The Sun.
London, England, 1836-09-16 00:00:00

• - N
JOINT STOCK BANKS.

REPORT.
Ile F REPORT. Committee appointed to inquire into the ope-
ration 0, •
etisotnablisl the Act of 7th Geo. IV. C. 46, permitting the
iment of Joint Stock Banks, under certain restric-
, f nd whether it 13 expedient to make any alteration
111 the 1 provisi
t eferre, I '
sons el' that Aet, have considered the matters
Report
to them, and have agreed upon the following
4Leport . :.....
a close, though th.:Ar inquiries have not been yet brought to
that ti; to state
Your Committee feel it to be their duty , d
not 0 1 e evidence already taken before them has fully proved
instito • Y fair: expediency, but the urgent necessity of having
Whicitlit ells
a close and searching examination into the laws
thou, Ire" elate joint stock banks, the principles on which
to Ivlse•lt ablishments are conducted, and the consequences
roor 0 i they lead. No subject at the present moment
' 0 eeply importantof to the interests of the public, as well
to t.l .ie interests attenti individuals, could have engaged the
soured
3n of Parliament ; and your Committee have enda.-
with d
''° apply themselves to the execution of their duties 4
./1 ili gence, attention, and zeal.
Portal order to
i bring before your Committee the more m-
ad4ll it facts of the case, their Chairman was instructed to
huo: . 38, to the several joint stock banks throughout Eng-
"- and Wales, a circular to the following effect :

(Private Circular.)
„,
"`Downing-street, May 21,
of ( ""x7LEmEN In pursuance of a resolution of the House
alit :431111). rn
10ns, adopted unanimously on the 13th instant, a co-
the tee 'has been appointed "to inquire into the operation of
ale et of the 7th Geo. IV., c. 46, permitting the establish-
exa at,of joint-stock banks under certain restrictions, and to
pro• a line Whether it be expedient to make any alterations in the
to 1:1 sioos of that Act." Of that committe I have the honour
obt,::: chairman, and at the first meeting I was requested to
enasq flom the joint-stock banks such information as may
by thr e the committee to execute the duties confided to them
Legislature.
the 0 As it was considered just to the parties concerned that
purn, 3rnmittee appointed should be one of secrecy, for the
req4 'se of avoiding any disclosure of private transactions not
the a red by the public interest, in place of transmitting to you
any o sual order of the committee, issued under the power and
of the House of Commons, it has been judged more
Joint e that this communication should be addressed to the.
shoal Mock banks by me as chairman, and that your reply
zei
lel be addressed under cover to " The Chancellor of the
quer," and marked " Confidential Bank Returns." I
ispoll two papers, calling your attention to the particular
Willi Ou Which the committee require information, and you
Doss ;is? 8° good as to fill up the return with as little delay as
if p, 4`ne• The account of liabilities and assets (No. 2) should
whi )ssible be furnished for the three last half-yearly periods to
Tie .4 Your ace ounts are made up, and the answers to the
—lona
You, in Om paper (No. I.) may be made in reference to
trou last Period of balance. This may, I hope, diminish the
also `;e toPosec.l upon you; and the returns called for may
Your, .°l4 the cxmination of witnesses. You will not hold
withil elf precluded from adding any explanations not coming
the scope of these inquiries; and I can assure youthat I
whiet Place every confidence in the zeal and readiness with
the You will promote the objects of this inquiry, it is at
their "le tittle the earnest desire of the committee so to govern
all Pr.eceedings as most to conduce to the convenience of
1); rties coi icarned.—l am, &o.
(Signed) "T. SPRING RICE."
etlik e questions and form of account alluded to in the dr-
ill% as A illow:

