Then, again, the large amounts of deposits which the modern joint-stook bank accumulates, encourages the management to develop the business unwisely, that is, in dangerous directions. The modern bank has largely usurped the functions of the merchant without being able to see each transaction, ab ovo, to its successful termination. This has been largely the case with the banks having relations with the East Indies, China, etc. They may be said, in fact, almost to have run the East India merchant off the road. Having a head office at home backed by a large capital, these institutions soon commenced to cut into the commission business of the merchant, who in the old times for his credit sake would, as a rule, draw his bills on another house at home, even if he had his own people there for other purposes. To enable them to go on receiving deposits, which they were not always sure of being able to employ, loan and discount business was by degrees supplemented by acceptance business, which is a very fascinating way of making money for a bank. Like the brightest and most gorgeous flowers which are nourished in the most poisonous swamps, and lure on him who would cull them to the perils of the underlying anguis in herba, the fascination for the banker of the commission on the acceptance leads him into many a financial swamp which leaves its mark on the balance sheet for the half year. The confession that this class of business is not considered to be legitimate as regards the extent to which it is practised finds expression in the system adopted in making some of the periodical statements where one total is made of the deposits and acceptances, for reasons which are of course obvious. This acceptance business, then, is another of the evils which is the direct result of the floating capital of the country having accumulated into heaps without a corresponding accumulation of skill to manage it. What does it lead to? The forcing of funds into the smaller patrician trade channels for employment, thus giving a monopoly to the big houses of certain branches of business to the discouragement of the energy and effort which a greater distribution of the loanable funds would call forth from houses whose name carries less weight in the discount market. We may be quite sure that where a bank has only one manager to manage everything, he will lend to a much smaller circle of merchants than several joint managers would. One brain cannot contain more than a limited amount of information, and the attempt persistently to register on the memory more than can be surely and readily reproduced, results in the whole tablet becoming blurred and ultimately useless.

It will be said, according to our theory large and powerful firms are more and more monopolising the trade of the world and making it less possible for small houses to exist and new ones to start. In reply we must remark that there is a great difference between perfectly sound well-established houses of second-rate standing and the small fry who have sought to compete in the business arena without sufficient capital and a full appreciation of the conditions on which success in these more difficult modern times depends. The firm of Alexander Collie & Co., although insolvent, was trusted for years with millions by reason of the ring which, in his astuteness, he managed to preserve in his name in spite of the alloy he had himself infused into it, while houses less well known tried in vain to pass the limit of credit prescribed for them in the money market.

We seem, therefore, to be driven towards the conclusion that if the banks are to avoid being used in the way Collie used them they must either establish some system by which each can know something of what the other is doing, or that the joint-stock institutions must become still larger by absorbing each other, with improved methods of management. If it were possible for the Bank of England to buy up all the other banks in London, and the best managerial talent with them, and form a sort of council for discount and loan purposes, the door would be effectually closed to such financial strategists as Collie. The fatal mistake the banker makes is keeping to himself the extent to which he gives his customers credit. As it is his business to lend, the more he is able to lend profitably the better he thinks he is off, and hence the reluctance to let others know what he is doing for fear some of the business may be taken away.

Bad debts must be incurred in all business where credit is involved, and as so large a portion of a banker's business consists of giving credit against the security merely of names without being able with any certainty to gauge the worth of the real tangible property that is behind, it is clear that a banker's business must be classed among the most risky of all, and demands quite exceptional skill and experience in those who manage it. One would think in such circumstances every banker would be glad to form one of a society for mutual protection. Instead, however, of any of them being anxious to band together for such a purpose, they look jealously at each other across their several frontiers like hostile tribes, only giving general information regarding the respectability of individuals at the request of a client from time to time. No merchant or trader who is in a Sound respectable position cares if inquiries are made about him of his banker, for the great question in such matters, after all, is that of character. It is the man with a crooked history who objects to open its pages for public inspection.

We entertain no doubt whatever that if some system is not devised whereby bankers can protect each other against fraudulent traders the disasters of 1875 will recur after a return of prosperity again causes the thick undergrowth of commerce to spring up and afford shelter to those who will save themselves at any cost and at anybody's expense when unable otherwise to extricate themselves from financial difficulties. At present it is, to a large extent, a system of groping in the dark. Those who grant loans and discount bills keep in some cases excellent records of the standing of firms and of the changes that take place from time to time in their constitution; but as regards most of our joint-stock banks it is extremely up-hill work, and brings a number of those engaged in the business to untimely graves.