they do not know how to come right. Our views and principles, from the commencement, have been straightforward, uncompromising, and consis

tent.

Nor have they been uttered in vain. Many and many a symptom have we been able to discover, from time to time, which have convinced us that they are becoming more and more acceptable to the truly enlightened public; and we are satisfied that it only requires perseverance and energy in setting them forth, to cause them so to prevail as that they shall displace that spurious, latitudinarian liberalism, which has so long confused the understandings and perverted the hearts of our people.

But were Sir Robert Peel prime minister to-morrow, we are satisfied that many of the evils connected with the national system, as at present administered, would be either mitigated or neutralized. Against the principle of any such system, we must continue to record our loud protest. God grant that our Conservative rulers (if we are again to have Conservative rulers) may see them in their true light, and eschew the national sin of being parties to their adoption. But if Sir Robert Peel, finding the system in operation, and not thinking quite so badly of it as we do, were disposed to give it a further trial, he might cause it so to be admi nistered as to be far less subservient than it at present is to the designs of the enemies of our Protestant institutions.

As matters stand at present, the system is bad, but its administration is worse. It is, itself, a great evil, and it is a cloak for still greater evils. Now, the evils of its administration, we conceive, would be materially diminished, if our rulers were such as would not connive at cases like that of poor Maloney, or abandon the whole working of the system to the Roman Catholic priests. It would no longer be “a penal offence in the eyes of the honourable commissioners," to be edified by a perusal of the Bible. We should be able to obtain returns of the comparative number of Roman Catholics and Protestants who are in attendance upon the schools. A system of honest inspection might be devised, and carried fairly into effect, by which the real character and working of the project might be fully disclosed. And, the

public mind being thus gradually enlightened, the natural consequences must speedily follow, namely, such essential modifications of this scheme as might reconcile it to the consciences of a religious and Protestant people.

Does not, therefore, every motive which can influence an enlightened, Conservative politician, concur to stimulate us to the speedy removal of an oppressive, unprincipled, incapable administration? Can there be any safety for the country, either at home or abroad, until they are dislodged from their strongholds of office? Normanby in the home office! O'Connell enjoying the smiles and the patronage of the court! While Frost and his far less guilty, though more unfortunate associates, are lying in their dungeon under sentence of death!

But we cannot trust ourselves upon that theme. Powerfully has Lord Brougham, in his place in the House of Lords, alluded to the contrast exhibited by the ruffians who are at large, and in the enjoyment of influence and opulence, and royal favour, and the more contemptible and guilty wretches who are awaiting the office of the executioner! Will it be lost upon the people of England? Is this a time to be diverted from the serious and stern reflections which the state of affairs is so well calculated to inspire, by the pageantry of nuptial arrangements, or any of the follies and vanities which amuse the leisure of the dissipated and the idle? We know well how the country feels upon that subject. The result of the motion upon the 28th ultimo, (which may be in the hands of our readers concurrently with these pages,) will shew how far that feeling is, or is not, responded to in the House of Commons. We calmly await the result, and provided the Conservative leaders but do their duty, by giving indignant expression to the feeling which prevails out of doors, we care but little on which side the advantage of numbers may be found upon a division. The doom of ministers will be sealed. The British Lion will shake the dew drops from his mane. The ancient spirit of British freedom will be fully aroused, and the people will no longer consent to be the laughing-stock of Europe, by consenting to be governed by a PETTICOTOCRACY.

ALTHOUGH a single great bank of issue may, without much danger or difficulty, regulate the currency and preserve the par of exchange with foreign countries free from any serious fluctuations, yet several banks of issue, acting in competition with each other, have by no means equal power. We have seen that the principle by which the conduct of a single bank of issue is to be guided, in all ordinary cases, is to keep the same value always of securities, and to suffer the currency to be regulated by the action of the public, in demanding gold for notes, or bringing it in for sale. But this principle cannot be taken as a guide when there are several banks in competition, nor can any other rule be found to supply its place. A bank may suffer by the over-issue of its rivals, as well as by its own. When there is a single bank, the consequences of its over-issues fall entirely upon itself, but where there are several banks, the evil consequences of the over-issue of one are partly shared among its rivals. Thus the stimulus to overtrading is found to be almost irresistible; while to prevent the mischief likely to ensue from it, demands a degree of tact and skill which is rarely to be found among the managers of a bank. It is necessary for us to give some proof and explanation of this assertion, as a contrary doctrine appears to have been held by some members of the select committee, and is, we know, very prevalent elsewhere.

