The Sun.
London, England, 1857-10-29 00:00:00

THE LirERPOOL BOROUGH BANK.

The failure of the negotiations with the Bank of Eng-
land for the support of the Liverpool Borough Bank has
been caused, not by any withdrawal on the part of the
Bank of England, but from the refusal of the other Liver-
pool establishments to give the guarantees originally
agreed upon, the plea of these parties being that the
temporary stoppage of the bank has removed the chief
inducement for them to come forward. They are willing
to give their notes as a collateral security to meet any
deficit after the realisation of the bank assets, but not to
come under any more immediate and direct liability.
The Bank of England, however, could not depart from
the conditions first stipulated, which alone were legiti-
mate. The negotiations therefore terminated, and, from
the notice issued to-day by the Borough Bank, it is to
be inferred they are not likely to be renewed. The dis-
aster will prove most serious, but it will fall at the mo-
ment chiefly on the depositors and ultimately on the
stockholders, since there can be little hope that under a
forced liquidation any portion of lithe capital of
1,000,0001. can be saved. The shock to the commercial
community will, it is believed, be much mitigated by
a course which the Bank of England will take for that
purpose. Ordinarily the Bank refuse to discount any
paper bearing the endorsement of a suspended establish-
ment, but in the present case, it is understood, this rule will
be waived, and no bills of a sound character, endorsed by
the Borough Bank, will be rejected on that account. A
great mass of paper will thus be prevented from be-
coming practically inconvertible. The total commit-
ments of the Borough Bank, in the shape of endorse-
ments, &c., are rumoured to amount to more than
3,000,000/., but a large portion is of an indirect
character, and will be duly provided for by responsible
parties. The deposits, which recently amounted to
1,500,0001., have latterly been reduced, it is said, to
about 1,000,0001. Many of these having been lodged
by persons for the sake of permanently securing a high
rate of interest, the inconvenience of their being
temporarily unavailable will be less felt than if they had
belonged to traders in active business.
It is affirmed that the investigation which must now
take place into the affairs of the Liverpool Borough
Bank will develop a most unsatisfactory system of
management, and show that advances have been made
to individuals of amounts which could not fail in any
period of pressure to lead to fatal consequences. The
last report of the bank, a copy of which is annexed,
announced a reduction of the rate of dividend from
7 per cent, to 5, in consequence of the winding-up of
the affairs of 1854 (rendered memorable by the failure
of Mr. Oliver and others), but added that the business
of the bank was unimpaired, and that certain changes
about to be made in its policy and regulations would
prevent similar losses for the future :
" REPORT OF THE DIRECTORS TO THE PROPRIETORS.
"According to the last report, the paid-up capital
of the bank was 900,000/., and the reserve fund was
101,0001. 10s. lld.
"Since that date two calls of 11. per share have
been paid upon the new shares, making the capital
1,000,0001.

£ e. d.

The net profits of the past year, after pay-
ment of all expenses of management, and
after deducting 45,625/. 2s. Id. for losses
by bad debts incurred during the same
period, amount to 69,318 12 8
Appropriated as follows :-
3A per cent, dividend upon
950,0001 £33,259 0 0
per cent. dividend upon
1,000,0001
Property-tax paid by the
bank

25,000 0 0

3,629 6 8
61,879 6 8

Balance carried to reserve fund . 7,439 6 0
" Nearly the whole of the losses above mentioned
have been caused by the frauds of a customer.
"Ii winding up the affairs of 1854, a year which
it is well known was most disastrous to those cus-
tomers of the bank who were engaged in the colonial
shipping trade, heavier loss has been sustained in the
realisation of the assets then taken over by way of
security and in the liquidation of estates then con-
sidered good, than could possibly have been antici-
pated.
The directors have thought it their duty at once
to reduce the dividend to the rate of 5 per cent. per
annum, on the grounds that, taking even the mod tavola.