The Imperial Bank of Germany goes half way as regards restriction by the innovation of a tax of 5 per cent. to be paid to the State on all issues beyond 385,000,000 of marks for the whole empire. This system, we believe, involves a fallacy, if, as we presume, it is intended that such a tax is to prevent more notes going into circulation than the bank can be sure of redeeming in gold in case of necessity. What is the use of a 5 per cent. barrier to a dangerous expansion of the note issues in a time of commercial crisis, when mercantile houses will gladly pay any rate of interest rather than not get the accommodation which is absolutely necessary to save them from failure ?

On the subject of cheques M. Victor Bonnet in his book on ' Le Credit et les Banques d'Emission '-a work well worth the attention of all financiers-says, " Quant au cheque en lui-meme, malgre ses avantages, il est peut-etre le moyen de credit qui peut le moins empecher les abus. II donne lieu a des decouverts considerables qui atteignent quelquefois des proportions effrayantes. Ainsi il n'est pas rare de voir en Angleterre et aux Etats-Unis des banques qui n'ont pas en reserve la dixieme partie des depots qu'elles se sont engagees a rendre a premiere vue. Et cette reserve, ou est-elle?" This is preferring against a system an indictment which rests on no substantial foundation at all. The cheque system cannot reasonably be held responsible for the banks not keeping a tenth part of the deposits which they engage to repay on demand. The system of cheques has no more to do with it than have bills of exchange with causing a commercial crisis. It is the managers of the banks who are to blame for using up too large a proportion of the balances which are entrusted to their care, and for unduly hiring out their credit, and not the cheque system. M. Bonnet should be above trying to depreciate the most useful economic device discovered this century because his countrymen are unable to appreciate its inestimable merits. The jealousy which exists is unhappily a barrier in many cases to the adoption by one nation of reforms introduced by another, a conspicuous case in point being our own perverseness and stupidity in not long ago having adopted the decimal system of currency.

The commercial revulsion of 1875 in England revealed a condition of things that had been built up for the most part during the previous fifteen or twenty years. Many persons who had had experience of the effects of the crisis of 1857 and 1866 were astonished at the comparatively limited area over which the disasters of 1875 were spread. One reason was that the chief blow fell upon the banks, but that did not explain the phenomenon. We must look farther back into the past. We must go even farther back than 1857 before we get to the foundation of the fabric of England's commerce which trembled in 1876, but did not as on previous occasions break up with a sudden general crash. The crises of 1847, 1857, and 1866 brought prominently under public notice the losses which resulted from overtrading and speculation, but the accretion of wealth which formed the solid substratum for the country's credit to rest upon was not revealed. At a time of crisis those who weather the storm remain quiet spectators in the background, silent as to the extent of their means. It is in the nature of people not to boast of their gains and wealth when they are surrounded by numbers of unfortunate persons soliciting help. The great money-making firms of England, and in fact of most other countries, keep like the large game in the thick luxuriance which is their fattening ground, and are seldom seen or heard. The effects of the overtrading of the years preceding. 1875 fell upon a time when there was an unprecedented array of forces to resist the crushing effect of the commercial torrent which had burst its bounds. The bank reserves did not alone do it. There was behind that an accumulation of savings in a more solid and permanent form than had ever existed previously under similar circumstances. Apart from the non-speculative traders the more speculative members of the community were richer than ever before. Many more than ever before who were caught napping could pay their losses and keep going besides. The difference between an old rich country, and we may fairly say a young rich country, was seen by comparing the effects of the 1873 crisis in the United States with those of the revulsion in England of 1875. Long after the crisis in the United States was over the failures even at the beginning of 1876, for the first three months, were larger than during any similar period since the crash occurred. This was owing to the paucity of the capitalists, the small extent of the aggregate savings compared with the extent of the business risks incurred by the mercantile community of the United States. The English mercantile community has made for itself such a solid standing-ground during the last quarter of a century that with ordinary prudence our merchants and traders ought for the future to be able to secure themselves against a sudden collapse of prices and a temporary shrivelling-up of credit more completely than they could ever do before. Early information is everything to people who in the nature of their business must have large obligations coming daily upon them to be paid in cash. A firm which excuses its failure on the score of the absence of remittances is in these times an object of ridicule, as there is no excuse for not knowing long before their expected arrival that what was required would not be forthcoming.

The right which any individual trader or company has at any time to ask for credit in the money market or in any other form in a commercial sense depends upon the answer which can be given to one question. The whole principle, in fact, upon which the system of credit ought to be conducted hangs upon a single thread as it were. It amounts to this, Does the applicant consume more than he produces ? This one query may be expanded into a volume if we desire to penetrate into the recesses of all branches of business, and into the nature of all enterprises and businesses in which credit plays a part sooner or later; and likewise as to the varying conditions upon which so much or so little credit can be legitimately granted. An individual starting in business requires, as a rule, credit, but naturally finds it difficult to obtain unless he can show himself to be possessed of ample capital, or can satisfactorily demonstrate at once that the profits of his business more than cover all his expenses.