6 TVVKMY PER CENT." A BANK1NU TALK VP TUE PKEiENT TIME BT TT1E ACTUOR OP "TTTB BUBDLES OF FINANCE. " It in not to be wondered at if the Anglo-Indian who returns home after a ojoura of a quarter ol a cpntury in the East, should, above all things, wish to "rest and be thankful" for the remain der of his days. Such, at any rate, was the principal thought that occupied my nvnd when, some six years ago, I made up my mind to rign my appoiatmentof ju lire Bt Bcelnpoorc, nd retire upon my peusiou of 1000 a year, which is the sum allowed to all those who have spent a quarter ot a century and up "wards in tho Indian Civil Service when they leave India for g.od and all. During my career in that country I had neither been extremely for tunate nor very much the reverse. Besides my pension aforesaid, 1 had saved some money, and having ' 'turned it over" judiciously, and never dabbled in speculative shares or hazardous undertaking1, I had, trom the very first that I commenced to nut by from my pay and allow ances, steadiiy increased my store, so that the day I took my pus-mge on board the i'enmsular nnd Oriental steamer nt Calcutta to return to Euglund, 1 could write in sell down as the mas ter and owner of some 2i).0O0: which, heme: invented in tiie Iuiiian (iovtintnent Five-per- cut. paper, nave HjO about 1000 a year, in nddit on to the like sum which I would lor the lutiire receive liom the India House. .Now, with X'2i () a vein- a mnn of moderate habits and inexpensive tastes may look forward to comfort, if not, to wlia: he terms luxuries, lor the rest of n.siU' s. It wns not necd'ul lor me 10 put by anything for mv widow; for, according to ttie niles of the Indian Civil Service, she would have i3i)(l a year at my death, which would he about equal to a marriage scU lenient et xl2,u.0. My children, by the regulations of the same Civil r.-crvire Fund, were also provided lor, each one that survived me being entitled to 100 a. year the iriils until they married, the boys until they were twenty-one years of one. My income of jl2(I0O 1 wa3 therefore, so to speak, tree to spend how aud vh 're 1 liked, without iu the leasi hazarding ttie luture ooinlo'-t- of those I lelt behind me. Not that I looKed lorward cither to a h'e of indolence1, or to letting what talent.' I biounlu home with me iu the way of capitul be hid behind a bu- hcl. The Italian pro vero sa.ys: "Vtii a b"vuta oecorcr" "be thai has drank will drink r.gii-u" and thi-no doubt holdj pood wi hthose v.'no have led an active lite during their 'eF.t years. Unless a man bot a hopelessly indolent Vii'poiiion and nothing is more unlikely thnn that such an individual should get on in the Indian Civil Service his p:st life of woiK only gives him a keener zest for luture labor. I was yet in ihe prime of hie, being some three year's on the right side of lifty. My health had suffered little or nothing by iny long residence in the I'Ju -it. There could have been .no greater ptuii'-hineut to me than heitnr con demned to lead an idle life for ihe remainder of my days. And, then-tore, with all my antici pations of home and home enioyment, there was mixed up ttie anticipation of having some employment which would fully take iu my time, and, although, not obliged ro do so, enable me to add a lew thousand pourds to what I had already saved. Farming, and the various occupations of a country gentleman who farms his own laud, had always great charms ler me. My native county was llerelordshire, a province where trom childhood upwards every man hears much and must learn something of the art ofculuvating land, buying and selling 'beasts," sheep, and pigs, as well t.s fattening the same. Neither heu a younu magistrate in the Upper Provinces of India, nor even wDen condemned iu after life to sit lor Fix hours every day op tn the bench as Judge ot lieefapoore, had this taste evar left me. During the whole of my Indian career I received The Fie.d by every overland mail, find read it iar more regularly than I did the Calcutta nr htihinan or the Lahore Chronicle. From the day I tirst went out to India I had set an object before me, aud this was to icturn to llerelord shire with money enough to rent or buy a small estate, which I could farm mvself, and thus add pleasure to protit, and a healthy occupation to both, and so soon as 1 landed at home I com menced to carry out my intention. But it is not easy to settle down quickly in England. In the first place, I had many rela tions to see and visit, and many of mv' wile's friends to become acquainted with. We had married in India, to which country she, then the only unmarried Rirl out ot seven daugh ters, had accompanied her lather, the Colonpl of a Queen's regiment. To meet and mix with various persons who live in dif lerent parts of the kingdom, it is absolutely necessary to reside in London, at anv rate tor a time, and we therefore agreed that we would put oil lor u year our settling dow n definitely in the country, although in the meantime we determined to be on the look-out for any place that would suit us, in or near my native county, to which, as I said belore, I wanted so much to return. To live at a London hotel tor twelve months is a luxury only allowable to million aires or foreign diplomats, and to reside in lodgings is- a misery which the poorest man would hardly submit to il he could do other wise. A lurnished house that is, to hire a habitation of this description means to pay double rent for the use of very bad beds, chairs, and tables, and when you leave the place to be mulct in the full value of these articles themselves under the head of "breakages," with out the privilege of taking possession of the same. Taking these tacts into consideration we determined to take a house of our own for the year we were to remain in London, and to trans port tho furniture w e should purchase down to the country when wo took our departure from the metropolis. So far from giving up my In tentions of larming, and on mv own account. I determined that the delayment in tallowing out my schemes should merely give me more time to carry ttiem out. i advertised in the Times, trie Field, and tne llerelordshire and Gloucester shire Daners lor a residence of a certain size. which 1 could rent or buy, but to which must be attached not Jess than a certain amount ol land, with shooting to be Lad in tiie neigh borhood. The answers I received to my ad vertisements were innumerable, and I am airsid to say what I must have paid the Great Western Rai'wav Company for