February 16, 2017

Thursday group reading on White Collar Crime

Please could you look at the following:

Yetunde - Anderson

Oliver B - Colley

Charlotte - Ditton

James - Finn (choose a chapter)

Louisa - Handler

Aksana - Jones

Izzy - King

Blessing - Locker

Mikka - McGowen

Oliver R-J - Phillips

Aleemat - Robb

Amie - Sindall

Abi - Taylor

Zoe - Wilson

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  1. Peter King, ‘Gleaners, farmers and the failure of legal sanctions in England, 1750-1850’, Past and Present, 125 (1989), pp. 116-50

    • East Anglia and southern Eastern England focused on.
    • Gleaning was the act of collecting leftover crops from farmers’ fields after they have been harvested. They were allowed to glean once a farmer had allowed it but before this time it was considered ‘illegal gleaning’
    • p. 116: Transition from custom to crime. Gleaning was an important source of income for labouring families. Gleaning sometimes accounted for more than a tenth of their annual income. Important in grain growing region of East Anglia (focus of this study); decline of other areas of income such as spinning, meant that gleaning became more and more important to women’s work in this region. Farmers began to use legal sanctions to stop women doing this but gleaners collectively defended their customary rights.
    • p. 117: Farmers legal sanctioning attempts are an example of a broader movement which sought to redefine many customary practices as crimes (transition from customs to crimes) which linked to property ownership. Gleaning was never formally redefined by parliament as a criminal offence. Instead, historians look at this as a ‘custom to crime’ through a civil case Steel v. Houghton, 1788.
    • p. 118: The Court ruled against the gleaner and gleaners would be trespassing if they did not obtain a farmer’s permission before entering his field to glean. From 1788 onward, gleaning was described as “a privilege given by the farmer at his own discretion”.
    • p. 119: Was gleaning now under the farmers’ control? Judgement was well-publicised in London and provincial papers and it became a common reference for courts; referred to in the Law Reports over a century later as “the great case of gleaning”.
    • p. 122: Farmers were assaulted at times when attempting to forcefully remove gleaners, but gleaners appeared usually in large groups.
    • p. 123: Most of the gleaning women were wives of husbandmen or labourers.
    • p. 124: Gleaners attempted to turn the tables on farmers for example, one woman had her gleaning bag seized from her by the farmer, but she claimed she had personal property within the bag also which he had therefore stolen. The farmer protested that he had been framed unknowingly but he found himself on trial for petty larceny and he would’ve been imprisoned if he had not used complex legal manoeuvres to save him, but this ended up costing him dearly. The fact that gleaners in Essex continually brought cases to the magistrates suggests that they were usually successful.
    • p. 125: No gleaners were ever indicted for theft by the courts and were not imprisoned as idle or disorderly persons. Instead, farmers were given advice to take them firmly by the arm and lead them out of their fields. Many cases were simply dismissed.
    • p. 128: The petty sessions nor the major criminal courts offered farmers much support. Their only other option was the civil courts.
    • p. 132: Gleaners protested and rioted together.

    16 Feb 2017, 22:31

  2. Peter King, ‘Gleaners, farmers and the failure of legal sanctions in England, 1750-1850’, Past and Present, 125 (1989), pp. 116-50, continued -

    • p. 133: One widow in 1780s Essex, was found gleaning before customary starting time as agreed by fellow gleaners, and so was thrown in a pond, as though she were a witch. Gleaners simply ignored farmers and entered fields in large numbers. Violent conflicts between farmers and gleaners did occur. Some gleaners were known to stone farmers of the lands and threated them with assault or arson if they sent their families or animals into the fields before they had a chance to glean – a Suffolk farmer who did this in 1772 was pulled off his horse, dragged through a river and “hung up to dry” for this offence. Tradition of collective action against the famers.
    • p. 135: It was difficult for farmers to prevent them in such large numbers. The county police forces set up after 1939 did not do much to help, claiming that they did not have the manpower to watch the gleaning fields. Farmers often only left with physical violence as a solution, but they had to be careful as they could face legal proceedings if severe injuries occurred.
    • p. 136: A farmer might have been justified with moderate force against violent gleaners, but they were sometimes forced to pay the gleaners’ costs, maintenance or medical expenses while other farmers simply paid up to avoid a court hearing. Courts and magistrates also often sided with the gleaners because they were women (crimes by women were more readily overlooked, and so many women felt they could claim “the privilege of their sex”).
    • p. 137: Although the law was notoriously unhelpful to women in other cases, such as rape and assault.
    • p. 142: The Clergy believed it to be “very wrong” to prevent the poor from gleaning as it had biblical ties – scriptural injunctions. Some Essex clergy preached harvest sermons which reminded farmers that gleaning had “the sanction of divine command” and that “preferring the feeding of your cattle to the feeding of your fellow creatures” was a “wicked practice”.
    • p. 143: There was a notion that ill luck or divine disapproval would strike farmers who oppressed gleaners, such as diseased flock – obvious religious influence.
    • p. 144: Farmers defences consisted of: refusing to hire members of a gleaners’ family if she offended him, they could impose formal sanctions and attempted to make local laws regulating popular culture.
    • p. 145: Some farmers attempted to confine gleaning to widows and those with families to support by threatening disobedience with loss of their flour allowance, and threatened that those who misbehaved, were violent or got drunk etc. would not be allowed to glean at all. Some places with larger populations were harder to control.
    • p. 149: Attitudes differed widely between areas according to the strength of local customs and approaches of farmers.

