On 12 September 1886, a rumour swept through Vienna’s manufacturing quarter: Karl Schiske, confidential clerk and procurator of the firm Gebrüder Klinger, had surrendered himself to the magistrates, confessing to substantial defalcations. Those acquainted with him took it at first for a misunderstanding. For two decades he had governed the Viennese branch virtually alone; the proprietors, established in Bohemia, had entrusted him with the keys, the ledgers, and the daily conduct of the house. He was reputed punctual, reserved, and devoid of taste for luxury. The following morning, however, the journals reported his detention and the discovery of a deficit estimated between sixty and seventy thousand florins.
The town hastened to assign him a vice. Some spoke of the lottery, others of reckless speculation; others still maintained that a man frugal at his own hearth had smothered an opera dancer in jewels. The chronicle of the Neue Pitaval records these rumours to show how arduous it was for his peers to imagine any other cause. Schiske had never been remarked in the theatres or the houses of pleasure; his domestic expenditures, by all accounts, remained modest. But public suspicion demanded a simple narrative: missing coin must needs have financed a clandestine existence.
Schiske himself advanced an explanation far more singular. At the hearing on 10 November, he insisted that the deficit arose from disorderly management, not personal enrichment. He had, he said, paid the firm’s expenses out of his own pocket without setting them down, neglected to enter rebates granted to clients, overlooked attorney’s charges and court stamps, advanced funds to underlings, and entered invoices at their gross face value despite the allowances conceded. He had acted as though the enterprise were his own, striving to preserve the façade of an unceasingly prosperous branch. He could no longer produce the necessary vouchers. He acknowledged his obligation to restore whatever remained due, yet denied having appropriated a single florin.
The presiding judge examined the man before the books: fifty-six years of age, twice married, one child, his countenance lined with care. Schiske had begun at an annual salary of twelve hundred florins; his emoluments had been raised to eighteen hundred, supplemented by a share in the profits. He possessed a villa in Währing, purchased by instalments, and led, according to the depositions, a regulated life. He related that his mother had bequeathed him nearly twenty thousand florins, and that his first wife’s life policy had yielded six thousand; these sums, he averred, had been consumed in abating the deficit. Thereafter, he had ceded to the firm his house, his furnishings, his books, his raiment, and his personal claims. Nothing remained to him, he testified, save the clothes on his back.
The court then heard the question raised by such conduct: wherefore surrender himself if his fault belonged to poor administration rather than felony? Schiske replied that he had acted wrongfully. Yet, when the magistrate asked whether he had retained anything for his own advantage, he answered that he had not. His counsel dwelt upon the vital distinction between a commercial liability, which required computation, and fraudulent conversion, which demanded strict proof. The public prosecutor, conversely, recalled that after speaking to his principal, Schiske had presented himself before the magistrates on the morrow, declaring he had taken sixty thousand florins for his own use. That initial statement weighed heavily against him; his testimony before the bar now sought to overturn it.
Anton Klinger, the son of one of the partners, was the sole witness examined. He had engaged Schiske in 1864, entrusting him with the firm’s procuration in 1866. He described irreproachable books, a business believed to be admirably conducted, and a trust so absolute that he had never once demanded to verify the cashbox. From 1878 onwards, the reported cash balance had stood at eight to ten thousand florins; the expansion of the house seemed to warrant such a reserve. The directors had discontinued the acceptance of accommodation bills, believing an ample operating fund remained requisite. They neither audited the portfolio of commercial paper nor the lines of credit Schiske mobilised without authority.
The alarm was sounded by a deposit of ten thousand florins remitted by a bank to Schiske in September. Klinger demanded an explanation. The clerk replied that he had sought to assist a friend in need; this vague rejoinder prompted Klinger to hasten to Vienna and, for the first time, require the keys to the strongbox. Schiske thereupon laid bare the full extent of the ruin. The total deficit submitted to the owners reached 78,248 florins. Yet the firm subsequently admitted that certain trade outlays might be deducted, reducing its demand for restitution to 43,263 florins. Advances, rebates, discount interest, and unauthorised bills had become so thoroughly entangled that no man could readily unravel every transaction.
Klinger’s testimony did not dispel the mystery; it rendered it more human and more acutely embarrassing. He had admired Schiske, viewed him as a preceptor, and had shrunk from wounding him by demanding an audit of the till. He believed, moreover, that his clerk possessed an inheritance and other means. He deemed it plausible that Schiske’s explanations were genuine, whilst maintaining that the house must be indemnified. Trust had not merely been a sentiment: it had ordered the entire accounting. For twenty years, no one had inspected the cash. Thus, the very regularity of the registers, which ought to have reassured, served to veil the operations kept off the balance sheet. As maturities fell due, discounted bills provided the necessary sums, but the mounting interest widened the very gulf it was intended to bridge. Advances, remissions, and unrecorded outlays formed no distinct, easily enumerated fund; they dissolved into the firm’s debts and trading losses.
The prosecution maintained that the debts and bills of exchange had served as instruments of embezzlement; the defence replied that they had financed the outlays and allowances of the branch, and thereafter the exorbitant interest of an engine devised to mask its losses. Had Schiske sought to enrich himself at his master’s expense? The evidence tendered at the bar failed to establish such a purpose. The ledgers proved a shortfall and an administration contrary to mercantile usage; they did not suffice to demonstrate the personal conversion of the funds. The firm itself acknowledged that monies had been expended in the prosecution of its trade, offering to strike them from its claim.
The tribunal acquitted Schiske and discharged him from custody. It relegated Gebrüder Klinger to the civil courts for the adjudication of their claim for reimbursement: wrongful conduct might establish civil liability without constituting the crime charged in the indictment. It did not follow that the books had been properly kept, nor that the proprietors were indemnified by the verdict alone. No civil trial ensued; Schiske and the Klingers arrived at an amicable settlement concerning the damages.
The chronicler ultimately attributes the disaster to a singular professional pride: Schiske had sacrificed his personal patrimony to sustain the repute of a great merchant and postpone the confession of his reverses. This interpretation is not the formal finding of the court, yet it imparts to the affair its inner movement. A man left without oversight, a commercial house that trusted blindly in its ledgers, advances conceded under the firm’s name, and bona fide expenses omitted from the balances had combined to yield a deficit which the penal law, upon the evidence adduced, could not brand as felonious self-enrichment. Schiske had lost his fortune and his station; the measure of redress was adjusted by private treaty with the enterprise. Upon the threshold of the prison, the confession had seemed to conclude the matter. At the bar of justice, it proved to be merely its beginning.