iittiiiiiiii^^ 
 
 THE UNIVERSITY 
 
 OF ILLINOIS 
 
 LIBRARY 
 
 35Z

 
 /. — --^ 
 
 /-6 
 
 THE PLAN X"^ 
 
 NATIONAL ESTABLISHMENT 
 
 COUNTRY BANKING, 
 
 AND THE PRINCIPLES BY WHICH IT IS llECOMMENDED; 
 
 ALSO, THE PROSPECTUS 
 
 COMMITTEE WHICH HAS BEEN FORMED TO CAIUIY SUCH 
 AN ESTABLISHMENT INTO EFFECT. 
 
 LONDON : 
 PRINTED BY W. J. RUFFY, 29, BUDGE ROW. 
 
 18SL
 
 .J
 
 THE PLAN, ike. 
 
 THK ENGLISH AND SCOTCH SYSTEMS OF BANKING EXA- 
 MINED AND CONTRASTED. 
 
 The usefulness of Banhs — the general consiernat'ion 
 produced hi a Country Toivn hy a run upon them — at least 
 Jlfty millions lost hy failures in the last forty years — the 
 equally baneful effects of the late panic. — The utility and 
 importance of Banks to this commercial nation, need 
 scarcely to be insisted upon. They are the medium through 
 which all remittances of money, from one part of the coun- 
 try to the other, are made and received. They are the 
 channel through which all bills are presented, when due, 
 as a means of securing their punctual payment. The 
 landed proprietor finds them a convenient place of deposit 
 for the ready money he possesses. The capitalist fre- 
 quently lodges his money with them, in order to have it 
 ready for any purchase he may have in view ; and mer- 
 chants and traders, of every denomination, find it conve- 
 nient to deposit with them those sums which the current 
 demands of their business require them at all times to pos- 
 sess. On the other hand the capital, thus placed in their 
 hands, is, in part at least, re-advanced to the public in dis 
 -counting bills, &c., and in affording facilities to commerce 
 upon which the trading part of the conmiunity are led to 
 depend ; while their promissory notes furnish the country 
 with a useful medium of circulation. 
 
 It may be proper, however, to observe, that this descrip-
 
 2 
 
 tion applies more particularly to country banks. In Lon- 
 don the circulation is exclusively in the hands of one Bank — 
 the Bank of England ; while the deposits of the public are 
 chiefly made with the private banks. Whereas in the coun- 
 try these functions are united ; and the country banks in 
 their respective districts, are at once the fountains of the 
 currency of the country, the reservoirs of its capital, and the 
 source from whence the supplies of it are drawn. They 
 are thus intimately connected with every class of society; 
 every person who has any thing to do, either with capital 
 or with money, to the amount at least of a bank note, is in- 
 terested in their stability, and many have no other alterna- 
 tive but to trust them in amounts which they could not be 
 deprived of in their business, even for a short time, with- 
 out the ruin of their credit, if not their total ruin. 
 
 A peculiarly deep interest is consequently felt in the wel- 
 fare of these banks. Nothing can in any manner affect them 
 without exciting the immediate attention of the public, and, 
 if it involve their credit, without its producing the greatest 
 possible agitation and alarm. Thus, when the slightest 
 apprehension is entertained respecting their solvency, how- 
 ever groundless it may sometimes prove to have been, a 
 run upon them immediately takes place ; that is, hundreds 
 of people crowd the doors of the bank to demand payment 
 of the notes they hold, or to withdraw that money out of 
 their hands which they have deposited with them. This 
 at once places them in danger of stopping payment, and 
 puts a stop to their usual banking operations. People, 
 consequently, cannot receive that accommodation upon 
 which they have relied, and upon which the regularity of 
 their payments and their credit depends. All is, therefore, 
 confusion, and the whole community is thrown into a state 
 of alarm and consternation which is better conceived than 
 described. 
 
 The Bank of England, when there is a panic or run 
 upon the banks in London, supplies, in some degree, by the 
 great liberality with which it always comes forward on 
 these occasions to assist the merchants, the want of the 
 usual accommodation afforded by the private banks. By 
 this means the evil, though still great, is much mitigated. 
 But in the country the community have no such resource. 
 Their only remedy is to stop the run by the restoration of 
 confidence ; to effect which every effort is generally made,
 
 and great risks arc sometimes run in conscfjuencc. It is 
 not unusual for the friends of a bank so situated, to issue 
 out bills or notices, pledging themselves to take its notes in 
 payment to any amount. This, generally, has the effect of 
 restoring confidence for a time, whether the bank is justly 
 entitled to it or not ; but were it to fail at the moment, 
 many of the parties thus pledged would, in a majority of 
 cases, inevitably be ruined. We may have some idea of 
 the inconveniences in which the mercantile world are in- 
 volved by such an event, when people are found wandering 
 so far out of the track of ordinary prudence, as to guarantee 
 the stability of establishments with whose affairs they have 
 no intimate acquaintance, and whose insolvency would thus 
 involve them in certain destruction. 
 
 Nothing, in fact, can affect the credit of the country 
 banks without being immediately felt, in a corresponding 
 degree, by the public ; and the actual stoppage of an exten- 
 sive banking concern deranges the whole frame of mercantile 
 affairs, and carries confusion, misery and ruin, into every 
 department of society. 
 
 Great, however, as the inconveniences are, which the dis- 
 credit of banks and the consequent runs upon them occa- 
 sion, and great as are the calamities by which their failures 
 are uniformly attended, they have been in this country, as 
 is well known, of very common occurrence. From the pe- 
 riod of the general panic, which occurred in 1793, to the 
 present time, there have been about three hundred and 
 ninety bankruptcies, to which must be added compositions. 
 These are generally reckoned as three to one — that is, as 
 three compositions to one bankruptcy : — for instance, in the 
 panic of 1793, more than one hundred banks failed, but 
 only twenty-six became bankrupts. We must, therefore, 
 to these three hundred and ninety bankruptcies, add eleven 
 hundred and seventy compositions to obtain the total num- 
 ber of failures. This would make them amount to fifteen 
 hundred and seventy ; but we shall say one thousand, to be 
 on the safe side. 
 
 Each of these, it must be observed, was like the bursting 
 of a volcano in the district where it occurred, not only in- 
 volving numbers in difficulties, and many in ruin, but ulti- 
 mately bringing many to the grave — the lingering, but too 
 frequent result of diHicultics and distress. The loss by
 
 some of these banks might not be great, but, if we take it 
 on the average at ^£'50,000., it will make a total loss of fifty 
 millions ; and if we add to this the losses produced by the 
 insolvency of those whom these failures ruined, as well as 
 the losses caused to others by the sacrifices imposed upon 
 them to maintain their credit, and bear up against the 
 shock which every failure produced, it will be obvious that 
 this estimate is far below the truth. 
 
 Nor are the evils of the system confined to the mere fail- 
 ures of the banks, great as is the amount of evil thus caused. 
 The general panic which occurred in 1825, and which was 
 not attended with much loss from bank failures, inflicted at 
 one blow upon the nation, an aggregate of loss and mis- 
 chief, as great, if not infinitely greater, than that above 
 stated. The contraction of the currency and fall in prices 
 of all goods, as well as of agricultural produce, which was 
 the consequence of it, and which spread itself over two or 
 three years, could not amount, in the aggregate, to less than 
 one hundred millions. It was the remark of the late 
 Mr Huskisson that the panic had caused greater loss to 
 the nation than the last three years of the war : during 
 which, it may be remarked, the expenditure of Government 
 was at least fifty millions a year more than it now is. With 
 regard also to the misery produced by it ; it is only necessary 
 to observe that in London, where the commercial failures 
 were much less numerous than might have been expected, 
 the distress of mind produced by the panic was so general 
 as to produce an epidemical disease, which the late Mr 
 Abernethy called the city disease ; and by which, no doubt, 
 many were brought to a premature end. 
 
 Joint Stock Baiiks not liable to failure and panics. — 
 Now, during all the time that England has been thus 
 visited, the banks of Scotland have been totally free from 
 these vicissitudes, not having lost more than thirty or forty 
 thousand pounds by bank failures, and never having had 
 a panic at all ; a fact which it is curious to observe has 
 only become generally known of late years. The effects of 
 the late panic, indeed, were not confined to England, but 
 afflicted every country in connexion with it, and Scotland 
 among the rest. But the panic itself did not extend to 
 Scotland ; it was only known there by its effects. 
 
 This has arisen, as is well known, from the Scotch banks
 
 being- joint stock companies. In no part of England, pre- 
 vious to 1826, could any bank, according to the charter of 
 the Bank of England, be formed with more than six part- 
 ners. But the charter of the Bank of England did not ex- 
 tend to Scotland, and the banks in that country might have 
 as many partners as they chose. The system of Scotland 
 became, consequently, one chieHy of joint stock companies, 
 which are more stable, and are preferred, by the public, to 
 private banks. 
 
 A joint stock bank, as is well known, consists of a num- 
 ber of persons who«su!)scribe amongst them a capital, and 
 manage it by a committee of their nunibei-, called a court, 
 or board of directors. The capital being either very large, 
 or the partners, who are responsible to the public, being nu- 
 merous, the pubhc are rendered perfectly safe against ulti- 
 mate loss, and the banks are thus secured against failure; 
 while, on the other hand, they are secured against panic 
 by the publicity of their proceedings, and the mutual sup- 
 port they are able and ready to afford each other. 
 
 Although the public might be ultimately safe with a 
 bank, there would still be runs upon it if any apprehension 
 were entertained that it might suspend its payments. The 
 majority of persons who deposit money in it, do so under 
 the impression that they have the power of withdrawing it at 
 a moment's notice, and many, as has been already observed, 
 would be injured in their credit, if not ruined, by only a 
 suspension of this power, though for a limited period. 
 Hence, if any apprehension were entertained of a bank stop- 
 ping, however safe it might ultimately be, it would certainly 
 produce a run upon it. But ti)is is never apprehended 
 with the Scotch banks. The directors are called upon to 
 give, annually, an account of their stewardship, or at least, 
 of the results, and declare a dividend of the profits made. 
 They would no doubt have been required to give more than 
 the mere results, did the shareholders apprehend any neces- 
 sity lor it ; but public trusts, in this country, are generally 
 executed with integrity, and no instance of any false state- 
 ment having been knowingly made, this has not hitherto been 
 considered requisite. This communication to the share- 
 holders is also a communication to the world. 'J'lie divi- 
 dend paid is at all times a practical exposition of the state 
 of the concern ; .so that, even wiih a small capital, the credit 
 »)f the bank paying a dividenil will generally remain un-
 
 6 
 
 shaken. But were this not the case, being perfectly safe, 
 the larger establishment would always assist it, in order to 
 prevent the alarm spreading ; for nothing is more unrea- 
 sonable than fear, when once generated ; and even should 
 it not be doing well, and be disposed to wind up its affairs, 
 being ultimately solvent, it would never have any difficulty 
 in finding another bank wilhng to take upon it its obliga- 
 tions, and carry on its business as before. Thus, runs and 
 panics from any cause are either avoided, or stopped the 
 moment any indication of them appears. 
 
 With private banks in this country, though there is little 
 doubt that many have large capitals, and are making great 
 profits, and are in reality as safe as it is possible for any joint 
 stock company to be, yet the public have no evidence of 
 this: there is no authentic publication either of their capital 
 or profits, and, in periods of alarm, these banks are, conse- 
 quently, liable to the same distrust as weaker establishments. 
 As weak banks obtain undue credit from the want of evi- 
 dence by the public of their weakness, in consequence of 
 this want of publicity, so strong banks frequently suffer 
 unmerited distrust from the same want of evidence of their 
 strength ; a blind confidence necessarily leads to blind dis- 
 trust ; while nine times out of ten, when private banks wind 
 up, they do it by first stopping payment. Neither can they 
 assist each other, for they are all, in general, in discredit 
 at the same time, and each is obliged to confine its atten- 
 tion to its own difficulties. 
 
 A more beneficial accommodation afforded to the public 
 by the Scotch than the English BajiJcs. — The credit of 
 the Scotch banks is thus unbounded, more especially that 
 of the principal establishments, which possess large capitals 
 and a corresponding publicity ; and this gives rise to a 
 mode of dealing very beneficial to the country, which it is 
 important to understand. 
 
 The public, possessing this superior confidence in them, 
 make deposits with them to five times the extent they do in 
 England. The Scotch, like the English country banks, 
 give an interest upon money lodged in their hands ,• but in 
 England the deposits with banks are very much confined 
 to the amounts that people would, for their own conve- 
 nience, be obliged to keep in their own houses, if they did 
 not deal with a bank. In Scotland, on the contrary, people 
 keep money in the banks, not merely as a place of conveni-
 
 ence, but as a place of investment — a disposition which the 
 banks encourage by makincr it likewise as convenient as 
 possible. With this view they give the depositor an in- 
 terest upon the balance in hand, so that if he only places 
 five pounds in the bank he gets interest upon it from the 
 day he deposits it ; or if he draws out five pounds he only 
 loses interest upon it from the day of its being withdrawn. 
 This convenience, and that of the parties being themselves 
 able to receive the interest for it on the spot, without 
 powers of attorney or other legal proceedings, renders the 
 banks a favorite place of deposit, more especially for small 
 sums, — say not exceeding two hundred pounds. These on 
 the aggregate, however, form a larger amount, — it is said at 
 least twenty millions, of which more than two-thirds is in 
 the hands of the five principal banks ; and it is a curious fact, 
 indicative of the permanency of these deposits, that though 
 the banks have, since the war, reduced the interest they 
 give, from 4 to 2 per cent., it has had little or no effect in re- 
 ducing the amount of the money thus lodged with them. 
 
 Having thus, at all times, a very large amount of money 
 which they can calculate upon never being materially 
 reduced, either from panics or any other cause, their 
 object is how to make the most of it. The private banker, 
 who is continually expecting runs, can only advance money 
 by discounting commercial bills, such as he can re-discount, 
 should any sudden demand upon him arise. But the 
 Scotch banks are not thus constrained ; they can lend 
 money in any way most conducive to their interests, and 
 are in the habit of advancing it upon what are termed cash 
 accounts. Any farmer, or any person in trade, by either 
 finding two sureties, or any security that is good, may open 
 an account with a bank and overdraw it to the extent of the 
 security given, for which he is charged 4 per cent, on the 
 balance he owes, he being allowed, within the limits pre- 
 scribed, to increase or diminish it as he thinks proper. 
 
 The money thus advanced is the best employed capital 
 in Scotland. It is chiefly lent to the prudent and indus- 
 trious, who borrow it when they are poor and repay it as 
 they become rich. It continually irrigates a large amount 
 of skill and industry with capital, which would in a great 
 degree be sterile without it, and is thus always productively 
 engaged. 
 
 This, however, is what in England is called illegitimate
 
 8 
 
 l)anking ; but in Scotland it is the most legitimate of any, 
 not only for the country, but for the banks, as they hardly 
 ever make a bad debt by it. It would, no doubt, be illegi- 
 timate with private banks in England, because it would lock 
 the money up, so that it could not be obtained at a short 
 notice in the event of a panic. The only legitimate bank- 
 ing by the private banks in England is to lend money on 
 bills, or employ it in the purchase of government secu- 
 rities. In either way, should it be wanted, it can be had 
 again on a short notice ; and those banks that do not strictly 
 adhere to these modes of employing their money very 
 generally repent it. 
 
 The English system gives rise to fluctuations in the 
 currency which a Joint Stock system would in a great 
 degree prevent. — This necessity of making advances in the 
 country upon bills only, does not merely deprive the com- 
 munity of the advantages derived in Scotland from the 
 system of cash accounts, but is also, as regards the cur 
 rency, attended with other more serious evils. 
 
 The general prices of commodities are determined by the 
 quantity of money in circulation, and the amount of the 
 currency cannot be increased or diminished without a cor- 
 responding alteration in the value of property. This ap- 
 plies, more particularly in these kingdoms, to the currency 
 of the country banks, by the medium ot which five-sixths of 
 the production and consumption of the nation is carried on. 
 The Bank of England circulation, though great in amount, 
 is chiefly employed in the higher departments of circula- 
 tion. It has a less immediate effect upon the value of 
 labour and commodities which enter into the cost of pro- 
 duction, and by which the general value of all things is 
 viltimately determined. 
 
