Littell's Living Age

their heads for advice they had lightly given and forgotten. They had little hope to hold out; and the dens of the stockbroking firms during business hours in these evil days resembled the consultingrooms of the popular consumptive doctors, who in the course of one busy morning's work may despatch their death-sentences by the dozen.

Meanwhile in the Stock Exchange, on the other side of the way, business was

mentary rules, the great establishment at
the "corner came down while the mass
of City folks still firmly believed in it. It
was rumored, as it might have been taken
for granted, that the most strenuous ef-
forts had been made to avert the catas-
trophe. The managers were said to have
taken a cabful of their books to the par-
lor of the Bank of England; but the bank
directors had not seen their way to lend-
ing the needful assistance. It was not to
be expected that the national loan estab-going cheerily forward. Speculative sell-
lishment should have stretched a point to
assist competitors who had been in the
habit of systematically underbidding it.
But it was argued, in ignorance of the
circumstances, that where Overend's
failed to find accommodation, other cred-
it-houses must seek it in vain; and there
were those who went so far as to say that
the bank itself might be in difficulties.
And in fact there was some slight foun-
dation for that assertion-inasmuch as,
soon afterwards, on the question of the
discount rate, the associated joint-stock
banks put pressure on the old lady in
Threadneedle Street by threatening a
combination to exhaust her reserves.

ing was so far absolutely safe, for every-
thing was tending steadily downwards.
The droop, in some instances, was as-
tounding, and men made hundreds or
thousands in the scratching of a pencil.
The danger to be avoided was the being
"stuck" for shares that were worse than
useless; for the sudden stoppages took
the very people by surprise who had been
laboring for them remorselessly. Many
failures were inevitable, no doubt, but
more were the work of villanous combi-
nations. Bands of conspirators leagued
themselves to "pepper," as it was pleas
antly termed, some particular class of in-
vestments. Of course the credit associ-
All that serves to explain the frenzied ations were chiefly selected for attack, as
state of mind into which the great failure being most susceptible to sinister influ-
had thrown the city. Operators on the ences. The Indian banks especially had
Stock Exchange saw their opportunity, a bad time of it. The Indian trade had
and hastened to avail themselves of it. been bad since the close of the American
Never did the "bears" have a better war, and the collapse of the ephemeral
time; and the faces of legitimate invest- prosperity of the great East Indian cot-
ors who flocked eastwards to look after ton port had affected all who had commer-
their property, and who had thought of cial relations with it. The new banks
cutting short probable losses, were so that had been bolstered by the Bombay
many pitiful studies in the tragic and gro- cotton-bales were in difficulties already,
tesque. It was then that the ignorant and this English crisis administered their
who had been investing so lightly began coup de grâce. Then the wreckers turned
to realize the full meaning of "limited" their attention to the new financial estab-
liability. It was then they began to sus- lishments, which by going in wholesale
pect the policy of the brokers' favorite for reckless promotion, had hitherto paid
maxim, which warned them against put- fabulous dividends, and seen their shares
ting all their eggs in one basket. The at fancy prices. They had lent out their
feelings of the father of a family who capital to subsidiary establishments; and
held shares in a single shaky credit estab- now all these affiliated societies were in
lishment were by no means enviable; but difficulties. Picture the feelings of the
in cases where he had "distributed his family investors of the day, who had been
risks," excitement was wrought up to receiving their interest regularly for a
agony-pitch. It was not simple ruin that couple of years or so, at the rate of twenty
stared him in the face, but he might be per cent. or upwards, and had been count-
saddled with a load of contingent liabili-ing on the future accordingly. When the
ties which he could not shake off in a shares were issued, they had received
lifetime. Next to the immediate victims allotments for a fraction of those they had
of the crisis, their professional advisers
were perhaps most to be pitied. For
hardly could the profits of innumerable
sales recompense them for the worrying
scenes they had to pass through; while
the bitterest reproaches were heaped upon

applied for, as a matter of favor, from influential friends. We can recall many cases where the allotments had been only assigned on the understanding that shares were to be held for permanent investment. The shareholders with available means,

