r^ji #1 a :^ LONDON BANKING LIFE. PAPERS ON TRADE AND FINANCE. Loan Bo-ik No X|„g LiniT 10 Day LONDON N.B. — This Book Compfete Contains.. ....Paget Illustration, v.u BA:b^KII^G- LIFE. PAPERS ON TRADE AND FINANCE. BY WILLIAM PURDY. NEW YOKR: LOVELL, ADAM, WESSON & COMPANY. 764 Broadway, J, J J J ,.>•. >»><1>3»' LAKE CHAMPLAIN PRESS, ROUSES POINT, N. Y. V \. THESE COMMENTS ON LONDON BANKING LIFE, SUGGESTED BY THE REMARKABLE EVENTS OF 1875, HAVING ORIGINATED IN CONVERSATIONS WITH A VALUED FRIEND WHEN ON HOLIDAY LEAVE, BUT NOW AGAIN IN BUSINESS CIRCLES OF AUSTRALIAN LIFE, ARE TO HIM INSCRIBED AS A REMEMBRANCE OF " The days that grow to something strauge In walking, as of old we walked, When we could talk as once we talked, Of men and minds, the dust of change-" w. p. May 4th, 1876. 38S112 " The growth of wealth has been such that in the moral sphere it would not be too much to call it a revolutionary change. There is much danger in the extraordinary multiplication both of the appliances of enjoyment, through mechanical contrivances of the conveniences of life, and the means of procuring them in the increase of fortunes witnessed of late years. Progress of all kinds is good ; but our instinct tells us that there are certain rates of progress which it is necessary to observe." William Ewabt Gladstone. " This is the way to lay the city flat ; To bring the roof to the foundation ; And bury all, which yet distinctly ranges, In heaps and piles of ruin." Shakespeare. CONTENTS. CHAPTER I. PAGE The Calm Before the Storm 1 The last Decade in Trade — Its well-defined Character- istics — Strikes — Wars — Collapse of French Empire — Commercial activity — Extension of Trade — In- crease of Prices — Great Movements of Capital — The new theory of " Sun-spot periods." CHAPTER n. Commencement of the Crisis Dangers not foreseen — How 1874 closed in depression — The warning disregarded — Agitation in the Ii'on and Coal Trades — The great failures that pceceded the crisis — Fall of Discount Houses. CHAPTER ni. Progression of Facts 10 Influence of high prices — Gold discoveries — Effects in 1858-1866, and subsequently — Results of war on trade and finance — Civil War in America — Franco- German War — Great Produce Markets. 4 Vlll CONTENTS. CHAPTER IV. PAGE The Collapse of Collie 22 Catastrophe of the 15th of June — The results of reck- lessness — Co-operative Specuhitors — Accommodation Bills — Analysis of Balance Sheet — Mansion House examinations — Flight of Alexander Collie — Reward for his apprehension — Impending Criminal Charges. CHAPTER V. Losses by Banks 29 Policy of Directors — Method of treatment — Discount Companies — Banks' Dividends — Public Opinion. CHAPTER VI. Policy of Opponents ....... 33 Press comments — Attacks analyzed — Replies thereto — Antagonistic views — West-End and City Life — Change of opinion — General success of Banks. CHAPTER VIL Critical Comments 42 Progress of Joint-Stock Banking — Metropolitan Banks — Scotch Banks — Irish Banks — French method criti- cized — System of Deposits — Not an evil — Responsi- bility not evaded — Classification of Scotch De- posits — Adam Smith's views — Trade dependent on Joint Stock Banking — The Australian System. CHAPTER VIH. Banks on Self-Improvement 53 Freedom in rates — Bank of England not obligatory — Associated Banks — "No Magic" in old regulations — Money at call — London and Westminster Bank's new rule — Interest on current accounts — P >wer of good management. CONTENTS. ix CHAPTER IX. PAGE Suggestions for the Future ..... 60 Separation of Assets — Division of risks — Analyzing Deposits — Investments in Government Securities — London and Westminster Bank — Bills of Exchange — Lord Overstone's opinions — Bankers' Acceptances Internal Trade — Good and Bad Bills — Money Brok- ers — Publication of Accounts. CHAPTER X. Bank of England 75 Advocacy of Paper Currency — Fluctuations in the value of Money — Low rates and depression of Trade / — Movements of Bullion — Effects of Gold Discov- erie.« \ \ CHAPTER XL Stock Exchange Influences 81 Growth of Business — New Undertakings, 1870-5 — Their soundness or otherwise — Limited Liability — Returns of Joint Stock Companies — Gambling ten- dencies — Trade Speculations — Results on Society. CHAPTER Xn. American Failures 94 Crisis in 1873 — Statistics of Failures — Gain by Insol- vency — Trade of 1875 — Nevada Bank — National Gold Bank — Bank of San Francisco — Bank of Cali- fornia — Statistics of Gold and Silver Pi'oduction — Trade between California and Australia. CHAPTER XIII. Canadian Affairs 104 Trade of 1873-4-6— Banking Returns — Government Finance — Savings Banks — Public Debt — Check to Prosperity. CONTENTS. CHAPTER XIV. PAGE Australian Trade and Finance . . . .112 Continuous Prosperity — Dangers to Importers — Bank- ing Statistics — New South Wales — Queensland — Victoria — South Australia — Tasmania — Western Australia — Statistics of gold production — Insolven- cies in 1874-5. / CHAPTER XV. Cape op Good Hope and South Africa , . . 125 Diamond Fields — Banking system — New Joint Stock Banks — Their early troubles — Statistical Returns — Review of Position — Future Policy. CHAPTER XVI. Ships and Marine Insurance 134 Recent Experience — Plimsoll's Agitation — the Ship- owners and their friends — Increase of Shipping Pro- perty — Decrease in the United States — The Wreck Register — Sacrifice of Human Lives — Marine In- surance Business — Statistics of New Companies — — The Old Insurance Companies — Discussion as to future Policy. CHAPTER XVn. Continental Troubles 155 Baron Strousberg's career — His difficulties — His fail- ure — Troubles in Russia — Moscow Banks — Statis- tics of Banking — Russian Commerce — Denmark and its troubles. J CONTENTS. XI CHAPTER XVni. PAGE Bullion Movements 168 Gold Discoveries— Statistics of Production— Absorp- tion of Precious metals — Exportation of Silver — East Lidian Trade— Depreciation of Silver— Re- shipments of Silver from the East — Statistics of Bullion Trade to the East— Indian Council Bills- Chevalier on the Precious Metals— Production of Silver in America— Banks of France and Prussia. ^ CHAPTER XIX. Foreign Loans 183 The " Bubbles " of History and Romance — Select Committee on Loans to Foreign States — Mexico — Greece and Spain— Egypt— Recent opinions by au eye-witness — Mr. Stephen Cave's Mission — Stocks and Bonds in Default— The Apologis4;s of the Stock Exchange. \ CHAPTER XX. Reminiscences of Men and Manners . . . 195 Unreasonable fears — David Morier Evans — The Old School — A Calm Spectator and his opinions — Types in Men of the " Rear Horse " of the Strand — Uni- versal Mammon — Moral Deductions. \ [Appendices, \ XU CONTENTS. APPENDICES. PAGE A — List of Failures in 1875 206 B — Stock Exchange Curiosities and Statistics . 211 C— The United States National Banks . . 215 D — Analysis of Stocks in Default . . . 216 E — Stored Bullion in Europe 219 F — German Speculations since the War of 1871-2 220 G — Turkish Loans . . . • • . ■ 221 H— Emigration in 1875 222 I — Balance Sheets of Failed Firms . . . 223 LONDON BANKING LIFE. CHAPTER I. THE CALM BEFORE THE STORM. " The most usual cause of general embarrassment is the recoil of prices after they have been raised by a spirit of speculation, intense in degree, and exteridlng to many commodities. " The opening of a new foreign market, or a short supply of any great arti- cles of commerce, excites speculation. At periods of this kind,-a great extension of credit takes place. " All to ivhom the contagion reaches, employ their a'edit much more freely than zisual, and a reckless adventurous feeling prevails, which dis- poses people to give as well as take credit more largely than at other times." John Stuart Mill. A DECADE in the history of a nation is always a period of importance for its politics and commerce. In the City it has become natural to associate with it a season of intense anxiety ; fluctuations in prosper- ity and prices, in the localities of trade , also in the lives of those who are the actors in the world's affairs, and of whom it is certain " They have their exits aud their entrances, And one man in his time plays many parts." The era between 1865 and 1875 has again shown that commercial crises do not merely repeat them- selves. They vary in origin, in character and in re- 2 LONDON BANKING LITE. suits ; are each susceptible of different methods of treatment, not to be disregarded either by the student or the historian. This period at its commencement was marked by great prostration in the credit of England ; there had been failures among banks, and great financial houses; the bubble ot enterprise by limited joint stock companies had burst, leaving a perfect wreck, not only of wild speculations, but of even sagacious and prudent undertakings ; while the safe investments of many had been sacrificed to the spirit of gambling, and peace and contentment were followed by blighted hopes, defeated and discomfited prospects. It became a subject of discussion whether those who guided the financial world would ever again witness the repetition of rampant folly and wickedness ; if it were within the bounds of proba- bility that huge speculations would once more run into excess of riot ; whether the vast fabric of com- mercial credit would be shaken to its very centre, if not shattered, by the great failures, severe embarrass- ments, or the absconding of any celebrities in business circles. The next two or three years rolled onwards amidst gloom, vicissitude and uncertainty. There were the slow and expensive windings up of the disasters of 1866 ; then came a sound superstructure of substan- tial work for the artizan ; afterwards labor was re- peatedly on strike ; wars in Africa and South America followed ; still worse, Europe was repeatedly star- tled and rendered, suspicious by the small embroil- ments in Italy, Austria and Luxembourg; and at last there came the great crash of empires — that of THE CALM BEFORE THE STOKM. 3 France collapsing, while that of Germany assumed colossal proportions, at once determining the course of history, and perhaps for many succeeding years materially affecting the business, the finance and the enterprise, not of England merely, but of all Euro- pean nations. Throughout these events, there was generally peace and prosperity for those engaged in British commerce. In fact the centre of trade, the pivot of finance, was in London. It has indeed been asserted that " in- dustrial and commercial acti\dty which had at last revived after a long depression, extending over three or four years, was checked and disordered by the sudden closing of Continental workshops and mar- kets." * The suspension of foreign competition, how- ever, was ultimately beneficial to English producers ; the progress of trade was only slowly deranged, al- though heavy losses were incurred by the variations in the value of investments. Railway traffic in- creased ; the public revenue maintained its elasticity ; there was an undoubted recovery of all home trade ; besides a remarkable force in the power over foreign markets, showing that the neutrality of the nation was the certain means of fostering commerce, stimu- lating production, and making England, for the time, the entrepot of the world. This remained the condition of affairs throughout 1871, and for a large part of 1872; but then the prices of money, coal, iron, and most articles of pro vision began to show rapid increases. There were significant signs developed in the great markets of *Times Summaiy, 1870, p. 395. 4 LONDON BANKING LIFE. labor ; wages had to be generally increased, strikes became more frequent, and many were the symptoms that a new epoch had commenced, not unmixed with evil, and certainly presaging enough for all reflecting minds to ponder over, when attempting any forecast of the undeveloped resources of the world, or the sustaining energy of those who follow the pursuits of industry. There were in the succeeding months spasmodic periods of repose and activity, of calm quietude and rampant speculation , of ease and comfort in the money market, and then of unusual, indeed severe, stringency. Those who followed the " art and mysterie " of banking were often in serious, sedate wonderment ; yet their functions were legitimately performed, attracting the uninvested capital of the world, and distributing it again throughout the ever- expanding surface of State loans and trade discounts ; stimulating new enterprises, fostering home, colonial and foreign interests , and finally heaping up almost fabulous profits for the benefit of those inactive shareholders who are drones in the hive of industry, absorbing everything, but yielding little or nothing either in prudence or business. It is difficult, perhaps it may be asserted with the poet, " that it were sad to tell and long to trace " all the causes known or supposed to contribute to the crises to which commerce in all civilized countries is periodically subject. It is being gravely discussed by savants, whether they may not be associated with " sun-spot periods," a discussion to be left with Pro- fessors Balfour, Stewart and Jevons, who have most THE CALM BEFORE THE STORM. amusingly raised the question before the British Association.* To those engaged in practical busi- ness, such discussions only allow a passing notice, and it is obvious that the facts connected with the crisis of 1875 are not referable to any deep laid or newly discovered theories which have their basis either in astronomical science or in political economy. That a steady recurrence of commercial difficulties does occur is not to be disputed ; they are not ex- actly decennial ; rather of more frequent occurrence, and with the enlarging commerce of the world, and the increased facilities afforded by steam and tele- graphy, these crises are to be more frequently ex- pected. Prices will be kept in chronic agitation, and there will be great disturbing causes in operation, the consequences of which should be watched al- though they cannot be foretold. * The tract on " The Science of Capital and Money," by Mr. William West- garth, may well be consulted for a brief summary and the results at present arrived at by the professors. LONDON BANKING LIFE. CHAPTER 11. COMMENCEMENT OF THE CRISIS. " Coming events cast their shadows before." Cabipbell. At the commencement of the year 1875, little warn- ing was given by the press of the " rocks ahead ; " the public writers, natural guardians of the people, not being endowed with any of that " mystical lore " which belongs to those who forecast events of im- portance. There is remarkable wisdom in the daily record of facts ; but how little to guide, in the future, the merchant or the banker ! Sometimes the inviolability of great principles is asserted by those who maintain a stern independence against the al- lurements of City Life; who, without prophetic power, show the consequences of any departure from sound proceedings. But there were no predictions heard, while the seeds were being sown, of failures, losses and frauds. Indeed, less than ordinary sagac- ity was manifested, and, it is worth remembering, that the utterances of the press at this eventful period were rather the reverse of melancholy ; there was elation, not depression ; confidence, not doubt or uncertainty. In the review of the year 1874, there are notable statements to the following effect : — That the magnificent harvest with which generally COMMENCEMENT OF THE CRISIS. 7 the whole world had been blest, would prove a most valuable aid to trade ! The year just vanished had been one of even tenor, and all classes had good reason to be thankful for its many mercies ! After a careful consideration of the character of the trade, and its results, the opinion was that it ex- ceeded in profits the year preceding ! There had been no absolute depression, but rather a pause after previous leaps of prosperity ; and a sea- son of reaction was not a comfortable time to people who have much hold of business ! There was no reason to assume that the existing de- pression was likely to be more than temporary ! It was not the first occasion on which trade had been depressed ; nor was its contraction likely to be suc- ceeded by important consequences. On three differ- ent occasions during fifteen years the export trade of the country had suffered a severe decline. The first of these reverses was due to the civil war in America ; the second to the crisis in 1866 ; the third to the reaction after the over-production and high prices of 1872. Although wisdom is thus " conspicuous by its ab- sence," there is no wish to insist on any sort of pre- science being expected, while prophecies in business are proverbially unreliable. It is safe, therefore, to infer that dark or dreary occurrences are only known after the event ; that while premonitory symptoms may be furnished, to follow them is uncertain and difficult : experts may understand the signs of the times, fitful and erratic as they are, indeed for months 8 LONDON BANKING LIFE. or years they give forth " an uncertain sound," al- though at last clear, distinct, and reliable. It was in this way that the iron trade became sig- nificant in its warnings. After years of extraordinary activity, there was an absence of remunerative results : contracted operations were necessary ; then a reduc- tion of wages, and perfect disorganization followed. In like manner, the coal market was disturbed ; the consequence of many fluctuations was great inflation, and prosjDcrity was succeeded by an equal amount of depression. Railway property declined. Money in its relation to trade underwent great oscillations. And at last, commerce declined, and capital became great- ly unhinged. The first presage of trouble was in March, 1875, when Messrs. I. C. Im Thurn and Co. suspended payment for not less than .£4,000,000 sterling. Their operations were for the most part in the South American trade ; merchandise, exchange transactions, and steamboat enterprises were combined ; and it early became apparent that all these departments were unremunerative, perhaps had never afforded profit, conducted on credit, revolving about an ex- panding circle, and that throughout a short-lived career, the firm exhibited no prevision in their ar- rangements ; no retrospect of results ; no prudent views of the future. Be this as it may, the warning note was struck, and in the month of May, the failure of Messrs. Fothergill, Hankey and Co., and the Aberdare and Plymouth Iron Company startled the financial world ; not simply from the magnitude of the con- COMMENCEMENT OF THE CEISIS. 9 cerns, but from the enlargement of bill transactions, the long series of renewals that had been going for- ward, and the extensive trading conducted largely on losing principles. There were features, too, which proved that discount houses had been resorted to, not for the purpose of short credit or facilities to current operations, but to raise capital for purchasing plant, machinery, and even the good-will of active concerns. The natural consequence was that the discount houses were engulphed in the ruin that surrounded them ; the statement of their affairs revealed engage- ments wholly beyond their means, a huge system of rediscounting with those banks which kept "open doors" for their indiscriminate — often reckless — method of business. The amazement of London was excited by finding millions of money guaranteed by houses of almost mushroom growth ! Some of the bill-brokers who suddenly emerged into notoriety had scarcely been heard of beyond the lanes about Lombard Street, others had too often come to grief not to have a wide reputation ; yet all brought down were simply indulging in the folly of building houses on the sand, deluding, not only themselves, but those who encouraged their operations ; living on the falla- cies that credit was capital, that there was no limit to the credulity of those who repeated the cabalistic symbols of bills, and that the fabric of accommoda- tion paper was of eternal duration ! 10 LONDON BANKING LIFE. CHAPTER III. PROGRESSION OF FACTS. "Li these days one must not only live upon what has been learnt, but learn more ; and instead of sleeping away our acquired ideas, we should seek for fresh ones, make neiv opinions fight old ones, and compare those of youth with those of an altered state of thought and society." De Tocqueville. It is at this stage, the threshold of the crisis, perhaps the culmination of greatness in trade, that the effect of the variation in prices may be investigated. The survey is rarely extended over any lengthened period of time, the only true method for gathering together facts of importance, or for arriving at sound conclu- sions. Even now, the generation passing away ap- pears scarcely conscious of the importance of the epoch through which they have lived and toiled ; the strides made in subduing the world to man's use and enjoyment ; and the vast progress in mechanical appliances for the development, and the actual triumphs in material progress. It may, therefore, be of some value to remember that the most notable events within the last twenty-live years have been the gold discoveries in California, Australia, and New Zealand; the bankruptcies of 1858 and 1866, proceeding from one and the same cause, although differing in results ; and lastly the great wars be- tween the Northern and Southern States of America, PEOGEESSION OF FACTS. 11 and, perhaps of all wars the most important, that be- tween the French and German Empires. Each event has been followed by great disturbing elements, and now that the cycle is becoming complete, it is of es- sential importance to understand the results for the students of commerce to profit by in the future trans- actions of business. Taking, first, the discovery of gold, it was clearly foreseen that the circulating medium of the world would not only be greatly changed, but largely in- creased. There would be in fact more money, either in coin or its representative, freely passing from one country to another, and there would be also an ab- sorption of gold in the great trading communities. In fact, America, England, and France quickly became possessed of a coinage unsurpassed in quantity as in quality ; and more recently a similar transformation, from a debased to a pure metallic currency, has been witnessed in Germany. Another almost immediate result from the supplies of gold was the increase in the rate of wages ; then capital came still further in demand ; rents increased ; land and house property improved in value. All this unquestionably followed from the advent of the discoveries ; but there has not, as yet, been any close scrutiny of the effect of the diminishing quantity of gold obtained from Australia or California. It is full early perhaps to speculate on this branch of the subject ; yet it should be borne in view, it being impossible for bankers and mer- chants to overrate its importance. At present the imports of the precious metals into England appear sufficient to maintain sound and convertible stand- 12 LOisTDON BANKING LIFE. ards for the currency of civilized countries, and in the language of one of the best statists, " The great revolution pursues its course so gradually; it is moderated and checked in modes so infinite and sub- tle ; and moulded by influences too delicate to be laid bare by any appliance of statistics : — that, so far as we can judge of the future by that which now oc- curs around us, we may contemplate without fear a change in the economical condition of the world — new and startling, doubtless; but already adjusting itself, without shocks or convulsions, to the expand- ing intelligence and resources of mankind." * The various causes which accelerated the crisis of 1858 and 1866, are easily determined. Speculation in produce ; abuse of credit ; accommodation of bills ; an undue expansion of the foreign trade ; unwieldy, unnatural and unmanageable application of the " limited liability " principle to joint stock enter- prises. It appears almost incredible that the lessons of prudence should be no sooner inculcated than forgotten. Yet as each generation comes rapidly forward, it as rapidly produces some tyros in trade, who, in their turn, despise warnings, assert their own infallibility, and are determined to buy expe- rience for themselves. Without moralizing beyond the subject, it is melancholy to reflect, on the wasted energies, the lost time, and the bitter experiences of traders, speculators, and adventurers, who "have sown the wind, and shall reap in the whirlwind," » " The New Supplies of Gold," by William Newmarch. This valuable tract was published in 1853 ; but will not its author bring down his statistics to a later period ? PEOGEESSION OF FACTS. 13 never realizing the harvest that follows from patience, and the endurinq; faith in matured sacjacitv and steady perseverance. The credit of England was on each occasion more heavily shaken than at any period of the present century ; and so it was predict- ed by those who most laboriously studied history. Such may be expected too in the future, from the ramifications of trade becoming wider ; the expanding area of financial oj)erations ; the wonder- ful communication by steam and telegraphy which centres in London. The consequences must be a more susceptible sympathy with the world at large than has ever been previously witnessed. Most com- pletely, indeed, is the statement of the old writer realized, that great interests, however conflicting in appearance, must "wax and wane together." As -war in general is sufficient of itself to interfere with prices, so the " after-glow " of victory is dan- gerous in the extreme to trade, to finance, and the adherence to sound principles. The proof was fur- nished throughout the United Kingdom in 1819 when there were the usual features — " Importers, speculators and manufacturers were successively ruined by having embarked too largely upon the an- ticipation of the maintenance of the former range of high prices." * " The large importations and eager speculation which had gone on for the greater part of the pre- ceding year, had the effect of swelling the revenue, and giving a semblance of extraordinary prosperity to the national finances." * Tookes' " History of Prices," ii. 77. 14 LONDON BANKING LIFE. " Here and there, the failure of a commercial house was announced. First, the failures were of houses which nobody supposed to be very stable; but presently, one firm after another stopped pay- ment. Buying and selling came almost to a stand ; for the country people looked at every kind of bank- note as if it would burn their fingers, and thought they would go home rather than sell anything at all. The run upon the banks spread from district to district ; and very soon to London. Lombard Street was full of men of business, standing about, waiting to hear the disasters of the day. It was a time to try the faith, and courage, and generosity of the rich." * This condition of affairs has characterized most periods when peace has been restored, or when great fluctuations in prices pass for a time unobserved. So now that the great American wars can be critically followed in their effects, it will be found that the carrying trade of the world almost wholly passed to British ship-owners ; steamers superseded sailing vessels ; stock accumulated more quickly and heavily than heretofore, and for a time an unusual stimulus was given to English manufactures. Again, the re- sults of the Franco-German war had analogous effects. There was a transfer of commerce and new ascend- encies in trading powers ; productions in some cases declined, in others increased; tendencies to extrava- gance were unduly developed; self-indulgence and luxury were stimulated ; yet, withal, the astounding effect of a war expenditure unparalleled within the * Harriet Martineau's " The Thirty Years' Peace," i. 209, 358, 359- PROGRESSION OF FACTS. 15 last twenty-five years, and a strain upon the gold supplies of the world never previously witnessed, were disregarded. " Signs and warnings " were un- availing, so also were the perturbations of prices suf- ficient to affect almost every commodity required by the necessities of mankind. In thus enumerating the principal elements of dis- turbance, it is fully admitted that other causes have operated, yet from these " stand points," the follow- ing statistics may with advantage be studied. [The following figures are mostly takeu from the valuable papers in the Annual " Commercial History and Review," published by the Economist, which should be regarded, not as a newspaper, but the vade mecum of every well regulated counting-house. In publishing the tables, the occasion may properly be availed of for expressing the acknowledgments that must be largely felt for the laborious results which will largely assist any who may be engaged on a future " History of Prices."] 16 LONDON BANKING LIFE. TEA. DATES. Congou. Mid. Com. to Fair to Good. Average for six years. 1st January 1st July 1st January 1865 1866 1867 1868 1860 1870 1871 1872 1873 1874 1875 31st D pcember d. H 12 H 5 5 9 10 9 9i Per lb. d. 12 15 13 to a a (( u ii (( u a « d. 10 14 10^ 28 32 . t( a a 11 12 13 12 WHEAT. DATES. Gazette Price. Per quarter. , ^ I Average for > 1850 i six years i" s. d. 53 1851 1st January 38 1 1853 1st July 44 11 1857 63 1 1858 1st January 48 7 1865 37 10 1866 46 3 1867 60 2 1868 67 4 1869 ' 50 11 1870 43 8 1871 52 7 1872 ' 55 4 1873 < 56 1874 61 8 1875 44 2 " 31st December 44/0 to 52/0 1 PROGRESSION OF FACTS. 17 COTTON. DATES. Surat. ^^ ( Average for ) 1850 i ^^^ y^^^'«- 3 1851 1st January 1853 1st July 1857 1858 1st January 1865 1866 1867 1868 1869 1870 1871 1872 1873 1874 1875 « <( « « (( 31st December Per lb. 5d. 4t to 3^ " 5| to 5 20d. Dhollerah fair. Hid. 12|rf. 8irf. Q^d. Q^d. Tid. 7id. 6irf. 6M. 5id. SILK. DATES. ^^ ( Average for | 1850 i ^^^ y^^^«- > 1851 1st January 1853 1st July 1857 1858 1st January 1865 1866 • " 1867 " 1868 " 1869 « 1870 « 1871 « 1872 " 1873 1874 1875 " " 31st December Raw Cossimbazar. Per lb. s. d. s- d. 9 to 14 12 17 14 17 19 16 16 6 17 u 15 13 6 11 6 10 8 17 15 30 22 19 0. 27 23 21 25 6 23 25 24 25 6 22 6 16 6 12 6 18 LONDON BANKING LIFE. WOOL. South Australian. DATES. English SoutMown. Port Philip Lambs. Lambs. Locks. Per 240 lbs. Per lb. Per lb. Per lb. 1845) to } Average for } £ 13 d. d. 12 to 22 d. d. d. d. 7 to 12 1850) SIX years. ) 1851 1st January 14 18 . . 10 " 14 1853 1st July 19^ 17 . . 7 " 17 1857 a 19 18 to 26 . . 13" 19 1858 1st January 13 16 " 21 . . 7 " 16 1865 a 24 to 25 " " 27 15 to 22 15 " 17 1866 « 21 " 22 15 " 24 " " 20 1. u u 1867 (( 19 16 " 28 " " 22 14 " 18 1868 « 14* 14 " 26 12 " 20 9 " 13 1869 u i4 16 " 23 10 " 16 3 " 9 1870 (I 13 12 » 25 9 " " (( (( u 1871 (( (( 11 " 22 8 " 15 " " 8 1872 " 21* 15 " 27 12 " 19 7 " 13 1873 (( 23 18 " 29 15 " 23 12 " 19 1874 » 201 16 " 28 15 " 22 8 " 14 1875 « ISi 17 " 32 16 " 26 11 " 18 a 31st December 17^ 18 " 30 15 " 22 11 " 14 TIMBER. DATES. Dantzic and IVIemel. Canadian Yellow Pine. Per load. Per load. 1845) to Average for ] s. d. 71 (( s. 81 d. . s. 65 d. i( s. d. 71 1850) SIX years 1851 1st January 60 a 70 55 (( 60 1853 1st July 72 (( 80 70 a 85 1857 a 57 (i u 75 (( 85 1858 1st January u (( 85 70 a 75 1865 it 60 (( 85 60 a 75 1866 ii 50 (( 75 ( li 80 1867 u ii (( a n «( 90 1868 (( 45 (( a ( (( i( 1869 <( 40 (( 80 70 <( a 1870 (( u a (i 75 (( (.i 1871 u 50 a 100 80 (( 100 1872 « a a 95 85 <( 105 1873 « 50 a 120 85 (( 105 1874 u 60 a 110 a (C n 1875 (( 50 11 90 110 11 130 (( 31st December 45 <( 85 110 (( 130 PROGRESSION- OF FACTS. 19 TALLOW. DATES. St. Petersburg, 1st Y. C. Per cwt. l^f? Average for) 1850) '^^ y^^^'"- -> s. d. 44 1851 1st January 1853 1st July 1857 38 49 65 1858 1st January 1865 52 41 1866 " 49 1867 « 44 6 1868 " 43 1869 " 49 1870 « 46 1871 45 1872 « 49 1873 « 43 1874 41 1875 " 47 6 31st December 53 COPPER. DATES. Tough Cake. Per ton. , I Average for } 1850 1 six years. 1 £ 88 1851 1st January 84 1853 1st July 107 1857 117 1858 1st January 107 1865 89 1866 " 106 1867 86 1868 " 76 1869 « 78 1870 " 73 1871 « 71 1872 « 90 1873 92^ 1874 « 92 1875 (( 31st December 88 20 LONDON BANKING LITE. IRON. DATES. British Bars. Swedish. Per ton. Per ton. 1845- to Average for ) ^ six years. ]" £ 8 £ 111 1850 1851' 1st January 6 111 1853 1st July H 11* 18.57 a H 16 1858 1st January 7i 15 1865 7* 111 1866 7 I to 8 (( 1867 7 m 1868 6^ a 1869 t( 10 1870 7i (( 1871 7 u 1872 81 • lOi 1873 m 17* 1874 1875 12i 9i 20* 173 ' -!■' 4 a 31st December 7i 16* LEAD. DATES. Englisli Pig. Per ton. 1S45) Average for) 1850) six years. ^ £ 17* 2 1851 1st January it 1853 1st July 24i 1857 25 1858 1st January 23 1865 20 1866 21* 1867 20 1868 19* 1869 19 1870 « 1871 18 1872 19 1873 211 1874 241 1875 24 " 31st December 22j ^^^^^ PROGRESSION OF FACTS. 21 TIN. DATES. British Bars, in Barrels. Per ton. 1S45) Average for) 1850 i si^y^^'-s- 1 & 85i If 1851 1st January 84 1853 1st July 108 1857 143 1858 1st January 109 1865 99 1866 104 1867 85 1868 96 1869 111 1870 118 1871 135 1872 153 1873 146 1874 122 1875 101 " 31st December 85 SUG AR. DATES. British Plantation, Bengal Good. Brown . Yellow and White. Per cwt. Per cwt. 18451 to 1 Average for "> s. 28 d. li s. 30 d. s. 36 d. a s. d. 49 1850 ) ' six years. \ 1851 1st January 26 u 28 34 46 1853 1st July 20 li 23 27 31 1857 u 40 (( 44 45 48 1868 1st January 23 n 26 33 01 36 0^ 1865 a 18 6 li 21 6 24 30 1866 22 6 «( 24 6 27 a 1867 19 6 Li 22 24 6 28 Grey Yellow. Low to Fine White. 1868 23 6 (( 26 25 6 31 1869 23 u 27 24 29 1870 27 u 32 27 32 1871 26 (( a 28 a 1872 29 (( « 27 31 1873 26 (i 30 23 27 1874 23 ii 27 21 26 1875 24 ii 27 21 6 24 6 " 31st December 21 6 li 24 0. 19 22 22 LONDOK BANKING LIFE. CHAPTER IV. THE COLLAPSE OF COLLIE. " 1 know of nothing for which these violent alternations of 'pros}jerity,' and 'disti-ess,' of speculation and panic, are more to he regretted than for their effect in nurturing the spirit of the gambler. The old- fashioned, steady, plodding, prudent and honest merchant or manu- facturer has become a rare exception from the general ride. Speaking generally, our men of biisiness of all ranks and kinds are in com- parison with their predecessors of the last century, unsteady, in haste to he rich, fearless of risk, sharp or ready to take advantage of all opportunities rather than signally honest and true." Edwakd Gibbon Wakefield, Notwithstanding the commercial failures of April and May, there was little else than a ripj^le, certainly not a wave of disturbance in monetary circles until Messrs. Alexander Collie and Co. suspended payment. The rate of interest was at three per cent.; more than ordinary ease prevailed among the banks ; bills for dis- count were scarce, and business generally was being cultivated as though no great dangers were impending. On the morning of the 15th of June, Alexander Collie had declared the intention of his firm to stop ; they cared no longer to continue operations in doubt and uncertainty, although admitting it was a volun- tary suspension, and that they could, if they thought fit, carry on for two or three years longer ! Such a statement was significant of the completely elabo- rated circle for the manufacture, the renewal, and THE COLLAPSE OF COLLLE. 23 the discount of their paper. The admission was, more- over, characteristic of reliance on the satellites by whom the firm was surrounded, and of a belief that the pending losses could be held in terrorem over the banks deluded by promises, and victimized by worth- less accomodation paper. The firm and its supporters had, in fact, long relied on the huge system of credit which increased from year to year, and revolved about transactions of as profitless a character as ever the race of so-called " merchants " indulged in for mere adventure. Early in their career, Messrs. A. Collie and Co. were noto- rious from being engaged in the blockade running with the Southern Confederate States of America. Their offices were then crowded by reckless, daring, and unprincipled spirits, who, having nothing to lose, were ready instruments for any enterprise. Among them there was an enforced obedience ; " to one he was told to go and he goeth, and to another come, and he cometh ! " Money was thus sometimes made in a facile manner ; each success led to increased risks ; and although the " profit and loss account " has not been produced, it can be little doubted that the seeds of decay were then sown, and the wretched structure of base, worthless credit was then com- menced. Although no critical examination has been made into the system of trading, perhaps, never will be, it is certain the firm endeavored to " compass sea and land," skilfully marshalling their myrmidons through- out the United Kingdom. Almost every Indian port ; China and Japan were included in their operations ; 24 LONDON BANKCNG LIFE. while their sympathies with the United States of America never ceased. When the failure was known in City circles it was soon understood that a crisis had in reality commenced, and it was even boldly as- serted by the principal member of the firm that the City would be shaken to the centre ; that the Over- end Gurney and Co.'s collapse would be exceeded in magnitude, and that trade would be long in recover- ing the effects. Such predictions were before many days realized for as the bills under discount matured, the firms trading with Messrs. Alexander Collie and Co. de- clared their inability to meet engagements. Not less than 200 houses, previously deemed unquestionable^ were at once placed under suspicion. Twenty have since failed, some have avoided suspension, others have struggled with difficulties, or are known to be in process of liquidation. When the balance sheet of Messrs. A. Collie and Co. was produced,* it excited even greater astonish- ment than the first intimation of their insuperable difficulties. It revealed the startling facts : — That there were total commitments for not less than 3,000,000L; the unsecured liabilities on bills discounted were 2,260,000Z. That the available assets had been reduced to 1,148Z. " cash at bankers," and 7,500^. bills re- ceivable on hand. That the estate, taken as a whole, showed only 250,542Z. estimated available assets, against 1,899,785Z. estimated liabilities. * Vide Appendix I. THE COLLAPSE OF COLLIE. 25 That some shadowy assets, " requiring time for realization," were, in an imaginary sense, valued at 551,850L, of which little or nothing tangible could be ascertained, although assumed to be connected with the blockade running. That a great absorption of capital must have long gone forward in the " Separate Estates," — the surplus alone being estimated at 75,000Z. after the " rack and ruin " of forced sales, and the utter destruction which always follows abandon- ment of those " lares and penates " of every pri- vate household, to say nothing of the subsequent flight of the nominal owners. Such were the revelations of their balance sheet and it became apparent, after the failure, that there were worse features than misadventure or uncontrol- lable losses. Yet, beyond legal circles, there was nothing of public importance known until the 2l8t of July. Then it was that the chairman of the London •and Westminster Bank made the significant state- ment to the proprietors at their half-yearly meeting : — " In addition to what may be termed the ordinary difficulties of banking business, we have had to en- counter others of a far graver character. The vicious course of trading has led to frauds of a nature, so far as the experience of this bank is concerned, hitherto unknown to commerce. In dealing with the grave matter the directors deem it their duty firmly to ex- pose those fraudulent practices, and bring home to those who have resorted to them, the dangers of their conspiracies. This is strong and unusual language ; 26 LONDON BANKING LIFE. but not one whit stronger than the circumstances warrant. I may announce that Alexander Collie was arrested last night, and is probably at the Man- sion House at_ this moment. In discharging these most painful duties, the Ijoard will receive the cordial co-operation of all concerned in promoting sound and honest dealing. In dealing with the losses, the direc- tors have pursued the same course as they have before done with regard to bad and doubtful debts ; by at once making provision in the full and ample manner set forth in the accounts now in your hands." * The painful narrative as regards the case would not be complete without stating that various rumors have, from time to time, been circulated that Alexan- der Collie has been seen at Stockholm, then at other places, and lastly at Barcelona. The fact is, however, that little reliance can be placed on these rumors, for it has been officially announced that " Alexander Collie had fled from the charge of fraudulent conspir- acy, and by his own act he confirmed the propriety and justice of the bank's procedure. The escape of Collie was that of no ordinary offender. Within a few minutes after his flight became known to the di- rectors, a reward of 1,000Z. was offered for his arrest. Telegrams conveying the fact, and a description of his personal appearance were sent to all chief Conti- nental cities, and to every seajDort in the United Kingdom ; skilled detectives were placed in charge of the case, and no practicable step for securing his * The chairman of the London and Westminster Banlc at the annual meet- ing on the 21st of July, 1875. THE COLLAPSE OF COLLLE. 27 arrest had been neglected. It would be impossible even if it were proper to dwell at anj length on the mass of varied information tendered to the bank, which these steps elicited; Every suppos'ed clue to Collie's whereabouts had been thoroughly tested, and any rumors to the contrary might be regarded as absolutely unfounded."* It is most important to follow the preliminary in- quiries to establish the criminal charge of obtaining money under false pretences made against the firm. The proceedings at the Mansion House on the 21st and 29th of July, 9th of August, 7th of September, and 18th of October may thus be summarized : — The prosecution alleged that the firm conspired to draw bills, which were nothing but accommda- tion bills ; they represented that the bills were trade-bills given for goods sold, bearing on the face of them certain marks and numbers, pur- porting to refer to goods, or to accounts in the ledger. Some of the bills described money due, with the words " value received ; " and other bills, issued and negotiated, had no reference whatever to goods ; but they had marks which purported to refer to accounts of goods de- livered. That the banks in taking all these bills and dis- counting them believing that they were given for goods supplied ; that the marks and numbers referred to actual merchandise in transitu, and for which proceeds would be received. * The chairman of the London and Westminster Bank at the half-yearly meeting on the 19th of January, 1876. 