within seven days after allotment, the remainder in four instalments of £1 each, with at least sixty days' interval after the second instalment, and by notice of twenty-one days.

The deed of settlement to be drawn by an eminent legal practitioner.

Should one-third of the capital ever be lost, the company to be dissolved, all its transactions closed, and its net assets distributed among its shareholders. Accounts to be made up quarterly, and the balance-sheet always open to the inspection of the shareholders. Dividends half-yearly.

XXIII.-LOAN BANKS.

FRIENDLY LOAN SOCIETY.

Enrolled pursuant to the provisions of 5 and 6 William IV. ch. 23.

The Friendly Loan Society is established for the purpose of lending at interest, to industrious persons of good character, small sums, not exceeding £15, to be repaid by weekly instalments.

The great advantages belonging to this method of assisting those who are in temporary distress are now very widely acknowledged. "The impossibility of obtaining the use of a small sum of money at particular moments frequently causes whole families to fall into sudden distress, from which they can never again extricate themselves; and frequently excludes an industrious man from all hope of bettering his condition when opportunities arise. And this occurs even where it is evident that the means of subsequent repayment might be produced with ease and certainty." The benefits of such a society extend even beyond the alleviation of these evils. " Wherever a loan fund has been established, its tendency has not only been to prevent distress, but the invariable and immediate consequence has been to promote industry, honesty, sobriety, and other moral virtues, within the circle to which it extended, among that numerous class who, from their situation, looked forward to the possibility of wanting its aid at any future time."

The immense value of such societies to the poor industrious classes is clearly indicated by the existence of the numerous money clubs already established among themselves.

These money clubs are associations for the purpose of lending money at interest to the subscribers in turn; but partly through the ignorance of their members, partly through the interested rapacity of those who profit by their abuses, they are often productive of greater evils than they were intended to remedy. The extent to which these clubs have long existed in the metropolis is almost incredible. Almost all are ill-conducted. Charges and forfeits of the most extravagant and oppressive kind are accumulated against the borrower, who seldom pays less, in the whole, than £25 per cent., at

the least, for the use of the money he obtains. All the business is transacted in public-houses, where, by the rules, a certain quantity of liquor must be paid for by each member at every meeting. The applicants for a loan are made to ballot for precedence, being thus forced to pay heavily, and to gamble for the chance of being allowed to borrow money at an usurious rate of interest.

It has been ascertained that the members of these clubs are, for the most part, sober men, in regular employment, and, with few exceptions, married men, with families. Many of them are aware of the exorbitant and cruel character of the rules of the society to which they belong, but submit to them rather than forego the delusive advantages which it holds out to them.

Benevolent persons have promoted the establishment of loan societies on better principles, in various parts of the kingdom, and with the most gratifying results: an account of some of these may be seen in Mr. Trench's pamphlet already quoted. In Ireland, these societies have been long known, and are warmly panegyrized by the parliamentary committee appointed to consider the distress of that country. At Tunbridge, Bath, Bristol, Great Missenden, Lorton, and other places in England, the same plan has been followed with the same good consequences. A society of this kind, termed the Benevolent Loan Society, has existed in Sloane Street since 1817 : and, in nineteen years, has issued the sum of £22,438 in 3,422 loans, averaging therefore only £6 11s. in each loan, although there is no fixed limit to the sums which it advances. This shews how small a sum is, for the most part, needed in individual cases. The last-named society does not require interest to be paid on its loans, a plan which has been rejected, upon mature consideration, by the promoters of the Friendly Loan Society, as not calculated to give the fullest development to the advantages expected from its in

stitution.

In the last session of parliament, a most useful act was passed for the encouragement of Loan Societies, exempting their securities from stamp duty, and giving a power of recovering arrears of loans by summary process before a magistrate.

The co-operation of the judiciously benevolent is confidently appealed to for the support of the Friendly Loan Society, by the agency of which they will be enabled to effect an incalculable amount of good at a very trifling sacrifice.

RULES OF THE SOCIETY.

1. The capital is to be raised by voluntary advances, for which, if not less than £5, debentures on the stock of the society will be given : each contributor of £5 or more will receive 3 per cent. interest on the amount of his advance, and will be entitled to withdraw it on giving three months' notice.

2. Applicants recommended by contributors will have a preference in obtaining a loan.

3. Donors of one guinea or more annually, or if ten guineas in one sum, will have the same privilege as contributors, in recommending applicants for a loan.

4. All sums received, whether by way of advance or donation, will be carried to the account of trustees, who will authorize the application of them to the purposes of the society, but will not be liable for any deficiencies.

5. The business of the society will be transacted by a committee of management and a treasurer, chosen by the contributors of £20 or more, and donors of ten guineas or more. The treasurer will give security to the trustees, if required, according to the act, but will not be liable for losses from loans, if made according to the rules of the society.

6. No money will be lent but to persons who can produce to the committee a satisfactory certificate of good character, besides the security of some solvent person for the repayment of the loan.

