420 BANKS AND MONEY. 



debts to collect; pieces of paper pushed in upon the counter, all 

 implying that John and William and Dick and Harry owe me a lot 

 of things. You go and collect these debts for me. That is a bank 

 er s business; to collect pieces of paper embodying debts, and to 

 collect them. The next thing is, what does a banker do? Does he 

 go and get the money which he has a right to on all these pieces of 

 paper? Not a bit. He is not going to be put to that botheration. 

 What he does is this: A cotton man has just thrown down 5,000 

 worth of bills upon the counter of the bank. A man who is a 

 dealer in silk turns up five minutes after, and says this: &quot;I want to 

 buy silk, but I have not the wherewithal/ I will hold you harm 

 less, I have got security, but security not available to-day.&quot; What 

 does the banker do? He says: &quot;Give me these securities; you don t 

 want to sell them; a cotton man has just given me 5,000 worth of 

 cotton bills; I know he will not draw any checks upon these for at 

 least a month. Go and buy silk for a month, and I will meet your 

 checks.&quot; The banker has debts to collect, and how does he collect 

 them ? By creating fresh debts in which he is the lender. That is 

 banking. 



A banker is therefore essentially a broker. I define in my book a 

 bank as an institution for the transferring of debts. A better one 

 is, an institution for the transferring of credits, but a still better 

 one is the following, which I prefer: A banker is essentially a 

 broker. That is his true character and nature; an intermediate 

 agent between two principals. Here is his relation to the cotton 

 man: &quot;You have given me 5,000 worth of cotton bills to collect. 

 I understand from your habits of business that these bills will be 

 with me a month. I am responsible to you for this, but I know I 

 shall have it at my hand.&quot; To the other man he is a creator of 

 debts, having lent him 5,000. What has he done ? The man who 

 sold cotton has purchasing power. He has the power of buying 

 5,000 worth of goods all over the town. He virtually says to the 

 banker, &quot; I don t want to buy anything for a month, and I shall not 

 ask you for the proceeds of those bills for a month .&quot; But he still 

 has the power of buying 5,000 worth, and that power he transfers 

 to the banker, and the banker to the silk merchant to buy silk. The 

 transfer from the banker to the silk merchant is buying power. It 

 consists of the bills of cotton which went from his store, which 

 must be paid for, and are paid for in silk. This is how I get these 

 great conclusions; that a man who sells, by the act of selling can 

 buy, because all trade and all selling is the exchange of equal goods. 

 That is the meaning of the word selling. The banker is enabled to 

 buy by virtue of the cotton bills, and he buys silk; so the silk 

 changes hands by virtue of the cotton. The banker is merely an 

 intermediate agent, a broker. The banker says, &quot; I will find some 

 body to use your buying power.&quot; The cotton buys the silk. There 

 is a tremendous number of conclusions to come out of that. What 

 comes out of this? The explosion of that delusion which infests 

 the city of London and the newspapers of England, that banking 

 is an affair of currency, an affair of money, and that when there are 

 disorders the cure is in currency. In the full light of the nineteenth 

 century, this is believed by every trader in the United KingdoJI; and 

 so when the crisis comes they wake the Chancellor of the Exchequer 



