6
FINANCE, FRAUDS, AND FAILURES.
K5T THE AUTHOR OF "THE BUBBLE i OP
FINANCE."
Amount ordinary Englishmen, how many
were thcie Ave jearu apo who attached any ietl
nite meHiitiif? to the wurd "finance," or in cn
veisation ever used the verb "to finance f" We
bad all read of the Minister of Finance in conti
nental countries, and shortly alter the (Treat
mutiny, lirttlsh hid a was not a little pu.zlod at
hcariint that tlie late Mr. Wilson had been
appointed "Finance Minister" tor our Eastern
Empire. The oilier1 of the former we kmo was
anaioeous to that of our own Chancellor of the
Exchequer; and we lamented the death of
the latu r, who ro quickly met in the Eiat
the late 01 ci'vcn out ol every ten European?
who vo late in life to that land ot tne sun.
But the luhetanilve 'finance'' wa rarely, ami
the vei"b "to nnance" wver, made use of. Not
even within the precincts ot the cltf did any
dihd Of business apply to the worlc of banklu!,
(lipcoun'iing, lendinp.'or borrolnff, the terms,
"Finance," or "to Finance." There were then,
as now, tnnkoru iu Lombard street, and lor
thoe who had eootl security to ollbr, it was
never Uilliciilt to obtain aid in pecuniary diffi
culty. II a merchant wanted money, b .' used to
take to his hankers the b.lls of cxcatinne which
he held, and which had been uccept-d by firms
Ol rexpeetab lit.V iu conscqueuco of merchandise
fold or conveyed to their care for sale, and tuee
document, It deemed "itood," ihe banker dis
counted at the current ratcot the dav. Thus the
merchant obtained money he required, white, in
return for what he hid disbursed, tha banker
held leea! available security, for the payment of
which two, three, or mor- firms were responsible,
and tor which, if he wished to exchange fjr cur
rent money, he, the banker, could always do so by
what is CHlled re-discounting. la the sane
way country gentleman, lundel proprietors,
householders, or others who ha I security to
ofler, could always got advances at a reasonable
rate of Interest, by depos tlnc with their
bankers equivalent security for the sum they
required.
Nor was it only those who had substantial
eecurities to pluc'e at their bankers' that could
Main advancs or loans. If Caotain Heavy
t the "Ifavs" wanted a couple ot hundreds or
io to pull him Ihrouvh the Epsom week, what
more natural than that he stould 4et his
friend De Saurey of tie Guards to write his
name across a piece of stamped paper, and w'th
this document be should repair to Mr. Leversou
and ret him to "do" the bill, paying for the
"accommodation" at the rate ot between 60 and
100 per cent, per annum? Nor could the
transaction be deemed altogether illeiritlmate,
althouqh it was certainly Irregular. It was ol
vital importance to Heavy that he should get
money somehow, else how could he meet his
engagements at X attersall'a, or pay his brother
plunger at the Rag what he had lost to them ?
Heavy has nothing thac could be called "capi
tal," beyond his two chaijgers, his uniform, a
Ifold watch, chain. rlns?s, and scarf-pini, in
in addition to a plentiful, but mostly unpaid,
wardiobe of clothes. It is true that his lacher
allows him 500ajear: but he owes Poole alone
half a year's inconie, and his "paper" is by no
means unknown to the money-lending fraternity
t London, Aldcrshot, and Dublin. Leverson
knows this, and is equally aware that beyond
a yearly increasing crop of debt-Lleuteuant
and Captain the Uod. Arthur de Saurey, of the
Coldstreams, tho acceptor of the bill, has no
property whatever. But Leverson trusts to the
chapter of accidents, and for the chance of ft.i
immense pro tit U ready to run the risk of an
entire loss. The friends and relations of
Heavy would not allow that foolish dragoon
to be ruined for want of so small a sum.
And even if his relatives fail altogether, is not
De 8 an rev the youneer sou of an earl, and
surely his lord? hip woulJ never see hisotispting
reduced logo through the Bankruptcy Court i
Such is the train ot reasoning of Mr. Leveron.
s We have written of all theae money dealing
in the past tenBe, not because similar transac
tions are unknown at the present time, but be
cause very tew years ago there were, as a general
rule, no other kiuds of monetary business prac
tised umopgBt us. Unfortunately for the pockets
and the prospects of many thousand English
men, it is now otherwise, 'it was an evil day
for this country when the word "finance,'' and
the undertakings known a "Finance Com
panies," becamelsnown In this country; and tne
mania ot attempting to make paper represent
money witLout money's worth being given
in exchange seized upon so many persons
of all classes and callings throughout the
land. Ever since, failures in trade have been
more frequent ; and as the facilities ol
obtaining money for what represented nothing
became more common, frauds, in tho general
race tor wealth, gradually came to be looked
on as far less iniquitous than formerly. 1 u tact,
the introducing of "financing" amongst uj ha
been one of the most berious evils which ever
atllicted our commercial world. It began by
calling into existence a race of men formerly
unknown in business, and now called "pro
moters of companies;" and it has gradually
brought about the failures and panic which
were witnessed in the city ou i'uur9day aul
Fr'day, the 10th and 11th of May. The era of
"finance'' and "financing" in England found
our, commerce flourishing, and confidence bu
tween men of business as great as it had ever
been in the history of trade. It has ended; for,
Jet us hope that we have, at any rate,
seen the bee'inting of the end of the system iu
thiB country, by leaving our monetary
dealings branded as (raniblitnr, and oy spreal ng
the curse ot mutual distrust amongst all our
tradintr classes. But to illustrate our meaning
we will relate coma facts , which , happened
within our own experience.
