[Trade and Finance] [1869]

[1]

[The Daily News, 25. August 1869]

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The Daily News. Nr. 7275, 25. August 1869. S. 5.
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TO THE EDITOR OF THE DAILY NEWS.

SIR,—There is a great evil in the practice of the directors of several of the leading Life Insurance Companies permitting their actuaries to become connected with new offices as consulting actuaries or as valuers of their liabilities, the names of those gentlemen, and their connection with offices of high repute, being calculated to give confidence where none should exist. Take the case of the Professional Life Office, which went to grief some years ago. Three well-known and able actuaries a very short time before its doors were closed, professed to have valued its outstanding risks, and pronounced its ability to provide for them as unquestionable. I know nothing of the matters beyond what then appeared in print, but soon after I had occasion to see one of them on the affairs of another office which has since come to grief, to whom I said that his report had astonished me, as I knew that the office was in a very different state to that which he had represented it to be. I then ascertained from him that he knew nothing whatever of the affairs of the office by personal investigation. All he knew was that he had received from the manager a statement showing, as he supposed, the amount insured by each policy, and that of each future renewal premium, with instructions to make a valuation by a given table of mortality and interest at a given rate. Whether the statements laid before him were true or not he told me was no business of his to inquire into, as all he had to answer for was the correctness of his valuation. I think it a disgrace to some of our great and undoubtedly respectable offices, that their chief assistants should be supposed to be so ill-paid or so little wanted as to have time to undertake not only to make valuations for solicitors and others, but also to be the actuaries of rival establishments. The evil has slowly grown until it has been made a means of deceiving the public and bringing ruin on thousands. Let the directors of honest companies look to this, and see that they are not indirectly made parties to mischief.—I am, &c.,

CAUTION.


TO THE EDITOR OF THE DAILY NEWS.

SIR,—Mr. Clench, in his letter which appears in your paper of to-day, says, “the proposed reconstruction of the Albert will be conducted under the advice and assistance of the most eminent actuaries of the day.” Now I ask Mr. Clench and these “eminent actuaries” if it is not a notorious fact that money spent (on the purchase of rotten offices) is always treated as the accumulated fund? A case tried some years ago against a Mr. Carpenter would expose many assurance frauds, if reprinted.—I am, &c.,

W. J.
August 24.

[The Daily News, 27. August 1869]

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THE ALBERT ASSURANCE COMPANY.

TO THE EDITOR OF THE DAILY NEWS.

SIR,—The unfortunate share and policy holders of the Albert are greatly indebted to you for the interest manifested on their behalf; and the sound advice given in your leader of to-day confers an additional obligation. Just twenty years ago I insured my life in the “Metropolitan Counties” for 1,000l. Sometime afterwards there were unpleasant rumours afloat, and I was more satisfied when a transfer of the business of that office took place to the “Western,” knowing some of its directors to be men of wealth and character. My confidence, however, was soon again shaken, as in a few years we were “shunted” into the “Albert;” the result of which is now shown. I have paid 27l. 10s. per annum for the 20 years, or a total of 550l., which, with the interest thereon, amounts to a much larger sum. Should I lose the whole of this it will not be of material consequence, as I am thankful to say business has prospered with me; but had I only been holding a situation of limited income, and debarred my family many comforts to keep up the annual payments, and having now a wife and eleven children depending at my decease on the sum insured for, it would have been a most distressing position for them to be placed in; and I fear such is the case in many instances. The point to be determined in my case is, are the shareholders of the companies which were transferred to the “Albert” now liable? If so, as your correspondent “W. W.” states that the “Metropolitan Counties” had a paid-up capital of 100,000l., and the “Western” of 500,000l., I have clearly a demand against them. At this stage I would strongly urge on both the shareholders and policy-holders the necessity of engaging two professional men of undoubted skill and character to represent their separate interests, having the same “unity of purpose,” and on no account to fall into the views of the parties who are so deeply interested in patching up and again floating this so-called “unfortunate company,” as, in my opinion, no amount of “Clenching” will make it safe and trustworthy.—I am, &c.,

J. G. M.
August 26.


TO THE EDITOR OF THE DAILY NEWS.

SIR,—I came up to town this forenoon to attend a meeting of shareholders and policy-holders referred to in your paper a few days ago, stopping at Cannon-street station. I went to the Committee who advertise that they hold meetings at the hotel; and one of them informed me there was to be no meeting there. He thereupon asked me to sit down and read a paper he put in my hands. Having read it (the purport of which was that Mr. Kirby should be removed from the position of liquidator), he thereupon produced a book in which about half a dozen gentlemen’s names appeared for sums of from 1l. 1s. to 3l. 3s. I declined to subscribe, although agreeing in the point that Mr. Kirby is not the right man for liquidator. On my saying I would go to the office of the company, he insisted on my giving him back the paper. I then went to the office of the company, where I found the clerks employed sending out notices similar to what appears in your paper of to-day, and calling a meeting for the 9th September of policy-holders. My object in this letter is not to find fault with the object the Cannon-street gentlemen may have, but to caution the policy-holders no to be led away by them, or by any other of those gentlemen who advertise in your columns; but to wait till the meeting, and then replace Mr. Kirby by some commercial man of standing. The proposals of the directors ought in common fairness to be considered calmly. I hope they may have the effect of staying the wild state which a number of those interested have got into. My advice to all is to hold their hands till the meeting, and then replace Mr. Kirby by some gentlemen of experience in insurance business, but one perfectly clear of all company making.—I am, &c.,

A POLICY-HOLDER ONLY.
London, August 26.


TO THE EDITOR OF THE DAILY NEWS.

SIR,—I have read with much interest your remarks upon the proposed reconstruction of this unfortunate concern, but while fully concurring in the desirability of frustrating, if possible, the designs of the whole band of professional wreckers and would-be liquidators, who are no doubt at this moment hovering, Vampire-like, over what they conceive to be their legitimate prey, I would urgently impress upon the policy-holders the inexpediency of giving their assent to any arrangement without first comprehending its principles and carefully examining its details. The statement put forth under the authority of Messrs. Jellicoe and Bailey appears to me to be suggestive of one very important inquiry, viz., does the value of the annuities (150,000l.), with half of which it is proposed to saddle the new concern, include the special annuities payable to negotiators and others, as compensation for bringing over a lot of rotten businesses? If this question be answered in the affirmative, I would suggest that every liability the company, or rather the directors, may have entered into in this way be at once renounced, on the ground of no proper consideration having been given. I will not trespass farther on your space, beyond reminding those who hold policies, that if they allow themselves to be bustled in the excitement of the moment into putting their signatures to forms of assent, or other documents emanating from official quarters, without perfectly understanding the nature of the power they are conferring, they will only have themselves to blame should a further reconstruction and further reduction become necessary at no distant date.—I am, &c.,

FIAT JUSTITIA.


TO THE EDITOR OF THE DAILY NEWS.

SIR,—We are very greatly indebted to you and others for the ventilation of opinions regarding this office. One thing I would ask—that some reliable centre be organised in behalf of the premium payers, whose interests, I think, are antagonistic to the shareholders, and both against the directors and managers. I have paid nearly thirty years—originally to Freemasons’ Office—and I should be glad to see the question tried if we cannot recover the value—surrender—of our payments. Were the office prosperous, it would be monstrous that certain parties should filch such sums. How much more monstrous that, in our ruin, they should expect to retain these immense sums, and escape the responsibilities of losses incurred by themselves. It is a wide-spread calamity, and I trust will continue to receive your powerful sympathy.—I am, &c.,

A PREMIUM PAYER OF LONG STANDING.
Norwich, August 25.


TO THE EDITOR OF THE DAILY NEWS.

SIR,—A somewhat long experience of Life Assurance has convinced me of the difficulty felt by many persons in grappling with the figures of an actuarial statement; the following plain explanation of the proposal made by the Albert Office to its share and policy-holders may therefore be useful. Put shortly, the office proposes to extinguish 7-10ths of its liability, and give each assurer for 1,000l. a policy for 300l. This is all they can afford to do, no doubt, as the following figures (their own) show sufficiently well:

£1,147,847 Value of liability under policies.
75,223 Half            〃          〃    annuities.
£1,223,070 Confessed liability, as shown in their scheme.
£271,500 Cash in hand.
55,250 Half the amount of debts and claims (if such an arrangement can be made).
£216,250
150,000 Estimated realization of capital.
£366,250 Claimed assets as shown in their scheme.

All that follows is a plain rule of three sum. As the assets they ought to have are to the assets they have, so are the sums assured that exist to those they can now undertake—a proportion of about 30 per cent. This is perfectly consistent with the letter of the Albert proposal, although perhaps the consistency is not on the surface. The office offers to keep on the existing policies, subject to a deduction of 25 per cent. only; but the offer is contingent on the payment of the original premium for the whole sum, and the position of the assured under these circumstances is identical with the one they would hold if the amount of the policy had been decreased seventy per cent., with a corresponding diminution in the premium—perhaps an imaginary case will show this point more clearly than general statements. A man about 38 years of age assures thirteen years ago with the Albert for 1,000l. at a premium of 30l. per annum; the office now offers him a policy of 750l. at the same premium. What the figures of the office justify would be an offer of a policy for 300l. at a premium of 9l., and this offer they in effect make, coupled with another of a new assurance for 450l. at the correct premium for the man’s present age of about 5l. The two assurances represent 750l., the sum given, at a premium of 30l., the amount required. The position, therefore, is plain and simple; seven-tenths of the existing sum assured is lost to the policy-holders, and they are asked to pay forty-five per cent. of new assurance premium. These being the facts, the next question is, How are we to treat a shareholding body which has lost to its policy-holders something more than 5,500,000l. out of 8,000,000l.? The answer of the liquidators is creditable to their humanity: “The shareholders owe 324,000l.—say we let them off for 150,000l. ‘estimated realization,’ then construct a new company out of the old materials, with the old spent capital to represent the new basis of security, and where they will receive not more than 5 per cent. per annum out of the profits made in the future by those who have for years been paying premium on 100l. to obtain a policy for 30l., as the result of the Albert management.” Every one would, of course, wish to give all assistance to those unfortunately connected with this miserable affair ; but there are two things that ought to be done—the whole position should be clearly understood, and the penalty should fall as far as possible on those who are responsible for the calamity.—I am, &c.,

R. W.
August 26.


TO THE EDITOR OF THE DAILY NEWS.

SIR,—I have carefully read the statement contained in the Daily News of to-day regarding the affairs of the Albert Assurance Company. It is very im|[2]portant, before any suggestion for reconstruction be assented to, that definite information be obtained how it is the company has an estimated assurance capital of only 271,500l., derived from the premiums received and the paid up capital, when it ought to have had, according to the report of the actuaries now consulted, a fund amounting to at least five times that sum derived from the premiums alone. This loss of capital must have resulted from improper management, either by accepting bad lives, or by investing in bad securities, of from a laxity which allowed an actual plunder of the funds of the company. The truth, whatever it may be, ought to be carefully sought and made known to the public. If the accounts have been properly kept, they will show where the money has gone. If they have not been efficiently kept, a personal responsibility and blame must rest on some one for that neglect. If the mortality has been excessive, that fact may readily be shown; and to what extent it has been excessive, and under what circumstances. To bring into bankruptcy a life assurance company, transacting business of the magnitude transacted by the Albert, positive blame must rest somewhere, and not mere misfortune; and whatever the actual cause or causes of failure may be, to reconstruct the company under the old management, or with the old materials, will be as disastrous as to send to sea a vessel reconstructed from the materials of a ship wrecked and broken up, on account of dry rot being in its timbers.—I am, &c.,

W. H. T.


TO THE EDITOR OF THE DAILY NEWS.

SIR,—I and many of my friends have policies to a large amount in the Albert, having been transferred from other offices which we believed to be sound. I have paid premiums upon a 2,000l. policy for 25 years, and now what is my position? To secure the same amount to my family it would cost me nearly double the premium. For the information of the public who are not thoroughly acquainted with the difference between good and bad insurance companies, I will add that I have a policy of 1,000l. taken up in the Scottish Equitable office at the same time as the one I have with the Albert. At the present time my 1,000l. policy is increased by additions of profits to 1,500l., whilst my 2,000l. policy in the Albert is worth—what? Probably nothing. And had I insured for 3,000l. in the Scottish Equitable, the policy would now be worth 4,500l. in case of my death.—I am, &c.,

B. H.


TO THE EDITOR OF THE DAILY NEWS.

SIR,—One great evil resulting from the amalgamation of insurance companies, and one not prominently noticed by any of your correspondents, is the creation of sinecure positions. The Amalgamating Society generally stipulates that some of its most important officers, such as secretary, superintendent, &c., shall have positions in the new concern which will command salaries equal to those which they formerly received. When we then consider that the Albert had united with about twenty offices, we are not surprised to find that it had at its collapse between ninety and one hundred such sinecures. Surely so many parasites must have contributed largely to bring about the late disastrous issue by sucking the life-blood of the concern. So many dead-weights are enough to sink the finest craft. Amalgamated companies are very similar to a fleet of pirate junks which prey upon honest commerce, and, like the pirates, the unarmed and unsuspecting passengers in both cases are cruelly massacred.—I am, &c.,

AN INSURANCE SUPERINTENDENT.
Manchester, August 25.


TO THE EDITOR OF THE DAILY NEWS.

SIR,—I am a medical practitioner, and have worked hard all my life for small fees. Twenty years ago, by the practice of the strictest economy, I began to pay 185l. annually to the Family Endowment Society (absorbed by the Albert in 1861), and paid it most regularly for a life annuity of 200l. in my old age; these payments swallowed up every farthing I could save from my income, and amounted to a very large sum. I am now more than 70 years of age, incapable of practising my profession as I used to do. All the savings of my long life have been swindled from me by this society, and I am left without a penny to support my wife and family. This is a very hard case.—I am, &c.,

X. Y. Z.

[The Daily News, 26. August 1869]

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THE ALBERT LIFE ASSURANCE COMPANY

TO THE EDITOR OF THE DAILY NEWS.

SIR,—In the year 1857 or 1858, an amalgamation was carried out between two London assurance offices. It was subsequently discovered that the chairman and directors of one of the offices put into their own pockets 5,000l. The case is best explained by giving the following questions that were submitted to counsel on the occasion, and the answers of Sir Roundell Palmer thereon. Sir Roundell Palmer’s advice was acted upon, a bill filed, and the 5,000l. refunded. The case may interest your readers at the present moment.—I am, &c.,

A. T.
London, August 25.

QUESTIONS. ANSWERS.
1. Whether the chairman and directors were justified in withholding from the meeting of the shareholders summoned for the purpose of transferring the society in question to the “———,” the fact that they were to receive the sum of money paid for such transfer, and whether the suppression of the fact did not invalidate the object for which the meeting was convened? 1. I am of opinion that the chairman and directors were not justified in withholding this fact from the meeting.
2. Whether the money received by the chairman and directors should not have been credited to the account of the whole body of members in this “———” society, instead of having been divided by the chairman and directors and put into their own pockets? 2. Assuming that the chairman and directors did in fact, when professing to explain to the meeting the purport and terms of the agreement which they were considered to sanction, omit all reference to the stipulation for the payment of 5,000l. to themselves (and that the agreement itself was not publicly read at the meeting), I think the chairman and directors cannot lawfully retain for their own benefit the money received by them, but that they are clearly bound to account for it as trustees to the whole body of shareholders (Hichens v. Congreve, 4 Rus. 562). I express no opinion upon the question whether they could have retained this money if the matter had been explained to the meeting, and assented to by a large majority only against the will of any dissentient shareholders or shareholder.
3. Counsel will be good enough to advise the members whether they have any and what remedy against the said chairman and directors, looking to the terms and provisions of the deed of settlement? 3. A bill in equity by one or more shareholders on behalf of themselves and all others, expect the defendants, against the chairman and directors will be the proper remedy.


TO THE EDITOR OF THE DAILY NEWS.

SIR,—With reference to the important question of liability on the part of the shareholders whose companies have been transferred to the Albert, should that liability, as “An Actuary” surmises, “revive again,” it may be some consolation to the policy-holders originally insured in those companies to know that a large amount of uncalled capital must still be available to meet their claims. The following is a statement of the nominal capital of seventeen companies out of the twenty-two whose business has from time to time been transferred to the Albert. In several of those offices the capital had been fully subscribed prior to transfer: Anchor, 1,000,000l.; Beacon, 150,000l.; Empire,100,000l.; English Provident, 50,000l.; Falcon, 100,000l.; Family Endowment, 500,000l.; Kent Mutual, “pro|[3]tected by an ample guaranteed capital; London and Continental, 100,000l.; Manchester and London, “with a numerous and wealthy proprietary, ”500,000l.; Medical, Invalid, “subscribed capital,” 500,000l.; Merchants’ and Tradesmen’s guaranteed fund, 100,000l.; Metropolitan Counties, 100,000l.; National Guardian, 100,000l.; National Provincial, alias Bank of London, 1,000,000l.; Oak Mutual, guarantee fund, 50,000l.; St. George, 100,000l.; Times, 250,000l.; Western, 500,000l.; Here we have independent of the “ample guaranteed capital” of the Kent Mutual a nominal capital exceeding five millions (5,200,000l.) subscribed to in numerous cases by a wealthy proprietary. Surely, then, if the shareholders’ liability in the defunct companies has only lain dormant, liable to be called into action in the event of the Albert not meeting its claims, the failure cannot be so great as is just now anticipated.—I am, &c.,

W. W.
August 25.


TO THE EDITOR OF THE DAILY NEWS.

SIR,—Nineteen years ago I assured my life in the “Anchor.” Their business was transferred without, I believe, the assured having a voice in the matter, to the “Albert,” and the only intimation of the transfer that I at least ever had was, that instead of receiving the usual yearly notice of my premium being due from the old office in Cheapside (where there is now a flourishing dining-room), I was summoned to pay in Waterloo-place, and so, woe is me! I have continued to do for years past. I have every reason to believe that the “Anchor” took lives of any kind, and as long as premiums were paid all went merrily as a marriage bell, but when those lives began to fall in, the concern as inevitably got into difficulties, as the Albert has now done from precisely the same reasons. Though a grievous sufferer by the Albert’s downfall, I cannot but congratulate the public on the clearing of the horizon which must be the result, and I do hope for the sake of the public at large that life assurance will be managed on improved principles hereafter. It is high time that the wings of promoters, agents, self-appointed managers and directors, should be clipped, and if anything will call attention to the unmerciful and impudent swindling of the public by insurance companies, surely the collapse of the Albert will do it—if not, why all I can say is that the public deserve to be gulled. My mind is irresistibly called to one of Dickens’s ablest satires, and though irritated and naturally desponding over the probable loss if the little sum I had hoped to secure to my family, I cannot but remember with a smile the “Anglo-Bengalee Disinterested Loan Society,” in “Martin Chuzzlewit,” the magnificent Tigg Montague, and the complaisant, though wary Jobling, in connection with the affairs of the company under inquiry.—I am, &c.,

FORTY-THREE.
London, August 25.


TO THE EDITOR OF THE DAILY NEWS.

SIR,—The collapse of the Albert Life Company appears to have taken many by surprise, but the surprise to many has been that the event had not taken place long since. Here is a company professedly doing about 336,000l. per annum, with only about 630,000l. funds invested; and I judge it will be found having a liability of about 11 millions, being about 5l. 10s. 2d. in hand to meet every 100l. assured—(you will see by published statistics enclosed that I have not overstated the figures)—and yet some persons are surprised that the company had come to a standstill. There are more surprises in store for some people; there are above a dozen life companies now in existence having less than 9l. in hand to meet every 100l. assured, and this does not include several industrial class companies, they being in a far worse position. Company letter A, 1l. 12s. 6d. in hand to meet every 100l.; B, 2l. 6s. 8d.; C, 2l. 10s.; D, 2l. 14s. 11d.; E, 3l. 18s. 5d.; F, 4l. 8s. 10d.; G, 5l. 7s. 7d.; H, 5l. 16s. 4d.; I, 6l. 2s. 1d; J, 6l. 13s. 11d.; K, 6l. 17s. 1d.; L, 6l. 18s. 10d.; M, 8l. 4s. 3d.; N, 8l. 9s. 2d.; O, 8l. 10s. 6d.; P, 8l. 18s. 1d., being about an average of 5l. 14s. in hand to meet every 100l. assured, these companies having liabilities amounting to nearly 35,000,000l.—five out of the above list having liabilities amounting to about 30 millions. I am aware it will be said that the liabilities will not arise for some years. I am quite aware of that, but I am sure that if the Albert was obliged to come to a standstill with 5l. 10s. 2d. in hand to meet every 100l. assured, those in the list with less than that amount cannot be safe, and I fancy that sensible men would not select companies having less than 9l. per 100l. in hand. There has been quite a rage for amalgamations to benefit various parties behind the scenes, and to enable secretaries and managers to boast of their large annual income. We have, including the Albert, four life companies who have between them absorbed 86 companies, many of these being at the time in a wretched position, and yet the sellers, the life traffickers, have managed to net large sums for the transfer of these insolvent companies. The public have been astonished to see how easily some people have made their way in the world, living in mansions, keeping their carriages, and standing ready to contest any manageable borough, and yet none have dared to speak out; but the game is nearly played out, and a few more Albert displays will bring the actors to the surface, and show them in their true light. Government would do great service by legislating on the subject of life assurance, enforcing every company to publish annually such a balance-sheet as could be understood by the public, and having Government auditors who should be associated with the company’s auditors, and give or withhold a certificate as the circumstances required. We often hear persons boasting of the security of proprietary companies. It does not appear that the capital of the Albert could save it, and unfortunately all the companies in the list I send are blest with shareholders. There is great truth in the well-known statement of one of our greatest actuaries, “that no amount of capital will save a company reared on a false basis.” I hope the assurable public will be more cautious in future, and not become connected with companies simply because a friend of theirs happens to be an agent, but use their common sense as they would in any every-day commercial transaction; and, above all, to eschew flaming reports and puffing circulars.—I am, &c.,

JOHN SEARCH.
London, August 24.


TO THE EDITOR OF THE DAILY NEWS.

SIR,—As a policy-holder in one of the assurance companies which have gone down with the Albert, I thank you for the valuable aid you are giving to us, the policy-holders, by your powerful leading articles, and the insertion of letters in your columns. It is pretty evident that companies have been formed not to prosper, but for the sake of the plunder which falling concerns are made to yield to the harpies which hang about their track. The case of the International has already been referred to by one of your correspondents. The liabilities of this unlimited company were, last year, handed over to the Hercules, a young and a limited company, with, I believe, a comparatively small proprietary. According to the report of Mr. W. J. White, the official liquidator of the last-named company, the liabilities of the International are given as 329,685l. It is presumed that the holders of the original shares in the Hercules are not liable; if it be so, the uncalled capital of this company is only 134,752l. to meet the liabilities of both. What a prospect for the policy-holders of the International! The cost of handing over the policy-holders as above, from the International to the Hercules, was upwards of 20,000l. The principal part of this sum appears to have gone into the hands of two individuals, as a fee for the operation performed. Premiums paid by policy-holders are frequently the fruit of hard work, care, and stint, and yet, forsooth, these are flung wholesale into the hands of avaricious schemers. Policy-holders should earnestly unite in an appeal to the Court of Chancery to set aside all illegitimate amalgamations. And, further, that all actuaries, agents, managers, and others, who by way of bonuses in these amalgamations, have taken above and beyond what the Court shall deem to be just and equitable, shall be compelled to disgorge for the benefit of the policy-holders. In some cases the amount which these individuals ought to receive would be nil. Anxious to see justice done as far as the wrong-doing of the past will permit. —I am, &c.,

A SUFFERER.
August 24.


TO THE EDITOR OF THE DAILY NEWS.

SIR,—I enclose a prospectus of the Albert Life Office, which is very carefully prepared for the purpose intended, but the only facts given upon which the condition of the office is to be determined are the annual income of the company from insurance contracts, and the assets, including the value of the premiums. Any person wishing to insure his life ought to be satisfied that the office is well and economically managed, that the security is ample, and that there is a fair division of the profits. For this purpose the following particulars are absolutely necessary:—The sums and annuities assured, the value of the sums and annuities, the additions, the value of the additions, the amount of the annual payments, the value of the annual payments, the annual income from premiums, the annual income from invested assets, the annual costs of management, a statement of the assets and how invested. There should also be a table of all the policies, showing the sums assured, and additions by way of bonus and annual premiums. In this table parties of the same age would have their policies considered as one collective policy. Now the Albert prospectus does not even state the total income, the invested assets, and the liabilities—that is, the sums assured and bonuses. It shows a large income from assurance contracts, namely, 328,622l. 7s. 2d., and that the assets amounted to 4,652,236l. 1s. 2d.; but unfortunately this includes the value of the premiums. In April, 1868, I wrote to the secretary for the amount of the assets, exclusive of the value of the premiums, and the amount of the sums assured, and bonuses. I did not ask for much, as I was afraid if I did it might frighten him, but he never answered my letter.—I am, &c.,

R. J. PARSONS.
Mansfield, August 24.


TO THE EDITOR OF THE DAILY NEWS.

SIR,—Presuming this public company, whose annual income exceeds a quarter of a million sterling, to be legally registered, will any number of the members holding not less than one-fifth part of the whole of the shares for the time being issued apply to the Board of Trade to appoint a competent inspector to examine into and report on its affairs under the powers of the 56th and following sections of the Companies Act, 1862, and to this end, on the order for winding-up the company being made, obtain the leave of the Court. Such an authoritative proceeding will do much to allay the fear which has seized the minds of many connected with this unfortunate company. Regarding the meeting about to be convened in London of the policy-holders, would the company’s executive arrange that our attendance thereat should in no way prejudice our rights against third parties or companies? We, holders of policies granted by other companies which, it is said, claim to have amalgamated with the Albert, while uniting for our common good, ought carefully to ascertain our exact legal position before committing ourselves to any line of conduct.—I am, &c.,

SAMUEL HARLEY KOUGH.
Church Stretton, August 24.


TO THE EDITOR OF THE DAILY NEWS.

SIR,—We will be obliged by your correcting an error in your otherwise accurate report of what took place yesterday before the Chief Clerk. We objected, it is true, to pledge our clients to bear the expense for the representative of the policy holders, but with this distinction, that whereas the objection was to bear such expense throughout the whole liquidation, yet as it was clear that the application must go before the judge personally, our clients offered, until that period, to attend the proceedings (and meetings, if necessary), at their own expense. The difficulty that the Chief Clerk felt in dealing with the application was, that the leave to hold the meetings, &c., had been obtained from the judge direct.—We are, &c.,

G. S. and H. BRANDON.
15, Essex-street, Strand, August 25.

[The Daily News, 27. August 1869]

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[Aug 27]

BY this time the great body, both of shareholders and policy-holders in the Albert Assurance Company know their true position. It is a painful subject to dwell on, but we had better discuss it directly and plainly. The shareholders understand that whatever money they may have severally paid upon their shares is all lost; and that whatever sums remain unpaid upon their shares, is lost also; although upon the former they were receiving only the other day 5 per cent., as the dividend of a profitable concern. It will increase their regret to know that after they have thus lost all their capital—amounting to 500,000l.—as much as 986,000l. is still needed to place |[4] the concern in a position to fulfil its engagements, and that as this sum cannot be found, the Company is completely and unequivocally insolvent. Now this is a state of things upon which one might well pause to condole with the shareholders. They invested their money in a class of business which, although it deals with the contingent and the future, is, when soberly conducted, as little speculative as any in the world, and they suddenly find that it is not only lost, but lost with discredit. We are heartily sorry for them, but our first regrets are due to their creditors. The shareholders have lost much, but not nearly so much as the policy-holders, who in no case had anything to gain, have lost through the way in which the former allowed their business to be conducted. The proprietors of a ruined company often speak of what they have lost by it, as if it were something other than themselves; but in the eyes of creditors—in this case the policy-holders—the shareholders are themselves the company, and it is by them that the creditors lose. But it is useless to dwell longer on the case of the shareholders. Their melancholy fate is to pay up to the last farthing of their legal liabilities, without the consolation of knowing that they thereby shield the widow and the orphan from loss.

Let us turn, then, to the policy-holders, and in their case the first question that confronts us is, Supposing the official view of the affairs and resources of the Albert, which we published yesterday, to be correct, why should a policy-holder consent to the scheme put forward by the provisional liquidators? That proposal, it will be remembered, is substantially that every subsisting policy before being transferred to the new company shall be cut down in order to bring it into proportion to the amount of assets of the old company, which the new company is to take over, together with its liabilities. As we explained yesterday, this cutting down would average 25 per cent.; but each case would be dealt with separately, so that while a young policy-holder who had insured in the old Albert for 1,000l. would be asked to consent to take for it a new policy for 950l., an older one might be asked to accept a new policy for only 600l. This is one the face of it unequal, but it is an indispensable condition of the scheme; for if terms were proposed which would make it better worth the while of the young lives to go off to other offices than to remain in this, and the New Albert were left with merely the old lives, there would be an immediate end of the matter. The inequality may be either accepted or rejected, but with it stands or falls the scheme. But to return to our question, Why should a policy-holder entertain this scheme? Well, not for some reasons that are being mentioned. Not because it is endorsed by very eminent solicitors. Not because its facts are guaranteed and its calculations superintended by able actuaries and accountants. Not because every business man instinctively shrinks from the thought of a fine connection dispersed, and sunken capital rendered for ever unproductive, and the liabilities of future schemes rashly undervalued and ignorantly thrown away—not, we say, for all these or for other like reasons. If policy-holders are to hold up their hands at meetings, or sign printed forms in favour of this scheme, it must be on the clear understanding that in this way they may best promote their private interests.

The most obvious objection to the scheme is that this proposed average reduction of 25 per cent. of the sum assured is not the whole loss which a policy-holder is practically asked to accept. A moment’s consideration will show that it cannot be, for no one whose assets are only 6s. 8d. in the pound can pay 15s. except by external assistance, which in this case is not to be had. The Albert is only able to propose so small a reduction as 25 per cent. on policies because policy-holders accepting the new arrangement will have to continue to pay their old full rates for a diminished advantage; will have to pay in the most favourable case upon 1,000l. to secure 950l. The letters which we publish elsewhere show that we have here the materials for some very elaborate calculations: but the subject need not be embarrassed by recondite inquiries. Every policy-holder can judge for himself, by consulting the tables of companies of acknowledged stability, whether the annual payment which is necessary to secure a certain sum under the new Albert scheme would secure more or less if otherwise employed. This is the simplest way of looking at the matter. The 6s. 8d. in the pound which is available towards satisfying the claims of policy-holders, certainly ought to enable the new company to offer policy-holders much better terms than they can get elsewhere. Supposing that the present constituents of the company can agree to hold together, they ought to be able to conduct their business upon much easier terms than a company either with a new connexion to form or bearing burdens inherited from earlier days.

It would be idle, or rather impossible, to ignore the truth that the proposal now before the policy-holders is very much prejudiced by the fact that the complete severance of the new company from the personnel of the old management is not made sufficiently clear. Policy-holders cannot and must not be asked to accept a new plan at the hands of those who have been concerned in ruining the old company. We do not say that they are expected to do so; we do not overlook the statement in the Proposal that in no case will Mr. KIRBY act as an ordinary liquidator. This is good as far as it goes; but, then, who is going to take charge of the new scheme and carry it through? Policy-holders will not be likely to move until they see some persons in whom they have con|[5]fidence standing forward to answer at least for the conduct of the experiment. It may be that, as criticisms, these remarks are premature, and we cannot doubt that those who are provisionally acting in this matter intend to afford the amplest guarantees in the character of the new leaders of the Company. But we only repeat what policy-holders are saying on all hands, and we trust that, at the meeting of shareholders to be held to-morrow, explanations will be given which will satisfy all reasonable expectations. [Aug 27]

[The Daily News, 31. August 1869]

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ALBERT LIFEASSURANCE COMMITTEE.

TO THE EDITOR OF THE DAILY NEWS.

SIR,—On behalf of this committee I have to request the favour of your permitting me to explain the circumstances under which the name of its chairman appears amongst those of the committee appointed at the meeting held at the Agra Bank on Friday last. At that meeting it was agreed that if arrangements for the purpose could be made an amalgamation of the two committees should be effected, but with the understanding that no one connected with the former management of the company should be a member. That arrangement having been departed from, this committee will continue to act independently as heretofore.—I am, &c.,

JOHN PIKE, Hon. See.
Committee Room, City Terminus Hotel, Cannon-street, August 30.


TO THE EDITOR OF THE DAILY NEWS.

SIR,—With reference to a question asked by a shareholder at the meeting on Saturday last, “whether Mr. Sadler, as solicitor to the Medical, Invalid, and General Insurance Society, received 2,000l. compensation upon the amalgamation of that society with the Albert Office,” I am in a position to state that the late Mr. R. R. Sadler received no compensation at all. I shall feel obliged by your inserting this contradiction, in justice to Mr. Sadler.—I am, &c.,

FRANK RICHARDSON.
28, Golden-square, August 30.


TO THE EDITOR OF THE DAILY NEWS.

SIR,—Twenty-years ago, being then twenty-nine years of age, I took an endowment policy for 500l. in the Western Life-office, the amount to be paid to me on attaining the age of 55, or to my legal representatives, in case of premature decease. I contracted to pay 25 annual premiums of 19l. 17s. 6d. each, which I did for several years to the Western, when one morning I received a notice from the Albert Life-office, the first intimation I ever had, that I was, in future, to pay the annual premiums to them. On making inquiry I learnt that the Western was no longer in existence, and had transferred its business to the Albert. The surrender value of my policy at that time was 77l. 5s., and on making an application for it was informed that the Albert could not allow any surrender value in Western policies till after five annual premiums had been paid to them, and then only on that amount. So that I had no alternative but to go on paying, and having only my head and my hands to depend upon for my daily bread, under the many vicissitudes in trade and business, it has not been without some pinching, screwing, and sweating that I have been able to regularly meet them. In May last I paid the twentieth annual premium, making an aggregate of 397l. 10s. already paid; there are now five more annual premiums due; altogether 99l. 17s. 6d. and then my part of the contract would be fully completed, and I should, or rather ought to be, entitled to the sum of 500l. As it happens I have never parted with the original policy I received in May, 1849, from the Western, and it is now before me, although I have paid the premiums for several years past to the Albert.

There being no Albert now to take the future premiums, and the reconstruction of the office being extremely problematical, I am advised that I have an immediate claim against the directors of the western, who signed the policy, for the actuarial surrender value of the 397l. 10s. already paid. I cannot expect more, as had my life become extinct in the past my legal representative could have claimed the full amount insured. Failing in this I have lost 400l., which is only as a drop of water in the ocean compared with the thousands, and tens of thousands that have gone into the pockets of the managers, secretaries, directors, and other officials of the 22 defunct Life offices, swallowed up in the Albert. I can but turn the moral page, and say with Plato, “I too am a philosopher”—and console myself with the reflection that I am none the worse than I should have been if I had never seen the inside of the Western or any other Life office, and instead of screwing, pinching, and sweating as I have done for 20 years to meet these payments, I had made myself as jolly as those who take no heed of the morrow, who never dream of life insurance, and had spent the money annually on brandy and water and cigars.—I am, &c.,

JOSEPH CARTWRIGHT.
10, Philips-road, Peckham-rye, August 23.


TO THE EDITOR OF THE DAILY NEWS.

SIR,—I was requested by a client, unfortunately a shareholder as trustee for a lady, to attended the meeting called for this morning of shareholders, but on our arrival at the offices we were informed that no solicitors could be admitted. Of course the projectors of the proposed reconstruction have their solicitors, but no one else was to be assisted. If the proposed scheme is so advantageous and obviously the best course, why pursue such tactics as these, altogether unusual, and, I venture to say, improper? Of course, if the suspicions of some of your correspondents are well founded, it is easy to understand the reason; but I may say my client held no preconceived opinion, and was only desirous to do what was best, but he will certainly require more amount of persuasion to take the course of the projectors than if openness and straightforward steps were adopted. My client simply refused to enter the room, and I agree with him in his opinion that it is very doubtful if the Vice-Chancellor, under whose directions these meetings are stated to be held, will approve of this course. The reason given at the door, viz., that the room was not large enough, was evidently a lame excuse.—I am, &c.,

A SOLICITOR.
August 28.

[The Daily News, 30. August 1869]

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THE ALBERT LIFE ASSURANCE COMPANY.

[Aug 30]

On Saturday, a meeting of the holders of ten shares and upwards was held at the offices in Waterloo-place, Pall-mall, for the purpose of considering the property of registering the company under the Joint Stock Companies Act of 1862.

The chair was taken by Mr. NEALE, a director, who said he presumed that no one could feel the slightest hesitation with regard to the course suggested, for no one could doubt that it would be greatly to the advantage of everybody to put the company under the protection of the Joint Stock Companies Act. He did expect, therefore, that there would not be one dissentient to the resolution which he should conclude by moving. But he had further to state that Mr. Price, one of the provisional liquidators, had prepared a very careful report, containing, as he was informed, a complete history of the company’s transactions so far as they could be ascertained. The question, therefore, was whether the meeting would have the report at once read, or whether they would first pass the resolution which he would now formally propose, namely, “That this company be forthwith registered under the Joint Stock Companies Act of 1862.”

Mr. NORTHMORE seconded the motion.

A general opinion was expressed that the resolution should be disposed of first, but

Mr. COTTRELL wished to ask whether the passing of this resolution was the only business the meeting had been called to perform, or whether it would be open to them to inquire into the reasons which had brought the company to its present very lamentable pass?

The CHAIRMAN said it was entirely for the meeting to decide what course it would take.

Mr. COTTRELL said it struck him that the shareholders had better consider the position in which they were placed before they consented to pass a resolution framed by the directors who had brought the company into such a position by their own wilful misconduct. They ought to have known long since that the concern was perfectly insolvent, and yet they had gone on for the sake of keeping their own position till the company had become the opprobrium of the insurance world. (Cheers.) Before the meeting passed the resolution it seemed to him that it ought to have some little explanation, and he thought it would be prudent to appoint a committee of shareholders to meet a committee of policy-holders in order to go carefully into the affairs of the company, and to report thereon. (Cheers, and cries of “No, no!”) He wished in the mean time to ask why it was that a meeting of influential shareholders had been called on the 12th inst. Of that meeting he had received no notice, though from the number of his shares he thought he might have been invited to it.

Mr. KIRBY—Had you sold your shares, Mr. Cottrell?

Mr. Cottrell—No, I had not.

Dr. WHITE said the question for the meeting was a very simple one. It was a question whether they preferred going into the Court of Chancery, and facing the nice little legal expenses which that would entail, or whether they would take steps for keeping the settlement of their affairs in their own hands. The directors were perfectly willing to have a committee appointed, and to allow it to examine their books; but that was a matter which they would have an opportunity of considering hereafter. (Hear, hear.)

Mr. JACQUES said that Mr. Cottrell did not refuse to pass the resolution. He only asked first for explanation.

Mr. ED. LEE said that before agreeing to the resolution he should like to ask a few questions. In the first place, he desired to know whether, if they established a new company, it was proposed to give 50 per cent. of the first year’s receipts to their agents. In the next place, he wished to ask whether the late manager’s will had not been proved under 60,000l., and whether his annual income had not been at the rate of 15,000l. (Cries of “Question.”)

Dr. WHITE—Cannot you ask your questions afterwards?

Mr. LEE—I shall ask them when it pleases me. (Interruption.)

Mr. Slater said the majority seemed to be studying their pockets rather than principles of high honour and integrity. He had quite expected to hear some statement respecting the means by which the company had been brought into its present state. (Hear, hear.)

The CHAIRMAN—But the meeting has expressed an opinion that the report shall be read after the resolution has been disposed of.

Mr. TARRING said the shareholders could have but one wish, and that was to ascertain what remained of their property; and to take care that the new company did not fall into a position no better than the old one.

The CHAIRMAN—This solution has nothing to do with a new company. It is merely to authorise the registration of the old one, in order that it may enjoy all the privileges and advantages that are conferred by the Joint Stock Companies Act. (Hear, hear.)

Mr. C. E. LEWIS, solicitor to the provisional liquidators, said he would explain the exact meaning of the resolution, and in doing so he should speak with a sense of the responsibility which belonged to his position, and as one bound to tell them not only the truth, but the whole truth. The object of registering the company under the Companies Act of 1862 was to enable the shareholders, at a subsequent meeting which must be called for that purpose, to resolve, by the requisite majority, that the company should be voluntarily wound up rather than allowed to go into the Court of Chancery. What was now proposed was a necessary preliminary step, without which such a meeting could not be held at all. It was merely a formal act to put them in a position to do something else.

Mr. SLATER asked why the meeting had been restricted to holders of ten shares and upwards.

Mr. LEWIS—This is a formal meeting, and it is so restricted by the deed of settlement.

Mr. SLATER—I can quite understand that; but we are under a different locus now.

Mr. LEWIS—No, Sir. We are holding a legal meeting.

The resolution was then unanimously agreed to. After this,|

[6]

Mr. PRICE rose for the purpose of reading this report, but before doing so he said he had been afforded the fullest information by the offices of the company. He wished also to explain the term “profit and loss,” as he used it. In a life insurance company there were periodical valuations of the assets, its policies and liabilities. These valuations were made by actuaries, and they depended not only on the number of the policies but upon the ages of the insurers. If there should at any time be an excess of mortality it would cause a serious difference in the value of the reversionary interest of the company in the premiums at the next valuation. In this instance, when they came to the later periods, they would find a very considerable decrease in the actuarial value of the premiums. When, therefore, he talked of “losses” of hundreds of thousands, and in the last period of upwards of a million of money, they would understand that he did not mean a loss in the sense in which an ordinary trader would say that he had lost so much money; he meant only the differences between the actuarial value of the company’s assets at one period compared with their computed value at some anterior date. (Hear, hear.) Mr. Price then read the following

REPORT.

“This company was established in 1838, under the title of the Freemason’s and General Life Assurance, Loan, Annuity, and Reversionary Interest Company. In December, 1849, the title was changed to the Albert Life Assurance Company, and so remained until September, 1860, when, on the amalgamation of the Medical, Invalid and General Life Assurance Society, it was changed to the Albert and Medical Life Assurance Company. On the absorption of the business of the Family Endowment Life Assurance and Annuity Society, in March, 1861, the name was again altered to the Albert Medical and Family Endowment Life Assurance Company, and so continued until April, 1863, when it re-assumed its title of the Albert Life Assurance Company. The capital is 500,000l., in 25,000 shares of 20l. each, all of which have been allotted. Upon each of the shares 3l. have been paid; but in many instances further sums have been paid up at the desire of the holders, and in others, shares, with an agreed sum to be taken as paid up, have been issued as part of the arrangements upon taking over the business of other companies. The total amount of the capital now standing to the credit of shareholders is 178,001l., leaving a sum of 321,989l. yet to be called up. Upon the formation of the company it was stimulated by the deed that the shareholders should receive 5 per cent. interest, and that the whole of the profits upon the policies not entitled to a share of the profit should be divided amongst the shareholders, and the profits upon the policies issued on the participating scale should be apportioned between the holders of such policies. But it was found impracticable to continue this principle of division after the amalgamation of other companies, and from the 1st January, 1862, the profit has been divided in fixed proportions, namely, 80 per cent. to the policy-holders, and 20 per cent. to the shareholders. Interest has been paid up to January last, at the rate of 5 per cent., and during some years a bonus of 1 or 2 per cent. was added. The company has branch offices in England at Birmingham, Leeds, Manchester, Newcastle-on-Tyne, and Nottingham; also at Berlin, and in India, and China; and agencies throughout the United Kingdom. The Indian branch was established at Calcutta in September, 1860. It was commenced by taking the business of the Medical, Invalid and General Life Assurance Society, which had been established in 1851. This company had absorbed, in 1853, the business of the New Oriental Life Assurance Company. The Indian business of the Family Endowment Society was added in 1861, and in 1865 that of the Indian Laudable Mutual Life Assurance Society. The head offices of the company in India are at Calcutta, where, as also at Bombay and Madras, there is a local board, a secretary, and staff. There are branches conducted by managing agents in China and Ceylon, namely, at Hong Kong and Colombo, the former having been very recently established. There are about 100 agents throughout the East Indies. The expenses of management in 1868 at the head office and at the branch establishments in England and abroad were as follows:—Directors’ and auditors’ fees, 4,220l. 10s.; salaries (including that of the present management, 1,200l.), 9,440l. 17s. 1d.; medical officers, 2,528l. 8s. 7d.; advertisements, stamps circulars, and postages, 6,255l. 6s. 3d.; law charges, 753l. 2s. 3d.; rents, taxes, and miscellaneous expenses, 5,781l. 5s. 9d.; agent’s commission and expenses, 24,204l. 11s. 9d.—making a total of 53,194l. 0s. 11d. Many of the premiums being received quarterly, a considerable increase of expense has been thereby incurred. The yearly charge on annuities is now 18,500l. For some years past the company has almost ceased to grant annuities. This company has at various times either amalgamated with other companies, or has taken over their business. The following is a list of such companies, with the dates and cost of each such amalgamation or transfer, exclusive of any loss upon the assets handed ever:—

The Beacon Life Assurance Company, September, 1856 £2,239 13 8
The National Guardian Assurance society, February, 1857 16,816 14 11
The London and County Assurance Company, March, 1857 201 7 0
The Time Life and Guarantee Assurance Company, March, 1857 21,250 14 11
The Bank of London and National Provincial Assurance Association, September, 1860 100,000 0 0
The Medical Invalid and General Life Assurance Company, September, 1860 77,735 14 8
The Family Endowment Life Assurance and Annuity Society, March, 1861 22,650 0 0
The Kent Mutual Assurance Society (registered) July, 1862 15,528 13 6
The Western Life Assurance Company, June, 1865 25,616 1 8
The Indian Laudable Assurance Society, July, 1865 972 0 0
Total 283,011 0 4

It has been impossible, as yet, to distinguish the profit (if any) or the loss resulting to the Albert Company from each of these amalgamations, it having been the custom to include the premiums received and the claims and annuities paid under each in the general accounts of those items in the books of the Albert Company. The balance of loss debited to profit and loss since 1855 in respect of assets is 85,538l. 15s. 4d., and has arisen almost wholly upon those taken over from the amalgamated companies. Besides the liabilities under policies there are debts due by the company to general creditors amounting to about 20,000l. Of this about 14,000l. is due to the estate of the late Mr. George Goldsmith Kirby. Mr. Kirby was the original projector of the company, and the terms of his engagement as stated in the deed of settlement were—that he should receive the annual sum of 400l., and also 5l. per cent. Upon all premiums received; that he should be permitted to occupy as a private business, rent free, the premises in Waterloo-place not required by the company; that he should be allowed to carry on his professional business on his own account, and have the conduct of the legal business of the company, for which he was to be allowed usual professional charges. When the an amalgamation with the Medical Invalid and General Office was effected in 1860, it was arranged that Mr. Kirby should take one-half per cent. Only upon its premiums, and allow a yearly reduction from his total commissions of 500l. From the 1st January, 1864, to 31st December, 1867, Mr. Kirby’s account had been credited with one moiety of the 5 per cent. Commission, of which 6,188l. 11s. 3d. remained unpaid, and he was entitled to the other moiety, amounting to about 18,000l. On the 4th December, 1867, the following arrangement was made, viz., that in lieu of the above 18,000l. Mr. Kirby could accept 15,000l., payable by six half-yearly payments with 5 per cent. Interest, the first instalment to be paid on the 1st January, 1868, and that subsequently to the 31st of December, 1867, Mr. Kirby was not to be entitled in any one year to more than 3,100l. in respect of commission. In default of payment of any of the above instalments and interest for thirty days after due date, Mr. Kirby’s original rights to receive, and the agreement was not to prejudice his right to the balance of the moiety which he had not received. On account of the 15,000l. and interest, two instalments, of together 5,312l. 10s., have been paid, the latter in Jury, 1868, since which nothing has been paid. On Mr. Kirby’s death, in April, 1868, the commission arrangement terminated.|

[7]

ACCOUNTS.

The accounts I have prepared, which are very voluminous, will be produced at the forthcoming meetings of the shareholders and policy-holders. They show the following yearly results of the income and expenditure of the company from the 1st January, 1855, to the 31st of December, 1868. This period covers all the amalgamations with and the purchases of the business of other companies. A valuation of the assets and liabilities, as on the 31st December, 1854, was made in 1855, and there was then a balance of 53,314l. 16s. 5d. in favour of the company. Since that date the following is a summary of the transactions of the company, between 1855 and 1858, 1858 and 186l, 1861 and 1866, and between 1866 and 1868, at each of which dates a valuation of the assets and liabilities was made. [1869]

In the following tables the cost of the amalgamations and the loss upon assets, previously stated, are not included. The profit or less stated to have been made includes the difference between the then present values of the premiums and assurance liabilities at the beginning and end of each period, and at the last valuation the calculation was made upon net premiums, whereas, in the former valuations, it had been based upon the gross premium income:

1855 to 1858.
Date. Premiums. Interest. Sundries. Total. Claims and Annuities paid. Expenses. Dividends. Sundries. Total.
£ s. d. £ s. d. £ s. d. £ s. d. £ s. d. £ s. d. £ s. d. £ s. d. £ s. d.
1855 14,037 9 7 3,840 15 3 13,969 10 0 31,847 14 10 21,905 17 1 4,284 0 5 3,688 9 9 1,000 0 0 30,878 7 3
1856 17,102 1 4 4,801 14 9 ... 21,903 16 1 24,031 19 5 4,202 18 7 4,018 3 8 ... 32,253 1 8
1857 52,303 16 5 3,193 1 7 580 1 11 56,076 19 11 26,544 0 8 11,937 2 11 4,233 0 2 ... 42,714 3 2
1858 69,152 18 10 2,026 8 9 1,005 18 9 72,158 6 4 46,423 2 2 15,162 19 10 5,133 4 2 ... 66,719 6 2
152,596 6 2 13,862 0 4 15,555 10 8 182,013 17 2 118,904 19 4 35,587 1 9 17,072 17 9 1,000 0 0 172,564 18 10
The profit made during the above period appears to have been £27,808 14s. 3d.
1859 to 1861
Date. Premiums. Interest. Sundries. Total. Claims and Annuities paid. Expenses. Dividends. Sundries. Total.
£ s. d. £ s. d. £ s. d. £ s. d. £ s. d. £ s. d. £ s. d. £ s. d. £ s. d.
1859 108,103 11 4 1,132 15 3 4,749 18 5 113,986 5 0 57,466 5 2 22,515 1 11 6,034 11 8 ... 86,015 18 9
1860 134,544 18 4 4,279 4 8 3,040 2 1 141,864 5 1 89,816 8 4 27,513 12 6 8,835 8 1 ... 126,165 8 11
1861 268,494 2 11 12,917 0 11 3,441 0 5 284,852 4 3 218,599 18 1 55,376 16 5 9,759 2 9 ... 283,735 17 3
511,142 12 7 18,329 0 10 11,231 0 11 540,702 14 4 365,882 11 7 105,405 10 10 24,629 2 6 ... 495,917 4 11
The profit during the above period amounts to £33,650 14s. 9d.
1862 to 1866
Date. Premiums. Interest. Sundries. Total. Claims and Annuities paid. Expenses. Dividends. Sundries. Total.
£ s. d. £ s. d. £ s. d. £ s. d. £ s. d. £ s. d. £ s. d. £ s. d. £ s. d.
1862 261,291 8 5 8,459 1 0 ... 269,750 9 5 204,718 13 3 53,117 19 10 12,607 10 7 ... 270,444 3 8
1863 274,363 5 1 10,282 6 7 ... 284,645 11 8 227,976 2 2 49,712 14 6 23,530 7 3 ... 310,219 3 11
1864 263,608 11 3 7,777 15 3 ... 271,386 6 6 224,591 17 5 55,238 18 11 12,610 10 7 ... 292,441 6 11
1865 304,061 7 6 9,818 19 10 ... 313,880 7 4 226,608 5 4 57,006 9 10 9,556 8 6 ... 293,171 3 8
1866 331,714 16 3 12,402 13 9 ... 344,117 10 0 331,833 0 5 60,789 12 0 13,625 9 0 ... 406,248 1 5
1,435,039 8 6 48,740 16 5 ... 1,483,780 4 11 1,215,727 18 7 275,865 15 1 71,930 5 11 ... 1,563,533 19 7
A loss was made during the above period of 281,702l. 11s. 3d.
1867 to 1868
Date. Premiums. Interest. Sundries. Total. Claims and Annuities paid. Expenses. Dividends. Sundries. Total.
£ s. d. £ s. d. £ s. d. £ s. d. £ s. d. £ s. d. £ s. d. £ s. d. £ s. d.
1867 317,033 4 0 12,372 0 7 100 17 1 329,506 1 8 278,339 15 3 73,777 12 0 9,041 15 3 ... 361,159 2 7
1868 308,318 2 5 12,217 9 9 125 19 8 320,661 11 10 281,687 17 10 53,194 0 11 9,039 15 0 1,125 3 10 345,046 17 7
625,351 6 5 24,589 10 4 226 16 9 650,167 13 6 560,027 13 2 126,971 15 11 18,081 10 3 1,125 3 10 706,206 0 2
A loss was made during the above period of £1,036,630 13s. 7d.|
[8]

The following, therefore, is a summary of the profit and loss since 1854:

PROFIT. £ s. d.
1854 53,314 16 5
1855 to 1858 27,808 14 4
1859 to 1861 33,650 14 9
£114,774 5 6
LOSS. £ s. d.
1862 to 1866 281,702 11 3
1867—1868 1,016,630 13 7
1,298,333 4 10
Deduct profits 114,774 5 6
Total loss £1,183,558 19 4

The position of the Company on August 14, 1869, was:

DR.
To amounts due on deposit and current accounts £19,203 9 5
To sundry liabilities for claims unpaid, about 80,000 0 0
To a count due to Western Shareholders, &c. 3,622 15 7
To unpaid dividends about 1,100 0 0
To loan on public investments, secured by assets, per contra £32,615 17 0
£103,926 5 0
To balance of present value of liabilities under policies, after allowing for value of premiums 1,147,487 0 0
To present value of liabilities under annuities 150,445 0 0
1,297,932 0 0
To capital subscribed 500,000 0 0
£1,401,858 5 0
CR.
By public investments £100,868 1 3
Less loan per contra 32,615 17 0
£68,252 4 3
By loans on mortgages and bonds 60,879 7 10
By branch and agents’ balances 41,178 5 10
By leasehold property, &c. 5,873 5 0
By loans on policies and other assets 61,872 2 10
Estimated at 50 per cent. 30,936 1 5
By life interests and reversions 22,726 14 1
By re-assurance policies 35,812 9 8
Estimated at 75 per cent 23,859 7 3
By cash 23,315 17 2
By uncalled capital 321,959 0 0
Estimated at 100,000 0 0
430,021 2 10
By deficiency 971,837 2 2
£1,401,858 5 0
SURRENDERS OF POLICITES.
The following amounts have been paid for the surrender of policies during the last five years:
1864 £10,209 13 8
1865 9,127 12 9
1866 10,631 6 4
1867 17,453 5 2
1868 19,296 3 1

These accounts have been prepared with as much exactness as the limited time given for their preparation has rendered possible. S. LOWELL PRICE.
13, Gresham-street, City, 28th August, 1869.

