Northern Times.
Liverpool, Merseyside, England, 1857-06-15 00:00:00

TO Till EDITOR OP Till NORTHERN TIMES.

Sir.—lt was quite a slip of the pen, when, in my last letter,
I proposed to make international payments the subject of the
present one. There is much to be•said yet on our domestic
monetary system, and, until that has been said, it would
scarcely be wise to descant on international payments.

In my last it was proposed that a joint-stock company should
be formed, to be called "The Commercial Stock Company,"
and that this company should open an office to be called " The
Commercial Stock Office,' and should take such other steps
as would be necessary for enabling the public to contract
ordinary loans by means of a new description of stock, to be
called " Commercial Stook." It was also submitted that it
would be advisable for this company to be invested with
the exclusive right of acting as the agent for contracting
loans on these conditions. We have now to inquire how
these exclusive rights may be conferred on the company
without therewith conferring the power of perverting the
privilege to their own undue advantage, and to the con-
sequent disadvantage of their customers. It would seem
necessary, for the attainment of this end, that the customers
should have the power of dictating the nature of the services to
be rendered by the company, and also the rate of emolument
to be appropriated by the company in payment of such services.
In short, it would seem that the company should rank, in every
way, as being merely the servants of the customers. But, in order
to secure the company from being damaged by unreasonable de-
mands on the part of the customers, the former should have the
right of resigning their privileges, stock, plant, &c., in favour of
the customers, and of receiving in return such compensation
as may be agreed at the time of conferring the said exclusive
privileges. Perhaps some such propositions as the following
may meet the desired end.

Proposed : —l. That the Commercial Stock Company,
described in the foregoing letter, shall have the exclusive
right of n.2gociating commercial and other similar loans on the
conditions therein defined, and -shall hold and exercise thcse
privileges so long as may bo mutually agreed between the
said company and their customers.
2. That the customers of the Commercial Stock Company
shall have the right at any time to form themselves into a
Mutual Association under the provisions of thg Joint Stock
Act, and that such association shall have the right of ,dictating
the iiiture of the services to be, rendered by ths CoMmercial
Stock Company, and also of determining the rate of emolu-
ment to be allowed to the company in consideration of such

services.
.3. That in case the company should refuse to "acr,ede to t 11.3
terms and conditions dictated by the association, the latter
shall purchasd from the former their exclusive rights, privileges,
stock, plant, Etc., on the follo!ing terms, namely :-Ist.
The association shall pay to the company a sum of money equal
to the entire paid up capital of the company. 2nd. 7f the
profits divided amongst the shareholders since the formation of
the company, shall have averaged less than 15 per cent. per
annum on the paid up capital, and n'per cent, per annum on
the deposited securities, the association shall .pay to the com-
pany such a sum, over and above the amount of the paid up
capital, as shall make the mean or average annual
profits of the cohapany equal to the rates above specified.
3rd If, at the time of the association thus buying up the
privileges, &c , of the company, the latter shall have been in
existence. a less term than. fourteen years, then,' imaddition to
the above sums, the association shall pay to the company a sum
equal to the half of what would accrue to the company, at the
above rates if profit, during the unexpired term of fourteen
years.

