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Mr. Hussey Vivian-continued. posited in the bank, and trading with it probably elsewhere. The fact of the case is, that money is chiefly collected by bankers in country places to be employed in towns, and if I could establish more branches I could benefit the neighbourhoods by giving them banking facilities, and at the same time I could benefit myself by collecting their money and employing it for my own profit.

6812. Do you think that that would be desirable? That is the practice now; that is what we all do, and I should only be extending that business which we are now carrying on; all business is mutual in its benefits; you cannot very long carry on business with a man if he gets nothing by it, however much you can get yourself; it must be a mutual advantage to exist at all.

6813. Do you think that it would be desirable to introduce the Scotch system of unlimited paper issue in order to effect that good?-No, the moment that a law of that kind passes, I should cease to be a banker.

6814. I mean limited only by the gold which they have in their possession ?-If they only issue notes on gold, my only objection to it is, that I do not see what good it would do, and I do not think that it would save much; I was looking the other day, and I found that a quantity of George III. sovereigns are still in circulation. Those must have been circulating for 50 years at all events. Supposing that somebody had held those sovereigns all these years, and circulated notes in the place of them, I do not think that the notes would have cost any less than the sovereigns have lost by wear and tear, because I cannot find any of those sovereigns that have lost more than a shilling's worth of their gold, whereas if a note circulated for 50 years, I take it that it would have been worn out many times, and have been replaced by a new one. I do not know what the cost of notes is; I have heard it said that the Scotch banks have reckoned the notes to cost three-halfpence each; eight three-halfpences is a shilling, so that if in 50 years you have to renew your note seven times, it has cost just as much as one of those George III. sovereigns; the Bank of England notes are said to cost 4 d. each, but whether that is so or not, I do not know.

6815. The public who pay for the note are not gainers by a note circulation, because it costs a man just as much to carry a 5l. note in his pocket as to carry five sovereigns, does it not? Yes; when you get to large quantities of gold, it is much more convenient to have notes. In fact, I do not know upon what ground you can justify the issue of notes at all, except that they are more portable than the gold; as to any advantage in any other respect, I do not think it is worth having.

6816. When I characterised the Scotch issue as unlimited, I meant that it was simply limited by the gold which they happened at that moment to possess, although that gold was liable, as a general asset, to all their liabilities; you have a certain amount of gold, I presume, always in your till, and the Scotch issue notes against their gold?—The bank which I have to do with is obliged to keep more gold than most banks, because we have to pay away weekly such an enormous sum for wages; the business of this bank is chiefly with the manufacturing interests in the districts where we are, and we have to find

Mr. T. Cooke.

Mr. Hussey Vivian-continued. them the money for wages, and that necessitates a very considerable stock of gold; I think that we pay away about 250,000 1. a-week in sovereigns, half- 5 July 1875. sovereigns, and silver. There is one thing that I take every opportunity of mentioning, and I should be glad if the Committee would allow me to mention it here; half sovereigns have become almost a necessary of life; they enter into the wages of almost every individual that works in a cotton factory. The Bank of England is not bound to pay half sovereigns, and we get them. from the Bank of England entirely by favour. The half sovereigns cost the Mint as much to coin as the whole sovereigns; obviously the Mint would rather not coin them, and if the Bank of England likes to be on good terms with everybody connected with it, as all bankers do, it does not press the Mint to coin half sovereigns; and there is this further reason, that they take a great deal more counting than sovereigns do, and the Bank of England likes to save itself as much trouble of that kind as possible.

Mr. Orr Ewing.

6817. Do they not weigh them?—Yes, but they have to count a great many, and it is a deal more trouble for a bank clerk, if he has to work all the day long with half sovereigns than if he works with sovereigns; and you require more clerks to count if you have nothing but half sovereigns.

Mr. Hussey Vivian.

6818. Have you, in your great experience of providing funds for the payment of wages, found any want of a local note circulation?—No, not at all; we have often found a want of silver, and of half sovereigns, but of nothing else.

6819. The wages are always paid in gold and silver, and bronze coinage, are they not?-I think that they are now almost universally. They were once upon a time paid in lumps; for instance, the wages of all the people who worked in one room were added up together in gangs, and some of the work people received the money for the whole, and received it in a shape in which it was not available; so that they had to carry it to some shop or public-house to get it split up; that has got into disuse. I may mention a fact which is historical; that in the early days of the first Sir Robert Peel he used to pay the wages for whole rooms together in his print works, by drawing a bill upon his establishment in London, and he used to hand that to the workpeople, and they were thankful to get it in those days in that shape.

