whether the two parties who have dealings with each other, keep their accounts with the same banker or with different bankers; for, as the bankers exchange their cheques with each other at the clearing-house, the effect, as regards the public, is the same. The deposit system might thus, by means of transfers, be carried to such an extent as wholly to supersede the use of a metallic currency. Were every man to keep a deposit account at a bank, and make all his payments by cheques, money might be superseded, and cheques become the sole circulating medium. In this case, however, it must be supposed that the banker has the money in his hands, or the cheques would have no value.

Since 1825, the following facilities have been granted by the Bank of England to those who have deposit accounts; or, as they are called, "drawing accounts" at the bank :

1. The bank receives dividends, by power of attorney, for all persons having drawing accounts at the bank.

2. Dividend warrants are received at the drawing office for ditto.

3. Exchequer bills and other securities are received for ditto-the bills exchanged, the interest received, and the amount carried to their respective accounts.

4. Cheques may be drawn for 51. and upwards, instead of 10. as heretofore.

5. Cash boxes taken in, contents unknown, for such parties as keep accounts at the bank.

6. Bank notes are paid at the counter, instead of drawing tickets for them on the pay clerks as heretofore.

7. Cheques on city bankers, paid in by three o'clock, are received and passed to account the same evening.

8. Dividend warrants taken in at the drawing office until four in the afternoon, instead of till three as heretofore.

9. Credits paid into account are received without the bank book, and are afterwards entered therein without the party claiming them.

10. Bills of exchange, payable at the bank, are paid with or without advice; heretofore with advice only.

11. Notes of country bankers, payable in London, are sent out the same day for payment.

12. Cheques are given out in books, and not in sheets as heretofore.

SECTION IX.

BANKS OF REMITTANCE.

IN the infancy of commerce, all trade was carried on with ready money. Before good roads are formed, and posts are established, trade between distant places is carried on by merchants, who associate together in considerable numbers, and meet at fixed. times at particular places, whence they commence their journey to the country with which they intend to traffic. When arrived at the place where the market is held, they dispose of their goods for ready money; they then lay out their money in the purchase of other goods, with which they return. Such was the practice with the merchants of the East, who formed the immense caravans that formerly traded between Europe and India; and such is the practice of similar caravans that now trade between Egypt and Mecca. In such cases all the transactions are carried on with ready money. The bankers, if such they may be called, are mere money changers, who exchange the money of the country in which they live, for the money of other countries.

The labour of carrying money from one country to another was considerably diminished by the invention of bills of exchange; but the same mode of remittance was continued even in England, until a very recent period, with regard to the transmission of money through the provinces. When a country is considerably improved, good roads are established, and places hitherto obscure become seats of manufacturing, and agricultural industry; an interchange of commodities will take place between the provinces; the produce of one district will be transported to another, hence will arise the necessity of having some means of transmitting money in payment of these respective commodities, and banks will consequently be established. It is not the banks that give rise to the trade, it is the trade that gives rise to the banks: though, after the trade is established, the introduction of a bank extends the trade.

The most effectual means of transmitting money throughout a country is by an extensive establishment of banks; banks transmit money by means of their agencies, by means of their branches, and by means of the circulation of notes.

First.-Banks transmit money by means of their agencies. This is the way in which it is carried on by the country bankers. Each country banker employs a London agent to pay his notes or bills, and to make payments in London; and, on the other hand, to receive sums that may be lodged by parties residing in London for the use of parties residing in the country. As each country bank is thus connected with London, it is virtually connected with all the other banks in the country; as far, at least, as concerns the transmission of money.

Money is remitted from London to a country town, by being paid into a London bank, to the credit of the country bank, for the use of the party who resides in the country. Money is remitted from a country town to London, by being paid into a country bank, to the credit of their London agents, for the use of the party who resides in London, or by remitting to the party a bill drawn by the country upon the London bank. Money is remitted from one country town to another by paying the money into the country bank, to be paid by their London agents to the London agent of the country bank established in the town to which the money is to be remitted, or by sending direct to the party a bill drawn by the country upon the London bank, which bill will be discounted by the bank established in the place to which the bill is sent.

