andithasbeennecessaryinGreatBritaintorelax，bystatute，therigourofentails，inordertoalloweitheroflongleases，oroftheexecutionofimprovementsattheexpenseoftheestate。
Itmaybeaddedthattheheirofentail，beingassuredofsucceedingtothefamilyproperty，howeverundeservingofit，andbeingawareofthisfromhisearliestyears，hasmuchmorethantheordinarychancesofgrowingupidle，dissipated，andprofligate。
InEngland，thepowerofentailismorelimitedbylaw，thaninScotlandandinmostothercountrieswhereitexists。A
landownercansettlehispropertyuponanynumberofpersonssuccessivelywhoarelivingatthetime，andupononeunbornperson，onwhoseattainingtheageoftwenty—one，theentailexpires，andthelandbecomeshisabsoluteproperty。Anestatemayinthismannerbetransmittedthroughason，orasonandgrandson，livingwhenthedeedisexecuted，toanunbornchildofthatgrandson。Ithasbeenmaintainedthatthispowerofentailisnotsufficientlyextensivetodoanymischief:intruth，however，itismuchlargerthanitseems。Entailsveryrarelyexpire;thefirstheirofentail，whenofage，joinswiththeexistingpossessorinresettlingtheestate，soastoprolongtheentailforafurtherterm。Largeproperties，therefore，arerarelyfreeforanyconsiderableperiod，Fromtherestraintsofastrictsettlement;thoughthemischiefisinonerespectmitigated，sinceintherenewalofthesettlementforonemoregeneration，theestateisusuallychargedwithaprovisionforyoungerchildren。
Inaneconomicalpointofview，thebestsystemoflandedpropertyisthatinwhichlandismostcompletelyanobjectofcommerce;passingreadilyfromhandtohandwhenabuyercanbefoundtowhomitisworthwhiletoofferagreatersumfortheland，thanthevalueoftheincomedrawnfromitbyitsexistingpossessor。Thisofcourseisnotmeantofornamentalproperty，whichisasourceofexpense，notprofit;butonlyoflandemployedforindustrialuses，andheldforthesakeoftheincomewhichitaffords。Whateverfacilitatesthesaleofland，tendstomakeitamoreproductiveinstrumentofthecommunityatlarge;
whateverpreventsorrestrictsitssale，subtractsfromitsusefulness。Now，notonlyhasentailthiseffect，butprimo。
geniturealso。Thedesiretokeeplandtogetherinlargemasses，fromothermotivesthanthatofpromotingitsproductiveness，oftenpreventschangesandalienationswhichwouldincreaseitsefficiencyasaninstrument。
4。Ontheotherhand，alawwhich，liketheFrench，restrictsthepowerofbequesttoanarrowcompass，andcompelstheequaldivisionofthewholeorthegreaterpartofthepropertyamongthechildren，seemstome，thoughondifferentgrounds，alsoveryseriouslyobjectionable。Theonlyreasonforrecognizinginthechildrenanyclaimatalltomorethanaprovision，sufficienttolaunchtheminlife，andenablethemtofindalivelihood，isgroundedontheexpressedorpresumedwishoftheparent;whoseclaimtodisposeofwhatisactuallyhisown，cannotbesetasidebyanypretensionsofotherstoreceivewhatisnottheirs。Tocontroltherightfulowner’slibertyofgift，bycreatinginthechildrenalegalrightsuperiortoit，istopostponearealclaimtoanimaginaryone。Tothisgreatandparamountobjectiontothelaw，numeroussecondaryonesmaybeadded。Desirableasitisthattheparentshouldtreatthechildrenwithimpartiality，andnotmakeaneldestsonorafavourite，impartialdivisionisnotalwaysynonymouswithequaldivision。Someofthechildrenmay，withoutfaultoftheirown，belesscapablethanothersofprovidingforthemselves:somemay，byothermeansthantheirownexertions，bealreadyprovidedfor:andimpartialitymaythereforerequirethattheruleobservedshouldnotbeoneofequality，butofcompensation。Evenwhenequalityistheobject，therearesometimesbettermeansofattainingit，thantheinflexiblerulesbywhichlawmustnecessarilyproceed。Ifoneofthecoheirs，beingofaquarrelsomeorlitigiousdisposition，standsuponhisutmostrights，thelawcannotmakeequitableadjustments;itcannotapportionthepropertyasseemsbestforthecollect。iveinterestofallconcerned;ifthereareseveralparcelsofland，andtheheirscannotagreeabouttheirvalue，thelawcannotgiveaparceltoeach，buteveryseparateparcelmustbeeitherputuptosaleordivided:ifthereisaresidence，oraparkorpleasure。ground，whichwouldbedestroyed，assuch，bysubdivision，itmustbesold，perhapsatagreatsacrificebothofmoneyandoffeeling。Butwhatthelawcouldnotdo，theparentcould。Bymeansofthelibertyofbe。
quest，allthesepointsmightbedeterminedaccordingtoreasonandthegeneralinterestofthepersonsconcerned;andthespiritoftheprincipleofequaldivisionmightbethebetterobserved，becausethetestatorwasemancipatedfromitsletter。Finally，itwouldnotthenbenecessary，asunderthecompulsorysystemitis，thatthelawshouldinterfereauthoritativelyintheconcernsofindividuals，notonlyontheoccurrenceofadeath，butthroughoutlife，inordertoguardagainsttheattemptsofparentstofrustratethelegalclaimsoftheirheirs，undercolourofgiftsandotheralienationsintervivos。
Inconclusion;allownersofpropertyshould，Iconceive，havepowertodisposebywillofeverypartofit，butnottodeterminethepersonwhoshouldsucceedtoitafterthedeathofallwhowerelivingwhenthewillwasmade。Underwhatrestrictionsitshouldbeallowabletobequeathpropertytoonepersonforlife，withremaindertoanotherpersonalreadyinexistence，isaquestionbelongingtogenerallegislation，nottopoliticaleconomy。Suchsettlementswouldbenogreaterhindrancetoalienationthananycaseofjointownership，sincetheconsentofpersonsactuallyinexistenceisallthatwouldbenecessaryforanynewarrangementrespectingtheproperty。
