and Ireland, respectively," which was carried without a division, and Mr. Goschen's bill remains in suspension-in limbo-neither pressed nor withdrawn

This Committee began its sittings on the 19th of April, 1875, and took evidence during 21 days, and reported the evidence taken to the House, but made no report on the evidence taken, and recommended its reappointment in the next session. But the Committee was never reappointed

The primary object of the Committee was to ascertain the legality or the contrary of the establishment of the Scotch branches in London. It examined Mr. Fitzjames Stephen, Q.C., and Sir Henry Thring, C.B., Parliamentary draughtsman to the Government, personally, as to the state of the Law: and besides that they had the written opinions of Sir James Scarlett (Lord Abinger), Sir Edward Sugden (Lord St. Leonards), Mr. Richards, and Mr. Roundell Palmer (Lord Selborne)

We shall commence by stating the opinions of these several Counsel on the point

Mr. Stephen gave it as his opinion, among other points, that -"No joint stock bank which issues notes anywhere, except the joint stock banks in England and more than 65 miles from London, may carry on business in any part of England"

He considered that all "foreign banks whatever, including under the name 'foreign' not only continental banks, but British banks out of England, that is, Scotch, Irish, and colonial banks, are forbidden by the various Acts of Parliament to establish themselves in any part of England." (Q. 206)

He denied that the Bank of Amsterdam, for instance, could open a branch in London. (Q. 207.)

Mr. Stephen admitted that he had never turned his attention to the subject before, and that he had merely been instructed to look at the matter on behalf of the English bankers some two days or a week previously; and that he was somewhat biassed by the side on which he was called. He also said that he derived most of his information from the memorandum of Sir Henry Thring, to be mentioned immediately

Sir Henry Thring differed so far from Mr. Stephen, that he thought the Scotch Banks might open branches in the provinces beyond the 65 miles limit, though he spoke somewhat doubtfully (Q. 404, 406). But he agreed with Mr. Stephen that it is illegal to open branches in London or within the limit of 65 miles

He also presented a memorandum to the Committee containing frequent references to the second edition of this work; and stating certain general conclusions he had arrived at. "Such being the circumstances of the case, the first question is whether it is or is not legal for Scotch Joint Stock Company banks of issue to establish branches in England. In answer to that question it is submitted that the prohibitions contained in the Acts of 1697 and 1708, and repeated in 1800, are still in force, with the special modification introduced by the Act of 1826, and are perfectly general in their terms, and extend to Scotch banks of issue as well as to country banks of issue in England, and, consequently, that, with the exception of the Royal Bank of Scotland, which is empowered by Act of Parliament to have a branch in London, all other branches belonging to Scotch banks of issue in London, or within 65 miles thereof, are illegal. On the other hand, there does not appear to be any legal prohibition against the Clydesdale Banking Company establishing their branches in Cumberland, being at a distance of more than 65 miles from London"

Sir Henry Thring then presented some suggestions as to the policy of expelling the Clydesdale Bank by law from Cumberland: into this consideration we shall not follow him, as, of course, every one is entitled to have his own opinion as to expediency and policy

The Author of this work having been expressly selected by the Royal Commissioners for the Digest of the Law to declare the Law on all points respecting to Bank Notes, and, moreover, having been frequently referred to in the memorandum presented by Sir Henry Thring, and being perfectly satisfied that there was no foundation whatever for the doctrines laid down by Mr. Stephen and Sir Henry Thring, applied to the Chancellor of the Exchequer to be heard before the Committee, but the Chancellor refused to hear him. As the opinions given by these learned gentlemen were calculated to strike at such wide-spread interests, he wrote a letter to the Daily News, which appeared in that paper on the 8th May, 1875, shewing that the opinions expressed by these gentlemen was quite destitute of any foundation

There were also published, in the appendix, the opinions given in 1833 by Sir James Scarlett, Sir Edward Sugden, and Mr. Griffiths, on the question whether Joint Stock Banks of Deposit could be established in London previously to the clause in the Bank Charter Act of 1833. All these three gentlemen held that they could not; they maintained that the words of the monopoly clause of the Act of 1697, and subsequent Act, included Banks of Deposit as well as Banks of Issue. But the legal adviser of the Government, Sir John Campbell, held exactly the reverse: he held that the monopoly of the Bank of England was exclusively restricted to issuing notes, and that it was perfectly legal at Common Law to establish Joint Stock Banks of Deposit; and upon that opinion the Government of the day acted, and introduced the declaratory clause in the Bank Charter Act of 1833

