BAN 



BANK, in Commerce, ia a denomination jriven to certain 

 focieties or communities, who take on them tlit; charge of 

 tiic money of private perfons to improve it, or keep it fe- 

 cure ; or it is a common repofitory, where many perfons 

 agree to keep their cafli, to be always ready at their call, 

 or diredlion. The word inni in this fcnfe comes from the 

 Italian banca, formed of the Spanifli banco, a bench, whereon 

 the ancient money-changers fat in the public markets ; or, 

 as othen; think, a table whereon they told their money ; for 

 the Spanifh banco fignifics a table, as well as a bench ; as 

 among the Greeks the word Tfccrr-^a fignified a bench, as 

 as well as a table, whence t!ie word t^kts^it*;,- for a ber.cher. 

 Accordingly the iiiftitution of banks commenced in Italv, 

 where the Lombard Jews kept benches in the market-places 

 for the exchange of money and bilb. Mr. John Law, in- 

 deed, in his treatife, intitkd, " Money and Trade confi- 

 dered," afcribes the invention of banks to Sweden ; alleg- 

 ing that the bulk of their money being copper, rendered it 

 inconvenient ; and in order to remedy this, a bank was fet 

 tip, where the money might be pledged, and paper credit 

 given to the value, which paffed in payments, and facihtated 

 trade. But this opinion, fays Andcrfon (HilL Comm. 

 vol. i. p. 476.), is fo far from bein^ barely probable, that it 

 is in a manner pall all doubt, that the free cities of Italy 

 were, in very eaily times, the inventors of banks (lumber- 

 houfes, or lombard-houfes) and bills of exchange, long 

 before the countries on the north extremity of Europe knew 

 any tiling of com.merce, whicl> Sweden knew Itfaft and iateft 

 of all the reft. 



It cannot be doubted but that the beginning of traffic 

 was by exchanging one commodity for another, a; men 

 could befl fuit each others occafions. But the neceOities of 

 men being fo various a:id different, in refpcft to the quan- 

 tity and quality of requifites, money was inftituted as the 

 moft convenient medium for commerce, whereby people 

 might procure whatfoever they ftood in need of, in quanti- 

 ties according to their exigencies. 



This changed the term of bartering into that of hvjying 

 and felling ; yet all trading at length refults into a general 

 barter. For he v/ho fells any thing to receive money for 

 it, purchafes what he requires with the fame money. Mo- 

 ney then becoming the principal engine for circulating the 

 bulk of commerce, its application to trade is proper to be 

 coniidered. 



Money is ufed in the minuter kinds of dealings, as retail- 

 ing, &c. when it is commuted for all kinds of labour, and 

 to furnifh the neceffary provifions for daily ufe. Ttiis re- 

 quires its being divided into the fmallell denominations of 

 the pieces, as into (hillings and pence ; fo that this way of 

 dealing is not capable of being tranfafted by bills and af- 

 fignmcnts. 



Money is alfo employed in the more extcnfive and whole- 

 fale way of trade, wherein large fums are negotiated ; and 

 this occalions frequent payments from one tradelman to ano- 

 ther. In which payments, although ilridly fpeaking ready 

 ca(h be required as often as contracts are made, yet as 

 commerce in general confifts in the mutual dealings and 

 tranfaftions of many traders, it may often fo fall out, by 

 means of interchangeable debts and credits, that divers 

 traders mav fatisfy each others occalions, without making 

 any payments in fpecie, by transferring tluir debts to each 

 other. 



But when fuch mutual conveniences do not occur, traders 

 ufually receive their money in fpecie, and fo pay it from 

 one to the other. Yet this way of payment i: attended 

 with many inconveniences, as trouble in counting the 

 money, hazard in fecuring it from tlic attempts of robbos. 



Vol. IIL 



BAN 



» 



»nd lofa from trufting it with unfaithful fervants : for the 

 prevention of all which, cities of larjje commerce have very 

 naturalfy introduced the ufe of banks. 



Of thefe banks fomc are puU'u, confiding of a company 

 of moneyed men, who, being duly eilabliilied and incorpo- 

 rated by the laws of their countiy, agree to depofit a con- 

 Cdcrable fund or joint ftock, to be employed in varioui 

 ways for the ufe of the fociety : or private, being fuch a« 

 are fet up by private perfons or parti.erlhips, who traffic 

 in the fame way upon their own fingle ftock or credit. Of 

 the former fort of banks, fevcral have been eftablifhed in 

 the principal trading cities of Europe, as in Venice, 

 Genoa, London, Edinburgh, Amitcidam, Hamburgh, 

 Paris, &c. The moft ancient of thefe i« the bank of 

 Venice. 



Bask, or Banco, of fcnicc, commonly C3.]\ed ban-r^ del 

 gtiira, was ellablifoed in the m.iddlc of the twelfth centur)', or 

 as Anderfonfuggells(Hill.Com. vol. i. p. 84.. 1, A.D. i 157, 

 though fome have dated its eftablifhment in 1 176, or fomc- 

 what later. It is properly a board of public credit and 

 interell, or a gcntr:d and perpetual purfe for all merchant* 

 and traders, cftablilhed by a folemn edift of the common- 

 wealth, which enads, that all payments of wholefale mer- 

 chandife, and letters of exchange, (hall be in banco, or 

 bank notes ; and that all debtors and creditors (ball be ob- 

 liged, the one to can^ their money to the bank, the other 

 to receive their payments at banco ; fo tliat payments are 

 performed by a (Imple transfer from the one to the other ; 

 he who was before creditor on the bank books, becoming 

 debtor as foon as he has refigned his right to another, who 

 is entered .down as creditor in his place ; fo that the parties 

 only chsnge name, without any effcdive payment being 

 made. Indeed there are fometimcs adual payments made, 

 efpecially in matters of retail, and when foreigners arc dif- 

 pofed to have ready money to carry off in fpecie ; or when 

 particular traders choofc to have a llock by them to nego- 

 tiate in bills of exchange, &c. The neccffity of thefe ef- 

 fedive payments has given occafion to the opening a fund 

 ol ready money ; which is found fo far from diminilhing the 

 ftock, that this liberty of withdrawing money at pleafure 

 rather augments it. By means of this bank, the republic, 

 without encroaching on the freedom of commerce, or with- 

 out paying any intereft, is miftrefs of 5,coo,COO ducats, 

 to which the capital of the bank is limited, to be in readi- 

 nefs on any preffing occalion ; the republic being fccurity 

 for the capital. The original fund of this bank was two 

 millions of ducats. In one of its wars with the Turks, the 

 date became fecurity to pay the money lodged in it, which 

 they had been under a neccffity of uling in that exigency. 

 Its agio, in procefs of time, arofe fo high as to be 30 per 

 cent, better than current money, although the ftate by fe- 

 veral edids endeavoured to keep it lower. Its capital was 

 afterwards made double the oiiginal fum ; and the ftate, in 

 another exigency, made free with that increafed capital. 

 In after times the ftate enaded, that bank money, or the 

 agio of the bank, (hould never exceed 20 per cent, advance, 

 as it ftill remains to this day. 



The conllitution of this bank was originally founded on 

 fuch juft principles, that it has ferved as a model in the 

 eftablidiment of banks in other countries, and the admini- 

 ilration of its aflairs has been conduded with fo much in- 

 tegrity, that its credit has never been (haken ; and it has 

 been of infinite bcnclit to the ftate. For adjuftingand balanc- 

 ing all their accounts in banking, they (hut their books 

 four times in every year, for three weeks at each period. 

 Accordingly, Venice may boaft of having given the tirll 

 example to Europe of an eftabUfhmcnt altogether unknown 



