TAILOR AS BANKER.

New Zealand Herald, Volume XLII, Issue 12973, 16 September 1905, Page 2 (Supplement)

TAILOR AS BANKER.

REVELATIONS CONCERNING THE

ECONOMIC BANK.

DIRECTOR'S NOVEL QUALIFICATION. " The Official Receiver intends to apply to the court for an order for the public examination of the parties concerned in the Economic Bank collapse." Loud cheers from a crowded meeting of the creditors, held at the Holborn Restaurant, greeted this announcement, not. unexpected, of the assistant official receiver, Mr. H. M. Winearls.

A draft statement of affairs was lodged disclosing a- total indebtedness of £62,148, of which £47,014 was returned as unsecured, and assets £14,809. As regards the shareholders a deficiency of £82,178 was shown. The £14,800 assets represent mainly a claim against the Financial and Commercial Bank.

Lieutenant-Colonel Lord Charles Robert Pratt, the chairman said, had written to Bay that he was too indisposed to be present. Ironical laughter followed this statement, which was renewed when the speaker, quoting the memorandum of association, alluded to the bank as being formed to encourage thrift, to make no loans, but to invest money in funds authorised by the Trustee Investment Act.

" Stand up and let us have a look at you" punctuated a question put to Mr. Massey, the managing trustee, with whom several irate depositors endeavoured, but not effectively, to come to close quarters. Down to the end of 1903, said the chairman, the business of the bank was confined to keeping small accounts, and to be profitable it was necessary that it should be conducted on o very large scale, but the transactions' were small, and the annual balance-sheet showed continuous losses, which by Match 31, 1903, amounted to £9774 10s Id.

Mr. A. D. Cochrane, of the Royal British Bank, came on the scene in (he latter part of 1903. He desired to acquire a controlling interest in the Economic. He instructed Mr. F. S. Grosvenor, an outside broker, to purchase as many shares as possible. Mr, Grosvenor purchased 9000 shares, and suggested to the trustees that they might employ their resources to better advantage by embarking in certain Stock Exchange transactions. This business appeared to the then board outside the limits of the memorandum. They all resigned. This statement naturally led a depositor to ask why these gentlemen, on surrendering' the reins, had not given the depositors a note of warning. • Proceeding with the sensational story, followed with intense interest by many who had " lost their all," the official receiver stated that Mr. Cochrane being unable to carry out his schemes to acquire control of the bank, Mr. Grosvenor induced Mr. Hugo Loewy, of the Financial and Commercial, to take the affaire of the Kconomic in hand.

At the suggestion of Mr. Grosvenor a tailor in the city named Hiklred was appointed to fill one vacancy on the board. Mr. Hildred had admitted that he knew nothing of company business or finance, but he had supplied clothes to Mr. Grosvenor. (Laughter.) The chairman then dealt at length with transactions between the Economic Bank and the Financial and Commercial Bank, which was also in liquidation. The amountdue from the latter to the Economic Bank was returned at £74,879, representing about one-half of the Financial and Commercial Bank's indebtedness..

The assets " investments" represented, to the extent of some £36.000 at least, nothing but book debts, of which, the official receiver added grimly, almost the whole was due from an insolvent concern! Yet official circulars went forth to the effect that the bank was free from the usual commercial banking risks, that, no loans were granted. Deposits with the Financial, including amounts due from the Financial fur shades in the Economic and for bonds lent to it by the Economic, were included as " cash at bankers and in hand." Even bonds which had long before been sold were also included as existing assets. It was estimated that the Economic Bank might receive, by realising the securities which it held, and by way of a dividend from £2000 to £3000 on "account of this claim.

Mr. Charles Comins. C.A.. was nominated as liquidator, together with a commit tea of inspection.