By the very large addition thus made to their idle money, some banks will find their income diminished and their loanable money reduced, so that traders and shareholders will alike find themselves contributors to the patriotic effort so timely and so forcibly pressed upon the great banks by the Governor of the Bank of England, by the Chancellor of the Exchequer, and by the press.

Thus the Baring crisis of 1890, and the manipulation adopted to evade its dangers, have led to results very interesting to bankers. We shall probably note these results to be a disturbance of the weekly returns of the Bank of England. New relations between the bank and the clearing bankers. An appeal on the part of the bank for a guarantee of some of its loans and for larger bankers' balances. The strong support so wisely given to the bank. The publication of monthly returns by the London bankers. The progress of bank amalgamations. The development of the altered character of the Consol market. A long continued state of financial anxiety and expectation and finally a great probability of large changes in our national banking and currency system in the future.

I can only spare a word or two for each of the other subjects that will naturally demand your attention. The course of trade during the past twelve months has generally been good. If Members of Parliament who profess to represent labour, and the gentlemen who are chosen by the working men as their leaders, would master two ideas, first, that capital is the best friend of labour, secondly, that the true interest of every one is to make the expansion of trade as easy and as profitable as possible, then the country would be prosperous, and the working people would have enough and to

spare.

The returns of the Bankers' Clearing House to October 29th have considerably diminished when compared with the corresponding period of last year. The total for the whole of 1890 was £7,801,048,000, the largest on record; and for the first ten months of that year was £6,540,530,000, while the total of 1891 to October 29th, was £5,683,057,000, showing a decrease, at present, in 1891, of £857,473,000.

Some anxiety has been caused amongst bankers by the facility with which cheques can be altered. The matter is receiving attention, and several suggestions have been made with the view of rendering the face of the cheque invulnerable. Here is the old story of attack and defence. With caution, and the adoption of the best modern improvements, the cheque will hold its own against its two most formidable enemies-strong chemicals and clever forgers. Customers should be duly instructed and often reminded as to the safest methods of protecting their cheques against dishonest persons.

Some brokers continue to say that the Consol market has gone, that there is no regular course of buying as formerly, and that trustees avoid Consols, partly because they cannot conveniently deal

with a 23% Stock falling to 2%, and partly because other channels of investment have been opened for them.

I have already alluded to the publication of monthly accounts by the London bankers. It appears reasonable that this custom should be made universal, and not applied only to a few banks. So far as this new plan may tend to satisfy the public mind, and to enforce habits of prudence with respect to reserves, advances, and investments, it is unquestionably good. But the system is not without risk. Needless alarm, and possibly consequent mischief, might arise from a large and sudden variation in the figures of some publishing bank, even though the change had been produced by a most legitimate cause.

Ordinary banks are not in same position as the Bank of England -however rich and powerful they may be, since commercial men feel that, at a real pinch, there stands behind the Bank of England the solidity of the British Government. Perhaps I may give an illustration, though like most illustrations it is not applicable throughout. I remember a story of a fight between an English and a French ship. The French were worsted-and the captain went on board the English frigate to arrange terms of surrender-at that moment the Englishmen had not a single shot left. Now if these ships had been obliged to display at their mast head, the condition of their ammunition, the victory would have been exactly reversed.

Perhaps there is not much in the danger that I have noticed and I trust that the new arrangements may prove beneficial.

The last topic to which I shall direct your attention in this very imperfect review of the banking events of the past twelve months is not a pleasant one. I speak of banking misfortunes-the wrecks that serve as warnings to more fortunate traders. Some land banks have failed, such as-The Imperial Banking Company of Melbourne; The Anglo Australian Bank; The British Bank of Australia; The Australian Mercantile Loan and Guarantee Company; The City and Country Investment Company; but these were land companies rather than banks. The term bank is sometimes misleading, and it would be well if it could be defined, so as to be used only in a restricted and proper sense.

Eastern and Australian banks have encountered heavy weather during the past year. In Australia the Bank of Van Diemen's Land has failed. The New Zealand banks have not escaped trouble.

At home banking business has been fairly good, though by no means equal to the best years.

Let us hope for prosperity and quiet times during the coming twelve months. Unforeseen, unavoidable, undeserved difficulties may arise in some cases. But as a general rule good banking produces good profits. Caution and courtesy should be watch-words for bankers. Towards the knowledge and the information and the united friendly action that lead to sound results, your Institute will always endeavour to contribute.

Mr. WILLIAM FOWLER: I have been asked to move a vote of thanks to Mr. Salt for his very interesting paper. I do not know that I can say I agreed with every word of it; but I am sure we shall all agree that he has discussed these subjects with great moderation and great ability. There are one or two observations that I should like to make that I think are of some interest in looking back at this extraordinary year. I am afraid there are not very many as old as I am in this room, who can look back to so many crises as I can. I went into Lombard Street as an active partner in a very important house in 1856, and I did not anticipate that the panic of 1857 would have come so soon after I entered business, otherwise I think I should have preferred to remain in the quiet shades of Lincoln's Inn, rather than to enter into that more profitable place, Lombard Street. But I did pass through the panic of 1857, with a whole skin, certainly, but not without anxieties, and I have passed through the panic of 1866, and I have now seen the panic— no, the crisis-of 1890. The remark I make is that the crisis of 1890 was not a banking crisis; that it did not arise from the imprudence of bankers at all. Bankers were the sufferers by the panic of 1890, not the creators of that crisis. But the crisis of 1857 was caused by the imprudence of bankers-not bankers such as we see represented here, but bankers who have disappeared; and the crisis of 1866 was mainly caused by the imprudence of a single house largely engaged in financial operations, a house that was a bank for bankers. Now, when I look back at the contrast between these crises and the crisis of 1890, that contrast, certainly, is very remarkable. The crisis of 1890 came, in a sense, like a thunderbolt out of a clear sky, and arose from the gross imprudence of a house in the highest credit ever known. Now, that being so, it would not be fair to say that bankers were in fault in the year 1890; and I think that is a very important observation to make, because a good deal has been written in the newspapers and other places on the assumption that the whole banking world was at fault in the year 1890. I maintain, on the contrary, that if the banking world had not been fairly well managed, the crisis of 1890 would have become unmanageable. As it was, it was got over with a comparative ease which was perfectly astonishing to one who, like myself, had seen Black Friday in 1866, and gone through the miseries of 1857. We must not go away with the idea that bankers are fairly responsible for the crisis of 1890; it is nothing of the kind. The other observation I should like to make is a confirmation of what the Chairman has said, and I think it is of some interest. Every crisis that we have had has made us more prudent. When I came to Lombard Street, it was not a very uncommon thing for the bank reserve to be about 4 millions, and it then became, perhaps, a little alarming; but we went through weeks I think I am right in saying-with 4 or 5 millions of reserve, and did not feel particularly alarmed until banks began to

