In all banks the clerks give sureties for their integrity-usually two, of ,500 each; and in some banks these amounts are increased on accession to higher offices. Of late years societies have been formed, both in England and Scotland, for the purpose of giving, on the part of clerks and others, the amount of security required.

The Lords of the Treasury, indeed, all Government Departments which require securities, and most of the great banking companies and private banks, accept the guarantee of these societies in preference to private suretyship.

In the year 1841 the Bank of England took measures for discontinuing the system of requiring sureties from the clerks. Every clerk subscribed annually two shillings per cent. upon the amount of his surety-bond. When he had subscribed in the course of five years (or immediately if he chose), ten shillings per cent., the liability of his sureties ceased. Every new clerk subscribes, when admitted, ten shillings per cent. on the amount of the bond he would otherwise give. These contributions are invested in the Three per Cent. Reduced, or Consols. This fund is fixed at 6,000 stock. When at this amount, the interest is given to the "Clerks' Widows' Fund," a fund established by the clerks, with the assistance and support of the bank. "When the claims have reduced the guarantee fund below 6,000 the interest goes to this fund until it has increased to this amount. If the claims reduce the fund so low as 4,700 then the clerks are required to make a further contribution until the fund is again raised to '6,000. But this contribution is never more than two shillings per cent. per annum on the amount of their respective bonds. Nor can any claim be brought against the fund greater than the amount of the bond that would have been required from the defaulter. The clerks still give their personal bonds, which are for the full amount of their deficiencies. This is an admirable plan for a large establishment. In adopting it the directors have shown a sound discretion, as it makes all the clerks interested in watching over one another. At the same time, they have manifested that kindness and goodwill which have, we believe, at all times distinguished the directors of the Bank of England in their conduct towards their clerks.

Mr. Thomson Hankey, when governor, delivered to the Banking Institute l the following account of the working of this system:-

"With regard to the guarantee system, it appeared to him that the principle adopted in the Bank of England in 1841, by his predecessor, was capable of extension, with great benefit to the clerks, to many of the other banking

1 This Institute was established in 1851 on the initiative of the editor of the " Bankers' Magazine." It flourished for a few years, and then gradually expired. It is to be hoped that the present " Institute of Bankers" founded in London last year, under the presidency of Sir John Lubbock, will continue to receive the strong support with which it has hitherto been carried on, and continue the very useful work it has already accomplished. In Scotland a similar institute, absorbing the old Bankers' Literary Society, was established in 1875.

II.

C institutions of the country. The principle of that plan was, that a compulsory payment of .1 a-year for five years, or 5 in one sum, was required from each clerk, on entering the establishment. These payments accumulated until they amounted to a sum of 6,000, the interest of which was then to he applied to another purpose, for the benefit of the clerk; but in the meanwhile the fund was applicable to all losses at the bank, which, under ordinary circumstances, would fall upon the private sureties. Every clerk, on entering the establishment, was bound to give security to the amount of .1,000. "Well, he believed the lowest premium the guarantee societies would take was 10s. per cent., or 5 for the 1,000, and this 5 premium had to be renewed every year. Now, the amount of this 5 premium from each of the 700 clerks of the Bank of England would be 3,500 a-year. Well, since the guarantee fund to which he had alluded had been established in 1841, the total defalcations in the Bank of England had only amounted to about 1,500. Now, if the 700 clerks had paid the 5 a-year each to the guarantee societies for the whole of that period, it would have raised nearly as much as 40,000, the whole of which would have gone into the pockets of the guarantee societies, with the exception of the 1,500 which would have been necessary to make good the defalcations. Now, if 40,000 had been paid in premiums, and 1,500 had been the loss, it would require very little argument from him to show that the guarantee societies would have been very great gainers, at the expense of the clerks."