178

LIMITED LIABILITY-LIMIT OF CREDIT.

made in the law from time to time. Till very recently, if a person or persons had enjoyed a right of way, or the use of side lights looking upon an adjoining property, and had been in peaceable possession of that privilege for twenty years, he could not after that be dispossessed. But by an Act passed in 1874 the term was shortened from twenty years to twelve years. Hence the necessity of closing such rights of way, or blocking up windows, the use of which is enjoyed only by sufferance, every few years, in order to prevent any piece of property from being encumbered by claims to which strangers or neighbours have no legal right, but to which they can establish a right, if these simple precautions are neglected.

Limited Liability. See Liability.

Limit of Credit. There is scarcely any doctrine in Economics of greater importance than that which relates to the Limit of Credit. Most commercial catastrophes have been caused by the overstepping of those limits, and that again has in many instances been done in consequence of the want of a clear understanding of the signs which indicate an undue Extension of Credit. Not that any one sign would of itself indicate that the Limit of Credit had been reached. It is the concurrent appearance of several signs that enables the prudent trader to guard against the coming storm; and some of these signs may with advantage be here noted. First, there is a large extension of manufacturing industry and commercial enterprise, and as there is little or no corresponding increase of metallic money in the world at these times, this great increase of business is carried on chiefly by means of credit, and instruments of credit, in the form of commercial bills. Such an increase is commonly known as the "Inflation of Credit" and is one of the first signs that the limit of credit is being approached. Secondly, since it is the business and in the interest of Bankers to watch these signs, those who interpret them most correctly, and act upon them most promptly, find it expedient to charge a higher rate of discount for their advances, in other words, when applied to by merchants to buy debts, by discounting bills of exchange, they give less for them than they have been in the habit of doing. Bills then are less freely offered, or if freely offered, bankers continue to increase the rate of discount, and thus discourage the creation of further credit. This is called in banking parlance a "Contraction of Issues." When bankers generally show an inclination to contract their issues, we have a second indication that credit is approaching its limit. Thirdly, as a consequence of Contracted Issues by the bankers, the prices of certain commodities are seen to fall. At one time it will be railway property, another mining shares, another textile fabrics, at another the shares of commercial companies. At this point, the public become aware for the first time of the storm that has been brewing, and as manufacturers and merchants cannot any longer get credit at the Banks they are obliged to sell their commodities at the low prices prevailing in order to meet bills falling

LIQUID ASSETS-LLOYD'S.

179

due day by day. This depresses prices still more, and it soon becomes obvious to the whole community, that commodities of some kinds, and perhaps of several kinds, have been produced more rapidly than they were wanted by the people. Hence this phenomenon has received the name of " Over-production," which is a third sign that the limit of credit has been very closely approached. Finally, as a co-operation of the foregoing causes, a fourth phenomenon reveals itself in the complete "Disorganization of Commerce." High rates of interest are offered for loans, while capitalists refuse to lend on any terms. Merchandise and commodities are piled up in warehouses, docks, and wharves, while thousands under the shadow of their walls, are perishing for lack of food and other necessaries of life. Everyone is offering his services in his own particular line of business, and no one can be induced to accept them. Trust and confidence which lay at the very foundation of all healthy trade, are supplanted by doubt and suspicion. These are the leading characteristics of most commercial crises which result from the abuse of credit-that is, by not restraining it within safe limits, Liquid Assets. A term used by bankers to denote coin, bank notes, and securities which can be instantly converted into cash. It excludes all bills which have several days or weeks to run, bonds and shares whose market value is depressed, so that they cannot be sold without a loss, and generally all such securities whose value cannot from any cause whatever be at once realized in an emergency.

Liquid Reserve. That portion of a Bank's Reserve which can at any moment be converted into cash, or otherwise realized. Liquid Securities. Securities that can be easily and promptly converted into cash.

Lira. From Latin, libra, the Roman pound; French, livre; Italian, lira.

