JOINT-STOCK BANKING SYSTEM, 541 



really not more than 2000J. to commence business with and de- 

 pending- for the rest merely on the presumed respectability of 

 the partners. To bring such examples and to follow them out fully 

 and satisfactorily would take up more space than can be afforded 

 in our pages ; and so we must be content with expressing our opi- 

 nion very strongly, and that too after mature consideration, that no 

 banking concern whatever, private or joint-stock, can succeed, un- 

 less there be a large amount, say at the very least two-thirds of 

 the available, paid-up capital, continually kept either in land-invest- 

 ments or in government securities, for the extraordinary calls made 

 on them in times of commercial exigences. It is a small matter, 

 whether a bank at its outset has a paid-up capital of 500,000/. ; for 

 what security have the public that the tithe of that amount will be in 

 its possession in a twelvemonth? This security, however, must be given 

 and given for the full amount [of its liabilities. Indeed nothing 

 short of an Act of the Legislature can fully secure the commercial 

 world against the imprudences of inexperienced or unprincipled 

 bankers. It ought indeed to be provided by Act of Parliament 

 without delay that those Joint-Stock banks which have already 

 opened business should be obliged at an early period to invest at least 

 two-thirds of their nominal capital in some easily convertible securi- 

 ties as a reserve fund to be ready at hand in case of any sudden 

 emergency, and to lodge in the hands of responsible parties leases* 

 title-deeds, or other securities from time to time proportional to the 

 amount of their issues. ' 



This arrangement should of course apply to all banks hereafter 

 to be formed : inasmuch as all of them should be absolutely obliged 

 before their opening to prove their requisite investments to the Bank 

 of England or to the government, and be subject to the same restric- 

 tions respecting their issues. This opinion if our own merely 

 would have been given with some diffidence ; but we have on our 

 side many highly respectable authorities on financial subjects.* 

 The system, as it exists at present, at any rate provides no check 

 on rash speculation and no security against embarrassment, if it 

 does not actually offer a premium to fraud and imposition. If such 

 a provision should be made, we shall see in one twelvemonth how 

 rotten is the foundation on which a large portion of the ninety-eight 

 banks now working rests. 



* Se M'Culloch's Dissertation on Money, appended to the last volume of his edition 

 of Smith's Wealth of Nations. 