" 1•
NT QUESTIONS.
of C • se of the joint stock bank, and date
cr ig business?
dist,: 2. Nu caber and situation of branches, and
---e° .ach from central bank ?
(t‘ 13- An count of nominal capital ?
of each
arL r of shares, and nominal value
" 5' N u mber of shares issued?
?,• Ari ,ount of paid-up capital ?
tba to of the several calls for paid-up
paid
arkti amount of the several instalments
cc P •
hior N umber of shares (if any) which may
ker:ts°?eeti forfeited for non-payment of instal-
:: 9- Rate of declared dividend ?
da Ip. Variations in rate of dividend, and
be;of suet' variations ?
" 11. Date 4)f deed of settlement, and num-
or persons vvlo have signed such deed ?
12. Copy of deed of settlement ; when it
as be( .n printed and published?
laid 13. Copie aof the last reports and accounts
oelfore the proprietors ; a statement of the
Atio
of the audit and examination to which
`bill ccounts .7tre subjected, and of the respon-
iyun. _
uer which such reports are prepared?
ahti 14- St atement whether the bank holds any
ei• Ivlaat at nount of its own shares or stock,
ther i
tru st, as security for advances, or in its
44, (right ?
bank ,„5' 11aces at which promissory notes and
,Vt- bills are made payable?
are iss mod?
17
whetb • Fate of interest paid by the bank,
cc c 7r. a '
deposits or balances of account?
Variations in such rate, and date of
••'rta.t .one
No, P. Date to which the account is made up?
--ACCOUNT OF THE LIABILITIES AND ASSETS OF THE
JOINT BANK OF

4' ' ANSWERS.

Anr_ty,TlEs.

£ s. d.
Amount of Prum
Notes /3ayablf a on de-
issory
Bakd, • • ... ........
Post tir is
Bills
Other iin al
Bi4444°:rgar :cepted by
lk Bank . ..........
beari);g. the en-
dorerner ,t or fmaran-
tee by te 13 a
••••••
, Depo sits -:
• Ilearirig in terest, and
kt wh:,t-rat e............
. Not 4ari ng interest
1341anee s of Aects•
eurre nt due from
th
interest, e ',kink :
1. 13eati • - and
No.
• ng
rate......
Allot ......
4. at w
bhat
e:.ring interest
er labilities, not
itiebad ed as above—

SSETS.

£ a. d.
Cash in coin and Bank
of England notes

Stock :-
1. Government Stock,
Exchequer Bills,Bank
of England Stock, In-
dia Stock or Bonds...
2. All other Stock and
Shares in PublieCom-
panies, distinguishing
the amount ( if any) of
' its own shares or stock
held by the Bank itself,
or intrust for the Bank

Bills of Exchange
Distinguishing the a-
mount (if any) overdue

All other securities not
included as above

T ot
„ 4 a 1 liabilities £ Total Assets...£
thenll objection was at first raised on the part of some of
e
quit establishments against furnishing the information re-
the ct ; brit this objection was very soon abandoned, and
of gltatrs;st r
the earliness was generally expressed, on the part
~ .
host .1 lint-stock banks, to lay before your Committee the
! Les'll e 3 '4l mute details illustrative of their mode of transacting
read', Your
Committee cannot avoid remarking, that this
take
carlhers to meet inquiry is in itself the surest pledge and
th e of the sound principles on which these or any
I,4,ihestablishinents are conducted, and of the fidelity with
llerfe,, the duties confided to directors and managers arc
(%oelLtn. ed• Had the objection been persisted in, your
sPeeVtee would not have hesitated in reporting the facts_
lnitteciP..6 confident that the House would not have per
tatty
,any individuals whatever to impede an inquiry inst-
Pal.,li‘ I).Y Parliamentary authority, and with a view to thei
..,. Interests.
fitth°l4' Committee have felt it to be their duty to sub-
bess,.° evidence to the reconsideration of the several wit..
expr: examined, in order that they might be enabled to
hitlie'ss an opinion whether the same might be published
llt risk or inconvenience.
tba N° this rule they made one exception ; in the case of
":iirt."°rwieh and Norfolk Bank, which has now ceased to
'01.11:1 4" in respect to which the same motives for reserve
the
witilot be
eeeltr, ole held to apply, your committee have published
evidence as it was given, without any second
niestreation to the witnesses. That case illustratesf
the ?reiblY the evils consequent upon a misapplicationo
ih_ PrieeNe_
-„l'g from r a of joint-stock banking, and the danger result-
-gale n klsmanagement and irregularity. At the same
hat t1;"°1" committee must guard against the inference.t
"tieue c disclosures made in that case by the three wit-
he isoi"aalined furnish any evidence of the mode in wine).
II ib,,4t-stack banks of England are generally conducted.b
Ilrede - co
ti ntrarY, many of the establishments appear to e
sotincitLY conducted • and though an inattention to the
"adact:rni,nciPles on Which banking operations
.should be
I'eney -eri_is exhibited in several cases, the ultimate so!-
t4gag „,' the banks, and their power of fully meeting their
t,et:l:4lll2—ei.etelvt!id,emniciest not be brought into doubt..
taken before your committee, and the
44111 ts 4.411' the Stamp-office, establish the fact that these_
Par'ie are
raPidlY extending in all directions ;that new corn
branch are daily forming, and that an increased number of
e‘'en in and agencies are spreading throughout England.,
Petitie_ 'Mall towns and villages,—that a principal of corn
ba,,k8,11 exists, which leads to the extinction of all private
kode intki to their conversion into banking companies. The
the Issue II tvilich this is effected, and the principle on which
batiknn,?f transferable shares acts at once on private
°Petlin'th'teg_en.e,railY on commercial credit, is fully deve-
" Your "lotence,
settle committee have had before them the deeds of
I),,aleennut If the greater number of the existing joint-stock.
4)1 some 0 f ttbueei Yr
Iperaodcienegd
Tile- ptortmsubmit to the House an analysis
provisions.
touch alittkgh the general objects of these establishments are
settle., e, Yet there are
, •“ent vvi • h . some variations in their deeds of
' Pirst ' nc It
, may be material to point out.
eotr,„.. , as to the power of altering the regulations of the
au
he a .
of
b etive duties are generally delegated to a
of ,sr °dY called the
while the- main body
ieel; oPrietors resery directors,
e to themselves the power of .
se-
thelguietslie, directors, and of altering from time to time
°Y which the directors are to be governed. In-

