fidence, the effect of which will be much more powerful in sustaining trade than that of the present notification in depressing it. There is, consequently, no reason to depart from the conviction that everything will go on smoothly, and that, even if further measures should be requisite, they will not produce any disturbance. Some persons are disposed to believe that a return to 5 per cent. will be adopted before the close of the year; but the drain of specie just witnessed has been so sudden, and has so evidently resulted from a combination of unusual causes, that it will be against all experience if an early re-action is not witnessed. Consols opened this morning at the improved prices of last evening, but the market was not strong, and a partial relapse occurred before the fresh rise in the Bank of England rate of discount was made known. Afterwards there was a further slight decline, and heaviness prevailed up to the termination of business. Unexpected as the measure was, it produced, however, nothing like agitation or distrust, and the general transactions of the day were not important. In the Stock Exchange the demand for loans was less active. The first quotation of Consols was 90 to for money, whence they went to 90 to. The notice from the Bank, which was rather late-the resolution of the court having apparently been preceded by considerable discussion-then caused a fall to 90, and from this there was no alteration. The writer in the Daily News remarked—

Although only a week has elapsed since the last advance, the directors of the Bank of England to-day further raised their minimum rate of discount from 4 to 4 per cent.. The demand for accommodation at the Bank during the week is believed to have been heavy. Yesterday, it is understood, numerous applications were made to the Bank for the means to meet the instalment of 20 per cent. upon the Turkish loan of £5,000,000. The drain of bullion at the same time has assumed considerable proportions, and is as yet unchecked. As we noticed yesterday, a belief had arisen in many quarters that next week would witness a rise in the rate to 41 per cent., but the adoption of the measure at to-day's weekly board seems to have taken many persons by surprise. At the same time, we notice no disposition to question the propriety of the step, the directors being undoubtedly best qualified at the present moment to form an estimate of the probable drain upon the Bank's resources. The effect of the movement upon the stock markets has been remarkably slight. The Funds, after a decline of 4 per cent., closed only per cent. lower than yesterday. The publication of despatches from General Pelissier, placing in a brilliant light the probable results of the victory just achieved at Sebastopol, contributed to check any downward tendency. In the absence from town, however, of a large number of the leading operators, and of many members of banking and mercantile firms, little disposition is shown to enter into spirited operations, and to this consideration the quiet aspect of the market may in measure be attributed. Nevertheless, it must be borne in mind that the natural tendency of a higher value of money is, to bring stock of various kinds to market; and a rumour which was prevalent this afternoon, to the effect that an immediate rise to 5 per cent. was advo cated to-day by some of the Bank directors, is calculated to induce caution. In Lombard-street, to-day, money was in active demand, but the discount houses have not yet announced any change in the rate of money" on call." The present rise in the value of money is calculated to prove prejudicial to the railway share market, already depressed during many weeks by the unfavourable aspect of the half-yearly accounts, and by the growth of distrust in existing railway management. The late decline of rates in the

discount market to 3 to 3 per cent. had led to the hope that the fund available for dividends would be increased by the savings effected on the renewal of debentures; but these anticipations are already effectually dissipated.

The Morning Chronicle thus refers to the alteration

The pressure upon the money market has been in full operation again to-day, and notwithstanding the great efforts made by the directors of the Bank of England to avoid raising the rate again so soon, after the advance made last Thursday, they have been compelled to-day to announce a further rise. At the usual weekly board meeting, held this afternoon, they issued notice that until further notice the minimum rate of discount for commercial bills will be 4 per cent. This decision was compulsory, the state of the money market being such as to necessitate its immediate adoption. The directors cannot, however, be blamed for having taken the step without first resorting to every available expediment to avoid doing so, which a due regard to the important interests over which they preside, or have some controlling power, dictates and permits. The demand for money has lately become so very active, and the supply so inconveniently short, that the value has advanced beyond the power of the whole moneyed interest to control or keep in check, and has thus to the fullest extent confirmed the observations which we have from time to time made on this subject. The war, which has prostrated the trade of Russia, and compressed within exceedingly narrow limits its money market, has checked the trade of this country, thereby lessening the source of wealth, and at the same time diminishing our reserves. we have before said, war not only unprofitably consumes money, but also destroys its power to increase, and consequently has a double action on the market. It is, however, well for the country that this influence has been so gradual and light, that there is the elasticity of hope, and the fruits of long years of prosperity and accumulations of substantial wealth. The pressure upon the nation generally has not been severe, and on the commercial and industrial interests it has been moderate, although it cannot be denied that every interest of the United Kingdom has more or less suffered.