The doctrine to which we have alluded, is thus intimated in the examination of a very candid and intelligent witness, Mr. Pim. Report, 1838, No. 520.

"Q.-Is there not this circumstance with regard to a competition in the issue of money, that although it may be true that one bank, of many, (issuing in competition in Dublin we will say,) if it issued more in a larger proportion than its rival banks would have its notes returned upon it; and is it not true that that would not operate as a check, if all,

in the spirit of competition in a period of excitement, were also disposed to issue largely?

"A. Yes; I understand the question, and the inference of your question is quite correct, that if they were all disposed to over-issue, none of them would feel the effects of it, I am afraid, till they felt it so suddenly as to produce most disastrous results,"

This is the doctrine to which we object, and which we think can be shewn by demonstrative evidence to be inaccurate. By way of illustra tion we shall suppose two banks A and B, with equal business, and equal capital, keeping the circulation of their district full but not redundant

by an issue of 40,000l. each, and that they each retain a reserve of 15,000l. in gold to meet any occasional demands or runs that may be made upon them. Let us now suppose that bank A adds 20,000 to the amount of its discounts, and examine what will be the effects of this overtrading upon each bank. In the first place the circulation will be excessive to the amount of 20,000l., and gold will, in due time be demanded for this excess of paper. But the public will not reason thus; bank A has been guilty of over-issue; there are too many of its notes in circulation; we will apply to it for gold. On the contrary, those who want gold will demand it from the bank, whose notes they happen to possess, and, as the notes of the two banks are distributed through the country in the proportion of three to two, the demand for gold will be in the same proportion: thus 12,000 will be drawn from A, and 8,000 from B. The banks will then be thus situated: A will have a circulation of 48,000, and 3,000 in gold; B will have a circulation of 32,000l. and 7,000l. in gold. In this state of things the daily or weekly exchanges between the two banks will balance each other, and no gold will pass to either side. If bank B discounts 10,000. of bills every week, it will receive on an average

that sum in payment of them, of which 6,000l. or three-fifths will be paid in its rival's notes, and 4,000l., or two-fifths in its own. It will therefore return 6,000l. every week to bank A.

In

But as bank A's business exceeds B's in the proportion of three to two, it will discount 15,000 every week, and receive the same amount in payments. Of this sum 9,000, or three-fifths, will be paid in its own notes, and 6,000/., or two-fifths in notes of bank B; and thus, each bank receiving the same amount of the other's notes, the exchange will be made without the transfer of any gold to either side. We have given this example to explain and illustrate this proposition, that in the absence of any disturbing cause, the circulation maintained by each bank will be proportioned to the amount of business done by it. the example we have just given, it is to be observed that the quantity of gold in the bank which did not increase its discounts, has been diminished in a greater ratio than its circulation. If the managers are desirous of keeping up the former proportion of fifteen to forty, or three to eight, it can only be done by reducing its discounts from 40,000l., to about 30,000. Thus the over-issue of one bank will derange the proportion between the gold and the circulation of another bank, which can preserve the proportion only by reducing its own discounts. Hence a bank of issue may have its gold drained off by a rival which, if it has capital enough, may even ruin its competitor, without any injury to itself. If to avoid this calamity it contracts its issues, it thereby enables its rival to extend its business still more, until at last the more moderate bank is obliged to give up business altogether. Thus a bank may be driven in self-defence to take up the system of over-trading adopted by its competitors, and where there several joint-stock banks of issue, the country will suffer under alternations of high and low prices, of confidence and panic, of great excitement and general depression of trade. That bank will gain most, which does most business during the period of excitement, and is quickest and most resolute in contracting its issues, and refusing to discount when the panic is coming. A system can scarcely be devised more injurious to the prospe

are

rity of a great commercial nation, than this of permitting everybody who wishes it to make and issue that which is to be its circulating medium, at the same time that it is their interest to issue as much as possible when the spirit of overtrading is prevalent, and to reduce their issues when trade begins to stagnate, and wants a stimulus to revive it. This seems to be hinted at in the following questions and answers in the report of 1832; witness, J. P. Wilkins, Esq.

