The times. [volume] (Richmond, Va.) 1890-1903, 1895-02-03
THE LIGHT WHICH FOREIGN BANK
I<G AFFORDS US

tcres.ing, and ought 10 lc very instruc-
tive to us in this country. We shall be-
gin that examination with 1874. when
what is known as Sir Robert PecrS act
was passed % ;corsan re the Bank Of
England This act divides the bank
INTO two departments. as separate, one
from the other, as II they were two in
situations. One is called the banking de-
partment and the other the issue de-
partment. The issue department is pr
mitted TO issue 300 900 Of notes bas ed,
like the issues Of our national banks or
Government bonds. But for every other
dollar Of notes that it Issues it must
have a dollar Of gold n It's vaults 1t
consequently has out always the fl5 900 900
that cre to be based upon Government
bonds, but its issue Of notes, based on
coin, varies constantly. sometimes get
ting up to or above f30,0O0C00.
For a long time Independent banks have
been growing up all over Great Britain,
until the whole country is now covered
with them. Every locality that has bust
and it issues notes. The population of
the whole country is dense, and the re
suit is that all people keep bank ac-
counts and make their payments with
checks This causes very little actual
money to be needed, so that all the
money and currency of great Britain,
paper and coin. is only about $4,000. 900,
while ours in this country, is more than
double that. This is a wonderful testi-
monial to the value and importance of
local banks amongst the people.
The state of affairs in France offers
a very marked and interesting contrast
to this blessed condition. which free
institutions that allow the people 10
manage their own Affairs in their own
way, have brought about The Bank Of
France has the monopoly of banking in
France 1t is required by law TO have
a branch in each of the Sc departments,
but, according to the latest report We
have seen 1t had branches in only 60 Of
them. Mr.. Walter Bagehot. in his work
on Lombard street. gives this account
OF the reason for this state OF facts lie
says a page IS:
"The reason is that central bank,
which is governed in the capital, and
dcScends on country district, has
much fewer modes Of lending money
safely than bank Of which the part
ners belong TO that district AMI know
the men and things in it. a note issue
is mainly begun by loans; there are then
6gnnglfg n 9t1t 4
loans in a rural district are of small
amount; the bills to be discounted are
triiling; the persons borrowing are of
small means and only local repute; tn
value of any properly they wish TO
pledge depends on local changes and
local circumstances. A banker who lives
in the district, who has always lived
there, whose mind is a history Of the
district and it's changes, is easily able
to lend money there. But a manager
deputed by a single central establish
ment does so with difficulty. The worst
people will come to him and ask for
loans. His ignorance is mark for all
the shrewd and crafty people there-
abouts. lie will have endless Difficult les
In establishing the circulation Of the dis
tant bank, because he has not the local
knowledge which alone can teach him
how TO issue that circulation"
Inc Ease Cpulu Iscl Ne btlltT SldtCu,
and II looks as though IL had been writ
ten with our own system OF national
banks before the mind OF the author,
and as a protest against them. The
result, then, is that France, outside Of her
large cities. is practically destitute Of
banking facilities, the check book is un-
known. and the people store their money
in what they call "caisse" Cor strong
boX) in their houses. This is the reason
why France has that large per capita OF
money, of which the free silverites who
have no sort of conception OF the true
state of the case, are always prating.
When we think Of Great Britain, with
her system of free banking ard album
dant money with only S7O0oo),ojO OF all
sorts, and France with a government
system and no banking facilities, the
case for free banking ought TO require
no further argument
But 10 return TO the English system.
The Bank of England has stood In tho
public eye so long and so soldly that it
possesses the confidence of the nation as
implicitly as the Government does. The
consequence IS that all the other banks
in Great Britain make it the deposit
place of their reserves. which makes the
notes OF their local banks that issue
notes practically national currency. And
when its condition is analysed il is
positively astounding TO see with now
little reserve ii is fortified against its
Immediate demands. We take from Mr.
Dagehot's book. before quoted, n state
ment of its condition on the 9th day
of December. 1863. 1t had. that day, sub
Ject 10 immediate check. liabilities
amounting to ~. 600. and it had of
cash to meet those liabilities only
FL. 297 900. or but little more than
one dollar with which to pay three. 1t
had property coi.sos and other seoul
ties-but not the ready cash. We arc
unable TO lay our hand at the moment
upon any ,recent publication OF the
banks state. But the system IL the
same to-day that It was In nss. and.