derived from the circulation.  The note issue is now a most trifling part of the liabilities of the Scotch banks, but it was once their mainstay and source of profit.  A curious book, lately published, has enabled us to follow the course of this in detail.  The Bank of Dundee, now amalgamated with the Royal Bank of Scotland, was founded in 1763, and had become before its amalgamation, eight or nine years since, a bank of considerable deposits.  But for twenty-five years from its foundation it had no deposits at all.  It subsisted mostly on its note issue, and a little on its remittance business.  Only in 1792, after nearly thirty years, it began to gain deposits, but from that time they augmented very rapidly.  The banking history of England has been the same, though we have no country bank accounts in detail which go back so far.  But probably up to 1830 in England, or thereabouts, the main profit of banks was derived from the circulation, and for many years after that the deposits were treated as very minor matters, and the whole of so-called banking discussion turned on questions of circulation.  We are still living in the debris of that controversy, for, as I have so often said, people can hardly think of the structure of Lombard Street, except with reference to the paper currency and to the Act of 1844, which regulates it now.  The French are still in the same epoch of the subject.  The great enquete of 1865 is almost wholly taken up with currency matters, and mere banking is treated as subordinate.  And the accounts of the Bank of France show why.  The last weekly statement before the German war showed that the circulation of the Bank of France was as much as 59,244,000 L., and that the private deposits were only 17,127,000 L. Now the private deposits are about the same, and the circulation is 112,000,000 L. So difficult is it in even a great country like France for the deposit system of banking to take root, and establish itself with the strength and vigour that it has in England.

The experience of Germany is the same.  The accounts preceding the war in North Germany showed the circulation of the issuing banks to be 39,875,000 L., and the deposits to be 6,472,000 L. while the corresponding figures at the present moment arecirculation, 60,000,000 L. and deposits 8,000,000 L. It would be idle to multiply Instances.

The reason why the use of bank paper commonly precedes the habit of making deposits in banks is very plain.  It is a far easier habit to establish.  In the issue of notes the banker, the person to be most benefited, can do something.  He can pay away his own ‘promises’ in loans, in wages, or in payment of debts.  But in the getting of deposits he is passive.  His issues depend on himself; his deposits on the favour of others.  And to the public the change is far easier too.  To collect a great mass of deposits with the same banker, a great number of persons must agree to do something.  But to establish a note