, 1840-10-17
WHOLE NUMBER SOS.

for payment before AS note is paid, it is evil
dent that the bank cannot fulfil its promises
to deliver capital, without borrowing from
some one else, or without compelling some
OF its other debtor to pay, and what is true
OF AS note is true Of all the other notes
which the bank may discount in exchange
Tor Its own notes.
A, then. it is clear, has not borrowed
capital OF the bank, as all the other borrow
ers did who preceded him. He has merely
borrowed the credit of the bank. And the
question NAV now be very naturally asked,
why should he be willing to borrow the cred
1t of the bank at the rate of SIX per cent.
per annrm, when he has found his own cred
it so good that the bank would take it, as is
proved by their trusting him for sixty days
with one thousand dollars of their hottest
The answer To this question is, that the cred.
1t OF the bank is Of CRATER notoriety than
the credit of A. Every body will trust the
bank, because its capital is known, or assum-
ed to exist, and because every body has
heard Of the bank, and has not heard Of A,
and consequently there are persons who will
trust The bank, who would not trust A;
or, because a confidence exists, that a bank
note will, for an indefinite period, continue
to pass from hand to hand, rs equivalent to
the metal, which, upon its face, it promises
to pay on demand. This universal conf
dence in the credit of the bank it is-in con.
%nection with the known fact, that these
notes will pay the debts due 10 the bank
for the million Of dollars first loaned as
readily as gold and silver which renders them
universally receivable; and as every body
who holds them knows that he can at any
time procure whatever he wishes to buy with
them, no one is in a hurry to send them in
for payment, and on that account they re-
main out in circulation for a long or short
time, by which the bank gains interest,
whilst the holders of its notes lose no more
than they would lose upon an equal balance
kept on hand in gold or silver. But there
is another reason why the credit Of the bank
is worth at least a part of the price which
A pays for it. 1t is susceptible, like coins,
of divisions and subdivisions into very small
fractions, whilst security is afforded for
p%unctual payment by the perpetual success
sion incident to a charter, or by the sur
vivorship OF one or more of several co-part-
ners, and facilities are granted by having
certain hours on each day at which payment
may be demanded, so that no time is lost in
making a second or third call, which would
be very apt to happen with the notes of in
dIviduals not acting as bankers. Perhaps the
certain knowledge Of the fact that banks
during certain hours are to be found open
and ready 10 meet demands without a mo-
ment's delay, does rs much to keep their
notes out in circulation as any thing else;
Tor any one can see. IL there were no bank
ING hours, and if a call might have to be re-
pealed. people at distance would receive
notes with reluctance. and would send them
in for payment before they actually needed
the money. for fear of disappointment on the
dav 1t was wanted.
But II NAV be said that A, when he got his
note discounted, did not wan to purchase
goods by retail, but by wholesale, and that
therefore. he gained nothing by the privilege
he possessed of taking small bank notes.
Why did he not then purchase directly by
using his own credit and giving his own
note, instead of giving the bank one per
cent. the discount of his note for sixty days,
for the use of their notes! answer for the
very simple reason. that he found that he
could purchase goods with the credit Of the
bank upon better terms than he could upon
his own credit. Upon no other principle
would he have gone to the bank for a dis.
ICbuHl, lOI SuTelt nO uldn "Oulu give one per
cent. to a bank for swapping notes for one
thousand dollars, if the banks notes would
not buy more than his own individual note
at sixty days, for a thousand dollars, would
bug. If it should be said that the object of
A in getting the discount was 10 pay an old
debt, the case would not be altered
The cre1it of the bank is worth to him, in
this case, rs much as in the former, the credit.
or being willing to receive it. because its
notorie'y rendered it universally receivable
by others.
In no case then can the issues of a bank
of circulation constitute capital; and we
think the reader will now be ready to ac-
knowledge that all that a bank of circulation
does effect, is the mere lending Of its credit
to individuals, TO enable them to procure up
on better terms, and in a more expeditions
and convenient mode, the capital Of others,
than they could with their own credit
Whether this facility DO beneficial or other.
wise, will appear hereafter.
A PrcruRE OF TExAs.-A correspondent
Of The Boston Post writing from Galveston