Report of the Trial of the Directors and the Manager of the City of Glasgow Bank

Charles Tennant Couper

• Publisher: Routledge
• Year: 2020
• Print ISBN: 9780367506001
• eBook ISBN: 9781000167566
• Edition: 1
• Topic: Betriebswirtschaft
• Subtopic: Buchhaltung

This book, first published in 1879 and reissued by Garland in 1984, analyses through the evidence from the original trial the collapse of the City of Glasgow Bank in 1878, and the reasons behind it. A history of gross mismanagement had been concealed by the directors by deceits facilitated by the absence of an independent audit.

EVIDENCE FOR THE PROSECUTION.

Sheriff Clark.

Francis William Clark, Esq., advocate, Sheriff of Lanarkshire, on being examined by the Solicitor-General with reference to the declarations, deponed, —That they were each of them emitted before him of the dates they bear by the prisoners at the bar, while in their sound and sober senses, and after being duly cautioned and admonished in the Usual way.

By Mr Mackintosh—The first declarations of the accused were emitted on the same day. The taking of them began about noon, and continued till about five minutes before twelve o’clock midnight. I do not remember whose declaration was taken last I do not remember whether it was Mr Taylor’s. The accused were brought to my chambers about midday, and they were kept in the buildings till midnight.

By Solicitor-General—There was no reason for taking all the declarations that day, except that I have always regarded it to be the duty of the magistrate to give accused persons the earliest possible opportunity of making any statement they may desire to make, because if they make a statement such as may warrant the magistrate in releasing them, which may sometimes be the case, the sooner it is made in their interest the better. On this occasion, I may say, I sat on at considerable personal inconvenience, so as to give them thatbenefit I inquired, and was told that they were properly taken care of in the building. No complaint was made to me of any exhaustion on their part ; if such had been made, I certainly would have attended to it.

George Brander.

By the Solicitor-General—I am a clerk in the Sheriff-Clerk’s office, Glasgow. I attended as a witness when the prisoners emitted their declarations. [Shown two declarations by Mr Stewart, dated 22d and 29th October 1878 ; three by Potter, 22d, 25th, and 29th ; two by Salmond, 22d and 29th ; three by Taylor, 22d and 29th (two) ; three by Inglis, 22d and 29th (two); three by Wright, 2 2d and 29th (two) ; and two by Stronach, 22d and 29th.] I was present at the emitting of these declarations, and wrote them. They were freely and voluntarily emitted. The prisoners were in their sound and sober senses. I heard them duly cautioned and admonished by the Sheriff in the usual way.

William Alexander Brown.

By Mr Burnet—I am procurator-fiscal at Glasgow. On 21st October, 1878, I went to the City of Glasgow Bank, and recovered from Dr M’Grigor, one of the investigators into the affairs of the Bank, the documents numbered in the inventory 124, 125, 127, and 128. After the meeting of shareholders on 2 2d October, I had a conversation with Dr MJGrigor as to the necessity of taking over the books of the Bank for the purposes of the prosecution ; and on the following day (23d October) I met Dr M’Grigor (then agent for the liquidators) and the liquidators in the Bank, and arranged with them that they should minute the arrangement by which the Crown was to take possession of the whole books and documents of the Bank. Since 23d October, accordingly, the books have been in the possession of the Crown, subject to the uses of the Crown and of the liquidation. They were not duly marked until immediately before they were brought to Edinburgh, but I became so convinced of the necessity of providing for their safe custody that the whole books of the Bank have been under charge of an officer under my supervision daily. There was a mark put on after 2 2d October to draw the distinction between the books of the Bank prior to that, and the time when the liquidation began. A stamp was put on to show that on 2 2d October the Bank went into liquidation. It was put on the books as they were when the liquidators took them over. The same books have been continued by the liquidators since. Nos. 1 to 123 of the inventory are books of the Bank, or excerpts from them. Nos. 508 to 514, both inclusive, are also books of the Bank recovered in the Bank. Nos. 129 to 184, both inclusive, are documents which I recovered from Dr M’Grigor from time to time, or prints of them since made. Nos. 185 to 190, and No. 191 a, I recovered in the Bank from Mr Morris, private secretary of the late manager, Mr Stronach. Under my instructions, Mr Boyd, superintendent of police made a search in the Bank for further documents ; and on 28th October he brought to me two locked boxes. In these I found the documents from No. 192 to 248 inclusive. They were selected from these boxes ; also No. 290. On 14th November I instructed Mr Boyd to make a further search, and he brought me a tin box, from which were recovered Nos. 249, 250, and 324. On 4th December I instructed him to make a further search in the Bank, and he took possession of a locked drawer, from which I recovered Nos. 251 to 260 inclusive, and Nos. 273 to 277 inclusive, and No. 295. I recovered Nos, 578 and 579 from Mr Harding, the receiver on Smith, Fleming, and Co.’s estate, and on James Morton’s estate. I also received Nos. 191, 191C, and 292 from Mr Harding. From the officers of Inland Revenue in London I recovered Nos. 305 to 320 inclusive. Nos. 325 to 348 inclusive, I got in the Bank. No. 359 I got from John Wardrop, a clerk in the Bank. I recovered Nos, 448 and 455 from Mr Aikman, the law secretary of the Bank. These books and documents have all been brought here.