The cost of the Bank of London and the Medical Invalid Companies created some sensation, and the total sum called forth exclamations of horror.

Mr. PRICE explained that the names of various other concerns had been mentioned in the newspapers, but those companies had previously been taken over by others which had been purchased. The list given above included all those which the Albert Company itself had taken. The sums specified included allowances and compensations. Of the loss on the last period, no less than 956,973l. represented the differences in the valuation of the company’s assets and claims, as compared with the last stocktaking. Previous valuations had been made on the gross premiums, a principle which he could not but regard as very inaccurate, whereas the present one allowed 221/2 per cent. for “loading.”

Mr. KIRBY—And that was charged on three millions and a half.

Mr. SLATER wished to know why, when the uncalled capital amounted to 321,000l., it was estimated to produce only 150,000l.

Mr. TARRING said a great deal had been stated by the press with reference to the amalgamations and the enormous sums paid to various parties—negotiators, secretaries, and managers in connection with them. He should like to know whether Mr. Price had been able to ascertain the amount of the payments, and if so, whether they were included in the account which had just been read. For instance, the cost of the amalgamation with the Bank of London and National Provincial Assurance Association was stated in the account to be 91,641l. Did that amount include all the various sums that passed from hand to hand at the time when the transaction took place?

Mr. PRICE said he had ascertained, so far as it could be done, from the books of the Albert Company—and he thought it was impossible that any account cold have been omitted—the cost of each of the amalgamations. He had also analysed the cost of each, including the various heads under which the payments were made, and he would now read the result to the meeting.

Mr. TARRING, before that was done, wished to ask Mr. Price whether he considered it possible that in the handing over of one concern to another any payments were omitted from the accounts for the purpose of satisfying certain parties, and consequently did not appear in any accounts which the Albert Company now possessed.

Mr. PRICE said he did not think that was possible in the case of that company.

Mr. TARRING said he alluded to the passing of accounts into other hands after the agreement for the transfer was made.

Mr. PRICE said the books of the Albert Company only showed its own transactions, and he was going to give them the result of the investigation of the Albert books. Of course it was impossible for him to tell what had been done in other companies, but so far as the Albert was concerned he believed he could give every payment which had been made on account of amalgamations. He would first state what occurred in the case of the Bank of London Association, which might be a guide to the others. There was paid to various parties who were connected with the Bank of London Association, by way of compensation as it was called, 34,116l. There was a claim upon a company for 25,000l., and taken over at that amount, which was properly estimated to be then worth only 15,000l., occasioning a cost to that company of 10,000l. The Bank of London Association had an unliquidated account for preliminary expenses, and profit and loss, of 36,400l., which was returned as paid. The law low costs of the Bank of London Association for the deed of settlement amounted to 3,689l., and that was also paid. There was likewise due from the Bank of London Association to the Anchor Assurance Company 7,405l., which was also paid. Those sums amounted together to 91,641l. 18s. 4d.

Mr. TARRING inquired whether Mr. Lewis had the names of all the parties to whom the payments were made.

Mr. LEWIS replied that he had.

Mr. TARRING thought that under the circumstances the cases might properly from the subject of an inquiry on the part of the shareholders, but that it would be better to defer the matter to a later period.

Mr. J. S. FIRMIN inquired whether it was a fact that Mr. Clench, the manager of the association just referred to, obtained 8,300l.; Mr. Cave, the fire manager, 8,300l.; and Mr. Walker, the actuary, 8,300l., making altogether 25,000l.?

Mr. PRICE replied that that was so.

Mr. FIRMAN then asked whether the directors had a couple of hundred pounds each.

Mr. PRICE—Yes.

Mr. FIRMIN wished to know also whether the shareholders in the Albert Company became liable for annuities of 600l. and 400l. payable to the manager and secretary of the Merchants and Tradesmans Life Office, which had been amalgamated with the Bank of London Association.

Mr. PRICE—Yes.

Mr. FIRMIN further asked whether the fire business of the Bank of London Association was purchased of the Albert by the Liverpool and London Association for 25,000l. agreed price, 10,000l. only being paid, because certain conditions were not complied with.

Mr. PRICE said he had not the information desired. He had given the gross amounts, but did not possess the details.|

[9]

Mr. FIRMIN thought the accountant of the company should make out a full list.

Mr. PRICE said the claim of 10,000l. upon a company which he had mentioned was a claim upon the Liverpool and London Association, and was included in the amount which he had given.

Mr. FIRMIN said, with regard to the Beacon and Times Associations, he thought Mr. Sheridan had 8,000l. as his share.

Mr. PRICE replied that there were several items of compensation in the books, amounting altogether to 2,700l., and Mr. Sheridan had 2,000l. There was an annuity given to that gentleman of 665l., which was afterwards purchased by the Albert Company for 8,725l.

Mr. FIRMIN believed Mr. Sheridan had 2,000l. for the National Guardian purchase.

Mr. PRICE said he had.

Mr. FIRMIN—Then, in the case of the Medical Invalid, he had 11,000l.

Mr. PRICE said he had 15,750l.

Mr. FIRMIN believed that in the case of the Family Endowments Association Mr. Sheridan received money from the Albert Company.

Mr. Price thought the meeting should bear in mind that Mr. Sheridan was not the only gentleman who was fortunate enough to receive considerable sums.

Mr. FIRMIN went on to remark that in the case the Medical Invalid Association the Secretary, Mr. Singer, had 15,000l.

Mr. PRICE replied that he had.

Mr. FIRMIN inquired whether Mr. Saddler, the solicitor of that association, did not receive 2,000l.

Mr. PRICE said there was a long list, but he did not find Mr. Saddler’s name in it.

Mr. FIRMIN then asked whether the directors of the Medical Invalid Association who did not join the Albert board did not receive 1,100l. each.

Mr. PRICE replied that a great many persons had that amount, and that he could give the names if they were required, adding that about twenty-five or twenty-six persons received sums ranging from 150l. to 15,000l.|

[10]

Mr. FIRMIN went on to inquire whether in the case of the Kent Mutual Association, Mr. Preston, the secretary, did not receive 3,000l. ?

Mr. PRICE said he obtained 3,500l.

Mr. FIRMIN—And Mr. Clench?

Mr. PRICE—3,500l.

Mr. FIRMIN said he thought Mr. Sheridan figured again in that case.

Mr. PRICE—For 1,500l.

Mr. FIRMIN thought that after all those statements there could not be any doubt as to where the money went. (Hear, hear.) Those figures spoke for themselves. (Hear, hear.) In the balance-sheet for 1866, which he had then before him, there was not the slightest reference to the payment of any such sums as had been mentioned in the way of compensation. There was, he believed, no allusion to anything of the kind in any of the balance-sheets. In 1867 the directors did not issue a balance-sheet, and the reason was evident.

Mr. PRICE observed that the form of the accounts for 1886 would exclude such items; they might have appeared in some other accounts.

Mr. NORTON said although the balance-sheet was one only of assets and liabilities, some account ought to have been given of the manner in which the company’s money had been dispersed.

Mr. TARRING said he wished to put a question with regard to the secretary. When they received any notice on paper the secretary’s name had always been attached, and they were warranted in supposing that he was the executive officer of the company. He had, however, been informed that that gentleman had seldom, if ever, been allowed to be present at meetings of the Board—that he had, in fact, been systematically excluded; and he wished to know whether that was a fact.

The CHAIRMAN said it had not been customary for the Secretary to be present.

Mr. TARRING having repeated his question, and there having been loud calls for the Secretary.

Mr. EASUM (the Secretary) said—I answer candidly that I have not been present at the board meeting of this company—(cries of “oh, oh”)—except in the absence of the managing director or manager, when I have been requested to attend.

Mr. TARRING—Have you not been present as the officer of the board to take minutes, and to attend to the business of the board?

The SECRETARY—I have not.

Mr. TARRING—You have not been allowed to do that?

The SECRETARY—I have not attended. (Loud cries of “Why?” and “Explain.”)

Mr. TARRING thought that would be a matter for subsequent inquiry. (Hear, hear.) What he wanted was to get at the facts.

Mr. NORTON inquired how long the present direction had existed?

The CHAIRMAN said he had only been a director of the company since its union with the Western Life Assurance Company in 1865. He did not know the dates of the appointments of the other directors, but there had been no new directors since he joined.

A SHAREHOLDER having asked who was the chairman of the Albert Board.

The CHAIRMAN replied that no one had filled that office permanently, the directors having taken the chair according to a monthly rotation.

A SHAREHOLDER wished to know whether, after the death of the late manager, Mr. Kirby, it was not made a condition at the appointment of the present manager that the claim of his father against the company should not be pressed.

Mr. KIRBY—Not that I ever heard of; certainly not.

A SHAREHOLDER complained that no answer had been given by Mr. Price to the question why the uncalled capital, amounting to 321,000l., was put down in the accounts just presented at 150, 000l.

Mr. PRICE replied that the list of shareholders, which had been carefully gone through, included the names of many persons who never contemplated having a penny more to pay in that unfortunate company, and who were in fact utterly unable to pay any call. His desire had been, not to make the best of the matter, but to let the shareholders know the worst at once. (Hear, hear.) He believed that the statement which he had read was in accordance with that desire. It was possible, and in fact not improbable, that somewhat more than 150,000l. might be realised, but he had been very desirous that they should not go away with an impression that the assets were larger in amount than at the worst they might be expected to prove. (Hear, hear.)

Mr. SLATER asked Mr. Price if he had examined what might be considered the real assets of the company—in which term he did not include uncalled capital.

Mr. PRICE had not personally done so. If, for example, he had seen a mortgage on an estate in Somersetshire it would have been impossible for him to say whether the property was worth the money. He had, however, gone through all the securities, and he had questioned the proper officer as to the basis on which those securities had been valued. In several cases where he thought that assets had been put at something above their value, he had estimated them at less than their nominal value.

Mr. SLATER—But are there any of them that would be at once convertible?

Mr. PRICE—Some of them; but others of them are not. I believe, however, that if you keep the management of your affairs in your own hands, the assets may be realized for the sum I have put down for them.

A SHAREHOLDER—Am I to understand that you look upon half the shareholders as insolvent? (A laugh.)

Mr. PRICE—I should be very sorry to put the matter in that way. I may say that I have had considerable experience in the liquidation of companies, and I believe it will be found that I am not far wrong; but I should be sorry to throw any imputation upon the circumstances of individual shareholders. (Hear, hear.)

Mr. COTTRELL said that in 1867 the balance-sheet showed assets amounting to 634,000l. The premiums in 1867 were 331,000l., and those in 1868 were 301,000l. It appeared, therefore, that the company had lost the whole of its premiums for the last two years, and two-thirds of its assets.

Mr. PRICE had no doubt that the reduction in the assets was owing to the difference in the actuarial valuation of the premiums and liabilities; but during the last two years there had been a considerable excess in the payments over the receipts. However he should be able to give further information at the next meeting. The figures he had read merely contained the results of a great mass of accounts which were in the rough upstairs; and at the next meeting he should be able to produce a profit and loss account.

Mr. TARRING said that in 1861 the assets were entered in the report at 749,000l.; in 1862, at 736,000l.; and in 1863 at 714,000l. He was not able to carry the comparison any later; but here was a very serious falling off in the assets; and yet the condition of the company had been represented as progressive and prosperous. He did not wish to say anything against the directors, who were all honourable men—(cries of “Question”)—but it was clear that they had been misled. He did not wish to speak disrespectfully of the late manager, Mr. Kirby, but he thought they must consider him to have been wholly to blame. He believed, from what he knew of Mr. Kirby, that he had been the mainspring of the company, and that the confidence the directors had in him had been such that they were always ready to do his bidding. That being the case he very much regretted that that gentleman’s son should have been announced as one of the provisional liquidators, and he would move that Mr. Kirby be requested to resign.

Mr. PRICE said Mr. Kirby had only consented to act temporarily, and not as an ordinary liquidator. He had been very much indebted to Mr. Kirby for the assistance which he had given him, and he thought that under the circumstances the motion would not be a very gracious one.

Mr. TARRING could not but think that under the circumstances Mr. Kirby’s retention of his office, temporary though it was, would complicate the final settlement of the affairs of the company; and unless Mr. Kirby resigned, he should feel it his duty to press his motion.

MR. GRARY entirely agreed that it would not be consistent with the interests of the company that Mr. Kirby should be a liquidator in the ordinary sense of the term; but his office was in reality a merely temporary one. It must be recollected that there was another, and he feared a much more difficult, body to deal with—the policy-holders; and he thought it was extremely desirable, with reference to that fact, that Mr. Kirby should remain in his present office. He wished to know what were the intentions of the directors. Would they call the shareholders together again, or would they consent to an adjournment till after the meeting of the policy-holders?

Mr. PRICE said it was intended to call the shareholders together again as soon as that could be legally done. As to his colleague, he thought it would be very damaging to their interests if they dismissed him, or asked him to withdraw. (Hear, hear.)

Mr. KIRBY could have had but one object in accepting the office, for he got nothing by it except a great deal of correspondence and a certain amount of abuse in the newspapers. He had consented to act as provisional liquidator simply for the purpose of carrying the thing through, and if it was thought that his continuing to act would not answer that purpose he should withdraw. (Hear, hear.)

Mr. BIDDER suggested that it was essential that Mr. Kirby should remain, for the sake of the company’s agents, who retained a great deal of confidence in him.

Mr. KING and Dr. WHITE also joined in deprecating the motion.

A GENTLEMAN, who was not himself a shareholder, but who said that he represented a large number of shareholders in Yorkshire, asked leave to address the meeting, but Mr. LEWIS said that it would be contrary to the deed of settlement to allow any one who was not a shareholder to take part in their proceedings.

Mr. LEE then intimated that he wished to withdraw his seconding of the motion requesting Mr. Kirby to retire from the office of liquidator.

Mr. LEWIS observed that when the company was called upon to decide whether there should be a voluntary winding up, an opportunity would be afforded to determine who should carry on the liquidation. Mr. Kirby and Mr. Price had, as co-liquidators, been requested to attend a meeting of policy-holders to be held at Manchester in the following week. The question raised must come before the Vise-Chancellor on the 17th of the succeeding month, and there could be no doubt that at a very early period the shareholders would have an abundant opportunity of giving practical effect to their wishes. That meeting could not desire to throw any difficulty in the way of calm and patient consideration on the part of the policy-holders. If he understood the feelings of the meeting, whatever might be the views of the shareholders with regard to past mismanagement, their object was in the main to resuscitate the company, and thus prevent complete disaster. (Hear.) He thought that however they might differ with regard to details, their desire was to prevent the company from becoming an entire wreck, a result which could do the policy-holders no good, and must bring great distress and disaster on the shareholders. (Hear, hear) After listening to the statement of details which had been made by Mr. Price—a statement which was very full, considering the short time that that gentleman had been engaged in the work of investigation—the shareholders present must feel that there was not the least disposition to keep back anything relating to past mismanagement, or to shield any person, but that Mr. Price’s object had been to present such a statement as it was their duty and their interest to obtain. The chairman had told them in effect that if they passed the formal resolution which constituted the only business they were called upon on that occasion to transact, they would not find that they had been caught in a trap and be sent away without any information. Mr. Price’s report would be presented at a future meeting, with the addition of further information, and the shareholders would then have full opportunity of sifting everything in any way they might think proper; but he (Mr. Lewis) now asked them to show that they approved of the attempt which was being made to reconstruct the company and prevent a common disaster to policy-holders and shareholders. (Hear.) In conclusion, he would suggest that the meeting should be adjourned to a future day, believing, as he did, that a frank, straightforward, and candid course was most likely to lead to the desired result.

Mr. TARRING said he was far from wishing to divide the meeting, and after the remarks just made by Mr. Lewis he had no desire to press his resolution. (Cheers.) His sole object, in fact, had been to carry out what Mr. Lewis had just mentioned.

A SHAREHOLDERS having inquired what would be the effect of an adjournment upon the resolution which had been passed with regard to registration.

Mr. LEWIS replied that the Act of Parliament only required the assent of a majority to such a resolution, and it had in fact been carried unanimously.

The CHAIRMAN also intimated that nothing which might occur could prevent the registration.

Mr. LEWIS said it appeared on reflection that there were legal difficulties in the way of an adjournment, and what he would suggest therefore was that the chairman should pledge himself to call a meeting of the shareholders for the following Tuesday three weeks, that being the earliest period at which a meeting could take place after the registration. (Hear, hear.)

[The Daily News, 21. August 1869]

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[Aug 4]

THE unfortunate policy-holders of the Albert Life Insurance Company are anxiously looking forward to the meeting on Thursday next, and to the explanations which must then be given as to the company’s means of discharging its liabilities, and the causes which have led to its present position. Of the latter we shall say no more at present than that they may be summed up in two words—Plunder and Waste; two things which commonly go together. It is hardly to be expected that a very detailed history of the progress of the Albert on the road to ruin can be given at the meeting next week, but it will be found that the disasters of the company are chiefly assignable to the two causes we have mentioned. A professional contemporary, from whose article we have borrowed elsewhere, gives the following illustration of the matter in which the frequent amalgamations of the Albert were made pleasant, at the expense of the concern:—When the Bank of London and National Provincial Company was transferred to the Albert, Mr. CLENCH got 8,000l. as compensation; the directors got 3,000l.; Mr. CAVE, 5,000l.; Mr. WALKER, 5,000l.; and the Secretary an annuity of 600l. a year; in all nearly 30,000l. When there is time to attend to them—and there will be plenty—the history of the Albert will afford an abundance of similar illustrations. For the present, however, policy-holders will be most anxious to know what are the resources, actual and potential, of the Company. With respect to the assets, we have nothing to add to the approximative statement given in another column; but there is one point of much interest to all parties to which we would allude. It was stated in this journal on Wednesday that although the Albert was not registered under the Limited Liability Act, “the liability of the shareholders “appeared to be restricted by certain clauses in “the policies.” A disposition has been shown in some quarters to contest this very qualified statement, which was only offered as an element of a very complicated question. The policy-holders and shareholders of the Albert will be fortunate if they succeed in wholly avoiding litigation as to their respective rights and obligations, and it would be presumptuous on the part of any one to anticipate the decisions of the Courts. It will be found, however, that our previous remarks were well founded. In a neighbouring column we print an extract from one of the Albert policies, which should be carefully read. As too often happens in similar documents, its language is studiously involved, but the sense we have assigned is undeniably there. The policy sets out certain funds or property of the Albert “which shall alone be answerable for all claims and demands upon the society,” in respect of each policy, and it is further declared that “neither the Directors signing the policy, nor any other proprietor, nor holder of shares in the capital of the Society, shall, when any claim or demand is made in respect of a policy, be individually subject or liable to such claim beyond so much of the shares then held by him in the said capital.” We refer to the letter of our correspondent “G. R.” for the full text from which we quote, and proceed to inquire in what consists the property thus, according to the policy, liable to the claims of policy-holders. In the first place, there is the “Proprietors’ Fund,” then the “Assurance Fund,” and, lastly, that portion of the capital held in shares which has not been called and paid up. These are declared to be “alone answerable” for all claims of policy-holders, and these limitations each policy-holder has accepted. As we have already said, we do not pretend to predict what a Court of Equity would have to say to the clauses to which we have referred. There is no doubt whatever that any such clauses inserted in the deed of a proprietary Assurance Company, such as the Albert is, would be illegal and perfectly nugatory. But, it is argued, the limitations of the company’s liability being embodied in every policy, form in each case a part of a special contract between the assurers and the assured. This is a matter upon which each policy-holder can obtain advice. We are more concerned, however, to place the elements of a judgment fairly before the public than to insist on a particular opinion.

[Aug 4] |

[The Daily News, 2. September 1869]

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[Sep 2]

MR. H. B. SHERIDAN has come forward to vindicate his position as one of the principal amalgamators of the Albert Assurance Company. His name, as he reminds us, was mentioned at the Shareholders’ meeting on Saturday, as one who had received commissions for policies introduced to the office. There is no need to be periphrastic on such an occasion as this, and we may therefore recall the statement of Mr. PRICE, the accountant and one of the provisional liquidators of the Albert, that Mr. SHERIDAN had received as much as 28,475l. for his services in connection with the transfer of five companies to that office. The honourable gentleman—Mr. SHERIDAN is M. P. for Dudley—informs us that “some of the statements made at the meeting are incorrect”; but in what respect, and whether the amounts are under or over stated, he does not explain. We may therefore infer that any inaccuracy there may be is not material. His object in writing is to remove an impression conveyed by a shareholder at Saturday’s meeting, that the Albert Office had “failed to profit by its transactions with him.” This is a very mild way of putting the matter; we may, however, say at once that if by the Company Mr. SHERIDAN means the handful of persons who hold the shares, it is a question hardly worth discussing, and certainly not one which the public is much troubling itself about. The interest of the shareholders is not to be mentioned in the same breath with the vastly greater interest of the policy-holders which they took in charge, and which they have betrayed.

What has most forcibly struck the public in the history of these amalgamations is the extreme care that has been taken of every interest, actual, contingent, or conceivable, except that of the policy-holders, for whose sake every Insurance Office professes to exist. We saw on Monday that the cost of taking over the assets and liabilities of the ten amalgamated offices amounted to 283,000l.—considerably more than half the nominal capital of the Albert, and within 45,000l. of its realised and realisable sum. It is further known that these ten offices had absorbed twelve others by a similar process before they were merged in the Albert, so that we have been contemplating only a part of the operations of a great amalgamating interest which could only be served by the artificial production, sustenance, and transfer of other interests which ought, above all others, to be marked by stability and permanence. We also saw on Monday what interest Mr. KIRBY had in the multiplication of these purchases. Every 10,000l. which he added 500l. per annum to his commission. In like manner the managers, secretaries, promoters, and other functionaries whose services were no longer required in the absorbed offices were taken good care of. Even the Albert shareholders celebrated the waste of their own capital and the assumption of heavy responsibilities by declaring and driving profits that were never earned. But what the public would like to know is, who was taking care of the poor policy-holders in the amalgamated offices all this while. Mr. SHERIDAN tells us that that was no business of his. The Albert people, he says, published no accounts, and withheld the knowledge of their financial condition from all persons but those especially appointed to investigate their affairs. In fact he was “only an agent in the matter, acting upon instructions, and receiving as payment a commuted commission on the business done.” Mr. SHERIDAN, then, was certainly not thinking of the policy-holders of the Beacon, Times, National Guardian, Medical Invalid, or Family Endowments Association, when he took his enormous commissions. He did not, he says, pretend to be. Then was this duty left to the officers of these societies? That cannot be. They had no interest in entertaining doubts or making inquiries about the solvency of the Albert. They were being well paid for that highly figmentary article, the goodwill of a clerkship, which Mr. CLENCH lately told us ought not to be reckoned as worth less than fourteen years’ salary. It appears, then, that these poor policy-holders were treated like so many sheep, to be shorn, slaughtered, melted down, packed off, or otherwise treated as suited the interests of a number of professional traders in insurance accidents, events which they best knew how to bring about. It was with the policy-holders’ money that these amalgamators were paid fees such as are unheard of in legitimate commerce, and which were themselves fortunes; it was the policy-holders who had to suffer most by this trafficking in companies; and it is with the policy-holders that the public now most deeply sympathise. The opinion of the public is expressed on all hands with unmistakeable clearness. The policy-holders have been plundered most unmercifully, and without pretending at present to assess the exact amount of blame due to every party, we must say that the deep discredit of those transactions is reflected upon all who were concerned in them, but chiefly upon those who profited most, and most exceptionably, by them.

[Sep 2]

[The Daily News, 2. Juli 1869]

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THE OVEREND AND GURNEY PROSECUTION.

[July]

Mr. EYKYN, in rising to call the attention of the House to the case of “Regina v. Gurney and others,” and to move that in the opinion of the House the prosecution of the defendants was of such national importance that the burden of it ought to be borne by the Government said that he considered the Stock Exchange ware responsible in the first instance for having given a setting day to the company in the face of the clause in the prospectus guaranteeing all outstanding liabilities, because it was now perfectly plain that the company could not have substantiated such a guarantee, and if the Stock Exchange had done its duty the company could not have been started. They were the more to blame because in 1865 they tacitly sanctioned the issue of no less than 34,870,000l., which in the same or following year came into liquidation. Be that as it might, the ruin caused by this company was so vast that it assumed a national importance and the effect upon public morality if this case was not suited to the bottom would be such as seriously to damage our national reputation for integrity. Dr. Thom alleged that he had already spent all the money which he was able to spend in this prosecution, and unless the matter was taken up by the Government, they would hear the hackneyed phase of there being one law for the rich and another for the poor. This case showed more than anything of late years the necessity of appointing a public prosecutor. If the persons charged should escape through the inability of the prosecutor to carry on the prosecution, the Lord Chief Justice having stated that the rules of the court would not allow of Dr. Thom appearing in person, it would be a disgrace and scandal to the whole country, because it would prove how easily wealthy defaulters could escape, even after their solemn committal to take their trial, and thought nominally the Queen was the prosecutor. He justified his motion by the action of the Government in the case of the British Bank.

The SPEAKER informed the hon. gentleman that one amendment having been put and negative on the question of going into supply, it was not competent to put another.

Mr. FOTHERGILL, who stated that he was himself a sufferer to the extent of 4,000l., considered that the prosecution was one which was instituted in a spirit of vindictiveness and revenge by angry speculators, who instead of making money had lost it. He was of opinion that there was nothing in the case which ought to induce the Government to step out of its way and prosecute the case at the public expense.

Dr. DALRYMPLE also protested against the Government taking up this case. He deprecated any discussion on the eve of this important trial, and said that although it might suit the press to write sensational articles on the case previous to trial, he did not expect the House of Commons to be made the arena for a sensational discussion, which he could only suppose was attempted to be introduced at the present moment for the purpose of prejudicing the case.

Mr. FAWCETT said that he only expressed the opinion of the independent members when he said that the motion had been defeated by the tactics of those who had resorted to the technical forms of the House to prevent any decision taking place. But clever as they thought themselves there was one mode remaining by which an expression of the opinion of the House could be obtained, and of that mode he would avail himself. The defendants were either guilty or innocent. If they were guilty let them be punished as they deserved; if innocent let their innocence be made clear; and with a view to give the House an opportunity of expressing, though in an indirect way, their opinion, he would move the adjournment of the House. (Cheers.)

Mr. MUNDELLA solemnly disclaimed the smallest vindictive feeling, but he should regard the breaking down of the prosecution for want of means as a public calamity, and he therefore felt bound to second the motion.

Mr. BRUCE indignantly denied that the Government had resorted to any tactical device to prevent the question from being raised; and the Speaker confirmed the right hon. gentleman. As regarded the prosecution itself. Mr. Bruce pointed out that there had been but one exception to the rule of non-interference on the part of the Government, namely, the case of the Royal British Bank in 1857, which had cost the country 20,000l. But had there been no instances of gross immorality since then? If the House thought that the Executive ought to interfere, it ought to have done it long ago. The Secretary of State who had directed the prosecution of the Royal British Bank directors had since expressed an opinion that that course ought not to have been taken; and the right hon. gentleman opposite had declined to assist in a proceeding against the Leeds Bank. In this case the Government had been called upon to undertake a prosecution when it had had no opportunity of investigating the case, and when the result of such an examination might have led it to the conclusion that there was no ground for proceeding. (Oh! oh!) He was expressing no opinion upon that point; but it was quite clear that the Government |[12] ought not to contribute to a prosecution on which it was not to have the direction. (Cheers.) Besides, the shareholders were wealthy enough to conduct the suit themselves if they were so minded, and the judge had now power to order the prosecutors their costs, if, after hearing it, he thought they were entitled to them. In a word, he saw no reason why this case should be treated as an exceptional one. (Hear, hear.)

Sir P. O’BRIEN thought that as the Government had been a consenting party to the passing of the Limited Liability Act, it was fair to ask it to assist an inquiry into the results of that measure.

Mr. GILPIN had relations who had been reduced to the verge of ruin by the failure of Overend, Gurney, and Co., but they would not add a feather’s weight to the load of humiliation, degradation, and suffering which had fallen upon the firm. (Oh.) The defendants were most anxious that the trial should proceed—(cheers)—but he protested against the power of the State being invoked at the last moment to carry on a suit began by a private person. (Hear, hear.)

Mr. S. HILL agreed with the Home Secretary that it had never been the practice of the Government to take up a case after the committal of the defendant. (Hear.)

The ATTORNEY-GENERAL had always supported the proposal for the appointment of a public prosecutor, but he agreed with his hon. and learned friend opposite that for the Government now to interfere would be a step wholly without precedent. The Government either prosecuted or it did not; but such a thing as for the Government to subsidise a prosecutor was never before heard of. The Government did not take up a case unless it felt almost a moral certainty that it would obtain a conviction. In his instance no depositions had been laid before it, so that the law officers knew absolutely nothing about the matter, and could form no idea as to the probability of success or failure. (Hear, hear.)

Sir J. PAKINGTON did not think that either Mr. Hill or the Attorney-General had grappled with the real question. (Cheers.) For his own part, neither he nor any friend of his had suffered from the failure of Over end and Gurney; but he thought that if this prosecution would be created from one end of the country to the other. (Cheers.( It might be true that there was no precedent for the present proposal; but if there was not the House ought to make one; and he trusted that no such scandal would arise as would be created by the failure of this prosecution for want of funds. (Cheers.)

Mr. C. BUXTON said the subject was one peculiarly painful to him, but he was in a position to say that the directors of the company would deeply regret the breaking down of the prosecution, for they had, by the advice of their counsel, withheld their defence when they were before the Lord Mayor; and they believed that if the trial went on it would end in their triumphant acquittal. He would not characterize the conduct of those rich gentlemen who professed to think that they had been injured by misconduct on the part of the directors, but who had refrained from supporting Dr. Thom. Certainly the defendants would, above all men, regard the proceeding of the prosecution as a great boon. (Hear, hear.)

Mr. BARNETT agreed with the hon. gentleman who had just spoken, and thought that the Government had exercised a wise discretion in not interfering.

Mr. GLADSTONE said he was glad to hear from the hon. Gentleman who had just sat down that there was a great likelihood that the prosecution would proceed, notwithstanding the decision of the Government. He thought the strong and positive assertion of the right hon. member for Droitwich was a little out of place when they considered that the proper time for undertaking this prosecution on the part of the Government was at the earliest stage of the proceeding, when the right hon. gentleman himself was in the Cabinet. No doubt the House had a right to interfere with the Government in the discharge of its executive functions; but it was an extreme right, and one which the House never dreamt of exercising only in the rarest cases. If an exception was to be made in this case, what were the grounds on which it was to be based. Was it on the moral enormity of the offence of the supposed delinquents? That could not be alleged in the present instance without the grossest inconsistency. Whatever might be said as to the magnitude of the ruin and the amount of the scandal, there could be no doubt that other cases of commercial immorality had been before them year by year without any call for a public prosecutor. Another important element was the certainty of the result. If they had a public prosecutor, he would not take up everybody’s case, but would carefully consider whether there was a probability of a conviction before he undertook it. But here they had no means of judging of the probability of a conviction. The motion of the hon. member for Windsor concluded by saying that the case should be undertaken by the law officers of the Crown. But the Solicitor-General had for months been retained for the defence. The third ground was a more plausible one, and that was that the shareholders had not the means to vindicate their own cause. But was that the case here? The fourth ground was the magnitude of the case. But the meaning of those words was, that although a portion of the shareholders might be persons of small means, others were persons of great wealth. No doubt it was a moral good that his hon. friend had in view. But (continued the right hon. gentleman) our object is to deter. And are we to say to a generation too greedy of money, when they adopt one of the most culpable means of obtaining money, that is to say placing their investments in concerns of which they know nothing at all, with a view of grasping large and easy gains—of gaining the fruits of industry without going through—the toils by which those fruits are ordinarily obtained—are we to say “You have only to look to the best prospectuses, you may rush into speculation, the advertisement will stand you instead of intelligence and forethought—you shall have all these advantages, and if you fail you will fail with a tragic splendor, benevolent men will be excited to make motions in Parliament to assist you; and for your neglect of the rules of prudence, and for your hasty and incautious indulgence of the thirst for gain, you will receive the exceptional favour of the State, and the British taxpayer will bear the expense of carrying your case before a court of justice? (Loud cheers.)

Mr. R. N. FOWLER expressed his belief in the honesty of the accused, however much they might be mistaken, ant that the trial would vindicate their honour.

After a few words from Mr. Morrison and Mr. Clay in support of the motion, and Mr. Muntz against it, the House was cleared for a division; but none took place, and the motion was negative.

[The Daily News, 3. September 1869]

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THE ALBERT INSURANCE COMPANY.

TO THE EDITOR OF THE DAILY NEWS.

SIR,—Mr. H. B. Sheridan, in his letter which was published in the Times of the 1st inst., states that in the year 1862 a valuation of the risks of the Albert Life Office was commenced by Professor de Morgan, and completed in 1864, and that the report of that investigation showed in the clearest manner that the result of the business was most satisfactory and profitable. I have never seen the Professor’s report, and am therefore unable to judge of the accuracy of that statement; but this I can assert, that it was not the opinion of the soundest actuaries of the day that the Albert was at that date in a satisfactory condition, but that on the contrary it was considered by them to be in a state of insolvency; and I have reason to know that the confidential advice which would have been given by them to any friend who was unfortunate enough to hold a policy in that company would be, to surrender it on any terms.

Mr. Sheridan wishes the public to draw the conclusion that the money which he received from the Albert was merely a commuted commission for the introduction of ordinary business. To this I demur, because a heavy commission had no doubt already been allowed by the transferred office to the original introducer of any policy, a commission which, to my knowledge, often amounts to one per cent. on the sum assured, or fifty per cent. on the first year’s premium, with, in either case, five per cent. per annum on the premium afterwards. In addition to this, it is certain that the commissions on many of the transferred policies had already been commuted by the payment of a lump sum to the original agent. The sum which Mr. Sheridan received was not paid by way of ordinary commission at all, but for his diplomatic skill in being able to transfer the business of sinking concern to another of better reputation.

Now that public attention has been drawn to this question of compensation it would be well if shareholders as well as policy-holders insisted upon knowing the sums |[13] which have been allowed in all the various amalgamations which have taken place during the last fifteen years. It is true that many of such sums are irrecoverable, but there are many which are still being paid by way of annuity by offices which can ill afford it, and such sums are out of all proportion to the work which has been done for them, and in fact as a rule they are the reward of mismanagement. Looking at the question entirely as a matter of income, it has scarcely paid a manager to work his office successfully during the last few years, since he could make so much more money for himself by letting it drift into amalgamation.

Until life assurance companies are compelled to publish the date on which their valuations are made exposures like that of the Albert will periodically occur, as unscrupulous actuaries and well-paid managers can, by a mere alteration of the rate of interest on which their calculations are based, prove anything; and so long as a certain amount of new business can be obtained, the first break down is for many years averted. At the present time the ordinary topic of conversation in well-informed insurance circles is the number of months that more than one of the very large assurance companies will be able to survive.—I am, &c.,

JNO. L. OLIVER.
45, King William-street.


TO THE EDITOR OF THE DAILY NEWS.

SIR,—I ventured to send you last week an extract from the form of policy in use by the above office, from which shareholders might calculate the extent of their liability, and policy-holders that of their security. I would not attempt to draw any practical conclusions, as I felt that the “disturbing elements” were far too numerous and potent to admit of even an approximation to the truth being arrived at. I do not place the smallest reliance on the calculations put forward, and I look upon the “reconstruction scheme” as about on a par with the famous Laputan one for extracting sunbeams from cucumbers. The disturbing elements I refer to are the incalculable but frightful cost of the winding-up machinery there seems so earnest a desire to set in motion, the vast field for ordinary and extraordinary litigation, arising out of the questions of liability of the shareholders to the annuitants and policy-holders, and of one set of shareholders to another, and their unascertained ability to meet the calls that will be made. I would now offer a practical suggestion, that may be worth the consideration of such of the policy-holders as are in position to avail themselves of it, and which, simple as it is, may not have presented itself to all of them. The class I refer to is not perhaps so large as might be wished, but still considerable—policy-holders, viz., of a comparatively recent date, and who are now in good health. To such I say—Cut the connexion, waste no time in attending meetings, no money in litigation, treat your payments as lost, abandon your claim, and at once effect a new insurance in some really good and solvent office; there are plenty to choose from, and there is not a solicitor in London of five years standing who cannot point them out. The loss to such will not be very serious; it is not represented—as might at first sight appear to be the case—by the premiums paid; for up to the time of stoppage consideration was received for them. Claims were paid as they arose, and the insurance paid for was actually enjoyed. The real present loss is limited to the surrender value of the policy, the future to the excess of premium paid for the new insurance, and that in the case of young lives will be very trifling indeed. It may, too, be fairly expected that offices would treat the insured under the peculiar circumstances with exceptional liberality.—I am, &c., G. R.
Lincoln’s-inn-fields.


TO THE EDITOR OF THE DAILY NEWS.

SIR,—Will you please permit us through the medium of your columns to express on behalf of our clients, who are shareholders, policy-holders, and creditors in this company, our entire concurrence in the resolution passed at the meeting at Manchester yesterday on the motion of Mr. Probis, and also to thank that gentleman and the other policy-holders who supported the resolution for the confirmation which it affords that we were right in advising our clients to apply for the dismissal of Mr. Kirby from the office of provisional liquidator? Our clients desire that their interests, which pecuniarily are of very considerable value, should be protected independently, except and until a sound and equitable arrangement of the affairs of this company can be preferred, which would be acceptable to all concerned; but no such arrangement has yet been brought forward. Upon the request of our clients we have instructed Mr. W. J. White, whose peculiar experience in the liquidations of insurance companies is a matter of notoriety (especially having regard to his very satisfactory liquidation of the Hercules Insurance Company), to prepare a proposal for such equitable arrangement, which will be submitted for the Vice-Chancellor’s consideration on the hearing of the petitions for the winding up of the company, when we believe there will be two or more schemes brought before his notice; and we confidently expect that the proposal for an arrangement which Mr. White will then submit will be such that will not only merit his Honour’s approval, but will recommend itself as a satisfactory basis for the solution of all the complications of the disastrous affairs of this company. It is only just to inform the public that the proposed schemes for reconstruction have not yet been fairly submitted for his Honour’s consideration.

The whole matter will be fully discussed before the Judge on the 17th inst., and while we shall carefully guard our clients’ interests, that they be not committed to any of the various channels open for litigation, we shall advise them not to discountenance, but, on the other hand, to support the best means that can be adopted to stay litigation and expenses, and dispose of the business of the company to some one or more of the present well-established insurance company or companies, which would secure a guarantee of the minimum loss to the shareholders and the maximum value to the assured therein.—We are, &c.,

MERRIMAN and Co.
28, Queen-street, City, E. C., Sept. 2.

[The Daily News, 25. September 1869]

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[Sep 25]

THE Directors of the European Assurance Society are making a somewhat superfluous appeal to the Policy-holders and Shareholders. It is but of little use to tell them, in the largest of capital letters, not to be alarmed, unless some figures can be given which will show them that the alarm is needless. It is, indeed, not quite obvious what harm it can do if the policy-holders and shareholders are alarmed. In the present position of affairs the Society is not likely to do any new business, and no shareholder can throw up his shares nor can any policy-holder demand the surrender value of his policy, for the Directors have already said that “in the interest of the great body of “policy-holders” they decline to purchase any more of the Society’s policies. Nor is it much to the point that the Directors are still “in full assurance of its sound position.” Their complete belief in the Society’s position is no sufficient reason for the public to believe in it. They have sent out such assurances so long and so often that the public cannot now rely upon their judgment. The policy-holders and shareholders may do far more harm to their own interests by accepting these assurances than they can possibly do by continuing their alarm. Whether the petitions for winding up are “unwarrantable” or not, they equally come on for hearing this day week, and the policy-holders must be prepared to establish their position in the liquidation should a winding-up order be made. Even if the position of the Society is as sound as the Directors believe it to be, it has been so shaken by recent events that nothing but an independent investigation can satisfy the policy-holders, and they must organize themselves, if only to enforce such an investigation. Meanwhile soundness is a demonstrable thing. It can be set out in figures; it can be proved by facts. Let the Directors and their Manager give the figures and the facts. Their balance-sheets are before the world; but by mystifying the case they cast suspicion over it. Let us have at once a clear balance-sheet, showing the liabilities and their nature, setting forth the assets in detail, describing the exact quality of the securities, and making the sound financial position of the Company so clear that even the unlearned in figures may understand it, and the learned in figures may approve. The Directors must have had some such statements before them or they could not, as men of business, arrive at the full assurance they profess. It can hardly be with them merely the full assurance of faith; and we can assure them that even if it is they will never communicate it to the public merely by printing it in capitals. Let us have it in figures, for in such a case seeing, and only seeing, is believing.

[The Daily News, 21. August 1869]

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THE ALBERT LIFE ASSURANCE COMPANY.

TO THE EDITOR OF THE DAILY NEWS.

[Aug 21]

SIR,—As some misapprehension exists with reference to the extent of the shareholders’ liability in the above office, the enclosed extract from one of the policies may not be uninteresting to your readers.—I am, &c.,

G. R.
Lincoln’s-inn-fields, August 20.

“Provided also that the funds or property of the said society, consisting of the sums and moneys of which the two funds, respectively called “ The Proprietors’ Fund” and “The Assurance Fund,” may from time to time be composed, according to the directions contained in the deed of settlement of the said society, and of the stocks, funds, securities, and property, in which the same may from time to time be respectively invested, and of so much of the capital of the said society for the time being held in shares by proprietors and others, as shall not for the time being have been paid up, or according to the provisions in the said deed of settlement in that behalf contained, treated and considered as paid up, and for the time being remaining unapplied and undisposed of, and inapplicable to prior claims and demands in pursuance of the trusts, powers, and authorities contained in the said deed of settlement, shall alone be answerable for all claims and demands upon the said society in respect of this policy, and neither the directors signing this policy, nor any other proprietor or holder or holders of shares in the capital of the said society, shall, when any claim or demand shall be made in respect of this policy, be individually subject or liable to such claim or demand beyond so much of the shares then held by him, her, or them in the said capital, and not subject to prior claims and demands, as shall not for the time being have been paid up, or according to the provisions in the said deed of settlement in that behalf, contained, treated, and considered, as paid up, and no other person shall upon any account whatsoever, be in anywise subject or liable to any claims or demands in respect of this policy.”


TO THE EDITOR OF THE DAILY NEWS.

SIR,—I have read the various letters of your correspondents, and beg to inform them that measures are being taken by myself and a number of policy holders to procure an independent supervision of the companies’ affairs. If your correspondents will communicate with me I shall be happy to inform them how it is proposed to obtain this.—I am, &c.,

ALEX. WERNER.
41, St. Mary-axe, E. C., August 20.


TO THE EDITOR OF THE DAILY NEWS.

SIR,—I have been this day instructed by the Secretary of the Investigation Committee to act on behalf of the committee, and I am desired to notice the letter of Messrs. Lewis, Munns, and Co., solicitors for the provisional liquidators, published in your paper of yesterday. My clients approve the suggestion made in your issue of |[14] Thursday, that at the outset an independent name should be associated with those of the provisional liquidators to represent the policy and shareholders until after mature consideration a course of action be determined on.

My clients make no suggestions; their maxim is audi alteram partem. But they require the most thorough explanations and the fullest investigation. They challenge the right of trustees to shield themselves from responsibility for the gigantic ruin impending over the heads of thousands, and they will discharge with unflinching resolution, and at the expenditure of adequate labour, the duty the policy and share holders have reposed upon them. The solicitors to the liquidators shadow forth a plan for the “reconstruction of the company,” which they state will be issued “in a few days.” Meantime a circular has been issued by the secretary of the company, convening a meeting of the shareholders for the 28th instant, to sanction the registration of the company under the Companies Act, 1862. It is manifest that, looking to the enormous interests involved, undue haste is to be avoided. The fullest inquired should be courted by those now invested with authority, and this is all that is required by those for whom I am acting, before being asked to consider or assent to any “plan of reconstruction.”—I am, &c.,

WALER WEBB,
27, Gresham-street, August 20.


TO THE EDITOR OF THE DAILY NEWS.

SIR,—I see by a letter in your money article of to-day that a strict investigation of the affairs of this company is being made by Mr. S. L. Price, the well-known accountant. It would, I feel certain, be very instructive if Mr. Price would give us the amount of compensation paid to the respective managers of the following companies absorbed by the Albert Life Office—viz., the Falcon Insurance Company, the Kent, Mutual, the Anchor, the National Provincial, the Bank of London and National Provincial, the Medical Invalid and General, and, I believe, two or three others, the names of which I cannot at the moment call to mind. I feel sure if this can be done the policy holders and the public will learn how it is that amalgamations so often take place, and it will no doubt be a warning to avoid insuring in an office that has made its business by the combination of a lot of companies got up for the sole purpose of being transferred, in order that the managers (who have in nearly all cases been the promoters) may bag some 5,000l. to 10,000l. each, as compensation for the supposed loss of their appointments. I very much fear there are several offices built on the same rotten foundations, with large incomes, in quite as bad a position as this unfortunate Albert, and which would, on strict investigation, be found hopelessly insolvent.—I am, &c.,

W. H.
August 20.


TO THE EDITOR OF THE DAILY NEWS.

SIR,—I feel that you will excuse me troubling you, but I cannot help telling you a little about my affair with the Albert. In 1834 I think it was that my late husband and me were at Exeter Hall, and we saw strewd over the seats prospectus of the Times Life Assurance Office on Ludgate Hill, and in them it spoke of that office as being so suteable for the working classes as they took the money quarterly, and we had not seen any other that took the money quarterly, so we made great sacrifices, and has paid ever since my husband died, five years ago, and since that time I have struggled to pay the £3 6s. a year. I can assure you that it has distressed me fearfully as the quarter comes round, even the week before last I was obliged to borrow the money, as I have a sister that works hard to help me to keep my home, and would never marry, tho she might have done so while our mother lived, and now my mother has gone to her rest in her 89 year, my sister will still work to keep our home, but I do not wish to fill this letter up with my distress; only seeing your remarks in this day paper about folks saying they knew the Albert was going, and they could have told me so 3 years ago, one lodger said this to me on wednesday when I spoke about it after reading it in the Daily News, and another said how much better if you had put it in a bank, and another person said that gone that 45l. that you have half starved to pay, and a 4th has said the same, but Sir these people that have this world comforts cannot see that working people cannot do what they can, we do work very hard from 4 in the morning till late at night to keep our home, but I feel my sister and me cannot always work if we are spared, as even now we are getting old and I cannot see very well, but what I want to tell you Sir is they never ask the policy holder weather they will continue or not but send as usual every quarter the notice to pay my 16s. 6d. and once I could not get it till one day after and they made me go to the Dr. to see if I was still in health before they would take the 16s. 6d., that was last year and I would not have submitted to that only I had paid more than 40l. and of course I thought of my sister and felt that was the only way that I could do anything for her if I was taken from this world, now only think Sir how I feel now I fear I shall not be able to leave her A shilling, surely some protection ought to be given to those who are obliged to trust to others it does seem so cruel I feel for others as well as ourselves, hopeing you will excuse me takeing up your time to read this I am your Obedient Servant,

H. M.
August 20


TO THE EDITOR OF THE DAILY NEWS.

SIR,—The scandal recently unveiled of the Albert Life Assurance Society must keenly affect and prejudice the business and credit of all existing offices, but there are some points to which your correspondents have not directed attention, of great interest to the unfortunate victims of such transfers or amalgamations with other offices, and I desire to prove how such amalgamations may set all prudence of selection at defiance. In my own case, I assured 1,000l. with the Family Endowment Society (absorbed by the Albert), being influenced by the high names attached to its direction and proprietary. Are such to prove no protection to those unwillingly transferred, and who groan over the grievous additional wrong that for 20 years the full rate of premium has been exacted without reduction, ending in a breach of contract now beyond repair? Surely some legal claim must attach to the original directors of the office who signed such policy.—I am, &c.,

A VICTIM.


TO THE EDITOR OF THE DAILY NEWS.

SIR,—Every life insurer must thank you for the article in yesterday’s paper. It is to me surprising that so much notice should be taken of the Albert, and so little of the failure of the International, which, as the National Loan Fund, was established about 1836, as I have a receipt for 10l. 15s. for a life annuity, dated Nov., 1837. From all I can gather the Hercules took off all the liabilities of the International last May twelvemonth for 77,000l. (the two negotiators receiving 8,000l. and 10,000l. respectively, in hard cash, for their share of the business). The Hercules came to grief in February last; and instead of 77,000l. being the price for the liabilities, &c., of the International, no less than 329,685l. is the sum to be paid the Prudential for taking off all the International liabilities, as by circular inclosed from Mr. Maynard, the liquidator. I may add I wrote Mr. Bright some months since, giving him particulars of the International matters, and received from his secretary a very courteous reply. Life insurance has never had such a blow before.—I am, &c.,

W. J. CLARKE.
Bath, August 19.


TO THE EDITOR OF THE DAILY NEWS.

SIR,—Observing the notice of meeting called for the 26th inst., allow me to urge the policy-holders firmly to unite in requiring that the shareholders and directors be held responsible for the due return of the moneys paid in premiums to all such as may object to enter a reconstructed company. The shares are not “limited.”—I am, &c.,

ONE WHO HAS PAID PREMIUMS FOR MANY YEARS.


(From the Insurance Record.)

It is a most difficult thing to get at any reliable data as to the present state of affairs, but when a valuation of the assets and liabilities of the office was made by Professor De Morgan, in 1861, the result showed that after the valuation of the sums assured and the gross premiums, and a distribution of 50,000l. as bonus, the reserve for future profits and expenses was not equal to 10 per cent. of the value of the gross premiums. If on that occasion the whole of the loading had been reserved, as it ought to have been, it would have been impossible to have divided any bonus at all. At this period |[15] the sums assured were about 71/4 millions, and the assets were 747,939l. These assets consisted of the following items:—Government stock and East India Government paper, 113,226l.; mortgages, 143,159l. bonds, freehold property, and other investments, 253,969l.; loans on policies, agents’ balances, current interest, premiums due and since paid, and other assets, 121,449l.; life interests and reversions, 71,395l.; value of policies with other offices, 13,679l.; cash at banker’s (deposit and drawing account), 31,062l.; making, as above, 747,939l. At the end of December, 1863, the assets had been reduced to 714,846l., whilst the liabilities had slightly increased. From that time to the present the assets seem to have declined very rapidly, until they are now something like 400,000l., and of these it appears that only the sum of about 180,000l. is absolutely available to meet policy liabilities, which amount in round numbers to 8,000,000l. In addition to this large sum there are annuities of about 22,000l. a year, which, at eight years’ purchase, may be set down at 176,000l. To meet these large liabilities there is the 180,000l. already mentioned, and an annual income of about 350,000l. Assuming, then, the annual premium income to be 300,000l. the value of the liabilities under the policies, estimating them at the moderate rate of three years’ purchase, will amount to 900,000l. Setting the annuities and assets against each other, there remains a deficit of a sum but little short of a million sterling. It may be imagined, therefore, that the shareholders are not in a position of themselves to make up this deficiency. Many of them have, no doubt, been large sufferers through the failure of other unfortunate concerns within the last few years, and are already to a certain extent “skinned out.” If, then, the shareholders are unable to meet the demands upon them, the policyholders must suffer. To what extent they will be called upon to do so it is impossible to say until a fair valuation of the liabilities and assets has been made. The office may be able to pay them, say, 10s. in the pound for a few years, and then on a fresh valuation, according to some principle yet to be defined, this may be increased or decreased as the experience of the office may justify. Of course, any arrangement with the policyholders such as that indicated will require the sanction of the Court of Chancery before it can be carried out. That sanction may be withheld, but if it be given, the probability is that the young and healthy lives will retire from the office, as it will be more to their advantage to lose the few premiums they have already paid than to continue paying for years for what they will never get by a very large percentage. The old and diseased lives will probably keep their policies in force, and consequently the claims will be excessive during the whole period of the existence of the office. Until some scheme is propounded and laid before the policyholders, it would be premature to offer any advice on the subject. There are one or two committees being formed for the ostensible purpose of protecting their interests, and with reference to these we would only caution those interested against putting their fingers, as the French say, “between the hammer and the anvil.” A meeting of the shareholders and policyholders has been convened for Thursday next at the offices of the company.

[The Daily News, 16. September 1869]

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THE CASE OF OVEREND, GURNEY, AND COMPANY.

[Sep 16]

Yesterday, at the Justice-room of the Mansion-house, Mr. Richard Bridgman Barrow, a magistrate for Derbyshire, described as of Sydnope-hall, Matlock, appeared before the Lord Mayor and Alderman Sir Robert Carden, on a summons which charged him with writing and publishing a certain false, malicious, and defamatory libel of and concerning Dr. Adam Thom and Mr. Oswald Howell, well knowing it to be false.

The charge arose out of the investigation recently made into the case of Overend, Gurney, and Co., in which, it will be remembered. Dr. Thom was the prosecutor, and Mr. Howell the accountant. The defendant, Mr. Barrow, was a shareholder in the company, and gave evidence against the directors in January last, before the Lord Mayor. An association was formed among the shareholders for the purpose of the protection, of which the respondent was appointed chairman, and the alleged libel was advertised in some of the daily papers at the end of last week. It bore the signature of the defendant, and was as follows:—“Overend, Gurney and Co. (Limited).—Notice is hereby given, that Oswald Howell, late partner in the firm of Messrs. Walker, Reddall, Nix, and Howell, of 39, King-street, Cheapside, London, and now a bankrupt, was (by a resolution passed at a properly constituted meeting of the committee of the Shareholders’ Association, for taking common law proceedings against the directors, Mr. Holm and Mr. O’Reilly assenting, and which resolution was subsequently duly confirmed) discharged from acting any longer for such committee, in consequence of his having withdrawn from the Bank of England, in conjunction with Adam Thom, several large sums of money belonging to and without the consent of such committee; that the said Oswald Howell had no authority, since his discharge, to issue circulars, or to do any other act by or on behalf of the said committee. (Signed) RICHARD B. BARROW, Chairman.”

Mr. Howell and Dr. Thom alleged that that statement was false, and that it had been maliciously made by the defendant to prejudice them on the trial of the directors.

Mr. Campbell was counsel for the prosecution; Mr. Serjeant Parry and Mr. Montagu Williams appeared for the defence.

