It is no commendation of these suggestions to say, that they are decidedly superior to the Government propositions by which they were followed: they are not, however, what they ought to have been. I object to the limitations upon the number of partners, the amount of capital, and the distance of branches: they are arbitrary, unnecessary, and, therefore impolitic. No definable law exists in Banking applicable to details of this kind. Different systems and modes of business constantly render all such primary conditions nugatory and absurd. We know that a large paid-up capital does not offer a sufficient guarantee against imprudence and loss; and, on the other hand, that a small paid-up capital does not repel customers, when attention, regularity, knowledge, and judgment are apparent. In these particulars, and also in that which advised Government interference, the directors of the Manchester and Liverpool Banks do not appear to have taken very sound views. Many well-educated and liberal-minded men have been strangely led away of late years by a mistaken partiality for the summary correction of every thing that goes wrong, by giving the Government of the day power to direct a right course in all things, and preventing people from taking any other but the one prescribed. Wiser heads and more expressive pens than mine have exposed the folly of this notion; I only repeat the sense of men who are entitled to be regarded as authorities, when I assert that all dictation of this kind in matters of trade and commerce is positively mischievous. Whatever you impose upon Government, you remove from the real agent; Government interference, accordingly, relaxes care and industry, retards progression and improvement, divides and diminishes responsibility, and by checking the natural impulses of interest and invention, crops prematurely the products of their fruitfulness.

I have been more than once at a loss for an appropriate place to speak of the Bank of Manchester, and as I fear I am not likely to find one more suitable than the present, I shall here offer a short sketch of its constitution and proceedings. The suggestions I have just copied and considered explain the opinions entertained by some of the most eminent merchants and manufacturers in Manchester upon the law of joint-stock Banking. The operations of the Bank of Manchester exhibit their practice as Bankers. The directors are amongst the most stirring, intelligent, wealthy men in their district. They are leading members of the Manchester Chamber of Commerce; they have figured conspicuously before the committees that have made Banking so frequently a subject of inquiry in the House of Commons of late years. Their proceedings have attracted, and are entitled to attentive consideration.

They founded the Bank of Manchester in the latter part of 1828, and commenced business in 1829. In 1832 the company consisted of 600 proprietors; the subscribed capital was 2,000,000l. sterling, the paid up 300,000l. This was at the rate of 15l. a share, the premium upon which was then 4l., and the dividend eight per cent, per annum. Soon after the establishment of the Bank, the directors applied for, and were refused, a discount account at the Manchester branch of the Bank of England. This compelled them to send their bills for discount up to the London bill-brokers, who charged a profit upon the transaction. At this period they circulated no notes, that is to say none payable to bearer on demand. But they issued bank post bills at seven days sight, and drafts on London at thirty, sixty, and ninety days. To explain the general character and extent of these transactions, Mr. Dyer, one of the directors, stated to the Bank Charter Committee in 1832, that of the last two millions of money paid by the Bank, one million had been paid in Bank of England notes and specie, (the latter in the proportion of one-fourth) 90,000l. in re-issued bills of exchange, 753,000l. in drafts on their London agents and customers' acceptances, and 180,000l. in bank post bills.

I have spoken in chapter II (Bankers Of The Old School And The New). of the ordeal the directors had to undergo when they resolved to issue their own notes, and the spirited manner in which Mr. Denison aided them in taking that course. The result of the experiment, and the present condition of the company was detailed in the report of the directors in October, 1841. According to that document, the failure of a number of houses having transactions with the bank, and several losses, amounting in the aggregate to a large sum, had been sustained during the preceding year. Notwithstanding the exaggerated reports which had been circulated respecting these bad debts, to the prejudice of the share-holders and the business of the concern, the managers were happy to say, that after providing for the whole of the losses of former years, as well as those of the past year, the reserved surplus fund had been found more than adequate to cover the same without trenching on the capital of the bank. The accounts had been balanced to the usual period, the 30th of June, by which it was shown that the net profits for the year amounted to 50,830l. 12s. 11d. Out of this sum, two dividends (making together five per cent. on the capital) had been paid to the proprietors, amounting to 37,051l. 10s. The remaining balance, 13,779l. 2s. 11d., had been carried to the reserved surplus fund. That by the last report, was 36,642l. 9s. l0d.; the above portion of profits being added to it, viz., 13,779l. 2s. 11d., made 50,421l. 12s. 9d., from which had been deducted the total estimated amount of losses to the 1st of July, 31,000l., leaving a balance of 19,321l. 12s. 9d. as the credit of the reserved surplus fund. The amount of the paid up capital was stated to be 741,030l., and the number of proprietors 515. The directors regretted that the losses above referred to, and the continued depression of trade, had rendered it advisable to reduce the rate of dividend for the last half year. They also announced that in consequence of the prevailing prejudice in Manchester and its neighbourhood against the circulation of local notes, they had decided to discontinue the issue of notes payable to bearer on demand, and to withdraw those in circulation. The Bank therefore ceased to be a Bank of issue on the 19th of July, 1841.