Chapter 9

Bibliography.—The only book dealing with the subject in general, viz. K. D. Hüllmann,Städtewesen des Mittelalters(4 vols., Bonn, 1826-1828), is quite antiquated. For Germany it is best to consult Richard Schröder,Lehrbruch der deutschen Rechtsgeschichte(5th ed., Leipzig, 1907), §§ 51 and 56, where a bibliography as complete as need be is given, both of monographs dealing with variousaspects of the question, and of works on the history of individual towns. The latter alone covers two large octavo pages of small print. As a sort of complement to Schröder’s chapters may be considered, F. Keutgen,Urkunden zur städtischen Verfassungsgeschichte(Berlin, 1901 =Ausgewählte Urkunden zur deutschen Verfassungsgeschichte, by G. von Below and F. Keutgen, vol. i.), a collection of 437 select charters and other documents, with a very full index. The great work of G. L. von Maurer,Geschichte der Städteverfassung von Deutschland(4 thick vols., Erlangen, 1869-1871), contains an enormous mass of information not always treated quite so critically as the present age requires. There is an excellent succinct account for general readers by Georg von Below, “Das ältere deutsche Städtewesen und Bürgertum,”Monographien zur Weltgeschichte, vol. vi. (Bielefeld and Leipzig, 1898, illustrated). A number of the most important recent monographs have been mentioned above. As fpr Italy, the most valuable general work for the early times is still Carl Hegel,Geschichte der Städteverfassung von Italien seit der Zeit der römischen Herrschaft bis zum Ausgang des zwölften Jahrhunderts(2 small vols., Leipzig, 1847, price second-hand, M. 40), in which it was for the first time fully proved that there is no connexion between Roman and modern municipal constitutions. For the period from the 13th century it will perhaps be best to consult W. Assmann,Geschichte des Mittelalters, 3rd ed., by L. Viereck, dritte Abteilung,Die letzten beiden Jahrhunderts des Mittelalters: Deutschland, die Schweiz, und Italien, by R. Fischer, R. Scheppig and L. Viereck (Brunswick, 1906). In this volume, pp. 679-943 contain an excellent account of the various Italian states and cities during that period, with a full bibliography for each. Among recent critical contributions to the history of individual towns, the following works deserve to be specially mentioned: Robert Davidsohn,Geschichte von Florenz(Berlin, 1896-1908); down to the beginning of the 14th century; the same,Forschungen zur Geschichte von Florenz(vols. i.-iv., Berlin, 1896-1908); Heinrich Kretschmayr,Geschichte von Venedig(vol. i., Gotha, 1905, to 1205). For France, there are the works by Achille Luchaire,Les Communes françaises à l’époque des Capétiens directs(Paris, 1890), and Paul Viollet, “Les Communes françaises au moyen âge,”Mémoires de l’Académie des Inscriptions et Belles-lettres, tome xxxvi. (Paris, 1900). There are, of course, also accounts in the great works on French institutions by Flach, Glasson, Viollet, Luchaire, but perhaps the one in Luchaire’sManuel des institutions françaises, période des Capétiens directs(Paris, 1892) deserves special recommendation. Another valuable account for France north of the Loire is that contained in the great work by Karl Hegel,Städte und Gilden der germanischen Völker im Mittelaller(2 vols., Leipzig, 1891; seeEnglish Historical Review, viii. 120-127). Of course, there are also numerous monographs, among which the following may be mentioned: Édouard Bonvalot,Le Tiers État d’après la charte de Beaumont et ses filiales(Paris, 1884); and A. Giry,Les Êtablissements de Rouen(2 vols., Paris, 1883-1885); also a collection of documents by Gustave Fagniez,Documents relatifs à l’histoire de l’industrie et du commerce en France(2 vols., Paris, 1898, 1900). Some valuable works on the commercial history of southern Europe should still be mentioned, such as W. Heyd,Geschichte des Levantehandels im Mittelalter(2 vols., Stuttgart, 1879; French edition by Furcy Raynaud, 2 vols., Paris, 1885 seq., improved by the author), recognized as a standard work; Adolf Schaube,Handelsgeschichte der romanischen Völker des Mittelmeergebietes bis zum Ende der Kreuzzüge(Munich and Berlin, 1906); Aloys Schulte,Geschichte des mittelalterlichen Handels und Verkehrs zwischen Westdeutschland und Italien mit Ausschluss Venedigs(2 vols., Leipzig, 1900); L. Goldschmidt,Universalgesdiichte des Handelsrechts(vol. i., Stuttgart, 1891). As for the Scandinavian towns, the best guide is perhaps the book by K. Hegel,Städte und Gilden der germanischen Völker, already mentioned; but see also Dietrich Schäfer, “Der Stand der Geschichtswissenschaft im skandinavischen Norden,”Internationale Wochenschrift, November 16, 1907.

(F. K.)

1As to the former, see S. Rietschel,Die Civitas auf deutschem Boden bis zum Ausgange der Karolingerzeit(Leipzig, 1894); and, for the newly founded towns, the same author,Markt und Stadt in ihrem rechtlichen Verhältnis(Leipzig, 1897).2About theBurggraf, see S. Rietschel,Das Burggrafenamt und die hohe Gerichtsbarkeit in den deutschen Bischofsstädten während des früheren Mittelalters(Leipzig, 1905).3As to the towns as fortresses, see also F. Keutgen,Untersuchungen über den Ursprung der deutschen Stadtverfassung(Leipzig, 1895); and “Der Ursprung der deutschen Stadtverfassung” (Neue Jahrbücher für das klassische Altertum, &c, N.F. vol. v.).4See S. Rietschel,Markt und Stadt, and J. Fritz,Deutsche Stadtanlagen(Strassburg, 1894).5G. von Below,Die Entstehung der deutschen Stadtgemeinde(Düsseldorf, 1889); andDer Ursprung der deutschen Stadtverfassung(Düsseldorf, 1892).6F. Keutgen,Urkunden zur städtischen Verfassungsgeschichte, No. 74 and No. 75 (Berlin, 1901).7F. Keutgen,Ämter und Zünfte(Jena, 1903).8J. Weizsäcker,Der rheinische Bund(Tübingen, 1879).9G. v. Below,Der Untergang der mittelalterlichen Stadtwirtschaft; Über Theorien der wirtschaftlichen Entwicklung der Völker; F. Keutgen, “Hansische Handelsgesellschaften, vornehmlich des 14ten Jahrhunderts,” inVierteljahrsschrift für Sozial- und Wirtschaftsgeschichte, vol. iv. (1906).10On this whole subject see Richard Schröder,Lehrbuch der deutschen Rechtsgeschichte(5th ed., Leipzig, 1907), § 56, “Die Stadtrechte.” Also Charles Gross,The Gild Merchant(Oxford, 1890), vol. i. Appendix E, “Affiliation of Medieval Boroughs.”11H. Kretschmayr,Geschichte von Venedig, vol. i. (Gotha, 1905).

2About theBurggraf, see S. Rietschel,Das Burggrafenamt und die hohe Gerichtsbarkeit in den deutschen Bischofsstädten während des früheren Mittelalters(Leipzig, 1905).

3As to the towns as fortresses, see also F. Keutgen,Untersuchungen über den Ursprung der deutschen Stadtverfassung(Leipzig, 1895); and “Der Ursprung der deutschen Stadtverfassung” (Neue Jahrbücher für das klassische Altertum, &c, N.F. vol. v.).

