once equitable to lord and tenant, and in confirmation of a practice not unfrequent. And the curse of common lands, once so useful under a different state of society, but now the fruitful cause of idleness and dispute, is in the course of gradual extinguishment, by the consent of those interested, under a law which, however tardy in its effects and cumbersome in its machinery, must be looked upon as a most wholesome instalment of a more complete measure. None then has a right to complain of any of the hardships which may still result from the existence of copyhold, herriot, or customary tenure, as it is in the power of any one to prevent the inconvenient consequences which they may entail.

Nevertheless, the feodal law still obtains in Great Britain and in Great Britain alone; and while other nations have shaken the fabric of the state to the foundations by abrupt legislative enactments, these islands have glided from night to dawn, and from dawn to broad daylight, without the sleeper being startled from his slumbers by the morning gun of legislation.

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XXII.-ON SOME ERRORS IN LEGISLATION ILLUSTRATED BY THE STATUTES RELATING TO JOINTSTOCK COMPANIES. BY NATHANIEL LINDLEY,

Esq.

[Read 21st January, 1861.]

A LONG study of the law relating to companies has convinced me that its unsatisfactory state, both past and present, is to a great extent attributable to a disregard by the Legislature of a few important principles established by writers on jurisprudence and legislation; and it will be my endeavour in the present paper to point out the errors which I conceive have been committed. I am induced to enter upon a criticism of the enactments relating to companies, by the reflection that those enactments have on the whole failed to establish the law upon a satisfactory basis, and to bring it into a satisfactory state, and by the further reflection that nothing is more calculated to lead to future improvement than a careful and dispassionate examination of causes of past failures.

Parliament has dealt with companies in two ways: it has done its best to suppress them altogether, and, finding that impossible, it has endeavoured to regulate them. In both cases the Legislature has acted with a view to the public weal, and in both cases it has committed grievous errors.

Let us consider the attempt to suppress companies and the various modes in which this attempt has been made.

In the early part of the last century, as is well known, a statute was passed for the purpose of preventing the voluntary subscription of capital by numerous individuals with a view to its employment for their common profit. I do not stay to consider whether the schemes afloat in 1719 were laudable or not; even if they were not, even if they were all bubbles and swindles, the proper remedy was very different from that to which the Legislature had recourse.

The reasons for condemning the principle of the Bubble Act are, as I conceive, as follows:

1. Because it is no part of the business of a Government to

protect persons, capable of taking care of themselves, from the ruinous consequences of their own deliberate acts.

2. Because it ought not to be assumed by a Government, that it is a better judge of what is for the benefit of its adult and sane subjects than they are themselves.

3. Because any attempt to prevent the commission of fraud on some persons, by prohibiting them and all others from engaging in what, apart from fraud, is unobjectionable, is invariably productive of more harm than good.

4. Because the only means of effectually preventing fraud in the getting up and management of companies, is to require publicity, and to make an example of those who are proved to have been guilty of fraud in any particular case.

Now, what is the principle on which the Bubble Act proceeded? Simply this; that because many people had been, and might again be, swindled and ruined by the promoters and directors of companies, therefore, there should be no companies at all. As well might the Legislature have said that because many people have been, and may again be, cheated at cards, there shall be no card-playing, at least, for money; or because many people have been, and may again be, unhappily married, all marriages shall be unlawful. Surely that is not the way to legislate for grown up intelligent men. The Bubble Act added one more to the list of offences, the existence of which is solely attributable to a ridiculous and cruel law. Socially and morally, wherein is it wrong for a number of people to combine their capital for the attainment of profit to themselves? and admitting that such combinations are powerful for evil as well as for good, it is a clumsy expedient to treat them all alike in order to make sure of suppressing those which are disapproved. What should we say of a farmer, who, because his crops had suffered from some particular insect, were resolutely to set to work to destroy every insect on his farm? He would himself be the first to confess his folly, after it had been pointed out to him that many insects do him no harm and much good.

The Bubble Act, however, has been long since repealed. But it must not be supposed that when the Legislature

repealed that Act, the principle on which it was founded was acknowledged to be erroneous, and was for ever abandoned. So far from this being the case, we find the old leaven still at work; to it must be attributed the efforts made to compel every company to submit its proposed plan of operations either to the officers of the crown, or to a Parliamentary committee; and to it also must be attributed the long and bitter, though ultimately unsuccessful, struggle against limited liability. It is not my purpose on the present occasion to discuss the comparative merits of limited and unlimited liability: all that I am desirous of doing is to protest against the notion that it is the duty of a Government to interfere to prevent persons from making contracts which affect those only who enter into them. For nearly a century and a half, from 1719 to 1858, this principle has been deliberately violated; and it has been assumed to be for the benefit of the public at large that speculation should be restrained by force. I say by force; because it is by force only that the Legislature can secure obedience. Punishment in some form or other is the means whereby alone laws can be enforced; and the ultimate test of the goodness of the principle of every law has long since been shown to be this: is the evil against which the law is directed, one which it is expedient to endeavour to suppress by compulsion by public authority? If the answer be in the negative, then, however great the evil, the cure for it must be sought elsewhere than at the hands of the lawgiving power. Tried by this test, every law having for its object the suppression of companies must be condemned. As long, however, as this test is neglected; as long as fancy and feeling are appealed to on the question whether this or that ought to be prohibited by law; as long as it is taken for granted that a law is a cure for every ill arising from objectionable conduct; as long as a government is deluded by the notion that it stands in the same relation to the governed as a parent to his child, so long will the laws of human nature be violated, and legitimate freedom of action be more or less hurtfully fettered.

Instead of attempting to suppress companies, and of waging war with those who desired to better their position in life by

the employment of their capital, an enlightened Legislature would have done nothing save so modify the law as to render justice attainable by and against the associated members. A sensible but non-paternal Government would have devised some means by which companies might have sued and been sued in ordinary courts, and would have passed a severe law to punish those guilty of fraud and malpractices, and would then have trusted the people to take care of their own interests as best they might.

It must not, however, be forgotten that companies might always be formed with the sanction of the Crown or of the Legislature. This, it is true, prevented the Bubble Act from being so intolerably oppressive as it otherwise would have been; but the necessity of obtaining from the Crown or Legislature special permission to do that which it ought to have been lawful to do without such permission, was in itself a great evil. Special permission to do a thing ought never to be required, unless what is sought to be done is something which is in general prejudicial. Within the limits set by the test before alluded to, people should be left free to act ; and it is only when they seek, for some exceptional reason, to pass beyond those limits that special leave to do as they wish should by law be necessary.

No doubt the notion was, that by requiring the projectors of companies to apply to the Crown or Legislature, a check would be put on rash speculation; and it may be admitted that much fraud was thereby prevented. But, on the other hand, it must be remembered, that by requiring the sanction of the Crown or the Legislature to every scheme demanding more capital than a few individuals could furnish, a very serious check was put on the employment of capital by the unwealthy; and it not only seems to be, but is, unjust to say that two or three rich men may engage in any transactions they like, but that one hundred comparatively poor men shall not do the same. Moreover I hesitate not to assert that, upon the whole, it is detrimental and not beneficial to the public to be compelled to obtain leave before trying to increase their wealth in their own way. Time was, even in this country,