V. BANKS (IRISH). "In no country, perhaps," says Sir Henry Parnell, "has the issuing of paper money been carried to such an injurious excess as in Ireland. A national bank was established in 1783, with similar privileges to those of the Bank of England, in respect to the restriction of more than 6 partners in a bank; and the injury that Ireland has sustained from the repeated failure of banks may be mainly attributed to this defective regulation. Had the trade of banking been left as free in Ireland as it is in Scotland, the want of paper money that would have arisen with the progress of trade would, in all probability, have been supplied by joint-stock companies, supported with large capitals, and governed by wise and effectual rules. "In 1797, when the Bank of England suspended its payments, the same privilege was extended to Ireland; and after this period the issues of the Bank of Ireland were rapidly increased. In 1797, the amount of the notes of the Bank of Ireland in circulation was 621,9177.; in 1810,2,266,471l. and in 1814, 2,986,999l. "These increased issues led to corresponding increased issues by the private banks, of which the number was 50 in the year 1804. The consequence of this increase of paper was a great depreciation of it; the price of bullion and guineas rose to 10 per cent. above the mint price, and the exchange with London became as high as 18 per cent., the par being 8. This unfavourable exchange was afterwards corrected, not by any reduction in the issues of the Bank of Ireland, but by the depreciation of the British currency in the year 1810, when the exchange between London and Dublin settled again at about par. "The loss that Ireland has sustained by the failure of banks may be described in a few words. It appears by the Report of the Committee on Irish Exchanges in 1804, that there were at that time in Ireland 50 registered banks. Since that year a great many more have been established; but the whole have failed, one after the other, involving the country from time to time in immense distress, with the following exceptions : -first, a few that withdrew from business; secondly, four banks in Dublin; thirdly, three at Belfast; and, lastly, one at Mallow. These eight banks, with the New Provincial Bank, and the Bank of Ireland, are the only banks now existing in Ireland. "In 1821, in consequence of 11 banks having failed nearly at the same time in the preceding year in the south of Ireland, government succeeded in making an arrangement with the Bank of Ireland by which joint-stock companies were allowed to be established at a distance of 50 miles (Irish) from Dublin, and the Bank was permitted to increase its capital 500,000l. The act of 1 & 2 Geo. 4. c. 72. was founded on this agreement. "But ministers having omitted to repeal in this act various restrictions on the trade of banking that had been imposed by 33 Geo. 2. c. 14., no new company was formed. In 1824 a party of merchants of Belfast, wishing tổ establish a joint-stock company, petitioned parliament for the repeal of this act of Geo. 2., and an act was accordingly passed in that session repealing some of the most objectionable restrictions of it (the 5 Geo. 4. c. 73.). In consequence of this act the Northern Bank of Belfast was converted into a jointstock company, with a capital of 500,000l., and commenced business on the 1st of January, 1825. But the remaining restrictions of 33 Geo. 2., and certain provisions contained in the new acts of 1 & 2 Geo. 3. and 5 Geo. 4., obstructed the progress of this company, and they found it necessary to apply to government to remove them; and a bill was accordingly introduced which would have repealed all the obnoxious clauses of the 33 Geo. 2., had it not been so altered in the committee as to leave several of them in force. In 1825 the Provincial Bank of Ireland commenced business, with a capital of 2,000,000l.; and the Bank of Ireland has of late established branches in all the principal towns in Ireland. "The losses that have been sustained in Ireland by abusing the power of issuing paper have been so great, that much more is necessary to be done, by way of protecting the public from future loss, than the measure proposed last session (1826) by ministers of abolishing small notes, and the measure already adopted of allowing joint-stock companies to be established in the interior of the country. As the main source of the evil consists in the interference of the law in creating a national bank with exclusive privileges, the first step that ought to be taken for introducing a good system into Ireland is the getting rid of such a bank, and opening the trade of banking in Dublin. The next measure should be the requiring of each bank to give security for the amount of paper that is issued; for after the experience of the ignorance with which the Irish banks have conducted their business, and the derangement of the natural course of the trade by the long existence of the Bank of Ireland, it would be unwise to calculate upon a sound system of banking speedily supplanting that which has been established. "Under the circumstances in which Ireland is placed, nothing would so much contri oute to her rapid improvement in wealth as the introducing of the Scotch plan of cash credits, and of paying interest on deposits. By cash credits the capital which now exists would be rendered more efficient, and the paying of interest on small deposits would lead to habits of economy, and to the more rapid accumulation of new capital.”