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(3). The fixing of a minimum capital for companies whose shares are to be dealt in on any stock exchange.

As regards the issue of a prospectus, it is provided by section 38 of the statute, that before any security is admitted for the purpose of being dealt in and quoted on any stock exchange, a prospectus must be issued, containing all information, which is of any importance for the purpose of ascertaining its true value. German government securities are exempted, and other securities may be exempted by the government of the state in which the application is made, but all shares in companies, whether incorporated in Germany or elsewhere, are included in any case.

It was already provided by the Mercantile Code, that persons issuing a prospectus by which shares are offered within two years from the incorporation of a company, are liable in damages in respect of inaccuracies or omissions in such prospectus. This liability can be enforced by the company only, whilst the liability imposed by the stock exchange statute in respect of mis-statements in the prospectus can be enforced by any holder of the security to which the prospectus refers. According to section 43 of that statute all persons who have issued or directed the issue of any prospectus containing any inaccurate statement on any matter affecting the value of the security are jointly and separately liable for any loss caused thereby, in so far as they knew, or ought in the absence of gross carelessness to have known, that the statement was incorrect. In the same way they are liable in respect of omissions as to essential facts, if caused by them knowingly or recklessly. If the inaccuracy or incompleteness was known to the claimant at the time of the purchase, or ought to have been known to him, on the application of the care usually given to his own affairs, he loses his claim to damages or restitution.

As regards the interval of time which must elapse before a company's shares can be dealt in on a German stock exchange, it is provided by section 39 that the shares of any undertaking which has been converted into a company cannot be admitted among the securities negotiable on any German stock exchange, unless at least a year has elapsed from the date of the registration of the company, and unless the first yearly balance sheet of the company has been published together with the profit and loss account. Power is given to the State Government of the place in which the shares are to be dealt in, to dispense from this rule in exceptional cases. It will be noticed that this close time is only prescribed No. 37.-VOL. X

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in the case of companies taking over an existing business; the shares of a company starting a new business may be publicly dealt in at once. The wisdom of the rule is very doubtful. A company cannot be registered before its capital is fully subscribed. The promoters must therefore hold the whole of the shares for at least a year and probably some months longer, as in most cases some time will elapse after the end of the year before the balance sheet can be drawn up and published; some compensation must, of course, be sought for the prolongation of the risk and capital outlay, and this compensation has, of course, to be paid by the public. On the other hand the safeguard is purely imaginary. By judicious manipulation profits belonging to a former year or to the subsequent year, may be squeezed into the critical twelve months, so as to produce a specially good profit and loss account, and the idea that the public in this way have an opportunity to see the working of the undertaking before they are asked to subscribe to it, is therefore purely imaginary.

The third regulation introduced by the stock exchange statute is intended to prevent stock exchange transactions in the shares of companies having a small capital only. The fixing of the minimum capital for each stock exchange is left to the federal council by section 42, which section also gives power to the same body to make further regulation for the admission of securities to any stock exchange.

An order was issued by the federal council pursuant to this power, containing the following provisions:

(1) The minimum capital of companies whose shares are to be dealt in at Berlin, Hamburg, or Frankfort must be £50,000, whilst for all other stock exchanges a minimum capital of £25,000 is fixed.

(2) The prospectus must state (a) the name of the company, (b) the clause in the articles or resolution authorising the issue, (c) the purposes for which the proceeds of the issue are to be applied, (d) the amount of the total issue, the amount offered, and the amount retained, and the time during which the lastnamed amount is to be retained by the promoters.

The provisions about statements in prospectuses and dealings on the stock exchanges are of minor importance and affect a limited class only; those relating to the prevention of overcapitalisation and the preservation of capital affect the whole trade of the country. It is stated on good authority that some branches of trade (such as the cycle industry) are rapidly going

down in England owing to the fact that they are worked by overcapitalised companies. This will show that the reform of company law has other objects than the protection of careless persons against unsound investments. If this fact could be understood and realised by public opinion, it would be seen that measures like those proposed in the bill which is now before Parliament, touch the real mischief as little as the previous voluminous legislation on the subject.