 Now, the Bank of England, in dealing with the public, 
 confines itself to discounting commercial bills, the same 
 as the country banks ; but when it has not a sufficient de- 
 mand for money upon such bills, to keep up its circula- 
 tion, it does so by purchasing exchequer bills. The same 
 with the private bankers in London. The money de- 
 posited with them, which they cannot lend out at 4 per 
 cent., they return into circulation, either by purchasing- 
 exchequer bills or stock, or perhaps more frequently 
 by lending it upon the security of stock, at the best 
 interest they can obtain. This is frequently not more
 
 9 
 
 than 2 per cent., though they can always obtain one 
 rate of interest or another. In London, conse<(uently 
 tlie system pursued by the banks, of only advancing 
 money to their customers upon bills, is productive of no 
 evil, because they have the Stock Exchange to resort to, 
 by which to keep up the circulation to its proper level, 
 when the demand for money upon bills at 4 per cent, is 
 not sufficient for that purpose. But in the country, if the 
 private banks cannot lend money upon commercial bills, at 
 the rate of interest they charge, they cannot lend it at all, 
 and their issues must be contracted in consequence. To 
 this cause, it is not improbable, may be attributed the 
 great fall of prices, and the agricultui-al and other distresses, 
 which took place between the years 1818 and 1823. 
 The Bank ot England, during all that time, had hardly 
 any commercial bills offered for discount, and was obliged 
 to keep up its circulation by purchasing Exchequer bills, 
 and making advances on mortgage ; while the private bankers 
 of London, like the Bank of England, were obliged to re- 
 sort to the purchase of Exchequer bills, or loans upon stock, 
 to employ the greater portion of their funds. Now in the 
 country commercial bills were equally scarce, and the 
 banks not having the power of issuing their notes in the 
 purchase of, or in loans, upon Government securities, a 
 great contraction of their issues, in consequence, took place. 
 They were supposed to have been reduced nearly one-half, 
 while the Bank of England kept up its circulation, in gold 
 and paper together, as high as before *. 
 
 With joint stock banks of great credit the case would be 
 different. Being enabled to lend upon permanent securities 
 they could keep up their issues by loans of money on mort- 
 gage. Sec. to parties who could employ it. For instance, the 
 Scotch l)anks at that period, amongst other means of keep- 
 ing up their issues, made great advances to builders -f*. 
 
 • Many intelligent persons supposed, at the time, this fall to have 
 heen produced by over production and glut; but it seems now very 
 generally thought to have been chiefly caused by a conlraclion of the 
 cuiTency ; and if so, there can be little doubt that we owe it principally 
 to the feebleness of our banking system as thus described. 
 
 f The Scotch banks, no doubt, contracted their issues at this time 
 also ; but this they were compelled to do by the English banks. The 
 English circulation, being so much the greatest, governs that of Scot- 
 land by means of the internal balance ot trade and payments, though 
 the efforts of the Scotch hanks would retard the contraction generally. 
 
 (•
 
 10 
 
 The country banks of England in short ought to be the 
 most powerful of joint stock companies. They ought not 
 to be deterred by any want of credit from lending money, 
 when they have it to lend, in any way in which there may 
 be a demand for it, in order to make up for the want of 
 that power possessed by the Bank of England, of issuing 
 its notes in the purchase of Exchequer bills. This ought 
 likewise to be more particularly the case in districts, where 
 the agriculturists, who have no bills to discount, are the 
 only borrowers, and who can never borrow with advan- 
 tage to themselves except they be allowed their own time 
 for repayment. Whereas, on the contrary, in a majority 
 of cases, the banks in these districts are of the weakest de- 
 scription. The extent of business done and profits made are 
 not sufficient to induce people of large capitals to under- 
 take the trade. It is, consequently, pursued by parties 
 of very limited property and credit, who, for their own se- 
 curity, are obliged to confine themselves to the narrowest 
 principles of private banking. 
 
 The establishment of powerful joint stock banks is, of 
 course, the remedy for these evils, and the good they would 
 effect may be thus enumerated : 
 
 1st. They would prevent failures, by which the public 
 have, in the last forty years, lost fifty millions, at least, if 
 not twice that amount, besides the distress, misery, and 
 mortality, with which the loss has been accompanied. 
 
 2d. They would prevent general panics, and the evils 
 which follow in their train, of which some conception may 
 be formed, when it is considered that, independent of the 
 bank failures consequent on the late panic, it is probable 
 that we suffered even more from it, than from the accumu- 
 lated losses resulting from the thousand banks which have 
 failed in the last forty years. 
 
 3d. It would prevent contractions of the currency, arising 
 from the feeble credit of our system, which it is highly pro- 
 bable, was the cause of the agricultural distress of 1819, 
 20, 21, and 22, as well as the manufacturing and commer- 
 cial distresses of the same period. 
 
 It may also be remarked, that it has been supposed that the circulation 
 of the Bank of England governs that of the rest of the kingdom. But 
 this has been disproved by experience, and in no instance more 
 strikingly than the one in question.
 
 11 
 
 4tli. It would be the means of introducing capital, and 
 supplying it to those who can turn it to good account ; and 
 as agricultural capital has been very much destroyed of late 
 years, and the productiveness of the soil has suffered in a 
 corresponding degree, the introduction of these banks 
 would help to supply the deficiency of capital, and restore 
 cultivation to its former state.
 
 12 
 
 THE RISK INCURRED BY, AND PROFITS DERIVED FROM, 
 THE ESTABLISHMENT OF JOINT STOCK BANKS. 
 
 In order, however, to establish joint stock banks, it is 
 necessary that the pubhc should subscribe to them ; and 
 the next point to examine is, the advantages they offer to 
 induce the public to do so, as well as the probable disposi- 
 tion of the public upon the subject. 
 
 In this examination, there are two points to be consi- 
 dered ; first, the risk which is incurred, and next, the pro- 
 fits that may be expected, as a compensation for the risk, 
 and — 
 
 1st. Js to the risk. — This is generally inferred to be 
 considerable. Numerous instances may be pointed out of 
 large fortunes having been made by banking ; but, on the 
 contrary, instances almost as numerous may be pointed out 
 of large fortunes having been lost. Many banks indeed 
 have failed, whose deficiencies would have swallowed up the 
 capital of some of the largest of the joint stock companies 
 now extant. Hence, banking is considered a trade of great 
 risk and danger to the capital embarked in it, on the one 
 hand, though it may frequently prove very profitable on 
 the other. But this is an error. Banking is by no means a 
 hazardous trade, under a proper system. Coach travelling 
 would be attended with great risk if the coaches were bad, 
 and the coachman did not possess the requisite knowledge 
 of driving. But we trust ourselves in a coach with great 
 confidence, because we are satisfied that care has been taken 
 to have good coaches, and steady and experienced drivers. 
 Now, if the same care were exercised in forming a bank, 
 with a suitable capital for the business it undertakes, as is 
 thus employed in fitting a coach for the services it has to per- 
 form ; and if the same prudence and attention were devoted 
 to choosing its managers, and seeing that they do their 
 duty, as is usually given in choosing a coachman, and 
 seeing that he does his, banking would not merely be at- 
 tended with less risk tlian coach travelling — to which we 
 daily trust our lives without apprehension — but would be 
 attended with no risk whatever. 
 
 Banking need never be attended with any very serious
 
 13 
 
 loss. Its profits are not intended to cover much risk, and, 
 as a general rule, bankers are not expected to run any ; 
 while, with proper discrimination, they are easily preserved 
 from doing so. Small banks, in country places, frequently 
 go on for years without a bad debt. An agent for a 
 Scotch bank, who discounted about ^£^200,000. per annum, 
 never made a bad debt during his agency ; and when this 
 fact was mentioned by the manager of the establishment he 
 had been an agent twenty years. Even a city banker 
 might be mentioned, who, in twenty years, never made a 
 bad debt of i?500., notwithstanding he more than doubled 
 the business and connexions of his house in the time ; 
 which, of course, implied, that he was a liberal as well as a 
 prudent banker. Indeed the most discriminating bankers 
 are, in general, the most liberal, for they know when to be so. 
 To be safe, however, is not difficult. It was once remarked 
 by the intelligent banker in question, more in joke no doubt 
 than in earnest, that a man might do very well for a banker 
 if he were but stupid and selfish. At all events it requires 
 a degree of prudence and judgment to be a good banker, 
 which all men do not possess ; and it is difficult to deter- 
 mine, without a good deal of previous knowledge of an in- 
 dividual, whether he be fit to manage a bank or not. Yet 
 many persons are placed in the management of private 
 banks, not only whose fitness has never been properly as- 
 certained, but whose management is never looked after by 
 his partners. It frequently happens, consequently, that 
 such persons mismanage ; get themselves and the bank in- 
 volved in difficulties; and, finally, ruin the concern, and 
 all connected with it. It must, however, be remarked, 
 that this generally takes many years to do : that, not only 
 are large fortunes never lost ni banking at once, but that 
 they are hardly ever lost at any time by a fair and legiti- 
 mate accumulation of bad debts. The failure of a bank is 
 generally a thunder-stroke to the public. But if the de- 
 ficiency be considerable, it has seldom taken less than ten or 
 a dozen years of folly, and frequently of fraud also, to ac- 
 complish it ; and often a much longer period. 
 
 With joint stock banks, on the contrary, no accumula- 
 tion of losses can occur. Being managed by directors of 
 property and respectability, who annually make an exjio- 
 sition of its affairs, a bank would be given up long before
 
 14 
 
 Its losses could amount to any thing very considerable. 
 Those who have traced the causes which have led to the 
 failures of private banks, have generally admitted that 
 these causes either never could have existed at all, with 
 properly constituted joint stock banks, or, otherwise, 
 never could have led to the same results. The evil would 
 have been met and strangled at the outset by, at all events, 
 the dissolution of the bank, if not by other means. 
 
 This, indeed, would be the interest of the directors 
 themselves, who, being shareholders, could gain nothing 
 by pursuing an unsuccessful trade ; while they would not 
 only lose their property, but their credit with the world, 
 by attempting it: and an honourable distinction is, in 
 general, one of the chief motives for people undertaking 
 the trouble which the management of banks involves. Per- 
 sons, however, are generally chosen directors of joint 
 stock banks for their commercial knowledge and known 
 prudence, — men who have attained experience in life, and 
 who have succeeded in the management of their own af- 
 fairs ; or, at all events, there are a portion of such men in 
 every direction, to whom the shareholders more particu- 
 larly look for the establishment being properly conducted. 
 When two or three of these men agree in the propriety 
 of any transaction there is seldom any risk in it, and if the 
 trade will yield a profit, they rarely fail to make it do so. 
 They, likewise, take care to be assisted by officers of com- 
 petent talents and experience, who could manage the bank 
 without them if it were necessary, so that there is little 
 risk of the management being bad ; and, with good manage- 
 ment, there is nothing to apprehend. 
 
 Banking is thus a safe business in proper hands ; and 
 the difference between a joint stock bank and a private 
 bank is, that Avith the former a proper choice of managers 
 is invariably made, but not with the latter. Hence, in- 
 stead of some of the joint stock banks making a great 
 deal of money, and others losing a great deal, as is the 
 case with private banks in England, they generally make a 
 pretty uniform and steady profit, and corresponding divi- 
 dends. This, at least, is the case with the larger establish- 
 ments, as may be seen by the price of their respective stocks. 
 The following, for instance, is a list of the dividends paid 
 by the five great Scotch banks, the market prices of their
 
 15 
 
 stocks, and the value which 3 per cent, of their dividends 
 is worth at such market price. 
 
 Bank of Scotland 
 
 Royal ditto ditto 
 
 Commercial ditto ditto 
 National ditto ditto ... 
 British Linen Company 
 
 Amount of 
 Capital. 
 
 £. 
 
 1,500,000 
 
 1,500,000 
 
 600,000 
 
 500,000 
 
 500,000 
 
 Total ... 
 
 Dividends 
 per Cent. 
 
 Price of 
 the Stock 
 per Cent. 
 
 6 per cent. 177 
 6 per ditto 1 56 
 6 per ditto 159 
 5 per ditto 136 
 8 per ditto 242 10 
 
 £31 
 
 £870 
 
 Price of 
 3 per Cent. 
 
 of each 
 Dividend. 
 
 88-10 
 
 78 
 
 79-10 
 
 81-12 
 
 90-18 
 
 Average 
 
 £83-14 
 
 The above is from WetenhalPs list of the 27th IVTay, 
 1831, on which day the highest price of the 3 per cent, 
 consols was dC83. and a fraction. Thus, on the average, 
 the stock of the Scotch banks is as high as the stock of go- 
 vernnient. 
 
 The dividends of these banks, it must also be observed, 
 greatly depend upon the annual profits derived from their 
 respective trades ; more especially the three last. The 
 capitals of these will, at 4 per cent, yield, two of them 
 d£'^0,000. each, and the other one =£'24,000. independent 
 of their trade. But they have large and expensive establish- 
 ments in Edinburgh, and someway about thirty branch 
 establishments each ; so that their standing expenses to be 
 paid, whether they make any profit or not, cannot be less 
 than from 20 or .£'30,000. each, or at all events, not less 
 than the amount of interest they derive from their capitals. 
 Their standing expenditure being thus at least equal to 
 their standing income, their dividends must be exclusively 
 paid out of the annual profits of banking, which it is ob- 
 vious, if it were a hazardous business, could never be done 
 with that certainty which is calculated upon. 
 
 It should, however, be observed, that these companies 
 must be instituted in places where proper directors are to 
 be had, and be on a sufficiently large scale to pay the ex- 
 pense of a proper establishment, and a ])roper system of 
 checks, in order to afford this certainty as to the annual 
 returns. If the machine be not rightly constructed, there 
 cannot be the same security for its working well. In Scot- 
 land, within these last few years, two small Ijanks have
 
 16 
 
 suffered each a very considerable loss from want of sucli a 
 system of checks, and such a board of dh-ectors. They 
 were established in small places, where proper commercial 
 men for directors, were not to be had. An incompetent 
 direction was, consequently, in each case formed, who, in 
 both cases, left the management to the principal officer of 
 the establishment without looking properly after him, and, 
 in both cases he was led to speculate, and make away with 
 the bank'^s money. If these banks had been branches of a 
 larger establishment, this could not have occurred. Ac- 
 counts would have been sent to the parent bank of the state 
 of each branch, and an intelligent inspector have been sent, 
 from time to time, to see that all was right, and that the 
 accounts furnished gave a faithful view of the actual state 
 of things. This he would, from his practical experience, 
 be able to discover without difficulty. That which would 
 blind the eyes of an inexperienced director would open his. 
 In short, subject to such inspection, fraud would rarely be 
 attempted, and could never succeed. But the temptation 
 which the uncontrolled command of money affords, cannot 
 always be resisted, even by parties who, without such temp- 
 tation, would have done well, both for their employers and 
 themselves. The larger establishments have also occa- 
 sionally lost money by the fraud of agents, but not of late 
 years, and never to affect their dividends. The system 
 of accounts and management now employed render such 
 losses extremely improbable, if not impracticable. 
 
 Hence, our remarks must be considered as exclusively 
 applicable to large establishments, where the joint stock 
 system of management exists in its greatest perfection, — 
 where a division of labour, practical intelligence, clear ac- 
 counts, and a fair share of judgement and experience, as 
 well as integrity, must, in the nature of things, be applied 
 to the management, and where proper checks are pre- 
 served without effort, as a part of the machinery of the 
 system. 
 
 Now, government securities bring their present prices 
 in the market, because unbounded confidence is reposed in 
 the resources, the good faith, and the stability, of the go- 
 vernment ; and no doubt is entertained of the payment of 
 the dividends. The 3 per cents would not sell at 83, if any 
 apprehension was entertained that the interest would be 
 reduced from 3 to 2 per cent., from inability to pay more.
 
