CHAPTER I.

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BLACKWOOD'S

EDINBURGH MAGAZINE.

NO. CCCL. DECEMBER, 1844. VOL. LVI.

CONTENTS.

The Scottish Banking System, 671

The Milkman of Walworth, 687

Injured Ireland, 701

Singular Passages in the Life of a Russian Officer, 713

Traditions and Tales of Upper Lusatia. No IV. The Moor Maiden, 726

"That's What We Are," 741

Edmund Burke, 745

My College Friends. No. II. John Brown, 763

Nelson's Despatches and Letters, 775

Guizot, 786

EDINBURGH:

WILLIAM BLACKWOOD AND SONS, 45, GEORGE STREET;

AND 22, PALL-MALL, LONDON.

_To whom all Communications (post paid) must be addressed._

SOLD BY ALL THE BOOKSELLERS IN THE UNITED KINGDOM.

PRINTED BY BALLANTYNE AND HUGHES, EDINBURGH.

BLACKWOOD'S

EDINBURGH MAGAZINE.

No. CCCL. DECEMBER, 1844. Vol. LVI.

THE SCOTTISH BANKING SYSTEM.

When any important branch of national polity has been impeached,

arraigned, and brought to stand its trial before the bar of public

opinion, it is satisfactory to know that the subject has been

thoroughly investigated, since a searching investigation alone can

excuse a verdict, be it of acquittal or of condemnation. That no man

can be twice tried upon the same indictment, is a proud boast of the

British constitution. It would be well if the same rule were always

applied when mightier interests than those of individuals are at

stake!

It is just eighteen years ago since a ministry, feeble in practice,

but strong in speculative theory, ventured to put forth its hand

against the monetary system of Scotland, under shelter of which the

country had improved and thriven to a degree of prosperity never

experienced to the north of the Tweed before, and at a ratio which far

exceeded that of any other nation in Europe. In the short space of

half a century, the whole face of the country had changed. From a

bleak, barren, and dilapidated region--for such she undoubtedly was

for many years subsequent to the last rebellion of 1745--Scotland

became, with the shortest possible transition, a favourite land of

husbandry. Mosses and muirs, which, at all events since the forgotten

days of the Jameses, had borne no other crop than rugged bent or

stubborn heather, were subjected to the discipline of the plough, and

produced a golden harvest of grain. Woods sprang up as if by magic,

from the roots of the old Caledonian forest, to hide the nakedness of

the land and redeem the national reproach. The towns and

boroughs--which had never recovered from the terrible blow inflicted

upon them by the failure of the Darien scheme, in which nearly the

whole capital of Scotland was embarked, and which had lost the greater

and more valuable portion of their trade, and dwindled down into

almost hopeless insignificancy--began to revive again. New

manufactures were established, the older ones were extended; the

fisheries rose immensely in magnitude and importance; the mountainous

districts were made profitable by the breeding and export of sheep and

cattle; and even the rugged shores of the Hebrides furnished for a

time a most profitable article of commerce. All this took place in a

poor and very neglected country. England for a long time knew little

of what as going on in the north; perhaps her eyes were then riveted,

with more than the anxiety of a gamester's, upon the great stakes for

which she was contending on the red battle-fields of Europe. This much

she knew, that Scotland could produce in time of need--ay, and did

produce--levies of men, whose high heroic courage, steady discipline,

and daring intrepidity, were the theme even of their enemies'

admiration; and of these services she was, and is, justly and

generously proud. But of the social condition of their northern

neighbours, we repeat, the body of the English, at this period, were

singularly ignorant. We had not very long before suffered the penalty

of adherence to a fallen cause. We were considered to be still rather

too irritable and dangerous for much interference; perhaps, also, it

was thought that it might be _cheaper_ to leave us to ourselves--and,

so long as we paid our proportion of the common taxation, not to

enquire too curiously into our own domestic system of management. In

all respects, therefore, notwithstanding the war, we flourished.

Peace came; and with peace, as a matter of course, a more searching

investigation into the internal state of the country. Then, for the

first time, Scotland became a sort of marvel. Our agriculture, our

commerce, our internal resources, so strangely and quickly augmented,

attracted the attention of the politician; and the question was

speedily mooted--"How, and by what means, have so poor a nation as the

Scotch attained so singular a position?" And truly the facts were

startling, and such as might justify an enquiry. _The whole coined

money in Scotland, at the date of the Union, was known not to have

exceeded the sum of_ ONE MILLION STERLING; and a large part of this

paltry sum was necessarily hoarded, and so withdrawn from circulation,

throughout the whole period of the intestine troubles. That single

million, therefore, held the place both of that part of the wealth of

the country which is now represented by bank-notes, and also of that

which is now deposited in the hands of the bankers. Aladdin's palace,

which sprang up in one night at the bidding of the slaves of the lamp,

could scarcely have been a greater paradox to the aged Sultan, than

this increase of prosperity on the part of Scotland was to our

southern legislators. How to explain the metamorphosis seemed for a

time a mystery. One thing, at all events, was clear--that English gold

had no participation in the change. North of the Tweed, a guinea was a

suspected article, apt to be rung, and examined, and curiously

weighed, before it was received in currency, and even then accepted

with a certain reluctance. The favourite medium of circulation was

paper-notes of one pound each, of somewhat dubious complexion to the

eye of the stranger, but received and circulated by the Scottish

people with the utmost readiness and confidence. The answer to the

question was a short one--"We have prospered through OUR BANKING

SYSTEM."

It was some time--not until ten years of peace had elapsed--before any

open attack was made upon that system, which had proved, if facts can

prove any thing, the greatest imaginable boon to the nation; and

which, be it always specially remembered, did not originate with the

state, but with private individuals--upright, honourable, and

patriotic men--who better deserve a monument to their memories, were

that required, than the most successful conqueror whose march is on

humbled thrones. During that period much was done with regard to

internal relations, of which we, in common with every Scotsman who

retains one spark of patriotic feeling, most heartily disapprove. The

tendency towards centralization in London--the inevitable consequence

of the Union treaty--was not only not counteracted, as we maintain it

ought to have been, by a wise and paternal government, but forced and

hurried on by an excessive exercise of power. Every remnant of our

ancient institutions that could be rooted up, and all our local boards

with hardly one exception, were transferred to the seat of

government--regardless of the drain that was thereby made from the

proper resources of the country, and the deep heart-burnings that such

a system must necessarily create amongst a proud, observant, and

jealous, though enduring people. These things we shall not dilate

upon--though the temptation is triply strong, and we know how keenly

that subject is felt by many of the best and most loyal of the

land;--but in the mean time we shall pass over this period of gradual

humiliation, and come at once to the first great attack that was made

upon the source of all our national prosperity.

At the close of the year 1825, there arrived a period of public

distress, followed by a panic which fortunately has but rarely been

felt in this country. We attributed it then, and we attribute it now,

to an unexampled glut in the money market, which we hold to be in this

trading country the most destructive of any, saving and excepting a

glut in agricultural produce and labour; and for this very plain

reason, that a glut of money resolves itself sooner or later into a

glut of goods, thereby carrying the amount of production in the

country far beyond the amount of the consumption and demand, and so

necessarily for a time closing the door against all the outlets of

industry. But it is of very little consequence to our present purpose

how that distress was created. The effects were very grievous. In

England the panic took effect, and a run was made upon the banks for

gold; the consequence of which was, that a number of the private and

joint-stock establishments failed. In Scotland, where the distress was

certainly not less in proportion, there was not only no failure on the

part of the banks, but no run, and no diminution in the usual credits.

At this time, it is very proper to remark, that England had been

thoroughly centralized; that is, that the whole course and tendency of

its money market was to London; and indeed, for purposes of trade, the

principal circulation of the important districts of Lancashire and

others, seems to have been bills of exchange payable in London, with

from twenty to fifty endorsements on each. With us such a system was

unknown. Scotland, then as now, and we devoutly trust for ever, had

her own internal circulation, and neither took nor gave, except when

statutorily compelled, beyond the limits of her own jurisdiction.

The attention of the ministry was immediately directed to an

investigation of the cause of the general distress. This was right and

proper, and precisely what a cautious and well-meaning government

ought to do under such circumstances, in order to prevent, if

possible, the recurrence of a similar disaster. But unfortunately the

ministers of the day, though well-meaning, were any thing but

cautious. The majority of them were imbued with speculative notions of

political economy. They were disciples of a school which rejects facts

and cleaves implicitly to theory--men who threw considerations of

circumstance, time, and national characteristics aside, as prejudices

too low for even the momentary regard of a philosopher; in short, they

wished to introduce the standard of an untried rule as the _ne plus

ultra_ of human sagacity, and remorselessly to overturn every existing

institution--no matter at what sacrifice or risk--if it only seemed to

stand in the way of the operation of their darling theories.

