THE HONESTY OF CONSIGNEES.

Lyttelton Times, Volume VI, Issue 373, 31 May 1856, Page 5

THE HONESTY OF CONSIGNEES.

(From the " Home Nev«(.") One of the first commission merchants of Berlin lias lately been tried, convicted, and sentenced to v u;r:ii of imprisonment, for Laving Wiide ft return of sale of corn somewhat lower than liie price winch he rf-ceived for the game ; tiiere was no question as to master and servant ; the decisitui whs based on the ground that it win flisiimit-st tn pivw-nd to act as agent—which implies lieing paid by commission—and then to deprive the principal of any portion of the price obtained for the merchandise. The decision lias been appealed against, and a petition signed arid presented by a number of the members of die Berlin Exchange, stating that the sentence was unjust, as the Berlin house was justified in its conduct by the usage prevalent in Prussia. What may he the issue of this case is a matter of no importance; it is, however, worthy of comment that a boiiy of the first merchants of Berlin should describe an act as justified by usage which is dishonest in the strictest sense of the word ; nor is it necessary to inquire how the law would h.ive dealt with such a matter in England; hut we avail ourselves of this opportunity to pneest and remonstrate against the spirit of dishonesty, in the above sense, which has prevailed and is gaining ground in the foreign and domestic commission trade of England. 'I his may appear a startling proposition, but it is nevertheless strictly true, and founded on a knowledge of circumstances in a practical acquaintance with the commission business in all its branches, and on observation directed to the subject from a long-standing conviction as to the many methods adopted by houses—and .some of the first magnitude—for enriching themselves at the expense of the unfortunate consignee. There are many small manufacturers, and others, who have endeavoured to increase their, business by occasional consignments, who can

testify to the fact that it has almost always proved ;i losing concern ; ami if they have by any chance been obliged to draw against the goods, then indeed the result has proved most disastrous. It matters not to inquire whether these parties had any legal remedies, or whether the consignees had laid themselves open in their transactions to legal consequences, or to the censure of their fellow-traders, because the parties making consignments under advances are mostly men labouring under difficulties; ami the fact of their entering into such transactions would prove ruinous to ihem. Moreover, the consignees always surround themselves with powers sufficient for all purpose. We do not write the present paper with the object of recommending the introduction of any law on the subject; we are, on the contraiy, of opinion that many "laws for the government of merchants are means for legalising injustice, and contribute to a lax state of morals. When right or wrong is determined by acts of Parliament, it is obviously easy for the most designing and

crafty to appear the must honest, and to reap the best harvest. We have in sever;*! recent failures had examples how little the law is capabie of keeping men honest; and we believe that those who have studied this subject will arrive at ihe conclusion, that mercantile transactions would, as a rule, be more honourable if (excepting in absolutely criminal matter.-.) the tiader were left to depend on himself. Honour, and not law, would then be the standard; these would only be trusted who had been found to deserve credit. And this knowledge, that all depended on honour, would tend more to make and keep men honest than all ihe legal powers conferred on the creditor, than all the le»ai remedies jriven to contracting parries, or than ail laws ior the prevention of fraud. We are, therefore, pureiv addressing ihe *eiHiuie;its of ihe mercantile community, ami not th«> instinct of the legislature, in condemning; the dishonest

practices of the consi«net;. Even it' we wtre in favour of legal means for preventing tl is >ix.uit:s of fraud, we shou d be at a loss what u> recommend without cieatiug;

new evils. , It is obviously of advantage if a t:";!;!tv, uiomeulrtvily pressed or unable to a wail 'in' ir.vn i>t the market favourable to himself wiiht.Mii >i me assistance, can obtain an advance on hi> £>■<■<;>.; in tiie nature of things lli^re will a!wa\s ■' c i!'.«'» who require these aids. It is then but t>«n' ::;'t those who make these advances >houhl ii'-t secure themselvesa»ainst loss; and hence i; iciiows that they should advance no tnore than iluy can at all times realise, and leave a niargi;) !'■■■■< ex-

penses. And it is equally essential to the safety of the consignee, that be should have unrestricted powers of sale to reimburse himself. These requisites being secured, and a price for services and accommodation agreed upon, every ialf-penny profited by the consignee beyond, at the expense of the consignor, is a direct fraud ; and any neglect or carelessness a breach of good faith.