6820. That was a very extended paper currency? I think that now most manufacturers who have due regard for their workpeople pay each workman separately, so as to keep them out of the shops and the public-houses, where they would probably be taken advantage of, if they had to ask for the favour of change.

6821. The Scotch system does not render it necessary that the banker should hold the gold for more than one day, the day upon which it certifies; is not that so?-I believe so.

We

6822. That must be a considerable benefit to them?-Yes; it would be a benefit to me. are obliged to hold a stock of one week's gold to the amount of 250,000 l. From year's end to year's end we have about 250,000 7. of gold in our tills waiting for the next week's demand. If

Mr.

T. Cooke.

5 July 1875.

Mr. Hussey Vivian-continued.

I could issue 250,000 l. of notes upon that, I should get interest upon those notes, and so save the loss of interest upon that stock of gold.

6823. Should you think that that would be a good or wholesome system for the country? The issue on gold would be right enough, but I do not wish every bank to have the opportunity of issuing, even on gold, because it would involve some kind of inspection on the part of the Government as to whether the gold which professed to be there was there. At present we rely upon the return made by the various banks that issue, but I should not like to rely upon the return of everybody; and, therefore, there would have to be some kind of inspection.

6824. You might have the gold in stock on the Friday, and it might be all gone on the Saturday night, might it not?—Yes, that is quite possible under certain circumstances.

6825. Do you consider that there is anything special in the Scotch system of banking beyond the power to issue notes ?-No, I think not; I believe that the system of our banking is something like the Scotch system; we were advised by those who were experienced in Scotch banking when our bank was established (long before my day as a banker, but I know it to be a fact), and almost all our first officers were Scotchmen, but we got into sad trouble; we almost ceased to exist in 1839 and in 1840, when so many banks broke in Manchester, entirely through inexperience in the management of the banking business; joint stock banks were quite a novelty then.

6826. Were you under the management of Scotchmen at that time?--Yes, under Scotchmen, or those who have professed to have learned from them; they are very clever men in the management of banking, but they are not quite infallible, and of course we did not quite get the pick of the Scotch bankers when we went to Scotland to get men to manage for us.

6827. We have been told that there is a great difference between English banking and Scotch banking; can you define any other diffe rencebetween the Scotch and English systems, except the issue of notes ?—I do not think that there is any difference. The Scotch banks get paid in meal if they do not get paid in malt; they charge no commission as we do in England, but they charge something equivalent to it, otherwise they could not make 15 per cent. profit, as they do.

6828. What is the proportion of your investments in bullion and first-class securities, in proportion to your liabilities?-In the year 1874, the paid-up capital was 900,000 7., and the reserve profits not divided amongst the shareholders, had accumulated to 600,000 7., or thereabouts. Now, the proportion that those two items, the paid-up capital and the reserve fund, bore to the deposits in the year 1874 was 11.99 per cent., that is 12 per cent.

6829. My question was as to the cash held, and investments in first-class securities?-The whole of our paid-up capital and reserve fund is invested in Consols, except 100,000 7., which is invested in the debenture bonds of the Corpora

tion of Manchester.

6830. Your next item is cash with London bankers and brokers at call and short notice; that is, I think, 2,860,000 7. ?-It was at Christmas.

6831. These two together, I think, are about 34 per cent., as compared with your liabilities?

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6833. You have no banks of issue at Manchester, have you ?—No, we have had none since 1844. Most of the joint stock banks issued up to that time, but they gave up their issues.

6834. Do you imagine that the absence of any bank with the right of local issue is any inconvenience to the neighbourhood?--Not at all.

6835. Do you suppose that in a country neighbourhood there is any great advantage in a local issue, which could not be obtained otherwise?We have a great many country banks in what may be called agricultural districts, and I do not desire the power of issue there; we get on well enough without it; and inasmuch as I think we are better as we are, I do not wish for it, whatever profit might attend it.

6836. It has been stated to the Committee by one of the witnesses, Mr. Seebohm, that a great advantage arose from the local issues, in respect of the facilities which they gave to the small transactions which formed the beginnings of trade; and he explained it by saying that persons who did not keep banking accounts received cheques upon issuing banks; that they then brought those cheques to the issuing bankers, and that the issuing banker gave his notes in exchange without charge; and that this was of very great advantage to persons carrying on small business, but an advantage which the bankers would not have been able to afford if they had not had their own notes to issue. Does that appear to you to be a sound account of the state of things in those parts of the country with which you are acquainted?-If those people never carry those people never carry the money that they have received into any other neighbourhood, it may be an advantage to them to have got their cheques paid without any special charge for paying them, the banker being content with the profit which he would get upon the issue of notes. But supposing that the people went into some other neighbourhood and wanted to use the notes, they might find that they were not very palateable, and that in order to get somebody to take them in a purchase they might have something to pay.