    16 Feb 2017, 22:32

  3. John P. Locker – ‘Quiet thieves, quiet punishment’: Private responses to the ‘respectable’ offender, c. 1850-1930

    → Historians/criminologists frequently comment on the significant under-reporting of offences like embezzlement/fraudulence and lack of academic insight into this subject area.
    → Most incidents remain hidden in records/correspondence of individual companies – so the statistical picture of workplace crime is seen as the ‘top of the iceberg’
    → There was an apparent reluctance by employers to pursue formal channels with most workplace crime dealt with through ‘internal mechanisms of justice’
    → Large numbers of embezzlements are never made public
    → Scholars haven’t fully engaged with the private records of businesses in order to better examine workplace offending behaviours and determine the nature and extent of ‘respectable’ ‘white collar’ crimes and the attitudes of employers towards this behaviour.
    → Historians focus primarily on the public face of crimes of this nature leaving the offences of the business world (like embezzlement) as an enigma.
    → Article aims to look at embezzlement within the Victorian Railway industry in order to expand understanding of the dynamics of public/private justice amongst ‘respectable’ white collar offenders.
    ○ ‘In so doing, it questions existing academic ‘knowledge’ of the motivations underpinning private mechanisms of justice in such cases, emphasising the inseparable relationship between the punitive worlds of the public and private.’

    Interpreting prosecutorial trends: existing frameworks

    → Various scholarly explanations given for the overwhelmingly private nature of justice in cases regarding embezzlement/financial dishonesty
    ○ Jerome Hall:
    1. Popular discourses/stereotypes of the criminal/thief dissuaded employers from punishing offenders. Their ‘respectable’ appearance and social position was at a juxtaposition to traditional images/notions of a thief (for example, burglar, robber, pickpocket). Public condemnation focused on this traditional image of the offender (they got the most punitive punishment) rather than the embezzler.
    □ Their ‘respectable’ persona made it more difficult to see them as ‘real’ criminal threat and the prevalence of such attitudes amongst employers can explain the persistent bias towards the embezzling employee and the more lenient punishments through private/informal methods.
    2. Employers identified with the embezzlers at a social level (= ‘paternalistic instincts’) and could empathise with the reasons behind their offending actions. This may explain the preference to private rather than public justice.
    3. Pragmatic considerations – the cost/inconvenience of prosecution, adverse publicity/damage caused to public image etc. also contributed to the lack of public prosecution.
    4. Issue of financial restitution. Where companies informally recouped losses in this way the incentive to use prosecution was potentially educed. If the individual could repay the money fraudulently taken, this dissuaded pursuit of public prosecution. The financial significance/harm of the embezzlement itself played a role in the ‘prosecutorial decision’
    BUT – these claims are underwritten by assumptions about the widespread existence/persistence of private justice regarding embezzlers.
    ○ Assumption that the embezzler viewed differently/more sympathetically that other ‘types’ of criminal
    ○ Choosing between private/public methods of justice was a decision made entirely/largely at a senior management level
    ○ Such patterns demonstrated a preference for private justice (based upon more empathy with this ‘type’ of offender and desire for ‘greater leniency’)

    17 Feb 2017, 14:33

  4. → The claims about the overwhelmingly private nature of justice in cases of embezzlement are accurate
    → The problem (for Locker) is that looking at the private records of the Victorian/Edwardian railway industry suggests that the factors behind the decision to go private over public were different to those suggested by Hall.

    The spatial dynamics of company justice: a case study od the railway industry

    → By 19CE there was a modern legal offence of ‘embezzlement’ and this ‘bolstered the public face of the crime’ and made prosecution a viable option for such offenders
    ○ After 1779 ‘clerks’ and ‘servants’ were held legally accountable for appropriating money they handled on behalf on an employer and this provided unprecedented legal support for railway companies (and other companies) dealing with such offenders
    → During 19CE upward trend in such prosecutions as employers brought large numbers of embezzling staff to court
    → The unprecedented size of the railway industry and the numbers of trusted servants employed within it exacerbated the issue of breach of trust offences
    → Directors of railway companies were keen to use public methods of justice against those who breached the trust. Prosecution was the main method through which to deal with embezzling staff.
    ○ For example, the official policy of companies such as the Great Western Railway (GWR) was to proceed criminally against all ‘provable’ cases of fraudulence, embezzlement and other forms of dishonesty
    ○ A memorandum from the company directors proved that there was an attempt within GWR to set a uniform course of practice for such cases and where cases of provable ‘defalcation, embezzlement and falsification of the company’s books’ occurred the perpetrator would be prosecuted
    → More than just empty threats. Victorian/Edwardian railway companies frequently pursued prosecution for cases of embezzlement
    BUT as private records show, only a small percentage of embezzlement/fraudulence was officially prosecuted.
    ○ Directors disposed of large numbers of untrustworthy, suspicious or financially ‘irregular’ staff through internal, private means of company justice.
    → Alternative factors (‘currently unrecognised within historical scholarship’) explain the desire for such companies to use private punishment
    → ‘The most fundamental dynamic in this process derived from within the legal arena, centring upon statutory intricacies which problematized the issue of obtaining satisfactory legal proof of embezzlement to proceed criminally against the offence.

