The Sun.
London, England, 1869-01-29 00:00:00

THE SUN, _LONDON, FRIDAY EVENING, JANUARY 29, 1t69

THEATRE-ROYAL, HAY3IARKET.

THIS EVENING, INTRIGUE. Messrs. Howe, Kendal, and
Miss F. Wright. Afier which, HOME: Messrs. Sothern, Chip-
pendale, &c. ; Mesdames Cavendish, Burke, &c. Concluding
with THE FRIGHTFUL HAIR: Messrs. Compton, Kendal,
Buckstone, jun., Weathersby, &c. ; Mesdames Wright, Burke,
Gwynn, &a Commence at 7.

d 7
; 4th
H.
-1-*/ ("VII" " °NS'
11
► '11.641‘-

LONDON, FRIDAY, JAN. 29, 1869.

Great as was the excitement with which the an-
nouncement of the Lord Mayor's decision was on
Wednesday awaited in the Guildhall, its substance
could have surprised few. The preliminary investi-
gation of the charges brought against the directors
of OVEREND and GURNEY had left little room for
doubt that a further examination was necessary. The
public have followed the whole story with such keen
and unflagging attention, their interest in this:com-
mercial tragedy has been so vivid and so personal,
that the facts were fully comprehended, and the part
played by each of the principal actors in the drama
was pretty accurately known. So far as one at least
of these chief figures was concerned the estimate was
not a flattering one ; and although Mr. EDWARDS
was not implicated in the charge, the crowds who
thronged the Guildhall manifested unmistakably
their displeasure at his revelations. Indeed, the
general excitement was so great that it needed all
the authority of the Lord Mayor to restrain its mani-
festations. When the decision was announced and
all the six defendants were committed for trial, the
cheers could riot be repressed, and the crowds without
who had been unable to obtain admission caught up
the echo. And yet the unfortunate position of men of
high standing and long established reputation could
not fail to excite sympathy, and tokens of such a
sentiment were not wanting, even on the Bench
itself. But it was felt that in the interests of Eng-
lish honour such an inquiry must not be hastily
terminated, and it was imperative that a charge
so seriously implicating a firm of such magnitude
should receive a thorough investigation. The collapse
of OVEREND, GURNEY, and Co. marked a crisis in
our commercial history. Mr. RF.NNIE, in his state-
ment on Wednesday, dwelt strongly on the fearful
depreciation in all property which followed the panic
of 1866, but the fall of the great house had no little
share in producing that depreciation. Few of us
have been altogether unaffected by the memorable
" Black Friday," and unhappily with a large number
of persons the effects are not likely to be removed. The
loss of £3,000,000, even though the loss be widely
spread, is no slight blow to a community, and the
shock to credit was even a greater misfortune than
the financial losses. The case of OVEREND and GUR-
NEY, though involving larger interests, has not unfor-
tunately been the only instance in which confidence
has been misplaced. It would seem as though the
standard of our English commercial morality were no
longer so high as it once was ; as if expediency had
superseded principle, and the successful pretence of a
flourishing business was held to be as creditable as
undoubted solvency. For the last two or three years
the financial affairs of the country have been in an
unsettled and unsatisfactory condition. The disturbed
state of continental politics, and the military prepa-
rations of the principal European nations, have un-
questionably produced a degree of uneasiness that is
very difficult to remove. Trade of all kinds has
suffered ; and the excessive speculation which was
previously going on naturally produced a very start-
ling and sudden revulsion. Wise men could have fore-
told it from afar, but instead of preparing for a storm
like prudent voyagers, the mercantile community
went on recklessly. The experience of this genera-
tion can recall many such a crisis, but each one
as it comes is more and more to be de-
plored. 1 he time appears to have gone by in
which an Englishman's word was his bond, and
lapses from the rigid rule not only of straight-
forward honesty but of high-minded honour were in-
cidents few and far between. It is not often indeed
that we see gentlemen of the social and commercial
position of the defendants in the GURNEY case ar-
raigned upon a criminal charge, but the instances of
less eminent men implicated iu the formation of
bubble companies, in the misstatement of accounts,
and in other transactions of a more or leis question-
able nature have become so common that they cease
to be a matter of surprise. In many of these
cases the culprits may have deluded themselves
temporary. I
into the belief that their embarrassments were only
cies e possibleing s
0 f to
OVEREND,
accept t that
GURNEY,
a n interpreta-
tiondofthe proceedings
the accused have boldly put forward that defence.
But it is time, and more than time, that these pre-
tences should be put an end to, and that the
make-believe system of solvency should be abandoned.
It will be long before the old feeling of confi-
dence can be restored, and with many of the share-
holders of OVEREND and GURNRY the memories of
Black Friday will, we fear, cast a shadow over their
whole lives. L_t us hole that the terrible lesson
conveyed in this gainful story will, at least secure a
useful purpose. We cannot compel Continental
Sovereigns to disband their armies and reduce their
military estimates ; we cannot cut the knot of diplo-
matic entanglements, nor reconcile the conflicting in-
terests of aggressive ambition with nations seeking
for a popular Government. The convulsions of the
moral world will not always be controlled any more
than the tempest, the hurricane, or the earthquake.
We can, however, by the Dapautellance of strict

