This historic book may have numerous typos and missing text. Purchasers can download a free scanned copy of the original book (without typos) from the publisher. Not indexed. Not illustrated.1841 Excerpt: ... 1. II possessed of small capital, upon the security of responsible persons, that much of the prosperity of Scotland has originated. The practice is capable of abuse when it interferes with the maxim, which presents Banks advancing capital to their customers, but, it may be observed, that the possession of character, prudence, and skill, is often a better guarantee to the creditor than the possession of capital, which may be injudicously managed, and finally lost; that, after all, the test of sound banking is the judicious use of capital, by loans to such persons as will employ it, so that it may be reproduced with profit; and that a knowledge of circumstances may render at times the strict application of a general rule unnecessary, although it may be kept in view amongst other considerations. " Under the check of responsible securities, this system has worked well, and is the Cash Account system of Scotland. It may be easily shown that, in Scotland and elsewhere, the question of the fluctuation of Bank issues has not been considered with due attention to the action of the public. For, under a metallic currency, large Bank deposits may exist, and, at a time of excitement and speculation, the depositors may withdraw these, to the positive loss of the country and themselves, by investment in foreign loans and projects, or in schemes at home,--such as railroads and canals, absorbing capital without immediate reproduction. Such operations, in the first instance, raise the circulation, whether paper or metallic, by increasing transactions, and, by the competition of capital, they may raise prices,--the fluctuation, showing itself first, in an abundance, and subsequently in a scarcity of money, would take place without any action on the part of the Banks. Assuming...