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already applied for-Part payment in shares shows confidence of Vendors—Quoting shares at a prernium-No Promotionmoney paid-Allotment expenses defrayed by Vendors—In: terest on capital paid for certain period-Estimates of profitsNegotiations for sale of part of property Stock-Exchange quotation applied for—If no allotment, money returned in full --Confidence trick again—Spasmodic impetus to waning companies—Instance giving result of the combination of these efforts ...

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VI.-WORD-PAINTING IN PROSPECTUSES.

Aims of Art as applied to Prospectus writing - Utilisation of

Geology - Natural geography- Natural philosophy and the laws of population-Profits from the art-Instances of wordpainting drawn from prospectuses of Kwartz Hill, Great Wheal Tolbooth, Santa Cruse, certain Cornish Mines, and Biblical Mine

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VII.-PROSPECTUSES FURTHER ILLUSTRATED.

Illustrations from the Prospectuses of Quasi Coffee Companies

and careers of the undertakings—Diamond and other Mines in
Africa, North and South America—The real prizes kept abroad
-Chilly Mine, and other Venezuelan ventures -Joint-Stock
Company for promoting Joint-Stock Companies and its aims... 39

VIII.—THE INDIAN GOLD-MINING CRAZE.
Its history-Statistics of the industry-Parliamentary Inquiry

into Mysore speculation-Rumours of success and dubious
telegrams—Height of the Craze-Prospectus estimates and
their non-fulfilment–Raison d'être of the companies

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IX.-ELECTRIC LIGHT COMPANIES.—THEIR

RISE AND DECLINE.
Their History leading up to the Mania in 1882—Excitement

caught by kindred undertakings—Sudden collapse of the Mania
-Their present position-List of companies floated

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X.-ELECTRIC LIGHT UNDERTAKINGS.

I. THE BRUSH FAMILY.
Table of Brush offspring—The capital and sums received for

Patents—Gleanings from Prospectuses of the Hammond and
tributary companies, also of offshoots from the parent company
- Present financial standing of the companies

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XI.--ELECTRIC LIGHT UNDERTAKINGS (continued).

II. OTHER FAMILIES.

Distinguishing features drawn from Prospectuses of the Maxim

Weston and its offshoots : Laing, Pilsen-Joel, and Gulcher Systems; Electrical Power and Storage, London and Provincial, Phænix, Duplex, Jablochkoff, Swan, Henley's, Markland, Fyfe-Main, Edison, Electric "Sun," J. B. Rogers', and Self-generating Systems — Syndicates Maintenance and Supply Companies-Trusts and Agencies-How the Mania was fostered— The Government Act, and present Aspects page 74

XII.-RAILWAYS, BANKS, INSURANCE AND

SUNDRY ASSOCIATIONS.
Early days of Railway enterprises, initial expenditure and

waste-Their Capital-Bank of England and other Joint-Stock
Banks—Banking Dividends, Capital and Reserves, and adoption
of Limited Liability-Insurance and Assurance Companies,
and their Assets — Water and Gas Companies - Provident,
Benefit, and Friendly Societies–Building and Loan Societies
-Funds, Stocks, Bonds, and other securities unnecessary to
notice here

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XIII.-STATISTICAL GLEANINGS.
How far figures may be made palatable and instructive—Yearly

totals of all Companies registered since 1862—Return of Com-
panies wound up to 1868—Analyses of returns, and loose habits
of complying with regulations in making them—Modesty of
liquidators-Demand for them begets supply-An Enterprising
Failure—Subdivision of Stock-Exchange Securities—Home and
Foreign Mining figures examined- Defunct Cornish Mines
recently Gazetted— Table showing Capital sunk in Joint-Stock
Companies, side by side with that in other investments, and
with main items of national expenditure ...

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XIV.-SUGGESTED REFORMS.
Freedom of Trading desirable, but should not degenerate into

Licence – 1. Haphazard Registration condemned — II. Legal
quibble of subscribers taking only one share denounced—III.
Money Guarantees should be deposited by Directors, &c.-IV.
Responsibilities of Directors and Promoters—Their transac-
tions should be open-V. Allotment deferred until sufficient
capital subscribed-VI. Directors' remuneration not to swallow
up capital — VII. Limit to Directors' engagements — VIII.
Blanks in Directorate to be filled up by Members, and reasons
publicly given for Directors' resignation-IX. Proxy rule to be
reconsidered - Balance-sheets - Liquidators' Administration-
These reforms meant to restrict indiscriminate promoting, but
would be welcomed by sound concerns

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PUBLIC COMPANIES.

CHAPTER I.

INTRODUCTORY AND HISTORICAL.

“It's a good wind that blows nobody harm.