Dr. Thom said he was very sorry that he should be called upon to proceed in this case against a gentleman with whom he had previously been on terms of personal friendship. The advertisement in question had been published to his prejudice and that of Mr. Howell in two daily papers, and the proceedings had been taken to vindicate their characters before the public. He contended that the publication was unprivileged and unjustifiable, but he assured the bench that he bore no hatred against the defendant, and that this proceeding was not taken vindictively. The advertisement, he urged, comprised a most elaborate libel, and he would show that it was utterly devoid of truth. He denied the allegation that Mr. Howell had been discharged from his position on the committee, that any meeting of the shareholders had been called for that purpose, and that the defendant held the office of chairman of the committee. He should prove these circumstances, and then apply that the defendant might be committed for trial.

Dr. Thom then entered the witness-box, and deposed that on the 11th of September he saw in a daily newspaper the advertisement in question, which was read to the court. The person there named as “Adam Thom” was himself. The allegations in it as affecting himself were untrue from beginning to end.

Cross-examined by Mr. Serjeant Parry—Mr. Barrow and witness were both shareholders in this company, and the defendant occupied the position of chairman of the committee of shareholders. The other members were witness and Messrs. Holm and O’Reilly. Its object was to obtain compensation from the directors of the company in common law proceedings. There had not been the slightest pretence for saying that he had put one penny into his own pocket out of the funds subscribed by the shareholders towards the cost of these proceedings. The first difference between him and Mr. Barrow was in February last. He had charged Mr. Barrow with “an attempt at shameless exaction.” The trustees were not allowed to draw cheques except by direction of the committee. In all, 2,350l. was subscribed. Witness had not paid a single farthing in money to that fund. Mr. Barrow held 200 shares, and paid 3s. to the fund on each share. No proceedings in common law had been taken. There was a payment of 200l. to Mr. Linklater, the solicitor, on account of some equity proceedings, 500l. to Messrs. Lewis and Lewis, solicitors for the prosecution in the criminal case, 200l. to Mr. Howell’s firm. Mr. Barrow objected to the payment of such sums, and expressed his dissent. He did not knew that 22l. was paid for depositions in the criminal case, and 58l. for stationery. Mr. Barrow also objected to that expenditure. The sum of 64l. was paid to Mr. Howell’s firm for rent of a room to the committee by a cheque singed by witness and Mr. Howell. Witness, Mr. O’Reilly, and Mr. Howell were trustees of the money, and two of them had to sign cheques. There was a suit in Chancery against a shareholder named Oakes, the result of which was that 1,800l. had to be paid to the liquidators. Witness and Mr. Howell, with others, were guarantees for that sum, and were pressed for its payment in July last. The sum required of witness and Mr. Howell was 900l., and a cheque was drawn for that amount out of the fund, signed by witness and Mr. Howell. He had no authority to do that by the committee, but it was agreed to at a meeting at which witness, Mr. Howell, and Mr. Reilly were present. Mr. O’Reilly declined to sign that cheque, as he wished it to be reserved for criminal proceedings. He would swear that Mr. O’Reilly did not call it a misappropriation of the money. The cheque was eventually signed on the 30th July, and Mr. Barrow did not know of it until August 20. The defendant, Mr. Howell, and Mr. O’Reilly then went to Ashurst, Morris, and Co., and witness as a committeeman alone remained. The sum was subsequently replaced on September 7, witness having been threatened with proceedings by Ashurst, Morris, and Co. That sum was replaced by Mr. Thos. Clark, a shareholder, but witness was no party to it, and was hostile to it. Witness subsequently declined to attend the meeting of the committee at Ashurst’s office.

Mr. Alfred Street, clerk to Mr. George Street, advertising agent, 30, Cornhill, produced the manuscripts of the advertisement in question, which he said were inserted in the Daily Telegraph, Daily News, Echo, on Saturday. The Times, Standard, and Star refused to insert it. He received the advertisement from Ashurst, Morris, and Co., and not from Mr. Barrow.

That was the case for the prosecution.

Mr. Serjeant Parry said the prosecutor had had an opportunity of explaining his transactions in the matter, and he was instructed by the defendant to say that not the slightest allegation was made against either Dr. Thom or Mr. Howell of personal fraud or misappropriation. He only wished to object to the payment of certain sums, and if the advertisement had led to any other belief, he could only express his regret.

Mr. Campbell, on the part of Mr. Howell and Dr. Thom, expressed himself satisfied with the statement made on the defendant’s behalf.

The defendant explained that he had not the slightest intention to impute any personal fraud or dishonour against either of the complainants.

The Lord Mayor then allowed the summonses to be withdrawn.

[The Daily News, 18. September 1869]

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The Daily News. Nr. 7296, 18. September 1869. S. 4.
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ANOTHER step in the fortunes or misfortunes of the Albert Assurance Company was taken yesterday, and both shareholders and policy-holders may consider themselves fortunate in having emerged from the confusion of the last few weeks into certainty. The Company is to be wound up, and the winding-up order will issue on two petitions, one of which represents the Company, and the other the Policy-holders. The policy-holders have allowed themselves to be somewhat divided, and their efforts to get complete control of the liquidation have been frustrated. Vice-Chancellor JAMES’s rebuke was by no means undeserved, and it may be hoped that the refusal of costs to persons who had illustrated the ancient proverb about the carcase and the eagles, will act to prevent further needless litigation. The liquidation will now probably proceed under two liquidators—one to be appointed by the petitioners who represent the policy-holders, the other by the Company. The shareholders meet on the 21st for this purpose, and they will probably still endeavour to devise some scheme for the resuscitation of the Company. Any such scheme must of course be entirely independent of the liquidation, and can only appeal to the policy-holders individually, by offering them something better than the mere dividend on their claims the liquidators may give them. But it is impossible to be sanguine of the success of any such proposal, and the unfortunate shareholders will probably have to make up their minds to pay off the rest of their liability and to bear their loss. It is the policy-holders who are most interested in quick and economical liquidation, and they have already reason to thank Vice-Chancellor JAMES for his determination to protect the property against litigation, “for which there was no pretence, but |[16] an attempt to get costs.”

The liquidation of the Company will be by no means a simple matter. On its very threshold there are two questions which the future liquidators will have to try, on the solution of which the success of the liquidation depends. As matters now stand the prospects of the policy-holders are by no means encouraging. The liabilities to the policy-holders and annuitants are set down in the provisional liquidators’ report as 1,297,932l., a sum which represents, of course, only the value of the policies, less the estimated value of such premiums as may be due on them. The assets, reckoning everything, are 430,021l. 2s. 10d., leaving a deficiency of 971,837l. 2s. 2d. Of these assets the sum due from the shareholders is only estimated at 150,000l. whereas their actual indebtedness amounts to 321,000l. But Mr. PRICE has stated that his experience as a liquidators does not justify him in reckoning on more than the sum he has named proving actually recoverable. It may be said that even on this statement the assets amount to about a third of the liabilities; but no creditor would be wise who estimates that he will actually receive even a fourth of his debt. Liquidation is always expensive and tedious, and several small dividends spread over a term of years is all that can be hoped for as matters now stand. But the question is, Are all available assets brought into Mr. PRICE’s reckoning? Is anybody else responsible? Is any of the squandered money recoverable? To the first question the Chairman of the Manchester Committee gave a very positive affirmative answer, and said that counsel’s opinion had been taken as to the liability of the shareholders in amalgamated companies, and the opinion was that they were liable. On the other hand, the liquidators and their solicitors, in their published statement, while they express a vague hope that some of the squandered money may be recovered, express a far less vague doubt whether the amalgamated shareholders are responsible at all. Indeed, the whole existence of this remote and scattered body of persons is involved in some degree of nebulosity. It has not yet been stated how many of the Albert shares and shareholders have become so by transference from other companies, or whether any have been so translated; but it is certain that, in any case, a very large number of persons must have held shares in those companies who are not Albert shareholders. Should these unfortunate persons be held responsible to their transferred policy-holders their contributions will considerably increase the assets, though those contributions will be the special property of transferred policy-holders, and will not go into the general fund. But though the question whether these unfortunate persons can be made responsible is one which affects many thousands of shareholders, not only in the Albert but in other of the great amalgamating companies, it is of far more public importance to solve the other question raised at the policy-holders’ meetings. The Albert has paid 283,011l. 0s. 4d. to amalgamators and others in so-called compensations and commissions, in what are called the cost of transfer. It paid an enormous commission to its late Manager—giving him an income, it is said, of many thousands a year. Were these payments legal? If not, can any portion of them be recovered, either from those who made them or from those who received them? This question interests the policy-holders, as bearing on their dividend; it interests the public, as bearing on the responsibility of the directors and officials of great companies in dealing with money which is, in a sense, public money. Incurring as they do a great public responsibility, and performing as they aim at doing a great public function, it will be well to know whether a public responsibility can be brought home to them or not. If it can all may be well; if not, some legislation must be undertaken which shall bring their legal responsibility more nearly to the level of that social and moral responsibility they so greatly overlook or so utterly deny.

[The Daily News, 11. September 1869]

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The Daily News. Nr. 7290, 11. September 1869. S. 3.
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THE ALBERT LIFE ASSURANCE COMPANY.

TO THE EDITORS OF THE DAILY NEWS.

SIR,—The “nostrum” of your correspondent, “Life Assurance,” as set forth by him in the Daily News of to-day, would only aggravate the company’s condition. He evidently considers 55,000l. an enormous reserve to put by for 8,000,000l. odd liabilities—it is not 3/4 per cent., and even this has to be reduced by the payment for annuities. I have been for the last fortnight investigating actually a plan similar to what I presume “Life Assurance” to mean; but the result has proved the idea utterly impracticable. I took four different hypotheses as regards lapsed policies, the percentage of these to existing risks varying from 5 to 25, with a gradually increasing rate of claims by death, commencing at three per cent., and interest of money four per cent., the present assets of the Albert and the unpaid capital being placed to the credit of the new company. Under these not unfavourable suppositions there resulted an “Assurance Reserve Fund” of from 15 to 18 per cent. on the sums assured, at an interval ranging between eight and ten years—not sufficient for the then state of the office on the basis of Messrs. Jellicoe and Bailey’s valuation by from one-third to one-fourth. After that date matters only grew worse. The great difficulty in any project for resuscitating the Albert is that in order to start the company on a sound basis the young lives must submit to have their policies reduced to such an extent as renders it more advantageous for them to leave the company at once.—I am, &c.,

WILLIAM KING.
English and Scottish Law Life Assurance Office, 12, Waterloo-place, London, Sept. 10.


TO THE EDITORS OF THE DAILY NEWS.

SIR,—I have read with much interest the letters published in your columns in re the Albert Life Office, and am astonished to find that no one, as yet, has moved for a list of the shareholders. We are under the impression here that they are worth more than 1,000,000l. Will some one in a position to inform us let us have some information on this point? I was originally in the Western, and the policy having been assigned, I am informed that the holders, in default of the “Albert” satisfying their claims, can proceed against the “Western” shareholders, probably many others are in a like position, and I should be happy to join trying this question.—I am, &c.,

X.
Liverpool, Sept. 9.


TO THE EDITORS OF THE DAILY NEWS.

SIR,—Your correspondent “Life Assurance” seems to me to have come nearer to the mark in the suggestions that he makes for the bringing out of the policy-|[17]holders of the above unfortunate concern with the least loss than any who have undertaken so delicate a task. His suggestion appears to me to be excellent as a groundwork, but no more; and I venture to submit the following short outline of a scheme which, if fully carried out, would, I think, be the most satisfactory which has yet appeared. I used scarcely say that for the successful working of any scheme of reconstruction it is absolutely essential that the co-operation of all (that is to say, of practically all) the policy-holders should be obtained, for if the younger and more healthy lives are content to pocket their losses, and rush off to other thoroughly established and reputedly solvent offices, nothing can be done with the rest; for it needs but little discernment to foresee, that if a new society were to be formed to take over only the worst of any company’s business, it would soon find itself in much the same position as the Albert at the present time.

1. A new society to be formed on the mutual principle, to take over the policies of the Albert, the assured paying the increased premium which would have been required had they joined the Albert at their present age. This renders policy-holders free from liability to rejection on a fresh medical examination.

2. Two eminent actuaries to be employed to make a valuation of the loss sustained by policy-holders having to pay increased premiums for the same assurance; and the sum so ascertained (and fixed by the Court of Chancery, if need be) to be regarded as the claim which the policy-holders have upon the Albert, and the various offices which have become incorporated therewith.

3. A deed to be executed by which the policy-holders vest in their directors for the time being, as trustees, the amount of their claim as so ascertained, with full power to realise everything, as far as law will permit, until the said claim shall have been completely liquidated.

4. The amounts so realised to be regularly invested, but kept quite distinct in the books of the society, and to be apportioned periodically in the form of a reversionary bonus upon all the policies which may be entitled to participate (that is, upon all taken from the Albert, and not any new ones which have been issued), due regard being had to the age of the original policies. In this way those who had suffered most, i.e., the oldest policy-holders, would receive the largest return.—I am, &c.,

W. W.


TO THE EDITORS OF THE DAILY NEWS.

SIR,—In reference to the lamentable disclosures of the conduct of the business of the Albert Life Assurance Office, some of your correspondents have suggested the policy of appointing a Government inspector, in order to test the accuracy of the statements issued by life or other assurance offices. The suggestion is worthy of consideration; but I would ask what advantage would be derived from Government inspection if the mode of auditing public accounts generally adopted by auditors, of merely attesting the totals or aggregate, be persisted in, instead of systematically going into the details, and comparing every voucher with the books of the company? I know some will say that the above mode is simply impracticable, on account of the length of time it would involve, and the multiplicity of vouchers which would have to be waded through. An auditorship, unless practically carried out, is merely a nominal office. I venture to assert that if the accounts of the Albert Life Office had been properly audited the present unhappy results could not have occurred, for the true state of the affairs of the company would have been apparent six or seven years ago; and if the same strict principle be applied in all the existing assurance offices, every unsound office would be weeded out, and we should feel that we have an impregnable barrier against unscrupulous persons making out fictitious balance-sheets, and thereby imposing upon the confiding shareholder.—I am, &c.,

ALBERT.
St. John’s-road, Isleworth, Sept. 9.


TO THE EDITORS OF THE DAILY NEWS.

SIR,—I have no desire to be drawn into a newspaper controversy on points of detail involved in any scheme for disposing of the business of the Albert Assurance Company, whether that scheme be a reconstruction on a similar basis to its present constitution, or a mutual basis, with or without a special Act of Parliament.

The one point about which I was most concerned when I addressed you on Monday last was the obvious desirability and importance of keeping the Albert business together, with the view of making the best of it for all parties. And there is nothing in the argument of “W. J. Thompson” necessarily opposed to this object. Let it be assumed that in this matter of the Albert, as in all others, it is every man’s duty to do the best he can for himself, it may still follow, as I hold it does, that the Albert policy-holders as a whole will do best for themselves, individually and collectively, by acting together. They may not, perhaps, by taking this course, do best for individual agents of other offices. But that is not their case.

The twenty-year old example adduced by Mr. Thompson in support of his particular project must in fairness be regarded as exceptional, and certainly quite insufficient as date on which to rest a general case, as few persons assure at the age of 20. Youth, however, I might almost say extreme assurance youth, is indispensable to this view. The “bonus” element of Mr. Thompson’s case is also exceptional, and at best of doubtful quality. Personally I am opposed to the “bonus” system as usually pursued and to Mr. Thompson’s example we can attach just so much importance, and no more, as may properly be given to a suppositious case. The Albert itself has paid “bonus” of one kind or another. The word “bonus” is, in too many cases, a mere bait on the assurance book. It is one of those things which it is very well, or not very well, as the case may be, for life assurance agents to play with. But if a man would make his estimate soberly and act with safety, it will be always most prudent to regard that little word “bonus” in a purely piscatory sense. I repeat, sir, the great matter for the Albert policy-holders, as individuals and as a body, is to fix upon some authoritative well-chosen scheme for dealing with the whole business, in order that the best interests of the whole body may be conserved, by saving what remains of the assets from being divided amongst antagonistic lawyers and rival liquidators; and, at all events, from that most of all to be dreaded eventuality—liquidation pure and simple.—I am, &c.,

JAS. BUCKLE.
London, Sept. 9.


TO THE EDITORS OF THE DAILY NEWS.

SIR,—With reference to the remarks of a gentleman at a meeting of the Albert Assurance Company, published in the Daily News of this day, would you be so kind as to permit me to say, that I am not, as supposed by many, the Dr. Beattie alluded to as being a director or that Company?—I am, &c.,

ALEX. BEATTIE, M. D.,
45, Porchester-terrace, Hyde-park, Sept. 10.

[Reynolds’s Newspaper, 18. Juli 1869]

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THE “SYSTEM” FOR PLUNDERING THE PEOPLE.

TO THE EDITOR OF REYNOLDS’S NEWSPAPER.

SIR,—It is to be hoped that the scandal originated by the near failure of the Overend and Gurney’s prosecution will be productive of good effects. The laws, as regard both great and petty criminals, as administered in this country, are a disgrace to any civilized community. And no wonder such is the case, as those laws were formed and framed by persons desirous of shielding their own order from the penalties incurred by the commission of grave offences, and anxious to retain in their hands the power of dealing rigorously with those in a condition of life beneath them. All such wicked and abominable laws as those which place the life of a pheasant in the same balance as that of a human being are the produce of one-sided legislation. Men have taken advantage of their high position to tyrannize over their fellow-creatures.

There is not a more tyrannical body of men on the face of the globe than the English aristocracy, and hence, knowing as we do that for centuries they have held the reins of government in their hands, there is nothing surprising in the circumstance that every day is fruitful of occurrences showing how vile and infamous are many of our boasted laws, and proving what a hollow mockery it is to cry up English justice as the purest on the face of the globe.

Take the case of Overend and Gurney as a specimen of the ricketty, cumbersome, antiquated machinery whereby our judicial system is worked. Dr. Thom, the prosecutor, alleges that he was plundered of a large sum of money by the fraudulent misrepresentations of the defendants. He goes to considerable expense in proving a prima facie case before the Lord Mayor, who commits the accused for trial, and binds the prosecutor over to prosecute in the sum of 5,000l. No sooner is this done than the defendants, being affluent persons, and blessed with rich connexions, go before Lord Chief Justice Cockburn and ask him to remove the case from the Old Bailey to the Court of Queen’s Bench. His lordship consented, and at the time he did so I remarked, in all probability, that was the first step towards the accused getting off scot free, and intimated that the burlesque would have been more complete had his lordship delivered his decision through a horse collar. This alteration immediately saddled poor Dr. Thom with thousands of pounds of additional expense, and the attorney for the prosecution declared that 5,000l. was the amount required for carrying it out.

Here, then, the luckless prosecutor was placed between two stools. If he did not proceed, the Lord Mayor mulcted him of 5,000l.; and if he did, the same sum must be found to go on with. There was not the slightest chance, be it remembered, of his recovering one farthing even of his original loss, and none of getting back a farthing of his legal expenses. In this dilemma Dr. Thom asked to conduct his own case. The Lord Chief Justice would not listen to such a proposal, and peremptorily told him he must appear by counsel.

Now, this may be law, but it certainly is not justice; for it is simply tantamount to declaring that no person without a heavy purse shall prosecute persons who he suspects, and has excellent grounds for believing, have swindled him of his money. Indeed, the practice of his court, as expounded by Lord Chief Justice Cockburn, is nothing better than carrying into effect the advice given by Lord Melbourne to a rich friend, who was engaged in an almost hopeless suit with a poor adversary. The “amiable” nobleman recommended his friend to continue the action at all risks, and so ruin the poorer man with expenses. Lord Melbourne, as one of the privileged classes, knew how admirably the laws his own order had framed were adapted for banging the door of justice in the face of the poor suitor; and Justice Cockburn must have known that when he removed the Overend and Gurney matter from the court where such cases are usually tried to the Queen’s Bench, and when he subsequently refused letting Dr. Thom conduct it himself, that he was opening loop-holes whereby the defendants might escape the punishment of whatever misdeeds they have committed.

If barristers are recognised institutions attached to the law courts, barristers ought to be hirelings like other servants of the public, and paid accordingly; and the stupid fiction of being voluntary mouthpieces of those who remunerate them by honorariums exploded. Hitherto most persons had believed, before Justice Cockburn told them to the contrary, that the tribunals of England were open for all classes of suitors to obtain relief. But, according to his |[18] lordship, you cannot ever be heard unless you are prepared to pay lawyers, and fee counsel whatever they may demand.

What we require in our administration of justice is levelling down to a machine whereby quick and economical equity can be obtained. We do not want enormously salaried judges stuck upon the bench for the sole purpose of throwing obstacles in the way of the poor man getting justice, or of putting exorbitant fees into the pockets of attorneys and barristers. The judges are by no means the very independent immaculate beings Englishmen are taught to believe. Most of them wink at legal iniquities that are in fact monstrous scandals.

Thus, for instance, frequently, when very complicated, troublesome cases are brought on, they endeavour to get rid of them by what is called a reference, or, in other words, leaving them to barristers named by the court to determine. All the time these references continue the barristers pocket their fees, and the longer the case lasts the more they get. The other day an unfortunate suitor who had thus been referred, wrote to the Times, complaining that although his case was a very simple one, it had lasted two years; that the referee seldom sat to hear evidence, only came at long intervals for two or three hours, the greater portion of which time was occupied in luncheon.

Now the judges know perfectly well all these scandals, but they never attempt to stop them. They belong to the system whereby they themselves have risen to the bench, and they do not care to disturb it. They are part and parcel of the system which crushes the poor beneath the iron heel of the rich. Judges are not, perhaps, accessible to pecuniary bribes, but they often strain the formalities of the law to screen those with whom they are accustomed to associate, whose preserves they have shot over, and whose purses have perhaps been open to them in early and less prosperous times.

[The Daily News, 7. September 1869]

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THE ALBERT LIFE ASSURANCE COMPANY.

TO THE EDITORS OF THE DAILY NEWS.

SIR,—I have made it my business to watch carefully the various wire-pullers in the matter of the Albert Assurance Company, and have attended the meetings of London policy-holders at the Whittington Club and the Guildhall Coffee-house with the view of forming an impartial opinion of the plans (?) submitted for dealing with the unfortunate position of the company, and of the character and position of the company, and of the character and position of the various parities submitting them. I have also read carefully every morning, and sometimes again in the evening, the various letters and reports which have appeared in your columns during the past fortnight, and the conclusion I have come to is that, unless rather more practical wisdom is manifested by the whole body of policy-holders at the approaching meeting on the 9th inst. than has hitherto been displayed by the majority of those who have as yet moved in this most distressing business, the result will be that the policy-holders will allow the whole business and affairs of the Albert to pass into the hands of a set of agitating self-seekers, whose sole object appears to be to get the winding up of the company under their own control. Accomplishing this object those disinterested gentlemen will care little about the welfare of either policy-holders or shareholders, and still less about the credit of the whole business of assurance. Let any impartial man look well to the names and connections of the various parties whose names have appeared to the several advertisements, and some of the correspondence in the daily papers, and I have little doubt his conclusion will be similar to the one here indicated. It is palpable the leading policy-holders have not as yet appeared upon the scene. But they will neglect an obvious duty, which in after years they will probably regret, if they do not come forward in support of some authoritative plan of a nature to save the whole business of their office from becoming a prey to a set of self-seeking attorneys and hungry liquidators.

Surely, sir, in an assurant constituency 16,000 strong a dozen policy-holders of position and independence can be found who have intelligence enough to see that the best interest of the policy-holders lies in some plan—if such can be discovered—which will keep the business together. If to this end they are not satisfied with the plan submitted by Messrs. Jellicoe and Bailey, or that of Dr. Farr, or of “W. G.,” whose letters appeared in your paper of Friday last, let them select a competent arbiter, and go before the whole body of policy-holders with his scheme. If the policy-holders do not adopt some such course as this, they will, by their wild and insane opposition to the Albert management, simply allow their interests, and the whole business of the company, whose agency network alone ought to be worth at least 50,000l., to be dissipated into thin air by that potent compound legal dissolvent—lawyers’ bills and liquidators’ charges.—I am, &c.,

JAS. BUCKLE.
London, Sept. 6.


TO THE EDITORS OF THE DAILY NEWS.

SIR,—In this age of enlightenment on the one hand and systematic fraud on the other, what will things get to in the course of a few years? We have heard of late a great deal about reform in the political world, and a great deal has been accomplished; I think that the next great reform should be to prevent the public being victimized and plundered by men who are represented to the world as men of means and high standing, such as the public have had brought before their notice of late; and the failure of the Albert Life Assurance Company is a fitting opportunity for some plan being devised to prevent, in the future, the recurrence of such downright roguery. Allow me, sir, to submit, through the columns of your valuable paper a plan which, if adopted, would, I think, afford perfect protection to shareholders and policy-holders in all joint-stock companies. In the first place, I propose that at the next session of Parliament a clause should be added to the present Limited Liability Act making it compulsory that the accounts of all companies ranking under this Act be audited every year by inspectors appointed by Government, who would be in fact Government accountants, and who should be paid for their labour by a percentage of the profits of the company whose books are examined; and when a case arises where fraud has been detected, then, on the sworn evidence of the inspectors, the Government should step in and prosecute in the case; and in the event of the directors being found solely to blame they should forfeit all they possess in the first place, and be punished according to the part they took in the transaction. In the case of “unlimited liability” and assurance companies, that the accounts be audited by Government inspectors, when requested to do so by at least one-third of the share or policy holders; the expense of auditing to be paid out of the profits, or bonuses of the company or society. I think if such a plan were adopted that all share and policy holders would be glad to avail themselves of honest and impartial inspectors to protect them from being made the dupes of designing men. In the case of new companies being formed, that they should lay a statement of their affairs and prospects before Government, who would have them strictly scrutinised by the said inspectors before the company was allowed to transact any business; this would effectually prevent bubble schemes and wholesale swindling. The insertion of this will oblige, sir, yours, &c.,

A POLICY-HOLDER.
Newcastle-on-Tyne, Sept. 4.


TO THE EDITORS OF THE DAILY NEWS.

SIR,—The policy-holders in the Albert are very much indebted to you for the earnest manner in which you continue to support their cause. The advice given today (Saturday) in your excellent leading article much have the approval of all the policy-holders who are not blind to their own interests. It is gratifying to observe the unanimity of opinion expressed at the different meetings of policy-holders in regard to the removal of Mr. Kirby from the liquidation. This is right; those under whose management the vessel has become a wreck, ought not to be trusted with the remnant of cargo, and its disposal. This leads to the mention of a matter of great importance, to which you refer, the selection of a person suitable to be appointed in the place of Mr. Kirby to |[19] act more especially for the policy-holders “and to assert their true position in the liquidation.” It is important to all concerned, shareholders as well as policy-holders, that the liquidation should be effected in an economical and judicious manner. A large sun from the assets of the Albert has already been spent in calling and holding public meetings, it is therefore urgent that the policy-holders should come to an early decision to ask the Vice-Chancellor to appoint some well qualified person to act in their interests.—I am, &c.,

A POLICY-HOLDER.
Sept. 4.


TO THE EDITORS OF THE DAILY NEWS.

SIR,—While second to none in my deprecation of the reckless conduct that has led the Albert Assurance Company into such a deplorable condition, I am anxious that just views should prevail on the subject of life assurance generally, and therefore regret that Mr. W. Gibbs’ letter which appeared in your issue of Saturday has not been answered in that of to-day. Mr. Gibbs asks, “Why should not the full amount of premium paid be recouped for the surrender?” and then goes on to argue as if an assurance company ought to be dealt with in precisely the same manner as a bank or building society. The answer is very simple, and yet is one frequently overlooked by policy-holders, who seem to think that because the office has not been called upon to pay a claim in their case, the premiums ought to be returned in full. A little thought will at once show the impossibility of this, for not only have the expenses of the business to be paid, but claims have to be met (for in spite of Mr. Gibbs’ doubt on the subject, every life office can testify to the fact that a certain number of assurers do die in the first year), and of course many premiums are required to pay one claim. Every carefully conducted office will, in cases of surrender, return a just proportion of the amount paid, but it is unreasonable to expect the office to bear the risk of paying a large amount (compared to the premium) year after year, and yet get nothing for it. I would not thus trespass upon your valuable space, but feel desirous that on this subject no wrong impression should remain on the public mind.—I am, &c.,

FAIR PLAY.
Sept. 6.


TO THE EDITORS OF THE DAILY NEWS.

SIR,—It seems to me that the policy-holders, shareholders, and the public generally, are at fault in the view they take of this unfortunate wretchedly-managed company. If there are assets at present for the debts—including, of course, claims which are due—how can you say the company is bankrupt? It is true that there are not sufficient assets until an assurer dies, for it is only then they are liable. I may be wrong—I am no lawyer—but I would ask, “If all they now owe was called for, and that there was money to pay it, can they be made bankrupt?”—I am, &c.,

U. R. M.


TO THE EDITORS OF THE DAILY NEWS.

SIR,—Among the many letters which I have read I have seen none embodying a distinct plan for relieving the policy-holders. Allow me to suggest one. It is this. Let the policy-holders propose to an office of repute that they take over their policies at the rates of such office, allowing, say 10 per cent., on the premiums, and let the policy-holders offer to release the Albert on payment to them of one year’s premium. The policy-holder would be freed from anxiety its proprietary—for of course the arrangement would only apply to average lives. I will assume such an arrangement to be carried out with the Economic, in respect of a policy effected at 30 by a life now aged 45: premium at 30 22l. 2s. 6d. for 1,000l. add 10 per cent. (2l. 4s. 3d.), value of 22l. paid by Albert, 1l. 15s. 3d., total, 26l. 2s., equal at 45 to 730l. The bonus to be paid by the new office would be only 5 per cent. on the premiums, for it would save any commission to agents. These figures are of course open to variation, but they will elucidate the principle.—I am, &c.,

ONE INTERESTED.
London, Sept. 6.

[The Daily News, 2. September 1869]

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ALBERT LIFE ASSURANCE COMPANY.

TO THE EDITOR OF THE DAILY NEWS.

SIR,—It appears, by the statement of the provisional liquidators, as published in your report of Saturday’s meeting, that the directors, in the seven years ending 1861, when they had made a profit, according to that statement, of 60,000l., divided 41,702l. among those interested; whereas during the last seven years they have divided, in “dividends and bonus”, no less than 90,000l., and that in the face of the very heavy “losses” which had in that time accrued. Now, it seems evident that this could only be done in one of two ways; either the board left the whole affair to Mr. Kirby, the “managing director,” who has managed matters to some purpose, or they understood the position of affairs, and, with Mr. Kirby, conspired deliberately to defraud the policy-holders. I leave the “annuitants” out of the question here, because I don’t know how many are in receipt of an annuity as “compensation” for the loss of their situations in offices which have joined the Albert, the legality of which compensation I think may well be doubted. It is quite clear, however, that the share-holders have pocketed dividends which were never earned, but it is possible that the balance sheets were so drawn as not to show it. I am a policy-holder, and of course never got such a document.

Then, as to the “amalgamations,” and the sums paid to individuals, officials or not, who have managed these affairs. I take it that the several directors, secretaries, &c., were dealing with—buying and selling—property not their own, with money not their own, and that in every case where they have appropriated any portion of the money to their own uses, without the express sanction of the shareholders, they have deliberately, in the eye of the law, robbed the shareholders and policy-holders in any company should be bought and sold in droves, as Mr. Sheridan’s letter proves to be the case, without being consulted in the matter?—unless, indeed, a packed meeting, convened for the purpose, can be considered as representing the parties most interested. I hope a good many of the victims in this catastrophe are Mr. Sheridan’s constituents. If it were one, I should know how to act, and as to the testimonial—why, in this case let “virtue be its own reward.” Mr. Sheridan’s letter in your issue of today will require examination.

With regard to the deed of settlement and Mr. Kirby’s “commission,” I do not think that the deed was drawn with a fraudulent intent, but simply that Mr. Kirby was taking what he thought to be the surest way to feather his own nest. The effect, however, is a fraud on the shareholders and the policy-holders, for it is contrary to all idea of justice that an individual, well paid in other ways, should realise such enormous sums, while the concern from which he obtains it is absolutely insolvent. I hear, too, that the directors received 4,000l. a year for their services. Surely the Court of Chancery would compel the restitution of these sums of “compensation” and “commission.”

On the question of reconstructions, it appears to me that the policy-holders would do well to unite and form themselves into a Mutual Assurance Society, having no connection with the old company, and without shareholders as such, for I cannot see why we, their creditors, should be called upon to pay them 5l. per cent. on money which they have lost in the old company. The directors’ proposal seems to me to be more in favour of the shareholders than the policy-holders, who have found the bulk of the money. The policy-holders could doubtless frame a constitution by the light of this disaster which would prevent such deplorable consequences in the future.

Thanking you heartily for the manner in which you have taken up this unfortunate matter, I am, &c.,

A HOLDER OF TWO POLICIES, (Bank of London and Western).
12, Cambridge-terrace, Sept. 1.


TO THE EDITOR OF THE DAILY NEWS.

SIR,—It is marvellous to note how some people will charge for work done when they are virtually in a position to make their own assessment. In the City, if I make an exceptional and unusually large transaction through a broker, I can invariably arrange that the commission charged shall be on a considerably reduced scale as compared with the ordinary rates. Mr. Sheridan, however, attempts to justify himself in charging for a month’s—or, say, for day to day work, less than a month’s negotiations, a fee which equally able men are glad to earn in a life time. A commission of 15,000l., or any sum approaching to it, ought to be entered in the books of amalgamated insurance companies as “black mail;” and I venture to assert that such charges would never have been allowed in this case if they had been stated in plain figures—the naked truth—to the shareholders, notwithstanding Mr. Sheridan’s insinuation that the Albert proprietors sanctioned the proceedings.—I am, &c.,

N.
City, Sept. 1.


TO THE EDITOR OF THE DAILY NEWS.

SIR,—I have seen an announcement in the Manchester Guardian, taken from the Insurance Record, that “in 1861 a resolution by the above company was passed to limit the number of shares to be held by each future shareholder to 100.” Can you or any of your numerous readers state whether that resolution is in force now or not; and if it is, how can a person hold 300 shares that have all been purchased by him since 1866, and from one broker?—I am, &c.,

A CONSTANT READER OF THE “DAILY NEWS.”
August 31.

[The Daily News, 3. September 1869]

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THE ALBERT ASSURANCE COMPANY.

[Sep 3]

A very numerous meeting of policy-holders was held in Liverpool yesterday, for the purpose of considering the proposal made for the arrangement of the affairs of the company. After some delay, Mr. I. Penny (Messrs. Horsfall and Penny) undertook to preside. Mr. Price’s report to the policy-holders and shareholders having been taken as read, Mr. Lewis (solicitor), read the order of the Vice-Chancellor, under which meetings like the present were held. The Chairman then alluded to the proceedings at Manchester yesterday, and read the resolutions there adopted. The resolutions denouncing the mismanagement of the company were warmly cheered. The Chairman said that though no doubt a very strong feeling prevailed with regard to the management of company, at this stage it was necessary to consider what was best to be done to protect their interests, and probably the appointment of a committee would be the best course to adopt in the meantime. Mr. Hull, solicitor, who opposed the plan of arrangement laid down in Mr. Price’s report, read a series of resolutions which he had prepared. The first of these, moved by the Rev. Canon Gray, and seconded by Mr. Bigley, was as follows:—“That, in the opinion of this meeting, the scheme of reconstruction of the company proposed by the provisional liquidators is crude and inequitable, and that it is not practicable for this meeting to frame any modification of it.” A long discussion took place, during which great interruption was experienced from a policy holder, who kept vigorously denouncing the affair as “a d——swindle,” &c., &c. Mr. Price wished it to be understood that the proposal made by the liquidators had not the definiteness of a plan, and merely enunciated a principle. After an interview that morning with the Manchester Committee, Mr. Price said there was a good and reasonable probability of some good substantial company taking up the concern. The discussion which followed was of a very excited character, and while one set of speakers fiercely demanded a winding up in Chancery, others were equally eager for proposals to be made to some other company to take over the business, while others advocated a voluntary winding up. After one or two amendments had been put and withdrawn, the resolution was put and carried with one or two dissentients. Mr. Hull then read his second resolution as follows:—“That a committee be appointed to co-operate with the several committees appointed by policy-holders in other towns, with power to adopt such measures as may appear best for the interests of the policy-holders.” The Chairman suggested that the question of the responsibility of the proprietors of stocks in the amalgamated companies should form one point for consideration by such committee. In reply to Mr. Edward Banner, Mr. Price stated that no opinion had been taken by the provisional liquidators as to the liability of shareholders in the amalgamated companies. He was not aware that any opinion on this subject had been taken by the board of directors. Mr. Cunningham next moved, and Mr. Collard seconded the resolution read by Mr. Hull. Mr. Provis (Manchester) wished to address the meeting, but the interruption was so great that he could not be heard. Loud cries were raised of “Go to Manchester,” “You had your meeting yesterday,” &c. All that could be understood of Mr. Provis’s remarks was a vigorous denunciation of Mr. Kirby, who retorted at intervals from the other end of the room.—Mr. Morgan (solicitor) spoke |[20] at length upon the importance of either forming a united assurance company amongst themselves or making overtures to take over the business to some influential offices. The resolution moved by Mr. Cunningham was put and carried unanimously. Mr. Ledward proposed, and Mr. Dodd seconded—“That in case it becomes necessary to wind up the company, compulsorily or otherwise, the committee are instructed to request the Vice-Chancellor to appoint as liquidators persons who will fairly represent the interest of the policy-holders. Upon this resolution Mr. Price explained that he considered himself bound to help both policy-holders and shareholders without being a partisan of either. After this explanation Mr. Ledward withdrew the resolution. Mr. Price further explained, in answer to loud calls of “Who gets the money?” that the money was paid day by day into the Bank of England in the name of the chief clerk of the Vice-Chancellor James, and the Provisional Liquidators, and that no cheque could be paid without the chief clerk’s and their signature. He further stated there was perfect safety with regard to the payment of premiums, for those premiums were vested in the names of the provisional liquidators and the chief clerk; that a separate account was kept of them; and that if before the 1st January next, the holder decided to discontinue his policy, he could have the premiums repaid. Mr. Lewis stated that the difficulties which would be experienced in the way of another company taking the business over were that one-third of the business of the Albert Company was Indian business, and that the amalgamation with the Medical and Invalid Office had contributed a large amount of life risks which an ordinary insurance company of first-rate character would not touch. In conclusion, he dwelt upon the importance of making some arrangements upon the basis of the really sound and good business which the society possessed for a settlement of the affairs, instead of protracting those arrangements until there was really little or nothing to work upon. A committee was then appointed, and the proceedings closed.

[The Daily News, 21. September 1869]

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THE ALBERT LIFE ASSURANCE COMPANY.

TO THE EDITOR OF THE DAILY NEWS.

SIR,—Allow me through the medium of your journal to address a few words to my brother sufferers by the collapse of the Albert Assurance Company. The fiat has gone forth; the company is to be wound up. But the end is not yet; though what the end must be, unless we combine and save ourselves, is a matter of the greatest certainty; i.e., total loss to all concerned, except the present creditors, and to many utter ruin. Shall we, then, submit to such a calamity when a small sum from each would save us all? It appears there are 20,500 policy-holders, annuitants, and shareholders. From 5l. to 50l., or an average of 35l. from each, would produce 717,500l., with which to form a new company for the purpose of taking over the liabilities and assets of the company now ordered to be wound up. If this be done there will then be an paid-up capital of nearly 1,000,000l., irrespective of the support which the public might, and no doubt would, render by subscribing to an undertaking offering so profitable and safe an investment as a new company so formed would do. Time is of the utmost importance in such a crisis. Let us all then, or at least every one of us who can possibly afford to subscribe even the small sum of 5l., unite heart and hand without a day’s delay, and form a new company under the Companies Act of 1862, by which every one can determine before hand the extent of his liability. To the shareholders particularly it is of the most vital importance that they should adopt either this or some better method of relieving themselves from the trouble now threatening them. If they do not, and the present company be wound up without the formation of a new company, they will be called upon to pay to the utmost extent of their means; and I need scarcely remind them that what they will have to pay will be totally lost; while, on the other hand, what they may subscribe to form a new company will not only save them from a present grievous loss, but will also become a profitable investment. There may be other methods by which something may be saved from the wreck, but as far as I can see this is the only plan by which everything and everybody concerned may be saved. It was stated by Mr. Price, one of the provisional liquidators, at a meeting held at Birmingham on the 3rd instant, that overtures had been made by a very eminent office for taking the risks of this company; but the amount required for so doing was 800,000l. beyond the assets of this company. Now, as the shareholders are not liable for more than 324,000l. in respect of the uncalled capital, and as on Mr. Price’s own estimate not more than 150,000l. of that sum is likely to be realised, it is obvious that a transfer of the risks to another company could only be effected at an enormous sacrifice to both share and policy holders and annuitants; in other words, the shareholders would lose entirely every shilling which could be squeezed out of them, and the policy-holders and annuitants would have to submit to a frightful reduction of the amounts insured by their policies and annuities.

Assuming a new company to be formed as I have proposed, it would start under the most auspicious circumstances, viz., with a very large business to begin with, and a proprietary of upwards of 20,000 persons, the interest of every one of whom it would be to, and who, of course, would influence their friends and acquaintance to insure with it. In addition to this, there is a large number of agents of the present company who would act as agents for the new company; and the united influence of proprietary and agents would produce thousands of new policies annually. A new company, so formed, must of necessity be a flourishing one. The annual income from premiums, and interest on capital invested, would pay all claims as they arose and a good dividend to the proprietors, and leave a handsome surplus for a reserve fund. Brother sufferers, will you then submit to enormous loss to all, and inevitable ruin to many, when there is such an easy way of escape open to you? Be up and doing, and save yourselves!—I am, &c.,

E. C., a Share and Policy Holder.
Sept. 18.


TO THE EDITOR OF THE DAILY NEWS.

SIR,—In 1854, under the influence of the local agent, I took out a policy on my life for the very humble sum of 200l., at an annual premium of 4l. 10s. 4d., in the Times Life and Guarantee Assurance Company, 32, Ludgate-hill, and in 1857 the business of that office was transferred to the Albert; and having paid in sixteen annual premiums, amounting in the whole to 72l. 5s., the machine comes to a “dead lock.” I have never been asked to part with it, and still hold the Times policy. The capital of the Times was 50,000l., in 5,000 shares o 10l. each, upon which 3l. per share had been paid, making the paid-up capital at the time I took out my small policy 15,000l.; which at that time I thought a sufficient guarantee. On the transfer of the business, the Times shareholders were recouped their payments at the rate of 20s. in the pound, or, in other words, paid back their 15,000l. out of the Albert funds, as I presume; and the manager, who had in fact founded the office, was awarded an annuity for life of 650l. per annum, which he afterwards surrendered, as I have been informed, for a ready cash payment of 8,500l.; out of the funds of the Albert also. My policy has the usual clause, “That no director signing it, and no shareholder, shall be liable in respect thereof beyond the unpaid part of any his shares in the capital stock of the company;” and I am aware it was laid down by the late Lord Eldon that the policy-holders were as much bound by this condition of insurance as the company was by the policy. It appears to my mind that the shareholders of the Times are therefore liable for the full amount of the subscribed capital of 50,000l. towards the liquidation of the claims under the policies signed by their directors, equally with the shareholders of the Albert; and the same principle will apply to the rest of the twenty-two offices the Albert absorbed. They should be all “tarred with the same brush”—and the public will not agree that justice has been done unless they are.—I am, &c.,

JAMES ALEXANDER.
The Square, Dunstable, Beds, Sept. 17.


TO THE EDITOR OF THE DAILY NEWS.

SIR,—If ever a Vice-Chancellor was “great” in his day and avocation, it was most certainly yesterday, when Sir William James decided that the shareholders of the Albert were not to be considered as a huge carcase to be preyed upon! And why should they be? The shareholders are equally the victims of the gross mismanagement of the company as the policy-holders are; the great difference between them being, that the one has to pay, the other to receive. The Albert paid away to the officials of twenty-two life offices the sum of 283,011l. 0s. 4d., as mis|[21]called compensation. The really first and most sensible course to be pursued is to see how much of this money can be legally recovered for the benefit both of share and policy holders. In this case, the “black flag” should be hoisted without commiseration, and no quarter shown. The recipients thereof have materially assisted in robbing the helpless widow and her fatherless children of the only last resource they had in this world to help them in their hour of need, and mercy to such men would be direct cruelty to the whole human race. That being done, than let us try the question, How far are the shareholders of the 22 companies who transferred their business to the Albert, liable for the amounts insured under their several policies, and signed by their respective directors? I believe the managers of the Albert never called in any of the policies that had been issued by these twenty-two companies, and that the originals are still in the hands of those who have nevertheless continued their payments thereon to that office. At all events, I still hold the original policy I had from the Western Life office in 1845, and which was transferred to the Albert in 1865, and the Western had a wealthy and highly-respectable proprietary, considerably more so than that of several of the others. That the policy-holders in the Albert have a right to protect themselves cannot be disputed; but do not let us apply it in the same sense that R. B. Sheridan did when he made Rolla say, in his great tragic play of Pizarro, “Such protection as vultures give to lambs, covering and devouring them.” In common justice, the Albert shareholders exclusively should not be called upon to bear the whole amalgamated liability of 23 offices, when, in all human probability, they had no voice whatever in either of the transfers. The legal liability of the whole of the parties above-mentioned should be tried in Equity, before these innocent lambs are slaughtered, and offered up as a sacrifice to appease the indignation of the victimised policy-holders.—I am, &c.,

HENRY BARRETT.
19, Wellington-street, Woolwich, Sept. 18.


TO THE EDITOR OF THE DAILY NEWS.

SIR,—Notwithstanding the large amount of space the Albert Life Assurance Company has recently occupied in your journal, I very much question whether anything has yet appeared similar to the statement which, with your permission, I am about to make public. The break-up of the above-named company forcibly illustrates the truth of the old proverb, “Honesty is the best policy.” I will, therefore, without further introduction, briefly and truthfully state how the Albert and Medical Assurance Company behaved towards me, and leave you and your readers to judge whether it was likely that any assurance company could stand and prosper which acted in the manner about to be described. In the year 1860 I applied to the Albert and Medical for a life policy of 200l. (I am a poor man) on my own life. I have previously applied to two other offices and had been rejected on account of something being the matter with my heart, the result of rheumatic fever in 1857, and that was why I applied to the Albert and Medical. I was examined by two of their medical officers, and a few days afterwards I received a letter from the company stating that they proposed that I should take out a five years, policy, which they offered to grant me for twelve guineas a-year; I was then 31 years of age. This offer was made, they said, with the view to my interest, as if at the expiration of the five years I should be in no worse health than I then was—and they said the probability was that I should be better—they would be happy to reconsider my case with the view to granting me a life policy at a lower rate of premium. I replied stating that I should prefer a life policy, and asked them to favour me with their terms for such. Their answer was that they should require twenty guineas a-year, and again urged the five years, policy. Well, sir, I was timid, thought I should probably soon drop down dead, and was anxious to do the best I could for my wife and children; I therefore accepted the offer of the five year’s policy, and, by dint of considerable pinching and screwing I managed to pay the twelve guineas a year for the five years. Shortly before the five years had expired, but after I had paid my six guineas for the last half-year’s premium, I wrote to the company, quoting their letters of five years previously in reference to the promised life policy at a lower rate of premium. Now, in my simplicity I expected that, as my case was a special one—it was treated specially in the first instance—I should not be dealt with in the same way as an ordinary applicant for a policy, the company having pocketed sixty guineas of my money. But no; they simply sent me one of the usual forms of application, which I had to fill up, and go before the medical officers in the ordinary way; and a few posts afterwards I received a short note informing me that my application was refused. At the present moment I quite forget whether I wrote again or not complaining of this treatment; but I think I did, and received no reply. I informed the company that their prophecy regarding my health had turned out correct; that for the past five years I had had uninterested good health, not having been laid by a single day. In conclusion, I may mention as a proof of the truth of this last statement that I afterwards wrote to the Provident Clerks’ Mutual Life Association, stating all that this letter contains, and although I was, of course, more than five years older than when I went into the Albert and Medical, the Provident granted me a life policy for 200l. for a premium of 8l. 13s. 8d. a year, payable half-yearly. If you can find space in your valuable journal for this letter, it may possibly prove to be of some benefit to simple, though honest, people.—I am, &c., R.


THE ALBERT LIFE ASSURANCE SOCIETY.—

On the 18th ultimo the committee representing the policy-holders in the Albert Life Assurance Society in Calcutta met the members of the local board of direction by request. The object of the committee was to ascertain to what extent the position of the policy-holders had been prejudiced by the proceedings of the board. The position taken up by the board, on the other hand, was, that they had done everything in their power, as far as their position allowed them, to protect the interest of the Indian assurers, and to maintain intact in India a fund sufficiently strong to meet all the probable liabilities of the Indian branch. The meeting extended over two hours and a half. The directors instructed the manager, Mr. C. H. Ogbourne, to read certain extracts from their proceedings, and from their correspondence with the head office. From this it appeared that from 1861, inclusive, a sum of 220,000l. had been withdrawn from India by the home board, and that a further sum of 50,000l. had been paid in England on what might be termed the company’s Indian account, thus bringing the total derived from the Indian branch up to 270,000l. Against these enormous withdrawals the Calcutta board had protested repeatedly and in the very strongest terms. Indeed, on the 16th of February last they wrote a letter reviewing the whole question, and declaring that unless the understanding come to in October, 1866, was adhered to, and the Indian fund kept at 100,000l., invested in Government securities, they would resign, and published their reasons for taking so important a step, and one so certain to prejudice the company in the eyes of the public. They next went over their relations with Mr. Neale, and fully explained how it was that they consented to his withdrawing a sum of 40,000l. from the Indian surplus funds. Mr. Neale came out, it appears, armed with full powers, and if he had not been allowed to withdraw the 40,000l., and he was only allowed to do so under stringent terms and conditions, he might have withdrawn all the funds. The directors throughout acted under the opinion of the Advocate-General. The Indian branch has now invested in Government securities more than 71/2 lakhs of rupees, and in addition it holds at the different agencies, securities, not immediately convertible, to the extent of some two or three lakhs, so that the assets of the Indian branch exceed, if anything, 100,000l. The directors finally read a resolution in which they strongly condemned the conduct of Mr. Neale, and expressed their indignation at the course he had pursued, and concluded by declaring their intention of immediately publishing and circulating to every policy-holder a pamphlet embodying the explanations made to the committee, and containing the extracts which had been read. This course met with the hearty approval of the committee, who then proceeded to pass the following resolutions:—Resolved, “That after the explanations afforded by the Calcutta board, and their statement that they consider themselves no longer directors of the Indian business, the Inquiry Committee request that the gentlemen forming the late Calcutta board will be good enough to continue their services, in conjunction with Mr. Ogbourne, in the interests of the policy-holders, until relieved by some one properly authorised by the Court of Chancery.” The second resolution recommended the policy-holders to continue the payment of their premiums, on condition that, if no arrangement was made for the transfer of the business, the amounts should be repaid.

[The Daily News, 23. September 1869]

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THE EUROPEAN ASSURANCE SOCIETY.

TO THE EDITOR OF THE DAILY NEWS.

SIR,—An advertisement in your columns to-day records another crash, and I fear a greater one than that which has of late occupied so large a share of public attention. As one of the unfortunate policy-holders in this European Society may I ask you to let me tell in your columns the story of my connexion with it, as it is probably that of many hundreds more? It is by no action of my own that I find myself an European policy-holder. In 1854 I insured my life for 500l. in the English Widows Fund, a society which was recommended to me by the published assurance that its capital was 200,000l., and by the facts that some of its directions were personally known to me, and that Dr. Lankester was its medical officer. There were also some especial recommendations, among them a provision that in case of inability to pay the premium the policy should not lapse, but the amount should remain as a debt upon it. In January, 1860, I received a circular, signed “J. Pope Cox, secretary,” telling me that a bonus of 22l. 17s. 4d. had been added to my policy, congratulating me on the result, expressing a cordial hope “that you may derive corresponding advantages in future from your connection with the Society.” I was also told in an italicised sentence “This addition is irrespective of the ordinary bonus,” which was said to be due in October, 1860; and an intimation was given that still another bonus might be expected in October, 1863. But October, 1860, found me transferred. When my Michaelmas premium became due I found that I had to pay it to the British Nation Company; and as no alternative was offered me, I did so. I took an early opportunity of testing whether the change had altered my rights under my policy, by demanding that one premium should be allowed to stand as a debt upon it. After some little altercation this was agreed to, and I afterwards went on paying my premiums to the British Nation. In 1863 I got a very congratulatory circular from this company, recognising the amount of my policy as 522l. 17s. 4d., and telling me that “the Reversionary Sum added to the above Policy, and payable at death with the above-named amount assured, is 24l. 12s.” This circular concludes by telling me that “the business is rapidly increasing, and it is hoped that at each succeeding valuation this very satisfactory bonus will be materially augmented.” But such is the mutability of all human things—and especially of Assurance Offices—that no further valuation ever took place. For in 1865 I found myself transferred again; and again without any power to help myself. The usual renewal notice came, and told me to pay the premium to the “European Assurance Society;” and I did so. Two years after this transfer I received another of these congratulatory circulars, informing me that the Reversionary Sum added to the Policy was 7l. 14s.; and again adding, “The business is still rapidly increasing, and it is hoped that at each succeeding valuation the bonus will be materially augmented.” But as the previous prophecy of material augmentation had not been realised I felt doubtful, not only of this promise, but of the whole amalgamated concern. The prospectus attached to the bonus declaration, however, removed my doubts. I saw that the Society was empowered by “special Act of Parliament;” that it had (this was in 1867) an annual revenue of upwards of 345,000l. ; that its capital, subscribed by nearly 2,000 shareholders, exceeded 800,000l.; that Government, the leading banks, railways, &c., accepted its guarantees; and more than all, that “the Royal Naval, Military, and East India Life Department is under the especial patronage of Her Most Gracious Majesty the Queen.” How could I longer doubt? All these great authorities gave the institution their sanction, and I, perhaps, rather than doubt its safety, ought to congratulate myself that my little policy had not only grown 50l. in value, but had been promoted step by step from Fleet-street, E. C., to Regent-street, W., and, more aristocratic still, to Waterloo-place, S. W., and that I was now in a Society one Department of which enjoyed the Special Patronage of the Queen, another Department of which was “the only Society authorised by the Imperial Parliament to guarantee the fidelity of persons holding Government appointments,” and the whole of which was under the powers of a special Act of Parliament. Thus matters went on with me till the fall of the Albert raised suspicious rumours about the European, and I got alarmed for my little investment of fifteen years’ premiums. So I wrote to the manager to ask for the surrender value of my policy, and told him I imagined that value to be the sum assured, with the bonuses—making together 555l. 3s. 4d., less the |[22] estimated value of the premiums due from me. The reply was, a paper of questions to answer, and a request for a fee of 5s. I answered the questions and paid the fee, and was informed in about a week that my policy was worth 36l. 19s. 6d.; that the sum owing on it was 6l. 1s. 3d.; leaving 30l. 18s. 3d. as the price the society could pay for its relinquishment. This was dated 8th September. On Saturday last I wrote accepting this offer, and last night I got a reply saying that “in the present state of the Insurance World the directors decline to purchase any more of their policies.” I at once resolved that to-day I would put an advertisement in the Daily News, asking other policy-holders to co-operate with me in forcing an investigation of the affairs of the company. But on taking up the paper at breakfast this morning I see that I am too late, for prominent among the advertisements is a notice of an application to the Court of Chancery yesterday to wind up the concern.

