THE UNIVERSITY 
 
 OF ILLINOIS 
 
 LIBRARY 
 
 552 
 
 hQ75 
 V.25 
 
 ECOKOMfCS
 
 A 
 
 PRACTICAL TREATISE 
 
 ON 
 
 BANKING, 
 
 containing an acrount of the 
 
 LONDON AND COUNTRY 
 
 BANKS; 
 
 EXHIBITING THEIR SYSTEM OF BOOK-KEEPING — THE TERMS ON WHICH 
 
 THEY TRANSACT BUSINESS— THEIR CUSTOMS IN REGARD TO lilLLS OF 
 
 EXCHANGE— AND THEIR METHOD OF MAKING CALCULATIONS- 
 
 ' Also a view of 
 
 JOINT STOCK BANKS, 
 
 ann the 
 
 BRANCH BANKS 
 
 of the 
 
 BANK OF ENGLAND: 
 
 Likewise ample information respecting the 
 
 BANKS OF SCOTLAND AND IRELAND: 
 
 with 
 
 A SUMMARY OF THE EVIDENCE DELIVERED BEFORE THE PARLIAMENTARY 
 
 COMMITTEES, RELATIVE TO THE SUPPRESSION OF NOTES UNDER 
 
 FIVE POUNDS IN THOSE COUNTRIES. 
 
 t- 
 
 BY 
 
 JAMES WILLIAM GILBART. 
 
 LONDON : 
 
 PUBLISHED BY EFFINGHAM WILSON, ROYAL EXCHANGE; J. RIDGWAY, 
 PICCADILLY; WESTLEY AND DAVIS, STATIONERS COURT; WESTLEY 
 AND TYRELL, DUBLIN ; AND WAUGH AND INNES, EDINBURGH. 
 
 1827. 
 [PRICE TWO SHILLINGS AND SIXPENCE.]
 
 Printed by E.Justins and Son, 41, Brick Lane, Spitalfields.
 
 Section 1 . — Introductory Observations. 
 
 *' What is it that we call a Banker ? There is in this 
 city a company or corporation, called goldsmiths, and 
 most of those called bankers are of that corporation ; 
 but so far as I know, there is not a company or corpo- 
 ration in England called bankers, nor has the business 
 any definition or description either by common law or 
 by statute. By custom we call a man a banker who 
 has an oi3en shop, with proper counters, servants, and 
 books, for receiving other people's money, in order to 
 keep it safe, and return it upon demand; and when any 
 man has opened such a shop, we call him a banker, 
 without enquiring whether any man has given him 
 money to keep or no ; for this is a trade where no 
 apprenticeship is required, it having never yet been 
 supposed that a man who sets up the trade of banking, 
 could be sued upon the statute of Queen Elizabeth, 
 which enacts, that none shall use any art or mystery 
 then used, but such as have served an apprenticeship in 
 the same.* This is an extract from a speech delivered in 
 the House of Commons in the year 1 74t) : and I shall 
 attempt no better definition of the art and mystery of a 
 banker. 
 
 The term bank is derived from banco, the Italian 
 word for bench, as the Lombard Jews in Italy kept 
 benches in the market place, where they exchanged 
 money and bills. When a banker failed, his bench was 
 broken by the populace ; and from this circumstance we 
 have our term banJi-rupt. 
 
 But banking, by whatever name it may be called, 
 or however it may be defined, is universally admitted 
 
 * See the London Magazine for 1746, page 120.
 
 to be intimately connected with the interest of trade 
 and commerce in every country. Where banking flou- 
 rishes, there commerce and wealth increase; and where 
 banking declines, these will wither away. In a country 
 like our's, it seems highly necessary that every one 
 should acquire some knowledge of a system in which 
 his own interest is so deeply involved; yet scarcely 
 any topic is so little understood. There is not, I be- 
 lieve, in our language, a work of importance that treats 
 exclusively upon this subject. Most of our public 
 writers consider banking as part of the science of 
 political economy, and are satisfied with tracing the 
 effects of the system upon the commercial interests of 
 society, instead of explaining the machinery of the sys^ 
 tem itself. It was not to be expected that writers who 
 had no practical knowledge of the subject could do 
 more. Having had better opportunities of acquiring a 
 perfect acquaintance with all the details of this compli- 
 cated machinery, I imagined I should be employing my 
 leisure time profitably to myself, and usefully to others, 
 by unfolding in all their simplicity and utility those 
 principles on which the system is founded ; and might 
 thus dissipate that profound ignorance, and that mys- 
 terious awe with which the subject is usually approached. 
 The following pages were originally designed to form 
 part of a work I have commenced upon the History 
 and Principles of Banking. But considerable time will 
 necessarily elapse before that work will be completed, 
 and I have thought that a treatise containing a view of 
 some of the practical operations of the system, would 
 neither be vmseasonable nor unacceptable to the public. 
 In this pamphlet I have been studiously practical. It 
 is designed to guide the conduct of practical men. 
 I have avoided the discussion of all theories upon the 
 nature and use of money ; not because I am averse to 
 such discussions, not because I think they are unprofit- 
 able, but because I had determined to make it my chief 
 aim to communicate information. While, however, I
 
 have been anxious to impart useful knowledge, I have 
 been unwilling to gratify an idle curiosity. It has 
 been my object to explain the system of banking, not 
 to disclose the private transactions of the bankers. 
 Hence I have carefully avoided the introduction of 
 matters, which are of importance only to the bankers 
 themselves, and have been anxious to select those topics 
 which are most interesting to the public at large. The 
 information I have supplied has been derived principally 
 from personal knowledge, and from printed documents. 
 The system of book-keeping as practised by bankers, 
 has never before, I believe, been described in print ; and 
 will probably be found interesting to those who are en- 
 gaged in the banking business. For an acquaintance 
 with the banks of Scotland and Ireland, I am greatly 
 indebted to the evidence delivered last vear before the 
 parliamentary committees ; and I have paid particular 
 attention to the testimony of the witnesses, as to the 
 effects of withdrawing the small note circulation of 
 those countries. 
 
 Section 2. — Of' the Utility of Banks. 
 
 In the first place, banks are useful as places of secu- 
 rity for the deposit of money. The circumstance which 
 gave rise to the business of banking in this country, 
 was a desire on the part of the merchants of London 
 to obtain a place where they might lodge their money 
 in security. Every one who has had the care of large 
 sums of money, knows the anxiety which attends their 
 custody. A person in this case must either take care 
 of his money himself, or trust to the care of his servants. 
 If he take care of it himself, he will often be put to
 
 6 
 
 inconvenience, and will have to deprive himself of holi- 
 days and comforts, to which a man who is possessed of 
 much money would not like to submit. 
 
 If he entrust it to others, he must depend upon their 
 honesty and their ability. And although in many 
 important cases a master is compelled to do this, yet lie 
 does not feel the same satisfaction as if the money Avas 
 actually under his own care. 8ome instances of neglect 
 or of dishonesty will necessarily occur, and these will 
 occasion suspicion in reference to other parties against 
 whom no suspicion ought to be entertained. 
 
 Besides, in both these cases the money is lodged under 
 the owner's own roof, and is subject to thieves, to fire, 
 and to other contingencies, against which it is not 
 always easy to guard. 
 
 All these evils are obviated by means of banking. The 
 owner of money need neither take the charge of it 
 himself, nor trust to his dependants. He can place it 
 in the hands of his bankers. They are wealthy men, 
 and they are responsible to him for the amount. If 
 they are robbed it is no loss to him. They are pledged 
 to restore to him the amount of his deposit when he 
 shall require it. Whenever he wants money he has only 
 to write an order or draft upon his banker, and the person 
 to whom he is indebted takes the draft to the bank, 
 and without any hesitation or delay receives the money. 
 
 2. The bankers allow interest, or another equivalent 
 for money placed in their hands. 
 
 By means of banking the various small sums which 
 would remain unproductive in the hands of individuals, 
 are collected into large amounts in the hands of the 
 bankers, who employ it in granting facilities to trade 
 and commerce. Thus banking increases the productive 
 capital of the nation. At the origin of banking, " the 
 new-fashioned bankers," as they were called, allowed a 
 certain rate of interest for money placed in their hands. 
 The banks of Scotland carry this practice to the great- 
 est extent, as they receive deposits upon interest of so
 
 low an amount as ten pounds ; and also allow interest on 
 the balance of a running account. The country bank- 
 ers in England allow interest at 2 1 or 3 per cent, on a 
 running account, and charge commission on the amount 
 of the money withdrawn. The London bankers do not 
 allow interest on deposits, but neither do they charge 
 commission. All their profits are derived from the use 
 of their customers' money. The banks of Scotland do 
 not charge commission, although they allow interest on 
 deposits, but then those banks have a profit by the issue 
 of their notes. The London bankers do not issue notes. 
 3. Another advantage conferred upon society by bank- 
 ers is, that they make advances to persons who want 
 to borrow money. These advances are made — by dis- 
 counting bills — upon personal security — upon the joint 
 security of the borrower, and two or three of his friends — 
 and sometimes upon mortgage. Persons engaged in 
 trade and commerce are thus able to augment their 
 capital, and consequently their wealth. The increase 
 of money in circulation, stimulates production. When 
 bankers are compelled to withhold their accustomed 
 accommodation, both the commercial and the agricul- 
 tural interests are plunged in extreme distress. The great 
 advantage arising to a neighbourhood from the esta- 
 blishment of a bank, is derived mainly from the addi- 
 tional supplies of money advanced in the form of loans, 
 or discounts to the inhabitants of the place. This 
 principle is so well understood in Scotland, that branch 
 banks are sometimes established in poor districts with a 
 view of obtaining a future profit from the prosperity 
 which the bank will introduce."* 
 
 4. Another benefit derived from bankers is, that they 
 transmit money from one part of the country to another.^ 
 There is scarcely a person in business who has 
 not occasion sometimes to send money to a dis- 
 
 * Evidence before the Select Comniiitee of the House of Gommoi»6, p. 43.
 
 8 
 
 tant town. But how is this to be done ? He cannot 
 send a messenger with it on purpose — that would be 
 too expensive. He cannot send it by post— that would 
 be too hazardous. Besides, the sum may be some frac- , 
 tion of a pound, and then it cannot go by post. The 
 post too takes considerable time, as three letters at least 
 must pass on the transaction. If he live in London he 
 may obtain a bank post bill, but he cannot obtain that 
 in the country ; and he may not be able to obtain it in 
 London for the exact sum he wants. How then is the 
 money to be sent ? 
 
 A country banker opens an account with a London 
 banker. Every other country banker does the same. 
 Now, then, if a man lives at Penzance, and wants to 
 send a sum of money to Aberdeen, how will he manage 
 it ? He will pay the money into the Penzance bank, 
 and his friend will receive it of the Aberdeen bank. The 
 whole transaction is this : the Penzance bank will direct 
 their agent in London to pay the money to the London 
 agent of the Aberdeen bank, who will be duly advised 
 of the payment. A small commission charged by the 
 Penzance bank, and the postages, constitute all the ex- 
 penses incurred, and there is not the least risk of loss. 
 
 Commercial travellers from London houses, who go 
 collecting money, derive great advantage from the banks. 
 Instead of carrying with them throughout the whole of 
 their journey all the money the)'^ have received, when 
 perhaps it may be wanted at home, they pay it into a 
 country bank, by whom it is thus remitted with the 
 greatest security, and with little expence : and they are 
 thus delivered from an incumbrance which would have 
 occasioned great care and anxiety. 
 
 5. By means of banking there is a great saving of 
 time in making money transactions. 
 
 How much longer time does it take to count out a 
 sum of money in pounds, shillings, and pence, than it 
 does to write a draft. And how much less trouble is it 
 to receive a draft in payment of a debt, and then pay it
 
 into the banker's than it is to receive a sum of money 
 in currency. What inconveniences would arise from the 
 necessity of weighing sovereigns. What a loss of time 
 from disputes as to the goodness or badness of particu- 
 lar pieces of money. 
 
 Besides the loss of time that must necessarily occur 
 on every transaction, we must also reckon the loss which 
 every merchant or tradesman, in an extensive line of 
 business, would certainly sustain in the course of a year 
 from receiving counterfeit or deficient coin, or forged 
 notes. From all this risk he is exempt by keeping a 
 banker. If he receive payment of a debt, it is in the 
 form of a draft upon his customer's banker. He pays 
 it into his own banker's, and no coin or bank notes pass 
 through his hands. If he draws bills, those bills are 
 presented by his banker; and if his banker take bad 
 money it is his own loss. 
 
 6. A merchant or tradesman who keeps a banker, saves 
 the trouble and expense of presenting those bills or drafts 
 which he may draw upon his customers, or which he 
 may receive in exchange for his goods. He pays these 
 into the hands of his banker, and lias no further trouble. 
 He lias now no care about the custody of his bills — no 
 anxiety about their being stolen — no danger of forgetting 
 them until they are over-due, and thus exonerating the 
 endorsers— no trouble of sending to a distance in order 
 to present them. He has nothing more to do than to 
 see the amount entered to his credit in his banker's 
 books. If a bill be not paid it is brought back to him 
 on the day after it falls due, properly noted. The 
 banker's clerk and the notary's clerk are witnesses 
 ready to come forward to prove that the bill has been 
 duly presented, and the notary's ticket attached to the 
 bill assigns the reason why it is not paid. But if any 
 endorser of the bill has given a reference in case of 
 need, that is, if any endorser has written on the back of 
 the bill that some other party will pay it in case the 
 acceptor does not, then the notary takes the bill to the 
 referee, and procures the money from him.
 
 10 
 
 This circumstance alone must cause an immense 
 saving of expence to a mercantile house in the course 
 of a year. Let us suppose that a merchant has only 
 two bills due each day. These bills may be payable in 
 distant parts of the town, so that it may take a clerk 
 half a day to present them. And in large mercantile 
 establishments it would take up the whole time of one 
 or two clerks to present the due bills and the drafts. 
 The salary of these clerks is therefore saved by keejjing 
 an account at a banker's. Besides the saving of expence, 
 it is also reasonable to suppose that losses upon bills 
 would sometimes occur from mistakes, or oversights — 
 from mis-calculation as to the time a bill would become 
 due — from errors in marking it up — from forgetfulness 
 to present it — or from presenting it at the wrong house. 
 In these cases the endorsers and the drawers are exone- 
 rated; and if the acceptor does not pay the bill the 
 amount is lost. In a banking-house such mistakes are not 
 so likely to occur, though they do occur sometimes; but 
 the loss falls upon the banker, and not upon his customer. 
 
 7. Another advantage from keeping a banker in Lon- 
 don is, that by this means you have a continual referee 
 as to your respectability. If a mercantile house in the 
 country write to their agent, to ascertain the respecta- 
 bility of a firm in London, the first enquiry is, who is 
 their banker ? And when this is ascertained, the banker 
 is applied to through the proper channel, and he gives 
 his testimony as to the respectability of his customer. 
 When a trader gives his bill, it circulates through the 
 hands of many individuals to whom he is personally un- 
 known ; but if the bill is made payable at a banking- 
 house, it bears on its face a reference to a party to whom 
 the acceptor is known, and who must have some know- 
 ledge of his character as a tradesman. This may be an 
 immense advantage to a man in business, as a means of 
 increasing his credit; and credit. Dr. Franklin says, is 
 money. 
 
 8. The keeping an account at a banking-house, enables 
 a trader not only to give a constant reference as to his
 
 11 
 
 own respectability, but it also enables him to ascertain 
 the respectability of other persons who keep bankers. 
 There are numerous cases in which a trader may wish 
 to know this. A stranger may bring him a bill, and 
 want goods in exchange : or he may have drawn a bill 
 upon a customer, and wishes to ascertain if this bill 
 would be paid before he gave him any further credit. If 
 this bill is not made payable at a banking-house, he can 
 obtain no information. But w^e will suppose this bill 
 to be made payable at a banking-house ; even then he 
 can obtain no information, unless he himself has a 
 banker. If he take the bill to the banker's, at whose 
 house it is made payable, and say, ' Gentlemen, I will 
 thank you to inform me if the acceptor of this bill be a 
 respectable man — may I safely give goods or money in 
 exchange for it?' They will reply, 'Sir, we never 
 answer any such questions to private individuals.* But 
 if the holder of this bill keeps an account at a banker's, 
 he has only to ask his banker to make the enquiry for 
 him, and he will easily obtain the most ample informa- 
 tion. Among nearly all the bankers in London, the 
 practice is established of giving information to each 
 other as to the respectability of their customers. For 
 as the bankers themselves are the greatest discounters 
 of bills, it is their interest to follow this practice ; and 
 indeed the interest of their customers also, of those at 
 least who are respectable. 
 
 Even those persons who are not in trade find the ad- 
 vantage of keeping an account at a banker's. Such a 
 person always has with him every advantage to be 
 derived from having a pocket full of money, and none 
 of the toil or inconvenience of carrying it. He takes 
 his cheque book in his pocket, and if he should want 
 money he draws a cheque upon his banker.
 
 12 
 
 Section 3. — Of the London Bankers. 
 
 I can adopt no better means of communicating a 
 correct knowledge of the business of a banking-house, 
 than by explainmg the banking system of book-keeping. 
 But I will first define a few terms which are often used 
 in connexion with this subject. By the word hill^ is 
 always meant a bill of exchange not yet due. The word 
 cashy denotes the various items included in a credit or 
 cash entry, and may denote due bills, cheques, bank 
 notes, country notes, or coin. The terms cheque* and 
 draft are used synonimously, and denote an order on a 
 banker, payable on demand. The word draft is never 
 used in London to denote a bill of exchange, though this 
 use of the term is very common in the country. Both 
 bills and drafts are often called articles, and if they are 
 cash, they are stiled cash articles. An addressed hill 
 is a bill made payable at a banking-house. By money 
 is always meant coin. To post an article, is to place 
 or enter it in the ledger. One book is said to mark 
 against another, when the same entry is made in both 
 books. One book is checked hy another, when any error 
 in one book would be detected by some operation in 
 another. To check a book, or an account, is to examine 
 it, and prove it correct, or make it so. To cast, or 
 cast up, means to add together. The balance of an 
 account is the difference between the credit and the 
 debit side. An account is said to balance when the 
 credit and the debit side are of the same amount. To 
 
 * This word is variously spelt. Most writers spell it check. I have 
 adopted the above form because it is free from ambiguity, and is ana- 
 lagous to ex-chequer , the royal treasury. It is also used by the Bank of 
 England " cheque office." The word draft is also spelt variously. 
 Mr. Justice Bayley in his " Summary of the Law of Bills of Exchange," 
 spells it draught, and he is supported by the authority of nearly all our 
 dictionaries and encyclopedias. 
 
 I
 
 13 
 
 balance an account is to enter the balance, and to add 
 up both sides, and then to bring down the balance as a 
 new amount. The credit side of an account, or that on 
 which the cash received is placed to the credit of a cus- 
 tomer, is the right-hand side as you face the ledger ; the 
 debit side is the left-hand side. In London, the esta- 
 blishments of bankers are usually called banking-houses ^ 
 not banks. The term bank is applied exclusively to the 
 Bank of England. 
 
 I will now explain the system of book-keeping em- 
 ployed by the bankers. 
 
 The Town Uepartment. 
 
 The principal books in this department are the 
 following : — . 
 
 1. Two Waste-books: one is called the "Received," 
 and the other the " Paid-waste-book." In the former is 
 entered an account of all the " cash" received, and in 
 the latter is entered an account of all the cheques and 
 bills paid by the house, and a description of the notes or 
 money with which thay have been paid. 
 
 2. The Cash-books. These are three ; — the Received- 
 cash-book, the Paid-cash-book, and the Bill-cash-book. 
 Into the Received-cash-book are copied from the Received- 
 waste-book, the amounts of all the credits, and the re- 
 spective names. The difference between the two entries 
 is this : in the Waste-book the various ite^ns of each 
 credit are enumerated; but in the Cash-book you state 
 only the totals, and these are placed under each other, 
 so as to admit of being added together. In the Paid- 
 cash-book is entered an account of all the payments that 
 have been made in the Paid-waste-book, but in this case 
 the entries are made from the vouchers themselves. In 
 the Bill-cash-book are entered, each day, all the bills 
 due on that day, payable in London. A bill payable in 
 the country is remitted through some London banking- 
 house to the place where it is payable, and it is entered
 
 14 
 
 in the Bill-cash-book when the amount is received. The 
 amount of the Bill-cash-book is carried into tlie Received- 
 cash-book, previously to the daily trial of the balance. 
 From this statement it will appear that the banker's 
 Waste-book resembles the waste or Day-book of a mer- 
 chant, and the Cash-books are analogous to the Journal. 
 
