Notebook “Trade and Finance 1868”. III. The Prosecution of the Directors of Overend, Gurney and Co., January 2 to 16, 1869

Newspaper cuttings, mostly from the Daily News, cut out and pasted in for Karl Marx by his daughter Jenny Marx in the notebook “Trade and Finance 1868”, London, 1868-1869 (IISG, Amsterdam, Karl Marx and Friedrich Engels Papers, P 1). Text from MEGAdigital (MEGA² IV/19), without the editorial apparatus; words in square brackets are missing from the cuttings and supplied by the MEGA editors.¹ Traducción al español

THE CHARGE AGAINST THE DIRECTORS OF OVEREND, GURNEY, AND CO.

Yesterday morning the six defendants in this case. Mr. J. H. Gurney, Mr. H. E. Gurney, Mr. R. Birkbeck, Mr. H. T. Barclay, Mr. H. G. Gordon, and Mr. W. Rennie again appeared in the answer to their bail before Lord Mayor and Alderman Sir T. Gabriel, at the Guildhall, on the charge of fraudulently conspiring to induce people to take shares in the company of which they were directors.

The same learned counsel appeared on behalf of the defendants. The court, as on previous occasions, was crowded by spectators.

Mr. Lewis proposed, in the first instance, to call evidence which would entitle him to put in the prospectus, to the production of which some objection was taken on Saturday.

Mr. Giffard would offer no objection.

Mr. T. Levine, the secretary of London Stock Exchange, deposed that application was made in August, 1865, for settlement in the shares of Overend, Gurney, and Co. (Limited), duly signed by some members of the Stock Exchange. A request was sent by the secretary of the committee of the Stock Exchange, and such documents as were required were received by him from the secretary of the company. A deed accompanied them.

Mr Lewis—Now I call for that deed. It is the deed of transfer: the first deed.

The deed was produced and handed to the witness.

Witness—I cannot identify it, but the deed purported to be the deed of covenant transferring the business of Overend, Gurney, and Co., to Overend, Gurney, and Co. (Limited). There is, however, nothing on the face of the deed by which he could identify it. He did not examine the signatures to the deed. There were documents in answer to their requirements, but no other deed. There was the memorandum of the articles of association, the prospectus, the director’s voucher, and two specimens of the letter of allotment. He retained all of them in his possession except the deed. A settlement and official quotation were granted for the 22nd of August.

Mr. Lewis—Before reading the prospectus, I will put in the minute-book, and read one or two minutes, after which I shall contend that the evidence of this witness will be sufficient to enable me to read the prospectus.

Mr. Serjeant Parry objected that the minutes would not prove themselves.

Mr. Lewis—Under the 67th clause of the Joint Stock Companies’ Act, the minute-book and minutes are made evidence.

Mr. Serjeant Ballantine—Why not call the secretary of the company? This is all done for the purpose of preventing calling the secretary, for what reason I do not know.

Mr. Lewis—I disclaim any such intention, and do not think the insinuation ought to be made. The course I pursue is pursued for the purpose of conducting the inquiry in the regular way.

Mr. Oke, the clerk of the court, read the section referred to, which provided that “any such minute as aforesaid, purporting to be signed by the chairman of such meeting at which such resolution was passed, shall be received as evidence in all legal proceedings.”

Mr. Giffard—I don’t object as the secretary is to be called, but I do not concede that that clause gives a right in a criminal prosecution to produce the minutes as evidence against the defendants without proving them.

Mr. Lewis—I submit that it is perfectly good evidence.

Mr. Serjeant Ballantine—We concede it on the understanding that the secretary is to be called.

Mr. Lewis—I give no such undertaking. I contend that the minutes themselves are evidence.

The Lord Mayor—They are good evidence in a preliminary inquiry at all events.

Mr. Lewis—I shall call Mr. Slater, the first secretary, to show that he submitted to the board a letter received from Mr. Slaughter, of the Stock Exchange, asking for the information required by the committee of that body, and then I shall call attention to the minute of the 25th of August, purporting to have been signed by J. H. Gurney, chairman, stating that Mr. Slater, having handed in the deed from Messrs. Young, Jones, and Co., for exhibition to the Stock Exchange Committee, and also the certificate of incorporation, was instructed to deliver them after the inspection to Messrs. Young, Jones, and Co., on behalf of the company; and I contend that that, and the minute stating that they had been received back, makes evidence of the documents produced by the witness, and which he stated he had received from the secretary of the company.

Mr. Giffard—That is precisely what he does not say.

Mr. Lewis—Here is a letter which purports to come from the secretary, stating that he was requested to do this, and I submit that such directions are evidence.

The Lord Mayor understood that all the documents had been kept in possession of Mr. Levine.

Mr. Oke—Yes, and he has identified all but the deed.

Mr. Lewis—Then I propose to have the prospectus read. The prospectus was then formally put in, and read by Mr. Oke, stating that the capital would be 5,000,000l., in 50l. shares, and that not more than 15l. a share would be called up.

Mr. Lewis then proposed to put in a letter from Mr. Slater, which was objected to, but a minute was produced, dated July 20, authorising his appointment as secretary pro tem., until Mr. Boyce, the permanent secretary, was appointed.

Witness—I received that from the office of Mr. Slater.

Mr. Lewis submitted it was evidence, because it varied the appointment of the secretary of the company.

Mr. Giffard—Did you receive it from his own hand?

Witness—I did not; it was sent to me.

Mr. Lewis then submitted that the letter he proposed to read was good evidence.

Mr. Giffard—What is it evidence of? It is merely a piece of paper signed by him, but it is no evidence of the contents.

Mr. Lewis—I have no objection whatever to call Mr. Slater, but I don’t wish it to be supposed that I am tendering evidence which is irregular.

Mr. Robert Slater, the younger, was then called, and said—I reside at 26. Cornhill, and am a member of Lloyd’s. I was not consulted with respect to the formation of the company, Overend, Gurney, and Co. (Limited); but a few days before the company was formed I met Mr. Gordon, and he told me that my services might be required in its management. I had been previously connected with other companies of which Mr. Gordon was a director, and on the 12th of July, 1865, I was again consulted. I think it was at the Oriental Bank I saw Mr. Gordon, and I was requested to attend at the offices of the solicitors of the company. I attended on the 12th. Mr. Gordon was there. I was requested to wait till a later hour, and was then informed by Mr. Gordon that I was to have the matter placed in my hands, and was requested to attend the following morning at the offices of the company, 51, Lombard-street. The name of the company was then mentioned, and I was to attend to the business that was to be transacted in respect to the allotment of shares. The prospectus was issued on the 13th of July. The first minute taken by me was on the 20th of July. There was no minute book kept as far as I know between the 12th and 20th of July. I kept none. On the 13th of July the offices of Overend, Gurney, and Co. (Limited) were opened at 51, Lombard-street, for the registration of shareholders. There was no agenda book kept between the 12th and 20th. On the 13th of July, I presume, most of the directors looked in. I received a bundle of prospectuses from the printer. They were issued to the public on application. There could be no doubt that between the 12th and 20th of July most of the directors called at the office. I believe all of them did, except, perhaps, Mr. Gibb. Some of the directors spoke to me. I do not remember who spoke to me, but I was spoken to on the general business of preparing the allotments. There were copies of the prospectus in the office for the public. I remember the application for documents coming from the Stock Exchange in reply to an application for a settlement. In the minute of the 8th of August, in my handwriting, there is reference made to it. Mr. J. H. Gurney in the chair; Mr. Barclay, Mr. Birkbeck, Mr. Gibb, and Mr. Rennie were present. The subject of the application of the Stock Exchange was brought before the board. The minutes state a letter was received from Mr. Slaughter. In accordance with the resolution passed, I applied to Mr. Jones, the solicitor, for the certificate of the incorporation of the company, and any documents that would have to be sent to the Stock Exchange. I received from him the certificate and the deeds, and also the original deed of covenant of the transfer of the business from Overend, Gurney, and Co., to Overend, Gurney, and Co. (Limited).

Mr. Lewis—Look at the deep produced.

Witness—I cannot identify it; it purports to be such a deed, but there is nothing on it that could lead me to identify it as the deed I sent to the Stock Exchange. I am certain that I sent only one parchment deed. I accompanied it with a letter, which witness read, and which was to the effect that application having been made to the committee of the Stock Exchange to allow a settling day in the shares of the company, he begged to forward a certified copy of the prospectus, and a certificate from himself to the secretary of the committee, giving the following particulars—the number of shares applied for by the public, the number of shares allotted unconditionally to the public, and the amount paid upon them, making 7l. per share; the number of shares not included in the public allotment taken by the vendors, a certificate that the shares were ready for delivery, and one from the bankers stating the money received by them; the company’s bankers’ passbook, two copies of the memorandum of the articles of association under the Companies Act of 1862, with the certificate of registry and incorporation; the certificate of the shares to be issued to the allottees, the original applications for shares, containing a list of the names of the applications, and the number of shares applied for; copies of the letter of allotment, and the original deed of conveyance in relation to the transfer of the business of Overend and Gurney to Overend, Gurney, and Co (Limited). In the certificate transmitted he certified that the number of shares applied for by the public was 224,484, of which 365 were withdrawn by the applicants before the allotment; 83,334 were allotted unconditionally to the public. He further certified that 16,666 not included in the public allotment were taken by the vendors; that the shares were ready for delivery, and that no impediment existed in the settlement of the account.

Mr. Lewis (handing a deed)—Did you ever see that deed? It is a contemporaneous deed.—I may have seen it. I remember seeing three deeds at 65, Lombard-street. It was when the seal was attached to the deeds. By the resolution of the board of the 8th of August it was resolved that the first five resolutions of that meeting be entered into a separate minute-book, unconnected with the allotment of the shares. They were not in his handwriting, but were signed by Mr. J. H. Gurney, and stated that, in conformity with the resolution of the 27th August, 1865, the seal of the company was affixed to the deeds, in the presence of Mr. H. F. Barclay and Mr. W. Rennie, and it was resolved that the deed of covenant of transfer, and the deed of arrangement on the basis of that deed, should be deposited with the solicitor for safe custody, and that one seal be held by the chairman and the other by the secretary, and the duplicates be kept at Messrs. Barclay, Bevan, and Co.’s, and not to be released except by a minute of the board. The witness proceeded to say that the allotment of the shares was on the 31st July. Was sure that he only forwarded the copy of one deed to the committee of the Stock Exchange. Was present when two deeds were sealed on the 8th August. Was not present when the resolutions were passed which were entered in a separate minute-book. Was not present, he supposed, because the directors did not wish him to be so. Was present during a portion of the meeting. Those resolutions were in the handwriting of Mr. Boyce, the secretary to the company. On several occasions he was requested to withdraw from the board-room, and it was possible that it might have been so on this occasion. Left the service of the company in February, 1866. Saw the seal of the company affixed to three deeds on the 8th of August. Was not aware of the contents of those deeds. One of the deeds was endorsed “Deed of mutual covenants in relation to the transfer of the business of Overend, Gurney, and Co.” Another was endorsed “Deed of arrangement on the basis of contemporaneous indenture.” Believed the signatures to the deed of Mr. J. G. Gurney, Mr. S. E. Gurney, Mr. Barclay, Mr. Birkbeck, and Mr. Rennie to be in their handwriting. The prospectus stated that a copy of the deed could be inspected at the office of the solicitor. Frequently went to the office of the solicitor. Never saw a copy of the deed there. The allotment of the shares commenced on the 24th July. The minute stated that on that day Mr. J. H. Gurney was in the chair, and that there were also present Mr. Birkbeck, Mr. Gibb, Mr. Gordon, Mr. H. E. Gurney, and Mr. Rennie. On the 25th of July the directors proceeded with the allotment, and the same gentlemen were present. Also proceeded with it on the 27th (the directors then present being Mr. J. H. Gurney, Mr. Gibb, Mr. H. E. Gurney, and Mr. Rennie); and on the 28th the allotment was completed, the total number of shares allotted being 83,180, there being 154 shares unappropriated to meet the contingencies which might arise in the hurry of closing the allotment. After he ceased to be secretary of the company he had no occupation in the company’s office. The last minute in his handwriting was on the 16th February, 1866. By that time the bulk of the shares had been issued to the public.

Mr. Serjeant Ballantine said he proposed to crossexamine the witness on a future occasion.

Mr. Lewis objected, and appealed to the court to follow the usual course, and that the cross-examination should be proceeded with at once.

Mr. Giffard said the witness had been called merely to prove something which it was necessary to prove, in order to enable Mr. Lewis to go on examining Mr. Howell.

Mr. Serjeant Parry then cross-examined the witness on behalf of Mr. Barclay, and in reply to his questions the witness said—I was only secretary pro tem. Mr. Boyce was to be the permanent secretary. I was employed principally in reference to the shares, and clearly understood that my office was to be but temporary. I understood that Mr. Barclay left England on the 14th of July, and did not return till the 5th of August. The 8th of August was the first meeting that he attended. The prospectus was issued on the 13th July. I do not remember Mr. Boyce saying to Mr. Barclay, on the 8th of August, “As you have come in, will you be good enough to certify the affixing of the seal?” There was no formal meeting of the directors till the 20th of July. (The third deed, which was here put in, was dated 2nd August, 1865, and is endorsed, “Deed of further arrangement and covenant.”

Mr. Serjeant Parry—Has not Mr. Barclay paid 35,000l. on those shares?

Witness—I do not know.

Mr. Serjeant Parry—I suppose you will admit that, Mr. Lewis?

Mr. Lewis—I am not a witness—I cannot admit it.

Mr. Serjeant Parry—I have asked Mr. Lewis if he will admit that Mr. Barclay has paid 35,000l. in respect of his shares, which he know is the fact, and he will not admit it.

Mr. Lewis—It is extremely irregular that I should be called upon to admit that which I do not know. What I do know is that Mr. Barclay, of Norwich, was stated to be worth a million.

Mr. Serjeant Parry—That is a method of conducting the prosecution which I cannot cope with.

Mr. Lewis (to the witness)—Does it appear in the minute-book that the solicitor was instructed to prepare those deeds?—Yes.