It should be explained that the object of the last of the
above conditions is to guarantee the company a certain amount
of profit in the event of the association taking possession of
the company's privileges. Without some such guarantee no
capitalist would devote either time or money to the develop-
ment of the system. •
If a Commercial Stock Company were forarsd, and. the
above three propositions were reduced to law, the customers of
the company would be pretty certain to form themselves into a
mutual association, as soon as their .number was groat enough
to justify that step. It may be observed, therefore, that when
such association was formed; it '_sieuld very 'probably contract
with the company for the discharge of the practical. services
reqUired by the associaton, and would else include therein the
duty of guaranteeing the customers (that is, the members of
the association) against loss from fraud,' on the part of the
officials employed in'the discharge of the required duties. But
in reference to guaranteeing the customers against loss from
defectiveness of the security provided as a basis for the creation
of the proposed Commercial Stock, it would be highly to the
advantage of the customers to take this duty on themselves, so
soon as their numbers were sufficiently large to afford a fair
basis for the operation of the laws of averages. Should this
course be decided on, it would be advisable for the,
_association
to depart from the usual plan of providing a reserve fund where-
with to meet or corer losses. There should be a stringent
rule to accept no security but such as, humanly speaking,
Would involve no risk, and the business of the association
*should proceed on the assumption that no losses would be
incurred from defective security. But it should be provided
that, if at any time a loss should be incurred, a sum to cover the
amount of such loss should be raised by a pro-rata levy on- the
„Ctutomerp, such levy to be made somewhat after the following
manner :—Firstly. A. levy of not more than one penny in the
pound should be made on the amounts severally due, to and from
the customers, at the monthly balance made prior to ascertain-
ing that a loss was incurred, Secondly. Should the amount
returned from this levy be insufficient to cover the loss, a levy of,
the same rate should be made on the balances due to and from
the customers at the monthly balance preceding that on which
the prior levy was made, Thirdly. Should the return ;rem
this seoond levy be insufficient, a levy on the_
_third month
should be made, and so on, backwards, until the necessary
amount was obtained.

Some very important ad vautages would result front this
mode of covering losses, but it is not necessary to enter into
detail on that subject at present. It should be observed,
however, that these advantages could be made a means of more
satisfactorily ensuring to the proposed company, or to any
a ssociation which the company may cause to be formed, the
exclusive use of the system which that company and associa-
tion would reduce to practice. This system would consist :
_Firstly, in effecting ordinary loans, on suitable security, by
means of a conveniently saleable stock ; and, Secondly, in the
recovery of losses by means of retrospective levies on the
debtors and creditors to such stock.
It does not seem probable that the legislature would object
to grant a company the exclusive use of this combined system,
subject to the above provisions for empowering the customers
of such company to form themselves into a mutual association,
and to take these exclusive rights and privileges into their own
bands, on certain defined terms and conditions. For, under
the above arrangements, the exclusive privileges would virtually
be conferred, not on an individual company or association, bat
on the public at large—the object of the arrangements being
merely to spare the public the evil that would result if every
adventurer, who may have a glibe tongue and a genius for
drawing up attractive prospectusses, should be allowed the right
of forming companies for undertaking this class of business.
It would be utterly impossible for the intended Commercial
Stock to command the confidence of the public, if opposition•
c"al'ablea for working it could be thus easily called into ex
. •
'tence• We have learnt by rather sad experience what un-
restricted competition can do for the public in the matter of as.
surance associations. It has saddled those who assure their lives
with the expense of maintaining twenty or thirty times as
many offices and staffs as would be necessary under a wiser
system, and it has made the word "mutual assurance" to rank
almost as the synonyms for swindling. If, then, the system
herein advocated should ever be reduced to practice, let , it,
above all things, be protected from the evils which have be-
fallen the system of life assurance.
Should the reader still be haunted with ideas about the
evils engendered by monopolies, let him define, if he can, one
single public evil that could result from the monopoly here
advocated. The only parties who could have any interest in
the subject would be lenders and borrowers of money, and

every such person could, by lending or borrowing through the
medium of this one office, or any authorized branch of the
same, become a member of the association to whom the mono_
poly was granted, and, hence, a participator in the advantages
conferred by it. Let us then hope no serious objection wil
be made to granting Cie proposed exclusive use of the system.
Supposing the proposed Commercial Stock Association to
be in existence, and to be invested with the exclusive privileges
above mentioned, the wishes of large sections of the members
could be acceded to as fully as though such sections formed
independent associations. Suppose, for instance, a large num-
ber of master builders should consider that the association
required too great a margin on the security for the stock—that
is, suppose they should consider their own security to be
good for larger amounts thin the association considered it to be
good for—in that case, the objecting parties could form them-
selves into a Branch Association, and the members of such
branch could collectively guarantee the parent association from
loss from defectiveness of the security severally provided by the
said members. It would then be prudent for the parent
association to permit stock to bo created to very nearly the full
value of the security deposited by the members of the said

branch.