5。FromthesubjectofInheritanceInowpasstothatofContracts，andamongthese，totheimportantsubjectoftheLawsofPartnership。Howmuchofgoodorevildependsupontheselaws，andhowimportantitisthattheyshouldbethebestpossible，isevidenttoallwhorecognizeintheextensionofthecooperativeprincipleinthelargersenseoftheterm，thegreateconomicalnecessityofmodernindustry。Theprogressoftheproductiveartsrequiringthatmanysortsofindustrialoccupationshouldbecarriedonbylargerandlargercapitals，theproductivepowerofindustrymustsufferbywhateverimpedestheformationoflargecapitalsthroughtheaggregationofsmallerones。Capitalsoftherequisitemagnitudebelongingtosingleowners，donot，inmostcountries，existintheneedfulabundance，andwouldbestilllessnumerousifthelawsfavouredthediffusioninsteadoftheconcentrationofproperty:whileitismostundesirablethatallthoseimprovedprocesses，andthosemeansofefficiencyandeconomyinproduction，whichdependonthepossessionoflargefunds，shouldbemonopoliesinthehandsofafewrichindividuals，throughthedifficultiesexperiencedbypersonsofmoderateorsmallmeansinassociatingtheircapital。Finally，I
mustrepeatmyconviction，thattheindustrialeconomywhichdividessocietyabsolutelyintotwoportions，thepayersofwagesandthereceiversofthem，thefirstcountedbythousandsandthelastbymillions，isneitherfitfor，norcapableof，indefiniteduration:andthepossibilityofchangingthissystemforoneofcombinationwithoutdependence，andunityofinterestinsteadoforganizedhostility，dependsaltogetheruponthefuturedevelopmentsofthePartnershipprinciple。
Yetthereisscarcelyanycountrywhoselawsdonotthrowgreat，andinmostcases，intentionalobstaclesinthewayoftheformationofanynumerouspartnership。InEnglanditisalreadyaseriousdiscouragement，thatdifferencesamongpartnersare，practicallyspeaking，onlycapableofadjudicationbytheCourtofChancery:whichisoftenworsethanplacingsuchquestionsoutofthepaleofalllaw;sinceanyoneofthedisputantparties，whoiseitherdishonestorlitigious，caninvolvetheothersathispleasureintheexpense，trouble，andanxiety，whicharetheunavoidableaccompanimentsofaChancerysuit，withouttheirhavingthepoweroffreeingthemselvesfromtheinflictionevenbybreakinguptheassociation。（2*）Besidesthis，itrequired，untillately，aseparateActofthelegislaturebeforeanyjoint—stockassociationcouldlegallyconstituteitself，andbeempoweredtoactasonebody。Byastatutepassedafewyearsago，thisnecessityisdoneaway;butthestatuteinquestionisdescribedbycompetentauthoritiesasa’massofconfusion，’ofwhichtheysaythatthere’neverwassuchaninfliction’onpersonsenteringintopartnership。（3*）Whenanumberofpersons，whetherfewormany，freelydesiretounitetheirfundsforacommonundertaking，notaskinganypeculiarprivilege，northepowertodispossessanyoneofproperty，thelawcanhavenogoodreasonforthrowingdifficultiesinthewayoftherealizationoftheproject。Oncompliancewithafewsimpleconditionsofpublicity，anybodyofpersonsoughttohavethepowerofconstitutingthemselvesintoajoint—stockcompany，orsocieteennomcollectif，withoutaskingleaveeitherofanypublicofficerorofparliament。Asanassociationofmanypartnersmustpracticallybeunderthemanagementofafew，everyfacilityoughttobeaffordedtothebodyforexercisingthenecessarycontrolandcheckoverthosefew，whethertheybethemselvesmembersoftheassociation，ormerelyitshiredservants:andinthispointtheEnglishsystemisstillatalamentabledistancefromthestandardofperfection。
6。Whateverfacilities，however，Englishlawmightgivetoassociationsformedontheprinciplesofordinarypartnership，thereisonesortofjoint—stockassociationwhichuntiltheyear1855itabsolutelydisallowed，andwhichcouldonlybecalledintoexistencebyaspecialacteitherofthelegislatureoroftheCrown。Imean，associationswithlimitedliability。
Associationswithlimitedliabilityareoftwokinds:inone，theliabilityofallthepartnersislimited，intheotherthatofsomeofthemonly。ThefirstisthesocieteanonymeoftheFrenchlaw，whichinEnglandhaduntillatelynoothernamethanthatof’charteredcompany’:meaningtherebyajoint—stockcompanywhoseshareholders，byacharterfromtheCrownoraspecialenactmentofthelegislature，stoodexemptedfromanyliabilityforthedebtsoftheconcern，beyondtheamountoftheirsubscriptions。TheotherspeciesoflimitedpartnershipisthatknowntotheFrenchlawunderthenameofcommandite;ofthis，whichinEnglandisstillunrecognizedandillegal，Ishallspeakpresently。
Ifanumberofpersonschosetoassociateforcarryingonanyoperationofcommerceorindustry，agreeingamongthemselvesandannouncingtothosewithwhomtheydealthatthemembersoftheassociationdonotundertaketoberesponsiblebeyondtheamountofthesubscribedcapital;isthereanyreasonthatthelawshouldraiseobjectionstothisproceeding，andshouldimposeonthemtheunlimitedresponsibilitywhichtheydisclaim？Forwhosesake？Notforthatofthepartnersthemselves;foritistheywhomthelimitationofresponsibilitybenefitsandprotects。Itmustthereforebeforthesakeofthirdparties;namely，thosewhomayhavetransactionswiththeassociation，andtowhomitmayrunindebtbeyondwhatthesubscribedcapitalsufficestopay。Butnobodyisobligedtodealwiththeassociation:stilllessisanyoneobligedtogiveitunlimitedcredit。