CASH CREDIT. The Scottish banks long ago established a cash credit system which has worked admirably and had much to do with the wide, popular use of banks in Scotland. The system was begun in 1727 by the Royal Bank of Scotland, which was founded in that year.
A cash credit is an advance made to a trustworthy person whose faith is guaranteed personally by two or more competent sureties, who are jointly bound in respect of the advance. Thus a credit is created upon purely personal security. In this way a bank customer is established with a credit account, into which he pays his receipts, and upon which he can draw to the extent of the advance agreed upon, interest being charged to him upon his daily overdraft. Thus a very large number of small businesses have been encouraged, and the foundations of big business secure ly laid. To the banks also the cash credit system has proved profit able, enabling them to use their resources to great advantage.