The Sun.
London, England, 1858-02-13 00:00:00

rbirbf .7i;bttion

SUN OFFICE, Seven, o'Clook.

TRIAL OF THE ROYAL BRITISH BANK
DI RECTORS —(This Day).

COURT OF QUEEN'S BENCH—CITY.
(Before Lord Campbell and a Special Jury.)
The long-expected trial of the Royal British Bank
Directors, for conspiracy and fraud to cheat the deposi-
tors and others of the bank, commenced this morning
at the Queen's Bench, Guildhall. The public excitement
was not so great as might have been expected. The ex-
terior of the hall presented its usual appearance, and the
admirable arrangements for keeping order and free in-
gress and egress to the Court were not called an requisi-
tion. The interior of the hall commenced filling in a
slow and regular manner, and at the commencement of
the proceedings was not above three-parts filled.
The body of the hall has undergone considerable
alteration to facilitate the trial and give increased
accommodation to all concerned. The benches allotted to
the bar have been put further back so as to admit
of tables being placed in the open space in front of the
judge for the attorneys in the case, andfthe numerous
voluminous documents and books required.
Additional accommodation of a❑ excellent character
was also provided for the press in front of the bench
under the Associate. The city authorities are deserving
of the highest praise for the facilities they have rendered
the representatives of the press for the discharge of their
arduous duties.
The defendants are charged with conspiracyand fraud.
There are three indictments. The first embraces the
names of IL Brown, Esdaile, M'Cleod, Alderman Ken-
nedy, 0 sen, Stapleton, and H. J. Cameron. The second
th© names of Stapelton, Esdaile, F. Vailliant, H. D.
M'Cleod, Kennedy, and Cameron. The third the names
of Esdaile, Browne, L. M. Vailliant, M'Cleod, Ken-
nedy, 0 wen, and Cameron. The indictments contain
several counts varying the indictment.
A t 10 o'clock Lord Campbell took his seat accompanied
with his Royal Highness the Prince of Wales, who took
his seat on the immediate right of his lordship.
Lord Campbell, hefore the special jury was called,
expressed his earnest hope that whilst the trials were
proceeding no comments would be made on them during
'heir progress. It was not fair to the jury, who were
secluded from the public during the trial, and it was
very important their minds should not be prejudiced
one way or the other against the defendants. It would
be indecorous in the court to make such comment, and
as he looked upon the press as an enlargement of the public
tribunal, it was equally so for them to do so. After the
trial was over, all her Majesty's subjects might freely
comment on what had been said and done in this Court.
The jury, which consisted of the following gentlemen,
were then called and sworn :
John Lowe, Foreman.
William Dimsdale Child.
Jonathan Chapman.
Thomas Paget.
Henry William Ripley. •
William Nesbitt.
Augustus Toulmin.
Beaumont Hankey.
Henry Augustus Bevan.
James Benjamin Harman.
William Medland.
George Hamilton Penney.
Mr. H. Browne stated the nature of the information
against the defendants.
Sir F. Thesiger then rose to state the case to the jury,
and in doing BO expressed his satisfaction at the delay
that had taken place in the trials, which bad enabled
the public mind to cool down to a state proper
for a deliberate inquiry. This was tow no longer
a singular case from what had since transpired,
and they were now prepared to approach this
inquiry with that calmness and attention which
the importance and gravity of the case required, and
with that impartiality which happily wee the charac-
terietic of the administratiou of oraninal justice in our
courts of justice. The facts he should lay before them
in, reference to this case would be both various and volu-
minous, but they would tend to the point, that of a charge
of conspiracy to deceive the public. The bank commenced
operations on 17th Nov., 1849, continued till 31 Sept.,
1866, when an application was made for winding up in
bankruptcy, which was now going on. It was proposed to
start the bank with a capital of 500,0001., with liberty
to increase it to one million; and there was a remarkable
passage in the prospectus, and afterwards embodied in
the charter, that the concerns of the bank should be
wound up when it had lost one-fourth of its paid up
capital. It was, however, found that a sufficient
amount for starting the bank could no*, be raised,
and the amount of capital was reduced to 250,0001., and
afterwards 100,000/., but in neither case could they
raise sufficient money on which to get the registration.
