The Sun.
London, England, 1866-05-11 00:00:00

SPIRIT OF THE PUBLIC JOURNALS.

shock which agitated the city of
London yesterday afternoon will, before this even-
ing closes, be felt in the remotest corners of the king-
dom. The suspension of payments by such a firm as
Overend, Gurney, and Co. (Limited) is a national
calamity. The reputation of the establishment has
not been so great since its transformation from a
private business into a limited liability company as
it was formerly, yet the estimation with which it was
reegarded may be measured by the fact that £500,000
was given in August last for the goodwill of the
business, and that six months ago the shares in the
company were at nearly 10 premium, or, in other
words, purchasers then believed the proper value of
the goodwill to be a million more than was given for
it. The names of Overend and Gurney were a house-
hold word. The "corner house" was one of the land-
marks of the City. Private bankers resorted to the
firm with their spare capital, and either left it with
them at the current rate of interest, or rediscounted
the bills which it was the direct business of the part-
nership to discount for commercial men. Possessed
in this way of unlimited credit, the fortunes made by
successive partners were colossal, and as one after
another of them died er withdrew in the course of
years, the shares and capital of the dead or outgoing
partners were valued at fabulous sums. This was in
the last generation, when Overend, Gurney, and Co.
could rightly claim to be the greatest instrument of
credit in the kingdom. Younger men succeeded to
the places, not, as it would seem, to the prudence, of
their ancestors; but even now, in spite of diminished
reputation and that loss of credit which almost al-
ways accompanies a conversion into a limited liabi-
lity company, it appears that the public has trusted
Overend, Gurney, and Co. (Limited) to the extent of
ten millions. The liability to depositors who hold bills
as security is six millions, and three millions and a
half are due to uncovered depositors. The paid-up
capital of the company is £1,500,000, but £500,000 of
this represents the purchase-money of the goodwill,
and the rest was all that was employed in the busi-
ness. It follows that the balance-sheet will show
eleven millions to be accounted for, and creditors
will naturally be anxious to know what will appear
on the other side. The price of shares last night
indicated a belief in the City of a probable surplus,
but it need scarcely be said that at such a crisis the
wildest guesses are always put in circulation, and
prices oscillate with a rapidity and to an extent
which will not allow us to put any confidence in
the accuracy of the opinion they may indicate at any
particular moment. It would be idle to deny that
the stoppage of such a firm as that of Overend,
Gurney, and Co. will produce general and wide-
spread inconvenience. The Company was prac-
tically the banker of the merchants who discounted
their bills at its establishment, and the annoyance
caused by the sudden interruption of a great busi-
ness—to put it no higher—must be extreme. There
is no reason, however, why the panic which has be-
set the Stock Market during the present week
should be intensified by this event, still less would it
justify a general want of confidence in all depart-
ments of commerce. We know that it is useless to
remonstrate with persons possessed of an unreason-
ing panic, since, as Sir Isaac Newton said of the
South Sea Bubble, it is impossible to measure the
limits of the madness of a people. And the
passion of fear is even more powerful than that
of hope. There are men who can resist
the seductions of promised profits and high
premiums, but when depositors think that a
stoppage is imminent, each rushes to secure his
deposit in time, caring little for the consequences.
