Daily Prices of STOCKS, from 20th OCTOBER, to 20th NOVEMBER, 1807. India Stock. In Ordinary Of the line. 50 to 44 guns. Frigates. Sloops. Gun-brigs. Total. 146 44 45 224 790 68 178 1.1111 THE LITERARY PANORAMA. FOR JANUARY, 1808. BANK OF ENGLAND. scale that it may be considered as a whole. sale dealer in this primum mobile. The wants of the merchant and farmer may be supplied by private individuals, but the wealth of individuals cannot be equal to the demands of a state, the necessities of which press suddenly, and often in all directions. SECOND REPORT OF THE COMMITTEE OF THE HON. HOUSE OF COMMONS, appointed to examine and consider what Regulations and Checks have been established, in order to control the several Branches of The Public Expenditure in Great Bri-tain and Ireland; and how far the same have been effectual; and what further Measures can be adopted for reducing any Part of the said Expenditure, or diminish-in most nations of Europe. The plans on ing the Amount of Salaries and Emoluments, without Detriment to The Public Service.[Ordered to be printed August 10, 1807.] The business of Banking is, beyond a doubt, one of the most artificial that is followed as a profession. It results from no law or operation of nature, but is a mere convention among a certain description of persons, for mutual conveniency. Commerce was originally conducted by barter: then money became the medium of commerce, and, the admitted standard of valuation; and, at length, it not only became the umpire of bargain and sale, but its services were bought, and it was hired out, by those who hada superfluity of it, to those who could employ it to advantage. Merchants hired the money with which they bought goods in one place to sell in another; farmers hired money with which to pay the labourers who tilled their ground, and the expected crop was to discharge the loan; and vernments hired money with which to pay the troops who defended them, or attacked their enemies. go The merchant and the farmer need but small quantities of money, but the operations of government are on so large a VOL. III: [Lit. Pan. Jan. 1808.] To meet such exigencies companies have been established, and have met with special protection from the ruling powers, which they have been established have been various: differing sometimes according to the constitution of the government, the disposition of the people, or the circumstances which determined their institution. establishment, may be considered as a The Bank of England, under its present consequence of the Revolution: it was patronized by William III, and after struggling with various difficulties in its infancy (for its notes were at a discount) it surmounted them all, and has for many been the most considerable money years center in Europe, and if in Europe in the world. dealings in gold and silver, coined, or in The Bank is by its charter restricted to chase land, or adventure in shipping: bullion, and in securities. It cannot pur it cannot stock its warehouses with merchandize; and the propriety of this regulation is evident, since it makes payments with its own notes, and by its descriptions to its own injury, or that of credit might accumulate stores of various the community. We have no occasion to pursue these hints any further, as a sufficient knowledge of the nature of the Bank for the purpose of the present paper may be obtained from Z mands for discount, or by making such loans to government, or buying such number of Exchequer bills, or other securities, as may suffice to maintain in circulation the accustomed quantity of notes. Those balances are lent at interest, because a demand for loans to this extent cannot fail to arise out of the natural demand for the accustomed quantity of notes. The bank have no property of any moment lying dead, cash and bullion excepted; they possess indeed property in buildings, but these are stated in the evidence to have been paid for as they were erected, out of their current profits, and constitute no article in their accounts. Unless therefore they have a sum at interest applicable, together with the cash and bullion, to the purpose of answering the demands of those who have deposits in their hands, they have not assets necessary to satisfy the three classes of claimants which have been mentioned. Secondly, The sum received from persons keeping cash at the Bank. This sum consists of the balances on the deposit accounts both of government and of individuals. In 1797, this fund, including all the balances of individuals, was only £5,130,140. The present government balances alone have been The productive quality of the floating ba stated at between 11 and 12 millions, lances is confirmed by a statement presented including bank notes deposited in the Ex-by the Bank itself to the secret committee of chequer. the House of Lords in 1797. (page 132) From thence it appears that the bank notes were, on the 25th February 1797 Thirdly, The sum received in return for notes put into circulation. A corresponding value for every note must originally have been given, and the value thus given for notes constitutes one part of the general fund to be lent at interest. A note holder, indeed, does not differ essentially from a person to whom a balance is due. Both are creditors of the Bank, the one holding a note, which is the evidence of the debt due to him, the other having the evidence of an entry