The Bank of Ireland is a chartered bank, like the Bank of England. It is the Government bank. It issues notes and has branches in the principal towns throughout Ireland. It has now no exclusive privileges.
In tracing the history of banking, we may observe that most public banks have been formed, in the first instance, under the protection of the Government of the State in which they were established. Such was the case with the Banks of Venice, Genoa, and Amsterdam; and such, too, was the case with the Banks of England, of Scotland, and of Ireland. The former were closely connected with the State, and may properly be called "State Banks;" the latter had peculiar privileges bestowed by charter, and are usually called "Chartered Banks." These privileges may be divided into two classes, those which refer to the proprietors themselves, and those which refer to other parties. The privileges of the first class relate to the amount of capital, the form of government, the number of directors, and the mode of their nomination, the meeting of the proprietors, and the specification of the branches of business the banks are allowed to carry on. The privileges of the second class refer to the restricted liability of the shareholders, and the prohibition of other parties carrying on the same business.
If the charters granted to banking companies conferred only the first class of privileges, they would be liable to but little objection. In the infancy of commerce and of banking, the assistance of the Government may with propriety be granted to encourage the formation of institutions so eminently calculated to promote the public advantage. But of what avail are prohibitory clauses? If no other persons are disposed to form similar institutions, then those prohibitions are a nullity. But if other parties are disposed to form similar companies, without the assistance of the Government, then why should the Government interfere at all? Why should they grant a charter to effect an object which can be effected without their assistance?
In the charter first granted to the Bank of England in 1694, there was no prohibitory clause. But when the charter was renewed in 1708, it was enacted that no other company formed of more than six persons should carry on the business of banking in England. The charter granted to the Bank of Scotland in 1695, contained the following prohibition:-" That for the period of twenty-one years from the 17th of July, 1695, it should not be lawful for any other persons to set up a distinct company or bank within the kingdom of Scotland." This privilege was not renewed after the expiration of the twenty-one years; and in the year 1727 a charter, without any prohibitions, was also granted to the Royal Bank of Scotland. In the year 1746 the British Linen Company was formed, and carried on the business of banking as a joint-stock company. Subsequently this bank also obtained a charter, but without any exclusive privilege. Hence Scotland has had the advantage of chartered banks, and joint-stock banks, and private banks, all working well together, without producing those effects which in this country have followed the prohibitory clauses of the charter of the Bank of England.
Both in its constitution and government the Bank of Ireland closely imitated the Bank of England; and it has produced in Ireland most of the advantages and evils which that establishment has produced in this country. It has supplied the country with a currency of undoubted solidity; it has supported public credit, it has granted facilities to trade, and it has assisted the financial operations of the Government. On the other hand its prohibitory clauses necessarily led to the formation of many private banks, whose failure was the cause of immense wretchedness to all classes of the population.
The charter of the Bank of Ireland contained a clause which prevented more than six persons forming themselves into a company to carry on the business of banking in Ireland. In the year 1824, they surrendered this exclusive privilege, as far as regards those places which are situated at a greater distance than fifty Irish miles from Dublin; and in 1826, the Bank of England made a similar surrender, with regard to places at a greater distance than sixty-five miles from London. As eleven Irish miles are equal to fourteen English miles, fifty Irish miles are equal to about sixty-five English miles. But it must be observed, that Dublin is situated on the sea-coast, therefore, the Bank of Ireland had only the monopoly of a semicircle, whose radius is fifty Irish miles. But London being situated inland, the Bank of England had the monopoly of a whole circle of 130 English miles in diameter.
The Bank of Ireland was established by an Act of Parliament passed in 1782, 21 and 22 Geo. III. cap. 16. The following are the provisions of this Act:-
The capital was =£600,000, which was lent to Government at 4 per cent. No one person was permitted to subscribe more than £10,000. If the bank incurred debts to a greater amount than their capital, the subscribers were answerable in their private capacity to the creditors in proportion to their subscriptions. The bank were not either to borrow or to lend money at a higher interest than 5 per cent., nor to engage in any business but banking. The stock to be transferable and deemed personal estate, and as such to go to the executors of the holders, and not to their heirs. No transfer of bank stock to be valid, unless registered in the bank books in seven days from the contract, and actually transferred in fourteen days; the charter to expire at twelve months' notice after the 1st day of January, 1794, and repayment of all sums due by the Government to the bank.
The charter is dated May 15, 1783, and contains as follows:-Such persons as should subscribe before January 1,
1784, the sum of £600,000, were to be formed into a corporation, to be styled the Governor and Company of the Bank of Ireland. The corporation were to have a governor, deputy-governor, and fifteen directors; which governor, deputy-governor, and directors, or any eight or more of them, shall be called a Court of Directors, for the management of the affairs of the corporation.