4See S. Rietschel,Markt und Stadt, and J. Fritz,Deutsche Stadtanlagen(Strassburg, 1894).

5G. von Below,Die Entstehung der deutschen Stadtgemeinde(Düsseldorf, 1889); andDer Ursprung der deutschen Stadtverfassung(Düsseldorf, 1892).

6F. Keutgen,Urkunden zur städtischen Verfassungsgeschichte, No. 74 and No. 75 (Berlin, 1901).

7F. Keutgen,Ämter und Zünfte(Jena, 1903).

8J. Weizsäcker,Der rheinische Bund(Tübingen, 1879).

9G. v. Below,Der Untergang der mittelalterlichen Stadtwirtschaft; Über Theorien der wirtschaftlichen Entwicklung der Völker; F. Keutgen, “Hansische Handelsgesellschaften, vornehmlich des 14ten Jahrhunderts,” inVierteljahrsschrift für Sozial- und Wirtschaftsgeschichte, vol. iv. (1906).

10On this whole subject see Richard Schröder,Lehrbuch der deutschen Rechtsgeschichte(5th ed., Leipzig, 1907), § 56, “Die Stadtrechte.” Also Charles Gross,The Gild Merchant(Oxford, 1890), vol. i. Appendix E, “Affiliation of Medieval Boroughs.”

11H. Kretschmayr,Geschichte von Venedig, vol. i. (Gotha, 1905).

COMMUNISM,the name loosely given to schemes of social organizations depending on the abolition of private property and its absorption into the property of a community as such. It is a form of what is now generally called socialism (q.v.), the terminology of which has varied a good deal according to time and place; but the expression “communism” may be conveniently used, as opposed to “socialism” in its wider political sense, or to the political and municipal varieties known as “collectivism,” “state socialism,” &c., in order to indicate more particularly the historical schemes propounded or put into practice for establishing certain ideally arranged communities composed of individuals living and working on the basis of holding their property in common. It has nothing, of course, to do with the Paris Commune, overthrown in May 1871, which was a political and not an economic movement. Communistic schemes have been advocated in almost every age and country, and have to be distinguished from mere anarchism or from the selfish desire to transfer other people’s property into one’s own pockets. The opinion that a communist is merely a man who has no property to lose, and therefore advocates a redistribution of wealth, is contrary to the established facts as to those who have historically supported the theory of communism. The Corn-law Rhymer’s lines on this subject are amusing, but only apply to the baser sort:—

“What is a Communist! One that hath yearningsFor equal division of unequal earnings.Idler or bungler, or both, he is willingTo fork out his penny and pocket your shilling.”

“What is a Communist! One that hath yearnings

For equal division of unequal earnings.

Idler or bungler, or both, he is willing

To fork out his penny and pocket your shilling.”

This is the communist of hostile criticism—a criticism, no doubt, ultimately based on certain fundamental facts in human nature, which have usually wrecked communistic schemes of a purely altruistic type in conception. But the great communists, like Plato, More, Saint-Simon, Robert Owen, were the very reverse of selfish or idle in their aims; and communism as a force in the historical evolution of economic and social opinion must be regarded on its ideal side, and not merely in its lapses, however natural the latter may be in operation, owing to the defects of human character. As a theory it has inspired not only some of the finest characters in history, but also much of the gradual evolution of economic organization—especially in the case of co-operation (q.v.); and its opportunities have naturally varied according to the state of social organization in particular countries. The communism of the early Christians, for instance, was rather a voluntary sharing of private property than any abnegation of property as such. The Essenes and the Therapeutae, however, in Palestine, had a stricter form of communism, and the former required the surrender of individual property; and in the middle ages various religious sects, followed by the monastic orders, were based on the communistic principle.

Communistic schemes have found advocates in almost every age and in many different countries. The one thing that is shared by all communists, whether speculative or practical, is deep dissatisfaction with the economic conditions by which they are surrounded. In Plato’sRepublicthe dissatisfaction is not limited to merely economic conditions. In his examination of the body politic there is hardly any part which he can pronounce to be healthy. He would alter the life of the citizens of his state from the very moment of birth. Children are to be taken away from their parents and nurtured under the supervision of the state. The old nursery tales, “the blasphemous nonsense with which mothers fool the manhood out of their children,” are to be suppressed. Dramatic and imitative poetry are not to be allowed. Education, marriage, the number of births, the occupations of the citizens are to be controlled by the guardians or heads of the state. The most perfect equality of conditions and careers is to be preserved; the women are to have similar training with the men, no careers and no ambition are to be forbidden to them; the inequalities and rivalries between rich and poor are to cease, because all will be provided for by the state. Other cities are divided against themselves. “Any ordinary city, however small, is in fact two cities, one the city of the poor, the other of the rich, at war with one another” (Republic, bk. iv. p. 249, Jowett’s translation). But this ideal state is to be a perfect unit; although the citizens are divided into classes according to their capacity and ability, there is none of the exclusiveness of birth, and no inequality is to break the accord which binds all the citizens, both male and female, together into one harmonious whole. The marvellous comprehensiveness of the scheme for the government of this ideal state makes it belong as much to the modern as to the ancient world. Many of the social problems to which Plato draws attention are yet unsolved, and some are in process of solution in the direction indicated by him. He is not appalled by the immensity of the task which he has sketched out for himself and his followers. He admits that there are difficulties to be overcome, but he says in a sort of parenthesis, “Nothing great is easy.” He refuses to be satisfied with half measures and patchwork reforms. “Enough, my friend! but what is enough while anything remains wanting?” These sentences indicate the spirit in which philosophical as distinguished from practical communists from the time of Plato till to-day have undertaken to reconstruct human society.

Sir Thomas More’sUtopiahas very many of the characteristics ofThe Republic. There is in it the same wonderful power of shaking off the prejudices of the place and time in which it was written. The government of Utopia is described as founded on popular election; community of goods prevailed, the magistrates distributed the instruments of production among the inhabitants, and the wealth resulting from their industry was shared by all. The use of money and all outward ostentation of wealth were forbidden. All meals were taken in common, and they were rendered attractive by the accompaniment of sweet strains of music, while the air was filled by the scent of the most delicate perfumes. More’s ideal state differs in one important respect from Plato’s. There was no community of wives in Utopia. The sacredness of the family relation and fidelity to the marriage contract were recognized by More as indispensable to the well-being of modern society. Plato, notwithstanding all the extraordinary originality with which he advocated the emancipation of women, was not able to free himself from the theory and practice of regarding the wife as part and parcel of the property of her husband. The fact, therefore, that he advocated community of property led him also to advocate community of wives. He speaks of “thepossession and useof women and children,” and proceeds to show how this possession and use must be regulated in his ideal state. Monogamy was to him mere exclusive possession on the part of one man of a piece of property which ought to be for the benefit of the public. The circumstance that he could not think of wives otherwise than as the property of their husbands only makes it the more remarkable that he claimed for women absolute equality of training and careers. The circumstance that communists have so frequently wrecked their projects by attacking marriage and advocating promiscuous intercourse between the sexes may probably be traced to the notion which regards a wife as being a mere item among the goods and chattels of her husband. It is not difficult to find evidence of the survival of this ancient habit of mind. “I will be master of what is mine own,” says Petruchio. “She is my goods, my chattels.”

