Bank of Bombay: The Bank That Cotton Killed

The Bank of Bombay · Rampart Row, 1840–1868 · Razack & Jhunjhunwalla group 1B.1 · three designs · fourteen graded survivors
Every fact sourced. Every claim we cannot stand behind is flagged where it sits.

This is the story of a bank that failed so completely that its own successor has written it out of its history. It begins with a public meeting in a merchant's counting-house and ends with a Royal Commission sitting in the very building engraved on the bank's own banknotes. In between: a rival bank that tried to destroy its currency with a rubber stamp, eight thousand rupees of badly-forged paper that halved the circulation in six days, a broker who was handed a book of blank promissory notes, a single deleted clause, and a loss of Rs 1,88,99,331 that the House of Commons twice refused to make good.

There is no published study of Bank of Bombay notes. The International Bank Note Society journal — sixty-eight converted India articles — contains a detailed Bank of Madras study and no Bombay equivalent; between them the two largest coin-and-currency auction archives in the world hold one Bank of Bombay note in over 1.3 million lots.¹⁹ Almost everything below about the paper itself is assembled here for the first time, from the printer's own day-books in London, from the Bombay directories, and from the eleven notes we hold records of.

Chapter OneThe bank nobody wanted

Calcutta had a public bank from 1770. Bombay did not get one until 1840. Charles Northcote Cooke, writing in 1863 as a banker inside the system, found this genuinely strange: "it is a remarkable circumstance… that although a public Bank was established in Calcutta in 1770, no attempt, that we are aware of, was made to establish a similar institution in Bombay until more than sixty years afterwards."¹

What finally forced it was not ambition but a withdrawn convenience. For years a handful of Bombay merchant houses had kept an average of over 20 lakhs of rupees on deposit at the Government Treasury, making transfers between themselves across its books. Government withdrew the privilege. On 26 December 1836, in the office of Messrs John Skinner & Co., a public meeting adopted "a prospectus for a bank for the Presidency of Bombay" and appointed a provisional committee to obtain a charter.²

Then it took nearly four years, and the delay is the most revealing part of the founding.

The opposition was not only local, and this is the part no account of the bank records. James Douglas — Sheriff of Bombay, writing in 1899 with the city's newspaper files in front of him — compressed the whole four-year fight into one sentence: "how the great houses of agency frowned upon it; how the Bank of Bengal, strong in the right of primogeniture (1806), viewed its establishment with hostility and threatened to open in Bombay; how the Bengal Government took the same views and imparted them to the Bombay Government; how our Chamber of Commerce remonstrated."²⁶ The senior Presidency bank, which held the sole right to print paper money in India, lobbied against a second bank of issue and let it be known that it would come to Bombay itself if one were founded. It never did — and the branch it would not build is the hinge of the Bank of Bengal's own story. Douglas also names the four men who "did duty in succession as honorary secretaries" — Ashburner, Finlay, Johnson and John Smith — and records that Ashburner was sent to London to secure the charter.

The subscribers eventually lost patience. On 20 March 1838 they resolved that if the charter were not sanctioned by 1 October they would abandon it and form an ordinary joint-stock bank instead. The Court signed the sanctioning despatch on 29 September 1838 — one day before the deadline.² A further year went in arguing whether the original subscribers or a public auction should get the shares. Act III of 1840 was passed by the Government of India on 17 February 1840, and the Bank commenced business on 15 April 1840, "nearly four years after it was first projected."¹

The numbers it opened with

The intended capital was 30 lakhs, then 50. Demand blew through both. Cooke: "such was the demand for shares, that the Provisional Committee was obliged to increase the amount to Rupees 52,25,000… divided into 5,225 shares of one thousand rupees each." The contemporary directory masthead confirms it word for word: "INCORPORATED BY ACT III OF 1840. (Established April 1840.) Capital, Rupees 52,25,000, in Shares of 1,000 Rupees each."¹¹

Sources: Cooke 1863 pp. 151–168¹ · Bagchi vol. 1 pp. 267–270, 325, 327, 373⁸ · Gazetteer 1909 III p. 213²

Note the Government's stake: 5.7 per cent, and three seats out of nine. That ratio is the seed of everything in Chapter Sixteen. State Bank of India's own published history says the presidency banks' capital was "four-fifth… privately subscribed and the rest owned by the provincial government" — a twenty per cent Government stake. For Bombay that overstates the reality by more than three times. ⚑ disputed

Who owned it — and who did not sit on the board

Cooke prints the shareholder register for 1840 and 1848, and it is the single best answer to "whose bank was this?"¹

At founding, Parsis were a third of the shareholders by headcount (109 of 332) and held about 24 per cent of the capital. Indian holdings overall came to 1,964 of 5,225 shares — 37.6 per cent — and fell to 1,387 by 1848.⁸ Cooke predicted, correctly, that "in the course of a few years the largest proportion of the capital will be held by parties resident in England."

Chapter TwoTwo dead governors on the money

Before the drama, the object.

A Bank of Bombay note is a horizontal sheet of handmade paper carrying, on either side of the text, two full-length statues on pedestals: a robed civilian at the left labelled ELPHINSTONE, a military figure at the right labelled MALCOLM. Between them, BANK of BOMBAY, the engraved promise — "Promise to pay the Bearer on Demand TEN RUPEES value received" — and BOMBAY in script beneath. The denomination appears in numerals at the four corners in Persian, English, Marathi and Gujarati; the promise text runs in four quadrants in Sindhi, Persian, Marathi and Gujarati.¹⁵

The choice is worth pausing on, because it is a decision about what a currency is for. Calcutta put allegory on its money — a seated figure of Commerce, later Britannia and her lion. Bombay put two named, recently dead colonial administrators on its money, as statues, as though the note were a civic square. Madras did the same thing with Sir Thomas Munro.¹⁶ Neither of the two articles that record these facts draws the comparison; it is drawn here. The presidency that ran on allegory was the one that never failed.

Elphinstone left Bombay in 1827 and Malcolm in 1830. By the time the bank existed, both were monuments. It put its monuments on its money, and no living person's face ever appeared on a Bank of Bombay note.

The London end

The printer is not in doubt. The firm's name is engraved on the notes themselves, and it doubles as a dating tool, because the partnership kept changing: Perkins, Bacon & Petch until it became Perkins, Bacon & Co. in 1852. The Type 1 notes carry Petch; Types 2 and 3 carry & Co. That is a hard terminus post quem on the redesign, and it is one of the few places where a Bank of Bombay note can be dated from its own face.¹⁵

Who signed them

Two manuscript signatures, and they are not two co-equal officers — a point every published account gets slightly wrong. At the lower right, beneath the engraved line For the BANK OF BOMBAY and above the engraved title SEC.Y & TREASURER., signs the Secretary and Treasurer. At the lower left, on a line reading Ent[ere]d ______ Acco[unta]nt, signs the man who entered the note in the books.¹⁹

The published literature names the Secretaries and contradicts itself doing so: one IBNS article gives James Blair as both "(1860–65)" and "(1855–1865)" five lines apart, and dates the bank itself three different ways in one piece.¹⁶ The Bombay directories settle that too. John Stuart is Secretary and Treasurer in 1843, 1848, 1850, 1853, 1855 and 1856, with a residents'-directory cross-entry each year. Blair appears in 1855 as Head Accountant and in 1856 as "Deputy Secy. and Head Accountant" — he succeeded Stuart around 1860, not 1855.¹¹ A collector examining a Rs 50 of 1846 and a Rs 10 of 1859 reached the same conclusion from the paper alone: the same Secretary's hand runs "right through 1859."¹⁶

From the twelve Bombay Calendar and Almanac volumes, 1822–1856. The 1851 and 1852 establishment entries are missing from the scans; 1851 is reconstructed from that volume's own name index.¹¹

Cargill's exit is worth a sentence. W. W. Cargill, the bank's first Secretary and Treasurer, resigned on 25 June 1842 — and on 18 July 1842 became managing director of the Bank of Western India, the rival that had just been formed to do the exchange business Act III of 1840 forbade the Bank of Bombay.⁸ Two years later that same rival would try to destroy the Bank of Bombay's currency.