28 LONDON BANKING LIFE. On examination of the firm's books, it was found that those bills were not genuine trade-bills drawn for goods sold, but accommodation bills, and that there were no such goods sold, and no such accounts in the ledger as those indicated by the marks on the face of the bills, and also that the persons accepting the bills had no goods account with the defendants. There was evidence given that the firm in some instances took small shares in ventures to com- plete " a more satisfactory lien on the goods ; " that the bill-brokers discounted on the belief that there was either produce or manufactures to represent each transaction ; and that their ag- gregate business was spread over so large a num- ber of firms as to reduce each separate risk to a very small figure. Of course these are for the most part ex 'parte statements, and it is right to assume that answers could be given or extenuating circumstances urged, were it possible to proceed with due regard to both sides having an impartial and dispassionate hearing. LOSSES BY BANKS. 29 CHAPTER V. LOSSES BY BANKS. " Wealth and the high estate of pride, With what untimely speed they glide, How soon depart ! " These gifts in Fortune's hands are found ; Her swift revolving wheel turns round, And they are gone ! *' No rest the inconstant goddess knows, But changing and without repose, Still hurries on!" COPLAS De Manbique. There was an almost spontaneous movement among the Metropolitan Banks to declare their losses, for the accommodation bills had been widely spread, and great disasters had to be boldly grappled with before the shareholders. The public either instinctively anticipated, or followed the declarations that soon had to be made at the half-yearly meetings. There was throughout these proceedings a determination neither to conceal, lessen, nor tamper with the diffi- culties. Tlie reports to the 30th of June, of the banks involved, show the extent of the transactions. 30 LONDON BANKING LIFE. BANK. London andWestminster Union London Joint Stock .... London and County .... City Alliance Imperial Consolidated Total £ Declared Losses. £ 500,000 100,000 52,000 157,762 41,000 38,848 nil. nil. 889,610 Taken from Profits. £ 152,000 61,124 52,000 82,762 6,000 28,848 nil. nil. Taken from Reserve. £ 348,000 38,876 nil. 75,000 35,000 10,000 nil. nil. 382,734 506,876 In addition to the losses of Banks, the Discount Companies suffered lieavily, but the same prompt measures were taken for placing their affairs correctly before the shareholders. NAME. Declared Losses. Taken from Profits. Taken from Reserve. National Discount Company. General Credit Company.. . . International £ 138,000 nil. 33,751 111,839 8,000 V 48,000 nil. nil. nil. 8,000 £ 90,000 nil. 33,751 111,839 nil. Financial Association Standard Discount Company The market value of shares in all banks and dis- count companies immediately responded to these declarations, and it may be worthy of record to show the fluctuations in 1875. LOSSES BY BANKS. 31 BANK. London and Westminster Union London Joint Stock . . London and County . . . City. Alliance Imperial Consolidated Highest Lowest Price. Price. £ £ 78 57 64 SSi 53 44A 65J 58* 15 12 14 Hi 19 17 7 6i There were satisfactory proofs, however, that the harmonious relationship between the directors and shareholders of the respective concerns was in no sense largely disturbed. Regrets, annoyances, bitter dis- appointments, were, of course, manifested. There was an absence of clamor, no excitement or revenge- ful feelings ; only a calm, steady, invincible faith that the great springs of credit were unimpaired; that the strength of the monetary institutions of the me- tropolis would be soon restored by prudence, and reasonable self-denial in regard to dividends. This, too, was readily adopted, as may be traced by the reductions at once submitted to on the recommenda- tion of the directors : — BANK. London and Westminster Union London Joint Stock . . . London and County. . . City :... Alliance Imperial Consolidated Total Dividend Total Dividend in ISTi. in 1875. Per cent. 21 15 21 20 10 8 16 20 Per cent. 12 15 17i 16^ 8 7 16 20 32 LONDON BANKING LIFE. There is no evidence that the banks suffered in any general sense in public estimation, and if comfort can be taken from the fact that " their strength was sufficient for their burden," — it is, at least, significant that the wealthiest had to bear the heaviest loss; that the oldest and best constituted had most to en- dure in the " furnace of affliction," and that if the common lot was one of trial, the season was passed through with a degree of fortitude becoming great institutions dependent on honor, good faith, and the observance of high principles. POLICY OF OPPONENTS. 33 CHAPTER VI. POLICY OF OPPONENTS. " Had any one loritt'n and divide/' d erroneous things, misusint/ and for- feiting the esteem had of his reason among men, after conviction this censure were adjudg'd him, that he should never henceforth write hut what were first examined by an appointed officer." Milton's Areopagitica. The general opinion in City circles was that the comments of the press on the extraordinary losses of banks, and the criminal proceedings which followed did not afford support to the principles of commer- cial integrity and prudence. It is remembered with gratitude, that the Times performed great services in the past to the cause of commercial rectitude and honor ; the Barnes' Scholarships and the monument at Lloyd's being memorials not easily forgotten. Knowing something of the deliberation which has characterized the movements of the banks, the asser- tion may be made, without hesitation, that there was no excitement, vindictiveness, or sensational proceed- ings. A careful discrimination was also exercised to distinguish legitimate losses, the result of falling markets for two or three years, from those disgraceful bill transactions which have shaken mutual confidence and disturbed the relations between banker and mer- chant. There was further constant and judicious 3 34 LONDON BANKING LIFE. care extended to those who make inevitable losses : but it was recognized that the time had arrived to mark with severe reprehension those guilty of the malpractice of transferring individual losses to public institutions. It should indeed be a subject of con- gratulation that vicious trading has at least for a time been rooted out ; to which there should be further assistance by giving moral support to all prudent measures for completely clearing the commercial atmosphere. In adverting to the criminal charges, it may be well to observe the first principles involved : A bill may be an " accommodation " between two friends, but the words "value received" do not de- stroy its validity to the innocent holder. Assuming that no money has passed, and only a commission given for the " use of the name," there are ample means of preserving the liability of drawer and acceptor. But, above all, supposing each bill has been drawn '" for goods," or against foreign or colonial invoices, and, after the words "value received" the mark of the goods and the name of the ship fully described in the bill of exchange, is it contended that when all this is a fiction, the charge cannot be sus- tained of " fraudulent pretences ? " There was no ordinary astonishment m the City, at the legal proceedings to settle these points; but that there should be any attempt, by a constructive case, to lead to a false issue, and divert men's minds from the true question was a source of amazement, for it is obvious that commercial morality must be maintained, and that credit, the mainspring of our POLICY OF OPPONENTS. 35 great and extending commerce, has to be purged from all that is notoriously spurious and injurious to the national honor. In fact, there is little cause of complaint that the banks have not acted with composure, or that excite- ment has been contagious from directors to share- holders. There has been no cloaking over the mis- fortunes. Each institution has in its turn laid bare its position, and courted on all points the fullest investigation. Surely, when 800,000/. has been declared and admitted as loss, the appetite for mis- fortunes may be satisfied ! The depreciation in share property has not been less than 25,000,000/. There is a rigid scrutiny, moreover, into about 30,000,000/. of engagements, the result of which must be highly beneficial. It is only, therefore, an act of justice to support the Metropolitan Banks, which have shown a praiseworthy intention to meet the exigencies of the times in a bold, uncompromising and public spirited manner. In order to follow those who have rebuked the monetary institutions, the arguments may be thus summarized : It is not proved that those who are charged with issuing "accommodation bills" have made any representations to deceive others. There has been a singular coincidence between the determination to prosecute and the holding of certain bank meetinsrs. The indignation, or " sympathetic applause," is nothing more than a "late awakening to the realities of the situation." 36 LONDON BANKING LIFE. The "utter sham " ought to have been known long since, as the '' normal position for years " was easily to be ascertained. There are moral platitudes and obvious deductions in abundauce throughout the recent discussions, but the rebuke or warning the commercial world requires is not forthcoming, still less has there been the least support to the banking interests in the criticisms on their proceedings. It has indeed been well said that " for years past the Times has been the first to expose frauds on the mercantile commuuity, and that it has even suffered by so doing ; but Avhen it publishes an article expressing all sorts of hesitation and doubts as to the guilt of joarties, surprise must be expressed." In reply to the hostile criticisms it may be asked, — Is it not ao-ainst law and reason to find two sets of bills for one cargo of goods ? A double money trans- action, where only one was necessary or justifiable? Then observe how the circle of each bill is completed. There are drawer, acceptor and bill-broker. The latter especially is supposed to be the " detective " — not merely a go-between, — but a respectable guaran- tor, and each of these must be either privy to the transaction, or hoodwinked and blinded before the banker can be deceived. The arorument is somewhat absurd to assume that the banks have wished to " hush up," or conceal any gigantic conspiracy. They rely on honor, punctuality, good faith, and other ethical laws for their self-pre- servation. There is, too, the principle in trade that a banker should be dealt with as a physician — the whole truth, no concealment — otherwise neither POLICY OF OPPONENTS. 37 medical prescription nor financial remedy. Surely, the Overend, Gurney and Co.'s affairs were not con- cealed ? Was there any desire to cloak over the Pul- liiiger, the Roupell, or the Robson cases? No ! For the obvious reason that great offenses, like state secrets, are not to be screened with impunity, nor is it desirable that the world should be unconscious of those offenders who leave such " foot-prints on the sands of time." " The press was severe enough about the "utter shams " of commerce; but only for the purpose of showinsf the inevitable io^norance t>f those who are the victims of deep-laid conspiracies, the effects of which can neither be foreseen nor guarded against. That such ignorance exists is one thing, and to be lament- ed ; but is it, therefore, cultivated as a supreme happiness? Is there any charm in sleeping over a burning volcano ? Or can it be that the regions of the West have a sublimation of wisdom, while in the East, citywards, there is neither light nor common bense? The tastes and habits of distant luminaries may differ. It may be that sumptuous banquets and gorgeous billiard-rooms are differently regarded ; cer- tain it is that costly pictures from basements to stair- cases are not always to be determined as real wealth. It is feared that the age is "growing old" in luxury, that merchants are becoming Sybarites, and in such cases the decay of empires may be foretold when crime is solaced in its splendor, Avhen subtleties and mental reservations are allowed to take the place of the grand old principles which have made English credit everywhere respected and honored. >>i3iili2 38 LONDON BANKING LIFE. It is necessary to keep in view the method of treat- ing the mercantile failures. There is no intention to " chop logic " with public writers, although there is a strange difference between them; some laboring after originality in monetary science, like saints who " hunger and thirst after righteousness," without ever attaining that inheritance ; others indulging in sen- sationalism, taking the moral line of condemnation, and sagely deducting lessons of experience as well for merchant as banker. The change was quite marvellous after the dis- appearance of Alexander Collie. At first he was "more sinned against than sinning." There were even excuses for iniquitous systems of finance — and it was gravely doubted whether the law had been vio- lated. The "alleged frauds, if they were really frauds," afterwards became "crimes of a very heinous character," and the " disappearance could hardly be interpreted otherwise than as a practical admission " of absolute guilt, aggravated by the " despicable meanness " of refusing to face the consequences of the prosecution. This was the sort of lesson incul- cated by those who believe in the assertion that "nothing succeeds like success;" but the ignoble doctrine should find no place in commercial circles, where sagacity is not measured by rapaciousness, nor wisdom by the extent of audacity. The gross licen- tiousness of recent trading may receive justification from those who supported blockade-running, and have sympathies only with the glare and glitter of West- end life ; but it should have no admirers where sound character, prudence, and forethought, are regarded POLICY OF OPPONENTS. 39 as the best inheritance, and the surest means of attain- ing to prosperity. By disregarding all such " old saws," the apologetic writers had only a mild form of rebuke for the trader who incurred obligations he was unable to discharge, while it was allowed to be an open question whether the banks which have been victimized "had not themselves to thank" for losses unparalleled in extent, and which excited astonishment rather than condemnation. By no process of argument is it intended to lessen the extent of the losses. But surely the banks have the right to compare the dividends of the last twenty years with the misfortunes of the half-year ending June, 1875. They may also be allowed to calculate the percentage of loss on the capital turned over and intrusted to their management. With these two points conceded, there is not much to groan over. The banks " made a clean breast of it," and may still be regarded as among the noblest of joint-stock insti- tutions, the most successful means of utilizing spare capital, encouraging habits of thrift, and stimulating the skin and enterprise of the nation. They have the responsibility of employing eighty millions of money, turned over at least three times annually in loans and discounts, while how often it revolves in the daily clearings and across the counters of the banks would pazzle the most eminent statist to deter- mine. In following this huge business, it is easy to criticise — a very simple process to analyze blunders, — a charming recreation to take pleasure in the misfortunes of others ! But is it not the duty of the public writer to guide, direct, and control the course 40 LONDON BANKING LIFE. of events ? Does not his province lie as much in cor- recting as in opposing — in suggesting remedies rather than finding fault? Yet there has been a strange tendency "■ to arouse reflection;" to excite those who trustfully commit their money to a sense of suspicion ; and to doubt if the " one vast reservoir " should be preserved for the numerous channels which represent the savings, the uninvested capital of London. It is true the banking: establishments have been favored with some practical suggestions. But what do they amount to ? That the reference-book should be more carefully consulted ; the bill-brokers subject to rigid treatment ; the law of averages studied so as to divide risk and lessen current contigencies ! There is, however, little " new undet the sun," and if Solomon, in all his glory, asserted, " of making books there is no end," he might also declare that wisdom does not always dwell with men ! Think who have worn the mantle of City editorships ! Re- flect on the great names, now no more, or suffering an inglorious silence. From them there might have been the noblest of lessons ; wisdom worthy of states- men from the crisis. Yet there has been little else de- duced than the strange admission that after a rigid ex- amination of documents, it is " admirable to trace the neat manner by which the whole game is cloaked over." Such has been the onlj^ conclusion drawn from a gi- gantic swindle ; the floating of a huge mass of worth- less accommodation bills, and an amount of capital lost, as irretrievably as though it had been sponged up, — the amount being equal to a large proportion of the revenue of the United Kingdom. POLICY OF OPPONENTS. 41 The great Metropolitan Banks have, it is asserted, " violated one of the soundest principles of political economy," that of the division of labor. The sys- tem under which they work has " been tested and found wanting," and there is a vague generalization about banks "■ small and great," with an attempt to discriminate, without actually naming any one par- ticular institution. The object, however, is plainly to denounce the large banks, who have " employed some of their money ill ! " It is gravely stated that "• the mischief has been growing for a long time past," and what is now witnessed is " simply its cul- mination." What has " culminated " has been rascal- ity, not defective management, for at no period since the establishment of joint-stock banking has trade been so demoralized, or merchants less mindful of their own honor. 42 LONDON BANKING LIFE. CHAPTER YII. CRITICAL COMMENTS. " In real life you rarely have to organize from the beginning, but rather to take up organization at a certain point of its progress. Hence the failure of constitution-mongers like the Abbe Sieyes,ichoare sublimely indifferent to the state of facts around them. To use a witty expres- sion of Charles II., they will not see that ^nothing more can be done in the matter than is possible.' "Plans are often organized to embrace the settled and the past which can only have a chance of succeeding by being limited, in the first in- tance, to the unformed and the future." Arthur Helps. Taking the statistics of the last twenty years, it will be found that there has been no spasmodic course of action by the Metropolitan Banks ; but, throughout, a steady growth, and a solid prosperity, for the ex- panding commerce of the country to rest upon, which should not have been abused, still less victimized, by those who have • availed themselves of its powers. The reserves have also been increasing, investments larger than ever made in Government Securities, and support afforded to the great producing-countries which have given England an ascendency all over the world. The latest figures show these remarkable re- sults : — 30th June. 31st December. Deposits £77,577,000 £74,702,876 Reserve Fund 2,786,000 2,943,581 Government Stocks 9,982,000 11,146,635 BiUs Discounted, and Loans 99,352,000 97,073,217 CRITICAL COMMENTS. 43 The position of joint-stock banking in Scotland can be ascertained by the following statistics from the latest annual accounts : — Deposits £78,401,000 ReserveFund 3,607,000 Govemraeut and Indian Securities, Cash, and Short Loans. .. 22,194,000 Bills Discounted, and Loans 74,602,000 These figures, like those connected with the Metro- politan Banks, show a steady increase of prosperity ; that industry and thrift are largely co-equal ; and that banks have a well-defined public duty in admin- istering to the requirements, not of borrowers only, but of depositors. It would be an additional benefit to ascertain ex- actly the condition of Irish banks. The statistics are not yet obtainable ; but, excluding the bank of Ireland and three provincial banks, the following fig- ures give an approximate statement of their condi- tion : — Deposits £17,426,021 Reserve Fund 941,000 Government and Indian Securities, Cash, and Short Loans. .. 5,387,485 Bills Discounted, and Loans 16,799,379 With this experience, is there any reason in the denunciations of joint-stock banking ? Is it expedi- ent to educate the public to a new faith, to an impor- tation of French ideas, and an application of doctrin- aire sentiments ? Yet the following proposals have been made for public consideration : — That there is to be "greater responsiblity " on banks through the " Soci^t^ en Commandite sys- tem." That capitalists are to spread their money 44 LONDON BANKING LIFE. among all deserving classes of the industrial community ! That there are to be " active partners or ^/mnifs," instead of dormant part- ners, or, as may be assumed, non-acting direc- tors. That there is to be '" less business done by the discount bills of exchange ; " consequently money is to be " lent for fixed periods," and there is to be " irrigation and not inundation " deducing from the Cobden theory that the thing required is that capital shall be " within the reach of the artisan for his various experi- ments." Although the press, as a rule, did not editorially commit itself to any new theories, the newspaper teemed with letters on this " growing evil I " A writer, who confessed to practical experience " once upon a time," attacked the whole principle of modern banking, by asserting that the custom of " allowing interest on deposits produced, and will continue to produce, results which have recently appeared. It has concentrated vast sums of money into few hands partly irresponsible, and has destroyed the energy and foresioht of the private capitalist, who has resigned his function of looking after his own invest- ment into the hands of the holders of millions," Are such assertions true ? Will they stand investi- gation ? Does the experience of the past twenty years warrant such ' conclusions ? Take them in order ; It is contended, for instance, that deposits are evil. Surely not to the thrifty, who leave them CRITICAL COMMENTS. 45 with banks and receive adequate interest, nor to the shareholders who, by utilizing the money have had enormous dividends ! But if an evil to trade, which has been " demoralized," " the rogue and swindler, as well as the innocent," have alike been corrupted, and it is added that " it has taken forty years to ar- rive at the present perfection." By thus reducing the assertion to its native simplicity, it is obvious that the writer has gone too far. Heavy crushing assertions like these fail to carry conviction, else the natural deduction would be that all trade is vicious, that credit Oannot soundly be administered, and the commerce of the World would cease to depend on banking capital ! Is it forgotten that, long before England tried joint-stock banking, Scotland had proved the legitimacy of trading on deposits ? Ire- land only began to be prosperous when the same system was pursued of drawing capital into commercial centres, so as to utilize in all branches of trade. The United States of America and the Colonies also adopt the same course of business, without which enterprise would cease, and confidence no longer be cultivated among the trading classes. The charge as to the irresponsibility of those who employ deposits defeats itself, and requires little effort to expose the fallacy. Are the Gilbarts, the Pollards, the Scrimgeours, the Higleys — giants in banking circles — all forgotten ? Have they left be- hind them disciples still living in almost every coun- try where the English language is spoken, and Brit- ish energy has to be encouraged ? It were " bootless " to remind those who make these assertions that there 46 LONDON BANKING LIFE. is daily responsibility ; that directors carry forward the organization of great institutions ; that a watchful public spirit, " which never slumbers nor sleeps," is vigilant in detecting errors, and exposing the least deviation from those principles which elevate and ennoble the banking interest. The old " banking system " so much vaunted at times, had about it less of the " fierce light that beats " on the joint-stock banks, with their recurring meetings and systematic balance-sheets. There is a strange inconsistency in the statement that energy and forethought are destroyed. Is it really urged that the depositors are " idle," possessed of no discrimination in the employment of capital and unable to attend to their own affairs? The public have lately been enlightened as to the classi- fication of deposits with the Scotch Banks, which showed the following remarkable results during 1874-5 :— Sums not exceeding £100. . . . 100 to £500 500 to 1,000 1,000 to 5,000 5,000 to 10,000 10,000 to 15,000 15,000 to 20,000 20.000. . . . £11,768,317 24,121,745 12,069,187 17,775,389 4,674,044 1,593,075 917,108 3,324,408 £76,243,273 Here is ample proof that the steady depositors are of the sober, industrious classes, the " bone and sinew " of the country, who ought not to be scared away, but encouraged by the great banking institutions. The same results, it is believed, could be relatively CRITICAL COMMENTS. 47 shown by the English and Irish Banks, if statistics were obtainable for the purpose, and it is hoped, ere long, a classification of deposits will be made, for, apart from the general interests, the figures would be highly serviceable in the administration of banking affairs. In almost all arguments against the recent bank losses, there is a conviction that traders have been too long allowed a wide latitude in their operations, carrying forward their engagements by a renewal of bills, and temporizing with difficulties until they have neither the courage to avow nor the capital to meet their losses. It is a facile assertion that banks are to blame, and have themselves to thank for present disasters. Without attempting a reply to such an absurdity, which implies that those who toil to make money have lost the faculty of keeping it, it may be urged that banks rely on honor, believe in character, and ha,ve not always the means of detect- ing fraud, that their business is not to consider all men rogues, until honesty is regarded as an exception rather than the general inheritance. There is a race of writers, following the movements of the money market, to be likened to the " provincial Chancellors of the Exchequer " who tormented Sir Robert Peel ; gratuitous instructors of the public— who undertake duties without responsibilities, and are ready to " prescribe," not according to the re- quirements of the patient, but from the abundance of their nostrums, and a belief in their own infallibility. Their productions mostly appear as letter contribu- tions, printed with editorial remarks, which at times 48 LONDON BANKING LIFE. may be regarded as suggestive " feelers," rather than dogmatic treatises. It was amusing to follow some of these correspond- ents in their oracular effusions, especially so with a writer who confessed he " once " was in harness as a manager. He petulently attacks the system of al- lowing interest on deposits by inquiring why he " must revert to his proposition that the vast accu- mulation of funds (? money) in a few institutions is the encouragement of fraud ? " It is, however, clear that the proposition was not correctly stated ; and as the premises were false, so were the deductions. He admits, indeed, that the deposits have been "suc- cessfully used up to the present time," from which it follows that for nearly forty years the joint-stock banks have been exercising a beneficial influence ; yet it was contended that, in the space of six months, the system has " culminated," and this profound banker of earlier times had, unfortunately, " to repeat ad nauseam^ that no bank managers or board of di- rectors can manipulate twenty or thirty millions of money with safety to the depositors." It is always clear that wild reckless assertions carry their own answer, and that little or no attempt is necessary to refute their absurdity. Those who study this sub- ject with the gravity it deserves, know that Adam Smith by no means encourages such reasoning, nor would his doctrines fail to support the principles and practice generally of modern banking. He watched its operation in Scotland, the business there being in his time, as since, " almost entirely carried on by banking companies." He goes on to remark CRITICAL COJVIMENTS. 49 that, "though the conduct of all those different companies has not been unexceptionable, and has, accordingly, required an Act of Parliament to regu- late it, the country, notwithstanding, has ever de- rived great benefit from their trade." He then cites the fact that the commerce of Scotland more than quadrupled itself after the first creation of the two joint-stock banks, and that it Avas believed in his time that the trade of Glasgow had been doubled in fifteen years ; and, he adds, " that, whether the trade, either of Scotland in general, or of the city of Glasgow in particular, has really increased in so great a pro- portion during so short a period, I do not pretend to know. If either of them has increased in this pro- portion, it seems to be an effect too great to be ac- counted for' by the sole operation of this cause. That the trade and industry of Scotland, however, have increased very considerably during this period, and that the banks have contributed a good deal to this increase, cannot be doubted." The same conclusions are to be drawn from an ex- amination of the trade of the United Kingdom during the last twenty years. Imports. Exports. 1854 .. £152,389,053 .. £115,821,092 1860 .. 210,530,873 .. 164,520,351 1865 .. 271,072,285 .. 218,831,576 1870 . 303,257,493 .. 244,080,577 1874 .. 370,082,701 . 297,650,464 1875 .. 373,941,125 .. 223,494,570 Is all this trade an unmixed evil — developed by the " mischief " of deposits ? Far from such being the case, it is certain that joint-stock banks have had 4 60 LONDON BANKING LIFE. a preponderating power in placing British commerce in the vanguard of civilization, and making London the depot of the world's products. Indeed, if de- posits were not fostered, if good credit balances were not maintained as the essence of sound banking, there would be more rotten foreign loans, more bub- ble companies, and gambling of all sorts than at present, imposing on the credulity of the saving or laboring classes, and making " confusion worse con- founded." Besides the objectors to deposits at interest, there is another class of objectors to joint-stock banking. These assume that, instead of interest being allowed, commission should be charged for the safe retention of money, like a " warehouse-keeper, who charges for safe custody and management." The absurdity scarcely needs exposure, except to assert that if metallic currency, or bank-notes, or other money equivalents, be only so much furniture, the " Pan- technicon " or a " safe deposit " can be resorted to rather than a bank, which has for its functions the bringing of borrower and lender together, producing profits from discount or interest which constitute one of the economics of modern science, without which trade would languish, and enterprise beyond the " narrow coast line " have little encouragement. These crude notions bring to remembrance a dis- cussion between two friends, both of whom had fol- lowed and thoroughly understood the practice of joint-stock banking in Australia. The one may be described as an objector, the other the supporter. In those colonies there is a fierce competition for capital, CRITICAL COJNOIENTS. 61 rates for deposits are on the increase, and banks are running a race with each other to attract money from the frugal or industrial classes. The uninvested money is now largely left with savings banks , it being rarely placed in Government securities, and it often remains for a long period without fixed em- ployment. The objector maintained that the banks were all wrong in combining to attract this money ; that each had not the same power of employment; that some did not require further resources ; and others would be better without an increase of de- posits. The reply, however, was that banks were not like machines, to be supplied with lubricating power ; that they are at all times active agents, the medium between producer and consumer, and that nowhere better than in young communities is their true use understood, or their functions more tho- roughly discharged. The objector maintained his point by urging that those who did not require de- posits to supplement capital had no right to take them ; that when money was wanted it should be publicly advertised for, or solicited ; and that, in a word, all combinations or systems leading to " gre- gariousness " should be avoided as radically unsound and often vicious in application. The supporter of the banks was, for a time, disconcerted ; almost over- whelmed by denunciations of " class interests," of " monopolies " unjust to the public, and of unfair- ness to the trading communities. The calmness of reflection and the refreshing coolness of an early morning came to his relief. In trying to adapt his friend's theories to the practical duties of life, the 52 LONDON BANKING LIFE. following questions were raised : — Would it be judi- cious to drive to another establishment steady sup- porters and regular customers? One day to take money at interest, another day to refuse it ? To ad- mit a good demand for capital sometimes, no demand at another ? To combine occasionally with kindred banks as to rates, and afterwards to break through agreements? To allow 1 per cent, under an estab- lished minimum as a general rule, and when money became scarce, to tout, scramble and bargain for it at 1 and 2 per cent, above the terms current with other banks ? With all diffidence, as one " shaken like a reed," the supporter of banks submitted these questions for consideration, and his friend, being thus " cornered," found refuge in the trite remark that " something ought to be done ; " " that the ven- tilation of the subject should be followed by reform; '* he and all others leaving it there without further contribution from the wisdom of experience, or the genius of invention. BANKS ON SELF-IMPROVEMENT. 68 CHAPTER VIII. BANKS ON SELF-IMPROVEMENT. ^^ Remember that what is now and then done may get a momentary reputation or applause ; but ivhat is done every day will be the basis of character and ultimate reputation." LoKD Palmekston. After the great bank losses, there was an obvious desire to make alterations for dealing with the money left on deposit, and it is now necessary to consider the prominent suggestion offered in the interest of joint-stock banking. Although much discussed, it has not been very clearly set forth. It may be briefly stated thus : — Agree not to be bound to uniformity of rates ; abolish the regular system of 1 per cent, under the Bank of England minimum ; meet from time to time, as changes occur, to decide the rate to be allowed ; believe in the inviolability of all rates agreed to by the " associated banks." In all other points allow each institution to assert liberty of action and to struggle for ascendency. It will be observed that no definite principle was eliminated from such suggestions. It Avas not announced wheth- er the deposit rate was to be li or 2 per cent, under the lending rate ; whether the " margin of differ- ence " was to be large in times of ease, and small when money was in demand ; what would be the practical effect under a lower discount-rate than 2 54 LONDON BANKING LIFE. per cent., or of a rate higher than 10 per cent, per annum ? The proposition, as stated, was not made to apply to such circumstances as occurred in 1866, which may again have to be contended with under a great demand for bullion for the resumption of specie payments in France or the United States ; or when China and Japan, with their millions of people, come fully under the influence of monetary science, the motive power of commerce and civilization. It was asserted that there was " no magic " in the present system ; that the " hard and fast line " of 1 per cent, under the Bank of England rate was not an infallible rule ; and there should be no attempts made for its continuance. It was also argued that the pres- ent system had ceased to afford profitable results, and that a change should be made in the interests of shareholders rather than the public. It would not be difficult, however, to prove that there is an at- tractive force in the " charming simplicity " of an easy, well-understood regulation ; that if, over a long course of years, it has worked well, the exceptional experience of six months affords no reason for a change ; and that it is unwise to agitate, to disturb, and unsettle the subject. The searching question of Lord Melbourne, "Can't you leave it alone?" is appropriate. There is no wisdom in "meddling" unless imperatively required ; " muddling " is certain to follow from false movements, and there may be no retracing the effects of a divergence from the long- established, well recognized practice of modern banking. One of the most able of modern econo- mists properly asserts that the old system has pro- BANKS ON SELF-IMPKOVEMENT. 55 duced certainty, while there is only darkness in the vao-ue propositions for the future. There is no dis- guising the fact that large dividends have been paid to shareholders ; that the vested interests of banks represented by the plenitude of reserves, the import- ant staff of officers— the mere buildings— are a great and growing power in the state ; that the system has endured the strain of 1848, 1858, and 1866; that from each crisis, instead of there being any dishonor, the banks have emerged from the strain without tarnished reputations, generally realizing increased importance from the good sense and practical wisdom of those intrusted with management. It may be urged that the " time of trial " has not been passed through ; but look at the terrible lessons of war, of famine, and revolution ; think of the gold discover- ies ; and of the introduction of free trade ; of the outer world brought as close neighbors by steam nav- igation and telegraphy. It will then be allowed that joint-stock banking has had to combat with great and momentous changes, which make this age one of the most famous in the world's history. It is satisfactory to find that at present no change of importance has been made in the relations between the joint-stock banks and the public. The only prac- tical alteration attempted is to arrest the increase of deposits repayable at call, and to substitute seven days' previous notice. Even this has only been brought before the public by the London and West- minster Bank since the 21st October, 1875, but it has not in reality been brought into operation. Already some beneficial results have been pro- 66 LONDON BANKING LIFE, duced, and the experiment may be made a regulation to be generally adopted by the other metropolitan banks. It has been asserted that " these tentative or over- cautious steps were all that it had been deemed pru- dent to adopt. But the hope was not abandoned of proceeding further in the same direction, if the steps already taken proved inadequate to the exigencies of the business." * The public cannot fail to be inter- ested in all practical improvements, although the con- servatism of monetary science, especially in great institutions, has become an axiom of the City so deeply rooted in most minds as to prevent mere ex- periments or rash adventures. The time has, however, arrived, when the allow- ance of interest on current balances might be advan- tageously abolished. The system is still followed by the Union Bank of London, the London and County Bank, the Central Bank of London, the Alliance Bank, and the Imperial Bank. There are no statis- tics for determining the advantages or otherwise, derived from the money thus held by banks ; but it is remembered that the system was the offspring of early competition ; as each bank started, the public had to be attracted; novel features were "few and far between ; " allurements were offered more in the sense of " baits '" to the unwary than of actual bene- fits to the public ; and there was less advantage than now in loans, discounts, or good management. While only a slight dependence can be placed on " associa- * By the chairman of the London and Westminster Bank at the meeting of shareholders on the 19th of January, 1876. BANKS ON SELF-HVIPROVEMENT. 57 tion " or " combination " of banks in arriving at common rules of action, a strong opinion is enter- tained that this change might well be agitated ; that the banks would be strengthened by uniformity, and that the public would not, in any appreciable man- ner, suifer from the alteration. A recent correspondence between bank directors asserts " that the credit of a bank must depend on the prudence and integrity of its management, and, if these are wanting, no contrivances, such as paid up capital, reserves, notices of withdrawal of de- posits, or balances at the Bank of England, can main- tain it in prosperity." On these principles sugges- tions arising out of the recent agitation of banking questions may be submitted for consideration by those who are responsible for future management. The principles do not fail to embrace all that is sound and prudent for internal arrangement, yet manage- ment, or the power of controlling circumstances, must be the dominant feature, without which there can be no continuing influence, or permanent prosperity. It is a trite remark that money cannot purchase the rare gift of tact, even in the most ordinary affairs of life; how, then, can it be obtained in banking? Although not always, yet, as a rule, within the ordi- nary staff, the trained skilled officers of a bank should be stimulated to exertion in the higher departments, and be convinced that the grandest prizes of the pro- fession are within their grasp. The Scotch school, over a long course of years, has had a race of eminent bankers, and in the north of Ireland the same power is manifested. There is, indeed, almost an inherit- 58 LONDON BANKING LIFE. ance of prudence and forethought that has qualified these men for banking in the most difficult parts of the world ; it being proved they are astute, hard- thinking, patient workers ; that in society they are capable of exercising power, influencing thought, and refining the circles to which they belong. It is hope- less to assume that this type of man can be found anywhere. Neither are bankers heaven-born, nor can officers according to mere seniority acquire and mature the much-needed wisdom by practice and experience. But, on the other hand, there is no worse evil in joint-stock banking than " over-weighting " first- class officers with the burden of detail ; imposing common routine work on them better done by sub- ordinates. Give time for study. Allow leisure for organizing and reorganizing. " Divide and govern," is not only a maxim of state policy, but should be recognized in all great establishments. As there is a palpable absurdity in taxing the willing horse, and a barbarous cruelty to burden the swift racer with a pound weight more than he is able to bear easily when running, so the same principle applies to the chief officer of a bank. Men have Idlled themselves by monopolizing all details, and have passed away from the field before their work was half accom- plished. Toiling daily from eight to six is not the duty of a thinker ; opening every letter, attending every committee, hearing all complaints, redressing every grievance, are not necessary details for a super- intendent. Great banks require departmental heads ; internal organization ; men to succeed one another ; two officers, equal in age and experience, ready to BANKS ON SELF-IMPEOVEMENT. 