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l Scotland , and . with bankers in the produces , the London and Westminster Bank , hich as our readers are aware was the sliest joint stock bank established in Lonm , announced in their first prospectus tat they would introduce the system of lowing interest on deposits , and the rate . ey offered was 2 A- per cent .,, terms which ould yield them at the time a fair profit , ther banks arose , subsequently , producing > rnpetition , until the principle was pretty
jnerally established of allowing 1 per cent . 3 low what the Bank charged on first-class Us . It was originally intended never to ) beyond 5 per cent ., but the same spirit of > mpetition , coupled with , a desire to show rge figures in their published accounts , oke down that limit , and if we are not misformed , as much as 9 , per cent , has been lid by some of these banks on money ) rrowed from the public . "We "believe that
3 w the highest rate paid is 8 per cent .,, which 2 per cent , under the Bank rate . It was with regret that we observed a short me since , iu : a weekly journal supposed by > me persons to derive information and opiions on matters of finance from a Treasury ficial , an approval of the system of allowing rate of interest aw money at call closely j proximating to the Bank rate . This aproval was deliberately pronounced at a time hen it was understood that there was a
Lflference of opinion among the various banks i to the policy of borrowing at so high a ite . It is extremely satisfactory to learn lat this approval is in direct opposition to le sounder views of Sir CoiiNEWAtii Lewis , hich we have quoted above . The enormous power exercised by the int-stock banks and discount houses , in msequence of their large amount of deposits , is not yet received sufficient attention . Mr ; T ' EGTjEiiiN' estimated the amount on deposit
ith the London joint-stock banks at tbirty-^ e millions ; the discount houses must , at Le very least , hold fifteen millions more . At le lowest estimate , the amount of these ^ pos its was , in May last , when he gave his vi&encc , Jiffy millions , all rejpayahle upon imand , or at . a short notice . At that \ timej ie total deposits in the Bank of England mounted to sixteen millions only , and gainst this sixteen millions , the Bank eld in hand upwards of five millions in
rerve > . It is quite clear that it would not answer p place deposit money in Grovernment seeuities , on old-fashioned banking principles , iuce these return only from 'SI . 7 s . to 31 . 16 s . er cent . Ordinary banking moneys find their r ay into the Funds , because of their absolute seurity and convertibility ; but money borowed at high interest must be lent on inerantile securities , repayable at some future ate , which securities are in the meantime
3 convertible , as it is not the custom of London ankers to . re-discount bills . It is also obvious tiat the money on deposit must nil ho invested ery closely ; for if only one-tenth he held eady to meet demands , instead of one-third r one-fourth , as the Bank had against their abilitieSja large portion of pro lit is consumed . !" o put it quite plainly : supposing a bank old a million on deposit , at 8 percent . Tito
atereet is , of course , at the rate of 8 O , 00 O £ . year . If one-tenth were kept to meet daily . emandsj 900 , 000 ? . would remain to be em'loyed , and any rate below 8 / . 18 s . per cent . i ould bo a dead loss . It is ,-therefore , quite mpossiblc that anything like one-tenth can e kept unemployed , and one-third to 0110-burth , bo it remembered , is the- ordinary reervo of tho Bank of England .
Mr . WjsoukIiIN calls attention to this subset in his letter . to the CuANCKr / r . oit of this 3 X 0 HEQUEH , dated 10 th November luat year .
"The : joi&isstock banks of London ^ judging by-their published accounts , have deposits to the amount of thirty millions . Their capital is not more than , three millions , and they have on an average thirty-one millions invested in one-kind of security or another , leaving only two millions of reserve against all this mass of liabilities . It is impossible to foresee-the .-consequence of the failure of one of these large establishments ; and it is a branch of the subject which , in my opinion , more pressmgly requires the attention of Parliament than any alteration in the Banking Acts of 184 * 4 and 1845 . "
When he penned this letter , he little anticipated the trials and difficulties which the following year has produced , and it must be a . matter of congratulation with him , as-it is with the whole mercantile community , that the London banks have passed through a period of probably xinparallelled pressure and distrust . Two large Scotch banks succumbed , besides the Northumberland District Bank , the Liverpool Borough Bank , the Wolverhampton Banking Company , and the
deposit house of Sanderson and Co . ; but thanks to the energy and skill displayed in the management of the London banks , the storm has passed over , every banking engagement has been punctually met , and we may fairly hope to see shortly brighter and better days . "When the next period of pressure comes round , we doubt very much whether we shall find bankers receiving money at anything like the rates now prevailing ¦• - and we trust that future Governors of the Bank of
England will not have again to comment on published accounts showing a reserve so little commensurate with the enormous obligations of our banks of deposit . -