Ques. 1651

"Do you think the distress and failures in 1825 were mainly owing to the exces sive issue of the country bankers?

"A.-I think the country bankers assisted."

Q. 1652

"Are you of opinion that any country bank can regulate its issues by a reference to the foreign exchanges?

A." As country banking is at present constituted, it is impossible; it is the country banker's interest to withdraw as much of his neighbour's paper as he can from circulation, and to put out his own."

This tendency of rival banks of issue to overtrading leads almost inevitably to numerous bankruptcies. It appears by the report of 1832, Appendix No. 101, that in the first thirty years of the present century 348 commissions of bankrupts issued against country bankers. There were 63 such commissions in the four months ending in March 1826, each of the failures as one witness described it, being like an earthquake in the district in which it occurred. In Ireland all the private bankers failed except two or three in Dublin, who had scarcely any notes in circulation.

The general feeling of the insecurity of private banks of issue led to an alteration of the law so as to permit and encourage the formation of joint stock banks. The alterations consisted chiefly in these points. 1st. In permitting a bank to consist of more than six persons. 2ndly. In permitting the bank to sue and be sued in the name of one of its public officers, thus removing the inconvenient necessity of making a numerous body of proprietors parties to every suit. 3rdly. In anuulling or modifying many laws relating to partners which would have made it almost impracticable for the bank to

transact any business with any of its shareholders.

Notwithstanding these improvements, the laws relating to joint stock banks are still liable to many objections, and although some of these have been pointed out by the committee of the House of Commons, yet no steps have been hitherto taken to remedy them.We shall consider these objections in another place but even if the law of joint stock banking was in a perfect state, it would do nothing to prevent the mischiefs that necessarily arise from the competition of rival banks of issue. There is no one point on which so many witnesses agreed as on this, that the multiplication of banks of issue would be decidedly injurious to the interests of the country. If it could be done without interfering with existing interests, it would be a desirable measure to suppress all banks of issue but one. Mr. Grote, a London banker and now one of the members for the city, thus expresses himself report 1832, No. 4764.

"If there be one bank of issue only, you get the circulation considered as a whole, which would be impossible if the circulation were distributed among six or eight or ten banks. With one bank of issue only, if that bank had been placed under the control of publicity, you have a much better security for the circulation being administered upon fixed principles, and enlarged or contracted with a constant reference to the foreign exchanges than you would have if there were six or eight or ten banks. No one among these competing banks would be either able or willing to measure its own separate issues with reference to that total of circulating medium which might be proper for the country at the moment. Each bank

would study principally the means of increasing its own part of the circulation, and would be tempted to extend its issues, not at the time when it might be desirable for the circulation generally that they should be extended, but at any time when there was a prospect of unusual profit, or of acquiring new connexions, taking the chance of being able to supplant the notes of other banks."

The evidence of the Irish witnesses, with the exception of Messrs. Dunne and O'Callaghan, two directors of the Hibernian bank, is to the same effect. The reader will presently have an opportunity of estimating the value of these gentlemen's evidence.

The advantage of having the currency regulated by one great bank of issue has been admitted in the case of England, for although in most parts of England unlimited competition in banking is permitted, still no bank of issue except the bank of England can be established within 65 miles of the metropolis. By this restriction the advantage of a single bank of issue is given to an important commercial district, and indirectly the whole country feels the benefit of it, since the currency in the rest of the kingdom must be in a great measure regulated by its coudition in London. Ireland has hitherto enjoyed a similar privilege, from a law providing that no bank with more than six partners shall issue notes within fifty miles of Dublin except the bank of Ireland. There is this difference between the exclusive privilege of the bank of England and that of the bank of Ireland. In the Loudon district no banker can issue bank notes. In the Dublin district any bank can, provided it do not consist of more than six partners. The Dublin district is also much smaller than the London one: as Dublin is on the sea the district measured by distance is only a semicircle. But as the size of the district is not of much importance, the bank of Ireland with its present privileges has been hitherto able to regulate the currency and to prevent it from being redundant or deficient in the most remote districts.