Rather more than two years ago, one of the
to any financial companies which at that titna
were daily springing into existence, was
"brought out." The "promotere" of the concern
were three iu number. One was a solicitor
without business, but who had not long bjlore
had to take retuge trom his debts under the
doors of the court in Basinghall 9treet. The
eeeond was a Scotchman, who had never been
poessed of capital, or laud, or business, bat
had been a traveller for a Dundee or Glasgow
firm, and had lately settled in London,
takii e a small office in the city and calling him
self a commission agent. The third was a naval
officer on half-pay, whose modest pension barely
served to keep down the interest of his deb s,
and who had managed to live in London for
many years by the renewal of small bills at
three months, by touting for money-lenders,
and finding wealthy victims for bill discounters.
The first time these three worthies met t dis
cuss the propectus of their proposed scheme,
it wag at the oilice of the Caledonian "commis
hlou ajient," and havine ordered a luncheon of
beef-steaks and "coop3r" from a neighboring
tavern, lound, after they had discussed the
meal, that the means of paying for it could not
be raised among the three. The lad who brought
them the repast said he "had master's orders
not to leave without tho money;" and so the
Lalf-pay lieutenaut, under pretense ot "seeing
whether a friend in the next office had any silver
by htm," went out and pawned for five shillings
a silk umbrella whicn he had the day before
obtained on credit from a West End shop. Yet
not only did these Individuals manae to "float"
a financial undertaking, which had a subscribed
capital of one million, a very influential direc
. tion, and whose shares "came out" at three
, to four premium : but they also man iged
to divide among them no les than 10,000
:. of promotion money, their only regret being
that tuey haa not RKoa na omainea twenty.
But how, it will be asked, could men without
( means contrive to meet the ordinary expenses
of startinii a public company, to say nothing of
petting men of position ana means to lend their
names as directors of a concern the promoters
Of which were mere adventures f To all save
those acquainted wlrh the inward life of "buui
. iii.'Sb" London, it would seem more than Impro
bable that three individuals, equally bankrupt
in character and purse, should be able to
obtain the amount of credit requisite' to start
an undertaking wh'cu was to begin business
with as large a capital as Rothschild or Baring
can oommand.
But the story is not the less trite tor all that.
In the day s of which we writer the end of 1BG3
Jtai ths &rt ftw mu&i gf l&i-weo of nil
TDEjiAlLY EVENIN
iriosM'ft were o eager to be "on some good
thine," so :ra;d that others should pass them
in the race for riches, that they were willing,
nay anxious, to lend their names to anything
and ever thing that held out the most remote
chanceof paiuing u.ouev. Whpn tie half pay
lieu cnant had induced" an oh! brother officer
who could write baronet after hie name to
become one of the director, the Scotch "com
mission Bgent" had pot the consent of a fellow
countryman, who bad once belonged to a
respectable Glasgow firm, to do the same, and
the insolvent attorney had managed to swell the
list by a co rnllrd "captain" belonging to a good
ciub, ihe battle was more than half won. It In
true that each and every one of these "directors"
had not only received written guarantees from
the "promoters" that they would not be held
liable for any of the preliminary expenses of
starling the company, but were also to be paid,
or picmleed lartre sums in paid-up shnies of the
conceit, before they would consent that their
names should be published in the direction of
the undcrtul.ing. Thus fraud was, from the
very outlet, perpetrated upon the intending
shareholders of the concern. When Mr. A, B,
or C, of the outside world, applied for shares in
a new company, he did so on the faith that
some persons, whose names he saw on the
dircctii n, had really a bona Jide stake in the
cor.pau) s undei taking, Instead of which they
had not only risked nothing whatever, but had
rea'ly been paid tor patronizing that by which
they could loe lktle or nothing. What was
this but ihe obtaining money und'T fal;e pre
tenses? The finance company ot whicn we write
was not more dishonest in this respect than jits
neighbors. We believe, if the true hi-tory of
the moct "u'spectaole'' of the finance companies
could be made pnblic, it. would be found that
the Inttniicis in which directors had duly quali
fied themselves tor their posts by subscribing
and really paying for a certain number of shires
in hard cash were tew indeed. In the concern
iu question there were, when the direction was
com letd, eleven gentlemen who had accepted
seats at the board. Thry were each obliged, by
the articlt s ot association, to hold at lease titty
shnies, butot the eleven not one had paid for a
tingle hare, and ot the great nialority it mlirht
have been said w ith truth, their means were
means of payment being investigated much
more "limited" than the liabilities of the share
holders. Still, it will be argued, thore must bo certain
considerable expenses in the bringing out a new
company, which have to be met with cash, and
how could this be done by men utterly penni
less1 1 To the brave all thing are possible, more
particularly In London. . In the cae of which
we write, temporary othces were hired, and what
litile luuiiiure was necessary procured ou the
chance ol beina paid tor at some luture day, or
given back should the coeern not "float." The
most serious expense was the advertising. The
prospectus ol new joint-stock companies are
nect ssarilv long. We have before us the pros
pectus ot the finance company of which we
write, and it lakes up very narly a column of
the 'limes. The expense of each such advertise
ment cannot be less than twenty or twenty-five
pounds. And when that has to be inserted for
a fortnight in all the list ot daily, to say nothing
of the weekly and provincial papers, the sum
required must be something considerable.
'X hen newspapers do not give credit. To ad
vertise Is to pay down hard cash, and "no
money, no advertisement," is a standing rule at
ail the newspaper offices in London.