 17 
 
 And it is precisely for the same reason, that the stocks of the 
 Scotch banks sells as as high as the stocks of Government. 
 Not only have all the five banks referred to continued to 
 pay dividends from their first establishment (two or three 
 of them having been in existence for upwards of one hun- 
 dred years), but no apprehension is entertained that the 
 dividend will, hereafter, be reduced in any degree. They 
 have been diminished since the war, and are now considered 
 to be at the peace level ; yet, if the trade was one of great 
 hazard, this confidence could never be felt. 
 
 It must be likewise observed, that we are now consi- 
 dering, not merely the risk of making profit^ but the risk of 
 losing the capital. The public have been so much in the 
 habit, as before observed, of seeing large fortunes swallowed 
 up by banks, that they do not subscribe their money to any 
 institution bearing the name, without apprehending the 
 possibility, at least, of a similar result. But when we see, 
 in a long succession of years, that the larger joint stock 
 banks have not only never been ruined, but have always 
 been enabled to divide a greater or less amount of profits, 
 we must be satisfied that these apprehensions, however 
 just as applied to private banks, are, with respect to such 
 institutions, quite unfounded ; and we may, therefore, con- 
 clude, that if banks of a similar description be established 
 there can be no danger whatever in subscribing to them. 
 
 2d. Wilh respect to tlie profits derived J'roin Joint Stock 
 Banks. — Having thus shown that tljcre is no danger in 
 subscribing to joint stock banking companies of a given 
 magnitude, we sliall next consider the profits that may be 
 expected from them. 
 
 In subscribing to a new undertaking, the object, in 
 general, is not only to obtain a good interest, but to im- 
 prove the ])rincipal sum embarked. This, in a bank, if it 
 be successful, the subscriber is enabled t(} do by selling his 
 share or interest in the concern. Such, indeed, is his only 
 mode of retiring from it ; and few peo])Ie will have any 
 connexion with a connnercial undertaking whicli they do 
 not expect to retire from with the advantage. Hence, in 
 subscribing to a new bank, the public are led to consider 
 the jiro^jable future price of its stock, the same as they would 
 that of an estate, or any other thing in which they embarked 
 their capital, not for the sjikc of income alone, but in anti- 
 cipation of again selling it. In forming a bank, also, 
 if there be any risk of loss, they nni it, and they an^ en- 
 
 D
 
 18 
 
 titled to any gain, on the other hand, that may be the 
 result. Hence, with reference to the formation of banks, 
 we are necessarily led to consider the price at which their 
 stocks are likely to sell after they are formed. 
 
 In this respect the present appears to be a very favor- 
 able time for their establishment, even much more fa- 
 vorable than during the war, when the profits of banking, 
 like all other profits, were much higher than they ai'e at 
 present. This will be evident upon reference to the fol- 
 lowing account of the price of stock, and of the amount of 
 the dividends of the Bank of Scotland, since the year 1810. 
 
 Dividend upon paid up Price of the Stock per cent. 
 
 Capital. on paid up Capital.* 
 
 £. s. d. 
 
 In 1811 7^ percent 169 16 
 
 1812 7^ — 169 11 
 
 1813 71 — 165 19 
 
 1814 7.^ — 171 
 
 1815 7.^ — 167 8 
 
 1816 7.^ 8i— 167 8 
 
 1817 8^91— 201 4 
 
 1818 9| — and a bonus of 20 percent. 255 14 
 
 1819 9', — 243 
 
 1820 9 A — 239 10 
 
 182191 — 237 4 
 
 1822 9i — 247 13 
 
 1823 9^8 — 233 10 
 
 1824 8 — 242 1 
 
 1825 8 — and a bonus of 20 per cent. 262 
 
 1826 8 — 229 19 
 
 1827 6 — 209 8 
 
 1828 6 — 207 12 
 
 1829 6 — 207 12 3 
 
 1830 6 — 205 5 8 
 
 The Bank of Scotland, it must be observed, never pays 
 its dividend out of any fund except income legitimately de- 
 rived from the interest of its capital, and from the profits of 
 banking. But during the war, the Bank, from the high 
 rate of interest obtained, was induced to invest laVgely in 
 
 "* The price of the stock of this bank, in the Stock Exchange lists, is 
 quoted at its price per share, upon whicli £83. 13s. 4d. has been paid. 
 The dividend, however, is given as above stated.
 
 19 
 
 Government securities. From the sale of these, a ^reat 
 profit was reahzed on tlie return of peace, which the Bank 
 divided, by giving its shareholders the two bonusses of 20 
 per cent, above mentioned ; and the dividends now paid, 
 are derived from the interest of its capital and profits of 
 banking annually made, the same as during the war. 
 
 A similar scale of prices and dividends of the other 
 Scotch banks that are governed by the same principles, 
 would show the same results. 
 
 It is thus seen, that though the dividends are now 20 
 percent, less than in 1811, a period when banking was 
 considered to be in its most flourishing state, the price of 
 the shares are nearly 20 per cent, higher. Hence, to the 
 shareholders, banking is, in the market, more valuable now 
 than it was then. A person concerned in forming a new 
 bank, in which he will obtain his shares at par, may expect 
 to make 20 per cent, more by the sale of them. 
 
 We have, however, much more direct proof of the advan- 
 tages likely to result from the formation of banks in Eng- 
 land in the success of those which have been already 
 formed. In 1826, immediately after the panic, the Go- 
 vernment, as is well known, obtained from the Bank of 
 England its concurrence to an Act of Parliament being 
 passed to enable joint stock banks to be established at a 
 distance of not less than sixty-five miles from London. 
 
 It was some little time, however, before banks began to 
 be established under this Act, and the first were formed 
 with difficulty. Three out of the first four did not obtain 
 subscriptions for more than two thirds of their capitals, and 
 it was, in each case, a question of much doubt whether they 
 should be able to obtain subscribers sufficient to enable them 
 to go on. Their success, however, exceeded all expecta- 
 tion : for within two years after their establishment, sales 
 of their shares were made at the following premiums upon 
 the capital paid up. 
 
 The Lancaster liank Shares sold at 100 per cent. prem. 
 
 The Huddersfield Bank do 50 do. 
 
 The Bradford Bank do 50 do. 
 
 The Norwich Bank do 50 do. 
 
 This was the result of actual success. In the first in- 
 stance their shares were unsaleable, and a forced sale at 
 least, could only have been made at a discount. Tlicsc
 
 20 
 
 premiums have since varied : the shares of the Lancaster 
 bank have fallen to 60 per cent, and the Norwich have 
 also fallen ; but the Huddersfield have risen considerably ; 
 and the last sale of the shares of the Bradford bank were 
 made at 130 premium ; so that, upon the average, they 
 have been maintained. 
 
 Banks, however, since then have, in a majority of cases, 
 been subscribed to with great eagerness when people of 
 respectability were found to form them. Eight or nine 
 more have consequently been established, and it is under- 
 stood that the shares of all of them sell for a greater or less 
 amount of premium. The following may be quoted as the 
 premiums of some of them. 
 
 The Birmingham Bank 120 percent. 
 
 The Halifax Bank 50 per cent. 
 
 The Workington Bank 50 per cent. 
 
 The Manchester Bank 25 per cent. 
 
 &c. &c. 
 
 Now none of these premiums have been given in antici- 
 pation of success, and, in general, they have risen gradually, 
 each succeeding sale being at a higher rate than the last. 
 
 After this, little further need be observed upon the 
 benefits to be derived from forming joint stock banks in 
 England, to those who form them 
 
 These banks, it may likewise be observed, for the most 
 part, have had no peculiar advantages. They in general have 
 had very powerful old established private banks to compete 
 with, and yet have succeeded in this extraordinary manner. 
 In Norwich, for instance, where the private banks are ex- 
 tremely popular and powerful, one recently gave up busi- 
 ness, and two thirds of its customers, notwithstanding the 
 superiority of the private banks they had the option to deal 
 with ; transferred their accounts to the joint stock company. 
 Having made, however, a considerable bad debt, its shares 
 do not at present bear the premium they did, though the 
 bank will not sell what it holds itself, at less than 50 per 
 cent,, the premium which they have hitherto borne.
 
 21 
 
 THE NECESSITY FOR METROPOLITAN INSTITUTIONS. 
 
 The limited number of Joint Stock Banks formed, com- 
 pared with the openinir for them. — The joint stock banks 
 which have been established under the Act of 185^6, have 
 cliiefly been so in principal towns ; but they can flourish, 
 more especially in agricultural districts, where private 
 banks cannot exist. 'I'heir superior credit enables them to 
 obtain deposits at a lower rate of interest on the one hand, 
 and lend them out again at a higher rate of interest on 
 the other. They thus have the power of making profits 
 where the private bank can make none. For instance, the 
 shares of the Workington Bank are at 50 per cent, pre- 
 mium, though it is instituted where there had not been a 
 private bank for twenty years : it being, in that respect, 
 an exception to the other establishments. In Scotland, 
 also, the convenience of banking is extended to numerous 
 districts, where private banks could not clear their expenses. 
 In proof of which, it may be also mentioned, that in the 
 little village of Coldstream, known to most northern tra- 
 vellers as being situated, in an agricultural district, on the 
 borders of Scotland and Northumberland, there is a branch 
 of one of the principal Scotch banks, which does more 
 banking business than is transacted in any town of that 
 extensive county, except Newcastle and Shields ; although 
 there are several other towns that would afford five times 
 the business of Coldstream, to establishments on the same 
 system. 
 
 It may be hkewise observed, that a public bank would 
 be considered in a flourishing state with an amount of 
 profit which a private banker would consider tantamount 
 to doing business for nothing. If a joint stock bank, with 
 d£'100,000 capital, paid a dividend of 5 per cent., although 
 the shareholders were liable, the same as in a private bank, 
 to the whole extent of their property (or the debts of the 
 concern, the shares would not sell for less than iiO or 30 per 
 cent, premium, and the bank would be considered to be doing 
 well; but if an individual were to embark 1' 1 00,000 ca- 
 })ital in a private bank, and risk a large fortune in it besides,
 
 22 
 
 he would think himself very poorly compensated indeed, if 
 he could not draw more than £5,000. per annum from it: 
 that is, not more than ^£'1,000. per annum above the com- 
 mon rate of interest, for his capital, as a compensation for 
 all the labour, the risk, and the anxieties of the business. 
 
 It must thus be obvious, that joint stock companies can 
 at once do with less, and make more profits, than private 
 banks, and that consequently, the one must, in a great 
 degree, supercede the other, wherever they are brought 
 into competition. 
 
 This, at least, will be the case in the smaller towns 
 where private banks are not so wealthy and powerful, and 
 also in agricultural districts. In large towns they will 
 still be able to maintain themselves ; for many persons, 
 more especially amongst the more wealthy classes, unques- 
 tionably prefer the greater secrecy and civility to be met 
 with from them. In Edinburgh, for instance, Sir Wm. 
 Forbes and Co., a private bank, does as much business, if 
 not more, than any of the public companies ; and there are 
 several other private banks, who each have a very consi- 
 derable business. Thus, in large towns, the business will 
 only be divided with, but in small places it will be ab- 
 sorbed by, joint stock banks. Hence, it is, sufficiently 
 obvious, that wherever there is a private bank, there is an 
 opening for a joint stock company, or branch of one, as 
 also in many other places, where there is at present, no 
 bank at all. Now there are upwards of four hundred 
 places, in England and Wales, which possess private 
 banks; yet notwithstanding this, and the great encou- 
 ragement which the success of those already established 
 holds out to induce the public to form them, not more than 
 a dozen, or say with branches, about twenty places have been 
 occupied by them ; and these, as before mentioned, chiefly 
 large towns, where private banking exists in the greatest 
 perfection, and where improvement is the least required. 
 
 The reason why so few Joint Stock Banks have been 
 formed. — Nor does this arise from any want of disposition 
 in the public at large to subscribe to them ; although they 
 have in general been formed with small capitals, and the 
 shareholders are personally responsible for their engage- 
 ments, should their capitals prove insufficient for the public 
 security. On the contrary, all those which have been re- 
 cently instituted have been subscribed to with the greatest 
 avidity. But the public naturally wish, and expect to see, 
 persons of considerable respectability at the head of them,
 
 23 
 
 before tliey will undertake this responsibility, and such per- 
 sons are slow in coming forward. 
 
 This arises from two or three causes. First : They 
 have not always the requisite information and knowledge 
 how to proceed. In the next place, many are deterred by 
 the persona] responsibility which is involved ; and in the 
 third place, all the leading and wealthy persons in towns, 
 are more or less intimate, and friendly with the existing 
 bankers, and do not wish to take a lead in any measure 
 that may be injurious to them, notwithstanding the impera- 
 tive call there is for such institutions. 
 
 Indeed this feeling, which is one in favor of the rich 
 against the poor, is very general, even with those who 
 ought to be governed by other principles, especially in a 
 matter of such importance to the general welfare. Indeed, 
 the argument in favor of the existing system is, that the 
 bankeis generally, are rich. If they were poor, it is uni- 
 versally admitted that they vvould be entitled to no consi- 
 deration ; but as they are rich — the ruinous effects pro- 
 duced by fluctuations in the currency — the evils caused by 
 a thousand failures — the desolation of repeated panics, and 
 tlie bursting of ten thousand hearts, are nothing, in the 
 opinion of some, to the injustice which has been inflicted 
 upon them, in questioning the fitness of the system from 
 which these evils have sprung. Neither would a change of 
 system be injurious to those who are really dependent upon 
 the present one, whether as clerks or acting partners. New 
 banks never desire to start with inexperienced persons, in 
 any department ; and the new system would cause a much 
 greater demand for such persons than the old one : their 
 services would be as desirable and as valuable, and be fully 
 as well compensated, as they are at present. The effect 
 would chiefly be to diminish the profits of the rich and in- 
 dependent bankers, many of whom, no doubt, might be 
 induced in consequence, to retire from the trade altogether. 
 
 Metropolitan lufititut'tons the best means of effecting the 
 improvement. — At all events it must be obvious, from the 
 slow advance already made in the establishment of joint 
 stock banks, that no great dependence can be placed upon 
 the local efforts of individuals, in promoting their forma- 
 tion. The impulse must evidently be given from a dis- 
 tance, and London is the place from which it ought to 
 proceed. The best banks in Scotland are metropolitan 
 institutions, which spread themselves over the country l)y
 
 24 
 
 means of branch establishments ; and thou^jh there are local 
 joint stock banks in the chief provincial towns of that 
 country, similar to those which have been formed in Eng- 
 land, they were not instituted until the chartered banks 
 had first established branches in these places. It was like- 
 wise not before the provincial bank of Ireland, a London 
 company, had established branches in Ireland, that any 
 local joint stock banks were formed, or any other steps 
 taken to practically improve the banking system of that 
 country. 
 
 Hence, it is by metropolitan institutions that the im- 
 provement must be brought about. In Belfast, for instance, 
 as soon as the Provincial Bank of Ireland and the Bank of 
 Ireland formed branches there, the two private banks of the 
 place formed themselves in joint stock companies, the richer 
 partners retiring, and the acting partners making very ad- 
 vantageous terms for themselves by the arrangement ; and 
 the same effect would no doubt be produced in England. 
 Indeed, in many places, the banks would be very glad to 
 give up their business to the brancth of any joint stock 
 bank that would take it off their hands ; for the business 
 of many bankers has ceased to be worth pursuing, and the 
 difficulty of winding up a banking businesss is very con- 
 siderable. 
 
 Hence, if local banks were most desired, the formation 
 of metropolitan establishments, in the first instance, wouhl 
 be the best means of introducing them, 
 
 I'he Banks rchicli liaic been farmed of the worst descrip- 
 tion. — As has been before observed, the mcjst powerful of 
 joint stock companies are necessary, in order to ct)nduct the 
 banking business in the country parts of England, on the 
 principles most conducive to the interests and safety of the 
 public. Whereas, those which have been formed are in 
 general of the worst description of such establishments : 
 the great majority of them not having more capital than 
 from thirty to fifty thousand pounds. 
 
