The limitations of limited liability — how a simple legal concept caused so much success and so much harm

London in the 1855 must have been a stimulating place. A bustling city in the heart of the British Empire, it was going through an unprecedented period of growth, from one million people in 1800 to seven million people a hundred years later. There was a constant and pressing need for new infrastructure; roads, bridges, railroads and public buildings, requiring plenty of capital to fund it. The London Stock Exchange was booming. Although rewards were high for those who got lucky…