Paper is a word derived from the Greek πάπυρος, papyrus, the name applied to the celebrated Egyptian plant which was so much used by the ancients in all kinds of writing. It is unnecessary to describe the different expedients which men have in every age and country employed for giving permanence to their ideas, and handing them down to posterity. When the art of writing was once discovered, stones, bricks, leaves of trees, the outer and inner bark, plates of lead, wood, wax, and ivory, were all employed. In the progress of society, men have invented the Egyptian paper, paper made of cotton, paper manufactured from the bark of trees, and in our times paper prepared from old rags.

The only kinds of paper which merit particular attention are, first, the Egyptian; secondly, that made from cotton; thirdly, paper made from the interior bark of trees; fourthly, Chinese paper; fifthly, Japanese paper; sixthly, paper made from asbestos; and, lastly, paper prepared from linen and cotton rags.

Egyptian paper.

Egyptian paper is that particular kind which was used by the ancients, having been made from a kind of reed called papyrus, which grew on the banks of the Nile. Isidorus is of opinion that this paper was first used at Memphis, and Lucan (Pharsalia, lib. iii. ver. 222), speaking of a particular period, says,

Nendum flaminas Memphis connexas bibles Novarat.

But however this may be, it is certain, that of all the kinds of paper used by the ancients, the papyrus was the most convenient, both from its flexibility, and from the ease with which it was fabricated. In fact it seemed a present from nature, and required neither care nor culture. It is not certain at what particular period the ancients began to make paper of papyrus; but there are several authorities which prove that it was prepared in Egypt long before the time of Alexander the Great.

Pliny (lib. xiii. cap. 11) gives a very full description of the method of making this paper in Egypt. According to him, they divided, with a kind of needle, the stem of the papyrus into thin plates or slender pellicles, each of them as large as the plant would admit. These were the elements of which the sheets of paper were composed. The pellicles in the centre were the best; and they diminished in value as they receded from it. When these pellicles were separated from the reed, they were extended on a table, and laid across each other at right angles, in which state they were moistened by the water of the Nile, and whilst wet were put under a press, and afterwards exposed to the rays of the sun. It was supposed that the water of the Nile had a gummy quality necessary to glue these stripes together. But, according to Bruce, we may be assured that this is without foundation, no such quality being discovered in the water of the Nile; on the contrary, he found it of all others the most improper, till it had settled and become absolutely divested of all the earthly particles collected in its turbid state. He made several pieces of this paper both in Abyssinia and Egypt; and it appeared to him that the saccharine matter with which the whole juice of the plant was impregnated was that which caused the adhesion of these stripes together, and that the only use of the water was to dissolve this matter, and bring it into perfect and equal fusion. When there was not enough of sugar in the plant, or when the water did not sufficiently dissolve it, the pellicles were united by a paste made of the finest wheat flour, mixed with hot water and a little vinegar; and when dried they were flattened and smoothed by means of a mallet.

The size of this paper varied much; yet it seldom exceeded two feet, and was often smaller. It had different names, according to its size and quality. The first, called imperial, was of the finest and largest kind, and used for writing letters by the great men amongst the Romans. The second, called the Livian paper, from Livia the wife of Augustus, was next to the imperial, and in size twelve inches. The third sort, called the succedental paper, was eleven inches in size. The paper used in the amphitheatres was of the dimensions of nine inches; but it was esteemed on account of its strength, whiteness, and polish. The ink, however, sunk less in paper highly polished, and therefore the characters were more liable to be effaced. When it was not carefully soaked in the first preparation, the paper brought a less price, because letters were with difficulty formed upon it, and it emitted a disagreeable odour. To remedy this defect, the paper went through a new course of sizing and hammering; and the size employed on the occasion was made of light bread steeped in boiling water, and passed through a filtering cloth. By this means the paper became in the highest degree united, and smoother than the finest linen.

It was this paper which gave so long a duration to the works of the Gracchi in their own handwriting. "I have seen them," says Pliny, "in the library of Pomponius Secundus, a poet and citizen of the first rank, nearly two hundred years after they were written." It may be added, that there still remain manuscripts of this paper, which were undoubtedly written a thousand or twelve hundred years ago. It appears from Pliny, that the Egyptians pasted together the pellicles of the papyrus by means of the waters of the Nile; but that the polishing with ivory, and the operations of the hammer and the press, were added by the invention and industry of the Roman artists. The Egyptians seem to have known the use of size; but it is evident from the same author that the Romans used a stronger size in the making of paper. Notwithstanding the care which was taken to give strength and consistency to the Egyptian paper, the leaves, although collected into a book, were too weak to support themselves; and for this reason it was a very common practice to insert a leaf of parchment after every five leaves.

This paper formed an important branch of Egyptian commerce, which continued to increase towards the end of the Roman republic, and became still more extensive in the reign of Augustus. The demand from foreign nations was often so great as to occasion a scarcity at Rome; and in the reign of Tiberius a tumult occurred amongst the people in consequence of this scarcity. In a letter of the Emperor Hadrian, the preparing of papyrus is men- tioned as one of the principal occupations at Alexandria. "In this rich and opulent city," says the emperor, "no- body is seen idle. Some are employed in the manufac- ture of cloth, some in that of writing paper." During the time of the Antonines, this commerce continued to flour- ish; and Apuleius says that he wrote upon the paper of Egypt with a reed of the Nile prepared at Memphis.

Towards the end of the third century, the demand for this paper became so great, that when the tyrant Firmus conquered Egypt, he boasted that he had seized as much paper and size as would support his whole army. St Jerome informs us that it was much in use in the fifth century, when he flourished. The duty on the importa- tion of this commodity had become excessive towards the end of the fifth or the beginning of the sixth century; and this duty having been abolished by Theodoric king of Italy, Cassiodorus congratulates the whole world on the discharge of an impost on a merchandise which was so essentially ne- cessary to mankind.

Montfaucon and Mabillon mention several fragments written on this paper in the sixth century. One of these was a charter of the Emperor Justinian, entitled Charta Plenaria Securitatis. In 1698, Montfaucon saw, in the li- brary of Julio Justiniani, three or four fragments of Egyp- tian paper of the same antiquity; and Mabillon mentions some books of the Jewish Antiquities of Josephus translat- ed into Latin, which seemed to have been written in the same century, and which were preserved in the Ambrosian Library at Milan; but he had not seen the manuscripts. The same antiquary mentions having seen in the library of St Martin of Tours the remains of an old Greek manuscript of Egyptian paper, and which appeared to him to be of the seventh century. He also believes that the copy of St Mark's gospel preserved in the register-house of Venice is written upon the same paper; that it is the most ancient of any of the evangelical manuscripts; and that it may be supposed to have been written at the latest in the fourth century. According to the same antiquary, the Egyptian paper was used in France, Italy, and other European coun- tries, both for books of learning and for public records; and there still remains, he adds, a great number of these in the archives of the church at St Denis, at Corby, in the Abbey de Grasse, and in other convents.

It is probable that the invention of paper made of cot- ton, of which we shall afterwards treat, insensibly destroy- ed the reputation and manufacture of the Egyptian paper; but it is still a question at what particular period the fa- brication of the latter totally ceased. Eustathius, the learn- ed commentator on Homer, assures us that in his time it was no longer in use; but Mabillon maintains that many of the papal bulls were written on papyrus in the eleventh century. Count Maffei, however (Histor. Diplomat. lib. ii.; Biblioth. Ital. tom. ii. p. 251.), is decidedly of opinion that Egyptian paper was not in use in the fifth century. He considers all records written upon this paper, and dated subsequently to this period, as not authentic; and the pa- pal bulls mentioned by Mabillon, as well as the copy of St Mark's gospel, were, according to him, written upon paper manufactured from cotton. To reconcile in some measure these contradictory accounts, it may be observed, that on some particular occasions, and by some particular persons, the Egyptian paper might have been employed for several hundred years after it ceased to be in general use.1

1 Whoever wishes for a fuller account of the Egyptian paper, may consult amongst the ancients, Pliny (lib. xiii.), and Theo- phrastus (lib. iv. chap ix.); and amongst the moderns, Guilandain, Scaliger, Saumaise, Kerchmayer, Nigrisoli, Hardouin in his edition of Pliny, Mabillon in his work De Re Diplomatica, Montfaucon in his Palaeography and Collections; Maffei in his Histor. Diplomat., Count de Caylus in the Memoirs of the Academy of Inscriptions, and Bruce in his Travels to discover the Source of the Nile. the natives have written with bodkins either on the leaves or on the bark. Such is the American palm, called tal by the Indians; and also the guajara of New Spain. Every palm, the bark of which is smooth, and the leaves large and thick, may be used for this purpose.

The art of making paper from vegetable matter reduced to pulp was known in China long before it was practised in Europe; and the Chinese have carried it to a high degree of perfection. The fine paper of China is much softer and smoother than that of Europe; and these qualities are admirably adapted to the pencil, which the Chinese use in writing. Several kinds of their paper discover the greatest art and ingenuity, and are applied with much advantage to many purposes. These are capable of receiving the impression of types; and Chinese paper is celebrated for affording the most clear and delicate proof-impressions from copperplates.

The different sorts of paper vary in China according to the materials of which they are composed, and the various modes of manufacturing these materials. Every province has its peculiar paper. That of Szechuen is made of linen rags, as in Europe; that of Fo-kien, of young bamboo; that of the northern provinces, of the interior bark of the mulberry; that of the province of Kiang-nan, of the skin which is found in the webs of the silk-worm; and in the province of Houguang, the tree chu or ko-chu furnishes the materials of which paper is made.

The method of fabricating paper from the bark of different trees is nearly the same with that which is followed in the bamboo. To give an idea, therefore, of the manner of manufacturing the interior barks of the mulberry, the elm, and the cotton-tree, it will be sufficient to confine our observations to the bamboo.

The bamboo is a kind of cane or hollow reed, divided by knots, but larger, more elastic, and more durable, than any other reed. The whole substance of the bamboo, composed of filaments, and a great abundance of fibrous materials, are employed in this operation. The shoots of one or two years, nearly as thick as a man's leg, are preferred. They strip the leaves from the stem, cut them into pieces of four or five feet in length, make them into parcels, and put them into water to macerate. As soon as they are softened, which generally happens in five days, they are washed in pure water, put into a dry ditch, and covered for some days with lime watered for the purpose of slackening. They are then washed carefully a second time, and every one of the pieces is cut into filaments, which are exposed to the rays of the sun to dry and to bleach. After this they are boiled in large kettles, and then reduced to pulp in mortars of wood, by means of a hammer with a long handle, which the workman moves with his foot.

The pulp being so far prepared, some shoots of a plant named koteng are taken, and being steeped in water four or five days, are reduced to an unctuous or glutinous substance; and when the workmen proceed to make the paper, this is mixed with the pulp in certain fixed quantities, because upon this mixture depends the quality of the paper. When the extract from the koteng is mixed with pulp of the bamboo, the whole mixture is beaten together in mortars till it become a thick and viscous liquor; when it is poured into large tubs or reservoirs, so exactly framed as that no part of the liquor can escape. After this the workmen plunge their forms into the liquor, and take out what is sufficient for a sheet of paper, which, when formed and consolidated, is at once dried and detached from the mould, by being held a moment or two against a heated hollow wall, the two fronts of which are smooth and extremely white. At the extremity of this wall is placed a stove, the pipes of which are carried in a circular manner throughout the whole empty space. The sheets of paper are laid on the surface, to which they adhere till a soft brush is applied to them; and after they become dry, it is easy to distinguish the side which received impressions from the brush from that which adhered to the wall. By means of this stove the Chinese dry their paper as fast as they make it; but it is only in cold seasons, or in certain provinces, that they find this expedient necessary.

The Chinese paper must be dipped in a solution of alum before it can take either ink or colours. They call this operation foner, from the Chinese word fan, which signifies alum. The manner of preparing this solution is extremely simple. Six ounces of isinglass cut very small are put into boiling water, and constantly stirred, that it may dissolve equally. When the isinglass is wholly dissolved in the water, twelve ounces of calcined alum are thrown in, and also stirred till it is completely dissolved and mixed with the isinglass. This composition is afterwards poured into a large deep basin, at the mouth of which there is a little round piece of wood; and the extremity of every sheet of paper is then fixed in another piece of wood, with a slit made to receive it. By means of this apparatus the sheet of paper is plunged into the composition of alum and isinglass; and when it is fully penetrated by the mixture, it is drawn out, and made to glide over a little round piece of wood. The long piece of wood which holds the sheet by one end, and keeps it from tearing, is afterwards suspended with it on a wall till it becomes sufficiently dry.

The Chinese give to the paper intended for different purposes different colours; but we shall confine our observations to the silver colour, which they impart to some kinds. They take two scruples of paste made of cow's hide, one scruple of alum, and a pint of water, and boil the whole on a slow fire till the water be evaporated. The sheets of paper are then stretched on a smooth table, and covered over with two or three layers of this paste. They afterwards take a certain quantity of talc, washed and boiled in water, with a proportion of one third of alum. The whole is then dried, reduced to a powder, passed through a sieve, boiled a second time in water, dried in the sun, and again passed through the sieve. This powder is then spread equally over the sheets of paper, prepared as above mentioned; and these are afterwards dried slowly in the shade. The sheets of paper, covered in this manner with talc, are laid upon a table, and rubbed with a little cotton, which fixes a certain quantity of talc in the paper, and carries off the surplus to be used on another occasion. By means of this composition the Chinese draw all manner of figures on their paper.

The paper made from the bamboo is sufficiently white, soft, and closely united, without the least inequality on the surface to interrupt the motion of the pencil, or to occasion the rising of the materials which compose it. But every kind of paper made from the bamboo or the bark of trees is more liable to crack than that made in Europe; besides, it is more susceptible of moisture, and is sooner destroyed with dust and worms. To obviate this last inconvenience, people are obliged frequently to beat their books in China, and to expose them to the sun. It may be observed, however, that the Chinese paper, employed for various purposes in Europe, has been preserved for a long time without receiving damage either from moisture or from insects.

According to Kaempfer, the bark of the morus papifera Japanese sotera, or true paper-tree, is chiefly employed for making paper in Japan. Every year, after the fall of the leaves, which happens in the tenth month, corresponding to our December, the Japanese cut the young shoots of this tree into pieces of about three feet, and collect them into parcels, which they boil in water containing a certain quantity of ashes. If the wood be dry, they take care to steep it twenty-three hours in water before it is boiled. The parcels are kept in a close copper till the bark at the extremity of the shoots is separated from the stem about half an inch; they are then cooled, and the bark alone is fit for making paper. They begin by a preparation, which consists of cleaning the bark, and separating the good from what is bad. For this purpose they steep it in water three or four hours; and as soon as it is softened they scrape off with a knife whatever is blackish or green, and at the same time separate the strong bark of a year's growth from the slender kind which covers the young shoots. The first of these gives the whitest and best paper. If there be any of the bark of more than a year's growth, it is laid aside for the coarsest kind.

After the bark has been culled and cleaned in this manner, it is boiled in a clear ley till the matter is of such consistency, that, being gently touched with the finger, it draws off in the form of hairs, or like a collection of fibres. During the time of boiling it is constantly stirred with a strong reed, and the waste by evaporation is supplied from time to time with additional quantities of the clear ley. To make this ley, they put two pieces of wood across the mouth of a tub, and cover them with straw, upon which is laid a bed of ashes a little moistened; and when boiling water is poured on the ashes, the salts contained in them are carried down to the tub. This is what is called a clear ley. After the bark is in the condition which we have just stated, it is washed with great care; for on this washing depends in a great measure the quality of the paper. It is put into a kind of sieve through which the water can flow freely; and great care is taken to turn it with the hand till it be sufficiently diluted, and reduced to soft and tender fibres. For the finest paper a second washing is requisite, and a piece of cloth is used instead of a sieve.

When the bark is washed, it is laid upon a strong and smooth table, and beaten with a kind of baton of hard wood till it is reduced to a proper consistency. Indeed it becomes so soft that it resembles paper steeped in water. The bark prepared in this manner is put into a narrow tub, with a glutinous extract from rice and the root orei, which is very viscous. These three substances are mixed together, and stirred with the reed till they form a liquor of uniform consistency. The composition is then poured into vats similar to those used for filling the forms or moulds in our paper-mills.

As soon as the sheets are made and detached from the form, they are laid in a heap upon a table covered with a double mat. A small chip of cane is placed between every sheet, and this jutting out serves to distinguish the sheets, and afterwards to raise them. Every one of the heaps is covered with a plate or thin board of the exact size of the paper. In proportion as the paper dries, or is able to bear it without danger of being compressed into one mass, they lay on additional weights. This pressure, being intended to carry off any unnecessary moisture, is continued during twenty-four hours, when the sheets are, by means of the little pieces of reed, suspended to long plants in the open air, till they are completely dried.

The extract from rice is made in an unvarnished earthen pot, which is at first agitated gently, and then more briskly; new water is next poured in, and the whole is filtered through a linen cloth. The finishing of the process is determined by the viscosity of the substance. The infusion of the root orei is prepared in this manner: The root, peeled and cut into small pieces, is infused in water for one night, during which time it communicates a viscosity sufficient for the purpose to which it is applied.

The Japanese paper is of such prodigious strength, that the materials of which it is composed might be manufactured into ropes. There is sold at Serige, the capital city of the province of that name, a kind of paper which is fit for bed-hangings and wearing apparel, and so much resembles stuffs of wool and silk that it is often taken for them.

There are four trees used in Japan for the manufactory of paper:—1. The true paper-tree, called in the Japanese language kaadai, and characterized by Kämpfer as *papyrus fructu mori celsa*, sive *morus sativa folio urticae mortae cortice papifero*: 2. The false paper-tree, called by the Japanese katsu or kadai, and by Kämpfer *papyrus procumbens lactescens folio longo lanceato cortice chartaceo*: 3. The plant which the Japanese call orei, and which is named by Kämpfer *malva radice viscosa flore ephemero magno piniceno*: 4. The futokadai, named by Kämpfer *frutex viscosus procumbens folio telephi vulgaris emula fructu racemoso*. The description of these trees, as given by Kämpfer, may be of service in leading botanists to discover the European plants and shrubs adapted, like the Japanese, for the fabrication of paper.

Before concluding this part of the subject, it may be proper to give an idea of the attempts which have been made to increase the original materials of paper in Europe. A slight attention to the Chinese process in reducing the bamboo to a paste, by a careful and ingenious analysis, and to the method employed by the Japanese in separating the principal fibres of the bark of the mulberry, will show the absurdity not only of taking plants without any kind of choice, but of giving them no preparation, except that of pounding them with mallets. With a proper selection and right treatment, it appears probable that many of the European plants might be used with great advantage in fabricating several kinds of paper. It is evident that the materials used by the Chinese require less labour and preparation than the stuff of linen rags. The sheets of the Chinese paper are easily detached from the form; they are laid in heaps, without the interposition of pieces of woollen cloth; the superfluous water is immediately discharged; and they require not, as in Europe, the vigorous action of presses to unite the parts more closely together.

Asbestos is a fibrous substance of little strength, and the threads of which are easily broken. This substance has made from the peculiar property of supporting the action of fire without receiving any damage; and hence pieces of cloth and garters made of it are incombustible. From the knowledge of this property, paper has been made of asbestos. The manner of fabricating this paper is described by Mr Lloyd in the Philosophical Transactions (No. 166). A certain quantity of asbestos is pounded in a stone mortar till it be reduced to a substance like cotton. All the parts of earth or stone remaining in the asbestos are then taken off by means of a fine sieve, and it is formed into sheets of paper by an ordinary paper-mill. Mixing it with water reduces it to stuff; but as it is heavier than that made from linen rags, it requires to be continually stirred when it is taken up with the frames. The only excellence of this paper is, that the writing disappears when cast into the fire. But as it is of a slender consistency, and easily torn, it is rather an object of curiosity than of use.

This paper is manufactured throughout all Europe, in the East Indies, and in America, from linen and cotton made from rags collected in the cities and in the country. Paper made of linen rags was utterly unknown to the ancients. The *libri lintei* mentioned by Livy (i. lib. iv.), Pliny (lib. xiii. c. xi.), and other Roman writers, are demonstrated by Guilandin, in his commentary on Pliny, to have been written on pieces of linen cloth, or canvass prepared in the manner of painters. But it is not sufficient to be certain that paper made from linen is a modern invention; it is necessary to know by what nation, and at what period, it was discovered. Polydore Virgil (*De Inventoribus Rerum*, c. ii. c. viii.) confesses his ignorance of this circumstance. Scaliger, without any kind of proof, gives the credit of the invention to the Germans; and Maffei claims it for the Italians. Other writers ascribe this honour to some Greek refugees at Basil, to whom the manner of making paper from cotton in their own country had suggested the idea. Duhalde is persuaded that Europe derived this invention from the Chinese, who, in several provinces, make paper of rags nearly in the same manner as we now do. But this invention was practised by the Europeans before they had any communication with China, and before the taking of Constantinople, at which time the Greek refugees were supposed to have retired to Basil. The precise date of this discovery in Europe is not exactly known. Mabillon believes that it took place in the twelfth century, and cites a passage of Pierre de Clugny, born in the year 1160, to prove it. 'The books which we read every day,' says De Clugny, in his treatise against the Jews, 'are written on sheeps' and calves' skins, or on oriental plants, or, finally, ex ruris veterum pannorum.' If these last words signify paper such as we use, there were books of it in the twelfth century. But this citation is the more to be suspected, as Montfaucon himself, after the minutest search in France and Italy, could find no book on this paper anterior to the death of St Louis, in the year 1270.

The epoch of this invention was not approximately determined till 1762, when M. Mierman proposed a reward to the person who could procure the most ancient manuscript written on this kind of paper. The collection of all the memoirs sent to him, along with the manuscripts, was published at the Hague in 1767; and it appeared that this paper had been used in Europe before the year 1800.

In 1782 the Abbate Andrez published a work, entitled Dell' Origine, Progressi, e Stato attuale d'ogni Letteratura, in which he speaks of the discovery of many kinds of paper, and particularly of that made of rags. The same person maintains, that paper made from silk was very anciently fabricated in China, and in the eastern parts of Asia; and that the art of making this paper was brought from China to Persia about the year 652, and to Mecca in 706. The Arabs substituted cotton, the commodity of their own country, instead of silk, or rather of bamboo. This cotton paper was carried into Africa and Spain by the Arabs. The Spaniards, from the quantity of linen to be found in the kingdom of Valencia, seem first to have adopted the idea of using linen rags; and hence the most ancient paper of this kind is that of Valencia and Catalonia. From Spain it passed into France, as may be gathered from a letter of Jonville to St Louis about the year 1260; and it is discovered to have been made in Germany in 1312. The first paper-mill in England was erected at Dartford by a German named Spielman in 1588, who was knighted by Queen Elizabeth. In consequence of paper made from cotton being imported from the Levant, paper made from linen was introduced much later into Italy, than into France, Germany, and England.

This manufacture owes, in a great degree, the prodigious advancement which it has attained in Great Britain during the last thirty years, to the ingenious and successful application of machinery. Many of its formerly tedious and uncertain processes are thereby greatly simplified and abridged; a remarkable instance of which is the improvement of cylinder-drying. The drying process used formerly to be effected mainly by the agency of the atmosphere; but since the paper-machine was perfected, the paper is now made to pass in the web, as it is formed, over the surface of a certain number of metal cylinders heated internally by steam, and is dried off in less than two minutes, whereas it was formerly exposed in the winter season to the frequent occurrence of being for weeks or months kept in a damp state, or exposed to severe frost, to its certain and great damage.

The manufacture naturally divides itself into that which is carried on in hand-mills, where the formation of the sheet, as formerly, is still performed by manual labour; and that which is carried on by machine-mills, where the paper is formed upon the machine wire-cloth in one continuous web. To give a distinct view of the subject, it will be necessary to describe all the important parts of the operation in their order, most of which are common to both modes of manufacture.

The materials principally used in Great Britain are old Materials. linen and cotton rags, which are collected in great quantity at home. A large quantity of rags, chiefly linen, is annually imported from the different countries whence the exportation is not prohibited, viz. Germany, Italy, Sicily, and Hungary. Within the last ten years a very abundant supply of material, formerly considered as totally worthless, has been obtained from the cotton factories in Manchester and its neighbourhood; we allude to the cotton waste, and sweepings of the cotton-mills, which, by being devilled, that is, cleaned by a machine used in the cotton manufacture called a devil or skreening machine, and afterwards boiled in alkaline solution, and bleached, are capable of being converted into very tolerable printing paper.

The selection of the rags, if it should not have been performed before they are brought to the paper-mill, is there performed by women sorting them into their various qualities, which facilitates the work of the rag-cutters, whose business it also is to sort the rags into their different kinds as they cut them. The rags are then assigned, in bags or bales of from two to five hundredweights each, to the women in the rag-house. These women stand at small tables of about three feet square, the upper surface being composed of iron wire cloth, the meshes of which are about one fourth of an inch square, whilst underneath there is a drawer. A knife or short scythe is firmly fixed in the centre of the table, in nearly a vertical position, and the woman is placed so as to have the back of it standing next her, and with a large wooden box divided into several compartments upon the floor, on her right hand. She then opens and examines the seams and patches of the rags, and removes the dirt, as well as any other noxious substances, such as pins, needles, buttons, silk and worsted pieces, &c. that may be attached, which would be hurtful to the machinery, as well as to the quality of the paper. She cuts the rags, by drawing them to her across the edge of the scythe, into pieces not exceeding four inches square, which are sorted and thrown into the boxes above referred to, according to their different qualities. A great deal of the dirt, sand, &c. passes through the wire-cloth into the drawer of the table, which is opened and cleaned out at convenience.

The rags, after being thus cut and sorted, are again carefully examined by women called overlookers or overhaulers, who have the charge of seeing that the work is properly performed, and that none of the noxious substances above referred to are allowed to remain in the rags. Much of the beauty and cleanliness of the paper, when finished, depend upon due attention being insisted upon in this department; for any dirty or noxious substances, when once committed by the trituration of the stuff into an endless number of small particles scattered over the surface of the paper, are of course wholly fixed and irremovable.

Several machines have of late years been invented for the purpose of cutting rags, and thereby abridging the labour and expense. By means of rollers they are carried round a large cylindrical drum, on which knives, placed diagonally, revolve with considerable velocity and power, and cut the rags into small diamond-shaped pieces. But

---

1 See the work of Abbate Andrez, printed at Parma, 1782, in 8vo; and Mierman's Collection, published at the Hague. such machines have hitherto been found of comparatively little service, as of course they cannot perform the work of selection, or the removal of the impurities from the material, which can only be done by careful and close examination at the time of cutting the rags, and with the advantage of using the sharp knife to cut or scrape off the injurious portion. These rag-cutting machines, moreover, have been apt to cut the rags into very unequal sizes, leaving one portion much too large, and another portion much too reduced, for the due trituration of them afterwards.

