to this objection is implied in our answer | Eldon, "the company might undersell to the preceding one. For, if individual "till all competitors were driven out of industry will not probably be disturbed" the market, and then do as it pleased." by the intrusion of joint stock companies, unless they can produce at a smaller cost, it follows that the effect of their establishment is to diminish the price of commodities. But since the objection has been confidently urged by men of pretension and weight, we think it not unworthy of a more particular refutation.

A monopoly, properly so called, is an exclusive right of selling; and since its usual effect is to raise the price of the commodity above the lowest price at which it might be produced, a trader who sells his commodity for more than that lowest price, is said, by analogy, to enjoy a monopoly, though subject to unlimited competition. But a joint stock company, of the nature contemplated by the objectors, is subject to unlimited competition, and, therefore, has no monopoly, properly so called. That it could never acquire and maintain a monopoly, in the improper acceptation of the term, may be made manifest without many words.

Assuming that a company could thus obtain the exclusive command of the market, it could only obtain it by sinking a portion of its capital. Therefore it might be questioned by each of the projecting adventurers, whether he could not make more, by a profit at the average rate on his entire capital, than by any amount of extraordinary profits which he could thus derive from the remnant. If he could, there would be no inducement to adventure in the joint enterprize, and the company would not be established. But a company could not obtain the exclusive command of the market in the manner imagined. For so soon as it raised the price above the lowest point at which the commodity might be produced, it would be encountered by fresh competitors, whom it must also undersell, and drive from the market; and so on, without end. Consequently, a joint stock company will never acquire and maintain the exclusive command of the market, unless it produce at a smaller cost, and sell at a lower price, than any who are at liberty to compete with it. To adopt a just, though epigrammatic, remark of Lord Liverpool, a company may establish a monopoly, but it will be a monopoly in favour of the public.

In producing the commodity, it derives peculiar advantages from its large capital, or it does not. On the first supposition, it can undersell its individual competitors. On the second supposition, it cannot make a profit at the average rate, unless it can raise the price to such a degree as to compensate for the peculiar disadvantages VIII. The arguments which we have of trading in an extensive partnership. urged against the rule of the Law of But this is impossible; since the con- Partnership may be applied, with some sumers can resort to individual traders, variations, to the provisions of the Bubble who produce the commodity at a smaller Act. Speaking generally, and with a view cost than the company. The company, to lasting results, joint stock companies therefore, obtains the command of the will not be projected or established, unmarket, by lessening the cost and lower-less the joint undertakings be advantageing the price of the commodity, or it is driven from the market by the smaller cost and lower price at which the commodity is produced and sold by its competitors. In either event, the commodity is sold for the lowest price at which it is practicable to produce it. More briefly, there is no monopoly.

It has, however, been supposed, that a company might persist in trading at a loss, till the capitals of its competitors were exhausted; and having thus obtained the exclusive command of the market, might take ample compensation for the capital which it had sunk, by raising the price of the conimodity at its own discretion. In the language imputed to Lord

ous to the adventurers and the public. Fictitious obstacles to the formation of such companies are, therefore, needless and pernicious. To insist at length upon the inexpediency of these provisions were useless as well as tedious. The act is now repealed; and it will hardly be replaced by an act of a similar tendency.

Lord Eldon, indeed, is said to have de clared that the acts prohibited by the statute are offences at common law. We incline, however, to hope that his lordship has been misrepresented.

That the statute was unintelligiblethat the ends at which it aimed wese un. known and unknowable-that it no where defined the acts which it denounced a

offences-has been stated distinctly by the present Attorney-General, and may be gathered from the various cases in which it has been attempted to enforce it. Whether the assuming to act as a corporate body was in itself an offence? or whether such assumption were not an offence, unless the project were pernicious? what it was that amounted to such assumption? and how a pernicious was to be distinguished from an innocent project? are only a few of the doubts which have been suggested by this statute, and which the courts of justice have found it impossible to resolve.

If the acts prohibited by the statute be offences at common law, the people of this country are obnoxious to penalties, and are left in ignorance of the conduct by which the penalties may be incurred.

the present article. The matter, however, is so extensive that we must postpone the consideration of it to some future oppor tunity. Strictly speaking, too, it forms no part of our proper subject. Individual as well as joint enterprises may need the aid of the legislature, though its assistance is more frequently applied for by parties to joint undertakings.

Law of Merchant and Factor.

