Arbuthnot & Co
Encyclopedia
Arbuthnot & Co was a mercantile bank, based in Madras, India. It was founded as Francis Latour & Co in the late 18th century, then became Arbuthnot De Monte & Co and failed spectacularly on 22 October 1906.
In the last quarter of 1906, Madras (now Chennai) 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 (now EID Parry
), may have been the earliest of them and Binny & 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 J.M. Young, a salaried partner who seems to have had no voice in the running of the firm. The firm entered into an arrangement with Patrick Macfadyen
who operated P Macfadyen & Co which was effectively Arbuthnot's London branch. Macfadyen engaged in speculation, in the process losing huge amounts of the firm's money. Prior to its collapse, Arbuthnots employed between 11,000 and 12,000 people, had 7,000 creditors and £1,000,000 in liabilities. It was ascertained that the liabilities of Macfadyen's were £400,000 and there were 1,000 creditors. It was agreed by the English trustee in bankruptcy and the official assignee in Madras that the assets of the two insolvent firms were to be treated as one and the same business, all creditors were to be entitled to share rateably in the pooled assets.
Macfadyen committed suicide by throwing himself under a train in 1906, and both firms had to close their doors. Both Macfadyen and Arbuthnot were consistently over-optimistic concerning their speculations. Arbuthnot was tried for the fraudulent activities the collapse revealed, and received a sentence of "18 months rigorous imprisonment".
A key figure in case was the Madras lawyer, V. Krishnaswamy Iyer
, who went on to organize a group of Chettiar
s that founded Indian Bank
in 1907.
In the last quarter of 1906, Madras (now Chennai) 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 (now EID Parry
EID Parry
EID Parry Limited is a public company, headquartered in Chennai, South India, which has been in business for more than 200 years. It has many firsts to its credit, including manufacturing of fertilizers for the first time in the Indian subcontinent...
), may have been the earliest of them and Binny & 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
George Gough Arbuthnot
Sir George Gough Arbuthnot was a businessman and civic leader in British India.Arbuthnot, the son of Archibald Francis Arbuthnot and Gertrude Sophia Gough was six times a member of the Madras Legislative Council...
and J.M. Young, a salaried partner who seems to have had no voice in the running of the firm. The firm entered into an arrangement with Patrick Macfadyen
P. Macfadyen
Patrick Macfadyen was a British businessman, banker and politician. He committed suicide in 1906 due to the crash of Arbuthnot & Co.- Early life :...
who operated P Macfadyen & Co which was effectively Arbuthnot's London branch. Macfadyen engaged in speculation, in the process losing huge amounts of the firm's money. Prior to its collapse, Arbuthnots employed between 11,000 and 12,000 people, had 7,000 creditors and £1,000,000 in liabilities. It was ascertained that the liabilities of Macfadyen's were £400,000 and there were 1,000 creditors. It was agreed by the English trustee in bankruptcy and the official assignee in Madras that the assets of the two insolvent firms were to be treated as one and the same business, all creditors were to be entitled to share rateably in the pooled assets.
Macfadyen committed suicide by throwing himself under a train in 1906, and both firms had to close their doors. Both Macfadyen and Arbuthnot were consistently over-optimistic concerning their speculations. Arbuthnot was tried for the fraudulent activities the collapse revealed, and received a sentence of "18 months rigorous imprisonment".
A key figure in case was the Madras lawyer, V. Krishnaswamy Iyer
V. Krishnaswamy Iyer
Venkatarama Iyer Krishnaswamy Iyer was an Indian lawyer and High Court judge of Madras. He was involved in the prosecution of a partner of the British banking Company Arbuthnot & Co after the bank crashed on 22 October 1906...
, who went on to organize a group of Chettiar
Chettiar
Chettiar , also spelled Chetty, is a title used by various castes in South India especially in Tamil Nadu. In Kannada, it appears as Setty, Shettar and Shettigar, who are Padmashalis in Andhra Pradesh....
s that founded Indian Bank
Indian Bank
Indian Bank is a major Indian Commercial Bank headquartered in Chennai , India. It has 22,000 employees, 1923 branches and is one of the big public sector banks of India. It has overseas branches in Colombo, Sri Lanka, Singapore, and 229 correspondent banks in 69 countries...
in 1907.