The Sun.
London, England, 1833-08-22 00:00:00

BANK CHARTER.

The following is the opinion (and it appears to us to be, a
well-reasoned one) of the law officers of the Crown on the
contested clause in the Bank Charter:—
" Lincoln's-Inn, Aug. 9.
"My Lord,—We have had the honour to receive your
Lordship's letter, requesting our opinion upon the question,
whether under the existing laws a joint-stock deposit
bank can be established in London, or ssithin 65 miles
thereof, and we have no hesitation in answering in the
affirmative. Such a hank is not contrary to the common
law, and it can only be considered as prohibited by the
statutes connected with the monopoly of the Bank of
England. If those statutes were doubtful, as they are in
restraint of trade, they ought, according to an established
rule, to be construed strictly against the corporation, and
favourably for the public; but after a very deliberate con-
sideration of all these statutes, we are of opinion that their
clear intention was only to prevent the establishment of
any other such bank as the 13ink of England by Parlia-
mentary enactments, and to prevent all companies or
partnership, under whatever denomination, that might
lawfully carry on the business of banking by the autho-
rity of the common law, from entering into rivalship with
the Bank of England, by issuing paper to he used as part
of the circulating medium.
" We must premise that the common law knows no
distinction between two joint-stock companies and any
other partnerships ; and that if a joint-stock deposit bank
within 65 miles of London he prohibited, any banking.
of more than six partners within the same limits, we con-
ceive, is equally illegal.
" The Balk of England was established under 5 Wil-
liam and Mary, c. 20. This statute, which contains the
original contract between the Bank of England and the
public, has no restriction against the erection of any other
bank by Parliament, nor against carrying on any branch
of banking business, by corporations, companies, or indi-
viduals. It merely prohibits the Governor and Company
of the Bank of England from buying or selling goods,
leaving them at liberty to deal in bullion, or to act as
pawnbrokers, and sell unredeemed pledges.
" Next come Et and 9 William 111., c. 20, for increasing
the capital of the Bank, and enacting by section IS, that
' during the continuance of the corporation of the Go-
vernor and Company of the Bank of England no other
hank or any other corporation, society, fellowship, com-
pany, or constitution, in the nature of a bank, shall be
erected, or established, permitted, suffered, countenancer)
or allowed, by Act of Parliament within this kingdom.'
We believe it is admitted that the meaning of this was only
to prevent the establishment of any other bank, which
it required a future Act of Parliament to erect, establish,
permit, suffer, countenance, or allow. At that time pri
vate bankers were called goldsmiths; and it was thought,
that without an Act of Parliament, what was then called
a bank meld not be established. This statute did not
intend to render unlawful any company for banking which
then existed, or to prevent the establishment of any bank
which was permitted by the common law. By a different
interpretation, no banking could have been carried on by
any number of person., or by any individual in London
or any part of the kingdom, except by the Bank of Eng-
land, for the enactment is universal, containing no excep-
tion as to place or number of persona. Indeed, the conse-
quence would be, all the London banking houses now esta-
blished would he unlawful, and they can no longer be
' permitted, suffered, countenanced, or allowed.' But as
they required no Act of Parliament to legalize them, they
were and are lawful, subject to the restriction of becoming
parties to promissory notes and bills of exchange, imposed
by the statutes which we now proceed to consider,
" The 6th of Anne, co 22, s. 9, enacts that it shall
not he lawful for any body politic or corporate whatso•
ever, erected or to he erected, other than the said Gover-
nor and Company of the Bank of England, or for other
persons whatsoever, united or to be unitA, in covenants
or partnership, exceeding the number of six persons in
that part of Great Britain called England, to borrow,
owe, or take up any sum or sums of money on their bills
or notes payable on demand, or at any less time than six
months from the borrowing thereof.'
" From this time there could be no hank of issue,
public or private, in any part of England, consisting of
more than six persons, except the Bank of England ; but
banks of deposit were left precisely as they were before
the Act passed, and if a joint-stock bank of deposit
allowed by the common law was before lawful, it con-
tinued to be so. The express prohibition to such common
law banks to issue the securities enumerated was an im-
Fesegnition of their power to carry on any other
4. The 7th of Anne, c. 7, a. GI, merely-re-enacts the
9th section of the 6th of Anne, c. 22.

