merce and the arts can hardly be said to have existed, there could be no field open for the banking business; but on the revival of commerce in the twelfth century, and when the cities of Italy engrossed nearly all the trade of Europe, the necessity again arose for the employment of bankers. At first they carried on their business in the public market-places or exchanges, where their dealings were conducted on benches, whence the origin of the word bank, from banco, the Italian word for a bench. The successful manufacturing efforts of the Florentines brought them into commercial dealings with different countries in Europe, and thence arose the establishment of banks. In a short time Florence became the centre of the money transactions of every commercial country in Europe, and her merchants and bankers accumulated great wealth.

The earliest public bank established in modern Europe was that of Venice, which was founded in 1157. This bank was in fact an incorporation of public creditors, to whom privileges were given by the state as some compensation for the withholding of their funds. The public debt was made transferable in the books of the bank, in the same manner as the national debt of England is transferable at the present time; it was made obligatory upou the merchants to make their contracts and draw their bills in bank-money, and not in the current money of the city. This establishment was always essentially a bank of deposit and not of issue, and existed until the subversion of the republic in 1797. Its money at all times bore a premium, or agio, over the current money of the city. [AGIO.]

About the year 1350, the cloth-merchants of Barcelona, then a wealthy body, added the business of banking to their other commercial pursuits; being authorised so to do by an ordinance of the king of Aragon, which contained the important stipulation, that they should be restricted from acting as bankers until they should have given sufficient security for the liquidation of their engagements. Fifty years afterwards, a bank was opened by the functionaries of the city, who declared their public funds answerable for

the safety of money lodged in their bank, which was a bank of deposit and circulation.

The Bank of Genoa was planned and partially organised in 1345; but was not fully established and brought into action until 1407, when the numerous loans which the republic had contracted with its citizens were consolidated, and formed the nominal capital stock of the bank. This bank received the name of the Chamber of Saint George, and its management was intrusted to eight directors chosen by the proprietors of the stock. As a security for its capital in the hands of the republic, the bank received in pledge the island of Corsica, and several other possessions and dependencies of Genoa.

The Bank of Amsterdam was established in 1609, simply as a bank of deposit, to remedy the inconvenience arising from the great quantity of clipt and worn foreign coin which the extensive trade of the city brought there from all parts of Europe. This bank, which was established under the guarantee of the city, received foreign coin, and the worn coin of the country, at its real intrinsic value, deducting only a small per centage which was necessary for defraying the expense of coinage and the charges of management. The credit given in the bank-books for coin thus received, was called bank-money, to distinguish it from the current money of the place. The regulations of the country directed that all bills drawn upon or negotiated at Amsterdam, of the value of 600 guilders (about 551.) and upwards, must be paid in bank-money. Every merchant was consequently obliged to keep an account with the bank, in order to make his ordinary payments. The Bank of Amsterdam professed to lend out no part of its deposits, and to possess coin or bullion to the full value of the credits given in its books. Dr. Adam Smith has given an account of this bank (Wealth of Nations, book iv. c. 3). When the French invaded Holland, it was discovered that the directors had privately lent nearly a million sterling to the states of Holland and Friesland, instead of keeping bullion in their cellars in accordance with the regulations of the

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Bank. In 1814 a new bank was established, called the Bank of the Netherlands, on the plan of the Bank of England.

The Bank of Hamburg was established in 1619, and is a well-managed institution, conducted upon nearly the same plan as the Bank of England. The Bank of England, which we have separately noticed, was opened in 1694. The Bank of Vienna, established in 1703 as a bank of deposit and circulation, subsequently (1793) became a bank of issue; and its notes were the sole circulating medium in Austria; but having fallen to a considerable discount in consequence of their excessive quantity, the Austrian National Bank was established in 1816, with the object of diminishing the paper currency, and of performing the ordinary banking functions. The banks of Berlin and Breslau were erected in 1765, under the sanction of the state. These are banks of deposit and issue, and are likewise discounting-offices for bills of exchange.