besides, had made the most of the privi- well may, for your misfortunes have let

lege of their preferential claims to an allotment of the scrip of subsidiary companies. So the clergymen and the widows, the half-pay officers and the maiden ladies with a few thousands for their portions, found themselves indefinitely entangled in "securities" that were practically unsalable. Then the romance of City business in its most tragic aspects was brought home to thousands of struggling households. We may fancy the palpitation of the heart and the trembling fingers with which the arrival of the post was expected in many a melancholy breakfast-room. The stockbrokers' curt letters brought little consolation, with their news from the falling. markets, where quotations were often nominal. At last suspense would be relieved by a line or two in conspicuous type in the journal, announcing the collapse of a company. The Discount Association or the Financial Corporation had succumbed, and the cherished scrip, which was the symbol of the family prosperity, represented something much worse than so much waste-paper.

The excitement of suspense is bad enough; but if we wished unwary investors in speculative insecurities to realize the risks to which they carelessly expose themselves, we should like to impress them with the lingering torments of liquidations. If you lose a large sum of money, there is an end of it; and the healthy mind begins to recover its elasticity, or at all events learns to resign itself. But with a failure under limited liability, you are only at the beginning of the end; and the end, which may be indefinitely deferred, is involved in doubts and darkness. Except in an exceptionally bad case, like that of the City of Glasgow Bank, the first formal circulars of the official liquidators are pretty sure to minimize the misfortune, and they lighten the first despair with fallacious gleams of hope. The company was brought to a stoppage by stress of circumstances, but time is all that is needful to realize assets that are locked up. In fact, your shares still represent the reversion to a valuable property, and possibly you are encouraged to believe that time may set you all on your legs again. Anxious still, but plucking up heart, you hurry off to the City to attend the first meeting of the sharehold

ers.

Nothing can seem pleasanter than the party assembled on the platform, and your spirits begin insensibly to go up as you contemplate their serene and smiling faces. The liquidator is smiling, as he

him in for an excellent thing. The directors appear serene, because they have screwed up their courage to the stickingplace, knowing that they must make the best of awkward disclosures. While the secretary and manager smile like the liquidator, albeit, to the close observer, their grins have something ghastly in them, because they have an uneasy suspicion that they are unpleasantly compromised, and may have laid themselves open to civil, if not criminal, proceedings. The liquidator's exposition of the circumstances would be more satisfactory did it not deal chiefly in specious generalities, which seem odd in a man who has been bred to figures. But you cannot complain that it has no point, and the sting lurks in the peroration. It may be hoped that all will come right in the end; but in the mean time a heavy call is indispensable, "to place the company in an advantageous position for liquidation." A call! and all your money is locked up in companies that are already entered on the black-list. A call that must be paid, with the alternative of insolvency, and a certainty of pauperism or a future of privations. All your sense of independence is gone with your hopes in that unlucky speculation; and now there is nothing left you but to endure, or to appeal to the cool friendship of acquaintances. And call succeeds to call; for the first estimate of the ruined company's future was colored by the interests of those who had compromised it. It may be that the directors had disposed of the capital in flagrant contempt of the articles of association. There may be good grounds for an action for compensation against them. But even should they be worth powder and shot, no man of energy and business experience seems disposed to take a lead in the matter; for, as we said already, City men in such circumstances seem to have a kindly fellowfeeling for the gentlemen who have victimized them.

But the loss of one is the gain of another. If the confiding public were not periodically victimized, what would become of promoters and professional speculators? We have spoken of the great fortunes of such families as the Rothschilds and Barings. But side by side with these hereditary magnates of finance and commerce, we see the rise of a class of millionaire nouveaux riches, who have apparently for the time an even greater command of money, or who scatter it, at all events, with more ostentatious profu.