 3. A set of Ledgers. These may be three, four, five, 
 or more, according to the extent of the business. The 
 names of the customers are placed in alphabetical order, 
 from the first ledger to the last. The credit side of each 
 account is posted from the Received-cash-book, and the 
 Bill-cash-book, and the Ledger-folio is placed in those 
 books, in a column ruled for that purpose. The paid 
 side of the Ledger is posted from the vouchers, and will 
 " mark" against the Paid-cash-book. 
 
 4. The Stock-book. In this book is entered every 
 night an account of all the " cash" in the house, con- 
 sisting of banknotes, cheques, unpaid bills, and coin. 
 
 It is well known that bankers try their balance at the ' 
 close of their business every night, with a view of cor- 
 recting any errors that may have occurred during the 
 day. The process is very easy. If to the amount of 
 the Stock-book last night we add the amount of the cash 
 received to-day, and deduct the amount of cash wo^ have 
 paid, the remainder will be the amount of the Stock-book 
 to-night. If on trial we find this is not the case, there 
 must be some error. Suppose, for instance, the Stock- 
 book last night amounted to £100,000, and we have 
 received £40,000, and paid £50,000 to-day, then will 
 the Stock-book to-night amount to £90,000. The 
 balance sheet will stand thus — 
 
 Stock-book last night - - £100,000 | Paid-cash-book - - - - £50,000 
 Received-cash-book - - - 40,000 Stock-book to-night - - 90,000 
 
 £140,000 I Balance £140,000 
 
 The other books of importance are — 
 1. The Lists. — Each banking-house divides London 
 into a certain number of districts, according to the
 
 15 
 
 number of out-door clerks. Each district is called a 
 walk, and takes its name from the direction in which 
 it lies, as the east walk, the west walk, and so on. To 
 each walk is assigned a book, in which is entered every- 
 day a list of the bills due in that walk, and hence the 
 book is called a List. After the clerk has returned from 
 his walk, he " answers" each bill ; that is, places against 
 it an account of the cash he has received for it, whether 
 cheques, bank notes, or money. If the bill be not paid, 
 he writes L. D, for " Left Direction," and then enters 
 the bill in the Take-up-book. 
 
 2. The Take-up-book. This book lays on the counter, 
 and takes up the bills unpaid in the Lists. When paid, 
 or returned, the bills are " answered" or discharged in 
 this book in the same way as the paid bills were in 
 the Lists. 
 
 3. The Money-book. On the opposite sides of this 
 book is entered an account of all the coin paid or re- 
 ceived in the course of the day. The money is counted 
 up at night, and must agree with the balance of this 
 book. The balance is then entered in the Stock-book 
 previous to the daily trial. Every entry in the Money- 
 book must mark against either the Received-waste- 
 book, the Paid-waste-book, the Lists, or the Take-up- 
 book. 
 
 A mi r)-ii I- I CIii these books are entered all 
 
 4. Ihe Bill-book. >,, , .„ -j • i. xu i, i 
 
 ^ rriL TT11 • 1 <the bills paid into the house by 
 
 5. The Bill-iournal. i-i • . ^ 
 
 •^ f the various customers. 
 
 In the Bill-book each individual has a separate ac- 
 count to which the bill is placed, and the entry includes 
 the names of the acceptor, drawer, person to whom 
 payable, date, time, day when due, and the amount. 
 The folio of the Bill-book is afterwards placed upon 
 the bill. In the Bill-journal, the bill is entered under 
 the day on which it falls due. The entry includes only 
 the Bill-book-folio, the name of the acceptor, and the 
 amount. The Bill-journal is marked every day against 
 the Bill-cash-book. In some houses the Bill-journal is 
 called the Calendar.
 
 16 
 
 6 Advice-journal. This book is similar to the Bill- 
 journal. Here are entered an account of all the bills 
 advised to be paid. But this book belongs more pro- 
 perly to the country department, as the acceptances of 
 town customers are paid without advice. 
 
 The Clearing Department. 
 
 Most of those London bankers who live in the city, 
 transact their business with each other at the clearing- 
 house. At this house which is situated in Lombard- 
 street, adjoining the banking-house of Messrs. Smith, 
 Payne and Smith, whose property it is, and of whom 
 it is rented by the bankers, a clerk attends from each 
 banking-house twice a day. First he goes at twelve 
 o'clock with those bills which he has upon other 
 bankers. He drops the bills payable at each house in 
 a separate drawer provided for the purpose, and he 
 enters in his book under separate accounts, those bills 
 that may be dropped into his drawer. At half-past 
 twelve he returns home. He goes again at three o'clock 
 with a fresh quantity of bills and cheques, which he 
 delivers in the several drawers as before. He then 
 enters in his book those cheques that may be delivered 
 in his drawer. From three to four he receives further 
 supplies of cheques brought to him from home by other 
 clerks. These cheques he enters in his book, and they 
 are then delivered in the proper drawers. As soon 
 as the clock strikes four no further cheques are taken. 
 He then easts up each account and strikes the ba- 
 lance. These balances are then transferred to the 
 balance sheet. The balance sheet is a half-sheet of 
 paper with a list of clearing bankers, printed alpha- 
 betically in a row down the middle. On the left- 
 hand side is a space for the debtors. On the right- 
 hand side is a space for tl^e creditors. The clerk 
 begins with the house at the top of the list. If this
 
 17 
 
 house owes him money he places the balance on the 
 left side of tlie name. If he owes money to this house 
 he places the amount on the right side. Thus he goes 
 through the whole hst. He then goes to the clerk of 
 €ach house and calls the balance to him, and if they 
 both agree they mark it with a pen. If they differ, 
 they examine where the error lies, and make the ac- 
 counts agree. He then casts up each side of his 
 balance sheet. If the total amount of debits exceeds 
 the total amount of credits he will have to receive the 
 amount of the difference. If the credits exceed the 
 debits he will have to pay the difference. 
 
 If a banker does not choose to pay a bill or draft 
 brought home from the clearing house, it is sent back 
 and dropped in the drawer of the house by whose clerk 
 it was presented. If this draft was delivered in the 
 first instance in the morning clearing (that at twelve 
 o'clock) it is usually returned before four o'clock ; but 
 in all cases it must.be returned before five o'clock, or 
 else it will not be taken back, and the banker is con- 
 sidered to have paid it. 
 
 All this is usually done by five o'clock, when the clerks 
 go home for a short time for two purposes; one purpose 
 is to fetch the money they have to pay, and the other 
 is to see if their balance on the sheet agrees with the 
 balance of the books at home. At about quarter or 
 half-past five they return, and any clerk who has money 
 to pay, pays it to any clerk who has money to receive. 
 It is common however for three or four clerks to form 
 a sort of club, and pay principally among themselves. 
 Hence when one member of the club has money to pay, 
 he will pay it to some member of the same club who has 
 money to receive, in preference to paying it to any one 
 else; by this means his friend obtains his money earlier 
 than he otherwise might, and gets off sooner. It is obvious 
 that all the money that is to be paid must be equal to 
 all the money that is to be received. If this should not 
 appear to be the case there must be some error, and the 
 clearing-house is then said to be wrong. Two inspectors
 
 18 
 
 are appointed with salaries to detect errors of this kind 
 by examining and marking off the sheets. Their signa- 
 ture is also necessary before any money can be paid 
 from one clerk to another. 
 
 No gold, silver, or copper, is taking to the clearing- 
 house; the differences under £5 that may be left 
 between the clerks who receive and pay with each 
 other, are carried to account on the following day. 
 
 Country notes are not paid at the clearing-house, 
 but are taken round to the banking-houses, and ex- 
 changed for tickets or memorandums, which are passed 
 through the afternoon clearing. The following is the 
 form of these memorandums: — 
 
 
 
 London, \st 
 
 .May, 
 
 1827. 
 
 Due to Messrs. 
 
 Steady 
 
 and Co. 
 
 One thousand pounds 
 
 
 
 for counti-v notes. 
 
 
 
 
 
 
 For Messrs. Hope, 
 
 Rich, 
 
 and Co. 
 
 £1000. 
 
 
 A Clerk, 
 
 
 Drafts that are paid into the banking-house after four 
 o'clock, are taken to the houses upon whom they are drawn 
 " to be marked;" that is, it is asked if these drafts will be 
 paid in the clearing of the next day ? If so, one of the 
 clerks marhs the cheque by placing his initials upon it. 
 If the cheque is refused to be marked it is returned as 
 dishonored on the following day, to the person who has 
 paid it in. Had it not been sent to be marked, the 
 draft would not have been refused payment until the 
 next day, and it could not be returned to the customer 
 till the day afterwards. 
 
 All the articles in the clearing are entered in a book 
 called the clearing-book. On the left hand are en- 
 tered the bills and drafts upon other bankers. These 
 are called the " clearing-out." On the right hand are 
 entered the drafts which are drawn upon the house, 
 and which have come in from the clearing. These are 
 called the " clearing-in." If the " clearing-out" is a
 
 19 
 
 ' greater sum than the '* clearing-in," the clerks say, 
 " tlie clearing brings in ;" that is, the clearing clerk 
 will bring in money from the clearing-house. In the 
 other case they say, " the clearing takes out;" that is, 
 he will take out money to pay away at the clearing- 
 house. The balance of this book should agree with the 
 clearer's balance sheet, excepting the differences of the 
 preceding night which he may have settled. When 
 this is the case, the clearer says, " I am right ;" if not 
 he is wrong, and he must discover the error. The 
 clearer may be wrong through errors made either in 
 his own book at the clearing-house, or in the clearing 
 book at home. The error at home may be either in the 
 " clearing-in" or in the " clearing-out." If the error be in 
 the clearing-outj it will make the house wrong; if in the 
 clearing-in it will not. Suppose, for instance, the clear- 
 ing out is wrong cast 5^1,000 too much, the house will 
 be £^1,000 over, and the clearer will be ^^ 1,000 short. 
 But if the clearing-in be j^ 1,000 too much, it will not 
 affect the balance of the house, because the stock-book 
 will consequently be 5^1,000 less, and these two 
 amounts, those of the stock-book and the paid-cash- 
 book, (into which the amount of the clearing-in-book 
 is entered) are placed on the same side of the trial 
 pa,per. But this error will make the clearer wrong. 
 The way in which the clearer discovers his errors is 
 by marking off his book against the clearing-book, and 
 by recasting both the books. An error may have 
 occurred at the clearing-house. If the clearer has 
 placed a wrong balance on his sheet, or has wrong-cast 
 his balance sheet, the clearing-house will be wrong, and 
 the inspectors will make it their business to discover 
 the error. But if the clearer has entered an article 
 wrong in his book, and the clerk of the house upon 
 whom the draft is drawn has entered it wrong also, 
 then the clearing-house will be right, and both these 
 clearers will be wrong, one being as much over as the 
 other is short. 
 
 All the articles in the clearing-out must mark against 
 either, the bill-cash-book, the received-wastc-book, the
 
 20 
 
 lists or the take-up-book. To secure greater accuracy, 
 the clearing-in is entered not only in the regular 
 clearing-book, but also in another book by itself, which 
 for distinction is called the clearing-in-book. The 
 amount of the clearing-in, is entered in the paid-cash- 
 book previous to the daily balance. On the following 
 morning the clearing-in-book is marked against the 
 debit side of the ledger, and the ledger-folio placed 
 against each entry. 
 
 The following is a copy of a clearing balance-sheet, 
 and a list of the bankers who clear. The name of 
 the house to whom each sheet belongs is placed at the 
 top, and is then of course omitted in the alphabetical 
 list. 
 
 Debtors. 
 
 Barclay 
 
 Barnard 
 
 Bond 
 
 Bosanquet 
 
 Curries 
 
 Curtis 
 
 Dorrien 
 
 Esdaile 
 
 Fry 
 
 Fuller 
 
 Glyn 
 
 Grote 
 
 Hanbury 
 
 Hankey 
 
 Hoare 
 
 Jones 
 
 Kay 
 
 Ladbroke 
 
 Lees 
 
 Lubbock 
 
 Martin 
 
 Masterman 
 
 Remington 
 
 Rogers 
 
 Sansom 
 
 Smith 
 
 Spooner 
 
 Vere 
 
 Weston 
 
 Whitmore 
 
 Williams 
 
 Willis 
 
 Creditors. 
 £ s. d.
 
 21 
 
 The Country Department. 
 
 In this department is managed the business con- 
 nected with the country banks, and of those customers 
 who live in the country. For this purpose there is a 
 separate set of ledgers, called the country-ledgers, and 
 the business generally is somewhat different from that of 
 the town department. When the letters are delivered in 
 the morning by the postman, one clerk takes them and 
 enters the cash enclosed in the letter in the waste-book 
 to the credit of the respective parties. Another clerk 
 takes the letters and enters the bills in the country-bill- 
 book and the bill-journal. The letters are then handed 
 to a third clerk, who copies off into a book all the 
 payments^ which are to be made immediately in cash. 
 This book is usually called the Draft-book, as the party 
 receiving the money signs a draft for the amount which 
 is as good as signing a receipt. If the payment is to 
 be made to a banker, he receives notice in a printed form, 
 called a memorandum, but if the payment is ordered 
 to be made to a private individual, he must call for it 
 and claim the exact amount. The following is the 
 form sent to a banking-house. The right hand side 
 is filled up by the house to whom it is sent, and the 
 memorandum is paid through the clearing. 
 
 London, May 1, 1827. q London, May 1, 1826. 
 
 Messrs. Steady and Co. c^l^^l^ Messrs. Hope, Rich, and Co. 
 Receive of {the country bk.} ^^^^ Pay E.F. Esq. or bearer, the sum of 
 per Mess. Hope, Rich, & Co. o^^^'"''^ hundred pounds, on account of \_thc 
 the sum of £100 <z:;^^^f^cQuntry bank.} 
 
 on acconnt of \E. F. Esq.} C^^^&O /"'or Messrs. Steady and Co. 
 
 £100 ^ Clerk. 
 
 A fourth clerk now takes the letters, and enters all 
 the advices (that is, bills advised to be paid when due) 
 in the advice-book and in the advice-journal. The cor- 
 responding clerk who answers the letters usually manages 
 the stock department. Hence he observes the orders to 
 purchase or sell stock to procure powers of attorney and 
 other business of that kind. When writing a reply to 
 the letters received, he notices if all the items in the let- 
 ters are marked by the proper clerks. If any thing is 
 wrong he is informed of it. Bankers' letters are usually
 
 short and plain comprising only two or three lines. The 
 following example includes all the ordinary topics. 
 
 Messrs. HOPE, RICH, and Co. Bankers, London, 
 
 Gentlemen, Country Town, May 1, 1827. 
 
 Enclosed we remit you sixteen bills, value £1,750, and cash 
 £2.50, making together £2,000 to our credit; and we subjoin a list of 
 payments, and advices to be made to our debit. We will thank you to 
 purchase £10,000 new fours, in the name of James Wealthy, gentle- 
 man, of Stately House, near Prince Town, and forward us a power of 
 attorney for sale, and dividends of £200 consols, now standing in the 
 name of Susan Thrifty, spinster, of this place. Please inform us of 
 the respectability of Messrs. John Careful and Co. of Southwark — they 
 bank at Messrs Steady and Co. Lombard Street. The bill you sent us 
 to present here for payment has been paid, and we credit you £50, the 
 amount. We herewith send you the signature of our relative, Mr. John 
 Keen, who is going to London, and whose drafts to the extent of £3,000 
 we wish you to honor to our debit. On Mr. Keen's return, which will 
 be in about a week or ten days, he will bring with him our paid notes. 
 
 We are, Gentlemen, 
 
 Your obedient Servants, 
 
 KEEN, BUSY, and Co. 
 
 (REPLY.) 
 Messrs. KEEN, BUSY, and Co. Bankers, Country Town. 
 
 Gentlemen, - London, May 2, 1827. 
 
 We have received your favor of yesterday's date, enclosing 
 sundries, value £2000, which we have passed to your credit, and note 
 your lists of payments and advices. We also credit you £1,476 : I65. : 6c?. 
 per Messrs. Good and Co. on account of John Green. We have enquired of 
 Messrs. Steady and Co. as to the respectabihty of Messrs. John Careful 
 & Co. and are informed they are highly respectable. We now enclose 
 a stock receipt for Mr. James Wealthy's £1,000 new fours, £10,012 :105. 
 to your debit, and also Susan Thrifty's power of attorney, for which we 
 debit you £1 : 1 5. : 6d. also a dishonored bill on Badluck, noted £100 :1s.: 6d. 
 to your debit ; and your weekly cash account and monthly account cur- 
 rent, which we trust will be fouud correct. We debit you £50 for the 
 bill you had the goodness to present for us ; and we now enclose another 
 on White, £120, which we will thank you to get accepted and return. 
 We have opened a credit in favor of Mr. John Keen, for £3,000, and 
 will forward your paid notes by him as requested. 
 
 We are. Gentlemen, 
 
 Your obedient Servants, 
 
 HOPE, RICH, and Co. 
 
 All the entries in the country-ledger, as well as those 
 
 in the town-ledger, must first pass through the waste
 
 2S 
 
 and cash-books. The credit side of the ledger is posted 
 from the bill-cash-book and the received-cash-book. The 
 debit side is posted from the vouchers themselves, and 
 like the del)it side of the town-ledger will mark against 
 the paid-cash-book and the " clearing-in-book." 
 
 The General Balance, 
 
 The daily balance checks the waste-books, the cash- 
 books, the clearing-book, the lists, the take-up-book, 
 and the money-book. If any error occurs in any of 
 those books throughout the day, the " house will be 
 wrong." But the daily balance does not check the 
 ledger though this is the most important book of 
 all. The ledger is always marked off every morning 
 against the three cash-books and the clearing-in- 
 book. But this is not a sufficient check. Hence in 
 every banking-house there is a quarterly, half-yearly, 
 or annual balancing. This is called the general 
 balance. Every account in the ledgers is balanced, and 
 the balances are taken off in a book and added together. 
 The amount of the received-cash-book every day since 
 the last balance, is also taken off and the sums added 
 together. The same is done with the paid-cash-book. 
 Then if to the amount of the ledger-balances, at the 
 last balance, you add the total amount of the received 
 cash-book since that period, and deduct the total 
 amount of the paid-cash-book, you will have the present 
 amount of the ledger-balances. When this is the case 
 the ledger is correct. The balance sheet will stand 
 thus: — 
 
 - , , , , . ^ r Total amount of paid-cash- 
 
 Ledger-balance last tune. / 1 book 
 
 Total amount of received- ^ PquaK Ledger-balance at the pre- 
 
 cash-book. ) (_ sent time 
 
 Balance * 
 
 Every person on opening an account with a London 
 banking-house, enters his name in a book called the 
 
 * Different banking-houses have different modes of book-keeping, 
 and call their books by different names. I have here given a general 
 outline ; at a future period I may entor more into detail.
 
 24 
 
 signature-book, and this book is referred to whenever 
 a draft is presented having a doubtful signature. The 
 person is supplied free of cost with a book of printed 
 drafts and a cash-book, in which is entered an account 
 of his debits and credits, as often as he thinks proper to 
 leave it for that purpose. 
 
 London bankers do not usually give receipts for 
 money paid into their hands, but they enter the amount 
 into the customer's book. A person paying money on 
 account of a country bank, will sometimes require a 
 receipt, and he is then given what is called a shop- 
 receipt in the following form: — 
 
 London, Mmj '[, 1827. 
 Received of \the country hanK\ the sum of one thousand pounds. 
 To account for on demand. 
 
 For Hope, Rich, and Co. 
 £1000 A Clerk. 
 
 The name of the party paying the money is not 
 inserted in the receipt, as that would require a stamp. 
 
 The payment of a draft, or a bill, is always made 
 either in Bank of England notes, or sovereigns, as the 
 party receiving it may desire. 
 
