THE FAILURES IN INDIA.

IF, up to this period, we have abstained from calling public attention to the causes and effects of the frightful failures of the great agency-houses in India (contenting ourselves with publishing, from time to time, for the information of their creditors at home, such details of the proceedings abroad, in respect to the insolvent estates, as the Indian papers thought proper to communicate), our forbearance has arisen from no spurious commiseration towards the members of the insolvent firms, who, we think, are not only entitled to no commiseration, but are heavily responsible for the extensive misery they have inflicted. We have met with lamentable cases of distress caused by these failures, in various classes of society. "The mite of the widow, the hard earnings of the military servant, the collected accumulations of the civil servant, the funds of the trading capitalist, and the realized treasure of the retiring pensioner, on its way from India to Europe, have all been involved in one common deterioration or ruin.”* Such are the consequences of these failures, described by a faithful, but by nó means unfriendly pen; and what have been the causes? They are frankly, though perhaps unwillingly, confessed by the same writer: "They have been occasioned solely by the mode in which the great Calcutta agency-houses have been transacting business for the last ten or fifteen years,' in other words, since the charter of 1814; "the rage for speculation or inordinate gains, on the part of the directors, and the too eager or confident cupidity of their customers, over-trading, improvident enterprize, extravagant miscalculation, and excessive expense in living, have no doubt been the cause of the recent failures."

The aggregate sum of the debts due by these firms, at the dates of their respective failures, is truly appalling. Beginning with the year 1830, and excluding the house of Mercer and Co., which failed in 1827, its outstanding obligations being reported at half a million, the debts of the Indian insolvent firms, and of those connected with them at home, amount to the monstrous sum of nearly twenty millions sterling!

Supposing the assets of the firms to have been worth, at the time of failure, one-half the debts,-that the creditors will obtain such proportion, it is idle to expect, especially when we consider the sums annually vanishing in the shape of salaries, law and other expenses;*—there will still be a deficit of ten millions: how is this deficiency to be accounted for?

We have been told, by pretty good authority,† that some of the old partners of agency-houses retired with part of their fortunes, and that men of no capital took their place. But, supposing that a million, or two millions, may have disappeared in this manner, what has become of the rest? The answer has been already given: it has been swallowed up in "over-trading," "imprudent enterprize," and a "rage for speculation." What is this but an admission, now the mischief is done and the end secured, that, in this frightful destruction of property, we have a key to the specious imposture, which tricked so many credulous people, and we suppose Mr. Grant amongst the number, into a belief that the prodigious increase of the open Indian trade was a profitable increase, "otherwise," it was triumphantly asked, how could it be carried on ?" It now appears that it was, in part, ingeniously carried on with money deposited in these agency-houses; so that, if this theory be correct, and it is admitted to be so, the losers of these vast sums have at least the satisfaction of knowing that it has been expended for a patriotic purpose,—the abolition of that abominable nuisance, the East-India Company.

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It would be invidious if we were to pick out, from the published declarations of certain gentlemen connected with these insolvent firms, Messrs. Bracken and Rickards, for example, statements which appear strangely inconsistent with their actual condition at the time the statements were given. From the first moment of the outcry raised against the Company's system of combined trade and government, we strenuously contended for two points, namely, that the representations of the prosperity of the open trade with India were fallacious, and that a reliance upon the capacity of the Indian agency-houses, as channels of government remittance, was precarious and impolitic. In spite of the repeated failures at home, of persons connected with shipments to India, our arguments on the first point were disregarded, it being considered probably that the capitalists of Calcutta were reaping a harvest, from which the English consignees of goods were by some accident or mismanagement excluded. It now appears, however, that the former were actually propped up by the deposits they obtained, for which, notwithstanding their presumed large gains in trade, they were not in a condition to pay four or six per cent. less than the ordinary interest of money in India: in other words, they were losing instead of gaining, their losses being chiefly incurred in the pursuit of that very species of speculation, indigo-cultivation, which afforded the principal theme of exultation to our shallow or designing orators and writers, who talked of the mighty profits of

* The expenses of the establishment for managing the estate of Alexander and Co. were for some time 10,000 rupees a month; those of Mackintosh and Co. not much less. They have since been reduced.

