THE BANKING SYSTEM. 57 



his 6 per cent, dividend on the deposited State stock, besides 

 the interest and commissions which he can realise in lending 

 to his customers the notes which represent the same money. 

 In a country like this where every farmer is the owner of his 

 land, and where conveyances of real estate and mortgages are 

 managed in the simplest and cheapest manner, there can be no 

 business either safer or more profitable than that of a banker. 

 The loans are made chiefly on the security of real estate, and 

 the rate of profit in these new countries, where land is cheap 

 and productive, admits of 10 per cent, as the common rate of 

 interest on such security. 



That such a system of paper currency must occasionally lead 

 to embarrassment is self-evident. For with a general run 

 on the banks there must be a suspension, as the State securi- 

 ties would in that case become as inconvertible as the bank 

 notes. 



But though the fair and legitimate profits of the bankers 

 are thus very considerable, plans are occasionally adopted for 

 increasing these profits, which are reckoned here, though a lit- 

 tle " smart," still perfectly fair. If a banker is in good credit 

 he finds that his notes will circulate readily although not pay- 

 able in the State in which he carries on his business. He may 

 have bought the stock of some other State, Alabama or Florida 

 for instance, lodged his stock there, and obtained the counter- 

 signature of the State auditor to the authorised amount of notes 

 which he dates within that State, and where alone they are de- 

 mandable in gold. He does not issue them there, but brings 

 them to his usual place of business, many hundreds of miles 

 distant, and then lends them out among his customers. When 

 the notes come back upon him he requires a commission, not 

 that he disputes his liability or the soundness of the notes, but 

 because he deems himself entitled thus to add to his profits, 

 on the plea that if gold was wanted the holder of the note 

 3* 



