The Sun.
London, England, 1836-10-21 00:00:00

country. "At present," say the authors of the pam-

Wet now before us—
" There are only four banks in India—the Bank of Ben-
gal and the Union Bank, established in Calcutta, with a
sort of Government establishment at Madras, and a re-
cently-formed bank in Agra—but of these the first two are
the only ones of any importance ; and even their capitals
are comparatively limited, the Bank of Bengal not having
more than 750,000/. paid up in capital, if so much, and
the Union Bank only 500,000/. ; their constitution is, in
various respects, defective ; and they have no branches or
subordinate establishments in any part of the country, the
sphere of their operations being confined principally to the
city of Calcutta, and wholly to the province of Bengal.
No doubt these banks have been of material service ; but
it would be as absurd to suppose that two banks established
in London, without a single branch, assisted by a small
Government establishment at Dublin, and a small private
bank at Liverpool, should be adequate to transact the
banking business of the United Kingdom, as that the two
banks referred to should suffice to transact the banking
business of our Indian empire, extending as it does over
1,300,000 square miles, and comprising a population of
about one hundred and thirty millions !
" In fact, the largest portion' by far of the foreign
banking business of India was transacted, until very re-
cently, by the great agency houses established in Calcutta,
Bombay, and Madras, but principally in the first. Most
of these houses were founded originally by retired civil
servants of the East India Company, or by adventurers
from Europe, without, in most instances, being possessed
of any considerable amount of capital. Besides being
bankers, they were merchants, and sometimes also indigo
planters and shipowners ; and to this vicious combination
the ruin in which so many of them have been involved may
be primarily ascribed. Their credit being high, large suns,
principally consisting of the savings of individuals in the
Company's service, were deposited in their hands, for which
they engaged to pay a high rate of interest ; but, instead
of employing these deposits as bankers in England would
do, or as the proposed Bank of India would have done had it
been then in existence, in the discount of approved bills at
short dates, in the granting of cash credits, or in the pur-
chase of Government securities readily convertible into
money, they employed them in all manner of hazardous
speculations—advancing very large sums to indigo planters,
several of whom had no capital of their own ; exporting
goods to Europe, China, &c., either directly on their own
account, or indirectly by lending largely on the security of
the goods to those who did ; becoming owners of Indian
shipping, &c. Many of these speculations turned out ex-
ceedingly ill. The cultivation of indigo was so much in-
creased that its price gradually fell to a level at which it
would not pay the expense of production ; so that very
heavy losses were sustained, and much capital sunk by the
planters and those by whom they were propped up. The
investments in Indian shipping turned out even worse
than those in the indigo plantations, the shipping of Eng-
land having nearly driven that of India out of the field.
At the same time that most of the houses in question had
been thus getting themselves entangled in difficulties, se-
veral of their partners returned to Europe, taking large
sums with them, as their share of the capital of the firms.
The embarrassment produced by the locking up of their capi-
tal by the withdrawing portions of it to Europe, and by the
unfavourable termination of many of the adventures in which
they had been engaged, began to manifest itself simulta-
neously with the scarcity of money occasioned by the drains
on account of the Burmese war."
One of the advantages—and an important one it is
—which would spring from the establishment of a
sound and extensive banking system in India, would be
the discontinuance of the mischievous practices so com-
mon there, of hoarding and of burying the precious
metals in the earth, by which incalculable sums must
have been lost. This evil has arisen, in a great measure,
from the want of such safe and profitable means of
investing surplus capital as the Bank of India will
furnish.

The success of the Scotch banks, and the im-
mense benefit which they have conferred on Scot-
land, are very properly alluded to, as exemplifying what
may be expected from the same system as applied to
India. These banks receive deposits as low as 101.,
and they allow interest on these deposits nearly as high
as could be obtained in the market. The result has
been, that by the encouragement thus given to industry,
and the habit of accumulation engendered among the
people, the immense amount of 25,000,0001. are said
to be deposited in the Banking Institutions of Scotland.
Reasoning from analogy, which they are fully war-
ranted to do, the projectors of the new establishment