in the ledger of the bank. The sum at all times running at interest will be in exact proportion to the amount of these three funds combined, deduction being made for the value of cash and bullion. Under the three heads above-mentioned, first, of capital and savings; secondly, balances of deposit accounts; and, thirdly, notes in circulation; all the sums are stated which the Bank would have to discharge in the event of the winding up of their affairs; and they must of course have assets sufficient and available for this purpose, which assets can only consist of cash and bullion, and securities for money lent. In whatever degree therefore any one of the three first-mentioned items, namely, capital, deposits, or notes, increase, the other two remaining fixed, in the same degree must the sum running at interest increase, provided the cash and bullion do not vary; and this adaptation of the sum at interest to the amount of the balances, may be presumed to take place without any particular cognizance of the subject by the directors, who make a profitable use of the balances by consenting so far to satisfy the current de £8,640,250 5,140,130 And the "drawing accounts" (or deposit accounts) and “audit roll" (or unclaimed dividends, &c.) And the "surplus" (or undivided profit) of the Bank, which was of the nature of additional capital... 3,826,890 Making together............ £17,597,280 This debit side of the account exhibited the total sum due both to the Bank proprietors and others on the 25th February 1797. with the exception of £11,686,800′ capital lent to government, which was adverted to only at the foot of the statement. The credit side of the account enumerated the effects (amounting to £17,597,280) applicable to the payment of that debt. These assets were stated to consist of " advances on government securities," viz. on "land and malt," on " Exchequer bills, &c." "bills discounted, &c." and cash and bullion." Supposing therefore the amount of surplus capital and bank notes on the debit side, and the cash and bullion on the credit side, to continue stationary, the amount of the other articles on the credit side (all of them articles producing interest) must necessarily fluctuate in exact correspondence with every fluctuation of the deposits; and in case another statement, formed in the same manner as that presented in 1797, were now to be made out, the sum of £8,640,250 of notes having been augmented to £16,621,390, and the sum of £5,130,000 of deposits having risen probably to about thirteen or fourteen millions, there would unquestionably be an increase of about sixteen or seventeen millions running at interest to be stated on the other side, deducting whatever may have been added to the cash and bullion since February 1797. The annual and temporary bonus of five per cent. which the Bank have for some successive years added to their accustomed dividends of seven per cent. and the recent augmentation of their regular dividends to ten per cent. exclusive of property tax; the rise also of the market price of their stock, which having sold in 1800 from £156 to 172 per cent. now sells at £230, are strong circumstances in confirmation of the large increase of their profits. This increase cannot be accounted for by any material augmentation of the advantages derived from the manage ment of their own capital, nor from that part of their business which they transact as bankers to individuals, (a part indeed at all times comparatively small in its amount;) for although the number of persons having accounts open with the Bank, has been lately much increased, the floating balances on those accounts are known to be in general very small, most of the accounts being kept open only for the sake of the opportunity which they afford of borrowing in the way of discount. The extension either of loans to government, or of discounts to the merchants, or of both, is the necessary effect of the augmentation of the government deposits, and it is to the largeness of these deposits, that the increased profits ought to be referred. The gain which the Bank have derived from the issue of one or two pound notes, amounting to £4,217,960. on the 1st of February last, may be expected to cease whenever the payment of cash shall have been resumed. It is a principle in all trade, and especially in that executed as commission, that, within certain limits, the greater the quantity of business done, the lower is the rate per cent. which is esteemed a fair compensation for the trouble, &c. of conducting it. Government, then, dealing at all times very largely in money, has a right to expect that its money transactions should be more favourably executed at the Bank, than those of any other customer, whose accounts, in comparison, could not be other than trivial. On the same principle, when the accounts of government were themselves small, as ten, twenty, fifty millions: for adjusting these accounts a greater premium per cent. was fairly demandable, than when they rose to three, four, or five hundred millions. The rate of allowance originally was £562. 