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Title: Notebook “Trade and Finance 1868”. IV. The Overend and Gurney Prosecution and the Charge against the Directors of the Merchants’ Company, January 18 to 23, 1869
Description: Newspaper cuttings in the notebook “Trade and Finance 1868”: Daily News reports of January 18, 19 and 23, 1869 on the preliminary inquiry at the Guildhall against the directors of Overend, Gurney and Co. (Limited) and on the charge brought against the directors of the Merchants’ Company (Limited).
Author: Karl Marx
Date: 1869-01
URL: https://marxismo.school/archivo/marx-engels/originales/1869%20Notebook%20%E2%80%9CTrade%20and%20Finance%201868%E2%80%9D.%20IV.%20The%20Overend%20and%20Gurney%20Prosecution%20and%20the%20Charge%20against%20the%20Directors%20of%20the%20Merchants%E2%80%99%20Company%2C%20January%2018%20to%2023%2C%201869
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*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.[^lic] [Traducción al español](https://marxismo.school/archivo/marx-engels/1869%20Cuaderno%20%C2%ABTrade%20and%20Finance%201868%C2%BB.%20IV.%20El%20proceso%20Overend-Gurney%20y%20la%20acusaci%C3%B3n%20contra%20los%20directores%20de%20la%20Merchants%E2%80%99%20Company%2C%2018-23%20de%20enero%20de%201869)*

#### THE OVEREND AND GURNEY PROSECUTION.

The further hearing of this case was proceeded with on Saturday morning at the Guildhall, before the Lord Mayor and Sir T. Gabriel.

The first witness called was Mr. Richard Bridgman Barrow, of Sydnope-hall, near Matlock, Derbyshire, who was examined by Mr. Lewis, and said—I am a county magistrate. I saw a copy of the prospectus of the company in the newspaper, and in the autumn of 1865 I purchased 200 shares at a premium of between 2 and 3. Previous to the winding up of the company I paid 3,000l., and since the winding up I have paid the two calls of 10l. each, which make 4,000l. more, or 7,000l. in all. I purchased the shares believing the truth of the prospectus.

Mr. Lewis—Had you known the facts which you have since learned, would you have purchased the shares?

Mr. Poland objected to the question, which the Lord Mayor thought too wide.

Mr Lewis—I will put it in a different form. Had you known 4,000,000l. represented as assets were represented by the accounts read in this court, would you have purchased those shares?

Mr. Serjeant Sleigh—The only question which can be asked is, what induced him to part with his money?

The Lord Mayor—And that has been put and answered.

Mr. Lewis—If the learned counsel will point out in what way the question is irregular, I can answer him.

The Lord Mayor—Your questions must not be what are generally understood by the term leading questions. You must not indicate in them the answer you wish to get from the witness. You have elucidated the fact that he was induced to take the shares on reading the advertisement, and he took them because he believed the statements in that advertisement to be true. You may ask him whether anything has since come to his knowledge which, if he had known before, would have induced him to withhold from taking the shares.

Mr. Lewis—Have any facts since come to your knowledge which, if you had known, would have induced you to refrain from taking shares?

Mr. Serjeant Sleigh—Surely, my Lord Mayor, the question is, what operated upon his mind at the time.

The Lord Mayor—It is a little too much in the leading form.

Mr. Lewis—Have any fact come to your knowledge which would have induced you to have refrained from taking shares?

Witness—Certainly.

What are they?—The proceedings which I heard in the Vice-Chancellor’s Court, in the House of Lords, and what I have heard in this court, would have prevented me from taking shares.

Sir T. Gabriel—I don’t think it is worth your while to press it further, Mr. Lewis.

Mr. J. Holme sworn—I reside at Botcherby, Carlow. I live on my means. In August, 1865, I purchased 120 shares in Overend, Gurney, and Co. (Limited). I purchased them after having seen the prospectus in the Money Market Review. I have paid every demand that has been made on me.

Mr. Lewis—That would be 4,200l. in all?—I don’t know; I don’t like to calculate it.

What induced you to purchase the shares?—Seeing the prospectus, and believing the Gurneys to be upright and honourable men.

Mr. Peak was recalled, and his former depositions having been read over, he added, in reply to Mr. Lewis—I was induced to purchase shares by the statements in the prospectus, the natural inference I drew from the terms of the prospectus, and the fact that that prospectus was vouched for by gentlemen such as the Gurneys and the other directors.

Mr. Mathew—You mentioned the name of Mr. Gibb on the last occasion as being present to your mind at the time?—Yes, that is so.

Mr. Howell was recalled and asked with reference to the 71,000l. paid in by Mr. Barclay, and the withdrawal of that sum. He stated that on the 1st of May the balance standing to the credit of Gurney, and Co. of Norwich was 65,761l., and 71,000l. was transferred to their credit by Mr. Barclay from the single deposit account, and 20,000l. by Mr. Samuel Gurney Buxton, making altogether 156,761l. standing to their credit on the 2nd May. On the 10th of May, the date of the stoppage, the amount standing to their credit was 41,525l.

Mr. R. P. Harding, of the firm of Harding, Whinney, and Co., was then examined. He stated that he is one of the liquidators for Overend, Gurney, and Co. (Limited). Was appointed along with Mr. Turquand on the 11th May, the day after the stoppage. At that date 1,250,000l. had been paid by the shareholders in respect of their shares. Two calls of 10l. a share had since been made. The first, which was made on the 20th August, 1866, produced with interest 846,500l.; the second made on the 3rd June, 1867, produced 805,941l., which had gone into the general funds of the company.

Is there any chance of any portion of the money being returned to the shareholders?—I think not.

Are you sure of that?—There are assets still to be realised.

Do you think, or are you sure?—I am not sure; my impression is that there will not be.

What are the liabilities of Overend, Gurney, and Co. (Limited) after payment of these calls?—On the 31st of December last the indebtedness of the company was in round figures 950,000l. That includes interest up to September next.

Have the liquidators made any resolution to make another call on the shareholders?—It was determined yesterday, and circulars are now in preparation. The Vice-Chancellor is to be applied to to make a call of 5l. a share, as we find it impossible to realise the remaining assets in time to meet the promissory notes which will fall due in March next.

That call is half a million?—Yes; on 100,000 shares.

Has Mr. John Henry Gurney paid his 20l. a share call?—We have taken about 600,000l. from the separate estates of the old partners. There has been no specific application of any portion of those moneys to the payment of any particular call. The calls on them are not entered as paid in the book. The old partners executed a deed of inspection after the failure of Overend, Gurney, and Co. (Limited). They had some other creditors besides the limited company. At the date of the suspension they owed the limited company 2,970,168l. 17s. 10d. The calls on their shares would amount to about 166,000l.

Mr. Lewis—It is proved that about 8,000l. of those shares were sold to the public, so that there will be that to be deducted from the total amount.

Sir. T. Gabriel—Mr. Lewis, you give us too much of your arithmetic. You had better get it from the witness.

The Lord Mayor—The fact is that of the shares 8,000 remain unsold, and the calls on those shares have been added to this amount.

Witness—8,323 shares were retained by the members of the old firm, on which 20l. a share has been called, making 166,406l.

How much have you received under that deed of inspection?—The limited company have been benefited to the extent of 595,973l. 11s. 5d. There are other assets yet to be realised.

Sir T. Gabriel—What do those assets consist of?

Witness—There are some reversions, and I think a little land unsold. I think we estimate them to produce something like 100,000l.

Mr Lewis—I suppose that 595,000l. has gone in payment of the creditors?—It has gone to the augmentation of the funds of the limited company. I should have gone on to state that although the 5l. call is required, there are assets outstanding which are estimated to produce 1,051,000l., but they are not immediately available. The balance of indebtedness is, in round figures, 951,000l. On the 10th of May, 1866, there appeared to be owing to the limited company by the Atlantic Royal Mail Steam-packet Company 848,000l., and that has since been reduced by a transfer to the liquidators of 10,787l.

Sir T. Gabriel—Does the company hold any securities?

Witness—There is no expectation of anything further being realised.

Mr. Mathew—The question was, whether there were any securities.

Sir T. Gabriel—I asked whether they held any securities yet to be realised.

Witness—No. It leaves a balance of 837,372l.

Sir T. Gabriel—Have you any account of what securities were handed over on the 31st July?

Witness—This was one of the excepted accounts.

Sir T. Gabriel—I know that; but I ask whether any securities were handed over to the company in respect to that account?—No, I only have the details of how the amount was made up.

By Mr. Lewis—My partner, Mr. Whinney, liquidated the Atlantic Royal Mail Steam-packet Company, but it does not follow that I know anything about it. As a fact I do not except that Mr. Whinney liquidated it. It is not usual for us to interfere with each other’s business. I remember that on the 4th of July, 1865, Messrs. Overend and Gurney paid me 5,000l. It was for the expenses of liquidating the Atlantic Royal Mail Company, and was paid in consequence of an agreement sanctioned by the Court of Chancery, by which Messrs. Overend and Gurney were to pay the expenses of the liquidation on taking over the ships. My partner was not paid a fixed sum per month for liquidating the company.

Mr. Giffard objected to the relevancy of this evidence.