deed, it might have been expected that the proprietors
would always have reserved to themselves this power ; nor
should this general rule have been noticed, had it not been
necessary to point out a single exception to it, in the case
of one particular Company, in which all the powers of the
Company are vested in the directors of the central bank,
till January, 1838, and even after that date this authority
is only to be controlled by the General Board of Direc-
tors,' consisting of the central directors themselves, and of
the local directors of branch banks, appointed by them.
The deeds of all the other Companies expressly gtve a power
to the shareholders to make new laws and regulations.
" Secondly, as to the mode of conducting the business of
banking.
" This is for the most part set out in general terms.
Some banking companies content themselves with defining
the business to be banking in all its branches ;' in other
cases it is called the business of bankers.'

" Advancing money on real security is in no instance for-
bidden. The deeds of three companies are silent on the
I subject ; the rest expressly allow it.
" The majority of the deeds are silent on the subject of
the purchase of land. The - banking Company ex-
pressly allows it. The - banking company and the Union
banking company expressly forbid it.
" An advance of money on mining concerns is in no
instance expressly allowed ; in many it is expressly for-
bidden ; in the majority it is passed over in silence.
" Advances of money upon any public foreign Govern-
ment stock, or the stock of any foreign chartered public
company,' is directly sanctioned in the deeds of four
banking companies. Investment in foreign government
stock or funds is allowed by the deed of another bank.
Such advances are expressly forbidden by many of the
deeds, and are passed over in silence by many others.
" In no instance is the company forbidden to become the
purchaser of its own shares ; hut, on the contrary, power
is expressly given to do so by means of the deeds, and that
to any amount. The only modifications of this power
which your committee have found are in the case of one
banking company, in which the directors are authorised
to purchase shares in the case only of a refusal to admit
as a proprietor the person proposing to buy ; and in the
case of another bank, the number of shares to be bought
in by the directors is restricted to 40.

