Northern Times.
Liverpool, Merseyside, England, 1859-01-28 00:00:00

JOINT STOCK BANKS

MUCH has been done, within the last few years,
to bring the Joint Stock Banking system into dis-
repute in this country. Doubtless it is a system
which, in knavish hands, may be turned to very
mischievous account, in so far, more particularly,
as the shareholders are concerned. Their having
been individually liable for all deficiencies, how-
ever it may have protected the public, has, in too
many instances, made sad havoc with the fortunes
of those who were but, as it were, the sleeping

partners in the Companies ; and unconscious, in
the simplicity of their hearts, if not in the disin-
terestedness of their minis, of anything but
what was straightforward and right. They might
often know that they were in the hands of clever
men, but they were unwilling to suspect that they
were likely to be the victims of cunning ones.
They had no objections to good fat dividends—
nay, they eagerly sought to secure them ; and this,
too generally, without much scruple about the
modus operandi. They little thought—perhaps
they did not wish to think—how frequently it
happened that the very cunning which they
admired as prinaoting their interests as share-
holders, was a quality that also exerted itself
for private and selfish aims, and that stuck at
nothing to' make them succeed. Nor did these
shrewd and scheming operators themselves, we

dare say, very often remember that, as a close
observer of human nature has described it,
" worldly men, in haste to be rich, have over-run
the only means to it,—and for want of laying
their contrivances with proper skill, or managing
them with proper secrecy and advantage, have lost
for ever what they might have certainly secured
with honesty and plain-dealing." How many have
lived to find out this truth, —how many have
found it out through the very means we are here
referring to ! And, what was far the worst of it,
how many innocent, unsuspecting parties, did they
not precipitate, along .with themselves, into an
abyss of ruin !

Still, the Joint Stock Banking system is an
admirable one, notwithstanding all such perversion
and abuse of it, - and one that may be profitable
and secure to the shareholders, while it is safe and
convenient to the public, There have been some
very notable evidences of this in London during
the last fortnight. The half-yearly meetings of
several of such Banks have been held, and have
furnished proofs of the signal success of the sys-
tem, which cannot possibly be questioned, For

instance—as we find the broad results reviewed by

one of our metropolitan contemporaries :
First in order of time comes the Union Bank of Lon-
don, the paid-up capital of which amounts to £600,000,
raised upon 60,000 shares. Daring the past half-year
the profits of this thriving institution amounted to £67,540,
including the sum of £7,495 brought from the previous
half-year. The directors have declared a dividend at the
rate of 10 per cent. per annum, and a bonus of 21 per
cent. on the paid-up capital, being together at the rate of
15 per cent. per annum, clear -of income-tax, and have
earned forward for appropriation next July, a balance of
£22,540 undivided profit.

The paid-up capital of the Commercial Bank of Lon-
don, which is next in rotation, amounts to £300,000,
raised upon 15,000 shares. The balance-sheet for the
half-year showed a net profit of £13,822 (including the
undivided profits of the half-year preceding), and a divi-
dend at the rate of 6 per cent. per annum, was declared,
leaving £1,401 to be carried to the next account.

The City Bank, which is only six years old, has a paid-
up capital of £300,000, raised upon 6,000 shares. The
directors here have declared a dividend at the rate of 5
per cent. per annum, leaving £6,982 to be carried forward
to the new profit and loss account.
The net half-yearly profits of the London and West-
minster Bank (the paid-up capital of which amounts to
£1,000,000) exceed £86,000. The directors have declared
a dividend at the rate of 6 per cent. per annum, and a
bonus of 6 per cent. on capital; that is to say, 9 per cent.
on the current business. This, added to the 8 per cent.
previously distributed, makes a total of 17 per cent. for
the entire year 1858. The undivided profits amount to
more than £12,000.

The paid-npcapital of the London Joint Stock Bank

amounts to £600,000, on 60,000 shares,

Here the amount

available for distribution on the 31st of December last
being £107,000, allowed a dividend at the rate of 121 per
cent. per annum, together with a bonus of £1 per share,
making a total payment of 271 per cent. - for the entire
year, free of income-tax, and giving £10,200 to the
guarantee fund.

The gross profit of the Bank of London, with a paid-up
capital of £300,000, amounted to £24,139, which, after a
deduction for rebate on bills not due, and provision for
doubtful debt, gave a devisable amount of £11,891, out
of which a dividend at the rate of 5 per cent. per annum,
free of income-tax, was declared, and £4,391 carried to
new account.

here, in all, these instances, we see the
complete success of the system. The Banks must
surely be profitable, when they can pay bona fide
dividends of eight, ten, and even fifteen per
cent. ; and they cannot but be safe when, after
appropriating such dividends, they can carry over
heavy balances, and provide large guarantee funds.
As our contemporary, from whom we have
borrowed the above enumeration, observes, " the
public look to the directors to see that they are
men of character ; and it is on the character of the
directors and on prudent management that the
safety of a Bank must mainly depend." And not
the public only, but the shareholders also. When
the liability is unlimited, they are first and above
all concerned in the prudent management and
safety of the Bank. In how many cases might the
utter ruin, not of individuals only, but of families,
have been prevented, had there but been prudent
management and safety,—had the shareholders
been more particular to see that their directors
were really .men of such, character as would
reasonably have guaranteed it.
In a more general point of view, the results we
have adduced are interesting and important, as
indicating a recovery from the disastrous
influences of the late financial panic. _Banks
could scarcely prosper as these have done,
during the last six months, if there had
not been a healthier state of commercial credit, and
altogether a higher condition of commercial sta-

bility, than there was but a year ago.
There is another reflection, as regards the con-
duct of one of the Banks, that is pleasing and
oncouraging. The London and Westminster
Bank, desirous that they who, even in subordinate
positions, contribute to its efficient business work-
ing, should participate in its success and its
profits, and that they should feel an interest in
its healthfulness and prosperity, has generously
and wisely presented its staff of clerks with a
gratuity of ten per cent. on their salaries. Such
liberality as this is as prudent as it is noble ; and
it will have its reward. The shareholders, and all
concerned, will receive it back again fourfold. It
is an exemplary act which deserves to be not only
publicly recorded, but warmly commended. Let
us hope that it may find in such, and indeed in
other prosperous institutions, many that are deter-
mined to go and do likewise.