Vincent Otto Nolte.

Fifty years in both hemispheres; [microform] or, Reminiscences of the life of a former merchant. Translated from the German online

. (page 29 of 47)
Online LibraryVincent Otto NolteFifty years in both hemispheres; [microform] or, Reminiscences of the life of a former merchant. Translated from the German → online text (page 29 of 47)
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and of ordinary commerdal honesty of many of our oorrespon-
dents who had so caressed and courted me the year bef^e, was
without example. Every meims was made use of by these
men to avoid the necessity of keeping the losing purchases for
their own account One M. Morel Fatio, who had played an
important part as Coulissier in the Paris stock exchange, and
afterwards did a heavy business in cotton, at Rouen in 1822,
threw bade upon us 200 bales of cotton, before he had even seen
them, under the pretext that he had ordered " prime quality"
(without limitation of price), that all the New Orleans houses
advertised " prime quality" at nineteen cents, and that as our
factor only asked seventeen and a half cents it could not, possibly,
be " prime quality."

One exception to this scandalous course which seemed to have
become the rule, must not be left unrecorded : I refer to the firm
of Victor Elie Lefevre 6i Sons, Rouen. This firm had sent us
the reimbursement of our paper in a draft upon the London house
of Barandon de Co. When our drafts were presented and
accepted, this house had received the money from Rouen to pay
them, but &iled before the acceptances fell due, and Lefevre lost
the amount. He did not, however, delay one moment, but im*
mediately instructed another house in London to take measures
for the payment of our paper. Besides the loss of this capital,
Lefevre had also to bear the loss of the cotton bought on his
account, and accepted by him, and for which he was thus obliged
to pay twice. I have considered it so much the more my duty to
set down the honorable act of a Rouen house, not so much
because of the strict fulfilment of mercantile obligations under the

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ciroomstanoes, aa became of iAut rarity of the ooomrence in that
part of the world ; for the natives of Normandy ^ and the houses of
Rouen and Havre, do not enjoy the best reputation, and in the
art of overreaching, and the practice of dieating, are usually con-
sidered as masters. From this quarter, as already remarked, I
derived my bitterest and most abundant experience.

One word about the morality of a merchant He who does not
positively despair of the possibility of an exact and strict observa-
tion of the laws of trade and commerce, must at least confess that
he has fidlen upon the exceptions far oftener tlian upon common
instances. It is often said and believed of politics, that that science
cannot be bound by the customary laws of morality, or in other
words, that the common acceptation of the words Right and
Wrong, must undergo a considerable modification when those
words are politically employed — then judiciousness decides,-r-and
whatever b judicious must be right One may say about the
same of commerce ; if we allow that all that is " on the books,**
as merchants say, is right, because it is judicious, which means no
more than that it brings the money in. According to the ideas
of the day, wealth has taken the place of worth, which was the
object once of the merchant's ambition. Whether the practice of
this principle violate the conscience of the honest man or not, if
he adopt any measure simply because it is judicious, he cannot in
trade, justify himself by saying *^ the end sanctifies the means."
In politics, the recognition of this principle meets with but few
difficulties, and fifty years' experience has taught me, that in
commerce also, it is oftener foUowed ihan neglect^. Out of
many such experiences let me record one incident : during a coo-
fidential reading of this chapter to Mr. Alexander BaHng, he gave
to the conduct of the merchants in Havre, the name of ^ felony.'*

In the autumn of 1824, as I have already remarked, the Liver-
pool cotton miu*ket showed the greatest probability of a rise
in^ prices. The house of Hottinguer & Co., in Havre, at the
head of which was M. Bourlet, a practical, experienced man of
business, was several times urged by the house of Cropper, in
Liverpool — in whose house young Hottinguer, noV head of the
Havre house, was a derk — to go into an operation in cotton; M.