Both dates are confirmed independently, from the Bombay newspapers rather than the bank's own records: Douglas gives the resignation as 25 June and the signature as Managing Director of the Western on 18 July, and adds that Cargill "had already been over two years in that office" when he went.²⁶ That fixes the start of the series. Cargill signs the Bank Committee's public notice of 27 January 1840 — the one announcing that the Vice-President of the Council had postponed the Charter Act — as Secretary, eleven weeks before the bank opened. So the officer whose title is engraved on every Bank of Bombay note held that post from the opening in April 1840 until June 1842, and no published account of the notes names him. Any Bank of Bombay paper of 1840–42 should carry Cargill's signature, not Stuart's. None is known: the earliest Bombay note reproduced anywhere is the one dated 15 April 1843 in Bagchi's plate 19,⁸ and the earliest catalogued example is the Rs 50 of 15 April 1846.¹⁶ But it is the right thing to look for.

Chapter ThreeThe rival that stamped the notes to death

This episode appears in no popular account of the bank, and it is one of the strangest things in Indian monetary history.

In July 1842 the Bank of Western India was formed at Bombay with a capital of fifty lakhs. Its stated object was "to supply the want of a Bank for the conduct of Exchange and other legitimate Banking business, from which the Bank of Bombay was excluded by its Charter."¹ The exclusion was real and it lasted: the three presidency banks were barred from foreign exchange until the Reserve Bank of India was created in 1935.²¹ The Bank of Western India exists because of a clause in the Bank of Bombay's charter. Read it as evidence about Bombay, not as a rival biography — and do not confuse the two banks, which the catalogues occasionally do.

It began as a boycott, and it ran both ways. The Western opened for business on 6 October 1842, and Douglas — again from the newspapers — describes what happened to the two currencies at once:

"They drew upon the Union Bank of London, and issued notes. The notes were refused in payment at the Bank of Bombay and also at the Government Treasury. The "Western" retaliated, and refused payment of Bombay Bank notes, and so the war went on."

James Douglas, Glimpses of Old Bombay and Western India, 1899, printed p. 116²⁶

Three things are in that sentence. The Bank of Western India issued its own notes — an unchartered private bank putting paper into Bombay alongside the Government-constituted bank's own, which is why its surviving proofs are catalogued as currency at all. The Government Treasury would not take them, which is the state taking a side before any of the correspondence below. And Bank of Bombay notes were being turned away over a Bombay counter within two and a half years of the bank opening — the earliest evidence we have that its paper circulated widely enough to be worth refusing. What happened in July 1844 was not the start of the quarrel. It was the escalation of one that had been running for nearly two years, after mutual refusal had failed to shift anything.

Then, in the summer of 1844, the rival went after the currency itself. On 22 July 1844 John Stuart complained to Government that the Bank of Western India had begun stamping every Bank of Bombay note brought across its counter with the words "Received payment: Bank of Western India" in large characters. A defaced note could not be reissued. Between 1 and 22 July 1844 alone, Rs 7,04,860 of notes had been destroyed this way — on a circulation then running at four or five million rupees.⁸

Stuart feared that "in a short time the whole notes … in circulation … [would] in like manner, be destroyed", and asked the government whether it was for the public benefit "that notes should be issued in India by other than the Government chartered banks."

Bagchi, from the Bombay Archives, on the correspondence of July–September 1844⁸

The Advocate-General found no legal remedy. The Government of India, on 6 September 1844, called the practice "contrary to any banking practice the Government of India [was] acquainted with" and then did nothing — recommending only that the bank reissue the defaced notes, "since their value was not in reality diminished", and that the directors reassure the mercantile community "and especially the native portion of it, whose fears probably it [was] designed principally to work upon."⁸

That last clause is the whole attack in nine words. The Bank of Western India was not trying to bankrupt its rival. It was trying to make Bombay's Indian merchants distrust a piece of paper. And the artefact survives: Bagchi's plate 19 reproduces a Bank of Bombay promissory note dated 15 April 1843, defaced by a stamp of the Bank of Western India.⁸

Chapter FourEight thousand rupees of bad paper

On 8 November 1848 forged Bank of Bombay notes were discovered in the bazaar. The forgeries were, in Bagchi's phrase from the bank's own record, "apparently very indifferently executed", and the total value of forged paper "probably not more than Rs 8,000". Precisely two of them — a Rs 5,000 and a Rs 1,000 — ever reached the bank's assistant shroff, and the man passing them was arrested by the police.⁸

It did not matter in the slightest.

A contemporary report puts the scene in the street: "an extraordinary 'run' upon the Bank of Bombay… The total amount of the forgeries was only Rs. 8,000, yet such was the panic, that, in the course of two or three days, the 'run' was to the extent of nearly 25 lakhs… The parties who flocked to the bank to get their notes cashed were almost all Marwarries." The Bombay commercial report of 16 November called it "an absurd panic… The forgeries are only to a very limited amount, but the natives in their fears have magnified the evil."¹⁴

Two things follow from this that matter for everything after.

First: the bank refused to pay. Lovell states it flatly — "In November 1848 it faced a short panic caused by a few forged notes being put into circulation. Payment of these notes was refused by the Bank."⁷ That is the exact opposite of what the Bank of Bengal had decided in February 1811, when it chose to honour forgeries presented by fair holders. Bombay chose the other way, and its circulation halved in a week.

Second: Government read the balance sheet and did not like it. The Government of India's reply of 2 December 1848 noted that this was already the third time the Bank of Bombay's position had come before it, and observed that "By far too large a proportion of the capital of the Bank of Bombay, in fact nearly its whole capital, [was] invested in Government securities, their amount being upwards of 49½ lakhs out of a capital of 52½ lakhs." It called it "absolutely essential" that holdings be cut to less than half the capital, "at whatever sacrifice." Bagchi's verdict on compliance: the directive "was obviously only partially attended to."⁸

Twenty years before the collapse, the Government of India told the Bank of Bombay to change how it invested, and the Bank of Bombay did not. Nobody made it.

February 1851 — the robbery that is not a forgery

On 8 February 1851, Rs 95,900 of Bank of Bombay notes were stolen in a robbery at the Oriental Bank in Bombay — the former Bank of Western India. The Oriental advertised that payment had been stopped and printed the stopped numbers in English only. A delegation of leading shroffs — Javerchund Atmaram, Wukutchand Khoosalchund, Tricomdass Mathooradass and others — went to see Stuart, who assured them that "as all bank notes were payable to the 'Bearer', he could not refuse payment of them to any innocent holder." It was too late: average circulation fell from Rs 45,75,114 to Rs 33,37,595, "the lowest figure ever reached after 1842 and before the withdrawal of the right to issue notes."⁸

The damage travelled. In 1849 the Madras Government, refusing to widen the acceptance of bank notes in its own treasuries, "pointed to the confusion into which the monetary system of the Bombay Presidency had been thrown as a result of the recent discovery of some forged notes of the Bank of Bombay."⁸ One badly-made forgery in a Bombay bazaar narrowed the use of paper money nine hundred miles away.

Chapter FiveOctober 1854: a pencil line and a London day-book

Somewhere around 1854 the Bank of Bombay redrew its notes, and for a century and a half nobody knew when. The catalogues give date bands a decade wide. The bank's own records for the period are not digitised. What survives instead is the printer's day-book, in Fleet Street, in manuscript — and it turns out to name the exact days.

The Royal Philatelic Society London holds seventeen Perkins Bacon Engraving Books, 1828–1935, page-imaged and free to view. Read directly from the page images, the Bank of Bombay entries for 1854 run like this:¹²

Four denominations — 10, 25, 100 and 1000 — engraved new in twenty-five days, preceded by a die for the East India Company arms. The published catalogue lists Type 2 as existing in exactly those four denominations: 10, 25, 100, 1000.¹⁵ Four of four. The redesign is an October 1854 event.