The bank, however, became registered on false represen-
tation, cad when the charter was granted, the title of
Royal British Bank was unhappily conceded, which, no
doubt, had rendered the bank more attractive and im-
posing to the public. Mr. Cameron was; to be appointed
manager with a salary of 1,2501. for the first year. 1,5001.
for the second, and 2,0001. for the third, till the succeed-
ing seventh year. He was also to have an allowance for
house rent, and a commissier of the profits of the bank.
In the course of the appeals to the public, the direc:ore
repeatedly iesued prospectuses to the public, addressed
particularly to the middle and humbler classes, in which
they accounted for the delay in opening the bank from
being unable to get the premises completed, reminding
the public that "though these steps were slow they were
sure," that "certainly was to be preferred to speed,'
and that "the oak was but an acorii." The pro-
moters were unable to 'else the 50,0001. eecessa--,
to register the bank, and although they paid
ti the banker a pramissory note from Cameron
for 4,3001. for shares, &c., never purchased, there were
7,402/. deficient when they made the representation that

the money was paid up. The registration was com-
pleted, a charter was obtained, and the bank was opened
with great solemnity. The terms of the charter were so
stringent that one would hardly have considered men
would have deviated from the straight path of duty, and
from pretecting the intereets of the elteeholdere.
He thought he should be able to prove that the
transactions of the directors had been of a most
imprudent and improper character—not, how-
ever, of a speculative but charges of impru-
dence and improper mismanagement, which had brought
the bank into a state of helpless embarrassment, and
insolvency of many of the shareholders, by various
fraudulent and dishonest acts and representations cf the
directors—by deluding the customers and the public
into a belief that the bank was in a sound, stable, and
flourishing condition, when, in fact, it was not so, to the
ruin of many of the contributors. He should endeavour
to lay the case before them under three points : first, to
the condition of the capital, and the state and
condition the bank was brought into by the
mismanagement and misconduct of the defendants ;
secondly, if they were aware of its condition at the
time the representations were made ; and thirdly,
whether with that knowledge they made false and frau-
dulent representation., and performed fraudulent acts
for the purpose of concealing the true state of things,
and in that manner had brought themselves within the
range of a charge of conspiracy. The honourable
and learned gentleman then proceeded to state
the advances that bad been made to the direc-
tion. Mr. Macgregor's advances, who is now dead,
were all lost. Gwynne's advances amounted to
137,0001, all of which had been lost except 7001., the
advance to Mr. Mullens, the solicitor, who had died
insolvent, amounted to 10,C00/., which was all lost.
Cockram's advance amounted to 10,3001., out of which
only 3,0001. had been recovered. The advance to
Cameron amounted to 36,0001., 33,0001. of which had
been lost to the bank, of that amount promissory notes
to the extent of 10,6001. had been given by him for
shares in the bank to prevent them being forced on the
market, and the credit of the bank depreciated. In Feb.,
1855, Mr. Cameron was taken ill and had to leave the
bank for some time, and in his absence Mr. Esdaile took
the management. Cameron's accounts were then trans-
ferred to " the green ledger" under seven different heads
amounting to 27,0001., for which he had not given the
slightest security, but before leaving the bank he was
pressed to give security, and he handed over to the bank
a mortgage on his estate called Dingwall, in Scotland,
werth 6,0001., but which was at the time mortgaged to
the Bank of Scotland for 3,0001 ,and it was from that estate
30001. had been recovered. He also assigned two debts,
both of which had been decreed, and eleven life policies,
three of which had lapsed, three had been B°4l, three
had been assigned over to his son-in-law, and two had
been pledged for the full amount before he handed them
over. The next case was that of Humphrey Brown,
which was of a remarkable character. Brown became
a director in February, 1853, qualifying himself by
giving promissory notes for the amount of the
required shares, which now remain due. He
at the same time opened a cash account by
depositing 181. lit. Od.—(laughter)--on the same day
borrowing of the bank, 2,0001., which within three
months was increased to 9,0001., and for which he gave
no security, though he had promised to do so. Having,
however, to renew two bills deposited with the tank, he
gave a bill of sale on a vessel called Helen Lindsay, and
afterward', oa a further advance o! 5,000 Z., he deposited
, a bill of sale on the Magdalena. In tee February
following he mortgaged to Mr. Walton, then governor
of the bank, two vessels, the Hero, and another.
