8Z5 



BANK; BANKER; BANKING. 



BANK; BANKER; BANKING. 



826 



la all populous and civilised communities, and especially in such as 

 are to any great extent commercial, the business of banking is one in 

 the proper understanding and right conducting of which the public 

 generally is, beyond all other businesses, interested. Errors, however 

 grave, committed by those who are engaged in the business of importing 

 and exporting, or in manufacturing and dealing in goods, are for the 

 most part mischievous only to the parties immediately concerned, and 

 to those with whom they may individually hold commercial relations. 

 But errors with regard to the principles or practice which should 

 govern the trade of banking, extend their evil consequences to a far 

 wider field, and in such cases the mischief cannot fail to be felt in 

 some degree by great numbers of the community. 



This fact appears so obvious upon the slightest reflection, that it 

 must afford matter for surprise when we consider in how trifling a 

 degree the better informed among the mercantile body, and even the 

 greater part of those who are actually engaged in the business, have 

 attempted to gain any knowledge of the true theory of banking ; while 

 the remaining portions of the community, as well those whose station 

 in life renders attention to matters of business unnecessary, as those 

 whose humble rank affords them no opportunity of acquiring a practical 

 knowledge of extensive money transactions, with but very few excep- 

 tions appear to have considered the question as one with which they 

 have no concern. It is foreign to our purpose to enter at large upon 

 the discussion of any of the controverted points connected with the 

 theory of banking. In the few remarks of a general nature that may 

 be here offered, our design will principally be to awaken attention to 

 the subject ; while by bringing forward some of the more prominent 

 facts and principles connected with it, we may be able to afford that 

 degree of knowledge which will form the best and most practical 

 groundwork for speculative investigations, and at the same time, we 

 trust, prove a preservative against the mischiefs which are likely to 

 result from plausible fallacies. 



We propose to consider the subject of banks and banking under the 

 following heads : 



I. Brief historical notices of the origin and progress of banking in 



various countries of Europe and of the British Colonies, with 



gome account of the present state of banking in the United 



States of North America. 



II. An explanation of the objects and general principles of banking. 



III. The history and constitution of the Bank of England. 



IV. The art of banking, as carried on by private establishments and 



joint-stock associations in London and other parts of England, 

 and in Ireland. 



V. A description of the Scotch system of banking. 

 I. Historical Sketch of the Oriffin and Progress of Bankiiiy. The 

 ragii e notices which are found in ancient history, both sacred and 

 profane, connected with dealings in money as a separate business, 

 apjwar fully to warrant the belief, now generally held by scholars, that 

 banking, in the sense wherein it is now understood, was but little 

 known or practised in very remote periods. In tunes when nations 

 were chiefly engaged in pastoral or agricultural pursuits, the trade of 

 banking would hardly suggest itself to anybody as a profitable calling ; 

 and until, in the progress of a community towards civilisation, the 

 extent of its commercial dealings had become very considerable, none 

 would be led to give their attention to the occupation of facilitating 

 the money operations of the rest of the mercantile community. At 

 first this office would doubtless be undertaken for others by the more 

 considerable traders, and a further period would elapse before it would 

 become a separate business. 



It is probable that the necessity for some such arrangement would 

 be first experienced, in consequence of the different weights, and 

 degrees of fineness, of the coined monies and bullion which would pass, 

 in the course of business, between merchants of different nations. The 

 principal occupation of the money changers mentioned by St. Matthew, 

 was doubtless that of purchasing the coins of one country, and paying 

 for them in those of their own, or of any other people, according to 

 the wants and convenience of their customers. It is likewise probable 

 that they exercised other functions proper to the character of bankers, 

 by taking in and lending out money, for which they either allowed or 

 charged interest (Matthew xxv. 27). 



There has been supposed to be some allusion to the operations of 

 Oriental banking in the parable of the slothful servant : " Thou oughtest 

 to have put my money to the exchangers, and then at my coming I 

 should have received my own with usury." The banking of those days 

 probably consisted chiefly in exchanging small coins for large ones, and 

 the money of one country or district for that of another, charging a 

 small commission for the accommodation. But all this is very obscure ; 

 and we cannot be said to know anything very certainly upon the 

 question of what was the nature of the money dealings among the 

 ancient Jews. 



Ghreck Banking. The information which is extant upon the subject 

 of "money dealing in ancient Athens may be summed up as follows : 

 A class of persons, called rfavtfiTai, from the stands or tables 

 (rpJartftu) at which they attended to do business in the market-place 

 of the city, were chiefly occupied in changing money, at an Agio 

 [Aoio] : but yet a considerable part of then- business consisted in 

 taking money on deposit, allowing interest on it, and of course lending 

 in, or employing it in some other, manner, at higher interest. 



They sometimes also lent out money of their own on deposits of goods. 

