The Sun.
London, England, 1856-09-12 00:00:00

ROYAL BRITISH BANK.

The failure of the Royal British Bank has led to
a variety of suggestions frohi those who are prone
to believe that Government restrictions to prevent
theri en ceeff.e e
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ms heonw n such disasters are better than the lessons of expe-
rience.
of
pru-
dent by determining the modes in which they shall
transact their business there are always a number of
persons ready, whenever any financial disaster oc-
curs, to propose measures of control, the fact being
wholly lost sight of that a multitude of regulations
serves merely to confuse the general public and to
give adroit schemers increased openings for evasion,
while at the same time it begets a false confidence
and extinguishes the habit of private vigilance. The
evils of such a system would be insuperable even if
Parliament, instead of being constituted as it is, were
composed of persons gifted with greater discernment
as to the true principles on which financial establish-
ments should be conducted than the ordinary trader
whose daily personal interests are all enlisted in the
question. It is damaging, therefore, whenever an
event occurs from which men should be taught to
gather for themselves a wholesome lesson, to seek
to divert them from the true uses of the adversity
by representing that it has happened not from any
want of wisdom on their part, but from the neglect
of sta.tesn3,7,l3 to frame preventive checks. In the
case of banks, when a stoppage happens, it is
usually con tended that greater publicity of accounts,
the supervision of a Government auditor, the com-
pulsory investment of the capital in Government
stocks, or other analogous provisions, should forth-
with be adopted. The whole, however, would prove
nugatory. The publication of bank accounts, unless
coupled with the names of the drawers, acceptors,
and endorsers of each bill discounted, is entirely
worthless, the supervision of Government auditors
would soon sink into deceptive routine, or be ac-
companied by vexatious formalities that would ren-
der it intolerable, and the enforced investment of
capital in any particular method would throw all
the responsibility upon the State in case through
political or other circumstances it should at any
time lead to embarrassment. Hard as the asser-
tion may seem, people who suffer from events like
that which has just occurred merely reap the con-
sequences of their own ignorance or false confi-
dence, except in so far as they are misled by such
tampering with the natural freedom of their ope-
rations as is promoted by the protective laws al-
ready in existence, and which the theorists in ques-
tion desire to see carried further. The fact that
the Royal Biitish Bank had been favoured by
Government with a special charter, and the suppo-
sition that the law which renders its directors and
shareholders liable to their last shilling must afford
an ample guarantee not only for their prudence, but
for the fulfilment of their engagements under all
possible circumstances, have no doubt betrayed
many of the depositors into the blind reliance from
which they have suffered, but in all other respects
they have only themselves to blame. They could
not be expected to recognise that unlimited liabi-
lity in many cases throws the management of banks
into the hands of a reckless class, and often causes
the proprietary to be composed of persons whose
liability, limited or unlimited, is worth little • nor
could they assume that the restrictions of a charter
framed by the Board of Trade, and containing a
proviso that upon one-fourth of the capital being
lost the establishment should be wound up, were
scarcely anything but snares. The fate of the Tip-
perary Bank, some of the Newcastle banks, and a
variety of others, might have warned them, but
these examples were not likely to be potent when
throughout the last session of Parliament the in-
estimable value of such regulations in all banking
concerns was universally insisted upon. In every
other aspect of the matter, however, they must be
answerable for their mistaken trust. But, although
the cry for Government meddling is unsupported
by reason or experience, and is suited for the con-
tinent instead of England, the public are entitled
to denounce, not merely the absence of such just
laws as would visit great financial offences with the
severity shown to other delinquencies, but the actual
encouragement given in such cases by the know-
ledge that a resort to the Court of Chancery will
be far more terrible to the creditor than to the
parties by whom he has been ruined. Until the
wilful concealment of losses, the misappropriation
of proprietary funds, and offences of this descrip-
tion generally, are made penal, and the prompt
and inexpensive procedure of a criminal court can
be invoked, it will be vain to hope for any improve-
ment. At present it is the offender, and not the
victim, who holds up the law as a threat, and all
the efforts of the latter, as has been seen in the
case of the British Bank, are exerted to obtain any
compromise which shall save him from the protec-
tion of the Winding-up Act. With regard to
ordinary companies, the new Joint Stock Bill
makes an important advance in the right direction,
but banks, in which more than anything else the
safety of the trader is concerned, are still left to be
conducted, like the Aberdeen Bank, the Tipperary,
or the Royal British, under;laws which seem framed
to deter prudent persons of large property from
having anything to do with them, and to insure
immunity to all who may desire to make them a
medium of depredation.—Times City Article.