Von Jenny Marx (Tochter) geschrieben.
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Trade and Finance
 Von Marx geschrieben.
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1868.

 Von fremder Hand geschrieben.
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Marx!

[1]

 Von Jenny Marx (Tochter) geschrieben.
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August 10.
 Von Marx geschrieben.
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1868

[The Daily News, 10. August bis 16. November 1868]

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The Daily News. Nr. 6949, 10. August 1868. S. 5.
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TRADE AND FINANCE.

Aug 10. Anmerkung von Jenny Marx

THE accounts of the principal London joint-stock banks have been completed by the formal issue of the report of London and County at their meetings in the past week. The meeting of the Consolidated had been held at Manchester a little while before. Comparing the balance-sheets for six months ending June 30, 1867, with the same period of 1868, the most important items are on the whole more than ordinarily satisfactory. The customers’ balances, whence bankers’ profits are chiefly derived, have varied but little. The acceptances are essentially a fluctuating total, and convey no material information. Subjoined are the actual figures:

CUSTOMERSʼ BALANCES, ETC.
1867. 1868.
London and County £12,032,334 12,004,477
Consolidated 2,159,710 2,260,770
LIABILITIES ON ACCEPTANCES
1867. 1868.
London and County £1,397,184 1,676,317
Consolidated 128,588 200,531

It is, of course, impossible to determine how far these sums have been affected by the changes in deposits left at interest or in ordinary bankersʼ balances. Probably the difference is rather on the former side. The current rates of discount have doubtless led to a withdrawal of sums upon which 1 per cent. only was allowed. It necessarily follows that banking profits must have decreased in proportion. Hence the dividends for the two half years have been:

Per Cent. per Annum.
1867. 1868.
London and County 22 16
Consolidated 5 5

It may be observed, however, that in one case at least there has been a material addition to the capital. The reserve funds are also higher. The special fund of the Consolidated is retained to meet any loss from obligations connected with the Atlantic and Great Western Railway. The capitals and reserve funds are as under:

London and County. 1867. 1868.
Capital £880,864 £959,996
Reserve fund 380,864 459,996
Consolidated.
Capital £799,424 800,000
Reserve fund 95,000 100,000
Ditto special 10,000 30,000

As every depositor in, or creditor of a bank l(?)ooks especially to his security, it is satisfactory to find that there is no falling off in this respect. Subjoined are the sums hold, and in round figures the percentage on the liabilities:

CASH AND INVESTMENTS.
1867. 1868.
London and County £4,263,148 £4,404,234
Consolidated 600,266 626,503
PER CENTAGE ON LIABILITIES TO CUSTOMERS.
1867. 1868.
London and County 351/2 36 2-3
Consolidated 28 28

Another feature of the week is supplied by two meetings of shareholders of the Credit Foncier of England Company, naturally indignant at the loss of their money and the deceits which have been practised upon them, and as naturally sceptical of fresh promises from a fresh authority of an early dividend of from 4 to 5 per cent. One meeting, the first, decided to appoint a committee to consult with the directors as to the wisest mode of proceeding with respect to the interests of the shareholders, both as to the past and present affairs of the company. The second meeting, held the next day, showed much diversity of opinion, and strong comments were expressed upon the conduct of the Board. The result was an amicable agreement to defer further action until the committee formed the day before had presented their report.

It is well to be moderate on such excited occasions, but it is more important to be just and practical. We boast ourselves to be the first business nation of the world, but it is notorious that in foreign countries the popular verdict is against our self-estimate. The origin and fate of such an undertaking as this Credit Foncier and Mobilier Company justify their unfavourable opinion. No parallel can be drawn between this scheme and the Credit Mobilier of France, for the simple reasons that the latter was a creation of the Imperial Government, and that its management was confided to men of wealth and high financial repute. The English imitation, when started, had nothing to commend itself to public confidence. Its career has been a course of transformations both as regards name, capital, and management.

The new chairman, Mr. MOWATT, has made what he called at the last meeting of the company “a clean breast of it,” and confessed that the directors had received in cash, in addition to their salaries, a large but indefinite amount in per centage on profits which clearly have never been realized. He mentioned that the company had been paid in “stuff,” which means securities, while these fortunate individuals had coolly appropriated an enormous sum in hard money. Such was his avowal. Mr. ALBERT GRANT, he stated, had, as managing director, taken some 76,000l. of the total for his own share. The defence is that the Articles of Association provided for such remuneration; but if the shareholders would deal practically with their wrongs, they would soon find that their best remedy is a suit in equity, which would compel the production of all the books of the company. These books would easily show that the profits declared by the concern from year to year, and upon which the directors voted themselves their per centage, were utterly nominal, and that therefore on the ordinary principles of justice they must make restitution. It is quite clear that the greater part of the securities enumerated in the last report of the company were set down at fictitious values. The directors stated that they could not arrive at even an “approximate” valuation, but the notorious belief is that the major part of them are and have always been more or less unsaleable at anything like the prices affixed to them in the companyʼs accounts. All this could be easily ascertained in our law courts. Committees of Investigation are very hopeless for the most part. They involve expense and delay, and their results are generally unsatisfactory. What is wanted is an early and judicial opinion whether the monies appropriated by the board have not been unduly taken. It seems too clear that a large proportion of 2,000,000l. sterling has been lost in this disastrous undertaking, and it is beyond doubt that those managing it have largely profited at the expense of the proprietors.|

[2]

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The Daily News. Nr. 6955, 17. August 1868. S. 4/5.
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TRADE AND FINANCE.

Aug 17. Anmerkung von Jenny Marx

A BANK, whether considered publicly or privately, is a sacred trust. The depositary of millions of money from those who have no guarantee for safety but the reputed integrity and wealth of private individuals, or that terrible resource of joint stock enterprise—the uncalled capital of trusting shareholders—such an establishment should always stand like a rock, unassailable as to management, and impregnable when panics come. Many ruined homes, and many premature deaths, bear a sad testimony to the banking failures of the last twenty years; but, on the other hand, it is simple justice to say that these disastrous exceptions have been few, and that the banks of this country, whether conducted privately or as joint stock companies, have long been admirably administered, to the enrichment of their proprietors, to the help of commerce, and to the convenience of the community at large. It is much to be regretted that an institution possessing a deservedly high reputation, and a management once beyond dispute—in fact one of our leading banks, “The National Bank of Dublin and London”—should have become not only a subject for legal discussion during the last week in the County Record Court of Cork, but a ready theme for public criticism. The trial, which has brought to light within the past few days much that had better have remained untold so far as the present timid confidence of the public is concerned, is still highly instructive. The action was one of damages for libel—Sir JOSHUA NEALE M’KENNA versus Mr. THOMAS M. USBORNE, the first chairman, the second shareholder of the National Bank. The evidence is so voluminous, and the summing up of the judge, Mr. O’HAGAN, so full, clear, and conclusive, that we can only treat of a few salient features of the case, and must refer all those interested in it to the Cork journals of the past week. There they will learn from the proceedings in question that no institution that lives by credit can afford to take a speculative position, and that nothing can be more fatal to the name and prosperity of any banking establishment than the belief that its funds are used for market jobbing, or that those who preside over it occupy the double position of banker and promoter. For some years, under the chairmanship of Mr. Fowler Newsam, the National Bank enjoyed great esteem. Its shares ruled at high premiums, and its credit was impregnable. There is nothing whatever to affect the latter now, but the régime has been changed, and hence this lamentable suit at law. Sir JOSHPH MʼKENNA was the ruling spirit in Ireland, and some few years since was imported here as managing director of the Bank. Mr. NEWSAM and others quitted the scene, it is believed, to make way for the new and spirited element. Those who have gone, it is said, have left good and honourable marks upon the annals of this Bank, but what of the present state of things? Sir JOSEPH MʼKENNA brings an action for libel against Mr. USBORNE, practically for defamation, and after a long and assuredly a patient investigation, the defendant gets a verdict upon all counts. The proceedings are well worth reading. Sir. JOSEPH was more valorous than wise in undertaking this assault. Rashness is one thing, courage another, and when men go to law they should avoid impulse and be sure to have right on their side. The mingling of a bank holding the deposits of the public with the disreputable “financing” of the last few years is utterly indefensible. Imagine such house as Coutts’ or Glyn’s uniting with “the Credit Foncier and mobilier of England” to float bubble companies. More difficult is it to imagine that such an establishment as the National Bank should be allied even in name to such doubtful schemes as the Imperial Land Company of Marseilles, the Lundy Granite Company and the Peruvian Railways Company, &c. By some mysterious legerdemain, these schemes were made for very belief period to appear successful; but where are they now? The answer is very easy: they never had any real existence; the market was “rigged” by somebody, and from these facts, whoever or whatever the cause, follows the depreciated value of the National Bank as a property, and this unfortunate suit at law. It is impossible in our space to give any précis of the details of the case itself. We repeat, they are well worth reading. No excuse can be made for a banker, who ought to be the guardian of his depositors, becoming the co-operative agent of perilous speculation. Circumstances do and will arise when such a panic as that caused on “Black Friday” by the failure of Overend, Gurney, and Co. make menʼs hearts fail from fear. They do not attempt to reason with themselves. They simply hoard in fright. Bankers at such moments have to protect themselves against a panic run. Unfortunately, too many expand in the sunny speculative days when they ought to contract, and refuse legitimate accommodation when clouds come to customers they ought to aid. This is the history of the last three years. The principle of banking should be—personal experience of the customer, a certain amount of accommodation in storm or in calm to that customer, and no promoting or loan-mongering such as records of the Cork Assizes of the past week supply relative to the National Bank and its chairman, Sir JOSEPH NEALE M’KENNA.|

[3]

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The Daily News. Nr. 6961, 24. August 1868. S. 4/5.
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TRADE AND FINANCE.

Aug. Anmerkung von Jenny Marx

GOOD red English wheat was slow of sale in Mark-lane last Monday at 54s. to 58s. for old and at 56s. to 58s. for new. This was 2s. lower than the prices of the previous week, which represented an advance of 1s.; and as the crops have since been fully gathered, while imports are liberal, the reduction is hardly yet stopped. Wheat growers have done so well this season, and they can send their produce to market so rapidly, that we may look for a maintenance of home supplies until a price is reached which will induce farmers to hold rather than to realise. The price at which this may be expected is about 50s. for the descriptions named: and this price, now that the drought has passed away, will not improbably be seen by the middle of September. While it will ensure bread to consumers at reasonable and comparatively low rates, it will, for the most part, satisfy the expectation of farmers; and when these two classes are content with their position, it may safely be inferred that there will be a greater demand for manufactured commodities and raw materials generally.

That 50s. will be about the ruling price of wheat will appear from several considerations. One is the superior quality of the crops, not only England but all over the world where the harvest has been good. This is attributable to the effects of prolonged sunshine, which from the general accounts of excessive heat appears to have been universal. The ears have been swelled to their full. Of blight or disease we have heard nothing. The corn has been dried upon the spot where it was cut, and the moment it was garnered it might have been turned into bread. This quality renders old wheat less necessary, if not quite unnecessary, for mixing, and in consequence old wheat is competing with the new. As a greater breadth of land was sown last year with wheat in consequence of the full prices of 1866 and 1867, quantity is also an important element in estimating the future range of prices. We have no statistical means of ascertaining the increase in the area of land applied to wheat. We only know that it was more than in the immediately preceding years. On the whole, the farmers may be taken not only to have secured crops of high quality, but of exceptional abundance. Hitherto they have not fully shown their capacity for supplying the markets. They are only feeling them; and this process will go on until, as just observed, a price has been reached low enough to cause them to hold. That 50s. will be about the point we infer because it does not assume a fall of more than from 4s. to 6s. from present prices; and the probability of such a reduction is supported, not only by our stocks, but by the knowledge that imports will be ample. There is, however, one condition more which seems to assure us that what a week or two ago was barely possible has now become as certain as we can be of any issue yet in the future. The drought has passed away, and it has been succeeded by genial showers, intermittent: intermittent with sunshine, which have refreshed and renewed the face of the country. Land that a fortnight ago was brown and scorched is now smiling with luxuriance; and the grass that had shrivelled up promises to give another crop to repair the deficiency of the first. A great portion of our root crops will either be saved of supplemented by others of a later season. Until this change took place it was with reason thought that, though the wheat harvest was good, much of its benefit would be neutralized by the deficiency of what has been called the meat harvest, which cannot be good if the hay and root crops fail. We are now assured of feed for our live stock, which, if dear, will still be cheaper than if the drought had continued only a week longer. The weather now is improving the meat harvest, just as the weather six weeks ago was improving the wheat harvest. All this will tell, in due time, upon the price of wheat.

Under these circumstances the estimated probable price of wheat which we have made is not an unreasonable price. At this season of commercial dulness, the prospect of lower prices for the chief article of food cannot but be a point of extreme interest. We have estimated a fall of from 4s. to 6s. before the end of September, by which time men will have returned from their vacations, renewed in spirits, we trust, as well as in health. Take the mean of 5s. as the probable reduction. At this estimate a sum of more than four millions sterling will be available among our own population for buying other articles. The general dispersion of such a sum out of the pockets of consumers must have some effect upon our domestic trade; and it is quite as certain that the excellence of the harvest in all the principal countries that we trade with will enable their several peoples to buy more of our exports. To support high prices of wheat or meat, the supplies must be less than the demand. These conditions in the case of wheat are universally reversed, and we do not despair of seeing them considerably modified in the case of meat now that the risk of general failure in the grass and root crops is removed. In these conditions there is rational ground for anticipating a revival in trade, sound and unspeculative; and trade in that state will compel where it may not invite financial confidence. A 2 per cent. minimum rate of discount at the Bank of England is the expression of a state of distrust, and the last twelve months has shown that the offers of money at this rate have failed to revive business. This was because the area within which the offers were made was contracted. Low interest offered no temptation. But with enterprise encouraged and trade invigorated, through the means which the harvest will furnish to the population of supplying their wants and increasing their luxuries or enjoyments, money-lenders and money-borrowers will speedily renew their former relations, to the advantage of both and the benefit of the community.|

[4]

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The Daily News. Nr. 6967, 31. August 1868. S. 4/5.
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TRADE AND FINANCE.

Aug. 31. Anmerkung von Jenny Marx

WE referred last week to the excellence of the wheat crops, and to the consequent probability of lower prices than were then prevailing. The fluctuations in Mark-lane have confirmed this view, notwithstanding the partial firmness of Fridayʼs market; and the indications of good red English wheat receding to about 50s. a quarter are practically unmodified by the weekʼs events. The supplies from our own growers, without being pressed, are good; and they have been supplemented by considerable foreign arrivals, for which the competition is without spirit. As to the continental markets, it is only at a few places where local conditions are peculiar that full prices have been obtained, while at certain great centres, such as Marseilles and Bordeaux, business was exceedingly languid the whole of last week, through the unwillingness of buyers to pay the prices demanded. Under these circumstances we cannot anticipate a higher range of rate than that which now prevails, while all the leading indications point to a moderate, if not to substantial, reduction.

It is too early yet for trade to feel the effects of large supplies; but those effects are only temporarily delayed. They will be partially felt in the winter; but their main development may not appear until the spring of next year. Meantime it is not alone from reduced prices for cereal food that an improving trade may be anticipated; the abundance of capital, and consequent low rates of discount, must sooner or later exercise their ordinary effect. The Bank of of France is still accumulating specie on an unprecedented scale. If we refer to the condition of the Bank of England, which is held to be the reservoir from which the commerce of the country is ultimately to be supplied with the means of assistance, we find that it is in a position to render all, and more than all, the aid that may be needed. According to the last return (August 26) the Bank held 20,774,101l. of bullion, with a reserve of notes and coin amounting to 11,818,471l. At the same time its discounts and advances amounted to only 15,597,078l., while it held in private deposits 19,838,830l., This is a position which on the one hand indicates the power to render accommodation to trade without enhancing the existing rates of interest, and on the other it shows that the Bank itself would derive advantage from an enlargement in the applications for its aid. The private securities have not stood below 16,000,000l. for several years, though the private deposits have frequently been less than their present amount. Looking at the amounts of these items, and a reserve approaching 12,000,000l., there seems little chance, as far as commercial affairs are concerned, of any advance for some time to come from the minimum of 2 per cent. that has so long prevailed. It may especially be noted that the export of bullion to the Continent has ceased with the completion of the new French Loan, and thus our regular supplies from Australia and America are again taken to the Bank. Hence the stock of bullion promises before the close of the year to reach even a higher aggregate than in January last, when the total exceeded 22,000,000l.

Trade, however, is likely to be exposed to the competition of a very formidable borrower, whose necessities cannot be put off, and must be immediately supplied. This contingent borrower is the Government, which has seldom been in greater need of money than it is in the current quarter. Whatever may be the cause, whether from extravagant expenditure or from postponements in the receipt of taxes, it is a conspicuous fact that at the present moment the public balances are reduced to a point that is disagreeably, if not dangerously, low. At present we are within four weeks of the end of the quarter, and within five weeks of the time when the October dividends will be due, yet there is absolutely less than 3,000,000l. to the credit of the Government in the Bank of England! This is not a position that a State like England ought to be in at such a period; and it is inevitable that a very large sum must be borrowed from the Bank in order to enable the Government to meet its liabilities. Now the Bank, notwithstanding the satisfactory state of its reserve, cannot lend two or three millions out of it without sensibly affecting the market price of money on commercial bills; and the probability that a sum equal to the mean of these figures must be borrowed may be seen from the following statement of the Government balances in the present and the two preceding years:

PUBLIC DEPOSITS.
1868 1867 1866
July 1 £7,021,048 £9,356,727 £6,800,251
 〃 8 4,396,418 5,121,309 2,726,739
 〃 15 3,359,776 4,618,373 2,161,726
 〃 22 3,139,924 4,627,247 2,517,449
 〃 29 3,499,374 4,898,157 3,189,580
Aug. 5 3,379,081 5,189,684 3,160,456
 〃 12 3,088,830 5,508,038 3,353,525
 〃 19 2,864,334 6,526,514 3,411,639
 〃 26 2,979,410 7,350,218 4,137,048

The comparison is very unfavourable with 1867, but it is worse with 1868, because the country at that time was in the deepest depression from the collapse of the previous month of May. Discounts in 1866 were for months at 10 per cent., but in 1867, as in 1868, they had dropped to only 2 per cent. Yet when the value of money was in 1866 at an inordinately high price, the Government was able to maintain its deposits at a respectable amount, and had no occasion to borrow to pay its way in October. We do not venture to affirm that the necessities of the State will so far compete with mercantile requirements that money will rise very high in price; but the future advance, whatever it may be, will have its origin in this cause; and the competition of the State with ordinary commercial borrowers will probably last until |[5] we are well in the new financial year. To the extent, therefore, of the difference between the price of money now and its price in April next, by which time the country will have been informed what new taxes will be required to equalise the income with the expenditure, the advantages of an abundant harvest will be to some extent neutralised. We may and do lament this prospect; but the position must be accepted. The only relief consists in the fact that a good harvest is provocative of a good trade. Had the case been reversed, and to the great deficit in revenue there was superadded, as was at one time threatened, deficient crops, the financial condition of the country might have become extremely serious. As it is, it is a misfortune that just when we are commencing to recover from the disappointment and losses of the greatest commercial collapse ever known, we should be exposed to the possibility of a dearer money market—a contingency that might easily have been avoided if a more judicious economy had been the guiding principle of the present Administration.

The one great fear, however, that forms the most serious check upon a thorough revival of commerce must be looked for abroad, not at home. Scarcely a day passes without more or less open threats that Europe is about to be plunged in war, and war on a scale that will dwarf even the tremendous contests of the First Empire. It is to no purpose that now and then some official disclaimer, couched in terms of studied ambiguity, is put forth with the hopeless attempt of reassuring the commercial world. It is impossible conceive upon what ground these clumsy devices are adopted. No one, certainly not the mercantile and financial public, believes one syllable of what are complacently termed “pacific utterance.” The rulers of France know this well; and they also know that when facts are distorted to produce untrue inferences’ the fraud will not impose for a moment upon the lowest clerk in a merchantʼs counting-house. For instance, the success of the late loan was held out as a proof of the confidence of the people in the Imperial régime. It has, on the other hand, been conclusively shown that it is because of the want of that confidence that such enormous sums of money have been kept idle, that trade as carried on only to meet the wants of the day, that all classes spend as little and hoard as much as possible, and that enterprise even of the safest and best considered description is at a complete standstill. As for the magnitude of the sums subscribed, that proves nothing. The purchaser of Rentes lent their money to the State, not to the Dynasty. In the latter case there is good reason to believe that the result would not have been equally satisfactory.

Above all things let us be fairly relieved from this incessant state of uncertainty. Even if “pacific utterances” commanded credit, still commerce would be reduced to mere gambling. A careful merchant would cease to reckon upon all the ordinary chances of trade—overstocked markets in one quarter of the globe, scarce supplies in another, productive or failing harvests, and the like. His calculations would rather be based upon the gossip of courts, the varying temper of men high in power, and early reports of the instructions that are daily given to official journals for the morrowʼs number. It is time that this state of affairs came to a close, and there are many slight indications which go far to prove that the change is near at hand.

Aug. 31 Anmerkung von Jenny Marx

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TRADE AND FINANCE.

Sep 28 Anmerkung von Jenny Marx

AN event of great and general interest is often converted by a large class of people into a pretext for carrying out a purpose with which it has no connection whatever. There is a certain fascination in thereby turning an unpromising opportunity to advantage. Is it not in reality essentially convenient to have provided ready to hand an indirect mode of performing a disagreeable duty?–of giving sham reasons when, from mere timidity, or even force of habit, the real causes are by tacit consent sedulously kept out of sight? Somehow or other this style of dealing has spread through all classes of society. In church, law, or state, actual offenders often suffer on implied transgressions which were neither known nor cared for. The practice has even extended to commerce. It is a rare occurrence for the manager of a bank or great house of business to be publicly displaced, and when it does happen it is rarer still for the precise facts to be made generally known. In the case of a public company it is especially advisable for all parties to hush things up as much as possible even when at most only want of judgment or a tendency to overtrading or some other comparatively venial fault has been committed by the outgoer. No one can benefit by too much discussion. The directors dislike it, since it might betray a want of competence or proper care on their part. The shareholders dislike it, since it may cause the price of the shares to fall in the market. The public are little interested, save that a small and calculating portion will feel more chary than usual in investing in the concern. The gentleman who retires can have no possible motive for saying that it is not from ill-health, long service, or any other equally substantial reason. Thus affairs are made pleasant. Everything turns out to be apparently quite right and above board, although somehow or other suspicious will exist that there is something kept in the background.

The Board of the National Bank have lately resolved that their managing director should give his entire time to the business of the bank, and neither be a member of Parliament nor mix in politics. The present managing director, Sir JOSEPH NEALE M’KENNA, M.P., is well known to be an able and active politician, but he concurred in the resolution–although its passing involved his retirement from his present position–and it was consequently carried unanimously. The Board have made up their minds on this point much quicker than is their usual fashion. To the outside public it certainly seems strange enough that the directors of the Bank should have taken several years to make the discovery that politics and business are apt to interfere with each other, and still more so since it looks very much as if their new opinion had been considerably quickened, if not awakened altogether, by the remonstrances of their constituents on a different subject. It is further noticeable that this displacement should occur within a very short interval of a late trial for libel, when Sir J. N. M’KENNA did not come off with flying colours, although politics had next to nothing to do with the case. Again, it is no new thing for the managing director to be in Parliament; certainly he was so in some of the palmiest days of the Bank’s prosperity. His attendance at the House of Commons never interfered with his securing valuable concessions for his (mercantile) constituents–concessions which possessed but one disadvantage—that of being particularly fair on the outside, and exceedingly rotten within. In the first instance there were, at all events, good commissions to be got, which helped to swell the dividends. So far so good; but when evil days came, and the apparently profitable speculations had proved certainly prejudicial to the standing of the Bank, a sudden light seems to have burst forth on directors and shareholders. The manager ought to have nothing to do with politics. The logical inference is that, in the opinion of the proprietors, the mere fact of his being a member of Parliament was the cause of the shares having fallen in the market, and the credit of the Bank to be thus, to some slight though immaterial extent, weakened. And all this knowledge of the incompatibility of politics with the management of the Bank must have been ascertained in the short interval that elapsed since the trial of M’KENNA against USBORNE, about six weeks ago.|

[6]

Sir J. N. M’Kenna is unquestionably a man of considerable talent, and of unimpeachable personal integrity, as Judge O’HAGAN remarked in his summing up; but there is no dispute that he has connected the National Bank with some schemes which no bank ought to introduce, and least of all an establishment of such deservedly high position. We give every credit to the managing director that he was actuated by the wish to benefit his clients, and that whatever mistakes have been committed are fairly attributable to errors of judgment. Still it requires but a very cursory perusal of the evidence given at the trial to show that these errors were serious enough to involve the promptest notice. A few years employed in fostering companies of the stamp of the Peruvian Railways, the Marseilles Land, and others of the same sort, although profitable at the outset, must inevitable jeopardize any bank in the kingdom. An institution whose breath of life is its credit cannot with impunity sink into the position of a prompter of projects, at the best of doubtful success. This false step Sir J. N. M’KENNA has induced the National Bank to make, and a change in the supreme control was therefore inevitable. This is doubtless the real, if unavowed, reason of the retirement of the managing director, and the Board would have shown more frankness and more courage in avowing it, than of adopting the sidewind of political engagements. The plea is especially unlikely to command respect, coming as it does on the eve of an election.

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TRADE AND FINANCE.

Sep 21 Anmerkung von Jenny Marx

ANOTHER quarter of the year is drawing to a close without that revival in trade which has been so long and so anxiously looked for. For many years the autumn has been regarded as the time when commercial activity is most likely to recommence, especially after a protracted period of distrust and stagnation. Equally in 1868 as in 1867 these hopes present little chance of fulfilment. At certain intervals a few signs have appeared which promised a gradual awakening from the present lethargy. Thus far they have, on the other hand, been productive of nothing but disappointment. It was a fair conclusion to draw, that if the public showed a renewed disposition to seek for better profits and higher rates of interest for their capital they would not merely support foreign loans and enterprises, but would naturally turn to home industry. If Russian companies could issue prospectuses and fill their subscription lists in a few hours, capital ought not to be wanting for British or colonial ventures. Here, at all events, was one encouraging feature. Besides, this kind of movement reacts upon all departments of commerce. Trade generally is never so brisk as in times of joint stock or other speculative activity. However, it is evident that the success of the late foreign railway loans has caused no corresponding demand for, or creation of, new investments at home. The reports from the manufacturing districts also afford conclusive proof that the business of our great industrial centres is yet far from recovering its former healthy tone. The position of the London money market again shows how little capital is needed. Money is coming in from all quarters, and there is no outlet for its satisfactory employment. It seldom happens at these periods of the year that the general rate of discount should be materially below the Bank minimum. Usually it is, if anything, higher. Therefore, since London is, for all practical purposes, the financial centre of the empire, it seems an inevitable inference that capital is overabundant in all parts of the kingdom; and in a country like England, at once wealthy and commercial, when the supply of capital is much in excess, it only signifies that trade is more or less below its ordinary level. Merchants and manufacturers refrain from borrowing money since they cannot profitably use it.

A formidable, and apparently irremovable, drawback to the revival of confidence rests in the continued tension of political affairs. This tension is so well known, and has been so thoroughly discussed, that is seems hardly deserving of more now than a passing allusion. But the evil seems to be never ending, but always beginning. Scarcely a day elapses without some peaceful reassurance, sufficiently alarming in itself, and safe to be followed by a warlike article or speech on the morrow. These tactics only serve to prolong the uncertainty of suspense; and uncertainty, as we all know, is fatal to the prosperity of commerce. In the past week some remarks of the King of PRUSSIA caused a panic on the Paris Bourse. The plan taken to counteract their effect sounds strangely at variance with English ideas. Three Ministers of the Imperial Cabinet sent a joint letter to the Syndic of the Bourse, giving their views—of course pacific—on the speech in question. Suppose an analogous case were to occur here. The Chairman of the Stock Exchange would be considerably surprised to receive a collective note from Lord STANLEY, Mr. W. HUNT and Mr. G. HARDY, to say that in their opinion the remarks meant nothing, coupled with a request to placard the note in the house. This sort of official commentary would certainly have in London, and probably had in Paris, pre-|[7]cisely the effect it sought to avoid. An ostentatious avowal of confidence in the maintenance of peace has come to be considered rather more alarming than a warlike manifesto. So at least it is judged by the mercantile classes, who have the best grounds for forming an opinion both from public and private experience.

Some strange fatality seems to hang over the crisis of 1866. On former occasions, if the pressure was at least sharp, it was decisive. Many suspensions and much unforeseen hardship and ruin were the immediate consequences, but they were to all appearances quickly got over. Whatever individual misery followed from the convulsions of 1847 and 1857, it soon sank out of knowledge, or was sedulously kept below the surface. A few months, even weeks, after the crisis and commercial affairs were proceeding as smoothly as usual, the only difference being the substitution of a little extra caution for excessive trust. We are now suffering from a kind of protracted crisis. Not only have speculative companies gone by the board, but the great railway interest has suffered severely, and in too many instances with justice. First one and then another large and outwardly prosperous undertaking, with its millions of capital, its immense works, and its armies of functionaries, has turned out insolvent, and been compelled to make the best terms it could with its creditors. Even that might have been got over, but political have closely followed upon financial difficulties. For more than two years there has been the daily dread of something going to happen. An indefinable fear and distrust have been constantly present. Week by week and month by month the same leaden weight has been paralysing the sources of industry and enterprise. We can thus claim little or no advantage for the crisis of 1866 over its two predecessors because in the later period commercial failures might be counted by tens, while before they occurred by hundreds. If the misfortunes of those days were more severe while they lasted, they were at all events much less enduring.

It is not agreeable to look forward to the future. If we were to judge by existing appearances alone, there is no likelihood of improvement over the past. The same elements of doubt and apprehension which have crippled commercial prosperity during the last two years are present now. Perhaps, however, for this very reason a change may be hoped for. It seems certain that public affairs have arrived at that point when there can be no holding back, and that some decisive step must be taken one way or the other. The sooner it occurs the better for the ultimate peace and prosperity of the world. All that can be done is to follow carefully the march of events. Prudence in business is always necessary, and at times what would ordinarily be over-caution is desirable. At present it is a simple duty to sacrifice the chance of immediate profit for the certainty of ultimate gain.

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The Daily News. Nr. 6997, 5. Oktober 1868. S. 4.
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TRADE AND FINANCE.

Oct 5 Anmerkung von Jenny Marx

EVERY day brings fresh evidence that trade is far from recovering from the unsatisfactory position in which it has remained for at least the last two years. The official accounts of our foreign commerce in the month of August have just been published, and although these statistics invariably appear too late to form the grounds of an immediate opinion, they at least serve to confirm previous and usually well-based conclusions. The broad facts are that in August, 1868, we exported goods to the nominal value of 16,427,597l., against 17,880,999l. in 1867 and 17,450,156l. in 1866. This decrease is heavy enough as it stands, but it is still more marked on comparing it with the totals for the first eight months of the year. Taking the amounts for the month alone, the diminution is a little less than 6 per cent. from 1866, and rather more than 8 per cent. since last year. But, on the other hand, the reduction for the eight months exceeds 63/4 per cent. from 1866, and is less than 31/2 per cent. from 1867. It therefore follows that as regards the latter year at least we have been retrograding, since the average reduction has gone from 31/2 per cent. in the eight months to 8 per cent. in August alone. The only possible inference is that comparatively with other years trade is at this period worse than for some time back. Private experience certainly corroborates this view. The revenue returns, when carefully examined, are equally conclusive. A decrease in the receipts from Stamp Duties and the Post-office provides one of the best and surest tests of the progress or retardation of commerce. This proof has been unfortunately too truly afforded, and it serves to show that the many causes which have effectually impeded the revival of commerce are still far from being removed.

It may seem strange that in 1866 trade (looking at it in a material sense) should be so much better in that year than at the present moment. A considerable decrease in our exports could be readily understood between 1866 and 1867 but less easily between 1867 and 1868. The year 1866 included an European war and a commercial crisis, and the decline in the first eight months of 1867 of 4,210,000l. In the same period of 1868 there was a rather larger decrease from 1867 of 4,270,000l. The reason is chiefly to be found in the invariable rule that any disturbance of the ordinary progress of trade shows its chief development after the proximate cause has passed. Thus a panic has no immediate effect upon the Board of Trade returns. Affairs may to outward seeming be progressing satisfactorily, but six or twelve months after their effect is seen in diminished orders, want of enterprise, dulness or deficient work in the manufacturing districts, and all those signs that too clearly show that trade is stagnant. It is impossible to escape from the teaching of these actual facts, even if they were not brought too clearly before us, that it would be simple folly to ignore them.

Some stress has been laid upon the circumstance that if the total estimated value of our exports appears to fall off, the deficiency is at least compensated (certainly as far as cotton is concerned) by the fact that the price of the raw material has decreased in proportion, and thus that little or no difference is made one way or the other. This result is perfectly correct so far as it goes, but what are called exceptional circumstances always happen. Hence it turns out that although on paper there can be no apparent doubt of making a profit on a certain transaction, in practice the result may be widely different. Other matters have to be considered than the ordinary ones of actual supplies of stocks in the market, and their current values. The great financers and merchants of the City, and those who are wise enough to follow them, know well this principle, and that if they desire success they must consult the temper not only of the mercantile, but of the larger general public. Leaving, however, this more important question aside, and looking only to the purely commercial view, it is tolerably certain that financiers, merchants, and the general public alike care little for new undertakings or new enterprises. A few new loans have been successfully launched, but they merely form the exception that proves the rule.

The ensuing week promises to give some token of the interest that shareholders have determined to take in their respective companies. We commented last week upon the change in the direction of one of our most important banks. In the present week it is understood that we shall have a more interesting specimen of a commercial cause célèbre. The case has yet to be judged, and the full facts to come forth. To judge from report they are not calculated to be particularly edifying.|

[8]

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The Daily News. Nr. 7003, 12. Oktober 1868. S. 4.
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TRADE AND FINANCE.

Oct 12 Anmerkung von Jenny Marx

IT is just three years since we had to comment upon the introduction of a new Italian Loan in this market and the principal exchanges of the Continent. The object of the operation was to put an end to a provisional state of things (we quote the words of an Italian statesman) which had entailed upon the country a series of deficits of some eight to ten millions a year. Unless these were checked, it was remarked, the result must in a few years be disastrous. Various reforms were therefore proposed for saving expenditure and increasing taxation, so that the annual deficit would immediately be reduced to on four millions, and at no distant period be cleared off altogether. Apparently, however, some actual supply of cash was necessary, and hence the State Domains Loan was issued, of ten millions nominally, and of about seven-and-a-half in net cash. As Italian credit was not at that time in as favourable a condition as could be wished, it was thought advisable to protect the subscribers of the new bonds by a special guarantee of the State property. The operation proved successful, and it was hoped would be the last of the long series of Italian loans which, under one form or another, had been constantly offered to the capitalists of Europe. Nothing had, in fact, been more discouraging to the friends of the new country than to find a too faithful repetition of the worst financial extravagances regularly practiced by older governments. The consequences of such reckless waste were before their eyes, and it was certainly desired and believed that Italian statesmen would above all avoid the errors or corruption which have caused three-fourths of the European powers to become practically bankrupt. The lesson has not been learnt, however, and Italy follows in the well-worn path of deficits and loans which has been so long trodden by Austria, Russia, and a dozen others. It is only just, nevertheless, to admit that the war of 1866 has certainly shaken the calculations of 1865, and has of course retarded the equilibrium which was expected to be established after three or four years of peace. Yet, making this allowance, it seems a strange coincidence that at the very period when revenue and expenditure were calculated to balance each other, without counting extraordinary resources in hand to meet extraordinary expenses, we should have proposals for another loan of 9,404,762l., on terms which, reckoning the various advantages in the price of issue, repayment by periodical drawings, discount, &c., will give the subscribers a net return of nearly 91/2 per cent. on their capital. There is, of course, a special security, that of the tobacco revenue. Thus we have once more Italy in the field for a heavy loan, and judge from appearances, it by no means promises to be the last.

The question is, how is this to end? When a State has arrived at that point of financial depression that it can only borrow at 91/2 per cent., and is even then obliged to protect its credit by special security, it would appear a mere matter of conjecture among enemies how soon the inevitable stoppage must come, or among friends how late the evil day can be staved off. A State, like an individual, finds it no difficult matter at first to contract debts on moderate terms, but as its securities begin to multiply in the market lenders each time require a higher, and at last extortionate price. The 5 per cent. offered this year must be raised to 6, to 7, and at last to 9 or 10. Caution or timidity increases marvellously fast in these cases, and it does not take long before capitalists begin to ask for more than the mere general security of a Government. The next thing required is an actual pledge of specific property or revenue. As far as England is concerned this has already been done with the State Domains, and it is now to be done with the Tobacco-tax—probably the most reliable source of income, except the Lottery, of all the revenues in the kingdom. If another loan is to come out in the next year or two, some other available security must be given, and so as one portion of the public revenue disappears after another it will become a question how the Government can be supported at all without repudiation of the public obligations. We are ready to acknowledge that this supposition is an extreme one, but it is only the logical consequence of these incessant loans, which serve to foster financial extravagance to the point of ruin. Italy, it is true, stand by no means alone among both the great and second-rate Powers in this suicidal course of systematically exceeding her income, not to moderate, but, in proportion, to a very large extent. Turkey, for instance, has set the example of pledging successive items of revenue until it appears a puzzle, when we read in foreign papers of fresh projects of loans, where the security is to come from. The Turkish bondholders believe that they are safe enough within certain limits, since their guarantees are pretty certain to be enforced by the irresistible diplomatic action of one or more of the great Powers. An Italian bondholder, however, has no such safeguard. If an exceptional tax is laid upon coupons, or, in other words, a portion is confiscated, it is no easy matter to get anyone to interfere. Italy is not in any way under the same kind of European tutelage as Turkey. Hence, if from the pressure of necessity a temporary default should be made, the chance of redress is pro tanto diminished. As we have said, the supposition that public engagements will be repudiated is extreme; but, at any rate, there is a great temptation when a measure of this sort seems the only alternative to stopping the functions of the Government altogether.|

[9]

The new loan contains one stipulation which will be accepted as a necessary though regrettable security. The bonds are to be subjected to no special tax, with the exception, if it be properly termed one, of the Italian income tax. The enactment of some particular impost upon the coupons of the public debt seems to be one of the latest forms of repudiation. Governments have so far subjected themselves to suspicion that they are obliged to announce formally that they will not commit an act of manifest dishonesty. It seems to have occurred to some ingenious financiers that, if they promised to pay 10 per cent. for a loan, they might reduce the interest as much as was advisable by an exceptional income tax. A pretext of this kind was of course readily exposed. In the case of Italy it is to be regretted that the precaution of stipulating for no special tax has not been uncalled for. The attempt to impose this sort of levy upon the holders of foreign loans could not be forgotten, and besides there are some questions with reference to the Cavour Canal and other industrial works in Italy, which, if not savouring of direct denial of legitimate claims, are, to take the most indulgent view, undignified specimens of sharp practice.

We have constantly expressed our opinion of the inadvisability, if not danger, of encouraging this never-ending succession of loans, which are turned to no good purpose, but are devoted to worse than wasteful expenditure. It is to be hoped that capitalists, both here and abroad, will at last cease to support them. We may be sure that, as long as persons are ready to lend, there will be no lack of governments to borrow. If the money were applied to reproductive works, no better use for it could be found. Unfortunately, it is all absorbed for armaments, war expenditure in time of peace, and in some cases for financial jobbery and peculation. One thing is sure, that lenders will sooner or later find out their mistake, when, having got to the end of their tether, governments discover it to be inconvenient to pay.

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The Daily News. Nr. 7009, 19. Oktober 1868. S. 4.
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TRADE AND FINANCE.

Oct 19 Anmerkung von Jenny Marx

A PARLIAMENTARY return has been lately published which tells with more accuracy than can be found elsewhere the low ebb to which commercial enterprise has been brought within the last two years. It gives a comparative view of the number of new companies established from 1863 to the first portion of 1868. The decline during the latter half of this period is necessarily very marked. Under any circumstances the extreme point to which the joint-stock movement was carried in 1864 and 1865 would have been followed sooner or later by the inevitable reaction. The crisis of 1866 served but to intensify the severity of the transition from commercial depression to commercial excitement. Nothing is more common than to ascribe important changes, whether for good or evil, to some great and striking event. The promoters who three or four years ago reaped so fine a harvest doubtless lay all the blame for their gains being cut short to the failure of Overend and Gurney, and of other similar companies. The fact is, however, that the public had already been so over-supplied with new projects that there was no room for the introduction of more. It was so in France. There, as in England, a constant stream of companies had been brought forward, for all kinds of objects—land improvements, gas, railways, banks, almost everything, until at last people got tired of subscribing for shares. The result has been precisely as we have seen it here. Although no mercantile crisis has occurred, it is as hopeless to start a new company in Paris as in London. Distrust reigns as paramount in one city as the other. Some allowance, perhaps, should be made for the effect of the war rumours that are so persistently, and with too much reason, circulated. Yet, admitting this plea, there are not wanting signs to show that some time before the Austro-Prussian war, French capital was not so freely obtained for joint-stock enterprises as in the palmy days of the Crédit Mobilier. Subscribers to these companies seem, if not to have exhausted their capital, at least to have exhausted their faith. However sanguine they might be, they instinctively felt there was a point at which it were best to stop. This feeling has of course been exaggerated, as any reaction from previous idea is almost certain to be. Instead of reasonable caution the effect has been general distrust.

As regards England, the result of the present inactivity is sufficiently exhibited by the following figures. In each year only the amounts of the nominal capital are given, a few companies—52 out of 4,264—being registered “without nominal capital.” The difference is, however, of no importance. The summary of the return is subjoined:

Companies Nominal
Registered Capital
1863 790 £139,988,242
1864 997 237,437,083
1865 1033 205,391,818
1866 762 76,824,823
1867 479 31,444,982
1868 (first five months) 203 13,896,182

From the above statement it appears that in 1864 the subscriptions were about 70 per cent. more than in 1863, and 48 per cent. more in 1865. In 1866 there was a sudden drop of nearly two-thirds, and in the next year again of more than a half of even this reduced total. In 1868, calculating from the first five months of the year, even this sum will yet to be diminished.

Looking to the general figures of the return, there are some deductions to be drawn which are anything but satisfactory. It is true that of the 460 companies registered in the 12 months ending the 31st May, 1868, only about seven or eight are being wound up; but some three-fourths are returned as being “supposed to be in operation,” the remainder constituting the companies actually in existence. Of these also nearly a half are in Scotland and Ireland. We may reasonably conclude that of the companies “supposed to be in operation” a large proportion is represented by those which have omitted to send proper returns. The remark of “No return” meets the eye constantly in this paper, and therefore greatly detracts from its value. For this reason it is difficult, if not impossible, to estimate the actual amount of money paid by the public for joint-stock companies, since the nominal sum mentioned is often delusive. It has often happened that the amount called up has been materially disproportionate to the total named in the prospectus. In one case it was as little as 5l. per 100l. share.

It is of course a moot point whether the public gain or lose by their present excess of caution. Many will say that, after the severe lessons of the past few years, it is simply an act of prudence to have nothing to do with a joint-stock company. One thing is certain, that the public are acting upon the maxim. It is rare to find any one willing in these days to take shares in the most promising concern. Prudence of this kind is so far advantageous that when money is safely deposited in a bank or invested in Consols there is no fear of losing it. Safety is certainly ensured, but at a material loss of interest. If calculations of this kind had always prevailed, the wealth of England would be materially less than it is now. It is just, and in the long run advantageous, to incur some risk for the sake of ultimate benefit. If the traders of old days had thought only of safety and little profit, Eastern commerce might have remained to us a sealed book.|

[10]

On the other hand, the extreme should be avoided of rushing into speculation simply because it is speculation. Oddly enough, it appears that men are prone to commit those errors in the practical purposes of life which theoretically they are so ready to perceive and denounce. Nothing is more absurd than a commercial mania, except perhaps a panic. In the one instance there is nothing but blind confidence bestowed where in all probability it is least deserved; in the other, an universal distrust as indiscriminate as it is unfair. The difficulty is to avoid these extremes. It seems hopeless to attempt to warn the public against them. The general opinion has a constant tendency to run in particular grooves, and is too often directed by insignificant circumstances.

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The Daily News. Nr. 7015, 26. Oktober 1868. S. 5.
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TRADE AND FINANCE.

Oct 26 Anmerkung von Jenny Marx

THE decline in the exchanges, and the consequent export of a large amount of gold, which it had been confidently anticipated would have been retained here, are the immediate indications of another change of feeling in the investing public. The British capitalist is returning once more to his old appreciation of foreign stocks. For a long period these securities were so persistently neglected that even the most habitual borrowers of the Continent deemed it hopeless to bring forward their never-ending new creations upon the London market. By the events of 1866 the English public had been taught the lesson that high interest means bad security: it was thoroughly taken to heart, and, as usual, carried to an extreme length. A mass of companies paying excessive dividends had been found to be utterly rotten; therefore such concerns should in common prudence be avoided. A similar kind of reasoning seems to have been insensibly applied to even the best classes of foreign bonds; they paid nearly twice as much interest per cent. as Consols, or more, therefore their security was doubtful. The fact was ignored that they might have been issued by Governments which had shown scrupulous care in maintaining their public faith. At length, however, investors have got tired of receiving no more than 1 or 2 per cent. in the Stock Exchange or the discount market, and are now buying back at enhanced prices the securities which not very long ago they were anxious to sell on almost any terms. Hence the bullion movement has taken a sudden turn. Instead of seeing an increase store of gold hoarded at the Bank, it is now more profitably, if somewhat less safely, employed for investment. As long as this revived demand is kept within moderate bounds, it will do more good than harm. A properly guaranteed stock issued by a country careful to allow not the slightest stain upon its integrity, and not given to habitual borrowing and extravagance, might be held by cautious capitalists. Unfortunately investments of this character are considerably in the minority. The danger that is to be apprehended is that the public may be induced to risk their money in those plausible, but hazardous and speculative loans by which so many have experienced often loss, and too frequently ruin.

There have been several signs of late that the mistrust of the last two or three years has been a little, if only a little, mitigated. After the first effects of the crisis of 1866, almost the only stocks which were in any demand were the Indian guaranteed railways. They presented the double advantage of safety hardly second to that of Consols, and next a rate of interest of 5 per cent. The supply being soon absorbed, attention was directed to the debenture stocks of our best home railways and colonial loans. The former constituted merely a change of the form of investment, since it is probable that the bulk of the subscriptions came from the holders of the previous current debentures. The latter formed a fresh outlet of capital. Without reckoning the previous debts of the colonies (exclusive of India), estimated on good authority at about 68,000,000l., the bulk of which was raised here, the new loans introduced in London in 1867 and the current months of 1868 amounted in round numbers to a nominal total of about 5,000,000l. They were issued almost exclusively for public and reproductive works, and therefore it is satisfactory to observe that they have commanded general success. New South Wales, Queensland, South Australia, and the other Australasian colonies have taken the largest sums. Beside these were the Russian railway loans, but it is difficult to estimate the aggregate held here, as probably a considerable portion was either subscribed abroad or has since gone there. It is sufficient, however, to mention that these three classes of securities—the Railway Debenture stocks, the Colonial Bonds, and those of the Russian railways—nearly all stand at a higher price than that of issue. It was clear that the public were becoming less difficult in employing their surplus capital. During the same two years a few foreign |[11] loans had been brought forward, of which the most successful were those for Chili, the Danubian Provinces, Egypt, Portugal, and the Argentine Republic, all for comparatively small sums. The total raised in cash was about nine millions in all, only one of those operations exceeding two millions sterling. Of these also a large part is probably held abroad. More recently there have been the Egyptian Loan of 11,890,000l. and the Italian Tobacco Loan of 9,404,762l. in nominal capital.

The Egyptian Loan, above mentioned, was professedly negotiated to clear off existing liabilities, and was satisfactorily heralded in the prospectus as no creation of fresh debt. This feature was accompanied by a further and still more satisfactory announcement, that Egypt, who has been for some years past so industrious in getting all the money she could, both in the home and European money markets, on any terms, contracts to borrow no more in the latter at least for five years to come. This unquestionably was the favourable condition of so large an additional issue—very large, taking into account her previous issues since 1862, and her existing revenue. To this contract she will be unquestionably kept by the markets in which these bonds are to be negotiated from henceforth. That spendthrift States will raise money as long as they can, is especially seen in the case of those in the East, which are paternally governed. The Sovereign and his Government both borrow on personal credit, and on any increased taxation they can levy with safety on the people. Take Turkey, for instance. For years we have heard of nothing but her reforms and retrenchments. She has had many friends in this country to parade both, but both have been almost always a happy incident reserved for the future. We have had even official estimates of a fast approaching equilibrium, but somehow or other the Land of Promise is never reached, and among those best acquainted with financial status at Constantinople it is believed that the Turk is still vitrually hard up, and only enabled to find money by borrowing at rates which even those mysterious resources of the Empire still undeveloped will not be able to support in the long run. Lenders are for the time of course enriched; but to common sense it is clear that reckoning must come sooner or later, and we have only to recall 1859, when the Italian war broke out, and when many of such securities melted away. Another allurement, skilfully prepared, for the British public and others, is the assignment of special revenues by the borrowing States. When railways and forests and river dues, &c., have all been converted into money to supply the pressing void, these needy Governments vend their monopolies. The Italian Government, no longer able to impose greater taxation without the risk of extreme popular discontent, has just raised a new loan of 9,404,762l. sterling nominal on the Government tobacco monopoly. This operation is said to be successful. It may be a perfect security, but it may not. It so happens that in Spain some of the provincial juntas have very recently taken advantage of the revolution to abolish this tax upon tobacco, which is regarded as especially oppressive by southern nations. It becomes a serious question, particularly for lenders, what is to be done when these various States have pawned and sold all? Necessarily if the money so obtained is expended on reproductive works, the temporary sactifice will be more than counterbalanced by the results; but hitherto it has certainly not been so—costly armaments, the evil fruits of despotism, or national extravagane have sapped the resources and wealth of too many foreign countries. Their money as well as their men have been spent in absolute waste. Our English capitalists will be wise to remember this, and reflect well before, merely to get a high rate of interest, they place their fortunes in the hands of such unceasing and unsound borrowers. They have had this year one specimen of confiscation abroad in the shape of exceptional taxes imposed on the public debt. It was quickly found that this system must be suspended if more loans were to be got, and we have now the re-assuring stipulation in some loan contracts, markedly in that for the Italian Tobacco Loan, that the subscribers are to be permanently exempt from similar deductions. If, however, evil times should come, especially if war should arise, this confiscating remedy must of necessity be again resorted to. Governments so long and seriously impoverished would be unable to pay and we should have nothing to do but grumble at their “Non possumus.”|

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The Daily News. Nr. 7021, 2. November 1868. S. 5.
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TRADE AND FINANCE.

Nov 2 Anmerkung von Jenny Marx

THE returns of our commerce for the first nine months of the year have just been published, and at the present period are of more than usual interest. It would be easy to deduce both favourable and unfavourable results from the figures, since, although there is a marked increase in September, taken separately, still there is an equally marked decrease in the total of the year. In the latter item, for example, a reduction is exhibited, compared with the panic period of 1866, of 8,232,635l.—from 141,936,898l. to 133,704,263l.—a difference of rather more than 6 per cent. Judging by this fact alone, it would appear that we are materially worse of than at a time when trade was utterly disorganised by the severest crisis in modern experience. The comparison is not much better with 1867. In this case the falling off is, it is true, only a fraction over 2 ½ per cent., but if, as we are assured, confidence were reviving, it seems strange to find that the difference is not the other way. There is indeed nothing extraordinary in the circumstance that our present exports should be less than in 1866. All exceptional disturbances of commerce have a prospective rather than an immediate effect. The orders given in the prosperous year, the ventures and engagements undertaken when everything appeared fair and untroubled, are often completed in a season of gloom and uncertainty. We are, therefore, prepared to meet a sudden decrease in the trade of the next year following a panic, but afterwards we look for a gradual though moderate recovery. Hence it may be inferred that if 1868 gives no better, but rather worse promise than 1867, the long-looked-for revival of trade is even farther off than ever.

On the other hand, there are signs that if the year itself shows by no means a favourable account; at least there is an improvement in the last month alone. The exports of September not only exceed the corresponding period of 1866 and 1867, but are higher than in any other month of 1868. The augmentation has been pretty continuous, as the following figures will show:

1868.
January £12,252,688
February 14,340,979
March 14,829,249
April 14,575,152
May 14,670,035
June 13,933,054
July 15,748,269
August 16,427,597
September 16,927,240

The three last month manifest an especial advance, and slightly exceed the sum for the same period of 1866, but are yet nearly half a million less than the past year. The returns for July to September are subjoined:

1866 £49,079,068
1867 49,589,013
1868 49,103,106

At the same time it may be remarked that in 1866 the exports for September had decreased, compared with August, from 17,450,156l. to 16,671,078l. and in 1867 from 17,880,999l. to 16,145,584l., whereas in 1868 there was actually an increase, as shown above. When, therefore, the question of an improvement in trade is disputed, it is a legitimate argument to point out that if dulness prevailed in the first part of the year, the latter months at least have exhibited a material recovery. We incline to take this view. There are unmistakable signs that the lethargy which has prevailed for the last two and a half years is giving way to a feeling of greater confidence. The demand for foreign stocks, and the readiness with which the Russian Railway loans have been subscribed, conclusively prove that the moneyed public have so far got over the shock of the disasters in 1866 that they think their capital can be better used than in leaving it idle and unproductive. Opinions of this nature are rarely confined to one class of men. Even as the small investor withdraws his deposit from a joint stock bank to buy a Russian or Egyptian bond, so the merchant once more takes confidence, and seeks to enlarge rather than to contract his business. The unexpected change in the political situation owing to the revolution in Spain has also materially contributed to this return of commercial activity. The best criterion is afforded by weekly accounts of the Bank of France. Instead of gold being accumulated to an almost fabulous total, week by week sums are now withdrawn. There can only be one reason for this alteration. The apprehension of war has for the moment died out, and money is again employed in trade. We must guard, however, against building too great hopes upon these apparent changes in public opinion. They are at best but indication of the actual tendency, and it will be the work of more than a few months to recover the confidence which was so rudely put to flight by the commercial and political events of 1866.

To return to the Board of Trade tables of September, it appears that among the principal items exported from this country cotton manufactures show a satisfactory augmentation. The totals of piece goods for the nine months have been as follows:

Yards
1866 1,902,707,880
1867 2,039,600,498
1868 2,188,591,288

For the month only the figures are:

Yards
1866 236,122,896
1867 250,424,092
1868 288,330,583

The difference in quantity between 1866 and 1868 corresponds nearly to the shipments in September alone, so that in the first eight months of the present year we exported about as much as in the nine months of 1866. But notwithstanding that the quantity shows an increase, there is a material decline in the value. The amount in sterling is represented as under in the nine months of the respective years:|

[13]
1866 £43,828,525
1867 39,893,168
1868 37,014,376

In the month of September alone there is a decrease of more than a quarter of a million in value compared with 1866, and an increase of about 165,000l. over 1867.

