The Sun.
London, England, 1857-11-13 00:00:00

LONDON, FRIDAY EVENING, NOVEMBER 13, 1857.

THE LIVERPOOL BOROUGH BANK.

LIVERPOOL, Nov. 12.
The adjourned general meeting of shareholders
was held at the bank this afternoon. The represen-
tatives of the press were not admitted, but our cor-
respondent has been furnished with the following
copy of the official minutes :
" At an adjourned general meeting of the proprietors
of the Liverpool Borough Bank, held on Nov. 12, 1857,
at the bank in Water-street,
"Mr. W. Rathbone, chairman of the bank, in the
chair,

" Present-100 persons holding 37,924 shares, and
proxies were banded in for 37 persons holding 22,021
shares.

"The minutes of the proceedings at the general meet-
ing, held on the 10th inst., were read and confirmed.
" The Chairman mentioned that it was deemed expe-
dient to call another general meeting of the shareholders
for the 24th inst., principally for the formal adoption and
confirmation of the proceedings of this day, and that no-
tice of such meeting would be issued this evening.
" The directors presented the following report to the
shareholders, which was read :

" ' Report of the Directors to the meeting of Share-
holders of the Liverpool Borough Bank, held at the
bank on the 12th November, 1857.

" Gentlemen,—Since the last report to the share-
holders at their annual meeting in July it became appa-
rent to the directors that the position of the bank in re-
spect to losses incurred and capital locked up and un-
available rendered it impossible to carry on the bank,
except at the risk of being suddenly stopped by a run
that might at any time ensue from the disclosure of these
losses, even if the constant drain on its resources which
seemed to have set in did not compel its suspension
within a short period. It was therefore decided that it
would be the wisest course to seek assistance in London.
The state of the money market madeit extremely difficult
to obtain this assistance, and the bank, after various pro-
tracted negociations, failed to secure it in time to prevent
the necessttyof closing its doors at the moment when its
efforts seemed to be successful.
" ' It then became the duty of the directors to place
themselves in such a position as would satisfy the
shareholders, the creditors, and the public that they
were doing everything that could be done for the inte-
rest of all concerned. Under the able advice of Mr.
Field, whom they summoned from London to their
assistance, they called together a large number of
shareholders not previously connected with the manage-
ment of the bank to assist the directors by their advice
and sanction in all the steps necessary and advisable
to be taken. The chairman of the committee then
formed by these shareholders will inform you more par-
ticularly of its proceedings, and the directors would only
briefly state that it was further deemed desirable,
under the advice of Mr. Field, to summon a meeting of
the depositors, who elected a committee, with which the
directors and the Committtee of Shareholders have since
been in communication.
" Mr. Brancker, chairman of the Committee of
Shareholders, and Mr. Dixon, one of the managing di-
rectors, were deputed to go to London and open negotia-
tions with the bill brokers there ; the result is that the
London billholders and a large proportion of the deposi-
tors have agreed to accept the terms of payment pro-
posed by the bank, viz., in instalments of 6, 12, 18 and
24 months, with 7 per cent. interest ; and there is every
prospect that the remainder of the depositors and
the few other bill holders who have yet to be communi-
cated with will fall in with the terms which so large a
majority have already in this short space of time so
readily acceded to.

