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enough to cross the border. It is not for a moment suggested that the Scottish banks have in any way abused the joint monopoly which was thus conferred upon them; it is only implied that the fact of this monopoly has enabled them to work together in a manner which has been found quite impossible by their English counterparts.

To proceed to the details of the act, it may be observed that the average circulation of each bank was arrived at from the figures for the year preceding the ist of May, 1845. On the basis of these figures the commissioners of stamps and taxes were instructed to give each of the banks a certificate stating the amount of notes which they might in future issue without holding any gold or silver against it, this amount being called the authorized circulation. Above this line each bank must hold gold or silver coin to an amount equal to the excess, and the silver was not allowed to exceed one-fourth of the gold—that is to say, one-fifth of the total bullion held.

The excess circulation was to be arrived at upon an average of four weeks. Weekly accounts had to be rendered to the commissioners of stamps and taxes stating the amount of notes in circulation on the previous Saturday, the gold and silver coin held at the head office of the bank on each day of the week ending on the same Saturday, and the gold and silver coin held at the close of business on that Saturday. At the end of each successive period of four weeks each bank had to show the average amount of circulation during the four weeks and the average amounts of gold and silver coin held at the head office during the four weeks.

The commissioners were instructed to publish these accounts in the London Gazette, and they are also published in the Edinburgh Gazette.

The commissioners of stamps and taxes were empowered to inspect the books and papers of the banks, and to examine the amount of coin held by them at all reasonable times; but this right of inspection never appears to be exercised. It

may be added that, as in the case of the English joint stock banks with a right of note issue, the liabilities of Scottish bank shareholders, in banks which are under the limited liability acts, is unlimited with regard to note issue. Three of the oldest of the Scottish banks, which were organized under charters, are believed to involve no further liability to their shareholders beyond the amount paid up on the shares, but, as in the case of the Bank of England, there is a certain amount of doubt with regard to the question of liability on shareholders.

The Scottish banks regularly publish annual balance sheets, but the system of monthly statements adopted by most of the leading English banks has not penetrated north of the Tweed.

CHAPTER III.

THE BANKING BUSINESS IN ENGLAND AND SCOTLAND.

(A) ENGLISH ARRANGEMENTS.

The general nature of the business done by the English banks consists as elsewhere in taking care of money for one set of customers and lending it to another, a certain proportion being held in cash or invested in marketable securities. In England the bankers are also the chief creators of currency, since by means of the loans that they make in the form of advances and discounts they create deposits for themselves and one another against which the checks are drawn which form by far the most important part of English currency.

As a rule it may be said that whatever be the class of community for which each bank or banking branch is providing facilities, the customers to whom it lends will be chiefly the producing and mercantile classes, and the customers for whom it takes care of money will be the investing classes, that is, the professional, land-owning, and propertied classes, though it will also hold the current balances of the producers and distributors, who are as a rule the most important borrowers.

Owing to the rapid extension of banking by branches, the business in England has lately been democratized to a very remarkable extent. Not many years ago some banks deprecated the drawing of checks by their customers

for a smaller amount than £5; nowadays the check is frequently used for the settlement of the smallest retail transaction, and is even drawn for sums smaller than £1. By this development, the alleged advantage of the Scottish banking system, which provides its customers with a credit instrument in the shape of the £i note, has been largely done away with, since the flexibility and adaptability of the check give it obvious advantages.

The business done by the English banks in the provinces is with all classes, from the small farmer or shopkeeper in rural districts to the large merchants and manufacturers in centers such as Liverpool and Manchester. In all districts they also provide banking facilities for what may be called the private or investing classes, but in their case, as has already been pointed out, the banker acts chiefly as the custodian or guardian of money, while in the case of the mercantile and producing sections of the community he also acts as its provider, making credit and currency for them by means of loans and discounts.

With regard to the rates charged, it is impossible to lay down any rule which would not at once be overwhelmed by exceptions. Banking in England is infinitely flexible. It adapts itself to the case of every borrower and takes into consideration both his standing and the security offered. The arrangements that it makes with its depositors are to a greater extent regulated by use and wont, but even in their case it would be misleading to make too definite statements. Arrangements very frequently vary in accordance with the length of time for which the deposit is placed with the bank, and are sometimes modified by the keenness and business acumen of the depositor, who is occasionally able to squeeze

his banker by hints at more favorable accommodation to be obtained from competitors.

The liabilities of banks to the public—that is to say, the money that they receive and take care of for it-are divided into current and deposit accounts. Current accounts are held by the banks on behalf of every kind of customer. Anybody, that is to say, who wishes to make use of banking facilities opens a current account with his banker, either by paying in cash or credit instruments, or by obtaining a loan from the banker, and uses this current account in order to draw checks against it for the purposes of his business if he be a business man, or for his necessary purchases if he be a private investor living on accumulated or inherited capital. This class of account is clearly a convenience provided by the banker to the customer; the checks drawn by the customer involve a large amount of clerical work on the staff of the bank, and unless the account is habitually kept at a sufficiently remunerative level no interest can be allowed upon it by the banker; most banks stipulate that unless the balance is maintained at at least £100 the customer must pay, for the facilities given by means of it, either a regular payment at the end of each half-year or a small commission upon the turnover.

When the current account is provided by means of a loan from the bank, the charge or commission is still made over and above the interest on the loan, and when there is no definite arrangement of a loan, but a customer is allowed to draw checks up to a certain amount by way of overdraft, the commission is charged as well as the rate of interest on the borrowing which the overdraft represents.

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