Cotton yarn shows a considerable increase in quantity, but a smaller augmentation in value. In the nine months the totals were:

Quantity. Value.
1866 Yards 99,183,419 £9,927,089
1867   〃  119,035,637 10,922,725
1868   〃  129,629,893 10,988,866

This is not a satisfactory result, since it implies that it is cheaper to manufacture cotton goods abroad than to buy them in English markets. As regards woollen yarn also there is the same argumentation:

Quantity. Value.
1866 Yards 18,723,459 £3,290,063
1867  〃  28,333,704 4,490,683
1868  〃  33,819,615 4,927,332

In linen yarn there has been no material difference. In linen manufactures the exports have decreased considerably. Taking piece goods alone, the following are the figures:

Quantity. Value.
1866 Yards 190,684,787 £6,795,307
1867  〃  162,762,745 5,457,883
1868   〃  154,744,515 4,990,993

Woollens are also lower on the year, although the month alone exhibits an increase:

Value alone.
1866 £16,789,629
1867 15,990,864
1868 14,833,463

As regards iron similar results are shown. Although the totals for the year are rather unfavourable, those for September alone present a slight improvement. Taking the first nine months, the following are the figures:

Quantity. Value.
1866 Tons 1,275,381 £11,288,913
1867  〃  1,467,214 11,585,786
1868  〃  1,465,891 11,148,988

The imports and exports of specie present some of those singular contrasts which appear destined to puzzle the scientific monetary authorities of the day. True that we imported more in 1866 than in 1868, but we also export more. The totals are:

IMPORTS.
1866 £28,126,262
1867 17,825,381
1868 20,524,195
EXPORTS.
1866 £18,513,972
1867 9,268,839
1868 14,928,319
BALANCE RETAINED.
1866 £9,602,290
1867 8,556,542
1868 5,595,876

On the whole it appears that the low rates of interest in 1867 attracted on balance little more than a million less than the 10 per cent. of 1866, although in 1868 there was a reduction of nearly three millions, when money has been nearly the same price. We leave these anomalies to be explained by the advocates of the flow of gold theory.


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TRADE AND FINANCE.

9 Nov Anmerkung von Jenny Marx

THE British public, as is their wont, appear to be passing through the intermediate stages which separate the lowest suspicion from the highest confidence. A year or two ago the advocacy of a foreign security as a desirable means of investment would have been utterly scouted. Capitalists were more inclined to dwell upon the many instances of bad faith exercised towards the British creditor than to pay attention to the examples where public faith had been strictly, and even scrupulously, observed. One extreme, however, always begets another. At present there seems to be hardly any limit to the desire for subscribing to foreign bonds. In one and most important respect there is an improvement over old times. Russia figures still as an ever-ready borrower, but at least she alleges grounds for her claims more tangible than those which used to appear in the loan prospectuses of ten and twenty years ago. Whatever money is raised is at least to be devoted to an useful purpose. Capital is undoubtedly well employed in such works of general benefit as the Russian Railway Loans are intended to accomplish. Of course something can be said on the other side of the question. There is always the lurking mistrust that these undertakings are planned more with a view to military than commercial facilities. The same argument would indeed apply to every improvement in the internal communications of any great and powerful empire. The same railway that conveys the harvests of a province to a profitable market will on occasion equally serve to carry troops for hostile aggression. This, however, is the condition of all improvement; the best things are most liable to misuse. The concurrent testimony of the world certainly favours the belief that no better security exists against war than safe and frequent intercommunication between country and country, province and province. Hence there can be no doubt that subscribers to a railway loan have at least the satisfaction of knowing that the money advanced will not be misapplied in the scandalous fashion of covering annual deficits caused by extravagant and irresponsible expenditure. It is certainly a mark of the steady progress of public opinion that foreign governments approach the possessors of capital in a more rational and business-like manner than was their custom a few years ago. Then the idea of giving any explanation as to the manner in which the money should be employed was never entertained for a moment. To venture an inquiry was looked upon as equivalent to infringing a State prerogative. The bonds were offered without comment, whether by Russia or Austria, by Portugal or Venezuela, to be accepted or rejected at once. As long as foreign credit remained good this policy answered every purpose. Latterly, however, there has been a growing disposition to look more closely into the affairs of those States whose appearance on our markets may safely be expected once or twice a year. The change is easily discerned. We have elaborate tables of revenue, special guarantees, the precise objects for which the loan is wanted, all duly specified, and, in short, a whole accumulation of securities, none of which, it may be observed, would be worth anything if the borrower should choose to break faith. Whatever may be thought of these concessions, they at least serve to show that the public require a little more than they were wont to do. It is impossible to banish credulity altogether; but it is nevertheless a step in advance to expect statements and guarantees, however worthless they may ultimately prove. Anything is better than the blind and foolish trust that takes everything for granted, without even the semblance of inquiry or the desire to take the commonest measures of self-protection.

The desire of the public to invest in foreign securities is, however, more evinced at present by the purchases of bonds long ago created than of fresh issues. The Russian Railways are an exception, but as regards these creations there are special reasons for their being taken. They are based not only on the credit of the Government guarantee, but also on the actual value of the different lines themselves. Besides, the prices at which they are offered make them very remunerative in point of interest; and there is also the fact, which investors never fail to appreciate, that the market quotation has become materially higher than the amount of their original issue. Hence every fresh loan that is brought out is speedily taken. There is no doubt that the public will not have reason to complain of any insufficiency of these stocks. The prospectus of one is hardly distributed before we have another. Our Australian colonies show no desire to be behindhand. Almost every mail brings news that some fresh railway expenditure has been authorized in one or other of the provincial legislatures. Australian securities promise shortly to be as plentiful in the market as those of any borrower with whom England, for good or evil, has had to deal. Leaving, however, these two classes of railway loans aside, it does not appear that the public care much for new creations. The Italian Tobacco Loan is one of the last, and it can hardly be said to have had a brilliant success. At present the chief wish is to purchase those bonds which have been for years in existence, and all that time have been regularly paid. They have, as it were, the prescription of antiquity. Few people care to anticipate the chance of default or repudiation, but if ever they consider the matter they are sure to form the conclusion that the latest loans will be the first to suffer. This will to some extent account for the apparent discrepancies in price between stocks which, as far as security is concerned, stand on precisely the same footing. A |[14] bond issued fifteen or twenty years ago is considered more valuable than one created within the last twelvemonth. The latter may pay the same interest, and even possess special advantages in the way of repayment by drawings, but somehow it is almost invariably estimated to be of inferior worth.

The fact, however, of London market being again open to the needs of the foreign borrower is not likely to be thrown away. A fine array of loans may be expected within the next few months. The Bank rate of discount will of course be raised, but the difference between 2 and 3 per cent. will hardly discourage investors who look for 9 or 10. The position of financial affairs on the Continent is such that it is difficult to say what terms may really be offered. Formerly, when foreign loans were few, it was considered a great gain to invest at 5 per cent.; now nothing appears to have probability of success unless 10 or 12 is granted.

High interest means bad security; and certainly, if the former increases, the latter does not by any chance improve. It is to be feared that the public may not appreciate this circumstance. The old lessons of precaution which have proved of material value during the last three years may again be cast aside, and a foreign loan mania again inaugurated.


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TRADE AND FINANCE.

THE general desire which has lately been manifested by the public to invest in foreign loans appears to have been partially checked. The possibility of a rise in the rate of discount has had a much greater effect than could have been anticipated. Instead of foreign bonds being imported into this country to meet the renewed demand from English investors, a portion at least of the securities recently purchased are sent back for realisation abroad. At the same time the influx of fresh Russian railway loans has been stopped, at least for the present. Since the Imperial Government are opposed to grant any further guarantees, appeals to British subscribers will be practically futile. There is little inclination here to depend solely upon the security that mere local authorities can offer. In nine cases out of ten the very names of the provinces are utterly unknown, and the privileges they offer are in consequence equally disregarded. There is, besides, always a lurking fear that these subordinate authorities wear their responsibility very lightly. In cases of dispute or default it is but slender satisfaction to be referred for redress to the local tribunals. On the other hand, a national guarantee gives, at all events, a solid and tangible security. Any infraction is, by common consent, liable to exclude the offending Power from the money markets of the world. Since this rule is rigorously enforced, only those Governments who have sunk so low in insolvency and discredit as to find it hopeless to borrow again care to incur the penalty. Hence, if a fresh railway loan were to be brought forward with the Russian imperial guarantee, there seems every probability that it would be as readily subscribed as the last. Without this essential condition success would be worse than problematical. The calculators in the money market need not, therefore, feel much anxiety on this score. Again, the late fall in the exchanges and the export of gold have brought about that vague feeling of anxiety, or even alarm, which for the last three years has appeared at only too frequent intervals. The chance of a rise in the rate of discount to all outward seeming has materially disturbed the public mind. Perhaps, however, the occurrence of a general election has had a great deal to do with it. People are always prone to false impressions at a tiWeme of political as well as financial agitation, and small capitalists especially. As this class comprises in the main the habitual investors in foreign stocks, it seems probable that they have left off buying until the present period of uncertainty shall have passed over.

Yet it is to be feared that the sudden cessation in the demand for foreign investments is due less to moral than material causes. The plain fact appears—and it would be an useless attempt to disguise it—that the non-trading classes have not the means at their command which they had a few years ago. There is little chance of a succession of new loans varying from four to eight or ten millions being subscribed, not merely by speculators, but for permanent investment, as it happened in 1862 to 1864. The losses caused by the financial disasters of 1866 have affected all classes of the community. The tradesman whose custom has been diminished; the servant discharged because his master must reduce his establishment; the country curate, unluckily the registered holder of five shares in a bankrupt company, with calls actual or impending, has no money to put by; the savings of what the French term “the small public” have been either swept away or at least cannot be continued. The point is material, since it is among this class of persons that the steady holders of foreign bonds are chiefly found. They like the high rate of interest—no small consideration when only 200l. or 300l. can be invested; there is in addition the chance of repayment at par in the drawing, or in other words gaining a prize in a permitted if not positively legalised lottery; they may easily escape the income-tax on their dividends in a way well understood in the City; and besides, the bonds being “to bearer,” |[15] they can be held or transferred with hardly more difficulty and expense than in passing a bank-note from hand to hand. Married women used to find these securities an eligible mode of investing their earnings in the days before they could be protected by the existing law. For these reasons foreign bonds long enjoyed exceptional favour. The speculative public understood this well. When, therefore, it appeared that the distrust originated in 1866 was beginning, as regards foreign stocks, to pass away, that new issues were subscribed and old bonds bought, there was the usual wish among speculators to take advantage of the change in public opinion. The result has been that a large amount of these securities have been speculatively purchased and taken up with borrowed money. The low rate of interest lately prevailing especially facilitated operations of this nature. In the absence of demand in the discount market and the abundance of unemployed money bankers were of course ready to lend on fair terms with the protection of a good margin of security. In the meantime these purchases are held over, waiting till the small public are again in a mind to invest. It is not improbable that the delay will be long. The small public, in the first place, have, as we have mentioned, but little money to lay out; secondly, from the present aspect of affairs they will, just now at least, get little more; and, thirdly, that they are again so tentative and cautious that there is little profit to be looked for from an immediate return to the old fashioned credulity. It is to be hoped that before affairs return to their normal state when investments are bought and sold in the ordinary manner without the fear of extraneous influences, no European complication should occur. The mere apprehension of such an event caused in one day in 1859 a terrible fall on the Exchange, in some stocks of as much as 20 per cent. In the present state of continental politics a diplomatic difference, a sudden death, a popular émeute, might prove in like manner disastrous, though scarcely to as great an extent. Still in critical times a “margin” soon disappears when everybody is a seller, and bent upon realising as quickly as possible. Even the best and most cautious management may thus be at fault.

Money seems plentiful enough in the discount market, but that is simply the consequence of the continued stagnation of trade. We are constantly hoping for better times, and now and then there is an indication that trade is at last about to revive. No better sign could be found than in the rise of the Bank rate of discount. A drain upon the Bank’s resources often, if not always, means that the nation requires money, that it is able and willing to pay for it, and that in the end it will come back with a handsome profit. Nothing is more weary than to look back upon the long period when 10 per cent. denoted utter distrust, and 2 per cent. complete stagnation. It is a debateable point whether the nation at large was much better circumstanced in one period than the other. Commerce suffers severely for a time in the course of a crisis, but is altogether paralysed by the lethargy consequent on a tardy and ever expected revival. Let us trust that confidence is now about to return in good earnest, though repeated disappointments forbid entertaining any great hope.

[The Times, 25. September 1868]

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Even the parlour of the Bank of England has now echoed to the cry which has been long resounding throughout the land. “Why is not Capital put out to employment, instead of being left to accumulate in stagnant and unprofitable millions?” “Will the public,” ask one of our correspondents, “never recover from an irrational and discreditable panic?” Look at our unenclosed, undrained, unreclaimed, uncultivated lands; look at out mineral wealth, evident to the trained eye of the geologist, but left unexplored for want of Capital; look at our boundless resources and our innumerable wants, and then turn once more to the spectacle of these unemployed heaps of money lying useless from year to year! Nearly three years have now elapsed since the financial panic set in, and confidence still seems almost as remote as ever. All this time “Capital has been on strike,” and very dim are the signs of its return to work. Can nothing be done to accelerate the consummation?

We freely admit that this question ought to be asked, and that it would be hard indeed to find a more important subject of inquiry. The mischief resulting from the panic is infinite. Unemployed Capital means unemployed industry. Nothing but money can create a demand for labour. If the millions now lying idle were put out to use, so many hands would be at once engaged, so many mouths filled, and so many households satisfied. Nothing could be imagined more beneficial to society than the theory on which the financial system of five years since was originally based. Formerly it was impossible for any man to invest anything in Jointstock Companies without investing all, and more than all, he possessed. The acquisition of a single share in any concern constituted the owner a partner, and as partner he was liable for the whole debts of the partnership to his last shilling and his last acre. That tremendous responsibility deterred ordinary people from embarking their money in such hazardous ventures, and, in order to remove this barrier in the way of wholesome enterprise, it was determined to “limit” the “liability” of partners or shareholders to the amount represented by their respective shares. The practical result was that any person became at liberty to invest 100l. in any undertaking without being liable under any circumstances for more than that sum. The expectation entertained was that this new law would attract vast volumes of Capital into central reservoirs, whence they might be diffused in fertilizing rills over new fields of enterprise. The small capitalists would thus obtain good interest for their savings, the abundance of money created would give an extraordinary stimulus to industry, and all classes of society would gain by a system which brought Capital and Labour together for their mutual benefit. In the face of all that has happened, we do not hesitate to say that the principles of this legislation were sound, and that the disappointment of the public hopes is traceable to two unfortunate incident of the first experiment.

The first of these was the difference established between the whole amount of the share and the proportion of it “paid up.” We have good reason to know that this point, familiar as it is to all men of business, was commonly misapprehended by investors at the time, and is but imperfectly appreciated even now. The new law of limited liability provided, as we have said, that the purchaser of a share in a joint-stock concern should be liable for the amount of that share, and no more. Thus, if the shares were of 100l. each and the investor had paid down his 100l. for one of them, he would be absolutely exempt from all further responsibility, and that was the notion properly impressed on the public mind. But the system on which the new Jointstock Companies were actually established upset this theory entirely. Shares were never brought into the market at full price. A portion only—and sometimes a very small portion—was “paid up,” while the remainder was left to be called for as the managers or directors thought fit. Thus, a share of 100l. might have only 20l. paid upon it, leaving 80l. payable. To take the example of a well-known case still before the public, let us see how the system actually operated in the matter of Overend, Gurney, and Co. In that Company the shares were 50l. each, and consequently any purchaser of a share would be liable for his 50l., and no more. But when these shares were introduced into the market 15l. only had been called up, while 35l. was still to be called for. By this the public was misled. It was perfectly true that the full amount of the shares in this, as in all other concerns, was published in every prospectus and could be seen in every share-list, but the fact was not apprehended by the ordinary purchaser. Investors looked at these shares with 15l. paid up as simply 15l. shares, and never gave a thought to the liability of 35l. which was still attached to them. Yet this liability, it will be seen, was so enormous as to be practically unlimited. The unsuspecting purchaser, when paying down his money, exposed himself to a demand of more than twice as much again. Worse than that could not have happened under the old system, and it is this unexpected result which has so prolonged the terror of the public. Men stood, |[16] as they fancied, to lose their investment, and no more; whereas, after the investment was lost, “call” followed upon “call” till the liability seemed interminable. All this must be rectified before Jointstock Companies can be brought into favour again.

The next and most glaring fault of the financial experiment was the outrageous extravagance with which it was conducted. Money did, according to the calculation, flow so rapidly and so abundantly into the reservoirs opened for it that it lost its old position in the market, and lenders were as eager to do business as borrowers. Capital might be had by anybody and for any purpose. The Companies, in order to attract the subscriptions of the public, offered fabulous rates of interest, and could only pay this interest by exacting still higher rates from those to whom they advanced their funds. But these persons, again, in their turn, were compelled by the very nature of their bargains to rush into daring speculations, for no ordinary enterprise could be expected to return the profits required. Capital, in short, instead of being “on strike,” was then competing against Capital for employment, and there was a glut of money, for which interest was sought without regard to security. The result might have been anticipated. The customers who were to pay the Company 50 per cent. for its advances, in order that the Company might divide 40 percent. among its shareholders, could not long make good their bargains, and when once suspicion became rife the whole fabric of finance as thus constituted came to the ground. When it is reconstructed shareholders must be content with more reasonable profits, and Directors must look less to rates of interest, and more to the value of securities. Limited liability will do a good deal, but it will not give people 30 per cent. for their money without risk.

All this, however, being conceded and established, it will be asked when and where the desired revival is to being. Our correspondents inquire why, if people will only trust their money to Banks instead of placing it out in investments, the Banks themselves cannot become investors, and so set industry going again? But the answer to this is that Banks have had their own share of the fright, and will put out their hands only so far as to allow of their drawing them back again when they please. They have had enough of “locking up” their funds. We are afraid there is no remedy for the mischief except in the effect of time, aided by the gentle pressure of the “strike” itself. We may again say, as we said some time ago, that Capital can sustain a “strike” far more easily than Labour, but it suffers something nevertheless.

[The Daily News, 22. Oktober bis 31. Oktober 1868]

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OCTOBER 22, 1868.

A TERRIBLE story of ruinous bank management is told in the Report presented by Messrs. R. ROBERTS and W. BARTLETT, two of the Committee of Investigation of the Royal Bank of Liverpool, to its shareholders. This great establishment, it may be remembered, passed through the earlier stages of the great panic, not indeed without loss of credit, but without actual shipwreck; indeed, in January, 1867, the proprietors were congratulated upon a state of things which allowed the directors to declare that even in the previous disastrous year a profit of 83,800l. had been made. The bank, however, had been in an unsound state for many years; the crisis of 1866 greatly increased the drain upon its resources caused by the wants of its least solvent customers; the adventurous character of the business it was doing became known among its London connexions; and thus, when the Bank of England prudently set a limit to the assistance it would afford, the Royal Bank of Liverpool closed its doors, exactly twelve months yesterday. It now appears that, in the words of this Report, “the more remote but real cause of the failure was the locking up of the capital of the bank by advances of a most extraordinary nature, and of unprecedented amount, to two firms, who, after their insolvency, were ‘carried on’ by the directors, apparently from want of courage to admit the fact that they had made very heavy bad debts. The effect of the arrangements made with those firms was practically to convert the bank in a great measure into a trading concern, and the results have been eminently disastrous.”

In support of these statements the authors of the Report analyse a number of accounts, giving especial prominence to those of H. T. WILSON, CUNNINGHAM, and Co., and SEDDON and Co. They state that on the day when Overend, Gurney, and Co. closed their doors Mr. WILSON, of the former of the two Liverpool firms, called at the bank and stated that the house must stop payment. At the request of the bank he made a statement of its position, showing 341,000l. assets and 370,000l. liabilities, the assets, however, being enormously over-estimated. After consultation the board offered Mr. WILSON to cancel his overdrawn account of 30,000l.; but he refused to keep on upon those terms, and was then told that the bank would “carry him on.” He stipulated as a condition of continuing his business and transferring his property to the bank, that the bank should pay, or become liable to pay, all his then existing debts, and that he should be allowed five years, in which he was to endeavour to work round, but if he failed to do so the bank were nevertheless to pay all debts incurred in the business, and to release Messrs. WILSON and Co. from all claims and demands; and, extraordinary as it seems, all this appears to have been agreed to, and a deed was drawn up to that effect. Thus, as Messrs. ROBERTS and BARTLETT |[17] remark, “in order to avoid a probable loss between 50,000l. and 60,000l., the bank was by this deed placed under liability to the extent of about 450,000l., the greater part of the security, for which consisted of shipping, a security at all times a risky one for a bank to accept.” Thus the bank was saddled with Messrs. WILSON’S large business, with chances of losses to an indefinite extent, while in no case could it receive more than the amount of debt due to it.

The effect of the deed upon the account of Messrs. WILSON and Co. was soon apparent. On the undermentioned dates it stood thus:

Debit Balance. Acceptances. Drafts. Unpaid Bills. Total.
June 30, 1866 £156,329 £42,508 £59,965 £10,447 £269,249
December 31, 1866 261,834 56,536 68,435 43,205 430,010
June 30, 1867 276,887 63,599 68,614 44,015 453,115
At stoppage of the bank 268,022 67,145 84,807 44,015 463,989

This large and sudden increase is accountable for by the fact that the other bank with which Messrs. WILSON and Co. had been in the habit of discounting their paper, having heard that the firm was being carried on by the Royal Bank, refused to continue their discount, and thus the whole of the paper was thrown upon the bank. This, however, was not all. In December, 1866, when, as we have seen, WILSON’S account was more by 200,000l. than it was in June, Mr. WILSON obtained the bank’s authority to speculate in the purchase of cotton, and transactions took place which resulted in a loss of 64,000l., bringing the total indebtedness of WILSON and Co. to the bank up to 528,000l.

We need not multiply illustrations, for where such things as these are possible, everything is possible. It is impossible to read of such doings without feeling that the unfortunate shareholders—who only as late as January, 1866, were assured that the profit of the year, after making full allowance for all bad and doubtful debts, was 102,633l.—have been cruelly betrayed.

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THE TRIAL OF MR. DOULTON, M.P., AT BRUSSELS.

Brussels, SUNDAY.

The trial of Mr. Doulton, M.P., was resumed yesterday.

After the evidence already reported had been given, M. Anspach, the burgomaster, was recalled, and questioned by the presiding judge. He said that after the exposé in La Finance respecting the pot-de-vin to be handed over to Doulton, he had had no relation with Doulton. Heritage, the solicitor to the company (who has been sworn to as having been a participator in the pot-de-vin), said to him several times that the contract made secretly with Mention was disliked by him. The witness said he had never to his remembrance seen Mr. Clench during the time of the concession.

Mr. Clench was then recalled and told that the presiding judge was about to examine him under the oath administered the previous day. In reply to questions he said that when the concession was under question he was taken by Doulton and Swan to the house of the burgomaster, and introduced to the burgomaster as the gentleman who would introduce the capital into the proposed company. He also saw the burgomaster at the Hotel de Ville twice or three times. He also saw the burgomaster at the Hotel de Ville twice or three times. He went over the plans with Doulton in his presence. He thought that the burgomaster must have gathered from what took place that Doulton and Swan were his agents, and moreover, the secretary of the burgomaster came to London. Proceeding to speak of the pot-de-vin secret contract, the witness said he had heard shareholders say that if they had known of that secret contract they would have had nothing to do with the company. The witness said directly he found out about the secret contract his solicitor wrote letters to the board of directors; and on this board of directors were, besides Mr. Albert Grant, M.P., and Mr. Doulton, M.P., Mr. Warner, M.P., Lieut.-Colonel Neville, Mr. J. Irving Pascoe, and Mr. Henry Pownall, J. P.

The presiding judge drew attention to certain lists which the accused had laid before the London directors in excuse for having made this secret contract. The lists referred to were in une lettre confidentiellle from the board of directors to the communal council of Brussels, and was signed by Mr. Heriot, the secretary. It was dated the 2nd of April, 1868, and contained a resolution passed by the directors in January, 1867, stating that Mr. Doulton, having brought before the directors a statement of accounts of money which he was personally liable to pay, should be at liberty to “make such arrangements with the contractors” as should appear to him convenient, so long as the conditions and price already agreed upon under the contract should not be altered. The list of moneys for which Mr. Doulton stated he was liable was as follows:—Mr. Swan, 15,000l.; Mr. Clench, 25,000l.; M. Keymolin, 8,000l.; Van der Erst, 2,000l.; Ronstorff, 20,000l.; Langrand, 1,600l.; publicity (the sums given to the editors of L’Independance Belge and L’Etoile Belge) and for new plans (about) 2,000l.; making a total of 75,000l. There was an additional list, in which Mr. Doulton said that he had applied 6,103l. 16s. 9d., as follow:—To Swan, 2,051l.; to Swan’s solicitor, 121l.; Mr. Clench, 969l.; Mr Clench’s solicitor, 400l.; Jennings, 600l.; J. B. Smith, 337l. 16s. 9d.; other expenses, 475l.; and to his solicitor, 650l.

The Judge wanted to know how Mr. Clench’s name appeared in these lists after his letter to the directors concerning the secret contract.

Mr. Clench proceeded to reply that the two sums put down to his name and Swan’s were those really due to himself—in all 40,000l., representing his interest in the ultimate profit of the concern; but he was not to be paid this out of the pot-de-vin, for it had been otherwise provided for, so that its insertion in this list as a debt due, and for which Doulton was responsible, was a falsity. When the company was announced to the public, the witness said, I saw by the prospectus that our claims on the concern had been overlooked, or not provided for. I saw Doulton on many occasions, and he said it had been decided to give up these claims. I saw Mr. Heritage, the solicitor, and complained that the concession had been parted with contrary to the agreement entered into with me by Doulton and Grant. He said it could not be helped, for the only provision was to be made with the B shares (deferred). I drew Doulton’s attention to the fact that I was entitled to a fourth of the B shares, besides my other claims, and he said he could not help it, and I, acting under the advice of my solicitor, signed a deep of release of my claim, on condition of having B shares to the amount. I should not have done that if had known of this secret contract for the pot-de-vin; but I have not had the shares to this day, and believe that the company, who told them, set up claim upon them for money owing by Doulton. I have received no money from Doulton except what has been given him by the company to pay certain expenses, 2,500l., and the money he has entered as having paid me, 969l., is the interest of my caution money, and that interest he had received from the town, so that could not have come out of the pot-de-vin, as he has stated. Besides, there is a sum of 600l. which he has received, and that is still owing.

In reply to further questions, witness said the prospectus of the company was issued in 1866, and might be said to be formed in the middle of December of that year. The prospectus said, “No purchase money for the concession and no promotion money will be paid, and the expenses will be strictly limited to the actual preliminary disbursements necessary to acquiring the concession, and the establishment of the company.” The capital was altered, and the company had to be re-registered, as it was registered March. His own name and the names of other capitalists were submitted to the town as willing to find capital before the concession was granted. He further said it was his belief that Doulton never attempted to obtain any other tender than that of Mention’s. Doulton brought a particular friend of his, Mr. Webster, over, but there was no bonâ fide tender that witness was aware of.

The presiding Judge several times expressed his surprise that a company could be formed in commercial England without any more inquiry than had been made in this case, and from his remarks it was apparent that he could not comprehend how persons could be found to take shares in a company of whose working they could know nothing. He was the more astonished that this could take place in England.

Mr. W. C. Reynolds, solicitor, of Fenchurch-street, said—I was present when Mention was charged with the secret contract with Doulton, and he did not deny it. Doulton refused to answer any questions about it until he found we knew all about it. It had then been done some time, from the beginning of the works, and Doulton said that it had been done with the knowledge of Grant, the chairman, and Heritage, the solicitor. I afterwards spoke to Heritage, and he told me that Doulton had been empowered by the resolution of January, 1868, to make arrangements with the contractor, but he (Heritage) said he had no idea that it was for such a sum as 100,000l.

The presiding Judge—You have read this resolution, of course. Now, tell us what you think—you, a solicitor, and one knowing the law, what you think of it?

The Witness—I think it is a resolution framed for committing such a fraud as this, and framed also to conceal it. The witness then continued—Doulton told me on several occasions that the money was to be divided between himself and Albert Grant, after 5,000l. and small payments to John Beavan Smith and Jennings, the engineer and the clerk of the works. Doulton has received money for expenses; as by the balance-sheet of last year it will be seen that expenses were charged and paid for preliminary expenses. I have read the deed of assignment and the concession, and I know that it is laid down that 50,000l. “caution money” is to be refunded to Doulton. But then it is not Doulton’s; and then Doulton is allowed money for plans and expenses incurred in obtaining the concession. By not having any sum stated in that, it was meant that Mr. Doulton should be paid any sum for which he could vouch as having actually paid as travelling expenses and such like. These were to be merely “out of pocket” expenses. The meaning of Doulton’s being remunerated for obtaining the concession by having awarded to him 10,000,10l. shares, B deferred, was that he was to have his profits after the shareholders’ claims had been satisfied, and these B deferred shares were to serve the double purpose of remunerating Doulton for the concession, and to pay off charges. I have complained to Grant, the chairman of the company; Mr. Pascoe, a director, and other directors, of the secret contract with the pot-de-vin, and I was told distinctly that some had been deceived by Doulton. With respect to the question as to whether Doulton employed any “fraudulent manœuvres” to obtain the contract for Mention, it must be palpable that Doulton must have told a false amount. The first board was formed of Doulton, Albert Grant, and Heritage, the solicitor. As a fact the company was formed on the production of the concession and the provisional contract.

The presiding judge expressed himself as unable to understand how a company could be formed on the mere production of “two pieces of paper.”

The witness continued—Doulton informed me that he had made inquiries, and was unable to find a contractor to do the work for a less amount than that to be given to Mention, and I believe it is on the minutes that he told the company the same thing. I made an arrangement with Doulton for Mr. Clench, and this was that Mr. Clench should take his money, advanced in the caution money, in A shares, and that he should have 2,400 of B deferred shares, in discharge of his share of profits, 40,000l. Mr Doulton represented to me that there was no other way to meet the claim, and if the claim was not settled Mr. Clench would certainly lose all his money for the company would be broken up. Doulton offered to pay the costs of a suit I had entered against him, and to refund to Mr. Clench 2,800l. paid for expenses before the concession, and he said he would pay these personally. I have been told they have been paid by the company in money; but Doulton gave bills for the amounts. (A laugh.)

Witness further said that he had been informed by a director that Grant had been accused in the board-room of sharing the pot de vin, and that he did not deny it. As to the “charges” which Doulton said he had to meet, all the real charges witness believed had been met by the company, and the other charges had been repudiated. The sums put down by Doulton were certainly not personal liabilities; and as to Mr. Clench’s 40,000l., which Doulton had returned as due by him personally, that debt and the company’s had actually been extinguished by the acceptance of B shares.|

[19]

 Jenny Marx klebte den Ausschnitt mit den letzten vier Absätzen des Artikels auf S. [19] und den Anfang des folgenden Artikels auf S. [18].
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In answer to M. Lauret
, the Procureur’s representative, the witness said that Doulton had never shown any receipt for the money he said he had paid Swan. All the accounts were then gone over one by one, and it was stated in detail that Doulton had incurred no personal liability upon them, as he had said in the excuse for making the secret contract.

Several other witnesses were called, and their evidence supported the testimony already given.

The speech of M. Lauret followed. In this he analysed the accounts given by Doulton, and contended that their fictitious character had been established; and if that were not so, he said the accused had only shown out how he was to expend 75,000l., whereas the pot de vin by the secret contract amounted to 100,000l.; so that Doulton convicted himself, on his own showing, of putting into his own pocket 25,000l. As to the question of the jurisdiction of the court, Doulton had twice acknowledged it, and he had only refused to come at the last moment, the third time the court had assembled. The learned counsel held that as the company had Belgian shareholders, was enrolled under Belgian law, and its operations were conducted on Belgian soil, and as Doulton had lived in this country when committing the offence, and had been paid with Belgian money, he was answerable to Belgian law. Attention was drawn to the fact that the secret contract was made at the starting of the company, and that the resolution empowering Doulton to make arrangements with the contractors was only passed this year. As to the fact that some of the money had been restored, this did not condone the offence, for that remained, and was an offence still. The law, the advocate pointed out, was, that a person who had a fraudulent intention offended against the law, and Doulton had proved his fraudulent intention by an overt act by which he had profited. The learned gentleman in severe terms condemned the bribes to the press, and concluded a powerful address by calling for a severe punishment to recorded against the accused, who by his social position had incurred more serious responsibility than the humble.

The address occupied more than two hours, and at its conclusion the judge said the court would deliberate.|

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The Daily News. Nr. 7019, 30. Oktober 1868. S. 3.
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THE DOULTON TRIAL.

TO THE EDITOR OF THE DAILY NEWS.

SIR,—After the full report of the proceedings in Brussels which has appeared in your journal, I, as an act of justice, have to ask the insertion of this letter of explanation. In doing this it is not necessary to occupy your space by entering into the early history of all the proceedings that led to the granting of the concession, further than to state that in 1865, having received an intimation personally addressed to me from Brussels that the authorities of that city were prepared to receive tenders for the execution of works for its drainage and improvement, I, in an unhappy moment, applied to the firm of which Mr. Clench was the head to co-operate with me in that business, and Mr. Swann, at that time known to Mr. Clench as his colleague on the board of the Oriental and Commercial Bank, was mentioned to me by him as the most suitable person to undertake any necessary surveys and inquiries on the subject, and consented, at my request, to proceed to Brussels respecting the matter. The result was provisional contract with the city authorities, myself, and Mr. Swann. The caution money required was 50,000l., and this Messrs. Clench, as financial agents, undertook to provide. The time, however, when the deposit had to be made had nearly expired without their being able to find more than 15,000l.; and in this emergency I applied to Mr. Albert Grant, who, after satisfying himself as to the value of the concession, undertook to provide the next day 35,000l. upon Mr. Swann’s assignment of his share in the contract, and an express disclaimer in writing from Mr. Clench and his firm as to any connection or pretension on their part with or to the concession and contract in question. The disclaimer alluded to was in the following terms:—“Sept. 30, 1865.—Dear Sir,—You having made an arrangement with us to pay us an agreed sum out of your share of the profit in the Brussels concession, we hereby acknowledge that we have otherwise no claim upon the concession, and that you are thereby at full liberty to deal with it as you may think proper.—We are, dear sir, yours faithfully, CLENCH, SMITH, and Co.
To F. Doulton, Esq., M.P.”

The conditions upon which Messrs. Clench and Co. abandoned all rights in the concession, having regard to an initiatory understanding that they should join me in working out the enterprise, and to their contribution of 15,000l. as part of the caution money, were that they should receive a sum of 25,000l. Upon Mr. Swannʼs assignment, as above stated, I agreed that upon his engaging to complete the project in its various parts, and conduct the business with the municipal and state officers and engineers at Brussels, he should receive 15,000l. In addition to these two sums, amouting to 40,000l., Mr. Swann had entered into other obligations which he deemed necessary, or which were forced upon him as necessary to acquiring the concession, of a nearly like amount, making in the whole about 80,000l., for which, as concessionaire, I became personally liable. And it was, therefore, not only prudent but necessary, that I should provide for that amount before transferring the contract and concession to any company. The estimated price for the whole of the works, including all contingencies, was 600,000l. Up to that time, however, November, 1866, I had been unable to obtain any English contractor who would carry out the works for that sum, even without contributing to any of the liabilities, Messrs. Brassey and Co.’s estimate for works only being (I have not the exact figures by me) nearly 610,000l. So desirous was I, however, that English contractors of repute should execute the works, that I actually made anoffer of the contract to Mr. Harrison, of that firm, at the price of 603,000l., and a letter from that gentleman confirmatory of this statement has been in the hands of the Brussels legal authorities for some time past. Failing in these endeavours, I, after receiving strong recommendations from |[19] the Belgian authorities in favour of Messrs. Mention, of Liege, entered into a contract with that firm for the sum of 598,000l., which included a rebate of 163/4 per cent., as an approximative amount likely to be required to meet existing liabilities and other carges incidental to the concession that might arise of a special and exceptional nature. At this time no company was in existence. I was concessionaire, and as such had a perfect right to make any arrangement I liked with the contractors, even although I had not been under any such obligations as those to which I have referred. After this date the Belgian Public Works Company was formed, and they having before them the fact that the Messrs. Brassey’s estimate was over 600,000l., accepted from me, with the concession, the contract of Messrs. Mention.

Soon after the formation of the company, and at the same time that the contract and concession were formally handed over by me, I was appointed managing director of the company, and then it was that I informed the board that I had made arrangements with the contractors. At the same time, a discussion arose as to the notice which had been served upon the company on the part of Messrs. Clench, Smith, and Co., who claimed to be entitled to a charge upon the profits of the concession, and to an interest in the B shares of the company; thereupon a long discussion ensued upon the fact of the company being harassed by legal proceedings at the very commencement of its operations. I explained to the board that I considered myself liable to provide for the payment of all claims on the part of Messrs. Clench, Smith, and Co., and also claims by several parties in Brussels and elsewhere, and that I had made arrangements with the contractors to meet the same. Finally, the board passed the following resolution:—“Resolved that upon Mr. Doulton giving the company a complete indemnity against all claims whatsoever, excepting as set forth in the articles of [a]ssociation, that he be at liberty to make any arrangement with the contractors which he may think fit, provided that the terms of the contract above referred to be in no way affected thereby.” This indemnity I accordingly gave. Mr. Clench was the first who endeavoured to enforce what he considered to be his rights, by filing a bill in Chancery against myself and the company for 40,000l. and a fourth interest in the B Deferred shares. This bill he ultimately withdrew, abandoning altogether his claim for 40,000l., and accepting, in full satisfaction of all his claims, 2,400 of my Deferred B shares. Having thus got quit of half the liabilities, and with good grounds for believing that the remainder might be settled for a comparatively small amount, did I seek to retain the percentage which had been set aside especially to meet these amounts? Let the following facts show:

Believing at the time that the contractors would continue the execution of the works, and that a large sum would still be paid to this rebate fund; I, in the interests of the company, entered into a contract with them to give them a bonus of 20,000l. over and above their contract price, provided they would finish their contract in an accelerated period. I also induced them to obtain the services of an experienced English contractor, with whom I entered into a contract, whereby (out of this fund) I undertook to pay him a salary and per centage on the work done, which together at the close of the undertaking would have amounted to 20,000l., of course, this being conditional on Mentionʼs continuing the work, and the payment by them of the 163/4 per cent.

In the autumn of last year, and long before the existence of the rebate of 163/4 per cent. was talked of or known in Brussels, Messrs. Mention applied to the board to consent to a modification of their contract as to times and mode of payment, but not in any way affecting the price of the work. As managing director the board natullaly refered this question to me, and what was the course I took? If the 163/4 per cent. agreement had been made for my own personal use, and not simply to meet the liabilities to which I have referred, I should naturally have advised the board to consent to the contractors’ proposal, especially as by so doing the payment of the percentage would have been more certainly secured; but no, the liabilities for which the rebate was intended had been in a great measure extinguished, and not being satisfied with the progress made, I, in the interest of the company, and of my own, being the largest shareholder, wrote a formal report to the board, advising them not to accede to the request of the contractors, but to put an end to their contract. This course, upon my recommendation, was adopted; and with this cancelling of the contract of course the rebate ceased, which would have continued to this day if I had consented to the proposal of the contractors, who, not from unwillingness, but from having had unexpectedly to encounter work of a different character to that which they had anticipated, were not, in my judgment, equal to the requirements made upon them; and upon my advice, and my advice only, all contracts with Messrs. Mention were put an end to. The whole of the money received from the contractors under this agreement amounted to about 6,000l., and was in the first instance paid to Mr. Smith, one of the superior officers of the company at Brussels, who has been most grossly maligned and calumniated in reference to this matter. Him I selected for that purpose, firstly, because his integrity was unquestionable, and secondly, because it appeared to me advisable that some one other than myself should be able to testify as to the nature and amount of that account. On a question arising, however, as to my right to retain the rebate for the purpose of disbursement, as intended, it being alleged that the claims could not be sustained in Brussels or elsewhere, and in any case should not be borne by the company, I, to remove all charge against myself of sharp practice towards the company, although having no doubt as to my legal rights, at once consented to refer the whole matters in dispute to arbitration, leaving the appointment of the arbitrator absolutely to the company, and pending such arbitration offered, and did accordingly deposit the whole amount received by me, into the company’s hands, together with an account of my disbursements. The arbitrator appointed was the eminent barrister, John Horatio Lloyd, Esq.

Such are the simple facts in connexion with this matter, and it will perhaps scarcely be believed, that all I have here stated, with documents in proof, were by me given to that singular functionary, the Judge of Instruction, at Brussels, some months since, yet not the slightest reference has been made to these facts in the trial which has now closed. As to the evidence, as it is called, that has been given I confess it is difficult to speak with anything like calmness. I distinctly assert, however, that the only fact proved as affecting me, by such evidence as would be received in England, is the one fact of the existence of the rebate—which, indeed, I have never denied. All the rest has been hearsay evidence, most of it entirely beside the question, and without any foundation in fact. This hearsay evidence has, be it remarked, not only been received, but actually solicited by the judge. Now let us suppose a man on his trial in this country for the offence, say, of horse stealing, and let us imagine, if we can, the following examination by the judge of a witness:|

[18]

 Jenny Marx klebte die Ausschnitte mit den letzten Absätzes des Artikels auf S. [18].
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Judge—Do you
know the accused? Witness—I don’t know him exactly; but I have seen him.

Judge—Well, what do you know of his morality? Witness—Well, I don’t know anything myself, but only what I have heard.

Judge—What have you heard as to his morals? Witness—Well, I have been told by a friend, who had it from a party who was in a position to get good information, that the accused seldom goes to church, and totally disregards the obligations of “fast-days;” and forthwith that fact is jotted down as incontestable evidence that the accused stole the horse.

Now this, without any exaggeration, is the kind of evidence given and accepted at Brussels. The assertions made on oath that I have given Mr. Clench bills that have never been paid—that I have not paid Mr. Swann the sum put down to his name—that there was not only no other tender, but that I never sought for any other tender but that of Messrs. Mention—that I informed Mr. Clench and Mr. Reynolds of other directors who had received a portion of the rebate—I had acknowledged to have wronged him (Mr. Clench)—that he has never been able to obtain his B shares, by reason of debts owing by me to the company—all these, I assert, are absolute inventions. Fortunately, most of these statements, although made on oath, can be incontestably disproved. Thus the statement as to Mr. Swann is proved to be false by the fact of his having made a statutory declaration that he did receive the money in question. The assertion as to no other tender being invited is answered by there being in existence evidence that not only were tenders sought, but offers made to English contractors to undertake the work. The impudent statement that I have given Mr. Clench bills that are still unpaid is dis proved by the unquestioned fact that I have every bill in my own possession at the present time—or receipts for their payment; while the no less impudent statement that his B shares are retained by the company by reason of debts owing by me is met by the fact that their retention is owing to a notice served on the company by Mr. Clench’s late partner, who contends, and I believe justly, that he has an equal right to them with Mr. Clench himself.

I am quite aware that as to some of the evidence given at Brussels I am simply pitting my word against that of Mr. Edmund Clench, late of 1. Royal Exchange -buildings, London, and now of Brussels, and Mr. William Collett Reynolds, late of the firm of Reynolds and Palmer, Yarmouth, and now of Fenchurch-street; and thus I am contented it should be. And it is upon statements and hearsay evidence such as I have here alluded to that I am to be charged with great crimes and misdemeanors. Fraud, attempt at fraud, fraudulently manœuvring, &c., there has been none. I can quite understand the question will be put—Why, if you have to the charges brought against you so clear and straightforward a defence, did you not go to Brussels to meet your accusers? No one will, however, ask this question who is cognisant of the system of jurisprudence in Belgium, or who knows the character of the witnesses there arrayed against me, some of whom, to my own knowledge, were in daily private conference with the judge who had to report upon the case; still less shall I be asked this question by those who have been observers of the growing prejudice existing against me in Brussels, mainly because I, and my able coadjutors there, have surmounted the tremendous difficulties we had to encounter, revealing, as this has done, the exceptional value of the enterprise in which, in common with the rest of the shareholders, I am so deeply interested.

What the decision of the court may be I neither know, nor do I care. What I do care for, and what I think this simple recital of facts will ensure, is the continued good opinion of my friends, and my countrymen in England, and my retention among them of an honest and honourable name.—I am, &c.,

FRED. DOULTON.
Oct. 29


TO THE EDITOR OF THE DAILY NEWS.

SIR,—My attention has been called to a report your journal of the proceedings in Brussels against Mr. Doulton, in which it is alleged that I participated, or expected to participate, in the arrangement made by him with the contractors, Messrs. Mention and Co. I beg to give my most distinct and unqualified denial to this statement. I never received or expected to receive, one shilling from the transaction, and I am at loss to understand why my name should have been mentioned in the matter, unless it was because I persistently opposed the attempts made by some of the parties giving evidence on the inquiry to obtan money from the company and the directors by the threat of legal proceedings, for which, in my opinion, there was not the shadow of foundation.

I have only this morning returned from the continent, or I should have sent this communication before.—I am, &c.,

FREDERICK HERITAGE.
Clement’s –Jane, Oct. 29.|

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The Daily News. Nr. 7015, 26. Oktober 1868. S. 5.
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MR. F. DOULTON, M.P.

TO THE EDITOR OF THE DAILY NEWS.

SIR,—The insertion in your journal of an account of some proceedings now being taken against me in Brussels induces me to request that you will allow me to state shortly the circumstances upon which these proceedings have been founded. About three years since I became one of the concessionaires for important works in Brussels, having for their object the sanitary improvement of that city, and in the obtaining of which concession I necessarily incurred very many heavy pecuniary liabilities. As concessionaire I in the first instance sought for competent contractors in England to execute the works at the estimated amount; failing in this I entered into provisional arrangements with Belgian contractors, who undertook the execution of the contract for 598,000l., being considerably less than any tender I had been able to obtain from English contractor; they agreeing also to contribute such a sum as would enable me to discharge the beforenamed liabilities. Subsequently to this an English company was formed to purchase the concession and contract; and I was requested to occupy an official position in connexion therewith. This I accepted; and at the same time, and before the assignment of the contract to the company, informed the board of directors (they having had a claim made upon them for a large amount by one of the parties to whom I considered myself liable) that my arrangements with the contractors would enable me to meet all claims in connection with the obtaining the concession, whereupon the following resolution was passed:—“Resolved, that upon Mr. Doulton giving the company a complete indemnity against all claims whatever, excepting as set forth in the articles of association, that he be at liberty to make any arrangement with the contractors which he may think fit, provided that the terms of the contract above referred to be in no way affected thereby.” This indemnity was given, and the contract sealed with the contractors. No sooner, however, had the works commenced with vigour, and the exceptional value of the concession become apparent, than attempts were made to injure the company, with the evident object of getting the concession rescinded, by circulating charges against myself and the more prominent members of the city authorities, with whom it was alleged I had a corrupt agreement. This attempt, however, collapsed, by the prosecution of the journal which originated the report, the editor of which was mulcted in heavy damages. The attempt to injure the company then took the form of the present proceedings against myself, on the ground on that the arrangement made with the contractors for payment of the liabilities before alluded to was contrary to Belgian law. Directly this question arose, I, although assured that my position could be neither legally nor morally assailed, but with a view of removing all proceedings that might in any way injure our enterprise, made an offer to the board of directors to refer everything in connexion with or relating to the formation of the company and the contract to arbitration, the arbitrator to be appointed by themselves; and to this the board assented, appointing as arbitrator the eminent barrister, John Horatio Lloyd, Esq. I further offered to deposit, pending his decision, the whole amount I had received, together with an account of my disbursements. Accordingly, I did deposit this sum with the company, to await his award. Beyond this simple statement of facts, I do not desire, at the present time, to occupy your space, especially as, although the inquiry is closed in Brussels, no decision has yet been arrived at. When that is given I may, if necessary, ask your indulgence to lay before the public evidence which will reveal as gross a case of persecution as few have had to encounter, but which, as the largest shareholder, I am glad to say, has not had the effect contemplated, viz., to damage one of the most valuable concessions ever obtained by English enterprise.—I am, &c.,

FRED. DOULTON.
Oct. 24.|

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The Daily News. Nr. 7020, 31. Oktober 1868. S. 6.
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THE JUDGMENT IN THE CASE OF MR. DOULTON.

The following is the text of the judgment pronounced by the correctional tribunal of Brussels in the case of Mr. Doulton:

“Considering that the accused, Frederick Doulton, although properly summoned, has not put in an appearance, considering that it results from the information which Mr. Doulton supplied at Brussels on the 9th December, 1866, through Mention and Son, that there was—first, a sub-contract for the works to be executed for the purification of the Senne at a cost of 14,950,000fr. (596,000l.); second, a promise, through the agency of Smith, by which Mention and Son bound themselves to return to him a sum of 2,500,000fr., to be deducted from the price of the sub-contract;—Considering that the accused had obtained the sub-contract under these circumstances with the view of depositing it in a company which he intended to create in London, that in point of fact a company was formed by Doulton in London on December 19, 1866, under the denomination of the Belgian Public Works Company;—Considering that it results from the examination and especially from the letter of April 2, 1868, issued by the directors of that company, that, towards the end of December, 1866, the company was established to obtain the concession of June 15, and that the declaration of Doulton that perfectly solvent contractors in Belgium had made a provisional contract for the purification of the Senne, for a sum of 596,000l.—in other words, the subcontract between Doulton and Mention—was one of the inducements to the obtaining of that concession;—Considering further, that it appears from the same letter of April 2 that Doulton, with a view of getting his contract for 596,000l. accepted by the company, induced his co-partners to believe that he was in correspondence with the wealthiest contractors in England and that they were convinced that nowhere could more favourable terms be obtained;—Considering that after the company was formed, Doulton, as its managing director, renewed in its name, in London on January 15, 1867, the sub-contract of 596,000l. in order to make it complete and valid;—Considering that Doulton by this proceeding put it in his power to appropriate ulteriorly in Brussels a part of the profit under the agreement between him and Mention and Son, to the prejudice of the Belgian Public Work Company;—Considering that it results from the foregoing that Doulton thus succeeded by fraudulent manœuvres to influence the aforesaid society in London to take on its own account the sub-contract of Mention and Son, and consequently that the acts constituting swindling as defined by Article 490 of the Belgian Penal Code have been done in a foreign country;—Considering, indeed, that by this act the society contracted an obligation towards Mention and Son, and that it was this obligation fraudulently worked by Doulton that enabled him to receive the unlawful advantage which he stipulated for him;—Considering that if Doulton remitted to Brussels, through Mention and Son, a sum of 14,897,537fr., this payment, which would show a persistence in his intention, was in Belgium but the consequence of a delinquency committed abroad;—Considering that it is of little importance that since the constitution of the Belgian Public Works Company, the originators of which are all foreigners, Belgian shareholders were subsequently interested in that company, since it has not been established that fraudulent manœuvres were employed by the accused to influence them to take shares;—Considering that the acts charged against Frederick Doulton, and committed by him in Brussels, do not fall within the purview of the new Belgian penal code: The court, for these reasons, discharges the accused from further prosecution.

[The Daily News, 18. November 1868 bis 11. Januar 1869]

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TRADE AND FINANCE.

Nov 23 Anmerkung von Jenny Marx

 Von Marx mit einer kurzen Auslassung und eigenen Hervorhebungen übernommen in seinen Artikel „How Mr. Gladstone’s Bank Letter of 1866 Procured a Loan of Six Millions for Russia“, der am 2. Dezember 1868 in der „Diplomatic Review“ veröffentlich wurde (MEGA² I/21. S. 103.14–24).
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THE withdrawal of a million sterling in gold from the Bank in a single day is precisely one of those unprecedented events that strike most forcibly on the public mind. We are accustomed to a moderate drain; to see sums taken for export at the rate of 20,000l. to 100,000l. at a time; to find that our regular arrivals from Australia, America, and other parts of the world, are at once purchased by shippers for the Continent, so that more than a million may easily leave us in this manner in a week. But it has not the sensational effect of a million going out of the Bank in one huge amount, and without the least warning that any such grand operation was contemplated. Hence the first consequence of the affair was a depreciation in the public funds alone of some 3,000,000l. to 4,000,000l., and in other securities, home, colonial, and foreign, of at least as much more.
Why the withdrawal of this large sum should cause an eightfold loss in the quoted value of permanent investments is one of those questions which cannot be explained on purely economical grounds. Supposing that the money represented remittances from the United States to pay for their newly-acquired territory, it was only held by us, as it were, in transitu, and could not affect the prosperity of the nation one way or the other. Say that it represents the subscriptions to the late railway loans—hardly a satisfactory explanation considering their total amount, and the fact that a great proportion must remain here in payment of materials—still in the existing state of the money market the export or import of a million ought not to make much difference. Besides, we have nearly that sum coming forward in a week or two, which would serve to fill the gap. The foreign exchanges also have risen, so that whatever specie is now received may fairly be expected to remain. The demand for gold for the Continent generally has subsided, and does not appear likely to revive for the present. The advance in the Bank rate of discount cannot be considered in the light of a protective measure, since it has come after instead of before this export of a million, and when it was evident the exchanges were already turning in our favour. The rise may thus be regarded as a consequence of the withdrawal rather than an effort at its prevention. It is very certain that if the Bank rate had been raised to 21/2 per cent. last Thursday week, it would not have had the slightest effect in retarding the operation which started the mercantile public a few days later. There is, likewise, little or no reason to doubt that even if a fresh advance were to be adopted to 3 per cent., it would be ineffectual to stop a similar transaction, always supposing the conditions equal. There are many financial arrangements constantly passing between foreign Governments and the great monetary houses of England and the Continent of which the general public hear but little. On the present occasion, the magnitude of the affair has attracted especial notice, solely because it happened that the supply |[21] of gold required was taken from the Bank, and a heavy decline in the Bank bullion is an important question to every trader.

There seems, however, good cause for believing that, apart from this exceptional transaction, money was about to rise in value—slowly, perhaps, but steadily. Symptoms of revival in trade are apparent, which will be much more marked as soon as the general election shall have been concluded. As long as merchants and manufacturers are thoroughly engaged in political matters, commercial business is naturally more or less put in the background. Besides, the expenditure consequent on a general election necessitates a large absorption of ready money or floating capital—temporary, it may be, but effective for the moment. Every one is ready to admit that the money will return into banking circulation by-and-bye, but the great point is that it is not immediately available. This circumstance, of course, adds to the influence produced by the late heavy withdrawal. A month or two hence our trade may have returned to the normal conditions of the period before 1866. There are indications that, notwithstanding the general election, this long looked-for improvement might have happened even now, but we have some legislative obstacles to battle against, which, thrice removed by overpowering necessity, are still maintained in defiance of experience and common sense. Under our present currency system any large and sudden withdrawal of gold like the present has the effect on moral grounds of disturbing confidence and tending to derange our commercial relations. True, the Bank of England still retains nearly 181/2 millions of bullion, and the Bank of France 461/2 millions, and there is therefore no cause to fear a restricted money market, on any existing reasonable basis; but the evil is, that directly the reserve begins to decline, a certain sort of anxiety is fed by obstinate adherents to the Bank Charter Act, who refuse to see that trade such as that of this country, always extending, must require from time to time exceptional measures of accommodation. With equal readiness money-lenders take advantage of the situation, and assist to create an artificial scarcity. It has been frequently said, “Lenders are few just now, people prefer to hold their money.” And why? Not that it is really less abundant, but that the falling off of the reserve of the Bank makes capitalists hoard for highest rates. Borrowers are equally anxious to provide against the difficulties born of our currency system, and which they have severely suffered from in the past crises. How many a man has undeservedly fallen since the panic of 1866 because his securities were of scarcely second-class kind, and bankers refused to lend from dread of advancing anything upon those not quickly convertible.

