chievous rule of law is about to reconstitute itself), has issued a statement remarkable for its clearness and particularity, and which will enable any one who wants to know to form a much better notion of the business of credit companies than any preceding materials made possible. "The general result of the study of this document we believe will be that finance companies, though far from fulfilling the exaggerated conceptions of two years since, have still a legitimate place and purpose, and can still, upon fair grounds, make good dividends—a conclusion which, from the natural reaction of the human mind and the change in circumstances, is now in doubt. The most favourable point in the statement of the General Credit Company is that its liabilities to the public are very small. The present claims on it are described thus: "And in addition to this there are some contingent liabilities, but even these are of manageable and inferior amount, and will, if acted on, increase the assets of the company to a very considerable, if not to an equal, extent. They are1st, calls on shares held by the company, amounting to 44,2257., only half of which the directors consider to be imminent for some years; 2ndly, a covenant to lend 118,500l. on the shares of an English railway, with an undoubted personal' guarantee; 3rdly, a promise to lend to a foreign Government, which may or may not amount to an investment of 45,000l. in the stock of that country. These liabilities, whether present or future, are, when compared with many which we have recently had explained to us, decidedly very small. "On the other hand, the assets of the company are very considerable. The directors give the following list : 1. Cash at bankers 2. Consols, 30,000l. : 3. Lent on Stock Exchange to 15th November 4. Consignment of gold to Egypt for immediate returns £ 137,618 26,818 48,480 20,101 Ditto Ditto Ditto 11. Calls in arrear................. 12. Loans secured by acceptances of borrowers and collateral securities, maturing within 3 months... 30,265 254,713 31,500 70,000 160,050 5,319 151,300 2,041,100 "This table is most instructive, as showing the sort of business in which the company have been engaged, which, though in a certain sense so far well known that it is matter of floating assertion and recognised belief in Lombard Street, was, nevertheless, incapable of proof and wholly unattested by evidence. Even now the nature of the collateral securities by which the borrowers' acceptances are secured is altogether unknown, and other points of necessarily imperfect information might easily be given. Generally the result is this, that the Credit Company have invested their money in what may be called the 'exceptional' securities of Lombard Street, There is a vast deal of business which does not exactly come under banking business, or discount business or any other common head. The best banker or the best bill broker is in the habit of saying, 'This security looks queer. I do not say it is queer, but it has a complexity about it. It is not my business to examine complexities; on the contrary, it would be fatal to me if I began to examine them. My whole mind is taken up in dealing with a common, plain business. If I began difficult research, it would land me in the Gazette. But still there ought to be some persons who will undertake to examine securities which are really good, though out of course and odd-looking, and a finance company which really does this, and does this well, has (though it is in the change of opinion almost unpopular to say so) its proper place and its useful function in our money market. "We cannot, indeed, at all undertake to say whether the General Credit Company has properly invested its money; there are no materials before us which are sufficient to enable us to judge. We can only say that there are securities which such a company might profitably select, if only it were skilful enough to select them, and no others. But we do not think that those who originally began the business comprehended its limitations. They divided large profits. But it must be evident to every one that occasionally such a company must make large losses. This is most fully and candidly admitted by the directors of the General Credit Company. They say that No. 16 loans to a foreign railway company overdue are in an unsatisfactory state,' and other losses they consider possible, but they believe that their reserve fund of 175,000l. will cover all these losses, or nearly so; and that their capital of 1,600,000l. may be considered intact. Yet even so we scarcely consider the dividend of 15 per cent. which the company has divided to be justified by the result. Such investments as they have dealt in yield large occasional gains; and many private persons have made immense fortunes by dealing in them and have few or no losses. But a company is under two very material difficulties in such a trade. First, it cannot be idle; it must employ its money; it must pay a dividend. And it will not be entirely easy to carry on two kinds of business, one in times of enterprise, and another in times of caution. There is a connection in such matters which cannot wholly be neglected. A company cannot stand still, though an individual who has made what he wants can and does. And secondly, a company is not only always restless but always existing. It is, so to say, immortal. It has to take the average, not of a year or two like a chance speculator, but of all years to come. On this account it cannot permanently gain exceptional profits; these belong to the happy speculator who intervenes at the moment of exception; but a continuous entity, such as a company, has to take its share of good fortune or ill fortune, unpleasant results and pleasant ones. A finance company which divides high dividends, probably divides at the expense of future low dividends, and even of future losses, and we do not think that any finance company two years ago duly understood this condition of its being. "Again, we do not believe that any finance company will, now that their business is understood, be a large borrower from the public. The General Credit, as shown by their own account, are scarcely borrowers at all. And the public will hardly lend to any company whose investments are 'exceptional,' are by definition and idea investments out of the usual course. Lenders will say,These queer things may be all right, but we can never know that they are all right. If we lend to a finance company, we must lend to a company whose business is a difficult mystery, and whose securities would not yield the profit they do if we who are but common persons comprehended them.' A finance company will have to employ its own capital The only almost exclusively, and this will limit its dividends in the long run. permanent high dividends are those of companies which, in some shape or other, are dealing with much money of other people, and have to divide only upon a small capital of their own. Such companies have a great quotient and a small divisor, and therefore they can pay a dividend which no others ever can. "After its general account, the General Credit Company makes two proposals. First, to lower the denomination of its shares, which, subject to the claims of existing creditors, all companies ought to be able to do. Unluckily, the Joint Stock Companies Act of 1862 omitted to give that power, and last year a supplementary bill, which supplied the defect, was rejected in the Lords,' at the instance of certain peers who do not like limited liability. But if such companies are permitted to exist, they ought not to be permitted to exist in fetters. They are either good, and ought to be free, or bad, and ought to be abolished. The present law is like the old custom of incarcerating a suspected but unconvicted person; it is sure to be wrong if he is innocent, and has no ground for being right if perchance he is guilty. Secondly, the company proposes to establish a discount business, but on this we think they entirely misconceive their position. It is true that there is an excellent opening in the city for a third discount house. There are only two first-class ones, Messrs. Alexander and Co., and the National Discount Company, and a third, to fill the gap caused by Overends' colapse, would be a real public gain. But the General Credit Company cannot fill that gap. No discount company will now satisfy the public which deviates into outlying securities. It was these which ruined Overends, and which awakened public caution. A company must be able to say to depositors, 'We have no back shop; we have no hidden securities; we take bills for discount, and we leave you bills as security; this and this wholly is our business.' A discount company lives on the money intrusted to it by others; a finance company upon its own capital; and it is a mischievous error thus to attempt to fuse the two." FROM the Saturday Review of the 27th October :— "The town hall at Leeds was recently the scene of a very remarkable meeting. Fifteen hundred coal miners, with their wives and sweethearts,' assembled to commemorate the improvement in their social and material position that had been effected by the judicious measures lately resorted to by their employers. One feature of the proceedings consisted in the presentation, on behalf of the workmen, of a piece of silver plate to the managing partner. The reader will at once assume that the proprietors of this particular colliery are a body of philanthropists, in whose eyes the percentage realised on the capital of the concern is but a trifle when compared with the fulfilment of their kindly wishes. He will admire the goodnatured zeal for the innocent pleasure of their workpeople which is implied in the organisation of such an entertainment, while he will wish that the selfishness of human nature could oftener permit considerations of profit to be thus postponed to the promotion of mutual goodwill. Or, supposing him to be of a practical turn of mind, he may be led to condemn the intrusion of pure benevolence into business matters, and to prophesy the approaching ruin of the amiable enthusiasts who have made the experiment. If, however, he were acquainted with the recent history of the district whence the guests were drawn, his sober recollections would hardly coincide with the imaginary picture with which we have thus credited him. And if he had listened-even without this previous knowledge-to the speeches made at the meeting, he would gradually have come to discover that the associations originally called up by the mention of the Whitwood and Methley Collieries had been of a wholly different character from those suggested by the present gathering. He would have identified the name of the senior partner in the undertaking with one long connected with some of the sternest and most protracted contests between masters and men ever known in that branch of industry. He would have heard a frank confession that those years of constant warfare had been years of large pecuniary losses to the proprietors, as well as of deprivation and suffering to the miners employed in their service; and that it was in consequence of this conviction gradually forcing its way into the minds of the former that they had resolved to try some new expedient for reconciling two classes of persons whose respective powers seemed to be just so evenly balanced as to ensure the ruin of both. "The interest attaching, therefore, to this bold innovation on long-established relations between employers and employed is far greater than would be excited by the good or evil fortunes of any merely charitable scheme. By slow degrees we are learning that, however valuable philanthropy may be as a preliminary agent, it will not supply the force which is wanted to bring the disputes between capital and labour to a satisfactory and final settlement. The higher class of workman does not ask in these days for charity; indeed, he would probably reject it if it were offered. He asks, though too often blindly and unintelligently, to have justice done him, and to receive from the gross profits of the master for whom he works a share which shall be fairly proportionate to the outlay which he has himself contributed. If this proportion can be ascertained, it is obviously to the interest of the capitalist to accede to the terms. To hold out for something better is merely to run the risk of the men refusing to work, or emigrating to other districts, and consequently of his own capital lying idle, instead of bringing in its fair return. A corresponding danger awaits the workman if he pitches his demands too high. In that case, he makes it impossible for his employer to go on producing except at a loss, and in this way he drives the capital on which he really depends for his support to seek a more profitable investment elsewhere. The whole machinery of strikes and lock-outs is simply a rude and imperfect attempt to work out this equation. The master is withheld from offering too little in the way of wages, by the fear of a combination among the men; the men are withheld from asking too much by the fear of a combination among the masters. Such a method as this can only give a very rough approximation to the real standard. Innumerable circumstances may interpose to prevent either party from feeling it safe to push its requirements to what may all the time be their just length. So long as the wrong is not too conspicuous, it may be better for the master to pay more, or for the men to take less, than the state of trade really dictates, rather than to provoke an appeal to that disastrous warfare which always lies as a possibility in the background. It follows, therefore, that even if men were governed only by considerations of interest, there are grave objections to the ordinary process by which the relations of labour and capital are adjusted. But when we further take into account the extent to which men are influenced by passion, and the utterly reckless manner in which, when so influenced, they will inflict suffering upon others, or submit to it in their own persons rather than yield a point, however trifling, about which they feel strongly, these objections are indefinitely multiplied. 