The GLIO Site

BANKING AND COMMERCIAL ATLAS
THE LONDON AND COUNTY BANK.

     This has been a most unfortunate establishment. Its reputation has been subject to various ebbs and flows. So early as 1841 the Directors deemed it right ‟to notice the statements which have been most industriously and maliciously circulated in various channels, by unprincipled parties, containing false accounts of the affairs of the Bank, and equally unfounded personal attacks on some of the Directors.” In 1843 a shareholder again moved, and the meeting adopted, a resolution—‟that they cannot too strongly express their indignation at these unprincipled attempts to injure the Bank in the estimation of the public, by attacking the public and private characters of the Directors, and those of several of the officers of the establishment, by persons not connected with the Company, and whose dismissal (or forced resignation) as officers is most amply justified by their subsequent conduct.” Further resolutions of the same character were passed, requesting the Directors to rely on the honourable feelings of the proprietors. To add to their misfortunes, they were involved in heavy litigation as to advances made to the Messrs. Colls and Co., which extended over some years. In 1848 they congratulated the proprietors on the accession of John Sadleir to the chairmanship. In 1856 they had to pass through a fearful ordeal of doubt, suspicion, rumours, and runs, the result of the congratulatory step of 1848. These, however will be dealt with in their turn. The Bank started in 1836, with the title of the ‟Surrey, Kent, and Sussex Bank.” Its progress we can only imperfectly sketch at present, but give as full details as the information within our reach will enable us to supply.

     In 1840 the Directors reduced the proposed capital of two millions to one million; in 1854 they again raised it to two millions. They have numerous branches all over the home counties and some adjacent ones. They have in their career absorbed the Aylesbury Bank of J. and T. Chapman; the Chatham firm of Jeffrys and Hill; Wilmshurst and Co., of Cranbrook; Davenport and Co., of Oxford; Hector and Co., of Petersfield; Emmerson and Co., of Sandwich ; and John Storeld’s bank at Petworth; and, in consequence of private bank failures at Abingdon, Arundel, Cambridge, Canterbury, Chichester, Romford, St. Albans, and Stoney Stratford, have at each of these places also established branches; and have now altogether 72 branches. In 1854 the Bank was admitted to the clearing-house. These are the important landmarks connected with its history and progress, and we have now to deal with its present position and future prospects.

     Of course, it will be expected that some allusion should be made to the connection of Mr. Sadleir with the establishment. We are not about to blame the Directors for having sought his chairmanship. To all outward appearances, he was a respected, honourable man. Long after Lombard-street had endorsed the general opinion, the government of Lord Aberdeen had stamped it with the Treasury mark; and although it is impossible to believe that no dishonourable use was made by him of his position, so impenetrable is the official secrecy of Downing-street, that no breath of suspicion excited notice out of doors. The 40 boroughs he held, the 40 votes he had to sell, bought him the Lordship of the Treasury. Sadleir was more prime-minister than Aberdeen. His 40 votes secured the Minister’s position. What Lord Derby had refused to buy, Lord Aberdeen eagerly sought and paid the full price for. Lombard-street may fairly put it, that distrust on their part only commenced with the honours of the Treasury.

     Sadleir, in his celebrated letter, boldly put the point, that the accounts of three banks were ‟cooked”—the names of those three banks have been kept secret; the London and County all through have denied that their bank was one of the three, and Mr. Nicol, the chairman at the last meeting, called it a ‟mendacious” letter, and justified the appointment of Mr. Coleman on the ground of its statements. At the time when Lombard-street refused the bills of John Sadleir, arrangements were made by which large discount accounts were opened at one of the branches, by two parties at least, who discounted Sadleir’s bills at one rate and re-discounted them through the branch at the market rate. One of these parties has named 70,000l. as the amount of his transactions with the late chairman. If such transactions were unknown to the Directors, then the branch system might any day have closed the head office; we have reason, however, to believe they were checked immediately they became known. The continued use of Sadleir’s name after he had ceased to hold office, the occupation of the chair as the official chairman, after his disconnection, were false lights, alluring confidence, and deserved the severest and most condign reprehension. These acts have been sought to be defended; but when it is known that his bills had been refused for months, that the bank was a heavy creditor, that he was in as bad a pickle in the market as George Hudson; that the solicitors of the Bank were personally serious losers, as they had confided and trusted until the honourable gains of a long career were absorbed, and ruin seemed inevitable; that the parties who knew this were directors, solicitors, and managers: we are fully justified in saying that confidence in such men was impossible. However, new directors were sought—Mr. Blyth, Mr. Ewart, M.P., Mr. William Nicol—men of the purest and most unsullied commercial renown; Mr. Hoghton, Mr. Laming, and Mr. Lee, M.P., distinguished alike for probity and position; and under cover of these names the flickering life of the establishment was gradually restored. It had had so severe a shaking, that nothing but names like those could have saved the concern. They did save it, and our duty, as public censors, is to look at the balance-sheet and position of the Bank, anxious only for the consolidation of the establishment on a sure basis.

