TRANSACTIONS OF THE SECTIONS. 193 



some of the smaller networks to South Wales, Shrewshury, and Hereford (jointly), 

 and the Cheshire lines (jointly). The Great Western gTOiip he would compose 

 of the Great AVestern, South-Western, Shrewsbury and Hereford (jointly), 

 Cheshire lines (jointly), South-Eastern and some of the smaller lines in South 

 Wales. The Great Northern group would combine the Great Northern, Great 

 Eastern, North-Eastern, North British, and the Highland (jointly). The Midland 

 group would consist of the Midland, Manchester, Sheffield, and Lincolnshire,. 

 Glasgow and South-Western Highland (jointly), Brecon and Merthyr, Bristol and 

 Exeter, and London, Chatham, and Dover. The four systems might in the fulness 

 of time become practically four distinct railway networks, each one visiting the 

 most important commercial centres of the kingdom, and each independent, or 

 nearly so, of the others. When the systems had attained such a condition, it 

 might be said that the absolute perfection of the scheme had arrived : that was 

 to say, a choice of four difl'erent routes would be oftered to any person travelling 

 from one place of importance to any other place of importance. The author 

 proceeded to enumerate the advantages of the system he had thus sketched out. 



Commercial Panics. By W. D. Hendeeson. 



The writer considered the whole question of banking on the " historic method," 

 and showed how it was that various laws had from time to time checked the 

 natural development of the business of banking. He then pointed out tliat of all 

 trades banking was the one which ought to be freest, as it dealt not with commo- 

 dities, but with the representatives of commodities and the credit of individuals. 

 After pointing out how it had happened that in England the capital of the banks 

 was small in proportion to their liabilities, and the specie also small, and that the 

 Bank of England held the entire specie reserves of the country, he proceeded to 

 point out that the remedy for the small capital was now in the hands of individuals, 

 who could either singly or in combination, or in the latter case, under either the 

 Limited Liability Act or the unlimited, form what banks they pleased. As regards 

 augmenting the specie reserves he showed that this also was largely in the power 

 of the banks, and that what was required was chiefly that the London banks should 

 form a fimd of specie to which each would require to contribute, and settle their 

 clearing-house transactions, not by cheques on the Bank of England, but by 

 cheques on this fund. He showed how the possession of this fund would steady 

 the action of the banks in times of pressure, and that it would be open to the 

 banks, if a great emergency arose, to hand its amount, which would probably be 

 4,000,000, to the Bank of England. He then considered the one exception to the 

 general principle of free trade, and admitted that the issue of small notes was 

 really a monopoly, as the holders of these notes were involuntary creditors. The 

 assumption of the Act of 1844 was examined, viz. that a circulation of notes 

 should fluctuate as one of gold would do ; and it was shown that this was impos- 

 sible, and that in Scotland, for example, between May and July, there was a varia- 

 tion in the circulation of 10 per cent, from what the small note circulation might 

 be expected to be on this theory, and what it actually was. He advocated the 

 issue of these notes by the State, provided that the State held a large reserve of 

 specie to secure their controvertibiiity. The amount of sovereigns in circulation 

 was now about £75,000,000, and probably notes issued by the State would take 

 their place to the extent of £-50,000,000. Of this sum one half might be kept in 

 gold and the other half in consols; and of course, as no interest would be payable 

 on consols, the State would make a profit yearly of 3 per cent, on £25,000,000, or 

 £750,000 a year. The writer then pointed out that in times of panic a portion of 

 this gold might be rendered available. On the principle of the Bank Act of 1844, if 

 the normal circulation was £50,000,000, it was inconceivable that it should ever 

 fall below £.30,000,000 ; and the First Lord of the Treasury and the Cliancellor of 

 the Exchequer might have power to sell, say, £1,500,000 of gold, and purchase 

 consols for every 1 per cent, that the Bank rate rose above 8 per cent. There 

 would thus be a margin of £5,000,000 from the small note department, viz. the 

 difierence between £25,000,000 ordinarily held of consols and the £30,000,000 



