banking in Scotland was accelerated by a practice little known in England, namely, the mode of making advances by way of "cash credit." The system is well described in the report of the Lords' Committee on Scotch Banking of 1826. "There is also," the report says, "one part of their system, which is stated by all the witnesses-and, in the opinion of the committee, very justly stated-to have had the best effects upon the people of Scotland, and particularly upon the middle and poorer classes of society, in producing and encouraging habits of frugality and industry. The practice referred to is that of 'cash credits.' Any person who applies to a bank for a cash credit is called upon to produce two or more competent sureties, who are jointly bound; and after a full inquiry into the character of the applicant, the nature of his business, and the sufficiency of his securities, he is allowed to open a credit, and to draw upon the bank for the whole of its amount, or for such part as his daily transactions may require. To the credit of the account, he pays in such sums as he may not have occasion to use, and interest is charged or credited upon the daily balance, as the case may be. From the facility which these cash credits give to all the small transactions

of the country, and from the opportunities which they afford to persons who begin business with little or no capital but their character, to employ profitably the minutest products of their industry, it cannot be doubted that the most important advantages are derived to the whole community. The advantage to the banks who give these cash credits arises from the call which they continually produce for the issue of the paper, and from the opportunity which they afford for the profitable employment of part of their deposits. The banks are, indeed, so sensible of it, that, in order to make this part of their business advantageous and secure, they hold it necessary that their cash credits should, as they express it, be frequently operated upon, and they refuse to continue them unless this implied condition be fulfilled. The total amount of their cash credits is stated by one witness to be five millions." The system undoubtedly was of considerable influence in the early establishment of joint-stock banking in Scotland.

It must be stated, however, that there was another circumstance connected with Scotch legislation which much accelerated the growth of northern joint-stock enterprise, while, not existing in England, it could not operate in

the same manner here. The law of Scotland tended greatly to place the mutual relations of bankers and their clients upon a secure footing, both by affording ready means for attaching a debtor's property, whether consisting in land or moveables, and by giving unusual facilities for ascertaining the pecuniary circumstances of men possessed of real estate, the class from which come most of the shareholders of the old-not "limited "-joint-stock banks. A creditor in Scotland is empowered to attach the real and heritable as well as the personal estate of his debtor for payment of personal debts, among which are classed debts due by bills and promissory notes; and recourse may be had, for the purpose of procuring payment, to each description of property at the same time. Execution, likewise, is not confined to the real property of a debtor during his lifetime, but proceeds with equal effect after his death. The law for the establishment of records gives, moreover, ready means of procuring information with respect to the real and heritable estate of which any person in Scotland may be possessed. No purchase of an estate is valid until the "seisine," the document certifying that actual delivery has been given, is put on record; nor is any

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