lirst-class lares to nereiord, Gloucester, Worcester, Mon mouth., and all the stations adjacent to these towns. Still I could find nothing that exactly suited me. One place had an excellent house. but little or no land worth the trouble of fann ing attached to it. At another the land was all 1 could desire, but the h use was badly situ ated, and very inconvenient inside. A third was desirable in every way, both as to house ana land: t lie owner would onlv sell, not rent. it; and the price he ftslicd whs iuuch more than I could allord to give. In shirr, there was some )b ection or other to everv Place I looked at aud by degrees I began to despair of eetting nailed as I wished. In the meantime we were daily tuking deeper Mid deeper root in tne soil ot London. Good rctiooU were to be had for the children, occupation and amusement lor ourselves, and the boeietv of old Indians, which is so liirco in the capital, became mov. and nioie necessary ro our everyday existence. At the el no in -t. James' feqtnre 1 met everybody worm knowing wlio Uad ever been in the Last, and s.as certain of sacln,' my former colleague, tneuda, mid " ac quaintances, whenever I ch iso to look them up. Thus it wai; that by decree?, aud as it were without intending ir, we began to give un. or at any rate to po.dpotjc. our settlement in the country, and to consider ourselves us utmost regular Londoners. I huvo mentioned these circumstances not men ly as nu instance of the truth that man proposes 'but Go 1 uisoosns! hut also to show how that, with intentions and di-position to take to quite a different kind of life, 1 wan insensibly led into what I have hud good reason to lament most deenlv. There wan one thing wanting to my comfort in town ii'e. and that was occupation. 1 lelt , mat an ldie existence van doing me harm, and Jhut either some business, some oilice, or some' TP AHiYJgKy 1 G . TI 3LIGB A fP FDILADELrill A, FRIDAY, AUGUST 17, 1866. b on that wcuUl lorce me to work at any rate a few hours every day, was an b9olnie necessity. It was not even how our intention to remain always in London; we bad resolved to wait until some pond opportunity of renting or buying a piste in Ihe country t-houlri occur. But this might be in a month, a year, or three years, and tn the meantime I lelt that a totally idle life was in juring nie very much in mind and body, and so determined 1 would do a little of what every one was (list then running mad about, tamely, dabbling in shares cf public companies. At tbc t'mo at which I write, the idea of fnai.ee and credit companies was almost new in Lncland. One or two of tbetn had sprung Into existence, and were looked upon as most sue ce'Plul speculations. The directors of thrse undertakings were known as most respectable, alttioueh some ot them were rather "go-ahead" in their monetary ioerw and notions. Some of these pentlemen I was well acquainted with, having' know theni lew personally, others by repute iu India. They were by no means men of straw, their means being ample, aad their clmracters for caution in moncv matters beyond dispute. Tlx-v were not looked upon as wild speculator?, but as men wno, having discovered a new method of making money quickly, had introduced th? art into 1 ngland Irom foreign countries. At the club there was little save tinanee and credit compa nies talked about. One of these institutions had declared a dividend, which, even lor tne t rsl six months of its existence, whs at the rate ol twenty per cent, per annum. I becin: lairiy uincn wi'.n the mania, and ciiieuia'-eci ma , il 1 coi.ldtlas invest but halt ol the IW.UM I hud mode in India wbiri nt this rate woul I give me exuctly 4000 per annum a very lew years would en.'ble me not meiely to rent, but even to buy out mid out some good-sized estate, with n. een'ifnrti.lile man: ion attached. And ll I rlios-to lay out nil my 20,01)0, 1 couM. atn very moderate calculation, in tivc years naveiuu,ui u, wh ch 1 could cnl) my own. Mixing w ith otuer men in the world winks evii ris well as uood. Ihe hermits ot old who visliro to nveid temptation of everv sort, were wite in the;r pcreration when they elected to ive each one by himself. Certain it was that in mvcase talking over the finance" movement at the club continued me in my tpecultit.ve notions. 15y degrees 1 began to th'iuk ot nothing but shares', dividends, and h trh interest for investments. Commencing with 1000, I sooiiidi-poed ol nearly half ol 'my Id Indian Fccuritie", and luu! out rhe money thus icali.ed in t!ie shares ot one or other ot thete new concerns, mid soon became known as a man who "went in'' for any "i-ood thing" that ottered. Moth in g could be more prosperous to all outwaid appearances at the period ot which I wnte tnau tue lngusu money murkec, and never were fucli ample means forthcoming for every purpose ol (peculation. The American civil war had given a new impetus to the Indian cot ton trade, lor the staple which could not bo produced in the west had to be brought from the cast. W un increased imports troin, came much larger exonris to, India; and with a greatly enlarged conimetce more banking facilities were required lor that country. It was suggested to nie one day at tne club tnat 1 should become a director in a new establishment of this kind. "The Malabar ond Yokahamu Bank, Limited," was about to be established, on principles which combined the utmost security for all shareholders, with the greatest possible accom modation lor all customers. "Thing's as sim ple as possible," said Watson to me when 1 lunched witn mm at tue "Junior" one day (Watson had been for thirty years of his lite a drugoon oil ice;- in India, aud ha I only lust returned from an up-country s'ation in that country, where there was neither bank nor trade of any kind; he was, therelore, an excel lent judce ol the requirements ot the mercan tile world). "Thing's as simple as possible. Fellows out in India got lots of cotton: Man chester lellows want cotton. Indian fellows send cotton to England, draw on Manchester fellows, ba;;k cashes their bills, keens cotton until bills are paid, gets 10 or 12 per cent, for doing so, and there you are." Tinr, gallant sol dier had certain fixed notions on money matters in general, which he was accustomed to explain in a terse and sententious manner, but which carried with tucni the conviction ot hi9 hearers, or, nt any rate, ot his hearers in the military clubs, lie that as it may, I con sented to become a director of the "Malabar and Yokahama Bank. Limited," und