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^ 4fi5. February 19, 1859-1 THE LEADEB. ...
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Bank op Austria.-—The casli payments of ...
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Note: This text has been automatically extracted via Optical Character Recognition (OCR) software. The text has not been manually corrected and should not be relied on to be an accurate representation of the item.
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The Joint Stock Banks ¦ . ¦ Op ¦ ¦' . . ...
no less than 753 , 275 ? ., while the paid-up capital is 3 972 , 6601 ., making together a sum of 4 , 725 , 935 / . belonging to the shareholders . These vast sums subscribed and gained , give , however , only a faint notion of tlie business carried on by these banks . On tlier seciu-ity offered by their capital , and the continued prudence by which their affairs have been managed , the public entrusts them with money on current accounts , and in deposit , to the amount at the end of December , of 39 , 583 , 233 ? . This ^ is 16 873 , 586 / . more than the deposits , not distinthe
guished from the accounts current entrusted to keeping of the Bank of England which , at the same period , amounted to only 22 , 709 , 6477 ., though then swollen by all the public money , which in a few days was to be disbursed to pay the dividends on the JSTational Debt . The capital of the Bank of England , and its reserved fond amounting only to 17 , 668 , 077 / . * the money entrusted to the joint-stock banks is only 794 , 491 / . less than the . sum entrusted to the Bank of England and its whole capital together . In less than twenty-five years the abolition of one trifling , and and almost meaningless restriction , to which no
person for many years paid any attention , has permitted the development of a branch of industry niore serviceable to the public , tested by the use they make of it , than the Bank , of England , and , judging by the average dividends , almost twice as advantageous to the 6 , 471 proprietors as . share ' s would be iri the stock of this renowned corporation . So far as banking capital leads to the development of commerce these banks are now of nearly twice as much service to trade as that renowned Bank . That many circumstances have combined to produce this extraordinary result , such as the invention of railways and the
great progress of society since 1834 , is unquestioned ; but such improvements and such inveiir tions are always taking place ; and always there are in cxistence ^ though a few inquirers only are acquainted with some of them—numerous restriction ? , which everywhere prevent—as the old monopoly of the Bank of England prevented—the development of new , useful , and profitable branches of industry . Man ' s knowledge , too , of society is
so imperfect that he can never learn how much injury such restrictions cause till after they are abolished and the new industry they prevent has become a living fact . We can , therefore , have no other guide to legislation on such matters than the general principles ' of freedom ; and every restriction , consequently , shoxild be opposed as certain to do harm , though we may not know in what manner and in what form the harm will come .
Having on general principles said thus much , let ub now turn to the tables we have compiled , which show ue the condition of each bank now and at the end of June , 1858 , and the condition , for comparison , of such of these banks as were in existence at Midsummer , 1855 . . First , wo see that since 1855 the capital of the five banks then established has only been increased by 33 , 667 / ., while their resorved fluid has been augmented 'from 682 , 728 / . to 702 , 871 / . They have all , therefore , been enabled to lay something by out of their gains . Our tables will show the reader the sums appropriated by each bank to the reserve , winch
n > ak ; es it needless for us to dwell hei'e on the proportions . It will be seen , however , that the net profits of these banks were considerably less —fi 8 , 174 / .- ^ in the half-year ended with December last , and less in the half-year ended with Juno last , than they were in the year' ended with Juno , 1855 . They were , however , a small sum greater in the half-year ended with December than endod with June- —facts which show that tlie joint-stook banks suffered to some extent from the commercial convulsion tff 1847 , but that the suffering was greater in the early part of the year than in tho latter . It > "fty bo noticed that nt both periods tho largest
ratio of net profits per cent , to paid-up capital was found as the rule , though there is a slight exception in the case of the Union in the last half-year , in conjunction with the largest ratio of deposits and current accoiints to paid-up capital . In other words , as the sum of money entrusted to the banks in proportion to their own capital was large , so was the amount of their net profits and the ratio of these to paid-up capital . This leads us at once to the source of the profits obtained by these banks . Confidence is not , as Mr . Gilbart says , money *
it is the means , if honestly and properly used , of making money . The vast sum , then , which the public places in the hands of these banks , enables them—actuated as they always are by similar motives and , therefore , as the rule , pursuing one line of conduct—to obtain a command over the markets of public securities far greater than is acquired by individuals . They are thus enabled to deal with such subjects on more advantageous terms than individuals , and to make a large profit on the ao-gre ^ ate sums entrusted to their keeping , which
the individuals to whom they belong could never make , each by his own means , even if each one could turn his money to any account at all . The shareholders , then , obtain large dividends , and the depositors obtain a considerable interest by the sums placed in any bank being large in amount and skilfully handled . This principle is equally true of private bankers . They make large fortunes when they obtain confidence and behave well ; and we have no doubt were their ledgers exhibited to public inspection we should find in many of them
proofs that such men as Lord Overstone , and other bankers , had made far greater profits per cent ., in proportion to their : capital , than ever were made by any joint-stock banks , large as some of their profits have been . Indeed , it is known from many instances ^ that men who have deservedly acquired the confidence of their fellows have made fortunes , as bankers , without possessing aiiy capital . One , then , of the great benefits of joint-stock banks ,
properly managed , is to diffuse amongst a great body of shareholders the vast advantages which accrue to individuals from , enjoy ing the public confidence . " With this is combined a very considerable advantage—an exposition of their affairs , which at once tends to make them deserve the public confidence , informs the public of the great advantages of credit , and reveals to it the chief mystery of the art' by which so many individuals have made large fortunes .