7. To meet the expenses of management, every applicant for a loan must pay ls. for a copy of the rules; and if a loan is granted, will be charged £5 per cent. interest on the sum advanced, which he will be required to repay by small weekly instalments.

A list of donors and contributors will be published, and a meeting called for the purpose of choosing the managers as soon as a sufficient sum is subscribed for, to enable the society to commence operations.

For a farther account of loan banks, and of saving banks, I refer the reader to my " History and Principles of Banking."

SECTION XII.

REPORT OF THE COMMITTEE OF THE HOUSE OF COMMONS UPON JOINT STOCK BANKING.

The following are the members of the committee.

Mr. CHANCELLOR OF THE EXCHEQUER.

SIR ROBERT PEEL.

MR. POULETT THOMSON.

SIR JAMES GRAHAM.

MR. CLAY.

MR. GOULBurn.

MR. F. BARING (Portsmouth)
MR. LOCH.

MR. MORRISON.

MR. JOHN ABEL SMITH.
MR. PATTISON.

SIR JOHN WROTTESLY.
MR. MATHIAS ATTWOOD.
MR. STRUTT.

SIR THOMAS FREMANTLE.

This committee was nominated by the Chancellor of the Exchequer; but the motion for a committee was made on the 12th May, 1836, by Mr. Clay, the member for the Tower Hamlets.

The committee examined the following witnesses.

Mr. Edmund Burdekin, Manager of the Bank of Manchester. Mr. John Stanway Jackson, Manager of the Manchester and Liverpool District Bank.

Mr. Robert Gilbert, formerly Director of the late Norwich and Norfolk Banking Company.

Mr. Thomas Ninamo, formerly Manager of ditto.

Mr. John Amery, Manager of the Stourbridge and Kidderminster Banking Company.

Mr. Paul Moon James, Manager of the Birmingham Banking Company.

Mr. Joseph Gibbons, Director of ditto.

Mr. Vincent Stuckey, of Stuckey's Banking Company.

Mr. Walter Gibson Cassels, London Agent of the Northern and Central Bank of England.

General Austin, Director of the North of England Banking Company.

Mr. John Harding, a Banker at Barlington in Yorkshire.

Mr. Simon Martin, of the firm of Gurney's, Birkbeck, and Martin, Bankers, Norwich.

Mr. John Wood, Chairman of Stamps and Taxes.

Mr. Samuel Gurney, of the firm of Everand Gurney and Co. Bill Brokers, London.

Mr. Samuel Bignold, formerly Director of the late Norwich and Norfolk Banking Company.

Mr. Daniel Robertson, Manager and Agent of the National Provincial Bank of England.

The committee delivered the following

REPORT.

The secret committee appointed to inquire into the operation of the act of 7 Geo. IV. c. 46, permitting the establishment of joint stock banks, under certain restrictions, and whether it be expedient to make any alteration in the provisions of that act, have considered the matters referred to them, and have agreed upon the following report :

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Although their inquiries have not been yet brought to a close, your committee feel it to be their duty to state that the evidence already taken before them has fully proved not only the expediency, but the urgent necessity of having instituted a close and searching examination into the laws which regulate joint-stock banks, the principles on which those establishments are conducted, and the

consequences to which they lead. No subject at the present moment more deeply important to the interests of the public, as well as to the interests of individuals, could have engaged the attention of parliament; and your committee have endeavoured to apply themselves to the execution of their duties with diligence, attention, and zeal.

"In order to bring before your committee the more important facts of the case, their chairman was instructed to address to the several joint stock banks throughout England and Wales a circular to the following effect :

In pursuance of a resolution of the House of Commons, adopted unanimously on the 13th instant, a committee has been appointed "to inquire into the operation of the act of the 7th Geo. İV., c. 46, permitting the establishment of joint stock banks under certain restrictions, and to examine whether it be expedient to make any alterations in the provisions of that act." Of that committee I have the honour to be the chairman, and at the first meeting I was requested to obtain from the joint stock banks such information as may enable the committee to execute the duties confided to them by the legislature.

returns."

"As it was considered just to the parties concerned that the committee appointed should be one of secrecy, for the purpose of avoiding any disclosure of private transactions not required by the public interest, in place of transmitting to you the usual order of the committee, issued under the power and authority of the House of Commons, it has been judged more advisable that this communication should be addressed to the joint-stock banks by me as chairman, and that your reply should be addressed under cover to “ the Chancellor of the Exchequer," and marked "confidential bank I inclose two papers, calling your attention to the particular points on which the committee require information, and you will be so good as to fill up the return with as little delay as possible. The account of liabilities and assets (No. 2.) should, if possible, be furnished for the three last half-yearly periods to which your accounts are made up, and the answers to the questions in the paper (No. 1.) may be made in reference to your last period of balance. This may, I hope, diminish the trouble imposed upon you; and the returns called for may also limit the examination of witnesses. You will not hold yourself precluded from adding any explanations not coming within the scope of these inquiries; and I can assure you, that whilst I place every confidence in the zeal and readiness with which you will promote the objects of this inquiry, it is at the same

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