But even in this matter the wind is tempered
to the ehoin lamb; in London, tnore are such
persons as "advertising agents," whose business
it is to act as sort of middle men between the
public who want to advertise and the newspapers
that want advertisements, receiving a small
commission from the former. Inordinary times
and circumstances these persons merely act in
the ordinary way of their calling. But in the
duy3 of wnich we write, there were some of them
who aodtd to their business a speculative trade,
which they generally found pretty profitable.
They undertook to advertise embryo compan es
in the public papers, and to pay ail expenses of
such advertisements tn the following very
simple conditions. It the undertaking flourished
it the public came forward, took shares, and
the directors were ab e to "proceed to an allot
ment" of the same the advertising agent was
to receive, iu consequence of the risk he had
run, double the amount cent, per cent. of his
bill, no matter how much the total might be.
The risk he ran was, that the company. In pro
moter's slang, "did not float." If this hap
pened, ail that tho advertising agent had
laid out was lost. Thus it was that
those who brought out the company of
which we write found means to make the
golden hopes which their undertaking held
out known to the public. Here, too, as in
many hundreds of instances, it may be noted
that the frauds upon the shareholders, com
menced from the very Brtt. For every pound
that had been really expended in th'j expenses
of aavertising.the unfortunate shareholders had
to pay torty nbulings when tney took possession
ot their properly, in some row instances out,
rarely tne directors nau iue courage 10 msisc
that the advertising expenses should be paid
bv the nromoiers out of tho promotion money.
This was, however, exceptional, and in most
cases the doublo expense had to be borne by
those who were not purties to tne oargain, una
were ignorant that the charge had ever been
made or paid.
To follow out step by step the history of a
joint stock company, through every stage, is
not necessary tor our purpose; bo long as me
race lor this kind of investment lasted, the
history of these undertakings has been very
much the same.
During the company mania it was almost in
variably these investments of which the public
understood least that were most sought after,
nnme.lv. the shares of the finance companies;
and this brings us back to our original question
as to what the operations ot a nnance company
really were, and how it was that during their
palmy days they were able to announce such
large dividends.
Let us miBBine "The Universal Finance and
Comprehensive Credit Company Limited," fairly
launched, ine promoters, or nurses, are nis
missed, after having pocked their cheques; aud
as amongst the directors there are four or live
gentlemen say one-third of their number of
fair standing, and against whose commercial
character nothing is known, the undertaking
may now look out for business. The capital of
the company is one milliou, divided into f0,000
shares ol 20 each. But when wo come to read
a little lower down in the prospectus, we find
that ouly "one-half of these shares are to be is
sued lor the present." Here, then, at one blow,
Is the real capital reduced Irom 1,000,000 to
r00,000. A little further on aud we una that it
)g only intended to cull up, lor the present'' 5
per ehare, so that the actual bona fide paid-up
capital ot the compauy will uot amount to more
than 125,000, that Is, 25,000 shares with 5 paid
up minus of course the balances duo by those
who cannot pay their calls, and of the directors'
shares, upon which nothing whatever has been
paid. Still there is the nominal paid up capital
of 5 per share, and on this we find or we did
find before the bubble burst finance companies
paying dividends of oue,. two,, three, or lour
pounds per share, or at tho rate of 20, 30, 40, or
60 per cent, per annum; uay, if we are not nils
taken, there was an undertaking of this kind
that ter onehalt year declared a diridend at the
rale ot 150 per cent, per annum. No wonder th it
lor a time people went mad alter this newr
method of acquiring riches at a blow. Buy
shares, invest In one of tho new fashioned ur.
derfakines, aud for every live-pound note sowq
there was reaped at the half-yearly harvests a,
like sum, or pel haps even more. Butihowf-,
This was the qiie&iion which every one asked.
How came it that old flourishing Joint-stock
banks, with wary managers, could uot make
nioie than 8, 10, or 14 per cent., In tho most
favorable times, and that these new "finance','
undertaking, at the very first starling used to
deelare vts, and to pav dividends at double,
treble, and even ten times those rates f . Surelf
it were better for every one to sell or dispose
of everv share thev had in the world in old
affairs and Invest their all In a better, becauae
a quicker mode oi making money. ,
Here let us digress lor a moment It
older to tlance at two subjects for con
emulation that there are connected with
the "tiuuiice" company mania. The one
, 1b, that the bubble &as burst so coin
pmntivcly earlv in its career. Had It been
otherwise had the general pontic got so accus
tomed to the untie ami rystem ot the scheme as
to invest more largely in their shares, the ruin
brought aliout would hae crumbed lorcver hun
dred ot 1houauds of poor men, Instead of only
pnit ully injuring a lew h'indr-ds of comnara
tiyrly wealthy individ'inlF. The taich in these
new Institutions has been very fervent, but It
hns by no means been general. Ths belief In
(heir stability ba been confined mostly to city
men, who ought fo have known bctt r,'and has
hnrdlv been snared in at all by country gentle
men, oi by thai numerous body of the middle
clswes who have a fixed but small Income to
live upon. .Sensational lending articles to the
contrary notwithstanding, the immense majority
ol Englishmen ar careful ot their me.iiH, and no;
over credulous with respect to new undertak
ings. Had th finance companies lusted
longer 11 woui l have teen lar otherwise, and as
many more would na.-e invested their ilMlo all
in these companies a year or two hence, so
when the crash came the ruin would have been
tar more general than it is now.