10,0001. was advanced by Walton on bills of Brown,
which were discounted by the bank ; and it appeared
that Brown bought all his vessels out of advances fr
the bank, and which he afterwards proposed as eceurity
for other advances. 15,0001. was afterwards advanced
to him. He gave the security of five ship, know as
"the Gloster ships," to tee bank in this way : two of
them to Mr. Walton for his advances through discounts
of the bank, amounting to 44,0001., and for which
he had made himself liable ; and the other three
ships were 'assigned to the bank, two of which ships it
was afterwards discovered had been previously mort-
gaged to the Gloucester Bank .for 10,0001. advanced to
Brown, and he afterwards sold them. The advances
made to Brown amounted in the whole to 75,0001., on
which there had been a loss of 40,0001. There was also
a regular transaction in reference to the Islington Cattle
Market to the extent of 8,6001., the only solvent person
in the concern being a Mr. Harrison, who left the
country and wont to Boulogne, and being anxious
to proceed against him, they indorsed the notes over
to Friend's attorney at Boulogne, and the result was
that he was enabled to recover the amount from
Harrison, and the agent became liable to the Com-
pany to the extent of about 11,0001., both of which
sums had been lost to the Beck. There were trans-
actions also with Mr. Oliver, of Liverpool, and when
that person was paying only 2s. 61 in the pound,
his debt was included on the balance sheet
amongst the mots of the bank. In a transaction
with a person named Tart, out of 39,0001. ad-
vanced, 23,0001. were lost. But the matter
which pressed most heavily on the bank was the trans-
action with referenc3 to iron and coal mines in the
north and in Glamorgeoshire, on the latter of which they
advanced 48,0001. out of the 50,0001. paid up capital,
and the losses in connection with these works amounted
to 120,0001. In the balance-sheet of 1855 the director
stated that out of 26,5011. bills discounted the doubtful
bole amounted to 6,3721., whilst out of bills amounting
to 112,8471. only 18,9741. were good, showing an actual
deficit of 93,5401. Thelearnedgentlemanthen referred to
dividends, which in some cases amounted to 6 per cent.,
the consequence of which was that they could not have
been paid out of profits. The question therefore wee,
were these circumstances known to the directors ? He
thought he should have no difficulty in proving it,
because he should be able to show that the affairs of the
bank were divided under certain heads, and placed under
the direction of different directors as members of the
various committees. The learned gentleman then pro-
ceeded to enter into the details by which he should
.establish his case, reading from documents and letters to
ahem the knowledge of the directors of the separate acts
charged to them, and the time they joined the bank,
which will be better understood from the evidence. The
all-important and most painful part of the inquiry re-
lated to the conduct of what he was compelled to call
false misrepresentations which were made from time to
time by all the directors who were defendants ore this
record with respect to the actual state of the bank, and
representing that instead of being helplessly insolvent
it was in a flourishing condition, and who had been
' guilty of resorting to the deceptive means to entrap the
public into connection with the bank, which their
fidelity to society and their honest integrity to
others should have not led them to do, The bank
never was in a solvent state, and was started with a ridi-
culously small capital for the amount of business aimed
a'. No profits had ever been made, and what dividends
bad been paid must have been paid out of capital. In
June, 1851, the bank was in that state, yet a
supplemental charter was obtained for the raising
of 200,0001. by new shave, when circulars were
issued inviting the public to become shareholders,
the object of which was to supply the vital capital,
without which its existence would be at ah end.
As it was undesirable abates should go into the market,
it was arranged that as the directors could not deal with
them, Cameron and iempson, solicitors to the bank
should fl
purchase or intercept them, the directors making
advances from the bank to enable them to do so as
required. The shares were not taken up, notwithstand
ing their vaunting and flourishing them forth to the
public by the circular they issued, and they were obliged
to have recourse to their issue on several occasions.
In these circulars they stated the bank had not been
loss sucresoful than much elder banks, if a
comparison were made of corresponding periods of their
existence. Several persons were at last attracted by the
statements put forth in their circulars, and went to the
bank respecting them. One of them, Mr. Marcus, a
respectable tradesman, went .o Tokenhouve-yard,
where the bank was then carried on, and saw
Mr. Esdaile, the deputy-governor, and on his asking
him how it was they proposed to issue shares at par
when the bank was so flourishing, and asked to be in-
formed about the state of the bank. Mr. Esdaile handed
to him the balance-sheet of the previous half-year, in
which it appeared there was a reserved fund of 12,5001.,
which the new shareholders were to anticipate at 5
premium. He said that the number of shareholders
were limited, but that they wanted to increase the busi-
ness of the bank, which was in a most flourishing con-
dition, notwithstanding the prestige of the London and
Westminster Bank, which he said it fairly rivalled, and
he advised Mr. Marcus to lose no time in getting shares
from the number of applications that were being made, or
he would be disappointed. Mr. Marcus then became the
purchase of 20 shares, and he had in consequence been
ruined. Mr. Alderman Kennedy was present at the
interview. , Alderman Kennedy called on a friend
of his named Nicholl, and in February or
March, 1855, an 1 asked him to take shares to
qualify for a director, to which he replied that before
doing so be should like to examine the accounts, but he
was told he could not do that unless he became a shire.
