Paid in full with a glass of milk

Many stories and anecdotes float on the internet.  They are read and forwarded to relatives and friends.  Some of them are true accounts.  Some others are partly true and some of them are totally false.  Their reliability ignored, they often make good reading.  If we go behind them a bit deeply and verify their authenticity, many new dimensions unfold.

I have received a story from three different sources over the last few months.  It is something like this......

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A poor boy was selling goods from door to door to earn for paying his school fees. One day when he was moving from house to house, he felt very hungry.  He had only one dime (a ten cent coin; one tenth of a Dollar) left in his pocket.  He decided to ask for a meal at the next house.  A lovely young woman opened the door.  He could not ask for a meal and instead asked for a drink of water.  The woman looked at him, thought he was hungry and went inside the kitchen.  She brought a large glass of milk.  He drank it slowly and then asked, "How much do I pay?".  "You do not owe anything.  My mother has taught me never to accept anything in return of kindness", she replied.  He thanked the pretty woman and left.  

Many years later the woman became critically ill.  The local doctors were baffled about the reasons for her illness and suggested that she be admitted to the big hospital in the city so that she could receive treatment from specialists.  A specialist visited her and attended to her over the next few months.  She recovered from her illness.  She was all along more worried about something else than her ailment. She was afraid of the fat bill she had to meet at the time of her discharge from the hospital.  She was scared when she asked for the bill on the day of discharge.  The bill was brought to her and she was advised that the bill was already paid.  The bill was signed by the attending specialist Doctor after the the words, "Paid in full with a glass of milk".

***** 

Johns Hopkins was an entrepreneur and earned substantially through his hard work. While working with his uncle in his grocery business in Baltimore, he is said to have fallen in love with his uncle's daughter Elizabeth.  In those days marriage of first cousins was not acceptable in Quakers families, a group to which he belonged.  Hence both Johns and Elizabeth never married in their life.  He used his vast wealth for the welfare of orphans, students and healthcare.  He died on christmas eve in 1873 as a childless bachelor.  He bequeathed a vast fortune of 7 million US Dollars to Philanthropy.  It was the biggest donation to charity at that time.  Many institutions with his name came up through this corpus left behind him. Johns Hopkins Hospital and Johns Hopkins University in Maryland are the major ones among them.

Four prominent doctors, known as "The Big Four", are credited with being the founder Professors of the Johns Hopkins University and Medical College.  They are Dr William Osler (Medicine), Dr William Halsted (Surgery), Dr William Welch (Pathology) and Dr Howard Atwood Kelly (Gynecology).  Dr Howard Kelly is hailed as the man who developed Gynecology as a specialized field in medicine.  He did pioneering research in "women only" medical problems and developed new surgical approach to cure such diseases.  He developed "Cystoscope", an instrument that has mirrors like a telescope or microscope and used in treatment of urinary tract related issues.  He is also credited as being the first for use of Radium in treatment of cancer.  He has left his indelible mark in the field of medicine.

The story of "Paid in full with a glass of milk" relates to Dr Howard Kelly.  It is said that there is a reference to this incident in his biography written by Audrey Davis.  But the details are different.  Instead of being a poor student selling goods from house to house, Kelly was from a relatively wealthy background and received generous pocket money from his family.  On one of his walking trips in Northern Pennsylvania, he stopped by a farm house for a glass of drinking water, but the young girl offered him a glass of milk.  When she was admitted to the hospital decades later, it was for no such thing as unknown serious disease.  But it is true that the doctor recognized the woman as the young girl who gave him the glass of milk several years ago.  It is also true that he paid off the bill with those famous words, "Paid in full with a glass of milk".  Over a period of time the anecdote has added additional features and grown in excitement and interest!

Paying the "Milk Girl's Bill" was not an isolated instance.  Dr Kelly is said to have treated three out of four of his patients without charges, but charging the rich patients with a fat fee. That was his way of subsidizing the poor patients.  We know of many such doctors who charge high from patients capable of paying more and treating poor patients free or with nominal fee.  May their tribe increase.

Whatever may be the additions and modifications, the story of paying the bill with a full glass of milk is really interesting and noteworthy.  This also provides us an opportunity to thank people like Johns Hopkins and Dr Howard Atwood Kelly for their service to humanity.

