a flock of half-fledged schemes, which do nothing but damage the promotion of the sounder enterprises, creating, when the excitement ceases, a disgust in the public mind which is not readily forgotten. The progress of the industry is retarded, and even its most brilliant achievements are for a time looked upon with distrust. The working out of the problem of ELECTRIC LIGHTING has made great strides within the past few years; an Act has been passed by Parliament to regulate its introduction and prevent its becoming a perpetual monopoly as in the case of GAS and WATER, and the industry is so far recognised as to have a directory specially devoted to its interests. To what extent the flow of capital was attempted to be diverted into improper channels may be gathered from a short extract from the introduction to that work in its issue for the present year, 1883. It says, and says well:"Inventors, ripe or not, came forward, electricians pro tem. "rushed to the patent office to create a property which "might be negociable, and some succeeded in vending "their goods in the verdant state, such was the craze for "something unknown and wonderful. It seemed as if the "inventions were mere pretexts for enabling speculation to "have free scope; and, in fact, it was nothing else than unhealthy financial jobbery. A few of the companies so "formed were, of course, genuine, but the majority of them "had no reason to be, and cannot possibly last. In all "likelihood some people have, or will have to pay dearly "for their blindness, the electro-financial gentlemen having 'by this time prudently retired with their earnings."

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A

CHAPTER XII.

RAILWAYS, BANKS, INSURANCE AND SUNDRY
ASSOCIATIONS.

"Success is the index of merit."

TREATISE bearing on JOINT-STOCK COMPANIES would be incomplete without a brief sketch of those undertakings which, from their very nature, can only be attempted nowadays by a large command of capital, and

which hold out the most eligible field for joint-stock enterprise. We refer to railways, banks, and insurance companies, gas and water companies, &c.

Corporations were instituted on a grand scale for special trading purposes by Royal charter or letters patent generations ago, but it was not till the days of steam and its application to the formation of RAILWAYS that the banding together of comparatively small amounts to produce large collective capitals became at all general. Few private individuals could find the capital to construct a large railway, and, even if they could, they would not care to undertake the risks of putting their whole capital in one venture. These are schemes which can only be taken up by a GOVERNMENT itself, as in some countries, or by associations formed with large capitals under State sanction; and, although we do not advocate governments taking upon themselves to do what can be as well, if not better done by the community, they should not go into the opposite extreme and allow the public money to be frittered away in undertakings which have no chances of success. A great mistake in this direction was made in the early days of our railways. Schemes, good, bad and doubtful, had to fight their way as best they could; ruinous sums were paid as compensation to landowners, and companies running over practically the same ground as others were permitted to be started. It has been estimated that reckless expenditure of this kind has entailed a waste of capital of over fifty million pounds, that is, our railway system might have been constructed as efficiently for this much less than they actually cost. The expenses of getting bills through Parliament are still very heavy, but nothing like what they used to be. Some idea of this initiatory expenditure may be gauged when it is known that the Parliamentary expenses alone in promoting the Brighton Railway came to about £5,000 per mile, and of the Blackwall line nearly £15,000 per mile, the average cost of the total construction of some lines being, under favourable circumstances, only £5,000 per mile; so that, to begin with, a railway is much hampered when its capital account is loaded by the untoward expenditure referred to. The solicitors' bill for the South-Eastern Railway is said to have covered 10,000 folios, and to have amounted to £240,000. Parliament has since given greater attention to railway matters, a body of general railway law has grown up, the Board of Trade has a certain control over the companies, and a Parliamentary Committee sits from time to time when any new features call for introduction. The

returns, up to the end of 1882, show that 18,457 miles of railway are now open in Great Britain and Ireland. To give an idea of the vast capital employed in this branch of commerce, the amounts paid up in shares, loans and debentures of these lines total £767,899,570; and, after deducting working expenditure from receipts, there was in 1881 £33,206,688 available for dividends. With such figures before us it is highly necessary that the Legislature should keep a watchful eye on all their operations, and ensure that the public, in these monopolies, are protected, both in the starting of joint-stock railway enterprises and in their regulation afterwards.

