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would not consent to renew the privilege at the expiration of the period of their present charter; finding, also, that the proposal by the Bank, of establishing branch banks, is deemed by his majesty's ministers inadequate to the wants of the country, are of opinion, that it would be desirable for this corporation to propose, as a basis, the act of the 6th Geo. 4th c. 42, which states the conditions on which the Bank of Ireland relinquished its exclusive privilege j this corporation waving the question of a prolongation of time, although the committee cannot agree in the opinion of the first lord of the Treasury and the chancellor of the Exchequer, that they are not making a considerable sacrifice, adverting especially to the Bank of Ireland remaining in possession of that privilege five years longer than the Bank of England.
The act above alluded to contains the following clauses, sections 4 and 18. [See the annexed paper, marked A.l
(A)—"Provided always, and be it further enacted, that nothing in this act contained shall extend, or be construed to extend, to enable or authorize any such society or copartnership, either by any member or members thereof, or by their agent, or any other person on behalf of such society or copartnership, to pay, issue, or re-issue, at Dublin, or within 50 miles thereof, any bill or note of such society or copartnership, which shall be payable to bearer on demand, or any Bank post-bill, nor to draw upon any partner or agent who may be resident in Dublin, or within fifty miles thereof, any bill of exchange which shall be payable on demand, or which shall be for less amount than 50/., nor to bor
row, owe, or take up, in England, or in Dublin, or within fifty miles thereof, any sum or sums of money, or any promissory note, or bill of any such society or copartnership, payable on demand, or at any less time than six months from the borrowing thereof, or to make or issue any bill or bills of exchange, or promissory note or notes of such society or copartnership, contrary to the provisions of the said recited acts of the 21st and 22nd years of king George the 3rd, or of the 1st and 2nd of his present majesty, save as provided by this act in that behalf.
"And be it further enacted, that execution upon any judgment in any action obtained against any public officer, for the time being, of any such society or copartnership, whether as plaintiff or defendant, may be issued against any member or members, for the time being, of such society or co-partnership, and that in case any such execution against any member or members, for the time being, of such society or co-partnership, shall be ineffectual for obtaining payment and satisfaction of the amount of such judgment, it shall be lawful for the party or parties so having obtained judgment against such public officer for the time being, to issue execution against any person or persons who was or were a member or members of such society or co-partnership, at the time when the contract or contracts, or engagement or engagements, on which such judgment may have been obtained, was or were entered into. Provided always, that no such execution as last mentioned shall be issued without leave first granted on motion in open court, by the court in which such judgment shall have been obtained, and which motion shall be made on notice to the person or persons sought to becharged; nor after the expiration of three years next after any such person or persons shall have ceased to be a member or members of such society or co-partnership."
Resolved,—That the foregoing recommendation of the committee of Treasury be agreed to; and that the governor and deputy governor be requested to lay it before the first lord of the Treasury and the chancellor of the Exchequer.
No. V.—The first lord of the Treasury and the chancellor of the Exchequer have taken into consideration the paper delivered to them by the governor and deputy governor of the Bank, on the 27th instant.
They think it right to lose no time in expressing their concurrence in the proposition which has been sanctioned by the court of Directors, as to the exclusive privilege of the Bank of England, and are willing to agree that the two clauses inserted in the Irish act last year, and referred to in the paper communicated by the governor and deputy governor on the 27th instant, shall be inserted in the bill, which will be necessary to give effect to the new arrangement.
The first lord of the Treasury and the chancellor of the Exchequer cannot conclude without adverting to that part of the paper of the Bank which respects branches of the Bank of England. In their paper of the 13th of January, the first lord of the Treasury and the chancellor of the Exchequer have stated the reasons why they are of opinion that, under all the present circumstances, the establishment of branches of the Bank of England would not of itself be sufficient to meet all the exigencies of the country; but they are so far from wishing to discourage the establishment of such branches, that they are decidedly of opinion, that the formation of them, under proper regulations, would be highly advantageous both to the Bank and to the community.
Fife-house, Jan. 28/A.