when the pros pectus of that establishment appeared iu the column? of the Times, I flatter myself that the name of Joseph btronarm, Esq., late Bengal Civil Service, looked as w ell as that of any of his colleagues in the same list, although it was universally allowed in the city that we had "a very strong direction," so much 60, that we were quoted at 2 to 3 premium the day alter the bank came out, and by the time we had alloted the shares they bad men to 6j to 6 premium. It may be asked what opportunities had I. either as assistant magistrate at Meerut, as joint magittiate at Agra, us assistant commissioner in Oude, as collector at Beetapoore, 119 commis sioner in Sewarie, as acting judge iu Lahore, or finally, as Judge of Beeiupoore, to learn any thing about banking? I reply, that I had quite as good a cnance ot learning the trade as any ot mv brother direc tors. The chairman of our board was an ex-Indian civil servant, who had for merly been Auditor-General or Accountant General at one of the Presidencies. Having had lor many jears to deal with the pay accounts of a vast country, and to check any errors which may have crept into tho various collectors' accounts, must Lave proved an ex cellent training for the board ot a London bank, whose chief business it was to deal with trans actions in raw cotton sent from, or Manchester goods Eeut to, Culcutta, Madras, and Bombay. Mext to our chairman, on the list of our direct ors, came Colonel Watson, who, having lor tnuty years ot ms me done nothing but attend "orderly room," driil his men at "held days," look after tho riding school of his corps, and blow up the ollicers at "staples." was equally suited for the duties of a bank director. There yvere certainly two and only two out of the twelve that composed the board ot our duectors who were mercantile men: but as one of these hao spent all his business life in the interior of the cape Colony, and as the other had broucht the firm ot which he was a paitner to unmistakable and undeniable grief in the Calcutta, Insolvent Court, the l-ss we tay ot them the better. The list ot our director-" may be briefly classed as follows: Four ex-civil servauts of the ludian establishments ex judges, ex-collector?, aud tiie like; one ex colonel of cavalry; one ex-major ot infantry; one hal!-pay irvul captain; the two ex-merchants atoiesaid; a gentleman who could boast of no trade or calling except that he was a member ot Parliament; and two individuals who were nothing, aud never had been any thing iu particular, save that they had handles to their names, tte one being the brotht r ot an earl, and therelore un honoiable, the other a baionet. It is true we had this much eood amougst us we apfoiuted an excellent eeneuil manuaer. lie was u geiittemau of creat Indian bunking experience, and not only oid we eive him a liberal salary, but we were w ise enotnh to leave 111 liw hands the appoint ment ot ill the heal agents end malingers, alihoiiL'h we certainly did not let him have his own way iu mamieiug the affairs of the bank. But of tins, lm.ie presently. Xo sooner rind my name rone forth as a director 01 the "Malabar and Yokahama B:nk Ltinilid." than 1 vm beset 011 every side to oiu tiie bonrCs of nil l.Uj r, and sorts of companies, not a lew ol tlieiu the most uimossib! uuder r.ikincs lhtt the inirtd of man could conceive. Not u day pulsed but ihut I received letters lr in ''promoters" ot couctrns, to which Martin Chuzzlev. it's laiiious iiisT.o-bi.'ngalre Company was as the 1'ank of Hue laud to the la'e't jomi ftock um'citaktnn out. Every one I ta' or mixed with u l.ed me as 11 particular favor to loiu (his mat, or the other company. It became known, somehow or other, that 1 had twenty (tocit n.on iiiiit-iii'led it into u hundred) thou sand poumi't, w hich I could invest as Hiked, .without r.H'ching my pension of l0(i tt vear i v- . rcpArted' to be 'a.'kitowuii; aui, ' ,ctM.'Wai .U-.au of business u long- i...y o.n.w. mill, ct last I real v begun to I a eyu ihut, jut mercantile aud bank i!j knowlec e only beean to show itsli, like my grey hair, as I approached the age of fifty; arid when I wan at latd per.-naded to oln the ditcciion Of a newly formed Finance Company, the chares ol the concern Immediately rose L'i each on the Stock Exchange. The Directors of "Tho Malabar and Yoka hama Bank, Liro'ted" were neither dijhoupst nor needy men. As time went thev discharged their duties conscientiously, and without any af'ter-t bought of individual gain. They took it in regular turns to attend the bank every day, in addition to tho board meetings, which were, of coniee, held every week. othmg wasdote. no dratt accepted or paid excepting, of course, the current accounts ot customers that had balances to their credit-without being signed by a director and countersigned by the manager. If bills were Drought for discount, and the bdlfl ol lading, invoices, and insurances ot f he goods which those bills represented were deposited at the bans;, we made an advance upon them, always leaving a wide ninrzlu in our own favor to provide for any possible losse-. In short, nothing could be safer or more sure than the business we were cloieg, Hnl yet nt the end of ihe first hflli-year, although our expenses had been very preat on account of what are called preliminary expenses, we were able to declare si dividend at the rate of 10 per cent, per annum, and to put by some 500(1 towaids the formation of a reserve fund. At tho same meeting, our chairman declared to the assembled share h lders that Lc would never rebt contented until he was able to declare a dividend nt the Tate of 20 per cent, per annum, and to put by at lcaf-t 10,0110 every half-year to the reserve tuud. As a matter of course, the tirst general meeting of the bank passed over plensanrly enough, and in consequence of our extremely favorable balance-sheet, the shares of "The Malabar and Yokohama" rose from .'to G.J per ceut. premium in a sinule week. But as there are many ot my readers who will not nnder-tand by the torecning what is the nature of thp bu-dne0.? clone in an Anplo-Indiau Bank, I will explain for their satisfaction what it chiell cousisu ol, and how the profits are made. Let us Hippose that the London firm of .Tones iV, Co. icceivps from Bombay correspondents, Messrs. Horsmasjie. Bamasjie, JCiirset.iie, A Company, an order to shin to the la'ter sundry Manchctcr. Glasgow, Shellield, or luncv good -, to the amount of 10.000. Nosv, although the house has a lair amount of working capital, it would certainly not suit Messrs. Jotes to pay ilO.OUO down, aud be that sum out of pocket until the good ship Abce Black arrives nt Bombay w hich, as she is a sailing vessel, and proceeds around the Cape of Good Hope, will not be less than tour months until the goods are delivered to Messrs, Ilonuasjie, and until the last-named firm can remit theiu the amount due for such goods. What is then to be done ? If Jones & Ci. were to ass Messrs. Ilormasiie to remit the amount of the Iuvoice beiorj they ship ied the goods, that illustrious l'ur.