Was that minute-book ever exposed to the shareholders or the public?—Certainly not.

By Mr. Serjeant Parry—I did not see Mr. Barclay at the office until the occasion of the first meeting, the 8th of August. I did not go to the office till the 13th of July.

(The allotment-book was here put in.)

Mr. Lewis—Now look at that book, and tell us whether any shares were allotted to Mr. J. H. Gurney, or Mr. J. E. Gurney, other than those represented in the good-will?

Mr. Giffard objected to the question, and

The Lord Mayor ruled that the witness should first be asked what shares were allotted to these gentlemen, and then he might be asked in reference to other matters.

Witness—In this allotment book I find no shares allotted to Mr. John Henry Gurney, Mr. H. E. Gurney, or Mr. Barclay. There are no shares beyond those which it was understood they took under the articles of association.

How many were allotted to the public?—83,334 were allotted unconditionally.

The Lord Mayor—That is not the same number that was given before.

Witness—The number that I sent into the Stock Exchange Committee, and which is correct, is 83,334 allotted unconditionally to the public.

Mr. Lewis—That would leave 16,666 to make up the 100,000.

Witness—The shares taken under the articles of association are considered as part of the 83,334.

Mr. Lewis—Turn to the book and see what shares were allotted to John Henry Gurney.—His name is not there. He had previously taken shares under the articles of association.

Mr. Alderman Gabriel—What is the total number in that book? I calculate the number in this book to be 70,034.

The Lord Mayor—You stated that this book is the public allotment book. The number I find allotted by this book is 83,334.

The witness—I do not know it by the name of the Public Allotment Book.

Mr. Alderman Gabriel—But you say those names are not in that book?—Yes.

Mr. Lewis—See if Mr. Gordon’s name is down?—Mr. Gordon is down.

The Lord Mayor—It is more satisfactory to find the names in the book.

Mr Lewis—I asked if Mr. Gordon is there. He signed articles of association, 200 shares, and he is in the book. I asked him if the Messrs. Gurney are there, and he says they are not there. (To the witness)—Does Mr. Gibb appear?

Witness—Mr. Gibb appears, but these are not the original allotment sheets; this is only a copy of them. Mr. Gordon’s name has been added here in my own hand writing, written here doubtless in consequence of his having signed the articles of association.

Now later Mr. T. A. Gibb?—He appears here for 1,000 shares.

That is a portion of the 83,334?—Yes. Mr. Rennie appears as the holder of 401, of which he held 200 as representing Messrs. Lubbock, Bevan, and Co. Those also are a portion of the 83,334. Mr. H. F. Barclay, 1,000 shares; Mr. S. G. Buxton, 600 shares. All these names appear in the public allotment book.

Mr. Lewis—Do you find in that book Mr. J. H. Gurney, Mr. H. E. Gurney, or Mr. R. Birkbeck, allotted 10,000 or any such number of shares.

Witness—I do not find their name down at all.

Mr. Lewis—To whom were the 16,666 shares given which with the 83,334 made up the 100,000?—They were given in accordance with the instructions of the chairman, as following—Mr. Samuel Gurney, 4,666; Mr. R. Birkbeck, 2,000, Mr. H. E. Gurney, 4,000; Mr. J. H. Gurney, 4,000; and Mr. H. Birkbeck, 2,000.

Now, was one farthing ever paid in respects of those shares by any of the persons named?—The bankers’ book will show, I presume.

Mr. Lewis—You must know that.

Mr. Serjeant Ballantine—But do you?

Witness—To the best of my knowledge I received advice from the bankers that amounts had been received on them.

Mr. Lewis—Then we must have the bankers’ book produced.

Mr. Serjeant Ballantine contended that the manner in which shares were dealt with was shown by the deed.

The Lord Mayor—You had better put the question again.

Mr. Lewis—Was a single farthing received from those gentlemen in reference to the 16,666 shares so placed in their names?—According to the bankers’ book I should say yes.

Mr. Lewis—Well, then, we must see the bankers’ book.

The bankers’ pass-book was here produced.

Mr. Lewis—With regard to those 16,666 shares, was any thing paid to the bank?

Witness—I have an impression that something was paid in, but I cannot find it in the book; but I have not seen the book for three years, and the transactions were extensive.

Mr. Giffard—They were paid-up shares?

Witness—To the best of my belief the affair was arranged by a counter entry.

The Lord Mayor—No money was received in respect of those shares. You said you believed the pass-book would show it, but it appears there was no ground for your belief.

By Mr. Sleigh—Mr. Gibb was present at the allotment meetings and took his part in the deliberation of the directors among the rest.

By Mr. Giffard—Mr. Rennie appeared as an allottee for 401 shares—200 in his own name and 201 in the name of himself and partners. He was an applicant for 500 shares; there was a great demand for them, and he waived his right to the 99 shares. He was quite willing to take them. Mr. Gibb seemed to me rather an elderly gentlemen. I should suppose over 70 years of age. I cannot say whether he had the largest stake in the company.

By Mr. Lewis—I don’t know the premium at which the shares were sold, except by hearsay from the stockbrokers.

The examination of Mr. Oswald Howell, the accountant for the committee of shareholders, was then resumed, his previous disposition being first read over.

Mr. Serjeant Sleigh wished to take this opportunity of correcting a statement in Mr. Lewis’s opening with respect to the securities of the Ebbw Vale Company, and which compromised Mr. Gordon. He mentioned that a debt of 11,000l. by the old Ebbw Vale Company, to Overend, Gurney, and Col., had been transferred to Overend, Gurney, and Col. (Limited); that Mr. Gordon was a director of the old Ebbw Vale Company, and had a great interest in it; that in consequence of advances and bills discounted, there was an increase in the indebtedness of the Ebbw Vale Company in nine months from 11,000l. to 48,000l.; and he made it appear that it was principally owing to the rediscounting of bills on the inception of the old Ebbw Vale Company. The fact was that Mr. Gordon never was a director of the old Ebbw Vale Company, and the increase from 11,000l. to 48,000l. was owing to calls paid by Overend, Gurney, and Co. (Limited) made by the new Ebbw Vale Company on their shares, which Overend, Gurney, and Co. (Limited) had obtained in exchange for worthless Millwall shares. They held 2,450 of those shares, which were at a marketable value of 15l. a share, so that they would realise something like 36,000l. if sold now, and if held the transaction might result in gain instead of loss.

Mr. Lewis utterly denied that Overend, Gurney, and Co. (Limited) possessed 30,000l. worth of shares in the Ebbw Vale Company, and that the shareholders had the slightest chance of getting money from them. It was true that Mr. Gordon was not a director of the old Ebbw Vale Company, but the only error was that of calling it the old instead of the new company. Mr. Gordon for a short time was a director of the new Ebbw Vale Company, and it was equally true that at the time of the transfer of the indebtedness to Overend, Gurney, and Company it was 11,000l. and that in the nine months of their existence it reached 48,000l. in respect to calls on the shares. He said nothing against the respectability of the new Ebbw Vale Company, in which they hold nothing.

Mr. Serjeant Sleigh pointed out that the great difference in the two statements was, that whereas in the first Mr. Lewis characterised the new Ebbw Vale Company as a worthless concern, in the second he said that he had nothing to urge against its respectability.

Mr. Lewis—No, we don’t hold anything at all in it.

Mr. Lewis (to witness)—Now, what constitutes the difference between the 4,213,000l. to which you have alluded, and the 4,003,000l. of which you have given us the items?

Witness—Turning to the “Ledger, old firm,” opened the day before the transfer, there appears a further list of items in what is termed the suspense account. I find the British Honduras Company put down at 5,103l.; Kilkenny Railways shares, 11,200l.; Land Credit Company, 225,000l.; Panama Railway shares, 288,000l.; Albert Perry, 67,500l.; Pensacola and Georgia Railway bonds, 3,750l.; Tewkesbury and Malvern Railway, 12,005l. There were other items in the book, making an aggregate of 4,084,000l., but he had already explained how this was reduced to 4,213,000l.

Can you produce any account showing how that 4,213,000l. was dealt with between the old company and the new company? Yes; I find in the general ledger of the old firm, which was to begin at midnight on the 31st July, 1865, folio 80, an account headed “Overend, Gurney, and Co., suspense and guarantee account,” and the first entry is 31st July, cash 4,213,896l. 16s. 4d.

Do I understand you correctly that this list of debts, amounting to 4,213,000l., is transferred from the general account of the old company as cash amounting to 4,213,000l.?—Cash, 4,213,000l., to the debit of the old firm.

From your investigation of the books can you state how much of the liabilities of Overend, Gurney, and Co., were in respect of deposits and current drawing accounts?—Yes, 5,147,444l.

What was the amount of cash that Messrs. Overend, Gurney, and Co. handed over to meet that 5,147,444l.?—The cash handed over was 120,000l.

Mr. Giffard—By the balance-sheet there appears to have been also a million of bills handed over.

The witness was then questioned as to the increase or decrease of the debts handed over by the old to the new company, and he stated that Mr. Leopold Lewis’s debt, which was 341,559l., was reduced to 333,003l. on the data of the stoppage. On the 15th March, 1865, 70,000l. was written off that debt, and debited to the reserved fund of Overend, Gurney, and Co., in the private ledger; and on the 15th May, 90,000l. was written off, and on the 19th May, 35,000l. Then the debt due from the Millwall Iron Works, which was transferred at 510,368l. 11s. 2d., was increased to 566,489l. 12s. In March, 1865, 90,000l. was written off that account in two items.

Then there is the Atlantic Royal Mail—was anything written off that?—I have noticed that. I have taken those two instances.

The witness proceeded to say that the debt of 400l. 6s. of Astley and Co., which was transferred, was increased by the new company to 12,270l. The next item was that of Leopold Burzewitz, who left off as a debtor for 135,334l., the amount of debt at the date of transfer being 54,382l. J. H. Cox and Co. owed at the time of the transfer 180l., which had increased to 4,575l. The Greek and Oriental Steam Company’s account at the time of transfer was 144,144l.; it did not increase, but nothing came of it. He then proceeded to give the increase in other items. The East India and London Shipping Company owed at the time of the transfer 406,264l., at the time of the stoppage 578,218l. F. and G. Garraway began with 190,977l., and left off at 192,256l. Haliday, Fox, and Co. began with an indebtedness of 34,628l. and left off at 61,291l. Thos. Howard began with 331,765l., and left off at 331, 425l; John Jones, at the date of transfer 22,353l., and at the date of stoppage 61,200l. Mr. J. E. Koch began with 243,069l., and at the time of the stoppage the debt had increased to 335,412l. The indebtedness of the Millwall Iron Works at the time of the transfer (including some other accounts put down as nominees in the list and objected to by Mr. Giffard), 510,368l., and at the time of the stoppage, 566,489l. The entry as to Ebbw Vale shares does not say whether it was old or new.

What made you put it down as “old Ebbw Vale shares?”—Out of compliment to the new company. (Laughter.) As a fact it is simply Ebbw Vale shares. It is an account stated, the actual result being that it began with an indebtedness of 11,112l., and left off at 48,705l.

By Mr. Serjeant Sleigh—I find no entry on the 2nd of July about a transfer of shares.

By Mr. Lewis—Sichel, Alexander, and Co.’s account of July 31st was 51,921l., and at the time of the stoppage 107,393l., the increase being 55,472l. Von Dadelszen and North were put down as indebted at the time of the transfer at 2,845l., and it was increased at the date of suspension to 23,690l. In the old firm ledger was an account of John Watson, in respect of which the new company paid a balance of 103,240l. The gross increase in the liability of the new company in the nine months of its existence in respect to the accounts he had referred to was 908,338l., irrespective of 131,000l. for interest. The decrease on certain other accounts was 292,000l., leaving a balance of upwards of 615,000l. of increase. During the nine months of the existence of the Limited Company all the profits it made, without making any allowance for bad and doubtful debts, was 4,552l. There was an apparent profit of 220,000l., which was arrived at by calculating the interest on all the bad and doubtful debts. (Laughter.) In the suspense and guarantee account the total amount of all the accounts in the old ledger, 4,213,000l., is placed on one side. On the 31st of December, 1865, the interest, 62,621l., is charged; and at the date of the stoppage, on the 10th of May, 68,946l. is charged. Those two amounts make 131,567l. Except that charge of interest on debts which had brought a loss, the company did not make a profit beyond 4,000l. odd. The salaries of the managing directors are deducted. They took their salaries in cash, and I have not been able to find that it went to reduce their debt to the company. The balance of the suspense and guarantee account at the time of the stoppage stood at 2,970,168l. On the credit side was the item of 1,053,715l., p. l., which letters meant private ledger. That was after deducting the amount of the overdrawn accounts. There was also 250,000l., half the amount to be paid on the transfer of the business, written off. It was put down cash purchase account. There was also an item of 172,633l., cash received from the sale of shares. Of the 16,666 shares above referred to which were retained unallotted, it appeared from the books that a large sum was realised from the sale of shares, but it was impossible to tell how many were sold. In the aggregate the proceeds amounted to 156,000l., including interest. At the time of stoppage they had 8,320 unsold. Those that were sold seemed to have been sold at 5½ premium on the average. In one case where 1,500 shares were sold in November, they realised 7½ premium, being sold for 35,000l., they being 15l. paid shares. The amount of the suspense account was reduced by 172,633l., received from the sale of shares.

At this stage of the proceedings the court adjourned to Friday.

A short discussion took place, in the course of which the Lord Mayor intimated that it would be desirable to sit also on Saturday, but on the application of Mr. Lewis the matter was left open.

Mr. Serjeant Ballantine suggested that, as the evidence would probably be brought to a close on Saturday after a short sitting, an adjournment of a week should take place in order to allow counsel time to prepare their answer to the charge.

The bail was then renewed, and the defendants realised as before.

THE OVEREND, GURNEY, AND CO. PROSECUTION.

