Mr. Anderson-continued.

have no advantage, as compared with an ordinary bank, in the issue of its notes.

5739. But in that case there would not be 200 or 300 descriptions of notes in circulation? Obviously, from that point of view, there would be an advantage, but I think that there are many objections to a State issue of notes.

5740. Would the 11. notes circulate among a different class in England from what they circulate among in Scotland and Ireland? They would, beyond doubt, circulate in a lower class in England than the 5 l. notes do. I have no experience of Scotland and Ireland, and therefore I cannot answer you upon that point.

5741. Are there lower classes in England than there are in Ireland and Scotland?-Is the drift of your question whether England is less educated than Scotland?

5742. I understand you to say that the risk of forgery is greater in England than it is in Scotland and Ireland, because the notes would circulate in a lower class of society; is there a lower class of society in England than there is in Scotland or in Ireland ?-I do not know that there is.

Mr. Beckett Denison.

5743. I imagine that the density of population has a good deal to do with the facility of forgery? -I imagine that it has.

Mr. Anderson.

66

density"?

5744. What do you mean by I am afraid I cannot explain density to the honourable gentleman.

5745. Why is it that the 1 7. notes would be more liable to be forged in England than they are in Scotland or in Ireland?-I think that the number of kinds of 11. notes, as I stated, which is contemplated, would be a great difficulty.

5746. But supposing that the number was got quit of by having one uniform State issue, would not that meet your objection?-If there was one uniform State issue, beyond doubt there would be more difficulty in forging it.

5747. Supposing that there were in England 11 issues, as there are in Scotland, do you think that the risk of forgery would be as small as it is in Scotland. I suppose you are aware that there is no such thing as the forgery of 11. notes known in Scotland or in Ireland now ?—I consider that the fact that there are only 11 banks in Scotland must tend very greatly to diminish the number of forgeries. Every cashier of every bank is presumably well acquainted with the notes of every other bank.

5748. Therefore the difficulty about forgery, in your opinion, can be got quit of?-Beyond question it can be diminished.

5749. Then the only other objection is the risk of panic, is it not ?—I do not think that the remarks of the honourable gentleman have entirely removed my doubts with regard to the risk of forgery.

5750. You think that there would still be a risk of forgery?—Yes, I think that there would be a great risk of forgery.

5751. While there is none in Scotland or in Ireland, you think there would be greater risk in England?--I must imagine a 17. note issued in England by all the banks, and if there were 200 forms of plate for the 1 l. note, forgery would be evidently much easier.

Mr. Anderson--continued. 5752. I do not think that it is necessary to contemplate 200 issue, but even on that footing, do you think there would be great risk of forgery?-Even on that footing, I think it would be easier to forge when there were 200 examples, than when there were 11 examples.

5753. I think you gave as another reason the quantity of gold that would be displaced?-I think there would be a very great disadvantage in that.

5754. In what way?-I think it is a great advantage to a country to have a considerable amount of gold circulating in it.

5755. When does that advantage come into play ?-I think that at any period of a foreign drain, a gold circulation is a great advantage.

5756. But that circulation is required for the country itself; therefore how can it help a foreign drain?-It might be economised if the foreign drain were very heavy and very long.

so.

5757. To any material extent?-I should think

5758. Without issuing any substitute to take its place ?-It might be possible to economise the use of gold by the use of cheques, in such an

event.

5759. In that case cheques would take the place of notes?-For the time.

5760. There would be an extra notes issue then to take the place of gold when gold was taken away by a foreign drain ?—I think that the circulation of cheques stands in a totally dif ferent position from the circulation of notes.

5761. I think so too, but that is the substitute which you would propose ?—I did not propose it.

5762. Is it not the fact that this large amount of gold circulating in the country would never come into use to help us in a foreign drain unless we put an end to specie payments?--I hardly think that I can answer that question in any practical way:

5763. Is it not the fact that the gold is required for use in the country itself, and that therefore it cannot be taken out of the country to help a foreign drain, unless you put something in to take its place, or in other words suspend specie payments, and issue unbounded paper?-I do not think that we should be compelled to suspend specie payments under those circumstances.

5764. But is it not only in the event of suspending specie payments and issuing paper, that this gold would be liberated, so that the country could get the benefit of it ?—I think that a portion of it sufficient to arrest a foreign drain might be liberated without suspending specie payments.