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Boailet, however, gave evasive answers, and the matter ftD
through. At the same time Mr. Daniel Williok, of Amsterdaiay
established in Liverpool, had greatly befri^ded Mr. P. C. Laboo-
chere, .and kept up a regular correspondence with him, from his
estate Hylands, in the neighborhood of Chelmsford, in Essei
County. He entered heartily into Cropper's ideas, and ofiered
to trust him with a certain amount of capital for the opowtioD,
which af^eared to promise great gain ; only conditioning that the
purchase should not be delayed. M. Laboudiere determined
quickly, and at once sent express to Havre, and commissioned
Messrs^ Hottinguer to purchase for him 3,000 bales of cotton.
The express reached Havre late in the evening of Saturday. The
entire disposable quantity of cotton in Havre was 10,000 bales,
nearly all of which was in the hands of Hottinguer & Co., and
Thuret ds Co. On Sunday morning the merdiants assembled as
usual at the Bouru du Canon, to wait for the arrival of the Paris
maiL A dedded possession of the market was not only possible
but certain ; but to succeed, it must be executed by the brok^
Lefevre, because he possessed the entire confidence both of buy-
ers and sellers. He was the man usually employed by the most
ext^isive purchasers, the house of Guerard, Dupasseur dc Co., and
their interests lay naturally near his heart M. Bourlet, as soon
as he saw a person like M. Labouchdre entering earnestly into a
cotton speculation, changed suddenly his own views, and recog-
nized Uie operation as an unfailing one. Thereupon he se&t for
the broker Lefevre, and in order to avoid the peril of a betrayal,
whidi might throw the whole affiur into other hands, he invited
the Messrs. Guerard, Dupasseur ds Co. to a consultation. A
share m the purchase of the whole quantity, 10,000 bales, was also
ofiered to M. Delautiay, at tiiat time head of the firm of Thuret 6t
Co., in Havre ; and the two houses agreed to the entire purdiase,
the house of Guerard alone appearing as buyers. It was also
determined that Hottinguer and Thuret should offer all their cot-
ton for sale, and that the broker Lefevre should try to get posses-
sion of all smaller quantities. My house th^ possessed 500
bales, stored with Messrs. Hottinguer, and 300 with Thuret Our
agent, M. Emanuel Bernoulli, was by accident m Havre. U la

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lioi-niBMMry to My hero in what maimer he beoame aoqimmted
wilh th« foregoing oiroumstaiioes, but he loet no time in going to
M. Bourle^ and tiling Um, resolutelj, " Whatsoerer occars in
the oottoa market., all further sale of Nolte's cotton must be stofK
ped. You ntoiat not sell a single bale irithout directions from me."
Tbea he went to M. Delannay, and made the same remark to
him ; but he was answered with the eoisqpletest sangfroid, ^' V6u9
orrivtM irwp tard, mom ami. Vos c^kms sont dtjA vendus. The
800 baiaa had thus Mim into the handi of this worthy specu-
lator. Al o&oe it was rumored about the exchange, that the
entire stodc in Ha^re had fldlen into the hands of Messrs. Gne-
ratd, Dupasseur ^ Co. On Monday mondng the post brought
news <^a rise of prioes in the Liverpool market, the instant eon-
seqneoee of which was a rise of three francs a hmulred weight,
ndiidi went still hi^er soon aften M. Laboudb^re was written
to, tiiat tlie Havre pnrdiasers had gotten the start of him, and had
thwvrted the fulfilment of his commission ; it was thought, how-
ever, that a similar outlay of cf^ntal hi cotton-yam at Rouen
would be judicious, inasmuch as the prices of this had not been
aiected by the news. Bourlet knew with whom he had to do,
when he reckoned upon the cheapening of this improper acquis!-
tioa ; instead of a regular rbe in ^ first mon^ of the year 1825,
it gave a very meagre result. M. Labouch^re had learned nothing
about the fbregoing circumstances, nor the head of the Paris
house, the elder M. Hottinguer, whose strai^tforward, honest spirit
woidd have severely condemned the acticm of his associates. I
have «beady remaa^ied, that in the United Statee, overreaching
goes finr cleverness, and tltere this act would probably be called
^ a eiqMtal combination." How very fhw merdiants, indeed, Are
there out of England who, like Mr. Alexander Baring, would give
it a very diflfeirent appellation !

The commerce of New Orleans, deethied to do mighty a future,
and which had begun its increase the second year after the treaty
of Ghent, in 1814, was obliged in the city itself to contend with
Uie greatest difficulties, because of the miserable condition of the
streets, the highways, and the dykes of the river, which threw a
thousand hindrances in the way of trade's advancement The


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996 HS^ 0RLEA19B IK 18S1.

