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passages of Chief Justice Tindal's judgment in that case, it is stated in a very emphatic manner that what I have given is the true interpretation of those prohibitions, namely, that they were meant to prohibit the establishment in England of joint stock banks of issue other than the Bank of England.

209. I want to be quite clear that we understand the extent of the prohibition itself. Under the Act of 8 & 9 Will. 3, there was a prohibition against the establishment of any company, &c., in the nature of a bank subsequently, by the Act of Anne, it having been found possible to evade that prohibition by the constitution of bodies which did not bear the name of banks, but which did a certain class of banking business, a Statute was passed prohibiting any body corporate whatsoever, exceeding the number of six persons, from doing a certain class of business, that is to say, borrowing, owing, or taking up any sum or sums of money on their bills or notes payable at demand, or in less time than six months from the borrowing thereof. Would that provision in the Act of Anne have prevented any body corporate, which did not come under the definition of the Act of William III., from doing any other business in the nature of banking which does not come under the words "borrow, owe, or take up any money," &c. ?-I am not prepared to say whether the Statute of Anne, if it had stood alone, would have had that effect; but I think the Statute of Anne, together with the Statute of William III., would prevent the establishment of any bank whatever in England, other than the Bank of England, if it carried on the business of issuing notes.

210. It is quite clear that if it carried on the business of issuing notes in England, it would be prohibited by the Statutes of William and of Anne; but if it was a bank like the Bank of Amsterdam, carrying on business of whatever kind in a foreign country, of which we knew nothing, is there anything, first of all, in the Statute of William, which prohibits that bank from having a branch, for deposit purposes only, in London? -Yes; the express words are "no other bank, or corporation in the nature of a bank, shall be allowed by Act of Parliament within this kingdom."

211. Then what is the precise object of the amending Statute of Anne?--Its only effect, as it seems to me, was to explain somewhat more fully the Statute of William, and to show that in speaking of a bank or a corporation in the nature of a bank, it was intended to embrace corporations which carried on banking business in connection with other transactions, such as mining, which was the particular case which occasioned the

enactment.

212. But does not the Statute of Anne, if that is its meaning, put a construction upon the expression "banking business," which really limits them to this particular process of taking up money on notes payable on demand?-It does not seem to me to do so; it seems to me that the Statute of 8 & 9 Will. 3, says positively that there is to be no bank, or body in the nature of a bank, in England, except the Bank of England; and then the Statute of Anne says that no corporation which is in the nature of a bank shall do that part of the business of a bank; that is to say, shall issue notes.

Chairman-continued.

213. But it might do any other part of the business of a bank?-It could not do any other, because then it would be a corporation in the nature of a bank.

214. Will you proceed to the point of the relaxations?-We then come to the relaxations of this original monopoly, and having passed over the enactments with regard to the private banks, the first considerable relaxation was the Act of 1826; that Act, as I apprehend, permitted the establishment of joint stock banks, issuing notes at a distance of upwards of 65 miles from London, on the condition that those banks should not come to London or have any establishment or agency there. That Statute appears to me like all the other Statutes upon this subject, to be emphatically confined to England; and I do not think that it was intended to have the operation of relaxing the exclusion from England of foreign banks which had been effected by the earlier Statutes, to which I have already referred.

It may, perhaps, be convenient that I should now give the reasons why I think that the Act of 1826 was confined to England. In the first place, the title of the Act states that it is "An Act for the better regulating Co-partnerships of certain Bankers in England;" and then it goes on to say, "and for amending so much of an Act of the thirty-ninth and fortieth years of the Reign of his late Majesty King George the Third," and so on, "as relates to the same. The preamble then begins by reciting the Act passed in the 39th and 40th years of his late Majesty King George III., intituled so and so; and it says, "Whereas it was to prevent doubts as to the privilege of the said Governor and Company enacted and declared in the said recited Act, that no other bank should be erected, established, or allowed by Parliament," and so

on.

