The Sun.
London, England, 1857-12-30 00:00:00

THE GLASGOW BANKRUPTCIES.

(Front the North British Daily Mail.)
The two cases of bankruptcy which have given
Glasgow an unenviable notoriety at this period,
which may be said to have sealed the fate of the
Western Bank, and which have had an influence
both on public and private interests far beyond
what could ahnost have been believed to lie within

the range of such causes, have ran their course of
investigation before the sheriff, and we are not
likely to hear much more of the firms of D. and J.
Macdonald and John Monteith and Co. The aspect
of these concerns has somewhat changed since they
first began to be a subject of rumour. That of the
Macdonalds does not appear nearly so good in the
examination of the bankrupts, nor that of Bohn
Monteith and Co. quite so bad as was predicated.
The publication of the bankruptcy examinations,
therefore, will be found in a rather signal manner
inithese cases to give every man his due, and to
prevent what is bad from appearing either better
or worse than it ought to do.
The history of the firm of D. and J. Macdonald
and Co., as disclosed in court, is as melancholy a
chapter as could well be gleaned from the annals of
private enterprise and speculation. The firm is so
imiaaaating and honourable in its oriein, and so
reckless and revolting in its fall, that one can only t
trace its progress with the most mingled feelings,
while every step in its upward and downward
career is fraught with instruction and warning.
The father of these young men had made money in
the sewed muslin trade, in Paisley. In 1834 he
retired, transferring to his two eldest sons the good-
will and a balance to their credit of 1,7001. In
four years this sum had been ne ,rly doubled by the
profits of the business. Two other brothers were
then assumed as partners, the father putting 1,000/.
into the firm for them, and each of tho four brothers
being allotted a share in proportion to their interest.
Industry, frugality, and a determination to save
and gain by honourable means were then the cha-
racteristics of the firm, which consequently pros-
pered and rose gradually to moderate wealth and
distinction. In 1841 one of the brothers died, and
on a balance it was found that there was 6,1391. to
the credit of the firm over and above capital, or what
had been left or given to it as such by the father.
Up to this time the partners had restricted them-
selves to moderate saleries, and drew nothing from
the profits. But in two or three years more a change
came over the spirit of their dream. The ambition
of extending their business, and of seizing the lead-
ing position in the trade, began to urge them into
hazardous courses. In 1845 they bad recourse to
8,000/. of accommodation bills. These were chiefly
concocted, however, through their father and one
or two agents who had the goods of the firm con-
stantly passing through their hands. About the
same period, or shortly after, and while their accom-
modation paper was increasing, they entered into
larger premises, the annual rental of which was
1,3001. Their business wasalready too large for their
capital ; yet they strove eagerly to enlarge it ; and,
in doiug so, encountered rental, taxes, and expenses
which would have been most formidable even with
the possession of the requisite funds for carrying on ,
such extensive operations. This was the first
step to ruin. Still the firm went on, making profi's
apparently exceeding losses and charges, one
brother going out and a new one coming in, till in ,
1851, on the death of James, there was found to '
be a balance at credit of 28,0001., and the firm be-
came
bound to pay 11,0001. to the executors of the
deceased partner. In 1852 and 1853 trade was
prosperous. TO balance of the latter year showed
40,0001. to the credit of the firm, and with this
shoal of profit came a new dream of ambition. The
money market was easy. The bullion dealers had
filled the vaults of the Bank of England with gold,
and that establishment was overflowing with paper
notes. Credit, loans, and accommodation were
very cheap iu terms and unlimited iu amount.
The Macdonalds in this state of affairs entered into
extensive building operations, which cost before
they were completed no less than 90,0001.. being
20,0001. more, of course, than was estimated. This
most unwise speculation, considering that the ordi-
nary business of the firm was carried on by accom-
modation bills, now swelled to 80,0001., bad
scarcely been sot afoot when bad debts were made
to the amount of 23,0001. The builders were paid
by bills at long dates, the rates of interest being as
low as 21 to 3 per cent. In 1855-56, when these
bills had to be paid off, the accommodation paper
of the firm jumped at one leap from 85,0001. to
188,0001., the interest being now from 5 to 7 per
cent. Entrance into extensive premises led of
course to new efforts to increase a business that had
many years been much too 1 rge, and consequently
to increased business expenses, which, together
with the enormous sums paid for discounts amount-
ing in one year to 40,0001.), swallowed up not only
profits, Lut capital, stock, credit—all. At this
stage a tendency to gamble in paintings was de-
veloped in the leading partner of the firm. At the
balance of 1856 the sums to credit which had
hitherto appeared had totally vanished. The
course of ruin was run, and everything was pre-
pared for the moral fall which took place in the
spring of this year, when the extraordinary, fatal,
and disgraceful expedient of hiring worthless parties
in London to sign bills at a commission of 1 and
11 per cent. was adopted and carried out till the
accommodation paper of the firm rose in a few
months to the verge of 400,0001. Did any history
ever exhibit more strikingly the importance of
avoiding the beginning of evil 1 What a lurid
glare does that 400,0001. of wind-bills, all but
forged, and the final catastrophe in which they ex-
ploded, throw back over the 8,0001. of accceimx:ae.c-i
tion in 1845, and all the various errors and follies
of the intervening years
The case of John Monteith and Co., as
by the bankrupt himself, is that of a firm
over-
whelmed by losses, accommodations to othersndby the ensnearing entreaties of a bank manager to
aid in propping up various concerns that were
rotten to the core. Much of this may be true.
1` There can be no doubt that John Monteith and