The unit of value and of account in Italy according to the terms of the monetary laws of April, 1862, and July, 1866, and of the Latin Monetary Convention of 1878.

Both the gold and silver lira are identical in weight and fineness with the French Franc. It is divided into 100 centesimi. (See Franc.)

The old Lira of Tuscany was worth 7 d. sterling, and was divided into 20 Soldi; it is now superseded by the Italian coinage.

The Lira of Turkey and Egypt is of the same fineness as the English sovereign 91666, and is worth 18s. sterling. (See Medjidié.) Livre. Old French computation, value 10d.; 20 sous

Lloyd's. A name given to the place of general insurance business. from that of the proprietor of a coffee-house, formerly used for a similar purpose in Lombard Street. The concern was afterwards removed to Pope's Head Alley, where it was called New Lloyd's; and subsequently, in 1773, to some rooms in the upper part of the Royal Fxchange and the interest of it having long been

180

LLOYD'S POLICY.

purchased of the then proprietor, it has from that time been placed under the management of a committee of the members. This institution, now known simply as "Lloyd's," is devoted entirely to Marine Insurance, and to such business as is subsidiary thereto; as the classification and registration of vessels, &c.

Lloyd's Policy. The form of policy authorized by the Committee of Lloyd's.

Appended is a form of "Lloyd's Policy," the body of which is printed in Roman type, with blank spaces for the portions here filled in with Italics, as well as for the amount stated on the margin at the left. The letters S. G. are the initials of the Latin words "Salutis Gratia" (for the sake of safety.) Taken with the figures immediately below, they mean "insured-or made safe-to the extent of 1,000 pounds.

S. G.

£1,000.

or

Be it known that G. Cowen & Co. & as Agents as well in
their own name, as for and in the name and names of all
and
every other person or persons to whom the same doth,
may, or shall appertain, in part or in all, doth make
assurance and cause themselves, and them and every of
them, to be insured lost or not lost, at and from-

Genoa to London. With leave to call at any ports
or places for all purposes. Additional conditions as
attached.

upon any kind of goods and merchandises, and also upon the Body, Tackle, Apparel, Ordnance, Munition, Artillery, Boat, and other furniture, of and in the good Ship or Vessel called the Waterford whereof is Master, under God for this present Voyage, ALFRED WATSON or whosoever else shall go for Master in the said ship, or by whatsoever other name or names the same ship, or the Master thereof, is or shall be named or called, beginning the adventure upon the said Goods and Merchandises from the loading thereof aboard the said ship as above upon the said ship, &c., and shall so continue and endure, during her abode there, upon the said ship, &c., and Goods and Merchandises whatsoever, shall be arrived at as above upon the said ship, &c., until she hath moored at anchor Twentyfour Hours in good safety, and upon the Goods and Merchandises until the same be there discharged and safely landed; and it shall be lawful for the said ship, &c., in this Voyage to proceed and sail to and touch and stay at any Ports or Places whatsoever and wheresoever, &c., without prejudice to this insurance. The said Ship, &c., Goods and Merchandises, &c., for so much as concerns the Assured, by agreement between the Assured and the

LLOYD'S BOND.

181

Assurers in this Policy, are and shall be valued at as under.

