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the country joint-stock banks, to some extent at least, insist on having for correspondents in London, not their brethren of the Toison d'or-the London joint-stock banks—but the old private banking establishments. The position of the shareholders in all cases of incorporated joint-stock banks is not, it is to be remembered, that of a partner or principal in the transactions of the company; he is not the banker, but it is the incorporated body with whom he is not identified” that performs the business, is the banker, and is responsible for the conduct of affairs. On the one hand, therefore, a shareholder is not liable to be sued upon the dealing, covenants, and undertakings of the company; he is only liable after judgment has been obtained against the companyhis liability being the subject of very peculiar statutory provisions. On the other hand, that the company's affairs are being arranged in bankruptcy, or under the winding-up acts, is no answer to a motion for leave to issue execution against him upon such a judgment, in the manner pointed out by the statute;* nor is it an answer that he was induced by fraud to become a shareholder, and that as soon as he discovered the fraud, &c., he had repudiated his connection with the company."

Let us next advert more fully to that which can hardly be denied to be the most striking financial phenomenon of the day. Joint-stock banking, no one needs to be told, has advanced and developed, and on the whole prospered, in a manner wholly unprecedented and unexpected. It has been calculated, and, as excellent authorities believe, accurately calculated, that in October, 1857, there was held in London by the joint-stock banks, at interest and on call, or at seven days' notice, between

i Logic of Banking, p. 400.
? Per Lord Wensleydale in O'Flaherty v. M‘Dowall, 6 H. Lds., 182.
* Fell v. Burchett, 3 Jur. N.S., 388, Q. 13.

* Morisse v. Royal British Bank, 3 Jur. N.S., 137; and see Cleave v. Harmer, 3 Jur. N.S., 190.

5 Daniell v. Royal British Bank ; 1 H. & N., 68). See Fry v. Russell, 27 L. J., C. B., 153; Hemlinon v. Royal British Bank, 26 L.J., Q. B., 112, 114; Powis v. Harding, 26 L.J., C.B. 107.

2

70 and 80 millions sterling. This might be held out as giving some idea of the sums which the joint-stock banks in the aggregate throughout the country hold in deposits, were it not that the amounts specified baffle and bewilder from their vastness; but at least the figures suggest this safe inference, that the sums so held are enormous to an incomprehensible extent; whence, then, have they been provided ? No one appears to have alleged, as matter of knowledge, before the committee of last year, when the subject was several times touched upon, that the joint-stock banks have merely got transferred to their keeping accounts that were formerly kept at private banks. Mr. Gilbart is positive that such is not the case, and that few or no accounts have been withdrawn out of the hands of private bankers, to be confided to those of the companies. Indeed, it seems that the deposits with private bankers have universally increased of late years. If we are not mistaken, the great weight of authority goes to shew these sums to have been contributed by classes of persons who never before employed bankers, or invested the small sums of surplus that might from time to time be lying in their hands. If we are not mistaken, the price of consols of late years has kept a range which is unfavourable to the supposition that any large portion of these sums has been removed from government securities as an investment, and deposited as an investment, for the sake of the interest given, in these banks ; certainly the condition of the savings banks shews no.symptom of the removal having been made from thence. In the year 1857, the authorized returns shew capital deposited in savings banks, £35,108,596 against £34,946,012 in 1856. Then the fashion for investing in foreign securities has not passed away in favour of the British joint-stock banks. In September, 1857, the calculation was (as the Governor of the Bank of England told the committee of last year), that American securities were held here to the extent of eighty millions sterling. : The truth

1 Evid. of Mr. Kirkman Hodgson, M.P., Evid., p. 259, Q. 3654.
· Evid., pp. 92, 93, 378, Q. 5665.
8 Evid., p. 2.

seems to be this: Vast numbers of persons, who, on the one hand, never before employed a banker, and, on the other, were not much in the habit of investing either in British or Foreign securities, but who kept in hand, in their homes for the most part, any small sums that they might have to spare above their daily wants, attracted by the high interest given by the jointstock banks, upon sums deposited with them at very small notices, and in many cases absolutely at call, have flocked to them to place their money

