is more densely peopled and more actively
cultivated. It results, that the amount of
precious metals amongst us is not sufficient
in quantity to serve all the purposes of
money; and the disproportion threatens to
increase instead of to diminish. Industrial
produce seems likely to augment in a higher
ratio than the produce of the gold-fields.
But for the discovery of the Californian and
Australian mines, this want would now be
more urgently felt than it is. But they have
acted as palliatives rather than as remedies
to the deficiency; even under existing
circumstances, the production of coin is limited
within certain bounds, and is quite inadequate
to fulfil the demands of the world's ever
increasing commerce.

To meet the difficulty, recourse has been
had to the invention of paper money, or
bank-notes. As trading by means of the
precious metals is more convenient than
simple barter, so paper is, in some respects,
more convenient than metal coin, especially
in the case of large sums. Still, paper is an
equivalent for the precious metals only
inasmuch as it is convertible into them at the
will of the holder. If gold and silver coin
are the representatives of value, paper is
merely the representative of a representative,
and in that alone lies its utility. Paper
money combines a paradoxical union of
merits and defects. It is very liable to waste
and utter destruction, but it may be suddenly
increased or diminished as circumstances
require; it is of very low intrinsic value, but
it does not lock up a vast amount of
unproductive capital, as is the case with the metallic
currency. A very great defect in a paper
currency is, that it is not cosmopolite, as
metal is. A wheaten currency, like that
supposed above, would be more universally
received that a paper one. The further a
provincial bank-note travels from home, the
more its value is depreciated, till at last it
arrives at nullity. There are many places in
the world where a thousand pound Bank of
England note would purchase less than a
copper farthing. Against this may be set,
what in theory is a great merit,—that paper
money approximates nearer to being a fixed
standard of value than metallic money;
paper money is not so completely a marketable
commodity as the precious metals; the
temptation to export it is comparatively
slight, because, abroad, it is less useful then
in the country where it was first issued.

The currencies, then, of modern times are
composed of metallic and paper money jointly.
The puzzle has been, and still remains, how
to regulate the proportions they should bear
to each, so as to avoid inconvenience. The
control of those proportions has mostly
remained in the hands of parties styled
bankers, whether private individuals, persons
connected with State affairs, or the State
itself. It is curious that the profession of
banking should have do definition or description
either by common law or statute, and
that there should be in England no company
or corporation called bankers, although there
is in the city of London a company called
goldsmiths to which most of the persons
called bankers belong. By custom, we call a
man a banker who has an open shop, with
proper counter, servants, and books, for
receiving other people's money, in order to
keep it safe, and return it upon demand;
and when any man has opened such a shop,
we call him a banker, without inquiring
whether any man has given him money to
keep or no; for this is a trade where no
apprenticeship is required, it having never yet
been supposed that a man who sets up the
trade of banking could be sued upon the
statute of Queen Elizabeth, which enacts, that
none shall use any art or mystery then used,
but such as have served an apprenticeship in
the same. The interpretation clause of Peel's
Act of eighteen hundred and forty-four
enacts "that the term Banker shall extend
and apply to all Corporations, Societies,
Partnerships, and Persons, and every
individual Person carrying on the Business of
Banking, whether by the issue of Bank-notes
or otherwise, except only the Governor and
Company of the Bank of England." The
Lombard Jews in Italy kept benches, or
banchi, in the market-place, where they
exchanged money and bills, whence our word
Bank. When a banker failed, his bench was
broken by the populace; from Banco-rotto
we have our term Bank-rupt.

According to Gilbart's very able Elements
of Banking, a banker is a dealer in money.
He is the intermediate party between the
borrower and the lender. He receives money
from one party, which he lends to another;
and the difference between the terms at
which he borrows and those at which he
lends, forms the source of his profit. He
thus draws into active operation those small
sums of money which were previously
unproductive in the hands of private individuals;
and at the same time furnishes accommodation
to those who have need of additional
capital to carry on their commercial transactions
The business of banking consists
chiefly in receiving deposits of money, upon
which interest may or may not be allowed;
in making advances of money, principally in
the way of discountng bills; and in effecting
the transmission of money from one place to
another. Private banks in metropolitan
cities are usually the agents of banks in
the provinces, and charge a commission on
their transactions. In making payments,
many country banks issue their own notes.

The disposable means of a bank consist of:
First capital laid down by the partners or
shareholders. Secondly, the amount of money
lodged by their customers. Thirdly, the
amount of notes they are able to keep out in
circulation. Fourthly, the amount of money
in the course of transmission,—that is, money