It was easy for men so tutored and trained, to overlook the necessary

effect which fluctuation of the seasons at home and abroad must have

upon the prices of either produce, of the effect of these prices upon

manufactures, and the manifest and established fact that there is a

point when _production_ will exceed _consumption_. This state of

things it is totally beyond the power of man to remedy. The facts of

nature will always be found too strong for the theories of the

political economist; but our rulers in the plenitude of their wisdom

thought otherwise; and began to search within the social system for a

cause of that disorder, which was neither more nor less than an

epidemic, as totally beyond the reach of their prevention as if the

College of Physicians were to issue their solemn fiat--"This year

there shall be neither cholera nor fever." In searching for the cause,

however, they stumbled upon an effect which they at once adroitly

magnified into a cause. In England there had been a marked increase

during the rise in the issue of the country banks. Here was an

opportune discovery for the champions of metallic currency! and,

accordingly, the paper system was prostrated in England to make way

for its more glittering, often more slippery, and always more

expensive rival.

Scotland, in the mean time, was going on in her old and steady

footing. One and all of the banks--chartered, joint-stock, and

private--were as firm as if each had been backed by the whole weight

and responsibility of the state. Between them and the public the most

perfect confidence subsisted; and very nobly indeed, in that time of

trial and distress, did the banks behave, in maintaining credits

grievously depressed for the moment, but certain to revive with the

return of general prosperity. This mutual confidence is the great

secret of the success of the Scottish system. The banker is to the

trader as a commercial physician--sometimes restrictive, sometimes

liberal, but always a judicious friend. It is impossible to separate

the interests of the two; and as they have risen together, so, in the

event of a change, must they both equally decline. But we will not

anticipate our defence, before we have adduced the facts upon which

that defence is founded.

All at once, and without sounding any note of preparation, the

ministry announced, that after the expiry of a given season, the whole

Scottish banking system was to be changed, all paper currency under

the five-pound note abolished, and a metallic circulation introduced

and enforced. If Ben Nevis had burst forth at once in the full thunder

of volcanic eruption, we could not have been more astonished. What!

without complaint or enquiry--without the shadow of a cause shown, or

a reason assigned, except it might be that reason--to a Scotsman the

most unpalatable of all--the propriety of assimilating the

institutions of both countries; in other words, of coercing Scotland

to adopt the habit of her neighbours--to excavate the foundation-stone

of our whole prosperity, and make us the victims of a theory which,

even if sound, could not profess to give us one tittle more advantage

than the course which we had so long pursued! We believe that if the

annals of legislation were searched through, we could not find a

parallel case of such wanton and unprovoked temerity!

We said then, and we say now, with even more emphatic earnestness, it

is the curse of the age that every thing is to be managed by political

economy and philosophy, and that local knowledge is to be utterly

disregarded in the management of local interests. CENTRALIZE and

ASSIMILATE--these were the watchwords of the ministers of that day;

and for aught that we can see, Sir Robert Peel is determined to

persevere in the theory. What excuse was there, _then_, for the

attempt of any assimilation between the banking systems of the two

countries? If it had been alleged that the Scotch paper currency was

surreptitiously carried into England--that it was there supplanting

the legal currency, and absorbing the gold in exchange, there might

have been some show of reason for a slight modification of the

system--at all events for a more stringent preventive check. But no

such allegation was made. The most determined hater of the Scottish

banks knew well that their paper never crossed the Border; for the

very best of all possible reasons, that the notes were not a legal

tender, and that five persons out of six to whom they might happen to

be offered, would unhesitatingly reject them. Again, to absorb the

gold would have been neither more nor less than partially to carry out

the views entertained by the supporters of a metallic currency, and

therefore surely, in their eyes, a venal, if not a meritorious,

offence. But such was not the fact. In Scotland there was no such a

thing known as a gold circulation. The fishermen, the cattle dealers,

and the small traders, would not so much as take it; and the stranger

who, through ignorance, had provided himself with a stock of the

precious metal, was forced to have recourse to a Scottish bank in

order to have it exchanged for notes. Beyond what lay in the bank

reserves, there was literally none in the country; and therefore any

idea of the interference of the currencies was too preposterous to be

maintained.

But it is not here, or at this point, that we intend to discuss the

propriety of the measure which was then proposed. Unfortunately, we

are called upon to do so with reference to our own times, as well as

to those which are now matter of history; and the remarks which we

shall have occasion to offer are equally applicable to the one as to

the other. In the mean time, let us see how the mere alarm engendered

by that unlucky proposition affected Scotland, and what steps were

taken to resist the threatened change.

First of all, we have it in evidence that the open threat of the

ministerial scheme produced within the country more actual distress

and bankruptcies than had previously occurred during the period of the

previous depression. This may seem a paradox to a stranger; but the

reason will be readily understood, and the fact candidly admitted by

every one who is conversant with the Scottish system of banking. A

short explanation may be necessary. One large department of the

business of every bank was the granting of CASH-CREDITS; a method of

accommodation to the public which the experience of _ninety-four

years_ (cash-credits were granted by the Royal Bank of Scotland so

early as 1729) had shown not only to be the safest to the bank, but by

far the most advantageous to the public. Indeed it is not too much to

say, that were those credits prohibited, and no other alteration made

in the existing system, the mainspring of the machinery of Scottish

banking would be broken, and its general utility impaired. With that

point we shall deal more fully when we come to the consideration of

the system in detail; at present it is only necessary to remark, that

these credits had been maintained unimpaired during the period of

depression, and were the fortunate means of averting ruin from many.

But the attitude which the ministry assumed was so formidable, and the

prospect of a sweeping change so alarming, that the bankers were

forced in self-defence, though sorely against their will, to make

preparation for the worst contingencies. They were, so to speak,

compelled to follow the example of England in 1745--to recall all

their outlying forces from abroad, concentrate them at home, and leave

their allies to fight their own battles as they best could, and to

conquer or fall according to their ability or weakness. Their first

step was rigidly to refuse the granting of any new cash-credits; their

second, to withdraw--with as much tenderness as might be, but still to

withdraw--those which were already in existence. It was then that the

country at large began to feel how terribly their interests were

compromised. The trader, who was driving an active business on the

strength of his cash-credit, and turning over the amount of his

bank-account it may be thirty times in the course of the year, found

himself suddenly brought to a stand-still. The country gentleman, in

the midst of his agricultural improvements, and at the very moment

when their cessation would undo all that he had hitherto accomplished,

was compelled either to desist for want of ready money, and throw his

labourers on the parish, or to have recourse to the pernicious system

of discounting bills at a ruinous rate of interest. The manufacturer,

in despair, was reduced to close his works, and the operatives went

forth to combine, or starve, or burn; for the hand of the ministry was

upon them likewise, and their burden was sorer than their masters'.

These were the first fruits of the proposed metallic currency; and it

soon became evident to all, that nothing was left for Scotland, if she

wished to escape from universal ruin, but to offer a firm and most

determined resistance. The struggle was felt throughout the length and

breadth of the land to be one, which, if it did not actually involve

existence, involved a greater commercial interest than had been at

stake for more than a century before. The combination which took place

in consequence was so extraordinary, that we may be pardoned if we

express our wonder how any minister who witnessed it, can at this hour

have the temerity to return to the charge. Party-spirit, always higher

and keener in Scotland than elsewhere, was at once forgotten in the

common cause. All ranks, from the peer to the peasant, rose up in

wrath at the proposed innovation; and from every county, city, town,

village, and corporation in the kingdom, indignant remonstrances were

forwarded to the foot of the Throne, and to the Imperial Parliament of

Great Britain. It was assuredly a dangerous experiment to make with a

proud and jealous people. Old watchwords and old recollections, buried

spells which it were safer to leave alone, began to revive amongst us;

and many a lighter act of aggression, which had been passed over at

the moment in silence, was then recalled and canvassed, and magnified

into a serious grievance. In short, Scotland, from the bottom of her

heart, felt herself most deeply insulted.

It was at this time that the celebrated letters of Malachi

Malagrowther appeared. To the general sentiments contained in that

work, we subscribe without the slightest hesitation. Strong language

is usually to be deprecated, but there are seasons when no language

can be too strong. We think meanly of the man who can sit down to

round his periods, and prune his language, and reduce his feelings to

the level of cold mediocrity, when he knows that the best interests of

his country are at stake, and that he is her chosen champion. And

such, most assuredly, and beyond all comparison, was Sir Walter Scott.

He went into that conflict like a giant, in a manner that disdained

conventionalisms; he neither begged, nor prayed, nor conceded, but

took his firm ground on the chartered liberties of his country, and

spoke out in such manly and patriotic accents as Scotland has rarely

heard since the days of Fletcher and Belhaven. All honour be to his

memory! Were it for that good work alone, his name ought for ever to

be immortal.

In consequence, ministry were condescending enough to allow a

Parliamentary enquiry. Even that was not granted readily, as the

prevailing impression in the cabinet seemed to be, that Scottish

affairs were of too slight importance to occupy the time of the

Imperial Parliament. The old country might be dealt with summarily,

and left to remonstrate at its leisure. But the spirited resistance of

our representatives, and it is no less incumbent upon us to add, that

innate sense of justice in Englishmen, which will not suffer any one

to be condemned unheard, procured us the investigation, upon the issue

of which we were willing to rest our cause. The Scottish banking

system underwent the severest of all scrutinies before committees of

the Houses of Peers and of the Commons; and the following was the

nature of the reports.

The committee of the House of Commons, after recapitulating the

leading points which were brought out in evidence before them, came to

the following conclusions--which it is very important to bring before

the public now, as they refer not only to the deductions which the

committee had formed from the history of the past, but to the special

reasons which were to influence the legislature in future and

prospective change.

