H.M. Hyndman

Further Reminiscences

Chapter VIII
Of Business

BUSINESS is not supposed to be a very amusing occupation, but to anybody who can look upon things from the outside there is a good deal of quiet enjoyment to be got out of the ups and downs of finance and commerce. The imposing profundity of the City is at times exquisitely funny. It is scarcely too much to say that those who deal habitually with banking and money must be superficial. But nobody would believe it to look at them. Yet such superficiality is part of the stock-in-trade of a successful City man. If he saw more he would gain less. It is said, I believe, with truth, that, as a rule, a stockbroker who sees beyond the fortnightly settlement is a ruined man. That, of course, is an exaggeration, and there are stockbrokers, the late William Trotter of Capels, for one, who develop into capable financiers, and even permit themselves to reason about the current of events. But these are the exceptions. Bankers go up a step higher. But they, too, have the most ludicrous limitations, and not long ago Lord Avebury wrote to the Times to proclaim to the world as an incontestable truth that the interests of capital and labour are identical! So they are, from the point of view of Lombard Street, and all the bankers shall say “Amen.” Sharks and flying-fish come in the same category. In the course of a very long experience, however, I have only met two City men, and they had retired from active business, who really understood what was going on around them.

But in ordinary times this is only to say that bankers, bill-brokers, stockbrokers, stock-jobbers in the same way as merchants, shippers, shipowners, have no more necessity for knowing the basis of their business than a captain navigating a vessel is bound to be acquainted with the mathematical theory which underlies his logarithmic tables. He has his tables, he has his sextant, and rule of thumb does the rest for him. So with our City magnates, Semitic and Caucasian alike. They know the bank-rate, they know what bills are out, they can form a general idea of the aspect of foreign markets, and they can talk learnedly about the fluctuations of trade, the ups and downs of stocks, the necessity for caution, and a larger gold reserve; but of why there should be crises, what are the causes of “bad times” they are ignorant. It is enough for them that they take their little craft along on the old lines, and reef down early when the financial outlook forbodes a tornado.

I once wrote a book on the Commercial Crises of the Nineteenth Century, and the more carefully I studied the behaviour of “first-rate men of business,” in periods of real stress and strain, the more absurd it appeared to me. The City in a panic is even more silly than a crowd of hysterical suffragettes in a window-breaking fit. Any one who listened to the talk on the street, not to say in the solemn security of the bank parlour, would believe that the bottom was falling out of the universe of trade, for the time being at any rate, because gold had ceased to be a measure of value, a basis of credit, etc., and actually was demanded as a means of payment. The same thing occurs over and over again in ricketty markets like those of London or New York, and nobody seems to learn anything by the successive shocks. They are content, however, that in finance they come less often than they used to come. That is all.

If also you were to tell these manipulators of money, exchange, bills, and the like, that they were of small account to mankind, and that the world could get on very well without them, they would consider you fit for a lunatic asylum, which from their point of view you would be. My old friend Butler Johnstone, whose career was so sad an example of Carlyle’s phrase “character is destiny,” was once travelling up to the City from Brighton with some very important City folk. There was a heavy fog on the line, and the train became more and more behind its time. The plutocrats began to fidget. “This is a very serious thing indeed,” said one of them; “I shall miss several most important appointments.” “I really don’t know what to do,” said another; “ I have a meeting at my office to make the final arrangements for that big issue of ours on Monday, and delay now might imperil everything. The worst of it is, there is no way of getting into touch with my partners.” Every man in the car had something similar to say.

”Has it occurred to you, gentlemen,” said Butler Johnstone in his sweetest voice, “that it would make very little difference to anybody if none of you ever arrived at all? “ The idea had never presented itself to them, and two of them took the suggestion as a downright insult. But of all the useless encumbrancers of our anarchical society, I agree with Butler Johnstone, the day-to-day financier is the most useless. The old merchant-adventurer, and banker of the Gresham type, had something fine about him, though he, like his modern successor, promoted brigandage quite as much as he advanced commerce. But it would be difficult to find much to admire in the modern speculator, whose one ambition is to tumble his shares in any enterprise he may enter into upon “the general public” as quickly as may be. English banks vigorously aid this stock gamble. They do not help actual development either at home or abroad. They make their vast profits chiefly by advances upon bills and shares, thus fostering the less sound side of modern finance and increasing the natural tendency to get rich in a hurry. Not long ago one of the most important London banks lent its entire stock of gold to a great American speculator, and very nearly went bankrupt, in consequence, when the pinch came, good as the security was upon which the hypothecation was made. The majority of people are quite unaware that the actual gold “reserve” upon which we operate our financial and banking business is only 4 per cent of the total mass of superincumbent credit. Whenever things are really tight, the Bank of England has to go to Paris for relief, and the chief national security is now below 75.