" Thirdly, as to the degree of publicity to be given to
the proceedings.
"No principle seems to be more attended to or pro-
minently put forward, than that of preserving secresy as
to the state of the accounts of the customers of the banks.
To this principle there does not appear to be an exception.
" The directors arc in general required to sign a de-
claration pledging themselves to observe secresy as to the
transactions of the Bank with their customers, and the
state of the accounts of individuals. In some of the com-
panies this declaration is also to be signed by all the clerks
and officers. One banking company goes so far as to re-
quire an oath to this effect. If the proprietors are dissa-
tisfied with the statement of accounts made by the direc-
tors, a power is generally reserved to appoint auditors or in-
spectors for the examination of the books ; but these
auditors or inspectors are required to sign a similar declara-
tion of secresy.
" No proprietor, not being a director, is entitled to in-
spect any of the books of the company.
" The directors are in general bound to exhibit to the
general meeting of the shareholders a summary or balance-
sheet of their affairs, and to make such further statement
or report as the directors may deem expedient and condu-
cive to the interests of the company. In the case of one of
these banks, even this is not obligatory by terms of the
deed, which leave it to the discretion of the directors whe-
ther they do or do not exhibit a balance-sheet. In a
very extensive bank, the proprietors annually appoint
auditors to examine the affairs of the company and to re-
port thereon.

" In some of the companies the principle of sccresy is
carried still further : two of the directors, selected from the
rest, are the exclusive depositors of the power of inspecting
the private accounts of customers. These persons are
sometimes called confidential directors.' This provision
is stated to be made in order that the credit and private
transactions of individuals may be preserved inviolate.'
Sometimes they are called managing directors,' sometimes
special directors.' In other companies, though all the di-
rectors have the power of inspection of the accounts of
customers, two of the directors are selected to inspect bills
and notes, in order to prevent the exposure of such bills
of exchange and promissory notes as may pass through the
bank.' These two directors arc called the bill committee.'
In two of the companies a single person, called the ma-
nager,' has the exclusive power of inspecting bills and notes.
" Fourthly, as to the terms on which the company is to
be dissolved.

" The deeds of all these companies contain some provision
for dissolution in certain contingencies. It is in general
provided that a dissolution of the company shall take place
by reason either of a certain amount of loss, or of a
voluntary agreement. Dissolution by reason of loss in the
great majority of the deeds is provided for in the following
manner :

" It is necessary to premise that the directors of each of
these companies are bound to set aside a certain portion of
the profits to form a fund to meet extraordinary demands,
which fund is sometimes called the surplus fund,' some-
times the reserve fund,' but more usually the guarantee
fund.' The ordinary provision for dissolution is to this
effect :—That if the losses sustained shall at any time have
absorbed the whole of this guarantee fund, and also one-
fourth of the capital paid up, then any one shareholder
may require the dissolution of the company, which shall
take place accordingly, unless two-thirds in number and
value of the shareholders shall be desirous of continuing
the company, and shall purchase the shares of those pro-
prietors who wish to withdraw. In one bank the dis-
solution of the company takes place upon a loss of one-
fifth instead of one-fourth of the capital. In two other
banks no mention is made of the guarantee fend.
" The provision of the great majority of deeds, as above
stated, is, that in the event of a given amount of loss, any
one shareholder may propose the dissolution. In some,
three shareholders arc required. In the Banking Com-
pany A. the requisition for dissolution must be made by ten
shareholders holding 200 shares ; in the Bank B. by one-
fourth of the company ; but if the loss amount to one-half of
the capital, then by any single shareholder.
" By the general provisions of the great majority of
deeds, the dissolution of the company, though duly proposed,
may be averted by two-thirds of the proprietors ; but in
some there exists no such restriction ; and on the occur-
rence of a given amount of loss, the dissolution, if proposed,
must necessarily take place. In other instances, on the ap-
pearance of a given amount of loss, the dissolution is to take
place immediately, even though no partner should pro-
pose it.
" The Banking Company C has provisions for dissolu-
tion peculiar to itself, and among others it is set forth, that
the partnership shall determine on the Ist of January,
2001.

" The Bank of D, besides the usual provision for disso-
lution in case of a loss, has a provision for dissolution if the
company shall not repay a contribution to a shareholder
who shall have been compelled to pay a debt of the
company.

" A dissolution, by voluntary agreement, may in general
be directed by a majority of two-thirds of the shareholders
in number and value, but with the concurrence of a certain
number of the directors.

