The private banks now doing business in London are few in number. The tendency of late years has been to transform these banks into "Limited Liability" Companies, or to amalgamate with companies of this character. It looks as though, in course of time, private banks will altogether cease to exist, the joint-stock banks being better adapted to modern requirements. The private banks do not invite deposit, and interest on accounts is not allowed. They look to the average balance on each account to compensate for the trouble and expense of keeping it, with a considerable margin for profit. They require that not less than a certain fixed sum shall be the minimum balance of a customer's account, but, of course, the larger the balance the better for the banker.

The balance in some cases may be very large where the bank has a wealthy connection, it being a boast with some rich persons that they have never less than 10,000, or even 20,000 at their bankers. The money so left in the banker's hands is lent out, or invested in various ways, and all that he receives in the shape of interest, after paying the expenses of his establishment, is clear profit. In short, the 500 a year which the customer might obtain if he invested the 20,000 he leaves at the bank, goes to the banker.

At the head of the joint-stock banks of London is the Bank of England, which, like the private banks, do not take deposits upon which interest is allowed, but rely upon the cash at their disposal in their customers' accounts for their profits. In all other respects their mode of transacting business is much the same as that of other joint-stock banks. Accounts may be opened by merchants and traders, and by private individuals of known respectability, and no particular sum is required to be lodged upon opening the account. Formerly cheques were not allowed to be drawn for a less sum than 10, but now there is no restriction as to the amount. The profits of the bank are chiefly made by discounting bills of exchange, which is done to an enormous extent. A bill of exchange is an instrument by which a party who is owed money by another party, and accords to him the benefit of delay in payment, for a fixed period, draws on him in a form of order to that effect.

For instance, the firm of Bullion & Co. have sold to John Robinson certain goods, which need not be specified, as the principle applies in all cases, whether it be bankers, merchants, or traders, and for all transactions where one party is indebted to another. The form drawn by Bullion & Co. on John Robinson, which requires to be stamped according to the amount, would be as follows:

| Due 1st Nov.                                          |
| ------------                                          |
|     500                    London, 29th Aug., 1987.  |
|                                                       |
|  THREE months after date pay to our order the sum of  |
| Five Hundred Pounds for value received.               |
|                                                       |
|  To Mr. John Robinson,               Bullion & Co.    |
|         Merchant,                                     |
|             Liverpool.                                |
|                                                       |

(Written across:
Accepted payable
at the Bank of
J. Robinson. )

The acceptance of the obligation by John Robinson is written across the face of the document, and he makes it payable, as most bills are for convenience, at a London bank, presumably the London agent of his own bankers at Liverpool. Payment becomes due three months after date, with three days of grace added according to custom. Probably Bullion & Co. would find this 500, if in cash, useful in their business, and supposing the parties to be of good repute, they can readily convert it by discounting this bill at their bankers or at a bill broker, who, deducting a small amount in the shape of discount, will hand over the balance to the firm, or carry it to the credit of his account. It is this discount that constitutes the profit to the banker, and the rate varies according to the value of money, whether it is plentiful or scarce.

The rate of discount is supposed to be regulated by the Bank of England, and the "bank rate," which is arbitrarily fixed by the directors, is moved up and down (sometimes for other reasons than the value of money), and is supposed to be the rate of discount for bills of the best description. It is found in practice, however, that when there is an abundance of money seeking employment, bills are discounted at lower rates.

The Bank of England make purchases and sales of British or Foreign securities, and dividends on stocks will be received and placed to account. Exchequer bills, bonds, railway debentures, or any other securities may be deposited, and the interest, when payable, will be received and placed to a customer's account free of charge. Cash boxes (contents unknown), plate chests, and deed and security boxes are also received for customers for safety, free of charge, and all other banking facilities conceded, as are given by the Blankshire Bank.

The other joint-stock banks of London transact their business in all respects in the same manner as the Bank of England. In addition they invite money on deposit, allowing interest on the same. Sums of money lodged on deposit, and they may be by persons who are not otherwise customers, are not carried to a customer's account, but, as in the case of the Blankshire Bank, are placed on a special form of receipt which is changed for a new one when the interest or any part of the principal is withdrawn. The rate of interest allowed by the Blankshire Bank, and by the country banks generally, is a fixed one, but that of the London banks is regulated by the value of money, and fluctuates from time to time, notice being given by advertisement in the London newspapers of any change in the rate. Deposits are received by the London bankers "at call," that is, payment may be required on demand; or at an arranged term of notice of repayment. The rate of interest on money at call is less than where notice is required, and the longer the period of notice the higher the rate of interest.

In Scotland there are no private banks, and in Ireland only two. The joint-stock banks are numerous, and their mode of business is practically the same as in England, indeed the English system is founded on that practised by the Scotch many years before the joint-stock bank was general in England.