6837. If cheques are drawn upon you and given to persons who had no account with you, you cash those cheques without charge, do you not? Of course we charge our customers for our services. The cheque is an order to us to perform a duty for the customer, and we charge him; we do not charge the man to whom the duty is to be done.

6838. But you do not charge your customer upon

Chairman-continued.

upon every cheque that he draws, do you?—Yes, in all those accounts where there is no commutation of the commission, we charge a commission upon everything that is withdrawn from the account. We do not charge any commission upon what is paid into the banking account; we merely charge a commission upon what we pay

out.

6839. Is that a common system with bankers? -It is the system throughout, I believe.

Mr. Backhouse.

6840. Where interest is allowed upon the account? I take it that it is the system almost throughout England to allow interest on deposits.

6841. My suggestion was that where interest is allowed on a current account a charge is made for commissions, that is so, is it not?-Yes.

6842. And when no interest is allowed on a current account you make no charge for commission? -Sometimes, but rarely, a deposit account drifts into what we call a current account. The man may not have used any of the money, but may have added to the hoard for several years, and then he begins to draw amounts out, and, of course, a few cheques of that kind we should generally pay no attention to; but if he begins to draw numerous cheques upon this account, then we take his money out of the deposit account and put it into a current account, and charge him commission, because we are doing costly work.

Sir John Lubbock.

6843. Do you not usually charge your commission, not upon each separate cheque, but halfyearly?---Half-yearly.

Chairman.

6844. That is to say, you take the balance of the transaction?-We charge a commission upon everything that has been withdrawn from the bank. If the money is withdrawn and paid back again, and again withdrawn, we charge for our services in paying it out commission each time.

6845. I suppose that this system is also pursued by issuing bankers, is it not?-I believe

So.

6846. They, I suppose, would charge in the same way for any cheques that were drawn upon them, whether they paid them in their own notes or otherwise?-Yes, in ordinary cases; but I understood that Mr. Seebohm said that this power of issue was an advantage because it enabled people who had no account with a bank to get cheques of other banks cashed without any charge to them.

6847. As Mr. Seebohm refers to Manchester, you may, perhaps, be able to confirm or explain his statement. He speaks of various classes of persons, and he says this: "Market gardeners are another class in my own district who send their produce to distant markets, even as far as Manchester, receiving cheques on Manchester banks in payment, which cheques are brought to the bank and cashed without charge for them, though they are not customers." Do you suppose that he means that those cheques are drawn by persons who have accounts at the Manchester banks? Yes, they are crossed cheques, which in all probability people remit in the usual

way.

Chairman-continued.

6848. Those cheques having been drawn by the customer of the Manchester bank, is the customer ultimately charged a commission upon them? The customer of the Manchester bank who draws the cheque is charged a commission after the cheque is paid.

6849. But what Mr. Seebohm says is, that the small tradesman, a market gardener, or whoever he may be, who receives this cheque, has an advantage in getting it cashed without charge; that is not confined apparently to the case of banks which issue their own notes, because you do it who do not issue your own notes?-No, we should charge in such cases; if such holder of a cheque on our bank as Mr. Seebohm spoke of were able to present it at our bank he would get it cashed for nothing; but he takes it to Mr. Seebohm's bank, which is not bound to pay it, and they at once give him their promissory notes, not the money, for it without charge; if they had to pay him in Bank of England notes or gold they could not afford to do that business for nothing; it is only because they are able to pay him in their own notes that they can do him that service without charging for it.

6850. Mr. Seebohm means that they are brought to the bank at Hitchin and cashed there without charge, and that the bank at Hitchin would not be able to do that without charge unless it were an issuing bank ?--That I take to be the meaning, and I have no doubt that that it is so.

6851. Putting that construction upon it, which is probable; would you say that the existence of a bank, with a right of issue, was an advantage to trade in those parts of the country where there are a good many small transactions?— Yes, in that way.

6852. Should you think it a public inconvenience then that the right of issue should be withdrawn from the provincial banks ?-Perhaps it might be practically; a small portion of the public might be inconvenienced, but I think that the public at large would be gainers by a better system.