Theclassofpersonswithwhomsuchassociationshavedealingsareingeneralperfectlycapableoftakingcareofthemselves，andthereseemsnoreasonthatthelawshouldbemorecarefuloftheirintereststhantheywillthemselvesbe;providednofalserepresentationisheldout，andtheyareawarefromthefirstwhattheyhavetotrustto。Thelawiswarrantedinrequiringfromalljoint—stockassociationswithlimitedresponsibility，notonlythattheamountofcapitalonwhichtheyprofesstocarryonbusinessshouldeitherbeactuallypaiduporsecuritygivenforit（if，indeed，withcompletepublicity，sucharequirementwouldbenecessary），butalsothatsuchaccountsshouldbekept，accessibletoindividuals，andifneedful，publishedtotheworld，asshallrenderitpossibletoascertainatanytimetheexistingstateofthecompany’saffairs，andtolearnwhetherthecapitalwhichisthesolesecurityfortheengagementsintowhichtheyenter，stillsubsistsunimpaired:thefidelityofsuchaccountsbeingguardedbysufficientpenalties。Whenthelawhasthusaffordedtoindividualsallpracticablemeansofknowingthecircumstanceswhichoughttoenterintotheirprudentialcalculationsindealingwiththecompany，thereseemsnomoreneedforinterferingwithindividualjudgmentinthissortoftransactions，thaninanyotherpartoftheprivatebusinessoflife。
Thereasonusuallyurgedforsuchinterferenceis，thatthemanagersofanassociationwithlimitedresponsibility，notriskingtheirwholefortunesintheeventofloss，whileincaseofgaintheymightprofitlargely，arenotsufficientlyinterestedinexercisingduecircumspection，andareunderthetemptationofexposingthefundsoftheassociationtoimproperhazards。Itis，however，wellascertainedthatassociationswithunlimitedresponsibility，iftheyhaverichshareholders，canobtain，evenwhenknowntoberecklessintheirtransactions，impropercredittoanextentfarexceedingwhatwouldbegiventocompaniesequallyill—conductedwhosecreditorshadonlythesubscribedcapitaltorelyon。（4*）Towhicheversidethebalanceofevilinclines，itisaconsiderationofmoreimportancetotheshareholdersthemselvesthantothirdparties;since，withpropersecuritiesforpublicity，thecapitalofanassociationwithlimitedliabilitycouldnotbeengagedinhazardsbeyondthoseordinarilyincidenttothebusinessitcarrieson，withoutthefactsbeingknown，andbecomingthesubjectofcommentsbywhichthecreditofthebodywouldbelikelytobeaffectedinquiteasgreatadegreeasthecircumstanceswouldjustify。If，undersecuritiesforpublicity，itwerefoundinpracticethatcompanies，formedontheprincipleofunlimitedresponsibility，weremoreskilfullyandmorecautiouslymanaged，companieswithlimitedliabilitywouldbeunabletomaintainanequalcompetitionwiththem;andwouldthereforerarelybeformed，unlesswhensuchlimitationwastheonlyconditiononwhichthenecessaryamountofcapitalcouldberaised:andinthatcaseitwouldbeveryunreasonabletosaythattheirformationoughttobeprevented。Itmayfurtherberemarked，thatalthough，withequalityofcapital，acompanyoflimitedliabilityoffersasomewhatlesssecuritytothosewhodealwithit，thanoneinwhicheveryshareholderisresponsiblewithhiswholefortune，yeteventheweakerofthesetwosecuritiesisinsomerespectsstrongerthanthatwhichanindividualcapitalistcanafford。Inthecaseofanindividual，thereissuchsecurityascanbefoundedonhisunlimitedliability，butnotthatderivedfrompublicityoftransactions，orfromaknownandlargeamountofpaid—upcapital。ThistopiciswelltreatedinanablepaperbyM。Coquelin，publishedintheRevuedesDeuxMondesforJuly1843。（5*）
’Whilethirdpartieswhotradewithindividuals，’saysthiswriter，’scarcelyeverknow，exceptbyapproximation，andeventhatmostvagueanduncertain，whatistheamountofcapitalresponsiblefortheperformanceofcontractsmadewiththem，thosewhotradewithasocieteanonymecanobtainfullinformationiftheyseekit，andperformtheiroperationswithafeelingofconfidencethatcannotexistintheothercase。Again，nothingiseasierthanforanindividualtradertoconcealtheextentofhisengagements，asnoonecanknowitcertainlybuthimself。Evenhisconfidentialclerkmaybeignorantofit，astheloanshefindshimselfcompelledtomakemaynotallbeofacharactertorequirethattheybeenteredinhisday—book。Itisasecretconfinedtohimself;onewhichtranspiresrarely，andalwaysslowly;onewhichisunveiledonlywhenthecatastrophehasoccurred。Onthecontrary，thesocieteanonymeneithercannoroughttoborrow，withoutthefactbecomingknowntoalltheworlddirectors，clerks，shareholders，andthepublic。Itsoperationspartakeinsomerespects，ofthenatureofthoseofgovernments。Thelightofdaypenetratesineverydirection，andtherecanbenosecretsfromthosewhoseekforinformation。Thusallisfixed，recorded，known，ofthecapitalanddebtsinthecaseofthesocieteanonyme，whileallisuncertainandunknowninthecaseoftheindividualtrader。Whichofthetwo，wewouldaskthereader，presentsthemostfavourableaspect，orthesurestguarantee，totheviewofthosewhotradewiththem？