    The importance of proof

    → Current interpretations are wrong in ‘exaggerating’ the agency held by employers when deciding between public/private justice in cases of embezzlement
    ○ Existing research overemphasises the power of employers and assumes company directors had complete control over deciding whether to pursue a prosecution or not
    ○ Existing research relies on the assumption that companies chose not to publically prosecute certain embezzlement cases

    17 Feb 2017, 14:34

  5. → In reality (according to Locker), because the law provided ‘inadequate statutory provision’ regarding embezzlement it made it difficult for employers to pursue such prosecutions .
    → The legal offence of ‘embezzlement’ was very difficult to establish and subsequently it was hard to achieve successful prosecutions
    → Companies struggled with ascertaining whether missing money had been fraudulently appropriated or not
    ○ ‘Embezzlement’ was only deemed a chargeable offence if it could be shown that a clerk/servant had intentionally not accounted for money in order to deprive their employer of that amount.
    ○ Relied heavily upon proving the means rea of the crime
    ○ In cases of irregularity distinguishing between honest mistakes and embezzlement relied upon establishing the intention of the clerk/servant
    → In large industries such as the railways where many clerks/staff were entrusted with receiving/handling company money, deciphering the true intention behind an act of financial ‘irregularity’ was very difficult as constant supervision was impossible and missing money regularly occurred within clerical work
    ○ Records show clerks frequently came up short. Such acts did not immediately suggest fraudulence
    The case of Charles White

    → Clerk. Irregularities with his finances, didn’t hand money in before his holidays. Claimed innocent mistake and returned the money. Superiors suspicious. Eventually reinstated.
    → In such cases where there is uncertainty behind the causes of a clerk’s behaviour, the label of ‘irregularity’ is the only one which can be applied, despite its vague/ambiguousness. The precise legal terminology of ‘embezzlement’ cannot be applied in such uncertain cases.
    → The reason behind directors’ decision to deal internally with such issues is most likely their inability to categorically prove the true nature of the ‘irregularity’ or use legal measures to deal with it

    Prosecutorial caution

    → Legal technicalities around the offence of ‘embezzlement’ meant that even when intent could be proved, prosecutions could still be undermined.
    → Failed prosecutions cost companies time/money and also open them to counterclaims by the dismissed clerk/servant
    ○ 1855 Mr Found (clerk and Shrewsbury goods station) reported for deficiencies in his cash (£78.6s.9d) and prosecuted for embezzlement. Following unsuccessful prosecution in 1856 Found pursued a counterclaim.
    → Thus, it is likely that prosecution was only undertaken when the chance of winning was high
    → Company solicitors provided the principle source of advice to directors, would discuss the likelihood of even the most obvious of cases wining
    → Proof was of central importance

    Exploring the uses of private justice

    → Where legal methods of justice were not available, the system of private justice demonstrated the ‘determination of directors to pursue clerks as far as possible within the limits of their powers’
    → The system emphasised severity rather than leniency
    → Private methods of justice pursued out of necessity rather than choice

    Scale of embezzlement and costs of public prosecution

    → Costs of prosecution were not often discussed as an ‘immediate or pressing issue’ and was of little consequence
    → Companies offered financial rewards for information leading to successful convictions

    17 Feb 2017, 14:34

  6. Paternalistic impulses, sympathy and leniency

    → Suggested that emphatic responses to offenders led to private justice being used as a more lenient alternative
    → However, Victorian/Edwardian media reporting of embezzlers show that attitudes towards such criminals were ‘ambiguous’
    ○ Some offenders could receive public/judicial sympathy the opposite was true and possible
    ○ Regular view of offenders as hiding their true nature behind a ‘façade’ (doesn’t conflict with Victorian moral/classist attitudes/beliefs)
    ○ ‘Respectable’ persons in trusted positions were expected to act ‘better’ than those from whom criminal behaviour was expected. They were held to an even higher stander so such criminal activity was viewed as even worse.
    → Railway companies’ attitudes towards offenders was more severe than lenient and incredulous rather than sympathetic
    ○ Contrasting with Hall, the evidence of the ‘litigious outlook’ of companies such as GWR is reflective of the ‘severe threat’ posed by embezzlers and any financially dishonest staff
    ○ Where a case was enabled by evidence companies rarely sought to withdraw the charges/find mitigating circumstances even at the insistence of offenders, their families or influential acquaintances.
    → Employer paternalism severely lacking even when prosecution wasn’t pursued
    ○ Employers didn’t show much concern for the prospects of dishonest staff with some even going to great lengths to reduce their future employment opportunities
    ○ 1850s a number of railway companies joined together to create intercompany ‘blacklists’ of dismissed/prosecuted employees to ensure that they would not be employed again within the industry
    → Paternalistic sentiments (after many years of service etc.) were of ‘little value’ in changing the minds of railway employers in the event of a breach of trust
    → As private correspondence shows, directors remained universally severe in their approach irrespective of the individual circumstances of the case or employment/service records or histories of the staff concerned
    → Where accused staff’s explanations were not satisfactory but public justice wasn’t available, dismissal was the regular result
    ○ This wasn’t necessarily a more lenient punishment
    ○ Said clerks struggled finding employment after and dismissal bore heavily upon their lives – public shame/embarrassment etc. a number committed suicide after their public disgrace
    ○ Economic repercussions – dismissal could force clerks/staff into poverty