Yesterday morning having been appointed for the inquiry at the Mansion-house into the charge against certain of the boarding of directors of the late company of Overend, Gurney, and Co., whose failure on the 10th of May, 1866, caused such almost universal dismay and consternation in the public mind, the greatest interest appeared to be excited, and the court was filled by persons connected with the commercial world, and others, many of whom were sufferers by the calamity.

The facts connected with the failure of this once eminent firm must be so fresh in the recollection of the public that it will not be necessary to state at the outset more than that the 50l. shares of the company, upon which only 15l. had been paid, and which shortly before the panic stood at a premium, collapsed entirely upon the failure, and that, owing, as was alleged, to the reckless and improvident manner in which the affairs of the association had been conducted, there was a deficiency of nearly 20,000,000l. sterling. Proceedings had long been talked of as being intended to be taken against the persons whose misconduct was alleged to have been the cause of the calamity, and the present summonses were issued by the Lord Mayor upon the sworn information of persons who felt themselves aggrieved, and were determined to endeavour to punish the authors of what they alleged to be an enormous commercial fraud.

The summons was issued at the instance of Dr. Adam Thom, of Gower-street, Bedford-square, who had purchased a number of shares upon the faith of the false representations alleged to have been made by the defendants, and who, upon the failure of the company during the great panic in May, 1866, was called upon to pay a large sum of money for calls made by the official liquidator upon the shares he had so purchased.

The defendants summoned were Mr. Henry Edward Gurney, Mr. Robert Birkbeck, Mr. Henry George Gordon, Mr. William Rennie, Mr. Henry Ford Barclay, and Mr. William Henry Gurney.

The following is the charge laid in the summons:—“Whereas you have this day been charged before the undersigned, the Lord Mayor of the City of London, by Adam Thom, LL.D., of No. 90, Gower-street, Bedford-square, Middlesex, gentleman, for that you, in the month of July, 1865, and at divers other times, in the City of London, unlawfully did conspire, combine, confederate, and agree together, by divers false and fraudulent pretences and representations, and by divers subtle devices and means, to induce the said complainant and divers other persons to become, and thereby they did become, shareholders in a certain public company, to wit, a company called Overend, Gurney, and Co. (Limited), registered under the Companies Act, 1862, with intent thereby to cheat and defraud the said complainant and the said other persons of divers valuable securities, bankers’ cheques, orders for the payment of money, and divers sums of money, their property and moneys respectively, and which were acquired and obtained by the aforesaid pretences, representations, devices, and means, whereby the said complainant and the said other persons were in fact defrauded to the amount of three millions sterling, against the peace, &c.” The summons bears date the 11th of December, 1868. It should perhaps be stated that the character of the offence imputed to the defendants is that of misdemeanour, which would render them liable, upon conviction, to be sentenced to imprisonment, with or without hard labour, or a fine, at the discretion of the court.

At the commencement of the proceedings a large number of books, extracts from which are intended to be given in evidence, were brought into court.

The presiding magistrates were the Lord Mayor, Alderman Sir T. Gabriel, Alderman Sir R. Carden, Alderman Sir B. Phillips, and Alderman Cotton.

Mr. G. Lewis conducted the prosecution; the defendants were severally represented by Serjeant Ballantine, Serjeant Parry; Mr. Giffard, Q. C., Mr. Poland, Mr. Gardyne, Mr. Montagu Williams, and Mr. J. C. Mathew.

The whole of the defendants pleaded not guilty. They were seated in front of the clerk’s table.

The defendants, who are all men advanced in life, were accommodated with chairs in front of clerk’s table, and they all seemed to feel the painful position in which they were placed most acutely. The only one who exhibited anything like unconcern during the inquiry was Mr. Gordon, who smiled occasionally while Mr. Lewis was describing what he alleged to be the malpractices on the part of himself and his co-directors. They all paid the most earnest attention to the opening statement of Mr. Lewis, and frequently took notes of what he said.

Mr. Lewis stated the charge against the defendants. He appeared, he said, on behalf of Dr. Adam Thom to charge the defendants with having conspired together to defraud Dr. Thom and other shareholders of money to the extent of three millions sterling, and he (Mr. Lewis) believed, when his lordship had heard the facts and the evidence which he was prepared to produce in support of it, that a greater offence than that of which the defendants were guilty had never disgraced this country. The three first defendants were originally partners in a firm of the highest respectability in that City, which was carried on under the name of Overend, Gurney, and Co. The three other defendants were not partners in that firm, but they subsequently became partners in the new firm, which was called Overend, Gurney, and Co. (Limited), and the charge against them was that they, being perfectly aware of the hopeless and irretrievable state of bankruptcy of the company, did agree together to conceal from those whom they induced to become shareholders in the firm secrets that were perfectly well known, and by that means and by other frauds they induced the shareholders to subscribe 5,000,000l. to the funds of the company, while they were perfectly aware that the whole 5,000,000l. was lost. They had in bills of exchange and other documents 9,000,000l. sterling, and owed on other documents 5,147,000l. Beyond this there were contingent liabilities to the extent of 9,313,000l., making an aggregate of 23,000,000l. sterling. To meet those engagements they had 120,000l. in cash. They had also further sums deposited with them to the extent of 5,147,000l., but the only available means to meet the claims against them were 120,000l. They had government stock to the extent of 372,000l., but this was not available to meet liabilities. They had bills to the extent of 1,300,000l.; there were 721,000l. loans guaranteed; there were 9,613,000l. in bills rediscounted, making the total indebtedness 23,000,000l., leaving them insolvent to the extent of 3,000,000l. Such was the state of things in the month of July, 1865. Now, in July, 1865, the course pursued by the defendants was this. They had a very great name in the City—one that commanded perfect confidence in the City. They knew the secret of their own insolvency: but no one else knew it or suspected it. What he submitted was this, that the defendants, availing themselves of their name and credit, formed a combination to throw the whole of their enormous loss upon those whom they most dishonestly invited to become partners in their ruined and bankrupt concern, and that they did so with a full knowledge of what the consequences must be; and, in fact, of what the consequences actually were. He would here observe that there was no reason to suppose that the three first defendants—Messrs. J. H. Gurney, E. Gurney. And R. Birkbeck—concealed the real state of their affairs from the other defendants; on the contrary, he should show that the opposite was the fact, that they disclosed to the other three defendants all the circumstances of their position, explained to the fullest extent their hopeless insolvency, and that therefore they did not attempt to deceive those whom they wished to become co-directors. The company was registered on the 12th July, 1865, by the six defendants, who were the promoters of it. Mr. Gurney Buxton was also a promoter, and Mr. T. A. Gibb. The latter gentleman had since died; but it would be some satisfaction to his friends to know that no charge of fraud could be brought against him, as far as the present prosecution was concerned. The prosecution believed that there was no tittle of evidence against Mr. Gibb. He believed that that gentleman, who was an elderly gentleman, was the victim of the defendants, and that he had no criminal intentions whatever in respect of this company, The three first defendants, when the company was formed, nominally took a certain number of shares; but he would show that it was a fraudulent subscription, done in order to deceive the public; that no shares were really allotted to them; and that their only object was to induce the public to believe that they were largely interested in the concern. Mr. Birkbeck took 1,000 shares, Mr. Rennie 500, and Mr. Gordon 200, and the six defendants, without any knowledge on the part of those who ultimately became shareholders, registered the company on their own account, and neither his client nor any of the shareholders were at all concerned in that registration. The company was registered to carry on the business of Overend, Gurney, and Co., and by the articles of association, page 18, it was provided that the six defendants and Mr. Gibb should be the first directors of the new company. His lordship would see that the defendants in the articles of association constituted themselves the first and only directors of the company, and by doing so they, and they lone, knew the secrets of the hopelessly insolvent position of the firm, and by the fact of their remaining in that position they were able to keep that secret back from the knowledge of the public. No act of theirs gave the public the slightest possible chance of becoming acquainted with this material fact. The only fact which was material to be known was if th(ey) were an honest and honourable transaction. He then referred to the article in the association that the managing directors were to have 5,000l. a-year, that there was to be the creation of a reserved fund amounting to one-fifth of the net profits, and a dividend to the shareholders of 7 per cent., after which the managing directors were to have further remuneration to the extent of one-fifth of the net profits, while the other directors were to have 500l. a year—all which he contended was calculated to give the public the idea that this company was doing a great business—as great as that which had brought large fortunes to the ancestors of some of the directors. He then proceeded to refer to the deed which transferred the business of Overend and Co. to the limited company. He would read three letters written by Mr. Daniel Gurney, of North Runcton, near Lynn, to Mr. J. H. Gurney. On May 25, 1865, Mr. D. Gurney says:—“You appear to have done the right thing to negative the continuance of Overend, Gurney, and Co.’s business.” He also refers to the negotiations with the National Discount Company, and states that he hopes the termination of the American war may facilitate the selling of the ships. On June 24 he expresses his satisfaction that things seem to be in train for the formation of a new company, and he suggests that a fourth directory might be desirable, and says he supposes a Baring cannot be obtained. He adds, “I feel great objection to our joint and several guarantees for the deficiency of the new company.” What was the meaning of the deficiency of the new company, which did not come into existence until the 12th of July? The company was not then in existence, and it must have been known that whatever company took the concern must take it with an enormous deficiency of 5,000,000l. And yet, he said, he hesitated about giving a joint guarantee! He affirmed that this was a scheme to win the shareholders, and the language used showed that there were aware that they were intending to transfer ruinous liabilities to the shareholders, whom they were intending to make their victims, the effect of which had been to drive hundreds of men from their homes and from their country. He also objects because the proposal placed their marriage bonds pari passu with other liabilities, and that it abstracted their private assets from the Norfolk creditors. He say—“It might be proposed to the independent directors that, at all events, our marriage settlement bonds ought to precede.” If those gentlemen were solvent, why was this said? If they were solvent, he was unable to say what this meant. The writer also says—“I doubt whether the proposal several security is quite honourable to families into which my children have married,” and he further states that he must leave the matter in the hands of his correspondent. In the same letter Mr. Daniel Gurney asked—is there a condition that we must not sell the shares of the new company under a certain time? What could be the object of such an inquiry? Clearly it was an attempt at taking shelter, or why should it have already occurred to the writer to inquire as to when the shares could be sold? Mr. Daniel Gurney was uncle of Mr. J. H. Gurney and Mr. H. E. Gurney. He was one of the persons who executed the deed of transfer and covenant. He was interested in Overend, Gurney, and Co., a sum of upwards of 100,000l. standing—by a fiction—to his credit in the books of that company, and he had further a large interest in the Norwich Bank with whose affairs he was intimately acquainted. Well, this gentleman was certainly familiar with the business of the concern, and yet he wrote a letter on the 4th of July to his nephew (one of the defendants), that he acceded with pleasure to certain kind proposals made by his correspondent in reference to his security, and added:—“In case of a real catastrophe, all my family and myself would be in total destitution, or almost so.” What interpretation could be put upon such language passing at such a moment between the uncle and the nephew? Did it not clearly show that they both sufficiently well knew that it was true that the business of the firm was pulled up? Mr. Lewis proceeded to quote the deed of transfer, by which the payment of 500,000l. was provided for, half in cash, and half in fully paid-up shares of the new company, and he maintained that the object of this arrangement was fraudulently to make the public believe that, the business having been sold for half a million of money, it was a business of enormous magnitude and enormous profit. The deed of transfer provided that the 500,000l. should not be paid over to the vendors, but that it should be held by the new company as a material guarantee that the assets they made over to the new company were sufficient to meet liabilities, while by another deed this sum of 500,000l. was taken by Overend and Co., and was put against the enormous losses which they had transferred to the limited company. He need hardly say that this second deed was never shown to the public; it was kept concealed till the failure. It was not even produced then, till it was discovered when a search was made on behalf of the shareholders. Much as he regretted to make the observation on gentlemen who occupied such a high position, he must say that no one would have believed, except for the undeniable fact that they would have condescended to commit a fraud so base, so glaring, and so monstrous, and which they knew most bring ruin upon everybody whom they deceived by this second deed, which was executed on the same day with the first. The articles of transfer went on to state that the accounts of Overend and Company were to be transferred except as to certain debts which the new directors might object to. There were such debts—doubtful debts—in every concern, however honourable; and that they new directors made this objection went to show the public how vigilant they were in looking after the interests of the shareholders. The deed then went on to state that the vendors guaranteed that the assets which were made over to the new company, that was, not all kinds of assets, but those only which the new directors might accept, were sufficient to meet all the liabilities, and to pay 20s. in the pound; and over and above this they agreed to leave the 500,000l. in the hands of the directors as a material guarantee. The next clause was to the effect that the new company was to take over all debts and liabilities whatsoever belonging to Overend and Co. The meaning of these clauses was veiled in the most specious manner. Overend, Gurney, and Co. had lost 4,000,000l. sterling of their capital. They did not choose to write off 1,000,000l. of their credit, and thus to reduce the 4,000,000l. to 3,000,000l., which would have been the honourable mode of conducting the operation. They had lost that 1,000,000l. sterling, every shilling of the 5,000,000l. of their customers was gone, and they had only 120,000l. in cash. They knew they were placing 1,000,000l. on the backs of their shareholders. What did Mr. D. Gurney mean when he spoke of the catastrophe of the new company? Was it not almost absurd to notice the way in which these frauds were netted together? Then there was clause 16, the meaning of which seemed to be that the directors of the new company had taken very good care that Overend, Gurney, and Co. should not palm off on the new company any had assets at all, and that none of the assets should be taken by the limited company. And yet, by a secret deed, made the same day, between the same parties, in the same matter, these five defendants—not Mr. Gordon, though he was present—but the five defendants, by a secret deed, positively transferred the whole of this “rottenness” to the limited company as cash on the books of the limited company, and as worth 20s. in the pound. Such a monstrous fraud never was committed, and he challenged the opposing counsel to explain that fact. He said that they were as guilty of crime, as crime could be brought home to any human being. It was hardly possible to suppose that gentlemen of such character should have been guilty of what he must denounce as a scandalous fraud. He did not know that it was necessary to call attention to anything further in connection with this deed. It was the document which was made public in conjunction with articles of association. The impression they were calculated to produce was that the business of the firm was one of boundless wealth; that it was one which could afford to pay the defendants large salaries; whereas it was now notorious that the case was widely different. And his lordship would find that every advantage by which the company could possibly make the least profit had been wrung from them by the deed to which he would now call attention. After his lordship had heard that deed, he should be prepared to assert that, even if there was nothing else to which he had to call attention, enough would have been done to establish the charge against the defendants. But he was sorry to say that there were many other matters equally gross, and of an equally dubious character, to which he should be obliged to invite attention.

