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• Essays On Economics and Society 1850–1879
• The Savings of the Middle and Working Classes 1850
• The Regulation of the London Water Supply 1851
• Newman’s Political Economy 1851
• The Law of Partnership 1851
• The Income and Property Tax 1852
• The Bank Acts 1857
• The Income and Property Tax 1861
• Currency and Banking 1867
• Endowments 1869
• Thornton On Labour and Its Claims 1869
• Leslie On the Land Question 1870
• Land Tenure Reform 1871
• Property and Taxation 1873
• Chapters On Socialism 1879
• Editor’s Note
• Chapters On Socialism
• Preliminary Notice
• Introductory
• Socialist Objections to the Present Order of Society
• The Socialist Objections to the Present Order of Society Examined
• The Difficulties of Socialism
• The Idea of Private Property Not Fixed But Variable
• Appendices
• Appendix A: Mcculloch’s Discourse On Political Economy (1825)
• Appendix B: Petition On Free Trade (1841)
• Appendix C: Examination Paper In Political Economy Set By Jsm (1872)
• Appendix D: Land Tenure Reform Association: Public Lands and Commons Bill (1872)
• Appendix E: Bibliographic Index of Persons and Works Cited In the Essays, With Variants and Notes

THE LAW OF PARTNERSHIP

1851

EDITOR’S NOTE

“Appendix to the Report from the Select Committee on the Law of Partnership,” Parliamentary Papers, 1851, XVIII, 182. Signed; not republished. Original heading: “1.—Reply to Queries by J. Stuart Mill, Esq.” Not mentioned in JSM’s bibliography or Autobiography. No copy in Somerville College.

JSM’s reply was to the following “Form of Queries” (ibid., 181), which was sent to twelve respondents in all:

“It has been proposed to limit the liability of partners to the amount of their respective subscription in certain companies or partnerships duly registered.

It has been thought by some persons that such a measure, properly guarded by regulations to prevent fraud and rash speculation, may assist useful investments for the combination of capital of the middle classes, and aid useful local enterprises.

It is proposed that this measure should not extend to banking, insurance, or other employments for capital of a very speculative nature.

Such partnerships of limited liability, under certain rules, are established in France, Germany, Holland, and the United States of America.

It is desired by some parties that such partnerships should be introduced here.

Your opinion is requested on this subject, with such suggestions as you may think useful.”

The Law of Partnership

the liberty of entering into partnerships of limited liability, similar to the commandite partnerships of France and other countries, appears to me an important element in the general freedom of commercial transactions, and in many cases a valuable aid to undertakings of general usefulness.

I do not see any weight in the reasons which have been given for confining the principle to certain kinds of business, or for making certain employments an exception from it. The prohibition of commandite is, I conceive, only tenable on the principles of the usury laws, and may reasonably be abandoned since those principles have been given up. Commandite partnership is merely one of the modes of lending money, viz., at an interest dependent on, and varying with, the profits of the concern; and subject to the condition, in case of failure, of receiving nothing until other creditors have been paid in full. This mode of lending capital is evidently more advantageous than any other mode to all persons with whom the concern may have dealings; and to retain restrictions on this mode after having abandoned them on all others, appear to me inconsistent and inexpedient.

The only regulations on the subject of limited partnerships which seem to me desirable, are such as may secure the public from falling into error, by being led to believe that partners who have only a limited responsibility, are liable to the whole extent of their property. For this purpose, it would probably be expedient, that the names of the limited partners, with the amount for which each was responsible, should be recorded in a register, accessible to all persons; and it might also be recorded, whether the whole, or if not, what portion of the amount, had been paid up.

If these particulars were made generally accessible, concerns in which there were limited partners would present in some respects a greater security to the public than private firms now afford; since there are at present no means of ascertaining what portion of the funds with which a firm carries on business may consist of borrowed capital.

No one, I think, can consistently condemn these partnerships without being prepared to maintain that it is desirable that no one should carry on business with borrowed capital; in other words, that the profits of business should be wholly monopolized by those who have had time to accumulate, or the good fortune to inherit capital: a proposition, in the present state of commerce and industry, evidently absurd.