Finance and Business in India

Colonial Life

In June 1845 the board of Standard Life discussed extending business to the colonies including India. As it is viatl in the life insurance business to have life expectancy statistics it was agreed to use tables based on other offices working there. A new agency planned in Calcutta and on 20^th November 1845 all overseas business was agreed to be handled by Colonial Standard Life, a company specially formed for that purposes but sharing offices and staff with Standard Life in Edinburgh. This idea was the brainchild of William Thomson, George Patton, David Smith and James Kinnear, Smith and Kinnear both WS having extensive contacts with Edinburgh financial institutions, and who got other life companies who also wanted representation overseas to join in. On the 27Jan 1846 at the first board meeting of Colonial Life assurance company there were six directors form Standard life itself and the rest were merchants and lawyers, one banker, one accountant. The chairman was William Stuart Walker of Bowland of Scottish Equitable Life Assurance Society.  The governor was the Earl of Elgin. The Royal Bank of Scotland acted for them.  £500,000 capital in £50 shares had been raised. Areas for initial operation were North America, Ceylon and the West Indies who also had shareholders. There were at first no shareholders in India, but Patrick Alexander Reynolds captain of the East India Company and shipping agents and merchants from London with connection to the East joined in as well. For the India market local boards were to be set up to accept risk of up to £2000 in Bombay and Colombo, and the first policy was issued on the 6^th Nov 1846 on George Smith in Ceylon, a 28 old merchant  (MOSS, 2000, p. 56-59)

Life in Zone C

Robert Christison the chief medical officer for Standard life was involved in drawing up the morbidity statistics which are vital for actuarial tables for the life assurance company. Thee world was divided into risk zones and India, Ceylon and the China ports were classed as a class ‘C’ risk, just above the worst risk class ‘D’ for the West Indies (MOSS, 2000, p. 58-59). Attempts to break into the Indian and Far Eastern markets, as many agency houses there have Scottish connections, were at first hampered by not finding any resident managers, so an agency house needed to be appointed. In June 1847 Macivar Smith and Co were appointed agents in Calcutta and the associate houses Macivar Burn & Co in Bombay and Macivar & Co in Shanghai. A month later James George smith became agent at Kandy for Ceylon and Binny & Co for Madras. Progress was painfully slow though with little new business and simply the collection of premiums from policy holders resident in the country being the order of the day. In Madras there was little chance of competing with the local Madras Equitable and other British companies with British directors. Consequently in the autumn of 1849 the Maciver partnership broke up. Bombay and Shanghai closed down and Calcutta was renamed Smith Farie & Co.

Secretary Henry Jones Williams sent to India Dec 1851 with instructions to appoint local boards, medical officers and solicitors. In both Bombay and Calcutta he found the business in disarray due to predatory activities of Medical and Invalid Life office which had saturated the market with agents.  Also he though Colonial life rates were uncompetitive and that he needed more up to date mortality statistics. In Kandy he discussed with a local doctor the mortality of the European and burgher (Dutch-Eurasian) community.

Building up the business

Proposals to pay premiums monthly rather than quarterly were made, as well as endowment policies, as the policies were usually only used as collateral for borrowing were another idea. So he reinvigorated Madras to 1.23.700 rupees of new proposals by August 1853, and until 1857 Madras and Colombo produced as much new business as the whole of Canada (MOSS, 2000, p. 65-67).

Even after the mutiny, there was in Calcutta still strong competition though from Medical and Invalid agents and Colonial Life did not give enough attention to expansions (MOSS, 2000, p. 92-93). In 1869 George Lucas Kemp was appointed as secretary to the board in Calcutta. He travelled 3800 miles by all means to secure the agents of the defaulted Albert Life Insurance Company of which he himself had been an agent and he set up new agencies in Allahabad, Benares, Cawnpore, Delhi, Lahore, Lucknow and Umballa, as after the fall of the Albert there was now a gap in the market. The Delhi and London Bank Ltd accepted policies as collateral against loans. He also expanded into insuring Eurasian lives but he still rigorously excluded native lives.

Within a year he had accepted 16lakhs of new business and in 1871 he was promoted as permanent secretary with an assistant Thomas Lang sent out for him from Edinburgh. By 1873 the Calcutta branch had far outstripped all other overseas branches  (MOSS, 2000, p. 102-103) in mid 1870s the rates for India were in urgent need of updating due to the ‘improvement which have taken place in certain conditions … of recent years’, especially in young lives rates were reduced, but still no native lives were insured. The depreciation of the Rupee, due to fall in price of silver, needed to be addressed as premiums were paid in rupees and benefits in sterling at 2 shillings to the rupee while the real rate was now 1sh six pence per rupee. The Bombay agents went into liquidation as a consequence and its own branch needed setting up (MOSS, 2000, p. 129-130).

