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cordingly be very far distant from the mind of any man who had an overdrawn account, or who required occasion. al accommodation upon a bill. The banker, fully aware of this mighty influence which he necessarily enjoys over his customer, has not unfrequently exercised it for political, as well as other purposes ; and were scrutinies to be made of the result of election contests, it would be found that in many districts the successful candidate owed no small part of his majority to the interest and influence of the banks, though it might sometimes happen, on the other hand, that the minority was swelled by the like rival interest."
In the State of New York every bank must transact its business at its own counter, with only one ancient acci. dental exception in favor of the Ontario Bank of Canan. daigua, which, possesses, till the year 1856, the power to maintain a branch bank at Utica. In England, however, and Wales, four hundred and forty-five branch banks were, in the year 1839, owned by one hundred and three jointstock banks, and so entirely reasonable is the power there deemed, that Mr. Bell says, “as well might the Legislature enact that a merchant should confine himself to one place of business, or that a ship-owner should trade only to one port,” as prevent a bank from establishing branches. But all men seem not of the same opinion, even in England; for, when evidence on the subject was taken before a committee of Parliament, we find, “one banker is entirely opposed to branches, another considers that they ought to be within the distance of an easy day's ride, to and from the parent bank: a third is inclined to think the distance should be limited to one, or, at most, two counties; while a fourth asserts that no difficulty exists in managing branches at a distance of two hundred miles and upwards, from the head office."
The power to create branch banks at will, has occasioned the following discrimination in the names by which English banks designate themselves :
“Many of the joint stock banks are distinguished by the name of district banks,' as the Manchester and Liverpool District Bank, the Yorkshire District Bank. These names indicate that those banks have been formed for the purpose of supplying the advantages of a good system of banking to the Manchester, and Liverpool, and Yorkshire districts, respectively; and that offices or branch banks are opened in subordination to the head bank, in different towns throughout those districts of country. Other banks are distinguished by the name of provincial,' as the Provincial Bank of England, and the Provincial Bank of Ireland, indicating that those establishments are severally for the purpose of diffusing a well organized system of banking throughout the provinces of England and Ireland. Other establishments, again, are designated by the different quarters of the kingdom in which they are located, as the East of England Bank, the North of England Joint Stock Bank, implying that their operations are limited to those quarters."
A joint stock bank, in England, seems to be only a species of private partnership, rather than an incorporation of many natural persons into one artificial person, as a bank is with us. The company is formed on “a deed of settlement, which prescribes the duties devolved upon the directors, and invests them with the power and privileges necessary to the full discharge of those duties." The organization is completed by the procurement of a "license given by Act of Parliament," but the object of the license seems merely fiscal, enabling the bank to compound for issuing bank notes without stamps, and subserving some other purposes connected with the revenues of Govern. ment.
The essential difference between such a bank and ours, consists in the limited liability of our bank stockholders, while in theirs, “the joint stock banks being, with a few exceptions in Scotland, unchartered companies, and there being no restriction as to the liability of the shareholders, each shareholder is liable to the public creditor to the last farthing of his property.”
We commend the following to a numerous class of persons who seem to think that banking is the distribution of favors to needy friends or necessitous merit, and hence feel aggrieved when they are not supplied with loans, irre: pective wholly of the banking merits of their applications :
“A banker is one who deals in money. This money is his merchandise, which his duty and interest require him to buy and sell to the best advantage.” “A merchant engaged in trade, procures his stock at as low a price as possible, and sells again at the best price he can persuade the public to give him, the difference being his profit, or loss, as the case may be. A banker acts on the same principle. He lends out his capital on the highest terms he can get."
The following description of a bank director is, we trust, drawn from life :
“A bank director should be a man of strict integrity and uprightness. This is a quality perfectly indispensable to the welfare of the bank. He must be above all trafficing in the stock of the Company, or taking any undue advantage over the other shareholders, through his intimate knowledge of the state of their affairs, as regards the bank. He must never, for a moment, forget, that while he is a
partner in the concern, and, as an honest man, is bound to conduct it in as faithful and diligent a manner as he would his own private affairs, that he is at the same time appointed to a solemn trust, in having the interests of numerous others, equally interested with himself, under his management and control. In fact, unless the director of a bankis a man of strict integrity, he is placed in a position calculated to be productive of great mischief. He is invested with power to ruin the fortunes of others, and to inflict much commercial evil upon the community. Where there is a want of integrity, there is a want of capacity, and the bank must necessarily be mismanaged.”
We fear, however, that English human nature is not much better than American, for Mr. Bell thinks—
" It would be a most wholesome regulation, were it stipulated in all deeds of settlement, that no bank director should be privileged to overdraw his account. The great facilities which directors enjoyed of raising money from overdrawing their bank accounts, have, in some instances, resulted in extensive commercial disasters, and in the total wreck of large establishmerts. The temptation to specuations of all descriptions which such facilities hold out, necessarily increases the risk of the bank, and induces no rigid inspection of the accommodation afforded to other customers. Where those who are entrusted with the manage. ment of the bank forget the extent and importance of the trust reposed in them, and begin to enter into unwarrantable speculations with the funds committed to their care, it is not supposable that they will be particularly scrupulous as to the general management pursued by others."
Mr. Bell's book abounds with excellent observations, and we have quoted only from portions of it that we think least known to our readers. With the same design we will close our too brief review of so valuable a book, by some extracts from his chapter on re discounts; for, though the practice is not resorted to by our country banks as extensively as it seems to be by English banks, yet re-discounts are practiced, and we do not remember to have ever before seen the subject discussed on its banking merits :
“A bank whose capital is either not commensurate with its business, or imprudently invested, becomes dependent, in a large measure, upon re-discounts. The facilities which exist for this, are chiefly confined to London bill-brokers. Few banks have any arrangements with those houses for permanent or stated advances, nor might such engagements be at all times convenient for either party. Banks therefore, which are in the position alluded to, are often put to incredible inconvenience from the caprice and disobliging manner of bill-brokers. The remedy for this is obvi. ously for a bank to confine its operations within the prudent limits of its own capital. To conduct a large business with a small capital, and depend on the London market, or even its own credit with other establishments, for the re-discount of bills, is a very unsound and unsafe system, and altogether an error in banking. The bank that is under the neces- . sity of constantly re-discounting its London paper, however large may be the profits it is enabled to divide among its shareholders, is evidently laboring with too small a capital. In fact, wherever large dividends are declared, there can be no doubt the bank is working on too small a capital. The official returns made by joint stock banks show that numerous establishments in the manufacturing and mining districts possess very inadequate capitals, and the same fact is revealed by the large quantity of paper bearing the endorsement of these banks kept constantly afloat in the money market.