 Sjjch banks not being able to pay the expense of a proper 
 system of checks, and possessing a more confined know- 
 ledge on banking subjects, are at once more liable to loss, 
 and less able to bear it. While, on the other hand, with 
 such small capitals, they could never conduct their opera- 
 tions upon any broad scale of public accommodation. With 
 resources so limited, they must, like private banks, keep 
 their funds more within their reach ; and in agricultural
 
 25 
 
 districts, where banl<ing accommodation of a permanent 
 description is so much required, such banks would be 
 unable to afford it on the principles and to the extent neces- 
 sary. For the same reason they would be unable to pre- 
 vent contractions of the currency. As has been before 
 observed, they must not, for this pin-pose, be deterred from 
 lending money upon any good security that the public may 
 have to offer, when a sufficient demand for it is not found 
 to exist, in the ordinary channels — a mode of dealing which 
 these banks could never adopt, whatever might be the ne- 
 cessity for it. Neither, on the other hand, does the insu- 
 lated position of such banks afford them the information 
 requisite to govern themselves in checking any undue 
 enlargement of their issues, when the demand for money, 
 at the current rale of interest, exceeding the supply, causes 
 a tendency to such undue enlargement, and renders the ex- 
 ercise of an intelligent and judicious control over their 
 operations, necesssary. 
 
 In short, though these banks, as in Scotland, may do 
 very well if the system be upheld by more powerful estab- 
 lishments, yet, unsupported by such institutions, they 
 would, however general, not be productive of the benefit 
 required. Neither would it be proper to term the exclu- 
 sive introduction of such establishments an adoption of the 
 Scotch system, as three fourths of the banking business 
 of Scotland, or at least of that part possessed by the joint 
 stock companies, is in the hands of the metropolitan banks 
 and their branches. The smaller banks are rather the 
 exception than the rule. Properly speaking, the Scotch, 
 is a system of metropolitan establishments. 
 
 The amount of capital possessed by these banks, it may 
 also be observed, though very inadequate in their present 
 form, would have been very ample, had they consisted of 
 one comj)any. With a large establishment, a much smaller 
 amount of ca|)ital is requisite than with a number of small 
 ones. The British Linen Company is a chartered bank, 
 and its shareholders are not personally responsible for its 
 engagement. It has also about twenty-five establishments ; 
 and if its capital were equally divided amongst them, it 
 would give <i?2(),000. to each — a sum totally inadequate to 
 sustain the credit of the least of its branches ; yet, united, 
 its capital is amply sulHcient for any business it can obtain. 
 But it would take two or three n)illions of capital to com- 
 mand the credit necessary for the business transacted, were 
 
 E
 
 26 
 
 each branch an independcn^t company. So with the banks 
 formed. United, their capitals would be ample, but, at 
 present, they are totally unequal to the duties which, it is 
 the interest of the public, they should be able to perform. 
 
 Under whatever view, therefore, the subject be consi- 
 dered, metropolitan banks are the proper establishments by 
 which to effect the improvement required. Whether it be 
 as a means of stimulating the formation of local banks in the 
 country ; or of supporting those already formed ; or of 
 giving accommodation to the country by a better system of 
 dealing; or of applying the largest amount of credit to the 
 business of banking, with the smallest amount of capital, as 
 in Scotland — a system which is not only the best, but must, 
 in the end, be the cheapest for the country. 
 
 Besides this, such banks are required as a stay and sup- 
 port to the existing private bankers, who will never be alto- 
 gether superseded, and whom it is, consequently, desirable 
 should be upheld. A great source of embarrassment to 
 private banks, in periods of difficulty, results from their 
 having to apply to London for assistance. If they could 
 obtain it on the spot, which will be the case when metropo- 
 litan establishments have formed branches in their respec- 
 tive neighbourhoods, it will enable them to do business on 
 much less confined terms, and more successfully maintain 
 themselves against the competition they will have to en- 
 counter. Nor will such assistance ever be refused, or nig- 
 gardly afforded : for, independent of the rivalry of such 
 institutions towards private banks never being a jealous one, 
 they consider themselves the conservators of public credit, 
 and bound at all times to take the most efficient means of 
 preventing the embarrassments resulting from panic. 
 
 Thus, in every point of view, metropolitan institutions 
 are the institutions required.
 
 27 
 
 THE PLAN OF A NATIONAL ESTABLISHMENT FOR COUNTRY 
 BANKING, PROPOSED AND EXAMINED. 
 
 As a metropolitan system is thus the one required, the de- 
 sired improvement must, of course, be introduced by the 
 formation of a bank upon tliat system ; and the plan to be 
 adopted is the next subject of consideration. The object, 
 must be to form as complete an establishment as pos- 
 sible ; and, in doing this, we must not make an implicit, 
 but an intelligent use of the experience derived from exist- 
 ing institutions. We must not adopt their plans without 
 analizing them, and seeing how far they are likely to suit 
 us. We must ascertain how far they may be accommodated 
 to local circumstances, not existing with us ; and whether, 
 which is the great point for us to consider, they will admit 
 of the branch system being carried to the extent we re- 
 quire. It would, of course, be desirable to form an es- 
 tablishment that would at once introduce the joint stock 
 system into all parts of the country, prove a stay and 
 support to the existing private banks, and give that firm- 
 ness and texture to the whole of our banking system which 
 it so much requires. 
 
 The Scotch and Irish Systems of Branches not adapted 
 to England. — There are two modes of conducting branch 
 establishments at present in use, namely, that of the Scotch 
 banks, and that of the Provincial Bank of Ireland. 
 
 The metropolitan Scotch banks have branches in all 
 the towns and many of the villages of Scotland, where they 
 do business upon the same principles as at the parent esta- 
 blishment, viz. borrowing money at interest, and lending it 
 to any extent upon good security. These l)ranchcs are con- 
 ducted by agents under the direction and controui of the 
 parent bank. ]Uit the power of lending money is a dan- 
 gerous one in the hands of many persons ; and the Scotch 
 banks not only pay their agents a fixed salary, that they 
 may not l)e tempted to do improper business ior the sake 
 of a commission, but they make them answerable for the
 
 28 
 
 bad debts they may contract, and find large security that this 
 may not be merely a nominal obligation. This, it might be 
 presumed, would be an effectual check against imprudent 
 advances ; but it is not so in all cases ; and they find it 
 necessary to possess, from week to week, a clear view of 
 their transactions, and to exercise an immediate directing 
 controul over them besides. For this purpose the Directors 
 have such returns sent them, as enables them to keep dupli- 
 cate books, by which they know at once the state of every 
 man's account, and they also require to be referred to by the 
 agents before any loans are granted above a certain sum. 
 In addition to this, they continually send inspectors to ex- 
 amine into the transaction on the spot ; and some of them 
 have every bill, discounted, sent up to Edinburgh, to be over- 
 looked. All this, it must be likewise observed, is found neces- 
 sary in a country thinly populated, where individual credit 
 is easily appreciated, and where the connection of Edinburgh, 
 the seat of these banks, with all parts of the country, is so 
 intimate, that the personal character and credit of every 
 man of any business in the kingdom is either intimately 
 known, or easily ascertained. 
 
 Now, in England, it must be observed in the first place, 
 that prudent men could not be had for agents who would 
 guarantee the debts, or who, if they did, could find security 
 as in Scotland, where personal confidence is more generally 
 entertained, and mutual assistance more easily afforded ; 
 and in the next, that there is not the same power of as- 
 certaining the safety of their proceedings. The country 
 is more populous and less united, and the character and 
 transactions of people less known to each other. It may, 
 therefore, be very much doubted whether the system of 
 simple agency would answer in England at all. It has 
 not been found to answer in the case of private banks, very 
 few of whom have any agencies. The Bank of England 
 has, indeed, adopted it. But it does not transact business 
 on the system which it is proposed to introduce. The di- 
 rectors limit their advances to the discounting of bills upon 
 London, the character of which they can in some degree ap- 
 preciate from their own knowledge, and which are sent up to 
 London for examination each day as they are discounted. 
 This gives the bank a tolerable good check over its agents ; 
 but it is a system neither suited to the bank nor the country ; 
 for while it affords no accommodation to the public, that
 
 29 
 
 could not be elsewhere obtained, it yields no profit to the 
 bank. It is, indeed, only by doing business for little or no 
 profit, that it gets any business to do. 
 
 If", however, we assume that agencies, with the Scotch 
 system of business, could be adopted in England, they 
 still could not be so to any extent. 
 
 One board of directors can only go through a given 
 quantity of business; and overlooking, controuling, and 
 directing the transactions in detail, of twenty or thirty 
 agencies, with each a considerable business, would be as 
 many, if not more, than they could manage. Some of the 
 Scotch banks, indeed, have more than that number ; but 
 many of them are in villages and places where very little 
 business is done, and where the agent, with any prudence, 
 could hardly get wrong, at least with the strong motives 
 he has to keep right. These, consequently, give little 
 trouble. The business of one large town would be as great, 
 and require more attention than thirty such agencies. The 
 Royal Bank of Scotland has only one branch, namely, in 
 Glasgow, where it does a very extensive business ; and we 
 know of no other reason why it has not more, than that it 
 finds this one as much as it can manage. 
 
 In short, a system of mere agency, it is probable, would 
 not answer, except upon a limited scale, in any other 
 country but Scotland ; and in forming the Provincial Bank 
 of Ireland, — an establishment with its head office and seat 
 of direction in London, while its branches are in the chief 
 provincial towns of Ireland, — it was thought necessary to 
 improve upon it. With each agent was, therefore, asso- 
 ciated a local board of directors, consisting of the most 
 intelligent and respectable commercial people of the place. 
 The advantages of this system ai*c,first,that a complete check 
 is placed upon the agent, with respect to the cash, which 
 is regularly inspected by the local board ; and next, that 
 the local knowledge of men of respectability and expe- 
 rience is obtained, in deternnning the prudence of advances. 
 Such minute details as are furnished by the Scotch branches, 
 as well as duplicate accounts, are consecjuently unneces- 
 sary, and more confidence can, of course, be ])laced in the 
 safety of the transactions of each branch. Notwithstanding 
 this, it is still requisite that all advances, above a particular 
 sum, should be referred to London, and that the general 
 operations of each branch should be reviewed and directed
 
 30 
 
 by the London board. The local directors arc highly 
 respectable, and as much to be trusted without controul as 
 other directors ; but not being interested in the success of" 
 their own management in particular, or responsible for it 
 to the shareholders, those who are responsible, must be 
 made acquainted with it, and consulted about it. Besides 
 which, each branch being only a part of a large establish- 
 ment, the local directors have not the knowledge neces- 
 sary to enable them to determine the prudence of advances 
 with reference to the state of the company's funds. 'J'hus 
 a constant system of references to London, and attention 
 by the London board to the details of each bi-anch becomes 
 necessary, and requires much time and consideration. The 
 London board consequently, though it has only fifteen 
 branches, sits every day, and finds its time fully occupied. 
 Hence it will be obvious, that though this system, assuming 
 that it might be extended farther than the Provincial Bank 
 has found it necessary, it could not be carried to any thing 
 hke the extent required. 
 
 There is, also, another objection to both the Scotch and 
 Provincial Bank of Ireland branches, which is, that they 
 could not stand the competition of local joint stock banks. 
 These having a body of local shareholders, and a board 
 of directors, responsible for their success, would be ma- 
 naged with more zeal and interest, and gain a preference. 
 The Scotch banks find that although their superior credit 
 and resources give them an advantage in some respects, yet a 
 well-managed local bank will frequently prove too much 
 for them, and obtain the best business of the place. This 
 is still more likely to occur in England ; and it might be 
 with certainty calculated upon, that the agencies of a Lon- 
 don establishment, would eventually generate local compe- 
 tition, which would take their best customers from them ; 
 and that in the end they would prove to be nothing but 
 the pioneers of a local and an inferior system, and this 
 would neither be desirable for the London establishments, 
 nor yet for the country. 
 
 These systems an exception rather than a rule. — It is 
 therefore obvious, that we must endeavour to improve upon 
 these systems. We must have branches that can be more 
 easily managed, and whose business cannot be so easily 
 taken from them. Nor will this be a matter of much dit- 
 culty. The agency system is by no means the most ap-
 
 31 
 
 proved ; and the practice of the Scotch banks is rather 
 an exception than a rule. 
 
 The usual mode with those who have establishments at 
 a distance, where a discretionary power must be exercised, 
 is to have them conducted by partners. People of greater 
 responsibility, and more entitled to confidence, can be had 
 for partners than for agents ; and it is likewise i'ound by 
 experience, that even good agents make still better part- 
 ners ; that more confidence can be reposed in them in one 
 character than in the other ; and that to engage all their 
 powers of mind, as well as their time and attention in your 
 service, you must give them an interest in their own exer- 
 tions. To manage, therefore, a business at a distance by 
 agents, though sometimes done, is, as before observed, 
 rather an exception than a rule. This is also more parti- 
 cularly the case with banking in England, where manage- 
 ment by agents is not found to answer, while management 
 by partners is. A country banker, with different esta- 
 blishments, has always a managing partner in each. Each 
 establishment is a separate bank, and the managing partner 
 is, in general, only concerned in the bank he manages. 
 Take Messrs. Gurney, of Norwich, for example, who are 
 well-known for the success and extent to which they have 
 carried country banking. They have a great many dif- 
 ferent banks, all of which are managed by partners ; and 
 these, if not a branch of the family, are generally persons 
 of business, of property, and of prudence, selected on the 
 spot. 
 
 Now it is not necessary to propose that a public bank 
 shall enter into partnership with individuals ; but a public 
 partnership may be formed, and that too, with the same 
 advantages over a private partnership, that a public bank 
 has over a private cme. 
 
 The plan for this purpose is remarkably simple. 
 
 THE PLAN PROPOSED. 
 
 Let each branch be a separate bank. 
 
 Let it have a body of local shareholders, who shall take, 
 we shall say, one-half the profits, and one-half the risks of 
 the concern. 
 
 Let it be managed by a local board of directors, chosen 
 by the local shareholders, subject to the review and controul 
 of the London board.
 
 32 
 
 This is liothms^ viorc than Messrs. Gnrneys'' principle 
 applied to public banking ; and their princij)le of manage- 
 ment will have equally to be adopted. Their acting- 
 partner of course exerts himself to extend the business of the 
 bank, and render it profitable. In this his interest is their 
 security for his zeal. But they will have proper accounts 
 furnished them at stated periods, and occasionally visit the 
 bank themselves, in order to know how far they can 
 depend upon his integrity and disci'etion. Should the 
 bank be prudently conducted, and yield a satisfactory profit, 
 their object is attained, and they will seldom interfere with 
 the management; and at all times their interference will 
 be the exception, and not the rule. But should it not be 
 well conducted, they, no doubt, will interfere efi^ectually, 
 and either improve the management, or get rid of the 
 acting partner who does not answer their purpose, and 
 endeavour to obtain another who will ; or otherwise, if the 
 establishment will not pay, give it up. 
 
 This is precisely the plan to be pursued by a joint stock 
 bank, upon the plan proposed. The London directors 
 will receive proper returns, and occasionally send inspec- 
 tors to examine the books, and report upon the state of 
 each bank ; and they will reserve to themselves the power 
 of interfering in whatever manner they may find necessary, 
 or think useful. But so Ion"; as a bank is well managed and 
 successful, they will have no motives for interfering, and 
 have little or no trouble with it. 
 