’Again，availinghimselfoftheobscurityinwhichhisaffairsareshrouded，andwhichhedesirestoincrease，theprivatetraderisenabled，solongashisbusinessappearsprosperous，toproduceimpressionsinregardtohismeansfarexceedingthereality，andthustoestablishacreditnotjustifiedbythosemeans。Whenlossesoccur，andheseeshimselfthreatenedwithbankruptcy，theworldisstillignorantofhiscondition，andhefindshimselfenabledtocontractdebtsfarbeyondthepossibilityofpayment。Thefataldayarrives，andthecreditorsfindadebtmuchgreaterthanhadbeenanticipated，whilethemeansofpaymentareasmuchless。Eventhisisnotall。Thesameobscuritywhichhasservedhimsowellthusfar，whendesiringtomagnifyhiscapitalandincreasehiscredit，nowaffordshimtheopportunityofplacingapartofthatcapitalbeyondthereachofhiscreditors。Itbecomesdiminished，ifnotannihilated。Ithidesitself，andnotevenlegalremedies，northeactivityofcreditors，canbringitforthfromthedarkcornersinwhichitisplaced……Ourreaderscanreadilydetermineforthemselvesifpracticesofthiskindareequallyeasyinthecaseofthesocieteanonyme。Wedonotdoubtthatsuchthingsarepossible，butwethinkthattheywillagreewithusthatfromitsnature，itsorganization，andthenecessarypublicitythatattendsallitsactions，theliabilitytosuchoccurrencesisverygreatlydiminished。’
Thelawsofmostcountries，Englandincluded，haveerredinatwofoldmannerwithregardtojoint—stockcompanies。Whiletheyhavebeenmostunreasonablyjealousofallowingsuchassociationstoexist，especiallywithlimitedresponsibility，theyhavegenerallyneglectedtheenforcementofpublicity;thebestsecuritytothepublicagainstanydangerwhichmightarisefromthisdescriptionofpartnerships;andasecurityquiteasmuchrequiredinthecaseofthoseassociationsofthekindinquestion，which，byanexceptionfromtheirgeneralpractice，theysufferedtoexist。EvenintheinstanceoftheBankofEngland，whichholdsamonopolyfromthelegislature，andhashadpartialcontroloveramatterofsomuchpublicinterestasthestateofthecirculatingmedium，itisonlywithinthesefewyearsthatanypublicityhasbeenenforced;andthepublicitywasatfirstofanextremelyincompletecharacter，thoughnow，formostpracticalpurposes，probablyatlengthsufficient。
7。Theotherkindoflimitedpartnershipwhichdemandsourattention，isthatinwhichthemanagingpartnerorpartnersareresponsiblewiththeirwholefortunesfortheengagementsoftheconcern，buthaveothersassociatedwiththemwhocontributeonlydefinitesums，andarenotliableforanythingbeyond，thoughtheyparticipateintheprofitsaccordingtoanyrulewhichmaybeagreedon。Thisiscalledpartnershipencommandite:andthepartnerswithlimitedliability（towhom，bytheFrenchlaw，allinterferenceinthemanagementoftheconcernisinterdicted）areknownbythenamecommanditaires。SuchpartnershipsarenotallowedbyEnglishlaw:inallprivatepartnerships，whoeversharesintheprofitsisliableforthedebts，toasplenaryanextentasthemanagingpartner。
Forsuchprohibitionnosatisfactorydefencehasever，sofarasIamaware，beenmade。Eventheinsufficientreasongivenagainstlimitingtheresponsibilityofshareholdersinajoint—stockcompanydoesnotapplyhere;therebeingnodiminutionofthemotivestocircumspectmanagement，sinceallwhotakeanypartinthedirectionoftheconcernareliablewiththeirwholefortunes。Tothirdpartiesagain;thesecurityisimprovedbytheexistenceofacommanditeisincetheamountsubscribedbycommanditairesisallofitavailabletocreditors，thecommanditaireslosingtheirwholeinvestmentbeforeanycreditorcanloseanything;while，ifinsteadofbecomingpartnerstothatamount，theyhadlentthesumataninterestequaltotheprofittheyderivedfromit，theywouldhavesharedwiththeothercreditorsintheresidueoftheestate，diminishingproratathedividendobtainedbyall。Whilethepracticeofcommanditethusconducestotheinterestofcreditors，itisoftenhighlydesirableforthecontractingpartiesthemselves。Themanagersareenabledtoobtaintheaidofamuchgreateramountofcapitalthantheycouldborrowontheirownsecurity;andpersonsareinducedtoaidusefulundertakings，byembarkinglimitedportionsofcapitalinthem，whentheywouldnot，andoftencouldnotprudently，haveriskedtheirwholefortunesonthechancesoftheenterprise。
Itmayperhapsbethoughtthatwhereduefacilitiesareaffordedtojoint—stockcompanies，commanditepartnershipsarenotrequired。Butthereareclassesofcasestowhichthecommanditeprinciplemustalwaysbebetteradaptedthanthejoint—stockprinciple。’Suppose，’saysM。Coquelin，’aninventorseekingforacapitaltocarryhisinventionintopractice。Toobtaintheaidofcapitalists，hemustofferthemashareoftheanticipatedbenefit;theymustassociatethemselveswithhiminthechancesofitssuccess。Insuchacase，whichoftheformswouldheselect？Notpartnership，certainly’;forvariousreasons，andespeciallytheextremedifficultyoffindingapartnerwithcapital，willingtoriskhiswholefortuneonthesuccessoftheinvention。（6*）’Neitherwouldheselectthesocieteanonyme，’oranyotherformofjoint—stockcompany，’inwhichhemightbesupersededasmanager。Hewouldstand，insuchanassociation，onnobetterfootingthananyothershareholder，andhemightbelostinthecrowd;whereas，theassociationexisting，asitwere，byandforhim，themanagementwouldappeartobelongtohimasamatterofright。Casesoccurinwhichamerchantoramanufacturer，withoutbeingpreciselyaninventor，hasundeniableclaimstothemanagementofanundertaking，fromthepossessionofqualitiespeculiarlycalculatedtopromoteitssuccess。Sogreat，indeed，’continuesM。Coquelin，’isthenecessity，inmanycases，forthelimitedpartnership，thatitisdifficulttoconceivehowwecoulddispensewithorreplaceit’:
andinreferencetohisowncountryheisprobablyintheright。
WherethereissogreatareadinessasinEngland，onthepartofthepublic，toformjoint—stockassociations，evenwithouttheencouragementofalimitationofresponsibility;
commanditepartnership，thoughitsprohibitionisinprinciplequiteindefensible，cannotbedeemedtobe，inamerelyeconomicalpointofview，oftheimperativenecessitywhichM。