"Upon a review of the evidence tendered to your committee, and

forming their judgment upon that evidence, your committee _cannot

advise_ that a law should now be passed, prohibiting, from a

period to be therein determined, the future issue in Scotland of

notes below five pounds:--

"There are, in the opinion of your committee, sufficient grounds

in the experience of the past for permitting another trial to be

made of the compatibility of a paper circulation in Scotland with

a circulation of specie in this country.

"Looking at the amount of notes current in Scotland, below the

value of five pounds, and comparing it with the total amount of

the paper currency of that country, _it is very difficult to

foresee the consequences of a law which should prohibit the

future issue of notes constituting so large a proportion of the

whole circulation_.

"Your committee are certainly not convinced that it would affect

the cash-credits to the extent apprehended by some of the

witnesses; but they are unwilling, without stronger proof of

necessity, to incur the risk of deranging, from any cause

whatever, A SYSTEM ADMIRABLY CALCULATED, in their opinion, to

economize the use of capital, to excite and cherish a spirit of

useful enterprise, and even to promote the moral habits of the

people, by the direct inducements which it holds out to the

maintenance of a character for industry, integrity, and prudence.

"At the same time that your committee recommend that the system

of currency which has for so long a period prevailed in Scotland,

should not, under existing circumstances, be disturbed, they feel

it to be their duty to add, that they have formed their judgment

upon a reference to the past, and upon the review of a state of

things which may hereafter be considerably varied by the

increasing wealth and commerce of Scotland, by the rapid

extension of her commercial intercourse with England, and by the

new circumstances that may affect that intercourse after the

re-establishment of a metallic currency in this country.

"Apart from these general observations, bearing upon the

conclusions at which they have arrived, there are two

circumstances to which your committee must more particularly

advert.

"It is evident that if the small notes issued in Scotland should

be current beyond the Border, they would have the effect, in

proportion as their circulation should extend itself, of

displacing the specie, and even in some degree the local currency

of England. Such an interference with the system established for

England would be a manifest and gross injustice to the bankers of

this part of the empire. If it should take place, and it should

be found impossible to frame a law consistent with sound and just

principles of legislation, effectually restricting the

circulation of Scotch notes within the limits of Scotland, there

will be, in the opinion of your committee, no alternative but the

extension to Scotland of the principle which the legislature has

determined to apply to this country.

"The other circumstances to which your committee meant to refer,

as bearing materially upon their present decision, will arise in

the event of a considerable increase in the crime of forgery.

Your committee called for returns of the number of prosecutions

and convictions for forgery, and the offence of passing forged

notes, during the last twenty years in Scotland, which returns

will be found in the appendix. There appears to have been, during

that period, no prosecutions for the crime of forgery; to have

been eighty-six prosecutions for the offence of issuing forged

promissory notes--fifty-two convictions; and eight instances in

which the capital sentence of the law has been carried into

effect."

This may, on the whole, be considered as an impartial report; and, as

it is as well in every case to disencumber a question from

specialties, we shall state here that experience has since shown that

there has been no tendency whatever to the introduction of Scottish

notes into England. With regard to the other special point referred to

by the committee--that of forgery--such a thing as a forged bank-note

is now unknown in Scotland. The evidence taken before the last

committee on banks of issue in 1841, established the fact, that since

the improved steel plates were brought into general use, there has

never been a forgery of a note. Such being the case, it is unnecessary

here to dispute the wisdom of that policy which would leave a great

national institution at the mercy of a single forger. The experience

of this last month alone might show how wretchedly that test would

operate if applied even to the Bank of England.

Setting these specialties aside, the only possibly grounds which this

committee saw for any future legislative interference were, "the

increasing wealth and commerce of Scotland, the rapid extension of her

commercial intercourse with England, and the circumstances which may

affect that intercourse after the re-establishment of an English

metallic currency." To us the first part of this reservation sounds

somewhat like a threat of future bleeding when Scotland shall have

become more pursy and plethoric. Nevertheless we are ready to join

issue with our opponents on any of these grounds.

The report of the Lords was even more favourable; and, at the risk of

being thought tedious, we cannot refrain from inserting their

admirable digest of the evidence, which, for candour and clearness,

might be taken as a universal model.

"With respect to Scotland, it is to be remarked, that during the

period from 1766 to 1797, when no small notes were by law

issuable in England, the portion of the currency in Scotland in

which payments under five pounds were made, continued to consist

almost entirely of notes of L1 and L1, 1s.; and that no

inconvenience is known to have resulted from this difference in

the currency of the two countries. This circumstance, amongst

others, tends to prove that uniformity, however desirable, is not

indispensably necessary. It is also proved, by the evidence and

by the documents, that the banks of Scotland, whether chartered

or joint-stock companies or private establishments, _have for

more than a century exhibited a stability which the committee

believe to be_ UNEXAMPLED IN THE HISTORY OF BANKING; that they

supported themselves from 1797 to 1812 without any protection

from the restriction by which the Bank of England and that of

Ireland were relieved from cash payments; that there was little

demand for gold during the late embarrassments in the

circulation; and that, _in the whole period of their

establishment_, there are not more than two or three instances of

bankruptcy. As, during the whole of this period, a large portion

of their issues consisted almost entirely of notes not exceeding

L1 or L1, 1s., there is the strongest reason for concluding,

that, as far as respects the banks of Scotland, the issue of

paper of that description _has been found compatible with the_

HIGHEST DEGREE _of solidity_; and that there is not, therefore,

while they are conducted upon their present system, sufficient

ground for proposing any alteration, with the view of adding to a

solidity which has been so long sufficiently established.

"This solidity appears to derive a great support from the

constant exchange of notes between the different banks, by which

they become checks upon each other, and by which any over-issue

is subject to immediate observation and correction.

"There is also one part of the system, which is stated by all the

witnesses (in the opinion of the committee very justly stated) to

have had the best effects upon the people of Scotland, and

particularly upon the middling and poorer classes of society, in

producing and encouraging habits of frugality and industry. _The

practice referred to is that of_ CASH-CREDITS. Any person who

applies to a bank for a cash-credit is called upon to produce two

or more competent securities, who are jointly bound, and after a

full enquiry into the character of the applicant, the nature of

his business, and the sufficiency of his securities, he is

allowed to open a credit, and to draw upon the bank for the whole

of its amount, or for such part as his daily transactions may

require. To the credit of this account he pays in such sums as he

may not have occasion to use, and interest is charged or credited

upon the daily balance, as the case may be. From the facility

which these cash-credits give to all the small transactions of

the country, and from the opportunities which they afford to

persons who begin business with little or no capital but their

character, to employ profitably the minutest products of their

industry, it cannot be doubted that the most important advantages

are derived to the whole community. The advantage to the banks

who give those cash-credits arises from the call which they

continually produce for the issue of their paper, and from the

opportunity which they afford for the profitable employment of

part of their deposits. The banks are indeed so sensible that, in

order to make this part of their business advantageous and

secure, it is necessary that their cash-credits should (as they

express it) be frequently operated upon, that they refuse to

continue them unless this implied condition be fulfilled. The

total amount of their cash-credits is stated by one witness to be

five millions, on which the average amount advanced by the banks

may be one-third.

"The manner in which the practice of deposits on receipt is

conducted tends to produce the same desirable results. Sums to as

low an amount as L10 (and in some instances lower) are taken by

the banks from the depositor, who may claim them at demand. He

receives an interest, usually about one per cent below the market

rate. It is stated that these deposits are, to a great extent,

left uncalled for from year to year, and that the depositors are

in the habit of adding, at the end of each year, to the interest

then accrued, the amount of their yearly savings; that the sums

thus gradually accumulated belong chiefly to the labouring and

industrious classes of the community; and that, when such

accounts are closed, it is generally for the purpose of enabling

the depositors either to purchase a house or to engage in

business.

"It is contended by all the persons engaged in banking in

Scotland, that the issue of one-pound notes is essential to the

continuance both of their cash-credits and of the branch banks

established in the poorest and most remote districts. Whether the

discontinuance of one-pound notes would necessarily operate to

the full extent which they apprehend, in either of these

respects, may perhaps admit of doubt; but the apprehensions

entertained on this head, by the persons most immediately

concerned, might, for a time at least, have nearly the same

effect as the actual necessity; _and there is strong reason to

believe, that if the prohibition of one-pound notes should not

ultimately overturn the whole system, it must for a considerable

time materially affect it_.

"The directors of the Bank of England, who have been examined

before the committee, have given it as their opinion, that a

circulation of notes of L1 in Scotland or in Ireland would not

produce any effects injurious to the metallic circulation of

England, provided such notes be respectively confined within the

boundary of their own country.

"Notwithstanding the opinions which have been here detailed, the

committee are, on the whole, so deeply impressed with the

importance of a metallic circulation below L5 in England, not

only for the benefit of England, but likewise for that of all the

other parts of the empire, that if they were reduced to make an

option between the establishment of such a metallic circulation

in Scotland, or the abandonment of it in England, they would

recommend the prohibition of small notes in Scotland. But they

entertain a reasonable expectation, that legislative measures may

be devised which will be effectual in preventing the introduction

of Scotch paper into England; and unless such measures should in

practice prove ineffectual, or _unless some new circumstance

should arise_ to derange the operations of the existing system in

Scotland itself, or materially to affect the relations of trade

and intercourse between Scotland and England, they are not

disposed to recommend that the existing system of banking and

currency in Scotland should be disturbed."

