THE BRITISH BANK.

Lyttelton Times, Volume VIII, Issue 491, 18 July 1857, Page 3

THE BRITISH BANK.

In the Cotirt of Bankruptcy, on March 11, before Commissioner Holroyd, Mr. Edward Esdaile, Governor of the Royal British Bank at the time it stopped, was examined; and the report of the examination occupies upwards of nine columns of the morning papers. Much of the space is filled by the reiterated efforts of Mr. Linklater, who appeared for the assignees, and of the Commissioner, to extract direct answers from Mr. Esdaile: they were generally unsuccessful; the Governor fencing with the questions very skilfully, making little orations, and contesting the implied charges on his truth and honesty inch by inch. But from what came out no one can have any difficulty in drawing very distinct conclusions. Mr. Esdaile was one of the original projectors; he was an ordinary Director till February 1855, when he was appointed Governor. The bank commenced business when the legal amount of £50,000 had not been paid-up in money—some£7ooo appears to have existed in-the form merely of promissory, notes. Mr. Esdaile could not ' recollect'that money was borrowed to mak? up the necessary deposit in the Bank of England. Mr. Cameron, the manager, was allotted eighty-nine original shares: he did not {pay for them ; he gave a promissory note for £4300; Mr. Esdaile ' presumed ' that that represented part of the 'paid-up capital.' The Manager and Directors divided £1100 among them soon after the bank opened; that went down to ' preliminary expenses;' it was remuneration for their trouble in getting up the bank. The bank lost at least £ 10,000 by their deceased solicitor, Mr. Mullens. The pocket-ledger of Mr. Cameron—the'green book'—the witness had seen before he was Governor, but he had never opened it till then. Mr. Esdaile and other Directors—including Mr. Apslev Pellat —-signed a certificate sent to the Board of Trade declaring that £50,000 had been paid-up. Shares were taken back from persons at Newcastle, the deposits having been repaid by the moneys of the bank —an illegal act. The witness, who had no account with the bank, had got Cameron to discount a bill for £500; Cameron got that money advanced by the bank, to which at the period he owed £15,000. Mr. Esdaile repaid the money to the bank. Other Directors passed acceptances through Cameron's account. Mr. Esdaile wanted the £500 to increase his ' stake' in the bank • —to take up new shares! Some of the 'securities' on which Cameron and others got advances were shares of the bank— though the law expressely prohibits this. Other ' securities' of Cameron's turned out to have been previously mortgaged. The Welsh mines were put down as an asset for

£120,000 when a purchaser for a much smaller sum had been sought: the Directors hoped the colliery would eventually turn out valuable ; it would if it had been connected with some important railway. The witness would not answer' yes' or ' no' to the question whether he knowingly issued false balance-sheets on hopes—hopes that the^ affairs of the bank would improve ; that the mine, and the securities of the Directors, and the debts of other people, would turn out better by and by ; that the bank in. the course of years would recover itself, the profits of after years paying off the losses of its youth : so the Directors, said Mr. Linklater, reported that the affairs of the bank were ' improving and thriving' when they were hopelessly insolvent ! Hard pressed as to ths insolvency of the bank, the witness at last said that itiwas insolvent, he supposed. The .original capital had all been lost by June 1855 ; yet new shares were issued, at premium too.—The examination of Mr. Esdaile was adjourned. The second examination of Mi*. Esdaile. \efore Commissioner Holroyd, on the 18th, was, if possible,* more damaging than- his first appearance; as his plea of having been partially ignorant, till a recent period, of the position of the British Bank was more effectually destroyed by his admissions or semi-denials, and by letters written by him which Mr. Linklater produced. Esdaile -said he had paid nothing on the call made on the 17th of September; he had since paid his father £4,000, for which he had held security on witness's business. He admitted that he had induced a Mr. Goddard—now a bankrupt through the failure of the bank—to takes shares in 1856, representing that the bank was in a good

position, and that the investment would be

a profitable one. In August last, he wanted Mr. Marcus, a shareholder and depositor, to go into the market and buy shares of the bank—with the bank's money, it would seem: the object being to bolster up the shares. In September 1855, Cameron was in Scotland, endeavouring to get Sir James Mathesoi ' :