 The branches xvill be well managed. — That they will, in 
 general, be well managed may also be safely inferred. In 
 the first place, the directors will be chosen, as is uniformly 
 the case, for their known prudence, property, and respec- 
 tability ; and as it has been found by experience that 
 boards of directors so constituted, generally manage well, it 
 may be inferred that they will equally do so in this case. 
 But they will also have stronger motives for good manage- 
 ment than ordinary. They will not only have an interest in 
 the bank themselves, and annually have to report the result 
 of their management to a meeting of their constituents, which 
 are the usual motives, but they will have to give a more 
 detailed account, to more competent judges, of what good 
 management consists in, which will, of course, render them 
 still more particular. They also, it must be recollected, 
 will be shareholders in their own establishment only, and 
 in consequence will have much stronger reasons for being
 
 33 
 
 anxious to succeed, than even the London directors. The 
 London company will have a great many branches; and 
 if they are successful, upon the average, it will answer 
 their purpose. They, therefore, need not be so anxious 
 about the success of any one in particular : the good will 
 pay for the bad. But not so the local directors. Their 
 local constituents w ill have no such means of compensation, 
 and must immediately suffer and feel, in the loss of capital 
 or of dividend, the injury which the mismanagement, or the 
 misfortunes of the branch, may inflict upon them. 
 
 Thus when it is considered that these branches will be 
 managed by men as respectable in their sphere, and as fit 
 to be entrusted with the uncontrouled management of any 
 bank, as the London Board themselvt s, or any other direc- 
 tors could be ; — that they will have stronger motives for 
 good management than the London directors, in a pecu- 
 niary point of view ; that they will have the same motives 
 as regards their responsibility to their local constituents ; 
 and that they will also have to render an account of their 
 management to the London directors —it may fairly be 
 inferred that, nineteen times out of twenty, their manage- 
 ment will be such as to call for no observation whatever 
 from the London board. 
 
 Ecich Branch zoill be innnaged as a separate Bank ; but 
 the London Directors to have the same power as over an 
 agent. — Each bank will be managed as if it were an inde- 
 pendent establishment. It will have its own circulation, its 
 own funds, its own London stock account, &c. ; and if it 
 should want to borrow money of the parent bank, or of any 
 other branch, or vice versa, it will have to be done by 
 negotiation. The initiative of management — the thinkinjj 
 and contriving how to make the bank profitable, will be 
 thrown altogether upon the local board. The London di- 
 rectors, unless by general regulations apj)iicable to all, will 
 not trouble nor interpose without a special reason for it ; the 
 necessity for which it is reasonable to presume will .seldom 
 occur. At the same time the London board will have the 
 same jx)wer of interfering as with an agent. They will not 
 only have the power of directing and controuling, but of 
 dismissing the directors, should it be necessary, and of 
 winding up the concern ; or otherwise, of calling upon the 
 local shareholders to choose other directors. The same 
 power, in short, so far as the parallel can be preserved, that 
 Messrs. Gurney will reserve to them.selves in the case 
 
 F
 
 34 
 
 of their banks. Tlie London hoard will also have proper 
 retm-ns, and a proper system of inspection, which will en- 
 able them at once to see if any thing be wrong. 
 
 This system capable of being carried to a great extent. 
 — The branch system on this plan could, vmdoubtedly, 
 be carried with far greater safety and success, to a much 
 greater extent, than a system of agency, under any form. 
 Indeed the more numerous the branches, the more cer- 
 tain the profit. Tf banking is profitable upon the ave- 
 rage, the greater the average the better. All that the 
 London company has to do, is to see that the shareholders 
 of each local bank pay up capital amply sufficient to cover 
 their share of any loss that may occur, and that the direc- 
 tors chosen are sufficiently respectable ; and it is hardly 
 possible for them to have too many branches so constituted. 
 
 This s^'stem will also affiard great facilities for establish- 
 ing banks in the smaller towns and agricultural districts, 
 where they are so much wanted. Banking in these places 
 is comparatively simple, and easily conducted ; and if a 
 body of respectable shareholders would take half the con- 
 cern, and choose a proper board of directors to manage 
 it, the bank could have but little difficulty in joining them. 
 The i-isk would be trifling, rf any, and so would the trou- 
 ble; while a moderate profit could hardly fail to be rea- 
 hzed, if it were but from the business of the shareholders, 
 themselves. 
 
 In most places the Bank zoould be opened first, and the 
 shares given out afterwards, — Where, however, a good 
 business was clearly to be obtained, the bank would pro- 
 bably proceed diffisrently. Having obtained a few respec- 
 table parties as local directors, they would open the branch 
 first, and leave the local directors to distribute the shares 
 afterwards, with a view to extending and cementing the 
 connexions of the establishment, after they had had time 
 and opportunity for ascertaining how this was to be done 
 with the greatest advantage. In this way a much better, 
 and a more binding connexion, could be formed, than with 
 twice the capital subscribed to an independent bank, which 
 would be obliged to raise its capital before it could com- 
 mence business. By this means consequently the bank 
 would be able, in a great degree, to secure itself against 
 that local competition, which would be fatal to a mere 
 agency. 
 
 The Parent Bank zvill not subscribe capital, but allow 
 the local shareliolders an interest instead. — The parent
 
 35 
 
 bank will not subscribe any capital to its branches, but will 
 employ its capital in London, for its own benefit, and only 
 afford them its credit. This will be no disadvantage to the 
 branch ; but in dividing the profit with the local share- 
 holders, who have paid up their capital, it will be proper to 
 make an allowance of interest for it in the first instance. 
 The rate to be allowed ought to be determined by the 
 value of money in London. In consequence of being up- 
 held by the credit of the j)arent bank, and having it to 
 apply to in case of need, it will be enabled to employ all 
 its own capital in the country. Whereas, without this, it 
 would have to keep it (and if it did an extensive business, 
 probably a much larger sum,) in London, as a reserve fund, 
 to be ready in case of an emergency. It will make more 
 interest by being enabled thus to eniploy its capital in the 
 country ; but as this will be the result of the connexion, 
 the advantage of it should be equally divided, and the 
 interest be allowed that it would have obtained, had the 
 connexion not existed. Besides this, the London company, 
 whose capital will be raised for the purpose of supporting 
 the credit of its branch establishments, will only make 
 this rate of interest of it ; and it consequently would be 
 putting the parent bank, and its local shareholders, on 
 an equal footing. 
 
 Hence tite advanfaffcs to the Parent Bank may he thus 
 briefly stated, — It will obtain one half the profits derived 
 from the connexions and labours of its local shareholders 
 and directors, with great safety and little trouble ; and 
 will, consequently, it is presumed, be enabled to establish 
 branches wherever they are required. 
 
 The advantages to the heal shareholders from the con- 
 nexion may also be thus enumerated. First, In the supe- 
 rior credit derived from it. — I'he capital of a bank is only 
 wanted for credit; it is not recpiired for the purposes of 
 banking, which consists in borrowing or receiving the de- 
 posits of the public on the one hand, and lending them out 
 on the other; in circulating notes; and in buying and 
 selling bills upon I^ondon, &c. For this credit is necessary, 
 and capital is wanted ibr the mere purpose of giving it. 
 No profit is made upon the capital beyond the low rate 
 of interest frc([uently obtained for it. The resources ot 
 the Bank of England, upon which in times of difficulty 
 the whole nation depends, are exclusively tlerived irom its 
 credit. The whole of its capital is lent to Government
 
 36 
 
 and it has not a shilling of it at its own disposal. Now, 
 although the branches would not have the disposal of the 
 capital of the parent bank, they would have all the advantage 
 from it which it is intended to afford ; namely, the credit 
 it would give them, which would be twenty times as great 
 as what they could derive from their own, or from twice the 
 amount were they to stand alone. They would, conse- 
 quently, obtain more deposits, and be able to deal more 
 extensively. As they would also be able to arrange with 
 the parent bank for temporary assistance, should they ever 
 require it, they might lend all the money, they received in 
 the country, out to the public in the country again, upon 
 any good security, that would yield them a good interest. 
 By this they would make much more profit and give greater 
 facilities to the country, than if they were obliged to employ 
 a portion of it in London. 
 
 Second. In the distribution of the Shares. — The shares 
 also would be distributed more advantageously, and though 
 the local capital were only half the amount which a local bank 
 might possess, that had the whole profit to divide on the 
 spot, yet they would command as much business. 
 
 Third. In the circulation of its Notes throughout the 
 Mnffdom, and other Jhcilities. — Each branch would have an 
 agent in every other branch, that would pay its notes, ho- 
 nour its drafts, present its bills, and answer its enquiries. 
 When the branches came to be spread over all parts of the 
 country, these facilities would be a great advantage. They 
 would induce merchants and manufacturers of extensive 
 dealings to give it a preference; while the nobility and 
 gentry, who are continually travelling about, would find it 
 a great convenience to deal with a bank of which the notes 
 would pass everywhere, and which had everywhere an agent 
 that would honour its drafts without trouble. 
 
 Fourth. In the smaller 7iumber of Directors that would 
 he required. — The blind confidence which it is necessary 
 for the shareholders to repose in directors of independent 
 Joint Stock Banks, and the chances that some of them may 
 not be very efficient, render it necessary that every board 
 should consist of more directors than would be required, 
 could their management be overlooked, and their efficiency 
 be depended upon. This is a disadvantage which these 
 banks labour under. Those who deal with banks are 
 jealous of too many persons being made acquainted with 
 their private affairs ; but it is a disadvantage which will be
 
 37 
 
 obviously guarded against by this plan, where the same 
 degree of confidence is not called for. It will, clearly, not be 
 necessary to appoint more directors than are required to 
 manage tlie concern ; as it may be arranged that they shall 
 retire when they are unable to give the requisite attention 
 to it. By this means it is probable that one half, at most, 
 of the usual number of directors will be sufficient, which 
 will give the branches a great advantage over local banks, 
 in which the directors are more numerous. 
 
 Local Banks will be unable to contend against these cut- 
 vantages. — The only advantage which banks, exclusively 
 local, could ever possess over the proposed branch establish- 
 ments, would consist in the larger number of their share- 
 holders, which, as has been seen, would not, probably, under 
 the circumstances of their distribution, give them any supe- 
 riority; while, on the other hand, it would be impossible 
 for them very successfully to compete with all the other pre- 
 eminent advantages which the proposed system of branches 
 would thus enjoy ; and there can be little doubt of its pre- 
 vailing over every other. 
 
 The Shareholders will have more confidence in the ma- 
 nagement. — It may also be observed that it will be an 
 advantage in the estimation of the local shareholders, which 
 will make these branches be preferred, that the manage- 
 ment of them will be under the review of competent judges. 
 The shareholders might have no objection to place unlimited 
 confidence in the local directors, were it necessary, and 
 might sooner place it in them than in any other parties, 
 but such confidence will never be given in preference where 
 it can be avoided. 
 
 I'he controid erf the Londx)n directors not an objectionable 
 one. — It may perhaps be objected that it is proposed to give 
 the London directors too much power ; that it is not 
 necessary for them to possess unlimited controul over men 
 as respectable as themselves. In answer to this it must be 
 observed, that it would be extremely difficult to define 
 the proper limitations. That it is only in extreme cases 
 where tlie power of dismissal would ever be used, and, in 
 such cases, the jnore promptly it could be exercised, the 
 better for all parties. That in point of fact, shareholders 
 always reserve to themselves as niuch power as they can 
 exercise with advantage ; and that any partner in a private 
 concern, under similar circumstances, would reserve to 
 himself the same power over it. Besides which respectable
 
 38 
 
 men would never comj)lain of a reasonable controul which 
 involved a beneficial connexion, even were it attended with 
 an interference to which they would otherwise object. But 
 such an interference would never occur. If the London 
 board had any motives for interfering needlessly, the num- 
 ber of branches would be a sufficient guarantee against its 
 being done. The directors could never be desirous of 
 creating trouble to themselves. The whole of their arrange- 
 ments, on the contrary, would naturally be directed to pre- 
 vent the necessity of interference. In addition to this, it 
 may also be observed, that the real management would 
 necessarily be in the hands of the local directors, and the 
 power and influence which it conferred would be propor- 
 tioned to the credit, extent of business, and means of the 
 establishment ; and, in that respect, the branch directions 
 would be more honourable, and more valued, than those of 
 banks exclusively local. There are, likewise, always men of 
 respectability willing to undertake these duties ; and in most 
 places there are numbers sufficient to supply directors for 
 several banks : whereas, at present, local banks could only 
 be formed, for reasons already stated, in few places, and the 
 proposed establishment would be the only one for which 
 directors would be required. If, therefore, the establishment 
 be properly formed in London, there will be no difficulty 
 whatever in getting men of the first respectability to take the 
 management of its branches in the country. 
 
 Having thus discussed the principles of the plan, we shall 
 briefly recapitulate it, and then proceed to consider the 
 manner in which the capital would be best raised. 
 
 RECAPITULATION OF THE PLAN. 
 
 1. That a Company be established in London, with a 
 suitable capital, as may be hereafter determined upon. 
 
 2. That it form branches in the country in connexion 
 with it, which shall be separate banks, with each a body of 
 local shareholders, interested in it alone, and not responsible 
 for, or connected with, any other establishment. 
 
 3. That the profits or losses of the branch shall be 
 divided equally between the local shareholders, and the 
 London company. 
 
 4. That each branch shall be managed by a board of 
 local directors, chosen by the local shareholders, subject to 
 the inspection and controul of the directors in London:
 
 39 ; % i 
 
 that tlie London board shall possess supreme power, and 
 be enabled to take any steps desirable for the interest of all 
 concerned. 
 
 5. That the London company shall not advance any 
 capital to the branches, but the local shareholders shall 
 advance sufficient to cover their share of any losses that may 
 possibly be incurred, and be allowed interest upon it ; the 
 rate of which to be determined by the value of money in Lon- 
 don ; after which an equal division of profits to be made, 
 
 6. It may be also added, that each company shall pay 
 its own expences of management. 
 
 THE MANNER IN WHICH THE CAPITAL OF THE BANK WILL 
 BE BEST RAISED. 
 
 The usual Mode of Raising Capital^ and the Objections 
 to it. — The plan usually adopted for raising the capital for 
 such undertakings is, to fix the amount of capital much 
 higher than there is any immediate prospect of requir- 
 ing, and then to call such part up, either at once, or by 
 degrees, as may be necessary. The reason for thus fixing 
 what may be termed the nominal capital high, most fre- 
 quently is, to give an imposing appearance to a small 
 subscription, in order to cover the undertaking with an 
 air of respectability, which does not properly belong to it. 
 But where there is any probability of the capital being ul- 
 timately required in case of the concern succeeding, it 
 becomes necessary to have the power hereafter of calhng 
 for it, which, without it was conferred by the original con- 
 tract, could not be done. When parties join an under- 
 taking, they agree to pay their proportion or subscription 
 if called upon, but no more. Any enlargement, therefore, 
 beyond the amount so fixed, effected by the company itself, 
 would require the consent of every individual. This, in 
 concerns more especially that have been any time esta- 
 blished, can never be obtained, however advantageous to 
 the individuals, as some of the shares are almost always 
 held in trust for others. Under such circumstances, there- 
 fore, no enlargement beyond the amount originally fixed, 
 however desirable, could take place, without the consent of 
 parliament; and this, except under particular circumstances, 
 would be refused. Not that parliament would have the 
 least objection to any concern enlarging its capital, — the 
 more capital a bank in particular has, the better lor the
 
 40 
 
 public, — but the consent of parliament would be required 
 to enlarge it, by breaking the original contract, and 
 compelling certain parties to embark more money in the 
 concern than they had agreed to do, and for some reason or 
 other, would consent to. This parliament would at all 
 times feel a difficulty in sanctioning, and to avoid the 
 necessity of such an application, the easiest mode is to 
 make the nominal capital high in the first instance. If it 
 is never wanted, no harm is done ; and if it is, an appli- 
 cation to parliament is saved. 
 
 But to this mode of raising capital, experience points 
 out many objections. In the first place, the system of 
 nominal capital has been very much abused, and it would 
 be desirable if the whole, or a great part of the capital 
 subscribed, were called up. It would hardly, after the 
 experience of the past, be considered respectable, were this 
 not the case. Yet if this plan succeeds, it will not require 
 less than five, and may require ten millions ; and to call 
 up the least of those sums, in the first instance, would be 
 out of the question. The public would never subscribe to 
 an undertaking in which it was proposed to call up so large 
 a capital for the purposes of a business to be created. 
 