 The London bankers differ very much from the 
 Scotch bankers in estimating the goodness or badness of 
 a person's account. Suppose a person kept a £1000 in 
 his banker's hand, and did not draw above two or three 
 cheques in a twelvemonth; this would be called a dead 
 account. Let another person keep the same balance, 
 but pay in and draw out money every day. This would 
 be a running account^ or as the Scotch banker would say 
 an operating accoimt. In London the dead account 
 would be deemed by far the better of the, two, but in 
 Scotland the operating account would be preferred. 
 Indeed, so much so, that in 1824 the Royal Bank of 
 Scotland allowed only two per cent, interest on dead 
 deposits and two and a half per cent, on operating ac- 
 counts.* What can be the reason of this difference ? 
 
 * See the evidence of Mr. John Thomson and of Mr. Robert Paul, 
 before the Select Committee of the House of Commons, p.p. 146, 205.
 
 25 
 
 The reason is that the London bankers do not issue 
 their own notes. All their profits are derived from the 
 amount of balances in their hands ; and the fewer 
 cheques their customers draw, the fewer clerks will they 
 have to keep, and the less will be their expences for 
 paper and books. But the Bank of Scotland derives a 
 profit from the issue of its notes, and the more an 
 account is " operated upon," the greater number of 
 notes does it put into circulation. 
 
 There is no law prohibiting the issue of notes by the 
 London bankers, but it would not be a profitable un- 
 dertaking. In London the property or prudence of a 
 banker are not so well known as in the country. In 
 almost every case Bank of England notes would be 
 preferred. Even in Edinburgh notes are not issued 
 by the private bankers. In Dublin two private banking 
 establishments issue notes, but their circulation has been 
 principally in the provinces, and that circulation is now 
 much curtailed by the establishment of the provincial 
 banks. In Dublin the circulating medium consists 
 mainly of notes of the Bank of Ireland. 
 
 Section 4. — Of Country Banks. 
 
 There is a striking difference between the business of 
 a London and of a country bank. A London banker 
 takes care of his customer's money, but a country 
 banker has chiefly to advance money to his customers. 
 Nearly all the country agriculturists and manufacturers 
 carry on their business to the full extent of their capital. 
 Hence it is that the establishment of a country bank 
 is found to produce such beneficial effects upon the 
 neighbourhood. By making advances of money it 
 creates new capital, and thus give a stimulus to all 
 the commercial operations of the place. 
 
 The following are the usual charges of the country 
 banks, though they differ very much from each other. 
 
 A charge of £5 per cent, per annum on the discount 
 of bills. Besides five per cent, interest on bills discounted
 
 26 
 
 they usually charge five or six shillings per cent, com- 
 mission and one shilling postage, particularly if the 
 amount is not taken in their own notes. 
 
 Charges for commissions on all payments. This 
 charge is made to their regular customers on the 30th 
 of June, and the 31st of December. It is usually five 
 or six shillings per cent, on the amount of the debit side. 
 
 Charges for transmission of money. Most country 
 bankers charge a quarter per cent, on all monies paid 
 into the bank to be received in London, but no charge 
 is made for monies paid into the London-house to be 
 received in the country, provided the party take the 
 notes of the bank. It is the object of the country 
 bank to receive as much and to pay as little as possible in 
 London. Some banks, however, charge both ways, unless 
 the money received in London is on account of a regular 
 customer. For money transmitted to meet bills made 
 payable at the London-house, the charge is the same as 
 though the money were to be received by another party. 
 Country banks at a distance from London sometimes 
 charge a month's interest on the amount, that is, eight 
 shillings and fourpence per cent. Some commercial 
 travellers instead of paying the country bank commis- 
 sion for transmitting their money to London, prefer 
 taking a bill that has a week or a fortnight to run. 
 
 Charges for postage. This is a source of profit to 
 a country banker, for if he have to advise a dozen 
 payments in one letter, he will charge each of these 
 parties the full amount of postage. In discounting 
 bills also there is a charge of Is. postage. Customers who 
 pay bills into the bank are also charged Is. postage on each 
 bill, whether the bill be actually sent to London or not. 
 Country bankers like to receive bills of small amount, 
 not only as the charge for postage is increased, but 
 also because they can more easily pay them to those 
 commercial travellers who will take them in exchange 
 for notes. The postage of all letters that pass between 
 a London and a country bank is paid by the latter. 
 
 The grand source of profit to a country banker arises 
 from the issue of his own notes. The advances of
 
 27 
 
 money for loans or for bills discounted, are always made 
 in the notes of the bank, and interest charged in the 
 same way as though the amount was advanced in gold. 
 
 The country bankers allow 2^ or 3 per cent, on 
 deposits placed in their hands. But except in populous 
 and manufacturing districts it is presumed that a country 
 bank has but little business of this kind. 
 
 The country banker has to pay rent, taxes, and petty 
 expences of the office, salaries of clerks, stationer's bill 
 for books, paper, pens, ink, engraving of notes, &;c. 
 He pays also i^30 per annum for his licence; and he 
 must have a distinct licence for every place at which 
 he carries on business. He has to pay also the stamp 
 duty on his notes which is as follows: — 
 
 Notes not exceedi 
 
 ng 
 
 1 
 
 I 
 
 2 
 
 5 
 
 10 
 
 20 
 
 30 
 
 50 
 
 1 
 
 
 5 ead 
 
 Exceeding. . • 
 
 1 and not exceeding 2 
 2 5 
 
 2.. 
 
 5., 
 
 0.. 
 
 0., 
 
 0. 
 
 0. 
 
 0. 
 
 , 10 
 
 Ditto 
 
 
 . 1 3 
 
 Ditto 
 
 
 5 10 
 
 1 9 
 
 Ditto 
 
 
 20 
 
 . 2 
 
 Ditto . . . 
 
 
 30 
 
 . 3 
 
 Ditto , . . 
 
 50 
 
 5 
 
 , Ditto ... 
 
 
 100 
 
 . 8 6 
 
 Every country bank keeps an account with a London 
 banker. The country banker receives from London a 
 weekly statement of his cash account, and a monthly 
 account current. The cash account is a copy of the 
 London banker's ledger. But as the London banker 
 does not consider as cash any thing which may not be 
 immediately turned into bank notes, the cash account 
 does not exhibit a statement of the undue bills which 
 the country banker may have remitted, nor of the bills 
 which he may have advised to be paid. By means of 
 a monthly account current, he has a full view of all 
 these operations. On the credit side of the account cur- 
 rent is entered the total amount of each remittance, 
 whether it consists of bills or cash. These are followed 
 by entries of " extra" sums of cash that have been re- 
 ceived in London. On the debit side is placed the total 
 amount of the advices, that is, of bills advised to be 
 paid, and also any " extra" payments of " drafts" to
 
 28 
 
 persons in London. Then the account is balanced, and 
 we have an easy check by which any error that may 
 have crept into either the cash account or the account 
 current is detected. For if both accounts be correct, 
 
 The amount of advices not "^ /The amount of all bills 
 
 yet due / \ not due 
 
 added to / Equals J added to 
 
 The balance of the account i iT'i^ balance of the cash 
 
 current. ) V account. 
 
 In consequence of frequent robberries of bankers par- 
 cels sent by coach or waggon, country banks now receive 
 their paid notes from London by private hands. The post- 
 office will send parcels of the notes, and charge after the 
 rate of tjie postage of a single letter upon every ounce 
 weight of the parcel. They also require a declaration 
 signed by one of the partners in the London-house, that 
 the said parcels contain nothing but paid country notes. 
 The charge is deemed so high, that few country bankers 
 avail themselves of this mode of conveyance except on 
 particular occasions. 
 
 Country bankers are the usual agents for procuring 
 the purchase or sale of government securities, on behalf 
 of persons in their neighbourhood. 
 
 The stock-brokers charge one-eighth commission on all 
 purchases and sales of stock ; one shilling per cent, on 
 exchequer bills; sixpence per pound on long annuites; 
 a quarter commission on all shares in public companies. 
 The charges are made on the amount of stock not on 
 the amount of money invested. In the purchase of 
 shares, the charges are upon the nominal value of the 
 shares. In continuation* accounts the commission is 
 only one-sixteenth per cent. One-eighth commission is a 
 charge of two shillings and sixpence (the one-eighth of 
 a pound) on every £100 : a quarter commission is of 
 course five shillings. 
 
 * A continuation account is when a party buys stock for money and 
 sells it for time. It is an exquisite mode of evading the laws of usury.
 
 29 
 
 Section 5. — Of Bills of Exchange. 
 
 A bill of exchange is a written order from one per- 
 son to another, directing him to pay a sum of money 
 to a third person at a future time. This time is usually 
 a certain number of days, weeks, or months, either 
 after the date of the bill, or after sight; that is, after 
 the person on whom it is drawn shall have seen it, and 
 shall have written on the bill his willingngss to pay it. 
 The party expresses this willingness by writing on the 
 bill the word, " acceptecl^^^ and his name. If the bill 
 be drawn after sight, he also writes the date of the 
 acceptance. 
 
 If the party in whose favor the bill is- drawn, 
 wishes to transfer it, he writes his name on the back. 
 This is called an endorsement; and may be either 
 special or general. A special endorsement is made to 
 a particular party, as " pay to Messrs. John Doe and 
 Co. or order." A general or blank endorsement is when 
 the person merely writes his name. It is held by the 
 lawyers* that a special endorsement cannot follow a 
 general endorsement, and that the holder might sustain 
 an action for the amount, though the bill were not 
 endorsed by the party to whom it was thus specially 
 assigned. In practice, however, this is very common; 
 and bankers always refuse to pay bills not properly 
 endorsed, even though previous endorsements may be 
 general. 
 
 The following is the form of a bill of exchange. 
 
 £1000. London, 1st of May, 1827. 
 
 Two months after date pay to the order of Messrs. Quick 
 Active, and Co. [or me or my order) the sum of one thousand pounds, 
 for value received. 
 
 Hearty, Jolly and Co. 
 To Messrs. John Careful Sr Co. Accepted, Payable at 
 
 ^ . , Messrs. Steady !f Co. Bankers, 
 
 isouthwark. John Careful ^ Co. 
 
 * See Chitty on Bills of Exchange, p. 103.
 
 30 
 A promissory note is as follows: — 
 
 £1000. London, \st of May, 1827. 
 
 Two months after date, wc promise to pay Messrs. Hearty, 
 Jolly, and Co. or their order, the sum of one thousand pounds, for value 
 received. 
 
 John Careful and Co. 
 At Messrs. Steady and Co. 
 Bankers, 
 Lombard Street. 
 
 The acceptance is usually written across a bill, but 
 it should always be on the front, not on the back of the 
 bill. An endorsement, as the name implies, should be 
 placed on the back. Noblemen and gentlemen un- 
 acquainted with commercial affairs, sometimes accept 
 bills on the back, and even endorse them in front. 
 When such bills find their way into a banking-house, 
 they occasion considerable mirth at the expence of those 
 noble and right honorable personages. 
 
 All bills are allowed three days grace. Thus a bill 
 drawn at two months from the first of May will fall 
 due on the fourth of July; but if that day be a 
 Sunday or a public holiday,* the bill will be due the 
 day before. Bills from France instead of being drawn 
 after date or sight, sometimes state the time of payment 
 as *' on the first of August, pay &c." These bills are 
 allowed the usual three days grace. This bill would 
 fall due on the fourth of August. 
 
 Some parties when they endorse a bill, write at 
 bottom " in case of need, apply to Messrs. C. D. and 
 Co." That is, if the bill be not paid when due, Messrs. 
 C. D. and Co. will pay it for the honor of the endorsers. 
 
 * To remove all doubts upon this subject, an act of parliament has 
 recently passed (7th and 8th Geo. IV. chap. 5.) which enacts, " that from 
 and after the tenth day of April, one thousand eight hundred and twenty- 
 seven. Good Friday, and Christmas day, and every day of fast or thanks- 
 giving appointed by his Majesty, is and shall for all purposes whatever, 
 as regards bills of exchange and promissory notes, be treated and con- 
 sidered as the Lord's day, commonly called Sunday." This act does 
 not extend to Scotland. 
 
 Il
 
 31 
 
 The notaries always observe the " cases of need" upon 
 the bills that come to their hands, and apply to the 
 proper parties. The advantage of placing a case of 
 need upon a biU is, that the party endorsing it receives 
 it back sooner in case of non-payment. It also makes 
 the bill more respectable, and secures its circulation. 
 
 Were it not for the space it occupies, it would be 
 very desirable that the endorser of a bill of exchange 
 should be compelled to state also his address. This 
 would prevent forged and fictitious endorsements, and 
 give a banker who discounts a bill, a better opportunity 
 of ascertaining the respectability of the parties. In 
 case too the bill was unpaid, he might immediately 
 apply to all the endorsers, whereas now he has to find 
 them out in the best way he can. The endorsers and 
 drawer of a bill would have earlier notice of its non- 
 payment, and have a better opportunity of obtaining 
 their money. 
 
 When a merchant in one country draws bills upon a 
 merchant residing in another country, he usually draws 
 them in sets, that is, he draws two, three, or more bills 
 of the same tenor and date. These bills are sent to 
 his correspondent by different ships. Thus he secures 
 the swiftest conveyance, and his remittances will not 
 be delayed by any accident that may happen to an 
 individual sliip. In drawing these bills, it is always 
 expressly stated whether each bill be the first, second, 
 or third of a set ; as " pay this my first of exchange 
 (the second and third not being paid)." On the pay- 
 ment of any one bill, the others are of no value. If a 
 merchant has a set of bills, say at Paris, drawn on a 
 merchant at London, he will sometimes send over the 
 first bill to his correspondent in London, to get it 
 accepted, and to retain it until claimed by the holder of 
 the second. The merchant at Paris will then write on 
 the second bill that the first lies accepted at such a 
 house in London. He will then sell it or pay it away. 
 By this means he is sure that the bill he negotiates will 
 not be returned to him, and greater value is given to
 
 32 
 
 his bill, not only as it has the additional security of the 
 acceptor's name, but if it be drawn after sight, it will 
 become due so much the sooner. When the second bill 
 arrives in London, the holder takes it to the house 
 where the first is deposited, and it is immediately given 
 up to him. 
 
 Foreign bills are often drawn at a " usance" after 
 date. A usance from Amsterdam, Rotterdam, Ham- 
 burg, Altona, Paris, or any place in France is one 
 month; from Cadiz, Madrid, and Bilboa two months; 
 from Leghorn, Genoa, or Venice, three months. Where 
 it is necessary to divide a month upon a half usance, 
 which is the case when the usance is either one month 
 or three, the half month is always fifteen days. Bills 
 drawn from Russia, are dated according to the old 
 style, and twelve days must be added to the date, in 
 order to ascertain at what time they fall due. 
 
 Bankers usually send out all bills for acceptance if 
 they have four days to run. They are left at the house 
 of the drawer, and are called for on the following day. 
 On the day the bills are due, the clerks present them 
 in the morning at the place where they are made pay- 
 able. If not paid when presented they leave a printed 
 notice or direction, of which the following is a copy: — 
 
 Bill for £ 
 Drawn by Mr. 
 On Mr. 
 
 Lies due at Messrs. Steady and Co. 
 
 J^o. Lombard Street. 
 
 Please call between two and five o'clock. 
 
 Drafts intended for payment of bills, must be brought by half-past three 
 
 o'clock. 
 
 If not paid by six o'clock, the bill is sent to the 
 notary's. It is brought to the banking-house the 
 following morning, with the notary's ticket attached to 
 it, stating the reason why it is not paid. The bill is 
 then returned. If it be a foreign bill, that is, drawn 
 from any foreign land, it must be protested. Foreign
 
 33 
 
 bills are also protested for non-acceptance ; but inland 
 bills are not, nor even noted, 1)ut the party who remitted 
 the bill to the banking-house is advised of the cir- 
 cumstance. 
 
 A bill is sometimes accepted ^r Hie Jionor of the 
 drawer or of one of tlie endorsers. Thus if a bill from 
 Hamburgh be drawn upon a person in London, who re- 
 fuses to accept it, and another party knows the drawer or 
 one of the endorsers to be a respectable man, he will 
 (after the bill is protested for non-acceptance) accept the 
 bill himself for the honor of the party with whom he is 
 acquainted. By this means he prevents the bill being 
 returned with expences. This kind of acceptance 
 renders him liable to pay the bill: but he can afterwards 
 recover the amount from the party for whose honor he 
 has accepted it, and of course from all preceding parties 
 through whose hands the bill may have passed before it 
 came into his possession. But to secure himself he must 
 not accept the bill until after it has been protested for 
 non-acceptance, and he must write " accepted for the 
 honor of A. B. and Co." upon the face of t!ie bill. 
 
 Country notes and bank post bills are not received in 
 payment of bills of exchange except by courtesy. No 
 drafts are taken except drawn by the acceptor of the 
 bill. If such a draft should not be paid, the party 
 may be prosecuted for a fraud. No person can be 
 compelled to receive in payment of a bill a larger 
 amount of silver than d*^. 
 
 Bills accepted and made payable at a banking-house 
 in the usual manner, without the addition of the word 
 ONLY, may be presented either at the banking-house, 
 or at the residence of the acceptor. In either case it is 
 a legal presentment.* In practice, however, bills are 
 always presented at the place where they are made pay- 
 able. If a bill be addressed to a banking-house, or any 
 other place only, the payment cannot be enforced, 
 until it has been presented at that place. 
 
 ♦ 1 and 2 George IV. cap. 78. 
 C
 
 34 
 
 The notary's charge for noting a bill within the scite 
 of the ancient walls of the city of London, is one 
 shilling and sixpence. Beyond those limits the charges 
 are 2s. 6d. 3s. 6d. 5s. and 6s. 6d. according to the dis- 
 tance. If the notary has several bills at the same 
 house, he makes the full charge upon each bill. The 
 charge for protest of a bill under 5^20. is 7*. 6d. — from 
 £20. to £100. it is 8^. 6d.— .£100. to £500. it is 
 10<y. 6d. — £500. and upwards it is 17^. 6d. Mr. Justice 
 Bayley states positively, that if a bill be paid when 
 presented by the notary, the acceptor is not bound to 
 pay the expence of noting.* But this is contrary to 
 the usual practice. In such cases the notaries always 
 refuse to take the money for the bill, unless they are 
 paid the noting-fees at the same time. When " a case 
 of need" is placed upon a bill, the notary makes no 
 extra charge for applying to the referee. By an act 
 of parliament passed in 1801,f any person acting as 
 notary without having served an apprenticeship of 
 seven years, is liable to a penalty of £50. Every 
 notary must take out a licence : upon which, in Eng- 
 land, there is a stamp duty of ^30, and in Scotland 
 of j^20.t 
 
 The following is the table of stamj) duties upon bills of 
 
 exchange. 
 
 Not exceeding 2 Exceeding 2 months 
 
 months after after date, or 00 
 
 date, or CO days sight, 
 days siglit. 
 
 £ s. £ s. £ s. d. £ s. d. 
 
 Amounting to 2 and not exceeding 5 5..0 1 0..0 1 6 
 
 Exceeding 5 5 20 0..0 1 6..0 2 
 
 20 30 0..0 2 0..0 2 6 
 
 30 50 0..0 2 6..0 3 6 
 
 50 100 0.,0 3 6..0 4 6 
 
 100 200 0..0 4 6..0 5 
 
 200 300 0..0 5 0..0 6 
 
 300 500 0,.0 6 0..0 8 6 
 
 500 1000 0..0 8 6..0 12 6 
 
 1000 2000 0..0 12 6,.0 15 
 
 1000 3000 0,.0 15 0..1 5 
 
 3000 0..1 5 0..1 10 
 
 * Bayley on bills of exchange, p. 200. 
 t 41 Geo. III. cap. 79. + 55 Geo. III. cap. 184.
 
 35 
 
 Foreiyn bills drawn in sets. 
 
 Not exceeding . . 
 
 
 ..100 
 
 1 
 
 6 each bill 
 
 Exceeding £100 
 
 not exceeding 
 
 200 
 
 3 
 
 
 
 200 
 
 , 500 
 
 4 
 
 
 
 500 . 
 
 
 .1000 
 
 5 
 
 ., 
 
 1000 
 
 
 2000 
 
 .3000 
 
 7 
 
 10 
 
 15 
 
 6 '. .. 
 
 2000 . 
 
 3000 . 
 