One word on this application. It is made by two of the directors of the company, and must, in the interest of the policy-holders, be resisted. We must have, as the Albert has, a compulsory winding up, and must be represented in it, as the Albert policy-holders are. But for this purpose we must at once organise, and I shall be glad to help in the arrangement of a preliminary meeting to set the matter moving.—I am, &c.,

P. W. CLAYDEN
13, Tavistock-square, W. C., Sept. 22.


TO THE EDITOR OF THE DAILY NEWS.

SIR,—You have opened your columns to the disappointed policy-holders of the Albert, pray do not close them to the miserable victims of the European. Look at my case. In 1855 I insured in the Diadem. In 1857 the Diadem merged in the Anglo-Australian. In 1858 the Angle-Australian was incorporated with the British Provident. In 1859 the British Provident became absorbed in the British Nation, and in 1865 the British Nation yielded to the same fate as its predecessors and was incorporated in the European. Now, in 1869, the European is swallowed up in vacancy. Surely I have one consolation, for as not one of these amalgamations or transfers has taken place, so far as I know, with my consent, I have a remedy against five sets of shareholders, and five boards of directors. I am ready to help any fellow-victims in enforcing that remedy.—I am, &c.,

A LOST DIADEM.
Sept. 22.

[The Daily News, 27. September 1869]

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PROSECUTION OF THE “ALBERT” DIRECTORS.

[Sep 27]

On Saturday at the Marlborough-street Police-court, Dr. William Beattie, Mr. Peter Hood, Mr. A. R. Kirby, Mr. E. Vansittart Neale, Dr. Nicols, M. R. C. P., Vice-Admiral the Right Hon. Lord George Paulet, C. B., Mr. W. Page, Mr. T. Phillips, Mr. T. Stevenson, and Mr. Robert Whitworth, the directors and managing director of the Albert Life Assurance Company, appeared to answer a charge preferred against them by Mr. Lee and other shareholders of the company of “conspiring to defraud certain persons of divers sums of money between the years 1864 and 1869.”

Mr. Straight, instructed by Mr. A. J. Murray, appeared on behalf of the prosecutors; Mr. Milward, Q. C., Mr. Poland, Mr. Metcalfe, and Mr. Besley were the counsel present of behalf of the defendants.

Mr. Straight applied for an adjournment in order that he might have time to examine the books of the company, observing that he was desirous, before opening his case, of being in possession of that information, as he was very anxious to avoid casting any aspersions upon the gentlemen against whom the summonses had been granted.

The counsel on the other side objected to an adjournment, arguing that a charge had been made against their clients that could in no way be substantiated, and they trusted that the inquiry would be allowed to go on in the usual way.

Mr. Knox ruled that the case should go on, and

Mr. Straight proceeded to open his case. His only desire, he said, was to place the facts of the case as clearly as he could before his worship, and to enable him to come to a proper and just conclusion in the matter. He would ask him to say how far the directors ought to have been aware of the state of the affairs of the company, and if he could show that they allowed false reports to be issued, and that they paid dividends and bonuses out of imaginary capital, he submitted that they had been guilty of a great fraud upon the shareholders of this company. The company was established in 1838, but it did not assume its present title until 1863. The capital of the company was 500,000l., in 25,000 shares of 20l. each, all of which were allotted. In 1865 the defendants, with other persons who seemed to have subsequently withdrawn, were directors of the company, and on each share 3l. had been paid, and further sums at the desire of the shareholders. At the time of the crisis, in January, there was a sum of 321,989l. to be called up. The shareholders were to receive 5 per cent., and the profits were to be divided on a participatory system between the shareholders and the policy-holders. From 1838 to 1858 the profits were 29,808l. 14s. 3d.; from 1859 to 1861, 33,650l. 14s. 9d.; altogether 294,152l. 3s. 8d. had been paid for amalgamations, and form the time they were made losses seemed to have commenced, for from 1862 to 1866 the loss was 281,702l. 11s., and between that period there had been an amalgamation with the Western and Kent Assurance and the Indian. He would call attention to the fact that in 1865 the defendants were directors, and must and ought to have known that the company was insolvent. They had the accounts and the books before them, and continued paying bonuses; and he would ask his worship to say that this was done to make the company appear a good and sound concern: and this, he contended, was criminally wrong. From 1867 to 1868, 1,360,630l. 13s. 7d. was lost, and yet statements were put out calculated to induce the public to buy shares and become policy-holders. Even in January of the present year an advertisement in the papers stated the half-yearly dividend was in course of payment to shareholders; and he (the learned counsel) would say that it was not right to conceal from the shareholders and the public a true state of the company’s affairs. After stating that Mr. Lee, the prosecutor, bought his shares in February last, believing the company to be in a sound condition, he proceeded to comment upon the amalgamation that took place, to which he attributed much of the company’s misfortune, and afterwards read the report of the meeting of shareholders on the 30th of August, on which occasion Mr. Price made his statement of the affairs of the company. He concluded by calling upon the magistrate to send the case before a jury, allowing that he considered he (Mr. Straight) had made out a prima facie case; but, on the other hand, if the magistrate did not think so, no one would be more glad than he to see the case dismissed.

Edward Lee deposed—I live at 55, Lancaster-road, Notting-hill. I am a law student. In the early part of this year I had a few hundred pounds of my own, and I was desirous of investing that money. I looked about where best to invest it, and I saw advertisement in the Times newspaper.

Mr. Knox—What date is it?

Witness—13th of January, present year.

Examination continued—The advertisement declared that the half-yearly dividend was in course of payment. I also saw two reports of the Albert Assurance Company for 1865 and 1866. I made inquiries with regard to this company, and I was led to believe from reading the documents in question that I should receive a large amount of interest upon the capital invested. I gave instructions to Messrs. Smith to purchase 199 shares, for which I paid about 120l. I instructed Messrs. Smith to buy whenever they could get an opportunity. There were 30 or 40 shares for which I never got certificates; the company stopped before there was time to issue the certificates. After the purchase of these shares I made certain inquiries at the offices of the company in Waterloo-place, and from the information I got there I bought more shares, for which I received certificates after some considerable time. I first learnt that the company was in trouble either in July or August. I learnt it from the newspapers. I received a circular from the secretary of the company. I forget when I received it, but it is dated in August. On receiving this letter I attended the meeting of the shareholders on the 28th of August. It was held at the offices in Waterloo-place. Mr. Neale was in the chair; Mr. Kirby, the manager, was also there. I also saw Mr. Price there. I should not have invested my money if I had been aware that the company had been making a loss. I attended a second meeting at which Mr. Neale presided, but I don’t remember whether any other director was present. In consequence of advice tendered to me I went to the office of Mr. Price, the liquidator, yesterday week. I saw Mr. Price, but on the advice of Mr. Lewis I was not allowed to see the books. I have been in communication with Mr. Tarring and other shareholders.

Cross-examined by Mr. Metcalfe—My address is No. 55, Lancaster-row, and I am studying with Mr. Vallancey Lewis. I bought some of the shares at 5s. 6d., with 3l. paid, but I cannot give the number. I also bought other shares, for which I paid 28s. 6d. I do not know how |[23] much was paid up, but I should imagine that 10l. had been paid up on them. I mean to say that when I paid 5s. 6d. for shares on which 3l. had been paid, I believed that profits were made by the company. I knew that shares of companies had been much depreciated owing to the badness of trade and the great stoppages that took place years ago. Such shares when depreciated had never recovered their value, and I believed the Albert Company might be solvent.

Cross-examined by Mr. Poland—I hold about 240 shares. I cannot say how many on which 10l. has been paid, but certainly twenty or thirty. I did not examine the policies to see the nature of the contract between the company and the policy-holders. I made inquires at the company’s office, but I have never examined any policy.

Cross-examined by Mr. Besley—The number of shares which I bought for 123l. represent about 1,000l. I do not know the extent of my liability. They were 20l. shares, and my liability will go as far as that. I first saw Mr. Smith in reference to the purchase of Albert shares at the beginning of this year. I bought shares from February to June, seeing Mr. Smith from time to time, and talking matters over with him. I saw him sometimes two or three times a week. I had numerous transactions. I bought shares but I have not sold shares. The house in Lancaster-road is occupied by my father. He is not a monetary agent, nor has he an address in Cheapside. I have been studying for two years with Mr. Vallancey Lewis. I do not know any of the persons from whom the shares were bought. They are all strangers to me, and the transactions were through Mr. Smith. I did not pay as little as 4s. 4d. for any of the shares. I executed transfers, and except on one occasion I gave them to Mr. Smith to lodge at the office. I do not know whether Mr. Smith gave a lump sum for any parcel of shares. I really expected to get 5 per cent. on 1,000l. on my investment of 100l. I know that there are companies paying at that rate, taking into account the price of their shares in the market. I did not know the exact interest I should receive. I asked my broker to buy the shares, thinking at the time they were a good investment. I saw several documents and newspaper reports, one in the Times. In share brokers’ offices generally papers are lying about relating to companies. I saw reports of the Albert Company for 1865, 1866, and 1867 in Mr. Smith’s office before I gave him authority to buy shares. Mr. Smith is a client of Mr. Vallancey Lewis, and that is how I became acquainted with him. I did not give him orders to buy shares before I had seen documents, reports, and advertisements relating to the company. I saw the advertisement announcing that the dividend was to be paid in the Times and other papers. On looking at the “Directory” at the beginning of the year I saw the advertisement of the directors. From the fact of seeing the reports in Mr. Smith’s office I first thought of buying the shares. I will not swear to any report in particular, but I believe I saw the last report issued by the company in Mr. Smith’s office, and Mr. Smith was present. I did not myself get any documents of the kind. Those I produce I cannot say where they came from. I have some reports in my possession, but I cannot say where I got them from. I only know Mr. Tarring and Mr. Cottrell from having seen them at the meeting. With regard to the report read by Mr. Straight, that was the report of the meeting which was reported. I am the Lee mentioned in the reports. These shares were not the only investment I intended to make. I should have invested 300l. or 400l.

Mr. Poland—Have you the means of paying your liabilities?

Mr. Lee—That is not a question you should ask me.

Mr. Straight—There should be no concealment. Have you the means of paying your liability on these shares?

Mr. Lee—I am sorry to say I have not.

By Mr. Pools—I cannot identify any particular report. The report I saw was, I believe, the report issued in 1866, and presented to the meeting in 1867.

Mr. Straight—Whether or not you saw the reports in Smith’s office, you saw them before you bought the shares?

Mr. Lee—Mr. Smith is a client to the gentleman to whom I am articled, and I was continually in and out of his office, sometimes on legal business and sometimes about buying shares. Mr. Smith’s office is an ordinary shareholders’ office, with papers and reports lying about.

Samuel Lowell Price, provisional liquidator, deposed—I was first called in on the 13th of August. Mr. Kirby, jun., acted for some time as my provisional colleague. I obtained a great deal of information from him. He was perfectly well acquainted with the affairs of the company. I prepared the report that was read at the first meeting of the shareholders on the 28th day of August. I was present at that meeting. The report is made from the ledger and cash books and books in daily use. I should not necessarily have to refer to the minute-books. I find that the original report is substantially correct. The company was originally started in 1838, and it assumed its present title in 1863, and the capital was 500,000l. All those shares have been allotted. I believe. They are all 20l. shares, upon all of which 3l. has been paid, and some more. The total amount of capital now standing to the credit of the shareholders is 178,011l., which leaves the realisable amount of 325,989l., which might produce 150,000l. or more, and thus there was a deficiency of 971,837l. 2s. 2d. in August last. The deed of 1839 provided that there should be 5 per cent. paid to the shareholders and a proportion of the profits. From 1858, when the second deed was executed, down to the stoppage of the company, the interest has been paid, and in some instances the bonus. The last bonus was declared in 1862. Interest was paid to the shareholders in 1858 to the amount of 5,138l. 4s. 2d. No bonus was paid in that year. In 1859, 6,032l. 11s. 3d. was paid for interest. I am not sure if a bonus was paid. In 1860, 835l. was paid; in 1861, 9,759l. 2s. 9d.; in 1862, 12,607l. 10s. 7d.; the capital of course being increased year by year. In 1863, 23,530l. 7s. 3d.; in 1864, 12,610l. 10s. 7d.; in 1865, 9,556l. 1s. 6d.; in 1866, 13,625l. 9s.; in 1867, 9,641l. 15s. 3d.; in 1868, 9,059l. 1s. 5d. In January, 1869, other dividends were paid of 5 per cent., amounting to about 4,000l. Between 1859 and 1861 a profit was made of 54,235l. 19s. 7d. In September, 1860, the Medical Invalid and the Family Endowment were amalgamated. After enumerating the amounts given to the various societies for amalgamating, witness said that there had been a dead loss of 86,679l. between 1862 and 1866. Three other companies were amalgamated between 1862 and 1866. Was not aware that Mr. Vansittart Neale was a director of the Western.

Mr. Metcalfe—Is there any came whatever against my client?

Mr. Knox—I must let the case go on. I am slow to express an opinion, and I would rather not express any opinion at present.

Mr. Metcalfe—Although the examination of Mr. Price is not concluded, I shall ask leave to put one or two questions to him.

Mr. Knox—I am willing to allow anything reasonable in the anomalous position of this case, in which equity is law. I am simply expressing an opinion. I think the case ought to go on for the purpose of giving an opportunity of inspecting the books. I do not see how I can stop the case.

Mr. Metcalfe—I think, Mr. Price, you said there was a loss of about 1,000,000l. in 1869, and that 968,000l. of it arose from difference of valuation—the real loss was about 69,000l.?

Mr. Price—That is so, I believe.

Mr. Metcalfe—Then the million loss vanishes. You got all your information, I understand, from the books. The books, I understand, contain the most complete information on the subject. Whoever was paid to be shareholders, or for amalgamations, or to be directors, is there stated?

Mr. Price—It is.

Mr. Metcalfe—Do you find on examination of the books any trace of concealment on the part of the directors?

Mr. Price—Not the slightest.

Mr. Metcalfe—Or any tampering with the books or accounts?

Mr. Price—No.

Mr. Straight—No insinuation of the kind is intended.

Mr. Metcalfe—Still there is a strong insinuation when the directors are charged with conspiracy. You say, Mr. Price, you find not the slightest trace of fraud whatever in the dealings of the company?

Mr. Price—No.

Mr. Metcalfe—The directors must divide the 5 per cent. and the whole of the profits according to the original deed. The original deed was made by none by these gentlemen, and these gentlemen are compelled to carry out its provisions.

Mr. Price—I believe that to be so.

Mr. Metcalfe—They declare of 5 per cent. whether there are profits or no, according to the original deed, which is binding on these gentlemen.

Mr. Straight—That depends upon how you interpret the deed.

Mr. Metcalfe—Are the reports for 1865 and 1867 completely borne out by the books?

Mr. Price—Yes, as far as they go. I do not approve of all the accounts, but the figures are correct.

Mr. Poland—That is a debateable point about the accounts. No two accountants prepare accounts in the same way.

Mr. Price—That is so.

Mr. Poland—There is, in fact, legitimate ground for difference of opinion. Do you know how many shares the directors held?

Mr. Price—I cannot tell you the number of shares held by the directors. I heard it stated by the accountant that four or five of the directors held very large amounts.

Mr. Poland—We will have the exact number at the next examination.

Mr. Besley—I will reserve my cross-examination.

Mr. Knox—Do all these amalgamations represent loses?

Mr. Price—I cannot say. The accounts of these amalgamations are involved in other accounts.

Mr. Straight—I am quite willing to let the matter stand adjourned. I am particularly anxious to have an opportunity to look over the books, and to form an opinion how far these gentlemen are implicated in the charge. It may be that some of these gentlemen were not regularly in attendance, and did not give active supervision to the affairs of the company; and I shall be glad, therefore, to relieve those gentlemen from the responsible position in which they are placed. I do not wish to inflict unnecessary pain, should it be shown that they did not attend, and were not mixed up with the doings of the company.

Mr. Knox—I am bound to allow the case to go on as far as it can go on to-day. All must feel that it is much better the case should go on, as there is a great point at issue. I think it better that you should take 21 days’ adjournment.

Mr. Metcalfe—I should wish for as short a period as possible, and that the gentlemen should be selected against whom it is intended to proceed. One gentleman in particular is, I know, suffering under the greatest possible anxiety from the present position of matters.

After some consultation it was agreed that an order should be granted for an inspection of the books under an order of the Court of Chancery.

An understanding was eventually come to that the further proceedings should be adjourned for three weeks, the counsel for the prosecution intimating that he should have no objection to let the defendants go at large on their own recognizances.

Mr. Knox said he would take their own recognizances in a trifling amount, say 10l. each, and the proceedings were accordingly adjourned.

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THE EUROPEAN ASSURANCE SOCIETY.

TO THE EDITOR OF THE DAILY NEWS.

SIR,—On Wednesday last I wrote you a letter, which you were good enough to publish, in which I told you my experience of life assurance as a transferred policy-holder in the European Society, the offer made me by the society to purchase my policy, and the refusal which was returned to my letter accepting their offer. This morning I received from the office the enclosed letter, accompanied by a cheque for the amount I had signified my willingness to accept. As this letter is in reply to the one you kindly published, I presume that the appearance of that letter in your columns brought it under the eye of some of the higher officials of the company, and that a letter which I wrote to the manager on the day before I wrote to you fell into the hands only of some assistants in the office. I need scarcely add that I had no hesitation in accepting the cheque and giving up my policy.—I am, &c., P. W. CLAYDEN.
13, Tavistock-square, W. C., Sept. 25.


“Surrender Department, London, Sept. 24, 1869.
“P. W. Clayden, Esq., 13, Tavistock-square, W. C.

“SIR,—From a letter addressed by you to the Daily News, and published yesterday, I find that a mistake has been made by an assistant in this department in replying to your letter of the 18th inst., which I regret should have occurred. It is perfectly true that the directors have, for the present, while so much excitement exists in the assurance world, decided to offer no more quotations for the surrender of policies, but they never had the least intention of refusing to carry out a surrender in any case in which a price had been offered by the society. The senior of this department happens to be away on leave, and an assistant unfortunately placed your letter with some new applications for surrender, which caused you to receive a reply which was applicable only to these last-mentioned cases. I now hasten to correct the unfortunate error by enclosing a cheque for 30l. 18s. 3d., the amount (less loan and interest) agreed to be given for your policy. Please sign the receipt which you will find endorsed upon the policy sent herewith.—Yours faithfully,

SAMUEL YOUNGER, [Interim Head of Surrender Department.”]|

[The Daily News, 22. September 1869]

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THE ALBERT LIFE ASSURANCE COMPANY.

[September 2]

A meeting of shareholders in this company took place yesterday, at No. 7, Waterloo-place, pursuant to adjournment. The chair was taken by Mr. VANSITTART NEALE, who reminded the meeting, when opening the proceedings, that the recent decision of the Vice-Chancellor in favour of a compulsory winding up of the concern had removed the object for which the meeting had been summoned, namely, to consider the propriety of a voluntary winding up. He was glad, however, that the shareholders had attended, as the solicitor had some explanations to make which would be worthy their attention.

Mr. LEWIS said that the shareholders could now take no legal action in the matter stated in the circular, which circular was issued when the shareholders were competent to decide on the future fate of this undertaking. The resolution passed at the last meeting was simply that the company should be registered under the Act of 1862, with a view to a voluntary winding up, and that course might have been followed but for the strong and inflexible opposition of a large body of policy-holders. They were all familiar with the course of events, and the order of the Vice-Chancellor, which put a voluntary winding up out of the question. He deeply regretted that result, and also that more time had not been taken for reflection, and for arrangements for the transfer of the business. It was not perhaps yet impossible to take up the plan which he had recommended, acting under most eminent actuarian advice. It had been said that that plan of his was a shareholders’ scheme, and was proposed solely in the interest of the shareholders. He denied that in toto, although many shareholders approved of it; it was the result of anxious consideration, and was intended solely to make the best of the great disaster by which all, both policy and share holders, had suffered so seriously. It was said it was a shareholders’ scheme, because, although on the face of it clearing the entire capital of the company, it reserved a modicum of interest for them in the new company, should future transactions be profitable. The two gentlemen who had moved and seconded the opposing resolution did not condescend one word of argument, but contented themselves with stigmatising his plan as a shareholders’ scheme, whereas it was in fact a scheme for the benefit of the policy-holders, and an influential member of the policy-holders’ committee had since produced a precisely similar scheme, simply omitting the clause to which he had alluded. He had merely done as much as he could to prevent what was likely to happen now—namely, that every shareholder would have as much to pay as could be extracted from him, and every policy-holder would get as little as could possibly be arranged. He believed that if his plan had been accepted, it would have been the best for all parties concerned.

Mr. TARRLING asked whether an arrangement would yet be possible between shareholders and policy-holders for the reconstruction of the company?

Mr. LEWS would not say that such a thing was not still possible, but the chance was much more remote since the decision of the court. Mr. Price, the official liquidator, was endeavouring to make some arrangement with another office, and until the result was known it would be useless to stir further. Mr. Price would always be most happy to confer with both shareholders and policy-holders.

Mr. TARRLING then moved that a committee of seven shareholders be appointed to investigate, in co-operation with the official liquidator, the affairs of the company. He would suggest that the committee should consist of shareholders holding not less than fifty shares. He had a question to ask. It was stated at the last meeting that the secretary was not always present at the meetings of the directors. It was also stated that although he was not always present, all the minutes of the boards passed through his hands. He wanted to know whether such was the fact.

The SEORETARY thought there were certain minutes respecting amalgamation.

Mr. TARRLING was alluding to the general business of the company.

The SECRETARY said there had been meetings at which he was not present, and the minutes of which never passed through his hands.

Mr. TARRLING—Can you tell me whether the minutes were entered in any book which came into your keeping?

The SECRETARY—I am unable to answer that question.

Mr. TARRING—Then we are to understand that there were board meetings held of which you, as secretary, had no cognizance?

The SECRETARY—There were certain meetings regarding amalgamations of which I had no notice. (Hear, hear.)

Mr. BRADLEY—Was it not your duty to be present at all the board meetings?

The SECRETARY—That is a question which the board must answer.

Mr. BRADLEY—Why were you not there? You were paid to represent our interests, and I want to know why you were not there.

Mr. KIRBY—I know of no business of which the secretary had not cognizance. There might have been a meeting to talk over matters, but no steps of any importance were taken the absence of the secretary. The secretary had access to all the books of the company. Whilst I was manager either the secretary or myself was always present. I did not understand it to be customary that the secretary should be present at every meeting of the board.

Mr. BRADLEY remarked that 280,000l. of the shareholders’ money had been swallowed up in two years. Out of the 20,000l. contract debts were they to take the 14,000l. due to Mr. Kirby?

Mr. PRICE (official liquidator) said that Mr. Kirby not having drawn that amount of his commission, it remained a charge against the shareholders.

Mr. BRADLEY hoped that Mr. Kirby’s family would never claim the money. (Hear, hear.)

Some angry observations followed respecting the late Mr. Kirby (as to commission), and the balance-sheets which were produced in his time, at the close of which

The CHAIRMAN stated that he (Mr. Neale) did not come in until 1865, and then Mr. Kirby was entitled, by deed, to 4 per cent. commission on all the business of the company, and was appointed manager for life. That was the legal state of affairs, and with it he (Mr. Neale) could not interfere. Counsel’s opinion was taken as to whether the 4 per cent. commission extended to the policies of the amalgamated companies. Lord Cairns was of opinion that it did absolutely, and Sir Roundell Palmer thought it extended only to the policies which were endorsed by the Albert. When he came in there was 18,000l. due to Mr. Kirby as commission, and the sum was rapidly increasing. Mr. Kirby consented to abandon his commission for the future, provided the sum then due was guaranteed, and paid to him by instalments. He (Mr. Neale) thought that in acceding to that arrangement he had made an excellent bargain for the company.

A VOICE—But you (the company) were bankrupts then.

The CHAIRMAN proceeded to explain that the assets properly calculated would reach the amount which had been stated in the reports.

A VOICE—Where’s your reserve fund?

The OFFICIAL LIQUIDATOR—There is no reserve fund.

Mr. COTTRELL remarked that in 1866 the accumulated fund was set down at 647,000l.; but when Mr. Price came to examine the accounts he could find only 271,000l. He (Mr. Cottrell) wanted to know what became of the difference in so short an interval.

Mr. PRICE said that the figures of 1866 assumed that the balance-sheet was made out on a correct principle, which he did not admit, not assuming that the amount in 1866 would be as stated. But it assumed the sums paid to other companies to be good assets; and if those sums and a few other items were taken, they would account for the falling off. He believed that every sum expended, whether wisely or not, would be found fairly entered in the books.

The CHAIRMAN said that one of the Indian amalgamators had sent over 300,000l. That was not bad business.

After some further desultory conversation the resolution was altered, it being found impossible to get seven shareholders to act on the proposed committee. Three were substituted for seven, and the resolution in its amended form was carried. Messrs. Cottrell, Firmin, and Tarrling were nominated, with power to add to their number up to seven.

The proceedings terminated with a cordial vote of thanks to the chairman, directors, and official liquidators.


Yesterday at the Chancery Chambers, a summons was appointed to be heard, taken out by Mr. Edmands on the part of some policy-holders, to ask the approval of the chief clerk, Mr. Bloxam, to a scheme for the reconstruction of the Albert Life Assurance Company. It will be recollected that on Friday last Vice-Chancellor James made an order for the compulsory winding up of the company. Several parties connected with the winding up were present, Mr. Roberts (Messrs. Merriman), Mr. Gaskell |[25] (Brandon and Co.), and others. On the part of Mr. Edmands an application was made for an adjournment. It was stated that Messrs. Lewis, Munns, and Co. had given a consent to an adjournment, and Messrs. Ashurst and Morris, the solicitors for the company, had been served with notice. The chief clerk granted an adjournment for a week. It is expected that several new proposals will be put forth to take the case out of the Court of Chancery.

At the conclusion of the business at Chambers a gentleman addressing Mr. Bloxam, the chief clerk, said he was a policy-holder of 30 years’ standing. He wished to ask the chief clerk whether the order of the Vice-Chancellor affected the payment of his premium, and whether it was advisable that he should pay it. Mr. Bloxam said that he could not give any advice about the matter. A solicitor who was present said the official liquidator was in court. It was understood that the order of the Vice-Chancellor was that the premiums should be paid, and that credit should be given for such payment.

[The Daily News, 18. September 1869]

[Sep 18]

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UNITED STATES’ DEBT.

TO THE EDITOR OF THE DAILY NEWS.

SIR,—I have received from the Hon. David A. Wells, Special Commissioner of Revenue for the United States, a letter, of which the enclosed is a copy. I shall feel obliged if you will insert the same in the Daily News.—I am, &c.,

THOMAS H. DUDLEY.
United States’ Consulate, Tower-building South, Water-street, Liverpool, Sept. 16.


Treasury Department, Washington,
August 19, 1869.

Dear Sir,—In answer to the inquiry in your note of the 6th as to the probable surplus revenue of the United States which can be made applicable during the current fiscal year for a further and continued reduction of the public debt, I will, in place of giving you a direct and specific opinion, ask your attention to the following figures:—The accounts of the Treasury for the fiscal year which ended on the 30th of June last have not yet been fully completed; but enough is at present known to make it certain that the excess of receipts over expenditures was at least 48,000,000 dols.; i.e., receipts, 371,000,000 dols.; expenditures, 323,000,000 dols. As no radical change in the laws imposing taxation or in the business of the country can be immediately anticipated, we are warranted in believing that the above surplus will at least be continued during the current year; and we therefore assume it as the basis of our estimate. To this amount must be added two specific items of expenditure provided for out of current receipts during the last fiscal year which will not be carried over into the present year, and must, therefore, be reckoned as a net gain to the treasury, viz.—18,000,000 dols. required to complete the payments for extra bounties; and 7,5000,000 dols. gold (equivalent to 9,5000,000 dols. currency) disbursed in payment of the Alaska purchase. The present annual elasticity of the revenue, or its increase from the increase of the country in wealth and population, will average at present 15,000,000 dols., while the gain from the rigid system of economy inaugurated by the present Administration, and from a more faithful collection of its taxes, will undoubtedly equal, and probably exceed, 30,000,000 dols. The sums of these several items will be found to be 120,000,000 dols., which approximately indicates the amount of surplus revenue which is likely to be placed at the disposal of the Treasury during the current fiscal year, and made applicable for the further reduction of the National Debt. It only remains for me to call your attention to the fact that an annual investment of 100,000,000 dols. at six per cent. in a sinking fund will extinguish the entire principal of our debut in less than 15 years; or if the contribution to the sinking fund be limited to 50,000,000 dols. per annum at six per cent. (and a smaller contribution than this is not in accordance with popular sentiment) the law will only be extended to 23 years; and between these periods you have, in my opinion, the exact time when the present public debt of the United States will be extinguished.—I am, yours most respectfully,

DAVID A. WELLS, United States’ Special Commissioner of Revenue.
To Hon. Thomas H. Dudley, Consul of the United States, Liverpool.



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THE ALBERT LIFE ASSURANCE COMPANY. ORDER FOR WINDING UP.

Vice-Chancellor James yesterday sat in Chambers, as the Vacation Judge, to hear the several petitions—five in number—presented to the Court of Chancery to wind up the affairs of the Albert Life Assurance Company. The matter would, according to practice, have been heard at the Chambers of the Chief Clerk, but it was represented that the Court could be the only place, from the crowd expected, to hear the case, and it was arranged that the hearing should take place therein. The case was appointed for eleven o’clock, and the court was densely thronged in a short time. His Honour appeared without his judicial costume, and some of the barristers who appeared robed had to divest themselves of their professional habiliments. In the place allotted to Queen’s Counsel appeared Mr. Karslake, Mr. Amphlett, Mr. Edlin, Mr. Webster, Mr. Milward, and Mr. T. Hughes; whilst at the outer bar in the case were Mr. N. Higgin, Mr. Cookson, Mr. Fisher, Mr. Cracknell, and many others.

It was 12 o’clock before the case was reached, the Vice-Chancellor taking the other applications before him, and soon after it was called on a barrister complained that he could not get a seat, and his Honour invited him within the bar, but he declined the invitation to sit with her Majesty’s counsel.

Mr. N. Higgin opened the first petition on the part of Mr. M’Lachlan, for a winding-up order, and wished to state what had been done since the petition had been presented. There were now five petitions before the Court. Meetings had taken place under its sanction, and all premiums paid had been kept separately. The learned counsel enumerated some figures, and said about 1,000l, per day was payable.

The Vice-Chancellor said the only question he had to deal with was whether there should be a winding-up order, and he thought it was the best course to be adopted. It had been stated that he had authorised meetings to be held, and that at an expense of 10,000l. He could only say he had done nothing of the kind.

Mr. Higgin assured the Court that the expense of the meetings had only been 25l.

Mr. Edlin asked to be heard on the case before a winding-up order was made.

The Vice-Chancellor said he would hear all, but it seemed plain that winding-up order was necessary, and the point was on whose petition it was to be granted. He had directed that a distinct account should be kept of the premiums paid in since the commencement of the proceedings, so that those who paid their money could have it returned intact without being sweated for costs or any other expenses.

Mr. T. Hughes, Q. C., with whom was Mr. Ince, appeared for policy-holders, and complained of Mr. Kirby.

Mr. Edlin, Q. C., also appeared for policy-holders, and urged that the first petition by Mr. M’Lachlan was in the interest of the company, and that the second was collusive with the first.

Mr. Amphlett, Q. C., (Mr. Joyce with him) represented numerous policy-holders on the petition of Mr. Wilson.

Mr. Karslake, Q. C., gave his adhesion to the first petition, or the first and second petition. They now all seemed agreed that there should be a winding-up order made; indeed, no other course was open, and the only question was on whose petition it should be granted.

Mr. Milward, Q. C., was for some Liverpool policy-holders.

Mr. Cookson represented the committee of the Indian shareholders, who were in a different position. He wished, in the event of a winding-up order, to leave notice of matters before the Chief Clerk.

After considerable discussion,

The Vice-Chancellor expressed himself of opinion that there must be a compulsory winding-up of the company, and that the best course would be, in order to meet the views of all parties—creditors, shareholders, and policy-holders—to appoint Mr. M’Lachlan, the first petitioner, and Mr. Wilson, for whom Mr. Amphlett appeared, and for other policy-holders to a large extent. Both the interests would be represented, and on those two petitions he should make the order. He had great pleasure in saying that not one farthing would be allowed as costs, except on those petitions and to the provisional liquidators.

The expression of this opinion as to costs caused a murmur of apparent satisfaction in court, and his Honour was understood to add that a public company was not to be considered as a carcase to be preyed upon.

Order made for winding up, with costs to the company and the others mentioned.

A summons, adjourned from Chambers, was afterwards heard, as to the withdrawal of Mr. Kirby from the post of joint provisional liquidator with Mr. Price, but the Vice-Chancellor said there was no pretext for assuming that Mr. Kirby could or would do anything wrong. It was stated by counsel that Mr. Kirby had resigned, and the Vice-Chancellor dismissed the summons with costs.



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NEW MODE OF SWINDLING.

TO THE EDITOR OF THE DAILY NEWS.

SIR,—A new form of swindling has lately been adopted by a “City gentleman,” and that with considerable success. He is in the habit of driving about in a six-seated machine with a page boy, and making application for board and residence at respectable establishments in the West-end of London and Brighton. Being an adept at the business, plausible in his manners, and giving in an unintelligible manner great names as references, he soon effects an entrance. He is in the habit of paying for his first week’s board, and during that time he contrives to use the name and respectability of the house to obtain credit to a large extent in the surrounding neighbourhood. When he finds that it will be impossible for him to stay any longer in the boarding-house on account of his inability to pay and the dunning from tradesmen, he contrives some fine morning very early, before any of the inmates are stirring, to vacate his apartment, taking with him everything that he can conveniently carry away. This gentleman has victimised two respectable houses in this way during the past two months; and it is in order to prevent him from swindling others that I request the favour of this insertion in your columns—And remain, I regret to say,

ONE WHO HAS SUFFERED.

[The Daily News, 13. September 1869]

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THE FAILURE OF OVEREND, GURNEY, AND COMPANY.

[Sep 13]

On Saturday, at the Mansion-house, before the Lord Mayer, Mr. E. Selby Campbell, barrister, made an application of behalf of Mr. Oswald Howell, of 39, King-street, Cheapside, at 11, St. Aubyn-road, Upper Norwood, for a summons against Mr. Richard Bridgman Barrow, of Sydnope-hall, Matlock, in the country of Derby, and of 53, Hans-place, Sloane-square, Chelsea, for having, on the 11th September, 1869, published in the daily newspapers a false and malicious libel, to the following effect:—“Overend, Gurney, and Co. (Limited).—Notice is hereby given, that Oswald Howell, late partner in the firm of Messrs. Walker, Raddall, Nux, and Howell, of 39, King-street, Cheapside, London, and now a bankrupt, was (by a resolution passed at a properly constituted meeting of the committee of the Shareholders’ Association for taking common law proceedings against the directors, Mr. Holm and Mr. O’Reilly assenting, and which resolution was subsequently duly confirmed) discharged from acting any longer for such committee, in consequence of his having withdrawn from the Bank of England, in conjunction with Adam Thom, several large sums of money belonging to, and without the consent of, such committee, that the said Oswald Howell had no authority, since his discharge, to issue circulars, or do any other act by or on behalf of the said committee.—(Signed) RICHARD B. BARROW, chairman.” Mr. Campbell went on to say that the deposition and information of Mr. Howell utterly denied that any such resolution was passed at a meeting of the Shareholders’ Association such as that described. He affirmed that such a resolution never could have been subsequently confirmed as alleged, seeing that it was never passed, and had it been so passed, no such meeting could whatever have been held of the committee. He further stated that only one sum was taken out of the Bank of England of 900l. 6s. 5d., and that withdrawal took place with the consent of the trustees of the Shareholders’ Association, and this sum of 900l. 6s. 5d., said to have been withheld without the consent of the trustees, was actually repaid to their account on Sept. 6, prior to publishing the libel complained of. The learned counsel maintained that Mr. Barrow had full cognisance of such repayment. He (Mr. |[26] Campbell) went on to say that the statement so advertised in widely-circulated journals was calculated to damage Mr. Howell in his commercial character as a man of honesty and integrity. Mr. Howell had no notice of his alleged discharge from the offices of secretary to the Shareholders’ Association, which he had held ever since the commencement of the criminal proceedings against the directors of Overend, Gurney, and Co. (Limited), now some three years ago. It was true that Mr. Howell had become bankrupt, but to a large extent his position had arisen from the fact of his having devoted almost the whole of his professional attention, with very slender remuneration, to the important and complicated affairs of Overend, Gurney, and Co. The allegations could only have been imported into the libel for the purpose of injuring his position in connection with the approaching trial of the directors of Overend, Gurney, and Co., who stand charged with conspiracy to defraud, &c. If the Lord Mayor should be pleased to grant the application Mr. Howell would be prepared with evidence in support.

Dr. Adam Thom, who appeared in person, applied for a summons on similar grounds.

The Lord Mayor granted the summonses, and appointed the hearing for Wednesday next at 12 o’clock.

[The Daily News, 10. September 1869]

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THE ALBERT LIFE ASSURANCE COMPANY.

[Sep 10]

IMPORTANT PROCEEDINGS.

A meeting of the policy-holders of the above company was held yesterday afternoon, at the London Tavern, Bishopsgate-street, “for the purpose of considering the best mode of arranging the affairs of the company, and the plan proposed by the provisional official liquidators with reference thereto.” The meeting was convened by the liquidators, under an order of the Court of Chancery, dated the 14th of August. Lord WM. HAY was unanimously called to the chair, and sitting by his side were Mr. S. Lowell Price (provisional official liquidator), Mr. Kirby being absent; Mr. Morris (Messrs. Ashhurst, Morris, and Co.), and Mr. Lewis, solicitor to the liquidators.

The room was densely crowded, and it was computed that at least five or six hundred persons were present.

Before the business of the meeting commenced,

The CHAIRMAN observed, in reply to a question, that although no precautions had been taken at the door to exclude persons who were not policy-holders, he hoped none but policy-holders or their assignees would take any part in the proceedings.

The CHAIRMAN, in opening the proceedings, said, having been a policy-holder for many years, he was happy to place his services when asked to do so at the disposal of the meeting. His pecuniary interest was not very large, but after the failure of an institution of such magnitude it was, in his opinion, the duty of any man who had time at command to place his services at the disposal of his fellow-sufferers. (Cheers.) That was the only motive which had induced him to attend that meeting. The meeting was called, as they had been informed, in pursuance of an order made by the Vice-Chancellor’s Court, “for the purpose of considering the best mode of arranging the affairs of the company and the plan proposed by the provisional liquidators with reference thereto.” The first business before them was to consider the scheme referred to in the notice. It was perfectly true, and he dare say every person in that room was aware of the fact, that the liquidators had thought proper to withdraw that scheme. He did not wish or intend to anticipate the decision of the meeting, but he did not think it was anticipating it to say that he expected that scheme to be summarily and entirely rejected. (Loud cheers.) It had been practically withdrawn. (Mr. Lowell Price intimated his dissent from this statement.) He was corrected; it was not practically withdrawn, and he must therefore ask the meeting to listen to any remarks which the liquidator and other gentlemen who were in favour of that scheme might make. It would afterwards be the duty of the meeting to express its opinion, first with regard to the original scheme of the liquidators, and secondly with regard to any modified scheme which they might offer. He hoped the meeting would not enter into the previous management of the Albert Company, as it would be an utter waste of time to do so. The proper time for that would be when they had before them all the facts—(hear, hear)—and he was quite sure that any condemnation of the past, supposing condemnation to be deserved, would come with the greatest force when it was based upon a consideration of all the facts of the case. (Hear, hear.) After the scheme of the liquidators had been disposed of, the meeting would have to consider what was best to do under all the circumstances, or, to quote the words of the advertisement, “the best mode of arranging the affairs of the company.” As regarded that part of the business, he thought he was justified in assuming that the interests of the policy-holders and of the assignees of policy-holders were for all practical purposes identical. That being so, it followed that in this case, as in every other where action was necessary, union was strength, and that the converse was equally true; namely, that disunion was the source of weakness, and weakness meant nothing less than playing the game of those who had been most instrumental in bringing the institution into its present state. (Hear, hear.) There were only two courses open to the policy-holders of the Albert; one was reconstruction without liquidation; the other liquidation, which included the possibility of reconstruction; the term “reconstruction” including those schemes which had for their object the transfer of the business to any company that was willing to take it. If that classification were an accurate one, it must be perfectly unnecessary to point out that no scheme, whether it were for reconstruction or for any other purpose, could possibly be considered in a place or on an occasion like that. It was impossible to imagine any scheme so simple that its details would not require more attention than could be given to them by that meeting. An object like that could only be achieved through the appointment of a committee, and he was glad to find that one was to be proposed which would as far as possible represent the various interests of the whole body of policy-holders, whether they were in this country or in foreign countries. (Cheers.) He need not point out the enormous importance of appointing such a committee with care, as it would have to consider the various schemes originated, and, if the affair came to liquidation, would have to perform the important duty of recommending a liquidator to the Vice-Chancellor, and urging his Honour to appoint a person in whom the great body of the policy-holders could place entire confidence. The duty of the meeting was plain; it was to seek out as diligently as they could the best course that could be followed. He was afraid that the ruin which seemed to surround the Albert was due in a great measure to the confidence which was placed in persons who were scarcely worthy of it. (Cheers.) He would not permit himself to go into the question of the amount of blame which attached to different persons—first, because that would be to prejudge the question; and secondly, because it might lead him to use expressions which he would afterwards regret. He must, therefore, now ask them to devote themselves to the important question what was best to be done under the circumstances; and he hoped they would act so as to prevent any one from saying that they had, by want of decision, by vacillation, or by any other weakness, rather deserved than otherwise the misfortune which they had all so much cause to deplore. (Cheers.)

A GENTLEMAN, who, amid considerable noise, announced his name to be Joseph, here attempted to address the meeting, but after he had been vainly vociferating for some time,

THE CHAIRMAN called upon Mr. S. L. Price, the provisional liquidator present.

Mr. PRICE said he was exceedingly glad to have that opportunity of giving the policy-holders all the information in his power. In the investigation which he had made of the affairs of the company, he was, he could assure them, wholly uninfluenced by directors, manager, or any one else connected with the company. He had no communication with them, and he alone was responsible for the report which was issued—a report into which, in accordance with the chairman’s wish, he should then refrain from entering, though he would be happy to answer any questions relating to it. The immediate subject for consideration was the plan brought forward by the provisional liquidators. He desired at the earliest moment to say that that plan was never designed by the liquidators to be accepted as a whole by the policy-holders. (Hear, hear.) It was a plan which they were called upon to produce at very short notice indeed; for he need not tell them that the affairs of life assurance companies were not like those of other companies, their position being such as to render instant action absolutely necessary in a case of that kind. What they designed was not so much to indicate the precise mode in which that company might be recon|[27]structed, if, it were reconstructed at all, as to point out the principles on which reconstruction might in their opinion be carried out with safety both to shareholders and policy-holders. That plan had been in print a long time, and it would scarcely be necessary for him to read it. Having read a great deal that had been written, and found a great deal of misapprehension about the design of that plan, he and two other gentlemen on the previous day prepared a memorandum on the subject, and he was sorry that it only appeared in some of the morning papers of that day. The object of those who issued that memorandum was not to enter into a discussion, but to sketch out a course, and he proposed to read that paper to the meeting. He should then sit down that he might have the advantage of hearing the various suggestions which might be made, and he hoped the meeting would afterwards listen to his friends Mr. Lewis and Mr. Morris.

Mr. J. CUNDY said they were met there to consider not the plan but the reconstruction policy.

Mr. PRICE said he wanted the policy-holders to consider what the plan was in principle, not what it was not, and he had seen indications that the matter was not properly understood. He wished the meeting to know exactly what the provisional liquidators meant. As regarded the reading of the memorandum which he had mentioned, he was entirely in the hands of the meeting. (Cries of “Read,” and counter cries of “Sit down.”)

Mr. W. PARKES observed that the meeting was called to hear what the policy-holders had to say, not what the liquidators had to say. (Hear, hear.)

Mr. JOSEPH here again insisted on his right to be heard, especially on the ground that he was in possession of the chair when Mr. Price was allowed to address the meeting.

The CHAIRMAN, however, took a show of hands on the question whether Mr. Price should be allowed to read the memorandum published in the Daily News of Thursday, and declared that there was a slight preponderance in favour of it. No sooner, however, had Mr. Price proceeded to act on this decision than he was met with impatient interruptions which drowned his voice, and he was soon obliged to give up the attempt to obtain a hearing.

Mr. JOSEPH then spoke amid great uproar. He wished, he said, to know who had taken their money. (A Voice—“Robbers.”)

THE CHAIRMAN hoped Mr. Joseph would speak to the purpose. (A Voice—“We want to know whom we shall hang.”) (Laughter.)

Mr. JOSEPH FREEMAN protested against such a course as that of Mr. Joseph being pursued. That was not an indignation meeting, but a business one. (Hear, hear.)

THE CHAIRMAN said he trusted the meeting would support him in calling upon Mr. Cundy, a gentleman who had paid great attention to the question, and who was a very large policy-holder, to move a resolution.

Mr. JOSEPH said he had himself a resolution to propose—(hear, hear)—his object being that officers of the company and others who had received large sums of money should not be allowed to go scot free. (Cheers.) He concluded by moving the following:—“That any committee of policy-holders that may be subsequently appointed be authorised to test the liability of the shareholders of amalgamated companies.”

Mr. W. T. GUYATT seconded the resolution.

Mr. LEWIS said the meeting had been convened to consider only two specific questions, and he thought it would be more respectful to the Court of Chancery if it confined itself to them. (Hear, hear.)

In response to an appeal from the chairman, Mr. Joseph then consented to withdraw his resolution till the close of the meeting, on the understanding that it would then be submitted from the chair to the meeting.

Mr. J. CUNDY said he would not detain the meeting long. They had, he observed, most of them read in the newspapers of that day a sort of apology which had been put forth by the liquidator and two other gentlemen. He called it a sort of apology, because it in no way touched the weak points in the scheme of the liquidators. Any one taking a common-sense view of the matter must have perceived that that scheme was put forward in the interest not of the policy-holders, but of the shareholders. (Hear, hear.) Believing that to be the case he would move—“That this meeting rejects the scheme put forward by the provisional liquidators for the reconstruction of the company, such a scheme being manifestly proposed in the interest of the shareholders, and antagonistic to those of the policy-holders.” (Hear, hear.)

Mr. OMMANEY, in seconding the resolution, said a friend of his had just received a letter from Berlin, in which it was stated that the Prussian Government had seized all the cash and property of the Albert Company in that city, and also the receipts sent out by the liquidators. He agreed with the mover of the resolution, that the scheme put forward was a scheme in the interests of the policy-holders. He had no wish to impute anything to Mr. Price or to his friend Mr. Morris. Mr. Morris’s legal talent was widely known, but they were all aware that even the most respectable solicitors were apt to adopt the views of their clients, and that gentleman might unwittingly have done so.

Mr. MURRAY regretted the absence of Mr. Kirby, because he had intended to put some practical questions to him with respect to the assets. Mr. Kirby ought to know what had become of the reserve fund, which in January, 1868, was stated to be still in existence. The speaker was entering into some items connected with the assets, when he was interrupted with exclamations that those were questions for a committee.

Mr. J. WYLD said, as a policy-holder for 1,000l., he wished to remark that Mr. Price, in making the proposal he had done, was simply acting officially and as a man of business, having no personal interest in the matter. They should do justice to that gentleman as they would to any other man in a similar position. Mr. Price had brought before them a scheme, and he merely asked the meeting to consider it. (“No, no”) He would move as an amendment, “That a committee be formed to represent and protect the policy-holders and annuitants, and to adopt such measures as they may consider best calculated to secure the same.” That committee would have power to examine Mr. Kirby and the directors and shareholders of the company, and to go into details connected with the past management; and he would ask the meeting as men of business not to pledge themselves to any course until the committee had reported. He spoke with some authority on that subject. In the case of the British Bank failure he was appointed representative of the debtors and creditors, and he succeeded in obtaining for the latter 16s. in the pound.

Mr. TARRING seconded the amendment.

The CHAIRMAN observed that practically the question then to be decided was whether the scheme of the liquidators should be rejected at once, or referred to a committee thereafter to be appointed, and requested that the speakers would apply their remarks to that question.

Mr. BASHFORD, who said he was a policy-holder of 20 years’ standing, said about two months ago he wrote to Mr. Easum, the secretary of the company, and to Dr. Beattie, one of the directors, to inquire why the shares had been sold at five or six shillings a share, and the answer he received from both was to the effect that the price of the shares was all a fallacy, and the concern was as good as gold. (Laughter.)

The CHAIRMAN begged the speaker to keep to the point.

Mr. BASHFORD contended that he was doing so. (Crises of “No.”) He added that within the last two years wealthy persons had transferred their shares to men of straw, and that in one instance some shares had been transferred to a schoolboy. From what Mr. Easum said to him, only three days ago, he felt sure that the policy-holders could not realise 200,000l. apart from the shares, and as the latter would not realise more than 50,000l., there would, it appeared, be only 250,000l. to form the basis of a new company.

Mr. MACKENZIE, who stated that he was a policy-holder for 8,000l., thought the wisest course was to appoint a central committee, bearing in mind in its selection that there might be many claims upon other companies which had amalgamated with the Albert.

Mr. HOWARD said it seemed to be the unanimous opinion that the ill-conceived scheme of the liquidators should be rejected at once. (Cries of “Yes, yes,” and “No, no.”) With few exceptions, he thought they were agreed that that scheme was a stupid one, so far as the interests of the fleeced policy-holders were concerned. (Cheers.) Let them have men to represent them who were entirely untainted by connection with the Albert Office; let them have a committee who would tell them candidly how far they had been swindled and by whom, and who would, at the proper time, place the delinquents at that bar where they must sooner or later appear. (Cheers.) He was happy to see that they had at last arrived at a point of concord, and with a view to their going before the Vice-Chancellor with the policy-holders’ view of this subject, he wished to move the following:—“That the plan proposed by the provisional official liquidators be rejected, and that in lieu thereof a committee of policy-holders be appointed to consider and determine, in conjunction with any provisional committees, the best mode of arranging the affairs of the company, and to report the same to a further meeting of policy-holders to be convened by such committee.” (Cheers.)

Mr. GEDGE having seconded the resolution,

Mr. CUNDY thereupon withdrew his resolution in favour of that of Mr. Howard.

The CHAIRMAN said before putting the resolution he would ask Mr. Price to offer any remarks which he might wish to make. (Loud cries of “No, no,” and “We won’t have him,” followed by great and continued uproar, in the midst of which Mr. Price spoke for two or three minutes without making his voice heard by the meeting. He then sat down.

Mr. LEWIS, who met with a similar reception, appealed to the meeting for a hearing on behalf of Mr. Morris and himself, on the ground that their names were appended to the memorandum which appeared in some of the morning papers of that day. He asked the policy-holders, he said, as a matter of business, and a matter of justice and propriety, to hear them in support of the paper which had been placed before them.

Mr. MORRIS rose amid similar impatience and interruption on the part of the meeting generally.

The CHAIRMAN entreated the meeting, on the principle of simple fairness, to listen to Mr. Morris.

Mr. MORRIS, in reply to a question, said that he was a policy-holder. All he wanted, he observed, was a patient hearing for a few minutes, having no wish to interfere with the decision of the meeting. He had had no connection with the Albert Company except as a policy-holder; but in consequence of his having had an experience which was perhaps second to that of no one, in rescuing large concerns like that from the miseries of liquidation, when the company stopped payment he was asked, not knowing a single officer of the company, whether he would apply the experience which he had gained in other cases to that one. (Cries of “Who sent for you?”) After Mr. Lewis had been instructed to present a petition he was sent for at the request of some of the principal shareholders to advise as to what was to be done. (Renewed uproar.) He claimed the right of a professional man to give independent advice when it was sought. Interruptions were continued for two or three minutes, when Mr. Morris resumed his seat.

Mr. Wyld’s amendment having, through the withdrawn of Mr. Cundy’s proposal, become an original resolution, the chairman then put it to the meeting, and it was carried, first as an amendment, and afterwards as a substantive motion, in the latter case unanimously, and amid immense cheering.

Dr. MORGAN, after congratulating the meeting that it had unmistakably condemned the scheme of the provisional official liquidators, moved, “That the following gentlemen be constituted the committee, with power to invite the co-operation of the provincial committees and to add to their number—Mr. J. D. Bell, representative of the policy-holders in Calcutta; Mr. James Bird, Mr. Joseph Bravo, Mr. James Cundy (Messrs. James Barber and Co., Leadenhall-street), General Cunningham, chairman of the London and Delhi Bank; Mr. P. H. Edlin, Q. C., Lord William Hay, Mr. J. H. Matthews, Mr. T. Webster, Q. C., Mr. Octavius Ommanney, and Mr. Howard, the mover of the resolution just adopted.

Mr. W. PARKES seconded the motion.

A long discussion ensued with regard to the merits and suitability of several gentlemen thus proposed, in the course of which there was a declaration on the part of those concerned, that their position was simply that of policy-holders.

Mr. EDLIN, Q. C., having been alluded to, said he recognised that the interests of the policy-holders were directly adverse to those of the shareholders. (Hear, hear.) He recognised most distinctly the absolute duty and necessity of bringing the directors of that most disastrous scheme to a strict and thorough account. (Loud cheers.) Further, he recognised the absolute necessity of committing that onerous duty to professional gentlemen, to be nominated by themselves—(hear, hear)—gentlemen who had had no connection, directly or indirectly, with the directors of the Albert company, and in whom, therefore, the policy-holders could repose unlimited confidence. That was a duty which they owed to themselves and to the windows and helpless orphans concerned; and he called upon the meeting to take care that the beginning of the proceedings did not tend to prevent their proper termination. (Cheers.)

In reply to a question,

The CHAIRMAN observed that the Western policy-holders were represented on the committee as nominated, adding that there were altogether 22 amalgamated offices, and that he had reason to think that the policy-holders were all fairly represented.

The following gentlemen were ultimately selected to form the committee: Mr. J. Bell, Mr. James Bird, Mr. J. Cundy, General Cunningham, Mr. Edlin, Q. C., Mr. J. H. Matthews, Mr. T. Webster, Q. C., Mr. O. Ommanney, and Lord William Hay.