-ee lirni would in all probability cease then and there from ordering anything' more Ironi tncni. And yet Messrs. Jones fe Co., having lour or five similar orders on hand every month, have certainly not the capital wherewith to rav such immense mns of money, and be out of their funds lor so considerable a time. They therefore manage 111 this wise and no'e that the transaction is deemed perfectly legitimate in trade, both in Knsland, in India, and all over the commercial world. Messrs. Jones & Co., being a firm on eood credit, purchased the goods they want upon short credit, say from fourteen days to a month. When bought, these goods are at once shipped, and when shipped bills of lading are giveu by the captain of the ship, without producing which the goods would not be delivered up at the place 01 the vessel's destination. These bills ot lading are then taken by Messrs. Jones to the bank, aiid bills tor three-totirths, or two-thirds, or perhaps tour-fifths of the value of the ship ment are drawn upon Messrs. Ilormasjie of Bombay, the bank retaining the bills ot lading as security, and sending them out to their branch bank at Bombay, with orders not to deliver them up and consequently not to deliver np the goods until the bills yvhich are drawn against the bills ot luding are puid. The arrangement suits every one, and may be termed tho real oil by which the wheels ot trade are kept in Motion. It suits Messrs. Jones .t Co., because they at once obtain lrom the bonk two-thirds, or three-fourths ot the amount, of money they have to pay, and are therelore able to meet their engagements whilst only out of pocket 0 comparatively very sniau sum. 11 suits nut Dank, ior tnat establish ment has in hand more than security enough to cover any probable loss by depreciation of the value of tbe goods, and at the same time charges interest, commission, and goodness know what besides, for tbe advance, or rather ior demount ing the bill. It suits the Parsee merchants out in Bombay, for the bill upon them Is drawn nt three, four, or six months after sight, and as the goods will be all that time in gettinc out to India via the Caoe of Good Hope, they (Messrs. Hormnsjie), will only be obliged to pay tor them about the time they arrive at Bombay. In short, no banking transaction could be more legiti mate, more profitable to the bank, and at the same time more secure, than those of a like nature. It is by similar advances, thus secured, that Indian banks make the enormous fortunes they do, and, until lately, pay their shareholders such very large dividends. It would have been well for "The Malabar and Yokahama Bank, Limited," it we had stuck to this line of business. But like all boards of directors at the time I write of some two years aco, or rather more we weie bitten with the mania of making large profits in a short space of lime. Our chairman had said he would never rest contented until we could declare a dividend of 20 per cent, per annum, and 20 per cent, we were bound to make, even if us an American would say "we cracked up" in our endeavors to do so. At the present day, when the storm which over-speculution caused has buret over our heads, it is easy enough lor shareholders to turn round and abuse directors lor mismanagement ot their funds, but if the truth bad to be told, were not tbe loimer equally to blame with the latter? If at a ceneral meeting of the company ot any company, whether bunk or other the director's declared a small, or even a comparatively small dividend, did not the wrath of the shareholders fall on their devoted head-; I 8m quite sure that both at our own aud other board rooics of joint stock banks ,whenever cautious measure ore ire- ful dealing was advocated, it was overruled purely from fear of what the shareholders would hay if a large dividend was not forth coining at the end of the half year. And therelore it was that banks whose legitimate business would prooably have carried through almost any amount of trouble, were led into traiifactlons which, though perfectly lawful in thenit-elves, were not such as they had either the capital or the connection to carry on, and which ended, as we all know, more or less, by their ruin. 1 need hardly sny that by the time "The Malabar and Yokahama Bank, Limited," had bisen six or seven months in existence, 1 wus so entirely ubtcibcd by business, that I hud altogether banii bed the idea of goiug to live in the couutry, at any rate, lor the present. Luring all my of.icial career, not even when getting up the name languages in Calei..ta ior my exaini natior. beiore I could be appointed to any ro-t in Inula, did I work as hard us at present. Alfhousb. we lived in the tar west of Bavswater. I was up, diessud, Lreaklasted. aud iu the city by eleven o'clock, even it it was not my turn to ue on duty as duector 111 attendance, for the week. Jo set busings far the bank, to hear of more business being obtained, to knew bow our Muuci were tn the Stock Exchange to learn tne last news and the latest tclcr-mis lrom India, lormccl the whole and t,ole end of my ex Mocco. At our second half-yeurly meeting tho dividend was declared to be at the rite ot 12 prr cent, per annum, out this did not c.