The Liverpool Standard and General Commercial Advertiser.
Liverpool, Merseyside, England, 1840-07-10 00:00:00

BANKING

TO THE PEOPLE OF GREAT BRITAIN.
Edinburgh, 29th June, 1840

The great use of banking as we now understand the term,
is, either to economise capital generally, by bringing the sur-
plus in the hands of one man, into known places of deposit,
where the use of it may be obtained by others, upon terms
that are known ; or to economise the use of BULLION, in
carrying on transactions, by issuing BANK NOTES, as they
are termed, or obligations by banks, in place of the usual
gold and silver tokens.

For example :—THE CIRCULATION of the Bank of England,
(as its notes in the hands of the public are termed, amounted
at 23d instant, to..
Its bullion, to 4,434,000

12,437,000

The amount of bullion saved in the circulation,
by means of the Bank of England, is,
Effecting a saving to the State annually, in inte-
rest alone, equal to £621,850
And if the expense of coining, tear
and wear, and loss are included,
equal at least to 1,243,700
The circulation of other banks is
stated (though I think erroneously)

from £11,000,000 to £12,000,000
And deducting for bul-
lion in a like ratio

with the bank of Eng-
land 3,200,000
They save in bullion
And in tear and wear and 1055.... 880,000
The total circulation in paper would thus be 21,237,000
(Being less, by this account, than the circulation
of the Bank of England alone used to be.)
And the annual saving to the country £2,123,700
This last, if greater, (and it certainly is greater,) may seem
little in the eyes of a minister accustomed only to look at
figures: but-itis equal to a sixth part of the whole profits on
cotton goods exported, and employing 12,000 citizens ; and it
is equal to a third of the profits realised; and consequently
is in reality a saving of great importance.
But the great benetit arising from this operation, is not in
the annual saving, but in the actual total saving of non-pur-
chased bullion, exceeding, even by the usual computation,
£21,237,000 ;—in keeping down the price consequently, by
that amount less required ; in giving to the industry of the
country that facility and elasticity that nothing else could
give it; and lastly, in preventing the dealers in bullion from
constantly scourging the country, ad libitum, by making a
trade. of the mere instruments of trade.

These are very important circumstances ; and these are
what give banking, as it is termed, or the saving of capital and
bullion, its great value.
It exceedingly simplifies the view of this matter, to know,
that all we have to think off, in regulating the circulation of
banks, (that is the substitution of paper for bullion,) is—
First—To make the circulation of banks SAFE—and

Second—To keep it from becoming EXCESSIVE.
In thinking of a sound paper circulation, we have no more
to do with the par of exchanges, as it has been termed, than
we have to do with the par of the tides. Money will flow
out of a rich country into a poor one, and goods, the result
of labour, to flows out of a poor country into a rich; and this
may be aided or averted by regulations in trade—as the flow-
ing of water may be aided or averted by suitable regulations.
But countries are only rich or poor in circulation, as indivi-
duals are, in proportion to their wants as compared with their
possessions. Great Britain with a circulation of fifty or a
hundred millions, and a trade in proportion, might find it-
self more pinched for money, or the means of carrying on its
operations, than France with only half the amount of circu-
lation, and half the business, though spread over a population
exceeding that of the British islands by one-third—exactly as
a rich man with large occasions, may be infinitely more em-
barassed for money than his humblest menial, who has occa-
sions only in proportion to his means. So long as the occa-
sions of a country are equal to its circulation, the circulation
will not fall there ; it may be even more valuable as a gene-
ral position, than in a poorer country with fewer occasions.
Money in this way might flow from the poor country to the
rich, exactly as it might from the poor man to the rich ; and
the circulation of credit, to a proper extent, is in such cir-
cumstances of infinite value, in two ways ' • in preventing an.
active and industrious country, like Great Britain, from being
at the mercy of an idle country (but with surplus capital in
the hands of a few,) for the mere instruments of trade ; and
in preventing the possessors of capital in a poor country,
from rendering it yet poorer, by selling the instruments of
trade, and means of employment, to strangers, in disregard
of the poor and unemployed at home.
In the simple view which I take of the circulation, we have
just to say this :—The occasions of the country require a cir-
culation of a certain number of millions ; how many of these
is it safe and proper to have in paper, in the view of saving
the expense of bunion ? and consequently how many in bul-
lion ? This is the only question in the first instance.
We have long held that one third in bullion is a fair pro-
portion to be in the hands of banks issuing notes.
I cannot avoid saying, that as regards banks, this is a
ridiculous position ; for it is their prudence, and the nature
of their securities, that in reality give security to the public
at present. But in regard to the public generally, it may be
a very proper proportion, if we provide that it shall be main-
tained; and this it will be my object to do, whatever may be
the proportion determined upon ; and I would do it thus :
The circulation of the Bank of England has of late years
been reported from £16,000,000 to £18,000,000; state
it at
The circulation of other banks has been stated at 12,000,000
Though, I think, greatly under the mark, if