The name of Mr. Howard was rejected, apparently on |[28] the ground that that gentleman was a lawyer; while Mr. Mackenzie, who had been proposed, declined to act.

Mr. BELL moved the following resolution:—“That, in the opinion of this meeting, the conduct of the proceedings consequent on the insolvency of the company should be entrusted to gentlemen to be nominated by the policy-holders, and not to those appointed by the directors, who have forfeited the confidence of the policy-holders.” He observed that the immediate cause of the failure of the company was the course pursued by the directors in withdrawing funds from India. A committee of policy-holders in India, not being satisfied with the explanations offered, on the 18th of June the manager, Mr. Kirby, and the directors, knowing that it was essential to keep matters quiet, telegraphed to Calcutta;—“London board will give all information to committee; therefore avoid meetings and publishings. To satisfy all parties a special and ample guarantee will be provided for all Indian policy-holders.” When questioned with regard to the state of the concern, two of the directors, Dr. Nicholl and Mr. Phillips, said it was perfectly solvent.

Mr. FERGUSON, who stated that he was a policy-holder for 3,500l. on the Indian register, in seconding the resolution, observed that when the directors were pressed as to the cause of the withdrawal of the funds from India, they said that since the mutiny of 1857 there had been great difficulty in getting English shareholders to allow funds to remain in India. (Laughter.)

The resolution was carried unanimously.

The resolution of Mr. Joseph was afterwards, in accordance with the understanding before mentioned, submitted to the meeting, and the result was its adoption.

On the motion of Mr. T. Webster, Q. C., thanks were voted to the chairman, and the meeting then separated, the proceedings having occupied upwards of three hours.


At a meeting of the committee of the Albert Assurance policy-holders at Manchester, on Wednesday afternoon, the following resolutions were passed:—“That this committee endorse the resolution passed at their first meeting, and recommend that strenuous efforts be made to get a first-class office to take the business of the Albert, or reconstruct the company under new management. That, if Mr. S. L. Price will act for the policy-holders, this committee have every confidence in him as liquidator, and are also of opinion that a gentleman in the provinces should be appointed to act with Mr. Price, and recommend Mr. David Chadwick, M. P., of Manchester and London.”


TO THE EDITOR OF THE DAILY NEWS.

SIR,—Upon my return from the continent, after nearly a month’s absence, I have become acquainted with the details of the deplorable collapse of this company, and have seen the observations thereon which have appeared in the papers. In some of these I find the amount of compensation which I received more than ten years since in connection with the transfer to this company of the business of the Bank of London Insurance Company commented upon. I shall feel obliged if you will allow me space in your columns for a brief statement of the facts, showing the only connection I ever had with the Albert. In 1853, whilst knowing nothing of insurance companies, I became acquainted with two of the directors of the then Anchor Insurance Company, and was induced by them to become a shareholder in that institution. Having, as the result of representations made to me, entire faith in its character, I took a leading part in the establishment of a branch office in the place where I then resided. Of this I was elected one of the local directors, the M. P. for the borough being its chairman. After some months of prosperity in our branch, rumours impeaching the soundness of the office were conveyed to us. The local shareholders elected a deputation to wait upon the board in London, to demand facilities for personal investigation. Of this deputation I was an active member, All were earnest practical men, but our actuarial knowledge was limited. We however discovered, and reported, what we considered to be errors of the gravest kind in the principles on which capital had been dealt with, annuities granted, and dividends paid, and that its general expenditure for the previous year had exceeded 50 per cent. of its income. After much deliberation it was determined by the shareholders that the company’s operations should be continued under altered conditions. Some of the old directors retired, and new directors and a new chairman were elected from amongst the principal shareholders. These gentlemen refused to take office unless I became its managing director. It appeared to me, and I was advised by my friends, that the active part I had taken in the establishment of the branch office held me morally bound to accept this post; and as the matter was urgent I did so immediately, without waiting to make arrangements for the abandonment of my own business.

By means of a call upon the shareholders, moneys refunded by the old directors, dividends withheld and fees relinquished, the most rigid economy in every department, and the most careful personal scrutiny of every important agency at home and abroad, and the creation of new ones on sound business principles, I succeeded, after three years of most arduous and onerous labour, with the help of a small but loyal staff, and the most generous support of my colleagues on the board, to so far improve the condition of the company as that its income had increased nearly threefold, whilst its gross expenses had fallen from 50 to 15 per cent. In 1857 proposals were made by the Bank of London Insurance Company for the amalgamation with it of the Anchor Insurance Company. No commission, compensation, or other payment was made to any person whatever in respect of it; but I received an appointment for a term of years, the details of which were unanimously approved by a general meeting of the shareholders of each company. The considerable success I had achieved, and the great sacrifices I had made to ensure it, appeared to me to have fairly won a special engagement. I had not long entered upon my new and wider field of operation, which presented also larger prospective advantages, when it was thought desirable that a proposal for the purchase of the Bank of London Insurance Company by the Albert Company (and not its amalgamation) should be accepted. It was in connection with this arrangement, which involved a surrender of the appointment I had obtained as before stated, that I received the compensation in question, which included also my services towards the disposal of the fire department of the business, and my visiting Canada and Newfoundland in connection therewith. All these engagements I faithfully fulfilled. Thus closed, more than ten years ago, my association with the Albert Company. I had previously no connection with it, or any of the companies with which it appears to have amalgamated, except as herein stated; nor have I had any since.—I am, &c.,

THOS. CAVE, M. P.
London, Sept. 7.


TO THE EDITOR OF THE DAILY NEWS.

SIR,—The various nostrums suggested in your columns for retrieving the situation of this company appear to me either difficult or unfair. What I have to suggest is very simple, and, if practicable, quite fair. It is founded upon two suppositions. First, that share capital was only necessary to start the company has proved delusive as a security, and may be dispensed with by the policy-holders. Second, that if any society could get together such a constituency of lives at rates corresponding with their present ages, they would be a prosperous mutual office. I therefore suggest that the policy-holders should unite as a mutual assurance society, that all policies should be cancelled, and new policies issued, as at this time, for equal sums as in the old policies less any debt upon them, and at the higher rate chargeable for greater age of policy-holder, or for such lesser sum as the payment of the same amount of premium as formerly paid would insure at the increased age of the policy-holder. Supposing, as we may safely suppose, first, that there was a mortality causing 230,000.l of claims to be paid in the year (I see that it was 220,000l. by last report), and, second, that the original average age of entry was 35 only. Third, that the lives have been on an average ten years at risk, and that the average age of all the policy-holders is now 45. Then the whole policies reconstituted upon an addition of ten years to their premiums, by the Albert’s table of rates, would yield 310,000l. a year in premiums, to meet a mortality claim of 230,000l.—leaving a balance for management and accumulation of 80,000l. per annum. The management and commissions on new business should not exceed 25,000l. a year, which would still leave a balance of 55,000l. for accumulation. Let us suppose that any man wishes to start a new mutual assurance company, what better opportunity could he desire than a society of 20,000 lives (as the Albert must be), to start afresh, as a new society of lives from this date forward. But in order that this should be accomplished there should be no exclusion or selection of lives but all lives on the list willing to so associate themselves should be taken at the rates for present age, &c. As to the shareholders, they have now no interest except as debtors to the policy-holders, and it seems the height of impudence in them to pretend to manage the policy-holders’ affairs any longer. There has been long a dispute as to whether the advan|[29]tages to policy-holders were greater under the mutual or proprietary principle. It is notorious that the capital of many of the proprietary offices is quite insufficient to be any security whatever—while, as in the case of the Albert, the direction being placed in the shareholders, and not generally amongst the policy-holders, the latter find themselves without organisation and without management at the very time when they most require it. As another proof of this delusion as to proprietary offices and the fancied security of their capital, I may point out that the Standard, for example, has 16,000,000l. assured, and its unpaid up capital is 380,000l. In the event of a disaster there, what would be the use of the capital? And yet the Standard is most deservedly esteemed one of our best offices, but it is really, and to all intents and purposes, a mutual office as far as the policies’ safety is considered. The true use of these small capitals was to start an office with—it was the can of water to make the pump suck—but if there should be a fire in the house, a squirt would be as useful to extinguish the flame as “the capital” of such offices to arrest destruction. To all intents and purposes successful proprietary life offices are merely mutual offices paying a tax to a few shareholders, and for all purposes of its future existence the Albert has no more occasion for the shareholders than a drowning man has for a handful of shot in his shoes.—I am, &c.,

LIFE ASSURANCE.

[The Daily News, 13. September 1869]

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The Daily News. Nr. 7291, 13. September 1869. S. 6.
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THE ALBERT LIFE ASSURANCE COMPANY.

[Sep 13]

TO LORD WILIAM HAY, CHAIRMAN OF THE ALBERT COMMITTEE OF ANNUITANTS AND POLICY-HOLDERS.

My Lord,—The questions for the consideration of the committee over which you preside, as representing the annuitants and policy-holders of the Albert Assurance Office, are:—1st. Ordinary liquidation under a winding-up order and distribution at some distant day of the residue of the assets saved from the wreck thereby created. 2nd. Re-construction as the means of preserving the interests, present and future, of the annuitants and policy-holders. 3rd. So-called amalgamation; that is transference as a whole, or in sections, to another office or other offices, which would be to the older and more questionable lives, the worst from of liquidation. Ordinary liquidation and re-construction are essentially distinct. Each has its peculiar difficulties. The liquidation of an insurance company has little analogy to the liquidation of a bank or ordinary commercial undertaking; it has a closer analogy to finance and railway companies. It is a case for the calm judgment of impartial and independent men, able to deal with the present emergency, and to investigate the past proceedings of the company to the fullest extent. But let not the annuitants and policy-holders be misled. The one question of to-day for them is by what means can the present value of their policies be best secured and maintained. The questions of to-morrow and for the future are what can be obtained from the shareholders and assets of the company. The keeping together the vast and valuable connection, the agencies and branches created at so great a cost (which have no value as an asset in a balance-sheet) may be the means, if properly worked, of covering the present anticipated loss on policies. The unanimity of the meeting for the appointment of a union committee of policy-holders to consider and confer upon the different plans submitted, and to communicate with the other committees is a hopeful and reviving symptom. This committee will be able to suggest the kind of liquidation essential to re-construction; to select from and on behalf of annuitants and policy-holders persons for the future management of the re-constructed office, and to submit the persons so selected to the annuitants and policy-holders for approval. This must be done without delay or the connections of the office will pass away. The Indian connection alone has been stated to send 20,000l. per annum of new business of good character. This being done and the plan of re-construction agreed upon, there may be inquiry to the fullest extent as to all questions who is responsible for the amalgamations—what resulting liabilities may still attach to those who betrayed their trust and transferred the policies to another company; whether the amalgamations have been profitable or not—what was the gain or loss due to each—questions beyond the powers and province of an accountant, and requiring the highest talent and closest investigation of experienced actuaries. The annuitants and policy-holders are interested in ascertaining their probable position under a well-devised scheme of reconstruction. The anticipated deficiency between the premiums to be hereafter received and the policies to be hereafter paid is said to be 1,100,000l., or over a million. This is swollen by a sum of say 800,000l. for the expenses and profits of the future office, that is to say 221/2 per cent. has been taken from the future income, thus reducing the assets by that amount. This sum represents the loading on the premiums of the reconstructed office, which, if this be so, would start with 800,000l. to the good. The estimated loss on policies is put at an average of 20 per cent., or one-fifth; 100l. policies rank as 80l., 1,000l. as 800l. But can no portion of this deficiency be made good out of the 800,000l. and other profits which attend a business in full operation? Is it right to assume, as in some statements, that a breach of contract exists as to the policies in existence? The event anticipated by the policy, and the non-payment by the office, must occur before the claims for the return of all the premiums can be maintained. Such a claim is neither equitable nor legal: during the payment of the premiums, risks have been incurred, some of which have attached, and been discharged out of the premiums of the surviving members. What portion of such premiums may have improperly gone in dividends to the shareholders is a subject for inquiry hereafter. The effect of the discouraging statements is obvious, the alarm is not unnatural, coming as it does as a new calamity from a quarter least expected. The excitement has been great, but the office is not a wreck, and will only become one from mismanagement. Actuaries of great position have declared that the new office would be sound and strong by the adoption of some of the various plans suggested. The older policy-holders will have to submit to various degrees of reduction, but they are creditors on the assets, the assurance reserve, and the shareholders. The expenses of management may be enormously reduced. I am hopeful as to the result. Let not reasonable men throw away 15s. out of a sovereign, because they may some years hence lose 5s. The excitement is aggravated by the alarm of tearing the office to pieces by an ordinary winding up, in the confusion of which proceeding annuitants and policy-holders will loose all, and the system of life assurance receive a shock which is not warranted by the occasion. It is impossible under judicious and economical management that the future profits will not cover the average deduction of one-fifth. The interests of the policy-holders and shareholders are distinct and in some measure antagonistic, but they may be readjusted on an equitable basis, each giving strength to the other. To effect this, as your lordship said in opening the meeting at the London Tavern on Thursday last, it is the duty of all who may have time or ability to assist their fellow policy-holders.—Believing that this may be done.—I am, &c.,

THOMAS WEBSTER.
2, Great George-street, Westminster, S. W.,
Sept. 11.


TO THE EDITOR OF THE DAILY NEWS.

SIR,—There has been such a “swooping down” upon the carcase of the Albert, so many beaks have been publicly whetted, and so much natural, wild, and impracticable matter has been put forward on all sides, that men who really do know something of this and of kindred affairs have refrained from mixing themselves up in the crowd of impossible letter writers or the aspirants for equally visionary liquidatorships. As there is now a momentary lull in the air, permit me to address a few lines to you on this distressing, but not likely to remain singular, collapse. In limine I beg to say that my surprise has been awakened less by the disclosures which have been made public than by the suppression of matters which have long been subjects of common report in insurance circles. When the proper time arrives more may be said upon this point. My chief object in writing to you is to suggest a very obvious policy under the circumstances, which I have mentioned to a number of experienced men during the past ten days or more, and which I proceed to explain:

Let the business of the Albert be divided into sections in some such manner as below:—The Indian, the All England south of London and Bristol, the Midland Counties, the Northern Counties, the Scottish, the Irish and Welsh.

Let then, the business in each section be valued and separately dealt with. In this manner the entire business will be readily absorbed by six or nine good offices, and infinite time, money, labour, anxiety, and agitation saved. No one company can well take over so large a mass without, to a great extent, encumbering its neck with a millstone; and even if a sufficiently powerful office consent to take it, several considerations strongly present themselves:

First—Such a company would necessarily be able to dictate its own terms.

Second—Even if disposed to act with as much liberality as is consistent with bare prudence, it is evident that such a company would allow nothing, or next to nothing, for the connections, agencies, and organisations of the Albert (which would be of value to smaller offices), as it would, of necessity, be independent of such additions.

Now, by parcelling the business out, a much larger number of sound offices—unable to cope with the whole, but perfectly good for a part—would be available for treaty. Much better terms could be thus secured, and much valuable time and money saved, and many heartaches spared. These sections would, doubtless, greatly differ in value, and while some might be taken over at par, or even at a premium, others might be at an enormous discount. But these matters could be very easily adjusted by the application of the principles of strict, mutuality to all the policy holders. Thus, by spreading the loss equally and proportionately over all the policies, and requiring the purchasing companies to pay to a central fund (say the committee appointed yesterday) the value of the business of the better sections, including the value of the amounts which may (not necessarily will) have to be written off each policy in order to make up deficits on other sections, and which the committee, or the central fund, would hand to the purchasing companies of the less favoured sections—the gain all round would be enormous, and the individual loss comparatively insignificant, or, at all events, greatly minimized. In effect, the Central Committee would, if found necessary, after estimating the assets and receiving the offers of various companies, practically make a pro rata call upon the policy-holders—not by asking them to pay money, but by inviting them to assent to a certain slight reduction of their policies; and it is evident that incalculably less loss would be incurred under the method than under any other yet proposed. And if, when the policy-holders are all “housed” in good offices, the Committee realise further funds from the shareholders of the Albert proper and of the amalgamated companies, they could divide a rateable dividend to the policy-holders in compensation of the reductions, if any, on their policies. I earnestly recommend these suggestions to the consideration of all interested, and, if desired, and by your kind permission, I shall be glad to further elucidate them.—I am, &c.,

L. C. A.
Falcon-court, 32, Fleet-street, London, E. C.,
Sept. 10.


TO THE EDITOR OF THE DAILY NEWS.

SIR,—So much misconception appears to exist in the minds of the policy-holders as to the measure of their claims against the office, that I trust you will be able to find space for the following extracts from Professor de Morgan’s valuable “Essay on Probabilities, and their application to Life Contingencies” (Longman and Co), which places the matter in a singularly clear light:—(Page 265) “Among the sources from which the insurance offices have drawn profit we must reckon lapsed policies. It has frequently happened that an individual assuring his life has continued his premium for a few years, and then allowed his policy to lapse to the office by non-payment. The office of course is benefited, but not as might be supposed by the total amount of the premiums paid. What it has received does not all become profit by the lapse of the policy, but only that portion by which the premium for the whole life exceeds that for a temporary assurance. Every premium paid by an insurer contains the consideration given for the chance of his dying in each and every subsequent year. If, then, he remain a member of the office and stand the risk of death during a certain number of years, all such part of the premium as was consideration for the risks of those years became due to the office, and was taken by the office as compensation for those risks, and cannot therefore be said to fall to it as profits upon the lapse of the policy. Two individuals, A and B, go to the same office on the same day, and assure their lives for the same sum each—A on his whole life. B for seven years only. A pays, say, 10l. premium, B 7l. At the end of seven years A allows his policy to lapse just at the time when B’s policy expires by its own construction. What does the office gain by the lapse? Evidently the temporary annuity of 3l. by which the premiums differ. Out of each 10l. paid by A, 7l. was not more than sufficient to pay his share of the claims which arose during the years he remained in the office; the remaining 3l. was a reserve for future years, which, on his declining to stand the risks of those years, becomes profit to the office. Perhaps no part of the subject is less understood than this. Persons having assured for |[30] their whole lives, and being desirous to discontinue, are surprised to find that they cannot get for their policies even as much as the premiums they have paid, to say nothing of interest. Each of them reasons thus: ‘Since I did not die, the office lost nothing by me, and as it turned out, ran no risk—Why, then, should they not restore me the premiums I have paid? To which it should be answered, ‘Because the risk which turned out favourably in your case, did not produce the same result in others, and it is the very essence of an assurance office that those who live pay for those who die. If you can induce the executors of those who have died during the time your policy existed to repay to the office what they have received from it with compound interest, then the office can repay you your premiums also with compound interest.” . . . The preface also contains the following passage, written in August, 1838, but of great value in 1869. After referring to the “puff” advertisements of rival blacking dealers, the Professor says:—“If there be in the country a person whose ambition it is to walk in the brightest boots to the cheapest assurance office he has my pity, for granting that he is ever able to settle where to send his servant, it remains a difficult question to what quarter he shall turn his own steps. The matter would be one of no great consequence if persons desiring to assure could at once be told to throw aside every prospectus which contains a ‘puff;’ but unfortunately this cannot be done, as there are offices which may be the most eligible which adopt this mode of advertising their claims. . . . Public ignorance of the principles of assurance is the thing to which these advertisements appeal. When it shall come to be clearly understood that in every office some must pay more than they receive in order that others may receive more than they pay, such attempts to promise the public a certainty of unusual profit will entirely cease.”

The work from which these extracts are taken is much too abstruse and mathematical, as a whole, for general circulation, but it would be of much advantage at the present time if the publishers would reprint separately in an accessible from the chapters “On the Nature of Insurance,” “On the Management of an Assurance Office,” and “On the Adjustment of the of the various Rights of the Members of an Assurance Office,” in a word, the nonmathematical portion of the book, which, emanating from so distinguished a scholar and so upright a man as the learned Professor, deservedly commands the respect of all interested in the matters with which it deals.—I am, &c.,

G. W.
Sept. 9.


TO THE EDITOR OF THE DAILY NEWS.

SIR,—As one who has had a little experience in the liquidation of some of the gigantic failures of 1866, and who has also seen the beneficial working of those which have been resuscitated, permit me to offer a few suggestions to the policy-holders. I am not about to advocate the scheme put forward by the provisional liquidators, nor shall I enter upon any other scheme; but I propose to warn the policy-holders against being led by the nose by those whose only aim is to place themselves in the position of the present liquidators of the company and their professional advisers. I was rather surprised to learn from your report of yesterday’s meeting that men of business and men who have large interests at stake would not listen to anything emanating from Mr. Price or Mr. Morris. The questions at the present moment are—Whether there is to be a liquidation or a resuscitation, and what is best to be done to preserve the property and business of the company. I should like first to point out to policy-holders the results of liquidations. I believe with one exception only has any large liquidation succeeded in paying off the whole of its liabilities, and that was accomplished chiefly by means of calls on the shareholders. I should like to point out the cost of these liquidations, and then I would refer them to those cases where a resuscitation has been successful, the creditors have been paid in full and with interest, the costs of liquidation have been saved, the shareholders have not been called upon; and the concerns are now firm and doing good businesses; Mr. Morris was, I believe, the originator of the plan, and carried through successfully the resuscitation of these concerns even after such a course had been declared impossible; and he has received the thanks of all parties interested. The Manchester policy-holders set an example which I am sorry was not followed by the London ones—they did not pledge themselves to any scheme; but they listened to the professional gentlemen’s suggestions, and, whether practicable or impracticable, I have no doubt they will be carefully considered by the committee appointed; and they also nominated a second liquidator to be appointed if necessary. The policy-holders will do well, however, to follow this example. If they desire litigation, they will find no lack of professional gentlemen who will be ready to encourage this desire.—I am, &c.,

FREDERIC COKER.
32, Cheapside, Sept. 11.


TO THE EDITOR OF THE DAILY NEWS.

SIR,—I find that I made an important omission from my letter of yesterday. I should have mentioned that all claims and annuities payable by the new company were subjected to a deduction of 25 per cent., and that the expense of management varied with the income, the maximum being 20,000l. and the minimum about 9,000l. per annum—the balance of yearly receipts varying from 80,000l. to 25,000l. There seem to be but three possible ways of making the Albert solvent; any plan must be either one of these or a modification.

1. A present payment of such a sum as would provide for the deficiency in the Assurance Fund, nearly 1,000,000l. sterling. This is hopeless.

2. A pro rata reduction on actuarial principles of all the policies, so as to equalise the assets of the office with its reduced liabilities.

The danger in this is that the younger and healthier lives would withdraw. Some of your correspondents have already advised this.

3. A deduction for a certain number of years from the claims against the company of such a percentage as would at the end of that term enable it to show 20s. in the pound.

It was this last plan the practicability of which I investigated, the result proving that 25 per cent. deduction is not sufficient.

Supposing all the assurers to consent to a reduction of say 40 per cent. form all claims for a period of ten years, the company would recover itself in that time. But would not the majority of the policy-holders think the remedy worse than the disease? It would give to the survivors their present policies in full, and the profit that might be derived from new business which the new company being solvent could then undertake.—I am, &c.,

WILLIAM KING.
English and Scottish Law Life Assurance Office
12, Waterloo-place, London, Sept. 11.


TO THE EDITOR OF THE DAILY NEWS.

SIR,—I find the name of Mr. James Wyld as one of those selected at the meeting of policy-holders on the 9th inst. to represent the interests of the policy-holders. I should be glad to know that this gentleman is not one and the same with the Vice-President of the Central Gas Consumers’ Company, which has lately become celebrated through the embezzlements of Benjamin Higgs. If he be, I, for one, must be excused for saying that I object to my interests being represented by him. Are we not at the present moment reaping the fruits of our confidences in the late manager of the Albert, and might not the great loss suffered by the Gas Company have been saved had a little of that supervision generally expected from presidents and vice-presidents been exercised in the case of Benjamin Higgs?—I am, &c.,

A POLICY-HOLDER NOT PRESENT AT THE MEETING.
Sept. 11.

[The Daily News, 23. September 1869]

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[Sep 3]

FEW persons at all acquainted with rumours or the realities of insurance business were surprised to learn, as the pubic did by an advertisement which appeared in our columns yesterday, that another great Assurance Company could no longer keep its difficulties from the knowledge of the world. It was well known that the Albert was hardly likely to fall alone, but that other companies of somewhat similar history and constitution had been terribly shaken by its overthrow. Chief of these was the European, and the revelations made before the Vice-Chancellor yesterday, on the presentation of several petitions to wind up the Society, render it no longer wonderful that rumour had been so busy with its name. We need not assume that the statements made by |[31] Mr. KEKEWICH in support of his application are a complete account of its affairs, but the whole of the proceedings of yesterday can leave no doubt in the minds of the public that a failure, greater and more ruinous than that of the Albert, is imminent, if it has not actually taken place. The figures of what we believe is the last report issued by the Society have prepared us for much of the revelations of yesterday. The Society advertises a subscribed capital of 800,000l., but the share capital actually invested is only 159,019l. The invested funds are down for 755,100l., including the above-named share capital. The sums assured, with the bonuses, are stated at 11,276,600l., and the assets, therefore, represented only 6l. 13s. 11d. for every hundred pounds of prospective liability; or 1l. 3s. 9d. more than the Albert. Of course this prospective liability can never become actual till the premiums are all paid; but the amount which will become actual in the winding-up depends in some degree on the nature of the wind-up. If the policies are handed over to some other company the value of the premiums due on them can be set over against the prospective liability on them; but if it becomes a case of mere broken contract on the part of the Society, the greater portion of the premiums paid on every policy will have to be refunded to the policy-holders. What chance there is of doing this will be learned hereafter; but if the statements made yesterday before the Vice-Chancellor be at all complete, the condition of the Albert will hardly compare unfavourably with that of the European. It is, however, premature to discuss these matters on the very partial information which is before us. But even on the basis of Mr. KEKEWICH’S statement we see one hopeful sign. He, indeed, said that the call of 5s. per share, made during this summer, had been used to pay a debt to the bankers and a dividend to the shareholders, but he also said the call had produced 150,000l., and that five times as much remained unpaid on the shares. But even the 750,000l. which thus seems to be available is probably but a dividend on the vast indebtedness of the society, and there seems to be no probability that any successful resistance will be offered to the winding-up petitions. We shall, however, have the manager’s side of the question on Saturday week; and if there are any reassuring facts to detail, it is to be hoped that the directors will let the policy-holders and shareholders know them as soon as possible.

One very important feature of the European Society was its remarkably heterogeneous constitution. We have heard much of the amalgamations of the Albert, but the Albert is nothing in this respect to the European. Its manager, Mr. LAKE, was once hailed by one of its directors, Mr. BERMINGHAM, as “the great amalgamator,” and the Society itself is literally and actually the great amalgamation. The Albert absorbed ten Societies, and those ten Societies had previously absorbed twelve others, so that it formed an aggregate of twenty-three Companies. The European has absorbed eleven Societies, but one of those Societies—the British Nation—had previously absorbed as many as the Albert, so that the existing European is a great aggregation of thirty-four Companies. To describe these various amalgamations is like stating a puzzle. A correspondent tells us of his transference from the Diadem to the Anglo-Australian, from the Anglo-Australian to the British Provident; from the British Provident to the British Nation; and from the British Nation to the European. Other persons might tell as long a story under different titles. For example, the General Indemnity Company was formed in 1853; in 1857 it was amalgamated with the Commercial; in 1858, the Commercial was amalgamated with the English Widows’ Fund; in 1860 the English Widow’s Fund amalgamated with the British Nation, and in 1865 the British Nation amalgamated with the European. Even this all-absorbing European itself has undergone transmutation. The present Society was originally formed in 1853, and called the People’s Provident; in 1858 it absorbed the original European, which had been founded in 1819, and took its name; and on amalgamating with the British Nation in 1865 it took from that Society its manager, some of its directors, and many of its characteristics. All these aggregated Societies have, in fact, been running through a long cycle of change which now seems likely to end in dissolution. A number of Societies which could not stand alone united in little groups, hoping to stand together. Being even then too weak to bear the stress of life, they aggregated in larger bodies, and the British Nation and European were the result. Not even these aggregations gave them sufficient strength, and the two aggregates united to support each other. But the union which is strength is not the mere aggregation of weakness, and Societies which could not stand alone have failed to stand even by crowding together. The whole thirty-tour of which the European Society consisted have, therefore, followed the lead of the twenty-three which constituted the Albert, and gone to the Court of Chancery to ask for quiet dissolution and decent burial.

Quickly as this catastrophe has followed on the former, there is no necessity for panic or alarm. The insurance world is excited; great amalgamators are uneasy, and the shareholders of the fifty-seven Societies are alarmed, but the insuring public have small cause for fear. The well-established Societies, which have large invested funds, give small commission to agents, and have become what they are by a process of healthy growth, will not even feel the fall of those which can be shaken down. It is true that both the Albert and the European were large Societies—among the largest in the Kingdom. But their large size was the result of aggregation—not of growth. Their magnitude was not the result of one great success, but was the mere pilling together of a few small successes and a multitude of failures. Nothing is safer than a wisely-managed Life Assurance Society. The uncertainty of life is purely individual; in the mass all uncertainty disappears; and the business of assurance is one which compensates for individual uncertainty by the statistical certainties of society. Such a business can only possibly fail from miscalculation, mismanagement, or peculation. It will be for the policy-holders and share-holders of the European Company to inquire to which of these causes, or what other cause, is to be attributed its untimely end.

[The Daily News, 10. September 1869]

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Now that the London meeting of Albert policy-holders has been held it may be hoped that the affairs of the Company will enter on another stage. Legislation by public meeting is always unsatisfactory, and this case has been no exception to the rule. A number of persons called together on a question which excites their feelings may demonstrate and denounce, but cannot deliberate. Such gatherings give needful vent to pent up feelings, but they add nothing to the wisdom and but little to the information which is needed for action. The London meeting was pretty much a reproduction of the chief provincial meetings. It was a gathering of victims, and the aggregate of their indignation was greater than the aggregate of their wisdom. Every man felt that he had been deceived, perhaps defrauded; and his demand was for a victim on whom to vent his anger. Provincial meetings had Mr. KIRBY, and were satisfied by an unanimous vote of want of confidence in him and in all connected with him; but Mr. KIRBY wisely retreated previous to the metropolitan meeting of yesterday, and there was nobody but Mr. PRICE to make a scapegoat of. So Mr. PRICE was put down. The meeting would not hear the memoranda of Mr. PRICE and the solicitors, would not let Mr. PRICE speak, but came to its resolution without a word from any of those who were prepared to defend the liquidator’s proposal for reconstruction. Now we grant that all this indignation is perfectly just, but it is only fair to Mr. PRICE and the solicitors who acted with him to remember that they are not its proper objects. They assure the policy-holders that they “had not the smallest connection (professional or otherwise) with the Company prior to its stoppage,” and their object has been to save the wreck from the wreckers, and make the best possible arrangement to prevent the calamity of breaking up. Nor does there seem to be any desire to force their scheme on the policy-holders. They have almost unanimously rejected it, and we have all along held that they would, and should, reject it, but there is no need |[32] to do so with indignation. Apart, however, from this very natural, but rather untimely, anger the meeting acted wisely enough. They were called together to consider the liquidator’s scheme, and to decide what course to take to defend their interests, and to arrange the concerns of the Company. Their eventual resolution, which was carried almost unanimously, was to reject the plan of the provisional liquidator, and in lieu thereof to appoint a committee to determine, in conjunction with the provincial committees, the best means of arranging the affairs of the Company and report to the policy-holders at a future meeting.

This resolution is a wise one, because it merely removes one scheme out of the way and leaves the ground open for the proposal of another. The policy-holders have now a central committee in London, prepared to co-operative with the committees formed in the large provincial towns, and together with them constituting a representative body having charge of their interests. This policy-holders’ parliament will at once supersede all the little cliques and parties which persons in pursuit of business have formed at their private offices. Hitherto the policy-holders have been an unorganized crowd, without a leader or a purpose, and a host of would-be leaders have offered to put themselves at is head; now the occupation of such gentlemen is gone, and any advice they may have to offer, any plans they may have to suggest, can be communicated to a representative body, which has ability to deliberate and power to decide. Of course, the usefulness of this body still depends in some degree on the allegiance it receives from those for whom it acts; but it is so obviously the wisdom of the policy-holders to act together that it is hardly possible to believe that any considerable section will be disposed to take independent courses. The feeling of all the meetings has been that expressed by Lord WILLIAM HAY yesterday, that their hope is in union. What the actual legal status of such a committee may be, how far it will have power to act, and what may be the effect of its action, remains to be seen. That it can organize the policy-holders into a new association, or make and receive proposals from other societies for taking over the policies, is obvious, but in either case each individual policy-holder will be at liberty to act on its suggestion or to reject its proposal. It is less certain how far it may be able to go in enforcing liability or bringing home responsibility for the mismanagement or the extravagance of the past. But this is not its present business. The question now is—What is to be done to save the business. The machine has stopped—can it be set going again? The vessel is upon the rocks—can it be got off and taken into harbour, there to be refitted and put under new guidance? Everybody agrees, or nearly everybody, that the worst thing which can be done is to break up, to let the Company drift into liquidation, and to sacrifice the business. The value of the business is the best asset of the business, but it is an asset which can only be realised by some method of keeping on the policies. The large annual income which arises from the premiums of the policy-holders is said by some persons to be nearly sufficient to meet all the claims under the policies as they become due, and the first question to be asked is whether the income can be continued and the polices preserved. The liquidator and the solicitors, in their memorandum, doubt whether a new company can be formed, except on some such terms as those which their scheme suggested. They are also doubtful whether any existing company will take over the business. But the duty of the committee will be to solve these doubts one way or other as speedily as possible; and they will do well to direct their whole attention to that object. It will be time to go back over the past when the future is provided for.

One or two matters which were mentioned at yesterday’s meeting require a word of comment. A distinct proposal was made to authorise the committee to test the liability of shareholders and the amalgamated companies, and it would probably have been carried had it not seemed to lie beyond the function of the meeting. The provisional liquidator had already, in the memorandum the meeting refused to hear read, explained that in all such cases the responsibility of such shareholders, if they have any, would have to be separately settled in each individual case. As to the general Albert shareholders, their liability is estimated at only 150,000l., and the liquidator very fairly pleads, not only as Portia pleads with Shylock, the blessedness of mercy, but, as a modern liquidator may more successfully plead with a modern creditor, he pleads that mercy is most profitable. A resolve to have the pound of flesh may even frustrate itself. Towards other parties no such consideration will be either profitable or wise. Some policy-holders yesterday asked for further information about the assets, but the provisional liquidator had already told them that one of the first duties of an official liquidator would be to investigate most strictly whether the payments made to amalgamators and others were legal, and whether those who have received enormous sums from the Company could be made to disgorge any portion of their spoil. But it is quite clear that the time for the discussion of these questions has not yet arrived. The step which has now been taken ought to carry the affairs of the Company out of the arena of excited discussion into that of cool inquiry. The policy-holders now know the worst—henceforth their prospects may begin to mend. The first thing to be done was to find a repre|[33]sentative of their interest, and now that a representative body has been found, all that the policy-holders have to do is to give allegiance and confidence to it. The thing now to be done is for the committee to save the business, if they can, and they must do this in one of three ways. They must either re-organize the Company, or form the policy-holders into a new company, or get some other company to take over the business. Either way the policy-holders must lose something; but if neither of these plans be adopted, and there is a mere scramble for the assets, they may lose all.

[The Daily News, 28. September 1869]

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THE ALBERT ASSURANCE COMPANY.

[Sep 28]

TO THE EDITOR OF THE DAILY NEWS.

SIR,—Now that every morning’s post brings a scheme for the resuscitation of the Albert Assurance Company, it is desirable to remind the policy-holders of a few indisputable facts which must not be lost sight of in judging of the practicability of either of these proposals. In the first place, an order having been made for a compulsory winding up, every policy-holder, annuitant, and creditor is entitled to his dividend, or pro rata share of the assets of the company. Unless, therefore, the aggregate claims of all those who would stand upon this right are so insignificant as to admit of voluntary adjustment in such a manner as would enable the others to put a stop to proceedings under the winding up order, the assets of the company must be collected, and every legitimate means used for the purpose of bringing those assets together as speedily as possible. To this end—notwithstanding a willingness on the part of certain policy-holders to assist the directors in stifling inquiry—there must be a searching investigation into the past transactions of the company, especially with a view to test the continuing liability of the several companies absorbed by the Albert, and to recover some portion of the enormous sum of 274,000l. paid for the amalgamations. Every scheme, therefore, which ignores this inevitable consequence of the winding-up order draws its conclusion from premises which can never be brought face to face with the actual position of the company; and all such schemes are really undeserving of serious attention. Keeping this consequence in mind we have next to inquire whether the assets of the company are of such an amount, and so far within the reach of the liquidators, assisted by the machinery of the court, as to warrant an expectation that the share of those assets devolving upon any number of section of the general body willing to unite for the purpose would be sufficient to constitute a basis for the formation of a new mutual assurance company.

I have looked at this question from every point of view, and with a sincere desire to evolve a satisfactory answer—but the facts are too plain. Every proposal that has yet been put forward for a mutual assurance (without fresh subscribed capital) has been based upon a reduction of the amount already assured (varying, according to age, from 20 to 40 per cent.), and upon the continuance of the old premiums; that is to say, taking the average of such reduction at 25 per cent., each insurer would in future pay for a policy of 75l. what before he paid for one for 100l.; or, in other words, he would pay for the reduced policy one-third more than the proper premium, such addition being apparently intended to form a substitute for paid-up capital. If calculated on sound actuarial principles, this should be equivalent to re-insuring members at the rates proper to their actual ages. Obviously this offers no advantages above that of re-insuring in some well-established and secure office, except it be the saving do damaged lives of the payment for additional risk resulting from a change in their family or personal health bill. In this partial advantage, no doubt, a considerable section of the Albert policy-holders would participate; but it would be an element of danger to the new society, into which every member ought to enter after re-examination and paying for any extra risk. Before enumerating the disadvantage of joining the resuscitated company, allowance must be made for the claims of annuitants and general creditors, which are stated to amount to about 250,000l. The reservation of a proportionate dividend, therefore, say of ten per cent., would reduce the estimated assets of 300,000l. to about 275,000l. Provision would also have to be made for the large amount of policies that will have fallen in since the stoppage of the company, and before any scheme for reorganisation can be matured. But, adopting the most favourable calculation on behalf of the reuniting body of policy-holders, we will base our argument upon the assumption that the new company might even reckon upon eleven-twelfths of the entire assets, or 275,000l., and suffer no material defection on the part of the younger lives, whose adhesion would be absolutely essential to the vitality of the scheme. In thus forecasting contingencies, we shall have endorsed the most sanguine view that any actuary has hitherto taken of the actual position of the old company’s affairs. The mutual assurers would, nevertheless, labour under the most serious disadvantages. First, the company would be of damaged character, and so less able to secure new business. Secondly, it would contain many bad lives and a preponderance of old lives, the former not paying for their risks. Thirdly, and above all, it would have but 275,000l., and that not in hand, to meet the claims of six millions of policies (the reduced amount). Supplement this with the fact that during the last few years the annual claims from deaths have amounted to five-sixths of the entire income of the company, and the prospect for the survivors of the first year’s existence of such a resuscitated company may be read at a glance. The claims paid in 1868, after deducting 18,500l. for annuities, amounted to 263,000l. In short, it is manifest that with the assets so small and the claims so enormous, any reorganisation without a large fresh capital actually paid up, can offer to the policy-holders no solid or substantial advantage whatsoever above that which would attend a reinsurance in any sound office already existing.

As to feasibility of forming such a combination, it must be remembered that the policy-holders are scattered over all parts of the globe, and even if all stood upon an equal footing with regard to rights and remedies, it is highly improbable that any such number could be brought together as would be willing—or if willing as would suffice—by united action to form a secure mutual assurance. A great deal has been said about the “good-will” of the company’s business, and the very persons who, besides squandering all the paid-up capital, have well-nigh dissipated the entire the income of the company from 1838 to 1869, are now pleased to claim a good-will in the future premiums of the policy-holders, and to calculate their value as an asset of the company. The fallacy is so palpable that it scarcely deserves exposure. This utterly bankrupt company, whose shareholders the official liquidator assures us cannot pay six and eightpence in the pound upon the uncalled capital, has no “good-will” to be disposed of for the benefit of its creditors, the policy-holders—save that which may attach to its ruined name, or to the premises in Waterloo-place, where it earned its evil repute. The goodwill of every policy, or, to speak more correctly, the value of every future premium, belongs to the assured; and there is nothing to prevent any number or any section of the policy-holders from combining for their common advantage, and taking their policies over to any office willing to assist them. The various equities involved in the several amalgamations with the Albert Company will necessarily have the effect of separating the policy-holders into different sections, each having its peculiar interests, the pursuit of which through the mazes of the Court of Chancery might or might not operate for the benefit of the general body. It is in view of those possibly divergent interests, and of the impracticability of any united action on the part of the general body, that I would advise each policy-holder to make the most of what his dividend may yield him for investment or future insurance, and to place his future premiums beyond the risks attending calculations not of what is, but of what may be; and I would also venture to recommend each section of the policy-holders who have claims upon the absorbed company in which they were originally insured to unite its forces for securing the best means of escape.—I am, &c.,

P. H. EDLIN.
Sept. 25.

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THE EUROPEAN ASSURANCE SOCIETY.

[Sep 28]

A meeting of policy-holders in the Royal Naval, Military, and East India Life Assurance Society, which was amalgamated with the European Society about three years ago, was held yesterday afternoon at Grindlay’s Rooms, Parliament-street; Mr. S. F. Low in the chair.

The CHAIRMAN, after reading the proposal of amalgamation, dated August 18, 1866, said that their object in meeting together was not to become “wreckers” of the European Society, but simply with a view to self-protection. They wanted to know their position with reference to the European as policy-holders in the Royal Naval and Military Society, and then to ascertain whether they had better go on with the old office than remain with the new one. Petitions had been presented for winding up the affairs of the European, and the directors had issued a circular showing that there was no occasion for it. The press had commented upon the affairs of the society as shown in its balance-sheets, and the policy-holders as business men could also form their opinion from those balance-sheets, whether it would be best to support or oppose the directors of the European. It would be a matter for inquiry whether the late Naval and Military Society had the power to transfer their interests, and whether the policy-holders should attack the position of the directors. Applications had been made to the European to surrender policies, and a letter had been received, dated September 20, declining, in the interest of the general body of policy-holders, for the represent to purchase more policies. He (the Chairman) had looked upon that as tantamount to an admission of bankruptcy. After consulting with their solicitors, it had been thought best not to add to the difficulties of the European Society. The meeting would have to consider whether they should take steps for winding up the affairs of the Naval and Military Society, or confer with the directors in order to resuscitate it. He did not think its policy-holders would suffer, as they had no power by their deed to amalgamate with any other office.

Captain JONES, a policy-holder, and also a director of the European, said that the late Naval and Military Society was wound up voluntarily.

Mr. GREY moved a resolution to the effect that no steps should be taken in connection with the directors of the European Society.

Mr. CLARKE said that it would be useless to waste time and money in watching the proceedings in Chancery. With reference to what had been said by Captain Jones, he could say that the shareholders of the Naval and Military were liable to the full extent of their liabilities, and that winding up by shareholders could not affect the policy-holders. Nothing could be done until the deed of amalgamation had been seen and the decision of the Court of Chancery given. At the suggestion of the Chairman, the resolution was altered to the following:—“That this meeting be adjourned for a week, and that a committee of three policy-holders be appointed in order to obtain the facts of the Naval and Military Society.”

Mr. PYKE, solicitor, said the European directors were the custodians of all the documents, including the deed of amalgamation, and that they had refused to give any information.

Captain JONES, in reply to the Chairman, said that when the application had been made the officials and documents were at the Vice-Chancellor’s Court under examination. He did not think the chairman or directors of the European would refuse to grant every facility for examination of the deed and other documents. The petitions in Chancery had been filed by shareholders who were not able to pay their calls, and who had been taken in hand by some parties, and had been led to present these petitions. The guarantee business of the European amounted to 50,000l., and the clear profits on it of 22,000l., which in itself ought to be able to cover the whole expenses of the life department. The office had an income of 300,000l. a year, and taking the claims upon it to amount even to 200,000l. a year, there was a profit left of 100,000l. a year, which was sufficient to place the company, in a few years, in the position of one of the largest companies in England. The company was perfectly able to meet every claim as it fell due, and they had now a very good margin of young lives.|

[34]

Mr. DENIS WALKER (actuary of the European) said every claim on the European could be met as it came due, and the company could call up capital, by calls upon the shareholders, to the extent of 500,000l. It had acquired within a few years 2,000,000l. of insurance. In a short time the American business would be withdrawn, as the American Government would not permit them to transact other business than life assurance; consequently there would be the whole of the American funds to be received. He believed that the petition in Chancery would be dismissed, on the ground that the European had ample funds to meet all claims as they should fall due.

The CHAIRMAN asked how it was that the letter he now preferred to was issued on the 20th September, before the petition was filed.

Captain JONES explained that in consequence of the Albert Company’s troubles, and the fact that rumours had been circulated with respect to the European, a large number of holders had applied to surrender their policies, but that the directors, in order to prevent a run upon the funds, declined, for the present, to purchase any beyond the 20th September.

Captain OMMANNEY said that the small amount which the directors gave for a surrendered policy, as in a case which he instanced, made him think the company was not in a solvent state. It could not be perfectly solvent, he thought, with the small amount they had to meet policies to the extent of 8,000,000l. The point to be looked at, however, was the position of the Naval and Military Society, whose directors had amalgamated with the European without a single word being said to the policy-holders on the matter.

In reply to the Chairman,

Captain JONES said that, so far as he was concerned personally, and he thought he was also speaking the opinion of his brother directors, and of Sir F. Smith, the chairman of the European, every facility should be given to a committee appointed to inquire into the circumstances of the Naval and Military Society.

Upon the motion of Mr. PILLEAU, a committee consisting of the chairman, Captain Ommanney, and Mr. Clarke, was appointed, and the meeting was adjourned until Monday next.


A meeting of policy- European Assurance Society was held on Saturday in Dublin, Mr. J. H. Owen, C. E., architect to the Board of Works, presiding. The Chairman said that the object of calling that meeting had been simply to form a body possessing the confidence of the policy-holders to represent them, to obtain information, and to assist in the proceedings which were about to be taken in England. He animadverted strongly on the statements made by the chairman, manager, and officers of the company, regarding the flourishing prospects of the company, and said that the facts disclosed a gross amount of carelessness, if not something else. Resolutions in support of the object of the meeting were adopted.

[The Daily News, 25. September 1869]

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DEFAULTING ASSURANCE COMPANIES.

(From the Solicitors’ Journal.)

Close on the fall of the Albert Assurance Company is announced to follow that of the European Assurance Society. The application to wind up this company was made before Vice-Chancellor James on Wednesday, and the petitions (two in number) stand over to be heard, in court this day week, at half-past ten a.m. It is rather significant that, a little more than a year ago, the European Assurance Society was the subject of a very disagreeable scandal in Ireland, in consequence of conduct which the Lord Chief Justice stigmatised as “embarrassing, evasive, and unsatisfactory,” in resisting the payment of a genuine claim. In that case a writ was at length issued against Sir Frederick Smith, K. H., F. R. S., the chairman, to enforce payment. After severely condemning the conduct of the defence, the court exonerated Sir. F. Smith form blame, believing him to have been ignorant of the abuse which had been made of his name. Like the Albert, the European is the result of an enormous number of amalgamations, having absorbed since 1859 no less than thirty-three other companies. The effect of such “amalgamations” upon shareholders and policy-holders respectively is just now exciting a good deal of attention. As to the shareholders in the companies which were swallowed up one after another, their rights to decline the change originally would depend upon the deeds of settlement of their own companies. As Vice-Chancellor Wood observed in “Re Empire Assurance Corporation, ex parte Bagshaw” (15 W. R. 889, L. R. 4 Eq. 347), it might be that the directors were authorised to hand over all the assets to the other company, leaving the objecting shareholders to lose their money simply, or it might be that the objecting shareholders could claim to be paid off, or the arrangement might be ultra vires. But it could not be that the objecting shareholders should be bound to accept the arrangement and become contributories of the new company. The Vice-Chancellor confessed that he had not the least conception what might be the full legal effect of the word “amalgamate”; but, at any rate, he said it was not a word by which people, having subscribed to company A., were inevitably bound to become subscribers to company B. And if, after the “amalgamation,” the shareholder in the swallowed company took simply no steps at all, he “simply became no shareholder in the consolidated company” (“Higg’s case,” 13 W. R. 937). Probably in the majority of instances the shareholder accepted a status in the latter company, but in either case it would not be very difficult to determine the whether or no. As to the policy-holders there may be more difficulty. It is customary where an “amalgamation” takes place between two assurance societies to get the assured to adopt the consolidated one by accepting a new policy. Where that has not been done there may be a serious question as to what quarter the assured may be entitled to look for payment of their claims. Pending the Vice-Chancellor’s decision upon the European petition, we shall not enter into the details of the case. If the failure of the Albert demonstrated the necessity for Government interference in the audit of insurance companies’ accounts, the difficulties of the European afford about as strong a corroboration as could be imagined. Few will dispute this when it is stated that this society lately withdrew from business in the United States, where the system of public supervision is in full force.

[The Daily News, 2. September 1869]

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THE ALBERT ASSURANCE COMPANY.

[Sep 2]

The first of a series of meetings of policy-holders in the Albert Assurance Company (to be held in various districts), called under an order of the Vice-Chancellor, to consider the best means for the arrangement of the affairs of the company, was held in Manchester yesterday. Mr. S. Lowell Price (the provisional official liquidator of the company), Mr. A. R. Kirby (the present manager), and Mr. Lewis, of the firm of Lewis, Munns, Nunn, and Longden, solicitors to the company, were present. There was a large attendance of policy-holders, and the proceedings, which were protracted over three and a half hours, were very excited and noisy. The first two hours were occupied by the liquidators and Mr. Lewis answering questions addressed to them by the policy-holders. There appeared little, if any, readiness on the part of the policy-holders to suggest any course of action, and the general feeling appeared to be in favour of an adjournment. It was pointed out, however, that the adoption of this course was impossible, inasmuch as by the Vice-Chancellor’s order the answer of the policy-holders is returnable on the 10th inst. Ultimately Mr. Lewis, on the part of the liquidators, suggested that the following resolution should be adopted:—“That (without prejudice to such further investigation into the state and transactions of the Albert Life Assurance Company as may be necessary) this meeting of policy-holders and claimants approves generally of the plan of arrangement of the affairs of the company proposed by the provisional official liquidators, and recommends the same for acceptance, subject to such modifications thereof as may from time to time be sanctioned by the Court.” Mr. Lewis said that the liquidators could not propose this resolution themselves, but they submitted it to the policy-holders as the best means of relieving themselves from the difficulty in which they were at present placed.|

[35]

Mr. HALSE, solicitor, London, moved:—“That in lieu of the scheme proposed by the provisional liquidators, it is desirable that negotiations be opened with an established insurance office of standing, or that a mutual society be formed for taking over the Albert policies and annuities, and it being admitted that the assets of the Albert Company are wholly insufficient to meet the claims of their policy-holders and annuitants, the Vice-Chancellor be requested to place the carriage of the proceedings for compulsory winding-up in the hands of liquidators, to be nominated on behalf of the original and amalgamated policy-holders and annuitants.” This motion was seconded, and for some time appeared to gain the support of the meeting; but, in opposition, it was pointed out that the expenses of a compulsory winding-up would be much greater, without conferring any greater advantage upon the policy-holders, than a voluntary winding up under the supervision of the Court of Chancery. Mr. Challoner, London, moved, “That a committee, consisting of the four largest policy-holders in Manchester, or four policy-holders to be nominated by them respectively, with the addition of three policy-holders to be named at this meeting, be appointed to consider the circumstances of the society and the proposition made, and what course it will be most beneficial to take in the interest of the policy-holders, and to report to a future meeting.” The course proposed in the last motion appeared to meet with general approbation, with the exception that a large number of policy-holders objected to the constituents of the proposed committee, and ultimately the following resolution was adopted by a large majority:—“That in the opinion of this meeting it is advisable that a committee of policy-holders be appointed to confer with the liquidators, to consider what is best to be done in the interests of the policy-holders.” Six gentlemen were then nominated.

The following resolution was also unanimously agreed to, and ordered to be advertised in the London and leading provincial newspapers:—“That this meeting of policy-holders of the Albert Insurance Company, resident in Manchester and district, feels bound to express its opinion that for several years past the management of the company in London has been conducted in a most reckless and extravagant manner, and seeing that since 1862, the losses have amounted to nearly 1,250,000l., they cannot but censure, in the strongest possible manner, the board of directors, and especially the late and present manager; nor will it have any confidence whatever in the liquidation of the affairs of the said company as long as Mr. Kirby remains in the position of joint liquidator. Further, it hopes that every means available will be used to bring to a proper tribunal the guilty parties in the said reckless extravagance.”

[The Daily News, 25. September 1869]

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THE EUROPEAN ASSURANCE SOCIETY.

[Sep 25]

At Vice-Chancellor James’s Chambers yesterday Mr. Lording (of the firm Freshfield and Co.) made an application to Mr. Bloxam, the chief clerk, to have the order made on Wednesday last by Vice-Chancellor James signed. The undertaking of the directors was that they should keep a separate account of all monies paid into their hands, and give all persons so paying an indemnity for the same.

The Chief Clerk said he must know who the directors were.

Mr. Lording said he had the names of the whole of the directors—except two—Mr. Crawford and Mr. Hayward.

The Chief Clerk, being answered that there was no appearance by the directors, said he would give them till 2 o’clock to hear anything on their behalf.

In the interval elapsing the representative of the official liquidator stated that he wished, through the reporters, to make public that the number of letters sent to the Judges’ Chambers by policy-holders and others, asking the assistance of the judge or his chief clerk, were of no use being sent in that way, and that policy-holders and others ought to put themselves in communication with the provisional liquidator. In this the Chief Clerk acquiesced.

Mr. W. Moon said he represented various policy-holders in the European Society, and before paying the premiums he would like some authority for their doing so.

The Chief Clerk said in the order the company gave an undertaking to carry the premiums paid to a separate account. The premiums would be returned in case of the company not being resuscitated.

The time having lapsed for some one on behalf of the directors appearing to show why their names should not be attached to the Vice-Chancellor’s order giving an undertaking about the separate account.

Mr. Lording said he could produce the books showing the directors’ names; and it would have been an easy matter for them to have appeared if they had been so minded.

Some time afterwards the Chief Clerk duly signed the order, attaching the following directors, leaving out Messrs. Crawford and Hayward:—General Sir Frederick Smith, George Frederick Anderson, Edward Hamilton Anson, George Bermingham, Henry Deffell, James Furnell, Robert Wallen Jones, Lord George Gordon Lennox, M. P., Robert Norton, M. D., Admiral Michael Quin, and Reginald Read.