59 relieve each other in emergencies. As men, " high- minded men," have made nations great, so they are indispensably necessary for monetary affairs. These rules have in some cases been recognized, and no dif- ficulty is found in Government offices, none is known to exist in the Bank of England, and it is no rash assertion that our northern bankers have more ad- vanced views on these subjects than the metropolitan institutions. In a- word, then, the period has come to elevate the class ; improvement will be manifested when time is given for reflection, when the social status is increased, and when measures of reorgani- zation generally admitted to be necessary are adopted. [The correspondence referred to " between Bank Directors," if not a breach of confidence or trust, is a signal proof of at least a violation of that " declaration of secrecy " which should be religiously observed in aU Banks. After the eminent services of Mr. J. P. Gassiott to the London and West- minster Bank, it is truly unfortunate that he has not been better advised than to " rush into print " in his season of honored retirement from active life.] 60 LONDON BANKING LIFE. CHAPTER IX. SUGGESTIONS FOR THE FUTURE. " Uver reaping something new ; That which they have done but earnest of the things that then shall do." Tennyson. FoKEMOST in the plans of improvement should be an arrangement within the banks for the true division of assets. The principle has not been sufficiently discussed, and no settlement even attempted. Given .£30,000,000 of deposits, then determine whether a fourth or fifth should not be in Government securi- ties ; after which the balance might be proportion- ately divided into bills having three months to run, and short loans to first-class reliable customers. Fix moderate limits for known or ascertainable risks, and enlarge the " lines '' where balance-sheets and full publicity are obtainable. There will be no great dif- ficulty in determining these points, if the duty is undertaken in a large and liberal spirit of fairness to customers of tried integrity. The bank, with its aggregate duties, its corporate responsibilities, being above and beyond all individual claims, must have its powers and privileges always in the ascendant. There has hitherto been little or no accurate knowledge cultivated within the banks of trades, of manufac- tures, of distant markets, or of foreign exchanges ; but SUGGESTIONS FOR THE FUTURE. 61 all such points should be studied by those who ad- minister credit, and assist in regulating the great commerce of the Emjjire. A perfectly accurate knowledge is not necessary for any department of a Metropolitan Bank ; but the means should exist for obtaining it, as well to prevent unjust suspicions as to follow the movements that have a common focus in London. It is well-known these movements alter- nately radiate outwards and inwards, mostly accord- ing to seasons; at times, there are disturbing influences, glutted markets, novel exchange transac- tions, and Government finances. How are all these to be followed, provided for, or even anticipated? It is obvious that for such purposes there should be men of study, of large grasp of mind, great force of character ; while to train and develope such men is now the highest and most incumbent duty of those in whose hands is deposited the safety and progress of joint-stock banks in the metropolis. It would be a great advantage for the joint-stock banks in London to analyze their deposits ; not simply to classify the amounts, after the manner of the Scotch banks, but to separate the " short money " from deposits left almost in permanence. A large amount is deposited almost as fixed investments, and only when death occurs is a change made. In such cases the depositor avoids all risk in the fluctuating price of securities ; the bank having to pay the exact principal when claimed, and of course the interest periodically. What then is the proportion of such deposits ? It would not be carrjdng the analysis too far if there could also be a sub-division of money be- 62 LONDON BANEING LIFE. ginning with seven to ten years ; then three to five years, and finally one year's duration. All the rest must be assumed to be deposited at call, or short notice, and be constantly represented in cash, bills, or the most convertible securities. It may be con- tended that such an arrangement is, after all, very arbitrary, unreliable, and that the first " crisis " would show the whole fabric to be a myth, a shadow, to crumble into decay, or wither as the " gourd " of the prophet's admiration : — " Like the baseless fabric of a visioii, The cloud-capp'd towers, the gorgeous palaces, The solemn temples, the great globe itself." The fact is, however, that all crises are periods of unreasoning fear ; prevision is almost an impossi- bility for a weak and uncertain mental condition ; nothing can prevent a panic if such is fiercely entered upon ; but as Lord Overstone remarked on invasion, " it must 7wt be,'' in fact it is impossible in England.* In sound banking there is a necessity to be fore- armed, and, therefore, the deposit system may be strengthened by spreading the " investment money " over a larger basis than at present occupied. Such a course would avoid the spasmodic movement of large masses of capital ; there would be less reliance on bills of exchange, and the basis would be Govern- ment securities in case of emergency. The whole * The probable derivation of the word " panic " is well known. Pan, one of the captains of Bacchus, with a few men, put a numerous army to rout by a noise which his soldiers raised in a rocky valley abounding with echoes. This stratagem made their number appear far greater than it really was, so that the enemy quitted a commodious encampment and fled. Hence all ill- grounded fears have been called "panics" or panic fears. — Vide an admirable article in the" British Almanac " for 1867. SUGGESTIONS FOE THE FUTURE. 63 policy of investment comes under consideration. Is it perfect ? Can no improvement be made ? At pres- ent, the banks allow it to be assumed they resort only to Imperial guarantee stocks, but include Indian bonds, and bank stock. The wisdom of the Court of Chancery in investments rules the Metropolitan Banks. No change has been made throughout their history, and none perhaps will be unless the entire system of business undergoes revision, and substan- tial improvements are accomplished. Consols, like land, are the foundation, the rock upon which national security rests ; the surest " barometer " of public opinion, and the index which best determines the strength or weakness of that complex, almost un- definable creation called " the Empire." But is nothing safe, except consols ? Have we not the great resources of three of the mightiest countries, the United States of America, the Dominion of Canada, and the Australian Colonies ? They have at least 400,- 000,000?. of securities guaranteed by their respective Governments, which are increasing in value and impor- tance. As these enlarge in population, the basis of wealth improves. Nations become more amenable to public opinion ; revenues increase ; and there is year bj^year a solid foundation to rely upon in dealing with their securities. Again, too, it should be remembered that their public loans represent reproductive works ; for the governments being paternal in character have to construct railroads, deepen harbors, supply water, and engage largely in industrial operations, which in other cases are conducted by joint-stock companies. In a word, these securities are not for 64 LONDON BANKING LIFE. war or wasteful purposes ; while the security of the public lands is largely available as a further guarantee, the revenues are constantly increasing, and the unde- veloped resources of great tracts of country have yet to be fully explored and developed. It should be distinctly understood that only a partial, well-con- sidered proportion of deposits should be so invested. Some banks may not be able to do anything ; others may want to mature experience ; but each should determine the point with due regard to the results worked out by the suggested analysis of deposits. There can be no doubt that first-class English invest- ments must at all times be preferred, and upon the whole subject, the evidence of Mr. Alderman Salo- mons in 1858, before the committee on commercial distress, should be carefully remembered, showing the course then pursued by the London and West- minster Bank : — " Do you consider Government securities a good asset in the event of pressure ? — Undoubtedly ; if that is not good, I do not know what is. " It is, of course, good, subject only to any loss which may arise from a forced sale. — Just so, and in 1847 we made a forced sale ; we sold 300,000Z. con- sols at that time, and repurchased them at a loss of 20,000?. But no doubt consols are one of the most ready securities which a bank can hold, subject, of course, to the fluctuation in price. " As a banking security, they are subject, of course, to all the fluctuations of the market between the time at which you have to buy, when they are gener- ally rather high, and the time at which you have to SUGGESTIONS FOR THE FUTURE. 65 sell, when they are rather low ? — Just so. As regards ourselves, properly speaking, we hold consols with our own capital ; they represent our own capital." It is also important to recollect that the same bank has more than once, after times of great excitement, proved the elasticity of its resources by large pur- chases of consols — of at least <£l,000,000in 1865, after the crisis had subsided; and, if rumor is not incor- rect, about X500,000 in 1875. And it may be well asked — why not invest more largely ? If trade is unable to supply undoubted bills, should not first- class securities be resorted to for the employment of money ? Some risk may have to be incurred when the time for selling arrives ; but what is that com- pared to inactivity, a dormant policy, a losing busi- ness? These arguments are urged only so far as government stocks are concerned, as it would at least be premature, if not dangerous, to think of employ- ing " banking money " on ordinary railway shares, as strangely recommended by an authority which often commands public attention.* It is nevertheless true that, as the deposits are the proper inheritance of banks, so the absorption of the money becomes a responsibility that must be incurred, after making all wise provision for present safety and future con- tingencies. There is, in fact, no more reason for not investing than there is in waiting for a wind that fails to serve when it does blow ; leaving the ship helpless when it should be in full, free motion. It is not argued that bills of exchange are to hold a subordinate position among banking assets. All * The Economist, 2d of October, 18T5. 5 66 LONDON BANKING LIFE. trade in every country depends on sucTi instruments, and, if properly circulated, representing producer and exporter, importer and merchant, dealer and con- sumer, nearly every bill dependent on a foreign- grown or foreign manufactured article requires the intervention of a banker. There may, indeed, be many mediums, each banker having a distinct func- tion ; yet all follow the course of business in dispens- ing credit, and helping to close the transaction. Bills of exchange thus become of vital importance to modern banking, notwithstanding the sweeping de- nunciations of some modern writers on the danger of widespread manufacture, and of their being " cre- ated " for the purpose of absorbing deposits, and em- ploying capital waiting investment ! Lord Overstone, in his evidence in 1857, shows the value bankers should attach to the use of bills of exchange : — " Are not the parties who draw bills of exchange capitalists ? — The parties who draw bills of exchange may be, or may not be, capitalists. "As a general rule, is it not the custom of the merchants of this country to carry on their business by means of bills of exchange ? — No doubt about it. " Are not bills of exchange the representatives of the goods manufactured or dealt in ? — I hardly know the meaning of that expression. Bills are drawn very often in consequence of sales of goods made, very often in consequence of credit granted ; they are sometimes drawn as arising out of exchange trans- actions, sometimes out of dealings in commodities. " Are they not as much the representative of the stock of the merchant or manufacturer as the bank paper which you stated was the mere representative SUGGESTIONS FOR THE FUTURE. 67 of gold or the shadow of gold ? No, I do not think they are. The bank paper is the representative of gold, because it is the certificate of gold placed in deposit against it ; but a bill drawn is by no means the certificate of goods in that sense of the word. " The merchant draws a bill on the faith of goods he is either making or has sent abroad ? — Take any particular transaction, there is no doubt about what the fact is. A person shijDS goods abroad, and draws a bill upon the person abroad to whom he ships these goods, or he draws a bill upon the merchant at the port through whom he ships them. That bill, no doubt, has a commercial relation to the commodity so shipped, but it has not a relation similar in its nature nor in its effects to that which the bank note has to the bullion deposited. "Is not his object to get money? — No; getting money is not the object in drawing the bill. Getting money is the object in discounting the bill." The wide significance thus given to bills of ex- change as a necessity of trade, makes the discounting of such paper the first duty of a well-conducted bank, which must keep in view the principles of shortening credit, anticipating the payment of money, meeting the demands of commerce, and facilitating financial transactions. It would be profitable to trace accurately the amount of acceptances current at an}^ one time, and available for discount by the Metropolitan Banks. Although it is not possible to arrive at an exact con- clusion, there are statistics to assist in arriving at ap- proximate results. There are at least two great sources of information which are beyond dispute : — 68 LONDON BANKING LIFE. ACCEPTANCES OF METROPOLITAN JOINT-STOCK BANKS. 30th June. 31st December. London and Westminster... £1,087,311 £1,235,939 London Joint Stock * 4,517,000 4,517,700 London and County 1,960,488 2,162,096 Union 4,402,218 4,176,153 City 3,390,620 3,150,941 Imperial 735,871 541,483 London and South- Western . 4,381 4,450 Consolidated 180,569 221,476 Central 827 nil. AUiance 582,892 641,777 £16,862,177 £16,651,315 ACCEPTANCES OF SCOTCH JOINT-STOCK BANKS FROM THEIR LATEST REPORTS :— 30tli June. Slst December. Bank of Scotland £1,442,774 £1,977,986 British Linen Company 245,604 245,605 City of Glasgow 855,457 855,457 Clydesdale 256,176 332,612 Commercial Bank of Scotland 432,624 523,774 National Bank of Scotland. . tl,224,454 tl>101,800 Royal Bank of Scotland.... 422,748 406,210 Union Bank of Scotland . . . 219,135 166,943 £5,098,972 £5,612,381 ACCEPTANCES OF AUSTRALIAN JOINT-STOCK BANKS :— 30th June. Slst December. No accurate details can be as- certained from the published Reports, but taking a well- known proportion of accept- ances upon the capital and business of the respective Banks, the amount estimated is about £2,000,000 £2,500,000 ACCEPTANCE OF MISCELLANEOUS BANKS :— 30th June. Slst December. Including Indian, Egyptian and other foreign States, adding thereto an estimate of Pro- vincial Banks' acceptances, the amount may be calculat- ed at £3,392,251 £4,000,000 * The only return issued was on the Slst of December, 1873. t Including letters of credit. SUGGESTIONS FOR THE FUTURE. 69 The other acceptances afloat, such as those of the Liverpool, the Manchester banks, and of the great manufacturing towns are not of large amount. The banks connected with Canada and the United States of America also issue bills of exchange. On the other hand the acceptances of large finance houses, like Rothschilds', Barings', Brown, Shipley and Co., and other eminent firms, to say nothing of those connected with the centres of European commerce, must be an important item in the discount market, — paper such as theirs never being doubted, and its real value as high as that of any bank. All these points furnish data for estimating the amount of bills connected with the external trade of the country ; or more prop- erly speaking, the exports from India, the Colonies, and foreign ports, not simply the portion imported into this country, but all trade of that kind through- out the world which has its centre, and must termin- ate financially, in the ever-varying, troubled waters of the London Money Market. Another class of bills of exchange represents the internal trade of a country. There have been many methods for ascertaining the amount of paper in cir- culation, more or less available for discount, accord- ing to the exigencies of the holders. The only prac- ticable calculation is to amalgamate loans and dis- counts ; then take a population of 200,000, and allowing 21Z. per head, it is found that bills are under discount for 4,200,000/. ; then give the same amount to a population of 32,000,000, and there is reasonable ground for concluding that 672,000,000/. would represent the floating credit between traders, all of 70 LONDON BANKING LIFE. which must either be under discount, or ready, if required, for that purpose. This is only a vague method for determining statistical results ; but it will at least serve* to show that banks' capital and the de- posits of the public have a large, if not an absolutely sufficient, ground for sound and profitable operations. How are good bills to be obtained, and bad paper avoided ? The difficulty, admitted by all who know anything of modern banking, must be more than ever felt, as proved by recent events. The question may be best answered by determining if brokers offer the best machiner}' for obtaining sound paper for dis- count. " These men, constantly moving about, make it their business to become acquainted witli the re- quirements of both parties, and are able to adapt them to each other with greater mutual advantage than could otherwise be accomplished. But, in this way, a broker's requirements are not really his own, but those of the public who find it expedient to trans- act their business through him. And so it is with the money broker : he merely deals with bills instead of produce or manufactured goods, and under ordi- nary circumstances, is able to make the daily financial supplies and demands of his various customers bal- ance pretty evenly, while at the same time, rates are to a great extent equalized by his intervention." * But then, on the other hand, it is asserted that discount-houses have become inevitable from the requirements of an ever-extending trade, that the wants of the country have necessitated the conversion of the middle-man into a principal, who makes a cal- * From a pamphlet — " The Bank of England and the Discount-houses." SUGGESTIONS FOR THE FUTURE. 71 culation of what amount of such paper he may rea- sonably expect to keep placed on the market, and to that extent provides for his clients an amount of ac- commodation which otherwise could only be obtained by them at a sacrifice of much valuable time." * In- stead, therefore, of a broker, in the true sense of the term, there is a competitor with banks ; the race is to the swift in easy times; the active "negotiator" obtains the best bills, and a large supply of money, mostly from Scotch and country banks, and the great provincial capitalists who follow exchange and bullion transactions. The broker has thus a tempo- rary, fitful occupation ; being compelled to buy his money dear and sell it cheap; outbidding in his changing career all who attempt to enter the market against him, while the cupidity of those who prefer hio-h rates, is often based on uncertain securities, with the inevitable result of vicious trading. Should the banks follow these shadows of the financial world ? There is not now the broker — sage, inquisitive, well informed — such as existed in earlier days, when commerce was more concentrated than at present. Indeed, it is in no spirit of antagonism the assertion is made, that there are no brokers — abso- lutely none — who have capital of their own which can be relied on as a guarantee for large transactions with banks. The time, indeed, has arrived for deter- mining whether brokers, as a class, are deserving of any encouragement — whether, as in 1860, they should not be made to depend upon their own resources, not on those of banks. There is, however, a need * From a pamphlet—" The Bank of England and the Discount-houses." 72 LONDON BANKING LIFE. for more large wealthy companies to conduct dis- count operations, and the period is opportune for suggesting the establishment of institutions to supple- ment the power and the business of banks. No better remedy for some of the present defects could be found than a strong, well organized, and substantial enterprise of that nature. The natural consequence of avoiding rather than encouraffino: business with brokers would be for the banks to be more restricted than at present to opera- tions with their own constituents. There would then be a full knowledge of the customer's proceedings ; no registry or " clearing office " necessary ; informa- tion, as required, would be forthcoming; not as rumor or second-hand, but authentic, positive, and reliable intelligence. Great frauds would also be less likely to occur than at present ; the creation of paper would be lim- ited ; renewal become impossible ; borrower and lender would be brought face to face for mutual ex- planations, and difficulties largely obviated. The sig- nificant fact of the principal holder of recent dishon- ored bills having no account with the largest dis- counter could not have occurred, nor would there have been an absence of all kinds of personal inter- course. The bane and antidote would be at once understood without a " middle man," the scrambling for bills not being good banking, while habits, char- acter, and method of trading should at all times be integral parts of a sound administration of credit. It would then necessarily follow that the " reference " and " character " books would not be neglected or SUGGESTIONS FOE, THE FUTURE. 73 give forth any " uncertain sound ; " each bank would have volumes of information, accumulating genera- tion after generation, for the guidance of successive managers. Mistakes, flagrant errors, deep schemes of fraud or forgery, can never be altogether prevented, and, as with life in general, so in the special vocation where greed, rapacity, and covetousness are culti- vated, there must be not infrequent losses, and those casualties which attach to great competition and the ordinary walks of commerce. A more frequent publication of accounts by the Metropolitan Banks would not only be an advantage to the commercial community, but the means of exer- cising a beneficial influence on the current business in deposits and discounts. The want of oflicial sta- tistics was much felt between May and August, 1866 ; also during the half-year ending 31st December, 1875. In the first named period, it was often inquired, — Can the banks maintain their ground ? Are the cur- rent balances with the Bank of England increasing? Is paper credit diminishing ? Could the deposits be repaid on any sudden demand? More recently it has been inquired, Have the joint-stock banks suffered in public estimation ? Are deposits being rapidly withdrawn ? Have the losses impaired the useful- ness of banks ? Are there indications of confusion, want of steadiness, or absence of self-reliance in the management? Information on these questions that would have settled thoughtless incredulity or con- firmed public confidence, would have been valuable. Now that these anxious periods have been safely passed, attention may be invited to the most valuable 74' LONDON BANKING LIFE. means of inspiring public faith by imparting regular, frequent, and reliable public intelligence. The man- agement of the Imperial Exchequer was never better understood than since the publication of weekly re- turns by the Government. Every one instructed in the working of the Issue Department can follow the movements of the Bank of England through the pub- lication of their accounts. So. too, if the Metropoli- tan Banks were to give monthly or quarterly returns of their affairs, increased confidence in their proceed- ings would follow^ without any diminution of their own internal power or usefulness. In the United States of America, the importance of publicity is fully recognized, for the New York " Associated Banks " publish weekly returns. Throughout the Australian colonies, the banks supply quarterly accounts show- ing all variations in the principal departments of business. It would, therefore, be a wise concession for London banks voluntarily to meet the public de- mands on this important requirement. Should Gov- erment interposition, however, be necessary, there are ample proofs, in Sir Robert Peel's great speech in 1844, on banking, that he contemplated a full revelation of all figures relating to the public in- terests, necessary to inspire general confidence. BANK OF ENGLAND. 75 CHAPTER X. BANK OF ENGLAND. " The Banking Act o/1844 is entirely the Act of Sir Robert Peel, and the lasting gratitude of this counti^y is due to him for the seiiiice rendered to it hij the passing of that Act. He has never beenproperhj appreci- ated ; but, year by year, the character of that statesman vpon this subject will be appreciated. By the Act of 1844, he has obtained ample and efficient security that the honest foundation of our moneta'ry sys- tem shall be effectually and permanently maintained, and no inscrip- tion can be ivritten vpon his statue so honorable as that he restored our money to its just value in 1819, and secured for us themeans ofm.ain- taining that just value in 1844." Lord Overstone. It is a singular»fact that, throughout the financial crisis — which is the term for the great convulsions of the past six months — there has been scarcely an objection to the working of the Bank Act of 1844. The exception to gratitude comes again from a limited school of thinkers, and a few writers only remembered in connection with the Anti-Gold League, who, in consistency with almost traditionary opinions on the currency, still complain against " our most anomalous monetary system." They wish the sub- ject discussed, not on its general merits, but rather in relation to the oscillations in the value of money. Why are upward changes made in the rate of dis- count ? Why is the commercial public troubled by mere autumnal movements of bullion ? Why these 76 LONDON BANKING LIFE. perturbations about a million or two to the Conti- nent ? Then they assert that the Bank of England's movements were ineftective on their own reserve, and still more so on the "open market," which ought to be entirely and legitimately governed by the " law of supply and demand," than which nothing can be more perfect, either for trade in general or for the actual business of money dealers. It was also asserted that " these irregular proceedings are in contravention of the spirit, if not the letter of the law, and that the legislature never contemplated that the Bank Direct- ors should impose on the mercantile community an artificial demand for money, in order to obtain rates of discount which could only be justified by a real demand." The fluctuations in the value of money, however, are not peculiar to the epoch through which trade is now passing. By tracing through a long period the rate of interest, or the allowance made by brokers on loans at call, it will be found : — In 1821 it was 5 per cent. ; in the early part of 1822 it was 2i per cent. ; again, in 1824, the early part, the rate was 2 per cent. ; in 1825 it was 5 per cent. ; in the middle part of 1826 it was 5 per cent. ; and again, in 1827, in the middle part, it was 2 per cent. ; in 1838 it was 2J per cent.; in 1839, the latter part, it had risen to 5i per cent. At that time, the partial suspension of the usury laws had come into action. In 1840, the latter part, it was 5 per cent. ; in 1843 it fell to 2 per cent. There is then the subsequent period for which the Bank Act of 1844 is responsible ; and the following are the results : — T/z per cent 2 2i 2 2 2 BANK OF ENGLAND. 77 Highest. Lowest. 1844 to 1850 8 per cent. 1851 to 1855 - . 6| 1856 to 1860 10 1861 to 1865 9 1866 to 1870 10 1871 to 1874 9 The average rate has been 4 per cent, throughout this long and important period. The trade of the coun- try has, since 1844, increased about fivefold; great troubles have been worked out successfully ; and no country in the world has, throughout the last thirty years,been so impregnable in its commercial system, more content with its progress in material wealth, or been so far free from convulsions in credit, currency, or cash payments. It is obvious that the commercial men are charmed with the working of the Act when the rates move downwards ; and the terms current in the market are most complacently accepted. There is then a jubilant tone of satisfaction. Such was the case from June to October of the year 1875 while the commercial atmosphere was clearing itself, and inflicting unpar- alleled losses on Metropolitan Banks. The average value of money was only 2f per cent, per annum ! Yet there has been no benefit to trade, no stimulus to manufactures, but a positive decline of exports, in fact, dreariness and almost dismay eveiy where ! No previous commercial crisis had been attended with less banking strain : money was a drug, and the only difficulty has been how to employ capital safely and profitably. There might have been millions of bills from St. Paul's and Wood Street poured into Lom- 78 LONDON BANKING LIFE. bard Street or Lothbury ; but the streams of business were dried up, enterprise had forsaken the race of merchants, and, instead of making money, they took to the art of destroying capital, squandering precious, hard-earned wealth in folly, extravagance, and reck- less speculation I The next great argument against the Act of 1844 was that bullion movements are ephemeral and should not disturb the value of money. It must be confessed that the old students of finance have the ever-recurring difficulty of educating their opponents to the nice distinctions between money in relation to the home trade, and money in its ultimate bearings on foreign exchanges. The lesson is only to be learned from the teachings of those " high and dry " writers of abstract science, who in these times have only a few real disciples. The prophets, who are they ? Adam Smith, Gibbon Wakefield, Stuart Mill, or Jones Lloyd, are often ruthlessly superseded for vague doctrinaires, or a new race of modern profes- sors, whose confessed theories can never be put into practice. During the half-year ending 1875 the vari- ation in the stock of bullion in the Bank of England has been from 28,627,950L to 22,554,835^. This enormous difference has occurred simultaneously with an import of gold of not less than 3,000,000Z. ; even Mr. Disraeli would not call this a " mere flea- bite," although he once elegantly so described the National Debt ; while it must be allowed that these perturbations of the precious metals are a most import- ant element in the money market, whether its organ- ization be perfect or imperfect. Indeed, the whole BANK OF ENGLAND. 79 trouble does not rest on mere autumnal movements, or the export of " a million or two ; " but on a (Ton- tinuous drain to meet the exigencies of commerce, the enormous strides other countries are making to assimilate their coinage to that of this country in obtaining good currency laws, and in resuming cash payments. Then, have the movements of the Bank of England been ineffective? Their returns show that the iieserves of coin have been fully sustained upon sound principles ; that ordinary business has been carefully followed ; that when the balances of bankers were heavy there was a due proportion of cash and notes, and that the loans and discounts — shown in " Other Securities" — have been legitimately followed as the index representing the commercial demand for money. The more novel point of the relation of joint-stock banks to the Bank of England is, however, a subject not irrelevant to the present inquiry, Look at the facts. The metropolitan joint-stock banks have a lending power of nearly 100,000,000?. as shown by their last balance-sheets, while the Bank of England has never had under discount more than 35,000,000?., which occurred at the height of the 1866 panic. This is most significant. The Bank of England is, there- fore, charged with too much, and the other banks with too little influence, and it follows that the Bank of England has no power to create an artificial de- mand, to disturb the laws of economic science, or to imperil the safety of the commercial classes. There is more to be feared from neglecting to follow the movements of bullion, than from the imaginary 80 LONDON BANKING LIFE. grievances attached to the mero mechanical working of banks. It is extraordinary how little these great subjects are studied, yet the mightiest revolution is going forward so far as the precious metals are con- cerned. The wonderful chapter in " Macaulay's History " on the debasement of the English coinage and its improvement, shows also that the precious metals have continued to be the best circulating me- dium in Europe, and that other nations have followed the example of England. Lord Liveri^ool's work, on the operations of the Mint, might well be reprinted with other famous tracts on the Currency Laws for the benefit of modern students. But withal, it is often forgotten how great and arduous a task has devolved on England since the gold discoveries. There has been imported into Great Britain not less than 500,000,000^., which represents the only true standard of value ; it has been distributed throughout America and Europe — but especially in France, Italy and Germany, for the purpose of an exchangeable commodity, honestly valued, so far as peoples and governments are concerned. It has been a mighty movement from which England has had all the profits in transit, and it has, moreover, had the advantage of employing its industrial classes in the Colonies and California in producing, shipping, and distributing this wealth throughout the world. STOCK EXCHANGE INFLUENCES. 81 CHAPTER XI. STOCK EXCHANGE INFLUENCES. " David said in his haste, ' All men are liars ; ' yet he kneiv nothing of City frauds, of hr(hhle companies, of railway swindles, of iiisensate fjambling, and 7-uinoiis betting transactions. "Even members of an association founded on the strictest principles of honor, may be accused of being scoundrels and rogues, ivithout draw- ing doion any thunders of Jove. " Betting has as many votaries as the v:orship of Dionysius, in ancient Greece, but their modern imitators are grown men, in their natural seiises, the peculiarity of the vice seeming that, like dipsomania, it is not only incurable but aggressive." " The World " Newspaper. There is a view of Stock Exchange operations not often considered by those who have to trace their in- fluence on tlie thoughts and actions of mankind. This view is dependent on the enormous growth of business which claims attention from year to year. Without going into minute details, there is much to understand from Wettenall's Daily Lists, and to en- able a comparison to be made of the most important epochs of the century, decennial points are taken starting with 1840, and ending with 1860. Subse- quently it is more important to follow the particulars admirably furnished by Messrs. Spackman and Son's annual lists, which give the details of all new under- takings. 6 82 LONDON BANKING LIFE. In 1840. Railways : Nominal Paid up Mines : Nominal Paid up Joinf Stock Banks : Nominal Paid up , Miscellaneous : Nominal Paid up Total £ £ 45,000,000 •• 38,920,000 18,325,000 •• 11,960,000 31,902,500 •• 8,775,000 89,820,000 •• 47,375,000 £185,047,500 107,030,000 In 1850. Raihuays : Nominal. Paid up . . Mines : Nominal. Paid up . . Joint Stock Banks ; Nominal .... Paid up Miscellaneous : Nominal. Paid up. . Total , £ 228,500,000 5,650,000 20,260,000 2,784,000 £256,194,000 £ 180,250,000 4,793,000 7,500,000 1,495,400 194,038,400 In 1860. Railways : Nominal. Paid up . . Mines : Nominal. Paid up . . Joint Stock Banks : Nominal Paid up Miscellaneous : Nominal. Paid up.. Total. £ 385,000,000 6,400,000 36,616,000 31,110,000 £459,126,000 £ 350,000,000 5,460,000 16,836,000 24,540,000 396,836,000 STOCK EXCHANGE INFLUENCES. 83 1870. Companies * Banking Kailvvay Sanitary Home Enterprises Foreign Loans. Alabama, 8 per cent Buenos Ayres, 6 per cent. . Chilian, 5 per cent Kgyptian, 7 per cent French, G per cent Honduras, 10 per cent Massachusetis, ."> per cent. Montevidean, 6 per cent. . . Japan, 9 per cent North German, 5 per cent.. Peruvian, 6 per cent Koumanian, 1% per cent . . Ilitto 7 per cent Russian, 5 per cent Spanish, 5 per cent Tasmauian, 6 per cent Total Capital Offered £ 300,000 2,115.000 42.'i,000 ll,S2(),2(;(i £14,600,i;CO 450,000 l,o;U,700 1,012,700 7,142,S(;0 10,(1(10,000 2,5(KI,000 GIO.SOO 3,000,000 l,0OO.i 00 7,500,000 11.020,000 (iOO,000 43^,3:11 12,000,000 2,31X,100 100,000 £76,292,757 Called up. £ 80,000 290,2,50 101, .500 4,121,975 £4,599,725 425,2.50 910,.536 840,541 5,0)07,098 4,000,000 2,000,000 .53:1,226 750,000 9S0,000 2,200,000 7,4.50,000 432,000 373,498 9,(i00.000 1,N54,480 100,000 £42,602 ,.354 187 Companies, t Banking . Kailway Sanitary Home Enterprises FoRKioN Loans. A rgentine, 6 per cent Brazilian, 5 per cent Costa Kica, 6 per cent Ditto ditto French, 5 per cent Georgia, U. S., 7 per cent Ditto ditto Louisiana, 8 per cent Liberian, 7 per cent Massachusetts. 5 per cent Moscow Kouisk Railway, 6 per cent Paraguay. 5 per cent . . ." Roumanian, 8 per cent Russian, 5 per cent , Spanish, 3 per cent Ditto 6 per cent United .States, 5 per cent , Ditto ditto Uruguay, 6 per cent Total Capital Offered £ 225,000 34,615,078 170,000 25,198,580 £60,208,658 6,122,400 3,0 0,000 500.000 500.000 80,000,000 225,000 315,000 450,000 100,000 300,000 1,700,000 1,000,000 17,550,000 12,000,000 6,.375,000 2,622,781 45,000,000 16,875,000 3,500,000 £258,343,839 Called up. £ 22, .500 19,0;;0,513 70,000 10,207.858 £29,230,871 5,418,324 2,670,000 360,000 125,000 26,960,000 175,.500 245,700 337,500 85,000 273,000 340,000 .3.50,000 13,162,500 9,780,000 1,976,250 2,098,160 40,9.59,000 15,350,250 875,000 £150,772,055 *90 New Compames, 1 196 New Companies. 84 LONDON BANKING LtFB. 1872. Compaiiies.* Banking Kail way Sanitary Home iinterp rises FoKEiGN Loans. Argentine, 6 per cent Arkansas, 7 per cent Bolivian, 6 per cent Boston City, 5 per cent Canada (Quebec), G per cent. Costa Kica, 7 per cent French, 5 per cent Hungarian, 5 per cent Massachusetts, 5 per cent — New iTork City, 6 per cent. . . Ottoman, 9 per cent Pariiguay, 8 per cent Peruvian, 8 per cent Russian, 5 per cent . Spanish, 3 per cent Washington City, 6 per cent Total Capital Offered £ 8,420,000 25,602,300 2,755,000 39,290,395 Called up. £76,007,695 1,225,000 487,125 1,700,000 400,000 100,000 2,400,000 160,000,000 3,000,000 443,500 3,375,000 11,120,200 2,000,000 15,000,000 15,000,000 10,625,000 900,000 £303,849,520 £ 1,267,500 18,869,408 713,000 16,998,412 £37,848,320 931,000 316,615 1,156,000 300,000 100,000 1,968,000 45,600,000 2,430,000 412,445 3,121,875 10,959,307 1,400,000 11,625,000 13,350,000 743,750 787,500 £133,049,812 1873. Companies.t Banking Railway Sanitary Home Enterprises Foreign Loans. Buenos Ayres, 6 per cent . . Chilian, 5 per cent Egyptian, 7 per cent Hungarian, 5 per cent Ditto, 6 per cent Japanese, 7 per cent Russian, 5 per cent Turkish, 6 per cent United States, 5 per cent.. Total Capital Offered £ 2,913,000 32,755,990 1,069 550 43,607,239 £80,345,779 2,040,800 2.276,500 32,000,000 5,400,000 7,500,000 2,400,000 15,000,000 2,223,460 60,000,000 Called up. £ 428,650 20,534,099 585,050 15,748,379 £37,296,178 306,120 2.1.39,910 16,960,000 4,320,000 1,500,(100 2,180,000 3,000,000 655,903 54,600,000 £209,186,539 £122,958,111 * 234 New Companies. t 206 New Companies. STOCK EXCHANGE INFLUENCES. 85 1874. Companies.* Banking Railways Sanitary Home Enterprises . Foreign Loans. Belgian, 3 per cent Canadian, 4 per cent Hungarian. 6 per cent Ottoman, 5 per cent Santa Fe, 7 per cent Total. Capital Offered Called up. ■ £ £ 3,020,000 295,000 21,194,000 14,923,035 3,238,000 804,480 18,084,400 9,859,755 £45,530,460 £25,882,270 1,440,000 1,087,200 4,000.000 3,600,000 7,500,000 4,875,000 15,900,000 5,406,000 300,000 276,000 £74,676,160 £41,126,470 1875. Companies, t Banking Railways Sanitary Home Enterprises Foreign Loans Brazilian, 5 per cent Russian, 4i^ per cent , Swedish, 41/2 per cent Total * 128 New Companies. Capital Offer e \ £ 100,000 12,615,000 290,000 8,436,000 Culled up. £ 25,000 8,701,800 143,500 4,646,900 £21,441,000 5,000,000 8,000,000 1,000,000 £35,441,000 £13,517,200 4,825,000 7,360,000 987,500 £26,689,700 t 02 New Companies. 