    17 Feb 2017, 14:34

  7. Phil Handler, ‘Forgery and the End of the ‘Bloody Code’ in Early Nineteenth-Century England’, pp. 683-702
    - In the 1830’s criminal law and punishment was decried as ‘draconian’, with capital punishment being phased out to the wishes of a ‘more human public’. (p. 683)
    - 18th century punishment often labelled as the ‘bloody code’, Handler suggests a different term is needed to capture the textured layers of the period. (p. 684)
    - Samuel Romilly and James Mackintosh led the reformers movement, author describes a dramatic pendulum shift from the 1820’sto 1840’s in regard to capital punishment, but still reformers had to tread carefully due to the opinions of moderates. Even Mackintosh stated that any crime that attacked ‘the life or dwelling of man ought to be punished with death’. (p. 685)
    - The argument was made that 18th century legislators ‘made justice a potentially fatal lottery by casually enacting new capital felonies’, but this was no longer acceptable in enlightened 19th century. Mackintosh argued that in order for laws to be respected, they had to adhere to the ‘particular feelings of the age’. (p. 686)
    - However caution was exercised when including the general public, as William McKinnon argued in 1828 that public opinion should only consist of those ‘best informed, most intelligent and most moral persons in the community’. (p. 687)
    - This is not to say reformers were unaware of the dangers of failing to include the wider population, as McGowan argued, for reformers ‘the desire was not just to reduce crime but to secure wider support for the legal order’. (p. 688)
    - Forgery attracted large public interest due to the perceived threat to paper credit, and the fact that most perpetrators were middle class and thus received less sympathy. The ‘uncertainty and betrayal’ evoked by such a crime singled it out as being heinous. (p. 689)
    - The switch to paper notes marked an increase in forgery 1818-21, and the Back of England were often blamed for rising crime. The crime carried the death penalty, and the blanket nature of sentencing drew criticism. (p. 690)
    - The death penalty came to seem ineffective in the case of such widespread fraud. The cases of Joseph Hunton and Henry Fauntleroy both prompted public campaigns for their mercy, which while unsuccessful brought infamy to the crime. Quakers in particular objected to the death penalty, so Quaker bankers would often refuse to prosecute, rendering the death penalty further ineffective. (p. 692)

    22 Feb 2017, 17:35

  8. Handler, ‘Forgery’, (cont.)
    - While Peel was in favour of legal reforms to make the laws on forgery clearly, he was not in favour of removing the death penalty. Handler writes, ‘it was notorious that convicted forgers would hang and Peel wished to maintain that impression’, even to the extent of defying the king when he asked for Hunton’s mercy. (p. 695)
    - Colin Macauley re-emphasised the will of the public in the cases such as Hunton over the belief of legislators, arguing ‘the opinion of the people ought to regulate the measure of punishment’. Public opinion should supersede the seriousness of the crime. (p. 696)
    - Others such as Beccaria or Bentham believed ‘punishment had to be measured according to principle without any reference to the state of public opinion’. This was the rational mode of thought that treated society as static and not organic. (p. 697)
    - By way of evidence, reformers gathered petitions across the country in 1828-30, one in particular signed by 735 bankers making up what they estimated was half of Britain’s bankers, who stated their opposition to the penalty. By demonstrating that the tide of respectable opinion had turned, their argument was significantly strengthened. (p. 698)
    - The motion to abolish capital punishment in forgery offences was passed in the Commons, but by the encouragement of Peel, said to be ‘disgusted’ at the ruling, the motion was thrown out in the House of Lords. However by this point reformers had ‘critical mass’ on their side which was crucial. (p. 699)
    - Reformers contended that the state of criminal law reflected national humanity. Ewart made the statement that ‘a mild code of law was really a proof of a great and good country, because in all countries where the law was mild, the inhabitants were also mild and civilised’. By depicting previous law as a ‘bloody code’, reformers were able to sharply distinguish their era from what had come before. (p. 701)