PRESIDENT BUCHANAN'S MESSAGE . James Buchanan acceded to the Presidency of tlie United States at a period of unusual difficulty , and since his accession the difficulties have increased . In the brief history of the United States , there have been times when the internal affairs of the Republic have been convulsed by greater political conflicts , and party feeling has at such times been much more violent : with embarrassments of this kind Mr . Buciiatstax has not to contend . They have re quired all the energy of a Washington , a Jeffjsesqn , or a Jackson ; they have reduced weaker men to tlie most painful of positions . But perhaps at no period have the affairs of the Republic demanded a greater exercise of the qualities which distinguish Mr . Buchanan above his predecessorspractical sagacity , unprejudiced desire to act for the best , and cool judgment . When he ascended the presidential chair , the Mormons had already established themselves in Utah , and had laid a way for that rebellion which has since become flagrant ; but they had not actually repulsed a party of the republican troops sent to sustain the federal authority hi a recognized State . Tlie Nebraska-Kansas difficulty liad begun , but it had not been hardened by time , and complicated by the dishonesty as well as the fanaticism , by the ineptitude as well as tho rashness , of the subordinate officials . And although the unparalleled prosperity" of tho Union , like thai ; which we have witnessed at home , had paved the way lor reaction and crisis , the crisia had not token place . ' Without pressing too severely on the character of the gentlemen who immediately preceded Mr , BucirAna . n " , avo did feel much anxiety at tho last election , that tho man chosen should be ot power and character to restore the dignit } of the chief magistracy . "Wo foresaw tho embarrassments that would surround him , and desirod to Lave at the head of tho
licpublie a man whose clear insight would enable him to discern the path through every in > tricacy . It is with some satisfaction , then , that we peruse the first message of the new President , and perceive how completely oua ? anticipations have been justified . For even the ordinary English reader can learn frongi the striking quiet and clearness of its language , the lucidity of its arguments , and the simplicity of its purpose , that the administration of the Republic has fallen to a real statesman . The first subject which Mr . Buchanan handles is that vast one of crisis and cuprencj' . In this part of his message he will ' be found to > be completely of ' accord , in prins ciple at least , with the predominant opinion : amongst our statesmen . He agrees with them in thinking the precious metals the most convenient and the safest- standard of value ; he sees the dangers which attend the spurious extension of credit by- the creation : of paper money , But a curious omission in the Federal constitution prevents the chief magistrate from enforcing his "views on thes& points , perhaps restrains even Congress , and leaves the ^ Republic , as a whole , at the mercy of its several parts , the States . While the sovereign Tight of coinage is reserved to the-Federal Grovernment , the issue of notes is left unrestrained to the banks of the States- — some one thousand four hundred in number- ; and the wholesome laws that regulate the metallic currency become powerless as soon . as they are applied to the paper currency : Some advantage will be gained , even if the President were able to do nothingTiiore than , point out the character of these-dangers ; but he also points out the possibility of a remedy , in the passing of an Act of Congress which : would make it £ the irreversible organic law of each bank ' s existence , that a suspension of specie payments shall produce its civil death ;' The instinct of self-preservation would then compel ib to perform its duties in such manner as to escape the penalty and preserve life-. The only question remaining after this clear exposure of dangers , and indication , of a remedy , is , whether Congress is up to tie standard of the President in intelligence- or patriotism . The President was the diplomatic medium for carrying on the negotiations respecting Central America—a course of litigation between England and America still unclosed . We have seen it lately represented with singular dishonesty that tho American Grovernnreiit puts upon the CI / ATto ^ -Bulweb convention a construction designed to keep open for the United States a power of encroachment . The real point in dispute is occarsioned by tho fact that the English Government lias put a construction upon the treaty designed to preserve to tliis country the right of encroachment , on the main of Honduras and . tho island of liuatan with its companion islands . This point avo have already made sufficiently clear : the President repeats the leading facts , but ixvows liis willingness to efface all past negotiations and bargaining , and to begin afresh in tho amicable hope- of closing the dispute . It is a thousand pities that statesmen either of ^ Franco or England should permit themselves to make inroads on national independence and on liberty in the name of tho independence ) of races and of human freedom ; but such is the fact . The humane 11 < a . s Oasas l ^ e rriuadcd statesmen to encourage African migration to America , in order to spare thefeeblo Indian races of tho West Indies ; and ' thus he originated tho horrors of tho slave trade . In order to put a forcible suppression upon tho slave trade , our statesmen hnvo driven it into a clandestine form of emigration , and they are at this moment enibarrasB-
TSo * yT > mwmm > 2 , 6 ; 1 & 57 : ] TBEE BJ 1 KB : !® 36
Leader (1850-1860), Dec. 26, 1857, page 1235, in the Nineteenth-Century Serials Edition (2008; 2018) ncse2.kdl.kcl.ac.uk/periodicals/l/issues/vm2-ncseproduct2223/page/11/