tumble down, and money became what is called "tight." But after the panic of 1857 was over, I remember particularly well there was a great change in the management of banks all over England, and I knew it in this way: The great business of our house about 1857 was re-discounting for country banks. That business rapidly reduced after 1857, because banks felt the imprudence of having such a mass of bills that they could not hold themselves, and therefore they kept more money in London than they previously had had. But that process went on far more rapidly after the year 1866, and after 1866 the reserve of the bank was habitually much larger than it had ever been before, and I believe the condition of banks generally was marvellously improved by the lesson of 1866. Those lessons have never been forgotten, and it may truly be said, I think, that the great bulk of banks in the country that were large discounters in 1866, are now large depositors in London-a change very marked and very important. Now I think, therefore, that the crises have not been without their good effect. They have produced caution, they have produced a disposition to keep more loose money; but we must remember that our greatness as a trading nation depends upon this-that we trust one another, and carry on our business to a very large extent upon credit. We could not do our business if we carried on our business as men do on the continent, to a very large extent upon cash, one man not trusting another. I remember being told by a rich man on the continent that he would not trust a banker or anybody with sixpence, and he pointed to the chest where his money was kept as his only banker. I have no doubt he had a quantity of money in that chest. That is the sort of thing which prevails on the continent. People will not trust one another, and a vast amount of capital is not used which would be used in England, being used by the bankers for those to whom it belongs. The system of deposits and of using money has increased enormously in our own time all over the country. number of people who keep banking accounts has increased greatly, and is continually increasing. There are dangers in it, but there are great benefits. We want, as the Chairman says, to keep more cash. That is true, but we cannot have our cash and use it. That is a thing we are apt to lose sight of. I remember we had a great debate in the House of Commons in 1873, and I pointed out to the House then that it was impossible we could have a very comfortable time on all occasions, if everybody would use up all their cash every night of their lives. Even now there is too strong a tendency for people to think they are not comfortable if they go home with any money unused. But there is a great improvement, and I am certain the amount of cash kept in proportion to liabilities is very much larger, taking the whole country over, than it used to be. We must not forget that so long as we do our business upon credit we are liable to these crises and difficulties; but on the other hand

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we must not forget that crises do not come every ten years as they used to do by a kind of natural law, for since 1866 we have never had a panic. I do not regard 1890 as a panic. I have passed through panics. But that is what I call a crisis, not a panic. I hope we have passed the era when it is necessary to have these crises, but we are liable to them because we do use our money up so closely by trading upon credit. It is a good thing in itself and saves us enormously in the course of ten years in interest, and adds to the power of the country in commercial matters. I remember a distinguished man-a banker-who has gone from us, saying to me one day, "I dare say, Mr. Fowler, we ought at our bank to "have £250,000 more every night, in cash, than we have, but "what a lot of money that would cost us in ten years, and I do "not know that I should be better off if a crisis came.' I do not say that is a sound argument, but it was an argument used by one of the most distinguished financiers I ever had the honour of knowing. Keeping a great deal of cash is very expensive, and many gentlemen in the room know that, and shareholders will find it out, and those who are interested in banks will find it out. I confess I look back on this last year with a good deal of satisfaction, in considering how able the country was to meet this terrible difficulty. Some people have said to me that it would have been better if the whole thing had been fought out to the bitter end. Well, I am very thankful it was not. I think any man who says that, has very little idea of what the consequences would have been. My own impression is, that the magnitude of that crisis would have been something compared with which all other crises would have been as nothing, and the injury to this country would have been incalculable, and I honour those who came forward so boldly to meet it. I think we have a great difficulty arising from our laws in dealing with these crises. It is my firm conviction that a change in the law might be made which would give more elasticity to our system, without in any way encouraging imprudence. I believe, if we had something like the German plan, by which there would be a power of extra issue, but with the condition that, on every penny issued beyond the gold limit, there should be interest at a considerable rate paid to the Government, we should not have that liability to excessive alarm which we have had in times past. I wonder what people, in the crisis of 1847, must have felt-those who never had had a letter from the Chancellor of the Exchequer, and only had to hope that Sir Robert Peel was right when he said, in substance, the thing would work all right? Robert Peel had nothing to do with business, or he would not have thought so. I think that must have been a very bad quarter of an hour for people who did know what was going to happen. I have heard it said that Lord Sherbrooke said, nothing would have induced him to do anything if he were Chancellor; and I am very thankful he is no longer Chancellor of the Exchequer. Something has to be

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