THERE was a time when Scotland made a boast of her poverty. She was proud to be known as "the land of brown heath and shaggy wood." When her hillsides were left free to her hardy sons, she could look with Spartan contempt on the purse-proud Saxon with his fat meadows and his cotton factories. But the spirit of the age at length proved too much for the self-denying Scot. He was drawn into the whirling current of steam - looms, radicalism, and accommodation bills, and it not only swept him away from his old moorings, but made a new man of him-perhaps not a better one, but that at present is not the question in hand. He threw himself with characteristic energy and single-mindedness into every new venture that turned up. When colonisation came into vogue, he was foremost among colonists. When China reluctantly opened her doors to trade, it was no doubt a Scot who first taught the Celestials the superior merits of sized cotton goods. In the South Seas he followed close at the heels of Captain Cook, and was soon doing a good business with the natives in glass beads and Birmingham-made idols. He hunted the buffalo on the slopes of the Rocky Mountains; he harpooned whales in the Arctic Ocean; and he pitched his explorer's tent among the blacks in Central Australia. Invariably fortune attended his steps. He opened up new channels for trade; he wrestled with savage nature, and tamed her into a submissive servant; wherever money was to be made, the proverbial Scotchman had not long to be looked for. Wealth seemed to

start into existence at his touch. It marked his track in every part of the world, and it blessed not only himself but all his kith and kin. It returned like a flood over the old country, and coursed through its veins like a new and keener life. In the course of the first half of the present century Scotland was changed from one of the poorest to one of the most prosperous countries in Europe. From an unknown inaccessible corner of the world it has been transformed within the life of two generations into the favourite haunt of the tourist and the home of merchant princes.

She

Scotland herself is but dimly conscious of the revolution she has undergone in this respect. does not pose before the world as a leader of commerce or a ruling centre of finance, but she has claims to both if she chooses to assert them. Her industrial rank is already abundantly recognised; justice is seldom done, however, to her financial influence. That she has a large accumulated capital within her own borders hardly requires to be stated, but it is much less generally known how much she contributes to the great stream of British capital which is continually flowing out to foreign countries. Whether this vast exportation of our surplus wealth be wise or unwise, Scotland is to a large extent responsible for it. In proportion to her size and the number of her population, she furnishes far more of it than either of the sister kingdoms. England gives sparingly, and Ireland hardly any, but Scotland revels in foreign investment. She welcomes any financial proposal to relieve her of

a million and three-quarters. The aggregate subscribed capital of the whole nineteen Companies is nearly seventeen and a half millions sterling. For the smaller Companies not closely connected with Scotland, at least twelve and a half millions more might be put down. Thirty millions is, we believe, not an over-estimate of the golden flood which the old country has poured into America and the colonies through the agency of Finance Companies of various degrees of solidity and good management.

So long as America and the colonies can find passable investments, Investment Agencies are only too glad to supply the needed funds, and so far there has been no difficulty whatever in getting funds from the public. Some investors are attracted by the tempting dividends on the shares, and others by the charming combination of sim

plicity and security supposed to exist in the debentures. The latter are by far the larger class, as the next table will show. The above nineteen selected Companies handle funds amounting in the aggregate to seventeen and a half millions sterling, but of that little more than three millions is share capital paid up. The other three-fourths has been raised in the very easy and lucrative form of debentures and deposits. In skilful hands the three or five year debenture is an Aaron's rod that draws unlimited water from the least promising of rocks. One leviathan Company has tested its miraculous power to the extent of over two and threequarter millions sterling; another has collected fully a million and a half; and a third commands a million and a quarter of four per cent money.

Total paid-up capital

£3,022,937

13,537,579

17,943,701

A very creditable feature in the best of them is the care and perseverance with which they have built up their reserves. As a whole, they are strong in that respect, the total of their reserves amounting, as shown below, to over a million and a quarter sterling, equal to fully 40 per cent of their paid-up capital. It is to be regretted that this guarantee fund should be so unequally distributed. Almost a half of it is owned by two out of the nineteen companies the Australian Land Mortgage and Finance Company, with its magnificent accumulation of £400,000 of undivided profits, and the Scottish American Investment Company, with its quarter-million placed to reserve. Only three others can be said to have made

liberal provision for a rainy daythe New Zealand Loan and Mercantile, the Scottish American Mortgage, and the Trust and Loan of Canada. The proper test of a reserve is its relation to the prospective liability of the Company, against which it may be regarded as an offset. The showing in this respect is not completely reassuring. The aggregate reserves of the nineteen Companies are only about 7 per cent of the uncalled capital and 8 per cent of the borrowed money. They thus go but a small way toward protecting the shareholders from calls in the event of misfortune, or pressure from debenture - holders. Subjoined are the details of the various reserves and their relations to unpaid capital, &c. :—

account. Debenture-holders, and even shareholders, seldom think of that. They know little or nothing about where their money goes, or of how the high interest is earned. Necessarily there is more risk in earning it than there would be at home, and there must also be more expense. Flourishing as some of the Finance Companies are, they have many difficulties to contend with. Prima facie, if there were no drawbacks to the business, if their funds were all in constant and profitable employment, the returns to shareholders ought to be princely. If they are not all that they might be, the cause is to be sought for either in heavy working expenses, or in losses incurred, or in unemployed funds held against unforeseeable demands. From the following table may be gathered-first, what the gross income of the various Companies was for the past year; secondly, how much of it they had to pay away for expenses and interest on borrowed money; thirdly, the percentages of outlay to revenue and to the total funds handled respectively. The gross income of the nineteen Companies was £1,357,000. That, on a total of seventeen and a half millions—namely, paid-up capital, three millions; debentures and deposits, thirteen and a half millions; reserves, &c., a million and a quarter-would be about 73

per cent all over. The expenses of management were rather more than a quarter of a million, and deducting them, the net interest realised would be 6 per cent. As most of the money is invested at 8, 9, and even 10 per cent, such a small average suggests either frequent losses, or locking up of capital to a larger extent than is generally suspected. There must be considerable sums either lying idle in banks at home, or paralysed abroad through foreclosure of mortgages.

Starting with a gross yield of about 73 per cent on their entire funds, original and borrowed, the next point of interest is its distribution. This inquiry has been rendered needlessly difficult by the capricious and confused form in which some of the leading Companies present their accounts. With regard to two of them, and these not insignificant ones either, it is impossible to distinguish working expenses from interest paid.

The New Zealand Loan and Mercantile Agency brings into its Revenue Account only the difference between interests received and interests paid. The totals given for this Company in Table D are estimated on the best data available in the circumstances, but they may be taken as a practically fair approximation: