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

adding not "a little TO the proits of tue concern.
To carry this business on in India, where the |
banking facilities offered to the public do not |
yet equal the demand, is easy enough. But not |
so in London. Here the banks are so many and |
the competition for profit 80 keen, that any new
establishment can only expect to have the refuse
OF bills which other banks will not LOOK at.
With caution, and in time, this difficulty like
many Others, can do doubt be overcome. But |
to do So the manager of q bank must not have |
tnglsh and India business on his hands at the
same time. This was the first mistake we made, |
and through 1t we we're led into several other
blunders which we might otherwise perhaps have
ayoided. At any rate, the turning our bank into
London as well as an Indian establishment,
and not sticking closely TO the work Tor
which we were hrst instituted, helped not
little TO bring into trouble, and this Is how
we managed to make mistake number oae.
A banker, or q bank, as every one who reads
the leaders of the Tunes during the late panic
must have learnt pretty well, is, or ought TO be,
an individual or an establishment that bor-
rows money without interest and lends i,
charging ior the use of it, and as the very life
and sou of bank is credit it IS able to have
as much almost as it wants OF other persons
money, for which 1t is answerable, and which
it lends upon security to those who have good
security to offer whilst both parties are salts
hed Withe their respective shares Of the bargain.
Thus It suits Mr.. A, Mr.. B, aud MIR. @ to
keep their money at bank, and to
maze all payments by checks on that
establishment. The bank takes charge of their
moLey, and is res ponsble to them tor the same.
These parties are, as 1t we're, the lenders to the
bank, They get-or they used to get in olden
days, when banking was conducted On more
legitimate footing than at present-no interest
Tor the money they deposit, but what they pay
into the bank Is kept IN safety, and-to say
nothing OF the conventional responsibility of
having ian account with bank'-they can pay
their money by cheques, and have their accounts
kept tor them gratis. These, as l said before,
are the lenders to the bank. But there are also
borrowers from the same establishment. Mr..
d, MIR. r, and Mr. F, want to discount their
IN hnF fl,fnn
security. If that security is good, the banker
lends them the amounts they require, and the
interest charged forms the profit of the bank.
When a business ike this is well established,
and when it is worked with ordinary caution,
banking cannot be otherwise than very prodt-
able. But this must take time, and those who
manage it must go very carefully a. first. More
over, banks established for foreign business
ought never TO enter upon line which cannot
possibly be managed at the same time as that
they have already in hand. We did so, and in
time found out the mistake we had made.
Nothing Is more easy than TO get custom for
London bank, but the difficulty is to obtain ac-
counts worth having. When we commenced
doing English as well as India banking business,
there were plenty Of clients came to us, and
such as brought anything like respectable In.
troductiCn we could hardly refuse to take, But,
with few exceptions, the histories of all such
banking accounts were the same, and one eX-
ample will serve for fifty. An individual would
bring a letter OF Introduction to the manager,
and would open an account with hundred or
hundred and flity pounds-perhaps more. He
would ask and obtain q Cheque book and pass
book; but hardly would the ink with which the
Necessary entries were made be dry, than the
cheques drawn against the account would come
tumong in, so that IN perhaps three days not
only was all the money deposited drawn out but
the balance was five, ten, or twenty pounds on
the wrong side. A young bank, being as 1t were
afraid OF disgusting customers, seldom or never
sends back checque because there are no funds
to meet it. This is so well known that in Lon
don there are numerous adventures who make
it point to open accounts with Tew establish
ments, knowing full well that they will make
few pounds by each such speculation. How
they obtain letters OF introduction to managers
is one o! the many wonders of London business
life, but that they do so is certain, as is also
the tact that they manage to deposit a re-
spectacle sum, draw out and pay in money for
a time, and then make a hnal shot at the
establishment by checque which draws out all
the balance they have, and some pounds beyond
1t. This done, they are never more heard of,
and in vain they are written TO and requested
to pay ia the amount they have overdraWn.
They know better than that, and so betaKe
| themselves and their sham accounts somewhere
else, 10 serve, in due time, some other establish
ment as they did that from which they have
| Withdrawn their patronage.
| OF accounts like this we got several-many
| more than we wanted-but OF real bona lide Gus
| toners who ALWAYS kept balance OF three or
| four hundred pounds to their credit we had not
| a Dozen and OF these the majority were direc
| tors In banking, it is we'll known, unless
| customer leaves a certain amount to his credit
| and never draws below that, his account is not
| worth having and it is only young banks that
refrain from requesting individuals who do not
| keep such balances to withdraw their accounts
altogether. This then was our case, and thus
began trouble number two OF our bank. We
| had all the risk, all the trouble, and all the
work of keeping number of current accounts,
| from which, as so few balances were left in our
| hands, we derived no profit whatever. The
reason was obvious. There is so much compe-
| titiCn for custom amongst the London banks,
| and there are so many well-established concerns
| of the kind, that customers worth having will
not 90 TO new establishments; and why should
| they?
| IL was the same thing with the bills brought
| to us for discount. We had either to put up
| with paper which other banks would not look
| at, or else to do nothing. Here the same COM
| petition for profits told against us. Although
| the bills we accepted were selected with the
utmost care, and quantities OF rubbish were
| rejected, they were worth but little, and if we
! did not renew or make some arrangement at
| maturity, we generally found ourselves minus
| the amount of cash advanced. OF course there
were exceptions to the rule, but still our
| losses were considerable, taking into considera-
| tiOn the comparative small amount OF business
| we did in tins particular line. And this, be it
| remembered, with board OF directors as honest
| and honorable as could be found in Eng
| land, not one Of whom ever thought OF obtaining
| q loan or OF disCOunting on his own account.
| Had it been otherwise-had we been given to
| help each other, or of making advances to each
others friends--the losses of the bank would
| have been teniold what they were. We were IN
! fact like so many Colonel Newcomes. With the
| best of intentions and the utmost honesty OF
| purpose, we made terrible mess OF LONDON
| banking business, simply because we knew
| nothing whatever about it. 1t was much the
| same as if we had commenced the trade OF