" To provide against the possibility of angry feelings
exciting shareholders and creditors to a course of action
which, though natural in its motives, might lead to re-
sults exceedingly detrimental to the interests of all con-
cerned, creditors as well as shareholders, the directors
adopted the suggestion of appointing mediators, who
might step in to calm irritation, and to point out the
absolute necessity of all parties—shareholders, directors,
and officers of the bank—uniting in one general effort of
cordial co-operation to make such a settlement with the
creditors of the bark as would be most conducive to
the interests of shareholders, whose forbearance in seek-
ing the fullest information that can be afforded is only
desired in so far and so long as the exercise of it is abso-
lutely necessary for their own interests.
Mr. George Holt, Mr. James Robinson, Mr.
Ed ward Moon, and Mr. James Aikin have kindly
consented to accept the office of mediators, and the
directors have only to expiess the wish that their
kindness in so accepting an onerous duty for
the sake of the good results to the welfare of
all connected with the bank may be reciprocated as it
desei yes by the determination to make the call for their
good offices as little needed as possible.
" With referenee to the pecuniary position of the
bank the directors have to state that more than one-fourth
of the capital is gone—an amount which under the deed
renders it imperative upon them to give the shareholders
the option of winding up the affairs of the bank, and
that three-fourths of the capital is so locked np as to be
at present unavailable for banking purposes. These are
rt
ehe only
g,
?r ds
`Withht we o points
roebflercetn
co thateftthoe the
is
reesgeenn essentialteral
a to state as far as
meeting.ff
s of the bank
the directors need hardly state that it is at all times ex-
tremely difficult to arrive atconolusions that will convey
reliable impressions as to the probable results of winding
up of matters involving such very large amounts, especi-
ally at a time when the varying aspect of the money-mar-
ket and the occurrence of unexpected commercial diffi-
culties of unexampled intensity bring new elements of
embarrassment into play. They consider, however, that
they have ground to hope that a portion of the capital
may be preserved ; the amount so preserved will mainly
depend upon the good management and judicious nur-
sing of assets, which the arrangement now proposed will
enable those gentlemen to exercise who are about to take
charge of the bank's affairs-
" The resolutions which will be submitted for your
adoption have for their object the voluntary winding up
of the bank under and in accordance with the provisions
of the act of 1857, which was framed with the intention
of leaving the conduct of affairs in the hands of share-
holders themselves, subject only to the interference of
the Court of Chancery when it is required to compel an
inconsiderable minority of shareholders or creditors to
yield to the wishes of a majority, and to arm the com-
pany with sufficient power to enforce on reluctant share-
holders a compliance with calls made on them in order
to enable the bank to discharge its liabilities.
" The directors are happy to inform you that the re-
gistration of the company resolved on last Tuesday is
now completed.
" Having thus laid before you a statement of the
ep
ur on
lc
seteadni
en
egss
which
f h h
itehe
hdait
vr rectors c
givenrs wr
st
eh referenceto
this
eteot
nt the ci r-
and
having indicated the steps proposed to you in the pre-
sent posture of affairs, the directors beg to refer to what
cw
ei
nei
tstteaet
of sbnya rMe
hrei
dB k e
rrsa, nacnde r Int hweh
acith aof the
Mr. Harwood
Banner may wish to say.
Mr."L `Liverpool 08l Boroughrancke"r: Chairman.
Nov.
2.
ers' Committee, then presented the following re-
port on behalf of the committee, which was read:—
BWchinakir:LAaiTl: chairman of Sharehold-
ers'
The Committee of Shareholders of the Liverpool
Borough Bank, informally appointed, no doubt, but pre-
senting at the time, as has been since eminently proved,
the instrument most ready at hand, under all circum-
stances, best calculated to aid the directors in deciding
on such measures as the urgency of the circumstances
required, beg to present the following report :
"`After agreeing on a recommendation to the direc-
tors to convene a meeting of the shareholders, the com-
mittee proceeded to take into consideration the best
mvedhbwooaiohotnsl
woidvescreei
haldtdohoe:naefrftgsr.aahstetpeheiiototpensonr
abosmoaeaotuilmgbwlhkdeheol
intnwrdgpegbeoaitutsi hnlhonedei
reasonably
scacepproberpeoni
coydrfstboi
eetaptdvoboeititssetoaaeolol
successive
fbudpii
importance
hcfcepereet
oresoe
sarbdttitiahhvai nteseenhertal ,apesienwtBrt ohi
o were
raed hehcas
settlementi
cre-
ditors ctaenwhot..
of their claims.