The Golden Years

In 1877 Standard Life managed to take over the small India Life partly because of its good relations with banks. The Colonial Life Brand had merged with Standard Life in 1871 and now the branches were re-organised making Bombay and Calcutta the main branches now, with Madras and Ceylon now coming under the Bombay branch which in 1884 was the first to get a new purpose built offices. Right at the heart of the European centre of the Fort area of Bombay in the busy Hornby Road (MOSS, 2000, p. 133) the building was highly decorative, featuring balconies, a ballustraded parapet and urns, and was designed by leading Bombay architects Gostling & Morris. The year '1825' (being the founding of Standard life) can still be seen through the grime on what is now Mumbai’s Dadabhai Naoroji Road.

In 1881 finally native lives were allowed to be assured, but no agent seemed to have been very interested and no great amount of new business comes from that field. Nevertheless the 1880s were the golden years of Standard Life in India, and it now continued to dominate the Indian market, outperforming all other British competitors, with 12-13 lakhs a year of new business in Calcutta and 9-11 in Bombay. 1887 saw new mortality tables coming out which allowed premiums to be dropped by 10% especially for young lives, which in turn brought an immediate upturn in business, with Bombay at 12-19Lakhs now for a while even overtaking Calcutta at 9.7 to 18 Lakhs (MOSS, 2000, p. 131-2).

Good relation with banks were retained and this allowed Standard Life to keep up against competition and so 1893-94 saw record returns from India which allowed for the building of a new purpose built offices in Calcutta’s prime address of Dalhousie Square (MOSS, 2000, p. 133-134). Designed by the prolific Bombay-based architect Frederick W Stevens (see Victoria Terminus Railway station there), this fascinating brick building still appeals with its exquisite detailing, from the multi-domed corner tower, to the figures in the triangular pediment, the ballustraded parapet and the cherubs with their musical instruments in the upper windows. The most striking figures are those immediately below the archway and the name of the insurance company in relief; these figures are of 'Life' (represented by a young woman carrying the Light of Life) on the left, and on the right, 'Death' (represented by the Grim Reaper). Like the Edinburgh and the Bombay buildings before it, it of course features Standard Life's logo of the biblical Ten Virgins in its main pediment; the parable of the Ten Virgins (Matthew 25:1-13,) being thought to be an appropriate motif for an insurance company with the message of always being prepared for future contingencies. Those years of expansion and publicity also saw Thomas Lang the Standard Life representative in India, gifting the ‘Calcutta Cup’ to a rugby Club in Calcutta for annual ‘friendly’ matches held annually between its Scottish and English members (MOSS, 2000, p. 75). The cup was later taken to the UK to be used for a similar but now much more prominent series of matches when the club closed down and it members returned home.

Years of Complacency

Another collapse of the rupee though lead to rupee investments to be realised and losses written off. Also Thomas Lang until his death in 1896 still resisted insuring native lives, which other agents now increasingly do. (MOSS, 2000, p. 133-134). Taking over Calcutta after Lang’s death George Stewart now increasingly saw customers going off to the competition. Other issues were the increasing Indianisation in business and government which reduced the number of the usual new European customers coming out to India. Furthermore in 1898 during Boer war whole regiments of European troops were transferred from India to South Africa, taking their custom along with them.

To counteract these negative trends Standard Life now started insuring native lives, and in 1902 worked up new mortality new tables to include them. By 1903 of Bombay’s new risks 40% were native already although in Calcutta it was only 16%.  Outmoded sales techniques, with circulars and the selection of most agents only with a public school stamp though reduced Standard Life’s appeal to new customers both native and European, and so the new native business was not strong enough to halt the decline which had set in in the late 1890s. (MOSS, 2000, p. 134) and in 1903 George Oliver was sent to India from Edinburgh to undertake an investigation of the failing Indian business (MOSS, 2000, p. 144)

By 1904 Leonard Walter Dickson was the manager who dealt with George Oliver's report which made the points that "a more commercial and pushing style of transaction and seeking business than in the past" was now needed. For that, new rates of commission for agents should be introduced and all agents should be visited every year. Special native agents should be employed, but only to recruit natives with knowledge of English, as they were thought to be a better risk.

