The Liverpool Standard and General Commercial Advertiser.
Liverpool, Merseyside, England, 1840-07-14 00:00:00

by their business; The truth is, the first thing they•them-
selves do, is to place not only their own capital in the funds,
but as much as they can of the capital entrusted to them by
others ; thereby drawing a high interest upon both, every
hour; while they issue their own notes, which cost them
only the stamps and paper, but for which they demand, and
properly, the highest interest they can obtain, and that paid
beforehand. This regulation, therefore, would in no way
cramp the operations of the banks. It would only render
them undoubtedly SAFE TO THE PUBLIC on the one hand,
and, on the other, make THE PUBLIC CONFIDENCE
UNDOUBTING IN THEM. For every one receiving or holding
the note of a bank so constituted, must know, that security
had been lodged in the hands of the State, for every note
issued by the bank ; and security that could not be got
back, until the last note of that bank had been retired.
Consequently, there could be no original doubt of such a
bank, and NO PANIC could be raised in reference to its circu-
lation at least. And the circulation of a bank is the only
thing with which the public is concerned. The confidence
of depositors, is a mere matter of private Confidence.
It is true, the Bank of England, or some of its Directors,
seem to be parading their wish to have up their capital from
the State, at present, that they may lend it at a higher
interest. But to whom else could they lend such a sum,
even at the interest it hears, and yet have it useful, either as
security, or available capital? To whom ?—Would they
trade in French, Spanish, or Portuguese securities? In South
American—or even in North American ? Whether they
would or not, my opinion is, that they should not have the
option, so long as they continue to issue notes in this
country. And as to our own Funds (the only other re-
' source,) they are high enough already, and something more.
In short, the Bank of England should be made to continue
her deposits, and other banks to imitate her example. There
should be do distinction in that, nor in any other particular.
On the other hand, while the Bank of England allows
eleven millions of its capital to remain in the hands of the
State, (for that is the amount that now remains,) and not
only at a fixed amount, but at a reduced rate of interest, it
has clearly claims to the consideration of the State, that
other banks have not. _ _ _ _ _

Third,—Not only is it necessary that deposits should be
made by banks issuing circulation, but also that these de-
posits should be intangible by the banks, while circulation
continues to be issued upon the faith of them. What security
else can the public have, that the most stately and apparently
prosperous banks, are not things of STRAW ? The honour
and responsibility of Directors Look at THE AGRICUL-
TURAL BANK OF IRELAND ! Raised for the very best pur-
poses, and capable of having performed the most invaluable
services to that unfortunate country, and enriching its pro-
prietors at the same time, it has yet come to the ground, from
the mere fault of its Directors and Managers. It is found,
that it never had more than .£1 per share of paid up Capital!
That its partners have been allowed to decline subscribing
the contract, in the idea, that thereby they might evade re-
sponsibility f—and, that it kept no perfect books ! This ex-
hibition is of itself sufficient to justify all the precautions I
have suggested, and the single regulation of lodging due se-
curity in the hands of -the State for the circulation about to
be issued, would not only have guarded against loss from this
establishment, but insured its prosperity, for it would have
rendered the evasion of original capital impossible, and from
that, all wish to avoid responsibility ; and at the same time
it would have inspired such anxiety in the partners, as would
have secured a careful, and consequently successful manage-
ment.

The same remark is applicable to the NORTHERN BANE
OF ENGLAND. That institution was calculated to have been
one of the first in the kingdom. But in it there was the
same disgraceful mismanagement. They seem there to have
kept, not only one set of books but two—one to record the
actual state of things, and flagrant delinquencies of the Di.
rectors and Managers ; the other to gull the proprietors and
the public. Nothing but extreme folly of management could
have led to this deception ; and folly is not the word that
can characterise the deception itself. It was in the last de-
gree criminal. Had the capital of this bank been less tangi-
ble, it would have been better managed ; and an institution
would have been saved that was calculated to be every way
useful.

