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mittedly excellent and perfectly safe joint-stock banking system which prevails throughout the whole of Scotland, and throughout at least the North of Ireland, to serve as an example, I believe that a far more convenient, suitable, and satisfactory system of banking could speedily be established by private enterprise, than can ever be set up and regulated by arbitrary authority and unbending rules. We require a system which will accommodate itself to the wants of the country--which will meet any extraordinary exigency by a corresponding effort, accelerating the circulation, or adding to its amount, as there may be a necessity for it, just as the circulation of the blood is safely and naturally stimulated by the muscular effort required for ascending a hill. Whereas the present system, like the unyielding routine which has been so fatally exemplified in the Crimea, loads the adventurous climber with its heaviest weights; equips him in heavy marching order, with knapsack and other similar aids to enable him to surmount his difficult ascent; and then, to prevent any undue or dangerous muscular development, it fits on with great care a girdle, or strait-waistcoat, nicely adjusted to the average circumference of the body, instead of allowing free scope and action to the chest, when circumstances require more than average exertion.

În ordinary times, it would be impossible for the banks, under a system of free trade, unduly to extend the circulation, as men will not be foolish enough to pay interest for money which they do not require. And when we did enjoy free trade in banking, although most of the private English banks were unsafe and insecure, owing to the Bank of England monopoly, it has not been proved that the crisis of 1825, or that of 1837, was brought about by any want of judgment or discretion in the private banks. That of 1825 was ascribed to the issue of small notes. But Ireland and Scotland enjoyed small notes with impunity. The crises of 1837 and 1839 were ascribed to over-trading and over-issues generally; but we had the crisis of 1847 after our banking system was restricted, and fairly put into the strait-jacket. And if we had not a monetary crisis in 1855, we had something only a single shade less disastrous-a rate of discounts which pressed with ruinous effect upon the industrial energies and resources of the country.

It is a mistake, then, to suppose that the Bank Charter Act has been a successful measure, and that it has relieved us from the periodical fluctuations and commercial difficulties to which we were previously exposed. If the mercantile community were polled, I believe the prevailing sentiment would be, that it has grievously aggravated these difficulties that it was designed mainly to give the Bank the command of the bullion market, and not to foster or cherish the fair, legitimate trade of the country, and that it has made matters worse than it found them. If this be the general feeling among intelligent and well-informed men of businessmen whose opinions would be deemed valuable on any question of administrative reform-the Bank Charter Act, which was only enacted for a limited time, and is now open to modification or repeal, will very speedily be brought before Parliament for reconsideration. And if so, I cannot but hope that it will be so amended

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as to press less severely on the trade and commerce of the country, when a more gradual and elastic pressure would serve every useful purpose still more effectually, without inflicting needless injury on any class or individual.

Viewed in a strictly scientific light, this Act has also been a failure, for it has not served "to make the effective (or unrepresented) issue of paper constant," as it was designed to do (see Dr. Hancock's paper, p. 267, supra). I subjoin a table* with which Mr. Cairnes has kindly furnished me, of the state of the issues of the Bank of England from 1844 till 1855 inclusive, from which it appears that the unrepresented (or effective) issue under an Act which was to render that issue constant, has actually varied from 15.5 millions in 1846, to 9 millions in 1850-that is, about 42 per cent. of the larger sum. Nor does this proportion mark the full amount of fluctuation; for it appears that in October, 1847, the unrepresented issue had reached 17.6 millions, while in June, 1852, it had fallen to 7.6 millions, showing a reduction of nearly 57 per cent. upon the maximum of these eleven years. Whereas, when we turn to the record of the unrepresented (or effective) issues of the Bank of England during the corresponding period of eleven years before the passing of the Bank Charter Act, we find that the extreme fluctuation ranged from 17.6 millions, in August, 1839, to 12.1 millions in February, 1838, or little more than 30 per cent., although the severe commercial crises of 1837 and 1839 took place during that period.

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VI.-Notes on the Société Générale de Crédit Mobilier.-By Richard Hussey Walsh, LL.B., Professor of Political Economy in the of Dublin.

[Read 16th June, 1856.]

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PUBLIC companies have been productive of the greatest utility to society, by affording its members an opportunity of combining their capital for the achievement of common purposes, and thereby occasioning results beyond the power of any of them to effect by himself. But considerable as is the force thus brought into play, anticipations of what it might be and ought to be advance yet further; and the fears of those who dread the competition of such companies, and the hopes of those who embark their means in them, are exaggerated in proportion. In Mr. Lowe's Joint Stock Companies' Bill, lately brought before the House of Commons, Mr. Spooner (see Debates on Monday, May 16, 1856) could see nothing but an engine for the destruction of private traders, unable to compete in any of the paths of industry with wealthy opponents commanding the resources of numbers. "Conceive," he cries, a company of grocers!" What is to become of "the individual grocer ?" Judging from experience, the chances are "the individual grocer" will stand his ground remarkably well against his threatened rivals; and when I ask what is to become of the shareholders of the promised " company of grocers," I put a more pertinent question. For the credulity of shareholders is proverbial since many a long day; we have all heard of the South Sea Company, its absurdities and misfortunes; but according to Mr. Francis, in his History of the Bank of England, the South Sea Company was a legitimate trade compared with some of the speculations which arose in the early part of the last century. "Schemes were proposed which would have been extravagant in 1825, and which stamped the minds of those who entertained them with what might be truly termed a commercial lunacy. One was for the 'discovery of perpetual motion.' Another for subscribing two millions and a half to a promising design hereafter to be promulgated.' A third was a company for carrying on an undertaking of great advantage, but nobody to know what it is; every shareholder who deposits £2 per share to be entitled to £100 per annum.' Even this insolent attempt on the credulity of the nation succeeded; and when the arch rogue opened his shop, he was beset with applicants. In five hours, £2000 were deposited in the hands of the projector; and from that day he ceased to be heard of in England. Projects like these enlisted the lowest with the highest. On some sixpence, and on others one shilling per cent. was paid; and as no capital was required, the comparative beggar might indulge in the same adventurous gambling and enjoy the same bright castles in the air which marked the dreams of the rich and the great. Some came so low as to ask only one shilling on every thousand pounds. Persons of quality, of both sexes, were engaged in them. Avarice triumphed over dignity gentlemen met their brokers at taverns, ladies at their milliners' shops."