BANKING is another successful field for joint-stock enterprise. Although there are 57 private banks in London alone, besides 198 in England and Wales, their resources are outstripped by our joint-stock banks. Some of these were incorporated under Royal charter many years ago, but the greater number of them have sprung up of recent times as the exigencies of trade demanded. Although competition is great, the high dividends earned by most joint-stock banks show that the business is a lucrative one, when carried on with due care. Taking the accounts of 124 home and colonial banks in London for 1881-82, the dividends average about 12 per cent., many of them giving 20 per cent., some 25 per cent., and one as high as 333 per cent. The BANK OF ENGLAND, incorporated in 1694, was the first joint-stock bank in England, and until 1834, having exclusive privileges in the Metropolis, it was the only joint-stock bank in London. In that year the LONDON AND WESTMINSTER BANK was founded, and its success quickly brought THE LONDON JOINT-STOCK BANK and others into the field as the commerce of the country developed and required additional facilities for its being efficiently carried on. The capital of the Bank of England was originally £1,200,000; but, from the services which it rendered to the Government at various periods of its history, it received special privileges and facilities for handling the monies paid into and out of the Exchequer, and various additions were made to its capital, which now stands at £14,553,000. Into its details of management, however interesting, and the part it serves in regulating the distribution of our currency in coin and notes, and plays in what is known as the money market, it is not our province to enter. The total dividend paid to its shareholders for the year ending 5th October, 1882, was 10 per cent., and its reserve fund was then £3,090,249.

There are altogether 120 joint-stock banks in England, ten

in Scotland, and nine in Ireland, besides over fifty British, colonial and foreign banks with offices in London, and the capitals of which are largely held in this country. Some idea of the volume of business carried on by these banks may be gleaned when we learn that their average deposits. are £90,000,000, and that the 133 leading joint-stock. banks have a paid-up capital of about £90,000,000, with a reserve fund amounting to £38,000,000,-total £128,000,000. Until the failure of the CITY OF GLASGOW BANK, many of them were conducted on the principle of unlimited liability; but the pecuniary commitment to which shareholders rendered themselves liable under that system was then laid bare, and most of our joint-stock banks have since taken advantage of the Act empowering them to adopt limited liability, and are now so registered. But, in banks empowered to issue notes, the liability of members is still unlimited to the extent of this issue. Instances have occurred, but they are rare, of promoters directing their skill to the floating of spurious joint-stock banks; this is reserved especially for the smaller fry of public companies. Owing to the careful management of our banks and their excellent machinery, it is seldom that we hear of decided failure in this department of joint-stock enterprise, and the capital uncalled up, and their large reserves, together with the publicity of their accounts, give the public every. confidence in them. When a break-up does occur, the shock, however, is correspondingly heavy.

INSURANCE and ASSURANCE companies now exist for every description of risk,-Life, Fire, Sea, Cattle; Accidents... to human beings, to boilers, plate-glass, &c., &c. Then there are Guarantee Associations and other corporate bodies, in all of which immense amounts of the country's savings are locked up. Some of these are on the Mutual principle, wherein the members assured reap all the benefits and profits; others are Proprietary, where the profits go mainly to those having shares in the companies. Some are registered under the Companies Acts, others are not. The total annuities and assets of the various LIFE offices alone amount to something like £155,000,000; their incomes from premiums and interest on investments to £20,000,000 per annum, and the claims paid during the, same period aggregate £10,500,000.

The amounts of the risks taken by FIRE and MARINE Insurance Companies cannot be estimated with any degree of certainty, insurances sometimes being effected for terms. of a few weeks or months, as circumstances demand, and varying also according to the time of year. The returns of

:

the leading companies show that 1882 has not been so successful as during the few previous years, their losses having been exceptionally heavy.

The monopolies created by Act of Parliament for GAS and WATER Supply also absorb much capital. When these are in the hands of Local Boards and Corporations, and managed in that way for the benefit of the towns and cities where they are at work, they perform good service, and the municipal loans by which they raise their capital are favourite stocks for investment. Very different, however, when they get, as in London, into the hands of private companies, which administer them solely with the view to profit. Like all monopolists they seem to treat their consumers as they please, and, instead of listening to their complaints, cut off their supplies of water and gas. When a company is started to supply a public want, and that a necessary of life, and, by a fortunate combination of circumstances which no one could foresee (such as a great increase of population) their property is enhanced beyond their highest expectations, some portion of this enhancement should be shared with those who produce it. Instead of all the increased value being devoted to increased dividends, a part should be apportioned to reduce the rates for the commodity supplied, and an equable system of charging made according to what is consumed, and not, as in the case of water, on the gross rental of property. As public Acts of Parliament are amended, so also should private Acts when the necessity arises. The dividends of gas companies are now mostly limited to 10 per cent., the balance to be devoted to decreased rates; and special attention was paid to the enfranchisement of the public from further monopolies when the recent Electric Lighting Bill was framed. A résumé given in the chapter on statistics will show how much capital is invested in the principal Gas and Water Supply Companies, and also in TELEGRAPH AND TELEPHONE undertakings.

There are other associations which, although not classed. as joint-stock companies, are the result of combinations of capital, and are registered under kindred acts. Some have for their object the payments of certain sums to their members in cases of sickness, or to their relatives in case of death, and are called PROVIDENT, BENEFIT, and FRIENDLY SOCIETIES. Many of them were founded on wrong principles, and often came to grief, until a searching Government examination was made into their methods of working, and now they are properly looked after and must be registered under the Friendly Societies Acts. The