bases 
 
 cs: 
 
 Charles Woolley, 
 
 F.R.G.S.
 
 GILBERT* FIELD, 
 
 BOOKSELLERS, 
 
 67.MOORGATE STREET. 
 
 LONDON.F..C.
 
 PHASES OF PANICS: 
 
 A BRIEF HISTORICAL REVIEW. 
 
 BY 
 
 CHARLES WOOLLEY, F.R.G.S., 
 
 PRESIDENT OP THE INSTITUTE OF SECRETARIES; 
 
 FEU.OW OF THE INSTITUTE OF BANKERS ; 
 FELLOW OF THE SOCIETY OF ACCOUNTANTS AND AUDITORS. 
 
 Read at the London Institution, Finsbury Circus, Friday, 
 10th April, 1896. 
 
 [THE RIGHT OF TRANSLATION AND REPRODUCTION is RESERVED.] 
 
 HENRY GOOD SON, PRINTERS, 12, MOORGATE STREET, E.G. 
 
 1896.
 
 PREFACE. 
 
 THK flattering reception which friends and the public have 
 been kind enough to accord to the production of the matter 
 contained in my paper, originally delivered as a lecture, and 
 intended only for publication in this popular form of present- 
 ment, and the continuously-sustained interest and demand on 
 the part of many whom I had not heretofore had the privilege of 
 numbering amongst my friends or acquaintances, all of whom 
 are good enough to express a wish for an extended publica- 
 tion in a more enduring form, for purposes of reference, has 
 led me to yield to their earnest solicitations, and to allow it 
 to appear in its present form. 
 
 In consenting to this course, I do so with varying sensations 
 of diffidence and deference. The diffidence arises from the 
 fact, that the material in uncollected form has appeared before 
 the public, from time to time, through the instrumentality of 
 that all-powerful factor, "The Press" whilst deference is due 
 to the opinions and feelings of those more intimately asso- 
 ciated and more closel}" in touch with the particular incidents 
 and features, which, from sheer necessity for compression. I 
 have been able here only passingty to dilate upon. 
 
 It may, perhaps, suffice for the purpose of this work to 
 state, that I have efldeavoured to keep strictly within the 
 region of fact and correctness as regards figures quoted, it 
 being no function of the historian to import colourable views 
 of merely personal creation. 
 
 I have been jocosely reminded that the work might have
 
 IV 
 
 been rendered more useful, had I been able to attempt to 
 forecast the date of the next panic. 
 
 It is well known that "a prophet has little honour in his 
 own country," but I may briefly state that it is not on this 
 account that I have shirked any responsibility which might 
 reasonably be presumed to devolve upon me. 
 
 My answer is, that I have dealt with the last panic, and, 
 if this statement should prove to be a truthful prediction, I 
 forego all claim to the merit of successfully guessing. 
 
 C. W. 
 
 May i6th, 1896. 
 
 DEAR SIR, 
 
 I thank you for your pamphlet, in which you appear 
 to me to have compressed into a very small space a great 
 mass of important and interesting information. 
 
 Yours very faithfully, 
 
 W. E. GLADSTONE. 
 C. WOOW.EY, Esq.
 
 INDEX. 
 
 PAGE 
 
 Introductory 7-12 
 
 1837. Undue Railway Speculation 12 
 
 Joint Stock Banks 12, 45, 46 
 
 Railways ... 12, 16 
 
 Bank of England Rate 15, 16, 23, 26, 31, 36, 39, 65 
 
 1847. Railways and Company Mania ... ... ... 16 
 
 Bank Charter 16, 23, 31, 62, 63 
 
 Irish Famine ... 16 
 
 Corn Laws and Richard Cobden 17 
 
 Bank of France ... ... 18, 51 
 
 Bank of England ... 1 8, 50, 51 
 
 Gold Discoveries 18 
 
 Germany Gold Standard ... 19 
 
 Latin Union 19 
 
 South Africa 20, 69 
 
 1857. America, Liverpool, and Glasgow ... ... 23 
 
 Bank of England Note Issue ... 23, 32 
 
 Bessemer Invention 24 
 
 Abolition of Paper Duty 24 
 
 American Civil War 25 
 
 Companies Act, 1862 25 
 
 1866. Overend, Gurney & Co., Limited 26,54 
 
 . Do. do. Prospectus ... 28, 29 
 
 Do. do. Gazette Notices ... 30, 31 
 
 Do. do. Directors' Trial 34 
 
 George Leeman's Act ... ... 35, 59 
 
 1875. Alexander Collie & Co., Manchester and India 36 
 
 Joint Stock Blanks' Dividends 37 
 
 Jabez Balfour Liberator Society 38 
 
 Foreign Loans 38 
 
 Messrs. Rothschilds 39> 5 1 
 
 Suez Canal 39
 
 VI 
 
 PAGE 
 
 1878. City of Glasgow Bank, Australia and India 40 
 
 Caledonian Bank 43 
 
 Bank Shares and Limited Liability 45, 46 
 
 Consol Conversion 46 
 
 Rt. Hon. Hugh Childers 46 
 
 Rt. Hon. G. J. Goschen 47,55 
 
 1890. Baring Brothers & Co 18,48,54 
 
 Uruguayan Loan 49 
 
 Buenos Ayres Water Supply Co. 49 
 
 Baring Guarantee Fund ... 50 
 
 Rt. Hon. W. Lidderdale 50 
 
 Mr. David Powell ... ... 51 
 
 Russian Government ... ... 51 
 
 Baring Brothers & Co., Limited 52 
 
 Baring Estate Co., Limited 53 
 
 Directors' Liability Act, 1890 55 
 
 Sherman and Bland Acts America 56 
 
 McKinley Tariff America 56 
 
 1893. Australian Banking 56 
 
 Moratorium ... 61 
 
 Legal Tender Act 63 
 
 Act of 1819 ... 63 
 
 Rt. Hon. Cecil Rhodes and South Africa 69 
 
 ADDENDA.
 
 PHASES OF PANICS 
 
 A BRIEF HISTORICAL REVIEW. 
 
 THE statement proverbially representative of the blase 
 portion of the World says " there is no new thing under 
 the sun." The response has come with dramatic force from 
 the wily natural wisdom of " The Bard," the " immortal " 
 Shakespeare, who has fittingly answered : " There are more 
 things in heaven and earth than are dreamt of in your 
 philosophy." 
 
 In the World's ordering and progress, comprised and 
 expressed by the term, " heaven and earth " the celestial 
 and the mundane, or terrestrial we mortals wisely aspire 
 to realise the former, and, relying upon the sense of force 
 implanted within us, we believe and act accordingly, that 
 we have power to control the affairs of the latter, and not 
 unnaturally desire to make the best of both worlds. 
 
 It has been wisely said perhaps again by a cynic : 
 " With how little wisdom the world is governed, my son ! " 
 
 "Government by the tongue," which is said to be the 
 form of latter-day Constitutional National government that 
 we adopt, very often proves this, when in the height and 
 heat of party conflict, conviction gives place to convenience, 
 and convenience becomes outwardly expressed conviction, 
 by would-be leaders. 
 
 Into the din and strife of political warfare, or the world
 
 8 
 
 of Politics, I do not here propose to enter, but merely 
 passingly to say of constitutional government, that the 
 groundwork of politics must, I assume, be the science of 
 Political Economy, well understood ; and as this also forms, 
 consciously or unconsciously, the basis of the conventional 
 social life of civilised communities or, perhaps, more 
 moderately stated, it is studied and accepted in this teaching 
 form, and, moreover, it also forms the basis of business or 
 commercial affairs so the practical politician of to-day 
 should needs be a political economist, a theoretic, if not 
 a practical, business man, and should thus understand, if 
 he does not convey or help to carry into effect, the right 
 and proper ordering, upon well-indicated principles, of his 
 country's and of the world's welfare in the workable 
 every-day life of its citizens. 
 
 Whether as governing or governed the unit is the nation, 
 the nation is the unit multiplied, and the welfare of each 
 is the welfare of all. 
 
 In the teeming thousands who flock to the centre of our 
 and the world's commercial life this great City of London 
 it seems difficult to realise and to fully appreciate the 
 importance of the fact that individual effort, and personal 
 energy practically devised individually, and so carried 
 into effect is the mainspring of our commercial supremacy. 
 
 Combinations for the purpose of controlling the markets 
 in particular commodities have from time to time been 
 tried, here and elsewhere the object being, to control 
 supply and affect the price artificially against the consumer 
 or user, and it is safe to say that in the majority of 
 instances, such combinations have signally failed in their 
 efforts to defeat the natural law of supply and demand, 
 with the almost inevitable result that loss, oftentimes of a
 
 serious character, has accrued to such combinations, and 
 the selfish benefit sought to be obtained by them at the 
 expense of the community, by manipulation, has resulted 
 in the very reverse. 
 
 Improved methods of production and means of com- 
 munication and transit in every way, are now so facilitated 
 and rapid, that no enactment of law such as existed formerly 
 as regards " forestalling," especially in the case of food 
 supplies, seems at present necessary to defeat such un- 
 wholesome combinations. 
 
 Of these latter, it seems unnecessary here to state, that 
 every known quarter and particle of the habitable globe is 
 now made to contribute its quota of commodity, for the 
 benefit of the general weal and welfare, and the produce 
 of the earth in every conceivable form, finds somehow or 
 somewhere its way into the world's markets, and with a 
 ready promptitude. 
 
 Combinations such as I have alluded to, have existed 
 and subsided, and with the results stated ; and, given the 
 subsidence of spasm which these create in their attempted 
 sphere of operations, the markets resume their normal state, 
 and the individual trader resumes his ordinary course of 
 sale and purchase. 
 
 Despite the fact that these combinations are from time 
 to time created, and that, in addition to this fact, each 
 individual trader, ever alert and striving, but without prior 
 concerted action and with only the gauged state of the 
 markets as a guide to action in other words, with only 
 a fair all-round view, and without the favour in these 
 times of the rapid spread of information, special means of 
 intelligence and transit, sufficient in their absence in former 
 days to constitute a monopoly in any one case with each
 
 IO 
 
 one trying to pull the machine, so that it may record 
 beneficially in his favour a tug here, a tug there, and a 
 tug everywhere but seldom a torpedo boat to explode 
 the whole process it does seem remarkable that the un- 
 gearing of the machine does not more frequently take 
 place, in some spot or other, where it would seem that in 
 so many places, by its volume and the extent of its 
 ramifications, it must be vulnerable. 
 
 I am speaking now of trade in its ordinary course, and 
 not of such periods as are described by the imported and 
 now universally adopted title of " booms," or extreme 
 speculative activity. 
 
 And yet we know only too painfully that dislocation 
 of the machinery does take place, and that until recently 
 these dislocations were looked for in regular recurring 
 cycles of periodicity, and with a length of span or interval 
 of only a decade. 
 
 Their course is marked by a repetition of the golden 
 number seven and I propose briefly to consider them, 
 dating from 1837, on to 1847, 1857, 1866, 1875, 1878, 1890, 
 and lastly, 1893 though in the present century they are 
 identified with the years 1807, 1817, and 1826, in addition 
 to those specified later. 
 
 The distinctive features are: 
 
 1837. Undue Railway Speculation. 
 
 1847. Railways and Company mania, and Famine 
 
 in Ireland. 
 
 1857. America, Liverpool and Glasgow Trade. 
 1866. Financial Overend, Gurney & Co. 
 
 1875. Alexander Collie & Co., Manchester and India 
 Goods. 
 
 1878. City of Glasgow Bank Australian Colonies 
 and India.
 
 II 
 
 1890. Financial Baring Bros. & Co. 
 1893. Australian Banking. 
 
 For each and all of these there must be and is an 
 ascribable cause. 
 
 The God of Commerce, Mercury, when in full health is 
 a splendid subject for contemplation, and notably in the 
 power of drawing together through the medium of peaceful 
 commercial operations, remote regions of the earth, bringing 
 Nations and Races into contact ever gradually trending to 
 the dawn and the enduring day of universal civilisation, it 
 not of brotherhood, and by its means releasing the isolation 
 induced by the confusion of tongues the great decentralising 
 agency in the peopling of the world, of ever-varying 
 climates and conditions of life. 
 
 Max Muller speaks of the nine hundred languages that 
 are simultaneously spoken over our Globe. 
 
 But when it pleases us to upset and efface the smiling 
 tendencies of the beneficent God of Commerce, and we are 
 brought face to face with sickness and ailment of that 
 potent factor, the lessons to be drawn are not indifferent 
 ones, or merely passingly interesting. 
 
 Of Mercury in thrs stage I will now, with your per- 
 mission, take a brief glance beginning with the date ot 
 
 1837- 
 
 A necessarily brief review of these periods is all that 
 time will permit of, and I may have to ask you to pardon 
 slight interspersions of digressive matter, which, though not 
 perhaps strictly germane to the subject, yet seem of relative, 
 if not direct, importance. 
 
 I shall quote you from time to time the Bank rate, &c., 
 as a barometrical indication of existent ease or pressure, 
 and as evidence of the growing and waning excitability
 
 12 
 
 1837. Rail- 
 way Specula- 
 tion. 
 
 Banks. 
 
 Railways. 
 
 of temperament of the Old Lady of Threadneedle Street; 
 and who amongst us is there that is not deeply interested 
 in all her sensibilities r 
 
 Gentlemen, I approach my subject with every sense of 
 diffidence, relying upon your forbearance. It is an effort 
 to outwit the weapon of old Father Time, and in the 
 magic working of the keenly-cutting scythe, the minute is 
 to be substituted for the year. The period embraced is 
 full fifty years. 
 
 THE PANIC OF 1837. A- 8 I have said, the crisis previous 
 to this was in 1826, and from that date, as is usual after a 
 time of depression, signs of returning prosperity were 
 eagerly watched for, and a distinct improvement began to 
 be manifest after an abundant harvest in 1834, and there 
 was a decided and continuous steady growth of improve- 
 ment, but without the element of undue general speculation 
 being apparent. 
 
 But by degrees the commercial spirit of the nation 
 became more attracted by the Stock and Share markets, than 
 by those for produce and manufactures, and during the 
 period from 1834 to 1836 it was estimated that some 300 
 companies were started, the capital subscribed being nearly 
 ; 1 35,000,000 (135 millions), comprising Joint Stock Banks 
 notably the London and Westminster in 1834, with con- 
 siderable pertinacity of purpose, and later on extensive 
 development, and the London Joint Stock in 1836. Mining 
 projects came into favour, and, lastly, the projection of 
 Railways upon an extensive scale, such as the Great 
 Western, the South Western, South Eastern, and London 
 and Brighton, all pre-eminently useful projects, the rail- 
 ways absorbing over 69 millions of capital, banking 
 23! millions, mining seven millions, insurance over
 
 13 
 
 seven millions, and for miscellaneous objects, roughly, 
 25 millions. 
 
 In consequence of the development into excessive specu- 
 lation in these directions, and with resultant inflation of 
 prices, the bullion in hand at the Bank of England was 
 depleted, falling as low as 4^ millions at the close of 1836. 
 
 Added to the state of tension here, trouble arose in the 
 United States, and with a resultant effect of the bankruptcy 
 of 250 so-called banking houses. 
 
 The intimate and close association of trading interest 
 between England and America at this date intensified the 
 trouble here. 
 
 Briefly, the ensuing stringency, prevalent and subsequent 
 depression, are attributable to railway mania speculation, to 
 be further followed up at a later date, and to undue facilities 
 for credit afforded by Banks other than the Bank of 
 England, by excessive issue of bank paper, and by other 
 facilities for the granting and increase of credit, leading 
 ultimately to the consideration of the system of banking, 
 and practically evoking the Bank Charter Act of 1844 as 
 the outcome of reforms then deemed necessary. 
 
 This period is mainly identified with railway extension, 
 and, if at the time the results were disastrous, their bene- 
 ficent effect has been made abundantly apparent since. As 
 distributors, as a means of communication and transit, the 
 value of railways increases and grows daily, and to George 
 Stephenson, with his appropriately named and first publicly 
 running locomotive, the "Rocket" (which in 1829 travelled 
 at the rate of twenty-five and thirty-five miles an hour, 
 and obtained, in October, 1829, the prize of ^500 offered by 
 the Directors of the Liverpool and Manchester Railway 
 Company for the best locomotive), belongs the credit, as an
 
 14 
 
 inventor of peaceful intentions, of the honour of producing 
 a civilising agency second only to the power of the Printing 
 Press ; for while the latter conveys and communicates 
 thought, the Railway induces and permits the equal benefit 
 of ready personal contact, and the better understanding 
 promoted thereby. 
 
