said, he regretted that it should be incumbent on him to move that the House resolve itself into a Committee on this Bill that day three months. But he had carefully weighed the Amendments he had placed on the Notice Paper, and, considering their nature and extent, deemed it more frank to make such a Motion in the first instance, as it would enable him to express, as a whole, his objections to the present Bill, which he had no opportunity of going into since the altered Bill was placed in the hands of hon. Members. The original Bill was introduced on the 21st of April by the Chancellor of the Exchequer, in Committee of the Whole House, on a Motion—

"To bring in a Bill to amend the Law with respect to the liability of members of Banking and other Joint Stock Companies; and for other purposes."

The right hon. Gentleman availed himself of that opportunity for explaining the circumstances which called for legislation, and he used these words—

"According to the provisions of the Joint Stock Companies Act of 1862, it has been optional for any company to register itself either as limited or as unlimited…It was believed that that power was a continuous one; but they found, on taking legal advice, that it was not possible for a bank which had once elected to be registered as an unlimited company to become limited."—[3 Mansard, ccxlv. 791.]

That was an intelligible statement, and a cogent argument in favour of some measure. No one could even attempt to refute the proposition that something ought to be done to remove the technical difficulty complained of, unless, indeed, he took up the ground that the Companies Acts of 1862 and 1867 were altogether wrong, and he (Sir Joseph M'Kenna) was not at all disposed to take any such grounds; but the grounds on which he based his present Motion were that the Bill before the House went far beyond the scope of the Amendment which the Chancellor of the Exchequer indicated, and that it introduced principles at variance with the recommendations of the Select Committee of 1867, which were the last deliberate pronouncement they bad to guide them in legislating on this exceedingly critical subject. He (Sir Joseph M'Kenna) would ask the attention of hon. Members to what he was now about to say. The latest law which applied to the subject of the reduction of the liability of shareholders in public Companies was the Companies Act of 1867–30 & 31 Vict. c. 131. That Act was passed on the basis of the Report of the Committee of the same year. The Committee made its Report on the 28th of May, 1867, shortly after which the Bill was brought in and passed through Parliament, and received the Royal Assent on the 28th of August. He would say a few words as to the constitution of the Committee, which was a very strong one. Of its Members there was not one who had come forward to support this Bill; and there was notably one Member—the right hon. Gentleman the Member for the City of London (Mr. J. G. Hubbard)—who did not regard this measure one degree more favourably than he (Sir Joseph M'Kenna) did. Now, what did that Committee recommend? It recommended that Companies should be allowed to reduce their capital, or to reduce the amount of their shares, or to reduce both their capital and their shares, on the following conditions:—Notice to the Registrar of Joint Stock Companies; advertisement of notice in such manner as the Board of Trade might direct; the consent of all parties being creditors of the Company at the date of the reduction. Or, as an alternative, payment to the creditors; or, in case of absence or legal incapacity of creditors, that the amount in cash of their claims be invested in Government Stock, or, in the names of trustees, lodged in the Bank of England under conditions to be approved of by the Board of Trade. These were the conditions recommended by the Committee bearing on the subject of the reduction of capital of Joint Stock Companies. The enactment which followed on these recommendations was comprised in the 9th to the 20th sections of 30 & 31 Vict. c. 131—the Companies Act of 1867, which were as follows:—

said, there was great force, no doubt, in much that the hon. Gentleman had said; but he thought the hon. Gentleman saw, as all hon. Members saw, that some measure must pass to enable the existing defects of the law to be remedied. He, therefore, suggested as the most practicable course that the Bill should be allowed to go into Committee, where, he apprehended, the hon. Member would not object to the passing of the clause providing for the registration of unlimited banks as limited Companies. Then they would come to the consideration of the clause respecting reserved liability, and to the special provisions to which he understood the hon. Member to take exception for doing away with the present system of giving notice to all creditors, and substituting a system of advertisements. With regard to the unlimited liability of the bank in respect to notes, he thought, when they came to that, they would be able to satisfy the hon. Member that they had better not go further with the matter to which he had drawn their attention. Accounts were matters of detail which they need not discuss. Other clauses had better be discussed in Committee, where suggestions could be more easily made and Amendments moved. He hoped, therefore, the hon. Member would not press his Motion.

quite concurred with the right hon. Gentleman in the opinion that the questions raised by the hon. Member for Youghal could be more conveniently dealt with in Committee; but it would, he thought, facilitate the progress of the Bill if some understanding were first arrived at as to the clauses relating to reserve liability, to which a very strong objection was entertained. He had no wish to prevent unlimited banks from limiting themselves, provided it could be done without injury to the depositors. Many unlimited banks, he believed, had called up a great part of their capital, and would not have sufficient margin, if they became limited banks, on which to found a large business. The public ought to see the position of a bank at a glance. He believed most of those in this country and in Scotland and Ireland were in a sound and healthy state, and were making the changes proposed. The House should be careful to do nothing that should interfere with their stability. The question of accounts was one that might possibly wait until next year, because it would be a very difficult thing to compress all the accounts of the banks into one form. Many buyers of bank shares thought no more of the transaction than if they were buying stock; and the first result of this agitation would be that shareholders would look more closely after their own interests, and see the accounts were fully displayed. If a bank had £10 shares, and £7 were called up, the balance was not enough for a large business. There was no reason why such a bank should not make its nominal share £15, and so leave a wide margin. He had placed in his hands, within the last few minutes, a clause with which the Chancellor of the Exchequer was, no doubt, acquainted; and if the right hon. Gentleman were to adopt that clause he did not see why there should be any difficulty in passing the Bill.

thought it very desirable that means should be taken for limiting liability; and provided that the circumstances were well known and published to the world, there was no reason why security should not be given to those shareholders. He did not think the House need hesitate to grant the change. It should be borne in mind, however, that in changing their character they changed the relations between themselves and their depositors, and it would not be right to make the change without intimating the same to each depositor. He objected very much to a reserve liability bank, because it was a thing that nobody could understand, and it conveyed no definite idea, and it seemed to him that in matters of this kind things should be as clear as they could be. Banks should do at once, while in a state of solvency, what they would be called upon to do in a state of insolvency—namely, to call together their shareholders, and to require from them large subscriptions in addition to their former amounts. This would only be fair to depositors when shareholders changed to limited responsibility. Notice should be given to depositors of the new character of the bank indicated. If these changes wore made he should be perfectly satisfied, and would give his support to the Bill.

