STROUSBERG.
STROUSBERG—it is quite absurd to call him Dr. Strousberg, or Herr Strousberg, or Mr. Strousberg—has failed, and the English public, so far as it knows anything of him, is meting him out hard measure. It classes him remorselessly with the " financing', rogues who ever since the foundation of the Second Einpire have been trying in Paris, London, and New York to make great for- tunes, by speculating in shares.which they can send up or down at pleasure, and who have succeeded at last in so discrediting joint- stock enterprise, that Great Britain is at her wits' end to know where to put her accumulations. Very few of them have made solid fortunes, while their " operations " have involved heavy fines on almost every country, and city, and mineral district honoured with their attentions. We should like to know, for example, how much a year America is now paying in the shape of extra interest for railway and mining capital, which, but for the discredit flung on American speculations by half-a-dozen swindlers, she would never have been compelled to offer. Strousberg did not belong to this gang at all. We are not about to defend his pecuniary character, which may be indefensible, for anything we know, and certainly can be defended satisfactorily only by the only man who has the key to his astounding enterprises—that is, by himself,—but the facts on the face of his record, and especially the facts related by Herr Delietz, the special Commissary appointed by the Berlin Civil Court, do not justify all the harshness of English opinion. For aught that appears in evidence, Strousberg may have been an unsuccessful Brassey, and he was certainly not a man who intended merely to dupe the public. He was a sort of Napoleon of Contractors, and was ruined, like Napoleon, not so much by ambition, though, of course, that helped, as by a fatal disparity between his supply of energy and of foresight. Strousberg was no Stock-Exchange man, but a gigantic speculator of the contracting and not the financing class, a man who had conceived the idea that sudden and enormous wealth might be realised out of perfectly honest enterprise, if only the enterprise undertaken were of sufficient magnitude. His theory obviously was that if money can be made out of a railway sub-contract for half-a-mile, it can be made as easily, and in larger amounts, out of a contract for a thousand miles ; that if a carriage company can make money by engine and carriage-building, so can an individual, if only he can rise to the height of the big businesses which a company can undertake. That theory is true, granted two conditions,—that you can secure sufficient trustworthy agency, and that you have capital enough to stand the consequences of a misfortune. That Strousberg secured the first condition would appear certain, from the bare facts of his career. He did build his Rail- ways ; he did supply his carriages by the thousand ; he did work his mines ; and to da all these things he must have secured agency of a kind which it requires a great knowledge of men of very differ- ent capacities to have obtained. It was in securing the second condition that he broke- down, and this mainly because his affairs had been so extended by his remorseless energy, that no foresight
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could cover the whole area of the circumstances which might affect them. His plan was to build Railways in districts which wanted them, and take payment as the work went on in shares, interest on those shares, in his first operations at all events, being guaranteed by a government. The fairness of that business de- pends, of course, solely upon the question whether or not the public who buy those shares know that they have been paid for in work, instead of capital, a point which the Commissary in this case does not explain. At all events, Strousberg succeeded at first ; he built or nearly built a system of guaranteed Railways, the Roumanian, and made so much money that he thought himself able to carry through any number of similar enterprises. And he might have been able, as far as his own energy and ability were concerned, but he widened his area of enterprise till his foresight was insufficient for the demands on it. He undertook railways in Roumania, in Russia, in Hungary, in Hanover, in Prussia Proper, and in Posen, built the Berlin cattle-marketand slaughter-houses, organised immense iron- works at Neustadt and Dortmund, and commenced laying out a new town at Antwerp, and drove on all these immense under- takings at one and the same time. So great was his energy, and so successful was he in discovering cempetent sub-contractors and other agents, that all he undertook went rapidly forward to com- pletion,- and in 1870 it was believed that he .had 70 millions sterling, of contracts on hand, and that he• might win at least a fair per-centage upon the whole amount. Contractors run great risks, and although, from the way they are paid, they do not need, while prosperous, very great supplies of capital, they expect very large returns ; but Sae per cent. upon his undertakings would have left Strousberg, after less than ten years of work on the great scale, in the front rank of the working capitalists of Europe. There are larger fortunes, no doubt, but the man who can lay his hand on £3,000,000 sterling of his own, and actually available, can attempt any contract, and almost compel any enterprise to succeed. Strousberg's undertakings, however, had widened till he had reached the point at which politics begin to influence the profits of industry, and about politics he probably knew nothing. He had no more calculated out Bismarck and Napoleon ILL, than Napoleon L had calculated out the Russian cold. The war of 1870 broke upon him unexpectedly, and the blow, in Commissary Delietz's opinion, was fatal. Accumulation stopped throughout the Continent, or if it went on, the people took to hoarding their money till times grew more settled, and the vast masses of shares on which Strousberg depended as capital were saleable only at ruinous sacrifices. He fought