Sir Stafford Northcote on Tuesday introduced his Banking Bill,—a very
weak affair. It does not compel Unlimited Banks to become limited, but permits them ; and also allows them to enter a new class, clumsily called " Reserve Liability Banks," in which shareholders may be liable for only twice or thrice their capital. The effect of these provisions will be that unlimited Banks anxious for deposits at any price will stay out, and that better Banks will be afraid of their competition. If only one great Bank stays out, commerce will remain liable to the crash which follows the fall of any great unlimited concern. The creation of a third class of Bank, too, seems useless. A Limited Bank need not call up all its capital, and might, if needful, be forbidden to call up more than half. As the amount uncalled is stated in every report and advertisement, a shareholder would always know his liability, about which, under the new scheme, there will be constant uncertainty. No Scotch Bank of Issue, with a branch in London, is to enjoy the benefit of the Bill, a restriction intended, as Sir Stafford allowed, to send them back to their own country. That provision secures the opposition of the Scotch Members, and is a most undignified way of settling a difficult question— namely, the moral right of Banks, strengthened by a privilege intended to be local, to employ that strength outside local limits. The Bill is better than nothing, but we trust that in Committee the Reserve liability clause will be cut out, and the registration with limited liability made compulsory.
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