 
 
 
 
 
 Bills under the value of forty shillings, are not subject 
 to the stamp duty. Nor are drafts upon bankers, pro- 
 vided the drafts are drawn within ten miles of the 
 banking-house, and they specify such place, and bear 
 date on or before the day on which they are issued. 
 A person drawing a cheque beyond this distance is 
 subject to a penalty of £lOO.; the person knowingly 
 receiving it to a penalty of s^20.; and the banker 
 paying it, is liable to a penalty of £lOO. The post- 
 dating of cheques to make them serve the purpose 
 of bills of exchange is subject to the same penalties.* 
 
 The following is the form of a draft or cheque. 
 
 No. 457. May 1, 1827. 
 
 Messrs. Hope, Rich, and Co. Lombard Street. 
 
 Pay John Doe, Esq. or bearer, the sum of one hundred pounds. 
 
 £100. Peter Thrifty and Co. 
 
 The words " or bearer" are essentially necessary, or 
 the draft must be drawn on a stamp, and endorsed by 
 the party who receives it. 
 
 Bills of exchange form a vast proportion of the cir- 
 culating medium of Lancashire, and supply the place 
 of country notes. Mr. Loyd, of the firm of Messrs. 
 Jones, Loyd, and Co. estimates that the circulation of 
 Manchester consists of nine parts bills of exchange, 
 and the tenth part gold and bank of England notes. 
 Others think the proportion is as high as twenty to one, 
 or even fifty to one.t Mr. Loyd stated he had seen 
 bills of ^10. with 120 endorsements upon them; and 
 
 * 55 Geo. III. c. 184. 812. 813. 
 
 t See evidence of Lewis Loyd, Esq. and of^Mr. Kenry Burgess, 
 
 before the Committee of the House of Lords pp. 294. 298.
 
 36 
 
 when the stamp duties were lower, bills were drawn ot 
 a less amount. He gives the following criteria of accom- 
 modation bills. " Bills that are issued for speculation 
 generally travel to London very rapidly, with very few 
 endorsements upon them; they are wanted to be con- 
 verted into bank notes immediately, and come quite 
 clean, and without any marks of negociation upon 
 them; and besides that we know the parties upon them 
 pretty well." In Scotland an accommodation bill is 
 called a wind bill. 
 
 The Bank of England with a view of preventing 
 fraud, will discount only those bills which are made 
 payable at a London banking-house. 
 
 No person can be arrested upon a bill of a less 
 amount than ^10. The payment of a bill originating 
 in a usurious or a gambling transaction, cannot be en- 
 forced, even though the holder may have given actual 
 value for it. 
 
 Section 6. — Of the Method of making Calcu- 
 lations. 
 
 When a bill is discounted, the party is credited for 
 
 the full amount, and debited for the interest. The 
 
 interest is calculated from the day on which the bill is 
 
 discounted to the time it falls due. The shortest way 
 
 is to make use of an interest book, but if it be done 
 
 with the pen, the following rule may be useful. 
 
 Multiply the amount of the bill by the number of days. 
 
 To the product add one-third of itself, one-tenth of 
 
 that third, and one-tenth of that tenth. From the 
 
 total strike off four figures to the right for decimals. 
 
 This will give the interest at 5 per cent, in pounds and 
 
 decimal parts of a pound. The decimals are to be 
 
 brought into shillings and pence, by multiplying by 
 
 twenty and twelve. The interest of any sum at a 
 
 different rate per cent, may be found in the same way, 
 
 if you multiply the principal by twice the rate of 
 
 interest, and strike off five figures of decimals instead 
 
 of four. — Example : It is required to find the interest 
 
 of 3^500. for ninety days at 5 and at 3| per cent.
 
 37 
 
 £ 
 500 p 
 90 n 
 
 lincipal 
 umber of days 
 
 3*. 3d. at 5 per 
 
 fit V/ ut U nu 
 
 l-3rd 
 1-lOth 
 1-lOth 
 
 cent. 
 
 £ 
 
 500 principal 
 
 7 twice the rate of interest 
 
 I-3i(l 45000 
 1-lOth 15000 
 1-IOtIi 1500 
 
 3500 
 
 90 number of days 
 
 150 
 
 315000 
 
 105000 
 
 10500 
 
 1050 
 
 6,1650 
 20 
 
 3,3300 
 12 
 
 4,31550 
 20 
 
 3,9600 
 Answer. £6 
 
 ■P4 
 
 6,31000 
 12 
 
 3,72000 
 
 It must be observed, however, that this method of 
 calculation is not exactly correct, it produces nearly 
 a farthing too much on every £10. of interest: in 
 calculating large sums, therefore, the amount of these 
 farthings must be deducted. 
 
 In taking the interest for any number of months, it 
 will be useful to remember that the interest of one 
 pound for one month at 5 per cent, is one penny. Thus 
 the interest of £100. for two months is twice a hundred 
 pence, or sixteen shillings and eight-pence. The interest 
 upon shillings and pence is never taken into the ac- 
 count. If the fraction is more than ten shillings, it is 
 regarded as £1. ; and if it be less it is not noticed. 
 
 There is often a difference in the amount of in- 
 terest according to the method of calculation, either 
 by months or by days. A month from the 10th of 
 February to the 10th of March, is only 2S days; but 
 from the 10th of March to the 10th of April, a 
 month is 31 days. The half year from the 1st of 
 January to the 30th of June, is 181 days; but from 
 the Jst of July to the 31st of December, the half-year 
 is 184 days. The interest of £10,000. for 6 months 
 is £250; for 181 days it is only a^247 18*. lid.; for 
 184 days it is £252 1*. Id. 
 
 In calculating commissions for 1 per cent, divide by 
 100 — for 2 per cent, by 200 — for i per cent, by 400 — • 
 for an eighth per cent, by 800.
 
 38 
 
 In calculating the dividends on stock, if it be in the 
 4 per cent, the half-yearly dividend will be one-fiftieth 
 part of the principal. Hence multiply by 2 and divide 
 by 100. 
 
 If the stock be 3 per cents, the half-yearly dividend 
 will be ith of the principal. Hence add to the 
 
 principal one half of itself, and divide by 100. 
 
 If the stock be S3 per cent, add to the principal one 
 half and one quarter of itself, divide by 100, and you 
 have the half-yearly dividend. 
 
 Examples. — What is the half-yearly dividend on 
 ^13,476 10.sr. Sd. S per cents 3 J per cents, and 4 per 
 cents. ? 
 
 (ANSWER.) 
 
 £ s. d. £ s. d. £ s. d. £ s. d. 
 
 13476 10 8 13476 10 8 13476 10 8 3 per. ct. 202 2 11 
 
 6738 5 4 6738 5 4 2 3iperct. 235 16 & 
 
 3369 2 8 4 per ct. 269 10 7 
 
 202,14 16 269,53 1 4 
 
 20 235,83 18 8 20 
 
 20 
 
 2,96 10,61 
 
 12 16,78 12 
 
 12 
 
 11,52 7,36 
 
 9,44 
 
 In making calculations respecting the purchase or 
 sale of stock, multiply the amount of stock by the 
 price, and divide by 100. Stock-brokers have seldom 
 any occasion to make these calculations, as there are 
 books published expressly for their use. 
 
 Bankers differ in their mode of calculating the in- 
 terest upon running overdrawn accounts. Some houses 
 have an interest ledger, in which they state the interest 
 upon every individual item in the account. Thus for 
 instance : the general balance takes place the 30th of 
 June, and the 31st of December. If a sum of money 
 is paid in on the 1st of May, the interest is calculated 
 on that amount from the 1st of May to the 30th of 
 June, and is then carried to the credit of this interest 
 account. On the other hand if a cheque be drawn on 
 the 1st of May, the interest is calculated and carried 
 to the debit of the interest account. On the 30th of
 
 39 
 
 June the interest account is balanced, and the balance 
 is carried to the debit or credit of the party's running 
 account. Other bankers take off the balance of the 
 running account every day from the 1st of January to 
 the 30th of June ; add all these amounts together, 
 and then take the interest of the total for one day. 
 To take the interest of any sum for one day, is a very 
 easy operation. The interest of any sum for one year 
 at 5 per cent, is one-twentieth part of the principal, 
 and the interest for one day is the 365th part of the 
 interest for a year. Now 365 multiplied by 20 gives 
 7,300. You have then only to divide any sum by 
 7,300, and you have the interest of that sum for one 
 day at 5 per cent, per annum. The interest of any 
 sum for one day at any other rate than 5 per cent. 
 may be found by multiplying the principal by twice 
 the rate of interest, and dividing the product |jy 
 73,000. 
 
 Section 7. — Of the Suppression of the Small 
 
 Notes. 
 
 In the last session of parliament an act was passed 
 for the suppression of small notes. This act is entitled, 
 '• An act to limit, and after a certain period to prohibit 
 the issuing of promissory notes under a limited sum 
 in England.*'* This law enacts that the commissioners 
 shall not stamp any more notes under the value of 
 £5. and that after the 5th of April, 1829, no such 
 notes shall be issued under the penalty of £20. It is 
 a question of much importance whether this act is 
 beneficial or injurious to the public, that is to say, 
 whether it is beneficial or injurious to the individuals 
 of whom the public is composed. For it is by its 
 practical effects upon the interest and convenience of 
 individuals that we must judge of its pubhc utility. — 
 I shall consider it in this point of view. 
 
 * Anno Septimo Georgii, IV. Regis, cap. VI.
 
 40 
 
 What will be its effect upon individuals generally ? 
 People must take sovereigns instead of small notes. But 
 these sovereigns may be a little short of weight. When 
 the Bank of England resumed cash payments, the 
 JDankers' clerks were obliged to carry a pair of scales 
 in their pockets to weigh the guineas, half-guineas, 
 and S3ven shillings pieces, that were offered in payment 
 of bills of exchange. And full well they recollect 
 with what sensations they saw an individual take out 
 a hoard of guineas to pay a bill, what time it cost, 
 what altercation took place, how the money was 
 shifted from one scale to another, and how often it 
 would have puzzled a philosopher to decide the simple 
 question whether a guinea was or was not the full 
 weight. The guineas were called in, and the scales 
 were of no farther use, as the sovereigns being all new, 
 required no weighing. But sovereigns will wear away, 
 and become light as well as guineas, what then is to be 
 done? The scales must be produced again. A pair 
 of scales or balances will become a necessary piece of 
 furniture in the shop of every tradesman. Now all 
 this weighing takes up time, and is a great interruption 
 to business. A thousand £l. notes might be counted in 
 less time than a hundred sovereigns could be weighed. 
 But trouble is not all — there is the risk. Persons who 
 live in towns may run to a shop and weigh a sovereign 
 they are going to receive ; but what is to be done by 
 those w^ho live in the country ? The gold will wear 
 away, and the loss must be borne by somebody. A 
 party might write upon a j^l. note the name of the 
 person of whom he received it; and if it were bad, he 
 could recover the value; but he cannot write upon a 
 sovereign ; if it be bad or light, he must bear the loss. 
 
 A thousand sovereigns are a thousand times as 
 heavy as one sovereign, but a thousand pound note is 
 no heavier than a £1. note. Persons who have to 
 travel a long Avay to market, and who carry with them 
 the money they intend to lay out, would find it more 
 convenient to carry paper than gold. Collectors of
 
 41 
 
 money and bankers' clerks would rather receive bank 
 notes than sovereigns, because they are a less weight 
 to carry. 
 
 Again, sovereigns cannot be sent by post. If I owed a 
 person in the country three or four pounds, I could en- 
 close the amount in a letter, but I cannot enclose the gold. 
 And here I must observe that the Bank of England 
 does not grant bank post bills under ^10. Now, 
 many bankers and stock-brokers receive dividends 
 which they remit immediately to their principals. But 
 suppose the dividend amounts to any sum under ^10. 
 how is it to be remitted? If indeed the person lives at 
 a place where there is a country bank, it may be re- 
 mitted through that bank, but it cannot be sent by 
 post. I have known some charitable persons who 
 wished to do good by stealth, regret that they cannot 
 now enclose a ^1. note in a letter and send it to a 
 poor family or a charitable institution anonymously, 
 but are obliged to take a sovereign in jyropria persona. 
 
 What will be the effect of this law upon an individual 
 manufacturer? In regard to those wealthy manu- 
 facturers who want no accommodation from a banker, 
 the law perhaps will have little effect. But very few 
 manufacturers are of this description. Let us take the 
 case of one who is accustomed to receive from a country 
 bank either as a loan, or in exchange for long dated 
 bills not negotiable in London, ^500. or j^lOOQ. per 
 week to pay his workmen's wages. Above two-thirds 
 of this sum will probably be in £1. notes. But small 
 notes are abolished. What is he to do now? Five pound 
 notes will not suit him, because his men do not earn 
 each of them £5. per week; and if he classed two or 
 three of them together, and gave them £5. between 
 them, they must take it to the bank to be exchanged 
 before they can divide it. In this emergency the ma- 
 nufacturer may adopt either of these three ways. First, 
 he may procure sovereigns from his banker: — secondly, 
 he may procure his banker's acceptance in exchange for 
 his long bills, send it to London to be discounted, and 
 have the amount remitted in sovereigns: — or, thirdly.
 
 42 
 
 he may open " a tommy shop," and pay his men their 
 wages in food and clothing With regard to the first 
 plan, it is not to be supposed that the bankers will lend 
 sovereigns on the same terms as their own notes. They 
 will of course charge an extra commission, which must 
 be paid by the manufacturer. As to the second plan, 
 the banker would in this case too charge a commission 
 upon his acceptance, and the manufacturer would have 
 to bear the risk and expence attending the transmission 
 of the gold, while at the same time the number of bills 
 of exchange would be increased, and this would have 
 the same effect upon prices and exchanges as the in- 
 crease of country notes. The other plan is illegal. 
 An act of parliament was passed a few years ago to 
 prohibit the practice. But this act may be as easily 
 evaded as the laws of usury. It is only necessary to 
 let the shop be kept in another person's name. By 
 adopting this plan, the manufacturer would have little 
 occasion for gold. The goods sold in the tommy shop 
 would be paid in the usual way by a bill on London. 
 It is obvious that in adopting either of the first two 
 plans, the manufacturer must incur increased expence, 
 and in the latter plan the workmen would be subject 
 to those extortions which are supposed to be practised 
 in shops of that description. 
 
 After the run in December, 1825, several bankers 
 in Lancashire drew in their notes, and burnt them. 
 In one instance a banker took a bundle of ^13,000, 
 and put it into the fire at once. One of the witnesses 
 was asked — 
 
 " How have the manufacturers paid their workmen since the small 
 notes were destroyed to that extent ?" 
 
 " To answer that, I must divide the manufacturers into three classes: 
 — the first and wealthiest do now, as they can at all times, pay their work- 
 men with the notes of the national bank, without the intervention of any 
 agent or banker, and they do pay their workmen in that manner. The 
 second class not so wealthy as the former, are in connection with some 
 of the largest bankers, such as Jones, Loyd, and Co. of Manchester, and 
 through their intervention they would obtain bank of England notes or 
 gold, and would continue their operations. The third class, infinitely
 
 43 
 
 the greatest in number, as well as in the aggregate amount of their 
 transactions ; but the poorest cannot resort to either of the former means 
 of obtaining money to pay their workmen. They have been accustomed 
 to obtain accommodation from the country banks in their neighbourhood 
 in which they live. Since the contraction of the circulating medium 
 they have hardly been able to pay their workmen at all : they do it partly 
 by checks upon provision dealers, partly in goods, and partly by col- 
 lecting from mealmen and bakers the notes of banks circulating within 
 eighty miles of the place in which they live."* 
 
 What will be the effect of this act upon a country 
 banker ? It is certain the country banker wLQ save the 
 expellee of stamps and of engraving upon his small 
 notes, and he will also save the expence of procuring 
 their payment in London. But then he must find gold. 
 Let us suppose a country banker has £10,000 in cir- 
 culation in small notes. He must supply their place 
 with sovereigns. He will perhaps sell out c£l 0,000 
 new four per cent, stock and have the amount remitted 
 in gold. Here is a loss at once of £400 per annum 
 which he was accustomed to receive as a dividend upon 
 his stock. It is obvious he cannot afford to issue these 
 sovereigns on the same terms that he previously issued 
 the small notes. He will charge an extra commission 
 to repay himself the £400 per annum which he has 
 lost. 
 
 But suppose the banker reasons with himself in this 
 way — " I now without any risk or trouble to myself 
 receive £400 per annum dividend on this stock. If 
 I sell it out, and discount three months bills at five per 
 cent, and charge a quarter commission, I shall get six 
 per cent, that is, £600 per annum. But then I must 
 deduct from this amount the expence of transmitting 
 the gold, a portion of the expence of my establishment, 
 and the loss that will occasionally take place through 
 discounting bad bills. I will not sell my stock : let those 
 who want sovereigns get them elsewhere." In this case 
 the banker will restrict his business. The manufac- 
 turer unable to obtain the usual accommodation, will 
 
 * Lords' Report, p. 296.
 
 44 
 
 restrict his business also. Labourers will be thrown 
 out of work, and the productions of the country will 
 be diminished. 
 
 But we will suppose that the banker supplies gold 
 and obtains an extra commission to repay him the 
 expence. In some seasons of the year, particularly in 
 the hopping season in Kent and Sussex, and in harvest 
 time generally throughout the country, the demand for 
 small currency is greater than at other times. He 
 must procure extra supplies. When the demand is over, 
 the gold will be returned upon his hands. He must 
 now send the sovereigns to London again to be profit- 
 ably employed. Thus the banker will have to bear 
 the risk and expence of frequent transmissions of gold, 
 for which he will hardly be repaid by an extra com- 
 mission. 
 
 What will be the effect of this act upon a London 
 banker ? He will not have to pay any small notes for 
 country banks. The paying, sorting, entering and re- 
 turning these notes takes up a great deal of time. The 
 London banker can now do with fewer clerks. He 
 saves the amount of their salaries, but at the same 
 time he will get less profit by the country banks. 
 The demand for bankers' clerks will be diminished ; but 
 there will no doubt be abundant employment for 
 coiners and scale makers. 
 
 What will be the effect of this act upon the govern- 
 ment ? The government will certainly lose the amount 
 of taxes upon the small notes, and also the tax upon 
 the paper used in their manufacture. They will also 
 incur the expence of coining some millions of sove- 
 reigns. And whenever the course of exchange shall 
 be against this country, these sovereigns will be ex- 
 ported, and the state will have to incur the expence of 
 a fresh coinage. It cannot be expected that the coin 
 will remain in the country, if every individual can dis- 
 pose of it to advantage. When gold has been at a pre- 
 mium, even some of the bankers' clerks have sold to 
 bullion dealers the guineas they received in their walks, 
 and put the premium into their own pockets.
 
 45 
 
 Section 8. — Of Joint Stock Banks. 
 
 By a clause in the charter of the Bank of England, 
 no partnerships formed for carrying on the business of 
 banking, could consist of more than six persons, but 
 by an act passed the last session of parliament,* co- 
 partnerships of more than six in number are permitted 
 to carry on business as bankers in England, sixty-five 
 miles from London^ provided they have no house of 
 business or establishment as bankers in London, and 
 that every member of such co-partnership shall be 
 responsible for all the debts of the company. These 
 joint stock banks are also prohibited to draw bills for 
 a less sum than £50 upon any person residing within 
 sixty-five miles of London. They must also deliver to 
 the Stamp-office the names and places of abode of all 
 their members, and also a list of their officers. These 
 lists are to be copied into a book, which any person 
 is entitled to see on paying one shilling, and to obtain 
 a copy for ten shillings. The banks may sue and be 
 sued in the name of 'their public officer, and execution 
 upon judgment may be issued against any member of 
 the co-partnership. They are not compelled to take 
 out more than four licenses though they may carry on 
 business in as many places as they please, beyond the 
 prescribed distance. 
 
 To many persons it appears surprising that no joint 
 stock bank has yet been formed on a large scale, with 
 branches in all the principal towns, but that the Bank 
 of England is allowed to take possession of all the 
 main posts without any kind of opposition. Such a 
 bank would have an advantage over the country private 
 banks, inasmuch as the notes issued at one branch would 
 be paid from courtesy at every other branch. Thus the 
 notes of this bank would have a more extended cir- 
 culation than those of any provincial bank. It might 
 also have an advantage over the branches of the Bank 
 
 * 7 Geo, IV. cap. 46.
 