-hl y cither eburcboldci'H or directors. i.ik 1 the bowi hud made it almost a print of honor that the dividends bbotiid bo brought up to 20 percent., aud to effect that we determined iu Biuire ueitner laDor nor time. I have already explained the nature ol the business done by an Indian batik, that is the regular banking transactions which are carried on, and with considerable protit, between Loudon and our snipping ports tn India. As a matter of course, the . various bi itnch buuis of any such establishment ju India will always keep current accounts of customers, and discount good locul bills, thereby adding not u little to the prodts or the concern. To carry this business on in India, where the banking facilities otleredtothe public do not yet equal the demand, is easy enough. But not foln London. Here the banks are so many and the corr petition lor profit to keen, that any new establishment can only expect to have the reluse of b lls which other banks will not look at. With caution, and in time, this ditlicultv, like many others, can do doubt be overcome. But to do so, the manager of a ban' must not have ingltsh and India business on his bauds at tho same time. This was the tirst mistake we made, and through It we were led into several other blundvrs which we mipht otherwise perhaps have avoiaed. At any rate, the turning our bank into a London as well ns an Indian' establishment, and not sticking closely to the work for which we were first InstituteJ, helped not a little to brine us into trouble, and this is how we manaed to make mistake number o.ie. A banker, or a bank, as every one w ho reads theleadeisof the 1 inics during the late panic must have learnt pretty well, is. or ought to be, an individual or on establishment that bor rows money without Interest and lends if, 1 harcing .'or the use of it, and as the very life nr.d foul of a bank is credit, it is abic to have as much almost as it wants ol other persons' money, for which H is answerable, and which it lends upon security to tlmsn who have eood security to oiler whilst both parties are satis fad withe their rer-pective shares of the bargain. '1 litis it suits Mr. A, Mr. B, and Mr. O to keen their money at a biiuk, and to nuite nil puvments by checks on that estat li-hmen;. ' The bank takes charge of their mor.ey, and is responsible to them tor the same. Thefe" parties are, as it were, the lenders to the bank. Thev go. or they used to get iu olden days, whi n t .liking was conducted uii a more legitimate tooting than at present no interest lor the money they deposit, but what they pay into the bnuK is kept 111 safety, and to say nothing 01 the conventional respectability of having "an account with a bank" they can pay their money by cheques, and have their accounts kept tor them prat is. T'luse, as I said before, ate the lenders to the bark, f.nt there are also borrowers from the same establishment. Mr. I), Mr. K, and Mr. F, want to discount tholr trade biils, or to borrow money upon other security. If that security is good, the banker lends tin 111 the amounts they require, and the interest charged tonus the . protit of the bank. When a business IIkc this is well established, and when it is woiked with otdmary caution, banking cannot be otherwise than very proiit able. But this must take time, and tliosc who manage it must go very caretully a", first. More overbanks established lor loie;gu business ought, never to enter upon a lino whch cannot possibly be managed at the same time as that they have already in hand. We did so, aud tu time loiiud out the mistake we had made. Nothing is more easy than to get custom for a lionuon bark, nut tue ditticuity is to obtain ac counts worth having. When we commenced doing English as well as India banking business, there were plenty of clients came to us, and such as brought anything like a respectable ln trouuetien we could hanily refuse to take, But, with lew exceptions, the histories of all such bankinc accounts were the same, and one ex ample will serve for titty. An individual would bring a letter ot introduction to the manager, and would open an account with a hundred or a hundred nncl tlltv pounds perhaps more. He would ask and obtain a chequebook and pass book; but hardly would the ink with which the necessary entries were made be dry, than the cheques drawn against tbe account would come tumbling in, so that in perhaps three days not only was all the mouey deposited drawn out, but the balance was five, ten, or twenty pounds on the wrong side. A young bank, being as it were alraid of disgusting customers, seldom or never sends back a cbecque because there are no funds to meet it. This is so well know n that in Lon don there are numerous adventurers who make it a point to open accounts with tew establish ments, knowing lull well that they will make a lew pounds by each such speculation. How they obtain letters of introduction to managers is one of the many wonders of London business lile, but that they do so is certain, as is also the laet tbat tiic.v manage to deposit a re spectable sum, draw out and pay in money tor a time, and then make a final shot at the establishment by a checque w hich draws out all the balance they have, aud some pounds beyond it. This done, they are never more heard ot, and in vaiu they are written ro and requested to pay iu the amount they have overdrawn. They know better than that, and so bctase themselves and their sham accounts somewhere else, to serve, in due time, some other establish ment as they did that from which they have w ithdrawn their patronage. Ol accounts like this we got several many more thnn we wanted but of real bona fiae cus tomers who always kept a balance ot three or tour hundred pounds to their credit, we had not a oozen. and ot these the majority were direc tors. In banking, it is well known, unless a customer leaves a certain amount to his credit and never draws below that, bis account is not worth having, and it is only young banks that retrain from requesting individuals who do not keep such balances, to withdraw their accounts altogether. This then was our case, and thus began trouble number two ol our bank. We hud all the risk, all the trouble, and all the work of keeping a number of current accounts, from which, as so tew balances were left in our bands, we derived no profit whatever. The reason was obvious. There is so much compe tition for custom amongst the London banks, and there ure so many well-established concerns ot the kind, that customers worth having will not go to new establishments; and why should they It was the same thing with the bills brought to us lor discount. We hod either to put up wirh paper which other banks would not look at, or else to do nothing. Here the same com petition tor profits told aeainst us. Although the bills we accepted were selected with the utmost care, and quantities of rubbish were rejected, they were worth but little, and if we did not renew or make some arrangement at maturity, we generally found ourselves minus the amount of cash advanced. Ot course there were exceptions to the rule, but 6till our losses were considerable, taking into considera tion the comparative small amount of business we did iu this particular line. Aud this, be it remembered, with