During the reign of the Empress Catherine, three different banks were esta blished at St. Petersburg; these were, the Loan Bank, the Assignation Bank, and the Loan Bank for the nobility and towns. The Loan Bank, or Lombard, or Russian Mont de Piété, was established in 1772, and makes advances upon deposits of bullion and jewels, and allows interest upon all sums deposited for at least a year. The operations of this bank as a Mont de Piété are still carried on for the profit of the Foundling Hospital in St. Petersburg. The Assignation Bank, opened in St. Petersburg in 1768, and Moscow in 1770, issues the government paper-money, and is in all respects an imperial establishment: it is now called the Imperial National Note Bank, having been changed into a Reichs (imperial) assignation bank at St. Petersburg in 1786. The Loan Bank, established in 1786, for the nobility and towns, advances money on real security. It is likewise a discount-bank, and acts as an insurance company. The Aid Bank, established in 1797, advances money to relieve estates from mortgages, and to provide for their improvement. The punctual payment of interest upon its advances is enforced by taking their

estates from the possession of defaulters until the entire debt is discharged. The Imperial National Commercial Bank of Russia, which was established in 1818 receives deposits of coin and bullion, and has a department for transferring credite from one account to another, in the manner of the banks of Amsterdam and Hamburg. It is also a bank of discount, and makes advances upon merchandise of home production. Its capital, about a million and a half sterling, is declared to be sacred on the part of the Russian government, and free from all taxation, sequestration, or attachment, as well as from calls for assistance on the part of the state. This bank has branches at Moscow, Archangel, and other important commercial towns in the empire.

The Bank of France, established in 1803, has a capital of 3,596,000l. sterling. This association alone enjoys the privilege of issuing notes in France, which are for 1000 to 500 francs each. The bank is a bank of deposit and circulation, and has several branches. It is obliged to open an account with any person who may require it; and is not allowed to charge any commission for the transaction of ordinary banking business. Its profits result from the use of money deposited by its customers, from the issue of its own notes. and from discounts upon mercantile bills besides which, a charge is made every six months of one-eighth per cent. for the safe custody of plate, jewels, and other valuables upon which it has made advances. The affairs of this bank are managed by a governor and deputygovernor, who are nominated by the king, and by seventeen regents and three censors elected from among the shareholders. A full statement (compte rendu) is published every quarter (pursuant to the law of 30th of June, 1840), which furnishes a complete exposition of the affairs of the bank, which is one of the most flourishing and best managed banks in Europe. The official return of the operations and state of the bank for the quarter ending 25th September, 1844, contained the following items:-Sundry Cash Receipts 44,309,380l.; Cash paid 44,173,0281.; Commercial Bills discounted 11,140,8967.; Notes outstanding

Banks have been established at Calcutta, Bombay, and Madras; and in the interior of India the natives are extensively engaged in banking, but chiefly in issuing and discounting bills of exchange. Within the last few years several banks have been established in London which confine their business chiefly to particular colonies, where they have branches.

II. Objects and General Principles of Banking.-Banking establishments may be divided into three classes, banks of deposit, banks of issue, and banks which exercise both these functions.

Banks of deposit, strictly speaking, are those which, like the old bank of Amsterdam, simply receive the money or valuables of others into custody, and keep them hoarded in their coffers till called for by the depositors. However convenient such an establishment may be to the persons by whom it is used, it must be evident that it can contribute nothing to the general wealth of a community, and that the only means of profit which it provides for those who conduct it, must arise from payments made by its customers in the shape of commissions, or fines which partake of the nature of commissions. If, instead of burying the clipt and worn coins of which its hoards were composed, the Bank of Amsterdam had converted them into money of the proper standard, and had lent the same at interest upon proper securities, no commissions need have been required from its customers, who would in so far have been benefited: and a considerable capital being set free for the prosecution of commercial enterprises, the country might have thence derived continued additions to its wealth.

Banks of deposit, in this confined sense of the word, are now very little used, and the term is generally understood to mean an establishment which lends as well as receives the property of others, and derives its profits from charging a higher rate of interest than it allows. Some banks of this description, such as the private banks

In like manner there are few, if any, establishments which are purely banks of issue. A banker sends forth his promissory notes that he may employ to his own profit, during the time that the notes remain in circulation, the money or property for which he may have exchanged them, and by this course he gives to his establishment the mixed character of a bank of issue and of circulation. The most usual means by which a banker gets his notes into circulation is by lending them on personal or other security to customers engaged in business, who have a running account at the bank. In general, those bankers who issue their own notes likewise receive deposits: this at least is the practice in England.