I have watched the vagaries of business men in many parts of the world, and I could easily write a book upon the chances and changes of financial life, not the least interesting part of which would be the wonderful adventures of the millionaires of San Francisco during and after the great “boom” of the mines on the Comstock Lode. But some of the quite minor events made an equal impression on my mind.

When the New Zealand diggings were in the high tide of success, and men who were lucky could make a small fortune within a comparatively short time, by washing gold out of the alluvial goldbearing gravel, there came into being an organised gang of men who would go from one field to another and appropriate likely-looking claims that were being profitably worked by others. These marauders being chiefly Irishmen, they were called Tipperary Boys or shortly “Tips.” The goldfields were at that time under the autocratic control of Crown Commissioners who, although they had no immediately available force at their command to enforce their decisions, were as a rule implicitly obeyed. With the “Tips,” however, difficulties frequently arose. They refused to abide by the rulings of the Crown Commissioners, or evaded them in some way, and became the terror of the country.

It so chanced that in one district four industrious, sober Germans were making excellent wages at a claim of their own when the “Tips” came along, saw that the prospects were very favourable, and ordered the Germans out. As the “Tips” were numerous and armed, the Germans were obliged to give way, abandoned their claim, and went off for the time being elsewhere. One of them, however, took a trip down to the Crown Commissioner and told him what had happened. That functionary at once rode up to the claim and peremptorily ordered the “Tips” to clear out themselves. They did so, and the Germans were reinstalled before the Crown Commissioner left. No sooner was his back turned than the “Tips” again ousted the Germans and took possession, with many threats of what would befall the Teutons if they complained again. The latter, nevertheless, applied afresh to the Crown Commissioner, who told them plainly he could not possibly maintain them in their claim now, but he would take care they were rightly dealt with in the long run, and advised them in the meantime to work another claim. This they did.

Months rolled on and the whole force of the “Tips” was concentrated on the claim of the ill-used Germans, which proved to be much richer than could have been anticipated. In those days all gold won was sent down at intervals to bank by escort, and was credited in the books to the claim whence it came, stores, etc., necessary for the miners being sent up to camp and charged against the balance. After more than a year had gone by and the claim had been practically worked out, the “Tips” all returned to Dunedin to divide up the very large amount of gold they had remitted, and to have a good time together. They then found that every pennyweight of gold they had extracted from the claim, less the bare cost of their living, had been credited by express order of the Crown Commissioner to the four Germans whom they had dispossessed!

A more terrible case of revenge by a private individual occurred at the same time. He was a very successful prospector, and had discovered more than one rich gold deposit. As such men generally are, he was careless and free-handed, and consequently was frequently taken advantage of. But his last find had been exceptionally rich, and he had been undoubtedly cheated out of his fair share by the wealthy men who had been associated with him in his new claims. This he might have put up with under ordinary circumstances. Having now a wife and children, that changed his view of matters. He disappeared for some weeks. On his return it became known that he had been quite amazingly successful, and that a goldfield of unprecedented wealth had rewarded his search in the bush. Those who had previously benefited by his work soon heard of this and were anxious, of course, to be interested. He insisted this time that each should give him something substantial on account; and that only those who would engage themselves formally beforehand to put up considerable amounts for working capital should accompany the expedition. There was quite a rush of well-to-do speculators to share in the venture and go with the lucky prospector. Everything seemed quite sound and in good faith.

The expedition started, making for a district previously almost unexplored. Though the party was well equipped, and all were accustomed to rough travelling, it was most trying work. At last, when the whole party was thoroughly bushed, the prospector himself disappeared. It was found out afterwards he had made his way to another port on the coast, where he met his wife and children and shipped for America. His unfortunate victims straggled back to their base; but having relied entirely upon their guide, they underwent great hardships, from which some of them died. Nothing was ever heard of the vengeful prospector in New Zealand.

And the ups and downs of mining ventures are very strange. All the gamblings of Monte Carlo or other resorts of the wealthy punter are trifling as compared with what actually occurs in real life. This I say with confidence, though I myself was once present as a lad at the rouge-et-noir table at Wiesbaden, when a most extraordinary change of luck took place. The famous Spanish or Cuban gambler Garcia had been playing for some time against a run of abominably bad luck. He even appeared to be cleaned right out, and at any rate sent the lady who was with him for more funds. Then backing red for one coup to the utmost stake allowed, he followed up his luck and actually had a run of nineteen on the red in succession, always staking the full amount. He broke the bank of course; but as he had been playing very heavily they started afresh, and I saw the run completed. It was attended by a very amusing incident. As Garcia raked in rouleau after rouleau of gold wrapped up in nice white paper, he handed them all over to the lady spoken of, who in turn deposited them in a large bag she had with her. At last the weight of the accumulation of winnings became so great that the handle of the bag broke and all the rouleaux tumbled out upon the floor. Some of them broke asunder and scattered the coins about. A rush was made by the attendants, who picked up the money, and I don’t think Garcia lost any of it. If he did he said nothing about it. What became of Garcia afterwards I never heard. But it was reported that he was mixed up later in a tremendous gambling scandal in the Havana. The gambling tables at Wiesbaden have, of course, been closed for many years.