This is just what a Parliamentary report ought to be--calm,

perspicuous, and decided. There is no circumlocution nor ambiguity of

expression here. After a patient investigation into the whole

question, and a minute examination of enemies as well as friends, the

Lords arrived at the opinion, that the existing banking system of

Scotland ought on all points to be maintained, and they not only

stated their general conviction, but gave their reasons for upholding

each part in detail, in the luminous manner which has always been the

characteristic of that august Assembly, and which has established its

proud reputation as not only the noblest, but the most upright

tribunal of the world. It is worthy of the most marked attention, that

the committee of the Lords in this report, which afterwards received

the sanction of the House, advocated no temporary continuance of the

banking system in Scotland, but were clearly of opinion that it should

remain as a permanent institution. They evidently entertained no

ideas, grounded upon mere expediency, that it would be prudent to wait

until Scotland, by means of her cherished institutions and her own

internal industry, arrived at that point of condition when it might be

expedient to introduce the lancet, and drain off a little of her

superfluous blood. They vent upon the righteous maxim--that a nation,

as well as a man, is entitled to work out its own resources in peace,

so long as it does not trench upon the industry or prerogatives of its

neighbour, and so long as no impeachment can be laid against the

prudence and stability of its institutions. We defy any man to read

over this report, and to adduce one word from it which shall convey

the idea that it was not intended as a final judgment, with the simple

qualifications that we have stated in the last sentence.

These two reports saved the country--we trust we shall not hereafter

be compelled to add, only for a time--from its great impending

misfortune. The circulation in England became metallic, with what

success it is not for us to say, whilst Scotland was allowed to retain

her paper currency with at least most perfect satisfaction to herself.

One pregnant fact, however, it would be unpardonable for us to

omit--as showing the stability of the northern system when compared

with that practised in the south--that at the last investigation

before a committee of the House of Commons in 1841, it was stated,

that whereas in Scotland the whole loss sustained by the public from

bank failures, _for a century and a half_, amounted to L. 32,000, the

loss to the public, _during the previous year in London alone, was

estimated at_ TEN TIMES THAT AMOUNT!

Since 1826, we have had eighteen years' further experience of the

system, without either detecting derangement in its organization, or

the slightest diminution of confidence on the part of the public.

There has been no interference with the metallic currency of England.

Forgery is a crime now utterly unknown, as is also coining, beyond the

insignificant counterfeits of the silver issue. This, in fact, is a

great advantage which we have above the English in point of security,

since we are exempt from the risk of receiving into circulation either

base or light sovereigns, and since the banks provide for the

deterioration of their notes by tear and wear, whilst the holder of a

light sovereign has to pay the difference between the standard and the

deficient weight. When we reflect upon the small amount of the wages

of a labouring man, it is manifest how important this branch of the

subject is; for were gold allowed in Scotland to supersede the paper

currency, a fresh and most dangerous impetus would be given to the

crime of coining; and there cannot be a doubt, that in the remoter

districts, where gold is utterly unknown, a most lamentable series of

frauds would be perpetrated, with little risk of detection, but with

the cruelest consequences to the poor and illiterate classes.

We are not, however, inclined to adopt the opinion expressed by the

committee of the House of Commons, to the extent of admitting that it

would be either politic or just to disturb the whole banking system of

a country on account of private frauds, whether forgeries or the

fabrication of counterfeit coin. If their opinion was a sound one, the

weight of evidence is now upon our side of the argument; but we hold

that the interests at stake are far too great to be affected by any

such minor details. If any new circumstance has arisen "to affect the

relations of trade and intercourse between Scotland and England," we

at least are wholly unconscious of the occurrence, and, of course, it

is the duty of those who meditate a change to point it out, in order

that it may be thoroughly scrutinized. Internally, the business of the

banks has been increasing, and, commensurate with that increase, there

has been a vast addition to the number of branch banks spread over the

face of the country; so that, whereas in 1825 there was but one office

for every 13,170 individuals, in 1841 there was an office for every

6600 of the population. This is plainly the inevitable effect of

competition; but lest that increase should be founded upon by our

opponents as a proof of over-circulation, we shall say a few words

upon the subject of the _exchange_ between the banks themselves, which

is a leading feature of our whole system, and the most complete check

against over-trading which human ingenuity could devise. Fortunately

we have ample _data_ for our statement in the evidence tendered to the

committee on banks of issue in 1841.

It is right, however, to premise that, strictly speaking, there are

not more, nay, there are positively _fewer_ banks in Scotland at the

present moment than there were in 1825, though the amount of paid-up

capital in the banks is more than doubled. It is the branches alone

which make this astonishing increase. Now, as a branch is merely a

local agency of the parent bank, established at a distance for the

sake of outlying business, the number of parties engaged in banking

who are responsible to the public is not thereby increased, nor is the

amount in circulation extended. In fact, the multiplication of the

branch banks has been of extraordinary benefit to the public, by

affording the inhabitants of even the remotest districts a ready,

easy, and favourite method of deposit, and by extinguishing all risks

of credit. Further, it has this manifest advantage, that the manager

of the branch bank has far greater facilities of ascertaining the

character, habits, and pursuits of those persons who may have received

the advantage of a cash-credit accommodation, and can immediately

report to his superiors any circumstances which may render it

advisable that the credit should be contracted or withdrawn. So far

are we from holding that the multiplication of branch banks is any

evil or incumbrance, that we look upon it as an increased security not

only to the banker but the dealer. The latter, in fact, is the

principal gainer; because a competition among the banks has always the

effect of heightening the rate of interest given upon deposits, and of

lowering the rates charged upon advances. Nor does this give any

impetus to rash speculation on the part of the dealer, but directly

the reverse. The deposits always increase with the advancing rate of

interest; and experience has shown, that it is not until that rate

declines to two per cent that deposited money is usually withdrawn,

which is the signal of commencing speculation. To the mere speculator

the banks afford no facilities, but the reverse. Their cash credits

are only granted for the daily operations of persons actively engaged

in trade, business, or commerce. So soon as that credit appears to be

converted into a different channel, it is withdrawn, as alike

dangerous to the user and unprofitable to the bank which has given it.

Of thirty-one banks in Scotland which issue notes, five only are

_chartered_--that is, the responsibility of the proprietors in those

established is confined to the amount of their subscribed capital. The

remaining twenty-six are, with one or two exceptions, joint-stock

banks, and the proprietors are liable to the public for the whole of

the bank responsibilities to the last shilling of their private

fortunes. The number of persons connected with these banks as

shareholders is very great, almost every man of opulence in the

country being a holder of stock to a greater or a less amount. That

some jealousy must exist among so many competitors in a limited field,

is an obvious matter of inference. Such jealousy, however, has only

operated for the advantage of the public, by the maintenance of a

common and vigilant watch upon the manner in which the affairs of each

establishment are conducted, and against the intrusion of any new

parties into the circle whose capital does not seem to warrant the

likelihood of their ultimate stability. Accordingly, the Scottish

bankers have arranged amongst themselves a mutual system of exchange,

as stringent as if it had the force of statute, by means of which an

over-issue of notes becomes a matter of perfect impossibility. _Twice

in every week the whole notes deposited with the different bank

offices in Scotland are regularly interchanged._ Now, with this system

in operation, it is perfectly ludicrous to suppose that any bank would

issue its paper rashly for the sake of an extended circulation. _The

whole notes_ in circulation throughout Scotland return to their

respective banks in a period averaging from ten to eleven days in

urban, and from a fortnight to three weeks in rural districts. In

consequence of the rate of interest allowed by the banks, no person

has any inducement to keep bank paper by him, but the reverse, and the

general practice of the country is to keep the circulation at as low a

rate as possible. The numerous branch banks which are situated up and

down the country, are the means of taking the notes of their

neighbours out of the circle as speedily as possible. In this way it

is not possible for the circulation to be more than what is absolutely

necessary for the transactions of the country.

If, therefore, any bank had been so rash as to grant accommodation

without proper security, merely for the sake of obtaining a

circulation, in ten days, or a fortnight at the furthest, it is

compelled to account with the other banks for every note they have

received. If it does not hold enough of their paper to redeem its own

upon exchange, it is compelled to pay the difference in exchequer

bills, a certain amount of which every bank is bound by mutual

agreement to hold, the fractional parts of each thousand pounds being

payable in Bank of England notes or in gold. In this way over-trading,

in so far as regards the issue of paper, is so effectually guarded and

controlled, that it would puzzle Parliament, with all its conceded

conventional wisdom, to devise any plan alike so simple and

expeditious.

The amount of notes at present in circulation throughout Scotland is

estimated at three millions, or at the very utmost three millions and

a half. At certain times of the year, such as the great legal terms of

Whitsunday and Martinmas, when money is universally paid over and

received, there is, of course, a corresponding increase of issue for

the moment which demands an extra supply of notes. It is never

considered safe for a bank to have a smaller amount of notes in stock

than the average amount which is out in circulation; so that the whole

amount of bank-notes, both in circulation and in hand, may be

calculated at seven millions. The fluctuation at the above terms is so

remarkable, that we are tempted to give an account of the number of

notes delivered and received by the bank of Scotland in exchange with

other banks during the months of May and November 1840:--

Notes Notes

Delivered. Received.