a board ot directors at honest and honourable as could be found in Eng land, not one of whom ever thought of obtaining u loan or of discounting on his own account. Had it been otherwise hud we been given to help each other, or ot making advances to each other's friends the losses of tbe bank would have been teulold what they w ere. We were in fact like so many Colonel Newcomes. With the best of intentions aud the titmo-t honesty ot purpose, we made a terrible mess ot Loudon banking business, simple because we knew nothine whatever about It. It was much the sume as if we had commenced the tradn ot coach-making or house-building, or iron-foundering, without bavng ever learned one 01 other 01 ihese cullings. So long us our regular Indian bankin.' nour ished, we were able to make a good show in our hall'-vcaily accounts, lorwhat we lost by different c ustomers and bad bills we nntdo up by thej profits upon lepbimate advances, which were secured by hills ot ladins, i-s I have already ex rilaincd. Thus the one branch ot our business was more than balanced by the other. Cotton from india was 111 great demand, the prices raneiiiglauher and hiulK'r; ond as the trade iu that staple increased in the East, so larger and Inreer shi uients w ere mad", and mils drawn through our Bombay branch were sent to us, umuly covrieo by tuo pioduce these bills repie sei.ted. We were in hopes that whilst our regu lar Indian business continued to prosner, our London banking would eet better and better, and that iu timu we should see it established on a frm basis. . But, unfortunately, creat prosperity cannot last toiever, ana it w heuic lads in u bunking establishment, there has not been prudence and caution in the ruede tf doing business, tho most serious trouble is likely to ensue. Wo had all but reached tho desired iroal or a Z) per cent, divtdeud our lust one heing at t'.u ruto ot IH-wbeu, us the project, of peaca in America began to sret brighter and biiphter, totton trade iu India commenced to look dull, in consequence of toe prices on this side gcltiuz lower every dny. Here we commenced to sutler not much at first, but nifr a time ourlo-ses got serious. Cotton bad, perhaps, been shipped in India, a', a suppoftd value of a shilling a pound, and bills to the value of, perhapf, nluepence a pound hnd been drawn Hgainst it, the coun tervail being paid by ono of our Indian branches, and the bill sent home t us. But by the time it reached England the cotton which It represented hod. perhaps, lal'.en to seven or ilghtpence a pound, the market having what Is called a downward tendency, tome times the parties upon whom tbe bills were drawn would not accept them, and thus tbe cotton wns left on tur hands to be sold almost always nt n sreut loss. In many instances the bills were accepted, but belore they arrived at maturity the parties who ought to have paid thim toiled, and acain we were left with cotton on our hands to be sold nt a ruinous price. On the other side- in India thinrs got blacker and blacker. Goods sent trom England were sold at less than a fourth of then value, and our t ranches there lost much in the same way (enly in greater proportions) that the head establishment in London sullercd. To maico matter? worse, a tcmpoiary insanity seemed to have seized upon the managers of our Indian blanches. They had us we afterwards found out when too Inte advnuccd largo sums of money upon utterly worthless Indian shares, os well hs upon buildings, lauds, and other kinds of securities which a bank ougli. never to touch. The consequence of this lolly was, that when we expected remittances from India to provide tor bad bills and lallures in London, wo found that our futio weie locked up in the East lor a considerable time to come, and tbat even when they became available, the seen jiiies would uot piobably realt.e a tenth ot the money that had been advanced upon them, lorthisiicw trouble we directors could hardly be blamed, for it was as impossible lor us to bo in London and India at tho same time, as it wruld have been to work a bank of this kmd ana not leave tho di ileum t. nmunpers abroad power to act to the best ot their judgment. It is an axiom, and a very "proper one, in commerce, that cvt ry principal is bound by the acts ot his acknowledged agent, and consequently we. the directors ol the board at the head otfice in Lou (ion, were oblieed to confirm tho doings of our managers in the hast, no matter how much yve disapproved of those acts. Aeainst this Kind ot misfortune there is no positive or certain guarantee. Tbe directors of a conipary can always, or in a a rent measure at any rate, insure their shareholders aguinst the dishonest acts of a subordinate, and in all cases insist upon persons so employed finding a proper guarantee for a considerable sum. But to euard aeainst disobedience ot orders is impossible, and if no actual fraud can be discovered, the utmost punishment they can intlict upon the subordinate who slichts their directions, is to dismiss luni fiom their service. But the British shareholder is the last mail to listen to reason if he believes his pocket is to be touched, aud in most cases, he, by fits own ylliiig, brings down the house upon his own head. Our next meeting was by no means .1 pleasant one. All kinds of Indian securities were getting lower and lower, and our shares, being those of a young bank, fell very consider ably. The board of directors were accused of all sorts ot negligence, and some of the intelli gent individuals present went so far as to hint that we, no doubt, "stood in to win" something considerable by the depreciation of these same shares. It was In vain that yve offered to prove by thp books of the bank that wc were all large shareholders in the concern, and that some of us who had bought in when the shares were at a premium were very heavy losers indeed. In my own case I had purchased no Ics than tilteen hundred shares when they were quoted at one pound premium, and now they were at three pounds discount, being a loss of tour pounds per share, or 6too upon the transac tion. In place of the twenty per cent, interest, and the lew years' work in London, by which 1 hoped to purchase my estate, the money I had brought home from India was reduced by more thau a fourth. 