1F,om Goar.,s Journal of |, .nklng.
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sibe in only a limited amount. In Scotland, on ii'e contrary c. c partner Is liable to the whole cNieit |" his piyaie fortune for the engagements ol ile iN'- Herein is hu fundamental difference Of the two sys- tc,ns o which is to be attributed the safety olSeoic and the insecurity of American banking.

 In Scotland, there are, ndeel, three incorporates banks, bd their power Is relatively so small that uey ar, obi ged to conform to he usages which the uhh- corporated bankers establish

 These nsages are such might naturally be eN- nectc5 tp be adopted where the individual ruin o tue banker would be the necessary consequence of ms management of bank concerns. No loans or discounts are made except n close scrutiny oi the securities offered; and the balances due by the banks to one another are settled every three days Most oi the hanks have agents different towns, and these ngenls. fany loss is sustained on the business done by them, are ma .e to bearpart of that loss.

 The internal management of these banks IS diiie' rent from ours Before the paying teller can pay d check 1t is certified be good by kind o record

 ing clerk. In this way, ovefdiaits are prevented. u like manner when deposit IS made, at least two ol- iccrs of the bank certify the fact Such IS the eS- actness with which every thlns Is managed, ihai me Bank of Scotland has il is said, m the course O century, lost but few hundred pounds, on lrahaG- lions amounting in the aggregate, to hundreds oi hl lions. IL,

 h 1895, there were thirty banks in Scotland ha- yinn altogether one hundred and thirty three 'iai- ches, besides three banking houses m Edinburgh, which issued no notes. One oi the note issuis nl-

  had 55i, and another 4l6. the resalningoanks, there were three in which the number ofparucrs eN- ceeded l0O; six ln which the number Was Aetween 20 and l90; four in which the nuiiber Was 1et"eeh 10 and 20; and twelve in which the ha'ipef was less than 10. Tine smallest number oi pafners In any banking company was three

 ii is worthy of remark that though tho tisiness ot banine is free to all in Scotland, only si$ ew banks appear to have been established betweenlhe years l7e2 and 1921, period of 32 years | io2o, Ca year of great specuaton,) four new hnks were established, and the number has probably slhce been increased.

 Ii is not because the business is moi profitable, that the number of institutions is not multipied Iher

 stocks stand on an average at l0O per cnt premium on the capital originally paid in. The Aberdeen Banking Company commenced bushes ln lloa, on q capital of l50 pounds per share, or ,oJo pounds maid in In 1921 it's shares were selling at elf90. Subsequently they rose to t2300, a1ein lSSo were held at the rate of 3000 grineas per sare

 Jealous as the existing Scotch B.uks are oi one another they must be supposed to be sill more jealous

 of any nteropers in their lucrative iSlness. None but persons of unloubted wealth coul establish new bank in Scotland with ans prospectf su'ness, and

 most of these seem think it bette 10 buy shares Tn

 the banks already established, ala which, having already possession of the ground cn do business 10

 most advantage

 The noly restrictions to which lle Scotch Bankers arc restricted, is prohibiting nen from issuing Il

 (ss4 ,S5 and another which prohibits their issuing nocs payable the bearer on denand or payable al the option of the isBuer at the em oi SIX months, w

 sum equal the legal interest rom the date oi the demand to the time of paymen. The practice oi issuing this kind of post notes, we might cal them

 prevailed up to the year l163, when 1t Was put all end to by act of Parliament.

 As the Scotch banks make no etnrns to the Le2is-

 lature as is customary with American Banhs, and as ther affairs not inspected by Commissioners, af are those of the banks oi New York, the amount oi their capital and the extent of business they perform is altogether conectura. It is said that the whole amount of banking transactions is about equal to one hail of that of the single county of Lancashire.

