Mr. Goschen.

699. Will you show the Committee the words? -The whole of this is a modification of the Bank of England Charter, and, therefore, it would necessarily have nothing to do with the other words.

700. Then you must maintain that the Bank Charter Act would have allowed an Irish or Scotch bank of issue to come to London ?Certainly, except that they could not have been banks of issue in England.

701. Then you maintain that even before this Act the Irish and Scotch banks had privileges as regards coming to London, which the English bankers had not got?-They could have come to London and been banks of deposit and discount, although consisting of more than six partners.

702. While the English banks could not do so? Yes, all the banks in England could do it also, provided they were not banks of issue.

703. At present you admit that there is a distinction between banks of issue in England, beyond the 65 miles radius, and the Irish banks; your case is that the Irish banks could come to London, but that an English bank of issue could not come to London ?-Because in England the joint stock banks have no power to be banks of issue at all, except under the Act of 7 Geo. 4.

704. Then have they not the same common law rights of banking in England, as they have in Scotland or in Ireland-Certainly, except that the 7 Geo. 4 forbade the banks established under it coming to London.

705. Then from what date did Parliament begin to legislate permitting the Scotch and Irish banks to come to London, and excluding the English banks?-I apprehend that they have never interfered with the question, except as explained in my last answer.

706. But the English banks of issue are excluded from coming to London; for instance, the National Provincial Bank could not come to London, and your bank can; from what date do you establish that difference between the two?-The Bank of England Charter forbade the issue of notes in any part of England by any company of more than six persons, and the Act of 7 Geo. 4, enabled banks, exceeding six persons, to issue, provided they did not do so within 65 miles of London.

707. But where is the Act preventing an English bank of issue from being a bank of deposit in London, in the same way as an Irish bank of issue may be a bank of deposit in London? There never was any law upon that point that I know of, except with reference to the banks established under 7 Geo. 4.

708. Then according to that they may come now ?-Certainly; they can do it now, when they have given up their issue authorised by the Act of 7 Geo. 4. .

709. You have an Irish bank which issues notes, and you have an English bank which issues notes; they both wish to establish a branch for deposits and discount in London; under what statute, and at what date did it become lawful for an Irish bank of issue to have a deposit branch in London, and become unlawful for an English bank of issue to have a deposit branch in London ?-It became illegal in this way, that the statute of 7 Geo. 4, told them, "If you wish to avail yourselves of the privilege of being a bank of issue in England, the condition upon

Mr. Goschen-continued. which you are to be a bank of issue in England is that you shall not have a bank in London," but that only applies to England, of course.

710. Then your contention is that this Act of 1826 took away the privilege from the English banks of being banks of deposit in London ?Yes, because they could not be banks of issue, except on that condition.

711. Then your answer is that in the Act of 1826 Parliament legislated against the English banks, while continuing the privilege of the Irish and Scotch banks?-That was no privilege legislated against by that Act; it was giving a privilege to all the world, if you please, to establish a bank of issue in England, 65 miles from London, provided they did not have a house in London.

712. But from that time forward a bank of issue in England could not have a bank of deposit in London ?-They could not have been a bank of issue under the 7 Geo. 4.

713. And a bank of issue in Ireland could be? -But they could not have been a bank of issue at all in England under that Act, except under the same condition.

Mr. Mundella.

714. You contend, I suppose, that you could under that Act have come to England and have been a bank of issue in England within 65 miles of London, but that in that case you could not have established a bank in London; is not that so?-We should not have wanted this Act at all to be a bank of deposit in London. We could not have been a bank of issue at any time within the 65 miles, but we could beyond the distance, and in the latter case we could not have a bank in London.

715. But supposing that you had established yourselves 65 miles from London, you could under that Act have established yourselves as a bank of issue within 65 miles of London, could you not?-We could have done so at a distance not less than the 65 miles.

716. If you had come to London, you would have had to give up the English portion of the issue, but not the Irish ?-Certainly.

