And not only the depositors and the shareholders of these large banks have a grave interest in their good government, but the public also.  We have seen that our banking reserve is, as compared with our liabilities, singularly small; we have seen that the rise of these great banks has lessened the proportion of that reserve to those liabilities; we have seen that the greatest strain on the banking reserve is a ‘panic.’  Now, no cause is more capable of producing a panic, perhaps none is so capable, as the failure of a first-rate joint stock bank in London.  Such an event would have something like the effect of the failure of Overend, Gurney and Co.; scarcely any other event would have an equal effect.  And therefore, under the existing constitution of our banking system the government of these great banks is of primary importance to us all.

CHAPTER X.

The Private Banks.

Perhaps some readers of the last part of the last chapter have been inclined to say that I must be a latent enemy to Joint Stock Banking.  At any rate, I have pointed out what I think grave defects in it.  But I fear that a reader of this chapter may, on like grounds, suppose that I am an enemy to Private Banking.  And I can only hope that the two impressions may counteract one another, and may show that I do not intend to be unfair.

I can imagine nothing better in theory or more successful in practice than private banks as they were in the beginning.  A man of known wealth, known integrity, and known ability is largely entrusted with the money of his neighbours.  The confidence is strictly personal.  His neighbours know him, and trust him because they know him.  They see daily his manner of life, and judge from it that their confidence is deserved.  In rural districts, and in former times, it was difficult for a man to ruin himself except at the place in which he lived; for the most part he spent his money there, and speculated there if he speculated at all.  Those who lived there also would soon see if he was acting in a manner to shake their confidence.  Even in large cities, as cities then were, it was possible for most persons to ascertain with fair certainty the real position of conspicuous persons, and to learn all which was material in fixing their credit.  Accordingly the bankers who for a long series of years passed successfully this strict and continual investigation, became very wealthy and very powerful.

The name ‘London Banker’ had especially a charmed value.  He was supposed to represent, and often did represent, a certain union of pecuniary sagacity and educated refinement which was scarcely to be found in any other part of society.  In a time when the trading classes were much ruder than they now are, many private bankers possessed variety of knowledge and a delicacy of attainment which would even now be very rare.  Such a position is indeed singularly favourable.  The calling is hereditary;