XII. SCOTCH JOINT-STOCK BANKS.

NOT a few good things have come to us from Scotland; among them the art of joint-stock banking. The oldest joint-stock bank in the United Kingdom, the Bank of England, was established by a Scotchman; but while nearly a century and a half elapsed here before the example thus set was followed on a large scale, the seed took early root and flourished in Scotland in all directions. The earliest notice of banking in Scotland which occurs in the statutebook, is an act of King William the Third, passed in the year 1695, under which the Bank of Scotland was established. By this act, an exclusive privilege of banking was conferred for a limited time upon the Bank, it being provided, "that for the period of twenty years, from the 17th July, 1695, it shall not be lawful for any other person to set up a distinct company or bank within the kingdom of Scotland, besides those persons in whose favour this act is granted." However,

while the privilege of the Bank of England was renewed from time to time, no renewal took place in the case of the Bank of Scotland, and private enterprise in the latter country remained free and unfettered. It was partly this, and partly the thrifty and economical habits of the people in the north, which brought banking into far more extensive use, particularly among the lower classes of the population, than in our own country. The establishment of the Bank of Scotland was followed, in 1727, by that of the Royal Bank; in 1746 by the British Linen Company; in 1763, by the Dundee Banking Company; and in 1766, by the Perth Banking Company. All these joint-stock banks differed in many important points from the early private banks and the one great public Bank of England. Unlike our own, all the Scotch banks issued small notes; all of them granted interest on the balance of current accounts; all of them made advances to the public by way of "cash credit;" and nearly all of them had branches, which extended their usefulness into the remotest parts of the country.

The Bank of Scotland began to issue onepound notes as early as 1704, and most of the other banks followed the example, there being no

restriction whatever upon the issue of promissory notes, payable to the bearer on demand, for a sum of not less than twenty shillings. In England, as is well known, the issue of notes for a less sum than five pounds, was prohibited by law from the year 1777. More important in its effects than this issue of small notes, was the early system adopted by the Scotch banks of granting interest on the balance of current accounts, and, at the same time, taking deposits of a very small amount. Thus while the bankers of England were—and still are to the present day-the purse-keepers of the rich, like their predecessors, the ancient goldsmiths, the bankers of Scotland started on an entirely new plan by making themselves the trustees of the savings of the poor. Some curious evidence, illustrating this notable point in the history of Scotch banking, was given before a committee of the House of Lords which sat in 1826. A witness who had been connected for many years with different banks in Scotland, and had gathered experience on the subject at Aberdeen, Edinburgh, Glasgow, Perth, and Stirling, stated that more than one-half of the deposits in the banks which he had known were in sums of from ten to two hundred pounds. Being asked from what classes of the community

the depositors came, he replied: "They are generally the labouring classes in towns like. Glasgow; but in country places, like Perth and Aberdeen, the deposits come from servants and fishermen, and that class of the community who save small sums from their earnings." This statement is worth noting; but still more SO the following, made by the same witness before the House of Lords, and which, as it explains Scotch banking, also shows the great influence it has exercised on the social life of the northern kingdom. "Half-yearly, or yearly," so goes the statement, "these depositors (labourers, servants, and fishermen) come to the bank, and add the savings of their labour, with the interest that has accrued upon the deposits, to the principal; and in this way it runs on accumulating at compound interest, till the depositor is able either to buy or build a house, when it comes to be one, or two, or three hundred pounds; or till he is able to commence business as a master in the line in which he has hitherto been a servant. A great part of the depositors of our banks are of that description, and the great part of the most thriving of our farmers and manufacturers have arisen from such beginnings."

It is very strange that with us in England this

extended system of banking, embracing the lower as well as the upper classes, should never have come into operation, although its effects are clearly beneficial to the banking interest, as well as to the industrial habits of the people. Even at present the practice of saving, so far from being encouraged among us, is almost prohibited. It is not only that English bankers scorn to burden themselves with the small earnings of "labourers, servants, and fishermen,” but that the Government itself, which has long intruded in banking, as it has recently encroached upon life-insurance-playing the Napoleonic part of Patent-happiness-distributor - has actually made saving penal. No man, as the law at present stands, is allowed to save more than £150, or, with accumulated interest, £200; and, should the industrial propensities go further, and the thrifty creature invest his or her money in a second Government institution, misnamed a savings-bank, the sum so invested is liable to forfeit and confiscation. To parody the words of the Scotch witness before the House of Lords, it may be said that "a great part of the most thriving of our farmers and manufacturers have not arisen from such beginnings."

The growth and development of joint-stock