Mr. Goschen.

717. So that it is, in fact, legislating against the English issues, and giving the Irish issues a privilege which the English do not possess?I do not quite see that.

718. To go back to the speech of Sir John Campbell, the concluding words are these: "The Committee would observe that the words constituting the monopoly of the Bank of England were clearly recognised. Under this declaration any bank of deposit might be established in the metropolis or within 65 miles of it, so that it was not a bank of issue." You stated that you concurred entirely in this statement?-The only point that I do not assent to is that of the 65 miles. My belief is that you could have done it all over England.

719. The words of Sir John Campbell, which the honourable Member says he did not read, are these: "Under this declaration any bank of deposit might be established in the metropolis, or within 65 miles of it, so that it was not a bank of issue." Do you observe that in this statement of Sir John Campbell's he mistook the difference between a bank of issue in England and a bank

722. Do you think that when he was making this speech he was considering the point whether the Irish and Scotch banks might come to London?-It would not bear upon the subject at all.

723. Then the whole of this paragraph that has been read to you is without any bearing upon the admission of Scotch and Irish banks to London?-I will not say that it is without any bearing, because when they come to London they come within the same category.

724. Then they are to drop their issue, in other words, if they come within that category?-Certainly not; because the issue that they drop is the issue that was given to parties under 7 Geo. 4. Now the issues in Scotland and the issues in Ireland are not at all under that Act.

725. That is your reasoning upon the matter? That is positive law. The whole right of issue to which that Act applies is the issue authorised by that Act.

726. But you are aware that that is not held by everybody?-I am very much surprised that it should be doubted.

727. You are surprised that there should be any doubt that a bank in Cumberland coming to London must give up its issue, and that a bank coming from Scotland to London need not give up

its issue?-Not at all; because the United Kingdom consists of England, Scotland, and Ireland, and the Bank of England is a private establishment incorporated as a bank in England only; you may call it public, if you please, because it has public advantages; and if the Bank of England do not object, who is there to object? It appears to me that the Bank of England alone can effectually assert its own privileges, unless and except there may be penalties recoverable by an informer.

728. I do not understand your allusion?--I mean that if I had no right, and nobody has any right out of the country to do so. Surely, the Bank of England charter is simply a private charter of their own, and they are not obliged, that I know of, to stand up for their privileges. They may do as they like, and nobody else has any right to question it.

729. But how can that affect the law?—That is the law. I do not know that I, or any other person, could enforce the privileges of the Bank of England; the Bank of England could do it, of

Mr. Hussey Vivian-continued.

it not?-It is only an enabling Act to them to form themselves as a private establishment.

732. Surely it is part of the statute law?-It is part of the statute law, but it is not one that you can enforce; it can only be enforced by the Bank of England itself. They are established by their Act of Parliament the same as the East India Company were established, or any other privileged corporation, I suppose.

Mr. Goschen.

733. Do you mean to say that unless the Bank of England set itself in motion the banks of issue could do as they pleased with regard to the statutes under which they are acting?-No, I do not say that; because supposing that an action were brought between two individuals, and one of them pleaded that the transaction was illegal, because it was contrary to the charter of the Bank of England, I daresay it would be a good plea, because it would be as against a duly constituted body; but I do not know that anybody is interested but the Bank of England.

Chairman.

734. You have stated, I think, that your attention had not been drawn to the Act of 8 & 9 Will. 3, but that it had been drawn to the statute of Anne?-I stated that the statute of Anne was within my recollection more particularly.

735. On the last meeting of the Committee I addressed some questions (Nos. 210, 211, 212, and 213) to Mr. Fitzjames Stephen; his answers to those questions show, I think, that his opinion upon these points is somewhat at variance with your own, and therefore I would ask your opinion upon the subject; from those questions and answers you will perceive that Mr. Fitzjames Stephen considered that the operation of the Act of William the Third precluded any foreign bank, and therefore any bank of Scotland or Ireland, from transacting business, even for deposit purposes, in London or England; do you assent to or dissent from that opinion?-I entirely dissent from it.

