such bills are placed in his hands to perform the ordinary duty of a banker, namely, to receive the interest on them,. and from time to time to exchange them for fresh bills. And so if a specific sum be handed to the banker in money or notes expressly for transmission to a particular place, or to purchase bills or letters of credit on some one at the place, then such sum will be free of lien, unless the banker warns the customer that it will be subject to lien.

To state this matter shortly. The general rule is, that the law gives the right to lien for a general balance due to the banker. To this rule the case of documents, which either from their own nature will be presumed to be left for a specific purpose, or by agreement actually were so, forms an apparent but not a real exception, for it depends on a different principle. Besides this, any sort of document, whether or not it naturally pertains to the business of banking, may, by agreement, become the subject of such lien. And, lastly, the mode of dealing. between the parties may, like a specific agreement, vary the general law in the particular case.

Where a partner in a firm, which is indebted to a bank, has a private balance or deposit, the bank has no lien on such balance or deposit to secure the debt due by the firm.

A banker may not only keep instruments on which he has a lien, but where they are negotiable may recover; on them so much as will cover the balance due to him from his customer.

11. Bankers are sometimes required to find security on the firm, or some member of it, being appointed to the office of treasurer to a public body; and they are in the habit of requiring security for the fidelity of the clerks whom they employ.

Such securities are called guaranties.

Guaranties must, by statute of the twenty-ninth year of King Charles II, be in writing, and signed by the person to be charged therewith, or some one authorised by him. That is, if an action is brought, the defendant or his agent must be shown to have signed the writing.

Guaranties, like other contracts, are of two kinds, one by deed, i. e. by writing under seal, the other by writing not under seal; the latter are most common, and to these the name of guaranties is almost exclusively given.

The usual consideration for giving a guarantie is the employment by the person to whom it is given of the person whose fidelity is secured. But where the guarantie is by deed, as, for instance, a bond, no consideration need exist; and where the guarantie is not by deed, although a consideration must exist, yet by virtue of a recent Act of Parliament it need not be expressed in the writing. Until that act was passed an immense number of guaranties were bad because no consideration was stated on the face of them.

With regard to all guaranties securing the fidelity of clerks it must be observed that any change in the course of dealing between the master and the clerk which materially alters the risk contemplated by the person giving the guarantie will discharge him. As, for instance, if the clerk were required to perform totally different duties and were subjected to largely increased temptations to those which were contemplated at the time the guarantie was given, the guarantor would be discharged unless the alteration was made with his knowledge.

For instance, where a clerk originally paid by salary was afterwards paid by a commission, in fact amounting to more than his salary, the person who had guaranteed his fidelity was discharged, though the mere increase or diminution of salary would not have made any differ

ence.

The same was held to be the result where a clerk in consideration of an increase in his salary undertook with his employers to be answerable for a fourth of their losses upon discounts.

But although notice of any change of dealing between employer and employed must be given to the guarantor, yet it is not necessary in order to keep up the liability of the latter that notice of every defalcation should be given to him. An action may be brought at any time within six years after one or more defalcations. After six years have elapsed (I am now speaking of guaranties not by deed, for twenty years is the time as regards the others) the remedy will be barred by the Statute of Limitations.

If the guarantor requires such a notice with power to discontinue his guarantie, he should expressly stipulate for it on the face of the document. What perhaps might do

as well would be to limit expressly the amount and time for which he is to be liable.

The following form of a simple guarantie may be given as an example. The consideration is stated at the commencement. London, 1st January, 1859.

SIR,-If you will employ Mr. S. as a clerk in your bank, I will indemnify you against any defalcations in his I am, &c.,

accounts.

C. D.

To A. B., Esq., Banker. If the writer had wished to limit the amount or time for which he would be responsible, he might have added "for the space of a year and to the extent of £1000."

This guarantie should be stamped as an agreement. A guarantie for the fidelity or solvency of a partner is not a guarantie for the fidelity or solvency of the firm to which he belongs; if, for example, a partner in a banking house is appointed treasurer of a public body and such body pays its funds into the bank, and in fact treats the whole firm as their treasurers, the person giving the guarantie will not be liable for the defalcations of the bankers on their bankruptcy.