Two Masala Dosas, please

The frail looking short man entered the restaurant near the bus stand of the district town. He sat on a chair at the corner table and wiped the flowing sweat on his face with the long towel around his neck. The summer heat and stay outdoors since morning had made his appearance a big mess.  The dhoti and shirt he wore were indeed white when purchased from the cloth shop, but due to continuous use in the dusty fields had now turned yellowish orange.  He placed his worn out leather bag on the table and beckoned the waiter boy.  The boy moved casually with a steel tumbler of water, placed it on the table and looked at the man quizzically. "Two Masala Dosas, please" said the man.  "Where is the other person?", asked the waiter.  "There is no other person.  Both dosas are for me.  Put them in the same plate and bring it fast.  I am in a hurry to catch a bus", said the frail man. The boy had not seen anyone order two masala dosas for oneself.  He was surprised. "That would cost two Annas. Do you have the money?", derisively asked the waiter. In those days, fifty years ago (1965), sixteen Annas made a rupee. Though decimal system was introduced in 1957 and a rupee was made up of 100 "Naya Paisa", meaning new paisa, Anna was a common usage for sometime thereafter as well. "Do not worry about the money.  Do your job. Bring the Dosas fast", said the man as he moved to the wash basin in the corner of the hall to wash his face and hands. When he returned to his chair, the boy again looked at him. "Have you ordered the dosas?" asked the man.  "You have not yet shown me the two annas", said the waiter boy.

*****  

Christine Francis was the personal assistant of the owner and Managing Director of the big Hotel.  The hotel was in financial trouble and the owner was unable to get renewal of the mortgage due that week.  Many in the administrative circle of the hotel knew that the hotel may be up for sale.  The owner of a large chain of hotel was arriving that day for discussion and finalization of the purchase. Everyone of the employees, Christine and Assistant General Manager McDermott included, were tense and worried about the continuance of their own employment. On the way to lunch, Christine stopped at the AGM's office and realized that he was seized with many problems at the hotel that had cropped up all at once. One of the problems was that one of the guests was moaning heavily in his room. Having come to know that the name of the guest was Albert Wells, she recalled that he was a regular guest at the hotel.  She remembered the name specifically because during one of his earlier visits, Albert Wells had a complaint about a laundry bill of 75 cents.  He insisted that the bill did not relate to his room.  The supervisor offered to waive the charge with a view to avoid a complaint.  The guest did not accept waiver, but insisted that it be withdrawn properly and not treated as a waiver. On verification of the records, it was found that the bill actually belonged to some other room and was deleted.  Since he was a regular guest at the hotel, Christine offered to check on the guest personally.

When the room was opened with a passkey, it was found that Mr Wells was very sick and unable to breathe due to acute bronchitis. He had very little luggage and modest belongings.  The old man was shifted to this least preferred room by the front office staff to accomodate another guest as Mr Wells would not protest such a change.  The air conditioner of the room was not working properly and the guest became very sick.  Christine acted swiftly, arranged a doctor and got the guest shifted to a better room. Wen the doctor advised hospitalization, Wells did not agree and asked for a attending nurse round the clock.  The nurse was arranged, but Christine was worried about payment of the bills.  On her advice, the credit investigator of the hotel contacted the bank through which earlier payments were received. The bank informed that Mr Wells's cheques would be honored by it.

The old man invited Christine and the AGM for lunch at one of the expensive dining rooms of the hotel, as a gesture of thanking them for their prompt action and arranging for medical aid.  Christine wondered how this man could pay the heavy bill of the restaurant.  On his visits, the old man stayed in modest rooms and his bills were always small.  He was not known to spend on tips and luxuries.  She did not want to burden the host.  She found a way out by contacting the head waiter at the restaurant.  A small bill was to be presented to Mr Wells and the remaining amount to be debited to Christine's account.

*****  

"You have not yet shown me the two annas", said the waiter boy. Summer heat and hunger had made the man tense already.  This derisive comment by the boy infuriated him. "Call your manager or owner.  I want to talk to him", said the man in a high voice.  The boy was now afraid and did not know what to do.  "Dosas will be ready by now.  I will get it fast", he said.  "I do not want dosas now.  I want to talk to your owner", shouted the man. Hearing the commotion in the restaurant hall, the owner of the place came to the table.  "What is the problem, Sir?" asked the owner politely.  "I asked for two masala dosas. Your waiter boy wanted to see my two annas before ordering the dosas.  I now want to buy your hotel. Please fix a price and I am ready", he said.  Before the owner could say something else, he took out the wide belt from his dress.  The belt had many pockets  with wads of currency with them.  He placed them on the table and told the owner, "Cash is ready.  If this is not sufficient, treat this as an advance.  Fix a fair price for this place and tell me the amount.  I will be back with the remaining amount tomorrow morning to conclude the deal", thundered the frail man.

