The Sun.
London, England, 1860-12-08 00:00:00

" I 0 TILING LIKE LEATHER."

Certainly, there is " nothing like leather," and if
anybody ever doubted the excellence of that won-
derful article, Messrs. Laurence, Mortimore, and
Co. have now fairly established it. Leather is
money, credit, commerce, profit, and wealth. It is
a foundation for any amount of trade, and will bear
the most marvellous superstructure. True, the
basis may be insecure, and the result somewhat pre-
carious. One of the adventurers in this famous
enterprise even fell into a transport of rage with
the article, and abused it in no measured terms.
" What a frightful thing this leather is !" said he.
"What a log it is about my neck !" But leather
did its work, nevertheless ; though, like all evil
spirits, only for a time. By the aid of leather, the
house or houses of Laurence and Co. had " trade
transactions" in the space of three years and a half
amounting to £5,377,750. The " profits" were
reckoned by scores of thousands per annum. It
was a prodigious business, so long as it lasted ; but
unluckily there came a day of account, and the
whole fabric collapsed like a paper edifice, as indeed
it was.

We have already told the story and explained
the case, in so far, at least, as it admits of explana-
tion to ordinary people. It is an instance of what
can be done by " accommodation bills," and the
adjourned examination of the bankrupts has
brought the phenomenon into even bolder relief
than before. Things went quite swimmingly this
week in Basinghall-street. "We are getting on
very well to-day," observed Mr. Linklater to an
important witness, who was making a clean breast
of it. "We improve upon acquaintance," replied
the witness, and proceeded incontinently, in a
frank and cheerful tone, to relate the " transac-
tions" of the house with a Mr. H. Smith. Mr.
Smith, in the course of three years and a half,
sent Laurence and Co. bills to the amount of
£836,000, of which sum Laurence and Co. provided
£706,000. The actual value of the goods bought
during that period was £20,000, so that, as a grand
moral deduction, it appeared that " bills to the
extent of a million and a half were used against a
trading of £120,000." That, as Mr. Linklater and
the deponent concurred in thinking, was " pretty
well," and the public, no doubt, will coincide in
the estimate. In fact, we can't beat that specimen.
It is now admitted that the " transaction" was not
quite in the usual way of the trade, and that Mr.
Laurence had done himself injustice when he
ranked such dealings with the common run of
things. For the rest, we simply learn from the
continued report how very much trade language
differs from ordinary language, and what very
great convertibility its terms possess. Profits are
not profits—in fact, they are often losses. Entries
do not mean what they express, but quite the con-
trary. ABisC D as often as not; while, as to
" capital," we really cannot say what in the leather
trade is the definition of that attractive term.
Perhaps the creditors of Laurence and Co.. will find
out by and by.
There ought to be a great moral attending this
astounding case, but it will be confined, we fear,
to a comparatively narrow circle. A mar need
really be a bill discounter or a " kite-flyer"
himself to comprehend all this mystery of
paper money. To common mortals the privilege
of " accommodation" practice appears almost as
valuable as the old seignorial right of coining. Two
" parties" together can turn any amount of paper
into gold with the assistance of a third. A whole-
sale house, a retail house, and a joint-stock bank
there is your recipe for raising the wind. Let A
" draw" upon B, let B " accept," and C " discount,"
and the thing is done. How little actual " value"
need enter into the transaction we have already
seen. Trade, or, at least, the leather trade, or
rather the trade of Laurence and Co., consists not
so much in buying and selling as in drawing and
accepting, and the secret of success lies in the art
of giving the bills a palatable and negotiable form,
in arranging them so as to go down in the discount
world. Here it was that Mr. Laurence's genius
shone forth so conspicuously. He it was who
managed the "pocket pistols" and directed the
service of that efficient artillery. We get a little
glimpse of the science as so dexterously practised.
The bills " never substantially agreed with the
amount of the transactions," and were " invariably
drawn for odd money." That is described as a great
stroke of art, and Mr. Laurence has the credit of
it. The " odd shillings and pence" were his "idea."
This is one consolatory inference to be drawn
from all these disclosures, and we do not see how
it is to be questioned. There must be an immense
amount of loose money in the country. The
" accommodation" system, with all its mysteries
and complications, its fictions and its dummies,
its imaginary values and its men of straw, is merely
a system for raising money, And money could not
be " raised" at such a rate, except from a most pro-
ductive deposit. Mr. Linklater hit the nail on
the head when he remarked that the real
" mine" of the bankrupts was in other people's
pockets represented by the joint-stock banks.
These numerous and flourishing institutions ex•
press simply the accumulation of capital in the
country. Capital increases with prodigious rapi-
dity, and, of course, is no capital at all,
ueless it can be productively emplayed. Accord-
ingly it is placed in the hands of bankers or
discounters, who lend it out on the security of
bills. Sometimes the lenders suffer, as they have
done notably in the case before us, but the fact is,
after all, that the trade in money, like all other
trades, requires customers to make it profitable,
and when the supplies approximates to the demand,
or, in other words, when the people who have
money to lend bear a considerable proportion
than before to the people who want to borrow,
borrowers come better off and lenders must
take easier terms. That is really the case in the
present day. It is a subject of regret beyond doubt,
that such trading as is exemplified in the reports
before us should receive encouragement, but to a
certain extent the result is due to the condition of
the money-market. We have not, indeed, conic to
the point when money will be looking after
men instead of men after money, but when it is
said that Banks are bidding against each other fur
custom I he whole truth of the matter is stated. The
Banks do bra against each other, and for this rea-
son—because establishments of that class have of
late years been multiplied, because they have all
got their profits to make, and because the laws
of competition apply to their trade as effectu-
ally as to all others. They contend for customers,
—that is to say, for bills, and the more these bills
are in request the less are the discounters likely to
be fastidious. There is a double emulation in the
matter. The Banks first bid against each other for
deposits, and offer terms more and more enticing
for the money with which they want to deal. Then
they bid against each other for custom, and, as
they have bought the money dearly by promising
a high interest to those who lent it to them, they
are necessarily compelled to sell it dearly by asking
a still higher interest from those to whom they
lend it out again. This may look like money being
dearer instead of cheaper, but the fact is what is
gained in interest is surrendered in security.
Money is nut so much procurable at a lower rate
as upon a slighter responsibility. It is not bor-
rowed at a smaller percentage, but by a more
numero-as and less trustworthy class of borrowers.
The effect of abundant capital is thus felt less
in the cheapness of cash than the facility of
credit. Sellers of money have become less dis-
criminating in the selection of customers to deal
with. They want high terms because they have
given high terms, and have only attracted the
savings of the public to their tills by covenanting
to pay a satisfactory interest. Before they can
pay this they must earn it themselves, and in
most cases they do so, but, when a commodity is
abundant, purchasers must needs gain at some
point of the bargain or other, and what they
gain here is in credit. Credit can now be obtained
by men who in former times would have applied
for it in vain. True, they pay highly for it, but
that is more agreeable than not getting it at all.
Customers are wanted to borrow money at a high