powerfully stimulated by the facility which banks then possessed of issuing additional quantities of paper; and of that facility they are now all but deprived. It is, perhaps, true, that the fair and legitimate influence of the acts now referred to may be in some degree countervailed by the circulation to a greater extent than formerly of bills and other sorts of paper not payable on demand. but at short dates; and it is not improbable that sooner or later the question may arise, whether any regulations should be adopted in regard to the issue of such paper. In so far, however, as respects the issue of paper money, or notes payable on demand, the regulations in the act of 1844 appear to have left little to be desired. No doubt, also, numbers of the private and other banks that now issue notes will from time to time wind up their affairs; and as no new banks of issue can be established in their stead, the vacuum caused by the withdrawal of their notes will be supplied by those of the Bank of England; so that a gradual progress will be made towards the desirable consummation of having only one bank of issue.

It is sometimes contended, by those opposed to the policy of limiting the issues, that they never can be in excess so long as they are payable on demand. Such, however, is not the case notes payable, and really paid, on demand cannot, it is true, fall below the value of specie in the country in which they are issued; but the check of payment in specie does not, in fact, begin to operate till their over-issue has depreciated the value of the whole currency, gold as well as paper, in such country, below its level in the surrounding countries, and till, consequently, the exchange becomes unfavourable, and it is advantageous to export gold. Then, of course, the over-issue is stopped, but such stoppage is almost always accompanied by a great deal of public distress and inconvenience; while it by no means necessarily follows that any considerable portion of the loss thence arising will fall on those banks by whose misconduct or over-issue the fall in the exchange and the demand for bullion may have been occasioned.

The measures adopted in 1844, though they deeply affected many powerful private interests, were passed with little difficulty, and were very generally approved of. In this respect, however, public opinion subsequently varied a little; and the act of 1844 was charged by various parties with having aggravated the pressure experienced by the mercantile world in 1847. But we are satisfied that there is no real ground for any such imputation. The crisis of 1847 was a consequence, partly of the railway mania of the previous year, and partly of the failure of the potato crops of 1845 and 1846. The failure in the latter year deprived fully two thirds of the people of Ireland, and a

considerable portion, also, of those of Great Britain, of their accustomed supplies of food. In consequence of this deficiency, and of government having come forward to provide the means for its relief, there was an unprecedented importation of all sorts of corn; and the demand for bullion for exportation to meet this importation, occurring simultaneously with a vast railway expenditure, pecuniary accommodations were obtained with the greatest difficulty, and the rate of interest rose to an extraordinary height. Instead, however, of being increased by the act of 1844, it is abundantly certain that the operation of the latter contributed to alleviate the severity of the crisis. The restraints it imposed on the issues of the country banks had hindered them from embarking to any great extent in railway adventures, so that they were better able to assist their customers; and it also prevented the Bank of England from attempting to meet the exigencies of the case, otherwise than by raising the rate of interest, and restricting her issues. And besides being the natural and proper, these were, in fact, the only means by which the value of bullion could be raised in this country, its demand for foreign remittance checked, and the exchange turned in our favour. A great many mercantile houses that had been trading upon very insufficient capitals, or which had previously been virtually insolvent, were, of course, swept off during the crisis; and the alarm that was thereby occasioned, though for the most part without any good foundation, gave rise to a species of panic. During the prevalence of the latter, government consented (25th October 1847) to a temporary suspension of the act of 1844'; but there is, we believe, little doubt that this was an unwise proceeding. When it took place the violence of the crisis had abated. The drain for gold for exportation had not only ceased, but it had begun to set in our favour; and the probability is, that in a few days all alarm would have passed off, without the dangerous precedent which was set by the interference of ministers. Hence, in our view of the matter, the experience afforded by the crisis of 1847 tells strongly in favour of the act of 1844. But for its influence, it is most probable that the Bank would have attempted to meet the demand for bullion without raising the rate of interest, at least to the extent to which she did raise it; and if so, we should have been exposed to the imminent risk of a suspension of cash payments. If, therefore, the act of 1844 should be subjected to any modifications, it is to be hoped that they may be such as may tend to carry out and strengthen the principles on which it is founded.

