OVEREND, GURNEY, AND CO.
WE do not wonder, either at the deep pity felt by some men for the defendants in this trial, or at the roar of applause with which the news of their committal was received. It is hard, while human nature remains as it is, not to feel for men who, having risen so high, have fallen so far ; and as hard not to enter into the satisfaction of the crowd on hearing that the law was strong enough to compel inquiry into the causes of the greatest commercial ruin wrought in our days, to demand proof that this ruin was not due to fraudulent design. That is the effect of the committal, and we cannot, we confess, see how just and shrewd magistrates could come, on the evidence before them, to any other decision. Of course, any definite opinion as to the guilt or innocence of any of the accused would still be grossly premature. Not one witness has been examined on behalf of the defendants, their case has never even been thoroughly examined ; Mr. Rennie's defence, for example, being indefinitely better than that put forward by Serjeant Ballantine ; and some parts of the story are still involved in almost unintelligible obscurity. Still the facts as presented in Court were of the kind which renders legal examination imperative. As we read the evidence, which is throughout only prosecutors' evidence, Overend, Gurney, and Co. were, up to 1858, or thereabouts, doing an enormous business in discounts, turning over £76,000,000 a year, and earning from £180,000 to £250,000 or so of profit. Either because this profit had begun to decline, or from greed, or from ill-advice, they were induced to add to their proper business enormous " financing " operations, advances to contractors, to ironworks, to steam companies, to all manner of "dangerous" speculations, which they were often compelled to carry on for themselves. They seem, indeed, to ordinary men to have pitched money into the sea, advancing colossal sums to wretched concerns engaged in businesses of which the firm, as a whole, knew and -could know nothing whatever. The Milwall Iron Company got half a million, the Atlantic and Royal Mail Company three -quarters of a million, the Greek and Oriental Steam Company £144,000, It was ask and have for some time, the firm relying apparently on a Mr. Edwards, an official assignee, who by his own account can remember nothing except that he took deuceurs pretty much all round, and finished by demanding £20,000 from them, which be received. He seems to have advised on loans on their behalf for enormous pay, and to have taken money from the loanees at one and the same time. Whether through his conduct or other causes, the great firm found itself, as it affirms, embarrassed by a rash "lock-up," or, as its accusers affirm, hopelessly insolvent. It had, at all events, liabilities variously estimated at from £3,000,000 to 14,000,000, deposits were being withdrawn rapidly, and a tremendous crash began to seem inevitable.
The clear duty of the partners in the firm at this moment was to have met that crash, surrendered their great properties, and arranged matters with their creditors. Had they done this, men would, indeed, have wondered at the astounding folly of men so experienced in business throwing away their money in such speculations; but their names would have begn unstained, and capital would have been forthcoming to enable them to regain a position. Instead of this, they—moved, perhaps, in some degree by genuine consideration for their own depositors, whom, be it remembered, they saved from loss—resolved to sell their business to a Company, which should bring in a new capital of £5,000,000. They did so sell it, and it is here that the question of their intent begins. It is certain that if they had published to the world the precise facts of their position they would never have got a penny. This they themselves probably do not question, certainly their counsel did not • but they contend that their estates were so large, their credit or good-will so valuable, and their legitimate busi
ness so immensely profitable, that it was still reasonable to think that all losses might be met and the new Company still flourish. A deed was, therefore, drawn up, under which the old firm were to pay or guarantee all liabilities outstanding. and the new Company, as we understand the evidence,—which as yet is prosecutors' evidence,—were to carry on the legitimate discount business. The distinction between the two is thus drawn in a letter from Mr. John Henry Gurney to Mr. Rennie, on July 5, 1865. "During the four succeeding years [after 1860] we made no divisions of profits, having reserved the entire earnings of the business during those years against losses which ensued from various transactions by way of investment, loan, or discount, which were entirely extraneous to the legitimate concern of our business, but upon which we unadvisedly entered. These transactions were connected with various advances made to companies and firms engaged in the shipping, shipbuilding, and timber trades. They also comprised loans made to railway contractors, as well as advances to a late West Indian firm, against bills drawn in connection with their colonial estates. Excluding for the present calculation the losses sustained from exceptional transactions of this character, and from business apart from the legitimate discount business of our firm, we consider that"— &c. This arrangement under the first deed would have probably resulted as affairs went in the bankruptcy of the old partners, but not necessarily in the bankruptcy of the new, and had this arrangement been carried out, no objection could have been raised except as to the moral wrong of taking shareholders' money without informing them of the whole truth. But the arrangement, according to the prosecutors, was not carried out. Instead of it, a second deed was prepared, by which, as the prosecutors allege, the liabilities of the old Company were transferred to the new, and the guarantee for their payment became, in fact, a debt from the old partners. This transfer involved the new Company in the old liabilities ; they lost, it is said, 13,400,000 in eight months ; the securities proved worse than they expected, some of the doubtful debts were utterly bad debts, and the total result was a deficit of three millions, which the unfortunate shareholders, who thought they were buying a discount business, with a completely protected "lock-up," have had to pay. The grand point, therefore, for inquiry is whether the second deed could have been honestly prepared, could have been intended for any purpose except to relieve the old firm at the expense of the shareholders in the new. Mr. Rennie, in his extraordinarily able defence, denies point-blank that the second deed, which was drawn by the same conveyancer as the first, differed in any essential from the first, that the bad debts were ever calculated, except at a minute price ; and that the "excepted accounts" were ever placed in the books of the new firm, and attributes the whole loss to the withdrawals caused by the panic which followed the sale of the partners' private estates. If he can prove that, the position of all concerned will doubtless be immensely improved, but it is this very point which so urgently demands the investigation now ordered. The prosecutors' suggestion is, that while one deed of association, the only one seen by shareholders, left the new Company with no liabilities other than those they might incur, the now deed, which was secret, put the liabilities of the old firm on them secured only by the Gurneys' guarantee. And this allegation is supported by the fact that the new shareholders lost three millions, which they could hardly have done had that business been ordinary discount. There is not a doubt that the capital of the new Company was subscribed under an impression that it was to be used in discount business, not in paying Overend Gurneys' old debts. There is not a doubt that some of it was used to pay them, and the point is, whether that false impression was not designedly raised to benefit the Gurneys. That is a point for a jury, upon which no one can have a right to an opinion until the witnesses for the defence have been heard, and every kind of document connected with the case has been published ; and the magistrates, in sending it before a jury, seem to us to have done the only thing that on the prima fade case produced they could do. To say, as some journals are saying, that defendants are innocent, or as many private people are saying, that they are guilty, is equally wrong and absurd. Defendana zeitne.ws have not met been heard, and till they have been, the only just judgment is, that there is a sufficient pl laid fade case to go to a jury. That is the magistrates' decision.
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