And then a note in a Bombay saleroom agrees to the day

This is the strongest single piece of evidence in the study, and so far as we can establish it is unpublished.

We hold the record of a Bank of Bombay Rs 25 Type 2 specimen on card — Todywalla sale number 17, 9 December 2006, lot 187; unsold against an estimate of ₹600,000. Its date field is the engraved blank 18__, never filled in. Below that field, in pencil, someone wrote a date.

What actually changed on the note

Set the two designs side by side and the 1854 redesign is a list of four changes, three additions and one deletion:

1. Added: the Town Hall of Bombay, engraved above the promise text, with the date set into the vignette.
2. Added: the East India Company coat of arms, bottom centre — from a die cut on 2 August 1854.
3. Added: a coloured concentric-circle underprint, and a different colour for each denomination — Rs 10 reddish brown, Rs 25 brownish maroon, Rs 100 greenish blue.¹⁵
4. Removed: the printed reverse. Type 1 is the only Bank of Bombay type with anything on the back — BANK OF BOMBAY, the denomination in words in English, and a promise line in Arabic. Types 2 and 3 are uniface.

Why? The honest answer, and the good argument

No source states a reason. Not a book, not a journal, not an archive catalogue, not the open web. That should be said plainly rather than papered over. But the devices the bank chose are not neutral, and they point somewhere specific.

The problem with the argument, stated honestly. If the redesign were a response to forgery, the response took a very long time. Once Cooke's "1851 forgeries" is set aside as a conflation, the bank's only documented note-forgery episode is November 1848. The artwork begins February 1854 and the plates are cut in October 1854 — a gap of six years. Nobody in 1848 wrote down that the notes needed hardening; the Governor called the forgeries "so ill executed that it is almost impossible that any one could be deceived by them", and the institutional response was liquidity management, not new plates.⁸

There is also a mundane alternative that deserves equal billing: the 1854 campaign cut a Rs 1,000 plate and worked on a Rs 500, the top of the range, at a moment when circulation was recovering. A bank extending its denomination range has to cut new plates anyway, and a design refresh rides along for free. Two questions are in play and they have different answers:

Chapter Six1856: "native char", and the four corners

Sixteen months after the Type 2 plates were finished, the same clerk in the same book recorded the bank altering them again — and this time he wrote down why, in two abbreviated words.¹²

Three denominations — 10, 25, 100 — and the published catalogue lists Type 3 in exactly those three. Three of three. The verb is altering, not engraving: these are the Type 2 plates being modified, which is precisely what the catalogue's "As Type 1B.1.2 except…" construction implies.¹⁵

And the alteration is vernacular script. What Type 3 adds is BOMBAY BANK and the denomination in words in all four corners, in Urdu, Arabic, Marathi and Gujarati, where Type 2 filled only two of the four panels and left the other two as blank guilloche. That two-of-four against four-of-four is still the quickest way to tell the types apart by eye, and our own images confirm the diagnostic literally.

There was a real user demand behind it. When the Government's own currency notes appeared a few years later without native characters, the Bombay Chamber of Commerce protested — so the vernacular panels were not decoration, and a bank that widened them in 1856 was answering something its customers cared about.²

What the surviving paper says about the changeover

Because the Rs 10 serial run is continuous, the dates on ten surviving notes bracket both transitions tightly. Unlike the Bank of Bengal — whose serials reset, so a Bengal serial cannot date a note — Bombay's Rs 10 numbering runs unbroken straight through the Type 1 → Type 2 change, and resets exactly once, at Type 3, which is when the A prefix appears.

Monotonic without a single exception, across ten pieces and sixteen years. Two conclusions follow:

• Type 1 → Type 2 happened inside 1857, between serial 73879 and serial 85958 — probably the second half of the year. The hard bracket from dated notes alone is 10 October 1856 to 2 January 1858.
• Type 2 → Type 3 happened between January 1858 and September 1859. Running the Type 3 issue rate backwards (A5534 → A14518 is 8,984 notes in 13.8 months, about 650 a month) puts A0001 at roughly early 1859 — a modelled estimate, not a reading.

Which means something useful to any collector: a Bank of Bombay Rs 10 serial can date a note to within a few months, anywhere in the run. That is not true of Bengal, and it has not been said in print before.

Chapter SevenAn island currency

Here is the fact that decides the whole story, and it is buried in a reply the Bank of Bombay's directors sent to the Bank of Madras around 1848.

"The circulation of Bank of Bombay notes in the interior was very limited. Estimating the total circulation at Rs 35 lakhs, perhaps not more than 1 lakh was in circulation beyond the limits of the island."

Three per cent. Ninety-seven rupees in every hundred of the Bank of Bombay's paper money never left Bombay Island. The average aggregate held in all provincial treasuries in the Presidency, the directors added, "the year before was only Rs 30,000."⁸

And it was not for want of official permission. Bombay had the most liberal acceptance rule of the three presidencies — "All Collectors, Paymasters and other officers of Government are authorised to receive as cash Bank of Bombay Notes when tendered in payment of sums due to Government" — with, Bombay's Accountant-General told Madras in 1849, "no restriction to receive the notes of the Bank of Bombay in the treasuries of the Native Aumils and Custom Servants, provided that they [were] satisfied that the bank notes [were] genuine."⁸ The widest formal acceptance of the three, and it made almost no difference.

Bagchi's own check eight years later says the same thing. Of Rs 5,86,760 of Bank of Bombay notes held in every government treasury in the Presidency on 1 April 1856, Rs 4,95,445 sat in Bombay town and its suburbs, "leaving less than Rs 1 lakh for the rest of the presidency."⁸

Where the notes did travel is a small map of the cotton economy: "Bank notes were used as a remittance to Poona for the payment of the troops, etc. and also as a remittance to Surat and Broach for the purchase of cotton, and by these means got into circulation in the Bombay Deccan and Gujarat."⁸ Where the money went, the paper went. It is the same geography that will kill the bank fifteen years later.

How much paper was ever out there

The statutory ceiling was Rs 2 crore. The bank never came close for two decades, and then came close only at the very end.

Bagchi vol. 1, Tables 13.3 and 13.9, from the Bombay Archives and the Bankers' Magazine; all OCR-grade.⁸ Cooke, writing in 1863, gives the all-time peak as Rs 1,28,12,000¹ — close to, but not the same as, Bagchi's 31 December 1860 figure. ⚑ disputed

So: roughly 1.24 to 1.28 crore against a 2 crore ceiling, reached only in the bank's final full year of issue. Even at the top it was about two and a half times the bank's paid-up capital — and the 1868 Commission named the note issue as a pillar of the bank's prosperity: "Another element of prosperity was the power to issue so large an amount of notes."²

State Bank of India's own history explains why bankers valued it so much, in a sentence that is the hinge of this article: the note issue "meant an accretion to the capital of the banks, a capital on which the proprietors did not have to pay any interest… for a long time… bank notes and government balances made up the bulk of the investible resources of the banks."²¹

Free money. A crore and a quarter of interest-free funding, created by printing it. In 1861 the Government took it away.

A footnote that is really a warning

In 1841 the Bank of Bombay had tried to open a branch in Calcutta. It had Rs 33 lakhs lying idle; it had already offered the money to the Bank of Bengal at 6 per cent (refused) and to the Government at 5 per cent (declined). The Court of Directors rejected the branch on 26 July 1843, on the ground that it was "inadvisable to encourage the use and circulation of any paper currency other than that of the Bank of Bengal within the limits in which the notes of that bank were then accredited."⁸

So the Bank of Bombay had no branches at all until 1862. Its issue was an island issue, by policy as much as by habit. When the Government of India came to decide, in 1860, whether the presidency banks should keep the right to print money, the thing it looked at was whether their notes had reached the country. They had not.