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THE ALBERT ASSURANCE COMPANY.—

At the Chancery Chambers, yesterday, two summonses appeared in the list of vacation business before Mr. Bloxam, the chief clerk of Vice-Chancellor James, in reference to the affairs of the Albert Life Assurance Company. One was respecting a scheme to be put forth to prevent the winding-up order being carried out, and the other was in regard to the payment of premiums by the policy-holders. The second summons was by anticipation in effect granted by Vice-Chancellor James on Wednesday last: The first-mentioned summons as to the scheme to get rid of the winding-up of the company stands over until Tuesday next. Other proposals are expected to be put before the public to take the case out of court.

[The Daily News, 17. September 1869]

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AMERICAN SAFE DEPOSIT COMPANIES.

(FROM OUR SPECIAL CORESPONDENT.)

NEW YORK, SEPT. 4.

I have been very much struck by a story on which the Daily News received by the last mail bases a leading article, of a man in England who, having no place of security in which to place his bonds or other valuable papers, carried them with him in a carpet bag when he went on a summer tour, and consequently lost them. Even the resource hitherto offered to possessors of valuables by bankers’ vaults has, it seems, been cut off or rendered unsafe by the recent decision pronouncing bankers not liable for the loss of securities which they have simply taken charge of as a favour to their customers. Now, people here have been suffering seriously from this same difficulty for several years back; but they have, I believe, found a remedy as nearly perfect as anything that can be devised, and it may be interesting to your readers to have it described. It was, until three or four years ago, the custom here, as in England—indeed it may be said to be still the prevailing custom—to keep these valuable papers in boxes in bankers’ vaults. But, then, the banker gives no receipt for them, and is not responsible for them in case they are lost through other causes than gross negligence. If his safe should be entered by burglars, or robbed by dishonest employés of his own, the unhappy owner of the valuable deposited with him for safe keeping has to put up with the loss as best he may. The defects of the arrangement have not, however, been seriously felt until within the last nine or ten years. During that period government bonds, railroad bonds, and other negotiable securities have multiplied enormously—partly owing to the creation of the public debt, and partly to the great and rapid increase in the number of industrial enterprises. Railroads, for instance, were formerly constructed by means of subscriptions to the stock of the companies. They are now mostly constructed, wholly or in great part, by the sale of mortgage bonds—or debentures, I believe you call them—and these are almost as easily transferred as money itself, and are found now in the hands of large and small investors by the million all over the country; the larger portion being, of course, concentrated here in New York, as being the great financial centre and the principal seat of capital. Many people, of course, keep them at their banker’s; but them, as I have said, the banker is not responsible for them, and the bank vaults are accessible to many different persons, and it is troublesome and inconvenient to get things as frequently as one may require in a bank vault. Consequently a great many persons got into the habit of keeping their securities in their own iron safes in their offices; but here, as it turned out, they were far more exposed than anywhere else. For, in obedience to the great law of supply and demand, with the multiplication of bonds there arose a large band of thieves, specially devoted to the work of stealing bonds, and now well known to the public as a distinct profession called “bond robbers.” I think I am within bounds when I say that they have during the last seven years relieved the lawful owners in this city of transferable securities to the value of a million sterling. They have performed some very remarkable exploits in what is known as the “butcher’s cart game.” In that two or three confederates cruise along the streets, towards the opening or close of business hours, in a light butcher’s cart, with a fast trotting horse; they see a porter of clerk walking along with a tin box; perhaps they have watched him from his bank or counting house,—in the full confidence inspired by the presence of crowds of his fellow-citizens, and the presumptive nearness of the police. They drive rapidly up beside him; one of the gang descends, knocks him down by a smart blow in the eyes, perhaps peppers him profusely at the same moment, flings his box into the cart, and off they go at the rate of a mile in three minutes, and are out of sight before the bystanders have fairly begun to comprehend the nature of transaction. This has led of course to extra precautions, and now no clerk or porter goes to and fro in the streets alone with a box in his hand; he has a companion, and the two are apt to be armed.|

[36]

But the thieves were not foiled. They followed the bonds into the offices and counting-houses, and some of their most tremendous strokes have actually been performed in the offices of bankers and brokers in the middle of the day, during business hours, and in the presence of the clerks. They go in couples, or trios, having of course previously reconnoitered the ground; one or two to distract attention by a pretence of business, while another calmly walks up to the safe, draws the securities from it, and goes out with them, the employés not noticing him. This may seem incredible, but it has been done over and over again. In the famous Lord case, two years ago, nearly, 300,000 dollars worth of Government bonds were taken out of an office in this way; and nearly a similar amount in the Royal Insurance Company’s case. In neither, I believe, was there the slightest proof or suspicion of complicity on the part of the clerks. Each was simply an illustration of the art of distracting attention, to which the success of so many jugglers’ tricks is due, carried to the highest point. Their boldness and dexterity were well illustrated in a case which came under my own knowledge a year ago. A friend who had been passing two years in Europe, on returning went to his bankers, and took out the tin box containing his whole fortune, and it was a tolerably large one, in Government bonds, some of which he had determined to convert into something else. He walked down to his broker’s, a few doors off, for this purpose, carrying the box in his hand, went down to the lower end of the office, put the box on the counter at his side, and leaning forward on his elbows, entered into conversation with the broker. He was followed in, however, by a bond robber, a young respectable-looking man, who went boldly up, removed the box, and walked slowly out with it, nobody noticing him, except a clerk near the door, who asked if that was his employer’s box, and was courteously informed “that it was the other gentleman’s.” When the hue and cry was raised he was out of sight, and my friend’s sensations—a young man recently married—during the first ten minutes afterwards may possibly be imagined. Happily the bonds were nearly all registered, and were consequently not transferable, so that the actual loss was, after all, very small. Some of these raids on the banks have been somewhat astounding, both for their magnitude and success, though in two of the worst cases they undoubtedly owed their success to gross carelessness on the part of the banks, in having no watch during the long interval between Saturday night and Monday morning. In one of these—that of the Ocean Bank, in this city—about three months ago, they entered the bank through a hole cut in the floor below, blew the safe open with powder, and took everything. They entered a savings bank in Philadelphia about the same time, in the same way, and with a somewhat similar result.|

[37]

 Jenny Marx klebte zuerst einen kurzen Ausschnitt des Artikels auf S. [37] und den darauf folgenden Ausschnitt wieder auf S. [36].
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The general alarm and anxiety caused by this state of things called into existence what we call “Safe Deposit Companies,” of which nearly every large city has now two or three. There are two at least in New York. They are corporations, chartered by the State Legislature for the safe keeping of valuables, and offering as a guarantee to depositors unlimited liability on the part of the directors and stockholders. Of course
|[36] it is a prime requisite that the directors should be men of high standing, both as regards wealth and character, and they are. I may take one, with the working of which I am personally acquainted, as a sample of all of them. Its premises are in the basement of a fire-proof building in Broadway, the offices occupying the front, and its vaults, all lined with iron, extending some distance back, with the usual defences in the shape of double iron gates, patent locks, and so forth. These vaults are pierced by three or four long passages, lighted with gas, and each of these passages are lined, from the floor up as high as a man can reach, with small iron safes or closets of various sizes, in which tin boxes containing valuables can be placed. These safes are rented only by the company, at prices varying from 2l. to 8l. a year, according to size; the hirer keeps the key, of which there is no duplicate, and over the key-hole lies another lock, or stopper, of which the company keeps the key. At night the gas is kept brilliantly lighted, rendering every part of the premises, including the passages in the vaults—for they are closed by gates, and not solid doors—visible from the street; two watchmen keep watch and ward within, and two without, and to obtain access to the vaults, the combination of three different persons—the President, secretary, and safekeeper—in necessary. Suppose I wish to hire a safe. I go there, and in the first place am required to have myself identified by some person of respectability known to the company, in order to make sure that I am the person whose name I give, and that I am a person of good character, and likely to want the safe for proper purposes. This done, a page in a great book is given up to me. Here is inscribed my name, my age, my occupation, my address, my height and weight, and a full description of me; the character of my face, the colour of my eyes and hair, the impression produced by my nose, and any peculiarities, such as marks or scars, that may be apparent. If I have no such marks visible, I am asked to mention and show any there may be on any easily accessible portion of my person, and of these a description is also put down. I then choose a pass-word, for which I may be called upon, if thought necessary, when I seek admission, and I choose one, and it is set down. I then select my safe from amongst those that are vacant, and am furnished with a small flat key with a number on it, which is, however, not the number of the safe, so that anybody who found it could make no use of it. I purchase a tin box from the company, which exactly fits the safe, and in it I deposit my valuables. I may come and examine it as often as I please; if the officer outside knows me by sight he at once accompanies me into the vault; if he does not know me he looks me up in the book and tests me, and then removes the cap from my keyhole with his little |[37] key. I open the safe with mine, and take out my box, locking the safe after me. But as the vault is not a proper place to examine my papers in, I pass into a room adjoining the main office, where I find several long rows of desks, with stalls on them marked off by high partitions. In one of these I insert my box and my head, and produce my securities. If I wish to cut off coupons I find a pair of scissors, hanging by my side; if I want to know where and at what dates the dividends or interest of the principal stocks and bonds are payable in New York, I find a book close by in which it is all set down; and if I wish to make memoranda, I find pen and ink on my desk. Having finished my examination, I replace my papers, and set out on my way back to the vault, but go along a passage fenced in from the outer office by a tall and close iron railing or wire work, so that nobody from the outside can “grab” my possessions. But I find the company has suspicions of me too. I may have robbed some of my companions in the examining room, and it will not do to let me pass suddenly out or it; so I find my progress arrested by a gate, which can only be opened from the outside, and through and over which a full view of me is obtained by the porter in charge of it. I again enter the vault, accompanied by the keeper, deposit my box in the safe in his presence, and march off.

Now the company does not offer you any legal guarantee for the safety of what you place in these safes. As they have no knowledge of what you keep in them, to offer to become liable for the contents would of course expose them to innumerable fraudulent claims, and a combination amongst the principal officers undoubtedly might bring about a robbery. The advantages of hiring a safe are that you have one to yourself, of which you hold the key, and that extraordinary precautions are taken by men of undoubted character to prevent anybody but you getting access to it, and that the whole concern is occupied with nothing but keeping watch and ward. In short, the security is as complete as is consistent with giving you unrestricted and uninspected access to your property. The extent to which these safes are now used by professional men, ladies, and annuitants of all kinds who have no offices or means of security of their own, is very great.

Should you, however, not wish to hire a safe, and desire to have the company liable for the safe keeping of your property, you have simply to take your bonds, or stock, or other property down and present them, and take a receipt for them, and pay one dollar a thousand per annum on their nominal value, and the company will charge itself with their safe custody, will deliver them to you on demand, and will, if you desire it, collect the interest or dividends on them, and forward to you. If you wish to deposit plate or jewellery with them, you can put it in a box, seal it with your seal, and they will receive it, charging you one per cent. per annum on the declared value of the contents—the valuation they leave to yourself—and undertake to return it to you with seals unbroken. To persons leaving town for the summer, or going abroad, this furnishes an invaluable resource; in fact, there is no species of valuable property of small bulk of which they are not made the custodians. The business is growing rapidly, and nothing has as yet occurred to shake people’s confidence in it. I have described, as I have said, the office of which I have personal knowledge, and which was the first started; there are others with better accommodation. Of course, however, there is no use in trying to start such an enterprise unless men of the highest commercial standing can be secured for the board of direction.

[The Daily News, 4. Oktober 1869]

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THE EUROPEAN ASSURANCE SOCIETY.

[Oc 4]

On Saturday morning the petition of Mr. Robert Crawford for the winding up of the company came before Vice-Chancellor Sir W. M. James upon an application that Mr. Henry Lake, the manager, now in course of being cross-examined upon oath before the special examiner, might be ordered forthwith to produce book, and documents relating to the matter in question. The petition, which was presented on the 21st of September, describes the petitioner as a contributory, and also a policy-holder of the company.

Mr. Kekewich, in support of the motion, stated that the cross-examination was practically stopped by Mr. Lake’s refusal to produce the books and documents from which the petitioner was desirous of providing his allegation that the available assets were insufficient to meet the liabilities.

Mr. Glasse, who with Mr. Miller represented the company, took a preliminary objection to the title of Mr. Crawford to be heard as a petitioner. Mr. Crawford was a shareholder and a director, and like all the other shareholders was bound by the deed which declared that two successive extraordinary general meetings should, provide a majority of at least two-thirds in number of the shareholders personally present should be in favour of a dissolution have full power at any time to resolve upon a dissolution of the company. There had been no attempt to hold a general meeting for the purpose, and even if the court were not disposed to dismiss the petition of a shareholder presented under such circumstances, the hearing ought not to be proceeded with till the preliminary steps prescribed by the deed had been taken, and the sense of the other shareholders and policy-holders ascertained with regard to the propriety of winding up. The capital of the company was 1,000,000l., divided into 400,000 shares of 2l. 10s. each, and there remained unpaid something like half a million, which afforded ample security for the policy-holders. Even if it were not for the deed of settlement the court had no power or jurisdiction under the Act of 1862, to interfere in this matter, there being no evidence whatever that the company was unable to pay its debuts beyond the statement of the petition.

Mr. Fry (with whom was Mr. Bevir) stated that he appeared for the holders of nearly one-fourth of the shares and about one-eighth of the policies, and concurred in Mr. Glasse’s objection. Each shareholder had contracted with every other shareholder that no dissolution of the company should take place, except upon the judgment of two-thirds of the body at two successive meetings, and therefore the court had no jurisdiction at the instance of a shareholder to order the winding up.

Mr. L. Webb, on behalf of a number of policy-holders, pointed out that there was nothing in the petition to show what amount Mr. Crawford had paid upon his shares, and it had been held that a shareholder upon whom no further call could be made was not in a condition to present a winding-up petition.

The Vice-Chancellor was of opinion that the objection could not hold. The petition alleged that the company was insolvent and unable to pay its debts, and if that were made out at the hearing the case would come within the Act of Parliament, and the court would have power to make the winding-up order. The only question was whether there was anything in the deed of settlement which would preclude the right of a particular person to avail himself of the law which made joint-stock companies liable to be wound up on the petition of a creditor in certain cases. It must be made out very clearly indeed that a man was precluded from applying to the court before a judge could hold that he was deprived of his legal remedies. In his opinion the true meaning of the clauses which had been cited from the deed was that the company was not to dissolve itself without complying with the conditions laid down, and that they did not preclude any individual from availing himself of the provisions of the general law, which were in fact incorporated with the deed of settlement.

Mr. Glasse—Then I ask your Honour to hold your hand in the matter till there has been a meeting of the shareholders.

The Vice-Chancellor—I will hear the motion opened.

Mr. Kekewich said the motion was that all books and papers relevant to the inquiry should be produced before the special examiner. Mr. Lake had declined to produce the documents, stating that they were in the custody of the company, who by their counsel had positively refused to produce them except under the order of the court. The notice had been framed in a general form which had been found useful in other cases, but he should be prepared to mention before the examiner each document that was required, so that there might be a fair discussion as to whether it was important or not. Mr. Lake had admitted that there was a claim book, and one of the principal allegations of the petition was that there were claims now payable or about immediately to become payable to the extent of 119,000l., while there was not in the bankers’ hands more than 10,000l. to meet them, and there were no other available assets. It was admitted that the claims did amount to something of that kind, but the company tried to make out that some were not admitted, and that others would not become payable for a short time. He believed, however, that they admitted 60,000l. to be due at the present time, and that they had not more than 12,000l. at their bankers.

The Vice-Chancellor—I suppose that Mr. Lake has got the personal control of these documents as servant of the company. I see the notice is addressed to him.

Mr. Kekewich said it was addressed to Mr. Lake, to all the directors by name, and to the solicitors of the company, and the counsel appearing before the official examiner, for |[38] Mr. Lake represented the company also. Moreover, the affidavit on which the cross-examination was proceeding stated that it was filed on behalf of the company; and there was not one statement in it that was worth anything unless it could be proved from the books.

The Vice-Chancellor thought when the application for the production of the books first came under his notice that the petitioner might have trusted to the effect upon the judicial mind of the refusal to produce evidence in contradiction of his allegations.

Mr. Kekewich said the company did not exhibit a single book.

The Vice-Chancellor observed that cross-examination before special examiners generally went to an inordinate length.

Mr. Kekewich said his clients wished to have the whole matter fully investigated, and would have been glad if the cross-examination could have been taken in court.

The Vice-Chancellor—I understand, then, that you are not prepared with the present material to go on with the petition.

Mr. Kekewich had got secondary evidence in support of the petition, but the statements were entirely founded upon documents which the company would not produce.

Mr. Glasse did not want to make evidence for the petitioner, and therefore declined to produce the books unless compelled to do so by the court.

Mr. Kekewich said if his Honour thought the company ought not to be called upon to produce the books publicly, a provisional liquidator might be appointed to examine them.

The Vice-Chancellor remarked that the appointment of a provisional liquidator would be in the nature of a judicial decision that liquidation was necessary.

Mr. Kekewich was of opinion that the court might, for the protection of the assets, make such an order.

Mr. Whitehorne suggested that an accountant should be appointed with the consent of all parties to examine the books.

The Vice-Chancellor—I should suppose that Mr. Crawford, as a director, has a right to see every book of the company.

Mr. Kekewich—He swears positively that he is not indebted to them, as they allege, and that he has called on that account to inspect the books, and has not been permitted to see them.

Mr. Glasse said that no individual director was entitled to see the books except at a board meeting.

The Vice-Chancellor—How can a director perform his duties if he is not?

Mr. Glasse—If he is, there is an end of this application.

Mr. J. N. Higgins said he appeared for another petitioner, and it had been agreed that the same order should be taken on both petitions.

Mr. Glasse observed that if the court were to order a general meeting to be called under the 82nd section of the Winding-up Act, every shareholder would have the right to inspect the books.

Mr. Kekewich said Mr. Lake had sworn that in the present year an advance of 15,000l. had been made to the company by their bankers, almost contemporaneously with the call, and that letters had passed between the bankers and the company. The present proceeding was in the nature of a bill filed by Mr. Crawford against the company, for taking the accounts of this large partnership, and upon a bill filed for the purpose the court would at once make an order for the production of the documents.

The Vice-Chancellor—Has application ever before been made to the court for the production of books under similar circumstances ?

Mr. Glasse—Never before the winding-up order.

Mr. Kekewich said it had not been necessary, because where large sums were going out and coming in, a provisional liquidator had been appointed to take charge of the books.

Mr. J. N. Higgins mentioned that in the case of the Credit Foncier and Mobilier, Vice-Chancellor Malins directed an inspection of the books, and the only difference between that case and the present was that a voluntary winding up had been resolved upon, and the petition was to make it compulsory, or to continue it under the supervision of the court.

Mr. Kekewich submitted that his Honour had full power to make the order whether there was any precedent or not, but if there was any doubt upon the point, the object could be attained by the appointment of a provisional liquidator. Justice absolutely required that the books should be produced, and that these gentlemen should not be allowed to file a host of affidavits containing statements which were not verified.

Mr. Glasse asked the court not to make an order now which would have the effect of a winding-up order, without giving the company the opportunity which the law allowed of considering the property of going into liquidation. The notice was informal, inasmuch as it failed to specify the documents required, and would be in effect equivalent to a bill of discovery; and the court had no jurisdiction to require the production of documents until after a winding-up order had been made. It was asking the court for an order to enable the petitioner to make out his case.

Mr. Millar said that in the seven years of hostile and often speculative litigation which had followed the Act of 1862, the court had never yet made an order for the production of documents in support of a winding-up petition. When the matter came on for hearing, the company would meet the case in the most liberal, generous, and straightforward spirit. The directors having been most shamefully attacked in the newspapers, had taken the earliest opportunity of putting an affidavit on the file, in which they stated that, to the best of their belief, no inspection of any books, accounts, or documents of the society, or any explanation was asked for by, or on behalf of, the petitioners till after the petition was filed; that the shareholders had always expressed satisfaction with the conduct of their directors, and a large number of shareholders and policy-holders had very recently declared their unabated confidence in the board. The affidavit further asserted that when the petition was presented the company had 17,000l. at its bankers, and that Mr. Crawford was indebted to the society. The directors expressed their belief that a party had been organised to create a panic in this and other insurance societies, and that this was a mere fishing attempt to prolong the exanimation of witness, in the hope of eliciting something which would justify the filing of the petition.

Mr. J. N. Higgins stated that in the case of the petition he supported a subpoena duces tecum had been issued, under the Chancery Amendment Act, requiring the manager to attend the examination and produce accounts.

The Vice-Chancellor said the ordinary practice upon a bill of discovery was to order the defendant within a certain time to make affidavit showing what books and documents he had in his possession relating to the matters in question, and to produce them, unless he should show cause to the contrary. No such order had, however, been made upon a petition to wind up, and he felt loth to make a precedent of the kind, especially having regard to the fact that if he made the order he would probably have to suspend its operation to enable the opinion of another court to be taken upon it. Moreover, it would be a strong measure to require every one of these-large companies, the moment a petition was filed against them, to produce every book and document which the petitioner might suggest as relevant to the inquiry. With regard to the subpoena duces tecum, it ordered the manager to produce documents which were in the custody of his masters, and which he could not produce without their direction; and the matters scheduled showed to what a very wide scope it was intended to carry the inquiry. He should make no order on either notice, but left it to the directors to consider what course they would take, knowing the effect it must have upon their evidence if the books were not forthcoming.

Mr. Kekewich asked that the undertaking of the defendants to carry all moneys received to a separate account should be continued till the hearing of the petition.

The Vice-Chancellor said he put them upon the undertaking with a view to the appointment of a provisional liquidator, but it had been decided that he had no power to make such an appointment, except with the consent of the company.|

Mr. Glasse said there were certain claims which it was necessary to the carrying on of the business should be met from day to day, and there was no intention to give an unfair preference to any creditors.

The Vice-Chancellor, as those who presented the petition were not in a condition to have it heard, declined to make any order tying up the hands of the company.

Some conversation then took place as to the day on which the petition should be proceeded with, and ultimately the hearing was fixed for Wednesday, the 13th inst.

THE COMMENTS OF THE “TIMES” NEWSPAPER.—CONTEMPT OF COURT.

Mr. Glasse then moved that Mr. Goodlake, the printer and publisher of the Times, should be called upon to show cause why he should not be committed for contempt of court in publishing on the 23rd and 24th of September comments upon the matter of the petition. The comments were comprised in the City Article, and were to this effect:—“An assurance collapse, which has been apprehended for some weeks, and which it is feared may prove more disastrous than that of the Albert, has been announced. Two petitions were heard to-day before Vice-Chancellor James for the winding-up of the European Assurance Society, and it was ordered that the case should stand over until Saturday week, all receipts on account of premiums being meanwhile kept separate. The outstanding policies of the society are stated to be for an amount of between nine and ten millions sterling, in addition to which they are under contract for the payment of annuities, amounting, according to a recent statement, to 16,000l. per annum, but which are believed now to be considerably beyond that sum.” Further comments introduced a statement of the receipts and assets of the society, as well as an allusion to their having “absorbed 33 other companies, the great majority of which were, doubtless, got up by the usual adepts for the purposes of sale.” In conclusion there were the following observations:—“So far back as 1865 pamphlets were published to awaken the vigilance of all persons interested, and yet at the general meeting of the shareholders in March last there was perfect unanimity in denouncing the statements and motives of every one who had questioned the position of the society, and votes of thanks to all concerned were passed with acclamation. It is not the least lamentable part of the affair that the board of directors comprises the names of men of whose individual honour and intentions there can be no doubt, and who, partially ignorant of practical business, must have been grossly misled by more adroit persons.” These certainly were not comments that ought to have been inserted, and he was astonished that a paper like the Times, when its attention was called to the matter, should not have taken the course which was followed by three other papers, of inserting some expression of regret. It had been said by Lord Hardwicke that nothing was more incumbent upon courts of justice than to preserve their proceedings from being misrepresented; nor was there anything of more pernicious consequence than to prejudice the minds of the public against persons concerned as parties in causes before the cause was finally heard. The decision of Lord Hardwicke had been followed by Lord Hatherley and Vice-Chancellor Malins in very recent cases, and the words used by the Times came fully within those decisions.

Mr. Wood, who appeared for the publisher of the Times, submitted that every word of the article could be justified by statements already published by the company themselves. He did not see, therefore, how the Times could withdraw the statements. Suppose it were a libel against the company, then it could be punished in a court of law, but it was no contempt of this court to put forward true statements and to comment upon them without any malicious intention, but merely for the purpose of giving information to the public.

The Vice-Chancellor said the attempt at justification only increased the fault committed by the Times. The question was one of prejudicing the minds of the public against persons concerned in the suit, and not whether the statements were true or not. He had no doubt these comments were calculated to have the effect of influencing the minds of the public and the decision of the court, and they came within the principles always acted upon, and constituted an interference with matters pending litigation. The press must learn to restrain their observations until after the hearing of the suit. He did not understand even now that counsel for the Times was instructed to express regret for the insertion of such comments.

Mr. Wood said that he was instructed to express regret at the publication, and to give an undertaking that it should not be repeated.

Mr. Glasse said he would be satisfied if an undertaking were given to state in the Times City Article that the comments in question were inserted through inadvertence, and the defendants paid the costs of the application.

The Vice-Chancellor—By their counsel they express in open court their regret for having been guilty of contempt, and they will, of course, have to pay the costs. I am not aware that the court has ever put persons upon terms of publishing an apology in such a case.

Mr. Locock Webb moved, on behalf of the company, for an injunction to restrain the defendant, Mr. Crawford, from parting with, destroying, or mutilating a certain agreement entered into by him for the lease of certain premises occupied by the European Assurance Company. It was stated in support of the motion that Mr. Crawford had been instructed by the directors to look out for new offices, and to make arrangements for leasing them; that in pursuance of these instructions he had negotiated with the owner of certain premises, and had entered into an agreement with him for a lease at a rental of 180l., and that he subsequently made an agreement with the company in his own name to let to them the same premises at a rental of 650l., by which he had made a considerable profit on his own account; and further, that he had required payment of 150l. in consideration of some expenses alleged to have been incurred by him. The plaintiffs apprehended that Mr. Crawford would destroy or put away the original lease of the premises to prevent its being seen by them, and consequently they asked for an injunction to restrain him from so doing.

The Vice-Chancellor said there was no equity for coming to the court for an injunction to restrain a man from parting with or destroying an agreement upon the mere allegation that he intended to do so. There was no evidence in support of the case, and the motion must be refused.

[The Daily News, 12. Oktober 1869]

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[THE GOLD RING AT NEW YORK.
(FROM OUR CORRESPONDENT.)]

NEW YORK, SEPT. 29.

I, who have neither gold to sell nor anything wherewith to buy that useful commodity, have been of late almost pestered out of my life by hearing from morning to night nothing—in hotels, in private houses, in railroads, and in steamers—talked about but gold. I have positively sometimes almost believed myself to be a millionaire from living in this atmosphere of gold and golden promises. The fluctuations in the price of gold have been so great, and it has appeared so easy a thing to make a few thousand dollars in the course of a morning, that all the inhabitants of this city have been bitten with the gold-gambling mania. Are you “short” or are you “long”? is a question which has superseded “Good day” when friends meet. I called a few days ago upon a young lady, aged 18, in whose virgin bosom I imagined I had inspired an interest, not to say a tender one. I found her elated, and imagined that my visit was the cause. Not at all: she had been a bear, and had made several hundred dollars. The cause of this mania was the attempt of a powerful combination to raise the price of gold in the market, and the desperate effort with which those who were not in the clique resisted them. One day the “bulls” would push gold up several points; the next day the “bears” would drag it down again. But for the last three weeks the “bulls” have had it all their own way. The price of gold has steadily advanced. The facility with which united action may produce this result is one of the consequences of the United States Government continuing long after the necessity for such a system has passed to make their 70,000,000l. inconvertible greenbacks legal tenders. The transactions of the New York Gold Room on certain days have exceeded 500,000,000 dollars, and as there are only about 15,000,000 dollars of gold in the city, any body of men who are able to lock up the greater portion of this amount, and then to sell daily gold in large quantities, and call for a settlement of the difference, or its delivery, must, if they have sufficient funds at their disposal to resist opposition, realize vast sums by the speculation. This fact occurred to Mr. James Fisk, of Erie Railroad notoriety, and he proceeded to form what is called a “ring,” to buy gold, having first, through the action of several banks which he and his friends controlled, rendered it scarce. Day after day the price of gold advanced; all that was thrown upon the market was bought up by the clique. In vain appeals were made to the Secretary of the Treasury to relieve the stringency by selling his surplus gold. He refused to interfere. On Thursday gold had reached 145, and on Friday morning there appeared no reason to doubt that the clique would carry out their boast of putting it up to 200. That day had been fixed upon for the final tug of war between the bulls and the bears, and in order to witness it I went down town at an early hour. A dense crowd already filled Broad-street, although the Gold Board had not commenced operations, and seedy individuals were offering recklessly to sell millions to anyone who confided in their solvency. I soon found a friend who took me into the Gold Room. It somewhat resembles a circus; in the middle there is a fountain, which falls into a large basin, around which is an iron railing about 100 feet in circumference, with a space of some 20 feet between the walls and the basin. Before the fountain sits the secretary recording sales, and by his side is a telegraph clerk. Wires run from the telegraph to about 500 brokers’ offices, who are thus able, if they prefer it, to make their bids without appearing on the scene. On one side of the room there are two galleries, one for spectators and the other for errand-boys, and from this latter I surveyed the fray. For about half an hour after the opening of the Board there was not more noise than in the London Stock Exchange; but this comparative calm did not last long. Gold went rapidly up to |[40] 160, and the respectable and well-dressed crowd below me degenerated into a wild, surging mass of shrieking fiends. Men were hanging on to the iron railings; standing up on the window-sills; some were fighting to get in; others were fighting to get out; all were screaming, gesticulating, and thrusting each other out of the way; while those who had managed to get to the iron railings were shaking their memoranda and howling at each other. Gold was at 160; the bears were worsted, for a margin of 25 per cent. had been exacted on all operations, and this margin had now been exceeded. They still desperately held their ground, and, with purple faces and eyes starting out of their heads, yelled defiance; but they felt and knew that their last financial hour had sounded, and that nothing remained for them but to die game, for their ammunition was all expended, when—like the Prussians at Waterloo—just in the nick of time, the Secretary of the Treasury poured in reinforcements. He had at length yielded to the applications which had been made to him by the respectable merchants of New York and other important towns, and let loose the gold stored up in the Treasury. At the same time it was rumoured that Baring Brothers had telegraphed to their agents here to endeavour to stem the upward current by large sales—the bubble had burst—in half an hour gold tumbled down to 135—and the bears, so lately in the agony of despair, literally danced with delight. One old gentleman I watched leaping up in the air for five minutes at least, and clapping his hands over his head. As for the poor bulls, but a few minutes before so jubilant, they appeared stunned by the blow which had converted their victory into defeat. One leading broker, who had remained calm and collected during the battle, now began wildly to offer to buy gold at 170. His friends got him away, for his mind had gone. But now a new element of disorder was imported. The Gold Exchange Bank, where almost all the brokers keep their accounts, refused to pay any further cheques until they could ascertain the precise standing of their customers, and thus virtually suspended. It was noised about, too, that many of the prominent bull-brokers would be unable to meet their engagements, and that Fisk, the chief of the bull-ring, refused to recognise sales made for him and his party on verbal orders. This damped the triumph of the bears: none could tell whether he was a rich man or a beggar. Those who had sold gold above 150, and bought it below 140, now felt that they had built their castle on the sand, and that very possibly they had lost their fortunes instead of doubling them. In vain the leading bulls now offered to buy at 160; none would sell to them at the price, while the bears were selling to each other at 135. The fight was over, and I left the battle-field with the conviction that 500 human beings, in a frenzy of avarice and greed, is the most repulsive sight it is possible to imagine. When I emerged from this pandemonium Broad-street was full of people, eagerly gazing at the indicator outside the building, which marks on a dial the price of gold. Crowds were endeavouring to force their way into the offices of the bull-brokers who had suspended, and were resisted by posses of sheriffs’ officers, who had been sent for to keep the peace. The largest and most noisy crowd were round the doors of James Fisk. That worthy had invited several blonde beauties of questionable virtue to see him smash Wall-street, and these frail goods were just driving away amid the yells of the crowd when I came up. On their departure there were loud cries for the great man himself. After a few minutes, as it appeared probable that if he did not come out the crowd would come in, the door opened, and he stepped forth. He is a young man, stout, and with curly hair, and dressed in the extreme of the fashion. He commenced a speech, of which, of course, not one word could be heard; but his eloquence was soon effectually cut short by some one, probably a holder of Erie stock, hitting him a blow between the eyes. Fortunately for him a large body of police came up at this minute, who dragged him within his door, and closed round it to keep out his assailants. As nothing more was to be seen, and as the crowd was rapidly assuming the apathetic and patient air of persons who stare at a house in which a murder was committed two days before, and as it did not appear likely that any one would be hung, I went home to dinner.


SEPT. 30.

To-day the Gold Board has passed a resolution adjourning over until Monday, and all outward manifestations of excitement have disappeared. The bull broker offices are still guarded by sheriffs’ officers. The shutters are up at the Gold Exchange Bank, although the directors announce that they will resume business on Monday. No one seems to know who has failed, and who has weathered the storm. James Fisk has gone into that somewhat vague place—the country. The newspapers are full of articles protesting against the iniquitous conduct of the “men who combined to disturb the commerce of the country by an unprincipled attempt to force up the price of gold;” although it is difficult to understand why, if the law makes gold coin a commodity to be bought and sold, they had not a perfect right to turn that law to their own advantage. It is to be hoped that the common sense of the nation will go to the root of the evil, and put an end to a system which enables half-a-dozen men to raise in a day the value of all commodities by twenty-five per cent. A country cannot make itself richer by agreeing to call counters money. It would have been far better if the inconvertible greenbacks had never been issued. They |[41] have inflated prices, raised to an artificial standard the price of necessaries and wages, depreciated the credit of the country, destroyed fixity in values, and only promoted reckless speculation. No doubt that an attempt to withdraw them at once from circulation would precipitate a commercial crisis; but the policy of Mr. Macculloch, gradually to call them in, ought never to have been overruled, and must sooner or later be resumed. Their place would speedily be taken by the national currency, secured by the deposit of Government securities, and the amount of notes necessary for the commercial transactions of the country would then regulate itself. Many of the leading men in the South are recommending their States to resume specie payments in all their transactions. They consider that this policy would attract capital to their section of the country.

[The Daily News, 23. Oktober 1869]

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THE ALBERT LIFE ASSURANCE COMPANY.—

An application was yesterday made to Mr. Leman, the chief clerk of Vice Chancellor James, by Messrs. Brandon, to appoint Mr. Chatteris, the accountant, as “representative” of the policy holders, at the expense of the company. It was supported by policy holders to upwards of 400,000l. Mr. Mackenzie, for policy holders representing 2,000,000l., opposed the application, and asked that a committee should be appointed at their own expense. The goodwill of the company was valuable, and should be realised. Mr. Lindo proposed Mr. Alfred Good on policy holders to 9,000l. at some length. Mr. Lattey represented Indian policy holders to 2,000,000l., and supported the application of Mr. Mackenzie. Messrs. Lewis and Munns opposed Messrs. Brandon’s application. Mr. Brockbank, for the liquidation, objected. A long discussion followed, and ultimately the chief clerk dismissed the summons of Messrs. Brandon, and said all parties must go before the Vice Chancellor on the question.

[The Daily News, 5. November 1869]

[Nov 4]

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ALBERT ASSURANCE COMPANY.—

An adjourned summons was yesterday heard before Mr. Bloxam, the chief clerk to Vice-Chancellor James, being an application by Mr. Welford for an order to inspect the deed of settlement of the Kent Mutual Assurance Society, which was in 1865 amalgamated with the Albert Company. Mr. Tucker, on behalf of Mr. Welford, stated that the Kent Mutual Company’s business was sold to the Albert Office without the concurrence of his client, and on the stoppage of the latter company, counsel’s opinion was taken as to the course Mr. Welford had best pursue, and an inspection of the deed of settlement of the Kent Mutual was advised in order to determine future action. Mr. Musgrave, of the firm of Messrs. Lewis, Munns, and Co., solicitors to the liquidators, opposed the application as being inconvenient and unnecessary. There were 22,000 policy-holders, and each had as great a right as the present applicant to inspect deeds in the custody of the liquidators. It was manifest, therefore, that serious delays would occur in the winding up of the company if these irregular applications were granted. The Chief Clerk said that no ground had been shown sufficient to authorise him to make the order asked for. The judges seldom allowed inspection of documents until litigation had commenced, and it would be unfair to permit an inspection for discovery such as this would be. The summons would be dismissed with costs, but an appeal to the judge would be allowed, if applied for within a reasonable time. Mr. Musgrave then applied that Mr. Price, the official liquidator, should be allowed to retire from the provisional liquidatorship, on the accounts being carried in. This matter was ordered to stand over. Mr. Musgrave then said the liquidators were endeavouring to carry out an arrangement with another assurance company for the transfer of some of the business of the Albert Office, and wished to go before the judge to-morrow upon the matter. The Chief Clerk gave his assent to this course.

[The Daily News, 14. Oktober 1869]

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THE EUROPEAN LIFE ASSURANCE COMPANY.

[Oct 14]

The petitions for the winding up of this company were again heard yesterday, before Vice-Chancellor James, at Lincoln’s-inn.

Mr. Serjeant Sargood, Mr. Dickinson, Mr. J. Napier Higgins, Mr. Kekewich and Mr. Anderson, appeared in support of the petitions; Mr. Glasse and Mr. Fry for the company against the petitions; and Mr. Amphlett and Mr. Bagshawefor certain policy-holders and shareholders.

Mr. Glasse—There are two petitions. You will take them both at once.

The Vice-Chancellor—Yes; the question is, whether the company is to be wound up, not who is to wind it up.

Mr. Dickinson said he appeared for Mr. Crawford, but Mr. Serjeant Sargood had precedence. But before Mr. Serjeant Sargood was heard he had an application to make to the court. When he case was last before the court some comments which had appeared in the Times were brought before the notice of the court, and an application was made to commit the publisher of the Times for contempt. It was desirable that no party having any proceedings should be subject to any intimidation. He found an article in the Observer

The Vice-Chancellor—With what view are you stating this? Are you going to move to commit?

Mr. Dickinson—I may do.

The Vice-Chancellor—I cannot go into that without notice.

Mr. Dickinson—A letter having been published by Mr. Lake—

The Vice-Chancellor—I will not go into that, because it is vacation, and nothing is to be done in vacation but what the parties have had notice of.

Mr. Dickinson—If necessary, I shall apply to your Honour for leave to move to commit Mr. Lake.

Mr. Serjeant Sargood said he appeared in support of a petition filed by Mr. Coupe, who was a shareholder of the European Insurance Society, which was a company originally formed as a life and fire insurance society, and for the granting of annuities and guaranteeing the integrity of clerks, and business of that description; but the fire business, he believed, had been discontinued. Mr. Coupe was the holder of 3,000 shares. The Act of Parliament provided that a company was to be deemed to be unable to pay its debts under various circumstances which were set forth, and whenever it was proved to the satisfaction of the court that a company was unable to pay its debts, the company was to be wound up; and the real question which the court had to try was, whether the company was or was not in solvent circumstances, not whether it could pay the debts now actually incurred.

The Vice-Chancellor—I must confine myself to the words of the Act of Parliament—“Able to pay its debts.” Of course, if you change the issue, I must assume it is done with some object or other.

Mr. Serjeant Sargood said then he would take it that he had to show that the company was not able to pay its debts.

The Vice-Chancellor—The Act of Parliament is not whether the company is solvent or not.

Mr. Serjeant Sargood said that it was imperative on the court to determine whether it was just and equitable that the company should be wound up. Of course that involved the condition of the company, and whether it was prudent that the company should go on pledging its faith to the public.

The Vice-Chancellor—Prudent or imprudent is not the thing that I can try.

Mr. Serjeant Sargood said he was not discussing whether it was prudent or imprudent on the part of those who went into the company, but whether the court would consider it just and equitable that the court should allow the company to go on receiving money from the public, and whether it was not incumbent on the court to interfere.

The Vice-Chancellor—I have nothing to do with the public, but only with the creditors and shareholders.

Mr. Serjeant Sargood said he used the word “public” in its popular sense. The allegation on the part of Mr. Coupe was, that the company had granted policies to the amount of 8,750,000l.; that the company had purchased the business of a number of other insurance offices which had been amalgamated with this company, for which purchase the company paid 261,000l. Then it was alleged that, although the premium income of the company in 1868 was no less than 398,000l., so great had been the drain on the resources of the company, that instead of being able to invest a large portion of the income as they received it, they had been obliged to make a call of 5s. a share. A very important point which would be raised in argument was this—what were to be considered the debts of an insurance company—were they the obligations of the hour, or were they the entire obligations of the company? He should contend that the debts of the company were the whole of the obligations and liabilities of the company, and that the test of the company’s ability to pay its debts was not whether it was able to discharge the claims that were made upon it from day to day out of the money that it received from day to day, but whether its assets were sufficient to meet the whole of its contingent liabilities. They were in this difficulty, that they were ignorant of the details.

The Vice-Chancellor asked if it were meant that the petitioner as a shareholder of the company had presented the petition in utter ignorance of the details of the petition of the company?

Mr. Serjeant Sargood did not mean to say that they had filed the petition as a speculative petition without any knowledge of the facts, but he should submit that, taking the balance-sheet issued by the company itself, there was prima facie proof that the company was insolvent. They had not been able to get at the details, because they had been met in the cross-examination with such answers form the officers of the company as “I do not remember,” and “I do not recollect,” with a constant refusal to produce the documents. He should maintain, however, from the general balance-sheet of the company, that the company was insolvent. There was an affidavit by Mr. Hadley, a director of the company, who stated that he had often been refused by Mr. Lake an insight into the books, and that he had been unable to obtain any information of the state of the company, and that in 1866 when the question of paying a dividend was discussed at the board he opposed it, because he felt that dividends were being paid out of capital, and in that he was supported by Mr. Cyrus Legg and Mr. Crawford; but their objections were of no avail, and the payment of the dividend was determined upon; and a cheque was sent to him for his dividend, but, as he thought the dividend ought never to have been declared, he had never cashed the cheque. In 1867 he again endeavoured to obtain information.

The Vice-Chancellor, interrupting, said this was all very improper, and was intended to create a prejudice. If a shareholder or a director had occasion to complain of the conduct of the manager, he had his remedy, by going to a meeting of the shareholders and making a complaint. But the question he had to determine was, whether the petitioner had or had not brought himself within the Act of Parliament.

Mr. J. N. Higgins then read the affidavit of Mr. T. H. Bailey, actuary of the London Assurance Association. He stated that he took as his data the statements of Mr. T. Walker, the consulting actuary of the European Insurance Company, that the total amount of the sums for which policies had been granted was 8,750,000l.; that the premium income in respect of such insurances was 290,000l. per annum; that the present average of the lives assured was 42 years, and the average duration of the policies was nine years. From his knowledge and experience as an actuary, he said that if the policies had been effected for the whole term of life, which was the case with the great bulk of life assurances in other companies, the company should now have in its possession at least 40 per cent. of the premiums received on the existing |[42] policies, which proportion of 40 per cent. would amount to 1,044,000l., which sum at least should be invested at an average interest of not less than 4 per cent., and be constantly accumulating. He further stated that, taking the value of the liabilities under annuities at 140,000l., which sum had been stated by Mr. Walker, the actuary of the company, and taking the claims accrued on life and guarantee policies and general debts to amount to 120,000l., it followed that the society should have at least 1,304,000l. in actual possession, invested so as to produce a rate of interest not less than 4 per cent. In making this estimate he did not mean to imply that a life assurance society having a reserve of 40 per cent. of the premiums on the existing policies was in a satisfactory position. On the contrary, a valuation made on proper principles would give a larger sum. He was informed that Mr. Walker, in making his valuation of the assets, had taken the gross premiums without any deduction for commission and expenses, a mode of calculation which he considered unsafe and erroneous. He added that to put the 261,000l. paid for the transfer of the business of other societies as an asset was preposterous, and that deducting this sum, and also 595,000l., the uncalled capital, the total realised assets of the society, assuming them to be good, amounted to 470,958l., which was 833,041l. less than the amount that ought to be in hand. Under these circumstances, he was of opinion that the company was insolvent, and that if the company were allowed to go on the present funds would in a few years be exhausted.—Mr. Higgins also read the affidavits of Mr. Robert Tucker, actuary of the Pelican Insurances Company and of the National Reversionary Investment Company, which was pretty much to the same effect as that of Mr. Bailey; but he added that with regard to the valuation of the liabilities, amounting to 312,486l., and deducting 140,000l., included therein as the value of the annuities payable, there remained only 172,486l. as provision for those liabilities; and as the premiums were usually paid annually in advance, it was to be assumed, in making a valuation, that as they fell due at all times of the year, there was half-a-year’s premium due on each, the other half being supposed to be in hand. If, therefore, from the said 172,486l., half-a-year’s premium, amounting to 145,000l., were deducted, there would remain only 27,486l. as a reserve.—Mr. Higgins also read the affidavits of Mr. Patterson, the actuary of the Commercial Union, of Mr. Hendrichs, the actuary of the Universal; of Mr. Ingall, actuary of the Mutual; of Mr. Augustus Morgan; of Mr. Ansell, the actuary of the Atlas—all to the same effect; Mr. Ingall stating that in his opinion the European was hopelessly insolvent, and that the payment of every claim on a life policy now dropping in was an injustice on the younger lives. The affidavit of Mr. Lake, the manager of the European, and his cross-examination, were also read. In his affidavit he stated that there was no debt of the society which the company was not prepared to pay, and that all the claims on the society were regularly and promptly paid as they became due. In his cross-examination, Mr. Lake stated that before he became manager of the European he was manager of the British Nation, and before that of the Unity, and before that of the Trafalgar; that he received from the European a salary of 500l. and one per cent. on the premium income of the company; that 200l. was the regular monthly cheque on account of the 1 per cent., and that he received from the company between 3,000l. and 4,000l. a year; that when he went to the European from the British Nation, so far as he knew, nothing was paid by one company to the other; that there was a claim by Mr. M‘Clelan, the former manager of the European, which was referred to arbitration, and that he was awarded a sum of from 12,000l. to 15,000l.; that the payment to Mr. Sheridan did not come under his notice, and he could not state the amount—that it was not 50,000l., and that his impression was it was under 10,000l.

The Vice-Chancellor remarked that this, he took it, was a very illegitimate use of the power of cross-examination. It had nothing to do with the issue before him, and was introduced simply for the purpose of creating a prejudice.

Mr. Serjeant Sargood said a large sum had been paid by this company to other companies for the absorption of their business, and it was right to show into whose hands it had gone. The sum so paid figured as an asset of this company.

The Vice-Chancellor said it seemed to him to be idle and irrelevant. He agreed that this was not an asset of the company.

The reading of the statements of Mr. Lake, in cross-examination, was proceeded with. He stated that when he was manager of the British Nation, he was entitled to 2 per cent. of the premium income. When he became manager of the European he was to be entitled to only one per cent. of the premium income, and to one per cent. on the amount paid in as capital. He did not like this, and he went to the directors and said, though under that arrangement he would have been entitled to between 7,000l. and 8,000l. he wished to give that up; and they presented him with a free policy of 5,000l., payable three months after his death. The whole amount of the life claims last year was 100,000l., but of that 20,000l. had been in abeyance for years. He believed that the company were overdrawn to a small amount with their bankers, Messrs. Hopkinson, some 4,000l. or 5,000l., and in addition to that there was an advance of 10,000l. This advance was in June. But there was not one insurance company in London that did not do exactly the same thing. 400l. was paid to Hopkins, the clerk to the solicitors of the company, for services about the opening of the account with Messrs. Hopkinson. The former bankers were the London and Westminster. He himself had an advance from the company of 1,605l. for his private purposes, for which he gave as security a policy of 4,000l., and his free policy of 5,000l. On being asked “Do you think you could have met the claims of the company for the next two years without a call,” he replied, “I cannot go into the future in that way. I believe the majority of the shareholders would be willing to pay any call that might be necessary.” Further questioned, he said he did not know how much of the 71,500l. due from agents was good; and on being asked about his shares, he stated that he is a holder of 500 shares; that he did not know how many he held a year ago, but it was more than 1,000; and that the largest number he ever held was 3,000. Some were sold during the present year, and they realised from 3s. to 5s. a share.

The cross-examination of Mr. Thomas Walker, the consulting actuary of the company, was also read. In it he stated that in making his calculations he did not take into account the 70,000l. a year expended by the company. If he had, that would have made a difference of three-quarters of a million. The premiums of the society were loaded above the premiums required to cover the risk by about 25 per cent.

The evidence of Mr. Parmenter, the accountant of the company, was also read. He stated that he believed the assets of the company were reduced 60,000l. a year in 1868; that the income was about 360,000l., and the expenses, including commission, about 70,000l., or about 20 per cent. of the receipts. The expenses this year, he thought, would not exceed 50,000l., or 15 per cent. The account with Messrs. Hopkinson was opened about the end of 1867, and at the end of 1868 the company owed them about 15,000l.

Mr. Sargood then resumed his address to the Court, which had been interrupted by the reading of the evidence. He said the affidavits of Younger, the principal of the guarantee department, and of Kelly and Jackson, the principals of the other departments showed, not how the company paid its debts, but how it was enabled to stave them off. They had to meet within the year claims amounting to 101,831l., and of this sum claims amounting to 59,649l., and no more had been paid. Then there was 20,696l. due in respect of old claims carried forward, some of them for many years, waiting for proofs, or for claimants to appear, and in regard to which they said no immediate provision was necessary to be made. He contended that the company was in a state of hopeless insolvency. The balance-sheet of the company only showed a surplus of 109,000l., but when they took off the 260,000l. paid to other companies on their absorption, which was clearly not an asset, and they came to examine the other items, it was evident that there was a great deficiency, and he submitted therefore that the Court should comply with the prayer of the petition, and wind up the company.

Mr. J. N. Higgins followed on the same side.

Mr. Dickenson then addressed the Court on behalf of Mr. Crawford, the other petitioner. He examined the |[43] items of the balance-sheet minutely, contending that it afforded sufficient evidence of the insolvency of the company.

Mr. Kekewich having been also heard on behalf of Mr. Crawford.

Mr. Anderson said he appeared for three policy-holders, and he suggested that his Honour should appoint two actuaries to inquire into the affairs of the company and make a report.

Mr. Amphlett said he appeared for a large number of policy-holders and shareholders. If his Honour should hold that the legal requisites of the statute had not been complied with, of course there was an end of the matter, and the petition would be dismissed; but suppose his Honour should hold that the legal conditions had not been complied with there was an important question behind, namely, whether the court would make the order. Now upon that point the view that those he represented took was this. They thought it would be a great evil to the policy-holders and shareholders to have the company wound up under the Act, but that it would be still worse that the company should be allowed to continue under the present management, and the present improvident arrangements, and they suggested that if the directors would give a pledge that they would put the matter on a different footing, that if necessary they would at the meeting of the policy-holders all resign their offices and allow new directors to be appointed, then those he represented would ask his Honour not to grant the prayer of the petition; but if on the other hand the directors stood on their strict rights and refused to resign, and determined on conducting the affairs of the company in the old fashion, then his clients would join in asking that the company be wound up.

Mr. Bagshawsaid he appeared for Messrs. Grindlay and Co., who were the holders of three policies, and they were in this dilemma, that this very day 90l. was due for premiums, and the alternatives presented to them were either to pay the money at the imminent risk of its being devoted to pay the policy of the next person who died, or to refuse to pay, by which they would lose the policies. The view that they took was that the case came within the equity of the statute. On the three policies they had paid as much as 2,200l.

An affidavit of Mr. Avens, a sharebroker, was read, stating that he attended the recent meeting of policy-holders, and that he recognised some 50 or 60 clerks and agents of the company, who were stationed in different parts of the room, and who refused to hear Mr. Lowe, and created great confusion.

Mr. Kekewich stated that Mr. Crawford had offered to leave it to two independent actuaries to inspect the books, and if they said it was right that the company should go on, he would withdraw the petition.

This closed the case for the petitioners, and the Court then adjourned till to-day, at half-past 12.

[The Daily News, 23. Oktober 1869]

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CHARGE AGAINST DIRECTORS OF BARNED’S BANKING COMPANY.

[Oct 23]

Mr. Charles Mozley and Mr. Lewin Barned. Mozley, of 27, Leadenhall-street, London, and Lord-street, Liverpool, were summoned before the Lord Mayor, at the instance of Mr. Michael Emanuel, outfitter, 63, Leaden-hall-street, City, the charge against them being that they, in the month of June, 1865, and at divers other times, then being directors of a certain public company called Barned’s Banking Company (Limited), unlawfully did make, circulate and publish, and concur in making, circulating, and publishing a certain written statement, to wit, a prospectus of the said company, they then well knowing the same to be false in divers material particulars, with intent thereby to deceive and defraud the complainant and other shareholders, and induce them to become shareholders, contrary to the 24th and 25th Vic., cap 96, sec. 84.

They were further charged in the summons with unlawfully conspiring together with divers other persons to commit the aforesaid offence, and also by divers false pretences and subtle means and devices to cheat and defraud the complainant and other shareholders of large sums of money of the amount, it is stated, of two millions sterling.

Mr. George Lewis, solicitor, instructed by Mr. Joel Emanuel, solicitor, on the part of certain shareholders, appeared for the prosecution. It is understood that Mr. Poland, barrister, is retained for the defence.

The defendants did not appear, however, either personally or by counsel; and it is believed that an application was afterwards made for warrants against them, but that they were not granted in the meantime.