1840,

May 1, L 51,000 L 43,000

... 5, 52,000 32,000

... 8, 44,000 45,000

... 12, 43,000 48,000

... 15, 54,000 64,000

... 19, *132,000 *172,000

... 22, 98,000 69,000

... 26, 38,000 33,000

Nov. 3, 38,000 32,000

... 6, 37,000 33,000

... 10, 51,000 61,000

... 13, *99,000 *138,000

... 17, 67,000 80,000

... 20, 66,000 49,000

... 24, 52,000 33,000

... 27, 66,000 42,000

*Term Settlements.

It will be seen from the above table how rapidly the system of bank

exchange absorbs the over-issue, and how instantaneously the paper

drawn from one bank finds its way into the hands of another.

If further proof were required of the absurdity of the notion, that a

paper circulation has a necessary tendency to over-issue, the

following fact is conclusive. The banking capital in Scotland has

_more than doubled_ between the years 1825 and 1840--a triumphant

proof of their increased stability; whilst the circulation has been

nearly stationary, but, if any thing, _rather diminished than

otherwise_. We quote from a report to the Glasgow Chamber of Commerce.

"The first return of the circulation was made in Scotland in

1825. Every one knows the extraordinary advance which Scotland

has made between that period and 1840; for instance, in the

former of these years, she manufactured 55,000 bales of cotton,

in the latter, 120,000 bales. In 1826, the produce of the iron

furnaces was 33,500 tons; in 1840, about 250,000 tons. In 1826,

the banking capital of Scotland was L4,900,000; in 1840, it was

about L10,000,000; yet with all this progress in industry and

wealth, the circulation of notes, which in 1825 varied from

L3,400,000 to L4,700,000, was in 1839 from L2,960,000 to

L3,670,000, and in the first three months of 1840, L2,940,000."

We are induced to dwell the more strongly upon these facts, because we

have strong suspicions that our opponents will endeavour to get at our

monetary system by raising the senseless cry of over-issue--senseless

at any time as a political maxim, it being the grossest fallacy to

maintain that an increased issue is the cause of national distress,

unless, indeed, it were possible to suppose that bankers were madmen

enough to dispense their paper without receiving a proper

equivalent--not only senseless, but positively nefarious, when the

clear broad fact stares them in the face, that Scotland has in fifteen

years thrown double the amount of capital into its banking

establishments, increased its productions in a threefold, and in some

cases a sevenfold ratio, augmented its population by nearly half a

million, (one-fifth part of the whole,) and yet kept its circulation

so low as to exhibit an actual decrease.

If we were called upon to state the cause of this certainly singular

fact, we should, without any hesitation, attribute it to the great

increase of the bank branches. The establishment of a branch in a

remote locality, has invariably, from the thrifty habits of the

Scottish people, absorbed all the paper which otherwise would have

been hoarded for a time, and left in the hands of the holders without

any interest. It would thus seem, from practice, that the doctrines of

the political economists upon this head are absolutely fallacious;

that the increase of banks, supposing these banks to issue paper and

to give interest on deposits, has a direct tendency to check

over-circulation, and in fact does partially supersede it.

With these facts before us, we consider that the measure of last

session, prohibiting any further issue of notes beyond those already

taken out by the banks, is almost a dead letter. We have not the least

fear, that under any circumstances there can be a call for a larger

circulation; at the same time, we demur to the policy which ties our

hands needlessly, and we object to all restriction where no case for

restriction has been shown. We look upon that measure as especially

unfair to the younger banks, whose circulation is not yet established,

and whose progress has thus received a material check, from no fault

of their own, but from want of ministerial notice. With every system

where competition is the acknowledged principle, it is clearly

impolitic to interfere; nor can we avoid the painful conviction, that

this first measure, though comparatively light and generally

unimportant, was put out by way of _feeler_, in order to test the

temper of the Scottish people--to ascertain whether eighteen years of

prosperity might not have made them a little more supple and pliable,

and whether they were likely to oppose to innovation the same amount

of obstinate resistance as before. It is dangerous to permit the

smallest rent to be made in a wall, for, with dexterous management,

that rent may be so widened, as to bring down the whole

superstructure.

In the absence of any distinct charge against the Scottish banks,

which were so honourably acquitted in 1826, we shall confine our

further observations to the effects which must necessarily follow upon

a change in the established currency. In doing so, we shall conjure up

no phantoms of imaginary distress, but merely state the consequences

as they have already been explained to Parliament by men who are far

better able to judge than ourselves, and even--with deference be it

said--than our legislators, of the substitution in Scotland of a

metallic for a paper currency. That measure is to be considered, 1st,

as it will affect the banks; 2dly, as it will affect the public.

The general effect of the change would be to derange the whole of the

present system. The first result would probably be the abolition and

withdrawal of all the branch banks throughout the kingdom. These

offices are at present fed with notes which are payable at the office

of the parent bank, whither, accordingly, they invariably return.

These are supplied to them at no risk or expense, whereas the

transmission of gold would not only be dangerous, but so expensive as

entirely to swallow up the profits. Add to this, that the banks would

no longer be able to allow interest on deposit accounts; at all events

such interest would be merely fractional, and too insignificant to

induce the continuance of the saving habit which now so fortunately

prevails. In short, all the branch business would stagnate and die.

The consequence of the removal of the branch banks would be the ruin

of the Highlands.

Mr Kennedy's account of the profits of banking will explain the

sweeping nature of the change. "A banker's profits are derived from

two sources--the brokerage upon the deposit money, and the returns

that he gets from his circulation. We have tried to estimate the

amount of deposits in Scotch banks, and we calculate it at about

thirty millions; that, at the brokerage of one and a half per cent,

yields L450,000 annually. The currency we will take at three millions,

and that, at 5 per cent, is L150,000: making a gross sum of L600,000,

_which is the whole profit derived from banking in Scotland_. Out of

that are to be deducted the whole of the charges. From these figures

it will be perceived that the gross profit of the currency is a fourth

part of the gross profit of banking; but the expense that falls upon

the currency is not so large as the expense that falls upon the other

portions of the banking business; so that I should be inclined to say

that, upon the average, the profit derived from the circulation bore

the proportion of a third to the aggregate profit of banking."

Assuming Mr Kennedy's calculation to be correct, the profit of

L600,000, derived by the banks, would thus be reduced to L400,000 by

the change of currency.

But the diminution would not rest there. The brokerage upon the

deposits--that is, the difference between the rates of interest given

and charged by the banks--on the present calculated amount of

deposits, is L450,000. from which the charges are deducted. Now we

have already seen that the banks find it necessary, in order to

encourage deposits, to give a liberal rate of interest; and we have

also seen that, whenever interest falls to two per cent, the deposits

are gradually withdrawn, and a period of speculation begins. Let us

hear Mr John Thomson, of the Royal Bank, on the effect of a gold

currency on deposit accounts:--"I think, on the operating deposits, we

could scarcely allow any interest, and on the more steady deposits,

that the rate of interest would require to be very considerably

reduced."

It follows, therefore, according to all experience, that, if no

interest were allowed, the deposits would be generally withdrawn for

investment elsewhere; and thus another serious reduction would be made

from the already attenuated amount of the Scottish bankers' profits.

But besides the loss of profit on the small notes, there would be a

further loss sustained by the necessity of keeping up a large stock of

gold in the coffers of the bank. Hear Mr Thomson again upon this

subject:--

"It would occasion greater loss than the mere profit on the small

notes, inasmuch as at present we have to keep on hand a large

stock of small notes, to fill up in the circle those that are

taken from it by tear and wear, and to meet occasional demands.

The present mode of keeping up this stock, which consists of our

own notes, is done at no expense; if we had to keep a

corresponding stock of gold to keep up the circle in the same

proportion, we would, perhaps, if there is L1000 dispersed in

small notes, require to keep up a protecting fund of L500 to meet

that, or something in that proportion. So that, upon the whole,

if there was L1,800,000, which was the sum assumed of notes in

circulation, withdrawn, we would require to fill up the place,

L1,800,000, in gold, and in order to fill our coffers with a

protecting stock, perhaps from _seven to nine hundred thousand_,

to keep up the stock; and, in addition to that, there is the

expense of transmission from one part of the country to another,

and the bringing it from London."

The small note circulation is here estimated at L1,800,000 but there

is no doubt that it is now considerably larger. Taking it, however, at

Mr Thomson's calculation, what a fearful amount of unoccupied and

inoperative capital is here! This, be it observed also, is only the

first reserve, which at present is represented by the small notes of

the bank. According to the later evidence of Mr Blair, the Scottish

banks are in the habit of holding, _besides this_, a further reserve

of gold and Bank of England notes, equal to _a fourth of their

circulation_, without taking into account exchequer bills, or other

convertible securities which bear interest.

Thus it follows, as a matter of course, that if the small notes were

abolished, and a gold currency established, there would not be room in

the country for one-fourth of the present number of banks. If the

banks are removed, and more especially the branches, which must

inevitably fall, we should like to know from any theoretical

economist, even from Sir Robert Peel, how the country is to be

supplied with money?

So much for the effect which the introduction of a metallic currency

would have upon the banking establishments. Let us now see what would

be the consequence of the change upon the interests of the public, who

are the dealers.