Precisely the same may be said of the COMMERCIAL BANK
of MANCHESTER, even from what has been disclosed ; for
that gives evidence at once of deficient capital, and the
most foolish management. All these banks seem to have
been raised not for the purpose of finding employment for
capital, but for creating credit. The last seems to be con-
sidered the sole object of banks, in many modern instances.
They have been carried on, too, not for the purpose of
serving the public, but (the English banks in particular) for
serving a certain number of overtrading capitalists, or wholly
needy adventurers ; who having got possession of the little
capital that was, could never return it. The end has been,
not only the injury of the public, but even the discredit of
banking, though these institutions have never deserved the
name of banks ; having been raised without the least regard
to principle, and conducted without the least regard to com-
mon sense. Something like this has happened in Scotland,
but never to any considerable extent ; and never from want of
honour in the Directors, but from over-confidence in
Managers—of course one evidence of incapacity.
Fourth.—The regulation of the amount of issues, by the
stamps, is CERTAIN and SELF-ACTING; rendering returns
to government, however trust-worthy, unnecessary ; and this
should be enough. But I consider returns utterly useless;
and every one must acknowledge that they are exceedingly
troublesome.

Fifth.--1 consider it not unjust that the deposits for re-
gulating and securing the issues of banks, should bear a
mitigated interest to the state. Even at the rate I propose,
the result would be as follows :
They would receive from the STATE for every £lOO de.
posited, £3 0 0

And from individuals for £2OO of notes issuing on
the faith of the deposits,

Together £l3 0 0
direct, on every £lOO of actual capital invested in the circu-
lation ; besides perpetually revolving interest, commissions
for managing cash transactions, exchanges, &c., and all the
other profits derivable from extensive credit. And the ex-
tent of these may be conceived from the fact, that hardly
anything is deemed surprising that a bank or a banker may
do ; and from this farther fact, that an 011 Scottish Num-
MAKER not long dead, had conceived the idea of buying half
the land of the country, and was doing so very rapidly, with
the country's own money.
And the annual saving to the STATE, by the mitigation of
interest I have proposed, would be on thirty-three millions
currency (the half of sixty-six), at two per cent, £660,000,
a sum in my opinion Well worth attention ; particularly from
this, that while it would materially assist the revenue, it
would be from a source that would be benefiting both indivi-
duals and the public, in place of injuring them, .as too often
happens in raising revenue.
Sixth.—lt seems equally necessary that a security should
remain of a FIXED AMOUNT, as that it should remain intan-
gible. This is due to the creditors of the banks. And it is
also due to this every-way overburdened and pillaged com-
munity, that its debts should at last become like other debts,
of a known amount, instead of being, as they at present are,
the subject of incessant speculation, and the means of inces-
sant plunder.
Seventh.—The distribution of the banks over the country,
and with them of the power of exertion and its profits, is
self-evidently proper. The concentration of capital, and
profit or expenditure, is the worst and most unjust policy
that can be followed. It offends against all principle ; and
the government of this country has of late years offended
largely in this particular.
I cannot go farther in the way of explanation. I have only
to repeat, therefore, and I do it with I think some knowledge
of the subject, and certainly after having for many years con-
sidered these arrangements, both in themselves and with re-
ference to passing events, that I am satisfied they are equally
just and necessary ; and that though we may go on as we
have done, floundering from glut to panic, and from panic to
glut, one day seeing money of no comparative value, and the
next day property, the circulation of the country will never
be upon rational principles, until it stands upon principles
such as these. Even the return to gold and silver exclusively,
would be more ridiculous than our present state : for it would
infer an insane expense for the instruments of trade, before
getting into a situation to trade ; an enormous annual ex-
pense for tear and wear, and, above all, from loss; a constant
fluctuation in the currency, from rendering it a perpetual sub-
ject of speculation, utterly inevitable were the precious metals,
the only materials employed ; and, finally, a decline in its
value corresponding to its accumulation, that would render
accumulation a thing to be avoided. It would be no wiser
than the contests of Swim's Yahoos, " for useless quanti-
ties of yellow clay."
The transaction of business even in actual bullion, would
be a thing almost impossible, where the business were of the
least importance. In the Spanish settlements in America,
about forty years ago, bullion was the sole medium of ex-
change, and the consequence was, that the receiving an'a tell-
ing of fifty or an hundred thousand dollars, was a grievous
labour. Its transport was another, and in this country could
scarcely be attempted even in gold, unless accompanied to
its destination, and guarded there, by detachments of troops.
I must speak of some remedies proposed by others, in yet
another paper. D. BAIN.