736. Could you give the Committee any reason against it? There is nothing in the Bank of England Charter that interferes with it. The express words of the Act of William the Third are," No other bank, or any other corporation, society, fellowship, company, or constitution in the nature of a bank, shall be erected or established, permitted, suffered, countenanced, or allowed by Act of Parliament within this kingdom;" what does that mean? Does it mean that Parliament have pledged themselves that they will not give to any other company privileges to the prejudice of the Bank of England?

737. Then think the stayou mean that you tute of William the Third was a nonsensical statute? I think it is very,oddly worded; I quite agree with Mr. Fitzjames Stephen when he says that the statute of Anne explains more fully the statute of William; but then, when he goes on to say that it shows, "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," I do not go with him; but I have no doubt that it was to explain more fully the statute of William, and the meaning of it was that you were not to stake your credit upon bill or note. 738. Is

Chairman-continued.

738. Is it your impression that the statute of Anne was intended to be more liberal or more restrictive than the statute of William the Third? I do not know that it is either one or the other. My impression is that it is only explanatory; that it explains that the charter was only to extend to prevent persons staking their credit on bill or note.

739. That is to say, that it was to make it clear that persons who might have been supposed to have been prevented doing business by the Act of William were not to be prevented doing that business?-Whatever the intention was, that appears to be the operation of it.

740. Of course the statute of Anne is intended to explain the previous statute? It looks like it.

741. And it must have been passed either because the previous statute was found to be too severely restrictive, and it was desirable to qualify it, or because it was found not to be restrictive enough, and it was desirable to make it clearer and more restrictive ?-It was not sufficiently intelligible if it meant to give any exclusive privilege.

742. Are you aware that the reason for the passing of that statute of Anne was this: that in the year 1704, a few years after the passing of the statute of William, a charter of incorporation was granted to certain mining adventurers of England, and that that corporation thereupon proceeded to erect themselves into a money bank of issue, and to issue its own sealed bills, and cash notes in the same manner as the Bank of England?-I do not remember whether that was

so or not.

743. If that was so, we must consider, must we not, that the statute of Anne was intended to be more restrictive than the statute of William the Third?-Probably so.

744. If that was so, and if Mr. Fitzjames Stephen's argument is a correct one, foreign banks and Scotch banks could not have come to England under the law as it was left by the statute of Anne ?—I do not follow the question. Mr. Fitzjames Stephen says that no corporation in the nature of a bank shall do that part of the business of a bank, that is to say, shall issue notes. That, of course, I agree to; of course they cannot issue notes. I do not know what he may have meant, but when he says, "which carried on banking business in connection with other transactions," they could not be banks of issue; that was all.

Mr. Goschen.

745. You can scarcely follow the argument, I think? No. When Mr. Fitzjames Stephen is asked whether there is anything in the statute of William which prohibits a foreign bank from having a branch for deposit purposes only in London, he says, "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.'" I do not agree with his argument; I may not understand him, but assuming he means simply to assert that no foreign bank could be a bank of deposit in London, I differ with him.

Sir John Lubbock.

746. May I call your attention once more, for a moment, to Sir John Campbell's opinion,

Mr. Tatham.

Sir John Lubbock--continued. in the memorandum which has just been read, that under the Act of 1833 a bank of deposit 3 May 1875 might be established in the metropolis, or within 65 miles of it, so that it was not a bank of issue; I think I understood you to say that, in your opinion, the case of Scotch and Irish banks was not contemplated in the discussions which took place on that Act?-I should think it could not have been.

