statement was made by a president of the Bankers' Institute who, as chairman of the largest joint stock bank in England, may be taken to have had exceptional opportunities for the exploration of banking accounts. He spoke as follows:

"I may add that a joint stock bank which came into our fold some years ago, whose reputation and position were second to none in the Kingdom, and justly so, too, and was a model of good management in other respects, employed every farthing they possessed, save and except what they required for till money, up to the hilt every day; feeling sure that by means of their investments, which were gilt-edged though not consols, they would always be helped over the stile if pressure came. And that, I may say, is not an exceptional case."

It follows from this state of things, under which country banks, competing keenly in the provinces with the branches of the great London institutions, keep practically no cash reserves at all, that the agitation for more complete and genuine publicity on the part of the great London banks is to some extent unfair, and that reform, if any could ever be carried out, should first apply itself to compelling all the banks to make clearer periodical statements. In this matter the law might well intervene by insuring due publicity and uniform statements from all banks in England. In other respects its regulations might very probably be harmful, but it could not be asking too much from the banks if it compelled them to show periodically genuine statements of their position, giving the averages of the period covered, as is done by the New York banks.

With regard to the liability of shareholders, the law again makes no definite regulation, but it is the general custom for English joint stock companies to have a comparatively small amount of their capital actually paid up, so that there is a heavy reserve liability which can be called in in case of liquidation. All the chief joint stock banks are now registered under limited liability. Since the reserve liability involved by the fact that only a small proportion of their shares is paid up is an important item in their credit, it follows that the directors of banking companies exercise a considerable amount of care concerning the persons into whose names their shares are transferred. They have the right to refuse transfers of shares into the names of persons of whose financial ability to meet the liability in case of need they are not sufficiently assured, and this right is frequently exercised.

It will be observed that the above regulations make no provision with regard to capital and reserve funds, the amount of which is left entirely to the discretion of those responsible for the bank's affairs, and that there is no provision for any inspection, supervision, or examination by government officials, except in the case of those country banks which still retain the right of note issue.

(C) THE PRIVATE BANKS.

Proceeding to the private firms, we find that as far as they are concerned the law has practically nothing to say, always excepting the case of those few country institutions which retain the right of note circulation, with regard to which the regulations are the same as those enumerated for the joint stock companies. Private firms have

to make a statement to the Government of the names and addresses of their partners. The number of their partners, which was not to be more than six at the time of the Bank of England's original charter, has now been raised to a possible ten. Above that number they have to register as joint stock companies. There is no provision of any kind for any statement of their assets and liabilities, and though most of them do, in fact, publish half-yearly or yearly balance sheets, there are still one or two private banking institutions which never make public any statement whatever concerning their position. Appended is a balance sheet of a leading private banking firm:

Forty-ninth statement of assets and liabilities of Glyn, Mills, Currie & Co., December 31, 1908.

In accordance with the provisions of subsection 2 of section 19 of the companies act 1907, I report that I have examined the above balance sheet with the books of the bank, I have obtained all the information and explanations I have required, and I am of opinion that such balance sheet is properly drawn up so as to exhibit a true and correct view of the state of the bank's affairs according to the best of my information and the explanations given to me, and as shown by the books.

JANUARY 11, 1909.

C. W. M. KEMP, F. C. A.,
Public Accountant.

(D) THE SCOTCH BANKS.

In the case of the Scottish banks the law is very similar in essence to that which governs their English brethren. That is to say, it has laid strict and important regulations upon the note issue, and has left the other important banking functions practically to the discretion of the bankers. But since all the great Scottish banks possess the right of note issue, and regard it as a very valuable asset, whereas in the case of the English banks the note issue is now a negligible part of the banker's function, it

will be seen that the regulation laid down by the law is much more important in Scotland than in England. These regulations were largely based upon the principles which dictated Peel's Act of 1844 for regulating the note circulation of the Bank of England and of the English banks. It will be remembered that with regard to English banking Peel laid down that from that time forward no increase in the Bank of England's note issue could be permitted unless backed by an equivalent amount of bullion, and that the English country banks should under no circumstances whatever be permitted to increase their circulation of notes. In Scotland, since there was no leading institution enjoying any monopoly, the regulation which was applied to the Bank of England was applied to all the bankers as a whole. That is to say, the average amount of their circulation was ascertained, and it was laid down that in future any increase in that amount must be backed by an equivalent amount of bullion. It naturally followed from the terms of this act for regulating Scottish banking, passed in 1845, that any new bank thereafter created would not have the right of note issue and the result of this was that the then existing banks were given what amounted to a joint monopoly of the banking field in Scotland.

This fact has no doubt to some extent accounted for the completeness with which the Scottish banks have been able to make a hard and fast combination among themselves with regard to the rates at which they are prepared to do business with their customers. It has protected them from competition, either by any new rival who might arise or by any English bank which might be bold