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inadequate and whether that was not a reason for failure. To my knowledge there are many banks profitably operating on a capital of less than G. $25,000.00. It was therefore, my aim, from the start, that our capital should be $50,000.00 Hongkong currency. When the desire to purchase the building was included in the aim, my estimate was increased by the value of the building, making the capital $150,000.00. In this I was in disagreement with my co-directors who desired
a big capital and in consequence, I agreed and did incorporate the company and had a large authorised capital in
order to allow for the possibility of later expansion on the lines they wished, the idea being that an agreemen
experienced banker manager was to be brought in and take charge and run a banking exchange along their lines when they wished to do so. While I was in charge of the capital
I insisted that the capital should not be excessive.
When applications arrived at 2 million odd dollars worth of shares and the experienced bank manager had not appeared
I being left in full responsibility - I was genuinely purturbed by the possibility of the excess money coming into my responsibility. I had no doubt whatever as to the genuineness
of these publications, or of the existence of this money, because it had been a direct point of contention between me and my follow directors as to whether a large capital should or should not be accepted. Not being willing to accept such a huge sum with inexperienced helpers, and myself inexperienced in banking, I sought every method to avoid such a responsibility.
There were two obvious things to be done. One, having a call of 10% only and accepting only 10% and refusing to allow any further monies to be paid in above the 10% - the disadvantag of that was apparent in that when the manager was appointed and I was expecting his appointment daily - it would take him a month to comply with the formalities necessary for a further
call; and he would presumably be a high salaried man, and a month's waste of time would be of importance.
The other method would be to accept all the money and pile it
up in a current account in another bank to wait for the manager's arrival to use it. The disadvantage of that being that it would be a waste of interest.
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Consideration gave me a third method which did away with both disadvantages.
By permitting the shareholders to pay not only the 10% called up,
but also the money uncalled and then insisting that the shareholder himself make use of that money on behalf of the
bank by re-borrowing it - putting the manager, when he arrived, in a position where he could inmediately call up that money, and at the same time it prevented the bank from losing any interest or having unused money on its hands.
By this method the monies of the bank were safely utilised,
and were yet ready and available when required. Owing to a misapprehension I must amplify the word "safely" in this connection.
10% of our shares were called up. A man who had applied for $10,000.00 could be asked to pay 1,000.00 and no more. If he paid $10,000.00 he had paid $9,000.00 more than his shares required him to pay, therefore that extra $9,000.00 was in fact a deposit. Every bit as much as if he had come and paid over the counter into the Deposit Account. It was not
share money. If he borrowed against that deposit, as is the custom of every bank to lend up to100% on such deposit account
If he borrowed against that deposit the worst that could happen
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