When we were young my grandmother used to keep telling us about how her father that is my great grandfather had lost quite a significant amount of money due to a bank run. I was too young to understand the meaning of a bank run and was assuming that the owner of the bank had run away with all the money. Much later during y college days when I was studying Economics at university did I really understand the actual meaning and the basic reason why such things happened in the first place.
For the last couple of years during any heritage trail around Dalhousie area of Kolkata, you are sure to pass in front of an ornate red and white building with the name “Reserve Bank of India” on it. Located right opposite of yet another famous landmark St. John’s Church this building is usually referred to as the building that once housed the “Alliance Bank of Simla”. A couple of month’s back I had the chance of visiting this building on coming to know that RBI (Reserve Bank of India) had recently opened its one of a kind museum out here.
About The Alliance Bank of Shimla
This bank happens to be one of the oldest banks in India started in the year 1874 as the name suggests in Shimla. Shimla back then was spelled, as “Simla” thus the bank was known as the “Alliance Bank of Simla”. This bank was established by Sir James Lewis Walker who was born and brought up in India. He was initially the General Manager and then the Director of the bank (1874 – 1891). He died in the year 1927.
The bank managed to expand quickly and at one point had around 55 branches. There were even talks to have a brand in Mesopotamia.
Delhi and London Bank Limited & The Punjab Banking Company were amalgamated into The Alliance Bank of Simla in the year 1915. With the failure of Bank of Upper India, its assets were taken over by The Alliance Bank of Simla in 1916. Similar was the fate of Bank of Rangoon, which was taken over in 1917.
Calcutta (Kolkata) then being the capital of the country had to have a presence thus on 15th of October 1889 a branch was started at its present location in Kolkata.
Greed and mismanagement were the main factors which led to the shutting down of this bank. Things were not going well with the bank and to revive its future the headquarters were shifted from Shimla to Kolkata in the year 1922. This was however too little and too late, the bank had run out of cash and had to be shut down on 27th April 1923.
One of the main culprits behind this was Boulton Bros. and Co. Ltd. Who allegedly had dubious investments which were funded by the Alliance Bank of Simla. When the business failed Boulton Bros failed to pay back the bank and at one point there was no going back and the bank had collapsed. Out of the Rs. 1,50,00,000 when they took from the bank they had security of only Rs. 50,00,000 adding to the woes was Trust of India – Punjab who had a liability of Rs. 1,00,00,000 against security of only Rs. 10,00,000.
With direct instruction from the Governor General it was decided that the Imperial Bank would be paying up to fifty percent owned by Alliance Bank of Simla. With the liquidation of its propertied the headquarters in Calcutta thus came under the Imperial Bank.
Rudyard Kipling & Alliance Bank
There is an uncanny connection between Rudyard Kipling and The Alliance Bank of Simla. Shimla being where the bank started had its headquarters at Kelvin Grove, this is also where Sir James Lewis Walker had his private residence. Rudyard Kipling spent his first summer holiday here at Kelvin Grove in the mid-1880’s. He frequented the high society of Shimla and became a popular member of its various activities. Sir James Lewis Walker was a friend of Rudyard Kipling and that is why he resided at his place.
Sir James Lewis Walker was also the owner of two newspapers (Pioneer & Civil and Military Gazette) and Rudyard Kipling used to work for these two publications.
The Presidency Bank
Before the RBI (Reserve Bank of India) there was the Imperial Bank of India and even before that, there was something knows as The Presidency Bank. There were three such presidency banks (Bank of Bengal – 1806, Bank of Bombay – 1840 and Bank of Madras – 1843). These banks had limited access to the market and were obliged to follow some strict guidelines.
These banks individually could issue their own currency notes but had restrictions like the amount of money it can lend to an individual (1 Lakh) & to the government (5 Lakhs). The amount of interest that it can charge that varied between 5% to 12%. And strict guidelines about the minimum cash reserve ratio that they have to maintain.
However, from 1862 the presidential banks were not allowed to print any currency and that was taken over by the government. In exchange, many previous restrictions were lifted. From 1866 onwards, the government was directly printing money.
The Imperial Bank of India
With the Imperial Bank act of 1921 (27th January), a lot of changes were brought into the scene of banking in India. This was more like any other commercial bank of India though not officially but carried many duties, which otherwise a central bank would do. This Imperial Bank is the State Bank of India that we see now. In the year 1955 (30th April) Reserve Bank of India acquired a controlling interest in the bank and after two months floated this as a separate entity with some control from RBI.
The Reserve Bank of India
On 1st of April, 1935 RBI started its operation as per the Reserve Bank of India Act, 1934. The government as whole needed to control the banking sector with wars across the world it was important to control and regulate the finances.
When Alliance Bank of Simla failed and the Imperial Bank of India intervened to help recover some of its investors by acquiring assets of the bank it automatically became the owner of its headquarters at Council House Street.
This building was constructed by Martin & Co. which was owned by Sir Rajen Mookerjee and was a partnership with Sir Thomas Acquin Martin. Historically this firm has some famous building to its name in the city as well as around the country. The most significant amongst those is that of Victoria Memorial.
The Reserve Bank of India Museum
In the year 2019, the lower floor of the building was converted into a museum which is having a permanent exhibit on the “Story of Money”.
The entrance of the museum has a story of its own as the money tree is all made up of old defunct coins along with some clever use of demonetized currency notes, which in its shredded form forms a story of its own. The main entrance to the exhibit depicts that of a one Rupee coin, which is synonymous to money in this country.
There is a section dedicated to old machinery used in currency manufacturing and packing process. You get the first-hand experience of old letterpress printing technology.
There are many interactive sections like the weight of your body in relation to gold bars and you get to lift a gold bar (replica) in its exact weight form. You will surely be surprised to see how heavy a gold bar can be.
There are multiple sections on the ground floor each dedicated to a topic within the concept of currency as money. You get to see models of old Egyptian trading system to unique coins from around the world. Being a part if RBI this museum has obvious sections dedicated to the changing and evolving monetary policies of the nation and its history.
The mezzanine floor is a child’s paradise; it has interactive games and displays. There is a Snake & Ladder board game on the floor, which has sensors and will show different monetary tips on the screen. There is a match the dots, carom and many other interesting exhibits.
Overall, you would need more than two to three hours if you want to go around the museum and go through every exhibit. Personally, for me, it was a privilege to step into this historic building which I had always seen from outside but never managed to see from inside.
Modern Banking In India by S. K. Muransan
Money, Banking And Exchange In India by H. Stanley Jevons
Statistics of British India by India Commercial Intelligence Dept
Thackers New Guide To Simla by Beresford Harrop
Recollections of Calcutta for over half a century by Montague Massey
Qatar National Library
National Library Board Singapore
Kipling Sahib: India and the Making of Rudyard Kipling 1865-1900 By Charles Allen
Kim by Rudyard Kipling
Pioneer Mail and Indian Weekly News, Volume 47