 In contrast to railway pace, in the best days of coach- 
 ing the record from London to Edinburgh was forty-two 
 hours twenty-three minutes. In August, 1895, the same 
 distance was done by an East Coast train in six hours 
 nineteen minutes. 
 
 The year 1837 also witnessed the introduction of Cooke 
 and Wheatstone's patented electric telegraph, and in the 
 same year also that of Professor Morse, of the United 
 States. 
 
 The railway records at this period are that from 1826 to 
 1835 Acts were passed to raise 19 millions capital and 
 loans. 
 
 From 1836 to 1843, 60 millions; in 1844, 14^ millions; 
 and in 1845, 59,613,000. 
 
 In 1846 additional schemes were launched, involving an 
 expenditure of 560 millions, and shares and stocks were 
 gambled in recklessly. 
 
 Great Western, issued for 8,168,000, were worth in the 
 market 13,500,003, and Midland, 4,180,000, the selling 
 price of which was equal to seven millions, are fair 
 examples, and in other cases the rise was fabulous. 
 
 In 1825 the first railway which demonstrated steam loco- 
 motion as a fact, by George Stephenson, was the Stockton 
 and Darlington, followed by the Liverpool and Manchester, 
 which was the first passenger railway, and now forms part 
 of the London and North Western system, the richest and
 
 15 
 
 most powerful of our railways, of which there are now 
 thirty-one principal Companies in the United Kingdom. 
 
 The total Capital now invested in the world's railways 
 probably represents one-tenth of the total wealth of civilised 
 nations, and one-quarter, if not one-third, of their invested 
 capital. The railway capital of the United Kingdom is half 
 as great again as the whole National Debt. 
 
 In 1839 Mr. (afterwards Sir Rowland) Hill propounded 
 the scheme of uniform penny postage, which was adopted 
 in 1840, the Postal Union, later on, being concluded in 
 1874, and renewed in 1878. 
 
 Retrenchment of commitment, with careful husbanding 
 of available resources, and steady development of productive 
 enterprises and productive capacity, mitigate in succeeding 
 years the ravages of undue and imprudent speculation, 
 proving that the energy of the world cannot be effaced or 
 stand still under any shock, however severe it may appear 
 to be at the period of its occurrence. 
 
 An interval of breathing time, for the patient exercise of 
 the grandmotherly quality of prudence, enables recuperation 
 to take place, and from periods of undue appreciation to 
 abnormal depreciation, the Yeturn to the normal or natural 
 is the inevitable outcome. 
 
 But while the scars remain the wound is often forgotten, 
 and the quicker swing of the pendulum is stimulated the 
 jog-trot hum of the wheel of commerce is again exchanged 
 for a run at an accelerated pace. The years succeeding 
 1837 pass quietly along under conditions of fairly cheap 
 money, until we find that in September, 1844, the Bank rate 
 fell to 2 1 per cent. 
 
 But prior to this date the Bank of England rate was Bank Rate 
 
 of Discount. 
 
 never reduced below 4 per cent.
 
 i6 
 
 Railways had continued, as I have indicated, to receive 
 attention, and in the issues following 1837 we find the 
 Midland and the Furness in 1844, the North Western and 
 the Great Northern of Scotland in 1846. 
 
 Tightness of money in consequence began to be 
 apparent, and the rate was raised loth April, 1847, to 5 per 
 cent., and to 8 per cent, on 23rd October. 
 1847. Rail- I 847- Commodities which had, in the interval, been 
 
 way and Com- 
 
 pany Mania. ruling at steadily increasing prices, lost ground in conse- 
 quence, and corn and cotton suffered heavy shrinkage in 
 value, while undue speculation had taken place in iron. 
 Contraction of business facilities resulted. 
 Bankers had to resort to the Bank of England to meet 
 their customers' demands, and Consols fell to 85. 
 
 Sus ension of n O ctoDer 2 5 tn l &47> permission for the suspension of 
 Bank Charter. conditions of the recently created Bank Charter had 
 
 to be accorded, but under stipulation that the rate charged 
 Bank Rate. f r advances should not be less than 8 per cent. 
 
 This measure of relief had the desired effect, although 
 
 no resort had to be made to an increased issue by the 
 
 Bank. 
 
 The public mind was satisfied by the knowledge that 
 
 resources were existent to meet demands, and the panic 
 
 died down. 
 
 In 1847 we deal with records of railway extension, and 
 
 the continued speculation attendant, and also harvest 
 
 deficiencies prior to and culminating at that date, in- 
 
 clusive of the Irish famine. 
 Irish Famine. The total failure of the potato crop in Ireland in 1846, 
 
 insignificant as a contributory cause though it may at first 
 
 sight seem, intensified the difficulties of the position by 
 
 entailing heavy expenditure in the acquisition of food
 
 17 
 
 supplies wherewith to stave off and bid defiance to the 
 spectre of famine in Ireland, and added to this was the 
 cost of importation of food supplies owing to deficient 
 harvest generally. 
 
 A probable estimate of the loss from the famine in 
 Ireland is 13 millions, and from four to five million quarters 
 of grain for food supplies were required. This disaster 
 had a terrible effect, and constitutes a distinct mark in 
 the history of Ireland, where the misery and helplessness 
 caused the greatest anxiety there and in England. 
 
 Three millions of the people were in receipt of poor 
 relief; large numbers succumbed to fever and pestilence. 
 
 Emigration was freely resorted to where possible. 
 
 The average price of wheat in June, 1847, was 925. lod. 
 per quarter, falling later on to 525. 3d. in December. In Corn Laws. 
 1847 twelve million quarters were imported, chiefly from 
 Russia and America, and, practically, this was the signal 
 for the abolition of the Corn Laws, to the infinite satisfac- 
 tion and credit of Richard Cobden. Cbbden. 
 
 In addition, speculation had been indulged in under false 
 expectations of generally extended trade at this date, while 
 the continued fixing of capital for development purposes, 
 say, in railway ventures, and its consequent diversion from 
 ordinary commercial transactions, was vast, and had been 
 fostered further by undue extension of credit facilities. 
 
 But it must be borne in mind that the position was 
 strong enough in itself, with the power to right itself in the 
 end when confidence was restored, evidenced by the fact 
 that although the severe check existed, and with its conse- 
 quent loss, the power to suspend the Bank Charter was 
 nothing more than a formality, as it was not acted upon as 
 regards an increased issue.
 
 i8 
 
 Bank of 
 France. 
 
 Baring 
 Brothers. 
 
 Bank of 
 England. 
 
 Gold 
 Discoveries. 
 
 I might here perhaps mention, merely as an incident, 
 that in September, 1839, the Bank of England borrowed 
 from the Bank of France two millions, and that the 
 operation was conducted by and effected through the 
 instrumentality of Messrs. Baring Bros., as intermediaries 
 and drawers of the bills upon certain specified bankers in 
 Paris, which bills were afterwards discounted and the pro- 
 ceeds paid to the Bank of England. This process was 
 resorted to, as it was not the practice of the Bank of 
 England to draw foreign bills, nor was the Bank of France 
 able to make advances other than by the discount of bills 
 or against Government securities. 
 
 Before proceeding now to the years subsequent to 1847, 
 a notable feature occurs in September, 1847, by the remark- 
 able discoveries of gold in California, and on the i2th 
 February, 1851, by Edward Hargreaves in Australia. 
 
 At that, and prior to that period, trade developments 
 had increased with the growth of the Century materially, but 
 without the refined systems of credit as now practised, and 
 working more upon actual currency, rather than, as now, 
 using it as a pivot and consequently rendering such dis- 
 coveries especially welcome in what seemed then the 
 necessary increase of currency, the absence of which had 
 probably suggested as expedients crudely used many of 
 those mediums and means of exchange now in vogue. 
 
 The question arises opportunely here as to the sufficiency 
 or otherwise of a requisite stock of gold, sufficing for trade 
 requirements, without endangering, by the leanness of 
 available quantity, that stage which has recently been so 
 animatedly debated viz., the comparison of the price of 
 commodities during an era of full gold supplies, with other 
 periods, when gold has seemed less plentiful, and appearing
 
 almost to be insufficient to meet the demands of the trade 
 of the world upon it, thereby tending, as it is stated, to 
 appreciation in the value of gold, as expressed by the price 
 of commodities, and to the depreciation in price of the 
 latter, and at least producing constant changes in the value 
 of money, as expressed by the rate of bidding for its attrac- 
 tion or retention, to the evident and obvious loss at times 
 to the trader, through increased interest or discount pay- 
 ments, and giving every possible opportunity for fluctuations 
 of a frequent, though not necessarily violent, nature, which Germany. 
 
 Gold 
 
 it has been maintained has been the case since 1873, the Standard, 
 date of the demonetisation of silver, and of the adoption of 
 the gold standard, by Germany, and also the date of the 
 practical breaking up of the Latin Union, the latter osten- Latin Union, 
 sibly for the avoidance of the unloading of Germany's 
 discarded silver. 
 
 There are fluctuations in the purchasing power of gold. 
 
 The glut of gold in 1851 increased then the prices of 
 goods. 
 
 The effect of the adoption of a gold standard in Germany, 
 as well as in other European Countries of less importance, 
 has been to depreciate the value of silver measured by a 
 gold standard. 
 
 Silver in appreciable quantity has been thrown upon 
 the market owing to demonetisation. 
 
 With gold required to take its place the supply had been 
 diminishing. 
 
 Consequently, if the value of gold depends upon the 
 relation of supply and demand, fair grounds existed for 
 stating that the supply had diminished and the demand 
 increased, the natural result being a rise in value of gold ; 
 and the declining prices of commodities since 1870, as 
 
 B 2
 
 2O 
 
 established by authoritative tabulated price lists, rendered 
 intelligible by the use of an index number, seem to substan- 
 tiate this. 
 
 Whether openly acknowledged or not, it appears to be 
 realisable that gold scarcity means appreciation in value of 
 gold as measured by commodities, and consequent depre- 
 ciation in value of commodities -assuming always that 
 commodities in their production are at least equal to the 
 consumption demand, not in excess of it. 
 
 That such influences are from time to time apparent in 
 
 the trade of the world, and operate adversely, and force 
 
 themselves forward, we in these later times have seen, and 
 
 South but for the fortunate discoveries of gold in South Africa 
 
 Africa. 
 
 (which, by some, is maintained to be the richest goldfield 
 the world has ever known), aided also by increased supplies 
 from other sources, partly through recently improved 
 mechanical methods of production and extraction, the ques- 
 tion would have been more keenly debated. 
 
 As it is, we have seen comparatively recently, strenuous 
 efforts made, to arrive at the knowledge of the amount 
 of the available quantity of gold in circulation, and 
 minute details entered into as regards the quantity used 
 for ornaments and decorations, and thus diverted from 
 currency purposes, so acute was the question of economising 
 the available supply. 
 
 The sense of relief from these inquiries, which now 
 appears existent, owing to nearness of rapid and continuous 
 replenishments and addition to our stock coming and to 
 come forward, will make apparent the value of the Cali- 
 fornian and Australian discoveries at the period now under 
 review. 
 
 But, as touching upon currency questions, now so
 
 21 
 
 prominent, I might usefully add here, that the effect of these 
 discoveries in Australia and California was not at the time 
 entirely beneficial, and it is curious to note that it is on 
 record, that some countries previously anxious to preserve 
 their gold circulation adopted now a reverse course. 
 Holland demonetised certain of her gold coins, Belgium 
 demonetised gold entirely, Russia prohibited silver expor- 
 tation, and Portugal only allowed a current value to English 
 sovereigns, while France was disturbed and inquired into 
 the matter by the instrumentality of a Commission. 
 
 Previous to this, gold had been at a premium, as silver 
 was in 1864, when it rose to 626.. per ounce. 
 
 The rectification of this position was conduced to by an 
 immense expansion of trade all over the world, causing 
 absorption by the power of employment of these resources, 
 w T hich otherwise appeared to be redundant. 
 
 Developments of public works, continued construction of 
 railways, the expense of the Russian War from 1854 to 
 1856, with the Indian Mutiny following on, causing a 
 draining expenditure with heavy remittances for costs. 
 
 From 1847 to 1853 money had been plentiful and cheap, 
 the Bank of England rate receding to 3 per cent, in 
 October, 1848, and not exceeding that rate until May, 1853, 
 with Consols touching par in May, 1852. 
 
 On the ist October, 1853, the Bank rate was raised to 
 5 per cent., the declaration of war by Turkey against Russia 
 being at that date. War was subsequently declared by 
 England and France against Russia in March, 1854, and 
 peace proclaimed March, 1856. 
 
 The Bank rate only fell below 5 per cent, from yth April 
 to 2Qth September, 1855, when it again reverted to 5 per 
 cent., and, with the slightest possible period of deviation,
 
 22 
 
 the rate held to 5 per cent., and increased until, on the 
 1 4th November, 1857, it was raised to 10 per cent., at which, 
 with Consols at 89, it remained until the 26th December, 
 when it was reduced to 8 per cent., and by rapid steps to 
 3 per cent, on the i3th February, 1858. 
 
 As previously stated, for a few years after the gold dis- 
 coveries the trade of the country progressed and expanded 
 vigorously, with considerable extensions to the United 
 States, France, and inevitably Australia. 
 
 Harvests had been uniformly good, and prices remune- 
 rative to producers. 
 
 Prosperity seemed evident until the end of 1856. 
 
 At that date over-financing in America had produced 
 disastrous results, by great depreciation in value of railway 
 securities and the difficulties of banks, with subsequent 
 suspensions. 
 
 Owing to the closely - drawn associations between 
 England and America at this date, it was inevitable that 
 the disturbance should extend to this country, and the 
 effect was especially severe as regards Liverpool, Glasgow, 
 and London. 
 
 London, as the great centre of the world's monetary 
 transactions, quickly took alarm, and the most serious 
 apprehensions were excited. 
 
 With credit restrictions the natural outcome of distrust 
 and excitement and the natural desire to accumulate 
 readily available resources by the banks (the great reser- 
 voirs of the capital of the country), bills not being met at 
 maturity, and deposit withdrawals occurring ; with calls from 
 everywhere, for strengthening purposes, upon the ultimate 
 reserve -holder, the Bank of England, which was freely had 
 recourse to as usual, the position was yet not so bad that,
 
 23 
 
 but for an untoward sequence of events, serious as it was, 
 it might have been tided over. 
 
 The successive events which precipitated the next crisis, 1857. 
 
 America, 
 
 that of 1857, were, first, the failure of the Liverpool Borough Liverpool, and 
 
 Glasgow. 
 
 Bank (the depleted reserve at the Bank of England stood 
 on the 5th November, 1857, at only 2,944,000), followed 
 quickly upon by the failure of the great Anglo-American 
 House of Dennistouns on the 7th November, with liabilities 
 of two millions ; the Western Bank of Scotland, on the gth ; 
 and the City of Glasgow Bank on the nth. 
 
 A rapid succession of disasters, the significance of which 
 could not be gainsaid, emphasised by the drain upon the 
 reserve of the Bank of England, which on the i ith November 
 had decreased to 1,462,000, so that, recognising the serious- Suspension 
 
 of Bank 
 
 ness of the position, the Government, again, on the 1 2th Charter. 
 November, as in 1847, authorised the suspension of the 
 Bank Charter. 
 
 The Bank rate at this juncture had been raised to 10 per Bank Rate, 
 cent., as against 8 per cent, in 1847; but even with this 
 prohibitive charge the Barik was powerless. 
 
 Under a Governmental authorisation, the Bank issued Bank Note 
 
 Issue, 
 two millions of notes, represented by securities passed to 
 
 the issue department, this period differing from 1847 in 
 that, although in that year the suspension of the Charter 
 took place, no issue was made ; but, although the issue of 
 two millions was now made, it is on record that the Bank 
 was only under the necessity of parting with about half 
 roughly, ,928,000 the remainder being held as reserve in 
 the banking department, which also held 407,000 in coin. 
 
 The relief measure of the suspension of the Charter had 
 the effect of allaying apprehensions. 
 