It is quite right that bankers should do their utmost to protect their depositors. It is also right that speculators should not be encouraged by money facilities from those who take in charge the funds of others; but it is not right, or the least wise, that we in this country should be subjected periodically to vague alarms and checks to trade because a large amount of gold is suddenly taken from the Bank, or its reserve shows for some weeks a regular, though actually an unimportant decline. It is not so in France. There the Bank authorities take upon themselves to deal with the circumstances of the time. At periods of great trial they have not hesitated to make large over issues of notes to meet national hoarding and stay public alarm, and there can be little question that their policy has been successful. The knowledge that legitimate accommodation would be granted, though the gold coffers of the Bank were getting daily lighter, arrested growing fright, and has more than once prevented wide-spread ruin. Happily we are not in these times. A plethora, not a dearth, of bullion, is and has been long the distinctive feature of both these Banks. We have a little return of confidence, and foreign governments have been drawing from us, owing to our low rates of money, a little fast, but let us hope that some sound revival is coming, that we are the wiser for the ruinous lessons of the last few years, and let us regard dearer money as the best evidence of returning enterprise.

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MONEY MARKET.

TUESDAY EVENING.

Nov 18. Anmerkung von Jenny Marx

Business in the City to-day was much interfered with by the excitement in connection with the elections. Apart from this, attention was chiefly directed to the actual realization of yesterday’s rumour with regard to impending withdrawals of gold, the heavy amount of 1,000,000l. in Russian imperials having been taken from the Bank to-day for exportation to Russia, through the agency of Messrs. Baring Brothers and Co. One effect of this transaction was an increased demand for money, and an advance in the rates in the general market. In fact the terms in the discount market to-day were generally fixed subject to revision in the event of the Bank of England minimum being raised on Thursday to 21/2 to 3 per cent. To-day’s large withdrawal of gold having already made the foreign exchanges firmer, and a total of about 1,000,000l. being on the way from Australia, though not yet due, the impression is that the movement on Thursday will not be beyond 21/2 per cent., more especially as the Bank would run a risk of being underbid by the general market were it to charge more. At the Bank discount-office to-day a good demand was experienced. It is of course absurd to suppose that after more than two years’ plethora of bullion our financial arrangements here can be seriously affected by this exceptional draught upon our stock. On the contrary, the prospect is that with a somewhat higher value of money we may have an increased amount of business, a 2 per cent. rate at the Bank being, in fact, synonymous with stagnation.

The funds to-day were dull, and closed at a reduction of 1-16 to 1/8 per cent. As regards foreign stocks, some, such as Portuguese, Honduras, and Brazilian of 1865, improved, but several were lower, including Danubian, Turkish Six per Cents. of 1865, and Spanish of 1867. Home railway stocks were mostly better; there was a rise of 1 per cent. in Caledonian and South Eastern B, or Preferred, 5/8 in Great Eastern and South Eastern, 1/2 in Great Northern A, and 1/4 to 1/2 in a few of the other principal lines, but Brighton experienced a fresh fall of nearly 1 per cent. There was again considerable excitement in Erie Railway shares in consequence of the advance telegraphed from New York. After repeated fluctuations the price closed 1 per cent. higher than yesterday.

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The Daily News. Nr. 7051, 7. Dezember 1868. S. 5.
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TRADE AND FINANCE.

Dez 7 Anmerkung von Jenny Marx

THE Exchequer Chamber have in the past week reversed the decision of the Common Pleas in the important Stock Exchange case of “Grissell v. Bristowe.” This result could not have been altogether unexpected, since one judge—not the least able, or the least acquainted with commercial law—dissented from the majority of his colleagues. Strangely enough, the duty has also devolved on Lord CAIRNS to pronounce a judgment in the cognate case of “Coles v. Bristowe,” which was entirely antagonistic to his own preconceived ideas. We have no care to quarrel with that. So long as justice is done it matters little whether it comes by the correction of former mistakes or without the commission of any whatever. The result is the same, and, as far as the general community are concerned, is equally valuable. There can be no question that the decision in the case of “Grissell v. Bristowe” is perfectly equitable. How, in the first instance, it could have been other than it is seems at first sight difficult to explain. We can only offer the diffident assumption that the judges—always expecting Mr. Justice BYLES—contrived to get puzzled with purely commercial technicalities.

However, the question has been decided, both by the highest courts of common law and equity, that an agent or intermediary is not a principal. If the agent fail in his duty, let him by all means be hold responsible; but if he fulfil his part of the contract, he ought not, on any principle of business or common justice, to be made responsible for the laches of others. Both the LORD CHIEF JUSTICE and Chief Baron KELLY clearly defined this situation. The remarks of the latter on closing the case are especially worthy attention. They distribute the responsibility fairly. There was so much to be done on one side, so much on the other. But it is not fair that in a mutual agreement the whole onus should be cast on one party when he has done his best to fulfil his share of the bargain. A dealer buys shares every day, and is responsible to pay for them. On default of his principals he must meet this engagement, in times of difficulty an onerous one enough. Granted, however, that, as in the case of Messrs. BRISTOWE, |[22] everything had been done that had been undertaken, it seems unjust that the dealers should be saddled with a responsibility they had never undertaken.

This verdict is regarded as a great relief by those engaged in monetary transactions. It has a double value. It not only establishes a safe basis on the highest authority on which professional dealers in shares and sellers or buyers of shares among the public may transact their business, but it bears just testimony to the usefulness of the Stock Exchange as the recognised mart for operations of this nature. We have had occasion sometimes to differ from the judgments of the Committee of this body, and we retain the opinion that its constitution should be altered so as to prevent any member of the Committee from taking part in the trial of any case in which he is personally interested. This is wrong in principle, and will always leave a certain amount of doubt whether justice thus administered by a private tribunal can be strictly pure; but, apart from this very obvious conclusion, there can be little question that the Stock Exchange is a very valuable medium for the carrying out of financial business, and the prompt and honest realization of stock and share property. Moreover, it has been proved through a long series of years that the Committee in the main have discharged their functions well. Those who have had any experience of their judicial procedure must bear testimony to the patience of their investigations, and their studious desire to do right between the public and their own body. Any fair complaint from the public is sure to receive full consideration, and it is of vital importance to such a corporation that it should be so. The Stock Exchange is one of the very few monopolies that remain in this country. At the same time it is an arena open to every one who can be responsibly introduced and who will bind himself to subscribe to its published laws. Thus the monopoly becomes virtually one merely in name, and as such a medium of monetary dealings is regarded as indispensable both here and in all the principal cities of the world, anything that can tend to ensure justice and safety of dealing and raise the character of such privileged bodies, is a clear advantage to their own members, and an equally clear boon to the communities at large. Since the fall of Overend and Gurney’s house, and the terrible ruin it involved, of which the Stock Exchange must naturally have had frequent and conclusive evidence, the question of the liability of the jobber, or middle-man, has been continually raised, and the very existence of doubt on this point has for a long time past paralysed business, and in thousands of cases made it impossible for holders of any share property with liability attached to realise, whatever the sacrifice they were prepared to make. Even securities of very high class, such as our joint stock banks, with capital uncalled, have suffered in some degree from the uncertainty of the situation. A restricted market generally leads to undue depreciation, and manifestly everything that impedes the free interchange of the securities of this wealthy country must be as prejudicial to capitalists as to those whose agency they employ for conversion into money or investment. On this further ground, the judgment of last week is rightly regarded as a subject of general congratulation. How far the points which have been so long and seriously debated may be of public service in another sense, has yet to be tested. The immediate lesson it teaches, in addition to the sad instruction of the past few years, is that shares if registered on our joint stock principle should be issued fully paid up. Infinitely preferable would it be to imitate the example used on the Continent, and adopt the system of issuing shares to bearer. If this policy had been permitted three or four years back, a quarter of a million, to say the very least, would have been saved in litigation alone. At the same time speculation and “rigging the market” would have been seriously arrested by the obligation to pay the money subscribed at once, instead of a small deposit, the subscriber, with very few exceptions, taking his stock in the hope of an immediate premium, and with the full purpose of evading future calls. This system has been fruitful of evil, and is still telling on us as a people. The welcome judgments of the Exchequer Chamber and the Chancery Courts in the analogous case of “Grissell v. Bristowe” and “Coles v. Bristowe,” will be doubly valuable if they lead us to a more sensible and honourable mode of carrying out fresh enterprise. The want is that those embarking in it should follow the wisest principle of life, that of not incurring obligations beyond their resources, present or prospective, but of limiting their subscription by their actual means.

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The Daily News. Nr. 7073, 1. Januar 1869. S. 5.
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TRADE AND FINANCE IN 1868.

THE principle that a nation is happy which has no history does not precisely apply to commerce. An uneventful year may have its negative advantages, but commerce needs impulse, movement, and effect, while a quiet year too frequently means stagnation in business, unemployed capital, and diminished profits.

The twelve months which expired yesterday have not furnished us with new examples of the recklessness of a sanguine period. Some feeble attempts at speculation have been manifested, but although occasionally successful for a time, their subsequent break down has been sufficiently marked. The Russian railway loans, readily as they were taken at the first issue, have dropped from premiums to discounts. The constantly promised revival of trade is apparently still as far off as ever. At intervals some few indications have been presented that commerce was at last about to improve, but these signs have been always evanescent, and we have finally dropped back into the old state of weary and profitless |[23] stagnation. Dulness in trade was the characteristic of the year 1868 at its commencement; dulness is equally the feature at its close. It is impossible to gloss over the fact that merchants and producers are making but little money now. The announcement that the Lancashire cotton-mills are to be put upon half time in the present winter is far more significant than any statistics from the Board of Trade. After making every possible explanation there stands the actual fact, that the purchasing power of our home consumers, and probably of our foreign customers as well, is materially below the average mark.

Certainly we have the consolation, whatever it may be worth, that if trade has gained little, it has lost less. The mercantile failures have been remarkably few—hardly one could be mentioned of any magnitude. Now and then some disagreeable reminder has been received that the great joint-stock disasters of 1866 have still to be finally adjusted; that calls are made, or pending; and that the public are yet far from having completed the expiation of their follies in 1864–5. But these difficulties trouble the mercantile class less than the other portions of the community. Traders are not, perhaps, altogether too wary to escape being led into these risks sometimes, but in the long run they are less liable to err than the confiding clergymen, doctors, and governesses who are specially marked out as the promoter’s prey. These last investors, who were tempted by a high premium to invest their money, find out that they have incautiously undertaken obligations far beyond what they knew, or even suspected. The year 1868 has bitterly undeceived them in this respect.

As regards purely monetary affairs the prospects on the 1st January betokened an easy discount market. The bullion at the Bank was 22,061,728l., and the reserve 12,819,673l.—a respective increase compared with 1867 of about 2,646,000l. in the former item, and of nearly 1,700,000l. in the latter. The introduction of railway loans was commenced by the issue of two new projects, for the Panama Railroad, and for New South Wales, supplemented afterwards by a fresh demand for the Madras Company. Another instalment of the many revelations of railway mismanagement had been furnished by the publication of the report from the Committee of Investigation of the Caledonian. A Hungarian loan was introduced, but commanded little attention.

In the next month the prominent topic in commercial circles was the first judgment in the case of “GRISSELL v. BRISTOWE,” which, if it had been upheld, would have fastened a liability on dealers in the Stock Exchange practically subversive of business. It is only lately that the first decision has been reversed on appeal. The first of the Russian Railway loans for the year had been brought forward with a success that has not been maintained to the present day.

There is little to record in March. Railway loans were again the feature, both for India and the colonies. The issue of debenture stocks for some of our own lines had been satisfactorily tried. A Spanish colonial loan proved informal, and was not persisted in, there being some doubt whether it had received the proper sanction of the Cortes. The subscriptions received were consequently returned.

In April an important bill was introduced in Parliament to enable the Government to acquire and work the Electric Telegraphs. The annual and illusory attempt to place the Bankruptcy Laws upon a satisfactory and equitable footing was brought forward in its tenth new shape by Lord CAIRNS. A fresh railway loan had come out, this time for the Indiana Southern Company (United States). Tasmania also appeared as a borrower, “for railway and other useful works,” of 400,000l., the operation proving a perfect success.

In May another of our colonies, New Zealand, appeared in the field, with an intended conversion of her public debts combined with a new issue of stock of 1,114,000l., at 97. Shortly afterwards a first mortgage of 400,000l. on the European and North Railway at 75 was brought out, followed by an issue of 600,000l. by the Great Indian Peninsula Company.

In June the new Argentine loan of 1,950,000l. nominally, was issued and fully subscribed. About this period the plan for confiscating a portion of the public creditors’ interest by some foreign Government—notably Italy and Austria—in the shape of a special tax on the coupons, was attracting attention, and hence, in the case of the Argentine loan, Messrs. BARING, the agents for the affair, expressly mentioned that the bonds will be exempt from any present or future taxation on the part of the Argentine Government. In this month Consols reached the highest point of the year—953/8—and the Bank bullion on the 25th was at 22,962,981l., nearly 700,000l. more than in the corresponding week of 1867. An attempted combination of the South Eastern, London, Chatham, and Dover, and London and Brighton Companies had fallen through, the bill to effect this purpose having been withdrawn.

In July and the succeeding month the British public were offered rather a perplexing choice of new securities in which to make their investments. They comprised a Russian Railway Loan for 320,000l., a Swedish Loan for 1,150,000l. an Egyptian for 11,890,000l., a Canadian Intercolonial for 2,000,000l., the West Wisconsin Railway 200,000l., the great French Loan of 18,000,000l., the new French Atlantic Telegraph Company of 1,200,000l., and another issue of bonds for Russian railways of 1,920,000l. The above sums represent the nominal amounts, and in some cases a portion was subscribed abroad—the great French Loan, for example, being practically taken in its entirety in Paris and the Departments. Notwithstanding these drains, money at the end of July was only 11/2 per cent. on the best bills, although the rate soon after increased. About this period occurred the meeting of the Credit Foncier Company of England, with anything but a satisfactory result to the shareholders—Mr. ALBERT GRANT, M.P., hitherto the leading genius of the concern, being conspicuous by his absence. At the commencement of September the rate of discount had risen in London to not more than 13/4 per cent. In Paris it was 11/2, and the bullion at Bank of France stood at the enormous total of nearly 52,572,000l. Since that period, however, there has been an almost continuous decline.

The events of the latter part of the year have more of political than financial importance. The earthquake in Peru and Ecuador, and the revolution in Spain, necessarily affected the prices of the stocks issued by those countries, but not to any very great extent. In October and November we had a fresh batch of loans—the Italian Tobacco Loan for 9,404,762l.; South Australian Debentures, 400,000l., and two more Russian Railway Loans of which 3,300,000l. was offered in London. The effect of these and previous operations was seen by the unprecedented withdrawal in one day of 1,000,000l. of gold from the Bank for St. Petersburg. Hence on the 19th November the Bank rate was raised to 21/2 per cent., and on the 3rd December to 3, at which it still remains. Besides the above the Great Indian Peninsula Company announced an issue of 2,000,000l. guaranteed stock, and the Pennsylvania Railroad 800,000l. General Mortgage Bonds.

Scarcely any new companies of importance have been introduced during the past year, nor was there the slightest likelihood that they could have been attended with success. Perhaps the most prominent have been the Foreign and Colonial Trust, an association to enable capitalists to hold foreign and other bonds with the minimum of risk of loss, and the French Atlantic Telegraph Company, which, however, concerns our neighbours more than ourselves. Some few minor undertakings have been floated, but they have commanded little attention. For the present the public have no care to run the slightest chance of repeating their late experiences. Anything is looked upon as better than a joint stock share where a call is possible.

As regards the future, there is still the expectation that trade may revive, but there appears little chance of its being realised for the present. During the last few months we have been going backward rather than forward. It may be hoped that this is but a temporary reaction, and that the new year will bring us better times than we have experienced since 1865. The prospect, however, is not encouraging—wars and rumours of wars, and political disturbances abroad, and short time in the manufacturing districts at home. Still we live in days of sudden changes. The public may on a sudden break through its long-continued lethargy, and resume the old habits of trust and enterprise, which, judiciously combined, have made England what she is.|

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TRADE AND FINANCE.

Dec 21 Anmerkung von Jenny Marx

THE recent events on the Stock Exchange have amply justified the warning we gave to the public three weeks ago. It has been proved that the late demand for foreign stocks was in a great degree speculative, and that the Bonds taken off the market were frequently held against borrowed money. Up to the last moment there seems to have been a hope that these stocks would be absorbed by real investors, but the general public appear for the present to have had enough. Their revived inclination to take a class of securities which a few years ago were in universal favour has been amply satisfied by the new creations that foreign governments are ever ready to supply. Still it might have been prudent for the speculators to have held on if they could for the chance of realising at a profit, but they did not calculate on the effect of the approaching close of the year. Everybody likes to have a good balance on the 31st December, and a joint-stock bank especially. Hence, even under ordinary circumstances, outstanding loans are at this period often either called in or renewed with difficulty, particularly where there is even the faintest suspicion of risk. This feeling has been necessarily aggravated by the course of political affairs. Holders of Turkish Bonds are not unnaturally anxious about the threatened revival of the Eastern question. Perhaps some of the more timid may sell the whole or a part of their investments, and the price, of course, goes back. Holders of Russian, Italian, Spanish, and other securities are in a nearly equal degree agitated by the possibility of a general European conflagration. These, too, also sell rather than buy, and the result is a generally falling market. A prudent banker takes care not to allow his margin for loans on foreign securities to run very close. The fluctuations are too violent to be risked with safety. The experience of the year 1859 is a case in point, when some stocks fell 20 or 30 per cent. in a few hours, and were then practically unsaleable. Hence there have latterly been forced sales, or, which comes to be the same thing, the banks have withdrawn their advances. It is therefore merely a foregone conclusion that at least a slight collapse from the previous speculative excitement was imminent. Fortunately no great harm has yet been done. There have been in some cases heavy losses, but not that terrible ruin which the political difficulties nearly ten years ago produced. The danger cannot be said to be over, but it is something to say that it has not occurred at present. The maxim that to be forewarned applies more truly in financial affairs than in any other walk of life. The fact that everybody is preparing for a panic renders a panic almost impossible. Sudden precautions may indeed bring on the very evil they were intend to obviate; but when they are deliberately adopted, steadily and without haste, they rarely fail to turn out successful. There are exceptions, doubtless; but we trust that the present time is not one of them. The only difficulty lies in the peculiar channel into which speculation has just now been diverted.

We have observed upon the success of the Russian Railway Loans. However excellent the purpose for which this capital was required, there have been evident signs that these operations have been pushed too far. The success of the first issues emboldened further proposals, until the aggregate reaches a formidable sum. If the bonds had passed solely into the hands of permanent investors we should probably have had fewer of these applications; but the speculative public, seeing the favour with which the first of these stock had been received, naturally welcomed others. They subscribed to sell again, caring little for the future, but looking only to their present profit. Hence during the present year we have had a goodly array of projects, while in the past we had but one—the pioneer, and not the least of the number. Annexed is the list:

£ Prince of issue. Per Cent.
June, 1867 Orel-Vitebsk 2,000,000 75 5
Feb., 1868 Ditto 2,500,000 75 5
July,    〃 Tamboff-Kozloff 320,000 723/4 5
Sept.,  〃 Moscow-Jaroslaw 1,920,000 78 5
Nov.,  〃 Charkof-Azof 4,329,280 781/2 5
(London, 2,000,000)
 〃     〃 Charkow-Krementschug 1,716,000 773/4 5
(London, 1,300,000)
Total £12,805,280

The nominal total is thus not far short of thirteen millions, in less than a year and a half. Deducting from this the amount reserved for the Continent (not an infallible test, since if the bonds are quoted at a good premium in London, those subscribed abroad soon find their way over here), and allowing for the price of issue, the actual cash raised from the England capitalist must represent in round numbers pretty nearly seven and three-quarter millions. Even Russia, whose credit is unimpeachable to this day, has seldom or never got so much hard money from us within so short a time. The financial policy of that empire is certainly in one sense admirable. Although the state currency is hopelessly depreciated, and the annual budgets, such as we see of them, reveal a chronic deficit, Russian credit is well maintained in other countries. Latterly there has been no attempt to negotiate a single government loan, the utter failure of the affair of August, 1867, being conclusive on that point. The time has gone by for this old style of dealing. But money can still be raised for public works with the safeguard of the Imperial guarantee, and this plan has been worked to good effect; and if common honesty is observed—which we have no reason to doubt—to the mutual benefit of borrower and lender. There are, of course, rumours afloat that the money will be diverted from its avowed purpose, but this can hardly be credible.

We may dismiss in a few words the chance that our other speculative borrowers will come before us anew. Turkey, indeed, has at all events a plausible excuse in the Cretan insurrection to raise what she can; but the power is not equal to the will. Turkish finance is rather blown upon. People are tired of hearing one day that the budget shows a surplus of half a million, and the next that, owing to pressing necessities, the Porte has borrowed from a foreign house a couple of millions at 16 or 17 per cent. There is no logical coherence in the facts, |[25] and Englishmen are dull enough to care for these in preference to the best written descriptions of the amazing present and future prosperity of the Turkish Empire. We are happily freed from Egypt for a few years to come. She is bound to raise no more loans in Europe for a specified period, under penalty of being shut out from the great Exchanges of the world. Whether she may contrive to evade the pledge in a roundabout way, is a question which we do not care to discuss. The successful introduction of the Turkish Consolidés in London shows that this sort of thing is not utterly impracticable.

Reverting, however, to matters of more purely domestic interest, it is clear that the events and severe fluctuations of the past week fully bear out the view we have frequently urged of the dangers of a wide-spread speculation in foreign stocks. A large class of investors are content to risk a moderate proportion of their capital in these securities for the high rates of interest they return; but when, as at the present time, a formidable aggregate is held on borrowed money, and the political horizon becomes suddenly overcast, fresh investors are slow to come forward, and the speculator loses at one and the same time the support both of the capitalist and the banker.

The latter is, as we have said, sure to be the first to take alarm—his duty and reasonable object is to lend his deposits for as short a time as possible, except upon commercial bills, and he naturally withdraws his money at the due date when confidence is shaken, either by financial or political causes. Then comes the difficulty of the speculator, and too often ruin, which common prudence would have averted. The evil is that men will operate much in excess of their means. Honour and common sense are alike forgotten in the haste to make money. The immediate position fully confirms this view. Few of the loans of this year are yet solidly placed; and with more to follow, and even a small note of war sounded in Europe, real buyers will be shy, and wisely defer their investments until the depreciation arrives which almost inevitably follows speculative excess.

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The Daily News. Nr. 7058, 15. Dezember 1868. S. 5.
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COMPANIES IN LIQUIDATION.

Dec 15 Anmerkung von Jenny Marx

THE troubles of shareholders are far from being at an end. In some of the worst cases they have apparently but just commenced. Hardly a day passes without a report of some costly process of litigation or other. The state of our law, and the strange and contradictory views taken by the various Courts in its interpretation, promote all kinds of suits. The majority come from the unlucky class of contributories, many of whom seek to get rid of their own liability at the expense of their co-partners. The attempt generally fails, but the chance of success through some ingenious legal quibble is too tempting to prevent its being repeated again and again. It is perfectly extraordinary, and not very flattering to our estimate of English commercial honour, to mark the shifts which highly respectable people are quite ready to employ in order to evade the unpleasant necessity of meeting their obligations. Two specimens were reported on Friday, in which the demand for relief was based on the ground that the applicants were victims of a collusion to deceive the public at large. Vice-Chancellor MALINS, who is certainly sufficiently acute to prevent the powers of his Court from being abused, and has sufficient force of will to characterize a “subterfuge” of this sort as it deserves, spoke out pretty strongly. It would indeed be most unjust and unfair that a contributory, by some adroit dodge, should escape scot-free, and leave in the lurch others who most likely had been partially deceived into subscribing for shares by the very same dodge. Probably there is no more unpleasant position than having to pay debts which other people have led you into mainly through your own folly. Even the most honest and upright of men will require strict proof that the liability has been really and fairly incurred. Bur there the question ends. A sense of justice ought to prevent any endeavour to wriggle out of the affair by a pettifogging or captious objection. This healthy moral feeling, however, is somewhat capricious in its action. The sense of right which will prevent a man from taking dishonest advantage of a shopkeeper, somehow or other often tones down to a vanishing point when share allotments in defunct companies have to be considered.

Moreover, shareholders do not for the most part regard the claims of creditors of a company as they do their business or private liabilities. The view is, if bad times come, that these claims must wait, or be compromised. The creditors of a company in liquidation have, however, their remedy. When the capital is not paid up they can enforce a call, and bring any defaulter into a court of law. Hence the ruinous litigation which has already taken place, and the prospect of much more. It is perfectly intelligible on the ground, so far as regards the creditor, that, unlike a mercantile concern in difficulties, which may be reconstructed by new capital and the support of powerful connections, a company that stops payment almost invariably stops once for all. The creditor has nothing to hope for in the future. He naturally seeks the payment of his claims as quickly as he can; while the shareholder wants time, and constantly resorts to litigation or a trip abroad to get it. We have a case of recent occurrence to which these remarks pointedly refer. Unhappily it is but one of many. In the halcyon days of 1864, when everybody was going to make his fortune out of a join-stock company, and few dreamt of losing one, a gigantic scheme was introduced called “The International Contract Corporation.” It was heralded by a long and imposing list of directors, both native and foreign, at the head of whom figured the name of Senor DE SALAMANCA, the well-known Spanish capitalist. The capital of this undertaking was on a grand scale—no less than 4,000,000l., in 80,000 shares of 50l. each. Only one-half, however, was to be issued at first, and the amount called on this preliminary total of 40,000 shares was 5l. on allotment. Afterwards another 5l. was required, making altogether a round sum of 400,000l. It does not appear, however, that the whole was paid in cash. The business of the concern is sufficiently described by its name—the execution of great works, not in one, but both hemispheres of the globe. An eminent contractor’s business—Mr. PICKERING’s it was stated—had been secured on highly advantageous terms. All very attractive and glittering, no doubt, but the substantial result was sadly different; in about a year and a half the company passed into liquidation. The liabilities are so formidable that the whole of the remaining 40l. per share will, it is said, be required; thus, supposing all the shareholders pay up in full, 1,600,000l. will be provided for an utterly bankrupt company. The claims are so imperative, that not only Class A, the actual holders, have been compelled where practicable to meet their entire liability, but it is understood that Class B, those who had not transferred their shares to responsible parties, or whose transfers had not been registered by the buyers within a specified period before the stoppage, will be rigorously proceeded against. It would be as unnecessary as painful to expatiate upon this disastrous affair in general terms. The facts speak for themselves.

The practical question is, whether shareholders should submit tamely to be ruined in this fashion. That they have been deceived is very obvious. Two dividends were paid by this very company of 10 per cent.; but as in the case of the Credit Foncier Company (that signal monument of public folly, which wasted nearly 2,000,000l. of the money of its shareholders, and rapidly enriched Mr. ALBERT GRANT) these dividends were improperly paid. The Contract Company, like the Credit Foncier, held securities it could not realise, and had large liabilities upon those inconvertible securities to meet, fast coming on, instead of honest profits to divide. It can scarcely be that the directors, who are responsible for unveracious official statements, are not amenable to the law—and before their dupes part with that which in too many cases forms their sole means of subsistence, or seek the shelter of that chilling asylum, the Bankruptcy Court, they should certainly unite, and under good advice take practical measures to ascertain how far they can transfer their liability to those who have deluded them into undertaking or retaining it. It is not only a duty they owe to themselves, but to the community at large. Granted that litigation is expensive and the issue uncertain, still they can hardly be in a worse position than their present one. Combined action is cheap, and often powerful for good, and in such a case as this of the International Contract Company it would have the usefulness both of exposing a gross public wrong and of ascertaining what reparation can be enforced from those who circulate fictitious accounts. It is high time that some practical course was taken by shareholders to compel restitution of fees or profits taken by directors and managers as a reward for their services in protecting the general body of proprietors. According to the opinion of some great legal authorities the contests between insolvent companies and |[26] their victims will increase rather than diminish. The fight is, in fact, gaining strength. How many will be wounded or utterly slain it is impossible to compute. Presently there will be a Class C of shareholders to be attacked, and then liquidators, accountants, and lawyers will have golden times; but the reverse of the picture is gloomy indeed. We have had too much of this mysterious ruin. Unfortunately, thousands cannot help themselves, either from ignorance of business or fear of costs; but there are thousands who can, and they should be up and stirring, to ascertain if the calls made upon them are honest, and of real necessity; and also, to bring those who have betrayed them to the bar of public justice.

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The Daily News. Nr. 7075, 4. Januar 1869. S. 5.
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TRADE AND FINANCE.

Jan 4. Anmerkung von Jenny Marx

THE opening of the new year is always a season of interest in the commercial world. For many mercantile purposes the last half of December is practically a dead letter. No one cares at that season to undertake fresh transactions, except where indispensably necessary. This feeling becomes entirely changed at the commencement of the new year. The previous apathy is shaken off, and all go to work with the more zest that the inactivity of a week or a fortnight has to be made up. There are two annual periods when trade is often unusually active—the beginning of the autumn and the beginning of the year. In the former instance 1868 has not much to boast of; but, if only from this fact, increased hopes are entertained for 1869. It is reasonably argued that the longer the depression of trade the greater will be the ultimate reaction. The great question is whether the hoped-for recovery is really at hand. In a general sense, we are afraid that it is yet far in the future. In the immediate present, however, there is no doubt that business will for a few weeks improve, from the reasons that have been already cited. Hence, without extraneous circumstances, there is just now enough to occupy the attention of City men generally.

The first day of 1869 has nevertheless been characterised by the formal opening of a prosecution of such consequence as at any time to absorb public attention. The proceedings against the directors of the defunct company of Overend, Gurney, and Company (Limited) bid fair to result in the most important commercial cause célèbre within living memory. We have neither the right nor the inclination to pronounce an opinion as to the ultimate issue. Both before a legal tribunal and that other more powerful tribunal of public opinion judgment is reserved until both sides have been fairly heard. The facts must be left to be fully divulged before a decision can be given on the entire merits of the individual case. But, apart from these considerations, the present action is one that in a general sense—no matter what the ultimate verdict may be—claims to fix upon the directors of a great company a responsibility that has almost, if not always, been disregarded. Nothing for years has been more common than for a director to sanction the issue of a prospectus, in his and his co-directors’ names, containing statements which he has neither taken the trouble nor had the leisure to verify. Some excuse may be made for this neglect. There are sometimes difficulties in the way of the proper interpretation of deeds, conveyances, and so forth, for which he depends solely upon the solicitor of the new company. There is no wrong in this last course, since the trust thus reposed in very rarely if ever abused. But when laxity of personal examination creeps in it is liable to go a great deal farther than the easygoing gentlemen who pocket their fees once a week care to think about. Something is wrong, and the prospectus turns out not quite correct. Where there is an error it is occasionally discovered by the Committee of the Stock Exchange, when a settlement in or official quotation of the shares is applied for, and consequently refused. In that case the company is nine times out of ten virtually at an end. The shareholders have their money returned, or, in case of default, have been compelled to try and enforce their claims in the Court of Chancery, with the by no means improbable event of being defeated by a technical objection.

The peculiarity in this instance is that the remedy sought is not in the civil, but the criminal law. The plaintiff does not sue in an ordinary court for money improperly obtained, but prefers a complaint before the sitting magistrate on the ground of alleged fraud. There is no chance that the affair will be burked in the mysterious manner by which similar proceedings were stopped in another failed company a little time ago; the cause will no doubt be fully tried to the end. The point to be considered is how far the precedent may be followed, whether in the present case the complaint succeed or fail. There must be many companies of all sorts and descriptions where similar allegations, true or untrue, could be brought forward. In one notorious instance the directors of a concern with a large nominal capital recommended the payment of a dividend up to the very eye of the stoppage of the company, since when most of the shareholders have been ruined by calls to meet unknown liabilities. Suppose that any one had purchased shares on the faith of the handsome profits the board alleged to be realised; or that they announced that a property had been purchased at a fair price which any competent valuer would have told them was not worth one-tenth of the money, and yet included it as an asset for |[27] the full amount in their balance-sheet? It is needless to repeat instances of this sort; they appear in a dozen different shapes. We ought, however, in fairness to distinguish. Many as are the charges brought against directors for this sort of fraud, they have not been frequently substantiated. Sometimes they are made from recklessness or disappointment—no persons being so unreasonably angry as shareholders who have lost a little money by a temporary fall in prices, or have unsuccessfully tried for a seat at the board. Others, sometimes practical men of business, entertain the opinion, though rarely expressing it, that affairs of this kind should be hushed up. Certainly it is by no means uncommon that proceedings, threatened or begun, for some inexplicable reason fall to the ground. Again, directors have the strongest reason to fight the matter out together, sometimes with the money of their own shareholders, while an individual proprietor has generally the only consolation of having to pay his own costs. It is evident, nevertheless, that the public mind is undergoing a great change on these points, and is getting tired of leaving things to take care of themselves.

The end will be beneficial, though probably not all at once. Some difficulty will be experienced in getting what are termed first-class names on the board of a new company; but as these have generally too much to do in caring for their own business to attend to anything else, their absence will be well dispensed with for second-class persons with more time to exercise their direct supervision. One ultimate advantage will be a heavy blow and great discouragement to professional directors, the gentlemen who belong to fourteen or fifteen boards at a time. The fact that a heavy responsibility attaches to their office will come home to them with most disagreeable force.

[The Daily News, 2. Januar bis 2. Februar 1869]

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The Daily News. Nr. 7078, 7. Januar 1869. S. 2.
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THE CHARGE AGAINST THE DIRECTORS OF OVEREND, GURNEY, AND CO.

Jan 7. Anmerkung von Jenny Marx

Yesterday morning the six defendants in this case. Mr. J. H. Gurney, Mr. H. E. Gurney, Mr. R. Birkbeck, Mr. H. T. Barclay, Mr. H. G. Gordon, and Mr. W. Rennie again appeared in the answer to their bail before Lord Mayor and Alderman Sir T. Gabriel, at the Guildhall, on the charge of fraudulently conspiring to induce people to take shares in the company of which they were directors.

The same learned counsel appeared on behalf of the defendants. The court, as on previous occasions, was crowded by spectators.

Mr. Lewis proposed, in the first instance, to call evidence which would entitle him to put in the prospectus, to the production of which some objection was taken on Saturday.

Mr. Giffard would offer no objection.

Mr. T. Levine, the secretary of London Stock Exchange, deposed that application was made in August, 1865, for settlement in the shares of Overend, Gurney, and Co. (Limited), duly signed by some members of the Stock Exchange. A request was sent by the secretary of the committee of the Stock Exchange, and such documents as were required were received by him from the secretary of the company. A deed accompanied them.

Mr Lewis—Now I call for that deed. It is the deed of transfer: the first deed.

The deed was produced and handed to the witness.

Witness—I cannot identify it, but the deed purported to be the deed of covenant transferring the business of Overend, Gurney, and Co., to Overend, Gurney, and Co. (Limited). There is, however, nothing on the face of the deed by which he could identify it. He did not examine the signatures to the deed. There were documents in answer to their requirements, but no other deed. There was the memorandum of the articles of association, the prospectus, the director’s voucher, and two specimens of the letter of allotment. He retained all of them in his possession except the deed. A settlement and official quotation were granted for the 22nd of August.

Mr. Lewis—Before reading the prospectus, I will put in the minute-book, and read one or two minutes, after which I shall contend that the evidence of this witness will be sufficient to enable me to read the prospectus.

Mr. Serjeant Parry objected that the minutes would not prove themselves.

Mr. Lewis—Under the 67th clause of the Joint Stock Companies’ Act, the minute-book and minutes are made evidence.

Mr. Serjeant Ballantine—Why not call the secretary of the company? This is all done for the purpose of preventing calling the secretary, for what reason I do not know.

Mr. Lewis—I disclaim any such intention, and do not think the insinuation ought to be made. The course I pursue is pursued for the purpose of conducting the inquiry in the regular way.

Mr. Oke, the clerk of the court, read the section referred to, which provided that “any such minute as aforesaid, purporting to be signed by the chairman of such meeting at which such resolution was passed, shall be received as evidence in all legal proceedings.”

Mr. Giffard—I don’t object as the secretary is to be called, but I do not concede that that clause gives a right in a criminal prosecution to produce the minutes as evidence against the defendants without proving them.

Mr. Lewis—I submit that it is perfectly good evidence.

Mr. Serjeant Ballantine—We concede it on the understanding that the secretary is to be called.

Mr. Lewis—I give no such undertaking. I contend that the minutes themselves are evidence.

The Lord Mayor—They are good evidence in a preliminary inquiry at all events.

Mr. Lewis—I shall call Mr. Slater, the first secretary, to show that he submitted to the board a letter received from Mr. Slaughter, of the Stock Exchange, asking for |[29] the information required by the committee of that body, and then I shall call attention to the minute of the 25th of August, purporting to have been signed by J. H. Gurney, chairman, stating that Mr. Slater, having handed in the deed from Messrs. Young, Jones, and Co., for exhibition to the Stock Exchange Committee, and also the certificate of incorporation, was instructed to deliver them after the inspection to Messrs. Young, Jones, and Co., on behalf of the company; and I contend that that, and the minute stating that they had been received back, makes evidence of the documents produced by the witness, and which he stated he had received from the secretary of the company.

Mr. Giffard—That is precisely what he does not say.

Mr. Lewis—Here is a letter which purports to come from the secretary, stating that he was requested to do this, and I submit that such directions are evidence.

The Lord Mayor understood that all the documents had been kept in possession of Mr. Levine.

Mr. Oke—Yes, and he has identified all but the deed.

Mr. Lewis—Then I propose to have the prospectus read. The prospectus was then formally put in, and read by Mr. Oke, stating that the capital would be 5,000,000l., in 50l. shares, and that not more than 15l. a share would be called up.

Mr. Lewis then proposed to put in a letter from Mr. Slater, which was objected to, but a minute was produced, dated July 20, authorising his appointment as secretary pro tem., until Mr. Boyce, the permanent secretary, was appointed.

Witness—I received that from the office of Mr. Slater.

Mr. Lewis submitted it was evidence, because it varied the appointment of the secretary of the company.

Mr. Giffard—Did you receive it from his own hand?

Witness—I did not; it was sent to me.

Mr. Lewis then submitted that the letter he proposed to read was good evidence.

Mr. Giffard—What is it evidence of? It is merely a piece of paper signed by him, but it is no evidence of the contents.

Mr. Lewis—I have no objection whatever to call Mr. Slater, but I don’t wish it to be supposed that I am tendering evidence which is irregular.

Mr. Robert Slater, the younger, was then called, and said—I reside at 26. Cornhill, and am a member of Lloyd’s. I was not consulted with respect to the formation of the company, Overend, Gurney, and Co. (Limited); but a few days before the company was formed I met Mr. Gordon, and he told me that my services might be required in its management. I had been previously connected with other companies of which Mr. Gordon was a director, and on the 12th of July, 1865, I was again consulted. I think it was at the Oriental Bank I saw Mr. Gordon, and I was requested to attend at the offices of the solicitors of the company. I attended on the 12th. Mr. Gordon was there. I was requested to wait till a later hour, and was then informed by Mr. Gordon that I was to have the matter placed in my hands, and was requested to attend the following morning at the offices of the company, 51, Lombard-street. The name of the company was then mentioned, and I was to attend to the business that was to be transacted in respect to the allotment of shares. The prospectus was issued on the 13th of July. The first minute taken by me was on the 20th of July. There was no minute book kept as far as I know between the 12th and 20th of July. I kept none. On the 13th of July the offices of Overend, Gurney, and Co. (Limited) were opened at 51, Lombard-street, for the registration of shareholders. There was no agenda book kept between the 12th and 20th. On the 13th of July, I presume, most of the directors looked in. I received a bundle of prospectuses from the printer. They were issued to the public on application. There could be no doubt that between the 12th and 20th of July most of the directors called at the office. I believe all of them did, except, perhaps, Mr. Gibb. Some of the directors spoke to me. I do not remember who spoke to me, but I was spoken to on the general business of preparing the allotments. There were copies of the prospectus in the office for the public. I remember the application for documents coming from the Stock Exchange in reply to an application for a settlement. In the minute of the 8th of August, in my handwriting, there is reference made to it. Mr. J. H. Gurney in the chair; Mr. Barclay, Mr. Birkbeck, Mr. Gibb, and Mr. Rennie were present. The subject of the application of the Stock Exchange was brought before the board. The minutes state a letter was received from Mr. Slaughter. In accordance with the resolution passed, I applied to Mr. Jones, the solicitor, for the certificate of the incorporation of the company, and any documents that would have to be sent to the Stock Exchange. I received from him the certificate and the deeds, and also the original deed of covenant of the transfer of the business from Overend, Gurney, and Co., to Overend, Gurney, and Co. (Limited).

Mr. Lewis—Look at the deep produced.

Witness—I cannot identify it; it purports to be such a deed, but there is nothing on it that could lead me to identify it as the deed I sent to the Stock Exchange. I am certain that I sent only one parchment deed. I accompanied it with a letter, which witness read, and which was to the effect that application having been made to the committee of the Stock Exchange to allow a settling day in the shares of the company, he begged to forward a certified copy of the prospectus, and a certificate from himself to the secretary of the committee, giving the following particulars—the number of shares applied for by the public, the number of shares allotted unconditionally to the public, and the amount paid upon them, making 7l. per share; the number of shares not included in the public allotment taken by the vendors, a certificate that the shares were ready for delivery, and one from the bankers stating the money received by them; the company’s bankers’ passbook, two copies of the memorandum of the articles of association under the Companies Act of 1862, with the certificate of registry and incorporation; the certificate of the shares to be issued to the allottees, the original applications for shares, containing a list of the names of the applications, and the number of shares applied for; copies of the letter of allotment, and the original deed of conveyance in relation to the transfer of the business of Overend and Gurney to Overend, Gurney, and Co (Limited). In the certificate transmitted he certified that the number of shares applied for by the public was 224,484, of which 365 were withdrawn by the applicants before the allotment; 83,334 were allotted unconditionally to the public. He further certified that 16,666 not included in the public allotment were taken by the vendors; that the shares were ready for delivery, and that no impediment existed in the settlement of the account.

Mr. Lewis (handing a deed)—Did you ever see that deed? It is a contemporaneous deed.—I may have seen it. I remember seeing three deeds at 65, Lombard-street. It was when the seal was attached to the deeds. By the resolution of the board of the 8th of August it was resolved that the first five resolutions of that meeting be entered into a separate minute-book, unconnected with the allotment of the shares. They were not in his handwriting, but were signed by Mr. J. H. Gurney, and stated that, in conformity with the resolution of the 27th August, 1865, the seal of the company was affixed to the deeds, in the presence of Mr. H. F. Barclay and Mr. W. Rennie, and it was resolved that the deed of covenant of transfer, and the deed of arrangement on the basis of that deed, should be deposited with the solicitor for safe custody, and that one seal be held by the chairman and the other by the secretary, and the duplicates be kept at Messrs. Barclay, Bevan, and Co.’s, and not to be released except by a minute of the board. The witness proceeded to say that the allotment of the shares was on the 31st July. Was sure that he only forwarded the copy of one deed to the committee of the Stock Exchange. Was present when two deeds were sealed on the 8th August. Was not present when the resolutions were passed which were entered in a separate minute-book. Was not present, he supposed, because the directors did not wish him to be so. Was present during a portion of the meeting. Those resolutions were in the handwriting of Mr. Boyce, the secretary to the company. On several occasions he was requested to withdraw from the board-room, and it was possible that it might have been so on this occasion. Left the service of the company in February, 1866. Saw the seal of the company affixed to three deeds on the 8th of August. Was not aware of the contents of those deeds. One of the deeds was endorsed “Deed of mutual covenants in relation to the transfer of the business of Overend, Gurney, and Co.” Another was endorsed “Deed of arrangement on the basis of contemporaneous indenture.” Believed the signatures to the deed of Mr. J. G. Gurney, Mr. S. E. Gurney, Mr. Barclay, Mr. Birkbeck, and Mr. Rennie to be in their handwriting. The prospectus stated that a copy of the deed could be inspected at the office of the solicitor. Frequently went to the office of the solicitor. Never saw a copy of the deed there. The allotment of the shares commenced on the 24th July. The minute stated that on that day Mr. J. H. Gurney was in the chair, and that there were also present Mr. Birkbeck, Mr. Gibb, Mr. Gordon, Mr. H. E. Gurney, and Mr. Rennie. On the 25th of July the directors proceeded with the allotment, and the same gentlemen were present. Also proceeded with it on the 27th (the directors then present being Mr. J. H. Gurney, Mr. Gibb, Mr. H. E. Gurney, and Mr. Rennie); and on the 28th the allotment was completed, the total number of shares allotted being 83,180, there being 154 shares unappropriated to meet the contingencies which might arise in the hurry of closing the allotment. After he ceased to be secretary of the company he had no occupation in the company’s office. The last minute in his handwriting was on the 16th February, 1866. By that time the bulk of the shares had been issued to the public.

Mr. Serjeant Ballantine said he proposed to crossexamine the witness on a future occasion.

Mr. Lewis objected, and appealed to the court to follow the usual course, and that the cross-examination should be proceeded with at once.

Mr. Giffard said the witness had been called merely to prove something which it was necessary to prove, in order to enable Mr. Lewis to go on examining Mr. Howell.

Mr. Serjeant Parry then cross-examined the witness on behalf of Mr. Barclay, and in reply to his questions the witness said—I was only secretary pro tem. Mr. Boyce was to be the permanent secretary. I was employed principally in reference to the shares, and clearly understood that my office was to be but temporary. I understood that Mr. Barclay left England on the 14th of July, and did not return till the 5th of August. The 8th of August was the first meeting that he attended. The prospectus was issued on the 13th July. I do not remember Mr. Boyce saying to Mr. Barclay, on the 8th of August, “As you have come in, will you be good enough to certify the affixing of the seal?” There was no formal meeting of the directors till the 20th of July. (The third deed, which was here put in, was dated 2nd August, 1865, and is endorsed, “Deed of further arrangement and covenant.”

Mr. Serjeant Parry—Has not Mr. Barclay paid 35,000l. on those shares?

Witness—I do not know.

Mr. Serjeant Parry—I suppose you will admit that, Mr. Lewis?

Mr. Lewis—I am not a witness—I cannot admit it.

Mr. Serjeant Parry—I have asked Mr. Lewis if he will admit that Mr. Barclay has paid 35,000l. in respect of his shares, which he know is the fact, and he will not admit it.

Mr. Lewis—It is extremely irregular that I should be called upon to admit that which I do not know. What I do know is that Mr. Barclay, of Norwich, was stated to be worth a million.

Mr. Serjeant Parry—That is a method of conducting the prosecution which I cannot cope with.

Mr. Lewis (to the witness)—Does it appear in the minute-book that the solicitor was instructed to prepare those deeds?—Yes.

Was that minute-book ever exposed to the shareholders or the public?—Certainly not.

By Mr. Serjeant Parry—I did not see Mr. Barclay at the office until the occasion of the first meeting, the 8th of August. I did not go to the office till the 13th of July.

(The allotment-book was here put in.)

Mr. Lewis—Now look at that book, and tell us whether any shares were allotted to Mr. J. H. Gurney, or Mr. J. E. Gurney, other than those represented in the good-will?

Mr. Giffard objected to the question, and

The Lord Mayor ruled that the witness should first be asked what shares were allotted to these gentlemen, and then he might be asked in reference to other matters.

Witness—In this allotment book I find no shares allotted to Mr. John Henry Gurney, Mr. H. E. Gurney, or Mr. Barclay. There are no shares beyond those which it was understood they took under the articles of association.

How many were allotted to the public?—83,334 were allotted unconditionally.

The Lord Mayor—That is not the same number that was given before.|

[30]

Witness—The number that I sent into the Stock Exchange Committee, and which is correct, is 83,334 allotted unconditionally to the public.

Mr. Lewis—That would leave 16,666 to make up the 100,000.

Witness—The shares taken under the articles of association are considered as part of the 83,334.

Mr. Lewis—Turn to the book and see what shares were allotted to John Henry Gurney.—His name is not there. He had previously taken shares under the articles of association.

Mr. Alderman Gabriel—What is the total number in that book? I calculate the number in this book to be 70,034.

The Lord Mayor—You stated that this book is the public allotment book. The number I find allotted by this book is 83,334.

The witness—I do not know it by the name of the Public Allotment Book.

Mr. Alderman Gabriel—But you say those names are not in that book?—Yes.

Mr. Lewis—See if Mr. Gordon’s name is down?—Mr. Gordon is down.

The Lord Mayor—It is more satisfactory to find the names in the book.

Mr Lewis—I asked if Mr. Gordon is there. He signed articles of association, 200 shares, and he is in the book. I asked him if the Messrs. Gurney are there, and he says they are not there. (To the witness)—Does Mr. Gibb appear?

Witness—Mr. Gibb appears, but these are not the original allotment sheets; this is only a copy of them. Mr. Gordon’s name has been added here in my own hand writing, written here doubtless in consequence of his having signed the articles of association.

Now later Mr. T. A. Gibb?—He appears here for 1,000 shares.

That is a portion of the 83,334?—Yes. Mr. Rennie appears as the holder of 401, of which he held 200 as representing Messrs. Lubbock, Bevan, and Co. Those also are a portion of the 83,334. Mr. H. F. Barclay, 1,000 shares; Mr. S. G. Buxton, 600 shares. All these names appear in the public allotment book.

Mr. Lewis—Do you find in that book Mr. J. H. Gurney, Mr. H. E. Gurney, or Mr. R. Birkbeck, allotted 10,000 or any such number of shares.

Witness—I do not find their name down at all.

Mr. Lewis—To whom were the 16,666 shares given which with the 83,334 made up the 100,000?—They were given in accordance with the instructions of the chairman, as following—Mr. Samuel Gurney, 4,666; Mr. R. Birkbeck, 2,000, Mr. H. E. Gurney, 4,000; Mr. J. H. Gurney, 4,000; and Mr. H. Birkbeck, 2,000.

Now, was one farthing ever paid in respects of those shares by any of the persons named?—The bankers’ book will show, I presume.

Mr. Lewis—You must know that.

Mr. Serjeant Ballantine—But do you?

Witness—To the best of my knowledge I received advice from the bankers that amounts had been received on them.

Mr. Lewis—Then we must have the bankers’ book produced.

Mr. Serjeant Ballantine contended that the manner in which shares were dealt with was shown by the deed.

The Lord Mayor—You had better put the question again.

Mr. Lewis—Was a single farthing received from those gentlemen in reference to the 16,666 shares so placed in their names?—According to the bankers’ book I should say yes.

Mr. Lewis—Well, then, we must see the bankers’ book.

The bankers’ pass-book was here produced.

Mr. Lewis—With regard to those 16,666 shares, was any thing paid to the bank?

Witness—I have an impression that something was paid in, but I cannot find it in the book; but I have not seen the book for three years, and the transactions were extensive.

Mr. Giffard—They were paid-up shares?

Witness—To the best of my belief the affair was arranged by a counter entry.

The Lord Mayor—No money was received in respect of those shares. You said you believed the pass-book would show it, but it appears there was no ground for your belief.

By Mr. Sleigh—Mr. Gibb was present at the allotment meetings and took his part in the deliberation of the directors among the rest.

By Mr. Giffard—Mr. Rennie appeared as an allottee for 401 shares—200 in his own name and 201 in the name of himself and partners. He was an applicant for 500 shares; there was a great demand for them, and he waived his right to the 99 shares. He was quite willing to take them. Mr. Gibb seemed to me rather an elderly gentlemen. I should suppose over 70 years of age. I cannot say whether he had the largest stake in the company.

By Mr. Lewis—I don’t know the premium at which the shares were sold, except by hearsay from the stockbrokers.

The examination of Mr. Oswald Howell, the accountant for the committee of shareholders, was then resumed, his previous disposition being first read over.

Mr. Serjeant Sleigh wished to take this opportunity of correcting a statement in Mr. Lewis’s opening with respect to the securities of the Ebbw Vale Company, and which compromised Mr. Gordon. He mentioned that a debt of 11,000l. by the old Ebbw Vale Company, to Overend, Gurney, and Col., had been transferred to Overend, Gurney, and Col. (Limited); that Mr. Gordon was a director of the old Ebbw Vale Company, and had a great interest in it; that in consequence of advances and bills discounted, there was an increase in the indebtedness of the Ebbw Vale Company in nine months from 11,000l. to 48,000l.; and he made it appear that it was principally owing to the rediscounting of bills on the inception of the old Ebbw Vale Company. The fact was that Mr. Gordon never was a director of the old Ebbw Vale Company, and the increase from 11,000l. to 48,000l. was owing to calls paid by Overend, Gurney, and Co. (Limited) made by the new Ebbw Vale Company on their shares, which Overend, Gurney, and Co. (Limited) had obtained in exchange for worthless Millwall shares. They held 2,450 of those shares, which were at a marketable value of 15l. a share, so that they would realise something like 36,000l. if sold now, and if held the transaction might result in gain instead of loss.

Mr. Lewis utterly denied that Overend, Gurney, and Co. (Limited) possessed 30,000l. worth of shares in the Ebbw Vale Company, and that the shareholders had the slightest chance of getting money from them. It was true that Mr. Gordon was not a director of the old Ebbw Vale Company, but the only error was that of calling it the old instead of the new company. Mr. Gordon for a short time was a director of the new Ebbw Vale Company, and it was equally true that at the time of the transfer of the indebtedness to Overend, Gurney, and Company it was 11,000l. and that in the nine months of their existence it reached 48,000l. in respect to calls on the shares. He said nothing against the respectability of the new Ebbw Vale Company, in which they hold nothing.

Mr. Serjeant Sleigh pointed out that the great difference in the two statements was, that whereas in the first Mr. Lewis characterised the new Ebbw Vale Company as a worthless concern, in the second he said that he had nothing to urge against its respectability.

Mr. Lewis—No, we don’t hold anything at all in it.

Mr. Lewis (to witness)—Now, what constitutes the difference between the 4,213,000l. to which you have alluded, and the 4,003,000l. of which you have given us the items?

Witness—Turning to the “Ledger, old firm,” opened the day before the transfer, there appears a further list of items in what is termed the suspense account. I find the British Honduras Company put down at 5,103l.; Kilkenny Railways shares, 11,200l.; Land Credit Company, 225,000l.; Panama Railway shares, 288,000l.; Albert Perry, 67,500l.; Pensacola and Georgia Railway bonds, 3,750l.; Tewkesbury and Malvern Railway, 12,005l. There were other items in the book, making an aggregate of 4,084,000l., but he had already explained how this was reduced to 4,213,000l.

Can you produce any account showing how that 4,213,000l. was dealt with between the old company and the new company? Yes; I find in the general ledger of the old firm, which was to begin at midnight on the 31st July, 1865, folio 80, an account headed “Overend, Gurney, and Co., suspense and guarantee account,” and the first entry is 31st July, cash 4,213,896l. 16s. 4d.

Do I understand you correctly that this list of debts, amounting to 4,213,000l., is transferred from the general account of the old company as cash amounting to 4,213,000l.?—Cash, 4,213,000l., to the debit of the old firm.

From your investigation of the books can you state how much of the liabilities of Overend, Gurney, and Co., |[31] were in respect of deposits and current drawing accounts?—Yes, 5,147,444l.

What was the amount of cash that Messrs. Overend, Gurney, and Co. handed over to meet that 5,147,444l.?—The cash handed over was 120,000l.

Mr. Giffard—By the balance-sheet there appears to have been also a million of bills handed over.

The witness was then questioned as to the increase or decrease of the debts handed over by the old to the new company, and he stated that Mr. Leopold Lewis’s debt, which was 341,559l., was reduced to 333,003l. on the data of the stoppage. On the 15th March, 1865, 70,000l. was written off that debt, and debited to the reserved fund of Overend, Gurney, and Co., in the private ledger; and on the 15th May, 90,000l. was written off, and on the 19th May, 35,000l. Then the debt due from the Millwall Iron Works, which was transferred at 510,368l. 11s. 2d., was increased to 566,489l. 12s. In March, 1865, 90,000l. was written off that account in two items.