No. VI.—At a general Court of the Governor and Company of the Bank of England, Friday, February 3rd:
Resolved,—That this Court do consent to the terms proposed to the Bank, in the papers now read, and do request the court of Directors to carry the arrangement into effect. .,.
Rbpokt from the Select Committee of the House of Commons, on Promissory Notes in Scotland and Ireland.
As it appears to your committee to be advisable to consider the state of circulation in Scotland, separately from that in Ireland, they will, in the first instance, report the result of the inquiries which they have made with reference to the case of Scotland.
The first notice of banking in, Scotland, which occurs in the Statute-book, is an act of king William the 3rd, passed in the year l(iy.5, under which the bank of Scotland was established. By this act an exclusive privilege of banking was conferred upon that bank;
it being provided, "that, for the period of twenty one years from the 17th July, 1695, it should not be lawful for any other persons to set up a distinct company or bank within the kingdom of Scotland, besides those persons in whose favour this act is granted.'' No renewal of the exclusive privilege took place after the expiration of the twenty-one years.
The bank of Scotland first issued notes of 20*. in the year 1704; but the amount of notes in circulation previously to the Union was very limited.
The bank of Scotland continued the only bank from the date of its establishment in 16Q5 to the year 1727- In that year a charter of incorporation was granted to certain individuals named therein, for carrying on the business of banking under the name of the royal bank; and subsequent charters were granted to this establishment, enlarging its capital which now amounts to one million and a half. An act, passed in the year 1765, is the first and most important act of the legislature, which regulates the issue of promissory notes in Scotland.
It appears from its preamble, that a practice had prevailed in Scotland of issuing notes which circulated as specie, and which were made payable to the bearer on demand, or payable at the option of the issuer at the end of six months, with a sum equal to the legal interest from the demand to that time.
The act of 1765 prohibits the issue of notes, in which such an option as that before mentioned is reserved to the issuer. It requires that all notes of the nature of a bank note, and circulating like specie, should be paid on demand;
and prohibits the issue of any promissory note of a sum less than 20*.
With respect to the issue of promissory notes in England, an act was passed in 1775, prohibiting the issue of any such note under the sum of 20*.; and, in the year 1777, restraints were imposed by law on the issue of notes between the sum of 20*. and five pounds, which were equivalent to the prohibition of such notes circulating as specie.
In the year 1797, when the restriction as to payments in cash was imposed upon the Bank of England, the provisions of the act of 1777, with regard to the issue of notes between 20*. and 51., were suspended. By an act passed in the third year of his present majesty, the suspension was continued until the 5th of January, 1833, but now stands limited by an act of the present session to the 5th April, 1829.
The general result of the laws regulating the paper currency in the two countries respectively is this:
That, in Scotland, the issue of promissory notes, payable to the bearer on demand, for a sum of not less than 20*., has been at all times permitted by law; nor has any act been passed, limiting the period for which such issue shall continue legal in that country. In England, the issue of promissory notes for a less sum than 5l. was prohibited by law, from the year 1772 to the period of the Bank restriction in 1797- It has been permitted since 1797, and the permission will cease, as the law at present stands, in April, 1829
Your committee will proceed to give a general view, deduced from the examination of witnesses, and
from the documents called for by the committee of the laws which regulate the business of banking in Scotland, and of the mode in which it is at present conducted.
The general provisions of the law of Scotland bearing upon this subject are calculated to promote the solidity of banking establishments, by affording to the creditor great facilities for ascertaining the pecuniary circumstances of individual partners, and by making the private fortunes of those partners available for the discharge of the obligations of the Bank with which they are connected.
There is no limitation upon the number of partners of which a banking company in Scotland may consist, and, excepting in the case of the Bank of Scotland and the two chartered Banks, which have very considerable capitals, the partners of all Banking Companies arc bound jointly and severally, so that each partner is liable, to the whole extent of his fortune, for the whole debts of the company. A creditor in Scotland is empowered to attach the real and heritable, as well as the personal estate, of his debtor, for payment of personal debts, among which may be classed debts due by bills and promissory notes, and recourse may be had, for the procuring payment, to each description of property at the same time.