60 much tor amateur bunking by those who, however sooti their intentions may be, do not understand the science. By some means or othcr-cbielly by turning deaf ears to the insults parsed upon us by many of the shareholders we managed to get over this meeting, and determined to do or die during the next six months, so as to present a better balance-sheet and to raise the price ot our shares. There was but one way ol eilectiug this change, and in adominrr the method we did but follow the example set us by many of me oanK8 ano otuer monetary institutions around up. 1 allude to the system of "finan cing," which bad become so very common with a number, not only of "finance" companies, but also with numerous banks, discounting esta blishments, and the like. To "finance" so tar as the art is understood in England, where il has been but partially developed as yet is to charge high Interest and commission for accepting cr becomimr responsible tor neeuniarv liabilities, which, if only lrom the long date of tne secuiiues, can hardly be termed good. Thus, amongst many other instances, a builder that was erecting a new square, or street, wa3 in want of money to complete his work. He came to us, and gave us a mortgage upon these houses which as yet were but halt' finished, and in return we accepted the bills he drew upon us, which bills he got discounted elsewhere, and tcr which transaction we charged him at the rate of 30, 40, or 60 per cent., without having parted with anv cash, and hold ing in our hands mortgages of double the amount ot the bills we Had accepted. To the umui tinted this may seem a most profitable business. and eo it is so long as there is no panic in tho money market. But the monentthat tbereis anv ditlicultv about discounting bills. thp hnilrlf.f fia a mntlnr nf nrmran Co.la n ,l ' those who have given their acceptances are left ' to nrovide lor tne same, with nnthinn tr tv, 1 1 back on except a mortgage which cannot be turned into money lor, perhaps many months. As a matter ol course, we, the directors of "Tue Malabar and Yokahama Bank, Limited," uia not give out publicly that we were 'financing," no bank ever does. But we worked the newly discovered mine, which we believed to be inexhaustible, and us the money market w as once pretty easy, we managed to make up on paper lor the losses we had incurred during the previous half year. At tho first eeueral meeting held after the "financing" system had been commenced, we were able to declare a dividend at the rate of fifteen per cent, per annum, and the value ot our shares roso in a tew days lrom tbrpe discount to three premium. As a matter of course nothing could be moie cordial than the reception w hich we directors received at that meeting from our shareholders. Whether they would have greeted us so well had they known the serious risks wo were running, is another question. But this ranch I will say, which is, that the board of directors, oue aud all, believed firmly that the ultimate results ot tho "Dnaneing" scheme would be ot immense benefit to the bank. We were all bitten with the mania of making money upon tho security of documents which were really not available 111 any way lor converting into cash, aud us ue fherho appeared to work well enough lor the f resent, we did not care for or did not think 0tthe future. Tnat we believed our opera tions to be for the beneht of the shareholders, niuy be inferred trom the fuct that althoush our shares ros in value every day, there yvfs not one of tho directors thai sold a smile share, whilst tnero were many ot us that purchased more snd more ot our sen). Of tin latter 1 was one, so mitcli so thai, utter a short tunc, hud 1 been called upon to pay up tlieli.ll amount lor which J was liable on' mv shares, it would nave absorbed nearly ti e w iiole 01 my 20,0(10 of saving which I had bnuebl home trom India. But I had no fear tor the uPimute rcult of our opei atious. A r.cwciecd bad been preached in the Cry of London, and amongst its upjstles wero to be found some of the mo't "respectab!"" of our commercial men. According to this belief, boldness and courago were all that were wanted to make money. No matter how long dated, or how tittcrlv unavailable to turn intj euih was the Kicuiilv ollelfd, th:; ne,v school ol "iiuance" nclieved that it would nil come riabt some day. Who wns 1 that I should ec-t my experience uiid my Indian wisdom against tho ideas of the great men of Iiomboid and Threadneedle streets And o T, like the rest of my brother direc or wept with the crowd, and followed to the very utmost the "go-ahead"' principle that hini-tiitely b en imported into this couuirj (rom ibiond. It is but fair to! cay, that in its "financing" operations "The Malabar and Yokahama, Bank Limited." fueeceded very much better than it had during the rather short caret r of London banking w hlch it had tried and failed to maHe anything of except a Inree crop ol bad debts. 8ouie ot tbe projects we "financed'" were magnificent in con ception and wonderful iu idea. Thus a short line bt railway had to be constructed, but the eupitol was not subscribed lor by the public. Now the chief person Interc sted in netting up this railway was the- contractor who was to make tt. Not only did he hope and expect that the contract would be a most profitable one, but he Bnd certain friends had purchased for a mere song tome iron and coal mine, the value of which would be increased 0 hundredfold if a railway could be brought to tbe mouths of the pits. But the British public did not seem to see tliis; and so, in spite of advertisement after ad vertisement in all the public pnprr3, there were but thirty or forty thousand pounds worth of upna pae applications lor shares in n line W hich reqnhec: u capital of nt least "i00,000. In his distress the contractor cume to us. and ofleicd us any interest we liked to name on the security of paid-up shares of tho I nc. us well as moriftigcs on the mines, if we would advance him the money in bills which he could act discounted. Tho affair took a verv loui time to negotiate, for even wc cliicctois of the "ad vanced 'commercial school thought il somewhat toolareenu undertakiua lor our establishment to enence in alone. But, to make a long story short, tbc business wss FttUed, and it was in this way we arranged it. A J'uris bank French bankers will engage in "tiiiaticii g" to nnv amount, in fact, they con sider it a part ol liieir legitimate business was to draw 011 us at three months' dute iu sets of bills of 1500 each, 10 the amount ot (,00,000. These bills w hich.beiug draw n by one bank and accepted by another, would bo very easily dis counted were to be made over to the contractor, who, iu return, gave us paid up shares and deben tures upon the tutnre line, to the amount of 1,000.000 sterling, as set urity lor his bond, payable 111 three equal instalments in oue, two, and three .vears, besides a mortgage of 230,000 upon his iron nnd coal mines, which was also payable in tnree years. We that is, the two banks took upon ourselves the keeping up the bills, that is, of renewing them ngun and again, in various forms and in ditlereut wa.vs, until tho three years were over, and we had iealized the share.