in 1858, says that the accommodation bill system "arose from a new element, which, when the Act of 1844 was made, did not exist at all, and that was the immense amount of deposits in the hands of Joint Stock Banks paying interest!!"

9. In 1774, by the Statute of that year, c. 32, the Bank of Scotland was authorised to double its capital stock, and the limit which any shareholder might hold was raised to forty shares. In this year the bank began successfully to establish branches, which has since become so marked a feature in Scotch banking. In 1784, by the Statute of that year, c. 12, the capital of the bank was raised to £300,000, and all restrictions as to the amount of stock any proprietor might hold taken off. In 1792, by the Statute of that year, c. 25, the capital was raised to £600,000, and by Statute, 1794, c. 19, to £1,000,000, and by Statute, 1804, c. 23, to £1,500,000, of which £1,000,000 has been called up, and at which it still remains

10. The next great commercial crisis was in 1793. This also extended to Scotland. This was attributed by the best contemporary writers to the inordinate multiplication of the country bankers and the commencement of the revolutionary war. This crisis was most severely felt in Glasgow. Numbers of the most wealthy firms, both commercial and manufacturing, failed. The Glasgow Arms Bank, one of the three oldest in the city, stopped on the 14th March. Three-fourths of the country bankers in England were greatly shaken. The Bank of England refused all assistance, in spite of all solicitations made to it, for which it is severely blamed by Sir Francis Baring and the Bullion Report. When the Bank adopted this perverse course, universal failure seemed imminent. Sir John Sinclair remembered the precedent of 1697, when Montague had sustained public credit by an issue of Exchequer bills, and thought that a similar plan might be followed in this crisis. Mr. Pitt desired him to propose a scheme for the purpose, which he presented on the 16th April. A Committee of the House of Commons was immediately appointed. In the meantime a director of the Royal Bank of Scotland came up, with the most alarming news from Scotland. The public banks were wholly unable, with due regard to their own safety,

to furnish the accommodation necessary to support commercial houses and the country bankers. That, unless they received immediate assistance from Government, general failure would ensue. Numerous houses, which were perfectly solvent, must fall, unless they could obtain temporary relief. Mr. Macdowall, M.P. for Glasgow, stated that the commercial houses and manufactories there were in the greatest distress, from the total destruction of credit. That the distress arose from the refusal of the Glasgow, Paisley, and Greenock Banks to discount, as their notes were poured in upon them for gold. This panic was allayed by the Government consenting to issue small Exchequer bills, and by the activity of Sir John Sinclair in getting money sent down to Glasgow in anticipation of these Exchequer bills

An idea of the great severity of this crisis may be formed from the interesting memoirs of Sir William Forbes, of the history of that house. He says, p. 80, speaking of deposit receipts

"In ordinary times the number paid and granted are pretty much the same

"Amount paid above granted, in December, 1792, £10,670

"The diminution on current account balances was in proportion, that is, nearly as much more

11. The news of the suspension of cash payments by the Bank of England reached Edinburgh by express on the 1st of March. An immediate run on the banks took place. The managers of the public banks waived all etiquette, and met at Sir William Forbes's to consider what was to be done. It was agreed to follow the example of the Bank of England, and suspend all payments in specie. A meeting of the principal inhabitants was called by the Lord Provost, and attended by the Lord President of the Court of Session, the Lord Chief Baron

of the Exchequer, the Lord Advocate, and the Sheriff of Edinburgh. The meeting came to a unanimous resolution to support the credit of the banks, and to receive their notes as specie. This resolution was advertised in the papers, and expresses sent off to the principal towns in the kingdom to inform them of it

The suspension of cash payments gave rise to terrible scenes of confusion and uproar. The doors of the banks were besieged by crowds, clamouring for gold and silver in exchange for notes. The demand for small change by the lower classes was most urgent. They adopted the plan of dividing the £1 notes into halves and quarters. Spanish dollars, stamped by the Mint, were issued at 4s. 6d., and quarter guineas were coined. An Act was speedily passed, to allow those banks which had been in the habit of issuing notes to issue 58. notes for a limited period. The panic was allayed, and confidence quickly returned. The notes were received as readily as ever, though the banks refused to cash them; and, what was somewhat remarkable, no attempt was ever made by the people to compel them to pay specie, and not a single action was brought against them, although they were entirely unprotected by any Act of Parliament, and in a short time business proceeded more prosperously than ever

