Great catastrophes we know are now and again occur-ing in all departments of this world's affairs, but very often old, obsolete, slipshod systems are kept going in spite of the warnings which are thus given, because in the case of banks there is no soul among the directors or the public with sufficient energy and weight of character to risk taking the initiative in a reform which circumstances have shown to be absolutely necessary. In business concerns of every kind the management is everything. Much good has no doubt been done in developing certain industries by the introduction of the joint-stock system, and many valuable concerns have been kept going by its aid which must otherwise have ceased to exist; but making all allowance for the new impulse and virgin energy which has been generated, and taking credit for the benefits which have resulted from joint-stock enterprise, there is no doubt that there is the serious matter to be dealt with of the loss of precision in the transaction of business with the public, which arises from the improvement in the organisation not having kept pace with the growth of the business to be managed. No single individual can grasp with his intellect more than a certain number of threads of thought. Those who possess this power more strongly than others are usually not men of business, but are people accustomed to the kind of reasoning which requires a higher atmosphere for its development, where the details so necessary to be taken account of in business are matters of secondary importance. A manager of business affairs who has too much to manage will mismanage everything. The difficulty of getting a very large office or institution reorganized upon a more workable basis is often to be found in the luxuriant ambition of people to do everything themselves. Men are difficult to deal with when it is proposed to deprive them of anything, especially of command.

II. Business.

The next point is, in what respect have these changes in the organization, which have resulted from the transformation of so many banks from private into joint-stock, affected the business of banking generally. There is one effect of the movement which stands out as perhaps the most dangerous of all. The reform has given a few people, comparatively speaking, the command of a great amount of the floating capital of the country, with inferior means of contending with the difficulties which beset the banker in the altered conditions under which modern banking is carried on. What is the consequence ? A looser system prevails of granting loans and discounts throughout the whole joint-stock banking community. This is no mere theoretical postulate; we have ample proof of the truth of the assertion in the extent to which all the leading joint-stock banks were losers in 1875 by the historically famous Aberdare and Plymouth Iron Companies and Alexander Collie and Co.'s failures. The joint-stock bank is in fact; in its fullest development, as we know it, for profitably utilising the public savings, a machine which has been unequally perfected. Some parts remain undeveloped in their old proportions, and are rusty, neglected, and unable to bear the strain which is thrown upon them by the modern improvements which have been introduced into other parts. In other words, the means of obtaining information as to the stability of houses seeking loans or discounts are, in one sense, less than in the old private banking days when the banker knew everything about his customer and exactly what business he was engaged in; while, with the joint-stock banks, there is from ten to fifty times as much money to be kept employed by salaried officers. The number of managers has not been multiplied but on the contrary diminished, while the business to be conducted has increased ten-fold in numbers of cases, and very much more in others.

It is quite possible to conceive a bank overburdened with that all important element-deposits, and the bad business that the joint-stock banks have transacted from time to time has been largely due to the weakness thus occasioned. It is obvious that for a bank to hold large amounts of deposits which it cannot profitably employ is a weakness, as the manager is always in danger of being tempted to do bad and risky business in order to avoid making a loss upon money which, when offered to him as a deposit, he does not like to refuse, for fear of diverting to his rivals in the trade that which will enable them more successfully to compete with himself. The public is naturally more disposed to trust large institutions, just as people always feel safer in going to sea in the biggest ships, and generally think big people better informed than little ones. The big banks consequently stand a much better chance of becoming bigger than small ones, and especially new small ones. Where it is a question of reposing confidence size is the attractive power; it always has been, and it always will be. As the world gets older small organizations for carrying on the business of the people who live in it are in less request and large ones in greater demand. Everything is larger in these days to meet the larger demand and the bigger ideas of modern society.

With less power to do more work what results ? If we can imagine an engine driver who had too heavy a load for his machine to draw persuading the railway company to alter the gradient so as to give him the assistance of the law of gravitation instead of furnishing another engine we should conceive approximately an illustration of the erroneous principles which have been applied to the working of some of the joint-stock banks whose business has very largely increased. Instead of paying five or at most say ten thousand a year more in salaries to extra managers money has been lost in huge amounts in the endeavour to accomplish with inadequate means the same results which the extra managers would probably have successfully achieved.