The Perfectionists of Oneida, on the other hand, held that there was “no intrinsic difference between property in persons and property in things; and that the same spirit which abolished exclusiveness in regard to money would abolish, if circumstances allowed full scope to it, exclusiveness in regard to women and children” (Nordhoff’sCommunistic Societies of the United States). It is this notion of a wife as property that is responsible for the wild opinions communists have often held in favour of a community of wives and the break-up of family relations. If they could shake off this notion and take hold of the conception of marriage as a contract, there is no reason why their views on the community of property should lead them to think that this contract should not include mutual fidelity and remain in force during the life of the contracting parties. It was probably not this conception of the marriage relation so much as the influence of Christianity which led More to discountenance community of wives in Utopia. It is strange that the same influence did not make him include the absence of slavery as one of the characteristics of his ideal state. On the contrary, however, we find in Utopia the anomaly of slavery existing side by side with institutions which otherwise embody the most absolute personal, political and religious freedom. The presence of slaves in Utopia is made use of to get rid of one of the practical difficulties of communism, viz. the performance of disagreeable work. In a society where one man is as good as another, and the means of subsistence are guaranteed to all alike, it is easy to imagine that it would be difficult to ensure the performance of the more laborious, dangerous and offensive kinds of labour. In Utopia, therefore, we are expressly told that “all the uneasy and sordid services” are performed by slaves. The institution of slavery was also made supplementary to the criminal system of Utopia, as the slaves were for the most part men who had been convicted of crime; slavery for life was made a substitute for capital punishment.

In many respects, however, More’s views on the labour question were vastly in advance of his own time. He repeats the indignant protest of theRepublicthat existing society is a warfare between rich and poor. “The rich,” he says, “desire every means by which they may in the first place secure to themselves what they have amassed by wrong, and then take to their own use and profit, at the lowest possible price, the work and labour of the poor. And so soon as the rich decide on adopting these devices in the name of the public, then they become law.” One might imagine these words had been quoted from the programme of The International (q.v.), so completely is their tone in sympathy with the hardships of the poor in all ages. More shared to the full the keen sympathy with the hopeless misery of the poor which has been the strong motive power of nearly all speculative communism. The life of the poor as he saw it was so wretched that he said, “Even a beast’s life seems enviable!” Besides community of goods and equality of conditions, More advocated other means of ameliorating the condition of the people. Although the hours of labour were limited to six a day there was no scarcity, for in Utopia every one worked; there was no idle class, no idle individual even. The importance of this from an economic point of view is insisted on by More in a passage remarkable for the importance which he attaches to the industrial condition of women. “And this you will easily apprehend,” he says, “if you consider how great a part of all other nations is quite idle. First, women generally do little, who are the half of mankind.” Translated into modern language his proposals comprise universal compulsory education, a reduction of the hours of labour to six a day, the most modern principles of sanitary reform, a complete revision of criminal legislation, and the most absolute religious toleration. The romantic form which Sir Thomas More gave to his dream of a new social order found many imitators. TheUtopiamay be regarded as the prototype of Campanella’sCity of the Sun, Harrington’sOceana, Bacon’sNova Atlantis, Defoe’sEssay on Projects, Fénelon’sVoyage dans l’Île des Plaisirs, and other works of minor importance.

All communists have made a great point of the importance of universal education. All ideal communes have been provided by their authors with a perfect machinery for securing the education of every child. One of the first things done in every attempt to carry communistic theories into practice has been to establish a good school and guarantee education to every child. The first impulse to national education in the 19th century probably sprang from the very marked success of Robert Owen’s schools in connexion with the cotton mills at New Lanark. Compulsory education, free trade, and law reform, the various movements connected with the improvement of the condition of women, have found their earliest advocates among theoretical and practical communists. The communists denounce the evils of the present state of society; the hopeless poverty of the poor, side by side with the self-regarding luxury of the rich, seems to them to cry aloud to Heaven for the creation of a new social organization. They proclaim the necessity of sweeping away the institution of private property, and insist that this great revolution, accompanied by universal education, free trade, a perfect administration of justice, and a due limitation of the numbers of the community, would put an end to half the self-made distress of humanity.

The various communistic experiments in America are the most interesting in modern times, opportunities being naturally greater there for such deviations from the normal forms of regulations as compared with the closely organized states of Europe, and particularly in the means of obtaining land cheaply for social settlements with peculiar views. They have been classified by Morris Hillquit (History of Socialism in the United States, 1903) as (1) sectarian, (2) Owenite, (3) Fourieristic, (4) Icarian.

1. The oldest of the sectarian group was the society of the Shakers (q.v.), whose first settlement at Watervliet was founded in 1776. The Harmony Society or Rappist Community was introduced into Pennsylvania by George Rapp (1770-1847) from Württemberg in 1804, and in 1815 they moved to a settlement (New Harmony) in Indiana, returning to Pennsylvania again in 1824, and founding the village of Economy, from which they werealso known as Economites. Emigrants from Württemberg also founded the community of Zoar in Ohio in 1817, being incorporated in 1832 as the Society of Separatists of Zoar; it was dissolved in 1898. The Amana (q.v.) community, the strongest of all American communistic societies, originated in Germany in the early part of the 18th century as “the True Inspiration Society,” and some 600 members removed to America in 1842-1844. The Bethel (Missouri) and Aurora (Oregon) sister communities were founded by Dr Keil (1812-1877) in 1844 and 1856 respectively, and were dissolved in 1880 and 1881. The Oneida Community (q.v.), created by John Humphrey Noyes (1811-1886), the author of a famousHistory of American Socialisms(1870), was established in 1848 as a settlement for the Society of Perfectionists. All these bodies had a religious basis, and were formed with the object of enjoying the free exercise of their beliefs, and though communistic in character they had no political or strictly economic doctrine to propagate.

2. The Owenite communities rose under the influence of Robert Owen’s work at New Lanark, and his propaganda in America from 1824 onwards, the principal being New Harmony (acquired from the Rappists in 1825); Yellow Springs, near Cincinnati, 1824; Nashoba, Tennessee, 1825; Haverstraw, New York, 1826; its short-lived successors, Coxsackie, New York, and the Kendal Community, Canton, Ohio, 1826. All these had more or less short existences, and were founded on Owen’s theories of labour and economics.

3. The Fourierist communities similarly were due to the Utopian teachings of the Frenchman Charles Fourier (q.v.), introduced into America by his disciple Albert Brisbane (1809-1890), author ofThe Social Destiny of Man(1840), who was efficiently helped by Horace Greeley, George Ripley and others. The North American Phalanx, in New Jersey, was started in 1843 and lasted till 1855. Brook Farm (q.v.) was started as a Fourierist Phalanx in 1844, after three years’ independent career, and became the centre of Fourierist propaganda, lasting till 1847. The Wisconsin Phalanx, or Ceresco, was organized in 1844, and lasted till 1850. In Pennsylvania seven communities were established between 1843 and 1845, the chief of which were the Sylvania Association, the Peace Union Settlement, the Social Reform Unity, and the Leraysville Phalanx. In New York state the chief were the Clarkson Phalanx, the Sodus Bay Phalanx, the Bloomfield Association, and the Ontario Union. In Ohio the principal were the Trumbull Phalanx, the Ohio Phalanx, the Clermont Phalanx, the Integral Phalanx, and the Columbian Phalanx; and of the remainder the Alphadelphia Phalanx, in Michigan, was the best-known. It is pointed out by Morris Hillquit that while only two Fourierist Phalanxes were established in France, over forty were started in the United States.