But, as I say, all that I have ever seen or heard of as happening at gaming tables, and I have myself witnessed some very queer occurrences at Faro out West, do not equal the astonishing ups and downs of business. Here is one of them which I saw much too close to be pleasant. I had become intimate, through my friend Butler Johnstone, with a large and successful firm of stockbrokers and financiers in the City. The business had been built up by a retired colonel whose character for great uprightness and shrewdness combined had secured for him a most enviable connection from which he and his successors derived a large income. Mr. Montmorency, the head of the firm at the time I speak of, was regarded as a capable successor of his uncle, and had fully maintained the position to which he had succeeded, extending largely the scope of its affairs. What that position was may be gathered from the following facts. I was negotiating on behalf of my friend Mr. Montmorency and his firm through another very old friend of mine, the late Mr. W.A. Stevens of New York, for the purchase of one-half of the great Ontario Mine of Utah, which belonged then to Messrs. Haggin & Tevis (proprietors of Messrs. Wells, Fargo & Co., the well-known transport agents and bankers). It was a very large business indeed of its kind, in the days before the South African mining development had dwarfed everything else of a mining character on the London market. The whole transaction seemed to be a good, sound, and favourable one, as the mine itself was returning large dividends, and I believe does so still, more than thirty years later. The intention was to have active dealings in the shares at a fair premium, both in London and New York.

So it happened that one day as we walked down Old Broad Street, Stevens said: “This is such a very important business that though of course I know all about you, Hyndman, and I have every reason to believe your friends are all right, if you don’t mind I will just run in here – 22 Old Broad Street, it was – and ask my old friend Junius Morgan about them. Come in with me.” In we went, and Mr. Stevens was very shortly ushered into the presence of the head of the house of J.S. Morgan & Co., who received him very cordially and asked what he could do for a man with whom he was evidently on very intimate terms. “The fact is, Morgan,” said Stevens, “I have got a very important transaction with some friends of Mr. Hyndman’s to purchase half the Ontario Mine, in which I have an interest, from Haggin & Tevis, and I have looked in to ask you, in Mr. Hyndman’s presence, what you know about them.” “As it happens,” answered the old gentleman, “I know a great deal about them, and I don’t mind telling you as an old friend that when last I went over to the other side, the matter of the Cairo and Vincennes Railway being in a very ticklish condition, I entrusted the management of this end of that business to the head of the firm you name. I think that ought to be enough for you.”

It was quite enough, and after a few friendly words, Mr. Morgan asking Stevens where he was staying and so on, we went on. Of course nothing could have been more satisfactory, as Mr. Junius Morgan deservedly had the credit of being one of the most cautious, able, and successful financiers in the world at that time. Stevens expressed his pleasure and we parted. But that was not the end of it. My wife and I dined with Mr. and Mrs. Stevens that evening at Brown’s Hotel in Albemarle Street. In the middle of dinner a messenger was announced who insisted upon delivering his communication to Mr. Stevens himself, though no answer was required. He was shown in, delivered the letter, and went. Stevens opened it, read it, and handed it to me without a word. It was from Junius Morgan himself, was marked “personal,” and after reference to some private matters it more than confirmed what he had said about Montmorency & Co. earlier in the day. “That is extremely kind of Morgan,” said Stevens, “and I should think it must be very gratifying to you.” Within eighteen months that firm, in which a man like Junius Morgan had such complete confidence, failed for £300,000.

It was quite a dramatic collapse and contained some very exciting incidents. Among them was this: My friend’s firm was acting at the time as brokers for the Lyons Branch of the “Union Générale.” This was the great Catholic Bank set on foot by M. Bontoux, with the help of M. Jean Feder and others, in order to make head against the still greater Jew bankers and their connections. At first the combination was very successful, and one of the principal Jews in Paris, who had thought proper to “bear” all M. Bontoux’s securities, was caught in the rise, and, being unable to meet his engagements, he adopted the Chinese remedy against insolvency and committed suicide. Catholic up: Jew down.