kgiflktion aboot dty inteMsto was in the haads of the mayor aa4
a council, almoet entfirel j composed of native, u «., ignorant ore»
dea, who, during the first years of peace, thought of nothing, and
used their influence for nothing but the protection <^ their own
peraonal interests; and troubled themselves exoeedhigly little
about the common-weal. The major himself Boniigaac by
name, was a native of France, formerly « oaivalry officer in the
Spanish service, had the best will in the worid, was an hoocat^
practical person, but yet so perfectly uninstmeted thsi he feared
to trust himself or any other man. So it lii^pened that nearly
six years went by, before they took the sK^piteBt action towards
the improvement of the streets. In 1821 New Orleans did not
possess one single paved st^reet. Throuf^h the dty ran four feet
wide side-walks, which were called ianquetUtj and which ran ak^g
olose to the houses. They were made of brick set loosely in the
sand, and in wet weather became almost utterly useless, smoa
nearly every step of the pedestrian produced a spirt of liquid mad
from between the loose bricks. The streets themselves were
nothing but mud holes, with occasion^ projecting bits of dried clod.
In 1822 the city council recognized the necessity of some imfrove-
ment, and it was determined that the prindpid street, called Bus
Royale, should be paved. The cost of this pavement was cakiK
lated at $300,000, while the revenue of the city amoimted onl j to
$60,000 or $70,000 per annum. Leases of tenements and laoda
belonging to the city, and the yearly sale of part of them, the
results of public sales, eta, made up this sum« Finally, they
determined to make an effort to borrow the money ; a oonunittea
of the city council was appointed, and this committee imme*
diately waited upon me, requesting the loan at an interest of 7
per cent, payable half yearly ; the money to be retained so l<Hig
as they might require it. I could 6nd no means of rendoiag
comprehensible to these gentlmnen the feet that no capitalist could
be discovered who would lend upon such terms; particularly
none in Europe, whither, they appeared to be looking : that they
must borrow the money for a certain specified time, eta At
length I succeeded m proposmg an acceptable project fer a losn.
That the city should receive a cash payment of $150,000, to ba

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Mlowed tiie next year by a omilar siiii^ giving its obligadon to
vqpay the mna in ten yean, with interest at the* rate of 98 per
eoit. for that time. I also naturally arranged to have oertifieiutes
of sUx^ all bearing the same date of emission, to be held as cooa-
penaation for the yearly interest on the seeond half of the loan,
while I paid in the sum in solid, well secured planter's notes,
whidi had one year to run. These notes were in the money*
market, at a discount of from 15 to 18 per cent, and the diffiar-
enee of interest^ whieh amounted to about (13,000, and which tha
oouncil eonld have gained had they chosen ; but by their neglect
of k, it f^ to me. The Messrs. Barings sold me these notes with
a bonus of 17 per cent, and the whole operation brou^t me in «
net profit of $65,000. This was the Ibrerunner of a later advaaee
made by the Barings to the city of New Orleans and the state oi
Louisiana, and which somewhat surpassed a couple of millions.
This business was conducted, some jeem after the ruin of jdj
house, by Mr. Alexand^ Baring, who visited New Orleans ior
the purpose.

The stock of cotton which the stimulus already spoken of, had
gathered and left unsaleable in many European markets, particu-
larly Liverpool, of course caused great anxiety about the new
Ameriean crop, in the minds of all who had made advances, and
to whom shipments would not guaranty a return. The great
quaker house of Cropper, Benson 61 Co., were at the head of the
firms who found themselves in this position. Whether it were a
proper comprehension of the real position, and look of the whole
European cotton market, in reference to the stock on hand, and
the supply to be imported, or only an experiment to awaken (he
Sjpiiit oi speculation, and to cause a rise in prices ; in brief^ thb
house exhibited a g^eral manifest, in which by a variety of caU
enlatioos it strove to show by logical conclusions and reckonings,
that the production of cotton had its limit, and that in consequence
cf the abolition of the slave trade, und the annual decrease of the
oolored population,* as well as by the natural restrictions which

.* This argum«Dt waa preciselj one of the most feeble b the logM of the
Croppers. Fire jean before, the colored eensoi was 1 J$88.0A0 ; sad in 1880^
Qdxty years later, 8.176JB80, a yearly inerease of 54.60f toida.

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Bo r ti w fn htitodes jdaoe upon ootton growing, that the noesaarf
and a{>|>^o«ohiDg*conseqii^06 mxmt be, that the importation would
become diulj less, and obtainable only at very high prices, sad
that from this would result — so at least they believed — that the
ooBsumption would fiur exceed the production, and make the cost
of cotton immensely high. This manifest was dissemiBated with
a certam pomp over all the ootton mamiftcturing cities of £[|g-
laod and the United States. People read it with interest, but it
fiuled of its object, and had very slight e&ct upon the ootton
market The thoughtfiil houses of Havre and Bonen, called it
^ Mumfimdage pour /aire monler Us priz^ and in Liverpool
and Manchester they were distrustful, and appeared to remember
the calculation, by means of whidi the firm of Cropper had
prof^iesied a poor crop <^ wheat, and high prices only a few years
befi»^ l%ey went so &r as to send their agents into every part
of England to calculate the general yield oi ears in the wheat
fields of the various districts, and ^b% aven^ number of gndns in
the ears, in order to strike a parallel with the yield (^ grains in
frultftd and abundant crops, and so to support their prophecy
with reference to prices. All the calculiOions fiuled ; the crop
was a good general crop, and speculators, among whom were the
Messrs. Cropper themselves, lost very heavily. Their very
important share in the speculations which followed these calcula-
tions, poved in this instance,^ the uprightness of their conviction ;
but in respect of the cotton manifest that appeared later, I had no
opportunity to divine the concealed objects. I had visited
Liverpool in the course of the summer of 1828, and found thai
the general vmce of the exchange there was not prophetic of a
rise in the price oi cotton. In the house of Cropper a hint waa
given me that other views might possibly be correct Therenpooi
I betook myself to Mandiester, to look around me among my
fiieads there. This occurred about the time of the Donoaster
races, where Mr. William Garnet (of the then important house of
Messrs. Robert & William Garnet), had determined to go in his
own carriage, and invited me to accompany. I had scarcely
accepted, and so written to my fnend Adam Hodgson, thtt
partner in the house of Rathbone, Hodgson & Co., that I at onoe