Then there is the Atlantic Royal Mail—was anything written off that?—I have noticed that. I have taken those two instances.

The witness proceeded to say that the debt of 400l. 6s. of Astley and Co., which was transferred, was increased by the new company to 12,270l. The next item was that of Leopold Burzewitz, who left off as a debtor for 135,334l., the amount of debt at the date of transfer being 54,382l. J. H. Cox and Co. owed at the time of the transfer 180l., which had increased to 4,575l. The Greek and Oriental Steam Company’s account at the time of transfer was 144,144l.; it did not increase, but nothing came of it. He then proceeded to give the increase in other items. The East India and London Shipping Company owed at the time of the transfer 406,264l., at the time of the stoppage 578,218l. F. and G. Garraway began with 190,977l., and left off at 192,256l. Haliday, Fox, and Co. began with an indebtedness of 34,628l. and left off at 61,291l. Thos. Howard began with 331,765l., and left off at 331, 425l; John Jones, at the date of transfer 22,353l., and at the date of stoppage 61,200l. Mr. J. E. Koch began with 243,069l., and at the time of the stoppage the debt had increased to 335,412l. The indebtedness of the Millwall Iron Works at the time of the transfer (including some other accounts put down as nominees in the list and objected to by Mr. Giffard), 510,368l., and at the time of the stoppage, 566,489l. The entry as to Ebbw Vale shares does not say whether it was old or new.

What made you put it down as “old Ebbw Vale shares?”—Out of compliment to the new company. (Laughter.) As a fact it is simply Ebbw Vale shares. It is an account stated, the actual result being that it began with an indebtedness of 11,112l., and left off at 48,705l.

By Mr. Serjeant Sleigh—I find no entry on the 2nd of July about a transfer of shares.

By Mr. Lewis—Sichel, Alexander, and Co.’s account of July 31st was 51,921l., and at the time of the stoppage 107,393l., the increase being 55,472l. Von Dadelszen and North were put down as indebted at the time of the transfer at 2,845l., and it was increased at the date of suspension to 23,690l. In the old firm ledger was an account of John Watson, in respect of which the new company paid a balance of 103,240l. The gross increase in the liability of the new company in the nine months of its existence in respect to the accounts he had referred to was 908,338l., irrespective of 131,000l. for interest. The decrease on certain other accounts was 292,000l., leaving a balance of upwards of 615,000l. of increase. During the nine months of the existence of the Limited Company all the profits it made, without making any allowance for bad and doubtful debts, was 4,552l. There was an apparent profit of 220,000l., which was arrived at by calculating the interest on all the bad and doubtful debts. (Laughter.) In the suspense and guarantee account the total amount of all the accounts in the old ledger, 4,213,000l., is placed on one side. On the 31st of December, 1865, the interest, 62,621l., is charged; and at the date of the stoppage, on the 10th of May, 68,946l. is charged. Those two amounts make 131,567l. Except that charge of interest on debts which had brought a loss, the company did not make a profit beyond 4,000l. odd. The salaries of the managing directors are deducted. They took their salaries in cash, and I have not been able to find that it went to reduce their debt to the company. The balance of the suspense and guarantee account at the time of the stoppage stood at 2,970,168l. On the credit side was the item of 1,053,715l., p. l., which letters meant private ledger. That was after deducting the amount of the overdrawn accounts. There was also 250,000l., half the amount to be paid on the transfer of the business, written off. It was put down cash purchase account. There was also an item of 172,633l., cash received from the sale of shares. Of the 16,666 shares above referred to which were retained unallotted, it appeared from the books that a large sum was realised from the sale of shares, but it was impossible to tell how many were sold. In the aggregate the proceeds amounted to 156,000l., including interest. At the time of stoppage they had 8,320 unsold. Those that were sold seemed to have been sold at 51/2 premium on the average. In one case where 1,500 shares were sold in November, they realised 71/2 premium, being sold for 35,000l., they being 15l. paid shares. The amount of the suspense account was reduced by 172,633l., received from the sale of shares.

At this stage of the proceedings the court adjourned to Friday.

A short discussion took place, in the course of which the Lord Mayor intimated that it would be desirable to sit also on Saturday, but on the application of Mr. Lewis the matter was left open.

Mr. Serjeant Ballantine suggested that, as the evidence would probably be brought to a close on Saturday after a short sitting, an adjournment of a week should take place in order to allow counsel time to prepare their answer to the charge.

The bail was then renewed, and the defendants realised as before.

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The Daily News. Nr. 7074, 2. Januar 1869. S. 2.
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THE OVEREND, GURNEY, AND CO. PROSECUTION.

Jan 2. Anmerkung von Jenny Marx

Yesterday morning having been appointed for the inquiry at the Mansion-house into the charge against certain of the boarding of directors of the late company of Overend, Gurney, and Co., whose failure on the 10th of May, 1866, caused such almost universal dismay and consternation in the public mind, the greatest interest appeared to be excited, and the court was filled by persons connected with the commercial world, and others, many of whom were sufferers by the calamity.

The facts connected with the failure of this once eminent firm must be so fresh in the recollection of the public that it will not be necessary to state at the outset more than that the 50l. shares of the company, upon which only 15l. had been paid, and which shortly before the panic stood at a premium, collapsed entirely upon the failure, and that, owing, as was alleged, to the reckless and improvident manner in which the affairs of the association had been conducted, there was a deficiency of nearly 20,000,000l. sterling. Proceedings had long been talked of as being intended to be taken against the persons whose misconduct was alleged to have been the cause of the calamity, and the present summonses were issued by the Lord Mayor upon the sworn information of persons who felt themselves aggrieved, and were determined to endeavour to punish the authors of what they alleged to be an enormous commercial fraud.

The summons was issued at the instance of Dr. Adam Thom, of Gower-street, Bedford-square, who had purchased a number of shares upon the faith of the false representations alleged to have been made by the defendants, and who, upon the failure of the company during the great panic in May, 1866, was called upon to pay a large sum of money for calls made by the official liquidator upon the shares he had so purchased.

The defendants summoned were Mr. Henry Edward Gurney, Mr. Robert Birkbeck, Mr. Henry George Gordon, Mr. William Rennie, Mr. Henry Ford Barclay, and Mr. William Henry Gurney.

The following is the charge laid in the summons:—“Whereas you have this day been charged before the undersigned, the Lord Mayor of the City of London, by Adam Thom, LL.D., of No. 90, Gower-street, Bedford-square, Middlesex, gentleman, for that you, in the month of July, 1865, and at divers other times, in the City of London, unlawfully did conspire, combine, confederate, and agree together, by divers false and fraudulent pretences and representations, and by divers subtle devices and means, to induce the said complainant and divers other persons to become, and thereby they did become, shareholders in a certain public company, to wit, a company called Overend, Gurney, and Co. (Limited), registered under the Companies Act, 1862, with intent thereby to cheat and defraud the said complainant and the said other persons of divers valuable securities, bankers’ cheques, orders for the payment of money, and divers sums of money, their property and moneys respectively, and which were acquired and obtained by the aforesaid pretences, representations, devices, and means, whereby the said complainant and the said other persons were in fact defrauded to the amount of three millions sterling, against the peace, &c.” The summons bears date the 11th of December, 1868. It should perhaps be stated that the character of the offence imputed to the defendants is that of misdemeanour, which would render them liable, upon conviction, to be sentenced to imprisonment, with or without hard labour, or a fine, at the discretion of the court.

At the commencement of the proceedings a large number of books, extracts from which are intended to be given in evidence, were brought into court.

The presiding magistrates were the Lord Mayor, Alderman Sir T. Gabriel, Alderman Sir R. Carden, Alderman Sir B. Phillips, and Alderman Cotton.

Mr. G. Lewis conducted the prosecution; the defendants were severally represented by Serjeant Ballantine, Serjeant Parry; Mr. Giffard, Q. C., Mr. Poland, Mr. Gardyne, Mr. Montagu Williams, and Mr. J. C. Mathew.

The whole of the defendants pleaded not guilty. They were seated in front of the clerk’s table.

The defendants, who are all men advanced in life, were accommodated with chairs in front of clerk’s table, and they all seemed to feel the painful position in which they were placed most acutely. The only one who exhibited anything like unconcern during the inquiry was Mr. Gordon, who smiled occasionally while Mr. Lewis was describing what he alleged to be the malpractices on the part of himself and his co-directors. They all paid the most earnest attention to the opening statement of Mr. Lewis, and frequently took notes of what he said.

Mr. Lewis stated the charge against the defendants. He appeared, he said, on behalf of Dr. Adam Thom to charge the defendants with having conspired together to defraud Dr. Thom and other shareholders of money to the extent of three millions sterling, and he (Mr. Lewis) believed, when his lordship had heard the facts and the evidence which he was prepared to produce in support of it, that a greater offence than that of which the defendants were guilty had never disgraced this country. The three first defendants were originally partners in a firm of the highest respectability in that City, which was carried on under the name of Overend, Gurney, and Co. The three other defendants were not partners in that firm, but they subsequently became partners in the new firm, which was called Overend, Gurney, and Co. (Limited), and the charge against them was that they, being perfectly aware of the hopeless and irretrievable state of bankruptcy of the company, did agree together to conceal from those whom they induced to become shareholders in the firm secrets that were perfectly well known, and by that means and by other frauds they induced the shareholders to subscribe 5,000,000l. to the funds of the company, while they were perfectly aware that the whole 5,000,000l. was lost. |[32] They had in bills of exchange and other documents 9,000,000l. sterling, and owed on other documents 5,147,000l. Beyond this there were contingent liabilities to the extent of 9,313,000l., making an aggregate of 23,000,000l. sterling. To meet those engagements they had 120,000l. in cash. They had also further sums deposited with them to the extent of 5,147,000l., but the only available means to meet the claims against them were 120,000l. They had government stock to the extent of 372,000l., but this was not available to meet liabilities. They had bills to the extent of 1,300,000l.; there were 721,000l. loans guaranteed; there were 9,613,000l. in bills rediscounted, making the total indebtedness 23,000,000l., leaving them insolvent to the extent of 3,000,000l. Such was the state of things in the month of July, 1865. Now, in July, 1865, the course pursued by the defendants was this. They had a very great name in the City—one that commanded perfect confidence in the City. They knew the secret of their own insolvency: but no one else knew it or suspected it. What he submitted was this, that the defendants, availing themselves of their name and credit, formed a combination to throw the whole of their enormous loss upon those whom they most dishonestly invited to become partners in their ruined and bankrupt concern, and that they did so with a full knowledge of what the consequences must be; and, in fact, of what the consequences actually were. He would here observe that there was no reason to suppose that the three first defendants—Messrs. J. H. Gurney, E. Gurney. And R. Birkbeck—concealed the real state of their affairs from the other defendants; on the contrary, he should show that the opposite was the fact, that they disclosed to the other three defendants all the circumstances of their position, explained to the fullest extent their hopeless insolvency, and that therefore they did not attempt to deceive those whom they wished to become co-directors. The company was registered on the 12th July, 1865, by the six defendants, who were the promoters of it. Mr. Gurney Buxton was also a promoter, and Mr. T. A. Gibb. The latter gentleman had since died; but it would be some satisfaction to his friends to know that no charge of fraud could be brought against him, as far as the present prosecution was concerned. The prosecution believed that there was no tittle of evidence against Mr. Gibb. He believed that that gentleman, who was an elderly gentleman, was the victim of the defendants, and that he had no criminal intentions whatever in respect of this company, The three first defendants, when the company was formed, nominally took a certain number of shares; but he would show that it was a fraudulent subscription, done in order to deceive the public; that no shares were really allotted to them; and that their only object was to induce the public to believe that they were largely interested in the concern. Mr. Birkbeck took 1,000 shares, Mr. Rennie 500, and Mr. Gordon 200, and the six defendants, without any knowledge on the part of those who ultimately became shareholders, registered the company on their own account, and neither his client nor any of the shareholders were at all concerned in that registration. The company was registered to carry on the business of Overend, Gurney, and Co., and by the articles of association, page 18, it was provided that the six defendants and Mr. Gibb should be the first directors of the new company. His lordship would see that the defendants in the articles of association constituted themselves the first and only directors of the company, and by doing so they, and they lone, knew the secrets of the hopelessly insolvent position of the firm, and by the fact of their remaining in that position they were able to keep that secret back from the knowledge of the public. No act of theirs gave the public the slightest possible chance of becoming acquainted with this material fact. The only fact which was material to be known was if th(ey) were an honest and honourable transaction. He then referred to the article in the association that the managing directors were to have 5,000l. a-year, that there was to be the creation of a reserved fund amounting to one-fifth of the net profits, and a dividend to the shareholders of 7 per cent., after which the managing directors were to have further remuneration to the extent of one-fifth of the net profits, while the other directors were to have 500l. a year—all which he contended was calculated to give the public the idea that this company was doing a great business—as great as that which had brought large fortunes to the ancestors of some of the directors. He then proceeded to refer to the deed which transferred the business of Overend and Co. to the limited company. He would read three letters written by Mr. Daniel Gurney, of North Runcton, near Lynn, to Mr. J. H. Gurney. On May 25, 1865, Mr. D. Gurney says:—“You appear to have done the right thing to negative the continuance of Overend, Gurney, and Co.’s business.” He also refers to the negotiations with the National Discount Company, and states that he hopes the termination of the American war may facilitate the selling of the ships. On June 24 he expresses his satisfaction that things seem to be in train for the formation of a new company, and he suggests that a fourth directory might be desirable, and says he supposes a Baring cannot be obtained. He adds, “I feel great objection to our joint and several guarantees for the deficiency of the new company.” What was the meaning of the deficiency of the new company, which did not come into existence until the 12th of July? The company was not then in existence, and it must have been known that whatever company took the concern must take it with an enormous deficiency of 5,000,000l. And yet, he said, he hesitated about giving a joint guarantee! He affirmed that this was a scheme to win the shareholders, and the language used showed that there were aware that they were intending to transfer ruinous liabilities to the shareholders, whom they were intending to make their victims, the effect of which had been to drive hundreds of men from their homes and from their country. He also objects because the proposal placed their marriage bonds pari passu with other liabilities, and that it abstracted their private assets from the Norfolk creditors. He say—“It might be proposed to the independent directors that, at all events, our marriage settlement bonds ought to precede.” If those gentlemen were solvent, why was this said? If they were solvent, he was unable to say what this meant. The writer also says—“I doubt whether the proposal several security is quite honourable to families into which my children have married,” and he further states that he must leave the matter in the hands of his correspondent. In the same letter Mr. Daniel Gurney asked—is there a condition that we must not sell the shares of the new company under a certain time? What could be the object of such an inquiry? Clearly it was an attempt at taking shelter, or why should it have already occurred to the writer to inquire as to when the shares could be sold? Mr. Daniel Gurney was uncle of Mr. J. H. Gurney and Mr. H. E. Gurney. He was one of the persons who executed the deed of transfer and covenant. He was interested in Overend, Gurney, and Co., a sum of upwards of 100,000l. standing—by a fiction—to his credit in the books of that company, and he had further a large interest in the Norwich Bank with whose affairs he was intimately acquainted. Well, this gentleman was certainly familiar with the business of the concern, and yet he wrote a letter on the 4th of July to his nephew (one of the defendants), that he acceded with pleasure to certain kind proposals made by his correspondent in reference to his security, and added:—“In case of a real catastrophe, all my family and myself would be in total destitution, or almost so.” What interpretation |[33] could be put upon such language passing at such a moment between the uncle and the nephew? Did it not clearly show that they both sufficiently well knew that it was true that the business of the firm was pulled up? Mr. Lewis proceeded to quote the deed of transfer, by which the payment of 500,000l. was provided for, half in cash, and half in fully paid-up shares of the new company, and he maintained that the object of this arrangement was fraudulently to make the public believe that, the business having been sold for half a million of money, it was a business of enormous magnitude and enormous profit. The deed of transfer provided that the 500,000l. should not be paid over to the vendors, but that it should be held by the new company as a material guarantee that the assets they made over to the new company were sufficient to meet liabilities, while by another deed this sum of 500,000l. was taken by Overend and Co., and was put against the enormous losses which they had transferred to the limited company. He need hardly say that this second deed was never shown to the public; it was kept concealed till the failure. It was not even produced then, till it was discovered when a search was made on behalf of the shareholders. Much as he regretted to make the observation on gentlemen who occupied such a high position, he must say that no one would have believed, except for the undeniable fact that they would have condescended to commit a fraud so base, so glaring, and so monstrous, and which they knew most bring ruin upon everybody whom they deceived by this second deed, which was executed on the same day with the first. The articles of transfer went on to state that the accounts of Overend and Company were to be transferred except as to certain debts which the new directors might object to. There were such debts—doubtful debts—in every concern, however honourable; and that they new directors made this objection went to show the public how vigilant they were in looking after the interests of the shareholders. The deed then went on to state that the vendors guaranteed that the assets which were made over to the new company, that was, not all kinds of assets, but those only which the new directors might accept, were sufficient to meet all the liabilities, and to pay 20s. in the pound; and over and above this they agreed to leave the 500,000l. in the hands of the directors as a material guarantee. The next clause was to the effect that the new company was to take over all debts and liabilities whatsoever belonging to Overend and Co. The meaning of these clauses was veiled in the most specious manner. Overend, Gurney, and Co. had lost 4,000,000l. sterling of their capital. They did not choose to write off 1,000,000l. of their credit, and thus to reduce the 4,000,000l. to 3,000,000l., which would have been the honourable mode of conducting the operation. They had lost that 1,000,000l. sterling, every shilling of the 5,000,000l. of their customers was gone, and they had only 120,000l. in cash. They knew they were placing 1,000,000l. on the backs of their shareholders. What did Mr. D. Gurney mean when he spoke of the catastrophe of the new company? Was it not almost absurd to notice the way in which these frauds were netted together? Then there was clause 16, the meaning of which seemed to be that the directors of the new company had taken very good care that Overend, Gurney, and Co. should not palm off on the new company any had assets at all, and that none of the assets should be taken by the limited company. And yet, by a secret deed, made the same day, between the same parties, in the same matter, these five defendants—not Mr. Gordon, though he was present—but the five defendants, by a secret deed, positively transferred the whole of this “rottenness” to the limited company as cash on the books of the limited company, and as worth 20s. in the pound. Such a monstrous fraud never was committed, and he challenged the opposing counsel to explain that fact. He said that they were as guilty of crime, as crime could be brought home to any human being. It was hardly possible to suppose that gentlemen of such character should have been guilty of what he must denounce as a scandalous fraud. He did not know that it was necessary to call attention to anything further in connection with this deed. It was the document which was made public in conjunction with articles of association. The impression they were calculated to produce was that the business of the firm was one of boundless wealth; that it was one which could afford to pay the defendants large salaries; whereas it was now notorious that the case was widely different. And his lordship would find that every advantage by which the company could possibly make the least profit had been wrung from them by the deed to which he would now call attention. After his lordship had heard that deed, he should be prepared to assert that, even if there was nothing else to which he had to call attention, enough would have been done to establish the charge against the defendants. But he was sorry to say that there were many other matters equally gross, and of an equally dubious character, to which he should be obliged to invite attention.

Mr. Lewis then proceeded with his statement and examination of the second deed which was concealed from the public. It would perhaps escape attention that in this deed there was one clause giving the directors of the old company certain time to pay up their suspense accounts; that period was fixed from the 31st of July 1865, to the 31st of December, 1868. This suspense period was for the purpose of giving Overend and Co. time to liquidate their suspense accounts, and they were not to be called upon by the directors of the limited company to pay over any moneys till the expiration of that suspense period. Now it was an odd circumstance that this suspense period did not expire till yesterday, and it showed the delusions which the directors were practising upon the public that they had three years and a half to pay up the suspense accounts of the company, though the limited company itself did not exist for more than nine months; but it was put in such a way that, if the deed had been seen, this was not likely to attract attention. And yet for this three-and-half years they had the power, as he would show, of using the means of the limited company, thus bringing further ruin upon the shareholders than they would have done if they had told the truth. Another item in the deed was, that the limited company were to accept certain accounts. What those accepted accounts were he would not proceed to show. There were, first, the accounts subsisting between Overend and Co. and the Millwall Iron Company, and the accounts connected with shareholders in that company. This concern was utterly worthless and ruinous. Then they were to accept all accounts between the company and any companies of the firms that might be in course of being wound up or liquidated or in the Court of Bankruptcy. His lordship would presently be able to form some idea of the utter worthlessness of those acceptances which the first deed represented as certain to yield 20s. in the pound. How, he asked, could Mr. Barclay, or any of the other directors who had signed both deeds, showing the false one and concealing the other, how could they be ignorant of the real state of matters? Positively, this mass of insolvent and worthless “rottenness” was, by a second deed, which was concealed from the shareholders, taken over by the new company as being worth 20s. in the pound. By this second deed these rotten debts were thrown over upon the shareholders—debts which had been kept secret. There was a transfer of business by which one party sold a business for 500,000l., and the other party agreed to take that sum. But he wished to know why two deeds were made. If the company was to take the bad debts, why was it not stated in the first deed? Why were two deeds executed? For the purpose of fraud? If so, the thing was easily intelligible. Was there anything in the world so dishonest as that these accounts were to be taken over by the second deed, of which the public had no knowledge, and at the full value? Could credit be given for common honesty to those who could be guilty of such fraud? Then came 30 items of account, among which stood the Atlantic and Royal Mail Steam Navigation Company, in liquidation, 839,000., which was valueless, except to the amounts of the estimate for the sale, which realised 120,000l. He would give his lordship a few further specimens of the accounts thus transferred. One firm, Messrs. Howard, were put down at 330,000l., though he believed that they denied that they owed anything like that sum. Charles Joyce. 28,000l.; John Jones, 22,000l.; another firm, 291,000l.; J. E. C. Cook, 243,000l.—a sum which Mr. Cook declared that he knew nothing about; the Levant and Black Sea Steam Company, 38,000l.; David George Lewis (whose failures were notorious), 341,000l.; the Millwall Iron Works, 510,000l.; Mineral Company, 83,000l. All these were utterly worthless, and produced next to nothing. Again, there was the Old Ebbw Vale Company—(in which one of the Mr. Gurneys and Mr. Gordon were directors)—down for 11,000l., and during the nine months of the existence of the limited company of Overend, Gurney, and Co., this sum was increased to 48,000l., the whole of which was lost. Messrs. Rigby were down for 14,000l., another firm 51,000l., C. Alexander and Co., 51,000l., ultimately increased to 107,000l., and he might furnish endless other instances of failed firms whose names were handed over for large sums to the company. Thirty of these firms were down altogether for 4,000,000l., the whole of which was worthless, and produced nothing; and altogether rotten acceptances to the value of something like between 5,000,000l. and 6,000,000l. were handed over. It was true that an estimate was made of the value of those securities, and it was put down at 1,000,000l.; but the figure might just as well have been 2,000,000l. or 3,000,000l., for they were all equally fictitious. The real value of the securities was simply nil, or at the most, if carefully realised during a long course of years, they might have proved to be worth, perhaps, 100,000l. In point of fact, however, they not only proved valueless, but actually increased the liabilities of the company by 463,000l., in consequence of certain guarantees which the defendants had given in connection with those liabilities, and which they dishonestly concealed at the time. He would observe that throughout, the company, as it was called, consisted really of the defendants. The shareholders had no voice or influence in its affairs; they were slaughtered like lambs. Well, the directors had it all their own way. They were obliged to delude the public, for they were on the even of a catastrophe; and unless they did so, they would have been lost and disgraced for ever, by having it shown that they had defrauded their depositors to the extent of 5,000,000l. If this was an honest transaction, why was not some independent gentleman called in to act between the old company and the directors of the new company to make a valuation of the assets and the goodwill that were taken over? That was the usual course in such a transaction; but it would not have done in this instance. Then it was found that the suspense account contained all the worthless assets of 5,000,000l., while 1,000,000l. was set over against it. Why was it not represented that this 1,000,000l. went to pay the worthless accounts as far as it would go? Of course the real effect was the same; but the effect produced upon the mind of the public was that there was 1,000,000l. |[34] more standing to the credit of the company, when, in fact, there was nothing of the kind. He would like to know where this second deed was kept. Was it in the hands of the solicitor? He asked that because he knew that some shareholders of the company entering the office to make inquiries, and seeing three deeds lying on the table, asked what they contained, and were answered, “Oh, it is only three copies of one and the same deed.” One gentleman not doubting the fact, and yet wishing to know more, said, “Well, but is there no other deed?” And he received for answer, “Oh no; there is no other.” The statement was made by the secretary of the company. Of course no one imagined that the secretary knew anything of the deed by which, as his lordship would see, all the material guarantees given in the first deed were taken away. There was a third deed, which was not of much importance, and which provided if either of the old directors were to become bankrupt, or lunatic, or going abroad, the suspense period allowed for paying up the doubtful accounts was to be shortened. This was honest and proper; but there should never have been any suspense at all. He would now call attention to the position of the different defendants, and his lordship would see that they were all deeply interested in concealing the state of the company. The two first defendants were partners in the original firm. Mr. Rennie was a partner in the firm of Cavan, Lubbock, and Co., which owed Overend and Co. 661,000l., and in addition they had 50,000l. in the company, as deposit, which was worth at the time of the transfer about 6d. or 1s. in the pound. It would be seen that Mr. Rennie had a deep interest in keeping up the company. There was this remarkable fact as to Mr. Rennie, that within a week of the limited company coming into existence, though he must have been aware that they were bankrupt to the extent of 3,000,000l. as soon as they took down their shutters, he withdrew not a portion, but the whole of his deposit of 50,000l. within a week. As to Mr. H. G. Gordon, he (Mr. Lewis) believed that Mr. Gordon had no connection with the company beyond that of a desire to become a director. Mr. Barclay was, unfortunately, a party to the two deeds. Mr. Barclay was a cousin of the Gurneys, and was intimately connected with them and the whole of their family, and Mr. Barclay was nearly related to one of the firm of Barclay, Bevan, Tritton, and Co., the bankers of Overend, Gurney, and Co. at the time they gave the business up to the limited company. Overend, Gurney, and Co. owed to Barclay, Bevan, Tritton, and Co. at that time 771,000l. Part of that was received, but to what extent he did not know. Barclay, Bevan, and Co. were appointed bankers of the new company.

Mr. Serjeant Parry said that nearly the whole of this sum was secured. An incorrect statement had been made on the subject, for which an apology had been made to Messrs. Barclay, Bevan and Tritton.

Mr. Serjeant Ballantine said that statements of this kind ought not to be made in so loose a manner.

Mr. Serjeant Parry said that an apology had been made for the mis-statements. He desired distinctly to contradict the statement of Mr. Lewis.

The Lord Mayor thought that any mistake of this kind could not be too soon rectified.

Mr. Lewis said that he had not been correctly understood. He had alleged that Barclay, Bevan, and Tritton held security, but whether to the full extent he could not say.

After a few words of explanation from Serjeant Parry,

Mr. Lewis said that he would now proceed to refer to the prospectus that was issued at the time the company was formed—a document that he must characterise as false and fraudulent. It announced that the capital of the company was to be 5,000,000l., in shares of 50l. each, and that only 15l. per share would be called up. That would amount to 1,500,000l., or taking off the 250,000l. paid to the old firm in cash, there was a working available balance of 1,250,000l. Now the defendants must have known that that sum would be useless in the then position of their affairs. But they wanted the public to believe that the only object of forming the company was to increase the business of the firm by the introduction of some fresh capital. The directors further declared that in their opinion the terms on which the business had been purchased were such as “could not fail to secure a highly remunerative return to the shareholders.” What could be more deceptive? On what pretence could the goodwill of the business be said to be worth 500,000l. ? Was that estimate based upon the annual returns of the firm? But he should prove that for the previous six years the firm had not only made no profits whatever, but had made losses of upwards of 600,000l. a year. Well, the public were deceived by a prospectus so flattering, and supported by names in which they had such perfect confidence. But he repeated that the prospectus was one of the grossest pieces of deception and falsehood ever perpetrated in the City. The prospectus further stated that the deed of transfer might be seen or inspected at the company’s offices. Well, no doubt one of the deeds executed on the 27th of July was shown. But the other deed—which in fact proved the insolvency of the concern—was hid or concealed, and he maintained that if there had been one bit of good faith, one remnant of honesty in the prospectus put forward by the directors, they would never have concealed the second deed. It was not done accidentally, but of set purpose. Undoubtedly they consulted together on the subject. They saw that they were ruined if the public caught scent of the second deed, and therefore it was not produced, and no suspicion of its existence got abroad, The learned gentleman then called attention to the rough draft of a prospectus which would be proved to be in the handwriting of John H. Gurney, Gordon, and Rennie, and he called attention to the discrepancies between this and the prospectus, as it afterwards appeared, as an evidence that the directors were at first disposed to set forth the affairs of the company in more glowing colours than they at last ventured upon. Thus it was said in the rough draft that the sale of the business had actually taken place on highly favourable terms. It was also stated in this rough draft that the liabilities were all amply and satisfactorily guaranteed, but in the real prospectus they did not venture on that; they only said that their liabilities were provided for on the guarantee of the vendors. In the margin of the draft it was said the public would thus have the advantage of entering upon a large and profitable business. In the real prospectus nothing was said about profitable. In the rough draft it was said there was no promotion money. In the real prospectus it was said that the goodwill was to be bought for 500,000l. These alterations were not made till they began to feel that it would be dangerous to make such statements—that there was such a thing as being brought up to the Mansion-house for issuing a false prospectus. The rough draft went on to say that the shareholders would have a fair chance of increasing the profits which Overend and Gurney had long earned. They dared not insert that passage in the real prospectus. It was struck out. Why? Nothing could have been more calculated to give confidence than to refer to “the profits so long earned,” but the words were struck out. The intention had been to subscribe a capital of one-third, but that was found impossible; they knew they could not do it, and so instead of subscribing one third they subscribed nothing; but this deluded the people into the belief of the extent of their business. The prospectus stating that |[35] “three of the present members would retain their seats at the board, in which they would also retain their large pecuniary interest.” Did they maintain any such interest? He should like to see it. Would anybody point it out? He challenged an explanation of a matter which had been proved beyond dispute. There never was a company in which shares were so eagerly sought. There was one fact beyond dispute, that the shareholders of this company had paid 3,100,000l., every shilling of which had gone to reduce the liability of Overend, Gurney, and Co., and there were enormous liabilities yet outstanding, so the money now subscribed would not pay their losses—there would probably be nearly another million before this company was wound up. The new directors, Mr. Gordon, Mr. Rennie, and Mr. Barclay, might say that they believed the private estates of Overend, Gurney, and Co. were sufficient to pay any deficiencies, and that Overend, Gurney, and Co. had led them to believe that their private estates would pay the deficiency. If so, why did they not state this in the prospectus? That was the obvious answer. It was said further, that Overend, Gurney, and Co. were entitled to landed property privately. Including the estates and other kinds of property, Messrs. Overend, Gurney, and Co. had proceeds amounting to 1,253,000l. From that must be deducted 143,000l., leaving about 1,100,000l., but that would not pay 4,000,000l. or 5,000,000l. of deficiencies. When the old firm realised their private estates to the extent of 800,000l., from this amount 300,000l. was appropriated to the payment of current and private debts, and the remaining 500,000l. from the private estates came to the suspense and guarantee account, but if they paid in 150,000l. in one day they took it away the next, so that day by day, as the money came in, it was drawn out before the eyes of the directors to pay debts, not in the suspense account, but against the guarantees that had been given. Thus, when credit was taken for the surrender of the private estates, out of the 800,000l., at which they were estimated, only 85,000l. ever reached the creditors. Well, it is then said that there was the Norwich Bank, and that a million of money (including the value of the goodwill) was lying there to the credit of the defendants. But his lordship would hardly believe that though there certainly was a million nominally there, it was but the million at which the taken-over accounts were estimated, and that it was worth not a farthing. It depended upon the realisation of worthless paper, and in point of fact not one farthing of it ever came to the benefit of the creditors. It was all fancy and moonshine, put upon paper merely for the purpose of securing a retreat in case of proceedings being taken against them. The million at which the securities were estimated was a fictitious million. The million at the Norwich Bank never produced a farthing. It was all a delusion. But it was necessary to take advantage of these two imaginary millions, and, in order to bring the amount up to the necessary figure of the assets, 500,000l. was put down for the goodwill, 45,000l. for the lease of the Lombard-street premises (it only realised 26,000l.). By this means an imaginary 5,000,000l. was obtained on the one side against the 5,000,000l. on the other. The whole thing was a mountain of fraud, falsehood, and delusion; and, further, it was on the even of that failure that the Norwich Bank was, he must say, spirited away. The goodwill was made over to Mr. H. F. Barclay and Mr. Buxton, neither of whom was a party to the deed of covenant in which the company was guaranteed against loss. Again, if it was really believed that the private estates of the defendants were sufficient to meet the liabilities of the firm, why was not a lien taken upon them? Why were they left to the mercy of the Bankruptcy Court, or of other creditors? The secret had been what he had stated, and it was another proof of the hollowness and rottenness of the whole affair. He should now be prepared to place before his lordship evidence of what he had stated, and he should then ask him to commit the defendants for trial on this serious charge of conspiracy and fraud. Mr. Lewis concluded by observing that he had urged Dr. Thom to employ some eminent counsel to conduct the prosecution, but he had preferred to leave it in his (Mr. Lewis’s) hands. Dr. Thom, he might state, believed in the justice of his accusation—he believed in the justice of this court, and therefore he had left his case in his (Mr. Lewis’s) hands.

Mr. Lewis then proposed to call Dr. Thom formally to prove his information, but Serjeant Ballantine objected, saying it would give rise to a good deal of discussion, and eventually the Lord Mayor agreed to remand the case without going into the evidence.

Serjeant Ballantine expressed a hope that the public at large would not accept an ex parte statement, however able and ingeniously made, but would reserve their judgment until the whole of the facts had been brought forward. One other matter he had to ask. After a considerable lapse of time, this charge had been brought against the defendants, and they were anxious and determined to meet it, but they were at the same time desirous that no delay should take place, and he had therefore to ask his lordship to hear the case de die in diem until they could take the judgment of a higher tribunal.

Serjeants Parry and Sleigh and Mr. Giffard also expressed a hope that the case would be investigated as speedily as possible consistent with the business of the court; and after a short discussion it was arranged that the case should be continued to-day, and that for the better convenience of the leaned counsel engaged in the case the adjournment should be to one of the large courts at Guildhall.

The defendants were admitted to bail; themselves in 2,000l. each, and one surety each in 2,000l.

Mr. Thomas Fowell Buxton became bail for Mr. John Henry Gurney, Sir Thomas Fowell Buxton for Mr. Henry Edmund Gurney and Mr. Barclay, Sir John Lubbock for Mr. Birkbeck, Mr. Kirkman Daniel Hodsgon for Mr. Gordon, and Mr. Robert Gillespie for Mr. Rennie.|

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The Daily News. Nr. 7080, 9. Januar 1869. S. 5/6.
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THE CHARGE AGAINST THE DIRECTORS OF OVEREND, GURNEY, AND CO.

Jan 9 Anmerkung von Jenny Marx

The Court of Queen’s Bench, Guildhall, was again crowded yesterday during the investigation of this charge before the Lord Mayor and Alderman Sir T. Gabriel. The defendants, as on previous examinations, occupied the seats usually appropriated to solicitors, immediately below the bar.

The same learned gentlemen appeared on behalf of the defendants. In the course of the day, Sir R. Carden, Mr. Alderman Wilson, Mr. Alderman Lawrence, Mr. Alderman Cotton, Mr. Alderman Causton, and other City magnates visited the court, and occupied seats on the bench by the side of the presiding magistrates, but merely as spectators.

On the opening of the court the examination of Mr. Oswald Howell was proceeded with—He said on the 4th of November, 1865, there was an entry in the suspense and guarantee account, “House purchase account, 26,572l.” That was transferred from the old company to Overend, Gurney, and Co. (Limited). The four items, of the amount of good will, the cash amount, the share amount, and the value of the premises, amount to 449,205l. There was paid in to the credit of that account by Messrs. Gurney and Birkbeck 561,500l., and of that amount I find that 476,000l. was withdrawn on payment of guarantees and of credits which had been granted by the old firm, so far as I have been able to ascertain from the books.

Mr. Lewis—Now, will you refer to the several items of which that account is made up?

Witness—I turn to the account, “Overend, Gurney, and Co. Suspense and Guarantee Account,” and I find on the credit side certain sums of money paid in. The first is 7th of August, 1865, “Lees and Son, for J. H. Gurney, 6,000l.

Mr. Lewis—Do you find anything on the other side?

Mr. Oke (the clerk of the court) suggested that all the sums on the credit side of the account should be first given.

Mr. Lewis stated that all he wanted to show was, that the sums paid in were withdrawn by the Gurneys at or near the same time they were paid in.

Mr. Oke—We had better have all the items on one side of the account first.

Mr. Lewis said that if it would facilitate the staging on the depositions, he had no objection.

Witness—The next is an item dated 7th August, ditto 500l. On the 19 of August I find an entry, cash per Gurneys, 150,000l.; which means, I believe, Gurney, and Co., of Norwich.

Mr. Giffard—What is the entry? You must allow us to draw the inference.

Witness—It is merely cash 150,000l. The next item, in cash, Gurneys, 2,500l; 16th, cash per H. E. Gurney, 35,000l.; 29th September, cash per H. E. Gurney, 15,000l.; October 2, cash, Gurneys, 25,000l.; 20th October, cash, T. H. Gurney, per Gurney and Co., 30,000l.; 24th, D. Gurney, 15,000l; 28th, cash, H. G. Gurney, 20,000l; 1st Nov., A. Birkbeck, 4,204l.; 22nd Dec., per H. E. G., 13,000l.; 30th, P. L. Gurney, 12,000l.; 12th Jan., per S. Gurney, 1,000l.; 12th, R. Birkbeck, 3,500l.; 20th Jan., 1866, per H. E. Gurney, 18,000l,; 5th Feb., by S. G., 3,000l.; 14th, J. H. G. (13th Feb.), 30,000l.; 27th Feb., per J. H. Gurney, 10,000l.; the same day, by H. E. Gurney, 20,000l.; |[38] 1st March, per S. G., 6,000l.; and 2nd March, D. Gurney, 10,000l.; ditto, per H. Birkbeck, 4,000l.; ditto per H. G., 20,000l.; 15th, per S. G., 32,000l.; ditto, per D. Gurney (C. H. G.), 6,000l.; per H. E. Gurney, 4,000l.; per W. Birkbeck, 11,000l.; 6th April, per R. Birkbeck, 2,500l.; per W. Birkbeck, 6,500l.; H. Birkbeck, 1,000l.; 9th, per R. Birkbeck, 5,700l.; 11th, H. Birkbeck, 2,500l.; 14th April, cash per W. Birkbeck, 4,000l.; 30th, per W. Birkbeck, 500l.; per H. Birkbeck, 1,800l.; per J. H. Gurney re S. G. Buxton, 4,500l.; ditto, 7,200l.; per D. W. Chapman, 6,000l.; 4th May, H. E. Gurney, 10,000l. That is all I think that I can find.

The Lord Mayor—And they make what?

Mr. Lewis—561,5000l.

Witness—I am not quit sure that those items cast up under any circumstances. It is difficult taking out items exactly.

Mr. Lewis—Now, do you find that on the days, or almost on the days, on which those items were paid in, there were payments on the other side falling due to Overend and Gurney?

Witness—I will give a few instance, but in the case on 150,000l. I do not find on that day or on any approximate day that the money was withdrawn. I think that in most of the other instances the money was withdrawn either the day before or the day after.

Mr. Giffard—Whatever inference may be derivable from them, we must have the entries.

Mr. Lewis—From the investigation of the books that you have made, do you find any sum paid on the day you have mentioned in any way in respect of the indebtedness of the limited company?

Mr. Giffard objected that this would not be evidence, but an inference of the witness.

Mr. Lewis—I am going to each specific entry, but I wish to show that each of these sums was to meet a pressing demand on account of Overend, Gurney, and Co.

Witness—The first entry I find is on the 7th August, when 6,500l. was paid in by J. H. Gurney, or apparently paid in by him; and on the other side I find an entry, “Cash, D. W. C. and J. C., 5,877l.

Was that in any way a payment in respect of the limited company?—It was not.

The Lord Mayor—How do you arrive at that?

Witness—I have seen an account in the name of A. C. and D. W. C. in the books of the old firm, and the item, if I remember rightly, of 5,877l., was paid in respect of a liability of the old firm which existed on the date of the transfer. On the 7th September there is an entry, “Per Gurneys 5,000l.,” on the credit side; and on the debit side on the day before I find “Kelson unpaid; 3,000l.

Have you traced what that is?—Yes; It is a bill of Kelson, Tritton, and Co., for 3,000l. which had not matured at the time of the transfer. It became due on the 5th, and the new company paid it. On the 16th of September 35,000l. was placed to the credit side of the account by H. E. Gurney, and on the opposite side there are two entries, Cash, Swedish, 27,5000l.; ditto, Von Dadelszen 2,500l.

Have you investigated what “Swedish” was?—I cannot state exactly what it was. I did investigate it at the time. It was a liability in respect of certain bills which had not matured at the time of the transfer. The 2,500l. was a bill of Van Dadelszen’s. On the 29th, when Mr. H. E. Gurney paid in 15,000l., I find an entry on the opposite side, “Millwall, 14,180l.

Did you investigate that—I did not. On the 2nd of October there is an entry, “Gurneys, 25,000l.” to the credit, and on the other side there is an entry, “Cash per D. O., 39,751l.” I have traced that to a payment made to the Norwich Bank.

Mr. Giffard—On the 29th September you have given “Millwall, 14,180l.”—is there not an entry on the other side?

Witness—On the 26th there is an entry, “Millwall Iron Works, 14,180l.

You have it on each side of the account?—Yes, it happens to be so. On the 20th of October, the day that Mr. T. H. Gurney paid in 30,000l., I find a payment made to the Manchester and Liverpool District Bank, “re Sichell, 25,000l.,” and on the same day “bills, re Sichell, 10,133l.” That 10,133l. is a cross entry. It is paid on the other side.

What was the payment to the Manchester and Liverpool District Bank?—It was a guarantee of the old firm.|

[40]

Was the limited company responsible for that?—Not that I am aware of. Then on the 24th, the day that Mr. D. Gurney paid in 20,000l., I find “Halliday, Fox, and Co., p.n. 21st, 10,000l., ditto 10,000l., ditto 10,000l., ditto 10,000l., ditto 10,000l.;” making 50,000l. in all. On the 28th, the day that Mr. H. E. Gurney paid in 20,000l., I find an entry, “Sichell, Herscheld, Perrein’s draft, 10,000l.,” and on the previous day three entries of 5,000l. each in the name of Von Dadelszen. Those three entries I have traced as bills lying at the Norwich Bank at the time of the transfer of the business. They matured on that day. On the 1st November, the day the 4,002l. was paid in, I find “L. Bruzewitz’s draft, 25,000l.,” and credit is given two days afterwards for the premises, 26,572l. On the 22nd December there is 13,000l. on the credit side, and on the debit side J. Watson and Co., 20th December, 20,000l.; London and African Company, 19th December, 5,000l.; Astley and Co., 800l.; and there is a marginal note, “9th October;” ditto, 11th December, 3,000l. On the 30th P. L. Gurney paid in 12,000l., and there is a debit entry on the same date “for interest to the 31st of December, 62,621l.” On the 12th of January there was 1,000l. to S. Gurney, and 3,500l. R. Birkbeck paid in. There was also a payment of 1,000l. to Captain Perry; and on the day before one to Joseph Fry, 4,000l. On the 20th 18,000l. appears credited from H. E. Gurney the day before. There is an entry of Bowman’s bill, 15th January, 7,952l., and on the 16th there was a payment of Ebbw Vale, on 2,450 shares, 12,250l.

Serjeant Sleigh—Is that a payment on calls?—I believe it was.

Examination resumed—On the 5th of February for S. G. 3,000l. was paid in. I am unable to trace that, but there is, on the 10th of the same month, 52,000l. to the Contract Corporation, J. Watson’s bills. The payments were 20,000l. and 32,000l. to the Contract Corporation, and there was a payment of 30,000l. to Bruzewitz, making 82,000l. They were for bills accepted by Watson, which were dishonoured, and carried to the debit of Mr. Watson’s account. The Contract Corporation appear in connection with Watson’s bills. As to Bruzewitz, that was a guarantee of the old firm, and Bruzewitz’s acceptance were paid under that guarantee. That payment was in no way a payment on behalf of the limited company. On the 27th Mr. J. H. Gurney paid in 10,000l., and Mr. H. E. Gurney 20,000l.; and on the 26th there was a sum paid to the Bank of London, 50,000l. From an investigation of the books it appears that was a guarantee of the old firm, and not a payment on behalf of the limited company. The 50,000l. I refer to exactly corresponds with the entries. On the 1st of March S. G. paid in 6,000l.; on the 2nd D. Gurney paid in 10,000l., and Mr. Birkbeck 4,000l.; which make, with the items paid in by the Gurneys on the 27th of February, exactly 50,000l. On the 14th the entry on the credit side of the day book, H. G., 20,000l. appears; and on the 15th, per S. S., 32,000l.; that makes 52,000l. On the 15th I find a debit entry, Agra, 52,000l. That means a guarantee given to the Agra Bank by the old firm for that amount outstanding on the date of the transfer. From an investigation of the limited company’s book, I find that was not a payment on their behalf. The next is the 15th, paid in per D. Gurney (C. and G.), 6,000l., and for H. E. Gurney, 4,000l., and for W. Birkbeck, 11,000l.; total, 21,000l. On the next day I find Agra (a debit), re O’Byrne and others, 21,000l. Agra re O’Byrne was guarantee given to the Agra Bank by the old firm, outstanding at the time of the transfer. It does not appear to have been a payment on behalf of the limited company. The next payment was on, April 6th, R. Birkbeck, 2,500l., W. Birkbeck, 6,800l., and H. Birkbeck, 1,000l. Debited on the same |[37] day I find an entry, Loader re Bruzewits, 10,530l. That was a guarantee outstanding at the time of the transfer given by the old firm, and had nothing to do with the limited company, as appeared by the books. On the 9th there was a payment per R. Birkbeck, 5,700l. and on the 7th there were four bills paid, “North Field Ironworks, 7,500l.” On the 14th there was a sum of 4,000l. paid by W. Birkbeck; and on the 13th there is an entry, Millwall Ironworks, 4,000l. 30th of April there were entries—W. Birkbeck, 500l.; H. Birkbeck, 1,800l., per J. Gurney; re S. G. Buxton, 4,500l.; ditto, 7,200l.; per D. W. Chapman, 6,000l., making 20,000l.; and there was a payment, D. W. Chapman re Mercantile Credit, 20,000. There was a guarantee given on behalf of the old firm to the Mercantile Credit, for Mr. D. W. Chapman and Mr. Lister O’Byrne, 20,000l. That is the item. It was in no way a payment in respect to the limited company. On May 4 there was an entry H. E. Gurney 10,000l., and on same day a payment entered to the London Financial 10,000l. I find that that was a guarantee given by the old firm to the London Financial Corporation. That had nothing to do with the limited company.

Mr. Lewis—Now, having regard to all these items, can you tell us how much the limited company profited by anything which Messrs. Overend and Gurney subscribed to the limited company?

Mr. Serjeant Ballantine—I object to that.

Mr. Lewis—It is a point in your favour. 561,000l. received from the partners and their private estates, and there are payments made of 476,000l. on account of the indebtedness of the partners at the time of the transfer, leaving a balance.

Witness—Yes, 85,000l.

Mr. Lewis—The limited company profited 85,000l. by the money subscribed by the old firm?—Yes.

Now, in addition to the 15,000,000l. which you gave us from the general ledger of the limited company as the liabilities transferred to them from the old company, were there other liabilities of Overend, Gurney, and Co.?—There were.

Mr. Giffard—How do you mean?

Witness—As appears by the books.

Mr. Giffard—What book? Lead us to something.

Mr. Lewis—In addition to the 15,000,000l. of liabilities of Overend, Gurney, and Co., there were others?—Yes, there were bills re-discounted.

Were credits given?—Yes.

Mr. Giffard—Let us have one thing at a time.

The Lord Mayor—I presume that the witness will show from the books what the bills re-discounted and the credits granted were?

In respect of bills re-discounted, bills payable, credits granted, and guarantees, what was the aggregate of the additional liabilities of Overend, Gurney, and Co.?

Mr. Giffard—We must have the source from which he gets it, otherwise it will be impossible to check him.

Witness—The total amount of the bills is 9,313,280l.

Mr. Giffard—What book is that you are looking at?

Witness—It is bills in hand and re-discounted.

Has it any particular name?—No, the total amount of the bills in the diary and diary out-book is 9,841,000l. On the 31st July, 1865, the total amount of the bills, in, out, and in hand was 19,100,680l. I find that the bills in security amounted to 8,507,000l. Those bills were deposited with customers as security for loans.

Now, deducting those bills that were in security, tell us what bills were re-discounted and bills payable?—Deducting the bills in security from the 19,100,680l., and also the bills in hand of 1,345,000l., they were 9,348,494l. There are a few further entries which appear in this book which [were entered after the 31st of July, but which evidently belong to the entries preceding that time. The bills re-discounted were 9,313,280l.] |

[39]

Mr. Lewis—But altogether what was the gross amount of liabilities of Overend, Gurney, and Co., at the date of the transfer in respect of contingent liabilities, bills payable and guarantees?—The contingent liabilities in that respect were 9,313,280l.

Now I wish to know this, do those liabilities of 9,313,280l. in any way appear among the liabilities that are entered in the general ledger of the limited company as taken over by the limited company? They do not appear as taken over in the books in the limited company.

Does it appear in any form?—Certainly not. I can give the items.

By reference to the same account in the general ledger, except the 120,000l. cash, and the other items that you have mentioned as assets taken over by the limited company, do there appear any additional assets?—No additional assets beyond what I have already named, assets amounting to 15,281,000l.

But that includes the 4,000,000l. of suspense and guarantee account?—It does.

Mr. Lewis—Now, so far as the books of the limited company and those of Overend, Gurney, and Co., show, was any large pecuniary interest retained by them in the limited company?—The only pecuniary interest that I can see which was retained by them consisted of their own overdrawn account.

Their overdrawn account?—Yes. (Laughter.)

Mr. Giffard—I suppose to elicit some such expression at that was the object of the question.

What did those overdrawn accounts amount to?—On the date of the stoppage to 2,970,000l., as appears from the books.

Can you trace any pecuniary interest they had except that in the limited company?—None whatever.

Sir T. Gabriel—What is this apropos of?

Mr. Lewis—The prospectus states that the vendors will retain a large pecuniary interest in the company, and I ask the witness what he discovers is their pecuniary interest in the company, and he says nothing but their over draft, which the shareholders had to pay, and which amounts to nearly 3,000,000l.

Mr. Giffard—I should have thought that their interest would have been in the shares they held, but we need not discuss it now, and in the insolvency or goodness of their company, which you say is worth nothing; but we shall see more about it.

Is that an interest which they retained to the close of the company?—I have just mentioned that.

Do you produce a guarantee book?—I do, but it is impossible to say the exact amount of guarantees outstanding at the time of the transfer, because the guarantees are not cast up, and it would be necessary to ascertain all the guarantees, which do not appear in this books.

Is anything torn out from it?—No, not from that book.

From any book?—Yes, from this (producing a book)—great many leaves. The book was handed in.

Mr. Lewis—Is that also a guarantee book?—Yes; I had better call out the guarantees appearing this book (the first) at the time of the transfer, 7th July, 1865. The first is a guarantee for 50,000l., J. E. C. Koch, with the Imperial Mercantile Credit, due 9th October, 1865. On the 9th July, 50,000l., “Impl.” against it. There is a side entry—“Arrangement with them. These stocks given up to Imperial Mercantile Credit.” 21st July, 25,000l., due 31st April, 1866; 19th August, 26,000l., ditto the Agra Bank; 27th August, 50,000l. and 10,000l. Koch entered in the margin, 50,000l., Bank of London, the other the London Financial; one due 26th of November, 1866, and the other the 27th February; 5th June, 1865, 21,000l. Koch, J. D. Cooper, London Financial, due 5th June, 1866. The next has no date, 10,000l. J. D. Cooper, London Financial due 25th April, 1866; next no date (I presume 5th June), 25,000l., J. D. Cooper, London Financial due 18th December, 1866; 50,000l., J. D. Cooper, Whitfield and others, City Bank, due 16th August, 1866; 17th October, 30,000l.; J. D. Cooper, London Financial, due 17th October, 1867 30th June, 120,000l., A. R. N. S. Steam Company, due 1st January, 1866; 1st June, 150,500l., E. I. Shipping Company, with Fielding, due 2nd October; next without any date, 50,000l., Millwall Company (Limited), |[41] on account of the Millwall Company with Martins, due 2nd March, 1860; 9th June, 71,000l. struck out, and 50,000l. and 21,000l. put, making 71,000l., Millwall, with Robinson and Fleming, due, I think, on the 18th March, 1866; 19th July, 25,000l., M’Henry, with the Bank of London, due 20th October; 30,000l. without a date, McHenry, Bank of London, due the 21st January, 1866; the next is 29th June, 50,000l., M’Henry again. Consolidated Bank, struck out as paid off 24th December, 1865. The there is 120,000l. mortgage, the Atlantic Royal Mail, struck out, 5th May, 1865; 30,000l., L. Bruzewitz with the Agra Bank, due 8th November, 1865, altered into 1866; 13th January, 1865, 10,000l., L. Bruzewitz with the Agra Bank, no due date; 31st July, 25,000l., L. Bruzewitz, O. G. and Co., due 1st November; 6th October, 1865, 10,000l., on account of L. Bruzewitz, G. Loader, due 6th of April, 1866; 31st January, 1866, 30,000l., Bruzewitz, G. Loader, due 3rd May, 1866; 28th October, 1864, 25,000l., on account of Sichel, Alexander, and Co., Man. And L’pool. (meaning Manchester and Liverpool Bank), paid off 15th October, 1865; June 15th, 1865, 30,000l., Von Dadelszen and North, M. and Li., due 17th September, 1865, that is debited and ruled out. Those guarantees amount to about 1,000,000l. They do not appear to be included in the 15,000,000l. transferred to the Limited Company.

Now take the second guarantee-book, from which you say certain leaves are town. (The book was handed to Mr. Oke.)

Witness—On page 206 of that book I find a guarantee for 120,000l. (A letter which was on the fly-leaf was read. It stated that the guarantee was given at the request of the official liquidator of the Atlantic Royal Mail Steam-packet Company, and for valuable consideration, and the writers undertook to guarantee the association against any loss that might arise from their paying certain bills, of which a list was give. The date of the letter was the 2nd April, 1866.) Immediately following this guarantee I find pages from 207 to 235 torn out.

Have you ever been furnished with the leaves that are missing?—No.

I need not go on with the details, but what is the amount of the guarantees in that book?—I cannot tell you. On page 236 there seems to be an unlimited guarantee, as far as I can read it. (Laughter.) “At the request of J. D. Cooper, and against adequate value lodged, we hereby agree on your making advances to him not exceeding 25,000l.—(a laugh)—on security of shares of Bangor Railway, to guarantee the repayment of such advance for twelve months.” There are three other entries, extending the guarantee for twelve months, and again to the 18th Dec., 1866.

Mr. Giffard—Then it is not unlimited?—No. I had only read the entry in the margin when I said that.

Do those guarantees appear as transferred?—No, they do not, I can trace this back to a bad debt.

Mr. Giffard—I must object to that. That is a speech.

Mr. Lewis—I wish to know what was the amount of deposit that any one of the dependants held on the stoppage of the limited company. Take first Mr. J. H. Gurney. Had he any deposit?

Witness—In the “Single Deposit Ledger” of the limited company, page 780, there is an account headed “J. H. Gurney,” and there is an entry on the 2nd April.