on, however, with unabated courage, sold every property that would sell, the Berlin cattle-market, the Hanover engine-factory, the Neustadt iron-works, the Dortmund iron-works, the Siegen iron and coal-mines, the Hungarian North- Eastern line, parted with his picture-gallery, mortgaged his real estates, and still drove on the remainder of his railway works. With part of the moneys thus obtained he even commenced a new and gigantic business, which seems to have had in it many of the elements of success. He would supply the Continent with railway-carriages. - He purchased an estate covering a county in Bohemia, and erected works on such a scale that he had thirty- seven miles of railway on his own ground merely to connect them ; that his workmen filled a town he had built, and that he could venture to take a Russian contract for 2,000 carriages to be delivered almost at once ; while he was building a Hungarian railway for £600,000, which, says the Commissary, when com- pleted, will pay the debenture-holders heavily ; and securing a gigantic concession, that of 550 miles of French railway from Paris to Narbonne. His credit, however, had been shaken in 1871 by a refusal of the Roumanian Government, whose rail- way system he had built, to pay some disputed guarantee ; his need of capital was incessant, he mortgaged every acre of real property he possessed—including, of course, his Bohemian estates —and at last, on the refusal of a Russian bank to make some advances, he collapsed, and was arrested. His whole property would appear to have been sacrificed in the effort to carry on his works—the personalty not being worth £11,000—and the unsecured creditors scarcely hope for a dividend; and yet so powerful is the character of the man, that members of the highest Austrian aristocracy went bail for him, and that even the Commissary expressed his belief that the only hope for everybody was to place Strousberg once more in control of his own affairs.
We have no moral to draw from the.story, for, as we have said, we know too little of the transactions involved to decide whether Strousberg was a great industrial speculator rained in spite of his best exertions, or a dishonest man trading upon a fictitious credit. .His utter fall suggests that he fought fairly and made no
purse for himself, and the main fact on the other side, the- magnificence in which he lived, was, the scale of his operations= considered, rather ridiculous than extravagant. But there is any intellectual lesson to be derived from his story which has been forced on observers of late years by a good many events. The- limit of men's capacity for fortune-making would appear to have been reached. Industrial speculation has assumed, year by year, more of a grandiose character, till at last it has begun to demand faculties which no man, or at all events no man found oftener than once in a century, can undertake to find. The great secret of fortune-making has been said to be, that it is just as easy to deal with millions- as with hundreds of thousands, with hundred agents as with ten, with a dozen countries as with two ; but that is not the case. There is a point at which the mind of the speculator is found to be insufficient. The able banker who- can place ten millions so well, finds that he cannot place thirty millions safely; that his risk increases not in arithmetical, but in geometrical proportion ; that his mind will not carry the history" of so many borrowers; that the chances of an accident are increased not threefold, but by an indefinite multiplier. MB range may be ever so wide, but he must reach its edge- at last, and over that edge he is as powerless as a blind man. The great speculator can combine up to a certain point, a point quite beyond the little speculator's ken ; but he has his limit too, and that once reached, ho is as unable to- grasp and provide for all the circumstances which may affect him as the most ordinary observer. A 'great business • is . distinguished from a little business mainly by ' the more frequent repetition of the same transaction, - and up tn a certain point, the qualities which suffice for the suc- cessful management of the little affair suffice also for the- successful management of the large one ; but that-point-is not in- definite, but is strictly limited by the limit of mental power. A juggler who can keep up two balls can by incessant practice keep up ten, but let him add one more ball than his eye is quick enough, or his brain steady enough, to follow, and the perform- ance ends at once in the fall of a shower of gilded-pellets. The- man who tried to manage the commerce of 'the whole world would find that he made no profit, even of the business he thought he understood best. It has long ago been shown that the most dangerous of operations is to •establish a monopoly of any natural product, for no man's knowledge suffices. to make him certain that more cannot be produced anywhere iw some one of the countries of the world, and the man who extends industrial speculation over too wide an area is under precisely the same liabilities. His knowledge, in fact, which is;the basis of his skill, is exhausted sooner than his energy, and once exhausted, he is as liable to ruin as the feeblest sub-contractor. His capital may enable him to pay losses, but it will not help him to prevent losses. No brain could understand clearly and provide against all the incidents of a business like Strousberg's, and he was• as liable to be overwhelmed by accident as the speculator who risks: a hundred pounds in shares he knows nothing about. We shall. see big businesses succeed yet, perhaps bigger businesses than any yet attempted, but that monopoly of business of which many dreamers have dreamed is as far off as ever. Omnipotence in the shape of capital and energy needs omniscience to guide it, in fact as well as in poetry, and omniscience is refused. There is far more energy and power in mankind than there is foresight, and when the latter is over-taxed, the former is of exceedinkly little- avail.
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