Then it goes on to say: "And whereas the Governor and Company of the Bank of England have consented to relinquish so much of their exclusive privilege as prohibits any body politic or corporate, or any number of persons exceeding six, in England, acting in co-partnership, from borrowing, owing, or taking up any sum or sums of money on their bills or notes payable on demand, or at any less time than six months from the borrowing thereof; provided that such body politic or corporate, or persons united in covenants, or partnerships, exceeding the number of six persons in each co-partnership, shall have the whole of their banking establishments, and carry on their business as bankers, at any place or places in England, exceeding the distance of 65 miles from London"; and having recited all that, it goes on to authorise joint stock banks in England to carry on business in England at a distance of 65 miles or upwards from London. The effect of that seems to me to be that the whole of that section, which is the important one upon this subject, is carefully limited to England, and that it shows that the intention was to maintain the monopoly of the Bank of England, except as against English banks in England, established at a distance of upwards of 65 miles from London.

215. Are you at all aware whether, at the time that Act was passed, there were any Scotch, or Irish, or foreign banks carrying on any business of any kind in England? The whole of my knowledge upon that subject is derived from the Memorandum

Chairman--continued.

Memorandum of Sir Henry Thring and Mr. Fleming. I know nothing about it of my own knowledge or information.

216. Assuming that at the time that that Act was passed there were any of what may be called in the large use of the word foreign banks of issue carrying on any business in England, your contention would be that the Act of 1826 did not touch them?-My contention would be, that they were doing an illegal thing, which they were prohibited from doing by the earlier Acts.

217. And that the Act of 1826 had nothing to do with them?-That it had nothing to do with them.

218. If, therefore, at that time there were any Scotch banks which were cashing their notes issued in Scotland at agencies of their own in Newcastle, or other northern towns, they were, in your opinion, doing an illegal thing at that time?-Yes, I think so. Then there are certain other sections in the Act of 1826 which confirm my opinion upon this subject. If you turn to Section 4 of the Act, you will find provisions for the registration of banks. Those provisions all apply to England, and provide for registration in London. Another Act, passed on the same day, viz., the 26th May 1826, relates to Scotch banks, and provides for their registration at Edinburgh. That is 7 Geo. 4, c. 67. Again, in the same Session, another Act was passed, viz., 7 Geo. 4, c. 6. That was an Act, the object of which was to abolish the issue of 17. notes, or other notes under 57. It is a well known matter of almost contemporary history, that it was originally intended to abolish 17. notes in Scotland as well as in England, but that owing to the very strong opposition of the Scotch to their abolition (as to which it is, perhaps, worth notice that Sir Walter Scott took a very prominent part, and wrote extremely popular pamphlets on the subject), the plan was given up, and the consequence was that 17. notes were permitted to continue in Scotland, although they were abolished throughout England. Those circumstances taken together seem to me to show that the Act of 1826 applies entirely to England, and that the effect of it was to surrender to a limited extent, in so far as it affected a part of England, the monopoly of the Bank of England.

219. Has your attention been directed to an Act which was passed two years later, in 1828, to restrain the negotiation in England of Scotch and Irish bank notes below 51. ?-Yes.

220. In the preamble of that Act, which refers to the Statute of 1826, it is stated that "doubts may arise how far the provisions of the said Act may be effectual to restrain the circulating in England of certain notes, drafts, or undertakings made or issued in Scotland or Ireland"; and the Act accordingly proceeds to prohibit them. Would it not, according to the view that you have given us of the law, have been illegal for Scotch and Irish banks to allow their notes to be circulated in England?-I think it would have been illegal for them to have paid their notes in England, or to have had agents for the purpose; but I do not think it is at all clear that the notes might not have circulated from hand to hand among other people who were not bankers.

Chairman-continued.

221. Then you consider that the Act of 1828 had reference simply to circulation, and not to agency?—I should not like to express too confident an opinion upon the subject, but that is my opinion.

