This, however, does not at all reflect on the nature of a bank, nor of the benefit it would be to the public trading part of the kingdom, whatever it may seem to do on the practice of the present. We find four or five banks now in view to be settled. I confess I expect no more from those to come than we have found from the past, and I think I make no broach on either my charity or good manners in saying so; and I reflect not upon any of the banks that are or shall be established for not doing what I mention, but for making such publications of what they would do. I cannot think any man had expected the Royal Bank should lend money on mortgages at 4 per cent. (nor was it much the better for them to make publication they would do so from the beginning of January next after their settlement), since to this day, as I am informed, they have not lent one farthing in that manner.
Our banks are indeed nothing but so many goldsmiths’ shops, where the credit being high (and the directors as high) people lodge their money; and they — the directors, I mean — make their advantage of it. If you lay it at demand, they allow you nothing; if at time, 3 per cent.; and so would any goldsmith in Lombard Street have done before. But the very banks themselves are so awkward in lending, so strict, so tedious, so inquisitive, and withal so public in their taking securities, that men who are anything tender won’t go to them; and so the easiness of borrowing money, so much designed, is defeated. For here is a private interest to be made, though it be a public one; and, in short, it is only a great trade carried on for the private gain of a few concerned in the original stock; and though we are to hope for great things, because they have promised them, yet they are all future that we know of.
And yet all this while a bank might be very beneficial to this kingdom; and this might be so, if either their own ingenuity or public authority would oblige them to take the public good into equal concern with their private interest.
To explain what I mean; banks, being established by public authority, ought also, as all public things are, to be under limitations and restrictions from that authority; and those limitations being regulated with a proper regard to the ease of trade in general, and the improvement of the stock in particular, would make a bank a useful, profitable thing indeed.
First, a bank ought to be of a magnitude proportioned to the trade of the country it is in, which this bank is so far from that it is no more to the whole than the least goldsmith’s cash in Lombard Street is to the bank, from whence it comes to pass that already more banks are contriving. And I question not but banks in London will ere long be as frequent as lotteries; the consequence of which, in all probability, will be the diminishing their reputation, or a civil war with one another. It is true, the Bank of England has a capital stock; but yet, was that stock wholly clear of the public concern of the Government, it is not above a fifth part of what would be necessary to manage the whole business of the town — which it ought, though not to do, at least to be able to do. And I suppose I may venture to say above one-half of the stock of the present bank is taken up in the affairs of the Exchequer.
I suppose nobody will take this discourse for an invective against the Bank of England. I believe it is a very good fund, a very useful one, and a very profitable one. It has been useful to the Government, and it is profitable to the proprietors; and the establishing it at such a juncture, when our enemies were making great boasts of our poverty and want of money, was a particular glory to our nation, and the city in particular. That when the Paris Gazette informed the world that the Parliament had indeed given the king grants for raising money in funds to be paid in remote years, but money was so scarce that no anticipations could be procured; that just then, besides three millions paid into the Exchequer that spring on other taxes by way of advance, there was an overplus-stock to be found of 1,200,000 pounds sterling, or (to make it speak French) of above fifteen millions, which was all paid voluntarily into the Exchequer. Besides this, I believe the present Bank of England has been very useful to the Exchequer, and to supply the king with remittances for the payment of the army in Flanders, which has also, by the way, been very profitable to itself. But still this bank is not of that bulk that the business done here requires, nor is it able, with all the stock it has, to procure the great proposed benefit, the lowering the interest of money: whereas all foreign banks absolutely govern the interest, both at Amsterdam, Genoa, and other places. And this defect I conceive the multiplicity of banks cannot supply, unless a perfect understanding could be secured between them.
To remedy this defect, several methods might be proposed. Some I shall take the freedom to hint at:—
First, that the present bank increase their stock to at least five millions sterling, to be settled as they are already, with some small limitations to make the methods more beneficial.
Five millions sterling is an immense sum; to which add the credit of their cash, which would supply them with all the overplus-money in the town, and probably might amount to half as much more; and then the credit of running bills, which by circulating would, no question, be an equivalent to the other half: so that in stock, credit, and bank-bills the balance of their cash would be always ten millions sterling — a sum that everybody who can talk of does not understand.
But then to find business for all this stock, which, though it be a strange thing to think of, is nevertheless easy when it comes to be examined. And first for the business; this bank should enlarge the number of their directors, as they do of their stock, and should then establish several sub-committees, composed of their own members, who should have the directing of several offices relating to the distinct sorts of business they referred to, to be overruled and governed by the governor and directors in a body, but to have a conclusive power as to contracts. Of these there should be:—
One office for loan of money for customs of goods, which by a plain method might be so ordered that the merchant might with ease pay the highest customs down, and so, by allowing the bank 4 per cent. advance, be first sure to secure the 10 pounds per cent. which the king allows for prompt payment at the Custom House, and be also freed from the troublesome work of finding bondsmen and securities for the money — which has exposed many a man to the tyranny of extents, either for himself or his friend, to his utter ruin, who under a more moderate prosecution had been able to pay all his debts, and by this method has been torn to pieces and disabled from making any tolerable proposal to his creditors. This is a scene of large business, and would, in proportion, employ a large cash, and it is the easiest thing in the world to make the bank the paymaster of all the large customs, and yet the merchant have so honourable a possession of his goods, as may be neither any diminution to his reputation or any hindrance to their sale.
As, for example, suppose I have 100 hogsheads of tobacco to import, whose customs by several duties come to 1,000 pounds, and want cash to clear them. I go with my bill of loading to the bank, who appoint their officer to enter the goods and pay the duties, which goods, so entered by the bank, shall give them title enough to any part, or the whole, without the trouble of bills of sale, or conveyances, defeasances, and the like. The goods are carried