 Although this crisis is mainly identified with England
 
 24 
 
 and America, the close linkage of monetary centres, and 
 the known ramifications of commercial transactions, readily 
 make it apparent that disturbances in principal countries 
 like these induce adverse results beyond their limits, and 
 difficulties in Norwegian, Swedish, Danish, and Prussian 
 trade each added their quota of disquietude. 
 
 In opposition to these disturbing and disastrous influences 
 to continuous development, one great factor towards this 
 end may usefully here be recorded. It is true " that peace 
 hath her victories, no less renowned than war," and while 
 we are face to face with the fact that the Russian War, 
 1854-1856, entailed upon the nation an expenditure of nearly 
 70 millions of ruinous cost, we are permitted to counter- 
 balance this loss by the wonderful and enriching discovery, 
 so prolific in its remunerative and otherwise advantageous 
 Bessemer results, of the Bessemer invention in 1856, for improve- 
 
 Invention. . 
 
 ments in the manufacture of iron and steel, and also the 
 discovery in the same year of aniline dyes. 
 
 The vast revolutions peacefully achieved which these dis- 
 coveries have effected are patent to all, and their benefits 
 still exist. 
 Abolition of In 1860 we might also record the abolition of the 
 
 Duty on 
 
 Paper. duty on paper, with the consequent benefit to the Press 
 
 especially, which, side by side with the railway loco- 
 motive, has been a most powerful and beneficial element 
 in the world's progress and civilisation. 
 
 In 1860 also occurred a momentous event in the history 
 of the American Nation, by the election in November of 
 that year, of Abraham Lincoln as President, and as a con- 
 sequence the speedy secession of the Southern States, 
 resulting in a wasteful and gigantic Civil War between the 
 Southern Slave States and the Northern Free States.
 
 25 
 
 The defeat, after a protracted struggle, of the former, 
 and the resultant settlement of the slavery question are now 
 matters of history, as also the lamentable assassination of 
 President Lincoln after his re-election. 
 
 The effect of the American Civil War could not fail to American 
 
 Civil War. 
 
 be severely felt here, and the distress entailed upon the 
 Lancashire industries by the limited importation of cotton 
 is notable. 
 
 In 1860 we imported 1,391 million pounds of cotton, of 
 which 1,115 millions came from the United States. 
 
 In 1862 the imports amounted only to 6,394,000 Ibs., 
 and the average price of middling cotton in 1860 was 6-n>-d. 
 per lb., but in 1864 rose to 2yfd. 
 
 The check to America by this civil war was felt far 
 beyond her own bounds. Increased taxation, and the 
 enormous increase of paper currency, created economic con- 
 ditions extremely adverse, not only to her own progress 
 but to commerce generally. 
 
 * 
 
 I should, perhaps here, fittingly make mention, as not Companies 
 
 Act, 1862. 
 
 being without interest to you as a Body, and as a feature 
 of the period, the passing of the Consolidation Act the 
 Companies Act, 1862 which received the Royal assent on 
 the 7th August. 
 
 Companies with limited and unlimited liability have 
 figured conspicuously in the piping times of peace, and have 
 also figured disastrously at the sounds of war's alarms, 
 and in notable instances may be said to have precipitated 
 certain of our worst panic experiences. 
 
 The record here as regards the value of money is of 
 a sharp rise from 5 per cent., on i3th November, 1860, to 
 8 per cent. i4th February, 1861, and thence rapidly declining 
 to 2 per cent. from 5 per cent, on 2nd November, 1863,
 
 26 
 
 Bank Rate. 
 
 Overend, 
 Gurney & 
 Co., Ltd. 
 
 to 8 per cent, on the 3rd December, fluctuating down to 
 6 per cent, on 25th February, 1864, and thence up to 9 per 
 cent, on the 5th May, 1864; again down, and up again to 
 9 per cent, on the 8th September, 1864, until the loth Novem- 
 ber, and then steadily down to 3 per cent, on i5th June, 1865. 
 
 From that point continuously and significantly upward, 
 until 10 per cent, was reached on the i2th May, 1866, 
 with Consols at 86. 
 
 1866. The memorable nth May, 1866, styled then and 
 since " Black Friday," brings us face to face with a crash 
 of terrific magnitude, and indelibly associated with this 
 memorable year the name of Overend, Gurney & Co., 
 Limited, stands forth pre-eminently upon the Black List. 
 
 Who is there that was actively associated with the 
 busy hum of the world of commerce at that date that 
 can forget the appearance of Lombard Street and the 
 Banking quarters with the dense and struggling masses 
 striving for entrance into and exit from practically every 
 banking house ? It might be said all ages, of both sexes, 
 seemed for the day to have lost all belief in stability, as 
 the result of pure panic-scare, and favoured good, bad, and 
 indifferent institutions with their pressing requirements of 
 withdrawal. It was a picture to remember, "once seen, 
 never forgotten," a " run," in banking parlance, a "stampede" 
 in common sense. 
 
 Prior to its appearance in the form of a limited company, 
 the Firm had enjoyed for years a unique position of un- 
 questioned credit, and with power to afford facilities second 
 only to that of the Bank of England. 
 
 The position was rightly accorded for their known wealth 
 and business capacity, and the Firm's profits, as bill brokers, 
 
 See Addenda were enormous. 
 
 at end.
 
 2 7 
 
 It is stated that in 1860 the divided profits among the 
 Partners amounted to ,190,000. 
 
 As is frequently the case, the retirement and death of 
 partners, leading to the consequent withdrawal of partner- 
 ship capital and ripe experience, both have their share in 
 indicating the causes of the breakdown. 
 
 The head of the house of Overend, Gurney & Co., Mr. 
 Samuel Gurney, died in 1856, and Mr. David Barclay 
 Chapman retired in 1857. 
 
 With an unrivalled position and name, the Firm's com- 
 mitments were attempted upon the same scale of magnitude, 
 and a continuance of this in the effort to sustain profits, 
 with diminished resources and experience, must mean extra 
 risk ; a lessened exercise of caution in the selection of risk 
 inevitably leading up to unliquid, unreadily realisable 
 resources, and to positive lock-ups in forms of securities 
 against advances. 
 
 The liquidation following upon the suspension revealed 
 ruinous transactions in this respect, and which were passed 
 over to the Limited Company in the Firm's assets, many 
 of which latter were of a very doubtful nature. 
 
 With a presumed valuable' goodwill, stated to be worth 
 half a million sterling, and an apparently well-established 
 business, but requiring fresh capital, recourse was had, in 
 July, 1 865, to Limited Liability Company formation. 
 
 A Prospectus was issued, dated i2th July, an original 
 copy of which I have here the pleasure to exhibit to you, 
 and the particulars of which I here append :
 
 28 
 
 Prospectus. OVEREND, GURNEY & COMPANY, LIMITED. 
 
 (Incorporated under the Companies Act, 1862.) 
 
 Capital - - 5,000,000, in 100,000 Shares of 50 each, 
 Of which it is not intended to call up more than ^15 per Share. 
 
 Deposit on Application, 2 per Share ; ^5 per Share on Allotment ; ^4 per 
 Share on the I5th September, and the same on the 15th November. 
 
 Directors. 
 
 HENRY EDMUND GURNEY, Esq., 65, Lombard Street. 
 
 JOHN HENRY GURNEY, Esq., 9, St. James's Square, and Catton Hall, Norwich. 
 ROBERT BIRKBECK, Esq., 65, Lombard Street. 
 HENRY FORD BARCLAY, Esq., Monkhams, Woodford, Essex. 
 THOMAS A. GIBB, Esq (Messrs. T. A. Gibb & Co.), 72, Old Broad Street. 
 HARRY G. GORDON, Esq., Chairman of the Oriental Bank Corporation. 
 WILLIAM RENNIE, Esq. (Messrs. Cavan, Lubbock & Co.), 16, Leadenhall Street. 
 
 Bankers. 
 
 BANK OF ENGLAND. 
 Messrs. BARCLAY, BEVAN, TRITTON, TWELLS & Co., 54, Lombard Street. 
 
 Brokers. 
 Messrs. SHEPPARDS, PELLY & ALLCARD, 28, Threadneedle Street. 
 
 Solicitors. 
 Messrs. YOUNG, JONES, VALLINGS & ROBERTS, St. Mildred's Court, E.G. 
 
 Offices. 
 65, LOMBARD STREET. 
 
 Temporary Offices for Allotment and the Registration of Shares. 
 51, LOMBARD STREET. 
 
 THE Company is formed for the purpose of carrying into effect an arrangement 
 which has been made for the purchase from Messrs. Overend, Gurney & Company 
 of their long-established business as Bill Brokers and Money Dealers, and of the 
 premises in which the business is conducted; the consideration for the goodwill 
 being ,500,000, one-half being paid in cash and the remainder in Shares of the 
 Company, with ^15 per Share credited thereon terms which, in the opinion of 
 the Directors, cannot fail to ensure a highly remunerative return to the Share- 
 holders. 
 
 The business will be handed over to the new Company on the ist August next, 
 the Vendors guaranteeing the Company against any loss on the assets and liabilities 
 transferred. 
 
 Three of the members of the present Firm have consented to join the Board of 
 the new Company, in which they will also retain a large pecuniary interest. Two of 
 them (Mr. Henry Edmund Gurney and Mr. Robert Birkbeck) will also occupy the 
 position of Managing Directors and undertake the general conduct of the business.
 
 2 9 
 
 The ordinary business of the Company will, under this arrangement, be carried 
 on as heretofore, with the advantage of the co-operation of the Board of Directors, 
 who also propose to retain the valuable services of the existing staff of the present 
 establishment. 
 
 The Directors will give their zealous attention to the cultivation of business of a 
 first-class character only, it being their conviction that they will thus most effectually 
 promote the prosperity of the Company and the permanent interests of the Share- 
 holders. 
 
 Copies of the Company's Memorandum and Articles of Association, as well as 
 of the Deed of Covenant in relation to the transfer of the business, can be inspected 
 at the Offices of the Solicitors of the Company. 
 
 Applications for Shares must be accompanied by the payment of a deposit of 2 
 per Share, which will be received by Messrs. Barclay, Bevan, Tritton, Twells & 
 Company, 54, Lombard Street. 
 
 In the event of no allotment being made, the deposit will be returned in full ; 
 should a less number of Shares be allotted than are applied for, the deposit will, 
 so far as required, be appropriated towards the payment due upon allotment. 
 
 LONDON, i2th July, 1865. 
 
 OVERENDS. This Company was registered i2th July, 
 1865, with a capital of five millions, in 100,000 shares of 
 ^50 each, the consideration for the goodwill of the firm's 
 business being ^500,000, one-half to be paid in cash, 
 remainder in shares, with 15 credited thereupon. The 
 business, that of money dealers and bill brokers, was 
 handed over to the Company on ist August, 1865, as set 
 forth in the Prospectus. 
 
 The Vendors entered into an agreement by which their 
 Private Estates were made liable to make good any loss 
 by insufficiency of assets as against liabilities. 
 
 All the capital was allotted and 15 per share paid 
 up, making, with 1,250,000 by Public subscription and 
 250,000 allotted to partners in Overend, Gurney & Co., 
 a total of one and a-half millions. 
 
 The public eagerly subscribed, but without knowing 
 the true position, and Overend, Gurney & Co., Limited, 
 superseded the Firm.
 
 30 
 
 So far as outward evidence may indicate, there was 
 considerable tension in the Money Market, as expressed 
 by the high Bank rate, but no open fear of calamity on 
 the part of the public right up to the date of the actual 
 suspension of Overend, Gurney & Co., Limited, on the 
 loth May, 1866; but it is certain, and I speak advisedly 
 from knowledge as to this, that in certain privileged 
 quarters, where overtures for assistance had been made by 
 the Company, that the knowledge of and consequent pre- 
 paration for the event did exist, and it probably must be 
 always so confined to the few at the expense of the many. 
 Gazette I here append the Gazette notices. 
 
 Notices. 
 
 From the London Gazette, nth May, 1866: 
 
 "In the matter of the Companies Act, 1862, and of 
 Overend, Gurney & Co., Limited. 
 
 u Notice is hereby given that a petition for winding- 
 up the above-named company by the Court of 
 Chancery was, on the nth day of May, 1866, pre- 
 sented to the Master of the Rolls by Henry Edmund 
 Gurney, of Lombard Street, in the City of London, 
 Esquire, and others, Directors of the said company, 
 and that the said petition is directed to be heard 
 before his Lordship the Master of the Rolls on the 
 28th day of May, 1866, and any creditor or contributory 
 of the said company desirous to oppose the making of 
 an order for the winding-up of the said company 
 under the above Act, should appear at the time of 
 hearing, by himself or his Counsel, for that purpose, 
 and a copy of the petition will be furnished to any 
 creditor or contributory of the said Company requiring 
 the same, by the undersigned, on payment of the 
 regulated charge for the same."
 
 Young, Jones, Roberts & Hale, 2, St. Mildred's Court, 
 Poultry, London, Solicitors for the Petitioners. 
 And, further, following: 
 
 " In Chancery Vice-Chancellor Wood, for the Master 
 of the Rolls. 
 
 " The Judge, Vice-Chancellor Wood, acting for the 
 Master of the Rolls, doth hereby appoint William 
 Turquand, of No. 10, Tokenhouse Yard, in the City of 
 London, Accountant, and Robert Palmer Harding, of 
 3, Bank Buildings, in the City of London, Accountant, 
 to be provisional official liquidators of the above- 
 named company. 
 
 "Dated this nth day of May, 1866." 
 
 The rush for assistance, to the Bank of England, during 
 the panic scare was so great, that its resources were 
 rapidly depleted (the reserve running down to ^859,000, 
 as shown by ist June return : at one period, from the 
 middle of April, it had not exceeded six and a-half 
 millions, and decreased from then), and for the third 
 time since 1844, the date of the Bank Charter Act, an 
 appeal was made to the Government to authorise its Suspension of 
 
 Bank Charter. 
 
 suspension, the position being described with regard to 
 the state of things in the City, as one of extraordinary 
 distress and apprehension, differing from 1847 an d 1857 i n 
 that those were periods of Mercantile distress, whereas 
 now Banking credit was involved, and, moreover, the 
 crisis had arrived with an intense rapidity. 
 
 The Government authorised the suspension, again 
 stipulating for a minimum rate of 10 per cent, for Bank Rate, 
 advances, then and now, apparently, the recognised high- 
 water mark of alarm and of the open indication of such
 
 32 
 
 feeling fine bills were actually discounted at rates up to 
 15 per cent, per annum. 
 Bank Note There was, however, no necessity for an issue aerainst 
 
 issue. * 
 
 securities, as in 1857. 
 
 The ship had power to jettison the regulations of the 
 Act of 1844 to her obvious relief, and also that of the public 
 mind, and the position gradually righted after a fearful " list." 
 
 Mr. Lancelot Holland, the Governor of the Bank of 
 England, in speaking of this crisis in September, 1866, 
 said : " Looking back, however, upon recent events, I 
 cannot take any blame to this court for not having been 
 prepared for such a tornado as that which burst upon 
 us on the nth May, and I hope the Court of Proprietors 
 will feel that their Directors acted properly upon that 
 occasion, and that they did their best to meet a very 
 extraordinary state of circumstances. 
 
 " The downfall of Overend, Gurney & Co., Ld., and of 
 many other houses, must be traced to the policy which they 
 adopted of paying interest on deposits at call, while they 
 were themselves tempted to invest the money so received, 
 in speculations in Ireland, or in America, or ' at the 
 bottom of the sea,' where it was not available when a 
 moment of pressure arrived. We advanced in the space 
 of three months the sum of 45 millions, and what more 
 than that do you want r " 
 
 Early in 1866 heavy withdrawals by depositors took 
 place, with a great fall in the price of the shares of 
 Overend, Gurney & Co., Ld. 
 
 A first meeting of creditors was held iith June, 
 1866, and W. Turquand and R. P. Harding were 
 appointed liquidators, with a Committee of two Share- 
 holders and one Depositor.
 
 33 
 
 On 22nd June, 1866, the Court of Chancery made an 
 order for continuing the winding-up. 
 
 The liabilities, approximately, and allowing for contin- 
 gent liabilities, at the date of suspension amounted to 
 18,727,915 133. 8d. 
 