" After some mature deliberation it was decided to
recommend the payment in cash of all deposits under
2001, no soon as the directors should be in a position to
do so, and to offer to all the other creditors of the bank
alike the bank's promissory note at 6, 12, 18, and
24 months' date, with interest at the rate of 7 per cent.
per annum. Onerous as this latter condition may
appear, it was only with great difficulty that a large
and influential portion of the creditors could be brought
to give their assent to it. That difficulty having, how-
ever, been overcome, and a large number representing
in amount nearly three fourths of the whole having
now acceeded to the propositions, it may be fairly as-
sumed that they bear upon them the stamp of reason-
ableness, both in respect of the creditors and of the
shareholders.

" It is further hoped that the unanimity exhibited at
the meeting of Tuesday and the determination evinced
to proceed with the liquidation of the bank's affairs in
the best possible manner will not be without its effect in
influencing such creditors as have not yet assented to
come into the arrangement.

" The Sub-Com—mittee of the Shareholders' Com-
mittee having had a somewhat more intimate access to
the bank's affairs, it may be expected that this report
should contain some allusion to it.
"' So far as the shortness of the time they have been
able to devote to the inquiry and their previous utter
ignorance as to the real state of the accounts will admit
of their arriving at any conclusioa whatever, they ven-
ture to express their opinion that of not only the 2 original
capital of the bank, but also of the assets held by them,
a considerable portion is so locked up in various kinds of
securities that much time, great forbearance, and good
management will be required to insure their advantage-
ous realisation, and that upon the due combination of
these several elements will mainly depend the eventual
result as regards the original capital of the bank.
" Such being the case, and the bank being about to
issue its obligations to its creditors, as before stated, it
becomes imperative on the Shareholders' Committee, in
order to insure the punctual fulfilment of those obliga-
tions, to recommend to the directors to make a call on
the shareholders • indeed, this condition had been already
insisted on by the' creditors.
They trust, however, that the dates for its pay.

ment may be arranged so that, while securing the object
which renders it necessary, it may be made to press with
as little severity as possible on the shareholders.
" The meeting ot Tuesday having passed a resolution
to place the company usder the Joint-Stock Companies
Act of 1857, •ertain other resolutions requisite to carry
out fully the objects for which that course was adopted
will be proposed to the adjourned meeting to-day.
Should the shareholders, as they will see it to be their
interest to do, approve them, the functions of this cm-
mittee will naturally cease, unless it should be the plea-
sure of the shareholders to ask for their further services.

" The committee have been too fully oocupied to
allow of their going into any inquiry as to the origin of
the present difficulties, feeling likewise that the time bad
not arrived for such an investigation. Whether it shall
be the pleasure of the shareholders to institute it through
them, or otherwise, must be left a subject for further
consideration.

" The committee cannot, however, conclude the
report without expressing the approval of the manner in
which the directors of the bank have received the various
suggestions and recommendations they have made to
them from time to time, and of the realiness with which
they have during the whole period of their joint action
afforded to the committee every information in their
power on the different subjects to which their attention
has been directed.
" JOHN B. BRANCKER,
" Chairman of the Committee of Shareholders.' "
The report of the accounts of Messrs. H. Banner
and Son was next read. It stated that they had
compiled a statement of the affairs of the bank, but
the committee, their legal advisers (Lace and Co.),
td Mr. Field were of ()pinion that it was not to
o interest of the shareholders that that statement
should be read. The interests of the shareholders
depended upon two matters..-first, on the necessity
of neither doing nor saying anything which might
directly or indirectly touch the position of any par-
ties who have engagements with the bank, espe-
cially in a case like this where there is a large quan-
tity of paper bearing the bank endorsement which
ought to be met by the parties primarily liable upon
it ; and, secondly, that the assets have been valued
at the present depreciated rate of such securities in
the market—rates which, in realising, it is hoped
will be exceeded • but any statement of those valua-
tions could tend, making known the depreciation
at which they have been taken, to operate against
what is considered the intrinsic value of the
respective properties, such value, as, in fact,
in improved times would certainly in most
cases be obtained. A large portion of these assets
consist of securities of various kinds, in land, in
ships—some few in shares and other matters. To
get the valuations of these securities as correctly
and as safely as possible, it obtained the assistance
of Mr. Culshaw and Mr. Lamport, whose estimates
are formed upon the present depreciated value of
the different properties submitted to them. It will
be understood that such valuations can little be de-
pended upon all the prices which might be obtained
when mercan. ile matters settled do t", n again to their
accustomed course ; and it will also be well under-
stood how largely the circumstances of the times
have operated against the interests of the share-
holders, both as regards the value of the property
which they hold, and the increase in the liabilities
of the bank, which latter has almost daily been tak-
ing place by the suspension of mercantile houses
with engagements bearing its endorsement. The
estimate of these engagements is large certainly ;
but, after all, it is merely an estimate, and it is
quite impossible to say whether or not the amount
may be exceeded, and to what extent.