747. May I call your attention to the fact, that Sir Robert Peel, in discussing the Act, used these words: "If we introduced the Scotch system into England, there would not be security for our paper circulation even for a month;" and that Lord Althorpe, in replying to him, said: "The Scotch system owed its safety to the bullion kept in England. He concurred with the right honourable gentleman" (that is, with Sir R. Peel), "that if the Scotch system were spread into England, it would place the country in great danger;" surely, it is obvious, therefore, that neither Sir Robert Peel nor Lord Althorpe considered that, in introducing this Bill, they were supporting a measure which would have the effect of introducing Scotch banking into England?-That was only expressing an opinion upon the mode of conducting business in Scotland.

748. Therefore, banks of issue were. limited to English banks of issue, but included also Scotch banks of issue?--No, it did not at all; that was only an argument, as I read it, for the system under discussion, as appears to me, was the English system alone.

749. But their statement was that if they introduced the Scotch system into England, it would place the country in great jeopardy; and surely it is a fair inference to draw from that, that they did not consider that they were introducing the Scotch system into England?—I do not know how that bears upon the point at all. Sir John Campbell, as a lawyer, would not consider that that bore at all upon his opinion. That might have been a question of policy, but it would not affect his view at all.

750. I understood you to argue that under the common law Irish banks and Scotch banks could come to London if they were precluded by the Act of William the Third; but the Act of 1826 in that case it seems to me would be a restrictive Act, because that Act says: "That from and after the passing of this Act, it shall and may be lawful for any bodies politic or corporate, erected for the purposes of banking, although such persons so united or carrying on business together shall consist of more than six in number, to carry on the trade or business of bankers in England, and for such bodies politic or corporate, or such persons so united as aforesaid, to make and issue their bills or notes at any place or places in England exceeding the distance of 65 miles from London, payable on demand, or otherwise at some place or places specified upon such bills or notes exceeding the distance of 65 miles from London and not elsewhere, and to borrow, owe, or take up any sum or sums of money on their bills or notes: Provided always, that such corporations or persons carrying on such trade or business of bankers shall not have any house of business or establishment as bankers in London, or at any place or places not exceeding the distance of 65 miles from London." Therefore, surely under this Act no right could be claimed to establish

Mr. Tatham.

Sir John Lubbock-continued. banking business in London?-There was no 3 May 1875, occasion for the right; that is not the object of this Act; this is only a condition; they could not be banks of issue anywhere in England. This Act says: "You may be a bank of issue in England, provided you do not have your house of business in London, or within 65 miles of London." It is an enabling statute; it is limiting the restrictions of the Bank of England charter, that is all; but it does not prevent their coming to London as banks of deposit and discount from any part of the world, either in England or elsewhere. It does not affect the law at all on that point.

751. And you would consider that the words "in England" cover the whole context?-The whole object and subject is confined to England

752. And therefore it would not apply to Scotland or Ireland?-Certainly not. This is an enabling statute to enable persons to establish banks of issue upon certain conditions.

753. And it applies only to England, I understood you to say?-It enables anybody to come, but if they establish a bank in England, they become an English bank.

754. I understood you to say just now, that you considered that the words "in England covered the whole context?-They do, for this reason, because the Bank of England charter applied to England only, and those words are consistent with that. The Bank of England charter was that there should not be banking companies of issue of more than six partners in England, and this Act says that they may carry it on in England on certain conditions.

755. But the effect of this clause is entirely confined to England ?-No doubt that is so.

Mr. Mulholland.

756. With reference to the last clause in Sir John Campbell's memorandum, it has been suggested to you that the words, "banks of issue there" are ambiguous; but, if you look at it, you will find that that sentence is a mere summary of the clause in the Act of Parliament; and upon referring to the clause in the Act of Parliament, you will see that a bank of issue is defined to be a bank of issue in England?—It must be so.

757. So that although Sir John Campbell left out the words" in England" in his speech, yet in the Act of Parliament the words the Act of Parliament the words "in England are actually added?-You have adverted to the Statute of Anne; but have you also adverted to the Statute of George 3? That is the Act which is recited in the Statute of George 4.