Mr. Lewis then proceeded with his statement and examination of the second deed which was concealed from the public. It would perhaps escape attention that in this deed there was one clause giving the directors of the old company certain time to pay up their suspense accounts; that period was fixed from the 31st of July 1865, to the 31st of December, 1868. This suspense period was for the purpose of giving Overend and Co. time to liquidate their suspense accounts, and they were not to be called upon by the directors of the limited company to pay over any moneys till the expiration of that suspense period. Now it was an odd circumstance that this suspense period did not expire till yesterday, and it showed the delusions which the directors were practising upon the public that they had three years and a half to pay up the suspense accounts of the company, though the limited company itself did not exist for more than nine months; but it was put in such a way that, if the deed had been seen, this was not likely to attract attention. And yet for this three-and-half years they had the power, as he would show, of using the means of the limited company, thus bringing further ruin upon the shareholders than they would have done if they had told the truth. Another item in the deed was, that the limited company were to accept certain accounts. What those accepted accounts were he would not proceed to show. There were, first, the accounts subsisting between Overend and Co. and the Millwall Iron Company, and the accounts connected with shareholders in that company. This concern was utterly worthless and ruinous. Then they were to accept all accounts between the company and any companies of the firms that might be in course of being wound up or liquidated or in the Court of Bankruptcy. His lordship would presently be able to form some idea of the utter worthlessness of those acceptances which the first deed represented as certain to yield 20s. in the pound. How, he asked, could Mr. Barclay, or any of the other directors who had signed both deeds, showing the false one and concealing the other, how could they be ignorant of the real state of matters? Positively, this mass of insolvent and worthless “rottenness” was, by a second deed, which was concealed from the shareholders, taken over by the new company as being worth 20s. in the pound. By this second deed these rotten debts were thrown over upon the shareholders—debts which had been kept secret. There was a transfer of business by which one party sold a business for 500,000l., and the other party agreed to take that sum. But he wished to know why two deeds were made. If the company was to take the bad debts, why was it not stated in the first deed? Why were two deeds executed? For the purpose of fraud? If so, the thing was easily intelligible. Was there anything in the world so dishonest as that these accounts were to be taken over by the second deed, of which the public had no knowledge, and at the full value? Could credit be given for common honesty to those who could be guilty of such fraud? Then came 30 items of account, among which stood the Atlantic and Royal Mail Steam Navigation Company, in liquidation, 839,000., which was valueless, except to the amounts of the estimate for the sale, which realised 120,000l. He would give his lordship a few further specimens of the accounts thus transferred. One firm, Messrs. Howard, were put down at 330,000l., though he believed that they denied that they owed anything like that sum. Charles Joyce. 28,000l.; John Jones, 22,000l.; another firm, 291,000l.; J. E. C. Cook, 243,000l.—a sum which Mr. Cook declared that he knew nothing about; the Levant and Black Sea Steam Company, 38,000l.; David George Lewis (whose failures were notorious), 341,000l.; the Millwall Iron Works, 510,000l.; Mineral Company, 83,000l. All these were utterly worthless, and produced next to nothing. Again, there was the Old Ebbw Vale Company—(in which one of the Mr. Gurneys and Mr. Gordon were directors)—down for 11,000l., and during the nine months of the existence of the limited company of Overend, Gurney, and Co., this sum was increased to 48,000l., the whole of which was lost. Messrs. Rigby were down for 14,000l., another firm 51,000l., C. Alexander and Co., 51,000l., ultimately increased to 107,000l., and he might furnish endless other instances of failed firms whose names were handed over for large sums to the company. Thirty of these firms were down altogether for 4,000,000l., the whole of which was worthless, and produced nothing; and altogether rotten acceptances to the value of something like between 5,000,000l. and 6,000,000l. were handed over. It was true that an estimate was made of the value of those securities, and it was put down at 1,000,000l.; but the figure might just as well have been 2,000,000l. or 3,000,000l., for they were all equally fictitious. The real value of the securities was simply nil, or at the most, if carefully realised during a long course of years, they might have proved to be worth, perhaps, 100,000l. In point of fact, however, they not only proved valueless, but actually increased the liabilities of the company by 463,000l., in consequence of certain guarantees which the defendants had given in connection with those liabilities, and which they dishonestly concealed at the time. He would observe that throughout, the company, as it was called, consisted really of the defendants. The shareholders had no voice or influence in its affairs; they were slaughtered like lambs. Well, the directors had it all their own way. They were obliged to delude the public, for they were on the even of a catastrophe; and unless they did so, they would have been lost and disgraced for ever, by having it shown that they had defrauded their depositors to the extent of 5,000,000l. If this was an honest transaction, why was not some independent gentleman called in to act between the old company and the directors of the new company to make a valuation of the assets and the goodwill that were taken over? That was the usual course in such a transaction; but it would not have done in this instance. Then it was found that the suspense account contained all the worthless assets of 5,000,000l., while 1,000,000l. was set over against it. Why was it not represented that this 1,000,000l. went to pay the worthless accounts as far as it would go? Of course the real effect was the same; but the effect produced upon the mind of the public was that there was 1,000,000l. more standing to the credit of the company, when, in fact, there was nothing of the kind. He would like to know where this second deed was kept. Was it in the hands of the solicitor? He asked that because he knew that some shareholders of the company entering the office to make inquiries, and seeing three deeds lying on the table, asked what they contained, and were answered, “Oh, it is only three copies of one and the same deed.” One gentleman not doubting the fact, and yet wishing to know more, said, “Well, but is there no other deed?” And he received for answer, “Oh no; there is no other.” The statement was made by the secretary of the company. Of course no one imagined that the secretary knew anything of the deed by which, as his lordship would see, all the material guarantees given in the first deed were taken away. There was a third deed, which was not of much importance, and which provided if either of the old directors were to become bankrupt, or lunatic, or going abroad, the suspense period allowed for paying up the doubtful accounts was to be shortened. This was honest and proper; but there should never have been any suspense at all. He would now call attention to the position of the different defendants, and his lordship would see that they were all deeply interested in concealing the state of the company. The two first defendants were partners in the original firm. Mr. Rennie was a partner in the firm of Cavan, Lubbock, and Co., which owed Overend and Co. 661,000l., and in addition they had 50,000l. in the company, as deposit, which was worth at the time of the transfer about 6d. or 1s. in the pound. It would be seen that Mr. Rennie had a deep interest in keeping up the company. There was this remarkable fact as to Mr. Rennie, that within a week of the limited company coming into existence, though he must have been aware that they were bankrupt to the extent of 3,000,000l. as soon as they took down their shutters, he withdrew not a portion, but the whole of his deposit of 50,000l. within a week. As to Mr. H. G. Gordon, he (Mr. Lewis) believed that Mr. Gordon had no connection with the company beyond that of a desire to become a director. Mr. Barclay was, unfortunately, a party to the two deeds. Mr. Barclay was a cousin of the Gurneys, and was intimately connected with them and the whole of their family, and Mr. Barclay was nearly related to one of the firm of Barclay, Bevan, Tritton, and Co., the bankers of Overend, Gurney, and Co. at the time they gave the business up to the limited company. Overend, Gurney, and Co. owed to Barclay, Bevan, Tritton, and Co. at that time 771,000l. Part of that was received, but to what extent he did not know. Barclay, Bevan, and Co. were appointed bankers of the new company.

Mr. Serjeant Parry said that nearly the whole of this sum was secured. An incorrect statement had been made on the subject, for which an apology had been made to Messrs. Barclay, Bevan and Tritton.

Mr. Serjeant Ballantine said that statements of this kind ought not to be made in so loose a manner.

Mr. Serjeant Parry said that an apology had been made for the mis-statements. He desired distinctly to contradict the statement of Mr. Lewis.

The Lord Mayor thought that any mistake of this kind could not be too soon rectified.

Mr. Lewis said that he had not been correctly understood. He had alleged that Barclay, Bevan, and Tritton held security, but whether to the full extent he could not say.

After a few words of explanation from Serjeant Parry,

Mr. Lewis said that he would now proceed to refer to the prospectus that was issued at the time the company was formed—a document that he must characterise as false and fraudulent. It announced that the capital of the company was to be 5,000,000l., in shares of 50l. each, and that only 15l. per share would be called up. That would amount to 1,500,000l., or taking off the 250,000l. paid to the old firm in cash, there was a working available balance of 1,250,000l. Now the defendants must have known that that sum would be useless in the then position of their affairs. But they wanted the public to believe that the only object of forming the company was to increase the business of the firm by the introduction of some fresh capital. The directors further declared that in their opinion the terms on which the business had been purchased were such as “could not fail to secure a highly remunerative return to the shareholders.” What could be more deceptive? On what pretence could the goodwill of the business be said to be worth 500,000l. ? Was that estimate based upon the annual returns of the firm? But he should prove that for the previous six years the firm had not only made no profits whatever, but had made losses of upwards of 600,000l. a year. Well, the public were deceived by a prospectus so flattering, and supported by names in which they had such perfect confidence. But he repeated that the prospectus was one of the grossest pieces of deception and falsehood ever perpetrated in the City. The prospectus further stated that the deed of transfer might be seen or inspected at the company’s offices. Well, no doubt one of the deeds executed on the 27th of July was shown. But the other deed—which in fact proved the insolvency of the concern—was hid or concealed, and he maintained that if there had been one bit of good faith, one remnant of honesty in the prospectus put forward by the directors, they would never have concealed the second deed. It was not done accidentally, but of set purpose. Undoubtedly they consulted together on the subject. They saw that they were ruined if the public caught scent of the second deed, and therefore it was not produced, and no suspicion of its existence got abroad, The learned gentleman then called attention to the rough draft of a prospectus which would be proved to be in the handwriting of John H. Gurney, Gordon, and Rennie, and he called attention to the discrepancies between this and the prospectus, as it afterwards appeared, as an evidence that the directors were at first disposed to set forth the affairs of the company in more glowing colours than they at last ventured upon. Thus it was said in the rough draft that the sale of the business had actually taken place on highly favourable terms. It was also stated in this rough draft that the liabilities were all amply and satisfactorily guaranteed, but in the real prospectus they did not venture on that; they only said that their liabilities were provided for on the guarantee of the vendors. In the margin of the draft it was said the public would thus have the advantage of entering upon a large and profitable business. In the real prospectus nothing was said about profitable. In the rough draft it was said there was no promotion money. In the real prospectus it was said that the goodwill was to be bought for 500,000l. These alterations were not made till they began to feel that it would be dangerous to make such statements—that there was such a thing as being brought up to the Mansion-house for issuing a false prospectus. The rough draft went on to say that the shareholders would have a fair chance of increasing the profits which Overend and Gurney had long earned. They dared not insert that passage in the real prospectus. It was struck out. Why? Nothing could have been more calculated to give confidence than to refer to “the profits so long earned,” but the words were struck out. The intention had been to subscribe a capital of one-third, but that was found impossible; they knew they could not do it, and so instead of subscribing one third they subscribed nothing; but this deluded the people into the belief of the extent of their business. The prospectus stating that “three of the present members would retain their seats at the board, in which they would also retain their large pecuniary interest.” Did they maintain any such interest? He should like to see it. Would anybody point it out? He challenged an explanation of a matter which had been proved beyond dispute. There never was a company in which shares were so eagerly sought. There was one fact beyond dispute, that the shareholders of this company had paid 3,100,000l., every shilling of which had gone to reduce the liability of Overend, Gurney, and Co., and there were enormous liabilities yet outstanding, so the money now subscribed would not pay their losses—there would probably be nearly another million before this company was wound up. The new directors, Mr. Gordon, Mr. Rennie, and Mr. Barclay, might say that they believed the private estates of Overend, Gurney, and Co. were sufficient to pay any deficiencies, and that Overend, Gurney, and Co. had led them to believe that their private estates would pay the deficiency. If so, why did they not state this in the prospectus? That was the obvious answer. It was said further, that Overend, Gurney, and Co. were entitled to landed property privately. Including the estates and other kinds of property, Messrs. Overend, Gurney, and Co. had proceeds amounting to 1,253,000l. From that must be deducted 143,000l., leaving about 1,100,000l., but that would not pay 4,000,000l. or 5,000,000l. of deficiencies. When the old firm realised their private estates to the extent of 800,000l., from this amount 300,000l. was appropriated to the payment of current and private debts, and the remaining 500,000l. from the private estates came to the suspense and guarantee account, but if they paid in 150,000l. in one day they took it away the next, so that day by day, as the money came in, it was drawn out before the eyes of the directors to pay debts, not in the suspense account, but against the guarantees that had been given. Thus, when credit was taken for the surrender of the private estates, out of the 800,000l., at which they were estimated, only 85,000l. ever reached the creditors. Well, it is then said that there was the Norwich Bank, and that a million of money (including the value of the goodwill) was lying there to the credit of the defendants. But his lordship would hardly believe that though there certainly was a million nominally there, it was but the million at which the taken-over accounts were estimated, and that it was worth not a farthing. It depended upon the realisation of worthless paper, and in point of fact not one farthing of it ever came to the benefit of the creditors. It was all fancy and moonshine, put upon paper merely for the purpose of securing a retreat in case of proceedings being taken against them. The million at which the securities were estimated was a fictitious million. The million at the Norwich Bank never produced a farthing. It was all a delusion. But it was necessary to take advantage of these two imaginary millions, and, in order to bring the amount up to the necessary figure of the assets, 500,000l. was put down for the goodwill, 45,000l. for the lease of the Lombard-street premises (it only realised 26,000l.). By this means an imaginary 5,000,000l. was obtained on the one side against the 5,000,000l. on the other. The whole thing was a mountain of fraud, falsehood, and delusion; and, further, it was on the even of that failure that the Norwich Bank was, he must say, spirited away. The goodwill was made over to Mr. H. F. Barclay and Mr. Buxton, neither of whom was a party to the deed of covenant in which the company was guaranteed against loss. Again, if it was really believed that the private estates of the defendants were sufficient to meet the liabilities of the firm, why was not a lien taken upon them? Why were they left to the mercy of the Bankruptcy Court, or of other creditors? The secret had been what he had stated, and it was another proof of the hollowness and rottenness of the whole affair. He should now be prepared to place before his lordship evidence of what he had stated, and he should then ask him to commit the defendants for trial on this serious charge of conspiracy and fraud. Mr. Lewis concluded by observing that he had urged Dr. Thom to employ some eminent counsel to conduct the prosecution, but he had preferred to leave it in his (Mr. Lewis’s) hands. Dr. Thom, he might state, believed in the justice of his accusation—he believed in the justice of this court, and therefore he had left his case in his (Mr. Lewis’s) hands.

