BANKS, in commerce, are of three kinds, viz. banks of deposit, banks of discount, and banks of circulation. Banks of deposit have been instituted, 1st, with a view of afford ing security against the loss of money by pillage or fire ; 2dly, for the purpose of affbrding facilities to commercial trans actions, by substitutnig a transfer on the books of the bank, in the place of the actual payment in coin of the sums to be expended ; and idly, for the purpose of establishing a circulating medium equiva lent to coin of a standard weight, as de scribed below in relation to the bank of Amsterdsm. Banks of discount, are insti tutions possessed of capitals, which, with the money placed on deposit, are employ ed in the discounting of promissory notes, bills of exchange, and other securities. Banks of circulation, in addition to the loan of their capitals, issue promissory notes, payable on demand, for such an ad ditional amount as the circulation of their neighbourhoods will easily bear, without rendering themselves liable to more de mands than the specie in their coffers can at any time discharge. Most banks, particularly in the United States, are banks of circulation, and are there almost exclusively owned by incorporated bo dies, chartered for the purpose by their respective states. In England, the great mass of banks are the establishments of one or a few individuals. The facilities which banks afford to commerce, added to the benefits which the countries in which they are situated derive from the substitution of a paper medium for one of coin, are such as have induced the prin cipal nations of Europe and elsewhere to patronise and authorise their establish ments. The bank of Venice was estab lished as early as about the year 1157, the bank of Genoa in 1345, the bank of Am. sterdam in 1609, the bank of Hamburg in 1619, the bank of Rotterdam in 1635, the bank of England in 1694, the bank of Scotland in 1695, the bank of France in 1716, the bank of North America in 1781, and the bank of the United States in 1791.
The bank of .1msterdam was solely a bank of deposit. The chief design of its institution was, to establish a currency, which having a relation to the intrinsic value of coins, without regard to the clip ped, worn, and consequently depreciated currency then in common use, should maintain a permanent equivalency with the standard money of the country. Its capital consisted of the " deposits made by merchants and others of coins, as well foreign as domestic, light or standard, for the intrinsic value of which, without regard to their denominative value, they received a credit on the books of the bank, transferable at pleasure; and as, by law, all bills of exchange for 600 guilders and upwards were payable in bank money, a sound currency, favourable to the ex changes of the city, was regularly main tained. For a particular account of this
bank, see Smith's Wealth of Nations, Book iv. chap. iii.
Bank of the United States. The first institution which bore this title was incor porated by act of congress on the 25th day of February 1791, with a charter to continue until the 3d of March 1811. Its capital was ten millions of dollars, of which two millions was specie, and six millions funded debt bearing 6 per cent. interest, subscribed by individuals, bo dies corporate, &c. The remaining two millions was subscribed by the govern ment, and paid for by a loan made to it by the bank. It had branches at Boston, New-York, Baltimore, Washington, Nor folk, Charleston, Savannah, hnd New-Or leans, at each of which plates the business of the branch, denominated the office of discount and deposit, was conducted by a president and twelve directors, who were annually chosen by the twenty-five directors of the mother bank locatedat Philadelphia. A considerable portion of the stock of this bank was eventually held by Europeans, a circumstance highly be neficial to the country, as the investments thus made constituted a permanent loan of capital to the nation. The plan of this bank was projected by Alexander IIamil ton, the first secretary of the treasury af ter the organization of the government. Towards the expiration of its charter, strenuous exertions were made by the stockholders, and other friends of the in stitution, to obtain a renewal of it, but it was refused by congress, and the bank was compelled to wind up its concerns. This it progressed in by a diminu tion of its loans, and a simultaneous divi sion of its capital; and the result, as far as it has been ascertained, has proved satis factory to the proprietors and to the pub lic. At this period, (September 1816) af ter the whole of the original capital of ten millions has been paid, a balance due the bank of near 400,000 dollars remains un collected, and upwards of 21/0,000 dollars of notes remain yet in circulation. Should all their debts be collected, a surplus fund of 600,000 dollars will be in the hands of the trustees. The dividend of this bank, from its institution to its close, averaged about 84 per cent. per annum.