But this was only the first round in the financial “fight to a finish.” The Jews were determined to have their revenge. Bontoux’s own incredible imprudence gave it them; for I have never been able to see why the French Catholic community, which is immensely rich, far richer than probably all the other religionists in Europe put together, should not have been able to hold its own in legitimate financial and investment business against all the Jews and their descendants who ever came out of Palestine. By a curious accident I got later the most correct information possible as to what was in contemplation on the Hebrew side. Some years before I had been able to save a very powerful Parisian Jew from serious unpleasantness, in a matter quite outside of finance, and had got to know him pretty well in consequence. He was always trying to show me in some way he had not forgotten this. He thought now he had an opportunity of doing me a great service. My wife and I had been staying in Paris in company with some friends just at the period when the struggle between the Union Générale and the Jews and their allies was at its height.

I was called back to London on important business and came over, leaving my wife with our friends at the Hôtel Continental with the full intention of returning to Paris in three or four days. On the second day, to my astonishment, I got a telegram at home from my wife in the morning, telling me to meet her at Charing Cross Station by the mail arriving at 7 o’clock. I was astonished at the telegram, and still more surprised when I heard the reason of this sudden change of plan. I soon learnt. It appeared that that morning my Jew friend, who thought I was still in Paris, had called at the hotel on very particular business, which, when he learnt I was absent, he would only communicate in private to my wife, and having done so begged her to leave at once for London, as the information he had given her could only be passed on safely by word of mouth. What he said was that the Jew combination had finally decided to break the Union Générale at the next Wednesday monthly settlement, and that all arrangements were made to that end. “I know,” he added, “that Mr. Hyndman never speculates in shares himself, but those with whom he is associated do, and they are engaged in operating for one of M. Bontoux’s branches at the present time. They will know what I tell you can be absolutely relied upon when Mr. Hyndman gives my name, which he is perfectly at liberty to do.”

This my wife told me as we went home from the station, and after dinner we drove down to Rutland Gate, found my friend, and I told him the news. Although he admitted the banker was not at all likely to be mistaken, and was still less likely to deceive me, when the great rush came his firm, instead of having won a large sum of money, actually lost by neglecting to act on this very early and absolutely correct information. When I told my Paris friend what had occurred, all he said was, “The man is mad; draw clear of him as soon as you can.” And mad he undoubtedly was.

This was made apparent very shortly afterwards when he began to plunge here, there, and everywhere in all sorts of wild schemes, and thus brought himself and his firm completely to grief. Then he forged under circumstances which made discovery sooner or later practically certain. Last of all, he somehow got himself arrested in the country, just before his forgeries were found out, on a matter of £800. Sir George Lewis, who was a very close friend of his, went down, paid the money, and hustled him off full speed to port with the words, “There is only one safe country for you – Mexico.” Thither he went.

But that is not the end of the story either. Mr. Montmorency had a very attractive wife, previously divorced on her own motion from an old Trinity friend of mine, who had succeeded to a peerage. With her husband Mr. Montmorency finally expatriated to the realm of Diaz, and herself reduced to practical widowhood in London, this lady’s position with three or four children left a good deal to desire. Circumstances became still more trying when a man of good family and standing was anxious to marry her, not being aware of the fact that husband number two was still living. What was to be done? Nobody knew where Montmorency had gone, beyond that he had sought privacy and oblivion in one of the Spanish American States which had no Extradition Treaty with Great Britain. Then it became known that he had chosen Mexico as his place of retirement, or Mexico had chosen him. But Mexico is a large country, less well known in the early eighties than it is today.

Then came the unexpected, or deliberate and well-contrived, discovery. A well-known Englishman was riding towards one of the rich but out-of-the-way mining camps with which Mexico abounds, when he came across another traveller riding in the same direction. The newcomer entered into conversation with his chance companion, became more or less friendly with him, and learned that after a series of adventures, scarcely agreeable to a man who had been living a most luxurious life at home, he was now foreman of one of the mines in the camp towards which they were bound.

Further intercourse made them more friendly still, and certain questions asked by this chance acquaintance led the Englishman to believe the person with whom he was talking was himself a fellowcountryman, well acquainted with the world and pretty deeply versed in finance. On his return he heard of the search being made for Mr. Montmorency, and came to the conclusion that the man he had met in Mexico was that person. But this brought the much-married and disconsolate spouse no nearer to her third nuptials than before, inasmuch that, married to Montmorency as she undoubtedly was, his wife she still must be, and nothing but death or divorce could unmake they twain from being one flesh.