Coquelinascribestoit。Yettheinconveniencesarenotsmall，whichariseindirectlyfromprovisionsoflawbywhicheveryonewhosharesintheprofitsofaconcernissubjecttothefullliabilitiesofanunlimitedpartnership。Itisimpossibletosayhowmanyorwhatusefulmodesofcombinationarerenderedimpracticablebysuchastateofthelaw。Itissufficientforitscondemnationthat，unlessinsomewayrelaxed，itisinconsistentwiththepaymentofwagesinpartbyapercentageonprofits;inotherwords，theassociationoftheoperativesasvirtualpartnerswiththecapitalist。（7*）
Itis，aboveall，withreferencetotheimprovementandelevationoftheworkingclassesthatcompletefreedomintheconditionsofpartnershipisindispensable。Combinationssuchastheassociationsofworkpeople，describedinaformerchapter，arethemostpowerfulmeansofeffectingthesocialemancipationofthelabourersthroughtheirownmoralqualities。Noristhelibertyofassociationimportantsolelyforitsexamplesofsuccess，butfullyasmuchsoforthesakeofattemptswhichwouldnotsucceed;butbytheirfailurewouldgiveinstructionmoreimpressivethancanbeaffordedbyanythingshortofactualexperience。Everytheoryofsocialimprovement，theworthofwhichiscapableofbeingbroughttoanexperimentaltest，shouldbepermitted，andevenencouraged，tosubmititselftothattest。
Fromsuchexperimentstheactiveportionoftheworkingclasseswouldderivelessons，whichtheywouldbeslowtolearnfromtheteachingofpersonssupposedtohaveinterestsandprejudicesadversetotheirgood;wouldobtainthemeansofcorrecting，atnocosttosociety，whateverisnowerroneousintheirnotionsofthemeansofestablishingtheirindependence;andofdiscoveringtheconditions，moral，intellectual，andindustrial，whichareindispensablynecessaryforeffectingwithoutinjustice，orforeffectingatall，thesocialregenerationtheyaspireto。（8*）
TheFrenchlawofpartnershipissuperiortotheEnglishinpermittingcommandite;andsuperior，inhavingnosuchunmanageableinstrumentastheCourtofChancery，allcasesarisingfromcommercialtransactionsbeingadjudicatedinacomparativelycheapandexpeditiousmannerbyatribunalofmerchants。InotherrespectstheFrenchsystemwas，andI
believe，stillis，farworsethantheEnglish。Ajoint—stockcompanywithlimitedresponsibilitycannotbeformedwithouttheexpressauthorizationofthedepartmentofgovernmentcalledtheConseild’Etat，abodyofadministrators，generallyentirestrangerstoindustrialtransactions，whohavenointerestinpromotingenterprises，andareapttothinkthatthepurposeoftheirinstitutionistorestrainthem;whoseconsentcannotinanycasebeobtainedwithoutanamountoftimeandlabourwhichisaveryserioushindrancetothecommencementofanenterprise，whiletheextremeuncertaintyofobtainingthatconsentatallisagreatdiscouragementtocapitalistswhowouldbewillingtosubscribe。Inregardtojoint—stockcompanieswithoutlimitationofresponsibility，whichinEnglandexistinsuchnumbersandareformedwithsuchfacility，theseassociationscannot，inFrance，existatall;for，incasesofunlimitedpartnership，theFrenchlawdoesnotpermitthedivisionofthecapitalintotransferableshares。
ThebestexistinglawsofpartnershipappeartobethoseoftheNewEnglandStates。AccordingtoMrCarey，（9*）’nowhereisassociationsolittletrammelledbyregulationsasinNewEngland;theconsequenceofwhichis，thatitiscarriedtoagreaterextentthere，andparticularlyinMassachusettsandRhodeIsland，thaninanyotherpartoftheworld。Inthesestates，thesoiliscoveredwithcompagniesanonymes——charteredcompanies——foralmosteveryconceivablepurpose。Everytownisacorporationforthemanagementofitsroads，bridges，andschools:whichare，therefore，underthedirectcontrolofthosewhopayforthem，andareconsequentlywellmanaged。Academiesandchurches，lyceumsandlibraries，saving—fundsocieties，andtrustcompanies，existinnumbersproportionedtothewantsofthepeople，andallarecorporations。Everydistricthasitslocalbank，ofasizetosuititswants，thestockofwhichisownedbythesmallcapitalistsoftheneighbourhood，andmanagedbythemselves;theconsequenceofwhichis，thatinnopartoftheworldisthesystemofbankingsoperfect——solittleliabletovibrationintheamountofloans——thenecessaryeffectofwhichis，thatinnoneisthevalueofpropertysolittleaffectedbychangesintheamountorvalueofthecurrencyresultingfromthemovementsoftheirownbankinginstitutions。
Inthetwostatestowhichwehaveparticularlyreferred，theyarealmosttwohundredinnumber。Massachusetts，alone，offerstoourviewfifty—threeinsuranceoffices，ofvariousforms，scatteredthroughthestate，andallincorporated。Factoriesareincorporated，andareownedinshares;andeveryonethathasanypartinthemanagementoftheirconcerns，fromthepurchaseoftherawmaterialtothesaleofthemanufacturedarticle，isapartowner;whileeveryoneemployedinthemhasaprospectofbecomingone，bytheuseofprudence，exertion，andeconomy。
Charitableassociationsexistinlargenumbers，andallareincorporated。Fishingvesselsareownedinsharesbythosewhonavigatethem;andthesailorsofawhalingshipdependinagreatdegree，ifnotaltogether，uponthesuccessofthevoyagefortheircompensation。EverymasterofavesseltradingintheSouthernOceanisapartowner，andtheinteresthepossessesisastronginducementtoexertionandeconomy，byaidofwhichthepeopleofNewEnglandarerapidlydrivingoutthecompetitionofothernationsforthetradeofthatpartoftheworld。Whereversettled，theyexhibitthesametendencytocombinationofaction。