 One practice by which the Scotch banks are dis tinguished from the American, Is that of granting what are called ''cash credits store-keeper, foi example, will give bond with i've or more approved securities for 300 pounds. credit IS then grasted 10 him on the books of the bank for this anougt II, on the next day. in the next week, he draws iOO of this from the bank interest on tbs amount and on this amount only, commences on the day He makes the drafl.-lf he repays it Tn the next week, tbe interest ceases on the dpJ which the repayment is lnade-This practice is much more equitable than that of our American bankers, who require those who get discounts from them to pay interest on the whole amount thoucn half the sum may remain on deposit in the bank, and never be touched by the borrower.

 The Sco.ch bankers are very careful that these s'cash credits do not degenerate into accommodation loans. Unless the borrower draws out the amount, and pays if in again. four or five times in the of the year, hints are given to him that his proceedings are

 not satisfactory, and the amount becomes alogeth- CT stagnant and remains for any length of time, ntmations are given to hun that fixed period he must discharge the debt. The whole amount of the credits thus granted, sad, in 1925, to be six millions sterling, and the amount drawn out al any one time be average, two thirds of the whole or four millions.

 Another practice which is general among the l,uLs fIata f pavt nt on is Generally the of the banks is to receive such deposits small sums as ten pounds, but four or five pounds would not be refused. The aggregate amount of such deposits, in 1925, was estimated as exceeding ten millions sterling, and not exceeding twenty-fve millions. This practice of paying inter- est on deposits, while 1t does justice to the public, prevents the banks from over issuing beyond cer- tain extent. Any issue very greatly exceeding the demands of trade and speculation, would be to come back the banks not for prompt payment, but in the form of deposits, the interest on winch would exceed the profit made by the banks such exces- siye issues. .-

 Scotland is the only country in regard to which n doubt can be nationally entertained whether paper money banking has done more harm than good. The system, independent of it's issues, IS excellent, that it would be difficult 10 suggest any improvement of it.. Interest is paid by the banks those who lend them money on deposit and interest is paid to the banks by those who borrow money from them, for just the time it is borrowed, and no longer. The loan and dis count, and deposit departments, may be said to be perfect. But the issuing department has all the de- fleets which inherent in every sys.em in winch m attempt is made to suppant metallic money by paper. In lS23 the highest amount of notes in circulation in Scotland, was IS, ,462,0l2; and in 1925, it was 6S3,2l2 being increase of more than one-third Where such enormous expansions can lake place, enormous cOntractions necessarily follow. And q scordingly we find MT. aeCulloch declaring that 's1he Scotch banks are most liberal of their advan- ns tltay lbey risk mak- ing them; but the moment alarm and dscrcdit begin to make thelr appearance, they demand payment of every advance that is not made on the very best carty; they cease, in great measure, to discount; and provide for then own safety, by running thousands of their customers"

 Other authorities confirm this testimony. Among these are the .'Drectors of the Chamber of Com nerce and Manufactures of Manchester" In their report of December 18th, 1859, on the effects of the ofthe Bank of England upon the com- nercia and manufacturing interests of the country" ,peaking of the convulsion of May, lS37 they say, sScotlaid was the first usua to feel the effects ,f pecuniary crisis"

 It is saying but little in favor of banking system say that the swole loss sustained by bank failures rom the ifstintroducon of paper, Is St, ,344 pounds if that system still subjects commerce to all those onvulsions which rum thousands, and deprive tens If thousands of employment. Never, till the stop ,agc of the SchuykilI Bank, did the Philadelphia ubIic lose une dollar, in the here intended, by he failure of any of their banks, yet Philadelphia Banking is becoming proverb of reproach The osses occasionally sustained by depositors and note olders, through the stoppages and breakings of anks, are among the smallest evils which English md American banking inAicts on the people of Eng and and ihe United States. rg ~ The Scotch banking system is essentially the same 8 the old English country banking system. The only

 Inference is, that under the old English system, no riyate banking firm could have than six part CTS, while in Scqtand the number of partners to q anking firm Is unlimited. Yet numerous failures ccurred under the old English system. In 1793, up 'afds of hundred country banks stopped payment nough at the same time they were pr,'iibted from l terling. .s,aa' Hs i5pssN ,44A The modern English Joint stock system is es-