Execution is not confined to the real property of a debtor merely during his life, but proceeds with equal effect upon that property after his decease.
The law relating to the establishment of records gives ready means of procuring information with respect to the real and heritable estate of which any person in Scotland may be possessed. No
purchase of an estate in that country is secure until the seisine (that is, the instrument certifying that actual delivery has been given) is put on record, nor is any mortgage effectual until the deed is in like manner recorded.
In the case of conflicting pecuniary claims upon real property, the preference is not regulated by the date of the transaction, but by the date of its record. These records are accessible to all persons, and thus the public can, with ease, ascertain the effective means which a banking company possesses of discharging its obligations; and the partners in that company are enabled to determine, with tolerable accuracy, the degree of risk and responsibility to which the private property of each is exposed.
There are other provisions of the law of Scotland which it is not necessary minutely to detail, the general tendency of which is the same with those above mentioned. There are at present thirty-two banks in Scotland, three of which are incorporated by Act of Parliament, or by royal charter, viz.
The Bank of Scotland, the Royal Bank of Scotland, and the bank called the British Linen Company. The National Bank of Scotland has 1,238 partners. The Commercial Bank of Scotland has 521. The Aberdeen Town and County Bank has 446. Of the remaining banks there are three in which the number of partners exceeds 100; six in which the number" is between 20 and 100; and seventeen in which the number falls short of 20.
The greater part of the Scotch Banks have branches in connection with the principal establishment, each branch managed by an agent acting under the immediate darections of his employers, and giving security to them for his conduct.
The Bank of Scotland had, at the date of the last return received by your committee, sixteen branches, established at various periods between the years 1774 and the present. The British Linen Company had twenty-seven branches. The Commercial Banking Company in Edinburgh, thirty-one. The total number of branches established in various parts of Scotland, from the southern border to Thurso, the most northerly point at which a branch bank exists, is one hundred and thirty-three.
Speaking generally, the business of a Scotch Bank consists chiefly in the receipt and charge of sums deposited with the bank, on which an interest is allowed, and in the issue of promissory notes upon the discount of bills, and upon advances of money made by the Bank upon what is called a cash credit.
The interest allowed by a bank upon deposits varies from time to time, according to the current rate of interest which money generally bears. At present the interest allowed upon deposits is four per cent. It has been calculated that the aggregate amount of the sums deposited with the Scotch banks amounts toabout twenty or twentyone millions. The precise accuracy of such an estimate cannot of course be relied on. The witness by whom it was made, thought that the amount of deposits could not be less than sixteen millions, nor exceed twenty-five millions, and took an intermediate sum as the probable amount.
Another witness, who had been connected for many years with different banks in Scotland, and has had experience of their concerns at Stirling, Edinburgh, Perth,
Aberdeen, and Glasgow, stated, that more than one-half of the deposits in the banks with which he had been connected, were in sums from ten pounds to two hundred pounds.
Being asked what class of the community it is that makes the small deposits, he gave the following answer, from which it appears that the mode of conducting this branch of the banking business in Scotland has long given to that country many of the benefits derivable from the establishment of Saving Banks.
Q.—" What class of the community is it that makes the smallest deposits?"
A.—" They are generally the labouring classes in towns like Glasgow. In country places, like Perth and Aberdeen, it is from servants and fishermen, and just that class of the community, who save from their earnings, in mere trifles, small sums, till they come to be a bank deposit. There is now a facility for their placing money in the provident Banks, which receive money till the deposit amounts to ten pounds. When it comes to ten pounds it is equal to the minimum of a bank deposit. The system of banking in Scotland is just an extension of the provident bank system. Halfyearly or yearly those depositors come to the bank and add the savings of their labour, with the interest that has accrued upon the deposits from the previous half year or year, to the principal; and in this way it goes on without being at all reduced, accumulating till the depositor is able either to buy or build a house, when it comes to be one, or two, or three hundred pounds, or till he is able to commence business as a master