PROTECTION OF PAPER SECURITIES.
[To THE EDITOR OF THE " SPECTATOR.")
Sra,—The question discussed in your paper of Saturday last, namely, how best to protect from theft securities payable to bearer deposited for safe custody with bankers, is one of very great importance. I think I can throw some light on the sub- ject, derived from my own experience.
Very many years ago, the public were shocked by the failure of an old-established London Banking-house, and the painful discovery that securities to a large amount which had been en- trusted to their care had been dishonestly made away with, not by a subordinate, but by the partners themselves. I was at that time the head of a country banking firm, and we held on account of our clients a large amount of India floods, &c., which, for the purpose of receiving the half-yearly interest, we had transferred to our London correspondents. After such a heavy blow to public confidence as the disclosure I have re- ferred to, I felt it to be due to our clients to be in a position to show them at any time that their property was safe, and accord- ingly I directed the return of halves of all their India Bonds, &c., the counterparts, with the interest coupons attached, remaining in our correspondents' hands.
The interest continued to be received as before, and when a sale was desired, the half-part held by us was sent up for the purpose. No inconvenience whatever resulted from this arrange- ment, which lasted for a long series of years, and, in fact, until our Bank was closed, by transfer to a Joint-Stock Banking Company.
The division of such securities as I have referred to (the separated parts being placed in different hands) seems to afford complete protection against fraud in respect of both sets of halves. Were I a London banker, I should decline receiving for safe custody any securities payable to bearer, unless thus divided. Had the River Plate Company adopted this simple precaution, the loss they have recently sustained would have been impossible. I may add that a perforated line carried through the security would render its division (when required) more easy.
The plan I have described has already been suggested in a letter to the Times, some few weeks back. I merely write for the purpose of showing that it has been acted on with perfect success.—I am, Sir, &c., A RETIRED COUNTRY BANKER.
[The plan looks perfect, but does not meet depositors' diffi- culty. They want to avoid keeping their bonds, but are left in charge of the second halves.—En. Spectator.]
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