222. You would not take that preamble as evidence that there was a system of agency at the time?-Certainly not; and I can give a reason. The reason is, that if you read the Act to which it refers, 7 Geo. 4, c. 6, s. 3, you see at once how the doubt arose. I should observe, that before that time 17. bank notes circulated freely in England, as well as in other places; and at that time it being intended to put an end to it, an Act was passed in these words: "If any body politic or corporate, or any person or persons, shall, from and after the passing of this Act, and before the 5th of April 1829, make, sign, issue, or re-issue in England any promissory note," and so on, for any sum less than 57., there is to be a penalty of 201. Supposing that a man paid a bill with a bundle of Scotch 17. notes, it would be impossible to say that he either made or signed in England those notes, and it would be a strained interpretation to say that he issued or re-issued them, because he was not the original banker, but merely passsed them on. Then, if you look at the words of 9 Geo. 4, c. 65, which clear up that doubt, they go far beyond issuing or re-issuing, for they say: "If any body politic or corporate, or any person or persons, shall, after the 5th of April 1829, by any art, device, or means whatsoever" (not "make or issue," but) publish, alter, negotiate, or transfer in any part of England any " note of less than 5, there is a penalty of 201 So that that Act made it utterly illegal for people "to publish, utter, negotiate, or transfer" a Scotch note in England.

223. Has your attention been directed to any of the debates which took place in Parliament at the time that the Act of 1828 was passing ?Only upon one or two special points; I have not read the debates.

224. I find that in a discussion which took place when the Bill restraining the negotiation of Scotch and Irish bank notes under 1 l., was before the House of Commons on the 16th of June 1828, that Mr. Baring, who was supporting the Bill, said this, "If this Bill were not passed it would be merely taking away the right of issue from one set of men to give it to another set; establishments would at once be formed in Scotland to issue notes for circulation in England. Indeed he was acquainted with an opulent person who, if the Bill were not passed, would take that course immediately. What was there to prevent a banker in Newcastle, who was not allowed to issue notes at his own bank, from putting his name into a Scotch firm, and circulating notes in England?" According to your view that would have been illegal?-It might have raised a nice point of law whether it was legal or not, because if the English banker took the notes simply as cash, if he chose to consider them as a valuable commodity, and issued them out to his customers afterwards, I do not know enough of the way in which banking business is carried on to give an opinion as to how far that would have brought him within the prohibitions to which I have referred; but I can

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easily understand its being contended that it would not do so, and that they wanted to make it plain.

225. Do you not think that that indicated that at that time Scotch notes were introduced into England? It is obvious that Scotch notes must have been circulated in England at that time, and I do not think, so long as they circulated like coin from hand to hand, apart from the Act of Parliament to which I have just referred, there would be anything illegal in it.

226. I see that another speaker in that debate, Mr. Hudson Gurney, who opposed the Bill, said, "That it was impossible that the right honourable gentleman could carry such a measure into execution. All that he could do to prevent Scotch notes circulating in England, would be to prohibit Scotch bankers from having agents in England, which would make the business of circulating the notes in England so difficult that it would not be advantageous, and that in no other way could it be stopped"; that gentleman's views must have been different from yours as to the legality of the proceeding?-Very probably. It is quite possible that Mr. Hudson Gurney might have taken a different view; but I think, from looking at the Acts carefully, that it would have been illegal for the Scotch bankers to transact business in London. I am afraid I am giving an unreasonably long exposition to the Committee, but it is impossible to make it very short. Going now to 3 & 4 Will. 4, c. 98, which is the Act of 1833, I say that that Act, like its predecessor in 1826, is also limited to England. I think that it is so, because it again is founded upon and refers back to the Act of 1826. As the one is limited to England, so must the other be limited to England. However, apart from that there are two or three special reasons which seem to show that that Act was limited to England. In the first place, if you look to Section 6 you will find that it declares that Bank of England notes are to be a legal tender except at the Bank of England and at branch banks. A question seems to have arisen afterwards as to whether that section applied to Scotland; and by 8 & 9 Vict. c. 38, s. 15, it was declared that that section did not extend to Scotland. If that section does not extend to Scotland, it shows that the Act was confined to England. With the permission of the Committee I will pass over for the moment the 3rd section of that Act, which is the important one, in order to complete my view of the legislation, by saying a word or two upon the effect of the Bank Charter Act of 1844. After the passing of the Act of 1833 you have this state of things: nobody is permitted in England to issue notes at all except the Bank of England, private banks, and joint stock banks 65 miles from London. The Bank Charter Act declares that no new banks of issue shall be opened in the United Kingdom, and that nobody shall be allowed to issue a larger amount of notes than he then lawfully issued, the quantity being ascertained in a certain prescribed way in 1844. That completes the whole scheme of legislation upon that subject; and that brings me back to Section 3 of 3 & 4 Will. 4, c. 98, and to the question of what its true interpretation is. The marginal note of that section is: "That any company or partnership may carry on busi