 The assets included a debt due by the old Firm of 
 2,970,168 75. iod., secured by certain assets of the old 
 Firm and also the private estates of the Partners, and 
 otherwise the ordinary assets of bills, debts due, and premises. 
 
 The assets of the old firm realised 688,560, and the 
 private estates produced 909,870. 
 
 The shareholders were called upon to pay an addi- 
 tional 25 per share (making 40 in all): in 1866, 10; 
 1867, 10; and 5 ist March, 1869. 
 
 Twenty shillings in the pound was paid to the Creditors, 
 with interest; the first dividend in December, 1866, the 
 last on 3oth June, 1870. 
 
 The Shareholders ultimately received back a total of 
 7 1 8s. 2d. per share, the last payment to them being 
 made in December, 1891. 
 
 Complicated litigation had to be resorted to during the 
 liquidation, and with poor results. 
 
 The cost of the liquidation, extending over the whole 
 period, including all expenses, and excluding an item for 
 rent, &c. (14,367 53.), amounted to 122,588 2s. iod. ; the 
 actual amount received by the Liquidators being7 1,946 33. 4d., 
 and the Committee of Supervision 6,750. The law costs 
 were 52,007 125. 2d. 
 
 The account of receipts and payments by the Liqui- 
 dators from loth May, 1866, to i6th November, 1893, 
 showed 5,729,281 os. 7d., including proceeds of calls, 
 2,088,286, and cash on hand, 28,383.
 
 34 
 
 The liquidation concluded ist July, 1892, and a final 
 meeting was held i6th November, 1893, the Liquidator, 
 Mr. Whinney, present, then remarking that " only those 
 persons who were of full age in 1866 could realise what 
 the panic then was. It was alleviated but not stopped 
 by the suspension of the Bank Charter Act." 
 
 Amidst even intense anxiety the ludicrous is seldom 
 absent, and it was stated, as regards Black Friday, that 
 a cool-headed partner in a banking firm induced dis- 
 quietude, by rushing in with the statement that he could 
 not " get any," and it was assumed that he referred to 
 assistance, but upon explanation it proved to be Plovers' 
 egg's ' f r a " feed." The explanation was more satisfac- 
 tory than the announcement, when men's hearts were 
 failing them. 
 
 Truly the stomach is near the heart, and will intrude 
 
 itself even in the stirring events of a campaign. (An 
 
 Army General once said that soldiers fight upon their 
 
 stomachs, meaning an empty or a full one.) 
 
 Overend, The concluding fiasco of Overend, Gurney & Co., 
 
 Gumey & Co., 
 
 Ld - Limited, was the appearance of the Directors for trial at 
 
 Directors' 
 
 Tnal. the Guildhall, but the verdict was one of acquittal, on 
 
 22nd December, 1869. 
 
 I may here state, that I have the honour and the 
 esteemed privilege of daily personal association with a 
 Member of the Grand Jury which brought in the trw bill 
 of indictment, but who, for the needless notoriety now, 
 must remain nameless, and also that we have present a 
 member of the staff of Overend, Gurney & Co. 
 
 It is worthy of mention here, that malpractices were 
 resorted to during this period of 1866 by " bears " for 
 wrecking Banking Institutions, by the spreading of
 
 35 
 
 insinuating false reports as to their position, and by the 
 systematic sale of shares, which tactics, unhappily in 
 mora than one instance, bore fateful results. 
 
 To remedy this, George Leeman introduced a short George Lee- 
 man's Act. 
 Act, which bears date iyth June, 1867, and entitled "An 
 
 Act to Amend the Law in respect of the Sale and Pur- 
 chase of Shares in Joint Stock Banking Companies," 
 which set forth that "All contracts, agreements, and 
 tokens of sale and purchase after 1st July, 1867, for sale 
 or transfer (or purporting) of any share or shares, or of 
 any stock or other interest in any Joint Stock Banking 
 Company in the United Kingdom of Great Britain and 
 Ireland . . . shall be null and void, unless it shall 
 set forth by the respective numbers by which the same 
 are distinguished at the making of such contract, &c., 
 or, where there is no such register distinguishing num- 
 bers, shall set forth the person or persons' names regis- 
 tered as Proprietors." 
 
 "This Act shall not extend to shares or stock in the 
 Bank of England or the Bank of Ireland." 
 
 The object was, to prevent purely speculative "bear" 
 sales, with the power to wreck, the " bears " taking the full 
 risk which such sales gave, and which was a power of no 
 mean dimensions, with a fortnightly account and a further 
 ten days in which to deliver roughly, twenty-four days' 
 time. 
 
 The Act is in force here now, but is a reserve power Victorian 
 
 Parliament. 
 
 seldom acted upon, and practically a dead letter; but its 
 provisions were made law in the Australian crisis of 1893 
 by the Victorian Parliament, the position seeming again to 
 require the power of prevention. 
 
 On the 25th July, 1867, the Bank of England rate was 
 
 C 2
 
 36 
 
 Bank Rate, reduced to its lowest rate of 2 per cent., and remained at 
 that rate until the igth November, 1868 a duration ot 
 sixteen months ; and though for a week it stood at 6 per 
 cent, in August, 1870, it ruled considerably below 5 per 
 cent, until i5th May, 1872, rising again to that rate on 
 3rd October, to 6 per cent, on the zoth, and to 7 per cent, 
 on the gth November, declining thence sharply to 3^ on 
 3oth January, 1873. But later in 1873 the year of the 
 realisation of " leaps and bounds " in our commercial pros- 
 perity, as so described by the Right Hon. W. E. Gladstone 
 we find that 9 per cent, was reached on the 7th November, 
 after a sharp rise to 7 per cent, and fall to 3 per cent, on 
 2ist August in between, and thence upward, with no less 
 than twenty-five changes in the year 1873. 
 
 Alexander 1875. In the middle of June, 1875, disaster again 
 
 Collie & Co. 
 
 occurred this time in the Manchester and India trade by 
 the failure of Alexander Collie & Co., of Manchester and 
 Leadenhall Street, London, and in consequence this year 
 became known then, and since, as the " Collie " year. 
 
 The liabilities of this Firm were estimated at three 
 millions ; but Firm after Firm, as a result of the failure ot 
 this house, suspended payment, one house having nominal 
 liabilities of two and a-half millions. 
 
 The firm of Collie consisted of two brothers, Alexander 
 and William Collie. 
 
 The trustee in bankruptcy was the late Mr. John Young, 
 of Turquand, Youngs, and the realisation of the Estate 
 proved to be a lingering and disastrous one for the 
 Creditors, the actual amount of dividend paid by this par- 
 ticular estate being only at the rate of is. io||d., disbursed 
 in six instalments, in 1876, 1878, 1880, 1883, 1885, and the 
 final closing of account took place in June, 1889.
 
 37 
 
 At meetings of Creditors, and by statements from respon- 
 sible quarters, it transpired that the debtors had been living 
 in all the prodigality of luxury that between them they 
 had been in the habit of drawing ^ 2 0,000 a year for their 
 personal expenditure, Mr. Alexander Collie having drawn 
 123,000 for himself. 
 
 The lease of Alexander Collie's house in Kensington 
 Palace Gardens sold for 38,500, and the " costly contents " 
 were the subject of five days' sale. 
 
 It is notorious in connection with that year, that, in Bank 
 
 Dividends. 
 
 consequence of losses sustained, the leading Joint Stock 
 Banks had to reduce their half-yearly Dividends, in addition 
 to otherwise providing for the losses sustained. 
 
 A feature of this firm's transactions was, that they did 
 not accept Bills, and there was not a single Acceptance of 
 theirs existent at the date of their failure. 
 
 They drew upon Houses many of whom were entirely ot 
 their own creation, and who were financed by them. 
 
 On the 2ist July both Partners, whose Capital existed 
 only in name, were charged at the Guildhall Police Court 
 for having obtained money by false pretences, in drawing 
 Bills with marks and numbers upon them, indicating that 
 they referred to Cotton and Ledger accounts ; but, in fact, 
 they were only Accommodation Bills. 
 
 It was proved that there were no such goods sold, no 
 such accounts in the ledger, and no goods accounts between 
 the acceptors and the prisoners. 
 
 As a matter of fact, goods to the extent of 100,000, 
 roughly, were all that represented i| millions of Bills in the 
 hands of Banks and other Firms. 
 
 On the gth August it was announced that Alexander 
 Collie had absconded.
 
 38 
 
 Warrants were granted for his apprehension, but he was 
 
 not arrested, and it was afterwards ascertained that he was 
 
 in Spain, between which Country and this, at that time, no 
 
 Extradition treaty existed. 
 
 jabez Balfour. The charge was not proceeded with as against William 
 
 "Liberator." 
 
 Collie, and Alexander Collie died in New York on 23rd 
 November, 1895, the date upon which Jabez Balfour, of 
 " Liberator " fame, received his exemplary and well-deserved 
 sentence of imprisonment. 
 
 The effect of this failure was severely felt in the 
 Manchester and India Goods markets. 
 
 Goods had been pressed forward upon glutted markets, 
 and the stagnation that prevailed until stocks were 
 worked off, suggested every faddist panacea for the obvious 
 evil of over-production, such as shorter working hours 
 and controlled limitation of output. These were openly 
 advocated in the columns of the Economist. 
 Foreign 1875 is characterised as the year of repudiation and 
 
 Loans. 
 
 default as regards foreign loans, and in this year the 
 Foreign Loans Commission inquired into various issues 
 and revealed gross irregularities. 
 
 A few particulars may usefully be added here. In 
 1862 the Government National Debts of the World were 
 2,600 millions; in 1892, 6,150 millions; but the increase 
 from 1872 to 1882, in consequence of prior defaults and 
 disclosures in 1875, was only 789 millions, whereas from 
 1862 to 1872 it was 2,000 millions, principally by foreign 
 Governments; and from 1882 to 1892, again, only 756 
 millions; in both which latter periods, from 1872 to 
 1892, Colonial borrowings formed a considerable feature. 
 
 Between 1862 to 1872 the United States Civil War 
 cost the victors 450 millions, the Austro-German War
 
 39 
 
 added 60 millions, the Paraguayan War 40 millions, and 
 the Franco-German War added 390 millions to national 
 indebtedness, these four wars costing nearly half the 
 increase of 2,000 millions from 1862 to 1872. 
 
 Between 1862 and 1872 Turkey floated 130 millions, 
 Egypt 70 millions, Spain 220 millions, Portugal 40 
 millions, Italy 200 millions, and Russia no millions of 
 new loans. 
 
 In these ten years the debts of Foreign States were 
 more than doubled, the result being that in 1872 an 
 amount of National insolvency existed for which the 
 public were at the time quite unprepared, added to this 
 there were other external borrowings. 
 
 But the check to such investments was very real after 
 the great collapse in Foreign Loans in 1875. 
 
 The Market value of Stocks in London and Paris fell 
 seriously, and for two or three years these great Inter- 
 national Markets would hardly look at a foreign loan, even 
 where solvency was unimpeachable. 
 
 1875 is also notable as the year in which, in November, Suez Canal, 
 the British Government purchased the Khedive's interest 
 of 176,602 shares of ^20 each in the Suez Canal for four 
 millions through the instrumentality of Messrs. Rothschild. Rothschild. 
 
 This marvel of engineering skill was commenced 25th 
 April, 1859; it opened i7th November, 1879; its total 
 cost was 19 millions. 
 
 By the definition of Sir Stafford Northcote in 1879 it British 
 
 . Interest in the 
 
 displaced the importance of Constantinople as a British East of 
 
 Europe. 
 
 interest in the East. 
 
 From the 2oth April, 1876, until the 3rd May, 1877, Bank Rate, 
 we again had a twelve months' spell of a 2 per cent. 
 Bank rate.
 
 4 o 
 City of 1878. On the 2nd October, 1878, occurred the failure 
 
 Glasgow 
 
 Bank. of the City of Glasgow Bank a dismal date in the Com- 
 
 mercial, Banking, and social life of Scotland. 
 
 Of that reckless disregard of commercial rectitude, 
 which, in its after-effects smote Scotland hip and thigh, 
 and convulsed Society there, making it quiver in 
 rebellion to its base, in the first shock of the knowledge 
 of pecuniary loss of a ruinous nature, entailing havoc 
 and ruin upon many homes and names in Scotland ; and 
 also of the seeming breakdown in faith in the vaunted 
 perfectibility of its Banking system, it is sufficient now 
 to state that the canker was confined to this one spot, 
 and that Scotland remained true to its traditions of 
 steadfastness, and responded nobly to the effort required 
 from it. 
 
 It may be at once frankly stated that this Bank was 
 not regarded as of the Ai type, but its Acceptances were 
 for a time freely taken generally, and too freely created. 
 On this account we know that, as an expediting cause 
 of the actual suspension, they were viewed with suspicion 
 for remittance purposes. 
 
 At the date of suspension the amount of acceptances 
 was estimated at three millions. 
 
 Falsified balance sheets and dividend declarations, 
 dating as far back as 1873, had held the position up to 
 the very sudden date of the suspension, the direct 
 evidence of this being that the Market quotation per 
 .100 of stock the day previous was ,236. The smallest 
 holding of stock permissible was ^5. 
 
 At the date of the suspension the estimated liabilities 
 were ^12,404,297 8s. 3d. 
 
 The assets were estimated at ,5, 190,983 us. 3d.,
 
 showing a deficiency of over ^7,000,000, including the 
 capital of One Million. 
 
 The liability of the Shareholders, of which a meeting 
 was held on 22nd October, was unlimited. 
 
 The final catastrophe was ascribed to reckless trusting 
 of enormous sums to a few large insolvent Firms, which 
 had been continued for a very considerable space of time. 
 
 The total amount of bad debts which the Bank had 
 thus been treating as good on ist October was ^7,335,358. 
 Securities held against these were valued at ^1,743,234. 
 
 The confidence of Bill Brokers and Bankers had been 
 gradually broken down by the enormous quantity ot 
 Acceptances in circulation, but that of the general Public 
 was maintained to the very last moment, and the ordinary 
 business of the Bank was carried on quite as usual up to 
 the end of the ist October. 
 
 There was no run, or semblance of one, there was no 
 local discredit; the concern suddenly stopped because it 
 was utterly rotten, 
 
 The Notes were taken up by other Banks, and Depositors 
 were also relieved to the extent of 50 per cent. 
 
 The return of the note circulation, made up to 28th 
 September, was ^604,000. The authorised circulation was 
 only ^72,921. Add to this coin at Head Office and 
 branches, ,293,545, making a total of justifiable issue, 
 ,366,466. Fraudulent entries in the Bank's books to the 
 extent of .300,000 in the weekly return of bullion made 
 to the Government account for the difference. 
 
 "The suspension of Scotch banks in 1857 was only an 
 incident in, and not the originating cause of the crisis. 
 There had been a complete destruction of credit in the 
 United States, where nearly every Bank had suspended
 
 payment, and Mercantile failures were daily taking place 
 i 
 
 by the hundred." 
 
 The summary of Stockholders in the City of Glasgow 
 
 Bank in 1878 was as follows: 
 
 206 Spinsters ... ... ... ... held ^48,906 
 
 154 Married Women and Widows... ,, 54*653 
 
 98 Executors 57,653 
 
 76 Trustees 99,460 
 
 51 Bankers and Bank Officials ... 22,601 
 
 29 Insurance Agents ... ... 16,090 
 
 39 Ministers of Religion ... ... 24,270 
 
 62 Tradesmen... ... ... ... 20,540 
 
 28 Farmers 13,389 
 
 37 Solicitors and other Legal Men 28,366 
 
 99 Merchants ... ... ... ... 92,350 
 
 24 Medical Men ... ... ... 25,220 
 
 24 Manufacturers ... ... ... ,, 40,670 
 
 4 Shipowners and Builders ... ,, 9,100 
 
 10 Paper Makers ... ... ... ,, 66,017 
 
 389 Described formally as Gentlemen 253,619 
 Sundry others ... ... ... 2,850 
 
 It transpired that the Bank was a holder of .153,536 
 of its own stock (presumably against advances). 
 
 The Liquidators appointed were George Auldjo Jamieson, 
 William Anderson, John Cameron, and James Haldane. 
 