† Mr. Bracken's evidence before the Commons' Committee on East-India Affairs.

a traffic, which was, at that very time, becoming the grave of millions, wrung from the widow, the orphan, and the disabled public servant. So, in respect to remittances, making every allowance for the guarded way in which Mr. Bracken, of the house of Alexander and Co., gave his evidence before the Commons' Committee, there can be no doubt that it left an impression upon those who heard and read it, that the capabilities and credit of the Calcutta houses were unimpeachable; whereas it appears, that, for years past, the real condition of those houses was very different from their outward appearance, which, it is now admitted, was false and hollow; "the symptoms of these failures," observes the writer we have quoted at the beginning, were neither hidden nor ambiguous."

But it is now useless to descant upon these topics. The fatal step has been taken; and it is for the government, to adopt the most prudent measures to ward off public evils, which, it is to be hoped, may have been foreseen. Our present object is to consider the private mischiefs of these failures, and to suggest some mode of obviating them.

*

The first consideration is that of securing to the utmost the wrecks of the property. Now, it appears, in the first place, that there have been changes in the constitution of some of the insolvent houses, by the retirement of partners carrying away capital. If the houses, in which such retirements occurred, were not solvent at the date of such retirements, there can be no doubt that the property of the retiring partners is liable to the claims of creditors of the firm. In the next place, since the working funds of the houses seem to have consisted almost wholly of deposits, which could be drawn out at any time, it is evident that some creditors on the spot may have obtained, through improper indulgence, an unfair advantage over the other creditors in India as well as Europe, in being permitted to draw out their deposits when the firm which held them was really insolvent. These sums may, perhaps, be also legally called back into the assets, and thus diminish the rateable loss of the creditors generally. Thirdly, one of the largest firms, that of Fergusson and Co., last year, procured a written stipulation from some of their creditors, that they would not call for their deposits; it has been stated† that some of these parties, nevertheless, obtained large transfers of their deposits (which, indeed, seems intimated in the circular of the house announcing the cessation of payments); these inequitable transfers, we should think, might also be returned into the general fund. Lastly, the estates, as now administered, seem to be in a fair way of being realized only for the purpose of paying expenses, of establishments, law-charges, enormous commissions and salaries to assignees and partners of the late firms, for the discharge of functions. which, in England, are executed either gratuitously or at a trifling cost to the unfortunate creditors.

Either the machinery of the law must be extremely defective, or there must be adequate means of counteracting these evils, and of securing to

* Mr. Bracken's evidence.

+ Bengal Hurkaru, November 26th.

the whole of the creditors a fair dividend or proportion of their remaining property.

The creditors resident in England are most interested in devising an equitable system of realization and distribution, the latter object being a comparatively simple one, when the first is secured; and as it is impossible for one or two creditors to act beneficially, we strongly urge the proposal already made by a correspondent in this Journal, that a meeting of creditors should be held in London, who might appoint a committee of active persons, invested with large discretionary authority, empowered to correspond with the creditors abroad, and, if deemed necessary, to send out an agent or agents to India, with delegated power to act, in the name of the committee, as circumstances required. The latter object seems to us highly expedient; for, if we can place any reliance upon private communications, there are transactions going forward in India, with regard to the property and assets of the firms, which require to be brought fully and distinctly before the whole body of the creditors.

