At present there are about seventy European merchants in Calcutta, if we deduct the fallen houses. Forty years ago there were only six or seven. Large fortunes were made in what are called "the good old days;" but the merchant traded, for the most part, with borrowed capital. It will be obvious to any person, that if a merchant gave 8, 10, and at times of pressure 12 per cent., he must have made immense profits to repay the money borrowed, and realize, besides, what a merchant considers a fair profit, namely, 12 per cent. per annum. It was a ruinous system; for, when it was found prudent to speculate, it was evident that the profit, say upon half the usual outlay, would do little more than pay the borrower; whereas, by trading with your own capital, you would acquire smaller profit, but it would be all your own. When the Houses failed, in the years 1829-33, for eight or ten crores of rupees, or, in English money, for eight or ten millions sterling, the shock was dreadful. Though the smaller Houses were left in possession of the field, they could not take up the business of the bankrupt firms without pecuniary aid, and that would be by borrowing. The result would appear to have been this: the small Houses could not raise the necessary funds, but some old firms sent out a merchant to form a new House. Thus the late Capt. Cockerell, R.N. (a connexion of Cockerell and Co., London), established a business on the ruins of Palmer and Co.
It was the Agency business which destroyed many Houses; because, while there were a few wealthy servants of government who had lent money, there were a great many civilians and officers in debt, who had borrowed money from the Agents. In fact, it might happen that a House had advanced more money than it had borrowed. The system was mischievous in another way; for the Agents, to make certain that the lives of the borrowers were insured, paid the insurance themselves, and charged it as an item of account with interest: but, cui bono! they failed, and could not come upon the insurance office till the death of the persons so insured.
Now in the army we reckon the deaths, except in time of war, at three per cent. in Bengal, and at Madras and Bombay nearly four per cent. per annum. Now, if they had a hundred of such constituents, as they were erroneously called, they would not soon recover their advances.
Again, there was another system devised in Calcutta, namely, that of compromise. One civilian, for instance, who owed 300,000 rupees, or £30,000, compromised for £7,000, which he borrowed from a friend. Some made three and four lakhs of rupees, £30,000 or £40,000, in three or four years. Some have wound up in fifteen or twenty years; that is, on the last dividend being paid; say one anna in a hundred rupees, or three half-pence in £10! or the infinitesimal least portion. Those who had lent the Houses money, were losers, minus these dividends; i.e. some Houses paid 8, 10, 15, 25, and even 33 per cent.
Now, those who lent money, got, say 8 per cent., at a time when the Company's paper yielded only 4 or 5 per cent., and the Bengal bank 10 (6 per cent. was the last dividend paid in 1849). Many a man risked his whole fortune in the effort to obtain 3 or 4 per cent., with the chance of losing all; and he not only lost his all, and ruined himself and his family, but, in many cases, took refuge in drink, to drown care.
The failure of the great Houses produced a host of small ones; nearly ten times the number there were forty years ago. On the 1st of January, 1849, there were, deducting defuncts (forty insolvent firms in liquidation), about seventy European merchants, thirteen Armenian merchants and agents, and four Greek firms. Forty years since there were only six English houses, namely, Alexander and Co., Colvin and Co., Downie, Cruttenden, and Co., Fairlie and Co., Mackintosh and Co., and Palmer and Co. There are now above sixty commercial brokers, the system of brokers or middlemen being of modern date.
The Chamber of Commerce, consisting of a President, Vice-President, nineteen members, and a Secretary, was established in April, 1834. The duty of this chamber is to discuss any subject connected with commerce. Thus, in the year 1842, the merchants sent in a memorial to Sir Lawrence Peel, chief justice, complaining that the barristers and attorneys still charged sicca rupees while all the rest of the community were taking Company's rupees, or six and two-thirds per cent. less. Any matter connected with port-dues and pilots, is also considered by this committee, which is a very useful board.
The Calcutta Trade Association, established in July, 1830, is for the purpose of regulating matters of trade, and to represent to Government any grievance injurious to it.
The Indian establishment of the East India Railway Company arrived in Calcutta in November, 1847. The act for the formation of the Company guaranteeing 5 per cent., has been passed by Parliament, and a Staff of Engineers are at work in laying down the projected line of railway.