5765. The honourable Member for Maidstone asked you if a charge of from 1 s. to 2 s. per cent. on the business of a bank would not be an enormous advantage in competition; and you said that it would be an immense advantage; was your answer given on the understanding that that 1 s. or 2 s. per cent. was over the whole business of the bank?—I think that it is obvious that if one bank is subject to a charge for a portion of its business, or for the whole of its business, and another bank is not subject to such a charge, the bank which is not subject to such a charge is at an advantage as compared with the bank which is subject to such a charge.

5766. Would that apply even if only a small portion

Mr. An lerson-con tinued. portion of its business was affected by the charge? It would depend upon the proportion upon which it applied.

5767. Do you charge commissions on current accounts in your bank?-My bank, which is a private bank, is not in the practice of disclosing its charges. For the first time in our existence, during a period of 100 years, we have made a statement to anyone outside our business (I mean to the Right honourable Gentleman in the Chair) of the state of our deposits; and in that answer I must include every statement respecting my own bank.

5768. You do not wish to say anything about charges?—No; but I will answer questions generally.

5769. You object to securities being asked from the banks for their notes, do you not?-I did not object; I only pointed out the practical difficulties that would arise.

5770. You said that it would require them to deposit securities for a very much larger amount than the profit which they would derive from it, did you not?-I said that it would compel those banks whose actual issue was below their authorised issue to deposit a far larger amount of securities in proportion to their issue than the other banks whose actual issue approached more closely to their authorised issue.

5771. But that is only supposing that security were asked for their whole authorised issue?--I cannot imagine that security could be asked for on any other basis.

5772. Might it not be asked for their actual issue according to returns over a given period?— That might be the case.

5773. Would not that get quit of one part of your objection?-Beyond question it would diminish the difficulty.

5774. Supposing that they were obliged to give returns of their actual circulation once a month, and that once a month that circulation must be kept within the amount of the securities which they have deposited, would you see any objection to that?-English banks of issue at the present time are in the habit of making such returns as you have mentioned.

5775. Would you see any objection to their depositing securities for the notes to that extent. You said that depositing securities to the extent of their actual issue involved forfeiting their right of issue up to their authorised issue. I do not see that that is necessary?—I think that I must have failed to explain myself to the honourable gentleman.

5776. You do not mean that it involved the confiscation of the difference between the actual and the authorised issue?--I meant that it would deprive those banks which are limited at the present time to their actual issue, of the right which they at present possess of issuing up to their authorised issue. Of course my remarks

Mr. Beckett Denison.

apply to those banks which are within their authorised issue.

5777. But does asking them to deposit securities to the extent of their actual issue necessarily take away any part of their right to issue up to the authorised issue?—I do not know that it would, but it might have that tendency.

5778. If it did not have that tendency, would your objection still apply?—I think that the objections of the banks would be less under those circumstances.

5779. Will you state what amount of gold a bank of issue keeps at present against its circulation, in a general way?—I think that it varies entirely in different districts, according to the demand that may be made upon the bank.

5780. What would you consider a fair thing for a bank to keep against its issue?-The proportion varies so much in different districts that it is impossible for me to give answer to that question.

5781. Could an average be arrived at ?-Of course, if a return were obtained from all the banks.

5782. Do you suppose that 25 per cent. would be about the thing?-Some banks to my knowledge hold considerably more than their authorised issue.

5783. Surely that would depend also upon the amount of deposits held at call?-No; the question, as I understand it, applies merely to circulation. I think that it would be absolutely impossible to ascertain this point.

Mr. Anderson.

5784. Do you think that it would be possible to ascertain any general average which a bank of issue would need to keep in addition to what a non-issuing bank would have to keep ?—I think that it would be impossible to discriminate between their liabilities upon deposit and their liabilities upon issue.

5785. Supposing that a non-issuing bank had 2,000,000 l. of deposits, and that a bank of issue had 2,000,000 7. of deposits also, would not the bank of issue have to keep more gold in respect of its issue?—I think it would.

5786. How much, in a general way, do you think it ought to keep?-I can give no statement that could be of any possible use to the honourable Member upon that point.

5787. Supposing that an average can be arrived at by consultation with other bankers, would you have any objection to deposit securities for the remainder; supposing, for instance, that you required to keep gold to the extent of 25 per cent. of your issue, would you have any objection to deposit securities for the other 75 per cent.?-1 think my answer must be that I can give no information upon that point which can be of any service.