86 LONDON BANKING LIFE. The extraordinary mass of business shown by these statistics raises important considerations. Is it all sound, to be relied on by bankers, as the result of well directed energy? Or is it like the "bubble repu- tation," in many respects of ephemeral character, the emanation of base speculation, of reckless trading, and of things begun in haste, continued in doubt, culminating in folly or fraud? An analysis of the enterprises must be made to determine these ques- tions; and the student of finance has to bear the points in view when daily reading reports of meet- ings, fluctuations in prices, and the ebb and flow of business on the Stock Exchange. There is, moreover, the principle, that the legiti- mate home enterprises may be distinguished from those which are "conceived and born" of vicious speculation. The foreign and colonial loans may also be distinguished in their ends and objects ; some be- ing for bolstering up weakness in finance, the linger- ing decay of empires, or the wasteful extravagance of war. Other loans are for the development of trade, opening up new countries, and the honorable enterprises of young and thriving communities. The Joint-Stock Companies Act of 1855 was the great turning point in the enterprise of England, and without detailing the subsequent modifications of the Act, its objects were to provide for registration, de- claration of objects, limited liability, publication of returns, honest dividends, punishment of fraud ; for calls to be absolutely paid in cash, not by notes or obligations to pay ; and for loans not to be made on the shares of such companies. STOCK EXCHANGE INFLUENCES, 87 There has for some years been a steady adherence to the principle of limited liability in new Joint- Stock Companies. Yet no inquiry has been diligently pursued as to the working of the principle, or the influence of recent undertakings on general com- merce. The most forcible objections to limited lia- bility came from those who instinctively understood the art of sound enterprises, and had carefully fol- lowed the expanding influence of commerce under free trade and the gold discoveries. Their predic- tions were that it would " prove seriously destructive of the sober and substantial virtues of the mercan- tile character. By weakening in the mind of the trader the sense of full responsibility for the conse- quences of all his actions, and limiting the obligation which now rests upon him to return in full all that he has borrowed from others, the general tone of commercial morality must be deteriorated. By limit- ing the unfortunate consequences of failure, whilst no corresponding limitation is placed upon the gains which may attend success, the due equipoise between the restraints and the stimulants to enterprise and speculation, upon which depend the solidity and safety of the commercial system, rnust be disturbed. By enabling parties to put a fixed limit to the amount of possible loss, the chief incentive to caution or vigilance in the conduct of business will be taken away or seriously weakened ; whilst by leaving the hope of gain unrestricted and indefinite, a gambling spirit will be introduced into commercial transactions, and the risks of trade will assimilate themselves to the chances of the lottery wheel rather than to what 88 LONDON BANIONG LIFE. they are now — the legitimate results of hopeful in- dustry and cautious enterprise." There were no modifying restrictions to guard " against the danger, first, of excessive and reckless enterprise, naturally generated by the sense of strict limitation of risk ; and second, of fraudulent abstraction, under the form of interest or profits, or that specific and fixed amount of capital which is alone appropriated as the security of the honest creditor." It was properly urged that " profits in trade consist of interest upon capital, remuneration for labor and skill, and pre- mium of insurance on risk. In proportion as the risk in any business is great, profits are usually high ; but of these high profits a large share is, by every honest trader, set aside as the })remium reserved against high risks. Then as regards the Limited Liabilities Act, the object is to enable concerns to limit their liability to a certain fixed sum, which has no reference to the varying magnitude of the risks which they incur, or to the high profits which, through those risks, they are appropriating to themselves, but not reserving for the honest protection of their cred- itors." It was foreseen that " the sober calculations and legitim.ate transactions of real trade would give way to a general spirit of speculation in hazardous enterprises and jobbing in shares — a state of things which the history of 1824 and 1825 affords a practi- cal illustration, and at the same time holds out a warning example." The measure, as predicted by its supporters, would be " to restrict rather than to increase credit, by filling the community with a mass of concerns notoriously undeserving of public confi- STOCK EXCHANGE INFLUENCES. 89 dence. The consequence must be a serious injmy to commercial character abroad, a diminution of the confidence which other countries repose in the en- gagements of merchants and traders, an interruption to the ease and freedom with which all trading inter- course with the world is at present conducted, and in the end absolute pecuniary loss to England. The tendency of the measure must be to extend and in- tensify these evils, by giving facility for the wide- spread introduction of joint-stock companies — reck- less in their procedure because protected by limited liability, and filling the community with the instru- ments of gambling in the form of shares upon which little or nothing has been paid up. Important changes of the laws which affect the monetary or commercial system, however sound may be the principles on which they rest, are almost invariably followed by rapid and excessive development, leading to temporary but serious embarrassment." Such were the views •Lord Overstone expressed before the ])assing of the Limited Liability Act, and the protest embodying these opinions will always be classed among the most important records of parliamentary proceedings. There is ii difficulty in giving precise data for de- termining the effects of the Acts of 1855 and 1862, but the defunct and moribund companies abound in every street, and their glaring titles are an offence on many a door jamb or lintel. The returns to the House of Commons on these companies being without summaries or analyses are at present almost useless for reference. It, however, appears from the latest return that in 1874 out of 90 LONDON BANKING LIFE. 1076 Companies, 1046 were in operation, or supposed to be, and 30 were being wound up. The same re- turn shows that the 1076 limited companies were registered with a nominal capital of <£ 11 0,540,000 ! Stock Exchange operations require to be placed by banks more completely under control than at present. It is too obvious that gambling has become a national vice, a very prominent feature of English society, pervading all classes and entering into nearly every pursuit. Speculations are. also widely entered into without care or knowledge. Extravagance, luxury, and self-indulgence, are painfully manifested by those who live on the property of their creditors. These are heavy charges, yet if each be examined in turn, the result will be that the section of the commercial community with which banks are deeply, if not inti- mately concerned, are frequently the most culpable. " Gambling " is, indeed, the paramount vice to be dealt with, so far as great borrowers are concerned. A former generation addicted itself to cards, dice, and other games of chance, until legislative enactments became necessary to banish gamesters from taverns, clubs, and more ordinary places of resort. This gen- eration has witnessed great operations in railroads, in "Limited" companies, in finance undertakings. There have been monopolies of cotton, tobacco, rice, and silk. The metal markets have been invaded too by a race of adventurers, until they were " scared " by their own imprudence. There is a reaction as to foreign loans ; month after month governments profit by repudiation or actual insolvency, and England is the acknowledged victim of swindlers, base in- STOCK EXCHANGE INFLUENCES. 91 triguers, low schemers, and sometimes of self-convicted "blacklegs," who have been exposed, disgraced, and expatriated members of coarse., vulgar and debased European communities. These statements, though in appearance strong, are susceptible of proof from the Report of the Foreign Loans Committee. But, then, what is said of the victims? Pity would be a false sentiment, and unacceptable. Silent contempt is unproductive of benefit. Satire and rebuke might be availing, if there were again a censor like Sidney Smith, when he remarked that " among the discussions to which the moral lubricities of insolvent people have given birth, they have arrogated to themselves the right of sitting in judgment upon the property of their creditors, of deciding who among them is rich and who poor, and who are proper objects of compas- sionate payment ; but, in the name of Mercury, the great god of thieves ! did any man ever hear of debtors alleging the wealth of the lender as a reason for eluding the payment of a loan? Is the Stock Exchange a place for the tables of the monej'-lenders, or is it a school of moralists, who may amerce the rich, exalt the poor, and correct the ine(|ualities of fortune ? " The stinf? of some such moralist is often more effective than the stern, cold, severe lesson of the banker ! Let him discourage bubble companies, refuse credit, and reject discounts to those who are diverting hard-earned, honestly-acquired money, from true enterprises to atrocious, wicked, and wasteful speculations. Walk through Lombard or Thread- needle Streets, wade througli Cornhill, or loiter in Lothbury on the great " Settling-days," and it is im- 92 LONDON BANKING LIFE. possible to avoid the reflection that times have changed, that the old things have passed away, and new habits have come over the lives of citizens ! It is Tattenham Corner — not the Exchange of merchants — Tattersall's instead of the Halls of Commerce. There are no longer students of finance, but keen " bookmakers, " those who ''hedge," "carry over," and affect the " smartness " of members of the " ring " rather than the sober practices of gentlemen, or the grave, thoughtful calculations of the true merchant.* " Speculations " in trade are, of course, as vicious as any other class of misdeeds which end in bank- ruptcy. It is often argued that the tendency of the age is " for the rich to become richer and the poor poorer," which is true in many cases, and certainly is more than " half the truth" whenever great banks lend themselves to bolstering up markets, permitting goods to be held over from season to season and throughout periods when prices "greatly fluctuate. It is no secret that the world has yet to be informed of many a breakdown of markets ; of " Syndicates " parted company ; of conspiracies exposed ; and of the " honor " among a certain class of dealers failing to fulfil their ordinary requirements. Banks should be no party to such proceedings, nor allow money upon *" It is true that the credulity and cupidity of certain classes of the com- munity have blinded them to the danger of embarking in speculations. They appear to have measured the value of the promises held out to them, not by any rule of experience, but by their own sanguine expectations ; and thus they have fallen a prey to those who, by trading on their credulity, have ob- tained their money, and then betrayed their interests. The Secretary of the Honduras Legation "—himself an undoubted authority— " asserts that 'the fault of the failure falls with equal force upon all who have interests, rights, claims, complaints, or any participation whatever in these matters. It is a kind of " original sin," which reaches even the most innocent who have any- thing to do with the undertaking.' "—Report on Loans to Foreign States. STOCK EXCHANGE INFLUENCES. 93 any sort of security of doubtful character. They should be suspicious of all combinations, convinced, from experience, that whatever is unsound in prin- ciple cannot stand investigation. " Extravagance, luxury, and self-indulgence" may be reduced to a compound phrase, needing only a passing elucidation. It is not necessary to enter into any moral disquisitions, yet the private habits, dispo- sitions, even the tastes of great borrowers, should be followed. It will not conduce to safety that those in the " thick of the fight " should servilely imitate patrician manners and customs, still less that sump- tuous banquets and other meretricious displays should be dispensed as bribes for credit. It is con- trary to City habits that the " West-end " should be the parade-ground which all men must frequent in order to be known ; " club life " the proper pass- port to a bank parlor ; the " season " recognized as the only orthodox time for dinners, luncheons, and that then we should " ape " the tone, the dress, the very accents of idle, dawdling dandies who aifect superiority ; themselves the toadies of a bloated plutocracy, who " come like shadows, so depart." 94 LONDON BANKING LIFE. CHAPTER XII. AMERICAN FAILURES. " In democracies men are never stationary. A thousand chances loaft them to and fro, and their life is always the sport of unforeseen or extemporaneous circumstances. Thus they are often obliged to do things which they have imperfectly learned; to say tilings they im- perfectly understand; and o devote themselves to work for which they are unprepared by long apprenticeship. " In the United States fortunes are lost and regained loithout difficidty ; the country being boundless and its resources inexhaustible. The peo- ple have all the wants and cravings of a growing creature ; and whatever be their efforts, they are always surrounded by more than they can appropriate. Boldness of enterprise is the foremost cc»/.se of its rapid progress, its strength, and its greatness. Commercial business is there like a vast lottery, by which a small number of men continually lose, but the State is always the gainer. Any bold speculation risks the fortune of the speculator, and of cdl those icho put their trust in him. The Americans, who make a virtue of com- mercial temerity, have no right, in any case, to brand with disgrace those loho practice it. Hence arises the strange indrdgence .shoivn to bankrupt.'i in the United States ; their honor does not suffer by sitch an accident. In this respect the Americans differ from all the com- mercial nations of our time, and resemble none of them in their posi- tion or their wants." De Tocqueville. The events of 1873 in the United States exercised a potent influence throughout America, and have naturally affected the subsequent commerce of Eng- land. It was in August of that 3'ear the financial panic, offspring of vicious speculation, culminated ; the crisis spread to every important city in Northern America ; some of the greatest banking houses sus- pended payment ; the Stock Exchange of New York was closed ; and there was a paralysis of enterprise, AMERICAN FAILURES. 95 of power, and all action in trade. These results con- tinued to be felt throughout 1874, and a chronic weakness manifested itself in 1875, which circum- stances have to be remembered in the review of com- merce or finance. The statistics of failures show re- markable results : — Year. Number of Failures. Amount of Liability. 1873 5,183 £ 45,699,800 1874 5,830 31,047,800 1875 7,740 40,212,070 Though these figures exhibit a large increase in the number of failures, the average amount of liabilities for each failure is diminishing. There is a tendency for ordinary business to be more than ever subject to casualties, while great undertakings in banking, finance, or manufactures, are, on the whole, able to protect themselves from sudden storms or contin- gencies. Some curious calculations are indulged in by those who study commercial disaster in the United States. By an eminent authority on the subject, it is asserted " the liabilities of the 7,740 who failed in 1875 are, in round numbers, 200 millions of dollars. Estimating the average yield of failed estates to be 33 1-3 per cent., the actual loss to capital account by the failures of the year will stand at about 120 millions of dollars. This amount is equivalent to the value of one-half the cotton crop, and is more by 30 per cent, than the entire yield of all the gold and silver mines 96 LONDON BANKING LIFE. of the country. It is a serious loss that individuals have to bear, to be deducted from the profits of business or to trench upon the accumulation of pre- vious years. This 120 millions of loss represents a profit at 10 per cent, on 1,200 millions of dollars of business ; in other words, that amount of busi- ness of the country for the past year has been done for nothing, the profits being absorbed by losses. This loss of 120 millions of dollars is diffused over many centres of trade, and has been equally divided between individual concerns." As in most other countries, so in the United States, there is a growing conviction that periods of crisis afford opportunities for making money, the arrange- ments for time with creditors, or the compounding of debts being systematized by professional men, by whom there is often the greatest abuse of the law. It is notorious, however, that " neither capacity nor capital, neither character nor conservatism, are im- parted by a compromise, and so in six cases out of nine the same result will follow in the course of time. Meanwhile the trader who gets his settlement at thirty or fifty cents can very well afford to undersell the solvent merchant who desires to pay one hundred cents on the dollar. The entire trade of towns, es- pecially in the South, has been demoralized by set- tlements with parties entirely unworthy of confi- dence, who, by imposing on the good nature or fear of creditors, are able to tempt the local cash trade for prices far below what an honest merchant dare accept. The result of competition between them will be to impair the fortunes of the solvent man, AMERICAN FALLUBES. 97 unsettle the community, and destroy the chances of a profitable business." Eminent authorities on the trade of the United States in 1875 have thus summarized the position of affairs. " No general expression will entirely photograph the condition of business at the close of the year ; while depression, lack of profit, and want of confidence prevail in many quarters, espe- cially in the eastern section of the country, there has been con- siderable activity, a lars>-e absorption of goods, and increased purchasing and debt paying power in the west, and portions of the south. Apart, however, from this sectional improvement, the general results of the year have not been satisfactory. The number of those actively engaged in trade who have added to their surplus are exceptionally few ; those who have held their own are not numerous, while a larger number than both of these combined would have to admit a diminution, if their assets were valued at realizable figures. The failures of the year are in many cases significant ; but they have been confined to no distinctive trades ; they bear a very small proj^ortion to the number in each branch of business; and some circumstances are noticeable, involving departure from legitimate business principles, which would result, sooner or later, in ruin, even in the best of times. The failures in many leading lines have been astonishingly few, indicating previous accumulations of capital, limited internal indebtedness and a sounder condition of things generally than it was supposed could exist after all the waste of war, excessive taxation, a vastly increased cur- rency, and the necessary expansion which followed. So that, though the year has resulted very rarely in profit, and much more frequently in loss, there is much in its history to encourage confidence in the ability of the rank and file of the commercial community to wait for better times."* The most important occurrence in the United States throughout the year 1875 was on the 26th of ♦The valuable circulars of Messrs. Dunn and Co. have been relied on for these statistics and quotations. 7 98 LONDON BANKING LIFE. August, when the Bank of California stopped pay- ment. The bank was regarded as a " political power; " it was the fiscal agent of nearly all the mining cor- porations in the Pacific States ; vast speculations had been entered upon through its means in stocks, shares and real property, and jDerhaps never in the history of any country had capital been more quickly or remarkably developed. It is not wise to rely on the glowing language indulged in when the mind is immediately affected by passing events, yet there were statements made in San Francisco at that time so remarkable as to be worth recording. One of the apologists for the failure asserted that " when the full history conies to be written it will be seen that the bank now stands upon a stronger and more hope- ful basis than at any time since its inception, or the first opening of its doors, with assets in excess of its liabilities." Party feeling was however so strong as to bring the public journals into the embroilment, some assailing the bank, and others defending its conduct. The utmost excitement was shown by the President, whose remarkable career, which had long attracted attention, was now drawing to a painful conclusion. He had been bold, adventurous, and spec- ulative in all undertakings. When the failure oc- curred his mental excitement became extreme. Accu- sations were indulged in against his integrity, and grievous recriminations passed between him and his op- ponents. He was induced voluntarily or involuntarily, to rush into the water, avowedly for the purpose of bathing; but the result was that he sacrificed his life. There were then renewed attacks on his AMERICAN FAILURES. 99 memory, but defences came from many friends. The general opinion, however, was that the charges were unjustifiable, that he had been " the master spirit of most enterprises ; that his career had been distin- guished by sagacious activity and high public spirit." There were two other important failures, the Ne- vada Bank and the National Gold Bank of San Fran- cisco, both illustrating the dangers of recent banking in that part of America. Their system was to keep a reserve in gold, about twenty-five per cent, of the deposits ; but there was no obligation to receive "greenbacks " at par, although obliged to pay their debts in coin. This was peculiar to the gold-pro- ducing States; but not to other parts of America. The run on the National Gold Bank was a conse- quence of the failure of the Bank of California, and accelerated by the very provisions which provided for its safety. This would have been the case with any other bank, if compelled by law to a defined reserve, and is a good illustration of the absurdities of leds- lative enactments on trade which is always able to take care of itself amidst changes and troubles, far better than if subject to any abstract law regulating its internal government.* Returning to the remarkable movements of the Bank of California, there was no sooner a failure de- clared than resuscitation commenced. Daily intelli- gence reached England that the leading capitalists had subscribed 4,800,000 dollars to enable it to re- sume business ; the bank prepared to re-open during * The authorities of the United States publish an important return of these " National Banks." Their number is more than 2000, and the statis- tics are worth recording. See Appendix C. 100 LONDON BANKING LIFE. the intervening month, and absolutely resumed business on the 4th of October. Since then the bank has successfully followed the regular course of busi- ness, and it may be presumed was never better able to control and regulate the important transactions intrusted to its management. The experience which results from such a temporary stoppage, is of great value to those engaged in the administration of af- fairs. They know the " shoals and quicksands " to avoid ; the customers of dangerous adventures ; those of too ardent a temperament ; and others of deep de- signing character, who are best understood when once their plans are allowed to be developed. It is now an amusing and instructive lesson to follow some of the early traders of this remarkable city. There was a firm so cautious, that they never owned a dol- lar of stock in a mine ; never had a branch house ; never sent out a " drummer " to get business ; and never sued a man for debt. In politics they did not sell their principles, and when a Pacific Railroad was still a dream of the future, they were among the fore- most to urge forward the undertaking. Immense difficulties were encountered, such as the fluctuations of Government Bonds, the variations in the price of materials, and the absorption of money ; yet the " good faith to build a railroad " carried them and their colleagues to a successful result. So it has been with most enterprises in young countries ; and, while often swamped by speculators, the " good and true men " in the new cities of the far west ever follow the law of progress. While the reorganization of the great bank was go- AMERICAN FAILURES. 101 ing forward, rumors were circulated as to other banks ; but on the 11th of September it was reported : — " Commercial circles are beginning to assume a cheerful phase. The clouds are passing over, dispelled by the light of reason. No mercantile failure has occurred during a fortnight, not a single mechanical or manufacturing establishment of any- kind has been compelled to close its doors or to suspend busi- ness. It is true that by reason of the suspension of three banks, out of perhaps a score of banking houses, large sums of active capital have for the time being been locked up and withdrawn from circulation. Yet there have been no failures among mer- chants, mechanics, or stock brokers. This shows a degree of financial strength greater than had been claimed, and proves the value of a sound currency ; that wealth is not builded upon a false irredeemable paper currency. The Merchants' Exchange Bank resumed specie payments a week since, and has since de- clared its regular monthly dividend of one per cent. There is yet a good deal of coin locked up in private vaults, waiting for a general resumption on the part of the several stock boards; the general every day business of the city seems to equal the full average for the season. Wholesale jobbers find no reason to complain, nor do the large fancy dry goods establishments exhibit any signs of distress."* All travellers able to understand the Western States of America, report that San Francisco con- tinues an astonishing place, seeing that it came into existence with the discovery of gold in California only thirty years since. It is remarkably well placed for business, within a perfectly land-locked harbor many miles in length, and some six or seven miles across. An immense work has been done in the erec- tion of buildings ; but wood and iron are used, as in all American cities, to an extent that fully accounts for the sweeping character of the great fires that oc- • The San Francisco ^ezos Letter, llth of September, 1875. 102 LONDON BANKING LIFE. casionally occur. The climate resembles very much that of Australia ; its products are somewhat similar, and there is no cold worth mentioning, even in the wet season. The mines of California are improving, as is shown from the statistics of the gold and silver returns for the year 1875, yielding a value of about £16,000,- 000 sterling. The consequence of this remarkable progress has been to draw to the place emigrants from all nations, the Germans and Chinese being in great numbers, — there are some from Japan, while other Eastern races are not absent. As the epoch just passed through will become a subject of promi- nent importance, it is desirable to record some general statistics of American progress : — Statement showing the d'wision of the precious^ metals produced in the States and Territories ivest of the Missouri River during 1875. States and Territories. Gold Dust. Silver Bullion. Total. California Nevada Ofeoi'on 16,326,211 216.543 1,16.5,046 81,932 1,280,067 2,735,609 48,154 23,500 2,627,444 68,117 1,776,953 s 1,426,940 40,261,826 274,835 838,000 5,639,440 85,593 3,672,373 2,340,554 $ 17,753,151 40.478,369 1,165,046 81,932 1,554,902 Washington Idaho Montana 3,573,609 5,687,494 10 ,093 Utah Arizona Colorado Mexico British Columbia. . 6,299,817 2,408,671 1,776,953 Total $ 26,-349,476 54,539,.561 80.889.037 Returns of preceding years of the same precious metal s : — 1871. 1872. $58,284,029 62,236,913 1875 $80,889,037 1873.... $72,258,693 1874.... 74,401,055 AMERICAN FAILURES. 103 The trade between California and Australia has lately been placed in an improved position through the establishment of a new line of steamers by the New South Wales and New Zealand Governments. The following statistics, therefore, may be valuable for future reference : — Exports from America to the Australian Colonies for the past twenty years. Year. Amount. Year. Amount. Year. Amount. % ^ f 1856 1,123,400 1863 487,700 1870 166,000 1857 314,600 1864 579,700 1871 200,500 1858 380,100 1865 501,900 1872 292,800 1859 730,400 1866 2,164,800 1873 304,200 1860 874,700 1867 28,300 1874 382.600 1861 1,056,400 1868 838,000 1875 399,100 1862 332,300 1869 374,500 From 1856 to From 1866 to 1865 iuclusive. 1875 inclusive . S6,38 1,200 5,150,700 Total $11,532,000 Direct Exports from San Francisco to the Colonies in 1875. INlonlh. Australia. January February. . . . March April May June July August September. . . October November. . December . . . Total. . 22,600 40,100 33,700 13,500 22,900 21,000 64,400 44,600 16,700 18,500 45,800 52,300 New Zealand, 399,100 7,400 4,100 5.300 2.600 2,700 300 22,800 10,700 5,300 5,900 4,600 7,400 79,100 104 LONDON BANKING LIFE. CHAPTER Xm. CANADIAN AFFAIRS. " We are now on the frontier of civilization. To cross almost impene- trable forests ; to swim deep rivers ; to encounter pestilential marshes ; to sleep exposed to the damp air of the rooods : — are efforts which a Canadiaii easily conceives, if a dollar is to be gained. " Civilized man clears the ground of its remains. In the solitude of America, all-powerful nature is the only instrument of ruin, as well as of reproduction. Here and in the forest over which man iviles, death strikes continually ; but there is none to clear away the remains. " The perfect repose of natwe is as striking in the wilderness as on the ocean. WJien at noon-day the sun's rays penetrate the forest, tJiere is often heard a long sob, a kind of plaintive cry echoing in the dis- tance. It is the last breath of the expiring breeze. Deep silence ensues, and such absolute stillness as Jills the mind with a kind of superstitious awe. " At sea the voyager xcatches the horizon on which he is steering. His view is bounded only by the poioers of the human eye. But what is there to indicate a j^ath across the leafy ocean? Ini-ain man may climb the lofty trees ; others still higher loill surround him. Every- where the forest folloios him, the forest which extends to the Arctic Pole, and to the Pacific Ocean." De Tocqueville. The Dominion of Canada has, in proportion to its trade and resources, experienced a corresponding^ de- pression to that of the United States. The statistics for 1873 and 1874 would, if procurable, show a serious list of disasters; but 1875 furnishes 1970 failures with an amount of ,£28,883,611 of liabilities. The vast territories of Canada are not calculated CANADIAN AFFAIRS. 105 to develope great prosperity ; the seasons being ill- adapted to steady, continuous labor in forest or in field ; nor is there a population large enough to sus- tain great enterprises. Yet the last few years have shown much overtrading, especially in imported goods. The government expenditure has not at all times been either wise or expedient, while the rail- way enterprises have absorbed capital without yield- ing profitable results. It must, however, be remembered that the Canadas present no homogene- ous race, the differences being as great as in the United States. There is, of course, the grand sub- stratum of French and English people ; but the clearances of the Scotch moors, of the western High- lands, and of the waste lands of Ireland have brought together a very mixed population with great diver- sity of language, manners, and religion. The Gov- ernment has had its times of trial and affliction, not the least being those connected with the neighboring States, which have often provoked aggressive move- ments, endangered the Colonial institutions, and ar- rested the progress of local improvements. There has, since the Confederation, been strength and cohesion which augurs great things for the future, and it may well be believed that a ncAV and prosper- ous era has been commenced. The admirable bank- ing system has, moreover, generally maintained the Dominion in a sound financial condition. It is, there- fore, important to show the resources of the various Banks, which, with one exception, are entirely of local origin, and in nearly all cases dependent on local support. 106 LONDON BANKING LIFE. CANADIAN BANK RETUENS LIABILITIES. Banks. Circula- tion. Govern- ment Deposits. Other Deposits. Other Liabili- ties. Total. Ontario. $ $ $ $ $ Bank of Toronto .... 932,503 197,295 2,221,080 118,950 3,469,8^8 Bank of Hamilton . . . 461,896 92,333 603,755 9,041 1,167,025 Canadian B'kof Commerce 6,902,247 368,439 6,599,510 176,621 14,046,817 Dominion Bank .... 813,061 50,000 1,802,361 104,845 2.770,267 Ontario Bank 924,232 918,059 2,412,169 165,808 4,420,268 Royal Canadian Bank . . 972,990 340,808 1,423,126 214,575 2,951,499 St. Lawrence Bank . . . 442,120 82,694 321,322 8,584 851,720 Federal Bank 522,738 189,300 737.167 3,593 1,452,798 Bank of Ottawa . . . . 122,384 25,303 170,165 , , 317,852 Imperial Bank of Canada. 347,968 84,813 821,842 9,354 1,263,977 Quebec. Bank of Montreal. . . . 3,513,550 4,181,472 10,240,547 534,709 18,470,278 Bank of British North America 1,377,574 65,385 6,029,343 97,313 7,569,615 Banque du Peuple , . . 214,635 132,907 867,223 20,242 1,235,067 Banque Nationale . . . 681,510 257,427 1,306,943 89,167 2,335,047 Banque Jacques Cartier . 31,358 808,873 531,361 653,986 2,025,578 Banque Ville-Marie . . . 130,324 62,369 368,749 44,509 605,951 Banque de St. Jean . . , 95,830 45,350 71,048 11,300 223,528 Baiique de St. Hyaciuthe . 80,841 28,485 219,474 , . 328,800 Banque de Hochelaga . . 234,201 50,900 147,368 432,469 City Bank 319,423 337,168 1,632,541 132,610 2,421,742 E. Townships Bank , . . 455,365 393,007 616,269 14,610 1,479,251 Exchange Bank .... 397,105 35,050 663,342 37,442 1,132,939 Molson's Bank 1,066,607 310,202 2,301,742 131,236 3,809,787 Merchants' Bank .... 3,457,330 207,640 7,701,391 858,622 12,224,983 Metropolitan Bank . . . 45,347 64,779 148,923 . . 259,019 Quebec Bank 586,385 321,399 2,890,242 195,913 3,993,939 Union B'k of Lower Canada 477,770 298,122 1,379,848 199,961 2,355,701 Stadacona Bank .... 187,992 25,000 195,861 • • 408,853 Total $ 25,795,286 9,704,639 54,424,712 3,832,991 14,027,628 CANADIAN AFrAIES. 107 TO SOxn DECEMBER, 1875. ASSETS. Specie. Dominion Kotes, &c. Loans. Bank Premises. Other Assets. Total. $ $ $ $ $ $ 205,919 900,624 614,634 50,000 4,884,043 6,004,220 71.457 216,300 311,032 1,220,149 1,818,998 898,284 2,005,822 1,132,161 216,354 13,034,009 17,346,690 141,389 080,001 240,851 30,074 3,895,613 4,993,928 169,908 1,009,203 364,150 172,734 6,283,105 7,999,280 139,734 494,799 818,490 68,289 3,494,002 5,015,314 29,115 142,317 59,928 1.177,620 1.408,980 71,651 332,728 109,235 44,395 1,610,131 2.108,140 15,145 112,344 1,000 4,825 507,974 701,288 53,409 444,802 92,000 61,678 1,291,762 1,^3,711 1,793,992 7,833,282 2,130,187 425,000 24,730,117 36,918,578 824,998 2,000,524 198,210 200,000 9,022,902 12,846,640 76,912 453,539 81,950 35,000 2,471,R9C 3,119.297 56,044 044,211 193,600 52,215 3,786,016 4,732,086 , , 232,01)4 419,202 113,019 3,140,891 3,911,116 967 91,027 11,800 38,400 1,274,373 1,417,167 5,576 05,389 , , 14,801 371.107 456,873 3,376 92,485 , , 400,992 550,8,53 2,975 160,938 18,250 836,719 1,018,882 44,216 405,191 , , 129,138 3,.533.112 4,111,657 72,103 353,868 224,564 59,982 2,315,9.'J9 3,026,4.56 25,026 264,059 183,421 114,070 1,616,405 2,203,641 186,878 667.096 184,420 156,143 5,227,080 6,421,617 1,156,498 2,981,005 787.009 655,006 16,812,5-6 22,392,974 13,831 106,122 429,627 44,901 460.590 1,055,071 122,426 628,658 477,666 70,502 5,773,.594 7,072,906 170.656 313,157 19.646 108,5K9 4.227.918 4,839,966 21,288 104,395 143,175 3,938 1,138,381 1,411,177 6,373,833 24,412,270 9,252,214 2,870,013 124,605,170 167,573,506 108 LONDON BANKING LIFE. Although the first eight years of Confederation, closing in the July of 1875, enjoyed uninterrupted prosperity, the balance of revenue over expenditure in that interval amounted to nearly X 3,000,000, the surplus for the year 1875 has now been ascertained to be only .£1,000,000. The finance minister antici- pates, however, that owing to the universal prostra- tion of trade on the American continent, there will, during the current year, be an important reduction in the value of imports, causing so serious a decline in the customs revenue as to convert the traditional surplus into a deficit. Instead of yielding to the pressure of the manufacturing and other interests de- manding increased or retaliatory customs duties, the government have wisely looked to maintaining the equilibrium by a sweeping reduction in ordinary ex- penditure, and their estimates for the current year, accordingly, show a diminution of no less than .£2,500,000. This course is the more creditable since, while in England the largely increasing returns from stamp duties may be relied on in times of com- mercial depression to supplement any falling off in other sources of revenue, there are in Canada, neither accumulated fortunes nor that concentration of loan- able capital from the incidence of which the English Exchequer derives so steady an income. Canada, in fact, depends almost exclusively on customs, public works, and excise. As regards the last, she labors under the disadvantage of having to assimilate her imposts to those of the United States. If the Canadian excise on beer or spirits be much in excess of the United States, the articles will CANADIAN AFFAIRS. 109 be produced there. So with her costly public works, the tolls of which must be regulated by those on the United States' outlets to the ocean. It is a good omen that under these circumstances the gov- ernment should both resist the strong popular demaijd in favor of increased import duties as well as over- come the natural reluctance to a self-imposed economy. In addition to the strength thus shown in banking institutions, the deposits of Savings Banks in 1875 amounted to nearly X4,000,000, a large proportion of which was represented by sound, convertible assets, and the remainder held in gold as a reserve available for the sudden demands. There has been an interval of repose lately in Ca- nadian affairs which is believed, by those of practical experience and competent to decide, to be only a passing storm, or a temporary check to prosperity. Yet it allows a calm review of the trade, the inter- nal resources, and the general policy of the last eight years. Within that period the Confederate Govern- ment has had the management of the colonies, which previously were separate, often with divided inter- ests, or working upon different, if not opposing prin- ciples. The first year of the Dominion was 1868, when the aggregate trade amounted to £27,000,000. It continued to increase until 1873, when it reached X44,500,000. During the last two years a decrease of power has been manifested, traceable to the ex- traordinary depression of trade in the United States, which has reacted upon Canada. A prohibitory tariff having for its object the encouragement of native manufactures is thought vitally and essentially ad- 110 LONDON BANKING LIFE. verse to the expanding commerce of free countries. Besides these points, there has been over trading, which time must be allowed to control, and to permit of those recuperative measures required in all com- mercial undertakings. Concurrently with prosperity throughout the Do- minion there was a continuous progress in the gov- ernment revenues. They have steadily advanced from X 2,800,000 in 1868 to X5,000,000 in 187-4; but in 1875 the figures are for the revenue <£5,050,000, expenditure £4,850,000, showing a surplus of X200,- 000 notwithstanding the reduction of the customs receipts, and the erroneous policy of the protection- ists in the legislature. This is the more to be la- mented, as the Canadians have before them in the United States the visible evidence of retrogression from the same errors, while, if the measures of the present government are adopted, there will be little else required than a moderate reduction of expendi- ture, a more liberal tariff, and a firm belief in the future, placing the country in a position to deal with a lower basis of prices, and a return of prosperity when prudence, sagacity and sound enterprise are again manifested. It is necessary in all new countries to watch, not only the extent of the public debt, but the objects for which it is incurred. The total debt, then, of the Dominion is about £25,500,000, and the money has been raised for legitimate objects of public utility, such as canals, railways, roads, harbors, lighthouses, and river improvements. In an official document it is admitted that, though many of the public works CANADIAN AFFAIRS. Ill have so far yielded but a small revenue in comparison with the interest on their cost, much of the expendi- ture has been regarded both by the Imperial and Dominion governments as necessary, not in the in- terest of Canada exclusively, but also on national grounds, so much so that the Imperial parliament has, at various times, sanctioned guarantees in aid of their construction to the extent of £8,400,000. The en- gagements of Canada in connection with all these guarantees have been punctually met without any advance whatever, from the Imperial treasury. There is a sinking fund of X 1,000.000 established which is working fairly, while the interest, once at 6 per cent., is being brought to 4 per cent, per annum, the whole annual charge being not more than .