Loading ...ESSAY ON BANKING
BANKS are by far the most important of all our commercial establishments. They are the fountains of our currency, the depositories of our capital, and at once the wheels and pillars of our trade. Business to any great extent could not be carried on without them. All who have cash transactions of any kind are more or less dependent upon them. The landed proprietor finds them a convenient place of deposit for the ready money he possesses, or a useful resource in case of need. The capitalist, when he deems them safe, can lodge his money with them, receive interest for it, and have it ready when the chances of trade or changes of property may throw a desirable purchase in his way. Merchants and traders of every denomination are enabled through them to send money to, and receive it from the most distant places, to raise money when in want of it upon the Bills which they receive from their customers, to have those Bills presented for payment through a channel which in general secures their being duly honoured, and to deposit in them those sums which any particular occasion, or the current demands of their business require. Their Promissory Notes, also, furnish the country with a useful and convenient circulating medium, and are in the hands of every one.
They are, therefore, intimately connected with every class of society. * Every person who has any thing to do either with capital or money is interested in their stability. But the capitalist, merchant, manufacturer, and tradesman, and all who have large payments to make and receive, are continually under the necessity of trusting them in amounts, the loss of which might prove their utter ruin. They have besides daily to confide in them for the negotiation of Bills and advances of capital, which, in commercial transactions, are continually required.
On this account, a very deep interest is felt in the welfare of Banks. Nothing can in any way affect them without exciting the immediate attention of the public, and (if it involve their credit) without producing the greatest possible agitation and alarm. Thus when the slightest apprehension is entertained respecting their solvency, however groundless it may sometimes prove, a run upon them immediately takes place. That is, hundreds of people immediately crowd the doors of the Banks, to demand payment of the Notes they hold, or to withdraw that money out of their hands, which they have deposited with them. This puts a stop to their usual Banking operations. People in trade cannot receive that accommodation upon which they have relied, upon which the regularity of their payments, and, consequently, upon which their credit, depends ; and no person can take their Bills upon London, for the purpose of remitting money to meet their engagements at a distance (the only mode by which they can make such remittances), without placing their money in a state of peril, which they cannot ascertain to be groundless, until the run upon them is over. All is, therefore, confusion ; and the whole community is thrown into a state of apprehension and alarm, which may be better conceived than described.
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