of the Highlands.

Mr Kennedy's account of the profits of banking will explain the
sweeping nature of the change. "A banker's profits are derived from
two sources--the brokerage upon the deposit money, and the returns
that he gets from his circulation. We have tried to estimate the
amount of deposits in Scotch banks, and we calculate it at about
thirty millions; that, at the brokerage of one and a half per cent,
yields L450,000 annually. The currency we will take at three millions,
and that, at 5 per cent, is L150,000: making a gross sum of L600,000,
_which is the whole profit derived from banking in Scotland_. Out of
that are to be deducted the whole of the charges. From these figures
it will be perceived that the gross profit of the currency is a fourth
part of the gross profit of banking; but the expense that falls upon
the currency is not so large as the expense that falls upon the other
portions of the banking business; so that I should be inclined to say
that, upon the average, the profit derived from the circulation bore
the proportion of a third to the aggregate profit of banking."

Assuming Mr Kennedy's calculation to be correct, the profit of
L600,000, derived by the banks, would thus be reduced to L400,000 by
the change of currency.

But the diminution would not rest there. The brokerage upon the
deposits--that is, the difference between the rates of interest given
and charged by the banks--on the present calculated amount of
deposits, is L450,000. from which the charges are deducted. Now we
have already seen that the banks find it necessary, in order to
encourage deposits, to give a liberal rate of interest; and we have
also seen that, whenever interest falls to two per cent, the deposits
are gradually withdrawn, and a period of speculation begins. Let us
hear Mr John Thomson, of the Royal Bank, on the effect of a gold
currency on deposit accounts:--"I think, on the operating deposits, we
could scarcely allow any interest, and on the more steady deposits,
that the rate of interest would require to be very considerably
reduced."

It follows, therefore, according to all experience, that, if no
interest were allowed, the deposits would be generally withdrawn for
investment elsewhere; and thus another serious reduction would be made
from the already attenuated amount of the Scottish bankers' profits.
But besides the loss of profit on the small notes, there would be a
further loss sustained by the necessity