The second reason for congratulation In onr
lute monetary troubles, Is that the working
classes In England have entirely held alocl from
any speculations iu these undertakings. Neither
Individually nor collectively has there been any
buying of "shares anionet the artisans of Lon
don, or any of our large towns, in investments
which their on roagh common sense told tuem
held on t promises tar fo bright to be real. Hail
the mania taken amongst them had tho work-
incmen of England been induced by golden pro
mises to Deiievcmthe new gospel ot immense
profits upon outlays ol small capital, who can
toll what the results would have been when
the biitor fruit of failure had to bp
eaten? If the many thousand associations of
"Odd riliows," "foresters," and "friendly
Societies," had invested their funds In the-e
concerns, Mr. Tia 1 l'ratt would have needed no
small amount ot extra help to get through the
additional work ot his office. Ho; amidst the
general feolir.g of regret lor the misfortune of
so manjr individuals who have been led into
buying at a high price shares which they can
hardly gel nu ot now upon any terms, we have
pood reasons to be thankful that the working
classes of this country were not tempied by
large dividends to risk their money in buch
straw bulit edifices.
But it is or rather It was on paper and not
on straw that these finance palaces were
founded, and by the same material they were
built up. Once fuirly started at work, it was the
directors' business to find out how, where, and by
wdbi means tne largest returns coma oe made,
and the lollowing is but a specimen of the manv
ways by which they worked the oracle.
A railway contractor bnds that he is in want
of funds with which to conclude the contracts.
On application to the company to which the
intended lite oeiongs, ne meets wrth a trank
avowal that, what between fair expenses, sur
veying; lees, engineers' charges, and other out
lays, their balance with their bankers is in a state
of collapse. What is tobeoone? To go on
without money is impossible to declare his
inability to proceed Is oankruptcy and ruin. In
place ot nard cash, will the directors give him a
certain amount in debentures or pVid-up shares
upon the future line ? Ot course they will, and
are delighted to do so. Iu other words t hey
virtually discount the future problematical
profits of a line not yet made, or, at any rate,
not finished. It is as if a young man newly ap
pointed to a commission in the army should
pay for his outfit by bills which would fall due
when ne shall become a captain in the service.
But anything is better than to stop the works
of the railway. To place debentures bearing
lour, five, or tven six per cent., and which are
only payable after a term of years, with the
general public, is an impossibility. What man
outside ot Bedlam would dream ol investing in
such securities with Consols at eighty-eight and
finance companies paying forty per cent. ? But
these securities serve the purpose of the con
tractor, who hus undertaken f ar more more than
his capital iustlfied him in doing, and his em
ployers are equally pleased to pay him on these
terms. But ot what use are them debentures to
a man whose chipf outlay is the weekly wagc6
he has to pay ? Navvies, even 11 they could be
made to undeand the nature of sach securi
ties, could hardly be induced to take them in
lieu ot their weekly wages. But tho contractor
has no intention of making any attempt to uuiui
off the paper - he holds upon the rough
giacts he employs. With, say, 50,000 ot
these o Dentures in his nana, ne betakes himself
to the "Universal Finance and Comprehensive
Credit Compuny. Limited." and after one or two
interviews with the general manager, his pecu
niary arrangements are completed." By deposit
ing these bederitures lor 50.000 with the "Uni
versal Finance," he obtains the acceptances of
that company to sundry small bills drawn in
sums of perhaps f00 each, and amounting to a
total perhaps of 30,000, thus leaving a margin
on the security of 20,000.
For these bills, which are drawn by himspll
and accepted by the "Universal Financ," he
has to pay at the rate of from fifteen to thirty
percent, oy way ot commission, it ne is well
to do in the world the company would make
him pay the smaller, if needy, the latter
sum. The bills are drawn at three months,
and as the "Udiversal . Finance and Com
prehensive Credit Company, Limited" enlov
good credit In the city, what banker could refuse
to discount them? Of course the paper is
"good," quite good, ana so tne contractor gets
it discounted at once, and placing the proceeds
to the credit of his account with his own banker,
obtains the credit of being a wealthy man. But
three months is not a lone time to wait, particu
larly when the end ot that time is noted bv the
date upon stamped paper, as many oi us snow
to our cost, or have known st some period or
other, in three months' time "The Universal"
will have to meet their bills, and with their
small capital of but 6 paid upon each of the
25.000 shares that were issued, where is the mone v
to come from, lor our contractor Is by no meins
the only partv with whom "The Uutversal"
does business of this kind? This small diiliuuliy
is, however, easy of solution. With a little more
stamped paper, and a pen and Ink, fresh
bills are drawn out, discounted, and the old ones
taken up, By the lurMated thU process Is called
renewing bills; and, according to the agreement
of "The L'nivf rsal" wuh the contractor, that in
stitution is obliged to renew these little docu
ments over a certain number of years. But what
say the bankers to whom acceptances, bearing
the same names, are ottered again and again for
discount? In the first place a judicious distri
bution of these documents is made no mono
poly ot favors being conferred upon any one
bank. If the first set of bills are discounted,
fcay by "The London Joint Block Bank," the
second, with which they are to be taken up,
will be sent to "The London apd Westminster,"
or to PuriH, Biistol, Liverpool any where. What
would, vvhHt could, Messrs. Blount, or Mallett
Freres, or Hottinquer, of the Urst of those towns,
Messrs. Bailie & Co., or 8tuckey A Co., of the
second, or Barned & Co., or "The Consolidated
Bank" at the third, know of the acceptances
which the contractor had previously dis
counted, and which he now wants to take
up? Tne bills appear pcrlectlv good;
"The Universal" is believed to be good
for almost any amojut; and It is all In the way
of business Unit a great railway contractor
should have tbee bills to ofler. Therefore the
second ret are discounted, the first set taken up,
So long as the commercial barometer stands at
"fet fair," the process is easy and pleasant, if
not protirable, to the contractor; at any rate it
keeps him always in funds, which, with the
"go-ubead" class of business men, seems all that
is requited to iusnre prosperity in their under
takings. How the machinery would act if the
same barometer marked "change," or what
would be the results If it fell to "stormy," we
shall see presently; but let us first take a glance
as to how the bargain we have detailed would
work In the Interests ot thtt much-enduring
body, the shareholders, of "The Universal Fi
nance and Comprehensive i Credit Company,
Limited." i
Directors of public companies invariably and
natuially place tho best construction possible
upon their own acts. If the gentlemen who rule
the aflairs of "The Universal Fioauce" h'ld laid
before the shareholders an account of this trans
action with the railway contractor, they would
no doubt cull attention to the great safety as
well as h l;yge profits ofsOke baryta. Ou
USliAY,
drpoltof 60,000 "securitle-" they do not su?
