we are told by an old chronicler of the quaint and curious that in ancient times a number of hebrews scattered in the cities along the shores of the mediterranean conducted a most profitable banking business without the use of capital, by drawing one upon the other, in a perfect circle, the draft upon one being taken up by the next banker in the series, and so on ad infinitum.

perhaps it will not do to scrutinize this story too closely, but there are many instances of almost as odd and ingenious devices in the history of banking. it was not until within a comparatively recent period that banks began to issue circulating notes. the early bankers were for the most part merely lenders of money, and this species of banker was called into existence very early in the world’s history. in fact, he was the natural result of the invention of money.

“a simple invention,” says carlyle, “it was in the old world grazier, sick of lugging his ox about the country until he could get it bartered for corn or oil, to take a piece of leather and{456} thereon scratch or stamp the mere figure of an ox (pecus), put it in his pocket and call it pecunia, money. yet hereby did barter grow sale; the leather money is now golden and paper, and all miracles have been out-miracled; for there are rothschilds and english national debts; and whoso has sixpence is sovereign to the length of sixpence over all men; commands cooks to feed him, philosophers to teach him, kings to mount guard over him—to the length of sixpence.”

it has been claimed on behalf of the bankers’ craft that they date back to abraham, because it is recorded that he weighed out four hundred shekels of silver as the purchase-money for the cave and field of macpelah wherein to bury sarah. but this is rather far-fetched. livy, however, writes of the tables of the money-changers in the roman forum existing 300 years before christ, and later latin writers refer to deposits, checks and drafts, with all the familiarity of a financier of the present day, as if they were in general use. in these days, when the capitalists of the world are puzzled to invest their money safely to yield them three per cent., it is refreshing to remember that the old greek bankers or money-lenders exacted as much as thirty-six per cent. a year from the spendthrift youths or embarrassed merchants of that day. aristophanes, in one of his comedies, makes a money-lender bitterly bewail the fact that he has only been{457} able to get four per cent. on his loan. the greek bankers used the temples as safe-deposit vaults for the storage of their treasures, and seem to have taken the priests into a sort of partnership. something of the same sort probably prevailed among the jews, and it is not difficult to believe that they were usurious, for the saviour, when he overturned their tables in the temple, called them thieves—“my house shall be called the house of prayer, but ye have made it a den of thieves.”

during succeeding ages, however, the methods of banking seem to have been lost until re-discovered and re-established by the jews. a bank was established at venice in the latter part of the twelfth century, another at genoa in 1345, and they came into existence in several of the dutch cities early in the seventeenth century. all of these were, in a sense, state banks, lending money to the state, and exercising their functions under its authority and protection. the jews, and the lombards, who had been taught in their schools, were almost the only money-lenders of europe from the twelfth to the fifteenth century.

the first money-lender in england who at all approaches our modern idea of a banker was william de la pole, a shipping-merchant of hull, who loaned edward the third large sums to carry on his french wars, and in return the king{458} made over to him the collection of customs and internal revenues. he collected the royal rents and acted as paymaster of the army, and in a general way became the royal banker. naturally a title was conferred upon him.

the prefix of “sir” was subsequently given to dick whittington, of cat celebrity, for similar services to henry the fourth and henry the fifth. the goldsmiths in those times acted as money-lenders and pawnbrokers. after charles the first grabbed about a million dollars, which they had deposited in the mint for safe-keeping, the nobles began to deposit their money with the goldsmiths, who allowed them interest thereon, and from having the custody of their rents and their income it was a natural step for them to request the goldsmiths to collect the money. the goldsmiths gave written evidences of indebtedness for the sums intrusted to them, and these were often transmitted by the holders in settlement of debt. when one of these goldsmiths speculated unfortunately or his business went wrong, his depositors naturally had to suffer.

losses of this kind paved the way for the establishment of the bank of england in 1694. it was planned by a scotchman named william patterson, who, however, derived many of his ideas from the bank of amsterdam, which was then in successful operation. in return for a loan of twelve hundred thousand pounds sterling{459} to the government the lenders, who organized the bank, were granted certain exclusive privileges, and their concern became the depository of the government money and has remained such ever since. it has now the accounts of many thousand private depositors, pays the interest on the government debt, issues circulating notes, and to a certain extent controls the rate of interest on money in england.

as to the establishment of banking, congressman ben butterworth, of ohio, says:

“in the forces of civilization we find the banker in the forefront. it was a banker that first taught the world the maxim of an honest commerce. it was the bank of venice that was the first to arbitrate commerce and control the seas; it was a banker that first taught a nation that the public fidelity was the right basis of all successful effort in the business world. for six hundred years venice maintained unstained her honor, elevating the civilization of the world. in course of time she was succeeded by amsterdam and antwerp, their bankers honoring every check and paying every piece of paper, teaching the world that there was a giant in trade and commerce capable of strangling a nation. the bankers thus brought the world together, made the nations of the earth one man, one commonwealth.”

savings banks originated in switzerland, and{460} were instituted mainly for the benefit of the poor. they were organized by benevolent persons, who received no salaries for their services, and no capital was required. the purpose was rather to induce working-people to save from their earnings something for a rainy day or to provide for their old age, and consequently but little effort at first was made to secure large earnings on the deposits. the first we can learn of in switzerland was established in 1805. a dozen years later they were organized in scotland and england, and shortly after in france. in this country the first was organized in boston in 1816, and within a few years they were to be found in new york, baltimore, and philadelphia, and their success in these centres soon led to their establishment in all the large towns throughout the country. they were chartered by the states, and were held by the state authorities to account for their honest and prudent management. naturally the ideas of legislators in the various states differed somewhat as to the nature and functions of the banks, and hence there was a difference in their organization at the beginning, which subsequent legislation has made still more marked. there are now in existence three different classes of savings banks: the first is of the primitive type, instituted without capital; the second are joint-stock concerns, and the third are of the trust-company type, and{461} transact a banking business aside from the mere receipt and investment of deposits.

as population increased and the banks multiplied in number, and the desirability of establishing these banks became more general, they were no longer required to have a special charter in each instance, but were permitted to organize under general laws. the deposits in these now amount to a thousand million dollars, and the number of depositors in the northern and middle states is about three millions. objection has been raised in some quarters to the joint-stock type of savings bank, on the ground that its deposits must be loaned profitably for the payment of dividends, and that consequently greater risks are incurred. this risk is still greater where savings banks are permitted to do a commercial business, as the paper which they discount may prove inconvertible in a time of commercial depression or in a panic. in some of the states the depositors are given the preference in such circumstances.

mr. t. h. hinchman, a prominent banker of detroit, says: “the change from the purpose and policy of original savings institutions has been progressive, but of questionable character. it was not the acquirement of experience or the result of greater wisdom, but of enterprise by those in pursuit of greater profit. different aims and objects should be under distinct, separate,{462} and appropriate laws. benevolent institutions require different men and other management than those conducted on a commercial basis for profit.” he argues that there should be separate enactments for savings institutions and for trust companies, and indeed a wise distinction is made by the laws of most of the older states. these undoubtedly prove advantageous to all banks and bankers, as they simplify and increase their business. officers of banks doing a mixed business are thereby relieved from error, responsibilities, risks, and cares, and savings depositors escape commercial hazard, and are free from risks caused by mismanagement of persons who advertise as savings banks.

those who remember the frightful confusion that prevailed before the establishment of the national banking system, when the notes of the old state banks constituted a considerable portion of the circulating medium, are among the most ardent admirers of the present system, at least so far as its method for the issue and guarantee of notes is concerned. in those days the laborer often went to his home on saturday night carrying the wages of his week’s labor in the shape of notes issued by banks in half a dozen different states, and when his thrifty wife went out to expend them in purchase of the necessaries of life for her family she would be distressed to find that for some she could get but ninety cents on{463} the dollar, for others eighty cents, and that still others were of too questionable a character to be accepted by the shopkeepers at all. the farmer often received for the fruits of his toil notes of which he could know nothing, and which would be subsequently declared by experts to be worthless because the bank which had issued them was in liquidation, and it was not at all uncommon to find a forged note or two among them, for in the myriad issues of bills of every conceivable design and character of engraving the forger had an easy task.

the present national banking system probably never could have been called into existence except for the difficulties in which the government was involved by the war with the south, for a scheme overthrowing, as it did, so many other systems organized by the authority of states would have met with an irresistible storm of opposition. as it was, the act authorizing it was fought not only by the opponents of the administration then in power, but by men like roscoe conkling, of new york, and senator collamer, of vermont.

mr. logan c. murray, president of the united states national bank of new york city, thus speaks of the national banking system:

“in 1863 the government of the united states, irrespective of state lines, took hold of the bank question and made it a national one, inaugurating{464} a state of perfection which i believe is unparalleled in the history of finance among the nations of the world.