was disposed to think that it would be better to adopt the suggestion of the Chancellor of the Exchequer, and defer the discussion until the House went into Committee; hut, as the hon. Member for Cork (Mr. Shaw) had pointed out, if they could come to an agreement upon certain points, in all probability the Bill would pass in a short time with general concurrence; and he confessed he thought the hon. Member (Mr. Shaw) was right. He could not agree with the hon. Member for Youghal (Sir Joseph M'Kenna), that the first two clauses would be quite sufficient to carry out the intention of the Bill and meet the requirements of the case. The fact was, the House had before it a very difficult and delicate task. If they had to begin anew, then he thought it would be perfectly easy, because the limitation of liability would lead to the limitation of credit. People, unless they knew there was an unlimited amount of capital at the back of the bank, would not give credit on an insufficient basis, as it was known they did in the case of the City of Glasgow Bank. A number of transactions would, under these circumstances, have been brought to a stop much sooner under limited liability. But the position in which they were was this—they had unlimited credit built on the foundation of unlimited liability, and if the House were not careful they would strike away their unlimited liability in the first place, and unlimited credit would come to an untimely end. That was the difficulty pointed out by the hon. Member for Cork, and the two first clauses would not meet that position: There were many banks whose great credit was founded on their known good management and the fact that they had unlimited liability at their back. Suppose a bank had liabilities amounting, say, to £25,000,000, with a nominal capital of £3,500,000. Would anybody say it would be safe to do away with that bank's unlimited liability, and leave the bank with such a capital as that? In a list of 27 banks, there were more than half of them with capital paid up; but in many of these their good credit was founded on their good management. How would the Bill apply to such banks as these? But it was said it was absolutely necessary to do something. There would be the pressure which would be put upon Directors by shareholders to constitute their banks under limited liability; and there would be the temptation to banks whose subscribed capital would not furnish sufficient security for their liabilities. Yet there was the state of feeling only recently excited by a considerable amount of distress, and which would not easily pass away; and if liberty were extended to banks to transfer themselves to limited liability without reserve it might lead to a very bad state of things indeed, and this was why there was a necessity for such clauses as the "Reserve Liability" clauses to enable banks to do away with their unlimited character, and yet preserve liability sufficient to meet the amount of their credit. He could see no valid objection to these reserve liability clauses, and he believed they would be very useful, and it would be an advantage that banks should ascertain the amount of capital they were able to call on. The clause proposed by the hon. Member for Cork was a good one, and might be proposed as an alternative if the clause of the Chancellor of the Exchequer was not accepted by the House. They must not run the great risk of having banks driven by the feeling amongst their shareholders to adopt a principle of limited liability without sufficient capital to justify the state of liability in which they were in, and would probably remain in. There would be a source of serious evil unless some such provision as that proposed by the Chancellor of the Exchequer was accepted.

agreed with a good deal that had fallen from the hon. Member for Liverpool (Mr. Rathbone). He had stated, the other day, that this was not, and must not be looked on as a banker's Bill at all. It must be looked upon as a Bill for the public generally. Many persons bought bank shares as they bought Consols, without considering the risks they ran. In consequence of the state of things in the last 12 months, these persons had begun to look about them, and to find that they had a real practical responsibility. This had gone on to such an extent that shareholders were unwilling to hold their shares subject to unlimited liability, as in the case of the City of Glasgow Bank, and were wishing to get rid of their shares. If that took place, the good shareholders ran out of the banks, and that was not for the public interest. Therefore, it was in the interest of the public that this Bill was brought before the House, and he hoped hon. Members would not look upon it as a banker's Bill. If good shareholders got rid of their liabilities, the shares were likely to get into the hands of men of straw, who had nothing to pay with. Care must be taken that if unlimited banks changed themselves into limited they should not be allowed to throw off too much responsibility. It should not be possible for those banks to call up all their capital and have nothing left to fall back upon. Some years ago, when he went carefully into the matter, a bank that had called up £10 or £20 held it to be absolutely necessary to have £20 more that could be called up, leaving £60 out of the £100 share that could not be called up, except in the case of accident to the bank. The Bill did not overlook that point, and the question was only as to whether the clause of the hon. Member for Cork, or the provision of the Bill was preferable. The hon. Member for Cork suggested that limited liability Companies should have the same privilege as unlimited liability Companies. But there was a considerable difference between the cases. The unlimited liability shareholder could not object to his liability being lessened; but the limited liability shareholder would very fairly object to his liability being increased. Of course, if the limited liability shareholder consented to his liability being increased, no one could object; but it would be impossible to effect that object merely by introducing the words "limited or unlimited" into the clause. He quite agreed that this conversation had done good in bringing them together, and might facilitate the progress of the Bill through Committee.

said, he had been brought to the conclusion that something approaching a Reserve Liability Clause would be necessary to be introduced into the Bill. The right hon. Gentleman the Home Secretary had said it was more for the public interest than in the interest of the banker; but his opinion was that the public interest was best preserved by allowing the bankers to make what bargains they could, and, therefore, he was strongly in favour of the unlimited banks being allowed to deal with their creditors as best they could. But then, of course, came the position of some banks with a capital very nearly paid up, and he would not venture to make them unlimited unless there was a reserve. He agreed with the Home Secretary that they could hardly increase the liability without the consent of the shareholders. Then came in some provision in the Bill to enable an unlimited bank, the capital of which was nearly paid up, to make a call upon its shareholders; and it appeared to him to be a very fair thing that the general body of shareholders should do that; but he confessed he would prefer seeing a clause in the Bill similar to that of the hon. Member for Cork, rather than the clause that already existed in the Bill. The effect that was desired would be entirely gained by the clause suggested by the hon. Member for Cork.

concurred in what had been said as to the necessity for providing unquestionable security for the depositors in a bank which limited its liability. When the joint-stock principle was adopted a number of private banks had failed, a fear as to their solvency having caused a run upon them; and it was to prevent such panics occurring that shareholders were rendered liable for every penny they possessed in the world. In his opinion, the reserve to be provided for in the Bill ought not to be restricted to an amount equal to that paid up, but ought to extend to two or three times the amount paid up.

thought a reserved liability would be very good for the shareholders, but would afford no reliable security to the public, for it might be the case that a large proportion of the shareholders would be men of straw. There wore many banks in which the value of the shares altogether did not amount to one-twentieth the amount of the deposits.

said, he had an Amendment which he would submit to the Chancellor of the Exchequer, although he feared there was not much chance of its being adopted. He might say, in the first place, that he introduced his Proviso with the assumption that the House would not be content with a mere advertisement of change of character for a bank, and would insist on retaining the notice already provided for in the Act of 1862. By that Act a notice of the conversion into limited liability would have to be sent out to every creditor of a Company, informing him of the change. Assuming that that condition was fulfilled, he ventured to suggest that the principle of limited liability should, after a certain time, apply to all creditors of banks; because, otherwise, they would have a series of very difficult questions arising, known to lawyers under the name of novation; the point at issue being whether a creditor had, or had not, accepted a new limited liability bank in place of the old unlimited bank. In the country, especially, there were many cases where people left money and received a deposit note, or even a bill, or perhaps a book, which was brought in, year after year, and interest paid on it, nothing being said as to any change made; but if the creditor had received a notice of the change, which he assumed would have been given to him, he thought, after a lapse of three years, it should be a matter of law, not to be disputed, that the depositor had accepted the limited liability Company in substitution for the previous bank; and that in the case of a current account, where transactions were constantly happening, that after 12 months a customer might be assumed to have accepted the new Company in substitution for the other. He need not tell the Attorney General or the Chancellor of the Exchequer that most vexing questions had arisen where, after the lapse of a great many years, Companies supposed to have been absolutely defunct had been resuscitated, for the purpose of providing funds to meet the demands of persons who had apparently accepted, and had gone on accepting, substituted Companies for very many years. The necessity of producing evidence fixing these people with absolute consent to the change, which had to be decided from their acts, had given rise, in the cases of the "Albert," and the "European," and certain other well-known cases, to great difficulties in liquidation. This would certainly arise in the liquidation of any bank, especially any country bank, after its conversion into a limited Company; and, of course, he need not say that questions always were arising as to the period at which outgoing partners became released from their liability. For this reason, he ventured to suggest that they should accept the Proviso he wished to add to the clause—namely, in page 1, line 23, to add—