Mr. Orr Ewing. 5788. You represent a bank of issue, do you not?—Yes; and, I may add, equally a bank of deposit. We do every class of business.

5789. I suppose that all banks of issue are banks of deposit ?-So far as I know there is no exception whatever.

Our

5790. How many partners are there in your bank? I can hardly tell you off-hand. firm is divided into four head offices, with distinct partnerships in each.

5791. Am I to understand that in your firm there are four distinct branches, with different partners in each branch?-There are some partners who go through the whole, and others who do not go through the whole.

5792. I thought that private banks could not have more than six partners?-That is perfectly true, but you may have different partners in each head office.

5793. Then am I to understand that you have four distinct companies ?-Four distinct partnerships at Norwich, Lynn, Wisbech, and Yarmouth.

5794. Do they all issue?-Each bank issues. Our total issue, as I have already stated, is 261,109 Z.

5795. Should you not more properly be considered a joint stock bank than a private bank? -We are a private bank, but this has always been the case in our firm ever since its commencement.

5796. When you returned to the Government your issue, did you return it as 261,000l.?—No, we returned it at Norwich as 105,519., and for separate sums at the three other offices.

5797. Then are there four different concerns? -There are four different banks, legally.

5798. Does each of those concerns balance its books separately; and do you combine them in any instance into one?-Every bank makes up its accounts separately, and the head office combines them. It is from the head office that we have had the honour to answer the Chancellor of the Exchequer.

5799. And you think that you are quite within you are quite within the law when you represent your four different

Mr. Orr Ewing-continued.

firms, although you are combined as one?-We are only so far combined as one, that there are some partners whose names run through the whole concern.

5800. Can you not give the Committee information as to how many partners you have in each of your concerns?-I am not at present prepared to do so.

5801. Is it so intricate that you could not do it ?-No.

5802. Should I be wrong in saying that you have six partners in each? My impression is that there are six partners in each.

5803. You have given to the Committee voluminous and interesting statistics, but there is one piece of information which you have not given, and that is as to the extent of your deposits, and of the charges which you make to the public for conducting their business?-The information as to our deposits we have, as I stated, given in to the right honourable gentleman in the Chair, who will doubtless communicate the amount to you in the total of the information with which he will supply you. I am exceedingly sorry that it is not in my power to supply you with the information which you desire. It is not the custom of private banks to publish their balance-sheets; if it were, we should have much pleasure in doing so.

5804. Then you decline giving any information to this Committee or to the public as to the rates which you charge for conducting business?

I should have much pleasure in answering you in a general statement, which I hope will meet all your wishes.

5805. You decline to give that information, as regards your individual bank, because you are a private bank?-It is so little the custom of the private banks to give this information that I hesitated to do so when I was asked on Thursday; but if I state that we allow interest on the daily balances of current accounts, at the rate of 1 per cent., and charge our customers on the daily balance brought out in a similar manner at 5 per cent., and that I am convinced that our charges for commission, on the aggregate, do not amount

to

Mr. Orr Ewing-continued.

o one-eighth per cent., and also interest on deposit accounts at rates varying with the value of money, and further that, having very carefully gone through the statement of Scotch charges, which was put in by Mr. Davidson, I am satisfied, from my knowledge of the working of our business, that our charges and allowances to our customers are more favourable than those of the Scotch banks, I hope I have answered your question. 5806. Uuder those circumstances, would you not think it wise that private banks, with the privilege of issue, should, in the interests of the banks themselves, not only give information to this Committee, but should make their transactions public, so as to inspire confidence in them?--I have no hesitation whatever in saying that if the firm I represent were to publish their accounts in the manner of the joint stock banks, it would tend to increase our business; I cannot say to increase the confidence of the public, because I take it that we have that now to the fullest extent; but as it is not the practice of private banks to do it; we have never published such a statement.

5807. I quite believe that you have the confidence of the public; but not speaking of your individual bank, but as a general principle, do you not think that it would be wise for private banks to publish the transactions of the bank, in order that the public may see how they manage their business, and ascertain whether all the private banks are trustworthy or not?-I think that there are nearly 200 private banking firms in England, and the honourable gentleman will excuse me from answering for all of them. Simply as a general principle, I cannot doubt that the more publicity a bank gives its affairs, the greater the business it will do.