“this child of the war between the states, born in the very travail of the soul of the nation, is to-day full-grown, of five and twenty years, comely, substantial, and has not been disappointing. hard money was scarce in 1861. there had been built upon this limited supply, through the channels of credit, a massive structure; suddenly, as the storm arose, the sky became dark and the curtains of night were let down around state boundaries; with these parcels of credit, known as state currency, far from home, with no foster parent hand near by to protect it, intercourse cut off, we found ourselves depending upon a broken staff which was as chaff in the mighty storm, commercial ruin on every hand, and our shores strewn with the wrecks of a dismembered, useless and faithless medium.

“we found the secretary of the treasury knocking at the doors of our strongest moneyed institutions, asking from them aid in his great distress, appealing to the wisdom, courage, patriotism and resources of an almost forlorn hope. how nobly he was met is a matter of history.

“not, however, until 1863, or two years afterwards, did the national bank system have its birth—born of despair, of want, blood-bought, yea, in the very darkness of that midnight storm.

yet it is but the survival of the fittest. and now let us see after the uses which have been made of the system, and after the unparalleled prosperity which has come to us as a nation under its influence, if the parent of all this prosperity, to a greater or less degree, is to breathe its last—if its strong arm is to be stilled, and if we are to look for something better. shall we wonder that men are bewildered when we look into the future and ask what is to supply the vacuum caused by the decay of the national banking system? i for one answer:

“do not fear, the national banking system is not going to be destroyed. in the fulness of time it will be yet better established.

“let us divide the system into two parts, as it were, and treat them as they may be. first, there is the treasury of the united states, the secretary charged with certain duties, the comptroller of the currency, the executive officer with each of the four thousand national banks in every section of the land reporting to him, responsible to him, and he to the country at large—and by far his greatest responsibility is the care, faithful preservation and safe return to the depositors of the great mass of the deposits of the people made with these institutions. this is one part, and the great part of the system—the care of the deposits of the people and the careful and safe loaning of these deposits to the commercial{466} and manufacturing community by each institution, all under its general supervision.

“now we come to the next part of the business of the system, and that is issuing note circulation. does it occur to you how small a proportion of the circulation of the united states to-day the national bank circulation is? let us say it is about one-fifth part. now let us assume that this shall gradually be cut off, as undesirable as that is; it is gradually declining, while other mediums of circulation are advancing in volume. we must remember that money, actual money, is about four per cent. only of all commercial transaction; credit, and credit alone, supplies the other ninety-six per cent.

“i do not think any national bank or any other bank should emit any note or bill, for circulation without it is secured. is it not true that there are very many national banks in the united states to-day which do not issue circulation, even though banks of a capital of $150,000 and above are required to lodge but $50,000 of bonds with the treasury, and some of these do not take out circulation on those bonds—whereas a small bank in dakota is required to lodge one-fourth part of its capital, say if it is $50,000, it is required to lodge $12,500 of bonds with the treasury, whether it takes out circulation or not? why is it so? if they issue no circulation, then no bonds should be required. if large banks to-day{467} are not issuing circulation on the small amount of bonds required, say $50,000, even though its capital be $5,000,000 (as is the case), then why require one-fourth part of the capital of a small bank to be invested in high-priced bonds before beginning business?

“therefore, repeal that part of the national bank act which requires a deposit of united states bonds from a bank which is to receive no circulation. if a bank choose to lodge bonds, then give it the privilege of issuing circulation on them, as of old.”

the reduction, and now the current purchase, of government bonds, which serve as a basis of circulation for national bank notes, have driven the bonds to such a high premium that the banks some years ago began to surrender their circulation at such a rate as to seriously contract the currency and excite apprehension as to the result. but for the issue of silver certificates, which have largely taken their place, a crisis would, in the opinion of many financiers, have been reached long ago. the profit on circulation was so seriously reduced by the high price of the bonds, on which it is based, that a number of banks in new york city and elsewhere surrendered their charters as national banks and organized under the law as state institutions. they were largely impelled to do this by a desire to escape the restrictions imposed by the national banking laws and{468} the scrutiny of the comptroller of the currency and the officials of his department. the passage of the law forbidding over-certification compelled a number of them to take this course. in august, 1883, the wall street national bank was forced to suspend. an examination by the government officials showed that it had certified checks of a firm $200,000 in excess of their balance in cash and that this was the principal cause of the bank’s failure. the cashier was indicted, but the bank was wound up, went out of existence, and the intention of making a terrible example of the delinquent official, who, however, acted with the approval of the president and directors, appears to have been abandoned.