Scotland and Ireland are included.
And the bullion in the country has been stated at 18,000,000

Together

£48,000,000

That is, £2,000,000 under
It is many years since I estimated the circula-
tion of Great Britain and Ireland (by a pro-
cess which I need not detail) as certainly

£50,000,000

equal to
And the power of circulation required to transfer the immense
mass of property constantly floating from hand to hand in
this country, and in its dependencies so far as resting on this
country, cannot be less than £100,000,000. This may not
be all in bank notes and bullion ; on the contrary, the bills
of merchants may supply a very' large proportion ; and at
present they certainly do, particularly in Elngland. But as
these are always accompanied by more or less of risk, and so
far as they pass and are retained in the circle, form a soecies
of irregular circulation, the object should be, to provide the
means of passing these into the hands of the banks of issue,
or PUBLIC SPONSORS ; and to provide that these public
sponsors shall be equal to their task.
I think, then, that we necessarily fail to contemplate a
power of circulation, to the extent of one hundred tnillions ;
but the actual exigencies of the case, will ver speedily de-
termine it to the last shilling, under the plan which I am to
propose ; and it is this :
Suppose the power of circulation required in this
country to be £100,000,000

And that we determine that two-thirds may

safely be in paper, then deduct for bullion

one-third, or

And the sum to be allowed in paper, that is, to
be issued by banks, will be about

If the returns in the hands of government, the
judgment of better informed men, or the actual
circumstances of the case, shall fix it at its
supposed present amount, of
or at any amount less or more, it will only vary the details,
and not the principle. But my FIRST POSITION is, LET THE
CIRCULATION OF BANKS BE LIMITED ; for without this,
there is no power of regulating, guaranteeing, or in any
other way treating it, as is necessary for the safety of indi-
viduals, or the really onward prosperity of the state.
To make these thirty millions, or these sixty millions of
paper SAFE, and to distribute them properly over the country,
(every part of which has an equal right to be attended to, so
far as possible,) I would suggest.—
Second,—That every bank proposing to issue currency,
shall find security in the hands of government by purchases
into the public funds, to the extent of one-half the amount of
the notes they propose to issue.
Third,—That these securities shall be INTANGIBLE BY
THE BANKS, while they continue to issue notes on the faith
of them, and be termed bank securities ; and when the banks
should cease to issue, or determine to restrict their issues,
securities to be returned in transferable bonds, in the propor-
tion of £lOO of securities, for every £2OO of notes cancelled ;
that being the original ratio of issues and securities.

Fourth,—To make sure that no more currency should be
issued, or remain in circulation, than has been bargained for
and guaranteed, STAMPED NOTES to the precise amount only,
should be issued in the first instance ; and on a renewal,
£lOO of new notes to be issued for 1:100 of old; the old to be
cancelled before reaching the stamp-office, and there to be
consumed.