what occuritlPN lor that would be a Defrayal of
confidence and secret like this are held invio
lable until the day for a general i masn arnves--they
have advanced .".0.000 in b lis, lor which
they have charted in per cn per anruui
intf res ar.d 20 per ccn . com mission. Trm,,
with a margin of 40 per cent. Iu ca-ie ot fluctua
tions In these "jecurities," ihev eet 20 per cent,
for tho use of their name, and not a shilling paid
out, Ihe whole of the paid-up capital of t'ie com
pany Mng etitl in the haruli of tficir banl-crg.
The last words we have put In It'ilijs,
for thty are, or used to be, very generally
used by finance company dlroctois, and were
always sure to make au immense impression
upon the hareholders, particularly such
ammgst ihem us were not business men. With
perhaps a hundred, thirty, or forty similar trans
actions iu tie course ot the sx months, what
wonder if tho half-yearly dividend ol the com
pany wa Imrm use, li the shares rose in value,
and If the outside wond inducing the great
majority of the shareholders felt convinced
uat, here in the city of London, a new Bldo
ninV had been di-covercd, in which money
could command thirty or lorry per cent., and
sliil be retained in the strong b x of its owner.
"How can we ever co wrong?" said a lady
shareholder In one of the finance companies to
the present riter, "when by onr banker'" own
b oks the whole of onr capital is st'll in his
hands, with the exception of a few thousands,
and yet we ate getting interest at the rate ot
tweiity-uve per cent, per annum for our
unueyr' It is proailv to bo feared thtt our
friend likp many others of the innocent share
holding cImps did not fully understand the
metinmg of the word "liabilities."
And now let us glance at the other side of the
picture, with respect vi this bargain with our
rnilwiiy conti actor. It Is true that Ihe "Uul
versal Finance and Comprehensive Credit Com
pany, Limited," baye upon securities ot 50,000
value only advanced :iO,(j0t); but -what is the
real nature of such paper ? of what use would
it be if required to b.' converted into cash iu
order to meet l ubil ties ? Of none whatever.
The debentures have tour, five, or more years to
run; the very line on which thev are to form a
mortgage is' only partially constructed, and
will not be at work for a long time. Tne con
tractor may fad such an event is by no means
uncommon amongst men ot his cla 8 and
calling and where will be the money with
which the "Universal would have to meet its
engagements ? Wkh perhaps a hundred or
two such transactions ot the kind on. their
books, of what use would be the 12'i,000
(25,000 shares, with 5 paid on each) of
paid-up capital ? It may be said that a cnll
cou'd be made, 15 per share being still
payable on each, share. But that is what all
directors would avoid, and do avoid, until the
very liu-t moment a call, no matter of how
small an amount, being certain to send down
the shares in the market, and put all the share
holders in the verv worst possible humor.
There are no pleasant half-yearly meetings when
a call has t be made, for the very reason that
more than half the shareholders have not the
means with which to pay the call, and are
obliged to sell out at a loss.
Or, take for instance w hat we have witnessed
in the City during the last lew weeks. Money
gets dear; rumors of companies getting
"shaky" are afloat; bankers look shy at paper
which they lormerly took fieelv; it is impos
sible to get any but the best bills "done" on
almost any terms; to obtain money with which
to keep up the renewing game is out ot the
question; contractors fail, and the value of
debentu as securities is shown to be nil; the
panic increases; one or two large houses "go,"
and, for a time, anything like business is at
an end, and credit, even to good houses, Is sus
pended. Then eomes the fall of joint stock con
cerns; the min of shareholders; the angry meet
ings; the threatening with Guildhall, and crimi
nal indictments; and all the commercial panic
and contusion through which we have lust
passed.
But although we have taken an advance made
to a railway contractor as an instance of the
business done by finance companies, our readers
must not think that all contractors are men of
straw, or that the instance we have adduced is
one by any means extraordinary. There are
many at this class who can, and do pay their
way with as much regularity as anv men in the
kingdom; end the dinicuiues with which a num
ber of them have to contend, are, in most in
stances, brought about by the mismanagement
of those who employ them. Various and won
derlulare tho proposals for "business" which
are put before a finunce coropanyjQind mere ex
traordinary still are the engagements which
some of these undertakings enter luto. We
cannot wonder at this, when we consider the
numerous companies that exist, and the immense
competition. Nor is thi6alL It is well known
iu the city that the business of "financing" or
of granting credits with paper for long periods,
upon securities which will not be paid until
some distant day is one whicii is nominally so
profitable that many establishments, constituted
lor perfectly difl'ereut purposes, have taken to it.
This increases the existing competition, and
nucleases also the facilities which men of no
means have of obtaining "accommodation" lor
their speculative schemes.