    22 Feb 2017, 17:36

  9. Rob Sindall, ‘Middle-class crime in nineteenth-century England’, Criminal Justice History, 4 (1983), pp. 23-40
    - Most accounts of Victorian crime focus on the working or ‘deviant’ classes and therefore so do theories as to the causation of crime.
    - However, a study into the cases brought before the Quarter Sessions and Assize Courts show that the middle class were equally as criminal.
    - These courts were created specifically to deal with crimes more serious that the Petty Sessions, and middle class crime was often of a greater magnitude, in terms of monetary value, than lower class crimes.
    - Middle class crime was closely associated with occupation.
    - P. 23 During the second half of the nineteenth century, there was a considerable decline in people appearing before the courts, and by 1890 the levels were lower than that of today.
    - Middle class crime did not follow this general trend and was in fact, on the increase.
    - This can partly be explained by the greater number of middle class civilians as the century progressed but also that this group were exerting greater criminal tendencies over time, relative to the rest of society.
    - Over the period, the number of people committed to trial fell, altering the perception of criminality. Prior to 1870 it would seem that other groups were more criminal but after this point the number of middle class accused fell less steadily than other groups.
    - Post 1870, crime was becoming less attractive to the lower classes and more attractive to the middle classes.
    - Commercial and service sectors of the economy increased, resulting in additional criminal activity for the middle classes. Moreover, the working class suffered as the golden age of ‘pickpocketing’ began to die and juvenile punishments became more severe. Additionally, fashion changed and close fitting clothing became more popular, making petty crimes such as pickpocketing more difficult. The Education Act of 1870 also decreased the number of idle and ‘nimble fingers’.
    - It is also likely that the increased efficiency of the police and the introduction of detective forces put lower class individuals off committing crime. This didn’t effect middle class crime as this was often within offices and therefore out of reach of the police.
    - Most middle class criminals never made it to court, and most philanthropists and social reformers were middle class and were fixated on the idea of an inherent criminal class, bore from the lower classes of society, and not their own.
    - However, after 1870, the number of middle class committals matched or exceeded the number of middle class individuals within society.
    - Of the Central Criminal Court, the middle classes accounted for 9.2% of crimes in the earlier period (1857-59), while it rose to 15.5% in the later period (1881-83).
    - One explanation is that the middle class criminal was more intelligent, and appreciated the cost of criminality. They acknowledged the high risk of prison, damaged social status and the loss of their job, so they decided they would risk this only for a greater reward.
    - Secondly, and Sindall argues more importantly, the middle class individual had greater opportunities to commit more severe crime.
    - The middle class criminal could embezzle from his desk. The new world of shares, accounts and limited liability bought greater opportunity for crime.
    - The most common crime committed of the middle class was larceny (24%), followed by fraud (14.7%), embezzlement (12.3%), larceny from the person (5.7%), larceny by a servant (5.2%), and receiving of stolen good (5%).
    - Despite similar expressions of criminality, those of the highest social class were found not guilty 28.5% of the time. Compared to those of social class II which were found not guilty 18.5%. to Sindall, this shows that courts were influenced by the social class of the defendant.
    - Those of the highest classes often engaged in ‘violence for fun’ and this was not a new concept.

    22 Feb 2017, 20:34

  10. Aleema Salami

    Robb, White-Collar Crime in Modern England
    • White-collar crime (WCC) is often seen as something from today but the real origins of WCC was 200 years ago during the financial growth that came as a result of the British Industrial Revolution
    • It created a complex economy which depended on finance and investments, “a vast banking network, a burgeoning commercial nexus of insurance, stocks and credit, and an increasingly complicated legal system”
    • The was an increase in lawyers, brokers and financers but the atmosphere expanded the potential for white collar crime
    WCC signifiant to British history because it affected large amounts of property, threatened savings and ruined the lives of many investors
    o E.g. the collapse of the Liberator Building Society in 1892, fraud against the Crystal Palace ompany to the extent of £30,000 etc.
    • The image of the respectable Victorian businessman is an illusion created during the 20th century
    o Contemporary Victorians “were plagued by white-collar crime as no other people before or since”
    • The most significant aspect of the new financial structure and that which was most susceptible to fraud was the joint-stock company
    o Purchasers of shares were joint owners and were entitled to a percentage of the profits
    • The advantage of joint stock companies was that there was no limit to the amount of wealth that could be drawn upon

    22 Feb 2017, 22:21

  11. Aleema Salami

    • By the late Victorian period, middle and upperclass England was virtually “a nation of shareholers”
    o “By 1914, the seven largest industrial companies alone had an aggregate of 400,000 shareholders”
    o By 1927 distinct bank shareholdings were at 300,000 and railway shareholders were at 900,000
    • However the manner within which the companies were organised “transformed opportunities for financial dishonesty”
    o “The rising scale of organisation increased the distance between the nominal owners, the shareholers and the active directors, and heightened the impersonality of this relationship”
    o “Thus the directors and their allies, the company floatation experts, were more open to the temptation to subject the investments of the faceless thousands to a wide variety of manipulations”
    • Discussions of business frauds filled newspapers and journals during the Victorian and Edwardian periods and were also featured in novels by Dickens and Trollope and attracted the attention of dramatists like W.S. Gilbert and Granville Barker
    • The term “white-collar crime” was first used by Edwin Sutherland, a sociologist from the 1940s
    o He defined it “as a crime committed by a person of respectibility and high social status in the course of his occupation”, crimes by that class which were not work related, such as, rape or murder, would not be considered white-collar crimes

    22 Feb 2017, 22:22

  12. Robert Colley, ‘The Shoreditch tax frauds : a study of the relationship between the state and civil society in 1860’, Historical Research, 78 (2005), pp. 540-62.

    • Tax fraud was a symptom of the growing tensions between state and society.

    • White collar crime was nothing new in Victorian England but the historical debate now focuses on the progress I has had during the 19th century.

