ABSTRACT
With the hopes and expectations at the end of the 1860s that the opening of the Suez Canal and the speed of efficient telegraphic communication to the whole of the East would have a positive effect on the operations and profitability of the Eastern exchange banks, the 1870s started optimisti cally enough for Mercantile Bank. However, any expectations of a new and sustained era of prosperity for Eastern banking were soon frustrated by the more or less endless fall in the price of silver. None of the banks anticipated at the beginning of the decade that the silver problem was going to be with them for over 20 years. However, the crisis of 1878 (see Chapter Six) focused attention on the situation and resulted in reduced dividends being paid by all the Eastern exchange banks and provisions being made for contingent losses due to the depreciation of silver and Eastern currencies.