 On the 1 3th November, 1878, a first call of ,500 per 
 ;ioo of stock was made, payable 23rd December, 1878, 
 and 24th February, 1879, in equal instalments, the nominal 
 amount represented therefrom being 4,232,320. 
 
 On the 8th April, 1879, a second call of 2,250 per 
 100 of stock was made, payable 22nd April, 1879, the 
 nominal amount represented thereby being 7,813,957 IDS.,
 
 43 
 
 a staggering- total amount of call of .2,750 per 100 of 
 stock. 
 
 It was openly stated at the time that the more proper 
 course as regards Calls would have been for a call upon 
 each Contributor liable, for the full extent of the deficiency. 
 
 A feature worthy of remark was, that the list of Con- 
 tributories was settled as the Register stood on the ist 
 October, 1878, and that, although all formalities with 
 regard to the passing or acceptance of certain transfers 
 had been complied with, except the deferred act of posting 
 into the register , no regard was paid to transactions un- 
 posted at that date, evidencing the importance of alacrity 
 in this particular. 
 
 Of course, transfer deeds and contracts were existent, 
 to disprove the direct responsibility of the transferors, and 
 giving them the full right of recourse as against the 
 transferees unregistered, for what it was worth, when put 
 to the test ; but, having parted with their interests as 
 Stockholders, it was damaging to be placed upon the list 
 of Contributories, as it entailed the process of payment 
 and recourse. 
 
 In the case of Trustees, the responsibility being personal, 
 cases of extreme hardship arose. 
 
 The Caledonian Bank, Inverness, was a registered Caledonian 
 
 Bank. 
 
 holder of 400 of Stock, which it took as security, and 
 became a Registered holder in respect of, and its position 
 was rendered an unenviable one, in the event of short 
 reponse by the other Contributories. 
 
 A Relief Fund for distressed shareholders was started 
 with good results. 
 
 The directors of the bank, John Stewart, Lewis Potter, 
 Robert Salmond, William Taylor, Henry Inglis, John James
 
 44 
 
 Wright, with Richard Stronach, the Manager, were brought 
 to trial and received exemplary sentences. 
 
 In November of 1878, the writer, at an hour's notice, 
 travelled to Edinburgh to appear in the Law Courts in 
 connection with this memorable case of the City of Glasgow 
 Edinburgh. Bank, and vividly remembers alighting, after a sleepless 
 journey of eleven hours, in the modern Athens. Emerging 
 from the railway station just at the break of dawn, the 
 enchanting Castle, the veriest point of a hill promontory, 
 was almost obscured in the vaporous wreathing of the early 
 morning mist. 
 
 Emerging like a giant awaking from sleep, it seemed 
 at first a dream an expectancy gradually unfolded into a 
 vision a picture of former might in all its reality. 
 
 A morning's work until noon with satisfactory results, 
 then a hurried scramble through the delights of this pic- 
 turesque city ; an ascent to the summit of Arthur's Seat, in 
 charge of a prosaic bill case ; a view of Portobello and 
 Leith ; the inevitable dinner (for are we not told that man 
 lives that he may dine ?) at nine p.m. back in the Mail ; 
 another night's sleepless journey, followed by a day's work, 
 and the compressive power of facility and comfort, of Railway 
 travelling is passingly demonstrated. 
 
 The Bankers and Discount Brokers were at the time, 
 loosely charged with having encouraged the creation of this 
 Bank's Acceptances, knowing the unlimited liability ; but 
 this was one of the wild rumours from losers and sympa- 
 thisers with ruined homes, and had no foundation ; but it 
 is certain that, as a class of Creditors of the Bank, the Bill- 
 holders met with little sympathy from the Liquidators, 
 although at a period in the liquidation, an appeal was made 
 to them to forego the claim for interest upon the debt, 2os.
 
 45 
 
 in the pound having been received by them in respect of 
 principal ; and to the extent of the interest, they mani- 
 fested their sympathy by at once acceding to the request. 
 
 It was stated that certain Creditors, through their Agents 
 or Managers in India, having been offered a composition 
 by the Drawers of Bills on the spot, assented to its accept- 
 ance without prior reference to the Liquidators, and met 
 with a very sharp reproof from the latter, to the effect that 
 the Bank was released from liability thereby; but this 
 position was yielded by the Liquidators, although there was 
 undoubted danger in the position of such Creditors. 
 
 I have omitted to mention that the Bank Notes in the 
 hands of the Public, on the ist October, amounted to 
 ,863,403, and which were cashed on presentation by other 
 Banks. 
 
 The effect of the failure of this Bank dulled things down 
 for eighteen months, and it was severely felt in India, 
 Australia, and New Zealand. 
 
 The Bank's suspension and liquidation induced the 
 framing and subsequent enactment of the Act of 1879, an 
 Act to permit companies not registered with Limited 
 Liability, say, under the 1862 Act, to so register themselves. 
 
 This Act is dated i5th August, 1879, and is entitled "An Unlimited to 
 
 Limited 
 
 Act to Amend the Law with Respect to the Liability of Liability. 
 Members of Banking and other Joint Stock Companies, and 
 for other purposes." 
 
 The effect of Unlimited Liability in the case of the City Bank Shares 
 
 Liability. 
 
 of Glasgow Bank having been shown to be so disastrous 
 in its consequences, for the time being Bank shares were 
 a strictly limited market, if not unsaleable, and indeed the 
 effect upon such shares generally was universal deprecia- 
 tion.
 
 The passing ot this Act was stigmatised as being "panic 
 legislation^ but it appears to have had the requisite effect 
 of calming and steadying the uneasiness of the Public, 
 although it has burdened many of the Banks which availed 
 themselves of the provisions of it, with added capital upon 
 which to pay Dividends, besides other burdensome restric- 
 tions of Reserve Liability, &c., and from the Shareholders' 
 point of view, in this light, the advantage may be said to 
 have been a qualified one. 
 
 This point has recently received attention from Mr. 
 Buckley. 
 
 The principal Banks which took advantage of its pro- 
 visions were 
 
 Banks and I n 1880, the London and County, the London and 
 
 Liability. Westminster, the National Provincial of England, 
 
 the Capital and Counties ; 
 
 In 1882, the Clydesdale, the Commercial of Scot- 
 land, the London Joint Stock, the National Bank, 
 the National of Scotland, the Union of London, the 
 Union of Scotland ; 
 
 together with the Wilts and Dorset in 1883, with others 
 too numerous to mention. 
 
 Gold in India. It was in 1878 that the announcement was made of 
 gold discoveries in the Wynaad district of India, but results 
 have not substantiated expectations in this district, although 
 the outcome from the Mysore and Colar districts has been 
 considerable and remunerative. 
 Consols In 1884 Mr. Childers, then Chancellor of the Exchequer, 
 
 Conversion. 
 
 attempted conversion of Consols, New, and Reduced 3 per 
 cents., offering 2f per cent. Stock at 102 for every ^100, 
 Mr Childers. or 2 \ P er cen1 - at io8 for every ;ioo of Stock, repayable 
 1905.
 
 47 
 
 The attempt was not a success, the total converted being 
 only 21,648,000. 
 
 In March, 1888, Mr. Goschen successfully performed con- Rt. Hon. 
 
 G. J. Goschen. 
 
 version at 2| per cent, until April 5th, 1903, and thence- 
 forward 2\ per cent, until April 5th, 1923. 
 
 ^550,000,000 of stock accepted these terms, the remainder 
 was paid off. 
 
 Reverting to Bank rate, six per cent, was touched 3oth 
 November, 1874, to 8th January, 1875, and again i4th 
 October, 1878, to 2ist November, 1878; but from loth 
 April, 1879, to 6th November, 1879, was only two per 
 cent. Six per cent, was again reached 3oth January, 1882, 
 to 23rd February, and not again reached until 3oth 
 December, 1889, lasting until 2oth February, 1890; again 
 on 7th November, 1890, until 4th December. 
 
 1890. A somewhat longer gap now separates us, with 
 an era of peaceful development, before we again touch the 
 Crisis records. 
 
 During the early part of 1890 sinister rumours, pro- 
 ceeding from unascertained causes, filled the air, and as 
 month by month passed the gloom deepened. 
 
 Men's minds were prepared gradually for impending 
 catastrophe, but when, where, or how the blow would fall, 
 was matter still awaiting solution. 
 
 As on the eve of an impending discharge and disrup- 
 tion of the elements, one observes the gathering clouds 
 marshalling and centring with overcharged weight of 
 their destructive forces, with the false tranquillity of the 
 still and stifling atmosphere, deepening to the senses in 
 gloom almost to the darkness of restful night even at 
 the fulness of mid-day such as may not infrequently be 
 observed as one of Nature's exceptional moods, even in the
 
 Baring 
 Brothers & 
 Co. 
 
 South 
 America. 
 
 ordinary course of the mellowing days of fragrant, fruitful 
 summer alarming intelligence, like the flash indicating 
 electrical ignition, fills the air or void all suspense is at 
 an end the storm has given. What its forces may mean 
 as a wave of destruction, none can predict ; it must rage 
 until it has spent itself, and the cost be counted afterwards. 
 
 So the climax was approached, and the date of the i5th 
 November, 1890 a Saturday let the world into an un- 
 welcome secret, which had then, in all its painful force, 
 to be disclosed. 
 
 The great house of Baring Brothers & Co. was in 
 difficulties of an insurmountable nature. 
 
 Towering above competitors, with an unsullied name, 
 with world-wide influence, with transactions the vast volume 
 of value and ramifications of which it would have been 
 difficult to estimate or appraise in their princely magnitude, 
 a name identified with useful suit and service to the State, 
 as having furnished a Governor- General for India, 1872, 
 and first Lord of the Admiralty, 1880-85, and with the 
 honour of a Barony conferred upon the senior Partner of 
 the house, Lord Revelstoke, in 1885, the House seemed 
 assuredly one built upon a rock. 
 
 But over-financing, as we have seen in 1866, will sap 
 away even the seemingly strongest foundations, and to the 
 locking-up of resources in this description of transaction, 
 and the unwisely entering into illimitable commitments, 
 without duly counting upon or allowing for the period of 
 contraction, owing to surfeit of supply, and inability to 
 further efforts of digestion by the investing public to 
 these we must to-day ascribe this catastrophe. 
 
 For some period prior to 1890, cautious men had declared 
 that the South American countries, and notably Argentina,
 
 49 
 
 had been over-borrowing, and it is not to much to say 
 that a warning had been administered and not forgotten 
 by the public, when, in the seventies, Argentina, with great 
 difficulty, surmounted actual default. 
 
 Discredit had now openly fallen upon Argentine 
 financing, and to the failure to launch the Buenos Ayres 
 Waterworks, with its contracted-for capital of Five Millions, 
 together with the Uruguayan Loan, untouched by the 
 public, practically, we must attribute the culminating point 
 of the pull-up. 
 
 Particulars of these issues are as follows : 
 
 The Uruguayan 6 per cent. Sterling Loan for ^4,255,300 Uruguay 
 was offered at an issue price of 82^. The date of the 
 Prospectus was 5th April, 1888. Subscriptions were to be 
 received in London, and, by Messrs. Hope & Co.,* of *See Addenda 
 
 at end. 
 
 Amsterdam, in Paris by the Banque of Paris, and in 
 Antwerp by the Banque of Antwerp. 
 
 The Prospectus of the Buenos Ayres Water Supply Buenos Ayres 
 and Drainage Company, Limited, was dated i4th November, and Drainage 
 
 Company. 
 
 1888. The share capital was 5 millions, in 300,000 6 per 
 cent, cumulative Preference shares of 10 each, and 
 200,000 Ordinary shares, also of 10 each. 
 
 Subscriptions were asked for the whole of the Pre- 
 ference and 50,000 Ordinary. 
 
 The dates of payment were to extend to 8th July, 1889. 
 
 The conditions of supply were made compulsory by 
 law on every house in the City of Buenos Ayres to agree 
 to pay a stipulated rate equal to 14 8s. per annum, and 
 the Company was to have a lien upon each house in 
 respect thereof; but the Concession limited the net 
 income distributable by the Company to an amount 
 equalling 730,000 at an exchange rate of 43.; after
 
 50 
 
 which the Government had power to reduce the rate 
 charged. 
 
 The duration of the Concession was thirty-nine years, 
 and then the works were to revert to the Government free 
 of compensation. 
 
 The Contractors undertook to discharge certain 
 liabilities, and were to receive five millions Share Capital 
 and five millions 4 per cent. Debentures of the Company, 
 redeemable by 1927. 
 
 Mr. C. H. Sandford, of Samuel B. Hale & Co., 
 was a Director nominated to join the Board after allot- 
 ment. 
 
 Baring On the morning of the i5th November, 1890, con- 
 
 Guarantee 
 Fund. certed action by the Banks with the Bank of England 
 
 was initiated by the latter, and responded to with 
 alacrity, for the purpose of forming a Guarantee Fund to 
 meet the liabilities under Acceptances of Baring Brothers 
 and Company, which Acceptances were held in large 
 blocks, the total amount being ^15,775,000. 
 
 Right Hon. Xhe ready response must have been very gratifying- 
 
 Wm. Lidder- 
 
 dale - to the Bank of England, and the Governor, the Right 
 
 Hon. Wm. Lidderdale, whose name will be inseparably 
 associated therewith, was afterwards publicly thanked at a 
 meeting of Bankers and Merchants at the Guildhall. 
 
 The total liabilities of the Firm were, at the date of 
 suspension, ^30,253,000. 
 
 The assets, subject to realisation, but estimated in 
 value, showed a surplus of over three millions. 
 
 The value of the action of the Bank of England 
 with regard to the Guarantee Fund, which amounted to 
 over seventeen millions, was, that the disturbance of 
 credit which any other course would have caused, was
 
 5' 
 
 minimised if not completely avoided, and Foreign Corres- 
 pondents of the Firm were relieved from anxiety about 
 the fate of their drafts or active credits. 
 
 At this period Consols marked 93 1, realisations of 
 large blocks of stock for available resources, an indica- 
 tion preceding panic, driving the price down. 
 
 I should mention that the Guarantee, initiated on i5th 
 November, was continued on the 2Qth March, 1893, but 
 under a reduced amount, to the i5th November, 1895 ; 
 but on the nth January, 1895, the Bank of England, 
 Mr. David Powell being then Governor, notified a release Mr. David 
 
 Powell. 
 
 to the Guarantors, and conveyed the thanks of Messrs. 
 Baring Bros. & Co. to them, expressed in a letter dated 
 loth January, 1895. 
 
 The Bank of England, in preparation for this Bank of 
 
 England. 
 
 catastrophe, in addition to the later initiation of the 
 Guarantee Fund, had further made prior arrangements, 
 by which its stock of gold was increased by 4^ millions, 
 the reserve being at a minimum point for safety, the 
 Bank rate being 6 per cent., and it was felt that an 
 increase of rate would have caused increased alarm. 
 
 One and a-half millions of this was obtained by the Bank of 
 
 France. 
 
 sale to the Russian Government of Treasury Bonds held Russian 
 
 Government. 
 
 by the Bank, and, through Lord Rothschild, the Bank of Lor( j 
 France agreed to lend the Bank of England three millions 
 for a specified time of three months, at 3 per cent, per 
 annum, with option of renewal for a further limited term. 
 
 The loan was not renewed, but was repaid at expi- 
 ration of three months, the bullion being the same as 
 that sent to London, the boxes having remained unopened. 
 
 This was one of those occasions, when the Bank, by 
 
 its action, had to steady the condition of the market and 
 
 D 2
 
 52 
 
 to limit the strain thereupon, and it fortunately happened 
 that Russia and France were at the time both interested 
 in financial operations ; but for this fact neither might 
 have been disposed to lend assistance. 
 
 Baring Bros. Baring- Bros. & Co.'s merchant banking 1 business, 
 & Co., Ld. 
 
 which had shown safe and magnificent profits from 
 
 ordinary mercantile transactions, was converted into 
 Baring Bros. & Co., Limited, and the allotment of the 
 capital asked for was made to the privileged few, and 
 handsome results have since accrued to its shareholders. 
 
 The particulars of the Limited Company are as 
 follows : 
 
 BAKING BROS. & Co., LIMITED. This company was 
 registered 25th November, 1890, to continue the business 
 of the old Firm. The authorised capital was 1,000,000 
 in shares of 500 each, all issued and paid up in full. 
 