Mr. Lewis then proposed to call Dr. Thom formally to prove his information, but Serjeant Ballantine objected, saying it would give rise to a good deal of discussion, and eventually the Lord Mayor agreed to remand the case without going into the evidence.

Serjeant Ballantine expressed a hope that the public at large would not accept an ex parte statement, however able and ingeniously made, but would reserve their judgment until the whole of the facts had been brought forward. One other matter he had to ask. After a considerable lapse of time, this charge had been brought against the defendants, and they were anxious and determined to meet it, but they were at the same time desirous that no delay should take place, and he had therefore to ask his lordship to hear the case de die in diem until they could take the judgment of a higher tribunal.

Serjeants Parry and Sleigh and Mr. Giffard also expressed a hope that the case would be investigated as speedily as possible consistent with the business of the court; and after a short discussion it was arranged that the case should be continued to-day, and that for the better convenience of the leaned counsel engaged in the case the adjournment should be to one of the large courts at Guildhall.

The defendants were admitted to bail; themselves in 2,000l. each, and one surety each in 2,000l.

Mr. Thomas Fowell Buxton became bail for Mr. John Henry Gurney, Sir Thomas Fowell Buxton for Mr. Henry Edmund Gurney and Mr. Barclay, Sir John Lubbock for Mr. Birkbeck, Mr. Kirkman Daniel Hodsgon for Mr. Gordon, and Mr. Robert Gillespie for Mr. Rennie.

THE CHARGE AGAINST THE DIRECTORS OF OVEREND, GURNEY, AND CO.

The Court of Queen’s Bench, Guildhall, was again crowded yesterday during the investigation of this charge before the Lord Mayor and Alderman Sir T. Gabriel. The defendants, as on previous examinations, occupied the seats usually appropriated to solicitors, immediately below the bar.

The same learned gentlemen appeared on behalf of the defendants. In the course of the day, Sir R. Carden, Mr. Alderman Wilson, Mr. Alderman Lawrence, Mr. Alderman Cotton, Mr. Alderman Causton, and other City magnates visited the court, and occupied seats on the bench by the side of the presiding magistrates, but merely as spectators.

On the opening of the court the examination of Mr. Oswald Howell was proceeded with—He said on the 4th of November, 1865, there was an entry in the suspense and guarantee account, “House purchase account, 26,572l.” That was transferred from the old company to Overend, Gurney, and Co. (Limited). The four items, of the amount of good will, the cash amount, the share amount, and the value of the premises, amount to 449,205l. There was paid in to the credit of that account by Messrs. Gurney and Birkbeck 561,500l., and of that amount I find that 476,000l. was withdrawn on payment of guarantees and of credits which had been granted by the old firm, so far as I have been able to ascertain from the books.

Mr. Lewis—Now, will you refer to the several items of which that account is made up?

Witness—I turn to the account, “Overend, Gurney, and Co. Suspense and Guarantee Account,” and I find on the credit side certain sums of money paid in. The first is 7th of August, 1865, “Lees and Son, for J. H. Gurney, 6,000l.

Mr. Lewis—Do you find anything on the other side?

Mr. Oke (the clerk of the court) suggested that all the sums on the credit side of the account should be first given.

Mr. Lewis stated that all he wanted to show was, that the sums paid in were withdrawn by the Gurneys at or near the same time they were paid in.

Mr. Oke—We had better have all the items on one side of the account first.

Mr. Lewis said that if it would facilitate the staging on the depositions, he had no objection.

Witness—The next is an item dated 7th August, ditto 500l. On the 19 of August I find an entry, cash per Gurneys, 150,000l.; which means, I believe, Gurney, and Co., of Norwich.

Mr. Giffard—What is the entry? You must allow us to draw the inference.

Witness—It is merely cash 150,000l. The next item, in cash, Gurneys, 2,500l; 16th, cash per H. E. Gurney, 35,000l.; 29th September, cash per H. E. Gurney, 15,000l.; October 2, cash, Gurneys, 25,000l.; 20th October, cash, T. H. Gurney, per Gurney and Co., 30,000l.; 24th, D. Gurney, 15,000l; 28th, cash, H. G. Gurney, 20,000l; 1st Nov., A. Birkbeck, 4,204l.; 22nd Dec., per H. E. G., 13,000l.; 30th, P. L. Gurney, 12,000l.; 12th Jan., per S. Gurney, 1,000l.; 12th, R. Birkbeck, 3,500l.; 20th Jan., 1866, per H. E. Gurney, 18,000l,; 5th Feb., by S. G., 3,000l.; 14th, J. H. G. (13th Feb.), 30,000l.; 27th Feb., per J. H. Gurney, 10,000l.; the same day, by H. E. Gurney, 20,000l.; 1st March, per S. G., 6,000l.; and 2nd March, D. Gurney, 10,000l.; ditto, per H. Birkbeck, 4,000l.; ditto per H. G., 20,000l.; 15th, per S. G., 32,000l.; ditto, per D. Gurney (C. H. G.), 6,000l.; per H. E. Gurney, 4,000l.; per W. Birkbeck, 11,000l.; 6th April, per R. Birkbeck, 2,500l.; per W. Birkbeck, 6,500l.; H. Birkbeck, 1,000l.; 9th, per R. Birkbeck, 5,700l.; 11th, H. Birkbeck, 2,500l.; 14th April, cash per W. Birkbeck, 4,000l.; 30th, per W. Birkbeck, 500l.; per H. Birkbeck, 1,800l.; per J. H. Gurney re S. G. Buxton, 4,500l.; ditto, 7,200l.; per D. W. Chapman, 6,000l.; 4th May, H. E. Gurney, 10,000l. That is all I think that I can find.

The Lord Mayor—And they make what?

Mr. Lewis—561,5000l.

Witness—I am not quit sure that those items cast up under any circumstances. It is difficult taking out items exactly.

Mr. Lewis—Now, do you find that on the days, or almost on the days, on which those items were paid in, there were payments on the other side falling due to Overend and Gurney?

Witness—I will give a few instance, but in the case on 150,000l. I do not find on that day or on any approximate day that the money was withdrawn. I think that in most of the other instances the money was withdrawn either the day before or the day after.

Mr. Giffard—Whatever inference may be derivable from them, we must have the entries.

Mr. Lewis—From the investigation of the books that you have made, do you find any sum paid on the day you have mentioned in any way in respect of the indebtedness of the limited company?

Mr. Giffard objected that this would not be evidence, but an inference of the witness.

Mr. Lewis—I am going to each specific entry, but I wish to show that each of these sums was to meet a pressing demand on account of Overend, Gurney, and Co.

Witness—The first entry I find is on the 7th August, when 6,500l. was paid in by J. H. Gurney, or apparently paid in by him; and on the other side I find an entry, “Cash, D. W. C. and J. C., 5,877l.”

Was that in any way a payment in respect of the limited company?—It was not.

The Lord Mayor—How do you arrive at that?

Witness—I have seen an account in the name of A. C. and D. W. C. in the books of the old firm, and the item, if I remember rightly, of 5,877l., was paid in respect of a liability of the old firm which existed on the date of the transfer. On the 7th September there is an entry, “Per Gurneys 5,000l.,” on the credit side; and on the debit side on the day before I find “Kelson unpaid; 3,000l.”

Have you traced what that is?—Yes; It is a bill of Kelson, Tritton, and Co., for 3,000l. which had not matured at the time of the transfer. It became due on the 5th, and the new company paid it. On the 16th of September 35,000l. was placed to the credit side of the account by H. E. Gurney, and on the opposite side there are two entries, Cash, Swedish, 27,5000l.; ditto, Von Dadelszen 2,500l.

Have you investigated what “Swedish” was?—I cannot state exactly what it was. I did investigate it at the time. It was a liability in respect of certain bills which had not matured at the time of the transfer. The 2,500l. was a bill of Van Dadelszen’s. On the 29th, when Mr. H. E. Gurney paid in 15,000l., I find an entry on the opposite side, “Millwall, 14,180l.”

Did you investigate that—I did not. On the 2nd of October there is an entry, “Gurneys, 25,000l.” to the credit, and on the other side there is an entry, “Cash per D. O., 39,751l.” I have traced that to a payment made to the Norwich Bank.

Mr. Giffard—On the 29th September you have given “Millwall, 14,180l.”—is there not an entry on the other side?

Witness—On the 26th there is an entry, “Millwall Iron Works, 14,180l.”

You have it on each side of the account?—Yes, it happens to be so. On the 20th of October, the day that Mr. T. H. Gurney paid in 30,000l., I find a payment made to the Manchester and Liverpool District Bank, “re Sichell, 25,000l.,” and on the same day “bills, re Sichell, 10,133l.” That 10,133l. is a cross entry. It is paid on the other side.

What was the payment to the Manchester and Liverpool District Bank?—It was a guarantee of the old firm.

Was the limited company responsible for that?—Not that I am aware of. Then on the 24th, the day that Mr. D. Gurney paid in 20,000l., I find “Halliday, Fox, and Co., p.n. 21st, 10,000l., ditto 10,000l., ditto 10,000l., ditto 10,000l., ditto 10,000l.;” making 50,000l. in all. On the 28th, the day that Mr. H. E. Gurney paid in 20,000l., I find an entry, “Sichell, Herscheld, Perrein’s draft, 10,000l.,” and on the previous day three entries of 5,000l. each in the name of Von Dadelszen. Those three entries I have traced as bills lying at the Norwich Bank at the time of the transfer of the business. They matured on that day. On the 1st November, the day the 4,002l. was paid in, I find “L. Bruzewitz’s draft, 25,000l.,” and credit is given two days afterwards for the premises, 26,572l. On the 22nd December there is 13,000l. on the credit side, and on the debit side J. Watson and Co., 20th December, 20,000l.; London and African Company, 19th December, 5,000l.; Astley and Co., 800l.; and there is a marginal note, “9th October;” ditto, 11th December, 3,000l. On the 30th P. L. Gurney paid in 12,000l., and there is a debit entry on the same date “for interest to the 31st of December, 62,621l.” On the 12th of January there was 1,000l. to S. Gurney, and 3,500l. R. Birkbeck paid in. There was also a payment of 1,000l. to Captain Perry; and on the day before one to Joseph Fry, 4,000l. On the 20th 18,000l. appears credited from H. E. Gurney the day before. There is an entry of Bowman’s bill, 15th January, 7,952l., and on the 16th there was a payment of Ebbw Vale, on 2,450 shares, 12,250l.

Serjeant Sleigh—Is that a payment on calls?—I believe it was.

Examination resumed—On the 5th of February for S. G. 3,000l. was paid in. I am unable to trace that, but there is, on the 10th of the same month, 52,000l. to the Contract Corporation, J. Watson’s bills. The payments were 20,000l. and 32,000l. to the Contract Corporation, and there was a payment of 30,000l. to Bruzewitz, making 82,000l. They were for bills accepted by Watson, which were dishonoured, and carried to the debit of Mr. Watson’s account. The Contract Corporation appear in connection with Watson’s bills. As to Bruzewitz, that was a guarantee of the old firm, and Bruzewitz’s acceptance were paid under that guarantee. That payment was in no way a payment on behalf of the limited company. On the 27th Mr. J. H. Gurney paid in 10,000l., and Mr. H. E. Gurney 20,000l.; and on the 26th there was a sum paid to the Bank of London, 50,000l. From an investigation of the books it appears that was a guarantee of the old firm, and not a payment on behalf of the limited company. The 50,000l. I refer to exactly corresponds with the entries. On the 1st of March S. G. paid in 6,000l.; on the 2nd D. Gurney paid in 10,000l., and Mr. Birkbeck 4,000l.; which make, with the items paid in by the Gurneys on the 27th of February, exactly 50,000l. On the 14th the entry on the credit side of the day book, H. G., 20,000l. appears; and on the 15th, per S. S., 32,000l.; that makes 52,000l. On the 15th I find a debit entry, Agra, 52,000l. That means a guarantee given to the Agra Bank by the old firm for that amount outstanding on the date of the transfer. From an investigation of the limited company’s book, I find that was not a payment on their behalf. The next is the 15th, paid in per D. Gurney (C. and G.), 6,000l., and for H. E. Gurney, 4,000l., and for W. Birkbeck, 11,000l.; total, 21,000l. On the next day I find Agra (a debit), re O’Byrne and others, 21,000l. Agra re O’Byrne was guarantee given to the Agra Bank by the old firm, outstanding at the time of the transfer. It does not appear to have been a payment on behalf of the limited company. The next payment was on, April 6th, R. Birkbeck, 2,500l., W. Birkbeck, 6,800l., and H. Birkbeck, 1,000l. Debited on the same day I find an entry, Loader re Bruzewits, 10,530l. That was a guarantee outstanding at the time of the transfer given by the old firm, and had nothing to do with the limited company, as appeared by the books. On the 9th there was a payment per R. Birkbeck, 5,700l. and on the 7th there were four bills paid, “North Field Ironworks, 7,500l.” On the 14th there was a sum of 4,000l. paid by W. Birkbeck; and on the 13th there is an entry, Millwall Ironworks, 4,000l. 30th of April there were entries—W. Birkbeck, 500l.; H. Birkbeck, 1,800l., per J. Gurney; re S. G. Buxton, 4,500l.; ditto, 7,200l.; per D. W. Chapman, 6,000l., making 20,000l.; and there was a payment, D. W. Chapman re Mercantile Credit, 20,000. There was a guarantee given on behalf of the old firm to the Mercantile Credit, for Mr. D. W. Chapman and Mr. Lister O’Byrne, 20,000l. That is the item. It was in no way a payment in respect to the limited company. On May 4 there was an entry H. E. Gurney 10,000l., and on same day a payment entered to the London Financial 10,000l. I find that that was a guarantee given by the old firm to the London Financial Corporation. That had nothing to do with the limited company.

