The Sun.
London, England, 1836-05-13 00:00:00

TITHE ON FISH.

Mr. PENDARVES presented a petition from Pen-
zance, praying that the tithe on fish be abolished.

SEE OF DURIIAM.

Mr. PEASE presented a petition from a parish in the
diocese of Durham, praying that any surplus of Church re-
venue might be applied to the education of the people in
that district.
Mr. HUME gave notice that he would to-morrow (this
day) present a petition from a public meeting at Calcutta,
praying the House to consider the state of the law relating
to the trade with India.
Mr. WARBURTON presented a petition from Bath,
complaining of the sale of quack medicines, and praying for
better protection for the licensed practitioners in medicine ;
also a similar petition from London.
MEDICAL REFORM.
Mr. WARBURTON, in reply to Sir G. Sinclair, said
that before he could introduce any Bill on medical reform
this session the Committee should re-assemble, and consider
the evidence again.
TAKING THE VOTES.
Sir C. BURRELL complained of the inaccuracy and
the delay in taking the votes in divisions. His name was
often omitted in the printed lists.

Me. MIME thought time was rather gained'. than lost;
and though mistakes may occur, vet on the whole there was
Hume'
an improvement in the plan. His (Mr, o) name,
too, was often omitted.
Mr.' WAKLU said the present plan was a hotter one
thin ght f9rrner.
Colonel glit-MT did not look on the presvnt plan
n

as an improvement.
The subject then dropped.
MUNICIPAL CORPORATIONS.
Colonel SIDTHORP gave notice of a motion for to-
morrow, for a return of the number and names of those per-
sons recommended for appointments to the magistracy by
the town councils, together with the names and numbc►s of