Mr. Lewis—My object is to show that, with reference to the Atlantic Royal Mail Company, Messrs. Overend and Gurney had finished with it prior to transferring their business to the limited company, and were perfectly aware that nothing more was ever to come from that; and I wish to prove that they paid Mr. Harding 5,000l. for the liquidation out of their private account. (To witness)—Now, what was done by you after that?—Nothing by me. Since the liquidation commenced, a sum of 10,000l. has been transferred to the account of Mr. Whinney, the liquidator.

Sir T. Gabriel—Are we to understand that the estate was realised and wound up by the 12th of July with the exception of that small amount?

Witness—That is my impression; if Mr. Lewis will call my partner he can ascertain.

Mr. Lewis—What is the transfer of 10,000l.?—That was a sum of money standing to the credit of Mr. Whinney in the books of Overend and Co. (Limited). It is an accumulation of funds, as I am given to understand, which in the end would be payable to them in respect to preference shares which they held in the Atlantic Company. Then there was 10,000l. belonging to them standing in the name of Whinney at the time of the transfer of the business; but there were no payments in regard to the transfer of the business of the Atlantic Royal Mail. At that time 10,000l, stood to the credit of Mr. Whinney. There has been no payment since the liquidation. Nothing has been received except a sum of 572l., but there has been a transfer of 10,000l., which was standing to Mr. Whinney’s credit in the books. It may be taken that 10,572l. has been received since the bankruptcy.

Mr. Lewis—Now take the East India and London Shipping Company, whose debt to the limited company appears to have amounted to 578,000l.

It was here suggested by Mr. Giffard that, for the purpose of avoiding confusion, the witness should be cross-examined with respect to each of the accounts immediately after he had made his statement; and the Lord Mayor expressed his approval of this proposal; but the witness having observed that his partner, Mr. Whinney, who had acted as the liquidator in the case of the Atlantic Mail Company, could afford more complete information in reference to its accounts it was ultimately arranged that the cross-examination upon that point should be reserved until that gentleman appeared in the witness-box.

Mr. Lewis—I believe that at the date of the formation of the limited company the East India and London Shipping Company owed to the Messrs. Gurney, and Co. 406,000l., and that at the period of the stoppage of the limited company that debt amounted to 578,000l.?

Witness—I believe so; but I had nothing to do with the liquidation of the East India and London Shipping Company after the 10th of April, 1865, when their seven vessels were made over as security to the Messrs. Overend and Gurney.

Mr. Lewis here read the agreement of the 10th of April, 1865, by which the vessels in question were made over to the Messrs. Gurney, and Co. It recited all the names of the vessels with their tonnage, which varied respectively from 2,091 to 1,600 tons.

Mr. Lewis—This mortgage the limited company paid off in pursuance of this agreement, that it should be paid off in twelve months, and that is the reason why this debt appears as a debt of 172,000l. in addition to the amount which was transferred. You mean to say that the limited company paid off these mortgages.

Witness—I did not say so; it appears so, but I cannot state it of my own knowledge. I should assume that it was paid because we subsequently sold the vessels. The witness added that 150,000l. was advanced by the limited company to pay off the mortgages in pursuance of a minute of the board at which some allowance had to be made, and 98,500l. net had been received in respect of them; so that it would appear that the taking over of the mortgages had cost the limited company 52,000l.

And with reference to the 406,000l., that was carried over. How much has been paid?—I cannot see that anything has been paid.

Sir T. Gabriel—You have told us that on the 10th of April the debt of Gurney ‘s against the Steam Packet Company was 139,870l., and that they dealt with that by taking over the steamboats and realising them, but when the books were balanced on the 31st July, 1865, the debt is called 406,000l.; are you prepared to tell us how that difference arose?

Witness—222,000l. was in respect of shares.

Had the liability accrued on the 10th of April? It must have accrued on the 10th of April, because the company was then ordered to be wound up.

Then it was not a matter to be dealt with in any way?—It remained as a balance in the book.

Cross-examined by Mr. Giffard—I cannot state what is the value of vessels of that description, it has varied so much in the last few years. It has varied from 6l. to 10l. a ton. I suppose it is estimated at so much per ton and so much per horse power. I believe there was an offer made for these vessels prior to the suspension of the company for a considerable amount—something like 700,000l.—for these and the vessels of the Atlantic Royal Mail Steam Packet Company. The market for such vessels is very different from what it was a few years ago. I should think that these vessels cost a sum much beyond what I have stated.

The witness then proved the handwriting of Mr. J. H. Gurney to several documents, and of Mr. D. Gurney, and the following letters from Mr. D. Gurney to Mr. J. H. Gurney were read:

North Runcton, May 25, 1865.

My dear John Henry,—You appear to have done quite the right thing in negativing the proposal for continuing Overend, Gurney, and Co’s business, and I trust there will be no side wind attempt to frustrate negotiation with the National Discount Company: and I think if the result is successful we shall all rejoice. I regret very much if you think you have overrated the shares, and I trust that when you go accurately into the figures that will not turn out to be the case. I should hope that the termination of the American war may lead to greater use in selling the ships.—I am, your affectionate uncle, D. Gurney.

North Runcton, Jan. 24, 1865.

My dear John Henry,—Your two letters of the 23rd I received this morning. I am sincerely pleased that everything is in good train for the formation of the new company, and I trust all will go well on starting, and that you may find desirable directors. Your account of Mr. Gibb is very satisfactory. I suppose no Baring could be obtained, and a person like Troubridge, of high character, but without commercial knowledge, would not do; but I mention this merely as it occurs to me, partly from Sir John Hay being in the Millwall company. But I certainly feel a very great objection to our joint and several guarantees for the deficiency to the new company, both because our marriage settlement bonds would be on a pari passu level with these fresh bonds, and also abstracting our private estates from our Norfolk creditors, or rather placing them after the requirements of the liquidation fund. I doubt whether the first of these results is justifiable. I think it might be proposed to the independent directors that, at all events, our marriage settlement bonds ought to precede that now to be given. I should be sorry to trammel the negotiations in any way, but I doubt whether this proposed several security is quite honourable to the families into which my children have married. Perhaps you may make an effort on this point, but I feel that the case is urgent, and I must leave it in you hands. I think it likely that the elections will oblige us to put off the settlement till the beginning of August, but we shall see as to that soon. H. Birkbeck says S. Foster may not come to the neighbouring sett. I am afraid he is ill.—I am, your affectionate uncle, D. Gurney.

P.S. Is there a condition that we must not sell our shares of the new company under a certain time? I am keenly sensible of your great kindness as to what you say respecting your being willing to make a sacrifice in my favour when it comes to the appropriation of losses.

North Runcton, 4th July, 1865.

My dear John Henry,—I have looked over my marriage settlement, which is as I supposed. The old trustees were your father and Canon Woodhouse; and the present ones, made in 1848, are Francis Joseph Cresswell and Charles Woodhouse, of Bury. The sum of £20,000 was to be invested in mortgage or in government securities; and £12,000 was for mortgage of Hunstanton, and £8,000 remained in my hands, a bond of Samuel Gurney being given for it. Both of these are now paid off, and the money entirely in my hands. It is a very awkward case. It places it on the same level, as a security, as my bond to Overend, Gurney, and Co. In short, I feel very uneasy about this and the marriage settlements of my daughters and sons, especially the former. I accede to your kind proposal of giving security: but you must bear in mind that in case of a real catastrophe, all my family and myself would be in total destitution, or almost so: and I do not see how this settlement would be approved of. I hope Charles will come to-morrow; but I cannot help thinking the independent directors of the new company would allow our present private debts to precede the bonds about to be given; and as respects young Charles Woodhouse and Charles Cressell, they would be almost, if not quite, ruined. Whenever I have the opportunity, I should wish to invest Rachel’s, Louisa’s, and Margaret’s settlements—(Rachel has £5,000 invested already)—and my own if possible. I am sorry to trouble you with all these details, but can not very well avoid doing so.—Your affectionate uncle, D. Gurney.

Mr. Lewis—We now come to the Greek and Oriental Steam Company. There is a sum of 144,144l. to the debit of that account which has been transferred to the limited company.

Witness—This is one of the excepted accounts.

Mr. Lewis—Is that a company?

Witness—I have no knowledge of it, except what I see here.

Mr. Lewis—Have you made any inquiry about it?

Witness—I have.

Mr. Lewis—Have you been able to find out its office?

Witness—No.

Mr. Lewis—Have you seen any shareholders of the company?

Witness—No.

Mr. Lewis—Have you spoken to Mr. Gurney in reference to the company?

Witness—I cannot recollect having done so.

Mr. Lewis—Has anything been paid in respect of it?

Witness—There has been received a small dividend of 7l. 16s. 4d. on a bill of 1,500l. (A laugh).

Sir T. Gabriel—Will you tell me what, if any, steps have been taken to recover that sum of 144,000l. odd?

Witness—No steps were taken.

Sir T. Gabriel—Why not?

Witness—Because it was not considered necessary.

Sir T. Gabriel—By whom was it not considered necessary?

Witness—By the official liquidators. But Mr. Turquand has had this debt more especially under his charge.

Mr. Lewis—But you have been acting together as official liquidators?

