The British Press; or, Morning Literary Advertiser.
London, England, 1826-01-09 00:00:00

THE BRITISH PRESS.

is out of sight—as to the multitude it always must be—it
is set down to the excessive issue of Bank paper, and the
evil of country Banks. if the necessaries of life chance to
be dear, the cause is readily to be found—not in the
failure of the crops, bad seed time, or a hail harvest—but
in the credit obtained by the farmers, which enables them
to withhold their corn from the market. There is, in fact,
no shape which agricultural or commercial (listless can
assume, but all is made to resolve itself into an over-issue
of Bank paper and the circulation of country notes. If
these notions shall gain a general reception—and, owing to
the pains taken to instil them into the popular mind, they
are fast gaining ground—their influence cannot fail to he
injurious in the extreme, and to affect moil vitally all the
interests of commerce and of the country. That Country
Banks may be multiplied to too great an extent we do not
mean to deny—that there may occasionally be an over-
issue of country notes in any given district may also be
true. But the objection amounts to this, that Country
Banks—like all other establishments—are liable to abuses.
To estimate them truly, we ought first to determine,
whether their utility is such as to occasion a public
benefit greater than the bad effects that incidentally arise
out of them.

In the mixed concerns and institutions of the mercantile
world we must balance the good with the evil, and if the
former preponderates, we do well to be content; to guard
against the latter is left to the exercise of prudence; and
wherever their interest is concerned, there is generally
enough of this virtue among mankind to keep a pretty
sharp and successful look out against deception. Swirl'
somewhere says, very shrewdly, that " in cheating, it
makes no great difference, the first time, whether you have
a man of sense or a fool to deal with, but it makes a pro-
digious difference the second." In our dealings with man-
kind it roust unavoidably happen that confidence will be
often misplaced, and credit given to many persons who
ought neser to have been trusted. But those who, on first
entering the world, erred on the side of unsuspecting re-
liance, ate soon taught by experience to confide with more
caution, and the greater part soon become quite sharp-
sighted enough for their own security. If they suffer, it
is in general from that spirit of speculation which leads
them to risk much on the prospect of great gain, or from
that necesiity of competition which leaves no hope of suc-
cess but ley putting much to the hazard.
Much has been said as to the evils arising from the mul-
tiplication of country banks. For ourselves we completely
concur in opinion with ADAM SMITH, that the danger
arising !rem country banks is lessened by the multiplica-
tion of them, and the reasons which he assigns for this
opinion wEI be found satisfactory. "If bankers," says
he, " are restrained from issuing and circulating bank
notes, or notes payable to the bearer, for less than a certain
stun ; and if they are subjected to the obligation of an
immediate and uncontional payment of such bank notes
as soon as presented, their trade may, with salty to the
public, be rendered in all other respects perfectly free. The
late multiplication of banking companies in both parts of
the united kingdom, an event by which many people have
been much alarmed, instead of diminishing, increases the
security of the public. It obliges all of them to be more
circumspect in their conduct, and by not extending their
currency beyond its due proportion to their cash, to guard
themselves against those malicious runs, which the rivalship
of so many competitors is always ready to bring upon them.
It restrains the circulation of each particular company
within a narrower circle, and reduces their circulating
notes to a smaller number. By dividing the whole circula-
tion into a greater number of parts, the failure of
any one company, an accident which, in the course of
things, must sometimes happen, becomes of less conse-
quence to the public. This free competition, too, obliges
all bankers to be more liberal in their dealings with their
customers, lest their rivals should carry them away. In
general, if any branch of trade, or any division of labour,
be advantageous to the public, the freer and more general
the competition, it will also be the more so."
We are aware of the many objections that may be urged
against any Parliamentary measure for the regulation of
country banks. We feel the full force of that maxim of
the French Political Economist, pas imp gouverner, and
are satisfied that the advice not to govern too much is as
applicable to banking establishments as to any other of the
concerns of commerce. We should therefore be disposed
to borrow as little assistance as may be, from the Legisla-
ture, for the regulation of country banks. At the same time
it must, we think, be acknowledged as reasonable that any
Company that obtains a license from the State to coin paper
money,—for this in effect is done by every Bank who are
authorised to issue their own notes, and, by so doing, to
displace the current coin, and effectively to influence the
price of commodities,—cannot complain, if, before they are
authorised to do this, some security should be taken on be-
half of the public that its interests should be as far as pos-
sible protected. Under this impression, and knowing the
prevailing opinion that some interposition on the part of
Government is called for, if we offered any suggestion it
would be, that the license which the country bankers are
already obliged to obtain, and to renew annually, should
be granted, subject to some such conditions as the follow-
ing:—
That a statement, on oath, should be delivered by the
partners -of the nature and extent of their capital, and of
the amount in money and available securities in which it
consists—that they should give bond, or other sufficient
security, to keep, at all times, a sum in cash and Bank of
England notes equal to one-third of their capital,—and
that they should not at any time have in circulation a
quantity of their notes exceeding the amount of their avail-
able capital. To these suggestions we would add, that the
number of partners ought not to be limited, as at present.
The solidity of the Scotch Banks arises out of this security,
which strongly demonstrates the impolicy of their restric-
tion in England. •
Such regulations as the above, or any other which
might be devised as more effectually protective, could not in
justice be complained against, on the ground of undue in-
terference with the employment of capital. The arguments
which might be urged as to all ordinary cases would not
be applicable here; If the Government license any
Banking Company to issue its notes, and thereby to aug-
ment the circulating medium of the country, it has a right
previously to guard the public against any failure of its
engagements. It has a right to say, " Before we will sanc-
tion this augmentation of the paper currency, we will first
be informed as to your means of satisfying the obligations
you contract, anti that your property is equal to the dis-
charge of all the demands to the payment of which it is to
be pledged." No party can object to such a scrutiny as un-
reasonable, because, whoever requires a license to insti-
tute a Banking Company is bound to accept it with what-
ever conditions the Government shall think it expedient on
public grounds to annex to it.
IVe shall recur at intervals to this important subject of
the currency: our limits preclude us from further amid.
ing our remarks upon it in our columns of to-day..