I want to know whether on the stoppage of the company Mr. J. H. Gurney had any sum deposited with the company?—I believe not. On the 2nd April he drew out 3,026l., which balanced the account. (Laughter.) There is an account “H. E. Gurney, Crawford-street, account,” a small account, 69l. only. That 69l. remained in the limited company at the time of the stoppage. S. Gurney and J. S. Barclay is another account. There is a small balance of 28l., which was to be given to the clerks. Mr. Robert Birkbeck does not seem to have had an [account. Mrs. Robert Birkbeck had. It was drawn out on the 29th March. 1866-812l. ] |

[37]

At the time of the stoppage of the old company what did they appear to owe to the limited company?—2,970,000l.

After giving credit for everything?—After giving credit for everything.

Mr. Lewis—They held 8,200 shares, and you say there have been two calls?—Yes.

Can you inform us whether Mr. Birkbeck, Mr. J. H. Gurney, or Mr. H. E. Gurney paid anything on account of those calls?—I have looked at the books, and do not find that they have paid anything.

Mr. Giffard—Those books would not show it. As far as these books are concerned they are evidence against the defendants so long as they were under their control, but from the moment they passed from their control they are not evidence against them any longer.

Mr. Lewis—Now take Mr. H. F. Barclay, How much had he on deposit on the 10th May, 1866, when the limited company stopped?—10l. 4s. 4d. (Loud laughter.)

Do the books disclose whether there had been a larger amount of deposit? There had been a deposit of 71,010l.

When was that withdrawn?—The 71,000l. was withdrawn on the 2nd of May.

Mr. Serjeant Parry—It was transferred to another credit, the Norwich Bank.

Witness—The Norwich Bank had nothing to do with it.

Mr Serjeant Parry—I was irregular in asking the question. I was prompted by my client to put it; but I must say that this sort of laughter that continually arises in the court must be embarrassing to your lordship. It is extremely embarrassing to the counsel, and it is most unfair to the defendants, the painfulness of whose position ought not to be added to by what I must call an idiotic laugh. (Hisses.)

The Lord Mayor—There must be no expression of feeling in the court, otherwise the court must be cleared.

Mr Lewis—Now take Mr. Rennie; had he any deposit account?

Witness—Mr. Rennie had no deposit account.

Had Mr. Harry George Gordon any money in the bank on deposit?—I cannot find the name of Mr. Gordon in the book.

Can you tell us whether Mr. Barclay, Mr. Rennie, or Mr. Gordon during the nine months the limited company existed drew any money for salary as directors?—There is no amount drawn for salary that I have seen, but I cannot answer the question offhand.

Can you tell us whether Mr. Barclay had paid the two calls of 10l. each on the thousand shares which he held?—I have not the least doubt about it.

And that Mr. Gordon and Mr. Rennie have paid their calls?—I have not the least doubt of it.

By Mr. Sleigh—Mr. Gordon paid the allotment money on the shares he took.

Mr. Lewis—Mr. Rennie, I believe, was a member of the firm of Cavan, Lubbock and Co.?—Yes, At the time of the transfer to the limited company that firm had a deposit of 56,518l. with Overend, Gurney, and Co. It is in the single deposit book. It did not remain there till the stoppage of the company, but was withdrawn during the first few days of the limited company’s operations. 10,000l. was withdrawn on the 2nd of August; 3rd, 10,000l.; 5th August, 6,000l.; 12th, 10,000l.; 15th, 20,000l.; and on the 18th, the interest, 559l. The account was re-opened afterwards. It was paid by the limited company.

Mr. Giffard—I think you will find it is paid in.

Mr. Lewis—Do the books show that the 56,000l. was paid in or handed over?—It was merely handed over as an asset.

By the Lord Mayor—It was handed over as a liability.

The Lord Mayor—It is a debt transferred.|

[39]

[Mr. Lewis—Will you turn to the old ledger, and see] whether it was deposited with the old company some time before, or not.

Witness (having referred to the single deposit book of the old company)—It is a liability transferred from the old to the new company of 56,000l. It is a running account. There is an entry 31st July, 49,819l.

Mr. Lewis—How much was Mr. Rennie’s firm indebted in respect of loans and bills discounted at the time of the transfer?

Witness—691,000l.

Mr. Giffard—There was not a farthing of debt due by them.

Witness—I refer to a book marked supplementary ledger, folio 1,553, Cavan, Lubbock and Co. This is the discount ledger of the old firm. It is not balanced so as to ascertain the liability of the customers; but on taking out the different items you will find that is the amount.

Mr. Giffard said that his lordship would find the securities consisted of bills of such firms as Baring and Co., Rothschild’s, and so on, which his lordship would estimate the value of, so that it was idle to speak of the indebtedness of Cavan, Lubbock and Co., as if such bills would not be met.

Witness—I find by the supplementary ledger, in folio 1,564, Cavan Lubbock, and Co.’s bills, due 31st August, promissory notes 40,000l., current at the time of the transfer. On the same folio N. Cavan and Co. on Cavan, Lubbock, and Co., 30,000l.; same folio, Cavan, Lubbock, and Co.; promissory notes, 20,000l.; on folio 1,567, N. Cavan and Co. on Cavan Lubbock, and Co., 40,000l.; on folio 1,567, Sichell, Alexander, and Co. on Sichell, Alexander, and Co.

Mr. Giffard—I think that is a mistake.

Witness—The drawer and acceptor are the same parties in the book. The amount is 4,000l., in two bills of 2,000l. In the same folio Cavan, Lubbock, and Co. p. n. 40,000l. There are four items. Again, Cavan, Lubbock, and Co. p. n. 40,000l., folio 1,568.; Sichell Alexander on Sichell Alexander 7,250l.; Cavan, Lubbock, and Co. p. n. 20,000l.; same folio, Egyptian Canal and Irrigation Company accepted London Office bills for 8,000l.

The Lord Mayor inquired whether Mr. Giffard wanted all the items read.

Mr. Giffard would undertake to say that 400,000l. of the indebtedness in question was covered by the first-class securities, and he wished that fact to come out.

Witness—There is a large amount in the shape of promissory notes.

Mr. Lewis—Baring Brothers and Rothschild’s bills appear here (referring to a printed book in the hands of counsel and the Lord Mayor).

The Lord Mayor said he had only looked at the book to check off the amounts as read by the witness from the ledgers, &c., of the company.

Mr. Giffard drew attention to 54 bills lumped together in the printed list, and put down at 58,000l. odd, and asked whether they were included?

The witness replied that they were, and proceeded to read a list of them.

Mr. Lewis—What was the amount of promissory notes of Cavan, Lubbock, and Co.?

Witness—The promissory notes amounted to 160,000l. but Cavan and Co. had drawn on Cavan, Lubbock, and Co. for another 100,000l.

Did Cavan and Co. transfer their business?—Yes, I believe they transferred it to a colonial company.

From an investigation of the books of Overend, Gurney, and Co., can you say whether the loans to Cavan, Lubbock, and Co., were renewed?—Promissory notes to a large amount were renewed from time to time up to the date of the transfer of the business. 100,000l. was advanced in February and March, 1863, to Cavan, Lubbock, and Co., and the loan was renewed regularly up to the time of the transfer of the business. I have not traced out any further instance.

And after the transfer?—I have not traced that out. I have no doubt they were paid by somebody.

Now, as to the renewals; do the books disclose whether any amount was charged to the limited company for renewals and bills of exchange?—Yes, very large sums were charged on the renewals from time to time. I find an entry in the general ledger of the limited company “Overend, Gurney, and Co., 30th September 1865: Gurneys, 1,375l.” There |[41] are various items. I have selected from this book entries amounting to 30,000l. for interest paid by the limited company in respect of the renewals of bills and guarantees which were outstanding at the time of the transfer.

Mr. Giffard—Do those items appear there?—No, but I have traced the amount in various entries. If it has not been paid for interest the limited company has lost the 30,000l. (The witness referred to various entries of sums paid for renewals.)

The limited company started business on the 1st August, 1865?—It did.

Do the account books show whether there was ever any balance-sheet sent out to the shareholders?—No balance-sheet was ever sent out, I believe.

Was there any meeting of the shareholders until after the stoppage?—No.

Now I want to ask you with reference to the goodwill of this bank. You have told us that the limited company made 4,000l. profit in the nine months it existed. From the investigation of the books of the old company, which you have made, can you say whether they made any profits?—They made no profit whatever.

Can you give us an idea whether they made a loss?—The losses they made were very serious. I have endeavoured to satisfy myself of the nature and character of the business before the transfer.

What did they lose?—It is difficult to state what they lost in any particular year; but my idea is they lost about 500,000l. a year. (Cries of “oh!”) I believe candidly that they lost 500,000l. a year for six or seven years before the transfer of the business.

Mr. Serjeant Ballantine—Why do you say candidly? Is it the first time you have spoken candidly while giving your evidence? (Laughter.)

Mr. Lewis—There is very little effect produced in a court of justice by sneering, and therefore Serjeant Ballantine I beg you will not sneer at the witness.

The Lord Mayor—You had better simply answer the questions put to you.

Mr. Lewis—Now, how many shares were allotted to Sir Fowell Buxton?—He appears to have applied for and been allotted 1,000 shares.

What became of them?—They were to have been all sold.

Mr. Giffard objected to this course of evidence.

The Lord Mayor said that as a matter of evidence a professional gentleman could examine the witness on any portion of the book put in.

Mr. Lewis—I wish to show that the family of the Gurneys received a large number of shares, which were immediately transferred to the public.

Mr. Giffard—Now I ask your lordship how can that be evidence against the present defendants?

Mr. Lewis—It is evidence to show that it was brought to the knowledge of the defendants that the nearest relatives of the Gurneys had no stake in this concern.

Mr. Giffard—I should think it was clearly not evidence. If it is, it is the oddest evidence I ever heard.

The Lord Mayor, after consulting with Sir T. Gabriel, decided that the evidence proposed was not relevant to the case.

Mr. Lewis—Then that will terminate the examination in chief of this witness.

A discussion then took place as to the adjournment. counsel urging very strongly on the Lord Mayor the inconvenience of attending for some days, and eventually it was arranged that the case should be proceeded with this day (Friday) week.

Bail was then renewed, and the defendants released as before; the sureties being—Mr. J. G. Barclay for Mr. J. H. Gurney, Mr. T. F. Buxton for Mr. H. G. Gurney, Mr. Jas. Hoare for Mr. Birkbeck, Messrs. R. C. and L. [Bevan for Mr. Barclay, Mr. K. D. Hodgson for Mr. Gordon, and Mr. M’Chleeney for Mr. Rennie.] |

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The Daily News. Nr. 7086, 16. Januar 1869. S. 3.
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THE OVEREND, GURNEY, AND CO. PROSECUTION.

Jan. 16 Anmerkung von Jenny Marx

The inquiry before the Lord Mayor and Sir T. Gabriel into the charge of fraudulent misrepresentation brought against the late directors of this company was resumed at the Guildhall yesterday morning. The court was again crowded with shareholders, stockbrokers, and others, there being no diminution apparently in the interest with which the proceedings are regarded in the City.

The gentlemen accused, who surrendered to their bail, were seated, as on previous examinations, in front of the barristers defending them.

In consequence of counsel being engaged in the Central Criminal and other courts they were not present at the opening of the proceedings, but no inconvenience ensued, the time of the court being occupied until 12 o’clock by reading over, at the suggestion of the Lord Mayor, the evidence given by the accountant, Mr. Oswald Howell, at the last examination.

On the application of Mr. J. C. Mathew, an omission in the depositions was rectified, by adding a statement of the witness to the effect that the amount stated to be due at the time of the transfer from Messrs. Cavan and Lubbock was not due to the limited company; and on the application of Mr. Gardyne, that the deposit account of Messrs. Cavan and Lubbock, which was closed in the month of August, was reopened in the month of September.

Mr. Henry Boyce, clerk in the office of the liquidators, was then called to prove the draft prospectus—the one that was not published. He stated that the draft was in the handwriting of Mr. H. G. Gordon. There were two alterations in pencil. Did not know whose handwriting they were in. Did not know whether they were in Mr. J. H. Gurney’s handwriting, nor did he believe it. Had no belief on the subject.

Mr. W. Mathew Paterson, an officer of the Court of Bankruptcy in Manchester, produced the proceedings under the bankruptcy of Mr. Thomas Howard, manufacturer, of Hyde. The adjudication was on the 20th June, 1866. Was not aware that Messrs. Overend, Gurney, and Co. proved any debt under that bankruptcy.

Mr. Thomas Howard was then called, and he stated that he resided at Longchurch near Manchester. Was declared a bankrupt in June, 1866. Had obtained his discharge.

Mr. Lewis—On the 31st July, 1865, a debt of yours was transferred to the limited company of 331,665l. How much have you ever had from Overend, Gurney, and Co. ?—Very little indeed.

How much have you had from them?—Perhaps 2,000l.; about 3,000l. in the whole.

Can you tell us whether Overend, Gurney, and Co. had discharged you from any claim of theirs before your bankruptcy?—I believe they had.

Do you remember receiving 3,000l.?—Yes.

At that time had they discharged you from any claim?—To the best of my knowledge.

I suppose on the 31st July, 1865, you were not in a position to pay 331,000l.?—On what account?

On account of Overend, Gurney, and Co. Had you any means on the 31st July, 1865, of paying that large sum?—No I had not.

As far as you know, did you on the 31st July, 1865, owe them any money whatever?—Not to my knowledge; not a penny.

Cross-examined by Mr. Mathew—You had become security to the Gurneys for very large sums?—They held security against me for a very large sum.

You were security, in fact, for Mr. Lever, were you not?—It was Lever that brought me into my difficulties.

Mr. Lever was the agent connected with the Atlantic Royal Mail Steam Packet Company?—Yes, and member of parliament for Galway.

And you handed your estate over to the Gurneys, and got money on the discharge?—They got all my papers and securities.

Did you not give guarantee for as much as over 300,000l. to the Gurneys in one way or other for Mr. Lever?—There were some ships bought. I did a good deal for Mr. Lever, but I do not know what I did.

Mr. Lewis—Were the papers and securities that you handed over to Gurney, and Co. anything of any value?—I had some estates in the neighbourhood of Hyde, and a large mill, and they got all they could from me.

What did they produce?—I cannot say. It was a large mill, and cost me 75,000l. They got all my securities that I was possessed of.

By Mr. Mathew—I did not hand over the cotton mill to the Gurneys. I could not. I had some of my nephews connected with the mill. Overend and Gurneys got all that I had. They came down and frightened me out of it. They got it clandestinely. They got all my estates except the cotton mill.

Was that on account of your liability for Mr. Lever?—Certainly it was. It was through him that I was brought to ruin.

Mr. John S. C. Koch was the next witness. He stated that he resides in Oxford-square, and is a metal merchant at present.

On the 31st July, 1865, you appear as a debtor to Overend, Gurney, and Co., for 243,000l.?—I am not a debtor to Overend, Gurney, and Co., at all.

Have you never received that money from Overend, Gurney, and Co.?—I have received very large sums from them, but not on my own account.

Were you aware that you appeared in their books as a debtor to that amount?—I was not.

Have you since that period become bankrupt?—I have made a deed of assignment for my own protection.

Has any claim been made by Overend, Gurney, and Co. under that deed?—No. I did not know a firm of Gordon and Co.; but I knew Alexander Thomas Gordon, a contractor. That firm failed either in 1863 or 1864. Messrs. Coleman, Turquand, and Co., accountants, were concerned for the creditors. I had a conversation with Mr. H. E. Gurney in regard to that failure. I knew what the firm owed, because I was the agent for Overend, Gurney, and Co., with Mr. Gordon. It was arranged that I should take charge of certain business. There were two railways they were engaged in, for which they were to advance money, and I was to act as agent between the two parties. I received securities from Gordon, and received the money from Overend and Gurney to hand to Gordon. I received 1 per cent. commission. The failure must have been previous to 1863. I had the conversation with Mr. H. E. Gurney about the time of the failure. It was the ordinary conversation which would take place between banker and agent. I told him that Gordon had failed, and that they must hold the securities and make the best of them. I was myself a creditor of Gordon to a small amount. Gordon owed Overend and Gurney, as near as I can recollect, about 350,000l. I cannot explain why I was put down as a debtor for 243,000l. in Overend and Gurney’s account, unless it may have been on account of my acting as agent and the account being kept in my name. I never could have paid any such sum. The way in which the business was done was for me to draw upon Gordon, and they had the bills.

Mr. Mathew—It is a very long way off from the matter in hand. He was never asked for any money, or treated as a debtor.

By Mr. Lewis—I never knew I was in the books for 240,000l., but Overend and Gurney gave me an indemnity. It is a very ordinary mode of doing business. One railway was sold to the London and North Western Company about 1864, and 100,000l. which it produced was paid to Overend and Gurney. The account of Gordon at that time was over 300,000l. There were securities in addition of various railways in which Mr. Gordon was interested. Some small sums were realised from them, but no large amount. My name stood in the books for 243,000 l. on the 31st July, and at the time of the stoppage of the limited company for 330,000l. In May I received about 250l. from the old company. I received no sums from the limited company.

Mr. Lewis—And yet you appear in the books to have received about 90,000l.

Mr. Mathew—No, it is an account carried on in the name of the agent.

Mr. Lewis—I beg to say that in the ledger of Overend, Gurney, and Co. they appear to have paid Mr. Koch that sum.

Mr. Serjeant Parry explained that the name of Mr. Koch was merely used as a representative name. It did not appear that that gentleman had been in any way treated as a debtor, nor had any demand been made upon him by Messrs. Overend, Gurney, and Co. He was quite sure that Mr. Lewis would not press this inquiry if he found that the name of Mr. Koch was merely representative of debtors such as Gordon and others.

Mr. Lewis said that his lordship would see the position in which he was placed. Mr. Gordon stopped in 1862. At that time he was entered as a debtor for 24,000l. On |[43] the 1st of July, 1865. The sum of 243,000l. was entered against Mr. Koch. How could anyone, merely looking at the books, imagine that that was a debt of Gordon’s, who stopped in 1862, and whose estate must be supposed to be exhausted. Then there were further sums entered against Mr. Koch to the amount of 90,000l. That could not have been for payments to Mr. Gordon.

The Lord Mayor—The question, rather, is whether the amounts entered in the ledger under the name of Mr. Koch are entered in connection with any other name, which explains why the account was entered in the name of Mr. Koch,

Mr. Mathew—That is so, my lord, if you refer to the ledger. Mr. Koch’s name is used in connection with certain railways and piers.

Mr. Lewis—All that I can find in the ledger in connection with Mr. Koch’s name are the letters “P. D. O.”

Mr Mathew—That means the Portadown something, and Over Railway, which was the property of Mr. Gordon.

Mr. Lewis—But there are these additional payments between 1865 and 1866. Your lordship will see in page 313, No. 95 in the book, “Koch, P. D. O.,” a payment of 96,000l., in addition to the 243,000l. paid by the limited company. I want to know whether that was ever paid by or through the witness.

Mr. Sergeant Parry—I believe it will appear that this gentleman’s name was used originally in reference to Gordon and Co. He was the agent of Overend and Gurney, and after the stoppage his name was continued in the ledger with the explanation each time it occurred.

Mr. Lewis—I do not see that it makes the case either better or worse whether the name is Gordon or Koch who is charged 300,000l.

Mr. Koch—I was also agent for Overend and Gurney in respect to the transactions with reference to the Metropolitan Railway Company, in which there was a profit of 13,596l.

Mr. Lewis—Let us keep to Gordon, and don’t let us go into something else.

Mr. Mathew—There were other accounts, then, managed in the same way?

Witness—Yes, I was employed by them in a variety of ways.

Mr. Mathew—And as an instance you give us the Metropolitan Railway, in respect of which there was a profit of over 13,000l.?—Yes. When Mr. Gordon stopped there were certain lines unfinished, and Overend, Gurney, and Co. held the shares as securities, and after Gordon’s stoppage they continued to make advances in order to finish them, I continuing to act as their agent for that purpose.

Did you also act as their agent in respect to advances made on the securities of other undertakings?—I think not. There may have been a few exceptional accounts, but nothing of any great amount. The nominal amount of the securities we held, was very much larger than the sums advanced.

Mr. Lewis—What do you call the nominal amount?

Witness—Supposing you had shares in an unfinished railed?

Mr. Lewis—I should be very sorry. (Laughter.

Witness—Well, I have received large sums for them. It arises in this way—you advance 5,000l., and get the securities to the value of 8,000l. or 10,000l.

You mean if they turn out well, they pay very well?

Witness—If the borrowers are not good you must look, of course, to the securities you hold. 100,000l. was realised by the sale of one of the railways, reducing the balance to 243,000l. Other small sums were realised from time to time. I was always realising securities for them in some way or other.

Did you ever realise any after the limited company came in?—No, that was not the time to realise shares.

How do you mean?—Overend and Gurney were at 9l. premium. But they stopped.

But after the limited company came into existence, did you realise anything?—I think I did, in fact I know of one or two amounts. I realised debentures to the amount of 20,000l.

After the limited company came into existence?—Yes,.

And yet the debt was increased by 90,000l.—I don’t know anything about that.

On the application of a gentleman, who appeared from the Manchester Court of Bankruptcy, but whose name did not transpire, the proceedings in bankruptcy produced by the officer of the court were placed in the custody of Mr. Oke, the Lord Mayor stating that they could not be looked at for any other purpose than that of seeing whether Messrs. Overend and Gurney proved any debts.

Mr. Lewis—I defy you to show that they do prove a debt, and certainly Mr. Howard’s examination does not prove one.

Witness—I wish to state that instead of being a debtor to Overend and Gurney, I am a very large creditor.

Mr. Lewis—I am sorry to hear that, because we shall have to pay you.

Witness—I don’t think you will, because after my guarantee is satisfied I shall have some securities to hand over to you.

Sir T. Gabriel inquired what guarantee the witness was alluding to.

Mr. Lewis—He said that Overend and Gurney guaranteed him in respect to any bills that he might draw on Gordon.

Mr. Mathew—And his statement now is that after he is indemnified he will have some securities to hand over.

Mr. G. Lewis was then recalled, and produced the articles of association of the Atlantic Royal Mail Steam Packet Company, who owed at the time of the transfer 839,000l. The resolution to wind up the company was dated July 18, 1864. It was to be wound up voluntarily, and Mr. Whinney (of the firm of Harding and Co.) was appointed official liquidator. He also produced the articles of association of the East India and London Shipping Company, and the order of the Court of Chancery for its winding up, under which Mr. R. P. Harding was appointed liquidator.

Mr. Ernest Robins, clerk in the London Bankruptcy Court, produced the proceedings under the bankruptcy of the following debtors to the firm:—D. L. Lewis, adjudicated bankrupt on the 7th June, 1845, and again on the 15th March, 1845; of Astley and Co., adjudicated bankrupt on the 4th January, 1855, again on the 7th June, 1855, and again on the 15th March 1865; of Joyce and Co., made bankrupts on the 20th May, 1867; G. Garraway, adjudicated bankrupt on the 9th March, 1866; J. C. Mare, made bankrupt in May, 1867; Lawrence and Fry, made bankrupt May 18, 1865; C. Garrett, made bankrupt May 1867.

Mr. W. Smith, clerk to the chief régistar of bankruptcy, produced deeds of assignment or inspection of other debtors of the firm, including deeds relating to the estates of Kelson, Tritton, and Co., filed 26th February, 1868, but dated 30th June, 1865, their total debts being 430,000l.; Haliday, Fox, and Co., dated 15th February, 1865, the total debts being 570,379l.; Laurence and Fray, dated 6th July, 1864, total debts 391,228l.; and Leopold Brueewitz, dated 13th June, 1866, total debts 403,850l.

Mr. Howell was then recalled and cross-examined by Mr. Serjeant Parry.

The witness having referred to Mr. Barclay’s deposit account in Overend, Gurney, and Co.’s ledgers, which after some search was produced from amongst an immense pile of books deposited on the floor of the court, said—In January, 1866, Mr. Barclay deposited 60,000l. in one account, and in another account 30,000l. That deposit account appears to have been closed on the 2nd of May, 1866. At that time the amount on deposit was 71,000l. There was an error of 10l. 4s. 4d. in the interest. The amount standing to him would have been 71,000l. 10s. 4d. It appears exactly as 71,000l. It appears that 543l. 15s. 3d. was paid in on that day to make it an exact sum of 71,000l. The 10l. 4s. 4d. was actually to his credit on the 2nd of May, 1866. That was interest to which he was entitled.

Mr. Serjeant Parry—Now turn to the Norwich current account.

Witness—This book produced is entitled “Bills out April 10th, 1866, to May 10th, 1866.” There is in this book an account current with Overend, Gurney, and Co. Under the date of May 2 there is credited to Gurney, and Co., the Norwich Bank, 71,000l., but it is really wrong to call it the Norwich Bank; it is Gurneys and Company.

There was some expression of applause in the court at the observation of the witness.

Mr Serjeant Parry—Really, my lord, the tone of this—public meeting—is very embarrassing.

The Lord Mayor—I am surprised at these expressions of feeling, after what passed the other day.

Mr. Serjeant Parry—I am afraid of making any criticism after the mode in which my last was received.

Cross-examination resumed—You say it is not the Norwich Bank?—No; I don’t say it is not.

Sir T. Gabriel—Has he a right to say anything outside the book? You see you bind him to the book, and then ask him about the Norwich Bank.

Mr. Serjeant Parry—No doubt it was popularly known as the Norwich Bank, and I rather expected it would appear as the Norwich Bank in the book, but it is too bad to say the Norwich Bank is Gurney, and Co., and Gurney, and Co. is the Norwich Bank.

Mr. Lewis—Well the learned counsel say when the Norwich Bank went from Gurney, and Co. to Mr. Barclay?

Mr. Serjeant Parry—I say emphatically that the deed shall be immediately produced by me on his behalf.

Mr. Lewis—Well, I will call for it, but let one thing be done at a time.

Mr. Serjeant Parry—Now just read the whole of the heading.

Witness—The account is headed Gurneys and Co. I see nothing further. It is a book of the limited company. On the 2nd of May, 1866, there appears placed to their credit 71,000l. There are certain charges.

My question is not whether there are certain charges, but whether there is a credit?—Yes, to H. F. Barclay.

Now, looking at that, does it not appear, on your oath, that there was a transfer from Barclay’s account to Gurney’s account of 71,000l. on that day?—According to that entry there was, but the entry as it appears in the single deposit book is different. It is there entered as a sum paid at call, while here it is entered as a simple deposit, while it is only a transfer entry in the other book.

But supposing they had never failed, but were in good instead of evil circumstances, would it not be a fair way of entering a transfer from one side to the other? I ask you on your oath.—On my oath, when we were entering—

Mr. Serjeant Parry—Answer the question, and give a straightforward categorical answer. Supposing this firm in good circumstances now and flourishing, does it not strike your mind as an accountant that this was a simple transfer of 71,000l. from Mr. Barclay’s account to Gurney’s account?—That entry does not show it. It does by taking this account with it.

This is what I ask.—It is a deceptive way of making an entry, I consider.

Mr. Serjeant Parry—Now you are drawing on your imagination, Mr. Howell.

Examination resumed—The books are kept by double entry, but this particular account is not, being a single deposit account.

Re-examined by Mr. Lewis—The entry would indicate to my mind that the account was transferred from the credit of Mr. Barclay to the credit of Gurney, and Co., of Norwich. It did not decrease by that amount the money in the hands of the limited company.

Supposing the Norwich Bank belonged to Mr. Barclay, would it increase the funds of that bank?—No.

What would be the effect?—It would place the 71,000l. at the disposal of the Norwich Bank. It depends entirely on the position of the Norwich Bank and the limited company. It did not touch the funds?—No.

The Lord Mayor—It does not alter the cash account in any way. It is simply a transfer?

Witness—Just so, my lord.—Not on that day. The sum is apparently drawn out and paid in again. The 71,000l. does not appear at all on the 2nd of May.

Mr. Lewis—As a fact between the 2nd of May and the 10th did Gurney, and Co. of Norwich get from the limited company 71,000l.?

Witness—They got apparently 41,521l., but there was an account outstanding to their credit at the time the 71,000l.?—There can be no question of that.

Mr. Serjeant Parry—But other sums were paid in?

Witness—Yes, and larger ones drawn out. (Slight hissing in the court.)

Mr. Lewis—I want to know whether the sums amount to 71,000l. which were drawn out of the coffers of the limited company?—The amount is not balanced, but most undoubtedly the whole of the 71,000l. was withdrawn.

Mr. Serjeant Parry—Look at Gurney, and Co., and tell me what amount they had on deposit on the 2nd May, 1866, besides the 71,000l. |

[44]

Witness—It will involve an extensive addition; there are thousands of figures here.

Tell me within 1,000l. or so?—I should say that on the 2nd May there was about 100,000l. to their credit.

It is an account on which there are daily payments in and out?—No doubt of it.

When Overend, Gurney, and Co. stopped, what was the amount of deposit standing to the credit of Gurney, and Co., of Norwich?—41,000l.

Mr. Lewis—So that in fact they drew out the difference between 100,000l. and 41,000l., besides the 71,000l. placed to their credit?—Yes.

Cross-examined by Mr. Giffard—You stated that the old company made a loss of 500,000l. a year?

Witness—I said so, but not in any particular year.

How long have you been investigating these accounts?—I have investigated them during the last two years, not continually but occasionally.

Have you brought out any calculation that shows that result?—An estimate.

What is the basis of the calculations for the years 1864,1863, and 1862?—The position of certain very large accounts and also the entries as they appear in the private ledgers. The exact position on which I rely does not appear in the books, but I know the losses in connection with those accounts.

Did you ascertain what was the amount of bill-broking business separately from any other. What was the amount of turnover in the year 1864?—I ascertained that more from curiosity than anything else.

Did it amount to 75,000,000l.?—I think it was considerably beyond that.

In the year 1863 it was more?—I think it was.

Without pledging yourself to a million or two, may I take it that that was the average, going back from 1864 to 1861?—Yes.

The witness was then questioned in reference to Cavan, Lubbock, and Co.’s account, and he stated that there was 56,518l. to their credit on their deposit account on the 31st of July, 1865, but on the 2nd of July there was nothing standing to their credit. That account should be taken in connection with their discount account.—That credit of 56,518l. was created in that month.

Mr. Giffard said the witness had answered him so satisfactorily that he did not propose to ask him any further questions. If the 56,000l. were placed on deposit it was placed in the bank in July, and if it were not deposit, but accommodation, Mr. Lewis’s observations respecting withdrawal of that 56,000l. were equally answered.

The Lord Mayor—What other witnesses do you propose to call?

Mr. Lewis—I do not know that I need call any. I think I need not call Mr. Harding.

Mr. Giffard—Then how will you prove those are bad debts?

The Lord Mayor—Mr. Lewis can prove that to-morrow.

Mr. Serjeant Parry submitted that Mr. Lewis should state what clauses in deeds he relied upon, because he should submit to the court that his client, Mr. Barclay, should not be committed.

Mr. Lewis said the clauses on which he relied were the first, in which the vendors agreed to sell and transfer the business; the fourth, in reference to the good-will; the fifth, which provided that the sum of 500,000l. should be made available by way of guarantee, in aid of the covenants of the vendors; the sixth, which excepted the accounts to be closed by the old firm from being taken over by the new company; the seventh, providing for the transfer of the cash balances; the eleventh; the thirteenth, which was a very important one, providing that the limited company should take over the liabilities in the private loan account, making it appear as if they took over a million in cash.

Mr. Mathew—That million went into the suspense and guarantee account.

Mr. Lewis—No doubt; but it appeared by the deed as if a million stood to the credit of the vendors, whereas by the books there was nothing; the sixteenth, by which the old company should retain their name while winding up such matters as they had to wind up during the suspense period, ending the 31st December, 1868; the statement that the limited company were to accept the suspense and guarantee account as representing securities equivalent to cash, and various other clauses, together with the signatures of the defendants, whether as attesting witnesses or parties to the deeds.

The proceedings were then adjourned till to-morrow (this day), the bail being renewed as before.

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The Daily News. Nr. 7087, 18. Januar 1869. S. 3.
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THE OVEREND AND GURNEY PROSECUTION.

Jan 18 Anmerkung von Jenny Marx

The further hearing of this case was proceeded with on Saturday morning at the Guildhall, before the Lord Mayor and Sir T. Gabriel.

The first witness called was Mr. Richard Bridgman Barrow, of Sydnope-hall, near Matlock, Derbyshire, who was examined by Mr. Lewis, and said—I am a county magistrate. I saw a copy of the prospectus of the company in the newspaper, and in the autumn of 1865 I purchased 200 shares at a premium of between 2 and 3. Previous to the winding up of the company I paid 3,000l., and since the winding up I have paid the two calls of 10l. each, which make 4,000l. more, or 7,000l. in all. I purchased the shares believing the truth of the prospectus.

Mr. Lewis—Had you known the facts which you have since learned, would you have purchased the shares?

Mr. Poland objected to the question, which the Lord Mayor thought too wide.

Mr Lewis—I will put it in a different form. Had you known 4,000,000l. represented as assets were represented by the accounts read in this court, would you have purchased those shares?

Mr. Serjeant Sleigh—The only question which can be asked is, what induced him to part with his money?

The Lord Mayor—And that has been put and answered.

Mr. Lewis—If the learned counsel will point out in what way the question is irregular, I can answer him.

The Lord Mayor—Your questions must not be what are generally understood by the term leading questions. You must not indicate in them the answer you wish to get from the witness. You have elucidated the fact that he was induced to take the shares on reading the advertisement, and he took them because he believed the statements in that advertisement to be true. You may ask him whether anything has since come to his knowledge which, if he had known before, would have induced him to withhold from taking the shares.

Mr. Lewis—Have any facts since come to your knowledge which, if you had known, would have induced you to refrain from taking shares?

Mr. Serjeant Sleigh—Surely, my Lord Mayor, the question is, what operated upon his mind at the time.

The Lord Mayor—It is a little too much in the leading form.

Mr. Lewis—Have any fact come to your knowledge which would have induced you to have refrained from taking shares?

Witness—Certainly.

What are they?—The proceedings which I heard in the Vice-Chancellor’s Court, in the House of Lords, and what I have heard in this court, would have prevented me from taking shares.

Sir T. Gabriel—I don’t think it is worth your while to press it further, Mr. Lewis.

Mr. J. Holme sworn—I reside at Botcherby, Carlow. I live on my means. In August, 1865, I purchased 120 shares in Overend, Gurney, and Co. (Limited). I purchased them after having seen the prospectus in the Money Market Review. I have paid every demand that has been made on me.

Mr. Lewis—That would be 4,200l. in all?—I don’t know; I don’t like to calculate it.

What induced you to purchase the shares?—Seeing the prospectus, and believing the Gurneys to be upright and honourable men.

Mr. Peak was recalled, and his former depositions having been read over, he added, in reply to Mr. Lewis—I was induced to purchase shares by the statements in the prospectus, the natural inference I drew from the terms of the prospectus, and the fact that that prospectus was vouched for by gentlemen such as the Gurneys and the other directors.

Mr. Mathew—You mentioned the name of Mr. Gibb on the last occasion as being present to your mind at the time?—Yes, that is so.

Mr. Howell was recalled and asked with reference to the 71,000l. paid in by Mr. Barclay, and the withdrawal of that sum. He stated that on the 1st of May the balance standing to the credit of Gurney, and Co. of Norwich was 65,761l., and 71,000l. was transferred to their credit by Mr. Barclay from the single deposit account, and 20,000l. by Mr. Samuel Gurney Buxton, making altogether 156,761l. standing to their credit on the 2nd May. On the 10th of May, the date of the stoppage, the amount standing to their credit was 41,525l. |

[45]

Mr. R. P. Harding, of the firm of Harding, Whinney, and Co., was then examined. He stated that he is one of the liquidators for Overend, Gurney, and Co. (Limited). Was appointed along with Mr. Turquand on the 11th May, the day after the stoppage. At that date 1,250,000l. had been paid by the shareholders in respect of their shares. Two calls of 10l. a share had since been made. The first, which was made on the 20th August, 1866, produced with interest 846,500l.; the second made on the 3rd June, 1867, produced 805,941l., which had gone into the general funds of the company.

Is there any chance of any portion of the money being returned to the shareholders?—I think not.

Are you sure of that?—There are assets still to be realised.

Do you think, or are you sure?—I am not sure; my impression is that there will not be.

What are the liabilities of Overend, Gurney, and Co. (Limited) after payment of these calls?—On the 31st of December last the indebtedness of the company was in round figures 950,000l. That includes interest up to September next.

Have the liquidators made any resolution to make another call on the shareholders?—It was determined yesterday, and circulars are now in preparation. The Vice-Chancellor is to be applied to to make a call of 5l. a share, as we find it impossible to realise the remaining assets in time to meet the promissory notes which will fall due in March next.

That call is half a million?—Yes; on 100,000 shares.

Has Mr. John Henry Gurney paid his 20l. a share call?—We have taken about 600,000l. from the separate estates of the old partners. There has been no specific application of any portion of those moneys to the payment of any particular call. The calls on them are not entered as paid in the book. The old partners executed a deed of inspection after the failure of Overend, Gurney, and Co. (Limited). They had some other creditors besides the limited company. At the date of the suspension they owed the limited company 2,970,168l. 17s. 10d. The calls on their shares would amount to about 166,000l.

Mr. Lewis—It is proved that about 8,000l. of those shares were sold to the public, so that there will be that to be deducted from the total amount.

Sir. T. Gabriel—Mr. Lewis, you give us too much of your arithmetic. You had better get it from the witness.

The Lord Mayor—The fact is that of the shares 8,000 remain unsold, and the calls on those shares have been added to this amount.

Witness—8,323 shares were retained by the members of the old firm, on which 20l. a share has been called, making 166,406l.

How much have you received under that deed of inspection?—The limited company have been benefited to the extent of 595,973l. 11s. 5d. There are other assets yet to be realised.

Sir T. Gabriel—What do those assets consist of?

Witness—There are some reversions, and I think a little land unsold. I think we estimate them to produce something like 100,000l.

Mr Lewis—I suppose that 595,000l. has gone in payment of the creditors?—It has gone to the augmentation of the funds of the limited company. I should have gone on to state that although the 5l. call is required, there are assets outstanding which are estimated to produce 1,051,000l., but they are not immediately available. The balance of indebtedness is, in round figures, 951,000l. On the 10th of May, 1866, there appeared to be owing to the limited company by the Atlantic Royal Mail Steam-packet Company 848,000l., and that has since been reduced by a transfer to the liquidators of 10,787l.

Sir T. Gabriel—Does the company hold any securities?

Witness—There is no expectation of anything further being realised.

Mr. Mathew—The question was, whether there were any securities.

Sir T. Gabriel—I asked whether they held any securities yet to be realised.

Witness—No. It leaves a balance of 837,372l.

Sir T. Gabriel—Have you any account of what securities were handed over on the 31st July?

Witness—This was one of the excepted accounts.

Sir T. Gabriel—I know that; but I ask whether any securities were handed over to the company in respect to that account?—No, I only have the details of how the amount was made up.

By Mr. Lewis—My partner, Mr. Whinney, liquidated the Atlantic Royal Mail Steam-packet Company, but it does not follow that I know anything about it. As a fact I do not except that Mr. Whinney liquidated it. It is not usual for us to interfere with each other’s business. I remember that on the 4th of July, 1865, Messrs. Overend and Gurney paid me 5,000l. It was for the expenses of liquidating the Atlantic Royal Mail Company, and was paid in consequence of an agreement sanctioned by the Court of Chancery, by which Messrs. Overend and Gurney were to pay the expenses of the liquidation on taking over the ships. My partner was not paid a fixed sum per month for liquidating the company.

Mr. Giffard objected to the relevancy of this evidence.

Mr. Lewis—My object is to show that, with reference to the Atlantic Royal Mail Company, Messrs. Overend and Gurney had finished with it prior to transferring their business to the limited company, and were perfectly aware that nothing more was ever to come from that; and I wish to prove that they paid Mr. Harding 5,000l. for the liquidation out of their private account. (To witness)—Now, what was done by you after that?—Nothing by me. Since the liquidation commenced, a sum of 10,000l. has been transferred to the account of Mr. Whinney, the liquidator.

Sir T. Gabriel—Are we to understand that the estate was realised and wound up by the 12th of July with the exception of that small amount?

Witness—That is my impression; if Mr. Lewis will call my partner he can ascertain.

Mr. Lewis—What is the transfer of 10,000l.?—That was a sum of money standing to the credit of Mr. Whinney in the books of Overend and Co. (Limited). It is an accumulation of funds, as I am given to understand, which in the end would be payable to them in respect to preference shares which they held in the Atlantic Company. Then there was 10,000l. belonging to them standing in the name of Whinney at the time of the transfer of the business; but there were no payments in regard to the transfer of the business of the Atlantic Royal Mail. At that time 10,000l, stood to the credit of Mr. Whinney. There has been no payment since the liquidation. Nothing has been received except a sum of 572l., but there has been a transfer of 10,000l., which was standing to Mr. Whinney’s credit in the books. It may be taken that 10,572l. has been received since the bankruptcy.

Mr. Lewis—Now take the East India and London Shipping Company, whose debt to the limited company appears to have amounted to 578,000l.

It was here suggested by Mr. Giffard that, for the purpose of avoiding confusion, the witness should be cross-examined with respect to each of the accounts immediately after he had made his statement; and the Lord Mayor expressed his approval of this proposal; but the witness having observed that his partner, Mr. Whinney, who had acted as the liquidator in the case of the Atlantic Mail Company, could afford more complete information in reference to its accounts it was ultimately arranged that the cross-examination upon that point should be reserved until that gentleman appeared in the witness-box.

Mr. Lewis—I believe that at the date of the formation of the limited company the East India and London Shipping Company owed to the Messrs. Gurney, and Co. 406,000l., and that at the period of the stoppage of the limited company that debt amounted to 578,000l.?

Witness—I believe so; but I had nothing to do with the liquidation of the East India and London Shipping Company after the 10th of April, 1865, when their seven vessels were made over as security to the Messrs. Overend and Gurney.

Mr. Lewis here read the agreement of the 10th of April, 1865, by which the vessels in question were made over to the Messrs. Gurney, and Co. It recited all the names of the vessels with their tonnage, which varied respectively from 2,091 to 1,600 tons.

Mr. Lewis—This mortgage the limited company paid off in pursuance of this agreement, that it should be paid off in twelve months, and that is the reason why this debt appears as a debt of 172,000l. in addition to the amount which was transferred. You mean to say that the limited company paid off these mortgages.

Witness—I did not say so; it appears so, but I cannot state it of my own knowledge. I should assume that it was paid because we subsequently sold the vessels. The witness added that 150,000l. was advanced by the limited company to pay off the mortgages in pursuance of a minute of the board at which some allowance had to be made, and 98,500l. net had been received in respect of them; so that it would appear that the taking over of the mortgages had cost the limited company 52,000l.

And with reference to the 406,000l., that was carried over. How much has been paid?—I cannot see that anything has been paid.

Sir T. Gabriel—You have told us that on the 10th of April the debt of Gurney ‘s against the Steam Packet Company was 139,870l., and that they dealt with that by taking over the steamboats and realising them, but when the books were balanced on the 31st July, 1865, the debt is called 406,000l.; are you prepared to tell us how that difference arose?

Witness—222,000l. was in respect of shares.

Had the liability accrued on the 10th of April? It must have accrued on the 10th of April, because the company was then ordered to be wound up.

Then it was not a matter to be dealt with in any way?—It remained as a balance in the book.

Cross-examined by Mr. Giffard—I cannot state what is the value of vessels of that description, it has varied so much in the last few years. It has varied from 6l. to 10l. a ton. I suppose it is estimated at so much per ton and so much per horse power. I believe there was an offer made for these vessels prior to the suspension of the company for a considerable amount—something like 700,000l.—for these and the vessels of the Atlantic Royal Mail Steam Packet Company. The market for such vessels is very different from what it was a few years ago. I should think that these vessels cost a sum much beyond what I have stated.

The witness then proved the handwriting of Mr. J. H. Gurney to several documents, and of Mr. D. Gurney, and the following letters from Mr. D. Gurney to Mr. J. H. Gurney were read:

North Runcton, May 25, 1865.

My dear John Henry,—You appear to have done quite the right thing in negativing the proposal for continuing Overend, Gurney, and Co’s business, and I trust there will be no side wind attempt to frustrate negotiation with the National Discount Company: and I think if the result is successful we shall all rejoice. I regret very much if you think you have overrated the shares, and I trust that when you go accurately into the figures that will not turn out to be the case. I should hope that the termination of the American war may lead to greater use in selling the ships.—I am, your affectionate uncle, D. Gurney.

North Runcton, Jan. 24, 1865.

My dear John Henry,—Your two letters of the 23rd I received this morning. I am sincerely pleased that everything is in good train for the formation of the new company, and I trust all will go well on starting, and that you may find desirable directors. Your account of Mr. Gibb is very satisfactory. I suppose no Baring could be obtained, and a person like Troubridge, of high character, but without commercial knowledge, would not do; but I mention this merely as it occurs to me, partly from Sir John Hay being in the Millwall company. But I certainly feel a very great objection to our joint and several guarantees for the deficiency to the new company, both because our marriage settlement bonds would be on a pari passu level with these fresh bonds, and also abstracting our private estates from our Norfolk creditors, or rather placing them after the requirements of the liquidation fund. I doubt whether the first of these results is justifiable. I think it might be proposed to the independent directors that, at all events, our marriage settlement bonds ought to precede that now to be given. I should be sorry to trammel the negotiations in any way, but I doubt whether this proposed several security is quite honourable to the families into which my children have married. Perhaps you may make an effort on this point, but I feel that the case is urgent, and I must leave it in you hands. I think it likely that the elections will oblige us to put off the settlement till the beginning of August, but we shall see as to that soon. H. Birkbeck says S. Foster may not come to the neighbouring sett. I am afraid he is ill.—I am, your affectionate uncle, D. Gurney.

P.S. Is there a condition that we must not sell our shares of the new company under a certain time? I am keenly sensible of your great kindness as to what you say respecting your being willing to make a sacrifice in my favour when it comes to the appropriation of losses.

North Runcton, 4th July, 1865.

My dear John Henry,—I have looked over my marriage settlement, which is as I supposed. The old trustees were your father and Canon Woodhouse; and the present ones, made in 1848, are Francis Joseph Cresswell and Charles Woodhouse, of Bury. The sum of £20,000 was to be invested in mortgage or in government securities; and £12,000 was for mortgage of Hunstanton, and £8,000 remained in my hands, a bond of Samuel Gurney being given for it. Both of these are now paid off, and the money entirely in my hands. It is a very awkward case. It places it on the same level, as a security, as my bond to Overend, Gurney, and Co. In short, I feel very uneasy about this and the marriage settlements of my daughters and sons, especially the former. I accede to your kind proposal of giving security: but you must bear in mind that in case of a real catastrophe, all my family and myself would be in total destitution, or almost so: and I do not see how this settlement would be approved of. I hope Charles will come to-morrow; but I cannot help thinking the independent directors of the new company would allow our present private debts to precede the bonds about to be given; |[46] and as respects young Charles Woodhouse and Charles Cressell, they would be almost, if not quite, ruined. Whenever I have the opportunity, I should wish to invest Rachel’s, Louisa’s, and Margaret’s settlements—(Rachel has £5,000 invested already)—and my own if possible. I am sorry to trouble you with all these details, but can not very well avoid doing so.—Your affectionate uncle, D. Gurney.

Mr. Lewis—We now come to the Greek and Oriental Steam Company. There is a sum of 144,144l. to the debit of that account which has been transferred to the limited company.

Witness—This is one of the excepted accounts.

Mr. Lewis—Is that a company?

Witness—I have no knowledge of it, except what I see here.

Mr. Lewis—Have you made any inquiry about it?

Witness—I have.

Mr. Lewis—Have you been able to find out its office?

Witness—No.

Mr. Lewis—Have you seen any shareholders of the company?

Witness—No.

Mr. Lewis—Have you spoken to Mr. Gurney in reference to the company?

Witness—I cannot recollect having done so.

Mr. Lewis—Has anything been paid in respect of it?

Witness—There has been received a small dividend of 7l. 16s. 4d. on a bill of 1,500l. (A laugh).

Sir T. Gabriel—Will you tell me what, if any, steps have been taken to recover that sum of 144,000l. odd?

Witness—No steps were taken.

Sir T. Gabriel—Why not?

Witness—Because it was not considered necessary.

Sir T. Gabriel—By whom was it not considered necessary?

Witness—By the official liquidators. But Mr. Turquand has had this debt more especially under his charge.

Mr. Lewis—But you have been acting together as official liquidators?

Witness—If we had been under the impression that anything whatever would have been produced by legal proceedings they would have been instituted. I believe that the Greek and Oriental Company belonged to Mr. Stephanos Zenos. No attempt was made to recover the debt, because we believed it to be hopelessly bad.

Sir T. Gabriel—Why did you think so?

Witness—My colleague will be better able to tell you.

The Lord Mayor—You see this was a large debt, and what we must know is, what steps were taken to ascertain the age of it, by whom it was incurred, whether the person was solvent, &c.; in short, all the grounds on which you based the conclusion that the debt was hopelessly bad?

Witness—I am not in a position to answer that question.

By Mr. Lewis—The account does not appear to have been operated upon since 1863. It increased in 1864 from 42,000l. odd to 144,000l. odd. A sum of 101,458l. was transferred to it from the account of Stephanos Zenos.

Sir T. Gabriel—What was the date of that transfer?

Witness—The 31st of July, 1865.

To Mr. Lewis—The account appeared to have been last operated upon the 29th of December, 1861, when there is the entry of a receipt of 2,000l. There does not appear to have been any interest calculated on the debt after the 26th of July, 1862.

Mr. Lewis—But it was on the suspense or guarantee account, and interest was charged on that in the aggregate with the other items.

Witness—Interest was charged on the balance.

Sir T. Gabriel—But, Mr. Harding, here is a debt of 144,000l., and you have not given us yet any reason why you as a liquidator did not try to recover the money. I ask you this—Why was not the company called upon to pay?

Witness—Because there is no company in existence.

Sir T. Gabriel—Do you personally know when it ceased to exist?

Witness—I do not.

Sir T. Gabriel—How do you know that it has ceased to exist?

Witness—The answer I have given is the best evidence that I can give.

Sir Thomas Gabriel—I ask you how you know this company ceased to exist?

Witness—I had an impression to that effect.

Sir Thomas Gabriel—Donʼt give me your impressions; tell me how you know; what reason you have for telling me that the company has ceased to exist.

Witness—I spoke from the impressions which were formed in my mind.

Sir Thomas Gabriel—Don’t forget that you are the liquidator of a company to which there is a debt of 144,000l. owing. You must have had some reasons which justified you in taking no steps to recover that debt. You tell me that the company does not exist. How do you know that?

Witness—I can only say that my colleague gave me that information.

Sir Thomas Gabriel—But you do not know personally that the company does not exist. (A laugh.)

The Lord Mayor—No, no; there must be perfect order; there is nothing to laugh at.

Witness—I can only say that I do not know it does not exist except from the impressions I had formed.

Sir Thomas Gabriel—Have you spoken to any one of the directors about this debt of 144,000l.?

Witness—I can only say that my colleague, Mr. Turquand, has taken charge to a considerable extent of the suspense and guarantee account, and having every confidence in him I left it in his hands.

Sir Thomas Gabriel—Have you spoken to any of the directors?

Witness—I don’t know that I have.

Sir Thomas Gabriel—But as a professional man you must know whether you have or not; and I ask you again, have you spoken to any of the directors?

Witness—I cannot say that I have.

Sir Thomas Gabriel—But can you say that you have not?

Witness—I am no aware that I have, but I cannot swear that I have not.

Sir Thomas Gabriel—Were there any securities handed over to the limited company?

Witness—I think not. My impression is that nothing was transferred of any value.

The witness added that the Greek and Oriental Steam-packet Company was the firm of M. Z. Zenos, who carried on business under that name, and it was in evidence in the Chancery proceedings that in July, 1865, the valuation of this estate was 7,000l.

Sir Thomas Gabriel—After looking over these matters, are you prepared to give any further information?

Witness—I have no personal knowledge. The books do not state it.

Mr. Lewis—We will now go to the account of Mr. Thomas Howard. His debt is 330,765l. Have you received anything since the company went into liquidation in respect of that debt?

Witness—No.

Do the books disclose whether anything was received by the limited company from the date of the transfer in respect of that account?—No, nothing appears to have been received. I do not hold any securities in respect to that debt, (A deed realising Mr. Howard was handed to the witness.) I believe the signatures of S. Gurney, H. E. Gurney, D. W. Chapman, and Arthur Birkbeck, to be in their handwriting.

Mr. Lewis—I propose to have the deed read which realises Mr. Howard in 1863.

Mr. Mathew reminded the court that the circumstances had been explained on the previous day, that the deed was given by Mr. Howard on his giving up all his property to the Gurneys.

Mr. Lewis—It had better be read. I think it will fully explain the circumstances.

The deed was read by Mr. Oke.

Mr. Giffard directed the attention of Sir. T. Gabriel to the 16th clause of the deed, in which the securities were directed to be transferred.

Mr. Lewis—But there were none. (To witness) What have you done to realise the 331,000l. due by Mr. Howard?—We had no securities. I knew of the deed before. I have no remembrance of speaking to Mr. Birkbeck on the matter. I had no remembrance of speaking to Mr. Birkbeck on the matter. I had information that there was no chance of getting anything from the estate of Thos. Howard.

Mr. Lewis—Because he had been released by that deed?—Witness—That is so.

Mr Lewis—But had you nothing to say to them respecting his account having been carried over for 330,000l. as a good and valuable asset when he had been entirely released from it by a special deed?

Witness—The account was not valued.

Mr. Lewis—But cannot you tell me the exact motives of the inquiries that were made, before it was ascertained that legal proceedings should not be instituted to recover this large debt?

Witness—I cannot speak positively on that point. I cannot say if I made any inquiries on the subject of the |[47] defendants. Having ascertained that the securities obtained from Mr. Howard had been hypothecated, and that there were no grounds for suing him, we came to the conclusion that nothing could be realised.

Mr. Lewis—And I am therefore to understand that, though you knew all the circumstances under which this account had been transferred—that it was, in fact, worth nothing, because a deed of release had been granted in 1863—you never asked the defendants for an explanation of the transaction?

Witness—I did not see any necessity to ask the question, as nothing could be recovered.

Sir Thomas Gabriel—You found that the securities had been “hypothecated,” to whom?

Witness—Overend, Gurney, and Co., for an advance.

Mr. Lewis—And the account was in precisely the same position at the time of its transfer to the limited company as it was when you subsequently, as official liquidator, found it would it be—worthless?

Witness—It appears to be so.

The Lord Mayor—In short, the matter stands thus: You found yourself absolutely precluded from taking any step to recover this debt because it had been cancelled by the deed of release.

Mr. Lewis—But I particularly wanted to ascertain if the witness made any demand of the defendants for an explanation of the matter.

To Mr. Lewis—Turning to the account of Kelson, Tritton, and Co., I find that there was 197,503l. due from them to the company at the time of the stoppage. The liquidation of that firm was made in our office, and I was one of the inspectors. The sum of 12,550l. has been received since their failure. The securities consisted of promissory notes, bills with other names upon them, and a small parcel of cotton. In July, 1865, there were no specific bills of lading or warrants handed to me.

Mr. Lewis—Was it not in your knowledge as inspector that there were triplicate bills of lading in existence?

Witness—I was aware that there were separate bills of lading, of which one part was held was Overend and Gurneys.

Mr. Lewis—Which part?

Witness—I cannot tell whether they were the first or duplicate bills.

Mr. Lewis—When did this come to your knowledge?

Witness—In the early part of 1865.

Mr Lewis—Did you see any of the directors of Overend and Gurney about the matter?