Chapter Eight1 March 1862: the press is taken away

The idea did not begin with James Wilson, and it did not begin after the Mutiny. In the September–October 1857 clash inside the Bank of Bengal, the government directors had already warned their mercantile colleagues that "the government would be warranted in taking steps to render themselves independent of the Bank altogether by the issue of notes of its own." The Madras Governor had gone further years earlier, calling it "an error in principle for the Government to divest itself of the power of issuing a paper currency, and to give that privilege to any other body."⁸

Wilson announced the intention on 3 March 1860. Act XIX of 1861 received the Governor-General's assent on 16 July 1861 and took effect on 1 March 1862; from that date the presidency banks were barred from issuing notes payable on demand, and the Government of India held the monopoly.²² Cooke, writing within a year: the Bombay circulation "continued to increase until February 1862, when it was withdrawn by Government."¹

What Bombay was promised, and what it got

This is the causal hinge of the entire story, and the Bombay Bank Commission put it in one sentence:

"in 1860 the Government of India determined to deprive the Bank of this power and establish a paper currency of its own. As compensation for this, Government proposed to entrust the management of the General Treasuries, Pay Offices and Currency Department, with their respective cash balances, to the Bank. But this proposal was subsequently modified, and only the Treasuries and Pay Offices were transferred to the charge of the Bank."

Report of the Bombay Bank Commission, quoted at Gazetteer 1909 III p. 213 n.²

Read the second half again. The bank surrendered a crore and a quarter of interest-free funding in exchange for three things, and then one of the three — the Currency Department, with its cash balances — was quietly withdrawn from the deal.

There was one immediate, visible consequence, and it is the one thing the presidency banks did right in the 1860s. Once assured of the free use of government treasury balances at places where they opened branches, all three began to expand at speed. Cooke's 1863 directory of officers lists, under the heading "Branches — Established in 1862":¹

• Ahmedabad — William Wilson, Agent
• Poona — William F. Hunter, Agent
• Surat — William Watson, Agent

plus a new head-office post of Inspector of Branches. Bhavnagar followed in 1864. In twenty-two years of note issue the bank had opened none; within a year of losing the issue it opened three. One popular reference work states that Bank of Bombay branches opened at Ahmedabad and Poona "by the mid-1870s". Cooke, a contemporary and a primary source, has them in 1862. That reference is wrong by more than a decade.

And the bank did the arithmetic on what it had lost. Wacha, who worked inside it, is explicit that the capital increases of 1863–64 were "warranted by the larger demand for money, specially after the power of circulating its own notes was withdrawn by reason of the institution of the State currency in 1862."⁴ The Commission itself accepted that the first increase "was necessary and did no more than supply the deficiency occasioned by the Bank's loss of their note circulation."²

The Bank of Bombay did not fail because it printed money. It failed because it stopped.

Chapter NineThe clause

Everything so far has been prologue. What follows took four years and destroyed the bank, and the Commission that investigated it put a single legislative act at the head of its list of causes.

The old Act III of 1840 was a straitjacket, and deliberately so. Advances were capped at Rs 3 lakh to any one person, repayable in three months. There were no advances on personal security at all — a cash credit required Government paper, guaranteed railway shares or bullion. The bank had to hold cash equal to at least one-fourth of all demand claims against it. No overdrafts. Establishment spending capped at Rs 60,000 a year without a general meeting.¹

In 1861, "in consequence of new arrangements for the note issue", the board resolved to seek a new Act. What it got, as Bombay Act X of 1863, differed from the old charter in this way — the Gazetteer lists the changes as clauses (a) to (h):²

"(a) it allowed the discount of any negotiable security; (b) it allowed advances to be made on the security of shares in public companies in India and did not require that all the calls on such shares should be paid up; (c) it allowed an advance to any one firm for a larger amount than 3 lakhs and for a longer period than 3 months; (d) it allowed advances on all goods and merchandise, whether perishable or not; (e) it contained no definite provision against the overdraft of accounts; (f) it contained no provision prohibiting any discount or loan unless the cash in the bank equalled one-fourth of all the claims outstanding; and (h) it empowered the proprietors to increase the capital… provided such increase did not exceed 2 crores and 10 lakhs."

Gazetteer of Bombay City and Island, vol. III, p. 214²

Every single prudential restraint, removed at once. Clause (b) is the famous one — the Commission's own comparison with Calcutta reduced the difference between the two banks to it:

"the only practical difference between the charter granted to this bank and that granted to the Bank of Bengal is that contained in section 32 of Bombay Act X of 1863, authorizing advances being made on shares."

The Commission, quoted by Lovell, printed p. 82⁷

Who deleted the words

The restrictive wording did not fall out of the draft by accident, and the India Office named the men responsible on the floor of the House of Commons:

"Who was it who struck out of the original draft the words, the absence of which afterwards led to so much mischief?… They were two commercial Directors, Messrs. Scott and Foggo. They were appointed to be a Committee for the preparation of the Act by the Directors, not by the Government."

Mountstuart Grant Duff, Under-Secretary for India, HC Deb 3 May 1872¹³

Michael Scott of Ritchie, Steuart & Co. and George Foggo of Forbes & Co. — two of the bank's own merchant directors. Their deletion was ratified by a special general meeting of the shareholders on 28 November 1861.²³ And there was a second deletion. The draft Act carried a schedule of by-laws; these were dropped at the suggestion of the mercantile members Michael Scott and Tristram, on the understanding that the Directors would make them themselves.

"They never were made, which left a free hand to the executive officers."

Nor did the Government insist. Gregory, moving the shareholders' case in 1872, made the same point from the other side: the substituted power to make by-laws "was never enforced, the Government never taking the trouble to see that it was exercised."¹³

And the lawyer told everybody it was fine

The bank's solicitor, Mr Kelly of Kelly & Hore, advised Government that the draft followed "the phraseology of the English Joint Stock Acts." The Commission checked:

"A comparison of all the English Acts with the draft shows the statement as without a shadow of foundation, the Acts being entirely dissimilar" — one of many instances of "the reckless manner in which the legal business of the Bank was done."

The Commission, quoted by Wacha, ch. XI⁴

Wacha adds, in passing, that Frewen Kelly of the same firm was himself a co-founder of the Alliance Bank with two Bhattia cotton merchants.⁴ The bank's solicitor was a bank promoter.

Then they trebled the capital

In sterling: from £520,000 to £2,000,000 in nine months.¹³ The bank now had four times the capital, no lending limits, no by-laws, no cash-ratio rule, and no note issue to invest it in. It had to find somewhere to put two million pounds.

Chapter TenCotton

On 12 April 1861 Confederate guns opened on Fort Sumter, and within two years the price of Indian cotton in Liverpool had quadrupled. Lovell states the mechanism in one breath:

"When the American Civil War broke out and cut off the chief source of cotton to the European trade, the price of cotton rose and merchants and cotton dealers in Bombay were given the opportunity of realizing profits previously unheard of. These profits as they returned to Bombay, produced a plethora of wealth far beyond the requirements of a bona fide trade. Therefore an extraordinary means of investment became a necessity… Bombay went mad with the spirit of speculation."

Carol Grace Lovell, The Failure of the Bank of Bombay (1971), abstract⁷

The numbers behind that sentence: Surat cotton went from 3–5d a pound to 20–24d; Bombay exports from about 528,000 bales a year to 1.2 million in 1865; total Bombay exports to 40.52 crore of rupees, of which cotton was about 29 crore — up from roughly 5 crore in 1861. Gold imports rose from 4.23 to 9.83 crore and silver from 5.32 to 10.07 crore, a cumulative inflow of something like 52 crore of rupees into the Presidency between 1861 and 1865.

And yet money was tight: 18 per cent for good borrowers and 23 per cent for bill discounting by the autumn of 1864. That is the paradox that made the mania. There was more cash in Bombay than anyone had ever seen and nowhere legitimate to put it, so it went into paper.

