March 16, 19 16. 
LAND AND WATER 
INADEQUACY OF OUR BANKS. 
By Arthur Kitson. 
"^OR many years past British manufacturers and 
merchants have complained of the difficulty of 
obtaining adeqviate banking facilities and of the 
unreasonable objections made by their bankers 
to affording then the accommodation their businesses 
required. These complaints have become much more 
frequent and general since the London Joint Stock Banks 
invaded the Provinces in such force, and began their 
policy of absorbing the private country banks — a policy 
wliich has proceeded at an accelerating speed of late, 
until to-day very few of the old private banks remain. 
WitJiout doubt, this policy has been productive of great 
injury to the nation and great hardship to hundreds of 
small producers throughout Great Britain. 
These country banks were the mainstay of thousands 
of industries, and they were conducted on a far more 
liberal and patriotic scale than the London Joint Stock 
Banks. The Country Banker knew all his clients person- 
ally, and was usually familiar with their family history. 
He knew whom to trust. He could easily distinguish be- 
tween the thrifty, industrious, enterprising man and the ex- 
travagant, lazy and unprogressive individual. The banker 
was usually a leader in social affairs in his own to-.vn or 
district, and took a personal pride and interest in assisting 
in the development of its industries. Whilst he was, per- 
haps, as keen to make large profits as the London Bankers, 
his desire was tempered by a sort of civic pride. It was 
very gratifying to him to feel he was helping his neigh- 
bours and fellow townsmen, which ensured him their 
esteem and gratitude. The demands of borrowers in 
London or abroad were not likely to induce him to forget 
those of his own townspeople. In short, he usually had a 
large amount of local as well as national patriotism. 
Sympathy and Mutual Help. 
Those who have read Prince Krapotkin's great woi-k. 
Mutual Aid. will remember what an immense factor 
symjiathy, leading to mutual help, has been in the 
development of animal life. Sympathy has been a 
similarly valuable factor in the development of industrial 
and commercial affairs. This factor was present, in- 
lluencing the conduct of the private banker. With the 
advent of the soulless Joint Stock Company principle, 
this factor was utterly destroyed. 
The private banker frequently became a shareholder 
in his town's local enterprises. All this greatly contri- 
])uted to the upbuilding and development of Britain's 
industries. I have been told by many of the farmers and 
country ti-adesmen, how comparatively easy it was for 
them to get financial help from their private bankers 
thirty or forty years ago. With the advent of the London 
Joint Stock Companies' country branches, all this is now 
changed. In place of the local banker with his wealth,' 
power, local pride, knowledge and sympathy, we have a 
manager who is usually a stranger, and who knows little 
or nothing of the townspeople themselves, who is usually 
without any social or political standing, and is powerless 
to grant any considerable banking facilities without the 
consent of his London Board of Directors. His instruc- 
tions are to secure all the deposit accounts possible and 
send as much currency as he can to London. If it were 
possible for a country manager to acquire country deposits 
without having to grant loans, the London Banks would 
regard this as an ideal condition. 
Just as in the United States the great bankers of New 
York and Chicago have always endeavoured to denude 
the States of cash in order to amass and control it in their 
own- cities, so the London banks have tried to keep the 
stream of currency always flowing in their direction. When 
it is considered that this policy of denuding the country 
districts of money is often for the purpose of enabling the 
London banks to grant loans to foreigners who are inter- 
ested in building up industries abroad which successfully 
compete with our own, the irony of the situation becomes 
ajiparent ! From the National and Patriotic standpoint 
what can be more i.mizing than the knowledge that the 
savings of tJie British public are being employed dirjctly 
to cripijle them in their own trade and industries ? In a 
former article I quoted from a well-known financial 
writer a statement showing the valuable assistance the 
London banks have given to the Germans in building 
up their vast businesses. This policy has been for this 
country ruinous in the extreme. Although it has ])ro- 
bably helped to increase the banks' dividends, it has 
blasted scores of British industries. 
Risk of a Monopoly. 
The continual absorption of the smaller banking 
companies by the laige ones, indicates that within a 
comparatively .short space of time the entire banfcing 
business of Great Britain will be under the complete 
control of one board of directors. I'his is a national 
danger which should be prevented at all hazards. It 
would constitute a monopoly as far reaching and as 
inimical to the public interests, as that which was exposed 
in the United States by a Congressional Committee a few 
years ago. 
The monopoly of money is the greatest 0/ all monopolies, 
for it controls all others ! It gives its controllers supreme 
power over production, trade and commerce — nay, over lite 
itself J Under modern conditions money has been made 
indispensable to everyone. Such a monopoly ought to 
be permitted to no one company or aggregation of com- 
panies. In the United States, its effects have been shown 
in the corruption of political life, and in the omnipotence 
it gives to men like the late Pierpont Morgan, who was 
able to possess himself of almost any branch of industry 
he desired. The career of almost every one in America 
was at his mercy. He could make and unmake whom 
he chose, and woe to the man who opposed him I His 
power far exceeded that of the President of the United 
States himself. 
If such a monopoly must exist, let it be owned by the 
nation. Here is a legitimate field for democratic control. 
For, even in the hands of the State, a bxnking monopoly 
may bs a source of infinite harm to the public, unless it is 
properly and impartially conducted for the interests of all 
classes alike. Honestly and efficiently conducted, it would 
prove one of the greatest institutions for the development of 
trade, for effecting a more equitable condition between capital 
and labour, for improving social conditions and providing 
an inexhaustible revenue for the State. 
The policy hitherto pursued by our Joint Stock banks 
has been to give facilities to the strong and deny it to the 
weak. Evidently they believe in the saying : " Unto 
him that hath shall be given, but unto him that hath 
not shall be taken away even that which he hath.". The 
object of this policy is, to lend to those only who are able 
to repay immediately on demand. Hence the speculator, 
the Stock Exchange gambler, can get accommodation 
where the producer would be denied. 
The Policy Hitherto. 
I have known a manufacturer, who, having sunk his 
capital in plant, machinery, and tools for producing 
necessary and useful articles, was unable to proceed for 
lack of banking accommodation which was refused him on 
the ground that machinery and tools are not considered 
banking security. Had this man bought shares and tried 
his luck as a gambler, he might have secured banking 
facilities to his heart's content. A system which dis- 
criminates against the production of wealth in favour of 
gambling pure and simple, is neither morally nor econo- 
mically beneficial to any country. 
Let it be admitted at once that this feature is not 
altogether the fault of the bankers themselves. It is 
the natural and combined results of the Legal Tender 
Acts and the Deposit System under which the banks 
are compelled to agree to pay depositors their claims on 
demand in legal tender. Consequently it would be 
courting bankruptcy for the bankers to lock up all the 
money belonging to their depositors in investments they 
are unable to quickly realise. Hence, preference is given 
to short-time loans on gilt-edged security. And this 
class of loan which —although suitable to speculators 
