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House, was principally devoted to striction was removed, the solid and general disquisitions on the history more extensive banks would not and fluctuations of the currency, fail, in time, to expel the smaller the sources of the existing distress, and weakers In London, for the other remedies which might be example, paper

circulation applied, and the conduct and in- existed, except that of the Bank fluence of the country banks. Lord of England. Yet this was not the Liverpool, while he admitted that effect of law, for no enactment prethe measures which government vented private bankers from cireuwas now carrying through were lating their own paper ; but they far from being perfect, and, in knew, that, if they issued notes, some individual details, might even these notes would immediately be be thought hard ones, begged the presented for gold, or Bank of House to recollect, that the char- England paper, and, therefore, tered privileges of the Bank of they declined the issue of them England stood in the way, and altogether. But in this country, prevented government from going the free and the restricted systems farther. · Government, he had no were.

re united; we were in a state hesitation in saying, ought to go of restriction as related to every farther, and would go farther, but, thing good and substantial in a at the present moment, it could do state of liberty as to every thing

The law as to the con rotten and bad. The law said to stitution of banks was absurd and any shop-keeper, however limited ridiculous in its nature, futile in his means, "you may establish its construction, and dangerous in bank ;" but, to persons of capital, its effects; but it had gradually willing to engage in a similar ungrown up into what it was, and dertaking, it said, “your company could be reduced only by time and shall not consist of more than six trouble within reasonable dimen- partners." We ought either to sions or sound proportions. One impose wholesome restrictions, or of two systems might be adopted. leave banking in full and complete One was, to allow only a limited liberty ; and the present measure number of banks, or to exact from was an approach towards a system such as were permitted to exist, se of the latter kind. It might, no curities for their solvency.. This doubt, be represented as a half was in itself a wise and salutary measure. Imperfect it certainly system, and might be profitably was; and imperfect it must remain, followed, if circumstances would till the country should be freed admit of its adoption. It prevailed from its engagements with the in Massachusets, one of the most Bank, or the Bank should step settled and best-established states forward to release the country of America. That state allowed from such parts of its charter as only twelve chartered banks; and impeded the establishment of a so soon as any one of them became substantial system. It would be unable to pay in specie, its charter short-sighted in the Bank of Engwas forfeited.

The other system land to imagine, that its interests was one of unlimited liberty, which were engaged in retarding this was thought to be less objectionable desirable consummation. If the in itself, and to gain equally the Bank were to limit the circulation same end ; because, when all rea of its notes to London and the

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vicinity, no banks now existing, or. It would not be easy to form such hereafter to be created, could in- establishments ; for people, in terfere with its prosperity ; while general, would be averse from ensuch a step would be attended with gaging in speculations, in which incalculable benefits, and would every one would be liable jointly enable government to place the and severally to the last shilling of banking system of the empire on a his fortune. It was natural that a more secure foundation.

bank consisting of a few partners, The Earl of Lauderdale opposed each of whom could attend to the bill, and said that it was im some department of the business, possible to trace the late, and the should be better conducted than a existing embarrassments, to any more unwieldy establishment, the excess of paper currency, or to any most interested members of which speculations arising out of such an were sleeping partners'; and it excess ; and that there was no could not be doubted, that, badlycircumstance connected with them managed joint-stock banking comwhich might not as well have oc- panies would produce as much miscurred, even if the circulation had chief and misery, as any system of contained as much gold as ministers currency, however vicious. The now seemed to desire. Their true example of Scotland proved deorigin was in the state of the money monstrably how unnecessary it market, and in the fall in the rate was to seek for security in a large of interest, which, from the anxiety number of partners. Scotland posto employ money profitably, na sessed thirty banks; of these seven turally led to speculation and over were chartered banks; of the retrading. The commissioners of the maining twenty three, only seven Sinking Fund purchased annually were joint-stock companies, and the about 5,000,0001.: every visit they rest, with one or two exceptions, did made to the Stock Exchange threw not consist of more than four, six, additional capital into the market, or eight partners. Yet the solidity created an increase of employ- of the latter had never been more ment, and a rise of prices; for questioned than that of the former; the inevitable effect of the opera- their notes were as well established tion of the Sinking Fund was, the in circulation, and they had stood noble lord maintained, to diminish the storm with as much vigour. He the interest of capital. Such an could not conceive it, therefore, to influx of capital resembled the be just, or necessary, or expedient, to coming of a lottery prize of interfere in the present state of the 30,000l. into a country town; it country, with the exclusive privianimated the whole district with leges of the Bank of England. a rage for scheming and specula- Lord Ellenborough, likewise, could tion; and both argument and au not anticipate much good from thority shewed, that to this cause joint-stock companies ; and exthe existing difficulties of the coun- pressed his apprehensions lest, in try must be, in a great measure, if 1833, when the Bank charter not altogether, ascribed. The pro- would expire, great embarrassment, posed remedy, therefore, by allow- as to the course which it might be ing banks to consist of an unlimited deemed advisable to pursue, should number of partners, would not be arise from the existence of these efficient, and was not necessary, establishments, VOL. LXVIII,