those rejected by the Government.
JOINT-STOCK. BANKS.
Mr. CLAY, in rising to bring forward the subje at of
which he had given notice, said—Sir, the motion 1 aar
about to submit le the House is as follows :—" That a se-
c ,
lact committee be apptsiuted to inquire into the opration of
the Act of the 7th George IV., c. 46, permitting the esta-
blishment of joint-stock bents, and whether it be expedient
that
to make any, and what, alteratinns in the provisions of
Act." Under that Act a system of ;oint-stock banking has
grown up already of great magnitude,
ly
tending its ramifications, and which prooises very short
to comprehend every portion of the kingiom and every
class of the population within the sphere of its operatiohn;
My object is to induce the House to inquire whether t
which is daily ex-
system of joint-stock banking in this country 11
..A.s receivedis
the best legal development of which it is susceptibtl! I,tut
capable of conferring great benefit on the communee
e.
may, if ill regulated, give birth to as great calamities.
we taken all the means within our power to secure the
story- One,
and to obviate the Other ? I .think not. The hi at
who,
1825 must be familiar to every Honourable Gentleman
hears me ; the mad excitement, the idle dreams of un-
bounded prosperity, the wild projects at the commencement
of that memorable year, the widespread distress, the
still more widely-spread alarm which attended its
clos
vil.eli
are not, I am sure, forgotten by this House, and
not be, I trust, forgotten by the public. On the egos-
bling of Parliament in 1826,
best
his Majesty having called it!
attention to the calamities which had signalized the periodt
then recently elapsed, and to the consideration of the
means of obviating the risk of their recurrence, two meed
a:
!sures for the accomplishment of that object were subniitt
first
by the Government of that day to both Houses. The
was for a suppression, at an earl riod, of all notes undeli
51., issued by private banking establishments, the. Bank et.
England having already discontinued the issue of sue"'
notes. On this measure (in m opinion a most salutary
one) it is not necessary that I should at present commentsof
the second was intended to create a sounder sysrn °
banking. In the panic a very great number of cou.n.-
try bankers stopped payment-59 commissions of bank
ruptcy were issued against country banks from October,
1825, to Feb. 1826, and many suspended their PaYreents
whose affairs did not proceed to bankruptcy. An orini°ll
in consequence became pavvalent that one of the caves,
most operative in producing' the crisis just then overpa°
was to be found in the law w.laicb, by restricting Partner'
ships consisting of more than six parsons from issuing notes,
and, indeed, as was supposed, (althnugh, as subsequenty.
appeared, erroneously) from carrying pn'the trade of bank
ing altogether, greatly enhanced the Difficulty of forty.
ing solid establishments for that purpose. To the
relaxation of that law, originally enacted in the Year
1708, to confer upon the Bank of England a ill°°°-
to
poly of the power of issuing notes, it was neeessarY
obtain the consent of the Bank, as its re-enactniflnte 'I.
part of the last as of previous bargains with that theCOrgor
tion. Accordingly the First Lord of the Treasury an q a
Chancellor of the Exchequer, the late Lord Liverpool A%
Lord Goderich (then Mr. Robinson), had on the 3d of tue ;
written a letter to the directors urging such consent. ''''''
result of the negotiation was, that the Bank consented
et°
wave its exclusive privileges in that particular, provid!
that the banking co-partnerships under the new law wert;
not to be established at a less distance than 65 miles fr°
. London, and that every member should be individuallY
liable for the whole debts of the firm. In the course of the
session an Act was passed, the.7th of Geo. IV. c. 46, er
bodying these conditions. As a law for the general reef
tion of joint-stock banking, this Act was avowedly illaPu',..
feet. The Ministers of that day stated, not that the My
was the best that in their opinion could be framed for the
purpose ; but that it was the best which the then existll
bargain with the Bank of England allowed them to brill?
forward ; and most deeply is it to be lamented that ad4alY
tage had not been taken of the renewal of the Bank Charter,
in 1833, to establish a sound and enduring system of joint'
stock banking as far as that object can be accomplished bi. '
the interference of the Legislature, that that opportunitl
was lost. Lord Althorp did, indeed, propose conferring ehercii
ters of limited liability on such joint-stock banks as well,j,
issue only Bank of England notes ; but he subseqaeel
abandoned that intention, and the only change then mad,
in the law relating to those establishments was perlll-:
ting them to make their notes payable in London. The lavi,:
regulating the trade of banking by partnerships of nlri"
lows :—They must not be established at a less
than six persons in England and Wales are briefly stancel'3'
dthan sixty-five miles from the metropolis. They may, issue,'
notes payable on demand where issued, or in London. °
where issued. They may discount in London bills of el'