It will hardly be bel eved what extraordinary
proposals are brought belore finance compunies
with requests lor assistance, and ofleu upon
tecurity which a child would condemn as utterly
woilhless. But still more wondeiful are some of
the pio)Ot8l which have been entertained, and
ore now, or were quite recently, woi king out
their own destruction and the loss of the share
holders under the auspices of some of the finun
ciul companies. To obtain advances, by bills
of course with which to build cities In South
America the security offered being mortgages
on whole streets yet to be built, upon ground
which is still a virgin forest was once proposed
to or.e of the finance companies In London, and
at a board meeting, at which there were nine
oirectors present, the scheme was only rejected
by a majority ot one. On another occasion, bv
the bo aid of another coipi any, a proposal to
bonow by acceptances as in the former
case one hundrd thousand pounds, with
which to -cut 'down in tho far north of
Sweden vast quantities of timber and import
the same to Liverpool (the security offered
being a large forest, from which the wood was
to be cut), was accepted, but the resolution
w as not confirmed at a eubfequent meeting of
the directors. The chief reasou for tho more
prudent action being that no one could find
the forest upon any known map ot turope; and
even it leund, the name was such as no one la
the office could pronounce. A third proposition
tho promoters of which very nearly obtained
the acceptances they asked lor brought belore
a finance company, was to build warehouses at
a certain seaport in the south of Europe. By
mere accideut the plans of the buildings,
together with the site on which they were to
stand, were shown to a gentleman unconnected
with the company, but who happened to be well
acquainted w ith the town which was to be thus
hlehly favored. From what he said, an English
architect was sent to visit the place, when it
was found that excellent capacious warehouses
had been erected about five years previously on
this very snot, and that no one in the place ever
dieamt ol building others. And II it were allow
able to give naraeB of persons and places iu a
magazine article, how as tonished would many
wonby shareholders be at the extraordinary
schemes which their money or rather
their credit has helped to "finance" over dif
ficulties. Mines, railways, coffee and tea
plantations, timber estates, fisheries, loans on
ut heard of lands to unheard-of people, the build
ing ol detached and semi-detached villas in
"genteel" suburban districts by insolvent build
eis; the "bringing out" which means aettng as
the "promoters" ol companies more visionary
than the wildest dreams ot bankrupt schemrs
could Imagine are but a lew ot the uses to
which the cred t of finance companies has been
applied duiing tha last two years. Anyrhing,
ever thing, to make money If possible by fair
means but in any case to make, or rather seem
to make, large dividends to parade before the
shareholders.
11 auv one thinks that we have at all ex
aggcralNa the combined evils of Finance and
Fraud, t him turn to the Times of Tuesday, the
16th ol Jay, aud in the parliamentary report of
the pr us evening, read what Lord Itedesdale
suid j acting the unscrupulous practices
JUKE 25, 18CG.J
by which railway n'hemes are worked lip, and
the way in which contraciors aud tuaoi-e cjji-
fianles iuvolvc the shareholders in enormous
labilities In return for "incommoditiloo."
Amongst other, his lordship ins'aneed (he Cur
manhen and Cardigan Railway Company. Tr
proposed capital oi the concern wa ?.00oo;
and of thisouiv 2,000 was ever subicrioel.
But to Increase the r funds the directors, had
raised 168,70 bv preference shares, 0u,.ir,5
by debentures, and 733.833 on Lloyd's bond,
makinct a total capital of 081. 9R6 for fhe con
struction r f a line of railway for which 3(K).roo
only had been proposed In the bill and allow-d
by i'brliamrnt. The question will naturally arle,
ss to wliat became of the balance oi the'tnoney
raised, and secondly, how will the subscribers
to the original 29.0n0 feel at being thus
swamped by the Increased capital t Were the e
gentlemen consenting parties to the drown
ing of their own property, or had the
diicctors the power to make ducks and
drakes of their money? Another example
as to how the proporty of share
holders was played with by directors, was on
the at e occnsion brought forward by bis lord
ship. He siated that during the past yar the
contractors for the city extension ot the London,
CI mliani, and Dover lladway went to the Credit
ilobiher Finance Company tor a million sterling,
w li'i-h they obtained on tho following terms:
For every 21 advanced there was given 40 of
lully pald-np stock, thus paving 19 fi reery
21. "It was in effect," said his lordship, "pay
ing 622,200 sacrificing that amount at once
and loievt r in order to eet 677,500." For the
bei ctit of the unliiitia ed. it mav perhaps be as
well to explain thai the "40 fully paid up slock"
being given lor 21 advanced, was a transaction
Precisely similar to that one by which Captain
llavy would give Mr. Leverson his bill lor 40
on condition of the latter advancing him 21, a
piece ot business whicn we believe the most
foolish dragoon or spendthrift, guardsman that
ever "got up behind" stamped paper would
roiuse to tianeact, although ai trading on his
own credit he would be perfectly Justified In
doing that which the directors of u joint s'ock
coapany are by no means at liberty to do with
the rjcdit of others.
Is It, then, any wonder if, with the slate of
commercial morality of the present day, failures
follow, as a piatter of com sc. tipon the
"tinaiice" and frauds which we h.ive endeavored
to depict ? Go where you w ill, in business parts,
or n.tet who you like of business men.it is
and has been for the Inst three ears the same
story and the same lament. 1 Dishonesty, un
truth, and wl.at may in pla n English, be term
ed mercantile swindling within the limits of the
law, exist ou all sidos and on every quarter.
