language Cheques. The very essence and business of banking consists in "making engagements to pay money payable to bearer on demand." It may be said, indeed, that a banker is not a party to the cheque: true, his name is not on the face of the instrument, as an obligor; but he is bona fide, and, in reality, a party to it so long as he has funds to meet it: for it is a legal liability of his to pay his customer, or any one his customer may assign it to; and by the very fact of his creating the Credit, he authorises his customer to put it into circulation. So long as his customer does not exceed the amount at the credit of his account, the banker is legally a sleeping party to the cheque.

Now, suppose that two men agree to assail a traveller; one of them points a loaded pistol at the traveller's head, the other pulls the trigger both are equally guilty of the murder. Suppose one man lights a match and gives it to another man, and tells him to set the house on fire, both are equally guilty of the arson.

The very same argument applies to the ordinary routine business of banker and customer. The law distinctly says that no banker "shall make any engagement to pay money payable to bearer on demand." But the ordinary routine business of a banker to create a credit in favour of his customer which he expressly authorises his customer to make payable to bearer on demand, and to put it into circulation. Now what is this transaction but a clear conspiracy between the banker and the customer to violate the express words of the Bank Charter Act of 1844? The banker creates the engagement, and the customer puts it into circulation. The banker loads and points the pistol at the Bank Act, and the customer pulls the trigger: or the banker lights the match and delivers it to the customer who consumes the Act. How is this transaction one whit less a conspiracy in law than in the case of the murder or the arson?

Of course, the whole difficulty has been created by the gross ignorance of those who drew the Act of the routine business of banking: but that is no business of ours. There stand the distinct words of the Law; and there are the actual facts of banking; and it is not possible for the wit of man to reconcile them.

40. The subject cannot fail, we think, very soon to engage the attention of the Courts of Law and the Legislature, for very

recently a new institution has been founded which is a still bolder contravention, not only of the Bank Charter Act of 1844, but of all our monetary legislation for the last hundred years, with a certain exception.

This Bank is called the CHEQUE BANK, and we will first describe its method of business, and then compare it with the existing monetary Laws.

It receives Money only, and in exchange for this money it issues an exactly equal amount of cheques payable to order, and crossed with the words " & Co."

Thus, suppose a person pays in £50; it will give him a book containing ten cheques payable to order and crossed, and perforated with the mark not exceeding £5. The customer may, of course, fill up the cheque with £5, or any less sum; but not with any greater sum and supposing that any balance remains after the customer has exhausted the 10 cheques, the bank will give him cheques to the amount of the balance.

As the cheques are crossed, it pays no money over the counter, but all its cheques must pass through the hands of a banker, and are only payable to a banker. But though the Bank itself only pays them to a banker, any banker or other person may give cash for them just in the same way as for an ordinary cheque, and in the first year of its existence it has already established relations with about 1,500 home, foreign, and colonial banks, which will cash its cheques.

The plan adopted by this Bank obviates an objection to which ordinary cheques are liable: when a customer places money with an ordinary banker, the banker gives him a cheque book, but there is no security that the customer may not draw cheques in excess of the credit he has in the Bank: consequently, no one who takes an ordinary cheque has any guarantee that the drawer has any funds to meet it. But this cannot happen with the cheques of the Cheque Bank. They are not issued except in exchange for money: and any one who takes one of them is positively assured that it will be paid. These cheques, therefore, have all the actual security of cash. They are intended by the promoters of the bank to be received as a substitute for cash; and already several Railway and other companies have agreed to receive them as cash. The Directors also propose to supersede Post Office Orders; and there can be no doubt that they are far more convenient and

cheaper than Post Office Orders. As the Directors take care to issue no more cheques than money paid in, they publicly announce that none of their cheques will ever be refused, however long it may remain in circulation. These cheques are, therefore, in reality, crossed Bank Notes.

Now we do not intend for one moment to question the merit, the ingenuity, and the utility of this bank. But the question is-How does it consist with the whole of our monetary legislation for the last hundred years, as well as with the Bank Act of 1844 ? About one hundred years ago many parts of the country were deluged with silver notes for 5s. and 10s., and even less: they were found such an intolerable nuisance that an Act was passed in 1775 to prohibit all notes under 20s.; and in 1777 another Act was passed, prohibiting all notes under £5. And, with the exception of the period between 1797 and 1829, it has been the inflexible determination of the Legislature to prohibit any banking obligations payable to bearer on demand, for less than £5, from being issued and circulated. And since the Bank Act of 1844, even this right has been restricted to those bankers who were in existence at that period. No new banks may issue obligations payable to bearer on demand. It was even for a long time illegal to draw cheques for less than £5, though that restriction is now removed. It is perfectly well known that coin cannot circulate along with paper of the same denomination; consequently, for a hundred years it has been the settled purpose of Parliament that no paper shall come into competition with the coin of the realm.