12. The next occurrence that we may mention, as it was regarded as a political event, was the foundation of the Commercial Bank in 1810. This was at the time when the high Tory regime was in its highest and palmiest state, and the banks were alleged to carry their politics into their business. The Liberal party then determined to found an opposition bank, which was named the Commercial, which has attained as great an eminence as any of the older ones in public estimation. Its capital, as yet paid up, is £1,000,000, which, its directors very recently gave the satisfactory assurance to its shareholders, is perfectly intact, and in addition to that, it has £400,000 of accumulated profits as a reserve fund. This bank subsequently obtained a charter, but the liability of its shareholders is specially declared unlimited

In 1818, it being found that many foreigners availed themselves of the privileges of naturalisation, by purchasing stock in the Bank of Scotland, this clause in their original Act was repealed.

13. The long and dreadful catalogue of banking failures in England, chiefly owing to the monopoly of the Bank of England, and which were attributed to the issues of the £1 notes of the country bankers, made the Ministry of 1826 desirous to abolish them in Scotland and Ireland, at the same time as they did those of England. But this raised such a ferment in the country that the Government consented that Committees of both Houses should be appointed to inquire into the matter. The result was so eminently favourable to the Scotch banking system that no further interference was attempted. "With respect to Scotland," says the report of the Lords, "it is to be remarked that during the period from 1766 to 1797, when no small notes were by law issuable in England, the portion of the currency of Scotland in which payments under £5 were made continued to consist almost entirely of notes of £1 and £1 1s., and that no inconvenience is known to have resulted from this difference in the currency of the two countries. This circumstance, among others, tends to prove that uniformity, however desirable, is not indispensably necessary. It is also proved, by the evidence, and by the documents, that the banks of Scotland, whether chartered or joint stock companies, or private establishments, have for more than a century exhibited a stability which the Committee believe to be unexampled in the history of banking; that they supported themselves from 1797 to 1812 without any protection from the restriction by which the Bank of England, and that of Ireland, were relieved from cash payments; that there was little demand for gold during the late embarrassments in the circulation; and that in the whole period of their establishment there are not more than two or three instances of bankruptcy. As during the whole of this period a large portion of their issues consisted almost entirely of notes not exceeding £1, or £1 18., there is the strongest reason for concluding that, as far as respects the Banks of Scotland, the issue of paper of that description has been found compatible with the highest degree of solidity; and that there is not, therefore, while they are conducted upon their present system, sufficient ground for proposing any alteration, with the view of adding to a solidity which has so long been sufficiently established." The report of the Commons was also adverse to any legislative interference with Scotch banking

of the Exchequer, the Lord Advocate, and the Sheriff of Edinburgh. The meeting came to a unanimous resolution to support the credit of the banks, and to receive their notes as specie. This resolution was advertised in the papers, and expresses sent off to the principal towns in the kingdom to inform them of it

The suspension of cash payments gave rise to terrible scenes of confusion and uproar. The doors of the banks were besieged by crowds, clamouring for gold and silver in exchange for notes. The demand for small change by the lower classes was most urgent. They adopted the plan of dividing the £1 notes into halves and quarters. Spanish dollars, stamped by the Mint, were issued at 4s. 6d., and quarter guineas were coined. An Act was speedily passed, to allow those banks which had been in the habit of issuing notes to issue 5s. notes for a limited period. The panic was allayed, and confidence quickly returned. The notes were received as readily as ever, though the banks refused to cash them; and, what was somewhat remarkable, no attempt was ever made by the people to compel them to pay specie, and not a single action was brought against them, although they were entirely unprotected by any Act of Parliament, and in a short time business proceeded more prosperously than ever

12. The next occurrence that we may mention, as it was regarded as a political event, was the foundation of the Commercial Bank in 1810. This was at the time when the high Tory regime was in its highest and palmiest state, and the banks were alleged to carry their politics into their business. The Liberal party then determined to found an opposition bank, which was named the Commercial, which has attained as great an eminence as any of the older ones in public estimation. Its capital, as yet paid up, is £1,000,000, which, its directors very recently gave the satisfactory assurance to its shareholders, is perfectly intact, and in addition to that, it has £400,000 of accumulated profits as a reserve fund. This bank subsequently obtained a charter, but the liability of its shareholders is specially declared unlimited

In 1818, it being found that many foreigners availed themselves of the privileges of naturalisation, by purchasing stock in the Bank of Scotland, this clause in their original Act was repealed.