Private banks conduct a large part of the banking business of the country, as may be seen by reference to the Banker's almanac, the most complete work of reference on the subject, as might be expected under the able editorship of Mr. Inglis Palgrave. It is indisputable, however, that, although private banks still play a prominent part in assisting in the distribution of floating capital, their day is gone by. In this as in other cases where new machinery has to be set up, it is of the more approved type. In other words, private banks are an anachronism. Many of the larger private banks, if not in name, are in character more joint-stock than private.

Formerly private banks could not have more than six partners. By the Act of Parliament 39 & 40 Geo. III, c. 28, section 15, no bank was allowed to be established whose partners should exceed six in number, "to borrow, owe, or take up any sum or sums of money, on their bills or notes, payable on demand, or at any less time than six months from the borrowing thereof." Later on, in the year 1826, an Act of Parliament, of 7 Geo. IV, c. 46, was passed, which allowed banking corporations to be established consisting of more than six persons; but they were not allowed to transact their business within sixty-five miles of London, and were prohibited from having any branch establishment in the city of London. Every member of a banking corporation established under this Act was responsible for every and all its acts and deeds.

There are many provisions still unrepealed which affect banking corporations which have not been registered under the Joint-Stock Companies Acts of 1857 or 1862, or have not been incorporated by letters patent under the 7 & 8 Vict., c. 113. This last Act was passed in the year 1844, and gave permission to banks whose corporations consisted of more than six persons, and which had been established before May 6, to apply for letters patent, by which they could be incorporated under this Act. The 7 & 8 Vict., c. 113, gave to banking companies established within sixty-five miles of London, and incorporated on and after May 6, 1844, the great privilege of sueing and being sued in the names of their public officers, provided they complied with the Act in other respects, by making the returns required. In 1857, however, the Act was repealed, and not till 1862 were the provisions for the banks sueing and being sued in the names of their public officers re-enacted. The latest Act of Parliament, that of 1862, affecting the establishment of banks, makes the following prohibitions in section 4:

1. No partnership of more than ten persons is to be formed for banking purposes, unless it is registered under the Act, or is formed under some other Act of Parliament or letters patent; and,

2. No partnership of more than twenty persons is to be formed for the acquisition of gain, unless it is registered under the Act, or is formed under an Act of Parliament or letters patent, or unless it is formed for working mines within the jurisdiction of the stannaries; in fact, a cost-book mining company.

Banking corporations established under the 7 & 8 Vict., c. 113, who neglected to register before January 1, 1858, might be sued, but were unable to sue either in equity or at law. Managers and directors were subject to a penalty of 51. for every day that elapsed after the registration should have been made, and the shareholders could receive no dividend. The above omissions, however, did not make the bank illegal.

Banking corporations registered under 20 & 21 Vict., c. 49, were required to register under the Companies Act of 1862, except the liability of their shareholders was limited by letters patent or Act of Parliament. Not having complied with the demands of the Act 20 & 21 Vict., c. 49, laid them open to the penalties above named also.

In the year 1858 an Act was passed, 21 & 22 Vict., c. 91, which permitted banking corporations to be established with limited liability, under the Joint-Stock Companies Act of 1857. All other banks could make the liability of their shareholders limited, excepting in regard to their issue of notes; and for this they must remain unlimited, by registering under the Act. It was necessary, however, to make due publication of the fact, that all who kept accounts or had other business with the bank might be made acquainted with the change, and withdraw if they chose. The bank was also obliged to publish periodically a statement of its assets and liabilities.

Many banking companies, consisting of seven members or more, as is well known, have singly and with others become limited companies under the above Act. They are compelled, however, before registration, to obtain the consent of the majority of their members at a general meeting - the only alteration required in the name of a company registering under the Limited Liability Act being the addition of the word ' limited.'

Private banks, of six or ten members, may still carry on their business without being required to register themselves as banking companies; but, without registration, the liability of the members cannot be ' limited'

On its being proposed to start a banking company on the ' limited liability' principle, it is required that at least seven persons must sign a deed of association, having the following particulars contained therein: 1. The objects of the company; 2. The company's name, attaching the word 'limited' at the end; 3. A statement that the members' liability is limited; 4. Naming the place where the office of the company is to be situated; 5. The amount of each share, and total amount of the capital, with other particulars specified in the Act in detail.

A manager or director, who endorses or accepts a bill for a bank registered under the Limited Liability Act, without including the word ' limited' becomes personally-liable thereon.

In 1708 the Bank of England besides its other privileges obtained an Act granting to them and their successors the privilege of banking to the exclusion of all co-partnership of more than six persons. Several joint-stock banks then in existence were compelled in consequence to wind up their affairs. This prohibition, which lasted until the year 1826, did not extend to Scotland. It could hardly be expected in an enterprising country like England that a monopoly so unjust and impolitic in its nature could be allowed long to exist, and in the latter part of 1825, notwithstanding the strenuous resistance of the Bank authorities, an Act was passed allowing under certain limitations the formation of joint-stock banks in England.