shange. They must, before issuing notes, enter at the Sys
Office in London the name of the co•partnership, the nal°
and residences of the partners, and the name of two or Inettl
officers of the co-partnership through whom they alai s r
or be sued. A like return must be made every theYe
and also whenever a change takes place in the officers, a.
members, or the places where notes are to be issutor
ehe
EXecution on judgments and decrees obtained against
officers may be sued out against any member oft le tip.
partnership. This responsibility attaches to persons re to
ing from the Company for three years, as far as relatesdef
transactions occurring whilst they were members. till up
these laws a system of Joint Stock Banking has gr°,llll air
already, as I have said, of vast extent, and day by dor,. der
larging the sphere of its action. By a return to a" eihat
of this House of the 21st of March last, it apnen,r4 d,
there were atthat date 61 Joint Stock Banks esta""a`licof
with their branches at 472 places, and consisting in ,•shod
15,673 partners or shareholders. Of these 3 were estallo
in 1826, 4 in 1827,6 in 1829, 1 in 1830,8 in 1831,7 i°„r to
10 in 1833, 10 in 1834, 8 in 1835, and 4 in this ye" 'etr.
the 21st; and since the date of the return 5 have hellos)
tered at the Stamp Office (one of them having 24 bran in $
and 2,052 partners. More companies I know to I:',e hich
course of formation, and there are probably °dorsal °bole
I have not heard. We have called into existence, we rave
introduced into our monetary system an element of tre 00.
dous power. We have taken no precaution to limit ort
_s,
trot its. operation. The dangers to which our preset] ;it,
tern is exposed arise mainly from these causes, by lirir, the
ting an unlimited number of persons to corahine
confer °(I
purpose of carrying on the trade of. banking, Yin' e„sioesss
them an enormous power of creating an extensive "nsibler
by rendering all the shareholders individually reSPeercjit,
you afford the most dangerous facility in obtaining, banks
whilst you take not the smallest precaution that sue)
vents
shall possess capital commensurate with the cngaigiekteat
into which the power and facilities you bestow
no
state
them to enter.—(Hear, hear.) I can conceive ne that
more directly tending to produce that excitement'is ad,
overtrading, that apparent prosperity, so pleasant in ca.le
vent—so bitter in its consequences. If there be oners_ of
in which Legislative interference with the interco,in a%,t,
individuals could be justified equally by reasoning ' no to
perience, beyond all doubt it would be an interferens
and
obviate the dangers which an abuse of the nover_doee.
facilities of joint-stock banking inevitably tends toproaditio
We have made no such attempt. The one solo CO
_lit of
is, that every partner shall be liable to the whole esi extent is
his fortune, and those who may deny that any el at,f_
,„0
the law is necessary must be prepared to show thateurtoe 'the
provision of unlimited liability is sufficient to se
that the
stability of a system on which it is quite evident
od 0,
whole banking of the country is at no distant Peri
an ob-
tined to be conducted. Will that condition enseroeur own
servance of the caution essential to stability ?
~. reply.
experience of almost half a century is a sufficie,.} 1.3,011‘
Banking in England has (with the exception of ttie d 1
of England) been hitherto on no other footing.
~,,e has
remind the House how far from stable that foot! ri7anka
ountrs' a •
proved ? In 1791 and 1792 one hundred c sirietion,
were swept away, there had then been no bank r
.c. 1.0 more
notes:n. rur-jtel
and there were no small notes ; but was -the es" _o„ritrY
[ secure during the bank restriction, and whilst the L; „co
1 bankers had the power of issuing small
1809 to 1819 no less than 174 commissions of
hadb.k :gaol
were issued against country bankers, and after "6e including
returned to cash payments, from 1.819 to 18`2: ;_,..A. TO
the period of the panic, 99 commissions were isroun cases
these bankruptcies must of course be added the
ni'leroots
of temporary suspensions of payment and a rai,prho toad
with creditors, stopping short of bankrupt
rking of al
Ote
of
capital
injury to the community, produced by thec%Yv
unsound system of banking, is, first, in the wastes
or stieliv
consequent upon the overtrading which it creates „watt
lates ; and, secondly, in the shock to cre 1 i ~ich the
the distrust, and lessened demand for laboure--vitva"
biy Pr°'
port..
duces. How far, then, do's unlimited lialoi ~ t the Stop'
extensive failure of banking catablishments.ittev.
itv opals t
does It
ners of joint-stock banks afford a secur .
Not only
ping payment of such establishments ?
, tends to augmenh
afford no such security, but it inevitably
obtained by slice
the risk of such occurrences. The credit ,
i ital, but to the
will be in proportion, not to the paidlupneeyp
their engag
presumed extent of their. ultimate so vee 0
rtion to the elle:
meets in prosperous times will be in. pir
.p. ~, ,
t (maw*, arriAree
dit so obtained ; but should a perm(
1 fund to which
the paid up capital would be the
only
a cll on the sh'a're.r
course could be had. Trot suppose t a
attended to, is visie
in the
holders at such a mome would be

