four, five, or even ten times the value of a quantity of merchandise, have grown out of its successive sales, before the first bill of the series has become due. And not only this, but bills are themselves very frequently rediscounted ; and in this case the credit of the last indorser is generally the only thing looked to ; and there is not, perhaps, one case in ten in which any inquiries are made in regard to the origin and history of the bills, though they are often
of the most questionable description.On the whole, therefore, it would seem that the real or presumed solvency of the parties signing a bill, and respon sible for its payment, is the only safe criterion by which to judge whether it should or should not be discounted. But the fact of a merchant or other trader offering accommoda tion bills for discount ought unquestionably to excite a suspicion that he is trading beyond his capital. Inquiries of the most searching description should forthwith be instituted ; and unless satisfactory explanations are given, his paper should be rejected. On the same principle, the offering of bills for rediscount ought to awaken suspicions of the bankers and others who resort to so questionable a mode of carrying on business. But, except in so far as a feeling of distrust may be thus very properly excited, there does not appear to be anything in an accommodation bill per se to hinder it from coming within the pale of negotiability. It is a mode of obtaining a loan from a bank ; and when the character of the bill is known to the banker, or is openly declared, it does not appear to be an objectionable mode.
Besides bills avowedly intended for accommodation pur poses, another and a different variety of such bills is drawn by parties at a distance from each other, often men of straw, and made to appear as if they were bottomed on real trans actions. Bills of this sort are, it is greatly to be regretted, always current, and often to a large extent. Of course no person of respectability can be knowingly connected with such bills, which are almost always put in motion either to bolster up some bankrupt concern, or to cheat and defraud the public. But despite the mischief of which they are productive, it appears to be pretty generally supposed that the currency of these bills is an evil which cannot be pre vented. There can, however, be no real doubt that it may, at all events, be very greatly diminished ; and this desir able result would be effected were it enacted that all bills shall henceforth bear upon their face what they really are ; that those that are intended for accommodation purposes shall have at their head the words " Accommodation bill; " and that those only shall bear to be for " value received " that have grown out of bonafide transfers of property. An enactment of this sort could not be felt as a grievance by any one unless he had a fraudulent purpose in view. And were the impressing of a false character on a bill made a criminal offence, punishable by several years imprison ment, there is every probability that a formidable check would be given to the issue of spurious bills, and to the manifold abuses to which the practice gives rise.
Bill-discounters who have got fictitious paper on their hands and attempt to get rid of it by concealing its char acter or representing it in a favourable light make them selves parties to the fraud. Such conduct is so very flagitious, that when it can be fairly brought home to the parties it should subject them to the severest penalties.
The rates of discount charged by the bank, since its establishment in 1G94 down to 1845, were as follows:—
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Per cent. FromAug. 8, 1694 to Aug. 30, 1694 on Foreign bills 6 Aug. 30, 1694 Jan. 16, 1695 Foreign bills 4^ Oct. 24,1694 Jan. 16,1695 Inland bills 6 Jan. 16, 1695 May 19, 1695 Foreign bills G Do. to customers of the bank 3 Jan. 16,1695 July 26, 1716 on Inland bills 4 Tcr cent. From May 19, 1695 to Feb. 28, 1704 on Foreign bills 4 Do. on Foreign bills not payable at the bank 5 Feb. 28, 1704 to .Tnnp, "22. 1710 mi F yrpicm bills. . . June 22, 1710 July 26, 1716 For. & Inland do. 4 July 26, 1716 April 30, 1719 B ills arid notes 5 April 30, 1719 Oct. 27 1720 Bills 5 Oct. 27, 1720 Aug. 23, 1722 Bills 4 Aug. 23, 1722 Oct. 18,1742 Inland bills 5 Do. do. Foreign bills -i Oct. IS, 1742 Dec. 12, 1744 Foreign bills. . . 5 Dec. 12, 1744 May 1, 1746 do. (15 d. to run) . 4 Do. do. Ii iland bills .. .5 May 1, 1746 April 5, 1773 Foreign bills 5 May 1, 1746 June 20, 1822 Bills and notes (95 days to run) 4 June 20, 1822 Dec. 13, 1825 do. 5 Dec. 13, 1825 July 5, 1827 do. 5 July 5, 1S27 July 21, 1836 do. 4 July 21, 1836 Sept. 1, 1836 do. 44 Sept. 1, 1830 July 15, 1838 do. 5 Feb. 13, 1838 May 16, 1839 do. 4 May 16, 1839 June 20, 1839 do. 5 June 20, 1839 Aug. 1, 1839 do. 54 Aug. 1, 1839 Jan. 23, 1840 do. 6 Jan 23 1840 Opt IK i.<un fi. i rlnv bills . Oct 15 1840 .Tmip R IK-il 95 dav bills 5 June 3, 1841 April 7, 1842 do. 5 April 7, 1842 Sept. 5, 1844 do. 4 Sept 5 1844 lU.ii- 13 184S ills .. .. 2 A Do do Notes 3
Since 1845 the changes of interest have been, for reasons already given, much more numerous. We give the number of changes in each year—
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In 1845, 2 changes. 111 1855, 7 changes. In 1865, 14 changes. 1S4G, 1 ,, 1856, 8 1866, 14[1] 1847, 10[2] ,, 1857, 9[3] 1867, 3 1848, 3 1858, 6 1868, 2 1849, 1 1859, 5 1869, 7 1850, 1 ,, 1860, 9 1870, 9 1851, ,, 1861, 13[4] 1871, 10 1852, 2 ,, 1S62, 5 1872, 13 1853, G ,, 1863, 12 1873, 24[5] 1S54, 2 ,, 1864, 14[6] 1874, 14
The dividends on bank stock, from the establishment of the company to the present time, have been as follows:—
Years. Dividend. Years. Dividend. 1694, 8 per cent. 1823, 8 per cent. 1697, 9 ,, 1839, 7 1708, ) Varied from 9 to 1852, 74 .. 1729, 5^ per cent. 1853, 8 1730, 6 1856, 94 )> 1730, 5i 1859, 84 1721, 6" 1863, 85 ,, 1728, 54 1864, 9* 1747, 5 1865, 1U 1753, 44 1866, 101 1764, 5 1867, 10 1767, 54 1868, 8 , 1781, 6 1869, si , 1788, 7 1872, 94 , 1807, 10 1873, 10
- ↑ The average rate in 1865 was 4, but at the close of the year it rose to 6 and 7 ; and in 1866 it mounted until it reached 10 per cent, on the 15th August, from which it fell to 3 before the end of the V6tir.
- ↑ Rising from 4 per cent, on 3d April to 8 per cent, on 20th Nov., declining again to 5 per cent, by 24th Dec., and to 3 in 1848.
- ↑ With the exception of one week the rate was high, varying from 4 to 54 from Sept. 1853 to May 1856, from which date it rose to an average of 6 per cent, until Oct. 1857, when it rapidly mounted to 10 per cent, in Dec. 1857, and thence declined to 4 in Feb. 1858.
- ↑ 7 was the average rate in the spring, and 6 the average in the summer of 1861.
- ↑ The crisis in America (see Banking in the United States, p. 341) was followed by a rapid rise from 3 per cent, on the 20th August to 9 per cent, on the 5th Nov., from which the rate receded to 44 before the end of the year.
- ↑ At the end of 1863 the rate rose to 7 and 8 per cent., and it oscillated about these figures throughout 1864, twice falling to 6, and twice rising to 9 per cent.