    • The tax system was born in the 18th century. Unpaid local commissioners appointed their own officials to carry out the day to day tasks of assessment and collection. The income tax came from a war tax which had been started during the wars with France and stopped after Waterloo.

    • The system relied the local élite acting as unpaid commissioners, who were justices of the peace, commissioners, Poor Law guardians, members of parliament and land tax commissioners.

    • The tax administration heavily localized and quasi autonomous, based on geographic area of each county.

    • Trustworthiness and respectability in the eyes of the local community were the attributes needed for employment in this area, there could be no disruptive behaviour by respected officers.

    • John Rose, a tea-dealer and grocer who had three shops in Shoreditch, made a return of income for each year from 1855 to 1858 in sums of £1,000, £1,180, £1,600 and £1,500 respectively. In total, £223 5s 0d income tax was properly payable and this sum was collected by Jay. But the assessments were made in sums of £500 for each year, yielding tax of just £91 13s 4d.

    • How extensive fraud cases were was difficult to establish with certainty. The public record is unreliable for measuring the scale of the crime. It is probable that the true levels of fraud were much greater. Proof of embezzlement could be obtained only by comparing the receipts for tax paid with the assessments made.
    • Further corruption also exacerbated the problem with fraud as when it was discovered it often went further than just one person.

    • The crucial questions were how it could have been perpetrated in the first instance and whether there should be a reappraisal of the administrative structures which permitted it to happen at all.

    • The relationship between locality and centre was also being brought into question with regard to how those who committed crimes should be punished.

    22 Feb 2017, 22:41

    Chapter 3: The Counting House World
    • Strong contacts between employers and the clerks
    • A vertical relationship of trust and loyalty
    • The Paternalistic Relationship
    • A relationship of interdependence: clerks were indispensable and employers showed gratitude by ensuring job security, social mobility and status
    • The length of a clerk’s service became a determinant of an employer’s gratitude
    • Gifts were also a physical sign of paternalism; pensions also provided – revisionary and seen as a sign of gratitude
    • This was the ‘soft’ side to the paternalism; but there was also a ‘hard’ side when they did not fulfil their responsibilities
    o Disciplinary action: for any number of transgressions
    o Dismissal or forced to resign
    FRAUD – embezzlement of small amounts;
    • 1868, at Chester, a clerk named Bond used embezzled amounts for gambling
    • When a clerk embezzled it was likely to affect his future relationships – esp. his father, who was almost certainly respectably connected and has probably pledged financial securities for his son’s career
    o Fathers may have to make up for the loss
    • Embezzlement committed by low level young clerks/ apprentices
    • There were more damaging effects if it were committed by more senior employees
    o William Smith 1890s Liverpool, embezzlement came to light in 1897 (£800)
    o WS claimed that it was a clerical error at first
    o Resigned in 1897 because it would jeopardise his family
    o Embezzlement was more extensive than initially assumed
    o Continued to receive a salary form some months, and money to pay off some debts
    o Perhaps through sympathy or fear of scandal, his employers refused to prosecute.
    o Decline into anonymity and bankruptcy
    o Effect upon the other clerks: uneasy to discuss it before for fear of their own dismissal; culture of deference
    • Most crimes were concealed from the public because of employers fear of scandal and the chances of the clerk’s getting another job
    • Exposing the crime was the strongest form of paternal discipline – warned others of their disloyalty and blighted their social/ economic prospects
    • Prosecution = social degradation through public exposure
    • Sometimes the employers had a change of heart and decided not to go through with the prosecution (worked for a long time; had family, not because of retribution) – ‘kindness of the master’
    • When it was made public, the clerk was not the only culprit: the employer ‘might also be abdicating his responsibilities’ (for allowing the conditions to exist)
    • Barry Case – where the employers were blamed:
    o Total amount: £20,000
    o Not in dire economic need
    o Of high standing
    o Given an exemplary sentence
    o Employers blamed for lack of business management (weak technique in bookkeeping and inadequate supervision and also they thought that they were not paying the clerks well enough > the employers wanted the privileges of paternalist control ‘but were not prepared to pay for it’
    o Wage argument also believed by the press
    • Embezzlement led to loss of trust in the system – clerks could not be trusted with money
    • Merchants (employers) fulfilled the stereotypes of the Victorian middle class; seen as financially successful and economically independent
    • Social mobility and social connections
    • But the small income, realities of depression, and insecure employment eroded the goal of economic independence

    22 Feb 2017, 23:00

  14. Charlotte Beesley

    PERKS, PILFERAGE, AND THE FIDDLE: The Historical Structure of Invisible Wages.
    JASON DITTON (1977).

    - States differences between benefits of blue collar and white collar workers:
    + Blue-collar workers get side-benefits of various kinds, these benefits act as added occupational commitment, and are prof- fered instead of exclusively direct financial reward.
    + Whereas white-collar workers never get part of their wages in kind: instead, they may receive kind extras, which do not displace an appropriate amount in their salaries, and which act as unofficial rewards rather than as added commitment.

    - Highlights how early 17th century England customary rights allowed the ownership of property and hence through this ownership gave a window into criminalisation and abusing of these rights.

    - “The annexation of common rights (and their subsequent replace- ment with legal rights) naturally culminated in the simultaneous creation of “property,” and the propertied classes, and the ultimate criminalization of customary practices”.