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House, was principally devoted to striction was removed, the solid and general disquisitions on the history more extensive banks would not and fluctuations of the currency, fail, in time, to expel the smaller the sources of the existing distress, and weaker. In London, for the other remedies which might be example, paper

circulation applied, and the conduct and in- existed, except that of the Bank fluence of the country banks. Lord of England. Yet this was not the Liverpool, while he admitted that effect of law, for no enactment prethe measures which government vented private bankers from cireuwas now carrying through were lating their own paper; but they far from being perfect, and, in knew, that, if they issued notes, some individual details, might even these notes would immediately be be thought hard ones, begged the presented for gold, or Bank of House to recollect, that the char- England paper, and, therefore, tered privileges of the Bank of they declined the issue of them England stood in the way, and altogether

. But in this country, prevented government from going the free and the restricted systems farther. · Government, he had no were united; we were in a state hesitation in saying, ought to go of restriction as related to every farther, and would go farther, but, thing good and substantial

in a at the present moment, it could do state of liberty as to every thing

The law as to the con rotten and bad. The law said to stitution of banks was absurd and any shop-keeper, however limited ridiculous in its nature, futile in his means,

you may establish a its construction, and dangerous in bank ;” but, to persons of capital, its effects; but it had gradually willing to engage in a similar ungrown up into what it was, and dertaking, it said, “your company could be reduced only by time and shall not consist of more than six trouble within reasonable dimen- partners.” We ought either to sions or sound proportions. One impose wholesome restrictions, or of two systems might be adopted. leave banking in full and complete One was, to allow only a limited liberty ; and the present measure number of banks, or to exact from was an approach towards a system such as were permitted to exist, se of the latter kind. It might, no curities for their solvency. This doubt, be represented as a half was in itself a wise and salutary measure. Imperfect it certainly system, and might be profitably was; and imperfect it must remain, followed, if circumstances would till the country should be freed admit of its adoption. It prevailed from its engagements with the in Massachusets, one of the most Bank, or the Bank should step settled and best-established states forward to release the country of America. That state allowed from such parts of its charter as only twelve chartered banks; and impeded the establishment of a so soon as any one of them became substantial system. It would be unable to pay in specie, its charter short-sighted in the Bank of Engwas forfeited. The other system land to imagine, that its interests was one of unlimited liberty, which were engaged in retarding this was thought to be less objectionable desirable consummation. If the in itself, and to gain equally the Bank were to limit the circulation same end ; because, when all rea of its notes to London and the

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vicinity, no banks now existing, or It would not be easy to form such hereafter to be created, could in- establishments ; for people, in terfere with its prosperity ; while general, would be averse from ensuch a step would be attended with gaging in speculations, in which incalculable benefits, and would every one would be liable jointly enable government to place the and severally to the last shilling of banking system of the empire on a his fortune. It was natural that a more secure foundation.

bank consisting of a few partners, The Earl of Lauderdale opposed each of whom could attend to the bill, and said that it was im some department of the business, possible to trace the late, and the should be better conducted than a existing embarrassments, to any more unwieldy establishment, the excess of paper currency, or to any most interested members of which speculations arising out of such an were sleeping partners; and it excess ; and that there was could not be doubted, that, badlycircumstance connected with them managed joint-stock banking comwhich might not as well have oc- panies would produce as much miscurred, even if the circulation had chief and misery, as any system of contained as much gold as ministers currency, however vicious.