5808. Do you consider that the secresy with which private banks conduct their business has been to a certain extent the cause why the circulations of private banks have dropped below their authorised limits?- Not in the slightest degree; I attribute the amount of the circulation of the private banks, as I do that of the circulation of the joint stock banks, to the peculiar circumstances of the districts in which they carry on their business. It has so happened that private banks are more generally found in the agricultural districts of England, where the population has either remained stationary, or at least, speaking generally, has not advanced for the last 30 years. I take it that the altered habits of those districts, the greater number of deposits now received, and the manner in which business is now carried on, has limited the circulation in them. I observe that joint stock banks carrying on business under similar circumstances as to district with private banks, generally stand at pretty much the same proportion of their actual to their authorised issue. If the honourable gentleman will look through the table which I have prepared, I think that, in a general way, he will find that it bears out my statement. Nevertheless, I may mention that a joint stock bank, as it happens, is the lowest but one in the list of proportions of absolute to authorised issue; but, as I mentioned before, no inference can be drawn from the circulation of a bank as to the extension of its deposits. I therefore take it that it is the circumstances of the district, and in no sense any other point, which affects the circulation of each bank.

Mr. Orr Ewing-continued.

5809. You think that it is not from any want of confidence on the part of the public because of the statement of the affairs of the bank not being published?-From no want of confidence whatever.

5810. From the figures which you have put in, it appears to me that you have nothing to fear by publication; you have shown, I think, that your capital and reserves stand at 18 per cent. of your total liabilities?—That return was a general return, including a good many banks; if it had been in my power to have laid a statement of the whole before the Committee, I would have done the same with an equal confidence that it would have shown similar, or nearly similar, facts, to exist over the whole of England.

5811. It was no selection of the banks ?-None whatever it was not a natural selection or an arbitrary selection.

5812. What do you make the total proportion of capital and reserves to liabilities of the Scotch banks?-I find that it is stated to be 15.77 per cent.

5813. In the London joint stock banks what proportion do capital and reserves bear to liabilities? The proportion is not so large as it is in the case of the provincial banks. It appears to me to be rather less than 10 per cent.

A

I am

5814. There has been, I think, some opinion stated by Members of the Committee that the Scotch banks do not conduct their business on such safe principles as the English banks; do you share in that opinion?-I do not share in that opinion. Perhaps the honourable Member will allow me to read a statement made in the speech of Sir Robert Peel on the 5th of June 1845. This is the continuation of a speech which I quoted last Thursday: "The reason why England is able to maintain its system of banking is that England has adopted another course. great country having taken measures to secure a sufficient supply of gold may permit, in a distant part of the empire with a more limited amount of commerce, a different system of banking to prevail with security. But the security of the system which prevails in Scotland rests in the amount of gold in England, and it is this which enables Scotland to dispense with an amount of bullion in proportion to its circulation, which, and not the solvency of the banks, ought to be the foundation of the promissory notes. not surprised that Scotland should wish to be exempt from this; I am not surprised that Ireland should wish the same; and I do not say that it may not be possible, by taking the whole expense of maintaining a gold currency upon this part of the empire, that another system may not succeed in other parts of the empire. But I do say that it is just that the burden should be borne in equal proportions by all parts of the empire, for I believe that that alone constitutes the real foundation of a safe issue of paper. I do not ask from Scotland that it should bear more than its fair share. I know that generally the banks in that country have been conducted in a manner most creditable to all concerned with them. think their system is preferable to that which prevails in this country; but I see no reason why, in the use of an extended issue of promissory notes, the banks, with their immense amount of paid-up capital, should not have a small amount of bona fide gold currency to provide for its future increase." I trust that the honourable Member

I

5815. That speech of Sir Robert Peel was introducing the Act of 1845, was it not?-Yes.

5816. And, therefore, it had reference, had it. not, to the system of banking in Scotland prior to the passing of the Act of 1845, and not to the law as it is now in Scotland, where we are obliged to bear a part of the burden of maintaining the gold currency ?--I quoted this passage in order to be able to quote that sentence which I repeated. The honourable gentleman put to me an inquiry respecting the conduct, as I understood him, of the banks in Scotland; and I thought that it would be more satisfactory to him if I replied in the words of a very great authority.

5817. But that speech was with reference to the system of banking which existed in Scotland prior to the year 1845, was it not?-I believe that no Scotch banker has stated that there has been any alteration in their system in the last 30 years.

