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To what extent was the rise to dominance of company law in the nineteenth and early twentieth centuries the inevitable consequence of technological advance?

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Introduction

To what extent was the rise to dominance of company law in the nineteenth and early twentieth centuries the inevitable consequence of technological advance? During this period of history, Britain experienced what came to be known as the 'second industrial revolution' - a period of major industrialization with changes to British industry as a whole, and further to this, a change in the idea of the 'company' or firm. Hand in hand with this were technological advances, which it has been said spurred on this major change to life in Britain. Industry was expanding not least because of the growing importance of other industries such as the motor trade, metals and electrical engineering, but whilst this was a major cause of the growth in industry, was it in fact the reason for the triumph of company law in the early twentieth century? In this essay I intend to explore technological advance in this period, how much of an effect it had on company law as such, and to look further at other features of this age which could have affected the rise of company law. By 1914, company law had overtaken the Joint Stock Company and the law of partnership as the most dominant form of industrial organization in Britain. As mentioned previously, this is often attributed to the increase in technological advances and the changes this made to industrial Britain. ...read more.

Middle

The 1844 act sought to eliminate the problems of fraud and exploitation that awaited unincorporated companies because of their association with the law of partnership. It required all joint stock companies to incorporate and had a system of registration and publicity. It was made abundantly clear that this act was not for the use of private companies - only for firms with transferable shares and associations of 25 or more people. The Limited Liability Bill in 1855 did little more to change this - in fact at this time incorporation with limited liability was confined to joint stock companies only because it was restricted, like the 1844 act, to associations of 25 or more people10. However, within one year a change came about which, despite the original views of the legislators, made a significant contribution to the rise of company law and private companies. The 1856 Joint Stock Companies Act extended the sphere of the company legal form with an important change - only associations of 7 people were now needed to incorporate. The legislators did not intend to open up incorporation to private companies - this is obvious not least, by the title of the act - The Joint Stock Companies Act. However, with the number of persons required set at only seven, a private company, by selling shares to family, friends or in fact even servants as was common at the time, could easily now become incorporated. ...read more.

Conclusion

far overtaken joint stock companies, thus meaning the law of company had in essence scored a triumph over the law of partnership. This issue of technological advance it seems has not been the most influential or important cause of the rise of company law, and neither, in my opinion, was the dominance of company law an 'inevitable consequence' of technological advance. The merger boom, the rise of the joint stock company, The Great Depression, private companies, the legislation of the mid 1800's and finally the Salomon case were all partially responsible for the rise of company law, and the company legal form. In fact, one can trace these events chronologically and see a pattern arising through the period of development of ideas, companies and the law. All of these factors are interrelated, the joint stock companies with the private companies, the depression with the mergers and it is important to notice that technological advance stands at one end, and company law at the other. Although not the only, nor the inevitable consequence, technological advance can perhaps be seen as the catalyst - without it there may have been no over-production, mergers and depression, but that said without out the other intervening factors there would have perhaps have been no company law. 'By the end of this period, nearly half the occupied population was in industry' 16, and this is an important indication of how influential technology and development had become with regards to it preparatory role in company law. ...read more.

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