[The Daily News, 18. Oktober 1869]

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[Oct 18]

THE Directors and officials of the European Assurance Society have baffled the attempt made to wind up their Company: but they scarcely need to be reminded that all the value of a victory depends on what you do with it. They are not likely to make the fatal mistake of rejoicing over their success and forgetting to secure the ground they have won. The dismissal of the petitions for winding up the Society may seem to the outside public like a vindication of its past, and a guarantee of its future; but the persons more directly concerned know that it is nothing of the kind. To understand the judgment fully we must understand the judgment fully we must understand what the petitioners attempted to prove. They were not able to say that the Society could not pay its debts; it had paid all that were due; but what they did say was that it had paid current debts out of monies which ought to be laid by to meet prospective but inevitable liabilities. Their contention was that the Society was paying old and matured policies with the premium income from new ones, discharging to-day’s debts out of income which itself creates new debts which will become due to-morrow; that it was therefore prospectively insolvent; was going along the road to ruin, and ought to be stopped now lest its last state should be worse than the first. In proof of this charge the affidavits of several eminent actuaries were put in, in order to show from the published accounts of the Society and the sworn admissions of its Manager and its Actuary that a great snowball of accumulating liabilities was rolling down upon it, and must inevitably overtake it sooner or later. But here their evidence failed. Vice-Chancellor Sir WILLIAM JAMES held that it was not proved that the Society must inevitably be overtaken by its liabilities. The point turned in a great degree upon the unpaid capital. The actuaries, whose reports were relied on by the petitioners, had not reckoned the whole 595,000l. unpaid capital as an asset, and indeed experience did not permit them to believe that it was possible to get it all in. A call which should have brought 70,000l. had only produced 50,000l. But the Court having no evidence before it of the insolvency of the shareholders, must regard them as solvent, and reckon the whole capital as an asset. It may be very ruinous to shareholders that every farthing of their capital should go to pay debts, but that it not the question, and in reckoning whether there is any probability that the policies of this Society will be paid as they become due, every farthing of the capital comes in as an asset. The shareholders are the people indebted, the policy-holders have consented to be their creditors, and it is not proved that there will not be enough to pay every policy-holder when his claim comes due. The shareholders may lose their money, but there is no proof that the policy-holders will lose theirs. “Profit or loss, prudence or imprudence,” said Sir W. JAMES, “are matters with which this Court has nothing whatever to do. This Court gives no opinion whether persons ought or ought not to trust the Company. . . . . The petitioners have failed to prove that which it was requisite for them to prove—viz., that this Company is insolvent, and that being so, the petition is dismissed with costs.”

There are, of course, three questions involved and three parties interested in this decision. The managers and officials of the Company must make their peace with the shareholders as best they can, and when they have come to some fresh understanding together they must set to work to regain the confidence of the public. The shareholders have now a chance of redeeming their position, but they must not forget that they have it to redeem. Their liability has saved the Company; their capital is its security; their shares, which should be sources of income, are also debts. But that is their matter, not the business of the public. If they have let their officials spend money which ought to have been saved to meet the policies as they come due, they may have to pay that money themselves unless they can contrive by new and cheaper management to save it. They are spending 70,000l. a year in expenses of management. Here alone, as the VICE-CHANCELLOR intimated, is almost a sufficient opportunity for reduction to redeem the whole position. The question for the public, however, is not the value of European shares, but the value of European policies. The VICE-CHANVELLOR’S judgment is much more reassuring to the policy-holders than to the shareholders. The Society has been mismanaged, but not ruined, and an elaborate investigation has failed to satisfy the VICE-CHANCELLOR that there is any present danger of inability to perform the contract in its policies. Both shareholders and policy-holders will benefit by the investigation. Mr. GLASSE formally recorded in Court the offer and pledge of the present Directors that the shareholders should decide for themselves as to the future of the Society, and |[44] that meetings of both shareholders and policy-holders should be called, to confer on its position and prospects. It may be hoped, in the interest of this large and valuable business, that this pledge will be generously and unreservedly fulfilled.

But besides the shareholders and the policy-holders there is the public; and the public cannot be left out of the reckoning. The Society will want new business; and the question is—how is new business to be got? The Society is not where it was before these petitions were presented, and it remains for the Directors to decide whether its position shall be better or worse. Pandora’s box has been opened, and the evils which have swarmed out can never be shut up again. The opinions of eminent actuaries will remain on record, and the rebuke of the VICE-CHANCELLOR will be remembered. The Court gave no opinion whether persons ought or ought not to trust the Company, and the only chance for the Company is to give persons every opportunity of forming that opinion for themselves. The European Society must do this now, if it is to flourish. There must be no mystery, no reservation, no complication of the accounts; everything must be clear, straightforward, and open. The VICE-CHANCELLOR very mildly rebuked the publication among the assets of the item for purchase of businesses. The Society had spent 261,000l. in paying for amalgamations, and put down the money as an asset. Of course every actuary who saw the balance-sheet said, as the VICE-CHANCELLOR did—“That item ought never to have appeared there.” Future statements will no doubt be so made as to stand criticism. The Directors have fought the petitions with so much energy that they clearly believe the position of the Society to be sound. Let the public know, then, the entire liabilities of the Society, the classes of policy under which the liability is uncured; the whole of its assets, and what they consist of; let them be able to trace the expenditure or investment of all money paid in premiums, and to see that no more of it is squandered in huge salaries or compensations, and they will soon learn to have confidence in a Society which puts confidence in them, and the European Assurance Society will become as prosperous as any.

[The Daily News, 2. November 1869]

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THE OVEREND, GURNEY, AND COMPANY PROSECUTION.

[Nov]

Mr. G. Lewis, jun., applied at Vice-Chancellor Malins’ chambers yesterday, on behalf of Dr. Thom, for the means necessary to enable him to proceed with the prosecution he had commenced against Mr. John Henry Gurney and other directors of the above company who had been criminally indicted for conspiracy and fraud. He grounded the application on an affidavit made on the 28th of last month by Mr. G. H. Lewis, solicitor to Dr. Thom, which set forth that the directors had been brought before the Lord Mayor and committed for trial to the Central Criminal Court. A true bill was found against them, and then an application for the renewal of the hearing of the case at the Court of Queen’s Bench was granted.

Mr. Markby, solicitor, attended on behalf of the shareholders, and objected to any money being granted out of the funds in court for the purpose of the prosecution of the directors.

Mr. Lewis said that the application was made under the 167th clause of the Public Companies Act, and he contended that the terms of the Act were so explicit as to leave no doubt as to the right of an individual, even though not a shareholder, who was interested in a company, to take proceedings against the directors, or apply to the court for winding up. He submitted that the only question to be considered was whether there was anything in the present case which did not come within the meaning of the Act. He quoted as precedents the cases of the Leeds Bank, the Unity Bank, and the Joint Stock Bank. In the second of these a Mr. Finnis was prosecuted, and although, as in the present case, a true bill had not been found against him at the time, a similar application was made, and funds were granted for the prosecution. Vice-Chancellor James said that it did not matter whether the proceedings were instituted by one or more shareholders.

Mr. Buckley, the chief clerk, said that there was no doubt as to the jurisdiction of the court to deal with the funds.

Mr. Lewis said that about 70,000l. had been spent out of the funds of the company twelve months ago, and about 20,000l. since. The present case was one of material importance, and all he asked was for 5,000l., which would not be more than a shilling per share. It would be monstrous if Dr. Thom should be required to carry on the prosecution at his own expense.

Mr. Buckley said that the shareholders had already spent a great deal of money, and might not feel disposed to spend any more.

Mr. Lewis submitted that the question was not one to be decided by the shareholders, but by the Act of Parliament.

Mr. Buckley said that as the term would commence today he would sooner not express any opinion on the matter, and he appointed Friday next for the hearing of the summons.

[The Daily News, 22. Oktober 1869]

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THE PROSECUTION OF THE ALBERT ASSURANCE COMPANY DIRECTORS.

[Oct. 12]

APPLICATION FOR FRESH SUMMONSES AGAINST THE DIRECTORS.

Mr. Hamilton Bromby, accompanied by Mr. Edward Lee, one of the prosecutors in the charge of conspiracy against the directors of the Albert Assurance Company, Waterloo-place, attended before Mr. Knox, at the Marlborough-street Police-office, to make an application for fresh summonses against the directors.

Mr. Knox said he should be sorry to comply with the application. What he had said on the last occasion was, if Mr. Straight attended before him with Mr. Lee he would grant fresh summonses.

Mr. Bromby understood when Mr. Knox dismissed the summonses last Saturday, that he said if Mr. Lee would appear with counsel he would grant fresh summonses. Mr. Lee was present, if the magistrate would like to hear him.

Mr. Knox said on the last occasion, out of consideration for Mr. Straight, the senior counsel for Mr. Lee, and his great earnestness in the case, it being apparent that Mr. Straight was convinced of that which he (Mr. Knox) certainly was not, that there was bona fides in the prosecution, he intimated that if Mr. Straight would appear with Mr. Lee and ask for summonses they should issue.

Mr. Bromby explained that Mr. Straight was out of town, and further he did not know whether Mr. Straight would have been instructed to make this application, but at all events he (Mr. Bromby) was instructed to do so, and Mr. Lee was present to answer questions if needed. He was there as Mr. Lee’s counsel, instructed by Mr. Murray, and he now asked that the magistrate’s promise last Saturday he carried into effect, and that fresh summonses might be granted.

Mr. Knox said in deciding on this application he must take the whole of the facts into consideration, and do justice to all parties. Mr. Lee had already applied and obtained summonses against the directors, and had been examined in chief by his own counsel in support of his case. Mr. Lee had been partially cross-examined by the counsel for the defence; and it was well understood that his serious cross-examination was to be reserved for the next hearing. Instead of appearing and affording an opportunity of being cross-examined, Mr. Lee had chosen to absent himself, on what he did not hesitate to say was a trivial and trumpery excuse, namely, that he had gone into the country to collect some debts.|

[45]

Mr. Bromby wished to make a few remarks personal to himself. He was partly responsible for Mr. Lee’s absence, and what had operated on his mind in advising Mr. Lee was this, that it was extremely hard on a private individual to have to incur considerable expense and considerable personal inconvenience in endeavouring to set law in motion against persons whom, rightfully or wrongfully, he believed to be criminally responsible; and he felt it was hard that in addition he should be compelled to attend the court on every occasion when the charge was gone into, no matter how important the business that might call him elsewhere on other duties, perhaps to his great loss; apart from which, he would remind the magistrate that Mr. Lee had been cross-examined on the first hearing, and had been re-examined by his own counsel, and therefore Mr. Lee was not aware that he would be required to be present at the next examination, believing that the witnesses to be called would occupy all the day with their examination. It was Mr. Lee’s intention to have attended at the next examination, and to have afforded the counsel for the defendants an opportunity to complete his cross-examination.

Mr. Knox said it was well understood that the cross-examination by the counsel for the defence on the first occasion was merely preliminary to a more serious cross-examination, which was to have taken place on Saturday last. With the full knowledge of that arrangement Mr. Lee chose to absent himself, and the only excuse which his employer, Mr. Vallancey Lewis, assigned for his absence was that he had sent him to Southampton, because he had no other clerk to send. He now said he absolutely and peremptorily declined to grant fresh summonses, except they were applied for by Mr. Straight, and an assurance given by that gentleman that he had carefully looked into the case, and was satisfied there was bona fide ground for a prosecution. There was also another view to be taken of the matter. The interests of public justice would not suffer by his refusing to grant fresh summonses to Mr. Lee, as proceedings were pending in Chancery, and it would be competent for the Vice-Chancellor to direct a prosecution if he thought a case of fraud could be made out against the officers of the company.

Mr. Lee wished to address the magistrate, but

Mr. Knox said he would either hear Mr. Bromby or Mr. Lee, but not both.

Mr. Bromby said he must bow to the magistrate’s decision, but in fairness to Mr. Lee he wished to state that that gentleman was most anxious to be put in the witness-box that he might be fully cross-examined. Whatever truth there might be in the groundwork of the accusation brought against Mr. Lee, he was prepared to give an explanation which he felt sure would be perfectly satisfactory, and which also would show there was no truth in a great deal of what had been urged against him.

Mr. Knox said he expressed no opinion on Mr. Lee’s conduct, and except on the condition he had mentioned he should decline to grant summonses unless applied for by some bona fide shareholder or policy-holder. Mr. Lee well knew his serious cross-examination was to take place at the succeeding examination. He ought to have been in court last Saturday to defend his character, but he was absent. As he did not consider that Mr. Lee was a bona fide shareholder, he did not feel himself justified in bringing the directors to the court again, and must therefore refuse the application.

[The Daily News, 13. Oktober 1869]

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AMERICA.

(FROM OUR SPECIAL CORRESPONDENT.)

[Oct 13]

NEW YORK, Oct. 2.

It is very difficult for anybody writing at this distance to know where to begin in trying to give an English reader an intelligible account of the nature of the convulsion in the “Gold Room” by which this city has been agitated during the last ten days, because one can hardly tell how much English readers know about the “Gold Room,” the character of the men who frequent it and “operate” in it, or about the peculiar performance known on the New York Stock Exchange as a “corner.” Making a corner is, in reality, the modern equivalent of the mediaeval practice of levying “tolls” vi et armis on peaceable traders, on the high road or on rivers. It is not gambling; it is something more and worse. There is an element of chance in gambling, even when you play with marked cards or loaded dice. The victim may escape, for he may refuse to play beyond a certain point; or you may make mistakes with your cards; or the dice may fall with the heavy side up. “Cornering” is rather lying in wait for the gambler when he is on his way to the gambling-house, with the money he proposes to stake in his pockets or when he is coming away with his winnings on a road you know he has to take and then putting a pistol to his head and forcing him to disgorge. When a mediaeval baron was hard-up, we are told by the chroniclers or preachers of the time, it was no uncommon thing for him to call his vassals to arms, simply to overhaul the rich travellers, or ambassadors, or trading caravans on the highways, in order to despoil them. A New York “operator” does not do this, the time for it is past; but neither does he put himself always on equal terms with his rivals, and fight them fairly, according to the rules of the market. If he speculates simply for a rise or a fall, and takes his chance, he may lose, and often does lose. When he is tired of gambling, and wants to be sure, he makes a “corner”—that is, he collects about him a band of confederates, and between them they muster, by borrowing or otherwise, a considerable sum of money—ten or twenty years ago it would have been a few hundred thousand dollars, it is now a few millions—and thus armed make arrangements to despoil the other operators as they are leaving the market. They know that large numbers of speculators have “sold short,” or are willing to sell short—that is, have agreed to deliver a certain quantity of a certain stock at a certain price, and they contract for a large quantity from them on these terms. Then they go to work, and buy up all of that stock they can lay hands on, until they have either secured all of it there is in the market or all there is to be had on any terms; and then they have the unhappy “sellers short” at their mercy, and the latter have to pay over the difference between the price at which they agreed to deliver the stock and the price at which the “corners” are willing to sell it.

Formerly these operations were confined to stocks exclusively. Since gold went out of circulation they have naturally enough betaken themselves to gold. Gold is now regularly bought and sold in the market, and quoted from hour to hour, just as stocks are. Although not in circulation, foreign accounts have to be settled with it, customs duties have to be paid with it; and in addition to this, inasmuch as the price of it is still affected by a variety of influences, financial and political, it affords as good material for speculation as any stocks. Accordingly there is an Exchange known as the “Gold Room,” devoted exclusively to “gold brokers,” and as two-thirds of the purchases are not real purchases, attended with the transfer of the coin, but mere bets; there is a “Gold Clearing House,” to which each gambler sends in his memoranda at the close of the day, just as banks send their cheques to the clearing houses, and there the gold he has bought being balanced against the gold he has sold, he has only to pay the difference. So that he may deal in millions, and never have occasion to pay over more than a few thousands. “Corners,” too, are made in greenbacks by a process which I think I tried to describe to you some weeks ago. The operators collect all of them they like; borrow all they can from the banks, and some fine morning money is found to be awfully tight, and stocks consequently fall, and the operators rush in and buy, and their game is finished. “Corners,” too, are occasionally made in sugar, coffee, tea, cotton, and there is hardly any commodity that some dealers do not gamble in by “selling short,” but these things the chiefs do not touch. They confine themselves to the money market proper.

Their success a few weeks ago with the great greenback “corner” emboldened them so much that they made great preparations for raid on the “gold-room” a fortnight ago; raised all the money they could, and got into the combination as many persons with large credit as they could, and then went to work.

But I feel that it is almost useless to convey to your readers an adequate notion of the men who got this last combination up. James Fisk, jun., the hero of Erie Railroad war, was at their head; his confederate, Jay Gould, was his lieutenant, and their followers were composed of a few men of the same kind, and that kind is something peculiar, and something which is produced nowhere but in the United States, and in the United States is only seen in |[46] perfection in New York. Take Fisk at the representative of the class. He is entirely illiterate—that is, he has learned in a New England district school to read, write, and cipher, and he has been bred up in that practical acquaintance with the operations of trade which nearly every New England boy possesses. The church and Sunday school probably tried to teach him morality, but totally failed in doing more than giving him a knowledge of figures.

[The Daily News, 16. Oktober 1869]

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THE EUROPEAN LIFE ASSURANCE COMPANY

[Oc]

DISMISSAL OF THE PETITIONS.

The petitions for the winding up of this company again came on for argument yesterday, before Vice-Chancellor James, at Lincoln’s-inn. The case appeared to excite great interest, and the court was crowded to excess the whole of the day.

Mr. Glasse addressed the court for the company against the prayer of the petition. He said, before he entered on the merits of the petition, he wished first to make an observation with reference to a suggestion made at the close of the sitting on Wednesday, that the company should call a meeting of the shareholders and policy-holders. The chairman and the directors had proposed more than once to call such a meeting; and this was no act of grace, for by the terms of the deed of settlement any five shareholders holding collectively 1,000 shares might call a meeting. Of course they did not recede from that offer, but if it were to be made the subject of an order, he could not agree to it. The time had now arrived when he could expose those calumnies and aspersions which had been cast on this company. He should submit that the petitioners had no legal right to present such a petition; and that if they had, their conduct disentitled them to the indulgence of the court.

Mr. Dickinson—The term “conspiracy” has been used.

Mr. Glasse said he would adopt the term. He would undertake to prove that the generic term “wreckers” applied to those who were seeking to wind up the company. The Act of Parliament provided that a company should be wound up when it was proved to the satisfaction of the court that the company was unable to pay its debts, or when the court was of opinion that it was just and equitable that the company should be wound up. With regard to the first point, he submitted, first, that the court could not be in a position to say the company was unable to pay its debts unless a creditor came before the court and proved that he had been unable to obtain payment of his debt. But here no creditor was complaining that he had not been paid, and he should contend that it was not for a shareholder to move the court to take steps for the protection of creditors and policy-holders. The court, however, had not heard that any claim on the company remained unsatisfied, and the fact was that every admitted claim had been paid. Then with regard to the contingent liabilities of the company, he contended that according to the reported cases the court was not entitled to take them into account in considering whether a company should be wound up. In the matter of the Agricultural Insurance Company exparte Spackman, Vice-Chancellor Knight Bruce had dismissed a petition, and in dismissing the appeal Lord Cottenham said the contingent liabilities of the company ought not to be taken into consideration, because the premiums hereafter to be paid might meet all those liabilities. Nor had he a right to look into the books. The Act gave no such power, and he could not inquire into the mode in which the company had carried on its business. The Act provided certain tests of the solvency of the company.

The Vice-Chancellor—You must not assume that I am with you on this point. They have to prove to my satisfaction that taking the whole amount of their assets and capital, including the unpaid-up capital, the company is absolutely insolvent. If the company is absolutely insolvent then the Act of Parliament applies. It appears to me that before any question of law arises I cannot apply the Act of Parliament till it is proved that the company is insolvent.

Mr. Glasse said he was not there to prove a negative, and that it was for the other side to prove the proposition affirmatively.

The Vice-Chancellor—It is a question of fact.

Mr. Glasse—Just so; and I say they have not made it out, and their evidence is concluded.

The Vice-Chancellor—I entirely put out of view the point that was pressed upon me—that an insurance company is to be treated differently from any other company.

Mr. Glasse—My position is that they have not proved a debt due.

The Vice-Chancellor—I do not agree with you. Supposing you had a capital of 10,000l., and you had got some person to discount your bills for a million, would not that bring you within the Act of Parliament?

Mr. Glasse said if that was made out his Honour would deal with it; but that was attempted to be made out. All that was attempted to be made out was that the assets were not immediately available. In Re the National Live Stock Company, 26 Beavan, 153, it appeared that the company had always been carried on at a loss, and yet the Master of the Rolls refused to wind up the company. And in the Anglo-Greek Steam Navigation Company, on application being made to wind up the company, on account of the gross misconduct of the directors and manager, the Master of the Rolls held that the misconduct of the directors and mangers, although it might be such as to render them liable, if a suit was instituted against them by the shareholders, was not a ground on which the court would think it just and equitable to wind up the company under the Act where there was no evidence that their mismanagement had produced insolvency, or that the company was a mere bubble company, or where there was a reasonable prospect that under proper management the company would become prosperous. They in the case of the Suburban Hotel Company Lord Cairns held that the court would not wind up a company on opinion-evidence that the company could not carry on its business with success. Now he (Mr. Glasse) took upon himself to say that, apart from the balance-sheet of 1868, the court had nothing to go upon but opinion-evidence, and opinion-evidence of the actuaries of rival assurance companies. By that balance-sheet it appeared that there were claims on the company of 109,000l., but they were all paid.

The Vice-Chancellor said he should be very much astonished if it were contended that a claim which became due, say on the 31st December, 1868, should be paid out of moneys coming in in 1869.

Mr. Glasse said unless they could do that, no insurance society only a few years old could go on.

The Vice-Chancellor said his opinion was that current income was not available to pay current claims, and that they ought to be paid out of the insurance fund. Of course they might take the money they might have in hand rather than sell it out, placing that amount afterwards to the insurance fund.

Mr. Glasse said to a proposition so qualified he had not a word to say. Then the other debt of the company, as shown on the balance-sheet, the debt due to the bankers, had been paid, and instead of the company now owing its bankers 5,000l., the company had a balance of 17,000l. in the hands of the bankers at the time the petitions were filed. Every debt was paid, and the court, he submitted, had no power to take into account the liabilities of the company. In the case of the Joint Stock Coal Company, which was carrying on business at a heavy loss, the Master of the Rolls said he had no power to make a winding up order, nor had |[47] he power to direct a meeting of the shareholders. Then, there being no debt due, or none that the company was not able and ready to pay, and the court having no power to take into account the future liabilities of the company, he submitted that the court could not grant the prayer of the petitions. But further, even if the court could take into account the liabilities, the court had nothing to go on but opinion-evidence, and he could produce counter opinion-evidence showing that the company was perfectly solvent. Mr. Burt, one of the firm of Coleman, Turquand, and Co., had made an affidavit in which he stated that he had examined the balance-sheet of the company, which he believed to be, in all respects, an accurate balance-sheet, and that he had no doubt that the society, as regarded its policy-holders and creditors, was perfectly solvent; and it would continue to be so if it were only allowed without molestation to continue its business, and he should hold that opinion even if the 261,000l. paid for the business of other companies was struck out of the assets. Then there was the evidence of Mr. Woolhouse, the actuary of the Emperor Company, which was to the same effect. Independent of these considerations, he submitted that Mr. Coupe and Mr. Crauford, the petitioners, had no right to petition at all. By the 109th section of the deed which they had executed it was provided that the company should not be dissolved unless a resolution to that effect was carried by three-fourths of the shareholders at two meetings. But they had taken no step to convene a meeting. Then with regard to Mr. Coupe, when the call was made he employed a solicitor, who represented that he was a ruined man, and that it would be of no use suing him, and then, when the company refused to let him off the call, he employed other solicitors to file the petition. Then, with regard to Mr. Crauford, he had been an agent of the society at Edinburgh, and it was in evidence that he desired to become an agent of the company at Chicago. He was a director of the company, and was sitting at the board with the other directors on the 20th September. On the 21st the petition was filed. There was the affidavit of Mr. Hayward, who at first was a co-petitioner, and he stated that he received a letter from Crauford requesting him to meet him in Chancery-lane, and that he did so, and went with him to some chambers in New-square, where they saw a solicitor, and Mr. Young, who was afterwards to be the provisional liquidator; that it was stated that it would be well to get the petition filed at once to prevent anyone else getting the appointment of liquidator, which might be to the prejudice of the company; that he found it was expected he was to be one of the petitioners, and he at first refused, but afterwards reluctantly consented; but on the same evening a solicitor, a neighbour of his, advised him to withdraw his name which he did. Mr. Glasse contended, therefore, that the conduct of the two petitioners had been such as to act as an estoppel upon them, and for all these reasons he submitted that the petitions should be dismissed, and with costs.

Mr. Mellon followed on the same side.

Mr. Fry said he appeared for 469 shareholders, holding 149,875 shares, or nearly one-half of the whole of the shares; and he also appeared for 5,402 holders of policies, the value of their policies being 1,451,000l. With regard to the shareholders, he did not wish to add anything on their behalf. But with regard to the policy-holders, they were distinctly of opinion that the company should go on. He contended, from the figures of the balance-sheet, that the society held assets to meet its liabilities, that it was paying its claims, and ought not to be wound up.

Mr. Beevor, Mr. Locock Webb (who said he appeared for virtually the whole of the Irish policy-holders), and Mr. Cotterill followed on the same side.

Mr. Dickinson replied on the whole case, and with reference to the attack which had been made upon Mr. Crauford, he said evidence had been given that months before he filed the petition he had been writing letters to the chairman, stating his dissatisfaction with the management of the company.

The Vice-Chancellor, in giving his judgment, said—The same reasons which induced me to hear this petition as soon as possible during the vacation, the enormous amount of interest that seems to be involved in the case, and the great embarrassment which the hanging over of a

[The Daily News, 10. August 1869]

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[The CHAIRMAN said he was quite willing to give a pledge to that effect.]

[Mr. LEWIS thought it was very important, in reference to the policy-holders, that, before the meeting terminated, it should intimate whether he was correct in assuming that, without binding themselves to specific details, the shareholders were decidedly in favour of some such scheme of reconstruction as that which had been placed before them.] (Loud and general cheers were the response to this appeal.) It would strengthen the liquidators very much in meeting the policy-holders and dealing with them to know that that was an almost unanimous opinion. (Cheers.)

Mr. COTTRELL said as one who was a policy-holder as well as a shareholder, he thought it would be well if half a dozen shareholders were selected to represent the body at the policy-holders’ meetings; adding that he would propose the appointment of such a committee to attend the meetings, to watch over the general interests of the shareholders, and to investigate the affairs of the company.

Mr. LEWIS remarked that when they knew what the policy-holders intended it might be desirable to form a joint committee, but not before. (Hear, hear.)

A SHAREHOLDER wanted to know whether, in case the concern were not resuscitated, the shareholders would be responsible beyond the 17l. uncalled.

Mr. LEWIS said, having been asked the same question at a meeting of shareholders the other day, he had taken care to furnish himself with a copy of the policies issued by that office, and it appeared to him that the liability was limited to the amount of the shares. He did not mean to say that they might not have entered into other contracts which he had not seen. That would place them in a different position, but as regarded all the policies originally issued by that company, and also all those of which he had seen indorsements, the company was clearly not liable beyond the amount of the shares.

This terminated the proceedings.

[The Daily News, 19. November 1869]

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IT is fortunate for the Shareholders of the European Assurance Society, that their late manager and late directors did not succeed in burking all public discussion upon its affairs. The sensitiveness to public comment which those officials exhibited, has been amply justified by its results. They fought the winding-up petition with vigour and success, and that resistance was the one final service they have rendered the society. So soon as the shareholders followed the advice given them by the press, and took their affairs into their own hands, the reign of mismanagement was over. The report of the Committee of Shareholders presented to yesterday’s meeting fully bears out all that we have said as to the need of a reconstruction of the Society’s management, while the result of the meeting has been to effect exactly the changes which were needful to regain public confidence, and to put the business on a second and healthy basis. The Committee “were of opinion that there had been gross mismanagement and recklessness in purchases and amalgamations with other companies, and in enormous and unjustifiable expenditure.” They condemned “the want of proper vigilance on the part of the directors, and the great power acquired by the general manager, which power had been very frequently exercised improperly.” They, therefore, recommended an entire change in the management of the society; and a call of ten shillings a share to produce a reserve fund which should justify public confidence. Their investigation had produced its effect. They were able to meet the shareholders with the means of a peaceful revolution in their hands. The manager had resigned, and the meeting at once accepted his resignation. The directors had previously taken the same course, and the resignations of eight out of eleven were also accepted. The three which remained will, it was said, elect their successors and then resign, so that the change of management will be compete. The new directors will, therefore, be Messrs. J. BROWN WESTHEAD, M. P., Alderman CARTER, M. P., A. BRISTOWE, J. FIELD, CHILDE, E. HEALLY, and the Hon. AUBERON HERBERT. Such a directorate will command public confidence, and will speedily redeem the society’s position. The shareholders have not only overthrown a bad government, but have set up a good one, and have saved the business by putting it into new and better hands. There can be no question that with such management as the Society will now enjoy it may still be made one of the best and most prosperous of Insurance business. The new directorate enters on a large and valuable business which nothing but mismanagement has imperiled, but which a thoroughly wise and popular management will probably seedily restore.

[The Daily News, 21. Oktober 1869]

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AMERICA.

(FROM A CORRESPONDENT.)

NEW YORK, Oct. 8.

“Order reigns” in Wall-street. The bulls and the bears are engaged in counting their dead and wounded. The war has been transferred from the Stock Exchange to the press. Every man supposed to be connected with the late fluctuations in gold is “interviewed” from morning to night by reporters. Who constituted the “gold ring,” who lost money by its operations, and who made money by it, whether any Government officials were connected with it, and if so who those Government officials were, are the sensation questions of the day. Messrs. Gould and Fisk admit their connection with the ring, but they assert that a certain Mr. Corbyn, a brother-in-law of the President, was the originator of the scheme, and that the stock which he contributed to the association was the promise of the President that no sales of Treasury gold should take place for some weeks.

Notwithstanding Mr. Corbyn’s indignant denials, there appears to be abundant evidence to show that he was in alliance with Fisk to “corner gold,” and that he made use of the name of the President to influence the market. That he did this, however, without the knowledge of Mr. Grant is the universal opinion. As a President Mr. Grant has proved to be a failure. He has inaugurated no reign of purity, and he has not freed himself from the trammels of party. Having chosen his Cabinet, he seems to have considered that he might subside into a constitutional king who reigns but does not govern. He spends a great part of his time travelling over the country, and leaves politics to take care of themselves. But while the country has lost confidence in his talents and firmness, they still believe him to be an honest man; and this belief has not been shaken by |[48] the complicity of his brother-in-law in stock-jobbing manoeuvres. Mr. Corbyn meets the accusations against him by denials which convince no one, and by appeals to friends to come forward and testify that he has always been a moral and religious man. As for Messrs. Fisk and Gould, they are sharp New England men, and no more feel shame for the exposure of their robberies than an African savage comprehends the iniquity of eating a missionary.

Although the name of Fisk is a household word here, and carries terror and dismay into the heart of every holder of Erie Railroad stock, yet, as his fame is hardly European, it may interest some of your readers to know who he is, and who he was. Mr. James Fisk first appeared before the public as a circus-rider. Although he gained a considerable reputation for jumping through fiery hoops, and balancing himself upon the backs of horses, he had a soul above such vulgar triumphs, and left the arena in order to engage in commercial pursuits. For several years he travelled through New England with a pedlar’s pack, and traded in wooden nutmegs and other Yankee notions. But still his ambition was not satisfied. He felt that he was born for better things, and exchanged his pack for a stool in the office of Mr. Drew, who then shared the railway throne with Commodore Vanderbilt. His shrewdness soon attracted the attention of his principal, and, having acquired a little money, he gave up his clerkship, and, with the aid of Mr. Drew, became an “operator” in Wall-street. As he was intelligent and perfectly unscrupulous, he was employed by many persons to do their dirty work, and to bear the abuse which followed detection. In the course of his business he made the acquaintance of a certain Jay Gould, a third rate stockbroker, and of a pettifogger of the name of Lane. These three worthies, like the two centurions of Tacitus who determined to revolutionize the Roman Empire, determined to make themselves absolute possessors of the Erie Railroad; and, like the centurions, they succeeded. The wonderful manoeuvres by which three obscure individuals become maters of a wealthy railroad company are too well known. At present Mr. Fisk, Mr. Gould, and Mr. Lane form an executive committee, who manipulate all the finances of the Erie Company, and who own besides a fleet of steamers. They keep a judge in their pay to interpret the law in their favour, and they are able to carry any new law which they may require through the State Legislature at Albany. Although the earnings of the Erie Railroad must be largely in excess of the expenditure, they pay to their shareholders no dividends. All the money that comes into the exchequer is devoted to corrupting officials and judges, and making purchases for the company by which they enrich themselves. The directors of several English lines of railroad do not enjoy the absolute confidence of their shareholders; but what would be sad if the chairman of an English railroad were to buy Covent-garden Theatre, sell it for double the amount which he paid for it to the company, transact business in the green-room, and carry on an opera with the proceeds of his railroad? Yet this is what has been done by Mr. Fisk. The offices of the Erie Railroad are in that excellent freehold which he sold to the company, the “Grand Opera House,” and the money of the Erie shareholders goes to keep up a theatrical company. Englishmen who have invested their money in the line will be glad to hear that their enterprising President recently produced Sardou’s comedy of Patrie, in a very creditable manner, and that at the present moment their money is employed in reviving the legitimate drama by the representation of one of Shakespeare’s plays. There is a species of Royal box, in which on most evenings Mr. Fisk is to be seen dealing out hospitality from a well-furnished buffet to his friends and admirers. As I am fond of making the acquaintance of celebrities in their homes, I was introduced to Mr. Fisk the other day in his box, and partook of a glass of excellent champagne, for which, and for the play, which was well acted, I beg to tender my thanks to the proprietors of Erie stock.

As a sensation, Cuba is, to use the American expression, played out. Americans are occupied at home in endeavouring to grow rich, and they care very little for the acquisition of the island. The Cuban junta in New York, and its agencies throughout the country, failed to inspire either confidence or respect. They were perpetually making appeals for money, and most of what came into the treasury went to support a herd of dingy-looking patriots, who infested third-rate hotels, drinking, smoking cigarettes, and abusing Spain. The rest was invested in the purchase of recruits, who took very good care to convey the intelligence of the port from which they were to embark to the United States authorities, who were then obliged to interfere to prevent their sailing. From all accounts nothing has been really done by the revolutionists in Cuba, and the contrast between their magniloquent boasts and frothy deeds has alienated all sympathy for them. They are now ridiculed and despised by the entire press. Neither the Republican nor the Democratic party ventures to take action against them, for fear public opinion should again veer round in their favour; but I think both the Government and the country are prepared to accept the view which Mr. Sumner has taken of the matter, that they must become belligerents before they are recognised as such. Even should Mr. Sickles be able to effect the purchase of the island, I think it is very questionable whether Congress would vote the money to carry it out. The Munro doctrine is a theory, but taxation is a fact.|

[The Pall Mall Gazette, 24. November 1869]

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THE “ALBERT” AND ITS AMALGAMATIONS.

Vice-Chancellor James this morning delivered an important judgment in the case of the Family Endowment Society, one of the many associations which had been amalgamated with the Albert Assurance Company, now undergoing the process of winding up. General Pott, an unpaid annuitant of the Family Endowment Society, had presented a petition praying the court to grant an order for the winding up of that society. The petition was opposed on the part of the society on the grounds that the Albert Company had, upon the amalgamation, undertaken its liabilities, and that by such amalgamation it was dissolved, and therefore the court could not now order it to be wound up.

The Vice-Chancellor, in the course of his judgment, said this was a case in which very cogent evidence would be required to establish that a man who had a grant in writing from a society, which he could enforce under the provisions of an Act of Parliament against that society, had accepted in lieu of his original debtor another joint-stock company without any knowledge on his part, or any means of knowing whether the amalgamation of his original debtor with that company was ultra vires or intra vires. In this case not only was there not that cogent evidence, but it seemed to the court that in truth there was no evidence whatever. The receipts which he gave to the Albert Company were written upon the instrument which was given to him by the Family Endowment Society, and not upon any new or substituted contract. The court was therefore of opinion that the society had entirely failed to make out its first proposition. The next proposition of the society was that it had ceased to exist at the time when the Act of 1862 was passed or came into operation, and that that Act only applied to companies then existing. The court was of opinion that the society had not ceased to exist and could not cease to exist. The arrangement with the Albert provided that the society should continue to exist for the purpose of distributing its assets and paying its debts, and the society, by that arrangement, agreed to indemnify the Albert Company in case of its neglecting to collect its assets. As to the third proposition—namely, that the court should leave the petitioner to his remedy at law—the court did not think that it could properly or justly do so. It would not be right with regard to a creditor in his position to leave him to bring an action against nominal directors, and endeavour to find out shareholders in every part of the kingdom, or to allow nominal defendants to be harassed without any means of being indemnified by the society. Under these circumstances it appeared to the court that the petitioner had made out his case, and that the society having failed to make out any part of their case an order for the winding up of the society went ex debito justitiae.

[The Pall Mall Gazette, 25. November 1869]

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When the collapse of the Albert Life Assurance Company was first announced we expressed a very decided opinion that the holders of policies issued by any of the offices absorbed by that company could still have recourse against the office in which they had originally insured, provided, of course, that they had not expressly accepted a new and substituted policy from the Albert. The correctness of this view was yesterday confirmed by Vice-Chancellor James in an important judgment. General Pott held an annuity from the Family Endowment Society, which in 1861 was amalgamated with the Albert, and he had since that date received the payments due to him through the latter. When the Albert failed, he fell back upon the Family Endowment Society, and in order to obtain satisfaction of his claims in respect of the annuity, applied to the Court of Chancery to deal with the Family Endowment as having a distinct and independent existence apart from the Albert, and to wind it up accordingly, making the shareholders liable for all policies issued in their name previous to the amalgamation. The Family Endowment Society, on the other hand, argued that they ceased to exist in 1861, and that all claims upon them were then transferred to the Albert. The question before the Vice-Chancellor was, therefore, simply this—whether the Albert as regards the creditors of the absorbed company was an agent or a substitute. His decision was in favour of the former view, that the Family Endowment Society might arrange with the Albert to transact business on its account, but could not substitute the latter for itself as a debtor without the assent of the creditors, and that this assent was not implied merely by the acceptance of payments due by the Family Endowment Society through the hands of the Albert. This is, we believe, the first authoritative judgment on this point, but it is difficult to see how there could be any room for doubt or what the rule of law should be. That a proprietary assurance office should have a right to transfer all liability on its policies to another company without the assent of policy-holders is a proposition, as it seems to us, so monstrous that it only requires to be stated in plain words to be at once rejected as utterly opposed to common honesty and common sense. In the case of the Albert, which had absorbed about a score of different companies, the application of the principle now affirmed is especially important.

[The Daily News, 26. November 1869]

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The Daily News. Nr. 7355, 26. November 1869. S. 5.
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AMERICA.

(FROM A CORRESPONDENT.)

NEW YORK, Nov. 14.

London has hardly recovered from the crisis of 1866. Before the financial crash of that year, the Limited Liability Act had produced a short period of fictitious wealth. An idea took root in the minds even of staid careful men that money was worth at least ten per cent. For a few years the ten per cent. was forthcoming, and then the too sanguine investors discovered that they had been receiving back a portion of their own money, and that all that was left to them was the bright memory of ideal riches, and the sad reality of inexorable “calls.” New York is still in our position before 1866. During the war, a golden shower in the shape of contracts and bounties descended upon the inhabitants. Prices rose; but, notwithstanding this, everyone found himself rich, for the rise was in greenbacks, and Government had thrown into circulation 80,000,000 dollars of these vague promises to pay at some future date. This artificial prosperity has been kept up until now by high protective duties, by reckless speculation, and by the paper currency, which was regarded by its originators as a war necessity to be abrogated on the resumption of peace, still continuing to be a legal tender. It may be that the country will get back into a sound financial condition without a crash, but this will only be done by retrenchment in every class, and by a determination on the part of Congress to prepare in time for what must eventually come, a resumption of specie payments and large reductions in the tariff. New York, however, believes in no crisis. No distinction is made between income and capital, and money is squandered by the wealthy on every caprice which can be imagined. I do not think that I am far wrong in saying that full 50 per cent. of the upper ten thousand are living at a rate which is not justified by their incomes or trade profits. The city is situated on an island—“down town” is, like the City of London, devoted to commerce, and after business hours is almost deserted. “Up town” is the fashionable quarter, and yearly, as buildings progress upwards, the distance between the two rival camps increases. Thirteen years ago, the municipality appropriated 900 acres, situated in the centre of the island, to be converted into a park, and at present, thanks to the energy and taste of Colonel Stebbins, the President of the Commission in which all relating to it has been vested, Central Park—as it is called—is one of the most beautiful pleasure grounds in the world. The land comprising it has been laid out with great skill, and no care nor expense is spared to keep it in good order. The balance-sheet of last year showed an expenditure on account of maintenance of 269,416 dols., or about 38,480l. The greater portion of the area partakes more of a landscape garden than of a park, in our sense of the word. It contains several ornamental sheets of water, 20 miles of carriage and bridle roads, numberless secluded walks, where old forest trees are interspersed with |[50] huge boulder rocks, well mown lawns, which are reserved as playgrounds for children, and in the centre a wide stone terrace, where, on summer afternoons, a band of music plays. In every part of it there are shady arbours and seats, for the use of which there is no charge. In many places there are statues and works of art. Hired carriages are not, as in Hyde-park, excluded, but, fortunately, the democracy of the city has not as yet claimed a right to hold political meetings in it. New Yorkers, poor as well as rich, are justly proud of their Park, and any demagogue who announced his intention to get up a demonstration in it, would find public opinion against him. Last year 7,089,798 persons used the Park, and of this number, although the police are very strict, only 31 were arrested for disorderly conduct, and only one for injuring the shrubs and flowers. The Park will no doubt become the fashionable centre of the city. The increased assessed value of the three wards surrounding it, since it was laid out, amounts to 91,496,565 dollars. Few houses have as yet been built round it, but a single lot (a lot is 100 feet by 25), in a favourable spot overlooking it, already sells for about 4,000 dols. While the Park is the Belgravia of the future, Fifth-avenue is the Belgravia of today. In a city where there is no caste which can claim to itself social pre-eminence, the position of a man—or rather a man’s wife—in society depends very much upon the location of the house. The head of a family who by some happy speculation has acquired wealth, knows no peace at home until he takes up his quarters in Fifth-avenue. A lot in this favoured locality costs about 6,000 dols., and the house which is built upon it about 15,000 dols. Many persons, however, buy two lots, and build what is called a double house, and this, of course, doubles the cost. The streets around Fifth-avenue are fashionable in proportion to their vicinity to it; good three-windowed houses may be bought in the best for about 12,000 dols. I have been in several of the largest houses, and in many of those of average size, in this city, and they certainly exceed, both in comfort and appearance, anything that, except our few palaces, we have in London. What we call the ground floor is about 10 feet from the level of the street, and is approached by a flight of steps from outside. This floor usually consists of three rooms of equal size; two are used as drawing-rooms, and one as a dining-room. The two drawing-rooms are separated from each other by pillars, and the second room is very dark, as it has no windows. It is consequently rarely used, except in the evenings. The other floors are given up to bedrooms. These are large and airy, few of them are without a bath, with hot and cold water laid on, and most have a dressing-room attached to them; the houses are warmed throughout with hot-air pipes, and, in every room there are one or more gas burners. The furniture is rather in the French than the English style, it is lighter and prettier than ours. There is, however, too much gilding and stucco, and tenth-rate daubs in gaudy frames too often disfigure the walls. Still there are houses which may in point of taste and comfort compare favourably with anything in Europe.

[The Daily News, 2. Dezember 1869]

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The Daily News. Nr. 7360, 2. Dezember 1869. S. 2.
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THE CANONIZATIONS OF MAMMON.

(FROM A CORRESPONDENT.)

NEW YORK, Nov. 10.

The statue of George Peabody is opposite the London Exchange, and his mortal remains have found a sepulchre beneath the roof of Westminster Abbey. A rich man, there was nothing wonderful, nothing even remarkable, in the manner in which he acquired his wealth. It was the result of industry, and of ordinary commercial acumen. It was his mode of spending it that has made his name a synonym for all that is noble and generous. By honouring his memory, Englishmen have shown the manner of man that they delight to honour. Although Mr. Peabody was no American, and although he contributed to charitable institutions in America perhaps even a larger amount than he gave in England, neither New York nor any other city in this country has thought him worthy of a statue. That honour has been reserved for Commodore Cornelius Vanderbilt, a rich man of a very different stamp. This morning, in the presence of a vast crowd, the bronze effigy of this hero of speculation was unveiled; a bishop invoked a blessing on him, speeches were made and verses were recited in his praise, and the authorities of the city bowed down and worshipped before his image. A recital of the leading features in the career of an individual, who has thus in his lifetime, like the worst of the Roman Emperors, been acclaimed by his admiring fellow citizens a divinity, may not perhaps prove uninteresting. Fame is approached by many paths; it will serve some purpose to show the path which leads to it in New York.

Cornelius Vanderbilt was born in 1794. His father died when he was still a child, and he became a sailor on a small schooner belonging to his mother, which plied as a ferry-boat between this city and Staten Island. At the age of eighteen, having saved some money, he bought a boat himself, and entered into competition with his mother, whom he ruined. At that time there was a certain Mr. Gibbons, who, from some reason or other, had vowed vengeance against the proprietor of the steamboats which had recently been started on the Hudson River. He heard of Cornelius Vanderbilt, and, pleased with the early emancipation from vulgar prejudice which he had shown in beggaring his mother, he engaged him to superintend a complete line of steamers on the Hudson. This was the origin of Vanderbilt’s fortunes. In his new occupation he gave evidence of energy, resolution, and of a perfect absence of all scruple. The new boats drove the old line off the river after a lengthy struggle, and Vanderbilt, who never forgot his own interests, managed to make money for himself, as well as for his patron. Mr. Gibbons died, and left his young friend some of his steamers; these he used to good purpose: wherever he heard that a boat was doing a remunerative trade on river or estuary, he sent one of them, and there it remained, carrying passengers and freight at nominal prices, until the competition was bought off at a figure which yielded him a handsome profit. His name soon became such a bugbear to all engaged in river navigation, that, for several years, after the manner of a Highland cataran, he received more than a 1,000 dollars a month as blackmail from individuals and companies as the price of immunity from his |[51] depredations. As his resources increased, his ambition took a wider range, and he determined to pursue the same tactics on the ocean which had proved so remunerative on rivers. The Pacific Mail Company was then at the summit of its prosperity. Gold had been discovered in California, and the steamers of the company were crowded with passengers, travelling to and from the Isthmus of Panama. The commodore—for he had proprio motu assumed that title—organised an opposition company. Had he confined himself to a legitimate attempt to share in a growing trade he would very probably have benefited the community. But it was repugnant to the nature of the man to gain by common place enterprise what might be acquired by other means. Walker, “the grey-eyed man of destiny,” was then filibustering in Nicaragua, and, making this his excuse, he signed, as president of his company, an agreement with the directors of the Pacific Mail to withdraw from the Isthmus trade, on payment of 8,000 dollars monthly for two years. The first instalment he paid into the exchequer of the company, the others he absorbed into his own; and it is only within a few months that he has been forced to disgorge to the shareholders a portion of this booty. This financial operation had reduced the shares of the company to a mere nominal value, and the president, its fiduciary guardian, declared that it was in debt to him, and as a set-off appropriated to himself its ships. Having by this sharp practice become the absolute owner of a fine fleet of ocean steamers, he engaged in what may be called the trade piracy of the 19th century. Wherever a merchant had built up a remunerative carrying trade, one of these corsairs made its appearance, and competed with him for it, until he agreed to terms of capitulation. Flushed with success, at length Vanderbilt determined to levy contributions from the great English companies which carry passengers between New York and Europe. He established a new line between France and America, and advertised a scale of prices which he imagined would secure him a monopoly of the traffic. But he found that he had to do with men who were not to be frightened. In vain a complaint, Congress aided him in his enterprise with a subsidy; his boats were bad, his officers were ill-paid, and few cared to save a few dollars at the risk of their lives. The Vanderbilt steamers sailed with a beggarly array of empty berths, while the Cunard and the Southampton boats were always full. He persevered for some time in the attempt, but finding that, in his expectation of black mail, he had for once reckoned without his host, he at last avowed himself beaten, and withdraw his ships. After this defeat he turned his attention to the profitable field of Government contracts, and in 1861, feeling that some sort of public recognition was due to his merits, as a gentle reminder he presented to the United States navy one of his steamers, which unfortunately was so constructed that it burnt so much coal as to render it, like an elephant, a burthen to its owner. The thanks of his country and a gold medal were voted to him by Congress for this generous act, although even within the doors of the Legislature many were heard to mutter that the gift was in part a restitution of some portion of the sums which had found their way into the donor’s pockets for questionable contracts, and in part a bid for others still more questionable. With this present to his country, Vanderbilt closed his career on the seas, and he sold the remainder of his steamers to a company which in a few months became bankrupt. In his raids upon commerce he had rivalled Captain Kidd, but while to the worthy captain was adjudged a gibbet, his modern emulator was elected a railroad director. Such is the different estimate of the same exploits in two ages!

With respect to the Commodore’s experiences in the field of railroad enterprise, and his change of tactics from competition to consolidation, I cannot do better than quote from a pamphlet, entitled “A Chapter on Erie.” It is from the pen of Mr. C. F. Adams, a son of the gentleman who so ably represented this country in England. “A Chapter on Erie” has had a very wide circulation, and it exposes, in terse and vigorous language, the corruption of the legislature, of the judiciary, and of the railroad speculators in the State of New York. Mr. Adams says—“Two great lines of railways traverse the State of New York, and connect it with the West—the Erie and the New York Central—the latter communicates with the city by a river and two great railways. To get these two roads—the Harlem and the Hudson River—under his absolute control, and then, as far as the Central was concerned, to abolish the River, was Vanderbilt’s immediate object. First making himself master of the Harlem road, he there learnt his early lessons in railroad management, and picked up a fortune by the way. It was in the successful conduct of this first experiment that Vanderbilt showed his very manifest superiority over previous railroad managers. His success with the Harlem depended upon his getting rid of the competition of the Hudson River Railroad. An ordinary manager would have resorted to contracts which are never carried out, or to opposition which is apt to be ruinous. Vanderbilt, on the contrary, put an end to competition by buying up the competing line. Thus his plans had developed by another step, while through a judicious course of financing, and watering, and dividing, a new fortune had been secured by him. By this time Vanderbilt’s reputation as a railroad manager had become very great, and the managers of the Centralbrought that road to him, and asked him to do with it as he had done with the Harlem and Hudson River. He accepted the proffered charge, and now the magnitude of the prize within his grasp probably first dawned upon him. To obtain absolute control over the commerce of New York, he had but to repeat with the Erie his successful operation with the Hudson River Road. The New York Central passed into Vanderbilt’s hands in the winter of 1866–67, and he marked the Erie for his own in the succeeding autumn.”

Mr. Adams then—and his account should be read by every one who wishes to obtain a clear insight into New York financing—proceeds to relate how Vanderbilt was foiled in his endeavours to buy a commanding share in Erie Stock by the unscrupulous issue on the part of his opponents of new stock, with which they flooded the market. The details of the long fight between Vanderbilt, Drew, and Messrs. Gould and Fisk, in which Legislatures were corrupted, judges bought, and bands of armed men organised, would be almost incredible, were not every fact “authenticated by the sworn evidence of those best acquainted with the truth.” The Erie directors were the victors in the strife. “For once Vanderbilt was effectually routed and driven from the field. That he shrank from continuing the contest with such opponents is much to his credit. It showed that he, at least, was not prepared to see how near he could come to the doors of a State prison, and yet not enter them, that he did not care to take in advance the opinion of leading counsel as to whether what he meant to do would place him in the felon’s dock.” But Vanderbilt, if he did not come off with the honours, was not entirely without the spoils of war, for here as elsewhere, when railroad magnates fall out, it is the shareholders, and not they, who pay the cost of hostilities. In July, 1867, a treaty of peace, which in reality was but a truce, was signed between the contending parties, when Commodore Vanderbilt was provided for. He was to be relieved of 50,000 shares of Erie stock at 70, receiving therefor 2,500,000 dollars in cash and 1,250,000 dollars in bonds of the Boston, Hartford, and Erie at 80. He was also to receive a further sum of 1,000,000 dollars outright, as a consideration for the privilege the Erie Railroad thus purchased of calling upon him for his remaining 50,000 shares at 70 at any time within four months.” When subsequently the details of this corrupt bargain leaked out, he wrote to the New York Times denying his share in them in the following terms:—“I have had no dealings with the Erie Company, nor have I ever sold that company any stock or received from them any bonus,” and he did not cease to protest, in accents of indignant virtue, against this slur upon his honour as a man and his good faith as a director, until Messrs. Fisk and Gould confounded him by the production of two cheques of the Erie Company for the sum of one million of dollars, made payable to the treasurer, and by him endorsed to C. Vanderbilt, upon whose order they had been paid. Convicted thus of falsehood, the Commodore could only complain that his whilom friends had betrayed his confidence! Nor after the war had been again renewed, and a frail treaty of peace concluded, were his interests forgotten. The belligerents united in a joint attack upon the purity of the Legislature of the State, and the public and private interests of the community. “A stock dividend of 80 per cent.”—an operation which netted its fortunate deviser the modest sum of 8,000,000 dollars—“in the New York Central, had been suddenly declared by Vanderbilt. Presently the Legislature met. While the Erie ring seemed to have good reasons for apprehending hostile legislation, Vanderbilt, on his part, might have feared for the success of a Bill which was to legalise his new stock. But hardly a voice was raised against the Erie men, and the Bill of the Central was safely carried through. This curious absence of opposition did not stop here, and soon the two parties were seen in active alliance. Vanderbilt wanted to consolidate his roads, the Erie directors wanted to avoid the formality of annual elections. Thereupon two other bills went hastily through this honest and patriotic Legislature—the one authorising the Erie board, which had been elected for one year, to classify itself so that one-fifth only of its members should vacate office during each succeeding year; the other consolidating the Vanderbilt roads in one colossal monopoly. It may be that public and private interests were not thus balanced and traded away in a servile Legislature; but the strong probabilities are, that the settlement of December made white even that of July.”

The facilities for the president of a railroad to make large sums by dealing in his own stock are far greater here than on any European money market, because the fluctuations in the price of securities are more violent, and because he has far |[52] more power than it is considered elsewhere desirable to place in the hands of an individual who is the guardian of funds belonging to others. Thus, the common stock of “Harlem” has been quoted at 9 and 179 since 1860, and within the last three weeks the price of “Vanderbilt securities” has varied by 30 points. By some plan of consolidation, by issuing bonds convertible at any moment into stock, or by declaring scrip dividends, a railroad autocrat can raise or depress the market value of his shares at will. The present quotations of the stock of the Vanderbilt railroads is far above their intrinsic worth. They are bought and sold, as tulips were in Holland, for speculative gain. An operator either “bulls” or “bears” them because he presumes that the president of the lines intends to send them up or down in the market. When the Commodore, a few months ago, married a young wife, they fell, on the chance of marriage at his advanced age proving injurious to his health. His position as the master of two of the great lines of communication between the West and the seaboard is, consequently, that of the proprietor of a hell where the game is carried on with cogged dice. In his financial operations in Wall-street he plays with what Mississippi gamblers call “the advantages.” It can hardly, therefore, be a matter for much surprise that his gains are enormous.