Should this proposal be adopted, and it ought not to be neglected or deferred, we recommend that the committee, or acting persons appointed by the meeting, should be prepared to investigate all transactions brought to their notice, which can fairly be considered to relate to the deterioration or diminution of the capital of the firms, at any period since 1814, and which are properly within the scope of the creditors of persons who have employed their deposits in trade. Such investigation will be beneficial to the partners of those firms, who cannot be ignorant that malicious reports have been abroad, which they must be the first to desire should be refuted. We further advise, though with no malignant feeling towards the partners of the fallen houses, that a morbid delicacy towards them, on the part of the committee, should not interfere with a resolute discharge of their duty to the creditors. However amiable may be the characters of the gentlemen to whom we refer, whatever claims they may have upon the gratitude of certain classes in India, we must bear in mind that they are charged with wasting large sums of money entrusted to them, in "improvident enterprize," a "rage for speculation," and "excessive expense in living;" that there is reason to believe, primâ facie, that they knew of their insolvent condition at the time when they were receiving fresh deposits, engaging to pay interest thereon beyond what they could realize, and that, by thus taking advantage of the "confident cupidity of their customers," they have caused an amount of private distress unparalleled in its extent and severity from a similar

cause.

Before we conclude, we may notice the little attention which these failures have attracted in Parliament. Losses to individuals, to the present amount of twenty millions, have not, as far as we can recollect, provoked one solitary remark within its walls. This is extraordinary, when we call to mind the alacrity with which Parliament administered relief to the creditors of Mr. Ricketts, the registrar of Madras, whose defalcations were made good out of the revenue contributed by the people of India; and its sym

pathy toward private distress in the more recent case of the Nozeed creditors, who, although their claims were tainted in their origin and void by laches, have, nevertheless, been liberally compensated out of the same redundant and prolific source. Probably, Parliament has been too much occupied with more important affairs, or the creditors themselves have not thought it necessary to invoke its aid; but we think that a parliamentary committee, appointed to investigate the causes and circumstances of these failures, if it could obtain no further evidence than a committee of creditors might collect, would throw a character of authority around the inquiry, and call the attention of the untouched portion of the public to a subject, which, we fear," passes without censure only because it passes without observation."

TO THE EDITOR.

SIR:-Mr. Bracken, in his Strictures on your " March Correspondent's" letter, writes likes a Buhadoor, and assumes that your correspondent put on a mask, as if afraid of a personal shock with the physical or mental powers of Mr. B.; but your correspondent, being a creditor, signed his letter "A Creditor," and, therefore, Mr. B.'s assumption is a false position.

Mr. B. further charges your "March Correspondent" with disseminating "idle rumours and unjust insinuations," and shrewdly hints that his penetration has enabled him to discover that your " March Correspondent" is also the Constant Reader," who addressed you the month before; but in that also he is on the wrong scent, and certainly such observations as those, on the part of Mr. B., a member of the late firm of Alexander and Co., addressed to creditors of that firm who have lost their property by it, are, to say the least of them, extremely ill-judged, inconvenient, and misplaced.

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The balance-sheet, at the Court of Bankruptcy, mentions no mortgages, but says property taken, or to be taken, by the assignees, £618,000." What was meant by that? Why, of course, that the assignees could lay their hands on that property; but they cannot; and it is quite immaterial whether the expectation of a dividend of eight anas in the rupee, or ten shillings in the pound, was mentioned at the meeting of the 18th July, on the authority of Mr. B. alone, or that of the assignees. That expectation is disappointed woefully ; and by the latest intelligence, it appears that the expenses of the assignees, partners, and establishment, in one year, amounted to the enormous sum of 90,000 rupees, with law-expenses 10,000 rupees, and no dividend for the creditors!

Mr. B. attempts to justify the conduct of his firm in paying a million and ahalf to particular creditors, after they knew their credit was destroyed, and that they must fail inevitably. Such conduct was unjust to the general creditors, and particularly so to those in Europe; and his allusion to the determination of the Bank of England, during the panic, to pay every note that should be presented, is quite inapplicable, as the directors knew they were able to pay all; but that was not the case with Alexander and Co.

There is an able sketch of the Calcutta failures in the Times of the 2d. October, and two letters in the same paper on the 9th October, besides a comment by the Editor; and also two letters in your Journal for January and February, upon none of which has Mr. B. published his observations.

It has been suggested to the creditors in England of all the Calcutta firms that have failed, to hold meetings and appoint committees to consider every