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 Front Page arrow Titles (by Subject) arrow LAW OF PRINCIPAL AND FACTOR—PETITION FOR AN ALTERATION THEREOF 12 May 1823 - The Works and Correspondence of David Ricardo, Vol. 5 Speeches and Evidence

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LAW OF PRINCIPAL AND FACTOR—PETITION FOR AN ALTERATION THEREOF 12 May 1823 - David Ricardo, The Works and Correspondence of David Ricardo, Vol. 5 Speeches and Evidence [1819]

Edition used:

The Works and Correspondence of David Ricardo, ed. Piero Sraffa with the Collaboration of M.H. Dobb (Indianapolis: Liberty Fund, 2005). Vol. 5 Speeches and Evidence 1815-1823.

Part of: The Works and Correspondence of David Ricardo, 11 vols (Sraffa ed.)

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Liberty Fund, Inc. is a private, educational foundation established to encourage the study of the ideal of a society of free and responsible individuals.


LAW OF PRINCIPAL AND FACTOR—PETITION FOR AN ALTERATION THEREOF
12 May 1823

Mr. J. Smith presented a petition from the merchants and bankers of London, praying for an alteration in the existing law of lien upon goods sent on foreign ventures. Mr. Baring said, that ‘the great inconvenience felt from the present system was, that money could not be raised by the hypothecation of goods, because it was not known to whom they belonged.... If moneywere remitted, the possession passed from the hands of the principal to the agent, and no lien was created; the same freedom was sought to be established for the circulation of merchandise.’

Mr. Ricardo1 said, he would put the case in this way: suppose an individual employed him as an agent, to dispose of goods, and that he was dishonestly inclined, and defrauded his principal; in that case, who ought to be the loser, the man who said, “I will not pay a single penny without the goods are delivered to me;” or the man who did not make any inquiry, but lent his money upon mere representations? It was not desirable that either party should lose; but one must suffer, and the sufferer ought to be the individual who did not use proper caution.

On 15 May a select committee was appointed to enquire into the question: Ricardo was a member of the committee.

[1 ]The Morning Chronicle gives a fuller report of this speech: ‘Mr. Ricardo said he would suppose a case. Suppose a foreign merchant, who knew nothing of him, were to consign goods to him as an agent, and suppose for a moment, that he (Mr. Ricardo) were a dishonest man [a laugh], and, having without authority from his principal deposited those goods as a security for an advance from a banker, were to disappear, —according to the existing law the banker would lose his money. Now, in point of justice, which of the parties ought first to suffer —the banker who had the precaution to take the goods as a security, or the foreign merchant who had trusted him (Mr. Ricardo) as his agent without proper precaution? It was certainly unjust that either party should suffer; but, if either, surely it ought to be the man who had not used proper precaution. It had been said that the person who lent the money ought to ask the person to whom he lent it whether he was an agent, or the principal? A very good observation, if the truth could be got; but who did not know the difficulty of obtaining it.’