'WENTY-ONE years have now elapsed since the

passing of the Joint-Stock Companies Act of 1862, which gave so great an impetus to the formation of public and private companies, and in this year of its majority it is not unbecoming that we in some measure review its present aspects. There can be no question that the commercial position of our country has been immensely furthered by this and the kindred Acts which have since become law,gigantic undertakings have been launched, schemes propounded, and industries created that would never have grown up if dependent merely on the capital of a single individual; but it is useful to inquire to what extent these statutes have accomplished what was expected of them, and at what expense the admitted benefits have been purchased. In other words, how far has the spirit of the Acts been adhered to? to what extent have they been legitimately used and in what way abused ? and are the waste of resources, the perpetration of frauds, the wholesale robberies in promoting misleading schemes, which have unfortunately attended this class of enterprise, due to defects in the Acts, or in their administration, or are they wholly inseparable from the prosecution of such business? A review of the different kinds of companies started with more or less definite objects, and an examination of some of the leading branches of trade which the joint-stock system more readily lends itself to, will enable us to learn much as to what is its legitimate field and what is to be avoided.

The joint-stock idea was not a new one,—it had been applied successfully for hundreds of years before 1862, and

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the main object in framing the Companies Act of that year was the codification and amalgamation of about a dozen previous statutes into one compact whole, so as to embody, as far as might be, all the principles then recognised in one principal Act, and also to introduce more prominently the Limited Liability Clause.

It would be beside the purpose we have in view to inquire whether the more desirable way for business to be carried on is by private firms or as joint-stock concerns. Each has its advantages; and while, as a rule, businesses within the range of the means of a single capitalist will prove more remunerative than the same line of employment when taken up by a public company ; on the other hand, some schemes can only be attempted by the latter method. Political economists have summed up for both sides somewhat in this way :-Private businesses are more economically managed, greater attention is paid to details, and small savings are effected, which would be overlooked in companies. Then there is the advantage of personal superintendence ;-men will work harder and spare no pains when their own interests are at stake, and so their trading is likely to be more remunerative. Public companies, on the other hand, are more lavish in their expenditure, and look at things in a broad way, not going much into details. In extensive companies, as in banks and railway companies, where many men are employed, everything is reduced to system, and saving in time is effected by a great sub-division of labour. The employés, however, become mechanical in their movements, and where they have no direct interest in their employment, as they do have in the case of some co-operative associations, they are not so industrious as when under the eye of an employer who can advance them according to merit, and not on a definite system of rotation according to length of service. The business is often conducted by directors and officers who have only a small portion of their whole capital in the company, and the affairs are often left to men whose time may be spread over many similar concerns, in no one of which are their interests paramount. Again, the direction may be in the hands of those who have little business capacity, save for collecting their fees at each board meeting, or of others who have their own private business to look after besides. These disadvantages do not apply to the same extent to PRIVATE COMPANIES, where there are only a few shareholders, who continue to take an active share in the trading, and have merely taken advantage of the Acts to limit their liabilities and set free some of their

capital for other purposes, or to preserve a portion in case of business misadventures.

So long as a business continues to pay as a private .concern it is generally kept so, and the public are seldom asked to become sharers in its prosperity. It is, as a rule, only when a man has the bulk of his means sunk in one venture and is dissatisfied with the return he is receiving that he talks about " introducing fresh capital to extend his operations." He charges a good round sum for the plant, and, somehow, the business as a public company seems very often not to do what was promised of it, accountants' reports and carefully tabulated statements anticipating a profit of 10 per cent. to 20 per cent. on the nominal capital notwithstanding ; nor does the issue of debentures bearing high rates of interest tend to make the machine run more smoothly. In such cases it is not uncharitable to assume that his business was getting into tender ground before outsiders were taken into the confidence of its proprietor. Many instances of this truth occur ; and at present it is noteworthy that many of our formerly most prosperous shipping firms, since they have been turned into limited companies, have failed to exhibit a continuance of their previous prosperity. Perhaps this state of things is hastened too by undue competition, as companies will often continue to cut down profits, and even at times work at a loss to get traffic, when private firms would take care always to leave some margin for profit or else retire for a time from the field.

The History of joint-stock companies is easily traced. The earliest of these, -chiefly banks and mercantile trading corporations were incorporated by special Acts of Parliament, royal charters, or letters patent, and many of them were most extravagant schemes. Some, like the East India Company, absorbed the usual functions of Government over the districts in which they traded, and had their own ships and armies. Quite recently a venture of the samne scope has been incorporated, with a capital of £2,000,000, for the promotion of trade in British North Borneo. Even in the early days of joint-stock undertakings a vast amount of speculation was carried on, showing that this is not a product of the nineteenth century. Notably in this connexion was the South Sea scheme, promoted in 1711, with the view of restoring public credit and providing for the extinction of the National Debt, which at that time amounted to £10,000,000,-cnly one-seventieth part of what it now is. In 1720 this debt had reached £31,000,000, and the South Sea Company offered to take

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