 In the next place, were the calls made by degrees in the 
 usual manner, which must be the case if this plan be 
 adopted. Experience has shewn that every call for capital, 
 on a great scale, would be certain to bring so many shares 
 into the market, at one time, as to depress them, and cause 
 great fluctuations in their market price. This would give 
 rise to much jobbing, and its attendant consequences, which 
 would be very objectionable, and which it would be desi- 
 rable to prevent. 
 
 In the third place, the directors on this plan would have 
 no motive for extending the concern, and fulfilling the 
 objects of it, but the reverse. After having called up one 
 or two millions of capital, and found the unpopularity of 
 calls, they would be induced rather to limit the operations of 
 the company to the capital in hand, than call for any moi-e. 
 They would naturally think, — why should we extend our 
 business, and give ourselves additional trouble, if it is nei- 
 ther to increase our dividends, nor the price of our stock ? 
 If we have to make further calls, the additional profits will 
 merely have to be divided over a large surface : the profit 
 on the existing capital will not be increased, while the 
 market value of it will be reduced ! It is clear that they
 
 41 
 
 would do no such thing. Tlicy would, in preference, 
 confine their operations to the capital in hand, by which 
 the objects of the institution would only be in part ful- 
 filled. 
 
 In the last place, it would not, on this plan, suit many 
 persons to subscribe for the purpose of investment. They 
 would not find it their interest, did it suit their convenience, 
 to keep by them, for every share they held, and upon which 
 ten per cent, might have been paid, a considerable portion 
 of its nominal value, to meet future calls. Yet this would 
 be necessary if they intended to hold their shares. Neither 
 in all probability, would it suit the views of speculators, for 
 the calls would be certain to reduce the price of the shares, 
 and they would expect to purchase them at a discount, 
 They would be disposed therefoi-e rather to hold off with 
 that expectation than subscribe. Hence it is very doubtful 
 whether, on this plan, such a capital could be raised. 
 
 There are thus four objections to this plan of raising the 
 capital. 
 
 1st. That it would not be respectable without the capital 
 were paid up, and it would be too large to be so. 
 
 2d. That if a large capital were raised by a succession of 
 calls, it must give rise to a great deal of jobbing, and its 
 attendant consequences. 
 
 3d. That the plan would not afford a motive for ful- 
 filling, but rather for defeating the objects of the institution. 
 
 4th. And finally, that it is much to be doubted whether 
 .so large a capital as would embrace the objects of the pro- 
 posed institution, could be raised on this plan at all. 
 
 Plan of Raising the Capital proposed. — All these diffi- 
 culties, however, are very easily overcome by the judicious 
 adoption of a very equitable principle, namely, — that those 
 who incur the risk of establishing tne concern, should enjoy 
 the benefits resulting from the extension of it. This is 
 always aimed at in every undertaking, but often so clum- 
 sily, as for it to happen that those who first establish 
 the concern suffer severely ; while those who succeed 
 them, enjoy the whole benefit of it. The plan is simply 
 thus. 
 
 PLAN. 
 
 Let a capital, not more than sufficient to commence with, 
 say a million, be raised in the first instance, which shall be 
 called the original capital ; and as more is required, let it 
 
 G
 
 42 
 
 be raised by fresh Issues of sliarcs, at whatever premium 
 they are worth, such premium to go excjusively to the 
 original sliareholders and estabhshers of the concern. 
 
 Advantages of the Plan. — By this plan all the foregoing 
 objections would at once be removed. 
 
 1st. There would be no nominal capital. As the capital 
 first raised would not exceed the amount necessary to com- 
 mence with, the whole of it must, of course, be paid up ; 
 and as fresh shares would only be issued when further 
 capital was wanted, they would, of course, be issued at 
 their full value, for the same reason. 
 
 2d. The price of the stock would be kept steady, and all 
 jobbing prevented. The company would not extend the 
 concern and issue fresh shares, unless a fair price could be 
 obtained for them; while having so many to issue, it is 
 hardly probable they would, at any time, rise much above 
 the company''s price, until the whole capital had been raised. 
 Material fluctuation, therefore, in their price would not oc- 
 cur; and all inducements to speculation in them, except 
 for the purposes of investment, would be withheld, instead 
 of being created as with calls. 
 
 3d. The premium which would be obtained on the sale 
 of the fresh shares, if the undertaking was successful, would 
 form a source of very considerable profit, and would render 
 it a great object with the directors to extend the concern, in 
 order to justify their enlarging the capital. Thus, instead 
 of a demand for more capital defeating the reform pro- 
 posed, by limiting the operations of the company, it would 
 completely secure it, by holding out a powerful motive for 
 extending them. 
 
 4th. Instead of there being any fear of raising the 
 capital, it would be rendered doubly certain ; first, by 
 the limited amount that w^ould be required in the com- 
 mencement; and next, by the double source of profit 
 secured to the original subscriber. There is nothing ex- 
 travagant in supposing that, in seven years, the shares 
 would rise to fifty per cent, premium. Indeed it is almost 
 a matter of certainty ; and if so, it cannot be questioned 
 that the concern, in that time, might be extended so as to 
 require at least five millions of capital. Now if we assume 
 that only twenty-five per cent, premium would be on the 
 average obtained upon the additional four millions issued, 
 it would leave the original shareholder one hundred per 
 cent, premium. To this must next be added fifty per cent.
 
 43 
 
 from the success of the bank, and it would make his share, 
 in seven years, wortli .£'250. ; and this is a moderate calcula- 
 tion ; for although it may not be fully realized in practice, 
 it is as likely to be exceeded. There is, consequently, not 
 the most remote qinsstion of the capital being raised as 
 soon as the subscription is opened ; whereas on the usual 
 plan, as has been seen, the raising of the capital would 
 probably be a matter of much difficulty, if it could be done 
 at all. 
 
 Nor would the advantage which would thus accrue to 
 the original shareholders be gained by the loss of others. 
 The chief part of the additional capital would, of course, 
 be raised after a dividend had been paid ; and would be 
 bought by parties who would have run no risk in establish- 
 ing the concern. They would consequently be entitled to 
 pay a premium, would be willing to do so, and would 
 lose nothing by it. They would only pay for the shares 
 what they would be really worth. Whereas, on the other 
 hand, by the premium being given to the original share- 
 holders, on the plan proposed, the parties would obtain it 
 who were best entitled to it, while all that would be dis- 
 reputable and injurious to the undertaking, if it did not 
 prove fatal to it, would, as we have seen, be avoided.* 
 
 Amount of Original Cojjital, and principle hy xvliich it 
 shall be enlarged. — We have suggested that the original 
 capital be one million. There is little doubt that, in a 
 reasonable time, a profitable return might be obtained upon 
 this sum ; while a less amount would hardly hold out 
 the inducement of credit, which would be one of the chief 
 advantages of the local shareholders in connecting them- 
 selves with the branches. 
 
 The enlargement of the capital also must be determined 
 by a fixed principle, and the obvious and most simple one 
 
 • It has been proposed, and it is a proposal worthy of consideration, 
 that the premium ought to be held for a given time, and not go to the 
 original shareholders without the concern succeeded. Thua : let the pre- 
 mium originally given be marked on the certificate of each share ; and lot 
 the holiler of it, at the end of a given time from the issuing of it, say 
 seven years, have the option of calling upon the Company cither to take 
 the share off iiis hand, at the original price, or return him the premium. 
 'I'his he would do if the concern did not turn out according to tlie expec- 
 tations formed, and the share was at a less price than he had given for it. 
 If the concern did succeed, the shares would, in seven years, be above 
 I he jiricc they were issued at, and the C'ompany would gain the premiinn ; 
 but,- in that case, they would only do so provided llicy were entitletl 
 lu it, and shares bail rcully proved tu be wuith the money given ibr tlicin.
 
 44 
 
 is, that the amount of capital raised in London shall be 
 equal to the aggregate of that raised in the country. By this, 
 though the London bank will not pay any capital over to 
 its branches, unless borrowed in the ordinary manner, to 
 be repaid as may be agreed upon, it will raise as much 
 capital for their purposes as they do themselves. Every 
 new bank formed will consequently entitle the London 
 company to add to its London capital a sum equal to the 
 local capital of such bank. On the other hand, it must be 
 obvious that if the concern does not succeed, it cannot be 
 extended. The directors cannot indulge fanciful prospects, 
 as is frequently the case, on the plan of calls, and compel 
 the shareholders to advance more money at par, when, if 
 they wished to enlarge their interest in the concern, they 
 could do it better by purchasing the shares at a discount. 
 Directors often pretend, in such cases, that they have nothing 
 to do with the price of the shares, whereas they could not 
 have any more conclusive evidence of the opinion of their 
 constituents. 
 
 On this plan, however, no person will, at any time, be 
 compelled to embark a shilling against his inclination. 
 
 With these few observations, we shall briefly recapitulate 
 the terms of the plan. 
 
 RECAPITULATION OF PLAN FOR RAISING THE CAPITAL. 
 
 1 . That an establishment be formed, in the first in- 
 stance, Avith a million of capital, to be called the Original 
 Company, the whole of which to be paid up. 
 
 2. That it proceed to form branches on the principle 
 already proposed, until the local capital of its branches 
 amounts to that sum. 
 
 3. That for every bank it may afterwards form, it shall 
 enlarge its London capital to the extent of the local capital 
 subscribed. 
 
 4. That the shares thus issued by the London com- 
 pany, shall be issued at such premium as they may be 
 •worth. 
 
 5. That the premium thus obtained shall go exclusively 
 to the original shareholders and establishers ol" the concern. 
 
 OBJECTIONS TO THE FOREGOING PLAN CONSIDERED. 
 
 The details of this plan, as thus given, arc not, as vve 
 shall have further occasion to remark, offered as having
 
 45 
 
 received the final assent of those who arc favourable to its 
 general principles, but one which experience seems to have 
 pointed out as worthy of consideration. In the mean time, 
 it may be well to make an observation or two on the objec- 
 tions which have been offered to it. 
 
 1st. It has been observed, that to guarantee the transac- 
 tions of directors in the country, is placing the London 
 establishment in great risk. In answer to which, it may be 
 observed first, that banking is not, in itself, a trade of great 
 risk ; and next, that whatever risk there is, is not increased, 
 but much diminished, if not annihilated, by this plan, inas- 
 much as two checks, each of which, in practice, is found 
 sufficient, are applied instead of one. People in the 
 country have no objection to form a bank, and entrust its 
 management to a board of directors, in whom they have 
 confidence, without any controul over them, and see no 
 danger in doing so. Banks, on the other hand, have no 
 objections to form branches at a distance, and entrust them 
 to agents or local directors, without any other check than 
 their own inspection, and see no danger in doing so. Now 
 this plan unites both these checks, by Avhich, most assuredly, 
 the risk is not increased, if, as before observed, it is not 
 altojj-ether annihilated. Besides this, the risk will be dimi- 
 nished by the number of the branches. It is not safe to 
 insure a single ship, but it becomes perfectly so to insure 
 some hundreds. Should a bank suffer any material loss 
 (and the greatest loss that can be imagined could never be 
 material compared widi the capital of the London establish- 
 ment), it would be covered by the profits of the remainder. 
 2d. Perhaps, prima facia, a more reasonable objection is, 
 that the people in country towns would prefer banks of their 
 own to being placed under the controul proposed. This, how- 
 ever, is a theoretical rather than a practical objection. In 
 three places out of four, they must have a joint stock bank on 
 this principle, or none. In the remainder, it will, no doubt, 
 by many, be thought better to have an independent estab- 
 lishment ; for men like power, and the very idea of controul 
 is frequently disagreeable to them. But the question is, 
 which is practically the best system ? It does not follow, 
 tliat because the proposed company may have a branch in 
 a town, that there is not also to be an independent local 
 l)ank ; or because there is a local bank, that the proposed 
 comjiany is not to form a branch there also. Banks are 
 in themselves, so respectable, that respectable people will
 
 46 
 
 join them on any principle ; but that principle which is the 
 best, will finally draw the most respectable people to it. It 
 is a question which, ultimately, will have to be determined, 
 not by theory, but by practice ; and there can be little 
 doubt that it will be found, in practice, that the greater 
 credit and resources of the national bank will give it the 
 preference. At the same time, both may, and no doubt will, 
 prosper. 
 
 3d. Another objection is, that the establishment is pro- 
 posed to be too extensive. The answer to which is, that 
 this is also a question to be determined in practice. It is 
 not proposed to start on a greater scale at first than has 
 been already found perfectly manageable, and then after- 
 wards to extend the undertaking by degrees. If, however, 
 the directors find they cannot extend it with advantage, 
 they will, of course, not do so. But this is a point of 
 management which must, of necessity, be left to their own 
 discretion. There can be no reason to suppose they will 
 have less than other people, and embarrass themselves with 
 more business than they can manage. The establishment, 
 in short, will commence in a comparatively limited scale. 
 The seed only will be sown first, and whether it only be- 
 comes a tree of ordinary magnitude, such as is known can 
 flourish, or a towering oak of the forest, will altogether 
 depend upon whether it finds it can spread its roots as well 
 as its branches, and nourish and sustain the stems it may 
 put forth. This is the consequence of the plan ; although 
 no doubt may be entertained of its proving as comprehen- 
 sive in practice as it is in theory. 
 
 4th. Some also have observed, that it is proposing a mo- 
 nopoly ; and as so much objection has been made to the 
 monopoly of the Bank of England, it would be wrong to 
 create another one. But the monopoly of free trade, and 
 the monopoly Avhich prevents free trade, are very different 
 principles : the one is as beneficial to the public as the 
 other is injurious to it. If a shopkeeper monopolizes a 
 large portion of the trade in any particular commodity to 
 liimself, by supplying the public on better terms than his 
 neighbours, the public consider it an advantage, whatever 
 liis rivals in trade may do. They would never compare 
 him to one, who obtamed his monopoly by a law Avhich 
 prevented the competition of others, and enabled him to 
 charge not a very low, but a very high profit. So with 
 this company, it can only obtain a monopoly by serving the
 
 47 
 
 public on better terms tlian other establishments; and if it 
 should obtain one on these conditions, it will be the better 
 for the public. But this is out of the question. It will 
 only be the first establishment of a better system. There 
 is little doubt that its success will eventually lead to the 
 formation of other and similar establishments, both metro- 
 politan and local. 
 
 Upon the whole, the objections which have been made to 
 the measure have been very few, and these generally neu- 
 tralize each other. If one person thinks the terms of the 
 connexion with the bi-anches too favourable to the London 
 company, another is equally impressed with the conviction 
 that the local shareholders will be the greatest gainers of 
 the two. The same with almost every other — it is certain 
 to have its antagonist objection quite as strongly entertained, 
 which, perhaps, is the best proof that could be offered of 
 the plan being, on the whole, well adapted for the objects 
 it is intended to accomplish.
 
 48 
 
 THE STEPS WHICH HAVE BEEN TAKEN TO FORM THE 
 PROPOSED BANK, 
 
 A prospectus, containing the general outlines of the 
 foregoing plan, having been circulated, and a conviction of 
 the absolute necessity of practical steps being adopted to 
 improve the banking system, being pretty generally felt, 
 as also of the value of such an institution for that purpose, 
 the following noblemen and gentlemen were last year 
 (1830) induced to form themselves into a committee to 
 promote its formation :^ 
 
 The Most Noble the Marquis of Bute 
 
 The Right Hon. the Earl of Darnley 
 
 Lord Viscount Althorp, M.P. 
 
 W. R. Cartwright, Esq. M. P. 
 
 Sir R. Hill, Bart. M.P. 
 
 W. Hanning, Esq. 
 
 T. JoPLiN, Esq. 
 
 Sir E. Knatchbull, Bart, M.P. 
 
 Sir T. B. Lethbridge, Bart. M.P. 
 
 The Hon. H. T. Liddell, M.P. 
 
 T. P. Macqueen, Esq. M.P. 
 
 W. A. MACKINNON, Esq MP. 
 
 Sir H. Parnell, Bart. M.P. 
 
 G. R. Robinson, Esq. M.P. 
 
 T. S. Rice, Esq. M.P. 
 
 Charles Tennyson. Esq. M.P. 
 