£1,300,000, or about Qs. Sd. per head of the population. The adverse events of the last two years in the commercial world will produce heavy results on these young settlements. Yet new life has been given by consolidation of political power ; and there has been unparalleled progress in trade, in shipping, and in public works. So it is equally certain that a wise and prudent system of taxation will stimulate further activity, giving material assistance to the country, which is not the most favored in America, seeing that it has to contend against climate, limited resources and a necessarily scanty population. 112 LONDON BANKING LIFE. CHAPTER XIV. AUSTRALIAN TRADE AND FINANCE. "It is an interesting study to watch the progress of colonies, to mark their vicissitudes, and record their struggles against natural or artificial obstacles. There are lessons loorth deducing from changes inevitably associated ivith neio settlements; and it may he that the principles both in trade and politics can be folloived loith greater accuracy when applied to small and rising communities than in old and settled countries. If modern colonization, ivith its important tendencies, its rapid progress, and astonishing residts are trxdy appreciated, much will be done towards understanding a subject ivhich by future generations will be deemed one of the inost important of the present century , from the great revolution it has effected in the social and political position of society. This vnll be acknowledged when the events are made matters of history ; as contemporaneous facts will then have ceased to be novelties. An age, like an epic poem, has to be viewed as a ivhole before it can be jitdged rightly ; and so icith the great tide of emigration and the gold discoveries — their results both in England and Australia have yet to be determined, although .10 far as their consequences are known, the endeavor must be continually made in a fair and comprehensive spirit, to trace their history, and to arrive at such opinions about thefuture as reason and argument will warrant." Anon. There is the true ring of English life in declaring that Australia is an atrsrresration of " free states with free banks." Such liberty has been well exemplified in the thorough elasticity of the trade and finance of the great island continent. Since the terrible conse- quence of the drought which followed three adverse AUSTRALIAN TRADE AND FINANCE. 113 seasons, there has been a steady and continuous im- provement in all affairs ; the various interests have been better understood than previously ; while for the most part there have been prudence and fore- thought among those instructed with the administra- tion of credit. Australia has, at present, been the gainer from the decline in the value of manufactures. Elsewhere traders have failed in numbers and for great amounts ; but Australia has not had many cases of insolvency, and those which have occurred have with one exception been for comparatively small figures. This may be traced to the staple pro- ducts being limited in variety and among the prime necessaries of life. There is, moreover, only a partial development of the country beyond the ''seaboard," hence the area of production is open to extension, and there is always the prospect of a decline of prices in the main exports being compensated for by an in- creased quantity, although even this may become a prospective danger if too lai-gely relied on by the producers. As the importing classes have become more gener- ally familiar with their special duties, there has not been anything like the financial troubles of the spec- ulative season which followed the gold discoveries. The clu-onic condition, indeed, is that of glutted markets, but the burden of finance is among London capitalists content to give long credit to representa- tives of storekeepers. It may be that stocks are almost as heavy in Sydney, Melbourne, or even Ade- laide houses, as in Manchester, Bradford, or London ; but there is an ever enlarging consumption ; the 114 LONDON BANKING LIFE. trade is followed through recurring seasons, and steam communication and telegraphy enable it to be well organized and placed on a generally sound foundation. The stream of emigration has of late years caused the manufacturing element to be intro- duced into the great Australian cities ; which, in the case of female and child labor, especially when em- ployed on machines for sewing or other handicraft, may rapidly assume importance. Already dangerous Symptoms have been manifested, giving forewarnings of "protection to home industries," the result of which have to be followed in tariffs that only reflect credit on those who have been educated in the school of Cobden or know how to appreciate the legislation of Peel. As it is long since any careful review of Australian banking was made, it may be important to record the mighty progress that has been going forward, recol- lecting that the statistics only embrace the three colo- nies of New South Wales, Victoria, and South Australia. The other colonies are omitted from the comparison from the fact that their growth has been almost entirely of a subsequent date, qy from the fact that there has not been the information published for public guidance. NEW SOUTH WALES. Liabilities. Assets. Year. Deposits. Circu- lation. Toial. Coin. other Assets. Total. 1860 1875 £ 5,313,944 13,650,892 950,967 1,114,411 £ 6,654,355 15,056,485 £ 1,626,993 2,317,600 £ 7,895,513 16,509,302 £ 9,522,506 18,826,902 AUSTRALIAN TEADE AND FINANCE. 115 VICTORIA. Liabilities. Assets. Year. Deposits. Circu- lation. Total. 1 Coin. Other Assets. Total. 1860 1875 £ 7,043,345 13,734,948 £ 1,905,843 1,382,612 £ 9,188,371 15,483,172 £ 2,649,909 2,660,087 £ 10,014,154 19,619,395 £ 12,564,063 22,279,482 SOUTH AUSTRALIA. Liabilities. Assets. Year. Deposits. Circu- lation. Total. Coin. Other Assets. Total. 1860 1875 £ • 689,984 2,-504,694 £ 248,187 403,038 £ 971,820 3,034,442 £ 272,588 471,127 £ 1,315,372 4,493,170 £ 1,587,960 4,934,297 With such evidences of progressive wealth, the proceedings and policy of governments must have an influence. Allowing for that, it is important to di- vide the colonies into their respective parts, and to remember that each bank is bound by local enact- ments to publish quarterly average returns of all im- portant operations ; but there is little else to control freedom of action, or to place bounds on their opera- tions. There have been attempts made to control the prerogative of liberty ; but happily not even the most rampant democratic assembly has ventured on legislative enactments for the future. The follow- ing are the statistics to the 31st of December, 1875:— 116 LONDON BANKING LIFE. NEW SOUTH WALES. Assets. Bajiks. Coin and Bullion. Bank Premises. Acciiiints withoth'r Banks. Debts to Bank. Total. New South Wales CommerciMl £ 1,017,384 495,305 108,353 85,328 310,738 46,716 50,026 136,756 116,195 55,744 £ 04,442 64,781 40,286 16,000 53,041 20,000 23,687 26,246 21,750 £ 9,486 22,848 2,33-1 593 14,715 746 472 2,298 1,171 182 £ 2,527,276 417,373 £ 6,796,523 4,634,998 872 351 Union 390,185 1,680 2,258 131,190 52,864 12,743 395,398 2,383,011 345,561 509.839 1,131,812 1,055,544 702,765 Australian Joint Stock London Chartered English, Scottish, and Australian Oriental City Mercantil Bank of Sydney Total £2,422,545 330.233 54,842 3,535,569 18.826.902 LlABILTTIES. Banks. Circu- lation. Accept- ances. Deposits. Other liabil- ities. Total. New South Wales Commercial Au.stralasia Union Australian Joint Stock £ 368,411 345,868 51,303 16,513 192,014 7,513 27,878 46,737 51,608 6,565 £ 3,276 6,344 7,013 6,308 9,769 353 2,144 1,738 63 £ 4,887,624 3,338,346 727,089 552,347 1,579,856 228,399 334,704 775,3.34 732,460 494,732 £ 84,352 36,830 10,583 39 278 110,708 11,343 45 £ 5,343,663 3,727,388 785,405 575,168 1,792,222 London Chartered English, Scottish, and Australian. Oriental 236,304 365,004 9;M,517 City 795,474 Mercantile Bank of Sydney 501,342 Total £1,114,410 .37,008 13,650,891 2.54,178 15.05(k487 AUSTRALIAN TRADE AND FINANCE. 117 QUEENSLAND. Assets. Banks. Coin and Bullion. Bank Prem- ises, Account ■ with otHer Banks. Debts to Bank. Total. New South Wales Union, £ 208,411 96,617 98,155 42,198 137,889 28,970 £ 20,833 16,269 23,048 12,185 21,454 9,000 £ 9,082 20,795 39,716 3,578 7,375 246 £ 761,789 649,605 703,981 375,478 591,426 369,368 £ 1,000,115 78;-!, 286 National 864,!KX) Commercial Bank of Sydney Australian Joint Stock Bank Australasian 433,439 758,143 407,584 Total £612,240 102,789 80,792 3,451,646 4,247,467 Liabilities. Banks. Cirou- liition. Accept- ances. Deposits. Other lia- bilities. Total. New South Wales Union National Commercial Bank of Sydney Australian' Joint Stock Bank Australasian £ 107,439 53,236 71,972 21,593 85,236 10,115 £ 462 4,887 887 303 1,535 4,063 £ 771,454 646,350 528,983 235,551 451,285 172,278 £ 13,052 '32,821 384 3,636 £ 892,407 604,473 634,663 257,831 541,692 186,456 Total £349591 12,137 2,705,;k31 49,893 3,117,522 118 LONDON BANKING LIFE. VICTORIA. Assets. Banks. Coin and' Bullion. Bank Prem- ises. Accounts with other Banks. Debts to Bank. £ 3,221,103 2,037,195 1,892,642 3,148,281 1,833,993 892,508 1,374,449 1,347,937 1,820,745 1,073,190 69,570 140,735 Total. Australasia Union New South Wales Victoria £ 469,661 249,141 519,630 609,310 337,222 92,477 178,458 171,807 309,679 179,444 2,893 1,902 £ 87,608 60,129 54,959 149,531 120,254 52,549 40,000 60,294 78,003 39,530 ' 2,009 £ 12,917 21,272 66,704 252,342 25,168 36,847 17,026 36,665 47,375 26,072 3,358 14,897 £ 2,791,289 2,377,737 2,533,935 4,169,464 London Chartered English, Scottish and Australian. 2,316,637 1,074,381 1,609,933 1,616,703 2,555,802 Colonial of Aus- tralasia National Commercial Australian and Eu- ropean City of Melbourne 1,318,236 75,831 159,543 Total £3,121,624 744,866 560,643 17,852,348 22,279,481 Liabilities. Banks. Circu- lation. Accept- ances. Deposits. Other lia- bilities. Total. Australasia Union £ 157,485 97,634 168,797 296,682 140,416 63,253 85,625. 92,852 160,147 106,207 12,204 £ 13,169 32,632 665 13,6.31 1,458 ' '6*445 2,004 3,381 877 £ 1,750,655 1,508,550 1,484,189 2,983,605 1,254,675 629,582 854,761 1,011,446 l,322,0i)6 835,197 25,189 75,023 £ "2,"272 2,313 116,478 1,046 12,812 20,047 30,564 37,238 68,636 14 10 £ 1,921,309 1,641,088 New South Wales Victoria 1,655,864 3,410,396 Loudon Chartered English, Scottish, and Australian. Oriental 1,397,595 705,647 966,878 Colonial of Aus- tralasia National 1,1.36,866 1,522,862 Commercial Australian and Eu- roDPan 1,010,917 37,307 City of Melbourne Total 1,311 76,344 £1,382,613 74,262 1.3,734,968 291,330 15,483,173 AUSTRALIAN TRADE AND FINANCE. 119 Banks. SOUTH AUSTRALIA. Assets. Coin and Bullion. South Australia.. Australasia Union National Adelaide English, Scottish, and Australian Chartered Total 137,898 79,478 44,600 113,551 58,873 45,227 £479,127 Bank Premises. Accounts with other Banks. 35,413 15,325 14,000 332,933 12,235 11,055 420,051 36,883 3,483 54,401 11,029 8,674 114,470 Debts to Bank. 849,592 335,214 315,345 1,031,432 1,010,383 677,864 Total. 1,069,696 430,017 377,428 1,232,317 1,092,020 742,820 4,219,830 4,934,298 Liabilities. Banks. Circula- tion. Accept- ances. Deposits. Other Liabilities. Total. South Australia... . Australasia Union £ 88,207 33,261 16,315 144,387 57,394 63,474 £ 3,941 1,585 2,385 1,859 550 £ 490,088 218,882 161,943 785,088 425,181 424,012 £ 16,061 4,922 91,096 4,358 £ 598,297 253,228 180,593 National 936,256 Adelaide 574,221 Slnglish, Scottish, ) and Australian ^ Chartered ) 491,844 Total £403,038 10,270 2,594,694 116.437 3,034,439 120 LONIX^N BANKING LIFE. As the old Van Diemen's Land Settlement was converted into the colony of Tasmania as recently as 1854, the statistics are not very complete ; but the most recent are now given. TASMANIA. Assets. Banks. Coin and Bullion. Bank Premises. Accounts with other Banks. Debts to Bank. Total. Australasia . . . Commercial . . Tasmania . • . Union . • . . Van Diemen's Land £ 55,770 58,093 8,240 87,540 35,815 £ 12,500 13,200 12,576 2,750 £ 12,720 377 1,824 £ 34,395 514,967 92,059 212,524 391,270 £ 102,665 598,980 100,676 312,640 431,659 Total . . . £245,458 41,026 14,921 1,245,215 1,546,520 Liabilities. Banks. Circula- tion. Accept- ances. Deposits. OtJier Liabili- ties. Total. Australasia .... Commmercial . . . Tasmania .... Union Van Diemen's Land £ 12,002 37,866 4,555 24,185 26,628 £ 1,663 1,308 2,037 £ 234,930 414,407 41,093 342,659 244,495 £ 2,933 £ 248,595 453,681 45,648 368,881 274,056 Total . . . £105,236 5,008 1,277,584 2,933 1,390,761 AUSTRALIAN TRADE AND FINANCE. 121 There is only one bank in Western Australia with distinctive returns for the colony, — the figures relat- ing to the National Bank being for all its branches. WESTERN AUSTRALIA. Assets. Bauks. Coiii and Bullion. B.aiik Premises. Accounts with other Banks. Debts to Bauk. Total. Western Australian National .... £ 23,173 526,593 £ 1,200 111,305 £ 25,200 26,989 £ 169,558 2.991,241 £ 219,131 3,656,128 Total . . . £ 549,766 112,505 52,189 3,160,799 3,875,259 Liabilities. Banks. Circula- tion. Accept- ances. Deposits. other Liabilities Total. Western Australian National .... £ 10,627 323,512 £ 1,060 7,982 £ 143,524 2,267.883 £ 10 49,146 £ 155,221 2,648,523 Total . . . £ 334,139 9,042 2,411,407 49,146 2,803,744 To assist in a complete exposition of the influences that Australia is exercising on the finances of the world, the production of gold has to be followed, it being obvious that, after the elfect locally, there- are elements of strength imparted to all other countries able to employ the precious metal commercially or as a circulating medium. 122 LONDON BANKING LIFE. Actual Pvodartiuns of Gold. Year. New South Wales. Victoria. New Zealand. £ £ £ 1851 600,000 600,000 1852 1,200,000 10,900,000 • ■ • • 1853 1,100,000 12,600,000 ■ ■ • • 1854 500,000 9,600,000 • • • • 1855 500,000 11,200,000 • • • ■ 1856 600,000 11,900,000 • • • • 1857 700,000 11,000,000 • > • • 1858 1859 1,100,000 1,200,000 10,100,000 9,100,000 100,000 1 (\C\ CiCiCi 1860 1,400,000 8,600,000 100,000 1861 1,600,000 7,900,000 800,000 1862 2,400,000 6,900,000 1,600,000 1863 1,700,000 6,400,000 2,500,000 1864 1,400,000 6,220,000 1,900,000 1865 1,200,000 6,200,000 2,200,000 1866 1,000,000 5,900,000 2,900,000 1867 900,000 5,700,000 2,900,000 1868 1,000,000 6,000,000 3,200,000 1869* 900,000 7,250,000 2,362,995 1870 1,200,000 6,680,000 2,163,910 1871 1,000,000 , 6,590,902 2,787,520 1872 1,100,000 6,000,000 1,731,261 1873 900,000 4,884,000 1,800,000 1874 1,000,000 4,620,000 1,987,425 1875 Total £ 1,100,000 4,600,000 1,800,000 27,800,000 185,424,902 32,933,111 In addition to these enormous amounts from the well known gold producing colonies, Queensland has for some years been exporting largely : — £ 1870 851,'112 1871 400.000 1872 500,000 1873 750,000 1874 1,000,000 1875 1,374,000 Total 4,375,412 ♦ There is some little confusion in these statistics, since the estahlishment of the Branch Mint in Sydney, from the fact that gold is imported there for the purposes of coinage. AUSTRALIAN TRADE AND FINANCE. 123 The result is then, from Australia or New Zea- land, there has not been less than an aggregate of £250,000,000 added to the stores of gold in the world. This is quite irrespective of the-production of Cali- fornian or Siberian mines, which cannot be accurately followed by English statisticians. The details on Australian insolvencies are not very complete, but the following may be relied on : — Colony. New South Wales Victoria . . . 1874. Liabilities. Assets. 236,000 10,500 79,000 7,000 1875. Liabilities. Assets 417,000 19,631 188,000 7,156 Although correct, these figures do not embrace the private arrangements of debtors with their creditors. Yet it is desirable to bear in view that, as a rule, the insol'vent laws are more generally made available in the new than in old countries. As in the United States of America, so in the British Colonies, there is unfortunately a decreasing sensitiveness, instead of a delicacy of feeling and a high sense of honor observed with regard to liabilities. The prosperity of Australia largely depends on the production of wool. Over the Island Continent there are enormous tracts of land exclusively devoted to sheep farming, and although it is apparent, from the most recent geographical expeditions, that all the best land is now rapidly coming under occupation, yet there are many improvements in fencing, in the 124 LONDON BANKING LIFE. methods of shei)herding, and in the selection of grasses, which may tend both to increase the " carry- ing power" of station properties, as well as to im- prove the character of the flocks. It may, therefore, be expected that, large as the exports of wool have been, there are higher figures yet to be reached. The following statistical information may serve as a guide to the future. Colony. 1806. 1867. 1868. 1869. 1870. New South Wales j and Queensland. . ( Victoria Bales. 82,184 141,931 16,422 40,510 3,565 64,243 106,794 Bales. 101,420 170,444 15,943 45,236 3,596 76,729 128,287 Bales. 121,439 211,243 17,920 55,173 4,175 81,268 141,916 Bales. 121.401 206,053 17,121 65,137 4,779 85,119 134,349 Bales. 142,352 209,261 Tasmania 17,318 Soutli Australia Western Australia . . New Zealand 68,545 5,298 106,628 Cape of Good Hope. . . 124,473 Bales 455,649 541,655 633,134 633,959 673,875 Colony. 1871. 1872. 1873. 1874. 1875. New Soutli Wales ) and Queensland. . j Victoria Bales. 153,655 216,476 15,584 65,960 4,743 110,595 126,977 Bales. 128,847 198,685 14,623 70,522 5.448 104,584 138,892 Bales. 128,695 209,675 14,693 74,918 6,275 117,738 156,027 Bales. 136,748 265,417 17,223 85.590 6,285 143,313 164,194 Bales. 143,107 279,741 Tasmania 18,956 South Australia Western Australia.... New Zealand Cape of Good Hope. . . 101,544 6,653 146,619 174,598 Bales 693,990 661,601 708,021 818,770 871,218 The public sales in 1876 will doubtless show a con- siderable fall in the price of wool ; but if it arises from depressed trade in England, rather than from overproduction in the Colonies, the effect will only be temporary, although of importance to those con- nected with Australian interests. • CAPE OF GOOD HOPE AND SOUTH AFRICA. 125 CHAPTER XV. CAPE OF GOOD HOPE AND SOUTH AFRICA. " On the all important question of a possible union of South Africa, Her Majestifs Government icill readily give their earnest and favorable attention to any snr/gestion that may be made. Assuming always a due regard to considerations of Imperial and Native policy, this great object is one to the achievement of ivhich Her Majesty's Government would be prepared to contribute their best and most cordial assistance. It is a measure ivhich woxdd tend to develop the prosperity of South Africa; to sweep aicay mayiy subjects of pro- longed and unfruitful discussion, and to knit together the scattered com7nuniiies of the European race into a powerful and harmonious union, valuable alike for the interests of themselves and the whole Empire." LoKD Carnarvon. The " diamond fields " discovered near the northern boundary of these colonies, has led to unexpected prosperity. It was in 1873 that searching for dia- monds begun, and since then not less than X 7,000,- 000 has from that source been added to the exports of the colony. The result has been not only a large increase of population, but a trade of corresponding importance. Until a few years previous to these discoveries, the banking system was wholly of a local character, adapted to small townships or a special class of traders. The consequence \xas that no institution possessed any large resources ; credit was confined to the district in which the bank was situated ; and there were neither firmly established agencies nor recognized offices in England. In 1863 the first joint-stock bank was started in this country. The 126 LONDON BANKING LIFE. following year a similar institution was launched, and together they competed to give increased facil- ities and importance to the credit system of South Africa. One of these banks, by bold and skilful combination, arranged terms for the purchase of several small banks. This movement would have been successful in the hands of experienced and prudent financiers, but there was undue competition, rates were fluctuating, credit loosely granted, indiscrimin- ate business encouraged and preponderating local in- fluences were producing serious efl^ects. It was soon evident that the seeds of evil were being widely dis- seminated ; that times of ease were again being proved times of danger ; that instead of a course of quiet, systematic, and patient proceeding, foundations were hastily laid, a huge superstructure of credit was raised, and facilities readily granted, — difiicult of subsequent control and productive in the end of dis- astrous results. There were then strong inducements to a liberal and active policy. Throughout the world, credit of every kind ran high. Profits had long continued upon a dazzling scale. Australia, in its gold produc- tions and mighty progress, had incited and allured the speculative. The banking accommodation there, so facile and successful, was assumed to be easily ap- plied else\vhere to produce the same or even extended advantasres. The mere creation of new banks in England caused other banks of ephemeral nature to be started that business might be fostered and stimu- lated. It is notorious there were men who applied themselves to fathom the depths of the "limited CAPE OF GOOD HOPE AND SOUTH AFRICA. 127 liability " principle ; by forced and ingenious labors they moved half-a-dozen schemes, creating shares, or- ganizing branches, finding unfledged bank-officers, and starting them on empirical missions to all parts of the world. There was a degree of justice, certainly more than "poetical," almost tragic, which followed this colo- nial excitement. When the business of Port Eliza- beth, for the most part originating with the old local banks, was transferred, the grave assurance was given that for fifteen years not more than £1,000 of bad debts were incurred ! Yet within six months it was found no care had been exercised in taking over the business; and "serious losses" had been the result of the new system of banking ! There was soon XI 33,000 overdue paper in the hands of one bank, and the statistics of two banks showed X 70,512 among " bills overdue, but not paid." The manage- ment of a large and extended business was deemed " easy and simple ; " the character and condition of " all the people were so well known," the credit system was positively " safer than in most other parts of the world ! " These views were uttered by an authority whose account was largely overdrawn, and whose position caused him early to retire from the direction of the bank he favored with his prudential maxims. His doctrines, indeed, were soon reversed by a local monetary crisis which placed all the im- portant districts in difficulties. It was seen that the traders had studied each other's peculiarities by cross bill transactions. There was a large issue of accom- modation paper, and unwieldy, lengthened credit 128 LONDON BANKING LIFE. among the storekeepers, while the " up country " traders were of course unsound, and often of a most fallacious character. Again, it was asserted that the new banking system was "safe," because it had so many branches ! Yet foremost among the meas- ures of contraction, the branch establishments were reduced, those newly found being a source of danger and unproductive ; besides which, a restriction of en- gagements and liabilities was imperatively required by the circumstances of the times. It would be useless to attempt any extenuation of these flagrant offences against sound banking prin- ciples. Yet it is obvious that in all communities changes of men, variations of policy, constant revision of principles,' are indispensable to safety, which is only secured by the application of measures to cir- cumstances constantly demanding new thought, new energies, and new combinations. If the blundering of individuals could be compared with the blunder- ing of states, there would be the significant proof that the minds of men need contact with the world be- yond their finite sphere ; and that there is no more fatal mistake than the shrouding over of difficulties, or the belief that things can be " let alone," which need vigorous attention, or that institutions will " last our time " when they are already worn out, effete, or crumbling to decay from the creation of new forces or the attacks of fresh competition. The latest banking returns of the South African Colonies may be introduced to show how great has been the improvement since the weakness of earlier years has been eradicated. CAPE OF GOOD HOPE AND SOUTH AFRICA. 129 THE CAPE OF GOOD HOPE BANKS. Assets. Banks. Coin and Bullion. Landed Property. Balances due from other Banks. Debis due to the Bank. Total. Cape of Good Hope South African . . Colonial .... Cape Commercial . Union London and South ) African . . . ) £ 44,582 16,327 12,857 16,775 26,062 110,837 £ 4,354 4,591 124 50,564 1,839 25,904 £ 176,601 13,839 3,961 222,347 59,462 40,849 £ 439,157 191,281 131,752 317,304 320,635 809,942 £ 664,694 226,038 148,694 606,990 407,998 987,532 Total . . £ 227,440 87,376 517,059 2,210,071 3,041,946 Liabilities. Banks. Notes in Circula- tion. Bills in Circula- tion. Other Liabil- ities. Deposits. Total. Cape of Good Hope South African . . Colonial .... Cape Commercial . Union London and South 1 African . . . ) £ 52,720 7,970 9,300 19,610 30,275 25,555 £ 1,852 38,954 £ 263,074 67,925 78,125 150,395 167,929 489,707 £ 347,047 150,143 61,269 398,032 209,793 472,271 £ 664,693 226,038 148,694 606,991 407,997 987,533 Total . . £ 145,430 40,806 1,217,155 1,638,555 3,041,946 130 LONDON BANKING LIFE. EASTERN PROVINCE BANKS. Assets. Banks. Coin and Bullion. Landed Property. Balances due from other Banks. Debts due to the Bank. Total. £ £ £ £ £ Standard of Brit- ) ish Soutli Africa ) 430,500 64,986 588,990 2,047,957 3,132,433 Worcester Com- ) mercial ... J 2,949 2,789 663 57,546 63,947 Graaff-Reinet . . 7,762 1,500 16,079 123,202 148,543 Caledon Agricul- 1 tural . . . . ) 1,871 1,367 6,911 22,966 33,115 Somerset East . . 8,749 115 4,048 41,347 49,259 Kaffrarian Colonial 22,566 806 6,079 78,957 108,408 Total . . £ 469,397 71,563 622,770 2,371,975 3,535,705 Liabilities. Banks. Notes in Circula- tion. Bills in Circula- tion. Other Liabil- ities. Deposits. Total. Standard of Brit- ) ish South Africa ) "Worcester Com- ) mercial . . . ) Graaff-Reinet . . Caledon Agricul- ) tural .... 5 Somerset East . . Kaffrarian Colonial £ 274,814 7,010 24,275 7,235 3,851 5,050 £ 35,111 £ 1,178,231 19,432 54,814 15,233 22,355 36,439 £ 1,634,144 37,505 69,454 10,547 23,053 66,318 £ 3,122,300 63,947 148,543 33,015 49,259 107,807 Total . . £ 322,235 35,111 1,826,504 1,841,021 3,524,871 CAPE OF GOOD HOPE AND SOUTH i^FRICA. 131 It may safely be asserted that colonial banking is not absolutely safe when resting rnerely on local in- fluences. There is an absence of disinterestedness, of high principles and of impartial rules by which financial undertakings ought to be regulated. Why, indeed, should it be otherwise ? Compare the colo- nies by themselves, or, better still, measure them by the standards to which they are equal. It is not ex- pected that vestrymen and guardians of even the largest of metropolitan parishes are immaculate enough to find " blots on their own escutcheon ; " to expose the blackness of their strongholds; the meanness of their own body ; or the baseness, the cupidity, the ignorance of corporate functionaries. Motives of self-interest bind them together. The moral fall of one might lead to the destruction of. others, and the weakness of many members would be found to be detrimental to the body politic. So it is with the issue of spurious bills, or the dis- pensing of over liberal credit. It goes on for a period ; it runs its course of renewal, of transfer from one account to another, but there is an inevitable necessity for re-payment, and it is when the rotten- ness is exposed and weak points are found out, that reform are demanded. Recriminations ensue ; per- haps a patching up, or, worse still, the carrying on of insolvent houses is allowed. All this is as "old as the hills," wherever financial affairs have been ad- ministered. The only remedies are honest, straight- forward exposure, or absolute, entire expurgation, be- fore the business can be placed in train for settle- ment. All other remedies are useless. Complaints 132 LONDON BANKING LIFE. about officers are unavailing, and the worn-out plea of bad markets or unsound trade should not be ad- mitted when they can be controlled by wisdom, fore- thought and determination. — Too often the men and not the sj^stem are at fault. Sound principles, un- impeachable integrity, freedom from combinations among themselves are necessary, and there must be no fear of consequences when a vigorous effectual policy has to be enforced. It is futile to expect these qualities, except men of the right class, adequately paid, are the executive officers. Indeed it is a vague sentiment to assume high-mindedness from directors when they have the interest of private concerns to promote, their friends to serve, or the "powers that be," to please, flatter, or truckle to for any purpose. These truths have long been recognized from the stern lessons of the past. It should be urged, too, that all banking systems require, as a necessity of success, good collateral securities. The old East Indian rule of hypothecation should be enforced for advances against produce. Punctuality in bills and all time engagements should be fostered as though it were an absolute appanage of the bank — an integral part of itself, a necessity of its very existence. Then, with well-regulated rates and a freedom from undue competition, business will be sound, profitable, and well-conducted ; then, too, will safety be secured for the colonies concerned, and for those who embark their capital in such enter- prises. The banking system, formerly weak, if not un- sound, has become well established, by being con- CAPE OF GOOD HOPE AND SOUTH AFRICA. 133 ducted on the strict principles thus enforced, and it generally conforms to those regulations observed in highly civilized countries. The trading statistics of the recent years show re- markable progress : — I'ear. Imports. Exports- £ .£ 1871 2,585,298 3,531,609 1872 4,388,728 4,757,494 1873 5,130,065 3,907,911 1874 5,558,215 4,233,561 1875 5,731,319 4,088,125 In the future of these colonies there will be much of immense importance to the commerce of England. The discoveries of Livingstone and of Cameron are alone sufficient to prove that new fields of enter- prise are being opened ; other men of science and genius have to follow the pioneers, and it is to be fer- vently hoped that the colonists of South Africa will be able to turn to profitable account the opportunity for developing good staple products, and creating new markets for manufacturers. 134 LONDON BANKING LIFE. CHAPTER XVI. SHIPS AND MARINE INSURANCE. " The world is governed by conciliation, compromise, influence ; the recognition of the rights of others, and, in addition, a general con- viction, resulting from explanations and a good understanding, that it is for the interest of all parties that business should be conducted in a satisfactory and peaceful manner." Benjamin Disraeli. At no period in the history of commerce have there been " facts, failures, and frauds " in navigation more serious than those of the last few years. The honor of ship-owners, and those subject to their authority, has been impugned; property in Marine Insurance Companies' shares is often nearly annihi- lated ; and the lives of thousands are sacrificed, either through neglect, indifference, or cupidity. With an unparalleled fleet, and an ascendency of power never previously enjoyed by British merchants, there are constant proofs that strong remedies or preventive measures must be adopted to check the recklessness that is*weakening the English character, and lower- ing the noble profession of the seaman into a game of chances, rather than a business of precision, if not of certainty. Hence the last two or three years have witnessed an agitation that has brought the subject under the attention of the Legislature. The principle of rendering " honor to whom honor is due " has to be specially associated with SHIPS AND MARINE INSURANCE. 135 the labors of Mr. Samuel Plimsoll, who has for many- years been strenuously laboring for an improvement in the navigation laws. He has hoped to accomplish the object by legislation : preventing over-loading, and deck-loading, and the employment of unseaworthy ships ; he also advocates a proper survey of all ves- sels during construction, and previous to actual ser- vice, together with a thorough revision of the prin- ciples of marine insurance. These objects have en- gaged the attention of the country, until enthusiasm in agitation has been aroused, at times with painful consequences ; but on the whole with a steady and undeviating progress towards ultimate and complete success. There has been neither wisdom nor expediency in the opposition this agitation has to encounter. The shipowners have assumed to themselves the spirit of martyrs ; they have been the aggrieved, the suffer- ing, and the persecuted ! At public meetings, and throughout the press, the watch ward has been " No surrender," although moderation has been manifested by their opponents, and compromises have been offer- ed. There was proof in the Session of 1875, par- ticularly towards its close, that legislation could not be longer delayed. The consequence was the Act of the 13th of August, 1875,(38 & 39 Vict. cap. 88), to make provision for giving further powers to the Board of Trade for stopping unseaworthy ships. It provides that seamen may claim protection against going to sea in a vessel deemed to be in an unsatis- factory condition. It also enacts that no cargo of which more than one-third consists of any kind of 136 LONDON BANKING LIFE. grain is to be carried, unless contained in bags, sacks, or barrels, or secured from shifting by boards, bulk- heads, or otherwise. There is also a penalty of 500^. against every person or party thereto who despatches a ship in an unseaworthy condition ; every person who attempts the same or is party thereto, and every master who knowingly takes the ship to sea is made alike liable. A load line in future is to be painted amidships, and no alteration is to be made in these marks until the vessel next returns to the United Kingdom. The penalty for neglecting this provision, or for defacing these lines, is 100/. It is also pro- vided that the shipowner is to be personally liable to the master, seamen, and apprentices of the vessel for neglect of prof)er measures to insure the sea- worthiness of the vessel at the commencement of and during the voyage. The success thus achieved proves that the subject cannot remain in its present position. The rate at which shipping property is increasing will make it more incumbent than ever for the Government to be supported by a sound and enlightened public opinion. The statistics deserve close attention : Total Tom age Belonging' to the United Kingdom and British Possessions, Year. Sailing Vessels. Steam Ships. Total. Tons. Tons. Tons. 1850 4,045,331 177,631 1 4,232,962 1860 5,210,824 500.144 5,710,968 1870 5,947,000 1,202,134 7, 149. 134 1871 5,731,088 1,411,803 7,142,891 1872 5,573,190 1,640,639 7,213,829 1873 5,468,492 1,825,738 7,294,230 1874 5,546,237 . 1,987,235 7,533,492 SHIPS AND MARINE INSURANCE. 137 Concurrently with this increase there has been a decrease in the shipping of the United States. The sailing vessels have receded from 4,485,931 tons in 1860 to 3,482,760 tons in 1873. Steam shipping of the States has only increased in the same period from 867,937 tons to 1,156,443 tons. As the carrying trade of the world is thus more largely than ever conducted in British ships, it becomes a serious responsibility for the business to be well and wisely controlled. There are, however, symptoms of declining virtue and probity, and the " signs of the times " demand that attention be directed to effect salutary improve- ments, so that no possible reflection should attach to the honor of merchants or ship-owners. The wreck register of the Board of Trade is not pleasant reading, even on its own merits. The figures furnish materials to convince the public mind that reforms have been rendered compulsory. It is obvious that it will no longer be sufficient to rely on self-interest ; but to legislate for the protection of life and property. It is af)palling to reflect on the misery, the wretchedness, the destitution, which one great casualty at sea may cause, but look at the aggregate loss, apart from money value, of human life, with homes deprived of the '' bread winners," the hopes of families destroyed, and then the statis- tics will not be without solemn warning. Were it expedient the names of vessels could be furnished, which would harrow the feelings of those who have to lament that the most ordinary precautions of com- mon sense, or the application of the simplest rules of navigation, have been neglecte'd. 138 LONDON BANKING LIFE. Tear. Absolute Wrecks. 1860 476 1861 513 1862 455 1863 503 1864 386 1865 470 1866 562 1867 656 1868 527 1869 578 1870 500- 1871 473 1872 310 1873 496 1874 346 Partial Wrecks. 605 658 695 830 653 832 876 1,020 841 873 912 820 847 1,236 1,076 Total. 1,081 1,171 1,150 1,333 1,039 1,302 1,438 1,676 1,368 1,451 1,412 1,298 1,157 1,732 1,422 It would be a terrible lesson to statesmen were the attempt made to resist the force of public opinion, and to believe that legislation will be powerless in preventing recklessness of human life. The means of ascertaining the total loss are most insufficient ; but the following is the approximate statement of lives lost on the English Coast : Year. Lives. Year. Lives. 1861 884 1868 824 1862 690 1869 933 1868 620 1870 774 1864 516 1871 626 1865 698 1872 590 1866 896 1873 728 1867 1,333 1874 506 It is a natural sequence of these statements to watch the continuous decline in the resources of Marine Insurance Companies, arising from the in- SHIPS AND MAKESTE INSURANCE. 139 creasing demands from losses, collisions and general average claims. The fact is worthy of attention that the oldest offices are being " sapped and under- mined," while the youngest are not becoming stronger. There is, in fact, a weakening process going forward from reckless competition, and efforts by which each community or province becomes its own assurers, rather than allow the business of the world to be regulated by those laws of average which govern the taking as much as the adjustment of risks. Although these points could be substantiated by details, it is sufficient to observe that there are now 12 offices with English shareholders, and with a strictly London or- ganization ; there are agencies from most of the princi- pal cities of Europe ; all the Australian Colonies and New Zealand are represented by small underwriting offices, while India, China, and Japan have several agencies for the transaction of business. Although it would be no unimportant inquiry to ascertain the solvency or otherwise of these various offices, the materials are not obtainable in all cases, nor would it be advisable to expose dangers without being at the same time able to provide remedies. It is obvi- ous, however, that shippers and ship-owners are more than ever dispensing with real, actual, bond fide in- surances ; that they are becoming their own assurers, or avail themselves of low rates in offices they especially desire to favor, or worse still, to take advantage of commissions placed before them as allurements to business. The following information will elucidate these points : — 140 LONDON BANKING LIFE, THE OCEAN MARINE INSURANCE COMPANY. Capital Reserve Fund Balance of Underwriting Ac- count and Undivided Profits Investments Interest Premiums Claims Expenses 18G6. £ 200,000 40,000 215,028 443,469 17,702 176,000 134,584 15,561 1875. £ 200,000 40,000 82,584 253,530 13,290 *63,774 15,041 * After deducting all Losses, Averages, &c., &c., &c. THE UNIVERSAL MARINE INSURANCE COMPANY, LIMITED. Capital Reserve Fund Balance of Underwriting Ac- 7 count and Undivided Profits f Investments Interest Premiums Claims Expenses 1866. 1875. £ £ 250,000 250,000 113,508 178,293 181,811 461,644 9 392 18,368 213,554 192,830 240,085 202,370 18,039 17,146 SHIPS AND MARINE INSURANCE. 141 THE THAMES AND MERSEY MARINE INSURANCE COMPANY, LIMITED. Capital Reserve Fund Balance of Underwriting Ac- 7 count and Undivided Profits ^ Investments Interest Premiums Claims Expenses 1865. £ 200,000 143,000 301,394 568,299 28,506 539,521 567,721 48,661 1875. £ 200,000 225,000 292,475 698,320 31,611 359,159 306,190 27,399 LONDON AND PROVINCIAL MARINE INSURANCE COMPANY. Capital Reserve Fund Balance of Underwriting Ac- ) count and Undivided Profits ^ Investments Interest , . . . , Premiums Claims Expenses 1866. £ 100,000 25,000 53,973 162,760 8,932 145,695 149,875 16,219 1875. 100,000 50,000 50,534 186,656 8,771 114,896 120,641 13,433 142 LONDON BANKING LIFE. THE UNION MARINE INSURANCE COMPANY, . LIMITED. Capital Reserve Fund - Balance of Underwriting Ac- 7 count and Undivided Profits ) Investments Interest Premiums Claims Expenses 1866. 1875. £ £ 203,200 203,200 46,589 140,678 101,916 290,476 311,103 13,340 12,923 226,000 151,386 208,380 118,589 15,945 13,883 THE BRITISH AND FOREIGN MARINE INSURANCE COMPANY, LIMITED. Capital Reserve Fund Balance of Underwriting Ac- ) count and Undivided Profits | Investments Interest Premiums Claims Expenses 1866. £ 100,000 26,285 88,196 168,777 9,574 269,368 340,639 31,353 1875. £ 200,000 121,348 205,019 467,217 23,432 306,674 125,663 21,638 SHIPS AND MAEINE INSURANCE. 143 COMMERCIAL UNION ASSURANCE COMPANY. Capital Reserve Fund Balance of Underwriting Ac- } count and Undivided Profits \ Investments Interest Premiums Claims Expenses 1866. 25,000 105,828 110,972 4,679 211,939 197,003 14,925 1875. 198,240 198,240 6,302 232,808 199,789 11,875 ENGLISH AND SCOTTISH MARINE INSURANCE COMPANY, LIMITED. Capital Reserve Fund Balance of Underwriting Ac- } count and Undivided Profits \ Investments Interest Premiums Claims Expenses 1866. 1875. £ 51,120 • • 79,861 1 c3 'O 51,844 3,565 1-3 127,597 a t— 1 149,317 8,539 144 LONDON BANKING LIFE. THE LONDON AND CALEDONIAN MARINE INSUR- ANCE COMPANY, LIMITED. Capital Reserve Fund Balance of Underwriting Ac- > count and Undivided Profits | Investments Interest Premiums Claims Expenses 1866. 100,000 104,803* 108,274 5,253 227,923 807,358 16,007 1875. c o • rH a • rH a" * Balance at Debit Profit and Loss Account, £T6,654. THE MARITIME INSURANCE COMPANY, LIMITED. Capital Reserve Fund Balance of Underwriting Ac- 7 count and Undivided Profits ) Investments Interest Premiums Claims Expenses 1866. £ 98,820 130,594* 149,599 8,616 203,730 205,345 10,051 1875. £ 98,920 80,000 108,260 262,897 11,007 148,772 144,714 14,383 * Balance at Debit Profit and Loss Account, £46,859. SHIPS AND MARINE INSURANCE. 