The Sun.
London, England, 1857-11-26 00:00:00

THE UNIOW BANK OF LONDON.

(From a Correspondent of the Morning Advertiser.)
Several reports having acquired considerable circula-
tion with reference to the Union Bank, we are enabled
to supply some particulars which may be depended upcia
as perfectly reliable. There is no truth whatever in the
reports that the bank has suffered by the commercial
crisis in America—that it has lent a great Ameri-
can house in Old Broad-street 400,0001., —or that it
has suffered a loss of 60,0001. by the alleged for-
geries of Bright, the corn merchant, of Hull. The
circulation of statements to this effect at a mo-
ment like the present has, of course, tended to
depreciate
,the shares of the Bank in common with
those of the other joint-stock establishments in the
metropolis, and an opportunity has been taken to lower
their value upon the Stock Exchange. The circumstance
that the Bank could lend any one firm nearly half a
million 'sterling, would, if true, be a cogent illustration
of its strength, but it is not true that the Bank gave
assistance to the firm in question to anything like the
amount named.

The facts of the case are- these. The American
firm of the solvency of which there is. no question,
applied to the Bank of England for a credit of 800,0001.
to be extended over six months'. Securities, consisting
for the most part of American bands and other paper of
the highest class, and far in excess of the accommodation
required, were tendered, but the Bank of England re-
quired the guarantees of English houses of the first cha-
racter. A. meeting of the managers of six or eight
banks was then held to consider the propriety of gum-
ranteeing the advance, and ultimately it was arranged
that the London Joint-Stock, the Union, and the Ot-
toman Banks should guarantee the Bank of England
the advance of 800,0001., the banks tl be secured
in their turn by the acceptances of the American firm,
and the deposit of securities with a margin of main hue•
dred thousand pounds. The Union Bank; agreed to find
150,0001.. not 400,0001., and the balance of the 800,0001.
was guaranteed by the London Joint-Stack (with which
the American firm keeps its account) and the Ottoman
Bank. The Union Bank, it is known, transacted the
largest English agency business with America. They are
the agents of Duncan, Shearman, and Co., one of the
first houses in New York, and other firms of the
highest standing ; but their business was solely confined
to agency, and thy are in no way affected by the crisis
in Wall-street. _ . .

The general publicity given to the statement that the
Union Bank was the agent of the Western Bank of
Scotland and the City of Glasgow Bank, naturally led
to an apprehension that it might be seriously compro-
mised by the suspension of those establishments. The
bank, however, is not only covered to the utmost shilling,
but the fact is that it will have to return something like
150,0001. to the estate of each of the suspended banks.
The impression that the bank was a serious loser by
the forgeries and failure of Bright, of Hull, may be traced
to the fact, that it claimed to prove on the bankrupt's
estate for a considerable sum ; but the fact that the bank
merely proved, in its capacity of agept for a firm in
Montreal, is a sufficient answer to the allegation. Of
the soundness of the Union Bank, id Common with the
other great joint-stock establishmenp, there can be no
doubt, although it is suite pos:,-ible that the, future
dividends of those concerns will be declared in a spirit

____
of greater caution. __ •
.
The facilities which the joint-:tock banks have afforded
to the trading community, have, no doubt, mainly con-
tributed to the present extraordinary crisis in the com-
mercial world. Overtraling and speculation were the
necessary consequences of unlimited accommodation,
and the joint-stook banks will probably find that a larger
reserve and a reduced dividend will be the policy to
adopt for the future_ The joint-stock banks are now
charging their customers 11 per cent. for discounts, while
at the same time they allow 9 per cent. upon deposits
and balances on drawing accounts. The difference be-
tween the amount paid by the bank and the amount
charged to the customers for accommodation is but 2 per
cont.. and the margin is far too small to enable a bank to
pay ' • •eQ
s •ttablishment charges and run the risk of lossts
on discount transactions. The principal sources of profit
in all banks, whether private or joint-stock, are the
balances to the credit of the smaller class of customers.
The number of small accounts in the London and Wei.t-
minister, the Uuion, and the joint-stock banks must
amount to many thousands, and as no interest is allowed
on balances below lOW., the consequ.nce is that the
banks can employ a considerable portion of this money
at tho highest rate of interest prevailing at the time.
The profits derived in this manner are however sensibly
curtailed in moments of panic, and we believe we are
justified in stating that the directors of the leading joint-
stock banks, mindful of the necessity of a larger reser% e
to meet the demands of the class of small depositors
made at moments of panic, will not for the future recon -
mend. a continuance of the heavy dividends and bonus, a
heretofore paid, until the reseved funds bears a justtr
proportion to the liabilities of the bunk,