As

THE SCOTTISH BANKING SYSTEM.

Ar the late meeting of the British Association, at Glasgow, a valuable paper (or, rather, extracts therefrom) was read by Mr. Cheshire, on the laws of the currency in Scotland, the contribution being from the pen of Mr. J. W. Gilbart, F.R.S. It was received with great consideration, the ability of the writer to treat of the subject being fully recognised. Mr. Gilbart has divided his paper under four heads1st. The constitution of banks by which notes were issued. 2nd. The operations by which the notes were put in circulation. 3rd. The laws regulating the fluctuations; and, 4th. The effects of the act for regulating the currency in Scotland.

With regard to No. I.-the constitution of banks in Scotland issuing notes-he states that, with the exception of one private bank in Edinburgh, all the banks in Scotland are banks of issue. In 1826, there were 32 such banks in Scotland; now there are only 17, although 12

new banks have been formed in the meantime. These banks were all joint-stock, and had several partners, more or less numerous; but of those which continue to exist, there is only one with less than 100, and as every partner is answerable for all the debts of the bank, to the whole extent of his property, the greater the number of partners, ceteris paribus, the greater security to the public. Of all the joint-stock banks in England, there is but one with a paid-up capital of £1,000,000; whilst in Scotland, there are six possessing that amount of paid-up capital, one of £1,500,000, and one of £2,000,000, the total amount of paid-up capital being £11,701,997, making an average of £688,352. The paid-up capital of a bank should bear a proper proportion to its liabilities, as, with large transactions and a small capital, losses may be incurred exceeding the capital. The amount of notes the Scottish banks are authorised to issue is £3,087,209; and in 1841, Mr. Blair, in his evidence before the Parliamentary committee, estimated the deposits at £27,000,000, so that the paid-up capital exceeded one-third of the liabilities, being higher than the proportion obtained in English banks.

II. The operations by which the notes are put in circulation are by current or drawing accounts, repayments on deposit accounts (through which habits of forethought are encouraged amongst the people), cash credits (drawing accounts upon security); and any tendency to excessive issue is checked by the systems of exchanges between the banks.

III. The law of the circulation of bank notes in Scotland. The amount varies from year to year, and is materially affected by the state of commerce and agriculture-excitement causing a large circulation, and panics limiting it; and this is increased by the custom in Scotland of settling transactions by bank notes, and not by cheques upon bankers, as in England. During the years of excitement relative to railways, the average circulation of notes in Scotland was, in 1845, £3,307,132; in 1846, £3,439,564; and, in 1847, £3,516,450. In October of the latter year came the panictrade was dull; and in 1848 and 1849, the circulation fell to £3,162,692 and £3,134,073. But in 1850, in consequence of the Australian gold discoveries and other causes, trade revived, and the average circulation of the following years are as follow:-1850, £3,225,214; 1851, £3,242,922; 1852, £3,403,949; 1853, £3,789,214; 1854, £4,055,216. The author considers it, therefore, a law of the currency in Scotland, that the amount of circulation will vary annually, according to the excitements and depressions in trade. A second law is, that the amount during each year is not uniform throughout the year, but varies from month to month, according as the accustomed times arrive for making payments, the two principal months for which are May and November. A third law of the circulation in Scotland is, that the amount of notes in circulation under £5 each is greater than those of £5 and upwards. The Bank of Scotland first issued £1 notes in 1704, and they have never since been prohibited; but in 1765 all notes below that amount, some of which were only of the value of 1d. English, were prohibited. A fourth law is, that in comparatively poor and thinly-peopled districts, the proportion of small notes circulated is greater than in districts more wealthy and more densely peopled. Scotland is prin

cipally supplied with notes by Edinburgh and Glasgow banks, having a number of country branches; but there are local banks at Perth, Dundee, Aberdeen, and Inverness, and these banks circulate a larger proportionate number of small notes than the other banks. By a fifth law it will be observed, that the circulation of the small notes does not fluctuate in conformity with the fluctuation of the large notes.