Now, although we hold, that upon every principle of public expediency

and justice, the legislature are bound to regard with particular

tenderness the interests of a body of men, who, like the Scottish

bankers, have not only established, but administered for such a long

time, the monetary system of the country with stability, temperance,

indulgence, and success, equally removed from weak facility and from

grasping avidity of gain; we must, nevertheless, allow that the

interests of the public are paramount to theirs, and that if it can be

shown that the public will be gainers, although the bankers should be

losers by the change, the sooner the metallic currency is established

amongst us the better. Here is the true test of the clause in the

Treaty of Union, providing that no alteration shall be made on laws

which concern private right excepting for the evident utility of the

subjects _within_ Scotland. There shall be no interference with

private rights if that interference is not to benefit the public; if

it does so, private right must of course give way, according to a rule

universally adopted by every civilized nation. In speaking of the

public, we, of course, restrict ourselves to Scotland; for although

the Treaty of Union is not, strictly speaking, a federal one, and in

the larger points of policy and general government is very clearly one

of incorporation, it has yet this important ingredient of federality

in its conception, that the laws of each country and their

administration are left separate and entire, as also their customs and

usages, so long as the same do not interfere with one another. It is a

sore point with the supporters of a metallic currency, and a sad

discouragement to their theories, that they have never been able in

any way to shake the confidence of the Scottish public in the

stability of their national bankers. It was no use drawing invidious

comparisons between a weighty glittering guinea, fresh started from

the mint of Mammon, and the homely unpretending well-thumbed issue of

the North; it was no use hinting that a system which professed to

dispense with bullion must of necessity be a mere illusion, which

would go down with the first blast of misfortune, as easily as its

fragile notes could be dispersed before a breeze of wind. The shrewd

Scotsman knew, what apparently the economist had forgotten, that the

piece of gold exhibited by the latter was in itself but a

representative, and not the reality of property; that the gold to be

acquired _must be bought_; that all representation of wealth within a

country must be conventional in order to have any value; and further,

that however fragile the despised paper might appear, that it was by

convention and by law the representative of things more weighty and

more solid than metal--of the manufactures of the country, of its

agricultural produce, and, finally, OF THE LAND ITSELF; all which were

mortgaged for its redemption. It was in vain to talk to him of the

rates of foreign exchange in the mystic jargon of the Bourse. He knew

well, that when the Scottish mint was abolished, and the bullion trade

transferred to London, that branch of traffic was placed utterly

beyond his reach. He knew further, that the circulation of Scotland

did not ebb or flow in accordance with the fluctuation of foreign

exchanges, but from causes which were always within the reach of his

own ken and observance. All scrutiny beyond that he left to the bank,

in the solvency of which he placed the most implicit confidence; and

accordingly he dealt with it as freely and as confidently as his

father and grandfather had done before him, and laughed the theories

of the political economists to scorn. Such is no overcharged statement

of the sentiments which the Scottish customer entertains;--is he

right, or is he wrong? and how would the change affect him?

In the first place, he would receive no interest upon his deposit

account. This point we have already touched upon, when proving that

the banks would sustain great loss by the inevitable withdrawal of

their deposits; but of course the profit to the bank is one thing, and

the profit to the customer is another. An operating deposit account on

which a fixed and universal rate of interest is paid, is a thing

unknown in England. In that country, according to Mr John Gladstone, a

Liverpool merchant, and a declared enemy to the Scottish currency, the

bankers only give interest on deposits by special bargain, according

to the length of time that these deposits shall be entrusted to their

hands. This is clearly neither more nor less than permanent loan to

the bank, and, like every other private contract, is arbitrary. But an

operating deposit is a totally different matter, by which the

circulation of the bank paper is promoted, and which acquires actual

value from the frequency of its fluctuations. It is a system so easy

in its working, that no householder in Scotland is without it; and for

every shilling that he deposits in the bank, he receives regular

interest, calculated from day to day, without any deduction or

commission, at as high a rate as if he had left, for a stipulated

period, a million of money unrecallable by him, to be employed in its

trade by the bank. This is surely a great accommodation and

encouragement to the trader. But see how the introduction of the

metallic currency would affect us. Operating deposits there would be

none; for, if the banker were not actually compelled to charge a

certain per centage of commission, he would at least be able to pay no

interest. Or let it be granted that, by great economy, (though we

cannot well see how,) he could still afford to pay a diminished rate,

the proportion would be too small to tempt the dealer to the constant

system of deposit which now exists, and hoarding would be the

inevitable result. Or suppose that the system of deposit should still

continue in the large towns, what is to become of the country when the

branch banks shall have been removed? A little topography might here

be valuable, to correct the notions of the theorists, who would

legislate precisely for the thinly inhabited districts of Kintail and

Edderachylis, as they would for the town-covered surface of

Lancashire.

But there would be more important losses to the public than the mere

cessation of interest upon operating deposit accounts. All the

witnesses who have been examined, agree that cash-credits must be

immediately withdrawn. Of all the facilities that a mercantile

country, or rather the foremost mercantile system of a country, can

afford to industry, that of cash-credit is certainly the most

unexceptionable. Take the case of a young man just about to start in

business, whose connexion, habits, and education, are such as to give

every possible augury for his future success. The _res angustae domi_

are probably hard upon him. He has no patrimony; his friends, though

in fair credit, are not capitalists; and he has not of himself the

opportunity of launching into trade, for the want of that one talent,

which, if judiciously used, would in time multiply itself into ten. He

cannot ask his friends to assist him in the discount of bills. Large

as the affection of a Scotchman may be for some descriptions of paper,

he has a kind of inherent repugnance to that sort of floating private

currency, which in three or in six months is sure to return, coupled

with an awkward protest, to his door. Probably in his own early

experience, or in the days of his father, he has received a salutary

lesson, better than a thousand treatises upon the law and practice of

acceptance; and accordingly, while he will lend you his purse with

readiness, he will not, for almost any consideration, subscribe his

name to a bill. To persons thus situated, the accommodation granted by

the bank cash-credits, is the greatest commercial boon that ever was

devised; but as the committee of the House of Lords, in the report

already quoted, has borne ample testimony in their favour, it is

unnecessary for us to dwell with further minuteness on their utility.

We must again have recourse to Mr Thomson for an exposition of the

reasons which, if a metallic currency were forced upon us, would lead

to the discontinuance of the cash-credits. "I do not think the

cash-credits would be maintained at all; the banker's profits might be

made up by the charge of a commission on each credit; but it is not

probable that the holders of accounts would pay at such a rate, if

they could borrow money upon bills at a cheaper rate, which they would

do. They would discount bills at five per cent. A banker would not be

disposed to come under the obligation to give a running credit with a

cash account, and thereby bind himself to keep in his hands a stock of

gold to supply the daily operations of a cash-account, while he might

find it perfectly convenient to discount a bill and give the money

away at once." In short, it has been stated, and distinctly proved,

that the difference to the trader between an operating cash-credit and

accommodation by discount, _is the difference between paying five and

a quarter by discount, and two and a half per cent by cash-credit_.

Are our merchants and traders prepared or disposed to submit to such a

sacrifice; more especially when it is considered, that a bank will

often refuse to discount a bill for L100, when it would make no

difficulty, from its opportunities of control, in granting a

cash-credit for five times that amount?

If individuals are thus to be crippled, the general commercial

business of the country must retrograde as a matter of course. Still

Edinburgh, and Glasgow, and the larger towns might, although they

would suffer immensely, get over the crisis by adopting some system of

internal arrangement, without experiencing a general crash. The great

question, however, yet remains behind--What is to become of the

country districts? To us who are familiar with almost the whole face

of Scotland, it seems a gross absurdity to suppose, that _under any

circumstances_, if the branch banks were withdrawn, a gold metallic

currency could be made operative in the remoter districts. Mr

Dunsmure, then secretary to the commissioners for the public

fisheries, gave very singular evidence upon that point in 1826; so

singular, indeed, that were it our purpose in this paper rather to

amuse than to warn and protest, we should have dwelt more minutely

upon his statements. Speaking of the silver currency, his evidence is

as follows:--"The quantity of silver on the west coast is so very

limited, that there is a great difficulty in getting a proper supply

for the necessary purposes. _Some of the people have been obliged to

issue promissory notes for 5s., long after they had been prohibited by

act of Parliament._ I happened to be at Barra, and the officer there

informed me that, having occasion to purchase some oats for a pony he

found it necessary to keep, the farmer whom he paid for them declared

he had not seen the face of a shilling for two years before." One of

the individuals who was thus forced by necessity to contravene the

statute, was a fish-curer and merchant, who kept a large store in

Tobermory, and the form of his notes is at once curious and

explanatory. "For want of change I owe you 5s., and for four of these

tickets, I will give a one-pound note." The establishment of branch

banks may somewhat have mended matters on the west coast, though we

doubt if the improvement has been commensurate with that of other

districts in Scotland, owing to the severe, and in our view

mischievous, commercial enactment which supplanted the native

manufacture of kelp, by the substitution of foreign barilla; but if

the branches are removed, no discovery short of the philosopher's

stone will establish the metallic currency there. Do our legislators

seriously mean to compel the population of about one-fourth of

Scotland, comprehending the whole western and northern divisions, to

accept the fish-curer's notes, instead of those of a joint-stock bank,

with its paid-up capital for security?

