The Sun.
London, England, 1866-01-08 00:00:00

SPIRIT OP THE PUBLIC JOURNALS.

The "SATURDAY REVI-EIV" ON SPECULATION IN
1865.—That the company speculation of the year
has been on a scale which cannot be permanently
maintained without bringing disaster in its train
is unfortunately too certain ; but it is very diffi-
cult to obtain any exact statistics of the real
extent of the operations carried on. The ex-
haustive list furnished to the Times by Messrs.
Spackman and Sons is no doubt accurate enough,
but it includes in the same category companies
that get their capital and companies that never
place a share, and exhibits totals which, if they
all represented actual financial operations, would
justify the utmost alarm. The capital asked for
by the new companies of the past year's growth
is upwards of £75,000,000, with powers to raise
£30,000,000 more when it may be found desirable.
The average of the two previous years was even
higher, the aggregate authorised capital of the three
years being the enormous sum of £362,000,000.
But the allowances to be made considerably dimi-
nish the real effect of these grandly conceived en-
terprises. In the first place, many banking, insu-
rance, and other companies have a nominal capital
which is not meant to be called up, except in the
event of unforeseen disaster. Then there are
many other companies which call up very
little of their capital, not because they do
not want it, but because it is hopeless to make
a call ; and in every case the calls are spread
over a long period, the first deposit being little more
than 10 or 12 per cent. And, lastly, there is the
great shoal of windbag speculations, which never
manage to place their shares, and entail no losses
except upon the over-sanguine promoters, whom no
one need pity. Unluckily, the worst companies do
not always fail to win subscribers ; butit is not im-
probable that, if all the worthless schemes could be
weeded out, the remainder would not be too much