at,

dlhan
•

q.

tie I 1!37 far the ;-•reater portion of joint-stock banks at is a Ileetthilate course of proceeding on the part of that
ftd;any I)lnut existing the ultimate solvency could not be doubt-- It'Mitt)ration, combining, as it evidently does combine, an
by how flightful a
be Put to th process would that salt increase of the currency, which may not be required, with
but c test ! But the mere misery thus 'aeated is a temptation to the joint-stocks thus supplied with their
a
should small portion, of the evil to be dreadeel, If a period notes to afford indiscreet accommodation, Another prace
ma ever erri •
should b ain which several of those establishments tics to which I may allude of these companies is the making
against
jecome embarrassed, and itval proceedings be had advance' on tio,iP Will shares—a practice cleaely liable to
would • shareholders it is certain that suspicion abuse, Aga which might, if carried td its ties3ible extent,
arise generally with regard to shareholders in all dcptive the public of the whole tk.etttrity apparently afforded
Such conee, -
rated th . • The House will not think that I have °vet, by a paid-up eapital.. seme of the Companies now in the
c
mind th, portancc of this consideration when it bears in course of fetatition propose in their advertiseinentS to
a nearly sixteen thousand persons, many of them make to their shareholders an advanee equal to two-
coeutor,,..
to. -lel men of considerable eminence in the great tititat a what they may pay en thtir shares. The prac-
eme.,e
England, are partners in these Companies. Them rise, again, of reserving thres on the first formation of
are ofaer
evils attendant on the present state of the law a Company to le lS'eued subsequently at a premikti has
alyt
tu joint-stock banks of no inconsiderable inegnitude. I been reseetied to by Companies highly re'aliettable ; and it
4,vile° Igh trifling compared with those to which I have jest wale Weed, hardly to be exoeted that any companies
10e3t,
the I d. Prominent among these is the facility afforded should hesitate to avail. enmselves of a profit so easy, and
lnent existing law for getting un in a moment of recite- which the Legislature had taken no steps to discourage.
bubble companies—compeAcs, I mean, of which the It is, however, in my opinion, a source of profit inad-
-I::thpetors have no other object than to make a profit by miscible under a sound system, opening the door, as I
conceive in the shares. It is scarcely possible, indeed, to have already said, to delusion, and leading to the con.
tiunan elirvide a state of the "taw affording a more direct tempta- coction of schemes having no other object than jobbing
tinder ..encourageme•at, to such schemes than the present. and speculation in shares. I ought not to omit to men-
;__ George IV,, a company for joint-stock bank- tion that some of the existing joint-stock banking com-
-4_l'3 may be forme?, with a nominal capital, we will.suppose panics, and among the most respectable too, have availed
'w a million-1%) OM shares of 1001. each—it may com- themselves to an extent which I considered inexpedient
men
businee '5OO
to
can
t, - A withor 100 shares really taken—for cf the permission of the Legislature to establish branches.
! itute.
eient the company according to the Act, it is suffi- Some have from forty to fifty branches, the most re-
the, that half-a-dozen shareholders and two officers enter mote from the centre being one or two hundred
;`-snarae.s at the Stamp-office. Upon those shares 40s. miles apart. And noW, Sir, havine stated what I con'.
Ili • etch may be paid up, for the Act requires no paid ceive to be the defects in the laws bby which joint-stock
,uttP4Pital ; and if the projectors can provide funds to pro- banking is regulated, and adverted to the evidence which
I mahogany desks and brass door-plates, they are autho- existing circumstances afford of the evil consequences flow-
lsed to
establish branch banks in every town in the king- ing from these defects, it is my duty to
point out how
rellr sixty-fire miles from the metropolis, for in the Act those defects may be remedied. lam convinced that the
,e is no limitation of the number. A fictitious dividend defects in our present system are capable of remedy ; and I
4', 3he declared, for the Act prescribes no publicity—and, shall, therefore, in conclusion, state briefly the nature of
h_ e 7,10) this, or' any other contrivance, the shares have the remedy I would recommend. It consists merely in the
raised to a premium, the reserved shares may be adoption of three great principles—limited liability, paid-
!vled—the profit thus obtained furnishing a fund from up capital, and perfect publicity. Of these three, I have
rtueli further dividends may be made and fresh delusions no hesitation in sayin", that I must rely on the first, with-
practised on the public. Even the principle of responsi- out which, indeed,. the two latter will be comparatively. of
~_llt3' of the individual shareholder is it-I.th existing law by little value. By permitting only joint-stock banks, with