The act of 1708, preventing more than six individuals from entering into a partnership for carrying on the business of banking, did not extend to Scotland. In consequence of

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this exemption, several banking companies, with numerous bodies of partners, have always existed in that part of the empire. The Bank of Scotland was established by act of Parliament in 1695. By the terms of its charter it enjoyed, for twenty-one years, the exclusive privilege of issuing notes in Scotland. Its original capital was only 100,0007.; but it was increased to 200,000l. in 1744, and now amounts to 1,500,0007., of which 1.000,000l. has been paid up.

The Royal Bank of Scotland was established in 1727. Its original capital was 151,0007.; at present it amounts to 2,000,0007., which has been all paid up.

The British Linen Company was incorporated in 1746, for the purpose, as its name implies, of undertaking the manufacture of linen. But the views in which it originated were speedily abandoned, and it became a banking company only. Its paid up capital amounts to 500,000l.

Exclusive of the above, there are two other chartered banks in Scotland: the Commercial Bank, established in 1810; and the National Bank of Scotland, established in 1825. The former has a paid up capital of 600,0007., and the latter of 500,000.

None of the other banking companies established in Scotland are chartered associations; and the partners are jointly and individually liable to the whole extent of their fortunes for the debts of the firms. Almost all the private banks have been merged in joint-stock associations, the greater number of which have numerous branches; so that there is hardly a town or village of any consequence without two or more banks.

The Bank of Scotland began to issue onepound notes as early as 1704, and their issue has since been continued without interruption. All the Scotch banks issue notes; and taking their aggregate authorised circulation at 3,000,000l., it is supposed that above 2,000,000l. consists of notes for 17. In 1826 it was proposed to suppress one-pound notes in Scotland as well as in England; but the measure having been strongly objected to by the people of Scotland, as being at once oppressive and unnecessary, it was abandoned.

There have been very few bankruptcies amongst the Scotch banks. This superior stability is to be ascribed to a variety of causes; partly to the great wealth of the early established banks, which had a considerable influence in preventing an inferior class of banks from acquiring any hold on the public confidence; partly to the comparatively little risk attending the business of banking in Scotland; partly to the facilities afforded by the Scotch law for attaching a debtor's property, whether it consist of land or moveables; and partly and principally, perhaps, to the fact of the Scotch banks being but indi

rectly and slightly affected by a depression of the exchange and an efflux of bullion.

The circumstances now mentioned render it unnecessary to enforce that suppression of local issues in Scotland which is so indispensable in England, where the system of provincial banking is of a very inferior description, the risk attending the business much greater, and where any excess in the amount of the currency necessarily occasions a fall of the exchange and a demand for bullion. The commerce and population of Scotland are too limited, and that country is too remote from the metropolis, or from the centre of the moneyed world, the pivot on which the exchanges turn, to make it of importance that her currency should be identical with that of England. We believe that the Scotch attach far more importance than it deserves to the issue of paper, and especially to the issue of one-pound notes; still, however, we do not think that the circumstances are at present such as to call for or warrant any attempt to introduce any material changes in their banking system.

All the Scotch banks receive deposits of the low amount of 107., and allow interest on them at from one to two per cent. below the market rate. But should a deposit be unusually large, as from 5,000l. to 10,000l., a special agreement is usually made with regard to it. This part of the system has been particularly advantageous. It, in fact, renders the Scotch banks a sort of savings' banks for all classes; and their readily receiving all sorts of deposits at a reasonable rate of interest, has tended to diffuse a spirit of economy and parsimony among the people that would not otherwise have existed. The total deposits in the hands of the Scotch banks are believed, as previously stated, to amount at present (1849) to above 30,000,000l., of which fully a half is understood to be in sums varying from 107. to 3001. The system of cash credits in Scotland has been already described, see ante, p. 130.

The bank of Ireland was established in 1783, and the same restriction as to the number of partners in other banks that formerly prevailed in England was enacted in its favour. Owing to that and other causes the bankruptcies of private banks has been more frequent in Ireland than in England. In 1821 this restriction was repealed, as respects all parts of the country more than 50 Irish miles from Dublin. Since that period several banking companies, with large bodies of partners, have been set on foot in different parts of the country of these the Provincial Bank, founded on the Scotch model, is among the most flourishing. The charter of the Bank of Ire land has been prolonged till 1855. The Irish banks, like the Scotch, issue notes for 17