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first. They are never to be found at home, or if you are lucky enough to catch them on a Saturday afternoon they are busy dressing or sitting over the fire heating their curling tongs between the bars. With the rest of the family coming and going, tea on the table, and children all round you, conversation, except with the family generally, is, of course, impossible. Therefore the only way remaining to us is to attract the girls to our clubs in their leisure hours. This calls out all our resources and ingenuity—it is no mere mechanical work, but full of the charm of personal effort. By watching their characters, calculating the right moment to bring pressure to bear on them, using one method with this girl and another with that, we are ever pressing toward improvement and yet stopping short of anything that would hinder the attractiveness of the club. In this way we are always having demands made on our highest powers. Surely this is not waste of time, neither is it so easy
that it can be done without much thought and prayer. How many people attend church regularly and listen to the most inspiring sermons, and yet never give a thought to the talents God has given them, talents which are carefully wrapped up and put away out of their lives. These powers of usefulness might prove such a blessing in many corners of dreary'slums,' where lonely workers are fainting under their heavy burdens and breaking down in nerve and health. It is difficult to realise the need until we go down and make ourselves familiar with the actual conditions of many poor parishes. Week-day clubs necessitate Sunday classes ; the girls are willing to come, bright and intelligent, and eager to be taught by any one who will win their affections. We think it is a great advantage for a club to be parochial; it links the week's work on to Sunday and the other stages of life, so that a member is not lost sight of when she outgrows the club.
A vast work lies before us; who will rise up and do it?
THE “LIMITED-COMPANY CRAZE
A YEAR ago not less than 23,728 limited companies, with a total paid up capital of 1,285,042,0211., were, according to official statistics, carrying on business in the United Kingdom. Now the most recent estimate with which I am acquainted places the wealth of this country at 11,806,000,000l.; and so, assuming this estimate to be approximately correct, we may make the broad statement that approximately one tenth of our possessions belong to, or are represented by, concerns regulated by the Companies Acts passed since 1861. These statistics take no account of companies which come under special Acts of Parliament; were we to include railways, &c., we should have to increase the amount already stated by more than 1,000,000,0001., and the ratio of company capital to total wealth would have to be raised from 1:10 to 1: 5.
We have been putting such a large portion of our eggs into the limited liability basket with ever increasing celerity. During the first twenty-five years of limited liability—from 1862 until 1887– we created 11,001 companies, with a capital of 611,430,0001.-roughly 440 companies a year with not quite 25,000,0001. capital. For the last ten years the total has been 12,727 companies, with 673,612,0001., or 1,272 companies with 67,361,0001. as an annual average. And from statistics published last New Year's Eve by the Westminster Gazette we gather that in 1897 limited companies offered not less than 106,000,0001. in newly created capital to the public.
The effects of this general limitation' are only too apparent. We can hardly perform any of the acts of daily life without being confronted with the word that has become the shibboleth of our commercial life. No sooner do we rise from our bed (furnished by Somebody, Limited) than we use a limited soapmaker's soap. Very likely some of our garments bear a limited address. When we have donned them and go down to breakfast we find on our table some prospectuses arrived by the first post; our bread and our jam bear the limited brand, and very likely our tea and our butter would bear it if they could. Our morning paper is owned by a limited company, and is sure to contain several big advertisements of the latest promotions, not to mention quotations of and paragraphs relating to limited companies and their shares. We go to town in an omnibus or a cab owned by a limited company, through streets almost lined with shops belonging to limited concerns. And so it goes on all day. We lunch and dine in limited restaurants; we seek amusement in limited theatres; and even when we take our nocturnal whisky we perceive the inevitable abbreviation on the mineral water bottle.
All this has had humble beginnings. If we care to look up old Hansards we can read between the lines that the Frankensteins who created this modern monster had not the faintest conception of the dimensions it would assume before the close of the Victorian era. They intended it to be a good-tempered creature of comparatively small dimensions ; had they suspected the rate at which it would grow, and the lines along which it would develop, they would have thought twice before they decided upon its creation.
At first limited liability followed the lines which its originators foresaw. Capitalists combined to do jointly what no single person of responsibility could or would do singly. Whenever an enterprise was projected which was too risky for one venturer a number of people each provided a small sum, the loss of which would have no serious meaning for them ; whenever anything was attempted which required so much money that a single person or a small group of persons could not readily advance it, many littles' were collected into the requisite 'muckle.' Whenever the partners in a firm wished to divide their interests amongst their families without disturbing the business in the event of the death of any or all of them they formed a limited company. All that was right and proper. Had limited liability kept within these legitimate bounds it would never have become the curse of our commerce or the bane of our saving classes which it is to-day.
But limited liability speedily overleaped its legitimate bounds. Very soon it could be noticed that combinations of capitalists were started for purposes
which had but little in common with those fair business risks which an enterprising but sober and level-headed people will always willingly take. Soon also it was noticed that many businesses were made limited without there being any visible reason why they should leave the hands of private owners. To-day it is safe to say that ninety-nine per cent. of the concerns transferred to companies are of this class. Why?