It is through such a fear as this that Overend, Gur-
ney, and Co., have fallen ; the losses of the com-
pany through the frauds of Pinto, Perez, and Co.,
and the lowering prospects of the Continent, de-
pressed the value of their shares, and when the
shares fell the depositors became alarmed and with-
drew their deposits. If a panic were absolutely mea-
sureless, no business whatever could withstand the
strain upon it. A simultaneous satisfaction of all
demands is even theoretically impossible. There is,
however, practically a point at which fear itself be-
comes exhausted, and prudent bankers and discount
agents know by long experience the limits within
Which they may safely reinvest the moneys intrusted
to them, and are, therefore, always prepared for an
emergency. There is reason to believe that these
sound principles are now as ever generally acted
upon, and that the suspension of 0 verend, Gurney,
and Co. is caused by an exceptional departure from
them. Overend, Gurney, and Co. (Limited) repre-
sented something more than the transformation of
a private firm into a public company ; it was the
transformation also of a purely discount business
into a " finance" business. The money of depositors
was no longer employed in discounting commercial
paper, and commercial paper only ; it was locked
up in investments which might possibly prove re-
munerative after a due interval, but which did not
possess the convertibility essential in the securities
of a borrower and lender of money. No margin was
left for losses or for a withdrawal of confidence on
the part of creditors, and the first severe run on the
resources of the company has caused it to suspend
payment. If we are right in believing that the sus-
pension of Overend, Gurney, and Co. is due to faults
from which all but the most speculative of financial
companies are free, the present state of panic may
be left to subside as it must do naturally. At the
same time there is a danger that the excitement of
the money market yesterday afternoon may be in-
creased to-day. Not long ago men trusted everybody
—it would almost seem that now they will trust
nobody. An extraordinary crisis requires an extra-
ordinary remedy, though we hesitate to believe that
a run on finance companies is of itself sufficient to
justify any interference with the ordinary course of
trade. The depositors in them may be alarmed, and
those who are ordinarily accommodated by such
companies may be embarrassed by a curtailment of
credit; but this is the inevitable and proper conse-
quence of an unsound course of business and of the
abuse of credit. Whether the sudden stoppage of
such a discount business as that of Overend, Gur-
ney, and Co. would not justify and even require
some vigorous measure towards supplying its place,
admits, however, of question. A great machinery is
suddenly thrown out of gear, and merchants and
traders find their business impeded by an occurrence
for which they are in no respect responsible. Other
companies and partnerships now in existence will
no doubt do their best to supply the needs of coin-
-merce, and new firms may be expected to start up
competing for the business thus suspended. But
existing companies already find room for the em-
ployment of all their capital, and new companies
require time for their development. It may, there-
fore, be plausibly urged that the discount business
of the Bank of England should be enlarged so as to
satisfy the pressing wants of the hour, and that the
capital necessary for such enlargement should be
raised, under the sanction of the Executive Govern-
ment, by such means as may appear best fitted for a
purpose purely temporary. Such a proposal can only
be supported on the supposition that acceptances of
persons of unquestionable responsibility cannot be
discounted solely in consequence of the pressure
upon the market occasioned by the stop-
page of the greatest of the discount houses.
Whether this is the case now can only be deter-
mined by men who possess such informa-
tion and experience as the Governors of the
Bank of England. Application was made to the
Bank of England to assist Overend, Gurney, and
Co., but the Governors, it is said, felt that they
could not help one " financing " business without
being prepared to help all. Perhaps they also felt
that they ought not to interfere to bolster up an
unsound business. If that is still their opinion, we
may be confident that things should be left to work
their own cure ' • but if the Governor and Deputy-
Governor were to represent to the Chancellor of the
Exchequer that the ordinary course of trade was en-
dangered by a stoppage the ill effects of which they
could remove if their powers were temporarily ex-
tended, there can be as little doubt that their request
would be immediately and properly granted.
POST.—The Chancellor of the Exchequer, with
his usual financial ingenuity, has devised a bill for
the Abolition of Compulsory Church Rates, and
the Rouse of Commons has giden it as cordial a
welcome as it was possible to show towards. a bill
whose terms were not yet before it. Few persons
will be sorry if it should turn out that this bill
really meets the case, and puts an end to a most
unpleasant topic of annual discussion. But we are
not sanguine. As far as we can understand the bill
it seems to be beset with difficulties of a practical
nature, while by many it will be considered incor-
rigibly wrong in principle. Of course it is founded
on a spirit of compromise—that is to say, it pro-
ceeds upon the spirit of twenty years ago. There
was a time when Dissenters were ready for a com-
promise, but Churchmen would not hear of it.
Then Dissenters went farther, and insisted on total
and unconditional abolition. At this point Church-
men offered a compromise which Dissenters in their
turn refused. Then the war became internecine,
each party raised the banner of no surrender, and
it is only fair to add that for the last three years
victory has inclined to the Church side. In the
new Parliament the contest is renewed, but the no-
surrender banner is no longer seen. If it be not
dropped, it is at least kept out of sight pending the
present armistice and negotiations with a view to
peace. There can be no doubt that if a practical
compromise can be come to it ought to be accepted
on both sides. The extreme men on both sides
will naturally go in for no surrender, but that is
a course which will not have many admirers.