justly observe—
" Bring the same facilities for saving and accumulating
within the command of the people of India that are en-
joyed by the people of Scotland, and who can doubt that
they will be productive of similar results ? And as these
facilities will be afforded to a very considerable extent by
the establishment of the Bank of India, who can deny that
it has a well-founded claim on the public favour and patro-
nage ?
" The vast additional capital that would thus be created
and brought into the field, would be distributed by the
bank in the most advantageous manner to those engaged in
the various departments of industry. In India, most, per-
haps we should all, classes of producers are short of capi-
tal ;—those engaged in the raising of indigo, silk, sugar,
cotton, &c., all require advances to enable them to prose-
cute their business. Formerly these advances were made
by the merchants ; and when their speculations failed,
those who had deposited money in their hands lost their
all. But when a banking company with large capital, and
properly conducted, comes into the field, this will no longer
be the case. The bank will discount the bills of mer-
chants and planters, who will thus be assisted with the
funds required to carry on their business till the produce of
their crops or sales comes to hand."
The benefit which the public, as well as individuals,
will derive from a joint stock Bank of issue, founded
on a sound principle, and conducted on a large scale,
are well stated in the following extract :
" To its influence as a bank for the receipt and distri-
bution of the money of others, the Bank of India will also
issue notes ; and will thus, as already explained, make an
immediate addition to the free disposable capital of the
country, equal to the excess of its notes afloat over the
bullion it may find necessary to keep in its coffers. The
notes of the bank of Bengal are taken in payment of taxes
by the East India Company's collectors in all the country
below Benares ; and there is not, and there cannot be, any
reason why the notes of the Bank of India should not be
in like manner received by the Government collectors in all
the districts where it may have branches. Such an arrange-
ment would be for the mutual benefit of all parties. At
present the revenue collected in the most distant provinces
has to be sent down in specie to Calcutta, where, after
having been locked up for a while in the Company's trea-
sury, it again finds its way into circulation ; the identical
sums brought from a distance of a thousand miles or more
being probably paid to merchants or agents at Calcutta,
by whom they are transmitted on loan to planters and
others in the vicinity of the place whence they were origi-
nally brought. The establishment of the Bank of India
will go far to put an end to this sort of national child's
play—to the expensive transfer of specie from one part of
the country to another, merely that it may be sent back
again. The money paid by the revenue collectors to the
different branches of the bank will be forthwith placed to
the account of Government at the head office in Calcutta ;
the loss attending the present rude and cumbrous system
will thus be completely obviated, and the money paid into
the branches of the bank, instead of being sent down to
Calcutta and tben sent back again, will be immediately lent
out to the industrious classes in their vicinity. The interest
of every party, and especially of the native population will
be promoted by this arrangement. The projectors of the
Bank of India wish, in fact, that the success of the esta-
blishment should depend entirely on its utility—they ask no
favour from the Government either in the circulation or re-
ceipt of their notes—they know that they will have to deal
with intelligent and able men, who will not fail to avail
themselves of every fair facility that may be afforded for the
transacting of the public business, either by this or any other
company ; and this natural desire to resort to speedy, safe,
and easy methods of conducting business, will be sufficient
to secure for the Government, the bank, and above all for
the people of India, the numerous advantages thus shortly
pointed out.
" The service that the bank will render to merchants, in
carrying on their business, is too obvious to require illus-
tration. Besides obtaining cash credits, and getting their
bills discounted, or being accommodated with loans, look at
the influence the bank will have in facilitating all sorts of
commercial transactions. Suppose that a merchant in Cal-
cutta finds that he can make an advantageous purchase of a
quantity of opium, silk, indigo, or other article at Delhi,
how will he proceed ? If there be no money due to him at
Delhi, and if he cannot (as is the case in nine out of ten
instances) purchase a bill on that city, he has nothing for it
but to decline making the purchase, or to send, through a
dangerous country and at a heavy expense, bullion to Delhi
to pay for the goods. The establishment of the Bank of
India will, however, completely obviate all difficulties of
this sort, and, by doing so, will give incalculable facilities
to commerce. The merchant, in the case now supposed,
will pay the price of the goods to the bank in Calcutta, and
obtain an order from them on their agent in Delhi for an