Secondly.-Banks remit money from one place to another by means of their branches. Money is received at the head office for the credit of any branch; and money is received at each of the branches for the credit of the head office; and letters of credit are also granted at every branch upon all the other branches. The Bank of England transmits money from London to a branch; and, vice versâ, for only the charge of postage. The branches also draw bills upon the parent establishment at fourteen days' date, without any charge.

Thirdly.-Banks remit money from one place to another by means of their circulation. Every bank of circulation will necessarily become a bank of remittance, whether it carry on the remitting of money as a branch of business or not. Some of the notes which are issued, will be sent as payments from one place to another. This will be more frequently the case if the notes are payable at any place besides the place of issue, or if the bank that issues them has credit over a great extent of country: thus, Bank of England notes serve the purpose of

remittance all over the kingdom. They are usually cut in halves and sent by post, one half being retained till the receipt of the first is acknowledged. The issue of bank post bills, payable seven days after sight, and granted in favour of the party to whom the payment is made, has still farther increased the efficiency of the Bank of England as a bank of remittance. The extent of the remittance of any place must depend in a great degree upon its trade-that is, upon its exports and its imports. Money must be sent from a place to pay for its imports, and money must be received in exchange for exports. Both these branches of remittance, as far as regards provincial towns, are effected through the banks. Exporters and importers, residing in a city or town, do not meet together, like the merchants engaged in foreign trade, and traffic from their bills, but both parties go to the bank. The exporter draws bills, which he discounts with the bank; the importer obtains from the bank bills or letters of credit, which he remits in payment of his imports. The amount of this kind of business must, of course, depend upon the amount of the trade. Where the imports are great, there will be demand for bills, or other modes of remittance, upon the banker. When the exports are great, bills will be brought to him for discount, or lodgments will be made to his credit at his agents. By comparing the sums which are thus transmitted in different directions, a banker can, merely by a reference to his own books, ascertain the balance of trade between the place in which he resides, and any other place with which it may have commercial intercourse. If he finds his exchanges with the neighbouring bankers are unfavourable, he may infer that the balance of trade is against the place in which his bank is established. And if, on the other hand, the exchanges are in his favour, he may infer the balance of trade is favourable. It will generally be found, that the trade between seaport and inland towns is always in favour of the former. Manufacturing towns and large cities have usually the balance in their favour. It may be observed, however, that the balance of remittances will not always show the balance of trade. With regard to places of fashionable resort for instance, there must be a great consumption of commodities imported from other places, and at the same time there is no commodity exported,-here the balance of trade is unfavourable: at the same time there must be great

.

remittances, in money, to the parties residing there, to enable them to pay for the commodities they consume. Thus, too, when large sums are remitted from England to absentee landlords, or as loans to foreign powers, the balance of remittance may be against England, while the balance of trade may be in her favour.

The remitting of money to London by a country bank, diminishes the currency to that amount in the place where the bank is established. If a person at Birmingham takes one hundred sovereigns to the branch of the Bank of England, and obtains a bill at fourteen days on the parent establishment in London, then there is a banking capital created for fourteen days. If, when the bill becomes due, the Bank of England pay the bill in gold, the banking capital is destroyed. The currency of Birmingham is now one hundred sovereigns less, and that of London is one hundred sovereigns more. During the existence of the bill there were one hundred sovereigns less in circulation, and these one hundred sovereigns were represented by the bill. Some country bankers, instead of drawing bills upon their London agents, reissue the bills they have discounted. By this means the banker saves the expense of remitting the discounted bill to London, and the person taking it saves the expense of the stamp for a new bill.

Banks of remittance encourage the trade of a district in two ways: First, by diminishing the prices of commodities. The facility of conveying money has the same effect upon trade as a facility of conveying commodities. The opening of good roads diminishes the expense of the conveyance of goods. This cheapness in the conveyance causes the commodities to be sold at a lower price. As the imports into the town are sold at a cheaper rate, and the exports are also sold at a lower price at the place of consumption, the increased cheapness in both cases increases the demand, and hence trade is advanced. The cheapness of conveying money operates in the same way as cheapness in the conveyance of goods. After the goods are sold, the money must be transmitted. The expense of remitting the money, like the expense of conveying the goods, must be regarded as an item in the cost of production, and be taken into account in fixing the price at which the goods must 'be sold. Banks remit money at a less expense than it can be remitted in any other way. Hence the merchants are enabled