Provided, however, that, in the case of any banking company, such limit of liability shall apply to any debt existing or arising as a balance of an account current at the expiration of one year from the date of such registration, and to any debt existing or arising as a balance of a deposit account at the expiration of three years from such date of registration."

said, he was very well aware that many questions did arise on this doctrine; but he did not himself believe that there would be any difficulty in regard to this particular Bill, for its provisions were clear on the subject. The creditor would have the same remedy and the same power as he had supposing the change had not been made. If a man had an account current and a sum due to him, and chose to let the account go on after having received a notice of the change from the bank, and payments were made to him from time to time by the bank in the ordinary course of business, those payments would be an acceptance of the limited liability; and, at all events, within a very short time the payments would extinguish the earlier liability on the account current. Thus, very soon that account would be obliterated altogether, and then whatever money was due would be due under the altered arrangement. The customer, of course, could not complain of the alteration in the arrangement if he could not say that he was damnified by the bank being turned from an unlimited into a limited Com- pany; because that would have been done under the provisions of an Act of Parliament. Neither could it be said that there was no notice on the part of the creditor; the matter would have been accomplished under the provisions of an Act of Parliament. He would have received his notice; and if, when he received his notice, he did not like the change, then he might have withdrawn his account and ceased to deal with the bank; but the notice having been given, if the creditor allowed his account to run on, he did so under the understanding that the liability of the bank to him would have been altered by Statute. These observations with reference to an account current would apply with less force to a deposit account. The payments made on that account, from time to time, would extinguish the earlier liability, and any further sums deposited would be placed to the account, on the understanding that they were governed by the limited liability. It seemed to him, although he quite acknowledged the attention the hon. Member for Liskeard had given to the Bill, that this provision would produce a much greater complication, and much greater evil would be produced by its adoption than there would be good gained by it.

observed, that the Attorney General had scarcely replied to the remarks of the Mover of the Amendment. It seemed to him that the result would be to confuse the customer, and he would not understand what he was about. The liability of the old bank and the liability of the new might last for four or five months, and a customer would scarcely know who were liable to him. In all these cases, it seemed to him that the straightforward way was to give notice. He had given Notice of an Amendment to Clause 7, providing that these notices should be sent to all creditors. There could be no difficulty about this, because every customer had a pass-book; and if he could receive that, he could receive a notice, and the bank could easily make the change from unlimited to limited.

thought that the hon. Member for Birmingham (Mr. Muntz) had not quite done justice himself to the speech of the hon. Member for Liskeard, and did not quite understand his argument. He himself did not deal with the question of notice in his speech, although he quite admitted that some reasonable notice ought to be given, because the hon. Member stated his case on the assumption that notice would be given. Assuming that, he thought, also, it was desirable to add this provision to the Bill, while he himself took the opposite view.

thought it was extremely desirable, in the interests of the shareholders of banks, that there should be some fixed period for determining the liability of the old bank. In a great many instances depositors left money in unlimited banks, for which they took receipts, that lay in their drawers for an indefinite period. It would be, therefore, impossible to say when the liability of an unlimited bank became limited; and it would be unknown to the public when the change took place, although the notice must be given to the customers of the bank. Many of these banks held deposits for many years; and it would be impossible to determine, within a certain period, whether the bank had become limited or unlimited, and whether it was not still liable for considerable amounts.

was of opinion that the change could do no harm; and, therefore, he thought they might adopt the provision.

said, the proposition was most pernicious, because the whole of the arguments in favour of the provision was that they were not to alter existing contracts. Now, this Amendment proposed to take away the remedy creditors otherwise possessed, and to apply limited liability to existing contracts. A more monstrous proposal he had never heard. A creditor deposited money while the bank was unlimited; a change was made; and after a year, if he kept a current account, or three years, if he was a depositor, the bank was to be a limited liability bank as regarded him, without any other provision on the subject whatever. No security was to be given, no funds were to be set apart to meet the creditor's claim; but the creditor, without his consent, and without any substituted security, was to be deprived of the security of the shareholders' unlimited liability, which formed part of the consideration of the original contract. The whole basis of this act would be upset if they were to introduce so serious a modification of existing contracts. He thought it was quite unnecessary with regard to depositors. The banks had only to give notice that they would pay off the depositors or commence a new account, and in the case of current accounts to close them, and then the whole matter would be done with, and the limited bank could begin afresh.

thought there was no occasion for this provision, for they would find the Act of 1862 went quite far enough in its 194th section. That provided all the machinery, and made all the preparations necessary, in a matter of this kind; and, in any circumstances, it would be scarcely a good thing to further complicate the clauses of the Act now in contemplation. There could be no very strong objection to the proposal; and if they had two months before them the matter might be fairly discussed and settled; but as the measure must be passed that night, having given the matter great study, he thought there would be no advantage derived from the clause, and therefore they had better drop it.

also recommended the hon. Member to withdraw the Amendment, and believed it would be almost impossible to carry it out, and he also believed that Clause 7 made ample provision for everything that was wanted.

would ask leave to withdraw his Amendment, although he was still of opinion that it would be a very great convenience if it were adopted. The hon. and learned Member for Gambridge (Mr. Marten) had been very severe on what he was pleased to call his high-handed interference with contracts, forgetting that for 12 months the creditor had full security and could withdraw his account. He did not wish to do anything except with ample notice; but the effect of not inserting a provision of this kind in the Bill was simply to make work for lawyers. In consequence, they would have a great deal of difficulty in schemes for winding up, which might have been prevented, in order to ascertain whether a particular depositor had accepted the substitution of the new limited Company for the old unlimited Company. That was a question which could only be settled by lawyers, and they were the only class who would profit by the uncertainty of the present law—an uncertainty which, in spite of the assertion of his hon. Friend the Member for Youghal (Sir Joseph M'Kenna), was not covered by the Act of 1862.

was understood to be entirely in favour of striking out this clause.

thought there would be some difficulty in working it.