It is for us rather a pleasant feature of the joint stock banks that the number of proprietors is increasing . By refqrring to the table it will be seen that , since 1855 , the number in every one of tho banks of which we have given a description in that year , had increased in 1858 , and the average capital apportionable to each proprietor had decreased . To take the first and last of the series jn 1855 the number of proprietors was 1 , 220 of tlie London and Westminster , and 314 of the Commercial ; and the
increased from 8 * 00 to 9 * 00 per cent . The last halfyear , therefore , was not , for the London and Westminster , so profitable as the first half-year of 1858 , —rather at variance with the general fact already stated . : The deposits and current accounts in the London and Joint-Stock Bank also declined from 10 , 287 , 623 / . in June to 9 , 367 , 722 / ., or 919 , 9017 . in December , and yet the amount of net profit was greater in the last than in the first six months of the year , and the ratio of net profits to paid-up capital was
17-95 in the latter , and only 16-65 in the former . The ratio of dividends also to paid-up capital was only 11 * 25 per cent , in the half-year ended with June , and 16-25 in the half-year ended with December . This bank seems , therefore , to have found—differing from its competitors—a more profitable employment for its diminished resources than for the larger sum entrusted to its care . This is somewhat contrary to the principle that profit depends on the sums entrusted to the banker and may require .
The . Union Bank shows a considerable increase of deposits on current accounts—^ 1 , 114 , 23 . 1 / . more in December than in June ; and in accordance with principle , and the general state of bur commerce , it shows a very slight increase of net profits , and a very slight increase in the ratio Of net profits to capital , and the same ratio of dividends to paid-up capital in the six months ended with December , compared to the six months ended with June .
The London and County Bank also shows an increase , though slight , of deposits in the last halfyear , a small increase of net profits , and an augmentation of the ratio of net profits to paid-up capital , and of the ratio of dividends to paid-up capital from 500 to 6-00 per cent . . The deposits and current accounts in the Commercial Bank were less in the last than in the first half-year of 1858 by 32 , 197 / ., on a total siim of 935 , 081 / ., and its net profits diminished , as did the ratio they bear to its paid-up capital ; while the ratio of its dividends was the same , and was at the rate of 6 per cent , per annum .
We shall not now extend in detail our remarks to the remaining four banksj all of which were established in or ; since 1855 . We must observe however that both the City Bank and the Bank of London —the former with 1 , 749 , 747 / ., amount of deposits and current accounts , at the end of December , and the latter with 1 , 300 , 903 / ., and the former with a net profit in the half-year of 17 , 382 / . —already exceed the Commercial on these points , which has the same amount of capital as each of them has , and was established fifteen years before them . It
would seem therefore that the new banks are not uncalled for . Their success has been great ; and in all of them the deposits and current accounts were greater in the last than in the first halfyear of 1858 . The total amount of deposits and current accounts , in the whole nine banks , was , in fact , at the close of the year—notwithstanding the diminution in those of the Westminster and London Joint-Stock—only 302 , 793 / . less than at the
end of Juno . We do not argue from this that the now banks have gained what the others lost ; on the contrary , wo believe that most of tho accounts with the new banks arc really new nccounta , other men becoming depositors and keeping a banker ; and that tlie accounts and deposits which . the five banks have lost have boon tho consequence of tho commercial disorder which afFeeted so many persons . Wo shall probably find it necessary to refer to this very interesting subject .
apportionable capital for each shareholder was . then 819 * 67 / . of the former , arid 955-41 / . of the latter . In 1858 , however , the gures wore—number of proprietors of the'London and Westminster , 1 , 648 ; of the Commercial , 375 : apportionable capitalformer , " G 06 ' 80 l . ; latter , 800 * 00 / . The number of proprietors then is continually increasing , and tho proportionable capital of each one decreasing . Such a fivat recommends these bunks to public approbation . They diffuao their advantages .
ltofomng more particularly to the instructive tables , which have been compiled with groat care , with a view to notice the progress of tho banks in tho last six months , it will bo seen that the current accounts and deposits of the London and Westminster declined in the half-year from 12 , 443 , 746 / , to 11 , 465 , 815 / ., or 977 , 981 / . ; tho ratio of not profits to capital accordingly full off from 931 ) per cent to 8 * 63 , but the ratio of dividends to paid-up capital
^ 4fi5. February 19, 1859-1 The Leadeb. ...
^ 4 fi 5 . February 19 , 1859-1 THE LEADEB . 249
Bank Op Austria.-—The Casli Payments Of ...
Bank op Austria .- —The casli payments of the Bank aro for tho moment almost suspended , a $ all kinds of difficulties wo thrown in the way of persona who wish to obtain silver in exchange . for their notes . The rate of oxchango on London is 10 SH . Austrian currency for £ \ 0 sterling , which Is equivalent to 1011 . conventional currency for XI sterling .
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Citation
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Leader (1850-1860), Feb. 19, 1859, page 25, in the Nineteenth-Century Serials Edition (2008; 2018) ncse.ac.uk/periodicals/l/issues/cld_19021859/page/25/
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