FIFTY years hence, it will perhaps be scarcely credited, that up to the year allowed the power of selling, unqualifiedly, 1825, an English factor to whom the law goods consigned to him by his principal, IX. If the change which we have was prohibited by that same law from suggested were made in the law of part-the goods upon the faith of the bill of exercising the qualified power of pledging nership, applications for charters or acts lading. If having sold them, he ran of parliament would be less frequent than at present. By the general law, as thus away, with his principal's money, the modified, the members of a joint stock principal had no claim against the vencompany could limit their liability to cre- them on the faith of the bill of lading, even dor; but if he ran away, having pledged ditors; whilst the body could sue and be without notice of the existence of a prinsued effectually and with ease: And these, or some of them, are the very pur-goods from the pledgee, without paying cipal, the principal might recover his poses for which such applications are frequently inade by parties to joint undertakings. But though these purposes were fully. Tash, (2 Strange 1178. 16th Geo. II.) provided for by a change in the general the merchants seem to have thought it law, applications for acts of parliament impossible that such a rule should have would often be necessary. If the purpose been laid down, or at all events, that it contemplated by the parties be inconsis- should have been persisted in: they tent with the rights of others, the pur-knew that the rules of common law are pose, it is obvious, cannot be accomplish- established by decided cases; they knew ed, unless the obstacle be removed by that decided cases are often overruled; the special interposition of the legis-and they must have expected that sooner

lature.

the money which had been advanced.

Notwithstanding this rule has been acted on ever since the case of Paterson

or later the decision in Paterson v. Tash

would have been abandoned: for during the last seventy years there has not been a

more

sive litigation than the transactions of facfruitful source of obstinate and expenof the bill of lading. The courts, howtors who have pledged goods upon the faith

ever,

Ellenborough and Mr. Justice Le Blanc adhered to their rule, although Lord disapproved of it. Chief Justice Best, in an able judgment, evincing clear and comprehensive views of the subject, said,

"Had I authority to alter the law, as the mode of carrying on commerce has altered, I would say that, when the owner of property conceals himself, whoever can prove a good title 'under the person whom the concealed owner

to this objection is implied in our answer | Eldon, "the company might undersell to the preceding one. For, if individual" till all competitors were driven out of industry will not probably be disturbed" the market, and then do as it pleased." by the intrusion of joint stock companies, unless they can produce at a smaller cost, it follows that the effect of their establishment is to diminish the price of commodities. But since the objection has been confidently urged by men of pretension and weight, we think it not unworthy of a more particular refutation.

offences-has been stated distinctly by the present article. The matter, however, the present Attorney-General, and may is so extensive that we must postpone the be gathered from the various cases in which consideration of it to some future oppor it has been attempted to enforce it. Whe-tunity. Strictly speaking, too, it forms ther the assuming to act as a corporate no part of our proper subject. Indivibody was in itself an offence? or whether dual as well as joint enterprises may need such assumption were not an offence, un- the aid of the legislature, though its asless the project were pernicious? what it sistance is more frequently applied for by was that amounted to such assumption? parties to joint undertakings. and how a pernicious was to be distinguished from an innocent project? are only a few of the doubts which have been suggested by this statute, and which the courts of justice have found it impossible to resolve.

If the acts prohibited by the statute be offences at common law, the people of this country are obnoxious to penalties, and are left in ignorance of the conduct by which the penalties may be incurred.

IX. If the change which we have suggested were made in the law of partnership, applications for charters or acts of parliament would be less frequent than at present. By the general law, as thus modified, the members of a joint stock company could limit their liability to creditors; whilst the body could sue and be sued effectually and with ease: And these, or some of them, are the very purposes for which such applications are frequently inade by parties to joint undertakings.

Law of Merchant and Factor.

FIFTY years hence, it will perhaps be scarcely credited, that up to the year allowed the power of selling, unqualifiedly, 1825, an English factor to whom the law goods consigned to him by his principal, was prohibited by that same law from the goods upon the faith of the bill of exercising the qualified power of pledging lading. If having sold them, he ran away with his principal's money, the principal had no claim against the venthem on the faith of the bill of lading, even dor; but if he ran away, having pledged without notice of the existence of a pringoods from the pledgee, without paying cipal, the principal might recover his the money which had been advanced.

Notwithstanding this rule has been acted on ever since the case of Paterson But though these purposes were fully provided for by a change in the general the merchants seem to have thought it v. Tash, (2 Strange 1178. 16th Geo. II.) law, applications for acts of parliament impossible that such a rule should have would often be necessary. If the purpose been laid down, or at all events, that it contemplated by the parties be inconsis- should have been persisted in: they tent with the rights of others, the pur-knew that the rules of common law are pose, it is obvious, cannot be accomplish- established by decided cases; they knew ed, unless the obstacle be removed by that decided cases are often overruled; the special interposition of the legis-and they must have expected that sooner

lature.

In every case of the kind, the legislature, though poorly qualified for the task, inquires, or ought to inquire, into the merits of the projected enterprise. For in order to determine the expediency of granting or refusing the application, it must compare the good which the project might produce, with the evil of infringing upon the rights which lie in the way of

its execution.