It is not to be supposed that the exclusive privileges which the Bank of Ireland has so long enjoyed could be regarded without envy which the bank of England has not escaped.

"A jealousy and envy of the prosperity of the Bank of England has given rise to much officious meddling by parties who have exhibited nothing but total ignorance of sound principles both of currency and of banking. There is a longing to participate in some supposed mysterious advantages which the power to issue paper money affords."

We quote from a small pamphlet which has lately appeared by Mr. Drummond, and the passage may be equally applied to those who desire the abolition of the Bank of Ireland's privileges. Mr. Drummond, like every one else who has taken pains to understand the question is in favour of

having the currency supplied by one great bank of issue. This opinion is not confined to the friends of the Bank of England. It is generally held by the London bankers, than whom the world does not contain a class of men more conversant with the principles of banking and of currency. In the year 1837, a pamphlet appeared written by Mr. Jones Lloyd and entitled “ flections suggested by a perusal of Mr. Horseley Palmer's pamphlet on the causes and consequences of the pressure on the money market." Mr. Lloyd censures very severely the conduct of the directors of the Bank of England, and disapproves of the principles upon which they professed to be guided, yet he concludes with an assertion,

re

"That undoubtedly an adherence to sound principles would lead to the conclusion that the issues of paper money should be confined to one body entrusted with full power and control over the issues, and made exclusively responsible for the regulation of their amount"-page 52,

And in page 53 he urges―

"The importance of directing the attention of the public to the following points. First-The propriety of securing, strengthening, and if possible extending the monopoly, as regards currency, of the central issuer, with the view of rendering the indirect control which it can exercise over subordinate issuers more powerful and effectual."

But it is unnecessary to multiply authorities on so plain a point. Let us rather direct our attention to the arguments used against it, and which all rest on the abuse of this one word monopoly. By the use of the word they strive to attach to the privileges of the Bank of Ireland the odium which properly belongs to monopolies in trade. But the exclusive privileges of the Bank of Ireland or of England do not constitute a monopoly; they are more properly to be deemed a delegation for the good of the public of certain powers, naturally inherent in the sovereign, viz. the power of making money, and of fixing the values and denominations of coins. There is no fair comparison between the office of issuing money, and the trades to which it is sometimes compared. As any man that chooses, it is said, may become a shoemaker, why may he not become a

banker? We answer that he may, but that he must not make paper money, which is not any part of the proper business of a banker. But why may not he make bank notes for those who wish to receive them, with equal freedom as he may make shoes for all? The answer is obvious, one is a public, and the other a private business. If the shoemaker makes too many shoes, he injures only himself, if he makes bad ones, he injures only his customers, the rest of the public are unconcerned about the matter. Prudence and caution will prevent any man from being injured by him. But no caution can prevent the public from suffering by the misconduct of the banker. His bankruptcy or over-trading may involve hundreds in ruin who never had the least connexion with him. The public are therefore entitled to be protected by law against an injury from which by any degree of prudence they cannot protect themselves. Besides there is no analogy between the two trades. The shoemaker by his industry creates wealth. He makes a pair of shoes. The value which his labour adds to the raw material is a natural value, altogether independent of any assistance derived All that he requires

from the law.

from the law is that which the legislator cannot without injustice refuse to any man. He asks for protection to his life and property, and liberty to make and sell his shoes, that is freedom to his industry. He does not want the law to confer any special quality, or value upon the commodity in which he deals. Not so with the banker. He signs a one pound note, and delivers it to his customer, but the value of that note, its power of passing as money, is entirely the creation of the law. Even at common law a bank note was not negotiable. The state therefore imposes no unfair restrictions upon any man's freedom, when it merely declares the terms upon which a promissory note shall be negotiable. A note for a smaller sum than one pound is illegal. No bank can make it why may not the state equally declare that except under particular circumstances, bank notes of larger value shall not be negociated?

The establishment of joint stock banks only professes to prevent one evil incident to private banks, viz., their liability to failure, and this it does imperfectly. But all the other evils arising from an excess of banking, or