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THE LONDON PRIVATE BANKERS.
RY the Bank Charter Act of 1844 (7 & 8 Vict. c. 32,
D s. 21), it was enacted “that every banker in England and Wales, who is now carrying on, or shall hereafter carry on business as such, shall, on the first day of January in each year, or within fifteen days thereafter, make a return to the Commissioners of Stamps and Taxes at their head office in London, of his name, residence, and occupation, or in the case of a company or partnership, of the name, residence, and occupation of every person composing or being a member of such company or partnership, and also the name of the firm under which such banking company or partnership carry on the business of banking, and of every place where such business is carried on; and if any such banker, company, or partnership, shall omit or refuse to make such return within fifteen days after the said first day of January, or shall wilfully make other than a true return of the persons as herein required, every banker, company, or partnership so offending, shall forfeit and pay the sum of £50; and the said Commissioners of Stamps and Taxes shall, on or before the first day of March in every year, publish in some newspaper circulating within each town or county respectively, a copy of the return so made by every banker, company, or partnership carrying on the business of bankers within such town, or county respectively, as the case may be.”
This was the first time that any of the banking com
panies in London were required to make returns to Government of the number or names of their partners. All banks that issued notes were required, when they applied for a licence, to name their partners; but as none of the London bankers issued notes, they required no licence, and made no return. Nor did the joint-stock banks established in London make any returns to the Government of their partners. For as they did not possess, until 1844, the power of suing and being sued in the name of their public officers, they did not register, at any Government office, the names of their partners, though, in some cases, these names were appended to the Annual Reports of the directors. This Act came into operation in January, 1845, and we have now, therefore, the means of obtaining the names of all the partners in all the banking establishments throughout England and Wales.
The Act not only requires that the bankers shall make these returns between the first and fifteenth of January in each year, it requires also, that the Commissioners of Stamps and Taxes shall publish them before the first of March following, in some newspaper that circulates within the town or county in which the bankers making the return carry on their business. The returns from the London banks are published in supplements to the “ London Gazette,” which we presume is considered to be a newspaper within the meaning of the Act.
The particulars required to be returned by the Act, and stated in the “ Gazette," are, the name of the firm or company; the name, residence, and occupation of the persons of whom the company or partnership consists; and the name of the place or places where the business is carried on.
The Clearing Banks are banks of deposit and of discount, and they act as agents to the country banks. The banks
· These are inserted every year in the Banking Almanac.
in Fleet Street and in Westminster do not usually discount bills for their customers, nor act as agents to country banks. Their connections embrace chiefly the clergy, the gentry, and the nobility. Their loans to their customers are chiefly upon landed security, and they are supposed to hold a large amount of exchequer bills and other Government securities. Few of the London private bankers allow interest on deposits, or charge commission on town accounts.
Those who act as agents to country banks charge a commission on the debit side of the account, and some of them allow interest on the daily balance. Instead of a pro ratâ commission, some country banks pay their agent by a fixed annual payment, or by keeping in his hands a certain balance without interest. None of the present London bankers have ever issued notes, though, until the year 1844, they had legally the power of doing so. Most of them issue “ Circular Notes,” for the use of travellers on the Continent.
The following is a summary of part of the evidence delivered before the Bank Committee of 1832, by George Carr Glyn, Esq., respecting the London bankers :
“ There are sixty-two private banks in the metropolis, none of which for the last fifty years have issued notes of their own, though it would seem that such of them as consist of fewer than six partners might lawfully circulate their own paper if they pleased. As they act entirely with the Bank of England paper, it is doubtful whether there be any limit to the number of partners of which London private banks may consist. They receive deposits, upon which they pay no interest. The system of allowing interest on deposits was formerly tried in London, but the houses that attempted it invariably failed. The deposits held by the London bankers are generally composed of very large sums, which are necessarily payable on demand;
and hence they cannot be made use of to the same extent as those which are entrusted to country bankers, and which, whenever interest is allowed, are usually left with them for a stipulated period. On the other hand, in all ordinary transactions, the London banks charge no commission to their customers.
“ The London banks, in order to be able to meet their engagements, usually keep a large deposit, nearly equal, perhaps, to half of what they hold in reserve, in the Bank of England; a portion of their current funds they necessarily hold at home in bank paper, and a small amount in gold. Their deposit in the bank they consider as so many notes in their drawer, liable to be called out by the daily fluctuations in the accounts of their customers. The balances in their hands, often very large, are frequently withdrawn without notice; hence their intercourse is almost hourly with the Bank of England, from which they receive every facility.
“In order to turn their funds to profit, the London bankers employ as much money as they can amongst their customers. They invest a considerably larger proportion of their deposits in bills of exchange and promissory notes than in public securities. The city banker is, however, under a disadvantage in this respect, which is not felt by the banker at the west end of the town.
The latter may, to a certain extent, depend upon the use of the money deposited with him, as his accounts are usually those of country gentlemen, and individuals out of trade; whereas the former, whose accounts are principally those of persons actively engaged in commercial or money operations, can hardly know three days beforehand what the amount of his deposits may be at any given period. The London bankers are obliged to employ their money occasionally at a very low rate of interest. In some cases, it may have
been within the last twelve months, 23 per cent. ; but the average has been from 3 to 3, and it has fairly kept at that rate. The highest rate has been 4 for short bills, but 5 has been charged for bills of twelve or eighteen months.”
The circumstances that attended the failure of Messrs. Strahan and Co. have called attention to the following section respecting bankers inserted in the Act 7 & 8 Geo. IV. c. 49.
“ Agents embezzling Money entrusted to them to be applied to
any special Purpose ; or embezzling any Goods or valuable Security entrusted to them for safe custody, or for any special Purpose, guilty of a Misdemeanour.
And, for the Punishment of Embezzlements com. mitted by Agents entrusted with Property, be it enacted, That if any Money, or Security for the Payment of Money, shall be entrusted to any Banker, Merchant, Broker, Attorney, or other Agent, with any Direction in Writing to apply such Money, or any Part thereof, or the Proceeds or any part of the Proceeds of such Security, for any Purpose specified in such Direction, and he shall, in violation of good Faith, and contrary to the Purpose so specified, in anywise convert to his own Use or Benefit such Money, Security, or Proceeds, or any Part thereof respectively, every such Offender shall be guilty of a Misdemeanour, and being convicted thereof, shall be liable, at the Discretion of the Court, to be transported beyond the Seas for any Term not exceeding Fourteen Years nor less than Seven Years, or to suffer such other Punishment by Fine or Imprisonment, or by both, as the Court shall award ; and if any Chattel or valuable Security, or any Power of Attorney for the Sale or Transfer of any Share or Interest in any Public Stock or Fund, whether of this Kingdom, or of Great Britain or of Ireland, or of any Foreign State, or