The reason is twofold. The Companies Acts soon generated and fostered the species of business man known as the financier--not the old, honourable banker, or broker, or merchant, but the modern company hatcher, the man who contrives to live, and live well, because he is able to extract profits from plausible theories. They also made it easy to capitalise and sell 'interests.' And what the Companies Acts encouraged the rapid creation of wealth under the new industrial conditions of the Victorian era encouraged too. Every day the nation added to its capital. Every day the difficulty of
profitably employing that capital increased. People required investments, and, somewhow or other, they were tempted to take them from those who made it a business to provide them.
This scarcity of investments had a very natural result. It tended to bring down the yield of capital. The man who had more money than he could employ was found ready to accept gratefully a return which the man of business scoffed at. The man of business required, if he traded in a small way, 20 per cent. or more ; if his was a large business he was perhaps satisfied with, let us say, 10 per cent. The investor would take five. And in this discrepancy we find the origin of a vast amount of promotion. Of course the difference is easily explained. If a business man expects, and obtains, a better return upon his capital than the investor it is because, in addition to his capital, he employs his time, or his labour, or his brains, whichever phrase you prefer. But the investor apparently overlooks this fact. Hence he is willing to buy businesses at a far higher price than ordinary business people would care to pay. If a well established business yields 15,0001. a year investors will generally be found ready to buy it for 200,0001., an amount upon which 15,0001. a year represents 7) per cent. But the owner of such a business would in nine cases out of ten gladly accept 100,0001. ; it is true that the business has given him 15 per cent. a year upon that amount, but that was on his capital plus his labour; and he is only asked to sell his capital, or rather that part of it which consists of the business, whilst he may keep that part which his connections and his brains represent.
And out of this circumstance arises the opportunity which brings the promoter upon the scene. He can afford to give an inducement both to the business man who might sell and to the investor who might buy. He offers for the business not the 100,0001. which its proprietor would readily accept, but 125,000l. on condition that the owner, who afterwards retires as a private gentleman, consents to remain on the board for a few years ; this always tempts people to buy shares. He then proceeds to offer the business to investors not at 200,0001., which would give 71 per cent. dividends, but at 175,0001., which gives more than 8; and the investor gladly takes shares if, as we will suppose to be the case, the business is sound. So the result is : (1) that the owner sells out at a better price than he expected; (2) that the new shareholder has the prospect of a higher yield than the minimun he looks upon as adequate ; and (3) that the promoter makes as his profit the difference between 175,0001. and 125,0001., viz. 50,000l., out of which sum he must, of course, pay certain expenses.
This imaginary limitation’ may be accepted as a fair illustration of a simple and fairly straightforward promotion. Of course in practice it will be found that there are complications—so many, in fact, that I can only hope to indicate a few of the most importan
ones in the course of this article ; but here we have the fundamental principles at work in full view. There is no doubt whatsoever that this example is typical of hundreds of conversions of ordinary businesses into limited concerns. On the one hand we have business men, advancing in years, perhaps, wishing for rest and retirement, or desirous of going from business into politics, meeting an opportunity of exchanging, on excellent terms, the cares of commerce for the comforts of private life; on the other hand we have investors, ready to employ their money at a small return; and between them we have the promoter, anxious to bring the two together to mutual advantage and his own. Hence, exit the man whose personal care made and maintained the business; and enter the shareholder, or his nominal representative, the director. And with business men anxious to 'capitalise their interest,' to sell out upon good terms, to take money, capital which they will keep, instead of income which they may lose ; with moneyed people exposed to a veritable investment famine; with promoters always on the alert, there is, alas! little hope that we shall see a cessation of company promoting. And even if there were to be a pause it would not matter much. It is too late to retrace the steps we have taken. By this time the lion's share of our business is in ‘limited' hands. For better or for worse, the shareholder has for good supplanted the old private proprietor, and a permanent change has come over British business.
It can scarcely be doubted that this change has, to put it mildly, been a change for the worse. Personal ownership has ceased to be the controlling power in trade; and when it left it took along with it that personal care, personal supervision, and personal responsibility which made our business great, and which so long kept it great. The old generation of solid, sturdy business men is practically gone. Where formerly we had many mighty lords of commerce we now have, in thousands of instances, mere 'corporations without bodies to be kicked or souls to be damned.' And those who know human nature need not be told what that means. Instead of men who depend for their very living upon their zeal, their energy, and their judgment we have, except in those rare cases where directors are also large shareholders, men who depend for their living upon the salaries paid to them by companies. Instead of people who think of and work for their business day and night we have people who as it were stand outside the business they govern, who take things easy, meet once a week or once a fortnight, and leave the rest to hirelings who, though they may do their best, must in the nature of things be less efficient than direct owners, and who must become commercially demoralised by the knowledge that they serve a concern which virtually has no supervising head, and which neither restrains by rigid discipline nor encourages with the prospect of gratitude. Instead of a proprietor who, so to speak, looks after every piece of