To suggest improvements upon the imperfect method in which such inquiries are now conducted, and to ascertain the principles by which they ought to be guided, was amongst the purposes which we contemplated when we entered upon

or later the decision in Paterson v. Tash

would have been abandoned: for during the last seventy years there has not been a more fruitful source of obstinate and expentors who have pledged goods upon the faith sive litigation than the transactions of facof the bill of lading. The courts, howEllenborough and Mr. Justice Le Blanc ever, adhered to their rule, although Lord disapproved of it. Chief Justice Best, in an able judgment, evincing clear and comprehensive views of the subject, said,

"Had I authority to alter the law, as the mode of carrying on commerce has altered, I ceals himself, whoever can prove a good title would say that, when the owner of property conunder the person whom the concealed owner

permits to hold it, should retain that property | petitioned the Legislature to declare, that against the owner;-but this is not yet the law of England. Possession is not proof of property sion of a bill of lading, should be taken any person intrusted with, and in possesOur ancestors kept their goods in their own possession. If agents were employed by them to be the owner of the lading for all purto deal with their property, they did not keep poses of contract entered into on the faith themselves out of view, and the extent of the of such bill, unless there was notice authority of the agent was so well known, that that he was not owner; and an act to no one dealing with those agents could be imposed upon. But as little credit was given, and effect this has now been passed+-passed, as men could not trade beyond their capital, they with the concurrence and approbation of were seldom reduced to the necessity of pledg- all parties, except Mr. Scarlett, and some ing their stock in trade. The sales of merchan-other lawyers out of the house. Mr.

dize were made in market overt, and if the buyers conducted themselves honestly, the law Scarlett spoke at great length against the protected them from suffering by purchasing in bill, and afterwards published his speech.. market overt property that did not belong to the His objections appear to be, in substance, person of whom they bought. This exception in That to sanction the pledge made by the our law proves that if a person acquires the possession of property in any mode, other than factor will enable him to defraud his that of sale in market overt, he cannot keep it principal to a greater extent and with against the owner; it proves at the same time, greater facility then before, and that the that, as commerce is now carried on, the pur-loss will fall on the least culpable of the chaser or pawnee should have the same protection, against him who permits another to deal with his property as if it were his own. But a small proportion of the merchandize that is now brought to sale, is sold in market overt. The law relative to sales in market overt, affords, therefore, but little protection to those who are engaged in commerce.

The owners of goods for many reasons keep themselves concealed, and put forward brokers to act for unknown principals. If such brokers abuse their trust, those who have trusted them

should suffer*."

But as the law stood, if the pawner of goods had no authority to pledge them on the faith of the bill of lading, the pawnee could not hold them against the owner. The practice of pledging on the faith of the bill of lading is a matter of convenience and often of necessity, whether the consignee be factor or absolute owner. Before the consignee can obtain his goods he has often heavy charges to pay for freight, wharfage, &c.;-at the time the goods arrive, the market may be low, and he cannot sell except at a loss; in three months it may rise; he may at the moment be destitute of other resources, and how is he to pay the charges and wait the turn in the market, except by pledging the bill of lading? But the money lender, as the law stood, would not be justified in making an advance till he had ascertained that the party offering the goods was not a factor: and whether he were factor or absolute owner, in general the proof of this, as we shall presently show, could not be furnished except to the destruction of the adventure. The inconvenience and injustice occasioned by the rule became at length so intolerable, that the merchants of London in a body

* Williams v. Barton, 3 Bingh. 145. 1825.

conflicting claimants; the foreign mer-
chant having fewer means of knowing
his factor's character than the English:
money lender has of ascertaining the title
to the goods offered in pledge: And fur-
ther, that the money lender is not com-
pelled to lend his money, but the foreign
merchant, in order to carry on his trade,
is compelled to employ a factor.

Now, if a factor who is disposed to commit a fraud, has it always in his power to sell his principal's goods and run away with the money, we cannot see how the facility for fraud, or the extent of the fraud, can be materially increased by enabling him to pledge as well as sell. Wherever he can pledge, there also he can sell, and he can always obtain more money by selling than by pledging.-If he be not allowed to pledge, lest he pledge with a view to fraud, neither ought he to be allowed to sell; and the less so, because the latter is the larger power; when he pledges, there is always a locus pœnitentiæ, and he may redeem the goods; if he sell and apply the money to his own use, there is no chance left for the principal.

It is by no means clear that the English money-lender has better opportunities of knowing the factor's character than the foreign merchant. The foreign merchant does not employ the factor till he has made due inquiry as to his respectability; he makes this inquiry, and receives his intelligence from other merchants, who, like the money-lender, live in the same town with the factor. With respect to the greater facilities which the money-lender is alleged to possess of ascertaining the

+6 Geo. IV. c. 94.