—( Observations on Paper Money, &c., by Sir Henry Parnell, pp. 171—177.) The capital of the Bank of Ireland at its establishment in 1783 amounted to 600,000%; but it has been increased at various periods, and has, since 1821, amounted to 3,000,0001. The Bank of Ireland draws on London at 10 days' date. She neither grants cash credits, nor allows any interest on deposits. She discounts at the rate of 54. per cent. In 1828 the currency of Ireland was assimilated to that of Great Britain. Previously to that period the currency of the former was 8 per cent. less valuable than that of the latter. Subjoined is A Statement exhibiting the Amount of the Liabilities and of the Assets of the Bank of Ireland on the 20th February, 1841. Excess of Assets over Liabilities £1,122,400, exclusive of the capital of the Bank. Provincial Bank of Ireland. — This important establishment was, as already stated, founded in 1825. Its subscribed capital consists of 2,000,0004, divided into 20,000 shares of 1001. each, of which 25 per cent., or 500,000l., has been paid up. Its head office is in London; and at present it has subordinate offices in Cork, Limerick, Clonmel, Londonderry, Sligo, Wexford, Waterford, Belfast, Galway, Armagh, Athlone, Coleraine, Kilkenny, Ballina, Tralee, Youghall, Enniskillen, Monaghan, Banbridge, and Ballymena. The last 5 have been opened since 1831. The entire management of the establishment is vested in the court of directors in London. The business of the branch banks is conducted, under the control of the head office, by the managers, with the advice and assistance of 2 or more gentlemen of respectability in the district, each holding 10 shares in the bank. The business consists of discounting bills; granting cash credits after the manner of the Scotch banks; receiving deposits, on which interest, varying according to circumstances, is allowed; in drawing and giving letters of credit on other places of Ireland, Great Britain, &c.; and of other details incident to banking. It has had several pretty severe runs to sustain. In the course of a single week, in October, 1828, about 1,000,000l. in gold was sent from England to Ireland on acccont of the Provincial Bank! This prompt and ample supply effectually maintained the credit of the establishment, and did much to restore confidence. The notes of the Provincial Bank have always been payable at the places where they are issued. The Bank of Ireland began to establish branches in 1825; but the notes issued by her branches were not, at first, payable except at the head office in Dublin. This distinction, which tended to throw the principal pressure of runs in the country on the Provincial Bank and other private companies, was abolished by the act 9 Geo. 4. Several joint-stock banks have been established in Ireland since 1825, especially in 1836. But the greatest of these, the Agricultural and Commercial Bank, which had nearly 4,000 partners and 28 branches, was in no long time obliged to suspend payments, and is now in the course of having its affairs wound up. Some of the others have also been abandoned. There are comparatively few private banks in Ireland. The provisions in the act 8 & 9 Vict. c. 37., with regard to banking in Ireland, do not differ materially from those in the preceding act relating to Scotland. The prohibition that formerly existed against joint-stock banks carrying on business in Dublin or anywhere within 50 miles thereof is repealed; the charter of the Bank of Ireland is prolonged till January, 1855, when it may be dissolved on notice; notes of the Bank of England are declared not to be legal tender in Ireland; and notes for less than 20s. are not to be negotiable. A List of the Joint Stock Banking Companies of Ireland in 1846, specifying the Dates of their establishment, the Number of their Partners, the Amount of their paid-up Capital, the Situation of their Head Offices, and of their Branches, when they have any, with the fixed Issue of those authorized to issue Notes. 3,738,428 Head Office, Dublin; Branches, Head Office, London; Branches, Head Office, London; Branches, Head Office, London; Branches, Total 281,611 No Issue. 761,757 66,428 24,084 243,440 927,667 No Issue. 