 In 1895 the capital was rearranged, and is now 
 500,000 5 per cent. Preference Stock, irredeemable for 
 ten years and then or after redeemable at no; 500,000 
 6 per cent. 2nd Preference Stock, redeemable at no by 
 payments not exceeding 50,000 per annum, taking one 
 year with another. 
 
 The Company also have the right to redeem at any 
 time all Preference Capital, both 5 and 6 per cent., at 
 115 on giving notice; and 25,000 Ordinary Stock. 
 
 The scheme was formulated and the capital subscribed, 
 but no public issue of a prospectus was made. 
 
 The first subscribers were Mr. T. C, Baring, 400 
 shares; Lord Hillingdon, 100; B. W. Currie, 100 ; W. B. 
 Beaumont, M.P., 100; Saml. G. Smith, 40; E. A. 
 Hambro, 40 ; F. C. le Marchant, 20. 
 
 First Directors: Thos. Chas. Baring, M.P., Hon. Fras.
 
 53 
 
 Baring, R. K. Hodgson, and Hon. John Baring, who 
 remained in office till the general meeting in March, 
 1893. 
 
 The objects were stated to be, to acquire and carry 
 on the busines of Bankers, Merchants, and Financial 
 Agents, and to undertake all the contracts and liabilities 
 of Baring Bros. & Co. in relation to the said business. 
 
 Testimony to the generous attitude of the late Mr. 
 T. C. Baring was paid, who, in addition to subscribing 
 a large portion of the Capital, by a separate agreement 
 accepted unlimited liability for its debts. 
 
 The transfer to the Company did not include any 
 property or assets of any description, whether belonging 
 to the Firm or to the Partners individually, all such 
 property having been transferred or hypothecated to the 
 Bank of England. 
 
 The final stage of the liquidation of the Firm's affairs Baring 
 
 Estates Com- 
 
 was the forming of the Baring Estate Company, Limited, pany, Limited 
 the lists for which were opened and closed on 3Oth 
 November 1894, the capital being 500,000, with an 
 issue of one million 4 per cent, ist and 500,000 5 per 
 cent. 2nd Mortgage Debentures, the assets taken over 
 being valued, quoted and unquoted, at 2,189,598, with the 
 added guarantee of the 500,000 capital, the latter all sub- 
 scribed by relations and personal friends of the Partners of 
 Messrs. Baring Bros. & Co., as stated in the Prospectus, 
 which contained an added clause, that no Dividend would 
 be paid on such 500,000 Capital, until the whole of the 
 Debentures had been redeemed. 
 
 The formation of this Company released the remaining 
 assets from the Bank of England, and so closed the 
 Liquidation.
 
 54 
 
 The long, dragging, dull times existent since 1890 
 are familiar to all, and there are many who have been 
 found to say, that, better than this, would have been the 
 sharp spasm of actual open crisis, with all its attendant 
 evils ; but, in the meantime, these " do not know," and 
 history written at a later date, will record its tribute 
 suitably to the skill, patience, and promptitude, which 
 averted worse disaster, the gravity of which is not even 
 yet fully realised. 
 Overend, In comparison with Overend, Gurney & Co., the minor 
 
 Gumey & Co. 
 
 Baring Bros intensity of this crisis was striking, notwithstanding that it 
 
 was a much bigger house (Baring Bros. & Co.) that had 
 come to grief. 
 
 A week of intense anxiety supervened on i5th November, 
 but the internal drain upon the Bank of England (always 
 on other occasions the outcome of open panic) was staved 
 off. 
 
 Overend, Gurney & Co. were rotten to the core, and the 
 Firm had been hopelessly insolvent for years before closing 
 its doors. 
 
 But of Baring Bros. & Co. there was practically no 
 question as to ultimate solvency; the assets were only not 
 in sufficiently liquid form. 
 
 Timely disclosure induced timely aid, and strengthening 
 action by, and power imported into, the Bank of England 
 assured the public, in addition to the action of the 
 Guarantors. 
 
 This has been called a " rich man's panic," not the 
 public loss. All kinds of Institutions who were Underwriters, 
 &c., were overloaded with issues, which they were unable to 
 foist upon the public, every condition pointing to what has 
 
 A dragging 
 
 Liquidation, since occurred a dragging liquidation. 
 
 Bank of 
 England.
 
 55 
 
 Mr. Goschen's appeal to Bankers is here worthy of Right Hon. 
 
 G. j. Goschen. 
 
 notice. 
 
 Mr. Goschen said at Leeds, in Jannary, 1891 : 
 
 "We were on the brink of a crisis through which it 
 might have been difficult for the soundest to pass unscathed, 
 for the wealthiest to have escaped. It was a time when 
 none who had liabilities or engagements to pay, could say 
 how they could pay them, if a condition of things were to 
 continue, under which produce could not be sold, under 
 which bills could not be discounted, under which there 
 appeared an absence of cash sufficient to discharge the 
 liabilities of the general public. That was the position at 
 home, and I will tell you what was at stake. You risked 
 the deposition of London as the Banking centre of the 
 universe. You risked the supremacy of English credit. 
 You risked the transfer of the business of this country to 
 other countries, if such a catastrophe had occurred as you 
 were on the eve of witnessing. I cannot exaggerate the 
 danger, the immediate danger, to which this Country was 
 exposed at that time." 
 
 It was a forcible, highly-coloured picture, but in effect 
 an appeal to the Banks to keep larger Reserves. 
 
 Although partially successful, the effect has been to 
 disorganise the Money Market at the end of each month, 
 by the calling in by Banks, of balances, for publication in 
 the monthly balance sheet of assets and liabilities, and the 
 process has been flippantly described as, the " Dressing of 
 the Shop- Fronts." 
 
 Dealing further and briefly with 1890, I may mention as Directors' 
 
 Liability. 
 
 a feature of interest to you, the Directors' Liability Act of 
 that year, and also as a topic of general interest, the Silver 
 legislation in America, the Sherman Act providing for the
 
 McKinley 
 Tariff. 
 
 Sherman and purchase of 4^ million ounces of silver per month, instead 
 
 Bland Silver 
 
 Acts. of as formerly, under the Bland Act of 1878, 2 million ounces 
 
 per month, the effect of which was seen in the latter half of 
 1892 and in 1893, when during a period of eleven months 
 between 17 and 18 millions of gold was exported from 
 America, leading to forced Bond issues to procure the return 
 of Gold. 
 
 Also to the McKinley Protective Tariff regulations, since 
 rescinded as a remedy worse than the original evil which 
 it was designed to cure. 
 
 Passing along with the rapidity of the conductor of a 
 Panorama, to whom Time and the World are but a stage, I 
 now mention, in conclusion, the Australian Crisis, the 
 approach to the climax of which, was induced by the early 
 suspensions of the Mercantile Bank of Australia in 1892, 
 the Federal Bank in February, 1893, and the Commercial 
 Bank of Australia in April, 1893. 
 
 1893. Again the record is mainly of unliquid resources 
 in time of emergency. It has been abundantly proved that 
 of the thirteen Banks which succumbed in 1893, many were 
 perfectly solvent on paper, as regards liabilities and assets, 
 but with assets unavailable in the time of emergency. 
 
 Money, which it had been found difficult to employ here 
 at remunerative investment rates, had been poured into the 
 coffers of these Institutions, tempted by the liberal deposit 
 rates offered, and also by the assurance, actually expressed, 
 that, if times of difficulty arose with any one or more of 
 them, the rest would combine, in the general interest, for 
 their own and the Depositors' protection. 
 
 How vain was this hope and powerless the effort, from 
 force of circumstances, we have seen. 
 
 The glut of funds available had to be employed, and 
 
 Australian 
 Banking.
 
 57 
 
 if profitably to the Banks, at rates exceeding those so 
 liberally allowed upon them. 
 
 The statement has been made, reiterated, and sub- 
 stantiated, that Colonies have not the same field for 
 advances such as exists in the Mother and older countries ; 
 that they have no Money Market; and that the class of 
 loan securities in the limited range of their transactions 
 must, at times, necessitate advances upon strictly local 
 securities, such as land, houses, crops, agricultural and 
 pastoral products, works and railways. 
 
 It cannot be said that a warning had not previously 
 been conveyed, to and understood by the Banks, on former 
 occasions, by the formation of companies created for this 
 heavy work, unsuitable to banking, at least to any ap- 
 preciable extent ; and such companies were so created, in 
 more than one instance, to relieve Banks of such securities, 
 and these companies had found even terminable Deben- 
 tures expensive and inconvenient, and, wherever possible, 
 at the earliest date had created instead thereof permanent 
 Debenture issues or Debenture Stock. 
 
 But, u Easy come, easy go," is an old motto, and as 
 money had come, so it would continue to come, and, mean- 
 time, the day of reckoning was not then at hand, and 
 seemed far off, even to vanishing point. 
 
 A remarkable feature in New World life, as contrasted Colonial 
 
 Townships. 
 
 with Old World, is the mushroom growths that town- 
 ships possess. A site is projected, and forthwith it is 
 peopled. Take an instance in South African life, Bulu- 
 wayo will do ; but yesterday the Capital of savages, with 
 Cetewayo for their King ; to-day a recognised centre, re- 
 quiring a Stock Exchange. 
 
 The prospecting mind is prolific of possibilities, but
 
 58 
 
 with a country like Australia, with the glamour of illimit- 
 able gold production then seemingly over, and descending 
 into the slower pursuit of agriculture and kindred pro- 
 ducts, the pendulum of appreciating values may easily 
 swing too quickly. 
 
 Where a demand exists for an article, as in the case 
 here of land and house property, continuously, it seems 
 obvious that it should appreciate in value to an extent, 
 even though the quantity be liberal. 
 
 Every plot of land cannot be an El Dorado, and the 
 seamy side of slower and duller times has to be faced, 
 with all its inquisitional inquisitiveness and unpleasant- 
 ness of realisation. 
 
 Given an undue commitment in this particular form 
 of security, and given free efforts at realisation, with the 
 concomitant demand of the Depositor- for repayment 
 necessitating attempted wholesale realisation the down- 
 ward impetus of prices and market values is accelerated 
 to the point of depletion ot surplus resources, right up 
 to the point of serious encroachment upon all available 
 resources, and the position involving suspension is at 
 once realised. 
 Commercial The failure of the Mercantile and the Federal were 
 
 Bank of 
 
 Australia. indications, but the accentuating point of disaster was 
 reached at the suspension of the Commercial Bank of 
 Australia, with its revelations and with its 10^- millions of 
 deposits. 
 
 AUSTRALIA. The record, briefly, is of gigantic specu- 
 lation in land and buildings, both in town and country, 
 some being unimproved lands yielding no income. 
 
 Twelve months prior to the stoppages the growth of 
 deposits had increased in such volume, as to become a
 
 59 
 
 source of anxiety and danger, to cautious observers, and 
 the following notice was then published: "That the asso- 
 ciated Banks (nine in number) in Melbourne have agreed 
 upon mutually satisfactory conditions, on which they will 
 extend their joint support, to any one of their number 
 requiring it." 
 
 The failure of the Federal Bank modified the effect 
 of this, as being at variance with the declaration, and 
 indicated, at least as regards that Institution, that its 
 position was beyond help ; but just prior to that event, 
 the foregoing assurance, for what it was worth, was 
 repeated. 
 
 Commissions had been paid by the Banks for obtain- 
 ing deposits, and partly help to explain their ready flow 
 to Australia, and also their instability at crisis time. 
 
 The total liabilities of the thirteen Banks that sus- 
 pended payment were 104 millions; about half the total 
 liabilities of all the Australian and New Zealand Banks. 
 
 Of this amount forty-two millions were British deposits, 
 and it was stated, that it was the certainty of the with- 
 drawal of these latter which created the panic, and also 
 the malignant false rumours spread, in consequence of 
 which latter, Leeman's Act, enacted here, following on the Leeman's Act. 
 Overend failure, was made law by the Victorian Parliament. 
 
 British depositors and shareholders in Australian Banks 
 were alike blamed for precipitating the crisis, the former 
 for withdrawals, the latter for wholesale and panic-stricken 
 unloading, by forced sales of their shares. 
 
 The "debauch of British money" was added to by 
 difficulties induced by a remarkable fall in value of all 
 colonial produce, with the consequent impoverishment. 
 
 After its failure the reconstruction scheme of the
 
 6o 
 
 Commercial Bank of Australia increased the sense of dis- 
 satisfaction, and it also has been described as one of the 
 features or contributory causes of the panic. 
 
 This Bank's paid-up capital was ^1,200,000, and the 
 uncalled ; 1,800,000, the reserve fund being ^750,000. 
 
 Under the reconstruction the Capital was to be six 
 millions, of which three millions, as Preference, was to be 
 wrested from the depositors ; which provision has been 
 mildly described as a drastic scheme of reconstruction. 
 
 The sequel to this scheme was open, manifest fear 
 and distrust of repetition, and subsequent suspensions read 
 by this light are not difficult to understand. 
 
 Within a period of less than two months, twelve other 
 Banks succumbed, like cardboard structures, as regards 
 their toppling capacity, but not necessarily as regards their 
 solvency in times of less acute difficulty, and it is curious 
 to note that the " cuckoo " cry of reconstruction, was the 
 justifiable reason assigned, and that while reconstruction 
 was possible, before undue sapping away of free resources 
 had taken place. 
 
 It has been properly observed, that the attempt at 
 forced realisation of so vast a volume of assets, would 
 have involved considerable time or senseless depreciation, 
 hence reconstruction was desirable, upon equitable terms, 
 in the interest of the continuation of the business, and 
 the preservation of reasonable values ; but it is considered 
 doubtful whether other than Town properties can ever 
 realise the advance values. Town properties reached fabulous 
 values, with, at the time, belief in their stability and 
 maintenance. 
 
 There appears to be a view expressed, that the recon- 
 struction conditions must affect the price of all the Banks'
 
 6i 
 
 shares for some time to come, and the heavy share pre- 
 miums formerly existing, not again be reached. 
 
 Stress is laid upon the Commercial Bank of Australia 
 suspension, as it was the initial element of importance 
 in more than one aspect. 
 
 The total Capital to be provided for the various re- 
 constructions, I might here add, was nearly twenty millions, 
 a heavy strain on Shareholders and Depositors. 
 
 It is worthy of mention that, under the reconstructions, 
 the various Bills of Exchange, where possible, were provided 
 for at maturity, or as early thereafter as possible. 
 
 The order of suspension, and the names of the suspended 
 Banks, I here append : 
 
 Mercantile Bank of Australia in 1892. 
 
 The Federal Bank of Australia, February, 1893. 
 
 Commercial Bank of Australia. 
 
 English, Scottish, and Australian Bank. 
 
 Australian Joint Stock Bank. 
 
 London Chartered Bank of Australia. 
 
 Standard Bank of Australia. 
 
 National Bank of Australasia. 
 
 Colonial Bank of Australasia. 
 
 Bank of Victoria. 
 
 City of Melbourne Bank. 
 
 Commercial Bank of Sydney. 
 
 Queensland National Bank. 
 
 Royal Bank of Queensland. 
 
 The position became so serious and so puzzling to cope 
 with, Australia never before having had such experience 
 as a banking panic, that amongst other expedients, what 
 was described as a "moratorium" was decreed "Bank Moratorium, 
 holidays" from ist to 5th May inclusive.
 
 62 
 
 The "Moratorium" is well known in Spanish law, and 
 practically amounts to a suspension of payment, with 
 the continued after open conduct of the business, and 
 much the same as is known to us here as a Receivership, 
 except that businesses are kept, and are intended to be 
 kept, going as going concerns. 
 
 In this Australian case the " moratorium " was only 
 intended for breathing time. 
 
 As is well known, the Bank of Australasia, the 
 Union Bank of Australia, and the Bank of New South 
 Wales, did not shelter behind this "moratorium," and 
 prestige accrued and still accrues to them in conse- 
 quence. Willingness to pay is construed into ability to 
 do so, and the effect of their action was pacifying the 
 panic subsided, not so the consequences. 
 
 It is curious to note that the registration of titles, 
 and the correction, where possible, of undue similarity, 
 appears apparent at this time, as also in 1878, but it 
 does not cure the evil of abbreviation. 
 
 In 1893 the Commercial of Australia, and the Com- 
 mercial of Sydney, were both spoken of as the Commercial, 
 and the detrimental effect upon the latter, through con- 
 fusion of name and incident, was apparent. 
 