 46 
 
 of England, by allowing interest on deposits, and open- 
 ing cash accounts on the system of the Scotch banks. 
 The business of remitting money to and from London 
 might be transacted through a London banker till the 
 year 1833, when London might be made the head 
 quarters. And in the mean time the various branches 
 might be governed by a board of directors meeting 
 in London. The act merely requires that the " co- 
 partnership shall not have any house of business, or 
 establishment as bankers in London, or at any place 
 or places not exceeding sixty-live miles from London." 
 The residence of a board of Directors in London, for 
 the purpose of governing banks, situated sixty-five miles 
 distant would be no infringement of the act. Indeed 
 the Provincial Bank of Ireland is governed in this way, 
 and has its establishment in St. Helen's Place. It 
 appears then that a provincial bank for England and 
 Wales might very easily be formed under the existing 
 law. 
 
 But though this limitation in regard to distance does 
 not prohibit the formation of joint stock banks, there 
 are other enactments which operate as serious obsta- 
 cles. In the first place the new joint stock bank could 
 not issue any notes under £5. while the Bank of 
 England and the country bankers are permitted to issue 
 the smaU notes until the year 1829. The new bank 
 would thus be cut oif from one source of profit, and 
 would have to incur the risk and expence of obtaining 
 their gold from London. How then could they sustain 
 a competition with other banks ? But there is also 
 another restriction. This bank could not draw on 
 London any bills under the value of £50. The ma- 
 jority of bills wanted in the country are under this 
 amount ; yet such bills the joint stock bank could not 
 supply. The effect of these two restrictions in pre- 
 venting the formation of new banks, is felt most 
 severely in those parts of England which are situated 
 on the borders of Scotland. In those districts the cir- 
 culation has consisted almost entirely of notes of the 
 Scotch banks. But these notes are about to be with-
 
 47 
 
 drawn, in consequence of tlie parliamentary proceedings 
 which took place last session. A memorial signed by 
 one thousand eight hundred and twenty persons, 
 " owners and occupiers of land, merchants, manufac- 
 turers, and tradesmen in the counties of Cumberland 
 and Westmorland," has been presented to the Lords of 
 the Treasury, and ordered by the House of Commons 
 to be printed. The memorial after stating that the law 
 which prohibited more than six partners engaging as 
 bankers had occasioned a preference to be given to the 
 Scotch notes, proceeds as follows : — 
 
 " No effective alteration has been made in the law which imposes 
 these restrictions npon banking companies in England up to the pre- 
 sent moment ; for although in the last session of parliament an act was 
 passed nominally legalizing the foundation of banks with a greater 
 number of partners than six, yet the insertion of a clause prohibiting 
 banks so formed from drawing bills of exchange on London for less 
 suras than fifty pounds, has rendered the concession virtually inopera- 
 tive. The difficulty of establishing any new bank is farther increased 
 by the recent regulation, altogether prohibiting the issue of any stamps 
 for notes under five pounds value, for what new bank can hope to 
 commence business with a fair prospect of success which is deprived of 
 the advantage enjoyed by existing establishments of issuing such notes 
 until 1829." 
 
 If these restrictions operate to prevent the esta- 
 blishment of new banks, in a place where the with- 
 drawing of the Scotch notes would weaken, if not pre- 
 vent all competition, is it any wonder that new banks 
 should not be formed in stations where every step would 
 be contested by banks already established ? Hence 
 it is that large capitalists have deemed it more pru- 
 dent to wait until after the bank charter has expired, 
 in 1833, before they engage in the establishment of 
 an opposition bank. 
 
 But though the obstacles arising from the above 
 restrictions cannot be wholly removed, they may be 
 diminished. If the joint stock banks are compelled to 
 keep a supply of gold, they will probably force the 
 country banks in their neighbourhood to do the same 
 by refusing to exchange notes with them, or to take 
 any payment by drafts upon London. If the joint 
 stock bank cannot draw bills for less than £50, they
 
 48 
 
 can discount bills under this amount payable in London 
 at a lower rate of interest. By this means they would 
 soon obtain a stock of small bills, which they might 
 endorse, and re-issue to those who wanted bills on Lon- 
 don. They might also keep a certain amount of bank 
 post bills. The joint stock banks will probably 
 follow the example of the branches of the Bank of 
 England, and discount bills without extra charges for 
 commission and postage. They may also grant interest 
 on deposits, which would necessarily withdraw from 
 circulation and place in their hands a portion of the 
 notes of the rival banks. To induce the depositors to 
 operate upon their accounts, the bank might grant 
 interest at three per cent, on dead deposits. But if at 
 the end of the half-year the amount of the debit side 
 of the account exceeded by a certain number of times 
 the average amount of the daily balance, then the de- 
 positors might be allowed three and a half per cent. 
 And if the proportion should be still higher, four per 
 cent, might be allowed. These frequent operations on 
 the accounts would necessarily keep in circulation a 
 large quantity of notes. Perhaps cash credits might be 
 granted in the same way. A small commission should 
 be charged upon the issue of gold. Should such a 
 system of management be adopted, the restrictions 
 imposed by the act might not be so seriously felt. 
 Indeed several local joint stock banks have been 
 formed in various parts of the country. 
 
 Section 9. — Of the Branches of the BanJi of 
 England. 
 
 The same act which permitted the formation of 
 joint stock banks in England, authorized the bank of 
 England to establish branches in the provincial towns. 
 Branches have been opened at Manchester, Gloucester, 
 Birmingham, and Swansea. Their mode and terms of 
 transacting business are thus described in a Welsh 
 newspaper, called the Cambrian : —
 
 49 
 
 " The Branch Bank is to be a secure place of deposit for persons having 
 occasion to make use of a bank for that purpose ; such accounts are termed 
 drawing accounts. The facility to the mercantile and trading classes of 
 obtaining discounts of good and unexceptionable bills, founded upon real 
 transactions, two approved names being required upon every bill or note 
 discounted ; these are called discount accounts. The application of parties 
 who desire to open discount accounts at the branch, are forwarded every 
 Saturday to the Parent Establishment for approval, and an ansvyer is 
 generally received in about ten days. When approved, good bills may 
 be discounted at the branch without further reference to London. Bills 
 payable at Swansea, London, or any other place, where a branch is 
 established, are discounted under this regulation. The dividends on any 
 of the public funds, which are payable at the Bank of England, may be 
 received at the branch here, by parties who have opened " drawing 
 accounts," after signing powers of attorney for that purpose, which the 
 branch will procure from London. No charge is made in this case 
 except the expence of the power of attorney and its postage. Purchases 
 and sales of every description of government securities are effected by 
 the branch at a charge of one quarter per cent, which includes bro- 
 kerage in London, and all expences of postage, &c. A charge of one 
 quarter per cent, is also made on paying at the Bank of England bills 
 accepted by persons having drawing accounts at Swansea, such bills to be 
 advised by the branch ; also for collecting payment of bills at the other 
 branches, and on granting letters of credit on Londori, or on the other 
 branches. The branch grants bills on London, payable at twenty-one 
 days date without acceptance, for sums of ten pounds and upwards. Per- 
 sons having drawing accounts at Swansea, may order money to be paid at 
 the bank in London, to their credit at this place, and vice versa, without 
 any expence. The branch may be called upon to change any notes 
 issued and dated at Swansea, but they do not change the notes of the 
 bank in London, nor receive them in payment, unless as a matter of 
 courtesy where the parties are known. Bank post bills which are 
 accepted and due, are received at the branch from parties having drawing 
 accounts, and taken to account without any charge for postage ; but 
 unaccepted bank post bills, which must be sent to London, are subject to 
 the charge of postage, and taken to account when due. No interest is 
 allowed on deposits. No advance is made by the branch upon any 
 description of landed or other property, nor is any account allowed to 
 be overdrawn. The notes of Messrs. Walters' bank at this place, of 
 Messrs. Williams and Rowland, Neath bank, and of the Brecon old 
 bank, are received in payment at the branch. Any other country 
 bankers may open an account for the like purpose. The notes are the 
 same as those issued by the parent establishment, except being dated 
 Swansea, and made payable there and in London. No note issued 
 exceeds the sum of £500, and none are for a less amount than £5." 
 
 We have here an enumeration of nearly all the opera- 
 tions of a country bank. It will be useful to make a 
 
 D
 
 50 
 
 comparison between the different modes of transacting 
 business at the branch, and at the private banks. 
 
 First. Drawing accounts. — These are precisely such 
 accounts as are usually kept by tradesmen and others 
 at the London or country banks, and which are usually 
 called running accounts. The account may be either 
 in cash or overdrawn. The London banker allows no 
 interest upon the amount in cash, but charges 5 per cent, 
 interest upon the amount overdrawn. The country 
 banker also charges 5 per cent, interest upon the sum 
 overdrawn, and allows 2^ or 3 per cent, upon the 
 amount in cash. The branch of the Bank of England 
 allows no interest on deposits, and never permits the 
 account to be overdrawn. Though the country banker 
 allows interest on the money in his hands, yet on the 
 other hand he charges 5s. or 6s. per cent, commission upon 
 the amount of the debit side. London bankers sometimes 
 do the same in regard to the country customers, and then 
 they allow interest on the deposits. Those accounts are 
 distinguished from what the Bank of England terms 
 " drawing accounts," by being termed " commission 
 accounts." 
 
 Secondly. Discount accounts. — The regulations of the 
 branch bank in respect to these accounts, must tend to 
 diminish their business. The London and couqtry ban- 
 kers make no distinction between " drawing* accounts," 
 and " discount accounts." Every customer who has a 
 drawing account, may occasionally have bills discounted 
 without opening a separate account. But the Bank of 
 England branch cannot discount bills even for their 
 regular customers, unless the party has sent up his name 
 to the parent establishment, and requested permission 
 to open a discount account. Now there are many men 
 of business who have need of discounts occasionally, and 
 yet who would not like to go through all this form. 
 There are also many safe men in country towns, who 
 may nevertheless not be known to fame in the London 
 money markets; and there are other men who are not 
 
 1
 
 51 
 
 deemed very safe, but who may occasionally receive 
 good bills that a country banker would not hesitate to 
 discount. But these are all shut-out of the branch. 
 The charges of the branch for discount is less than the 
 charge of the country banks. The branch charges only 
 5 per cent, interest without any extras. The country 
 banks usually make an additional charge of 5s. or 6s. per 
 cent, commission and Is. postage upon each bill. This 
 competition will probably compel the country bankers to 
 lower their charges, at least upon first-rate bills. Some 
 country banks have already reduced their charge for 
 discounts from five to four per cent. Though still 
 with the commission, their charges are uot so low as 
 those of the branch even upon bills that have two 
 months to run, and upon bills of shorter date the dis- 
 proportion is still greater. For instance, the discount 
 at five per cent, of a bill for £100 at two months is 
 sixteen shillings and eightpence ; at four per cent, with 
 a quarter commission, it amounts to eighteen shillings 
 and fourpence. If the bill has only one month to run, 
 the charge at the branch will be eight shillings and 
 fourpence, and at the private banks eleven shillings and 
 eightpence. Were it customary to discount bills drawn 
 at three months, the charge at each bank would be the 
 same. i^ 
 
 Thirdly, The regulations and the charges for the 
 transmission of money from the branch to London, or 
 from London to the branch > are nearly the same as those 
 of most of the country banks. 
 
 The refusal to exchange at the branch the notes of 
 the parent establishment, except as matter of courtesy, 
 appears to be necessary, as it is possible a person may 
 take notes from London in order to make a run upon 
 the branch. It could not be expected that the Bank of 
 England should keep at each of its branches a sufficient 
 quantity of gold to meet the demands of its whole cir- 
 culation. 
 
 Having compared the Bank of England branches 
 with the private banks, I shall now compare them with 
 the Banks of Scotland.
 
 52 
 
 The Bank of England branches do not grant cash 
 credits. A cash credit in Scotland is precisely the same 
 thing as an overdrawn " drawing account" in a country- 
 bank; with this difference, that the Banks in|Scotland 
 have two or three other parties as securities/and that 
 they charge no commission on the debit side. Their 
 only charge is for interest on the amount overdrawn. 
 A person who has opened an account of this kind, will 
 never keep much ready money in his house. If he re- 
 ceive £100 this afternoon, he will run with it directly 
 to the bank for the purpose of getting the interest 
 allowed upon it in his account. Hence this system has a 
 tendency to keep the circulating medium in motion, 
 and to enable the same commercial operations to be 
 carried on with a smaller amount. But the Bank of 
 England branches never allow accounts to be over- 
 drawn. Hence they can have no cash credits. 
 
 The Bank of England branches have no deposit ac- 
 counts; "no interest is allowed on deposits." I think 
 this is a matter of deep regret. All the witnesses 
 examined before the parliamentary committee concurred 
 in stating that the happiest effects had been produced 
 upon the character of the lower classes in Scotland by 
 means of deposit accounts. It is true that in England 
 we have Savings Banks, which are conducted upon the 
 deposit system. But these banks are not universally 
 established, and besides they are much restricted. No 
 person can deposit more than £50 the first year, and 
 £30 in every subsequent year, and when he has 
 deposited e^200 no more will be received. But it is 
 desirable that the widest encouragement should be 
 given to this excellent system. Were the Bank of 
 England, like the Banks of Scotland, to receive deposits 
 of £l0 and upwards, and allow interest upon them 
 at about one per cent. less than the market rate, they 
 would confer an advantage upon the community, and 
 open a source of profit to themselves. This is in fact 
 a part of the proper business of a bank. A banker is
 
 53 
 
 a dealer in capital, an intermediate party between the 
 borrower and the lender. He borrows of one party and 
 lends to another; and the difference between the terms 
 at which he borrows, and that at which he lends, is the 
 source of his profit. By this means he draws into 
 active operation those small sums of money which were 
 previously unproductive in the hands of private indivi- 
 duals, and at the same time furnishes accommodation 
 to another class, who have occasion for additional capital 
 to carry on their commercial transactions. 
 
 The establishment of branches of the Bank of England 
 will necessarily occasion some degree of competition be- 
 tween them and the country banks. Apprehensions 
 were entertained in some of the provincial towns, that 
 these branches would prove injurious to their commerce 
 and manufactures. It was stated that these branches 
 would of course receive all government taxes which 
 are now transmitted to London through the country 
 banks; that land-owners, men of independent property, 
 and opulent merchants, would remove their accounts for 
 the sake of greater security to the branch bank; and 
 that the country banks, thus deprived of their best 
 accounts, would be unable to afford the usual accommo- 
 dation to the middle class of tradesmen and manu- 
 facturers, while at the same time the branch confining its 
 discounts to first-rate bills, will no way do any thing 
 towards supplying the accommodation which has thus 
 been withdrawn. Others viewing the expensive mode 
 in which the Bank of England conducts all its opera- 
 tions, have imagined that the profits of their branches 
 will not pay the expence, and that their numerous and 
 tedious forms will operate as obstructions to their busi- 
 ness. The bankers of London have maintained, with 
 success, a rivalry with the Bank of England : and why 
 may not the country banks ? The number of drawing 
 accounts opened at the parent establishment in London, 
 is wonderfully small, compared with those opened with 
 the private bankers. The banks of Neath, Brecon, and 
 Swansea, have opened accounts at the Swansea branch.
 
 54 
 
 Should these branch banks do business on liberal terms 
 with the neighbouring country banks, they may injure 
 the London bankers. The country bankers will keep 
 the bulk of their ready cash in one of the branches, 
 instead of sending it to their agents in London. In- 
 dependently of the greater security, how much more 
 convenient would it be, in case of a run, if the country 
 banker could obtain a supply of Bank of England notes, 
 at a distance of about ten miles, instead of taking 
 post-chaises, and driving night and day to their bankers 
 in London. Notwithstanding this advantage, the Bank 
 of England branches will certainly diminish the profits 
 of the country banks. They will draw away some of 
 their best accounts — they will regulate the rate of dis- 
 count — they will diminish the charges for commission 
 and postage — and they will displace a portion of the pro- 
 vincial notes. But the country bankers have much less 
 to apprehend from the Bank of England branches than 
 they would have to fear from the general establishment 
 of joint stock banks. These banks would probably 
 have more activity and enterprise, and might possess an 
 equal portion of the public confidence. But such 
 banks cannot be established with any extensive effect 
 while the Bank of England maintains the monopoly 
 of a circle, of which the diameter is 130 miles, and 
 London is the center. 
 
 Each of the branches is conducted by an agent, 
 selected for his local knowledge, and a complement of 
 clerks supplied chiefly from the parent establishment. 
 All the clerks in the Bank of England take an oath 
 of fidelity and secresy on entering into office; and re- 
 peat this oath on the first of May in every succeeding 
 year. None are admitted after they liave attained thirty 
 years of age. 
 
 Section 10. — Of the Banks of Scotland. 
 
 My information on this subject will be derived prin- 
 cipally from the report of the Parliamentary Com- 
 mittees of last session. I shall state first the advantages 
 
 i
 
 55 
 
 of Scotland in regard to banking. Secondly, the acts of 
 parliament that have been passed for their regulation. 
 Thirdly, their mode of transacting business. 
 
 First, in regard to the advantages of Scotland. The 
 general provisions of the law of Scotland bearing upon 
 this subject, are calculated to promote the solidity of 
 banking establishments. 
 
 1. There is no limitation of the numher of partners. 
 
 2. The private Jhrtune of every partner is answerable 
 for the debts of the bank. 
 
 3. Land as well as other property mat/ be attached 
 for debt. 
 
 4. In Scotland «// land is registered, so it is easy for 
 any individual by referring to the records, to ascertain 
 what landed property is possessed by the partners of 
 the bank, and also whether or not it be mortgaged. 
 The following is the language of the Report of the 
 Committee of the House of Commons. 
 
 " There is no limitation upon the number of partners of which a 
 banking company may consist; and excepting in the case of the Bank of 
 Scotland, and the two chartered banks, which have very considerable 
 capitals, the partners of all banking companies are bound jointly and 
 severally, so that each partner is liable to the whole extent of his for- 
 tune for the whole debts of the company. 
 
 " A creditor in Scotland is empowered to attach the real and portable, 
 as well as the personal estate of his debtor for payment of personal debts, 
 among which may be classed debts due by bi>lls and promissory notes ; 
 and recourse may be had for the procuring payment to each description 
 of property at the same time. Execution is not confined to the real 
 property of a debtor merely during his life, but proceeds with equal 
 effect upon that property after his decease. 
 
 " The law relating to the establishment of records, gives ready means 
 of procuring information with respect to the real and heritable estate of 
 which any person in Scotland may be possessed. No purchase of an 
 estate in that country is secure vmtil the seisine (that is, the instrument 
 certifying that actual delivery has been given) is put on record ; nor is 
 any mortgage effectual until the deed is in like manner recorded. 
 
 In the case of conflicting pecuniary claims upon real property, the 
 preference is not regulated by the date of the transaction, but by the date 
 of its record. These records are accessible to all persons ; and thus the 
 public can with ease ascertain the effective means which a banking com- 
 pany possesses of discharging its obligations, and the partners in that 
 company arc enabled to determine with tolerable accuracy, the degree of 
 risk and responsibility to which the private property of each is exposed.
 
 56 
 
 C( 
 
 ' There are other provisions of the law of Scotland, which it is not 
 necessary minutely to detail, the general tendency of which is the same 
 with those above-mentioned." 
 
 Secondly. Notice those acts of parliament which 
 have been passed in reference to banking in Scotland. 
 
 *' The first notice of banking in Scotland which occurs in the statute 
 book, is an act of King William the Third, passed in the year 1 695, 
 under which the Bank of Scotland was established. By this act an 
 exclusive privilege of banking was conferred upon that bank, it being 
 provided, " that for the period of twenty years from the 17th July, 1695, 
 it should not be lawful for any other persons to set up a distinct company 
 or bank within the kingdom of Scotland, besides those persons in whose 
 favour this act is granted. No renewal of the exclusive privilege took 
 place after the expiration of the twenty-one years. 
 
 " The Bank of Scotland first issued notes of 20s. in the year, 1704; 
 but the amount of notes in circulation previous to the Union was very 
 limited. 
 