Witness—Yes, I saw Mr. Birkbeck and Mr. Edmund Gurney.

Mr. Lewis—Before the formation of the limited company?

Witness—Yes.

Mr. Lewis—Had you any conversation with them as to these triplicate bills of lading or warrants?

Witness—Yes, as to the securities, and the best mode of realising them.

Mr Lewis—Was anything stated by you or by them as to the impropriety of the bills of lading?

Witness—Yes.

Mr Lewis—Tell us that.

Witness—I said it appeared to me that it had come to their knowledge that duplicate bills had been used by Kelson, Tritton, and Co. I asked them for information on the subject, and whether they had seen the parties who were entitled to hold securities.

Mr. Lewis—But what did you say about the duplicate bills? That is a serious matter.

Witness—That was for their consideration.

Mr. Lewis—Did you ask them what chance there was of the firm sustaining a loss?

Witness—I have no doubt I did so. I asked them what securities they were entitled to and what other persons were entitled to.

Mr. Lewis—And what was the answer?

Witness—I believe they had ascertained that the bills of lading which were in their hands were duplicate bills that were held by other parties.

Mr. Lewis—Yes.

Witness—The question with me was who were entitled to those securities—what was the right between the parties who held the bills.

Mr. Lewis—Well, what did Overend and Gurney do?

Witness—They gave me an account of the bills of lading which they held, and what the securities were held for.

Mr. Lewis—Was there any conversation as to the amount of the advances they had made?

Witness—I think not.

Mr. Lewis—No inquiry was made by you as to the amount advanced on these bills of lading?

Witness—I think not; but probably 20,000l. was advanced on these bills of landing.

Mr. Lewis—What was done?

Witness—Such of the securities as were available were realised, and the unsecured balance ranked against the estate.

Mr. Lewis—What became of the duplicate bills?

Witness—As they had no value, Messrs. Overend and Gurney claimed as unsecured creditors.

What became of the duplicate bills of lading—did they go to the Mansion-house, or have you got them?—I cannot tell you whether they are in existence or not.

Did you take any proceedings against Kelson, Tritton, and Co.?—No, it was not my duty to do so.

Did Overend, Gurney, and Co., to your knowledge?—Not that I am aware of.

Did you report that fact to the general body of creditors?—I do not think a general meeting of the creditors was ever held.

Did you report what you had discovered to any single creditor?—Yes.

To whom?—Parties who held some of the duplicate bills of lading.

But they knew it. Did you report it to any creditors of the estate—I did not make it generally known, certainly.

Why not?—It was no benefit of the estate to do so.

How much did Kelson, Tritton, and Co. owe, not to Overend, Gurney, and Co. only, but altogether?—At the time of the failure I think nearly a million.

Sir Thomas Gabriel—How much did Overend, Gurney, and Co. prove under this estate?—The original claim was 408,426l. The unsecured claim was 220,000l., on which dividends amounting to 4s. in the pound were paid. The securities realised 89,436l.

When did you discover these duplicate warrants?—In 1865.

What transactions took place between the time that they made this proof of 220,000l. and the 31st of July, 1865, when the debt stood at 408,426l.?—There were various bills of Kelson, Tritton, and Co. in circulation which must have been returned. The claim was not admitted until long after the failure of Kelson, Tritton, and Co.

How was it that the 220,000l. grew into 291,000l.?—No doubt it would be a larger claim in Overend, Gurney, and Co.’s books, because they had securities which were not then realised.

It was ultimately settled that their claim should be 220,000l.?—Yes; and since it has been ascertained that the securities have not realised what was expected their claim has been extended.

Mr. Lewis—On the 31st July,1865, they stood as debtors for 291,000l. I want to know what was realised by the limited company between the 31st July and the date of the stoppage?—There are numerous items here; two columns of figures. The total amount received up to the present time in respect of Kelson, Tritton, and Co. is something like 141,000l.

Are you quite accurate in stating that this conversation about the duplicate bills of lading was before the formation of the limited company?—Decidedly; it must have been in April.

Mr. Lewis—Now take the account of J. E. C. Koch. He appears as a debtor to the limited company to the amount of 335,412l.

Mr. Lewis—What securities did you obtain against that debt.

Witness—We obtained stock of the Portadown and Omagh Railway of the nominal value of 86,750l.; stock of the Bangor Railway of the nominal value of 12,850l.; and stock of the Mid Wales Railway of the nominal value of 3,850l.

Mr. Lewis—How much have you realised by that stock?

Witness—We have not realised anything since the stoppage of the limited company. It was impossible to realise the fair value of the property. The stock was saleable, but at a very low price. It is impossible to put value upon it. If the government should buy up the Irish railways it would be worth a considerable sum.

Mr. Lewis—What is that stock saleable for now?

Witness—Perhaps not more than 25,000l.

Mr. Lewis—With the exception of those securities, have you anything to pay the debt of Mr. Koch?

Witness—We have not.

Mr. Lewis—Have you spoken to any of the present defendants with respect to Mr. Koch’s account?

Witness—I have on some occasions spoken to Mr. Birkbeck with respect to the value of those securities.

Mr. Lewis—But have you had any conversation with any of the defendants in reference to the indebtedness of Mr. Koch?

Witness—I do not know that I have. I had information on the subject from another source.

Examination continued—I understand that Mr. Koch was nominee of Overend and Gurney in various transactions—in two or three very large transactions—in connection with Gordon. I think I heard that from Mr. Birkbeck. Mr. Turquand, however, has specially applied himself to this account, and he can give you much fuller information.

Mr. Lewis—Let us know take the item of the Millwall Iron Works. Its transferred amount was 510,000l. which was increased at the date of the stoppage to 566,000l. How much has been realised from this asset?

Witness—7l. 10s.—(laughter)—and that, I think, came from a dividend on some bill.

Mr. Lewis—Were there any securities for this debt?

Witness—There was the equity of redemption on the property, and the plant and machinery. The property has not yet been disposed of, and I do not know what it may be worth.

Was the equity of redemption taken by Overend, Gurney, and Co., or by the Norwich bank?—The security was hypothecated to the Norwich firm, and if it should realise more than the amount of their charge upon it, then the difference goes to Overend and Gurney. I do not expect we shall get much benefit from it.

Sir Thomas Gabriel—Do you know when that hypothecation took place?—I do not. It was prior to the 31st July, 1865.

How much is the first charge on it to the Norwich bank?—230,000l.

Is there any other charge on it to your knowledge?—There is not. They have some other securities, but whether they will be entitled to any surplus arising from this is a matter that I have not yet considered.

Then what is there to be hoped for in respect of this 566,000?—I do not think anything.

When it was transferred it stood at 510,000l. It has increased 56,000l. What was that for?—The account has increased by some additions of interest and rent.

Sir Thomas Gabriel—Have you noticed whether the 510,000l. was composed of advances, or was there some share account?—It is a total of several accounts. There are some Millwall Dock shares.

Mr. Lewis—Now take Lawrence and Fry’s account?—I had nothing to do with that. I remember the failure as a matter of fact. It took place about July, 1864.

They owed at that time 148,000l., and at the stoppage of the limited company, 149,000l. How much did you receive in reference to that account?—7,515l. from dividend, and 1,187l. from a transfer of shares. I don’t think that there will be anything further. The liquidators have an award from one of the securities, Mr. Garrett, on which, probably, 5,000l. may be realised, and they also have securities of the nominal value of 18,260l.; but the actual worth is problematical. On the estate of Lewis and Co., which in the books is down for 331,000l. we have received 37,359l. from the Cork and Youghal Railway. The securities we have are on ordinary stock, 83,000l.; first preference, 62,600l.; second preference, 33,000l.; third preference, 32,000l.; Lloyd’s bonds 121,000l.; and other securities. The Cork and Youghal has been sold under an act of parliament, and wound up by Mr. Turquand. We expect that the securities we hold will realise about 125,000l. The estate of Emanuel and Co., down in the books for 83,143l., will not produce anything. They suspended in 1863. On that of Siehel, Alexander, and Co. we have received 6,200l., and the amount of debt is 107,000l. The debt was at the time of the transfer 51,000l., and increased to 107,000l. by the maturing of bills. We hold some further securities, and expect something more. Certain time has been allowed to realise the estate. In a recent conversation which I have had it was stated that the estate may eventually realises 10s. in the pound. The estate of Leopold Bruzewitz, on which there is a debt of 135,000l., has been benefited to the extent of 23,919l. by realising some securities. A dividend of 1s. in the pound, I think, has been paid. It was transferred as 34,000l. The amount received was not equal to that which the limited company paid. They lost all the 34,000l. The estate of |[48] Carlisle, Parr, and Co., which was put down for 26,000l., had been in liquidation since 1854. Nothing has been received from them, but the liquidators held some bills on which a dividend of 9d. and 3d. in the pound have been received. Altogether 2,000l. of the 26,000l. had been received. In the case of F. G. Garraway, down for 192,256l., there has been about 29,000l. received from the realisation of the produce of certain West Indian estates. Something more would come because the liquidators were negotiating with Messrs. Garraway. On Fox and Co.’s estate, on which the debt was 62,000l., 785.l. had been received from dividends, and a further small amount was expected. The liquidation is in Mr. Turquand’s office. The debt has increased from 34,000l. by bills falling due. In respect to the item of C. Reynolds nothing has been received, and nothing was due from him. It was an amount charged on 18,000 shares in the Mwnddy Iron Company, which were sold at 6s. 3d. per share, and produced 5,700l.

How much did they realise?—A little over 6,000l. The shares were part of the separate estate of Mr. S. Gurney.

What have you received on that account of C. Reynolds on behalf of the limited company?—Not anything.

Have you spoken to any of the defendants about that matter?—I do not know that I have.

Not made any inquiry?—I ascertained the fact satisfactorily to my mind. I have not taken any proceedings in respect of it, because I did not think they would be successful.

After the failure of the company did you retain the solicitors who prepared the deeds?—It is well known we did, they having more information concerning the affairs of Overend, Gurney, and Co. than any other solicitors.

Were they the private solicitors of Overend, Gurney, and Co?—Yes.

Were the solicitors of the limited company?—They were.

And then you appointed them as your solicitors?—We did that which we considered the best for the interests of the company.

The witness was then questioned in respect of the “Old Ebbw Vale Company shares account,” which, at the time of the transfer, stood at 11,122l. 17s. 7d.; but at the date of suspension had been increased to 48,705l. He stated that there did not appear to have been any advances to the company; but the money was paid for calls on shares, of which 2,389 were held; and the increase to 48,705l. was owing to further sums paid on calls by the limited company. Since the stoppage a further sum of 18,262l. 10s. had been paid for calls; and 8,577l. 12s. 1d. had been received for a portion of the shares which had been sold. There were still 2,030 shares on hand, and their present value was 15l. a share. The par value was 27l. 10s. He was advised to keep them for the present, as it was expected their value would increase. A dividend had been received on them this month, and a dividend of 15s. a share was received in December, 1867.

Mr. Lewis—Now take the next item—Peto and Betts, arad, 14,000l. The affairs of Messrs. Peto and Betts are in Mr. Turquand’s office.

What does “arad” mean?—I do not know. I believe it was a projected railway. It was not taken at the time as of any value. Nothing has been received from it, nor is anything expected.

By Sir T. Gabriel—I have not gone into the details of the item of Peto and Betts. It was not taken as being of any value.

You don’t expect that it is a debit which Peto and Betts would have recognized had they been solvent?—No.

By Mr. Lewis—John Jones is put down as a debtor for 61,200l. We have had 4,601l. in dividends on some bills from other estates, but the account has not yet been liquidated. Since the date of the suspension of the company, we have been led to expect that it will pay 5s. in the pound. Jones’s estate is very large. M’Cormack is put down for 13,174l. We have not received anything from that. The suspension took place about October, 1864. No dividend has been received on the debt, and we hold no securities at all.

Sit T. Gabriel—Bills discounted, I suppose.

Witness—Yes.

Mr. Lewis—Bills dishonoured and debited here as drafts. You don’t expect anything from that estate?—No.

You feel quite certain that the examination at this court will not affect the value of the assets?—I cannot tell. I don’t know about the Ebbw Vale shares.

Well, except them?—We have nothing else to put into the market, and we are not disposed to sell them.

The proceeding were then adjourned to Friday next, the defendants being again released on bail.

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The Daily News. Nr. 7088, 19. Januar 1869. S. 3.
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CHARGE AGAINST THE DIRECTORS OF THE MERCHANTS’ COMAPNY (LIMITED).

19. Jan Anmerkung von Jenny Marx

At the Mansion-house yesterday, Mr. Richard Stuart Lane, of No. 8, Chesham-place, Belgrave-square; Mr. Horace Edward Chapman, of Rochampton; and Mr. Frederick John Helbert Helbert, of 23, New Bond-street were summoned by Mr. John Somerville, commission agent, of Cathedral-street, Glasgow, for that they, in the month of November, and at divers other times during the year 1865, unlawfully did conspire together, by divers false pretences and representations, to deceive and defraud the complainant, and divers other persons, with the intent to induce them to become shareholders in a certain company called the Merchants’ Company (Limited).

There was a second summons against the same defendants charging them with conspiring together to publish a false prospectus relating to the same company.

There was also an summons against Mr. Richard Stuart Land, of Litchurch in the county of Derby, charging them with publishing a false circular, accompanying a call relating to the same company.

Mr. Humphreys (Humphreys and Morgan) appeared for the prosecution; the defendants were represented by Mr. Metcalfe, Mr. Montagu Williams, Mr. James, and Mr. G. Lewis.

The presiding magistrates were the Lord Mayor and Alderman Sir B. Phillips. The proceedings appeared to create very great interest.

Mr. Humphreys said he had to prosecute the defendants for a serious and fearful fraud upon the complainant and a number of other persons. Mr. Somerville was a shareholder in the Merchants’ Company, and he came forward as a prosecutor in that capacity. Mr. Lane was formerly a member of the firm of Horn, Baxter, and Co., and owed them a large sum of money at the time of the failure. The charge against the defendants was proved under the statute which enacted that any director who should make a false statement, or issue a prospectus containing any false statements, with intent to induce persons to become shareholders, with intent to defraud, should be deemed guilty of misdemeanour and be liable to penal servitude, or be imprisoned with hard labour, or be sentenced to solitary confinement. The offence imputed to them would be that of publishing a false prospectus and a false balance-sheet, with intent to defraud the complainant and the public generally, and he thought it right to state that it was extremely probable that on a future day other persons would be included in the charge. He was then about to read the prospectus, but

Mr. Metcalfe and Mr. J. Lewis interposed, and contended that some definite charge should be made against the defendants.

The Lord Mayor, under the advice of Mr. Oke, ruled that Mr. Humphreys was entitled to state all the facts.

Mr. Humphreys went on to say that the defendants gave personal covenant to pay the ten per cent. dividend; but it turned out that their personal debts exceeded their assets by a very great amount, and these personal covenants were not of the slightest value whatever. Mr. Humphreys proceeded to state that one dividend of ten per cent. was paid to the prosecutor, but he was never paid a single farthing more, and, eventually, upon his application to the Court of Chancery, the company was wound up.

Some formal evidence was then with regard to the registration of the company and the articles of association. It was registered on the 6th of October, 1865. Each of the defendants, it appeared, took 200 shares in the company, and they were appointed as director of the company. They were to receive a salary fixed at 500l. a year each. They were also to receive a sum of 10l. per cent. upon all profits after a dividend of 5l. per cent. had been paid to the shareholders. A sum of 62,500l. was to be paid to Messrs. Lane, Hankey, and Co., for the “good will” of their business. The prosecutor, Mr. Somerville was registered as the owner of 36 shares. It appeared that no dividend, except the dividend guaranteed by Lane, Hankey, and Co. of 10l. per cent, was to be paid except out of the profits of the company, and the directors were not to be permitted to purchase the shares of the company with any of the funds of the company. It was also stated in cross-examination that Mr. Richard Stuart Lane eventually became the proprietor of 1,000 shares in the company, and at one period he held so many as 1,250 shares. No call had been made upon the shareholders, it appeared, since the company had been wound up.|

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Mr. G. Lewis said that only 44,000l. was received from the shareholders, and all the debts of the company had been paid.

Mr. Alexander Somerville, the prosecutor, was then called to prove the purchase of 36 shares in the company, and said that he was induced to purchase these shares by the statements contained in the advertisement and prospectus of the company, and the belief that those statements were bona fide.

This witness stated that he paid a call of 5l. upon his shares in December, 1865, and upon the representation of the secretary that if a second contemplate call of 5l. were paid, 10l. per cent. would be allowed as discount, he paid that amount also, the result being that he paid 15l. upon each of his shares. He subsequently made an offer to the secretary to pay up the remaining 10l., the shares being 25l. each, but the company refused to receive it (Laughter.) They did not exactly refuse it, but would not take it except in the way of a deposit. (Renewed laugher.)

Mr. Spire, the principal clerk in the Joint Stock Registar’s office, was recalled, and he stated that Mr. Young, one of the partners in the firm of Coleman, Turquand, and Co., took a hundred shares in the company, and paid 1,500l. upon them.

Mr. Lewis said that this was one of the gentlemen composing the firm. He had examined the accounts of Lane, Hankey, and Co., and he was so satisfied with the character of their business that he took a hundred shares.

Mr. Somerville, the prospector, stated, in cross-examination, that no call had been made upon him, and the company was wound up in 1866, and he did not institute any criminal proceedings until the present year. He was not aware that the firm of Lane, Hankey, and Co. made profits amounting to 30,000l. a year.

Mr. Lewis said he should prove that this was the case.

The prosecutor then admitted that he had received a circular from Mr. Richard Stuart Lane, one of the defendants, complaining of the manner in which the former charge had been disposed of at the Mansion-house, and denying that there was any foundation for the allegation of fraud against himself and his brother directors, and offered to submit the question to the arbitration of any two men of high commercial standing, and to pay the expenses of such arbitration.

Mr. Humphreys said that the prospectus was a “written statement” and came within the act of parliament. He them proceeded to read the prospectus of the company. It was in the following terms:—“The Merchants’ Company (Limited). Incorporated under the Companies Act, 1862, with limited liability. Capital, 500,000l. First Issue, 250,000l., in 10,000 shares of 25l. each. 1l. to be paid on application, and 4l. on allotment. A minimum dividend of 10l. per cent. per annum for three year is guaranteed as hereinafter stated.” Then followed the names of the directors. The prospectus went on to state that the company was formed for the purpose of carrying on the business of merchants under the Joint-stock Companies Act with limited liability. It further stated that in order to secure an immediate basis of operations arrangements had been made with Messrs. Lane, Hankey, and Co. for the transfer of their business. This firm will liquidate all its obligations independently of company, handing over only such current transactions and accounts as the board may wish to accept. It is further purposed to bring in the business of other firms, as favourable opportunities may arise. The goodwill of the business of Messrs. Lane, Hankey and Co. has vendors also guarantee by personal covenant a minimum dividend of 10 per cent. on the paid up capital. They may add that they are most sanguine that this minimum dividend of 10 per cent. will be largely increased before the expiration of the three years. The following letter from Messrs. Coleman, Turquand, and Young, the accountants, was appended to the prospectus:—“To the Directors of the Merchants’ Company )Limited.—Gentlemen,—request of Messrs. Lane, Hankey, and Co., we have carefully examined their books with the view of ascertaining what commission they have made during the past six years, from 1st January, 1859, to 1st January, 1865, and find that the gross commission during that period amounts to 140,765l. 17s. 9d., being an average of 23,460l. 17s. 9d. per annum; and after deducting merchants’ “return” commission, and commissions for gods bought and sold by the firm, either on their own account or for the execution of orders in hand, the net commission earned amount to 106,900l. 17s. 4d., or an average of 17,816l. per annum. This is irrespective of the result of the firm’s transactions on their own account, or of the insurance business.—We are, gentlemen, your obedient servants, COLEMAN, TURQUAND, and Co.” He (Mr. Humphreys) was surprised that gentlemen of their position should have written such a letter, when he was instructed he should be able to show that at this very time the business of Lane, Hankey, and Co., was rotten to the very core. He could not conceive a worse offence than the one imputed to the defendants, for it was calculated to ruin hundreds of persons, Mr. Humphreys said that some of the parties connected with the Merchants’ Company were also connected with the Credit Foncier Company, and accommodation bills for 20,000l. were which were discounted by the Credit Foncier Company. One of the acceptors to these bills turned out, upon inquiry, to occupy one small room at Brussels, and when inquiries were made about him all the property that was discovered was a pair of dirty old stockings. The three defendants were members of the firm of Lane, Hankey, and Co.; and he believed he should be able to show that for several years that firm had made no profits whatever. Every endeavour had been made to procure the books of the firm, but hitherto they had been unable to do so; yet he hoped they should succeed by some legal process in obtaining a sight of those books before the termination of the inquiry. The Merchants’ Company came before the public in 1865, and was wound up ten months afterwards. The result was that a quarter of a million of money was entirely lost, and the unfortunate shareholders were liable for a large amount in the shape of calls. A sum of 284,000l. was found to be owing to secured and unsecured creditors.

Mr G. Lewis here interfered, and said this was not the case, and a great deal of the statement made by Mr. Humphreys was mere moonshine. Mr. Humphreys said Mr. Lewis no doubt knew a great deal upon the subject, as he had prosecuted the defendants on a former occasion. (A laugh.)

Mr. Metcalfe—Yes: and was satisfied that there was no foundation for the charge that was made against them.

Mr. Humphreys (to the witness)—Have you heard that Mr. Moore (the former prosecutor) has received any money from the defendants?

Mr. Lewis objected to the question.

The Lord Mayor said the witness could state what Mr. Moore told him in the presence of the defendants.

Mr. Lewis said Mr. Lane paid Mr. Moore’s claim. He stated that publicly. Mr. Lane gave Mr. Moore a satisfactory explanation, and it was after that that he paid him his claim. Mr. Lane was at the time standing as a candidate for Plymouth, and it was very prejudicial to him at that time even to have a charge brought against him, however unfounded.

Mr. Humphreys remarked that it was the payment of Mr. Moore’s claim that induced Mr. Lewis to withdraw from the prosecution.

Mr. Metcalfe said it might be also stated that the accounts were submitted to an accountant.

Mr. Hurlbatt, an accountant, said he was a co-inspector with Mr. Bois under a deed of inspectorship, and had possession of the books of Lane, Hankey, and Co.

Mr. Humphreys—Will you produce the books?

Witness—I brought some of them here, but they are so numerous that I could not bring the whole.

Mr. Humphreys—Well, give men a list of them.

Witness—I have not got a list.

Mr. Humphreys—You know I applied to you for them, and you refused.

Witness—I did not refuse.

Mr. Humphreys—You referred me to Mr. M’Kenzie. As a fact, you did not give me the books.

Witness—I referred you to Mr. M’Kenzie.

Mr. Humphreys—I ask you, are you willing to allow me to inspect books?

Witness—I have brought some of them here.

Mr. Humphreys asked whether he could see the books between this and next examination.

Witness—I will consult with Mr. M’Kenzie.

Mr. Humphreys—Then I must require your lordship to order the production of the books.

The Lord Mayor said the liquidator was bound to give every facility for inspecting the books under such circumstances.

Mr. Hurlbatt then said he would allow the books to be examined on Mr. Humphreys’ order.

Mr. Humphreys said this was as far as he could carry the case to-day.

Mr. Lewis expressed a hope that the examination would be resumed on an early day, and he pledged himself, on behalf of Mr. Lane, to show that he was entirely innocent of the charge brought against him.

Mr. Humphreys said he should ask his lordship to adjourn the case till to-morrow (this day) week. Hitherto he had not seen the books, and it would require some time to go through them.

The Lord Mayor said he did not think this was an unreasonable request.

The investigation was accordingly adjourned till this day week, and the defendants were admitted to bail, themselves in 1,000l. each, and one surety each in 1,000l.

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The Daily News. Nr. 7092, 23. Januar 1869. S. 6.
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THE OVEREND, GURNEY AND CO. PROSECUTION.

The public interest in this remarkable case appears to be in no degree diminished. Yesterday the defendants again appeared, in answer to their bail, before the Lord Mayor and Sir T. Gabriel at the Guildhall, and the court, as on former occasions, was crowded with spectators.

On the opening of the court, the examination of Mr. R. P. Harding, the official liquidator of the company, was continued, the evidence previously given by him being first read over by Mr. Oke, the clerk of the court. In reference to the transfer of the item of the Greek and Oriental Steamship Company, the witness said he wished to put himself right with the court. On the last examination several questions were put by Sir T. Gabriel with reference to the transfer of the sum of 144,000l. The questions diverted his attention from the book before him, but upon referring to it he found that the account had been closed, and the debt treated as irrecoverable. There was a line drawn under it in the ledger.

Sir T. Gabriel—But it forms part of the xxx,009,000l. odd that was transferred, does it not?

Witness—This is so.

Sir T. Gabriel—And I think that was what was generally understood?

Mr. Lewis—Yes.

Mr. Lewis—You mean to say that in December, 1865, six months after the formation of the company, they wrote it off?

Witness—Yes.

It went to make up the 4,213,896l. taken over by the new company?

Witness—No doubt. When I was asked about it I did not observe the fact that it had been treated as a bad debt. I said it was only value at 7,000l., and I was asked where I found that, and I referred to a copy of the evidence taken in Chancery. I did not recollect that I had in my possession a document which would have enabled me to state that that debt was valued at 7,000l.

By Mr. Lewis—In reference to A. and G. Gordon’s account, which at the time of the transfer was 27,028l., that was a balance in the books of the old firm. There was a credit entry by which it was transferred on the 28th of March, 1866, the entry being simply per contra 27,028l., and the same account was debited in the private ledger of the old firm. I interpret the transfer to mean that it was irrecoverable. That account forms a portion of the 4,213,000l.transferred to the new firm. The suspense and guarantee account was reduced from 4,213,000l. to 2,970,000l. The 4,213,000l. was entered as cash.

Can you explain that?—Yes; it was the custom of this establishment, and has been the custom of other establishment, to treat everything through the cash-book and not to use the journal. All the entries are treated as cash, although in fact in many instances they are mere transfers from one account to another. The 4,213,000l. was reduced by 1,053,000l., and then they took credit for 500,000l. for the good will; but on the same date there was a debit of 250,000l.; that reduced the account to something like 3,000,000l.

How did it leave off when the limited company closed its doors?—2,970,168l. 7s. 10d. appears to be the balance brought down on the 10th of May.

Then it increased?—It increased. I have estimated the amount claimed by the limited company against the old firm at something like 4,000,000l., or rather more. It increased in consequence of their debiting the account with the amount of sundry bills dishonoured for which the firm had given their guarantees to the limited company.|

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Mr. Howell told us that the limited company made 4,000l. profit without making any allowance for bad and doubtful debts; what did the bad and doubtful debts of the limited company prove to be?—1,300,000l.

Sir T. Gabriel—Is that in respect of their own transactions at that time irrespective of the old firm?—Yes. The 1,300,000l. included the interest on the accepted account, 131,500l. After debiting the losses, they made no net profits.

Do you mean to say that besides the losses of the old firm, 4,000,000l., or thereabouts, they lost 130,000l.? Yes. The claim on the old firm includes the aggregate amount, although the bills may produce 15s. in the pound from another source. The claims on the estates of the members of the old firm, besides that of the limited company, were estimated at about 400,000l. Of these about 236,000l. have been admitted and paid. In addition to the 4,000,000l. there is the claim on several members of the old firm with regard to the calls on the shares, making 166,460l. The old firm after the stoppage of the new company, executed a deed of inspection, and the liquidators had received from those estates about 500,000l. On the 31st July, 1865, the 144,000l. of the Greek and Oriental Steamship Company had not been written off, because it had not been debited as a specific item. The suspense and guarantee account did not show it, nor does it appear in the books of the limited company except as one of the items composing the 4,213,000l. on the 31st of July. The books of the limited company are not affected by it, and I will give an illustration to clear up this point. On the 31st of July there were certain items referred to, amounting to 4,213,000l., and there were standing in the books a credit of 1,053,000l. and 500,000l., reducing the balance to 2,900,000l. Had each item been taken as valued at 20s. in the pound, instead of Overend and Gurney being indebted to the limited company, the limited company would have been indebted to them for the difference.

Sir T. Gabriel—But we are speaking of the 31st July. They were so placed, were they not?

Witness—No; they were treated as a debt due from the old firm to the new company. They did not take it as an asset, or the amount would have gone to the credit of Overend and Gurney.

Mr. Lewis—The account had been reduced on the 31st July by the one million odd standing to their private account. Does the suspense and guarantee account show that that 4,000,000l. was benefited in any way by writing off 144,000l.—No; nor should it do so.

Then I want to know this. If Overend and Gurney received credit on the 31st of July for the million standing to their credit, and it became extinguished, how could they have written off anything?—They could deal with it in their own books. It had not been extinguished in their own books.

Had not a line been drawn in the books, and credit given to themselves or the limited company?—Certainly not. Had this balance been place to the credit of Overend and Gurney, it would have been requisite, whom this item of 4,000,000l. turned out to be irrecoverable, to debit them with the amount, but inasmuch as they were treated as creditors for the advance of 4,000,000l., there was no necessity to introduce into the book of the limited company anything relating to that item unless some money had been received or some payment made on account of it.

By Mr. Lewis—Of course the old firm in their books credit the limited company with 4,213,000l., and the limited company debit them with it?

The Lord Mayor (after examining the book)—The mode of entering in the ledger could not be in any other way whether or not anything was to be realised on either side. If everything turned out to be lost, and not a shilling of the 4,213,000l. was realised, it could not affect that side of the ledger. It must still remain, and, as Mr. Harding correctly says, any sum received in reference to it must be placed upon the other side.

Mr. Lewis—Exactly so. What I want to show is that, so far as the suspense and guarantee account is concerned, nothing has been written off.

Witness—Will you permit me to remark, in reference to the Greek and Oriental account, that I stated on Saturday last that I thought we had evidence that it was only value, in 1865, at 7,000l. It was irregular to refer to a printed copy, but I have since been able to refer to the affirmation of Mr. J. H. Gurney to that effect.

Mr. Lewis objected to the witness making any such reference.

The Lord Mayor—You find it was written off in 1865. That is a very valid reason why you should not take any steps towards its recovery in 1860.

Mr. Lewis—Now the debt of 839,000l. Atlantic Royal Mail Company was transferred. Was that written off at any time in the private ledger? Do you find 520,000l. written off on the 14th December?

Witness—I do. There was a sum transferred to the purchasers’ share account. The whole amount was written off. Millwall, 28,000l.; Mare, 8,000l.; ditto S. A., 1,311l.; Thomas Howard, 331,755l.; Carr and Co., 29,000l.; the East India Merchant Shipping Company, 160,000l.; ditto share account, 226,242l.—all these items were written off.

Now are any of those items so written off in the suspense and guarantee account?—No.

Mr. Mathew—And they ought not to be.

By Mr. Serjeant Ballantine—I suppose in the winding up of this affair you have referred to the books of the old firm;—I have referred to some of them.

Are you able to tell us the amount of the bills discounted for several years?—Yes, in the year 1861 the total amount of the bills discounted was 53,645,000l.; in 1862, 64,314,000l.; in 1863, 66,373,000l.; and in 1864, 74,984,000l.

I presume that that business was entirely independent of those speculations which resulted in the 4,000,000l. of debt.—No, because wherever those transactions were by bills, those would be classed as amongst the bills discounted.

So that that would to a certain extent diminish the actual profits of the business?—Yes.

Otherwise would it be a business of large profits?—It was a business that must have yielded very large profits.

And have you found from reference to the books that in point of fact the profits realised by the legitimate business of the bank was to a great extent destroyed by the speculative matters that you have named?—There is no the slightest doubt that the business was a profitable one.

And would have realised large profits?—It must have realised large profits.

Now, suppose you had been in the firm, looking at the thing in face, your advice would be to get rid of those speculations and those debts, and then you would expect that the concern would go on prosperously?—That question could be best answered by referring to the amount of bills discounted by the limited company.

What is that amount?—From the 1st August to the 31st December, 1865, it was 29,129,000l., and up to the 10th May, 1866, it was 56,029,000l.

And I may take it that such a business, conducted with ordinary prudence, would bring out a large profit?—No doubt it should bring out a very large profit.

Was there during the time the limited company was carrying on its business a great pressure in the money market?—Yes. The Bank rate of interest rose during that period considerably.

A great many failures?—Not so many till after the suspension of the company.

Was it in consequence of that pressure in the money money market that money of these bills were dishonoured?—No doubt, and the effect of the rate of interest rising was to diminish the profits of the bank very considerably. The amount of the debts which pertained to the old firm at the time of the transfer was 4,213,896l., and that was reduced by a transfer of 1,053,000l. from other creditors. The debt to the new company by the old one would be merely 2,900,000l. I have investigated the matter of the guarantee given by the old firm. Its value was simply the value of their private property. The landed estates were not a security, and that is the ground of our bill against the defendants. One allegation is that a material guarantee was not taken. We have realised under the deed of inspection nearly the whole of the estates. The limited company has been benefitted by such realisation by about 600,000l., and probably will receive 100,000l. more. Under the covenant in the second deed we have applied the money. A portion of the estates were sold before the stoppage. There was a sum of 400,000l. realised, but the money was absorbed, being taken to the credit of the suspense account. I believe the suspension of the limited company was to be attributed to the knowledge that the separate estates of the partners were being realised. There was a book produced with some leaves taken out. It was a letter book—a press copy book. I have come to the conclusion that the pages taken out were blank pages. There is nothing in the index referring to the missing pages, and I have been informed by |[51] the person who actually took them out that they were blank pages.

By the Lord Mayor—Twenty pages in all were taken out; all in one place. It is not an uncommon thing to have a sheet torn out of a press letter book, in order to put away the copy with the original document.

By Sir T. Gabriel—There was not much made of it.

Mr. Serjeant Ballantine—I don’t suppose you attached any weight to it, but the public are apt to do so.

Examination resumed—The amount of deposits actually withdrawn during the last four months of the existence of the company was about a million a month.

Sir T. Gabriel—But how much was paid in?

Mr. Serjeant Ballantine—The balance were reduced by that.

The Lord Mayor—Is that so? Was a million more drawn out than was paid in?—Yes, as I am informed.

By Mr. Serjeant Ballantine—The withdrawal of deposits I attribute to the realisation of the private estates.

You said something about a call of 5l. on the last examination. Is there any likelihood of that being returned?—We hope that we shall be able to realise the remaining estates, and if commercial affairs do not get worse than they are now I think our estimates are reasonable, and if carried out may result in the return. We did not anticipate the necessity of making a call.

Mr. Serjeant Ballantine—You do not give any promise, I observe. (Laughter.)

Mr. Serjeant Parry—Mr. Barclay had 1,000 shares, and has paid 35,000l. on them. Mr. G. Head was a shareholder to the amount of 1,000 shares at the time of the suspension of the company. It does not appear whether they were held in respect to his wife. It does not appear that Mrs. Head was the holder of 500. They were original shares allotted to Mr. Head. I have heard Mr. Head is the brother-in-law of Mr. Gurney. Mr. Head paid 15l. a share prior to the suspension and 20,000l. since—in all, 35,000l.

By Serjeant Sleigh—Mr. Gordon held 200 shares at the time of the suspension of the company. They were at one time selling at 5l. premium. He has paid 7,000l. on them.

By Mr. Gardyne—Mr. George Rennie was allotted eighty shares, which he held to the suspension of the company. He has paid all the calls. I do not know that Mr. George Rennie is the brother of the defendant.

Re-examined by Mr. Lewis—By the articles of association 200 shares were the qualification of a director. Messrs. Gurneys and Birkbeck held 8,302 shares at the time of the suspension a portion of them being for the goodwill.

You said the limited company made a profit of 2,000l. without providing for bad and doubtful debts. How do you account for that, considering that they turned over 56,000,000l. ?

Witness—After providing for bad debts, I said there was no other profit whatever.

Without providing for the bad debts?—That was after debiting the rebate and all expenses.

I wish to know what was the profit, without making any allowance for bad and doubtful debts, during nine months?—Including the interest charged on the suspense and guarantee account it is 131,567l.

And the profit you, say, altogether was 133,000l. Then I ask what would be the profit on this 56,000,000l. of bills discounted?—It would be the difference—about 2,000l.

Sir T. Gabriel—1,433l.

Mr. Lewis—That is the profit on this 56,000,000l. of bills discounted?—No.

Why not? You say that they turned over in nine months 56,000,000l. of bills discounted? Is it not that difference?—Yes; after deducting the expenses and rebate.

What were the bad and doubtful debts?—We anticipated the loss to be 1,300,000l., but after deducting the 250,000l. received it will be 1,050,000l.

What would the profit of turning over the 56,000,000l. be?—about 1,400l.

That includes bad debts?—Yes; because the interest of the suspense and guarantee account is a bad debt.

Have you looked over the books of the old company for the last five years, and do you know what the losses were?—They were 4,000,000l. in the six years.

You have known Overend, Gurney, and Co. a long time?—I did not know them till 1864. I had hear about May, 1866, a few days before the stoppage of the limited company, of the sale of the estates of Mr. Samuel Gurney. At the date of the stoppage I was on the premises of the limited company checking some balances. I am not sure that I had been appointed one of the auditors of the limited company, but I was acting as one of the auditors. On looking at the minutes I see that I was appointed.

Mr. William Turquand, of the firm of Coleman, Turquand, Youngs, and Co., was next called. He stated that he is joint liquidator, with Mr. Harding, of Overend Gurney, and Co. (Limited.)

Mr. Lewis—Can you explain the item Peto and Bettsarad, 14,000l.?

The witness said it was in connection with the making of a railway in Turkey. Peto and Betts contemplated making a tender for the works, but previous to that desired to make a survey, and it was agreed between them and Overend, Gurney, and Co., that they should be at the joint expense of the survey. The expense was 28,000l., and the 144,000l., the loss by the Greek and Oriental Company, was the loss after deducting the value of the ships. Overend, Gurney, and Co., used those ships afterwards in the business of the Levant and Black Sea Steamship Company. On that company there was a loss of 38,000l. after deducting the amount realised for the sale of the ships, but 7,000l. was received afterwards for some barges.

Mr. Charles Beard, of Bury St. Edmunds, sworn—I am a magistrate, and ex-mayor of the borough. I hold 150 shares in Overend, Gurney to purchasing the shares I had seen a prospectus, and my attention was attracted to the deed of covenant. On the 13th or 14th of July I came to London, and called on the solicitors of the company, in St. Mildred’s-court. I asked to see the deed advertised. I saw a clerk. There were three copies of a deed. I sat down and read one of them carefully. I saw that Messrs. Gurney had made it very well for themselves. I thought it altogether a sound affair. I took a copy up and said, “Are there any other deeds?” and the clerk, said “No, they are all copies of the same deed.” I saw that they were all endorsed the same. I had no knowledge before taking my shares that there was any other deed than that which I saw.

What inducted you to purchase the shares?—Looking over the deed, and considering the matter. I did not purchase the same day. I talked the matter over with my banker, and I bought the shares believing it to be a sound concern.

Mr. Peak recalled, and, in reply to Mr. Lewis, said—On the day the limited company stopped I was at the office of that company, and saw Mr. Robert Birkbeck. The shutters were put up whilst I was there. I told Mr. Birkbeck that I had heard a disagreeable rumour about Overend, Gurney, and Co., and he told me that they were going to put up the shutters; that the Bank of England had unexpectedly refused to make them an advance, although they had tendered them ample first-class securities. He further said that the Bank of England had done it to gratify a grudge, and that it would bring on such a catastrophe that the matter would be inquired into at the next meeting of parliament.

Did you say anything?—On the following day I called at the bank, and went to the private door. I saw Mr. Gibbs, and afterwards Mr. Birkbeck. I told Mr. Birkbeck that I seen Mr. Gibbs, and that he had informed me that a day or two before the board had decided to declare a dividend at the rate of 7 per cent. per annum. Mr. Birkbeck said that that was quite correct, and I then asked him what were the prospects with regard to the suspension, and he said that he and Mr. Gurney had carefully gone over the securities the night before, and that we should very probably—in fact, almost certainly—get back 7l. 10s. out of the 15l. which had been paid, although there might be a call necessary at first to wind up the company.

Was Mr. Birkbeck aware at the time that you held 2,000 shares, with a liability of 100,000l.?—He was.

Two letters were then put in from Mr. Birkbeck to the witness, one dated the 23rd of February, assuring him that the company had not lost anything; and the other, dated 14th April, 1866, denying that any of the directors were selling their shares, again assuring him that they had not made a single bad debt, and expressing a belief that the witness would find the accounts perfectly satisfactory in July.

Witness—Before July came the company had stopped.

A third letter was put in, dated 26th of October, in reply to an applicant for shares, stating that they were only to be had in the open market, signed by Mr. H. E. Gurney, and a second from the same gentleman, stating that a bad debt which had been referred to was one for which the old firm was accountable, and not the limited company, and denying that they had incurred any bad debts whatever, or that there was any fear of the one alluded to being paid by the old firm.

Mr. E. W. Edwards, one of the official assignees of the Court of Bankruptcy in London, sworn and examined by Mr. Lewis.—There was a sum of 10,000l. odd transferred to the new firm in February, 1865. I had 20,000l. standing to my credit in the books of the old firm, and a debit of 3,000l. It was placed to my credit in 1864 in fulfilment of an agreement entered into between me and Messrs. Overend and Gurney in 1862. I received the 20,000l. for services rendered to the company. I received a salary of 5,000l. a year. The 20,000l. was for two years’ service rendered and two years to be rendered. I began with Messrs. Overend and Gurney in 1859. I forget what I received the first year.

Mr. Serjeant Ballantine interposed, and asked what bearing this evidence could have on the case.

Mr. Lewis wished to show, through the evidence of a gentleman receiving a salary of 5,000l. a year, that the defendants must have had a knowledge of the state of their own accounts.

Examination resumed—The 20,000l. accrued from 1862. Between 1857 to 1862 I had received 5,000l. a year. There was no estate winding up in the Court of Bankruptcy in 1864.

Mr. Lewis—Now be good enough to tell us what you were to do for this 5,000l. a year?

Mr. Serjeant Sleigh objected to the evidence.

The Lord Mayor—We cannot tell yet what it is to lead to. All this has to do with making up the accounts and with the whole state of the affairs, and it may appear that proper precautions were taken through this gentleman to ascertain the affairs of the company.

Mr. Serjeant Ballantine—Mr. Lewis gave a very persistent reason for the examination, and therefore I did not persist in the objection.

The Lord Mayor—The sum of 20,000l. being paid in advance for services rendered for four years would bring it into the period of the limited company.

Examination resumed—One of the matters I was engaged in was that of Stephanos Xenos, in 1859. In that case a loan of 140,000l. had been made by Messrs. Overend and Gurney to the gentleman on the security of a ship chartered by the government and the fleet known as the Greek and Oriental Ships. I was the nominee of Messrs. Overend, Gurney, and Co., in that transaction, and I had a power to attorney to receive the charty-party from Xenos.

What did you do?—I had the entire management during a certain time, and attended to the business of Overend and Gurney in the matter after four o’clock, when my official duties were over. I was often engaged at the office of Stephanos Xenos till late. I ceased to look after that account on the appointment of another gentleman named Carr, in 1859. I attended all the boards of the Atlantic Royal Mail Company. I remember its being wound up. I fancy I was a director at the time. The debt to Overend, Gurney, and Co. increased while I was a director. I think it was upwards of 200,000l. when I became a director. I was there to watch it. It increased to about 600,000l. They had five ships as security. Mr. John Orrell Lever was a director when I first joined it, and Mr. Thomas Howard. I had also a great deal of correspondence and work in connection with the general business of John Orrell Lever, who was in the Anglo-Susso Company. Mr. Howard was security for Lever, and I had to look after the securities.

Did they advance money?—Yes.

Mr. Lewis—Now in 1861 what were you doing?

Witness—The business was daily; I cannot say particularly what I was doing.

But you received 5,000l. a year for doing something?—There was the Greek and Oriental Company; then there was the Millwall Iron Works. Nothing was absolutely put into my hands. I merely advised on particular items. I was not made a director or shareholder of the Millwall Iron Works Company. Mr. C. J. Mare was the original debtor on that accounts, and then the concern was taken over by a company. When that matter was put into my hands the debt was about 200,000l. I had to advise whether they should make advances. I was not aware that Overend, Gurney, and Co. held every share in the company.|

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Did you advise them about making advances to the Millwall Company?—They used their own judgment.

Was there any other thing that you did for which you received 5,000l. a year besides advising them to advance money and they using their own judgment?—Yes.

Did they advance money?—Yes.

And in the end the debt increased from 100,000l. to 566,000l.?—That is the result.

By Sir T. Gabriel—I never managed the Millwall Iron Works. I was merely in an office, and parties came to me and told me what was wanted. I was at Overend and Gurney’s after 4 o’clock and whoever had to see me there had to come after that hour.

Were you engaged in any other matter?—Yes; Mannel and Co. They were indebted to Overend and Co. I do not recollect any other. Mannel and Co. failed in 1860. I had also the correspondence as to Peto and Betts.

What was it you did from 1860 to 1862?—I cannot recollect the different cases.

What did you do in 1863?—The same. (Laughter.)

But what was it?—I cannot recollect.

Sir T. Gabriel—Was there any written agreement between you and Overend, Gurney, and Co.?—Yes.

Where is it?—I will look for it.

The witness went on to say, that when the 20,000l. was paid in to his credit, he had a conversation with Mr. J. H. Gurney. The payment was made after the formation of the limited company. He had a conversation with Mr. Birkbeck, who said Mr. J. H. Gurney would himself take the management of the matters in his department.

But there were only two, the Atlantic and Royal Mail and the Millwall Works?—There were a great many other matters.

Tell us one?—I do not recollect.

Can you tell us any one single matter that you were doing in 1864?—No. Allow me to say that Mr. Boyce kept a book for the purpose of entering everything which was done after business hours.

Mr. Boyce said he had no such book, but after a short search a book was found, and handed to the witness.

Witness (after examining the book)—I really cannot find anything.

Is that book for 1864?—No.

Mr. Boyce—Yes; October, 1864.

The witness asked for time to examine the book.

Mr. Lewis said that Mr. Serjeant Ballantine (who had left the court) had expressed a desire to cross-examine the witness to-morrow, and he would defer putting any further questions till he was called again.

The Lord Mayor—He will have to be recalled to-morrow.

Sir T. Gabriel—Were you official assignee in the bankruptcy of Mr. Mare?

Witness—I think the case was taken out of the court. I was appointed, certainly.

Mr. Lewis—Before it was taken out of court?

Witness—I really cannot say.

Mr. Lewis—We have the proceedings in the bankruptcy in Mare’s case, and also in Lever’s case, in court to-morrow, and I may state, that with the exception of a question or two to Dr. Thom, the prosecutor, that will be the whole of my case.

The Lord Mayor—hen we will adjourn till 11 o’clock to-morrow.

Mr. Mathews—Is it your lordship’s intention to sit till four?

The Lord Mayor—Yes.

Mr. Serjeant Parry—Then I am in hopes that we shall finish the case.

Bail was then renewed, and the defendants released.

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The Daily News. Nr. 7096, 28. Januar 1869. S. 3.
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THE OVEREND, GURNEY, AND CO. PROSECUTION.

Jan 28. Anmerkung von Jenny Marx

COMMITAL OF THE DEFENDANTS.

The preliminary inquiry into the charge of conspiracy and fraud brought against Mr. J. H. Gurney, Mr. H. E. Gurney. Mr. Robert Birkbeck, Mr. Henry Ford Barclay, Mr. Harry George Gordon, and Mr. Wm Rennie, the directors of the defunct company of Overend, Gurney, and Co. (Limited) was brought to a close yesterday at the Guildhall, and resulted in the whole of the defendants being committed to take their trial. Rarely has greater excitement been manifested by City men in any inquiry of the kind than was evinced yesterday. The extraordinary evidence given at the previous examination by the witness Edwards, a gentleman who has hitherto held a high position in the City, seems to have taken people by surprise, and long before the doors of the court were opened yesterday they were besieged by a dance crowd of applicants for admission. The doors were thrown open half an hour before the time fixed for the adjourned examination, but in a few minutes every available space was occupied, and as the crowd continued to increase not only the antechambers of the court were filled, but Guildhall yard itself, and it was with the greatest difficulty that the solicitors, counsel, and witnesses engaged in the case could make their way through the crowd.

A very large number of the aldermen and members of the Common Council were present in the adjoining chamber, the available space at the sides of the bench being speedily filled. Among those who were present on the bench, in addition to the Lord Mayor and Sir T. Gabriel, the presiding magistrates, were Aldermen Besley, Causton, Sir B. Phillips, Lawrence, M.P., and Cotton.

The Lord Mayor and Sir Thomas Gabriel entered the court at 10 minutes past 1 o’clock. The defendants, who were seated, as on former occasions, on the bench usually occupied by the solicitors during trial, appealed to be, generally speaking, in a very nervous and depressed condition. Mr. J. H. Gurney remained during the whole of the time with his head bent down, leaning on his hand, which was the position of several of the other defendants. When the counsel took their places there seemed to be a little consultation between the defendants as to the course they should adopt in addressing the court, and some memoranda were handed to the various legal gentlemen by the defendants. Serjeant Parry, Serjeant Sleigh, Mr. Mathew, and Mr. Gardyne, were present, but Serjeant Ballantine and Mr. Giffard were prevented by other engagements from attending. They were, however, represented by their juniors. Mr. Lewis, the solicitor for the prosecution, was also in his place; and sitting immediately beneath him was Dr. Thom, the prosecutor. Several gentlemen who had lost enormous sums of money, and who had given evidence of the fact, were seated near the professional accountants, and other witnesses almost blocked up the space on the floor of the court between the bench and the bar.

Directly after the Lord Mayor and Sir T. Gabriel had taken their seats,

Mr. Oke, the clerk of the court, proceeded to read over the depositions, which were afterwards signed by each witness.

When Mr. Edwards appeared in the box he was loudly hissed by the audience, a manifestation of feeding which was rebuked by the Lord Mayor, who said order and quiet must lie preserved in the court, but which did not prevent the hissing being repeated even still more loudly when the reading of his deposition was finished and he was about to sign it.

The Lord Mayor then said—Since the last adjournment we have given the most anxious and careful consideration to the evidence adduced in support of this charge with a view of determining how the evidence affected the several defendants. Due weight has also been given to the arguments put forth on the occasion by the able counsel who represented the several defendants, and I have now to announce the decision to which the court has arrived. That decision is that there is sufficient evidence to put upon their trial the whole of the defendants, and I have therefore to commit the whole of them on the charge. (Loud cheering, and cries of “Shame.”)

The Lord Mayor—I must request that in a matter of this grave importance, and affecting so many persons, there should be no manifestation of public feeling.

The cheering, however, was now taken up by the crowd outside, as soon as they had learned the decision of the court, and by whom it was continued for some time.

Mr. Oke then read the charge as set forth in the information.

The Lord Mayor, in the terms of the act of parliament, asked the defendants whether they wished to say anything in answer to the charge, reminding them that they were not bound to do so, but that if they did it would be taken down in writing, and might be used against them at their trial.

Mr. J. H. Gurney, who spoke with great emotion, said—Mr Lord Mayor,—On behalf of myself, Mr. Henry Edmund Gurney, and Mr. Robert Birkbeck, I wish to say that we are entirely innocent of any intention to defraud, as will be proved when full explanations upon the subject are given. In the present examination we have acted by the advice of our counsel, in whose hands we leave our defence. (Slight applause.)|

[53]

Mr. Barclay—My Lord Mayor and Sir Thoma[s Gabriel,—]I have merely a few words which I desire to pu[t on record,] and they are that it has been proved by the [answer of] myself and the other five defendants already sw[orn in the] Court of Chancery, that I had nothing to do wi[th the] preparation or issuing of the prospectus, nor in th[e arrange]ments for bringing out the company or tran[sferring to it] the business of Overend, Gurney, and Co. [I solemnly] affirm that I knew no more of the prospectus [than the pro]secutor. I never saw it till after it was issued to the public. I did not, and from circumstances at the time I could not, in fact, interfere in the business until long after the allotment of shares, and after the resolution was passed by the board for signing and completing the transfer. I cannot conceive how any man could be insane enough to take and to hold a thousand 50l. shares in a concern which he knew to be rotten. I do most solemnly affirm that I joined this company in the full belief that it was an honest undertaking brought out in good faith and likely to be of a profitable character (Applause.)

Mr. Gordon—I am entirely innocent of the charge.