';'ootmeans efficiently worked out. Having, Sir, now stated limited liability, I would crush at once the spurious credit
he House what I conceive to be the defects 'in the ex- at present enjoyed by these establishments from the re-
1111g law, and the evils likely to flow from those defects, it sponsibility of the individual shareholders, and -reduce
3,
mbe exttected that I shall state to what extent existing the credit to be obtained by a joint-stock bank, with-
i!'ettstarices illustrate the arguments I have used, and in its legitimate bounds--viz ,to the exact extent of its
s.lvrbether there be any symptoms indicating the near ap- paid-up and available money. It is impossible, in my
P °ad'. of those dangers and inconvoniencies which I have opinion, that this House, or the public, can be too
atated to be, in my apprehension, of probable occurrence, deeply impressed with the importance of this principle.
111 the
„, first place it will be observed, that a large propor- The collection and distribution of monied capital, is
"Kin of the joint-stock banks comprehended in the return the only legitimate object of banking. The money actually
ee the table—the only banks yet fairly in operation—were possessed by a bank, or held by it on the deposit, is
stablished before the present excitement, and are, there- the only sure and safe basis on which its engagements, and
fore, not open to the suspicion of being got up with any the extent of the accommodation it should afford, can be
"tiler than the avowed object. In the next place, lam calculated. All credit beyond this is spurious and unsafe.
quite persuaded that, with regard to very many of these To encourage the intervention in the monetary system of
establishments no no want of caution can be fairly imputed the country of a circulating credit, grounded upon the sup-
-1:8 those by whom they are conducted ; and where a course posed aggregate fortunes of the shareholders, is to attempt
been pursued open to objection the error is rather to coin into money the lands, the houses, the factories, the
be attributed to our own faulty legislation than to fixed capital of the country. By the permission to estae
."050 h
y whom the mistaken principles sanctioned by the blish banks of limited liability we should acquire the most
St St se
itself have been practically brought into operation. important of all securities for the good conduct of such
there are facts and circumstances connected with the establishments, namely, a certainty that the most respect-
actual of the * •
working
he stated with a due regard to the caution which it appears them. • Once remove the well-founded alarm which the
nMe every man, but especially every Member of either being engaged in indefinite responsibility inspires, and you
-"Louse of Parliament, is bound to observe in making state- would have spring up in every part of the kingdom bank-
toents which can by possibility affect the commercial credit ing companies, comprehending in their proprietary all the
Of the
country. For the following table lam indebted to wealth and intelligence of the district, conducted on sound
the courtesy of the Directors of the Several banks principles, because the shareholders would be well con-
113' r JOINT STOCK BANKS. tented with moderate profits, the very keystone of sound
eturn from Stamp-office, dated 21st March, 1836 61 bankin
Omitted
1 s nil charters, however, only on the two conditions—first, of
—62 ' the whole capital of the bank being paid up ; and, secondly
of entire publicity. From these provisions many important
advantages would flow--they would effectually put an end
to any getting up of these companies as mere bubbles for
the purposes of speculation. There could be no holding
back of shares, subsequently to be issued at a premium—
, no fictitious profits to be created out of those very pre-
miums, and, as a real outlay would be required, no banks
could be set on foot by persons without substance. The
publicity that I would require, moreover, would be real,
searching, and effective—making clear to the apprehension
of all men the circumstances of bank both as to assets
and 'liabilities. On this head the House will permit me to
read an extract of a-letter from the manager of one of
the existing joint-stock companies :—" On first establishing
this concern the directors came to their vocation with all the
bias respecting the absolute necessity of secrecy which pre-
vails in private banks. A gradual change has, however,
arisen in the midst of the directors, as they have watched
the progress of the joint-stock banking system.. Seeing the
great additional.security which it would afford for good ma-
nagement, the necessity under which it would lay weak
banks -to call up more capital, and the confidence which
the public would derive from an actual knowledge of the
state of their affairs, we should now feel little objection
to give the greatest publicity to the state of our issues,
liabilities, and assets, provided such publication were ge-
nerally required." Into the detail of the regulations by
which I would propose to work out these great principles
I do not now enter—they will be proper matter for con-
