ABSTRACT
The close of the Crimean War gave a great impetus to trade and encouraged inflation. Credit freely bestowed, and speculation stimulated by an abundant harvest, left the market open to cold shivers. The outbreak of the Indian Mutiny was one, and the collapse of the railway mania in America, accompanied by the failure of New York banks, furnished another. There was an organised bear syndicate at work in the United States, holding meetings, circulating false reports, challenging the validity of securities, and generally spreading mistrust with a view to the precipitation of panic. In England the liability to swift disquietude had been magnified by a series of episodes characteristic of the time and of the comparative looseness with which financial affairs were conducted in an era when so much was fresh and experimental. Walter Watts, in 1850, had been tried for robbing the Globe Assurance office of the sum of £70,000. He had done it by manipulating the bankers’ pass-book. Those who saw the book stated that it presented a mass of erasures and alterations which ought at least to have excited suspicion if it had not at once led to detection. November, 1855, brought the revelation of the Dock Warrant frauds by Joseph Windle Cole and the still more unpleasant revelation that Overend, Gurney and Co., after they had discovered (in 1853) the fraudulent nature of the documents upon which Cole was raising money, had concealed the facts. 1 The episode, and contemporary 365discussion of it, went far to damage the prestige of the firm and to pave the way for the tragedy of 1866. But to return to the enumeration of the scandals of the “ fifties.” In 1856 the body of John Sadleir, M.P., a former Junior Lord of the Treasury, was discovered on Hamp-stead Heath. 1 Sadleir had poisoned himself. After his death it appeared that by a series of ingenious frauds he had robbed the Tipperary Bank of £200,000. It had to suspend payment. Sadleir had also issued forged shares to the extent of £150,000 in the Swedish Railway Company, as well as bogus title deeds, acceptances, and securities in all directions. As Sadleir had been Chairman of the London and County Bank these revelations created a huge sensation. Later in the year came the news of the manipulation of the share transfers of the Crystal Palace Company by which W. J. Robson had succeeded in adding £10,793 to the outstanding Preference shares and £17,230 to the issued Ordinary capital. The total frauds amounted to over £28,000. As it was impossible to cancel the transactions, these amounts had necessarily to be added to the outstanding capital of the company. Practically simultaneously with this affair an examination of the Great Northern share registers, at King’s Cross, disclosed the fact that during several years one of the clerks, Leopold Redpath, had succeeded in issuing forged stock to the amount of £220,000. The Attorney-General, who was consulted on the subject, gave his opinion that as the stock thus fraudulently created had become so blended with the rest of the company’s issues as to be indistinguishable, there was no possibility of apportioning the dividend to the genuine stock only. Consequently until the forged stock had been, so to speak, legitimised, no dividends could be paid. The whole of this forged stock had therefore to be added to the existing capital of the company 2 366of which it still, therefore, in 1915, forms a considerable part.