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ness of banking in London, or within 65 miles thereof, upon the terms herein mentioned." My view of the section is that it was intended to declare what was the law, viz., that joint stock banks of deposit might be opened in London, although there had been doubts about the legality of it. The Committee is aware that it is stated in Sir Henry Thring's Memorandum that at that time the London and Westminster Bank was either formed or was intended to be formed, and the opinion of the law officers having been taken upon the question whether a joint stock bank of deposit only was permissible under the statutes to which I have referred, they were of opinion that it was; and accordingly this clause was introduced into the Bill. I am now referring to matters which I have not examined for myself, but which are easily verifiable by reference to the Parliamentary debates; but I am told that this Clause 3 was introduced as a substitute for a separate Bill, and was founded upon the opinion of the law officers which I have mentioned. They had intended to have a Bill positively empowering the establishment of joint stock banks of deposit in London upon certain conditions; but upon the strength of this opinion that clause was introduced, and was thrown into its present declaratory form. You will observe that the enacting part of it begins, "Be it therefore declared and enacted;" accordingly it is stated as a matter of law, and as an explanation of the existing law. This, I believe, was objected to by the Bank of England as being a breach of faith on the part of the Government. They justified themselves by reference to the opinion of the law officers, and this clause was passed in those terms. Upon the interpretation of that clause, the whole claim of the Scotch banks in this matter appears to depend, and, if the Committee will allow me, I will read it through, in order that I may explain the interpretation that I put upon it: "And whereas the intention of this Act is, that the Governor and Company of the Bank of England should, during the period stated in this Act (subject, nevertheless, to such redemption as is described in this Act) continue to hold and enjoy all the exclusive privileges of banking given by the said recited Act of the 39th and 40th years of his Majesty King George the Third aforesaid, as regulated by the said recited Act of the seventh year of his late Majesty King George the Fourth, or any prior or subsequent Act or Acts of Parliament, but no other or further exclusive privilege of banking. And whereas doubts have arisen as to the construction of the said Acts, and as to the extent of such exclusive privilege" (those doubts, I apprehend, were the doubts whether a joint stock bank of deposit could be established in London); "and it is expedient that all such doubts should be removed; be it therefore declared and enacted, that any body politic or corporate, or society, or company, or partnership, although consisting of more than six persons, may carry on the trade or business of banking in London, or within 65 miles thereof, provided that such body politic or corporate, or society, or company, or partnership, do not borrow, owe, or take up in England any sum or sums of money on their bills or notes payable on demand, or at any less time than six months from the borrowing thereof, during the continuance of the privileges granted by this Act to the said Governor

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Governor and Company of the Bank of England." Now I am informed that those words "in England" (I am told that it appears from Hansard) were introduced as an amendment, being the last amendment that was made in the Bill, that they were put in at the last moment. I think that when the wording of the Act is attended to it is obvious why they were put in. If you look at the 2nd section it is said that "No banking company of more than six persons is to issue notes payable on demand within London, or 65 miles thereof." If you look at the enacting part of this section, and read it without the words "in England," you will see why the words "in England were put in; "any body politic or corporate, or society, or company, or partnership, although consisting of more than six persons, may carry on the trade or business of banking in London, or within 65 miles thereof, provided that such body politic or corporate, or society, or company, or partnership, do not borrow, owe, or take up any sum or sums of money on their bills or notes payable on demand." If the words "in England are left out, it would be very natural for anybody to contend, "Oh, that only means to restrain us from issuing notes in London or within 65 miles thereof; and the meaning of the two sections is that we, the new banks to be set up, are not to do that which the banks referred to in Section 2 are prohibited from doing, and we are ready to agree to that." When that construction, which certainly was a possible construction, was pointed out, those words, "in England," were put in to prevent it, that is to say, "We do not mean to say that you are not to issue notes within 65 miles of London, but that you are not to issue notes at all in any part of England."

