Year: 1861

y number Ol ltIspus WIZ nave llOhSD W
lend on interest find several advantages in


clubbing together and putting their money
into common fund they constantly
form an association with this aim, and
such an association is called a bank. The
management of the funl is intrusted TO
experienced business men who are ac-
quainted, or who can make themselves
quainted, with the wealth or poverty of
persons applying for the use Of any part of
the fund, in order that it may be loaned


to those who are able to reray it again with


the interest agreed upon for its use.


These associations generally have money
coming in and going out daily, and it is


necessary to provide iron boxes or strong


stone closets for its safe keeping, aud


when these are provided, any person in


the community who has sum Of money


which he does not want Immediately, is
apt to ask the favor of having it placed in
the bank vaults til he wants it. The
number of persons who thus have money
which they do not require for immediate
use, and the sums which are constantly
left with the various banks for safe keep
ing is surprisingly large. The managers
soon find by experience that as portion
of these deposits are Withdrawn Others are
brought in, and there is thus a large
amount constantly on hand. As business
men of property, who can make safe notes,
are constantly calling for more money


than the capital of the bank amounts to,


the directors loan a portion of these de-
osits, taking care always TO keep enough


money on hand to pay any depositors who
are likely to call for it, As the bank pays


nothing to tie depositors for the use of
their money, and rs they get interest from


those to whom they loan it, they are gen
orally able to make profit in this way


more than enough TO pay the expenses Of
rent, clerk hire, &c.


Besides ihc interest obtained cor money
which is left with them for safe keeping,
the banks have another source of profit in
their circulation. After the credit of GER
tain banking companies became thor
oughly established, the discovery was made
that they could buy gold and silver, or
other articles of value with their notes,
and if they made these notes in small
amounts, they would pass from hand to
hand in exchange for merchandise, the
same as coin. and that a certain amount of
them would remain constantly in circula=
tion. Banks accordingly exchange their
notes not on interest with merchants and
other business men for tn cir notes on
and thus make q considerable T.
profit. OF course the banks must keep
some specie on hand to pay any of these I
notes that may be preseuted for payment, 4
as they are all constantly due, heing pay
able on demand. As the bank obtains 70
interest for the specie which is in its
vaults, there is n constant temptation to .
dimish this below a safe sum, and the |
numerous failures of banks to pay their
notes when they were presented prompted /
the Legislature of this State TO require
every bank issuing notes to deposit sccu-
rity for their payment with an officer Of
the State. As the security required con-
Bists of State stocks, mortgage, &C., which
draw interest, and as the bank notes Or aw
no interest, the banks make the profit on
their circulation in the same way that they
did before the passage of this useful law.


When banking co'apany loans money
TO merchant, it is customary to take out
the interest at the time of moking the
loan, counting out the interest or discount.
ing it as j. is called; hence the term dis.
has come to be applied to the
transaction of making the loan, and the
whole amount of money out at interest is
embraced in bank returns under the term
Of discounts. The banks Of this State arc
required to publish o statement weekly Of
their average deposits, circulation, dis
counts and specie, for the week The
statement for the weak ending February
%, of the condition of the banks Of this
city, is as follows:


capital soy 1862