said, he should very much regret that the Chancellor of the Exchequer, in deference to the wish of certain Members, should withdraw the clause. He believed the principle involved in it was a very sound one, and it had already been found to work admirably in our banking system. While he had nothing to quarrel with in the suggested clause of the hon. Member for Cork (Mr. Shaw), he thought he did not see that, by maintaining the word "limited," they would have, as a result, banks of limited liability with every shilling of their capital called up; and they would also have banks equally called limited, and under exactly the same denomination, with only half their capital called up. How were they to distinguish between the two? How were the public—especially the ignorant public, for whom they were legislating—to tell the difference between a limited bank with the reserve, and a limited bank without a reserve? The principle of reserve liability, as set forth by the clause as it now stood, was in actual working order throughout our Colonies, and was working there admirably. Throughout the whole of the Australian group it had received abundance of trial; and the principle had this advantage over a limited bank—that there was a margin in a limited bank which might be called upon, or could be financed by the Directors, or dealt with in some way or other, although not called upon; but here, in these reserve liability banks, they had, as a security for the depositor and the creditor, this reserve actually untouched and uncalled, except in the case of the bank failing to meet its engagements. That, he thought, was a great security for the public, and would always give great confidence to shareholders, and he could not see why there was any objection to it. It was not as though they were starting a new principle, for most of their chartered banks were on this principle; and it was one on which nearly all the Australian banks and the New Zealand banks trading in the City were based. There were no banks, he might remark, too, trading in this City or any other, that stood higher for credit, or were better managed, or had a better proprietary than those banks. Then, let them remember, also, the great advantage they gained by having a bank share, say of £25, with a future liability of £25. By such means they secured a good proprietary—men who knew the amount of their liability, and who went into the business with their eyes open, and were not afraid to meet that liability if called upon. He hoped the Chancellor of the Exchequer would firmly maintain his clause, as, thereby, he would be establishing a good system, and he could see no reason why it should not be carried out.

observed, in reply to the hon. Member's criticism, that they would, no doubt, have two descriptions of limited liability under the same name, and that some banks would have the whole of their capital called up, and some only part; but that system was in existence even at the present time, and there was no objection to it on that score. And, with regard to this reserve, it was not a capital reserve; it was simply a limit by guarantee, and the guarantee of a floating body of shareholders. There was never anything more calculated to suggest to his mind the idea of throwing dust in the eyes of shareholders than by having a reserve figuring on paper. If the Chancellor of the Exchequer wanted facilities for applying the Acts of 1862 and 1867 to the present emergency let him apply for them; but he did not think that the matter should be dealt with in the way proposed. The result would be to have a new course and a new departure in business, and a now species of intermediate aristocracy in the banking world. He hoped the clause would not be pressed; for if the Chancellor of the Exchequer did not give way he certainly would not get his Bill as rapidly as he wished. He thought that omission, on the other hand, would simplify matters very much.

wished to do his best to enforce what the hon. Member for Sheffield (Mr. Mundella) had said as to the advantage of the limit of liability usually fixed in the case of the chartered banks. Those banks were very well known all over the world; and the difference between them and ordinary limited and unlimited banks was that the limit of liability was double the amount of the banks' capital. The Government now suggested that banks of this kind should be called "reserve liability banks." He did not quite know how they had come to that term; but, whatever its name, the thing was perfectly well known all over the British Empire. He spoke with some experience on this subject, for he had been for many years a Director in one of those banks, although not so then, and he knew that they could not get a better proprietary than those banks did obtain. They did business in all parts of the world; they had generally a sound proprietary, and did their work in an eminently satisfactory way. He ventured to say that everyone who had had experience of these banks, or who knew anything of their work in different parts of the Empire, would say that the chartered banks, with liability of twice their nominal capital, were satisfactory institutions. He, therefore, should very much regret if the Chancellor of the Exchequer gave up this clause; but if he was compelled to give it up, he thought the Amendment proposed by the hon. Member for Cork (Mr. Shaw) was the best suggestion. He did hope, however, that the Government would first make a point of ascertaining the feelings of the House, and would adhere to the principle which, whatever the name—"a rose by any other name would smell as sweet"—had been found to be a practical and most convenient form.

remarked, that the previous speaker had said that banks of reserved liability were in operation in the Colonies. He had had a considerable experience in the Colonies; but he had never heard of them.

They are banks under Royal Charter, with exactly the limited liability now proposed.

Oh, yes; but, then, they had those in London also. Now they were to have four different kinds of banking enterprize. They were to have "Limited," and "Unlimited," and "Charter," and new banks with the name of "Reserve Liability." That was what he objected to. He objected to a new-fangled word—the public did not understand it—it took 20 years to make the people understand limited liability. The public understood it now. They saw how much capital was to be called up, and they gave their confidence to the bank; but let them start banks with a new name, and they would puzzle all the mass of the provincials, and a good many Londoners. Hon. Gentlemen must remember that the mass of mankind were not very intelligent. Intelligent men might at once learn; but how were small farmers, shopkeepers, small depositors, and all the spinsters and widows who knew nothing about business, to understand the meaning of this new phrase? He did not object to the principle of reserve liability; but what he did protest against was the addition of this new phrase, which, he maintained, would cause great confusion, and could do no possible good.

asked what was to prevent a number of persons associated together declaring, if they chose, that their shares should be also liable for a certain amount of reserve? Could the law interpose to stop that? The hon. Member for Birmingham (Mr. Muntz) had argued that there were limited and unlimited banks, and they could not go further.

begged to explain. He did not say that. His contention was, that as they had already limited and unlimited it was not desirable to have a new name.

thought, if the whole matter resolved itself into a question of a new name, the designation of the Chancellor of the Exchequer might stand.

said, he was sorry to disagree with his hon. Friend the Member for Birmingham (Mr. Muntz); he (Mr. Collins) thought the name was of some importance and was well chosen, because the object of the Act was to introduce the new principle of a reserve into limited liability banking. That being so, how better could they introduce those principles, and, at the same time, express to the public that there was associated with this limited liability a reserve fund provided for their protection, than by adopting the proposed designation? He hoped the Chancellor of the Exchequer would retain his clause, for the principle involved in it was most valuable and important. Next to it, doubtless, the proposition most acceptable would be that of his hon. Friend the Member for Cork (Mr. Shaw); but there was a wide difference and distinction between the two propositions. The Committee would do well to consider that the clause, as it stood, left a discretion as to the amount of reserve to Banking Companies intending to come under the Act, and was thus of a conveniently elastic character: it might be availed of to the extent of the circumstances and requirements of each bank profiting by it. There were many large banks to which the public entrusted considerable sums of money as fixed deposits, and it was said of some of these great institutions that they were desirous of altering their organization, and of re-constituting themselves under limited liability with an ample reserve beyond their nominal capital. No doubt, when re-organizing under this Act, they would consider how the change would be likely to affect their credit with depositors, and they would take measures to provide against distrust on their part. The result would be that the elasticity of the clause would be recognized, and in the case of largo banks holding immense deposits the amount of the reserve would be determined as any other essential element of re-construction. It was quite possible that some of these institutions might make a reserve of two, or three, or four times the amount of their nominal capital, in order to give such security and confidence to their depositors as might be entirely satisfactory. In dealing with the subject, due weight must be given to the interests of the public; at all events, they ought to be considered as fully as those of shareholders. Credit and importance were usually attached to banks according to the reserves they were able to appropriate and retain for the protection of shareholders and of the public; and the advantage of this clause would be that without calling up unnecessary capital and paying dividends on it, keeping money idle, or comparatively so, at moderate rates of interest, depositors would have as much protection in the event of difficulties as if reserves had been accumulated out of profits. Of course, it was open to discussion whether there was not a difference between holding a large sum of money as a reserve in a bank and allowing it to remain in the hands of proprietors; but the effect of there being a reserve created would be practically nearly the same, for the purpose of establishing confidence in the institutions contemplated by the Bill.