Thirty crores of capital and thirty-seven crores of premia

That is Wacha's own chapter heading, exclamation marks included, and his company-by-company tabulation of the 1864–65 float is the best measure of the bubble that exists:⁴

"Thus on a paid-up capital of 30 crores there was at one time to be realised a profit of nearly 38 crores! Most of the concerns had had hardly a year's existence, while the rest barely enjoyed a life of from three to six months."

The machinery was the time bargain — a forward contract, endlessly re-sold. Wacha watched it work:

"say, Company A out of its own funds bought from B two Back Bay shares for December delivery at 20,000 Rupees each. No sooner was the contract for such purchase completed than A sold to C the identical two shares for Rs. 40,000… Imagine sales of the two identical shares to half-a-dozen persons or institutions. Imagine that fifty financial concerns did the same."

Wacha 1910, ch. VI⁴

His verdict on the whole apparatus: "pure gambling transactions and no more", and "There was no such thing as banking in the real sense of the term."

And in the middle of it stood the Bank of Bombay. Wacha, who had no reason to flatter it:

"It was the Presidency Bank and as such was the principal factor in fostering financial speculation."

The tell that separates the real bank from the two dozen imitations floated in its shadow — the Bombay Presidency Bank, the Bank of India, the Union Bank of Bombay, the Imperial Bank of Bombay, all of them extinguished within months — is the share denomination. The mania companies floated on Rs 100–400 shares. The Bank of Bombay's share was Rs 1,000.⁴ None of these shadow banks had note-issue rights; the Government monopoly had been in force since 1 March 1862. If you meet one of those names in a catalogue, it is not a note issuer.

Chapter ElevenThe man who owned the bank

The Commission's own description of him is more generous than anything written since:

"He was originally a broker in no great business, but he speculated largely in cotton during the progress of the American War and rapidly amassed a large fortune, and when the 'Share Mania,' as it is not inaptly called, set in, he was in such a position that his name and influence were considered essential to the safe launching of the ephemeral schemes of the day… he became the great dispenser of allotments, which he judiciously distributed, first, among the managers of the Banks, and, secondly to the friends of the promoters… he has been called by some of the witnesses 'the key-stone of the commercial prosperity of Bombay'. His charities were munificent and Sir Bartle Frere says that his position was like nothing that he had ever seen or heard of in any other community."

Report of the Bombay Bank Commission, quoted verbatim by Wacha, ch. VII⁴

Read that middle clause again — first, among the managers of the Banks. It is the whole mechanism in six words.

How he got in

It was Premchand who suggested to James Blair, the Secretary, that if the Bank would lend on personal security he could produce plenty of applicants — because his associates disliked having their names go before the directors. Blair said he would consult the board. He did not, and started the practice anyway. "Coincidently Premchund Roychund and his father Roychund Deepchund were the first to receive cash credit under this new system," and the first such advance was "for a lakh of rupees to Roychund Deepchund, the broker of the Bank and the father of Premchund Roychund."⁷⁴

Then Blair handed him a book of blank promissory-note forms, to be filled up by Premchand himself with the names of parties he recommended for loans. Wacha calls it what it was: "tantamount to giving him a blank cheque book to enable him to exhaust the Bank's capital at his own will."⁴

With Cowasji gone, there was nothing left between Premchand and the till. The Commission on what followed:

"Intelligent and subtle, Premchund Roychund was not slow to fathom the imbecility and weak moral character of Mr. Blair and soon acquired great influence over him and his subordinates, with complete command of the funds of the Bank. He procured allotments for Mr. Blair and lent him money… Premchund also bought and sold shares for Mr. Blair and entered into joint speculations with him and never charged him a rupee for brokerage. The result was that the Bank became Premchund's."

The Commission, quoted by Wacha ch. XI and by Lovell from the Report Summary p. 14⁴⁷

And on the mechanics, which are worth setting out because they are so simple:

"If Premchund had a friend to oblige who wanted money, he recommended him for a loan. If Premchund had shares to sell, he would suggest to an acquaintance that he should buy, offering at the same time to 'finance' the purchase money by procuring him a loan from the Bank of Bombay. If Premchund wanted money for a speculation, he would suggest to some friend to join him in it, and then procure a loan in his friend's name for the money required. His influence was felt not only at the head office, but at the branches also, the Agents at Kalbadevi, Broach and Surat all receiving instructions to consult Premchund or his agents respecting advances."

The Commission, quoted by Wacha ch. VII⁴

The bill

Wacha's gloss: "with the tills of the old Bank of Bombay at his absolute disposal, he helped himself and his friends to their contents to the tune of one hundred and thirty-eight lakhs of rupees, or more than half its capital."⁴ On the schedule of advances outstanding at 31 December 1867 he is the largest single name on the list: advances 35.62 lakh, loss 20.78 lakh.

The sentence Wacha wrote to summarise the governance of a chartered bank with three Government directors on its board is the best line in the literature:

"To say that the directors entrusted the destinies of the Bank to the Secretary, that the Secretary left them at the mercy of Mr. Premchund and that Premchund left them to Providence is no exaggeration of the real state of the Bank."

Three specific malpractices, with prices

1. Lending against the froth. On 12 April 1865 the directors resolved to advance not only against the nominal value of shares but against the market premium — up to 75 per cent of it. If the shares stood at a £200 premium, the Bank would lend £175 of the premium. Gregory, in the Commons: "contrary to every system of banking which had existed in the world." Loss: £134,716.¹³
2. The illegal branch. The charter forbade a branch in Bombay itself. The directors opened one at Kalbadevi anyway, and Government specially sanctioned it. Loss: £190,000.¹³
3. Directors taking allotments. Sylvester Birch, a Government director and the Bank's President at the launch of the new charter, "received allotments of shares, by which he realized something like £37,000" — the Commission's own figure, via Wacha, is £37,575 "by way of premium or profit." Wacha's question is the right one: "how could the President keep his watchful eye on the Bank when he was indebted to the chief factotum… for fat allotments?"⁴¹³

Chapter TwelveThe Black Day of Bombay

Robert E. Lee surrendered at Appomattox on 9 April 1865. Word that the war was ending reached Bombay before he did so, and the cotton price did what everybody had refused to believe it could do. Wacha: "From 20 pence per pound it fell to 10 pence and even lower by the end of April 1865. That fall tolled at once the death-knell of speculation."⁴ Wacha's own text dates the news of Lee's surrender in Bombay to March 1865, which cannot be right — the surrender was in April. He is almost certainly compressing the news of the war's collapse; the price movement he describes is not in doubt.

A contemporary journalist, quoted by Wacha, asked the only question that mattered: "Seventy millions came into Bombay and what became of it?"

Hundreds of time bargains fell due on the same day, with an aggregate nominal value Wacha puts at "well-nigh seven to eight crore of Rupees." He was there:

"Back-bays, which were sold for Rs. 55,000 for 1st July, were absolutely unsaleable at even their nominal par value of 5,000 Rupees! Bank of Bombay shares, quoted at well-nigh 2,900 Rupees could not be sold even for 500!"

Wacha 1910, ch. XXIV⁴

"It was apprehended that there might be some squabbles or an economic riot. So the police had taken the precaution to post up an additional posse in the Fort." And: "People conversed in whispers in the streets with woe-begotten looks."

Wacha calls it Bombay's Black Friday, "as much as the 'Black Friday' of London a year later when… Overend & Gurney came to grief." He is right to link them, and the sequence matters: Bombay crashed first, by ten months.

Chapter ThirteenSeven in the morning, on the porch

This is the best-documented scene in the whole affair, reconstructed by Lovell directly from the Commission's sworn evidence, and it deserves to be famous.