Many persons have achieved fame by questionable acts, but it is doubtful if, at least in the old world, any one ever became famous with so few redeeming virtues, or even amiable vices, as this New York great man. To heap up dollar after dollar with a fierce, ruthless determination, indifferent, like Fate, to the welfare or misery of others, has been the one absorbing occupation of his lifetime. Million on million, his fortune has been built up on the ruin of thousands. A mere lad, he beggared his mother, and in the course of his long career he has beggared relations, friends, and associates with hard, pitiless impartiality. His own sons-in-law have successively had occasion to rue the day when they believed that ties of blood would protect their homes from his greed. His oldest associates have found their fortunes transferred into his pockets by some chicanery of the Stock Exchange. A master in all kinds of legal legerdemain from early youth to extreme old age, his hand has been against all those who have sought to acquire wealth by honourable means. As a shipowner he grew rich by preying on shipowners, as a railroad magnate he has amassed millions by preying on his brother directors, his brokers, and his shareholders. The example of his success has produced in the country a cynical indifference to the rules of right and wrong, a laxity in the ethics of commercial honour, and a wild, restless spirit of speculative gambling, which will be felt long after he and his “monumental brass” have both rotted. Gould and Fisk, men who elsewhere would be consigned to a prison, but who here, to quote Mr. Adams again, “walk erect, proud of their infamy, through the streets of our great cities, and by exposing their portraits in public conveyances, convert noble steamers into branch galleries of a police-office; nay more, bedizen their persons with gold lace, and assume honoured titles,” are but mere vulgar knaves, who seek to emulate him, and who follow up the path to greatness, where he was the pioneer. Nor does the manner in which he spends his gains redeem the mode by which they were acquired. He has more than 1,500,000 dols. I doubt if his warmest admirer could credit him with one single good action. No charity—here where almost all are charitable—can boast of one dollar which he has contributed to its funds, nor, in the length and breadth of the lands, could one poor man be found who has ever benefitted by his boards. “Almost all great men,” said, with unintentional irony, the orator who pronounced his eulogy to-day, “have had some eccentric trait of character. I trace one to Cornelius Vanderbilt, the secret mode of his generosities.” They have indeed been secret. He lives in a large house, where no soul has ever tasted of his hospitality—a harsh, arrogant, cruel man, feared, detested, and yet admired by the stupid and vulgar, and fawned on by parasites who, undeterred by a thousand examples, still believe that if, like the ass of the fable, they hunt with the lion, they will not share the ass’s fate.

This man is now 74 years old, and has lately been seized with a desire not to descend into the grave without leaving behind him some durable monument of his fame. That the statue of George Peabody should have been erected in London, while in New York there was no statue of Cornelius Vanderbilt, disturbed his peace of mind and irritated his self-love. To build and endow a charitable institution, which might bear his name, was alien to the habits of his life; he therefore determined to remedy the mistake of his fellow-citizens, and to elevate a statue to himself. The Commodore felt that ridicule would hardly spare him if he set up his own image in a public place. He had resort therefore to a pious fraud in making his present to his native town—secrecy in his benefactions, being, as we know, the one “eccentric trait in his character.” Among his hangers-on was a certain De Groot, who had formerly been the captain of one of his steamers. This worthy tar, who cared and knew no more of art than a Kaffir, was instructed to organise a committee to receive subscriptions for a statue to his patron. Soon after it was announced that the requisite amount had been subscribed by persons who, like the object of their admiration, were generous in secret. The statue was ordered, and paid for. Its cost was above 50,000 dols., and, needless to add, this sum came, with the exception of a very trifling portion, out of the Commodore’s own pocket. It was finished a few weeks ago, and the services of the indefatigable De Groot were again put in requisition to get up a grand demonstration on its being officially unveiled. The principal men of the country, from the President downwards, were invited to attend. Some accepted the invitation, because they wished to be seen themselves; some, because they desired the Vanderbilt interest at their elections; and some, because they hoped to curry favour with him. Many eminent citizens, however, who were bidden to the ceremony, shone by their absence; while more than one Mordecai was found who indignantly refused to countenance so impudent and so brazen an act of self-glorification.

The unveiling was announced to take place at one o’clock, and shortly after that hour I found myself at the Hudson Railway depôt. This buildings is one of those hideous masses of brick and windows which we owe to the practical spirit of the age. On the top of its western facade I saw an expanse of canvas, and facing this a platform had been erected. On the platform were the “eminent citizens,” between it and the wall persons provided with tickets; right and left, the general public, kept back by ropes and cordons of police. The ceremony had already commenced. |[53] When I arrived a bishop was offering up a prayer; it was not a short one, but at length, it came to a close. Then forth stepped De Groot, and introduced to the assemblage the Mayor of New York, who delivered the oration of the day. Here a little difficulty arose. The Mayor had prepared a speech with many telling allusions to “yon bronze which looks down upon us from those walls,” and “yon bronze” had not yet been unveiled. After some delay this was remedied, the canvas was drawn aside by a number of sailors, who lined the root of the depot, and the hero of the day stood forth in all the majesty of bronze. As a work of art, the statue and the bas-reliefs which surround it are beneath criticism. “It is due,” the orator informed us, “firstly, to the happy conception of Albert de Groot, inspired by grateful enthusiasm, it owes its completion to the artistic genius of Ernst Plassman, and the careful skill of Valentine and George Fisher, who moulded it into colossal shape,” and it is very much what the illiterate enthusiasm of a sailor, and the careful skill of an ironmonger, might be supposed to produce. The idol stands within a bronze semicircular niche, and, although intensely realistic, hardly does justice to the original, who in the flesh, is like one of those handsome dissipated hedge-parsons that are frequently portrayed in old engravings. He is represented in a pair of very baggy trousers, and a huge great coat trimmed with Astrakhan fur. One leg is thrust forward, one hand is clasped to his heart, and the other is outstretched. On each side of the central niche are bas-reliefs, they cover a space of 150ft. by 12ft. That on the right is devoted to the marine laudation of the hero—there are steamboats, sailing vessels, and boats, heaped one over the other with an utter disregard of every law of composition. All are apparently bearing down on a figure of Neptune, who brandishes a trident to keep them off. The left bas-relief celebrates the hero’s railroad enterprises. It is a wonderful composition, representing with hideous conscientiousness of detail, locomotives drawing trains up hill, a house, a rural landscape, bales of merchandise, dogs, and oxen, and it is flanked by a figure of Liberty, who, with rigid limbs, gazes in mild astonishment at the heterogeneous articles over which she presides. The unveiling elicited but little applause—for an American crowd does not know how to shout—and the Mayor commenced his oration. His effort, I see in the newspapers of this morning, is described as sublime. There is, we know, but one step from the sublime to the ridiculous, and that step is reached a little sooner with us than in New York. The speech contained little except bombast and high flown metaphors, and whenever these failed him, the orator paused a moment, passed his hand through his hair, looked meditatively up to the statue which faced him for inspiration, and then apostrophised it. The following will serve as a specimen of the civic eloquence of this country; the Mayor, as he delivered himself of it, assumed the rapt air of a seer, and pointed with uplifted arm to the sky:—“Stand there, familiar image of an honoured man! Stand there, and breast the storms, or glitter in the sunshine of coming centuries! Stand there, colossal subject of metropolitan pride. (A voice “Bully for you.”) Stand there and daily teach the lessons which the results of your own long life inspire. (The same voice “You are the chap to rub it into him.”) Stand there and tell those whose industry has been crowned by wealth, that the honours of life and the praise of future generations follow those, and those only, who make the world the better for their living in it.” After this magnificent burst the Mayor resumed his hat, and subsided into private life. He was born, need I add, in the “green island.” Then followed an episode, which reminded me of many a familiar scene in my native land. Few who have attended the election meeting of a candidate for parliamentary honours will not remember the old man who rises from among the audience, and feels himself obliged to offer his testimony in favour of the candidate, who many years ago called upon him, and finding him with his wife and children starving, relieved the unfortunate family. The old man has never mentioned the circumstance before; but, having come by accident to the meeting, and having understood that some portion of the constituency are unable to appreciate their good fortune in having such a candidate, he feels it incumbent upon him to break through the silence of years. Such an old man costs about one dollar and an old coat. No good electioneering agent carries on his campaign without having one to produce at the proper moment. In all connected with the mise en scene of popular demonstrations the Americans can give us points, and so, when the Mayor sat down, an old man—I had been expecting him—raised his voice from among the crowd, and in a spontaneous outbreak of gratitude testified to Commodore Vanderbilt’s numerous virtues. This little theatrical interlude over, De Groot re-appeared, holding by the hand a wild-looking being, with corkscrew ringlets, like Mr. Disraeli, and that general untidiness of dress which denotes genius. This was the poet, William Ross Wallace—a name as yet unknown to fame. The bard cleared his throat, drew forth a portentously large manuscript, stuck an appropriate attitude, and then, suiting as he went along the action to the word, smiling sweetly when he became sentimental, balling his fists and stamping his feet when he became grandly impressive, and gazing aloft when he became reverential, he recited an “ode.” This is the poet Wallace’s notion of harmony and metre:

Mighty monument to Conquest—so the Great Republic cries,
Power orbed on her vast forehead, earnestness burning in her eyes;
Well it is my myriad children, with such thoughtful gladness hail.
Thus thy miracle of dreamings, now resplendent from the vail.
Well, it is the Soul of Music, with a shout of triumph leapt,
And o’er all the New World’s Banner a new benediction swept.
For a conquest inspiration thou art, with no carnage dye—

This gifted child of song poured forth verses equal in poetic beauty and literary merit to his opening stanzas for about half-an-hour. When he ceased, De Groot shouted out, “Hats off,” a clergyman pronounced a short benediction, and the august ceremony was over.

I conclude with one more quotation from Mr. Adams, which is not inappropriate to the occasion:

It is not, however, in connection with the present that all this has its chief significance. It speaks ominously for the future. It may be that our society is only passing through a period of ugly transition, but the present evil has its root deep down in the social organisation, and springs from a diseased public opinion. Failure seems to be regarded as the one unpardonable crime, success as the all redeeming virtue, the acquisition of wealth as the only worthy aim of life. Ten years ago such revelations as those of the Erie Railway would have sent a shudder through the community, and would have placed a stigma on every man who had had to do with them. Now they merely incite others to surpass them by yet bolder outrages and more corrupt combinations. Were this not so, these things would be as impossible among us now as they are elsewhere, or as they were here not many years ago. While this continues it is mere weakness to attribute the consequences of a lax morality to a defective [currency], or seek to prevent its outward indication by statute remedies. The root of the disease is deep, external applications will only hide its dangerous symptoms. It is well to reform the currency, it is well to enact laws against malefactors; but neither the one nor the other will restore health to a business community which tolerates successful fraud, or which honours wealth more than honesty.

Mr. Adams is the grandson and the great grandson of a President of the United States. His family name is a household word here for all that is noble and honourable. In publicly denouncing, in no covert terms, the utter rottenness of everything in New York, he has shown great courage, and it is to be hoped that his book, which is being read by thousands, will force the inhabitants of this city, from very shame, to crush out the corruption which is eating into the core of their commercial and political institutions. Amazement and indignation, unless followed by some persistent effort at reform, are of no use. Public opinion must be aroused to healthy and persistent activity, honest men must combine against knaves, if this community is not to become a reproach to modern civilization, and a stumbling block to the universal recognition of the great principle of self-government.

[The Daily News, 3. Dezember 1869]

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AMERICAN CURRENCY AND TRADE.

(FROM A CORRESPONDANT.)

NEW YORK, Nov. 16.

The recent gold flurry in Wall-street has not been without good results. It has brought home to all classes the changers of a fluctuating standard of value, and has convinced most persons that the present monetary system of the country is radically unsound. The retail cost of articles and the price of labour do not follow the ups and downs of the gold market. Importers consequently find that, while they are obliged to pay heavy duties in coin, the relation of which to greenbacks alters every week, they only receive from their customers a fixed value for their goods. The importing trade consequently has become a speculative one, and men of sterling business habits are deserting it. The Western farmer, too, has discovered that, as long as the price of his corn depends upon the quotations in Mark-lane, while he has to pay for everything connected with raising it in an inflated home currency, his whole gains, as is the case this year, may be swept away by a fall in the price of gold. But the difficulty of basing any commercial enterprise upon an irredeemable paper currency is not confined to importers and farmers—it affects every species of contract, and introduces a gambling element into every business transaction between man and man. Since the war, the number of legitimate banking and commercial firms has materially decreased, and the number of brokers and Wall-street “operators” has enormously increased. Such is the distrust which is felt by financialists towards the whole commercial system of the country, that, while money may be obtained on collateral security for stock-jobbing operations at seven cent., prime commercial paper cannot be discounted under 12 per cent., and many perfectly solvent firms are obliged to pay as much as 24 per cent. for temporary accommodation, a rate which of course swallows up all their profits. Under these circumstances all are agreed that something must be done, although few agree what that something is to be. In many of the newspapers it has been proposed to follow the example of California, and to quote values and make all contacts in gold, receiving greenbacks at their discount value. This would, indeed, bring home to |[54] the community a realisation of the actual worth of their investments, and it would eliminate from contacts their speculative element, as far as regards a standard of value; but it is difficult to suppose that it would effectually remedy the existing state of things, even if the Treasury were to consent to buy Government bonds in gold, instead of going through the double process of first buying greenbacks in the market, and then buying the bonds with the greenbacks.

Another plan, which it is reported is favoured by President Grant, is to announce the purchase of 50,000,000 dollars bonds for gold. This amount of coin thrown on the market, in addition to the 26,000,000 dollars in the banks, would, it is thought, place greenbacks on a par with gold, when the circulation would be increased by all the gold in the country, which would then come into circulation. This scheme is not favoured by any sound financial authorities, because it is evident that its effect would be but temporary, and that, between coin of a real intrinsic worth and promises to pay at some vague indefinite period there can be no permanent equivalent in value. But while commerce and enterprise are paralysed by the existing monetary system, and by the uncertainty in the public mind as to the future financial policy of the Government, the future will, very probably, be still more complicated by a decision of the Supreme Court of the United States, which will be made public in January next, and which will involve the constitutionality of the Legal Tender Act in time of peace. It appears to be the prevailing opinion that the court will decide that the Act was a war measure, and that, in extending its operation after the restoration of peace, Congress has exceeded its constitutional powers. Such a decision, unless preceded by some legislation to meet it, would bring commerce to a dead lock. Until the Treasury and the banks pay out gold it will be impossible for the community to do so. The banks have but a small amount in their vaults, and the Treasury is subject to the direction of Congress. Should the decision of the Supreme Court be adverse to the Legal Tender Act, it will be called upon to decide upon a second question of almost equal importance—are debts contracted in greenbacks to be paid in gold, taking greenbacks and gold as equivalent in value, or are they only worth their value in gold at the time they were incurred? A recent decision of the court has created an impression that the latter will be its opinion. A short time ago an action was brought by a creditor for a debt which had been incurred during the rebellion in Confederate notes. The court decided that “we are clearly of opinion that, in order that justice may be done between the two parties, the party entitled to be paid in these Confederate dollars can only receive their actual value, at the time and place of the contract, in lawful money of the United States. Were this theory of indebtedness to be applied to all greenback contracts, coupled with a decision that greenbacks are no longer a legal tender, it is difficult to estimate the confusion that would follow. Take, for example, the case of a railway company—it would only be required to pay its bonds in an equivalent in gold at the time that they were issued. But these bonds are, in most instances, no longer in the hands of the original holders, consequently existing investors in what is considered here the least speculative investment would find themselves mulcted of a portion of their capital. In view of this contingency it will be additionally necessary, therefore, for Congress, as soon as it meets, to take the whole subject of the currency into consideration. The Legal Tender Act has been called a war necessity, but it was financially a mistake. Whenever a Government tampers with its currency it creates a deep-seated feeling of distrust in its honesty. Had this Act never been passed, the United States would have been able to borrow money on far less onerous terms; nor will it ever be able to fund its debt at a reduced interest until it is abrogated. States and railroad companies which have borrowed money since the war have been obliged to pay 8 and 10 per cent., because foreigners will not invest their savings in a country where the principle is maintained that the standard of value in which they lend their money may be legislatively altered. Sir Robert Peel conferred a benefit upon England by telling us what a pound meant, and an American Minister of Finance who will state in clear and unmistakable terms what a dollar means, and what it will mean in future, will confer an equal benefit on his country. How is it to be expected that loans will be contracted on anything but usurious terms in Europe by either American States or American railways, when the European investor has before him the example of Pennsylvania? That wealthy State borrowed, before the war, money in England at 5 per cent.; the loan was a sterling loan, and the interest was payable in sterling. Taking advantage of an Act of Congress, it paid interest and a portion of the principal of the debt in a depreciated paper currency. The United States now finds itself in a position in which it cannot remain, and yet from which an exit is by no means easy. The problem of a resumption of specie payments is a most difficult one. When Mr. M‘Culloch attempted gradually to reduce the volume of irredeemable notes, he was obliged to give up the attempt, because he found that those which were withdrawn were not replaced by any other circulating medium, and this will ever be the case as long as any contradiction is based upon the notion that gold will be released, and be given as an equivalent for paper which is not worth its nominal value. Some plan must be devised which will enable the Treasury gradually to withdraw the greenbacks, and at the same time cause those which remain in circulation to be an equivalent in value with what replaces them, which in its turn must be an equivalent as regards its nominal value with gold. The best scheme which I have seen suggested is this—1st, to extend the facilities to banks to put notes into circulation convertible on demand into gold, and, as these notes are issued, to cancel an equal number of greenbacks. 2nd, to make greenbacks a legal tender for sums only not above 1,000 dols. 3rd, gradually to accumulate a sufficient amount of United States securities as to be able, at some future period, by selling a portion of them for gold, to make greenbacks redeemable in specie—this would not require a very great amount, because a large number of the notes would be absorbed into the circulation. With respect to the question of the payment in gold of debts contracted in greenbacks, it would be well to fix the relation between these two values, and in order to prevent any general liquidation in view of a resumption of a specie basis, to allow interest and principal of debts which have been contracted in them to be paid in gold, with a reduction of 10 per cent.|

[55]

The other financial question which will occupy Congress will be that of the tariff. The report of Mr. Commissioner Wells has produced a profound effect, and Free Traders are increasing in number every day. The Tribune, the principal advocate of the Protectionists, is reduced to assert that the gold of British manufactures is producing this change in public opinion. But as the manufacturers who profit by Protection are in a small minority, while the majority of the nation suffers by it, there is no cause for surprise that the doctrine should have caused to be popular. The manufactures are endeavouring to enlist the patriotic feelings of the masses on their side. They ask whether American citizens are to be made to work for the wages of European slaves, and whether this vast country, with all its resources, should be dependent upon other nations? But the working-men here find that high wages do not mean prosperity, when the cost of every article of consumption is quadrupled; and with regard to the second appeal, they pertinently ask, as I somewhere saw, whether a man should black his own boots when he can employ his time more profitably. The only hope for the Protectionists lies in the necessity of raising a large revenue, and in the difficulty of doing this by means of internal taxation. If Congress decides that the revenues of the country can be reduced, an effort will be made to abolish the income tax, which, on account of its inquisitorial character, is most unpopular; and if this proves successful, the duties will remain as they are.

With a sound system of currency, and reasonable reduction of duties on imports, there is little to fear for the future of the country. The tide of emigration has not ceased to flow to its shores; every year increases the area of its cultivated land; in all parts railroads are being built, and throughout the West new towns and villages are springing up. Within two more years, provided the cotton crop is an average one, the South will be as rich, if not richer, than before the war. Formerly only wealthy men could engage in the cultivation of cotton, because it required a heavy investment of capital in negroes; at present men of moderate means do, and can, engage in it. Since the close of the war the Southerners have expended nothing in luxuries, and this saving alone will make up for all they have lost by the devastations consequent on the presence of hostile armies on their soil. Georgia and Alabama bid fair to become, in proportion to their population, two of the richest States in the Union; and even Virginia, which was the greatest sufferer, will shortly resume her legitimate position. In North Carolina, which is termed “the meanest State in the Union,” the value of real estate is more than double what it was twelve years ago.

One of the healthiest signs for the future commercial prosperity of the country is the indignation, which is daily increasing, against all those connected with the management of the Erie Railroad. The disclosures which have been made, both here and in Europe, respecting the mode in which a great commercial enterprise has become a pasture for thieves and scoundrels, who appear not even to care to assume the semblance of honesty in their depredations, has at length roused public opinion. It is felt that, for very shame, an effort must be made to bring them to account, and to show the world that their proceedings are the exception, and not the rule of conduct here. It was expected until very lately that proceedings would be instituted against them by Mr. M‘Henry, of Atlantic and Great Western fame. This gentleman, who had leased the Atlantic and Great Western to them, and who found that they paid him no rent, and that Mr. Gould, the president of the Erie Railroad, had been appointed receiver, went to Ohio, and there brought an action to cancel his contract, and to eject Gould from the receivership. In vain Gould filed an affidavit that he was not interested in the Erie line, and endeavoured to delay proceedings. The courts in Ohio, unlike those of New York, refused to listen to him. After a short struggle he resigned the receivership, and agreed to terms of composition respecting the railroad which were considered satisfactory by M‘Henry. This suit, which would have obliged the directors to put in a statement of their accounts, has thus been quashed. There are not wanting, however, gentlemen in New York who are prepared to act with the foreign holders of Erie stock to endeavour to turn out the present directors of the line, and, in the interests of the commercial honour of their city, they are prepared themselves to bear all the expenses of the war. The difficulty, however, in the way of action is that most of the common and preferred stock is held abroad, and that the shareholders will not act together. Most of them have not even sent over their stock to be transferred to their names, so that at a general meeting Messrs. Gould and Fisk hold the proxies of shares which belong to persons who would, if they voted at all, vote against them. I recently had a conversation with an eminent lawyer here on the subject of the prospects of success in any litigation which might be entered into by the shareholders. He told me that the safest plan would be the following: the preference shareholders have long been defrauded of their dividends; they might, as foreigners, institute proceedings in the District United States Court in Pennsylvania, through which State the Erie line runs for about 40 miles. The District Court, on their affidavit that the line has earned enough to pay them a dividend, would call upon the directors to put in their accounts, in order to invalidate the assertions in the affidavit. These accounts do not exist, and consequently would not be forthcoming, when the court would place the railroad in the hands of a receiver, who would soon be able to produce evidence of the depredations of the directors, and then criminal proceedings would be instituted against them. The reason why the action ought to be brought in Pennsylvania is, because there is no fear in that State of any State tribunal issuing an injunction to stop proceedings, whereas this would probably happen in New York, where the judges are the nominees of Tammany Hall, the Democratic Club, several of whose principal members have seats on the Erie board. By this means the preference shareholders might double the present value of their property. With respect to ordinary shareholders, their case is, I fear, a bad one. Nothing astonishes the American commercial public more than the way in which any number of these shares which are sent over to Europe are eagerly bought up at prices averaging from 25 to 20. As long as this continues Messrs. Gould and Fisk will print off shares, and by selling them abroad provide themselves with funds with which they will defy their own shareholders either to oust them or to punish them. The shares are, I presume, bought by English speculators, in the expectation that some time or the road will fall into honest hands, when their value will rise in the market. But even with the most honest and skilful administrators it is very doubtful whether even 1 per cent. could be paid on their par value. The following is the financial statement of the directors for the year ending 1868:—Capital—Common, 37,765,300 dols.; preferred, 8,536,910 dols.; total, 46,302,210 dols.; bonds and mortgages, 22,243,000 dols. The gross earnings of the road during the year amounted to 14,376,872 dols.; of this sum, 11,132,289 dols. was spent in working it, being 77.43 per cent. of the gross earnings, leaving a net revenue of 3,244,583, dols. The earnings per mile were 20,887 dols., and the expenses 16,173 dols. The profit per mile was consequently 4,714 dols. The income account for the same year is as follows:—Interest on bonds, 1,687,268 dols.; rents, railroads and docks, 703,393 dols.; taxes, 343,503 dols.; total (with several other smaller items), 3,221,911 dols., leaving 22,672 dols. to be divided between the shareholders of common and preferred stock, against which is to be set an item for “accounts payable” of 6,237,326 dols.

During the present year the common stock has been increased by new issues. It now amounts, according to the statement of the directors, to 70,000,000 dols., instead of 37,765,300 dols. But it is generally supposed that in reality it amounts to about 80,000,000 dols. Besides this, there is a floating debt of about 2,000,000 dols., 5,000,000 dols. convertible bonds have been issued, and there is every probability that the number of the preference shares has been largely increased. New locomotives and cars, too, are required, the cost of which is estimated at 4,000,000 dols. Now, the floating debt must be paid, and the cars and locomotives must be bought; and this can only be done by the issue of new shares, under the guise of convertible bonds; and as the shares are at present at 30 (in currency), in order to obtain the required 24,000,000 dols., it will be necessary to issue 80,000,000 worth of shares. I leave to the shareholders of common stock the task of calculating the amount of interest which, when Messrs. Fisk and Gould are replaced by honest men, these shares are likely to pay, and I recommend all those who are not in their predicament to weigh these facts before they become purchasers in Erie at any price. Were I to hazard a prophecy, I should say, that eventually the Erie railroad will be sold for the value of its mortgages, its preference share capital, and its floating debt. It is 557 miles long, it runs through the most populous portion of the State of New York, connects this city with the lakes of the West, the South-West, and with Canada; the cost of working it, to judge by the Vanderbilt lines, may be reduced to 69 per cent. and on a capital of about 50,000,000 dols., it will pay a fair dividend.|

[The Daily News, 13. Dezember 1869]

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OVEREND AND GURNEY PROSECUTION.

TO THE EDITOR OF THE DAILY NEWS.

SIR,—A paragraph has gone the round of the newspapers to the effect that as the prosecutor will not be allowed to appear for himself the defendants will be discharged on Monday next within the hour. If the accused individuals and the presiding judge are willing to accept such a conclusion, I feel very reluctant to become, even passively, a party to a proceeding which, whatever may be the merits of the case, will be at once a mockery of truth and a defeat of justice; I am, therefore, inclined to choose the less of two evils by sacrificing myself rather than my indictment on the altar of an imaginary technicality; in that event, to say nothing more of my personal feelings, I shall, at least, save our penal jurisprudence from the grave charge of conniving at a scandal which, if so condoned, may set an example to many a scandal even worse than itself.—I am, &c.,

ADAM THOM.
Dec. 11.

[The Daily News, 15. Dezember 1869]

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THE OVEREND, GURNEY, AND CO. PROSECUTION.

[Dec 15]

The trial of the Overend and Gurney directors was resumed yesterday morning, shortly after ten o’clock, in the Court of Queen’s Bench, at Guildhall, before the Lord Chief Justice.

The court was not nearly so full as on Monday, when a large number of barristers were attracted by curiosity to witness the opening of this celebrated case, and the public was largely and eagerly represented, even on seats where hearing was next to impossible.

Mr. Lewis, of the Joint Stock Companies Registration Office, produced the memorandum and articles of association, and other documents connected with the registration of Overend and Gurney Company (Limited).

A good deal of discussion took place between counsel and the Judge with regard to the production of the minute books kept by the directors.

Mr. Harding, official liquidator, having been called for the purpose of producing these books, stated, in reply to Mr. M‘Mair, that he was appointed to that office under the winding-up order. He then produced the minute books, and extracts from the minutes of several board meetings held shortly after the formation of the new company were read.

A certified copy of the prospectus having also been produced by the same witness.

Mr. Charles Edward Jones, solicitor to the defendants, produced the original deed transferring the business of the old company to the new one, and proved, as the attesting witness, the execution of it by the defendants. He also produced the second deed.

The Solicitor-General said that as the witness was the gentleman who prepared the deeds he wished them to examine him in order that he might give explanations with respect to them.

The Lord Chief Justice thought it would be best to have the deeds read first and explained afterwards.

Dr. Kenealy said he had always understood that in such a case all that was necessary was to put in the documents.

The Lord Chief Justice observed that the court had to consider quo animo the deeds were made, it being alleged that there was a fraudulent intention on the part of the defendants.

Dr. Kenealy remarked that the documents could speak for themselves.

The Lord Chief Justice said if the court know what instructions were given by the defendants, it would then be in a position to judge how far the charge was borne out.

Sir J. Karslake said there was a third deed, to which neither Mr. Gordon nor Mr. Rennie was a party.

Cross-examined by the Solicitor-General—I myself hold 100 shares in the company. In June, 1865, I learnt from Mr. J. H. Gurney that there were certain negotiations pending for the formation of a new joint-stock company, the intention being to purchase the business of Overend, Gurney, and Company, and I was requested to attend a meeting of the members of the old firm, and some other gentlemen who were to form a new company, at the house of one of the partners, in the St. James’s-square. I was never aware of any negotiations with the National Discount Company. The gentlemen present at the meeting were Mr. J. H. Gurney, Mr. Henry Edmund Gurney, Mr. Robert Birkbeck, Mr. Gibb, Mr. Gordon, and Mr. Rennie. I do not recollect any one else. I did not know Mr. Gordon before, but I believe he was a merchant well known in the City. Mr. Rennie, I believe, was also a merchant in City and was a customer of the firm. He had no interest in the concern. Mr. Gordon was a friend of Mr. Rennie. These men, as far as I knew, were men of position and wealth. So far as I remember the prospectus was the principal topic. The price of the good will of the old firm was discussed. The new company were to have the assets turned over, and were to be guaranteed against losses from the assets being taken over. There was a certain class of assets,—claims on estates in liquidation—which it was not considered expedient to pass over to the new company. They were to be got in by the old firm. Three years and a half was fixed as the period for winding up these claims.

The Lord Chief Justice—What had the new firm to do with that?—They were guaranteed to the new company by the old firm.

The old claims were to be wound up by the old firm, and the proceeds were to form part of the funds of the new company?—Yes; they were to be paid to the new company from time to as they came in. The deficiency was to be a balance against the old firm, and the old firm was to pay interest upon that balance. It was in point of fact a credit.

You say the proceeds as they came in would go to the new firm, and then in the end, if there was a loss, by which I suppose you mean a deficiency, that was to be made up by the old firm?—Yes; there was to be a suspense and guarantee account, and the old firm was to pay interest. In point of fact it was to be a credit.

The Lord Chief Justice—It comes to this, that the new company are to have all the assets; but whereas there are some doubtful ones, those shall not be made over to you; but we will undertake that as they are realised from time to time, the amount shall be paid to you, and as between you and us, the difference between the nominal value and that which they realise, we will guarantee it.

The Solicitor-General—That is it.

The Lord Chief Justice—Shortly, it is this—We guarantee you that the four millions of assets shall realise four millions?

Witness—Yes.

The Solicitor-General—Can you tell me at what sum these four millions were valued at the time of the negotiations? What they were expected to realise?—Something over a million.

And the difference was the subject of a guarantee?—The subject of a guarantee.

Was there a valuation made at the time of the private property of the individuals of the firm, as well as of the property in Lombard-street?—Yes, I believing there was.

Did the discussion proceed on the footing that there would be a considerable surplus?—It did. I was at Mr. Gurney’s, in St. James’s-square, also on two or three subsequent occasions. On the second occasion a prospectus was produced, and that was given to me for the purpose of getting it printed. I think proofs were given to each of the directors for the purpose of corrections. When the prospectus was settled I was instructed to prepare the memorandum and articles of association, and whatever was necessary to carry out what was agreed upon. In consequence I put myself in communication with Mr. Braithwaite, who has large practice in that class of conveyancing. I gave him a copy of the prospectus, and gave him verbal instructions to prepare a deed or deeds for the transfer of the business, explaining to him at the same the arrangement with reference to the accounts that were not to be transferred, and the guarantee to be given by the old firm. I saw him more than once. I was once accompanied by Mr. J. H. Gurney, who came with me to explain the mode of applying the proceeds of the separate accounts, and the technical mode of keeping the accounts. I did not give instructions to prepare two deeds instead of one. It is always left to the conveyancer to determine whether there should be one or more.

Did the Messrs. Gurney, or any of them, give any instructions whatever that there should be two deeds?—Certainly not. I got two drafts of deeds from Mr. Braithwaite. As soon as I got them I had them copied, and took them to Mr. Gordon and Mr. Rennie, in Lombard-street, and asked if I should go through them with them. |[57] Mr. Gordon said it would be more satisfactory that the deeds should be looked over by some independent attorney on behalf of the purchasers. I left the drafts with Mr. Gordon for that purpose, and he promised that they should be looked over by Mr. Messrs. Wilson and Carpmael, the solicitors to the Oriental Bank, of which he was chairman. There were several meetings between the counsel on both sides, and this took some little time. On the 11th of July the first deed was still unsettled, and the second deed had not at that time been touched by Mr. Fooks, the counsel. The prospectus was issued on the 12th of July. On the 12th of July I got a meeting with Mr. Wilson. Inasmuch as the brokers thought it absolutely necessary that we should have the deed mentioned in the prospectus, I got the draft settled at once.

In consequence of this was it that the first deed assumed its present form?—It was.

And it was left at your office to be consulted as the deed of contract?—Yes, the draft was.

Was it some days after that that the second deed was settled between Mr. Fooks and Mr. Braithwaite?—It was. There was a good deal of discussion between them, and it was finally settled between them about the 25th of July. They were afterwards executed together on the 27th of July.

Do you remember whether it was discussed at those meetings whether the members of the old firm should contribute to a greater or less extent according to their means if there was a deficiency?—It was so understood.

When Mr. Boyes, the secretary, applied to you for the deed to be shown to the members of the Stock Exchange, which deed did you send them?—The first.

Why did you do that?—Because I conceived it was the contract between the vendors and the new company.

Had any of the defendants anything to do in giving you instructions to do that?—None whatever.

Had you any motive or intention whatever to conceal the second deed?—None whatever; there was no concealment about it.

Then I take it that, in sending the first deed to the Stock Exchange, you did it on your own judgment and responsibility?—Entirely.

Were you, shortly after the formation of the new company, instructed by John Henry Gurney to prepare a deed between the partners of the old firm of Overend, Gurney, and Co., appropriating shares among them, and fixing their proportions?—I was.

Did it appear to you at that time that there would be a very large surplus after all the debts were paid?—The figures were not before me at the time, but I understood that the surplus would be large if the estates were disposed of.

What was the estimated amount of the surplus?—700,000l.

Did you know as a fact that John Henry Gurney had 10,000l. a year?—Yes, and a great deal more.

Dr. Kenealy having objected to this kind of testimony,

The Lord Chief Justice observed that if the case were a civil one the defendants would of course have an opportunity of making their won statement, and it seemed to him that their private solicitor, who as such was acquainted with the state of their affairs, should say what he knew about them. The witness must of course confine himself to what was within his own knowledge.

The Solicitor-General (to witness)—Do you know that the whole of John Henry Gurney’s property was sold?—Every shilling’s worth of his private property has been sold, and what was realised has been paid into the concern. Mr. Edmund Gurney’s property was sold for 170,000l. or 180,000l.

Cross-examined by Mr. Serjeant Parry, who appeared for Henry Ford Barclay—Mr. Barclay became a director at the last moment, just before the issuing of the prospectus. He was then a director of the Cable Construction Maintenance Company. He signed the articles of association in rather a hurry, being about to go away in the Great Eastern, which was to lay the Atlantic Cable. The first meeting of the directors at which he was present was held on the 8th of August, 1865. He was not present at any of the discussions about the prospectus, and his name did not appear in it. I had instructions to prepare a third deed, dated the 2nd of August, in consequence of a stipulation on the part of Mr. Barclay that in the event of the bankruptcy or death of either of the parties, before three-and-a-half years had elapsed the estates should be realised without waiting. The object of that third deed was to afford greater security to the new company. Mr. Barclay held 1,000 shares, and I understand that he held them to the last. I don’t know of my own knowledge that he has paid 45,000l. upon his shares. The third deed was not actually executed till September.

Cross-examined by Sir John Karslake—No promotion money was to be paid. Mr. Gordon had independent legal advice. After the draft was prepared I saw him at the Oriental Bank. I left a copy of the draft with Mr. Gordon and Mr. Rennie, on the understanding that it would be placed in the hands of their own solicitors.

Re-examined by Dr. Kenealy—Was solicitor to the two Messrs. Gurney and Mr. Birkbeck. Had an interview with them before the Limited Company was brought out, about the prospectus. That document was the principal topic at the first meeting of the Overend and Gurney directors. There was a general conversation about a surplus, the calculations with regard to which were based on some figures that were not produced. Thought it was Mr. Barclay who introduced the question of a surplus. The directors had satisfied themselves that there was a surplus. Did not remember any discussion on the point; the thing was taken for granted.

Were you aware that the concern had been losing half a million a year for some years?—I was aware that there had been large losses, but was not aware of their extent.

Examination continued—Did not recollect the defendants making any allusion to their losses, but was aware at the time that they had been losing considerably.

Did it not occur to you to ask them what their losses amounted to?—I understood that they had satisfied themselves that the guarantee would be perfectly ample, and that there would be a surplus.

Did they say so?—On a subsequent occasion. The subject at that time was the settlement of the prospectus.

Why did it not occur to you, when they were promising a guarantee, to question them about their losses?—Because I was perfectly satisfied that they had a surplus.

Did you say nothing about their assets or liabilities?—No; I simply asked for the form of prospectus; it did not fall within my province as a solicitor to question them about their assets.

Was not the 4,000,000l. part of the assets made over to the new company?—No; I did not consider so.

Examination continued—Gave the prospectus at once to counsel, with whom he had two or three interview. His instructions to Mr. Braithwaite were based on the prospectus. Mr. Braithwaite considered two deeds necessary for carrying out the transfer and the general arrangements, and he should not think of dictating to counsel in such a matter. Very material alterations were made in the drafts. The prospectus was issued as soon as possible after the preparation of the original deeds, because there was a general election pending, and the directors thought that if it did not come out at once it might have to be put off for months. Mr. Fooks was a possible candidate.

Have you ever known any other case in which several deeds were prepared?—I have known no other case similar to this. Believe that the Stock Exchange require that all the documents connected with the transfer of a business should be laid before them. The second deed did not seem to him material in reference to the transfer. It was not at variance with the first deed. The provisions of the second deed were in conformity with those of the first; they were collateral, that was his view.

Reading the first deed as a lawyer, would you not have supposed that the assets were to be realised within a short period?

The Solicitor-General objected to the question!

Dr. Kenealy thought it was necessary, as tending to show whether the two deeds were antagonistic.

Was there anything, in your opinion, in the first deed to show that the assets would not be realised within a short period?—No.

The Lord Chief Justice observed that the second deed referred to the first.

Sir J. Karslake said it excepted such accounts as required to be excepted.

The Lord Chief Justice remarked that by the first deed all the old assets were to be transferred under a certain guarantee, while the second provided what should be done in case the new company declined to take those assets. The old company was to get what it could for those assets within three and-a-half years, and pay it over to the new company, and any difference between the assets realised and the amount transferred was to be made up out of their private property. The value of the assets to the new company depended on the value of the private property of the guarantors.

In further examination, the witness denied that when some shareholders visited his office on one occasion to inspect the original deed, two other deeds were kept back. What they saw was, he said, three drafts of the same deed.

In reply to the Lord Chief Justice, the witness said the private estates sold after the stoppage realised 1,800,000l.; adding that they are sold under disadvantageous circumstances, and when money bore a high rate of interest.

Sir J. Karslake read passages in the second deed, to show that the 500,000l. to be paid for the good-will and the guarantee out of the private estates were carried to a suspense account.

Mr. Vallancy Lewis and Mr. Ernest Robinson were then called, but neither of them answered.

Dr. Kenealy said these witness were intended to prove the bankruptcy of some of the debtors in the excepted accounts, but perhaps the proceedings in bankruptcy would be admitted.

The Solicitor-General said the defendants being charged with conspiracy ought not to be called upon to admit anything.

The Lord Chief Justice said this was a part of the case where, having proved the prospectus, they might call persons who were induced to take shares from having read it.

Dr. Adam Thom was then called, and examined by Mr. Moir. He said—I am a member of the Canadian bar, and now reside in this country. On the 13th July, 1865, I purchased 60 shares in Overend and Gurney (Limited), but before I did so I got a copy of the prospectus from my brokers and took it back to them the next day. I produce the certificate of the shares. They run from 45,430 to 45,489, and though I was only a transferee they are all made out in my own name. They bear date the 15th November, 1865, the last day on which the instalment was payable. I paid 900l. in all—420l. to my bankers, and 240l. twice over to Barclay, Bevan, and Co., the bankers appointed by the company. Since the stoppage I have paid 1,500l. in calls. I was induced to take shares from the statements in the prospectus and my knowledge of the respectability of the partners, more particularly Mr. Gordon. One of the inducements to me to take shares was the first clause in the prospectus that 15l. a share was all that would be required, and for that reason I took exactly as many shares as I had funds for. Then another clause that I thought favourable was that Mr. Gordon, who was chairman of the Oriental Bank, was to be a director, and that three of the members of the old firm were to be directors of the new company. I was also influenced by the high hereditary character of the house. The stoppage of the company took place on the 10th of May, 1866. On the 11th of June, 1866, I was present at a meeting of the shareholders held in the largest room of the London Tavern. Mr. John Henry Gurney, after some question, was placed in the chair. A voice asked whether all the directors were present, and Mr. J. H. Gurney replied that they were. There were 500 or 600 persons present, whether they were all shareholders I did not know. During the proceedings I put some questions. I asked Mr. Jones whether any pains had been taken to ascertain the value of the private estates of the partners before the transfer. No answer was given, other business was going on. I repeated my question a second time, and then I asked a third time, and then Mr. J. H. Gurney was about to answer, but I said I could not receive an answer from him. After Mr. Jones had said what he intended to say, Mr. William Rennie rose and stated, in terms which I do not specifically recollect, that they had estimated the value of the assets, he and his friends the new directors, and after estimating the value of the assets, and some other items, such as the goodwill and the value of the buildings, there remained a deficit of about 1,400,000l., and that without investigating the value of the private estates in any way whatever, he and his colleagues had assumed that they must be worth at least 1,400,000l. I rose immediately, and asked whether I was to understand that the private estates were to answer only the 1,400,000l., or they were to be applicable to any deficiency that might occur; and the answer was—from whom it came I cannot say—that the private estates were liable to an unlimited extent. Mr. Rennie stated, I think, nearly at the beginning of his address, that what the company wanted at the time of the transfer was fresh capital; and he also stated, as a proof of the good faith of the directors, that at the time of the collapse every one of the directors had been a |[58] large shareholder and depositor. There was also something said by Mr. John Henry Gurney which I had rather not state, as it came in the nature of a confidential communication. No documents were produced. The great point before the meeting was as to the private estates. Mr. Lawrence, a solicitor, stated that the private estates would be in our hands in the course of a month. I had no information of the state of the company. I had made up my mind to a total loss, and went to the meeting more from curiosity than anything else. A committee of investigation, or defence association, was appointed, and I was the chairman of that association. It had its origin in some Chancery proceedings of Mr. Dundas. I had no knowledge of a second deed. I first heard of it about the 7th or 8th June, 1866. The meeting was held on the 11th June, and the report of the liquidators, which was issued a few days before, spoke of it, and of a suspense and guarantee account. I did not see the first deed before I became a shareholder. After I had made up my mind to take shares I called at Mr. Jones’s office, in Mildred-court, to look at the deed, and I was told that the deed had been removed from that office to 65, Lombard-street, the office of the bank, immediately after the allotment. This was on the 4th August, 1865; the allotment, I believe, had been made somewhere about the 30th of July. I made no further inquires about the deed. I did not see the first deed, but I saw the second. I saw them both together about the beginning of September, 1866. If I had seen the second deed before I became a shareholder I should not have become one. Viewing the first deed by itself, I should not be alarmed at the expression, “excepted accounts;” but in the second deed I found excepted accounts under the head of suspense and guarantee accounts. The character of all the items in the second deed would have staggered me, although the amounts were not stated. Beyond that, there is a postponement of personal guarantee in the second deed which would have alarmed me. In the original deed there is nothing about postponement till the 31st of December, 1868. There is clearly a discrepancy between the guarantee as given in the first deed and the guarantee as postponed in the second.

Sir J. Karslake objecting to the course of evidence,

The Lord Chief Justice said he thought the witness was entitled to refer to the sections as the ground of his position.

Witness continued—The first, thirteenth, and seventeenth sections and the schedule would together. I am quite satisfied, have deterred me from taking shares. As chairman of the committee of investigation, I have paid special attention the accounts of both the old and the new company.

The witness being about to refer, as was understood, to some figures of his own,

The Solicitor-General objected to such a mode of proceeding, observing that the witness could only refer to Mr. Harding’s (the liquidator’s) balance-sheet.

Dr. Kenealy contended that the witness, having examined the accounts, was entitled to give the result.

The Lord Chief Justice thought he could only refer to the statements of the official accountants.

The Solicitor-General admitted that the witness had a right to refer to accounts, but maintained that he should not be allowed to make a speech upon them.

Cross-examined by the Solicitor-General—I felt this country in 1832, and returned to it in 1839, and again in 1854. I was appointed chairman of the Shareholders’ Defence Association. I subscribed nothing; I gave my time and labour. I did not take the defendants into Chancery; Mr. Dundas and Mr. Peek did that. I believe there were affidavits in the proceedings, but no answers.

Are you master of your own situation?—Perfectly so.

Are you permitted to be so?—If I were “permitted” I should not be master of it.

Have you “in that spirit of fair play which is part and parcel of your being” refused to let the defendants have the full benefit of their own affidavits in the Chancery proceedings?—I see you are reading from a passage which I have written. I am not at all offended. (Laughter.) I have all along wished to act in a spirit of fair play, and to have those affidavits and affirmations put in.

As you are master of your own situation, will you consent to their being put in now?—Mr. Lewis objected to their being put in, and that is my reason for acting as I have done.

I want to know whether you are master of your own situation?—I am master of it as far as wishes go.

Will you tell me why they are not put in?—Because my legal adviser thought it would be prejudicial.

The Lord Chief Justice—Prejudicial to what?—Prejudicial to the investigation of this case.

The Solicitor-General—Am I to understand that nothing would satisfy you but the condemnation of the defendants? Do you not think it is essential to a thorough investigation that, in that spirit of fair play which you say is part and parcel of your being, they should have the benefit of their own affidavits and answers?—I have said so, and I say so still.

Who prevents their being put in?—My legal advisers.

Have you had any consultation with them?—I am not bound to state.

Who prevents their being put in?—My legal advisers.

Who prevents their being put in?—I cannot tell you.

Which legal adviser prevents it?—I cannot tell you; it has been a subject of consultation.

You cannot tell me which of your legal advisers prevents you from doing that which is essential to fair play?—I cannot tell you at this moment.

What do you mean by saying that your legal adviser prevents their being put in?—Mr. Lewis—

The Solicitor-General—No, Mr. Lewis is not your legal adviser now.

Witness—The other legal advisers—

The Solicitor-General—Who?

Witness—I have had no legal consultation.

Then how have you gathered their sentiments?—I presume from their not putting them in.

Do you not know that if they were put in an acquittal in this case would be inevitable?—No answer.

Dr. Kenealy said he knew nothing about what was being referred to.

The Solicitor-General (to witness)—One gentleman has repudiated having had anything to do with the matter; who is the other?

Witness—I have submitted that they might be put in, and have wished them to be put in, but I have had no conversation with the legal advisers as to why they are not put in.

The Solicitor-General—To what would it be prejudicial?—Prejudicial to the investigation of the case.

Then you don’t agree that it is required by that spirit of fair play which is part and parcel of your being?—That is their opinion.

The Lord Chief Justice—When was it that you gathered that such were the sentiments of the legal advisers?—I have put the documents into their possession, and have instructed them that the thing it to be done if they deem it desirable. If I had been allowed to conduct my own case here, I most indubitably would have put them in.

The Solicitor-General—Do you know that in those Chancery proceedings some or all of the defendants have been cross-examined?—I have been present at part of the cross-examination of John Henry Gurney, and at part of the cross-examination of Robert Birkbeck.

Do you know that all the defendants were cross-examined?—I do.

And do you know that in every single case in which they have been cross-examined the decision has been in their favour?—I cannot answer the question.

Cross-examination continued—He had not applied to the Court of Chancery for money out of the estate to carry on these proceedings, but he believed an application was made by Mr. Lewis in his name. He presumed that he was liable for the costs of that application. He had had the administration of the prosecution fund, and was not aware that any portion of it had been applied in paying the cost of Chancery proceedings. He believed that no part of the prosecution fund had been applied to any other purpose than the prosecution itself.

By Sir J. Karslake—I have known Mr. Gordon by reputation ever since I came to England in 1863. I knew him in the character of chairman of the Oriental Bank. I know now that he was also a director of the Union Bank. As soon as I instituted proceedings against him I did all I could to remove him from the chairmanship of the Oriental Bank, and I made a motion to that effect. I had not then charged Mr. Gordon with conspiracy, but proceedings had been taken against the liquidators in Chancery. He was not then dispossessed of his office, but he subsequently resigned. I do not know the circumstances under which he resigned. I never went to the company’s office for the purpose of seeing any document. I did not see the memorandum and articles of association before I bought the shares. The office of the company was about five minutes’ walk from the offices of the association. I saw the articles of association in my broker’s office when I bought the shares. |[59] I saw one of the articles which stated that, excepting balance-sheets, no accounts or documents should be seen by any shareholder. Mr. Gordon had 200 shares. If he has paid the whole of the calls on them, which I believe he has, he has paid 8,000l.

Re-examined by Dr. Kenealy—I do not know whether Mr. Gordon got the money out of this concern. I have understood a large amount was put down for salaries. Mr. Gordon, being a director, had 500l. a year. I am a shareholder in the Oriental Bank, and it was only in consequence of Mr. Gordon’s connection with this matter that I desired to remove him from the chairmanship of that bank. In that I acted alone. The document cited just now by the Solicitor-General was a pamphlet written by me a few months ago. My present legal adviser is Mr. Dawson. I instructed him to put in the documents, and he said, “We shall consider how far it is desirable.”

The Lord Chief Justice—You say if you had seen the second deed you would not have bought the shares, but you tell us at the same time that you did not see the deed mentioned in the prospectus?—Yes.

Now I ask you as a fair dealing gentleman if in the prospectus the word had been “deeds” instead of “deed” would that have made the slightest difference?

Witness—I do not think it would.

Mr. Thomas Clark stated that in August, 1855, he purchased 40 shares of the company, at a premium of 17/8, and held them down to the stoppage of the company. Had paid upon them to the present time 1,600l. Before he bought the shares, had seen a prospectus at the office of the solicitor of the company. He asked for one, and he believed they gave him one. He took it home. Bought the shares on the general faith that Gurneys were respectable. Applied for 60 shares, and got none. Knew now of the second deed, which he called the secret deed. If he had known of it at the time, should not have applied for shares.

Cross-examined by Sir J. Karslake. I read the prospectus. I saw the paragraph in it that the memorandum and articles of association, and the deed for the transfer of the business, were to be seen at the offices of the solicitor. I did not ask to see the deed. I did not know of the secret deed, and I did not ask to see the other. Before I bought the shares I ran my eye through the memorandum of association. I saw nothing unusual in it. I did not read the deed; in fact I was careless of the matter.

By the Court—I suppose if it had said “deeds” instead of “deed” it would have been exactly the same thing. You would have relied on the respectability of the Gurneys?—I should.

When you are making application for shares in a concern that is likely to be beneficial, do you make it a practice to go and look at the deeds, or do you take it for granted?—I have taken it rather for granted.

Mr. William Peek deposed that he saw several of the prospectuses of the company, and purchased 2,000 shares, and had paid 94,754l. on them, reckoning the costs. Was induced to buy them from the respectability of the firm of Overend and Gurney and the names of the directors. Since the failure, had heard of the second deed. If he had known that it contained the clauses referred to by Mr. Thom he should not have taken shares.

The Solicitor-General objected to this class of evidence. It was not a question as to what acted on the mind of the witness, which might be a ground of an action for damages, but this was a criminal proceeding.

The Lord Chief Justice said it was clear that there was a statement of accounts of which the witnesses knew nothing, and a deed of which they knew nothing. If the prospectus had referred to two deeds, or a dozen, or twenty, he did not think that these parities would have thought it necessary to inquire about them. But he did not think he could shut out from the case what would have been the effect on the mind of men of business if they had known of this second deed.

The Solicitor-General said he did not wish to shut it out of the case. On the contrary, he considered it part of the case; but this evidence was merely hypothetical.

The Lord Chief Justice—Part of the necessary allegation of the prosecution is that a certain course of conduct was adopted on the part of the defendants for the purpose of misleading the public, and this matter of the second deed is alleged as part of the fraudulent scheme, part of the mode in which the alleged conspiracy was to be carried out.

Mr. Serjeant Ballantine—Certain facts are stated, and certain conclusions are drawn from those facts. A man says, “I was told so and so, and I handed over a certain sum of money.” The question is whether that is the cause.

The Lord Chief Justice—There is a great deal more than that. It is alleged that if it had been known that this second deed was in existence, the public would have been deterred from taking shares. But I will talk the matter over with my brethren, and if this kind of evidence is tendered to-morrow, I will state whether we think it should be received.

Examination continued—On the 10th of May, 1866, while passing the office, he saw that it was being shut up. He went in and saw Mr. Birkbeck. Mr. Birkbeck said the Bank of England had refused assistance, adding as a reason, that there was an old grudge between them. Witness expressed his surprise and said the failure would produce a crash which would extend through the whole kingdom, to which Mr. Birkbeck made no particular reply. He said the directors had just applied to the Bank. Witness was then residing in Liverpool, and had just run up to town. He remarked to Mr. Birkbeck that if everything had been honest in the matter all would come right. Mr. Birkbeck said nothing in answer to that. The next day witness called again and saw Mr. Gibb. A day or two previous Mr. Gibb had told him that they would divide 7 per cent. dividend, the accounts having been made up, and shown profit to that extent. Mr. Birkbeck gave assent to that. Witness then went on to speak of the assurance he received from the directors as to the amount that would suffice to meet liabilities.

Cross-examined by the Solicitor-General—Chancery proceedings against the liquidator had been commenced in his name to settle the question of liability. Dr. Thom did not assist him. At the time of the stoppage money was at a high rate. The term “tightness” was comparative, and money could have been had then on good security. Could not say how much Mr. Birkbeck told him that he had invested in the bank, but the smallness of the amount struck him. Was not intimate with Mr. Gibb, but knew him as a business man. That gentleman’s name influenced him, with other names, in investing. Bought shares in the market. Saw the prospectus, and bought on the strength of it.

At a quarter to five the court adjourned till this morning.


W. B. Scott, one of the jury, asks up to correct the statement of the Globe, which we reprinted yesterday—that he took the affirmation as a Quaker, instead of the oath. This was not the case.

[The Daily News, 16. Dezember 1869]

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The Daily News. Nr. 7372, 16. Dezember 1869. S. 2.
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THE OVEREND, GURNEY, AND CO. PROSECUTION.

[Dec 16]

The trial of the Overend and Gurney directors was resumed yesterday morning, shortly after ten o’clock, in the