hoped the Chancellor of the Exchequer would consent to the withdrawal of this clause. By doing so he would accomplish two ends. He would get the Bill through very quickly, and he would please a great majority of country banks. They had no objection to the principle; but there was a very strong objection to these clauses. There was confusion enough in banking already. They had chartered banks in Scotland, with no liability beyond the share capital. There were chartered banks in the Colonies, which had double the amount of liability of their capital. They had limited banks; they had unlimited banks, and now it was proposed to have another description of bank, which would only end in bringing about confusion and in injuring the banking business of the country. The simpler they could make the change they were about to make the better. He thought the new clause he had suggested met all the difficulties which had been raised, and he could not imagine how anyone could object to the proposal.

said, it was clear they would have to deal with the broad question of reserve liability in this clause, and he must say he hoped the Government would not proceed with it. There was a broad and plain difference between limited and unlimited banks, and everyone knew it; but when they had to deal with reserve liability banks they had first to find out what reserve liability was—which might mean anything or nothing. They had to investigate the accounts of the bank to find what it amounted to, and what it consisted of, and how it was limited, and how it was reserved; and in respect to any reluctance of the banks to accept limited liability he did not believe it. Some of the most successful of the banks were those with limited liability; and if another, which was now unlimited, chose to change and accept the other system, he did not see why it should not say so distinctly and carry it out.

Sir, the question which is before the Committee is one upon which I confess that I am more anxious to arrive at a tolerably unanimous opinion than to press for a particular conclusion. It has been a question with the Government for several months what would be the best form of providing a constitution for such banks as desired to place themselves upon a footing similar to those of the chartered banks of the Colonies, of which we have heard. We believe it is a most excellent principle that banks should have the power of forming themselves upon a footing of having reserve liability—upon a footing on which they are liable in the case of winding up, not only to the amount of their capital, but to a further amount. I do not know why that should not be called a limited liability by itself—in one sense, everything that is not unlimited must be limited; therefore, we might make an exhaustive division of banks into these three categories. On the other hand, there seems to be among many of those with whom we have been in communication, and those who have been interested in this subject, a desire to adopt a name which would show that banks adopting this particular kind of constitution were on a somewhat different footing from the ordinary limited banks. We have framed the Bill with a view to give effect to the desire, and have bestowed a great deal of attention on the subject. I think myself that the Bill, as it stands, would have provided a very fair and workable constitution for banks of that kind. At the same time, it is impossible to deny that there is a good deal of difference of opinion on the subject; and I must say that if we pass this clause by a majority—I do not know how it will be, but the Committee may be pretty equally divided upon the subject—if we pass the clause by a majority, I am afraid we shall have before us a good deal of trouble on subsequent clauses which go into the status of reserved liability. I have considered the question, and I should not think much of that if I saw any real serious difficulty in principle between the two propositions; but in principle the clause suggested by the hon. Member for Cork is as nearly as possible, and is, in fact, the same thing, as reserved liability. The only question is, whether you are to give it a different name, or the same? Under the circumstances, I think the objections of those who dislike the introduction of the new name are stronger than the predilections of those who wish for the new name; and as there is no principle involved I think we shall be best consulting the feelings of the Committee by withdrawing the clause.

was extremely glad at the decision of the Chancellor of the Exchequer. The withdrawal of the clause removed all the objections he had to the Bill, and remedied, he had no doubt, a great many of those in the minds of others.

said, it was consequential upon what had already been done to strike out this clause altogether. It was not required at all.

said, that the 4th clause enabled those Companies which could not take advantage of the Companies Act of 1862 to take advantage of it. They had passed a clause which enabled an unlimited Company to limit itself, and he could not see that this clause was wanted.

had asked the Solicitor General whether there was any objection to have the provision which was in the Companies Act of 1862, whereby every depositor was obliged to have notice, instead of merely advertising in The Gazette, as was proposed in the Bill? The hon. and learned Gentleman had told him distinctly that it was absolutely neces- sary to have this clause repeated, for reasons which might, perhaps, be known to the Attorney General, but which he would not repeat in the absence of the Solicitor General. But the hon. and learned Gentleman saw no objection to every depositor having notice. The Gazette notice might never be seen, and he thought that a notice should be given to every depositor individually. It must be remembered that when an unlimited Company became limited the status of every person who had deposited money with the bank became altered; and, therefore, an opportunity should be given by which a man might have the power of withdrawing from his position.

said, from practical experience, he had never had any difficulty in giving notice. It was essential that everybody should have a perfectly honest and straightforward story of what was being done.

suggested that they might do without all the rest of the Bill. With regard to the two clauses which followed, they might as well do away with the notice. The unlimited liability, as far as issue of notes was concerned, was provided for already by the 182nd section of the Companies Act of 1862, now proposed to be repealed; and he thought the progress of the Bill would be facilitated by leaving out the two clauses. And as to the form of accounts suggested in the Schedule to the Bill, he feared the discussion would absorb more time than they could afford it. He understood that various forms of accounts had been agreed upon by various authorities on such subjects; but the form contained in the Bill differed from them all, and was not exactly approved by anyone outside the Government. All they had to do was to take the clause suggested to the Committee by the hon. Member for Cork (Mr. Shaw), which would very well meet the case.

had no doubt that bankers would act wisely in taking their customers fully into their confidence.

said, he could not assent to the opinion given by his hon. and learned Colleague that it was desirable, on the change of liability of a bank, that the operation should be brought to the attention of the customers of the bank not by notice, simply published in newspapers, which customers might never read, but by personal notice, and that the same sort of notice as was provided by the 188th section of the Companies Act of 1862 should be given under the present Act. No doubt, many hon. Gentlemen thought that that was, perhaps, a correct opinion; and it was quite possible that his hon. and learned Friend was perfectly right in thinking that the object would be compassed by allowing the section to remain unrepealed. But he was not quite sure that it would be so. The difficulty was that the Companies Act of 1862 only contemplated the registration, for the first time, of unlimited Companies, and did not apply to the registration of a Company registered under the Act of limited liability. Therefore, it might be that, strictly speaking, it would not be sufficient simply to allow the provisions of Section 188 of the Companies Act of 1862 to stand. It might be said by some astute lawyers that these provisions did not apply to cases where a bank of unlimited liability registered as a Company of limited liability. It seemed to him that the matter might be easily arranged by inserting a provision in the present Bill, to the effect that the provision with regard to notice contained in the 188th section of the Companies Act of 1862 should apply, under all circumstances, to the notice to be given under this Bill. If it turned out, upon reflection, that such a provision was desirable, it could be easily prepared. He trusted his right hon. Friend would, therefore, withdraw his Amendment.

thought no advantage would be gained by leaving out these words. The Committee would see that the object of the clause was to substitute for the 182nd section of the Companies Act of 1862 another clause which would carry out the exact intention with which that clause was passed, and which they hoped, in doing so, to make clearer. There had been some confusion as to the exact meaning of the section in question, and it had been thought better, in consequence, to repeal it.