Mr. Rennie—As a great deal of misapprehension exists in the public mind respecting this case, I desire to make a short statement, with the view of showing what induced me to become a director of the new company of Overend, Gurney, and Co. (Limited), and of explaining more fully than has hitherto appeared the dealings of Cavan, Lubbock, and Co. (of which firm I was then a partner) with Overend and Gurney’s house, and from which it will be seen that I had no possible motive or interest to serve by improperly assisting that house to form a limited company. The facts I am about to mention have been already stated on oath by me in my answer in Chancery, in the suit brought by Mr. Peek, and which answer has been studiously and, as I consider, very unfairly kept back in the conduct of the proceedings before the Lord Mayor. For some years prior to the formation of the limited company, the firms of Cavan Brothers and Co. and Cavan, Lubbock, and Co., in both of which I was a partner, had very extensive transactions with Gurney’s house; and as the financial arrangements of Cavan, Lubbock, and Co. were chiefly managed by me, I was Overend and Gurney’s firm, but our connexion and acquaintance was of a business character only. The first occasion upon which in conversation with any of the members of the firm of Overend, Gurney, and Co., any reference or allusion was made by me to a joint-stock company in connexion with that firm was, to the best of my recollection, in the early part of the year 1864. On that occasion the subject was introduced by me at the instance of Mr. Harry George Gordon. Mr. Gordon had formed a strong opinion that there could be no finer business for a joint-stock company to undertake than the business of the firm of Overend, Gurney, and Co. At his investigation I spoke to Mr. Birkbeck. I am unable to recollect precisely what passed; but the impression on my mind certainly was that what I said was not well received by Mr. Birkbeck. The subject was consequently dropped, and no further allusion was made to it until the month of April, 1865, when Mr. Birkbeck told me that an overture had been made to purchase their business, and he then reminded me of our conversation in the previous year. At this time Gurney’s house had the highest reputation in the City, and the partners were known to be men of standing and great wealth, and the business very extensive. I could form some idea of the magnitude of that business from the transactions of my own firm alone with the house. Cavan, Lubbock, and Co. discounted with them, in 1863, over 2,200,000l.; in 1864, 2,740,000l.; and in 1865, 3,000,000l.—or nearly 8,000,000. in three years, all first-class bills, for of this large aggregate the bills not retired by the acceptors on the day of maturity amounted to only 7,600l. Apart from, and in addition to, the banking and exchange operations of my firm, which gave rise to extensive discontents, our sales of produce in those years averaged one million and a quarter per annum. With regard to the 691,000l., which it has been stated was owing by Cavan, Lubbock, and Co. to Overend, Gurney, and Co.., at the date of the formation of the new company, it has been shown in the evidence for the prosecution amount of bills discounted by Cavan, Lubbock, and Co., the bills drawn on them discounted by other parties, and the amount of their loans. In regard to loans, I wish it [to be cl]early understood that Overend, Gurney, and Co. [held amp]le security, in produce or otherwise; in fact, the [security] held by Overend, Gurney, and Co. at the time of [the transfer] exceeded in value the amount of their loans [to my firm] by more than 100,000l. It has also been [shown that] the whole of the 691,000l. was paid to the [company at] maturity; in fact, it was all paid within [three months] of the formation of the company, and [Cavan, Lubbo]ck, and Co. could not in any event have been called upon to pay any of it a day sooner. It is therefore clear that the stoppage of Overend, Gurney, and Co. could not have affected the position of Cavan, Lubbock, and Co., and the motive attributed to me disappears. As regards the 56,000l. deposit of Cavan, Lubbock, and Co., and the motive attributed to me disappears. As regards the 56,000l. deposit of my firm on the day of the transfer, about which so much has been said, I need say nothing, as I believe even the prosecutor is now convinced of the groundlessness of his insinuations in this respect. It was stated at the opening of the proceedings that the late Mr. Gibb, one of the new directors, had no criminal intention, but had been deceived by the other defendants. There is no ground whatever for such an assertion. At the time when the formation of the company was first discussed, Mr. Gibb and Mr. Barclay were entire strangers to me; and, in justice to myself and co-directors, I feel bound to say that Mr. Gibb was not deceived, for the fact is (and it has been already proved on oath in the Chancery proceedings) that he took an active part in forming the company, and went more closely than any of us into the question of probable profits; and it was in compliance with a request from Mr. Gibb that Mr. John Henry Gurney furnished to him the following letter, and which letter Mr. Gibb showed to myself and Mr. Gordon before the formation of the company:—

“(Confidential.)—Lombard-street, July 5,1865.—Dear Sir,—We have already communicated to you, in confidence, that we estimate the gross earnings of our business, for the yen years ending 31st December, 1864, to have averaged about 227,000l. per annum. This is after deducting interest on capital and all expenses except income tax, but without deduction for bad debts or for loss of interest accruing from our having recently held several lock-up investments, which have produced no return. We now beg to state that during the first six years of the above term the actual divisions of profit among the partners in our firm, after paying interest on capital and writing off all ascertained losses, averaged 185,383l. per annum. During the for succeeding years we made no divisions of profits, having reserved the entire earnings of the business during those years against losses which ensued from various transactions by way of investment, loan, or discount, which were entirely extraneous to the legitimate concern of our business, but upon which we unadvisedly entered. These transactions were connected with various advance made to companies and firms engaged in the shipping, shipbuilding, and timber trades. They also comprised loans made to railway contractor, as well as advances to a late West Indian firm, against bills drawn in connection with their colonial estates. Excluding for the present calculation the losses sustained from exceptional transactions of this character, and from business apart from the legitimate discount business of our firm, we consider that our losses during the above four years upon bills discounted in the regular course of our legitimate business has been as under, namely:—

From Failures in 1861, 15,660l.; in 1862, 9,198l.; in 1863, 2,687l.; in 1864, 102,583l. you will observe that this gives an average loss on the four years, calculated as above, of 32,532l. per annum, but that the average includes one year (1864) of very unusual pressure; and we desire to add that the two principal terms of the amount quoted above for that year were of a peculiar character—one arising from the discount account for a house in which the most active partner was a relative of some members of our firm—the other arising from the default of a late firm of brokers, who misappropriated goods which they had hypothecated against their acceptance which we held. The amount of loss arising from these two accounts forms 47,000l. out of the total of 102,583l., which arose from the failure of 1864.—We are, dear Sir, yours faithfully, Overend, Gurney, and Co.” I now wish to make a few remarks on two points, which have been considered to have an important bearing on this case—viz., the suspense and guarantee account, and the two deeds. I may here remark that, in taking over the business and valuing the assets of Overend, Gurney, and Co., we considered that there would be a considerable surplus coming to the old partners, after fully providing for every debt and liability. First of all, with regard to the suspense and guarantee account. This account amounted, in round numbers, to 4,200,000l. From this there was to be at once deducted the sum standing to the credit of the partners in the private ledger—about 1,100,000l. this left 3,1000,000l., and this amount, and this amount only, was the balance of the suspended and guarantee account due by Overend, Gurney, and Co. to the limited company. Against this sum we estimated the assets thus:—Goodwill and value of Lombard-street premises, 540,000l.; value of lock-up or expected accounts of 4,200,000l., estimated to realise 1,080,000l.; separate private estates of partners, estimated to be worth (on details furnished by the old partners to myself and the other new directors), including value of Norwich Bank since sold for 300,000l., 2,150,000l.—total 3,770,000l., showing a surplus, in round numbers of 670,000l. A deficiency of assets was never even contemplated, looking to the separate estates of the partners. As the mode of dealing with the excepted accounts by the new company does not appear to be clearly understood, I would briefly explain that the excepted accounts were never taken over by the limited company, and were never transferred to the books of the limited company. On some of these accounts, specially commented on during the proceedings, I also desire to make a few remarks, to explain the basis of calculation made at the time of the probable value of these accounts, so far as the old firm of Overend, Gurney, and Co. were concerned in them, although the limited company in no way assumed them, and were only interested in them so far as their realisation affected the guarantee of the Gurneys. Atlantic Steam Company, alleged to have been taken over by the limited company at 839,345l.—this debt, it was considered, would realise 260,000l.; East India Shipping Company, alleged to have been taken over by the limited company at 406,264l.—this debt, it was considered, would realise 175,000l.; these two accounts, appearing in suspense and guarantee account, were considered good for 435,000l., being the estimated value at the time of 11 steamships (of 28,800 tons and 6,350 horse-power)., nearly new, being under 8l. per ton and 30l. per horse-power, and about 20,000l. estimated to be received from stores and debts owing. One of the liquidators, in his evidence, stated that an offer of 700,000l. was made for these ships a short time before. Howard’s Estate—alleged to have been taken over by the limited company at 331,000l.—was valued at 50,000l. The latter amount was borrowed by Overend, Gurney, and Co., elsewhere on the securities held in connexion with this debt; and as regards the limited company, the directors never expected or estimated a sixpence to come from Howard’s estate. Garraway’s estate—alleged to have been taken over by the limited company at 190,977l.—was estimated to realise only 10,000l. 29,700l. has actually been received. With this account, as being West India property. I was more especially conversant. David Leopold Lewis—This account is alleged to have been taken over by the limited company at 341,559l.; this debt, it was considered, would realise 182,000l. It has already realised 46,700l.; while the securities still held are now estimated by the liquidators to probably yield 125,000l., thus showing that the original estimate was reasonable one, and not exaggerated. I will not lengthen this statement by going through the whole of the excepted accounts; but I have reflected two or three of large ones, with the view of explaining that these accounts were not only taken over as cash at 20s. in the pound, but were never taken over at all; and that, at the time of the transfer of the business, they were not estimated as likely to produce to Overend, Gurney, and Co., in liquidation, more than 1,080,000l. towards the reduction of the amount due from them to the limited company under the head of suspense and guarantee account. Probably no period in the history of this country could have turned out more ruinous for the realisation of the assets of Overend, Gurney, and Co.—amounting to 24,000,000l.—than that which has elapsed since the formation of the company, and the public is apt to overlook the effects of the unprecedented change which occurred in the commercial affairs of this country subsequently to July, 1865—the disastrous shock to credit resulting in the panic of 1866, and the fearful depreciation which followed in all real, banking, railway, shipping, mining, and miscellaneous property, to such an extent that many railway debentures, Lloyd’s bonds, preference shares, and other securities in which Overend, Gurney, and Co. were largely interested, became |[54] almost valueless. With regard to the two deeds, I say there is no foundation whatever for the imputation that there were two deeds, instead of one, in order to conceal the real state of Overend, Gurney, and Co. from the public. The facts (and they have been before proved on oath) are these:—After the transfer was finally decided upon, directions were given to the legal advisers of Overend, Gurney, and Co. (who were also the solicitors of the new company) to prepare whatever was necessary to carry the arrangement into effect. With that view instructions were given to an eminent conveyancing counsel. It was upon his upon his recommendation, and not at the instance of any of the proposed directors, that two deeds were prepared. For my part I confess that I failed to understand why the arrangement could not be comprised in one deed, but I did not presume to interfere in a matter which seemed to me peculiarly within the province of counsel. After the drafts of the two deeds had been prepared, Mr. Gordon and I thought it right that we should have independent advice on behalf of the new company; and I believe that it was partly, if not entirely, attributable to that precaution on our part (which was certainly honestly intended) that only one deed was referred to in the prospectus. The counsel before whom the papers were laid on behalf of the new company, was a gentleman in large practice, and owing to his other professional engagements, he was unable to settle the two drafts before the prospectus was issue. The first deed was finally settled on the 11th July, 1865, and the prospectus was issued on the following day, namely, the 12th. The second deed was not finally settled until the 24th July, and consequently, from its not being then in existence, it was not referred to in the prospectus. Moreover, the question as to what documents were to be mentioned in the prospectus was left entirely to our legal construction of one or two clauses in the second deed. My able counsel, Mr. Giffard, contends emphatically that the bearings of the deeds are identical. However this may be, for myself I confess I never read the deeds, considering that, in referring them to independent solicitors could be expected of as, and all that any other man of business, under similar circumstances, would do. The solicitors employed by the new directors are second to none in the City of London. The new directors subscribed for 2,700 shares, and held at the stoppage 2,200 shares, or a stake of 110,000l., in the limited company. Mr. Gibb had also 30,000l. on deposit without security at the time of the stoppage, and the Norwich Bank, of which Mr. Barclay was a partner, had also on deposit a large sum without security. What greater proof of confidence in the concern could have been given by myself and the other new directors? With the whole facts before them I defy anyone to show that I had, or could have, any motives whatever to conspire to form Overend, Gurney, and Co. into a limited company. I thought it would be a profitable concern, and so went into it myself, and with the other new directors fully believed that the assets of the old firm together with the private estates of the partners were more than ample to cover every liability. We expressly provided that the new company should not take the look-up or excepted accounts. We treated these excepted accounts as had and doubtful, and as only worth about 4s. in the pound; and we took a deed of guarantee from the old partners against any loss to the new company in respect of the assets taken over, and we also arranged that the new company should take and carry on only the very profitable bill-broking business of the old firm, turning over 75 millions a year. No mistake was made by us in respect of the bill-broking business of the old firm, for the new company, during the nine months it existed, discounted bills to the amount of 56 millions, being at the rate of 75 millions a year, which exceeded our anticipations. I wish here to allude to the profits of this portion of the limited company’s operations. Those have been stated at various insignificant sums, but I am prepared to show that, taking rebates into consideration, the fifty-six millions of discounts gave over 100,000l. profit, and I wish it to be distinctly understood that this amount includes no charge for interest on suspense and guarantee account. Under these circumstances I maintain that the prospectus issued to the public reflected the conscientious opinion of all the directors in stating that the business contemplated by the new company would “ensure a highly remunerative return to the shareholders.” It must be borne in mind that the cause of the failure of the new company was the withdrawal of deposits by the public, brought about by the loss of credit following the sales of the private estates of the old partners of Overend, Gurney, and Co. Between the end of January, 1866, and the stoppage in May, 1866—or less than four months—the deposits had decreased four millions! In conclusion, I fearlessly assert that there was no fraudulent or criminal intention on our part, and that the most that can be said is what was said by Vice-Chancellor Malins in his judgment in Mr. Peek’s case, when he had the whole of the facts before him. The Vice-Chancellor said, “I think it, however, only as act of justice to the directors to add, that I think their conduct shows that they could not have intended to do wrong, and what they did, perhaps, was the result of a too sanguine view of the prospects of the concern, and a too great reliance upon the guarantee of the partners; for each of them embarked a large capital in the company and though the shares rose to a premium of between 9l. and 10l., none of them sold any of their shares.” I have now only to express my deep sorrow for the misfortune which has fallen on so many shareholders; but it is a calamity that has fallen with equal severity upon myself and it arose from circumstances which no one could have foreseen.

At the conclusion of this statement there were hisses and cheers.

The defendants were then formally committed, the Lord Mayor saying the bail would be two sureties of 5,000l. each, and each defendant in 10,000l.

After the proceedings were over the feeling of the audience was again manifested towards Mr. Edwards. As he was coming out of court he was followed by a great crowd, who hissed and hooted him, and he was fain to take refuge in a cab, in which he was driven off.

The bail were—For Mr. J. H. Gurney, Mr. J. G. Hoare and Mr. C. T. Lucas; for Mr. Gordon, Mr. K. D. Hodgson and Mr. C. Oppenheim; for Mr. Birkbeck, Sir John Lubbock and Mr. Joseph Hoare; for Mr. Rennie, Mr. William Burnley Hume and Mr. Henry M‘Chleny; for Mr. H. E. Gurney, Mr. George Moore and Mr. Henry Ed. Buxton; and for Mr. Barclay, Mr. Robert C. L. Bevan and Mr. Joseph G. Barclay.

TO THE EDITOR OF THE DAILY NEWS.

SIR—My name having been mentioned in the late inquiry in connexion with the affairs of the Atlantic Royal Mail Company (Galway line), of which I was the founder, may I ask the favour of the insertion of these few lines? When I and my friends left this concern in June, 1860, it was perfectly solvent. Its management then remained in the hands of Mr. D. W. Chapman and Mr. E. W. Edwards. During the first two years while I was connected with the management about the same number of voyages were made by the company’s vessels as during the subsequent management. In the former period a profit was made without subsidy (which was not then due) and a sum of 220,000l. was offered for the contract and goodwill of the line by another company. In the latter period, notwithstanding a subsidy of 91,000l. per annum, which had then become available, the loss incurred appears to have been 840,000l.—I am, &c.,

J. ORRELL LEVER.
Brighton, Jan. 27.

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[The Daily News, 26. Januar 1869]

Jan 26 Anmerkung von Jenny Marx

WHILE all respect is due to the anxious sense of responsibility with which the LORD MAYOR is pondering the grave case of Overend, Gurney, and Co., now before him, there is no reason to keep silence as to the very extraordinary evidence given last week by Mr. E. W. EDWARDS. This gentleman appeared in court holding the highly responsible position of an official assignee, but stated that, while charged with its duties, he was also a salaried officer of the unfortunate Overend’s firm at the rate of 5,000l. a year. The sum seems a large one to be earned late in the day, after office hours, for Mr. EDWARDS told the Court that he did not go to Lombard-street until after four o’clock. The LORD MAYOR was, of course, curious to know for what duties this large salary was the equivalent, but the questions of counsel on that head were not rewarded with a very conspicuous success.|

[55]

Mr. EDWARDS told the LORD MAYOR that he was retained to advice the firm on certain matters of business in which it was or was to be engaged, but as to which his memory now seems to be a perfect chaos. It seems somewhat ha[rd, when a] gentleman has directed operations resulting in the loss of millions, and been paid for his assistance by tens of thousands, he should be able to remember nothing, or next to nothing, of the facts. From what Mr. EDWARDS did disclose, however, he was evidently a very important personage. At times, and for some purposes, he was the Mayor of the Palace, greater than the King. At his word the tide of wealth ebbed and flowed, or rather it flowed and did not ebb. The list of companies, long since ruined, to which this gentleman advised the old firm to lend money is appalling. He was concerned for them with the Atlantic Mail Steam Packet Company, the Millwall Iron Works, the shipping business of PEARSON, and a host of minor affairs, but to every other question about them he has now nothing but the stereotyped answer, Non mi ricordo. We will not repeat the strong observations of Serjeant BALLANTINE, but by Mr. EDWARDS’s own account he was taking money from both sides in these affairs. While drawing his 5,000l. a year from Overend and Gurney’s he sold two of their ships to PEARSON for the admirable manner in which he had conducted the negotiation. He had also to transact business for the firm with Mr. STEPHANOS XENOS, and received from him a present of a yacht—a present which the giver has since likened to that which a dove makes to a hawk. Most extraordinary of all he makes advances to Mr. CHAPMAN, a partner of Overend, Gurney, and Co., unknown to the firm, which advances, he says, have not to this day been repaid. Then, when the firm can afford to accept his services no longer at any price, this tricky gentleman, who is in possession of their secrets, insists on and obtains a payment of 20,000l. These, however, are but personal matters not likely to have faded from the memory. When asked to throw light on that most unfortunate concern, he states that he really forgets, and does not remember, and does not like to swear at all to anything. We should think not indeed. What we do learn is that Mr. EDWARDS was receiving 5,000l. a year from the firm of Overend, Gurney, and Co., and lending money privately to one of the partners; that his duties were of the highest; that there were besides no inconsiderable pickings for sakes of ships, and a temporary salary from another party. All this while Mr. EDWARDS rejoiced also in the emoluments of an official assignee in the Court of Bankruptcy. His lot had certainly fallen in pleasant places. However, a NEMESIS was at hand. The cross-examination of lawyers is unpleasant enough; but it is nothing compared to the close scrutiny which practical men of business can bring into matters of business. It is n[o co]mpliment, but simply a duty, to acknowledge that, whatever their ultimate de[cision ma]y be, t[he LORD MA]YOR and Sir T. [GABRIEL] have in [this case exerci]sed the functions [of a] magistrate [with a ca]re and patience not to be surpassed by th[e most prac]tised and conscientious lawyer on the be[nch. On]e thing they have at least accomplished. They have turned Mr. EDWARD WATKIN EDWARDS thoroughly inside out in the witness box. Such evidence as his is sadly and shamefully conclusive—rarely has a man occup[ying] a public position for years of equal i[mpor]tance and respectability created a more d[isast]rous impression. What with evasions and constant pleas of defective memory, the feeling throughout the Court was that Mr. EDWARDS’S statements were utterly unreliable. The whole history of this case is miserable enough, but whateve[r t]he issue to the Directors of Overend, Gur[ney,] and Co., public opinion has already [passed an] unanimous verdict upon Mr. EDWARD [WATKIN] EDWARDS. Judging him out of his own [mouth] or reticence, that verdict is that he cannot be permitted to remain an official assignee of the Court of Bankruptcy.

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THE OVEREND AND GURNEY PROSECUTION.

Feb 2. Anmerkung von Jenny Marx

At the Central Criminal Court, yesterday, the Recorder, in charging the grand jury, referred to the charge against the directors in Overend, Gurney, and Co. (Limited) at some length. He said—It is a charge of conspiracy against the directors of a joint stock company, the offence imputed to them being that of having been guilty of various frauds by which they induced persons to become shareholders of that company with intent to defraud them of large sums of money. It would be quite idle to suppose that you are not familiar, to a certain degree, with the circumstances connected with this charge. It is one that has excited somewhat strong feelings—so much so, that it has been thought necessary to direct that, in the event of a true bill being found, this case be tried in a superior court. I am, however, perfectly sure that whatever you have heard respecting this matter before, you will confine yourselves to the evidence that will be laid before you, and observe that impartiality which almost invariably distinguishes our courts of justice. It appears from the depositions that lie before me that for a number of years previous to July, 1865, a very extensive business of bill-brokers and money dealers had been carried on under the firm of Overend, Gurney, and Co., and that for very many years it had been of an exceedingly profitable character. It also appears that for four years previous to July, 1865, the partners of that firm had embarked in matters somewhat foreign to their ordinary business, in consequence of which large sums of money had been locked up, and great losses were almost certain to be incurred. Notwithstanding these transactions, and the losses likely to arise from them, the evidence that lies before me of the accountants who have been investigating these affairs is that the ordinary business of the firm had been of a profitable nature even up to the time I have already mentioned, but that a very large sum of money had been locked up in consequence of the exceptional transactions, and I think you will come to the conclusion that it would have been almost impossible to carry on that business for any time without the introduction of a large amount of fresh capital. I suppose to supply that additional capital negotiations were set on foot to form a new company, by which the difficulties of the old firm were hoped to be overcome; and accordingly, in July, 1865, a prospectus was issued for the formation of that company, and in the prospectus it was stated that it was to be incorporated under the Companies Act to have a capital of 5,000,000l. in 100,000 shares of 50l. each, of which it was not intended to call up more than 15l. per share, that there was to be a deposit it on application of 2l. per share and 5l. per share on allotment, 4l. on the 15th September and the same amount on the 15th November. The directors of the company were to be John Henry Gurney, Henry Edmund Gurney, and Robert Birkbeck, who were three of the partners of the old firm, and the others were Henry Ford Barclay, Thomas Augustus Gibb, Harry George Gordon, and William Rennie. These seven gentlemen were to be the directors of the new company, and one of them has since died. The other six are the defendants in the present indictment. The prospectus then goes on to state:—“The company is formed for the purpose of carrying into effect an arrangement which has been made for the purchase from Messrs. Overend, Gurney, and Co. of their long established business as bill brokers and money dealers, and of the premises in which the business is conducted the consideration being 500,000l., one-half being paid in cash and the remainder in shares of the company with 15l. per share credited thereon—terms which, in the opinion of the directors, cannot fail to insure a highly remunerative return to the shareholders.” After reading the remainder of the prospectus the Recorder continued—That prospectus was issued on the 13th July, 1865, and in consequence a large number of shares were applied for. 83,334 were allotted to the public, and 16,666, with 15l. credited on each share, would make 250,000l., which was one-half of the price paid for the goodwill of the business. The shares were allotted on the 27th or 28th July, and the company was then complete, and the business was then transferred as from the 1st August following. A deed of transfer was prepared, and by that deed the whole of the business was to be transferred from Overend, Gurney, and Co. to Overend, Gurney, and Co. (Limited). The whole of the then existing assets and liabilities, and the liabilities to be incurred, were transferred, with exception, that the limited company was entitled to reject any portion of the liabilities which they objected to, and the old firm guaranteed the payment of all which then appeared as assets on the face of the books of the company. That was the deed by which the business was transferred; and in addition to that there was a second deed also prepared, which was described as a “deed of arrangement on the basis of the contemporaneous indenture,” which was the deed transferring the assets and liabilities of the company, and in that second deed it was stated that the parties were desirous of making further provision for carrying the transfer of the business into effect on the basis of the first deed. That second deed goes far more minutely into the matters referred to generally in the first deed relating to the accounts to which the new company were to be at liberty to object, and it was stated there were to be separate books kept for the accounts with which the limited company declined to have anything to do, and the amount of the various assets was to be made good by the old company. That deed, as I have stated, explained the nature of those transactions, and you will learn from it what the accounts were. It appeared that the old firm had entered into what I may describe as exceptional transactions, by which they had advanced very large sums of money upon the security of ships and railway shares, in consequence of moneys advanced to contractors by whom these railways were to be constructed, and a sum amounting to over four millions of money was locked up in these various transactions; and of that it had no doubt been ascertained previous to the transfer that a large amount would be lost. As against that four millions there was a sum of over one million which stood to the credit of the partners in the old firm, and which they had not been in the habit of dividing, and it was agreed that that million should be set off, in the first place, against the four millions of bad and doubtful debts. That would appear, on the face of it, to reduce the amount to somewhere about three millions. Then, it was further provided that the sum of 250,000l. to be paid as half the good-will should be also set off in these separate books against any loss on the excepted accounts. Besides that, the new company was to have a lien upon 250,000l. worth of shares which the old firm held as the other half of the price of the good-will; and any sums arising from the sale of these shares were to be transferred to the credit of the excepted account. So that against that four millions there was, first of all, the millions standing to the credit of the partners in the private ledger account, and then the 500,000l. either in cash or in shares, being the amount of the goodwill; and further, the price to be allowed on valuation for the premises in which the business had been |[56] previously carried on. The amount at which these premises were valued subsequently appears to be about 26,000l. Then for any further loss on these debts, it does not appear to be contemplated at this time that there would be a total nor was there, in point of fact, a total loss—any dividend upon these four millions would have to be set off against that amount; and for anything beyond that which was not discharged the new company would have nothing to look to but the guarantee of the partners in the old firm, who were supposed to be, and who doubtless were, possessed of very large private estates, which were naturally expected to realise a very considerable sum. That seems to have been the transaction that occurred between these parities at the time of the transfer. I have called your attention to the second deed, and I request you to apply your minds as mercantile men to that second deed, because part of the evidence in support of the indictment that will be laid before you arises from the fat that one deed only is mentioned in the prospectus, and one deed only was placed in the hands of the solicitors, and was shown by them to any persons who were anxious to obtain information respecting the company. It does not appear that there was any great curiosity to see the contents of the deed, but there was the evidence of one person who did go and look at the deed at the solicitor’s office, and his statement is that if he had know there was a second deed he should not have become an applicant for shares. I suppose all he means is that if there was another deed concealed from him, that was a circumstance calculated to excite suspicion. You will look at the provisions of these deeds. It appears to me that the legal effect of the two deeds is very much the same. There is a provision in the second deed rather in favour of the new company, because it limits the time during which these accounts were to be held in suspense, and the partners were bound to make good any loss on them by a certain specified time. But really the effect of both deeds is that what the new company would look to for any loss was the guarantee of the partners of the old firm; and their guarantee was the value of their private estates. Well, the business is then carried on by the new company, and so far the transfer seems to have succeeded, that they were enabled to see the greater portion of the business that had been previously carried on; and they did not appear to take part in any such exceptional transactions as those that had caused the ruin of the old firm. In the time of the old firm as much as 76 millions of money were turned over in the course of a single year, and during the nine months that the new company traded a sum of between 50 and 60 millions was turned over, according to the evidence on the face of these depositions. That was a turn over which, if the business was conducted with ordinary skill and prudence, would naturally lead to a large amount of profits. The profits of the new company, however, appeared to have been entirely swallowed up by a number of bad debts they made, which reached an almost starting amount; and in point of fact no profit at all was realised during the time they carried on their business. I suppose the times were somewhat unfortunate; and subsequently to the stoppage of the new company no times could be worse for realising any assets in their hands. The business I have said was carried on for nine months, and it was in the month of May, 1866, that the new company stopped payment. Various inquiries were then set on foot, accountants were appointed both on behalf of the creditors of the old firm and the shareholders of the limited company, in order that there should be a very full investigation of the affairs, and that investigation has been going on more or less from May, 1866, till the present time. About the end of last year this criminal charge was preferred against the directors of the new company. One of the directors, as I have told you, is dead, and the remaining six are the persons included in this indictment. That which seems to have been the immediate cause of the stoppage of the new company appears to have arisen from a circumstance which one is almost surprised was not foreseen at the time of the original arrangement. You will remember that the new company had to look to the private estates of the different members of the old firm for making up any loss upon the realisation of the assets that were transferred; and in order to provide for some of the losses which were discovered, it appears the partners in the old firm commenced selling their estates. The moment this was done the credit of the new company seems to have been affected, and in the four months previous to the stoppage of the company—from the commencement of which time the partners had been selling their estates—no less a sum than four millions of money was withdrawn from the deposits of the company, and it is stated in the evidence that that was the immediate cause of the stoppage of the company. I do not think it will be necessary for me to carry you through the details of the evidence which lies before me. The great part of it consists of the evidence of the accountants relating to long and intricate accounts, which it would be scarcely possible for me to make clear without having all the papers before me, and you having an opportunity of referring to the accounts, of which portions are given. I think the only way in which I am likely to assist you in the investigation that will devolve upon you is by calling your attention to the charge which is brought against the defendants in the indictment that will be laid before you, and calling your attention generally to the evidence on which you will have to be guided. The charge is not that they have been guilty of negligence or carelessness by which they, and through them the shareholders, have been misled, but that they have been guilty of conspiring by fraud to induce persons to become shareholders, with the view of defrauding them of their money. That is the charge on which the prosecutors will have to make out a prima facie case before you. The general evidence by which that will be supported is, first, the circumstance to which I have called your attention—the fact that there was a second deed which was not referred to in the prospectus, and not laid before the persons who proposed to become shareholders in the company. That is the first circumstance. Whether that is material or not, whether it tends to support the charge, will depend very much upon the construction of these deeds, and the effect they would have had on the minds of mercantile men supposing they had been laid before them. Supposing you to be of an unfavourable opinion upon this point, it is possible there may be some explanation of it by the defendants subsequently. What you have to consider is whether it tends to support the prima facie case in support of the charge. And as I am looking at the matter—probably not with the same amount of intelligence which you as commercial men will bring to bear on it—the circumstance which strikes me as one which would have an effect on intending shareholders, is that in the second deed there is more particular attention called as to the nature and amount of the excepted accounts. The second circumstance to which your attention will be called is the fact that a large amount of losses had been sustained by the old firm, and therefore you will have to consider whether the directors were justified in stating that the transfer of this business with price of 500,000l. paid for goodwill was likely to produce highly remunerative returns. When I say “justified,” you must come to a conclusion much more unfavourable than that in order to support the criminal charge, because you must come to the conclusion that they were not only not justified, but that in point of fact they did not believe the statement they were making, that it would produce a highly remunerative return. It is not because they formed a wrong opinion on grounds insufficient to support it, but in order to make out the criminal charge it must be shown that in the statement they then made they stated what they knew to be untrue, and stated it with a fraudulent intention. Then you come to the losses, and the evidence on this point you will look to carefully. It is not because a thing has turned out unfortunately you are to come to the conclusion that the directors contemplated that losses would be made. Then there are one or two other circumstances, probably, that will be laid before you, as to the statements made by some of the directors not very long before the stoppage of the company, in one or two letters which I have before me, in which they speak of not having made any very particular loss. One exception is made as to a house having been guilty of great frauds, by which they had been “let into a loss;” but up to a very short time previous to the closing of the concern, these letters speak of the business as if it were carried on satisfactorily, and as if no serious losses had been sustained. But, as it appears here, certainly the main portion of the charge is not the manner in which the business was carried on, but the fraud in its conception—namely, fraudulently inducing persons to become shareholders: and what you will have to direct your attention to principally is prospectus itself, and the general opinion |[57] amongst mercantile men and others of the soundness of the concern which had been carried on for many years, and which was about to be transferred. There are other circumstances which will be relied on in making good the charge, a great deal of which will depend on the evidence of the accountant; and I think I ought also to call your attention to certain facts undisputed in this case, and which tend to rebut the charge brought against these directors. Undoubtedly, as to the three defendants who were partners of the old firm, it may seems that they had a considerable object in the formation of the new company, because it was the only chance they had of retrieving the losses that had been incurred; but whether it would have any ultimate benefit to them depended on whether the company was fortunate or unfortunate. But with respect to the other three defendants and the fourth director, who had since died, it seems that they embarked very large sums of money in this concern, and in weighing the evidence you will consider how far that removes the suspicion that they could have been influenced by fraudulent motives inducing others to become shareholders in a concern in which they embarked so very large an amount of money. Mr. Gibb, the deceased director, took 1,000 shares, on which he paid 15l. a share, being 15,000l. and became liable for 35,000l. more. Mr. Ford Barclay also took 1,000 shares, and he has paid 15l. per share and 20l. per share on calls since the stoppage, making 35,000l. the amount that he has paid, and he still remains liable for another 15,000l., if that should be necessary to satisfy the creditors of the limited company. Of the other two directors, Mr. Gordon took, I think, 200 shares, and Mr. Rennie took originally 500 shares, 300 of them for himself and 200 for the firm in which he was a partner, but he gave up at the request of the directors 99 of these shares in order to satisfy other applicants. He remained liable for the others which remained in the name of himself and his partners, and all these four directors retained every one of the shares which they originally took up to the time of the closing of the concern. That no doubt is a circumstance which you are bound to consider in coming to the conclusion which you will on this matter. I do not think there is any other portion of the evidence to which it is necessary for me to call attention. I have told you the specific charge, and what you must be satisfied of before coming to a conclusion unfavourable to the defendants. You must be satisfied not only that they have been guilty of carelessness and negligence—not only that something has been done by them which may render their estates liable, as is sought to make them, liable in civil suits which have been already commenced against them, but you must be satisfied that they have been guilty of direct fraud, and that the object of that fraud was to induce persons to become shareholders in this company, and with the idea that they would defraud them of the moneys they would advance in order to obtain these shares. That is the specific charge made. It will be for you, looking to the whole of the evidence, and weighing all the facts both for and against the defendants, to say whether in your opinion a prima facie case is made out which, if unexplained, would be sufficient to convict these parties on the indictment preferred against them.

[The Daily News, 17. April bis 3. Juli 1869]

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THE HISTORY OF THE EDMUNDS SCANDAL.—

APRIL Anmerkung von Jenny Marx

It was lately stated that the proposed settlement of the dispute between Mr. Leonard Edmunds and the Treasury by arbitration had completely broken down, and that Mr. Edmunds’s case would be submitted to a jury in the form of an action for libel against the Solicitor to the Treasury. We are informed that the cause is likely to be tried in June, but that before then Mr. Edmunds’s claims are likely to become a Parliamentary question. In the meantime Mr. Edmunds has published “The History of the Edmunds Scandal” for general information.

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COURT [OF] QUEEN’S BENCH.—MAY 3.

Sittings i[n Banco.]—(Before the Lord Chief Justice, and [Justi]ces Lush, Hannen and Hayes).

THE QUEEN v. OVEREND, GURNEY, AND CO.

Sir J. Karslake said—I am instructed, on behalf of Mr. Gordon, in the case of Overend, Gurney, and Co., in which a certiorari has been granted to remove the trial of the indictment into this court, to ask your lordships to set down the indictment for trial at the sittings after Trinity term in July next. I believe I have also the consent of the other defendants in making this applications, on the ground of the importance of the case, and from a desire of the defendants that the trial should not go over until after Michaelmas term in December next. They have no wish to prolong their anxiety, and I have to ask on their behalf for an early day to be named for the trial.

The Lord Chief Justice—My learned brothers suggest that this is not a matter for the court to interfere in, but that application should be made to me, as I shall have to try the case, to make the necessary arrangements.

Sir J. Karslake—Under ordinary circumstances I should do so, but I make this application publicly, supposing the court has power to make an order.

The Lord Chief Justice—The Master suggests to me, and I think he is right, that it is only when the case is set down for trial that it comes within my immediate jurisdiction. It is therefore now in the hands of the court.

Sir J. Karslake—The case has been set down for trial, but no day has been appointed.

The Lord Chief Justice—What my learned brothers think it is desirable should be done in the matter I shall be ready to do. Is the case to be tried here?

Sir J. Karslake—No, in London.

The Lord Chief Justice—There are several serious matters to be considered with reference to this application.

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COURT OF COMMON PLEAS.—APRIL 16.

Sittings in Banco.—(Before Lord Chief Justice Boyill, and Justices Keating and Smith.)

EDMUNDS v. GREENWOOD—THE EDMUNDS SCANDAL.

This was an action brought by Mr. Edmunds, the late Clerk of the Patents, to recover damages for libel, and the statements complained of occurred in reports made by Messrs. Hindmarch and Greenwood to the Commissioners of Patents. When the case was down for trial an agreement between counsel was come to that the matter should be referred to arbitration, but in consequence of some misunderstanding the agreement was not carried out.

Mr. Digby Seymour, Q. C., on the part of the plaintiff, now moved for a rule calling upon the defendant to show cause why the case should not be restored to the paper, and an early day fixed for the trial; and why the defendant should not pay the costs of the day which had been rendered useless by the record being withdrawn. The learned counsel said that the action was commenced at the end of 1866, and on the 16th October, 1868, Mr. Sclater-Booth wrote, agreeing to terms of reference. A long correspondence followed, but no reference was brought about, and in January last the case again stood for trial. A day or two before the trial, counsel again agreed to a reference, “the reference to be on the hooting of Mr. Sclater-Booth’s letter of the 16th October, 1868, subject to the following change in section 4. The section to run thus: Their lordships are willing to abide by the offer made to you and declined by you in 1867, namely, that you should bring before the arbitrators any substantive claims which you may desire to make on legal or moral grounds against the Crown, the arbitration to have power in relation to any such claims to make a recommendation to the Government having regard to all the circumstances of the case. Stet processus of action without prejudice to any claims Mr. Edwards may make against the Crown in consequence of the reports of Messrs. Greenwood and Hindmarch.” A formal deed of submission to arbitration was thereupon drawn up, and it stated “That any claims which the said Leonard Edmunds may make against her Majesty the Queen in consequence of the said reports of the said Messrs. Greenwood and Hindmarch and the said two papers shall be referred to the award of the said arbitrators, and they may make any recommendation to her Majesty the Queen in respect of the premises in this paragraph set forth.” This deed, however, was not acceded to on behalf of the defendant, his advisers wishing to state in it that the arbitrators might consider the plaintiff’s claim in reference to the reports, “provided the arbitrators shall think fit to introduce them, and the plaintiff declining to accept my variation in the terms of reference.” The matter still stood in this position, and the learned counsel said that the plaintiff, who always had been, and still was, anxious to have his case tried by a jury, had no alternative but to make the present motion.

The Lord Chief Justice suggested that the rule should be to show cause why an order of reference should not be drawn up embodying the terms of agreement for reference signed between counsel for plaintiff and defendant or why the agreement should not be cancelled and this cause restored to its place in the list and appointed for the first sitting day after Trinity Term, and why the defendant should not pay the costs of the day. He apprehended that as soon as the matter came again into the hands of the counsel they would have no difficulty in coming to an agreement.

A rule was granted in the terms suggested by his lordship.

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[The Daily News, 26. Juni 1869]

THE danger of a miscarriag[e of justice] in the trial of the Directors of the late Overend and Gurney Company is so serious that it certainly deserves to be averted by extraordinary means. The defendants are presumed innocent till tried and convicted, but the law, speaking through the accredited mouth of the LORD MAYOR, had declared that there is prima facie evidence requiring them to be put on trial. More than this, it has bound over an individual, under a penalty of 5,000l., to prosecute them. If the prosecution were to break down now, the charges would be neither established nor refuted. The defendants, however innocent, would remain under the stigma of having been judicially declared liable to be tried, and it would be open to any one else at any future time to bring them to trial, and if they are guilty, they would escape conviction. On the other hand, the present prosecutor would be, in either case, mulcted of 5,000l. for having set the law in motion in a way in which a legal functionary has declared he was bound to set in motion. Nothing could be harder upon all the parties, and nothing could be a greater scandal to the law. Nor would the hardship or the scandal be greatly modified even if the LORD CHIEF JUSTICE had not interposed to reduce both to an absurdity. If Dr. THOM were to be allowed to conduct his case in person, he must, unless he were remarkable exception to the proverbial character of men who are their own lawyers, conduct it badly. If he stated properly the legal points, he would fail to extract fully the necessary evidence, he would be in perpetual risk of introducing what is irrelevant, and quite unable to raise objections to what might be objectionable on the other side. He would make a long trial twice, if not ten times, as long as need be, and waste the time and money of his opponents and of the public. And, after all, the decision on so lopsided a case could not give perfect satisfaction to anyone in whatsoever way it might go. We can hardly therefore impeach the prudence and wisdom, |[58] any more than we can dispute the law, of the LORD CHIEF JUSTICE, in refusing to allow Dr. THOM to redeem his pledge and go free from his penalty unless he appears by counsel.

But what is to be done? The answer is plain—if the case ought to be tried at all, it is the interest of the country that it should be tried properly. The country has nothing to do with the motives of the private prosecutor in the case. All that the country can take notice of is that a minister of the law has decided that the case ought to be tried, and that in consequence her MAJESTY’s judges will attend, and a jury will be summoned to try it. Quite possibly the LORD MAYOR may have been wrong in so declaring. Quite possibly any Lord Mayor is an unfit person to decide on such a question. But the country has declared that he is a fit person, and the country must provide for upholding his decision. No doubt the expense of prosecuting will be heavy. Dr. THOM declines it on that ground, and if Government takes it up the expense will certainly not be lessened. But then, that also is a matter for which the country has itself to blame. If its laws and its forms are such that they cannot be enforced without enormous expense, the country has no right to complain, And not only is it the duty of the country, as a general rule, to put its own laws in force, but it is peculiarly so in such a case as this. The offence charged is of a public nature, it is one the repression of which is of vital importance to public morality; but it is one in the punishment of which no single individual has now any personal advantage to gain. Thrown upon an individual, the duty would be neglected, unless either public spirit or revenge should instigate its performance. We have no right to invoke revenge for the vindication of our laws, and as little to call on one man to be public-spirited in lieu of the nation. But the only possible representative of the nation in this matter is the Treasury, and therefore we cannot doubt that the proper course is that the Treasury should take the conduct of the prosecution on its own shoulders. If the bill is a heavy one, we must thank the costs at the risk of sending Dr. THOM to prison, and preventing justice from having its course.

If these considerations hasten the general conviction that it would be cheaper as well as more decent to prevent such a risk hereafter by establishing the system of public prosecutors, the immediate inconvenience will not be without its compensation. While the law stands as it does, we may say that Dr. THOM had no right to begin proceedings unless he had counted the cost to the end. But are grave offence to go unpunished unless a prosecutor can be found willing to give some thousands of pounds to bring them to trial? On such a principle it is evident that the provisions of our laws must often remain a dead letter. Nothing but a performance of the duty by the public will ensure its being performed for the public. And if not performed, the public must inevitably suffer in one shape or another to a far greater amount than the cost of public prosecutions would come to. There is indeed hardly any difference of opinion upon the abstract question of the advantages of a public prosecutor. All civilised nations but England have the system, and even in Scotland it is in full force. Multiply the cost of the Scottish system by six, and we get an approximate estimate of the cost of establishing it here. We have not the figures in detail, but they do not in Scotland reach a total of more than a few thousands a year. The more serious difficulty lies no doubt in organising the scheme so as to work smoothly and well. But our Government cannot surely be unable to do what every other Government has done. The truth is, however, that it involves a difficulty of just amount enough to make a Government indisposed to take up the question voluntarily. The public, then, must force it on their attention. Long as we have borne the burden, it does not become lighter by use. Those of us who have suffered under its inconvenience do not at all relieve others from its incidence. Any of us may at any moment be subjected to a loss by theft, robbery, or embezzlement, to say nothing of crimes against the person, and then we shall discover that the first loss is perhaps the smallest, and that the law punishes us rather more heavily than it does the real criminal. We shall be bound over, like Dr. THOM, to prosecute the accused, and then we shall have to pay a solicitor to tell us what to do, and to pay a counsel to do it for us. This liability ought certainly to be enough to stir us up to the extent of bringing pressure to bear upon the Government. We must make it provide for us all the relief which, for its own credit, it must now afford to Dr. THOM, and to obviate for the future the recurrence of such scandals as well as to deliver us from the perils of such loss.

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OVEREND AND GURNEY DIRECTORS.

TO THE EDITOR OF THE DAILY NEW.

SIR—While I beg cordially to thank the press in general for having extend to me its generous sympathy in connexion with this prosecution. I wish to remove a misapprehension under which even the most friendly critics appear to labour. I am not faltering my course. In declining to engage counsel I am merely carrying out my original intention. As I told the Lord Chief Justice of the Queen’s Bench in Chambers on Tuesday last, I from the very beginning undertook the task in the full belief, whether correct or incorrect, that I might argue my case myself. Nor even in the face of unexpected obstacles, shall I shrink, on Friday next, from endeavouring to enforce what I hold to be my right, because I know it to be my duty—I am. &c.,

ADAM THOM.
London, June 28.|

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THE “EDMUNDS SCANDAL” CASE.—

June 17 Anmerkung von Jenny Marx

The questions as to the terms of reference to an open court of arbitration, of all matters in dispute between Mr. Leonard Edmunds and the Crown have at last been settled, and the court of arbitration constituted. It will be recollected that at the last hearing in open court the Lord Chief Justice Bovill undertook himself to settle the terms of the “rule” for constituting the proposed court. The matter was heard by his Lordship in chambers on the 8th inst., was then fully argued by counsel, and the “rule” has been since finally settled. The court is to sit in public. Mr. Edmunds, being the assailant, has the carriage of the arbitration.

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OVEREND AND GURNEY DIRECTORS

TO THE EDITOR OF THE DAILY NEWS.

SIR,—In yesterday’s debate one of the speakers stated that, as prosecutors in this case, I had applied for aid to the shareholders. Now I had not done so. My appeal had been addressed in the most general terms to the lovers of truth and justice in every class of society. Though those who know me best have, I believe, full confidence in my appearing for myself, yet the community at large may be disposed to doubt my competency. At the present crisis, therefore, I have resolved to forego what I claim to be my right, on the single condition of being supplied with sufficient funds to engage counsel worthy of the occasion.—I am &c.,

ADAM THOM.
July 2.

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[The Daily News, 3. Juli 1869]

July 3 Anmerkung von Jenny Marx

THE Government, in explaining on Thursday night its reasons for refusing to take on its shoulders the Overend and Gurney prosecution, missed the real point on which their intervention is asked??. It is not that the offence charged is unusually heinous, nor that the expense is beyond the means of a poor man. On both these heads they had a sufficient answer, when they replied that the law did not compel them to act; that many law did not compel them to act; that many crimes of deeper dye are constantly being left to private investigation; and that the shareholders are rich enough, if they choose to combine. But the special cause that demands their interposition in the present instance lies in the fact which both sides of the House seem to have overlooked, that the prosecution has been declared by the constituted public authority to be just and necessary, and the prosecutor has consequently been bound in an immense penalty to carry it on. It is therefore idle for Mr. BRUGE and Sir ROBERT COLLER to urge that if Government is to take steps at all, it should be entrusted with the control of the proceedings from the beginning. That would have been a very reasonable answer to Dr. THOM if at the time when his charge was still unheard he had called on Government to take the whole responsibility of the examination before the LORD MAYOR off his hands. We should in that case have recognised it as perfectly just that Government should choose to make its own investigation, and to exercise its own discretion as to taking proceedings or not. And had Dr. THOM applied to it at that stage no doubt he would have received just such an answer. But he anticipated the answer: at his own risk and expense he carried on the investigation for many days, and he makes no application for aid till the proper tribunal has declared his proceedings not only justifiable, but necessary. When this has been done it is preposterous in Government to complain that if it had had the option it perhaps would not have instituted the proceedings at all. The propriety of their being instituted is already settled by a Court which, while it exists, must be held as of higher authority than the Home-office or the Attorney-General. The only question now is whether, after such an authority has declared the proceedings to be essential, the public ought not to pay for their being conducted to a proper termination. And to this it is no answer to tell us that the whole of the shareholders were greedy fools, and that there are some of them rich enough to prosecute if they choose. The motives of the shareholders are not the point in question, and the guilt or innocence of the directors is no way affected by the readiness of the public to take doubtful securities. That some shareholders are rich enough to prosecute, but do not choose to do so, is as little a reason for not supporting the gentleman in whose person it has been established that it is a duty to prosecute. The fact remains that the LORD MAYOR is the judge on whom the Constitution has imposed the function of saying whether such a duty should be performed or not. If he is a competent officer to have such a function entrusted to him, the Government is bound to ensure its being carried into effect; if he is not a competent officer, the Government should say so plainly, and, as a consequence, abolish his jurisdiction. Since the partners in the firm of Overend and Gurney have been committed for trial, the presumption is that they are guilty. It is now for them to prove their innocence. If they erred only through want of judgment, a cruel wrong would be inflicted upon them if they were deprived of a public opportunity of rebutting the evidence on which they have been criminally committed; if, being guilty, they were allowed to go scot free, a wrong would be done to society at large. The shareholders in the Company which they launched have no interest in their prosecution which is not shared in by every other individual. If they are convicted, those who have lost their money will not regain it. That the trial should be burked because Dr. THOM does not happen to have money enough to carry it on according to the rules of the Queen’s Bench, is no reflection either upon Dr. THOM or upon his brother shareholders, but upon the misplaced parsimony of the Home-office. In urging that the prosecution should not fall through, the public press is not, as some members of Parliament seems to imagine, influenced either by vindictive feelings towards the defendants, or by any special sympathy for persons who have not taken to heart the Duke of WELLINGTON’s advice to remember that “high interest generally means bad security.” Our complaint is, that Government refuses to expend a comparatively insignificant sum in order to prevent a scandalous failure of justice in a matter of public interest. That it is of vital importance to every unit in a society of civilized human beings that crime should not go unpunished, and that the proper and impartial administration of the law should not be defeated by technicalities, or be dependent upon the financial means of an individual, we presume no person will deny. With the result of the trial we have nothing to do. We heartily wish that the defendants may be able to prove their innocence of everything except errors of judgment. All we contend for is that the trial should take place.

[The Daily News, 25. Januar bis 5. März 1869]

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OVEREND AND GURNEY PROSECUTION.

EXTRAORDINARY DISCLOSURES.

Jan 25. Anmerkung von Jenny Marx

The inquiry into the charge of conspiracy brought against the late directors of this company was resumed on Saturday morning at the Guildhall before the Lord Mayor and Alderman Sir T. Gabriel.

On the opening of the court the witness, Mr. E. W. Edwards, was called, and his examination in chief proceeded with.

Mr. Lewis—Have you had an opportunity of looking at the books and seeing what was done in 1864?—Yes, and I have also seen Mr. Boyce on the matter. I have made a tabular statement of what I have done in several years. I do not find any entry in the book of what was done in 1864.

What was done by you for Overend, Gurney, and Co. during that year?—In that year, up to July, the Atlantic was being worked, but I am not able to refresh my memory from anything I can find in the book.

Mr. Serjeant Ballantine—If books are referred to it is very desirable to have them produced, and not that the witness should speak from memoranda on bits of paper.

The Lord Mayor—I thought I saw an entry in the book yesterday.

Witness—No. This, my lord (producing a paper), is the agreement.

The paper being handed to Mr. Oke, that gentleman asked in whose writing the signature was.

Witness—David Ward Chapman’s.

Mr Serjeant Ballantine—I have no objection to the agreement being read, but it is not signed by any of the defendants.

The Lord Mayor—I need not tell you that a letter of agreement between a firm and a gentleman employed does not require the individual signatures of the partners.

Mr. Serjeant Ballantine reminded his lordship that that rule did not apply in a criminal case.

The Lord Mayor—The agreement is produced because I asked for it yesterday, merely to show how is was that he acted for Overend and Gurney. It must be taken in connexion with the facts sworn to by the witness, and he has sworn that he saw several of the defendants on the matter.

Mr. Serjeant Ballantine asked his lordship to take a note of his objection, because there were transactions between the gentleman signing the agreement and Mr. Edwards which he could not admit to be binding on the defendants.

The Lord Mayor—Certainly.

The agreement was then put in and read by Mr. Oke as follows:

“65. Lombard-street, 17th November, 1862.

“Dear Sir,—In consideration of your agreeing to continue to act for us in all matters in which we may ask for your advice and assistance, we hereby agree to pay you the sum of 5,000l. per annum for five years, to commence the 1st day of January, 1863, and to terminate on the 1st of January, 1868.”

The Lord Mayor—I understood Mr. Edwards to state yesterday that the agreement commenced prior to the year 1859, and that he received 5,000l. a year up to the period of 1862; that in the year 1865 he received this 20,000l., being two years’ payments for the two years prior to January, 1865, and, for two years subsequently to that year, for work which was to be done.

Examination resumed—It does not appear definitely in the book what was done in 1864, but it shows that there were transactions, because it refers to Millwall. The entry is “Re Millwall estimated receipts for three months end-|[60]ing October 31, 1864.” I gather from that entry that I was consulted in 1864. I was consulted by Mr. John Henry Gurney, but I don’t recollect whether I was consulted by the other directors or not. I generally conversed with Mr. J. H. Gurney on the matters in which I was engaged. I have no doubt it was the question of making advances on which I was consulted. That is an entry of requirements, is it not?

Mr. Lewis—It is an estimate of profits.

Witness—No; an estimate of receipts, not profits. I am speaking almost from ideas, not from recollection.

Mr. Serjeant Ballantine—I hope your lordship will take a note of that.

The Lord Mayor—You may depend upon it that nothing will be entered upon the depositions from the ideas or imagination of the witness. You have no recollection of any business you did in 1864?

Witness—Not of actual business.

Mr. Lewis—Well, then, have you any recollection of any conversations with any of the defendants in 1864?—No positive recollections.

In 1863?—I have no positive recollection of any business on which I was consulted in 1863.

Does not the book show?—I have not seen it.

The book was handed to the witness.

The Lord Mayor—Now, refresh your memory by considering the different estates you were connected with.

Witness—I have put down in a tabular from the estates with which I was connected, and, as far as I can recollect, the particular years.

Mr. Lewis—Let me see if I can remind you. Was there an arbitration between Overend, Gurney, and Co. and Mr. Lever?—No.

Were you not appointed umpire?—No.

Were not Messrs. Turquand and Harding appointed arbitrators?—No, that was an arbitration between Lascaridi and Lever. It was in reference to accounts between Lever and Lascaridi.

In what year were you appointed umpire?—I have not the date.

What was it about?—No answer.

This is a matter of serious moment to Overend, Gurney, and Co. You were receiving 5,000l. a year when you were appointed an umpire to decide this matter?—I was.

What was it about?—The accounts between Lascaridi and Lever.

Were Overend and Gurney interested in it, yes or no?—They were interested in the result, because I think both Lascaridi and Lever were indebted to Overend, Gurney, and Co. They were not examined before me, nor was Mr. Boyce. There was not to my knowledge a bill filed in Chancery by Overend, Gurney, and Co. about that matter. I do not recollect making an affidavit in reference to those accounts in 1863.

Sir T. Gabriel—It is exceedingly unfortunate that you cannot recollect anything of this transaction. You cannot expect that we can take your answer that you do not recollect anything.

Witness—I have a very bad memory for dates. (Laughter.)

Mr. Lewis—Have you been an accountant?

Witness—Yes.

In partnership with Mr. Turquand?—Yes.

Can you tell us what you did in 1863 and 1864, for Messrs. Overend and Gurney?—No, I cannot tell you definitely what I did in these matters.

Was not Mr. Pearson’s matter in 1863 and 1864?—No, in 1862 and 1863.

Overend and Gurneys lost a large sum by him?—Yes, but I do not recollect the amount.

Was it in the year 1861 that you were employed in reference to this matter?—I cannot say without reference to the books.

Cannot you tell us whether it was within two years of the appointment by which you had a salary of 5,000l. a year?—No, I have no recollection.

Was it in the year 1866?—I cannot say.

Can you give us any date between 1860 and 1866?—No.

Did you apply for the auditorship of the Galway Company?—If I did, it was in 1857 or 1858.

Sir T. Gabriel—You do not answer the question.

Witness—I believe I did.

Mr. Lewis—What were the estates which were being dealt with in 1863?—There were then going on the Atlantic Mail Company, the East India Company, the business of Zenos, the business of Manuel, the business of Pearson, the business of Howard, the business of John Scott Russell, and the business of J. C. Mare.

You were the advisers of the Messrs. Overend and Gurney in all those matters?—I was.

What was the last communication you made to the Messrs. Overend and Gurney with respect to the Millwall Iron Works?—I have no recollection; I never discussed the totals with them.

The Atlantic Mail Company, at the period of its winding-up, owed the Messrs. Overend and Gurney 800,000l. Can you state what was your last conversation with them upon that subject?—I have not the slightest recollection.

What were you doing then?—I simply communicated to them what took place.

Do you not recollect speaking to them about it after you had been watching it for eight years?—I do not recollect any particular conversation.

Then what were you doing for your 5,000l. a year?—I simply communicated to them from time to time what took place at the board.

But did you not have any conversation as to the loss of the 800,000l. odd?—No.

You knew that their indebtedness was becoming greater?—Yes.

That you also mentioned to the defendants?—Yes.

And you informed them?—Yes.

And the Millwall Iron Works?—Yes. I received some information; in the first place, from Mr. Mare, and afterwards from Mr. O’Beirne, who managed the Millwall Iron Works.

You were going to mention that you had a discussion with Mr. Birkbeck in 1864.—That was not the cause of my ceasing to act for them. I had a difference with Mr. Birkbeck which made matters unpleasant.

Tell us what took place between you and Mr. Birkbeck.—I really forget. (Laughter.) As far as I recollect Mr. Birkbeck, in rather coarse terms, accused me of having been the cause of some particular loss; but what loss it was I do not recollect. (Laughter.)

The Lord Mayor—Really try to refresh your memory. Was it the loss by Mr. Pearson?

Witness—No.

The Lord Mayor—I believe you received a present from Mr. Pearson on account of the admirable way in which you had conducted that estate?

Witness—No. I received a certain sum as a commission for ships purchased by Mr. Pearson from Overend and Gurney.

What was the amount?—2,000l.

Mr. Serjeant Ballantine—What account was that?

The Lord Mayor—Mr. Pearson’s, by whom Overend, Gurney, and Co. lost 36,000l.

Mr. Lewis—Then do I take it that you received 2,000l. as a commission on a transaction between Overend and Gurney and Mr. Pearson?—Yes.