IV. On the fourth point-the operations affecting the currency, by the laws of 1845-Mr. Gilbart calls attention to the issue of bank notes in Scotland having been limited by act of Parliament in that year. But the act of 1845 for regulating the issue of bank notes in Scotland, was not so unfavourable as the act passed in 1844 for regulating the circulation of England, inasmuch as not only were the small notes continued in Scotland, but the banks were allowed to issue beyond the certified amount of notes, provided they held gold equal to the amount of the excess; and also, if two banks of issue should unite, the new bank might issue to the amount previously issued by both the united banks. But Mr. Gilbart believes that this act, by prohibiting the formation of new banks of issue, has checked the extension of banking in Scotland; and in consequence of the expenses of keeping gold, the banks have, in some cases, increased their charges, thus showing that restrictions upon banks are taxes on the public. However, he congratulated the banking interest, that the operation of the legislature" has not been successful in imparting to the people of Scotland a taste for gold. The bankers are too wise to issue the gold, unless when it is demanded; and the public are too vise to make such a demand. Hence, when the increase of the currency requires a further importation, the gold is quietly brought from London to Edinburgh, is quietly locked up in the vaults of the bank, and, when no longer required, as quietly sent back again. Of course this is a loss to the banks of issue, but in this way it is less injurious than if put into circulation. Disastrous for Scotland will be the day when the people shall become inoculated with the love of a gold currency. The effect of such a desire in England is strikingly exhibited in seasons of pressure. When such pressure occurs in Scotland, the banks can employ their whole resources to assist their customers, and to support public credit. But when they occur in England, the banks have, in the first instance, to take care of themselves. The banks of issue have to find gold to meet their notes, and at a time, too, when the gold is leaving the country, and causing a corresponding contraction of Bank of England notes. We may here observe, in conclusion, that the laws of the currency in Scotland, to which we have invited the attention of the section, have not been enacted by the legislature. From 1765 to 1845 a period of eighty years, no act of Parliament was passed for regulating the issue of bank-notes in Scotland; and the act of 1765 was merely to prohibit notes under £5. And were an English statesman now to put to Scotch bankers the question once addressed by a Minister of Commerce to a body of French merchants - What can I do to serve you?' they would probably make the same reply-The greatest service you can render us is to let us alone.'"

STRAHAN, PAUL, AND BATES' FAILURE.

THE preliminary proceedings against these parties at Bow-street have been completed. They have been committed for trial; and although it was expected that it would have forthwith taken place, an adjournment has been agreed to, with the view of enabling the defendants to prepare for the serious charge brought against them. It has been considered necessary to increase the bail of the whole of the partners; and it is understood that further progress under the bankruptcy petition shall be arrested, until the criminal charge is finally disposed of. There will, it is apprehended, be no necessity to interfere with the arrangements made for declaring a dividend, since it is desirable that the earliest distribution of assets possible should take place. The following is a continuation of the ex-officio proceedings connected with this distressing failure:

The final examination of the defendants took place at Bow-street, on the 12th of September, before Mr. Jardine. The proceedings were almost exclusively of a technical character, having reference to matters of account. Mr. Bodkin conducted the prosecution. Mr. Parry attended for Mr. Bates, the other prisoners being represented by Mr. Lewis, in the absence of Mr. Ballantine.

Mr. Bodkin said he was happy to be able to inform the worthy magistrate that this case, which, from various causes, had so long occupied the attention of the Court, would now be resumed and completed.

Messrs. Stafford, Mitchell, Pater, Metcalfe, Frankland, and Heavison, bankers' clerks, were then called, and simply bound over to appear at the Central Criminal Court. Dr. Griffith, the prosecutor, Mr. Penny, Mr. Wildy, Mr. Fitzgerald, Mr. Young, Mr. Burnand, and the other witnesses whose depositions had been previously taken, were also bound over in the

same manner.

Mr. W. Bell, the official assignee of the Court of Bankruptcy, and also to the estate of Strahan and Co., said-On the 16th of June, after the fiat was issued, I went to the banking-house of the defendants, in the Strand, to make inquiries relative to the missing securities of Dr. Griffith. Mr. Strahan told me that they would not be forthcoming. I asked what had become of the securities, and Mr. Strahan replied, "They were either sold or pawned." I think Mr. Bates was sitting in the room when Mr. Strahan used these words, and Sir John Paul, I think, was up stairs at the moment. The conversation took place in the parlour at the back of the premises. I asked Mr. Strahan if there was not a book in the house containing a record of these transactions, and an account of the securitees deposited in them? The defendants looked at each other, but made no reply. None of Dr. Griffith's securities came into my possession that I am aware of. Other securities did, with the names of the owners attached to them. On the day of the bankruptcy (the-11th of June) I took possession of the money in the house. By Mr. Parry-I can't say that Mr. Bates heard the conversation between Mr. Strahan and myself.

Evidence to complete the point relative to the purchase of the bonds having been given.

Mr. James Allen, formerly clerk in Strahan and Co.'s bank, and now clerk in the Temple-bar branch of the London and Westminster Bank, recited from the day-books of the firm certain entries, relating to the dividends of Dr. Griffith (the coupons relating to which were cut off by