The Washington times., 1905-10-12

OF the banks to issue the Ei~ note,
which privilege has been recognized
since the first bank was established.
England abolished the Issue OF the fl
note as a result OF the panic OF is2S.
but this prohibition did not extend to
Scotland, the credit for which Is given
to Sir Walter Scott, who herceiy at
tackled the right OF England to steal
from Scotland her paper currency. Inc
resul. has been that Scotland retains
today her paper currency almost T.
the exclusion OF metal currency, while
the reverse is true Ia England
Issue Flexible.
The right OF issue. as to volume, Is
governed BIZ a statute passed In Io4e,
fexibility dependent upon the public de-
mapd being one of the characteristics.
while the aggregate fixed issue of the
banks of Scotland aggregate fz.6l6.35c.
which the aggregate fixed issue OF the
thirty-four private and Joint stock banks
of England may issue but Gl-15e,sa2. The
average circulation IN Scotland In lsof
was 97.6is.ooo. Of which az per cent was
E1 notes. and the REMAINDER hotes OF
Mr.. Blvsn maintained that II was the
fi note that enabled the network or
branch banks to be MAINTAINED IN scot
land. ard that encouraged the savings
Of the poorer classes. With the Eng
lish rs no.es and her metalns currency.
he said these branch BANKS could pot
have been inaintasned & because en-, On the he
aggregate deposits of the ten Scotch
banks is $500. ooo. .00C-
Rich Through Saving.
The country. he said, has grown rich
through saving. and the system of
branch banks has fostered that saving.
Another distinctive feature of the
Scotch system Is it's cash credit ac-
count, wherein a trader or manufac-
turer is enabled to borrow from the
banks temporarily by executing q bond
to which he gets the signature of two
or more friends. along with his own.
The bank accepts the bond and honors
checks UP to tho amount named In II.
TEfs system OF borrowing obviates the
pledsing OF collateral OF other securi-
ties for the loan The money is drawn
as needed and interest IL not charged
except on the amount drawn.
The account is regarded as an opera
tive rather than loan account. or an
ordinary deposit account reversed
commission charged by the ten Scotch
banks is regarded as a most important
and distinctive feature Of the system
During the. last half century there
Scotland.
Checking Runs.
TT may be well to explain" Mr..
Biyth said. how we provide against a
sudden and unexpected withdrawal Of
deposits. or extraordinary presentation,
In time or panic. OF our note issue-in
short, ruin on the bank =
First OF all there are the gold sover-
eigns In the banks own safes, which
may amount to 6.ooo.o0O. held against
the notes In question. but not legally
hypothecated.
Secondly. the Scotch banks all keep
large balances at the Bank of England.
and with other London bankers.
Thirdly they lend large amounts to
London bill brokers' at call. or at three
or four days notice. and In security
Of these loans they hold patches OF
bank bills duly indorsed or a mixture
OF bank and trade bills, the latter being
approved. or in other words the best
paper of It's kind.
"Fourthly. the banks lend large sums
also to London stock brokers from ac-
count to account, that Is for periods Of
fourteen days, and IN security there are
held stocks and shares duly transfer
red to the bank. ana greater In value
than the amount Of the loans" s