Touching the Adventures and Perils which we the Assurers are contented to bear and do take upon us in this Voyage, they are of the Seas, Men of War, Fire, Enemies, Pirates, Rovers, Thieves, Jettisons, Letters of Mart and Countermart, Surprisals, Takings at Sea, Arrests, Restraints and Detainments, of all Kings, Princes, and People, of what Nation, Condition, or Quality soever, Barretry of the Master and Mariners, and of all other Perils, Losses, and Misfortunes that have or shall come to the Hurt, Detriment, or Damage of the said Goods and Merchandises and ship. &c., or any Part thereof; and in case of any Loss or Misfortune, it shall be lawful to the Assured, their Factor, Servants and Assigns to sue, labour, and travel for, in, and about the Defence, Safeguard, and Recovery of the said Goods and Merchandises and ship, &c., or any Part thereof, without Prejudice to this Insurance; to the Charges whereof we, the Assurers, will contribute each one according to the Rate and Quan. tity of his sum herein assured. And it is agreed by us, the Insurers, that this Writing or Policy of Assurance shall be of as much Force and Effect as the surest Writing or Policy of Assurance heretofore made in Lombard Street or in the Royal Exchange, or elsewhere in London. And so we the Assurers are contented, and do hereby promise and bind ourselves, each one for his own Part, our Heirs, Executors, and Goods to the Assured their Executors, Administrators, and Assigns, for the true Performance of the Premises, confessing ourselves paid the consideration due unto us for this Assurance by the Assured, at and after the Rate of Seven Shillings and Sixpence per cent.

IN WITNESS whereof, we the Assured have subscribed our names and sums assured in London, 18th December, 1879.

N.B.-Corn, Fish, Salt, Flour, and Seed, are warranted free from Average, unless general, or the ship be stranded; Sugar, Tobacco, Hemp, Flax, Hides, and Skins are warranted free from Average under Five Pounds per cent.; and all other Goods, also the Ship and Freight, are warranted free from Average under Three Pounds per cent., unless general, or the Ship be stranded.

On Merchandises, &c., valued as above.

Lloyd's Bond. A Lloyd's Bond is a form of agreement authorized by the Committee of Lloyd's. It differs from a policy, inasmuch as a policy is issued before a ship sails, and contains a promise contingent on certain eventualities. But a Lloyd's Bond supposes a ship to have returned, and to have already suffered damage; and the object of the Bond is to protect shipowners from losses as

specified in the Bond. The following is a copy of a Lloyd's Bond as amended and authorized by the committee in 1878:

of the Ship or vessel called the

the several Persons whose Names or Firms are set and subscribed hereto, being respectively Consignees of Cargo on Board the said Ship of the other part.

WHEREAS the said Ship lately arrived in the Port of
on a Voyage
and it is alleged

from
that during such voyage she met with bad weather, and
sustained damage and loss, and that sacrifices were made and
expenditure incurred which may form a Charge on the Cargo,
or some part thereof, or be the subject of a general average con-
tribution, but the same cannot be immediately ascertained; and
in the meantime it is desirable that the cargo should be delivered.
NOW THEREFORE THESE PRESENTS WITNESS and
the said Master on his own behalf, and on behalf of his owners,
in consideration of the agreement of the parties hereto of the
second part hereinafter contained, hereby agrees with the re-
spective parties hereto of the second part, that he will deliver
to them respectively their respective consignments, on payment
of the freight payable on delivery, if any, and the said parties
hereto of the second part in consideration of the said Agree-
ment of the said Master for themselves severally, and respec-
tively, and not the one for the others of them, hereby agree
with the said Master that they will pay to the said Master
or the Owners of the said Ship, the proper and respective
proportion of any general average, or particular or other charges
which may be chargeable upon their respective consignments,
or to which the Shippers or Owners of such consignments may
be liable in respect thereof to contribute to such damage loss
sacrifice or expenditure, and the said parties hereto of the
second part, further promise and agree, forthwith to furnish to
the Captain or Owner of the said Ship a correct account and
particular of the value of the goods delivered to them respec-
tively, in order that any such general average and other charges
may be ascertained and adjusted in the usual manner.

This addition to AND WHEREAS at the request of the Owner of the be made to the said Ship the parties hereto of the second part have agreement in those cases which respectively deposited or agreed to deposit in the Bank justify the shipin the joint names owner in asking nominated for a deposit.

of

of

on behalf of Shipowners and
nominated on behalf of such Depositors the sum of
£ per cent. on the amount of the estimated value
of their respective interests NOW IT IS HEREBY