Saint Mary's beacon. [volume] (Leonard Town, Md.) 1867-1983, 1876-03-30

ESaLIsn BAxxs AND LrorsLArrox.
The first London bankers were the
Goldsmiths, whom Charles II. robbed
so barefacedly. Almost as soon as the
present Constitution was fixed by the
Revolution Of l6sS, the Bank Of Eng
land was started as . monopoly. No
other joint-stock hank was allowed to
he formed in England; and no bank,
joint or private, was allowed to
Issue notes within sixty Eve miles OF
London. In this way the formation Of
large banks, sslch as the Scottish banks.
with numerous branches, was preven-
ted; and 30 the banks Of large towns,
where money is always in demand, wero
unable directly to obtain the deposits
of the smaller towns, where money IL
always 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 cap
italists. 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 y
slow one. aud as soon as the older res
triSions 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 new
one was created. Thus, for example,
the first permission to establish JOINT
stock banks compelled all - adopt tho
principle ofunlimited liability, although
in the Oldest banks-the Banks of Eng
land. Irland, and Scotlaad-the liabili-
" was limited. The capital rf ths
banks was thus male small when COM
pared with their liabilities, as manv
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 removed. 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 over
come Then again this permission to
found unlimited" joint.stock banks
was. Nv n curious fatality, almost coin-
cident in time with the withdrawal Of
the right to issue notes under 4S.-
But, as very considerable proportion
Of the business Of new banks depends
upon the power of issuing notes, this
prohibition was really q formidable
check upon the formation Of new banks.
The Iecislature, indeed. seems to have
had special difficulties in dealing with
these small notcs. They were prohih-
tied in England between l1797and 1897.
and again from 1925 till the present
time. They had. indeed, been with
drawn from circulation year or two
previous To ls35, and the panic of that
year was. bv the testimony Of many
witnesses, allavcd hv the discovery in
the vaults Of the Banks of England of
n quantity Of these 81 notes, and their
issie to the public Under the Act Of
lS4t-the last great system Of bank
ing legislation-aided also bv the Act
Of lsl5-.which prohibits any new bank
from issuing notes, and prevents the
existing English banks from issuing
notes against Cold---tha banks all look
tothe Bank of England to furnish them
with it's 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 MI in
duced to dercnd upon the Bank OF
England: and the hank cannot even use
it's credit to help them. 1t may receive
their money. and issue to them in re-
turn deposit receipts or post bills, or
place il To their credit on it's books,
against which they can themselves issue
cheeks; Lu. it is prohibited from giving
them the one form Of acknowledgment
which they require for their customers
viz bank notes. An English banker.
thus carefully shut off from all obliga-
tion to provide gold for his liabilities.
looks TO the bank TO give him lis notes.
and the bank. if we may Judge from its
action for some time back, is more than
ever determined to lean upon the Gov
ernment. and TO regard a suspension of
the Act of 1874 as remedy for all
financial evils.