Parappa Basavannappa Patil was short and frail, but he was one of the biggest farmers of the area.  He was also a commission agent and brought the produce from other farmers and by years of hard work had built an empire.  Cotton, Chillies and pulses were his forte.  His appearance was deceptive and he never flashed his status or financial strength.  The owner of the restaurant and others present there profusely apologized and pacified him.

*****

While having lunch with the old man, Christine enquired about his profession and what he did for a living.  When he detailed his life's story, Christine suddenly realized that Mr Wells actually owned a Gold Mine and such other things.  The Assistant General Manager asked, "If you will pardon my curiosity, other things such as what?".  "I am not sure of all of it. There is a couple of newspapers, some ships, an insurance company, buildings and other bits and pieces.  I bought a food chain last year".  The head waiter presented the bill.  The old man looked at it, smiled, signed it off.  He had understood what was the reason behind the small bill. As the startled Christine and AGM stared at the old man, he smiled mischievously and said , "I wanted to tell you tomorrow.  I may as well tell you now.  I just bought this hotel." Then they realized that the old man's frequent visits to the hotel was actually to study its status and strike a deal without anyone suspecting it.

*****      

My father had been on a to a trip to North Karnataka in 1965.  He told Parappa Basavannappa Patil's story to us on his return from the trip.  Christine and Albert Well's story is a part of the famous novel "Hotel" by Arthur Hailey.  This novel was also first published in 1965.  Details differ but the central theme remains the same. In both instances, hotel staff doubted the capacity of the guest to pay the bills.  If arrogance was the underlying feeling in Patil's case, it was compassion in Albert Well's instance.

The message from both stories is simple and straight forward.  A person is not to be judged from his appearance or habits alone.  There are many who lead a simple life despite their affluence.  This also applies to knowledge and scholarship. Those with depth and profound insights may keep a low profile.  Empty vessels often make much more noise!          

200 Bags of Groundnut Oilcake

There is a general impression that Banking is carried on in Bank premises.  This is an impression not only with the general public, but also among bankers themselves.  What is done within the four walls of a bank branch is mainly Accounting and very little of actual banking.   Banking is mostly in outdoors and that is where the real action is.  Practical Banking is actually in Agricultural fields, factories manufacturing various products, markets and bazaars.   A banker who loses touch with the outside world will be put to lot of difficulties.  An arm chair banker is no banker and without constant touch with realities of happenings outside his four walls, he is a lame duck and an easy prey.

One of the first lessons I learnt in Banking was through 200 bags of groundnut oil cakes.

This was nearly four decades ago.  I had just started working in a bank branch at a place well known for agriculture produce.  Cotton, ground nuts, pulses, jowar (a type of corn), chillies were the main crops grown in the area and there was a big trading market as well in that place.  The major customers of the branch were traders in these commodities.  Just as mobilization of resources in the form of deposits is important for banks, profitable deployment of such resources by lending to all sectors of the economy is also equally important.   Traders are an integral segment of market economy and this branch was known for lending to traders in these commodities.   Many of the traders were in this line for generations and enjoyed excellent reputation in the market.

During the 1960s and 1970s, there was a severe strain on the resources and lending was subjected to several restrictions and strict supervision by the Reserve Bank of India.   Guidelines famously known as "Selective Credit Control" and "Credit Squeeze" were in force and lending to trading sector was specially marked for additional controls to curb hoarding.  In order to reduce availability of funds to traders, margins were increased suddenly, thus bringing down the drawing limits (Please read blog:   http://roundtheclockstories.blogspot.com/2011/11/haircuts-and-stock-markets.html  for effect of margins on borrowing) even though traders were able to provide adequate physical securities and stocks as security.  In short, traders were finding it difficult to raise funds despite having sufficient stocks.

There was another difficulty for the traders.  Sanctions of borrowing limits to them (and also other sectors) were in many forms, main types being Cash Credit  (popularly called as "Overdraft") and Discounting of Bills. Limits against discounting of bills were further divided as against clean bills and documentary bills.  Clean bills discounting limits were without any security backing and such limits were very frugal and almost negligible in relation to the volume of business of the trader.  Documentary bills limits were relatively better as they had the security of documents of title to goods in transit; general examples being Railway Receipts and Motor Transport Receipts (RRs and MTRs).  Limits against RRs were sanctioned relatively more liberally as against MTRs on the reliability factor.  In case of default by the party, banks could take delivery of the goods sent by Railway wagons or Lorries and realize the lent money by selling the goods.