sideration in the committee which I shall propose to the
House to appoint. lam well aware that many schemes
have been proposed for rendering joint-stock banking -safe
which do not involve an admission of the three great prin-
ciples I have stated as essential ; but valid objections may
in my opinion be raised against all those schemes, and it
is still less necessary, therefore, that I should occupy the
time of the House in discussing them. The application
of these principles' involves in my opinion, all within the
power of legislation to effect towards the establishment of
a sound system of banking ; but I also think that those
principles, if judiciously applied, will be effectual for the
accomplishment of that object. I have yet to hear one
valid argument against the so' applying them. To the
adoption of these principles all experience points. The
Bank of England presents an example of stability which
has never been doubted ; but it has had limited lia-
bility and large paid up capital. Can any one
doubt but that, if publicity had been enforced on
it, great errors would have been avoided, and great
calamities spared to the country? Scotland I know
may be quoted as furnishing an exception to the rule
I would establish ; but I believe it may be shown, by a
reference to the history of Scotch banking, that the excep-
tion is more in appearance than reality, and that peculiar
circumstances in Scotland have caused the banks of that
country to fail in one important particular, viz., paid up
capital within the rules I would lay down. It should not
he forgotten that the three Scotch banks which preceded
by many years the establishment of the others, and gave
the tone to public opinion on, the subject of banking, viz.,
the Bank of Scotland, the Royal Bank of Scotland, and the
British Linen Company, were chartered banks of limited
liability and large paid-up capital. In the United States
of America the same conclusion has been come to by a
people than whom none exists more intelligent, more saga-
cious, more practically wise, or more capable of, drawing
useful lessons from experience. In the United States the
trade of banking has never, with I believe but one instance
of exception, been carried on by individuals or firms of a
small number of partners ; it has always been in the hands
either of joint-stock or incorporated companies. The peo-
ple of that country have, therefore, extensive, and, in. but
too many instances, calamitous experience of the working of
a system yet in its infancy with us. The results of that ex-
perience is the adoption almost universally of the principles
I have laid down—viz., limited liability, paid-up capital, and
perfect publicity. In 1833 the President determined to
withdraw the Government balances from the Bank of the
United States. For this purpose twenty. three banks in
different parts of the Union were selected. Of course the
banks selected were among the first, in point of character
and solidity. The charters of all were laid before Con-
gress. I have looked carefully through those charters, and
can assure the House that, with some slight and doubtful
modifications in one or two, as to the liability of share-
holders, they embody those principles. Several of the
leading States of the Union—Pennsylvania, New York,
and Massachussets—have enacted general laws for the re-
gulation of banking. Those laws are pervaded by the same
principles. Many other and stringent regulations arc laid
down for the roverement of banks, which an experience of
the calamities flowing from malversation in such establish-
ments has led the people of the United States to adopt ; but
in no laws that I have seen are the principles of limited liabi-
lity, paid-up cupitel, and publicity in the main departed from.
In 1817 a law was passed by Congress for the regulation of
banking in Columbia. What were the provisions of that
law ? At that time there were in that district joint-stock
banks ; the Act constituted theM all Corporations, on com-
pliance with certain conditions, the most important of which
were that their whole capital should be paid up before the
Ist of January, 1819, and that they should every year lay
a complete statement of their affairs before the Secretary of
the Treasury ; it further prohibited, by heavy penalties, all
other parties from carrying on the trade of banking. To
the example of America I must add the example of some
of those Statesmen among ourselves most worthy to be lis-
tened to on such subjects in favour of liability. In a dis-
cussion in the. House of Lords on the Bank Charter
Amendment Bill, on the 17th of February, 1826, Lord
Liverpool said—" The measure he had to propose was but
a half measure, and why was it so ? Because they had the
chartered rights of the Bank of England to contend with.
This was an obstacle to their going further at present—
they•ought to go further whenever they could. The Bank
had consented to allow the restriction as to the number of
partners in country banks to be removed, and so far one
difficulty was removed." In a discussion on the same Bill
in the Commons on the 10th of February of that year,

