(2) That the scheme of opening London offices is a departure of the most marked kind from the maxims which have hitherto guided them.

(3) That the Scotch banks assuming responsibilities of London institutions must remodel their reserve funds.

The Scotsman of March, 1878, stated "that the experiment of raising deposits in Scotland and using them in London will be watched with interest".

Another point in connection with the opening of London offices was the large increase in the acceptances of those banks. This kind of business must always be carried on with great caution. In times of commercial distrust there is the possibility that the credit of any bank may be affected by the amount of its bills circulating in the market. The securities also held as cover may depreciate in value.

The following table shows the increase in the acceptances of Scotch banks from 1870 to 1877: -

In 1876-7 these acceptances were equal to one-fourth of the total acceptances of the London joint-stock banks, but there has been a great decrease in recent years. It seems an anomaly to allow Scotch banks of issue to open branches in London when English country banks have to forfeit their note circulation if they do the same thing.

The National Provincial Bank gave up its issue on opening in London, losing thereby £10,000 per annum. Besides this the Scotch Act of 1875 gave the banks considerable privileges, which practically secured for them the monopoly of banking in that country.

Mr. Goschen in 1875 introduced a bill to prevent the Scotch banks from opening in London, but this met with considerable opposition and was abandoned. A clause was inserted in the Banking Bill of 1878, stating that all banks opening in London should forfeit the right of issuing notes, but this also was struck out before the bill passed.

The dividends paid by the Scotch banks in 1869 were in comparison with the English banks in a lower class, the reason apparently being in consequence of their large capital. If we compare 1869 with 1878 we find that the Scotch banks had considerably increased their dividends, but the period from 1878 to 1894 shows a decrease: -

The Scotch banks in 1876 agreed to the following charges: (1) Interest on money lodged and on advances and discounts to be fixed at meetings of the banks to be held at Edinburgh.

(2) In addition to the discount a commission of 1s. 3d. per cent, is charged on bills payable in Scotland; on bills payable in London no commission is charged, but elsewhere in England and Wales, 2s. 6d. per cent.

(3) Other fixed charges are made for negotiating documents payable on demand, for granting drafts, making transfers, etc.