other person who keeps a banking account, he finds immediately that such is impossible from the banker, unless he keeps an account himself, which enables him to get the information through his own banker. It is a custom among London bankers, and no doubt will become universal in course of time, to give each other such information immediately. Such a system affords to the public an inestimable advantage, as by such means a dishonest trader soon becomes known, and so got rid of.

A banker's pass-book affords a complete history of the expenditure for the year; and those who have not business habits will find this a great assistance in controlling their expenditure, at all events in the aggregate.

By keeping a banker, one has a right to ask of him or his subordinates a variety of questions with regard to the best means of remitting money to distant places, and other matters, which otherwise might cause much trouble in obtaining.

The use of a bank assists most materially in dispelling the notion that wealth consists in money. This idea has existed for an incredible period in the minds of men, who by a little reflection could have so easily got rid of it. Adam Smith destroyed

it in the minds of all men who were willing to study his arguments; and now the question no longer even causes a dispute. The gold which lies still in the bank is of no more use than the ore from which it is coined; it only becomes wealth when it is circulated, and by such circulation assists production. Much gold lies always still in the vaults of the Bank of England. It may be thought that this fact upsets our argument; but if a certain amount of specie forms the pivot around which twice as much in paper circulates, it is more productive by the proportion, than if it were in active circulation itself-leaving out of the calculation the loss caused by using so costly a material. Gold is the chosen representative of wealth; that commodity by which the value in exchange of everything else is measured, by reason of its being more suitable than any other substance, for more reasons than because it varies so little in cost of production, and, consequently, in value in exchange, and also presents the greatest worth in a more convenient form than any other product of the earth. This representative of wealth it is the object of banks to keep constantly moving, which is more and more productive just in proportion as it is kept in circulation without

ceasing. As the maxim among shopkeepers is, small profits and quick returns, so for a bank to combine profit with safety, it should keep whatever funds it may have for employment always on the move; never out beyond reach for too long periods at a time.

Doctor Adam Smith says, that the advantages to be derived from the establishment of banks may be compared to the profit which would be obtained from converting our highways into corn fields, and procuring a road through the air.

The most important addition to the facilities which banking institutions have invented for themselves, to enable them to adjust their mutual indebtedness without the trouble of presenting separately for payment the cheques or bills which one bank may hold payable at another bank, was the Clearing-house, which was established by the principal bankers in London in the year 1775. The system pursued is so simple that, suffice it to say, when the clerks of two different banks wish to exchange the cheques one may have upon the other, the balance-in whosesoever favour it may be is paid by a cheque on the Bank of England, where every banker has an account. In the beginning the banks with the aid of the Clearing

house were enabled to adjust several millions sterling of mutual indebtedness, employing only a few hundred thousand pounds; the mode of settlement, however, has now become so simplified that neither notes nor coin is required at all. It is only quite lately that the Bank of England entered the Clearing-house.

CHAPTER II.

TWO CLASSES OF BANKS.

6

BANKS may be divided into two classes-private banks, and joint-stock banks with, and without, limited liability. Formerly private banks could not have more than six partners. By the Act of Parliament 39 & 40 Geo. III. c. 28, section 15, no bank was allowed to be established whose partners should exceed six in number, to borrow, owe, or take up any sum or sums of money, on their bills or notes, payable on demand, or at any less time than six months from the borrowing thereof.' Later on, in the year 1826, an Act of Parliament, of 7 Geo. IV. c. 46, was passed, which allowed banking corporations to be established consisting of more than six persons; but they were not allowed to transact their business within sixtyfive miles of London, and were prohibited from having any branch establishment in the city of London. Every member of a banking corporation