InNewYorktheyarethechiefownersofthelinesofpacketships，whicharedividedintoshares，ownedbytheshipbuilders，themerchants，themaster，andthemates;whichlastgenerallyacquirethemeansofbecomingthemselvesmasters，andtothisisduetheirgreatsuccess。Thesystemisthemostperfectlydemocraticofanyintheworld。Itaffordstoeverylabourer，everysailor，everyoperative，maleorfemale，theprospectofadvancement;anditsresultsarepreciselysuchasweshouldhavereasontoexpect。Innopartoftheworldaretalent，industry，andprudence，socertaintobelargelyrewarded。’
ThecasesofinsolvencyandfraudonthepartofcharteredcompaniesinAmerica，whichhavecausedsomuchlossandsomuchscandalinEurope，didnotoccurinthepartoftheUniontowhichthisextractrefers，butinotherStates，inwhichtherightofassociationismuchmorefetteredbylegalrestrictions，andinwhich，accordingly，joint—stockassociationsarenotcomparableinnumberorvarietytothoseofNewEngland。MrCareyadds，’Acarefulexaminationofthesystemsoftheseveralstates，canscarcely，wethink，failtoconvincethereaderoftheadvantageresultingfrompermittingmentodetermineamongthemselvesthetermsuponwhichtheywillassociate，andallowingtheassociationsthatmaybeformedtocontractwiththepublicastothetermsuponwhichtheywilltradetogether，whetherofthelimitedorunlimitedliabilityofthepartners。’ThisprinciplehasbeenadoptedasthefoundationofallrecentEnglishlegislationonthesubject8。IproceedtothesubjectofInsolvencyLaws。
Goodlawsonthissubjectareimportant，firstandprincipally，onthescoreofpublicmorals;whichareonnopointmoreundertheinfluenceofthelaw，forgoodandevil，thaninamatterbelongingsopre—eminentlytotheprovinceoflawasthepreservationofpecuniaryintegrity。Butthesubjectisalso，inamerelyeconomicalpointofview，ofgreatimportance。First，becausetheeconomicalwell—beingofapeople，andofmankind，dependsinanespecialmannerupontheirbeingabletotrusteachother’sengagements。Secondly，becauseoneoftherisks，orexpenses，ofindustrialoperationsistheriskorexpenseofwhatarecommonlycalledbaddebts，andeverysavingwhichcanbeeffectedinthisliabilityisadiminutionofcostofproduction;
bydispensingwithanitemofoutlaywhichinnowayconducestothedesiredend，andwhichmustbepaidforeitherbytheconsumerofthecommodity，orfromthegeneralprofitsofcapital，accordingastheburthenispeculiarorgeneral。
Thelawsandpracticeofnationsonthissubjecthavealmostalwaysbeeninextremes。Theancientlawsofmostcountrieswereallseveritytothedebtor。Theyinvestedthecreditorwithapowerofcoercion，moreorlesstyrannical，whichhemightuseagainsthisinsolventdebtor，eithertoextortthesurrenderofhiddenproperty，ortoobtainsatisfactionofavindictivecharacter，whichmightconsolehimforthenon。paymentofthedebt。Thisarbitrarypowerhasextended，insomecountries，tomakingtheinsolventdebtorservethecreditorashisslave:inwhichplantherewereatleastsomegrainsofcommonsense，sinceitmightpossiblyberegardedasaschemeformakinghimworkoutthedebtbyhislabour。InEnglandthecoercionassumedthemilderformofordinaryimprisonment。Theoneandtheotherwerethebarbarousexpedientsofarudeage，repugnanttojustice，aswellastohumanity。Unfortunatelythereformofthem，likethatofthecriminallawgenerally，hasbeentakeninhandasanaffairofhumanityonly，notofjustice:andthemodishhumanityofthepresenttime，whichisessentiallyathingofoneidea，hasinthisasinothercases，goneintoaviolentreactionagainsttheancientseverity，andmightalmostbesupposedtoseeinthefactofhavinglostorsquanderedotherpeople’sproperty，apeculiartitletoindulgence。Everythinginthelawwhichattacheddisagreeableconsequencestothatfact，wasgraduallyrelaxed，orentirelygotridof:untilthedemoralizingeffectsofthislaxitybecamesoevidentastodetermine，bymorerecentlegislation，asalutarythoughveryinsufficientmovementinthereversedirection。
Theindulgenceofthelawstothosewhohavemadethemselvesunabletopaytheirjustdebts，isusuallydefended，onthepleathatthesoleobjectofthelawshouldbe，incaseofinsolvency，nottocoercethepersonofthedebtor，buttogetathisproperty，anddistributeitfairlyamongthecreditors。Assumingthatthisisandoughttobethesoleobject，themitigationofthelawwasinthefirstinstancecarriedsofarastosacrificethatobject。Imprisonmentatthediscretionofacreditorwasreallyapowerfulengineforextractingfromthedebtoranypropertywhichhehadconcealedorotherwisemadeawaywith;anditremainstobeshownbyexperiencewhether，indeprivingcreditorsofthisinstrument，thelaw，evenaslastamended，hasfurnishedthemwithasufficientequivalent。Butthedoctrine，thatthelawhasdoneallthatoughttobeexpectedfromit，whenithasputthecreditorsinpossessionofthepropertyofaninsolvent，isinitselfatotallyinadmissiblepieceofspurioushumanity。Itisthebusinessoflawtopreventwrong—doing，andnotsimplytopatchuptheconsequencesofitwhenithasbeencommitted。Thelawisboundtotakecarethatinsolvencyshallnotbeagoodpecuniaryspeculation;thatmenshallnothavetheprivilegeofhazardingotherpeople’spropertywithouttheirknowledgeorconsent，takingtheprofitsoftheenterpriseifitissuccessful，andifitfailsthrowingthelossupontherightfulowners;andthattheyshallnotfinditanswertomakethemselvesunabletopaytheirjustdebts，byspendingthemoneyoftheircreditorsinpersonalindulgence。Itisadmittedthatwhatistechnicallycalledfraudulentbankruptcy，thefalsepretenceofinabilitytopay，is，whendetected，properlysubjecttopunishment。Butdoesitfollowthatinsolvencyisnottheconsequenceofmisconductbecausetheinabilitytopaymaybereal？Ifamanhasbeenaspendthrift，oragambler，withpropertyonwhichhiscreditorshadapriorclaim，shallhepassscot—freebecausethemischiefisconsummatedandthemoneygone？