145 HOME AND COLONIAL MARINE INSURANCE COMPANY, LIMITED. Capital Reserve Fund Balance of Underwriting Ac- > count and Undivided Profits ) Investments Interest Premiums Claims Expenses 1866 £ 100,000 59,883* 123,319 6,160 192,204 210,378 10,853 1875. £ 100,000 77,545 3,178 115,751 127,126 13,561 * Balance at Debit Profit and Loss Account, f |?S f 'il'^Jf' I 1875, £17,158. THE NATIONAL PROVINCIAL MARINE INSURANCE COMPANY, LIMITED. Capital Reserve Fimd Balance of Underwriting Ac- ) count and Undivided Profits | Investments Interest Premiums Claims Expenses 1866. £ 49,265 63,167* 48,329 3,615 133,862 165,027 7,845 1875. a .2 '■*^ a * Balance at Debit Profit and Loss Account, £50,359. 10 146 LONDON BANKING LIFE. THE GLOBE MARINE INSURANCE COMPANY, , LIMITED. Capital Reserve Fund Balance of Underwriting Ac- 7 count and Undivided Profits f Investments Interest Premiums Claims Expenses THE IMPERIAL MARINE INSURANCE COMPANY, LIMITED. Capital Reserve Fund Balance of Underwriting Ac- ) count and Undivided Profits ) Investments Interest Premiums Claims Expenses P CO o o o a S-l 0) a count and Undivided Profits \ Investments Interest Premiums Claims Expenses 1870. £ 37,500 10,672 11,547 258 1,718 1875. £ 50,000 25,000 45,923 102,102 2,751 26,964 19,491 5,601 > SHIPS AND MAEINE INSURANCE. 149 AUSTRALIAN GENERAL ASSURANCE COMPANY. Capital Reserve Fund Balance of Underwriting Ac- > count and Undivided Profits j Investments Interest Premiums . Claims Expenses ^^ o 2 m -(J l=! pl O o o c3 1876. £ 18,000 18,000 23,071 52,391 2,396 29,977 20,700 6,154 The condition of thg old Insurance Companies conducting maritime business is not easy to ascer- tain. Some results may, however, be derived from the market value of their shares, which for that purpose are introduced in the following table, all quotations being taken on the 31st of December in each year. Office. Alliance Indemnity Marine Globe Home and Colonial. London London &Provincial Merchants' Ocean Thames and Mersey Thetis Universal Paid up Capital. 1860. 1865. 1870. 1875. 25 60 38 20 17 50 148 127 114 101 18 104 91 93 45 4 , , • • , . 3 5 , . • • 4/ IVs 12i 47 47 47 59 2 \Y^ 2SX 3 ^'A 2 . . 10/ 5 8H 243/ 19 QVs 2 23/ SVz 5/ 6 5 8 6/3 7 . . 2 2H 4:/2 12 8H 150 LONDON BANKING LIFE. Although ample consideration has been given to the question of Marine Insurance, few practical im- provements have been attained. It has been perti- nently asked, " How comes it that years ago the Courts of Law were familiar with Insurance cases, underwriters disputing their liability on grounds which appeared sufficient, whether on the score X)f unseaworthiness or otherwise ? " Such legal conten- tions are now rarely brought before the public, nor has satisfactory proof been furnished that they are necessary. Some of those most interested in the question are in a chaotic condition of mind as to how they should act, whether defensively or by complete submission to injustice and spoliation. It is too pal- pable that there is not only the spirit of competicion for business, b'ut an actual thirst for precedence in settling claims, with the avowed object of influencing the action of other underwriters. This may result from the enormous growth of shipping and commerce during the last half century, but it furnishes no rea- son that the so-called " freedom of contract " should be maintained, nor that "honor" policies should be issued. From the shameless claims and discreditable losses it has become necessary to control declarations of value, to insist on proof of interest, to limit the power of insurance, and to conserve the property of the assurers as well as the assured. A writer on the subject has advanced the following passage in a re- cent pamphlet : " Granted that a marine policy should be simply a contract of indemnit}^, the ques- tion arises — To what extent is an owner to be in- demnified ? Is he to recover the mere market value SHIPS AND MAEINE INSTJEANCE. 151 of his vessel at the moment of her loss, which may- take place when, as at the present time, the value is exceptionally low ? " * The answers surely are that the market value of shipping property should alone be taken, the average of six or twelve months being ■'Sufficient to guide impartial authorities ; that the ' measures of indemnity " should be the measures of averages fair to each party concerned ; that the avner should not be allowed to add to or cover as- sumed profits ; that he should have co-equal risks wth those who follow his engagements ; and practi- ca men will have none of the difficulty described by t]v writer in detailing the various elements, such as ags materials, port of construction, classification, naUre of employment, and state of repair. ?here is another point in this discussion worthy of conideration, which has been urged by a well-in- forned authority, that the overtrading tendencies of the present day, coupled with the pressure brought to bar upon the British ship-owner through his un- resticted competition with foreign nations, are most injuious to the sailors' interest. It is argued that thos who advance money upon vessels should do so scely with reference to the intrinsic worth of a ship,and not with reference to the insured value. That it ought to be " as easy to mortgage a ship as it is o mortgage land " may be an incontrovertible propsition ; but it does not follow that a fictitious valus agreed upon by distinct parties with reference to a pecific contract between themselves, ought to be ujheld in order that advances may be obtained far * •' The Marine Insurance Question," p. 9. 152 LONDON BANKING LIFE. beyond the sum for which the vessel herself is a legitimate security. Borrowing within proper limits would not be affected. Nor has it been found that the rule of strict indemnity, and the necessity of proving the amount of that indemnity, which holds good on fire policies, has injuriously diminished thf power of borrowing on houses. Few things havJ more to do with ships being sent to sea insufficiently repaired, and insufficiently provided with all thatis requisite for their safety, than the facilities wih which needy shipowners obtain the loan of capial and enter upon adventures far beyond their meghs. Needy shipowners, who purchase vessels by m^ns of money borrowed at ,10 per cent., cannot be/ex- pected to spend much in making and keeping tteni seaworthy. I The discussions have produced many valijkble opinions, among others that of the late Mr. Jifetice Willes on the principle of valuation : — | The legitimate object of the mercantile usage of vacation (which is probably as old as insurance) appears to be ty)fold. First, the inconvenience of protracted and expensive inuiries as to value, which in many cases would be difficult ofiproof. Secondly, in the case of ships, to allow the assured to i^ure to the full extent of his interest, though exceeding the inarket value, or what he could get for his ship if put up for saj ; and, after all, comes the practical question whether the usefmess in fair commerce, as saving delay and expense in allowiiJ!^ a full indemnity to the assured with corresponding remunertion to the underwriter, does not preponderate, when weighecjigainst the possible hindrance which its abolition might in exqptional cases throw in the way of crime. I It is asserted by some that valuation has supj-seded SHIPS AND MARINE INSURANCE. 153 the principle of indemnity, because it was found to be the onl}'- way to keep free from contentions and litigation. An illustration of the difficulty was given in the fact that " four fine steamers were built costing 30,- 000^. each, and were sold the following year under rather urgent circumstances, and brought only 14,- 0001. each." And then the inquiries are made, What is the indemnity ? Why should the last value and not the first be taken. Surely here again a false issue is raised, for had a loss occurred, the mean, or average value, was the amount to insure, and that amount should alone have been recoverable. Had the larger amount been on the policy, injustice would have occurred, and an undoubted motive produced for recklessness, perhaps something worse. If it is not the duty of the underwriter to correct and con- trol value, the duty should be undertaken by the Legislature as well for the sake of the property as for the protection of those who may be intrusted with the management of the property. Is it not so in mines, in factories, in dangerous employments, even in the condition of houses that have to be in- habited, or streets to be traversed ? Ignorance, in- capacity, fraud, undue dangers are . all guarded against, — why not then the perils of the sea, the cupidity of shippers, the risks of ship-owners? Granted that bad owners are the exception, yet they are like other offenders, the men for whom laws become necessary, and against whom society must be rendered secure. There is matter for serious reflection in the fact 154 LONDON BANKING LIFE. that the greatest claims on Marine Insurance Com- panies are made when markets are depressed, which is as notorious as regards cargo as it is in respect to hulls. " Particular averages " figure almost as heavily as the total losses, which coincidence is not so much traceable to seasons as to prices. There has been no abatement of heavy claims for three years together, and the questions may well be raised, What is the remedy ? — who will apply it ? It is not suffi- cient to answer that the " cycle of bad seasons " will soon have run its length ; nor will the assertion be longer tolerated, that a period of " transition from sail to steam " is being passed through. There is abundant proof that science is not wanting, but real seamanship is ; that premiums are arranged without reference to risks, and that competition has supplant- ed the "law of averages;" that combinations for good results are not even attempted, while the con- nivance of evil is the only apparent evidence of vital- ity, although it has to be deplored as the sign of de- generacy in a profession that has had, and still may possess, the truest, ablest, noblest men of modern times. CONTINENTAL TROUBLES. 155 CHAPTER XVn. CONTINENTAL TROUBLES. *^If there were any termination of England that would be ever re- membered, ever honored in that western world where liberty is now retiring, conqvest would be more tolerable, and ruin more sweet ; hut it is doubly miserable to become slaves abroad, because we would he tyrants at home ; to persecute, when ice were contending against persecution ; and to per/s/i, because we have raised up ivorse enemies within than we are exposed to without, from unprincipled ambition. It is indeed a most silly and affecting spectacle to rage at svch a mo- ment against our own kindred and otir own blood ; to tell them they cannot be honorable because they are conscientious in religion; to stipulate that they must hold up the right haiid in prayer, and not the left ; and adore one common God, by turning to the east rather than to the west." Sydney Sjuth. There was no more remarkable financial event on the Continent of Europe in 1875 than the failure of Baron Strousberg. He was not altogether nnknown in London, having been, as far back as 1850, a writer for magazines and newspapers. There was a striking fact that early in life he kept some small shop ; while in 1870 he rented a sumptuous house at the West End ; then became familiarly known to Count Bis- marck, under whose patronage he went to Berlin, and in that city developed those financial schemes which proved both his success and his failure. In Roumania, he started a net-work of railways ; in Hungary, he projected the North Eastern line ; in Russia, the Brest-Grayevo ; in Germany, the Halle- 156 LONDON BANKING LIFE. Sorau, the Hanover-Altenbecken, and the Berlin- Posen lines. Besides these, he had acquired other railway concessions which were to be begun incon- tinently ; he had just established a large engine man- ufactory at Hanover, completed tlie Berlin cattle- market and slaughter-houses, and was increasing and re-organizing his ironworks at Dortmund and Neu- stadt, not to speak of other important factories on a less gigantic scale. Not satisfied with these under- takings, he had purchased the southern citadel of Antwerp, paying 3,500,000 f. as caution-money, and was prepared to cover the area of the fortifications with dwelling houses, forming a new quarter of the town. His career has been strikingly portrayed by a correspondent of the Times : — In the midst of these gigantic speculations he was surprised by the outbreak of the war between Germany and France. The blow thus inflicted was terrible, and he never recovered it. Exerting himself to the utmost, he, indeed, succeeded in carry- ing on his railway lines, and before the end of 1870 completed the greater part of the Roumanian railway, as well as parts of the Halle- Sorau line and the whole of the Berlin-Posen line. But, as the railway directors whose lines he constructed were paying him loith shares, which, in the financial depression caused by the war could only be disposed of at a considerable loss, mil- lions the debtor had counted upon were never realized. Other millions were lost by the shareholders of the Brest-Grayevo line discontinuing the payment of instalments. If these acci- dents went far to make a catastrophe inevitable, the embarrass- ments of the debtor reached an unmanageable height upon the refusal of the Roumanian Government to pay the January in- terest of the Roumanian lines early in 1871. The pros and cons of the question have been so often discussed that it would be needless to enter upon the merits of the case ; but it may be mentioned that though Strousberg held the Roumanian Govern- CONTINENTAL TROUBLES. 167 ment responsible for the interest due, he, on the refusal of the Bucharest authorities to pay, endeavored to establish a Railway Construction Company, to which he meant to hand over the greater part, of his property and undertakings, upon condition of the new concern advancing 2,000,000 thalers to satisfy the claims of the Roumanian shareholders. Thanks, however, to the long continuance of the war, the projected company could not be established, and the Roumanian interest remained un- paid. From that moment the credit of the debtor, almost un- limited in 1871, was shaken."* The expedients resorted to amidst these difficulties were sufficient to keep Strousberg afloat for some time lonsfer. He sold his extensive ironworks, he pledged the German estates, and mortgaged other property to the Roumanian Railway Company. From these measures he raised 700,000 thalers to pay the Discount Company, and 400,000 thalers for the Rou- manian Railway Company. Still anxious to sur- mount his difficulties, he sold other large and impor- tant properties ; yet he found it impossible to carry on his enormous railway unkertakings. He there- fore abandoned some, but contrived to confinue the Brest-Grayevo, the Halle-Sorau, and the Hanover- Altenbecken. He was then daring enough to con- ceive the idea of recovering his Zbirow estate by purchasing a large railway carriage manufactory, a locomotive manufactory, a railway wheel manufac- tory, a rolling mill, Bessemer ironworks, a number of puddling furnaces, blasting furnaces, &c. To con- nect these various works he laid down a railway thirty-five miles in length on his own property, and built a city for workmen. Then he endeavored to * Times, 20th November, 1875. 158 LONDON BANKING LIFE. gain a footing in England, but was foiled in so doing by having to hurry back to Germany to meet new financial difficulties incurred from the immense scale of his Bohemian works. The sale of his famous picture gallery — and of the Antwerp concession — supplied him once more with funds. Then he part- ed with the right to finish the Hanover-Altenbecken Railway for a consideration ; but he contrived to complete and open for traffic the Halle-Sorau and Brest-Gray evo lines. In 1874 he concluded an agree- ment with M. Polykoff, the Russian railway con- tractor, in which he engaged to supply him with 2,000 railway carriages within a very short period of time. To carry out this contract he further enlarged his Zbirow manufactory, and purchased another rail- way carriage manufactory at Budna near Prague. The carriages made under the contract were destined for the Kursk-Charkoff line, which paid the debtor with debentures, on which the Moscow Commercial Bank advanced the cash. Thus arose the connection between the debtor and that bank. The 2,000 car- riages furnished and delivered, the debtor entered into an agreement to supply 2,000 more, the Moscow Commercial Bank advancing 1,800,000 roubles on the strength of this contract. Thus busily employed, Strousberg bought back the Neustadt Ironworks and Siegen mines, acquired the Maria Ironworks at Dant- zic, all being greatly improved and enlarged. He likewise bought at St. Petersburgh a railway carriage manufactory, but failed to get orders in that city. In 1875 the finale commenced. The shares of the Mehltheur-Weida Railway proved a drug in the CONTINENTAL TROUBLES. 159 market ; then on the Vienna Exchange he was de- feated in floating 7i per cent, debentures, and finally the attempts to establish a joint-stock company for his German and Bohemian mines and ironworks were unsuccessful. Thus he attained the culminating point in his career, and in the autumn of 1875 his affairs were brought before the civil court for admin- istration. The principal difficulty of the liquidation was in the international character of the bankruptcy, and the different legislations of the countries in- volved. Some advantage, however, creditors might hope to derive from the Austro-Prussian Convention of 1844, under which German creditors might assert their claims either at Berlin or at Prague, according as they thought fit. The Russian and English as- pects of the case were different. Contrary to what had been stated, no real property had been handed over by the debtor to his wife, excepting the Elbing Railway Carriage manufactory. Mrs. Strousberg had at once declared her willingness to yield up this man- ufactory to her husband's creditors, but its value in a bankruptcy case was doubtful. The debtor owned in Germany the landed estates of Radawnitz, Wom- wellno, Alt-Laube, Priebisch, Garth, Lissa, Peisten, Worinen, Diepensee, Waldersdorf, and Moholz. In addition to these he owned a house at Neidenburg, and a mansion and villa, with a good deal of build- ing land, at Berlin. The value of his real property in Germanywas officially estimated at 16,916,151 marks; but as the mortgages amounted to 13,818,880 marks, the utmost of the creditors could hope to realize by sale was about 3,000,000 marks. The 160 LONDON BANKING LITE. Neustadt Ironworks with the landed estate of Xaver- lah, as well as divers iron mines in the Siegerland and Harz and the Maria Ironworks at Dantzic, had been sold by the debtor to the recently established company, of which he was the only shareholder ; but their actual transfer to the company had not yet been made. The personal estate of the debtor in Ger- many, as far as could be seen, consisted of the fol- lowing items : — 1. Cash, 22,000 marks ; 2. A share in the Zoological Garden Company of 750 marks ; 3. A library estimated at 60,000 marks ; 4. Furniture in the Berlin mansion, 70,690 marks; 5. Objects of Art in the Berlin mansion, 34,000 marks ; 6. Cook- ing apparatus, &c., 10,000 marks. Adding to this some minor amounts, they got a total of 218,565 marks, against " privileged claims " (operatives, workmen, &c.), reaching to 122,000 marks. From all this, they could not but arrive at the conclusion that the liquidation of the case would occupy some four or five years, at the end of which creditors might hope to receive a trifling fraction of their demands. It might be different were the debtor free, and in a position to co-operate with them for the reconstruc- tion of the shattered fabric before them. Their special commissary had thought it his primary duty to do all in his power to obtain Baron Strousberg's release from a debtor's prison in Russia. On the 23d of October the Commerce and Loan Bank of Moscow stopped payment, the cause appear- ing to be the losses of the bank through Dr. Strous- berg, at that time in Russia. He was arrested on the 25th, in St. Petersburg, apparently as a debtor only, CONTINENTAL TROUBLES. 161 though criminal charges against some of the directors, who had also been arrested, were hinted at by the Russian press, and in private correspondence. Those who studied these events knew that the effect would be very disastrous to the Western States of Europe, because of the poor communities in Russia and Germany, and tlieir inability to struggle against adverse circumstances. The capital of the " Commercial and Loan Bank of Moscow " was about 400,000^., its liabilities about 2,500,000/. Its failure was sufficient to cause gen- eral alarm, and a run on other banks soon followed. The Russian Government, paternal in its solicitude to allay apprehension, sent a delegate from St. Peters- burg. He gave the assurance that the disaster had arisen from exceptional circumstances ; assistance was rendered by the State to the other banks, and the sense of restored confidence was enjoyed which generally follows that kind of intervention. It has been observed that, with the recent expansion of European trade, there has been a considerable in- crease of banking accommodation in Russia, over- trading had been indulged, and a collapse of some important interests was inevitable. Following the Moscow events, there were disturb- ances in St. Petersburg, thus described in the Berlin Borsen Zeitung of 28th October : — •''The failure of the Moscow Commerce and Loan Bank has given the signal for a succession of failures in the interior of Russia, which affect St. Petersburg but little, but have com- pletely shaken confidence in the principal centres of trade in Poland, and Central and Southern Russia. This is most direct- ly shown in the extensive notices to call in the money deposited with the banks. Particularly the branches of the International 11 162 LONDON BANKING LIFE. Trade Bank in Kiev, and the Warsaw ' Wechsel Bank ' have been violently pressed for some days. Also the bank of Azov- Don, in Taganrog, and the Moscow Merchants Bank, have had to withstand a run after the American model. ' The rate of discount in Odessa is at this moment 12 per cent., and accord- ing to all appearance the stringency of money will yet become more severe there." The Banking System of Russia may be ascertained from the following : — Statement of the Liabilities and Assets of the Russian Banks {exclusive of the State Bank), on the 13th of August, 1873. Liabilities. Capital Reserve Deposits Current Accounts .... Brandies Correspondents Due to various creditors . . Acceptances Interest and commission . . Dividends payable .... Rediscount aud repledgiug . Goods and bills in commission Floating accounts .... In transit 1873. £ 12,775,000 400,000 22,015,000 18,130,000 1,465,000 7,095,000 1,215,000 1,970,000 2,270,000 15,000 1,810,000 120,000 290,000 670,000 Total £69,680,000 Assets. Cash Balances of Bank at State Bank Russian Trade Bills discounted ( with two signatures) . Foreign Bills Russian Bills (with one signature and special guarantee) Bills, Securities, and Goods in commission Advances repayable at call bearing interest Advances repayable at fixed dates bearing interest . . Carried forward 1873. £ 1,110,000 9,505,000 26,370,000 710,000 f>45,000 310,000 1,550,000 12,390,000 £52,890,000 CONTINENTAL TROUBLES. Assets — continued. 163 Brought forward Advances upon open credits In Transit Interest bearing securities, tlie property of the Bank. Sums due by brandies Debts due b}' correspondents Various debtors Cost of working Protested bills Interest paid Houses, furniture of banks, &c. Floating accounts, &c Total £ 187;^. £ 52,890.000 1,280,000 40,0 2,990,000 650,000 8,930,000 1,850,000 330,000 40,000 330,000 240,000 110,000 69,680,000 As it is certain that all rapid growths are full of danger, so the symptoms that followed these financial troubles have to be closely watched. The evidences were soon furnished that from over-importing, losses on manufactures and produce had to be sustained, and contraction of trade became necessary. The de- cline in the exportation of wheat aggravated these troubles, and occasioned serious embarrassments. It was asserted that the country could not afford its export to decline by tens of millions per year. Con- sidering that the Government revenue had increased from 275,000,000 roubles in 1852 to 559,000,000 roubles in 1875, the prospect held out by the best judges of losing 160,000,000 roubles of foreign money a year was portentous. Such an event would serious- ly interfere with the progress of the people ; it would fetter the administration, and it would either dimin- ish the fighting capacities of the Government, or, which is much more probable, lead to the doubling 164: LONDON BANKING LIFE. of the loans. The first symptoms of this latter con- tingency was the resolution of the joint-stock banks to try and contract a united loan abroad. There are, moreover, combinations that cannot be overlooked in times so momentous to Russia with its vast terri- tories and its 82,000,000 of inhabitants. " In R,ussia," remarks a most able writer, " Communism has existed since the earliest times, and we have no experience of the Russian peasant as an independent, self-reliant individual. Many of those best acquainted with him apprehend that to make an independent j^roprietor of him in his present low state would only aggravate matters. Being accustomed to sell everything to buy drink — one-third of the Government revenue is de- rived from that propensity of his — it is feared that a very large number would sell their land if they could, and that an army of vagabonds would be created too large to be conveniently dealt with. Every fourth day, moreover, is a holyday ; and to interfere with this pious custom would hardly strengthen that prim- itive faith to maintain which is the dearest wish of the Government. Nor can the peasantry be raised from their degrading habits unless a little enlighten- ment is allowed to be propagated by schools. Here, too, ecclesiastical and Government interests combine to keep Russia down. The Rayah subjects of the Porte in 1861 had one school for every 1774 of their suffering population, and one who could read and write in every seventy inhabitants ; in Russia, where the Rayahs are such objects of pity, in the present year, there is only one school to every 3319 inhabit- ants, and one scholar to every eighty-one inhabitants. CONTINENTAL TROUBLES. 165 It not being very probable, in these circumstances, that the undeveloped Russian will be shortly enabled to vie with the clever and thrifty American, some Russian papers have actuall}^ raised the question whether manufactures might not be encouraged if ag- riculture is becoming hopeless.' If linen and tallow, if hemp and leather, can be no more exported in the same quantities as formerly, yet they might be sent across the frontier in the shape of soap and boots, of shirts and ropes. But here it occurs, even to the most Protectionist Russians, that all attempts to make their manufacturers work for the foreign market are in vain while they are encouraged by a prohib- itive tariff to turn out an inferior article and charge hio-h for it. An alteration in this would involve a change in the whole system of Russian economy, and indirectly of Russian policy. To tell the Russian to work for the foreigner is to cut down the barrier that has so long separated him from the rest of the world ; is to compel him to go to school, and reform his Church; is to enable him to create a middle class, which would render the maintenance of absolute despotism impossible. No manufactories, moreover, can be effectually worked while the village author- ities have the right to forbid the members of their community to absent themselves, or while they may recall them at will after leave given. But this right can be dispensed with only when communism is abolished, and the individual peasant no longer re- quired to work for the parish."* There is much that would interest the student of * Times, ITtli of Januiiry, 187C. 166 LONDON BANKING LIFE. finance in other European cities ; but the following details must alone suffice : — "Denmark. — Considerable anxiety has for some time existed among the Danish commercial and in- vesting public, as it was feared that the eifects of over-speculation, which in Germany has caused so many victims, would also be felt here ; and when, some months ago, the banker, Baron Gedahlia, failed, it was thought to be but the beginning of the end. Discount has stood high, money has been scarce, and some of the more speculative shares have lately drop- ped considerably. I am, however, enabled to state, on what I am justified in calling the highest financial authority here, that there is no real reason for the alarming reports which have been lately industrious- ly circulated. The unification of the Swedish and Danish currency, which came into force on the first of January last, caused a great revolution in the Scandinavian commercial world — the Swedes, and also partly the Norwegians, who formerly carried on most of their financial transactions with bankers in Hamburg, having now recourse to the Copenhagen money market. Hence the scarcity of money ; and it is avowed that if the managing directors of the two leadino- banks — the National Bank and the Private Bank — had not taken timely precautions, a commer- cial crash could hardly have been avoided. But these two banks alone have during the last few months imported nearly thirty million crowns' worth of bar gold to meet the emergency. The great pres- sure on the banks will be understood when I state CONTINENTAL TROUBLES. 167 that during the last three months the bills discounted by one of these banks alone have increased by nearly four million crowns. The dividends on some of the companies may be less than last year — the Great Northern Telegraph Company suffering, for instance, from the politically and commercially unsettled state of affairs in China and Japan ; but I have every reason confidently to assert that the commercial situa- tion in Denmark, which is of great importance to England, considering the comparatively large sums at stake, is fundamentally sound."* * Pall Mall Gazette, 25th of November, 1875. 168 LONDON BANKING LIFE. (I CHAPTER XVIII. BULLION MOVEMENTS. The ability, the industry, and the strict uprightness of the great Isaac Newton sj)eedily produced a complete involution throughout the department which was under his direction. The old officers of the Mint had thought it a great feat to coin silver to the amount of fifteen thousand pounds in a week. When Montague talked of thirty or forty thousand, these men of form and precedent pro- nounced the thing impracticable. But the energy of Montague and of his friend Newton acco^nplished far greater wonders. Soon nineteen mills were going at once inside the Tower. As fast as men could be trained to the ivork in London, bands of them were sent off to other parts of the kingdom. Mints ivere established at Bristol, Yoi'k, Exeter, Noi-^cich and Chester. This arrangement was in the highest degree popndar. The machinery and the ivorkmen icere welcomed to the new stations with the ringing of bells and the firing of guns. The weekly issue increased to sixty thousand pounds, to eighty thousand, to a hundred thousand, and at length to a hundred and twenty thous- and. Yet even this issue, though great, not only beyond precedent, but beyond hope, ivas scanty when compared with the demands of the nation. " Some men, loho loved to trace in the strangely complicated maze of human affairs, the marks of jnoi-e than human loisdom, were of opinion that, but for the interference of a gracious Providence, the plan so elaborately devised by great statesmen and great philosophers would have failed completely and ignominiously." Lord Macaui.ay. The revolution in monetary science that England passed through in the reign of William III. has not been sufficiently studied in recent times. Its effects may be clearly traced in subsequent history ; and its BULLION MOVEMENTS. 169 advantages never better appreciated than in the changes consequent on the gold discoveries in Cali- fornia and Australia. These began in 1849, and the coinage then in circulation was found to be general- ly of its intrinsic metallic value, there being nothing of importance to withdraw, little to clip or alter, ab- solutely nothing to change in nominal value or cur- rency. There was not the same results in France when the silver coinage was replaced with gold Napoleons. Of course a mighty movement of silver was then witnessed, so much so that the South Am- erican and East Indian trades were greatly disturbed, and it was debated whether the bullion markets would ever again be perfectly understood ; whether there would not be an inexhaustible demand for that mar- vellous Eastern Continent which fascinates all who subject themselves to its influence. As in France, so in Germany, with the demonetization of the silver coinage, the commercial affairs of Northern Europe are confused, and many countries are agitated, dis- turbed, and unsettled. It is desirable to ascertain the foundations on which the precious metals depend. Statistics have been produced of the production of all countries in the world, from the beginning of the sixteenth cent- ury to the year 1873, professing, however, only to be approximately correct. In the three centuries and a half from the year 1500 to the end of 1849 the total production of gold amounted, in weight, to 8,900,- 000 lbs. and in value to 420,000,000/., sterling. The total production of silver was 295,000,000 lbs. or 850,- 000,000/. sterling. Of the entire production of the pre- 170 LONDON BANKING LIFE. cious metals, gold constituted less than 3 per cent, and silver more than 97 per cent, in weight. But gold formed 32 per cent, and silver no more than 68 per cent, of the value ; while, therefore, the silver raised out-weighed the gold more than thirty-two times, in value it was worth little more than twice as much. From the beginning of the recent gold discoveries to the end of 1873, the production has reached 9,600,- 000 lbs., or nearly three quarters of a million pounds weight more than was raised in the preceding 350 years. In value this quantity of gold reached 670, 000,000Z. sterling. The quantity of silver raised in the same five and twenty years is estimated at 69,- 000,000 lbs., or 310,000,000^. sterling in value. In this quarter of a century, therefore, gold constituted over 12 per cent, of the weight, and about 68 pei cent, of the value. According to this estimate, then, the total production of the precious metals in the period 1500-1873 reached the sum of about 2,900,- 000,000Z. sterling, of which total gold is about 1,300,- 000,000?. and silver is 1,600,000,000?.* It is surprising that by far the greater part of the gold and silver productions has actually disappeared from Europe. Of course there are large amounts in the banks and circulating in the several countries ; but the aggregate, after all, is relatively small. There is also a considerable quantity of gold and silver in the hands of the workers in precious metals, for manu- facturing into plate, jewellery, and other articles. In the 350 years from the beginning of the six- * These statistics are based on calculations made by an able economist in the Deutsches Handelshlatt. BULLION MOVEMENTS. 171 teenth to the middle of the nineteenth century, the quantity of silver produced exceeded that of the gold more than thirty-two times. As a necessary conse- quence, the value of silver continued to decline ; in the first half of the sixteenth century one ounce of gold exchanged on an average for llioz. of silver ; in the first half of the seventeenth century it ex- changed for 12i oz. ; in the first half of the eighteenth for 15 Jq oz. ; and in the first half of the nineteenth for 15 -^-^ oz. ; in other words, 11-25 oz. of silver were enough to buy an ounce of gold when the silver mines of Mexico and Peru were only beginning to act upon the markets of Europe ; at the end of the period it took as much as 15-65 oz. of silver to buy an ounce of gold. The fall in the value of silver during the 350 years was, therefore, over 39 per cent. Then the gold mines of California and Australia beo-an to coanteract the influence of the silver mines of Mexico and Peru. Gold fell in value, and rela- tively silver began to rise ; the tendency was height- ened by the demand which sprang up in Eastern Asia for silver — a demand increased by the cotton famine that resulted from the American civil war. While the enormous wealth of the world was not only developed by the gold discoveries : but, by the influences of free trade, and the opening of new markets in the East, the export of silver from Europe to India and China continued. In 1857, the total amounted to 17,310,090^., which was three times the value exported in 1854, and more than five times the amount sent in 1852. Throughout this period there was generally an advancing rate of interest in Eng- 172 LONDON BANKING LITE. land, and to justify such an enormous drain of bul- lion the " balance of trade " was adverse to England, and exchanges were proportionately unfavorable. The relation between the value of money in the East and in London is at all times tolerably well defined ; and so intimate is the connection between the vari- ous parts of this great Empire, that it would be next to impossible for one section to be in adversity or prosperity without making that condition felt at the centre of commercial operations, and preserving that harmony which distinguishes great financial under- takings. Following the drain of silver from Europe to Asia, the subsequent years may now be detailed. Year. Exports. Year. Exports. £ £ 1855 6,431,733 1866 2,365.626 1856 12,113,991 1867 642,912 1857 16,731,915 1868 1,685,642 1858 4,753,933 1869 2,362,943 1859 14,828,521 1870 1,579,473 1860 8,478,739 1871 3.712,473 1861 6,824,807 1872 5,654,451 1862 10,091,460 1873 2.497.676 1863 8,263,011 1874 7,092,726 1864 6 254,004 1875 3.714,404 1865 3,598,058 The great silver exports to India and China were re- quired to adjust the trade in silk, in tea, and the thousand commodities imported into Europe. In 1857, there was, however, a remarkable return of coin from the East, which, at the time, created consider- able discussion. The question was whether the phenomenon would continue ? Then it arose from the appreciation of silver, which in Shanghae was shown by the dollar fluctuating between 6s. l^d. and BULLION MOVEMENTS. 173 7s. bd. and the rupee in Calcutta between 2s. and 2s. 2>^d. — differen'ces representing a very important per- centage. Now, was that increase in the dollar or in the rupee wholly justified ? To determine that point the trade to and from the East must be carefully re- viewed for the few preceding years. The total ex- ports of British manufactures have to be compared with the imports of Chinese and Indian produce; and although the statistics do not account for the re- markable increase in exchanges, showing not much beyond the usual proportions between exports and imports, the latter greatly preponderating, there were special causes affecting certain articles, which acted as an index to the great derangement, in these finan- cial operations. Tea and silk were, of course, the articles mainly concerned. The first showed the an- omalous feature of a positive decrease, there being an import of 64,495,297 lbs. in 1857 against 86,200,- 414 lbs. in 1856. In silk, the raw and thrown to- gether, and the imports from phina, added to those from the East Indies, there were 7,277,024 lbs. in 1856, and 11,605,441 in 1857. In both of these articles, however, as well as with cotton, hides, spices, and other sundries imported from the East, prices as well as quantities have to be taken into account when considering the bullion shipments. Had the increase occurred from simple causes, and the prices then gone lower, or even remained stationary, there would have been no such balance due to the East ; but the fact is, that ever since the gold discoveries, prices in Eng- land and throughout the world have been continually advancing, until commercial crises occur and pro- 174 LONDON BANKING LIFE. diice a reaction. Consequently, the balances in 1857 were unduly, magnified, arguing upon merely ordin- ary grounds, and great delusion existed in the minds of men of business upon this point, and caused ^uch of the subsequent mischief. *^ There was a panic following these events in 18f which resulted in the usual collapse of produce markets, and the withdrawal of confidence in com- mercial circles. There can be little doubt that, with an abundant credit, the importing merchants, par- ticularly those connected with the East, availed themselves of every facility for over-trading, speculat- ing upon a rising market, indulging in a loose credit, and engaging in produce and bullion operations uf)on the belief in constant improvement in prices, as well as that " game of hazard," could be indefinitel3'- pro- longed. It can only be upon these grounds that stocks accumulated to such an extent as to glut the markets, and to cause that constant stagnation or downward tendency which so often characterizes Mincing Lane. Merchants have no right, especially when trading upon credit, to " hold over; " their duty is to be clearing off goods for new arrivals, and to be simply anxious to realise the true market value, which, at one time high and another low, must bring a correct average of value. Speculation in goods or bills cannot be continued for any long period, with- out recoiling on those engaged ; and many instructive lessons could be read if men would wisely review the experience of their predecessors. The undue ex- pansion of trade receives its best check from the absence of demand ; but with accumulating stocks BULLION MOVEMENTS. 