Divorce, which Montmorency might agree to, was thought to be preferable to suggesting suicide, which would not be so calmly viewed on the other side. But according to the account of the returned traveller the way to divorce had not been made plain for the deserted dame. There was no woman on the foreman’s premises, nor any of that sex with whom he was at all likely to cohabit within hail. But this was quite a minor difficulty to overcome, and overcome it was. A Commission was sent out; it was discovered and sworn to that the illustrious levanter was living in open profligacy with an attractive negress; proceedings for divorce were forthwith instituted, a substantial sum found a receiver in Mexico, and Mrs. Montmorency ere long figured forth before the world as – but what am I about to say? I came face to face with the lady years afterwards in a London drawing-room. There was no anxiety to renew the acquaintance on either side.

But when one begins to write about things of this sort it is difficult to know where to stop. Thus the reference to Mexico suggests to my mind the rich San Gertrudis Silver Mine. My old friend Alfred Renshaw, the solicitor, had a good deal to do with Mexico. One day he was offered three “bars,” or one-eighth of the twenty-four “bars” into which Mexican mines owned on the spot are divided, for a few thousand pounds. Renshaw was quite able to command that sum, but he had been unlucky in mining and declined. Thereupon his friend and companion, one Gould, asked him if he had any objection to Gould himself making the purchase. Renshaw said certainly not. Gould completed the deal, and Renshaw told me it had returned his friend annually several times the sum he paid for the purchase.

I had more than one experience myself on the other side. But as showing how easy it is to be mistaken even with the best advice, and after taking every precaution, the two following incidents suffice. I was interested with the man above referred to in the Broadway Mine. The mine was examined and reported upon by Mr. Plummer, the best expert of the great firm of Messrs. John Taylor & Sons. He sent home a perfectly honest and most satisfactory report. The shares went to a high premium, but I would not sell. Suddenly we learned that the lode had pinched quite out, and the shares were unsaleable. The mine was very foolishly given up without further proper exploration, and certainly Plummer had made a mistake. But others had more confidence, the vein was rediscovered, and people on the spot made a great and permanent success of it.

But I shall never forget the Miner’s Dream. That was in Western Australia. Everybody believed the Dream would materialise into wealth beyond the dreams even of a miner. Reports excellent, assays most encouraging, vein traced the full length of the claims. I had quite a large block of shares. I actually went into Court to prevent the fulfilment of an agreement by which I was obliged, as it was contended, to sell them at par, which I was forced to do. All the clever men in the venture were of the same mind as myself. Six months later the shares were not worth threepence a piece.

So it goes. And then Garcia’s run of nineteen on the red has its parallel on the other side in practical everyday matters. Those who say there is no luck in affairs know nothing about life. There was my friend the late Colonel Church, for example, the American engineer and contractor, as able and thorough and persistent a man in his business as ever was. After he lost his case in regard to the Bolivia Railway Loan in 1871, he could not do anything right for some fifteen years. That case alone was a remarkable instance of bad luck or worse. The late Lord Justice Cotton was one of Church’s counsel in the first trial, which Church won. He was raised to the Bench, and the cause came before him for trial on appeal. Church won again, Cotton being one of the majority of judges in his favour. There was a further appeal to the House of Lords, and by the time the trial came on Cotton was a Law Lord.

It seems incredible, but it is the fact that Church lost on this final hearing by the voice of one judge, and that judge was Cotton! One of the counsel opposed to Church, who had been in the case throughout, and knew the whole of it from end to end in every detail, as perhaps nobody else did except Church himself, told me that he was confident there had been a very gross miscarriage of justice, and that Cotton’s decision was quite inexplicable to everybody who was behind the scenes. Church had, as he phrased it, “fought the case down to the nails in his office carpet,” and it ruined him for the time being. More serious in its ultimate result from the capitalist point of view, Church’s great scheme for opening up the head waters of the Amazon by rail, connecting with steamers below the great rapids, was not carried out, and the development of Bolivia was thrown back more than forty years.

Well, after the loss of this case, Church, as I say, could do nothing right. Either there was a revolution, or a plague, or an earthquake to put a stop to his plans, and with all his ability and assiduity he began to be reckoned an unlucky man. One of the failures was quite extraordinary. Church had obtained from the Emperor of Brazil and his Government a railway concession which it would have taken £8,000,000 to finance. The bonds were guaranteed, and Church had placed half of them in London, with the assurance that the remaining £4,000,000 would be taken in Paris. Just when everything had been arranged, the revolution broke out in Brazil, Don Pedro was deported, and the Republic did not renew the concession, which would have been a success in a few weeks more when the final contracts were passed. Something similar, though not on quite so large a scale, occurred owing to a revolution breaking out in another South American State. So it went on, until, for no obvious reason, the tide turned, and Church died a fairly wealthy man. One thing he said which sticks in my memory. He had taken a prolonged tour through Asia Minor, visiting nearly all the places of interest. On his return we dined with him at his flat in Cromwell Road, and I asked him what struck him most in all his wanderings. “Imperator Hadrianus fecit” he replied. Church was a really good geographer, and the only foreigner, I believe, who was ever on the Council of the Royal Geographical Society.