of the above—
In process of formation 3
Private although included in return, having more
than six partners
4
No returns from ..... 9
—l6

tanks. Shares. Shares 46
Nominal Capital
46 issue,L capital. paid up.
821,050 599,397 £30,930,000 £5,922,505
.---.

of share 463 per cent. of capital 19 per cent. Of the above 46 banks, four, having a nominal capital of
0e500,0004 and paid-up capital of 1,474,6001., do not issue
their own. totes. The present circulation of notes by the
Whole of the joint-stock banks, including of course those of
,Whieh. I have not been able to state the capital, is 3,094,025/.
-Lo December, 1833, it was 1,315,3011., no great increase
Mier' the increase of their number is taken into account,
atui it is also recollected that the private bank circulation
has fallen off .500,0001. in the same period. But it is by no
means by the amount of issue of notes alone that the effect
of the operations of the joint-stock banks upon the mone-
t:y system of the country is to be measured. The means
4:letlY Within the power of such of these establishments as
not issue notes of affording accommodation to their
eltustomers consist, of course, first, of their paid-up capital ;
t 14.1, secondly, of the money deposited in their hands. Of
v'amount of this latter item I have no means of forming
a"rrect estimate, but as these establishments are corn-
taratiVely of recent formation, and large deposit accounts
only be the growth of years, it is not probable that
Ithe 'deposits with the joint-stock banks can be very' large,
the PS not commonly greatly exceeding the amount of
the Paid-up capital. In the case of such as issue notes,
e amount of circulation must be added to their means
of •
ISlVing accommodation. But I believe lam justified in
'4 ting that the accommodation afforded in many instances
these banks very considerably exceeds the combined
.Itlhount of paid-up capital, deposits, and circulation. They
r: enabled to give this accommodation by a re-discounting
'the London market. Now, I believe lam justified in
iring that this practice of re-discounting is not considered
'the most skilful and prudent among private bankers as a
tort qeditable or business-like proceeding, nor one which
h.t.sl be carried to any considerable extent by a private
,a7.4ing establishment without exposing it to suspicion and
Tscredit ; as showing conclusively that it was in want of
110 sable funds and getting into engagements beyond its
Zeogth to manage. But this practice thus repudiated by
ro:tate bankers is freely resorted to by some at least of the
tt:nt-stock batiks. The endorsement of a bank known to
4:lain among five or six hundred members many indivi-
of great wealth will give currency to any bill. "Do
tio"nr,t observe (said a broker to a person who expressed a
th.ar,t of the character of a bill offered to him for discount)
414 it has a thousand indorsers?" It i 3 quite clear,
liar. any joint-stock bank possessing, from the estimated
tt. IlitY of its many partners, an almost unbounded
died [t, may give a fearful stimulus to overtrading without
denting or procuringto be re-discounted one single bill
tiout drawn in discharge of a bona fidc mercantile transac-
Ntn But is the credit of these joint-stock banks when so
D'Yd a sound and wholesome credit ? Is it not, on
t: S, a credit in the highest degree hollow and dan-
k tans, and one which would, in a period of difficulty, but
oo
• tionProbably prove unsound? To what extent the opera-
tpe of the joint-stock banks may have contributed to
Rohl the present state of excitement in the commercial
must of course be mere matter of conjecture. That
thasr have had some considerable influence is probable from
tra fact that the excitement and rage for speculation is
titNtest in those parts of the kingdom where the operations
144 those establishments have been most active. London
ta. been comparatively unmoved, but Liverpool and Man-
1140ester have witnessed a mushroom growth of schemes
kik,exceeded by the memorable year 1825. I hold in my
tltel.`.! a list of twenty contemplated companies for every
potle,'es of undertaking, which have appeared in the Liver-
/t .4 and Manchester papers within the last three months.
• 11 .
eh,. possible, I think, not to suspect that the facility of
14'4 and consequent encouragement to speculation an
ve ,c of been without its effect in producing the great increase
ootree in almost all the chief articles of consumption
be, raw materials of manufactures. That increase has
Nta enormous—{lot less than 20 to 50, and even 100
klarile,t• in 'Lastly of the chief articles of produce of con-
lvot.7l°a. and materials of our manufactures. lam quite
price Ltlnt there is every indication of this advance of
tlat-t hieing sound—that' it has risen from consumption
I_ min
g supply—and that our manufacturers are work-
4tirent...iorclers rather than on speculation. But I.
.cantnyt
Ntb„,‘Qat the excitement of 1825 commenced legitimately
the rise of prices will iafallibly check consumption,
kOlO4-; it stimulates supply ; and when we look at the
:14 of our paper currency, resting at this moment on
eiel:atewhat narrow metallic basis of the bullion and spe-
Nt t- e vaults of the Bank of England, it is impossible
,9` eel apprehension, or at least the propriety of caution
forethought. The circulation of the Bank of England,
C. Ilpears by
the last average in the Gazelle, is—
•vepoZion of the Bank £18,063,000
With ditto „, 14,751,000
11,.;
32,814,000
4nd 32,814,000
-Stock B7.nks
robabi
C amount of Scotch and Irish Currency 144
0,00,2610,,009190
retie 54,261,919
tis ,444 Bullion at the Bank .....f7,801,000
40terIgtilili_t that I should say that I cannot approve of, the
ti 'recto "n by the Bank of England in this matter. flie
tile to: of that establishment, acting, I doubt not, with
servo
conscientious desire to protect the interests of
tL%tirs-toirl_nit,•:, have not taken, in m. ys . wisestcr.
ttict that object. _ With a iltsirt, to. discourage
•,eircu!4tlan of the notes of joint-stock banks, they-
km Nit.
notesles
yas have said to such as issue Bank of. Lie„-
cannot think that this mode of forcing issues