agreed with the view taken by the Chancellor of the Exchequer. If it was understood that an Amendment should be brought up on Report, or that the words should be struck out, then he would suggest that the clause should be read in this way—

"Section one hundred and eighty-two of the Companies Act, 1862, shall not apply, but in lieu thereof, &c."

said, it would be seen that the paragraph he proposed to add to the clause was purely permissive, and would allow those banks which wished to give substantial security to do so. The proposed Amendment would create a great security to the public. He moved to add the following words at the end of the clause:—

"The foregoing provisions of this section with respect to unlimited liability for notes shall not apply to any bank, the authorised issue of which is fixed and which gives security by deposit to the satisfaction of the Treasury for not less than the whole amount of the authorised issue of such bank. The deposit shall be made in such manner and in the names of such persons, corporation, or officer, and shall consist of Consolidated Three-per Cent. Annuities, or of such Government securities of such amount and valued in such manner as the Treasury from time to time determine, and the fact of the issue being secured by such deposit shall, at the request and expense of such bank, be certified on the notes of the bank in such manner as the Treasury from time to time determine. The holders of notes of a hank which has given security under this section shall have a first charge on the deposited securities for the whole amount of the notes and the expenses of recovering that amount, subject only to the rights of any other creditors to whom the bank was indebted at the time of giving the security. To the extent (if any) to which the claims of holders of notes are defeated by the claims of such other previous creditors. The provisions of this section shall apply with respect to unlimited liability notwithstanding the deposit of securities.

"A bank of issue may give security by deposit under this section for an amount less than its whole authorised issue, but in that case its authorised issue shall thereafter be reduced to the amount for which the security is given."

did not think it would be well to enter upon the large discussion which would be raised by the proposed Amendment, and thought the hon. Member for Liverpool would act wisely in not pressing it.

hoped the hon. Member would not press his Amendment at that moment; but in the event of its being proposed when a subsequent measure was brought forward he would give it all the support in his power.

suggested that the clause might be omitted for the reasons he had already given.

was strongly of the same opinion as the hon. Member for South Leicestershire (Mr. Heygate), and hoped the Chancellor of the Exchequer would strike out this clause.

said, it was absolutely necessary either to strike out the clause or the words "as a reserve liability company, or registered." He would move that the words be omitted from lines 2 and 3.

thought the nature of the accounts required by the Companies Act of 1862, then in force, were quite as good as those required by the present Bill. They had, at any rate, stood the test of time, while the present clause was a mere experiment. He considered it better to strike out the whole clause.

wished to enter his protest against the withdrawal of the clause, and pointed out to the Committee that the present was the proper time to insist upon having uniform balance-sheets. These were already furnished by Railway and Insurance Companies; and it was most important, in the interest of the shareholders and the public, that all bank balance-sheets should have some general groundwork of uniformity.

agreed with the hon. Member for Youghal (Sir Joseph M'Kenna) that it would be much better to strike out the clause and leave the law as it stood.

thought the clause, if passed, would not obtain the uniformity desired, because it would only apply to Companies registered after the passing of the Act. It seemed to him that, with regard to all those clauses, they were rather going beyond the Business of Parliament, and treading upon the business of banking, and that they were, to some extent, open to objection in doing so.

said, no forms that they could fix would secure the credit of a bank, which must rest upon the character of the Directors. It was impossible for creditors to get at a correct understanding of the accounts. How could they estimate, at their true value, the bills of exchange in the hands of a bank. He had seen hundreds of those that were not worth a £5 note.

was of opinion that this clause was one of the best parts of the Bill. There was no doubt whatever that the first Banking Companies in England and Scotland had adopted a form very nearly the same as was indicated by the clause. But there were many banks which did not disclose to the shareholders a full and particular statement of account. That was just what was wanted, and hence the advantage of this clause.

said, he would agree to the omission of the clause, which was introduced principally with a view to the class of banks originally contemplated.

said, it was impossible to prescribe by Act of Parliament the form in which the auditors should manage their accounts, and he objected entirely to this being laid down in the present Bill.

did not agree with the hon. Member for Peterborough (Mr. Thomson Hankey) that the clause laid down the form in which the auditors were to audit the accounts. The object of the clause was that the accounts should be audited. He agreed that to put upon an auditor the duty of stating the actual position of a bank was to put upon him what no human being could perform. But the clause imposed upon the auditor only the duty which an honest man could do—namely, of stating to the shareholders that, to the best of his belief, the balance sheets submitted contained a full and fair statement of the assets and liabilities of the bank as these appeared from the books of the Company. He should be sorry to see the clause struck out.

said, if the clause remained he proposed to make an addition at the end placing the auditor under certain restrictions. He thought that the part of the clause relating to the business of the auditor might very well stand.

thought that the accounts to be audited under this clause would be of such a formal character as to give a very imperfect notion of the state of the banks.

did not see anything to object to in the wording of the clause; but thought the clause itself was open to the objection that, by adopting it, they were stepping out of their proper province in interfering with the management of banks, and that the results might be precisely opposite to those at which they wished to arrive. It was perfectly easy to comply with every word in the clause; and yet he could not help thinking that the Directors might avoid the searching examination intended. The fact of the matter was, it was impossible for them to do the work of the shareholders, and to secure that they should have an audit of this kind.

thought the changes proposed to be made with respect to banking accounts unnecessary. Bankers who were registered under the Limited Liability Acts were already obliged to publish a very full account twice a-year, and hang a copy up in their offices.

said, if the 182nd section of the Companies Act remained unrepealed there was no occasion for the clause, the old machinery being quite sufficient.

had no doubt that the banks referred to by the hon. Member for Cork (Mr. Shaw), in presenting their accounts, did so in accordance with their Articles of Association, which, when properly drawn, always contained a clause providing for audits. But the object of the Bill was to make it imperative upon the banks that there should be an audit, and the terms proposed were very much in accordance with the corresponding article in the model form in the Schedule to the Companies Act of the Articles of Association.

agreed with the right hon. Member for Bradford (Mr. W. E. Forster) that they could not, by any precaution which might be taken, make Boards of Directors honest. But he also agreed with the Home Secretary in thinking that, had the system of accounts proposed by the Bill been adopted before, many frauds which had been perpetrated could not have taken place. If the Act of 1862 made this system of accounts compulsory, then, of course, there was no need of its being re-enacted; but he believed this was not the case; and, in that event, the present clause was one of the best in the Bill for the protection of shareholders and the public generally.

thought it would be a great pity to omit this clause. At the commencement of the Session, and before it began, there had been a great outcry for audits in the case of Banking Companies. That was a matter which he had steadily set his face against. Neither did he think it wise that Parliament should attempt to prescribe a particular form of audit, or to impose upon auditors a duty which they could not discharge. But it was quite within the province of Parliament to take care that, while they were reducing the securities possessed by the public, they should give an additional security with regard to the proper conduct of the business of banks. The clause provided that an audit should take place; and as it had been very carefully prepared lie thought it should be retained.