Isthereanyverymaterialdifferenceinpointofmoralitybetweenthisconduct，andthoseotherkindsofdishonestywhichgobythenamesoffraudandembezzlement？
Suchcasesarenotaminority，butalargemajorityamonginsolvencies。Thestatisticsofbankruptcyprovethefact。’Byfarthegreaterpartofallinsolvenciesarisefromnotoriousmisconduct;theproceedingsoftheInsolventDebtorsCourtandoftheBankruptcyCourtwillproveit。Excessiveandunjustifiableovertrading，ormostabsurdspeculationincommodities，merelybecausethepoorspeculator"thoughttheywouldgetup"，butwhyhethoughtsohecannottell;speculationinhops，intea，insilk，incorn——thingswithwhichheisaltogetherunacquainted;
wildandabsurdinvestmentsinforeignfunds，orinjointstocks;
theseareamongthemostinnocentcausesofbankruptcy。’（10*）TheexperiencedandintelligentwriterfromwhomIquote，corroborateshisassertionbythetestimonyofseveraloftheofficialassigneesoftheBankruptcyCourt。Oneofthemsays，’AsfarasIcancollectfromthebooksanddocumentsfurnishedbythebankrupts，itseemstomethat’inthewholenumberofcaseswhichoccurredduringagiventimeinthecourttowhichhewasattached，’fourteenhavebeenruinedbyspeculationsinthingwithwhichtheywereunacquainted;threebyneglectingbookkeeping;tenbytradingbeyondtheircapitalandmeans，andtheconsequentlossandexpenseofaccommodationbills;
forty—ninebyexpendingmorethantheycouldreasonablyhopetheirprofitswouldbe，thoughtheirbusinessyieldedafairreturn;nonebyanygeneraldistress，orthefallingoffofanyparticularbranchoftrade。’Anotheroftheseofficerssaysthat，duringaperiodofeighteenmonths，’fifty—twocasesofbankruptcyhavecomeundermycare。Itismyopinionthatthirty—twoofthesehavearisenfromanimprudentexpenditure，andfivepartlyfromthatcause，andpartlyfromapressureonthebusinessinwhichthebankruptswereemployed。FifteenI
attributetoimprovidentspeculations，combinedinmanyinstanceswithanextravagantmodeoflife。’
Tothesecitationstheauthoraddsthefollowingstatementsfromhispersonalmeansofknowledge。’Manyinsolvenciesareproducedbytradesmen’sindolence:theykeepnobooks，oratleastimperfectones，whichtheyneverbalance;theynevertakestock;theyemployservants，iftheirtradebeextensive，whomtheyaretooindolenteventosupervise，andthenbecomeinsolvent。Itisnottoomuchtosay，thatone—halfofallthepersonsengagedintrade，eveninLondon，nevertakestockatall:theygoonyearafteryearwithoutknowinghowtheiraffairsstand，andatlast，likethechildatschool，theyfindtotheirsurprise，butonehalfpennyleftintheirpocket。Iwillventuretosaythatnotone—fourthofallthepersonsintheprovinces，eithermanufacturers，tradesmen，orfarmers，evertakestock;norinfactdoesone—halfofthemeverkeepaccount—books，deservinganyothernamethanmemorandumbooks。Iknowsufficientoftheconcernsoffivehundredsmalltradesmenintheprovinces，tobeenabledtosay，thatnotone。fifthofthemevertakestock，orkeepeventhemostordinaryaccounts。Iampreparedtosayofsuchtradesmen，fromcarefullypreparedtables，givingeveryadvantagewheretherehasbeenanydoubtastothecausesoftheirinsolvency，thatwhereninehappenfromextravaganceordishonesty，one’atmost’maybereferredtomisfortunealone。’（11*）
Isitrationaltoexpectamongthetradingclassesanyhighsenseofjustice，honour，orintegrity，ifthelawenablesmenwhoactinthismannertoshuffleofftheconsequencesoftheirmisconductuponthosewhohavebeensounfortunateastotrustthem;andpracticallyproclaimsthatitlooksuponinsolvencythusproduced，asa’misfortune’，notanoffence？
Itis，ofcourse，notdenied，thatinsolvenciesdoarisefromcausesbeyondthecontrolofthedebtor，andthat，inmanymorecases，hisculpabilityisnotofahighorder;andthelawoughttomakeadistinctioninfavourofsuchcases，butnotwithoutasearchinginvestigation;norshouldthecaseeverbeletgowithouthavingascertained，inthemostcompletemannerpracticable，notthefactofinsolvency，butthecauseofit。Tohavebeentrustedwithmoneyormoney’sworth，andtohavelostorspentit，isprimafacieevidenceofsomethingwrong:anditisnotforthecreditortoprove，whichhecannotdoinonecaseoutoften，thattherehasbeencriminality，butforthedebtortorebutthepresumption，bylayingopenthewholestateofaffairs，andshowingeitherthattherehasbeennomisconduct，orthatthemisconducthasbeenofanexcusablekind。Ifhefailinthis，heoughtnevertobedismissedwithoutapunishmentproportionedtothedegreeofblamewhichseemsjustlyimputabletohim;whichpunishment，however，mightbeshortenedormitigatedinproportionasheappearedlikelytoexerthimselfinrepairingtheinjurydone。
Itisacommonargumentwiththosewhoapprovearelaxedsystemofinsolvencylaws，thatcredit，exceptinthegreatoperationsofcommerce，isanevil;andthattodeprivecreditorsoflegalredressisajudiciousmeansofpreventingcreditfrombeinggiven。Thatwhichisgivenbyretaildealerstounproductiveconsumersis，nodoubt，totheexcesstowhichitiscarried，aconsiderablyevil。This，however，isonlytrueoflarge，andespeciallyoflong，credits;forthereiscreditwhenevergoodsarenotpaidforbeforetheyquittheshop，or，atleast，thecustodyoftheseller;andtherewouldbemuchinconvenienceinputtinganendtothissortofcredit。Butalargeproportionofthedebtsonwhichinsolvencylawstakeeffect，arethoseduebysmalltradesmentothedealerswhosupplythem:andonnoclassofdebtsdoesthedemoralizationoccasionedbyabadstateofthelaw，operatemoreperniciously。
