The evening telegraph. [volume] (Philadelphia [Pa.]) 1864-1918, 1866-08-17

went with the crowd, and followed 10 the very
utmost the "go-ahead" principle that had-lately
been imported into this country from abroad.
II is but fair to- say, that in its financing
operations THE Malabar and Yokohama, Bank
Limited.' succeeded very much better than 1t had \
during the rather short career OF London banking
which it had tried and failed to make anything
of except large crop of bad debts. Some OF the
projects we financed were magnificent In con-
ception and wonderful in idea. Thus short
line ot railway had to be constructed, but the
capital was not subscribed Tor by the public.
Now the chief person interested in getting up
this railway was the contractor who was to
make it. Not only did he hope and expect that
the contract would be most profitable one,
but he and certain friends had purchased for a !
mere song some iron and coal mines, the value
OF which would be increased q hundredfold if a
railway could be brought to the mouths of the I
pits. But the British public did not seem to see
this; and so, in spite of advertisement after ad-
verusement in all the public papers, there we're
but thirty or forty thousand pounds worth of \
bona tide applications for shares in line which
required capital of at least f500,000. In his
distress the contractor came to u.s. and
offered us any interest we liked to name on the
security OF pMdup shares of the line, as well as
mortgages on the Mines II we would advance
him The money in bills which he could get
discounted. The affair took very long time to
negotiate, Tor even We directors OF the ''ad.
vanced' commercial school thought il somewhat
too large an undertaking for our establishment
to engage in alone. But, to make long story
snort, Inc business Wss settled and it was In
this way We arranged ii.
Paris bank-French bankers win engage in
Financing" to any amount, in fact they con-
slider it part Of their legitimate business-was
to draw on us at three months date in sets of
bills of $500 each, 10 the amount of fLOO,O00
These bills-which, being drawn by one bank and
accepted by another, would be very easily dis
counted-were TO be made overto the CONTRACTOR,
who, IN return, gave us paidup shares and deben-
lures upon the future line, to the amount of
$1,000, 600 sterling, Us security for his bond
payable IN three equal instalments in Que, two,
and three years, besides mortgage of f250, 600
upon his iron and coal mines, which was also
payable in three years. We-that is, the two
banks-tCok upon ourselves the keeping up the
Dlls, that is, OF renewing them again and again,
IN various forms ana IN different ways, until the
three years were over, and we had realized the
shares, Gebentures and mortgages. Thus, for
an advance upon paper OF f500O00 we were in
three years 10 get 81, 250, 600. Moreover, "The
Malabar and Yokohama Bank" charged the
contractor per cent. for negotiating the trans
action, and the French bank charged him 10
| per cent. Tor discOunting the bills, which it
Immediately rediScounted at per cent This
commission cost our customer E1O 0O0 and the
discount f50, 0O0, tor which-having little or no
| available funds of his own-he had 70 give his
bill, backed by suDdTy friends and partners in
| the transaction.
As a matter of course nothing could look
| better on paper than this immense pIodt as it
| appeared in our accounts for the current half
| year. We did not enter into any details, but
simply carried our gains to the right side of the
| profit and loss account. In order TO put our
| selves IN funds for the purpose of paying divi-
| dends, we discounted some Of the paper we held,
| and thus were able not only to declare out to
| pay dividend at the rate OF no less than 30 per
| cent. per annum. No wonder our 925 shares,
| but on which only 9l0 had been paid up, were
| quoted at $50, or G20 premium.
| Still less surprising were the bland and con-
| tented looks OF our shareholders, and the cor
| dial manner with which they agreed to all our
| chairman said and the unanimous vote ofthanks
| to hum and the board, with which the proceedings
| ended. For my own part, felt so certain that,
| the wheTewthal to purchase an estate in my
own county was almost within my grasp that
| once more set about consulting all the adver-
tisements l could lind respecting properties for
| sale. And so confident was that the prosperity
| OF our bank must go on increasing, that l not
| only laid out every shilling Lad on shares, but
actually borrowed money. by mortgaging my
pension, III order to buy more and more of our
| scrip.
| a second and third profitable half year
| brought us to the zenith OF our prosperity. We
| had many large undertakings on hand, and
| many more knocking at our door. 1t was per-
| tectly fabulous how we made money. The British
| public were always ready to deposit cash with
| us at or per cent, and to borrow our ac-
ceptances at l5. 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
OF birth, of means OF standing, as well as educa-
ton, in the world, were ready to kiss our feet in
order to get even small portion OF these pro-
misses of future wealth. We got three or four
|
city responsibility; but, alas! for us ALL aud for
me in particular, the day OF reverses came and
almost before the storm was at its worst, our
| good ship was wrecked on the shoals of dis
| credit.
| Who can tell what first causes one of those
| panics which bring on commercial crisis? To
| describe one of these financial storms would be
work of supererogation, considering how
lately we have witnessed the hurricane which
| swept over the city of London during the
month of May. The tempest in which our
good ship, 1.-THE Maabar and Yokohama
Bank, Limited" was destroyed, differed in
no material degree from other monetary
which after time fell away again,
leaving behind it a calm during which no
vessel could make any way. Then the WIND rose
| again; from stiff breeze 1t increased to gale,
| from gale to storm, storm to hurricane,
| from which ali the vessels indiferently COM
manded suffered more or less. But my object is
| to relate how it was that the ship IN which and
| all my property mad embarked became help
| less wreck.
For some days past things had been "looking
! queer In the city, and (as is invariably the
| case, although could never see any reason for
it, except 10 increase disfrust, and make the peo-
pie believe that things must get worse before they
| are better) the Directors OF the Bank OF England
! raised the lates of discount Another week
! passed over, and they increased the rate a. fur
| ther per cent. BY this time 1t was difficult to-
! discount any but the very best paper,
! and following the example set them by
the Bank OF England, the larger discount
| ceptionable bills. Believing the pressure
to be but temporary, and hoping we should tide
| over the difficulty, we endeaVOred to place our.
selves IN funos sufficient to meet any minor
engagements. For this purpose our manager.
! nosted over to Paris, and after "6nancieI
! .ssNY,O urifh pFFNn n l..