    - The criminalization of custom involved both moral attempts to define “common” as bad, and savage repressive measures enacted to persecute those who attempted to continue to exercise erstwhile rights.

    - The Acts of Enclosure made a relatively unknown distinction between common appendant and common appurtenant into a dividing line of crucial significance. The ability of the comparison to draw a de facto/de jure distinction between the actual (appendant) and legal (appurtenant) villagers refused common rights to those who sought its protection by custom, and restricted it to the smaller category of those who had legal entitlement. More is said about the legality of ownership here during 17th C England.

    - A crucial distinction between “pilferage” and “perks” is that anybody caught pilfering is stopped, but not necessarily prosecuted. Pilferage is thus itself a paradoxical state. Its immediate consequences are unpredictable, and, in historical terms, it is a transitional stage between wage-perk (which is offici- ally institutionalized), and wage-theft (which is officially condemned). Conse- quently, pilferage is the name which we should logically attach to those occasions where blue-collar employees abstract value in kind from their employer under a regime where the treatment of this appropriation is unpredictable, and its a priori meaning thus ambiguous.

    - A pilferer must himself qualify the possible advantages of his occupational theft with the a priori knowledge that what will happen to him should he be caught is, apropos of the employer’s reaction to the theft, wholly uncertain. Of course, he may be able to solve this problem at the psycholo- gical level, and successfully define the theft as pilferage to himself, but this in no way guarantees a similar definition by those who stand to suffer the loss.

    - It seems that pilferage for workers may become “customary” (although not yet officially a “perk”) under various structurally recognizable conditions. Management often turn a blind eye to pilferage when the pilfered goods do not really constitute a loss to the firm.

    22 Feb 2017, 23:08

  15. As this is an introduction to his book, is not as analytical but descriptive as it provides 18 examples of accounting scandals over time. It starts from ancient and medieval history to the modern day. He outlines the following:
    1. ‘the aim is to look across time to show the universality of accounting scams.’ (115)
    2. ‘As long as there has been accounting, therefore, there have been temptations for individuals creatively to use that information and to indulge in fraud. Interestingly, the boundaries between creative accounting and fraud have been fairly flexible. In other words, one period’s creative accounting becomes the next period’s unacceptable accounting, which if followed may be judged fraudulent. This is because creative accounting often contributes to accounting scandals.’ (115)
    3. ‘In a pattern that is often repeated across time, the pressure upon companies to raise money and the eagerness of investors to make money caused a relaxation of the normal rules of prudent financing. The need to raise finance and the consequent potential rich rewards led to many accounting abuses.’ (120)

    This introduction doesn’t go into detail about the social cost of white-collar crime against society. It remarks how it was done by a certain group.We tend to think of money as tangible currency (as depicted with pickpocketing, burglary etc. by the working class). But accounting fraud highlights how money is credit. Credit is intangible, it is a promise to pay, a debt. Therefore, ‘cooking the books’ meant:
    1. Deliberately talking up the company to get potential investors to invest. This is where we get an insight into how business was conducted amongst the privileged. Directors used their contacts from school and the City to procure investment.
    2. Blurred boundaries. It is this aspect in particular which affects public policy. This is because shareholders have to pay out a company when it makes a loss, if the shareholder includes the government, then instead of losses being exclusive to the middle-upper class directors, it is spread across society.
    3. Increased speculation in order to boost reputation on the stock market. This is achieved by making a complex network of transactions that would make it difficult to trace;
    4. Some figures using their authority to get away with writing misleading numbers, give out dividends etc., or even worse bribe politicians.

    23 Feb 2017, 08:06

  16. Examples relevant to our period
    1. Railway Scandals, 1840s-1860s England. Railway companies practiced payment of dividends out of capital. ‘The problem with this is that it disguised the fact that the companies were not making healthy profits. In addition, it encouraged the railway companies to raise more capital so that they could use this to pay their current shareholders.’ (120)
    a) George Hudson. By 1848 he controlled more than one-third of the railway network. He did so by false reporting his company’s activities; used insider information to manipulate shares; selling railway land he didn’t own. By blurring his private money and publicly provided funds, he was finally imprisoned for failing to pay his shareholders (120).
    b) Leopold Redpath, used his position as the company’s registrar to create false shares of the Great Northern Railway Company. He received dividends and sold the shares. He was convicted in 1857 for defrauding shareholders (120).
    c) Richard Hodgson, MP defrauded the North British Railway Company. This was scandalous as it was the largest Scottish company of the time. In 1866, an investigation revealed that he perpetuated fraud to inflate sale revenues and understated expenditure. This meant that in reality the company could not legally pay dividends but did so illegally by distributing £300 000 out of capital.
    2. City of Glasgow Bank, Scotland, 1878. Its collapse came as a shock because it had the most branches than nay other Scottish bank, had gross assets of £12 million, seemed stable and profitable. But fraud was committed by the collusion of 7 directors, 2 who actually did it. When trustees investigated, they found that instead of finding the reported £1.592 million profit, they discovered a £6.19 million deficit. ‘The directors were found guilty of falsifying balance sheets, of obtaining advances from the bank and embezzling them, and of using bills of exchange improperly to pay the debts of the bank.’ (121). This meant that ‘The shareholders, therefore, not only lost the money they had invested, but were also expected to cover the bank’s debts. Most of them could not do this and eight out of ten were made bankrupt.’ (121)

    23 Feb 2017, 08:07

  17. Watchdogs or apologists? Financial journalism and company fraud in early Victorian Britain
    • The article explores the characteristics and role of early finanical journalism through a case study of a major insurance company scandal in 1840s.