After the rags have been cut and carefully examined, they are enclosed in a cylinder called a duster, the whole circumference of which is composed of iron wire cloth; it measures about four feet and a half in diameter, and is about five feet in length; and a part of the circumference opens on hinges to admit the rags, from one to two hundredweights of which are generally enclosed at a time, and remain in motion for half an hour or an hour. On the axis in the interior of the cylinder there are a number of spokes, each about one foot long, fixed transversely, which pass through the rags when they are in rapid motion, and toss them about so as to make them part the more readily with the dust, sand, and dirt, which may still adhere to them. For the coarser and dirtier descriptions of rags this machine is used with good effect before they are cut, and renders the operation of cutting the rags less accompanied with dust, &c., and therefore less unpleasant and unwholesome to those engaged in it.

The women engaged in the rag-house cut on an average about three quarters of a hundredweight of home rags, that is, rags collected in Scotland and England, in the day of ten working hours, and about one hundredweight and a half of foreign rags in the same time. This arises from the latter being of a much heavier and stronger substance, generally speaking, than the former. Their wages amount to from twopence to a shilling per day on an average. The nature of their employment, though it subjects them to the inhalation of dust and fibrous matter floating through the air, does not seem at all to injure their health, nor to warrant the adoption of what medical men have sometimes volunteered to recommend, that of breathing through sponges placed over their nose and mouth, to prevent injury to their chests and lungs.

The next process is that of boiling the rags in an alkaline ley, which is rendered proportionally strong, according to the lowness of the quality of the rags and the quantity of the colouring matter to be discharged. In some mills large open-mouthed coppers, with fire under them, are used for this purpose; in others, where there is a full command of steam, the rags are boiled in large square iron boxes, capable of containing ten or twelve hundredweights at a time. Part of the lid is made to move on hinges, or with a rope and pulley and balance-weight, for the purpose of the rags being placed in and taken out of the vessel; and before the steam is allowed to pass into the chest, the lid is secured by being screwed tightly down, and the joints of it formed by oakum to prevent the blowing of the steam. The steam passes through an upright iron pipe of about an inch and a half in diameter, through the centre of the lid down to the bottom of the chest, whence it diverges through a number of pipes or radii towards the sides of the chest. There is a false bottom, also of iron, which is in moveable pieces, about six inches above the real bottom; it is perforated by a number of small holes, to allow the boiling ley to pass constantly through the mass.

The quantity of alkaline matter varies from four to ten pounds of carbonate of soda to each hundredweight of rags, according to their quality, with about one third part additional of quicklime, to render the ley caustic. The boiling is carried on upon an average for about eight hours, after which the rags are cooled as gradually as possible, since the process of cooling, if rapidly carried on, tends to fix some of the black colouring matter again in the rags. Some makers use only lime in the boiling process, whereas others use pot and pearl ashes to a considerable extent; but we believe that a ley composed of soda and a portion of quicklime is most commonly employed.

The rags, after being thoroughly cooled, to which a gentle flow of cold spring-water let into the boiler materially contributes, are laid inside in large wooden chests for use, or at once conveyed in boxes on wheels into the engine-house, there to be reduced to pulp. As this is one of the most important processes, and requires the whole power of the mill, we shall explain it, with reference to Plate CCCCHII. This plate represents a plan and elevation of a paper-mill for four engines, EE. W is the water-wheel, on which there are segments, S, of cast iron, which work into a main pinion P. This pinion is fixed on the same lying shaft on which the spur or fly-wheels F are also hung. The motion is thus brought up to the proper speed, it being necessary that the pinions p, p, p, of the engines, and the engine-cylinders e, e, should perform about 150 revolutions per minute.

The engines, fig. 1, which are to be understood as large troughs of an elliptical form, with a division d running nearly the length that intervenes between the foci of these imaginary ellipses, consist of two sorts, according to the purposes to which they are applied, viz. washing and beating engines; the former being designed for washing and rubbing out the rags, and the latter for shortening or beating down the fibres, after the washing and bleaching processes have been performed.

These engines are generally made of strong wood, and lined inside with lead or copper; but for some years past they have been very successfully cast in iron, all in one piece, although, from their awkward shape, it may be easily conceived to be rather a difficult matter to insure a good casting of such a mass. They measure about ten feet in length, four and a half feet in width, and about two and a half feet in depth, being dimensions sufficient to contain about 112 or 120 pounds of rags. From the rapid motion and weight of the machinery, and great friction necessary to triturate the stuff, it is evident that the solid fixing of the engines is a matter of extreme importance. It is usual, therefore, to build, from a solid foundation, a substantial mass of ashlar work (fig. 2, AA), of the size of each engine, for it to rest upon.

The cylinders in the engines, technically called the rolls, and by the revolution of which the rags are ground into pulp, are formed in general of solid wood. Elm is most generally used for this purpose. They are commonly about two feet in diameter, and two feet in length. Round the circumference are firmly fixed bars of steel parallel to the axis or spindle, in bunches of two together in the washing engine, and three in the beating engine, generally about eighteen or nineteen several bunches, and making therefore in all about thirty-eight bars in the washing engine cylinder, and fifty-four or fifty-seven in that of the beating engine. These steel bars are sunk and wedged into the circumference of the cylinder, parallel to the axis, and are, moreover, firmly fastened by means of hoops, which are fitted into a groove in the ends of the cylinder, and, passing through the bars at a place cut out in them for that purpose, secure them firmly in their place.

Under the cylinder is what is called a plate, see fig. 2, that is, a number of steel bars, which lie fixed in a place

---

1 A sketch of a chest of this description will be found under the article Bleaching, vol. iv. p. 683. provided in the trough b for them. They are accurately fitted, so as to form a segment of the same circle as the cylinder itself. The number of bars varies according to the kind of work performed at the mill; but in white-paper mills, in the washing engines, the plate has generally from twelve to eighteen bars, and in the beaters from twenty to twenty-four. The breadth of the plate is almost universally the same everywhere, namely, from five and a half to six inches. A plate six inches broad is found to require quite as much power, from the increased friction, as can in general be spared.

The thickness of the bars in the washing-engine plate is generally from about three eighths to half an inch; and in the beating engine from about three sixteenths to one fourth of an inch. In the latter they are made up with wooden or copper dividers, so as to afford the necessary thickness, in all of five and a half or six inches. The thickness of the cylinder and plate-bars ought to be about the same proportion to each other: they are bevelled or tapered off about an inch or an inch and a half from the edge, like a wedge; and those in the washing engine being intended for opening and rubbing out the cloth and duly washing it, it is the opinion of the writer of this article that they ought not to be under the thickness of one eighth of an inch, and in the beaters under that of a shilling at the edge after being ground, otherwise, by the too rapid conversion into pulp, the strength of the fibre would be materially injured.

The rags having now been boiled, and brought into the engine-house, the workman, or engineer as he is called, fills the engine or trough about half full of water, till the bars of the cylinder, which project fully an inch from the wood, get hold of the water, and begin to turn it round. He then begins to put the rags into the engine, and spreads them with his hand. By Plate CCCCIII., fig. 2, it will be seen that the spindle s, which goes through the cylinder, is supported in its bearing upon an iron lever, called a lighter, L. A screw h is attached to it, and by moving that screw, the cylinder can be raised about three inches above, or depressed so as to come into contact with the bars of the plate.

Behind the cylinder it will be found that there is a rise (fig. 3, r) in the trough, which, on the side next the cylinder, forms a segment of a circle similar to that of the cylinder, and within an inch or two from it, and then descends by a rapid declivity from the point t to the natural bottom. This rise is called by the workmen the backfall, from the rags falling down upon it. The cylinder is always, when the mill is at work, enclosed in a wooden cover, fig. 4. The cover of the washing-engine has four slits or grooves cut down through the top of it, two on each side of the cylinder. The two slits w next the cylinder are made for a board of wood w, which can be put in or removed at pleasure, being guided by grooves in the inside of the cover. The other two slits c receive two frames of very fine copper-wire cloth c, having about 4900 holes in every square inch. These wire-cloth frames are generally fixed, being only taken out when any repairs are requisite.

The rags being now filled into the engine, the cylinder, by means of elevating the screw (fig. 2) h, is raised as high as it will go, as there is thereby room for a greater quantity of water being carried round with the dirty rags, and driven by it, in its rapid revolutions, against the wire-cloths. In the bottom of the trough, see fig. 1, there is a false bottom f, which is punctured through by a number of small holes, and which communicates with a cock O. This cock, when kept fully open for the first twenty or thirty minutes, has the effect, in consequence of the pressure of water and suction, of carrying off a great deal of dirty water, as well as sand and loose particles from the rags, which have escaped former cleaning operations.

When the engine has been once filled with rags and water, of which there must be a large supply constantly flowing, the cylinder, by its projecting bars, working like the paddles of a steam-boat, draws them in. It then throws them up to the top of the back-fall formerly alluded to, dashing a portion against the two wire-cloths, through which the dirty water passes, and the rags or stuff remain. A great portion of course descend the inclination at the back-fall, and by this means produce a regular progressive motion of the stuff, which comes again and again under the action of the cylinder bars and plate. The cylinder is gradually depressed as the washing goes on, till it comes as nearly as possible in contact with the plate at its lowest point. The plates are not placed directly in line with the bars of the cylinder, but lie at an angle of about five degrees. This prevents the one from being locked against the other, should the cylinder, from any cause, be too much depressed; and it is moreover necessary that they should be in that position, to promote the reducing of the rags to pulp, on somewhat of the same principle with the cutting process performed by a pair of scissors, the one blade forming an angle with the other.

To make good paper, a great deal depends upon the state of the engines, bars, and plates. If these be not in proper working order, and well fitted together, and adapted for the description of material worked, it is impossible that any subsequent care can remedy the mischief done in the engine-house. It is much to be regretted that the great demand which has prevailed for paper for many years past has induced manufacturers generally to sacrifice quality to quantity, by hurrying the process, which impairs the strength of the fibre, and injures the texture of the paper.

Mr John Murray of Hull has paid considerable attention to the state of modern paper, and has contrasted its condition with that which was made thirty or forty years since, greatly to the disadvantage of the former. Mr Murray, who has pointed out the value of the Phormium tenax, or New Zealand flax, as a substitute for hemp in making cordage, and who has also printed and published a pamphlet (in 1836) upon paper made of its leaves, which, though coarse, is remarkably strong, thus writes, in a postscript appended to that work:—"The unquenchable rage for bleaching that now prevails is carried to an extent altogether irrational, and which our calmer judgment would condemn if suffered to interpose. Paper, when bleached, if the chloride be not removed, or permanently neutralized, produces effects of the most disastrous kind." Mr Murray then refers to a number of recent publications, which, he alleges, are rapidly crumbling into dust; and seems to attribute the whole evil to excessive bleaching. Whilst we admit the ruinous effect on the fibre, of bleaching to excess, and whilst we also admit that there is much truth and justice in Mr Murray's remarks, we do not share, to the same extent, in the alarm which he experiences in contemplating the speedy ruin of the books and manuscripts of the present day; and we are rather disposed to attribute the evil complained of, not by any means so much to excess of bleaching, as to the hasty preparation of the stuff in the engines.

In any former treatises on paper-making which we have seen, we observe that the trituration of the rags is described as an operation of cutting. If the bars and plates of the washing engines are kept so sharp as to cut the rags, nothing can be conceived more injurious. Every paper-maker knows that the stuff is rendered mellow and soft, by being rubbed out by blunt bars and plates. The longer the time occupied by this operation, the more water will the stuff incorporated with it hold when it is worked into paper, and the less easily will the water drain off from it, which is always a sign of strong paper. Stuff, on the other hand, which has been quickly prepared by sharp tackle, never has the water properly beaten up with it; but the fibres, having been cut down, as it were, are held in suspension in the water merely, and the paper made from such stuff is always weak, flimsy, and perishable.

An abundant supply of fine water is very essential to produce paper of fine quality. When the rags are first begun to be washed, the engine consumes about a hogshead per minute for the first half hour; but this quantity is soon diminished by the rags being opened up into pulp, and thereby taking up more room for themselves in the engine, till, towards the conclusion of the washing process, the water which passes through the wire-cloths does not amount probably to one-twentieth part of that quantity.

In reducing the rags to half stuff, about three or four hours have been hitherto considered as necessary for fine papers; but, from the desire to produce a large quantity, it is the practice of most machine-mills now to do this in half the time, to the very great injury of the fabric. The power required to keep each of the cylinders moving the stuff, when pretty near to the plate, is equal to about five horses.

The rags having undergone the process of being washed and broken in, that is, rubbed into half-prepared pulp, the engineer shuts off the supply of washing water, and then, by means of an iron hook two feet and a half long, which he inserts into the cavity of a conical brass valve, fitted into a pipe at the bottom of the trough or engine, raises that valve, and the half stuff then flows through a pipe of about six inches diameter, into the bleaching-house, situated in the under story, where it is received into a draining-chest of pretty large size, and suffered to part with the water, which flows through a number of very small holes bored in the wood. As soon as the stuff is emptied, the washing-engine is again filled with rags, as before.

The bleaching process is carried on in some mills by the rags being subjected in close chambers to the action of chlorine, which is produced in leaden retorts, from sulphuric acid, sea-salt, and the black oxide of manganese, and for an account of preparing which, we refer to the article Bleaching. In a great many mills, however, where this mode was long carried on, it has been entirely abandoned, and the practice of steeping the rags in a solution of chloride of lime has been very generally substituted, particularly in Scotland. The advantage, in the latter process, consists in the stuff not being so much injured in the fabric as if exposed to chlorine itself; and although the whitening effect may not be produced so speedily or completely as if done by the action of the gas, yet, by giving the steeping process plenty of time, that is nearly compensated for, and there is much less waste in the latter than in the former process.

The bleaching house for steeping consists of a long apartment, according to the number of sheets necessary for the extent of the works, and about sixteen feet wide. A passage of three or four feet wide goes down the middle, and on each side are arranged stone chests about three feet deep, and containing about fifty-seven cubic feet. In each there is a false bottom, which has been made of many different materials, none of which is so good as could be wished, to resist the action of the chloride, and which, therefore, require frequent renovation, viz. lead, copper, wood, stone, slate, &c. The false bottom is pierced through with a number of holes, as small as can be made; and under the false bottom there is a small pipe, into which a valve is fitted, and attached by a wire reaching up to the top of each chest, by pulling which, the liquid is allowed to escape at pleasure into a large tank, extending under the whole of the chests. In this tank is sunk a pipe, with a pump, for the sake of raising the liquor. Although this solution be now very weak, yet it is much better than pure water, and therefore it is so far eligible to make use of it.

The half stuff having come down from the washing engine into the draining chest, which is situated about three feet higher than the level of the stone bleaching chests, and being now freed by drainage of a great part of the water with which it descended from the engine, a part of one of the sides of the draining chest, being a kind of door on hinges, is opened, and the stuff is promptly raked into an iron square box lined with wood or metal, which moves on a railroad fixed along the passage above referred to, and is carried to each of the chests in succession, as they are ready to receive the stuff. About one hundredweight of rags is laid in each chest, and receives upon an average from six to eight pounds of Tennant's strong saturated chloride of lime, according to the quality of the rags, in solution with about twelve gallons of water; and the chest is then nearly filled up with the weak liquor pumped from the tank. Great care is necessary to keep the stuff frequently stirred, otherwise the whitening throughout would not go on regularly. It is always found, that from the effect of the air and light, the upper stratum of the stuff in the chests becomes white, whilst what is under is for some time but little affected.

The stuff is allowed to remain in the steep for twenty-four hours before the liquor is allowed to drain off, and of course there must be as many chests as there are hundredweights of stuff prepared in the twenty-four hours; but it is found not to have reached its maximum of whiteness even in twenty-four hours, for the stuff which has been set to steep on Saturday, is always found on the Monday mornings to be of a somewhat purer white than on any other morning.

After the time for steeping has expired, the stuff is again lifted into the iron box formerly mentioned, which, being full of stuff, is moved on the railway till it is placed on a moving sole of a Bramah hydraulic press, which is situated in a convenient part of the passage; and the water being injected by pumps moved by the machinery of the mill into the piston of about ten inches diameter, causes by its great pressure the iron sole, with the wet bleached stuff upon it, to rise against a wooden ram, as it is called, of the exact size of the box containing the stuff. What remains of the chloride in solution, as the ram enters into the box, is thus gradually pressed out, and flows into the tank formerly mentioned as situated under the chests. The ram enters into the box about one half of its whole depth, and it will be seen by the annexed table what space is occupied by a hundredweight of the material in its raw and manufactured state at different stages of the process.

One hundredweight of linen rags cut, but not pressed, occupies a space of about 5½ cubic feet.

When in the washing engine in process of washing...........................................46

When drained of all the water that will flow from it...........................................25½

When pressed by the ram...........................................7½

The object of pressing out the liquid weak chloride of lime is to lighten the labour of raising the stuff to the higher story of the engine-house again, and also to render the process of washing it out the more easy; for it is most essential that none of the bleaching matter should be left in it.

This washing is performed in precisely the same way as that of the rags, and goes on for about an hour, after which, in the same engine, the pure water being shut off, and the boards in the cover of the engine being put into their places, the pulp is reduced considerably in length of fibre in the same engine with blunt tackle, which tends to soften the stuff, and make it mellow. The engine which is specially set apart to wash out the remains of the chlorine, and to soften the stuff, is sometimes called the intermediate engine; the stuff being now half way between rags and paper, and called half stuff.

The stuff is then let down to the beating engine by lifting a valve in the pipe, and it is then beaten down by tackle considerably sharper than that in the washing engines. The stuff is here, as it were, combed out into fibres of perhaps one eighth of an inch in length, and this operation for fine paper ought to take from four to five hours; and, from the friction between the cylinder bars and those of the plate, the stuff ought to become moderately warm. It is now in a condition to be made into paper; and, by a valve being lifted, it flows out of the beating engine by a pipe which conducts it to a large stone or wooden reservoir called a chest in the vat-house or machine-house.

The apparatus for the formation of the paper in single sheets at a time by the hand consists of:

1. A chest for receiving the prepared stuff, and which, if there be enough of fall in the situation, it is extremely desirable to have situated about three feet higher than the vat, in order that the stuff may flow from the chest to the vat gradually as it is worked into paper, otherwise it must be lifted by a lad at intervals by means of a copper pan.

2. The vat, which is a stone vessel about six feet square, and about four deep. It is agitated by a hog or little wheel about twelve inches in diameter, which revolves through the whole length of it to keep the stuff constantly stirred; for the fibrous particles, being heavier than water, would otherwise sink.

3. The moulds or frames, of which a pair is required, so that when the vatman is dipping the one into the stuff, the coucher may be placing the sheet on a layer of felts, of which from four to eight quires, according to the size of the paper, form a post, that is, the whole quantity which is brought under the press at one time. The vatman stands at one side of the vat, and the coucher at the far corner of the side, on the vatman's left hand, and facing him; and between them is a narrow ledge of wood, on which the mould is sent from the vatman to the coucher. The vatman always holds in his hand a frame of wood called a deckle, which is about an inch broad, and is made to fit exactly all round the edge of the mould, for the purpose of forming a clean and not a ragged edge to the sheet; it is this which is called the water-edge, and which is so easily distinguishable from any other species of edge than can be otherwise produced as to have been generally adopted in paper used for banknotes. This description of paper is in consequence generally made on moulds of the size of the note, that it may possess the water edge, for the purpose of rendering forgery more difficult.

The moulds are made of brass wires or wire-cloth fixed upon a wooden frame, which is generally made of mahogany. A number of wooden ribs are fixed across the frame, placed at intervals of about one inch from each other, for the wires or wire-cloth to rest on. When wires only are used, these are laid longitudinally along the frame and across the wooden ribs, and interlaced with a wire somewhat thicker than the wires running lengthways, which is placed on the top of each rib. Paper made on such moulds is called laid, in contradistinction to what is made off the screen wire-cloth, and which is therefore called score paper.

When the vatman dips the mould into the vat with the deckle upon it, he takes up a quantity of the pulp, which has been previously mixed with a great deal of water, and well agitated by the hog; he then throws off a great portion of the stuff and water over the edge of the mould farthest from him, and bringing the mould to a horizontal position, shakes it to and from him, which connects the fibres together so as to form one uniform fabric, and shakes out the water. To attain this method perfectly requires a long apprenticeship, simple as it may seem. As soon as the pulp is no longer in a liquid state on the mould, the workman raises the deckle with his fore-fingers and thumbs from off the mould, and with his remaining fingers shoves the mould along the ledge before referred to, to the coucher, who is ready to receive it, and who places it in an inclined position upon a small wooden curved stay, on which it reposes for a few seconds, that the water may be further drained from the newly-formed sheet. The coucher is in the mean time pitching a felt or piece of blanketing upon a wooden plank of the proper size, and then takes the mould and presses the face of it upon the felt, which receives and takes off the sheet of paper from the mould, still in a very wet state. The mould, being now freed of the sheet formed upon it, is pushed back along a wooden bridge, as it is called, which is joined to the ledge, and is placed at right angles to it. The bridge crosses the vat in front of the vatman, and the mould lies on it ready to be used by him, whilst the other mould is employed by the coucher. The process is continued till all the felts, being placed above each other with a sheet between each, are employed, which takes about half an hour. A heavy plank is then placed on the top of the post, as this quantity is called, and the whole is drawn in on a railroad, or rollers, under a press which is contiguous, and where the water is squeezed out, either by means of a screw, or by a Bramah hydraulic press. The paper, when it comes out of this press, is so coherent as to admit of being handled, and the sheets are accordingly laid together in a pack by themselves, the felts being placed on a wooden deal between the person who takes off the sheets from the felts, called the layman, and the coucher, who immediately, with the aid of the vatman, begins a new post. The water-mark is produced by wires in the shape of the letter or design being raised upon the surface of the mould.

After a number of packs have been made, they are put into another press, where they are made to sweat by pressure; that is, just to part with a small quantity of water, which comes from them in single drops. If the pressing be carried on too quickly or too long, the paper would be damaged by the sheets adhering to each other, and peeling or tearing when attempted afterwards to be separated.

The paper is then parted sheet by sheet, so as to be enabled to undergo another pressure before it goes to the loft to be dried. In fine writing paper it is the practice to part the paper twice over, pressing between each parting. This is to make the sheets lose the marks of the felts, and to get the paper as dry as possible before it goes to the loft.

The lofts consist of a number of spaces filled with tribbles, that is, hair-ropes fixed into spars of wood, the ends of which are made to slide up and down the upright posts of wood, one of which is fixed at the corner of each space. The paper is hung up in spars, as they are called, of five or six sheets thick, upon the ropes, by the help of a wooden cross, shaped somewhat like the letter T. The workman holds this cross at the lower part of it, and the top of the cross must be as long as the width of the sheet. The dryworker then, with his left fore-finger and thumb, pinches the corner of the hard-pressed pack, which has undergone one, two, or, if fine writing paper, three, hard-pressings since it left the felts. He then partially raises by that corner the spar of five or six sheets, and with the cross gently catches the paper, which he slips over the hair-line, and leaves it there suspended. The pack is placed on a table which moves on small wheels, and against which the workman stands, and which he can push or draw with ease to any part of the loft that he pleases. When the tribble lines are all full, he pushes up the sides or spars upwards along the upright posts, which are bored all the way up for small pins of wood that support the tribbles; about eight or nine tribbles fill a room, as it is called, that is, each space. The sides of the lofts are boarded with spars of wood, placed vertically, about four inches wide and four separate. Inside of these are shutters made exactly similar, but fixed on wheels which move in a groove, so as to shut in the loft entirely or partially, or leave it open, according to the state of the weather. Many lofts have, in addition, woollen curtains within the shutters, which, with the addition of the heat derived from steam carried round the loft in pipes, are most serviceable for drying when the state of the weather renders it impracticable to dry by the air.

When the weather is favourable, the paper, before being sized, may be dried in twenty-four hours. After being sized, it ought not to be dried in less than three or four days, as by too rapid drying the size has a great tendency to fly from the paper; and therefore, when hung up after undergoing this process, the shutters are, in general, immediately closed upon it, so as to make the drying as gradual as possible.

Messrs Cowan's drying lofts at Valleyfield Mills, near Edinburgh, are perhaps as extensive as any in the kingdom. The paper is brought up to the loft by a crane on a scale, which is then in the loft placed on a carriage upon wheels, that moves on a railway along the centre of the lofts, forming a continuous line of about 360 feet in length. There are about 60 rooms or spaces, with nine tribbles in each, making about 500 tribbles in all, which, when filled, hold about 1200 reams of post paper.

The paper up to this point is quite bibulous, and therefore unfit to bear the ink. It is therefore transferred, when dry, to the sizing-house. The size is made from the refuse of tan-yards, called scrolls, consisting of the parings of skins, pates, ears, &c., which materials range in price, according to quality, from £20 to £40 per ton when thoroughly dried. The scrolls, as these pieces are called, are boiled for about ten hours, and the gelatine gradually and carefully strained off through straw, branches of trees, charcoal, &c., and lastly, through fine flannel bags. An addition of alum to the amount of about one fourth of the weight of the scrolls is then made. The size is run into chests or casks for use, where it soon congeals. When run off it is much too strong to size any description of paper with. When the sizing operation is to proceed, therefore, it is mixed up and diluted with water, in a small boiler, and heated with steam. From the boiler it is made to flow in a spout into a tub of about five feet square, which is also heated with steam introduced under a false bottom, it being very essential to use it always very hot. An additional quantity of alum is also made use of, which is placed in the spout, and is gradually dissolved as the size flows down in contact with it. The workman stands close to the tub, and dips the paper in handfuls, containing about six quires on an average, with a wrapper at top and bottom, which he soaks thoroughly, turning it backwards and forwards, so that every portion becomes completely penetrated with the size. It is also allowed to remain some minutes soaking in the tub, being held by wooden pincers suspended by a balance-weight. He then carefully lifts them out one by one, and places them in a press, adding to the heap till the press is full. The surplus size flows, and is then by a moderate pressure squeezed out of the paper, the edges of which are next rinsed by hot water, before the pressure is taken off, to prevent them from adhering together; and with the same view the heaps of paper, when taken out of the press, are enveloped with woollen cloths, so as to exclude the cold air.

Moreover, to prevent the paper from sticking when it is strongly sized, it is separated or parted sheet by sheet, after which it is pressed moderately, so as to make the spurs slightly adhere together. It is better to keep the sized paper forty-eight hours before hanging it up to dry, and then the more gradual the drying the better.

Another mode of sizing, which tends to save both labour and wrappers, is by means of a machine or wooden table about two feet from the floor, above which are placed two spars of wood parallel to each other, supported from the table. The spurs of paper are placed vertically on the table, that is, their long edge resting on the table and across it; and between each spur a thin slip of wood is introduced, which is attached to the spars of wood by means of hooks and eyes. The slips of wood are then pressed somewhat tightly together, so that the whole mass is easily raised, by a pulley fixed overhead, to a small carriage, by which the paper, when raised from the table, and thus suspended in the air, can be wheeled right over the tub, into which it is let down to receive the size. This tub is divided into two compartments by a wooden sole affixed to a screw, which lies horizontally, and is worked by some wheels, so as to press the paper. The paper, when let down into the other portion of the tub, has the frame and slips hooked away from it as soon as it is gently pressed by the screw, so as to keep it from falling down. The hot size is then allowed to flow in amongst the paper, on which, when thoroughly soaked with size, the screw is made to work, and to press it. A board which has been pressed down against the paper is now fastened to a board of similar construction by means of strong iron clamps, and the screw is worked back again, leaving the paper still under pressure. A strong false bottom of wood, on which the paper rests, is now raised by means of a rack and pinion, and with it the paper and the heavy planks confining it, above the liquid size; and whenever the pressure is removed, it is at once set aside as sized. The size left in the tub is then pumped back to the boiler to be again heated.