-, debentures, nnd raortgaees. Thus, for an advance upon paper of ."ioo,000, w e were in three years to get l,2'i0,000. Moreover, "The Malabar and Yokohama Bank" chareed the contractor 1 per cent, tor neeotiatins the trans action, aud the French bank charged hiin 10 per cent, for discounting rhe bills, which it immediately redi-counted at 0 percent. This commission cost our customer 10,000, and the discount f0,()(J0, for w hich haviue little or no available funds of his own he had to give his bill, backed by sundry friends and partners in the transaction. As a matter of course nothing could look better on paper than this immense pioOt as it appeared in our accounts tor the current halt year. We did not enter into any details, but simply carried our gains to the right side of tue profit and loss account. Iu order to put our selves in funds for the purpose of paving divi dends, wo discounted some of the paper we held, and thus were able not only to declare but to pay a dividend at the rate ot no less than 30 per cent, per unnum. No wonder our 25 shares, but on w hich only 10 had been paid up, were quoted at 30, or 20 premium. bull less surprising were tbe bland and con tented looks 01 our shareholders, and the cor dial mauuer with which they agreed to all our chairman said, and theunanimous vote of thanks to hun and the board, with w hieh the proceedings ended. For my own part, I lelt so certain that' the wherewithal to purchase an estate in my own county was almost within my grasp, that I once more set about consulting all the adver tisements I could find respecting properties for sale. And so confident was I that the prosperity ot our bank must go on increasing, that I not only laid cut every shilling I Lad on s Lares, but actually borrowed money, by mortgaging my pension, in oraer to buy more and more ot our iscrip. A second end third profitable half year brought us to the zeulth of our prosperity. We had many lurge undertakings on hand, and mhnv mnifi knnrkinff nt our rioor. It wsaiwr. leetly fabulous how we made money. The British f public were always ready to deposit cash with us at 6 or 7 per cent., and to borrow our ac ceptances at 15. So numerous were the con tracts, loans, and general ' financing" business we had at work, that we really lost sight of many of them. We issued new shares, and men ot birth, of means, of standing, as well as educa tion, in the world, w ere ready to kiss our teet in older to get even a small portion 01 these pro mises of future wealth. We got three or four new directors, two of them M. P.'s, with great city respectability ; but, alas 1 lor us all, and for me in particular, the day ot reverses came, and almost belore the storm was at its worst, our good ship was wrecked op the shoals of dis credit. Who can tell what tirst causes one of those panicB which bring on a commercial crisis? T describe one of these financial storms would be a work of supererogatiou, considering now lately we have witnessed the hurricane which, swept over the city of London during the month ot May. The tempest in which our, good ship, "The Malabar and Yokahama Bank, Limited," was destroyed, dillered in no material degree from other monetary bad weather. It began with a very slight gale, which after a time fell away again, leaving behind it a calm duriug whicu no vessel could make any way. Then the wind rose again; from a stiff breeze it inereaned to a gale, lrom a gale to a storm, a storm to a hurricane, trom which all the vessels indlflerentiy com manded sult'ered more or less. But my object is to relate how it was that tbe ship in which 1 and all my property had embarked became a help less wrcclw For tome days past things had bepn "looking queer in the cit," and (as is invariably the case, although I could never see any reason for it, except to increase distrust, and make the peo ple believe that things must get worse before they are better) the Dneciora of ibe Bank 01 England raised the lutes of discount. Another week passed over, und they increased the rate a fur ther 1 per ceut. By this time it was dillicultto discount any but tho very best paper,, and loilowing the example set them by the Bunk 01 England, the larger discount houses refused any but the mo6t unex ceptionable bills. Believing tho pressure to be but temporary, and hoping we should tido over the difliculty. we endeavored to place our selves in luuQS sufficient to meet any minor t neugemerts. For this purpose our manager posted over to Ban.-, and altera "financial operation" with some ot our mends in that cupitul, he returned with about a00,000 of billi?, drawn by us, accepted by a very good French financial company, und endorsed bv. a j rst claes bank. What we paid tor this little " accommodation" it is not lor me to sav: in tiut misfortunes tame so thickly upon us about this time, that 1 can hardly ri-oollpct the details of events us they happened. To the best of my be lie! ti e 001 ration was conducted upon the good old Scotch system, of "scratch nieiviidl'llt-cratch you." Iu uny cu-e. it wns a purely "accammod v ticn" b ee of busmefs; but was 'not any tempo rui'.v ahemc better thiiu allowiug a coucern of such uiue.ur.ucic to go 10 utteriuiuf our object 111 eetui.g these bill" was to try aud Ecop the leak" in me vi h-el until the storm weut down, w f eu w e believed we should be able t ) suve all th cr.igo; but it was ucstined to be otherwhe. The arst feetcf tiiese bills which we got dis counted u:;,ounted to 60,000, uud tins we ellteted without piuch trouble at tho Bank of England. With the proceeds wj paid off several comparatively small acceptances rather than r-.i.ew them, and thus so tar establish d con fidence that even during the panic our shares, which hud lallen lrom twenty to five premium, rc covered ono nnd a hull duriug a sinulo fore noon, and this in tbe middle of tho panic. 'A day or two later, und wc dt 'counted at oue of the Lombard s'reet establishments a mrther butch of 25,000 of bills, aud as we set this .
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