Bankers and banking associations usually possess considerable wealth, and are thought deserving of confidence on the part of the public; and there can be no doubt that, so long as they conduct their business with integrity and prudence, they are of material service in giving life and activity to commercial dealings. They are, in fact, the means of keeping that portion of the floating capital of a country fully and constantly employed, which but for their agency would frequently lie dormant and unproductive for uncertain periods in the hands of individuals. Thus, while banking does not directly create capital, the issue of bank notes enables people to buy who could not buy for want of a medium of exchange. Again, a large farmer has grain and stock, and he wants to drain; but money is short. He goes to a bank and gets bank-notes on the security of his property. That is a useful operation. Another thing is, people may deposit small sums of money at a bank, which the banker lends. Thus a bank is a mean of facilitating the loan of money from the possessor of money to the farmer or manufacturer who has goods, but wants ready money. The lending of money is the operation of banking, and a bank is a centre which facilitates this lending: it enables people to lend through a banker and his connexion, who could not lend without that. But the real legal loan is the banker's. The man who puts

from its being first opened; and on the 27th of July, 1694, the Bank received its charter of incorporation. This charter provides, "that the management and government of the corporation be committed to a governor, deputy-governor, and twenty-four directors, who shall be elected between the 25th of March and the 25th of April every year, from among the members of the company;-that those officers must be natural-born subjects of England, or have been naturalized;-that they shall possess, in their own names and for their own use, severally, the governor (at least) 4000l., the deputygovernor 3000l., and each director 2000l. of the capital stock of the said corporation;-that thirteen or more of the said governors and directors (of whom the governor or deputy-governor shall be always one) shall constitute a Court of Directors, for the management of the affairs of the company;-that no dividend shall at any time be made by the said governor and company, save only out of the interest, profit, or produce arising out of the said capital stock or fund, or by such dealing as is allowed by Act of Parliament." Each elector must be possessed of at least 500l. capital stock of the company. Four general courts to be held in every year, in the months of April, July, September, and December; and special general courts to be summoned at all times upon the requisition of nine qualified proprietors. The majority of electors present at general courts to have the power of making bye-laws for the government of the corporation; but such bye-laws must not be repugnant to the laws of the kingdom.

The original capital of the Bank, which amounted to 1,200,000l., was, as already mentioned, lent to Government, who paid interest for the same at the rate of 8 per cent., with a further allowance of 4000l. a year for management.

The first charter was granted to continue for eleven years certain, or till a year's notice after the 1st of August, 1705.

In 1697 a new subscription was raised and lent to Government, to the amount of 1,001,1717. 10s., which sum was repaid in 1707, and the capital again reduced to

its original amount. In the following year the charter was renewed until 1732; and in 1713 a still further extension was granted for ten years, or until 1742. On the first of these occasions the capital was raised by new subscriptions to 5,559,995. In 1722 further subscriptions were received, amounting to 3,400,000l.; and in 1742, when the charter was again renewed until 1764, a call made upon the stockholders raised the entire capital to 9,800,000l. A further call of 10 per cent. upon this amount was made in 1746. The charter was again renewed until 1786; but previous to the expiration of this term, was continued until 1812, a call of 8 per cent. having been made in 1782. In 1800 the charter was further extended until twelve months' notice after the 1st of August, 1833; and in 1816 the directors were empowered to appropriate a part of their undivided profits among the proprietors, by adding 25 per cent. to the amount of their stock. These successive additions raised the capital of the Bank to 14,553,000l., the whole of which amount was, as it was raised, lent to Government. At the renewal of the company's charter, which was granted in 1833 (Act 3 & 4 Wm IV. c. 98), a provision was made for the repayment, on the part of the public, of one-fourth part of the debt due to the Bank. At each of the times before mentioned for the renewal of the charter, some advantage was given by the Bank to the public, in the shape of an advance of money at a low rate of interest, or without any interest. At present, the rate paid by Government for the Bank capital is 3 per cent. per annum.

From its first institution, the Bank of England has discounted mercantile bills. The rate of discount charged fluctuated at first, but was usually between 4 and 6 per cent. In 1695 a distinction was made in this respect, in favour of persons who used the Bank for purposes of deposit: for such persons inland bills were discounted at 4, and foreign bills at 3 per cent.; while to all other persons the rate was 6 per cent. upon both descriptions of bills. After that time the rates were equalized to all classes, and fluctuated between 4 and 5 per cent. until 1773, when 5 per cent. was fixed as the rate of