"The want of this confidence, to a sufficient extent, and for a sufficiently long and uninterrupted period, has done more to injure the business of banking in England than any other circumstance. In this respect, and in the effect which the absence of confidence has exerted over the amount and character of the deposits of English banks, we discover a striking contrast between them and the banks of Scotland. Much of this fundamental defect in the character of English banks, if not all, we believe can be traced to the effects of legislation. Since the Bank of England was erected into a corporation, the restrictions which the Government has from time to time imposed on the exercise of capital and the independent efforts of individuals, whether singly or in a combined form, in order to preserve the privileges of that establishment, we believe to have been the root of much if not all of the mischief and discredit which has attached to the banking practice of England. But for the peculiar privileges granted to the Bank from time to time, but for the restrictions thus placed on private enterprise, and the constant interference of the Government to tinker and patch up evils to which their own previous acts had led, there can be no doubt whatever that many years ago we should have had our banking establishments placed on the highest, safest, and most beneficial principles which free competition, intellect, and energy could suggest and carry into practice. Banking, above all other professions, is that which under entire freedom and non-interference would soonest be placed in the most perfect position. The public will not employ an unsafe bank while they have those of perfect safety with which they can deal, and who are ready to afford them all the facilities which banks can do. It may be said that some men, who are chiefly borrowers, have no choice with which bank they can deal. But to suppose that bad banks could be supported by borrowers, with an indifferent credit, is absurd. It is the lenders and not the borrowers, and least of all the inferior borrowers, that constitute the strength and power of banks. We know what has been the result of the restrictions imposed on banking by the law in this country, and we have only to look to Scotland to see what has been the effect of a long career of perfect freedom and competition upon the character and credit of the banking establishments of that country, as well as in affording the greatest convenience and satisfaction to the public."

Lawson in his history of banking remarks, "By the kindness of the gentlemen at present carrying on the business of the bank of Messrs. Strahan, Paul & Co., we have been favoured with the privilege of inspecting the books of so early a date as the year 1672. They show that the nobility of the land were in the habit of frequenting their shop, and borrowing money on the deposit of various gold and silver articles, such as gold and silver tankards, golden thimbles, and other valuables of a very miscellaneous and sometimes comical description."

In Pepys' "Diary" dated 1667 the first " run " on the bankers is referred to in vol. ii, p. 67, as follows : " W. Hewer hath been at the banker's, and hath got £500 out of Backewell's hands of his own money; but they are so called upon they will be all broke, hundreds coming to them for money. And they answer him, 'It is payable at twenty days; when the days are out we will pay you;' and those that are not so they make tell over their money and make their bags false on purpose to give cause to retail it, and so spend time." This circumstance much impaired their credit, and it was subsequently entirely destroyed by Charles II seizing their money.

Yorkshire and Lancashire were the first counties to take advantage of the legislature having sanctioned the formation of joint-stock banks sixty-five miles from London by the establishment of joint-stock banks at Lancaster and Huddersfield. Other banks upon the same principles were rapidly formed throughout the country. The defective state of the law for the regulation of joint-stock banks soon revealed itself and at last attracted the attention of Parliament. In 1836 a secret committee was appointed to inquire "into the operation of the act and whether it be expedient to make any alteration in it." A circular was issued to all the existing joint-stock banks, and the result was a mass of information giving minute details of the mode of doing business, which formed the basis of a report recommending certain reforms.

At the time the Act of the 7th George IV, cap. 46, was passed and for some time after it was believed that no joint-stock bank could be established in London, or within a radius of sixty-five miles thereof. This opinion was opposed by Mr. Gilbart, who to test the matter set about forming a joint-stock bank; and the London and Westminster Bank, which was the first joint-stock bank formed in London, is the result of the untiring labours he went through before the numerous difficulties between him and the realisation of his project could be overcome. To set at rest the question of the legality of joint-stock banks being established in London the following clause was added to the Act of the 3rd and 4th William IV, cap. 98: "And whereas doubts have arisen as to the construction of the said Acts, and as to the extent of such exclusive privilege, and it is expedient that all such doubts should be removed; be it therefore declared and enacted, that any body politic or corporate, or society, or company, or partnership, although consisting of more than six persons, may carry on the trade or business of banking in London, or within sixty-five miles thereof, provided that such body politic or corporate, or society, or company, or partnership, do not borrow, owe, or take up in England 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, during the continuance of the privileges granted by this Act to the said governor and co. of the Bank of England." Notwithstanding the refusal to admit the London and Westminster Bank to the Clearing House and to grant it the privilege of having a drawing account with the Bank of England, the bank succeeded beyond all expectation. The early progress of this the first metropolitan joint-stock bank is of more than usual interest, and we subjoin a tabular statement of the results of the working in each year from its foundation in 1833 to the 31st of December, 1849.