175 and advancing prices, it is marvellous that merchanta and financiers can give encouragement to such a trade as is often carried on by rash or reckless adventurers. Experience teaches that each age has its victims, and that less than seven or ten years are now required to complete the true cycle of trading absurdities. This was the condition when the reshipment of bullion from the East occurred, and the inquiry was then natural whether bullion had been sent in any superabundant quantity ? That some did return was the best answer to the question. The fact was more prudent than the shipment of produce, and was of course consequent upon it becoming known in China that a great commercial crisis had occurred in England. There was, however, an early adjustment of aecounts, which rendered any great return of bul- lion unnecessary, for, when shipments of produce were resumed in the East, there was no large con- signment of silver ; and the corrective was early supplied. With stocks in the produce market easing off, confidence reviving in trade, and the continuance of moderate rates of interest, there was a general resumption of business, and shipments of silver from England continued to be a prevailing feature in the trade with the East. It is not necessary to detail any lengthened period ; but the statistics of the bullion trade would show that, from 1860 to 1870, there was no great disturbance to the regular course of business. The exports of pro- duce and the imports of the precious metals were in concurrent action ; the latter only affected by the great public works, especially the extension of rail- 176 LONDON BANKING LIFE. roads throughout the vast districts of India, which rendered necessary the substitution of " council bills " in order to provide funds in England for the Government expenditure. The only question on the minds of financiers familiar with metallic currency has been whether it would not have been wise to have introduced throughout British India a double standard of value, so as to have utilized the gold dis- coveries of Australia ? To understand the importance of these subjects the tabular statements on the actual movements both of bullion and Government paper should be studied. Comparative statement of six years' export of Bullion and Specie — gold and silver — to the East Indies. Shipped to 1870. 1871. 1872. 1873. 1874. 1875. £ £ £ £ £ £ Bombay . . . 497,000 1,784,325 3,293,707 261,530 3,795,478 2,008,372 Madras . . . 250,025 305,717 382,862 166,160 169,417 178,357 Calcutta . . . 79,012 875,069 1,127,040 313,763 1,642,269 531,447 Singapore . . 548,728 1,116,713 1,391,871 1,747,193 1,246,996 896,740 Total . . £ 1,374,765 4,081,824 6,195,480 2,518,646 6,854,160 3,614,916 Amount of India Council Bills draton during last six years. On 1870. 1871. 1872. 1873. 1874. 1875. Bombay . . . Madras . . . Calcatta. . . £ 1,102,500 196,818 7,619,182 £ 1,769,800 148,600 7,881,600 £ 3,458,400 272,500 10,221,600 £ 3,017,240 122,400 11,695,460 £ 2,568,500 148,900 8,332,600 £ 6,073,800 347,400 9,878,800 Total . . £ 8,918,500 9,800,000 13,952,500 14,835,100 11,050,000' 16,300,000 It will be seen that whenever there is a great BULLION MOVEMENTS. 177 decline in the export of the precious metals, there is a large increase in the sale of Council Bills, and the mercantile classes have become as familiar with their value as with that of any commodity in the market. There was no interruption to this condition of affairs until 1875, when the supplies of silver began to arrest attention, and the value of silver was necessarily affected by the release of immense stores in Germany and France. The market has shown the following fluctuations : — Year. Average Trice. Per oz. d. 1870 60A 1871 60K 1872 60^ 1873 59 j^: • 1874 58^ 1875 56^ Since the close of 1875, there have been symptoms of a still further decline, the average value for the first three months of 1876 being as follows : — Montli January February March Average Price. Per oz. d. 65 54X As some vague speculations have been indulged as to the consequences of this depreciation, it may be well to remember there were kindred fears and alarms 12 178 LONDON BANKING LIFE. when the value of gold was affected by the Califor- nian and Australian discoveries. No writer was then more authoritative than M. Chevalier. The transla- tion of his work by Richard Cobden contains the following remarkable passage : " The merchant and trader who balance their transactions in two, or three, or at the utmost six months, would be but slightly affected, in so far as the value of their capital is concerned, by the depreciation of the standard ; but they would experience the evil in another form. The tendency to a general rise of prices would lead to an expansion of credit, and an increase of speculation, which would be followed by panics and convulsions of greater violence and more frequent recurrence than have been hitherto experienced. Instead of a crisis visiting the commercial world once in each decade, its return might be expected every five years. The manufacturer would probably find it more difiicult to procure the raw material of his industry at remunerat- ing prices, for speculation will always be directed to- wards raw products, in preference to manufactured articles. This was the case previous to the late panic ; and even at the present moment, whilst we are still in the eddy of a crisis, the prices of raw materials of our staple manufactures maintain a high value, as compared with any corresponding previous period. The very nature of the trade created by the new gold mines is calculated to increase this evil ; for it cannot be denied that it is a sterile commerce which yields neither raw material nor capital." Let there be a transposition in terms from gold to silver, and the student will have no difficulty in realizing the BULLION MOVEMENTS. 179 consequences of a certain and continuous decline in value. There are, however, modifying or corrective cir- cumstances to be taken into consideration. It may be that production will not be maintained at its present rate, though authorities on the mineral capa- bilities of the Northern and Southern States of America affirm that silver appears almost inexhaust- ible. It may be that the standard of value, instead of being fixed in some countries may be mixed, and then would arise some such modifications as M. Chevalier states to have occurred in Europe. For instance, Belgium had no gold coinage until 1847 ; then there were 25 and 10 franc j)ieces coined to the extent of 800,000L ; the State Bank engaging to pay the nominal value of the gold pieces in silver cur- rency, but as it incurred no risk, the substitution cost nothing to the government. When there was a similar movement in Holland, the gold coinage amounted to 14,800,000?., and the two standards were adjusted, and whatever the government withdrew from circulation was paid florin for florin. These in- stances refer to the substitution of gold for silver ; but may there not be similar causes to uphold the value of silver ? Are there not countries which will assist in regulating supply and demand ? Even while the subject is agitating European circles, the United States government has wisely decreed that the " greenbacks " shall be paid in silver, and if cash pay- ments were resumed throughout America, there would at once be a means of arresting the decline. So, too, if commerce became steady and regular in the 180 LONDON BANKING LIFE. East ; if the huge populations of China and Japan were subjected to the habits, customs and practices of civilized nations as regards metallic currency, then the absorption of silver for coinage alone would soon be manifest. The world is only partially under the influences of sound banking princi|)les, and what has already been witnessed in the history of a few nations has to be applied to by far the greater portion of mankind. When such a result is achieved, these per- turbations will be less marked than during the last few years ; but revolutions in monetary science will not cease to follow great discoveries of the pre- cious metals or the substitution of one kind of coinage for another. The revolution through which the world is now passing in monetary science, began in 1852 ; has since then been very active both in France and Germany, espe- cially in mint operations ; it is now making itself felt throughout Asia ; will continue to affect America, and should especially be watched when old civilized countries recommence cash payments for internal purposes, or when semi-barbarous nations adopt .gold and silver, instead of clinging to barter or a debased currency. In no previous stage of financial history has there been more strength than at present in the bullion reserves of all European banks. It is marvellous that the precious metals are again being hoarded in super- abundant quantities ; but from this circumstance confidence should be imparted to trade and renewed vigor given to the development of the resources of all free countries. BULLION MOVEMENTS. 181 As much importance must attach to the financial movements of the principal European States, the returns of the Bank of France and the Bank of Prus- sia on the 31st of December, 1875, are worthy of attention : — BANK OF FRANCE. ASSESTS. Year. Coin and Bullion. Discount. Loans. other Assets. Total. £ £ £ £ £ 18G6 20,190,000 23,260,000 3,490,000 9,330,000 56,270,000 1867 39,480,000 21,050,000 6,160,000 9,740,000 76,430,000 1868 46,730,000 19,500,000 5,420,000 11,220,000 82,870,000 1869 49,340,000 24,470,000 5,l.'i0.000 10,990,000 89,930,000 1870 33,760,000 57,820,000 6,700,000 12,150,000 110,430,000 1871 25,410,000 28,120,000 4,110,000 66,990,000 124,630,000 1872 31,670,000 40,420,000 5,040,000 64,290,000 141,420,000 1873 29,310,000 45,480,000 5,530,000 61,080,000 141,400,000 1874 52,230,000 29,120,000 4,050,000 45,640,000 131,040,000 1875 &i,390,000 24,030,000 3,770,000 34,950,000 127,140,000 j Liabilities. Year. Circulation. Bank Post Bills. Deputies. Other Liabilities. Total, £ £ £ £ £ 1866 38,320,000 630,000 17,850,000 9,710,000 66,510,000 1867 45,710,000 1,340,000 19,970,000 9,410,000 76,430,000 18G8 51^090,000 1,320 000 20,410,000 9,480,000 82,900,000 18G9 54,910,000 1,950,000 23,600,000 9,470,000 89,930,000 1870 69,200,000 1,930,000 31,550,000 7,750,000 110,430,000 1871 91,850,000 4.30,000 17,890,000 14,460,000 124,630,000 1872 105,520,000 320,000 23,640,000 11,940,000 141,420,000 1873 115,350,000 360,000 13,410,000 12,280,000 141,400,000 1874 103,430,000 430,000 15,400,000 11,780,000 131,040,000 1875 96,010,000 470,000 18,540,000 12,130,000 127,150,000 182 LONDON BANKING LIFE. Year. 1872 1873 1874 1875 BANK OP PRUSSIA. Assets. Coiu and Bullion. £ 26,370,000 34,970,000 31,370,000 23,240,000 Discounts. and Advances. & 29,040,000 33,540,000 23,190,000 21,980,000 Liabilities. Circulation & 43,510,000 43,720,000 41,370,000 34,230,000 Deposits. £ 4,160.000 4,350,000 5,010,000 5,290,000 Acceptances & 3,660,000 16,200,000 4,590,000 1,420,000 Some curious statistics might be gleaned as to other State Banks ; but the periodical returns should be studied, and, happily, almost every government, amenable to public opinion, publishes reliable infor- mation.* • Vide Appendix E. FOREIGN LOANS. 183 CHAPTER XIX. FOREIGN LOANS. " We are no other than a moving row Of magic shadow shapes that come and go Round icith the sun-illumin'd lantern held In midnight hy the master of the show. " Impotent pieces of the game lie plays Upon his chequer-board of nights and days ; Hither and thither moves, and checks, and slays, And one by one back in the closet lays. " The moving finger ivrites, and having writ, Moves on ; nor all your piety and wit Shall lure it back to cancel half a line, Nor all your tears icash out a word of it. " Yesterday this day' s madness did prepare, To-morrow' s silence, tritimph, or despair." From the Persian, by Edward Fitzgerald. If a companion to Ward's admirable picture of the "South Sea Bubble" were to be painted, the artist would find studies suitable to his genius in the vic- tims of recent Stock Exchange transactions. Not only restless widows, credulous parsons, and antique spinsters ; but grave men, suspicious merchants, ex- perienced gamesters, would have their features boldly but truthfully delineated, in order to depict on can- vas the latest episode in rascality, baseness and cupidity. Charles Dickens has narrated with fer- tilit}^ of genius, the frauds and follies of the American land-sharks, the " Dismal Swamp," the miseries of Eden, and described the glowing prospects of the 184 LONDON BANKING LIFE. " Disinterested Loan and Life Insurance Company ; " but he would have had better materials in the gross delusion of the Honduras " Ship Railway Loan," which is unrivalled for absurdity and charlatanism ; or the shameless contracts of the " Costa Rica " financiers, who having drawn on their imagination for their facts, deceived themselves, and then deter- mined to draw their fellow-countrymen into their disgraceful schemes. Even the historian Macaulay, whose charming style fascinates his readers into re- garding the "tulip mania" almost as a romance, would have had in the San Domingo Loan facts as startling, and results as ruinous to those captivated by the folly and fraud of this century. That adven- ture embraced engineers' and chemists' reports on " forests, mines, and guano deposits," and although the bonds were issued at 70 they sooii fell in value to 10 ; the hypothecated securities that were never worth anything, the special services of the receiver of " customs, royalties, and revenues " were never required — yet all paraded by designing agents, brokers, and solicitors, who, though possessed of facile powers of persuasion and writing, withdrew from their occupations, after realizing a success founded on their victims' resources being partially, is not wholly, exhausted.' It has been reserved for the Select Committee on Loans to Foreign States, to unravel some of these mysteries. From the Report, it is evident that, while the so called " investors " have lost not less than 798,400?., the promoters of the Honduras, San Domingo, Costa Rica, and Paraguay Loans received FOEEIGN LOANS. 185 for their highly appreciated services, besides profits on contracts, an amount exceeding 500,000?. ! But while the labors of the Committee resulted in a signal exposure of these " financiers," they reported they could not avoid the conviction that the main evils were unredressed ; that there were no safe- guards for the public protection ; that " the fatal in- terval between advertisement and allotment would be fruitful in causing sales and purchases for the ex- press purpose of deceiving the public." There was a " charming simplicity " in the admission that gene- rally the proceeds of recent loans of minor states had been applied to redeeming former obligations, or paying the interest due to creditors, and that the several " governments had not only taken no steps to develope their resources, but, in some instances the funds had been shamelessly misapplied." There was a conviction on the mind of some members of the Committee that very little can be really done to remedy the evils which, though known to have ex- isted for some time, have now been more directly exposed by the evidence adduced before the Com- mittee ; and they believed that even for such reme- dies the public must look to the Stock Exchange rather than to Parliament, After the disclosures which have been made before the Committee, they express the hope that the Committee of the Stock Exchange will discover some effective mode of deal- ing with the admitted evils of the present system, and of preventing wealthy and unscrupulous persons from carrying out manoeuvres which in most cases have ended in great discredit and disaster. 186 LONDON BANKING LIFE. Had the terms of other foreign Loans been exam- ined, they would have demonstrated the same lament- able results. For instance, Mexico afforded an illus- tration of reckless gambling in 1864, by the issue of bonds at 60 per cent., which fluctuated through the influences of various European Bourses, until they reached the miserable value of Ql in 1875, from which there can be little hope of an improvement. But the transactions in Greek and Spanish Bonds also furnish proofs of disgraceful proceedings, reflect- ing equally on borrower and lender, the exposure of which would prove either fraud or folly, or perhaps both. It is almost an axiom that the art of " cheat- ino- and beino; cheated " becomes an undoubted lux- ury to be repeated occasionally, but not to be con- tinued with impunity. Among a certain class of men, of assumed rather than of true piety, there is an eleventh commandment, " Be sure you are not found out ; " and this new law having been broken, there are as yet no evidences of that absolution which enables the race of gamblers to enter again on their career of spoliation and robbery. The most remarkable course that England has pursued in Foreign Loans has been in relation to Turkey. While the Crimean War was largely the parent of mischief, and caused an expenditure of not less than 160,000,000?. of capital by England alone, there has, since then, been an increase to the public debt of the Ottoman Empire of 185,000,000?. To follow the manner in which that debt has been funded, leads to the conviction that rapacious ad- venturers, cunning usurers, and designing syndicates FOREIGN LOANS. 187 have successfully kept the falling exchequer in just that condition of declared weakness or absolute in- solvency which might assist their own base pur- poses. What can the bondholders now think of their securities on the " customs duties and octrois of Constantinople ; " on the revenues from " tobacco, salt, stamps and license duties," not to mention the " general revenues of the empire ! " There have been on other occasions a parade about the " conver- sion and unification of the internal debts ; " charges made on the " sheep tax," on the " mines of Tokat," and finally on the general revenues, " present, past, and future," — all phrases which have answered the purpose, but the vocabulary may now be regarded as exhausted. The venality of the " financiers " has also been exposed by the decree of October, 1875, which has for its object to " suppress " for a period of five years half the interest and sinking funds of the interior and exterior debt, the annual service of which amounts to about 14,000,000 Turkish pounds. The decree is " grandly imperial," framed in polished language worthy of a great cause, yet good plain English would know how to designate repudiation. A suc- cessor to Sydney Smith in the art of withering sar- casm is needed to ostracise all decorated with fez or turban, and to expose the folly of putting " faith in princes " who borrow without the means of paying, who contract debts to indulge extravagance and fos- ter habits detrimental to national virtue and honest practices. The condition of Egyptian finances has long at- tracted astute leaders of speculation, although it was 188 LONDt)N BANKING LIFE. reserved to a cabinet of English statesmen to elevate the subject into national importance, and to make it part of a ministerial policy to the exclusion of meas- ures promoting the interests of the empire. It would be needless to lament that the mind of the nation has been led captive ; but " the plagues of Egypt" never excited more criticism than the Khedive's debts or his personal interest in the Suez Canal. Yet many a student of this fascinating subject may be asked, " What is he to Hecuba, or Hecuba to him? " Has there not been a needless agitation? Why all this exciting interest in a country that has no great claims on the English nation ? It is by no means large in extent ; is certainly unimportant in numbers ; which only exceed by four times those of London, while its debt is 98,000,000?. with an ever-increasing deficit, and a mass of chaotic misery in bonds, treas- ury notes, funded and unfunded securities. When the mysteries are unravelled, it appears there has been an increase of 56,000,000Z. in eleven years ; an average yearly excess of expenditure over revenue of about 4,000,000?., and, in the language of the Vice- roy's apologists, there is " no doujit a considerable margin of waste attaches to much of this expendi- ture ! " The margin is absorbed in useless displays, gorgeous festivals, unproductive public works, facto- ries conducted on false principles, and a reckless ambition as regards obtaining and utilizing human labor. A recent visitor to the country reports that there is not much difference between " forced labor " and absolute slavery. FOEEIGX LOA]^. 189 " Some hundreds of hands are wanted at one of the Khedive's estates or works. An order is issued ; a steamer with soldiers on board is sent up the Nile, towing several huge barges of iron or wood. It anchors opposite a town or village, and some hundreds of men, boys, and girls, many of tender age, are seen hurrying and being diiven down the river bank, clutching such small bags of bread or fragments of rusk as they can collect in haste, and accompanied by their parents, friends, wives, and children, who rend the air with their shrill screams and lament- ations, for they well know that many a dear face will never be seen again. Neither the only sons of widows, or of blind and aged parents, nor the fathers of helpless infants are spared, The despot requires them — the bastinado and the prison are the cost of refusal. The whole crowd are rapidly swept into the barges, where, without regard to age or sex, they are packed together like herrings in a barrel. The steamer and the barges then start with their living freight, many of whom will never return to their homes from the distant sugar or cotton estate to which they are conveyed. During the process of their being driven on board, and during the voyage, no more account is taken of the occupants of the barges than of brute beasts. Arrived at the scene of their labors, an incessant mill-horse grind of toil . ensues. There is no Friday rest, no moment's space allowed for recreation. Both sexes labor under the eye of task-masters armed with sticks, whips, konobashes, which are freely and needlessly applied to the often naked and, at all events, only one-shirted backs of these poor ' free ' laborers whom the charity of England has not yet learned to pity, and whose brutal task-master-in-chief, she has not yet learned to condemn. I have myself seen little tender, emaciated girls staggering under heavy loads of earth, who have been lashed each time they ascended the high bank at which they were at work, and even prodded in the naked breasts with sharp palm- sticks. I have seen them sinking upon the earth, fainting un- der their loads. No sort of shelter is provided for these unfor- tunates, though the nights of an Egyptian winter can be very cold, and a single shirt is their only garment — many have not even this. On the filthy floor of the sugar factory, or on the bare stubbly ground of the cane-field, where they cease working, 190 LONDON BANKING LIFE. there they lie down to take their scanty rest, and are succeeded on the instant by other gangs awakened to relieve them." * Surely this is not the '' one Arab power to which the eyes of all friends of Africa naturally turn with hopefulness ! " If Egypt has to be made the great centre of African civilization, there must be a great clearance of much that now prevails in the country. The trading forces must be re-adjusted ; the finances subjected to thorough impl'ovement ; the orgies of the palace discontinued, and the plundering habits of certain functionaries in every town and village be extirpated from among the notorious vices of this semi-barbarous nation. The government can scarcely, indeed, take credit that " whatever may be its defects, it has shown that it possesses the rare Eastern merits of intelligence, vigor, and scrupulous honor in meet- ing its engagements. Breaking with old coubcrvative prejudices and traditions, it has fully recognized the advantages of modern progress, and in less than a generation, has revolutionized the country with rail- roads, telegraphs, canals, new methods of cultivation, schools, and most other agencies that materially en- rich and civilize a nation; while the people have never failed the government, nor the government the public creditor in providing punctually for its debts." t This is strong language, considering that the " in- vesting " public have had to endure some martyrdom since the publication of Mr. Stephen Cave's Report, in seeing the bonds decline from 58 to 44; that * " Some Truths about Egypt. " By Mr. C J. Chester, in the Fortnightly Review of 1st April, 1876. , , . -^ ^-i t " The Finances of Egypt," published anonymously, but evidently an in- spired " production. FOREIGI^ LOANS. 191 " foreign capital " has not been forthcoming to dis- charge debts, to pay the interest due to creditors, or to stimulate further "enterprises" of a doubtful character. As in the case of the famous Ottoman decree, a circular to bankers and merchants has given pointed significance to the financial weakness and embarrassment of the " dependency." The informa- tion was thus given to the public : " The Governor of Alexandria informs the public that, as the Egypt- ian Government has not yet arranged the financial combination intended to place its debts upon a regular footing {regler toutes ses dettes (Tune maniere reguliere), the Privy Council, by a decision approved by His Highness the Khedive, has decreed that the payment of bonds and orders to pay falling due during the months of April and May will be post- poned for three months from the date of their ma- turity." And what is to be the nature of this " finan- cial combination ? " Can it be traced in the lan- guage of ministers, or in the acts of diplomacy? Will a conference or a council settle the embroil- ment ? It will be obvious that difficulties surround the capitalization of a floating debt of 20,000,000?., the consolidation of loans issued at tempting rates, varying between twenty per cent, and seven per cent, per annum ; the equitable adjustment of taxa- tion, and a relief from that degree of suffering which has been described as the " defects of the system," such as "ignorance, waste and extravagance, im- mense sums expended after the manner of the East." * But will England allow its statesmen to waste their * Mr. Cave's Report on the Finances of Egypt. 192 LONDON BANKING LIFE. energies on such an Augean stable ? There are the demands of home industries, the sanitary improve- ments of towns and villages, the claims of the colo- nies — all demanding prior consideration. One of these subjects would alone be sufficient to absorb for a time the unemployed talent or the surplus capital of the country, and it is of essential importance tliat the " drift of the age " should be wisely and properly directed. The task would be almost endless to wade through the history of other loans. The spirit of George Canning would have little reason to boast over the triumph of the great statesman in having called a new world into existence, were the miseries of the South American bondholders fully understood. There are the Bolivian and the Ecuador Securities, the Paraguayan and Venezuelan Bonds — in respect to which absolute " repudiation " — the annihilator of credit — would be preferable to the existence of such monstrosities ! Taking that marvellous list in the Times of " Stocks and Bonds in Default and Shares paying no Dividend," it appears from a care- fully compiled analysis the following losses have been incurred.* Foreign Stocks Foreign Railways. Foreign Mines, .. . English Railways. Canadian American Telegraphs , Miscellaneous Total . £104.570,262 4,043,925 201,784 8,403,413 20,384,767 24,929,724 57,068 8,034,425 165,625,368 * Vide Appendix D. FOREIGN LOANS. 193 It is, of course, necessary to remember that this capital has not been wholly lost in England ; other " investing " states with " more money than wit " are entitled to participate in the delusions and follies, while there is a portion of the grand total " to be re- garded as more nominal than real, like the huge figures that represent the debts of all great borrow- ers." Yet when these deductions and allowances have been made, what an aggregate remains. How sad has been the waste ! Had the money been ex- pended on the improvement of the human race, in the cause of education, in the adornment of towns, in the development of art, or of new countries, then there would have been inestimable benefits to the Anglo-Saxon race, which would have dominated over waste lands, utilized great rivers, produced materials for the food, the clothing, the housing of the great human family. Although certain magnates of the Stock Exchange are apologetic on the baseness of foreign loans, and often exhibit an obdurate infidelity as to there being any remedies, it may even now not be too late to ex- tract from the retrospect some comfort for the future. For a time there is at least no chance of promoters or financiers foisting trashy commodities on the English market. No sensational writing either in " dailies or weeklies" with " open " advertisements in large type to attract the unwary, will have any effect on the reading public. There is a sense of nausea over the tricks and devices of " leading firms " to deceive, entrap, and exhaust the honest and thrifty of their hard-earned resources. The over-living, the effemin- 13 194 LONDON BANKING LIFE. ate luxury, the mendacious displays of modern society, and many other debasing tendencies, have been arrested, their vagaries controlled, and their victims punished. Will the benefits be lasting? Much will, and must, always depend on the moral tone, the healthy vigor, and the recuperative power of the age, which may be gauged as much in counting- houses as through the press or in the pulpit. It is to be desired that no scheme to withdraw money from useful and productive enterprises will be encouraged until it has been thoroughly scrutinized, and the pro- moters subjected to careful enquiries as to their motives, objects, and means of reward. The coun- tries to be entrusted with English capital should be like England — free, liberty-loving, " open and above board," with a public exchequer, a responsible government, and accounts easily understood, or opeu to public examination. I REMINISCENCES OF MEN AND MANNERS. 195 CHAPTER XX. REMINISCENCES OF MEN AND MANNERS. "Every man hath two birthdays; two days, at least, in evenj year, which set him npon revolving the lapse of time, as affecting his mortal dura- tion. The one is that which, in an especial manner, he tei-meth his. In the gradual desuetude of old observances, this custom of solemniz- ing our proper birthday hath nearly passed away , or is left to children, who reflect nothing at all about the matter. But the birth of a Neio Year is of an interest too wide to he pretermitted. No one ever re- garded the first of January with indifference. It is that from which all date their time, and count vpon what is left. It is the nativity of our common Adam ! " Of all bells, the most solemn and touching is the peal which rings out the Old Year. I never hear it without the gathering-up of my mind to a concentration of all the images that have been diffused over the past twelvemonth. It takes a personal color ; nor was it a poetical flight in a contemporary, when he exclaimed, ' I saw the skirts of the departed Year.' It is no more than what in sober sadness everyone of us seems to be conscious of, in that avful leave-taking. I am sure I felt it, and all felt it with me, last night, though some of my companions affected rather to manifest an exhilaration at the birth of the coming year, than any venj tender regrets for the decease of its predecessor. But I am none of those who ' Welcome the coming, speed the parting guest.' " Charles Lamb. It has been obvious throughout the recent crisis that fear rather than reason has predominated, which although not easily dealt with at the time of disaster or trouble, has a wonderful tendency to recede, di- minish, and then altogether disappear ! So it has been with all previous periods of the kind, the re- sults have been good ; some combatants wounded ; a few dead ; but the retrospect is not other than bene- 196 LONDON BANKING LIFE. ficial. Tliere is reason enough to ponder, and per- haps, the best conclusion to arrive at is that contem- poraneous history can never be well written, events being too near and too fresh in the memory to be properly estimated. But the smaller periodical " scares " are the offspring of timidity, of weak ap- prehension, and of that unsubstantial basis upon which so much of modern speculation is made to de- pend. The power is given to few men to trace the crises of nearly a quarter of a century, with the tact, the method, and the perseverance displayed by the late David Morier Evans.* Whether the close or the be- ginning of another commercial revolution is now being witnessed, his singular sagacity in acquiring information would have been invaluable ; the untir- ing, plodding, daily round to ascertain if " there was anything fresh," would have brought out all that was obtainable ; and the result would have been balance sheets of failed firms, reports of meetings of creditors, the rumors of the Exchange, the gossip of Capel Court, with some reflections on the solemn mysteries of Threadneedle Street. These would all have been photographed for the journals he represented, or the magazine he edited, although his productions were often brought out under great difficulty and never- ceasing pressure. He was a link between Alsager, the best of City Editors, and the race of fertile, ready writers who now follow the " lightning-like " con- * His books on the "Commercial Crisis of 1847-8 ;"" Coimuercial Crisis of 1857-8, and the Stock Exchange Panic of 1850 ; " " Facts, Failures, and Frauds;" are eminently worthy of reference on the subjects that he knew so weU how to treat. EEMIISriSCENCES OF MEN AND MANNERS. 197 ducted intelligence. Their work is generally hasty, crude, undigested, and fragmentary ; but they assist others to bring it into form and substance ; the mar- vel being that so much is done daily, sometimes hourly, to meet the eternal craving for " news," without caring to separate the true from the false, so that a sensation is aroused, a speculation indulged, or currency given to a scandal. The quieter times of the ancient city may well be recalled — "the old familiar faces." " How some they have died, and some they have left me, And some are taken from me : all are departed ; All, all are gone, the old familiar faces ! " The new race, whether bankers, merchants, under- writers, or gamesters, have to mould anew the thoughts and actions of this generation before there can be implicit faith in their doings, so dark, uncer- tain, and dangerous are the combinations that prevail in commercial and financial circles. It is natural to inquire, Cannot the press be imj)roved? Are there not literary forces yet to be brought into the service ? Is it not worth while to attempt something better and truer to the instincts of the age than the dull round of small paragraphs, copied from brokers' re- ports or compiled from official communications? It is deplorable there is little or no determined resistance to the shameful speculations and the gross competitive character of the age. The tendency is not after things sound, but cheap ; often a hungering for " sporting lots," not to make " assurance doubly sure," ])ut to barter and traffic away the vital prin- ciple of safety, to weaken the steady progress of 198 LONDON BANKING LIFE. thrift and prudence. The old City Merchant, almost absorbed in his own affairs, who gloried in the count- ing-house and revelled in the employment he was able to aiford to others, has nearly " passed away like a tale that is told." Where, too, are the men, — types of the sedate, thoughtful, highly cultivated clerks ? How rare is the broker who regards his true mission to be in the " market," not in the club ; to wait on trade not to lead into speculations ; to be disinter- ested in his opinions, chary in his advice,'prompt and sagacious in his contracts. It is in no spirit of dis- paragement of the present times, or vain reflections over the distant past, that these comparisons are sug- gested. No doubt there is a sense of rapidity, an en- largement of ideas, a quickening impulse to be real- ized in all that belongs to the active, aggressive ten- dencies of this age in its commercial undertakings ; but care has to be taken of the national character ; gambling should be discouraged ; vice, extravagance, and meretricious displays frowned out of good society ; the debased and contaminating features of some portion of the United States utterly banished from English circles. It may be that the leaders of commerce have themselves to reproach for some fol- lies now too largely indulged in by the youthful por- tion of the community. There has been great sym- pathy with all kinds of sport, with amusements with- out taste or discretion, with folly that is often " near akin " to vice. Manly recreations and national holi- days are not to be discouraged ; but let the columns of newspapers be examined and the result will be a greater preponderance of " intelligence " as to races, REMINISCENCES OF MEN AND IVIANNERS. 199 fights, shows, great crimes, or reckless follies than conduces to the public morals or the improvement of society.* It may be that these crises are traceable in some respects to a decline in national virtue. There would be no ordinary advantage in calling in one of the prophets, the sage friends now advanced in years, who are often " very oracular " after business hours. Many a time have the active men of the day been the better to have such spirits about them at the close of their work. Pleasant reminiscences have been in- dulged in of happy hours long since at the " Cock," in Threadneedle Street, or a few minutes at " Gar- raway's " in still earlier times, the latest news being discussed, with great advantage to those confined all day to the bank parlor. The evening chat is now continued in other forms, the " oracle " being mildly conscious that time is more precious than it was, and that business is necessarily compressed into short periods. Such a venerated friend has critically watched, studied closely, and then corresponded from his retirement on the events which have been going forward. He has clearly enough seen that bankers and merchants have been more frightened than hurt ; that there has been a " fool's paradise " for some to dwell in, and that the awakening from dreams is not * The columns of a daily newspaper, have been examined "haphazard." The curions fact is revealed that five columns of large type are devoted to korse-racing, athletic sports, boating, and football. This in a journal con- ducted by leaders of Evangelical religion, models of purity, the censors of immoral tendencies ! What shall be said, then, against the daily and weekly journals which devote the largest portion of their space to nothing else than sports and amusements, in which it is obvious a huge traffic is conducted on principles of gambling ? 200 LONDON BANKING LIFE. always a pleasant operation ! But what then ? A crash, a convulsion of all things, blighted prospects, or a decadence of English strength ? Nothing of the sort. Only a nine-days' wonder; losses heavy enough to endure ; but a wise investment for the future, if the lesson can be turned to good account. The grave spectator of passing events has lived through many a storm, and knows full well that moderate views come afterwards when bank rates are settled, when trade revives, and when confidence is again mani- fested. His serenity, and that of those like him, ex- empt from toil and anxiety, is quite refreshing, as they reflect on passing events, rich in knowledge of the past and foreseeing the future with tolerable cer- tainty and distinctness. None in this position need be cynical or indifferent ; but their experience should remind those in the daily struggles how " Calm are we when passions are no more ; " when the fluctuations of a troubled market can be reduced to order ; when all turmoil and excitement are brought into harmony with those " first prin- ciples," which are enduring if not eternal. The lessons of wisdom resulting from these reflec- tions may be glanced at as curious reminiscences. After one great period of excitement it was observed that the citizens of London were becoming more self- possessed, and resolved not to throw their property into the River Thames ! Then, again, in pondering over the mutability of all things human, especially the payment of a foreign coupon, it was thought that it might be the last for which provision would ever REMXNilSCENCES OF MEN AND MANNERS. 201 be made by that government. This grand specimen of the old school, has the belief that there is always an avenging Nemesis, an unpropitious deity, who generally steps in at a time when he is not wanted. As to a certain king who made trouble for himself, he deserved it all ! " What right has he to talk of Divine right ? It's blasphemy ! " And it was ob- served of his most eminent counsellor that it could only be said of him, as the Romans used to say to the unfortunate gladiators — " Habet ! " During the siege of Paris, the same oracle, with a terrible outburst of feeling, was disgusted with the French details. An extract from Trochu's speech, in which the French disasters were attributed to " English taxation and Italian corruption," seized him with the most supreme annoyance, exclaiming that there should not exist in a civilized country a man base and contempt- ible enough to give utterance to such an accusation. The seeds of anarchy, murder and confusion sown broadcast as they were in France must hereafter pro- duce a fiendish crop, and lucky will England be if she escapes from the concomitant evils of democracy, socialism, and infidelity ! " With the usual animos- ity of the school to which he belongs — hating all things foreign — the dogmatic statement was made that the French nation had been a "colossal sham" ever since the days of Adam ! And then calmly re- viewing the perturbations in the rate of discount he did not anticipate any severe tightness in money, — the world being overburdened with the precious metal, and as commerce is now largely carried on by 202 LONDON BANKING LIFE. means of the cable, coin is not so much needed as in the early days of this century ! It would not be difficult to portray minds the re- verse of this in its sympathies or antipathies. There has, however, been of late an absence in commercial circles of true specimens of Englishmen. There has for the most part been a remarkable tendency to re- pose faith in the unseen and the untried ; a gulli- bility as to whatever is novel, out of the way, or even of remote value or importance. These adven- turers are to be met with in most circles ; but they abound in coffee-houses, are often in attendance at public meetings of joint-stock companies, and are generally the centre of an admiring coterie of small speculators, and perhaps end their career by becoming members of " syndicates ! " They discharge, in fact, the ungenial service that is described as peculiar to the rear horse of Carting Lane in the precincts of the Savoy, Strand. " This poor animal was trained to go backwards, or, more properly speaking, was him- self dragged backwards, down the hill. From com- passion for the beast it was suggested to the owners that he should have a change in his miserable exist- ence ; but, strange to say, the animal was utterly useless except in his own occupation. From sheer force of habit the animal would only go hack^ not draw, contrary to the nature of horses. This is a fitting illustration of those human beings, who are so accustomed to the rules of contrary that they are only fit to hack — to be cantankerous, or meddle- some and obstructive members of the legislature, the church, the family, or society generall3^ Any one EE]\nNISCENCES OP MEN AND MANNERS. 