TE HE Ordinary Meetings of the Institute for the reading and discussion of Papers are held in the Theatre of the London Institution, Finsbury Circus E.C., on the third Wednesday of the months October to May inclusive. Notice of Meetings, Titles of Papers, and of the Dates assigned to them, will be given from time to time in the Journal, or by advertisement in the principal papers about one week before each meeting. Notice will also be sent to Fellows and Associates of the discussion of any Questions on points of practical interest at the above meetings. Visitors may obtain a card of admission to the Ordinary Meetings on the presentation to the Secretary, at the Offices of the Institute, of an introduction from a Fellow or Associate. This privilege may, however, under certain circumstances, have to be restricted. Members and others are invited to submit to the Council, for their approval, papers on any subjects of general interest to the Profession, with a view to such papers being read at one of the Ordinary Meetings of the Institute. To enable the Council to carry into effect one of the primary objects of the Institute, viz., the discussion of matters of interest to the Profession, they invite Fellows and others to acquaint them, through the Secretary, with any Questions on points of practical interest which may from time to time arise, so that, should it be deemed advisable, due notice being given, such questions may be fully discussed at one of the Ordinary Meetings of the Institute, or answered through the Journal as the Council may determine. If not out of print, members may obtain a single copy of each of the back numbers of the Journal at the reduced price of 1s. each. A few volumes bound in morocco can be obtained at 15s. each volume. The Journal is for the present published in eight consecutive months, namely, from December to the June following, with a further issue of one or two numbers during the Autumn. The date of publication is on or about the first day of the months named. To ensure punctual delivery, Members are especially requested to inform the Secretary, without delay, of any change in their Addresses. NOTICE TO MEMBERS. THE Library and Reading Room is open daily, from 10 a.m. to 5 p.m., except on Saturdays, when it closes at 1 p.m. Members may borrow books from the Library. Town Members are allowed to keep books for one week, Country Members for two weeks. Country Members may have letters and telegrams addressed to the Institute, and they may use the Institute for answering letters, etc., during their temporary stay in London. THE LIBRARY. The Council request the attention of Members to the following list of works, which, among others, are required in the Library : Early copies of the London Directory. Hansard's Parliamentary Debates. British Association Reports. Patrick's Records of the Coinage of Scotland. Kenyon's Gold Coins of England. Edinburgh Review. Quarterly Review. Alison's History of Europe. Macaulay's History of England. London Banks (back numbers). Doubleday's Financial History. Books issued under the Sanction of the Council :— Catalogue of the Library. Price 6d. ELECTIONS. The following is a list of those elected at the January meeting of the Council: : JAMES DUNCAN MACINTOSH GODFREY LANGFORD EVANS HENDRIK CHRISTIAAN SOETERS Bank of Ireland, Dublin. Factory der Nederlandsche, Handel CHARLES EDGELL DAVENPORT... Birmingham Banking Co., Ltd., Witney. ERNEST FREDK. AGNEW ELECTIONS-continued. ORDINARY MEMBERS. ... ... ... ... Liverpool Union Bank, Liverpool. Banking Company, Limited. Hull Banking Company, Ltd., Grimsby. Capital & Counties Bank, Ltd., Jersey. London & County Banking Co., Limited, London Joint Stock Bank, Limited, 28, Capital & Counties Bank, Limited, Ltd., London & County Banking Company, National Bank, Limited, Cork. London & County Banking Company, Halifax & Huddersfield Union Bank, Alliance Bank, Limited, Bartholomew Ulster Bank, Limited, Belfast. London & Provincial Bank, Limited. National Provincial Bank of England, Messrs. Gurney & Co., Aylsham. London & County Banking Company, Limited, Albert Gate, S.W. Messrs. Dale, Young & Co., South Shields. Barnard Castle. & Co., Worcester City & County Banking Co.. ADDENDA TO THE LIST OF MEMBERS. There should be prefixed to the names of the following gentlemen a showing that they are holders of the Certificate of the Institute : ARTHUR BERTRAM GUY. HENRY LENN. FRANCIS ROBERT STEAD. CHARLES LESLIE SMITH The Institute of Bankers. FEBRUARY, 1889. JOHN B. MARTIN, Esq., in the Chair. PRODUCE AS SECURITY FOR BANKERS' ADVANCES. By Mr. GEORGE R. S. GALLAHER, (Of the Imperial Bank). Member of the Institute of Bankers. [Read before the Institute on Wednesday, Jan. 2nd, 1889.] N the course