

BANKS. 



Joint-stock Banks in England. There are 56 

 of these banks in England. There are also 118 

 private banks of issue, besides numerous others, 

 especially in London, which do not issue notes. 



In the case of all these banks, whether issuing 

 or non-issuing, their profits are chiefly derived 

 from the use of their deposits. The issues of those 

 banks possessing the privilege are small compared 

 with their deposits. 



There are also in London the establishments 

 of many colonial, Indian, and foreign joint-stock 

 banks, and some of the Scotch banks have re- 

 cently established branches in London. 



Banks in Scotland. The earliest banking insti- 

 tution in North Britain was the Bank of Scotland, 

 instituted by a charter of incorporation from the 

 Scots parliament in 1695. The original capital 

 was ,1,200,000 Scots, or ,100,000 sterling. The 

 amount was raised by shares differing in extent, 

 from ,1000 Scots, or ^83, 6s. 8d. sterling, to 

 .20,000 Scots. In 1774, the amount of stock was 

 extended to 200,000 sterling : now it is ,1,250,000 

 sterling, and the shares ,100 sterling. 



The establishment of the Bank of Scotland was 

 of great service to the nation ; the landholders 

 borrowing notes, and bringing the country into 

 cultivation, and a spur being by that means given 

 to various branches of manufactures. The Bank 

 of Scotland continued to be the only bank in the 

 country till the year 1727, when a new and similar 



establishment was constituted under the title of the 

 Royal Bank of Scotland, whose advanced capital 

 is now j2,ooo,ooo. These two establishments 

 engrossed all' the respectable banking business in 

 the country till the year 1746, when another associ- 

 ation was formed, and incorporated by royal 

 charter, with the title of the British Linen Com- 

 pany. The object of this association was at first 

 to encourage the linen manufacture of Scotland, 

 but gradually it fell into the course of common 

 banking business, and now occupies a high station 

 among these institutions. From ,100,000, the 

 capital of this bank has been raised to ; 1,000,000. 

 The failure of the Western Bank in 1857 was 

 a great commercial and social disaster, although 

 its depositors and note-holders were afterwards 

 paid in full. The failure of the City of Glasgow 

 Bank in 1878, with public liabilities amounting to 

 ,12,404,297, and an estimated shortcoming of 

 ; 6, 190,983, was even a greater calamity. It 

 paralysed trade, and ruined most of the share- 

 holders, upon whom calls amounting to ^2750 

 for each ^100 share were made. Nevertheless, 

 by the beginning of 1880, little more than a 

 year from the time of the failure, a payment of 

 sixteen shillings in the pound had been made to 

 creditors. The following table shews the progress 

 in dividend and in the value of capital, of the six 

 Scotch banks having their head-office in Edin- 

 burgh, from 1857 to 1882 : 



The value of bank stock naturally had a down- 

 ward tendency after the City of Glasgow Bank 

 catastrophe ; the value of .100 Bank of Scotland 

 stock, which was at .319 in 1877, and fell to 

 ^281 in 1878, had risen again to ^290 in 1880, and 

 like that of the other banks, was steadily rising. 

 Those not mentioned in the above table are the 

 Clydesdale, the Aberdeen Town and County, the 

 North of Scotland, and the Caledonian Banks. 

 (Of these the largest, the Clydesdale, has a paid- 

 up capital of ,1,000,000. They are all limited 

 companies.) 



The banks in Scotland, like the Banks in Ire- 

 land, but unlike the provincial banks in England, 

 are allowed to issue notes beyond their fixed issues 

 on holding gold equal in amount to the extra 

 issue. The increase of trade and commerce in 

 Scotland has rendered it necessary for them to 

 take advantage of this power. But as the gold 

 thus retained is, like the other gold in reserve, 

 liable for all the deposits, as well as the whole cir- 

 culation of a bank, if it should fail, the security of 

 the establishment is increased only in a small 

 degree by this arrangement, which, apart from the 



loss of profit to the bank on the gold unemployed, 

 is attended with inconvenience at those seasons 

 when the circulation is extended. 



Besides employing money in discounting bills, 

 the Scottish banks grant loans of fluctuating 

 amount, called cash-accounts or cash-credits. By 

 a cash-account is signified a process whereby an 

 individual, on entering into an arrangement with 

 a bank, is entitled to draw out sums as required, 

 to a stipulated amount, and by an implied con- 

 dition to make deposits at his convenience towards 

 the liquidation of the same. On entering into this 

 arrangement, he finds security to the bank that he 

 will repay to the bank, whenever called on, the 

 balance of sums drawn out, less those paid in, 

 with the interest that may be due. These accounts 

 are balanced yearly like current or deposit accounts. 

 The only difference between them and a cash- 

 account is, that if the credit allowed on the cash- 

 account is being made use of, the balance is in 

 favour of the bank ; whereas, on the other kind of 

 accounts, the balance is in favour of the bank's 

 customer. Frequently, the balance due on a 

 cash-account is against the bank, owing to the 



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