Now the Cheque Bank publicly guarantees the payment of all its cheques. It is, therefore, avowedly a party to them. What, then, prevents them, or is supposed to prevent them from being an express violation of the words of the Bank Charter Act?

1st. It is said that they are issued payable to order on demand, and not to bearer on demand.

Now, this cannot save them from the penalties of the Act, because as soon as the payee has indorsed them, they become payable to bearer on demand; and, consequently, the bank is a party to an obligation payable to bearer on demand contrary to the express words of the Act.

This subtlety, therefore, will not hold water for an instant.

2nd. But there is a second one. The cheques are crossed, and,

therefore, they are not literally payable over the counter to bearer on demand; but only to the bearer's banker, or agent, on demand.

Now this is the sole subtlety which is supposed to save these instruments from being a direct violation of the Bank Act. They are distinctly Bank Notes-but they are crossell Bank Notes, and, therefore, are supposed to evade, by the skin of their teeth, the precise words of the Act. Now it is a well known maxim of law, that no one shall do indirectly what the law forbids to be done directly. Now the Law most expressly forbids any banking obligations payable to bearer on demand to be issued; and it is supposed that it will allow its solemn purpose to be set aside by the flimsy dodge of making the obligations payable to bearer's agent on demand!

Now whether a Court of Law could, by any possibility, hold that these ingenious gentlemen have succeeded in evading the precise letter of the Law, we shall say nothing; because we little doubt but that before very long the question will be formally investigated.

But there can be no possible doubt that these instruments, these crossed Bank Notes, are an utter and complete violation of the manifest purpose and intention, not only of the Bank Charter Act, but of all our monetary legislation for the last century. For what is easier than for the Bank and its customers to agree to make these Cheques for £1, and put them into circulation? Then we have at once £1 Bank Notes. So also the cheques for 10s. and 5s. are the old silver notes back again. If the Cheque Bank may do this with impunity, why may not every other bank in the kingdom do the same?

The Cheque Bank professes, for the present at least, to issue its cheques only in exchange for cash. But if it does so in exchange for cash, what is there to prevent them from issuing them in exchange for bills and other securities? And why should not every ́other Bank do precisely the same thing, if the Cheque Bank may? If the crossing is sufficient to save them from the penalties of the Act, they may equally be issued in exchange for bills and other securities.

No bank discounts a bill, or creates a credit in favour of a customer, unless it believes its advance secured. And if it creates a credit in his favour which he may the very next instant demand

payment of in cash, it may just as well give him these crossed Bank Notes, which will probably remain some time in circulation. There is nothing wanting but that the banker and the customer should agree to draw these cheques for even sums such as £5 and £1, or any others, and we have at once the power of unlimited issues of Bank Notes restored to the banks.

Now if it should be found that the ingenuity of these gentlemen has been successful, they will have completely picked the lock of the Bank Charter Act, and opened the floodgates to inundate the country with boundless quantities of paper money, which it has been the settled purpose of the Legislature to suppress.

The directors of the bank, to do them justice, make no secret of their intentions; they intend to revolutionise the banking system of the country, and they will assuredly do it, if their experiment is allowed to proceed. For this bank is the germ of a system which will reduce all our monetary laws and Bank Charter Acts to waste paper.

After the passing of the Bank Act of 1844, a custom sprang up in some of the Midland Counties of customers drawing cheques on their bankers, which the banker accepted. These, of course, were simply Bank Notes: and a clause was inserted in the Stamp Act of 1854 to preclude such proceedings.

Thus the Legislature has manifested its fixed determination to suppress banking obligations payable to bearer on demand; and when certain parties had discovered what they thought a loop-hole in the Act, Parliament immediately took care to stop it up. Now is it likely that when the Law Officers of the Crown and the Chancellor of the Exchequer are fully aware of the inevitable consequences which will sooner or later follow from the operations of this bank, they will suffer it to exist? Cheque Bank cheques are nothing more than accepted cheques, which have already been put down by law. The express purpose of Parliament is to suppress unlimited issues of circulating Banking Credit, and is it likely that they will permit their fixed determination to be set at nought by the paltry quibble that these Bank Notes are not payable to bearer on demand, but to bearer's agent on demand? The ingenious gentlemen who devised the Cheque Bank have laid a cockatrice's egg, which, if suffered to come to maturity, will inevitably devour the Bank Charter Act.