 W. W. Whitmore, Esq. M.P. 
 
 In order, however, to carry this measure into effect, it 
 was thought desirable to have the support of ministers ,• 
 and, avoiding details, the following resolutions in favour 
 of its general principles, drawn up by the present Right 
 Hon. Secretary to the Treasury, were adopted, for the pur- 
 pose of being laid before the late government : — 
 
 *' That the establishment of joint stock banks, under a 
 proper system of controul and responsibility, appears to 
 this meeting deserving of the consideration and encourage- 
 ment of the government, the legislature, and the public.
 
 49 
 
 " That a system of banking, bringing under the review 
 of a central board in London the issues of paper-money 
 in the country, appears, to this meeting, calculated to lead 
 to such prudent regulations as may apply the check derived 
 from the state of the Foreign Exchanges, to the amount 
 of the currency in circulation. 
 
 " That a system of London management and subscrip- 
 tion, applied to the direction of country banking, appears, 
 to this meeting, well calculated at once to afford a profitable 
 employment for capital where it is superabundant, and to 
 give relief where local circumstances may have limited the 
 amount and facilities of banking accommodation " 
 
 The Bank of England, in consenting to the relaxation of 
 its charter, in 1826, by which joint stock banks were allowed 
 to have establishments at the distance of 65 miles from 
 London, stipulated, that tliese banks were not to make their 
 promissory notes payable in London; nor to draw bills of ex- 
 change upon London for a less sum than £50. ; and also, 
 that their shareholders were to be held personally responsible 
 for their transactions, as in ordinary partnerships. These 
 restrictions were considered to be a great impediment to the 
 formation of the proposed bank, and the committee were 
 desirous to have them abrogated, as well as to obtain the 
 promise of a charter, limiting the liability of the share- 
 holders to the amount of their subscriptions. There were 
 no other obstructions than these to the formation of the 
 proposed institution. The Act of 1826 prevents joint 
 stock companies having establishments for practical banking 
 in London, or within 65 miles of it, but does not prevent 
 them from having boards of management, provided the 
 establishment for business be at the prescribed distance. 
 Indeed the Act was framed with reference to the probability 
 of institutions being formed in London similar to the Pro- 
 vincial Bank of Ireland ; which is a London company for 
 banking in Ireland under precisely the same restrictions : 
 the restrictions, in fact, having been copied from the act for 
 Ireland, under which the Provincial Bank was formed. 
 There were, therefore, no legal impediments to this bank, 
 under which the Provincial Bank did not labour. The 
 latter, however, was formed during the rage for joint stock 
 companies, when such impediments were less insurmount- 
 able. But since then, one extreme has begotten the other, 
 and restrictions and difficulties, which might at that time 
 have been overcome, must now be removed : more especially 
 
 H
 
 50 
 
 that one which renders shareholders, in such an under- 
 taking, hable for them, in the whole of their property. 
 This liabihty, indeed, nearly prevented the formation of the 
 Provincial Bank of Ireland, (most injuriously to the country, 
 had it done so,) and did induce several to withdraw from 
 it, when it was found that a charter could not be obtained. 
 But the shares being at a premium, and the public willing 
 to give a bonus for them, persons were led to doubt the 
 justice of the apprehensions so few appeared to entertain. 
 The majority were, in consequence, induced to hold their 
 shares, and proceed with the undertaking : for it may be 
 remarked that the effect of the premiums given for the 
 shares of the diff'erent companies then set on foot, was to 
 induce some to sell ; but more to hold, if they could afford 
 do so. Without this, the shares never could have reached 
 the premiums they did The premiums, in short, were 
 quite as much the cause of confidence as the effect of it. 
 It must also be observed, that this undertaking could 
 not, were it disposed, avail itself, in the same manner, of 
 the premium which its shares would undoubtedly rise to, 
 All the banks that have been since established, since the 
 mania referred to, have prevented any transfer of their 
 shares, until a year after they were formed, and the opera- 
 tions of the first year were known; by which no person 
 could obtain shares who merely intended to dispose of 
 them, or any part of them, for the sake of the premium, 
 without paying up the capital upon them, and without 
 waiting until all illusions upon the subject were dissipated. 
 Every subscriber must found upon a sober calculation of 
 actual success, and not upon benefiting by the folly of 
 other people. Indeed, if some such rule were not adopted 
 for this undertaking, it would be repudiated by the country. 
 However useful to the Provincial Bank of Ireland, and 
 however free from any abuse in the instance of that under- 
 taking, allowing the sale of shares before the capital is 
 paid up, is a principle so liable to be abused, that it can 
 never again be adopted by an institution of similar 
 respectabiHty. This establishment must, therefore, be 
 formed on public grounds simply. No inducement what- 
 ever can be held out to its first promoters, that they would 
 not obtain as simple shareholders, except the sense of good 
 which they may be instrumental in conferring upon the 
 community at large. Hence, if any prejudices are enter- 
 tained with regard to the liability in question, it is not un-
 
 51 
 
 natural that it should prove an impediment to the forma- 
 tion of the bank. It is unreasonable to expect that people 
 will risk, even in idea, a large property, in a mercantile 
 pursuit, for nothing. At the same time, if the risk is 
 merely imaginary, the public gain nothing by its being 
 incurred ; while it suffers materially from the obstruction 
 it offers to the formation of institutions of great utility, 
 which are imperatively called for. 
 
 It may, however, be remarked, that if this liability has 
 not prevented the formation of small banks in the country, 
 where it is something more than nominal, these prejudices 
 must be greatly removed. The banks, however, in the 
 country, are in general on a confined scale, and have been 
 formed, chiefly, by men of business and others, who are in 
 management of them themselves ; and who, from the com- 
 paratively limited extent of business, feel no apprehension 
 that any danger can arise which they themselves will not 
 be able to perceive and prevent ; and they in general 
 have been subscribed to by the public, not so much from 
 confidence in the principle, as from confidence in the in- 
 dividuals. 
 
 But the merchants and citizens of London, it must 
 be observed, by whom this bank will chiefly have to be 
 managed, however wealthy and respectable they may be, 
 are very little known out of London, unless they be in 
 parliament ; and their names, as directors, woidd hardly in- 
 spire any confidence, were they not associated with persons 
 whom the nation at large are better acquainted with. Two 
 thirds of the shares of the Provincial Bank of Ireland 
 are in the hands of persons resident in Ireland, while the 
 business of the establishment is conducted by a board of 
 directors, the majoi'ity of whom are totally unknown to the 
 people of Ireland. But there are amongst them, Mr Spring 
 Rice, Mr G. R. Dawson, who are connected with Ireland, 
 and two or three other gentlemen, with whom the Irish 
 public are equally well acquainted ; and these are a suffi- 
 cient evidence of the respectability of the whole. The 
 same with the establishment proposed. It will be neces- 
 sary for it to have in its direction, not only men of fortune 
 and respectability in the city, but men of wealth and con- 
 sideration connected with the country, who, from their 
 connexion with parliament, or otherwise, are more j)ublicly 
 known. The confidence, however, thus implanted, rc- 
 (juires a confidence in the safety of the principle to be 
 previously entertained, which has not yet become general.
 
 52 
 
 Besides which it must Hkewise be observed, that at 
 the outset, the bank will chiefly have to be set on foot by 
 country gentelmen. The Bank of England, whether justly 
 or not, is supposed to be jealous of this undertaking ; and 
 the private bankers in London, cannot, upon the whole, be 
 very favourable to it ; for, though it may not affect them 
 immediately, it will affect their country correspondents.* 
 These interests, of course, are very powerful with the mer- 
 cantile community, and it can hardly be expected that the 
 merchants in the city will be disposed to step forward with 
 very great eagerness, until the institution is, at least, cer- 
 tain to go on, however well they may think of it. Neither, 
 perhaps, is it desirable that the mercantile part of the 
 direction should be filled up, without some previous en- 
 quiry and consideration as to the elegibility of the parties. 
 The individuals who compose the direction must not only 
 
 • Many persons, however, who have not reflected much upon the 
 subject, imagme that joint stock banks will succeed in liondon as well 
 as na the country. Eut in this they are in error. The business of 
 public banks is chiefly with the middling classes; and where there are 
 private banks of great credit, the best accounts are kept with them. 
 This is the case, as has been observed, in Edinburgh, and is still more 
 likely to be so in London, where a banker is required as a friend and 
 referee, as much as for any other purpose, which a public bank could not 
 become. In the country also, the general knowledge which every 
 director has of the credit of individuals, renders it comparatively easy 
 for a board to manage transactions with its customers. But in London 
 the directors can have little, or no such knowledge, and the difficulty of 
 management will, in consequence, be infinitely greater. Those confi- 
 dential explanations, in short, which private bankers will receive, and 
 act upon, could never either be made to a board, or influence its conduct ; 
 and there can be little doubt that the ordinary banking business of 
 London will continue to be chiefly transacted by private banks, as long 
 as they are permitted to exist. At this moment the Bank of England, 
 after the form of opening an account is once gone through, will transact 
 the business of any house for nothing. It does not allow an account to 
 be over drawn ; but it will receive the cash, and pay the checques of any 
 house, without requiring a balance to be kept in its hands by way of 
 remuneration, as is the case with private bankers, and it will discount at 
 as low a rate of interest. Yet private bankers are preferred. Now no 
 public bank could do business for less than nothing ; and the probability 
 is, that the chief business of London will continue in its present chan- 
 nels. At the same time, there will, in all probability, still be a business 
 for public banks worth cultivating, although it will never exclusively 
 afford employment for a great capital. The great establishments of 
 London, will be all country banks, even after the trade is thrown 
 entirely open. Neither would throwing open the circulation of London 
 to competition, make any material difference. Those banks would obtain 
 it, who have the most numerous transactions with the public in paying 
 and receiving ; and the circulation would chiefly fall either into the 
 hands of the private banks, or establishments which they would form 
 amongst themselves, to keep the profit of it in their own hands.
 
 53 
 
 be highly respectable, but possess the ability, and the 
 leisure, as well as the inclination, necessary to induce them 
 to give the attention which will be required in laying the 
 foundation of such an important institution. Two thirds 
 of many directions of public institutions consist of parties 
 who are only nominal directors, which would not be proper 
 in this case. 
 
 If the capital was raised, however, and the establishment 
 about to proceed, there can be little doubt, that not only a 
 highly respectable, but a valuable direction, in every other 
 respect might be formed. The merchants of London, from 
 the anti-social nature of their own pursuits, are not indis- 
 posed to undertake the management of public business, if 
 adapted to their convenience. In every other town but 
 London, business begets personal and friendly intercourse ; 
 and there is mostly an hour or two, in every day, in which 
 the merchants meet in the news rooms, or the exchange, 
 and mix up business with general conversation, by which 
 the tedium of it is relieved, and the spirits refreshed, and 
 prepared for the more intense and laborious occupations of 
 the counting house. But in London, there is nothing of 
 this. Every person pursues his business in the solitude of 
 his own office ; and as the more laborious part is generally 
 confided to clerks, or junior partners, the wealthy merchants 
 have generally an hour or two, and sometimes the greater 
 part of the day at their own disposal, which they are not 
 sorry to spend in meeting a board of respectable men, for 
 the conducting of any public establishment. Hence, direc- 
 tions in London aie, for the most part, valued and sought 
 after, and are, in general, highly respectable. 
 
 The direction of the proposed bank will also possess 
 many attractions. Banking on so large a scale will, in 
 itselfl, possess much interest ; the connexions and influence 
 of the establishment will be great ; the intermixture of in- 
 telligent country gentlemen will not render the association 
 less agreeable ; its success can hardly be a matter of doubt ; 
 and the public good to be effected by it, will be very con- 
 siderable : which latter will not be an unimportant conside- 
 ration with the class of men required. Hence there can- 
 not be much doubt of a valuable direction being obtained, 
 after the undertaking is made public and the subscription 
 to it received. 
 
 Now though the first steps in such an undertaking may 
 easily be performed by men of sense and business, who
 
 54> 
 
 are not in trade : such as receiving the subscriptions, nomi- 
 nating a board of directors, negotiating with government, 
 &c. ; yet they may be very unvviUing to incur an undefined 
 risk, or, by their names, induce others to do so. The 
 less practically conversant people are with a subject, the 
 more prejudices are they likely to entertain about it ; and 
 as such an establishment could not be formed, at least on 
 the best principles, without them, if it could at the present 
 moment be formed all, a charter, or Act of Parliament, 
 to limit the liability of the shareholders, was considered 
 by the committee to be essentially necessary. It was, 
 therefore, as before mentioned, resolved to apply to the 
 government to obtain one, as also for an amendment of 
 the law relative to joint stock banks generally. This like- 
 wise was done with the more confidence, as the declara- 
 tions of Ministers in Parliament evinced a great desire on 
 their part, that an improvement in the stability of our 
 banking system, by the establishment of joint stock banks, 
 should take place ; and it was naturally inferred, that a 
 mode of promoting this improvement so effectual as the 
 proposed establishment would be gladly encouraged. The 
 following noblemen and gentlemen, consequently, waited 
 upon the Duke of Wellington and Mr. Goulbourn, to 
 express the views of the committee upon the subject, and 
 secure the sanction and support of the government : — 
 
 The Earl of Darnley 
 Lord Althorp 
 Sir T. B. Lethbridge 
 Mr. Rice 
 
 Sir E. Knatchbull 
 Mr. Tennyson 
 Sir H. Parnell 
 Mr. JoPLiN. 
 
 The Duke of Wellington, in answer to the deputation, 
 stated that the government had the subject under consi- 
 deration, but declined entering upon any discussion of 
 it, on the ground that the Bank of England must first be 
 consulted. 
 
 A charter, in which the limitation of responsibility, 
 should commence after the charter of the Bank of England 
 had expired, would have answered the purpose. Indeed, 
 with the least encouragement from the government, afforded 
 either directly or indirectly, the proposed institution could 
 at any time have been formed : and something more than 
 a cold assent to measures of great public utility is generally 
 expected from a paternal government, more especially if the 
 difficulties to be overcome be great.
 
 55 
 
 It had been admitted, however, by every minister, at 
 the time and since the passing of the Act of 1826, who 
 had spoken upon the subject, that charters ought to be 
 granted to joint stock banks ; and if so, there could be 
 little question that they must be granted to banks with 
 large capitals, formed by persons whose object was not their 
 own but the public benefit. Little doubt, thei'efore, was en- 
 tertained, that if the public were disposed to subscribe to 
 the institution, that all the necessary facilities would even- 
 tually be obtained for it ; and the next step to be taken 
 was to issue a prospectus, and ascertain, before any thing 
 further was done, whether the public were disposed to 
 subscribe to it or not. But with this view, a recom- 
 position of the committee was necessary ; and a meeting 
 was held for that purpose. Sir H. Parnell in the chair, 
 when the following members of the old committee, with 
 power to add to their numbers, were chosen, to carry this 
 intention into effect : — 
 
 The Most Noble the Marquis of Bute 
 
 The Right Hon, the .Earl of Darnley 
 
 W, R. Cartwright, Esq. M.P. 
 
 Sir R. Hiix, Bart. M.P. 
 
 W. Hanning, Esq. 
 
 T. JoPLiN, Esq. 
 
 Sir E. Knatchbull, Bart. M.P. 
 
 Sir T. B, Lethbridge, Bai't. M.P. 
 
 The Hon. H. T. Liddell, M.P. 
 
 T. P. Macqueen, Esq. M.P. 
 
 W. A. MacKinnon, Esq. M.P. 
 
 Sir H. Parnell, Bart. M.P. 
 
 G. R. Robinson, Esq. M.P. 
 
 T. S. Rice, Esq. M.P. 
 
 Charles Tennyson, Esq. M.P. 
 
 Shortly after this, however, all further proceedings were 
 suspended by the change which took place in the ministry, 
 and have continued so by the succession of exciting events, 
 both foreign and domestic, that have since occurred. But 
 it is presumed that, after the Reform Bill is passed, the 
 public and public men will deem it necessary again to turn 
 their attention to the subject of the proposed institution, 
 and the improvement, so imperatively called for, which 
 would be effected by it.
 