ThesearecommercialCredits，whichnoonewishestoseecurtailed;theirexistenceisofgreatimportancetothegeneralindustryofthecountry，andtonumbersofhonest，well。conductedpersonsofsmallmeans，towhomitwouldbeagreatinjurythattheyshouldbepreventedfromobtainingtheaccommodationtheyneed，andwouldnotabuse，throughtheomissionofthelawtoprovidejustremediesagainstdishonestorrecklessborrowers。
Butthoughitweregrantedthatretailtransactions，onanyfootingbutthatofreadymoneypayment，areanevil，andtheirentiresuppressionafitsubjectforlegislationtoaimat;aworsemodeofcompassingthatobjectcouldscarcelybeinvented，thantopermitthosewhohavebeentrustedbyotherstocheatandrobthemwithimpunity。Thelawdoesnotgenerallyselectthevicesofmankindastheappropriateinstrumentforinflictingchastisementonthecomparativelyinnocent。Whenitseekstodiscourageanycourseofaction，itdoessobyapplyinginducementsofitsown，notbyoutlawingthosewhoactinthemanneritdeemsobjectionable，andlettingloosethepredatoryinstinctsoftheworthlesspartofmankindtofeeduponthem。Ifamanhascommittedmurderthelawcondemnshimtodeath;butitdoesnotpromiseimpunitytoanybodywhomaykillhimforthesakeoftakinghispurse。Theoffenceofbelievinganother’sword，evenrashly，isnotsoheinousthatforthesakeofdiscouragingitthespectacleshouldbebroughthometoeverydoor，oftriumphantrascality，withthelawonitsside，mockingthevictimsithasmade。Thispestilentexamplehasbeenverywidelyexhibitedsincetherelaxationoftheinsolvencylaws。Itisidletoexpectthat，evenbyabsolutelydeprivingcreditorsofalllegalredress，thekindofcreditwhichisconsideredobjectionablewouldreallybeverymuchchecked。Roguesandswindlersarestillanexceptionamongmankind，andpeoplewillgoontrustingeachother’spromises。Largedealers，inabundantbusiness，wouldrefusecredit，asmanyofthemalreadydo:butintheeagercompetitionofagreattown，orthedependentpositionofavillageshopkeeper，whatcanbeexpectedfromthetradesmantowhomasinglecustomerisofimportance，thebeginner，perhaps，whoisstrivingtogetintobusiness？Hewilltaketherisk，evenifitwerestillgreater;heisruinedifhecannotsellhisgoods，andhecanberuinedifheisdefrauded。Nordoesitavailtosay，thatheoughttomakeproperinquiries，andascertainthecharacterofthosetowhomhesuppliesgoodontrust。InsomeofthemostflagrantcasesofprofligatedebtorswhichhavecomebeforetheBankruptcyCourt，theswindlerhadbeenabletogive，andhadgiven，excellentreferences。
NOTES:
1。PrinciplesofPoliticalEconomy，ed。1843，p。264。Thereismuchmoretothesameeffectinthemorerecenttreatisebythesameauthor，’OntheSuccessiontoPropertyvacantbyDeath’。
2。MrCecilFane，theCommissioneroftheBankruptcyCourt，inhisevidencebeforetheCommitteeontheLawofPartnership，says"Irememberashorttimeagoreadingawrittenstatementbytwoeminentsolicitors，whosaidthattheyhadknownmanypartnershipaccountsgointoChancery，butthattheyneverknewonecomeout……Veryfewofthepersonswhowouldbedisposedtoengageinpartnershipsofthiskind’（co—operativeassociationsofworkingmen）’haveanyideaofthetruth，namelythatthedecisionofquestionsarisingamongstpartnersisreallyimpracticable。
’Dotheynotknowthatonepartnermayrobtheotherwithoutanypossibilityofhisobtainingredress？——Thefactisso;butwhethertheyknowitornot，Icannotundertaketosay。’
Thisflagrantinjusticeis，inMrFane’sopinion，whollyattributabletothedefectsofthetribunal。’Myopinionis，thatifthereisonethingmoreeasythananother，itisthesettlementofpartnershipquestions，andforthesimplereason，thateverythingwhichisdoneinapartnershipisenteredmodeofinthebooks;theevidencethereforeisathand;ifthereforearationalmodeofproceedingwereonceadopted，thedifficultywouldaltogethervanish。’——MinutesofEvidenceannexedtotheReportoftheSelectCommitteeontheLawofPartnership（1851），pp。85—7。
3。Report，utsupra，p。167。
4。SeetheReportalreadyreferredto，pp。145—158。
5。ThequotationisfromatranslationpublishedbyMrH。C。
Carey，inanAmericanperiodical，Hunt’sMerchant’sMagazine，forMayandJune1845。
6。’Therehasbeenagreatdealofcommiserationprofessed，’saysMrDuncan，solicitor，’towardsthepoorinventor;hehasbeenoppressedbythehighcostofpatents;buthischiefoppressionhasbeenthepartnershiplaw，whichpreventshisgettinganyonetohelphimtodevelophisinvention。Heisapoorman，andthereforecannotgivesecuritytoacreditor;noonewilllendhimmoney;therateofinterestoffered，howeverhighitmaybe，isnotanattraction。Butifbythealterationofthelawhecouldallowcapitaliststotakeaninterestwithhimandsharetheprofits，whiletheriskshouldbeconfinedtothecapitaltheyembarked，thereisverylittledoubtatallthathewouldfrequentlygetassistancefromcapitalists;whereasatthepresentmoment，withthelawasitstands，heiscompletelydestroyed，andhisinventionisuselesstohim;hestrugglesmonthaftermonth;heappliesagainandagaintothecapitalistwithoutavail。IknowitpracticallyintwoorthreecasesoF
patentedinventions;especiallyonewherepartieswithcapitalweredesirousoFenteringintoanundertakingofgreatmomentinLiverpool，butfiveorsixdifferentgentlemenweredeterredfromdoingso，allfeelingthestrongestobjectiontowhateachonecalledthecursedpartnershiplaw。’Report，p。155。