 " The Bank of Scotland continued the only bank from the date of its 
 establishment in 1695, to the year 1727. 
 
 " In that year a charter of incorporation was granted to certain indi- 
 viduals named therein, for carrying on the business of banking under the 
 name of the Royal Bank ; and subsequent charters were granted to this 
 establishment, enlarging the capital, which now amounts to one million 
 and a half. 
 
 " An act passed in the year 1765, is the first and most important act 
 of the legislature, which regulates the issue of promissory notes in 
 Scotland. 
 
 " It appears from its preamble that a practice had prevailed in Scot- 
 land of issuing notes, which circulated as specie, and which were made 
 payable to the bearer on demand, or payable at the option of the issuer 
 at the end of six months, with a sum equal to the legal interest from the 
 demand to that time. 
 
 " The act of 1765, prohibits the issue of notes, in which such an 
 option as that before-mentioned is reserved to the issuer. It requires that 
 all notes of the nature of a bank note, and circulating like specie, should 
 be paid on demand ; and prohibits the issue of any promissory note of 
 a sum less than 20s. 
 
 " With respect to the issue of promissory notes in England, an act 
 was passed in 1 775, prohibiting the issue of any such notes under the 
 sum of 20s. And in the year 1777, restraints were imposed by law on 
 the issue of notes between the sum of 20s. and £5, which were equi- 
 valent to the prohibition of such notes circulating as specie. 
 
 *' In the year 1797, when the restrictions as to payments in cash was 
 imposed Upon the Bank of England, the provisions of the act of 1777 
 with regard to the issue of notes between 20s. and £5 were suspended. 
 By an act passed in the third year of his present Majesty, the suspension 
 was continued until the 5th January, 1833; but now stands Hmited by 
 an act of the present session to April 5th, 1829.
 
 57 
 
 " The general result of the laws regulating the paper currency in the 
 two countries is this : — 
 
 " That in Scotland, the issue of promissory notes payable to bearer 
 on demand for a sum of not less than 20s. has been at all times per- 
 mitted by law, nor has any act been passed limiting the period for vvhich 
 such issue shall continue legal in that country, fn England, the issue 
 of promissory notes for a less sum than £5 was prohibited by law from 
 the year 1772 to the period of the bank restriction in 1797. It has been 
 permitted since 1797; and the permission will cease as the law at pre- 
 sent stands in April, 1829." 
 
 Thirdly. Take a view of their mode of transacting 
 business. 1. Receiving deposits, and allowing interest 
 upon them. 2. Discounting bills. 3. Adv^ancing money 
 on cash accounts. 4. Transmitting money from one 
 part of the country to another. Of this last branch of 
 business, the committee have not taken any notice. In 
 all their advances the banks issue their own notes. 
 
 1. Receiving deposits. 
 
 " The interest allowed by a bank upon deposits, varies from time to 
 time according to the current rate of interest which money generally 
 bears. At present the interest allowed upon deposits is 4 per cent. 
 
 " It has been calculated that the aggregate amount of the sums de- 
 posited with the Scotch banks amounts to about twenty or twenty-one 
 millions. The precise accuracy of such an estimate cannot of course 
 be relied on. The witness by whom it was made, thought that the 
 amount of deposits could not be less than sixteen millions, nor exceed 
 twenty-five millions, and took an intermediate sum as the probable 
 amount. 
 
 " Another witness who had been connected for many years with 
 different banks in Scotland, and has had experience of their concerns at 
 Stirling, Edinburgh, Perth, Aberdeen, and Glasgow, stated, that more 
 than one half of the deposits in the banks, with which he had been con- 
 nected, were in sums from ten pounds to two hundred pounds. 
 
 " Being asked what class of the community it is that makes the small 
 deposits ? he gave the following answer ; from which it appears that the 
 mode of conducting this branch of the banking business in Scotland, has 
 long given to that country many of the benefits derivable from the 
 Savings Banks. 
 
 " Question. — What class of the community is it that makes the smallest 
 deposits ? Answer. — They are generally the labouring classes in towns 
 like Glasgow. In country places like Perth and Aberdeen, it is from 
 servants and fishermen, and just that class of the community who save 
 from their earnings in mere trifles small sums till they come to be a 
 bank deposit. There is now a facility for their placing money in the 
 provident banks, which receive money till the deposit amounts to ten 
 pounds. When it comes to ten pounds, it is equal to the minimum of
 
 58 
 
 a bank deposit. The sysfem of banking in Scotland is just an extension 
 of the provident bank system. Half-yearly or yearly those depositcs 
 come to the bank, and add the savings of their labour with the interest 
 that has accrued upon the deposits, from the previous half-year or year 
 to the principal ; and in this way it goes on without being at all reduced, 
 accumulating till the depositor is able either to buy or build a house, 
 when it comes to be one, or two, or three hundred pounds, or till he is 
 able to commence business as a master in the line in which he has 
 hitherto been a servant. A great part of the depositors of the bank are 
 of that description, and a great part of the most thriving of our farmers 
 and manufacturers have arisen from such beginnings." 
 
 2. Discounting bills. 
 
 On suras advanced by the banks on discount of bills of exchange, j 
 and upon cash credits, an interest of 5 per cent, is at present charged 1 
 without any commission. 
 
 3. Cash credits. 
 
 " A cash credit is an undertaking on the part of the bank to advance 
 to an individual sucb sums uf money as he may from time to time re- 
 quire, not exceeding in the whole a certain definite amount, the indi- 
 vidual to whom the credit is given, entering into a bond with securities, 
 generally two in number, for the repayment on demand of the sums 
 actually advanced, with interest upon each issue from the day upon which 
 it is made. 
 
 " Cash credits are rarely given for sums below one hundred pounds ; 
 they generally range from two to five hundred pounds, sometimes reach- 
 ing one thousand pounds, and occasionally a larger sum. 
 
 " The bank allows the party having the cash credit to liquidate any 
 portion of his debt to the bank at any time that may suit his convenience, 
 and reserves to itself the power of cancelling whenever it shall think fit 
 the credit granted." The expence of a bond for a cash credit of £500 is 
 £4 stamp duty, and a charge of half-a-guinea per cent, for filling it up. 
 The bank always stipulates that the account shall be " operated upon." 
 No account is considered to have been well operated upon, if the total 
 number of transactions in the course of a year is not equal to five times 
 the amount of the credit, but very often they are forty or fifty times that 
 amount. It would also be reckoned a bad account for the bank if the party 
 had to pay interest upon more than one half the amount of the credit.* 
 
 The following list contains an account of the number 
 of banks in Scotland — the name of the firm or bank — 
 date of its establishment — place of the head office — 
 number of branches — number of partners, and the name 
 of their London agents. 
 
 * Evidence before the Lords' Committee, p.p. 180, 181; and evidence 
 before the Committee of the House of Commons, p. 211.
 
 59 
 
 Names of Firms or Banks . 
 
 Date. Head Office 
 
 No. of I No. of 
 Branches 1 Partners 
 
 IJBank of Scotland ••••.... 
 2:Uoyal Bank pf Scotland. . . . 
 
 3 British Linen Company ,. . . 
 
 4 Aberdeen Banking Company 
 
 5 Aberdeen Town & Country Bk. 
 
 6 Arbroath Bankint; Company 
 /jCarrick & Co. or Ship Bank 
 Sjcpm. Bank. Comp. of Scotland 
 9 Commercial Banking; Comp. . . 
 
 lOjDundee Bankinii Company . . 
 
 11 Dundee Ne« Bank • • • • 
 
 12|Dundee Commercial Bank . . . . 
 13'Dundee Union Bank ••••...• 
 14 Exchange and Deposit Bank . . 
 1.^ Falkirk Banking Company . . 
 16]Fife Banking Company 
 
 1 7 Greenock Banking Company.. 
 
 18 Glasgow Banking Company . . 
 
 19|Hunters and Co 
 
 20 Leith Banking Company 
 
 21, National Bank of Scotland . . 
 
 22Montrose Bank 
 
 23, Paisley Banking Company . . . , 
 
 24 Paisley Union iBank 
 
 25iPerth Banking Company . . . . 
 
 26'Perth Union Bank 
 
 27,Ramsay's, Bonar's and Co. . 
 23 Renfrewshire Banking Comp. 
 
 29,Shetland Bank 
 
 l30 Sir Wm. Forbes and Co. • • • 
 :31|Stirling Banking Company . 
 32lThistle Bank 
 
 169.5 Edinburgh 
 1727 Ditto 
 1746 Ditto 
 1767 Aberdeen 
 1825 Ditto 
 1825'Arbroath 
 1749Glasgow 
 1810 Edinburgh 
 1778 Aberdeen 
 1177 Dundee 
 1802 Ditto 
 1825 Ditto 
 1809 Ditto 
 
 JEdinburgh 
 
 1787 Falkirk" 
 1802 Cupar Fife 
 1785 Greenock 
 1809'Glasgow 
 1773 Ayr 
 
 1792 Leith 
 1825 Edinburgh 
 1814 Montrose 
 1783 Paisley 
 
 1788 Ditto 
 1766 Perth 
 
 JDitto 
 1738 Edinburgh 
 1 1802 Greenock 
 iLerwick 
 lEdinburgh 
 1777 Stirling 
 1 176 I.Glasgow 
 
 16 
 
 1 
 27 
 
 6 
 
 4 
 
 2 
 none 
 31 
 
 none 
 none 
 
 1 
 none 
 
 4 
 
 1 
 
 3 
 1 
 3 
 
 4 
 
 charter 
 
 ditto 
 
 ditto 
 
 80 
 
 446 
 
 112 
 
 3 
 
 521 
 
 15 
 
 61 
 
 6 
 
 202 
 
 85 
 
 1 
 
 5 
 
 39 
 
 14 
 
 19 
 
 8 
 
 15 
 
 1,238 
 
 97 
 
 6 
 
 4 
 
 147 
 69 
 8 
 6 
 4 
 7 
 7 
 6 
 
 London Agents. 
 
 Coutts & Co. 
 Bk. Eng. & do. 
 Smith, Payne, & Co. 
 Glyn A: Co. 
 .Tones, Loyd, & Co. 
 Glyn tV Co. 
 Smith, Payne, & Co. 
 Jones, Loyd, & Co. 
 Kinlock & Sons 
 Kinlock & Sons 
 Ransom & Co. 
 Glvn & Co. 
 Glyn & Co. 
 
 Remington & Co. 
 (discontinued 1825) 
 Kay & Co. 
 Ransom &C.Glyn&C. 
 Herrics & Co. 
 Barnett & Co. 
 Glyn cSi Co. 
 Barclay 6: Co. 
 Smitli,' Payne, &r Co 
 Glyn .!!k; Co. 
 Barclay & Co. 
 
 Remington & Co. 
 
 Coutts"& Co. 
 
 Kay & Co. 
 
 Barclay & Co. 
 
 TBarclay) (Coutts) 
 
 Kinlock and Sons 
 
 Smith, Payne, & Co 
 
 Private Banking Companies who do not issue notes. 
 
 Thos. Kinnear and Sons .... 11748 
 
 Donald, Smith and Co. J1773 
 
 Robert Allan and Son 11776 
 
 .lames Indis and Co 
 
 Edinburgh 
 
 none 
 
 
 Ditto 
 
 none 
 
 
 Ditto 
 
 none 
 
 
 Ditto 
 
 none 
 
 
 Smith, Payne, & Co, 
 Glyn & Co. 
 Bosanquet & Co. 
 Bosanquet & Co. 
 
 To the foregoing list of banks should be added, the esta- 
 blishments of Messrs. John Maberly and Co. In the year 
 1818, Mr. Maberly, who is an extensive manufacturer in 
 Scotland, commenced the business of banking at Edinburgh, 
 Glasgow, Aberdeen, Montrose, and Dundee. At that time 
 the par of exchange between London and Scotland varied 
 from forty to fifty days according to the distance of the vari- 
 ous towns. By the pars of exchange is meant, that a person 
 might take money to the Scotch banks, and receive in exchange 
 a bill upon London drawn at forty or fifty days after date. 
 Mr. Maberly issued bills at twenty days after date, which
 
 60 
 
 compelled the banks to do the same ; and he has now 
 
 reduced his par to ten days. By these measures he 
 
 was necessarily involved in a contest with the banks 
 
 of Scotland. The mode in which that contest has been 
 
 carried on, is thus described by Mr. Maberly himself.* 
 
 " The banks of Scotland have until very lately refused to exchange 
 with me, and in many instances to take my paper, keeping up by 
 every effort that could be made, that attempt to induce me to give up 
 those establishments which have competed with them in the exchange. 
 In the summer of 1821, a formal and specific proposition was made to 
 the whole of the chartered banks in Edinburgh, to exchange with me as 
 with others. This proposition was entertained, and supposed to be 
 acquiesced in by several of the bankers, but when the question came to 
 be discussed by them generally and collectively, the proposition was 
 rejected. It therefore became necessary for me, when I had any de- 
 mands upon the Scotch bankers, to require payment for that which I 
 held in notes against them. As a metallic circulation is not that of 
 Scotland, I demanded payment, leaving the bankers their option of pay- 
 ing me in gold, in Bank of England notes, or in bills at sight on London. 
 In many instances they made an attempt to detain my people all day by 
 giving them silver. That I rejected in the first instance, because I 
 had no right to take more than forty shillings. They then set up a 
 right of holding every, single note as a separate demand, and therefore 
 that they had a right to pay each in silver, because each note was a 
 separate demand. However, they shortly waved that, and paid in gold. 
 The whole of this before the new sovereigns came out had to be weighed, 
 and my people were kept whole days in some of their shops, from the 
 quantity of light gold offered to them. The payment in gold was always 
 their own choice and not my demand. They imported gold from 
 London for the purpose of annoying me, that I might have that gold to 
 send back again." 
 
 During the panic in December, 1825, Mr. Maberly 
 received of the Scotch banks nearly ^^ 100,000 in gold, 
 though he was willing to take the amount in bills of 
 exchange, drawn at three days sight upon London. 
 
 Mr. Maberly does not grant cash credit, but he 
 receives deposits and cash accounts, and allows interest 
 at four per cent, on the balances in his hands. He 
 issues notes chiefly of the amount of £l. But to pre- 
 vent any run being made upon him by the bankers in 
 Scotland, all his notes are made payable only in London, 
 and payment of any of the deposits can be claimed 
 only by a bill of ten days upon London. If any depositor 
 
 * Evidence before the Committee of the House of Lords, p. 283.
 
 61 
 
 gives thirty days notice of his intention to withraw his 
 money, he receives half per cent, more interest. But 
 though the payments of the notes and deposits cannot 
 be demanded any where but in London, they are always 
 as a matter of courtesy paid in Scotland. 
 
 This contest, however, appears to be subsiding, for 
 Mr. Maberly states — 
 
 " I have lately made arrangements with the British Linen Company, 
 the National Banking Company, and the Commercial Banking Company 
 of Scotland, and the Leith Bank. The other banks in Edinburgh do not 
 exchange with me, except a private bank. In Glasgow nine — in Aberdeen 
 the whole of the local banks exchange with me ; and therefore when I 
 have a demand upon any of those banks that exchange with me, I take 
 their bills on London, if the balance of that exchange is in my favour. 
 If asfainst me, they take ray bill on London, at the same date — a date 
 agreed on." 
 
 This mode of making exchanges is common to all 
 the banks of Scotland. The branches exchange their 
 notes upon each other, and receive the difference by an 
 order payable on demand at Edinburgh. At Edin- 
 burgh the parent establishments exchange and receive 
 payment by a bill at ten days on London. The country 
 bankers in England act in the same way. Their 
 exchanges are usually made once a week, and the 
 difference is paid in course of post by their agents in 
 London. 
 
 The total amount of notes circulated by all the 
 banks of Scotland at the beginning of last year was 
 ^3,309,082. The notes under £5, amounted to 
 ^^2,079,244. Robert Paul, Esq. Secretary of the Com- 
 mercial Bank of Scotland, stated to the Committee of 
 the House of Lords, that the following would be the 
 effects of the abolition of the small notes.* 
 
 " We should diminish the number of our branches — because we 
 should be involved in an expence in the transmission of gold, which the 
 profits arising out of our branches could never compensate; they are 
 not the most profitably part of our business ; they are attended with a 
 great many hazards and disadvantages. 
 
 * Lords' Report, p. 204.
 
 6a 
 
 " We should withdraw our cash accounts — because they could no 
 longer accomplish the end for which they were granted ; which was the 
 maintaining our circulation, especially of our small notes. 
 
 " We should diminish the interest of our deposit accounts — because 
 we should then be required to keep a very large amount of dead stock of 
 gold in our coffers, to meet the constant variations that would arise, and 
 to keep it wholly unproductive. I imagine that if a gold currency were 
 substituted for a small note currency, there would be a much greater 
 amount of gold required than there is at present of notes. We have at 
 present, in order to meet the constant variations, a large amount of notes 
 constantly on hand, and in the same way we should require a stock of 
 gold, and that would be proportionably larger as the general circulation 
 would be greater."* 
 
 The following letter, written by an agent at Inverarv, 
 
 to Roger Aytoun, Esq. manager of the Renfrewshire 
 
 bank at Greenock, states the inconveniences v/hich the 
 
 writer apprehends would result from the introduction 
 
 of a metallic currency into that part of Scotland. 
 
 " With regard to the proposed measure of suppressing bank notes in 
 Scotland for less than five pounds, I think it will be ruinous to this 
 country; for I cannot see how, if it takes place, the business of the 
 country can be carried on. Confining myself to some of the most 
 prominent instances in which the Highlands will be affected, I shall 
 state the difficulties that occur to me. Our produce chiefly consists of 
 cattle and sheep, grain, wood, kelp, and the production of the fisheries. 
 Cattle are brought to the country markets by the breeders, chiefly small 
 farmers, every man attending his own, and having generally from one to 
 three young animals for sale. There they are met by the dealers and 
 graziers, who purchase such of the beasts as suit them ; and it is seldom 
 that a single animal, at the age of one or two years, being the ages at 
 which they sell them to the dealers and graziers, comes to the price of five 
 pounds ; the price is more frequently from two to four pounds. Of 
 these a dealer often purchases two or three hundreds in single beasts, so 
 that he has more than one pound and less than five pounds to pay to 
 each of as many sellers; but he has no notes under five pounds, and the 
 sellers are not able to return balance in any coin. This will occur to 
 many dealers at every market ; and how is the difficulty to be removed ? 
 The dealers must all come loaded with gold and silver, and this they 
 cannot carry to the necessary amount ; and besides, they will not be 
 supplied by banks with gold and silver for their bills, by which there 
 would be no profit. The means of paying being wanting, the seller 
 will not deliver, and the object of the parties is frustrated ; and thus a 
 difficulty is cast in the way of disposing of this material article of 
 Highland produce, which must discourage the sales, and occasion a 
 reduction of price, and consequently of the rent and value of land. 
 
 * Lords' Report, p. 132.
 
 ,63 
 
 " It is the same in the case of grain, of which bear or barley is what 
 is chiefly sold by small farmers to the distilleries. In settling for some 
 bolls, bought in small quantities of two or three bolls, five pound notes 
 will be found most inconvenient: and the purchasers and manufacturers 
 of wood and bark, and of sea-weed for kelp, who require many hands, 
 and pay off their workers generally once in the month, none of whom 
 will draw so small a sum as one pound, nor so large a sum as five pounds, 
 will experience the same difficulty. 
 
 " The herring fishery on our coasts employs several thousand men, 
 and is of very great importance. Instances have occurred of herrings 
 being taken in Lochfine alone to the value of £40,0o0 in one season; 
 and a thousand boats are generally employed there in the fishing. The 
 fishermen- every morning sell their fish to the curers on shore, receive 
 their money, and set out in quest of more. The value of each boat's fishing 
 for a night sometimes exceeds £5, but generally is under it ; and there are 
 in this fishing station alone a thousand boats to be paid off" every morning, 
 of whom most probably two thirds have to receive less than £5 each. It 
 will be impossible to provide gold and silver sufficient for such a pur- 
 pose; and in the remote parts of the North Highlands, where the fishery 
 is much more extensive, and banks at a greater distance, the difficulty 
 is insuperable. 
 