    23 Feb 2017, 08:25

  18. • Press reports both before and after the company’s collapse show that newspapers played a more active role in exposing and reporting fraud than has been argued.
    • The case had important ramifications both for company law and for future development of financial journalism, with willingness to expose fraud becoming central to financial journalists’ claim to legitmacy.
    • Writing at the start of the 20th c. Charles Duguid identified the emergence of what he called the ‘new financial journalism’ – designed to cater to the insatiable hunger among legions of new investors for information, opinion and gossip,t the new financial journalism was characterised by a ‘crisp’ and ‘outspoken’ commentary, ‘successful tips’ and ‘trenchant disclosures of financial fraud’.
    • New journalism came with greater risks, not only of offending advertisers but also of corrupting journalists tempted by bribery, it was clear that Dugids preference was for those articles ‘which attempt to make the dry bones of finance live’.
    • Porter – the arrival of the new journalism means that ‘the requirements of City editorship and financial journalism in general became more testing’.
    • The market economy and the market for information developed in tandem in the 19tj c. and the relationship between them was symbiotic.
    • Rising wealth and the burgeoning middle classes meant that financial institutions began to target larger masses of investors, and the newspaper press was instrumental in creating a viable market for financial products.
    • Readers were not just passive consumers of information and opinion, rather they were encouraged to write to newspapers.
    • Opinion that the modern press performed a distinctly ideological role, buttressing the market which underwrote its profitability.
    • ‘Newspapers have, almost from their inception, been about selling markets’ – Wayne Parsons.
    • Since the 19th c. they have been crucial in the mediation and legitimisation of ‘economic values,ideas and language’.
    • Normalising the market.
    • Previously associated with chaos, instability and danger the market was reconceptualised in the writings of mid 19th c. journalists.
    • Financial journalists – viewed as ‘apologists for the credit economy’.
    • Financial speculation, less like gambling – giving way to a new ‘science off financial; investments’ – stressed rationality and downplayed human agency – promoted the view that financial markets were not governed by any single individual/group.
    • Growth of the market in the 19 th c. also gave rise to unprecedented opportunities for fraud – raised questions about the close relationship between the press and market economy.
    • The presence of fraud highlighted the dilemma facing the press – was their loyalty to their readers or to advertisers?
    • With cases of fraud, much was considered newsworthy – the gap between respectable appearances and scandalous reality, the affluent lifestyles of the perpetrators contrasted with the tragic plight of the victims, the moral lessons for investors.
    • White-collar criminals were represented as ‘exceptions to a general rule of reliable transactions’

    23 Feb 2017, 08:26

  19. • This article argues that reports of fraud in fact reveal a more complex relationship between the press and the market, and it is only through empirical investigation of the promotion, exposure and repercussions of individual frauds that the nuances of this connection can be explored.
    • Although advertising enabled the press to free itself from its traditional dependence on political subsidies, reliance on the private sector for revenue created its own dangers.
    • Boundaries between the editorial and the advertising content of newspapers were blurred by ‘puffs’ – articles or shorter commentaries promoting particular companies, paid for by the firms in question, but purporting to be independent of them
    • Indeed, the established offices did themselves no favours, wedded to old and inaccurate mortality tables which underestimated life expectancy, thus inflating premium rates and company profits.
    • The average reader would know that ‘it is by free and open competition alone that extravagant prices and exorbitant profits are prevented, and that the public are supplied with commodities as cheap as the dealer can afford to sell them’.
    • The other arm of the company’s operations was also promoted by the press, which happily printed news items casting it in a flattering light
    • Fire insurance companies had to be adept at public relations to expand, and the I.W.M. was particularly skilled at planting good news stories in the press.
    • For example, when a dispute between insurance companies in Gorbals left locals without the protection of a fire engine, the company stepped in to present the people with ‘a very powerful and first class fire engine, with all its apparatus complete’.
    • The press was therefore instrumental in making the company an overnight success.
    • Customers flocked to the new firm, which rapidly became a significant player in the nation’s insurance and annuity market
    • By 1838 it was doing an extensive amount of fire and life insurance business, and registered £39,000 in annuities for the year. Its prospects for the future looked bright.
    • Newspapers clearly had a part to play in the new era of regulation by publicity, one made easier by a change in the law of libel in 1843 which made it possible for defendants in criminal trials to plead the truth as a defence provided publication was in the public interest.
    • Indeed, there is evidence that the mainstream London press was already beginning to envision a more active role for itself in tackling company fraud.
    • At a broader ideological level, the financial press was clearly not out to strangle the capitalist system on which its existence depended. But nor did it perform a straightforwardly normalizing role: the shadow of fraud was never too far away.

    23 Feb 2017, 08:26

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