There is eveiy where such a keen contest for
wealth, such a determination on the part of
those who have no means to bold their own in
trade with those who have capital, that
t n thousand doors are open tor every one who
choo.-es to pass out of the old truck which men
used to term honesty. That there are honor
able, honest men left still amongst our mer
chants, is but an assertion wnlch cannot be
denied; hut it quite as certain that these are
outnumbered a bundled to one by mere ad
venturers, who, like the finance companies
which have helped so greatly to exalt this
class wi'h a 6 paid-up capital, do business,
accept bills, and trade where and how they can
lor the r hundreds of thousands. The present
writer could point out an instance oue amongst
many ot a North-countryman who, eighteen
months ago, came to London (just alter having
tailed in Scotland) with barely money enough to
pay lor a third-class railway ticket, and who
lor many weeks alter his arrival In this metro
polis used to live by begging halt crowns from
the few acquaintances he had in town. This
man never hud, and never will have, any
capital whatever, save a large stock
of Impudence. But to-day he has an
office in the city, two clerks at work under
him, and pa3sesmany thousands of pounds' worth
of bills into his bankers and gets cash in re
turn every week ot hii liie. When such a state
of things can exist, and when all men know, not
only that it exists,, but that it is tLe rule and
not the exception, what wonder if, when the
slightest panic arises in the money market,
every-one takes fright, and by the confusion
which they cause increase a hundred-told the
number of con-merclal disasters. This is a
state of affairs which we shall see yet worse
lntvad - ot better, until by tne torce ol events
there shall arise a whirlwind in the mercantile
atmosphere which will so purify the air that it
will be impossible for either compunies or indi
viduals to trade upon imaginary capital; and
then borrowing upon bills, Which are nothing
more than so much "accommodation" paper,
will become a moral impossibility. Forsometime
past it hns been only those who have no solid
foundation for their business tbat really launch
out. Thev "finance," and commit what are really
frauds, aslongas they cun; and when those mines
can no longer be worked, they tail. There is a
strong feeling amongst the firms that have some
thing to lose that things must be worse beiore
they aie better, and tbat we shall yet see a far
more universal shipwreck In the mercantile
world than anything we have hitherto wit
nessed. The present systematic overtrading,
and the facilities by which the merest adven
turer can obtain money or money's worth, if he
likes to pay for it, can only have one result ; and
until thai pent ral overturning Likes place, the
commerce of the country, boib. export and im
port, as well as bank ne aud monetary, must be
a business of so much risk, that those only who
have little or nothing to lose will engage tin it to
any extent. As the laie panic took no one by sur
prise, so now every one is looking forward to
a coming day the final result of which
will be to srip "duffer" firms and make
believe companies of that pretense ol capital
which enables tbem to cause so much disas'.er
and ruin to trade. With the collapse of the
"finance" companies' system we shall hear loss
of frauds and failures; and although our com
merce may be more limited, it will be infinitely
rounder than at present. Nor will any one who
I does not belong to the mercantile adventurer
class look! oack witni regret to the days whau
these large "accommodation" shops were in the
full swing of burn ess. and when, as at present,
every man who Is able to buy bill-stamps can
write himself down a merchant. 2empce Lar
for June.
BOOKS AND STATIONERY.
REMOVAL.
WILLIAM G. I'E R II Y,
BOOKSELLER AND STATIONER.
HAS REMOVFD rnoM
s. w. coener Fouara and race,
TO 6 2SnnwIm 1
No. 7Q8 ARCH STREET.
F
INE STATIONERY, OF TUB BEST
Ouailty. w. . rwnii
Stallon.T,
No. T28 ARCH Htret.
riuiauelphlii.
A
RNOLD'H INK, FIBER'S 1'ENCfT.S, AND
OlUoti'a Steel rent, all genuine, loia tv
W. U CkKBT,
HU' loner,
, NO. 728 AKi H Mreet.
fultsilelpula
B
LANK BOOKS IN LARGE VARIETY,
oi niy own inanuiacture.
bXUSU AT LuWtST CA8HuBATESv
, .. No. TC8AHCH Utreot
' .""" Philadelphia
TNVELOPES, LETTER, CAP, AND BILL
P-PK-AT tOW(iA8HPRTr.FT
. , , stationer,
1 1 ' ' Ho. 128 ABCH Street.
I ...
, . - FolladelphU.
GOLD PENS, NATIONAL BANK PENS,
Peirv'a Una Steel fens, Etc -
' " ' ' ' Htailoner,
. 0. 729 AK H t-treet.
tattnuwlu) Philadelphia
WATCHES, JEWELRY ETC
i DO UVS,
)IA3lO
M'i.:,..n ic j;.n :.Ln.;i, z
WATCIISS. .
WATCHE3 (tod .
Owing to ths decline or Gold, ) mad grcit re
Auction In price of hit Iare and weu amcrted atock
Diamonds,
Wat che.
Jewelry,
Silverware, Eto.
The publlo are rMrectfntly niHti te call ant examln
cur Mock before pnrcbatlng e lew here, i i
SILVER AND PLATED GOODS,
op ran
Most Superior Workmanship, ,
AT THB
NEW H T O tt K ,
No. 704 ARCH STREET.
Tke otiderMnned (lat f the famoua Rogere Broa
BiHDulaciurlng t orn i any) reupcct ally announce tha
tbcv halt oprnrd a n. m tnsutilu. store i or the
ct BlLVrK anU 1 LATH l WaIiK, at o. 104 AKCM
Mreet. Our lung upntince a manuiaciurem wil
enable ne to kei p nothing but flrU-cla-i Gooda. and
tboi-e ho mny patronize our a ore will find cur p'ated.
pcoda lar auueiior to any ever imported, and our cus
tomer! n ay tely on the gooda being precisely what they
are represented to be.
HOWMAM A LEONARD.
WATCHES, JEWELRY, &c.
MUSICAL BOXES.
A lull ateor'nitrjt ol above pood coi elantlT on
band at meueiate pr ce the Musical ttuxuit playlna
Irom 2 to lOLianufnl Aire.