"Into the accounts upon which the losses have oc-
curred" continues the report, "I have not had time to
enter closely. They have moat of them been curreat
upon the books of the bank for some years, and I see
that large amounts have been written off from time to
time to the debit of profit and loss, the sum of
371,1781. 19s. ld. having been written off between June,
1854, the year in which Sir. Oliver stopped, and the
same time in 1857. Covering a period of four years
only it has been thought, and probably with reason,
that one or two prosperous years would place these
accounts upon a legitimate footing, and meantime the
business of the bank was so large and the real profit so
great that any deficiency occurring might be made good
out of the annually undivided portion of those profits.
Unfortunately this project has not been realized, and the
crisis which has now come upon this institution has been
in its consequences, and still is, most disastrous. In
conclusion I have to say that I have thought it right
to the proprietors to examine the accounts of the direc-
tors and managers. The latter have always been in
credit, and of the former two only have overdrawn ha-
lands—one is oovpre4 .to a considerable extent, and
more than this differmiie is now about being brought in
in cash, the other will, doubtless, shortly be arranged.
I find that Mr. Smith, the late manager, was a purchaser
of shares as lately as May last, the prim, paid being 101.
6s. 3d. per share ; and your respected chairman has
been a purchaser still more recently. I find also that
the only shares held by the directors which have changed
hands for many years were a small lot transferred by one
director to another in Feb., 1856.
"HARMOOD W. BANNER, Aocountant."

T"
That following
the
re resolutionspo report
el were
hee r pa
directors,e sseel u
includinganim us unanimously:—
that
made by Mr. Banner, now read, be and the same is
hereby adopted.
"That the several acts done and measures taken by
the committee of shareholders appointed by the board of
directors, and an informal meeting of shareholders, held
on the 30th day of October, 1857, be and the same are
hereby adopted and confirmed.
"That the report of the committee of shareholders,
mentioned in the last resolution now road, be and the
same is hereby adopted.
" 4. That the gentlemen constituting the committee
of shareholders referred to in the preceding resolutions
that is to say, Mr. J. B. Brancker, Mr. Samuel Martin,
Mr. John Dickinson, Mr. Gilbert Henderson, Mr. John
Laird, Mr. John Marriott. Mr. H. J. Webster, Mr.
Cooke, Mr. Thomas Blythe, Mr. Brawley Moore, Mr.
William Snlith, Mr. Thomas Hibbert, Mr John Park,
211 r. Fletcher Rogers, and Mr. John Bristow—be ap-
pointed a committee on behalf of the shareholders to
superintend, in conjunction with the board of directors,
the future conduct of the affairs of the bank ; and that
such committee be empo ivered to add to their number,
to appoint a sub-committee, and to make such regula
tions for transacting their business as they shall see fit.
"5. That the thanks of this meeting be offered to
Mr. Holt, Mr. Robinson, Mr. Aikin, and MrlE. Moon
for Consenting on the requisition of the directors and the
committee of shareholders to act as mediators in all
questions arising between the bank and its creditors,
and between the shareholders iu the bank inter se, and
that they be requested to continue to give the bank the of their valuable services in the earns capacity.
6. That it appears to this meeting that the losses of
stphel
tuetslceEommuepeedat
of ht
the
ev havee
companyex h a u s t e
cda thed f
tuhned nR
et
sheer
vdeede d o
Sur-
f
and also one-fourth part of the capital of
the company actually paid up by the proprietors ; and it
also appears that three-fourths of the said capital have
become unavailable by reason of the aforesaid losses of
the company, and of the remaining capital thereof being
invested on securities which are not at present conver-
tible.
"7. That having regard to the circumstances men-
tioned in the last resolution, all the proprietors of the
company present at this meeting require that the com-
pany be forthwith dissolved, and declare that the same
stands and is dissolved accordingly, subject, neverthe-
less, to the provisions of the deed of settlement of the
company, and of the Joint-Stock Banking Companies
Act, 1857, whereby it is provided that for the purpose
of winding up the company its corporate estate and all
its corporate powers shall continue.
o 8. That the event having occurred, upon the occur-
rence of which it is provided by the deed of settlement
that the company is to be dissolved, the company be
wound up voluntarily under the Joint-Stock Banking
Companies Act, 1857, and the acts incorporated there-
with.