Witness—If we had been under the impression that anything whatever would have been produced by legal proceedings they would have been instituted. I believe that the Greek and Oriental Company belonged to Mr. Stephanos Zenos. No attempt was made to recover the debt, because we believed it to be hopelessly bad.

Sir T. Gabriel—Why did you think so?

Witness—My colleague will be better able to tell you.

The Lord Mayor—You see this was a large debt, and what we must know is, what steps were taken to ascertain the age of it, by whom it was incurred, whether the person was solvent, &c.; in short, all the grounds on which you based the conclusion that the debt was hopelessly bad?

Witness—I am not in a position to answer that question.

By Mr. Lewis—The account does not appear to have been operated upon since 1863. It increased in 1864 from 42,000l. odd to 144,000l. odd. A sum of 101,458l. was transferred to it from the account of Stephanos Zenos.

Sir T. Gabriel—What was the date of that transfer?

Witness—The 31st of July, 1865.

To Mr. Lewis—The account appeared to have been last operated upon the 29th of December, 1861, when there is the entry of a receipt of 2,000l. There does not appear to have been any interest calculated on the debt after the 26th of July, 1862.

Mr. Lewis—But it was on the suspense or guarantee account, and interest was charged on that in the aggregate with the other items.

Witness—Interest was charged on the balance.

Sir T. Gabriel—But, Mr. Harding, here is a debt of 144,000l., and you have not given us yet any reason why you as a liquidator did not try to recover the money. I ask you this—Why was not the company called upon to pay?

Witness—Because there is no company in existence.

Sir T. Gabriel—Do you personally know when it ceased to exist?

Witness—I do not.

Sir T. Gabriel—How do you know that it has ceased to exist?

Witness—The answer I have given is the best evidence that I can give.

Sir Thomas Gabriel—I ask you how you know this company ceased to exist?

Witness—I had an impression to that effect.

Sir Thomas Gabriel—Donʼt give me your impressions; tell me how you know; what reason you have for telling me that the company has ceased to exist.

Witness—I spoke from the impressions which were formed in my mind.

Sir Thomas Gabriel—Don’t forget that you are the liquidator of a company to which there is a debt of 144,000l. owing. You must have had some reasons which justified you in taking no steps to recover that debt. You tell me that the company does not exist. How do you know that?

Witness—I can only say that my colleague gave me that information.

Sir Thomas Gabriel—But you do not know personally that the company does not exist. (A laugh.)

The Lord Mayor—No, no; there must be perfect order; there is nothing to laugh at.

Witness—I can only say that I do not know it does not exist except from the impressions I had formed.

Sir Thomas Gabriel—Have you spoken to any one of the directors about this debt of 144,000l.?

Witness—I can only say that my colleague, Mr. Turquand, has taken charge to a considerable extent of the suspense and guarantee account, and having every confidence in him I left it in his hands.

Sir Thomas Gabriel—Have you spoken to any of the directors?

Witness—I don’t know that I have.

Sir Thomas Gabriel—But as a professional man you must know whether you have or not; and I ask you again, have you spoken to any of the directors?

Witness—I cannot say that I have.

Sir Thomas Gabriel—But can you say that you have not?

Witness—I am no aware that I have, but I cannot swear that I have not.

Sir Thomas Gabriel—Were there any securities handed over to the limited company?

Witness—I think not. My impression is that nothing was transferred of any value.

The witness added that the Greek and Oriental Steam-packet Company was the firm of M. Z. Zenos, who carried on business under that name, and it was in evidence in the Chancery proceedings that in July, 1865, the valuation of this estate was 7,000l.

Sir Thomas Gabriel—After looking over these matters, are you prepared to give any further information?

Witness—I have no personal knowledge. The books do not state it.

Mr. Lewis—We will now go to the account of Mr. Thomas Howard. His debt is 330,765l. Have you received anything since the company went into liquidation in respect of that debt?

Witness—No.

Do the books disclose whether anything was received by the limited company from the date of the transfer in respect of that account?—No, nothing appears to have been received. I do not hold any securities in respect to that debt, (A deed realising Mr. Howard was handed to the witness.) I believe the signatures of S. Gurney, H. E. Gurney, D. W. Chapman, and Arthur Birkbeck, to be in their handwriting.

Mr. Lewis—I propose to have the deed read which realises Mr. Howard in 1863.

Mr. Mathew reminded the court that the circumstances had been explained on the previous day, that the deed was given by Mr. Howard on his giving up all his property to the Gurneys.

Mr. Lewis—It had better be read. I think it will fully explain the circumstances.

The deed was read by Mr. Oke.

Mr. Giffard directed the attention of Sir. T. Gabriel to the 16th clause of the deed, in which the securities were directed to be transferred.

Mr. Lewis—But there were none. (To witness) What have you done to realise the 331,000l. due by Mr. Howard?—We had no securities. I knew of the deed before. I have no remembrance of speaking to Mr. Birkbeck on the matter. I had no remembrance of speaking to Mr. Birkbeck on the matter. I had information that there was no chance of getting anything from the estate of Thos. Howard.

Mr. Lewis—Because he had been released by that deed?—Witness—That is so.

Mr Lewis—But had you nothing to say to them respecting his account having been carried over for 330,000l. as a good and valuable asset when he had been entirely released from it by a special deed?

Witness—The account was not valued.

Mr. Lewis—But cannot you tell me the exact motives of the inquiries that were made, before it was ascertained that legal proceedings should not be instituted to recover this large debt?

Witness—I cannot speak positively on that point. I cannot say if I made any inquiries on the subject of the defendants. Having ascertained that the securities obtained from Mr. Howard had been hypothecated, and that there were no grounds for suing him, we came to the conclusion that nothing could be realised.

Mr. Lewis—And I am therefore to understand that, though you knew all the circumstances under which this account had been transferred—that it was, in fact, worth nothing, because a deed of release had been granted in 1863—you never asked the defendants for an explanation of the transaction?

Witness—I did not see any necessity to ask the question, as nothing could be recovered.

Sir Thomas Gabriel—You found that the securities had been “hypothecated,” to whom?

Witness—Overend, Gurney, and Co., for an advance.

Mr. Lewis—And the account was in precisely the same position at the time of its transfer to the limited company as it was when you subsequently, as official liquidator, found it would it be—worthless?

Witness—It appears to be so.

The Lord Mayor—In short, the matter stands thus: You found yourself absolutely precluded from taking any step to recover this debt because it had been cancelled by the deed of release.

Mr. Lewis—But I particularly wanted to ascertain if the witness made any demand of the defendants for an explanation of the matter.

To Mr. Lewis—Turning to the account of Kelson, Tritton, and Co., I find that there was 197,503l. due from them to the company at the time of the stoppage. The liquidation of that firm was made in our office, and I was one of the inspectors. The sum of 12,550l. has been received since their failure. The securities consisted of promissory notes, bills with other names upon them, and a small parcel of cotton. In July, 1865, there were no specific bills of lading or warrants handed to me.

Mr. Lewis—Was it not in your knowledge as inspector that there were triplicate bills of lading in existence?

Witness—I was aware that there were separate bills of lading, of which one part was held was Overend and Gurneys.

Mr. Lewis—Which part?

Witness—I cannot tell whether they were the first or duplicate bills.

Mr. Lewis—When did this come to your knowledge?

Witness—In the early part of 1865.

Mr Lewis—Did you see any of the directors of Overend and Gurney about the matter?

Witness—Yes, I saw Mr. Birkbeck and Mr. Edmund Gurney.

Mr. Lewis—Before the formation of the limited company?

Witness—Yes.

Mr. Lewis—Had you any conversation with them as to these triplicate bills of lading or warrants?

Witness—Yes, as to the securities, and the best mode of realising them.

Mr Lewis—Was anything stated by you or by them as to the impropriety of the bills of lading?

Witness—Yes.

Mr Lewis—Tell us that.

Witness—I said it appeared to me that it had come to their knowledge that duplicate bills had been used by Kelson, Tritton, and Co. I asked them for information on the subject, and whether they had seen the parties who were entitled to hold securities.

Mr. Lewis—But what did you say about the duplicate bills? That is a serious matter.

Witness—That was for their consideration.

Mr. Lewis—Did you ask them what chance there was of the firm sustaining a loss?

Witness—I have no doubt I did so. I asked them what securities they were entitled to and what other persons were entitled to.

Mr. Lewis—And what was the answer?

Witness—I believe they had ascertained that the bills of lading which were in their hands were duplicate bills that were held by other parties.

Mr. Lewis—Yes.

Witness—The question with me was who were entitled to those securities—what was the right between the parties who held the bills.

Mr. Lewis—Well, what did Overend and Gurney do?

Witness—They gave me an account of the bills of lading which they held, and what the securities were held for.

Mr. Lewis—Was there any conversation as to the amount of the advances they had made?

Witness—I think not.

Mr. Lewis—No inquiry was made by you as to the amount advanced on these bills of lading?

Witness—I think not; but probably 20,000l. was advanced on these bills of landing.

Mr. Lewis—What was done?

Witness—Such of the securities as were available were realised, and the unsecured balance ranked against the estate.

Mr. Lewis—What became of the duplicate bills?

Witness—As they had no value, Messrs. Overend and Gurney claimed as unsecured creditors.