I ARR & BE0THER, Importers,
So 824 tHEj NU I 8TKEET,
llllrmttjrp Below Fourth,
BICU J EWELR Y
JOHN BRENNAN,
DEALER Dt
DIAMONDS, FINE WATCHES, JEWELRY
Etc. Etc. Etc
2C Ro. 18 S. fclGHTH 81 Kit JET, Pliilada.
SHIPPING.
ffj!t , FOR SAVANNA U, GA.
THE PHILADELPHIA AND BOTJTHfQBN MAIL
BlSAMSUIf COMPANY'S RKOPLAB USE,
BAILING EVKBI SATURDAY.
Cabin Faauge ....aiKX)
Deck PeaK $utM)
The Bteamahln ,
" T O N A W A N D A,"
Will commence receiving irelgbt lor Uie above port,
at BaC'a. street Wharf, on aAiUUDA Y, June 43, at W
o'clock A.M.
1 frhipptre are requested to lend bills ot lading with
their gooda.
Ihe Ma e-rootn accommodation!, or this eteamer are
ol a superior and conimouiooa character.
fc'rclgh i taken tor Charleston H. ti , and lorwaided via
gavaunah vitb quick deHiiatvh.
1,0 In. to of lading ttkucd al ter vessel leaves the whan.
8. a J M. KLA AOAN,
No 420 Houth DELAWARE Avenue.
i or ireignt or passage apuiv to
v
I I.LI A M C. HARRTfl.
Frelchi und Pmwniifir Affnni.
fiiStf
No. its Aorth UtUWAKt, Avenue.
t.AZ 'ANCHOR LINE OF H l KAMFRH
i.lhKRMA." . nroillnii
"OLKUON1A." "OAavBBlA,'
"l'.KlTANiilA," "LND1A.'
Bteam to
LIVLKl'OOL LONDONDEKKF, BELFAST, DUBLIN
tfEHKY, OKK. A .D Ul.aHGOW.
KATK. OV PA.-HAOB,
PAYABLE IN l'Al'EB Cl'RKNCY.
V A B I N U0. Sft, and 7ll
fc.lEA.KA life W
iHt PAID Ct.KUKl, ATE" .
bieued for bringing cut paaecnuera irom tne above
points at
LOWER KATES THAN AST OTHER LINK.
Also, to and Irom
ALL flA'llONS ON THE 1RIHH BAIL WAYS.
M'KCIALNOlR'K l'.engiTi wU uke particular
no'lee that the ' Anchor Line" la ibeonly line Framing
tliioutb tkkete at the above ratea from Philadelphia to
the points named above, and that the undersigned la the
only di.lv authorized Agent In rbliadilpbia.
Apply to W. A H 4.4 ILL,
Bole Agent for "ANCHOtt line,"
1 15 iio. 217 WALNUT Street.
mr tjKlTZS F0R N YORK. PHILADEL
Jitiiii ifiiHiia delphia bteam Propeller Comaany De
kuuiou bv, insure Lines, vw lie.uv.ure aud Karltan Canal,
leaving dai y at 14 M. and 6 P. At., connecting with aU
Northern and Eastern llnea,
Eor freight, which v. M be taken npon accommodating
teinis, atply to WILLI All M. BA1KI) A i o.,
S 10 No. lu2S DELAWARE Avenue
10 SHIP CAP1AINS AND OWNERS. THB
undersigned having leased the &ENSINQTO&
ECRLW IoCK,tieK loin orm hia fnencaand ibe patron
oi ibe Dock thai be U I renared 1th inoreaseo faof.lllea
to accommodate those having vesae a to be raised or
repaired and be Inn prao leal ehtp-oarpenter and
caulker. Till give personal attention to the veaaela su
trusteo to bint lor repaixa.
tantalna or Ageuia. chip tarpehien, and VachlnlaU
having vesfel to repair are solicited to call.
buying the agency for ihe aaie of ' Wettemtedt'a
Patent Atetallic t onipcwirlon'Noi op per Paint for the
pierervatlon ol vessels' boitoma. for tula city, 1 am pre
pared to mrnlsn the tame on lavonbie lenuH.
JOHN IL HAM MITT, .
Kens Dgton Kcrew Dock,
11$ DELAWARE A venae, above l-ALKEL Street.
SHIRTS, FURNISHING GOODS, Ac
J( W. SCOTT A C O.,
SHIRT MANUFACTURERS,
amd Duutaa im .
MEN S FUKN1SHINO GOODS,
No. 814 CHESNUT Street, ,
FOUR DOORS hi LOW THE "CONTI VESTAL,"
8 26 UP PHILADELPHIA.
PATENT SLIOULDER-SEAM
fclllUT MANUFACTORY.
AND GENTLEMEN'S FUKMSIIING STORE.
PERFECT riTIISQ BHIRI8 AND DRAWERS
made irom measurement at very short notice.
All ctber aitlclei ef GENTLEMEN 'tl DRESS GOODS
In lull variety.
W1NCHKSTEK & CO.,
8 24 1 No. 70S CHESNTJT Street
ROBERT SHOEMAKER & CO.,
AVU01FSALE DltUGGISTS,
MANUFACTURERS, .
IMPORTERS.
AND DEALERS IN
Taints, Tarnishes, and Oils,
No. 201 NORTH FOURTH STREETj
4 16 9m
V. E. CORNER OF RACS"
THREE GENERAL AGENTS WANTED TO
act In Important locations for the New York AooU
deatal Insurance Company. Active men of eoodaddreM,
;r,,lv to I'BAMt O. ALLEN, ttreuth OOWii
CLItSNUT Btrtteb Aply euoo.
Of 0