Encyclopaedia Britannica > Volume 3, Athens-BOI

330
BANKING
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 bona fide 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 1694 down to 1845, were as follows :
Per cent.
From Aug. 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 6
Do. to customers of the bank 3
Jan. 16, 1695 July 26, 1716 on Inland bills 4|
From May 19,
Do.
Feb. 28,
June 22,
July 26,
April 30,
Oct. 27,
Aug. 23,
Do.
Oct. 18,
Dec. 12,
Do.
May 1,
May 1,
June 20,
Dec. 13,
July 5,
July 21,
Sept. 1,
Feb. 13,
May 16,
June 20,
Aug. 1,
Jan. 23,
Oct. 15,
June 3,
April 7,
Sept. 5,
Do.
1695 to
on
1704 to
1710
1716
1719
1720
1722
1742
1744
1746
1746
1822
1825
1827
1836
1836
1838
1839
1839
1839
1840
1840
1841
1842
1844
Feb. 28, 1704 on
Foreign bills not
June 22, 1710 on
July 26, 1716
April 30, 1719
Oct. 27 1720
Aug. 23, 1722
Oct. 18, 1742
do.
Dec. 12, 1744
May 1, 1746
do.
April 5, 1773
June 20, 1822
Dec. 13, 1825
July 5, 1827
July 21, 1836
Sept. 1, 1836
July 15, 1838
May 16, 1839
June 20, 1839
Aug. 1, 1839
Jan. 23, 1840
Oct. 15, 1840
June 3, 1841
April 7, 1842
Sept. 5, 1844
Mar. 13, 1845
do.
Per cert
Foreign bills 4
payable at the bank 5
Foreign bills 5
For. & Inland do. 4
Bills and notes 5
Bills 5
Bills 4
Inland bills.. 5
Foreign bills 4
Foreign bills 5
do. (15 d. to run) . 4
Inland bills 5
Foreign bills 5
Bills and notes
(95 days to run)
do.
do.
do.
do.
do.
do.
do.
do.
do.
4
5
5
4
4^
5
4
5
54
6
65 day bills 5
95 day bills 5
do. 5
do. 4
Bills 24
Notes 3
Since 1845 the changes of interest have been, for reasons
already given, much more numerous. We give the num¬
ber of changes in each year—
In 1845, 2 changes.
1846, 1
1847, 101
1848, 3
1
1
0
2
6
2
1849,
1850,
1851,
1852,
1853,
1854,
7 changes.
8
In 1855,
1856,
1857, 92
1858, 6
1859, 5
1860, 9
1861, 133
1862, 5
1863, 12
1864, 144
The dividends on bank stock, from the establishment of
he company to the present time, have been as follows :
In 1865, 14 changes.
1866, 14s
1867, 3
1868, 2
1869, 7
1870, 9
1871, 10
1872, 13
1873, 24®
1874, 14
Years. Dividend.
1694, 8 per cent.
1697, 9
1708, ) Yaried from 9 to
1729, ) 5| per cent.
1730, 6
1730, 54
1721, 6
1728, 54
1747, 5
1753, 44
1764, 5
1767, 54
1781, 6
1788, 7
1807, 10
Years. Dividend.
1823, 8 per cent.
1839, 7
1852, 74
1853, 8
1856, 94
1859, 84
1863, 8|
1864, 9f
1865, 111
1866, 104
1867, 10
1868, 8
1869, 8|
1872, 94
1873, 10
The Bank of England does not allow, either at the head
1 Rising from 4 per cent, on 3d April to 8 per cent, on 20th Nov.,
iclining again to 5 per cent, by 24th Dec., and to 3 in 1848.
2 With the exception of one week the rate was high, varying from
to 54 from Sept. 1853 to May 1856, from which date it rose to an
rerage of 6 per cent, until Oct. 1857, when it rapidly mounted to 10
3r cent, in Dec. 1857, and thence declined to 4 in Feb. 1858. _
3 7 was the average rate in the spring, and 6 the average m tlie
immer of 1861. „ , n ,
4 At the end of 1863 the rate rose to 7 and 8 per cent., and it
scillated about these figures throughout 1864, twice falling to 6, and
vice rising to 9 per cent. ,. -+
5 The average rate in 1865 was 4, but at the close °f tjie } 1
ise to 6 and 7 ; and in 1866 it mounted until it reached 10 Fir cent.
11 the 15th August, from which it fell to 34 before the end of th
e®rThe crisis in America (see Banking in the United States, P-341)
-as followed by a rapid rise from 3 per cent, on the 20th f
er cent, on the 5th Nov., from which the rate receded to 42 befoie
fie end of the year.