What became of the duplicate bills of lading—did they go to the Mansion-house, or have you got them?—I cannot tell you whether they are in existence or not.

Did you take any proceedings against Kelson, Tritton, and Co.?—No, it was not my duty to do so.

Did Overend, Gurney, and Co., to your knowledge?—Not that I am aware of.

Did you report that fact to the general body of creditors?—I do not think a general meeting of the creditors was ever held.

Did you report what you had discovered to any single creditor?—Yes.

To whom?—Parties who held some of the duplicate bills of lading.

But they knew it. Did you report it to any creditors of the estate—I did not make it generally known, certainly.

Why not?—It was no benefit of the estate to do so.

How much did Kelson, Tritton, and Co. owe, not to Overend, Gurney, and Co. only, but altogether?—At the time of the failure I think nearly a million.

Sir Thomas Gabriel—How much did Overend, Gurney, and Co. prove under this estate?—The original claim was 408,426l. The unsecured claim was 220,000l., on which dividends amounting to 4s. in the pound were paid. The securities realised 89,436l.

When did you discover these duplicate warrants?—In 1865.

What transactions took place between the time that they made this proof of 220,000l. and the 31st of July, 1865, when the debt stood at 408,426l.?—There were various bills of Kelson, Tritton, and Co. in circulation which must have been returned. The claim was not admitted until long after the failure of Kelson, Tritton, and Co.

How was it that the 220,000l. grew into 291,000l.?—No doubt it would be a larger claim in Overend, Gurney, and Co.’s books, because they had securities which were not then realised.

It was ultimately settled that their claim should be 220,000l.?—Yes; and since it has been ascertained that the securities have not realised what was expected their claim has been extended.

Mr. Lewis—On the 31st July,1865, they stood as debtors for 291,000l. I want to know what was realised by the limited company between the 31st July and the date of the stoppage?—There are numerous items here; two columns of figures. The total amount received up to the present time in respect of Kelson, Tritton, and Co. is something like 141,000l.

Are you quite accurate in stating that this conversation about the duplicate bills of lading was before the formation of the limited company?—Decidedly; it must have been in April.

Mr. Lewis—Now take the account of J. E. C. Koch. He appears as a debtor to the limited company to the amount of 335,412l.

Mr. Lewis—What securities did you obtain against that debt.

Witness—We obtained stock of the Portadown and Omagh Railway of the nominal value of 86,750l.; stock of the Bangor Railway of the nominal value of 12,850l.; and stock of the Mid Wales Railway of the nominal value of 3,850l.

Mr. Lewis—How much have you realised by that stock?

Witness—We have not realised anything since the stoppage of the limited company. It was impossible to realise the fair value of the property. The stock was saleable, but at a very low price. It is impossible to put value upon it. If the government should buy up the Irish railways it would be worth a considerable sum.

Mr. Lewis—What is that stock saleable for now?

Witness—Perhaps not more than 25,000l.

Mr. Lewis—With the exception of those securities, have you anything to pay the debt of Mr. Koch?

Witness—We have not.

Mr. Lewis—Have you spoken to any of the present defendants with respect to Mr. Koch’s account?

Witness—I have on some occasions spoken to Mr. Birkbeck with respect to the value of those securities.

Mr. Lewis—But have you had any conversation with any of the defendants in reference to the indebtedness of Mr. Koch?

Witness—I do not know that I have. I had information on the subject from another source.

Examination continued—I understand that Mr. Koch was nominee of Overend and Gurney in various transactions—in two or three very large transactions—in connection with Gordon. I think I heard that from Mr. Birkbeck. Mr. Turquand, however, has specially applied himself to this account, and he can give you much fuller information.

Mr. Lewis—Let us know take the item of the Millwall Iron Works. Its transferred amount was 510,000l. which was increased at the date of the stoppage to 566,000l. How much has been realised from this asset?

Witness—7l. 10s.—(laughter)—and that, I think, came from a dividend on some bill.

Mr. Lewis—Were there any securities for this debt?

Witness—There was the equity of redemption on the property, and the plant and machinery. The property has not yet been disposed of, and I do not know what it may be worth.

Was the equity of redemption taken by Overend, Gurney, and Co., or by the Norwich bank?—The security was hypothecated to the Norwich firm, and if it should realise more than the amount of their charge upon it, then the difference goes to Overend and Gurney. I do not expect we shall get much benefit from it.

Sir Thomas Gabriel—Do you know when that hypothecation took place?—I do not. It was prior to the 31st July, 1865.

How much is the first charge on it to the Norwich bank?—230,000l.

Is there any other charge on it to your knowledge?—There is not. They have some other securities, but whether they will be entitled to any surplus arising from this is a matter that I have not yet considered.

Then what is there to be hoped for in respect of this 566,000?—I do not think anything.

When it was transferred it stood at 510,000l. It has increased 56,000l. What was that for?—The account has increased by some additions of interest and rent.

Sir Thomas Gabriel—Have you noticed whether the 510,000l. was composed of advances, or was there some share account?—It is a total of several accounts. There are some Millwall Dock shares.

Mr. Lewis—Now take Lawrence and Fry’s account?—I had nothing to do with that. I remember the failure as a matter of fact. It took place about July, 1864.

They owed at that time 148,000l., and at the stoppage of the limited company, 149,000l. How much did you receive in reference to that account?—7,515l. from dividend, and 1,187l. from a transfer of shares. I don’t think that there will be anything further. The liquidators have an award from one of the securities, Mr. Garrett, on which, probably, 5,000l. may be realised, and they also have securities of the nominal value of 18,260l.; but the actual worth is problematical. On the estate of Lewis and Co., which in the books is down for 331,000l. we have received 37,359l. from the Cork and Youghal Railway. The securities we have are on ordinary stock, 83,000l.; first preference, 62,600l.; second preference, 33,000l.; third preference, 32,000l.; Lloyd’s bonds 121,000l.; and other securities. The Cork and Youghal has been sold under an act of parliament, and wound up by Mr. Turquand. We expect that the securities we hold will realise about 125,000l. The estate of Emanuel and Co., down in the books for 83,143l., will not produce anything. They suspended in 1863. On that of Siehel, Alexander, and Co. we have received 6,200l., and the amount of debt is 107,000l. The debt was at the time of the transfer 51,000l., and increased to 107,000l. by the maturing of bills. We hold some further securities, and expect something more. Certain time has been allowed to realise the estate. In a recent conversation which I have had it was stated that the estate may eventually realises 10s. in the pound. The estate of Leopold Bruzewitz, on which there is a debt of 135,000l., has been benefited to the extent of 23,919l. by realising some securities. A dividend of 1s. in the pound, I think, has been paid. It was transferred as 34,000l. The amount received was not equal to that which the limited company paid. They lost all the 34,000l. The estate of Carlisle, Parr, and Co., which was put down for 26,000l., had been in liquidation since 1854. Nothing has been received from them, but the liquidators held some bills on which a dividend of 9d. and 3d. in the pound have been received. Altogether 2,000l. of the 26,000l. had been received. In the case of F. G. Garraway, down for 192,256l., there has been about 29,000l. received from the realisation of the produce of certain West Indian estates. Something more would come because the liquidators were negotiating with Messrs. Garraway. On Fox and Co.’s estate, on which the debt was 62,000l., 785.l. had been received from dividends, and a further small amount was expected. The liquidation is in Mr. Turquand’s office. The debt has increased from 34,000l. by bills falling due. In respect to the item of C. Reynolds nothing has been received, and nothing was due from him. It was an amount charged on 18,000 shares in the Mwnddy Iron Company, which were sold at 6s. 3d. per share, and produced 5,700l.

How much did they realise?—A little over 6,000l. The shares were part of the separate estate of Mr. S. Gurney.

What have you received on that account of C. Reynolds on behalf of the limited company?—Not anything.

Have you spoken to any of the defendants about that matter?—I do not know that I have.

Not made any inquiry?—I ascertained the fact satisfactorily to my mind. I have not taken any proceedings in respect of it, because I did not think they would be successful.

After the failure of the company did you retain the solicitors who prepared the deeds?—It is well known we did, they having more information concerning the affairs of Overend, Gurney, and Co. than any other solicitors.

Were they the private solicitors of Overend, Gurney, and Co?—Yes.

Were the solicitors of the limited company?—They were.

And then you appointed them as your solicitors?—We did that which we considered the best for the interests of the company.

The witness was then questioned in respect of the “Old Ebbw Vale Company shares account,” which, at the time of the transfer, stood at 11,122l. 17s. 7d.; but at the date of suspension had been increased to 48,705l. He stated that there did not appear to have been any advances to the company; but the money was paid for calls on shares, of which 2,389 were held; and the increase to 48,705l. was owing to further sums paid on calls by the limited company. Since the stoppage a further sum of 18,262l. 10s. had been paid for calls; and 8,577l. 12s. 1d. had been received for a portion of the shares which had been sold. There were still 2,030 shares on hand, and their present value was 15l. a share. The par value was 27l. 10s. He was advised to keep them for the present, as it was expected their value would increase. A dividend had been received on them this month, and a dividend of 15s. a share was received in December, 1867.

Mr. Lewis—Now take the next item—Peto and Betts, arad, 14,000l. The affairs of Messrs. Peto and Betts are in Mr. Turquand’s office.

