The Daily Times.
Liverpool, Merseyside, England, 1861-01-24 00:00:00

LONDON COURT OF BANKRUPTCY.

(Before Mr. Commissioner Holroyd.)

IN RE STREATFIELD, LAUREN CEO AND CO. IN RE
LAURENCE, MOUTIMORE, AND SCHRADER.

At the adjourned sitting for certificate under these
failures.

Mr. Kerslake addressed the court for the assignees.
He said, the assignees had felt it their duty to appear
before the commissioner for the prirpbse of assisting
in the investigation of the bankrupts' neeounts and
transactions. Althorigh the inquiry had proceeded to
a very great length, the facts' of the case to which he
(Mr. Kerslake) should call aftettion would befound in
the balance-sheet. The house of glreatfeiid arid Co.
appeared to have been established for a great ru'imiiier of
years. The bankrupt Laurence became a partner about
36 years ago. Mr. Streatfield died in 1845, and from
that time Mr. Laurence had been the senior partner in
the house. About 34 years ago the other member of
the house in London (Mr. Mortimore) joined the firm,
and he had continued a partner up to the present film.
The Liverpool firm was established in 1846, Mr. Schrader
being the resident partner, and in partnership with
Laurence and Mortimore. The bankrupts carried on
business as leather factors and hide factors, the establish-
ment in London being in St. Mary-axe. The legitimate
trade of the bankrupts was that of purchasing hides for
tanners and others on commission, and leather for
leather merchants and others, and to sell the leather
which was the produce of hides which were consigned to
them by the tanners, receiving commission upon those
sales. The bankrupts had departed from this legitimate
course of trading, and had brought themselves to that
court, inflicting serious injury upon their creditors.
'There was no doubt that up to a certain time the
bankrupts carried on a fair and prosperous trade. In
the city of London they were believed to be men of
the highest integrity. He (Mr. Kerslake) had some
difficulty in understanding why the bankrupts should'
have abandoned their legitimate business—whether
it was to be attributed to a desire for wealth on the
part of Mr. Laurence, or to the pench;znt of Mr. Morti-
more for buying land and houses. It was now clear,
however, from the accounts which were before the court
that -the bankrupts had to a large extent carried on
business as money lenders, lending money at interest.
The learned counsel then proceeded to refer at length to
the bankrupts' transactions. He stated that in one year
the bankrupts made profit (on paper) to the extent of
£40,000. The system of loans and advances had been
carried on to an enormous extent, and had been proceed-
ing for years ; but it was never known fully until July 2,
1860, when the house stopped payment. The bankruptcy
was duly announced in the commercial obituary, the
Gazette. It was thought the house rested on a rock, but it
was only raised upon sand, and when it fell eleven other
houses, built on a similar foundation, fell also. Those
eleven houses bad been supported by a system of loans
and renewals of bills originally given for goods
supplied. Perhaps the main charges were found in the
accounts from 1857 down the stoppage in 1860. The
assignees thought the bankrupts had traded recklessly;
that they had, for their own purposes, propped up houses
which but for them would have fallen ; ' that in order to
support this kind of trading, they sent bills into the
market as genuine trade bills, which were not genuine
trade bills. The system with tanners appeared to be this.
The tanners gave acceptances for hides, which accep-
tances on becoming due were renewed again and again,
Messrs. Laurence and Co. charging commission and
interest. This commission and interest was put upon
paper, in order to swell the so-called profits of Laurence
and Co. Laurence took no care to ascertain the solvency
of the houses with which he dealt, and, indeed, dealt
with those he knew to be insolvent. It seemed to be a
Mania with Laurence to sell goods on credit, and to go
on either renewing the bills, or making loans for the
purpose of taking them up. He had entirely dis-
regarded the rules of trade. In the case of Gibson,
the bankrupt began many years ago in Arbroath,
and not being successful there, became, through
Laurence, the owner of a yard at Godalming, in 1854.
Mr. Kerslake then explained the nature of the
transactions with Gibson, which had already 'appeared
in the evidence. Gibson had a capital of £4,000
or £5,000. It appeared that, upon the sale of the
tanyard, no question was asked by Laurence
as to his solvency or means. Gibson continued to
carry on the business until after Laurence's failure.
The business was at first profitable, until 1857, when
Gibson sustained a severe loss. Gibson accepted bills
for. goods supplied by Laurence and Co., and consigned
dressed leather to Laurence and Co., against which in
due course he drew bills. But this system was not con-
tinued. In 1858 a new mode was adopted. Gibson,
in 1855, felt that his capital was insufficient, in con-
sequence of a heavy loss which he had sustained. A
letter from Gibson to Laurence was then read, written
in 1855, in which he spoke of the losses by the Arbroath
concern £3,000, and a heavy loss by a person named
Brown, and a heavy but necessary expenditure. He said
that in such times he liked to shorten sail. Gibson said
from 1858, when goods were supplied acceptances were
