Juniata sentinel and Republican. [volume] (Mifflintown, Juniata County, Pa.) 1873-1955, 1875-08-11

The first London bankers were the
Goldsmiths, whom Charles IL robbed
20 barefacedly. Almost as soon as the
present Constitution was fixed by the
Revolution Of 1888, the Bank of England
was started as a monopoly. No other
ioint-stock bank was allowed TO be
formed in England, and no bank, joint
stock or private, was allowed TO issue
notes within sixty-five miles of London.
LIN this way the formation of large
banks, such as the Scottish banks, with
numerous branches, was prevented; and
so the banks in large towns, where
money is always in demand, were un-
able directly to obtain the deposits of
the smaller towns, where money is al
ways plenty. Owing to this the class of
money brokers, of which Overend,
Gurney & Co. was the type, grew up
toward the close of the last century;
their legitimate business was to obtain
money from country bankers aud capi-
talists, and to give them in return the
bills of town bankers. No doubt some
Of these restrictions were gradually
abolished, but the process itself was a
slow one, and as soon as the older re-
strictions were abolished, new ones
were created. In fact, if one might use
the illustration, the old twist or bias in
the system was not removed till a new
one was created. Thus, for example,
the first permission to establish Joint
stock banks compelled all banks TO
adopt the principle of unlimited liza
bilitv, although in the older banks, the
Banks of England, Ireland, and Scot
land, the liability was limited. The
capital of the banks was thus made
small when compared with their liabili-
ties, as many parties would object to
take shares in unlimited companies;
and of course. when the shareholders
were limited in number, the capital Of
the banks would also be limited. This
restriction has now, indeed, been re-
moved, and banks with limited liability
have been created; but there is still
prejudice against them, which, as will
be shown in the sequel, it will require
years to overcome. Then again this
permission to found "unlimited" joint
stock banks was, by curious fatality,
almost coincident in time with the with
drawal of the right to issue notes under
f5. But, as very considerable pro-
portion of the business of new banks
depends upon the power of issuing
notes, this prohibition was really for
midable check upon the formation of
new banks. The Legislature, indeed,
seems to have had special difficulties in
dealing with these small notes. They
were prohibited in England between
l777 and 1897, and again from 1925 till
the present time. They had, indeed,
been Withdrawn from circulation year
or two previous to 1925, and the panic
Of that year was, by the testimony of
many witnesses, allayed by the dis
covary in the vaults of the Bank of
England of quantity Of these 81 notes,
and their issue to the public. Under
the act of 1874 the last great system of
banking legislation, aided also by the
bank from issuing notes, and prevents
the existing English banks from issuing
notes against gold-the banks all look
to the Cank of England to furnish them
with its notes, which are legal tender,
while the Bank Is prevented from doing
so unless it holds gold against these
notes, The banks, in fact, are all in
duced TO depend upon the Bank of
England; and the bank cannot even
use its credit to help them. 1t may re-
ceive their money, and issue to them in
return deposit receipts or post bills, or
place it to their credit in its books,
against which they can themselves
issue checks, but it is prohibited from
giving them the one form of acknowl-
edgment which they require for their
customers-viz., bank-notes. An Eng
lish banker thus carefully shut off from
all obligation to provide gold for his
looks to the bank TO give him
its notes; and the bank, If we may
Judge from its action for some time
back, is more than ever determined TO
lean upon the Government, and to re-
gard suspension of the act of 1874 as a
for all financial evils.-Mocmil
ldn's Magazine.