There were some reporting requirements by banks to RBI for monitoring purposes.  One of the statements was called Form-C, in which details of loan outstanding against different commodities, classified as sensitive commodities, was to be reported periodically.  Entire working in those days was manual and not even electronic calculators were available.  All of us were provided with a book called "Kapoor's Calculator",  using which interest chargeable was manually calculated and checked.   Any wrong calculation would result in loss of income to the bank and audit objections on these issues were dealt severely.

One of the well know traders in the locality was sanctioned  big borrowing limits for his trade in my branch.   The limits were adequately secured by mortgage of shop and big open area attached to it where large quantities of commodities were stocked.  The party was financially sound and was quite solvent.  Each day some bills would be given for discounting and the funds thereof would be used for further buying the commodities.  I had just joined the bank and put on the seat for discounting of bills.  Arrival of the party's representative at the branch meant more work for me as he would bring bundle of bills for discounting.  A senior official who was preparing the statements of disclosures to RBI taught me how to handle the work. It basically consisted of entering the details, accounting the bill amount, calculating the interest and discount charges, sending the bills to another branch for presenting to the buyer for recovering the money and also accounting the payments properly when received.  One of the things he specifically told me was to note the item dispatched against which the bill was drawn in the last column of the register.  The description of item consigned would be available in the RR or MTR, usually with words like "200 bags said to contain groundnut seeds" etc. The disclosure statements would be prepared by aggregating such entries at the end of the month.

During the first month of my working the party had produced several bills covering consignments of several commodities like Groundnuts, Groundnut seeds, Groundnut oil cakes and grains like rice and jowar.  I had noted the consignment items dutifully in the last column.  At the end of the month, the senior official advised me to total the amounts item-wise to enable him to classify in the reporting statement.  I complied with the advice and found something amiss in the case of Groundnut oil cakes.  While all consignments were for 200 bags of oil cakes, the amount of bills in rupees was 17,000 initially and had gone up to 34,000 during the middle of the month and was as high as 45,000 at the end of the month.  I mentioned this aloud while handing over the summary of the month's bills.  There was sudden activity in the branch and the matter was reported to the Branch Manager.  Branch Manager called for the entire records and after scrutiny telephoned the party's office and called the representative to the Bank.  There were some discussion on the issue.  In the course of next two weeks all these bills were paid  and thereafter the branch stopped accepting bills covering dispatch of oil cake consignments for discounting.

Oil cake is a mass of seed from which oil has been extracted or expressed, and is used as feed for livestock.  In India nearly half of the area for cultivation of oil seeds was covered by groundnut and the nuts have as much as 40% oil content.  Groundnut is a native of South American Countries, mainly Brazil, Peru and Argentina.  It is said to have been introduced to India in the 16th century from one of the Pacific islands after traveling from South America.  Since most of the oils now used in cooking is hydrogenated oils, we are  denied the pleasure of  the taste and aroma of items cooked in oils like groundnut oil, til oil, coconut oil etc.  Sesame oil alone appears to be used in original form in some parts of the country.

The actual value of  200 bags of oil cake was much less than shown in the bills given to the bank.  As and when the credit availability became tight and margin was increased on stocks at the godowns, the party increased the value in the bills and started obtaining higher level of funds against oil cake bills.  There was an understanding between the buyer and seller and the bills would be paid by the buyer for full amount after getting the difference amount from the seller through telegraphic transfers.  Such bills are called as "Accommodation Bills" in banking language and in case the party fails to pay the bills, banks are exposed to loss as the value of goods will be much less than the funds advanced against them.  In those days banks were maintaining  a register called "Daily Rate Register" in which market rates of various commodities were noted on daily basis to enable the branch to keep track of price movements and safeguard bank's interests.  As groundnut oil cakes were not being advanced against except as bills, the rates were not monitored.  Party took advantage of this loophole and drew additional funds from the bank through such bills.  Today such register is not required as a visit to krushimaratavahini.kar.nic.in will give daily rates for all agricultural commodities in Karnataka and similar websites are available for other areas as well.

After about one year I was transferred from that branch.  On the day of my leaving the branch, this party's representative, who came to the branch daily for the firm's banking work, requested me to join him for lunch.  When I declined due to last minute arrangements and winding up, he insisted to have dinner before boarding the bus in the night.  While having dinner he thanked me for the favour to him.  I did not understand what he had in mind.  When I asked him what was the favour, he told me that he was opposed to getting the oil cake bills discounted for higher value but his mota seth (head of the firm) directed him to follow instructions.  Due to my pointing out the discrepancy bank stopped accepting such bills and he and the firm were spared of further embarrassment and loss of reputation.  How long this practice was going on and whether experienced people in the branch were not aware of it,  was a question I never asked.