One other recollection of bad luck. A friend who had had a long period of dull times in his business sold a property to great advantage to himself, but still cheap to the buyer, a Mr. M‘Ilwraith, for £60,000. Everything was agreed, and the parties met at the offices of the buyers’ solicitors to complete the transaction. The deeds were all ready, the first cheque drawn, and no difficulty whatever could have arisen, when Mr. M‘Ilwraith seated himself at the table to sign the documents. He had just taken up the pen when he fell forward dead, and the whole transaction fell dead with him.

My earliest lessons in finance, in which, for various reasons, I have personally never been very successful, were learnt from Samuel Laing, who was Finance Minister of India and Chairman of the London and Brighton Railway, also one of the most successful popularisers of scientific discovery of his time, as in Human Origins, etc. His eldest son was an intimate of mine at Trinity, and the year after I had taken my degree he suggested that we should go together to Paris, as his father had important business there, and we might have a good time, while Samuel Laing senior devoted himself to finance. I have always been ready to go to Paris since I was sixteen, and I am now almost equally ready to travel thither at seventy, so I fell in readily with the suggestion, and we started in company, all staying at the same hotel. This was in 1865, just when the Credit Lyonnais was established, and financial affairs in Paris were on a very different footing from that on which they stand today.

Sammy Laing and myself enjoyed ourselves immensely, and as I knew the city and its surroundings pretty well even then, having first made its acquaintance in 1858, and had kept it up, we had an exceptionally good time. But I became interested in Mr. Laing’s financial business too. This had to do with the Ottoman Loan, which he then had in hand, and of which he was arranging a large portion in Paris. The details have now no interest, but when the negotiations were taking the shape of a definite contract I wished to be present at the finish. This was agreed to, and Sammy and I assisted at the deliberations. At last all was settled as to the terms, date, and amount of the French subscriptions, and the documents drawn, with notaries present, only awaiting signature by the representatives of the various groups. “You will now sign, gentlemen,” said Mr. Laing. “Monsieur ――” – I have forgotten the man’s name – “will sign on behalf of all of us,” said the most important personage of the contracting groups. “Certainly,” was Laing’s reply, “if all you gentlemen will put your initials after him on the part of your respective institutions.”

At this these reverend, grave, and potent signors of finance drew back, saying that was not the arrangement they had made. “In that case,” was Mr. Laing’s rejoinder, “I am afraid the business must await completion until you have obtained the necessary authority.” Out they all trooped from the sitting-room of our hotel, and when they had gone I turned to Mr. Laing and asked him why he would not accept the signature of the gentleman whom the other bankers had put forward. “Well, you see, he is a rich man, and I am quite ready to believe an honourable man, and, if everything went even fairly right, I am disposed to think that he and the rest of them would act up to their bargain; but we are dealing with millions sterling, and should there chance to be a failure to subscribe on the part of the public, Monsieur So-and-so might possibly be travelling for health or pleasure in the less accessible parts of South America. So I preferred to get them each and all formally bound. They will all sign. This is only a little play.” But we had another full week in Paris before the matter was properly settled, and then we all left.

I do not think I should have recalled this but for the remarkable sequel. I was at breakfast in my rooms at 25 Bury Street, St. James’s, when one morning young Samuel Laing rushed in, evidently much upset. The first words he said were, “Things look like going very badly with the Ottoman Loan, and I have had an awful shock.” I took no personal interest at the time in financial matters, and had not noticed whether the markets were up or down. “What is the matter?” I asked. “Coming up from Brighton this morning, only half an hour ago, my father tried to throw himself out of the carriage as we came through the Merstham Tunnel.” “You ought not to have told that even to me,” I said. “If it were repeated in the City, or even hinted at, that would settle the business.” I refused to talk of the matter any more, and after Sammy had sat long enough to recover himself, I persuaded him to go to his Clubs looking particularly jubilant. Whether this incident with his father really occurred, or whether my friend, wrought up by anxiety, only imagined it, I have never been able to decide; but certainly Samuel Laing père was about the very last man I should have thought likely to commit suicide on any account. Any way, things took a turn for the better, and Mr. Laing made a personal profit of £179,000 that year, as I had an opportunity of knowing. He lived to nearly ninety, and kept his intellectual vigour to the last.

