Readings in Money and Banking Part 51

Q. Explain the phrase "cash credits," and upon what conditions are they given?

A. A cash credit account is an operative current account in security of which the princ.i.p.al debtor and two or more co-obligants have granted a personal bond in favor of the bank. The account is operated upon by the princ.i.p.al debtor, but all the parties are bound as princ.i.p.als and are jointly and severally liable to the bank.[163]

Q. Is the bank, through its branches, employed by other banks to any considerable extent for the transfer of funds from one city to another?

A. We act as correspondents for the large English and Irish banks and for colonial and foreign banks.

Q. Do you favor the issue of 1 notes? Why?

A. Yes; under the Scottish system, as it enables the banks to plant branches at little expense and so to open up the trade of the country in all districts and directions.

Q. It is your practice to employ your surplus funds in the purchase of prime bills through bill brokers?

A. We occasionally have such transactions.

Q. Were most of your branches organised by you, or were most of them other inst.i.tutions purchased by you?

A. All of them were organised by ourselves.

Q. Is the question of the amount of reserves, either in specie or in bank, regarded as of importance by Scotch bankers?

A. I should think so, though I only know positively my own opinion.

Q. Do you ever buy any shares of railroad or industrial companies?

A. No industrial company shares and only gilt-edged railway stocks.

Q. Do you ever own bank shares?

A. No.

UNION BANK OF SCOTLAND (LIMITED)

INTERVIEW WITH ROBERT BLYTH, GENERAL MANAGER[164]

Q. When was the Union Bank of Scotland (Limited) founded?

A. In 1830.

Q. When does your present charter expire?

A. The bank has no charter expiring at any specified time. It is incorporated under the companies acts.

Q. Have the obligations of the bank to the public or to the Government been changed from time to time?

A. The liability of the shareholders was formerly unlimited, but when the bank became registered under the companies act, 1879, the liability of the shareholders--unless in respect of notes--was limited to the amount of the uncalled capital.

Q. The tendency is for the consolidation of banking in Great Britain, is it not?

A. It is, but this tendency set in at a much earlier period in Scotland than it has done in England.

Q. Do you rediscount bills for other banks?

A. Yes; but only to a very limited extent.

Q. Is private banking carried on in Scotland?

A. Private banking ceased to exist in Scotland prior to 1845.

Q. Do you ever buy any shares of railroad or industrial companies?

A. No.

Q. Do you ever own bank shares?

A. No.

FOOTNOTES:

[158] Adapted from Hartley Withers, _The English Banking System_.

Publication of The National Monetary Commission, Senate Doc.u.ment No.

492, 61st Congress, _2nd Session_, pp. 41-50.

[159] (September, 1915).

[160] Adapted from _Interviews on the Banking and Currency Systems of England, Scotland, France, Germany, Switzerland and Italy_, Publications of the National Monetary Commission, Senate Doc.u.ment No. 405. 61st Congress, _2nd Session_, pp. 142-155.

[161] _Ibid._, pp. 127-139.

[162] _Ibid._, pp. 172-185.

[163] The cash credit system, sometimes pointed to as a unique feature of Scotch banking, is by no means unknown in England.--EDITOR.

[164] _Ibid._, pp. 157-170.

CHAPTER XXIV

THE FRENCH BANKING SYSTEM

THE BANK OF FRANCE

[165]The Bank of France was established in the year 1800, and was at first an entirely private concern, with a capital of $6,000,000. Among the first subscribers were Napoleon Bonaparte, Hortense Beauharnais, and bearers of names which are still prominent in the French banking world, such as Mallet, Hottinguer, Seillers, etc.