Cross-examined by Mr Balfour—(Q.) What was the total number of books and documents which you had through your hands in preparing the case for the Crown ? (A.) It is rather difficult to answer that question without a little more time—a considerable number. (Q.) A very large number? (A.) A considerable number is, I think, a better way of expressing it (Q.) Hundreds or thousands? (A.) Certainly not thousands, nor hundreds either. Those which I had were selections made by my instructions from still larger numbers. Besides the books and documents of the Bank, I had also through my hands a considerable number of documents—not many books—relating to other matters.

Cross-examined by the Dean of Faculty.—No. 298 is a writing which was found on Mr Stronach when he was apprehended, and which was handed to me by Mr Superintendent Boyd. I was not present when it was taken from him, but I was told by Mr Boyd that it had been.

David Mackenzie.

By Mr Burnet—I am in the employment of Messrs Johnston, lithographers, Edinburgh. [Shown Nos. 124, 125, 127, and 128.] These are abstracts of accounts of the City of Glasgow Bank. There is a great deal of printing, and black ink, red ink and pencil marking on them. We were employed to make correct copies of these four documents, and we did so of three of them, A, C, D. We did not make a copy of B. [Shown Nos. 127A, 128a, and 124A.] [See Appendix No. II.] These are the lithograph copies that we made. They are correct. [Shown No. 131.] That bears to be abstract of accounts of City of Glasgow Bank at head office, 6th June 1877. No. 131A is our lithographic copy of it. It also is a correct copy.

Cross-examined by the Dean of Faculty—[Shown No. 124.] I see that throughout that paper there are a number of pencil marks imperfectly delineated. They appear to have been rubbed out—whether intentionally or unintentionally, I don’t know. That is also made to appear, as well as we could do it, on the lithograph copy. No. 124A is a facsimile of the original, as near as we could make it [Shown No. 127.] I see that there are also a number of pencil figures on that paper. We have also represented them in our lithograph copy, No. 127a, as nearly as we could. They are not so much rubbed out in that paper as in No. 124. (Q.) Do these figures exhibit the same kind of calculations that you think were in the other paper? (A.) I never addressed myself to that particular point.

By the Lord Justice-Clerk—Our lithographs are facsimilies of the originals, as nearly as we could make them. They indicate the print, the MS. part, and the pencii jottings. They are, as nearly as we could make them, a faithful representation of the originals.

John Boyd.

By Mr Burnet—I am a superintendent of police in Glasgow. I apprehended several of the prisoners, and among others Mr Stronach. I found on him a pencil document beginning with the words, “Until for some time before “my brother left the Bank,” &c. [Shown No. 298.] That document was given up by Mr Stronach on his apprehension to me in the police office, and also the letter No. 297. It bears to be a letter from D. Bell, 11 Queen Victoria Street, London. After the prisoners were apprehended, I was instructed by the procurator-fiscal to search for documents in the Bank. I went there first on 28th October, when I found a great many, I locked them up in two boxes, and took them to the procurator-fiscaPs room. Nos. 192 to 248 inclusive in the list of documents appended to the indictment, were a portion of the documents which were in these two boxes ; they were all recovered by me in the secretaryVroom, and also No. 290. I again visited the Bank on 14th November, and took possession of a tin box in the manager’s room, which I also took to the Fiscal’s office, and handed to Mr Brown. In that box were the documents Nos. 249, 250, and 324. On 4th December I again visited the Bank, and took possession of two bundles of papers, which were also taken to Mr Brown. In these bundles were found the documents Nos. 250 to 260 in elusive, 273 to 277 inclusive, and 295. The documents now spoken to were all initialed by me, and handed to the procurator-fiscal.

James Roden.

By Mr Pearson—I am a sheriff-officer in Glasgow. I was instructed by the procurator-fiscal to take charge of the books of the Bank. They have been under my charge since 30th October last. I recovered certain documents in the Bank at various dates in October and November. [Shown Nos. 249, 250, 278 to 283, 296, and 324.] I recovered these documents. They are all initialed by me as part of the documents I recovered in the Bank.

The declarations of the prisoners were then read.

first declaration of john stewart.

At Glasgow, the twenty-second day of October, eighteen hundred and seventy-eight, in presence of Francis William Clark, Esquire, advocate, Sheriff of Lanarkshire.

Compeared a prisoner, and the charge against him having been read over and explained to him, and he having been judicially admonished and examined, declares and says—My name is John Stewart. I am a native of Glasgow, sixty-one years of age, and I reside at 34 Moray Place, Edinburgh. I am a wine merchant.