Among other persons who interested me in the City were Hume Webster and Baron Grant. Ordinary, respectable city men, who go through life in the odour of sanctity and of a big balance at the bank, are not interesting at all, or, if they are, develop their attractions outside their moneygetting avocations. But the adventurer, the man who starts at the bottom, and by hook or by crook gets himself up to the top, or nearly so, and then tumbles down to the bottom, or nearly so, is quite a pleasant study. Of course there are adventurers who always adventure prudently, or are believed to have done so when they succeed. They are like a man who really should possess a winning martingale for Monte Carlo. They have reduced legal conveyance to their own use to such a certainty that winning ceases to be a matter of chance at all. Beginning as office boys, they go over to the majority as millionaires; having become Members of Parliament, Privy Councillors, Baronets, and Peers, as well as Chairmen of Banks, Insurance Offices, and great Combines in the meantime. I have met many such people, and I have found them a very wearyful folk. Samuel Laings are quite the exception among them.

But the two I name above were worthy of study. The second was quite the type of the up-and-down promoter of the same kind as Whitaker Wright and Hooley: men who are courted when successful and denounced as rogues when they fail. Quite a poor lad of Jewish origin when he came to London, he became a person of considerable importance for a time. I knew him at the height of his fame and after his collapse. When I first met him he had just acquired, beautified and presented to the citizens of London, at a cost of ££30,000, Leicester Square. Those who, like myself, remember what Leicester Square was after the hideous Globe had been removed, and what a Golgotha in the very centre of London it became, will certainly, even now, have some feeling of gratitude towards the get-rich-quick Baron.

It was the best piece of public service performed for London by an individual rich man in my day. I only wish a few of the disreputable millionaires who have dumped themselves upon us from South Africa had a little of Grant’s readiness to expend some portion of their gains in removing a few of the eyesores still too common in our metropolis. Grant struck me as a brilliantly superficial but by no means as a thorough or a tenacious man of finance – at the inception of a business full of bright receptivity and optimistic zeal, and this lasted to the end if the venture went through with a run; but should serious difficulties arise, he showed himself by no means so capable.

Yet there was a time when Baron Grant was regarded as a really potent City magnate, and when he could certainly have realised upwards of a million sterling in hard cash. Moving into Lombard Street, and starting a bank without any deposit connection, building a magnificent edifice at Kensington, the late Sir James Knowles being its architect, with the finest staircase in London, and no bedroom accommodation for servants, Grant had persuaded himself that he would dominate the City himself, and hand on to his successors an imperishable name as the greatest financier of the nineteenth century. These grandiose aspirations he made no secret of, and so confident was he that when the one man whom he trusted gave him a hint that he had better secure his present position and wait a little, he threatened to break his head, as he was at the moment breaking a lump of coal with the poker. Shortly afterwards the collapse came. He became a man of comparatively small account, and as he had been treacherous even to his friends, nobody regretted either his downfall or his death.

Hume Webster never achieved the temporary eminence of Grant, though he was an abler man. I only mention him because he was also smitten in his way with that mania for grandeur, as the French call it, which afflicts so many others. He would probably have succeeded, if he had not had political ambitions, in addition to an expensive wife and an extensive stud farm. But Webster was a relative of the well-known Radical economist Joseph Hume, and he was so confident that the political mantle of this parsimonious Scotchman had fallen upon his shoulders that the House of Commons possessed what proved to be for him a fatal fascination. I knew Webster pretty well, and in the only transaction I ever had with him, a sound and a profitable one, he behaved quite straight-forwardly throughout.

When, therefore, he told me he had made up his mind to contest South-West Ham, the seat afterwards won by Keir Hardie and now held by Will Thorne, I told him I thought he had better look elsewhere, as the Labour people might probably take the constituency themselves. If, however, he was determined to go forward, there were two courses open to him: the first, to spend very little money, but to have a thoroughgoing social programme, and stick to it; the second, to spend any amount of money, and just buy the seat by the expenditure of cash and the acquisition of personal popularity. He chose the latter course, and it finished him, not he it. His hand was always in his pocket for ready money, and there were plenty of earnest supporters eager to relieve him of it; he was also constantly obliged to go down and speak and confer, and waste time as well as money.

As a consequence, he deprived himself alike of the “immediate money “ needed in his business, and of the freshness and vigour of mind that was even more indispensable. Thousands of pounds were spent to no good purpose for himself or anybody else. 1 saw and heard how things were going, and urged him seriously to give the thing up. It was of no use, I told him, to fight in this way, and he was being betrayed by the very men he was paying and trusting. Besides, the people saw that he only wanted to put “M.P.” after his name for financial purposes, and, for once, this unwholesome aspiration did not commend itself to the electors, even with fat cheques to back it. Now too his affairs began to get into a mess, he took to forgery as a last resource, and wound up by suicide at Marden Park, his breeding establishment.