What does “arad” mean?—I do not know. I believe it was a projected railway. It was not taken at the time as of any value. Nothing has been received from it, nor is anything expected.

By Sir T. Gabriel—I have not gone into the details of the item of Peto and Betts. It was not taken as being of any value.

You don’t expect that it is a debit which Peto and Betts would have recognized had they been solvent?—No.

By Mr. Lewis—John Jones is put down as a debtor for 61,200l. We have had 4,601l. in dividends on some bills from other estates, but the account has not yet been liquidated. Since the date of the suspension of the company, we have been led to expect that it will pay 5s. in the pound. Jones’s estate is very large. M’Cormack is put down for 13,174l. We have not received anything from that. The suspension took place about October, 1864. No dividend has been received on the debt, and we hold no securities at all.

Sit T. Gabriel—Bills discounted, I suppose.

Witness—Yes.

Mr. Lewis—Bills dishonoured and debited here as drafts. You don’t expect anything from that estate?—No.

You feel quite certain that the examination at this court will not affect the value of the assets?—I cannot tell. I don’t know about the Ebbw Vale shares.

Well, except them?—We have nothing else to put into the market, and we are not disposed to sell them.

The proceeding were then adjourned to Friday next, the defendants being again released on bail.

#### CHARGE AGAINST THE DIRECTORS OF THE MERCHANTS’ COMAPNY (LIMITED).

At the Mansion-house yesterday, Mr. Richard Stuart Lane, of No. 8, Chesham-place, Belgrave-square; Mr. Horace Edward Chapman, of Rochampton; and Mr. Frederick John Helbert Helbert, of 23, New Bond-street were summoned by Mr. John Somerville, commission agent, of Cathedral-street, Glasgow, for that they, in the month of November, and at divers other times during the year 1865, unlawfully did conspire together, by divers false pretences and representations, to deceive and defraud the complainant, and divers other persons, with the intent to induce them to become shareholders in a certain company called the Merchants’ Company (Limited).

There was a second summons against the same defendants charging them with conspiring together to publish a false prospectus relating to the same company.

There was also an summons against Mr. Richard Stuart Land, of Litchurch in the county of Derby, charging them with publishing a false circular, accompanying a call relating to the same company.

Mr. Humphreys (Humphreys and Morgan) appeared for the prosecution; the defendants were represented by Mr. Metcalfe, Mr. Montagu Williams, Mr. James, and Mr. G. Lewis.

The presiding magistrates were the Lord Mayor and Alderman Sir B. Phillips. The proceedings appeared to create very great interest.

Mr. Humphreys said he had to prosecute the defendants for a serious and fearful fraud upon the complainant and a number of other persons. Mr. Somerville was a shareholder in the Merchants’ Company, and he came forward as a prosecutor in that capacity. Mr. Lane was formerly a member of the firm of Horn, Baxter, and Co., and owed them a large sum of money at the time of the failure. The charge against the defendants was proved under the statute which enacted that any director who should make a false statement, or issue a prospectus containing any false statements, with intent to induce persons to become shareholders, with intent to defraud, should be deemed guilty of misdemeanour and be liable to penal servitude, or be imprisoned with hard labour, or be sentenced to solitary confinement. The offence imputed to them would be that of publishing a false prospectus and a false balance-sheet, with intent to defraud the complainant and the public generally, and he thought it right to state that it was extremely probable that on a future day other persons would be included in the charge. He was then about to read the prospectus, but

Mr. Metcalfe and Mr. J. Lewis interposed, and contended that some definite charge should be made against the defendants.

The Lord Mayor, under the advice of Mr. Oke, ruled that Mr. Humphreys was entitled to state all the facts.

Mr. Humphreys went on to say that the defendants gave personal covenant to pay the ten per cent. dividend; but it turned out that their personal debts exceeded their assets by a very great amount, and these personal covenants were not of the slightest value whatever. Mr. Humphreys proceeded to state that one dividend of ten per cent. was paid to the prosecutor, but he was never paid a single farthing more, and, eventually, upon his application to the Court of Chancery, the company was wound up.

Some formal evidence was then with regard to the registration of the company and the articles of association. It was registered on the 6th of October, 1865. Each of the defendants, it appeared, took 200 shares in the company, and they were appointed as director of the company. They were to receive a salary fixed at 500l. a year each. They were also to receive a sum of 10l. per cent. upon all profits after a dividend of 5l. per cent. had been paid to the shareholders. A sum of 62,500l. was to be paid to Messrs. Lane, Hankey, and Co., for the “good will” of their business. The prosecutor, Mr. Somerville was registered as the owner of 36 shares. It appeared that no dividend, except the dividend guaranteed by Lane, Hankey, and Co. of 10l. per cent, was to be paid except out of the profits of the company, and the directors were not to be permitted to purchase the shares of the company with any of the funds of the company. It was also stated in cross-examination that Mr. Richard Stuart Lane eventually became the proprietor of 1,000 shares in the company, and at one period he held so many as 1,250 shares. No call had been made upon the shareholders, it appeared, since the company had been wound up.

Mr. G. Lewis said that only 44,000l. was received from the shareholders, and all the debts of the company had been paid.

Mr. Alexander Somerville, the prosecutor, was then called to prove the purchase of 36 shares in the company, and said that he was induced to purchase these shares by the statements contained in the advertisement and prospectus of the company, and the belief that those statements were bona fide.

This witness stated that he paid a call of 5l. upon his shares in December, 1865, and upon the representation of the secretary that if a second contemplate call of 5l. were paid, 10l. per cent. would be allowed as discount, he paid that amount also, the result being that he paid 15l. upon each of his shares. He subsequently made an offer to the secretary to pay up the remaining 10l., the shares being 25l. each, but the company refused to receive it (Laughter.) They did not exactly refuse it, but would not take it except in the way of a deposit. (Renewed laugher.)

Mr. Spire, the principal clerk in the Joint Stock Registar’s office, was recalled, and he stated that Mr. Young, one of the partners in the firm of Coleman, Turquand, and Co., took a hundred shares in the company, and paid 1,500l. upon them.

Mr. Lewis said that this was one of the gentlemen composing the firm. He had examined the accounts of Lane, Hankey, and Co., and he was so satisfied with the character of their business that he took a hundred shares.

Mr. Somerville, the prospector, stated, in cross-examination, that no call had been made upon him, and the company was wound up in 1866, and he did not institute any criminal proceedings until the present year. He was not aware that the firm of Lane, Hankey, and Co. made profits amounting to 30,000l. a year.

Mr. Lewis said he should prove that this was the case.

The prosecutor then admitted that he had received a circular from Mr. Richard Stuart Lane, one of the defendants, complaining of the manner in which the former charge had been disposed of at the Mansion-house, and denying that there was any foundation for the allegation of fraud against himself and his brother directors, and offered to submit the question to the arbitration of any two men of high commercial standing, and to pay the expenses of such arbitration.

Mr. Humphreys said that the prospectus was a “written statement” and came within the act of parliament. He them proceeded to read the prospectus of the company. It was in the following terms:—“The Merchants’ Company (Limited). Incorporated under the Companies Act, 1862, with limited liability. Capital, 500,000l. First Issue, 250,000l., in 10,000 shares of 25l. each. 1l. to be paid on application, and 4l. on allotment. A minimum dividend of 10l. per cent. per annum for three year is guaranteed as hereinafter stated.” Then followed the names of the directors. The prospectus went on to state that the company was formed for the purpose of carrying on the business of merchants under the Joint-stock Companies Act with limited liability. It further stated that in order to secure an immediate basis of operations arrangements had been made with Messrs. Lane, Hankey, and Co. for the transfer of their business. This firm will liquidate all its obligations independently of company, handing over only such current transactions and accounts as the board may wish to accept. It is further purposed to bring in the business of other firms, as favourable opportunities may arise. The goodwill of the business of Messrs. Lane, Hankey and Co. has vendors also guarantee by personal covenant a minimum dividend of 10 per cent. on the paid up capital. They may add that they are most sanguine that this minimum dividend of 10 per cent. will be largely increased before the expiration of the three years. The following letter from Messrs. Coleman, Turquand, and Young, the accountants, was appended to the prospectus:—“To the Directors of the Merchants’ Company )Limited.—Gentlemen,—request of Messrs. Lane, Hankey, and Co., we have carefully examined their books with the view of ascertaining what commission they have made during the past six years, from 1st January, 1859, to 1st January, 1865, and find that the gross commission during that period amounts to 140,765l. 17s. 9d., being an average of 23,460l. 17s. 9d. per annum; and after deducting merchants’ “return” commission, and commissions for gods bought and sold by the firm, either on their own account or for the execution of orders in hand, the net commission earned amount to 106,900l. 17s. 4d., or an average of 17,816l. per annum. This is irrespective of the result of the firm’s transactions on their own account, or of the insurance business.—We are, gentlemen, your obedient servants, COLEMAN, TURQUAND, and Co.” He (Mr. Humphreys) was surprised that gentlemen of their position should have written such a letter, when he was instructed he should be able to show that at this very time the business of Lane, Hankey, and Co., was rotten to the very core. He could not conceive a worse offence than the one imputed to the defendants, for it was calculated to ruin hundreds of persons, Mr. Humphreys said that some of the parties connected with the Merchants’ Company were also connected with the Credit Foncier Company, and accommodation bills for 20,000l. were which were discounted by the Credit Foncier Company. One of the acceptors to these bills turned out, upon inquiry, to occupy one small room at Brussels, and when inquiries were made about him all the property that was discovered was a pair of dirty old stockings. The three defendants were members of the firm of Lane, Hankey, and Co.; and he believed he should be able to show that for several years that firm had made no profits whatever. Every endeavour had been made to procure the books of the firm, but hitherto they had been unable to do so; yet he hoped they should succeed by some legal process in obtaining a sight of those books before the termination of the inquiry. The Merchants’ Company came before the public in 1865, and was wound up ten months afterwards. The result was that a quarter of a million of money was entirely lost, and the unfortunate shareholders were liable for a large amount in the shape of calls. A sum of 284,000l. was found to be owing to secured and unsecured creditors.

