AGRICULTURAL CREDIT. DAVIDSON. 467 



the industry and the agriculture of the country. One writer says 

 enthusiastically : " In the space of a hundred and fifty years it 

 raised its country from the lowest state of barbarism to its pres- 

 ent proud position," and ' the far-famed agriculture of the 

 Lothians, the manufactures of Glasgow and Paisley, the unri- 

 valled steamships of the Clyde, are its proper children." This, 

 as applied to agriculture, is no exaggeration, and it is not a little 

 significant that the founders of the agricultural banks on the 

 continent of Europe, to which reference will be made later, 

 adopted from the Scottish Cash Credit System the idea of per- 

 sonal responsibility, which was its essence. We have not now 

 the cash credit system in Canada, It was tried in the early days 

 and had definitely to be abandoned because it was not suited to 

 a country where the population was as migratory as it is with 

 us. But the system of overdraft is quite as useful, and our banks 

 are able to maintain the essential benefits of the cash credit 

 system which did so much for agriculture in Scotland. 



Our banks to-day do more for the farmer than the Scottish 

 banks can now dor. In Scotland itself, the cash credit as applied 

 to agriculture is a thing of the past, and has been little used for 

 half a century. The cash credit was partly, at least, a device 

 for increasing the note circulation of the bank. An extra risk 



o 



was taken on the loan to secure an extra profit on the notes 

 which were thus got into circulation. When the right of 

 issuing notes at discretion, secured only by the general assets of 

 the bank, was withdrawn in 1845, the banks no longer had any 

 motive for encouraging borrowers in this way, and the cash 

 credit system was gradually withdrawn from agriculture and 

 confined in a restricted way to commerce and industry. And it 

 must be remembered that the farmers of the Lothians were 

 already men of some financial standing, and that the benefits of 

 the cash credit were never experienced by the small farmer and 

 crofter of the north. Our Canadian banks, however, still prac- 

 tically retain the right and privilege of note issues at the discre- 

 tion of the bank, and they are thus able to extend crrdit facilities 

 to districts which would otherwise go unserved. They still have 



