23 November 1867. N. 390

The Money Market Review, 23. November 1867. S. 533/534.
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London and Mediterranean Bank. Extraordinary Report of Liquidator to Shareholders.

Shareholders und Creditors of this concern in a „fix“ between shareholders und creditors of 2 other unfortunate concerns, the Continental Bank Corporation und die London, Bombay, and Mediterranean Bank. The London und Mediterranean Bank first agreed to take over and absorb the Continental Bank, and then the London und Bombay Bank agreed to take over and absorb them both. But, except as to Assets, assimilation imperfectly performed in both cases. Hence the appearance of the trio in the winding up court. Continental Bank Corporation founded Jan. 1863, 5000 shares of £100 each, subsequently increased to 10,000 shares of like amount, thus making a capital of 1 Mill. £, wholly subscribed. On the first 5000 shares £25 p. share called up, on the second 5000 shares £15 p. share. Bank had thus paid up capital of £200,000. Within 2 years, viz. by the early part of 1865, this Bank had lost the whole of its capital, and was considerably in debt besides; yet, at that moment, the directors in their Report to shareholders, with a most pretentious affectation of candour, regretted that they had sustained considerable losses, „deemed it their duty to make the shareholders acquired with the precise condition of their affairs, and to exhibit the whole losses incurred“, and then confessed that „the total loss amounted to £19,500“. It amounted [to] über £200,000. In order to meet these difficulties, the London und Mediterranean Bank was formed April, 1865, mit capital of 2 mill., in 100,000 shares of £20 each, of which it was stated in prospectus that „80,000 shares had been already subscribed“. Object of the Co. to take over the business of Continental Bk., converting its 100£ shares into £20 ones; and also to take over the banking business of Messrs. Landau et Co., of Alexandria, „and to facilitate commercial and financial transactions between this Country, Continent, and Egypt“. But statement that 80,000 shares subscribed, utterly false. The bona fide applications for the new shares only 1800 shares in number. Yet the promoters obtained a nominal quotation of the shares at a considerable premium. To obtain a settlement on the Stock Exchange, „the fictitious issue of a large number of shares“ was resorted to, in order to make up the requisite proportion of their capital, and, as a necessary adjunct to this, „the parties engaged in this scheme did not hesitate to manufacture a book, purporting to be a banker’s pass book, in order to carry out the pretence of payments of deposits on the fictitious subscription of shares.“ The report further shows that „a large sum, nearly approaching £40,000, was lost out of the assets of the Continental Bank Corporation in the purchase of its own shares [“]. Trotzdem no settlement, scheme broke down. Landau et Co. discovered that „there was no real substance in the new Bank“, and, although they had received no less than £60,000 to carry on the business, they ultimately obtained an abrogation of the agreement. That transaction mit Messrs. Landau resulted in direct loss of £22,000 to the shareholders, beyond loss of £40,000 on the purchase on of the shares in the Continental Bank, making a total loss of over £60,000 on the Landau purchase. But the transfer to the London und Mediterranean Bank of the business und liabilities of the Continental Bank had been so far carried out, that in the course of time the whole of the obligations of the Continental Bank were actually paid or turned into liabilities of the Mediterranean Bank, to the exoneration der Continental Bank, except a claim of London und County Bank, of which £30,000 und interest still undischarged. The liquidation of the Continental Bank entrusted to Maxwell, Cargill, Routh, and Cumming, all of whom had been directors; und diese gentlemen, notwithstanding the resolution to windup from 1st of May had still carried on business till 31 Aug. 1865; und zwar in such a way, that when at the latter date they actually handed over the Continental Bk. Estate to the Mediterranean Bank, it was £64,000 [worse] than on 1st May, when it ought to have been handed over. But, inasmuch as the liquidators of the Continental Bk. were also the liquidators of the Mediterranean Bk., and the shareholders in both Cos. were nobodies, that small addition to their liabilities was of no account. Bank N. 2 having thus failed the purpose of raising new capital, the promoters looked out for some Co. with the requisite Capital already raised with which they might amalgamate. This they found in „London and Bombay Bank and General Financial and Insurance Agency Corporation. Limited“, which had „paid up Capital of 150,000£ nearly untouched“. This bank fought at first rather shy of their would-be partners, but in the end consented to „take over“ the business of the Mediterranean Bank und on Sept. 7, 1865 agreement executed between the 2 Banks for that purpose. Between Sept. 1865 und April, 1866, the whole of the Capital of the London and Bombay Bank applied in meeting the pressing demands of the Continental Bk., or of the London and Mediterranean Bank, in respect of the original obligations of the Continental Bank. This process of pumping commenced „immediately after the agreement of 7. Sept“. [„]The same cause that brought about the destruction of the Mediterranean – the obligations of the Continental Bank, accumulated by the mismanagement of its liquidation, soon brought about the failure of the London and Bombay Bank, which went into liquidation July, 1866.“|


