Loading ...PREFACE BY THE AUTHOR
” The best security against management of banking affairs must ever be found in the capacity and integrity of those who are entrusted with the administration of them, and in the caution and prudence of the public ; but no legislative regulation should be omitted which can increase and insure the stability of establishments upon whiuh commercial credit so much depends.” Speech from the Throne in 1837.
The present work professes to treat of banking as an art. ” Art is the application of knowledge to a practical end.”* The practical end of banking, as of all other trades and professions, is to get money. This book treats of the means by which that end is obtained, points out the rules to be followed, and the errors to be avoided, shows how these rules are applied by various banking institutions, and in different districts of the United Kingdom, exhibits the qualifications necessary to the party by whom these rules are administered, and describes those moral virtues which are as indispensable as professional knowledge to the attainment of success.
It may be supposed, that in discussing the ” effects of the Act of 1844,” and ” the Laws of the Currency,” I have wandered beyond the limits of practical banking. Bat these matter* are viewed only in their practical results. The principles of banking are deductions from facts. The science of banking is a collection of these principles. It is of importance to have a correct notion of the nature of this science. In the physical sciences, as in chemistry and electricity, we often discover a principle, and then apply it to a practical end. But in banking, and in political economy, generally, we first collect our facts, and then ascend from facts to principles. Hence books, in which are described the practical operations of banking, and the actual results of legislative enactments, furnish the materials which enable us to arrive at sound principles.
There are several classes of persons to whom I think this book may be more particularly useful.
The first class includes those public men who have occasion to write or to speak upon our banking institutions. Statesmen, authors, and reviewers, however correct may be their knowledge of banking as a science, often fall into mistakes when they attempt to describe its practical operations. Although it must be admitted that the principles of banking may be well understood without any acquaintance with details, yet it is equally true that if a public man have acquired a competent, degree of practical information, his opinions will carry greater weight, and he will be less liable to fall into erroneous conclusions. They, especially, who are desirous of altering the constitution of our banking establishments should be anxious not to weaken the force of their recommendations by making misstatements as to matters of fact . The public have a right to expect that they who attempt to improve a system should be well acquainted with the system they attempt to improve.
The second class are those who are practically engaged in banking operations. Those directors of our joint-stock banks, who may have been appointed chiefly on account of their high character and local influence, may derive from this work some practical information, which will assist them in the discharge of their official duties. Young men, too, who occupy subordinate stations in our banking establishments, may here acquire those enlarged views that will qualify them for higher appointments. One object of this work is, to aid the formation of good practical bankers. Even to experienced bankers, books on banking are useful, not only from the information they impart, but from the impressions they produce, and the recollections they awaken. In banking, as in morals, we often go astray, more from want of firmness than from want of knowledge. We have all need to be reminded f the importance of a steady adherence to sound principles. And the more frequently the right path is pointed out to us, the less likely are we to wander into those which are forbidden.
The shareholders in joint-stock banks are a class to whom the subject must be of the deepest interest. Upon the wise administration of their respective banks will depend the amount of their dividends and the safety of their capital. This . book professes to show in what way this wise administration may be secured. Shareholders may here learn how to judge of the conduct of their directors, and (what is of no less importance) how to regulate their own.
To all persons who “keep bankers,” it must be useful to know by what rules bankers manage their business. They will thus be able to conduct their account so as to give satisfaction to their banker. And they will be able to judge how far be may be disposed to grant them such assistance as they may occasionally require. A large number of persons, especially in London, have not yet discovered the advantage of keeping a banker. They imagine that banks are merely places in which the opulent deposit their superfluous riches. The perusal of this work will be sufficient to show that the advantages of banking are not confined to the wealthy.
I do not know that I can promise much amusement, except to those who find amusement in the pursuit of knowledge. Banking is considered a dry subject. So are all subjects until they are understood. I think I may say, that neither in the matter, nor in the style, will my readers find anything here which they cannot understand. They who wish only for such a general acquaintance with banking, as in the present day every man of education is expected to possess, may read the first hundred and thirty pages, omitting the third, fifth, twelfth, thirteenth, and fourteenth sections. They may then consult their own taste as to whether they will read any other portions of the work. Should they do no more than this, they will obtain as much knowledge of practical banking as they will probably require for the purposes of general society, even in the company of bankers.
This book is designed to be useful to the public at large, by circulating that kind of information, which, as it becomes more widely diffused, will tend to prevent a recurrence of those evils that have in too many instances resulted from the bad administration of some of our banking institutions. To give useful information to the public has been the aim of this and of all my other works. When this book first appeared, there existed no other publication that described in detail the interior operations of a bank. I am happy to say, that since that period several valuable works of a similar kind have been published. And we are now presented monthly, in the “Bankers’ Magazine,” with excellent articles on practical banking, written chiefly by practical bankers.
The first edition of this work was published in May, 1827 ; the second in January, 1828; the third in December, 1834; and the fourth in October, 1836. In the beginning of the year 1847, I determined to publish a new edition; but before I had prepared it for publication the pressure came, and Parliamentary Committees were appointed to inquire into the causes of the distress. My position required that I should make myself acquainted with the evidence given before those committees. I wrote out my reflections on some portion of this evidence, and have embodied them in the present work. Hence one cause of the increased size of the book, and of the delay which has attended its publication.
I have been so long known as a writer on banking, and my writings have met with so muck acceptance, that it is not necessary I should enumerate any claims I may be supposed to have on public attention. But there is one claim that gathers strength by time, that is, experience. And in publishing a new edition of a practical work, it may not be inappropriate to state, that it is now upwards of thirty-six years since I first engaged in the business of banking, And I ha^ve been above twenty-two years a manager. I am thankful to acknowledge, that during those twenty-two years I have not had one unsuccessful year.
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