CURRENCY AJ:13) CERDIT.
London., 8th „February 1858.
Sur—The plan I proposed to myself has been completed in the three letters which you have already let' appear in your columns; and am 'quite aware both of the value of the txdrimiss and of the necessary pressure- f your engagements when Parliament is in session. But as the followiaig suggeetiona for the regulation of banks and' dir' !count,houser owe their origin chieflyto. your recent review of M'Culleeh'is "Money," there isa certain propriety instill submitting them for vourconsideratiOn. Net to take up time and roorm I suppress the train of reasoning that led from your remarks- to my own conclusions, and give von the conclusions alone; merely premising, that they assume, as adopted, the suggestions contained in my letters of 213th December and 4th January, for the limitation and gradual extinction of all.noten exee_pkthose issueilhy.tbe Bah of -England against bullies), for rendering Bak-of-England•notes a legal tender throughout the United Kingdom, and for affording relief in time of pan a, by means, not of notes, but of bank-bille.
1st, That banks be divided into threctelassee„ and be registered mid per- mitted to carry on business accordingly —viz. " BanksafDeposit," " Banks of Loan or-Discount," and "Banks of Issue." Banks of Discount and of Issue to specify the in- their respective titles, or to be registered-and permitted to carry an business as banks Of deposit only. 2d, That sums paid into a bank, or placed at theeceditof parties in the bank-books, be divided into two elaasee,—vie. "Deposits" and "Loans"; and be distinguished accordingly in all statements and; ageounte. All such sums to be regarded as deposits, unless speeifieally directed to be treated as loans by the parties at whose credit they are placed. - •
3d, That deposits be regarded as lodged for safe custody. only, and be not permitted to be employed.hy, the bank for its own benefit, except by invest- ment in Government securities.
4th, That lossebe permitted, to be employed by the bank for ite own benefit, in discount of bills or investment in private securities, to an extent bearing a certain proportion to Goverinnentseenrities, Am. held by- embank, as mentioned below.
6th, That the obligations Of a bank (exclusive of any inthe issue depart- ment and of deposits and loans) be also divided into two classes, and dis- tinguished accordingly in all statements and account,—viz. "Bills," including all bills,, promissory notes, and other .obligetions of any, kind, emanating from the bank itself, in which the bank hem any way directly or indirectly concerned; and "Acceptances,' including. all acceptances, indorsements, guarantees, and other obligations of. anykind, not originally emanating from the bank,- but for which the bank is in any way directly or indirectly responsible. - 6th, That every bank be required to have at all times baits poinession, on account of its banking department, (exclusive of the issue department in banks of issue,): Government securities', Bank-of-Englaticl notes, or coin, to the following amounts,—viz. The full amount of all deposits, one-fifth (or one-third) of the amount of all loans, and one-fifth (or one-third) of the amount of all the bank's obligations, as respectively defined above. [Query, also one-fifth (or one-third) of the shareholders' paidnp capital.] 7th, That pending the extinction ofnotes leaned by batiks other than the Bank of England, in the manner before suggested, every such hank be re- quired to have at all times in its possession, on-account of its issue depart- ments (in addition to the amount mentioned above for its banking depart- ment,) Governmentsecurities, Bank-of-England notes, hellion, or coin, to the amount of toe-fifth (or one-third) of the notes issued by its issue depart- ment, whether such-notes be in actual circulation or not, 8th, That any -infringement of these provisions be anbjeet to the penalties of the Fraudulent Trustees Act.
9th, That .ell regulations releting in banks be applied' also to discount- houses. Your obedient servant,- P.8.—Inthe Times City article dated 1st February, and" ublished on the following .da,y,,exe some excellent suggestions on the subject of the Bank- ruptcyLawe, which are not mine, but which I would. gladly -embody in my letters of 4th and 20th January.
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