Mr G. Lewis here interfered, and said this was not the case, and a great deal of the statement made by Mr. Humphreys was mere moonshine. Mr. Humphreys said Mr. Lewis no doubt knew a great deal upon the subject, as he had prosecuted the defendants on a former occasion. (A laugh.)

Mr. Metcalfe—Yes: and was satisfied that there was no foundation for the charge that was made against them.

Mr. Humphreys (to the witness)—Have you heard that Mr. Moore (the former prosecutor) has received any money from the defendants?

Mr. Lewis objected to the question.

The Lord Mayor said the witness could state what Mr. Moore told him in the presence of the defendants.

Mr. Lewis said Mr. Lane paid Mr. Moore’s claim. He stated that publicly. Mr. Lane gave Mr. Moore a satisfactory explanation, and it was after that that he paid him his claim. Mr. Lane was at the time standing as a candidate for Plymouth, and it was very prejudicial to him at that time even to have a charge brought against him, however unfounded.

Mr. Humphreys remarked that it was the payment of Mr. Moore’s claim that induced Mr. Lewis to withdraw from the prosecution.

Mr. Metcalfe said it might be also stated that the accounts were submitted to an accountant.

Mr. Hurlbatt, an accountant, said he was a co-inspector with Mr. Bois under a deed of inspectorship, and had possession of the books of Lane, Hankey, and Co.

Mr. Humphreys—Will you produce the books?

Witness—I brought some of them here, but they are so numerous that I could not bring the whole.

Mr. Humphreys—Well, give men a list of them.

Witness—I have not got a list.

Mr. Humphreys—You know I applied to you for them, and you refused.

Witness—I did not refuse.

Mr. Humphreys—You referred me to Mr. M’Kenzie. As a fact, you did not give me the books.

Witness—I referred you to Mr. M’Kenzie.

Mr. Humphreys—I ask you, are you willing to allow me to inspect books?

Witness—I have brought some of them here.

Mr. Humphreys asked whether he could see the books between this and next examination.

Witness—I will consult with Mr. M’Kenzie.

Mr. Humphreys—Then I must require your lordship to order the production of the books.

The Lord Mayor said the liquidator was bound to give every facility for inspecting the books under such circumstances.

Mr. Hurlbatt then said he would allow the books to be examined on Mr. Humphreys’ order.

Mr. Humphreys said this was as far as he could carry the case to-day.

Mr. Lewis expressed a hope that the examination would be resumed on an early day, and he pledged himself, on behalf of Mr. Lane, to show that he was entirely innocent of the charge brought against him.

Mr. Humphreys said he should ask his lordship to adjourn the case till to-morrow (this day) week. Hitherto he had not seen the books, and it would require some time to go through them.

The Lord Mayor said he did not think this was an unreasonable request.

The investigation was accordingly adjourned till this day week, and the defendants were admitted to bail, themselves in 1,000l. each, and one surety each in 1,000l.

#### THE OVEREND, GURNEY AND CO. PROSECUTION.

The public interest in this remarkable case appears to be in no degree diminished. Yesterday the defendants again appeared, in answer to their bail, before the Lord Mayor and Sir T. Gabriel at the Guildhall, and the court, as on former occasions, was crowded with spectators.

On the opening of the court, the examination of Mr. R. P. Harding, the official liquidator of the company, was continued, the evidence previously given by him being first read over by Mr. Oke, the clerk of the court. In reference to the transfer of the item of the Greek and Oriental Steamship Company, the witness said he wished to put himself right with the court. On the last examination several questions were put by Sir T. Gabriel with reference to the transfer of the sum of 144,000l. The questions diverted his attention from the book before him, but upon referring to it he found that the account had been closed, and the debt treated as irrecoverable. There was a line drawn under it in the ledger.

Sir T. Gabriel—But it forms part of the xxx,009,000l. odd that was transferred, does it not?

Witness—This is so.

Sir T. Gabriel—And I think that was what was generally understood?

Mr. Lewis—Yes.

Mr. Lewis—You mean to say that in December, 1865, six months after the formation of the company, they wrote it off?

Witness—Yes.

It went to make up the 4,213,896l. taken over by the new company?

Witness—No doubt. When I was asked about it I did not observe the fact that it had been treated as a bad debt. I said it was only value at 7,000l., and I was asked where I found that, and I referred to a copy of the evidence taken in Chancery. I did not recollect that I had in my possession a document which would have enabled me to state that that debt was valued at 7,000l.

By Mr. Lewis—In reference to A. and G. Gordon’s account, which at the time of the transfer was 27,028l., that was a balance in the books of the old firm. There was a credit entry by which it was transferred on the 28th of March, 1866, the entry being simply per contra 27,028l., and the same account was debited in the private ledger of the old firm. I interpret the transfer to mean that it was irrecoverable. That account forms a portion of the 4,213,000l.transferred to the new firm. The suspense and guarantee account was reduced from 4,213,000l. to 2,970,000l. The 4,213,000l. was entered as cash.

Can you explain that?—Yes; it was the custom of this establishment, and has been the custom of other establishment, to treat everything through the cash-book and not to use the journal. All the entries are treated as cash, although in fact in many instances they are mere transfers from one account to another. The 4,213,000l. was reduced by 1,053,000l., and then they took credit for 500,000l. for the good will; but on the same date there was a debit of 250,000l.; that reduced the account to something like 3,000,000l.

How did it leave off when the limited company closed its doors?—2,970,168l. 7s. 10d. appears to be the balance brought down on the 10th of May.

Then it increased?—It increased. I have estimated the amount claimed by the limited company against the old firm at something like 4,000,000l., or rather more. It increased in consequence of their debiting the account with the amount of sundry bills dishonoured for which the firm had given their guarantees to the limited company.

Mr. Howell told us that the limited company made 4,000l. profit without making any allowance for bad and doubtful debts; what did the bad and doubtful debts of the limited company prove to be?—1,300,000l.

Sir T. Gabriel—Is that in respect of their own transactions at that time irrespective of the old firm?—Yes. The 1,300,000l. included the interest on the accepted account, 131,500l. After debiting the losses, they made no net profits.

Do you mean to say that besides the losses of the old firm, 4,000,000l., or thereabouts, they lost 130,000l.? Yes. The claim on the old firm includes the aggregate amount, although the bills may produce 15s. in the pound from another source. The claims on the estates of the members of the old firm, besides that of the limited company, were estimated at about 400,000l. Of these about 236,000l. have been admitted and paid. In addition to the 4,000,000l. there is the claim on several members of the old firm with regard to the calls on the shares, making 166,460l. The old firm after the stoppage of the new company, executed a deed of inspection, and the liquidators had received from those estates about 500,000l. On the 31st July, 1865, the 144,000l. of the Greek and Oriental Steamship Company had not been written off, because it had not been debited as a specific item. The suspense and guarantee account did not show it, nor does it appear in the books of the limited company except as one of the items composing the 4,213,000l. on the 31st of July. The books of the limited company are not affected by it, and I will give an illustration to clear up this point. On the 31st of July there were certain items referred to, amounting to 4,213,000l., and there were standing in the books a credit of 1,053,000l. and 500,000l., reducing the balance to 2,900,000l. Had each item been taken as valued at 20s. in the pound, instead of Overend and Gurney being indebted to the limited company, the limited company would have been indebted to them for the difference.

Sir T. Gabriel—But we are speaking of the 31st July. They were so placed, were they not?

Witness—No; they were treated as a debt due from the old firm to the new company. They did not take it as an asset, or the amount would have gone to the credit of Overend and Gurney.

Mr. Lewis—The account had been reduced on the 31st July by the one million odd standing to their private account. Does the suspense and guarantee account show that that 4,000,000l. was benefited in any way by writing off 144,000l.—No; nor should it do so.

Then I want to know this. If Overend and Gurney received credit on the 31st of July for the million standing to their credit, and it became extinguished, how could they have written off anything?—They could deal with it in their own books. It had not been extinguished in their own books.

Had not a line been drawn in the books, and credit given to themselves or the limited company?—Certainly not. Had this balance been place to the credit of Overend and Gurney, it would have been requisite, whom this item of 4,000,000l. turned out to be irrecoverable, to debit them with the amount, but inasmuch as they were treated as creditors for the advance of 4,000,000l., there was no necessity to introduce into the book of the limited company anything relating to that item unless some money had been received or some payment made on account of it.