 The Commercial of Sydney was widely known and 
 regarded as powerful, and the effect of its suspension was 
 impressive. 
 
 It had made efforts boldly to turn the position, and, 
 in addition to gold on spot, had half a million in 
 sovereigns afloat, shipped in pursuance of its own idea 
 of the necessity for prompt, effective, and decisive ship- 
 ments of the precious metal. 
 Bank Charter. As by the suspension here of the Bank Charter from 
 
 Commercial 
 Bank of 
 Sydney.
 
 63 
 
 time to time, for relief purposes, the Legal Tender Act, Legal Tender 
 
 Act. 
 
 making bank-notes legal tender, was resorted to in Aus- 
 tralia for an authorised creation of paper currency, 
 against assured, or presumed, value of securities ; but a 
 departure to be limited by the shortest duration of time, 
 if the theory and practice is to be retained, of a currency 
 upon a metallic basis, with the ready convertibility of 
 the note issue guaranteed. 
 
 With regard to the suspension of the Bank Charter, Bank Charter 
 
 Act. 
 with its recognised principles, it may here be useful to explain. 
 
 Money is but a measure of value, and in this respect, 
 whatever the issue for currency purposes may be other 
 than as now accepted, Gold gold is now the ultimate 
 and arbitrary form of adjustment in the settlement of 
 balances due Internationally as practically the World's 
 accepted medium of Exchange ; and hence, paper issues, 
 having no metallic basis, are subject to undue deprecia- 
 tion, where the guarantee of absolute and ready con- 
 vertibility is absent, which ready convertibility it has 
 been the aim here to preserve, since the Act of 1819, Act of 1819. 
 and its value has been fully demonstrated. 
 
 Whatever we may do in opposition to this doctrine 
 in times of pressure or panic, the earliest and most 
 immediate return to this system is ever aimed at, and 
 suspension of the Bank Charter, giving power to issue 
 Notes against Securities, is always restricted and restrained 
 in operation, and of limited duration. 
 
 The Australian panic area was limited to the Colonies 
 of Victoria, New South Wales, and Queensland. The 
 other Colonies were practically unaffected. 
 
 Deep humiliation at the position was felt, and great 
 sympathy extended in some cases.
 
 6 4 
 
 The effect has entailed vast encumbrance in the 
 shape of added Capital, upon which prospectively to pay 
 dividends, and the recuperative power and trade of the 
 Colonies, will be sorely put to it, to increase by "leaps 
 and bounds " for the position to be substantiated upon an 
 enduring basis. 
 
 The circumstances are too fresh in your minds to 
 necessitate closer recapitulation of facts, which are at 
 hand and readily available in all the baldness of their 
 truth. 
 
 The Federal Bank of Australia, which failed in 
 February, 1893, has just recently declared a dividend, 
 making 75. in the only, at this late date, with the 
 announcement that dividends will in future be paid at 
 more extended intervals than formerly, owing to the 
 more liquid assets gradually becoming exhausted, and 
 the difficulty experienced in realising the balance of the 
 assets. And the report states, that the general state- 
 ment of assets is based upon book values, which are 
 greatly in excess of real values, and the difficulty of dis- 
 posing of the Bank's real assets in the Colony of Vic- 
 toria, does not show much sign of improving. 
 
 Further, that an application to settle the B list of 
 Contributories has been granted by the Court, and you will 
 realise the significance of this, and also that the Directors 
 who might be held to be legally liable to recoup the 
 Bank for losses sustained, are actually insolvent. 
 
 The reports just to hand, of the Commercial Bank of 
 Australia are not encouraging, and foreshadow further 
 efforts at reconstruction, and an absence of profit, owing 
 to the reduced value of money and the rate paid of 45 per 
 cent, upon its deposits.
 
 65 
 
 I should like to do better justice to the behaviour of 
 the Colonies of Australia in their hour of trial and 
 distress, in view of their enduring and increasing regard 
 for us, evidenced by many generous acts on behalf of the 
 welfare of their Mother Country, and overtures of assist- 
 ance to us in times of difficulty, which are reverently 
 regarded here and warmly reciprocated, but time does 
 not permit. It must suffice to say, that their material 
 welfare and continued progress, must ever remain an 
 object of the deepest and most continuous solicitude to 
 all here on this side, for are we not of one kin, root 
 and branch, and bound together in a common bond of 
 unity of interest, sympathy, and sentiment, and, though 
 seas divide us, the waste of waters can never eradicate the 
 strain of blood. 
 
 It is needless to remind you that on the 22nd February, Bank Rate. 
 1 894, the Bank rate was reduced to 2 per cent., the lowest 
 published rate the Bank at present records, and that it 
 has stood at that rate now for considerably over two 
 years, the longest period on record, and without any 
 indications at present of movement, and with plethoric 
 Money, constituting it in market parlance " a drug," the 
 bullion at the Bank being over 485 millions in the igth 
 February Bank return, with anticipations that it will 
 reach a total of 50 millions. A position of great strength, 
 but indicating the dormant in trade, with limitation and 
 curtailment in commitment, further evidenced by the 
 giddy prices to which all high-class investments have 
 risen Consols are now over no, in full view of a Consols, 
 reduction of rate thereon to 2\ per cent, on 5th April, 
 1903. 
 
 The Bank of England in its present state, has been 
 
 E
 
 66 
 
 described as the vault of the surplus unemployed moneys of 
 the World. 
 
 These facts date back to 1890 as their cause, 
 intensified by 1893, and the accumulations are no doubt 
 partly attributable to the damming up of the outflow to 
 America. the Australian Colonies, and, in addition, in 1892-93 we 
 received gold to the amount of 17 millions from America, 
 owing to fiscal dislocation there. 
 
 We are again now at the period awaiting " revival " 
 of trade, to disperse these over-accumulations, and we 
 seem on the eve of it. 
 
 Events move rapidly that which yesterday was pro- 
 jected, to-day sees fulfilled, and to-morrow, the record 
 is that of "Ancient History." 
 
 Commenting upon all the foregoing phases I should 
 say that, prior to disaster, and as the effect of it, judg- 
 ment and prudence seem thrown to the winds. 
 
 indications. To conduce to a reasonable judgment it may be 
 
 necessary to observe several indications : primarily the 
 course of the Foreign Exchanges, which give indications 
 of the balance of trade, for or against this Country ; the 
 state of the Reserve held by the Bank of England, its 
 expansion and contraction, and its proportion to liabilities, 
 i.e., the total of the Reserve, notes and gold, against the 
 public and private deposits seven-day and other bills 
 with the raising or lowering of the Bank rate of discount 
 consequent thereupon (which rate formerly was its mini- 
 mum of discount in practice, but this position was 
 abandoned nearly twenty years ago, with the result that 
 keen competition has since been entered into with the 
 open Market) ; the Board of Trade and Revenue returns, 
 and also the Bankers' Clearing House returns.
 
 67 
 
 Although I tell of strife, and of scenes and circum- 
 stances equal thereto in their destructive force and 
 desolating results, happily they are not the records of the 
 fields of carnage, where the nourishing red rain flows 
 to stimulate the growth of the leaves of the Laurel 
 Crown. 
 
 The battle-scene is the prosaic Tom Tiddler's ground 
 the location, the centres for the accretions of the sinews 
 of war but the laurel crown in one notable instance is 
 not absent, as evidenced by the honour offered to and 
 conferred upon the Right Hon. W. Lidclerdale, together 
 with the thanks of the Merchants and Bankers, conveyed 
 in public at the Guildhall. 
 
 I have painted some gruesome pictures, but not in 
 the vivid, lurid colours, in which they might have been 
 portrayed, rather choosing the matter-of-fact soberer 
 tints. I leave the rest contentedly to your imagination. 
 Construe the picture, read the writing on the wall it is 
 a wholesome warning. 
 
 I venture to hope you may not think the subject 
 unworthy of repetition in this brief paper form. 
 
 It may be useful as a succinct, readily available, 
 concise record, and it is for this purpose that I have 
 epitomised these incidents at this date. 
 
 I have not attempted to appraise the relative import- 
 ance warned by the authoritative Mrs. Malaprop, that 
 " comparisons are odorous " ; and, as a set-off against the 
 devastating and wasteful dissipation of successive years of 
 accumulations, with, in addition, the burden of declining 
 values, restrictive of credit facilities, I have placed the 
 value of peaceful inventions, in their power of enriching 
 
 their period of introduction, and in succeeding years 
 
 E 2
 
 68 
 
 liberally helping in recuperating, replenishing, and restor- 
 ing the strength of dispersed forces. 
 
 I have not dealt with the ripples upon the surface 
 which occur from time to time, associated and quite 
 distinct, but preferably with the great tidal -waves in 
 their destructive and submerging force, which, as is 
 shown, convulse the commercial world from time to 
 time. 
 
 And now, Gentlemen, I have at a point reintroduced 
 to you the wily machinations of adventurers, and also 
 the sad and mischievous results of the vaulting ambition 
 which o'erleaps itself. 
 
 I have placed before you features of Company work, 
 with Limited, and Unlimited Liability. 
 
 I have shown you how the 1862 Act was uselessly 
 availed of to avert disaster in 1866, and the reverse in 
 1890, where the recourse to the power of increasing the 
 co-partnery, and the infusion of fresh Capital, has re- 
 sulted beneficially. 
 
 The mercantile fraud is illustrated by the Collie 
 failure, while the maleficent effects of the uncontrolled 
 acts done in bank parlours have also been made mani- 
 fest. 
 
 Suffer me to, and forbear with me awhile, in descend- 
 ing for ever so brief a period into the idle sphere of 
 the mere philosopher, and, assuming the role of such 
 temporarily, I would say, whether in " booming " times or 
 in crises, stand firmly on your feet, your head was made 
 for understanding, but for a different use than perversion, 
 although sometimes the Individual, like the World, is 
 turned topsy-turvy. 
 
 The price list is not the true indication of value, as
 
 "booming" and depression times equally prove, and in 
 "booming" times, inflated paper values are accepted, with- 
 out sufficient discrimination or effort at appraisement at 
 even approximately actual values. 
 
 The policy, then, seems that of " devil take the hind- 
 most," each holder thinks he will have time to unload 
 upon some other the crash comes and with it incon- 
 vertibility of even good and sound things with terrible 
 shrinkage again of paper value, as representing then 
 market values ; lock-ups inconvertibility limitation of 
 credit shrinkage of resources powerlessness to meet 
 commitments entered into bankruptcy even often to 
 otherwise ordinarily sound firms and undertakings suffering 
 conferred alike upon the innocent and the guilty. 
 
 In Attic law the luxury of the peroration was denied ; 
 shall we, then, in these later and less heroic times, 
 aspire to greater privileges r 
 
 But, Gentlemen, I began this paper by extolling 
 individual effort, and as being pertinent to this point, 
 and this only, and as proof that in spite of every 
 apparent difficulty and disbelief, individual enterprise, 
 which ever seeks and will find its vent, can practically 
 overcome all checks and accomplish any reasonable ob- 
 ject I should like to end by quoting you a recent 
 splendid comment upon South African affairs, and we 
 cannot keep our eyes long away from there, and which, 
 in its concluding words, speaks thus : 
 
 " Had the country been merely annexed and main- Right Hon. 
 
 Cecil Rhodes . 
 
 tained under cut-and-dried Imperial rule, the wonder- 
 ful developments of five years would not have happened 
 within fifty. Working under the Charter, Mr. Rhodes 
 has been instrumental in producing streams of Capital,
 
 70 
 
 and forcing progress and development, at a rate of 
 pressure undreamt of in the moral philosophy of 
 Downing Street." 
 
 So much for individual personal effort, fortitude, and 
 courage. 
 
 Combination. And with regard to combinations, a word I also used 
 at the commencement, say for helping, and now termed 
 the " bolstering-up process," it has been pertinently 
 urged that, although " weak spots " are tided over and 
 saved from absolute collapse, the process is not good in 
 its results, in that weak and strong are alike confused, 
 and the outcome of it is the bandying of any and all 
 names, which is distinctly mischievous in straitened 
 times. 
 
 And now, in conclusion, "Study mankind as well as 
 books." Bacon has said that " to spend much time in 
 studies is sloth, to use them too much for ornament is 
 affectation, to make judgment wholly by their rules is the 
 humour of a scholar; they perfect Nature, but are them- 
 selves perfected by experience, for they teach not their own 
 use ; but there is a wisdom without them and above them, 
 won by observation." 
 
 Any faults in this paper I will ask you not to ascribe 
 to the want of sufficiency of matter available, but rather, as 
 Charles Lamb once said, " It was only the mind, you see, 
 that was wanting."
 
 ADDENDA. 
 
 FROM " STORIES OF BANKS AND BANKERS," BY FREDERICK 
 
 MARTIN. 
 
 (Reprinted by permission of Messrs. Macmillan & Co., Limited.} 
 
 A TRIO OF BILL-BROKERS. 
 
 JUST before Joint Stock Banks came to overpower the trade of 
 private banking, a small house in the Eastern Counties gave birth 
 to a new financial organisation, the growth of which, for a time, was 
 almost more gigantic than Joint Stock Banking. 
 
 It was in Norwich that arose the world-famous firm of Overend 
 & Co., the oldest house in existence that attempted bill-brokering in 
 its present form. 
 
 The firm was a direct offshoot of the Norwich Bank, established 
 by Mr. Henry Gurney in the year 1770. 
 
 The founder of the bank was succeeded by his son, Mr. Bartlett 
 Gurney, who, in the year 1803, took into partnership his cousin, 
 Mr. John Gurney, and several other members of the family. Mr. 
 John Gurney had previously been a woolstapler and spinner of 
 worsted yarn. In this occupation he became acquainted with Mr. 
 Joseph Smith, a most active and energetic man, chiefly engaged in 
 the woollen trade, but giving much of his time to discounting bills, 
 acting as a sort of intermediate agent between the Norwich Bank and 
 his own numerous friends and acquaintances. The latter occupation 
 was by far the most profitable of the two ; and Mr. Joseph Smith 
 was frank enough to communicate the fact to his most intimate 
 associates. One evening, while discussing the interesting subject 
 over a bottle of wine, the question was started : " Why not establish 
 a house solely devoted to the trade in bills ? " The suggestion came 
 from Mr. John Overend, an enterprising young man, clerk to Mr. 
 Joseph Smith. It was favourably entertained on all sides, and the 
 matter led to negotiations between the proprietors of the Norwich 
 Bank and several of the leading merchants of the town. Mr. Joseph 
 Smith personally declined to connect himself with the proposed bill- 
 dealing establishment, but offered to give his advice and assistance ; 
 and it was finally determined to put forward three young men as 
 founders of the firm namely, Mr. John Overend ; Mr. Samuel 
 Gurney, twenty-one years of age, the second son of Mr. John Gurney, 
 previously a clerk to Mr. Fry, who had married his sister, the cele- 
 brated Mrs. Fry; and Mr. Thomas Richardson, a clerk in the banking 
 house of Messrs. Smith, Wright & Gray, afterwards Esdaile & Co. 
 These three young men, all clerks at the time, laid the basis of one 
 of the most gigantic financial establishments of modern days. 
 
 The new establishment was, on the outset, a mere agency of the
 
 Norwich Bank, and under the entire superintendence of the Gurney 
 family. But, for some reasons of their own, the latter thought it best 
 not to show this patronage too openly, and the firm was brought 
 forward under the title of Richardson, Overend & Co. Mr. Richardson 
 soon retired, when the house commenced trading as Overend & Co., 
 which name it retained, although Mr. Overend died not long after, 
 leaving Mr. Samuel Gurney sole representative of the firm. 
 
 It was he who raised the house to the eminent position it after- 
 wards occupied. The way in which this was accomplished has 
 stamped the name of Mr. Samuel Gurney as one of the most eminent 
 financiers of modern times. While ordinary minds are able only to 
 draw advantage from prosperity, to "make hay while the sun 
 shines," Mr. Gurney distilled honey out of thorns, and built a 
 temple of wealth on a foundation of distress and adversity. The 
 panic of the year 1825 was remarkable for a distrust of bankers. 
 
