select the borrower. There is no truth in banking more cardinal than this, none that requires to be more deeply impressed on the mind of every trader and every banker.

Yet the part which the banker plays is very important. He neither created that wealth which his depositor sold, nor does he touch that other wealth which he enabled his borrowers to purchase; but it signifies immensely to what kind of borrowers he transfers the power of buying, by authorising them to draw cheques upon his bank. On him and his brethren it mainly depends whether the men who acquire the wealth of the nation, its stock of commodities which they reach. by the banker's agency, will employ it wisely, by applying it to processes which reproduce its consumption, or will waste and destroy it in prodigal expenditure, or unskilful trade, or reckless speculation, or in creating an excess of fixed capital which will not for many years replace its cost of production. This is the sole range of the banker's action. Omitting the capital which a joint-stock company puts into a bank, the banker possesses no capital, except his premises and any coin which may be in them, however much commercial and monetary literature may ascribe capital to banks. Lines and names in ledgers, cheques at the Clearing House, debts due to depositors, debts due upon bills by borrowers, are neither wealth nor capital. They are words and nothing more. Incorporeal property, under which these kinds of written words have been summed up, is not wealth; it is merely a collection of title-deeds, but from which the reality is absent. The corpus is not in those

all creditors, this tainting of all trading with gambling by the use of a tool which refuses to do the one work it was invented for performing, what assignable motive can it have?

One motive it has in almost every case-what Mr M'Culloch calls "the enrichment of one part of society at the expense of another." We cannot do better than listen to his description of the process adopted to effect this object. "Directly to alter the terms of contracts between individuals would be too barefaced and tyrannical an interference with the rights of modesty to be tolerated. Those, therefore, who endeavour to enrich one part of society at the expense of another find it necessary to act with caution and reserve. Instead of changing the stipulations in contracts, they have resorted to the ingenious device of changing the standard by which these stipulations are adjusted. They have not said, in so many words, that 10 or 20 per cent. should be added to or deducted from the debts and obligations of society, but they have, nevertheless, effected this by making a proportional change in the value of money."*

commonly urged in defence of inconible bars appeals to necessity, the political The State is in sore want of of taxation has been reached; ent do at such a time but proe for the safety of the nation,

be made good at some future vertible notes it pays no interest by an increase of the ordinary

er Money and Banks," J. M'Culloch.

National Debt an increased taxation would have been unavoidable. This may be so; at a moment of danger such a proceeding may admit of some excuse. But it should never be forgotten that the harm inflicted by such a currency goes on uninterruptedly year after year; it never stops; it is always working fresh injury. It goes on persecuting society at every turn. It poisons every sale as time rolls on, every exchange. Overwhelming necessity may extenuate the imposition of so easy but so vicious a tax. But the pressure once over not a day should be lost by any Legislature which has any knowledge of the nature and working of money, to arrest the plague and sweep away the inconvertible paper, which it felt forced to have recourse to in the hour of danger.

TE LEVE TOW Piet he gear inancai stiucon of more times Janking Isagency or earning Ae al-mportant service in vinci viisation legends

he exchange of ammodities pusi by fifferenc nakes in the fundamentai princicie tivisen of employments Thus i fos e same vork as noney ir currency: Janking and currency are va fifferent machines for performing the same function. They boch transfer goods and property from the hands of one perBon to Ficse of anctier That is their one and only task. They do nothing else, and this is a truth sadly ungerceived, and yet one which cannot be too fly graced, if light is ever to penetrate into this region. They each employ two operations to complete one transaction. The farmer buys three sovereigns with a sheep, and then with those sovereigns he purchases quano; a sheep has been exchanged for guano through the intermediate agency of money. In precisely the same manner the farmer again seils a rick of wheat for a cheque or bill, and his banker with that cheque enables a merchant to buy tea. Wheat has been exchanged for tea by the help of certain writing within ks. There is no difference whatever in the essence

process, though, of course, the mechanical nery actually employed in each case varies in

detail. Banking and money are purely tools of exchange, and nothing else.

But banking is not money nor currency of any kind. Endless confusion is generated on every side by this fatal misconception. Money does its work by means of a valuable metal; banking employs for its tools words written on pieces of paper called bills and cheques, which give legal claim to the metal called coin, and for which the courts of law will, if need be, compel that coin to be given. Thus debts expressed on paper are the tools with which banking works. Some little money it touches, as every business must; but both for banking and for the collective trade of a highly commercial country, coin, money, is absolutely nothing but its small change. Many regard the cheque and the bill as money, equally so credits opened in banking accounts; but if they are money, then farewell to all possibility of understanding what money is. Upon such ideas, a letter must often be regarded as money; for many are the payments which a banker effects without a bill or cheque, in compliance with the instructions of a letter. To jumble up into one heap coin, notes, money, banking, currency, cheques and bills, is to refuse to understand what are their natures and manners of working.

We have asked and answered the question, What is money?-let us do the same for a bank. What is a bank? A banker is an intermediate agent between two principals; that is the very essence of his action. He is as truly a broker as a tea-broker in Mincing Lane or a cotton broker in Liverpool. Like them he brings a seller and a buyer together, or rather, which is the same thing in substance, a lender and a borrower ; and