This would be the case, because-1. If the value, of any
portion of the proparty represented by the, security deposited
by the members of such branch should be reduced, there
would be a fair chance of some other portion increasing in
value in an equal or a greater ratio. 2. The property repre-
sented by the deposited securities would be under the direct
observation of a body of men practically engaged in building,
men who would, therefore, be highly qualified to judge of the
value of buildings. If a branch like this consisted of a large
number of individuals, and their securities consisted of build-
ings of a well assorted or average character, it would perhaps
be safe for the association to graht loans on such securities, to
within 5 per cent. of Oak full value:

Under a stilt wider latitude it would be feasible, though not
advisable, to allow a branch of this description to create stock
without consent of the parent society, to any extent which its
own members mar deem prudent. In such a case, the stock
so cceated would:be sold as a distinct sort of stocks in reference
to which the parent society would hold no other responsibility
than that of managing it, and publishing periodical reports,
drawn up by its owa' surveyor or surveyors, and containing
clear sta.enatntsof such information as may. be needful to the
security of the creditors in such special stock. A similar arrange,
went could be made with reference to stock created on any
other description of security. It does not seem likely, however,
that branch associations would derive any real advantage from
throwing off the control of the parent association, because,
in doing so, they would lessen the value of their security in the
eyes'of .be public, and would,-consequently, have -to pay a
higher rate of interest to secure their special stock from falling
below they& ue of the stock guaranteed by the parent association.
Befc;ie concluding this lettel,4-swould remark that the above
method or system"), of obtaining funds for covering-Josses, by
means of retrospective levies, is particularly applicable to life
and other assurance purposes. , When the
,present series of
letters is concluded I will venture a few observations on this
subject. JOHN BILITTRN.

P.S.--Since writing the abve letter, it has beea suggested that
many, who lack eitherithe time or the inclination to study the subject
deeply, may possibly confuse the fanctions of the intended " Com-
mercial Stock Company" with those of the " Soc le .e de Credit Mobilier"
of Paris; and since the principles on which t iat Societe is based
aro radically unsound, it may be advisable to describe, in-juxts-posi-
tion, a foil of the most salient contrasts which would exist between
the. propose 1 Company and the existing Societe.

The Credit Plobilier is a tradin; The Commercial Stock Com-
company, purposing to buy up pa y would be ~imply an agency
the snares of commer.lal or en- between those who bad money to
ginearing companies. lend, and those who required to
borrow.

The Credit Alobilier-issues cur- The Commerc'el Stock Com-
reacy notes. . parry would not. issue currency

notes, unless the Legisletare
shoald, at somefuture time, think
fit to grant the company a special
authority for so doing.

The Credit Mobilier makes a If the Commercial Stock. Corn-
profit on its circal4tion of car- p.ny should ever issue currency
reucy notes, and could not exist notes, it would (as will be shown
as a company wltlibut the help of in the bucceading letter) hand over
such profits. the entire profits of its note circu-
lation to the National Government.

The Credit !..lobilier provides The first and most important
accommodation to its customers ditty of the Commercial Stock
at rates of interest professedly Company wool I be, to prevent its
lower than the true current rate customer, from obtaining loans at
of interest for the time being. less than the current rate of inte-
rest for the time being.

Tile Credit :yrobilier makes ad • The Commercial Stock Company
valises, or grants credit, on corn- would only grant credit on real or
mercial bills and ocher like per- funded aecucity,
sena security.

It is hoped that-a sufficient contrast is shown here to prevent any
contusion of the functions of these two companies; but, lest this should
not be the case, I would submit that the function of the proposed com-
pany is not only extremely unlike what is knomn to be wrong in Paris,
bat is also extremely like what is known to be right in England.
Everybody knows that it is perfectly right and legitimaiefor an indivi-
dna', possesiing real or funded property, to raise koans on the sezurity
of such property. The prope ed company, as herein described, would
be merely in agenCY for effecting tub loans on conditions which would
ba more safe, and infinitely more convenient, to both lenders and bor-
rowers than the conditions on which this class Of loans are at present
effected. If tha severest critic, or the highest monetary authority, can
point outene single feature in which the company, as above deseribad,
would do more or less than this, I shall feel very greatly obliged by
his doing so. .