227. You mean that if those words had not been there, it might have been supposed that the restriction was merely applicable to that radius which has just been spoken of, and that it was therefore thought necessary to make it clear on the face of the Act what the real extent of the prohibition was to be?-Quite so.

228. Then why, if they intended to make clear what was the real extent of the prohibition, did they limit it to England, and not say "in any part of the United Kingdom"?-Because the whole applied to England and had nothing to do with any other place.

229. This is a declaratory clause, is it not?— It is a declaratory clause, and that again would be another reason. They are referring, of course, to all the former Acts, and they say, "This is the law; we do not touch the Acts that went before, but we declare that the prohibitions, such as they are, do not prevent a bank of deposit from being established in London; a bank of deposit may be established in London, notwithstanding those Acts, provided that that bank of deposit does not issue notes in any part of England." That is how I read the clause.

230. But would not that declaration apply further than merely to the case of English banks, and would it not seem to imply that it had never been illegal for the Bank of Amsterdam, for instance, to have an establishment as a bank of deposit in London ?-I think not, because that question would depend upon the construction of the former Acts, all of which former Acts are, either expressly or by inference, referred to in

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the earlier part of this Act. If you read the earlier part of Section 3, the preamble of the section expressly declares that the exclusive privilege assured by the earlier Acts shall be maintained, except so far as it is relaxed.

231. But this clause appears to be one which recites specifically the exclusive privileges intended to be given or continued to the Bank of England by the Act of 39 & 40 Geo. 3, as regulated by the Act of 7 Geo. 4; it recites that doubts have arisen as to what was the extent of that exclusive privilege, and then for the purpose of removing those doubts, it declares that there is nothing to prevent any bank carrying on the trade or business of banking in London, provided it is only as a bank of deposit; does not that seem to imply that those exclusive privileges of banking there referred to did not prevent banks of deposit being established in London ?-So long as in other respects they complied with the provision of the Acts.

232. What provisions excluded a bank in Scotland more than a bank in England?-The provisions of the Acts of 1697 and 1707, to which I have already referred.

233. Then you would dispute the construction which some persons have put upon this clause, which is, that the clause was to explain away a mistaken construction which had been put upon the privileges of the Bank of England from the year 1697 downwards ?-No, I think that was its intention; my view of the true construction of the earlier Acts is this: that they gave the Bank of England an exclusive privilege of banking throughout England, and that that privilege was afterwards subject to certain exceptions; but that the privilege which it had as against other English banks was the privilege of being the only bank permitted to carry on the business of issuing notes, and therefore they said, "These Acts do not prevent a bank of deposit from being established in London or in the neighbourhood of London, supposing it to be only a bank of deposit."

234. Reverting to the point to which I called your attention just now, and to those indications in the debates in 1828, of there being some system under which Scotch notes were issued in England by agents; supposing that to have been the case, how would you account for no reference having been made in the legislation which took place to a practice which, according to you was illegal, but which seems to have prevailed. If it prevailed would not some of these Acts have referred to it, and declared it illegal?— I do not think there is evidence that the Scotch Banks before 1827 had agents in London, or in England, for the purpose of issuing their notes. I do not know how that may be. It is obvious enough, I think, from the Acts that Scotch notes, circulated in England in the same way in which a Napoleon might circulate in England, and that was rendered in England illegal by the Act of 1828.

235. The Act of 1828 provided that it should be illegal for any body politic or corporate, &c., to publish, utter, negotiate, or transfer in any part of England, any promissory note for the payment of any sum of money less than 5 l., which should have been made and issued in Scotland or Ireland; do you conceive that that left it legal for persons to utter, negotiate, or trans

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fer notes which had been made and issued for sums above 5 7. ?-It left it as it was before, and unless it was illegal before, it certainly did not make it illegal then.