to him showing how Sir James might be led on to join the bank if the capital were made larger. The letter was a very suspicious one. Esdnile objected to Mr. Linklater reading it: still more to his calling the management of the bank a 'conspiracy'— ' Conspiracy!' he exclaimed ; "' that is rather a strong term to use.' Mr. Linklater: 'Not stronger than the occasion deserves.' The examination was again adjourned. The report of proceedings in the Court of Bankruptcy on the 25th showed Mr. Esdaile still under the hands of Mr. Linklater. The kind of facts elicited were quite on a par with those extracted at preceding examinations. Mr. Ksdaile was perhaps a little more frank. A few passages of dialogue will give an idea of the examination. Mr. Esdaile said that after Feb. 1855, Mr. Cameron might have discounted bills for himself, but 'not to our knowledge.' Mr. Linklater: ♦ Then, did you allow him to keep the accounts so that he could do as he pleased ?' Mr. Esdaile: ' Well, he was the principal of the executive.' Mr. Linklater : ' But you were the governor. Do you mean that you were for ornament only, and he for use r' Mr. Esdaile : ' I believe that was very much the case.' He said they put down known bad [debts as well as good. Commissioner Holroyd : ' Do j'ou mean that you wrote down all the debts in one list, without any distinction as to whether they were good or bad?' Mr. Esdaile: 'We were advised by Mr. Cameron that the practice of' banks differed as to writing off bad debts: some did it annually, some quinquennially; and in a young establishment we thought it better not to do it too early.' In reply to questions respecting the origin of the bank, Mr. Esdaile said, the bank began business on the 19th of November, 1849.

Mr. Linklater: ' They had prayers in the morning?' Mr. Esdaile : 'I had nothing to do with that; I was not there.' Mr. Linklater .• ' Were you at the revels at the London Tavern at night ?' Mr. Esdaile : 'I was at the public dinner. A silver medal was struck off on the occasion ; I got one, as did all concerned.' It appeared from the evidence, that at the time the bank was formed, its projector and secretary, 'John Menzies, Esq.,' was in the Insolvent Debtors' Prison, Whitecross street, 'hard up' for £50.

Mr. Apsley Pellatt was examined on the Ist April. He gave remarkable evidence. According to his own statement, he became director in February 1849. He joined it under the impression that the bank was formed on the principle of limited liability. He.had"'always considered that the capital »vas £100,000. When it was shown that the [capital was ! £50,000, he said that no doubt his recollection was wrong. He signed more than one minute without reading it. He did not know that Mr. Menzies was secretary to the bank, and he persisted in. stating" his doubts throughout. He did know Menzies was in Whitecross street prison when the bank was |formed. He signed the petition for the charter, which stated that the shares had heen paid up— without reading it. without ascertaining whether it was true. Mr. M'Gregor told him that the act had been complied with ; Mr. M'Gregor must have been wrong; Mr. Pellatt affixed his signature ' under a wrong impression.' A letter was read from Mr. Cameron, written in Scotland, giving a flourishing account of his "proceedings, and ending with this pious strain—" It would be too.presumptuous to say with the warrior of old, 'Venn vidi, vici!'; but I ought, with all humility, to say and proclaim that He in whom I trust is indeed invincible. For ever blessed be His name !' Mr. Pellatt left the bank in 1850, and sold his shares. In his evidence he said that he resigned because, after an inspection of the Welsh works, he thought the advance on them was an ' unbaijfa'ng transaction.' But Mr. Linklater read Mr. Pellatt's letter of resignation, full of compliments to the bank, as 'a sound, practical, benevolent, commercial establishment,' and stating his reason for retiring to be the health of his wife arid the press of other duties. He sold his shares'' at £3 discount. Two days before he resigned he signedva petition to the Crown for sion to issue new shares. At the end of his examination, Mr. Pellatt wished to know from Commissioner Holroyd how far the;;e was anything affecting his character and integrity. He protested that he had entered the bank to do a public service. The Commissioner declined to give any opinion. In th£ course of the proceedings, Mr. Linkla ter intimated that the whole case would have to go elsewhere.