203 may draw, but others content themselves with re- tarding the too rapid progress of the movement."* The same " obstructiveness " has long been prac- tised in financial circles ; stolid inertness against gigantic frauds, a blind following of the " successful " classes ; and a gregarious sympathy with all that is keen, sharp, and clever in the worst manner those terms can be applied. From such tendencies there has sprung up a base worship of Mammon, which has demoralized almost every class in society. It is to be found in all assemblies, it aifects both sexes, and all ages ; it degrades to one level, and brings all that is pure, noble and elevating to a common standard. People are afraid to be singular or stand alone, or protect their own individuality. It has been well stated that " Gold is the only power which receives universal homage. It is worshipped in all lands without a single temple, and by all classes without a single hypocrite : and often has been able to boast of having armies for its priesthood, and hecatombs of human victims for its sacrifices. Where war has slain its thousands, gain has slaughtered its millions ; for, while the former operates only with the local and fitful terrors of an earthquake, the destructive influence of the latter is universal and unceasing. Indeed war itself — what has it often been but the art of gain practised on the largest scale ? the covet- ousness of a nation, resolved on gain, impatient of delay, and leading on its subjects to deeds of rapine and blood ? Its history is the history of slavery and ♦ The Rev. Henry White, M.A., who gives this anecdote in a lecture on " Habit," will excuse its being applied to the improvement of his fellow citizens. 204 LONDON BANKING LIFE. oppression in all ages. For centuries, Africa — one quarter of the globe — has been set apart to supply the monster with victims, thousands at a meal. And at this moment what a populous and gigantic empire can it boast ! The mine, with its unnatural drudgery ; the manufactory, with its swarms of squalid misery ; the plantation, with its imbruted gangs ; and the market and the exchange, with their furrowed and careworn countenances, — these are only specimens of its more menial offices and subjects. Titles and honors are among^ its rewards, and thrones are at its disposal. Among its councillors are kings, and many of the great and mighty of the earth enrolled among its subjects. Where are the waters not ploughed by its navies ? What imperial element is not yoked to its car ? Philosophy itself has become a mercenary in its pay ; and science, a votary at its shrine, brings all its noblest discoveries as offerings to its feet. What part of the globe's surface is not rapidly yielding up its last stores of hidden treasure to the spirit of gain ? or retains more than a few miles of unexplored and unvanquished territory ? Scorning the childish dream of the philosopher's stone, it aspires to turn the globe itself into gold." * It is not from any assumption of the office of the " lay preacher " that the moral is attempted to be pointed. It may, however, be seriously urged, that character in trade has to be improved ; homely vir- tues respected ; good honest labor appreciated ; moderate gains attemj^ted, and rash recklessness dis- couraged. When these are again the rules of com- * "Mammon," by Dr. John Harris. REMINISCENCES OF MEN AND MANNERS. 205 mercial life, there Avill be less reproach against " the sins of the age," as well as a diminution of those financial scandals that are a disgrace to a city of his- toric renown, which has justly prided itself on men who have achieved greatness through the counting- house, ascended the ladder of fame after years of toil in the workshop, or manufactory. There are those, even now living, able to redeem the City from becoming a " Sahara " or a " Cathay," a wilderness of vice, a resort of tricksters who import habits and practices hitherto unknown in respectable society. Will the future be cleansed of these foul, rank abuses? It would be noble to elevate the tone, the sentiments, and the atmosphere of commercial life. It is time to have some true " hero worship " towards real greatness, it being believed there have been and are men living within the century who deserve to be remembered for their genius in trade, their disin- terestedness amidst financial success, and their no- bility in working, not in a spirit of selfishness, but from a desire to benefit their fellow-countrymen. When these have their reward, it will be known that the great springs of commerce are working prop- erly, and that integrity of purpose, honesty in all things, and well-regulated enterprises are again being developed. 206 LONDON BANKING LIFE. APPENDIX A. List of Failures in 1875. NAME. Aberdare and Plym. Iron Co.. Adamson and Sous, Hy Alilborn, A Alexander, Son, and Co., N.. Alforth, C. E Anderson and Sous, J " and Co., John " J.S " P Armit, R. H Aspinall, Joseph Aves and Co., E. L London . T. Bagot, Edward . . Barnard and Co. Barlow, Bros Bartelo, B., von and Co. Bauni, Sons, and Co Baxter, Albert " John Batchelor, H. C Bell, J. H.,and A Benjamin, M Benuet, Bensen, and Co Bennet and Glave Address. Glasgow . . . Dundee . Loudon. Swansea Manchester . . Crawshawbooth Bradford London Dundee Trade. Liabili'8. Ship Brokers Silk East India Timber General East India — Manure Merchant. General Com. Agent General ■ . . Provision Benson. Bobt., and Co Berry, Leech, and Co Birket, .lacob • Black and Co Bowes, Alfred : Bowler. Alfred Braudham, Sam Brett, F. R Brown, P., and J Browu, Stevens, Williamson Browning, Francis J. H Breslaur, L Brace, E. , and Co Burgess, Geo., and Co Burghardt, Krenels, and Co. Busoche, Em. de Bolton, Roger, and Co Dundee. London . London.. Caffala, S. G., and Co. Glasgow . London Kildwi. k. Glasgow.. London Glasgow Dundee Manchester.. Isle of Wight. Preston. ... London. Copper Smelter Warehousemen. .. . Cotton Brokers General Money Changers. . . Stock Broker Spinner Maritime Agent .Jute Merchants General Timber ( Woollen Manu- I ( f acturers ) American Merchants Australian General Shawl Mai i uf acturers General Merchant. . . Wine General Stuff Manufacturers, Sugar Brokers Oil Shipowner Wine Merchant., Merchants Shipowner . Dry salters . Greek Merchants. £ 868,000 100,000 203,000 300,000 95,000 Not Stat. 273,000 33,000 80,000 16,000 41,000 17,000 80,000 3,500 8,600 15,000 15,000 30,000 30,000 38,000 80,000 10,000 200,000 46,000 1,000,000 35,000 25,000 10,000 35,000 36,000 30,000 63,000 5,000 Not Stat. 145,0(10 DO.IMIO 100,000 80,0(10 60,000 31,000 180,000 13,000 38,000 Carried forward £4,558,100 APPENDIX A. 207 NAME. Caldwell and "Watson. . Carnie, Charles Chappell, Joseph Chapman, J Chard and Co., W City and County Bank. Cohn, Albert, and Co Cohen, Bonus, and Co Collie, Alex., and Co Cook and Co., W Corkling and Co., R Conyers, T. K Corry, Edward Coutts and Co., W Craven, W.J Crompton, Cooke, and Co.. CunlilTe, James CwillandCo.,D. Jr Da Costa, L. A Da Costa. Kaalte, and Co. Davis, J., and Co Dawbarn, Jas De Negri, P., and Co Digby, Gaudy, and Co Druitt, H., and Co Duca, Paleologo, and Sons. Dudgeon, J. and W Edwards, C. S Emmens, Bros Eutwisle, J Ewen, F. W., and Co. Farquhar, G Fearou and Co Finlay and Co., J Forbes and Co Fowlie, J. C Freeth, Samuel, and Co. Freeth and Whitling — Furniss, Fredk. Address. London . Bradford. Bristol... Loudon . . . Newcastle.. . Manchester. London Hunslet London Manchester . London ... . Belfast Loudon. Birmingham. London Liverpool . tt London . . . London . Manchester . Glasgow. London . . Belfast.. Dundee.. London . . Forthergill, Hankey, and Co London. Gallatti, John Gardner, McGregor. Geek, Gustavus Geekie and Black. . . Genl. South American Co. Glover, J. and J Gompers and Marcoss • Gonzales and Co., A Gow, Brothers, and Co ... . Gow, Daniel Graham, John Graham, S. and J Trade. Brought forward East India Merchants General Contractor Dyer Provision Merchants Bankers ( Woollen Manu- I I facturers ) General Merchants . . East India General Liabili's, Cloth Metal TwineManufacturers Commission Agent.. Yarn Dyers Commission Agent. . Linen Merchants .... London Glasgow London Cupar Angus, ) N.B I London Bradford . Birmingham . . . London Merchant . Factors Coal and Iron ) Merchant J Commission Agents., Wine Merchants West India General , Engineers Warehouseman... . Financial Agents. . General Merchant. Produce Broker East India General Merchants. Export Iron Founders Iron Manufacturers. Contractor Iron Founders Greek Merchant Umbrella Manu- ) f acturer j General Merchant. . . South American. . . . Cotton-Spinners Jewelers General Merchants, Manufacturers Warehouseman . Warehousemen . £ 4,558,100 70,000 56,000 27,000 13,000 22,000 Not Stat. 120,000 48,000 3,400,000 1,'!,000 149,000 9,000 173,000 12,000 17,000 600,000 16,000 50,000 11,000 207,000 18,000 34,000 240,000 2,000 80,000 100,000 100,000 15,000 140,000 100,000 10,000 'Large." 65,000 35,000 140,000 30,000 31,000 35,000 1,000,000 150,000 25,000 15,000 51,000 400,000 8,500 20,000 230,000 23,000 13,000 72,000 72,000 Carried forward. . .£12 85,600 208 LONDON BANKING LIFE. NAME. Gray and Buchanan — Greaves, G Green, Bros Grieves and Soveridge. Guild, Alex., and Co . . Halcomb, Alex. J Hallett, Manning & Prentis. Hare^ Telso S Harris, JiiUel H assail, and McMurdo Haj', Ingram, and Co Hay, J. O. and Co Heald, J., and Co " Mathwin, and Co Henley, W. T Hewitt, Ed., and Son Hester and Co Hoffenbacb Holland, R. L Holroyd and Co Holt, Kichard Humphreys and Pearson — Ireland, F.R. B Im Tliurn, I. C, and Co. Jeffrey, G. A Jones and Co., E. Kattingell and Campbell Kilburn, Kershaw, and Co. Kimber , E Kingsford, Bros Knight and Sons Knox and Co., J Laing and Irving Lambert, Bros., and Scott. . Laud, J. and E Lawton and Head Leeds Mercantile Bank Leslie, Alex. . Leslie, Rivington, Leveaux, Isidor. Address. Glasgow.. Kildwick . Belfast. . . Felixstowe. . . London Liverpool.. . . Birmingham. London Newcastle. London . . . . London . Bradford . Hull London. Liverpool. London. . . London . Glasgow , Hawick,, London . and Co. Lockwood, D., and W. Mabon, "Walter, and Co Mackenzie, B Magce, J. R. , and Co Magill, Riddell, and Co Malcolm, Hudson, and Co. . Marrell, Hartley Marshall, "Wm Leeds London.. . Trade. Brought forward. Machinist Cheesemongers . . . Linen Manufacturers Manufacturer., Cotton Merchant General Timber General East India Ship Brokers Telegraph Engineer. Provision Merchants Tea General Ship Broker Woollen Merchant, Shipbuilders, General Merchant.. Merchants East India. General East India Brokers. Machinist Millers Stock Brokers Coal Merchants Liabili's. Woollen. Coal Gun Manufacturers. General Merchants. . Bankers E't India Merchant .. Wine. Sl^effield linSacfu^r^r-s^l Manchester . Dundee Belfast Mason, Eadie, and Co. Mavrocordato, 0. T. . . Mc Arthur and Co London Bradford . . . Manchester. Glasgow . . . . London Engineers Linen Manufacturers Japan Merchants.. . "Worsted Merchant ( "Woollen Manu- ) ( f acturers j Stock Jobber Iron Founders £ 11,885,600 30,000 25,000 13,000 28,000 25,000 30,000 170,000 15,000 50,000 150,000 150,000 60,000 51,000 500,000 25,000 Not Stat. 10,000 17,000 50,000 50,000 50,000 60,000 3,000,000 17,000 120,000 400,000 201,000 Not Stat. 38,000 Not Stat. 380.000 12,000 100,000 65,000 47,000 47,000 13,000 6,000 30,000 33,900 50,000 59,000 100,000 22,000 100,000 38,000 Not Stat. 150,000 Carried forward £ 19,563,500 APPENDIX A. 209 NAME. McArthur, Wm McDonald, M., and Co McFarlane and Nance McGregor and Co., R McKellar, Duncan, and Co. . McLaren, J. R ' McLay and Co. , W McNair and Co., J Medlock, Smallware, and Co Mercan'le Bank (J. Holmes ) and Co.) ) Messulam, M. B Michaelson, E., and Co Michell, F Miles, J Mills and Haywood Morlet, A. A. and Co ... Morrison, John " W. R.,andCo Muirhead and Sons Munro, Donald Murray, J. B Niel and Shaw Neroutsos, G. D., and Co. Nicholson, Joseph Nixon, Joseph Gates, George Ochsenbein, C. E. Pamell,W Paton, Cook, and Co. . Patterson, H. P Pellatt, M. M., and Co PellY, Albert Phillips, E.G Phillips and Phillips. Phillips, Octavius, arid Co. . . Phoenix Bessemer Steel Co. Preller, E., and Co Pridmore, W. Hales Priestley, John Raffael, Bros Rainbow, Holberton, and Co Rankine, J., and Co Ramsden, A. W Ramsey. J., Jun Richardson and Son, T Rix, J., and N Robertson and Co., J. P.... Roberts, G Rodocanachi, Bros Ronaldson, J. J., and Sons.. Ross and Wood Rudall and Sons, J. H Russell, John Address. London . . Glasgow.. London. . . Glasgow.,. Greenock. Glasgow. . Manchester. Leeds Manchester. London . a Oldham . London . Dundee. . Glasgow. Loudon . . Glasgow. Belfast. . London . Dewsbury. London .., London . . Glasgow . London. . Sheffield Bradford Birmingham. Huddersheld. London Bingley... Bradford. London . Sheffield. London . . London . . Glasgow . Trade. Brought forward . . Iron Founder Manufacturers Builders General Merchants. Warehousemen Shipowner General Merchants. Bankers . . . General Merchant.. Lead Spinners General Merchants . Shipowner Cotton Spinners Jewellers Oil Refiner Yarn Merchant Provision General Cabinet Maker.. Hosier Wool Com. Agent. Auctioneer Manufacturers.. . . Gentleman Wine Merchants. General Colonial Brokers Silk Millowner , Produce East India. ... General Manufacturer. Engineers Iron Merchants Yarn Agents Carpet Manufacturer General Merchants . . Wine Com. Agents General Grain Carried forward, £ Liabili's, £ 19,56.3,500 263,000 34,000 43,000 36,000 Not Stat. 15,000 200,000 Not Stat. 65,000 10,000 16,000 Not Stat. 72,000 20,000 110,000 200,000 50,000 40,000 10,000 13,000 40,000 30,000 18,000 15,000 12,000 60,000 4,000 60,000 25,000 5,000 12,000 17,000 45,000 46,000 20,000 21,000 34,000 35,000 60,000 61,000 110,000 40,000 15,000 300,000 35,000 19,000 10,000 23,000 80,000 13,000 180,000 60,000 2,265,500 14 210 LONDON BANKING LIFE. NAME. Sanderson and Co Scarth and Scott Schotteld, Jno., and Co Schultz and Mohr Seffer, J. B Shand and ('o Shaw and Thomson Shaw, Wm., Son, and Co.. .. Sheridan, Kemball, and Co. . Simpson. J. and A Sloane, Kichard Smith, Gilead, A., and Co. . . " and Buchanan « J. W » Edward, and Sons. . London... Leith Bradford . London... iverpool London. . Smyth and Co., E Spotten, W. , and Co Stewart, Lewis Stockton Hail Mill Co. . . Strachan and Co., John. " Hy.S Supendin and Range Siordet and Co Address. Huddersfield. London Glasgow Birmingham. London Glasgow Bingley Sheffield London . . Belfast . . London.. Stockton. London . . Trade. Brought forward..., Bill Brokers Dyers E. India Merchants.. General East India Iron ( Woollen Manu- ) ( facturers j Contractors Yarn Merchants Metal Broker — General Merchants. .. Corn Factors Wool Comber Stockbrokers I Umbrella Manu- 1 \ facturers ( Linen Manufacturers E. India Merchant .. Iron Rails E- India Merchants. Stock Broker London . Taylor, James W. E Thompson, E., and Co Thorn, A., and Co Townsend, W Tysoe and Sons Upton and Hussey Vasconcellas and Co., J. B.. Viven and Co Walker and Co : •' and Simpson « W., and Co Warner, W. R Watt, J. H Webb.T. S Westbeach, A. E., and Co. . . Westhead, J. P. and Co Whitlock and Dodson Wilkinson, Watts and Co. . . Williams, Maurice Willis and Co., John Willison and Son, J Wilson and Co , " R., and Son < ' and Armstrong — " W Witt and Co., G. A Young, Borthwick, and Co. Zimmerman, A. and M Accrington . Loudon Salford..., London . . . LiverpooL E. India Merchants... Shipowner. Millowner.. Shipowners Builders Furrier Spinners Jewellers General Merchants.. Liabili'B. £ 22,2a5,500 7,000,000 Not Stat. 20,000 300,000 100,000 .342,000 250,000 30,000 Not Stat. 28,000 100,000 600,000 10,872 11,000 300,000 100,000 100,000 200,000* 80.000 45,000 300,000 253,000 45,000 100,000 150,000 1,000 50,000 32,000 120,000 London . . . Liverpool . London . . . Glasgow., London . . Engineers Flour Merchants. Ship Builders...... General Merchant. . Colliery Proprietor . General Merchants. Manchester. London Liverpool. Bradford . London Newcastle London Hawick ( London and ) ( Liverpool. | London ILondon Wine Merchants. Shipowners Cotton Broker... Brassfounders. ... 33,000 130,000 Not stat. 50,000 94,000 112,000 200,000 200,000 100,000 26,000 25,000 25,000 100,000 80,000 252,000 48,000 Merchant 100,000 Plush Manufacturers Provision Merchants Wool Merchants. . . Bill Brokers. Chemical . . . . Total £ 2,500,000 50,000 37,058,372 APPENDIX B. 211 APPENDIX B. Stock Exchange Curiosities and Statistics. There is a curious book by John Freke, Broker, entitled the ' Prices of the Public Stocks, Securities, &c., Soldhy the Author at his office over against Jonathan's Coffee House iti Exchange Alley.\ The work is worth consulting on the extent of .business transacted in 1715 andl716. It was issued in " leaflets ; " the first and last may thus be compared : — East Indic'i Stock Bank Stock . . Soutli Sea Stock East India Bonds Lottery 1711 „ 1712 . 1713 . 1715. 10 per cent. . 135 8 „ . 129 6 „ . 94i 151. pm. Par to 2 i)er cent. £2 to £8 £2 to £23 1716. 131^ 102i 301.pm. 2 to l| pm. i pm. £1 to £15 There are only ten stocks enumerated; the whole list measures 7 in. by 4 in., and is singularly compiled so as to embrace the " Course of Exchange ; " the number of years' purchase that annuities are worth, and the blanks and prizes in the lotteries. Each " leaflet" concludes with the announcement that, "John Freke, Broker, at his ofiice in Exchange Alley, buys and sells stocks, and all public securities, and lends money on the same. Any gentleman may have this paper left at his house twice a week, f or half-a-crown a quarter." The Course of Exchange was originally established by John Castaign, in the year 1718, and continued by the late Edward Wetenhall and his son and successor, James Wetenhall, with the addition of the prices of Canals, Dock Stocks, &c. "Pub- lished by authority of the Committee of the Stock Exchange on 212 LONDON BANKING LIFE. Tuesdays and Fridays, by James Wetenhall, Stockbroker, Stock Exchange, and 7 Capel Court, Bartholomew Lane. This publication is punctually delivered to Subscribers, in town, at 11. 4s., per annum." The list was printed by Maurice, Printer, Howford Buildings, Fenchurch Street," on a single sheet, worked on both sides, and measuring 8 in. by 13|- in. The follow- ing are the quotations of the twenty-three stocks enumerated: — Government Funds. Bank Stock Dividends 10 per ) cent ) .3 percent. Reduced Annuities 3 per cent. Consols Annuities Ditto, 1726 4 per cent. Consols Annuities 6 per cent. Navy Annuities 5 percent. Annuities, 1797* Lonjr Annuities, expire Janu- ary, 1860 Irisli 5 per cent Imperial 3 per cent. Annuities Ditto Annuities, expire May, 1819 Omnium India Stock Dividends 10^ per cent South Sea Stock Dividends 3i per cent Ditto Old Annuities Divi dends 3 per cent. . . Ditto New Annuities Divl dends 3 per cent. 3 per cent. Annuities, 1751 5 per cent. India Bonds Excliequer Bills, 3W. per day Bank for Account, January . Consols for Opening, Jan. 19 Omnium for paym. Jan. 15 . India for opening, Jan. 23 1816. Jan. 2. 236 a. 236i 59| a i a i Shut Shut 74i a i a i 92^ a 921 Notliing done 14lf a 15 Nothing done Nothing done Nothing done 14| a 141 pm. Shut Shut 59i Shut Shut 4s. a Is. dis. 5s. a Is. dis. Nothing done 611 a i a 62 a 615 14g a 15i pm. Nothing done 1819. Dec. 31. 217J 67| a 67 a I a i a I Shut Shut 84| a I a ^ a |a J Nothing done Nothing done m Nothing done 655 Nothing done Shut Shut Nothing done Shut Shut Is. dis. par. Is. pm. 5s. a 3s. dis. Nothing done ( 68i a I a f a J ( a§af a J 5 per cent. Nav}' as above with the Dividend for the opening. Besides the above, the list is compiled to embrace the "Course of Exchange," price of American Stocks, English grain APPENDIX B. 213 and all information as to Exchequer Bills on the first page ; and on the second, price of Canals, Dock Stocks, Water- works, the value of Irish funds, notices of meetings of public companies, and the price of coals. Course of the Exchange. Originally published by John Castaign, was subsequently published by authority of the Committee of the Stock Exchange, by James Wetenhall, Sworn Broker, on Tuesdays and Fridays, at Xo. 1 Copthall Court, Throgmorton Street, witli the addition of the prices of Canals, Dock Stocks, Assurance Companies, &c., &c., and may be had each day at five o'clock at the printer's, or delivered to sub- scribers the same evening, at 11. 4:S. per annum. A stamped edition of this Paper, for circulation throughout the country, &c., free of postage, is regularly published on Tuesdays and Fridays, with the unstamped edition, the price of which is 3/. per annum. This list was issued on a single sheet, printed on both sides, and measured 17 in. by 10 in. The following are the twenty- nine stocks enumerated, with a comparison of quotations: — :\ Government Funds. Bank Stock Dividends 8 pe cent .... 3 per cent. Reduced '6 per cent. Consols Annuities 34 per cent. 1818 . 3 per cent Annuities, 1726. 3^ per cent. Reduced New 4 per cent., witJi Divi- 1 (lends for opg., 22 January ) New 4 per cent., 1826 Long- Annuities expire 5th of ( January, 1860 . . .\ India Stock Dividends lOJ per ) cent. . . . .) South Sea Stock Dividends ) 3^ per cent. . . . \ Ditto Old Annuities Divi- \ dends 3 per cent. . . ( Ditto New Annuities Divi- ) dends 3 per cent. . . ) 3 per cent. Annuities, 1751 . 1830 Dec. 31. 1971 81ia2a 1^ a Shut Shut 902 a ^ a f 99a8| Shut Shut Shut Nothing done Shut Shut 214 LONDON BANKING LIFE. Government Funds. India Bonds 4 per cent. Excliequer Bills 2d. percent. ( £1,000 ] Ditto, £500 . . . Ditto, Small . . Ditto, Commercial Ditto, Endorsed Ditto, Advertised . Ditto, Church . . Bank Stock for Account 3 per cent. Consols for op 21st of January, 1829 India Stock for opg., 15th of January, 1S2'J. Commissioners for the Reduc- tion of the National Debt, purchased Reduced at . . Ditto, Consols .... Ditto 3^ per cent. Consols 1818 Ditto, Siper cent Reduced 1^29. Jan. 2. 68s. a 69s. pm. 67s. a 70s. a G9s. pm. 68s. a 70s. pm. 68s. a 70s. pm. Nothing done Nothing done Nothing done Nothing done Nothing done 571 a Nothing done 86i »og 95g 1830. Dec. 31. 8s. pm. 19s. a 17s. a 18s. a 16 pm. ( 19s. a 17s. a 18s. ( a 16s. pm. j 19s. O p4 -1 i O) CD ft 05 CO C •* o CD "3 ^g S Oi 00 CO Q CO CO »H to 04 t- t;- 00 oo H rH rH =4« o .a s- 216 LONDON BANKING LIFE. APPENDIX D. Analysis of Stocks in Default. foreign stocks. Name. Bolivia 6 per cent. . Costa Rica 6 per cent. Ditto 7 per cent. Ecuador 1 per cent (nom) Greek, 5 per cent. . . Honduras 10 per cent. Ditto 10 per cent. Mexican 3 per cent. . Ditto 8 percent. . Paraguay 8 per cent. . Ditto 8 per cent. . San Domingo 6 per cent Spanish 3 per cent. . Venezuela 3 per cent. Ditto 1^ per cent. Ditto 6 per cent. Ditto 6 per cent. Louisiana Levee 8 per ct. Ditto 6 per cent. Virginia Stock 6 percent. Total . . i Amount of Issue. £ 1,700,000 500,000 2,400,000 1,825,000 2,800,000 90,000 2,500,000 10,241,650 4,864,800 1,000,000 2,000,000 757,700 161,105,000 2,809,100 1,888,800 1,000,000 1,500,000 198,482,050 600,000 800,000 6,400,000 206,282,050 Price. 68 72 82 59 80 80 60 80 85 70 80 63 60 75 103 103 Price. 1876. 21 13 9 8 15 4 4 8S 6 9 9 10 17 7 4 9 9 45 45 40 Depreciation. £ 799,000 295,0(J0 1,752,000 1,432,000 694,000 1,900,000 2,626,992 710,000 1,520,000 474,620 85,385,650 540,000 765,000 99,894,262 180,000 464,000 4,032,000 104,570,262 fOREIGN RAILWAYS. Name. Amount of Issue. Price. Price . 1876. Depreciation. Mexican Royal Sardinian . . . Royal Swedish .... Ditto 7 per cent. Smyrna and Cassada. . Varna £ 2,299,801 400,000 450,000 160,000 414,160 900,000 20 10 5 4 20 20 li li .1 10 £ £ 2,155,595 340,000 438.750 70,000 207,080 832,500 Total . . £ 4,623,461 4,043,925 APPENDIX D. 217 FOREIGN MINES. Name. Amount of Shares. Price. Price. 1876. Depreciation. Eberhardt 25,223 10 Bdis £ 201,784 ENGLISH RAILWAYS. Name. Amount of Issue. Price. Price. 18T6. Depreciation. Cornwall East London London, Chatham and | Dover ( Metropolitan Waterford and Central 1 Ireland J 28,773 400,000 9,646,038 2,250,000 250,000 20 Stock. Total. 5 30 20 43 15 £ £ 21,582 170,000 7,716,831 1,282,500 212,500 8.403,413 CANADIAN RAILWAYS. Name. Amount of Issue. Price. Price. 1876. Depreciation. Canadian Sd. 7 per cent. Grand Trunk .... Ditto 2nd Pref. Stk. Ditto 3rd Ditto. Gt. West, of Canada . . Ditto 5 per ) cent. pf. con. 80. . . f Mid. of Can. 6 per cent. . £ 200,000 10,295,144 2.327,808 7,166,911 4,459,330 227,660 335,000 100 100 100 100 20i 100 100 58 10 34 15 6i 57 50 £ £ 84.000 9,285,630 1,536,348 6,091,875 8,121,525 97,889 167,500 Total . . . £ 25,011.853 20.384.767 218 LONDON BANKING LIFE. AMERICAN RAILWAYS. Name. Amount of Issue. Price. Price. 1876. Depreciation. At. and G. W. 1 Mort. 7 1 per cent ( At. and G. W. 2 Mort. 7 1 per cent J At. and G. W. 3 Mort. 7 : per cent : Detroit and Milvvaukie / 1st Mort. 7 per cent . ) Detroit and Milwaukie ) 2nd Mort. 8 per cent. ) Erie $100 Erie pref Mis. Can., &c. 1st Mort. . At. C. & G. W. Con. I Mort., &c ( $ 17,500,000 11,500,000 29,000,000 2,500,000 1,000,000 78,000,000 8,536,910 14,000,000 2,771,600 103 103 103 103 100 103 100 100 100 23 10 4 85 35 14 20 53 25 $ $ 13,592,233 11,388,345 27,873,787 1,893,204 650,000 67,397,864 341,472 1,484,000 27,716 Total . . . $ 164,807,910 124,648,621 TELEGRAPHS. Name. Amount of Issue. Price. Price. 1876. Depreciation. W. India, &c £ 60,071 10 i £ ' 57,068 BANKS. Name. Amount of Issue. Price. Price. 1876. Depreciation. Anglo Hungarian . . . Ld. Mort. of India . . . Metropolitan B. ... 40,000 100,000 9,016 10 . 5 10 Total . 4 h 2 . £ £ 240,000 450,000 72,128 762,128 APPENDIX E. 219 MISCELLANEOUS. Name. Amount of Shares. Price. Price. 1876. Depreciation. India rubber 10,000 40,000 37,000 25,000 30,000 14,000 20,000 17,500 20,000 10,000 10,000 20,000 15,000 25",600 £ 50 50 1 10 20 10 10 9 5 10 5 10 10 io TotaL £ 19 6 JL 2^ 1 2 1 3 2* 1 H 7 2 £ £ 310,000 Lend. Fin. Association Ry. & Gen. Light Imp- Upper Assam Birmingham and > District Tramway ) Buenos Ayres Nat. . . . Lisbon Stm 960,000 28,425 200,000 570,000 112,000 180,000 Gen. Sew. and Manure Native Guano New Somb. Phos . . . . Patent Gunpowder. . . Phospho. Sewage. . . . Phospho. Guano A. pref Ditto B. pref.. 105,000 30,000 80,000 40,000 170,000 45,000 200,000 3,030,425 APPENDIX E. Stored Bullion in Europe, There would be great value attaching to complete statistics on -this subject ; but not being obtainable from the various Govern- ments, the subject may be left for official statists who would thus render good service to the public. A curious process is going on in the Bank of France, which is thus described : " The gold in five vaults in April, 1875, exceeded 500 tons in weight — in other words, it weighs about as much as twenty locomotive engines of the first size. AVhat were the treasures of Solomon or Croesus to this ? To trace the process by which this immense mass has, as it were, gravitated to Paris, would be no easy task. £150,000 weighs over a ton ; £75,000,000 would therefore weigh 500 tons." As regards the Bank of Prussia, the bullion there is only a portion of Government Treasure, as Bismarck's Military Chest has to be remembered in the calculation. 220 LONDON BANKING LITE. APPENDIX F. German Speculations since the War of 1871-2. The extension of German commerce supplies important infor- mation which has to be carefully followed. As in the case of England after the great French wars, a dangerous inflation of business has been manifested, the trade investments have been extensive, and something like a crisis is already being experi- enced from the reactionary movements of either the cautious trader or the insolvency of those without means in proportion to their speculations. It is not unreasonable to expect further disasters, as the internal resources of the country are not suf- ficient to warrant extensive commercial under takines. JOINT STOCK COMPAJflES IN GERMANY. Nature of Companies. Mines, Iron,and Salt ) Works . . . . j Stone and Mineral ) Industries . . ) Metal Works . . . Machin'y & Apparatus Chemical Works . Light and Heating Textile Industries Paper and Leather Wood and Carving . Food & Refreshment Clothing .... Building .... Art Dealing . . General Trade . . Commercial . . . Various .... Bank and Credit . . R- R, Ordinary Stock Ditto Preference . Total . . No. of Com- panies 101 17 10 60 13 1 21 10 4 31 1 43 1 5 11 5 111 24 41 510 Paid up Capital. £ 26,200,000 1,127,000 659,000 5,651,000 1,234,000 300,(100 2,701,000 737,000 234,000 3,483,0110 75,000 8,310.000 75,000 720,000 1,195,000 533,000 43,075,000 73,812,000 15,545,000 185,660,000 Value at Market Prices of Securities. 1872. 1874. £ 36,390,000 1,095,000 788,000 6,834,000 1,180,000 279,000 2,495,000 731,000 251,000 3,0!:IS,000 63,000 8,514,000 71,000 789,000 1,316,1100 723,000 65.373,000 87,909,000 13,771,000 231,670,000 £ 19,602,000 ■ 399,000 329,000 3,422,000 367,000 180,000 1,393,000 432,000 132,000 1,812,000 25,000 3,227,000 17,000 597,0! 10 898,000 232,000 42,102,000 63,911,000 10,530,000 149,607,000 1875. £ 12,296,000 240,000 216,000 2,733,000 250,000 147,000 1,071,000 277,000 82,000 1,674,000 11,000 2,147,000 3,000 461,000 797,000 120,000 36,071,000 57,975.000 8,230,000 124,801,000 APPENDIX G. 221 The conclusions to be drawn from this remarkable document are that mining, — the worst of all industrial gambling, — makes itself conspicuous, and that Banking or Credit Companies have been in greater favor than their ultimate success has warranted. Germany, with all its desire to be rich has, like most countries with newly-acquired wealth, failed to turn its opportunities to good account. APPENDIX G. Turkish Loans. For years to come there will be .an increasing necessity to re- member the heavy experience obtained by investors in the stocks of the Ottoman Empire. The following table, therefore, must have a continuous interest to those who have suffered by their misplaced confidence in the "sick man," -the object of care and solicitude of the Allied powers. Date. Nature of Guarantee. Original Amount. Outstanding. 1854 1855 1858 1862 1863 1865 1869 1871 1872 (Treasury Bonds ex- changeable into 5 per cents.) 1873 General Debt or 5 per cent. Egyptian tribute Eng and and France Cusioms duties at Constantinople . j Revenue and salt duties, stamps, 1 ( and patents ) i Balance remaining from previous 1 ( hypothecations ) Sheep Tax and Syrian Serghis . . Various tithes Balance of Egyptian tribute . . Tithes , . • . £ 3,00ii,000 5.000,000 5,000,000 8,000,000 8,000,000 6,000,000 22,222,220 5,700,000 11,126,200 27,777,780 96,593,090 (35,020,650 notyetiss'd) £ 1896,500 3;815,200 3,589,500 4,915,900 • 5,083,400 4,034,500 20,650,000 5,450,630 6,816,400 27,201,180 61,572,440 ( Ximes, and part of Sheep Tax 1 ( and of tobacco monopoly . . 1 General Revenue 198,419,290 145,025,680 Mr. Farley estimates the entire debt of Turkey at £202,554,- 420, more than half which sum has been borrowed in the last five years. 222 LONDON BANKING LIFE. APPENDIX H. Emigration IN 1875. Port of Departure. United States. British North America. A-nstra- lian Colonies. All other Places. Total. Liverpool 72,350 2,692 14,069 126 932 20,464 7,413 2,189 3,497 667 89,640 26,779 Plymouth 8,080 Total England from ports at ) which there are Emigration > Otlipers . 1 75,042 1,135 14,195 7 28,809 449 6,353 9,316 124,399 Total from all other ports 10,907 Total England 76,177 14,202 29,258 15,669 135,306 Glasgow and Greenock (being"] the total Scotland from ports 1 at which there are Emigra- [ tion Oflicers) J Total from all other ports 8,492 1,864 4,5^1 28 180 11 15,070 39 Total Scotland 8,492 1,861 4,562 191 15,109 Cork 16,611 3,090 60 1,022 703 •• 17,374 4,112 Lonrlondftrrv Total Ireland from ports at J which there are Emigra^ [ tion Otlicers ) Total from all other ports 19,701 676 1,082 230 703 1,002 •• 21,486 1,908 Total Ireland 20,377 1,312 1,705 .. 23 394 Total from ports at which J there are Emigration Offi- [ cers ) 103,235 1,811 17,141 237 34,046 1,479 6,533 9,327 160,955 Total from all other ports 12,854 Grand Total United Kingdom. Total in 1S74 105,046 148,161 17,378 25,450 35.525 .53,958 15,860 13,445 173,809 241,014 Table showing the Origin of the Persons Comprised IN the above Return. Not Destination. English. Scotch. Irish. Foreign. Distin- guished. Total. United States 43,867 5,893 31,433 23,028 825 105,046 North American Co- lonies 9,044 1,871 1,391 5,016 56 17,378 Australian Colonies.. 20,749 5,750 8,251 767 8 35,525 All other Places 10,880 1,172 374 2,536 898 15,860 Total 84,540 14,686 41,449 31,347 1,787 173,809 Total in 1874 116,490 20,286 60,496 38,465 5.277 241,014 N.B. — Of the total number of passengers in 1875, 37,865 were cabin, and 135,944 steerage ; but the returns do not distinguish between bona fide set- tlers and ordinary travellers. APPENDIX I. 223 APPENDIX I. Balance Sheets of Failed Firms. It has not been practicable to furnish complete financial state- ments of all commercial houses " in suspense " or passing through bankruptcy. But it is deemed desirable to publish some of the more important balance sheets which present, not only figures of remarkable significance, but proofs of speculative tendencies, acting like beacons for the guidance of future com- mercial operations. It is, indeed, singular that more complete information on these subjects, together with statistical returns from the Bankruptcy Court, is not obtainable. The Registrar, however, explains that "cases of stoppage of payment, which neither resulted in bankruptcy nor insolvency, nor were the subjects of deeds of assignment, &c., are not registered in this court, and also cases dealt with by the Court of Chancery un- der the Winding-up Acts, cannot be followed, as no record of such cases exists in the London Bankruptcy Court." In ex- planation of this state of things the remarkable admission was made some time since " that creditors had a right to do as they liked with their own ! " While this may appear in the ab- stract incontrovertible, such a statement could be easily chal- lenged as to criminal offences. And is there not often a very "thin line " between crimes and misfortunes? At all events, more publicity would be beneficial, and the innocent, the vic- tims of downward markets, those who have been " brought to grief by no imprudence of their own," would emerge from the courts with shields untarnished, and reputations often improved or made to shine in the clear daylight. 224 LONDON BANKING LIFE. Messrs. Alexander Collie & Co. — Afproximatb Liabilities. Creditors unsecured Creditor's Balances subject to payment of their acceptances Creditors partly secured — Claim Security. . . . Creditors fully secured — Security .... Claim Surplus to Contra. . . Creditors, for Rents, Rates, and Salaries. Other liabilities Liabilities on Bills Receivable: Amount. Drawn against Consign- ments £606,286 11 2 Unsecured . £2,260,347 S 9 /^ess-Credit ) balances \ 1,274,292 6 5 as above ) 986,055 4 4 £1,592,341 15 6 S. d. Deduct — Cash and other securities in hands of holders of Bills Total . 42,788 8 22,248 2 10 107,386 3 11 165,036 3 11 32,350 Estimated to Rank 60,000 430,849 19 5 480,849 19 5 16,270 10 11 . £ £ s. d. 90,027 7 2 1,274,292 5 5 20,540 5 2 927 9 11. 39,118 14 7 464,579 8 6 1,889,785 10 9 APPENDIX I. 225 Statement of Affairs on the 2nd of July, 1876. Estimated to Eealize. Assets. Cash at Bankers and retained against Bills Discoiuited £ s. d. 11,406 10 11 £ s. d. Cash in hand Bills Receivable in hand Debtors, good Stock in Warehouse, &c Stocks and Shares and Sundry Assets. . Freehold premises, Aj-touu Street, esti- mated surplus after payment of balance of purchase-money Separate Estates. Alexander Collie, estimated surplus . . William Collie, estimated surplus . . . 15,295 18 10 60,000 15,000 1,148 16 3 7,500 12,775 12 7 48,607 18 3 30,510 75,000 75,000 . . . £ 4 32,350 10,000 71,000 38,500 100,000 300,000 Total 250,542 7 1 Assets requiring time for realization :— Estimated sui-plus from Creditors fully secured Bad Debts £223,198 Os. M., estimated to realize Carolina Cotton Warrants Ventures accounts : subject to adjust- ment Balance of the several accounts £146,540 19.S. 4fZ Judgment recovered against the U. S. Government, subject to Appeal and subject to law charges and expenses, about £190,000, of which it is esti- mated wiU belong to this Estate . . Further amoimts to be recovered, esti- mated at £551,850 15 226 LONDON BANKING LIFE. Messrs. N. Alexander, Son & Co.— Statement of LlABHilTIES. s. d. Acceptances to drafts of A. Collie & Co. in respect of goods. &c., under drawers' con- trol 251,705 15 Less Property in the hands of holders claimed by them. 11,984 17 4 s. d. £ s. d. 6,000 Bombay B. RaU 5,700 0* 112 Shares in A. & Co 6,400 0* Property of Mr. A 480 12,580 Less on overdft, of N. Alexander . 699 13 9 Other Creditors. Total 11,880 6 3 104 11 It £11,984 17 4 239,720 17 8 814 6 li £ 240,535 4 7 *Co. claim. t At Bank of E. Note.— There is a question as to the right of the Creditors holding these Securities to retain certain of them. APPENDIX I. 227 Assets an© Liabilities on the 18th of Juue, 1875. Assets. Cash at Bankers Stock, Shares, and Debentures. City of London and Bombay Rail Indigo Warrants Private Estates : — Surplus from the Estate of N. Alexander. .... £5,600 real Estate at Epsom. 2,400 Ireland Estate. 2,060 Under Mar. Bett. L. T. & S. Rail. 2 320 ) 1*200 } Sundries— Shares. 127) 1,432 Furniture. 200 Cash. 1,010 Rentcharge. 300 Tradesmen. B. H. Pearse £1,700 Univ. Marine. 500 Saccharine Co. 250 Policy in addition. Claim against A. Collie & Co. — £ s. d. Amount due on Loan and Current Account 4,367 13 4 Amount due on Joint Account with J. Mul- hoUand 987 10 5 £5,355 3 9 To proportion of Surplus of Alexander Collie's Private Estate, estimated by Messrs. Collie at £60,000. Total £ £ s. d. 1,348 1 1 13,840 1,800 15,066 3 11 2,200 34,254 8 228 LONDON BANKING LIFE. Messrs Hat, Ingkam, & Co. — Stateihent of the Liabilities. Unsecured Creditors £ $. 69,272 5 9,206 11 29,335 63 14 101 16 d. a £ s. Creditors fuUy secured 10,821 7 Less Estimated value of Securities . . . 11,096 7 d. 3 3 Surplus to contra . . £275 Creditors partly secured 18,184 17 Estimated value of Securities 8,978 6 6 6 n Other Liabilities ■ . . - Creditors, for Rent, Rates, Taxes, and Wages . . . Liabilities on Bills Discounted £101 16s. 3d. of which is expected will rank against the Estate for dividend it £ 3 Total 107,979 7 3 APPENDIX I. 229 Affairs on the 25th of March, 1875. Assets. Stock-in-Trade at . . . estimated at Book Debts about £ .... estimated to produce. . Cash in hand Bills of Exchange, or other similar Securities, estimated to produce Furniture, Fixtures, and Fittmgs at . . . estimated to produce Property i . . Surplus from Securities in the hands of Creditors fully secured, see contra Total £ £ s. d. 20 77 743 18 275 1,115 18 230 LONDON BANKING LIFE. Messrs. Gilead A. Smith & Co.— Approximate Liabilities. £ s. d. Creditors tmsecured 40,569 8 Ditto under £10 17 5 2 Creditors fully secured 226,212 17 7 Value of Security 244,183 8 10 Surplus to contra 17,970 11 3 Creditors partly secured 76,200 Value of Security 37,345 Creditors holding Bills for which Se- curity was purported to have been given Other Liabilities — On Bills payable against Securities de- posited with third parties not expect- ed to rank against the Estate . . . £48,450 On Bills payable without Securities being deposited, but which are not expected to rank against the Estate. £9,800 On Bills payable drawn by the Aber- dare and Plymouth Iron Companies for their accommodation On Sundries, principally BiUs dis- comited, none of which are expected to rank against the Estate .... £65,450 In respect of Debts of the Vacuum Brake Company, Limited, guaran- teed . . . . £1,12 5 7 Not expected to rank for more than Creditors for Rents, Rates, Taxes, Salaries, &c., payable in full, per contra ^ 424 3 8 Total £ s. d. 40,586 5 10 38,855 37,565 15 1 67,901 3 4 261 5 185,169 9 3 APPENDIX I. 231 Statement of Affairs, on the 2nd of July, 1875. Assets. Book Debts, estimated to realize Cash at New York Bills of Exchange Furniture, Fixtures, and Fittings at 23, Change Alley, estimated to realize Surplus from Securities in the hands of Creditors fully secured, but which may be claimed as hypothecated. . Deduct — Creditors for Rents, Rates, &c., payable in full . Total £ 20,212 4 £ s. d. 1,985 12 9 180 500 17,970 11 3 £20,636 4 424 3 8 232 LONDON BANKING LIFE. Messrs. Lambert Brothers & Scott.— Statement of Liabilities. £ s. d. Creditors unsecured — Above £10— 85 Gracecliurch Street On Acceptances 51,468 10 2 On Open Accounts 55,867 3 2 Coal Exchange 5,635 6 7 Inland Coal Account 1,851 2 Rochester 325 6 4 Port Said 4,643 10 10 Under £10— 85 Green church Street 81 15 3 Coal Exchange 40 y 6 Inland Coal Account 32 7 4 Rochester 37 6 9 Port Said 788 Creditors fullv secured — Value of" Securities 28,550 Less claims 23,262 14 3 Surplus to contra £5,287 5 9 Liabilities 58,798 5 6 Expected to rank Creditors — For Rent, Rates, Taxes and Wages— 85 Gracex'hurch Street 270 8 1 Coal Exchange 194 1 Inland Coal Account 19 16 8 Rochester 74 15 Liabilities on Bills discounted — 85 Gracechurch Street 108,059 8 4 Port Said 11,943 8 10 120,002 17 2 Expected to rank 14,567 3 2 Less Balance at Bank 178 8 11 Lambert Bros. & Hart, Deptford — Liabilities not expected to rank £ £1,364 14 4 s. d. 119,990 6 7 Total £ 35,910 5 6 559 9 14,388 14 3 170,848 7 1 APPENDIX I. Affairs on the 2'2n6. of July, 1875. 233 Assets. Stock-in-Trad e — 85 Gracecluireh Street. Coal Exchange . . . Inland Coal Account . Rochester Port Said Book Debts — 85 Gracechurch Street Estimated to produce Coal Exchange . . . Estimated to produce Inland Coal Account . Estimated to produce Rochester . ■ . . . Estimated to produce Port Said ' Estimated to produce Cash in hand — Bank of England Barclay & Co. . Held against Bills under discount— 85 Gracechurch Street . Rochester . . Port Said .... . . Bills of Exchange — In hand, 85, Gracechurch Street . Furniture, Fixtures and Fitthigs — 85 Gracechurch Street. . . . Rochester Port Said ........ Property — 85 Gracechurch Street Coal Exchange . . . Rochester Port Said s. d. 16,3.31 3 9 2