311,079 6,354,494 VI. BANKS (FOREIGN). To attempt giving any detailed account of the principal foreign banks would very far exceed our limits; we shall therefore only notice a few of the more celebrated. The Bank of Venice seems to have been the first banking establishment in Europe. It was founded so early as 1171, and subsisted till the subversion of the republic in 1797. It was essentially a deposit bank; and its bills bore at all times a premium or agio over the current money of the city. The Bank of Amsterdam was established in 1659. It was a deposit bank; and payments were made by writing off sums from the account of one individual to those of another. According to the principles on which the bank was established, it should have had at all times in its coffers bullion equal to the full amount of the claims upon it. But the directors privately lent about 10,500,000 florins to the states of Holland and Friesland. This circumstance transpired when the French invaded Holland, and caused the ruin of the bank. The Bank of the Netherlands was established in 1814. It is formed on the model of the Bank of England; and has the exclusive privilege of issuing notes. The original capital of 5,000,000 florins was doubled in 1819. The king holds one tenth of the shares. The affairs of the bank are managed by a president, secretary, and 5 directors, who are chosen every 6 months, but may be indefinitely re-elected. This bank discounts bills of exchange with three responsible signatures; it takes continuations on stock, and sometimes lends on bullion at such a rate of interest and to such an extent as may be agreed upon. It occasionally, also, makes loans on merchandize, but never at less than 5 per cent. Its notes vary from 1,000 florins to 25 florins; that is, from 83. to 24. The dividends have varied from 3 to 7 per cent. The shares are each 1,000 florins. The responsibility of the shareholders is limited to the amount of their stock. Its original charter, which was limited to 25 years, was prolonged in 1838 for 25 years more. The Bank of Hamburgh is a deposit bank, and its affairs are managed according to a system that insures the fullest publicity. It receives no deposits in coin, but only in bullion of a certain degree of fineness. It charges itself with the bullion at the rate of 442 schillings the mark, and issues it at the rate of 444 schillings; being a charge of ths, or nearly per cent., for its retention. It advances money on jewels to ths of their value. The city is answerable for all pledges deposited with the bank; they may be sold by auction, if they remain 1 year and 6 weeks without any interest being paid. If the value be not claimed within 3 years, it is forfeited to the poor. The Bank of Hamburgh is universally admitted to be one of the best managed in Europe. 5 The Bank of France was founded in 1803. The exclusive privilege of issuing notes payable to bearer was granted to it for 40 years, and was continued by a law passed in 1840 till 1867. This law was preceded by a very able Report, drawn up by M. Dufaure, in which, among other questions, the policy of having only one bank of issue in Paris is examined, and decided in the affirmative. The capital of the bank consisted at first of 45,000,000 fr.; but it was subsequently increased to 90,000,000 fr., divided into 90,000 shares or actions of 1,000 fr. each. Of these shares 67,900 are in the hands of the public: 22,100 having been purchased up by the bank out of her profits were subsequently cancelled; so that her capital consists at present of 67,900.000 fr. (2,716,000l.) exclusive of a reserve fund of 10,000,000 fr. represented by 500,000 fr. per cent. rentes. The capital of the bank was divided on the 1st of January, 1840, among 4,207 shareholders. The notes issued by the bank are for 1,000 and 500 fr. The dividend varies from 4 to 5 per cent. Bonuses of 200 fr. and 132 fr. a share were paid out of this reserve to the shareholders in 1820 and 1831. No bills are discounted that have more than three months to run. The customary rate of discount is 4 per cent., but it varies according to circumstances. The discounts in 1889 amounted to 1,188,719,400 fr., of which 136,640,000 fr. were by the bank's branches. At an average of the 10 years ending with 1838, the bank notes in circulation amounted to 213,730,000 fr., and the average amount of the specie in reserve in the bank's coffers during the same period amounted to 188,706,000 fr. The bank is obliged to open a compte courant for every one who requires it, and performs services for those who have such accounts similar to those rendered by the private banks of London to their customers. She is not allowed to charge any commission upon current accounts, so that her only remuneration arises out of the use of the money placed in her hands by the individuals whose payments she makes. This branch of the business is said not to be profitable. The bank advances money on pledges of different kinds, such as foreign coin or bullion, government or other securities, &c. It also undertakes the care of valuable articles, as plate, jewels, title-deeds, &c. The charge is per cent. of the value of each deposit for every period of 6 months or under. The administration of the bank is vested in a council-general of 20 members, viz. a