Abbildungen der Seite
PDF
EPUB

profits, but the capital employed now is worse paid than it used to be. Persons in employment have tolerable wages, but the majority are unemployed; but this want of employment, and consequent discomfit, is not at all to be attributed to the banking system, or the state of the currency, nor was distress consequent on the withdrawal of the 17. notes. It has been getting worse for the last twelve or eighteen months. The notes are never forced into circulation; they are only paid for wages or personal expenses. The circulation has never been doubled, or diminished by one-half, but has remained pretty steady. There is not now the same consumption of commodities in Leeds that there was before the present scarcity of employment. The loss of circulation by the suppression of 17. notes is about 30 per cent.; but the accommodation afforded has not been in the least affected by that circumstance. Part of the increase of bank business is owing to the stoppage of a neighbouring bank in 1825. The 30 per cent. reduced by the loss of the 17. notes is now supplied by an equivalent of amount of gold in circulation. The stamps being so expensive on small bills of exchange has very much reduced them. The specie of the Leeds bank is above one-seventh of the deposits, and the Bank of England notes and specie always cover more than the circulation. It is impossible to state what proportion the specie bears to the whole of the liabilities.

3. Panic of 1825. Circulation of Branch Banks. Does not think the present system can be improved. (p. 1367.)

The store of specie can be increased, and the store of bank notes also, in the first moment of alarm, for the bank keeps an account with the Bank of England, which is a considerable saving of expense. There was a supply from London during the panic of 1825, both of Bank notes and of gold. There was no run at the bank at Leeds during the late political discredit in May last. No reference is made to the foreign exchanges in the issue of the country bank notes. The bank looks to nothing but the wants of its customers for wages or local expenses. The establishment of the branch bank at Leeds lowered the rate of interest, and increased the difficulty of charging commissions; the branch bank charges no commission, and allows no interest. The Leeds bank does not make its advances for commercial and extensive dealings in its own notes. They are issued only for local purposes, but if all country banks neglect the state of the foreign exchanges, and go on issuing as demand increases, there might be danger-this was perhaps the case in 1824 and 1825. But at that time the Leeds bank only extended its issues 15 per cent., and that by the action of the public. It is not possible for every man to ascertain with accuracy the exact amount of circulation wanted for the whole country. Many country banks stopped payment in 1825, through no fault of theirs, but from, the panic in the public mind. The banks had not in any way contributed to that panic; but the distress was much increased by the failure of a great banking house in York

shire: that house had many establishments, and proceeded on principles inconsistent with common safety and common sense. If any man asked discount for a 1000l. bill it would be given in Bank of England notes, the country notes being issued only in small sums, for they are not payable in London, nor applicable to general purposes. The establishment of a branch bank in Leeds has been advantageous, where it has lowered the rate of interest one per cent. and is a great deposit for gold: it gives the public access to the London market, and enables a Leeds manufacturer to send his bills to his London agent, and have them discounted at the low London rate of interest, with only the extra charge for postage, and afford facilities for the safe transmission of money to any town in the kingdom where a bank is established. A speculative bank of issue in Yorkshire would not make a permanent impression, they might, if they took three per cent., get some customers at first; for Yorkshiremen, like other men, will go to the cheapest market, but it would not last without known capital. If there were a choice, it would be preferable to the banker to have the branch bank near him to being without it. It interferes very little with the private bank, and assists it materially. As now conducted, they are advantageous to the public. On occasion of the new renewal of the charter, there is not a single improvement, as regards the effect of the Bank of England and its branches on the public of Leeds, that could be suggested. The present arrangements are perfectly satisfactory. If the branch banks were ultimately to adopt the rules, and give the accommodation of the private banks, they would take all the customers, their credit being so much higher. The branch bank of Leeds remit the king's taxes collected there.

CHARLES SMITH FORSTER, ESQ.
Banker at Walsal.

1. Principles of Circulation, &c. (p. 1459.)

About one-sixth of the liabilities of the Walsal bank belong to its paper circulation, the remainder to deposits. The notes of this bank are payable in sovereigns. The amount of issue is regulated by the demand of the customer, and not at all by reference to the foreign exchanges. But the issue and circulation of the notes is a small portion of the business of the bank, and with regard to the discounts generally, the foreign exchanges are referred to. The notes are merely instruments to effect the discounts with. Their share in the discounting is very trifling; far the greater portion is paid in cash transfers. The party presenting a check has his option, gold or notes. The bank is rather singular, however, in respect to Bank of England notes, for those it does not issue, the branch banks being considered rivals. If Bank of England notes were demanded they would not be paid, but gold would. If the party dislike the

local notes, he is offered gold. The neighbouring banks, and the branch banks, issue more paper than this bank of Walsal. The notes of the neighbouring banks are payable in London, but they do not refuse to circulate Bank of England notes. They keep a store of Bank of England notes, which the Walsal bank (on principle) refuses to do, as forwarding the views of its rivals. This is made palatable to the local public by an increased accommodation of another kind. The manufacturer or employer generally draws on the bank to pay wages, &c. and takes half gold and half local notes. When the Bank issued 17. notes, they were generally to twice the amount of those of 51. and upwards. The 51. notes now above them, amount to one-fourth more than they did before the 11. notes were abolished. The Bank used to keep one-third of its circulation in gold, it now keeps less, because it has made an arrangement to be always readily supplied with gold.