9. That J. B. Brancker, of Liverpool, in the county
of Lancaster, broker, J. Dixon, of the same place, mer-
-Betrhiee masnatwenP of the same place, broker, Philip
place, insurance broker, and H. W,
cßnhwnaaanntse°nr P,: of
of the same place, accountant, be and they are
affairs of the company and distributing the assets
thereof.er te
hbeyappointed liquidators, for the purpose ofjwinding
" 10. That as between the liquidators and the company
the authority given by the Joint-Stock Companies Act,
1856, to any two of the liquidators to exercise all the
powers thereby given to the liquidators, shall only be
uh
p
exercised subject to such restrictions and qualifications,
if any, as the liquidators, or a majority of them, may
from time to time appoint ; but no creditor or other third
party shall be bound to inquire whether the acts of any
two of the liquidators are duly authorised under this re-
solution, or be affected by express notice that they are
not so authorised. "
11. That the liquidators be requested to consult
from time to time with the directors' and the sharehol-
ders' committee as to the best mode of dealing with the
interests of the bank, and, as far as they find they can
properly do so, to carry out the winding.up of the affairs
of the company with the sanction and concurrence of
these bodies.

" 12. That in the event of any vacancy by death or
otherwise occurring in the office of any of the liquidators
now or hereafter to be appointed, the company, in filling
up such vacancy, shall adopt the following principles,
that is tosay :—lf either of them, the said J. B. Brancker
and J. Dixon, or any person hereafter to be appointed
in the place of either of them, shall cease to be a liqui
dator, the company may supply the vacancy occasioned
thereby in such manner as it shall think fit. If the said
P. Serjeantson, or any person hereafter to be appointed
in his place shall cease to he a liquidator, the company
(until the debts of the London creditors shall be paid or
secured to their satisfaction) shall only appoint such
person to supply the vacancy occasioned thereby as shall
be approved by the London creditors of the company. It
the said P. Rawson, or any person hereafter to be ap-
pointed in his place shall cease to be a liquidator, the
company (until the debts of the Liverpool creditors of the