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At the present day there exists in France a mania for companies, equal in intensity to that which prevailed in England towards the commencement of the last century, and often sprung up at intervals since; or to that which desolated France itself under the regency of the Duke of Orleans. The extraordinary forms in which this mixture of the commercial and gambling spirit manifests itself, excites the alarm of economists and politicians; while moralists view with apprehension the all-absorbing greed for gain which seems to have taken possession of the nation. Some little sensation has been created in Paris during the last few days, by the Archbishop having published a pastoral letter, in which, half sorrowfully, half sternly, he condemns the prevailing mania for speculation. "There exist at present," he says, "dispositions, instincts, ardour, and fever, which terrify us. We fear that even the peace which has been given us will augment existing evils." And he proceeds to condemn severely the prevailing Mammon worship, and expresses grave apprehensions as to the probable consequences of this state of things. France is, indeed, at this moment in a fever

of avarice.

Rem facias, rem,

Recte si possis; si non quocunque modo, rem.

Or, as one of our own poets happily renders it :—

"Get wealth and power, if possible, with grace;

If not, by any means get wealth and place."

It very rarely happens that the social body recovers from such a malady, and resumes a healthful tone, without some dreadful convulsion, commercial or political.

In 1852, the system of credit and stock-jobbing, which has of late assumed such gigantic dimensions, seems to have received its first great impulse. In that year the Société Générale de Crédit Foncier, and the Société Générale de Crédit Mobile were formed -the second having been quickly followed by a third, established in 1853, called the Société Générale de Crédit Maritime. These are the giants of the new system; but they have numerous imitators on a smaller scale, all agreed in the general principle as to the superiority of public companies over individuals in every conceivable department of industry. The development which jointstock enterprise is taking in Paris becomes more and more remarkable. In a long list of companies recently established,* most of them of a character which would lead one to anticipate for them anything but a successful career, I find a company for washing clothes. Once, during one of our joint-stock manias, a company was set up in London for superseding the milkman, but it was unable to withstand the competition of the latter. The chances are, the Parisian washerwomen will prove equally formidable rivals to the company which has just come forward to teach them their work.

The most important of the Companies now existing in France is the Société Générale de Crédit Mobilier. As implied by its name,

"Economist," June 14, 1856.

†Those who wish for fuller details as to the constitution and operations of the Crédit

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moveable (that is, personal) property may be dealt with by this Company, unlike the Crédit Foncier (or Land-Bank), whose operations for raising money in addition to its paid-up capital, are confined to the negotiation of the securities it acquires by lending on mortgages of immovable (that is, landed) property. The capital of the Crédit Mobilier, all of which has been paid up, amounts to £2,400,000. It is permitted to borrow money to ten times that amount-£24,000,000-on the security of its own bonds; these bonds, however, differing from our own bank-notes, with which they are sometimes confounded, inasmuch as they are not like them payable on demand, but only (at least, in most instances) give the holder a right to receive an annuity from the Company, which, at the end of a term of years, extinguishes both principal and interest of the loan for securing which the bond was originally passed.* And besides its capital, whether subscribed by the shareholders or borrowed on the terms just explained, the Crédit Mobilier receives money on accounts current, and thus a third source is opened whence funds may be derived for supporting the gigantic operations of the Company. Not to trouble you with details, the general business of the Crédit Mobilier may be described briefly thus-It employs its money, whether subscribed by the shareholders or borrowed in the manner already pointed out, in buying up shares in other Companies; managing the affairs of these latter, or taking part in their management, as long as it pleases; and then re-selling them for whatever they may bring in the market. It may pledge these shares, if it be desired to raise money without selling them; and it may receive shares in pledge instead of absolutely purchasing them, and lend money to those who offer them in pledge. It may deal in the same way with public securities, such as the funds, buying and selling them, pledging them and receiving them in pledge. Besides dealing in shares and securities which had before been in existence, the Crédit Mobilier may take the initiative as a gigantic contractor. It agrees to supply loans, to perform works; and having fulfilled such contracts, is free to deal with the resulting securities on whatever terms it can.

The operations of the Company are not confined to France, but extend to other countries.

You must now perceive the wide range of business assigned to the Mobilier may consult the work of M. A. Courtois, "Des Opérations de Bourse, etc.,” published at Paris by Guillaumin et Cie.; also, the last report of the Crédit Mobilier, which is to be seen in the Times, 21st May, 1856. Along with much that is curious, if not instructive, both contain the most absurd and mischievous views on the subject of credit and association.

"The first,

* The bonds or debentures of the Crédit Mobilier are of two kinds. issued for a short time, must correspond with our various temporary investments; the others, issued with remote dates of payment and reimbursed by redemption, will correspond with the investments of like nature which we shall have made either in rentes, or in shares and debentures of manufacturing companies." The preceding is an extract from the original exposition of the plans of the Company, quoted in the Report for April 23rd, 1856. It appears that those debentures have been issued to a great extent. It is absolutely necessary for a Bank which invests the money of others in securities which cannot quickly be realised, (as for example, when it sinks it in a manufactory,) to provide that the creditors cannot demand payment until some distant date. Otherwise the Bank would be exposed to a 66 run, in periods of pecuniary

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