The now seemed to desire. Their true example of Scotland proved deorigin was in the state of the money monstrably how unnecessary it market, and in the fall in the rate was to seek for security in a large of interest, which, from the anxiety number of partners. Scotland posto employ money profitably, na- sessed thirty banks; of these seven turally led to speculation and over were chartered banks ; of the retrading. The commissioners of the maining twenty three, only seven Sinking Fund purchased annually were joint-stock companies, and the about 5,000,0001.: every visit they rest, with one or two exceptions, did made to the Stock Exchange threw not consist of more than four, six, additional capital into the market, or eight partners. Yet the solidity created an increase of employa of the latter had never been more ment, and a rise of prices ; for questioned than that of the former; the inevitable effect of the opera- their notes were as well established tion of the Sinking Fund was, the in circulation, and they had stood noble lord maintained, to diminish the storm with as much vigour. He the interest of capital. Such an could not conceive it, therefore, to influx of capital resembled the be just, or necessary, or expedient, to coming of a lottery prize of interfere in the present state of the 30,000l. into a country town; it country, with the exclusive privianimated the whole district with leges of the Bank of England. a rage for scheming and specula- Lord Ellenborough, likewise, could tion; and both argument and au not anticipate much good from thority shewed, that to this cause joint-stock companies ; and exthe existing difficulties of the coun- pressed his apprehensions lest, in try must be, in a great measure, if 1833, when the Bank charter not altogether, ascribed. The pro- would expire, great embarrassment, posed remedy, therefore, by allow- as to the course which it might be ing banks to consist of an unlimited deemed advisable to pursue, should number of partners, would not be arise from the existence of these efficient, and was not necessary, establishments, VOL. LXVIII,

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In the committee, lord Liver- had agents, they had recourse to pool called the attention of the another expedient: they made an House to the expediency of insert- alteration in their notes, by ining a clause, authorizing the Bank serting the word “Dublin,” thus of England to establish branch limiting the payment in specie to banks throughout the country. that city alone. Moreover, as the There was no doubt that such a country banks were to be compelled power was vested in the Bank by to pay their notes in gold at the their charter ; but a question had place where they were issued, it arisen as to the extent of discretion would be in vidious not to lay the with which they could clothe their same obligation on the branch agents. He did not think the estab- banks. The only difficulty was, lishment of branch banks would take that it would be necessary for the place to any great extent; yet it was Bank so to frame its notes, as to but right and prudent to give the ascertain at what particular place Bank the opportunity of trying the they had been issued : otherwise a experiment. He therefore proposed person taking a note to a branch a clause allowing the Bank of Eng- bank might be told, that it had not land to carry on branch banks for been issued there, and that there the purpose of issuing cash notes, he could not have gold for it; but and bills of exchange.

this obstacle, it was suggested, The adoption of this clause might be surmounted by the Bank rendered another proviso necessary, adopting a note of a particular deviz. a clause making the notes is scription for each of its branches ; sued by the branch banks payable and perhaps to give the notes this at the place where they were is- local character, would tend to sued; for, to lay individuals under lessen in some measure the inthe necessity of bringing or sending ducements to forgery. Lord Livertheir bank paper to London, before pool readily assented to the proreceiving gold for it, would be both posed clause, both because he inconvenient to the public and dis- thought it likely to prove a check ereditable to the Bank. Something on over-issues by the Bank, and of this sort had recently occurred because it was necessary to take in Ireland. The Bank of Ireland every precaution to prevent the poss had established branch banks in sibility of discredit being thrown on different parts of the country ; a any of these branch establishments; number of its notes had been pre- for the slightest imputation on the sented at these new establishments security of a branch of the Bank to be exchanged for coin, and, for of England would be attended with a while, were paid in coin, till the far more serious consequences than Bank, finding this inconvenient, even the failure of a private bank. refused to pay any where but in A greater degree of opposition Dublin. The consequence was, was manifested to the bill, when it that some of the notes were pro came down to the House of Comtested, and legal measures adopt- mons. It was there resisted both ed to recover the amount. Being by those who were hostile to the satisfied, however, that, the con- whole system on which ministers tract expressed on their notes were proceeding, and by those who being a general one, they were were over-chary of the privileges of bound to pay wherever they the Bank. The clause, it was said,

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