ERNEST SCHUSTER

?

THE CLOTH TRADE IN THE NORTH OF ENGLAND IN THE SIXTEENTH AND SEVENTEENTH

CENTURIES.

ATTENTION has been so often directed to the great increase of the clothing trade in Lancashire and Yorkshire which took place in the eighteenth century, that the extent and importance of the northern cloth trade before that time seems almost to be overlooked. The bulk of English cloth before the eighteenth century was no doubt manufactured in those parts of the south and west of England which were commonly known as the clothing counties, but the cloth trade nevertheless was carried on in the north as the statute book abundantly proves. As early as the reign of Richard II. there is a specific reference to the manufacture of coarse Kendal cloth.1 Camden says that this manufacture was introduced into Kendal by Dutch settlers in the reign of Edward III., who established themselves in the town, under the special encouragement and protection of the King, and taught the art of weaving to the inhabitants. Even before this reign Beverley was known for its cloth; and all the old incorpo rated towns of the north, York, Hull, Newcastle, Lancaster and Chester appear to have been early interested in the making and selling of cloth. During the sixteenth and seventeenth centuries however the manufacture of the north became very important, and it was subject to conditions so very different from those which existed in the southern trade as to make a comparison between the two interesting, especially in view of the subsequent history of the cloth trade in this country. The aim of this paper is to make this comparison, to sketch the progress of legal regulation of the northern trade, and to illustrate from contemporary documents its condition during the period.

The sixteenth and seventeenth centuries were pre-eminently the period of trade regulation, and during them a succession of Acts.

1 13 Ric. II., c. 10.

of Parliament dealt with the cloth trade. But during the first half of the sixteenth century, roughly speaking, no attempt was made to regulate the manufacture of cloth in the northern (counties. And this was not because its existence was not recognised. Early in the reign of Henry VIII. an Act forbidding the embezzlement of wool or yarn by spinners and weavers, the sale of coloured wool except in open market, and the undue stretching of cloth expressly exempted from its operation "woollen cloths. called Kendals, and cloths called Carpenal whites . . . and any clothes or plain linings or friese, made or to be made in Wales, Lancashire and Cheshire, or any of them." The reasons for the exemption seem to have been that the coarse rough cloth made in these places was for domestic use, and not for purposes of trading -at least not for export trade; and that the existence of a master clothier and workers to whom he gave material to be worked was not common in the north at this time.

2

In the twenty-seventh year of Henry VIII's reign another statute "for the true making of cloth " was placed on the statute book, providing that every clothier should weave his name or mark in his cloth, and put his seal on it, and providing penalties if cloths were not of a certain length and breadth. From this Act also "kendals, cottons and all manner of coarse clothes for linings," were excepted. Probably this exception would include all the northern cloths which had been excepted before. It was in the session of 1542-3 that the first legislation regulating the northern industry was enacted, the "bill for making coverlets at York." The preamble to the bill describes York as being "one of the ancient and greatest cities within the realm of England, and . . . afore this time hath been maintained and upholden by divers and sundry handicrafts there used, and most principally for weaving of coverlets," whereby "a great number of the inhabitants and poor people of the said city and suburbs thereof have been daily set on work in spinning, carding, dyeing, weaving, and otherwise."

The bill ordered that the coverlets should be made of certain sizes. Any defect was to be punished by forfeiture, one-half to go to the mayor and commonalty, the other to the wardens and company of the handicraft of coverlet makers. It rather suggests that the authority of the company of coverlet makers was declining, so that they found it impossible to enforce trade regulation, and additional probability seems to be given to this view by a statute of 1547, which declared that York was becoming depopu

16 Hen. VIII., c. 9.

3 34 and 35 Hen. VIII., G. 10.

2 27 Hen. VIII., c. 12.

4 1 Edw. VI., c. 9.

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