6853. Should you be of opinion that there were less conveniences given in those parts of the country with which you are acquainted through your branches, and in which there are no issuing banks, than in those in which there were issuing banks?—I take it that people in my part of the country are very well satisfied with the advantages which they get from bankers, or there would very soon be some complaint, and I never hear of any complaints of the absence of local notes; a great many of those people would be very glad indeed to avoid our charge for commission under similar circumstances to those spoken to by Mr. Seebohm, but I think they have the good sense to know that as a part of the community at large they are better off without the issue of notes.

6854. Speaking for those parts of the country with which you are acquainted, you would not think that the abolition of provincial issues would be a matter of serious inconvenience to them?I should think not serious.

6855. What is your opinion as to the advantages or possibilities of an issue upon the deposit of securities?-The promissory notes are a promise to pay certain metallic money, and securities are not the same thing. A man might hold very good securities, which might be worth

Mr.
T. Cooke.

5 July 1875.

Mr. T. Cooke.

Chairman-continued.

many thousands of pounds, but if another man came and required him to cash a 57. note, which 5 July 1875. he had promised to cash in sovereigns on demand, his securities would not avail him until he had gone through the process of realising them, and so he would fail in his promise to pay on demand.

6856. At the present time there are various banks in England with an authorised issue of about 6,500,000l., which issue is against nothing; should you consider it an advantage, or otherwise, if those banks were required to deposit in the hands of the Government a certain amount of securities to specially secure the 6,500,0007. of issue to which they are entitled ?-It would be an undoubted advantage. It would make their issues more certain ultimately to be paid, under any circumstances that might happen; but the amounts which most of the banks are empowered to issue are now very small in proportion to the business which they carry on, for since 1844, when the issues were fixed, the business of banks, I take it, has prodigiously in

Chairman-continued.

creased; I know of none in which the business has not greatly increased, and therefore their issues are a very small portion of their liabilities. I think that most of the issuing banks are conducted with very great prudence, and that it would be really an unnecessary precaution at the present time, their issues being so strictly limited, to require any security from them; but at the same time I am bound to admit that their issues would be ultimately made safer by it, and that the principle of their being allowed to issue is wrong.

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Sir John Lubbock.

6860. You are a Private Banker in London, are you not?—I am.

6861. A partner in the house of Smith, Payne & Co. ?-Yes.

6862. You attend the committee of London bankers as deputy chairman of that body, do you not?-I do.

6863. You have taken particular interest, have you not, in the question which is now before this Committee?--I have; and I have been from the first a member of the committee appointed by the London and Provincial bankers, private and joint stock, issuing and non-issuing, to watch the progress of the Bill introduced by the Right honourable gentleman the Member for the City of London; that committee consists practically of the banking interest in England; some 555 separate banks and branches, I think, being included and represented therein.

6864. Do they all agree in supporting the general policy of Mr. Goschen's Bill? They

do.

6865. Do you consider that the Scotch banks have, in consequence of their legislative privileges, a monopoly of banking in Scotland?Certainly.

6866. Do you think that it would be possible for an English bank, or for any new bank to establish itself in Scotland, under existing circumstances?-It has been proved not to be so, by the failure of one or two banks.

6867. It would not be possible for us even to have an agency in Scotland for the collection of bills and cheques, would it ?-It would not.

6868. Of course an agency in one part of Scotland would not be sufficient; it would require establishments all over the country?—You would be compelled to have agencies as widely spread as the branches of Scotch banks.

6869. And you consider that if we are pre⚫cluded from going into Scotland, there ought to be strong reasons alleged before those who have a monopoly of Scotch business are allowed to extend themselves beyond the area of that monopoly? The Committee of English bankers is very strongly of that opinion.

Sir John Lubbock-continued. 6870. Any extension of monopoly you consider to be bad in the long run, in the public interest?-Certainly.

6871. Do you not think that the establishment of branches of Scotch banks in England would inevitably tend to a circulation of Scotch bank notes in this country?- Most assuredly. In the north the circulation of Scotch bank notes is very rapidly increasing in some places, and notably where any Scotch bank itself is placed. I have one or two returns before me which will afford some information upon that point. At Berwick the number of notes passed through Messrs. Woods' bank is 3,130 7. a week; through Messrs. Lambton's about 600.; and through other banks about 300 l., making a total of about 4,000 7. a week; and the circulation is largest where there is a Scotch bank already established.

6872. What is the average amount of Scotch bank notes taken by Messrs. Woods & Co., at their branches where there is no Scotch bank?Only 70 7. as against 3,130 7. where there is a Scotch bank.

6873. We are able in England to collect cheques and bills payable in any part of England free of any commission, are we not?-We are through the county clearing.

6874. No English country bank makes any charge for paying cheques or bills?—None what

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Mr. Smith.

8 July 1875.

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