mortgage effectual until the deed is in like manner recorded. These records are accessible to all persons, and thus the public can with ease ascertain the effective means which a banking company possesses of discharging its obligations; while the managers of banks are enabled to determine, with tolerable accuracy, the degree of risk and responsibility which they incur in their transactions. It was on this foundationwithin a ring-fence pretty well secured by property laws forged by the iron hands of the ancient Romans-that there sprang into existence the Scotch edifice of joint-stock banking.

It took many years, almost a century, before England followed in the same direction. The struggle to establish joint-stock banking in England was long and severe one of the severest commercial battles fought in modern times.

XIII. BANKING MONOPOLY.

ADAM SMITH, in his "Wealth of Nations," truly remarks that, "though the principles of the banking trade may appear somewhat abstruse, the practice is capable of being reduced to strict rules. To depart upon any occasion from these rules, in consequence of some flattering speculation of extraordinary gain, is almost always dangerous, and frequently fatal to the banking company which attempts it. But the constitution of joint-stock companies renders them in general more tenacious of established rules than any private co-partnership. Such companies, therefore, seem extremely fitted for this trade." Sir Henry Parnell gives his testimony to the same effect: "The trade of banking," says he, "is of such a nature that it is scarcely possible for any but a very numerous body of partners to furnish a capital sufficiently large for carrying it on advantageously to the public. A single individual or a few individuals cannot be, but

very rarely, possessed of that amount of capital which alone can render this trade a safe one; for this reason, in order to establish in a country a sound system of banking, it is indispensably necessary that care should be taken not to impose any legislative restrictions in the way of large bodies associating together to form jointstock banking companies." It seems most extraordinary that, with such authorities in favour of a principle, clearly and generally recognised, it should have taken above a century to establish joint-stock banking in England. The fact appears strange; but the cause lies on the surface. It was simply the monopoly, real or assumed, of the first joint-stock bank which prevented other banks. on the same principle from being established. William Paterson, the founder of the Bank of England, by no means intended to create a monopoly in favour of his own scheme when he introduced the principle of joint-stock banking into this country; but by a curious concurrence of circumstances, the very organization which was invented by the shrewd Scot, himself a hater of all monopolies, to encourage and foster the trade in money, ultimately served to hamper and obstruct it for generations to come. From the beginning of its career, the Bank of England was

opposed by some of the leading members of the mercantile community in the City, who argued that "it would become a monopoly, and engross the whole money of the kingdom; and that, as it must infallibly be subservient to Government views, it might be applied to the worst purposes of arbitrary power." Against these accusations the Bank defended itself, in a pamphlet from the pen of Michael Godfrey, already cited. The writer disclaimed the idea that the Bank desired to have a monopoly, asserting that the monopolising tendencies were all on the part of the enemies of the new institution. "The goldsmiths," he said, "have been guilty of engrossing most commodities themselves, and they have also been great merchants and traders. And since the nation has suffered so much by their monopolising goods and trading with other men's stocks, it may seem highly reasonable that, as the Bank is restrained from trade, for fear of those mischiefs which the goldsmiths have practised, so the goldsmiths, in like manner, should be limited to the selling plate and jewels, which was their ancient and proper trade." In the latter sentence lurked the dangerous part of the spirit which guided the conductors of the great public bank. The desire to restrain and

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to limit the activity of others, in order to have greater room for activity themselves, soon carried the directors of the Bank of England from passive to aggressive measures, driving them, as a consequence, more and more under the shield and protection of the Government. At the same time, William Paterson, who did not sympathise with these proceedings, was ousted from his post as governor, without the least recognition of his eminent services. Moving onward in this direction, it gradually came to pass that a joint-stock society, originally consisting of 1,300 persons, with no other purpose in view than that of getting a fair interest for a subscribed capital of little more than a million, was transformed into a huge official corporation. This led to a struggle, extending over a century, between private enterprise, on the one hand, and vested interests assuming the form of monopoly, on the other.

By the first and original charter of the Bank of England its privileges were very limited, interposing no obstacle to the establishment of other joint-stock banking companies, either of issue or deposit. In consequence, the early success of the Bank brought forth several projects of the same kind-unfortunately very hollow in substance, and deeply tinged with the swindling