The Express.
London, England, 1866-05-14 00:00:00

BUR ceNrEMboRAIRIES.
, (rms DAY.)

• •
THI nowie maarsr.
The Times treats of the financial panic it a lead•
ing article extending to the unusual length of three
columns, and in the City Article the subject is discussed
still further. The rise and formation of what are
Galled finance companies are traced—those socie-
ties being described as compounded of all the
commercial novelties which have made and unmade
to many colossal fortunes, and as combining in one
the Bank, the' discounter, the railway, the iron-master,
the merchant, the stock-jobber, and that specious form of
limited liability which induces the hope of profit. on a
very large sum with the risk of a very small one. The pub-
lic in the meantime have been blind to such considerations
as that they were quite at the mercy of persons of whom
they could know very little, and they would not perceive
that the art of making money is the prise 'of special talent,
great industry, rare opportunity, or singular chance, and
they would forget that character is as important in com-
mercial affairs as it is in families and households. The
moat flagrant oversight, however, has been that the
financiers have not drawn money from the people
for the use of sovereigns and governments which
posses some sort of stability, but for railways of unex-
ampled daring and extravagance, contractors who can
seldom know whether they are millionaires or bankrupts,
speculators in cotton and iron, and even in warrants that
did not represent iron, and companies which had pur-
chased the interests of banks, some of them notoriously
the shadow of a great name, a sound, and nothing more.
This system is a complete inversion of the process of
banking. These new companies do not propose simply to
take care of the money of depositors, but to do business
for them, whatever business it chooses, and give them a
share of the profits. Yet for many reasons they must
have more than their share of the ordinary risks of trade.
The true authors, however, of this huge mischief are the
public themselves, who will not be contented with a
tedious 3 per cent., and who go on holding shares till
the depreciated shares will no longer cover the loans,
and the wreck must be abandoned to its fate.
Under some convenient neutral name they want some-
thing which shall yield them the interest not of trade
but of speculation. The Times abstains from names and
particulars, but the disclosures made to the Bank of
England and the Chancellor of the Exchequer on Friday
simply show that even our largest banks, those in the
bast repute and with the largest business, have been going
on, no one can say how long, upon the supposition that
there never meld be a run on them, that they might
hold any amount of deposits with only • very small
proportion of reserve to meet them in the time
of need, and that they simply relied on the aid
to be obtained from the Bank, if necessary by •
suspension of the act. That measure has not been left, as
many hoped, to its purely moral force. The Bank has had
to draw on its resources to an extent for which we believe
only one parallel can be found in its history. It now
devolves on the banks and financial companies to make
good their position in something like a calm after the
storm.
The Telegraph disputes the notion that the Bank Act
bad better be abrogated altogether. As a general rule, the
Bank issues ought to be restricted, so as not to exceed the
quantity of gold and securities—in other words, the means
of payment. But there arise every now and then
emergencies when that prudent rule may be pro-
perly violated, and such cues must be judged upon their
own merits. It would be impossible to define beforehand
by a general statute all the circumstances in which the
relaxation may be expedient. Consequently, no provision
is made by law for these exceptional measures, and they
are left to the discretion of a competent and impartial
authority—the government of the day, acting in conjunc-
tion with the most eminent financiers, whose counsel it
can command. If all these persons concur in the belief
that a crisis has arisen which just;fies a departure from
the ordinary rules of administration, the public may have
confidence in the accuracy of that opinion.
The Star agrees with the suggestion of the Economist,
that the Chancellor of the Exchequer and the First Lord
of the Treasury should have the legal power of suspending
the act of 1844. Something more is, however, wanted in
the shape of a permanent addition to the money of the
country, based upon the same unmistakable security as
that which now exists for the unconvertible portion of
the bank issue, in order to bring the amount more into
keeping with the extended business of the country and
the legitimate development of banking since 1644.