4. The Icarian communities were due to the communistic teachings of another Frenchman, Étienne Cabet (q.v.) (1788-1856), the name being derived from his social romance,Voyage en Icarie(1840), sketching the advantages of an imaginary country called Icaria, with a co-operative system, and criticizing the existing social organization. It was his idea, in fact, of a Utopia. Robert Owen advised him to establish his followers, already numerous, in Texas, and thither about 1500 went in 1848. But disappointment resulted, and their numbers dwindled to less than 500 in 1849; some 280 went to Nauvoo, Illinois; after a schism in 1856 some formed a new colony (1858) at Cheltenham, near St Louis; others went to Iowa, others to California. The last branch was dissolved in 1895.

See also the articlesSocialism;Owen;Saint-Simon;Fourier, &c.; and the bibliography toSocialism. The whole subject is admirably covered in Morris Hillquit’s work, referred to above; and see also Noyes’sHistory of American Socialisms(1870); Charles Nordhoff’sCommunistic Societies of the United States(1875); and W. A. Hinds’sAmerican Communities(1878; 2nd edition, 1902), a very complete account.

COMMUTATION(from Lat.commutare, to change), a process of exchanging one thing for another, particularly of one method of payment for another, such as payment in money for payment in kind or by service, or of payment of a lump sum for periodical payments; for various kinds of such substitution seeAnnuity;CopyholdandTithes. The word is also used similarly of the substitution of a lesser sentence on a criminal for a greater. In electrical engineering, the word is applied to the reversal of the course of an electric current, the contrivance for so doing being known as a “commutator” (seeDynamo). In America, a “commutation ticket” on a railway is one which allows a person to travel at a lower rate over a particular route for a certain time or for a certain number of times; the person holding such a ticket is known as a “commuter.”

COMNENUS,the name of a Byzantine family which from 1081 to 1185 occupied the throne of Constantinople. It claimed a Roman origin, but its earliest representatives appear as landed proprietors in the district of Castamon (mod.Kastamuni) in Paphlagonia. Its first member known in Byzantine history isManuel Eroticus Comnenus, an able general who rendered great services to Basil II. (976-1025) in the East. At his death he left his two sons Isaac and John in the care of Basil, who gave them a careful education and advanced them to high official positions. The increasing unpopularity of the Macedonian dynasty culminated in a revolt of the nobles and the soldiery of Asia against its feeble representative Michael VI. Stratioticus, who abdicated after a brief resistance. Isaac was declared emperor, and crowned in St Sophia on the 2nd of September 1057. For the rulers of this dynasty seeRoman Empire, Later, and separate articles.

With Andronicus I. (1183-1185) the rule of the Comneni proper at Constantinople came to an end. A younger line of the original house, after the establishment of the Latins at Constantinople in 1204, secured possession of a fragment of the empire in Asia Minor, and founded the empire of Trebizond (q.v.), which lasted till 1461, when David Comnenus, the last emperor, was deposed by Mahommed II.

For a general account of the family and its alleged survivors see article “Komnenen,” by G. F. Hertzberg, in Ersch and Gruber’sAllgemeine Encyklopädie, and an anonymous monograph,Précis historique de la maison impériale des Comnènes(Amsterdam, 1784); and, for the history of the period, the works referred to underRoman Empire, Later.

COMO(anc.Comum), a city and episcopal see of Lombardy, Italy, the capital of the province of Como, situated at the S. end of the W. branch of the Lake of Como, 30 m. by rail N. by W. of Milan. Pop. (1881) 25,560; (1905) 34,272 (town), 41,124 (commune). The city lies in a valley enclosed by mountains, the slopes of which command fine views of the lake. The old town, which preserves its rectangular plan from Roman times, is enclosed by walls, with towers constructed in the 12th century. The cathedral, built entirely of marble, occupies the site of an earlier church, and was begun in 1396, from which period the nave dates: the façade belongs to 1457-1486, while the east of the exterior was altered into the Renaissance style, and richly decorated with sculptures by Tommaso Rodari in 1487-1526. The dome is an unsuitable addition of 1731 by the Sicilian architect Filippo Juvara (1685-1735), and its baroque decorations spoil the effect of the fine Gothic interior. It contains some good pictures and fine tapestries. In the same line as the façade of the cathedral are the Broletto (in black and white marble), dating from 1215, the seat of the original rulers of the commune, and the massive clock-tower. The Romanesque church of S. Abondio outside the town was founded in 1013 and consecrated in 1095; it has two fine campanili, placed at the ends of the aisles close to the apse. It occupies the site of the 5th-century church of SS. Peter and Paul. Near it is the Romanesque church of S. Carpoforo. Above it is the ruined castle of Baradello. The churches of S. Giacomo (1095-1117) and S. Fedele (12th century), both in the town, are also Romanesque, and the apses have external galleries. The Palazzo Giovio contains the Museo Civico. Como is a considerable tourist resort, and the steamboat traffic on the lake is largely for travellers. A climate station is established on the hill of Brunate (2350 ft.) above the town to the E., reached by a funicular railway. The Milanese possess many villas here. Como is an industrial town, having large silk factories and other industries (seeLombardy). It is connected with Milan by two lines of railway, one via Monza (the main line,which goes on to Chiasso—Swiss frontier—and the St Gotthard), the other via Saronno and also with Lecco and Varese.

Of the Roman Comum little remains above ground; a portion of its S.E. wall was discovered and may be seen in the garden of the Liceo Volta, 88 ft. within the later walls: later fortifications (but previous to 1127), largely constructed with Roman inscribed sepulchral urns and other fragments, had been superimposed on it. Thermae have also been discovered (see V. Barelli inNotizie degli scavi, 1880, 333; 1881, 333; 1882, 285). The inscriptions, on the other hand, are numerous, and give an idea of its importance. The statements as to the tribe which originally possessed it are various. It belonged to Gallia Cisalpina, and first came into contact with Rome in 196B.C., when M. Claudius Marcellus conquered the Insubres and the Comenses. In 89B.C., having suffered damage from the Raetians, it was restored by Cn. Pompeius Strabo, and given Latin rights with the rest of Gallia Transpadana. Shortly after this 3000 colonists seem to have been sent there; 5000 were certainly sent by Caesar in 59B.C., and the place received the name Novum Comum. It appears in the imperial period as amunicipium, and is generally spoken of as Comum simply. The place was prosperous; it had an important iron industry; and the banks of the lake were, as now, dotted with villas. It was also important as the starting-point for the journey across the lake in connexion with the Splugen and Septimer passes (seeChiavenna). It was the birthplace of both the elder and the younger Pliny, the latter of whom founded baths and a library here and gave money for the support of orphan children. There was apraefectus classis Comensisunder the late empire, and it was regarded as a strong fortress. See Ch. Hulsen in Pauly-Wissowa,Realencyclopädie, Suppl. Heft i. (Stuttgart, 1903), 326.

Como suffered considerably from the early barbarian invasions, many of the inhabitants taking refuge on the Isola Comacina off Sala, but recovered in Lombard times. It was from that period that themagistri Comaciniformed a privileged corporation of architects and sculptors, who were employed in other parts of Italy also, until, at the end of the 11th century, individuals began to come more to the front (G. T. Rivoira,Origini del l’architettura Lombarda, Rome, 1901, i. 127 f.). Como then became subject to the archbishops of Milan, but gained its freedom towards the end of the 11th century. At the beginning of the 12th century war broke out between Como and Milan, and after a ten years’ war Como was taken and its fortifications dismantled in 1127. In 1154, however, it took advantage of the arrival of Barbarossa, and remained faithful to him throughout the whole war of the Lombard League. After frequent struggles with Milan, it fell under the power of the Visconti in 1335. In 1535, like the rest of Lombardy, it fell under Spanish dominion, and in 1714 under Austrian. Thenceforth it shared the fortunes of Milan, becoming in the Napoleonic period the chief town of the department of the Lario. Its silk industry and its position at the entrance to the Alpine passes gave it some importance even then. It bore a considerable part in the national risings of 1848-1859 against Austrian rule. (T. As.)