What was it?—For negotiating the sale of two ships.

From whom and to whom?—From Overend and Gurneys to Pearson.

In what year?—1861.

You were then receiving 5,000l. a year from Overend and Gurneys, and you received 2,000l. from Pearson. You were acting, then, for Pearson.—No, Overend and Gurneys.

The Lord Mayor—Now, I believe, Mr. Edwards, that was not the only occasion on which your services were recognised by the parties with whom Messrs. Overend and Gurney were dealing. (No answer.)

Did you receive anything from Mr. Mare?—Never.

From Zenos?—Mr. Zenos gave me a salary of 500l. a year. (Laughter.) It only lasted for six months.

Sir T. Gabriel—What ended the salary?

Witness—Because Messrs. Carr and Hoare took the business over.

Sir T. Gabriel—And they did not take you over with it?

Witness—No.

The Lord Mayor—Now, I believe that that was not the only recognition, Mr. Edwards, Mr. Zenos gave you for services you rendered him?

Witness—I think I received no other.

The Lord Mayor—Why, did he not give you a yacht?

Witness—Yes, but that was not for services rendered. (A laugh.) The Lord Mayor—Well, then, it was a friendly gift?

Witness—Yes.

Mr. Lewis—Was it a steam yacht?—Yes.

Mr. Lewis—Belonging to the Oriental Steam Packet Company? (A laugh.)—No.

Of what tonnage?—Twenty-five tons.

Sir T. Gabriel—Are you sure it was not fifty tons? (A laugh.)—Yes, quite sure.|

[61]

Mr. Lewis—Now take the case of Lascaridi and Lever. What did you receive as umpire?—Nothing.

The Lord Mayor—I think you had better draw a little on your recollection again, Mr Edwards. (A laugh.)

Mr. Lewis—Yes. You cannot make it worse in any case? Take the case of Lascaridi first?—I do not recollect receiving anything.

Or Lever?—Nothing from Lever.

Will you swear that you received nothing?—No, I will not swear, because my recollection fails me. (A laugh.) My impression is that I received nothing except my salary as umpire.

How much was that?—300l.

From whom?—From Mr. Turnquand.

The Lord Mayor—Now that was an important transaction, and no doubt you had a good deal of trouble with it. What is the total sum you received altogether in connection with it?—My impression is that I never received a penny either from Mr. Lascaridi or from Mr. Lever.

Mr. Lewis—Then will you swear that you received nothing beyond the 300l.?—I will not swear.

Nothing from anybody in that respect?—My strong impression is that I received nothing.

May you have received something and forgotten it?—I might. (A laugh.)

How much may you have forgotten?—I cannot say. (A laugh.) If I ever received anything I have forgotten it.

Now take the case of the Millwall Iron Works, there were commissions and advances made by Overend and Gurney. How much did you receive?

Witness—Nothing whatever. If I did my memory has entirely failed me. (A laugh.) I do not recollect ever having received a penny commission.

The Lord Mayor—Surely you must be prepared to say yes or no, or to swear whether you received any money or not in connection wit the Millwall Company?

Witness (after a pause)—I have no such recollection. (A laugh.) The Lord Mayor—But will you not swear that you did not receive any?

Witness—No, I will not.

And you may have forgotten it?

Witness—I may.

Will you swear that you did not receive 10,000l.?—I certainly did not.

Or 5,000l.—I do not recollect ever having a penny.

Will you swear, sir, that you did not receive 5,000l.?—I do not like to swear positively to anything. (A laugh.)

Why not?—Simply because my memory is an entire blank on the subject. (A laugh.)

Did you keep a banking account?—Two; one with the London and Westminster, and one with Robarts, Lubbock, and Co.

Mr. Lewis—And you will not swear that you did not receive 5,000l. in connection with the Millwall Company?

Witness—I will not swear. My belief is I received nothing.

Mr. Lewis—You used to advise the advances from Overend and Gurney. It is quite obvious what it was. I ask you have you have not received 5,000l. from that company?—I positively believe that I never received a single penny; if I ever did receive anything I have forgotten it.

You cannot forget such a thing as that. Don’t you see that if you did receive any such sum it was nothing else than bribery, and surely you can tell us whether you were bribed or not. You being a public officer appointed by the Lord Chancellor, and being paid a sum of money to advise Overend and Gurney whether they should advance money to a particular firm, can surely tell us whether you were bribed?—I never received a bribe from any one.

On your solemn oath have you received at various times any such sum as 5,000l. from the Millwall Company?—I positively believe not, but I will not swear that I did not. (Sensation.) I never received any money or present from Mr. Mare, or Mr. O’Beirne, or anybody in connexion with the Millwall Company. I never received a penny from Thos, Howard or Lever, nor from the Atlantic Royal Mail Company, except my fees. I receive the 500l. from Zenos for assisting him in the affairs as a shipping agent. I was not captain of one of his vessels, but I appointed a clerk of my own, who kept his books, and I went there from time to time to see how matters were going on.

Mr. Lewis—That was after 4 o’clock, I presume?—Yes. (Laughter.) When I was not at Overend and Gurney’s I was at Zeno’s, and when I was not at Zenos’s I was at Overend and Gurney’s. (Renewed laughter.) My agreement ended when Overend and Gurney appointed Mr. Carr to watch their affairs. My agreement with Zenos was either at the end of 1858 or the beginning of 1859 before I had any agreement with Messrs. Overend and Gurney. I have just remembered from him was after I had settled the terms of the arrangement with Mr. H E. Gurney.

The Lord Mayor—That was my impression.

Witness—I hope your lordship will take a not of that, because it was entirely a voluntary act. (Laughter.)

The Lord Mayor—He was so satisfied with the manner in which you had carried out the negotiations for Messrs. Overend and Gurney that he made you a present.

Sir T. Gabriel—It was a reward, I suppose, for not driving too hard a bargain with him. (Laughter.)

Mr. Lewis—Did you tell either of the defendants you had received 2,000l. from Mr. Pearson?

Witness (after some hesitation)—My impression is that I told Mr. H. E. Gurney.

Serjeant Ballantine—My lord, I must object to the impressions of the witness being given in evidence; there may be a change of position.

Sir T. Gabriel—Why do you not give your answers in a straightforward manner? Do you mean to say that you did?—I did.

Sir T. Gabriel—Then why did you not say so at one, instead of fencing about in the way you are doing (Applause in the body of the court.)

Examination resumed—I don’t know the loss on the business of Pearson. It was one of the business I was watching and I advised the advances. Pearson owed Overend and Gurney a large sum of money; but I don’t know whether it was 100,000l. or not.

You said that Mr. Birkbeck used very coarse language to you. What did he say? Probably you will remember it from the coarseness of the language. It might be appropriate.

Witness (turning to the Lord Mayor)—It is very difficult to repeat the exact language.

The Lord Mayor—Answer the question. Don’t look here.

Witness—He said, “If it had not been for you, we should not have had all theses losses.”

Mr. Lewis—Well, that is not very coarse language.

The Lord Mayor—I gather that there was a little word before “losses” (A laugh.)

Mr. Giffard—And perhaps two or three before the “you.” (Renewed laughter.)

By Mr. Lewis—I said “I have not been the cause of the losses;” but upon my word I cannot recollect what he said after. My impression is that I went out of the room directly. (Continued laughter.) I went at once to Mr. H. E. Gurney, and said, “Mr. Birkbeck has accused me of being the cause of some of your great losses. Do you entertain the same opinion?” Mr. Gurney said he did not. However, the result was that I obtained from them a letter.

“Sir T. Gabriel—A testimonial, I suppose?

Witness—A testimonial. (Laughter.)

The following letter was then produced and read:

“London-street, 20-12-64.

“Dear Sir,—Referring to the wish which you expressed that we should state to you the reasons for ceasing to avail ourselves of your services, we beg to inform you that we do so in consequence of our no longer requiring them, having declined the description of business in connection with which we formerly desired and received your assistance. We take this opportunity of adding that we fully recognise the assiduity with which you attended to such matters as were placed under your care, and are well satisfied that whatever advice you gave us respecting them, was dictated by a regard for our interests, and desire on your part to promote them.—Yours, faithfully, H. E. Gurney.

Mr. Lewis—on the 20th of December, 1864, you knew the secret of those heavy losses which the world did not know?—I knew that large advances had been made. The 20,000l. was placed to my credit on the 2nd January, 1865. The following is the letter I received in reference to it:

“Dear Sir,—We have placed to your credit with our house, in accordance with the terms of your letter to us dated December 20th, 1864—(Mr. Lewis—That is the day he received the other letter)—the sum of 20,000l. This will appear in our books as lying at fourteen days’ notice; any extra interest to be paid separately.—Your truly, Overend and Gurney.”

By the Lord Mayor—It is in the handwriting, I think, of Mr. H. E. Gurney?—The signature is.

By Mr. Lewis—I had written to the firm demanding 20,000l. for two years’ services rendered and two to be rendered.

Sir T. Gabriel—Speak to Mr. Lewis, not to me.

Mr. Lewis—But you were not to render any more; you had received your congé.

Witness—I had a grievance.

Did you draw the 20,000l. which had been placed to your credit after they had gone into the new company?

Witness—I have another letter here in reference to that:

“Lombard-street, 14—8—65.

“Dear Sir,—Owing the change which has been made here, we cannot continue to allow you more than the market rate, and therefore propose placing your money at our current rate at 14 days. Money on the 30th.—For Overend and Gurney (Limited), H. E. Gurney.”

Did you draw your 20,000l. from the fund of the shareholders?—No, it was transferred, I never took the cash till after the formation of the limited company clearly.

You knew how the limited company were situated?—No answer.

You knew how the private firm were situated?—No, I never knew anything at all connected with the private affair of Overend and Gurney.

By Sir T. Gabriel—I drew my salary year by year, and continued to do so up to the time I left.

Sir T. Gabriel—You are contracting yourself. You said you had drawn up to the time the 20,000l. was paid. If that be so, having already had 5,000l. a year for the two back years, nothing was due.

Witness—I received 5,000l. in December, 1862; I received 5,000l. in December, 1863; and therefore there was one year due to December 12th, 1864. I received that as part of the 20,000l.

Sir T. Gabriel—Then you were incorrect in saying that you received 5,000l. each year up to Dec. 12, 1864.

Mr. Serjeant Ballantine—But from 20,000l. this sum of 5,000l. was to be taken?

Sir T. Gabriel—You see, Serjeant Ballantine, this is different from what the witness told us before. He told us yesterday, and he has repeated it to-day, that he received it for two years’ back services.

Mr. Serjeant Ballantine—I am afraid it is not the only point on which you can fix a direct contradiction on him in the course of his evidence.

The Lord Mayor—At all events, we must take it that 5,000l. was received for services between 1863 and 1864.

Cross-examined by Mr. Serjeant Ballantine—You are still official assignee?—Yes.

You are quite sure about it. You have been to your office to-day?—No I have not.

Any communication from the Lord Chancellor would go to your office, would it not?—Yes.

There was a firm in the City known as Edwards and O’Beirne—who were the partners in that firm?—The ostensible partners were my two brothers and Mr. O’Beirne; but I had myself an interest in it.

But were not you a partner?—I was a partner.

While you were in the position of an official assignee you were a partner in a mercantile affair?—It was not a mercantile affair; it was a financial business.

And Mr. O’Beirne, who was one of the partners in that business, was obtaining advances from Overend and Gurney, of whom you were the agent?—I was not a partner of Mr. O’Beirne during the time I was with Messrs. Overend and Gurney. It was after I left them I went into partnership with Mr. O’Beirne.

Who was the first person whom you knew connected with the old firm?—David Ward Chapman, whose acquaintance I formed many years ago. I made an advance to him of 5,000l., I think in 1859. He was then a member of the firm. Mr impression is that he did not wish the other members of the firm to know of the advance which I made him. I was introduced to the firm before then, and I was on intimate terms with Mr. Chapman, and I advanced him my first year’s salary of 5,000l.

Do I understand you to say that you were receiving money from the firm for your services, and making secret advances to a partner who wanted to conceal the fact? Is that what you wish to go forth to the public? Is that what you want to convey?—I wish to convey that having money of my own, and Mr. Chapman having asked me for an advance, I made it to him.

But you were actually receiving that money from the firm and advancing it to a partner?—That is true.

Now, I ask you whether you are prepared to swear that you had not money transactions with Mr. Chapman 18 months before the advance made out of the salary which you received?—I had no money transactions with Mr. Chapman until I made him the advance of 5,000l.

The Lord Mayor—That was your first advance to him, it being also your first year’s salary?—Yes.

Mr. Serjeant Ballantine—How did you make that advance?—In Bank notes.

Did Mr. Chapman ever pay you back?—No.

Now take this letter from yourself into your hands, and I shall be able to remind you of the reason that Mr. Birkbeck gave for getting rid of you. Was not the reason assigned by Mr. Birkbeck that your connexion with the firm had been injurious?|

[62]

Witness (after a pause)—Yes.

That all the large losses of the firm had arisen from your advice?—Yes.

And that on the expiration of the terms of the agreement they intended to sever themselves from all connexion with you?—Yes.

Those were the reasons given by Mr. Birkbeck?—Yes.

But Mr. Gurney considered you an exemplary person?—Mr. Gurney wrote me that letter.

And so expressed himself to you when you tore yourself from the rude Birkbeck and found yourself in the arms of the gentle Gurney? (A laugh.)—No one entertained the same opinion as Mr. Birkbeck.

Sir T. Gabriel—We have had that complimentary testimonial read. Was it offered to you voluntarily by the parties, or did you demand it?

Witness—I asked them for it.

That was one of the conditions on which you made the settlement?—Clearly.

The witness went on to state that although the 20,000l. was placed to his credit, to be drawn out at fourteen days notice, it was an understanding that it was to remain in the bank for a longer time. The understanding arose before the letter was given. He volunteered to let it remain on deposit without specifying the time. He left it there till the limited company was formed.

The 20,000l.?—It was not 20,000l., it was 15,000l.

Mr Serjeant Ballantine—Quite different; and that is not the only case, I fear, in which you will find the facts different from his statements.

Witness—I am quite right in saying that the amount placed to my credit was the difference between 20,000l. and 5,000l.

Sir T. Gabriel—But you were wrong in allowing Mr. Lewis to draw the inference that the money was paid by the limited company.

The witness was then questioned as to the rate of interest he was to receive, and he said it was understood he was to receive 6 per cent.

A letter was put in from Mr. H. E. Gurney, dated 6th August, 1865, stating that in consequence of the change, they could not continue to allow more than the Bank rate.

Mr. Lewis—Had Mr. David Ward Chapman left the firm before the commencement of the limited company?—Yes.

Did you buy any shares in the limited company?—No.

Or deal with them at all?—No.

Are you quite sure that you had no transactions with them?—My strong impression is that I had not.

Mr. Serjeant Ballantine—Your first connexion with Mr. J. H. Gurney was in 1861, was it not?—I do not recollect.

Mr. Serjeant Ballantine—Now, Mr. Edwards, this is getting a little too bad. I ask you whether you do not know perfectly well that it was in consequence of the mess you had got the affairs of the bank into that Mr. J. H. Gurney came up from Norwich, and for the first time learned how matters were going on?

Witness—I do not know. I deny that I was in any way the cause of their losses. In the one or two conversations I had with Mr. J. H. Gurney he did not tell me I was the cause of their losses, but he told me that the firm was perfectly able to carry all the matters which had taken place. May I add, that the debt to the Royal Atlantic Mail increased yearly. The money was advanced as the construction of the ships progressed; and if the ships had turned out capable of doing the work required, there would have been no loss to Overend and Gurney.

Who built those ships?—Messrs. Palmer and Co. and Messrs. Samuelson and Co.

Who made the contracts with them?—They were made before I joined.

Ha you any commission on the ships?—Not a shilling.

The witness, before leaving the box, handed in the following letter as one of those he had written to Mr. H. E. Gurney in relation to his dismissal:

“22, Basinghall-street, Jan 27, 1864.

“My dear sir,—To avoid any misunderstanding that may have arisen in consequence of the various conversations I have had, firstly, with Mr. Birkbeck; secondly, with yourself; thirdly, with Mr. Chapman; fourthly, with Mr. O’Beirne; and fifthly, with yourself yesterday, I think it should be thoroughly understood at the conversation now proposed to be had with Mr. J. H. Gurney this morning, that I had made no demand upon your house, but that I have only asked you, as head of the house in London, if the house has come to the same conclusion, as Mr. Birkbeck, viz., 1st. That my connection with you has been injurious. 2nd. That all your large losses have arisen from my advice. 3rd. That so soon as the matters now in my hands are considered wound up you do not intend to avail yourselves further of my services. And lastly, that expiration of the term of your present agreement with me that you intend to sever yourselves from all connection with me. I must add that to Mr. Birkbeck I am indebted for the first intimation of this your intention, as from every other member of your firm, except Mr. Arthur Chapman, I have, from what has been stated to me, been led to expect a very different result as the reward of unlimited confidence on your part and unremitting zeal and integrity amounting at times to self-sacrifice both of position and health on my part. On receiving your answer I must consult my friends as to what my future course must be, and beg to remain, yours most faithfully, E. W. EDWARDS.”

Dr. Thom, the prosecutor, recalled and examined by Mr. Lewis. I was not at all aware of any secret deed before I took my shares, and had I known there was such a deed I should not have taken them. I was induced to become a purchaser because I believed in the truth of the prospectus, and my belief was founded not upon any knowledge of the facts, but because I believed in the knowledge and veracity of the prospectus and authors of the limited company.

Mr. Lewis.—I beg to state to your lordship that this is the evidence I propose to produce in support of the charge, and I now apply on behalf of Dr. Thom to your lordship that you will, subject to anything that may be said on their behalf, commit the defendants for trial for the conspiracy set out in the information upon which the summons is issued.

Mr. Serjeant Ballantine then addressed the court on behalf of Mr. J. H. Gurney, Mr. J. E. Gurney, and Mr. R. Birkbeck. They were the only defendants who were members of the old firm; but he wished to state that the other defendants, who were directors of the new company, imputed to them nothing like a dereliction of honour and honesty. Mr. Birkbeck, amongst others of the defendants, could scarcely credit the evidence given to-day by Mr. Edwards regarding young Mr. Chapman. For himself, he was not so incredulous. But before going into the history of those transactions, he would refer to the position of Mr. John Henry Gurney at the time they commenced. He was living at Norwich, having a large property uninvolved. He had but one-sixteenth of the Lombard-street business, and he trusted matters implicitly to those who were then managing it. In 1861 or 1862, from some accounts that were then submitted to him, he found that the firm was embarked in a dangerous business. He came up to town, and matters were investigated, and it turned out that Mr. D. W. Chapman, a comparatively young man, had been for some time acquainted with Mr. Edwards, who held an important public position as an official assignee in the Court of Bankruptcy, a position which ought to have prevented him from mingling in any other business. The exact nature of the relations between Mr. Edwards and the younger Mr. Chapman he would not inquire into. They culminated, no doubt, in the agreement entered into with Mr. Edwards, by which he was to receive 5,000l. a year, and the first sum of 5,000l. unquestionably found its way directly into the pockets of Mr. Chapman, jun., one of the partners of the firm. Such, at least, was the evidence of Mr. Edwards. No doubt the proper course would have been for Mr. Gurney when he came up to say, “Here is a loss of some hundreds of thousands of pounds; we can afford to lose it; let us go back to our proper business, and have no more of this.” If they had done so, in all human probability this painful inquiry would never have taken place. But the advice which came to them from at home and abroad—the hope that they would have better luck for the future—that common weakness of the human mind, induced them to go on; and then they had all along the admirable advice of Mr. Edwards, supporting, upholding, and encouraging them, till Mr. Birkbeck began to look into the matter, and said to him, “It is you who have got us into all those difficulties.” But Mr. Edwards did not like to be dismissed, and he wrote a letter which he thought would remind his lordship of letters that were sometimes produced in another court. The letter was |[63] eminently suggestive. The company might hope to recover its difficulties; but if intimation of those difficulties got somehow to the public, there was an end to the hope. The result was, that Mr. Edwards’ advice or counsel landed the company in a debt of three millions, while Mr. Edwards stepped off with the nice little sum of 20,000l. The charge was that these gentlemen, knowing that a large portion of their capital was hopelessly locked up—for he denied that they were hopelessly insolvent—issued a prospectus which was calculated to convey a false impression to the public, and that they met together, as it were, in camera, and in pursuance of a conspiracy they did issue this prospectus that there was no fraud, and no evidence of fraud in the minds of the defendants. There was reasonable ground for thinking that by the formation of this new company Overend and Gurney would obtain release from their difficulties. It was very important that this should be clearly understood. Mr. Birkbeck had discarded Edwards at any expense, and would have nothing to do with him; and the matters that Edwards introduced were matters that Mr. Birkbeck was determined to close. They were determined to carry on their business, from which they had a right to expect very large profits directly they were relieved from the weight of debt. They calculated on the profit made upon discount transactions in former years. They had made very large sums, and they might calculate that the business would continue to produce what it had done before. They had an idea that this weight would crush them, but they had an idea that assistance of some kind was needed. A matter of this kind generally told its own story, and the world generally must have known that fresh resources were necessary to carry on the business, and the firm determined to look the figures in the face. They backed their opinions in the best way which they could by risking every half penny they had in the world. The private estates of these gentlemen had realised altogether in round numbers 1,600,000l. of money. Therefore he had a right to deduct from the 3,000,000l. the 1,500,000l. that they were prepared to put into the ship. Then 500,000l. was to be added for the goodwill, and there was then, according to their calculation, a balance in their favour. He took the value of the accounts at 1,080, 000l. He was putting it not as if it were a mercantile case; he was dealing with it as a criminal charge, in which he had a right to place a supposition before his lordship, and therefore he was putting a value at which gentlemen might fairly have estimated the value of their estates, and he placed the value of the accounts at 1,080,000l., the goodwill at 500,000l., the premises at 45,000l., and the goodwill at 500,000l., the premises at 45,000l., and there was a further sum of 940,000l. Then he submitted that there was no misrepresentation in the prospectus, nor was there any concealment of the real facts of the question. The statement, however, made in the prospectus related to the business of the old firm; it had no reference to their liabilities; and there was nothing in it that was not connected with the facts as they actually occurred. In conclusion, he submitted that, though the defendants might have acted unwisely and imprudently, there was no evidence on which the charge of conspiracy and fraud could be substantiated, and that therefore they ought not to be committed for trial. (Slight applause.)

Mr. Serjeant Parry then addressed the court on behalf of Mr. Henry Ford Barclay. The case of Mr. Barclay, he said, differed from that of the three defendants for whom Mr. Serjeant Ballantine appeared, though he had the clearest instructions from Mr. Barclay to state that he had the fullest confidence in the integrity and honour of the other defendants. Mr. Barclay was the owner of a large independent fortune. He was never connected with Overend and Gurney until he was invited to take shares in the new company by men on whom he implicitly relied; and how could such a man be now charged, with any reasonable degree of probability, with having been actuated by a fraudulent mind? For direct and deliberate fraud—not mere negligence—must be proved. Before this charge could be established it must be shown that he knew that the old firm was hopelessly insolvent, and that he therefore brought into the concern 50,000l. of his own money for the purpose of defrauding the public, but himself also and his own family. There was not a tittle of evidence against his client upon which any jury in the world would convict; and if he could show this, he hoped he might rely upon his lordship not committing Mr. Barclay for trial. The two main facts upon which the accusation against Mr. Barclay depended were these:—The issuing of what was alleged to be a false prospectus, and the suppression of the second deed. Now where was the evidence that Mr. Barclay had anything to do with this prospectus? He agreed with the learned serjeant that it was only by a harsh and unjust interpretation of this prospectus that any falsehood could be found in it. But, without dealing with that, he asked where was the evidence that Mr. Barclay had to do with it? Then as regarded the deeds. It was alleged that one of these deeds was suppressed. He would not ask now whether the second deed disclosed more than the first. In the first deed it was clearly implied that there was a lock-up of capital. It spoke of assets and liabilities, both of which were guaranteed by the old firm; and any one reading the first deed would see that there was a lock-up, and might be expected to ask for information what those assets and liabilities were. He admitted that the second deed went more into detail, and that it extended the time during which the guarantee were to be renewed to 31/2 years—probably on account of the difficulty in selling real property. But at any rate there was no evidence of fraud in Mr. Barclay’s dealings with the second deed. Moreover, he never executed the second deed; he merely witnessed the placing of the seal of the limited company to it. In consequence of the imaginative way in which Mr. Howell had given his evidence it was made to appear that Mr. Barclay had drawn out of Overend, Gurney, and Co. (Limited) the sum of 71,000l. in April and May, 1866. Mr. Lewis had endeavoured to show that Messrs. Barclay, Bevan, Tritton, Twells, and Co. had a large amount in the concern which they withdrew. There was no fragment of truth in that, and Mr. Lewis had been misinformed. There was ample security for every farthing of the 700,000l. As to the 71,000., that was transferred from account to the other, and at the time of stoppage there was 41,000l. to the account current of the Norwich Bank, if it were produced, would place that transaction in a light favourable to his client; but, although Mr. Lewis had given notice for the production of the deed, he had not asked so because he believed the deed would not support his case. In conclusion the learned serjeant submitted that there was no evidence on which a jury could convict Mr. Barclay, and he appealed to the court to relieve that gentleman from all further suspense and anxiety, and to send him back to society to the honourable position he had so long held. (Applause.)

Mr. Giffard then addressed the court on behalf of Mr. Bennie. He understood the vital points of the charge against Mr. Rennie to be these: that he conspired to palm off upon the public the firm of Overend and Gurney, which he knew to be hopelessly insolvent, and that his motives were—first, that the firm with which he was connected had 56,000l. on deposit with Overend and Gurney, of which they could not realise more than 6d. in the pound if Overend and Gurney were to be wound up; and further, that there were large money dealings between the two firms—bills to the extent of 600,000l. or 700,000l.—and it was stated by the prosecution that if Overend and Gurney had failed at that time it would at least have been “very awkward,” if not fatal, for Cavan, Lubbock, and Co.; and there was the further question respecting what was called the secret deed. Now, as to the 56,000l., that charge, by general concession, had disappeared; for it had been found that 45,000l. was paid in within a few days of the formation of the new firm. Well, with regard to the second point, which had a plausible appearance, the motive attributed to his client rested upon the hypothesis that the bills in question were bad, whereas they had all been paid; and inasmuch as the limited company only lasted nine months, it was clear that the relief supposed to have been obtained by his client, or by the firm with which he was connected, was of no importance whatever, when it was borne in mind that the whole of the bills were met and paid. Having thus disposed of these two charges, he now came to the second or secret deed, and upon this point he desired to offer the clearest possible explanation, because he was convinced that the subject was perfectly susceptible of a satisfactory elucidation. The learned counsel referred to the different clauses of the two deeds, arguing with great force that the second deed was merely ancillary to the first, and that the effect of it was merely to regulate the mode in which the first deed should be carried out, and consequently that the presumption of fraud from the secrecy of the deed failed.

Mr. Serjeant Sleigh next addressed the court on behalf of Mr. Gordon. The only points relied upon by the prosecution as bearing against Mr. Gordon were that he drew out the prospectus, and was a party to what had been termed the secret deed, but which deed was, in fact, nothing more than an arrangement by which the old firm bound themselves to carry out the guarantee given in the first. He drew particular attention to the fact that Mr. Gordon was in no way connected with the old firm, and that he could have no possible motive in joining the company than that which actuated Mr. Gibb, a desire to be a shareholder in so eminent a firm, and he was no more amenable to a charge of conspiracy than Mr. Gibb would have been.

The Lord Mayor (after consulting with Sir T. Gabriel)—The court will adjourn till Wednesday next. The arguments of the learned counsel will be fully considered, and will have due weight. There are various documents to which it will be necessary to refer, and our decision will be given on Wednesday.

The court adjourned at half-past 6 o’clock, the sitting having lasted seven hours and a half.

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The Daily News. Nr. 7093, 25. Januar 1869. S. 5.
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TRADE AND FINANCE.

Jan 25 Anmerkung von Jenny Marx

DURING the past fortnight the chief London Joint Stock Banks have (with one considerable exception)held their meetings. Their half-yearly reports cannot be looked upon as unsatisfactory on the whole, although they perhaps appear less encouraging than when commercial affairs were at even a lower ebb. It is not the first time that we have had occasion to observe that the consequences of a year of mercantile disaster are scarcely known until some time afterwards. But on mere technical point slight ground remains for encouragement. The joint stock banks just hold their own, and there is little more to be said. They have done as well as might be expected, but there are dangers to avoid which are perhaps more obtrusive in quiet than in critical times. It is hoping against hope expect that our [bankers] will abandon the p[resent] practice of leaving a part, and often a great part, of their cash reserves at call. They have not been taught by the lesson of OVEREND, GURNEY, and Co. Of the peril of this system, and it is little use to pursue the subject further until some new catastrophe brings it home with force.

According to the published accounts of the bunks the following are the deposits, compared with the corresponding period of the previous year. The London Joint Stock is not included, since this institution is the solitary exception in not giving the simple details which all the other joint stock banks find no trouble or inconvenience in furnishing. Reticence is, however, the peculiarity of this particular company. Some years ago, instead of detailing the items of their assets, the London Joint Stock were accustomed to announce them in one grand sum, where government securities, cash, commercial bills, and all kinds of loans, were lumped together. The plan may have been convenient, but hardly satisfactory, since it has been more than half abandoned now. The deposit the principal banks are thus stated:|

[64]
DEPOSITS.
1867 1868
London and Westminster. £22,010,572 £19,638,542
Union 12,071,097 10,845,021
London Joint Stock Not specified. Not specified.
Consolidated 2,184,783 2,339,148
City Bank 2,229,791 2,451,941
Alliance 1,322,218 1,354,9[50]
Imperial 1,177,967 1,22[6,762]
Totals £40,996,428 £37,856,3[64]

It thus appears that a falling off of upwards of three millions has taken place in the deposits of six of the above banks. On the othere hand, the acceptances have increased to a more than corresponding extent. The details are subjoined:

ACCEPTANCES.
1867. 1868.
London and Westminster. £902,700 £1,074,779
Union 5,298,743 6,250,835
London Joint Stock Not specified. Not specified.
Consolidated 102,414 237,050
City Bank 1,418,388 2,721,177
Alliance 98,451 248,367
Imperial 134,726 127,112
Totals £7,955,512 £10,659,[320]

The two items stand together as follows. The London Join Stock Bank total is added:

1867. 1868.
Deposits £40,996,428 £37,856,364
Acceptances 7,955,512 10,659,320
London Joint Stock (lumped together) 11,977,332 14,779,010
£60,929,272 £63,294,694

The profits have closely approximated to those of the corresponding half-year; but that is not too encouraging. They stand as under:

PROFITS FOR HALF-YEAR ENDING DECEMBER 31.
1867. 1868.
London and Westminster. £147,646 £135,587
Union 89,711 102,029
London Joint Stock 60,926 58,592
Consolidated 27,263 29,291
City Bank 40,832 39,779
Alliance 5,734 4,921
Imperial 10,671 11,355
£382,783 £381,554

The dividends declared were as follows. With repect to the London Joint Stock Bank, it may be mentioned that in both half-years it was necessary to trench upon the reserve or guarantee fund to make up the total for distribution:

DIVIDENDS PER CENT. PER ANNUM.
1867. 1868.
London and Westminster. 32 26
Union 15 15
London Joint Stock 121/2 [121/2]
Consolidated 5 [61/2]
City Bank 7 [7]
Alliance Nil. [3]
Imperial 5 5

We conclude our statistics by giving a comparison of the past and present capital and reserve:

CAPITAL AND RESERVE FUND.
1867. 1868.
London and Westminster. £1,998,720 £2,995,125
Union 1,500,000 1,500,000
London Joint Stock* 1,599,609 1,608,285
Consolidated* 900,000 900,000
City 580,000 580,000
Alliance 989,725 979,997
Imperial 493,940 493,940

There is however something more to be said though these banks have not made large profits, they have not made large profits, they have not lost money. Much credit is due to the management of institutions which, after the terrible collapse of confidence of the last three years, can present balancesheets like these. Prudence has been evidently the motto of their conductors, and prudence must and ought to be the first principle of banking. The spectacle of sound management is needed; for, humiliating as the avowal is, it must be confessed that the basted commercial honour of England is now despised abroad. Such sandals as those of Overend and Gurney’s, and many others, seriously affect our national repute. Those who travel know too well the taunts and reproaches which our evil doings in this sense have provoked and do provoke. We have, indeed, been contributing a melancholy chapter to the financial annuals of our time. To be just, we must admit there is nothing new in all this—an era of speculation always breeds mischief and bad faith. Gambling is a strong propensity with the greater part of us—plodding industry is dull. To get rich quickly and without labour is almost a passion even in these cold northern islands. The main evil of the moment is that the misdoings of a few shed a blight upon all. And distrust paralyses action. Business men fear each other, and so commerce languishes and enterprise dies. Should this be so? Because a few gigantic frauds excite popular attention and draw some of us from steady daily work, is England all dishonest, and our manufacturing power and our good repute to be cast to the winds?

*Exclusive of special reserve.
*Exclusive of shares surrendered to the bank for debt, &c.

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The Daily News. Nr. 7099, 1. Februar 1869. S. 5.
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TRADE AND FINANCE.

WE have not advocated the purchase of Railways by the State. Governments manage business so badly that we are against trusting them with anything more than it is possible to help. If they do succeed at first with a great department like the Post-office, under the guidance of enthusiastic promoters and with a special administration, they do not escape complaints of routine and inefficiency when the zeal at the commencement has died away, and the administration in inferior hands becomes a machine without a guide. It may be necessary to let them manage such business, since to leave it to the public might for various reasons be worse, but it is uphill work to make the management what it ought to be, even with the daily stimulus of public criticism |[65] and complaint, and the opportunity of Parliamentary remonstrance. We should much prefer, therefore, to let the Railways alone, trusting to the natural influences of private interest and competition, and longer experience, for an amendment of existing evils. But just because we do so we may be allowed to give a note of warning. The cries of a suffering public under railway mismanagement are not at present very loud, but there is deep and growing discontent; and unless the companies take care, their absorption by the State on the hardest terms, or some extensive State intervention in their affairs, is unavoidable. There is great distrust of the Government, but people are saying that a railway board is worse than a State department. The public especially have not forgotten the recent flagrant sacrifice of their interests for the sake of a temporary gain—the diminution of trains and increase of prices all round, that insolvent spendthrifts, by finding an overflowing traffic, might escape the consequences of their own folly. They do no relish being made the victims of a wasteful expenditure, which was never intended for their benefit, though a pretence of that sort was put forward. In this mood they are likely to consider the alternative of government purchase with much more tolerance than before.

Railway companies, however, neither understand what is expected by the public from the undertakings they manage, nor the magnitude of their own shortcomings. They are thinking very much of their dividends, and very little of the public, except as an unreasonable creature which is apt to demand the impossible and to object to fares that pay, but which can be brought to reason in the long run by a steady application of the screw. Instead of this the popular opinion about their fares and rates and accommodation is steady and settled, and railway companies will find they must satisfy it under penalty of strict retribution. The opinion is that in a populous country such as this, studded with manufacturing towns, with all the conditions of railway prosperity in the highest vigour, the least they can expect is the cheapest rates which are going anywhere and the amplest accommodation. When they hear of exceptional advantages on favoured lines in this country, where, as on the Clyde, the competition of steamers produces marvels of cheapness on the parallel railway lines; or of fares a half, a third, or a fourth lower in neighbouring countries which are not so thickly settled, they conclude that the experience is widely applicable—that if they have not generally the same advantages, things are not only a little but very far amiss. The conclusion, we must say, is highly reasonable; and is not to be got over by vague talk about the exceptional speed of our trains, passengers privileges to carry luggage, and the rapidity with which goods are conveyed and delivered. The margin of advantages elsewhere is too wide to be covered by these details, which do not obviously cause so much additional expense as to prevent the other and more desirable advantages from being conceded. How wide the margin is in one instance, may be seen from the Report on Belgian railways which the Irish Railway Commission has just made, and which ought to be attentively studied by who are interested in the future of our railway companies. To take the case of passengers alone, as more generally intelligible, and coming home to people more than that of goods, the result of the report is that the Belgian State railways are worked at a profit, with the following passenger fares:

Rate per mile.
1st class. 2nd class. 3rd class.
Under 22 miles 1.24d. 0.93d. 0.62d.
Above 22 miles 1.17d. 0.84d. 0.56d.
0.46d. 0.32d. 0.23d.

Even the highest of these, for short distance, is much less than the ordinary charge on our English line; and as the charge falls with the increase of distance up to 155 miles, when it is a third of the maximum charge, it may be imagined how cheaply travelling is done in Belgium. To put the facts in a popular shape, the minimum first-class fare in Belgium may be taken as a halfpenny per mile; the minimum second-class fare a third of a penny per mile; the minimum third-class fare one farthing per mile. This is a state of things which the customary explanations of English railway officials can hardly touch. The most that can be made of return tickets, season tickets, extra speed, luggage privileges, and the rest, still leaves the solid fact that people may get from place to place in Belgium for very much smaller sums of money than they can in England. They do not always want the other advantages, and would prefer a system under which extras were directly charged, so that the requirement of personal travelling could be judged by itself. We know very well, however, what share of these boasted advantages falls to the lowest class of travellers. And even in respect of them the Belgian system may stand comparison.

English companies have nothing to compare with the express Belgian fares, which are only twenty per cent. higher than the ordinary rates, and with the addition of third-class carriages to every express train. These are the things which poor travellers can best appreciate, and are in striking contrast with the manner in which our companies run slow parliamentary trains at the most inconvenient hours of the 24.

To understand the whole difference it is only necessary to apply the Belgian scale to some of the English lines. The Brighton Company has been one of the most conspicuous in victimising the public, and asserting that the public are unreasonable in their outcry. Contrast, then, the natural expense of travelling as evidenced by the Belgian scale with the prince we are called on to pay.

LONDON AND BRIGHTON.
ORDINARY. EXPRESS.
1st cl. 2d cl. 3d cl. 1st cl. 2d cl. 3d cl.
s. d. s. d. s. d. s. d. s. d. s. d.
Actual fares 10 0 7 9 4 2 12 3 10 0
Belgian scale 3 1 2 1 1 6 3 8 2 6 1 91/2

The differences are so great as to be almost incredible; but it is to a public knowing the Belgian experience to be applicable, that the railway companies venture to repeat their platitudes in defence of the present system. We have applied the Belgian third-class scale to other places, especially to long distances, and the comparison is, if possible, more striking:

Belgian Ordinary. Scale Express. English 3rd class.
Miles.
London to Harrow 111/2 71/4d. 83/4d. 111/2d.
Windsor 211/4 1s. 2d. 1s. 51/2d. 1s. 9d.
Bletchley 463/4 1s. 6d. 1s. 10d. 3s. 101/2d.
Peterborough 70 1s. 10d. 2s. 21/2d. 5s. 9d.
Bristol 1181/2 2s. 7d. 3s. 1d. 9s. 10d.
Crewe 158 3s. 3s. 7d. 13s. 2d.
Bradford 191 4s. 4s. 10d. 15s. 101/2d.
Leeds 1921/2 15s. 51/2d.
York 191 15s. 101/2d.
Manchester 1883/4 15s. 6d.
Exeter 194 4s. 01/2d. 4s. 101/2d. 14s. 31/2d.
Liverpool 2013/4 4s. 21/2d. 5s. 1d. 16s. 9d.
Newcastle 2751/4 5s. 9d. 6s. 11d. 30s.
Carlisle 2991/2 6s. 3d. 7s. 6d. 24s. 21/2d.
Edinburgh 401 8s. 4d. 10s. 33s.
Glasgow 406 8s. 6d. 10s. 2d. 33s.
Aberdeen 5421/4 11s. 4d. 13s. 7d. 40s.

This is not the hypothesis of a reformer or projector regarding whose calculations, however sound they may be, it may not be difficult to produce bewilderment and doubt. Figures in any shape are not easily followed in a public discussion, but every one can see that if people travel in Belgium for 4s. ordinary and 4s. 10d. express where the distance is like that between London and Manchester, the necessary cost of travelling in England can hardly be 15s. 6d. The truth is that, if the Belgian system could be applied, the saving of money would be more than the repeal of half-a-dozen first-rate taxes, while the majority of people would buy far more travelling accommodation than they are now permitted to do under a prohibitive tariff. Like many other taxes, the railway tax is not only burdensome in what it takes from people, but in what it keeps them from spending.

The lesson is for railway directors and shareholders. Although the public ideal is high, we believe they could be won over to the present system by moderate temporary concession, with the prospect of greater benefits as time progresses. On the principle of give and take they are not unwilling that railway shareholders, although they have themselves to blame, should make some profit for themselves. They believe that private companies endeavouring to make a fair profit should nevertheless be able to give all the advantages which a government department can give, but which is indolent and inefficient without the spur of personal interest. But it is for the railway companies to make the theory correspond with facts. If they do not; if they imitate government departments in unthrift and carelessness, and expect to fill their pockets or recoup their extravagant outlay by fleecing those whom they serve; if they abuse their monopoly, in short, instead of using it for the general advantage, it is not difficult to predict what the end will be. Sooner or later popular patience will be exhausted, and measures will be tried, for good or for evil, by which the present railway bodies who have so shamefully thrown away their chances will certainly not be gainers.|

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The Daily News. Nr. 7127, 5. März 1869. S. 5.
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TRADE STATISTICS FOR 1868.

March 5 Anmerkung von Jenny Marx

The principal features of the Board of Trade Returns for the past year have already been published, but it is worth nothing how far our commerce varies with each country of the globe. Annexed is a statement in detail, and certainly some of the results shown are sufficiently remarkable. The fact that our dependencies take about 28 per cent. of the sum, is only to be expected, but when we add to these the exports to the first four foreign nations on the list—Germany, the United States, France, and Holland—we arrive at a total of 64 per cent., or not far short of two-thirds of the whole. Going further down the scale, we find among our next best customers the half-civilized States of Turkey, Egypt, China, and Brazil. Italy takes two-thirds of the Turkish demand, Russia rather less than three-fifths. It may astonish Spanish patriots to know that our export trade with Spain amounts to about one seventy-fifth of the whole, and may perhaps help to correct their prevalent ideas on the immense value of their commerce to the English nation. Austria, about whose commercial recognition so much is said, is still below Japan, and not very much a-head of bankrupt Greece. The most noteworthy movement is perhaps the displacement of the United States by Germany as the largest of our foreign customers. The general figures are as under:

BRITISH POSSESIONS.
1866. 1867. 1868.
India £20,009,400 £21,805,127 £21,211,343
Australasia 13,643,326 9,613,739 12,071,433
British North America 6,824,960 5,862,402 4,847,560
Hong Kong 2,387,017 2,471,809 2,186,100
West Indies 1,956,019 1,666,697 1,786,728
Singapore 1,986,802 2,068,910 1,513,397
Cape of Good Hope 1,226,842 1,701,441 1,322,111
Ceylon 1,082,973 771,879 835,798
Gibraltar 1,134,699 723,313 705,627
British Guiana 730,058 625,943 671,098
British West Africa 533,575 630,037 613,279
Channel Islands 490,859 469,523 556,458
Malta 653,303 498,796 500,422
Mauritius 569,385 377,450 383,618
Natal 172,182 191,570 269,122
British Honduras 144,041 148,016 133,573
Aden 65,400 79,127 75,763
Bermudas 40,240 43,479 46,963
St. Helena 41,811 36,936 32,562
Falkland Islands 17,027 7,611 13,408
Ascension 9,209 5,710 3,034
Heligoland 93 70 164
Totals £53,719,371 £49,799,610 £49,779,563
FOREIGN COUNTRIES.
Germany 15,767,690 20,542,653 22,777,390
United States 28,499,514 21,825,703 21,410,184
France 11,700,140 12,121,010 10,633,721
Holland 8,999,713 9,422,742 10,392,253
Turkey 7,965,404 6,625,498 7,523,031
China 5,090,974 4,996,469 6,312,866
Egypt 7,556,185 8,198,111 6,068,569
Brazil 7,224,733 5,694,557 5,323,937
Italy 5,832,876 4,831,353 5,002,525
Russia 3,176,656 3,944,035 4,250,721
Foreign (W. Indies) 3,666,099 3,335,760 3,299,499
Belgium 2,861,665 2,816,481 3,149,769
New Granada 2,947,778 2,390,931 2,704,958
Spain 2,337,133 2,503,636 2,403,545
Chili 1,852,983 2,524,438 1,958,234
Argentine Confederation 2,810,936 2,837,124 1,922,991
Portugal 2,213,462 2,006,039 1,723,270
Denmark 1,202,811 1,282,358 1,441,768
Sweden and Norway 1,677,836 1,496,161 1,392,371
Peru 1,355,950 1,422,122 1,135,213
Japan 1,444,539 1,545,386 1,106,069
Austria 912,058 953,952 1,081,575
Greece 851,648 949,124 975,081
Philippine Islands 917,841 1,042,648 955,081
Uruguay 1,392,803 1,452,508 930,973
Foreign (W. Africa) 602,532 816,450 901,309
Dutch Indian Possess 1,72,860 1,329,485 851,620
Mexico 1,283,213 812,948 849,481
Danubian Principalities. 184,563 432,655 634,070
Morocco 191,237 180,367 195,655
Central America 153,264 243,560 160,051
Venezuela 410,423 200,136 69,599
Islands in Pacific 137,493 19,888 47,988
Tunis 71,987 67,204 47,611
Cape Verde Islands 34,166 31,885 30,852
Ecuador 43,833 44,672 28,982
Algeria 15,743 22,625 T 23,597
East Africa 53,396 36,185 20,641
Persia 25,906 14,069 17,498
Arabia (native) 2,772 6,638 4,774
Bolivia 12,907 3,852 3,425
Madagascar 14,355 3,319 3,257
Siam 4,036 4,244 3,072
Cochin-China 940 612 431
North Whale Fisheries 100 300
Abyssinia 128
French Indian Possess’ns 2,074
Patagonia
Foreign totals £135,198,165 £131,162,313 £129,684,081
Grand totals £188,917,536 £180,961,923 £179,463,644

The total imports and exports of bullion show the subjoined results:

IMPORTS.
1866 £34,287,139
1867 £23,821,047
1868 £24,852,595
EXPORTS.
1866 £21,670,687
1867 £14,327,289
1868 £20,220,014

The difference between the amount sent out and that retained here, is nearly twenty-six millions and three-quarters in our favour. With so large a balance in hand, the withdrawal of a few hundred thousand pounds from the Bank ought not to be very alarming feature, or to keep the commercial dreading tightness in the money market, and a rise in the rate of discount.

The following are the details of the shipping returns. In each year British vessels show a satisfactory increase:

1866 1867 1868
Entered Inwards. Tons. Tons. Tons.
British 9,214,299 9,355,459 9,571,766
United States 431,103 455,197 458,070
Other foreign countries 3,630,491 3,530,061 3,821,481
Totals 13,275,893 13,340,717 13,851,317
1866 1867 1868
Cleared Outwards. Tons. Tons. Tons.
British vessels 9,951,721 10,586,370 10,901,685
United States 513,614 514,963 564,132
Other foreign countries 3,541,631 3,746,284 4,009,175
Totals 14,006,966 14,847,617 15,474,992

[The Daily News, 27. Januar bis 1. Mai 1869]

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THE CHARGE AGAINST THE DIRECTORS OF THE MERCHANTS’ COMPANY.

Jan Feb. 20 Anmerkung von Jenny Marx

Mr. Richard Stuart Lane and Mr. James Childs, two of the former directors of the Merchants’ Company, appeared again yesterday, before the Lord Mayor, at the Mansion House, to undergo further examination upon the charge of having published a false statement with regard to the affairs of the company, in a call circular issued by them in May, 1866, with intent to deceive and defraud the shareholders and the public.

Mr. Straight, barrister, again attended on behalf of the prosecution. Serjeant Parry and Mr. Ledgard appeared for Mr. Childs, and Mr. G. Lewis represented Mr. Lane.

The case for the prosecution, it will be remembered, was closed at the last examination.

Serjeant Parry addressed the Lord Mayor for Mr. Childs, and he said he hoped to satisfy his lordship that he ought not to commit either of the defendants for trial upon the charge that had been under investigation so many days. It was important to consider, in the first place, whether a jury was likely to convict upon the evidence that had been given in support of the charge; and, if his lordship should entertain any doubt upon the point, he submitted that he ought not to send the case for trial. He then referred to the statute and to the grave nature of the charge, and said that the substantial offence imputed to the defendants was that they had falsely stated in the call circular that had been issued by them on the day in question that the company had not sustained any losses. He would remind the court that it was not pretended that the public had been deceived by the statement in question, or that any one had been induced to part with his money in consequence of it, and the only question was whether the statement must come within the scope of the Act of Parliament. He then contended that there had in reality been no losses upon the ordinary business of the company, and that there was no case whatever against the defendants, unless his lordship should be of opinion that the non-payment |[67] of the calls upon the shares held by the defendants constituted losses. If the company had been prosperous there would have been no loss upon the forfeited fact in favour of the defendants. The real question as it appeared to him was whether there had been any trade losses, and if there had not been any such losses he contended that the defendants ought not to be committed for trial. Another point for his lordship to consider was whether what had been done was done with the cognisance of the defendants, and he argued that there was no evidence that this was the case. It was proved that no balance had been struck, and that the business actively carried on was a profitable and legitimate one, and there was nothing whatever to show that the company might not have tided over the difficulty, and have become prosperous; and even upon the case for the prosecution, the total amount of loss that had been incurred on the 25th of May, when this circular was issued, was only a loss of 5,000l. at the very utmost; and at this time all the ventures of the company were current, and it was impossible to know what might be the actual result of those operations. Serjeant Parry then on to say that he should call witness to show that no losses whatever had in reality been incurred, and that the defendants were perfectly justified in believing that the company was in the condition they had represented, and that at all events there was no ground for charging them with fraud. The learned serjeant next proceeded to refer to the transaction with Mr. White, with regard to the absence of 5,000l., said that although he could not justify such a proceeding or attempt to contend that it was a legitimate mercantile transaction, still, he said it appeared to him that it had little or nothing to do with the present charge against the defendants. Serjeant Parry went on to analyse the various business transactions that had been carried out by the company and endorsed, to show that they had security of firms which were then considered of high character, and that subsequent panic only showed that these securities were worthless, and he contended that it would be very hard indeed upon the defendants to make them amenable to a charge of fraud under such circumstances. He concluded by expressing an earnest hope that the Lord Mayor would not feel himself called upon to commit either of the defendants for trial.

Mr. Straight said he wished to correct one inaccuracy in the speech of the learned serjeant, namely, that at the time the circular was issued the losses were only 5,000l. In point of fact the amount of the losses was 13,000l.

Serjeant Parry said he did not understand that this was so.

Mr. Lewis then addressed the Lord Mayor on behalf of Mr. Lane, the arguments he adduced being pretty much the same as those brought forward by Serjeant Parry on behalf of the other defendant. He contended that the operations of the company were entirely bona fide, and that for anything that appeared to the contrary the company would have been a prosperous speculation if it had not been for the fearful commercial panic which swept them down in company with so many other large establishments. In the course of his further observations Mr. Lewis particularly called the attention of the Lord Mayor to the fact that the statement in the call circular that there had been no losses was a perfectly gratuitous one, and need not have been made. The defendants had complete power to make a call on the shareholders without giving any explanation, and it was monstrous to suppose that they should have put in the statement that there had been no losses, for the purpose of rendering themselves liable to a charge of misdemeanour. He then referred to the question whether arrears of calls constituted losses, and said he should call some of the most eminent accountants in London to show that arrears of calls were never so treated or regarded by any company or large mercantile establishment. Mr. Lewis next proceeded to refer to the transactions relating to the loan of 5,000l. to Mr. White, but,

The Lord Mayor interposed and said that although he considered this transaction to be an irregular one, it would not have any weight with him in his decision, and it was, therefore, unnecessary farther to allude to it.

Mr. Lewis then concluded by stating that the case was no doubt a proper one to be argued into, but he expressed a confident opinion that if it was sent for trial upon the facts, it would be stopped by the presiding judge on the ground that there really was no evidence to support the charge against the defendants.

Evidence was then adduced for the defence.

Mr. William Quilter, accountant, of the City, said he had examined the circular, and the meaning he should attach to the expression that no losses had been incurred referred only to the trading transactions of the company, and that it would be improper to treat arrears of calls as losses.

In answer to a question put by the Lord Mayor.

Mr. Quitter said that if the directors of a company purchased shares in the company speculatively, with the funds of that company, and a loss resulted, the amount so lost should be state among the losses, but not otherwise.

Mr. Robert Harding, partner in the firm of Harding, Whinney, and Co., accountants, was next called, and also said the statement in the circular implied only losses in trading.

Mr. Charles Fitch Kemp, accountant, Walbrook, in examination by Serjeant Parry, gave similar evidence to the two previous witnesses, namely, that the statement in the circular implied losses in trading. Witness’s firm was concerned in the liquidation of Gellatly, Hankey, and Sewell. The condition of the firm depended mainly upon the realisation of considerable coffee plantations. If the plantations had realised the original value, there would have been a surplus. The Merchants’ Company would not have been justified in saying there was a loss on the advance to Galllatly, Hankey and Sewell on the 25th May. A valuation of the estates was made subsequent to the 25th May, and they were then worth 1,000l. more than they were when a previous valuation was made.

Mr. John Young, of the firm of Coleman, Turquand, and Young, accountants, Tokenhouse-yard, examined by Mr. Lewis, said he considered arrears of calls should not be treated as losses. Witness was a holder of 100 shares of the Merchants’ Company, and had paid 1,500l. in respect of those shares. He was called in by Lane, Hankey, and Co., to examine their books before the formation of the Merchants’ Company. He was then an entire stranger to the firm. He investigated the books accordingly, and made out a statement of the commissions earned by Lane, Hankey, and Co. In the six years preceding the transfer the gross commissions earned were 140,745l. After deducting the return commissions, there was a balance of 106,000l. He gave the firm a certificate of that fact, and he thought so highly of the business that be took 100 shares, on which he had lost 1,500l.

Mr. Charles Joseph Braine said he was chief manager of the Colonial Company (Limited). His attention had been called to a valuation of two coffee estates in Ceylon, amounting to 20,000l. That was a fair valuation. (The estates referred to were those of Dickson, Tatham and Co., which the Merchants’ Company held as security for the advance of 10,000l. to Getatly and Co.)

Mr. James Gregg, of the firm of Quilter, Ball and Co., in reply to Serjeant Parry, said he examined the books of the Merchants’ Company in 1866. On the 31st May they had advanced by bills 129,517l. 2s. 6d. Subsequently they advanced about 13,000l. The account sales to the 31st May were 10,100l., and subsequently 80,000l. There was no actual trade loss on the 31st May, so far as he could judge from the books of the company. The amount advanced on shipping and goods for sale was about 100,000l.

The Lord Mayor, in giving his decision, said the charge was that of making, circulating, and publishing, and concurring in making, publishing, and circulating a written statement which they knew to be false in a material particular, with intent to deceive. He had gone vey carefully into this matter, and examined the books, not merely there, but many hours besides, with special reference to the evidence that had been given, and commissions earned on transactions that had not been closed, and he did not hesitate to say that with regard to Mr. Nichols’s account, if the books had been placed in his (the Lord Mayor’s) hands, he would have made the account less favourable to the company than Mr. Nichols, who had given them credit for something like five times the amount of commissions posted up in the books. Of course the matter he (the Lord Mayor) had decide was whether in his opinion, there was sufficient evidence of the intention of the directors when the circular was issued. He quite agreed with the remark that fell from Mr. Lewis, that the defendants were not obliged to state whether the company had made any losses, but at the same time he had no doubt that the real object of introducing the statement was to convey to those in whose