The Pattison Crash
last updated March 24th 2015

THE TRIAL - DAY 3

"What Happend When?                        The indictment
time frame        time frame
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Also the third day started with Mr Durham and he had checked bank accounts (The company, Robert and Walter Pattison).
Bankers form London offices (Clydesdale Bank, British Linen Company Bank and London Joint Stock Bank) and the Town and Country Bank, Dufftown and Aberdeen gave information about transaction with Pattisons.

A brewer from Newcastle-on-Tyne, Henry Emmerson was also heard. He gave detail about the transaction of 50 puncheons of Gordon whisky bought (bought 27th November 1894 - £4,942 2s including casks). He was sceptical to the fact that the invoice (which fell due 30th May 1895) was for the full amount as he got monthly parcels of the whisky but he was told by his agent that "Pattisons were as safe as the Bank of England" and accepted the bills which were renewed twice by forth months i.e matured 28th of January 1896. In January he got a new bill for £5,046 6s 4d (£4,942 2s + interest £104 4s 4d) but he was not aware of this until he was called in for this case.

My comment: This statement that he was not ware of this seems strange - in the productions is a letter dated January 15th 1896 from Pattison saying: "
".. the bills in question are against the 50 butts blended whisky invoiced waiting orders on 27th November 1894, five of which still to be delivered to you. Of course the bills in question will be run off by us at maturity, and with your permission, we propose invoicing another 50 butts on the same terms..."
And Emmerson replied the day after "... we cannot allow you to book 50 butts on the same terms, as we have whisky offered at less money.." and he got a new letter from Pattison in April 1896 "I find these bills for £7,000 odds fall due on Saturday. We have redrawn for £5,046 6s 4d at 47 and will pay them off at maturity. We must do this as our new company is not quitein working order yet".

Next witness was Mr James Greig, of Carter, Greig & Co. This company made the signed certicate which was embodied in the prospectus when the company should float. He told that he and his 6 clerks worked for one month "day and night" and had access to all books (around 100). He told that the brothers suggested that they should look only on the 2 years and 8 months back but Mr Greig said that this was too short and they agreed that 6 years was better for an average. He said: "At the time Messrs Pattison, Elder and Co were a firm of good repute, and he treated the Pattisons as men of good character." He had some questions which he put in a letter to the Pattisons. One of the questions was if all the invoices for goods purchased applicable to 1895 had been debited to goods account, and the reply was “yes”.
Now he was told this was not correct. He defended himself by saying that no investigation such as he was instructed to make would have enabled him find out the dodgy affairs. Next point was the over-valuations of whisky. He was cross-examined by Mr Guthrie (for Robert Pattison) about his controls of stock books and a particular distillers account (Ferguson). The reporter in Aberdeen Journal writes: "His evidence at this point was very indistinctly heard, and witness was several times asked to speak louder."
The witness again explained the methods adopted as auditor compared with the methods accountant in dealing with books.
Then it was time for lunch.

Next witness was the senior partner of Carter, Greig & Co and he had the same opinion that they had been misled by Pattisons and this was the reason for the false figures in the certificate they signed. He explained the valuation principle of blended whisky and said that 5 percent was added to the cost price after blending.
Miscellaneous witnesses were heard about sales of whisky for example a clerk from Ord Distillery, John and William Grant, W. Grant & Sons, Leonard M´Caw , Avoniel Distillery, Belfast and a cashier of Distillers Company, Edinburgh.

Mr James Mackenzie was clerk at Pattisons and he gave evidence as to the system under which the books were kept. He was not aware that credit had been taken twice for goods sold. He also told that Walter Pattison had nothing to do with his department.


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Sources:

Yorkshire Evening Post - Tuesday 09 July 1901
Aberdeen Journal - Wednesday 10 July 1901
Edinburgh Evening News - Thursday 11 July 1901

Advocates Library/National Library of Scotland