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tuated from 12 to 14 per cent. It is now pro- their habits ; it was to commercial difficulties posed to establish a third bank for deposit and solely that their losses were attributable ; but discount, with a paid up capital of one crore these difficulties in my opinion might have of rupees. I propose, in the first instance, to been foreseen and avoided. I admit, howconsider, what may be the effect of this mea. ever, that when the mischief has occurred it is sare on the trading interests of the country; as easy to point out the mistake which has for, I think, it will be conceded to me, that if been made, as it is difficult to avoid it before injurious to them it must ultimately prove we have the benefit of experience. It bad detrimental to the capitalists, from whom the nover been ascertained to what extent the money is borrowed. It requires but a limited supply of Indian products might be profitably knowledge of commercial affairs to ascertain, carried, or at what limit the demand would that the greatest disaster among merchants decline, while the temptation to increase that have originated in over-trading, and in the supply was almost irresistable, from the fermarkets being depreciated by the supply ex- tility of the soil, the numbers of labourers, the ceeding the demand, and that such an event capital which was tendered to, nay forced has been the invariable result of a superabun-upon, the houses, and the large profits which dance of capital. Should so clear a proposi- at first were made. I remember a most able tion need any demonstration, we may read it and ingenious paper published in this journal, in the history of the rise aud fall of the six for the purpose of establishing, that it was great agency houses of this city; and they almost next to impossible Bengal could proafford a warning so evident, solemn, and seduce more Indigo than would be required by vere, that it can hardly be disreg arded even by the European markets, and the correctness of the most unthinking. Few of the partners in these reasonings, and conclusions, were genethese six houses, were, at the time they joined rally acknowledged by the most experienced the firms, possessed of any capital; (I know but merchants and planters. How fatally has of two, Messrs. Hutton and Browne of Crutten- time refuted this theory. den and Mackillop's). Connexion, talent, When the over-supply had caused the deexperience, and assiduity, were the qualifica- mand to decline, it was then too late to remedy tions which obtained them admittance. The the evil. Immense capital had been embark. capital of the establishments was accumulated ed. Factories and works had spread over the by the deposits of their constituents, who re

country, and these had either to be abandoned ceived a rate of interest so high, that it could at a toial loss, or kept up to yield an insoffionly be supported, by their money being em cient and precarious return. Every year the ployed in a lucrative trade. Of this fact, there losses increased till the fall of Palmer's house was no concealment, and every man who announced that the fabrics were giving way, placed his money in an agency house, was and in three years none of them existed. aware, that it was immediately embarked in mercantile speculations. The civilians and The following is a correct account of the military, who had saved from their salaries, amount for which each firm failed, from which the natives who had acquired or inherited it may be nearly ascertained what the amount fortunes, were anxious to have their capitals of the borrowed capital was, which they had employed for them without having their leisure embarked in trade. disturbod, or their other avocations interfered Palmer and Co.......... 2,60,00,000 0 0 with. The agent was ready to devote himself Alexander and Co....... 3,44,00,000 0 0 to this work, and the surplus profit, after Mackintosh and Co...... 2,47,06,362 9 8 paying the interest, was to be his remunera- Fergusson and Co..... 3,26,21,000 0 0 tion. In fact, the agency houses and the Colvin and Co....... 1,21,00,000 0 0 capitalists of the community formed six vast Cruttenden and Co...... 1,35,00,000 0 0 partnerships, those who gave the money were the sleeping, those who employed it were the

14,33,27,362 9 8 active members. Those who contributed, well knew the purpose to which their funds were

To arrive at an aproximation, let the six devoted, and the man who would contend that crore and the thirty-three lacs be deducted this description is not correct, might as well from this sum, for debts accruing from accuassert, that the shareholders of the two banks mulated interest, and due to mercantile perare not engaged in banking transactions, and sons for trading transactions, it will leave are not partners in the firms.

eight millions of English money for deposits Having given this sketch of the state of by constituents. I believe that it is hardly affairs during the reign of the six houses, i anticipated that the six firms taken together next proceed to consider the circumstances will eventually pay 25 per cent on the amount which led to their downfall. It has never yet the eight millions lent by depositers to be em

of their debts collectively, and, if not, then of been asserted, nor sarmised, tbat the ruin of barked in Indian trade, six millions or 75 per the houses was caused or even accelerated by the extravagance of the partners, nor by their cent. will be the sacrifice of over-trading or carelessness, inexperience or want of atten- of the supply exceeding the demand. tion to business; never, perbaps, was there any I have dwelt on this topic at perhaps too body of men, possessing, as they did, the com- great a length, but the event is one so recent, mand of almost unlimited wealth, more labo- the facts are so palpable, the conseqgences tances so applicable to the danger which is belong ? To you, gentlemen, the capita impending, that I would omit nothing which listy of India, the agents themselves might weaken that strongest of all argumonts, had nothing. Had not the Government the appeal to the past, as a warning for the come forward, and had the opium merchants future.

failed, who would have been the sufferers ?