There cannot be a stronger evidence of the necessity for the stuff being well prepared, in order to obtain a sound paper, than the process of sizing. If the stuff has been slowly prepared by trituration, so as to hold a good deal of water, it will also hold and keep the size in a manner corresponding thereto; whereas a quickly prepared stuff, which has been cut rather than rubbed out, however strong the size that may be employed, can scarcely be got to keep it. It is also very injurious should any of the chlorine or chloride of lime be left in the paper unwashed out, as the glutinous matter is thereby decomposed, and rendered of no avail.

After the paper has again been thoroughly dried, it is taken to the salte or finishing-house, where it is pressed very often in order to take out the marks of the lines, and to improve the surface generally. The hot-pressing is carried on by means of smooth paper boards which have been glazed by passing through metal rollers. The paper is placed alternately between these, and heat is communicated by hot iron plates being laid upon these at intervals of about six quires. These plates are heated in an iron box, into which a supply of steam is sent, and where they do not generally require to be more than five or ten minutes. These plates,

---

A very laborious operation, and one injurious to the paper, used to be performed in the salte; that of picking out the knots and lumps in the paper by means of small knives. The paper could not fail to be injured by this system of scraping, and the ink was always apt to sink where it had been scraped; but this operation is now rendered almost unnecessary by the invention of the strainer, through which the pulp is strained before it passes into the vat. by means of pressure, communicate a good deal of heat throughout the paper, after it has been all brought under the action of the hydraulic press.

In consequence, however, of the general use of steel pens, and perhaps to some extent of the fashion of the day, it is necessary to finish fine letter-papers now with a much higher gloss, and various methods have been adopted for this purpose. One of these methods consists in using, instead of the hot-pressing smooth glazed boards, copper plates made very smooth, on which the sheets of paper are laid, a copper plate and a sheet of paper alternately. These, when filled with about one quire of paper, are passed between a pair of iron rollers, where the pressure is equal to twenty or thirty tons, and which are driven by the machinery of the mill. By moving a clutch, a small wheel is thrown in and out of gear at pleasure, so that the workman can instantaneously reverse the motion of these rollers, and they can be made either to take the copper plates away, or to return them again towards him after they have passed through, so as to sustain the pressure twice over. Another workman attends on the other side of the rollers to return the copper plates. It requires three women to be attending to fill and empty each set of copper plates, one filling in the rough, another taking out the smooth paper, and the third lifting off the copper plates in succession, and placing them on the sheets of paper as these are laid down. When the paper has had three or four pressures, it is pretty smooth, and is then denominated rolled or hot-pressed; but if it be passed more frequently through the rollers, it acquires a higher surface, and is then called glazed. Each set of three women can in this manner fill in about twenty reams of paper in one day. The work is laborious, from the quickness with which it is done; and, from the sharp edges and corners of the copper plates, and of the paper itself, the women are very liable to have their fingers cut, so that this department of work is not very popular, and in some manufactories it has acquired the name of the tread-mill.

Another mode of giving a higher surface to paper is by passing it through a calender, or cylinders which have been made of cast iron, copper, or brass, or one of them, like the ordinary calendars, consisting of a paper bowl. But these, although they be accurately fitted and polished, are all more or less liable to receive marks or indentations from any minute hard substances, or from folds or creases which may be in the paper, and which they give out again, and thus mark the paper.

The paper is now, after being rolled or glazed, told out into quires or half quires, folded, and made up into reams, and is subjected to pressure under hydraulic presses in every stage. It is then tied up in a wrapper, with a label on it, for the protection of the duty, and, the labeling being filled up by the trader and officer respectively, the paper is weighed by the latter, and stamped, so as to denote the amount being charged against the maker. The trader is allowed to keep his uncharged paper in bond, so that he is so far more favourably situated than those who follow many excisable trades, where the duty is levied on the raw material, or on the article in some process of manufacture. The regulations deemed necessary to protect the revenue are abundantly complicated and contradictory; but it must be allowed that, within the last few years, a disposition seems to have been manifested, both by the Board of Excise and their officers, to afford every facility, and cause as little annoyance as possible to the manufacturer; whilst the officers are now, generally speaking, a much more respectable and efficient class of men, than when their ranks used to be recruited from the decayed lacqueys and dissipated butlers of the gentry; and undeniably the appointment of Sir Henry Parnell's Commission of Excise Inquiry in 1833 has tended much to promote the comfort and freedom of the trader, and, at the same time, to afford additional security to the interests of the revenue.

Hitherto we have considered this manufacture as carried on by the hand. The papers made in that way are, for the most part, fine writing papers, into which it is necessary to introduce the water-mark, showing the maker's name on the mould. As the machine cannot have a water-mark nor make any paper except upon a wire-cloth, all water-marked and laid paper is necessarily made by hand.

The stuff having come from the engine-house in pipes, and being contained in large circular chests or reservoirs ready for use, is in them kept constantly stirred by wooden agitators, so that it may not sink to the bottom, or flow out on the machine in thick and thin portions.

The machine which is now used so universally all over the kingdom is the invention of a Mr Louis Robert, and was brought to this country by M. Didot of Paris, who came over to England about thirty or forty years ago, and, with the assistance of MM. Fourdrinier, and Mr Donkin the engineer, succeeded in perfecting the invention, and in acquiring a patent right, which was afterwards renewed for a longer period by parliament, in consequence of the patentee's not having derived sufficient compensation.

The stuff flows out of the chests CC, Plate CCCCIV., by a pipe p, on which there is a cock b, which the machineman opens more or less wide, according to the thickness of the paper to be made. It falls into the spout s, where it meets a large supply of water, which has been in great part passed through the web of pulp before, as will be afterwards explained. It then falls into the vat at the opening of the spout, and is there agitated by the little hog, as it is called.

A very important improvement has, however, been introduced at this stage, which, though not part of MM. Fourdrinier's machine, is now universally applied to it. We allude to the straining of the stuff, and thereby keeping out of the paper all the knots and hard substances which it was formerly necessary to scrape out in the salle, to the great injury of the surface of the paper. The strainer is an American invention, and has been introduced into England for about nine years; and a patent is now enjoyed for it by the Messrs Ibotson of Poyle Mill, Buckinghamshire.

The strainer is generally used before the stuff flows into the vat. It consists of a brass rectangular trough of about five or six feet in length by two feet in width, with sides about four inches deep. The bottom consists of a number of heavy bars of brass, the surface of which is perfectly planed and polished. They are about one inch in breadth, and can be taken out at pleasure. When the strainer is at work, these bars, which rest on a projecting ledge, and which are very firmly fixed in by wedges, &c. are placed so as almost to be in contact along the whole of their well-fitted edges; and the spaces between them at the sides are occupied by thin wedges, of such a size as to correspond to the length of the fibres. The strainer is driven by means of a light iron or brass shaft which passes above it, and has two small notched wheels, one placed above each end, and working into the frame of the strainer. When the shaft revolves, therefore, it will be seen that at every notch the strainer is raised, and then quickly descends by its own weight, so as to produce a continual jerking motion, making about a hundred and thirty strokes per minute. The stuff is now flowing in, and the bars are placed so close to each other that the fibres must necessarily pass longitudinally. The knots, &c. are therefore kept back, and as they accumulate in the strainer, the workman, with a wooden rake, draws them towards himself, then shuts off the flow of the stuff in that direction by means of a kind of sluice, composed of a piece of wood, which is covered with felt, and which is pressed in across the strainer. The end of the strainer next the workman is therefore left dry, and with a thin piece of copper or other metal he scoops up the knots, &c., takes out the sluice, and repeats the operation when it is required.

After the stuff has been thus strained and mixed in the vat by the agitator working in it, it is allowed to flow out by a number of holes in the side of the vat. These holes are of an oval figure, about four inches long by two in width; and against each of them is accurately fitted a brass plate, attached to a rod. This rod is worked by a screw in the workman's hand, who can thereby again regulate the flow of the stuff into a little cavity or box at c. From this point a piece of leather or apron extends to the point t, from whence the stuff flows on an endless fine wire-cloth, on which the web is formed. This wire-cloth, which must be perfectly level, moves upon a number of small copper rollers, about an inch and a half diameter and an inch and a half separate. These rollers rest upon a frame, which is left so far free as to be moved laterally by a rod which is attached to a little crank e; and thus is produced a vibration, more or less quick, according to the nature of the stuff, which causes the water to flow through the wire-cloth, and connects the fibres of the pulp together. A large shallow wooden vessel is placed below the wire-cloth, called the save-all, which receives the water and the flour of the pulp in large quantity. The water then passes through a spout on the side of the machine, and flows into a box, from whence it is lifted up by the scoops f, and then meets the supply of stuff from the chest, and flows into the vat.

The edges of the paper are formed by pliable deckles, which were formerly made of leather, then of woollen cloth. Belts or deckles, however, composed of alternate layers of linen and caoutchouc, firmly cemented together, are now most generally employed. These belts are half an inch thick and about sixteen feet long, and are drawn by the pulley upon the shaft g. It will be seen that they move under a solid plate of iron or brass, which is moderately pressed down upon them, but not so much as to impede their free motion along with the wire-cloth, whilst they fit sufficiently tight to it to prevent any of the stuff from flowing away laterally before the paper is set.

By the time these caoutchouc deckles leave the wire-cloth at the point p the stuff is no longer fluid, though a good deal of water still flows from it. The wire-cloth then passes on with the pulp upon it through the cylinders n, of which the under one is of metal, covered with a jacket, as it is called, of felting or flannel; and the upper one is generally of wood, but hollow, and covered with mahogany about an inch and a half thick; that wood being less apt to shrink or get out of shape than any other; and this roller also has a jacket. A slight pressure is given by these, which are called the wet-press cylinders; and after this stage the paper pulp is led on upon an endless felt, which must proceed exactly at the same speed as the wire-cloth, as, by any irregularity in their motion, the pulp would break. The wire-cloth returns back round the under wet-press cylinders, to receive a new supply of pulp, and is supported by a series of copper tube rollers, which revolve by the friction of it. The wire-cloth is generally about twenty-five feet in length by five feet in width, and has about sixty holes in the lineal, or 3600 in the square inch.

The web of paper, still in a very wet state, is now carried away by an endless felt, between cast-iron cylinders h, where it sustains a severe pressure, and where a great deal of water is squeezed out, after which the paper may be handled. It then passes through a second pair of press cylinders, that the mark of the felt which was impressed on the under surface by the first pressure may be removed; and for this purpose the under surface is now placed next the metal cylinder. The web then passes over the surface of a number of cylinders, heated with steam, and arranged as to number and relative position according to the ideas of the manufacturer or millwright. When the web has passed over about thirty lineal feet of surface heated in this manner, it is dry, and is wound upon a reel l.

When this reel has been filled, or has performed about a hundred and thirty revolutions, a spring, which holds in the ends of the reel, is taken out. The reel which is attached to the arms m, which move on the axis n, is moved quickly round, and changes places with the other reel, when the paper is torn through, and the end of the web is then attached to the reel in gear, which is filled, whilst the paper is being cut off the reel which is at liberty.

The paper machine moves at the rate of from twenty-five to forty feet per minute. The whole process, therefore, in its transition from liquid pulp at the one end, to dry paper at the other, occupies scarcely two minutes. This, in the ordinary state of the weather, could not formerly be done in less than seven or eight days. Supposing, therefore, that the machine makes ten yards lineal of a web per minute, or 600 in the hour; this is equal to a mile in three hours, or four miles per diem of twelve hours. The paper is generally made about fifty-four inches wide. Reckoning that there are 300 machines in Great Britain, and that they work twelve hours each day on an average (many go both day and night), the length of web would altogether be equal to 1200 miles, and the area of what was made would be about 3,000,000 yards daily.

Printing paper, which is now entirely made by the machine, is in general sized in the pulp. White soap, starch, glue, and dissolved rosin, are principally used for this purpose, with the addition of a few pounds of alum. Such of these as are used are put through a sieve into the beating engine. The web, before being dried off, is also in some mills passed through hot size, the surplus of which is pressed out between two cylinders. This tends to strengthen the paper materially; but it is not easy for paper to keep the size if it be dried off hastily on the cylinders; and this is difficult, if not impossible, in the finer descriptions of paper, where the material is not so strong as that for more common kinds, and not so favourable for being thoroughly sized.

The fine bluish tinge which so many writing papers possess is derived from a mineral but very expensive blue, namely, the oxide of cobalt, generally called smalts. This article used entirely to be imported from Saxony, Denmark, and Sweden; but the great improvements which have been effected by British manufacturers of late years have rendered it unnecessary to seek a supply abroad. In writing paper of fine quality it is usual to add four or five pounds of smalts to the hundredweight of rags.

Several machines have of late years been invented for cutting cutting paper as it is made by the machine. Amongst others, one by MM. Fourdrinier of Staffordshire has been very generally introduced and approved of. As it is capable, however, of cutting five or six thicknesses of paper at once, it is not in general attached to the machine, but in some contiguous convenient place. The paper is reeled on small rolls of about six inches diameter, and these are placed with the spindles lying in grooves in a curved frame, whence they are taken and passed round a drum, and then through some small rollers. After the web is divided longitudinally by circular knives, which are set opposite each

---

This blue is now greatly cheaper than it was during the war, and even after its termination, having fallen from 2s. 6d. to 1s. 3d. per pound, which last is the present price for FIFE smalts. other upon shafts on each side of the paper, the progress of it is stopped for an instant by a very ingenious contrivance, when a knife descends, beginning at one side of the web, which is held fast by a heavy weight laid across it, and cuts it across. The web then goes on till it has passed as much paper through as is the requisite size of the sheet, when the knife again descends. The sheets thus cut are carried on by a small felt moved in connection with the rest of the machinery.

The paper-machine is peculiarly suited for making thin papers, which are not easily made by hand without great damage in the couching department, from the difficulty of getting off the sheet whole upon the felt; namely, the thin paper for copying letters, tissue-papers used for putting before prints, &c. A large quantity of remarkably thin paper, also, made from old rags of a better description than usual, and called pottery tissue, is made by MM. Fourdrinier and others, for printing the colours on the china, &c., which could never have been made by hand. The machine has also been of immense service in producing paper of large sizes of sheets for newspapers, which could not have been worked by hand. It would have been very serious and laborious work for a man to make paper even large enough for a single sheet of the Times newspaper, which measures two feet by three. Indeed, till about 1823, the legislature restricted the size of newspapers to twenty-two by thirty-two inches, beyond which they could not be stamped; which restriction was done away with just as soon as it became possible to make by machinery any size of paper that might be desired. But, perhaps, in no department of paper-making has the advantage of the machine shone so conspicuously as in the paper used for paper-staining, and the consequent great reduction in price of the hangings. Before the application of the machine, the paper used by paper-stainers was of the size of twenty-eight by twenty-three inches, called elephant. It required, in order to form a piece of twelve lineal yards, that sixteen or eighteen of these sheets should be pasted together, which is now rendered wholly unnecessary by the paper being furnished to the stainers in sheets of twelve yards each in length.

The chief seats of paper manufacture in Great Britain are—

1. Kent, where it was first established, and where there are a great number of hand-mills for making fine watermarked writing papers. There are also a good many machines for fine writing and printing paper.

2. In Hertfordshire, Buckinghamshire, and Oxfordshire, the manufacture of fine printing papers is very extensively carried on, and all made by machinery.

3. In Lancashire and the contiguous counties, it is carried on to a very large extent, the material, as already noticed, being chiefly derived from the refuse of the cotton mills, to which is added a mixture of cotton-bagging, of which there is a large supply, and which tends to strengthen the paper. This description of paper, however, both from the impurities which are inseparable from so very dirty a material as the sweepings of the cotton mills, and from its spongy soft texture, is very inferior to that which is made out of a sound strong rag, provided that the trituration of the stuff, already adverted to, be done in a proper manner.

4. In Scotland the manufacture is carried on to a large and rapidly increasing extent. From the ready communication with London, and other causes, both fine writing papers and others find a ready market there. Independently of the white paper, there is manufactured in all parts of the country a large quantity of brown paper, made from old ropes, &c.

Mr M'Culloch, in his Commercial Dictionary, supposes that there are about 700 paper mills in England, and from seventy to eighty in Scotland. The former must, however, be on an average on a much smaller scale than the Scotch mills; for whilst the duty produced in England in 1833 amounted to L629,935, it amounted in Scotland, in the same year, to L102,536; thus showing, that although the mills in England are about ten times as numerous as those in Scotland, the duty is only about six times as much.

Paper is considerably adulterated with plaster of Paris, sometimes to the amount of thirty per cent., for the purpose of gaining weight. This can easily be detected by burning a portion of a sheet; when the plaster will remain after combustion in an ashy whitish-coloured residuum. Brown paper is also often mixed up with a good deal of ochre or clay, the makers saying that it is for the purpose of giving it a nice brown colour, though it may be doubted whether it be not also with the intention of increasing the weight.

The following table, showing the strength of different kinds of paper, has been prepared from actual experiment. It denotes the number of pounds avoirdupois required to break a strip of paper two inches wide, both ends being secured above, and the weights attached to a small wooden roller, resting upon the strip of paper.

| Bank post, very thin writing paper, sized | 65 | 23 | | Ditto unsized, but thinner | 48 | 13 | | Thick writing paper, machine made | 139 | 42 | | Ditto ditto, made by hand | 143 | 60 | | Ditto drawing paper, machine made | 217 | 55 | | Newspaper, sized at the machine | 113 | 39 | | Paper used for Scotch bank-notes | 95 | 70 | | Strong cartridge-paper | 135 | 64 | | Pink blotting-paper | 90 | 10 |

**PAPER-MONEY—BANKS.**

**PART I.—PAPER-MONEY.**

We endeavoured to explain, in the fifth section of the article Money, the reasons why paper has been used as a substitute for coins in the ordinary transactions of society, and the principles on which its value is maintained. It is consequently unnecessary to enter at length, on this occasion, on either of these subjects; but, to facilitate the understanding of what is to follow, we may shortly observe, that the employment of paper as a medium of exchange is an obvious means resorted to by society for saving expense and facilitating payments. An individual or an association, in whose wealth and discretion the public have confidence, issues promissory notes, binding himself or themselves to pay certain sums on demand, or at some specified period after the date of the notes. And it is obvious, that so long as these notes are punctually paid when due, and are not issued in excess, their circulation, besides being a source of profit to the issuers, is a great public accommodation. The weight of 1000 sovereigns exceeds twenty-one pounds troy, so that to pay or receive a large sum in metal would be exceedingly inconvenient; while there would be a great risk from loss, as well as a heavy expense incurred in the conveyance of specie from place to place. But with paper this may be effected with extreme facility, and payments of the largest sums, and at the greatest distances, may be made with almost no inconvenience or expense. And while the interest of individuals is thus consulted by the introduction and use of paper, it is of the greatest service to the public. Its employment, and the various devices for the economizing of currency to which it has led, enable the business of a commercial country like England to be carried on with a tenth part, perhaps, of the gold and silver currency that would otherwise be necessary. The cheapest instruments by which exchanges can be effected are substituted in the place of the dearest; and, besides doing their work better, this substitution enables the society to employ the various sums they must otherwise have employed as money, as capital in industrious undertakings, by which the public wealth and comforts are largely augmented. Of the various means, whether by the introduction of machinery or otherwise, that have been devised for promoting the progress of wealth and civilization, it would not be easy to point out one better calculated to attain its end than the introduction of a properly organized paper-money.

But paper-money, like many other highly useful inventions, is liable to great abuse, and, if not issued on sound principles, may become the cause of much mischief. By paper-money we mean notes issued by individuals or associations, for certain sums, and made payable on demand, or when presented. This description of paper is known in this country by the name of bank-paper, or bank-notes, from its being issued only by bankers. Bills of exchange, or bills issued by bankers, merchants, or other individuals, and payable some time after date, perform, also, in some respects, the functions of money; and being transferred from individuals, make payments much in the same way as if they consisted of bank-notes for the same amount.

But though there are many points in which a bill of exchange and a bank-note closely resemble each other, there are others in which there is a distinct and material difference between them. A note bears to be payable on demand; it is not indorsed by a holder on his paying it away; the party receiving has no claim on the party from whom he received it, in the event of the failure of the issuers; and every one is thus encouraged, reckoning on the facility of passing it to another, to accept bank-paper, "even though he should doubt the ultimate solvency of the issuers." Bills, on the contrary, are almost all drawn payable at some distant period; and those into whose hands they come, if they be not in want of money, prefer retaining them in their possession, in order to get the interest that accrues upon them. But the principal distinction between notes and bills is, that every individual, in passing a bill to another, has to indorse it, and by doing so makes himself responsible for its payment. "A bill circulates," says Mr Thornton, "in consequence chiefly of the confidence placed by each receiver of it in the last indorser, his own correspondent in trade; whereas the circulation of a bank-note is owing rather to the circumstance of the name of the issuer being so well known as to give it an universal credit." Nothing, then, can be more inaccurate than to represent bills and notes in the same point of view. If A pay to B L100 in satisfaction of a debt, there is an end of the transaction; but if A pay to B a bill of exchange for L100, the transaction is not completed; and, in the event of the bill not being paid by the person on whom it is drawn, B will have recourse upon A for its value. It is clear, therefore, that a great deal more consideration is always required, and may be fairly presumed to be given, before any one accepts a bill of exchange in payment, than before he accepts a bank-note. The note is payable on the instant, without deduction—the bill not until some future period; the note may be passed to another without incurring any risk or responsibility, whereas every fresh issuer of the bill makes himself responsible for its value. Notes form the currency of all classes, not only of those who are, but also of those who are not, engaged in business, as women, children, labourers, &c., who in most instances are without the power to refuse them, and without the means of forming any correct conclusion as to the solvency of the issuers. Bills, on the other hand, pass only, with very few exceptions, among persons engaged in business, who are fully aware of the risk they run in taking them. There is plainly, therefore, a wide and obvious distinction between the two species of currency; and it cannot be fairly argued, that because government interferes to regulate the issue of the one, it should also regulate the issue of the other.

When, therefore, we speak of notes, or paper-money, we mean notes issued by banks, and payable on demand. And unless when the contrary is mentioned, it is to these only that the subjoined statements apply.

To obviate the endless inconveniences that would arise from the circulation of coins of every weight and degrees with respect to purity, were there no restrictions on their issue, all governments have forbidden the circulation of coins not of a certain specified or standard weight and fineness. And the recurrence of similar inconveniences from the issue of notes for varying sums, and payable under varying conditions, have led, in all countries in which paper-money is made use of, to the enacting of regulations forbidding the issue of notes below a certain amount, and laying down rules for their payment. In England at this moment no note payable to bearer on demand can be issued for less than five pounds, and they must all be paid the moment they are presented. In Scotland and Ireland the minimum value of bank-notes is fixed at one pound, the regulations as to payment being the same as in England. In order to preserve the monopoly of the London circulation to the Bank of England, no notes payable to bearer on demand are allowed to be issued by individuals or associations, other than the Bank of England, within sixty-five miles of St Paul's. But beyond these limits every one who complies with the above regulations as to the minimum amount of notes, and who promises to pay them on demand, may, on paying the stamp-duty, and making returns of the issues to the stamp-office, circulate any amount of notes they can succeed in getting the public to take off.

We think it might be safely inferred, even if we wanted experience of the actual working of a currency so issued, that a system like this must unavoidably lead to the greatest abuse. The public is very apt to be deceived, in the first instance, in giving confidence to or taking the paper of an individual or an association; and though that were not the case, the condition of the individual or company may subsequently change from bad or expensive management, imprudent speculation, unavoidable losses, and fifty other things of which the public can know nothing, or nothing certain. The fact that any particular banker who issues paper enjoys the public confidence, is, at best, a presumption merely, and no proof that he really deserves it. The public believes him to be rich and discreet; but this is mere hypothesis; the circumstances which excite confidence at the outset, and which preserve it, are often very deceptive; and in the vast majority of instances the public has no certain knowledge, nor the means of obtaining any,

---

1 Practically speaking, this is the fact; but a person paying away a bank-note is liable to be called upon for repayment should the bank fail before it was in the power of the party to whom it was paid, using ordinary diligence to present it. The responsibility seldom exceeds a couple of hours, and can hardly in any case exceed a couple of days. In practice it is never adverted to.

2 Thornton on Paper Credit, p. 172.

3 Ibid. p. 40. as to the real state of the case. But it is unnecessary to argue this point speculatively. There have, unfortunately, been innumerable instances in which it has turned out that bankers who had long been in the highest credit, and whose notes had been unhesitatingly accepted by the public, have been found to be, on the occurrence of any thing to excite suspicion, quite unable to meet their engagements.

It has been supposed that the objections to the issue of notes on our present system, because of the risk of non-payment, might be obviated were they issued only by associations or joint-stock companies. But it is not easy to see on what principle leave should be granted to fifty or sixty individuals to do that which is to be denied to five or six. And though this difficulty were got over, the measure would not have the effect supposed. A single individual may possess more wealth than a number of individuals associated together; and the chances are, that if he engage in banking, or any other business, it will be better managed than by a company. Under our present system, and in fact it is impossible to prevent it under any system, the partners in joint stocks, as in other banks, may be men of straw, or persons without property, and unable to fulfil their engagements. It is of the essence of a secure and well-established paper currency, that the notes of which it consists should be of the exact value of the gold or silver they profess to represent, and that, consequently, they should be paid the moment they are presented. But it is not enough to order that this condition shall be uniformly complied with. Such order is obeyed only by the opulent, prudent, and conscientious banker, and forms little or no check on the proceedings of those of a contrary character. It is the latter class, however, that it is especially necessary to look after; and it is needless to say that any system that permits notes to be issued without let or hindrance by speculative, ignorant, or unprincipled adventurers, must be essentially vicious.

The issue of notes is of all businesses that which seems to hold out the greatest prospect of success to the schemes of those who attempt to get rich by preying on the public. The cost of engraving and issuing notes is but an insensible item compared with the sums for which they are issued; and provided they be got into anything like extensive circulation, they become at once considerably productive. They are not issued, except, as explained in the article Money (sect. 5), on the deposit of bills or other securities, yielding a considerable rate of interest; so that if an individual, or set of individuals, with little or no capital, contrive, by fair appearances, promises, and similar devices, to insinuate himself or themselves into the public confidence, and can maintain L20,000, L50,000, or L100,000 in circulation, he or they secure a good income in the mean time; and when the bubble bursts, and the imposture is detected, they are no worse off than when they set up their bank. On the contrary, the presumption is, that they are a great deal better off; and that they have taken care to provide, at the cost of the credulous and deceived public, a reserve stock for their future maintenance; hence, seeing the facilities for committing fraud are so very great, the propriety, or rather necessity, of providing against them.

It has sometimes been contended, in vindication of our present system, that bank-notes are essentially private paper; that the accepting of them in payment is optional; and that as they may be rejected by every one who either suspects or dislikes them, there is no room or ground for interfering with their issue! But everybody knows that, whatever notes may be in law, they are, in most parts of the country, practically and in fact, legal tender. The bulk of the people are totally without power to refuse them. The currency of many extensive districts consists in great part of country notes, and such small farmers or tradesmen as should decline taking them would be exposed to the greatest inconveniences. Every one makes use of, or is a dealer in, money. It is not employed by men of business only, but by persons living on fixed incomes, women, labourers, miners, and in short by every class of individuals, very many of whom are necessarily, from their situation in life, quite unable to form any estimate of the solidity of the different banks whose paper is in circulation. Such parties are uniformly severe sufferers by the failure of banks. The paper that comes into their hands is a part of the currency or money of the country, and it is quite as much a part of the duty of government to take measures that this paper shall be truly and substantially what it professes to be, as that it should take measures to prevent the issue of spurious coins, or the use of false or deficient weights and measures.

Now, it will be found, should the circulation of provincial Security notes be allowed to continue, that there is but one means of making sure of the solvency of the issuers, and of providing for their being paid when presented; and that is, by compelling all issuers of such notes to give security for their payment. This, and this only, will hinder the circulation of spurious paper, and afford a sufficient guarantee that the notes the public are obliged to take are really, and in fact, what they profess to be. The measure, too, is one that might be easily enforced. To carry it into effect, it would merely be necessary to order that all individuals or companies, on applying for stamps, should be obliged, previously to their obtaining them, to lodge in the hands of the commissioners an assignment to government stock, mortgages, landed or other fixed property, equivalent to the amount of the stamps issued to them, to be held in security for their payment.

It has been objected to this plan, that it would be injurious, by locking up a portion of the capital of the banks; but this is plainly an error. Its only effect in this respect would be to force such banks as issued notes to provide a supplemental capital, as a security over and above the capital required for conducting their business. But this supplemental capital would not be unproductive. If it consisted of lands, the owners would receive the rents; and if it consisted of government securities, they would receive the dividends or interest due upon them, precisely in the same way that they are received by other persons; while the fact being known that they possessed this supplemental capital, or that they had lodged security for the payment of their notes, would, by giving the public perfect confidence in their stability, enable them to conduct their business with a less supply of floating or immediately available capital than would otherwise be necessary.

It is absurd to object to this plan on the ground of its interfering with the private pursuits of individuals. It is the duty of government to interfere to regulate every business or pursuit that might otherwise become publicly injurious. On this principle it interferes to prevent the circulation of spurious coins, and of notes under a certain sum, and not payable on demand; and on the same principle it is called on to interfere to prevent the act ordering the payment of notes becoming again, as it has very frequently done already, a dead letter, by making sure that it shall be complied with. The interference that would take place under the proposed measure is not only highly expedient, but would be of the least vexatious kind imaginable. All that is required of the persons applying for stamps for notes is, that they should deposit in the hands of the commissioners a certain amount of exchequer bills, or other available securities, according to their demand for stamps. They are not asked to state how they mean to dispose of these stamps,—to whom or in what way they are to be issued. They are merely required to give a pledge that they shall be paid, or that they shall not be employed, as so many others have been, to deceive or defraud the... public. It is little else than an abuse of language to call this an interference with private affairs.

The taking of security in the way now suggested, from the issuers of notes, would effectually provide for their payment when presented. Adventurers without capital, and sharpers anxious to get themselves indebted to the public, would find that banking was no longer a field on which they could advantageously enter. Notes would be made, in fact as well as in law, equivalent to the specie they profess to represent; and the paper currency would acquire a solidity of which it is at present wholly destitute.

But though the plan of taking security would completely obviate the risk of loss from the circulation of worthless paper, or of paper issued by parties without the means, and probably also the inclination, to pay it on presentation, it would not touch another abuse inherent in the present system, that is, it would leave the currency exposed, as at present, to all those constantly recurring fluctuations in its amount—those alternations of glut and deficiency—by which it has been affected since provincial banks became and value, considerably multiplied, and which are in the last degree injurious. A paper currency is not in a sound or wholesome state, unless, 1st, means be taken to insure that each particular note or parcel of such currency be paid immediately on demand; and unless, 2nd, the whole currency vary perfooting in amount and value exactly as a metallic currency would do were the paper currency withdrawn and coins substituted in its stead. The last condition is quite as indispensable to the existence of a well-established currency as the former; and it is one that cannot be realised otherwise than by confining the issue of paper to a single source.

It is supposed by many, that there can be no greater fluctuations in a paper than in a metallic currency, provided the paper rest on an undoubted basis, and be regularly paid the moment it is presented. But this is an error. Wherever there are numerous issuers, there may be, and the chances are fifty to one there will be, perpetually recurring fluctuations in the amount and value of the currency. An over-issue of convertible paper is not, of course, indicated by any difference between the value of such paper and gold at home, but it is indicated by a fall of the exchange, and by an efflux of bullion to other countries. If paper were only issued by the Bank of England, or some one source in London, and then only in exchange for bullion, the currency would be in its most perfect state, and would fluctuate exactly as it would do were it wholly metallic. But at present it is quite otherwise. The currency is supplied by hundreds of individuals and associations, all actuated by different and frequently conflicting views and interests. The issues of the Bank of England, though not always, are generally governed by the state of the exchange, or rather by the influx and efflux of bullion, increasing when it flows into, and decreasing when it flows out of, the country. But it is quite otherwise with the provincial bankers. Their issues are not regulated by any such standard, but by the state of credit and prices in the districts in which they happen to be situated. If their managers suppose that these are good or improving, they rarely hesitate about making additional issues. Hence, when the state of the exchange, and the demand on the Bank of England for bullion, show that the currency is redundant, and ought to be contracted, the efforts of the Bank to effect its diminution are often impeded, and met by a contrary action on the part of the country banks. This is not owing to the ignorance of the latter. Under the supposed circumstances, the country bankers see, speaking generally, that they ought also to contract; but being a very numerous body, comprising several hundred establishments scattered over all parts of the country, each is impressed with the well-founded conviction, that all that he could do in the way of contraction would be next to imperceptible; and no one ever thinks of attempting it, so long as he feels satisfied of the stability of those with whom he deals. On the contrary, every banker knows, were he to withdraw a portion of his notes, that some of his competitors would most likely embrace the opportunity of filling up the vacuum so created; and that consequently he should lose a portion of his business, without in any degree lessening the amount of paper afloat. Hence, in nineteen out of twenty instances, the country banks go on increasing their aggregate issues long after the exchange has been notoriously against the country, and the Bank of England has been striving to pull up.

The circumstances now stated were strikingly exemplified in the course of 1836 and the early part of 1837, the Bank of England having been compelled to stop the efflux of bullion, and the still greater additions they made to the number of bills, checks, and other substitutes for money, occasioned a redundancy of the currency, a fall of the exchange, and a drain upon the Bank of England for gold. But while the latter was narrowing her issues, by supplying the exporters of bullion with gold in exchange for notes, the country banks went on increasing their issues! What the former did by contracting on the one hand, the latter more than undid by letting out on the other. The vacuum created by the withdrawal of Bank of England paper was immediately filled up, and made to overflow, by the issue of a more than equal amount of provincial paper; so that had it not been for the rise in the rate of interest, and the other repressive measures adopted by the Bank, the probability is, that she might have gone on paying away bullion for notes till she was drained of her last sixpence, without in any degree affecting the exchange. But this is not all. Not only do the country banks almost universally increase their issues when they ought to be diminished, but the moment they are compelled to set about their reduction, they run headlong into the opposite extreme, and unreasonable suspicion takes the place of blind unthinking confidence. The cry of sauvé qui peut then becomes all but universal. It is seldom that a recoil takes place without destroying more or fewer of the provincial banks; and, provided the others succeed in securing themselves, little attention is usually paid to the interests of those they have taught to look to them for help. It may be worth while, in order to exhibit the truth of what has now been stated, shortly to advert to the destruction of country-bank paper in 1792-93, 1814, 1815, and 1816, 1825-26, and more recently in 1836-37.

1. Previously to 1759 the Bank of England did not issue Destruct any notes for less than L20; but having then commenced the issue of L10 notes, her paper was gradually introduced into a wider circle, and the public became more habituated to its employment in their ordinary transactions. The distress and embarrassment that grew out of the American war proved exceedingly unfavourable to the formation of country banks, or of any establishments requiring unusual credit and confidence. No sooner, however, had peace been concluded, than everything assumed a new face. The agriculture, commerce, and still more the manufactures of the country, into which Watt and Arkwright's inventions had been lately introduced, immediately began to advance with a rapidity unknown at any former period. In consequence, that confidence which had either been destroyed or very much weakened by the disastrous events of the war was fully re-established. The extended transactions of the country required fresh facilities for carrying them on; and a bank was erected in every market-town, and almost in every village. The prudence, capital, and connections of those who set up these establishments were but little attended to. The great object of a large class of traders was to obtain discounts; and the bankers of an inferior description were equally anxious to accommodate them. All sorts of paper were thus forced into circulation, and enjoyed nearly the same degree of esteem. The bankers, and those with whom they dealt, had the fullest confidence in each other. No one seemed to suspect that there was anything hollow or unsound in the system. Credit of every kind was strained to the utmost; and the available funds at the disposal of the bankers were reduced far below the level which the magnitude of their transactions required to render them secure.

The catastrophe which followed was such as might easily have been foreseen. The currency having become redundant, the exchanges took an unfavourable turn in the early part of 1792; a difficulty of obtaining pecuniary accommodation in London was not long after experienced; and notwithstanding the efforts of the Bank of England to mitigate the pressure, a violent revulsion took place in the latter part of 1792 and the beginning of 1793. The failure of one or two great houses excited a panic which proved fatal to many more. When this revulsion began, there were about three hundred and fifty country banks in England and Wales, of which about a hundred were compelled to stop payments, and upwards of fifty were totally destroyed, producing by their fall an extent of misery and bankruptcy till then unknown in England.

"In the general distress and dismay, every one looked upon his neighbour with caution, if not with suspicion. It was impossible to raise money upon the security of machinery, or shares of canals; for the value of such property seemed to be annihilated in the gloomy apprehension of the sinking state of the country, its commerce and manufactures; and those who had any money, not knowing where they could place it with safety, kept it unemployed and locked up in their coffers. Amid the general calamity, the country banks, which had multiplied greatly beyond the demand of the country for circulating paper currency, and whose eagerness to push their notes into circulation had laid the foundation of their own misfortunes, were among the greatest sufferers, and, consequently, among the greatest spreaders of ruin and distress among those connected with them; and they were also the chief cause of the drain of cash from the Bank of England, exceeding any demand of the kind for about ten years back. Of these banks above a hundred failed, whereof there were twelve in Yorkshire, seven in Northumberland, seven in Lincolnshire, six in Sussex, five in Lancashire, four in Northamptonshire, four in Somersetshire, &c."

Attempts have sometimes been made to show that this crisis was not occasioned by an excess of paper-money having been forced into circulation, but by the agitation caused by the war then on the eve of breaking out. But there do not seem to be any good grounds for this opinion. The unerring symptoms of an overflow of paper—a fall of the exchange, and an efflux of bullion—took place early in 1792, or about twelve months before the breaking out of hostilities. Mr Chalmers states, that none of the great houses that failed during this crisis had sustained any damage from the war. The efforts of the country bankers to force their paper into circulation occasioned the redundancy of the currency, and it was on them, and on the country dealers and farmers dependent on them, that the storm principally fell. It is of importance to remark, that the Bank of England had no notes for less than L10 and the country banks for less than L5 in circulation when the crisis of 1792–93 took place.

2. During the period from 1800 to 1813 the number of country banks had increased from about 400 to 922; and in consequence partly of this rapid increase, and partly of the suspension of cash payments at the Bank of England in 1797, and the issue of one-pound notes by that establishment and the country banks, the amount of paper afloat was vastly increased, particularly after 1808, when it sunk to a heavy discount as compared with bullion. Mr Wakefield, whose extensive employment in the management of estates in all parts of the country gave him the most favourable opportunities for acquiring correct information, stated to the agricultural committee of 1821, that "down to the year 1813 there were banks in almost all parts of England, forcing their paper into circulation at an enormous expense to themselves, and in most instances to their own ruin. There were bankers who gave commission, and who sent persons to the markets to take up the notes of other banks; these people were called money-changers, and commission was paid them." (Report, p. 213.) And among the various answers to the queries sent by the Board of Agriculture in 1816, to the most intelligent persons in different parts of the country, there is hardly one in which the excessive issue of country-bank paper is not particularly specified as one of the main causes of the unprecedented rise of rents and prices previously to 1814.

Influenced partly by this extraordinary increase of paper, and partly by deficient harvests and the exclusion of foreign supplies, the price of corn rose to an exorbitant height during the five years ending with 1813. But, owing partly to the luxuriant crop of that year, and partly and chiefly, perhaps, to the opening of the Dutch ports, and the renewed intercourse with the continent, prices sustained a very heavy fall in the latter part of 1813 and the beginning of 1814. And this fall, having produced a want of confidence and an alarm among the country bankers and their customers, occasioned such a destruction of country-bank paper as has not been paralleled except by the revulsion of 1825–26. In 1814, 1815, and 1816, no fewer than 240 country banks stopped payment, and eighty-nine commissions of bankruptcy were issued against these establishments, being at the rate of one commission against every ten and a half of the total number of banks licensed in 1813! This destruction of bank-paper is said to have produced an extent of wretchedness and misery never equalled in any European country by any similar catastrophe, except, perhaps, by the breaking up of the Mississippi scheme in France.

3. The destruction of country paper during the period now referred to, by reducing the amount of the currency, raised its value in 1816 nearly to a par with the value of bullion, and enabled measures to be taken for reverting to cash payments at the Bank of England, which was effected by the act 59 Geo. III. cap. 78. But notwithstanding the ample experience that had been supplied by the occurrences of 1792–93 and 1814–16, of the mischievous consequences of the issue of paper by the country banks, and of their want of solidity, nothing whatever was done, when provision was made for returning to specie payments, to restrain their issues, or to place them on a better footing. The consequences of such improvidence were not long in manifesting themselves. The prices of corn and other agricultural products, which had been greatly depressed in consequence of abundant harvests, in 1820, 1821, and 1822, rallied in 1823; and the country bankers, true to their invariable practice on similar occasions, immediately began to enlarge their issues. It is unnecessary to inquire into the circumstances which conspired, along with the rise of prices, to promote the extraordinary rage for speculation exhibited in 1824 and 1825. It is sufficient

---

1 Macpherson's Annals of Commerce, vol. iv. p. 266. 2 Comparative Estimate, p. 226, ed. 1812. to observe, that in consequence of their operation, confidence was very soon carried to the greatest height. It did not seem to be supposed that any scheme could be hazardous, much less wild or extravagant. The inflation was such, that even the most considerate persons did not scruple to embark in the most visionary and absurd projects; while the extreme facility with which discounts were procured upon bills at very long dates, afforded the means of carrying on every sort of undertaking. The most worthless paper was readily negotiated. Many of the country bankers seemed, indeed, to have no object other than to get themselves indebted to the public. And such was the vigour and success of their efforts to force their paper into circulation, that the amount of it afloat in 1825 is estimated to have been nearly fifty per cent. greater than in 1823.

The consequences of this extravagant and unprincipled conduct are well known. The currency having become redundant, the exchange began to decline in the summer of 1824. But the directors of the Bank of England having entered, in the early part of that year, into an engagement with the government to pay off such holders of four per cent. stock as might dissent from its conversion into a three and a half per cent. stock, were obliged to advance a considerable sum on this account after the depression of the exchange. This tended to counteract the effect of the drain on the Bank for gold, and in consequence the London currency was not very materially diminished till September 1825. This reduction was accompanied by a repetition of the events of 1793, but on a larger and more magnificent scale, and with more destructive consequences. The country banks began to give way the moment they experienced a considerably increased difficulty of obtaining accommodation in London, and all confidence and credit were immediately at an end. Suspicion having awakened from her trance, there were no limits to the run. Paper was not carried to the banks to obtain gold, in the view of exporting it, as a mercantile adventure, to the Continent, but for the purpose of escaping the loss which it became obvious a large portion of the holders of country notes would have to sustain. The destruction of country paper was so sudden and extensive, that in less than six weeks above seventy banking establishments were swept off, and a vacuum was created in the currency which absorbed from eight to ten millions of additional issues by the Bank of England; at the same time that myriads of those private bills that had previously swelled the amount of the currency, and added to the machinery of speculation, were wholly destroyed.

4. Notwithstanding nations are proverbially slow and reluctant learners, the events of 1825-26, taken in connection with those of the same sort that had previously occurred, produced a conviction of the necessity of taking some steps to improve the system of country banking in England. But we regret to have to add, that the measures adopted in this view were very far indeed from being effectual to their object. In 1708 a law had been passed limiting the number of partners in banking establishments to six. This law was now repealed; and it was enacted that banks with any number of partners might be established for the issue of notes anywhere beyond sixty-five miles from London; and that banks not issuing notes might be established in London itself with any number of partners. The circulation of notes for less than five pounds in England and Wales was at the same time forbidden.

Much benefit was expected, but without any sufficient reason, to arise from these measures. So long as every one is allowed to issue notes without check or control, a thousand devices may be fallen upon to insure the circulation of those that are most worthless. Besides, there is no foundation whatever for the supposition, that the mere fact of a bank consisting of fifty or a hundred, instead of five or ten partners, renders it more worthy of confidence, or is any security that it will be better managed. The probability seems, in fact, to be rather the other way. A few wealthy individuals engaged in banking, or any other sort of business, must, if they would protect themselves from ruin, pay unremitting attention to their concerns, and act in a discreet and cautious manner. But the partners and managers of a great joint-stock company act under no such direct and pressing responsibility. The former, indeed, seldom take the trouble to inquire carefully into the business of the company; and the responsibility of their managers is of a very different kind from that of an opulent individual whose fortune is answerable for every error and false step he may commit. The recent history of the Northern and Central Joint-Stock Bank, and of various other associations, sufficiently establishes the truth of what has now been stated. The fact that there is a number of partners in a joint-stock bank, and the consequent notion, that though its affairs were to get into disorder, some of them would be able to make good the claims upon it, tends to procure a circulation for the notes of these establishments, to which they may be very little entitled. They in truth afford very great facilities for the perpetrating of fraud both upon the partners and the public. And even when best managed, and resting on an impregnable foundation, they may and do issue in excess; and thus produce those fluctuations in the amount and value of the currency that are everywhere most disastrous, but especially in a commercial country.

The prohibition of the issue of one-pound notes has gone far to shut up one of the most convenient channels by which the inferior class of country bankers formerly contrived to get their notes into circulation; but there are many other channels still open to them, and of these they have not failed to avail themselves. We have already seen that there were no notes for less than five pounds in circulation in 1792-93, and yet fully a third part of the country banks then in existence stepped payments! This is enough to show how little security can be expected from this limitation.

Those who supposed that joint-stock banks would be immediately set on foot in all parts of England, were a good deal disappointed with the slowness with which they spread stock for some years after the act permitting their establishment was passed. The heavy losses occasioned by the downfall of most of the joint-stock projects set on foot in 1824 and 1825, made all projects of the same kind be looked upon for a considerable period with suspicion, and deterred most persons from embarking in them. But this prejudice gradually wore off; and the increasing prosperity of the country, and the difficulty of vesting money so as to obtain from it a reasonable return, generated of new a disposition to adventure in hazardous projects. A mania for embarking in speculative schemes acquired considerable strength in 1835, and during the first six months of 1836 it raged with a violence but little inferior to that of 1825. It was at first principally directed to railroad projects; but it soon began to embrace all sorts of schemes, and, among others, joint-stock banks, of which an unprecedented number were projected in the course of the year. The progress of the system has been as follows:

| Year | Registered | |------|------------| | 1826 | 3 | | 1827 | 4 | | 1828 | 9 | | 1829 | 7 | | 1830 | 1 | | 1831 | 9 |

Total: 104 In point of fact, however, the number of banks created in 1836 was vastly greater than appears from this statement. We believe that, at an average, each of the forty-five banks established in that year, like those previously established, has from five to six branches; and as these branches transact all sorts of banking business, and enjoy the same credit as the parent establishment, from which they are frequently at a great distance, they are, to all intents and purposes, so many new banks; so that, instead of forty-five, it may safely be affirmed that about two hundred new joint-stock banks were opened in England and Wales in 1836; and mostly in the first six months of that year!

In January, February, and March 1836, when the rage for establishing joint-stock banks was at its height, the exchange was either at par, or but slightly in our favour, showing that the currency was already up to its level; and that if any considerable additions were made to it, the exchange would be depressed, and a drain for bullion be experienced. But these circumstances, if ever they occurred to the managers of the joint-stock banks, do not seem to have had, and could not in truth be expected to have, the least influence over their proceedings. Their issues, which amounted on the 26th of December 1835 to L2,799,551, amounted on the 25th of June to L3,588,064, exclusive of the vast mass of additional bills, checks, and other substitutes for money they had put into circulation. The consequences were such as every man of sense must have foreseen. In April 1836 the exchange became unfavourable, and bullion began to be demanded from the Bank of England. The latter, that she might the better meet the drain, raised the rate of interest in June from four to four and a half per cent., and this not being sufficient to lessen the pressure on her for discounts, she raised it in August from four and a half to five per cent. But during the whole of this period the country banks went on increasing their issues. We have already seen that, on the 25th of June 1836, their issues were L788,518 greater than they had been on the preceding 26th of December; and notwithstanding the continued drain for bullion, and the rise in the rate of interest by the Bank of England in June and August, and the reduction of her issues, the issues of the joint-stock banks increased from L3,588,064 in June, to no less than L4,258,197 on the 31st of December, being an increase of nearly twenty per cent. after the exchange was notoriously against the country; and the most serious consequences were apprehended from the continued drain for bullion on the Bank of England!

It may perhaps be imagined that the increased issue of the joint-stock banks would be balanced by a corresponding diminution of the issues of the private banks, and that on the whole the amount of their joint issues might not be increased. This, however, was not the case. Some private banks were abandoned in 1836, and others incorporated with joint-stock banks; and it is farther true, that those which went on managed their affairs with more discretion than their associated competitors. But, from the 26th of September 1835 to the 31st of December 1836, the issues of the private banks were diminished only L159,057, whilst those of the joint stocks were increased during the same period L1,750,160, or more than ten times the falling off in the others!

These statements show conclusively the extreme inexpediency of having more than one issuer of paper. Its issue ought in all cases to be governed exclusively by the state of the exchange, or rather, as already stated, by the influx and efflux of bullion. But the provincial banks may go on over-issuing for a lengthened period without being affected by a demand for bullion, or even for Bank of England paper. A drain for bullion always operates in the first instance on the Bank of England; and were she the sole issuer, she might always check the drain at the outset, by narrowing her issues, or by ceasing to replace the notes brought to her in exchange for bullion. But the country banks, not being immediately or speedily affected by the drain, take no steps to get rid of that redundancy of the currency by which it is occasioned; and, provided their credit be good, they may and do frequently go on for a lengthened period adding to their issues, and aggravating all the bad symptoms in the state of the currency. Thus we have seen the joint-stock banks in the early part of 1836 making large additions to their issues when the currency was already quite full; and, not stopping there, we have next seen them persisting, for more than six months, in increasing their issues in the teeth of a heavy and continued drain for bullion, a rapid rise in the rate of interest, and great apprehensions in the public mind. This conduct has nothing to do with the solidity of the banks. There is no reason whatever to think, supposing they had all given security for their issues, they would have been in any degree diminished. On the contrary, the probability is, that by putting an end to every doubt as to their stability, it would have materially facilitated their issues, and tempted them to increase them to a still greater extent.

But, in the end, an efflux of bullion is sure, by rendering money and all sorts of pecuniary accommodation scarce in the metropolis, to affect the country banks as well as the Bank of England; and then the shock given to industry, and the derangement of prices and transactions of all sorts, is severe in proportion to the previous over-issue. A revulsion of this sort seldom occurs without destroying some of the provincial banks, and exciting a panic, as was the case in 1792-93, and in 1825-26. But even when this is not the case, the check given to the practice of discounting, and the withdrawal of their accustomed accommodations from vast numbers of individuals, necessarily occasion a great deal of inconvenience and distress. The Bank of England, by bolstering up the Northern and Central Bank in November 1836, averted the bankruptcy of that establishment, which had no fewer than forty branches, and by doing so prevented the occurrence of a panic, and a run that would most likely have proved fatal to many other joint-stock and private banks. Still, however, the shock given to all sorts of industrious undertakings, by the revulsion in the latter part of 1836, although unaccompanied with any panic, was very severe. All sorts of commercial speculations were for a while completely paralysed, and there were but few districts in which great numbers of individuals were not thrown out of employment. In Paisley, Birmingham, and various other towns, the distress occasioned by the revulsion was very general and long-continued. The following memorial, subscribed by all the leading manufacturers, merchants, and traders of Birmingham, was presented to Lord Melbourne in March 1837. It sets the disastrous influence of fluctuations in the amount and value of the currency in a very striking light.

"My Lord,—We, the undersigned merchants, manufacturers, and other inhabitants of the town of Birmingham, beg leave respectfully to submit to your Lordship the following facts:—1. During the last two or three years a very great improvement has taken place in the trade and commerce of the town and neighbourhood. The workmen have generally been placed in a condition of full employment and good wages, producing a general state of satisfaction and contentment among them. Their employers also have enjoyed a condition of ease and security which might be called affluence when compared with the losses, difficulties, and anxieties which they endured for several years before. No stock of goods was accumulated, no overtrading of any kind existed; the products of one..." man's industry were readily exchanged for those of another; and all the products of industry in every trade were carried off into the absolute consumption of the people quite as fast as they could be produced.

"2. Suddenly within the last three months, with all the elements of general prosperity remaining unimpaired, this gratifying state of things has disappeared, and has been succeeded by a general state of difficulty and embarrassment, threatening the most alarming consequences to all classes of the community. Orders for goods are countermanded and discontinued, both for the foreign and home trade.

"The prices of goods are falling, so as in many cases to occasion a loss instead of a profit on their production. The process of production is thus obstructed; the workmen are beginning to be discharged, or to be placed upon short employment; and we are confident, that unless remedial measures be immediately applied, a large proportion of our population will shortly be thrown entirely out of employment.

"3. We earnestly solicit the serious and immediate attention of his majesty's government to this alarming state of things, confidently hoping that they will forthwith adopt decisive and effectual measures for its relief."

Certainly the legislature will most strangely neglect its duty, if it allow a system productive of such fatal consequences to continue to spread its roots and scatter its seeds on all sides. As long as any individual, or set of individuals, may usurp the royal prerogative, and issue money without let or hindrance, so long will it be issued in excess in periods when prices are rising and confidence high, and be suddenly and improperly withdrawn when prices are falling and confidence shaken. All the causes of fluctuation inherent in the nature of industry are aggravated a thousandfold by this vicious system, at the same time that it brings many new ones into existence. There is not, in fact, any reason for supposing, that if our currency had been either metallic, or made to fluctuate exactly as it would have done had it been metallic, that the difficulties in which we were involved in 1836 and 1837 would ever have been heard of. The inordinate increase of banks, of money, and of the facilities for obtaining money, in the spring of 1836, contributed powerfully to the rapid and uncalled-for increase of prices, the multiplication of wild and absurd projects, and the excess of confidence which distinguished that period; at the same time that, by bringing on a fall of the exchange and a drain for bullion, they insured the subsequent revulsion. If it be wished that the country should be kept for ever under an intermittent fever—now suffering from a hot and then from a cold fit, now in an unnatural state of excitement, leading to, and necessarily ending in, an unnatural state of depression—the present money system is the best possible. But we believe the reader will agree with us in thinking, that a fever of this sort is not more injurious to the animal than to the political body. So dangerous a disorder is not to be trifled or tampered with. This is not a case in which palliatives and anodynes can be of any real service. If a radical cure be not effected, it will go far to paralyse and destroy the patient.

Now, to accomplish this radical cure, that is, to make sure that the fluctuations of the currency shall not exceed those which would occur were it wholly metallic, it is indispensable, as already stated, that all local notes should be suppressed, and the issue of paper confined entirely to one body.

The exacting of security previously to the issue of notes would guarantee the holders from loss, and he in so far advantageous; but it would not hinder that competition among the issuers that is so very injurious, nor prevent the supply of paper being at one time in excess, and at another deficient. If we would provide for that unity of action and that equality of value that are so indispensable, we must make an end of a plurality of issuers. If one body only were intrusted with the issue of notes, it would be able immediately to narrow the currency when bullion began to be exported, and to expand it when it began to be imported; and it would be easy for the legislature to lay down and enforce such regulations as would effectually prevent the fluctuations in the amount and value of the currency ever exceeding those that would take place if it consisted wholly of the precious metals. But nothing of the sort need be attempted, so long as it is supplied by more than one source. Everything must then be left to the discretion of the parties. And it will certainly happen in time to come, as it has invariably happened in time past, that some of them will be increasing their issues when they should be diminished, and diminishing them when they should be increased.

Mr S. J. Loyd, whose authority on all questions of this sort is so deservedly high, states distinctly, that "an adherence to sound principle would certainly lead to the conclusion, that the issues of paper-money should be confined to one body, intrusted with full power and control over the issues, and made exclusively responsible for the due regulation of their amount." He is, however, disposed to think that the practice in this country, of individuals and associations issuing notes, has been so long established, and become so intimately connected with the habits and prejudices of the people, as to leave but little hope of its eradication. We do not, however, think that the difficulties in the way of the suppression of local notes would be found to be nearly so great were it set seriously about, as Mr Loyd seems to infer. Were parliament to enact that all local or provincial notes payable on demand in England and Wales should cease to circulate some two or three years hence, their withdrawal might, we apprehend, be effected with very little trouble and inconvenience. The circulation of notes, now that those for less than L5 have been suppressed, is far from being one of the principal sources of banking profits. The stamp-duty, the expense of engraving, and the still heavier expense necessary to keep notes afloat, and to provide for their payment when they may happen to be presented, cut deep into the profits made by their issue. Our readers are no doubt generally aware that several country banks have, within the half dozen years ending with 1837, withdrawn their own notes from circulation, and issued in their stead those of the Bank of England, according to certain terms agreed on with the latter. The banks in question would not certainly have done this had it made any serious inroad on their profits. But it has not sensibly diminished them; and the proof of this is, that the banks which have made this arrangement realise quite as large profits as are realised by those that continue to issue notes of their own. We submit that this is decisive of the whole question. It proves that the profits of the provincial banks are not sensibly impaired by the substitution for their own, of Bank of England notes. Had the project for suppressing local notes been productive of any considerable loss to the issuers, it would have furnished a plausible, though by no means a valid, argument against it; for it would be contradictory and absurd to pretend that any set of persons can be entitled permanently to enjoy a privilege injurious to the community. But there is no room nor ground even for an appeal ad mi-

---

2 Reflections on the Pamphlet of Mr Horsley Palmer, p. 52. We have said that it would be easy, were there only one issuer, to enforce compliance with such rules and regulations as would make the amount and value of the currency vary at all times exactly as if it were metallic. This has been doubted; but nothing could be more facile. Suppose that all local notes are withdrawn, and that there is only one issuer of paper; all that would be necessary to maintain an identity of amount and value between gold and paper would be, to regulate the currency exclusively by the influx and efflux of bullion; that is, never to issue an additional note except it be paid away for an equivalent amount of bullion brought to the office, nor to withdraw a note except when it is received in payment of an equivalent amount of bullion demanded from the office. The business of such an office would be entirely routine. Its managers would have no sort of discretion; their duty being merely to give paper for gold and gold for paper, according to the demands of the public. It has been frequently objected to the establishment of a national bank, that it would become a focus of intrigue and jobbing, and would be prostituted, or supposed to be prostituted, for the advancement of mere party purposes; and this, no doubt, would be the case were it allowed to discount and to transact ordinary banking business. A national bank for such purposes would be a national nuisance, that would very soon require to be abated. But were it confined, as it should be, to the mere issue of paper on the principle and in the way now stated, it could not be perverted to any sort of sinister object. Its conductors would be restricted to a sort of mill-horse path, and it would be impossible for them, even if so disposed, to show favour or partiality to any one. All would depend on an invariable rule; and the amount and value of the paper afloat would never exceed nor fall short of the amount and value of the bullion that would circulate in its stead were it withdrawn.

Supposing the average amount of paper afloat with a single issuer to be from thirty to forty millions, a stock of ten or twelve millions of bullion would be more than sufficient to begin with; for, it is hardly possible to imagine, under such a system, that anything should ever occur to lessen the paper currency so much as twenty per cent., or consequently to occasion a demand for so much as six or eight millions of bullion.

The Bank of England has endeavoured, for a considerable number of years past, to govern her issues nearly in the way now pointed out. But, in her present situation, having her operations frequently counteracted by other issuers, she neither can nor ought always to regulate her conduct by a regard to strict principle. She must look to the proceedings of others, by which she may be deeply compromised; and she must not only consider what may be the effect of the measures she may adopt on the exchange, or on the influx and efflux of bullion, but how they may be regarded by the provincial banks, and expected to influence them. Hence the Bank may frequently be justified in narrowing her issues when, had she been the sole issuer, she ought to have increased them, and conversely. But it is needless to say that this is a most unsatisfactory state of things, both as respects the Bank and the country. The former is obliged to exercise a discretion which cannot be safely confided to any set of individuals, whilst the latter is sure to suffer from all the errors into which the directors may fall, as well as from the disastrous consequences resulting from that competition of rival and conflicting issues, against which no degree of intelligence on the part of the directors of the Bank of England can possibly guard. In fact, we have no idea that it will be practicable for the latter and the country banks to go on together on their present footing. As matters now stand, the Bank of England may be brought at any time, and frequently is brought, into the greatest jeopardy by the proceedings of parties over whom she has no sort of control. The over-issue of the provincial banks, by depressing the exchange, drains the Bank of gold; and then their discredit, and perhaps failure, may, by exciting a panic, bring her to a stand still! Provided banks of deposit be established on sound principles, there cannot be too many of them. But it is quite otherwise with banks of issue. The more they are multiplied, the greater is the chance of fluctuation in their issues, and consequently in prices, credit, and so forth. Had the Bank of England been the sole issuer of paper, the crashes of 1792-93 and of 1825-26, and the revulsion of 1836-37, would not have occurred. They grew entirely out of the competition and proceedings of the provincial banks, and are in no degree whatever ascribable to anything else, domestic or foreign.

According to existing arrangements, the charter of the Bank of England must continue on its present footing till 1845. But we have no doubt, that were parliament to set about suppressing local issues,—an improvement that must precede every other,—the Bank would readily concur in any arrangement by which the proper regulation of her issues might be provided for and secured. But the suppression of local paper is indispensable as a preliminary to pave the way for other measures. Fluctuations in its amount and value are of the essence of a currency supplied by different issuers. If the country continue to tolerate the latter, it will unavoidably continue to suffer the perpetual recurrence of the former.

PART II.—BANKS.

Banks are commonly divided into banks of deposit and classes of banks of issue; that is, banks that take care of other people's banks, money, and banks that issue money of their own. But there are very few banks of issue that are not at the same time banks of deposit. This class of banks, as they exist in this and most other countries, are places where the money of individuals is received in deposit, payments being also made on their account, and loans made to the public. The managers of such banks are sometimes accustomed, as in most parts of England and Scotland, to pay interest at about one or two per cent. under the market rate for the money deposited in their hands; but when the business to be transacted in the receipt and payment of money on account of depositors is very large, it is not the practice for bankers, unless the deposits be proportionally great, to allow interest. The latter is the case in London. It is there customary for merchants and other people to send all the bills and drafts payable to them to their bankers, who make themselves responsible for their regular presentation for payment, and for their noting if not paid; and it is there also the practice to make all considerable payments by checks on bankers. Banking business is conducted in London at a heavy expense, and no little risk; and the London bankers do not, therefore, except in special cases, allow interest on deposits. They are in the habit of stipulating, in order to indemnify themselves for their trouble and outlay, that the individuals dealing with them should keep an average balance of cash in their hands, varying according to the amount of business transacted on their account. The bankers then estimate, as well as they can, the amount of cash they must keep in their coffers to meet the probable demands of their customers, and employ the balance in discounting mercantile bills, in the purchase of government securities, or in some other sort of profitable adventure; so that their profits consist of the sum they realize upon such parts of the money lodged in their hands as they are able to employ in an advantageous way, after deducting the various expenses attendant on the management of their establishments. A bank of deposit would never be established if it had to depend on its own capital. It makes no profit, in its capacity of bank, till it begins to employ the capital of others.

The business of banking was not introduced into London till the seventeenth century. It was at first conducted by the goldsmiths, who borrowed money from their customers at a certain rate of interest, and lent it to government and to private individuals at a higher rate. In the course of time, the business came to be conducted by houses who confined themselves to it only, and nearly in the mode in which we now find it. From 1708, as already stated, down to 1836, with the exception of the Bank of England, no company with more than six partners could be established, either in London or anywhere else in England and Wales, for conducting banking business; and by far the largest portion of that business is still conducted in the metropolis by firms with a small number of partners, or by what are called private banks.

In 1775, the London, or rather the "city" bankers, established the "clearing house." This is a house to which each banker who deals with it is in the habit of daily sending a clerk, who carries with him the various bills and checks in the possession of his house that are drawn upon other bankers; and having exchanged them for the bills and checks in the possession of those others that are drawn upon his constituents, the balance on the one side or the other is paid in cash or Bank of England notes. By this contrivance the bankers connected with the clearing house are enabled to settle transactions to the extent of several millions a day, by the employment of not more, at an average, than from £200,000 to £500,000 cash, or Bank of England notes.

The security afforded by a bank of deposit is a matter as to which there must always be more or less of doubt. When, indeed, a banking company confines itself to its proper business, and does not embark in speculations of unusual hazard, or from which its funds cannot be easily withdrawn, in the event of any sudden run or demand, it can hardly ever fail of being in a situation to meet its engagements; whilst the large private fortunes that most commonly belong to the partners afford those who deal with it an additional guarantee. Much, however, depends on the character of the parties, and on a variety of circumstances with respect to which the public can never be correctly informed; so that though there can be no doubt that the security afforded by many private banks of deposit is of the most unexceptionable description, this may not be the case with others.

All joint-stock banks, or banks having more than six partners, whether for deposit and issue, or for deposit merely, are ordered, by the act 3 and 4 Will. IV. cap. 83, to send quarterly returns of the number and names of their partners to the stamp-office. We see no good reason why similar returns should not, and several why they should, be required from all banks; and provided means were adopted for the proper publication of such returns, so that everybody might know with whom they were dealing, but little if any farther information would be required with banks not issuing notes. There is in this respect a wide difference between them and banks of issue. It is the duty of the government to take care that the value of the currency shall be as invariable as possible; but it has never been pretended that it is any part whatever of its duty to inquire into the security given by the borrowers to the lenders of money, any more than into the security given by the borrowers to the lenders of any thing else. Government very properly obliges a goldsmith to have his goods stamped, this being a security to the public that they shall not be imposed on in buying articles of the quality of which they are generally ignorant; but it does not require that the persons to whom the goldsmith sells or lends his goods should give him a guarantee for their payment. This is a matter as to which individuals are fully competent to judge for themselves; and there neither is nor can be any reason why a lender or depositor of bullion or notes should be more protected than a lender or depositor of timber, coal, or sugar. Gold being the standard or measure of value, government is bound to take effectual precautions that the currency shall truly correspond in the whole and in all its parts with that standard,—that every pound note shall be worth a sovereign, and that the amount and value of the aggregate notes in circulation shall vary exactly as a gold currency would do were it substituted in their stead. But this is all that government is called upon to do. If a trust a sum of money in the hands of B, it is their affair, and concerns no one else. Provided the money afloat correspond with the standard, it is of no importance, in a public point of view, into whose hands it may come. The bankruptcy of a deposit bank, like that of a private gentleman who has borrowed largely, may be productive of much loss or inconvenience to its creditors. But if the paper in circulation be equivalent to gold, such bankruptcies cannot affect either the quantity or value of money; and are, therefore, injurious only to the parties concerned.

The Bank of England, which has long been the principal bank of deposit and circulation, not in this country only, but in Europe, was founded in 1694. Its principal projector was Mr William Paterson, an enterprising and intelligent Scotch gentleman, who was afterwards engaged in the ill-fated colony at Darien. Government being at the time much distressed for want of money, partly from the defects and abuses in the system of taxation, and partly from the difficulty of borrowing, because of the supposed instability of the revolutionary establishment, the Bank grew out of a loan of £1,200,000 for the public service. The subscribers, besides receiving eight per cent. on the sum advanced as interest, and £4000 a year as the expense of management, in all £100,000 a year, were incorporated into a society denominated the Governor and Company of the Bank of England. The charter is dated the 27th of July 1694. It declares, amongst other things, that they shall "be capable, in law, to purchase, enjoy, and retain to them and their successors, any monies, lands, rents, tenements, and possessions whatsoever; and to purchase and acquire all sorts of goods and chattels whatsoever, wherein they are not restrained by act of parliament; and also to grant, demise, and dispose of the same.

"That the management and government of the corporation be committed to the governor and twenty-four directors, who shall be elected between the 25th of March and the 25th day of April each year, from among the members of the company duly qualified.

"That no dividend shall at any time be made by the said governor and company, save only out of the interest, profit, or produce arising by or out of the said capital stock or fund, or by such dealing as is allowed by act of parliament.

"They must be natural-born subjects of England, or naturalized subjects; they shall have in their own name, and for their own use, severally, viz. the governor at least L4000, the deputy-governor L3000, and each director L2000, of the capital stock of the said corporation.

"That thirteen or more of the said governors and directors (of which the governor or deputy-governor must be always one) shall constitute a court of directors, for the management of the affairs of the company, and for the appointment of all agents and servants which may be necessary, paying them such salaries as they may consider reasonable.

"Every elector must have, in his own name and for his own use, L500 or more capital stock, and can only give one vote. He must, if required by any member present, take the oath of stock, or the declaration of stock in case he be one of the people called Quakers.

"Four general courts to be held in every year, in the months of September, December, April, and July. A general court may be summoned at any time, upon the requisition of nine proprietors duly qualified as electors.

"The majority of electors in general courts have the power to make and constitute by-laws and ordinances for the government of the corporation, provided that such by-laws and ordinances be not repugnant to the laws of the kingdom, and be confirmed and approved, according to the statutes in such case made and provided."

The corporation is prohibited from engaging in any sort of commercial undertaking other than dealing in bills of exchange, and in gold and silver. It is authorized to advance money upon the security of goods or merchandise pledged to it; and to sell by public auction such goods as are not redeemed within a specified time.

It was also enacted, in the same year in which the Bank was established, by statute 6 William and Mary, c. 20, that the Bank, "shall not deal in any goods, wares, or merchandise (except bullion), or purchase any lands or revenues belonging to the crown, or advance or lend to their majesties, their heirs or successors, any sum or sums of money, by way of loan or anticipation, or any part or parts, branch or branches, fund or funds, of the revenue, now granted or belonging, or hereafter to be granted, to their majesties, their heirs and successors, other than such fund or funds, part or parts, branch or branches, of the said revenue only, on which a credit of loan is or shall be granted by parliament." And in 1697 it was enacted, that the "common capital or principal stock, and also the real fund, of the governor and company, or any profit or produce to be made thereof, or arising thereby, shall be exempted from any rates, taxes, assessments, or impositions whatsoever, during the continuance of the Bank; that all the profit, benefit, and advantage from time to time arising out of the management of the said corporation, shall be applied to the uses of all the members of the said association of the governor and company of the Bank of England, rateably and in proportion to each member's part, share, and interest in the common capital and principal stock of the said governor and company hereby established."

In 1696, during the great recoinage, the Bank was involved in great difficulties, and was even compelled to suspend payment of her notes, which were at a heavy discount. Owing, however, to the judicious conduct of the directors, and the assistance of the government, the Bank got over the crisis. But it was at the same time judged expedient, in order to place her in a situation the better to withstand any adverse circumstances that might afterwards occur, to increase her capital from L1,200,000 to L2,201,171. In 1708, the directors undertook to pay off and cancel one million and a half of exchequer bills they had circulating two years before, at four and a half per cent., with the interest upon them, amounting in all to L1,775,028, which increased the permanent debt due by the public to the Bank, including L400,000 then advanced in consideration of the renewal of the charter, to L3,375,028, for which they were allowed six per cent. The bank capital was then also doubled, or increased to L4,402,343. But the year 1708 is chiefly memorable, in the history of the Bank, for the act previously alluded to, which declared, that during the continuance of the corporation of the Bank of England, "it should not be lawful for any body politic, erected or to be erected, other than the said governor and company of the Bank of England, or of any other persons whatsoever, united or to be united in covenants or partnership, exceeding the number of six persons, in that part of Great Britain called England, to borrow, owe, or take up any sum or sums of money on their bills or notes payable on demand, or in any less time than six months from the borrowing thereof." This proviso, which has had so powerful an operation on banking in England, is said to have been elicited by the Mine-Adventure Company having commenced banking business, and begun to issue notes.

The charter of the Bank of England, when first granted, was to continue for eleven years certain, or till a year's notice after the 1st of August 1705. The charter was further prolonged in 1697. In 1708, the Bank having advanced L400,000 for the public service, without interest, the exclusive privileges of the corporation were prolonged till 1783. And in consequence of various advances made at different times, the exclusive privileges of the Bank have been continued by successive renewals, till a year's notice after the 1st of August 1855, under the proviso that they may be cancelled on a year's notice to that effect being given on the 1st of August 1845.

We subjoin an account of the successive renewals of Renewals the charter, of the conditions under which these renewals of Bank were made, and of the variations in the amount and interest of the permanent debt due by government to the Bank, with the exclusive of the dead weight.

| Date of Renewal | Conditions under which Renewals were made, and Permanent Debt continued | |----------------|--------------------------------------------------------------------------------| | 1694 | Charter granted under the act 5 and 6 Will. III. c. 20, redeemable upon the expiration of twelve months' notice after the 1st August 1705, upon payment by the public to the Bank, of the demand therein specified. Under this act the Bank advanced to the public L1,200,000 in consideration of their receiving an annuity of L100,000 a year, viz. eight per cent. interest, and L4000 for management. | | 1697 | Charter continued by 8 and 9 Will. III. c. 20, till twelve months' notice after 1st of August 1710, on payment, &c. Under this act the Bank took up and added to their stock L1,001,171 exchequer bills and tallies. | | 1703 | Charter continued by 7 Anne, c. 7, till twelve months' notice after 1st of August 1732, on payment, &c. Under this act the Bank advanced L400,000 to government without interest; and delivered up to be cancelled L1,775,027, 17s. 10d. exchequer bills. | | Date of Renewal | Conditions under which Renewals were made, and Permanent Debt contracted. | Permanent Debt. | |-----------------|--------------------------------------------------------------------------------|-----------------| | 1713 | Charter continued by 12 Anne, stat. I, cap. II, till twelve months' notice after the 1st of August 1742, on payment, &c. In 1716, by the 3rd Geo. I. c. 8, the Bank advanced to government, at five per cent. And by the same act, the interest on the exchequer bills cancelled in 1730 was reduced from six to five per cent. In 1721, by 3 Geo. I. c. 21, the South Sea Company were authorized to sell L200,000 government annuities, and corporations purchasing the same at 26 years' purchase were authorized to add the amount to their capital stock. The Bank purchased the whole of these annuities at 20 years' purchase. Five per cent. interest was payable on this sum to midsummer 1727, and thereafter four per cent. At different times between 1727 and 1733, both inclusive, the Bank received from the public, on account of permanent debt, L3,275,927.17s. 10d. and advanced to it on account of ditto L3,000,000. Difference Debt due by the public in 1733. Charter continued by 15 Geo. II. c. 13, till twelve months' notice after the 1st of August 1744, on payment, &c. Under this act the Bank advanced L1,500,000 without interest, which being added to the original advance of L1,200,000, and the L400,000 advanced in 1710, bearing interest at six per cent., reduced the interest on the whole to three per cent. In 1745, under authority of 19 Geo. II. c. 6, the Bank delivered up to be cancelled L985,000 of exchequer bills, in consideration of an annuity of L32,472, being at the rate of three per cent. In 1749, the 23rd Geo. II. c. 6, reduced the interest on the four per cent. annuities, held by the Bank, to three and a half per cent. for seven years from the 25th of December 1750, and thereafter to three per cent. Charter continued by 4 Geo. III. c. 25, till twelve months' notice after the 1st of August 1786, on payment, &c. Under this act the Bank paid into the exchequer L110,000, free of all charge. Charter continued by 21 Geo. III. c. 69, till twelve months' notice after the 1st of August 1812, on payment, &c. Under this act the Bank advanced L3,000,000 for the public. Carry forward. |

For further details as to this subject, see the appendix, No. 1, of the Report of 1832 on the Renewal of the Bank Charter, and the acts of parliament referred to in it. See also James Postlethwayt's History of the Revenue, pp. 301–310; and Fairman on the Funds, seventh edition, pp. 85–88, &c.

The capital of the Bank on which dividends are paid has never exactly coincided with, though it has seldom differed very materially from, the permanent advance by the Bank to the public. We have already seen that it amounted in 1705 to L4,402,243. Between that year and 1727 it had increased to near L9,000,000. In 1746 it amounted to L10,750,000. From this period it underwent no change till 1752, when it was increased eight per cent., or to L11,642,400. It continued stationary at this sum down to 1816, when it was raised to L14,553,000, by an addition of twenty-five per cent. from the profits of the Bank, under the provisions of the act 56 Geo. III. c. 96. The act for the renewal of the charter 34 Will. IV. c. 98, directed that the sum of L3,638,250, the portion of debt due to the Bank to be repaid by the public, should be deducted from the Bank's capital; which, in consequence, is now L10,914,750. (Report on Bank Charter, Appen. No. 33.)

The Bank of England has been frequently affected by runs upon companies amongst the holders of her notes. In 1745 the bank alarm occasioned by the advance of the Highlanders, under the Pretender, as far as Derby, led to a run upon the Bank; and in order to gain time to effect measures for averting the run, the directors adopted the device of pay- ing in shillings and sixpences! But they derived a more effectual relief from the retreat of the Highlanders, and from a resolution agreed to at a meeting of the principal merchants and traders of the city, and very numerously signed, declaring the willingness of the subscribers to receive bank-notes in payment of any sum that might be due to them, and pledging themselves to use their utmost endeavours to make all their payments in the same medium.

During the tremendous riots in June 1780 the Bank incurred considerable danger. Had the mob attacked the establishment at the commencement of the riots, the consequences might have proved fatal. Luckily, however, they delayed their attack till time had been afforded for providing a force sufficient to insure its safety. Since that period a considerable military force is nightly placed in the interior of the Bank, as a protection in any emergency that may occur.

The year 1797 is the most important epoch in the recent history of the Bank. Owing partly to events connected with the war in which we were then engaged; to loans to the Emperor of Germany; to bills drawn on the treasury at home by the British agents abroad; and partly, and chiefly, perhaps, to the advances most unwillingly made by the Bank to government, which prevented the directors from having a sufficient control over their issues, the exchanges became unfavourable in 1795, and in that and the following year large sums of specie were drawn from the Bank. In the latter end of 1796 and beginning of 1797, considerable apprehensions were entertained of invasion, and rumours were propagated of descents having been actually made on the coast. In consequence of the fears that were thus excited, runs were made on the provincial banks in different parts of the country; and some of them having failed, the panic became general, and extended itself to London. Demands for cash poured in upon the Bank from all quarters; and, on Saturday the 25th of February 1797, she had only L1,272,000 of cash and bullion in her coffers, with every prospect of a violent run taking place on the following Monday. In this emergency, an order in council was issued on Sunday the 26th, prohibiting the directors from paying their notes in cash until the sense of parliament should be taken on the subject. And after parliament met, and the measure had been much discussed, it was agreed to continue the restriction till six months after the signature of a definitive treaty of peace.

As soon as the order in council prohibiting payments in cash appeared, a meeting of the principal bankers, merchants, traders, &c. of the metropolis, was held at the Mansion-house when a resolution was agreed to, and very numerously signed, pledging, as had been done in 1745, those present to accept, and to use every means in their power to cause bank-notes to be accepted, as cash in all transactions. This resolution tended to allay the apprehensions that the restriction had excited.

Parliament being sitting at the time, a committee was immediately appointed to examine into the affairs of the Bank; and their report put to rest whatever doubts might have been entertained with respect to the solvency of the establishment, by showing, that at the moment when the order in council appeared, the Bank was possessed of property to the amount of L15,513,690, after all claims upon her had been deducted.

Much difference of opinion has existed with respect to the policy of the restriction in 1797; but, considering the peculiar circumstances under which it took place, its expediency seems abundantly obvious. The run did not originate in any over-issue of bank-paper, but grew entirely out of political causes. As long as the alarms of invasion continued, it was clear that no bank-paper immediately convertible into gold would remain in circulation. And as the Bank, although possessed of ample funds, was without the means of instantly retiring her notes, she might, but for the interference of government, have been obliged to stop payment; an event which, had it occurred, must have produced consequences in the last degree fatal to the public interests.

The error of the government did not consist in their Resumption coming to the assistance of the Bank, but in their continuing the restriction after the alarm of invasion had ceased, and there was nothing to hinder the Bank from safely reverting to specie payments. We have already pointed out (see article Money, vol. xv. p. 402) the influence of the suspension upon the conduct of the Bank, and the depreciation to which it led. But the destruction of country-bank paper in 1814, 1815, and 1816, having, by reducing the amount of currency, raised its value nearly to a level with that of gold, the legislature was able to revert with comparatively little difficulty to the old standard. The act for this purpose, 59 Geo. III. cap. 78, has been commonly called Peel's bill, from its having been introduced and carried through parliament by Mr (now Sir Robert) Peel. To facilitate the return to specie payments, the Bank was authorized, in the first instance, to pay in bars of standard bullion. She, however, recommenced payments in coin in May 1821, and has since continued them without interruption.

Having already given some account of the derangements of the currency in 1825-26, and in 1836-37, it is not needful again to allude to them here. When the charter legal tender everywhere except at the Bank, where every note was made legal tender, was renewed in 1833, the notes of the Bank of England were made legal tender everywhere except at the Bank, where every note was made legal tender. Of the wisdom of this regulation no doubt can be entertained. Bank-notes are necessarily always equivalent to bullion; and by making them substitutes for coin at country banks, the demand for the latter during periods of alarm or runs is materially diminished, and the stability of the Bank and of the pecuniary system of the country proportionally increased. Since 1826 the Bank has established branches in some of the great commercial towns.

The principle which the Bank endeavours to keep in view in conducting her business is, that she should so manage her affairs as to have always on hand a stock of coin and bullion equal to a third part of her liabilities; that is, to regulate her deposits. But in practice she is obliged frequently to deviate from this rule; and we have already seen that the circumstances under which the Bank is placed, in consequence of there being hundreds of rival issuers, are such as to make it impossible for her to abide constantly by any system in the regulation of her issues, or to act in the way that it would be for her interest as well as her duty to act were she the sole issuer of paper.

The Bank of England transacts the whole business of government. "She acts not only," says Dr Smith, "as England in an ordinary bank, but as a great engine of state. She receives and pays the greater part of the annuities which are due to the creditors of the public; she circulates exchequer bills; and she advances to the government the annual amount of the land and malt taxes, which are frequently not paid till some years thereafter." Previously to 1834 the Bank received about L270,000 a year from the public for her trouble in managing the national debt, paying dividends, transferring stock, &c. But the act renewing the charter having directed that L120,000 should be deducted from this charge, it now amounts to about L150,000 a year.

The greater part of the paper of the Bank has generally been issued in the way of advances or loans to government, upon security of certain branches of the revenue, and in the purchase of exchequer bills and other government securities, and bullion. But her issues through the terest. medium of discounts and loans to individuals have notwithstanding been at all times considerable, while during periods of distress they are often very large. Generally speaking, however, the directors do not think it advisable to enter into competition with private bankers in the transacting of ordinary banking business, or in the discounting of ordinary mercantile paper; and for this reason the interest charged by them is usually one or one and a half per cent. higher than that charged by private bankers and dealers in discounts. When, however, any circumstances occur to occasion a pressure in the money market, the market rate of interest immediately rises to the rate fixed by the Bank, and on such occasions the private bankers and the public generally resort to her aid. She then becomes as it were a point d'appui—a bank of support—and has frequently rendered in that capacity essential service, as in the famous instances of 1792-93, 1815-16, 1825-26, and 1836-37. The interference of the Bank on the latter occasion, in propping up the Northern and Central Bank, though in some respects objectionable, and in supporting the American houses till they got their engagements greatly reduced, no doubt averted a severe pecuniary crisis.

The Bank of England allows no interest, either at the head office in London, or at the branches, for deposits. She is, we believe, influenced in this respect by an apprehension, that were she to allow interest, she might be encumbered with too great an accumulation of deposits, which it might be difficult to employ advantageously, and which, in a period of alarm, might endanger her security. It is not to be denied that there is great weight in these considerations.

The dividends on bank stock, from 1767 to the present time, have been:—From 1767 to 1781, five and a half per cent. per annum; from 1781 to 1788, six per cent.; from 1788 to 1807, seven per cent.; from 1807 to 1823, ten per cent.; and from 1823 to the present time (1838) eight per cent. The sums paid as dividends are exclusive of those which have occasionally been advanced as bonuses: the latter amount, since 1799, to £3,783,750, over and above the increase of the Bank's capital in 1816, which amounted to £2,910,600.

### TABLES EXHIBITING THE CONDITION OF THE AFFAIRS OF THE BANK OF ENGLAND.

#### I.—State of the Affairs of the Bank of England, 29th of February 1832.

| Dr. | L. | Cr. | L. | |-----|----|-----|----| | To bank-notes outstanding | 18,051,710 | By advances on government securities; by exchequer bills on the growing produce of the consolidated fund in the quarter ending 5th of April 1832 | 3,428,310 | | To public deposits, viz.: | | Ditto 5th of July 1832 | 697,000 | | Drawing accounts | 2,034,790 | Ditto for supplies 1825 | 7,000 | | Balance of audit roll | 550,550 | Ditto for £10,500,000 for 1825 | 2,000 | | Life annuities unpaid | 85,030 | By the advances to the trustees appointed by the act 3 Geo. IV. c. 51, towards the purchase of an annuity of £55,740 for forty-four years from 5th of April 1823 | 10,897,850 | | Annuities for terms of years unpaid | 3,198,739 | By other credits, viz.: | | | Exchequer bills deposited | 38,350 | Exchequer bills purchased | 2,700,000 | | To private deposits, viz.: | | Stock purchased | 764,690 | | Drawing accounts | 5,683,870 | City bonds | 590,000 | | Various other debts | 54,560 | Bills and notes discounted | 2,951,970 | | To the Bank of England for the capital | 14,553,000 | Loans on mortgages | 1,452,100 | | To balance of surplus in favour of the Bank of England | 2,637,760 | London Dock Company | 927,500 | | | | Advances on security, and various articles | 570,090 | | | | By cash and bullion | 5,293,150 | | | | By the permanent debt due from government | 14,086,900 | | | | Rest or surplus brought down | 2,637,760 | | | | Bank capital due to proprietors | 14,553,000 | | | | | £17,190,760 |

L. 44,179,630 II.—Account of the Amount of the Notes of the Bank of England in Circulation, of the Deposits in the hands of the Bank, of all Securities held by the Bank, of Bullion in her Coffers, and of the Rest or Surplus Capital of the Bank, on the last day of February in each of the following years.

| Year | Notes in Circulation | Deposits | Public Securities | Private Securities | Bullion | Rest or Surplus Capital | |------|---------------------|----------|------------------|-------------------|---------|------------------------| | 1778 | 7,440,330 | 4,662,150| 7,198,292 | 3,322,228 | 2,010,690| 1,128,730 | | 1779 | 9,012,610 | 4,355,160| 4,852,424 | 2,973,668 | 3,711,150| 1,276,190 | | 1780 | 8,410,790 | 4,723,889| 9,145,639 | 1,755,371 | 3,581,000| 1,347,410 | | 1781 | 7,092,450 | 4,796,839| 8,640,973 | 1,546,667 | 3,279,940| 1,576,300 | | 1782 | 9,025,660 | 6,130,300| 10,436,655 | 3,440,915 | 2,157,660| 1,792,750 | | 1783 | 7,675,690 | 4,465,000| 10,916,349 | 2,788,431 | 1,921,199| 1,976,850 | | 1784 | 6,202,790 | 3,963,920| 7,789,291 | 3,629,929 | 655,840 | 1,168,330 | | 1785 | 5,923,080 | 6,669,169| 7,198,564 | 4,973,926 | 2,740,829| 2,321,060 | | 1786 | 7,381,960 | 6,151,669| 6,336,459 | 3,510,731 | 5,979,090| 2,558,710 | | 1787 | 9,329,490 | 5,962,080| 7,642,587 | 3,716,463 | 5,626,630| 2,753,320 | | 1788 | 9,561,120 | 8,177,050| 7,033,657 | 4,630,633 | 5,743,440| 2,869,750 | | 1789 | 9,097,210 | 6,537,370| 6,249,802 | 2,711,108 | 7,222,730| 2,811,840 | | 1790 | 10,040,540 | 6,223,270| 6,547,367 | 1,984,733 | 8,633,000| 2,791,210 | | 1791 | 11,439,200 | 6,364,556| 10,309,358 | 2,762,002 | 7,869,410| 2,666,300 | | 1792 | 11,307,300 | 5,525,370| 9,930,759 | 3,129,761 | 6,463,060| 2,705,870 | | 1793 | 11,888,910 | 5,246,450| 8,949,209 | 4,458,641 | 4,010,680| 2,789,570 | | 1794 | 10,744,620 | 7,891,816| 9,950,756 | 4,872,704 | 6,987,110| 2,675,330 | | 1795 | 14,041,510 | 5,973,699| 3,164,772 | 4,872,741 | 6,127,720| 2,945,530 | | 1796 | 14,762,820 | 5,747,040| 12,906,912 | 4,165,326 | 2,538,030| 3,247,290 | | 1797 | 9,047,470 | 8,291,539| 11,714,431 | 3,412,919 | 1,686,170| 3,557,610 | | 1798 | 13,604,580 | 6,143,900| 11,524,333 | 3,558,167 | 5,825,440| 3,585,710 | | 1799 | 12,939,800 | 9,131,320| 11,510,677 | 3,523,353 | 7,720,910| 3,582,210 | | 1800 | 16,844,470 | 7,062,650| 15,675,663 | 7,448,387 | 6,144,250| 3,661,120 | | 1801 | 16,213,289 | 16,745,840| 15,985,911 | 10,466,719 | 4,640,120| 4,140,730 | | 1802 | 15,186,889 | 6,858,210| 14,159,084 | 7,709,726 | 4,152,950| 4,657,620 | | 1803 | 15,319,930 | 5,970,849| 9,417,887 | 14,447,613 | 3,776,750| 4,321,480 | | 1804 | 17,077,830 | 8,676,320| 14,684,636 | 12,314,284 | 3,572,140| 4,616,450 | | 1805 | 17,871,170 | 12,033,620| 16,829,501 | 11,771,889 | 3,863,800| 4,590,400 | | 1806 | 17,730,120 | 9,930,709| 14,513,509 | 11,771,471 | 3,987,190| 4,867,350 | | 1807 | 16,950,650 | 11,829,320| 13,402,871 | 13,355,569 | 6,122,840| 4,771,200 | | 1808 | 16,183,850 | 11,961,969| 14,140,501 | 13,234,579 | 7,035,470| 5,068,730 | | 1809 | 15,542,850 | 8,992,950| 14,743,425 | 14,374,775 | 4,448,700| 5,081,090 | | 1810 | 21,016,500 | 12,457,310| 14,322,634 | 21,055,946 | 3,661,410| 5,493,850 | | 1811 | 23,390,220 | 14,445,650| 17,201,800 | 10,920,459 | 3,350,940| 5,667,420 | | 1812 | 23,465,320 | 11,505,200| 22,197,233 | 15,899,637 | 2,963,159| 6,665,260 | | 1813 | 23,210,930 | 11,268,159| 25,036,626 | 12,894,324 | 2,834,590| 6,336,340 | | 1814 | 24,801,990 | 12,455,260| 23,630,317 | 18,359,593 | 2,291,439| 6,567,800 | | 1815 | 27,261,650 | 11,702,250| 27,512,894 | 17,845,696 | 2,636,916| 7,651,200 | | 1816 | 27,073,620 | 12,386,890| 19,425,726 | 23,975,530 | 4,640,800| 6,633,600 | | 1817 | 27,397,900 | 10,825,610| 25,538,606 | 8,739,822 | 9,689,970| 5,739,090 | | 1818 | 27,770,970 | 7,597,556| 26,913,366 | 3,691,979 | 10,053,450| 5,192,270 | | 1819 | 25,126,790 | 6,413,370| 22,355,115 | 3,099,865 | 4,184,620| 4,899,550 | | 1820 | 23,484,110 | 4,693,599| 21,715,168 | 4,472,322 | 4,911,650| 3,520,830 | | 1821 | 23,844,920 | 5,622,296| 16,016,990 | 4,753,280 | 11,289,900| 3,153,260 | | 1822 | 16,663,350 | 4,689,946| 12,478,133 | 3,404,947 | 11,657,150| 3,674,940 | | 1823 | 18,392,240 | 7,181,106| 13,658,629 | 4,650,901 | 10,384,420| 3,139,620 | | 1824 | 19,736,996 | 10,057,350| 14,341,127 | 4,830,873 | 13,916,060| 2,547,220 | | 1825 | 20,753,760 | 16,168,790| 19,447,588 | 5,563,742 | 8,779,100| 2,807,630 | | 1826 | 20,467,910 | 6,955,946| 20,573,238 | 12,345,322 | 2,159,510| 2,974,240 | | 1827 | 21,698,910 | 3,601,660| 16,665,015 | 4,344,515 | 10,159,020| 2,996,290 | | 1828 | 21,095,710 | 9,196,146| 19,818,777 | 3,762,493 | 10,347,290| 2,749,710 | | 1829 | 19,970,630 | 3,683,946| 19,736,665 | 5,648,055 | 6,253,020| 2,794,900 | | 1830 | 20,050,730 | 10,769,150| 20,038,290 | 4,163,500 | 9,471,090| 2,561,510 | | 1831 | 19,600,140 | 11,213,530| 19,927,972 | 5,281,406 | 8,247,550| 2,612,360 | | 1832 | 18,051,710 | 6,837,170| 15,437,448 | 3,558,042 | 8,228,150| 2,637,760 | ### III.—Average Quarterly Account of the Liabilities, Assets, and Surplus or Rest, of the Bank of England, as ordered by the Act 3 and 4 Will. IV. cap. 98.

| Year | Notes in Circulation | Deposits | Securities | Bullion | Rest or Surplus Capital | |------|---------------------|----------|------------|---------|------------------------| | **1834** | | | | | | | January 1 | L.18,216,000 | L.13,101,000 | L.23,596,000 | L.9,948,000 | L.2,207,000 | | February 4 | L.18,377,000 | L.14,096,000 | L.24,762,000 | L.9,954,000 | L.2,253,000 | | March 4 | L.18,700,000 | L.14,416,000 | L.25,347,000 | L.9,829,000 | L.2,258,000 | | April 1 | L.19,097,000 | L.14,411,000 | L.25,970,000 | L.9,431,000 | L.2,293,000 | | May 6 | L.18,974,000 | L.14,081,000 | L.26,650,000 | L.8,384,000 | L.2,516,000 | | June 3 | L.18,922,000 | L.14,529,000 | L.27,312,000 | L.8,645,000 | L.2,496,000 | | July 1 | L.18,695,000 | L.15,690,000 | L.27,905,000 | L.8,095,000 | L.2,261,000 | | July 29 | L.18,110,000 | L.15,675,000 | L.26,502,000 | L.8,598,000 | L.2,315,000 | | August 26 | L.18,147,000 | L.15,304,000 | L.25,679,000 | L.8,272,000 | L.2,420,000 | | September 23 | L.19,126,000 | L.14,754,000 | L.25,691,000 | L.7,695,000 | L.2,506,000 | | October 21 | L.18,914,000 | L.13,014,000 | L.27,840,000 | L.7,123,000 | L.2,535,000 | | November 18 | L.18,694,000 | L.12,629,000 | L.27,130,000 | L.6,781,000 | L.2,550,000 | | December 15 | L.18,304,000 | L.12,250,000 | L.26,362,000 | L.6,720,000 | L.2,522,000 | | **1835** | | | | | | | January 15 | L.18,012,000 | L.12,525,000 | L.26,320,000 | L.6,741,000 | L.2,534,000 | | February 10 | L.18,099,000 | L.12,535,000 | L.26,482,000 | L.6,693,000 | L.2,541,000 | | March 10 | L.18,311,000 | L.13,281,000 | L.26,657,000 | L.6,336,000 | L.2,631,000 | | April 7 | L.18,591,000 | L.11,299,000 | L.16,328,000 | L.6,329,000 | L.2,677,000 | | May 5 | L.18,542,000 | L.10,726,000 | L.25,764,000 | L.6,197,000 | L.2,633,000 | | June 2 | L.18,460,000 | L.10,560,000 | L.25,582,000 | L.6,150,000 | L.2,684,000 | | June 30 | L.18,315,000 | L.10,954,000 | L.25,678,000 | L.6,219,000 | L.2,628,000 | | July 23 | L.18,322,000 | L.11,561,000 | L.26,244,000 | L.6,283,000 | L.2,644,000 | | August 25 | L.18,340,000 | L.12,208,000 | L.26,964,000 | L.6,326,000 | L.2,642,000 | | September 22 | L.18,240,000 | L.13,230,000 | L.27,888,000 | L.6,261,000 | L.2,679,000 | | October 29 | L.17,930,000 | L.14,227,000 | L.28,661,000 | L.6,186,000 | L.2,699,000 | | November 17 | L.17,549,000 | L.16,180,000 | L.30,063,000 | L.6,393,000 | L.2,645,000 | | December 15 | L.17,521,000 | L.17,729,000 | L.31,048,000 | L.6,626,000 | L.2,624,000 | | **1836** | | | | | | | January 12 | L.17,262,000 | L.19,169,000 | L.31,954,000 | L.7,076,000 | L.2,590,000 | | February 9 | L.17,427,000 | L.16,366,000 | L.31,622,000 | L.7,471,000 | L.2,700,000 | | March 8 | L.17,439,000 | L.16,966,000 | L.29,806,000 | L.7,701,000 | L.3,002,000 | | April 5 | L.18,063,000 | L.14,751,000 | L.27,927,000 | L.7,901,000 | L.2,914,000 | | May 3 | L.18,154,000 | L.13,747,000 | L.27,042,000 | L.7,782,000 | L.2,923,000 | | May 31 | L.18,051,000 | L.13,273,000 | L.26,534,000 | L.7,506,000 | L.2,872,000 | | July 1 | L.17,899,000 | L.13,610,000 | L.27,153,000 | L.7,462,000 | L.2,906,000 | | July 23 | L.17,940,000 | L.14,495,000 | L.26,315,000 | L.6,425,000 | L.2,906,000 | | August 25 | L.18,061,000 | L.14,796,000 | L.29,343,000 | L.6,325,000 | L.2,813,000 | | September 22 | L.18,147,000 | L.14,116,000 | L.29,466,000 | L.5,719,000 | L.2,560,000 | | October 21 | L.17,936,000 | L.13,324,000 | L.28,845,000 | L.5,257,000 | L.2,842,000 | | November 17 | L.17,543,000 | L.12,682,000 | L.28,134,000 | L.4,933,000 | L.2,842,000 | | December 15 | L.17,361,000 | L.13,330,000 | L.28,971,000 | L.4,545,000 | L.2,825,000 | | **1837** | | | | | | | January 10 | L.17,422,000 | L.14,354,000 | L.30,365,000 | L.4,267,000 | L.2,876,000 | | February 7 | L.17,868,000 | L.14,230,000 | L.31,085,000 | L.4,032,000 | L.3,019,000 | | March 7 | L.18,178,000 | L.13,260,000 | L.30,579,000 | L.4,048,000 | L.3,189,000 | | April 4 | L.18,432,000 | L.11,192,000 | L.28,843,000 | L.4,071,000 | L.3,263,000 | | May 2 | L.18,499,000 | L.10,472,000 | L.28,017,000 | L.4,190,000 | L.3,255,000 | | May 30 | L.18,419,000 | L.10,422,000 | L.27,572,000 | L.4,423,000 | L.3,154,000 | | June 27 | L.18,202,000 | L.10,424,000 | L.26,932,000 | L.4,750,000 | L.3,056,000 | | July 25 | L.18,261,000 | L.10,672,000 | L.26,727,000 | L.5,226,000 | L.3,020,000 | | August 22 | L.18,462,000 | L.11,005,000 | L.26,717,000 | L.5,754,000 | L.3,004,000 | | September 19 | L.18,814,000 | L.11,093,000 | L.26,655,000 | L.6,383,000 | L.3,001,000 | | October 17 | L.18,716,000 | L.10,501,000 | L.25,316,000 | L.6,856,000 | L.2,955,000 | | November 14 | L.18,344,000 | L.10,242,000 | L.22,985,000 | L.7,432,000 | L.2,831,000 | | December 14 | L.17,998,000 | L.10,195,000 | L.22,727,000 | L.8,172,000 | L.2,706,000 | | **1838** | | | | | | | January 12 | L.17,900,000 | L.10,992,000 | L.22,606,000 | L.8,895,000 | L.2,609,000 |

N. B.—The rest is found by adding together the circulation and deposits, and deducting their amount from the amount of the securities and bullion. It will be unnecessary, after the principles laid down and the details given in the previous parts of this article, to enter at any considerable length into an examination of the constitution of the joint-stock banks which combine with the business of deposit banks that of banks for the issue of paper. They consist of bodies of partners, varying from seven to nearly 1500, each holding one or more shares of the company's stock, and they are uniformly managed by boards of directors appointed by, and generally responsible to, the body of shareholders. The conditions of co-partnership vary materially in different associations; but the above are distinguishing features common to them all. There can be no doubt that several of these banks are discreetly managed, possess adequate capital, and afford the simplest security to their customers and the public. But it is very doubtful whether this can be truly said of the greater number of these establishments. The shares in many joint-stock banks are very small, few being above £100, the greater number not exceeding £50, whilst many are only £25, and some not more than £10, and even £5! Generally, too, it is understood, or rather it is distinctly set forth in the prospectus, that not more than five, ten, or twenty per cent. of these shares is to be called for, so that an individual who has ten or twenty shillings to spare may become a shareholder in a bank. And, owing to a practice, or rather a flagrant abuse, introduced into the management of various banks, by which they make large advances or discounts on the credit of the stock held by the shareholders, not a few individuals in doubtful, or even desperate circumstances, take shares in them, in the view of obtaining loans, and bolstering up their credit! The great danger arising from such banks is obvious; and were one of them to stop payment, it is plain, even though the claims on it should be ultimately made good, that they could be so only at the cost, and perhaps ruin, of such of its proprietors as had abstained from the abusive practices resorted to by others. It may well, indeed, excite astonishment, that any one who can really afford to make a bona fide purchase of shares in a bank should be foolhardy enough to embark in such concerns.

A knowledge of the circumstances now stated, and of the sort of agency by which certain joint-stock banks have been established and conducted, having been generally diffused, a secret committee was appointed by the House of Commons in 1836, to inquire into the operation of the act 7 Geo. IV. cap. 46, permitting the establishment of joint-stock banks; and whether it was expedient to make any alteration in its provisions. The report of this committee, and of a second committee appointed in 1837, with portions of the evidence taken before them, have since been published, and confirm all the conclusions of those who had contended that the existing system required material amendment. The committee of 1836 stated that—

"Subject to the local restrictions imposed for the protection of the privilege of the Bank of England, it is open to any number of persons to form a company for joint-stock banking, whether for the purpose of deposit, or of issue, or of both."

1. The law imposes on the joint-stock banks no preliminary obligation beyond the payment of a license duty, and the registration of the names of shareholders at the stamp-office.

2. The law does not require that the deed of settlement shall be considered or revised by any competent authority whatever; and no precaution is taken to enforce the insertion in such deeds, of clauses the most obvious and necessary.

3. The law does not impose any restrictions upon the amount of nominal capital. This will be found to vary from £5,000,000 to £100,000; and in one instance an unlimited power is reserved for issuing shares to any extent.

4. The law does not impose any obligation that the whole or any certain amount of shares shall be subscribed for before banking operations commence. In many instances banks commence their business before one half of the shares are subscribed for, and 10,000, 20,000, and 30,000 shares are reserved to be issued at the discretion of the directors.

5. The law does not enforce any rule with respect to the nominal amount of shares. These will be found to vary from £1,000 to £5. The effects of this variation are strongly stated in the evidence.

6. The law does not enforce any rule with respect to the amount of capital paid up before the commencement of business. This will be found to vary from £105 to £5.

7. The law does not provide for any publication of the liabilities and assets of these banks, nor does it enforce the communication of any balance-sheet to the proprietors at large.

8. The law does not impose any restrictions by which care shall be taken that dividends are paid out of banking profits only, and that bad or doubtful debts are first written off.

9. The law does not prohibit purchases, sales, and speculative traffic on the part of these companies in their own stock, nor advances to be made on the credit of their own shares.

10. The law does not provide that the guarantee fund shall be kept apart and invested in government or other securities.

11. The law does not limit the number of branches, or the distance of such branches from the central bank.

12. The law is not sufficiently stringent to insure to the public that the names registered at the stamp-office are the names of persons bona fide proprietors, who have signed the deed of settlement, and who are responsible to the public.

13. The provisions of the law appear inadequate, or at least are disregarded, so far as they impose upon banks the obligation of making their notes payable at the places of issue.

All these separate questions appear to your committee deserving of the most serious consideration, with a view to the future stability of the banks throughout the united kingdom, the maintenance of commercial credit, and the preservation of the currency in a sound state.

We do not, however, think that it would be at all necessary, in providing for a secure system of joint-stock measures banking, to make any regulations with respect to many of that should be adopted. At present every partner in a joint-stock bank is liable to the public for the whole debts of the firm; and this may be truly said to be the saving principle of the system, and without which it would be an unmixed intolerable evil. No individual should, however, by merely withdrawing from a joint-stock concern, get rid of his liabilities in connection with it. To prevent fraud, and to insure due caution, these ought to continue for a period of three years at least after he has publicly withdrawn his name. The public, too, are clearly entitled to know the partners in joint-stock associations, that is, to be informed

---

1 See Edinburgh Review, No. 128, art. 6; and the accounts of the Norwich Bank, and of the Northern and Central Bank, in the Reports of the Committees of 1836 and 1837. who the individuals are with whom they are dealing, and who are responsible to them. But, unluckily, no effective means are taken for supplying the public with this necessary information, and, consequently, of properly discriminating between one establishment and another. The act of 1833 (3 and 4 Will. IV. c. 88) directed, as previously stated, that an account of the places where they carry on business, and of the names and residences of the partners, should be quarterly transmitted to the stamp-office. But doubts have been entertained as to the correctness of these returns, and comparatively little use has been, or indeed can be, made of them. The accounts of the names and residences of the proprietors are not published; but are carefully secluded from the public eye, in the repositories of Somerset House! It is true that these lists may be seen by those who choose to apply at the office, for a small fee, and that certified copies may be procured at no great expense. But few know that such returns exist, and still fewer have the opportunity or think of availing themselves of them as sources of information. To render them of any real utility, they should be brought under the public eye, by being hung up in the offices of the banks to which they refer, and periodically published in the newspapers of the places where they carry on business. By this means the public would know exactly to whom they had to look, and would act accordingly. They would not be deceived, as they are liable to be at present, by supposing that, because a bank has a number of partners, some of them must be opulent and trustworthy. They would know the precise state of the fact; and if it were seen from the quarterly returns, that opulent and intelligent individuals were withdrawing from any bank, every one would be put on his guard, and would naturally conclude that the parties had very sufficient reasons for quitting the concern. Thus far publicity may be made effectual, and would be of the very greatest importance. Neither is it possible to allege a single plausible objection to this proposal. It interferes in no degree, nor in any way, with the proceedings of the parties; all that it does is to declare who and what they are, and to this degree of publicity no honest man will object. But we have great doubts whether it be possible to carry publicity farther than this. The committee state that "the law does not provide for any publication of the liabilities and assets of these banks, nor does it enforce the publication of any balance-sheet to the proprietors at large;" and it has been proposed to compel the periodical publication of a statement of this sort. But it is very questionable whether any such publication would not be a great deal worse than useless. It is not proposed that commissioners should be appointed to inspect the accounts of the different banks, and to see that the returns are accurate. This would be too inquisitorial, too burdensome, and too costly a plan to be thought of for a moment. There would be nothing for it, in fact, but to trust entirely to the honour of the parties. Hence, in all cases in which a disclosure would be really useful, the publication of an account of assets and liabilities would afford the means of deceiving the public, and of representing a bankrupt concern as being in a prosperous condition. Supposing, however, that the parties were in all instances perfectly honest, still the publication of a balance-sheet would be good for nothing. Every one knows how sanguine people are in relation to their own affairs; and that debts and obligations which other parties would hardly reckon worth anything, are estimated by them as if they were so much bullion. But, independently of this, the futility of the thing is obvious. A bank with a capital of L100,000 discounts bills and other obligations to the extent, perhaps, of L300,000 or L400,000; the fact that it has discounted them shows that it believes these bills and obligations to be good; and they will, consequently, be reckoned amongst its assets. But should a revolution take place, or any circumstance occur to shake credit, these bills may not be worth L100,000; and those who have dealt with the bank, on the hypothesis of its having capital and assets more than enough to meet all its obligations, will find to their cost that it is not possessed of a single shilling, but is, on the contrary, some L200,000 or L300,000 worse than nothing!