holder. Aldermau Kennedy presented Mr. Nicholl
with one of the circulars, and that gentleman was
induced to become a shareholder. On the 10th Sept.,
1855, a new circular was issued, in which shareholders
were offered participation in the bank on taking shares at
par instead .of premium. Mr. Brunter, coachrnaker,
who had the produce of his earnings in .the Charlotte•
street savings'-bank, had been induced by the high rate
of interest paid, to withdraw his money from the savings
bank, and depot it in tee Loyal British Bank. He was
there fore known to Cameron as such, we h
o applied to
him to take shares in the concern, wh ch was as safe as the
Bank of England. He asked Mr. Cameron if more that
5m thereo/r.e .w would
.1
wdbbßeaerdrne
ucobnatteolt; enrbbdeleeomos
takenttibih.andhanhcee woafs toldany
rhseemrwemphmroel
represented
•f the earn-
hinisg'';hwa'rneiesh which
his
benefit of the reserved fund. Another perStseio.dnatfnowarmed
Cantriil was'induced to take 28 shares, which, it was
stated by M'Cloud, belonged to a deceased shareholder,
but were, in fact, the property of the bank, through
flempston, who transferred them. About this tine,
things began to a,eutne a strange aspect, and directors
were withdrawing. On the 15th of January, 1856,
Mr. Esdaile wrote a letter to Mr. Owen, deputy,
relative to the state of the hank, in which he stated the.
our highest policy was to prec=ut a bold front to th •
public, whilst our weakest conduct wi'l be to dingle a
embarked rtTkh hp e d
e wpremium
share,
slightest
chance
rope of sand before them. We want courage, and, by
Gods blessing—(hisses)—our difficulties wid he co erY
come." The learned gentlemen then referred to the
aalance—heet, wilicb, by the tel ins of the charter, was
to be a fair and correct statement of the condition of the
bank, and f.aid the mode of producing the lad balaace
-beet was for the accountant to balance the ledger ie
pencil with which the balances of the different depart-
tuents were transferred into a general balance-sheet. He
then took one of the former printed balance-sheets and
altered the roeulte he fvuzid there
to
the result of his

0 particular examination at the time, and that so altered
was laid before the directors for their examination and
approval, with a tabular statement of the liability and
assets of the bank, and such a statement was, presented
with the balance-sheet in January, 1856. In the
gee(' rai ce-sn et t there eae r. sea merit
advanced on loans, convertible securities at short
periods, advances on cash credit accounts, and
bills discounted, 986,2721. 11e. id., the whole
of the assets representing 1,178,8121. The ex-
planations of the items so found in the balance-sheet, all
the debts, good, bad, and indifferent, were enumerated
amongst the assets of the bank, and the interest upon
all these bad debts went to swell the item of assets, as
well as the Islington and Cattle Markets' worthless bill
for 8,000/, that were enumerated as convertible sectlris
ties. The suspense account showed 46,2981., and that
account was the receptacle of all the different items it
was desirable to conceal ; amongst others all those tran-
sactions with reference to the purchase of shares
in the name of Cameron andffempson, the ftrebasere of
shares on account of the company. The money ad-
vanced to the Welsh- works was also inserted under
this head, as well as the costs of innumerable actioea
brought by and against them, and it was remarkable
that the adjusting interest account contained not only
the interest for bad debts, but the Welsh works were
introduced as an asset of 17,7691. All the past due
debts went toswell the assets, though in many instances
they were marked by the directors in the books as "bad,"
" hopeless," and in one instance jocularly " let him be
executed." (Laughter.) The gross balance for the year
ending Dec., 1855, after making provision on account of
bad debts, &c., was 25,320/. Bs. 3d. as originally pre-
pared ; the balance-sheet, after making such provision,
was altered from "provision for," to " provision on
account of " bad debts. What was the result of that
critical change he was unable to state. The provision
made for bad debts was only 3091. A dividend in Jan.,
1856, was declared of 6 per cent. The hon. and learned
gentleman then further traced the career of the
bank, and several of the directors, with the con-
currence of the whole, in certain matters connected with
the misrepresentations alleged against them, and in
conclusion said that on the 3d September the bank closed
with debts amounting to 700,0001., and assets of
300,0001., being a deficit of 400,0001. for the short
period the bank had been in existence. By the acts of
the directors wide-spread ruin had been scattered over
the country. Houses had been brought to desolation,
and families bad been plunged from affluence
into poverty, and hard earnings, industriously collected
by a long life of labour, had been entirely lost. Every
one who had any connection with the bank had bad
to rue the day on which they trusted to the assumed
fidelity and truthfulness of the directors. (Applause.)