there. Many persons,

it
may

be fairly surmised, under the same temptation, by means of greater thrift and self-denial, have been led to save and accumulate, and to have sums to deposit, who never owned a surplus or a saving before. In Scotland, where banks are very numerous—indeed, there are nearly as many banks, if we include branches, in Scotland as in the whole of England and Wales——the system of giving interest on deposits has long been known, and works in the same way, or (perhaps we might say) performs still greater miracles. The whole population 'of Scotland is about three millions, we believe; nevertheless, the amount of money which they deposit in their banks at call or short notice, but at interest, was, according to the calculation of well-informed persons, considered to be fifty millions sterling in November, 1857. The tendency of all this, the consequence of the position in which the joint-stock banks find themselves, by having these immense masses of money forced upon them—that is the language usedis said to be to incline their managers to run greater risks of losses in some cases, than is consistent with prudent banking; because it is said, as the interest on all this money has to be provided for immediately, and the dividend to be maintained besides, the temptation is to discount a lower class of bills than is prudent, and perhaps even, it is said, this course may be instrumental in giving currency to bills that probably ought not to be discounted. The notion of the generation which is dying out · Evid. of Governor of Bank of England. Evid., pp. 22, 65.

· Evid. of Governor of Bank of England. Evid., pp. 58 ; Q. 924, 59; Q. 926, 68; Q. 1101 ; and see and compare Mr. Salomon’s Evid., ib., p. 71, 72,

person who has

was, that to give interest on deposits is not banking, and no part of a banker's

proper business; but there is no better ground for this than for the notion (which yet prevailed for many centuries), that it was no part of the business of a Christian to take interest at all. The theory of the joint-stock banks is certainly plausible. These banks give, their advocates say, an advantage to the

money which he does not propose to invest in securities which he might perhaps be called upon to realize at times when he could not do so without loss, by giving him the opportunity of obtaining interest upon it at the same time that he can recall it at pleasure. To the borrower, on the other hand, they hold out the opportunity of obtaining money on the lowest terms known in the market. In short, as the fact has been expressed, “ the public, rightfully or wrongfully, have certainly taken to joint-stock banking;” and this fashion or fondness, together with the increase of late years in the amounts held by private bankers, leads to the estimate of one thousand millions sterling, as the grand total held upon deposit by the banks of this country. "True it may be, that some of these companies have advertised in the newspapers with a view of attracting notice and getting hold of business. Some shareholders of a few of them may have been known to solicit tradesmen and others to join them, and open accounts, &c. The expenses moreover of management may be larger than in private banks; still we apprehend it to be difficult to pronounce this system, at any rate as yet, with the limited experience which the country has of them, to be incapable of securing, upon the whol', advantages to the community, and, at the same time, profits to the shareholders. All the witnesses before the parliamentary committees of 1826, testified to the great benefits arising from the universal adoption of a similar system in Scotland. Why should the contrary effects, or any inferior effects, be looked for here? The London

78; Q. 1221, Mr. Coleman's Evid., ib., pp. 133, 137. Mr. Foster's Evid., ib., pp. 145, 146, 157. Mr. K. Hodgson's Evid., ib., pp. 250, 257, 258, 259, 263. Mr. Haliday's Evid., ib., p. 274.

Evid., p. 164.

joint-stock banks, it is to be remembered, do not follow exactly the Scotch system in respect of allowing interest ; for the Scotch plan is to allow interest on the daily balance, calculating the interest, day by day, at the same rate which they allow on deposit receipts. But the London banks allow interest only at the rate of one or two per cent. on money retained above a month in the bank, with other regulations tending to render the rate of interest paid in London lower than that given in Scotland. Since the establishment of joint-stock banks the dividends received by creditors in cases of bankruptcy have been found in general (it appears) to be larger than those realized from the estates of the private bankers that fail. The ruin is more widely spread, it is true, when a joint-stock bank becomes insolvent, as not only depositors but shareholders suffer—in the aggregate, a much greater number than can in general be affected by the failure of a private bank. But a similar objection may be applied to the great joint-stock carriers. When a railway accident occurs, it may be said the infliction of pain, damage, and death--the strages—is far more fearful than was possible under the old stage-coach system of travelling; yet railways are permanently established in the nature of an institution of the country, and so far as joint-stock banks draw into use money that formerly lay dead, they confer a benefit on the mercantile community, by rendering money cheaper and more abundant ; and it cannot be doubted but that, in November, 1857, the Bank of England was enabled to afford the extent of accommodation to trade which was afforded (previous to the 12th, when the Government letter appeared) by her, in a very large proportion, from the large deposits with her made by the joint-stock banks, and forined out of the small sums which were attracted to them in the manner that has been mentioned, and which, but for the joint-stock banks, would not have been available for discounts at all. The fact cannot be questioned; the benefit to the commercial body and to the whole country is undeniable. In consequence of the great and rapid growth of the monied classes which has been in progress in the last quarter of a century, the

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