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Te mived in answer, a most mgent letter, urging me, initead of
thinking of the Doncaster races, to weigh carefully an event whidi
must in&Uiblj oocur in the cotton market ; that my co-operation
was neoeaeary to him, and therefore, he begged me to return at
OBoe to Liverpool I obeyed the call, and betook myself directly
to Liverpool On my arrival, he pomted out to me, that he must
take me at once to the Meears. Cropper, and there it would be
shown to me in the strictest secrecy, that an entirely-new view
of ^ condition of things was to be taken. When we reached the
place, the elder Mr. James Cropper, head of'the firm, was in his
mneimm Mfic/omm, a homely sort of chamber, which touched the
great hall of the g^eral counting-room, and possessed a double
iron door. Into tikis chamber we were mysteriously introduced
by one of the partners, lir. David Hodgson, and after our
entrance^ the bead of the greatest cotton broker firm, Mr. Cooke,
of the firm of Cooke ^ Cowen, was s^t for; meanwhile, the
already mentioned, ever ready manifesto, was exhibited. Mr.
Cooke was sent for to prove to me that a demand for the
exportation of 10,000 bales of cotton to Havre, where the market
i4>peared to have been neglected, must infiillibly shake the
ordinary boy^ and spinners in Manchester and Glasgow ; and
already a rise in the prices was evident, as would soon be visible
to alL In die expectation that I would not refuse my assent and
co-operadon to a plan formed by him, and that I would associate
myself with their representatives, David and Adam Hodgson ;
Messrs. Cropper ha^ resolved to send both of these gentlemen to
Havre, in order to unite in one house commissions for the pur-
ohase, in Liverpool, of 10,000 bales for Havre; as it was dear
that the speculation would be a good one for both places, as it
would prove the result of the manifesto, so soon as it came to
general knowledge. My society, I said, was very much at the
service of those gentiemen, but their project must positively M\
particularly if they were to go directly to Havre. On the first
knowledge of the object of such a voyage taken by the heads of
two important Liverpool houses, the idea would suggest itself to
people that there must be an under design-*-to wit : if the specula*
tfon waa so sure and infidliVle, aa they appeared to think, folks

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would be oerlain to ask wliat the eetaUiahed hoase, in unigii widi
^ir namerous friends oould gain by sliding 10,000 bake of
ootton <m their own aooount to Havre. My advice was, not to
go by Southampton to Havre, but by Di^pe to Rouen, where i
would make them acquainted with a leading- merchant who
thoroughly understood the French cotton market, and who would
place them at once in the exact position to judge of the whcde
matter. My advice was taken* We went by London direct to
Bou^ and here I presented jny oompanione to M. Edward
Quesnel TAin^. A conversation took place. On his correctkn
of their ideas as to the nature of &*Havre merchant, they saw so
deaiiy the impossibility of continuing their project, that they
tiiemselves, proposed to accompany me to Paris, and so by Ho4<
laudbac^ toEi^land On this ocoasi<Hi I could not help recalling
that expression of Lafontaine's, ^^Jecm i'm <Ula' commit ii itaU

From Holland, whither I had accompanied my friends, I went
to Hamburg. H^*e memories of my early youth were still vivid
in the hearts of most of my acquaintances, and I fi>und my boy-
hood's fH^ids, with one exception, in good health and circum-
stances. I found also that botii my parents were ^1, although
my &the^ had already for some years been afflicted with total
blindness. Early m January, 1824, 1 n^&at to Paris again, and
there learned that the speedy arrival of Mr. Alexander Baring
and his &mily was expected.

