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England has lent all its capital to government, yet it has the same power of overwhelming other banks through its credit. If the government establish a national bank, the necessity of its having a capital would depend on whether it paid its notes in gold or not. Even competition should not prevent the capital of new banks being well looked after. The banks in Scotland have been brought to their present perfection without any regulation as to the amount of capital; but there the business is better understood; and they must have a certain amount before they can obtain a charter.

HENRY BURGESS, ESQ.

Secretary to the Committee of Country Bankers.

1. Committee represents seven-eighths of the Bankers of England. Bankers have resolved to relinquish their Circulation, rather than give Security for it. (p. 5131.)

The committee of country bankers represents all the country bankers throughout the kingdom, with the exception of about one-eighth. The fund was formed in 1827, to protect the interests of the country bankers against the Bank of England. In 1827 and 1828, when the renewal of the charter was at issue, a deputation from the committee obtained a promise from the Duke of Wellington, that their interests should be attended to in any contemplated arrangement. The only strong opinion to which the committee have come is, that if securities for their issues were demanded, they would relinquish their issues altogether. That resolution was embodied in a petition to Parliament. With the exception of Messrs. Stuckey, Messrs. Halford, and Messrs. Elton, of Bristol, no jointstock banks have coalesced with the committee.

2. Statement of relative Increase and Decrease of the Circulation of One Hundred and Twenty-Two Country Banks, from 1818 to 1828. (p. 5168.)

From an extensive acquaintance with the country banks, witness is enabled to say, that no specific information as to the amount of their circulation can be obtained. Witness put in a statement of the relative increase and decrease, from 1818 to 1825, of one hundred and twenty-two country banks, assuming the first amount at one hundred. The number of licences is a false criterion of the number of banks; for licences must be taken out for every branch bank issuing notes, as well as the mother bank. The statement includes principal banks only, about a third of the whole in number, but issuing more than a third. It is drawn up from information supplied by the bankers themselves, and affords a very accurate test by which to judge of all the bankers of England and Wales. For this statement, see Appendix. But the average results are, that their united circulation, in 1818, being represented by 12,2001., it fluctuated as follows:

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The circulation of country bankers' notes appears to be the lowest in the year 1823, and the highest in the year 1825. The increase, from the lowest to the highest, is 16l. 1s. 1d. per cent.

It would be difficult to continue such a return to the present time, in consequence of the small notes, which some bankers began to take out in 1817, and some bankers have not taken all out yet. In one bank in Cornwall, and another in Wales (the former Grills and Co., the latter Jones) the 17. notes have never been returned, and the bankers have not re-issued them. The above statement includes some banks that after failing resumed payment, but none that did not. Not more than twenty principal banks that failed in 1825 have not resumed; 1818 was a year of high circulation. The statement demonstrates, that between 1823 and 1825, the circulation of country bankers increased about 16 per cent. It is difficult to get a satisfactory statement of the banks that failed between 1818 and 1825, and which have not resumed payment. Probably about thirty failed in 1825 that have not resumed. Some have resumed without issuing notes; others, who are not bankers, take out a licence to issue notes. In Trowbridge there were at one time nine or ten licensed bankers, and but one who was substantially so.

3. Reasons why Country Bankers object to give Security for their Issues. (p. 5176.)

The chief reason why country bankers would cease to issue notes, if called upon for securities, is, that it would be giving a preference to one class of creditors over another, the depositors being deemed as worthy of being protected against failure as those who circulate their notes; besides, giving securities would be locking up their money in the funds, which money would thus be unavailable, and be also placed in risk. If they were called on for securities, it would alarm depositors, who would withdraw their deposits; it would also set an improper mark upon them, to be required to give security for their issues, which they do not give to their cus tomers it would impeach their credit.

4. Injury that would result from the present Bankers withdrawing their Issues. (p. 5180.)

The withdrawal of the circulation of the country bankers would embarrass internal commerce, and greatly impede industry; neither could the joint-stock banks of any description supply the wants of the community as the private banks do. The Bank of England could not take up the circulation if it were abandoned by the country banks, because it would alter all their regulations; nor

could the joint-stock banks, because they must in each individual case have the sanction of the directors.

5. On the Remittance of the Taxes by Private Banks, &c. (p. 5184.) Some private bankers receive and remit the taxes, but the branch banks have taken much of that business, to the injury of the others. Bankers remitting taxes are subject to an extent, government having a prior claim; which fact has affected their credit, more or less, in the immediate district. Bankers remitting taxes do not form one-fifth of the whole. The liability to the extent is not so injurious to credit as the giving securities would be, because the amount of taxes is small, compared to the deposits, and their responsibility is only periodical; while such security, although limited, would be constantly before the public, and its object would be obvious. The security given for the remittance of the tax is in private bonds.

6. Superior Advantages of the existing System of Country Banking, &c. (p. 5197.)

Where bankers issue the notes of branch banks, they give security to the Bank of England by bills of exchange, which are no security whatever to the public. The machinery of a joint-stock bank company is so cumbrous, that it cannot give such accommodation as a private bank. Personal character, and stability in life, even with imperfect security, is considered sufficient by country bankers to justify advances. The Bank of England does not think so; and the difficulties in the operations of the joint-stock bank, although less than the Bank of England, are greater than the private bank. The accommodating spirit of private banks has produced extensive good in times of distress, and no ultimate loss is sustained, but, on the contrary, a profit on the conclusion. Such accommodation, by preserving one great concern, has often averted wide-spread confusion and discredit. Loans, on personal character, sustained by a belief in the responsibility of the borrower, are seldom made by London bankers, who do not usually advance upon the personal security of the individual, without other security, nor for an undefined period, as country bankers do. The accommodation afforded by country bankers facilitates general business, enables rents to be collected, the farmer to await his returns, the manufacturer to procure the raw material and manufacture it before his own capital need be employed, and in many ways assists commercial transactions. If all these advantages were suddenly arrested, a convulsion would be the consequence.

