The Southwestern Historical Quarterly, Volume 71, July 1967 - April, 1968 Page: 8
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Southwestern Historical Quarterly
All through the nineteenth century, America had been a highly
favorite haven (although all too often a watering place) for the British
financier. The great investment family houses with the gilt names of
Barkley, Baring,' and Fleming' sent thousands of pounds sterling to
the "Wilderness America," as one capitalist put it.
In the eighteen sixties, a legal innovation occurred which revolu-
tionized the pattern and structure of British investment, namely, the
increasing vogue of the limited liability company. After the infamous
John Law debacle in the early eighteenth century, the government
passed the famous Bubble Act, which outlawed the unincorporated
joint-stock enterprise. There followed a century and a half of legal
ambiguity toward stock operations. Of course, British ingenuity fash-
ioned a variety of semi-legal joint-stock devices; especially favored
was the en commandite partnership.8 Finally, with the passage of the
General Liability Act of 1856 and the Consolidating Act of 1862,
legal benediction was given to a flood of limited liability companies."
Limited liability proved to be far from an unmitigated blessing.
Many of the hastily conceived companies developed only into financial
abortions with their single virtue being that they died quickly. The
members of Parliament, in their inimitable muddling-through manner,
refused to implement the legal remodeling necessary for total reform.
Yet devoid of this legal revision, the joint-stock company frequently
translated into "beware of the promoter."
Nevertheless, to hundreds of stockholders, the limited liability
company was a silver filigree door to fortune. Nowhere did the
virulence of "joint-stockitis" strike harder than at the Edinburgh,
Dundee, and London capitalist, who quickly organized dozens of
ventures for speculation in foreign mines and real estate. A plethora
of "Trusts," with the geographically enticing appellations of Bombay
Alliance, United States Mortgage, and Indian Investment, came into
being after an hour's consultation in some astute barrister's office.
In the early eighteen seventies, one Indianapolis attorney and broker
determined to be a catalyst between the British pound and American
*The rise, though not the fall, of the Baring dynasty is recorded in Ralph Willard Hidy,
The House of Baring in American Trade and Finance; English Merchant Bankers at Work,
x763-x861 (Cambridge, 1949).
7The Flemings' American holdings spread from Southwestern railroad interests to Middle
West real estate. Robert Fleming to G.M.G., December 31, 1963.
OH. A. Shannon, "The Coming of General Limited Liability," in Eleanora Mary Carus-
Wilson (ed.), Essays in Economic History (London, 1954), 358-379.
9H. A. Shannon, "The Limited Companies of 1866-1883," in ibid., 380-405.
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Texas State Historical Association. The Southwestern Historical Quarterly, Volume 71, July 1967 - April, 1968, periodical, 1968; Austin, Texas. (texashistory.unt.edu/ark:/67531/metapth117145/m1/26/: accessed January 22, 2019), University of North Texas Libraries, The Portal to Texas History, texashistory.unt.edu; crediting Texas State Historical Association.