and watchful probity, by the resolute refusal
to substitute what is expedient for what
is honest, and by the determination to preserve the
standard of commercial integrity at its former height
reduce the vicissitudes attending our complex mer-
cantile system to a minimum of risk. Had the spirit
of speculation, of reckless confidence, and self-de-
lusion been less rife of late years, it is probable that
the house of OVEREND and GURNEY would not have
been so infatuated as to dream of the recovery of their
fast decaying trade. The commercial world would then
have been spared the painful spectacle now presented
by men once high in position and in repute, whose
misfortunes,while they excite universal commiseration,
cannot. blind the public sense of justice to the real
nature of those specious transactions which have re-
duced hundreds from affluence to poverty, but have
left their chief promoters poorer still.

(FROM A CORRESPONDENT)

Tlr E result of the charge of conspiracy against the
dirctors of OVEItEND, GURNEY, and Co. may be sur-
prising to many persons, but it will be regretted by
few. Malpractices in commercial affairs have been
so common, and have been carried on with such im-
punity, that the outside world despaired of seeing
this worst species of dishonesty brought within the
reach of the law. City men, it is notorious, treated
Dr. Tsrom's prosecution with contempt ; it was in-
credible that a system which had flourished so
triumphantly could ever reach a point when the
nation would demand its right, and slumbering
justice would awake to the repression of an old crime
in a new guise. But the tide has turned at last.
The civic authorities have decided that the charge
against the directors of the great banking company
is so far supported as to need trial before an ordinary
judicature. In other words, the general belief that
the means adopted by the directors to form a com-
pany on the ruins of the old firm was a crime has
been confirmed by the London magistrates. It now
remains to be seen whether the crime is one of which
the law can take cognisance.
This, indeed, is all that remains to be done.
Whether this offence of modern growth will escape
through some loophole in the law or not, there can-
not be the slightest doubt that Dr. THOM'S allegations
are proved—that the offences of which he complains
have been committed. Before the trial commenced
the nature of the case was by no means a mystery.
After the first day or two it was clear that
the investigation at least was justified, and
now, in spite of the magnitude of the figures and
the complexity of the transactions, it requires no
great examination to perceive that the directors
attempted to induce capitalists to invest money on
the faith of a prospectus which, not to mince
matters, was utterly false. The company, which was
formed in 1865, was formed to purchase and carry
on a business which was represented to be valuable,
but which was really much more than worthless.
For years previously the old firm of OVEREND
and GURNEY had been losing largely, owed millions,
and had nothing to set against the liabilities
but assets of the kind which the director of another
company has expressively called " stuff." When the
company was formed the total liabilities of the firm
amounted to twenty-four and a half millions sterling,
against which they had assets which, viewed in a very
favourable light, might be set down as worth twenty-
one millions, leaving a clear deficiency of three
millions and a half. The existence of such
insolvency was known, pleaded the indictment, to
all the directors. It was known, in part at least,
to others ; but the general public believed
in the firm as in the Bank of England, and the defi-
ciency of three millions was not mentioned in the
prospectus. For some years the firm had been losing
at the rate of £600,000 per year. This fact, also,
did not find its way into the prospectus. At the time
of forming the company the amount owing by the
firm to unsecured creditors was £5,147,000, to meet
which there was the handsome, but inadequate, avail-
able balance of £120,000. But worse remains. The
firm had owing to them about four millions, wholly
made up of hopeless debts due from the bankrupt or
on the point of bankruptcy. This was handed over
to the company as an asset worth its full nominal
value. It was arranged by a deed that certain
accounts, including the greater part of these bad
ones, should not be transferred to the
new company ; but a second deed was executed
declaring that all this " stuff " was to be
taken as an equivalent for money to that amount
due to the company from the firm. The first deed
was open to the shareholders ; the second, which of
itself would have dissipated all the pleasing effect of
the prospectus, passed only between the members of
the old firm and the directors. These facts are suffi-
cient, without mentioning many other details
strengthening the case of the prosecution. Such is
the outline of a business for the " goodwill " of
which half a million was asked and given.
No one reading the prospectus and comparing it
with even these few salient facts could have the
slightest doubt as to the guilt of the transaction.
The double-deed arrangement contains in itself all
the elements necessary to substantiate a moral
charge of conspiracy. But the second deed was only
one of many expedients by which the directors endea-
voured to persuade the public that the great commer-
cial ruin was still a stable structure. If the defence
relied upon controverting the old maxim, "Suppressio
iero suggestiofalsi," it could avail nothing. Not only
was the truth kept back, but falsehood was preferred
in its stead, and supported afterwards by repeated
statements which were untrue. One of the counsel
for the defendants was in fact constrained to commit
moral suicide at a very early stage of the proceedings.
It was admitted that a vast amount was owing upon
loan ; " but," suggested Serjeallt BALLANTINE "the
only way the defendants could be implicated would be to
shew that the money had been lent without security,
or upon security so obviously bad that it was equiva-
lent to none at all." Now, it is obvious that this is
not a fair statement. It mattered not what security
the firm originally had : the defendants were evi-
dently implicated if a security which was at first good
became valueless, but was yet represented as a sound
asset. Even taking, however, the ground of the
counsel's own choosing, the case is equally proved. A Mr.
Kocu owed £335,000, and against that sum all the
securities that could be found amounted to £103,450,
and this amount was entirely represented by Irish
and Welsh railway bonds—hardly saleable, and
worth at most £25,000. The Millwall Iron Works
were down for £566,000, of which it was announced,
amid laughter, that £7 10s. had been realised, though,
certainly, there was the " property" to sell. Then
the Atlantic and Royal Mail Company owed
£848,000, of which the liquidator expects £B,OOO.
It is quite unnecessary to go
into details of small
losses, such, for instance, as the trifle of £40,000
sunk in the East India and London Shipping Com-
pany. The guilt of the directors consisted in repre-
senting these sums as good assets at a time
when they were worthless ; but it is clear that
they were never worth much. The investments
of the old firm were so utterly unreasonable that
the estimates of liquidators have continually
sunk, simply because people could not, at
first, persuade themselves to rate them at
their proper worth. The folly was such as
to be inconceivable. The argument for the de-
fence on Saturday was simply a confession, with an
attempt to shift the blame. There was no effort
made to deny the transactions, or that they were not
blameworthy. The liquidators have announced that
they will sue the directors for compensation to the
shareholders, after the recent example in France ;
and there is reason to believe that they can be
made to pay ; but, unfortunately, they own
nothing which can weigh against the millions
which have been wrung from the public. The ex-
posure of this history and the result of this
trial are of far greater value. They point to
an awakening of the public mind which must
speedily procure provision for this crime,
if none exist at present. Immunity has
hitherto been construed ari innocence, The