In 1855 the Clydesdale Bank took the opinion of Mr. Roundell Palmer (now Lord Selborne) as to whether it was legal for them to open branches in London and other parts of England, and carry on banking business, except only issuing notes; and Mr. Palmer gave it as his opinion that it was perfectly legal for them to do so. The opinion of Lord Selborne, therefore, exactly agreed with the opinion published by us in the Daily News of 8th May, 1875

We have already, in Chap. xiii., § 17, explained fully the strict law of the question; and shewn that any Bank, in any part of the world, is perfectly entitled to open branches in London, or any part of England, so long as it does not issue notes in England, payable on demand, or at any less time than six months after demand

Since then, all the Banks in Scotland, except only the local ones at Aberdeen and Inverness, have opened branches in London; and the question is now finally set at rest, and will never be mooted again

25. In 1858, as we have seen, an Act was passed to enable Banks to adopt the principle of limited liability. But it was adopted in very few instances; as Banks do not readily change their constitution; and they thought that such a change would probably endanger their credit. But the catastrophe of the City of Glasgow Bank, in 1878, created such consternation among the shareholders of banks that they made determined efforts to compel their Directors to adopt the principle of limited liability. This was the case, especially in Scotland, where investment in Bank shares was recognised by the Law Courts as a legitimate investment of trust funds. But the Trustees were personally liable for all calls and losses sustained by the banks, as well as to make good the losses to their clients

To facilitate this the Act, Statute, 1879, c. 76, was passed, which enacts

I. That any unlimited Company may increase the nominal amount of its Capital by increasing the nominal amount of its shares

Provided that no part of such increased Capital shall be capable of being called up except in the event of and for the purposes of the Company being wound up

In cases where no such increase of nominal Capital is made, the Company may provide that a portion of its uncalled Capital shall not be capable of being called up, except in the event of and for the purposes of the Company being wound up

II. A limited Company may declare that any portion of its still uncalled for Capital shall not be capable of being called up except in the event of and for the purpose of the Company being wound up

III. All Banks are subject to unlimited liability with respect to their Notes in circulation

The three senior chartered Banks were created Corporations before the Crown was empowered by Act of Parliament to create trading corporations with unlimited liability: therefore, they had always been limited Banks; and did not require to avail themselves of the Act of 1879 to become so. All the other Scotch Banks which were corporations with unlimited liability, without loss of time registered themselves as limited companies, under the provisions of the Act of 1879: and almost all the Joint Stock Banks in England have done the same: and the result has been to shew that the fears which had been entertained that limited Banks would enjoy less credit than unlimited ones have been perfectly groundless

VOL. II.

DD

CHAPTER XVIII

ON THE BUSINESS OF BANKING

1. In modern practice a Banker may stand in four relations to his customer

1. As the Purchaser from him of specie or debts

2. As his Agent, Trustee, or Bailee of his specie and valuable securities: i.e., securities for money and convertible securities; termed Banking Securities

3. As the Pawnee of the same

4. As his Warehouseman for plate, specie, jewels, deeds, &c., not being Banking Securities

On the Relation of a Banker to his Customer as the Purchaser from him of Specie, or Specie and Debts

2. The first of these cases is the ordinary one where a customer opens an account with a banker by paying in money to his account. The customer cedes the property in the money to the banker, and in exchange for it the banker writes down a Credit in his books to his customer's account. This Credit is a Right of action which the customer has to demand an equal amount of money from the banker at any time he pleases. This Credit, or Right of action, is, in modern banking language, termed a Deposit. It is also termed an Issue, from exitus; because by creating this Credit the banker has issued a Right of action against himself. The transaction is, therefore, a sale-an exchange of Money for a Debt: and the banker and his customer stand to cach other in the common law relation of Debtor and Creditor

It is also part of the fundamental contract between banker and customer that the customer may transfer his Debt, or Right of action, to any one else he pleases, and the transferee has the same