" In some companies a voluntary dissolution may be ef-
fected by three-fourths of the shareholders ; in others by a
majority ; in a few others there is no provision for a volun-
tary dissolution.
" The House will see from this analysis that these deeds
of partnership, on which depend the whole transactions of
the banks and their responsibility to the public, so far from
being framed according to one common and uniform prin-
ciple, differ materially from each other in many most im-
portant particulars ; and, in some instances, the deeds con-
tain provisions open to very serious objections, as entailing
possible consequences highly injurious to the interests of the
public, and of the banking establishments themselves.

" Your Committee will now call the attention of the
House to some few facts, which illustrate the present
system.

" Subject to the local restrictions imposed for the pro.
tection of the privilege of the Bank of England, it is open
to any number of persons to form a company for joint stock
banking, whether for the purpose of deposit, or of issue, or
of both.

" 1. The law imposes on the joint stock banks no pre-
liminary obligation beyond the payment of a licence duty,
and the registration of the names of shareholders at the
Stamp-office.

" 2. The law does not require that the deed of settle-
ment shall be considered or revised by any competent au-
thority whatever, and no precaution is taken to enforce the
insertion in such deeds of clauses the most obvious and ne-
cessary._

" 3. The law does not impose any restrictions upon the
amount of nominal capital. This will be found to vary
from 5,000,0001. to 100,000/., and in one instance an un-
limited power is reserved of issuing shares to any extent.
4. The law does not impose any obligation that the
whole or any certain amount of shares shall be subscribed
for before banking operations commence. In many in-
stances banks commence their business before one-half of
the shares are subscribed for, and 10,000, 20,000, and
30,000 shares are reserved to be issued at the discretion of
the directors.
" 5. The law does not enforce any rule with respect to
the nominal amount of shares. These will be found to
vary from 1,0001. to 5/. The effects of this variation are
strongly stated in the evidence.
"6. The law does not enforce any rule with respect to
the amount of capital paid up before the. commencement of
business. This will be found to vary from 105/. to 51.

Stamps and Taxes, August 2, 1836.

BANK OF ENGLAND.

JOHN WOOD.

Circulation. Deposits. Bullion. Securities.
25 December, 1833 17,469,000 15,160,000 10,200,000 24,576,000
29 March, 1834 18,544,000 13,750,000 8,753,00025,787,000
28 June, 18,689,000 15,373,000 8,835,000 27,471,000
27 September, 18,437,000 12,790,000 6,917,000 26,915,000
2S December; 17,070,000 13,019,000 6,978,000 25,551,000
28 March, 1835 18,152,000 9,972,000 6,295,000 24,533,000
27 June, 17,637,000 11,753,000 6,613,000 25,221,000
26 September, 17,320,000 13,866,000 6,284,000 27,724,000
26 December, 16,564,000 20,370,000 7,718,000 31,764,000
26 March, 1836 17,669,000 12,875,000 8,014,000 25,521,000
25 June, 17,184,000 15,730,000 6,868,000 28,847,000
" Your committee cannot too strongly recommend to all
parties engaged in banking the utmost caution and pru-
dence in these respects, both at the present and in their

future operations,
" It was under the consideration of your committee
whether the law, and the practice which they have de-
scribed, did not require the interposition of the Legislature
even during the present session. They have been led to
decline pursuing this course because their inquiries are
incomplete, and because they feared that more incon-
venience might have resulted from an imperfect measure
than from allowing the evils of the present system to con-
tinue without legislative remedy till the next session of
Parliament. If a Bill had been introduced, prospective
only in its enactments, an inference might have been
raised contrary to that which is the decided opinion of
your committee—namely, that the existing banks are sub-
ject to any revision of the law which Parliament may
enact. The right of the Legislature to interfere, not only
in respect to banks to be established hereafter, but in re-
spect to existing establishments also, is a principle which
your committee are prepared to assert in the strongest
manner. They have now before them the accounts of the
existing joint stock banks, exhibiting in very minute de-
tail their mode of conducting their business. If, as your
committee strongly recommend, it should be the pleasure
of the House to renew this inquiry at the opening of the
next Session, a continuation of these accounts would ne-
cessarily be called for. It is the earnest hope of your
Committee that the comparison of these two series of
accounts may prove that the banking operations during the
recess may have been conducted with prudence and caution,
and more particularly that those who assume the responsi-
bility of issuing notes payable on demand have felt it to be
their pressing duty to examine accurately the state of the
exchanges, the proceedings of the Bank of England in re-
ference to its issues, and may thus guard against the dan-
gerous error of an imprudent extension either of credit or of
circulation when an opposite course was rendered necessary.
" Your Committee, in conclusion, feel it their duty not
only to recommend caution to the directors and managers,
but vigilance and attention to the proprietors of joint stock
banks also. By several of the deeds of settlement, imper-
fect as many of those deeds are, it has been already shown
that the proprietors are entitled to an inspection of the
balance-sheet, and in some instances to an examination of
that account. When it is considered how great is the re-
sponsibility which the law imposes on these share-holders,
your Committee cannot but hope that these functions will
be strictly exercised by the proprietors. On this check
much will depend during the interval. which must elapse
before Parliament is called upon to interfere further._
August 20, 1836."