66 Considerations of this kind are too commonly only estimated at their full value by external and uninterested observers, and it is greatly to the credit of Messrs. Briggs that they should form an exception to this prevalent rule. About two years ago they became satisfied that it would not pay to carry on business on the footing on which it had been conducted up to that time. Their profits had fallen in one year to 4 per cent., in another year to 3 per cent., and the constant recurrence of strikes among their workmen offered no probability of effecting any improvement in their affairs. It was clear that there was little encouragement to run all the risks and to submit to all the anxieties of a business so costly and so uncertain as coal mining, and to get in return the same interest for the capital invested as it would have yielded if it had been left in the funds or put out on mortgage. They determined to try whether, by so far taking their workmen into partnership with themselves, as to make the interests of the two identical, the difficulty could not be solved. The company was accordingly registered under the Act of 1862, two-thirds of the share capital retained by the members of the firm, and one-third allotted in shares of 157., with 10l. called up, to their workmen and customers. The rate of wages paid was to be the average rate of the district, and the profits of the concern were to be divided in the following fashion:-10 per cent. was set aside as the dividend due to the capitalist, but all above that proportion was to be divided equally between the shareholders and the labourers in their employ. In order to encourage the latter class to become shareholders, the half set apart for them was to be again subdivided, so that the shareholders employed should appropriate one-third of the bonus, and the whole number employed the remaining two-thirds. It was agreed to try the plan here sketched during the year beginning 1st July, 1865; and in the previous May, Mr. H. C. Briggs, the managing partner of the firm, put out an address to the workmen, detailing the scheme at full length, and encouraging them to co-operate heartily with the experiment by a detailed example of the results which would follow, supposing the divisible profits for the year to amount to 12 or 15 per cent. In the former case a workman, not a shareholder, would receive, according to Mr. Briggs's calculations, 17ths per cent. on his earnings, making, if his weekly wages amounted to 308., a bonus of 26s. 6d. at the end of the year; while a workman who was also a shareholder would receive 5 per cent., giving him-supposing his wages to be the same-a bonus of 37. 188. at the end of the year. If the profits should rise to 15 per cent., the bonus divisible among the workmen would amount to 10 per cent. on his earnings, or double the preceding estimate. "For some time previously to the issuing of this circular, the profits of the concern had, as we have seen, been less than 5 per cent., so that it is not wonderful that promises based on the supposition that this sum might be trebled, or nearly so, encountered a good deal of doubt and suspicion. But the experience of the first year has abundantly justified Messrs. Briggs's anticipations. Fortune so far favoured them that trade was brisk, and this, aided by the increased care and attention of the workmen, and above all by the absence of strikes, enabled the directors to divide 12 per cent. for the year on the paid-up capital, and to devote a sum of 1,800l. (equal to 2 per cent. on the capital) to the formation of a workman's bonus fund.' Thus, on the one hand, the owners of capital realised an actually larger sum during the year than they had ever done before; and, on the other hand, the workmen received from 17. to 10l. in addition to the usual wages paid in the neighbouring collieries. Many had a 57. note in their possession for the first time, and some few had two, the highest bonus being paid to a miner who, being a shareholder, received on his year's earning of 109l. 8s. 9d. a bonus of 1ol. 188. 10d.' Here, therefore, there is no question of philanthropy. The results of the scheme are patent to every business man, and whatever doubts he may feel as to the ultimate working of the experiment he can have none as to the fairness with which it tends to benefit, so far as it benefits anybody, the capitalist and the labourer alike. We don't pretend,' said Mr. H. C. Briggs at the Leeds meeting, that we propounded our scheme solely from patriotic motives. We believed that it would pay; there is tangible proof that it has paid; and I believe that it will continue to pay.' So far as we can see, there is every reason to think that this prophecy will be fulfilled. The system of co-operation in the shape in which it is here introduced is free from many of the disadvantages attendant upon associations of workmen apart from capitalists, while it secures all the advantages which, under favourable circumstances, such associations have undoubtedly been proved to possess. It puts an absolute end to strikes, for when once the terms of the copartnership have been accepted, there is nothing left to quarrel about. Capital has its initial profit of 10l. per cent.; labour has its initial profit in the form of average wages; and all beyond this is equally divided between the two. But it is not to the cessation of strikes only that this success is due. It is caused at least as much by the improvement immediately visible in the character of the work done. The world is as yet a long way from a complete observance of the golden rule, and a man works very differently when he has only to consider how to be diligent enough to escape observation or dismissal, and when he is conscious that every addition to his master's income may in its degree be an addition to his own. In coal mining this dis |