was personally acquainted with banks where there were no audits, and where the accounts were simply signed by the Chairman of the Board of Directors.

maintained that where the auditors were made perfectly independent of the Directors there would be no safeguard, beyond what was already provided by the Act of 1862. Under the circumstances, he thought the clause, as it stood, was perfectly unavailing.

said, if the shareholders were content to accept balance-sheets signed by Directors only, they must be very remiss and blind to their own interest. It did not appear, by the 6th sub-section, that the balance sheet would show the amount of money paid and received; and it was quite impossible that the auditors could dive into all the accounts of the money in the hands of the bank. How, therefore, was it possible for them to make a full and fair balance sheet? They would be obliged to take the figures supplied by the Directors at the time of the audit. Neither could they ascertain whether the bills in the hands of the bank were genuine, nor place a value upon them. He thought it would be very much bettor to strike out the clause.

said, the auditors could always ascertain whether the balance was represented by Consols in the possession of the bank, and whether there was so much cash to its credit in the Bank of England. He agreed with the Chancellor of the Exchequer in saying that this safeguard ought to be given to the shareholders.

also agreed with the Chancellor of the Exchequer that the clause should stand. It was not perfect, but it indicated a certain form and a certain examination to be gone through; and he believed that had the accounts been exhibited to the shareholders in the City of Glasgow Bank in the form indicated by the clause, the failure of the bank never could have happened. He did not quite agree that the balance sheets of banks signed by Directors were valueless. On the contrary, he was disposed to place more reliance in their assertions than in those of auditors, who had only to give a certificate as a matter of form.

agreed with the hon. and learned Member for Cambridge (Mr. Marten) that the present audits of banking accounts were only voluntary, and that without some provision under the present Bill there would, in fact, be no audit. The system of audit had certainly worked very well in the case of Insurance Companies, and was regarded as most valuable. The advantage of having a person to act on behalf of the shareholders was that if anything wrong was going on it gave the shareholders an opportunity of investigation.

suggested to the Chancellor of the Exchequer that if the clause remained its provisions should apply to the existing limited banks as much as to those which were about to register.

said, that anyone who had experience of the auditing of accounts, either directly or indirectly, would know that the very fact that accounts were to be audited was, in itself, a safeguard. Had there been an audit of the accounts of the City of Glasgow Bank, that Company would have been bankrupt 20 years ago. No auditor in the Kingdom would have passed the accounts of the bank. He thought it was the duty of the House to make provision for the audit of bank accounts. The requirements of the Act of 1862, with regard to the audit, were optional, and were frequently evaded by Directors, on the ground that the shareholders had not asked for audited accounts in the proper form proscribed by the Act. There was, on the part of certain banks, a desire to evade giving full information to shareholders. Seeing, however, that the first-class banks were perfectly willing to supply this information, why should not the inferior banks be compelled to do the same?

while admitting the usefulness of a proper audit, thought that the Committee should guard themselves from enacting the provisions of this clause in a hap-hazard way. By the clause, as it stood, the auditor could, do just what he liked; inquire into the affairs of the bank, and then come upon the Directors and examine them. Of course, for these purposes, men of discretion might be obtained; but, on the other hand, it was to be feared that persons of a different character might sometimes be engaged in the work, who would do more harm than good. The wording of the clause required very careful consideration to make it workable.

said, the hon. Baronet who had just spoken was under a misapprehension with regard to the audit of banking accounts, which would be no more difficult a matter than the audit of the accounts of a Railway Company. He saw very clearly that the present clause was essential to the Bill; and, if time permitted, he could give many good reasons why it should be passed.

said, that the effect of the clause would be, as he believed, to improve the real security of shareholders.

thought that it might be provided that the auditor should have a list of the books of the Company delivered to him, any of which he could inspect if he pleased. It was impossible, in the case of a bank where there were a great number of books, for the auditor to have all the books placed before him. He, therefore, begged to move to omit from the clause all the words after "auditor," in line 6, down to the word "and," in line 7, inclusive.

remarked, that the clause only meant the different classes of books. There were various sorts of books—cash books, ledgers, and so forth.

thought that those words might be allowed to stand in the clause, as they had been in the Act of 1862, and had never been found to work injuriously. It would be practically useless to insist that all books should be necessarily inspected by the auditor; but it was well to have a provision making it necessary that the auditor should know all the books which were kept.

said, that the form of Articles of Association of the Companies Act provided that every auditor might be furnished with a list of all books kept by a Company, and should, at all reasonable times, have access thereto. He wished to point out that it was impossible for an auditor to do any good, unless he knew what materials there were which could be placed by the Company before him.

said that, technically, that was correct; but in the case of banks there were a vast number of books, many of which were kept at the branches. If it were understood that the clause merely contemplated that a general list of all books should be furnished to the auditor, then he would withdraw his Amendment.

wished to call attention to the fact that one paragraph was omitted from the clause which he thought should be inserted. It was provided, by sub-section 3 of Clause 9 that—

"Every such balance-sheet shall be signed by the secretary or manager, and by the director of the company, or three of them, at the least, and that a printed copy thereof shall, at least seven days before such meeting, be forwarded to every member of the company."

He had been an auditor for the last 25 years, and had had great experience in these matters. He thought that if a further responsibility were thrown upon the managers and Directors it would have a very good effect. He begged to move, in page 6, at the end of paragragh 6, to amend the clause by inserting—

"Every balance-sheet shall be signed by the secretary, or manager, or directors of the Company, or by any three of them."

pointed out that the Amendment would not come in the clause in which the hon. Member proposed it.

remarked, that if the balance-sheet was to be of any value to the shareholders it ought to be signed by the auditor, as well as by the manager, director, and secretary.

was not disposed to withdraw the Amendment, for he was persuaded of its importance. He ventured to say that if his Amendment were adopted that clause would be the most important one in the whole Bill. From his experience, he could say that it would be of the greatest value that the balance-sheet should not be submitted to the auditor until it had been signed, not only by the secretary and manager—for that was usual—but by three, at least, of the Directors. He would venture to press upon the Go- vernment the desirability of adopting his Amendment. If the Government would consider the matter he would bring up the Amendment upon Report; or, if thought desirable, he would have no objection to propose the Amendment as a new clause.

said, that the Amendment which he had to propose was one calculated to make the whole Bill work extremely well. The proposition then before the Committee was that banks might be permitted to limit their liability to a certain extent. There was only one class of proprietors of a bank who could not be deceived, and who had not the same right to limitation of their liability as general shareholders. He meant the Directors. He thought that it would give the public three or four times as much confidence in its dealings with banks if the Directors were made liable, as he proposed, for one year after they had ceased to hold office. At all events, that provision should be applied, as he suggested, to existing Companies. He begged to move, in page 8, line 16, after "company," to insert—

"But no director of any existing company which shall register under this Act, shall have or be entitled to any limitation of his liability, by reason of such registration, until one year after he shall have ceased to be a director, and then only provided that no order for winding up or resolution for the dissolution of the company shall have been in the meantime made or formally determined upon."

said, that the objection to the Amendment was that it would discourage men who would make desirable Directors from incurring the responsibility.

remarked, that his hon. Friend the Member for Birmingham proposed to introduce a new form of bank, and, while he wanted simplicity and uniformity, was really proposing to introduce a perfectly new and complicated system. The effect of his proposition would be to apply to limited banks provisions and restrictions that did not apply in any other case. He hoped the Amendment would not be accepted.

did not think that the proposal would work. He hoped that the Amendment would not be pressed.

suggested that the hon. Member for Birmingham should withdraw his Amendment, and move it after the Amendment of the hon. Member for Cork (Mr. Shaw).

said, that he would take that course.

said, he had upon the Paper, after Clause 7, to insert the following clause:—

proposed the insertion of the following clause, which he had mentioned at an early stage of the proceedings in Committee:—

"An unlimited company may, by special resolution passed by the members when assenting to registration as a limited company under the Companies Acts, 1862 to 1879, and for the purpose of such registration or otherwise, increase the nominal amount of its capital by increasing the nominal amount of each of its shares; Provided, always, that no part of such increased capital shall be capable of being called up except in the event of and for the purposes of a liquidation."

observed, that the clause was merely permissive. A Company seeking to register as a limited Company might obtain all the advantages without making use of the clause. At present, the liability of banks was unlimited, and the Bill, whilst it allowed a limitation of this liability, would leave it to a resolution of the shareholders to increase the nominal amount of the shares as security to the creditors. He thought it would be rather dangerous to enable liability merely to be limited by a resolution of the Company. He very much doubted whether parties would not have the right to say that they objected to a resolution which interfered with the liability upon the faith of which they had taken their shares, and that whilst they accepted the limitation of the liability, they objected to an increase in the amount of their shares. He admitted, however, that if the clause of the hon. Member were made imperative, and the provision were made a necessary part of the variation of the liability, there would be an end to his argument. He thought that it would be much better to provide for what was to be done by a clause of the Act itself, rather than allow it to be done by resolution.

said, that it appeared to him that the measure that had nearly got through would leave the shareholders and Directors of unlimited banks to settle with their creditors upon what terms they would think fit to allow them to limit themselves. They could not carry the thing through without the consent of their creditors. That clause would enable an arrangement to be made between the creditors and the Company seeking to limit its liability. He was of opinion that the clause of the hon. Member for Cork would be quite sufficient for the purpose.

observed, the fact was, that it was proposed to contract the liabilities of Companies in a certain manner. It was not to be done absolutely, but only within certain limits. It would be contrary to the spirit of the Bill and of legislation to make the matter compulsory; and it would be far better to keep the clause as proposed by the hon. Member for Cork, who had done good service by introducing it.

was in favour of the clause as proposed by the hon. Member for Cork.

inquired, whether he was at liberty to move his Amendment as an addition to the new clause?

said, the hon. Member would be at liberty to move it when the other Amendment had been disposed of.

thought the clause would be extremely valuable. The effect of the provision would be that balance-sheets would be prepared with much more care than was sometimes the case at present. In his opinion, the Directors of banks were themselves the best auditors that they could have. He hoped that the Committee would adopt the suggestion of his hon. Friend.

thought that the clause was a good one, and he was prepared to accept it, but with some qualification. The clause, as drawn by the hon. Member, applied to all banks, and not only to those to be registered under the Act. It might be right to make such a provision for all banks; but they were then dealing only with a particular class of banks. Those banks which did not propose to take advantage of the Act would not imagine that there was anything in the Act relating to them; and, in that case, they might be unexpectedly brought to book for non-compliance with the terms of the Statute. When the time came he should propose an alteration to remedy that defect.

observed, that the proposed new clause seemed to provide a safeguard which he did not think it would really do. He apprehended that a Director was, at the present time, as liable for the truth of a balance-sheet as he would be if the clause were passed. Moreover, when the balance-sheets were published, the names of the Directors were always upon them. The danger of the clause was, that it would raise a question in the minds of respectable men—men of substance and of standing—as to their responsibility, for they would think that there was something hidden underneath the clause. In that way the clause might have the effect of deterring an excellent class of men from becoming Directors. Still, if the Government thought the clause, ought to be adopted, he would not object.

considered that the Government was somewhat hasty in adopting the clause. In many joint-stock banks there were a limited number of Directors. Six was a common number, and by the constitution of the bank two were "managing" Directors, and they alone were permitted to inspect the accounts of individuals, while the other four only took part in what he might call the higher policy of the bank. In such cases it was hardly right to require three managing Directors to sign the balance-sheet. If the clause were passed, he hoped the number of Directors who should sign the balance-sheet would be limited to two, otherwise such signature would become a mere matter of form. If they wished to bring the responsibility home, they should be careful to place it on the right shoulders only.

remarked, that it must not be supposed that the Government had adopted the Amendment hastily; they had had it under their consideration for a considerable time.

thought it a very proper provision that the balance-sheet should be signed by three of the Directors.

wished to say that he did not think it was fair to make any provision for the Directors of a bank, who were not allowed to see the books or to understand the private affairs. They could not provide that there wore to be Directors without any responsibility.

did not think that men ought to occupy seats at the Board of of Direction of a bank, unless they made themselves thoroughly acquainted with the concerns of the bank. Any Director who sat at the Board and did not understand its business deserved to be responsible.

could, not understand how any man could be a Director and know nothing about the working of the bank. He considered the clause a very good one, if only for the fact that it would put an end to the practice of Directors not interesting themselves in the concerns of the bank they managed.

did not think that shareholders would obtain any additional security if the Amendment were adopted. As they had put the banks upon the terms of getting the assent of the creditors, he thought they might very well be left to themselves. The banks would have to obtain the confidence of the persons with whom they were dealing, and it was not right for Parliament to interfere in the matter. He thought that the matter might safely be left in its present condition.

observed, that the hon. Baronet the Member for Youghal had entirely misapprehended the meaning of his Amendment. He wished to provide that the creditors should have something to fall back upon beyond the capital called up at the time of registration. Many banks had all their capital paid up; and if such a bank chose to register under this Act, the shareholders would have no liability whatever. He only asked that banks, however much of their capital might be paid up, should be liable for, at least, three times the amount of capital paid up. By that means only, he thought that a sufficient security would be afforded to the public. But most of mankind knew nothing about banks, and it was necessary for the Legislature to give them some security.

said, that the Amendment of the hon. Member for Birmingham was directed entirely against the limitation of the liability of banks. A bank would have to obtain the confidence of the public by taking a certain amount of responsibility; and he did not think they would do wisely in attempting to enforce a hard-and-fast rule, such as that proposed by the hon. Member.

took the opportunity of calling attention to the way in which the Amendments to the Bill, and to other Bills, had been put down on the Paper. There had been considerable carelessness in the way in which Amendments had been prepared, and a great many of them had been placed on the Paper in such a manner as to tend to produce confusion and to impede the progress of the Bill in Committee. He did not for a moment say that any exceptional blame attached to those whose duty it was to prepare the Paper; but he wished to point out that hon. Members ought carefully to revise their Amendments, and to see that they were put down in their proper places where they could be inserted in their proper order.

entirely agreed in the remarks just made by the Chairman of Committees.