COMO,Lake of(theLacus Lariusof the Romans, and so sometimes called Lario to the present day, though in the 4th century it is already termedLacus Comacinus), one of the most celebrated lakes in Lombardy, Northern Italy. It lies due N. of Milan and is formed by the Adda that flows through the Valtelline to the north end of the lake (here falls in the Maira or Mera, coming from the Val Bregaglia) and flows out of it at its south-eastern extremity, on the way to join the Po. Its area is 55½ sq. m., it is about 43 m. from end to end (about 30½ m. from the north end of Bellagio), it is from 1 to 2½ m. in breadth, its surface is 653 ft. above the sea, and its greatest depth is 1365 ft. A railway line now runs along its eastern shore from Colico to Lecco (24½ m.), while on its western shore Menaggio is reached by a steam tramway from Porlezza on the Lake of Lugano (8 m.). Colico, at the northern extremity, is by rail 17 m. from Chiavenna and 42 m. from Tirano, while at its southern end Como (on the St Gotthard line) is 32 m. from Milan, and Lecco about the same distance. The lake fills a remarkable depression which has been cut through the limestone ranges that enclose it, and once doubtless extended as far as Chiavenna, the Lake of Mezzola being a surviving witness of its ancient bed. Towards the south the promontory of Bellagio divides the lake into two arms. That to the south-east ends at Lecco and is the true outlet, for the south-western arm, ending at Como, is an enclosed bay. During the morning theTivanowind blows from the north, while in the afternoon theBrevawind blows from the south. But, like other Alpine lakes, the Lake of Como is exposed to sudden violent storms. Its beauties have been sung by Virgil and Claudian, while the two Plinys are among the celebrities associated with the lake. The shores are bordered by splendid villas, while perhaps the most lovely spot on it is Bellagio, built in an unrivalled position. Among the other villages that line the lake, the best-known are Varenna (E.) and Menaggio (W.), nearly opposite one another, while Cadenabbia (W.) faces Bellagio.

(W. A. B. C.)

COMONFORT, IGNACIO(1812-1863), a Mexican soldier and politician, who, after occupying a variety of civil and military posts, was in December 1855 made provisional president by Alvarez, and from December 1857 was for a few weeks constitutional president. (SeeMexico.)

COMORIN, CAPE,a headland in the state of Travancore, forming the extreme southern point of the peninsula of India. It is situated in 8° 4′ 20′ N., 77° 35′ 35′ E., and is the terminating point of the western Ghats. The village of Comorin, with the temple of Kanniyambal, the “virgin goddess,” on the coast at the apex of the headland, is a frequented place of pilgrimage.

COMORO ISLANDS,a group of volcanic islands belonging to France, in the Indian Ocean, at the northern entrance of the Mozambique Channel midway between Madagascar and the African continent. The following table of the area and population of the four largest islands gives one of the sets of figures offered by various authorities:—

There are besides a large number of islets of coral formation. Particulars of the four islands named follow.

1. Great Comoro, or Angazia, the largest and most westerly, has a length of about 38 m., with a width of about 12 m. Near its southern extremity it rises into a fine dome-shaped volcanic mountain, Kartola (Karthala), which is over 8500 ft. high, and is visible for more than 100 m. Up to about 6000 ft. it is clothed with dense vegetation. Eruptions are recorded for the years 1830, 1855 and 1858; and another eruption occurred in 1904. In the north the ground rises gradually to a plateau some 2000 ft. above the sea; from this plateau many regularly shaped truncated cones rise another 2000 ft. The centre of the island consists of a desert field of lava streams, about 1600 ft. high. The chief towns are Maroni (pop. about 2000), Itzanda and Mitsamuli; the first, situated at the head of a bay in 11° 40’ S., being the seat of the French administrator.

2. Anjuan, or Johanna, next in size, lies E. by S. of Comoro. It is some 30 m. long by 20 at its greatest breadth. The land rises in a succession of richly wooded heights till it culminates in a central peak, upwards of 5000 ft. above the sea, in 12° 14′ S., 44° 27′ E. The former capital, Mossamondu, on the N.W. coast, is substantially built of stone, surrounded by a wall, and commanded by a dilapidated citadel; it is the residence of the sultan and of the French administrator. There is a small but safe anchorage at Pomony, on the S. side, formerly used as a coal depot by ships of the British navy.

3. Mayotte, about 21 m. long by 6 or 7 m. broad, is surrounded by an extensive and dangerous coral reef. The principal heights on its extremely irregular surface are: Mavegani Mountain, which rises in two peaks to a maximum of 2164 ft., and Uchongin,2100 ft. The French headquarters are on the islet of Zaudzi, which lies within the reef in 12° 46′ S., 45° 20′ E. There are substantial government buildings and store-houses. On the mainland opposite Zaudzi is Msapéré, the chief centre of trade. Mayotte was devastated in 1898 by a cyclone of great severity.

4. Moheli or Mohilla lies S. of and between Anjuan and Grand Comoro. It is 15 m. long and 7 or 8 m. at its maximum breadth. Unlike the other three it has no peaks, but rises gradually to a central ridge about 1900 ft. in height. Fomboni (pop. about 2000) in the N.W. and Numa Choa in the S.W. are the chief towns.

All the islands possess a very fertile soil; there are forests of coco-nut palms, and among the products are rice, maize, sweet-potatoes, yams, coffee, cotton, vanilla and various tropical fruits, the papaw tree being abundant. The fauna is allied to that of Madagascar rather than to the mainland of Africa; it includes some land birds and a species of lemur peculiar to the islands. Large numbers of cattle and sheep, the former similar to the small species at Aden, are reared as well as, in Great Comoro, the zebra. Turtles are caught in abundance along the coasts, and form an article of export. The climate is in general warm, but not torrid nor unsuitable for Europeans. The dry season lasts from May to the end of October, the rest of the year being rainy. The natives are of mixed Malagasy, Negro and Arab blood. The majority are Mahommedans. The European inhabitants, mostly French, number about 600. There are some 200 British Indians, traders, in the islands. The external trade of the islands has developed since the annexation of Madagascar to France, and is of the value of about £100,000 a year. Sugar refineries, distilleries of rum, and sawmills are worked in Mayotte by French settlers. Cane sugar and vanilla are the chief exports. The islands are regularly visited by vessels of the Messageries Maritimes fleet, and a coaling station for the French navy has been established.

