Making all due deductions, however, it is not to be denied that the spread of joint-stock Banks in 1836, and the liberal dividends some of them distributed to their shareholders, - dividends as high as ten or fifteen per cent., - afforded matter for serious reflection to the wise and wary, and must have suggested no ill-grounded fears, that a state of things which had shot up into such quick maturity was precocious, and neither perfectly sound at heart, nor destined to a lengthened career of health or prosperity.

Their mettle was soon tried. I recollect the strong saying of an old city quidnunc in the autumn of 1836, - "Nothing now can save the Bank of England, but lots of failures and a whopping fall of prices." Both came quickly and sharply, and the principal failures began amongst the Banks. The first who broke in 1836 was Evans of Manchester, a discount and deposit Banker, whose business for such a place was not extensive. The Agricultural and Commercial Bank of Ireland stopped next, with forty-six branches, and admitted liabilities exceeding a million sterling. This happened in October; and in December the Northern and Central Bank of Manchester followed, with forty branches, and an extent of liabilities not positively disclosed at the time, but certainly above a million and a half.

In January, 1837, two private Banks closed at Carlisle, one of which, that of Foster and Co., owed four hundred thousand pounds. Esdaile's in London stopped in the same month, for a very large amount. They were immediately followed by W. Medley and Sons, at Aylesbury. In the middle of the year the Leamington joint-stock Bank, one of three in that small place, failed; and about the same time the Norfolk Banking Company, and the Bank of Birmingham, merged into other co-partnerships. The debts of the first of those last-named were about 170,000l., and the losses of the two others amounted to about 100,000l. each. All three afterwards paid their liabilities in full.

The year 1838 passed without any Bank failures; but towards the end of the year the joint-stock Banks lost character in another way. It had been surmised for some time, that several of these companies had acted indiscreetly, giving accommodation in various quarters upon bills which did not represent bona fide transactions, and making advances of money upon stock and buildings, - a description of security which a Banker can seldom touch with safety. The Bank of Manchester was understood to have been severely hit in this way as early as 1836; and the North of England Banking Company was known to have got into serious difficulties by similar imprudence, about the same time. But the strongest instance of that kind of excess was disclosed by the Manchester and Liverpool District Bank, late in 1838. This had been one of the most flourishing of the joint-stock companies; fifteen pounds had been called upon its shares, making above a million of ready money, - the largest paid-up capital of any joint-stock Bank in the country except the Bank of England. Amongst its shareholders were many of the most stable and opulent merchants and manufacturers of its locality. Its deposit-fund exceeded two millions sterling; it issued no notes but those of the Bank of England, for which it paid by agreement an interest of three per cent. per annum.' At one period its shares bore a premium of 221. 10s.; towards the end of 1838 they were at par. This depreciation was entirely the result of bad Banking. It seems an odd remark to make, and yet it is a perfectly correct one, that the directors had too much money: they found it difficult to put out their three millions in the ordinary channels of investment, at a rate of profit which would enable them to realize the handsome dividends their proprietors looked for, and were thus tempted to transgress the bounds of legitimate Banking. They advanced one customer5 250,000l. upon a security which they no sooner attempted to take, than the debtor turned round and pleaded his co-partnership as a bar to its recovery. To another manufacturer they lent 120,000l.; to a third, 50,000l.; and to others different smaller sums, which locked them up, damaged the reputation of the managers as good men of business, and entailed considerable losses.

The interval I have just passed over, together with the amount of the failures, and the extent of mismanagement occurring during it, has been repeatedly dwelt upon by those who are unfavourable to the joint-stock system of Banking. It took, no doubt, from the new establishments, and very deservedly, many an attraction, and much of the popularity previously borne by them; but putting all the facts together, and founding our judgment of them upon the result, it is, I think, clearly demonstrable that, upon the whole, the country had gained an improved condition of Banking.

5 At the general meeting in January, 1839, the directors were obliged to propose to write off, as a positive loss, the sum of 375,000l., in consequence of the insolvency of two firms - Messrs. Taylor, Son, and Gibson, woollen manufacturers, and Messrs. Brown and Powell, calico printers.

The case on both sides stands thus: there were certain failures upon the part of private Banks and joint-stock Banks, and a certain description of losses upon the part of the latter; these losses, however, fell not upon the public, but, in each instance, upon the respective proprietors. So far the community suffered nothing. Then, as to the failures, they proved at this particular juncture more numerous amongst the joint-stock than amongst the private Banks; but of those already mentioned, the Leamington Bank, the Norfolk Banking Company, the Bank of Birmingham, the Agricultural and Commercial Bank, and the Northern and Central Bank, one and all paid their notes and creditors in full, within a short interval. When the Northern and Central Bank obtained 1,300,000l. from the Bank of England, not one person out of ten in the money-market believed the advance would be repaid, and yet the whole was repaid in a year after. Before that was done the Agricultural Bank had met its note issues, discharged other heavy incumbrances, and had started afresh. I have alreadv stated that the other suspended joint-stock Banks honoured all their engagements: these were novel circumstances in the history of Bank failures.