 On the whole they seem to have been a thriving class, and even to 

 have had a system of correspondents and business connections in the 

 chief cities of Greece, and generally to have been held in high estima- 

 tion. We read of one Pasion, a manumitted slave (afterwards presented 

 with the freedom of the city by the Athenian people), having attained 

 wealth as an Athenian banker : he is stated to have owned land to the 

 value of 20 talents, and besides to have had money at use to the 

 amount of 50 talents, out of which, 11 talents were deposits of his 

 banking customers ; or in. other words (taking the talent at equal to 

 250/. sterling), his landed property was worth 5000/., the money he had 

 out on interest was 12,500i, and the part of that which came to him 

 from his banking business was 2750?. He appears also to have carried on 

 a manufactory of shields or targets, and on one occasion presented the 

 republic with 1000 bucklers and five triremes fully equipped. His 

 name was celebrated ; he was a man of unquestioned integrity, and his 

 friendships and connections were extended through the whole of 

 Greece. He is very frequently spoken of by Demosthenes and the 

 contemporary orators (' Oratores Attici,' 1127, 1132, 1224). We find 

 mention also of other eminent bankers. The rate of interest they 

 exacted appears to modern political economy quite enormous : 36 per 

 cent, is stated to have been no unusual amount. 



The only trace we believe of an ancient Greek bank of a public 

 character occurs at Byzantium, where the republic (at a time of great 

 financial pressure) amongst other devices adopted for the purpose of 

 raising money, established a monopoly of money-changing at a single 

 bank or table, and then let it out to hire (Aristot. ' CEcqnorn.' lib. ii.. 

 p. 502. edit. Paris, 1619). It will be observed that the vast variety of 

 the coins used in the different Greek states necessarily rendered the 

 business of money changer, notes and paper money being unknown and 

 forming no part of the circulation, one of great importance as well as 

 profit. 



Roman Banking. The money dealers at ancient Rome seem to have 

 been divided into two classes : one called aryentarii (the currency 

 being silver), or aryente<e mensce cxercitores ' or argenti distractores : or 

 neyotiatores stipig argmtarice : the other class was called mensarii, or 

 meniularii, or nummularii. 1, the argentarii were private money 

 dealers who, in numbers fixed by law, carried on their business 

 consisting chiefly in changing coins, in shops or stalls round the 

 Forum, which appear to have been under the control of the censors, 

 and sold by them in the nature of a monopoly. The earliest mention 

 of this trade occurs, B.C. 350 ; but it probably must be dated much 

 earlier (Liv. ' Hist." vii. 21 ; xl. 51). From certain passages hi Cicero's 

 ' Letters,' it has been concluded that the Romans of his times were in 

 fact acquainted with the bill of exchange as a medium for the trans- 

 mission of money, and the settlement of accounts ; and it is said that 

 the argentarii for this purpose were in the habit of receiving money in 

 Rome, and by drawing a bill upon a correspondent in Athens (ex. 

 gra.) to be able thus to transmit without the passing of coin, and 

 with all the ease of modern mercantile and banking transactions. But 

 this, we must own, appears to us to be no more than a fanciful con- 

 jecture : the reader must judge for himself by a comparison of the 

 following passages from which this startling inference has been drawn. 

 (Cic. ad Att. xii. 24,27; xv. 15; v. 15; xi 1,24. Cic. 'ad Famil.' 

 ii. 17; iii. 5. Cic. ad ' Quint. Fra. Q.' i. 3. Cic. pro Rabir. 14.) It is 

 more certain that they received deposits, out of which they made the 

 depositor's payments for him ; and in that case paid him no interest on 

 the deposit. When a payment was to be made, the depositor either 

 desired the arr/enhiriim by word of mouth, or in writing, to make it; or 

 money was lodged with the argentarius on the footing of his paying 

 interest for the use of it. In this case it was called credittim, in the 

 former depositum; the written order to pay, or cheque (as it may 

 perhaps be considered equivalent to) was perscriptio. We are told also, 

 that if the person in whose favour the order was made dealt with the 

 same banker, the payment was made by a transfer in the banker's 

 book, called perqcribere, or merely scribere. The aryentarii also would 

 make payments for persons who had not deposited money previously 

 with them ; and on such advances they also made large profits. The 

 books of these people seem to have been kept with great accuracy, 

 and to have been looked upon in the courts of justice as most 

 credible sources of evidence; and the imperial law enforced their 

 production in evidence in the courts when necessary. They also not 

 uncommonly joined with L their proper business, that of acting as 

 agents or brokers at sales and auctions. In the times of the later 

 emperors, this body was . under the superintendence of the prcefcctus 

 urbi. Several of the ancient writers speak of the occupation of argen- 

 tarius as respectable and even honourable. (Cic. pro Csecin. 4 ; Aurel. 

 Viet. 72, &c.) Suetonius commemorates the fact, that the grand- 

 father of the Emperor Vespasian was a coactor, or collecting clerk at a 

 banker's ; and that his father followed the business of money lending 

 with the troops stationed among the Helvetii ; the biographer's general 

 object manifestly not being to cast any imputation on the emperor's 

 ancestry. However, the aryentarii in Latin comedy, seem to have 

 been always treated as contemptible ; but perhaps this is no more than 

 what may be said of the stage soldier, who is always made to be 1 a 

 boaster, and stage father, who is conventionally a tyrant and close-fist. 



2. The mensarii were distinguished from the aryentarii, in being 

 appointed by the state; like them, they had their banks or tables 