Mr. Lewis—Now, having regard to all these items, can you tell us how much the limited company profited by anything which Messrs. Overend and Gurney subscribed to the limited company?

Mr. Serjeant Ballantine—I object to that.

Mr. Lewis—It is a point in your favour. 561,000l. received from the partners and their private estates, and there are payments made of 476,000l. on account of the indebtedness of the partners at the time of the transfer, leaving a balance.

Witness—Yes, 85,000l.

Mr. Lewis—The limited company profited 85,000l. by the money subscribed by the old firm?—Yes.

Now, in addition to the 15,000,000l. which you gave us from the general ledger of the limited company as the liabilities transferred to them from the old company, were there other liabilities of Overend, Gurney, and Co.?—There were.

Mr. Giffard—How do you mean?

Witness—As appears by the books.

Mr. Giffard—What book? Lead us to something.

Mr. Lewis—In addition to the 15,000,000l. of liabilities of Overend, Gurney, and Co., there were others?—Yes, there were bills re-discounted.

Were credits given?—Yes.

Mr. Giffard—Let us have one thing at a time.

The Lord Mayor—I presume that the witness will show from the books what the bills re-discounted and the credits granted were?

In respect of bills re-discounted, bills payable, credits granted, and guarantees, what was the aggregate of the additional liabilities of Overend, Gurney, and Co.?

Mr. Giffard—We must have the source from which he gets it, otherwise it will be impossible to check him.

Witness—The total amount of the bills is 9,313,280l.

Mr. Giffard—What book is that you are looking at?

Witness—It is bills in hand and re-discounted.

Has it any particular name?—No, the total amount of the bills in the diary and diary out-book is 9,841,000l. On the 31st July, 1865, the total amount of the bills, in, out, and in hand was 19,100,680l. I find that the bills in security amounted to 8,507,000l. Those bills were deposited with customers as security for loans.

Now, deducting those bills that were in security, tell us what bills were re-discounted and bills payable?—Deducting the bills in security from the 19,100,680l., and also the bills in hand of 1,345,000l., they were 9,348,494l. There are a few further entries which appear in this book which [were entered after the 31st of July, but which evidently belong to the entries preceding that time. The bills re-discounted were 9,313,280l.]

Mr. Lewis—But altogether what was the gross amount of liabilities of Overend, Gurney, and Co., at the date of the transfer in respect of contingent liabilities, bills payable and guarantees?—The contingent liabilities in that respect were 9,313,280l.

Now I wish to know this, do those liabilities of 9,313,280l. in any way appear among the liabilities that are entered in the general ledger of the limited company as taken over by the limited company? They do not appear as taken over in the books in the limited company.

Does it appear in any form?—Certainly not. I can give the items.

By reference to the same account in the general ledger, except the 120,000l. cash, and the other items that you have mentioned as assets taken over by the limited company, do there appear any additional assets?—No additional assets beyond what I have already named, assets amounting to 15,281,000l.

But that includes the 4,000,000l. of suspense and guarantee account?—It does.

Mr. Lewis—Now, so far as the books of the limited company and those of Overend, Gurney, and Co., show, was any large pecuniary interest retained by them in the limited company?—The only pecuniary interest that I can see which was retained by them consisted of their own overdrawn account.

Their overdrawn account?—Yes. (Laughter.)

Mr. Giffard—I suppose to elicit some such expression at that was the object of the question.

What did those overdrawn accounts amount to?—On the date of the stoppage to 2,970,000l., as appears from the books.

Can you trace any pecuniary interest they had except that in the limited company?—None whatever.

Sir T. Gabriel—What is this apropos of?

Mr. Lewis—The prospectus states that the vendors will retain a large pecuniary interest in the company, and I ask the witness what he discovers is their pecuniary interest in the company, and he says nothing but their over draft, which the shareholders had to pay, and which amounts to nearly 3,000,000l.

Mr. Giffard—I should have thought that their interest would have been in the shares they held, but we need not discuss it now, and in the insolvency or goodness of their company, which you say is worth nothing; but we shall see more about it.

Is that an interest which they retained to the close of the company?—I have just mentioned that.

Do you produce a guarantee book?—I do, but it is impossible to say the exact amount of guarantees outstanding at the time of the transfer, because the guarantees are not cast up, and it would be necessary to ascertain all the guarantees, which do not appear in this books.

Is anything torn out from it?—No, not from that book.

From any book?—Yes, from this (producing a book)—great many leaves. The book was handed in.

Mr. Lewis—Is that also a guarantee book?—Yes; I had better call out the guarantees appearing this book (the first) at the time of the transfer, 7th July, 1865. The first is a guarantee for 50,000l., J. E. C. Koch, with the Imperial Mercantile Credit, due 9th October, 1865. On the 9th July, 50,000l., “Impl.” against it. There is a side entry—“Arrangement with them. These stocks given up to Imperial Mercantile Credit.” 21st July, 25,000l., due 31st April, 1866; 19th August, 26,000l., ditto the Agra Bank; 27th August, 50,000l. and 10,000l. Koch entered in the margin, 50,000l., Bank of London, the other the London Financial; one due 26th of November, 1866, and the other the 27th February; 5th June, 1865, 21,000l. Koch, J. D. Cooper, London Financial, due 5th June, 1866. The next has no date, 10,000l. J. D. Cooper, London Financial due 25th April, 1866; next no date (I presume 5th June), 25,000l., J. D. Cooper, London Financial due 18th December, 1866; 50,000l., J. D. Cooper, Whitfield and others, City Bank, due 16th August, 1866; 17th October, 30,000l.; J. D. Cooper, London Financial, due 17th October, 1867 30th June, 120,000l., A. R. N. S. Steam Company, due 1st January, 1866; 1st June, 150,500l., E. I. Shipping Company, with Fielding, due 2nd October; next without any date, 50,000l., Millwall Company (Limited), on account of the Millwall Company with Martins, due 2nd March, 1860; 9th June, 71,000l. struck out, and 50,000l. and 21,000l. put, making 71,000l., Millwall, with Robinson and Fleming, due, I think, on the 18th March, 1866; 19th July, 25,000l., M’Henry, with the Bank of London, due 20th October; 30,000l. without a date, McHenry, Bank of London, due the 21st January, 1866; the next is 29th June, 50,000l., M’Henry again. Consolidated Bank, struck out as paid off 24th December, 1865. The there is 120,000l. mortgage, the Atlantic Royal Mail, struck out, 5th May, 1865; 30,000l., L. Bruzewitz with the Agra Bank, due 8th November, 1865, altered into 1866; 13th January, 1865, 10,000l., L. Bruzewitz with the Agra Bank, no due date; 31st July, 25,000l., L. Bruzewitz, O. G. and Co., due 1st November; 6th October, 1865, 10,000l., on account of L. Bruzewitz, G. Loader, due 6th of April, 1866; 31st January, 1866, 30,000l., Bruzewitz, G. Loader, due 3rd May, 1866; 28th October, 1864, 25,000l., on account of Sichel, Alexander, and Co., Man. And L’pool. (meaning Manchester and Liverpool Bank), paid off 15th October, 1865; June 15th, 1865, 30,000l., Von Dadelszen and North, M. and Li., due 17th September, 1865, that is debited and ruled out. Those guarantees amount to about 1,000,000l. They do not appear to be included in the 15,000,000l. transferred to the Limited Company.

Now take the second guarantee-book, from which you say certain leaves are town. (The book was handed to Mr. Oke.)

Witness—On page 206 of that book I find a guarantee for 120,000l. (A letter which was on the fly-leaf was read. It stated that the guarantee was given at the request of the official liquidator of the Atlantic Royal Mail Steam-packet Company, and for valuable consideration, and the writers undertook to guarantee the association against any loss that might arise from their paying certain bills, of which a list was give. The date of the letter was the 2nd April, 1866.) Immediately following this guarantee I find pages from 207 to 235 torn out.

Have you ever been furnished with the leaves that are missing?—No.

I need not go on with the details, but what is the amount of the guarantees in that book?—I cannot tell you. On page 236 there seems to be an unlimited guarantee, as far as I can read it. (Laughter.) “At the request of J. D. Cooper, and against adequate value lodged, we hereby agree on your making advances to him not exceeding 25,000l.—(a laugh)—on security of shares of Bangor Railway, to guarantee the repayment of such advance for twelve months.” There are three other entries, extending the guarantee for twelve months, and again to the 18th Dec., 1866.

Mr. Giffard—Then it is not unlimited?—No. I had only read the entry in the margin when I said that.

Do those guarantees appear as transferred?—No, they do not, I can trace this back to a bad debt.

Mr. Giffard—I must object to that. That is a speech.

Mr. Lewis—I wish to know what was the amount of deposit that any one of the dependants held on the stoppage of the limited company. Take first Mr. J. H. Gurney. Had he any deposit?

Witness—In the “Single Deposit Ledger” of the limited company, page 780, there is an account headed “J. H. Gurney,” and there is an entry on the 2nd April.

I want to know whether on the stoppage of the company Mr. J. H. Gurney had any sum deposited with the company?—I believe not. On the 2nd April he drew out 3,026l., which balanced the account. (Laughter.) There is an account “H. E. Gurney, Crawford-street, account,” a small account, 69l. only. That 69l. remained in the limited company at the time of the stoppage. S. Gurney and J. S. Barclay is another account. There is a small balance of 28l., which was to be given to the clerks. Mr. Robert Birkbeck does not seem to have had an [account. Mrs. Robert Birkbeck had. It was drawn out on the 29th March. 1866-812l.]

At the time of the stoppage of the old company what did they appear to owe to the limited company?—2,970,000l.

After giving credit for everything?—After giving credit for everything.

Mr. Lewis—They held 8,200 shares, and you say there have been two calls?—Yes.

Can you inform us whether Mr. Birkbeck, Mr. J. H. Gurney, or Mr. H. E. Gurney paid anything on account of those calls?—I have looked at the books, and do not find that they have paid anything.

Mr. Giffard—Those books would not show it. As far as these books are concerned they are evidence against the defendants so long as they were under their control, but from the moment they passed from their control they are not evidence against them any longer.

Mr. Lewis—Now take Mr. H. F. Barclay, How much had he on deposit on the 10th May, 1866, when the limited company stopped?—10l. 4s. 4d. (Loud laughter.)

Do the books disclose whether there had been a larger amount of deposit? There had been a deposit of 71,010l.

When was that withdrawn?—The 71,000l. was withdrawn on the 2nd of May.

Mr. Serjeant Parry—It was transferred to another credit, the Norwich Bank.

Witness—The Norwich Bank had nothing to do with it.

Mr Serjeant Parry—I was irregular in asking the question. I was prompted by my client to put it; but I must say that this sort of laughter that continually arises in the court must be embarrassing to your lordship. It is extremely embarrassing to the counsel, and it is most unfair to the defendants, the painfulness of whose position ought not to be added to by what I must call an idiotic laugh. (Hisses.)

The Lord Mayor—There must be no expression of feeling in the court, otherwise the court must be cleared.

Mr Lewis—Now take Mr. Rennie; had he any deposit account?

Witness—Mr. Rennie had no deposit account.

Had Mr. Harry George Gordon any money in the bank on deposit?—I cannot find the name of Mr. Gordon in the book.

Can you tell us whether Mr. Barclay, Mr. Rennie, or Mr. Gordon during the nine months the limited company existed drew any money for salary as directors?—There is no amount drawn for salary that I have seen, but I cannot answer the question offhand.

Can you tell us whether Mr. Barclay had paid the two calls of 10l. each on the thousand shares which he held?—I have not the least doubt about it.

And that Mr. Gordon and Mr. Rennie have paid their calls?—I have not the least doubt of it.

By Mr. Sleigh—Mr. Gordon paid the allotment money on the shares he took.

Mr. Lewis—Mr. Rennie, I believe, was a member of the firm of Cavan, Lubbock and Co.?—Yes, At the time of the transfer to the limited company that firm had a deposit of 56,518l. with Overend, Gurney, and Co. It is in the single deposit book. It did not remain there till the stoppage of the company, but was withdrawn during the first few days of the limited company’s operations. 10,000l. was withdrawn on the 2nd of August; 3rd, 10,000l.; 5th August, 6,000l.; 12th, 10,000l.; 15th, 20,000l.; and on the 18th, the interest, 559l. The account was re-opened afterwards. It was paid by the limited company.

Mr. Giffard—I think you will find it is paid in.

Mr. Lewis—Do the books show that the 56,000l. was paid in or handed over?—It was merely handed over as an asset.

By the Lord Mayor—It was handed over as a liability.

The Lord Mayor—It is a debt transferred.

[Mr. Lewis—Will you turn to the old ledger, and see] whether it was deposited with the old company some time before, or not.

Witness (having referred to the single deposit book of the old company)—It is a liability transferred from the old to the new company of 56,000l. It is a running account. There is an entry 31st July, 49,819l.

Mr. Lewis—How much was Mr. Rennie’s firm indebted in respect of loans and bills discounted at the time of the transfer?

Witness—691,000l.

Mr. Giffard—There was not a farthing of debt due by them.

Witness—I refer to a book marked supplementary ledger, folio 1,553, Cavan, Lubbock and Co. This is the discount ledger of the old firm. It is not balanced so as to ascertain the liability of the customers; but on taking out the different items you will find that is the amount.

