Reply To: Ship ownership – early legislation

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    It is true that the sort of arrangement Helen Doe mentions conferred some management advantages on the more enlightened British ship owners, but it fell a long way short of the advantages offered by the Irish Anonymous Persons Act.

    Owners were still liable for any expenses that were not covered by profits, and their liability for uninsured cargoes, etc, was unlimited. Not so under the Irish act. A shareholder bought his shares and had no further liability. The management of the company also had liability only to the shareholders. Should a company fail, its assets were sold and any remaining capital after satisfying creditors was returned to the shareholders. Williams exploited this by not insuring his ships and cargoes, successfully undertaking to meet any losses out of profits. Such losses were minimal under his regime, his large and powerful ships proving very safe.

    The manager had much more freedom to act, only his board needing to know what was going on. He could buy and sell ships, alter routes etc, as he saw fit, and could only be removed if his shareholders voted him out at their annual general meeting. Also, the £50,000 was more generous than it seems. It would buy at least three large and sturdy steamships in about 1840, and leave enough over to run them for a considerable time. This enabled true lines of vessels to be established on routes. Inevitably, the more successful companies soon needed to employ larger capital sums, and they then sought British limited liability by individual Act of Parliament.

    The speed with which many British companies sought parliamentary approval for limited liability on formation (not just in shipping) shows that the value of the privilege was fully known and appreciated.