It is of great advantage to trade, and to society generally, that men should be able to obtain the services, and avail themselves of the . facilities possessed by others, in the disposal or purchase of goods ; it is, therefore, fair and proper that the agent should be paid for liis trouble ; but no custom of agents, be it as general as it may, can legalise any profit beyond that which is agreed upon and understood; everything beyond is a fraud. If the foregoing propositions be admitted, and it is difficult to conceive bow they can be argued against, then it follows—that to charge a correspondent excessive expenses is not honorable, and to debit him with what has not been paid, dishonest; to sell without a due regard to the interest of the principal is faithless, to do so from personal and interested motives, dastardly. To dispose of the goods upon which money has been advanced, without a due regard to the interest of the consignor, is reckless and unjust, because, had be bsen desirous of simply obtaining the price which his goods would fetch by a forced sale, he need not have gone to an agent and paid hi:« commission and interest; the object was different, and the promise implied in the transaction much opposed to this. Goods are -consigned under advances, because they cannot be immediately disposed of to advantage, and the consignee virtually agrees to keep them so long, and to do his best, until he obtains a proper price. To secure himself against loss and litigation, he reserves to himself the right of sale 'for reimbursement, either at a specified time, or, in the absence of this, when he deems proper; but it is implied, and always under stood, that there should be a.n honourable intention to use this power only for self-defence, and not for profit, and in no case without a due regard to the interests of the consignor. It is not the practice of those who address and depend upon a class to venture upon opinions which may give offence, or to do so with such intention ; our object is to argue against a prevailing and erroneous habit of mind.

Many honest men think it right to indulge in practices which they deem inseparable from their pursuit, and sanctioned by custom, but are yet most reprehensible, and thus the distinctions commence, but which are entirely unwarranted, between what is fair in trade, is right and desirable per se ; and the consequence is, a heartlessness and hardness in business on the part of the bsst, a close-shaving and steering within the precincts of absolute wrong 'by a great section, and a perversion of all morality, under the guise of mercantile acuteness and legal purity, by many who rise to the highest position, and from whom those who stumble in the effort of aggrandisement, and who, from time to time, give ri>e to great scandal, are only to be distinguished by less acmeness, but not less real honour.

There is nothing- which justifies an agent in taking advautage of his client, and the test in all these matters is ;ibstract right, and not the promptings of cupidity. There is a vast distinction between a due regard to personal profit, and a disregard of the rights of others, — between a desire to improve one's position, and callou>nes-> about the interest of those with whom we have any business relation—between availing oneself legitimately of the wants of those with whom we have dealings, and between abusing their trust and trading on their necessities. Let it not be supposed that what we complain against is of isolated occurrence ;we would, if it were right, give innumerable instances, and mention firms whose heads are looked upon as patterns of mercantile honour, who now aspire to serve their country, and to the highest confidence of tleir fellow-countrymen, who have made their fortunes as commission houses by the practices which we reprehend. We do nut say that there are not houses' descrying their eminent position, and acting strictly up to what is right; but they are the exception, and not the rule. Some of the largest siiip-nng houses in London scruple not to make advances of one-

half or two-thirds of the value of goods, and to make returns of sales which hardly ever return a balance in favour of the consignor. How these} sales, in all parts of the world, are effected is notorious ; everything but the interest of the principle is considered ; in some instances goods put up at auction at an unfavourable moment; in otheis they are knocked down at houses connected with the consignee, and so on. Commission houses have made gigantic fortunes by the same method in London, and it is proverbial that agency bills, excepting the influential and important clients, swallow up all profit. Tn no country is the importance of integrity in the agent greater than in England, and nowhere have the agents greater opportunities of oppressing the poor trader. In the United States credit is less tender, and business men more free in their movements ; moreover the prevalence of auctions in every town, of which all clnsses avail themselves, some from profit, others from need, enables a man in all cases of necessity to realise his gooils, or if he is not obliged to sell, to test the market, and, if unfavourable, to re-purchase them.

In Germany, there are a class of bankers who open ciedits to men in business upon their or their friends' security ; German merchants and manufacturers, therefore, boiro\v,money en their names, and not on their commodities; hence, if they employ an agent, they can occupy, opposed to him, an independent position. Moreover, both in Germany and France, business is pursued on a smaller scale—more to supply and less to anticipate wants. Trade generally is not so dependent on credit; manufacturers produce less on the chance of selling, and men of business purchase less on speculation.

The Bank of Prussia even mates advances on all kinds of commodities in cases where the parties are|.verv responsible, or if the commodities are left in their possession, the proceeds of sale repay the banks. In other instances, they are put in premises belonging to the bank, and every facility offered to the borrower to dispose of them for a certain time, after which only, the bank disposes of them to repay advances.

In England, the opposite to all this is the case. Trade is extensive, and every one seeks to enlarge his operations, hence the greater necessity for the aid <if agents, and credit is general, hence the greater frequency of monetary difficulty, the greater need for effecting sales, and the greater liability to losses.

I f all these circumstances are aggravated by the grinding avarice and unscrupulous greed of agents, it must be, as it does, follow that trade generally becomes less profitable than it would otherwise be.

Every commercial crisis, and the balance sheets of many bankrupts and insolvents, if sjfierl to die bottom, show that the accommodation of commission bouses, brokers, &c, encouraged speculation in the first instance, and that their intentional pressure and neglect, afterwards led to difficulties and ruin."