Recent events in London have called attention to the fact that the accumulation in the hands of a single bank, of enormous sums payable at call or short notice, and bearing interest, may be a source of risk to the banker, by entailing on him the necessity of finding some employment for money on which otherwise he would be making a dead loss; and while some banks have made changes more favorable to themselves, other institutions have discontinued the practice altogether. The City Bank recently made an announcement to that effect.

Overdrawn accounts, or as they are called in Scotland, "Cash creditsw are very common in the North, and not unfrequent in some parts of England. These accounts are worked in the same way as ordinary drawing accounts, but the balance as a rule is in favour of the banker, who takes security of his customer and gives him a ucash credit" for a certain sum, or in other words allows him to overdraw to that extent. It is as Mr. Macleod terms it an "inverse drawing account." This gentleman in his "Theory and Practice of Banking," vol. I, p. 135-137, praises this system of "cash credits" in most extravagant terms. It was as he says invented in Scotland, and to it he considers the umarvellous progress and prosperity of that country is mainly due," having uin the space of 150 years raised it from the lowest state of barbarism up to her present proud position."

Without being able to follow Mr. Macleod so far as this, we may admit that there can be no doubt that the system is eminently suitable to a country like Scotland, and that the results have been very satisfactory.

The advantages to the customer who has but a small capital are obvious. If he is able to find two friends who are willing to be his securities, with their aid he obtains a "cash credit." He is thus enabled to invest the whole of his capital in his business, being relieved of the necessity of keeping a considerable portion unemployed in readiness for daily expences. He has this too in his favour, that whereas if he discounted a bill, interest on the whole sum must be paid, although a part only might be required; with a "cash credit" interest is charged only on the actual amount drawn.

The banks of Edinburgh, we believe, originated the system of "Bank credits" or cash credits as they are now more generally termed. On this plan a merchant may be said to coin his houses, his household furniture, the goods in his warehouse, the foreign debts due to him, and his ships on the ocean. He can, in fact, by anticipating as it were their realisation employ these various kinds of property in all payments as if they were the current money of the country. What, perhaps, is of more importance than all to the merchants as arising from this invention, is the facility acquired in supporting each other's credit, which is a great security against bankruptcies. When the Bank-credit of one merchant is exhausted he applies to a neighbour who is not in the same condition, and makes use of his Bank-credit, replacing the money at his convenience. This practice having prevailed for some years at Edinburgh, it was further developed by several companies of merchants at Glasgow. An association of different banks was formed which issued notes as low as ten shillings, which were used in all payments for goods, manufactures, and labour of all kinds. These notes from the established credit of the companies passed current as money throughout the country. By this means the sum of five thousand pounds was able to perform the functions of ten, trade was stimulated, and traders were satisfied with less profit. In imitation of these banks established at Glasgow others were instituted at Newcastle and Bristol. Such a system, as it was developed, tended as a matter of course to drive out of the country the precious metals. Upon the recoinage after the Union it was found that there was nearly a million of specie in that country. Notwithstanding the increase of riches, however, through the growth of commerce and manufactures, it was estimated some forty years later that the specie current did not amount to one fifth of that sum.

It is, however, only a banker whose position is very strong who could safely carry on this class of business to any great extent, as he would, in 'case of a run have nothing that could be realised at once. The monopoly of note issues of small denominations, which the Scotch banks have so long enjoyed, gives them an entirely unique position, without which it is tolerably evident Scotland could never have developed the credit system to the extent which has been witnessed, and which has been the means of gaining for Scotchmen so high a reputation as bankers.

A banker's calculations as to the remuneration on deposits are simple. The clerical labour on this department is not large, he has only to consider what margin between the interest he allows and that at which he lends will remunerate him for his risk. "Cash credit" accounts are paid for by the interest on the debit balance from day to day, added to a commission, usually a per centage on the sums drawn.

In the case of ordinary drawing accounts, the circumstances and incidents of each customer's business vary more or less, and entail different calculations.

Before opening an account an intending customer usually asks the banker, What balance must I keep as a minimum? and to this very natural and proper enquiry the banker can only reply by putting a series of questions such as, What will be the extent of your transactions? How many cheques are you likely to draw? Shall you require discount accommodation or advances, and to what amount? Until these questions are answered it is not possible to give an estimate of the minimum balance required to make an account remunerative.

It must be remembered that a banker cannot make use of the whole of his customers' balances. A proportion must be retained to meet current daily demands. What that proportion should be will vary according to the locality, the season, and other circumstances which can only be accurately judged of by experienced persons.