I declare that I am not guilty of the charge of falsehood, fraud, and wilful imposition preferred against me, of having falsified the books of the City of Glasgow Bank, and prepared and issued false and fabricated balance-sheets, during the years from 1873 to 1878 inclusive, while the Bank was in a state of insolvency, and well known to me to be so, so as to conceal the true state of the affairs of the Bank from the shareholders and creditors, and of declaring false dividends, in order to deceive said shareholders, creditors, and the public.

I farther declare that, as I have been advised, I decline at this stage to make any farther statement, or answer any farther questions. All which I declare to be truth.

J. Stewart.
F. W. Clark.

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second declaration of john stewart.

At Glasgow, the twenty-ninth day of October, eighteen hundred and seventy-eight years, in presence of Francis William Clark, Esquire, advocate, Sheriff of Lanarkshire.

Compeared John Stewart, presently prisoner in the prison of Glasgow, and a charge of theft now preferred against him having been read over and explained to him, and he having been judicially admonished and examined, declares and says—I am not guilty of the charge made against me of stealing a number of bills, amounting to twenty-three thousand six hundred and ninety-three pounds twelve shillings and sevenpence, or thereby.

I am advised to make no farther statement at this stage than that I am not guilty. All which I declare to be truth.

J. Stewart.
F. W. Clark.

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first declaration of lewis potter.

At Glasgow the twenty-second day of October, eighteen hundred and seventy-eight years, in presence of Francis William Clark, Esquire, advocate, Sheriff of Lanarkshire.

Compeared a prisoner, and the charge against him having been read over and explained to him, and he having been judicially admonished and examined, declares and says—My name is Lewis Potter. I am a native of Falkirk, seventy-one years of age; and I reside at No. 7 Claremont Terrace, Glasgow. I am a retired merchant.

I declare that I am not guilty of the charge of falsehood, fraud, and wilful imposition preferred against me, of having falsified the books of the City of Glasgow Bank, and prepared and issued false and fabricated balance-sheets during the years from 1873 to £78 inclusive, while the Bank was in a state of insolvency, and well known to me to be so, so as to conceal the true state of the affairs of the Bank from the shareholders and creditors, and of declaring false dividends in order to deceive said shareholders, creditors, and the public.

I have nothing farther to say in the meantime, and I decline to answer any questions that may be put to me. All which I declare to be truth.

Lewis Potter.
F. W. Clark.

$$\begin{array}{cc}\begin{array}{c}\text{W.A. Brown,}\\ \text{Geo. Brander,}\\ \text{B.M'Lauchlin}\end{array}\}& \mathit{\text{Witnesses.}}\end{array}$$

second declaration of lewis potter.

At Glasgow, the twenty-fifth day of October, eighteen hundred and seventy-eight years, in presence of Francis William Clark, Esquire, advocate, Sheriff of Lanarkshire.

Compeared Lewis Potter, presently prisoner in the prison of Glasgow, and the declaration emitted by him before the said Sheriff, of date the twenty-second day of October current, having been read over to him, and he having been judicially admonished and examined, declares and says—

I am now brought before the Sheriff at my own request.

I considered that the City Bank was in a solvent state when the last balance-sheet was struck, J was under the impression that all the securities were sufficient. I signed the last balance-sheet. I did this under the impression that it was correct. It was done while I and the other directors were at luncheon, and I signed it at their request I think I had just come from Ayr at the time, where my time was spent in country quarters, and my mind was entirely off business. Before signing I had not examined any of the books or documents, so as to test the accuracy of the balance-sheet I acted on the impression that others had done so.

Shown a document, titled on the back, “City of Glasgow Bank, Abstract “of Accounts at June 5, 1878, B.” [See Appendix No. II.] I cannot say whether I had seen that before I signed the balance-sheet or ledger. I don’t recollect of going over the foresaid document along with Mr Stewart and Mr Robert Stronach before signing the balance-sheet. I may have seen it at the Bank. It is likely I did.

I observe that in the foresaid document the indebtedness of the Bank is stated under “bills payable” at £2,881,252, 18s. 6d, and that there is deducted from that, under “bills payable,” a sum of £973,300. I don’t know why that was done, and I understand nothing about it.

On the other side of the document I see an entry showing the amount lent by the Bank on credit accounts No. 1, a sum of £2,009,752, us. 2d., and that there is deducted from that a sum of £680,614. I do not know how that was done, and I don’t understand it.

Interrogated—Did you think it was properly done ? Declares—I cannot say. I am unable to give explanations regarding the said document, because, though I may have seen it, I have never thoroughly examined it.

I have been about twenty years a director of the City Bank. I came into the direction soon after the stoppage in 1856. I did this at the urgent request of parties.

I do not think I or my firms were indebted to the Bank at that time. Ever since that time, and certainly latterly, I and my firms abstained from do...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Original Title Page
• Original Copyright Page
• Introduction
• Report of the Trial
• Table of Contents
• Petition for Bail
• Trial of John Stewart, &c—
• Evidence for the Prosecution
• Addresses to Jury
• Appendix I. Scroll Abstract Balance-Sheets for 1876, 1877, and 1878
• Appendix II. Report by the Investigators into the Affairs of the Bank