The capitalist who advanced the money. But, gentlemen, this is not the only instance You have escaped being ruined a second which India affords of the consequences of time, from causes nearly similar to those over-trading and over supply. It is to this which had before ocourred, and it behoves system, that the recent embarrassments are you to let the past, warn you of the future. mainly attributable. The improvident treaty made by Mr. George Swinton, by which the

Having thus endeavoured to shew you that Malwa opium cultivation has been so extend the demand for the products of Bengal is ed, and the cupidity of the Supreme Govern - limited, and the ruinous results of too lavish ment which has increased the cultivation in a supply of capital, I now arrive at the questheir own provinces, has thrown into the China tion of, what is likely to be the result of the market a quantity far greater than the demand establishment of this new bank? The prewhich that country requires. I am not forget sent two banks possess a capital of 115 lacs of ful that other causes are likewise operating, rupees to be employed in purposes of discount; that high prices and the stoppage of the trade the Government, likewise, make large adhave had their effect; but, I do not believe, vances every year on consignments. Some of that the prices in Calcutta would have ranged mercantile houses are possessed of indehigher had the stock been less, for they rose pendent capital to a considerable amount, from a system of jobbing, and not from any and upwards of 50 lacs are locked up in real demand, while it is clear that over sup- China, but which will return. It is now proply did produce a fall in China, which this posed to introduce a crore of rupees into the made the bigh prices in Calcutta ruinous. In market; that is, those merchants who have no respect to the stoppage of the trade, it is pretty money, ask the capitalists who have, to lend well known that, had the increased bribe de-them this sum. This will be denied, but I manded by the Mandarines of 100 dollars shall presently prove that this is the case. a chest been complied with, the interference Now, let me ask what sudden change is there would never have taken place, or else have in the circumstances of this country, or in the quickly ceased; but an overstocked market markets in Europe to make it expedient, nay, had already produced losing prices, and the to make it commonly prudent, at once, to adá sellers were not in a situation to yield to fur. a million of ready-money to the trading capither imposition. On a review of all these cir- tal of this city ? Is indigo rising? On the cumstances, I again repeat, that to over cul- contrary, the fall in that great staple has uttertivation and supply the present difficulties ly ruined many. The more report that the of the opium trade are mainly attributable, crop of last year would average one lac and

five thousand maunds, induced a fall which Many of you, gentlemen, must be intimate has swept away many a handsome fortune. ly aware of the fearful consequences which Is this, then, encouragement to increase culthese difficulties bad nearly produced. If the tivation ? Is opium, at present, a very inviting Bengal Government had not remitted a por- speculation ? Or is the cotton, or the sugar tion of the price, or given, as it has been im- market, so lucrative and certain, as not to properly called, the bonus, what would now make it an act of insanity to risk a large and have been the situation of some of the first sudden increase ? I am far from contending houses Calcutta ? As it is, there is at present, that the trade of Calcutta has not increased, and has been for above a twelvemonth up- is not increasing, and will not increase ; but, wards of 50 lacs of rapees locked up in I warn you, gentlemen, capitalists, to look China, and thus diverted from the commer- into the question yourselves ; to examine cial parposes of this city, for though I admit narrowly that which is the real question, and that ihis sum may be said to have been devo- before you part with a million of your money ted to the opium trade, yet, as it has pot been to be employed in trade, to ascertain that returned in the ordinary course of remittance, there is an opening to employ it advantageit became necessary to supply the deficiency, ously, that the home markets can bear to have a by seeking for capital elsewhere, and this it million sterling of additional produce thrown is, which has occasioned a temporary scarcity, into them from Calcutta, and that the state and, therefore, unusual demand for money, of trade in this city, is NOW SO eminently and a temporary rise of interest.


THE TWO DISCOUNTING BANKS SHOULD, AT ONE Gentlemen, I refer you to the two events which I have described ; the failure of the stroke, AND IN ONE MOMENT, BE DOUBLED. agency houses, and the embarrassments of I shall be told that the high rate of interest the opium trade, both originating in over now charged by the banks, and the premiums production, which over production could at which their shares are selling, is incontestnever have occurred, but for the command of able evidence of the scarcity of money, and a superabundant capital. On rhom did the that, when money is scarce, supply should be real loss fall when the six houses failed ? On obtained. But my answer is, that the scarcity you, gentlemen, the capitalists of India ? is but temporary. The average rate of disyears, may be taken at 7 per cent, it is now signed it, (Cockerell and Co., Jenkins Ferio, and the rise commenced when the em-gnsson and Co., Carr, Tagore and Co.,and Bruce, barrassments of the opium trade began to Shand and Co.) and a fifth, Mackillop, Stewpress; that it increased as the season ap- art and Co., are reported to bave declined, proached, when money is most in demand, deeming such an increase oncalled for by the and few remittances had arrived from China ; state of the Calcutta market. Such was the and that when the funds in China are retorn result of sending this requisition to five prined or new capital has GRADUALLY infused itself cipal houses. Had time admitted of its being into the market to supply any real and per. sent to others, you may judge, gentlemen, of manent deficiency, that the money-market what the result would have been. This, lowwill resume its former level.