Business did not pick up though, and it was realised that ‘natives’ needed to be approached more widely with new agents appointed in Lahore, Bangalore, Shimla and Madurai, which did lead to a marked upturn in business which was 10% of all new business (MOSS, 2000, p. 147).

Still the 1905 business was discouraging partly because Provost in Bombay and Hill in Calcutta where not enough interested in the business, and said to concentrate more on keeping dogs, riding and going on safari instead. Out of date marketing mainly to old boys of public schools was also still a problem and so no some of Standard Life’s better managers left to Indian companies.  Before any great turn around could be made with the new commission rates and other changes which actually had been implemented the First World War broke out. (MOSS, 2000, p. 162-164)

Attempts at Indianisation

Volunteering for war service and call-ups led to staff shortages and few new customers came out to South Asia, so cuts in the network had to be made and in 1915 the Straits Settlement branch closed and their agent who innovatively went out to the rubber plantations on motorbikes were withdrawn. A complete new agency set-up was now copied from Indian companies, and in 1916, even Bombay was closed as a separate branch and the office was put under Calcutta control. New schemes and rates for Europeans and natives were introduced (MOSS, 2000, p. 162-164) and by 1927 new sums assured reached a record level of £422,000 now mainly due to insuring more native lives though local inspectors.

The horizon was darkened though by mounting competition especially from Indian companies strengthened due to nationalism, and then there was the fact that export dependent European business life in India was especially badly hit by the 1929 world recession. By 1933 there was a slight upturn as by now Standard life had even better rates than the Prudential, but expansion was hindered by it not being able to recruit enough local inspectors and native agents due to by now uncompetitive commission rates. 1937 saw the Standard Life Quarterly publishing a history of the branch, but the fact was that business fell yet again during that year. (MOSS, 2000, p. 210-212).

Closure

This and the fact that in 1938 tighter regulation of the Indian insurance market was brought in led Standard life to decide in July 1938 to close Indian branches to new business. A manager from Edinburgh, Davidson went out to wind it up, even visiting a (life-insured?) Yogi in a Himalayan cave. The Bombay office finally closed in 1939, while the Calcutta office stayed open during the war years until 1946 when all the remaining Standard Life business in India was transferred to the Gresham Life and an exactly 100 year old history of this Edinburgh institution in India came to an end. (MOSS, 2000, p. 210-212).

Further Reading:

MOSS, Michael (2000): Standard Life 1825-200. The building of Europe’s Largest Mutual Life Company. Edinburgh: Mainstream Publishing, 2000.

Banking in India

Just looking at an old school register of the Edinburgh Academy recording careers up to 1914 we can say for instance that 25 former Edinburgh Academy boys were employment in banking in India . As Scottish banks did not hold licences for banking in India, they were not transferred from Edinburgh head offices, but went out on their own to separate ‘oriental’ banks. Chief of these seems to have been the Chartered Bank of India, Australia, and China, founded in 1853 by a Scotsman and carrying on since 1969 as Standard Chartered Bank. It alone employed eight former boys at locations all across its wide network of branches in places as diverse as Calcutta, Bombay, Karachi, Bangkok, Hong-Kong, Shanghai, Singapore, Batavia, Surabaya and London.

The Bank of Bombay came in second place with five mentions and the Bank of Madras followed with four in branches not only in India but also Ceylon such as Kandy and Tuticorin. Four mentions were found as well for the Oriental Bank Corporation which on closer look also revealed a focus on Ceylon, but offered employment also in Bombay, Calcutta as well as Yokohama, Shanghai, and even Australia.

The Agra Bank also had four former pupils in employment and again we can see brothers following each other into similar careers as in the tragic example of the Howden brothers, Andrew and Robert Maitland, who both left the Academy in 1858 and joined the Agra Bank. It is not mentioned where they were stationed or which posts they took up, but both died relatively young, aged 28 and 23.

Not all Indian banking employment was in wider India itself as there were branches in London and Robert Hunter (EA 1824-29) the earliest mentioned ex-academy banker in India and originally Manager of the Bank of Madras in that place itself, ended his life in 1890 as Manager of the Agra Bank in Edinburgh (17, St Andrew Square, part today’s Standard Life Investment Building) followed by another ex-academy former pupil George Deas, (EA 1873-4).

The Bank of Bengal gets three mentions, two for boys both in the same year, 1862-4, at the academy, Frederick Burns and Robert Henry Scott-Moncrieff, suggesting they might have gone out together to branches in Nagpur and the timber port city of Moulmein/Burma respectively.

One mention each was found for the National Bank of India, and the Mercantile Bank of India, London and China at their Rangoon branch.