26 April 1866. Premchand Roychand needs Rs 25 lakh — £250,000 — by the next day or he stops payment. Donald Robertson, now the Bank's Secretary, tells the President, Francis Lidderdale. Lidderdale calls a special meeting and invites the managers of the Oriental, the Chartered Mercantile, the Asiatic and the Bank of Hindustan, "for everyone felt that Premchund would have to be assisted or else they all would fail with him." No statement of his affairs exists. They adjourn.

27 April 1866, seven o'clock in the morning, at Lidderdale's house. The Comptoir d'Escompte and the Commercial Bank have joined. Seven banks are in the room.

Premchand himself was there — but he remained on the porch, answering questions relayed in and out by Robertson or by Tracey, his own business partner.

A rough, unverified statement of his affairs is drawn up. The security offered is: his jewels (the memorandum values them at 20 lakh; nobody checks), and title deeds to land — valued in the memorandum at 26 lakh, by the Government director G. Norman, as collector of land revenue, at 14 lakh, and by Robertson in a letter at 18 lakh — plus a joint promissory note with his father and two others.⁷

When Tracey went out to the porch to press him on the securities, Premchand replied that

"if they wanted to make a bother I would rather stop payment, and that if they made any difficulty about these securities I would give them the names of three other parties as guarantees."

Premchand Roychand to R. Tracey, 27 April 1866 — Commission evidence, via Lovell ch. V⁷

The directors hurried to close. The split agreed: Bank of Bombay 10½ lakh; the Oriental, Chartered Mercantile, Asiatic, Commercial and Comptoir d'Escompte 2½ lakh each; Bank of Hindustan 2 lakh — with the Bank of Bombay advancing the whole sum and being recouped by the others.

Then, in order:

• Kelly, the solicitor, was told to draw a deed. Neither Kelly nor Robertson made any memorandum or minute of the agreement.
• No signatures were taken. Not all the security was handed over.
• Premchand drew the money that same afternoon.
• Robertson had not told the directors that Premchand was already 23½ lakh in debt to the Bank as of the previous day — including a 5-lakh overdraft and a 9-lakh outstanding loan. He and Tracey both knew.
• The other six banks later repudiated their liability. Lord George Hamilton conceded this from the despatch box in 1875; Gregory interjected to agree.

So the Bank of Bombay lent a quarter of a million pounds at seven in the morning to a man standing outside the door, against jewels nobody had seen and land nobody could value, with no minute, no signature and no deed — and ended up carrying the whole of it.

Chapter FourteenThe last two runs

The Government of India had by now noticed that it could not see inside the bank it part-owned. The despatch of 13 July 1866, in Sir John Lawrence's name, is unusually blunt for the genre:

"The Governor-General-in-Council, though fully sharing in the desire of the Bombay Government to uphold the credit of the Bank, cannot suffer the revenues of India to be indefinitely pledged to the support of an establishment of the affairs of which he is kept in ignorance."

Government of India despatch, 13 July 1866, quoted by Wacha ch. XII⁴

It then demanded, item by item: the banks, firms and individuals under advance; the dates and amounts; the securities and the sum advanced on each. The Bank stalled until a second despatch in October. The statement finally furnished on 23 November 1866 drew this from the Commission:

It "gave no information from which that Government could form any estimate of the true position of the Bank… It avoided all mention of Premchund's great loan of twenty-five lakhs… It omitted to set forth the large debt of more than nineteen lakhs due from the Asiatic Bank although the cash credit had expired on the 1st September, and the Asiatic Bank had failed on the 26th of that month. A more unsatisfactory statement could scarcely have been framed."

The Commission, quoted by Wacha ch. XII⁴

Wacha's own conclusion is blunter than the Commission dared be: "it became the common interest of the Bank and the Bombay Government to conspire in withholding all necessary information from Sir John Lawrence."⁴

What the shareholders got

Wacha, twice, and Lovell's text agrees with him: "The Bank of Bombay lost all its capital save a few lakhs which returned to the ruined shareholders about a hundred Rupees for every five hundred Rupees but which were once quoted at nearly 3,000 Rupees."⁴

Set against a fully-paid share of Rs 1,000, that is one-tenth. Against the reduced nominal of Rs 500 after January 1867, one-fifth. Against the peak market quotation of Rs 2,900–3,000, about one twenty-ninth. The widely repeated "one-fiftieth" comes from the abstract of Lovell's thesis and is contradicted by the body of the same thesis; on the arithmetic it cannot be right. ⚑ disputed

Wacha's reconciliation of the two Secretaries' periods gives the fullest measure of the damage: total advances head office plus branches Rs 3,52,60,662; total loss Rs 2,04,66,991 — a loss ratio of 57.96 per cent. Blair's period cost about 1.5 crore; Robertson's Rs 51,55,589.⁴

Depositors and creditors, note, lost nothing. Grant Duff in 1872: "no creditor or depositor has lost a penny by the Bank's failure, though the Government, like other shareholders, has lost nearly the whole value of its shares."¹³ The losses fell entirely on the proprietors — including three hundred shares' worth on the Government of Bombay itself.

Chapter FifteenThe Durbar Room

The Commission was established under Act XVII of 1868 on the direction of the Secretary of State. Its president was Sir Charles Jackson, in the 1850s a judge of the Supreme Court of Judicature in Bombay and "known to be a first-rate cross-examiner." With him sat Major MacLeod Innes, Military Accountant-General, and Maxwell Melville of the Bombay Civil Service. The vernacular accounts were translated by Nowroji Furdoonji.⁴

James Blair, by then in England, pleaded ill-health and asked that a written statement be accepted instead. The Commission went to his house in Bayswater and examined him anyway.⁴

The six causes

The Report itself is a Parliamentary Blue Book that is still not freely available. But Wacha prints the six findings verbatim, Lovell paraphrases them from the Summary, and Mr Dickinson read them into Hansard on 3 May 1872 — three independent witnesses to the same text:

And on the Act specifically: "It may be that the old Act was unnecessarily restrictive, but that did not justify the removal of all restrictions… They opened the door to great laxity of practice and a ruinous system of banking, and were in fact the chief cause of the Bank's failure."⁴

On the practices themselves, the Commission's paragraph is worth reading whole, because it is a description of a bank with no functioning controls at all:

"The most reckless system of advances commenced. The Secretary was virtually unrestricted in the powers he assumed to have, and the President and Directors, although they must have known that enormous sums were flowing out of the Bank, appear to have made no inquiries and to have exercised no supervision. The discount list was discontinued, no loans were brought before the Board or the weekly Committee for their sanction, lakhs of rupees were advanced by Mr. Blair without consulting the Directors, to single individuals, or to the ephemeral companies of the day on no other security than the promissory notes of the parties borrowing, and he appears to have in many instances granted loans although the borrower was already largely indebted to the Bank."

The Commission, quoted by Wacha ch. XI⁴

Wacha adds the detail that finishes it: "Even the documents taken from the borrowers were never carefully scrutinized. They were of a most informal character, such as in a Court of Law would be considered to be so much waste-paper."

The verdicts on individuals

Wacha's summary of the Commission's value is the reason this article can be written at all: "But for the Commission the monetary world of India would never have known the utterly rotten condition of its management."

Chapter SixteenWestminster says no, twice

The ruined shareholders had one argument, and it was a good one: the Government of Bombay had appointed three of the nine directors, had the power to audit, had been warned three times, and had twice stopped a run by promising public money. If it was not a partner, what was it?

They took it to Parliament. Four times.

8 May 1868 — the reconstruction is attacked before it opens

Ayrton objects that the new bank being set up has the same powers as the one that just failed, and warns against Government shareholding without legislative safeguards. Northcote concedes that Government shareholding in presidency banks is "inexpedient" but says reconstruction is impossible without it, and announces that Sir C. Jackson is going out to India.¹³

21 July 1870 — nobody will be prosecuted

The single sentence that turned a financial grievance into a political campaign:

"I regret that we have not seen, and do not see, our way to taking effective legal proceedings even against the persons most implicated in the unhappy transactions which led to the fall of the Old Bank of Bombay."

