, 1875-01-10
THE CEECK-RANK SYSTEM.

There is an institution in London known
| as the *Check Bank, which has had an e1-
istenee of something more than year. Tia
system upon which it does its business Is
| novel. Whenever it receives deposit, it is
sues checks Of various denominations to the
depositor, WHICH are equal in the aggregate
to the amount deposited. These checks are
payable upon the Endorsement of the holder,
and are issued to be used q currency. Tho
inducement to depositors IS the return OF
checks in small and convenient amo ants,
which may be sent away in payment Of ac-
counts, the bunk having established COT.
respondence with 9S| banks in the Cnite4
Kingdom and 596 abroad The bank c1akcs
its money BY placing the funds it receives Cd
deposit in. other banks which pay interest
thereon; the longer the checks circulate,
therefore. the more money the Check Bank
makes The scheme is admittedly expert
mental; and, while there are indications of
its enlargement and extension, We c7nnct
help regarding the system as defective and
dangerous. The points which Occur tc us in
the consideration Of the subject may be Lrieay
stated as folo17s:
l. II the system is to be practical and gen.
eral, these checks will become circu1 .ting
notes. As such, their validity depends solely
on the individual honesty and business ma,-
egement of the men who issue then. 4
failure in either respect would instantly con-
vert them into worthless shinplasters. An
extension OF the system throughout any
country would be An element Of panic a. any
time Of commercial t1ial and financial strin-
gency.
2. If they do not become currency for
general circulation, then they foil Of their
purpose, and are in no wise IN Improvement
upon the present medium Of exchange fur
nished by the regular bankers of the country
They simply take the place Of certificates Of
deposit, bills Of exchange, or certified checks,
which can be purchased from any bank doing
general business, and used in the payment Of
accounts at distance.
8. The security offered for these circulat-
ing notes is not Of character TINT ought to
gain public confidence. The money depoat-
ed to offset the issue Of these checks Is placed
in other banks to drnw interest. There Is
constant temptation held out to the mana-
gers Of the Check Bank to place their fun:ls
where they can get the largest rates on de-
posits, and, as rule, the banker who ofe-s
the largest rate of interest on deposits ia ths
least able to pay on demand in time OF gener-
81 financial distress.
1. It these checks become currency (which
is the sole purpose Of their issue, and an that
distinguishes them from other bank-checks).
they produce an imitation precisely to tbs
extent to which they are issued The money
which they represent is reissued by the banks
with which it is deposited on interest, and
circulates alongside of the *sprivate curren-,
cy." To the extent of the imitation, therefore,
it will contribute TO the fuctuation and in
stability Of the general currency, and, in that
it will be an unmihgated evil. The
experience Of England as commercial ma
ion has been that, the larger the business, tho
mailer the proportion Of actual currency 70.
luired to transact it. The issue Of ctrcu-
ating checks is in direct contravention Of
his experience.
g. This check currency is neither 80 sate
or transmission as postal orders, nor so well .
Projected against counsar1elts rs pauA-lSsoen'
+ it gets into anything like general circula-
ion, it must be indorsed in blank, and ona
night with equal safety inclose bank-nots
n an envelope to send it away. The eoun-
erfciters would have easy work; for, after
printing the forms, the signatures could Be
eadily initiated, aud the necessary variations
n the appearance Of different checks would
70 Of great help in the circulation Of coun-
erfeits.
Altogether We cannot see anything N the
ystem which commends it to imitation II
ppears to be one Of those novelties which
re constantly evolved out Of the visionary
esire 80 many young msz entertain Of doing
1ings infinitely better than the accumulated
xperisncs Of ages can suggest. It may bs