     The balance-sheet last presented by the new directors was more full than any previous one. The details of cash in hand—cash at call—government securities—‟other,” securities—‟special” securities—bills discounted, if not sufficiently specific, were at all events in advance of all other banks, and therefore tended undoubtedly to reassure the public. The capital account was in round figures put down at 600,000l.; the deposits being 4,213,738l. Here we pause to refer to Mr. Coleman’s quiet hint as to the insufficiency of capital. Mr. Nicol contrasted the capital of the Bank with that of other Banks, like the Westminster, Union and Joint-Stock. We will pass by these allusions, because we contend that the paid-up capital of each of these Banks is lamentably deficient; and as parliamentary committees are promised on Banks and Banking, we trust the next session will not pass without some stringent regulations as to the capitals of established Banks. The shareholders deemed Mr. Nicol’s reasoning conclusive. We again repeat, it is a question for the customers, and record our conviction that the minimum paid-up capital of this Bank should be one million sterling. We know many who closed their accounts last year, who would not have done so, had the capital been adequate to the business; and if the Directors desire permanently to stifle the calumnies which from time to time mar their progress, they will not delay this concession to the public opinion of the day. If it were a new Bank, such a measure would be compulsory; and if public opinion will not avail, the next Banking Act must make it imperative. 

     The explanations as to ‟other” securities were deemed satisfactory by the shareholders; but we shall yet be glad to have ‟other” securities, ‟special” securities, and overdue bills valued by a first class public valuer of such securities, and until that is done, the public have no right to take the last statements for granted. Mr. Coleman is an accountant; his duty was not to value Irish landed estates, or Westminster Bonds, or Victoria-street buildings. Let valuers or auctioneers of an undoubted name aid the public estimate, and then, and then only, will we take the valuation for granted. The Bank have also other sums invested by way of loans on buildings; all these securities should be submitted to the same investigation. The change of managers should also be satisfactorily explained. A clean breast should be made of it; and the new start, if guaranteed by increased capital, would remove all doubt, and reinstate the Bank in public confidence.

     We do not wish to be misunderstood as to the term ‟public confidence.” A capital of 600,000l. (including reserve fund) is the basis of transactions, extending over four millions and a-half of customers’ money. Now, taking the losses of the Royal British Bank, which had about one million of customers’ money, let us see how far this capital is available to cover losses on more than four millions. By the Welsh mines 170,000l. was sunk, by the directors and solicitors, 144,000l.; or, in other words, by one transaction the whole capital of that Bank was irretrievably involved; and by a few other transactions one-seventh of their customers’ balances, supposing the same ratio of loss to have been suffered by this or any other Bank, the whole of the capital, and one-tenth or more of customers’ balance would also suffer; whereas, if the capital was settled on the Scotch rule, it would suffice to cover even extra-ordinary risks. In the case of the Royal British, we are told that no dividend ought to have been paid from the first. It may be a very harsh view to take (which may be excused by the paucity of information afforded in balance-sheets), but, we contend, there is no evidence to show us, that any dividend is justifiable in any Bank. In this Bank more than one-half the capital is invested in special or other securities, the most doubtful, as we have often observed, of all securities. If any Bank requires a large capital it is this. With 72 branches, dealing with an agricultural body, liable to be drawn upon or run upon at so many points, and open to 72 sources of fraud, it cannot safely conduct its business on its present capital. We, therefore, earnestly urge an immediate increase. In view of the doubt and uncertainty of the last year, it has nearly one-half its assets immediately available, a proportion much larger than any other London Bank requires. The dividend of this Bank is necessarily much smaller than that of many other Banks, caused by the amount of their losses and expenses over so many branches, and by the necessity of keeping available a larger amount of their otherwise working capital. The audit last year by Mr. Coleman was better than any other we have had before us; but such an audit, to be sound, must be systematic and continuous. It was a fitful resolution to appease the agitation out of doors. If some guarantee be given for valuation of assets, for permanent and boná fide audit by paid men, for increase of capital, we know of no Bank so likely to hold and maintain public confidence. Without these guarantees it must ever be the weakest. We make these remarks from a sincere desire to second the efforts of the present directors, to make it equal in reputation to that of any other Joint-Stock Bank.