Fifth,—To compensate the country for this permission to
COIN IN RAGS (which though profitable to the state, is yet
more directly so to individuals), and for the trouble of super-
intending and regulating the system, the deposits should bear
a reduced interest, say not exceeding three per cent.
Sixth.—l conceive, that on the same ground, the securities
should be made of FIXED AMOUNT ; that is, not rising or
falling with the other debts of the State. This is necessary
on another ground—to make them actual and undoubted
securities.

Seventh.—Let the power of issuing the circulation agreed
on, be distributed over all the banks, and let provision be
made that these banks, instead of being limited to one or a
few spots, and so drawing the profits of banking from the
provinces to capital cities, should be as equally as possible
distributed over the country, and in the like manner diffuse
the facilities, and distribute the profits of banking.—This is
my plan ; and though exceedingly short and simple, I believe
no single public regulation farther is necessary, and that all
these regulations are necessary, and none of them unjust ;
and I am satisfied, that in the long run, they would be im-
mediately useful and profitable to the State. I will show
this iu another and concluding paper. .

D. BAIN.

• FATAL RENcorrritz.—Two gentlemen, on the 17th ult.,
both strangers in the west, had some dispute about the occu-
pation of the back seat in a coach, which runs between Peru
and Chicago. Each drew a pistol at the same instant—each
fired, and both fell to rise no more, for the contents of the
loaded pistols had the effect they were intended to have—
the contents of one entering the body just below the heart,
those of the other passing through the head of the opponent.
The driver, in haste, stopped the onward progress of his
foaming steeds, to ascertain the cause of the reports of the
pistols, and on unclosing the coach doors, what a horrible
scene did his eyes behold ! Two men, who but a few hours
before left the hotel at Peru in social mirth and glee, now
weltering in their blood. They were the only passengers,
and both died before any aid could be called, the distance
from any house being some miles. The names of the unfor-
tunate individuals are supposed to be, from papers found
about them, R. L•
W inn, who had in his possession about
900 dollars, and Joseph D. Brown, who had 450 dollars,
mostly in northern funds. Welearntlioihneas._lve
above particulars
Orleans
from a friend just arrived here from u
Times. • -

A MILITARY DOG.—Every one who has witnessed a re-
view or field day of the 11th hussars, since their stay in this
city (Canterbury), must have noticed a rough black and
white dog of the terrier breed, known as the " Major,"
which has constantly attended them,
tho-
roughly and seemed so
.acquainted with their evolutions, that even in their
most rapid wheeling and charging, he was always in his place,
and never met with an accident. It appears he is, or was
the property of Mr. Jennin,as a butcher in Northgate, and
that he " enlisted" abont 'l'g months o, since which his
mhoeimnebeb
rasofb eeevne every emseesns t.
r
fort occasioned by - • •
The
ex and he has been the welcome
'ennfusio and want of corn-

to visit
on Monday,
morning, the Ist division of t
.asa,
old
for marching, induced him,
regiment marched, he joined
them in passing through North
4. gtne L but he soon discovered
master; and when on Monday
that his favourite attraction,
somethingtn pet
and d
rguos
ni
his master had little difficulty in retaining
day morning he looked anxiously after the On Tues-
hwiams.wanted, and
il announced ohnol;
d bi
nngt
aacded hung
self ,if
thesuspicious
sound
of
atfru
awhen,nd e
the approach of " head-quarters," there wa
him ; he bounded over the shop-hatchway, and 7
self between Lord and Lady Cardigan, at the placed
regiment, immediately behind his favourite band,
and
df the
thus
marched out of Canterbury, The " Major" appears
de-
voted to a military life, and will, no doubt, be well treated.
We ourselves do not quite believe the doctrine of Pythago-
ras ; but they who do cannot reasonably entertain a doubt
that the soul of some defunct drum-major (perhaps formerly
belontOng to the very regiment), has passed into the body of
the faithful " Major."—Kentish Observer.