7. Objectionable Mode of acquiring Business by Joint-Stock Banks. Stability depends upon Profis. (p. 5216.)

The mode of acquiring business adopted by the joint-stock banks is highly objectionable: they tempt old customers from private banks, by transferring to their names shares bearing a premium, and they canvass in all directions; and every body connected with

them canvasses for them, a mode which a respectable private banker could not pursue. In some cases they transact some of their business at a cheaper rate, to attract customers; but the advantage is doubtful, for they often obtain riskful accounts, to get custom. The competition with them is not wholesome. Permanent stability depends on profits. If competition destroys the remunerating profit, bankers must ultimately fail, or be driven to abandon business. Competition that reduces the profits of banking is ultimately unsafe. 8. Delusive and unsafe System pursued by the Joint-Stock Banks.

(p. 5223.)

Some of the joint-stock banks established by Act of Parliament, are much less safe than the country banks that previously existed; others are quite as safe; but a rule, which witness believes to be generally adopted, of the York City and County Banking Company, shows how delusive their system is. The rule is, "Shareholders may have credit, or advances on cash accounts, to such extent of their stock paid up as the directors think proper." Several of the banks allow all the money paid up on shares to be available to any person keeping an account. The principle is calculated to create a class of proprietors speculating on borrowed capital; and gives a fallacious appearance of capital where there may be no capital left. It is a rule, when required, also to lend the whole capital to shareholders. A large paid-up capital is not necessary if there be prudence, otherwise it is. The number of contributors certainly affords security to the public ultimately, but resistance to a claim may be put in motion for eighteen months, or two years; and you must first obtain judgment against the secretary before you can proceed against any co-partner. As the law stands, joint-stock banks might be established with a great capital, which might all be lent back to the person who advanced it; and the bank, being left without capital, might issue notes and receive deposits, and then fail, and leave their creditors without any means of recovery except a process at law, which would take a year or two to have effect. It is in any case a difficult thing to recover money from joint-stock societies determined to resist. When such companies become insolvent, they throw every legal obstacle in the way of their creditors. Creditors unable to meet law expences may commonly go without payment.

9. Improper Motives upon which Joint-Stock Banks have been

established. (p. 5230.)

All such companies are bad; but the banking joint-stock companies are the most mischievous of all. They are peculiarly liable to abuse and mismanagement: in one instance, in about six years, such a bank made losses to three or four times the amount of its whole paid-up capital. It might be the interest of shareholders to take shares, which they can do without an advance, merely for the sake of obtaining influence. In the case of the bank of the United States, three persons lent 3,000,000l. in a private specu

lation, and the bank lost 700,000l. in consequence of these persons so using its credit. That bank has been latterly considered one of the best. Joint-stock banks have been undoubtedly established in England with such views, and in consequence of the refusal of private bankers to accommodate persons in their immediate vicinity. If the object were to make it available to all the proprietors, and not to a few, that would be legitimate. It is not legitimate in a proprietor to look beyond his profits, and become a partner, that he may borrow from the establishment. The giving facilities to traders by discounting is a legitimate object, prudently conducted; but the circumstances of the old banks refusing facilities sought by the proprietors of joint-stock banks is presumptive of something unsound. The proprietors and directors who establish a bank that they may borrow from it would be the principal borrowers, which would be a most unsound system. As the law stands, a few persons receive assistance from joint-stock bauks, and the community does not. There is a want of discrimination in their transactions. In one case, a joint-stock bank lent 15,000. upon securities upon which the private bank refused to advance 60001; the borrower failed, and the bank will lose at least 9000/. There are, however, instances of prudent management. If the capital subscribed were invested in securities, there might still be danger in allowing subscribers to do business to the amount of their shares, unless there was a larger deposit found. The amount of their paidup capital is generally small; several are under 30,000l., which is not enough. They are exposed to heavier losses; for they cannot so nicely discriminate in their transactions as the individual banker, who is more interested and mixed up in his business. The risk is increased by the branch bank: 20,000l. was an instance of one loss in that way. There is always the further security of private property, but it is difficult to get at it. In proportion as the paidup-capital is small, the dividend is large, which gives a show of prosperity. If they paid up a large capital, they should make smaller dividends. To pay up largely would so reduce the premium, that it would be equivalent to preventing the establishment of such banks. A bank recently failed at Carmarthen, when a number of gentlemen who had been largely indebted to the bank immediately proposed a joint-stock bank, in order to borrow money from it. A joint-stock banking company is formed under the Act of 1826, the shares are vendible in the market, and the individuals composing it are not subject to arrest, whether chartered or not. There is a great want of banks of issue in South Wales, and as no private capitalists appear disposed to embark in banking there, a joint stock might be established with utility.

10. Failures of Joint-Stock Banks more ruinous than those of Private Banks, &c. (p. 5296.)

By law, joint-stock banks, as compared with others composed of fewer than six partners, cannot draw a bill on London for less than 501., cannot make their bills payable in London, or draw on a firm

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