Sir John Lubbock.

758. Section 7 of the Act of 1833, introduces a modification of the usury laws, does it not?Yes, I apprehend so.

759. I think it is expressly provided in that and Ireland ?—It is. section itself, that it shall apply to Great Britain

760. Does not the reference to Great Britain

and Ireland in that particular clause lead to the inference that the rest of the Act was not intended to apply to Great Britain and Ireland, because if the whole Act applied to Great Britain and Ireland, where was the need of referring to them in that particular?--I should think that is so. The Act is intituled An Act for giving to the Governor and Company of the Bank of England certain privileges for a limited period under certain conditions. I do not know why that section should have been put into the Act, instead of being the subject of a separate Act.

761. WILL you mention to the Committee with what bank you are connected?—I am connected with the Bank of Scotland, as its Trea

surer.

762. Do you appear here to-day with any authority to speak for the Scotch banks generally?—I have with me an extract from a minute of the banks, if I may be allowed to read it: "Extract from the minute of a meeting of the managers of the Scotch banks, held at the Bank of Scotland, Edinburgh, on 30th April 1875. A Select Committee of the House of Commons having been appointed to consider and report upon the restrictions imposed, and privileges conferred by law on bankers authorised to make and issue notes in England, Scotland, and Ireland respectively, the meeting resolved: That it is the duty of the Scotch banks to afford the Committee every information on the subject to be investigated, and to render all the assistance in their power to facilitate the inquiry. That with this view Messrs. Davidson, Fleming, and Gairdner be requested to attend the Committee, and give evidence, if the Committee shall so desire. It being impossible for this meeting to anticipate the various matters on which questions may be put to, and opinions be expressed by, witness, it will be understood that such opinions are given on the individual responsibility of the gentlemen who may be examined, but as there are certain general questions relating to the Scotch banking system on which the managers are agreed, it is expedient to indicate these points now, in order to their being submitted to the Committee. Till 1844, the system of banking in Scotland, including the issue of notes, was one of perfect freedom, and was of great advantage to the country. All of the eleven banks now existing were established under that system. The prohibition of new banks of issue by the Act of 1844, and the restrictions imposed on the right of issue by the Act of 1845, were not proposed or sought by the Scotch banks. The people of Scotland have unbounded confidence in the currency and banking system of the country. After

Chairman-continued.

30 years' experience of the working of these Acts in Scotland, the managers are agreed that the result, both as regards the public and the banks, has been, on the whole, satisfactory. The abolition of the existing system of currency would most seriously interfere with the whole banking system of the country. The right of issue enjoyed by the Scotch banks which grew out of a free system, and was not conferred as a special privilege, is a very valuable one, both to the banks and to the country. Its value does not now consist, to any great extent, in the profit accruing to the banks from the actual circulation of notes; it rests in the right to issue notes to such extent as the public may at any time require (subject always to convertibility into coin), whereby the banks are enabled to carry on business at upwards of 800 branches, without the large abstraction of capital which the use of any other circulating medium would entail. Banking, as conducted in Scotland, is subject to the keenest competition among the 11 existing banks, and the result is a lower scale of banking profit than is earned in any other part of the United Kingdom. Should the profits at present earned by the banks suffer reduction, by the withdrawal of the right to issue their own notes, the consequence must be a serious diminution in the peculiar advantages afforded to the public by the Scottish system, particularly in regard to rates of interest, which at present are allowed on all accounts however small and fluctuating, and in regard to the unexampled facilities through the branch offices. For these reasons the meeting is decidedly of opinion that it would be unwise to disturb a system of currency which has existed for nearly two centuries, with which the people are familiar, and in which they have absolute confidence.' This minute was concurred in by the whole of the 11 banks."

763. Before we proceed to ask any questions upon that minute, I think you desire, do you not, to lay before the Committee some statements showing the present condition and extent of Scotch banking ?—Yes, I am axious to do so.