on demand; but only to the bearer's banker, or agent, on demand. Now this is the sole subtlety which is supposed to save these instruments from being a direct violation of the Bank Act. They are distinctly Bank Notes-but they are crossed Bank Notes, and, therefore, are supposed to evade, by the skin of their teeth, the precise words of the Act. Now it is a well known maxim of law, that no one shall do indirectly what the law forbids to be done directly. Now the Law most expressly forbids any banking obligations payable to bearer on demand to be issued; and it is supposed that it will allow its solemn purpose to be set aside by the flimsy dodge of making the obligations payable to bearer's agent on demand! Now whether a Court of Law could, by any possibility, hold that these ingenious gentlemen have succeeded in evading the precise letter of the Law, we shall say nothing; because we little doubt but that before very long the question will be formally investigated. But there can be no possible doubt that these instruments, these crossed Bank Notes, are an utter and complete violation of the manifest purpose and intention, not only of the Bank Charter Act, but of all our monetary legislation for the last century. For what is easier than for the Bank and its customers to agree to make these Cheques for £1, and put them into circulation? Then we have at once £1 Bank Notes. So also the cheques for 10s. and 5s. are the old silver notes back again. If the Cheque Bank may do this with impunity, why may not every other bank in the kingdom do the same? The Cheque Bank professes, for the present at least, to issue its cheques only in exchange for cash. But if it does so in exchange for cash, what is there to prevent them from issuing them in exchange for bills and other securities? And why should not every other bank do precisely the same thing, if the Cheque Bank may? If the crossing is sufficient to save them from the penalties of the Act, they may equally be issued in exchange for bills and other securities. No bank discounts a bill, or creates a credit in favour of a customer, unless it believes its advance secured. And if it creates a credit in his favour which he may the very next instant demand payment of in cash, it may just as well give him these crossed Bank Notes, which will probably remain some time in circulation. There is nothing wanting but that the banker and the customer should agree to draw these cheques for even sums such as £5 and £1, or any others, and we have at once the power of unlimited issues of Bank Notes restored to the banks. Now if it should be found that the ingenuity of these gentlemen has been successful, they will have completely picked the lock of the Bank Charter Act, and opened the floodgates to inundate the country with boundless quantities of paper money, which it has been the settled purpose of the Legislature to suppress. The directors of the Bank, to do them justice, make no secret of their intentions; they intend to revolutionise the banking system of the country, and they will assuredly do it, if their experiment is allowed to proceed. For this Bank is the germ of a system which will reduce all our monetary laws and Bank Charter Acts to waste paper. After the passing of the Bank Act of 1844, a custom sprang up in some of the Midland Counties of customers drawing cheques on their bankers, which the banker accepted. These, of course, were simply Bank Notes: and a clause was inserted in the Stamp Act of 1854 to preclude such proceedings. Thus the Legislature has manifested its fixed determination to suppress banking obligations payable to bearer on demand; and when certain parties had discovered what they thought a loop-hole in the Act, Parliament immediately took care to stop it up. Now is it likely that when the Law Officers of the Crown and the Chancellor of the Exchequer are fully aware of the inevitable consequences which will sooner or later follow the operations of this Bank, they will suffer it to exist? Cheque Bank cheques are nothing more than accepted cheques, which have already been put down by law. The express purpose of Parliament is to suppress unlimited issues of circulating Banking Credit, and is it likely that they will permit their fixed determination to be set at nought by the paltry quibble that these Bank Notes are not payable to bearer on demand, but to bearer's agent on demand? The ingenious gentlemen who devised the Cheque Bank have laid a cockatrice's egg, which, if suffered to come to maturity, will inevitably devour the Bank Charter Act. Since these remarks were written the original Cheque Bank has gone into liquidation, but we allow them to remain because the conception of this Bank has been received with so much public favour, that at the present time an effort is being made to resuscitate it under the care of its original founders: and even though that may not succeed, its idea is so popular that other banks may be tempted to adopt its principle, and it is absolutely necessary to point out its utter illegality. 27. This circumstance will, no doubt, tend to accelerate, what statesmen of all parties are so anxious to avoid, a thorough and searching investigation into the whole of our Banking system. But, however they may strive to stave it off, such an inquiry will inevitably come. For each succeeding crisis will be more severe than its predecessor. In 1847, the first crisis after the Act of 1844, the Credit system was comparatively small; it had greatly increased in 1857, and the crisis was more severe; in 1866 it had greatly increased, and the crisis was far more terrible; and so it will be in future. Every year the system of Credit is attaining more colossal dimensions, and, like a huge octopus, it now grasps all classes and almost all persons in its embrace. And, like the throes of Enceladus, it will periodically convulse the world, until it is settled on true scientific principles. CHAPTER XV. ON THE RISE AND PROGRESS OF JOINT STOCK BANKING IN ENGLAND. 1. It is very commonly supposed that Joint Stock Banks were not permitted by law in England before 1826, nor in the metropolis till 1833, but the preceding narrative shews that this idea is incorrect. By the common law, Joint Stock Companies of all sorts, including, of course, banks, are perfectly legal, and, consequently, if we wish to have a correct idea of the matter, we must observe this, and then ascertain what changes and modifications were made in the common law by successive Acts of Parliament. 2. Although the first joint stock mania in England took place in 1694, no one at that time thought of getting up a joint stock bank, in fact, joint stock bank shares are the very last thing any one would think of getting up as a mere speculation. When the Bank of England was founded, it received no monopoly in its favour, and it was only in 1697, after the disastrous failure of the Land Bank Scheme, and the ruin of public credit, that the Bank was enabled to obtain a monopoly. But even that did not affect the common law right to establish such institutions, it only said that no rival bank should be erected or countenanced by Parliament. None, however, were formed; but, in 1708, another Company began doing banking business by issuing notes. The Bank then, in 1709, obtained the clause in the Act of that year, prohibiting any company of persons exceeding six in number from "borrowing, OWING, or taking up money on their bills, or notes payable to bearer on demand," which, we have shewn, was the well understood meaning of the word "banking" at that time. This clause was effectual up to 1742, when, in the Act of that year, it was re-enacted in much more full and explicit terms. But still the restriction was confined to borrowing, or OWING, money on their bills, or notes. Conse gone into liquidation, but we allo conception of this Bank has bee favour, that at the present ti resuscitate it under the care though that may not succeed banks may be tempted to ado necessary to point out its utt 27. This circumstance: statesmen of all parties ar searching investigation; But, however they may inevitably come. For than its predecessor. 1844, the Credit syst increased in 1857, a greatly increased, a will be in future. more colossal dim all classes and a' throes of Encela it is settled or W Tre of I the \ bot \ it d it would not other powerful and ence was, that when st quarter of the last ran increased Currency, irections, grocers, linenstarted up, and turned y notes, so much so, that in se country "bankers." But, as of a most rotten description, commercial crisis they failed by i 1793 no less than 100 stopped aber were greatly shaken. In 1810 stopped, a great number in 1812, 814-15-16, ninety-two commissions in against banks, and, allowing the usual ensions to one bankruptcy, in those three 60 banks stopped. In twenty-eight years, the official return shews that 273 commisagainst bankers, or we may fairly assume that JO banks stopped payment during that period. hardship of the monopoly of the Bank Charter eived, when the Bank, doing no business itself at as Bristol or Liverpool, no powerful Bank could be these places on account of it. These enormous Among the country bankers, spreading ruin and desola Sed ཚ ཚེ |