We have not space here to proceed with a minute analysis of the

evidence which was formerly given. Suffice it to say, that it is of a

much more serious nature than even those who have general notions upon

the question can possibly anticipate. In the event of any change which

shall derange the present system of currency, the landowners and

agriculturists of every class must prepare themselves for crippled

markets, curtailment of the sales of their produce, and consequently

for a great reduction in the rent and value of land. This will apply

equally to the fisheries, the distilleries, and the linen trade--to

every branch, in short, of internal manufacture, which is now

prosperous, and which has become so from the superior ease, facility,

and advantage of our present currency. Compared with these, the

interests of the bankers are actually trifling. Such of them as may

remain under the altered system, will no doubt, in one way or another,

secure their profit; but for that profit the country at large will

have to pay a heavy price.

The great question now for Scotland to determine is, whether these

interests are to be sacrificed to the theories of any ministry

whatever, without resistance of the most determined nature. That

resistance, in our deliberate opinion, she is not only entitled, but

bound, to make. We have purposely abstained from dwelling--nay, we

have scarcely even touched--upon any points of extraneous irritation

which may exist between the sister countries. Our wish is, that this

question should be tried upon its own merits, independently of any

such considerations; and we are glad to see that this line of conduct

has been adopted by every one of the numerous bodies who have hitherto

met to protest against the change. Believing thoroughly and sincerely

that we have a clear case, both on the score of justice and

expediency, we do not wish to revive any warmer feeling, though we are

convinced that a word could arouse it. Scotland in this matter feels,

and will speak, like a single man. We are sure of the unanimous

support and energy of the members for the ancient kingdom; and

although that phalanx forms but an integral part of the legislature of

Great Britain, we will not allow ourselves to believe that any

minister will proceed with so obnoxious a measure in the face of their

united opposition. One word only of advice we shall venture to offer

them, before they leave their native country to do battle in her

behalf. COMPROMISE NOTHING! Do not, as you value the interests of

Scotland, permit even the smallest interference with a system which

has already obtained the unqualified approval of the state. If you do,

rely upon it that one change will be merely the forerunner of

another--that the statute-book, in each succeeding session of

Parliament, will exhibit new changes and new modifications, until,

gradually and by piecemeal, we shall lose all the benefits of those

national institutions which you are now ready and pledged to maintain

whole and unimpaired. Any other line of tactics must, in the long run,

prove not only injurious, but fatal, to the cause you support.

And now we have said our say. It is not for us--more especially as the

batteries of our opponents are still masked--to remonstrate with an

administration which assuredly, on many points, has a just claim to

the support and confidence of the nation at large. Still we may

insinuate the question--Is it very politic, in the present state of

matters, to rouse up a feeling in peaceful Scotland which may, with

little fanning of the fuel, terminate in an agitation quite as

extensive as that which at present unhappily prevails in Ireland? It

is not only wrong, but--what Talleyrand held to be a greater sin in a

statesman--most injudicious, to overlook in such a matter the tendency

of the national character. Scotchmen have long memories; and although

the days of hereditary feuds have gone by, they are not the less apt

to remember and to cherish injuries. Would it not, therefore, be

prudent to adhere to the homely but excellent maxim, "Let well be

alone;" and to abstain from forcing the country into a position which

it is really unwilling to assume, merely for the sake of illustrating

another proverb with which we close our remarks upon the Scottish

Banking System--"IT IS POSSIBLE TO BUY GOLD TOO DEAR."

THE MILKMAN OF WALWORTH.

CHAPTER I.

I was just fifteen, when the battle of Waterloo, (it will soon be

thirty years ago,) by giving peace to Europe, enabled my father to

gratify one of the principal desires of his heart, by sending me to

finish my education at a German university. Our family was a

Lincolnshire one, he its representative, and the inheritor of an

encumbered estate, not much relieved by a portionless wife and several

children, of whom I was the third and youngest son. My eldest brother

was idle, lived at home, and played on the fiddle. Tom, my second

brother, two years older than myself, had just entered the army time

enough to be returned in the Gazette as severely wounded in the action

of the 18th. I was destined for the church--as much, I believe, from

my mother's proneness to Prelacy, (in a very different sense from its

usual acceptation,) she being fond of expatiating on her descent from

one of the Seven of immortal memory, as from my being a formal,

bookish boy, of a reserved and rather contemplative disposition. The

profession did not appear uncongenial to my taste; and although, from

my classical education having been deplorably neglected, there was no

small share of grinding and fag before me, I entered readily into my

father's views; the more especially, as in them was comprehended the

preliminary visit to Germany, the land of my early visions, where I

hoped to be on more intimate terms than ever with my old

acquaintances, the Spirit of the Brocken, the Wild Hunter, &c. &c.;

or, mayhap, to carry to practical results in the heart of the Black

Forest the lessons of natural freedom I had so largely acquired from

Schiller. My father's object in sending me to Heidelberg was not, I

believe, quite of so elevated a character.

After a month's preliminary bustle, I set out. The Lincoln

Light-o'-Heart coach took me up a couple of miles from my

father's--and with me a chest of stores that would have sufficed for

the north-west passage. Furnished with a letter to a friend in London,

who was prepared to forward me by the first vessel offering for

Holland, I accomplished the journey to town satisfactorily. On

arriving in London, I found Mr Sainsbury, the friend already

mentioned, awaiting me at the coach-office in Lad Lane. He was my

father's banker--a little red-faced hospitable man, fond of Welsh

rabbits, Hessian boots, and of wearing his watch-chain down to his

knees. He welcomed me very cordially, said he had not had time as yet

to make the necessary enquiries about my passage; but as he was sure

no vessel would sail for Helvoetsluys for at least a week, he insisted

upon my putting up at his residence while I remained. Oppressed as I

was with fretting and fatigue, it was a matter of indifference to me

at the moment where I stayed while in town. I therefore, with a proper

expression of thanks, accepted the invitation. A job coach conveyed us

in a short time to Mr Sainsbury's abode. He lived at Walworth, at that

period an extensive suburb on the Surrey side of London, but long

since incorporated into the great mass of the metropolis. The street

in which the mansion stood was large, the houses were spacious and

handsome, their tenants, as I learned afterwards, opulent and

respectable. It was late in August; my friend's family were all at

Margate; and I found none to do the honours of the house but himself

and his eldest son, a young man of prepossessing appearance and

intelligent manners. On finding I was not disposed to go out the

following morning, he recommended me to the library and some

portfolios of choice engravings, and, promising to return early in the

afternoon, departed for his haunts of business in the city.

I found the library tolerably comprehensive for its size; and having

glanced along its ranges, I tumbled over Hogarth and Gillray on the

print-stands for some time. I settled upon my usual efficacious remedy

in desultory hours--old Burton's _Anatomie_, and dropped with it into

the window-seat. I have seldom found him to fail me on such

emergencies--his quaintness, his humour, the lavish prodigality of

learning and extraordinary thinking that loads his pages, never to me

lose their freshness. Yet on the present occasion I found them fix me

with more difficulty than I ever before, or I believe since,

experienced. My mind wandered constantly from the page back to home,

forward to Heidelberg, and, after a while, I laid down the volume to

gaze vacantly through the window. It overlooked the street. Yet here

the day was so piteously wet there was nothing to arrest my

half-drowsy eye or half-dreamy attention. No young ladies in the

opposite windows. They were all at Hastings or Brighton. No neat

serving-wenches chattering on the area steps--not even a barrel-organ

to blow out one's patience--no vagabond on stilts, with a pipe and

dancing-dogs--no Punch--no nothing!--Once, a ruffian with four

_babbies_, two in his arms and two more at his ankles, strolled down

the street, chanting--"In Jury is God known"--his hat off, and the

rain streaming down at his nose as from a gable-spout. But he, too,

vanished. Occasionally a dripping umbrella hurried past, showing

nothing but thin legs in tights and top-boots, or thick ones in

worsteds and pattens. At one o'clock the milkman passed along the

street silently, and with a soberer knock than usually announces the

presence of that functionary. I counted him at number 45, 46, 47,

48--number 49 was beyond the range of the window; but I believe I

accompanied him with my ear up to number 144--where the

multiplication-table ends. He was assisted in his vocation by his

wife, who attended him--very devotedly too, for I remarked she seemed

regardless of the weather, and carried no umbrella. Wearied out

completely by the monotony and dulness of the street, I next sank into

a doze, which destroyed one hour further towards dinner, and the

remnant of time I managed to dispose of by writing a large portion of

a long letter to my mother. My dinner was a tete-a-tete one with John

Sainsbury--his father having been called away to Margate on affairs

connected with the residents there. Finding myself labouring under a

cold, I avoided wine, and while my companion discussed his _Chateau

Margaut_, I kept up a languid conversation with him, enlivened

occasionally by the snap of a walnut-shell or indifferent pun, with

now and then an enquiry or remark respecting the street passengers.

Amongst those, the milk-vender and lady at the moment happened to pass

along--"By the by," I said, "there is one peculiarity about that Pair

I cannot help remarking. I observe, that wherever, or at whatever

pace, the man moves, his female companion always keeps at the one

exact distance behind him--about three yards or so--See, just as they

stand now at No. 46! I never perceive her approach nearer. She seems a

most assiduous wife."

