HOW TO SATISFY ONE'S CREDITORS WITH WASTE PAPER.
_Payment suspended--Sympathy for the ruined man--An important
letter--How worthless shares enabled a man to deceive his creditors
and make a fortune._
The following unpleasant circular was placed in my hands one morning
some ten years ago:--
"Dowgate Hill, E.C.,
"February, 7th, 1870.
"Sir,--It is my painful duty to inform you of the suspension of my
business. The liabilities are more than covered by securities, but
which, unfortunately, cannot be realized at present. I have placed my
books in the hands of Messrs. Bowen, Young & Co., the accountants.--I
am, &c.,
+ALFRED GEORGE GIBBS+."
On turning up my ledger I found that Mr. Gibbs owed me no less than
£3,560 14s. 6d. He had never been in my debt so much before, and the
heaviest of his acceptances were on the eve of becoming due. It was a
piece of bad luck for me that he should fail at this time. A few days
more would have made all the difference. The business we transacted was
in soft goods, which he exported to Australia.
If ever a human being appeared to carry his character plainly written
on his face that man was Mr. Gibbs. He was openness itself; nothing
secretive or cunning about him. His whole manner invited confidence.
His age was about thirty-five, and he had in the course of seven or
eight years made a great name for himself, and his dealings must
have been on a large scale, as after an examination of his books the
accountants announced that the liabilities amounted to £125,000,
against which they could only place real property amounting to £9,000
and some doubtful assets.
The failure took everyone by surprise, and the questions immediately
asked were, How has the money gone? He always seemed such a careful
man. Does he keep a mistress? Has he been betting or dabbling on the
Stock Exchange? As the money involved in the crash was considerable,
certain wrathful creditors instituted a searching examination into Mr.
Gibbs' mode of life, in the expectation of finding that he had been
leading a double existence--playing propriety in the City and the fast
man at the West-End, but they were disappointed. He was a model husband
and his establishment was conducted on anything but extravagant lines.
There was no young woman of doubtful virtue inhabiting an elegant villa
at South Bank, with sets of valuable diamonds and elegant equipages in
the background. He was unknown on the turf, and nobody had ever seen
him bet even half-a-crown. The result of the enquiries showed that the
bankrupt was a steady man, not given to drinking nor to dissipation of
any kind, and that he was most punctual in all business matters. The
people he employed were never tired of singing his praises, and no man
was better served in the City of London.
How such a perfect business man could fail was a mystery until the
accountants came to write on the credit side of the balance sheet
the particulars of the doubtful assets. There never was such a lot
of rubbish; the secret was revealed at last. He had been speculating
in stocks, but such stocks! Every rotten Company for many years back
seemed to have had him for a subscriber. He had embarked his money in
the wildest schemes; Honduras bonds, Peruvian loans, Colorado mines,
Spanish railways and Turkish waterworks. Nothing unsound came amiss
to him, and the shares, which came to an immense amount, were simply
unsaleable.
If men will go into things which they don't understand they must put
up with the results. Poor Mr. Gibbs may have had a thorough knowledge
of his own business, which, taken by itself, showed handsome profits,
but he was evidently not an adept at "bulling" and "bearing." He was
terribly "cut up" at his downfall, and no creditor, however irate,
could listen long to his explanations and laments without feeling some
sympathy for the man. He owned his fault, and said he had acted the
fool and must take the consequences, but that it was hard luck after
having the ball at his feet to have to commence the world afresh. His
bankruptcy did not make him seclude himself at home as it would other
men; he kept his usual hours at the office, and was always ready to see
any one and to give any explanations.
Before the first meeting of his creditors was held he did a very
politic thing. He called on each of them and asked how to act in the,
to him, grave emergency. One or two wealthy firms were so convinced
with his statements that on his promising to leave the Stock Exchange
alone in future, they offered to advance him money to pay a dividend,
and said they would do what they could to get his name taken off
the list of bankrupts. An overwhelming majority agreed to the terms
proposed, and Mr. Gibbs was reinstated in his former position. He had
been unfortunate everyone thought, but not culpable, and the dividend
of 2s. 6d. in the pound was duly paid.