sion. Some of these unscrupulous up- and good-will of his establishment. He
starts have made themselves sufficiently comes out in garments in advance of the
conspicuous; for they are often not only fashion, wears flowers in his buttonhole,
cunning men of business, but they aspire and acts the petit maître, though overdo-
to shine before society as well. Though ing the aristocratic swagger of his man-
far from hiding their light under a bushel, ners. He gathers a good balance at his
they do their best to keep their business banker's; he is ready to venture with it
secrets; and so long as all goes prosper- boldly; and thenceforward- his rise is as-
ously and their ventures turn to profit, sured. From being consulted by men of
their gold gilds the scandals of their some character and position, he takes to
careers, and their profusion stifles rumors getting up companies upon his own ac-
to their disadvantage. But occasionally
over-confidence will bring them to grief:
their doings become the subject of judicial
proceedings; and so we can compile a
tolerably faithful biographical sketchi from
the impartial charge of a judge and the
testimony of unimpeachable witnesses.
We hear, perhaps, of an ambitious trades-
man in a very small way, who recognizes
that he has a happy turn for finance. He
keeps a "coffee divan," and is brought into
friendly relations with the clever Bohemi-
ans, invariably out at elbows, who lounge
away their time in his establishment. He
has " a
friend" who has a little money to
turn over, and he puts it out for him on
bills at exorbitant interest, though gener-
ally on pretty safe personal security. His
establishment is in the city, in the pur
lieus of the Stock Exchange, and some of
his shady clients are hangers-on of "the
house," or fifth-rate solicitors struggling
for a practice. All these needy individu- | ries across the ocean to draw up secret
als have dreams of growing rich, should
fortune ever give them a cast of her fa-
vors. And the chance comes in a period
of inflated speculation, when doubtful
companies of all kinds are shooting up
like funguses, and their letters of allot-
ment are as good as bank-notes.

Our friend of the coffee divan has his council of confederates, ready to scent out "good things," and to conspire to turn them to advantage. In picking and choos ing among "rubbish" of purely ephemeral value, in deciding on the happy moment to realize, he shows himself possessed of keen financial sagacity. He gets talked of as a shrewd fellow he forms friendships with the rather disreputable brokers he employs till at last his advice is applied for by promoters in a small way. When he has once insinuated a finger into the City pie, the whole of both hands is sure to follow. For be it remembered that he is really gifted in his way, and no impostor as to his ability in "rigging companies; "and his self-confidence growing with a run of good luck, his counsels come to be regarded as those of an Achitophel. He casts his slough, and sells the stock

count. With the characters and connec-
tions he has made, that is by no means
difficult; and he begins prudently in a
modest way. He can find money for ad-
vertising and circulating prospectuses;
and the investing public bear him out with
the rest. Generally, there is something
ingeniously plausible in the scheme,
all events, he knows how to make a pro-
spectus seductive, and how far he may
take liberties with the public credulity.
He selects his directors with judgment, so
far as circumstances will admit, leavening
the board of respectable dupes with a
sprinkling of ready accomplices. His tal-
ents as a promoter come to be favorably
regarded in speculative circles; and em-
barrassed members of the aristocracy who
are looking out for directorships, pay him
court as a promising patron. So it comes
about that his enterprises develop with
his opportunities. He sends safe emissa-

engagements, and secures concessions of
undertakings, to be settled for after the
shares are subscribed. He has his sump-
tuous offices, where a numerous staff of
clerks is daily issuing prospectuses by the
thousand; he has his luxurious reception-
room, where he has his interviews with
schemers of his own stamp, and the jack-
al directors and "guinea-pigs
" who act
as his providers; while, on the strength
of his City triumphs, he becomes a sort of
lion on the outskirts of society. Men talk
of the Monte-Christo-like magnificence
with which he has furnished his residences
in town and country. He entertains
mixed companies with vulgar ostentation,
and pays hack writers in the press to
chronicle his entertainments. He sub-
scribes liberally to the advertising chari-
ties; he builds schools and restores
churches; or he bestows public recreation
grounds where municipalities are willing
to accept them. He has been making his
game, in fact, with the money of the peo-
ple whom we sketched as the victims of
unhappy liquidations. Perhaps the day
arrives when he is brought up with a
sharp turn. Reaction following inflation