 " At present the business of the Highlands is transacted by means of 
 
 bank notes of £1 and £1 \s. with some larger notes on occasions, and 
 
 that with the 2;reatest facility. Cattle dealers, and all others having to 
 
 pay away money to any amount in small suras to a number of people, 
 
 as in the instances mentioned, prepare themselves by a mixture of notes, 
 
 some large and some small, accompanied by a few pounds of silver, and 
 
 every thing goes on well. These notes are preferred by the country 
 
 people before gold, both because they are unable to distinguish between 
 
 the genuine and base metal, and because these coins are more liable to 
 
 be lost from their pockets than notes ; and they have no reason to repent 
 
 their confidence in the stability of these banks, whose notes they have 
 
 been accustomed to receive for so many years in their transactions. But 
 
 if small notes are superseded, and gold substituted, it is not easy to see 
 
 how the supply of gold is to be kept up to carry on the business and 
 
 transactions of this country. .Should a quantity of it be received into 
 
 the circulation, it would not remain long, but find its way into the banks, 
 
 who will not again give it out in bills as they do their notes, and 
 
 it will immediately become a scarce article in the country. A person 
 
 then, having to pay in small sums, will on every such occasion be obliged 
 
 to send his large notes to the bank that issued them, perhaps a hundred 
 
 miles off", to receive gold and silver in their place, to answer his purpose. 
 
 The conveyance of it to him is next to be provided for. The weight 
 
 may be too much for the post. There are no mail caaches ; and he must 
 
 either employ a carrier, moving too slowly i'or his occasions, or be at the 
 
 expense of sending a trusty person for the treasure. 
 
 " In transmitting money from one part of the country to another, the 
 same difficulty will often present itself. Suppose a person in the Western 
 Isles has to pay £19 to one on the Continent. At present this may be
 
 64 
 
 conveniently done by three notes of £5 and four of £ I inclosed by post ; 
 but when there shall be no £1 notes, the odd £4 must be sent in gold or 
 silver, not conveniently carried in a post letter, and requiring that a 
 person be employed for the purpose, and at some expence. 
 
 " Many other such difficulties and inconveniences will occur. These 
 presented themselves to me, and I stated them hastily, without regard to 
 order. If you find any thing in them useful for the purpose, I shall be 
 pleased. But it appears extremely hard that the Scotch system should be 
 disturbed, and that we should be obliged to adopt one not only unsuit- 
 able to our purposes, but ruinous to the business of our country." 
 
 Section 11. — Of the Banks of Ireland. 
 
 The following are the only banks in Ireland as given 
 in the Appendix to the Report of the Committee of the 
 House of Lords in 1826. 
 
 Banks. 
 
 Bank of Ireland 
 
 Seven Local 
 Agencies 
 
 Provincial \ 
 Bank of Ireland' 
 
 Seven Branches 
 
 In preparation for 
 Business, not yet 
 opened 
 
 Northern Bank- 
 ing Company 
 
 Eleven Agencies 
 
 Places where esta- 
 blished. 
 
 Dublin 
 
 Cork 
 
 Waterford 
 |Clonmel 
 
 Newry 
 IDerry 
 
 Belfast 
 
 Westport 
 
 London 
 
 Cork 
 
 Limerick 
 
 Belfast 
 
 Londonderry 
 
 Sligo 
 
 Clonmel 
 
 Wexford 
 c Waterford 
 } Galway 
 (^ Kilkenny 
 
 Belfast 
 
 Downpatrick 
 
 Newry 
 
 Armagh 
 
 Lurgans 
 
 Tandragee 
 
 Banbridge 
 
 Dungannon 
 
 Coleraine 
 
 Balymena 
 
 Derry 
 
 Magherafelt 
 
 Belfast Bank 
 
 Eight Agencies. 
 
 Belfast Commer- 
 cial Bank. 
 Two Agencies at 
 Hibernian Joint 
 Stock Company. 
 Shaw's Bank 
 Ball's Bank 
 One Agency 
 Findlays and Co. 
 La Touche 
 Delacour 
 
 Places where esta- 
 blished. 
 
 Belfast 
 
 Derry 
 
 Armagh 
 I Balymena 
 
 Newry 
 I Coleraine 
 ' Dundalk 
 
 Banbridge 
 
 Dublin 
 
 I Belfast 
 
 Armagh 
 
 \ Dublin 
 
 Dublin 
 
 Dublin 
 
 Londonderry 
 
 Dublin 
 
 Dublin 
 
 Mallow
 
 63 
 
 Total amount of notes in circulation of the bank 
 of Ireland on the 9th of March, 1826, in British 
 currency. 
 
 Notes under £5 Above £5 Total 
 
 £1,846,823:9:5: £1,659,518:9:11 £3.506,341:19:4 
 
 Highest and lowest amount of notes in circulation in 
 Ireland, in the year 1825, exclusive of those of the Bank 
 in Ireland, in British currency. 
 
 Under £5 Above £5 Total 
 
 Highest amount 1,359,054. 106,605. 1,465,659. 
 
 Lowest amount 854,126. 65,987. &20,113. 
 
 The Joint-stock banks in Ireland, are the Bank of 
 Ireland, the Provincial Bank of Ireland, the Northern 
 Banking Company, and the Hibernian Bank. 
 
 The Bank of Ireland. 
 
 The Bank of Ireland was established in 1783; and 
 its privileges resemble those of the Bank of England. 
 Its capital was at first 5^600,000, but on various re- 
 newals of its charter the capital increased to £2,500,000. 
 In 1821* the charter was again renewed, until the 
 year 1838, and the capital augmented to £3,000,000. 
 On this renewal the bank gave up some of its peculiar 
 privileges. At present banks containing more than six 
 partners may be formed at a greater distance than fiftyf 
 Irish miles from Dublin. These banks are not allowed 
 to draw bills upon Dublin for a smaller sum than £50, 
 nor at a less time than six months after date. This 
 enactment amounts to a prohibition of drawing bills. 
 Joint-stock banks in England are not restricted as to 
 the time of their bills, but only in regard to the amount. 
 
 A few years ago the Bank of Ireland opened an 
 account with the Bank of England, and commenced 
 
 * 1 and 2 Geo. IV. c. 72. 
 t Eleven Irish miles are equal to fourteen English miles. In ad- 
 dition to assimilating the currency of the two countries, the government 
 has began to assimilate their measures. All land let on lease must now 
 be let according to the English acre. This law has been in force since 
 January 1, 1826. 
 
 £
 
 G6 
 
 drawing bills at twenty days' date, in exchange for 
 cash. This beneficial measure has been of great ad- 
 vantage to~ the people of Dublin, and has prevented 
 those great fluctuations to which the course of the 
 exchange was previously exposed. No charge is made 
 except the expence of the stamp. The agents at the 
 various branches draw bills on Messrs. Coutts and Co. 
 No. 59, Strand. 
 
 In 1825 the Bank of Ireland, in consequence of the 
 formation cf rival banks, established branches in some 
 of the provincial towns. They have establisments in 
 Cork, Londonderry, Belfast, Newry, Waterford, Clon- 
 mel, and Westport. Each of these branches is ma- 
 naged by two agents who give adequate security, and 
 are allowed to act according to their discretion. The 
 notes issued at their branches are not payable in gold 
 any where but in Dublin, except as matter of courtesy. 
 When the Irish currency was altered, an alteration to 
 this effect was made in the form of the Irish notes. 
 Previous to the assimilation of the currency the silver 
 money of Ireland consisted of ten-penny and five-penny 
 pieces. An English shilling passed for thirteen- pence, 
 and 5^100 British, was equal to ^108 6s. Sd. Irish. 
 
 The notes issued by the Bank are for the sums of 
 e^l, s€l 10s. £3, and £5, and for larger amounts. 
 Post-bills are sent from Dublin to the branches with 
 the date and amount in blank, and are filled up by the 
 agents when issued. None are now for a less amount 
 than £5, though formerly they were as low as £3. 
 None of the notes or post-bills issued by the Bank of 
 Ireland are stamped. They pay a composition in the 
 same way as the Bank of England.* The sum paid at 
 present is £12,000 per annum. 
 
 * By Act 55 Geo. Ill, c. 184. the sum paid by the Bank of England 
 as a composition for the stamp duty upon their promissory notes and 
 Bank post bills, is £3,500 for every million sterling. It was enacted 
 that a new composition should be made when the Bank should resume 
 cash payments.
 
 67 
 
 The Bank of Ireland does not, either at Dublin, or at 
 any of its branches, grunt cash-credits, or allow interest 
 on deposits. Indeed the directors deem it illegal for 
 bankers to allow interest for money placed in their 
 hands, as it is prohibited by an act of the Irish par- 
 liament. The bank discounts bills at ninety-one days' 
 date, and charges 5 per cent, without commission, 
 though the legal rate of interest in Ireland is 6 per 
 cent. None of the banks, however, charge more than 
 fiv^e ; and the Bank of Ireland is restrained from doing 
 so by its charter. The government is under an en- 
 gagement to receive its notes in payment of taxes, 
 fractional parts of twenty shillings only excepted. The 
 bank is erected on the site of the building in which the 
 Irish parliament assembled previous to the Union with 
 Great Britain. The first stone was laid by the Earl of 
 Hardwicke, on the eighth day of March, J 804. 
 
 The Provincial Bank of Ireland. 
 
 I cannot give a better account of this bank than by 
 making a few extracts from the memorial which its 
 directors presented to the Treasury on the 2nd of 
 March, 1826. 
 
 " This memorial sheweth, 
 
 " That the society, or co-partnership, denominated 
 the Provincial Bank of Ireland, was established by 
 deed of settlement, of date 1st August, 1825, under the 
 authority of an act passed in the last session of par- 
 liament, intituled, ' An act for the better regulation of 
 co-partnerships of certain bankers in Ireland.' 
 
 " That a capital of two millions, divided into twenty 
 thousand shares, was subscribed by the share-holders of 
 this society, or co-partnership, chiefly in London. 
 
 " That the names of the shareholders have been duly 
 registered at the Stamp-office, in Dublin, and amount in 
 number nearly to one thousand, composed almost en- 
 tirely of persons of wealth and respectability, and that 
 the security to the public for the obligations of the
 
 68 
 
 Provincial Bank of Ireland, whether arising from the 
 issue of notes or deposits, is thus of the most ample and 
 satisfactory nature. 
 
 " That the distinguishing features of the systenj 
 adopted by the memorialists are as follow : — 
 
 " I. The establishment of branches in every principal town through- 
 out Ireland, at a greater distance than fifty miles from Dublin, from the 
 space within which circle your memorialists are excluded by the existing 
 privileges of the Bank of Ireland. 
 
 " 2. The notes of the Provincial Bank are all payable on demand at the 
 branches where they are respectively issued, and convertible into gold 
 there, at the will of the holders, differing in this respect from the notes 
 of the Bank of Ireland, which are convertible into gold at Dublin only. 
 
 3. " The issues of notes by tlie Provincial Bank are made only on 
 securities, founded on real transactions, arising out of the industry of the 
 people in the pursuit of commerce and agriculture, and the rate of inte- 
 rest which it charges to those dealing with it is under that which the law 
 allows. 
 
 4. " The Provincial Bank allows interest at the rate of 2 per cent, on 
 money deposited, a practice but partially known in the north of Ireland, 
 and altogether new in by far the greater part of the country." 
 
 *' That of the branches intended to be established by your memo- 
 rialists, five have been already opened : viz. Cork, Limerick, Clonmell, 
 Londonderry, and Sligo, and that nine more are in progress, houses 
 having been engaged, officers appointed, notes prepared, and other ar- 
 rangements made for commencing business without delay." 
 
 The Provincial Bank of Ireland has made a call of 
 £^5 per share, so that the sum of £500,000 has ac- 
 tually been paid up. The principal officers at each 
 branch of this bank in Ireland are a manager and an 
 accountant, who in every case hitherto are either 
 Englishmen or Scotchmen. There is also a local board 
 of directors, consisting of three, four, or five respect- 
 able gentlemen, residing in the place, each of whom must 
 be a proprietor of ten shares in the bank. 
 
 These directors have the power of discounting bills, 
 and of granting cash-credits to the extent of £1000. — 
 Cash-credits for a larger amount cannot be granted 
 without application to the board of directors in London. 
 The local directors are paid a small sum which is di- 
 vided among them according to the constancy of their 
 attendance. The manager takes his seat with the di- 
 rectors, and has a veto on their decisions. In case of
 
 69 
 
 difference of opinion between him and the local di- 
 rectors, the question in dispute is referred to London. 
 
 The Provincial Bank is restricted from issuing any 
 post-bills; but it issues notes of £l. a^l. 5s. £1. 10s. 
 £S. £5. and ^10. All these notes are payable in gold 
 at the place where they are issued. The notes issued 
 by any one branch are paid as matter of courtesy by all 
 the other branches ; and they are paid also by Messrs. 
 Latouche and Co. Dublin : but payment of a note 
 cannot be claimed any where but at the place where 
 it is issued. The Provincial Bank discounts bills at 
 5 per cent, without commission. This bank has hitherto 
 paid a dividend at the rate of 4 per cent, on the por- 
 tion of its capital which is paid up. Branches are 
 established at the following places : — Cork, (opened 
 September 1st. 1825,) Limerick, (November 1st. 1825,) 
 Clonmell, (November 15th, 1825,) Londonderry, (De- 
 cember 12tli, 1825,) Belfast, (March 1st. 1826,) Sligo, 
 (February 20th, 1826,) Wexford, (March, 1826,) Water- 
 ford, Galway, Armagh, and Athlone. The business at 
 every branch continues to prosper and improve. 
 
 The Northern Banking Company. 
 
 This was originally a private bank at Belfast, and 
 was called the Northern Bank ; but after the act of 
 1825 was passed, it was formed into a joint stock 
 bank, and assumed its present title. Its nominal 
 capital is ^500,000, consisting of 500 shares of a^lOO. 
 each. The number of partners, or share-holders, is 
 supposed to be about sixty. The portion of the ca- 
 pital advanced is ^^1 25,000. The notes issued are for 
 £\, £l. 5s. £i. 10s. and £1. 15s. None of a higher 
 amount have been issued since the assimilation of the 
 currency. Their notes are not payable in Dublin. 
 They allow interest on deposits at 3 per cent, if the 
 money remains in their hands three months, and 2 per 
 cent, for a shorter time. This has compelled the Pro- 
 vincial Bank to allow also 3 per cent, in those places
 
 70 
 
 where branches of both banks are established. They 
 charge 6 per cent, on money advanced by cash-credits, 
 or otherwise, but charge only 5 per cent, on bills dis- 
 counted. 
 
 The Hibernian Joint Stock Loan Company. 
 
 This bank was originated principally by some Roman 
 Catholic gentlemen, in consequence of the exclusion of 
 members of that body from the directory of the Bank 
 of Ireland, and it was supported by many Protestants, 
 who thought it would be an advantage to have an op- 
 position bank in the city of Dublin. Its nominal 
 capital is a^ 1,000,000, divided into 10,000 shares of 
 s^lOO each. Twenty-five per cent, has been paid 
 upon each share, so that the money actually advanced 
 amounts to e^250,000. This bank receives deposits, 
 but grants no interest on them, as it is not deemed 
 respectable in Dublin for a banker to do so. Its de- 
 posits were supposed by Mr. Pirn* to amount to about 
 ^80,000, or £90,000. They cannot issue notes nor 
 establish branches. They do not grant cash-credits, 
 but they discount bills at 5 per cent, in doing which 
 they issue gold and Bank of Ireland notes. The 
 London agents for this company are Messrs. H. and J. 
 Johnston and Co. 9, Scots Yard, Bush Lane. 
 
 In the year 1824 this company obtained an act, 
 entitled, " An act to enable the Hibernian Joint 
 Stock Company, for the purpose of purchasing and 
 selling annuities, and all public and other securities, 
 real and personal, in Ireland, and to advance money 
 and make loans thereof, on the security of such real 
 and personal security, at legal interest, and on the se- 
 curity of merchandize and manufactured goods, to sue 
 and be sued in the name of the governor or secretary 
 for the time being."f 
 
 * Evidence before the Commoas, p. 83. 
 
 f Anno quinto Georgii. IV. Regis, cap. 159.
 
 71 
 
 The preamble states, that — 
 
 " Whereas the commerce and manufactures and agriculture of Ireland 
 has long laboured under great disadvantage, arising from the want of due 
 command of capital ; and that merchants and manufacturers have no 
 means of procuring temporary advances of money on a deposit of their 
 goods, when a slackness of demand arises ; and whereas several persons 
 have agreed to form themselves into a company, or paitnership, under the 
 name of the ' Hibernian Joint Stock Company,' and have subscribed or 
 raised considerable sums of money in order to purchase and sell annuities 
 and all public and other securities, real and personal, in Ireland ; or to 
 make loans and advances of money on the security thereof, and on the 
 security of merchandize and manufactured goods, at legal interest, and to 
 receive lodgments of money or deposits thereof ; and great public benefit 
 is expected to be derived to the trade, manufactures, and agriculture of 
 Ireland from the formation of such a company, or partnership ; and 
 whereas difficulties may arise from time to time," &c. 
 
 It is enacted that this company may sue and be sued 
 in the name of their governor or secretary. A memorial 
 of the names of the governor, secretary, and members, 
 and of the transfer of shares, to be enrolled in Chancery; 
 and no actions to be brought by the company, under the 
 authority of this act, until such memorial shall have been 
 enrolled. Execution upon any judgment against the 
 governor or secretary may be issued against any of the 
 members, who are to be reimbursed their expences by 
 the company. 
 
 " Provided always, and be it further enacted, that it shall not be law- 
 ful for the said company, or any person or persons on behalf of the said 
 company, in any manner to stipulate, contract, or agree with any person 
 or persons to limit or restrict the liablity of the members of the said 
 company, or any of them, or to make any special agreement in relation 
 to the extent of the liability of the members of the said company or any 
 of them. 
 
 " Provided always, and be it further enacted, that the powers and pro- 
 visions of this act shall not take effect until the members of the said com- 
 pany shall have subscribed and engaged to pay by a contract, binding the 
 subscribers, their heirs, executors, and administrators for payment of the 
 money so subscribed (according to the amount of their respective sub- 
 scriptions) to the amount of four-fifths of the capital of one million so 
 intended to be created, nor until the sum of two hundred and fifty thou- 
 sand pounds ; part of such sum so to be subscribed, shall have been paid 
 into the Bank of Ireland, or invested in stock of the governor and com- 
 pany of the Banks of England or Ireland, or government securities, in 
 the name of the governors and directors of the said intended Hibernian 
 Joint Stock Company, for the benefit and use of the said company."
 
 n 
 
 The Private Banks. 
 
 The following are the private banks in Dublin •.-—• 
 
 NAMES. LONDON AGENTS. 
 
 Messrs Ball and Co \ ^°'^^"*^ ^""^ ^°' ^^' P^U-^^"- 
 
 Messrs. bail and ^o. | Ransom, 1, Pall-Mall East. 
 
 Messrs. Findlay and Co. Messrs. Hammersley & Co. 69, Pali-Mall. : 
 HT T rr 1 J ri S Messrs. Pueet, Bainbrid^e, and Co. 2 1 , 
 Messrs. La louche and Co. j St. Paul't Church Yard. 
 
 c- T> u * cu An S Messrs. Harman and Co. Adam's 
 
 Sir Robert Shaw and Co. | ^.^^^^ ^^^ g^^^^ ^^^^^^ 
 
 Messrs. Findlay and Co. and Messrs. La Touche and Co. do not issue 
 notes, but the former are in the habit of issuing post-bills. 
 
 The only private banks, north of Ireland, are at Belfast. 
 
 TITLES. NAME. LONDON AGENTS. 
 
 ( Messrs. H. & J. Johnston 
 Belfast Bank. Messrs. Batt, Houston, & Batt, <^ and Co. 9, Scots Yard, 
 
 (^ Bush Lane. 
 Commercial Bank, 7 n/r rr ^ o n ( Messrs. Dennison & 
 
 Belfast. j ^^''''' T^""^"* ^ ^^- \ Co. 106, Fenchurch-st. 
 
