ormed with more than six partners, and
was so understood at the time; and it did have the effect of preventing any
joint-stock bank being formed.

The prohibition, as already related, was modified in the year 1826 and
removed in 1833. Even then the privilege of limitation of liability was not
permitted to any other bank but the Bank of England. The result was that
when joint-stock banks were first formed many persons of good means were
kept back from becoming shareholders, that is to say partners, in banks.
For up to the date of the act of 1862 permitting "limited liability," every
shareholder in a joint-stock bank was liable to the extent of the whole of
his means (see the article COMPANY). Even as late as 1858 when the Western
Bank of Scotland and 1878 when the City of Glasgow Bank failed, very great
hardship was inflicted on many persons who had trusted with over confidence
to the management of those banks. The failure of the City of Glasgow Bank
was the cause of the Companies Act of 1879, passed to enable unlimited
companies to adopt limited liability. In limited companies the shareholder
who has paid up the nominal amount of his holding is not liable for any
further amount, unless the company issues bank notes, in which case the
shareholders are liable in the same way as if the company were registered
as an unlimited company. The facilities allowed by this act were used by
almost every joint-stock bank in the United Kingdom except those banks
which were at that date limited by charter or by special act.

[Sidenote: Private banks.]

To return to the early history of banking--thus, as no bank could be formed
with more than six partners during the whole of the period from 1694 to
1826 and 1833, the majority of the banks formed throughout England and
Wales for more than a century were necessarily small and usually isolated
firms. Further, when a partner died, his capital not infrequently went out
of the business; then a fresh partner with sufficient means had to be
found, constant change was the result, and confidence, "a plant of slow
growth," could not thrive, except in those instances when a son or a
relation filled the vacancy.

The banks in the country districts had frequently branches in the small
market-towns close to them; those in London had never more than one office.
These banks were sometimes powerful and generally well managed, a
considerable number being established by members of the Society of Friends.