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Leader (1850-1860), 28th November 1857, Edition 1 of 2, Page 1139, Untitled Article

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      lation be monopolized by that topic" ? The policy . of the Conservative "Whigs seems to be that of postponing Reform until it is demanded by violence , not by opinion . We trust that , for the credit of British statesmanship , a steadier course will be followed by Lord PALMEEsro ^ . It is his own position , not that of Beforrn , which is critical . If the Liberal members of Parliament are firm and united they will move the question , aud the

      constituencies -will support them . We niust have no further , compromise , no new capitulation . The pledge of tbe Government was not conditional . It was a seriouB engagement contracted by Lord PALMEESioif with tbe Reform party , and if lie fails to fulfil it , lie should be made a ' political bankrupt . The Brighton public have set an example , by authorizing their energetic representative , in their names , to insist that the promissory declaration of last session shall not be

      dishonoured . Now is the time for other constituencies to act ; but now-is . the time , also , for those politicians whose voices were so loud upon the hustings at tbe general elections to present themselves before the Grovernment and prove their / strength and determination . A great Reform Banquet in London has been , suggested , we believe ; it might confidently be announced , for we are convinced it would result in a demonstration which would surprise some Reformers , and encourage all .

      Untitled Article

      THE BANK CHARTER . " I iiA"VE the strongest opinion . " said Sir Eobert Peei ,. in introducing the Bank Charter Act , " that nothing would "better conduce to the credit of the Bank itself and to the prevention of panic and needless alarm , than the complete and periodical publication , of its accounts . " It cannot be said that the proposed end lias yet been fully attained— -the accounts , indeed , are published weekly , and in the shortest and most comprehensive form—but their full import is not yet generally understood .

      Having disposed in our last impression of the ' Issue department , ' -which we have shown to be purely mechanical- —governed , not by the Bank Directors , but by the action of the public—we proceed to explain the second portion of the weekly account , viz ., "what is called the ' Banking Department . ' AV " reprint both accounts for the week ending November 11 . Having commenced our illustration with that week ' s account , we think it will conduce to clearness to continue it . ISSUE DEPARTMENT . £ £ £ ITotes issued ... 21 , 141 , 065 Government debt 11 , 015 , 100 Other Secnrities 3 , 459 , 900 14 , 475 , 000 Gold coin and Imllion C , C 6 G , 0 G 5 21 , 141 , 005 BASKVXCi DKPARTMKNT . £ £ £ ¦ Proprietors * ca- Government sepitnl 14 , 553 , 000 curities 9 , 444 , 828 Kest ... 3 , 364 , 35 G ¦ Other securities 26 , 118 , 453 17 , 917 , 356 Notes 957 , 710 Public depo- Gold ami Silver sits .... 5 , 314 , 059 coin 504 , 443 Privnto deposits ,.. 12 , t 35 , 844 Poatbilla 868 , 075 19 , 103 , 078 37 , 020 , 434 37 , 020 , 434 Commencing on the debit , or loft hand side of tho account , we have iirst the capital of the Bank , 14 , 553 , 000 ^ . ^ then , what is called tho rest , or surplus accumulations of undivided profit , 3 , 361 , 850 ; . Theso , added together , make a total of 17 , 017 , 35 ( 3 / ., which

      is the security the Bank of England affords to the Grovernment and to its customers . Tbe three next items explain themselves , and present a total of 19 , 103 , 078 ? . liabilities . On the other side , we have , first , Government Securities ; next , ' Other Securities , ' which include a certain , but it is understood

      not very large , sum lent on mortgages . It is mainly made up of advances to the commercial world , as the Bank never hold any Foreign Stocks ;¦—and the two other items , ' notes' and ' coin , ' form the Till , or amount Which the Bank of England ( acting as bankers ) keep to meet any demands that may be made upon . them .

      N " ow the two main features of this account are , first , the amount-of ( unemployed ) ' notes ' in the banking department , and nexfcj the amount of what is ealled ' Other Securities . ' The practised eye of the money-dealer lights immediately on . these two items ; the first tells hizn whether the demand for accommodation has increased or diminished ; the second denotes what the power of the Bank is to supply the commercial world . The first is an index of the demand , the second of the supply ; and these two elements being given , he knows readily what combination may be expected to result . In the above account it will be seen that

      the 'Other Securities'amount to twenty-six millions . This is by far the largest sum that had appeared on the account since Peel's act was ¦¦ passed . It has been as low as eight millions , and only a little more than a twelvemonth ago it stood at fourteen millions . In this twenty-six millions we have an accurate representation of the necessities of the commercial world , and of the immense amount

      of promissory paper afloat . This gradual increase , of loans on ' Other Securities ' has been diligently noted by the prudent banker , who finds in this weekly account an accurate gauge of the monetary pressure ; it has been carefully marked by the merchant , who knows well that so large an increase of bills denotes a feverish commercial activity , an undue and dangerous extension of credit .

      Concurrently with this excessive demand for accommodation we see a diminished power of supply . The ( unemployed ) ' notes' stand lower than they ever have been—the demand is excessive—the supply almost exhaustedit is under a million . It "was very low this time last year , but it stood then at three aud a half millions—in November , ' 55 , it stood at five millions—ifc has been as high as thirteen and a half millions .

      The management of the Bank ' s Reserve ( the item 'Notes' in the ' Banking Department' ) ia the great point upon which the Directors ' attention is lixed . This reserve is fed mainly by securities falling due daily , by sales of stock , by fresh arrivals of gold . Nothing permanently diminishes it but a drain of bullion . The amount of tho reserve is the guide to the rate of interest—as the reserve falls , tho rate rises—and , as a rule , tho higher the rate is tho greater tho amount of ' Other Securities . ' In . the account before us the

      private securities are twenty-six millions , tlio reserve under one million , the rate of interest ten per cent . In November , 1852 , the private securities wero eleven and a half millions , the reservo eleven and a half millions , the rate of interest two per cent . The amount of accommodation was then less than one-half of what it now is , tho reserve twelve timea as great , and the Bnuk rate was for six : months two per cent . only . Here , then , is tlio key to tho wholo accounts—tlio amount of ' Notes' in the banking department . If ifc fall below live millions the prudent man looks serious , aud contracts his engagements , just as certainly as he takes

      his great-coat and umbrella when the glass marks much rain . Before we dismiss the subject , we think it desirable to show an abstract of the accounts in . another form : — . By a reference to the weekly statement printed above , it will be observed that the liabilities of the Bank are as follows : — For notes issued ................ £ 21 , 141 , 065 ¦ For deposits and post billa ... 19 , 103 , 078 Total liabilities ......... £ 40 , 244 , 143 Its assets are : — Issue department ..... ..... £ 21 , 141 , 065 Banking department 37 , 020 , 434 : Total assets ....... £ 58 , 161 , 499 showing a surplus of 17 , 917 , 356 ^ . after dischargiug every liability of every kind . Amongst its assets are about twenty-four millions of British Government Securities , and upwards of seven millions in . the precious metals . It has abundance of gold in exchange for all the notes that can possibly be presented for payment ( for , as we showed last week , the public cannot transact their daily business with less than from fourteen to sixteen-millions of paper ) ; it has Government Securities for twenty-four millions against deposits for nineteen millions . Is it possible to conceive any institution founded on a surer basis—any paper circulation more amply secured ? Our whole commercial fabric is founded upon our gold currency . Every contract made is an . undertaking to pay so rnany pieces of gold of a certain weight and of a certain fineness . A paper circulation has been introduced , partly tor convenience and partly for economy---for convenience , for who would carry a thousand -sovereigns- if a little piece of paper can be made to serve the same purpose ?— -for economy , because the fourteen and a half millions of paper money issued on securities is so much capital actually saved , which , at four per cent , interest , gives an annual return of 580 , 0007 . But in order that a small piece of paper ma } ' serve the same purpose as gold in ordinary transactions , it is absolutely necessary that it should at all times be convertible into specie at the will of the holder . This convertibility Peel's Act was intended to ensure—and this it has ensured . Assuming that the nation is convinced that it is absolutely necessary that bank-notes should be convertible ( and few really practical men deny it ) , it appears to us that the only question at present to be discussed is , shall we issue more than fourteen millions aud a half of notes upon securities ? Can we safely , and without endangering tho whole fabric of the currency , make the amount sixteen , seventeen , or eighteen millions , and is it expedient so to do ? Let tho question be brought to a distinct issue , and it will soon be perceived that to alleviate the present pressure requires something more than an issue of additional bank-notes—something more than tlie creation of further promises to pay—that many of our merchants havo been entering into speculations far beyond thoir depth—that they have made engagements immeasurably beyond their means—that several of them have ' gone in to wiu , having really but little of their own to lose—that they havo built upon the sand of credit instead of upon , the rock of capital—and that groat has been thoir fall when the floods of adversity camo ( as come they must ) , sweeping away with resistless Ibrxo houses fair to look upon , but entirely wanting" in solidity ; Hubatnntial to tho oyo of tho unwary , but dangoroutt , not only to those who unwisely confided in thoir apparent security , but also to all who wore unfortunately exposed to tho i crash attending their fall .

      Untitled Article

      "No . 40 V November 2 a , 1857 . ] TH E L EAD E B .- i ^ o

  • Citation
    • Leader (1850-1860), Nov. 28, 1857, page 1139, in the Nineteenth-Century Serials Edition (2008; 2018) ncse-os.kdl.kcl.ac.uk/periodicals/l/issues/vm2-ncseproduct2219/page/11/