The Fairmont West Virginian. (Fairmont, W. Va.) 1904-1914, 1913-06-16
THE HISTORY
OF BANKING
AN EXCERPT FROM PAPER READ
BY HON. HENRY G. DAVIS At
MEETING OF WEST VIRGINIA
BANKERS ASSOCIATION.

In oldea times money changers and
more recehtly goldsmiths were the or.
iginal bankers.
Coins are Of great antiquity: used
before the Christian era and largely
by the Romans.
Paper money is OF comparatively
recent origin. 1t is said. however. to
have been used By the Chinese in
1856.
Banks we're originally for deposit
only, and funds could be transferred
but not Withdrawn.
Italy had the first bank-in Ven.
ice in 115G, and continued until the
overthrow OF the Republic by France
in 1897. Second bank in Italy was at
eGnca in 1907; Bank Of Amsterdam,
1909; Bank or Hamburg, 1919: Bank
OF Rotterdam. 1885; Bank of stock
holm. 1865.
United tSates.
"In the days before the Revolution
when money was exceedingly scarce,
private banks were formed in this
country upon real estate security
alone The banks would issue to the
stock subscribers. notes 10 the extent
OF their subscription and take Il mort.
gage therefor upon their land.
During the Revolutionary war the
/ government issued notes known as
Continental Paper, but the long con.
tiHHaace OF the war made their re.
demption impossible and they lost
their value and disappeared from
trade. p
THE first bank was organized by
Robert Morris in 1881. by a charter
granted by Congress to the Bank of
North America, at Philadelphia.
1.-THE Bank OF Massachusetts was
organized In 1881; Bank OF New York
In 1891. These three banks are still
in existence. The Bank of New York
had among its stockholders Alexander
Hamilton, Aaron Burr and Rufus King.
National Banking System.
Created in 1869 as a war measure
10 help the sale of government bonds.
1t provided system OF note issues
based upon bonds as security and leg.
islated other banking issues out OF ex:
Istence by taxing tiem' ten per cent.
1t furnishes stable currency, but with
no adequate provision for expansion
and contraction when needed. The
amount OF money in the, country is not
equal to the business requirements;
1t has not kept pace in volume with
the. Increase in trade. '-. "a
Present State Banks.
'The joint stock banks organized
under the general incorporation acts
the several states are much more nu.
merous than the national banks: have
about the same capital and much larg.
er deposits. They are quite neces.
sary to the proper transaction Of the
business Of the country under present.
conditions, but they are discount banks
and not banks of issue, and have no
way Of increasing the money of the
country.
Aldrich Plan.
The monetary commission organic.
ed by Congress in 1908. with Senator
Aldrich as chairman, made exhaustive
investigations in this and other coun.
tries regarding an improved system
Of banking and currency for the Unit
ed States. They reported n bill which
in Substance provided for Central
Reserve Association, with fifteen
branches to be located in districts TO
be created and these were to be rep.
resentatives OF local. banking associa.
tions. All banks were eligible 10 be
members and stock could be subscrib-
ed only by banks. One hundred mil.
lion dollars OF capital must be paid in
and the entire capital was to be 20
per Cent of the aggregate capital Of
all the banks that were members OF
the association, one-half of it to be
kept in reserve and TO be called for
when needed. The branches could dis
count and rediscount commercial pa
per for members OF local associations.
The National Reserve Association was
TO buy the bonds INV held by the gov
eminent to secure national bank notes
and as presented for redemption. to
issue It's notes In their place. Several
officers are made members ex.ofic.al
OF its board OF directors. Il is to be
the principal fiscal agen, OF the gov
ernfhent, the custodian OF its funds.
the depository OF its receipts. and to
take the place of the present sub.
treasury system. Its deposits and cir
culating notes are to be covered to the
extent of 80 per cent nv reserve nj