The European Bank (Lim.) Meeting of Shareholders 19 Nov. (67) Appointment of Committee of Investigation.

The Money Market Review, 23. November 1867. S. 534/535.
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Bk. o. Europe stopped payment 19 May, ’66. It was first known, for brief period, als „Union Bank of England and France“. Its prospectus appeared November 1862, and it proposed to raise a capital of 1 Mill. £ in 10,000 shares of 100£ each, in order to meet „the growing wants“ of the extended trade between England und France expected to arise out of the commercial treaty with France. Schon its birth shows extraordinary disposition to appropriate or „take over“ other people’s businesses instead of minding its own, by „taking over“ an existing business which had been established for several months. After carrying on business mit moderate success for about 7 months, this Union Bk. o. E. and F. contemplated another union, found in the „English, Belgian, and Netherlands Bank“ a mate in every way worthy of its alliance. This latter lady was somewhat younger than the intended spouse, its prospectus having only appeared in March 1863. It was first the „English and Belgian Bank“ only, but agreed to embrace the Netherlands also; with Capital of 1 Mill. £, in 20,000 shares of £50 each. Before it had organised commencement of its business, invited to alliance mit der Union Bank, Sept. 1863 definitively amalgamated. Henceforth the 2 wedded Cos took the title of European Bank, mit united Capital of £2,000,000, in 40,000 shares of 50£ each, of which 20,000 had been subscribed, £10 p. share paid upon them, zusammen £200,000. The amalgamated Co. had commenced business in October 1863 und in May 1864 they concluded an arrangement for the amalgamation with them of the „English and Irish Bank“. This Bk. established in Nov. 1862, Capital 2 Mill. £, in 20,000 shares of £100 each, of which 7,282 shares had been subscribed. Board composed of Sir Robert Walter Carden , chairman, Alderman Rose, then Lord Mayor, and a number of other city men of commercial repute. Had for some time some success, very moderate too. Concern now „European Bank“, nominal capital of 2 Mill. £, of which 34,443 shares subscribed, and £10 p. share paid thereon, making paid up capital of £344,420. Now amalgamation arranged mit London, Birmingham, and South Staffordshire Bank – a Co. started in Dec. 1862 mit Capital of 1 Mill. £, in shares of £100 each, had commenced business in Cheapside in early part of 1863 mit paid up capital of £120,000. Result of this last operation: Nominal Capital of the European raised to 42,966 shares, 15£ p. share paid, paid up Capital of £644,490. Accounts of June 30, 1865 show that the Bk. was then doing a considerable business, deposits über £780,000 und bills payable über £844,000. On 31 Dec. 1865 balance sheet showed deposits to £1,138,319 und bills payable £974,520. In June 1865 dividend paid 5%, in December ’65 3%, zusammen 8% p.a. und Reserve of £45,000. Shares, nevertheless, fell to heavy discount in 1866, und in Folge von call of £5 per share still lower; 19th May 1866 Bank stopped payment. Now what has become of the large paid up Capital of the Co. and its Reservefund? Mr.  Conrybeare Conybeare at the meeting of 19 Nov. ’67 said: „the manner in which this Bank had been conducted, was a disgrace to the mercantile community.“ Liquidation had gone on for 12 months, creditors had only yet received 5s. in £. Sir R. W. Carden , he said, one of the directors, ought to be removed from the liquidation. Mr. Kintrea (also a shareholder) said: In the last balance sheet said that the concern was paying 10%, and was in a position to pay other 10%, „but that document“, inducing many to buy shares, „one of the grossest illusions perpetrated. He, for one, desired to bring the directors to a court of justice, to compel them to repay him“. Charges against the directors, besonders the chairman und Sir R. Carden of the gravest character. Mr. Finley said that at the very last meeting of the Co. he was advised by the directors to buy more shares. The chairman of the meeting said that „he had called upon Sir R. Carden on the day before the day on which the Bk. stopped payment, and that Carden had then assured him, on the honour of a gentleman, that the Bank was perfectly sound“.