has taken the wind out of his sails; his affairs are thrown into insolvency; he becomes the defender in numerous actions, brought with heavy damages by gentlemen who allege frauds, and seek to make him responsible for their losses; his establishments, with their contents, are in the hands of the auctioneers. But it is astonishing how one of these piratical navigators manages to weather the most appalling storms. He has made himself friends of the Mammon of unrighteousness; he has it in his power to make compromising disclosures; he has done his best to secure himself means of retreat; and he avails himself of the services of practitioners who are versed in all legal chicanery. As a rule, he slips through the toils that he has spread for himself, and he has hidden money out of the way in a reserve fund that eludes the perquisitions of his creditors. What is even more strange, though his character may have been torn into tatters, his reputation for financial adroitness still stands him in good stead; and before the scandals with which he is associated have been forgotten, he may be actively, though less obtrusively, engaged in business again. For it is a fact that, however a really capable promoter may have been blown upon, his services are still in request, though his name is no longer paraded.

The professional jobber and speculator on the Stock Exchange is a more commonplace character, though perhaps the qualities he should possess are even rarer. He is the last man in the world to lose his head, and he ought to be exceptionally gifted mentally and physically. He must have a strong constitution to stand the constant wear and tear of excitement, and a strong brain to bear the perpetual strain on it. In forecasting the immediate future of a stock, he must be able to combine and analyze the circumstances that influence it. And it is scarcely necessary to add that he should have perfect self-command, and invariably assume an imperturbable countenance. Men know that he is in the habit of dealing largely, and generally to good purpose, so they keep a watch on him and his operations accordingly. Either on private information, or from the exercise of his judgment, he has decided that a certain stock should go up. If he went to the Exchange and gave his orders openly, the dealers would immediately raise the prices on him. The more eager he is, the less he shows it: he strolls quietly into the house with his hands in his pockets, drops some careless

words of depreciation here and there, and probably makes a feint of selling. When he believes he has thrown the curious off his trail, he goes in earnest about the business he has in hand. It is evident that such an operator must have few scruples; and though he may deal fairly according to his own ideas, he has his peculiar code of morality. Though possibly less lax than that of our friend the promoter, it is easy enough in all conscience. He sees no harm in circulating false intelligence, nor does it give him a twinge to think that the profits of his day represent losses he may have gratuitously inflicted on his neighbors. In fact, the anxieties of his own life must naturally tend to make him indifferent to the sorrows and misfortunes of other people; nor can we imagine a more miserable existence, from whatever point of view we regard it. He might take for his Bashi-Bazouk motto the line of Byron, "I think not of pity; I think not of fear; " his life of care never knows a holiday; and should he be fortunate enough to retire on a competency, he is as miserable without his stimulants as the reformed laudanum-drinker. But what chance in the long run, we may ask, with such cold-blooded professionals as that, has the outsider who lightly ventures into the City, to win his loose hundred or two on one lucky deal of the cards?

Look at the inevitable odds against the latter. It may be assumed that he would find no professionals to deal with him, were they not morally certain of having the best of it in the end. He has to face better information and superior equanimity of temperament; and besides, to begin with, he must pay the broker's commission, which represents the fixed profit of the City gaming-table. There are minor circumstances he is apt to ignore, but which nevertheless may tell considerably. There are periodical seasons when the markets are sluggish, and slow to respond even to a decided impulse. In the first weeks of the year, for example, it is found that business is almost always dull; men are meditating over the Christmas bal ance-sheets or meeting Christmas liabili ties, and are slow to commit themselves to new engagements. Then bad weather notoriously depresses the markets, and the operator may be caught in a downpour of rain, when the mud that is flying in showers from cart-wheels on the crossings disposes everybody to look at speculative prospects en noir. It is found in practice, moreover, that rises are for the most part very gradual, and are apt to