"_Wife!_" rejoined Sainsbury, with a motion of the lip that might have

been a smile, but for the gravity of his other features--"she is not

his wife."

"Wife, or friend then," I said, correcting myself.

"She is not his friend either."

"Well, his sister or relative."

"Neither sister nor relative--in fact," he said, "I don't think she is

any thing to him."

"But the deuce is in it, man, you don't mean to say that she is not a

most devoted friend who thus so closely, and at all hours, it appears

to me, attends him and assists"----

"She does not assist him," again interrupted Sainsbury.

"I mean, shares his toil."

"She has no participation whatever in his business. Come," he said,

rising and advancing to the window, "I see you are puzzled; nor are

you the first who has been at fault respecting that extraordinary

Pair. Just observe them for a moment," and he threw up the sash to

afford me the means of glancing after them along the street; "you

perceive that there is not the slightest communication between them.

He has just stopped at that house, No. 50, and there stands the woman,

rigid as a statue, only three yards behind him; now he has done and

moves rapidly on--how exactly she follows! He stops again, and see,

she is motionless; now, he proceeds slowly across the street to that

house with the lofty portico, but, slowly or quickly, there she is

close at hand."

"How very odd!" I said; "they never speak."

"Speak! Watch him narrowly, and you will see he never for a single

instant _looks behind him_. Here they come this way, on his return

homewards. You hear the shout from those idle throngs that have just

caught a glimpse of yonder balloon; you see _that_ man never turns,

never pauses, never looks up; he knows who is behind him, and hurries

on. There, he has turned the corner, and, certain as his death, _she_

has vanished in his footsteps. Singular--most singular!" he muttered

to himself half musingly.

"But surely their home reconciles them?"

"They don't live together! On the contrary, I believe, they dwell far

asunder; and we of this neighbourhood, who have seen them for years,

have just as little cause to conclude that they are known personally

to each other as you have, who have only beheld them once or twice."

"But this strange companionship, this existence of attraction and

repulsion, which I have witnessed those two days, it surely does not

always continue. You talk of years"----

"Yes, several years; and during that time the man has not been once

missed from his business, nor ever found pursuing it unwatched or

unattended by that woman, more constant, in truth, than his very

shadow."

"Why, here is mystery and romance with a vengeance! ready made, too,

at one's threshold, without having to seek it out in hall or bower.

'Tis a trifle _low_ to be sure; had it been a shepherd and shepherdess

it _might_ do, but a milkman and a--may I say?--milkmaid."

"I assure you there is no quiz whatever in it. It is just as you see

it and say it--a downright mystery, and one that, perhaps, will never

be cleared up."

"I think the clue, my dear fellow, a very simple one--the woman is

mad."

"Not a bit of it; she is perfectly rational; of intelligence, I am

told, far beyond her apparent station in life--a little reserved, to

be sure."

"Then he is a lunatic, and she his keeper--eh?"

"For that I refer you to the cook, and all of that respectable calling

who transact business with the fellow. If he must be characterized by

any one particular quality, I would say that there is far more of the

villain than the fool about him."

"Pray, be kind enough," I said, "to tell me all you know respecting

this curious Pair. I am really interested in them."

"In what I have said already," replied Sainsbury, resuming his seat,

"I have told you all, or very nearly all, that I, or I believe any

body else, knows of them. My little information is chiefly acquired

from hearing the servants gossip about them; but I very well remember

that, on the first appearance of the Pair in this vicinity, they

excited a good deal of speculation and enquiry amongst every class in

Walworth. It is now more than eight years ago since this man's

predecessor--the purveyor, as he grandiloquently was wont to call

himself, of milk to this large district--died. His dairies, which I

fancy were lucrative things enough, were immediately sold, and taken

by a person who, we were informed, would not only continue to supply

Walworth with their produce, but, from motives of caprice or economy,

would deliver it himself. Accordingly, the man you have seen pass this

evening appeared; and all was uniform and punctual as before. In a few

days, however, he came, attended by that mysterious female, dogged

precisely as you have seen him an hour ago, and at once the heart of

every cook and kitchen-maid in the parish was on fire with curiosity

and suspicion. From the kitchen the contagion spread to the

drawing-room, and commissions of enquiry, in the shape of tea-parties,

were held in every house relative to the strange milk-vender and his

stranger shadow. To those who asked him any questions on the matter,

and very few ventured to do so--for his manner, though civil, had

reserve and sullenness, and there was in his deportment a decent

propriety, that repulsed, or rather prevented, enquiry--he usually

answered that he 'knew nothing of the woman who followed him;' 'that

he dared to say it was from some whim;' 'that she was welcome to do so

if she pleased;' 'she had the same right of highway as any other

person,' and suchlike evasive replies."

"But his companion--I should rather say, his attendant--from her sex,

she would, at least, be something more communicative?"

"Not at all. She was very seldom spoken to upon any subject. She kept

aloof from all who seemed disposed to be inquisitive; and if she ever

came within range, as the sailors say, of a question, she never gave

an intelligible, or at least satisfactory, answer. Besides, as she was

never seen save in the track of him whom she lives but to pursue, her

own sex have had no opportunity of conciliating her into an

acquaintanceship, and their patience and curiosity have long consumed

themselves away."

"Then, after all, it may be only the whim of an eccentric woman that

leads her thus to persecute an inoffensive, industrious person?"

"I cannot think so. I am persuaded there is some peculiar occurrence

in their past lives that has thus mysteriously associated them--some

conscious secret that, by its influence, draws them forcibly into

contact. What the nature of this strange sympathy may be, I cannot

form the least idea."

"Has no one attempted to unriddle it before now?"

"Not with any prospect of success. Of course there have been a

thousand conjectures. Among the lower orders of people, the prevalent

opinion is, that the woman once possessed a large sum of money, out of

which this Maunsell (for such is his name) contrived to cheat her; and

that she has ever since _haunted_ him, as they very appropriately term

it. But this offence I am inclined to think infinitely too light a one

to draw upon him the grievous punishment which has been so many years

inflicted on him. One of our neighbours, Rochfort, a very

matter-of-fact sort of man, not at all given to the marvellous,

asserts, that he witnessed by accident what he is sure was the first

meeting of the Pair after the man's arrival in this quarter. It was

late in the evening; Rochfort was standing, he says, in the shadow of

a gateway that breaks up the long blank wall of a large timber-yard

that belongs to him, at some distance from this, and which skirts a

lonely and unfrequented road leading to Kennington. He is positive

there was not a human being but himself within sight or hearing, when

he perceived the milkman coming along by the wall, his footsteps

echoing loudly up the dusty path. Not choosing to encounter a stranger

at the moment in such a spot, my friend withdrew further into the

shadow of the gateway. The man, in passing it, happening to drop some

pieces of money from his hand, stooped to recover then; and while so

engaged, a female, who, Rochfort asserts, must have risen out of the

earth on the instant, suddenly appeared standing at the searcher's

side, perfectly motionless, and muffled in those dark funereal

garments that have since been so familiar to our eyes. On lifting his

head the man perceived her, started, but, my informant says, it was

more the subdued start of one accustomed to face horror, than the

overwhelming dismay of a person terrified for the first time: he

folded his arms, as if endeavouring to collect himself, but his whole

frame shook convulsively. He was about to speak, when a noise of

workmen approaching up the archway stopped him, and, turning away, he

hastened on--that dark spectral woman gliding noiselessly after him."

"Perhaps," I said, with a forced laugh--for, despite of myself, the

story was exciting my imagination as well as curiosity--"she really

_is_ a visitant from another world."

"There are not wanting those who say so," replied my friend; "but

however ghost-like her mission and appearance may be, I believe there

is no doubt that as yet she is a denizen in the flesh."

"And this Pair--where and how do they reside?"

"The man lives at his dairies, a considerable way from here, and

although he has, I am told, an extensive establishment, never goes out

but on his daily business. He is of a serious, methodistical

disposition, and, I understand, affects devotional reading a good

deal; yet he is never seen at a place of worship. He is unmarried, nor

does any relative or companion reside with him. The woman--it is

hardly known where she lives; in some miserable lonely room far away,

buried in the heart of one of those dismal courts that lurk in the

outlets of London, her way of life and means of support equally

unknown, the one object of her existence palpable to all--to come

forth at the grey of daybreak in winter and summer, in storm or shine,

and seat herself at a little distance from that man's abode, until he

makes his appearance: when he was passed her, to rise, to follow, to

track him through the livelong day with that unflagging constancy

poets are fond of ascribing to unquenchable love, which the early

Greeks attributed to their impersonations of immortal Hate."

"Surely the wild and doubtful surmises that those circumstances have

raised in people's minds must have had an injurious effect on

Maunsell's business?"

"Not at all; on the contrary, I think it has assisted it. Every

neighbourhood loves to have a mystery of its own, and we, you must

confess, have got a superlative one. The man has been found

scrupulously honest, regular, and exact in his dealings; and were we

to lose him now, and get a mere common-place person to succeed him,

half the housewives of Walworth would perish of inanition. And now,"

said Sainsbury, rising, "That I have imparted to you all I know

respecting the milkman and his familiar, let us to the drawing-room

and seek some coffee."