The section 75 of this statute, begins with a recital of the act 8 and 9 of king William in favor of the Bank of England, viz. that no other Bank than the Bank of England shall be erected, permitted or allowed by act of parliament, and then the act proceeds, that for the better securing the priviledges of the Bank of England, It shall not be lawful (in the record it is shall and may be lawfull) for any Company to be established by virtue of this act, to borrow or give security for any sum or sums of money on credit, on any publick funds hereby granted, and that it shall not be lawful for such Company to be established by virtue of this act, to borrow or give security for any greater sum or sums of money, than such as shall be really and bona fide, expended and laid out in and for the buying of goods, bullion or commodities, to be exported for the proper account of the said Company to be established, or shall be otherwise employed in their trade, all which sum or sums of money so to be borrowed for the purpose aforesaid, shall be borrowed only on their common seal, and shall not be made payable or bona fide, agreed to be paid at any time less than six months from the time of borrowing thereof: and that it shall not be lawful for the Company to be established by this act, to discount any bills of exchange, or other bills or notes whatsoever, or to keep any books or cash for any persons whatsoever, other than only the proper monies and cash of the said Company.
The plain import of this clause is not to restrain the Company with respect to the extent of their trade, but merely to prevent its interfering with the business carried on by the Bank of England. The purchasing goods upon credit can never be considered as an interference of that kind.
The 86th section of this act does no way restrain the Company with respect to the amount of its debts, excepting only that the Company shall take care that the sum total of all the debts which they shall owe at any one time shall not exceed the value of the principal or capital stock or stocks which at any such time shall be and remain to the said society undivided; and that in case the Company, by any dividend whatsoever to be made amongst themselves, shall reduce or lessen their joint stock, principal or capital, without paying off or proportionably reducing the sum total of their debts, so that the value of the joint stock, principal or capital undivided, shall not be sufficient to answer their just debts then remaining unpaid. In every such case the particular members receiving such dividend shall be severally liable to the amount of the dividends received, to pay and satisfy the debts which shall remain due and unpaid by the Company.
The plain import of this clause of the act, is to secure the creditors of the Company from any unjustice by the Company's dividing their effects so as not to leave a sufficiency for payment of its whole debts, and can never admit of the construction which has been attempted to be put upon it, as if the Company's debts could never exceed the sum of money subscribed to Government.——By the words principal or capital flock or flocks undivided, is plainly here to be understood the total funds and effects of the Company, which are in fact the capital upon which the Company does trade; and there would be the greatest absurdity in supposing, that in a case where the Company had in its warehouses goods and effects to the value of three times its debts, the debtors of the Company could have an action against the receivers of dividends, under pretence that the sum total of the Company's debts exceeded the sum total of the capital stock subscribed to Government, at a time when the Company's total goods and effects might, as at present, exceed its total debts, in such a proportion as not only to pay its whole debts, but also to repay its capital advanced, and leave five or six millions over of clear ballance to be divided amongst the proprietors.
But if the words, principal capital stock or flocks undivided, could in this clause admit of the construction which is put upon them, yet certainly the words sum total of debts can in that case be only understood to mean the ballance of debts after deducing the fair value of the Company's effects, other than its capital subscribed; and if the debts are understood in this sense, viz. as the ballance of debts, there would be no inconsistency, that when the sum total of the ballance of debts exceeds the capital stock subscribed, that the receivers of dividends should be respectively answerable to pay the debts in proportion to what they receive, but unless the words, principal or capital stock or stocks undivided, or the words, sum total of debts are to be understood in the sense here affixed to them, the statute can not be explained so as to be agreeable to common sense or reason.
By the act 6th Q. Ann. c. 17. § 2. it is provided, that for the better enabling the East India Company to raise and pay the sum of 1,200,000l. advanced to the publick, the common seal of the Company shall and may be made use of to borrow any sum or sums of money, from time to time, upon account of their united stock and funds, so as the sum total of all the principal monies which at any one time shall be owing upon the security of the said seal do not exceed 1,500,000l. over and above the monies which might lawfully be borrowed thereupon before the making of this present act.
If any obscurity had in fact existed upon the footing of the former acts, this clause of the act 6 Q. Ann is sufficient to clear it up, the Company are no way restrained by the plain words and meaning of this last clause, as to the other book debts which they may owe not under the common seal, because debts under the common seal are the only ones which could interfere either with the Bank of England or with Government loans.
By the act 7th of George I. c. 5. p. 32. it is enacted, that it shall and may be lawful for the East India Company to borrow or take up money upon any contracts, bonds, &c. under their common seal, for carrying on their trade, or for lending money, by way of bottomry, so as by the monies already borrowed by them, and by the monies which they shall hereafter borrow pursuant to this act, the whole sum which they shall owe at any one time do not exceed the sum due at that time from the public to the said Company, or the sum of five millions of pounds sterling in the whole.
The plain meaning of this clause is, that the Company shall not owe, under their common seal, at any one time, a greater sum than 5,000,000l. but it neither imports nor implies any restriction upon the Company with respect to the purchasing goods upon credit, or freights due to ships, or other book debts incurred in the common course of trade without borrowing.
A criticism has been made on this clause, as if the Company could not take the benefit of borrowing to the amount of five millions under this statute, because the first part of the statute recites a plan or scheme which had been formed for incorporating nine millions of the South Sea capital stock into the stock of the East India Company, which scheme never took effect, and therefore it has been argued that the power of borrowing given to the East India Company being a part of that scheme, must fall with it.