Reports of Committees
| Published date | 01 March 1938 |
| Date | 01 March 1938 |
| DOI | http://doi.org/10.1111/j.1468-2230.1937.tb00030.x |
March, 1938 MODERN LAW REVIEW
313
REPORTS
OF
COMMITTEES
Interdepartmental Committee
on
Sharepushing
(Cmd.
5539)
In the report of the Chief Registrar of Friendly Societies for 1937
it
was
pointed out that the number of property societies
so
registered under the
Industrial and Provident Societies Acts on 30th September, 1937, was
approximately 100, of which about two-thirds were registered in 1936
and the first nine months of 1937. The share and loan capital subscribed
by the public to these societies by the end
of
1936 was ~1,400,000, but
mortgages and bank overdrafts totalled Lz,ooo,ooo. Figures for 1937 are
not yet available, but it is known that they show large increases. These
figures in themselves speak of a legal problem of some magnitude, created
by a gap in our existing Company Law, and
it
is satisfactory to learn from
the statement
oi
the Parliamentary Secretary to the Board of Trade in
the House on 15th December last that the Bill which the Government
have in contemplation will deal with property investment societies, as
well as with commodity pools, and mushroom and similar farms. Both of
the latter are recent developments which were commented upon in the
Report of the Interdepartmental Committee under the chairmanship of
Sir A. Bodkin, though they were not examined in detail, being regarded as
strictly outside their terms of reference.
The Report as a whole, however, may be regarded as
a
remarkable
manifestation
of
changing commercial morality, and
it
is significant that
all sections of the House of Commons, in the debate on 16th December,
fully approved its proposals. That some tenderness towards sharepushers
has been shown in the recent past cannot be denied. The Report points
out that of
177
firms which between 1910 and 1936 were known to
the police as engaged in or suspected of sharepushing frauds, two-thirds
were complained of between 1926 and 1936. From the 177 possible cases
there were only 37 successful prosecutions, 5 of these being by the City
Solicitor (whose functions in this respect ceased in 1926). 17 by the
Director of Public Prosecutions, and g by private persons, the remainder
being summarily dealt with. Since the publication of the Report, there
has been a notable increase in prosecutions, many of them successful,
and the sharepushers have now for the most part evacuated. It may be
regretted, however, that sharepushers should
so
long have enjoyed
so
large
a measure of immunity, and the proposals embodied in the Bodkin Report
to prevent
a
recurrence of this in the future will receive general approval.
From the purely legal point of view, the Report contains several
features of special interest. The exact analysis of the methods of the
share-tout is in places almost as exciting as a novel.
It
is a characteristic
of this type of activity that the tout
so
hypnotises his victim that the
ordinary processes of logical deduction remain temporarily in abeyance.
Apparently even acute business men in the City of London have not been
entirely immune from their activities.
A
second point of some importance in the Report is the sharp criticism
which
it
contains of the ineffectiveness of those sections of the Act of 1929
which were intended (rather optimistically) to repress sharepushers. The
precise meaning of some parts of section 356 have always been obscure,
and it certainly did not
go
far enough. The Bill which is at present being
drafted will presumably extend the existing law upon the lines suggested
in Appendix
IV
of the Report.
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