 56 
 
 STEPS WHICH ARE NOW PROPOSED TO BE TAKEN. 
 
 Since the committee, last mentioned, was chosen, some 
 changes have taken place with respect to different members 
 of it. One Noble Lord, whose loss is deeply deplored by his 
 friends and regretted by his country, is no more; and 
 other gentlemen will be prevented by these changes from 
 giving that personal assistance to the undertaking which it 
 would otherwise have received from them. At the same time 
 the sentiments of these last mentioned parties are not at all 
 altered. They had no motive in coming forward to promote 
 the undertaking than the public welfare ; and it may be in- 
 ferred, that nothing which has occurred to any party has 
 altered that feeling in any respect. It is still the wish of 
 all the existing members of the committee that the estab- 
 lishment should be formed. It is a matter of too much 
 importance, either to have been hastily taken up or to be 
 hastily abandoned ; and, individually, the co-operation of 
 every member will be given, until at least those difficul- 
 ties have been overcome, which are apt to impede the 
 first steps of every such undertaking. On the other 
 hand, several active and intelligent members have been 
 added to the committee, who will amply supply any defi- 
 ciency in personal assistance which might otherwise have 
 been felt. The course which it is consequently proposed to 
 adopt, may be thus stated : — 
 
 1st. Public attention having been called to the subject, 
 the probability is that many gentlemen, connected both 
 with the city and the country, may be desirous to assist in 
 promoting the measure, some as members of the com- 
 mittee, who may be extremely valuable in that character, 
 and others as agents of, or friends to the undertaking, in 
 different parts of the country, to which they may wish the 
 benefits of it extended, and it will be the business of the 
 committee to avail themselves of the assistance of such 
 parties. 
 
 2nd. The first proper object of the committee being to 
 ascertain the disposition of the public to subscribe to the 
 undertaking, it will also receive subscriptions for that pur-
 
 57 
 
 pose, either addressed to the committee, or to the respect- 
 able individuals, in different parts of the country, who 
 have liberally offered their gratuitous assistance in thus 
 laying the foundation of the establishment. It, at the 
 same time, may be observed, that there is not any doubt 
 that the public only wait for the opportunity of subscribing 
 to the establishment, which will be thus afforded, in order 
 to do so. This is inferred, not only from the sentiments 
 which have been generall}' expressed, upon the subject, 
 but from the eagerness with which the capital has been 
 recently subscribed to other undertakings. Rail roads, for 
 instance, requiring three times the capital, which will take 
 four or five years, at the earliest, before any dividends can 
 be received, and whose prospects of success are neither so 
 great nor so certain as this establishment holds out, have 
 been subscribed to without hesitation. 
 
 3rd. As the subscriptions are received, a deposit will be 
 called for to be paid, to the account of trustees nominated 
 by the committee, into such banking houses as they shall 
 appoint. 
 
 4th. After such a number of shares shall have been 
 subscribed as shall render the formation of the establish- 
 ment no longer doubtful, a general meeting of the share- 
 holders will be held, to consider the further steps to be 
 taken ; when it is also proposed that a re-election of the 
 committee shall take place ; and when, as the further co- 
 operation of all the existing meinbers will have ceased to be 
 necessary, some of those chosen last year may, perhaps, 
 from circumstances arising out of the political changes 
 adverted to, be led to retire, while the gentlemen whose 
 valuable assistance has since been obtained, and those who, 
 in the mean time, may be added to the committee, will be 
 submitted to the meeting for its approbation. 
 
 With reference to the general principles which it has 
 been thus attempted to explain and illustrate, the com- 
 mittee have agreed to issue the following Prospectus, with- 
 out, however, pledging themselves either to all the senti- 
 ments expressed in the foregoing observations, or to the 
 plan proposed, until after it has been more maturely con- 
 sidered with a view to reducing it to practice.
 
 PROSPECTUS 
 
 OF A 
 
 NATIONAL 
 
 METROPOLITAN ESTABLISHMENT 
 
 FOR 
 
 BANKING IN THE COUNTRY. 
 
 The numerous bank failures, and the repeated panics, 
 with which this country has been afflicted, and from which 
 Scotland has been totally free, and the want of capital 
 experienced in the agricultural, and other districts, which 
 banks on the Scotch system would supply, have demon- 
 strated at once the necessity and desirableness of proper 
 steps being taken to introduce that system into this country. 
 
 In doing this, it would be likewise desirable to furnish a 
 stay and support to the existing private banks ; and both 
 these objects, it has been thought, might be accomplished, 
 if the system were introduced, by the formation of a 
 national bank in the metropolis, which should spread itself, 
 by means oi branches, over the country.
 
 60 
 
 The practicability of such an establishment has also been 
 sufficiently demonstrated. The Provincial Bank of Ireland 
 is a company of this description. It has its chief board of 
 direction in London, while its branches, under the manage- 
 ment of local boards, which it has been enabled to conduct 
 with great safety and success, are spread all over the pro- 
 vincial parts of Ireland. The metropolitan banks of Scot- 
 land, which also spread themselves by means of branches, 
 in a similar manner, are, likewise, the most valuable intitu- 
 tions of that country ; not only from their conducting their 
 own banking operations on superior principles, but from 
 the stay and support they afford to the private banks, and 
 other establishments, when in any difficulty. 
 
 Such an undertaking, it has been also conceived, would 
 afford a fair return for those who invested their capital in 
 it. Of ten or a dozen banks, which have been formed 
 under the act of 1826, for legalizing joint stock banking 
 companies, having their establishments for business at the 
 distance of 65 miles from London, none appear to have done 
 ill, while the greater part have succeeded in an extraor- 
 dinary manner. This is shewn by the following premiums, 
 at which the shares of several of them sell : — 
 
 Manchester Bank 25 per cent. prem. 
 
 Workington Bank 50 ditto 
 
 Halifax Bank 50 ditto 
 
 Lancaster Bank 60 ditto 
 
 Huddersfield Bank 70 ditto 
 
 Birmingham Bank 120 ditto 
 
 Bradford Bank 130 ditto 
 
 These premiums are also, it appears, the result of actual 
 success : none of them having permitted their shares 
 to be sold until after they had reported the result of their 
 first year's operations, and some having been in existence 
 two or three years. Nor is there any reason to conclude 
 that a metropolitan establishment would not, on the average, 
 succeed as well as these have done ; if there are not, on the 
 contrary, reasons for supposing that such an establishment 
 would be preferred. Hence, there cannot be much doubt, 
 that while such an institution would be highly beneficial to 
 the country, it would be equally so to those who subscribed 
 to it, and it has accordingly been proposed to form one. 
 
 Its success it has likewise been proposed to secure by 
 another arrangement, which may, with great propriety be
 
 61 
 
 adopted. It is necessary, in order to the respectability of 
 the estabHshnient, that the whole of the capital should be 
 paid up. But the capital, ultimately required will be 
 very large. It has been estimated that it may even amount 
 to ten millions, if the undertaking be completely successful. 
 It will, however, only be wanted by degrees ; and to call 
 up any considerable portion of so large a sum before it is 
 required, would be out of the question. It is, conse- 
 quently, proposed to form a bank with only one million of 
 capital in the first instance, and, as more capital is reipiired, 
 to obtain it by issuing fresh shares, after the undertaking 
 has proved successful. This being the case they will, of 
 course, bear a premium, and this premium it is proposed 
 shall devolve to the subscribers of the Okigikal Cai'ITal 
 of One Million ; thus yielding a double profit to those who 
 establish the company. 
 
 It was found, by experience, that many persons who 
 would not subscribe to an undertaking in the first instance, 
 are verv willing to give a premium for its shares after it is 
 successful ; while it is obvious, that the first establishers of 
 a concern ought to derive whatever profit is to be thus 
 obtained : though it too frequently happens that the first 
 subscribers suffer materially for the benefit of those who 
 succeed them. This injustice will be prevented by this 
 arrangement, while many other advantages will be secured 
 by it, both as regards the respectability and final success of 
 the undertaking. 
 
 Hence, in estimating the probable amount of profit, 
 if the success of the banks already formed were taken 
 as a criterion, the prospects of advantage to the original 
 subscribers from the profits of banking, on the one 
 liand, and the enlargement of the capital, on the other, 
 which would be secured by tins plan, could not be fully 
 stated without the appearance of great exaggeration. It 
 mav, however, be assumed as in the highest degree pro- 
 bable, that the stock of this institution will, before, say, 
 seven years, be at 50 per cent, premium, and that its 
 capital will have been enlarged to, say three millions, 
 at half that premium, on the average, making a j)n)fit 
 to the original shareholder of 100 per cent.; namely, 
 50 per cent, by the success of the bank, and 50 by the 
 increase of its "capital. While this cannot lie considered 
 an exaggerated view cm the one hand, the chance of loss 
 on the other, will be trifling — the capital not being sunk as
 
 62 
 
 in other undertakings, aiid the cxpences at the outset being 
 comparatively small : the amount, it may be right to 
 observe, of any deposit which it may be deemed advisable 
 to require, will be intended as an earnest of the intention 
 of the parties, and not as any criterion of the cost of 
 forming the establishment. 
 
 Upon these principles, with respect to the capital, it is 
 consequently proposed to form such an establishment ; and 
 in order to carry it into effect, a committee was last year 
 (1830) formed, who intend to obtain, if possible, such 
 an improvement in the existing laws relative to banking, as 
 to remove whatever impediments may obstruct its forma- 
 tion, and also a charter from the crown. In this they hope 
 to succeed ; but it is previously necessary to ascertain the 
 disposition of the public to subscribe to it. Their further 
 efforts must be grounded upon the fact of a body of persons 
 being ready to form such a bank, if the necessary facilities 
 be obtained. It is consequently proposed, — 
 
 CONSTITUTION. 
 
 1. That a metropolitan establishment shall be formed for 
 banking in the country. 
 
 2. That it shall have its supreme seat of direction in London. 
 
 3. That it shall have branches in the provincial towns 
 where they are now, or may hereafter be^ admitted by law, 
 and where they can be formed with the prospect of advantage 
 to the institution. 
 
 4. That the board in London shall consist of twenty-four, 
 or such other number of acting directors, as may be hereafter 
 agreed upon ; and be composed of two-thirds commercial men, 
 and one-third country gentlemen, together with honorary 
 directors, presidents, &c. as may be hereafter determined. 
 
 5. That the branches shall be managed by boards of local 
 Directors, on principles to be hereafter arranged. 
 
 6. That the qualification of an acting London director shall 
 be £2,000. stock; and of a country director £ 1,000. 
 
 7. That a balance-sheet of the affairs of the company shall 
 be annually published. 
 
 CAPITAL. 
 
 8. That the capital in the first instance shall be One Million, 
 to be termed the Original Capital, to be subscribed in shares 
 of £l00. each : the whole to be paid up, by instalments, in a 
 given time, say in twelve months after it commences business. 
 
 9. That the capital shall be further enlarged, after the un- 
 dertaking has proved successful, as additional capital may be 
 wanted, by fresh issues of shares, on the principles which have 
 been mentioned.
 
 63 
 
 CONDITIONS OF SUBSCRIBING, &c. 
 
 10. That a deposit shall be paid, upon subscribing, into the 
 hands of trustees, as shall be appointed by the committee. 
 
 11. That the shares shall not be transferable until the capi- 
 tal be paid up, or until one year after the company be formed, 
 as shall hereafter be agreed upon; but before any more than 
 the deposit is called for, an abstract of the charter, act, or deed, 
 under which it is proposed the company shall be inslittited, shall 
 he sent to each subscriber for his approbation, and, should he 7iot 
 approve thereof, his deposit shall be returjied, subject to such 
 expences as may have been incurred. 
 
 12. That one half the capital shall be apportioned to the 
 first subscribers, of not exceeding fifty shares each, in the 
 order of their application, but the other half shall be distri- 
 buted with reference to the interests of the institution. 
 
 13. That should any portion of the capital remain unsub- 
 scribed, after the formation of the bank is finally determined 
 upon, the committee shall be at liberty to dispose, on behalf 
 of the company, of the whole, or any part thereof, by con- 
 tract, at not less than par, granting the contractors the privi- 
 lege of immediate transfer. 
 
 MEETINGS. 
 
 14. That a general meeting may be called as soon after the 
 deposits are paid upon £300,000. of subscription, as the 
 committee may think desirable. 
 
 1 5. That this meeting shall re-elect the committee, and con- 
 sider the steps further to be taken. 
 
 16. That subscribers residing ten miles from town shall be 
 allowed to attend and vote by proxy. 
 
 1 7. That an authentic report of the proceedings at the gene- 
 ral meetings shall be preserved, and copies sent to the subscri- 
 bers in the country, 
 
 18. That it is proposed that the establishment shall be de- 
 signated the Royal Bank, and each branch the Royal Bank of 
 the place where situated, permission being obtained for that 
 purpose. 
 
 19- That these terms and conditions shall be subject to any 
 alterations or modifications which may be thought advisable by 
 a general meeting of subscribers. 
 
 The conditions of subscribing thus proposed, it is hoped, 
 will be considered unobjectionable. Persons wishing to do so 
 may, consequently, apply by letter, addressed to 
 
 The Com7nittee for constituting the National Bank, 
 29, St. S within' s Lane, London; 
 
 or to any of the following parties, who will obligingly give 
 theii- gratuitous assistance to the committee, and to whom a
 
 64 
 
 portion of shares, according to the amount of applications, will 
 be assigned for distribution. 
 
 Barnsley Messrs. W. & E. Newman, Solicitors 
 
 Birmingham F. Wills, Esq Ditto 
 
 Blackburn Messrs. Carr & Hargreaves ... Ditto 
 
 Bolton Messrs. A. L. & E. Haworth.. Ditto 
 
 Bristol L.O.Bigg, Esq Ditto 
 
 Bromyard R. Dangerfield, Esq Ditto 
 
 Burslem Messrs. W. & T. Harding... Ditto 
 
 Cheltenham Messrs. Straford & Cox Ditto 
 
 Chester H. Kelsall, Esq Ditto 
 
 Derby F. Jessopp, Esq Ditto 
 
 Glocester B. Bonnor, Esq Ditto 
 
 Hereford and Ross Messrs. Hall & Humfrys ... Ditto 
 
 Hull C. Frost, Esq Ditto 
 
 Kidderminster W. Brinton, Esq - Ditto 
 
 Leicester Messrs. Robinson & Ingram Ditto 
 
 Leominster W. Preece, Esq Ditto 
 
 Leeds Messrs. Moore & Snowdon Ditto 
 
 Lincoln R.Mason, Esq Ditto 
 
 Liverpool... Lowndes & Robinson Ditto 
 
 Louth F. Lucas, Esq Ditto 
 
 Ludlow Messrs. Anderson & Downes Ditto 
 
 Manchester T. W. Winstanley, Esq. ... Ditto 
 
 Newcastle-on-Tyne Messrs. C. & P. Fen wick... Ditto 
 
 Nottingham C. Swann, Esq Ditto 
 
 Preston R. Bickerstaff, Esq Ditto 
 
 Rochdale J. Woods, Esq Ditto 
 
 Stockton Messrs. Clarke and Bayley... Ditto 
 
 Sheffield J. Dixon, Esq Ditto 
 
 Shrewsbury J. Williams, Esq Ditto 
 
 Stafford T. D. Weaver, Esq Ditto 
 
 Wakefield T. Taylor, Esq Ditto 
 
 Wellington, Salop C. R. Robinson, Esq Ditto 
 
 Wigan J. Lord, Esq. ., Ditto 
 
 Wolverhampton ...J. Foster, Esq Ditto 
 
 The committee will further be happy to obtain the assist- 
 ance and support of persons of respectability and intelligence, 
 in different parts of the country, who may feel a wish to ex- 
 tend the benefits of the institution to their respective towns or 
 neighbourhoods, and will be glad to receive any communica- 
 tions from such parties. 
 
 THE END. 
 
 W. J. Ruffy, Printer, 29, Budge Row, London.
 

 
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