" Finally, we come to the 15th Geo. 11., c. 13, a. 5,
copied by the 89th and 40th Geo. 111., c. 28, s. 15, upon
which the law now stands, and which does not in any
respect extend the monopoly of the Bank of England.
" The object is declared to be to remove doubts in re-
gard to the erecting any other banks by Act of Parlia-
ment, end the privilege given by former Acts to the
Bank of England of exclusive banking ; and it enacts that
no other bank shall be created, established, or allowed by
Parliament, and it shall not be lawful for any body
politic, or for any other persons exceeding six, &c. to
borrow, &c. (in the words of the 6th of Anne); and
the Bank of England is declared to be and remain a cor-
poration, with the privilege of exclusive banking as before
recited. It is not to have the privilege of exclusive
banking absolutely, but as before recited. Here, there-
fore, is an euutneration of its privileges, and none are to
be claimed which are not here recognised. What are
they ? That Parliament shall not interfere to legalize :my
bank which would not be lawful by the common law, and
that no paper to be used as cash shall be issued by any
corporation or partnership consisting of more than six
persons. The prohibitions of 8 and 9 William 111., and
6 Anne, c. 22, s. 9, are combined, and it is substantially
declared that the claim of the Bank of England to exclu-
sive banking should be confined to these. If hanks of
deposit were to be prohibited, words ought to have been
added to the effect that it should not be lawful for any
corporation or partnership consisting of mere than six
persons to have or receive money for safe custody from any
of his IMajesty'a subjects, or to pay any money upon any
check or order, or to lend or owe any money, although no
hill, note, or security maybe given or taken for the same.'
If a private bank of deposit be unlawful, the prohibition
against drawing and accepting notes an'l bills so anxiously
introduced and repeated in those Acts was wholly unneces-
s try. The object of this prohibition could not be to
prevent commercial partnerships consisting of more than
six persons from drawing and accepting such notes and
bills in the course of their commercial' dealings ; for it has
been expressly determined that the prohibition does not
extend to notes and bills so drawn and accepted.
" The statute 7 Geo IV., c. 46, does not touch this
question. The objet of this statute was to relax the
monopoly of the Bank of England with respect to banks
of issue with more than six partners, to be established
more than 65 miles from London. Such banks, before
unlawful all over England, were made lawful upon cer-
tain conditions, and have certain privileges conferred upon
them of suing and being sued if established more than 65
miles from London ; but in London, and within the circle
of 65 miles round it, the law with respect to banks and
banking remains exactly as it before stood.
" The result appears to he, that all banking companies
!bleb could exist, and be carried on by the authority of
the common law, may still lawfully exist and carry on any
banking business from which they are not expressly pro-
hibited. We therefore think they may be established as
hanks f deposit in London, or within 65 miles thereof,
or in any part of England.
" The circumstance of no
joint-stocl- bank of deposit
being hitherto established in London may probably have
arisen from the difficulty of carrying on such a concern
beneficially without a power accept bills of exchange at
a shorter date than six month,,ot and, still more, without a
power of ruing and being soed in the name of one of its
officers. No other corporation than the Bank of Eng-
land could have acted as a bank of deposit,et of Parliament
for there is no
other corporation created by charter o
for the purpose of banking, in any of its branches ; and a
corporation could not lawfully engage in banking if cre-
ated for a different purpose.
" Till the expiration of one year's notice, and repay-
ment by the Government of the debt due to the Bric ;
England, joint-stock banks of issue cannot be estabarhf t
in London, or within 65 miles thereof ; but we areL of
opinion that in this circle a joint-stock bank of deposit
may now be established under the existing laws. We feel
the mast sincere deference and respect for the opinions of
eminent lawyers which are stated to have been recently
given to the contrary, but being consulted by your
Lordship, we are bound distinctly and positively to state
Our own.
" We have reason to think that our opinion coincides
with that of other eminent lawyers given before the pre-
sent controversy began.
" We have the honour to be, my Lord,
" Your Lordship's obedient servants,
W. HORNE.
" .I. CAMPBELL.
" Lord Viscount Althorp."
The following are the opinions of Sir E. Sugilen and
Mr. Richards on the "Joint-Stock Bank" Question
" Fint....Whether, undo' the existing laws, a :Pi"'