BANK FRAUDS RECALLED

Greymouth Evening Star, 11 October 1934, Page 10

BANK FRAUDS RECALLED

DEATH OF THOMAS FARROW LONDON, August 29. The.death at the age of 72, at his home near Chichester, of Thomas Farrow, recalls one of the most disastrous •financial crashes of our time. He was the founder of Farrow’s Bank, which failed in 1920, a catastrophe which meant ruin to thousands of small investors, and involved him in a criminal prosecution and a sentence of penal servitude.

It was in 1904 that Farrow’s Credit Bank Ltd. began. It rapidly attracted small tradesmen and others by paying interest on approved credit balances, in addition to offering substantial rates for deposits for fixed periods. The founder himself had won a considerable reputation by his championing of tho victims of money-lenders. It was largely through his agitation that a Select'Committee was appointed by the Government, and the-Money-lenders Act was passed in 1900. Fai\ row's project, which was advanced as a means for defeating the smallscale usurer was enthusiastically supported by bishops, Nonconformist leaders and eminent lawyers. The bank was registered as a public company in 1907 with a capital of £lOO,OOO. From time to time the capital was increased, until in 1930 it stood at £1,000,000. In September of I that year the capital authorisation was I increased to £2,000,000. At that time it had 60 branches in all parts of the.' United kingdom, and its assets were believed to have reached £4,657,000. . DEFICIENCY OF £2,685.000 The crash came dramatically, just before Christmas. On December 20, 1920, notices were placed in the wind-

ows of every branch stating that payment had been suspended. Questions asked in the House of Commons revealed that the Government had been aware of the bank’s position for some time. The accounts were of such a character as not to warrant any assistance being given by the great joint-stock banks. News of Thomas Farrow’s arrest followed. IJis trial provided sensational evidence of systematic falsification of accounts. There was a deficiency in June, 1920, of £2,685,000, and the bank had actually sustained annual losses since 1.909. Farrow was sentenced to four years’ penal servitude. The sentence was served at Parkhurst. Farrow was ill when it began, and nearly the whole of his .term was spent in hospital or doing clerical work in connection with the hospital side of the prison.

On his release he settled! down ultimately in the quiet Sussex village of East Hampnett,’ two 'miles frdm'Gnibhesterl He had very little money, but up to the time of his death he-was firm in his determination to vindicate his honour. ’ ' ' ! Born at Catton, Norwich, he came to London in- his twenties, and; hot long after became one of the private secretaries of- Mr W. H. Smith; M.P., remaining in that capacity after Mr-.. AV. H. Smith became First Lord of 1 theTreasury. Later he -was private secretary to the late Mr. R. Yerbiirgh, M.F. fon Chester, and was hon. secretary of ’the Agricultural- Banks’ Association*. in which Mr. Yerburgh was greatly in-' terested. It was while occupying that position that he came into prominence with<his campaign against money-lenders.