Mountstuart Grant Duff, Under-Secretary for India, HC Deb 21 July 1870¹³

3 May 1872 — the great debate

Nineteen thousand words, and the fullest public narrative of the failure that exists in free text. Mr Gregory moved "That, in the opinion of this House, the case of the Shareholders of the Bank of Bombay is one for the favourable consideration of Her Majesty's Government," and framed it in a way that still reads well:

"The Government in India was despotic… but as a condition of being a despotic Government, it must necessarily be a paternal Government."

His charge: the Government of Bombay committed "acts both of omission and commission"; and "not only was there neglect on the part of the Government of Bombay, but… they deceived the Governor General and the Secretary of State, and further… they deceived themselves and were willing to be deceived."

Gladstone closed it. Shareholders could not claim "all the delights of dividend mounting up to 16 per cent, and then on the strength of vague presumptions… claim the benefits of a Government guarantee"; the Government Directors' wrong "consisted in their passive conduct, and they were, moreover, the minority; while the Directors appointed by the shareholders were the active wrong-doers, and also the majority."

The House divided: Ayes 116; Noes 78. The resolution was defeated by 38. Several secondary summaries say the motion was withdrawn without a division. The Hansard text records the division. Trust the text — Northcote urged withdrawal; Gregory did not withdraw.

9 April 1875 — the land

Gregory came back with the same motion and new material. He had moved for a Return of all lands sold by the Government of Bombay in 1864. It showed a valuation of £145,650 and a realisation of £400,000 — but did not state how much of the purchase money had been advanced by the Bank of Bombay. Gregory inferred that it had, and asked that a sum equal to the Government's profit be voted to the shareholders. Barttelot had put it more aggressively in 1872: powder magazine £400,000 plus esplanade lands £541,000, plus the 400 Back Bay shares Government declined and later auctioned, "which had realized over £1,000,000."

Mr Evelyn Ashley, seconding, produced the two images that stuck:

The facts "could be paralleled only by the loss of a well-found ship in mid-day, through the carelessness, incapacity, or wilful blindness of those in charge of her"; the Government Directors were "in the position of watchmen who deliberately fell asleep or shut their eyes while the spoilers were at work"; and Government had profited "by pandering to the spirit of speculation with the funds of which they were trustees and guardians."

HC Deb 9 April 1875¹³

Lord George Hamilton's reply for the Government is the most precise official statement on record, and it is worth having in full because it is the counter-case:

• The charter changes were initiated by the shareholders at their own special meeting in November 1861, not by Government.
• "out of a total loss of £1,800,000 only a loss of £440,000 was attributable to that alteration. The failure of the Bank was, therefore, attributable not to this alteration in the Bank Act, but to the conduct of the Directors."
• When Wood ordered the share-lending power rescinded, the communication "was denounced by [the Directors] as a most tyrannical interference."
• When Government tried to get a safe director elected, "the shareholders put him aside and chose to elect a speculative Director in his place."
• On the land: "while the expenses connected with that land amounted to £2,500,000, only £750,000 had been received in respect of its sale, thus leaving a deficit on the transaction of £1,750,000."
• And the closing line: "if the House wished… to put a stop to such practices as were revealed in Sir Charles Jackson's Report, it could not do better than reject the proposal."

The House divided: Ayes 104; Noes 37. Defeated by 67 — a wider margin than in 1872.

Net political outcome: no compensation, no prosecution, and one substantive consequence. The Government of India began the process of extricating itself from shareholding in the presidency banks altogether — a process completed by the Presidency Banks Act of 1876.

Chapter SeventeenAfterlife — and a tower

A new bank was already being assembled while the old one was still dying. The prospectus for the New Bank of Bombay, Limited is dated 19 July 1867 — six months before the old bank voted to wind up. Capital Rs 1 crore in 20,000 shares of Rs 500, of which 10,000 issued initially; allotment 16 December 1867; fully paid by March 1868. Of the first 10,000 shares, 8,327 went to old-Bank shareholders at par and 1,673 were sold privately by the Directors at a 19 per cent premium. Government put in 6 lakh and remained a shareholder until 1875, when its shares were sold. The New Bank opened on 14 July 1868.²

The rest of the institutional line is quick, and it ends where every Indian schoolchild's version of this story begins:

Premchand

He was bankrupted. Wacha lists him first among the estates wound up under Act XXVIII of 1865 and gives the dividend: "Premchund's estate did not pay more than 1.4 per cent, that is to say, a creditor of one lakh received the magnificent return of 1,500 Rupees!" Across a hundred-odd bankrupt estates the average distribution ran 1 to 5 per cent; only Byramji Hormusji Cama's returned over ten annas in the rupee — "the honest Byramji Hormusji Cama". Aggregate liabilities across the big failures came to about 26 crore.⁴

And then he recovered. Wacha, writing within a decade of Premchand's death: "such was his marvellous optimism… that he was able to accumulate again a handsome fortune, even after many embarrassments and a reverse or two, which popular account reckons at a quarter million sterling." Note Wacha's own hedge — popular account.

Two other claims that travel with his name should be handled carefully. That he was a founding member of what became the Bombay Stock Exchange rests on the same 2015 feature; Wacha describes the brokers' meeting-place at length and names Jamnadas and Devidas, Chunilal Motilal and Burjorji Sorabji Lahaiwala as the men under the banyan tree — and does not name Premchand as a founder of any association. ⚠ unverified And that he "lost the majority of his fortune in the Back Bay reclamation scheme" understates it: the Commission's figures make his exposure far broader than Back Bay alone.

What is not in doubt is that the redemption arc was already being told in 1869, by the body that had just finished dismantling him. "His charities were munificent," wrote the Commission, in the same report that recorded the Bank becoming his.

Chapter EighteenThe three designs, in order

Everything below is a note we hold a record of, and the design descriptions are the published catalogue wording rather than paraphrase.¹⁵ The progression is statues → plus Town Hall, Company arms and coloured underprint → plus four-corner legend and serial prefix. Unlike Bengal, which went Uniface → Commerce → Britannia and added both vignettes and colour, Bombay went the other way on one axis: it began two-sided and became uniface.

Chapter NineteenWhy almost none survive

Fourteen. That is how many Bank of Bombay notes exist in the PMG graded census, across six catalogue entries, in a snapshot taken on 16 February 2026.¹⁸ Set against the other presidency banks:

Bombay is graded at one-eighth of Bengal's level and under a third of Madras's — and that is despite the one published output figure putting Bombay's Rs 10 alone ahead of the whole of Madras's issue across nine denominations. Issue volume and survival have come completely apart.

The auction record says the same thing from the other side, and more brutally:

Between them, the two largest coin-and-currency auction archives in the world hold one Bank of Bombay note in over 1.3 million lots.

And the survivors are in terrible condition

Thirteen of the fourteen fall between Very Good 8 and Choice Fine 15. The finest known issued note in the census is a Choice Fine 15. Type 2 tops out at Very Good 10 in both denominations — so Spink's "[Top Pop]" on one of our notes is literally true, and tells you how low the ceiling is. The single Extremely Fine piece is precisely not a circulation survivor. The remainder reading rests on the standard catalogue suffix convention rather than an explicit PMG statement. ≈ interpretation

Why?

The honest answer is that nobody has established it, but three mechanisms are available and they compound:

• Redemption after 1861. When the Government took over the issue, Bank of Bombay notes were paper claims that had to be presented and destroyed. Notes that came home were cancelled. A direct trace of the transition survives in the same 2005 Heritage sale: a Government of India 10 Rupees of 7 June 1862 carrying an oval overprint for the Bank of Bombay — the successor instrument, with the predecessor's name stamped on it.
• The collapse. Bombay's paper had circulated almost entirely inside one city, in the hands of a mercantile community that lost 26 crore of rupees between 1865 and 1868. Nothing about that encourages people to keep souvenirs.
• Nobody was collecting. There is no Bombay Presidency category at the main Indian salerooms, and no published study to create demand. The scarcity is partly real and partly a self-fulfilling absence of attention.