governor and deputy governor, nominated by the king; and 15 directors and 3 censors, chosen by the general body of the shareholders. We beg to subjoin A Statement of the Liabilities and Assets of the Bank of France, on the 25th of December, 1842, deduced from the Official Statement of the Situation of the Bank published in the Moniteur. Commercial Operations of the Bank of France during the Last Quarter of 1842. (For farther information as to the Bank of France, see the Report of M. Dufaure, already referred to, in the Appendix (p. 356.) of the Report of 1840 on Banks of Issue; with the Comptes Rendus of different years; the returns in the Moniteur, &c.) Banks have also been established in Berlin, Copenhagen, Vienna, and Petersburg. Those who wish for detailed information with respect to these establishments, may consult the 4th vol. of the Cours d'Economie Politique of M. Storch, which contains a good account of the paper money of the different Continental states. The objects we have in view will be accomplished by laying before our readers the following details with respect to the Commercial Bank of Russia, established in 1818 :- This bank receives deposits in gold and silver, foreign as well as Russian coin, and in bars and ingots. It has a department for transferring the sums deposited with it, on the plan of the Hamburgh Bank. It discounts bills, and lends money on deposits of merchandise of Russian produce or origin. Its capital consists of 8,571,429 silver rubles. It is administered by a governor and 4 directors, appointed by government; and 4 directors, elected by the commercial body of Petersburg. The property in the bank is protected against all taxation, sequestration, or attachment; and it is enacted, that subjects of countries with which Russia may be at war shall be entitled-at all times to receive back their deposits without any reservation. It is also declared, that at no time shall the bank be called upon for any part of its capital to assist the government. All deposits must be made for 6 months at least, and be repayable at or before that period, and not be less than 500 paper rubles: sums so deposited to pay per cent. The deposits, if in bars, ingots, or foreign specie, are estimated in Russian silver coin, and so registered in the attestation; and if not demanded back within 15 days of the expiration of 6 months, or the necessary premium paid for the prolongation, the owner loses the right of claiming his original deposit, and must take its estimated value in Russian silver coin. No bills are discounted that have less than 8 days or more than 6 months to run. The rate of discount is 6 per cent. No interest is allowed on money deposited in the bank, unless notice be given that it will be allowed to lie for a year, and 3 months' notice be given of the intention to draw it out, when six per cent. interest is allowed. This bank has branches at Archangel, Moscow, Odessa, Riga, &c. American Banks.-The system of banking in America has attracted a great deal of attention in this country; principally, perhaps, from the extent to which English capital has been embarked in it; but partly, also, from the peculiar principles on which it has been founded, and the mode in which it has been conducted. And certainly it deserves to be carefully studied and meditated, were it only for the incontestible evidence which it affords that, how flourishing soever in other respects, a country cursed with a vicious banking system may be every now and then involved in the greatest difficulties, and reduced almost to a state of bankruptcy. Considering the peculiarly favourable circumstances under which the United States are placed, the boundless extent of their fertile and unoccupied lands, the lightness of their public burdens, and the intelligence, enterprise, and economy of the people, it might be presumed that distress and bankruptcy would be all but unknown in the Union, and that she would be exempted from those revulsions which so seriously affect less favourably situated communities. But the very reverse of all this is the fact: discredit and bankruptcy are incomparably more prevalent in America than in any European country; and all sorts of industrious undertakings and monied fortunes are infinitely more secure in Russia, and even in Turkey, than in the United States! This anomalous and apparently inexplicable state of things is entirely a consequence of the American banking system, which seems to combine within itself every thing that can make it an engine of unmixed evil. Had a committee of clever men been selected to devise means by which the public might be tempted to engage in all manner of absurd projects, and be most easily duped and swindled, we do not know that they could have hit upon any thing half so likely to effect their object as the existing American banking system. It has no one redeeming quality about it, but is from beginning to end a compound of quackery and imposture. Our own banking system is bad enough, |