. ,
WRECK OF THE RANGER.—A communication
from Quebec announces that the bark Ranger,' from Water-
ford, was on shore on the rocks at Bellchasse. She was con-
signed to Symes and Ross, and sailed in June last, with 223
passengers, and a general cargo. She was much damaged in
the bottom, and, it is feared, will become a total wreck. The
passengers were suffering from sickness and famine, being
without proyisiqns.

A STALE TRICK.—About one o'clock on Friday
Mr. J. Van Vierkan, a Dutch gentleman, residing at 49,
High Holborn, entered the Robin Hood, a few doors from his
own residence, on the opposite side of the way, and went into
the parlour to take some refreshment, and there he found
two men of genteel appearance, with whom he entered into
conversation, in the course of which one of them offered
to lay him a wager that he could not produce tool.
Without making a bet, he drew from his pocket one 201.
Bank of England note, a 101. ditto, and two 5/. ditto, and
85/. 10s. in sovereigns and half sovereigns, all of which he
laid on the table to the gaze of the strangers. He was
told by them to be careful of his menu, and he having ga-
thered and folded it up, one of them requested to be allowed
to place it safely in his pocket. To this he consented, and
all was deposited apparently right. The strangers then
drank his health, and, hoping to meet him another day
departed. Shortly after Mr. Vierkan had occasion to fee
for his money, when he discovered that it was
gone, and in
its stead some paper, in which was fourtcenpence in half-
pence, left.

TIIE POOR.—In reference to a statement made
yesterday by a morning Contemporary, that labourers' wages
in some parts of Essex have in no instance reached a higher
rate than that which was paid at the time allowance to
them was made by the overseer from the poor-rates, the Herald
of that county justly remarks that "if the poor mars be not as-
sisted through the change by the helping hand of those above
him--if the employer take the full benefit of a reduction of
poor-rate, without giving the labourer a proportionate ad-
vantage in the shape of wages, a mass of wretchedness, if not
of crime, may be engendered." The poor have by long habit
been accustomed to rely on relief from the poor rate, and a
rise in wages proportionate to the amount before derived from
his fund seems but reasonable. " When the master only pays
towards the support of the aged and the infirm, justice requires
that a sum equal to that which he before paid for the able-
bodied should find its way to the labourer, and we hope the
landlord will assist the tenant in thus improving, the condition
of the poor. We say this in our anxiety for the success of the
new law ; and we know that in the districts of this county
where the principle has been acted on, the farmers have found
their reward in the improved value of the labour they purchase."
On Saturday afternoon, a young woman, of genteel
address and appearance, went into the shop of Mrs. Dare, a
milliner in Walworth-road, and represented herself to be the
niece of Mrs. Fisher, the landlady of the Elephant and Castle
Inn, a few yards from the spot. She asked for a number of,
veils, collars, and other articles of millinery, of the most costly
description, to be sent for her inspection to the Elephant and
Castle. A boy was accordingly sent with her, entrusted with
articles to the amount of upwards of 101. She ordered him
to go round to the public door, as she always made it a point
of going in at the private entrance, but that she would take
the things to the apartments she occupied herself. The box
in which the articles were contained were given up to her, and
in a few minutes she disappeared, and has not since been
heard of.