not realized, but unfortunately more than enough were realized to create the greatest forebodings as to the future, and to throw back the recovery from the crisis, indefinitely.

On the 26th November, the private banking firm of J. and J. Fenton and Sons, of Rochdale, failed with liabilities of about half a million. This failure created little surprise in any quarter, and no excitement except locally. For some time the firm had not been in the highest repute in consequence chiefly of one of the partners carrying on the incongruous business of a speculative stockbroker in addition to banking. This led to persistent withdrawals of deposits, which at last necessitated a stoppage, as the assets were as usual in such unrealizable form as to render it impossible to meet the demand.

The West of England Bank, to which rumour had pointed for weeks, failed on the 9th December with liabili ties of about five millions. This failure was brought about by causes somewhat similar to those that brought down the City of Glasgow Bank. This bank was heavily locked up in Fothergill, Hankey, and Co., and the Aberdare and Plymouth Iron Companies, whose failures we have already noticed in an early part of this section. It was also heavily locked up in the Bwllfa Colliery Company, and in the firm of J. W. Booker and Co., Limited, of Cardiff.

In other respects the case of this bank was similar to that of the City of Glasgow Bank. At the instance of the Crown the directors of this bank were also indicted for the issue of false balance-sheets, but after a patient trial they were acquitted of the charge.

Having entered so fully into the history and causes of the failure of the Glasgow Bank, it is unnecessary to go into details respecting the Bristol Bank. Suffice it to say, and this we cannot repeat too often, or emphasize too

strongly, that it was brought down by much the same causes-viz., by heavy advances on inconvertible securities. This is another proof, if further proof were needed, of the danger of lending large sums of money to one or two firms -and especially to firms whose prosperity is so peculiarly dependent upon the existence of a general activity in trade.

It is easy to understand how such loans are in the first instance made. Trade is extremely brisk, we shall say, and the wealthy coal-owner, or iron-master, or cottonmanufacturer, not content with the large profits he is making, is tempted by the idea of making them larger. He goes to his banker and shows him very plainly how he can, by sinking another shaft, or erecting another furnace, or building a new mill, add immensely to his income. The banker, anxious to oblige a good customer, and looking at the proposal in the light of commercial sunshine, when no cloud is to be seen, and when it seems impossible that a storm can come, gives the desired advance. Byand-by trade grows dull on the Continent, or America, or here, or in India, and there is no demand for coal or iron or cotton goods; then the new works which had been gone into to meet the demand during the time of inflation, are no longer needed, and soon are laid aside for the time being. But money has been sunk in these works all the same, and interest on this capital has to be paid, in addition to an expenditure to keep the works from falling into a dilapidated state. But these charges cannot be met out of income in the bad times, and the party has again recourse to his banker, who, to save himself from loss, gives a fresh advance, and so on. Then the dull trade reduces profits, or makes them vanish altogether; then failures take place and create alarm; then alarm brings a crisis in which the bank which has made advances of this kind (and it always becomes perfectly well known locally which

banks are most given to doing this sort of business) is run upon, and being unable in proper time to realize these unmarketable securities, a stoppage is the inevitable consequence.

It is scarcely necessary to say that we do not condemn all loans of this description without exception. Every such proposal should be looked at, and dealt with, entirely on its merits, and without foolish confidence on the one hand or undue timidity on the other. It is one of the most important functions of a bank to develop the resources or the industries of its district by judicious monetary aid. What we condemn is the abuse of the system, by the granting of loans of a magnitude such as would imperil the bank in time of panic.

Then during the first day or two of January, 1879, in consequence apparently of the somewhat general banking distrust prevailing, and of the recent death of a partner, whose money, it was feared, would be taken out of the business, a run was made upon the banking firm of Tweedy, Williams, and Co., of Truro, and they were obliged to stop payment on the 4th, with liabilities of about £650,000. This failure seems to have been caused through ill fortune alone, and not through any gross mismanagement. At a meeting of creditors a composition of 16s. in the pound was accepted, and a resolution expressive of sympathy with the partners was passed. The business of this bank was subsequently resuscitated in a joint-stock form under the title of the Cornish Bank, Limited.

As if the failures, and rumours of failures, amongst the country banks were not enough at this period of great anxiety, some individuals concocted, and spread abroad, certain diabolical rumours respecting some of the London banks. But when they directed their chief attack against one of the largest of them all, the absurdity of the rumours

showed the cloven hoof so plainly as to render it very easy to connect them with certain operators on the Stock Exchange who had large "bear" accounts open in bank shares. The result of their operations, in conjunction with a certain amount of fright on the part of shareholders, especially in unlimited banks, was that these securities were depressed by between 20 and 30 per cent.

We have said that the acute stage of the panic terminated about the end of October. After that period confidence was again beginning slowly to be felt, but the restoration of confidence was seriously interfered with by Fenton's and the West of England Bank failures. And just when the effect of the latter was beginning to wear off, the commercial world was doomed to still further disappointment, and the return of confidence was once more retarded, by the Cornish Bank failure in the beginning of January.

To complete the record of banking disasters during this period, the failures must be mentioned of Vivian, Grylls, Kendal, and Co., of Helstone, Cornwall, on the 4th of February, and of Swann, Clough, and Co., York, on the 8th of May. They were both old established concerns. The former failed in consequence of a steady drain upon the resources of the bank ever since the date of the failure of Tweedy, Williams, and Co., and the latter in consequence, it was understood, of an unrealizable lock-up, as usual.

With the failure of Vivian's, of Helstone, the crisis of 1878 may be said to have passed away. Confidence was soon thereafter fully restored. But although this was so, trade did not revive, and since that period, with the exception of an occasional spurt in particular branches, it has remained at a uniform dull level, and we are at the moment of writing still waiting for the long looked-for reaction from dullness to activity.

IM

SECTION XXXVIII.

RECENT BANKING LEGISLATION.

MMEDIATELY after the failures of the City of Glasgow and West of England Banks, and the blow which was thereby dealt to the principle of unlimited liability, it is not to be wondered at that bank shareholders began very carefully to scrutinize their position in the light of these two great catastrophes. And although it will readily be admitted that this principle has served its object well, and has built up our banking system to its present strength, it must be confessed that it was more than human nature could reasonably be expected to endure that shareholders should quietly remain under a responsibility the extent of which they never dreamed of until it was brought so painfully before them by the ruin of the great bulk of the proprietors in these two unfortunate concerns.

It is true that such a disaster as that of the failure of the City of Glasgow Bank is unprecedented in the annals of banking; and though it may be true that such a disaster is unlikely ever to happen again, yet shareholders properly thought that it behoved them to guard against any contingency of the like nature by either selling out of unlimited companies, or by agitating that the banks with which they were connected should register under the limited liability Acts.

Nor was this an unreasonable action or an unreasonable agitation on their part, for it must be admitted that the return on their investment-to all, at least, but to share