The Montgomery advertiser., 1904-05-01

1 transferring portions of their credit at the bank from one to another was so
 much more convenient than paying their bills fn specie that the new system rap- idly became popular. Practically this was
 banking on the security of a loan to the government in the same way as under a
 national banking system. Genoa In 1920
 founded a similar bank. and in l6os the
 bank of Amsterdam was started to obvi- ate difficulties arising from the accumu- lation of light-weight coin in the exten- sive foreign trade of Holland This bank
 received all coin at it's standard value and credited the amount on its books
 and the worthy Dutch merchants found these credits obviously much more con venient to handle than the actual money which they represented.
 In England the first bankers were the Jews who came over with William the Conqueror and doubtless financed the conquest. and later the Lombards. who came from Italy as goldsmiths and whose name survives in Lombard Street. London. As these Lombard goldsmiths accumulated money they naturally be- came source for dispensing it and in the 17th century we find them not only lending money on collateral but collect ing rents for customers. placing the mon- ey on deposit and paying interest for the use of 1t in their own operations. In fact our modern use of notes and checks originated with these 17th century Eng fish bankers and the Englishman of the time instead of drawing a check on this bank drew check on his goldsmith. And private banking under their management proved of such benef1t to English com mercial conditions that in 1894 the Bank of England was founded as it's direct outcome.
 The law under which the charter of this first Bank of England was renewed in 1S44 represented, of course, all the knowledge of banking principles that had accumulated in England since the time when the goldsmith began collecting rents and paying interest. Tn other words, there had been evolved the mod ern method under which a large sum of money may be accumulated in a sin- gle depositary. each fraction of the whole properly credited to each depositor, and business. in all It's complexities, carried on by slips of paper representing yet other fractions of the sums deposited. Many other banks had sprung up mean time. some of them private banks and others joint-stock affairs in which many of the lineal descendants of the Lombard goldsmiths united to furnish capital and share profits. The banking act of 1S44 regulated the DuSineSS or all these banks. The amount to which each bank was en- titled to circulate notes was fixed by law and the details of the modern system definitely settled. the basic problem of all such legislation being to insure that no bank shall issue credit which is not represented. or which cannot be repre- serted at short notice. by ready money.
 When the war of the Revolution broke out in America the colonies had no bank. Paper money had on several oc- casions been issued by colonial treas uries-the first case being in 1890 to aid a Massachusetts expedition against Canada---and there had been several banks for this purpose, in which the subscribers stood as security, either in person or as represented by taxes. for the credit represented by the paper certificates. But this paper money, like many early experiments in finance, ob- tained little general confidence and rapidly depreciated until in 1740 Par liament forbade the existence of any banks whatever in the colonies. At the commencement of the Revolution, therefore, Congress had no money. Millions of dollars of paper money