- Arbuthnot & Co
Arbuthnot & Co was a mercantile bank, based in
Chennai , India. It was founded as Francis Latour & Co in the late 18th century, then became Arbuthnot De Monte & Co and failed spectacularly on22 October ,1906 .In the last quarter of 1906,
Madras (nowChennai ) was hit by the worst financial crisis the city was ever to suffer. Of the three best-known British commercial names in 19th century Madras, one crashed; a second had to be resurrected by a distress sale; and the third had to be bailed out by a benevolent benefactor. The agency house to close shop, Arbuthnot's, was considered the soundest of the three. Parry's (nowEID Parry ), may have been the earliest of them andBinny & Co. 's founders may have had the oldest associations with Madras, but it was Arbuthnot & Co., established in 1810, that was the city's strongest commercial organization in the 19th Century. When it fell, thousands lost their savings and the good name of British stability was severely rocked.Arbuthnot & Co had two partners at the time of its failure, namely Sir
George Gough Arbuthnot and Mr J.M.Young, a salaried partner who seems to have had no voice in the running of the firm. Prior to its collapse, the firm employed between 11,000 and 12,000 people.The firm entered into an arrangement with Patrick Macfadyen who operated P Macfadyen & Co which was effectively Arbuthnot's London branch. Macfadyen speculated with the firm's money, in the process losing huge amounts of money. Macfadyen committed suicide in 1906, and both firms had to close their doors.
Both Macfadyen and Arbuthnot seem to have been consistently over-optimistic concerning their speculations. Sir George appears to have lost money whenever he dealt using the firm's money for the firm, although he was occasionally more fortunate in his speculations with the firm's money on his own account, suggesting that he kept winning bets on his account, and transferred losing bets to the firm's account. Sir George was tried for fraudulent activities revealed on the collapse and received a sentence of 18 months imprisonment.
A key figure in case was the
Madras lawyer,V. Krishnaswamy Iyer , who made a name for himself representing claimants on the failed bank. He would go on to organize a group ofChettiar s who foundedIndian Bank in 1907.ee also
*
Indian banking
*V. Krishnaswamy Iyer References
*cite book | author=R. Srinivasan | title=The Fall of Arbuthnot & Co | publisher= East West Books (Madras) | year=2005 | id=ISBN 81-88661-40-6
* [http://www.arbuthnot.org/crash_of_arbuthnot.htm|The Crash of Arbuthnot & Co]
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