ever, is clear, that in the opinion of these five Now, gentlemen, if I have correctly point is not now wanted in the Calcutta money-mar

leading houses, an additional crore of rupees ed out to you the fatal and lasting consequen-ket, and that four of them consider, that the ces of throwing into the mercantile inarket a superabundant capital ; if I have correctly will be sullicient for the next two years to

half-yearly introduction of ten lacs of rupees stated the cause of the present pressure, and meet the exigencies of that trade, which, I adproved even the probability of its being tem. mit, has increased, and will increase. It ought porary, let me ask you, will you hazard the

to be distinctly understood, that the requisition loss of your hard-earned fortunes to remove to which I have alluded, was not sent to any a short-lived evil, and earn a short-lived

other mercantile house or mercantile men than profit?

those whom I have named. It had been better I have stated, gentlemen, that tbe trade could it have been otherwise; but time pressed, of Calcutta has increased, is increasing, and and it was not considered essential to secure will increase ; and, I admit, that capital and more than the necessary number of names to the facility of obtaining it, ought to grow with convene the proprietors, as the expediency of its growth, and the manner in which this the measure had to be twice discussed at two should be effected is the next point for con- public meetings. sideration. If the proposal for the new Bank succeed, the following probable result may be merchants who liave no money, are by this

I have likewise stated, gentlemen, that the anticipated. First, as regards the capitalists, who have a crore and fifteen lacs in the two proposal applying to the capitalists who have,

to lend them a crore of rupees to assist them banks. If the detention of fifty lacs in

in their trade. China raised the rate of interest from seven to

This was not, I believe, the ten per cent, the introduction of a crore into origin of the plan; it is reported that its the discount market, will reduce the interest desirous of realizing his property, and who

parent is an extensive householder, who is to four per cent, thus diminishing the divid- knows that when money is abundant, land ends on the bank share by from what they rises. Be that as it may; the meetings which were previous to the rise. But the diming have been held have been meetings of mertion will, in fact, be much more, for this cal, chants and not of capitalists, composed partly culation supposes that the whole of the capital of gentlemen, whose attendance bad been reof the banks to be constantly employed as it is now, and only the rate of discount aliered. quested, and who went more to watch than to whereas such an overtlow of money must leave participate, and of others, who would more a great quantity of capital idle; and, it is more advance capital for that purpose.

probably avail themselves of discounts tban tlan probable, that the dividends will fall to 4 or 5 per cent. Nor will the effect stop here. There are now in the mercantile list of Cal. Mark! what I warn you of, gentlemen, who cutta (:9 firms composed of 149 individuals. eschew the banks, and hold Company's paper: I bave said and repeat, that some of these (principally composed, as I believe you are of firms are possessed of considerable capital,ihe old and wealthy families of the native I believe of more substantial capital than was community ) no sooner shall this change take ever possessed by any of the old agency place in the money market, than the Govern- firms; but let me put ihis question to you, inent will pay off their 4 per cent. loan, and deducting from the 149, those whose stability open one at 3 per cent. This is what is is publicly known, what amount of capital impending over you, and such will be the in- will be found among the remainder ? and how evitable result of the new bank project, many may be numbered in that class? I preshould it prove successful. Then, in regard sume, not to answer the question, for I will to the merchants, I assert it as a fact, that it is not be unnecessarily invidious; but, I affirm, a moasure not sought for, but disapproved of that it is an important question for the capitalby some of the principal houses in Calcutta. ists, the real lenders, to consider before they À proposal has been made to increase the risk their money. I therefore put it to them capital of the Union Bank, not by one hundred as a point indispensably necessary for them to but by forty lacs, and that gradually by ten weigh well, and if they possess not the inform• lacs every six months, thus taking two years ation now, then diligently to seek it out. to introduce that sam. It is evident that the Gentlemen, I have pointed out to you tho trae object of this proposal is to knock up ruinous consequences of rash advances o the new bank scheme. The requisition was large capital; I have endeavoured to provo hastily circulated. It was only sent to five great to you that from the state of the markets at supply; and that the present pressure here, will, as assuredly follow the immense increase is but temporary and in reality occasioned by of supply beyond the demand of the market, that over-sopply, wbich will be the inevitable as it did when the agencies fell. It is my result of the scheme in which you are now firm belief that, on consideration, this rash and called on to join. I have shown to the numer- ruinous measure will not be fostered by any ous holders of bank sbares bow their incomes merchant possessed of capital or prudence. will be reduced, and, of course, to those who That an increase of funds in the discount embark in tbe new plan, how trifting their market will be beneficial I do not deny ; but profits will be. I have warned the holders of it should be gradual and moderate, not sudCompany's paper to guard against a forced den and enormous. 3 per cent. loan, and while an immediate diminution of income must be the fate of all,

I am, Gentlemen, &c. another ruinous loss to capitalists and ano

AN OLD INDIAN. ther general bankruptcy among the merchants

Hurkaru, March 26.]

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