What I have never been able to understand is why the Barings should not have been allowed to go the way of Grant and Webster, of Whitaker Wright, Hooley, Balfour, and Co. They had been just as foolish, if possibly more honest, than this collapsing quartette, but had not the Bank of England rushed to their assistance the bankruptcy of Messrs. Barings would have been as sensational a breakdown as the world of finance has ever witnessed. The head of the house, Lord Revelstoke, completely lost his head, and under the benign influence of a peripatetic Yankee drugseller who had made his pile, plunged in Argentine issues like a raw youth gambling for the first time at Monte Carlo. All the shrewd men in the City knew the crash was coming, but most of them, with that strange sort of self-deception which prevails at such periods of premonitory panic, shut their eyes to the signs of the times. I have commented at some length on the whole affair in my Commercial Crises.

Each smart punter thought he would hang on as long as possible and still be able to get out in good time. The cleverer had advised their correspondents in Buenos Aires not to take any more of the Barings’ bills months before. Some others had reefed down carefully to make ready for the approaching storm. But the great majority of business men still hoped trouble would be averted. The catastrophe, however, came soon enough, and it was quite interesting and even amusing, though entirely by my own fault I was one of the sufferers, to watch the hopeless imbecility and Headlong hurry-scurry of the great City men. I saw it all very close. Not only was I myself a shareholder in an important Buenos Aires Tramway, but my friend Colonel Church had himself issued shortly before the bonds of the Villa Maria and Rufino Railway, which, brought out by the Murrietas, had been subscribed eleven times over. The Barings fostered all the wild and dangerous speculation to the full extent of what was possible, made out of the scramble while it lasted huge profits, and were more to blame than anybody else for the final smash. The Murrietas, who also came to grief at this juncture, were certainly less responsible for the downfall than their rivals, and were really better people in every way. But to allow the house of Baring to founder was actually thought, by some singular process of reasoning, to be a national disgrace, and their complete ruin would be followed, so certain wiseacres argued who had objects of their own to serve, by a collapse of the whole system of English credit and finance, and would transfer the centre of the world’s business to some foreign capital.

Crocodile tears of the most acrid description were shed in waterfalls at the supposed imminence of such a calamity. The Government, the Directors of the Bank of England, and the leaders of the City, all with one accord resolved to save incompetence from its due reward, and to put a premium on high-placed imbecility. Mr. Lidderdale, the Governor of the Bank, was belauded as a hero for his services at other people’s expense, and was joined unto the Privy Council of this Realm by reason of his far-sighted support of financial rottenness.

When, as a humble student of finance and economics of quite another school, I poked fun at all this false and fatuous bolstering up of financial and intellectual weakness, and predicted that the geniuses of the City would have a Pelion upon Ossa of worthless paper hanging upon all the markets for years, as the result of this silly business – which, as a matter of fact, is precisely what befell – I was told not only that I was ignorant of practical affairs, but a few other things that might be expected to occur to angry men who had a very shrewd suspicion that I was right, at the bottom of their minds, all the time. The Baring crisis is now generally referred to as the worst example of how not to deal with bankruptcy in high finance.

There are two things to be noted in English upper-class life during the past twenty years: the growth of the influence of Catholics in “society,” and the increase of the domination of German Jews in finance. When I first knew the City, Englishmen could and did still hold their own in nearly all departments. Now the prominence of the foreigner, and especially of the Israelite, is very marked. Why is this? I don’t believe the Jew is the universal genius which his press makes him out to be. Personally, I am not at all afraid to meet him at anything, and I am only a fair specimen of my educated countrymen. What, then, is lacking? I tell a little story of what occurred not many years ago to myself which will, perhaps, explain it in part.

After one of my pleasing failures at Burnley, three important City men, two of whom are since dead, called to see me and wanted me to take control of a powerful syndicate they were starting. The terms offered were very good; the argument adduced, that, by this time, I must have had enough of honest and independent politics, was in the ordinary way of the world conclusive; the stipulation that I should withdraw from vehement exposition of Socialism was only reasonable, regard being had to what I was undertaking, and so on. I said quite plainly that I did not think it was possible for me to give up the work of my life, much as I felt flattered by their proposal, and foolish as such refusal might be to them; but that it seemed to me there were plenty of much younger Englishmen than myself who would jump at this chance of associating themselves intimately with such a powerful group. “That,” said the oldest of the three, “is just precisely what there are not, or we should not be here.” “What is the difficulty?” I asked. “We want a man of good financial experience; we want an Englishman whom we can trust as one of ourselves; we want somebody who can speak and read the languages, who won’t take interminable weekends, and who will refuse all outside commissions.” I could not enter into the agreement, on account of the political stipulation, but my friends did not get the sort of Englishman they were on the look-out for.

Golfing and weekends have a lot to answer for.

Last updated on 1.11.2007