The loss I incurred through Mr. Gibbs came at an inopportune time,
and crippled my financial affairs to such a degree that had it not
been for the assistance of a friend I must have paid a visit to
Basinghall-street myself. However, I managed to weather the storm, and
had never any occasion to regret my future transactions with Mr. Gibbs,
who was, strange to say, soon doing double his former business, and
making a fortune rapidly. He was not forgetful of the kindness of his
creditors, and when it was in his power they had always the preference
in his dealings.
Years rolled on, and the loss I sustained had been erased from my
mind, when in the latter part of 1879 I happened to run against a Mr.
Murray and the whole proceedings were revived. Murray had been on the
Stock Exchange, but "bearing" Egyptians settled him, and he was now not
in the best of circumstances, doing what he could outside the sacred
precincts. The man had been useful to me on different occasions, and
I took him into a wine place and gave him some sherry. After he had
finished the narrative of his own difficulties he all at once said:--
"What a fortunate man is Gibbs. Do you still transact business with
him?"
"Occasionally," I replied. "Since he dropped speculating on the
Exchange everything has prospered with him, and he is now reputed very
wealthy."
"What is that you say about the Stock Exchange? He never speculated
there to my knowledge, and I ought to know, as we were at one time very
intimate, and I lived next door to him for many years."
"But you are surely aware that it was his losses on the Stock Exchange
which compelled him to pay 2s. 6d. in the pound."
"No, and I don't believe it. I never could induce him to try a single
time bargain. I understood the bankruptcy was quashed, but I never
heard the particulars."
"Well, it is a fact that when he suspended payment he had in his
possession an immense number of worthless shares. There never was such
a stack of rubbish, and nobody could understand how a man with his wits
about him could have thrown his money away on such abominations."
Mr. Murray laughed loudly, and I looked at him in surprise.
"You have not got a list of his valuable shares?" he asked.
"I believe I have," I answered; "the accountants' balance sheet
contains one."
"Bring it here to-morrow and I will meet you. We may be able to make
some money."
My suspicions were aroused, and you may be sure that I kept my
appointment with Murray, who was punctual. I had been successful in
finding the list, and handed it to him.
He laughed loud and long, and it was some minutes before I could get a
word out of him. When he had exhausted himself, he observed--
"This is a splendid joke. After deducting the dividend, how much did
you lose by our unfortunate friend?"
"I had to write off £3,115, and could ill afford it at the time. Why do
you ask?"
"This is a business matter between us. How much will you stand out of
that sum if I show you how to get it?"
"I know there is no hope of that; but what would satisfy you?"
"Will you give me 25 per cent?"
"Willingly, but what chance is there?"
"Never mind; you go to him with a letter I will write, and if he does
not pay you there and then I shall be astonished."
The letter came next day. It was addressed to Mr. Gibbs, marked private
and sealed. It seemed a ridiculous errand, but still, as I had promised
to deliver the missive, I took it round to Dowgate Hill. I found Mr.
Gibbs in his private office, and he welcomed me with the usual smiles.
"What can I do for you?" he asked, in his blandest manner, pointing to
a chair.
"I want to see if there is any answer to this letter?" I answered.
He took Murray's epistle from my hand, and on perusing it he became
terribly pale and shook like a leaf; when he spoke I could not
recognize his voice. His eyes would not meet mine, and were fixed on
the desk before him.
"On your honour do you know the contents of this letter?" he asked,
hoarsely.
"I do not."
"I believe you," he said. "Now that I have recovered my position I
shall have much pleasure in paying your account in full with 5 per
cent. interest, on one condition, that you say nothing to my other
creditors."
To this I willingly agreed. It takes a man all his time to look after
his own affairs.
In exchange for my receipt he handed me a cheque for the proper amount.
On rejoining Murray, who was close at hand waiting the result of the
experiment, I tried to get an explanation, but did not succeed then.
A few days afterwards, however, when, to the astonishment of everybody,
Gibbs sold his business and went to South America, the mystery was
cleared up. He had cleverly managed to throw dust in the eyes of his
creditors. The bankruptcy had been carefully planned so as to enable
him to put an immense sum in his pocket. The various stocks, which he
returned as assets, and which he alleged had ruined him, did not cost
more than a few pounds. _The worthless shares were not purchased from
time to time as the various companies were launched, as was imagined,
but were bought by weight in one lot through Murray a few months before
the bankruptcy occurred, at an average price of 4 s. the lb._