THE SLAVE TRADE IN CDBA.—WO have it now pretty
accurately ascertained that the slave trade between the
coast of Africa and Cuba involves the export from Africa
annually of from 40,000 to 50,000 slaves, of whom about
30,000 reach their destination alive. It is clear that the
preventive service on the west coast is wholly unequal to
the suppession of this trade. The extensive seaboard, the
numberless creeks and rivers which characterise the
African coast, and the watchfulness of the parties engaged
in the trade., combine to render any attempt at effectual
suppression wholly impracticable in that direction. If
the trade is to be put down—that is to say if the British
Government be really desiroui of permanently sup-
pressing the traffic—the most effectal mode of doing so
would be to remove the blockade from the African coast
and to station it on the coast of Cuba. The slave trade
with Brazil was put down; not by the African squadron,
but by the rigid blockade of the few Brazillian ports, at
which alone the illicit cargoes could be landed. It would
need a larger squadron to effect the same object in Cuba,
but the end is equally attain‘able by the same means. At
present and for many years past there has been in fact no
preventive service whatever on the coast of Cuba.
A few of the seven or eight vessels of war on this
station have occasionally, no doubt, when not ,
otherwise occupied, or when information has been
received of an expected slaver or two, been ordered to
cruise off the east end of Cuba, in the hope of picking up
a prize; but no vessels whatever have been specially
allotted to this important service, nor has' there been, any
constant effort made to, intercept a trade which, for a
multitude of reasen,e is the most watchful iu the world.
What we would suggest is, that half-a-dozen small
steamers of light draft—sailine vessels 'are not adapted to
the service—should be specially devoted by the Admiralty
for the suppression of the slave trade on the coast of
Cuba. For this purpose coaling depots should be estab-
lished at the most accessible ports of the north side of
Jamaica, where the steamers can also provision and water
from time to time, as may be requisite. Port Antonio
and Lucea are probably the best ports that could be
selected for such a purpose,; and if three small steamers
were stationed at each of these, two might be constantly
at sea, whilst the third is taking in coals, water, and
provisions. If these vessels were on the constant look-
out off the east end, and along the south-eastern coast of
Cuba; we venture to. say thati three out of every four
cargoes of slaves destined for that island would be cap,
tured.— Colonial (Jamaica) Standard.
SHIP-BUILDING IN BELFAST.—There is at present a
high degree of activity pervading the ship-building trade
in Belfast. In the yards of Messrs. Hickson and Co.,
Queen's Island, two fine iron vessels are on the ways in a
very forward state. One, a clipper, nearly ready for
launching, of about 730 tons burthen, 186 feet long, and
29. feet in breadth of beam. Tnis vessel will be fitted
with iron masts and bowsprit, and is intended to class A.l
at Lloyd's for twelve years. The other vessel, also
clipper built, will be about 1,200 tens burthen, 255 feet in
length, and 34 feet in breadth of beam. Both vessels are
the property of the eminent firm of Messrs. Bates and Co.,
Liverpool; and it is no small testimony to the superiority
of Belfast ship-building, that the construction of two
such ships should be entrusted to the Messrs. Hioksoa,
whose ships have proved !themselves fast sailers, and
possessed of superior sea-going qualities. In addition to
these, the Belfast Ship-Building Company have two
wooden vessels in course of construction on the Island,
one a clipper ship,' Intended to register 1,000 tons, and
the other a barque of -500,tons register—both bring built
under special survey, and intended to class A 1 for
thirteen years at • Lloyd's. The old established and
eminent firm of the Messrs. ISPLaine, to whom the credit
of establishing the ship-building trade in Belfast may
fairly be said to belong, have a clipper barque, 520 tons
register, to class A 1 for thirteen years at Lloyd's, in a
forward state; and they have also a tug steamer of 100
tons, and forty horse power, for Ballina, the engines of
which will be supplied by Mr. Victor Coates, of the
Lagan Foundry. In Mr. Alexander Conneli's yard there
is a schooner of 100 tons on the stocks ; and three or four
vessels are undergoing repairs at Queen's Island and the
Harbour Board Graving Dock.—Belfast Mercury.