Mr. Giffard said that his lordship would find the securities consisted of bills of such firms as Baring and Co., Rothschild’s, and so on, which his lordship would estimate the value of, so that it was idle to speak of the indebtedness of Cavan, Lubbock and Co., as if such bills would not be met.

Witness—I find by the supplementary ledger, in folio 1,564, Cavan Lubbock, and Co.’s bills, due 31st August, promissory notes 40,000l., current at the time of the transfer. On the same folio N. Cavan and Co. on Cavan, Lubbock, and Co., 30,000l.; same folio, Cavan, Lubbock, and Co.; promissory notes, 20,000l.; on folio 1,567, N. Cavan and Co. on Cavan Lubbock, and Co., 40,000l.; on folio 1,567, Sichell, Alexander, and Co. on Sichell, Alexander, and Co.

Mr. Giffard—I think that is a mistake.

Witness—The drawer and acceptor are the same parties in the book. The amount is 4,000l., in two bills of 2,000l. In the same folio Cavan, Lubbock, and Co. p. n. 40,000l. There are four items. Again, Cavan, Lubbock, and Co. p. n. 40,000l., folio 1,568.; Sichell Alexander on Sichell Alexander 7,250l.; Cavan, Lubbock, and Co. p. n. 20,000l.; same folio, Egyptian Canal and Irrigation Company accepted London Office bills for 8,000l.

The Lord Mayor inquired whether Mr. Giffard wanted all the items read.

Mr. Giffard would undertake to say that 400,000l. of the indebtedness in question was covered by the first-class securities, and he wished that fact to come out.

Witness—There is a large amount in the shape of promissory notes.

Mr. Lewis—Baring Brothers and Rothschild’s bills appear here (referring to a printed book in the hands of counsel and the Lord Mayor).

The Lord Mayor said he had only looked at the book to check off the amounts as read by the witness from the ledgers, &c., of the company.

Mr. Giffard drew attention to 54 bills lumped together in the printed list, and put down at 58,000l. odd, and asked whether they were included?

The witness replied that they were, and proceeded to read a list of them.

Mr. Lewis—What was the amount of promissory notes of Cavan, Lubbock, and Co.?

Witness—The promissory notes amounted to 160,000l. but Cavan and Co. had drawn on Cavan, Lubbock, and Co. for another 100,000l.

Did Cavan and Co. transfer their business?—Yes, I believe they transferred it to a colonial company.

From an investigation of the books of Overend, Gurney, and Co., can you say whether the loans to Cavan, Lubbock, and Co., were renewed?—Promissory notes to a large amount were renewed from time to time up to the date of the transfer of the business. 100,000l. was advanced in February and March, 1863, to Cavan, Lubbock, and Co., and the loan was renewed regularly up to the time of the transfer of the business. I have not traced out any further instance.

And after the transfer?—I have not traced that out. I have no doubt they were paid by somebody.

Now, as to the renewals; do the books disclose whether any amount was charged to the limited company for renewals and bills of exchange?—Yes, very large sums were charged on the renewals from time to time. I find an entry in the general ledger of the limited company “Overend, Gurney, and Co., 30th September 1865: Gurneys, 1,375l.” There are various items. I have selected from this book entries amounting to 30,000l. for interest paid by the limited company in respect of the renewals of bills and guarantees which were outstanding at the time of the transfer.

Mr. Giffard—Do those items appear there?—No, but I have traced the amount in various entries. If it has not been paid for interest the limited company has lost the 30,000l. (The witness referred to various entries of sums paid for renewals.)

The limited company started business on the 1st August, 1865?—It did.

Do the account books show whether there was ever any balance-sheet sent out to the shareholders?—No balance-sheet was ever sent out, I believe.

Was there any meeting of the shareholders until after the stoppage?—No.

Now I want to ask you with reference to the goodwill of this bank. You have told us that the limited company made 4,000l. profit in the nine months it existed. From the investigation of the books of the old company, which you have made, can you say whether they made any profits?—They made no profit whatever.

Can you give us an idea whether they made a loss?—The losses they made were very serious. I have endeavoured to satisfy myself of the nature and character of the business before the transfer.

What did they lose?—It is difficult to state what they lost in any particular year; but my idea is they lost about 500,000l. a year. (Cries of “oh!”) I believe candidly that they lost 500,000l. a year for six or seven years before the transfer of the business.

Mr. Serjeant Ballantine—Why do you say candidly? Is it the first time you have spoken candidly while giving your evidence? (Laughter.)

Mr. Lewis—There is very little effect produced in a court of justice by sneering, and therefore Serjeant Ballantine I beg you will not sneer at the witness.

The Lord Mayor—You had better simply answer the questions put to you.

Mr. Lewis—Now, how many shares were allotted to Sir Fowell Buxton?—He appears to have applied for and been allotted 1,000 shares.

What became of them?—They were to have been all sold.

Mr. Giffard objected to this course of evidence.

The Lord Mayor said that as a matter of evidence a professional gentleman could examine the witness on any portion of the book put in.

Mr. Lewis—I wish to show that the family of the Gurneys received a large number of shares, which were immediately transferred to the public.

Mr. Giffard—Now I ask your lordship how can that be evidence against the present defendants?

Mr. Lewis—It is evidence to show that it was brought to the knowledge of the defendants that the nearest relatives of the Gurneys had no stake in this concern.

Mr. Giffard—I should think it was clearly not evidence. If it is, it is the oddest evidence I ever heard.

The Lord Mayor, after consulting with Sir T. Gabriel, decided that the evidence proposed was not relevant to the case.

Mr. Lewis—Then that will terminate the examination in chief of this witness.

A discussion then took place as to the adjournment. counsel urging very strongly on the Lord Mayor the inconvenience of attending for some days, and eventually it was arranged that the case should be proceeded with this day (Friday) week.

Bail was then renewed, and the defendants released as before; the sureties being—Mr. J. G. Barclay for Mr. J. H. Gurney, Mr. T. F. Buxton for Mr. H. G. Gurney, Mr. Jas. Hoare for Mr. Birkbeck, Messrs. R. C. and L. [Bevan for Mr. Barclay, Mr. K. D. Hodgson for Mr. Gordon, and Mr. M’Chleeney for Mr. Rennie.]

THE OVEREND, GURNEY, AND CO. PROSECUTION.

The inquiry before the Lord Mayor and Sir T. Gabriel into the charge of fraudulent misrepresentation brought against the late directors of this company was resumed at the Guildhall yesterday morning. The court was again crowded with shareholders, stockbrokers, and others, there being no diminution apparently in the interest with which the proceedings are regarded in the City.

The gentlemen accused, who surrendered to their bail, were seated, as on previous examinations, in front of the barristers defending them.

In consequence of counsel being engaged in the Central Criminal and other courts they were not present at the opening of the proceedings, but no inconvenience ensued, the time of the court being occupied until 12 o’clock by reading over, at the suggestion of the Lord Mayor, the evidence given by the accountant, Mr. Oswald Howell, at the last examination.

On the application of Mr. J. C. Mathew, an omission in the depositions was rectified, by adding a statement of the witness to the effect that the amount stated to be due at the time of the transfer from Messrs. Cavan and Lubbock was not due to the limited company; and on the application of Mr. Gardyne, that the deposit account of Messrs. Cavan and Lubbock, which was closed in the month of August, was reopened in the month of September.

Mr. Henry Boyce, clerk in the office of the liquidators, was then called to prove the draft prospectus—the one that was not published. He stated that the draft was in the handwriting of Mr. H. G. Gordon. There were two alterations in pencil. Did not know whose handwriting they were in. Did not know whether they were in Mr. J. H. Gurney’s handwriting, nor did he believe it. Had no belief on the subject.

Mr. W. Mathew Paterson, an officer of the Court of Bankruptcy in Manchester, produced the proceedings under the bankruptcy of Mr. Thomas Howard, manufacturer, of Hyde. The adjudication was on the 20th June, 1866. Was not aware that Messrs. Overend, Gurney, and Co. proved any debt under that bankruptcy.

Mr. Thomas Howard was then called, and he stated that he resided at Longchurch near Manchester. Was declared a bankrupt in June, 1866. Had obtained his discharge.

Mr. Lewis—On the 31st July, 1865, a debt of yours was transferred to the limited company of 331,665l. How much have you ever had from Overend, Gurney, and Co. ?—Very little indeed.

How much have you had from them?—Perhaps 2,000l.; about 3,000l. in the whole.

Can you tell us whether Overend, Gurney, and Co. had discharged you from any claim of theirs before your bankruptcy?—I believe they had.

Do you remember receiving 3,000l.?—Yes.

At that time had they discharged you from any claim?—To the best of my knowledge.

I suppose on the 31st July, 1865, you were not in a position to pay 331,000l.?—On what account?

On account of Overend, Gurney, and Co. Had you any means on the 31st July, 1865, of paying that large sum?—No I had not.

As far as you know, did you on the 31st July, 1865, owe them any money whatever?—Not to my knowledge; not a penny.

Cross-examined by Mr. Mathew—You had become security to the Gurneys for very large sums?—They held security against me for a very large sum.

You were security, in fact, for Mr. Lever, were you not?—It was Lever that brought me into my difficulties.

Mr. Lever was the agent connected with the Atlantic Royal Mail Steam Packet Company?—Yes, and member of parliament for Galway.

And you handed your estate over to the Gurneys, and got money on the discharge?—They got all my papers and securities.

Did you not give guarantee for as much as over 300,000l. to the Gurneys in one way or other for Mr. Lever?—There were some ships bought. I did a good deal for Mr. Lever, but I do not know what I did.

Mr. Lewis—Were the papers and securities that you handed over to Gurney, and Co. anything of any value?—I had some estates in the neighbourhood of Hyde, and a large mill, and they got all they could from me.

What did they produce?—I cannot say. It was a large mill, and cost me 75,000l. They got all my securities that I was possessed of.

By Mr. Mathew—I did not hand over the cotton mill to the Gurneys. I could not. I had some of my nephews connected with the mill. Overend and Gurneys got all that I had. They came down and frightened me out of it. They got it clandestinely. They got all my estates except the cotton mill.

Was that on account of your liability for Mr. Lever?—Certainly it was. It was through him that I was brought to ruin.

Mr. John S. C. Koch was the next witness. He stated that he resides in Oxford-square, and is a metal merchant at present.

On the 31st July, 1865, you appear as a debtor to Overend, Gurney, and Co., for 243,000l.?—I am not a debtor to Overend, Gurney, and Co., at all.

Have you never received that money from Overend, Gurney, and Co.?—I have received very large sums from them, but not on my own account.

Were you aware that you appeared in their books as a debtor to that amount?—I was not.

Have you since that period become bankrupt?—I have made a deed of assignment for my own protection.

Has any claim been made by Overend, Gurney, and Co. under that deed?—No. I did not know a firm of Gordon and Co.; but I knew Alexander Thomas Gordon, a contractor. That firm failed either in 1863 or 1864. Messrs. Coleman, Turquand, and Co., accountants, were concerned for the creditors. I had a conversation with Mr. H. E. Gurney in regard to that failure. I knew what the firm owed, because I was the agent for Overend, Gurney, and Co., with Mr. Gordon. It was arranged that I should take charge of certain business. There were two railways they were engaged in, for which they were to advance money, and I was to act as agent between the two parties. I received securities from Gordon, and received the money from Overend and Gurney to hand to Gordon. I received 1 per cent. commission. The failure must have been previous to 1863. I had the conversation with Mr. H. E. Gurney about the time of the failure. It was the ordinary conversation which would take place between banker and agent. I told him that Gordon had failed, and that they must hold the securities and make the best of them. I was myself a creditor of Gordon to a small amount. Gordon owed Overend and Gurney, as near as I can recollect, about 350,000l. I cannot explain why I was put down as a debtor for 243,000l. in Overend and Gurney’s account, unless it may have been on account of my acting as agent and the account being kept in my name. I never could have paid any such sum. The way in which the business was done was for me to draw upon Gordon, and they had the bills.

Mr. Mathew—It is a very long way off from the matter in hand. He was never asked for any money, or treated as a debtor.

By Mr. Lewis—I never knew I was in the books for 240,000l., but Overend and Gurney gave me an indemnity. It is a very ordinary mode of doing business. One railway was sold to the London and North Western Company about 1864, and 100,000l. which it produced was paid to Overend and Gurney. The account of Gordon at that time was over 300,000l. There were securities in addition of various railways in which Mr. Gordon was interested. Some small sums were realised from them, but no large amount. My name stood in the books for 243,000 l. on the 31st July, and at the time of the stoppage of the limited company for 330,000l. In May I received about 250l. from the old company. I received no sums from the limited company.

Mr. Lewis—And yet you appear in the books to have received about 90,000l.

Mr. Mathew—No, it is an account carried on in the name of the agent.

Mr. Lewis—I beg to say that in the ledger of Overend, Gurney, and Co. they appear to have paid Mr. Koch that sum.

Mr. Serjeant Parry explained that the name of Mr. Koch was merely used as a representative name. It did not appear that that gentleman had been in any way treated as a debtor, nor had any demand been made upon him by Messrs. Overend, Gurney, and Co. He was quite sure that Mr. Lewis would not press this inquiry if he found that the name of Mr. Koch was merely representative of debtors such as Gordon and others.

Mr. Lewis said that his lordship would see the position in which he was placed. Mr. Gordon stopped in 1862. At that time he was entered as a debtor for 24,000l. On the 1st of July, 1865. The sum of 243,000l. was entered against Mr. Koch. How could anyone, merely looking at the books, imagine that that was a debt of Gordon’s, who stopped in 1862, and whose estate must be supposed to be exhausted. Then there were further sums entered against Mr. Koch to the amount of 90,000l. That could not have been for payments to Mr. Gordon.

The Lord Mayor—The question, rather, is whether the amounts entered in the ledger under the name of Mr. Koch are entered in connection with any other name, which explains why the account was entered in the name of Mr. Koch,

Mr. Mathew—That is so, my lord, if you refer to the ledger. Mr. Koch’s name is used in connection with certain railways and piers.