10s. for each million: this, in 1786 was reduced to £450 for each million. The same allowance was made to the Bank of Ireland: the debt of that country being no more than 22 millions; whereas the debt of Britain, Jan. 5th 1786, was £224,102,424, and the charges of management were then (according to the reduced scale of allowances) £100,846. Jan. 5th 1797, the year in which the Committee on Finance reported, the principal of debt unredeemed was £272,892,444, the charges of management upon which, so far as concerned the Bank, were £115,543. Jan. 5th 1800, the year of the renewal of the Bank charter, the principal of debt unredeemed was £375,185,801, and the charges of management, received by the Bank, were £170,053. The debt unredeemed Jan. 5th 1807, was £550,441,314, and the charges of management, received by the Bank, were £265,818; to which must be added £5,687, on account of the Austrian loan, according to the same rate of commission. The allowance of £4,000 towards the expenses of the house, and also the original allowance of £1,898 on £4,000,000 purchased from the South-Sea Company, are in addition to the before-mentioned sums. The increase in the establishment of the Bank which has been rendered necessary by the progressive augmentation of this branch of their business, consists principally in a large addition to the number of clerks; of whom the whole number employed in the public. business, exclusively, or principally, was in 1786, 243; in 1796, 313; and in 1807, 450; whose salaries, it is presumed, may be calculated at an average at between £120 and £170 for each clerk; taking them at £135, which exceeds the average of those enployed in the South-Sea House, the sum is £60,750 67,500 76,500 at £150 the sum is at £170 the sum is be sufficient to provide a superannuation fund. either of which two last sums would probably The very moderate salaries received by the governor, deputy governor, and directors, amount to between £7 and 8,000; and only a part of these must be considered as compen sation for the trouble of superintending the public business. Incidental expences and sundries Law expences, and losses by frauds' 10,000 10,000 The whole increase of the officers who actually transact the business, in the last eleven years is only 137, whose annual expence may be from £18,449 to £23,290; the addition to the other permanent charges being probably about one-half, or two-thirds of that sum; but the additional allowance for management in the last ten years is more than £155,000. This general conjectural estimate of the expences actually incurred by the Bank, exhibits, if it be near the truth, the charge which would have attended the management of this business by Government, if previous to the arrangement which took place in 1786, it had been thought advisable to adopt the suggestion, formerly made by the Auditors of Public Accounts when this matter was referred to them by the Treasury. Their Report, already printed in XIV. 30. well deserves the consideration of the House ; and particularly the estimate they formed of the real value of the service, which they supposed might be executed at less than one-third of the charge at that time incurred, that is, at a rate of allowance under £187. 10s. for each million, when the debt was no larger than has been before stated. The Committee of Finance so far agreed with the Auditors of the Public Accounts, as to intimate an opinion in favour of the reduction of the existing rate of allowance for managing the public debt. They state" that the Bank, over and above the charges of management, are accustomed to receive allowances from the public, at the rate of £805. 15s. 10d. per million, for receiving contributions for loans; and £1,000, or sometimes more, for contributions to the lottery; and that they have the benefit of holding all the money for half-yearly dividends, besides having the cus tody of cash for the navy and army services. Upon reviewing therefore these circumstanees in the present times (1797), and without questioning the propriety of the arrangement made in 1785, when the public debt was so much inferior in amount, your committee cannot forbear to state it as a question still deserving the attention of Parliament, whether a further reduction of expence cannot, and ought not, to be made upon this branch of public expenditure ?" 5. Further balance of cash to a very large amount, consists of sums lying nominally in the exchequer, which nevertheles actually accumulate for the benefit of the Bank, and are for the most part applicable at the end of each quarter, to the payment of dividends. It is the eştablished usage of the Bank to draw daily from the Exchequer the several sums in question as they accrue, depositing indeed Exchequer bills in return for their own notes, which are thus received as money. This deposit is to be considered simply as a security for the public money drawn away, as the growing interest on the Exchequer bills belongs entirely to the Bank; and in case all the Exchequer bills possessed by the Bank, which they think fit to apply to this purpose, prove insufficient for the whole sum, the surplus remains in the exchequer in the shape of Bank Besides the management of the debt, the Bank have large transactions with the public, affording a considerable profit to the corpora-notes-The notes thus taken out of tion; into the nature and amount of which, it is proper to enter. 1. Average balance of cash kept at the Bank during the 3 months ending Jan. 1807, under the head of customs, excise, and stamps, about.. £457,000 Under the head of post office, dering several months in 1807, in which year that account was first pened.... 20,500 circulation amount occasionally to 4,461,062 |