Regarded et priori, nothing could be fairer than
the Churchman's case.. Church rates are a charge
upon property for the maintenance of an institution
in which every parishioner has a common law rig • ht

_
It cannot be unfair that all should
to wards what exists for the good of all. This el:
tion we hold to be absolutely impreg,nable.
justly or unjustly, there is a violent antipathy.
this charge, and Dissenters say that it is a hoer!.
on their consciences. Morally, Dissenters have ha"
case. They hold or occupy their houses subjec.t,tot.
this rate, and conscience has nothing to do
pay their qttota
The rate, as is well known, does not go to suPPebii
a religion as such, but to sustain the machine/3'os
which all parishioners, without distinction, may
the means of baptism, marriage ceremony, burial,
and other occasional religious offices, besides the:T.
portunity of public worship if they choose to 11 2„a
In all this there can be clearly no case of conseleucl;
whatever. No theology is involved. The char
.tro
rate is only a common impost levied to sostal the
common advantage. But, groundless as „lie
grievance of the Dissenter is, it is still worth. 71
for the supporters of the Church to see if to
cannot make some sacrifice to take away, evellese.
semblance of it. This, we think, there s tion iO,
ral disposition to do, and the only quesne's
whether it can be accomplished by Mr. was how
bill. We will admit the principle, and examine uits
it will work. The first clause takes church rates
..1.
Colllr.,
out of all the law courts, i.e., it aboliche%
altogeure'?
sion.
What does Mr. Gladstone give us
This is equivalent to abolition
He tells us that the vestry may make a rat:'who
that nobody is to be obliged to pay it. rasa
dog
object to pay it are simply disqualified from
haeough
as churchwardens for ecclesiastical purposes, t
they may discharge other parochial duties 121!
devolving upon those officers. This is the 070110,
counterpoise or set-off against the abolition of
woe
pulsion. It creates a disability. What is that it is
of thatxreation ? We hesitate not to say tua were
absolutely nil. If the office of churchwardeewiti-
one of honour and emolument so as to he a 'the
mate object of ambition amongst parishioneNie,
as a substit
but
disability might be serious. It is an office of treuiveli
worry, loss, and no thanks. So unwilling e're,,e bag
in some parishes to be churchwardens, that a Toted,
been instituted against those who, being e ;-
refuse to act. We know a parish where ever/ .0
son refusing is expected to pay a fine of 12°,18000
serves to show how little anxiety any sens',6,oThae
has to be a churchwarden. Should this bill: cope
law, nothing can be simpler than the way Z. to
from this troublesome office. A man .1100.;)1bs ati
refuse to pay the voluntary rate, and he,„WlThisd-
once freed from all liability to serve. -alr'utirch-
stone must have thought that the office of Cl' Fo.
warden was like that of the Chancellor of °end
chequer—an object of life-long ambiti°ll,,,L:fsets
thing to make sacrifices for. But, reallY% the
are all the other way, and the penall t pa'
shape of disability which the recalcitran 1, no
rishioners would have to pay would be airaPei 41)0
penalty whatever to any one who did not eie: being
honour of being parish churchwarden. ;Iv this
certain, then, that great numbers would referode
voluntary rate, how would the deficieneY ba of
up ? It is simpler to take a case. In the Irteyisy
A the actual expenses for which a church mould he
now be levied amount to £lOO a year, and 1-00 the
covered by a rate of threepence in the pent t it ja
whole rateable property of the parish. The
known beforehand that some will not Palh'ighert
rate must therefore be laid proportionately ip Ole
say fourpence. Now, the first thing aidellY4., bear
supposition is that the willing horses have Lea to
all the burden, and the Church, which ja
every man, and is for the good of all, is to
whole
tamed by only a portion, instead of by the
cone
the community. But there is a further in 1,100,
nience in the working. What is to be der not of
the rate being levied, and only a fractional, rt., cer;
it having been responded to, there is—as t'ecocit,'
tainly would be in many cases—a great to eat
"
Clearly the only fair way would be to return, iioro
person the amount paid by him, and start ade ore
to raise the required sum by some other aft, would
popular process. Thus this voluntary ra:old ""
soon die a natural death, and the Church "1,-sre loll,ed
left for all practical purposes precisely w--0
would be left by the unconditional abolitie
of Mr. Hardcastle or Sir John TrelawaPractiee
Gladstone's bill looks fairer in theory. itill3t IVie
it would bring about exactly the same resa.l;
fear that this would be fatal to the success of itopra"
For many who are not unwilling to join in Cl;oitge
mise, if a good one could be devised,
Will
before they support one which promises to aree` $o
oolf
indifferently as the well-intended Ineas
before the house.