New-York daily tribune. [volume] (New-York [N.Y.]) 1842-1866, 1857-11-27
THE JOINT.STOCK BANKS.
From The Daily Neass Ma 70

THE JOINT.STOCK BANKS.
From The Daily NeD,, Nor. H.
The stoppsge Of the Western Bank of Scotland.
with 81 SOC, 600 Of pad-up capital 900 shareholder
note circulation OF upward Of f300 GO0 more than
100 branches and deposits Of &c 900 600 has mot
stepdng the assurance of the Provost and
Of Glasgow, that mo cause whatever existed for s,y
6sirus whatever of the Dc rfect responsibility NJ The
other banking establishments of that city, been fol.
lowed OILY too promptly by the suspension Of the City
OF Glasgow Bark Of which the Duke of Argsu was
Governor and which had nearly 80 bran shes dispersed
over the country by general the other banks
in Glasgow and by state Of fsrment which has 1t Is
reported, while we write. induced the Magistrates to
make both civil and military demonstrations 10 pre-
serve the peace. Ard whether have yet witnessed
more than the beginning OF these disasters Is question
which depends more on the determinations come TO by
the Cabin yesterday than on any other At
late hour representations were it is known, made to
the Chancellor Of the EIchequer by psrsops Of the
bghet financial authority In the City to the sbsO-
Lutte necessity Of relaxing the srpgency Of the Bank
Act of 1914. One of the most eminent bankers closed
the day by exclsimiDg that though he had passed
through the crises Of 1925 ard 1847, their symptoms
bad alarmed him less than those he had met with yes
terdsy the of great houses freeyn peoples
mouths; and we repeat whether, under existing cir
cumstapces the weslthest stand fall depends the
course the Cabinet resolves on adopting. All that is
required to arrest the danger to avert public disturb
snoes ard to prevent at the end Of this week disms
sal Of manufacturing labor to extent distressing if
rot Alarming to contemplate s tha Lord Palmerst0n
should, in 1857, act with the courage aud decision
which distinguished Lord John Russell 10 1847. The
existing state of things unlike that of lS47 out Of
Liverpool and GlssgOw-produced by 70 fault or ex-
cesses Of tbe commercial community, nor by domestic
esuses. For the criss Of l847, produced entirely by
internal speculation Lord John Russell and Sir Charles
Wood found an easy remedy, one which met with the
full appreciation OF Parliament aud will Lord Palmers-
ton and Sir Cornewall Lewis now hesitate to furnish
that relief for situation forced the country by
American over-speculahon, which Lord John Russell
had the and ylQOr give the c0unfry when il
bad Only itself to blame We trust thst of the
Government organs Of this morning will have been
placed in position to answer this question in manner
that will avert from to-day the agony and distress Of
yesterday.
The general financial troubles of the country must
however, be kept separate and distoct from the dis
erpoOl and Glasgow have brought on themselves and
the cities and districts they mis- served They have
seriously shaken public confidence in JointStock Bank
management out Of London. 1t is not enough that the
principles of association aud unlimited liability on
which there institutions rest are sound the soupdest
principles afford the public no security, when their
application ntrusted to reckless, careless, weak or
insufficient hsnde; and that such has been the case in
Liverpool and Glasgow is only too clear. In both
tow ms the spirt of speculation has alwSys exceeded
the capital requisite for ts indulgence without danger
to others. There were consequently no places in the
empire where greater prudence was necessary on thu
part of banks. But so far ae the Borough Bank OF
Liverpool, the Western Bank of Scotland, and the
City of Glasgow Bank are concerned, the very great
1t may be at once admitted that the American dis
asters have burst upon Europe very much as the mu-
tiny did op Inda Unexpectedly, and with subsequent
severity that could not have been reasonably antci
pated even when the first symptoms as.onished rs.
Neither MERCHANTS nor bankers are to be blamed for
not having provided against reaction arising from ca
amiies which were not foreseen; and in the ordinary
Of their business, bankers could hardly have
avoided holding largely bills which could only be met
by the proce Of remtances from the United States
Houses that stop In consequence OF the failure OF such
han Ia hat auffer r0m
will command general sympathy and respect IN their
misoltupes And it is, We venture to Thick exceed.
ngly gratifying t. observe with what pronptitude and
his sene ct honor ard proprety firms thus affected,
which only few months ago commanded the highest
credit, have, on being compelled to suspend opera
ons seeued their property for their creditors and at
once proceeded to liquidation.
The real causes of the failure of the Joint Stock
Banks above alluded to not, however attributable
to the ciis in the United States, but to career OF
Encouragement to which that crisis has only given the
coup de grace They must not, therefore, be allowed
to escape from public and Reproduction in the
midst of general turmoil and dstIess. Theirs is
special requiring especial notice and remark To-
oivdual me,chabts Of the highest honor may az any
time fail without disgrace or imputanon on their pru
deDce ard good faith. Correspondents may deceive
and cheat them produce well bought at the momsnt
it was purchased may fall aud become unsuitable;
legislation ON which they relied may fail them. Thess
and q score Of other honest causes may briug the
proudest aud hohestest trader down without jas re-
proach. Not 80 with banks and bankers. Theirs lie
bufiress in which it is hardly possible to stop with
ont mourning iu-ty mened cenfure. For their trade,
properly conducted, is so plain simple, mechanical,
sno ought to be void Of large serious rsk that,
when improperly and imprudenty cOnd Icted 1t in
wolves positive violation OF good faith and scan-
dsous breach OF implied contract with their Gus
toners.
TIE fundamental rule of banking. that on which
their customers trust banks with cash, is, thst their
own capital and the money Of others which they hold,
either on current deposit account shall never be To-
vetted other than securities Immediately convert
BILE into money. The exigences on which banker
may be called on by bis customers are 80 numerous 90
unforeseen by them, and utterly unknown to the
banker that any locking up of their balances any os
trrg of speculation, any hazardous loans. any incon
vertibe securities, are utterly inconsistent with the
primary law of bis trade. We do not put our money
in banks that it may be lent on houses or ships on
land on mortgage, speculative paper, or divert
I'd 10 what the Western Bank chose to denOmioa,e
marginal cIedits'-whCh. in plain Engish. meant
the support of traders without capital, carrying on
great ventures not at their ss but at that Of the
shareholders and deposi'ors Of that corporation. We
place money in backs that it may be safely kept
Tor us. The bank takes il on that condition, aud
wherever it runs risk, whenever it makes hazsro-
loan, whenever il advances money on securities it
rot at convert into cash. whenever il begins
to support lite debtors by improper discounts, then it
breaks faith with its customers. Bankers are not en-
titled to use their own banking capital in that way,
much lees our cash.
Now Judge Of these defautpg institu ions by this
rule. The Borough Bank Of Liverpool is said to be
the mortgage of l20 ships the advances Of the West
trn Bank to firms speoulsting wildly appear 10 have
been endless, ard few years ago most improper I'D:
were, Il is asserted made to relative OF
the mspsger Of the City OF Glasgow Bank. The ships
OF the Liverpool concern doub, represent prior ad
vsrces for which the vessels taken security.
But the very extent ofthe advances indicates over
trading snd speculation which 1t was the duty oil
bank 30 repress and restrict not to il fame and eIsgge
rae. And in Glasgow to such extent did this dis
honest al immoral prscce CO. that to support weak
customers who had got heavily irto the Western