Tuesday, 30 August 2011

Banking Part Three

Trinidad, with its frontier town elan, hetergeneous population, and despite its confusion and the wars of the early 19th century, the dislocation of people during emancipation in the late 1830s, and the arrival of a whole new culture from the Indian sub-continent shortly after, was doing very well commercially by the 1880s.

The very diversification of its population itself spoke of people who had come for one or the other economic reason. The people of African descent, brought by the French and other catholics for opening up the forest and planting the first agricultural crops of cotton and sugar, had after the British conquest been added to by Scottish merchants, importing sugar factory and plantation equipment, as well as a range of household furnishings and fashionable objects.

The cultivation of cocoa was another industry that stimulated the export sector in the 1890s. The French creoles had bounced back after fifty years and had become both cocoa planters and exporters-importers.

The insurance industry took root at this time. Together with other crops, cane and cocoa gave Trinidad a two-tier economy: one worked mainly by the arriving Indians, increasingly attached to British interest in the canefields, and the other operating on the level of artisans and tradespeople like shoemakers, pot solders, ice salesmen, knife sharpeners (remember? “Sharpening knives and scissoooooors!”), all the way through to to ubiquitous clerks in the Frederick Street stores, to real ‘big shots’ like William Gordon Gordon, who built ‘Knowsley’ around the Savannah, and Leon Agostini, who built White Hall and started the Chamber of Commerce.

In that time of economic growth, the Colonial Bank’s old way of doing business in the West Indies was challenged by the West Indian Royal Commission for their excessively restrictive lending policies. The commission was told by several peasant witnesses, black people and ‘cocoa pagnols’, of the necessity for loans to expand their small operations.

René de Verteuil, one of the larger planters, recommended the setting up of an agricultural bank. The embryonic working class was also unhappy about the lending practices of the Colonial Bank. Walter Mills, a spokesman of the Trinidad Workingman’s Association, made a plea for the establishment of a government savings bank. Obviously, business was good.

The savings bank, or Penny Bank, as it was called, came into existence and attracted thousands of small deposits. However, it was not a lending agency. This badly needed service was attended to by the growing phenomenon of the ‘sou-sou’ in the Afro-Franco community. The more chancy ‘whe whe’ was there for the ‘investor’, while the Indian village life possessed ‘chaitey’, a form of sou-sou.

The Colonial Bank, limited by its charter, could not expand its modus operandi, and other banks which were not so restricted reaped the benefits.

Around the turn of the 20th century, the Royal Bank of Canada had made a successful entry into the West Indian economic arena. It opened a branch in Port of Spain in 1910, acquiring the Union Bank of Halifax which had come to Trinidad in 1902. Royal Bank of Canada quickly developed a good customer base in Trinidad, consisting especially of the importers of goods from Canadian trading companies, and others who opened savings accounts or accessed loans under the bank’s cautious lending policies.

In 1911, C.E. Neill of the Royal Bank of Canada in London proposed the acquisition of the Colonial Bank’s assets in the West Indies. The ‘Court’, Colonial Bank’s board of governors, considered the idea. Some welcomed it, but nothing came of it. However, this state of affairs was the truest indicator of a need for change.

During this period, another Canadian Bank, the Bank of Nova Scotia, attempted to establish itself, but the endeavour was burdened with distress. The death of two of their senior people, not to mention the aggressive techniques employed by the two other institutions, elbowed the Bank of Nova Scotia out of Port of Spain again.

Recognising the potential of San Fernando, Royal Bank of Canada established a branch there in 1912. Small farmers, cane farmers amongst the freshly un-indentured Indians, public servants and teachers became an important source of deposits. Apart from the good banking techniques displayed, it is obvious that the island’s economy was becoming substantial, varied, stable and underpinned by a growing and thrifty middle class. Especially in the south, the natural resources of asphalt and petroleum would bring greater prosperity to the people, which reflected itself in the banking business. It is also conceivable that many coloured customers felt more comfortable with Canadian clerks, who were themselves colonial subjects of the British crown, and with whom many small depositors might have felt more at ease than in the august halls of the British Colonial Bank.

The Colonial Bank act of 1916 extended the institution’s powers. “It meant that British corporations could carry on business as a banker in the United Kingdom or in any state, colony or dependency in the British Empire,” writes Richard Fry in his authoritative ‘Bankers in West Africa’ (quoted in ‘From Colonial to Republic’). “We have one clue to the riddle why the Colonial Bank suddenly felt, after eighty years of reasonably profitable work in the Caribbean and in the middle of a world war (1914 - 1918), that it must seek wider horizons. Its chairman in 1916 was Sir W. Maxwell Aitken M.P. (soon to become famous as Lord Beaverbrook), the Canadian who came to England to launch a crusade for the rebirth of the British Empire.”

He was not alone. F.C. Goodenough, chairman of Barclays Bank Limited, shared his expansionist views. ‘A close working arrangement’ was sought with the Colonial Bank, and talks between the two banks commenced in late 1917.

Over the next eight years, a world system of association in the form mostly of assimilation and merging, together with the organisation of corresponding banks, was created. At a special meeting of the proprietors of the Colonial Bank after the rearranging of its share capital it was decided to change its name to Barclays Bank (Dominion Colonial and Overseas) D.C.O. A new dispensation in world banking had been inaugurated, one that had its roots right here in Trinidad.

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