Lord Campbell said such conduct was indecorous,
and he hoped it would not be indulged in on either
side.
The learned gentleman, having concluded his address,
called the following witnesses :
Mr. H. Paddison deposed that he wag partner to
the late Mr. Mullens, who died on the 11th December,
1853. In 1848 proceedings were taken for promoting '
a new bank, and in 1849 he saw some of the defendants
in connection with it. ellr. Mullens took the whole
management relative to the formation of the bank ;
afterwards they acted as solicitors and secretaries to
the bank, and witness attended the meetings and took
minutes. On. the 26th of March, 1849, a memorial was
presented to the Board of Trade (which was read in
court) and the answer to it. The deed of constitution
was dated July 2, 1849, which was recited in the charter.
Previous to the charter granted in July, 1849, Kennedy,
Cameron, Esdaile, and Owen signed the deed of consti-
tution. He knew of the presentation of a petition for a
supplemental charter, signed by Esdaile, Owen, and
Cameron, on 29th October, 1854, and the greeting of
the charter, dated Feb. 23, 1855. A supplemental deed
was executed in accordance with it, dated 12th June,
1855. It was executed by a number of share-
holders. At the time of the original charter, Alderman
Kennedy, Mr. Esdaile, and Mr. Owen were acting as
directors, and Mr.- Cameron as general manager. Mr.
Esdaile continued to act as director down to the
close of the bask. Alderman Kennedy went
out in January. 1850, and returned to the
directory November, 1854, and continued so till the
end. Mr. Owen went out February, 1854, and re-
turned February, 1855, as a director, con-
tinuing till February 1856. Cameron continued to act
till July 22, 1856. Mr. Brown became a director is
December, 1852, and continued so till July, 1856. Mr.
M'Cloud became a director in Aug., 1853, and remained
so until the bank closed. Mr. Stapleton became s
director in July, 1855, and continued till the
end. The certificate to the Board of Trade that
the capital was paid up was dated November 16th,
1849, and signed by Mr. M`Gregor, governor ;
Alderman Kennedy, deputy-governor ; Mr. Esdaile,
Mr. Apsley Pellatt, Mr. Omen, Mr. Grogan, and other
directors. In receipt of acknowledgment the oerti
Scat°, dated 17th Nov. 1849, was received. On Noy.*
19, 1849, the bank was actually opened for business, and
they carried on business as bankers till they finally
closed in 1856. At the commencement they only had
one office in Tokenhouse-yard, afterwards they esta-
blished branch offices in different parts of London.
The Strand and Lambeth branches, he believed, in 1850.
The Islington in 1850-51, The Holborn branch
the last established, in the end of 1855 or beginning 01
1856. There were six branches altogether in Los-
don. A. work on Scotch banking by Cameron Was
read. It was a curious document, considered
in connection with his position in this ease,
but containing some excellent advice. The bank
consisted of a governor, deputy-governor, e:ght
directors, and a staff of officers in the bank,
with auditors appointed at each half-yeas-
The witness was then examined as to the entries in the
minute book, and the part therespective defendants took
in the management of the affairs of the bank, in count's'
tion with the charge of conspiracy and fraud.
At half-past 5 o'clock Sir F. Thesiger said that 120,
next proposed to enter on the large debts, to exhaust!
them before taking anything else, and as he was MAO
to enter on the case of the Welsh Mines,
Lord Campbell said the Court had better be adjourns('
till Monday.
Adjourned accordingly.