given as before, but Laurence and Co. thenceforth made
loans to take them up, charging interest; and Laurence
and Co., as soon as Gibson sent them leather, gave a
cheque for the amount, and they also enabled Gibson
to meet the bills falling due. The acceptances
originally given by, Gibson in the first instance did
represent leather, but ultimately it would be hard to
say whether the smell of the tan-yard ever passed
over it at all. The acceptances were cut up into small
sums, both pence and halfpence, and at the end bear-
ing no resemblance to the bills which had been 'given
for the goods. The learned counsel referred to letters
in June, 1857, from Laurence and Mortimore to Gibson,
" The amount of his (Gibson's) bills bad become un-
wieldy ; the bills must not be hawked about, which
would damage the reputation of both houses." Remarks
had been made on the amount of Gibson's bills.
Gibson admitted that the system was perfectly irre-
gular. Laurence admitted that he made no inquiries
in reference to Gibson ; but he said that because he saw
the bankrupt Gibson in company with one William
Gibson, a man of wealth, he inferred that Gibson
had an interest in the concern—that , was a puerile
statement to which no man of sense could give credit.
Gibson's account began in 1557. A more reckless
system could not well be conceived ; there were,
indeed, many peculiarities in the dealings between
Gibson and Laurence, which proved that the latter was
thoroughly conversant with the actual position of Gib-
son's affairs. As to Mr. James Herbert Smith, he was
a tanner at Bermondsey. He had been unfortunate in
business; and of this Laurence was aware. Laurence
said he never knew James Herbert Smith was insol-
vent, and that he did not think he could lose anything
by him. In 1850, J. H. Smith sustained a loss by a
debt owing from Payne and Clark of between £30,000
and £40,000. In his difficulty, J. 11. Smith, who was
a customer of Laurence and Co., applied to Laurence.
Laurence found that, in addition to the debt owing
to them by J. H. Smith, which was enormous, J.
H. Smith was
.also, about to lose £40,000. Neverthe-
less, Laurence advanced to J. H. Smith the money to
help Payne and Clark, and keep himself going. Wm.
Smith also lost money by Payne and Clark, and he, too,
came for help to Laurence and Co. J. H. Smith got
deeper and deeper into difficulties. Laurence and Co.
knew this, yet the accommodation transactions went on
as before, and J. H. Smith's bills were thrown upon the
market as if I. 11. Smith was the most solvent man in
London. The only way J. H. Smith could possibly
hope to get out of this load of embarrassment was
through a proposition by which J. H. Smith was to
become a partner with Laurence and Co., and get one-
third of the profits. This was, however, only in conver-
sation, and did not amount to a negotiation. A mining
share, also, said to be worth £16,000, was to be
taken by Laurence and Co. in part payment of a debt
of £93,000. Laurence did not know where or what this
mine was—whether in Spaia or Portugal. The mine
share was bought by J. H. Smith for £5OO, and it
seemed to him (Mr. Karslake) a curious fiction in order
to prevent the loss to Laurence and Co. by J. H. Smith.
This was, of course, now gone by the bankruptcy of
J. H. Smith. Mr. Karslake then referred to the
state of the accounts, showing the enormous amount
of bill and discount transactions, renewals, &c., pass-
ing between Laurence and Co. and J. H. Smith,
whose acceptances amounted to £246,000 in 1858.
All these figures had already appeared in the evi-
dence. Enormous as were these transactions, it was
shown that J. H. Smith was insolvent, and that J. H.
Smith told Laurence that such was the fact. Neverthe-
less, Laurence kept him on his legs. The next example
of the manner in which business was transacted was shown
in the case of Mundy. With him, in many cases, the
accommodation was pure and simple. Mundy's brother
married Mortimore's sister, and the issue of the marriage
was to be a tanner. William Mundy, who had been a
farmer, was taken from the plough to be a dry nurse to
young Mundy. They were to set up in a tanyard at
Bermondsey, and had a capital of about £3,000 between
them. In 1856 Mundy found the capital at command
was insufficient to carry on the business. Laurence & Co.
made large advances, and acceptances were renewed to an
enormous amount. Mundy's position was well known to
Laurence, who, nevertheless, continued the system down
to the end, and not content with renewed acceptances,
accommodation bills were to be taken from Mundy to keep
up the credit of Laurence and Co. Mundy dealt with
other leather factors, and he admitted that the mode in
which Laurence and Co. made loans to him was irre-
gular. Counsel then referred to the accounts, showing
how large was the amount of paper between them, and
how comparatively small was the actual transactions in
leather. Mundy gave accommodation bills, and admit-
ted that he begged of Laurence to discontinue that
system, and to realise his own property. Smith,
Patient, and Co. commenced in 1844. Smith had £l,OOO,
capital lent by his father, and Patient £l,OOO, lent him
by Laurence and Co. They started in Bermondsey, and
Laurence and Co. found the stock. Smith, Patient,
and Co., were tried severely in the panic of 1857, but
Laurence and Co., supported them down to the bank-
ruptcy. Smith, Patient, and Co. applied for assistance
from time to time, by singular notes, of which .the