Mr. Lewis—All that I can find in the ledger in connection with Mr. Koch’s name are the letters “P. D. O.”

Mr Mathew—That means the Portadown something, and Over Railway, which was the property of Mr. Gordon.

Mr. Lewis—But there are these additional payments between 1865 and 1866. Your lordship will see in page 313, No. 95 in the book, “Koch, P. D. O.,” a payment of 96,000l., in addition to the 243,000l. paid by the limited company. I want to know whether that was ever paid by or through the witness.

Mr. Sergeant Parry—I believe it will appear that this gentleman’s name was used originally in reference to Gordon and Co. He was the agent of Overend and Gurney, and after the stoppage his name was continued in the ledger with the explanation each time it occurred.

Mr. Lewis—I do not see that it makes the case either better or worse whether the name is Gordon or Koch who is charged 300,000l.

Mr. Koch—I was also agent for Overend and Gurney in respect to the transactions with reference to the Metropolitan Railway Company, in which there was a profit of 13,596l.

Mr. Lewis—Let us keep to Gordon, and don’t let us go into something else.

Mr. Mathew—There were other accounts, then, managed in the same way?

Witness—Yes, I was employed by them in a variety of ways.

Mr. Mathew—And as an instance you give us the Metropolitan Railway, in respect of which there was a profit of over 13,000l.?—Yes. When Mr. Gordon stopped there were certain lines unfinished, and Overend, Gurney, and Co. held the shares as securities, and after Gordon’s stoppage they continued to make advances in order to finish them, I continuing to act as their agent for that purpose.

Did you also act as their agent in respect to advances made on the securities of other undertakings?—I think not. There may have been a few exceptional accounts, but nothing of any great amount. The nominal amount of the securities we held, was very much larger than the sums advanced.

Mr. Lewis—What do you call the nominal amount?

Witness—Supposing you had shares in an unfinished railed?

Mr. Lewis—I should be very sorry. (Laughter.

Witness—Well, I have received large sums for them. It arises in this way—you advance 5,000l., and get the securities to the value of 8,000l. or 10,000l.

You mean if they turn out well, they pay very well?

Witness—If the borrowers are not good you must look, of course, to the securities you hold. 100,000l. was realised by the sale of one of the railways, reducing the balance to 243,000l. Other small sums were realised from time to time. I was always realising securities for them in some way or other.

Did you ever realise any after the limited company came in?—No, that was not the time to realise shares.

How do you mean?—Overend and Gurney were at 9l. premium. But they stopped.

But after the limited company came into existence, did you realise anything?—I think I did, in fact I know of one or two amounts. I realised debentures to the amount of 20,000l.

After the limited company came into existence?—Yes,.

And yet the debt was increased by 90,000l.—I don’t know anything about that.

On the application of a gentleman, who appeared from the Manchester Court of Bankruptcy, but whose name did not transpire, the proceedings in bankruptcy produced by the officer of the court were placed in the custody of Mr. Oke, the Lord Mayor stating that they could not be looked at for any other purpose than that of seeing whether Messrs. Overend and Gurney proved any debts.

Mr. Lewis—I defy you to show that they do prove a debt, and certainly Mr. Howard’s examination does not prove one.

Witness—I wish to state that instead of being a debtor to Overend and Gurney, I am a very large creditor.

Mr. Lewis—I am sorry to hear that, because we shall have to pay you.

Witness—I don’t think you will, because after my guarantee is satisfied I shall have some securities to hand over to you.

Sir T. Gabriel inquired what guarantee the witness was alluding to.

Mr. Lewis—He said that Overend and Gurney guaranteed him in respect to any bills that he might draw on Gordon.

Mr. Mathew—And his statement now is that after he is indemnified he will have some securities to hand over.

Mr. G. Lewis was then recalled, and produced the articles of association of the Atlantic Royal Mail Steam Packet Company, who owed at the time of the transfer 839,000l. The resolution to wind up the company was dated July 18, 1864. It was to be wound up voluntarily, and Mr. Whinney (of the firm of Harding and Co.) was appointed official liquidator. He also produced the articles of association of the East India and London Shipping Company, and the order of the Court of Chancery for its winding up, under which Mr. R. P. Harding was appointed liquidator.

Mr. Ernest Robins, clerk in the London Bankruptcy Court, produced the proceedings under the bankruptcy of the following debtors to the firm:—D. L. Lewis, adjudicated bankrupt on the 7th June, 1845, and again on the 15th March, 1845; of Astley and Co., adjudicated bankrupt on the 4th January, 1855, again on the 7th June, 1855, and again on the 15th March 1865; of Joyce and Co., made bankrupts on the 20th May, 1867; G. Garraway, adjudicated bankrupt on the 9th March, 1866; J. C. Mare, made bankrupt in May, 1867; Lawrence and Fry, made bankrupt May 18, 1865; C. Garrett, made bankrupt May 1867.

Mr. W. Smith, clerk to the chief régistar of bankruptcy, produced deeds of assignment or inspection of other debtors of the firm, including deeds relating to the estates of Kelson, Tritton, and Co., filed 26th February, 1868, but dated 30th June, 1865, their total debts being 430,000l.; Haliday, Fox, and Co., dated 15th February, 1865, the total debts being 570,379l.; Laurence and Fray, dated 6th July, 1864, total debts 391,228l.; and Leopold Brueewitz, dated 13th June, 1866, total debts 403,850l.

Mr. Howell was then recalled and cross-examined by Mr. Serjeant Parry.

The witness having referred to Mr. Barclay’s deposit account in Overend, Gurney, and Co.’s ledgers, which after some search was produced from amongst an immense pile of books deposited on the floor of the court, said—In January, 1866, Mr. Barclay deposited 60,000l. in one account, and in another account 30,000l. That deposit account appears to have been closed on the 2nd of May, 1866. At that time the amount on deposit was 71,000l. There was an error of 10l. 4s. 4d. in the interest. The amount standing to him would have been 71,000l. 10s. 4d. It appears exactly as 71,000l. It appears that 543l. 15s. 3d. was paid in on that day to make it an exact sum of 71,000l. The 10l. 4s. 4d. was actually to his credit on the 2nd of May, 1866. That was interest to which he was entitled.

Mr. Serjeant Parry—Now turn to the Norwich current account.

Witness—This book produced is entitled “Bills out April 10th, 1866, to May 10th, 1866.” There is in this book an account current with Overend, Gurney, and Co. Under the date of May 2 there is credited to Gurney, and Co., the Norwich Bank, 71,000l., but it is really wrong to call it the Norwich Bank; it is Gurneys and Company.

There was some expression of applause in the court at the observation of the witness.

Mr Serjeant Parry—Really, my lord, the tone of this—public meeting—is very embarrassing.

The Lord Mayor—I am surprised at these expressions of feeling, after what passed the other day.

Mr. Serjeant Parry—I am afraid of making any criticism after the mode in which my last was received.

Cross-examination resumed—You say it is not the Norwich Bank?—No; I don’t say it is not.

Sir T. Gabriel—Has he a right to say anything outside the book? You see you bind him to the book, and then ask him about the Norwich Bank.

Mr. Serjeant Parry—No doubt it was popularly known as the Norwich Bank, and I rather expected it would appear as the Norwich Bank in the book, but it is too bad to say the Norwich Bank is Gurney, and Co., and Gurney, and Co. is the Norwich Bank.

Mr. Lewis—Well the learned counsel say when the Norwich Bank went from Gurney, and Co. to Mr. Barclay?

Mr. Serjeant Parry—I say emphatically that the deed shall be immediately produced by me on his behalf.

Mr. Lewis—Well, I will call for it, but let one thing be done at a time.

Mr. Serjeant Parry—Now just read the whole of the heading.

Witness—The account is headed Gurneys and Co. I see nothing further. It is a book of the limited company. On the 2nd of May, 1866, there appears placed to their credit 71,000l. There are certain charges.

My question is not whether there are certain charges, but whether there is a credit?—Yes, to H. F. Barclay.

Now, looking at that, does it not appear, on your oath, that there was a transfer from Barclay’s account to Gurney’s account of 71,000l. on that day?—According to that entry there was, but the entry as it appears in the single deposit book is different. It is there entered as a sum paid at call, while here it is entered as a simple deposit, while it is only a transfer entry in the other book.

But supposing they had never failed, but were in good instead of evil circumstances, would it not be a fair way of entering a transfer from one side to the other? I ask you on your oath.—On my oath, when we were entering—

Mr. Serjeant Parry—Answer the question, and give a straightforward categorical answer. Supposing this firm in good circumstances now and flourishing, does it not strike your mind as an accountant that this was a simple transfer of 71,000l. from Mr. Barclay’s account to Gurney’s account?—That entry does not show it. It does by taking this account with it.

This is what I ask.—It is a deceptive way of making an entry, I consider.

Mr. Serjeant Parry—Now you are drawing on your imagination, Mr. Howell.

Examination resumed—The books are kept by double entry, but this particular account is not, being a single deposit account.

Re-examined by Mr. Lewis—The entry would indicate to my mind that the account was transferred from the credit of Mr. Barclay to the credit of Gurney, and Co., of Norwich. It did not decrease by that amount the money in the hands of the limited company.

Supposing the Norwich Bank belonged to Mr. Barclay, would it increase the funds of that bank?—No.

What would be the effect?—It would place the 71,000l. at the disposal of the Norwich Bank. It depends entirely on the position of the Norwich Bank and the limited company. It did not touch the funds?—No.

The Lord Mayor—It does not alter the cash account in any way. It is simply a transfer?

Witness—Just so, my lord.—Not on that day. The sum is apparently drawn out and paid in again. The 71,000l. does not appear at all on the 2nd of May.

Mr. Lewis—As a fact between the 2nd of May and the 10th did Gurney, and Co. of Norwich get from the limited company 71,000l.?

Witness—They got apparently 41,521l., but there was an account outstanding to their credit at the time the 71,000l.?—There can be no question of that.

Mr. Serjeant Parry—But other sums were paid in?

Witness—Yes, and larger ones drawn out. (Slight hissing in the court.)

Mr. Lewis—I want to know whether the sums amount to 71,000l. which were drawn out of the coffers of the limited company?—The amount is not balanced, but most undoubtedly the whole of the 71,000l. was withdrawn.

Mr. Serjeant Parry—Look at Gurney, and Co., and tell me what amount they had on deposit on the 2nd May, 1866, besides the 71,000l.

Witness—It will involve an extensive addition; there are thousands of figures here.

Tell me within 1,000l. or so?—I should say that on the 2nd May there was about 100,000l. to their credit.

It is an account on which there are daily payments in and out?—No doubt of it.

When Overend, Gurney, and Co. stopped, what was the amount of deposit standing to the credit of Gurney, and Co., of Norwich?—41,000l.

Mr. Lewis—So that in fact they drew out the difference between 100,000l. and 41,000l., besides the 71,000l. placed to their credit?—Yes.

Cross-examined by Mr. Giffard—You stated that the old company made a loss of 500,000l. a year?

Witness—I said so, but not in any particular year.

How long have you been investigating these accounts?—I have investigated them during the last two years, not continually but occasionally.

Have you brought out any calculation that shows that result?—An estimate.

What is the basis of the calculations for the years 1864,1863, and 1862?—The position of certain very large accounts and also the entries as they appear in the private ledgers. The exact position on which I rely does not appear in the books, but I know the losses in connection with those accounts.

Did you ascertain what was the amount of bill-broking business separately from any other. What was the amount of turnover in the year 1864?—I ascertained that more from curiosity than anything else.

Did it amount to 75,000,000l.?—I think it was considerably beyond that.

In the year 1863 it was more?—I think it was.

Without pledging yourself to a million or two, may I take it that that was the average, going back from 1864 to 1861?—Yes.

The witness was then questioned in reference to Cavan, Lubbock, and Co.’s account, and he stated that there was 56,518l. to their credit on their deposit account on the 31st of July, 1865, but on the 2nd of July there was nothing standing to their credit. That account should be taken in connection with their discount account.—That credit of 56,518l. was created in that month.

Mr. Giffard said the witness had answered him so satisfactorily that he did not propose to ask him any further questions. If the 56,000l. were placed on deposit it was placed in the bank in July, and if it were not deposit, but accommodation, Mr. Lewis’s observations respecting withdrawal of that 56,000l. were equally answered.

The Lord Mayor—What other witnesses do you propose to call?

Mr. Lewis—I do not know that I need call any. I think I need not call Mr. Harding.

Mr. Giffard—Then how will you prove those are bad debts?

The Lord Mayor—Mr. Lewis can prove that to-morrow.

Mr. Serjeant Parry submitted that Mr. Lewis should state what clauses in deeds he relied upon, because he should submit to the court that his client, Mr. Barclay, should not be committed.

Mr. Lewis said the clauses on which he relied were the first, in which the vendors agreed to sell and transfer the business; the fourth, in reference to the good-will; the fifth, which provided that the sum of 500,000l. should be made available by way of guarantee, in aid of the covenants of the vendors; the sixth, which excepted the accounts to be closed by the old firm from being taken over by the new company; the seventh, providing for the transfer of the cash balances; the eleventh; the thirteenth, which was a very important one, providing that the limited company should take over the liabilities in the private loan account, making it appear as if they took over a million in cash.

Mr. Mathew—That million went into the suspense and guarantee account.

Mr. Lewis—No doubt; but it appeared by the deed as if a million stood to the credit of the vendors, whereas by the books there was nothing; the sixteenth, by which the old company should retain their name while winding up such matters as they had to wind up during the suspense period, ending the 31st December, 1868; the statement that the limited company were to accept the suspense and guarantee account as representing securities equivalent to cash, and various other clauses, together with the signatures of the defendants, whether as attesting witnesses or parties to the deeds.

The proceedings were then adjourned till to-morrow (this day), the bail being renewed as before.

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1. Text from MEGAdigital (Berlin-Brandenburg Academy of Sciences and Humanities), MEGA² IV/19, licence CC BY-SA 4.0 (https://creativecommons.org/licenses/by-sa/4.0/); the editorial apparatus of the MEGA is not reproduced. ↩