insolvency of OVEREND, GURNEY, and Co. was known
in the City long before the company was formed; the
limited liability transaction was winked at—perhaps
applauded —by commercial men ; and we have
reason to know that many intending shareholders
received a timely " tip " from City friends,
and refused to take up shares which had been applied
for. The worst feature of these offences is the semi-
approbation with which they have been regarded.
The immunity will cease for the future. If there is
no law to meet these cases, the deficiency will
speedily be supplied.

C-72;t4A11,9
—Le*l
, •
61)

HER MAJESTY.

OSBORNE, Jan. 28.

The Queen, accompanied by Princess Beatrice,
drove out yesterday afternoon, attended by the
Dowager Duchess of Athole.
Her Majcsty drove out this morning, accompa-
nied by Princess Beatrice.
Prince Leopold walked in the grounds.
General and Lady Alice Peel had the honour of
dining with the Queen and the Royal Family
yesterday.

LATEST INTELL LGENOE.

(REUTEn's TELEGRAMS.)

AUSTRIA.

VIENNA, Jan. 29.

The Presse of to-day, confirming the despatch
by the Greek Government to the protecting Powers,
says that this memoranduum repeats the views ex-
pressed in the note of M. Delyaunis to Photades
Bey, and adds a sharp complaint on the ordered
expulsion of Greek subjects from Turkey, and on
the exclusion of the Greek merchant vessels from
Turkish ports, stating that such an expulsion in
time of peace is unheard of, and is at variance
with modern international law.

THE BOMBAY MAIL.
MARSEILES, Jan. 29.

The Peninsular and Oriental Company's steamer
Bangalore, from Alexandria, arrived here at five
o'clock this morning. The mails leave for London
by the 11.30 train.

CALCUTTA AND AUSTRALIAN MAILS.
SOUTHAMPTON, Jan. 29.
The steamer Nyanza,with the above mails, passed
the Needles at 9.20 a.m. to-day.
OUTWARD BOMBAY MAIL.
MALTA, Jan. 28.

The Peninsular and Oriental Company's steamer
Ceylon, from Southampton on the 16th inst., ar-
rived here on the 25th, at eight in the morning, and
left at four in the afternoon, for Alexandria.