5818. Had not that speech special reference to the law which permitted Scotch bankers to issue to an unlimited amount without having any gold to represent it?-I take it that the sentence respecting the conduct of the Scotch business. applied to the business generally, and in no way to the issue of notes.

5819. It had no reference to the issuing of notes upon the basis of gold, had it?-Not that particular sentence, so far as I have ever understood it.

5820. Was not that speech specially for the purpose of advocating the change which was carried out by the Act of 1845? There is no question that it was part of the discussion upon that measure.

5821. It was the reason for making that change, was it not?-I do not know that it was the reason; it gave Sir Robert Peel's feelings about Scotch banking.

5822. Was not the object of the Act of 1845, as introduced by Sir Robert Peel, to insist upon Scotland bearing a portion of the expense of maintaining the gold currency in the country? I believe that Sir Robert Peel's object in introducing the Acts of 1844-45 (which we must view as one for this purpose), was to make the paper currency of this country fluctuate in the same manner as a gold currency; and that was the object of the particular limitation which he placed on the Scotch and Irish banks.

5823. By the Act of 1845, the privilege which the Scotch banks have of issuing notes without a gold basis amounts to 2,700,000l., does it not? -I think that that is the amount of their authorised limit now; it was larger in 1844, as will be in the memory of the honourable gentleman.

5824. The amount which is allowed to be issued in England without a gold basis is 14,000,000 l.?-At present it is 15,000,000 l. for the Bank of England; it has been increased three times; I can give the dates if necessary.

5825. The amount that is permitted to be issued by other banks, joint stock and private, amounted to 8,000,000 ., I think?- No; about 6,000,000 7. at the present time.

Mr. Orr Ewing-continued.

5826. It was 8,000,000 7. in 1844, was it not? It was 8,648,853 l. in 1844, and now it is about 6,500,000 l.

-

5827. If you add the 6,500,000l. to the 15,000,000 l., that brings it up to 21,500,000 1., that the Banks in England are allowed to issue without a gold basis?-Certainly.

5828. Does not that circulation of notes without a gold basis bear a larger proportion to the population than is the case in regard to Scotland? -I do not think that the population only ought to be taken into consideration in such a statement as that. The wealth of the country, and the districts over which that circulation may extend should all be included. The Bank of England note circulates all over the world.

5829. But I should like you to answer my question. Is the amount of issue in England without gold greater than it is in Scotland in proportion to the population of the two countries?—I have never worked that out.

5830. The population of England is about six and a-half times as great as that of Scotland; what proportion does 2,700,000 7. bear to 21,500,000 7.?-The proportion of notes issued without gold is undoubtedly rather larger in England and Wales (which I must include) than in Scotland.

5831. Therefore the remarks of Sir Robert Peel in 1845 could not be made now, because Scotland is absolutely bearing a larger proportion than England in the maintenance of the gold currency, is it not?—I do not exactly follow out that statement, but it appears to be your opinion.

5832. But I should like to get your opinion upon the figures ?-The proportion of the Scotch circulation issued against gold on the 1st January 1874 (taking the particular date at random) was 2,951,000 l., which is rather less than 1 l. a head. We ought to sub-divide, if we have to go into this, as to the average amount held in Scotland against gold.

5833. What is the amount of gold held in Scotland? I think it is about 4,000,000 7.

5834. Is not that above the amount by which the circulation exceeds the authorised issue?Yes, but the honourable Member must bear in mind that that gold has a double debt to pay; it becomes also a part of the assets of the bank. It has been given in evidence by Mr. Fleming, that he would be most reluctant to see a smaller amount of gold held in Scotland, and therefore I do not think that it is quite possible to separate the amount of gold held against the circulation from the amount of gold which the Scotch banks would in prudence feel it necessary to hold if the Act of 1845 had not been passed.

5835. But it more than satisfied the requirements of the Act, did it not?-Slightly, no doubt.

5836. And you will admit, will you not, that gold is not the only kind of security that a bank can have in conducting its business with safety? Certainly not.

5837. You did not intend, I presume, to convey to the Committee that, because of there being about 2 per cent. of difference between the proportion of capital and reserves to total liabilities held by the banks in Scotland and those in England, Scotland conducts its business upon more unsafe principles than England ?—I had no intention whatever, in making that statement to

the