The committee seem to think that some regulation should be enacted, providing that a certain portion of its capital should be paid up before a bank begins business. But we incline to think that the better way would be to prohibit all advertising of nominal capitals; and to enact that the capital actually paid up, whatever its amount, shall always be represented as, and held to be, the capital of the bank. But although such a regulation were made, there would be no security that the capital said to have been paid up had really been paid into the coffers of the bank, or that, if received, it had not again been lent out, in one way or other, to the partners. Perhaps it might be good policy to enact that no shares should be issued under a certain sum, as L50; and that no loans should be made to the partners on the credit of their stock. But we should not be inclined to lay much stress on the former regulation; and the latter might, and no doubt would, be defeated in a thousand ways.

We are decidedly hostile to a proposal we have heard made, and which seems to be countenanced by the committee, for obliging all banks to establish a guarantee fund; that is, for obliging them to accumulate a portion of their profits as a reserve stock. But where is the security that such reserve would be always deducted from the profits? The truth is, that bankrupt and fraudulent concerns, and none else, would gain by such a regulation; inasmuch as it would enable them, by appearing to be prosperous, the better to deceive the public, and to blind them as to the real state of their affairs. It is plainly worse than absurd to teach the public to depend on guarantees that cannot be enforced, and which consequently must be good for nothing, unless it be to tempt to and conceal fraud. The knowledge of who the partners are in a bank, and their unlimited responsibility, are the only securities that, speaking generally, are worth anything. If these cannot protect the public from fraud and loss, nothing else will; and the question will come to be, not whether the system should be reformed, but whether it should be entirely abolished.

We have already noticed the extraordinary multiplication of branch-banks all over the country; and it is not very difficult to discover why banks of issue, at least, are so very anxious about the establishment of these outworks. They are bound, it seems, by the present law, to pay their notes only at the parent establishment; so that, by issuing them at a branch bank, perhaps a hundred miles distant from the head bank, the chances are ten to one that they will continue for a much longer period in circulation, and that they will consequently be able to carry on business with a much less amount of capital, than if they were, as they ought to be, obliged to pay their notes at the branches as well as at the principal office. It is obvious, indeed, that the convertibility of the paper, even of first-class banks, into either cash or Bank of England notes, is at present exceedingly imperfect; and that very great facilities are afforded for getting the worst class of notes into circulation, and for keeping them afloat, even after their quality may be suspected. This defect in the law ought undoubtedly to be amended, by obliging all banks that issue notes to pay them indifferently at any of their offices. But we incline to think that parliament might go farther than this, and that it should enact that no branch be established, whether for the issue of notes or otherwise, Beyond a certain distance (say fifty miles) from the head office.

Several of the points recapitulated by the committee, as to which the law is silent, respect the rights and interests of the partners in joint-stock banks, in relation to each other, and not as between them and the public. But it is always a very difficult matter to interfere to dictate the footing on which parties in any undertaking should stand amongst themselves. Much should, in such cases, be left to the judgment of the parties; and public regulations, if enforced at all, should only go to prevent obvious and acknowledged abuse. The parties may in most cases be safely left to take care of themselves. The protection of the public interest is the paramount consideration; and we do not well know what can be done to effect this, in the case at least of such banks as do not issue notes, other than the making known who their partners are.

The committee, like the manager who overlooked the part of the prince in casting the play of Hamlet, have omitted all reference to by far the most important matter connected with their inquiry,—the suppression of the issues of private and joint-stock banks. Though the regulations proposed or hinted at by the committee were adopted, and were as effectual as they are sure to be ineffectual and mischievous, they would do nothing to prevent those oscillations in the amount and value of money inherent in a currency supplied by different issuers, and which periodically overspread the country with bankruptcy and ruin. Even the exacting of security for their issues, the only regulation it is possible to adopt in regard to them which can be of any real value, though it would mitigate their violence, would not get rid of these destructive fluctuations. Nothing, as has already been fully shown, can do this short of the suppression of all local issues; and all schemes for the improvement of banking in England which do not proceed on this assumption, savour more of quackery and delusion than of anything else, and deserve but little attention.

### TABLES EXHIBITING THE NAMES, PARTNERS, CAPITAL, &c. OF JOINT-Stock BANKS.

I.—Official Return of all Places where United or Joint-Stock Banks have been established under the Act 7 Geo. IV. c. 46; with the Dates when such Banks were established, and the Number of Partners therein, down to the 24th November 1837. Subjoined is the paid-up Capital and Circulation of certain Banks, according to the Returns rendered to the Secret Committee of 1837.

| Place | Name of the Bank | Date when Established | Number of Partners | Paid-up Capital | Circulation Quarter ended Dec. 31, 1836 | |------------------------|------------------------------------------------------|-----------------------|--------------------|-----------------|----------------------------------------| | Ashton-under-Lyne | Ashton, Staleybridge, Hyde, and Glossop Bank | June 16, 1836 | 317 | 20,330 | ... | | Barnsley | Barnsley Banking Company | Jan. 25, 1832 | 112 | 25,100 | 8,247 | | Liverpool | Bank of Liverpool | April 23, 1831 | 503 | 380,170 | ... | | Manchester, Stockport, Bolton, and Newton | Bank of Manchester | March 19, 1829 | 677 | 741,050 | 136,366 | | Stockport | Bank of Stockport | May 3, 1836 | 331 | 66,625 | ... | | Walsall and Penkridge | Bank of Walsall and South Staffordshire | August 10, 1835 | 154 | 39,575 | 16,650 | | Kendal | Bank of Westmoreland | June 8, 1833 | 153 | 21,450 | 21,376 | | Bilston | Bilston District Banking Company | August 31, 1836 | 150 | 27,375 | 9,706 | | Birmingham | Birmingham and Midland Bank | August 18, 1836 | 263 | 36,400 | ... | | Ditto | Birmingham Town and District Banking Company | July 4, 1836 | 398 | ... | ... | | Ditto | Birmingham Banking Company | Sept. 30, 1829 | 296 | 50,000 | ... | | Bolton | Bolton Joint-Stock Banking Company | May 30, 1836 | 183 | 20,670 | ... | | Bradford | Bradford Banking Company | July 7, 1827 | 167 | 77,900 | 33,610 | | Ditto | Bradford Commercial Joint-Stock Banking Company | Feb. 27, 1833 | 155 | 43,095 | 20,575 | | Bristol | Bristol Old Bank | June 16, 1826 | 7 | 140,000 | 104,352 | | Bury | Bury Banking Company | June 14, 1836 | 110 | 63,925 | 8,256 | | Appleby, Carlisle, and Wigton | Carlisle and Cumberland Banking Company | Oct. 6, 1836 | 284 | 50,950 | 6,997 | | Cheltenham and Tewkesbury | Cheltenham and Gloucestershire Bank | May 19, 1836 | 151 | 22,625 | 9,555 | | Chesterfield | Chesterfield and North Derbyshire Banking Company | Dec. 21, 1831 | 97 | 23,280 | 16,255 | | Manchester, Preston, Burnley, Birmingham, Chester, Leek, Burslem, Liverpool, Blackburn, Ashbourn, Rochdale, Shrewsbury, Ellesmere, Uttoxeter, Whitechurch, Hanley, Newport, and Ludlow | Commercial Bank of England | July 2, 1834 | 664 | 262,485 | 113,527 | | Gloucester, Cheltenham, Burford, Cirencester, Farrington, Tetbury, Dursley, Northleach, and Stroud | County of Gloucester Bank | August 1, 1836 | 281 | 176,750 | 87,424 | | Coventry and Nuneaton | Coventry and Warwickshire Banking Company | Dec. 13, 1835 | 224 | 40,490 | 31,225 | | Ditto | Coventry Union Banking Company | May 12, 1836 | 151 | 32,700 | 16,430 | | Workington, Cockermouth, Maryport, Wigton, and Penrith | Cumberland Union Banking Company | March 13, 1829 | 146 | 18,810 | 36,970 |

N.B.—The banks to which an asterisk is prefixed issue notes payable to bearer on demand. Where blanks are left no returns have been made. | Place | Name of the Bank | Date when Established | Number of Partners | Paid-up Capital | Circulation Quarter ending Dec. 31, 1836 | |-------|-----------------|-----------------------|--------------------|----------------|----------------------------------------| | Darlington, Stockton, Stokesley, Barnard Castle, Northallerton | *Darlington District Joint-Stock Banking Company* | Dec. 22, 1831 | 250 | 55,425 | 73,285 | | Derby and Belper | *Derby and Derbyshire Banking Company* | Dec. 28, 1833 | 192 | 40,900 | 27,656 | | Plymouth, Devonport, Kingsbridge, Totness, Bodmin, Ashburton, St Austell, Liskeard, Dartmouth, Newton-Abbot, Exeter, Collumpton, Faristock, Crediton, and Launceston | *Devon and Cornwall Banking Company* | Dec. 31, 1831 | 200 | 56,829 | 110,762 | | Dudley and West Bromwich | *Dudley and West Bromwich Banking Company* | Dec. 30, 1833 | 185 | 32,325 | 42,030 | | Norwich, Great Yarmouth, Ipswich, Swaffham, Lynn, East Dereham, Foulsham, Fakenham, Harleston, Eye, Saxmundham, Bungay, Watton, Lowestoft, Beccles, Bury St Edmund's, North Walsham, Aylsham, Kenninghall, Thetford, Halesworth, Wrentham, Stowmarket, Woodbridge, Ixworth, Mildenhall, Downham | *East of England Bank* | Feb. 27, 1836 | 541 | 156,322 | 84,574 | | Swansea and Neath | Glamorganshire Banking Company | Sept. 8, 1836 | 107 | 32,500 | ... | | Gloucester, Stroud, Newnham, Evesham, Tewkesbury, Cheltenham | *Gloucestershire Banking Company* | June 28, 1831 | 245 | 100,000 | 76,132 | | Halifax and Huddersfield | Halifax and Huddersfield Union Banking Company | June 29, 1836 | 408 | 83,775 | 44,549 | | Halifax | Halifax Commercial Banking Company | June 21, 1836 | 167 | 65,000 | 13,345 | | Ditto | Halifax Joint-Stock Banking Company | Nov. 11, 1829 | 207 | 44,475 | 23,395 | | Hereford, Ross, Leominster, Ledbury, Kington, Hay, Monmouth, Coleford, Bromyard, and Abergavenny | Hampshire Banking Company | April 29, 1834 | 152 | 20,445 | 26,466 | | Huddersfield and Holmfirth | Helston Banking Company | August 4, 1836 | 19 | 4,190 | 2,896 | | Hull, Barton, Beverley, Brigg, Gainsborough, Goole, Grimsby, Lincoln, Louth, South Cave, Caistor, Market-Raisin, Retford, Howden, Smith, and Market-Weighton | Herefordshire Banking Company | August 5, 1836 | 126 | 30,300 | ... | | Huddersfield Banking Company | June 7, 1827 | 326 | 65,100 | 38,580 | | Hull Banking Company | Nov. 30, 1833 | 239 | 44,200 | 74,960 | | Knaresborough, Ripon, Wetherby, Easingwold, Hemaley, Thirsk, Boroughbridge, Masham, Pateley Bridge, Otley, and Harrogate | *Knaresborough and Clare Banking Company* | Sept. 14, 1831 | 162 | 21,620 | 37,944 | | Lancaster | Lancaster Banking Company | October 9, 1826 | 127 | 60,750 | 48,701 | | Leamington Priors | Leamington Bank | May 8, 1833 | 165 | 40,125 | 287 | | Leamington Priors and Warwickshire Banking Company | August 27, 1835 | 111 | 22,920 | 24,145 | | Leeds | Leeds Banking Company | Nov. 22, 1832 | 430 | 120,450 | 34,193 | | Leeds Commercial Banking Company | June 21, 1836 | 216 | 50,000 | 21,275 | | Leeds and West Riding Banking Company | Nov. 23, 1833 | 245 | 67,725 | 37,695 | | Leicestershire Banking Company | August 28, 1829 | 139 | 49,440 | 36,332 | | Litchfield, Rugeley, Tamworth, and Birmingham | Lincoln and Lindsey Banking Company | Aug. 10, 1833 | 225 | 33,510 | 67,955 | | Liverpool | Liverpool Borough Bank | June 28, 1836 | 407 | 206,225 | ... | | Liverpool | Liverpool Commercial Banking Company | Dec. 29, 1832 | 311 | 333,900 | ... | | Places | Name of the Bank | Date when Established | Number of Partners | Paid-up Capital | Circulation Quarter ending Dec. 31, 1856 | |--------|-----------------|-----------------------|--------------------|----------------|----------------------------------------| | Manchester, Liverpool, Oldham, Warrington, Ashton-under-Lyne, Bury, Blackburn, Wigan, Preston, Stalybridge, Rochdale, Hyde, Stockport, Nantwich, Hanley, Stafford, Burton, Leek, Lane-End, Cheddle, Rugeley, Market-Drayton, and Glosop | *Manchester and Liverpool District Bank* | Nov. 26, 1829 | 1302 | 749,725 0 0 | ... | | Manchester | Manchester and Salford Bank | June 15, 1836 | 239 | 271,900 0 0 | ... | | Newport, Ponty-Pool, Usk, Chepstow, Cardiff, Sydney, Monmouth, Abergavenny, and Tregear Iron-Works | Monmouthshire and Glamorganshire Banking Company | July 28, 1836 | 341 | 128,580 0 0 | 32,879 | | Nottingham | *Moore and Robinson's Nottinghamshire Banking Company* | July 12, 1836 | 146 | 51,282 0 0 | 22,433 | | Aberystwyth, Birmingham, Brecon, Llandovery, Hay, Bath, Shepton-Mallet, Boston, Castle Cary, Somerton, Bideford, Southmolten, Torrington, Bury St Edmund's, Cheltenham, Cardiff, Bridge-End, Dursley, Gloucester, Hereford, Holt, Stowmarket, Ipswich, Woodbridge, Lichfield, Rugby, Tiverton, Wisbech, Whittlesea, Chatteris, Long Sutton, Worcester, Ledbury, Wotton-under-Edge, Yarmouth, Bristol, Leicester, Dolgelly, Amblecote, Bala, Barnstaple, Okehampton, Cowbridge, Cwermawr, Darlington, Machynlleth, Exeter, Kington, Buxton, Plymouth, Ilfracombe, Deal, Ramsgate, Wem, King's Lynn, Whitchurch, Manchester, Newcastle, Emlyn, Stockton, Devonport, Pwllheli, Tremadoc, Portmadoc, Barnard Castle, Stokesley, Holbeach, March, Bromyard, Lowestoft, and Halesworth | *National Provincial Bank of England* | Dec. 27, 1833 | 800 | 367,635 0 0 | 329,480 | | Newcastle-upon-Tyne | Newcastle Commercial Banking Co | July 16, 1836 | 134 | 40,425 0 0 | 4,372 | | Newcastle-upon-Tyne, North and South Shields, Sunderland, Durham, Alnwick, Alston, Morpeth, Hexham, Hartlepool, Blyth, and Bishop's Auckland | *Newcastle, Shields, and Sunderland Union Joint-Stock Banking Company* | July 11, 1836 | 446 | 115,168 10 0 | 58,798 | | Newcastle-upon-Tyne | Newcastle-upon-Tyne Joint-Stock Banking Company | June 27, 1836 | 71 | 20,317 10 0 | 3,835 | | Liverpool, Dolgelly, Bangor, Machynlleth, Aberystwyth, Holywell, Wrexham, Pwllheli, Bala, Denbigh, Oswestry, Llanidloes, Ruthin, Llanroest, Fastiniog, Mold, Newtown, Chester, Caernarvon, Llangefni, Welshpool, Bishop's Castle, Llangyllin, and Holyhead | North and South Wales Bank | April 30, 1836 | 529 | 150,360 0 0 | 52,358 | | Newcastle-upon-Tyne, Sunderland, North Shields, Berwick-upon-Tweed, Morpeth, Hexham, South Shields, Durham | North of England Joint-Stock Banking Company | Nov. 28, 1832 | 625 | 240,000 0 0 | 105,670 | | Manchester | *Northern & Central Bank of England* | March 12, 1834 | 1171 | ... | 305,082 | | Northampton, Daventry, Wellington, Kettering, Stamford, and Market-Harborough | Northamptonshire Banking Company | May 23, 1836 | 317 | 47,630 0 0 | 33,657 | | Northampton, Daventry, and Welingtonborough | Northamptonshire Union Bank | May 13, 1836 | 419 | 107,500 0 0 | 89,776 | | Newcastle-upon-Tyne, Sunderland, North and South Shields, Melksham, Devizes, Bradford, Trowbridge, Westbury, Calne, Chippenham, Warminster, Corsham, Wotten-Bassett, Marlborough, Swindon, Marlborough, Highworth, and Malmesbury | Northumberland and Durham District Banking Company | May 23, 1836 | 304 | 123,312 10 0 | ... | | | *North Wilts Banking Company* | Nov. 6, 1835 | 240 | 37,975 0 0 | 60,152 | | Place | Name of the Bank | Date when Established | Number of Partners | Paid-up Capital | Circulation Quarter ending Dec. 31, 1836 | |-------|-----------------|-----------------------|--------------------|----------------|----------------------------------------| | Nottingham, Newark, Mansfield, Loughborough, Worksop, and East Retford | Nottingham and Nottinghamshire Banking Company | April 12, 1834 | 341 | £1,450 | £52,922 | | Leicester, Hinckley, Loughborough, and Melton-Mowbray | Pare's Leicestershire Banking Company, or the Leicestershire Union Banking Company | March 15, 1836 | 46 | £1,250 | £30,133 | | Liverpool | Royal Bank of Liverpool | April 30, 1836 | 258 | £52,930 | ... | | Saddleworth, Ashton, and Oldham | Saddleworth Banking Company | June 29, 1833 | 110 | £30,850 | £20,790 | | Sheffield and Rotherham | Sheffield Banking Company | June 24, 1831 | 203 | £2,170 | £35,778 | | Sheffield | Sheffield and Hallamshire Banking Company | May 20, 1836 | 617 | £15,057 | £13,771 | | Sheffield, Rotherham, and Bawdon | Sheffield and Rotherham Joint-Stock Banking Company | June 25, 1836 | 275 | £3,125 | £48,295 | | Shifnal, Wellington, Newport, and Coalbrook Dale | Shropshire Banking Company | May 27, 1836 | 276 | £40,215 | £50,560 | | Manchester | South Lancashire Bank | May 25, 1836 | 411 | £10,212 | ... | | Stamford, Spalding, Boston, Oundle, Bourne, and Peterborough | Stamford, Spalding, and Boston Joint-Stock Banking Company | Dec. 28, 1831 | 38 | £4,000 | £68,748 | | Stourbridge, Kidderminster, and Stratford-upon-Avon | Stourbridge and Kidderminster Banking Company | April 9, 1834 | 220 | £4,000 | £67,167 | | Bristol, Axbridge, Bridgewater, Taunton, Wellington, Crewkerne, Chard, Ilminster, Langport, Wells, Glastonbury, Shepton Mallet, Bruton, Wincanton, Frome, Castle Cary, Yeovil, Banwell, Weston-super-Mare, Williton, Martock, Somerton, South Petherton, Ilchester, Midsomer Norton, and Stowey | Stuckey's Banking Company | Oct. 9, 1836 | 38 | £5,000 | £239,070 | | Liverpool | Union Bank of Liverpool | May 2, 1835 | 341 | £25,350 | ... | | Manchester | Union Bank of Manchester | May 6, 1836 | 449 | £55,425 | ... | | Wakefield | Wakefield Banking Company | Oct. 25, 1832 | 102 | £4,920 | £10,950 | | Warwick, Leamington, Stratford-on-Avon, Southam, Henley-in-Arden | Warwick and Leamington Banking Company | Sept. 10, 1834 | 125 | £2,900 | £43,505 | | Bristol, Bath, Barnstaple, Exeter, Swansea, Taunton, Bridgewater, Cardiff, Newport, Wells, Glastonbury, Merthyr Tydfil, Wilton, Axbridge, and Somerton | West of England and South Wales District Bank | Dec. 23, 1834 | 558 | £213,530 | £76,465 | | Salisbury, Warminster, Devizes, Trowbridge, Melksham, Chippenham, Marlborough, Malmsbury, Wootten-Bassett, Frome, Yeovil, Dorchester, Blandford, Wimborne, Poole, Bridport, Sherborne, Mere, Fordingbridge, Christchurch, Lymington, Paulton, Gillingham, and Marshfield | Wilts and Dorset Banking Company | Jan. 11, 1836 | 454 | £3,105 | £74,976 | | Devonport, Plymouth, Totnes, Kingsbridge, Falmouth, Penzance, Truro, and St Columb | Western District Banking Company for Devon and Cornwall | Sept. 1, 1836 | 312 | ... | £17,880 | | Whitehaven Joint-Stock Banking Company | May 25, 1829 | 215 | £8,050 | £42,331 | | Wolverhampton and Staffordshire Banking Company | Dec. 28, 1831 | 234 | £9,435 | £51,229 | | York City and County Banking Company | March 2, 1830 | 266 | £75,000 | £94,500 | | York Union Banking Company | April 23, 1833 | 267 | £63,000 | £31,090 | | Yorkshire Agricultural and Commercial Banking Company | July 27, 1836 | 604 | £72,975 | £16,224 | | Yorkshire District Bank | July 30, 1834 | 1113 | £39,985 | £231,483 | | Bank of Whitehaven | Jan. 23, 1837 | 123 | ... | ... | | Birmingham Borough Bank | March 28, 1837 | 116 | ... | ... | ### Table I—Concluded.

| Place | Name of the Bank | Date when Established | Number of Partners | Paid-up Capital | Circulation Quarter ending Dec. 31, 1836 | |------------------------------|----------------------------------------------------------------------------------|-----------------------|--------------------|-----------------|----------------------------------------| | Carlisle and Cockermouth | Carlisle City and District Banking Company | Feb. 20, 1837 | 280 | Ls. s. d. | ... | | Liverpool | Liverpool Albion Bank (formerly called Liverpool Tradesmen's Bank) | March 22, 1836 | 434 | 94,375 0 0 | ... | | Liverpool and St. Helens | Liverpool Phoenix Bank | Jan. 26, 1837 | 134 | ... | ... | | Liverpool | Liverpool Banking Company (formerly called Liverpool United Trades' Bank) | May 12, 1836 | 291 | 113,719 5 7 | ... | | Oldham | Oldham Banking Company | Sept. 30, 1836 | 69 | 10,210 0 0 | ... | | Richmond, Leyburn, and Bedale| Swaledale and Wensleydale Banking Company | Dec. 30, 1836 | 223 | 26,325 0 0 | ... | | Huddersfield, Dewsbury, and Wakefield | West Riding Union Banking Company (formerly called Mirfield and Huddersfield Banking Company) | Dec. 29, 1832 | 457 | 63,900 0 0 | 40,360 | | Southampton | Southern District Banking Company | Nov. 22, 1837 | 124 | ... | ... |

### II.—An Account of the aggregate Number of Notes circulated in England and Wales by Private Banks, and by Joint-Stock Banks and their Branches, distinguishing Private from Joint-Stock Banks. From Returns directed by 3 and 4 William IV. c. 83.

| Quarters Ended | Private Banks | Joint-Stock Banks | Total | |----------------|---------------|-------------------|-------| | 1833. December 28 | 8,836,803 | 1,313,301 | 10,152,104 | | 1834. March 29 | 8,733,409 | 1,458,427 | 10,191,827 | | June 28 | 8,875,795 | 1,642,887 | 10,518,682 | | September 27 | 8,379,423 | 1,783,629 | 10,154,112 | | December 26 | 8,537,655 | 2,122,173 | 10,659,828 | | 1835. March 26 | 8,231,206 | 2,188,954 | 10,420,160 | | June 27 | 8,455,114 | 2,484,697 | 10,939,801 | | September 26 | 7,912,587 | 2,508,036 | 10,420,623 | | December 26 | 8,334,863 | 2,799,551 | 11,134,414 | | 1836. March 26 | 8,353,894 | 3,094,025 | 11,447,919 | | June 25 | 8,614,132 | 3,568,064 | 12,202,196 | | September 24 | 7,764,624 | 3,969,191 | 11,733,945 | | December 31 | 7,753,500 | 4,268,197 | 12,011,697 | | 1837. April | 7,275,784 | 3,755,279 | 11,031,063 | | July 1 | 7,187,673 | 3,634,704 | 10,822,377 | | September 30 | 6,701,996 | 3,449,053 | 10,150,049 | | December 30 | 7,043,470 | 3,826,655 | 10,870,135 |

### III.—A Return of Joint-Stock Banks in Ireland, with the Dates of their Establishment, the Names of the several Towns and Places where such Banks and their Branches have been Established, and the Number of Partners in each.

| Joint-Stock Banks | When Established | Towns and Places where the Bank or their Branches have been Established | Number of Partners | |-------------------|------------------|-------------------------------------------------------------------------|-------------------| | Hibernian Joint Stock Company | June 1825, By Special Act, 5 Geo. IV. c.159. | Dublin, Armagh, Athlone, Banbridge, Bandon, Ballina, Ballymena, Ballyshannon, Belfast, Cavan, Coleraine, Clonmell, Cootehill, Cork, Downpatrick, Dungannon, Dungarvan. | 225 | | Provincial Bank of Ireland | Sept. 1825, Under General Act, 6 Geo. IV. c. 42. | Belfast Banking Company, July 31, 1827. | 285 |

Northern Banking Company, Dec. 31, 1825. 207

Provincial Bank of Ireland. 707 ### Table III.—Concluded.

| Joint-Stock Banks | When Established | Towns and Places where the Banks or their Branches have been Established | Number of Partners | |-------------------|------------------|--------------------------------------------------------------------------|-------------------| | Agricultural and Commercial Bank of Ireland | Oct. 28, 1834 | Armagh, Ballina, Ballinasloe, Ballymena, Bandon, Belfast, Boyle, Castlebar, Cavan, Clifden, Clones, Coleraine, Cork, Dungannon, Ennis, Enniscorthy, Enniskillen, Fermoy, Galway, Kanturk, Kilkenny, Kilrush, Killarney, Kinsale, Limerick, Londonderry, Longford, Loughrea, Mallow, Nenagh, New Ross, Naas, Parsonstown, Roscrea, Roscommon, Sligo, Strabane, Strokestown, Thomastown, Thurles, Tipperary, Tuam, Waterford, Lurgan, Tralee, Donegal, Athlone, Boyle, Castlebar, Castlerea, Ballinasloe, Galway, Kilkenny, Longford, Loughrea, Moate, Roscommon, Sligo, Tuam, Limerick, Charleville, Ennis, Kilrush, Rathkeale, Cloonmel, Cashel, Thurles. | 3892 | | National Bank of Ireland | Jan. 24, 1835 | Wexford and Enniscorthy National Bank of Ireland. | 290 | | Limerick National Bank of Ireland | Aug. 17, 1835 | Tipperary National Bank of Ireland. | 553 | | Clonmel National Bank of Ireland | May 20, 1836 | Tralee National Bank of Ireland. | 487 | | Carrick-on-Suir National Bank of Ireland | May 21, 1836 | Carrick-on-Suir. | 416 | | Waterford National Bank of Ireland | May 23, 1836 | Waterford, Dungarvan, New Ross, Tallow. | 451 |

| Joint-Stock Banks | When Established | Towns and Places where the Banks or their Branches have been Established | Number of Partners | |-------------------|------------------|--------------------------------------------------------------------------|-------------------| | Ulster Banking Company | April 15, 1836 | Antrim, Armagh, Belfast, Banbridge, Ballymoney, Comber, Downpatrick, Enniskillen, Lurgan, Monaghan, Portadown, Tandragee. | 789 | | Royal Bank of Ireland | November 1836 | Dublin. | 363 | | Southern Bank of Ireland | Feb. 11, 1837 | Cork. | 92 |

The act of 1708, preventing more than six individuals from entering into a partnership for carrying on the business of banking, did not extend to Scotland. In consequence of this exemption, several banking companies, with numerous bodies of partners, have always existed in that part of the empire. The Bank of Scotland was established by act of parliament in 1695. By the terms of its charter, it enjoyed, for twenty-one years, the exclusive privilege of issuing notes in Scotland. Its original capital was only £100,000. But it was increased to £200,000 in 1744, and now amounts to £1,500,000, of which £1,000,000 has been paid up.

