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A View of the Banking Question Resulting from Practise and Experience

March 8, 2010

INTRODUCTION.

It is alleged by persons of great political influence, that defects very injurious to the community exist in the present system of Banking in England, and manifold evils in its practice ; and that the Legislature is imperatively called upon to remove those defects, by sanctioning some new method of Banking, and introducing a better practice. Few subjects are of greater importance than these, because the existing practice of Banking is now as intimately connected with internal industry, as turnpike-roads are connected with market-towns. If we destroy either Banks or roads, we shall, in the one case, by throwing obstacles in the way of a proper distribution of capital, greatly increase the difficulty of raising sufficient produce for the wants of the people ; and, in the other case, we shall have greater difficulties in carrying our produce to markets and places for consumption. Without contemplating an entire destruction of the practice, we may predicate that evils would result from any deep injury to the existing system of Banking, corresponding to the extent and nature of that injury.

These, therefore, are not matters of light concern. It requires a thorough knowledge of the facts of the case, a perfect acquaintance with local and particular circumstances in the practice and operation of Banking, a clear view of its general influences and consequences, and, above all, an absence of all prepossessions in favour of some particular theory, to facilitate the formation of accurate conclusions. Almost all who have been engaged on these important subjects, and who have endeavoured to influence public opinion and direct the course of public measures, have been men of superficial knowledge and general views, who, ingenious, confident, and plausible, have succeeded in making erroneous impressions upon the minds of many distinguished and honourable men. The object of the following observations is to remove such impressions, and, by the guidance CO of sound principles, and the evidence of practice and experience, to place the Question upon a just basis before the public. If that object should be accomplished, its accomplishment must, at the least, suggest to all legislators, the propriety of withholding a judgement on the relative merit of different Banking Systems, until a full and impartial public investigation have brought out the facts of the case, and placed it on proper grounds for Parliamentary Adjudication. The subject, as we propose to treat it, naturally divides itself into four parts : — 1st. The Bank of England — its peculiar Privileges and Functions. 2d. The alleged defects of the present System of Banking in England. 3d. The Branch-Bank System. 4th. The Scotch System of Banking, and its alleged superior adaptability to the People of England.

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