Persons who have given a guarantie to or for a firm of more than two partners, or to or for a person trading under the name of a firm, are not liable under the guarantie in respect of any act of commission or omission which took place after a change in the firm to or for whom the guarantie was given, unless a continued liability appeared, expressly or by necessary implication, to have been contemplated. The guarantie is not rendered invalid by the change in the firm, for it continues to apply to all acts or defaults which took place before that change. Guaranties given by a firm of course bind the members of the firm, notwithstanding that they take a new partner or dissolve altogether.

12. A banker is bound to honour his customer's cheque if there are sufficient funds in hand, and therefore to keep his books correctly is as important to the banker as to his customer. If a customer's cheque were presented during banking hours, there being sufficient assets in hand, and dishonoured, the customer would be entitled to substantial damages from the banker. The banker's books would in this case be evidence for the

customer; so indeed they would in other cases, but not for the banker, who may write in them what he pleases. A mistake in the account, or the fact of the last payment made by the customer being entered to a wrong account, would be no answer to the action.

13. Bankers are in the habit of furnishing to each customer a book called a pass-book, on the first page of which the bankers are described as the debtors, and the customer as the creditor. The customer does not make entries in the book, but it is written up by the banker from time to time from his ledger, of which it is considered to be a transcript. On the left-hand side are written sums received by the banker on account of his customer, and on the right-hand side are all sums paid to him or his order. The sums of the entries on each page are carried forward to the next corresponding page until the time arrives for balancing the book.

Credit given in the pass-book binds the banker, for the customer is thereby led to suppose that he may draw. It is said that the bankers may show that the entries were made by mistake, but they would probably in any case be liable to an action for dishonouring a cheque drawn on the faith of the representation made in the pass-book. I am supposing the pass-book to be kept in proper form, with entries on both sides, &c.

The correctness in book-keeping by bankers is further necessary, inasmuch as most bankers adopt the unsafe practice of returning to their customers the cheques drawn on and paid by them, so that in point of fact a banker, having parted with the only tangible document which was both his authority for paying and voucher for having done so, has no other evidence of the payments made by him for a customer, than the entries in hisbooks.

14. It has sometimes been contended that the notes and moneys paid into banks by private parties, continue to be their property, and are really as much a portion of their money as that which they have in their till or their pockets, the place where it is kept only being different.

But though specious, this opinion is entirely fallacious; the money has been deposited in a bank for banking purposes; the depositor has had credit with the bank for the amount paid in, and which he is entitled to

withdraw at any time, in one or several sums, but everybody knows that the right to a thing is not the thing itself (see sect. 3, as to the advantage of treating the customers' funds as a mere debt due from the banker).

15. There is a wide difference between private banks: of deposit, which do not issue notes, and banks of issue. It is undoubtedly the duty of Government to see that parties to whom it has delegated the important privilege to issue bank notes, or what is the same thing, papermoney, have some solid basis to rest upon, but it is no part of its duty to inquire into the nature of the secu rity that a non-issuing bank may give to its customers who may transact business with it; such business does not require any legislative measures to regulate it, for the act of depositing money in a bank is a voluntary one on the part of the depositor, and is an act of faith or confidence in the honour and integrity of the parties with whom he leaves his money. Whereas it may, and often does happen, that when a country bank note is tendered in payment, no other description of money being readily obtainable, the party is compelled to receive it or to go without.

16. Legislating for banks, in order to protect the customers being depositors in banks, is entirely out of place, for it is beyond doubt that much of the success of the private banks of London has arisen from the circum-stance that the Government has seldom or ever interfered with their business; a fact which ought to be strongly impressed on the minds of those who fancy that legislation can be applied with profit to the arrangement of transactions of every-day life between individuals.

It is inconsistent to couple Acts of Parliament regulating the paper currency of Great Britain with other Acts relating to simple banking, which are not only distinct in their general principles, but which have really no sort of connexion; and by allowing the two subjects to be treated on in the same Acts of Parliament, a constant confusion is kept up in the public mind, and a common feeling is perpetuated, that the sound manage-ment of the one depends on the good faith preserved ins the management of the other-a confusion which leads to erroneous impressions, and is calculated to do harm..