company shall be paid or secured to their satisfaction)
shall only appoint such person to supply the vacancy
occasioned thereby as shall be approved by the Liverpool
creditors of the company ; and if the said H. W. Banner
or any person hereafter to be appointed in his place,
shall clime to be a liquidator, the company shall only
appoint such person to supply the vacancy occasioned
thereby as shall be approved by the other liquidators for
the time 'Aug.
" 13. That the remuneration to be paid to the liqui-
dators be referred to the directors' and the shat eholders
committee who are hereby authorised and empowered to
settle and determine the amount and mode of payment
thereof, and if they shall feel any difficulty in the matter,
then that Messrs, Holt, Robinson, A ikin, and Moon be
requested to give them their advice and assistance.
" 14. That this meeting approves an arrangement
being made with the creditors of the company, and
authorises the liquidators to settle with the creditors on
the following terms and conditions, that is to say—
" 1. That all creditors upon deposit or open account,
other than shareholders, for sums not exceeding 2001. be
forthwith paid in full,
"2. That all creditors upon deposit or open account
other than shareholders, for sums exceeding 2001. be paid
by four equal instalments, to 'be scoured by the pro-
missory notes of the company, payable respectively, 6,
12, 18, and 24 months, from the 27th day of Oct., 1857,
with interest from that date at the rate of 71. per cent.
per annum.
"3. That the holders of bills bearing the liability of
the bank shall be entitled, if they require it, to the pro.
missory notes of the bank for the amount of their unpaid
bills for the time being, or such part thereof as they shall
require, such promissory notes to mature at 6, 12, 18,
and 2imoaths, from the said 27th day of October, in
equal instalments of ss. in the pound each, with interest
at 71. per cent. per annum, to be computed from the
maturity of the bills in respect of which such notes are
given. The bank is to have the right of redeeming such
promissory notes before the same become due in whole,
or in sums of not less than is. in the pound, on giving
notice the holders of their desire so to do, on condition
that the unpaid bills for which such promissory notes
shall be given shall be delivered to, the bank upon trust
for the benefit of the parties delivering the same, and in
order that the bank as their agent may collect the
amount thereof from the other parties thereto, but not
so as to divest the legal property of the holders in such
bills, such collection to be made by the bank to the best
of their judgment, and all sums of money collected by
the bank from the other parties to such bills shall be
immediately applied in liquidation of the promissory
notes given by the bank in lieu of such bills which have
the longest time to run, the bank to be credited in ac-
count with the holders of such notes with interest at the
rate of 71. per cent, per annum on the moneys so paid,
and the holders of the bills are to have the right of re-
quiring the re-delivery of such bills, or any of them, on
returning to the bank their promissory notes received
against them ; but the bills so re-delivered are to he
subject to such arrangements as the bank may have made
in the meantime with the parties liable thereon.
"4. That shareholders who are creditors upon deposit,
on open account, are not to receive the amount of their
credit until all their liabilities to the bank and the bank's
liabilities to the public have been liquidated.
" 5. That depositors and other creditors having hills
running with the hank under discount are not to receive
promissory notes for the sums due them until the bank
is satisfied of the safety of such bills.
"6. That the acceptances of the bank given out against
credits are to be paid at maturity if the liquidates shall
deem it safe and advantageous to the bank to do so.
" 7. That upon the realisation by the bank of any se-
curities deposited with the bank against any particular
bill or bills the proceeds thereof shall be applied imme-
diately as received towards the liquidation of such bill
or bills ; and in case of the bank having given their pro-
missory notes against such bill or bills to the holders
thereof, then the proceeds shall be applied towards such
of the said promissory notes then current as shall have
the shortest time to run.
" 8. That dividends and interest shall be paid to the
holders of bills who may be entitled to promissory notes
but who may not require the same, or who may have
returned their promissory notes to the bank in like man-
ner as if such notes had not been given or had not been
returned.
" 9. That the chief basis of the settlement with the
creditors of the bank hereby authorised is, that calls
amounting to 51. per share shall be made on the share-
holders as soon as the law will permit, and shall be en-
forced with all reasonable speed.
" 10 That in passing this resolution the shareholders
reserve to the liquidators the power to exclude any
creditor who shall not signify his assent to the settlement
hereby authorised by a day to be fixed by the liquidators
and by the creditors' committee from receiving a higher
rate of interest than the law would award.
" 15. That this meeting request the creditors of the
bank to continue the present or some other committee
to represent them during the winding up of the affairs
of the bank.
" 16. That, inasmuch as interest, at the rate of 71. per
cent, per annum is to be allowed to the creditors of the
bank, the like rate of interest shall be adopted in the
settlement of all accounts between the shareholders and
the bank, and shall be computed from the 27th October,
1857. All balances due to or from any shareholder on
banking account are to be transferred as of the afore-
said day to his shareholder's account, and to be dealt
with accordingly."