236. Then, according to your opinion, after the year 1828, and I presume as far on as the year 1844, it was legal to issue Scotch notes of above 5 l. in England?-It was legal to utter, publish, or transfer them; but I do not say that it would have been legal for a bank to issue them. They might pass between man and man. 237. Will you read the material words of the 9 Geo. 4, c. 65?-The offence created by the Act, and subjected to a penalty is this: "That if any body politic or corporate, or person or persons, shall, after the 5th day of April 1829, by any art, devise, or means whatsoever, publish, utter, negotiate, or transfer in any part of England any promissory or other note, draft, engagement, or undertaking in writing, made payable on demand to the bearer thereof, and being negotiable or transferable, for the payment of any sum of money less than five pounds, or on which less than the sum of five pounds shall remain undischarged, which shall have been made. or issued, or shall purport to have been made or issued in Scotland or Ireland, or elsewhere, out of England, wheresoever the same shall, or may be payable." That is the offence.

Mr. Goschen.

238. In fact, it assumes that the note has been issued in Scotland or Ireland, and not in England? That is exactly the distinction.

Chairman.

239. Will you state what has been the general impression made upon your mind by a review of the various Acts that have been passed? It is, that the whole course of legislation treats English and Scotch banking as essentially different things, based upon different principles. In England, the first thing done was to establish the Bank of England, and to give it a monopoly. That was in accordance with the policy under which the East India Company, the South Sea Company, and other great commercial monopolies were established at much about the same time. The notion was, that the issue of bank notes was a profitable monopoly, and that it was a good thing to put that profit into the hands of a great body corporate. As time went on, people came to look upon the matter, under different views of political economy, in a different light, and they considered (whether justly or otherwise, I do not presume to say) that the issue of notes ought not to be made a matter, of profit or of speculation, and that with some regard to vested interests means should be taken to restrain, and, if possible, put a stop to, the issue of private notes. Accord ingly, the Act of 1844 provided that no additional banks of issue should be opened, and that the issue of existing banks should not be extended, and that their right of issue should, under certain events, be forfeited. It also provided very carefully that the Bank of England should derive no profit from the issue of notes. It appears to me that that system is intelligible in itself, and that is the system established in England. The system established in Scotland, appears to have been entirely different; everybody was allowed to issue what notes he thought fit, or at

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least, matters were left to take their course, and that resulted after some changes in the establishment of eleven large banks, all of which were banks of issue, and all of which had the power of issuing notes of any amount; that was not in any way interfered with; it was a system which was popular in Scotland, and although at one time there was an intention of destroying it, it was allowed to exist, and does still exist. It seems to me that the two systems have been put by legislation upon an entirely different and distinct footing. I may add, with respect to the Act of 1833, that it does seem, having regard to the general view of the case, a very unlikely thing that the Legislature should require any English bank of issue which comes to London for any purpose, as a bank of deposit, to give up its issue; and that, on the other hand, Scotch banks of issue should be allowed to come to London without giving up their issue. It does not seem to me that that is a probable intentional state of the law, and for those reasons I think the two systems will rest upon an entirely different footing in the manner which I have stated.

240. Going back again to the point upon which I was asking you some questions a short time ago, your attention may perhaps have been called to some debates which took place in the . year 1826 upon the question of where bank notes should be payable, and especially to a debate in the House of Lords on the 21st of March 1826, when the Marquis of Lansdowne called attention to the subject, and afterwards brought in a Bill upon it; in which debate he stated that he had heard that one bank, as far off as Aberdeen, made its notes payable in London; according to your view, that would have been an illegal transaction at that time, would it not ?-I am not quite prepared to give an answer to that question; it might raise a point of law as to whether that amounted to carrying on the business of banking in London. If it did, I think it would be illegal; if it did not, then it would not be illegal.

Sir John Lubbock.

241. Those notes were not paid by the bank itself in London, I think, but by somebody else on behalf of the bank?-It is very difficult to say. It is comparatively easy to form an opinion as to what the Acts meant to do; but when you come to the question whether ingenious persons might not find means of evading them, it is a very different question indeed.

Mr. Anderson.

242. I thought your fourth proposition stated distinctly that they might make their notes payable in London; and your fourth proposition was one of those which you said was indisputable, was it not?-I said that English banks might, but not that Scotch banks might. The fourth proposition was: Both the private banks and the joint-stock banks above mentioned may have agents in London for the payment of the notes which they issue, and may state upon such notes that they are payable in London, and may draw bills of exchange for whatever amount they please upon agents in London. That refers to private banks in England and joint-stock banks in England upwards of 65 miles from London.

243. Does