'or the financial strength of the country. As a
matter of fact, however, the load is rapidly in-
creasing to apoint which threatens the gravestfinan-
cial dangers ; and prudent men are looking to all
quarters in search of some means of checking the
evil before it is too late. In a former article we ex-
pressed ourselves strongly against the notion, which
has been rather inconsiderately taken up, that the evil
can be best checked by repressive legislation. Though
we see not the slightest reason to qualify our opinions
in this respect, we should be sorry to be supposed to
underrate the extent of the mischief which is now
going on. Everything points to the possibility of
hard times (financially speaking) within the next
12 months ; and whenever the pinch may come, the
drain occasioned by the multitude of mushroom
companies will tell heavily in the scale. Even if
easy-going prosperity were certain to be the rule
for ever, there are other results of the- game of
company-making which are not less deplor-
able. The whole system, as it now exists, is
perpetuallywasting away not only the resources,but,
what is much worse, the very fibre and morale of
commerce. Why, then, it may be asked, oppose
the policy of those who would put an end to the
practice altogether by repealing all the facilities
which the law at present affords ? Simply because
the system as it exists is not what it might be, and
we believe will be, when a little experience has
tempered the enthusiasm in favour of limited lia-
bility, to which so many fragile schemes owe their
existence. In itself, the power of creating corporate
companies is of enormous value. We need look no
further for evidence of this fact than the rapid
transformation which is going on of the best of the
old private banks into limited companies. That a
movement of this kind should give rise to an abund-
ance of counterfeit projects is not very surprising,
and the one consideration which should be present
to the minds of all who interest themselves in the
future of commerce is, how the benefits of this new
phase of industry may be secured without the ac-
companying nuisance of a shoal of bubble specula-
tions. One part of the evil we have already
endeavoured to trace to its origin, and it was not
hard to find it in the well-organised trade of
" promotion," as carried on by individuals,
and still more perniciously by financial com-
panies. Nor was the remedy for much of the ill
consequences at present experienced at all more dif-
ficult to discover. Half at least of the facilities
for the concoction of deceptive companies are due
to artificial causes, which it is in the power of those
who control this department of traffic to remove.
But this is not the most serious aspect of the mat-
ter. Losses by shareholders who gamble in shares
of new companies are injurious enough, but a more
legitimate object of concern is the damage so often
inflicted on straightforward traders who have been
tempted, by an illusory show of activity and success,
to deal with insolvent companies on the same terms
as with ordinary firms. We do not pretend to have
the same pity for a victimised shareholder as for a
plundered tradesman. If the purchaser of scrip
finds, as he almost always does, that premiums turn
into discounts before he can realise and get out of
his venture, he has no one but himself to blame. It
is not even certain that the waste of national wealth
is at all in proportion to the sufferings of indivi-
duals. If a few hundred men lose, by the depre-
ciation of their shares, some fifty or a hundred
pounds a piece or more, for the sole benefit of
a knot of ingenious projectors, the circumstance
may be regretted from the point of view of
poetical justice ; but the operation is, after
all, only a transfer of capital, and it is by no
means certain that a man who may use the
sharpest practice in the game of speculation will
not invest his winnings with as much advantage to
the public as if the money had been left in the
pockets of his dunes. The case is very different
when a company breaks and leaves its creditors
crippled or bankrupt in consequence. A rotten firm
is no doubt as bad as a bubble company, and the
half-forgotten revelations of the last panic proved
that trading without capital or honesty was not con-
fined to limited companies. No corporate body has
yet produced a parallel to the great leather frauds,
and the worst company failures have been in con-
cerns which were sustained by the unlimited liability
of every shareholder. The only protection against
the recurrence of such disasters is, of course, pru-
dence in giving credit to doubtful firms, whether of
the partnership or the company kind. It is true that
this is a remedy which is more easily prescribed in
general terms than followed in particular cases.
Some amount of trusting faith is soon found to be
essential by every one who engages in commerce in
any shape, but the specially alarming feature of the
present time is the utter reckless confidence with
which credit seems to be given to the hollowest com-
panies. A reaction will assuredly come, when per-
haps an excessive suspicion will take the place of
unreasoning trust ; but it would be better that the
tide should turn gently now than that the flood
should be suddenly checked hereafter by universal
panic.
" THE SPECTATOR" ON MR. GLADSTONE AS LEADER
IN THE HOUSE OF COMMONS.— Mr. Bright's speech
at Rochdale concludes with a somewhat curious
passage, in which he expresseshis eager desire that
Lord Russell were not in the Lords, and could still
lead the House of Commons, and expresses it in a
way which indicates very distinctly indeed, not
exactly what he thinks, but what he does not think,
of the statesman to whom that office now falls. " I
lament deeply," he says, " that Lord Russell is not
at this moment a member of the House of Com-
mons •t? and further on he adds, in regard to reform,
" much depends upon him, and I am not sure with
regard to the measure that is • coming that every-
thing does not depend upon him." Clearly Mr.
Bright places no confidence at all in Mr. Gladstone.
And what of Mr. Gladstone himself—how does he
look upon the task before him? He has told us by
the motto to his Lancashire speeches that he partly
realises the greatness of the change which his pros-
pects have undergone, that " he'll shape his old
course in a country new." He has, like the Earl
of Kent, in " King Lear," already experienced in-
gratitude where he should least have found it--
in the University of Oxford—but has he not
new trials of the same kind still before him,
and is not Mr. Bright already by antici-
pation turning him from his door ? We know no
statesman whom we admire so much, and from
whom we hope for so much, as Mr. Gladstone. But
we fear that the same motto which he has chosen as
a delicate reproach to Oxford may be but too appli-
cable to the case of other desertions of Mr. Glad-
stone' in this ungrateful world—that in the " new
country" in which •he has now to travel, he will
often " weary with the greatness of his way" and
with the pangs incident to a nature in many respects
too sensitive for the work before him. Undoubtedly
in the task of leading the House of Commons Mr.
Gladstone has a kind of duty before him to which
every statesman would look forward with peculiar
anxiety, and that in great measure for the very rea-
sons for which we all admire him. For Mr. Glad-
stone is in many respects the first leader of thnmo-
dern generation of politicians—the politicians who
do not look at politics as a game of chess, but as a