Mr. Hoskins, another shareholder said that in 1866 Charles Bye Colchester, the Chairman of the Bank, had stated that „the Bk. was in such a prosperous condition that he would recommend anyone who, as a trustee, had funds to invest, to invest them in this Bank“. On his question to Colchester what their liabilities were on Foreign Securities, he stated them to be between £70 and 80,000, whereas it now appeared that they were at the time £280,000.

The Money Market Review, 23. November 1867. S. 546/547.
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At the meeting der shareholders (19 Nov.) chairman Potter said: Carden had told them they would have von £7 to 10£ per share of their capital returned to them. Stattdessen they were called upon for instalment of £2. 10s. to meet their liabilities, other calls would follow in quick succession. Oliver says: all the original directors of the European Bank , who were so at the time of the amalgamation, had all withdrawn, except Thompson. They had also, at different periods, got rid of their shares. The „English und Irish Bank“, when they absorbed it (June 1864) had up to that time paid no dividend but incurred losses etc. At last meeting, March 1866, Sir W. Carden presided, made highly favourable statement, dividend 6%, Reserve fund 13–14,000£. A retired colonel bought 100 shares on Carden’s Representations. Harding und Morgan, their auditors, at same meeting told, that they were doing profitable business. It was necessary to investigate the transactions with M. Lafitte et Co und namentlich mit der St. Nazaire Co. Die original proprietors der St. Nazaire Co were 8 men, seven of whom held 1 share each; und advance of £120,000 made to it before it was registered. It now appears that another Co. puts in a claim to the land assigned to the Bk. as a security for the advance in question, und die St. Nazaire Co., instead |282 of aiding the Bk. to realise that property, turned round and said they considered they were freed from all liability, since the suspension of the European Bank had led to their embarrassments. … Since it became known that a call of £2. 10s. was about to be made, a great many shares had been transferred to men of straw. There were 2 or 3 clerks in the office whose names now on the register for a large number of shares. One held 200, another 250 (a nephew to Colchester who never held a share while the Bank was a going concern, diese 250 shares). Colchester selbst (der chairman) »who held 2,467 shares, does not hold a single share nowKintrea (shareholder) says: „Colchester the high priest of the sacrifice of the Bank; was it true that for getting the advance made to the St. Nazaire Co. he obtained 600 paid up shares in that Co … During the whole time the shareholders were being propitiated by high dividends und deluded by favourable statements, they made loss after loss. There was so much rottenness und foul play going on in the management of the concern that it was questionable if a criminal court was not the proper tribunal to inquire into what had taken place.“


  • London. 1868.
  • 1866 „The Economist“ (Jahrgang 1866) vol. XXIV.
  • The Social Economist, 1. Oktober 1868
  • „The Economist“ (Jahrgang 1866) (Fortsetzung)
  • Jahrgang 1867.
  • Register der obigen Auszüge aus dem Economist für 1866 und 1867.
  • The „Money Market Review“. Jahrgang 1866.
  • The Money Market Review. Jahrgang 1867.
  • Register Money Market Review Jahrgänge 1866 und 1867