 Several London banks failed, and, according to Mr. Horsley 
 Palmer, no fewer than eighty private banks in the country; probably 
 many more would have failed but for the assistance they obtained 
 from the Bank of England. In this crisis, Mr. Samuel Gurney came 
 forward as the champion of a new principle of banking. He advo- 
 cated that private bankers, particularly those of the Metropolis, 
 ought to change their mode of investment, and, instead of employ- 
 ing their surplus funds in the purchase of Government Securities, 
 to be discounted at the Bank of England, place them on deposit 
 with bill-brokers, so as to be independent of the Bank. This, he 
 argued, would prevent future financial crises, occasioned chiefly by 
 the reliance of too many private houses upon a single great banking 
 establishment 
 
 The advice was followed largely, and a great many London 
 bankers, besides many houses in the country, began connecting 
 themselves with bill-brokers. 
 
 Almost the whole of this business fell to the share of Messrs. 
 Overend & Co. that is, Mr. Samuel Gurney who thus became the 
 banker of many hundreds of private banks. 
 
 When the latter had any surplus funds they placed them on 
 deposit with Messrs. Overend & Co., and when in want they with- 
 drew them from Messrs. Overend & Co. This arrangement made 
 the private bankers directly independent of the Bank of England, 
 releasing them from an attachment not infrequently fraught with 
 danger, and at all times with impediments for free action. The 
 change was accomplished in a few years. Mr. George Carr Glyn, 
 when examined before the Bank Charter Committee, in the year 
 1832, speaking for the London bankers generally, said : " We do not 
 feel the slightest dependence upon the Bank of England, nor do we 
 feel the slightest obligation to it in any way."
 
 73 
 
 The immense success of the new firm of bill-brokers could not 
 fail to call up rivals. 
 
 The first of them, in point of time, was the house of Sanderson 
 & Co. Mr. Sanderson, the founder of the firm, was originally a 
 clerk, or manager, with Messrs. Overend & Co., and, on getting con- 
 siderable experience in the business, had sufficient courage to set up 
 on his own account. 
 
 He acquired wealth, became a Member of Parliament, married the 
 daughter of a nobleman, and probable consequence of the latter 
 " interesting event " stopped payment in the year 1847. 
 
 But he succeeded, after a while, in paying off all his creditors, 
 and started afresh, taking into partnership Mr. Sandeman, a wealthy, 
 or supposed wealthy, stockbroker. 
 
 The new firm had a brilliant career of about nine years, and then, 
 in 1857, again stopped payment. This time the very extensive 
 business was wound up under the inspection of three of the largest 
 creditors, of whom two were private bankers. 
 
 It turned out, on investigation, that the total liabilities amounted 
 to the enormous sum of ^5,442,285, only a portion of which was 
 secured by bills of exchange. 
 
 Once more the giant rose from the ground, but, after a short 
 season of business, was fairly extinguished, and absorbed by a new 
 Joint Stock association the Consolidated Discount Company, which 
 started with a capital of one million, and a promise of ten per cent, 
 to the shareholders. 
 
 The fall of Sanderson & Co. raised the position of another great 
 firm of bill-brokers, third in time, but second in magnitude. 
 
 This was the house of Alexander & Co., established by Mr. 
 Alexander, chief clerk in the private bank of Robarts, Curtis & Co. 
 
 An idea may be formed of the vast transactions of the above 
 three bill-dealing firms including the house now bankrupt from a 
 statement of Mr. Neave, a well-known authority, given in evidence 
 before the Select Committee of the House of Commons on the Bank 
 Acts, which sat in 1858. 
 
 Mr. Neave states that, a short time before this period, about the 
 year 1856, there were three bill-brokers in London holding deposits 
 to the extent of fifteen millions and a-half sterling. He does not give 
 the names of these brokers, but Mr. J. W. Gilbart, in his " Logic of 
 Banking," supplies the deficiency, as follows : 
 
 Messrs. Overend, Gurney & Co ,8,000,000 
 
 ,, Alexander & Co. 4,000,000 
 
 ,, Sanderson & Co 3,500,000 
 
 Total ,15, 500,000
 
 74 
 
 Considering that each of the above three firms had grown up 
 within little more than a quarter of a century, and that all of them 
 were founded by men not possessed of wealth, and in the social 
 position of clerks, the figures tell a tale nothing less than marvellous. 
 
 In more recent times, joint stock has invaded the domain of the 
 bill-brokers, no less than that of ordinary bankers. 
 
 The National Discount Company and the London Discount 
 Company were the first to start in the footsteps of the Gurneys and 
 Alexanders ; and other joint stock companies, within the last few 
 years, have followed in the same direction. 
 
 It was probably in expectation of this rivalry that Mr. Samuel 
 Gurney expressed himself so severely against the principle of joint 
 stock association, when called as a witness before the Parliamentary 
 Committee on Joint Stock Banks in 1836. 
 
 It was the opinion of the great bill-broker that "the peculiar 
 distinction " of joint stock banks consisted in being " neither 
 legitimate nor respectable," and that, moreover, the system was 
 "dangerous and requiring legislation." And when the Chairman, 
 the Chancellor of the Exchequer, inquired of Mr. Gurney, "Do you 
 conceive it would be an improvement or a disadvantage to the 
 present system if joint stock banks were permitted to be established 
 with a limited liability?" Mr. Gurney replied, probably with some 
 emphasis, " I think it would be a very serious addition to the evils of 
 the case." 
 
 In the twenty years following his examination before the Parlia- 
 mentary Committee, Mr. Samuel Gurney must have suffered much, 
 not only in seeing joint stock get the upper hand over private bank- 
 ing, but accompanied by the greatest of "evils," the "limited 
 liability." 
 
 Mr. Gurney died in 1856, and was succeeded by Mr. David Barclay 
 Chapman, who retired from the firm on the 2ist December, 1857. 
 
 Extracted from VINCENT NOLTE'S REMINISCENCES. 
 
 1804. The house of Hope & Co., in Amsterdam, consisted, at that 
 time, of the head partner of the whole concern, Mr. Henry Hope, 
 who, as the son of a Scottish loyalist settled in Boston, had been 
 born in the United States, and had emigrated to England after the 
 first invasion of Holland by the French Republican army under 
 Pichegru; then of several members of the Hope family, Adrian, 
 Thomas L. Hope (the well-known "Furniture Hope," who had 
 written a work on antique furniture), and Henry Philip Hope, who
 
 75 
 
 resided sometimes at the Hague and sometimes in England, had 
 capital and interests in the Amsterdam firm, but, as sleeping partners 
 of the concern, were never known nor mentioned in it by name. 
 
 The management of the house was in the hands of Mr. John 
 Williams, an Englishman, who had married the niece of Mr. Henry 
 Hope, and afterwards assumed the name of John Williams Hope, but 
 in the latter years of his life called himself John Hope, under the 
 authority of a Royal patent signed by George IV. as Prince Regent. 
 Beside this gentleman stood, as the most active member of the house, 
 the very soul, in fact, of the concern, Mr. P. C. Labouchere. This 
 distinguished man, born at the Hague, was the son of a French dry- 
 goods merchant residing there, a native of Orthes, in Beam, who had 
 sent the young man to his brother, established in Nantes, there to 
 commence the mercantile career marked out for him. There young 
 Labouchere exhibited so many evidences of intelligence and industry 
 that his uncle felt desirous of opening before him a broader field than 
 he could pretend to offer in his own establishment, and as it just so 
 chanced about the time in question that his -friend Mr. Hope had 
 commissioned him to send him an active and capable clerk to take 
 charge of his French correspondence, he proposed his nephew to that 
 gentleman, who accepted the youth's services, and engaged him 
 provisionally on an agreement for three years with a fair salary. 
 Shortly before the close of this term young Labouchere gave his 
 principal a hint that a moderate increase of salary was desirable. An 
 answer was promised for the next morning. When he went at the 
 appointed time to receive the anticipated reply, old Mr. Hope laid 
 before him for his signature a contract already drawn up, in which 
 he named him as his partner, with a suitable share in the profits, and 
 entrusted him with the signature of the house. Mr. Labouchere was 
 at that time but . twenty-two, yet ere long assumed the highly 
 respectable position of head of the firm, the first in the world. 
 
 1807. This powerful house, which then stood at the head of the 
 mercantile order throughout the world, and, in Holland, not only felt 
 itself perfectly independent, but considered itself equal in financial 
 matters to any potentate on earth, and entitled to occupy a similar 
 footing with them ; yet Napoleon was weak enough to think 
 differently. 
 
 I will take this opportunity of saying something about the Baring 
 family, particularly its most distinguished members, Sir Francis and 
 his second son, Alexander, as well as the honourable chief of the 
 Amsterdam house, Mr. Henry Hope, whom I have already named. 
 The last of these, when I first made his acquaintance, had reached 
 his seventieth year and was somewhat deaf. He had never been 
 married. It was he who opened the way for the autocratic power of 
 Russia, under the Empress Catherine II., to the confidence of the
 
 76 
 
 then wealthiest capitalists in Europe, the Dutch, and thereby laid 
 the foundation of Russian credit. 
 
 The larger part of his considerable fortune, which he had be- 
 queathed to Henry, the eldest son of his niece, Madame Williams 
 Hope, who died unmarried, passed, at the decease of Henry, to 
 Adrian, the second son, who left no male heirs, but from whom it 
 descended to Francis, the third son, born several years afterwards. 
 This third inheritor is the rich and well-known Mr. Hope, now 
 settled in Paris, and the only surviving member of that branch of 
 the whole family. 
 
 A close examination into the origin of the Baring family traces it 
 back to a certain Peter Baring, who lived in the years from 1660 to 
 1670 at Groningen, in the Dutch Province of Overyssel. One of his 
 ancestors, under the name of Francis Baring, was pastor of the 
 Lutheran Church at Bremen, and in that capacity was called to 
 London, where, among others, he had a son named John. 
 
 The latter, well acquainted with clothmaking, settled at Lark- 
 beer, in Devonshire, and there put up an establishment for the 
 manufacture of that article. He had five children four sons, John, 
 Thomas, Francis, Charles, and a daughter, called Elizabeth. Two 
 of these sons, John and Francis, established themselves, under the 
 firm of John and Francis Baring, at London, originally with a view 
 of facilitating their father's trade in disposing of his goods, and so 
 as to be in a position to import the raw material to be required, such 
 as wool, dye-stuffs, &c., themselves directly from abroad. Thus was 
 established the house which after the withdrawal of the elder 
 brother John, who retired to Exeter gradually, under the firm-name 
 of Francis Baring & Co., and eventually under the firm-name of 
 Baring Brothers & Co., rose to the highest rank of mercantile 
 eminence in the commerce of the world. 
 
 Sir Francis, who, under the Ministry of the Count Shelburn, 
 father of the Marquis of Lansdowne, had become his intimate friend 
 and adviser in financial matters, having, in the year 1793, received 
 the title of baronet, was already styled by the latter the Prince of 
 Merchants. On the occasion of one of my visits to him, he told me 
 that he had kept his business for thirty years before he considered 
 himself entitled to keep an equipage. Upon another occasion, when 
 I spoke to him of my project in establishing myself in New Orleans, 
 he remarked, " Usually, my young friend, that commission business 
 is the best in which the commissions take this direction " here he 
 made a motion with his hands, as if throwing something towards 
 him "but where the business goes thus ! " motioning as if he was 
 throwing something from him. This amounted to saying, in other 
 words, that receiving consignments was a better business than
 
 77 
 
 executing commissions. Three of his sons, Thomas, Alexander, and 
 Henry, entered the London establishment ; but the first, who was 
 intended to have carried on the father's name, after the death of the 
 latter, on the i2th September, 1810, assumed the name of Sir Thomas, 
 and withdrew from the house, as the third also found occasion to do 
 at a later period. Alexander Baring, the second son of Sir Francis, 
 had received a portion of his education in Hanau, had then com- 
 pleted it in England, and commenced his mercantile career in the 
 house of Messrs. Hope, where a friendship sprung up between him 
 and Mr. P. C. Labouchere, which led to the latter's marriage, at a 
 later period, with his sister, Maria Baring. 
 
 When the Messrs. Hope retired to England in consequence of the 
 occupation of Holland by the Revolutionary French army, and after 
 Alexander Baring had left the house, he determined to visit the 
 United States of North America, where he married Anna, the eldest 
 daughter of Mr. William Bingham, in Philadelphia, who was at that 
 time considered the richest man in the United States, and was then 
 a member of the Senate. Of the nine children, the eldest, called 
 William Bingham, after his grandfather, is the present Lord 
 Ashburton. 
 
 The downfall of Napoleon's Empire in 1814 had presented to the 
 house of Hope & Co., which for five years had been subsisting only 
 for the liquidation of the various State loans undertaken by it, an 
 opportunity of at once resuming all its former importance ; but the 
 partners, who were then living in England, manifested but little 
 disposition to do so. 
 
 Mr. Alexander Baring, who fully comprehended the magic 
 influence of so illustrious a mercantile name, resolved to buy it out, 
 under the condition that the old original firm should be maintained. 
 
 He overcame the reluctance of his brother-in-law, Mr. P. C. 
 Labouchere, who had been intrusted with the business management 
 of the concern, to undertake it again, and the latter finally con- 
 sented, expressly stipulating that he should be allowed to select an 
 assistant ; the desired aid was found in his friend Mr. Jerome Sillem, 
 who had formerly lived in Hamburg. Mr. Baring reserved for 
 himself a third part in the new house of Hope & Co., and the other 
 two-thirds were divided between the brothers P. C. and S. P. 
 Labouchere, Mr. Jerome Sillem, Mr. Van der Hoop, of the former 
 house of Krusen, at Amsterdam, and Mr. P. F. Lestapis. 
 
 Mr. Thomas Baring, one of the present heads of the Baring house 
 at London, also took part in the management of the Hope firm, as 
 did John, the younger son of Mr. P. C. Labouchere. 
 
 In the summer of 1819, I again visited Europe. It was for both 
 the commercial and political relations of that continent an epoch of 
 the greatest interest, when business had just begun to recover from
 
 the consequences of the crisis that had arisen during the preceding 
 year. 
 
 France, at least, had, through the loan of 27,238,938 francs 5 per 
 cent. Rente, decided upon by the Congress of crowned heads at Aix, 
 and taken by the Barings at 67 francs, freed herself from the 
 burthen of the sanitary cordon which the leaders of the Holy 
 Alliance Russia, Prussia, and Austria had intended to maintain, for 
 five years, along the northern and north-eastern frontiers of France, 
 with an army of 50,000 men each. But the Paris Bourse received 
 some severe blows by the fall of the State paper from 67 to 58, and 
 was indebted for its rescue only to the coolness of Mr. Alexander 
 Baring. 
 
 It was Alexander Baring who freed France from this army of 
 occupation, thereby inducing the remark from the Due de Richelieu : 
 " There are six great Powers in Europe England, France, Russia, 
 Austria, Prussia, and Baring Brothers." 
 
 The loan taken by Messrs. Baring & Co. was concluded in two 
 portions one of 14,925,500 francs, at 66 francs 50 centimes, and the 
 other 12,313,438 francs, at 67. The Rente fell to 58 francs before the 
 contracting parties had the last portion in their hands. The whole 
 Paris Bourse was violently agitated. The contractors saw that, under 
 such circumstances, the strength was lacking to sustain so heavy an 
 emission of State paper, and that there would be any number of 
 failures in case a further sum were put into circulation. Thus 
 pretty nearly every one lost all presence of mind, but Mr. Alexander 
 Baring retained his. 
 
 He persuaded the Due de Richelieu to annul the contract for the 
 last half of the loan, and likewise prevailed upon the Bankers 
 associated with him to relinquish it, on their .part. Yet it was not 
 merely his powers of persuasion that brought about this result. 
 The majority of the Ministers of the allied Powers present at Aix 
 Metternich, Nesselrode, Hardenberg, and others had desired to 
 participate in the loan, and there had been an understanding to that 
 effect. When the Rente fell, Mr. Baring desired that they should 
 make their payments themselves, but they lacked the means ; they 
 had counted upon the profits and not upon the risks of the venture. 
 A hint was then thrown out that they should be released from their 
 obligations, if they could prevail upon the Due de Richelieu to 
 accede to the measure I have mentioned. The Congress of Plenipo- 
 tentiares bade and Richelieu obeyed. 
 
 HENRY GOOD & SON, LONDON, B.C.
 
 J