be arrested by slight reactions, while | paws, and the weak holders are alarmed.
some "bulls" are realizing small profits. Our friend, who scarcely contemplated the
The outsider who has bought on a reliable chance of losses, goes through paroxysms
piece of news, or on conclusions which are of mental anxiety in his hesitation as to
substantially just a very rare case in- cutting them short, but finally resigns
deed — hopes, let us say, to clear five per himself to a sacrifice which leaves him
cent. on his purchase. But he finds that £300 or £400 out of pocket. Had he
though things may be tending upwards, resources to fall back upon, he would
he is likely to have long to wait, and the have done better to hold on, as the effects
settling-day is approaching, when he must are out of proportion to their causes; but
either close or carry over. While, on the for the moment he almost feels happy in
other hand, some complication may upset having made up his mind to the worst
his calculations; uneasiness tells far more a mood which changes in a week or two,
quickly on sensitive stocks than hopeful when he has the bitterness of noting the
expectation, and a fall of five or even ten stock going up again. Being hit so hard
per cent. is nothing uncommon.
It may
is perhaps an extreme case, and may pos
be said, that being the case, that the out- sibly prove a blessing in disguise if it
sider would do better to go in for "bear- drives the victim in disgust out of the
ing; " but in fact, "bearing" is altogether betting-ring. If he merely burns his
antagonistic to his inclinations.
fingers, he has a craving to have his re-
venge; and when an embarrassed and
excitable gentleman takes to gambling,
we pity him almost as much as his family.

So we may imagine him retracing his
way from the City, having effected a bar-
gain for £5,000 in one of those notoriously
speculative railway lines, the stock of Speculative enterprise is one thing, and
which, though essentially sound, seems speculation in stocks is another; and the
to be bandied about like a shuttlecock growth of both has been almost beyond
among operators. Perhaps he has acted calculation in the lifetime of the present
on a happy inspiration; perhaps on a generation. As to Stock Exchange deal-
chance paragraph in a newspaper; possi-ings, it has been estimated on good au-
bly on the whispered intimation of a thority, that barely one bargain in twenty
pushing broker, that parties behind the in London is genuine; while the percent-
scenes have been buying. What objects age of bond fide purchases on the Paris
of interest the papers become to him from Bourse is probably even smaller. As for
that moment! How closely he scans the speculative enterprise, it necessarily ex-
share-lists in each new edition! For it pands as the world becomes richer; and
may be assumed that our acquisitive the wealth of the world seeks outlets and
friend is hard up, and that the stake he is remunerative undertakings, which in-
playing is of vital interest. A fractional crease it indefinitely when judiciously
movement upwards excites his hopes; but undertaken. So the one goes on reacting
the stock sticks there or thereabouts till upon the other, and fresh centres of
the eve of the settlement. He hardly activity are opened everywhere. Take
likes to pay a commission merely for a our own manufacturing and mining dis-
prolonged trial of his patience, and cabs tricts, for example. In prosperous times
off to take advice. His broker arranges they yield a flowing volume of superfluous
to carry over on easy terms, and he takes capital which floods the stock markets,
out a fresh lease of expectation, when seeking safe securities. That has been
one evening his appetite for dinner is going on to such an extent of late years,
spoiled by an item of intelligence in "our notwithstanding periods of stagnation and
latest edition." It may be the announce- depression, that now the stocks of the
ment of an issue of fresh stock; an un- choicer railways scarcely give higher re-
favorable estimate of dividend, given with turns than consols formerly; while the
judicial authority; or possibly a collision funds of America and the leading Conti-
is set forth in glaring type, with a melan- nental States have been rising till they
choly report of dead and maimed. The no longer tempt the needy. So shrewd
paragraph appeared after the closing of promoters have their innings periodically,
the markets, so he has to wait for the competing for the employment of the
morrow to learn results. The bulletin of plethora of capital, with schemes and con-
the opening sales is deplorable; and the cessions more or less plausible. On the
later ones, with unimportant fluctuations, solid foundation of the capital they can
are going from bad to worse. The bears, obtain, they rear a vast superstructure of
who are always sniffing at the stock, come credit that gradually becomes top-heavy.
down upon it with the full weight of their | And as we already remarked, speculation

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Littell's Living Age, Volume 152