THE MONEY CRISIS.

(From the Times' City Article.)

The Bank Charter Act is abrogated. Its fate at
the second time of trial has been the same as at the
first. The English Government have resorted to
the notification that the Bank are authorised to ex-
tend their issues on approved securities without
regard to the amount of bullion in their vaults, at
a rate of not less than 10 per cent.
Although the announcement will give immense
relief from fears which were rapidly spreading,
there can scarcely be au Englishman who will not
receive it with deep regret from the humiliation
it involves. It must have resulted from one of two
causes—either blind fright or an inherently un-
healthy condition of business which prevented our
merchants from sustaining themselves against a
rate of discount such as is borne at Paris, Hamburg,
and a number of other centres of commerce. In
either case the conclusion is equally lowering to our
fame as a mercantile nation. It is satisfactory to
believe that the measure was neither asked for nor
recommended by the Directors of the Bank of
England, or any delegated representatives of the
leading mercantile or banking firms. At the same
time, in justice to the Government, it must be ad-
mitted that the period had obviously arrived when
protective steps of some kind had become absolutely
necessary. The position of the Bank of England
and the private banks was never one of higher con.
fidence, but the apprehension was evident on all
sides that a withdrawal of deposits from the dis-
count houses and joint-stock banks might com-
mence at any instant and totally cripple their
power to continue further accommodation ; that
the Bank of England, from the point to which their
reserve has been brought by the sudden sweeping
away of nearly two millions of gold for Ireland and
Scotland, could in such case afford no adequate
help, and consequently that if a resistless panic was
not to be considered as having actually commenced,
we were in a position in which no one would calcu-
late on its being kept off even for a single hour.
But there were remedies available other than
that of breaking and destroying the law—for a law
which has been condemned on each occasion of trial
must be looked upon as destroyed. The state to
which we had come had not been brought about by
any fault of the Government or of the community
at large, and it was for those who had occasioned
it to find their own means of extrication. They
did not look about for those means, because they
knew they could obtain relief elsewhere. If this
conviction animated them they would long before
the present week have concerted measures for de-
fence. The whole history of our situation is plain.
For years past certain provincial joint-stock banks
have gambled to an incredible amount by means
of what are termed re-discounts—that is, with a
limited capital they have granted accommodation
to an almost unlimited extent, sending the large
proportion of the bills thus negotiated to the dis-
count establishments in London, who, in turn,
discount them for the joint-stock bank on the
strength chiefly of the indorsement of such bank,
and not upon any careful estimate of the responsi-
bility of the drawers or acceptors, or the legiti-
mate character of the transactions they represent.
" Of course we are safe with the indorsement
of the Liverpool Borough Bank," is the cry. "The
character of the business may be doubtful, but its
shareholders are all liable to their last farthing."
Again, " Why should we hesitate with the Western
Bank of Scotland ? Among its proprietary are two
or three names which are alone good for as many
millions." But how is the money obtained which
is thus freely granted by the London houses 7 The
security relied upon is the ultimate responsibility
of a certain number of shareholders scattered over
a large district, and which, so far from having any-
thing in common with a sound banking security,
is wholly unavailable in emergencies, and can never
be realised except through protracted legal pro-
cesses ; but the money advanced consists of deposits
lodged for the most part at call with the dis-
count houses, or at notice ranging perhaps to a
month with the joint-stock banks. Here, then, is
a deliberate breach of every recognised banking
principle, and it is one that on each occasion of
trouble has led to the same results. The London
money-dealers cannot have been insensible to the
peril ; but their practice is to carry on the system
until its inevitAble consequences develops them-