Semi-weekly standard. [volume] (Raleigh, N.C.) 1853-18??, 1857-10-24
The Standard.
Iron the Richmond Eramincr.l


lFrom The Richmond Examincr.l
THE BANKING SySTEM-A RETROSPECT.
lie origin ID modern and humble, and gave no in
dcalion Of the extraordinary growth and influence
which Il WAS destined to attain.
Tie old Bank Of 4msterddm.
II dates back to 1909, when the Bank Of Amster'
dnm vas established. Other banking institutions
preccded il; but they insulated and not imme'
disteiy connected with the systems which have since
sprung up, and which may be distinctly traced to
that bank, which WAS bank Of deposits mere
sorehouse- under the authority Of that
great commercial, metropolis for the purpose Of safe.
keeping the precious METALS the facilitating the vast
system Of exchanges which then centred there
The whole system was the most simple and beauti-
fulthat can be imagined. The depostor on deiv-
erng his bullion coin in store, received credit,
estimated at the standard value the books Of the
bank, and certificate Of deposit for the amount,
which was transferable from hand to hand, and en-.
titled the holder to withdraw the deposit on payment
of . moderate fee for the expense and hazard OF
afe-kecping. These certificates became, in fact, the
circulating medium Of the neutrality-suspicious.,
q It were the hazard and drudgery while the pre-
cious metals, which they in truth represented, gull
der for guilder lay quietly in store without being
exposed to the wear and tear losses incidental to
actual use. II was thus q paper currency was es-
tablished having all the sodty, safety and unifor-
nifty of metallic with the facility belonging 20 that
Of paper. The whole arrangement was admirable,
and worthy OF the strong sense and down right hon
esty of the people with whom it was originated.
Out Of this grew the bank Of deposit, discount
and circuidtion-a great and mighty change, de,
stined TO effect . revolution in the condition Of mod
ern society. A vast sum, not less than fifteen mil
lions Of dollars in amount accumulated and remain
ed habitualy in deposit in the Bank Of Amsterdam
the place Of the returned certificates being con.
stAnty supplied by new depositors With SO vast
standing deposit it required but little reflection to
perceive, that very large portion OF 1t might be
Withdrawn, and that sufficient amount would re-
main to meet the returning certificates; or, what
would be the same in effect, that an equal amount
Of fictitious certificates might be issued beyond the
sum actually deposited Either process, II interest
be charged on the deposits withdrawn, the 6cti-
tious certificates issued, would be q near approach
TO- bank Of discount This once seen, it required
but little reflection to perceive that the same process
would be equally applicable tot capital placed in
to issuing bank notes payable on demand, or bills Of
exchange, or promissory notes having but short
time to run. These, combined, constituted bank
Of discount, deposit and circulation.
Modern ingenuity and dishonesty, would not have
been long in perceivns and turning such advanta-
ges to account; but the faculties Of the plain Begi
an were either too blunt to perceive, or his honesty
too stern to avail himself Of them To his honor,
there is reason to believe, notwithstanding the temp
tation, the deposits were sacredly kept-and that,
for every certificate in circulation, there was q cor
responding amount in bullion or coin in store. 1t
was reserved for another people, either more ingeni
Gus or less scrupulous, TO make the change.
The Bank Of England.
The Bank Of England was incorporated in 1904,
eghty.Hve years after that of Amsterdam, and was
the first bank of dtpoit, discount and circulation.
Ns capital was 81 200 000 six millions Of dollars
consisting wholly Of government stocks, bearing an
interest Of eight per cent. per annum.+ Its notes
were received in payment Of taxes by the govern
ment and the public revenue deposited in the
bank It was authorised to circulate exchequer
bills, and make loans to government.
As bank Of deposit, it was authorised to receive
deposits not only for safe keeping. to be returned
when demanded by the depositor, but to be used
and loaned out for the benefit Of the institution, care
being taken always to be provided with the means
Of returning an equal amount, when demanded
As bank Of discount and circulation, It issued its
notes In the faith Of its capital government stock
and deposits, or discounted bills Of exchange and
promissory notes responsbly endorsed, charging an
interest something greater 'han was authorized by
law to be charged loans; and thus allowing II for
the use of It's credit, higher rate Of compensation
than individuals were authorized to receive for the
use and Inward Of money or capital loaned out
The bank took, in the shape Of promissory note,
the credit Of an individual so good that another,
equally responsible, endorsed his note for nothing
and gave out its credit in the form Of bank note (;
the TRANSACTION Delng obviously, Dut mcrc eACudibe
of credits. Such were the extraordinary advanta.
ges Of this institution, of whith II had an exclusive
monopoly; and It is not surprising that, from 1904,
when the Bank Of England was established, to 1897,
when Il first suspended-it had increased its capital
and It's action from fl,20o,00O to Ell ,000O 600
frop six to fifty.ive millions Of dollars.
II made these profits on an egregious popular dc.
lusion Its notes universally regarded as re-
presenting gold and silver, and as depending on that
representation exclusively for their circulation; as
much SO as did the certificates Of deposit in the
original Bank Of Amsterdam. No one supposed that
they could retain their credit for moment after they
ceased to be convertible into the metals on demand
nor were they supposed to have the effect Of ncreas
ing the aggregate volume Of the currency, and there
BY Of increasing prices. They completely
identified in the popular mind with the metallic cur
rency, If every note in circulation had laid up in
the vaults Of the banks equal amount, pound for
pound, into which all its paper could be converted
the moment it was presented AN this was delu.
sion. The issues ofthe bank Of England nere7 did
represent, from the first, the precious metals In
stead Of the repreeat2,ion, its notes in reality
the substitute for COIN Instead Of being the mere
drudges, performing all the outdoor service, while
the coins reposed at their in the vaults of the
bank, free from and tear and the hazard oil
loss or destruction did the certificates Of deposit
in the original Bank Of Amsterdam, they substitut.
cd, degraded and banished the coins Every note
circulated became the substitute Of SO much coin
and dispensed with il in circulation, and thereby de
preciated the value Of the precious metals, and in
creased their consumption in the same proportion
while 1t diminished in the same degree the supply
by rendering mining less profitable. The system
assumed gold and silver the basis Of its crcula
ton; and yet by the laws Of it's nature, just as
increases its circulation, in the same degree tn
foundation on which it stood weakened, crumblet
I'D vanished. Thus the germ Of destruction wa
implanted in the system at its birth, has expanded
with its growth and must terminate finally in it
dissolution. The conflict between bank circulation
and metallic is mortal one or the other must peris
in the struggle. Such is the decree Of fate- is ii
reversible.
Modern Banks