What the money says

Three things that record actually shows, none of them obvious:

1. Encapsulation did not help. The identical note, serial 89648, made ₹875,000 raw at Oswal in 2018 and ₹822,400 in a PMG holder at Spink in 2023 — nominally lower five years later. In a market this thin, the room matters more than the label.
2. The radar serial did. 85958 is a palindrome, Heritage led its lot title with "Radar Serial Number", and it made about 60 per cent more than the contemporaneous 89648 result in the same grade on the same type.
3. Estimates have run far ahead of bids. Todywalla's Type 1 Rs 10 estimate moved from ₹65–70,000 in 2003 to ₹1.6–1.9 million in 2019 — roughly twenty-five times in sixteen years — and the 2019 lot did not sell. Both 2006 specimens went unsold as well. The type is genuinely rare; the bid is not always there.

Chapter TwentyWhat it should have taught them

Every one of these is drawn from the record above. None of them is hindsight: in each case somebody at the time said it out loud, in a despatch or on the floor of the House, and was ignored.

AppendixWhat still needs checking

Every claim in this article that we cannot fully stand behind is listed here, with what the sources actually say, why it is doubtful, and what would settle it. If you can close any of these, please write in — the article will be corrected and you will be credited.

Sources

Sources 6 and 10 were read and informed the study without being quoted directly above. Where a source is in copyright it is cited, not quoted at length. Figures marked OCR-grade in the underlying research have been treated as approximate and are flagged above where they matter. The full 26-source research dossier this article is built on runs to some 1.7 MB of separately researched, deliberately unreconciled notes; where two sources disagree, both readings were kept and the disagreement treated as evidence.

1. primary C. N. Cooke, The Rise, Progress and Present Condition of Banking in India, Calcutta, 1863 — chapter "The Bank of Bombay", pp. 161–170, and the Oriental Bank chapter, pp. 141–146. archive.org
2. primary The Gazetteer of Bombay City and Island, vol. III (1909–10), "Bank of Bombay", pp. 211–220 — which quotes the Bombay Bank Commission's Report directly in its footnotes. archive.org
3. primary Bombay Bank Commission: Minutes of Evidence, 1869 — 787 pages of sworn examination, held in our library. The Report proper is Parliamentary Papers 1868–69 [C.4162, 4162-I, -II, -III] XV, and is not freely available
4. eyewitness D. E. Wacha, A Financial Chapter in the History of Bombay City, 2nd edn, Bombay 1910 — chs. VI–XVI and XXIV. Wacha was being trained inside the Bank during the mania and quotes the Commission's Report at length. archive.org
5. book D. E. Wacha, Premchund Roychund: his early life and career, Bombay 1913
6. book D. E. Wacha, Shells from the Sands of Bombay, 1920 — his fuller memoir of 1860–75
7. thesis Carol Grace Lovell, "The Failure of the Bank of Bombay, 1840–1868", MA thesis, University of Maryland, 1971 — the only monograph-length treatment in free full text, built directly on the Commission's Report. DRUM
8. book · in copyright Amiya Kumar Bagchi, The Evolution of the State Bank of India: The Roots, 1806–1876, vol. 1, OUP Bombay 1987 — ch. 13 is the fullest account of the note issue anywhere, from the Bombay Archives
9. book · in copyright Bagchi, vol. 2 (1997) — the reconstituted bank, 1876–1920. Part II of vol. 1, which carries the failure narrative, is not digitised
10. official J. B. Brunyate, An Account of the Presidency Banks, Calcutta: Superintendent of Government Printing, 1900 — the official statistical account, cited by Scutt and Bagchi; not online
11. primary The Bombay Calendar and Almanac / Bombay Almanac, Directory and Register, twelve annual volumes 1822–1856 — the establishment entries, board lists and residents' directories. The source for the officer and director tables above
12. archive Perkins Bacon Engraving Books, Royal Philatelic Society London — 17 volumes, 1828–1935, page images free to view. Book PB136026 (1853–61) carries the whole Bombay redesign record. p. 61, 26 October 1854
13. hansard HC Deb 8 May 1868; 21 July 1870; 3 May 1872, vol 211 cc204–247, "India—Old Bank of Bombay—Government Liability—Resolution" (~19,000 words, the richest free narrative of the failure); 9 April 1875, vol 223 cc624–39. Historic Hansard, 1872
14. contemporary Allen's Indian Mail, vols. 6 (1848), IX (1851), and 1856 — the November 1848 run as reported at the time, the 1851 Oriental Bank robbery, and the Bank of Bengal redesign notice quoted in Chapter Five
15. catalogue Rezwan Razack & Kishore Jhunjhunwalla, The Revised Standard Reference Guide to Indian Paper Money — group 1B.1, transcribed in our constants/jr_tag_mapping-presidencies.md; all design descriptions above are its wording
16. journal · in copyright IBNS Journal — 29-3 (the unlisted Rs 50 of 15 April 1846), 11-3 (the Elphinstone and Malcolm identification), 56-1 (signatures, internally contradictory), 56-2 (the 125,000-note output figure, unsourced), 56-4 (printers), 57-1 (the two British Library Perkins Bacon items)
17. archive British Library Philatelic Collections, Philatelic 26/1/9 — India, 1846–1858, two items, both Bank of Bombay: an annotated Rs 100 specimen marked "pattern 26th April 1852" and "Guzerattee Type", and an obverse proof for an unadopted Rs 1,000 of 1857 with the East India Company arms swapped for British Government arms
18. census PMG Population Report, as held in our pmg_population table — snapshot of 16 February 2026: 6 Bank of Bombay catalogue entries, 14 graded pieces
19. our data Our own paper_money database and the saleroom catalogues behind it — Todywalla, Heritage, Spink, CNG, Oswal Antiques, Classical Numismatic Gallery, Marudhar Arts, Stack's Bowers. Every note illustrated above is a record we hold; every image is blob-mirrored from the cataloguing house
20. book G. P. Symes Scutt, The History of the Bank of Bengal, Calcutta 1904, pp. 73–75 — the 1867 amalgamation attempt from Calcutta's side. archive.org
21. institutional State Bank of India, Evolution of SBI, and sbi.bank.in/web/about-us — the successor's own account, which does not mention the 1868 failure
22. institutional Reserve Bank of India, Monetary Museum: Early Issues and Currency in Retrospect — on the Paper Currency Act of 1861 and the Bombay vignettes
23. pamphlet The Late Bank of Bombay: Remarks on Act X of 1863, and the shareholders' pamphlets of 1867 and 1868 — contemporary advocacy, useful for the drafting history of the clause and read as advocacy, not documentation
24. scholarship R. S. Rungta, The Rise of Business Corporations in India; Lakshmi Subramanian, Three Merchants of Bombay (2016), pp. 122–130 on Premchand
25. catalogue Garry Saint, numismondo, "INDIA Paper Money INDEX, Bank of Bombay 1846-66 Issues" — the Pick and Jhunjhunwalla numbering skeleton, plus images of four notes not otherwise published. numismondo.net
26. contemporary James Douglas, Glimpses of Old Bombay and Western India, with Other Papers, London: Sampson Low, Marston, 1899 — Part II, "Banks and Merchants", printed pp. 110–133, compiled by the late Sheriff of Bombay out of the city's newspaper files, and the source for the Bank of Bengal's hostility (p. 112), the reprinted Bank Committee advertisement of 27 January 1840 and the opening at No. 23 Rampart Row (p. 113), Cargill's succession by John Stuart (p. 114), and the mutual refusal of notes (p. 116). Douglas is a compiler of papers, not a historian — the documents he reprints are stronger than the sentences around them, and where his own asides conflict with them we follow the documents. archive.org