Recently, I read a book "Madras Rediscovered" by the Madras-historian Mr S. Muthiah. Many things in the book interested me; i am going to write about one of these. If you like history like i do, then this would interest you too. Read on:
George Arbuthnot, a Scot, came to Madras in 1777 and joined the firm of Francis Latour & Co in 1800. Later, one John de Monte joined this firm and these two took over (purchased) the firm in 1810, and renamed it as Arbuthnot de Monto & Co. After the death of de Monte in 1821, the firm became just Arbuthnot & Co. It was in the present Parry's Corner area.
Over the years, Arbuthnot & Co became a big establishment and a household name in Madras. Much later, the nephew of George Arbuthnot (the founder), named Sir George Arbuthnot became the head. The firm by then had grown a lot, with a banking business also. The head Sir G started "spending" the public money in various investments all over the world. Like, searching for gold in Nilgiris, Anamalais. (Shades of Satyam of 2008-9?) Arbuthnot & Co was drained dry.
Its England associate & partner committed suicide, because of the losses, on Oct 20,1906. The crisis in the Arbuthnot Co would not have come to light, but for this suicide. Arbuthnot & co applied for insolvency (shades of US crisis?) on 22 Oct. The auditor appointed by the Governor to look into the Satyam, oops Arbuthnot affair, declared huge misappropriation and swindling.
The HINDU of that day thundered in its editorials, "the consequence of this disasterous failure .. will ... mean the ruin of many hundreds of families in South India. It is a calamity for the investors." As people of Madras and the entire South India believed that Arbuthnot & Co was a "strong and stable" British Govt instituition, they had invested all their hard earned money in that firm, and on 23 Oct 1906 everything, every single paisa went up in smoke! Even the then Governor of Madras, Sir Lawley, was a victim!
The swindling was going on for 12 years but the public didn't know about this. "Decoying innumerable innocent men and women into investing ... their hard earned savings and earnings .. ", thundered the HINDU. (by the way, did any of our ancestors lose anything in this scandal, do you know?)
Sir George was tried on eleven counts - "maintaining false accounts and diverting credits to his personal accounts and those of his family" (Satyam ?). He was sentenced to 18 months RI.
But, as it is said, some good things come out of every bad thing - eventually a most constructive thing came out. A young vakil, V Krishnaswamy Iyer (much later, a High court judge) got together eight other young persons, to promote a "bank incorporated locally and managed by Indians." That was within weeks of the scandal break-out.
There were several Indian banks founded earlier to 1906 - like Thanjavur Bank (1901), South Indian Bank Tirunelveli (1903), the Kumbakonam City Union Bank, CUB (1904), the predecessor of today's Corporation Bank in Udupi (1906) and the predecessor of today's Canara bank, in Mangalore (1906). All these banks were outside Madras, and there was NO Indian-operated bank in Madras (quite surprising).
Krishnaswamy Iyer and his co-promoters sought out funds from the public, notably Nattukottai Chettiyars, on Nov 2, 1906. The Nattukottai Chettiyars helped with finance and their business acumen to found a Bank and make a success of it.
Thus, the present INDIAN BANK was registered on March 5, 1907 and opened on August 15th. Today it has a business of over Rs 1,01,274 crores, with 1582 branches.
history to continue on other topics.
rajappa
1 PM on 4 March 2009
George Arbuthnot, a Scot, came to Madras in 1777 and joined the firm of Francis Latour & Co in 1800. Later, one John de Monte joined this firm and these two took over (purchased) the firm in 1810, and renamed it as Arbuthnot de Monto & Co. After the death of de Monte in 1821, the firm became just Arbuthnot & Co. It was in the present Parry's Corner area.
Over the years, Arbuthnot & Co became a big establishment and a household name in Madras. Much later, the nephew of George Arbuthnot (the founder), named Sir George Arbuthnot became the head. The firm by then had grown a lot, with a banking business also. The head Sir G started "spending" the public money in various investments all over the world. Like, searching for gold in Nilgiris, Anamalais. (Shades of Satyam of 2008-9?) Arbuthnot & Co was drained dry.
Its England associate & partner committed suicide, because of the losses, on Oct 20,1906. The crisis in the Arbuthnot Co would not have come to light, but for this suicide. Arbuthnot & co applied for insolvency (shades of US crisis?) on 22 Oct. The auditor appointed by the Governor to look into the Satyam, oops Arbuthnot affair, declared huge misappropriation and swindling.
The HINDU of that day thundered in its editorials, "the consequence of this disasterous failure .. will ... mean the ruin of many hundreds of families in South India. It is a calamity for the investors." As people of Madras and the entire South India believed that Arbuthnot & Co was a "strong and stable" British Govt instituition, they had invested all their hard earned money in that firm, and on 23 Oct 1906 everything, every single paisa went up in smoke! Even the then Governor of Madras, Sir Lawley, was a victim!
The swindling was going on for 12 years but the public didn't know about this. "Decoying innumerable innocent men and women into investing ... their hard earned savings and earnings .. ", thundered the HINDU. (by the way, did any of our ancestors lose anything in this scandal, do you know?)
Sir George was tried on eleven counts - "maintaining false accounts and diverting credits to his personal accounts and those of his family" (Satyam ?). He was sentenced to 18 months RI.
But, as it is said, some good things come out of every bad thing - eventually a most constructive thing came out. A young vakil, V Krishnaswamy Iyer (much later, a High court judge) got together eight other young persons, to promote a "bank incorporated locally and managed by Indians." That was within weeks of the scandal break-out.
There were several Indian banks founded earlier to 1906 - like Thanjavur Bank (1901), South Indian Bank Tirunelveli (1903), the Kumbakonam City Union Bank, CUB (1904), the predecessor of today's Corporation Bank in Udupi (1906) and the predecessor of today's Canara bank, in Mangalore (1906). All these banks were outside Madras, and there was NO Indian-operated bank in Madras (quite surprising).
Krishnaswamy Iyer and his co-promoters sought out funds from the public, notably Nattukottai Chettiyars, on Nov 2, 1906. The Nattukottai Chettiyars helped with finance and their business acumen to found a Bank and make a success of it.
Thus, the present INDIAN BANK was registered on March 5, 1907 and opened on August 15th. Today it has a business of over Rs 1,01,274 crores, with 1582 branches.
history to continue on other topics.
rajappa
1 PM on 4 March 2009
Interesting history. And as history continues, the same Indian bank went to the edge because of the generosity of its chairman (was it Gopalakrishnan??) and few politicians (no names - I dont want to be sued :) before recovering right? (I was a college student those days and wasnt seriously following these things)
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