The Royal Bank of Scotland was established in 1727. Its original capital was £151,000. At present it amounts to £2,000,000, which has been all paid up.

The British Linen Company was incorporated in 1746, for the purpose, as its name implies, of undertaking the manufacture of linen. But the views in which it originated were speedily abandoned, and it became a banking company only. Its paid-up capital amounts to £500,000.

Exclusively of the above, there are two other chartered banks in Scotland; the Commercial Bank, established in 1810, and the National Bank of Scotland, established in 1825. The former has a paid-up capital of £600,000, and the latter of £500,000.

None of the other banking companies established in Scotland are chartered associations; and the partners are jointly and individually liable to the whole extent of their fortunes for the debts of the firms. Some of them, as the Aberdeen Town and County Bank, the Dundee Commercial Bank, the Perth Banking Company, &c. have very numerous bodies of partners. Generally speaking, they have been eminently successful. An original share, L150, of the stock of the Aberdeen Banking Company, established in 1767, is now (1838) worth no less than L2500! Their affairs are uniformly conducted by a board of directors chosen by the shareholders.

There are very few banks with less than six partners in Scotland. Almost all the great joint-stock banks have numerous branches, so that there is hardly a town or village of any consequence without two or more banks.

The Bank of Scotland began to issue one-pound notes as early as 1704; and their issue has since been continued without interruption. With only one exception, all the Scotch banks issue notes; and, taking their aggregate circulation at from L3,500,000 to L4,000,000, it is supposed that from L2,000,000 to L2,500,000 consists of notes for L1. In 1826 it was proposed to suppress one-pound notes in Scotland as well as in England; but the measure having been strongly objected to by the people of Scotland, as being at once oppressive and unnecessary, was abandoned.

There have been very few bankruptcies amongst the Scotch banks. This superior stability is to be ascribed to a variety of causes; partly to the great wealth of the early established banks, which had a considerable influence in preventing an inferior class of banks acquiring any hold on the public confidence; partly to the comparatively little risk attending the business of banking in Scotland; partly to the facilities afforded by the Scotch law for attaching a debtor's property, whether it consist of land or moveables; and partly and principally, perhaps, to the fact of the Scotch banks being but indirectly and slightly affected by a depression of the exchange and an efflux of bullion.

The circumstances now mentioned render it unnecessary to enforce that suppression of local issues in Scotland which is so indispensible in England, where the system of provincial banking is of a very inferior description, the risk attending the business much greater, and where any excess in the amount of the currency necessarily occasions a fall of the exchange and a demand for bullion. The commerce and population of Scotland are too limited, and that country is too remote from the metropolis, or from the centre of the monied world, the pivot on which the exchanges turn, to make it of importance that her currency should be identical with that of England. We believe that the Scotch attach much more importance than it deserves to the issue of paper, and especially to the issue of one-pound notes; still, however, we do not think that the circumstances are at present such as to call for or warrant any attempt to introduce any material changes in their banking system.

All the Scotch banks receive deposits, even of the low amount of L10, and allow interest on them at from one to two per cent. below the market rate. But should a deposit be unusually large, as from L5000 to L10,000, a special agreement is usually made with regard to it. This part of the system has been particularly advantageous. It, in fact, renders the Scotch banks a sort of savings' banks for all classes; and their readily receiving all sorts of deposits at a reasonable rate of interest, has tended to diffuse a spirit of economy and parsimony among the people that would not otherwise have existed. The total deposits in the hands of the Scotch banks are believed at present (1838) to exceed L25,000,000, of which fully a half is understood to be in sums of from L10 to L200.

The Scotch banks make advances in the way of discounts and loans, and on what are called cash-credits or cash-accounts. By the latter are meant credits given by the banks for specified sums to individuals, each of whom gives a bond for the sum in his account, with two or more individuals as sureties for its payment. Persons having such accounts draw upon them for whatever sums within their amount they have occasion for, repaying these advances as they find opportunity, but generally within short periods. Interest is charged only on the average balance which may be found due to the bank. The total number of these accounts in Scotland in 1826 was estimated at about 12,000; and it may now, perhaps, be taken at about 14,000. They are believed to average about L500; few are for less than L100, and fewer still above L5000.

It has been contended, and by no less an authority than Adam Smith, that this species of accommodation gives the Scotch merchants and traders a double command of capital. "They may discount their bills of exchange," says he, "as easily as the English merchants, and have, besides, the additional conveniency of their cash-accounts." But this is an obvious error. The circulation will take off only a certain quantity of paper; and to whatever extent it may be issued by means of cash-accounts, so much the less can be issued in the way of discounts. The advantage of a cash-account does not really consist in its enabling a banker to enlarge his advances to his customers, but in the extreme facility it affords of making them. An individual who has obtained such an account may operate upon it at any time he pleases, and by drafts for any amount; an advantage he could not enjoy to any thing like the same extent, without an infinite deal of trouble and expense, were the loans or advances made to him through the discounting of bills.

The Scotch banks draw upon London at twenty days' date. This is denominated the par of exchange between London and Edinburgh.

The following table, extracted from a very useful publication, exhibits the partners, branches, capital, prices of shares, dividends, &c. in the five chartered banks, in December 1837; and it also shows the aggregate partners, branches, capital, &c. of the other joint-stock banks then existing in Scotland.

| Partners | Branches | Paid up Capital | Rate per Cent. | Amount | Payable | Shares Paid | Present Price | |----------|----------|-----------------|---------------|--------|---------|------------|--------------| | Bank of Scotland | 672 | 25 | 1,000,000 | 6 | 60,000 | April & Oct. | 83 6 8 | 159 | | Royal Bank | 764 | 7 | 2,000,000 | 5½ | 110,000 | Jan. & July. | 100 0 0 | 161 | | British Linen Company | 164 | 42 | 500,000 | 8 | 40,000 | June & Dec. | 100 0 0 | 236 | | Commercial Bank | 1600 | 74 | 3,500,000 | 6 | 210,000 | Jan. & July. | 100 0 0 | 173 | | National Bank | 521 | 48 | 600,000 | 6 | 36,000 | Ditto. | 10 0 0 | 16 | | Twelve other Joint-Stock Cos. | 4125 | 72 | 1,937,700 | 6½ | 116,995 | | | |

Total | 7467 | 227 | 6,537,700 | 6½ | 392,995 | | | |

1 Wealth of Nations, book ii. cap. 2. 2 Oliver and Boyd's Almanack for 1838. "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 six 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 £621,917; in 1810, £2,266,471; and in 1814, £2,986,999.

"These increased issues led to corresponding increased issues by the private banks, of which the number was fifty in the year 1804. The consequence of this increase of paper was its great depreciation; the price of bullion and guineas arose to ten per cent above the mint price; and the exchange with London became as high as eighteen per cent, the par being 8½. 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. (See article Exchange.)

"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 fifty 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 (1827) existing in Ireland.

"In 1821, in consequence of eleven 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 fifty miles (Irish) from Dublin, and the bank was permitted to increase its capital £500,000. The act 1 Geo. IV. 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. II. c. 14, no new company was formed. In 1824 a party of merchants of Belfast, wishing to establish a joint-stock company, petitioned parliament for the repeal of this act of Geo. II.; and an act was accordingly passed in that session, repealing some of its most objectionable restrictions. (5 Geo. IV. c. 73.)

"In consequence of this act, the Northern Bank of Belfast was converted into a joint-stock company, with a capital of £500,000, and commenced business on the 1st of January 1825. But the restrictions of 33 Geo. II., and certain provisions contained in the acts 1 and 2 Geo. III., and 5 Geo. IV., 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 33d Geo. II., 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 £2,000,000; and the Bank of Ireland has of late established branches in all the principal towns.

"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 contribute 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.

"The charter of the Bank of Ireland has still to run till the year 1838."

Since Sir Henry Parnell published the valuable pamphlet from which we have taken the foregoing extract, several joint-stock banking companies have been founded in Ireland. The Provincial Bank, to which Sir Henry alludes, has a paid up capital of £500,000, and has been well and profitably managed. But others have been less fortunate. The Agricultural and Commercial Bank of Ireland, established in 1834, with 2170 partners, a paid-up capital of £352,790, and many branches, stopped payment during the pressure in November 1836, and by doing so involved many persons in great distress. It would appear, from the statement of the auditors appointed to audit the accounts, &c., of this bank, given in the Appendix to the Commons' Report of 1837, that it had, to say the least, been very ill managed. "We have found," say the auditors, "that there was no efficient control over the branches, and that the system of inspection was most imperfect. A complete absence of plan for checking the accounts existed at the head office in Dublin; and the book-keeping has been so faulty, that we are convinced no accurate balance-sheet could at any time have been constructed. We have looked in vain for an account of 'outfits,' or of 'premiums' received; and we must add, that the personal accounts at the head office require a diligent and searching revision."

More than half of the existing Irish joint-stock banks, amounting to eighteen, were established in 1836 and 1837. It is to be hoped that these establishments will take warning by the disasters in which the Agricultural Bank has been involved, and adopt a safer course. But if the power to issue paper-money be continued to these establishments, it is clear that no time should be lost in compelling them to give security for its payment. Unless this measure be enforced, or the issues be entirely suppressed, we run little risk in affirming that Ireland has not seen either the last or most severe of those violent oscillations in the amount and value of money which produce so much bankruptcy and ruin.

The capital of the Bank of Ireland amounts to L2,769,330. The rate of dividend from 1830 to 1836 was nine per cent.; in 1836 it was eight and a half per cent. The charter, which expires in the course of the present year, has not as yet been renewed. It is almost needless to add, that there is no room or ground whatever for the continuance of the exclusive privilege the Bank of Ireland has hitherto enjoyed. We subjoin an

Account showing the Circulation of the Bank of Ireland from 1823 to 1836, both inclusive.

| Years | Large Notes | Small Notes | Post Bills | Total Average Circulation | |-------|-------------|-------------|------------|--------------------------| | 1823 | 1,827,700 | 1,383,600 | 1,859,100 | 5,970,500 | | 1824 | 1,938,200 | 1,451,600 | 2,190,600 | 5,579,500 | | 1825 | 1,969,300 | 1,677,500 | 2,662,500 | 6,309,300 | | 1826 | 1,502,700 | 2,644,200 | 1,758,000 | 4,905,000 | | 1827 | 1,460,300 | 1,491,800 | 1,411,300 | 4,363,600 | | 1828 | 1,540,200 | 1,669,800 | 1,375,900 | 4,505,000 | | 1829 | 1,615,200 | 1,459,300 | 1,362,700 | 4,437,300 | | 1830 | 1,541,800 | 1,395,100 | 1,147,700 | 4,074,700 | | 1831 | 1,488,600 | 1,329,300 | 1,025,000 | 3,913,000 | | 1832 | 1,534,400 | 1,519,600 | 1,028,900 | 4,063,100 | | 1833 | 1,600,600 | 1,472,300 | 943,400 | 4,016,500 | | 1834 | 1,608,400 | 1,363,300 | 862,700 | 3,834,300 | | 1835 | 1,623,400 | 1,249,800 | 763,600 | 3,636,600 | | 1836 | 1,706,500 | 1,057,400 | 633,200 | 3,429,300 |

It would far exceed our limits to enter into any detailed statements with respect to the banks and banking systems of foreign countries; we shall therefore confine ourselves to a brief notice of such banks as have been most celebrated, or are at present of the greatest importance.

The Bank of Venice was the most ancient bank in Europe. Neither its date nor the circumstances which led to its establishment are exactly known. Historians inform us, that in 1171, the republic being hard pressed for money, levied a forced contribution on the richest citizens, giving them in return a perpetual annuity at the rate of four per cent. An office was established for the payment of this interest, which, in the sequel, became the Bank of Venice. This might be effected as follows: The interest on the loan to government being paid punctually, every claim registered in the books of the office would be considered as productive capital; and these claims, or the right of receiving the annuity accruing thereon, must soon have been transferred, by demise or cession, from one person to another. This practice would naturally suggest to holders of stock the simple and easy method of discharging their mutual debts by transfers on the office books, and as soon as they became sensible of the advantages to be derived from this method of accounting, bank-money was invented.

The Bank of Venice was essentially a deposit bank. Though established without a capital, its bills bore at all times an agio or premium above the current money of the republic. The invasion of the French in 1797 occasioned the ruin of this establishment.

The Bank of Amsterdam was founded in 1609, on strictly commercial principles and views, and not to afford any assistance, or to commix with the finances of the state. Amsterdam was then the great entrepot of the commerce of the world, and of course the coins of all Europe passed current in it. Many of them, however, were so worn and defaced as to reduce their general average value to about nine per cent. less than their mint value; and, in consequence, the new coins were immediately melted down and exported. The currency of the city was thus exposed to great fluctuations; and it was chiefly to remedy this inconvenience, and to fix the value or par of the current money of the country, that the merchants of Amsterdam established a "bank," on the model of that of Venice. Its first capital was formed of Spanish ducats or ducatoons, a silver coin which Spain had struck in the war with Holland, and with which the tide of commerce had enriched the country it was formed to overthrow! The bank afterwards accepted the coins of all countries, worn or new, at their intrinsic value, and made its own bank-money payable in standard coin of the country, of full weight, deducting a "brassage" for the expense of coining, and giving a credit on its books, or "bank-money," for the deposits.

The Bank of Amsterdam professed not to lend out any part of the specie deposited with it, but to keep in its coffers all that was inscribed on its books. In 1672, when Louis XIV. penetrated to Utrecht, almost every one who had an account with the bank demanded his deposit, and these were paid off so readily, that no suspicion could exist as to the fidelity of the administration. Many of the coins then brought forth bore marks of the conflagration which happened at the Hôtel de Ville, soon after the establishment of the bank. This good faith was maintained till about the middle of last century, when the managers secretly lent part of their bullion to the East India Company and government. The usual "oaths of office" were taken by a religious magistracy, or rather by the magistracy of a religious people, that all was safe; and the good people of Holland believed, as an article of their creed, that every florin which circulated as bank-money, had its metallic constituent in the treasury of the bank, sealed up and secured by oaths, honesty, and good policy. This blind confidence was dissipated in December 1790, by a declaration that the bank would retain ten per cent. of all deposits, and would return none of a less amount than 2500 florins.

Even this was submitted to and forgiven. But, four years afterwards, on the invasion of the French, the bank was obliged to declare that it had advanced to the states of Holland and West Friesland, and the East India Company, more than 10,500,000 florins, which sum they were unable to make up to their depositors, to whom, however, they assigned their claims on the states and the company. Bank-money, which previously bore an agio of five per cent., immediately fell to sixteen per cent. below current money.

This epoch marked the fall of an institution which had long enjoyed an unlimited credit, and had rendered the greatest services. The amount of the treasure in the vaults of the bank, in 1755, was estimated by Mr Hope at 33,000,000 of florins.

The Bank of Hamburg was established in 1619, on the Bank of model of that of Amsterdam. It is a deposit bank, and Hamburg's 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 four ninths, or nearly one half per cent., for its retention. It advances money on jewels to three fourths of their value. The city is answerable for all pledges deposited with the bank: they may be sold by auction if they remain one year and six weeks without any interest being paid. If the value be not claimed within three years, it is forfeited to the poor. This bank is universally admitted to be one of the best managed in Europe.

1 Storch, Cours d'Economie Politique, tom. iv. The Bank of France was founded in 1803. The exclusive privilege of issuing notes payable to bearer was granted to it for forty years. The capital of the bank consisted at first of 45,000,000 francs, but it was subsequently increased to 90,000,000 francs, divided into 90,000 shares or actions of 1000 francs each. Of these shares, 67,900 are in the hands of the public; 22,100 being purchased up by the bank, form part of her capital. The notes issued by the bank are for 1000 and 500 francs. The dividend varies from six to ten and a half per cent., the latter being its amount in 1837; and there is, besides, a reserve retained from the profits, which is vested in the five per cents. A bonus of 200 francs a share was paid out of this reserve to the shareholders in 1820. No bills are discounted that have more than three months to run. The customary rate of discount is four per cent., but it varies according to circumstances. The discounts in 1834 amounted to 306,603,000 francs, but they vary materially from year to year, and are sometimes more than double this amount. 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. There are about 1600 accounts current at the bank; and of the entire expenses of the establishment, amounting to about 900,000 francs a year, two thirds are said to be incurred in this department. 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, bills, title-deeds, &c. The charge is one eighth per cent. of the value of each deposit for every period of six months or under. The average circulation of bank notes in 1834 was 207,321,000 francs, the price of a share of the bank's stock on the 8th of January 1838 was 2555 francs, a proof that its condition is believed to be eminently flourishing.

The administration of the bank is vested in a council general of twenty members, viz. seventeen regents, and three censors, who are nominated by two hundred of the principal proprietors. The king appoints the governor and deputy governor. The first must be possessed of a hundred and fifty, and the latter of fifty shares. A compte rendu is annually published, and a report by the censors, which together give a very full exposition of the affairs of the bank. The institution is flourishing, and enjoys unlimited credit. (For further details with respect to the Bank of France, see Storch, Cours d'Economie Politique, Paris, 1823, tom. iv. pp. 168-180; and the Comptes Rendus of the different years.)

For further information as to continental banks and paper-money, the reader is referred to the interesting chapter on that subject in the fourth volume of the Cours d'Economie Politique of M. Storch, and to M'Culloch's Commercial Dictionary.

The system of banking in the United States has recently attracted a great deal of attention in this country. The United Bank of the United States was incorporated by Congress in 1816, with a capital of 35,000,000 dollars, for the issue of notes and the transacting of ordinary banking business. Its head office was in Philadelphia, but it had branches that carried on an extensive business in most considerable towns of the Union. The charter was limited to twenty years' duration; and the question, whether it should be renewed, was debated with extraordinary vehemence in all parts of America. The late president, General Jackson, was violently opposed to the reincorporating of the bank, and rejected a bill for that purpose, that had been sanctioned by the other two branches of the legislature. A majority of Congress having come round to the president's views, the charter was allowed to expire. It has since, however, received a new charter from the state of Pennsylvania. But this merely enables it to carry on business in that state; though it may obtain, and has, in fact, already obtained leave from some of the other states to establish branches within their limits. It is, however, no longer a national or government bank; but it is now, as formerly, the first monied institution of the new world, and in this respect, indeed, is second only to the Bank of England.

We cannot help thinking, that the American government acted throughout the whole of this affair on the most erroneous views. Banking in America is, if possible, in a still worse condition than in England; and there can hardly be a doubt that the establishment of the Bank of the United States was of signal service to the republic, by affording a currency of undoubted solidity, readily accepted in all parts of the Union, and by its operating as a salutary check on the conduct of other banks. General Jackson, and the party of which he was the head, have, or affect to have, a great horror of paper-money. But it would be practising too much on the patience of our readers were we to endeavour to prove by argument the great utility, not to say necessity, of a paper currency of some sort or other, to all great commercial countries like the United States. To suppose that it should be altogether dispensed with, is as absurd as it would be to suppose that they should dispense with their improved roads and carriages. A wise statesman should not attempt to suppress what is indispensable, but should exert himself to obviate its defects, and to make it as suitable as it can be made to the objects in view. This, however, General Jackson and his party have not done. On the contrary, they declared war against the only unexceptionable bank in the Union, and to injure it gave full scope to the rest. Hence, instead of obviating any one of the gross defects inherent in the existing banking system, the proceedings of General Jackson have aggravated and multiplied them in no common degree; and it is now infected with every vice that it seems possible can belong to banking.

The American banks are all joint-stock associations. But instead of the partners being liable, as in England, for the whole amount of the debts of the banks, they are in general liable only for the amount of their shares, or for some fixed multiple thereof. It is needless to dwell on the temptation to commit fraud held out by this system, which has not a single countervailing advantage to recommend it. The worthlessness of the plan on which the banks were founded was evinced by the fact, that between 1811 and the 1st of May 1830, no fewer than a hundred and sixty-five banks became altogether bankrupt, many of them paying only an insignificant dividend; and this exclusive of a much greater number that stopped for a while, and afterwards resumed payments. The wide-spread mischief resulting from such a state of things has led to the devising of various complicated schemes for insuring the stability and prudent management of banks; but as they all involve regulations which it is impossible to enforce, they are practically worse than useless. In Massachusetts, for example, it is provided that no bank for the issue of notes can go into operation in any way, until at least half its capital stock be paid in gold and silver into the bank, and be actually existing in its coffers, and seen in them by inspectors appointed for that purpose; and the cashier of every bank is bound to make specific returns once a year of its debts and assets, on being required to do so by the secretary of state. But our readers need hardly be told, that these elaborately contrived regulations are really good for nothing, unless it be to afford an easy mode of cheating and defrauding the public. Instances have occurred of banks having borrowed an amount of dollars equal to half their capital, for a single day, and of such dollars having been examined by the inspectors appointed for that purpose, and reported by them, and sworn by a majority of the directors to be the first instalment paid by the stockholders of the bank, and intended to remain in it. We do not of course imagine that such disgraceful instances can be of common occurrence; but what is to be thought of a system which permits a company for the issue of paper-money, founded on such an abominable fraud, to enter on business, with a sort of public attestation of its respectability? The publicity, too, to which the American banks are subject, is injurious rather than otherwise. Those who are so disposed may easily manufacture such returns as they think most suitable to their views; and the more respectable banks endeavour, for a month or two previously to the period when they have to make their returns, to increase the amount of bullion in their coffers, by temporary loans, and all manner of devices. The whole system is, in fact, bottomed on the most vicious principles. But it is unnecessary, after what occurred in 1836 and 1837, to insist further upon the gross and glaring defects of American banking. Perhaps no instance is to be found in the history of commerce, of such a wanton over-issue of paper as took place in the United States in 1835 and 1836. The result is known to everybody; the revulsion to which this over-issue necessarily led having, in May 1837, compelled every bank in the Union, without, we believe, a single exception, to stop payments.

Table showing the Number and Capital of the various Banks existing in the United States at the undermentioned periods.

(See Letter of the Secretary of the Treasury, 4th of January 1837.)

| STATES | No. of Banks | Capital estimated | No. of Branches | Capital paid in | No. of Branches | Capital authorized | |--------|--------------|------------------|----------------|----------------|----------------|-------------------| | Maine | 6 | 1,250,000 | 15 | 1,654,900 | 18 | 3,935,000 | | New Hampshire | 8 | 815,250 | 1 | 1,005,276 | 18 | 2,663,203 | | Vermont | 0 | ... | 1 | 4,495,55 | 18 | 2,200,000 | | Massachusetts | 15 | 6,292,144 | 28 | 10,455,700 | 66 | 40,850,000 | | Rhode Island | 13 | 1,917,000 | 30 | 2,822,026 | 47 | 8,750,581 | | Connecticut | 5 | 1,533,000 | 5 | 3,688,357 | 13 | 8,519,363 | | New York | 7 | 7,022,700 | 33 | 10,065,333 | 86 | 37,203,460 | | Pennsylvania | 4 | 6,153,150 | 36 | 14,681,799 | 33 | 18,658,482 | | New Jersey | 3 | 739,740 | 14 | 2,130,000 | 18 | 7,575,000 | | Delaware | 0 | ... | 6 | 2,917,009 | 25 | 1,197,773 | | Maryland | 6 | 4,204,202 | 14 | 6,708,131 | 13 | 817,775 | | West of Columbia | 4 | 2,341,395 | 13 | 5,252,319 | 9 | 2,803,575 | | Virginia | 1 | 1,500,000 | 5 | 2,912,192 | 4 | 3,500,000 | | North Carolina | 3 | 1,576,600 | 3 | 2,964,837 | 3 | 6,711,306 | | South Carolina | 4 | 3,473,000 | 5 | 4,675,000 | 5 | 2,500,000 | | Georgia | 1 | 210,000 | 4 | 3,401,510 | 9 | 1,600,000 | | Florida | 0 | ... | 1 | 75,000 | 5 | 1,484,326 | | Alabama | 0 | ... | 3 | 469,112 | 2 | 6,558,969 | | Louisiana | 1 | 754,000 | 4 | 2,597,429 | 14 | 34,665,284 | | Mississippi | 0 | ... | 1 | 900,000 | 1 | 8,764,550 | | Tennessee | 1 | 100,000 | 8 | 2,119,782 | 1 | 1,763,000 | | Kentucky | 1 | 240,460 | 42 | 5,997,431 | 1 | 1,600,000 | | Arkansas | 0 | ... | 0 | ... | 0 | 0 | | Missouri | 0 | ... | 1 | 250,000 | 0 | 0 | | Illinois | 0 | ... | 2 | 140,910 | 0 | 0 | | Indiana | 0 | ... | 2 | 202,357 | 0 | 0 | | Ohio | 4 | 895,000 | 20 | 1,797,453 | 11 | 1,279,557 | | Michigan | 0 | ... | 0 | 100,000 | 7 | 8,369,744 | | Wisconsin/Territory | 0 | ... | 0 | ... | 0 | 0 |

States' Banks: 28 Union State Banks: 1

Total: 52,610,601

N.B.—Some of the returns of capital in the last column are incomplete.

1 Gouge's Paper-Money and Banking in the United States, part ii. p. 157.