The project of the minister-president, Mfurquis de Villele, to
convert the state debt finom five per cents to three per cents
gave rise to this visit. It was proposed to pay off with a round
sum those who were disinclined to exdiange theic claims which
bore five per cent interest for new three per cent claims, and to
take seventy-five firancs for every hundred. The whole state debt
amounted to 8,066,783,560 firancs ; and as it was shown that <Hily
about one-third of the state creditors would consent to the con-
version, a payment in cash c^ 1,055,556,730 fWuMSs became neces-
sary. In order to collect this important o^ital, the whole finan-
dal power of 'England, Holland and France must be called into
exercise. Invitations in all direotidns assembled the leaders of

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tbe Paxis and London Exchanges^— Messrs. Baring Brodiers Sg
Co., of London, Brothers RoOischikl and J. Lafitte & Co., of
Paris — to no very difficult task, namely, to arrange^ three lists
the capitalists of yarious lands with whom thej ware oooneoted,
«qpeciallj those'of London, Amaterdam, and Ptfis, at the head of
each list being^ one of themselves. Thereupon, under the piesir
dsnoy of Mr. Alexander Baring, a committee was appointed, com-
posed of Baron James Rothschild and Mr. Jacques Lafitte, to
tteat of the conyersion with the Marquis of V ill^ in exchange,
and to procure ready money for the payment of the old stale debt.
This committee sat daily in the house of the Brothers Bothsohild,
and sat the longer becMise of the inexhaustible doquence of M.
Lifitte, about the advantages to aoerue from the converrion and
all matters c(»mected with it^-an eloquence w^aik daimed all tibe
attration of his colleagues, and, as I learned from Mr. Barfang,
with whom, conformably to his desires, I breakftsted nearly every
day, drove them frequently into poative impatience. Hie secret
I^ of the holders of the 3 per cent debt was to raise it to 80,
and then to sell it, and so get rid of it. This price would give to
buyers an interest of 8^ per cent. ; and if the portion of the debt
to be paid off could not be raised, exc^>ting by new 8 per cent,
purdiasers at 80, the consequence wcmld be, that the 5 per cent,
before the conversion would be worth the relative price of 106
francs 66|, in order to get rid of the correiqponding interest This
governed the operations of the London, Frankfort, Amsterdam,
and Paris Exchanges. The capital destined ibr the conversion,
and collected at the conmion cost of the representatives of the
three lists, was e^mated at 1,000 millions. Speculat<»« had
conceived so fiivorable an idea of the 8 per cent funds to be cre-
ated — an idea based on the belief that the undertakers would not
bring it into drculation under 80 — ^that buyers were found in Am-
sterdam and Frankfort at 81*82, and even 88}. At the same
time important sales were made of French 5 per cent state p<^>er,
at the relative price of from 106 francs 67 to 1 10. Nothing more
was to be had. The project of M. de VillMe needed, in order to
become a legal operation, the sanction of the two chambers, and
cposed in^portant debates. Opinions about the judiciousnesa,

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904 ^"HE VIOQlfnS ra 0HATSA.I7BSIAin>.

and eren abovt the legalitf o# the ocMiTernoii, were ^ividcljr
dkierent. Meaowhile t^ minifltry poaseved, ia the olMUnber oi
deputies, an jmmenae im^ity of throe himdred and move, whom
the wita were aceustomed to wpeek of aa " M. de VUWe'a three
huadred Spartans ;" so that while a doubt of the auooeea of the
project was soaroely poaeible^ it was yet a oritksal matter to opott
a debate with the amall holders of the Bait, to whom co unti e w
deputiea b^QDged — itwaaatmingattheir punea. IlMfuimyiiMi
of Paris did not tet the oocaaioB slip. The Boe d' Art^ (now
Bue Lflfitte), in whidi lived Mr. Alezandcar Baring, <m tiia eonicr
of the Boulevard, in the Hotel d'Artoia^ Baren Jaawe Bo^MfaUd,
in the hotel formerly belonging to the ^een of Holland, and Mr«
Lafitte, in hia own hotd, oozner <^ Bae de Profvnee, was cbHSmI
^^JaMm de la B4duetiom;^' and the keepers of eate in theneig^
borhood, who had formerly given five lumpe of sii^iar to « cap of
o(^fee now gave but three, " on aoeount of tiie reduction," aa they
said. Whea the project of the oonvesvion came to a hearing m
the chamber of dcputiea, it passed by « minority d sixty-e^fat
This, in ordinary ciroumstaneea, would have been eenaidered a

Online LibraryVincent Otto NolteFifty years in both hemispheres; [microform] or, Reminiscences of the life of a former merchant. Translated from the German → online text (page 29 of 47)