The islands were first visited by Europeans in the 16th century; they are marked on the map of Diego Ribero made in 1527. At that time, and for long afterwards, the dominant influence in, and the civilization of, the islands was Arab. According to tradition the islands were first peopled by Arab voyagers driven thither by tempests. The petty sultans who exercised authority were notorious slave traders. A Sakalava chief who had been driven from Madagascar by the Hovas took refuge in Mayottec.1830, and, with the aid of the sultan of Johanna, conquered the island, which for a century had been given over to civil war. French naval officers having reported on the strategic value of Mayotte, Admiral de Hell, governor of Réunion, sent an officer there in 1841, and a treaty was negotiated ceding the island to France. Possession was taken in 1843, the sultan of Johanna renouncing his claims in the same year. In 1886 the sultans of the other three islands were placed under French protection, France fearing that otherwise the islands would be taken by Germany. The French experienced some difficulty with the natives, but by 1892 had established their position. The islands, as regulated by the decree of the 9th of April 1908, are under the supreme authority of the governor-general of Madagascar. The local administration is in the hands of an official who himself governs Mayotte but is represented in the other islands by administrators. On the council which assists the governor are two nominated native notables. In 1910 the sultan of Great Comoro ceded his sovereign rights to France. In Anjuan the native government is continued under French supervision. The budgets of the four islands in 1904 came to some £30,000, that of Mayotte being about half the total. The chief sources of revenue are poll and house taxes, and, in Mayotte, a land tax.

TheIles Glorieuses, three islets 160 m. N.E. of Mayotte, with a population of some 20 souls engaged in the collection of guano and the capture of turtles, were in 1892 annexed to France and placed under the control of the administrator of Mayotte.

SeeNotice sur Mayotte et les Comores, by Emile Vienne, one of the memoirs on the French colonies prepared for the Paris Exhibition of 1900;Le Sultanat d’Anjouan, by Jules Repiquet (Paris, 1901), a systematic account of the geography, ethnology and history of Johanna;Les colonies françaises(Paris, 1900), vol. ii. pp. 179-197, in which the story of the archipelago is set forth by various writers; an account of the islands by A. Voeltzkow in theZeitschriftof the Berlin Geog. Soc. (No. 9, 1906), andCarte des Iles Comores, by A. Meunier (Paris, 1904).

COMPANION(through the O. Fr.compaignonorcompagnon, from the Late Lat.companio,—cum, with, andpanis, bread,—one who shares meals with another; the word has been wrongly derived from the Late Lat.compagnus, one of the samepagusor district), a mess-mate or “comrade” (a term which itself has a similar origin, meaning one who shares the samecameraor room). “Companion” is particularly used of soldiers, as in the expression “companion in arms,” and so is the title of the lowest rank in a military or other order of knighthood; the word is also used of a person who lives with another in a paid position for the sake of company, and is looked on rather as a friend than a servant; and of a pair or match, as of pictures and the like. Similar in ultimate origin but directly adapted from the Fr.chambre de la compagne, and Ital.camera della compagna, the storeroom for provisions on board ship, is the use of “companion” for the framed windows over a hatchway on the deck of a ship, and also for the hooded entrance-stairs to the captain’s cabin.

COMPANY,one of a number of words like “partnership,” “union,” “gild,” “society,” “corporation,” denoting—each with its special shade of meaning—the association of individuals in pursuit of some common object. The taking of meals together was, as the word signifies (cum, with,panis, bread,) a characteristic of the early company. Gild had a similar meaning: but this characteristic, though it survives in the Livery company (seeLivery Companies), has in modern times disappeared. The word “company” is now monopolized—in British usage—by two great classes of companies—(1) the joint stock company, constituted under the Companies (Consolidation) Act 1908, which consolidated the various acts from 1862 to 1907, and (2) the “public company,” constituted under a special act to carry on some work of public utility, such as a railway, docks, gasworks or waterworks, and regulated by the Companies Clauses Acts 1845 and 1863.

1.Joint Stock Companies.

The joint stock company may be defined as an association of persons incorporated to promote by joint contributions to a common stock the carrying on of some commercial enterprise. Associations formed not for “the acquisition of gain” but to promote art, science, religion, charity or some other useful or philanthropic object, though they may be constituted under the Companies (Consolidation) Act 1908, seldom call themselves companies, but adopt some name more appropriate to express their objects, such as society, club, institute, college or chamber. The joint stock company has had a long history which can only be briefly sketched here. The name of “joint stock company” is—or was—used to distinguish such a company from the “regulated company,” which did not trade on a joint stock but was in the nature of a trade gild, the members of which had a monopoly of foreign trade with particular countries or places (see Adam Smith,Wealth of Nations, bk. v. ch. i. pt. iii.).

The earliest kind of joint stock company is the chartered (seeChartered Companies). The grant of a charter is one of the exclusive privileges of the crown, and the crown has from time to time exercised it in furtherance of trading enterprise. Examples of such grants are the Merchant Adventurers of England, chartered by Richard II. (1390); the East India Co., chartered by Queen Elizabeth (1600); the Bank of England, chartered by William and Mary (1694); the Hudson’s Bay Co.; the Royal African Co.; the notorious South Sea Co.; and in later times the New Zealand Co., the North Borneo Co., and the Royal Niger Co. Chartered companies had, however, several disadvantages. A charter was not easily obtainable. It was costly. The members could not be made personally liable for the debts of the company: and once created—though only for defined objects—such a company was invested with entire independence and could not be kept to the conditions imposed by the grant, which was against public policy. A new form of commercial association was wanted, free from these defects, and it was found in the common lawcompany—the lineal ancestor of the modern trading company. The common law company was not an incorporated association: it was simply a great partnership with transferable shares. Companies of this kind multiplied rapidly towards the close of the 17th century and the beginning of the 18th century, but they were regarded with strong disfavour by the law, for reasons not very intelligible to modern notions; the chief of these reasons being that such companies purported to act as corporate bodies, raised transferable stock, used charters for purposes not warranted by the grant, and were—or were supposed to be—dangerous and mischievous, tending (in the words of the preamble of the Bubble Act) to “the common grievance, prejudice and inconvenience of His Majesty’s subjects or great numbers of them in trade, commerce or other lawful affairs.” They were too often—and this no doubt was the real ground of the prejudice against them—utilized by unprincipled persons to promote fantastic and often fraudulent schemes. Matthew Green, in his poem “The Spleen,” notes how

“Wrecks appear each day,And yet fresh fools are cast away.”

“Wrecks appear each day,

And yet fresh fools are cast away.”

The result was that by the act (6 Geo. I. c. 18) commonly known as the Bubble Act (1719) such companies were declared to be common nuisances and indictable as such. But the act, though it remained on the statute book for more than one hundred years and was not formally repealed till 1825, proved quite ineffectual to check the growth of joint stock enterprise, and the legislature, finding that such companies had to be tolerated, adopted the wiser course of regulating what it could not repress. One great inconvenience of these common law trading companies arose from their being unincorporated. They were formed of large fluctuating bodies of individuals, and a person dealing with them did not know with whom he was contracting or whom he was to sue. This evil the legislature sought to rectify by empowering the crown to grant to companies by letters patent without incorporation the privilege of suing and being sued by a public officer. Ten years afterwards—in 1844—a more important line of policy was adopted, and all companies with some exceptions were enabled to obtain a certificate of incorporation without applying for a charter or special act. The act of 1862 carried this policy one step farther by prohibiting all associations of more than twenty persons from carrying on business without registering under the act. These were all useful amendments, but they were amendments of form rather than substance. The real vitality of joint stock enterprise lies in the co-operative principle, and the natural growth and expansion of this fruitful principle was checked until the middle of the 19th century by the notorious risks attaching to unlimited liability. In the case of an ordinary partnership, though their liability is unlimited (or was until the Limited Partnerships Act 1907), the partners can generally tell what risks they are incurring. Not so the shareholders of a company. They delegate the management of their business to a board of directors, and they may easily find themselves committed by the fraud or folly of its members to engagements which in the days of unlimited liability meant ruin. Failures like those of Overend and Gurney, and of the Glasgow Bank, caused widespread misery and alarm. It was not until limited liability had been grafted on the stock of the co-operative system that the real potency of the principle of industrial co-operation became apparent. We owe the adoption of the limited liability principle to the clear-sightedness of Lord Sherbrooke—then Mr Robert Lowe—and to the vigorous advocacy of Lord Bramwell. We owe it to Lord Bramwell also that the principle was made a feasible one. The practical difficulty was how to bring home to persons dealing with the company notice that the liability of the shareholders was limited. Lord Bramwell solved the problem by a happy suggestion—“write it on my tombstone,” he said humorously to a friend. This was that the company should add to its name the word “Limited “—paint it up on its premises, and use it on all invoices, bills, promissory notes and other documents. The proposal was adopted by the Legislature and has worked successfully. While limited companies have been multiplying at the rate of over 4000 a year, the unlimited company has become practically an extinct species. The growth of limited companies is, indeed, one of the most striking phenomena of our day. Their number may be estimated at quite 40,000. Their paid-up capital amounts to the stupendous sum of £1,850,000,000 and, what is even more significant, as the 1st Viscount Goschen remarks in hisEssays and Addresses, is that “the number of shareholders has grown in a much greater ratio than the colossal growth of the aggregate capital. The profits and risks of nearly every kind of business have been spread from year to year over fresh thousands of individuals, and the middle class with moderate incomes are more and more participating in that accumulation of wealth from business of every description which formerly built up the fortunes of individual traders or of bankers or of single families.”

