The joint-stock banks formed in London had to contend with great difficulties. These banks existed only in the form of an ordinary common law partnership and consequently in an action all the shareholders had to join. This was not remedied until the year 1844 The London and Westminster Bank applied for a bill to sue and be sued in the name of its chairman, but this was refused. In consequence of this all the London joint-stock banks were sued in the names of trustees.

The Bank of England refused to open accounts for the new banks in its books and the private bankers would not admit them to the Clearing House.

The Act which permitted their formation did not allow them to accept bills at a less date than six months. In the year 1888 an Act was passed which allowed "a banking company to sue and be sued by any of its members exactly as if they were separate individuals ". Prior to the passing of this Act, a shareholder in two different banks was unable to take proceedings. In the year 1840 this was extended to criminal cases.

By an Act passed in 1856 retiring directors in banking companies were made eligible for re-election.

In the year 1857 joint-stock banks' were bound to register themselves in the same manner as other companies. This Act also allowed the number of partners in private banks to be increased to ten. Banks were allowed to be formed with limited liability in the year 1858, and all those that were formed after that date were on this principle.

This was beneficial, because shareholders as a rule like to know the extent of their liability. If a bank is unlimited there is a tendency for its shareholders to consist of a class with little capital. It has been suggested that directors of banks should be liable to an unlimited extent in order to give a greater protection to shareholders, but we think there would be some difficulty in obtaining directors of high repute if such conditions were imposed. If a bank is registered as a limited liability company, it is still desirable that it should have a portion of its capital uncalled, as a protection to its depositors.

The following table will show the various dates at which the joint-stock banks were formed in this country: -

These banks are divided as follows: -

Some of these banks have a large number of branches. The number of bank offices has largely increased in recent years.

In the year 1877 no less than seventy-five new bank offices were added in England and Wales.

The following table shows the increase in joint-stock banks from 1844 to 1894: -

These tables show the enormous growth of joint-stock banks in this country.

Mr. Gilbart stated that the capital of a bank should be at least one-third of its liabilities, but when we see banks paying large dividends, from 15 per cent. to 20 per cent. and upwards, we may be sure that the capital is small in proportion to their liabilities. In Scotland the proportion is about one-sixth, but the London banks show a much smaller proportion.

In the year 1876 there were 116 banks, with the enormous capital of £31,151,429. These banks have accumulated out of their profits as reserve, the sum of £12,973,218. . Thus: -

The increase in the banking capital of the United Kingdom in 1876 was £1,908,291, in 1877 £1,800,000, and in 1878 £1,200,000. In the year 1876 there was an increase in the capital and reserve of ninety-three banks, in 1877 of ninety-five banks, and in 1878 of eighty-four banks.

This is very satisfactory, because it shows that the banks are strengthening their reserves against increasing liabilities. In the year 1878 fully £1,000,000 of capital was lost by the failures of the City of Glasgow and West of England Banks.

The prospectus of the London and Westminster Bank, which we have quoted, stated that money would be taken on deposit. Although this is the usual practice amongst bankers, yet it has been stated that it is no part of a banker's business to find investments for those who are not customers, but who wish to leave money at interest.

The competition between bankers, bill brokers, and foreign and colonial banks in London has made it difficult to employ deposit money at a profit.

If money "at call" is 1/2 per cent, and first-class paper is discounted at 3/4 per cent, it is a question whether bankers can afford to pay even 1/2 per cent on deposits. It was stated recently in a London paper that when call money was 1/4 per cent it scarcely paid for the ink, paper and labour in making the necessary entries. We must not forget to include the working expenses before ascertaining the amount of interest which a banker can pay on deposits.

In times of distrust the depositor is generally the first one to demand his money, and therefore it is a question whether bankers ought to encourage deposit banking. The recent Australian banking crisis shows that the depositors are the first to take alarm; in fact the banker might consider the depositor as his natural enemy.

The growth of deposits and current accounts in some of the London banks is shown in the following table: -

or an increase of l0.l0 per cent.

The deposits of the London and Westminster Bank increased from £266,844 in the year 1835 to £1,361,545 in the year 1840.

The following table shows the increase in the deposits, etc., of the principal joint-stock banks in London from 1849 to 1859: -

The London and Westminster Bank, for example, increased its amount on current and deposit accounts in ten years from £3,000,000 to £11,000,000, and the London Joint-stock Bank from £2,700,000 to £9,500,000.

The deposits in the London joint-stock banks sometimes show a decrease during a period of distrust. This is shown by the following table in 1878, when there were several bank failures: Cash Deposits.