Reference has frequently been made in the preceding pages to the bill introduced by the late government, dealing with the charters of the Colonial banks. As, however, in consequence of the fall of that government, the bill was not proceeded with, it can scarcely be described as forming part of recent banking legislation. It will be convenient, nevertheless, under this section to give some account of the bill, especially as the present government have expressed their general approval of it, and as it will most likely form the basis of some measure to be hereafter introduced.
The charters of the colonial banks were originally granted for longer or shorter terminable periods; and, at the expiration of such times, it was always necessary to have them renewed for a further terminable period. This system having been found somewhat cumbersome, a suggestion was made to the late government on behalf of the banks, that a bill should be introduced into parliament authorizing the perpetuation of the existing charters. This suggestion was favourably received by the government, and in accordance therewith they introduced a measure in February, 1880, entitled, "A Bill to make further provision with respect to certain Chartered Banking (Colonial) Companies, and for other purposes."
The preamble recited that the powers and privileges conferred by the charters of these banks are subject to determination at the times mentioned in the charters, but are capable of being renewed at Her Majesty's pleasure; that the said charters authorize the Treasury to control in certain respects the management of the banks; and stated that it is expedient to relieve the Treasury of its functions in these respects, and leave to the banks the uncontrolled management of their own concerns; but that at the same time it would be inexpedient that such removal of control by the Treasury should involve the determination of the powers and privileges conferred by the charters.
And the bill therefore proposed to enact:-
That the charters of the banks named in the schedule, in force at the date of the passing of the Act, and all powers and privileges therein contained, should, on the expiration of the time at which such charters are respectively limited to expire, continue in the same manner, in all respects, as if there were not in force any provision determining the same.
That power should be given to each of the banks, by special resolution passed by a majority of not less than three-fourths of the shareholders, to increase its capital by the issue of new shares of such amount as might be considered expedient, or consolidate and divide its capital into shares of larger amount than the existing shares.
That nothing in the Act should authorize any of the banks to exercise any power in relation to note issues, in relation to the establishment of branch banks in any colony, which it is not exercising at the time of the passing of the Act, and to the exercise of which the sanction of the Treasury is required, save with the assent of the governor of the colony where it is proposed to exercise such power; or, in the case of India, save with the assent of the Secretary of State in Council.
That from and after the passing of the Act the Treasury should cease to exercise the powers and control vested in them by the existing charters.
Provided-That nothing contained in the Act should affect the power of Her Majesty to revoke any charter, in such events as are at present contemplated in such charters.
This bill was referred by the House of Commons to a Select Committee for consideration. The Committee sat, and took evidence, and duly reported to the House, but before anything further could be done in the matter, the government resigned.
Shortly after the accession of the present government to power, however, the colonial banks brought the matter before them, and evoked a reply in the shape of a Treasury minute, dated the 21st July, 1880, of which the following is a copy:-
"My Lords read the bill brought into parliament by the late Board of Treasury making further provision with respect to certain Chartered Banking (Colonial) Companies. They read also the report of the Select Committee to which that bill was referred. They approve generally the principles embodied in the bill, and they would have been willing, if time and other circumstances had permitted, to re-introduce it in the present session, modifying it only to this extent, that they would have reserved to parliament the right from time to time of reconsidering the privileges which the charters confer. But the late period at which the work of the present session commenced, and other circumstances, have made it impossible for them to bring the question before parliament with fair prospect of exhausting the debates which they have reason to anticipate on the subject of the bill, and of passing it. The chartered banks affected by the bill have now been kept for some time in suspense as to the conditions to be imposed upon thorn, and my Lords would be reluctant to-prolong a state of suspense, which is in no degree due to the action of the banks themselves. They have accordingly considered whether they could adopt a course which would prepare the way for the advantages sought in the bill, while reserving to parliament due power of review; and they propose to attain these objects in the following manner. They will cause a model charter to be prepared, embodying in simple and concise terms the provisions of the bill of the late government, with any general clauses of the existing charters applicable either wholly or with slight modifications to all the banks. On the expiry of a charter, if the bank desires a new charter, my Lords will lay upon the table of both Houses a draft containing the provisions of the model charter, and so much of any special matter in the previous charter as my Lords may decide to be not inconsistent with the said provisions, and after the draft has lain for a certain period unchallenged, they will advise her Majesty in Council to grant the charter to the bank for a further limited period. Many of the charters do not expire for a considerable period. Should, in the meantime, the directors of any chartered bank desire to obtain a supplementary charter, or to resign their charter and obtain a new one, my Lords, if, in the exercise of their discretion, they entertain the proposal at all, will deal with it on the same principles as if the charter had expired by efflux of time. So long as existing charters remain in force my Lords will exercise the powers assigned by such charters to the Treasury according to their best discretion. My Lords will be ready to communicate the model which they propose to adapt to the different banks concerned, as soon as it is prepared, it being their object to offer no obstacle to the progress of the banks so long as the control of parliament and the simplicity and soundness of the regulations approved by the Treasury are secured. My Lords have only to add that the final arrangements should be such as will reserve to parliament entire liberty in dealing with this as with any other banking question. They will therefore endeavour to fix the limits of time for new charters on such a principle as will eventually ensure concurrence of the periods for which they are granted. A copy of this minute has been sent to each of the banks in the schedule of the Chartered Banks Bill laid before parliament in February last."
Such is the position of this question at the present moment, and it still remains to be seen what legislation, if any, will be proposed for the relief of the colonial banks by the present government.