It is with the limited company then—the company limited by shares—as the normal type and incomparably the most important, that this article mainly deals.

Companies Limited by Shares.—The Companies Act 1862, was intended to constitute a comprehensive code of law applicable to joint stock trading companies for the whole of the United Kingdom. Recognizing the mischief above alluded to—of trading concerns being carried on by large and fluctuating bodies, the act begins by declaring that no company, association or partnership, consisting of more than twenty persons, or ten in the case of banking, shall be formed after the commencement of the act for the purpose of carrying on any business which has for its object the acquisition of gain by the company, association or partnership, or by the individual members thereof, unless it is registered as a company under the act, or is formed in pursuance of some other act of parliament or of letters patent, or is a company engaged in working mines within and subject to the jurisdiction of the Stannaries. Broadly speaking, the meaning of the act is that all commercial undertakings, as distinguished from literary or charitable associations, shall be registered. “Business” has a more extensive signification than “trade.” Having thus cleared the ground the act goes on to provide in what manner a company may be formed under the act. The machinery is simple, and is described as follows:—

“Any seven or more persons associated for any lawful purpose may, by subscribing their names to a memorandum of association and otherwise complying with the requisitions of this act in respect of registration, form an incorporated company with or without limited liability” (§ 6). It is not necessary that the subscribers should be traders nor will the fact that six of the subscribers are mere dummies, clerks or nominees of the seventh affect the validity of the company; so the House of Lords decided inSalomonv.Salomon & Co., 1897, A. C. 22.

The document to be subscribed—the Memorandum of Association—corresponds, in the case of companies formed under the Companies Act 1862, to the charter or deed of settlement in the case of other companies. The form of it isMemorandum of Association.given in the schedule to the act, and varies slightly according as the company is limited by shares or guarantee, or is unlimited. (See the 3rd schedule to the Consolidation Act 1908, forms A, B, C, D.) It is required to state, in the case of a company limited by shares, the five following matters:—

1. The name of the proposed company, with the addition of the word “limited” as the last word in such name.

2. The part of the United Kingdom, whether England, Scotland or Ireland, in which the registered office of the company is proposed to be situate.

3. The objects for which the proposed company is to be established.

4. A declaration that the liability of the members is limited.

5. The amount of capital with which the company proposes to be registered, divided into shares of a certain fixed amount.

No subscriber of the memorandum is to take less than one share, and each subscriber is to write opposite his name the number of shares he takes.

These five matters the legislature has deemed of such intrinsic importance that it has required them to be set out in thecompany’s Memorandum of Association. They are the essential conditions of incorporation, and as such they must not only be stated, but the policy of the legislature has made them with certain exceptions unalterable.

The most important of these five conditions is the third, and its importance consists in this, that the objects defined in the memorandum circumscribe the sphere of the company’s activities. This principle, which is one of public policy and convenience, and is known as the “ultra viresdoctrine,” carries with it important consequences, because every act done or contract made by a companyultra vires,i.e.in excess of its powers, is absolutely null and void. The policy, too, is a sound one. Shareholders contribute their money on the faith that it is to be employed in prosecuting certain objects, and it would be a violation of good faith if the company,i.e.the majority of shareholders, were to be allowed to divert it to something quite different. So strict is the rule that not even the consent of every individual shareholder can give validity to anultra viresact.

The articles of association are the regulations for internal management of the company—the terms of the partnership agreed upon by the shareholders among themselves. A model or specimen set of articles known as Table AArticles of Association.was given by the Companies Act 1862, and is appended in a revised form to the Companies (Consolidation) Act 1908. When a company is to be registered the memorandum of association accompanied by a copy of the articles is taken to the office of the registrar of joint stock companies at Somerset House, together with the following documents:—

1. A list of persons who have consented to be directors of the company (fee stamp 5s.).

2. A statutory declaration by a solicitor of the High Court engaged in the formation of the company, or by a person named in the articles of association as a director or secretary of the company, that the requisitions of the act in respect of registration and of matters precedent and incidental thereto have been complied with (fee stamp 5s.).

3. A statement as to the nominal share capital (stamped with anad valoremduty of 5s. per £100).

4. If no prospectus is to be issued, a company must now (Companies Act 1907, s. 1; Consolidation Act 1908, s. 82) in lieu thereof file with the registrar a statement, in the form prescribed by the 1st schedule to the act, of all the material facts relating to the company. Till this has been done the company cannot allot any shares or debentures.

If these documents are in order the registrar registers the company and issues a certificate of incorporation (see Companies (Consolidation) Act 1908, sect. 82); on registration, the memorandum and articles of association become public documents, and any person may inspect them on payment of a fee of one shilling. This has important consequences, because every person dealing with the company is presumed to be acquainted with its constitution, and to have read its memorandum and articles. The articles also, upon registration, bind the company and its members to the same extent as if each member had subscribed his name and affixed his seal to them.

The total cost of registering a company with a capital of £1000 is about £7; £10,000 about £34; £100,000 about £280.

The capital which is required to be stated in the memorandum of association, and which represents the amount which the company is empowered to issue, is what is known as the nominal capital. This nominal capital must beCapital.distinguished from the subscribed capital. Subscribed capital is the aggregate amount agreed to be paid by those who have taken shares in the company. Under the Companies Act 1900, Companies Act 1908, s. 85, a “minimum subscription” may be fixed by the articles, and if it is the directors cannot go to allotment on less: if it is not, then the whole of the capital offered for subscription must be subscribed. A company may increase its capital, consolidate it, subdivide it into shares of smaller amount and convert paid-up shares into stock. It may also, with the sanction of the court, otherwise reorganize its capital (Companies Act 1907, s. 39; Companies (Consolidation) Act 1908, s. 45), and for this purpose modify its Memorandum of Association; but a limited company cannot reduce its capital either by direct or indirect means without the sanction of the court. The inviolability of the capital is a condition of incorporation—the price of the privilege of trading with limited liability, and by no subterfuge will a company be allowed to evade this cardinal rule of policy, either by paying dividends out of capital, or buying its own shares, or returning money to shareholders. But the prohibition against reduction means that the capital must not be reduced by the voluntary act of the company, not that a company’s capital must be kept intact. It is embarked in the company’s business, and it must run the risks of such business. If part of it is lost there is no obligation on the company to replace it and to cease paying dividends until such lost capital is repaid. The company may in such a case write off the lost capital and go on trading with the reduced amount. But for this purpose the sanction of the court must be obtained by petition.