2. Political Panic of May 1832. (p. 1490.)

During the political discredit arising from the ministerial interregnum in May last, the credit of the Bank of England was so low at Walsal, that its notes were brought in abundantly; a commission was charged, then it was doubled; but still the notes came in, and would have continued to do so, had the commission been trebled. The people of intelligence at Walsal, were aware that the government was in jeopardy, and that the Bank of England would fall with it, and that opulent and prudent country bankers would survive the revolution, and their notes were preferred. This, no doubt, appears very ridiculous to the committee, but it was a prevalent feeling. Persons of strong political opinion thought they promoted the success of that opinion by pressing the Bank of England. The preference of the local notes to those of the Bank of England only lasted six or eight days; and, generally speaking, the persons were in a very low class of life. This was the account given by the clerks on the return of witness, who had been absent part of the time. There was no actual substitution of local notes for those of the Bank of England; but there was a preference given to them in circulation. There was no account kept of the amount of Bank of England notes exchanged at a commissionthere was a very small amount of commission in all; but the feeling was such as has been described. One banker, who had given up issuing his own notes, had the Bank of England notes brought to him for gold, which he refused, and this increased the distrust; a premium was offered to effect the exchange. Some of the persons who wished to exchange Bank of England notes were of the middling class; one in particular, was a member of a political union, and was remarked on, when he made his appearance in the bank, as "a very dangerous political character;" but generally, it was fear, and not political feeling, that caused the run-that fear might be partly excited to serve political purposes; but there was not any placards with, "Go and exchange Bank of England notes," exhibited at Walsal.

3. Policy of issuing Bank of England Notes, &c. (p. 1498.)

The Bank of England notes were almost a novelty in the neighbourhood. They were circulated to a very small extent-they are the almost universal circulation. One-half the banks in the Walsal district have agreed to quash their own notes, and issue only Bank of England notes; and that proportion is increasing. The opinion of those bankers is, that it is more for their interest to use Bank of England paper than to circulate their own. "Is that your own opinion?"" It is not." The issue of its own notes gives an éclat to a country bank-answers the purpose of a tradesman's cardmakes the bank notorious-and brings deposits and customers. When a banker gives up his circulation, and pays in the notes of the Bank of England, he degrades into a bill-broker, and is in a less important station in the commercial world than when be issues his own notes, and pays them honourably. At the time of the run in May, the proportion of bullion in circulation was increased as a caution. It is a banker's prudence and his duty to prepare for any alarm by a greater quantity of bullion in proportion to his stock than quiet times demand. The Walsal bank has also a depôt of cash in another place, or, certainly, the amount of bullion kept would not be sufficient to meet all liabilities. Nineteen out of twenty of the notes are payable and paid in London.

4. Branch Banks injurious to Bankers, beneficial to Traders, state of Trade, &c. (p. 1508.)

The branch banks have taken away customers and diminished charges they have done the private bankers great injury. Before the establishment of the branch Bank of England at Walsal, no bill was discounted for any merchant under five per cent., now the tradesman can have his bill discounted for three and a half or three per cent. This is certainly an advantage to the public, but then the tradesmen made greater profit when they paid five per cent. than they do now. The Bank of England appears to be going on to engross the whole circulation of Staffordshire, and that would prevent the public from converting their paper into gold at the moment of their pleasure so to do, and would cause a more frequent suspension of cash payments. The principal trade of the Walsal neighbourhood is in iron-that trade has been much depressed lately, but the manufacturing towns are not in extreme distress now. However, the masters have large stocks on hand, and it is a convenience, under such circumstances, to save one and a half per cent. on their discounts. The branch banks have certainly arrested the progress of insolvency, which was proceeding fast; but there is a feeling of despondency as to the end. It is not an advantage to the public that banking profits should be reduced below a reasonable rate. The Walsal bank has issued notes for half a century, and in all that time only once suffered from forgery, and that to the extent of 10. only. The branch banks certainly do business at a rate of profit which no banking establishment could exist on; but their

notes stay longer out-they give no interest on deposits, and have little expense beyond that of their establishment. A banker of capital, rather than be forced to do business at that rate, would give up his business. The discredit into which the master manufacturers have fallen is owing to the state of their trade, and not to the establishment of branch banks. The country bankers, however, are less willing to accommodate them, for they conceive their first shop would be the branch bank, and that when they come to the private bank they have some bad reason for it. Wages could never be paid without the assistance derived from banking, and without the privilege of coining notes the accommodation would be less. For, that there may be no unemployed money, it is all sent to London; then parties come with bills to be discounted, and the notes are coined in an instant; whereas, if the money were to be obtained, the assistance would be more tardy. On the renewal of the charter, it might be suggested, that country bankers have 1:0 right to ask for the withdrawal of branch or joint-stock banks, but that the privilege should be common to all. If country notes were received in payment of revenue, as those of the Bank of England are, to the amount of a deposit lodged with government, on a rate of interest regulated by the market, it would infuse new life into the now dying concern of country banking; and prevent several opulent bankers from retiring, as they are now about to do. There is nothing in the charter to prevent this-it is a matter of regulation at the Treasury. The plan would increase the circulation, and give the people government responsibility without the evil of government currency. Country bankers should be left at liberty to adopt or reject this plan. There is no objection to be urged against the establishment of branch banks.

TUESDAY, JUNE 19.

J. B. WILKINS, ESQ.

Banker at Brecon and Merthyr Tydvil.

1. The manner in which the Issues of his Bank are made; Amount of them, &c. (p. 1579.)

The Merthyr and Brecon banks issue paper in the discount of bills and in loans or promissory notes: the issue is above one half the deposits: the customers are generally agricultural persons with joint promissory notes, or manufacturers with their trade bills. The former are not negociable; their form is "we jointly and severally promise to pay Messrs. Wilkins and Co., or order!" Some are payable in London, the interest on them is five per cent. On about one half of the deposits three per cent. are paid after they have remained six months. No notice is required for their withdrawal, neither is interest given nor commission charged on the drawing account. The circulation in September 1818, was 89,0007; in 1827 (the maximum), it was 120,000/.; in 1831 (the minimum),

« ZurückWeiter »