of a somewhat extensive reading of works upon Banking Practice, I have met with such an exceedingly small amount of registered information on this important subject, that I venture to hope that this essay may form a useful addition to existing banking literature. I desire to state, at the outset, that this paper is not intended to be a very ambitious one, and, although to many it may perhaps prove useful and instructive, I cannot help feeling considerable diffidence in reading it before an auditory which includes some of the most experienced and most critical members of the banking profession. To many London bankers, the subject in all its aspects is no doubt a very familiar one; but probably a not inconsiderable number of these have gained their knowledge and experience in a way they would rather have avoided, but which is certainly calculated to impress indelibly upon their minds the peculiar points in connection with produce loans and mercantile documents, which they must not overlook. If we can guard ourselves against losses by profiting from the unfortunate experiences of others, instead of waiting for a similar experience ourselves, it is well to do so. I propose, therefore, in discussing this subject, to lay most stress on the weak points in connection with making advances on produce, and to suggest, as the result of a considerable and very satisfactory experience of the practical working of this class of business, the precautionary steps which should always be taken in order that a loan on produce may be as safe as if made upon any other class of security. B The word "produce produce" is a useful general term which includes almost everything which is dealt in in the Mincing Lane markets; but I propose to give to it a very extended meaning, and have included in the term "produce," tea, coffee, spices, indigo, silk, metals (excepting gold and silver), turpentine, mineral and seed oils, sugar, galls, shellac, foreign corn, etc. This list is sufficiently long to show that the banker who is liable to be asked to advance money upon the security of produce, if he is to be in a position to entertain such proposals with safety, must have a considerable knowledge of the many different classes of commodities which are dealt in in all the great markets of the world. He must keep himself informed of everything that is going on in these various markets; he should know of every serious decline in the value of all merchandise in which he is or may be interested and, what is perhaps still more important to the lender, he must also note carefully any rapid or excessive rise in price, because it is when prices are inflated and abnormally high that danger is ahead. It is at such times that produce loans require to be watched very carefully and should be almost entirely avoided, except in the case of customers of undoubted stability; unless, indeed, the banker is well satisfied that the high prices are caused by the natural action of the economical laws of supply and demand. He must be quite sure that prices are not being driven up by the artificial action of some "ring" or foreign syndicate. It has become quite a fashionable diversion for syndicates to turn their attention suddenly to some description of produce and to perform with it the operation known on the Stock Exchange as "bulling." This is best effected by temporarily monopolising the existing supplies, and monopoly prices are demanded and obtained. The rising markets will then attract outsiders, anxious to make their fortunes, and it is just at such times that the banker will be asked by his customers to make advances in order that they may be "in the swim." Many a speculator will be anxious not only to invest all his capital in that particular commodity, but will be quite ready to put himself in such a position that his entire capital will be represented by the difference between the market value of the merchandise and the amount of the banker's advance. An artificial rise in price seldom, however, lasts long. The agencies of production will have been meanwhile exerted to their utmost, excepting so far as they have been controlled by the "ring," and then the syndicate, finding that they are unable to sustain the high prices in the face of increased supplies, quietly secure themselves, and knowing full well the weakness of the cause which raised the prices, they can, without risk, commence the opposite operation of knocking down prices, and make good profits both ways. Then a crash comes, and it is a case of "sauve qui peut!" The banker who has made advances with margins, which under ordinary circumstances might be ample, will find to his cost that as a rule prices fall more quickly than they rise, and that they fall to a |