 The private banks at Belfast do not grant cash- 
 credits. They allow 3 per cent, interest on deposits, 
 but not on running accounts ; and they discount bills 
 at 5 per cent, without commission. The notes issued 
 by the Belfast Bank are for £1. £1. 1^. £1. 5s. 
 ^1 10s. £l 15,5. and £'2. 2s.: none are of a higher 
 amount. They are payable only at Dublin (not at 
 Belfast), at the house of Solomon Watson, Esq. Sack- 
 ville Street. The agents of this bank discount bills at 
 their own risk, and are allowed a commission on their 
 transactions. John Holmes Houston, Esq. a partner 
 in this bank, stated to the committee of the House of 
 Lords that the average annual issues of the bank 
 for " fifteen years, from 1811 to 1825, has been 
 £322,000 ; the expence of carrying on the esta- 
 blishment has been (including stamp-duty, house-rent, 
 agencies, paper and printing, clerks and managers 
 salaries) £10,000 per annum : by this it will appear, 
 and the fact is, that it requires at least a circulation of 
 £200,000 to defray the expences. Therefore unless a
 
 73 
 
 bank, managed as this has been, circulates £200,000, 
 it would be a losing concern : all above that is the 
 profit."* 
 
 The notes of the Commercial Bank are payable only 
 at Belfast ; and consequently they do not circulate over 
 so great an extent of country as those of the Belfast 
 bank. 
 
 The only private bank, south of Dublin, is one at 
 Mallow, Messrs. Delacour and Co. whose London 
 agents are Messrs. H. and J, Johnston and Co. 9, 
 Scots Yard, Bush Lane. There are private discounters 
 of bills at Limerick, and other places, but no other 
 banks. 
 
 In viewing this statement of the banks in Ireland we 
 shall observe several circumstances worthy of notice : — 
 
 1. The fewness of the banks of Ireland compared 
 with those of England. — This may be accounted for by 
 the circumstance of several private banks having failed 
 within the last few years, and also from the character 
 of the country as an agricultural country. Ireland has 
 had hitherto few manufactures and little commerce. 
 Banks do not abound except in wealthy and commer- 
 cial countries. In those parts of Ireland where manu- 
 factures and commerce are most extended, there it is 
 that we find the greater number of banks. On this 
 principle it may be inferred that the banks in Ireland 
 will advance in prosperity ; for since the repeal of the 
 Union duties— duties which were imposed with the 
 design of protecting Irish commerce and manufactures 
 — the trade and manufactures of Ireland have very con- 
 siderably increased.! 
 
 2. The second circumstance to be noted is, that the 
 Irish banks issue notes for pounds and odd shillings. — 
 In England there are scarcely any notes issued between 
 £l and £5 ; the £l 1^. £2, and £2 2s. notes are very 
 few. But in Ireland they have notes for £l 5s. £l 10s. 
 
 * Lords' Report, p. 40. 
 •j- Evidence of Mr. Pim before the Commons, p. 85.
 
 74 
 
 5^1. 15^. £1. 11^. 6d. as well as £l. 1*. and £2. 2s. 
 notes. In consequence of the issue of these a less 
 quantity of silver is necessary. If a person has to pay 
 5s. he can give a £l 10s. note and receive a note for 
 £1 5s. In remote parts of the country, to which 
 silver could not be transmitted but at great expence, 
 this has been found very convenient. Notes for .5^. 
 and 10*. were some years ago issued in Ireland by 
 shop-keepers, but these have been discontinued. In 
 some parts of Scotland, similarly circumstanced, wealthy 
 individuals have issued " I O U" for five shillings, in 
 consequence of the scarcity of silver. 
 
 3. Another striking circumstance is the vast propor- 
 tion of notes under £5 issued by the Provincial Banks. — 
 This is accounted for from the smallness of the trans- 
 actions and the peculiarities of the Irish trade. In the 
 north of Ireland the people are engaged chiefly in the 
 linen manufacture, and in the south in the exportation 
 of provisions. The linen manufacture of Ireland is not 
 conducted like the cotton manufacture in England, by 
 assembling vast numbers of people in the same building, 
 under the employ of an individual capitalist. In Ireland 
 every weaver weaves his own web and takes it to 
 market. The materials of the manufacture are pur- 
 chased in small quantities ; and the payment for their 
 purchases, as well as for wages, must be made in small 
 sums. These small transactions cannot be conducted 
 by means of large notes. The Belfast Bank issues no 
 notes higher than £2 2s. They tried the experiment 
 of issuing larger notes, but they came back so soon 
 that the profit did not pay the expence. In the south 
 of Ireland, in consequence of the great subdivision of 
 land, the amount of each money transaction is necessa- 
 rily small. The supplies for tlie provision trade are 
 produced by a vast number of individual capitalists, 
 each of whom can furnish but a small quantity, and 
 whose receipts of money are limited to small sums. 
 The fairs or markets are attended by an immense 
 number of people, bringing their butter, corn, and
 
 75 
 
 poultry for sale, but few of them individually take back 
 the amount of £5. 
 
 The Report of the Select Committee of the 
 House of Commons, 
 
 IN REFERENCE TO THE CIRCULATION OF PROMISSORY NOTES IN 
 
 IRELAND. 
 
 •* With respect to the circulation of Ireland, the enquiries of your 
 ' committee have been less extensive than those which they have instituted 
 with respect to Scotland. 
 
 " The first law in Ireland which restrained the negociation of pro- 
 missory notes, was an act passed in the Irish Parliament in the year 
 1799. 
 
 " The preamble recites, that various notes, bills of exchange, and 
 drafts for money, have been for some time past circulated in lieu of cash, 
 to the great prejudice of trade and public credit; and that many of such 
 notes are made payable under certain terms, with which the poorer 
 classes of manufacturers and others cannot comply, unless by submitting 
 to great extortion and abuse. It adds, that the issue of such notes has 
 very much tended to increase the pernicious crime of forgery ; and the 
 act proceeds to apply to notes between the value of five pounds, and 
 twenty shillings, similar restrictions to those which had been applied to 
 such notes issued in England by the act which passed in the year 1777. 
 It permits, however, during the suspension of cash payments by the Bank 
 of Ireland the issue of bank post bills, bills of exchange, and drafts 
 under certain regulations, for any sums not less than three guineas. 
 This act did not extend to the Bank of Ireland. 
 
 " In 1805, this and some other acts which had passed in the interim, 
 relating to the issue of small notes, were repealed; and notes under 
 twenty shillings, which had been previously admitted, under certain 
 regulations by the act of 1799, were declared void. 
 
 " There is at present no law in force imposing any limitation to the 
 period for which notes for a sum not less than twenty shillings may be 
 issued in Ireland. 
 
 " A tolerably correct estimate of the amount of promissory notes, 
 above and below five pounds, circulating in Ireland, may be formed 
 from the subjoined returns made by the Bank of Ireland, and by other 
 banks at present established in that country. 
 
 " Bank of Ireland notes. — An account of the average amount of the 
 Bank of Ireland notes of five pounds and upwards (includino- bank post 
 bills) for the years 1820, 1821, 1822, 1823, 1824, and 1825. 
 
 (Irish currency.) 
 
 Notes and post bills of five pouads and upwards £3,646,660 19*. 6</. 
 " An account of the average amount of the Bank of Ireland notes 
 under the value of five pounds (including bank post bills) for the years 
 1820, 1821, 1822, 1823, 1824, and 1825. 
 
 (Irisb currency.; 
 Notes and post bills under the value of live pounds £1,643,828, 0.y. bd.
 
 76 
 
 " It appears from the evidence that a practice prevails in Ireland of 
 issuing notes for the payment of sums between one and two pounds, for 
 three guineas, and other fractional sums. 
 
 " Your committee see no public advantage rising out of this practice; 
 and they are of opinion, that it ought to be discontinued, as it tends 
 to dispense with the silver coin, and practically to exclude it from circu- 
 lation. 
 
 " Your committee hesitate in thje present imperfect state of their infor- 
 mation, to pronounce a decisive opinion upon the general measures 
 which it may be fitting to adopt with respect to the paper currency of 
 Ireland. 
 
 " Although they are inclined to think that it would not be advisable 
 to take any immediate step for the purpose of preventing the issue of 
 small notes in Ireland, their impressions undoubtedly is, that a metalhc 
 currency ought ultimately to be the basis of the circulation in that 
 country. 
 
 " It will probably be deemed advisable to fix a definite, though not 
 an early period, at which the circulation in Ireland of all notes below 
 five pounds shall cease; and it is deserving of consideration, whether 
 measures might not be adopted in the interim for the purpose of 
 ensuring such a final result by gradual though cautious advances towards 
 it." 
 
 A Summai'y of the Evidence, 
 
 GIVEN BEFORE THE COMMITTEES OF THE TWO HOUSES OF PARLIA- 
 MENT, AS TO THE EFFECT OF ABOLISHING THE SMALL NOTE 
 CIRCULATION IN IRELAND. 
 
 1. Small currency is necessary to carry on the com- 
 mercial transactions of the country. 
 
 John Acheson Smyth, Esq. Agent for the Belfast Bank at 
 
 Londonderry/. 
 
 "In Lancashire, I believe all the raw material is bought in large 
 parcels, and by bills. In Ireland, the raw material is all bought in 
 small parcels, and all in small notes. In Lancashire, there is only cash 
 wanted to pay the workmen ; but we want it both to pay the workmen, 
 and to buy the raw material. The provision and grain that we send to 
 England, are also bought in small notes, and we are reimbursed by 
 drawing bills for our shipments." — Com. Report, p. 77. 
 
 Pierce Mahony, Esq. Solicitor to the Provincial Bank of Ireland. 
 
 " If the banks were prevented issuing notes under the amount of £5. 
 would any inconveniences arise in conducting the trade of the South of 
 Ireland ? — The trade of Ireland generally, and especially in the South of 
 Ireland, would be greatly inconvenienced, and the growth of manufactu- 
 rers would be decidedly checked, if not destroyed by such a measure. 
 From the great subdivision of land in Ireland, and particularly in the 
 South and West (where the population is almost exclusively agricultural) 
 the produce is disposed of in small portions scarcely ever representing
 
 77 
 
 £5, and almost universally under that amount. I am of opinion, that 
 the withdrawal of all notes under that amount would have the effect of 
 curtailing the accommodation the banks now afford to the public, to a 
 ruinous extent ; and that the trade of the country under such circum- 
 stances, would not afford profitable employment for banking capital to 
 any extent ; and therefore I should anticipate the withdrawal of such 
 establishments except perhaps at Cork and Belfast. In the South and 
 West of Ireland, from the nature of the provision and corn trade, the 
 chief demand for notes, or for gold, commences in October, and continues 
 until March, when that trade is nearly over for the season. From 
 March until October, the butter trade is almost the only one in the South 
 and West of Ireland, and as that trade would not employ all the capital 
 that is required in the winter season, the effect would be if sovereigns 
 were substituted for small notes, that the extra supply required for the 
 corn, beef, and pork trade, must remain idle in the banker's chest, or be 
 remitted at great risk and expence for employment elsewhere during the 
 summer and autumn. 
 
 " Do you think if a metallic circulation was adopted that there would 
 be a difficulty in maintaining that metallic circulation ? — 1 do ; because 
 the trade in the South and West of Ireland is periodical ; the remittances 
 from those districts of Ireland would force the gold away at certain 
 periods, and it must be returned at others with considerable expence 
 to meet the trade of the country." — Com. Report, p.p. 250, 251. 
 
 2. A gold currency would be more inconvenient than 
 notes, and would not be so well liked by the people. 
 
 Mr. Leonard Dobbin, Agent for the JSforlhern Banking Company of 
 Belfast, at Armagh. 
 
 " Do the people of the north of Ireland manifest any wish for gold 
 in preference to notes, or for notes in preference to gold ? — They deci- 
 dedly prefer notes, and the weavers have refused to carry gold out of the 
 market lately. 
 
 " Can you assign any reason for this preference ? — There are many 
 reasons that I could assign. The bank notes are now the established 
 currency ; the people are perfectly acquainted with them. If a man 
 should lose notes, or a house be robbed, or if there is a forgery, it would 
 be much better for them to trace the notes than it would gold. I have 
 often assisted poor people in tracing notes that were robbed, and forged 
 notes, whereas the gold could not be traced so readily. Another reason I 
 would give is this, guineas became light, and were troublesome to the 
 people. When standing beam there was a shilling charged, and when 
 lighter than standing beam, two shillings and sixpence; and when gold 
 was scarce, and bank notes not a legal tender, the land agents refused to 
 take any thing but gold, the tenants were obliged to pay from one 
 shilling to four shillings on a guinea discount. Some agents would 
 only take gold." — Co7n. Report, p. 243.
 
 78 
 
 J. A. Smyth, Esq. Linen Merchant, and Agent for the Belfast Bank 
 at Londonderry. 
 
 " I am in the habit of employing my linen buyers to go to the 
 country markets, and I must supply them with the week's money before 
 they start, perhaps five hundred or a thousand pounds ; they have to go 
 through the interior of the country, and do not return ibr a week. They 
 make their purchases all in small quantities, and it is more convenient 
 for them to carry notes than gold." — Lords' Report, p. 7. 
 
 Arthur Guiness, Esq. Director of the Bank of Ireland. 
 
 " I conceive that with the persons who handle the circulation of the 
 country, there is a decided preference in favour of small notes, over cash 
 in every respect. I speak from mine own experience ; for I remember 
 perfectly well before the restriction upon cash payments when gold was 
 a great inconvenience in trade. I speak of those who handle the 
 currency of the country, among whom I think the preference is in favour 
 of the small notes as more convenient, more portable, and less liable to 
 counterfeit. I conceive these to form the general ground of preference. — 
 Com. Report, p. 237. 
 
 3. The profits of the banking establishments would 
 
 be so much diminished that they could not extend the 
 
 same accommodation to the agricultural and commercial 
 
 classes. 
 
 W. P. LuNNEL, Esq. Director of the Bank of Ireland. 
 
 " If the notes under £5 were prohibited, would the profits of the Bank 
 of Ireland be materially affected by such prohibition ? — T should expect 
 that they would suffer : they must sacrifice a certain profit." 
 
 " Have you considered to what extent the profits of other bankers 
 would be affected } — I should expect that the principal circulation of 
 the country bankers is in small notes, and therefore in that proportion 
 they would suffer. — Lords' Report, p. 108. 
 
 John Holmes Houston, Esq. Banker at Belfast. 
 
 " If all the notes under £5 were prohibited to be issued, would it be 
 worth while in your opinion to keep the establishment of a bank in Bel- 
 fast ? — I do not think it would, except by carrying it on in the same 
 manner as formerly it was — to keep a discount office, charging a commis- 
 sion on discounting bills, because £5 notes would not circulate ; then our 
 circulation would be so trifling it would not answer." — Lords' Report, 
 page 35. 
 
 H. A. Douglas, Esq. Director of the Provincial Bank of Ireland. 
 
 *' I consider the cash-account system, and the one,-pound circulation 
 so connected, that if the notes are withdrawn, it is understood that our 
 establishment will not grant any further cash-credits. — The business 
 which we carry on, even if we charged a higher rate of interest, or a 
 commission, would not be of sufficient magnitude to repay us for the
 
 79 
 
 expence of our establishment, independent of our notes. — If the issue 
 of small notes be withdrawn, then we cannot afford to allow interest on 
 deposits." — Lords'' Report, page 24, 26, 27. 
 
 4. The abolition of small notes would prevent the 
 investment of British capital in the present banking 
 establishments. 
 
 T. S. Rice, Esq. M. P. and Director of the Provincial Bank of Ireland. 
 
 " Is it your opinion, that if all notes under £5 were abolished, a con- 
 siderable inconvenience would arise in the ordinary traffic in Ireland ? — 
 I conceive that it would. I conceive that the first effect of the extinc- 
 tion of all notes below £5 would be a much more considerable diminu- 
 tion of the general mass of the circulating medium in Ireland than in 
 England. 
 
 " I fear extremely, that if any thing were to occur which materially di- 
 minished the profits of our establishment, it would have the effect of de- 
 priving us of one of the chief benefits of the establishment, namely, the 
 support and controul of British capitalists, and conducting the bank by 
 British merchants, and upon British commercial principles. I conceive 
 a rate of profit, rather higher than the average rate of profits, is essential to 
 induce persons so circumstanced to engage in such a business, more par- 
 ticularly when it is considered that there is no limitation of responsibility 
 by the grant of charters." — Lords' Report, p. 47, 51. 
 
 5. The gold currency would be sent out of the coun- 
 try whenever it bore a premium in England. 
 
 Henry H. Hunt, Esq. Local Director of the Provincial Bank of 
 Ireland, at Walerfurd. 
 
 " What do you think would be the consequence of a law which pro- 
 hibited the issue of notes below £5, both by the Bank of Ireland and 
 by any other banking establishment in Ireland ? — I should think it 
 would be very hazardous indeed : I should very much apprehend that 
 the gold circulation would at times be withdrawn in a very great degree 
 from the country, whenever gold was wanted in London ; for instance, 
 
 A SMALL PREMIUM UPON A SOVEREIGN WOULD INDUCE A VAST 
 QUANTITY OF THEM TO BE BROUGHT OUT OF IRELAND." 
 
 " Have you ever known instances of quantities of gold being brought 
 over from Ireland to this country, and persons making a regular traffic 
 of it.^" — I have. — Commons' Report, p. 73, 74. 
 
 6. The proposed measure would cause general dis- 
 tress and prevent the progress of enterprize. 
 
 John Robinson Pim, Esq. General Merchant in Dublin. 
 
 " The very idea of curtailing the currency under five pounds, would 
 have a tendency to discourage all adventure in Ireland at present. I 
 should not, for one, be careful of placing money in any kind of ma- 
 chinery till the effect was tried. I fancy it would reduce property very 
 much in that country, — and sometimes fancies are almost as bad as 
 reality. — Lords'' Report, page 91.
 
 80 
 
 7. The proposed measure would be a violation of 
 the charter of the Bank of Ireland. 
 
 Arthur Guiness, Esq. Director of the Bank of Ireland. 
 
 " You are aware that an act of parliament passed in the twenty-first* 
 year of the late king, on the occasion of increasing the capital of the 
 Bank of Ireland. — I am." 
 
 " The government, by that act of parliament, are bound to receive 
 Bank of Ireland notes in payment of all sums of money if offered, frac- 
 tional parts of twenty shilling only being excepted. — They are." 
 
 " If then the government were to prevent you issuing notes under £5, 
 would not the effect be the same as refusing to accept notes less than £5 
 in payment ? — The effect would be the same." 
 
 " Then to all intents and purposes it would be a breach of faith in 
 one case as well as in the other. — I conceive it would. — Report of the 
 Select Committee of the House of Commons, poge 240. 
 
 * It is obvious that the question has assigned a wrong date to this act : it was 
 passed July 2, 1821. 
 
 TABLE OF CONTENTS. 
 
 Page. 
 
 SECTION 1. — Introductory Observations - - - - 3 
 
 SECTION 2.— Of the Utility of Banking - - - - 5 
 
 SECTION 3. — Of the London Bankers - - - - l2 
 
 The Town Department - - - - I3 
 
 The Clearing Department - - - - 16 
 
 The Country Department - - - - 2 1 
 
 The General Balance - - - - 23 
 
 SECTION 4.— Of Country Banks - - - . - 25 
 
 SECTION 5.— Of Bills of Exchange - - - - 29 
 
 SECTION 6.— Of the Method of Making Calculations - - 36 
 
 SECTION 7. — Of the Suppression of the Small Notes - - 39 
 
 SECTION 8.— Of Joint Stock Banks - - - - 45 
 
 SECTION 9.— Of the Branches of the Bank of England - - 43 
 
 SECTION 10.— Of the Banks of Scotland - - - - 54 
 
 SECTION 11.— Of the Banks of Ireland - - - - 64 
 
 The Bank of Ireland - - - - 65 
 
 The Provincial Bank of Ireland - - - - 67 
 
 The Northern Banking Company - - - 69 
 
 The Hibernian Joint Stock Loan Company, - - 70 
 
 The Private Banks - - - - 72 
 
 The Report of the Committee of the House of Commons, 
 
 in Reference to the Banks of Ireland - - 75 
 A Summary of the Evidence as to the Effect of abolishing 
 
 the Small Note Circulation - - -76 
 
 ERRATA. 
 Page 22, line 31, for £1,000 new fours, read £10,000 new fours 
 Page 32, line 20, for drawer read draviee. 
 
 Printed by E.Juitins and Son, 41, Brich Lane, Spita/Jleids.