A share is an aliquot part of a company’s nominal capital. The amount may be anything from 1s. to £1000. The tendency of late years has been to keep the denomination low, and so to appeal to a wider public. Shares of £100, orShares.even £10, are now the exception. The most common amount is either £1 or £5. Shares are of various kinds—ordinary, preference, deferred, founders’ and management. Into what classes of shares the original capital of the company shall be divided, what shall be the amount of each class, and their respective rights, privileges and priorities, are matters for the consideration of the promoters of the company, and must depend on its special circumstances and requirements.

A company may issue preference shares even if there is no mention of them in the Memorandum of Association, and any preference or special privilege so given to a class of shares cannot be interfered with on any reorganization of capital except by a resolution passed by a majority of shareholders of that class representing three-fourths of the capital of that class (Companies (Consolidation) Act 1908, s. 45). The preference given may be as to dividends only, or as to dividends and capital. The dividend, again, may be payable out of the year’s profits only, or it may be cumulative, that is, a deficiency in one year is to be made good out of the profits of subsequent years. Prima facie, a preferential dividend is cumulative. For issuing preference shares the question for the directors is, what must be offered to attract investors. Preference shareholders are given by the Companies Act 1907, s. 23; Companies (Consolidation) Act 1908, s. 114, the right to inspect balance sheets. Founders’ shares—which originated with private companies—are shares which usually take the whole or half the profits after payment of a dividend of 7 or 10% to the ordinary shareholders. They are much less in favour than they used to be.

The machinery of company formation is generally set in motion by a person known as a promoter. This is a term of business, not law. It means, to use Chief Justice Cockburn’s words, a person “who undertakes to formPromoters and promotion.a company with reference to a given project and to set it going, and who takes the necessary steps to accomplish that purpose.” Whether what a person has done towards this end constitutes him a promoter or not, is a question of fact; but once an affirmative conclusion is reached, equity clothes such promoter with a fiduciary relation towards the company which he has been instrumental in creating. This doctrine is now well established, and its good sense is apparent when once the position of the promoter towards the company is understood. Promoters—to use Lord Cairns’s language inErlangerv.New Sombrero Phosphate Co., 3 A. C. 1236—“have in their hands the creation and moulding of the company. They have the power of defining how and when and in what shape and under what supervision it shall start into existence and begin to act as a trading corporation.” Such a control over the destinies of the company involves correlative obligations towards it, and one of these obligations is that the promoter must not take advantage of the company’s helplessness. A promotermay sell his property to the company, but he must first see that the company is furnished with an independent board of directors to protect its interests and he must make full and fair disclosure of his interest in order that the company may determine whether it will or will not authorize its trustee or agent (for such the promoter in equity is) to make a profit out of the sale. It is not a sufficient disclosure in such a case for the promoter merely to refer in the prospectus to a contract which, if read by the shareholders, would inform them of his interest. They are under no obligation to inquire. It is for the promoter to bring home notice, not constructive but actual, to the shareholders.

When a company is promoted for acquiring property—to work a mine or patent, for instance, or carry on a going business—the usual course is for the promoter to frame a draft agreement for the sale of the property to the company or to a trustee on its behalf. The memorandum and articles of the intended company are then prepared, and an article is inserted authorizing or requiring the directors to adopt the draft agreement for sale. In pursuance of this authority the directors at the first meeting after incorporation take the draft agreement into consideration; and if they approve, adopt it. Where they do so in the exercise of an honest and independent judgment, no exception can be taken to the transaction; but where the directors happen to be nominees of the promoter, perhaps qualified by him and acting in his interest, the situation is obviously open to grave abuse. It is not too much, indeed, to say that the fastening of an onerous or improvident contract on a company at its start, by interested promoters acting in collusion with the directors, has been the principal cause of the scandals associated with company promotion.

Concurrently with the adoption of the contract for the acquisition of the property which is the company’sraison d’être, the directors have to consider how they will best get the company’s capital subscribed. Down to the passing of the Companies Act 1900 the usual mode of doing this was to issue a prospectus inviting the public to subscribe for shares. After the act of 1900 the prospectus fell into general disuse. In the year 1903, out of a total of 3596 companies which registered, only 358 issued a prospectus, the directors preferring, it would seem, to place the share capital through the medium of brokers, financial agents and other intermediaries rather than run the risk of incurring, personally, liability under the stringent provisions for disclosure contained in the act (s. 10). Of late the prospectus has, however, returned into favour. Under the act of 1907, incorporated in the Consolidation Act 1908 (s. 82), a company, if it does not issue a prospectus, must file a statement of all the material facts relating to the company.

A prospectus is an invitation to the public to take shares on the faith of the statements therein contained, and is thus the basis of the agreement to take the shares; there therefore rests on those who are responsible for itsProspectus.issue an obligation to act with the most perfect good faith—uberrima fides—and this obligation has been repeatedly emphasized by judges of the highest eminence. (See the observations of Kindersley, V.C., inNew Brunswick Railway Co.v.Muggeridge, 1860, 1 Dr. & Sm. 383, and of Lord Herschell inDerryv.Peek, 1889, 14 A. C. 376.) Directors must be perfectly candid with the public; they must not only state what they do state with strict and scrupulous accuracy, but they must not omit any fact which, if disclosed, would falsify the statements made. This is the general obligation of directors when issuing a prospectus; but on this general obligation the legislature has engrafted special requirements. By the Companies Act 1867, it required the dates and names of the parties to any contract entered into by the company or its promoters or directors before the issue of the prospectus, to be disclosed in the prospectus; otherwise the prospectus was to be deemed fraudulent. This enactment was repealed by the Companies Act 1900, but only in favour of more stringent provisions incorporated in the Consolidation Act of 1908. Now, not only is every prospectus to be signed and filed with the registrar of Joint Stock Companies before it can be issued, but the prospectus must set forth a long and elaborate series of particulars about the company—the contents of the Memorandum of Association, with the names of the signatories, the share qualification (if any) of the directors, the minimum subscription on which the directors may proceed to allotment, the shares and debentures issued otherwise than for cash, the names and addresses of the vendors, the amount paid for underwriting the company, the amount of preliminary expenses, of promotion money (if any), and the interest (if any) of every director in the promotion or in property to be acquired by the company. Neglect of this statutory duty of disclosure will expose directors to personal liability. For false or fraudulent statements—as distinguished from non-disclosure—in a prospectus directors are liable in an action of deceit or under the Directors’ Liability Act 1890, now incorporated in the act of 1908. This act was passed to meet the decision of the House of Lords inPeekv.Derry(12 A. C. 337), that a director could not be made liable in an action of deceit for an untrue statement in a prospectus, unless the plaintiff could prove that the director had made the untrue statement fraudulently. The Directors’ Liability Act enacted in substance that when once a prospectus is proved to contain a material statement of fact which is untrue, the persons responsible for the prospectus are to be liable to pay compensation to any one who has subscribed on the faith of the prospectus, unless they can prove that they had reasonable ground to believe, and did in fact believe, the statement to be true. Actions under this act have been rare, but their rarity may be due to the act having had the effect of making directors more careful in their statements.

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