By Mr. Lewis—Of course the old firm in their books credit the limited company with 4,213,000l., and the limited company debit them with it?

The Lord Mayor (after examining the book)—The mode of entering in the ledger could not be in any other way whether or not anything was to be realised on either side. If everything turned out to be lost, and not a shilling of the 4,213,000l. was realised, it could not affect that side of the ledger. It must still remain, and, as Mr. Harding correctly says, any sum received in reference to it must be placed upon the other side.

Mr. Lewis—Exactly so. What I want to show is that, so far as the suspense and guarantee account is concerned, nothing has been written off.

Witness—Will you permit me to remark, in reference to the Greek and Oriental account, that I stated on Saturday last that I thought we had evidence that it was only value, in 1865, at 7,000l. It was irregular to refer to a printed copy, but I have since been able to refer to the affirmation of Mr. J. H. Gurney to that effect.

Mr. Lewis objected to the witness making any such reference.

The Lord Mayor—You find it was written off in 1865. That is a very valid reason why you should not take any steps towards its recovery in 1860.

Mr. Lewis—Now the debt of 839,000l. Atlantic Royal Mail Company was transferred. Was that written off at any time in the private ledger? Do you find 520,000l. written off on the 14th December?

Witness—I do. There was a sum transferred to the purchasers’ share account. The whole amount was written off. Millwall, 28,000l.; Mare, 8,000l.; ditto S. A., 1,311l.; Thomas Howard, 331,755l.; Carr and Co., 29,000l.; the East India Merchant Shipping Company, 160,000l.; ditto share account, 226,242l.—all these items were written off.

Now are any of those items so written off in the suspense and guarantee account?—No.

Mr. Mathew—And they ought not to be.

By Mr. Serjeant Ballantine—I suppose in the winding up of this affair you have referred to the books of the old firm;—I have referred to some of them.

Are you able to tell us the amount of the bills discounted for several years?—Yes, in the year 1861 the total amount of the bills discounted was 53,645,000l.; in 1862, 64,314,000l.; in 1863, 66,373,000l.; and in 1864, 74,984,000l.

I presume that that business was entirely independent of those speculations which resulted in the 4,000,000l. of debt.—No, because wherever those transactions were by bills, those would be classed as amongst the bills discounted.

So that that would to a certain extent diminish the actual profits of the business?—Yes.

Otherwise would it be a business of large profits?—It was a business that must have yielded very large profits.

And have you found from reference to the books that in point of fact the profits realised by the legitimate business of the bank was to a great extent destroyed by the speculative matters that you have named?—There is no the slightest doubt that the business was a profitable one.

And would have realised large profits?—It must have realised large profits.

Now, suppose you had been in the firm, looking at the thing in face, your advice would be to get rid of those speculations and those debts, and then you would expect that the concern would go on prosperously?—That question could be best answered by referring to the amount of bills discounted by the limited company.

What is that amount?—From the 1st August to the 31st December, 1865, it was 29,129,000l., and up to the 10th May, 1866, it was 56,029,000l.

And I may take it that such a business, conducted with ordinary prudence, would bring out a large profit?—No doubt it should bring out a very large profit.

Was there during the time the limited company was carrying on its business a great pressure in the money market?—Yes. The Bank rate of interest rose during that period considerably.

A great many failures?—Not so many till after the suspension of the company.

Was it in consequence of that pressure in the money money market that money of these bills were dishonoured?—No doubt, and the effect of the rate of interest rising was to diminish the profits of the bank very considerably. The amount of the debts which pertained to the old firm at the time of the transfer was 4,213,896l., and that was reduced by a transfer of 1,053,000l. from other creditors. The debt to the new company by the old one would be merely 2,900,000l. I have investigated the matter of the guarantee given by the old firm. Its value was simply the value of their private property. The landed estates were not a security, and that is the ground of our bill against the defendants. One allegation is that a material guarantee was not taken. We have realised under the deed of inspection nearly the whole of the estates. The limited company has been benefitted by such realisation by about 600,000l., and probably will receive 100,000l. more. Under the covenant in the second deed we have applied the money. A portion of the estates were sold before the stoppage. There was a sum of 400,000l. realised, but the money was absorbed, being taken to the credit of the suspense account. I believe the suspension of the limited company was to be attributed to the knowledge that the separate estates of the partners were being realised. There was a book produced with some leaves taken out. It was a letter book—a press copy book. I have come to the conclusion that the pages taken out were blank pages. There is nothing in the index referring to the missing pages, and I have been informed by the person who actually took them out that they were blank pages.

By the Lord Mayor—Twenty pages in all were taken out; all in one place. It is not an uncommon thing to have a sheet torn out of a press letter book, in order to put away the copy with the original document.

By Sir T. Gabriel—There was not much made of it.

Mr. Serjeant Ballantine—I don’t suppose you attached any weight to it, but the public are apt to do so.

Examination resumed—The amount of deposits actually withdrawn during the last four months of the existence of the company was about a million a month.

Sir T. Gabriel—But how much was paid in?

Mr. Serjeant Ballantine—The balance were reduced by that.

The Lord Mayor—Is that so? Was a million more drawn out than was paid in?—Yes, as I am informed.

By Mr. Serjeant Ballantine—The withdrawal of deposits I attribute to the realisation of the private estates.

You said something about a call of 5l. on the last examination. Is there any likelihood of that being returned?—We hope that we shall be able to realise the remaining estates, and if commercial affairs do not get worse than they are now I think our estimates are reasonable, and if carried out may result in the return. We did not anticipate the necessity of making a call.

Mr. Serjeant Ballantine—You do not give any promise, I observe. (Laughter.)

Mr. Serjeant Parry—Mr. Barclay had 1,000 shares, and has paid 35,000l. on them. Mr. G. Head was a shareholder to the amount of 1,000 shares at the time of the suspension of the company. It does not appear whether they were held in respect to his wife. It does not appear that Mrs. Head was the holder of 500. They were original shares allotted to Mr. Head. I have heard Mr. Head is the brother-in-law of Mr. Gurney. Mr. Head paid 15l. a share prior to the suspension and 20,000l. since—in all, 35,000l.

By Serjeant Sleigh—Mr. Gordon held 200 shares at the time of the suspension of the company. They were at one time selling at 5l. premium. He has paid 7,000l. on them.

By Mr. Gardyne—Mr. George Rennie was allotted eighty shares, which he held to the suspension of the company. He has paid all the calls. I do not know that Mr. George Rennie is the brother of the defendant.

Re-examined by Mr. Lewis—By the articles of association 200 shares were the qualification of a director. Messrs. Gurneys and Birkbeck held 8,302 shares at the time of the suspension a portion of them being for the goodwill.

You said the limited company made a profit of 2,000l. without providing for bad and doubtful debts. How do you account for that, considering that they turned over 56,000,000l. ?

Witness—After providing for bad debts, I said there was no other profit whatever.

Without providing for the bad debts?—That was after debiting the rebate and all expenses.

I wish to know what was the profit, without making any allowance for bad and doubtful debts, during nine months?—Including the interest charged on the suspense and guarantee account it is 131,567l.

And the profit you, say, altogether was 133,000l. Then I ask what would be the profit on this 56,000,000l. of bills discounted?—It would be the difference—about 2,000l.

Sir T. Gabriel—1,433l.

Mr. Lewis—That is the profit on this 56,000,000l. of bills discounted?—No.

Why not? You say that they turned over in nine months 56,000,000l. of bills discounted? Is it not that difference?—Yes; after deducting the expenses and rebate.

What were the bad and doubtful debts?—We anticipated the loss to be 1,300,000l., but after deducting the 250,000l. received it will be 1,050,000l.

What would the profit of turning over the 56,000,000l. be?—about 1,400l.

That includes bad debts?—Yes; because the interest of the suspense and guarantee account is a bad debt.

Have you looked over the books of the old company for the last five years, and do you know what the losses were?—They were 4,000,000l. in the six years.

You have known Overend, Gurney, and Co. a long time?—I did not know them till 1864. I had hear about May, 1866, a few days before the stoppage of the limited company, of the sale of the estates of Mr. Samuel Gurney. At the date of the stoppage I was on the premises of the limited company checking some balances. I am not sure that I had been appointed one of the auditors of the limited company, but I was acting as one of the auditors. On looking at the minutes I see that I was appointed.

Mr. William Turquand, of the firm of Coleman, Turquand, Youngs, and Co., was next called. He stated that he is joint liquidator, with Mr. Harding, of Overend Gurney, and Co. (Limited.)

Mr. Lewis—Can you explain the item Peto and Bettsarad, 14,000l.?

The witness said it was in connection with the making of a railway in Turkey. Peto and Betts contemplated making a tender for the works, but previous to that desired to make a survey, and it was agreed between them and Overend, Gurney, and Co., that they should be at the joint expense of the survey. The expense was 28,000l., and the 144,000l., the loss by the Greek and Oriental Company, was the loss after deducting the value of the ships. Overend, Gurney, and Co., used those ships afterwards in the business of the Levant and Black Sea Steamship Company. On that company there was a loss of 38,000l. after deducting the amount realised for the sale of the ships, but 7,000l. was received afterwards for some barges.

