Bank notes we have already dealt with generally, and it only remaifis to point out a few incidents relating thereto. The result of the Act of 1845 in restricting the issue of bank notes to the banks already then in existence was in effect to grant to them a monopoly of banking. With bank notes an essential feature of banking, it would be impossible for any new bank, unable to issue them, to compete successfully with its older rivals. Not only would the new bank be on the face of it incomplete in its functions in the view of the public, but it would also be seriously handicapped by the absence of any rig?it to obtain such credit for its necessary operations as is afforded to the existing banks by their uncovered note-issue within the statutory u ory limits. But discussion of the why and wherefore of the monopoly is needless in facp of the fact that no other banks do exist than those within the privildged circle.
Interest on current accounts has always been a prominent feature in Scotch banking. The rate was fixed by the banks in 1863, and continued until 1898, for daily balances from li to 4 per cent., and for minimum balances from 2 to 4i- per cent.
Deposits.—All banking establishments in Scotland take in deposits and allow interest upon very small sums lodged with them ; a fact which may account for the very small number of savings banks in that part of the king dom. The interest allowed varies according to the current market rate. In a House of Commons report of 1822, it was stated that the aggregate amount of the sums on deposit was then about £21,000,000. In 1865 the amount had risen to £57,140,000 ; and in 1894 to X93,489,068. These large and increasing deposits show most clearly the prudence, thrift, and industry of the Scotch people ; a great part of the depositors belonging to the labouring, fishing, and small trading classes of the community, from which, mainly by means of the deposit system, have arisen many of the most thriving and flourishing farmers, traders, and manufacturers. In Scotland, a few years ago, the cash
deposits amounted to £90 per head of the adult male population : a far greater proportion than in England or Ireland.
Cash credit is another peculiar system of Scotch banking which was introduced so far back as the year 1729. The nature of the system consists in the bank giving credit on loan to the extent of a sum agreed upon, to any individual or firm that can give two or more persons of undoubted financial position as joint and several sureties on a bond for the repayment on demand of the sum credited, with interest. The sureties have a right to inspect the bank books in order to see that the account is in strict accordance with the bond. Whoever obtains such a credit may employ the amount in his business, paying interest only upon the sum actually used, and having interest allowed from the day of repayment of any part of the loan. These loans, when advanced in the notes of the bank, are to the advantage of the bank in the call produced by these credits for the issue of notes. Apart from this, the credits afibrd an opportunity for the profitab e employment of part of the bank's deposits. Cash credits are equally a vantageous to traders, supplying, as they do, additional capital for the u.e of which interest is payable only in proportion to the amount employed. But to make the system as advantageous and secure as possible to the bank, it is necessary that the credits should be frequently operated upon ; for if the bank should find that they are used as dead loans yielding interest only, or that the operations of the borrower are infrequent, so that the amount of notes or money called for is inconsiderable, an end will speedily be put to the credit. Here, too, is a point in Scotch banking to which the English reader may usefully pay attention, and endeavour to obtain the same advantages from his own bank.