Mr. Charles Beard, of Bury St. Edmunds, sworn—I am a magistrate, and ex-mayor of the borough. I hold 150 shares in Overend, Gurney to purchasing the shares I had seen a prospectus, and my attention was attracted to the deed of covenant. On the 13th or 14th of July I came to London, and called on the solicitors of the company, in St. Mildred’s-court. I asked to see the deed advertised. I saw a clerk. There were three copies of a deed. I sat down and read one of them carefully. I saw that Messrs. Gurney had made it very well for themselves. I thought it altogether a sound affair. I took a copy up and said, “Are there any other deeds?” and the clerk, said “No, they are all copies of the same deed.” I saw that they were all endorsed the same. I had no knowledge before taking my shares that there was any other deed than that which I saw.

What inducted you to purchase the shares?—Looking over the deed, and considering the matter. I did not purchase the same day. I talked the matter over with my banker, and I bought the shares believing it to be a sound concern.

Mr. Peak recalled, and, in reply to Mr. Lewis, said—On the day the limited company stopped I was at the office of that company, and saw Mr. Robert Birkbeck. The shutters were put up whilst I was there. I told Mr. Birkbeck that I had heard a disagreeable rumour about Overend, Gurney, and Co., and he told me that they were going to put up the shutters; that the Bank of England had unexpectedly refused to make them an advance, although they had tendered them ample first-class securities. He further said that the Bank of England had done it to gratify a grudge, and that it would bring on such a catastrophe that the matter would be inquired into at the next meeting of parliament.

Did you say anything?—On the following day I called at the bank, and went to the private door. I saw Mr. Gibbs, and afterwards Mr. Birkbeck. I told Mr. Birkbeck that I seen Mr. Gibbs, and that he had informed me that a day or two before the board had decided to declare a dividend at the rate of 7 per cent. per annum. Mr. Birkbeck said that that was quite correct, and I then asked him what were the prospects with regard to the suspension, and he said that he and Mr. Gurney had carefully gone over the securities the night before, and that we should very probably—in fact, almost certainly—get back 7l. 10s. out of the 15l. which had been paid, although there might be a call necessary at first to wind up the company.

Was Mr. Birkbeck aware at the time that you held 2,000 shares, with a liability of 100,000l.?—He was.

Two letters were then put in from Mr. Birkbeck to the witness, one dated the 23rd of February, assuring him that the company had not lost anything; and the other, dated 14th April, 1866, denying that any of the directors were selling their shares, again assuring him that they had not made a single bad debt, and expressing a belief that the witness would find the accounts perfectly satisfactory in July.

Witness—Before July came the company had stopped.

A third letter was put in, dated 26th of October, in reply to an applicant for shares, stating that they were only to be had in the open market, signed by Mr. H. E. Gurney, and a second from the same gentleman, stating that a bad debt which had been referred to was one for which the old firm was accountable, and not the limited company, and denying that they had incurred any bad debts whatever, or that there was any fear of the one alluded to being paid by the old firm.

Mr. E. W. Edwards, one of the official assignees of the Court of Bankruptcy in London, sworn and examined by Mr. Lewis.—There was a sum of 10,000l. odd transferred to the new firm in February, 1865. I had 20,000l. standing to my credit in the books of the old firm, and a debit of 3,000l. It was placed to my credit in 1864 in fulfilment of an agreement entered into between me and Messrs. Overend and Gurney in 1862. I received the 20,000l. for services rendered to the company. I received a salary of 5,000l. a year. The 20,000l. was for two years’ service rendered and two years to be rendered. I began with Messrs. Overend and Gurney in 1859. I forget what I received the first year.

Mr. Serjeant Ballantine interposed, and asked what bearing this evidence could have on the case.

Mr. Lewis wished to show, through the evidence of a gentleman receiving a salary of 5,000l. a year, that the defendants must have had a knowledge of the state of their own accounts.

Examination resumed—The 20,000l. accrued from 1862. Between 1857 to 1862 I had received 5,000l. a year. There was no estate winding up in the Court of Bankruptcy in 1864.

Mr. Lewis—Now be good enough to tell us what you were to do for this 5,000l. a year?

Mr. Serjeant Sleigh objected to the evidence.

The Lord Mayor—We cannot tell yet what it is to lead to. All this has to do with making up the accounts and with the whole state of the affairs, and it may appear that proper precautions were taken through this gentleman to ascertain the affairs of the company.

Mr. Serjeant Ballantine—Mr. Lewis gave a very persistent reason for the examination, and therefore I did not persist in the objection.

The Lord Mayor—The sum of 20,000l. being paid in advance for services rendered for four years would bring it into the period of the limited company.

Examination resumed—One of the matters I was engaged in was that of Stephanos Xenos, in 1859. In that case a loan of 140,000l. had been made by Messrs. Overend and Gurney to the gentleman on the security of a ship chartered by the government and the fleet known as the Greek and Oriental Ships. I was the nominee of Messrs. Overend, Gurney, and Co., in that transaction, and I had a power to attorney to receive the charty-party from Xenos.

What did you do?—I had the entire management during a certain time, and attended to the business of Overend and Gurney in the matter after four o’clock, when my official duties were over. I was often engaged at the office of Stephanos Xenos till late. I ceased to look after that account on the appointment of another gentleman named Carr, in 1859. I attended all the boards of the Atlantic Royal Mail Company. I remember its being wound up. I fancy I was a director at the time. The debt to Overend, Gurney, and Co. increased while I was a director. I think it was upwards of 200,000l. when I became a director. I was there to watch it. It increased to about 600,000l. They had five ships as security. Mr. John Orrell Lever was a director when I first joined it, and Mr. Thomas Howard. I had also a great deal of correspondence and work in connection with the general business of John Orrell Lever, who was in the Anglo-Susso Company. Mr. Howard was security for Lever, and I had to look after the securities.

Did they advance money?—Yes.

Mr. Lewis—Now in 1861 what were you doing?

Witness—The business was daily; I cannot say particularly what I was doing.

But you received 5,000l. a year for doing something?—There was the Greek and Oriental Company; then there was the Millwall Iron Works. Nothing was absolutely put into my hands. I merely advised on particular items. I was not made a director or shareholder of the Millwall Iron Works Company. Mr. C. J. Mare was the original debtor on that accounts, and then the concern was taken over by a company. When that matter was put into my hands the debt was about 200,000l. I had to advise whether they should make advances. I was not aware that Overend, Gurney, and Co. held every share in the company.

Did you advise them about making advances to the Millwall Company?—They used their own judgment.

Was there any other thing that you did for which you received 5,000l. a year besides advising them to advance money and they using their own judgment?—Yes.

Did they advance money?—Yes.

And in the end the debt increased from 100,000l. to 566,000l.?—That is the result.

By Sir T. Gabriel—I never managed the Millwall Iron Works. I was merely in an office, and parties came to me and told me what was wanted. I was at Overend and Gurney’s after 4 o’clock and whoever had to see me there had to come after that hour.

Were you engaged in any other matter?—Yes; Mannel and Co. They were indebted to Overend and Co. I do not recollect any other. Mannel and Co. failed in 1860. I had also the correspondence as to Peto and Betts.

What was it you did from 1860 to 1862?—I cannot recollect the different cases.

What did you do in 1863?—The same. (Laughter.)

But what was it?—I cannot recollect.

Sir T. Gabriel—Was there any written agreement between you and Overend, Gurney, and Co.?—Yes.

Where is it?—I will look for it.

The witness went on to say, that when the 20,000l. was paid in to his credit, he had a conversation with Mr. J. H. Gurney. The payment was made after the formation of the limited company. He had a conversation with Mr. Birkbeck, who said Mr. J. H. Gurney would himself take the management of the matters in his department.

But there were only two, the Atlantic and Royal Mail and the Millwall Works?—There were a great many other matters.

Tell us one?—I do not recollect.

Can you tell us any one single matter that you were doing in 1864?—No. Allow me to say that Mr. Boyce kept a book for the purpose of entering everything which was done after business hours.

Mr. Boyce said he had no such book, but after a short search a book was found, and handed to the witness.

Witness (after examining the book)—I really cannot find anything.

Is that book for 1864?—No.

Mr. Boyce—Yes; October, 1864.

The witness asked for time to examine the book.

Mr. Lewis said that Mr. Serjeant Ballantine (who had left the court) had expressed a desire to cross-examine the witness to-morrow, and he would defer putting any further questions till he was called again.

The Lord Mayor—He will have to be recalled to-morrow.

Sir T. Gabriel—Were you official assignee in the bankruptcy of Mr. Mare?

Witness—I think the case was taken out of the court. I was appointed, certainly.

Mr. Lewis—Before it was taken out of court?

Witness—I really cannot say.

Mr. Lewis—We have the proceedings in the bankruptcy in Mare’s case, and also in Lever’s case, in court to-morrow, and I may state, that with the exception of a question or two to Dr. Thom, the prosecutor, that will be the whole of my case.

The Lord Mayor—hen we will adjourn till 11 o’clock to-morrow.

Mr. Mathews—Is it your lordship’s intention to sit till four?

The Lord Mayor—Yes.

Mr. Serjeant Parry—Then I am in hopes that we shall finish the case.

Bail was then renewed, and the defendants released.

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