touching the opposition shown in congress and elsewhere to national banking systems, ex-united states comptroller of the currency john jay knox says:

“the system has been of immense benefit to the government in its disbursements and in funding temporary loans and also in the refunding of its debt which, but twenty-eight years ago, amounted to $2,845,000,000. the national banking system rendered more valuable service to the government than any other human agency in the resumption of specie payments. the national banks held on the day of resumption (january 1, 1879) 125,000,000 of united states demand circulating notes. sixty-two national{469} and state banks in the clearing house of new york unanimously voted to receive the legal tender notes upon an equality with gold, and on the day of resumption the banks of that city, which held $40,000,000 of legal tender notes, did not present a dollar then, or subsequently to this day, for payment in coin. as at the commencement of the war the banks parted with their gold for the benefit of the government, so at its close and upon the resumption of specie payments they relinquished the right of again demanding it, and were well satisfied to receive instead the demand notes of the government, which are redeemable in coin upon presentation. yet, notwithstanding these important services, the legislative department of the government has never been strong in its friendship for this system. the statutes of the government contain very much restrictive and very little friendly legislation toward the institutions which were created by its fiat. a few years ago, when the charters of most of the banks were expiring, it was only after a long contest that an act was passed authorizing a renewal of their privileges. if at any time favorable legislation has been granted by congress, it has been given ‘grudgingly’ and not as a ‘cheerful giver.’

“we have heard much of the surplus and the necessity of the reduction of the revenue. both parties profess to be in favor of such reduction.{470} both parties have proposed to reduce the tax on the ‘filthy weed,’ and both parties proposed legislation granting relief to the whiskey manufacturer and the whiskey drinker; but not one officer of the government, nor one man of either house, has had sufficient courage to propose the lessening or the repeal of the tax on the circulation of the banks, which now amounts to less than $1,700,000 and which is the last of the remaining ‘war taxes,’ except the tax upon the two deleterious articles referred to, which are considered by the leading civilized nations as the most fit subjects for ‘high taxation.’

“yet no class of corporations since the organization of the government have contributed so largely toward the support of the state and the nation, and no class of corporations have ever been so unmercifully taxed as the banking institutions of this country. not only have congress and the different state legislatures imposed high rates of taxation, but the courts of the country, including the supreme court of the united states, composed as it is of able jurists who should be devoid of all prejudice, have construed the questions which have been brought before them with rigor worthy of the bitterest enemy of the system. while other corporations engaged in precisely the same line of business are authorized to do business almost without legislative restrictions and without taxation, the{471} very highest rates that can be imposed are placed upon these institutions, whose only source of profit is the loaning of money at the rates of interest fixed by the same high authority which imposes the taxation. yet, notwithstanding the opposition of congress and the unfriendly decisions of the courts and the bitter enmity of individuals, the system has steadily and rapidly grown in favor, until the institutions organized under it from the beginning number nearly four thousand, some of which are located in every state and territory as well as in every considerable village in the land.”

as the steady reduction of the national debt proceeds, students of financial questions are casting about for some substitute for the present outstanding circulation, which has now dwindled to about $150,000,000. mr. edward atkinson, of boston, the well-known statistician and economist, presents this novel suggestion:

“will any congress dare to reduce the revenue to such an extent as to leave any considerable amount of debt unpaid at the end of the present century, whether it be bonded debt or demand debt represented by legal tender notes? i submit these as the possible conditions which may make it an absolute necessity for the people of this country to invent a new instrument of exchange, to take the place of the legal tender notes and of the bank notes secured by united states{472} bonds, unless the whole circulating medium is to consist either of bullion, or of certificates of the government backed by bullion, dollar for dollar. the tendency of events is to cause the withdrawal from circulation of uncovered paper, to wit: national bank notes and legal tender notes, leaving only in circulation certificates of deposits of gold or silver, backed dollar for dollar by actual coin, and also gold and silver coin in specie.

“no position could be stronger than this; but the difficulty will arise in the fact that even were the annual revenues and expenditures of the government equalized, the working of the sub-treasury act in dealing with such large sums as now constitute the financial transactions of the government might seriously interfere with the money market at times. under present conditions it is becoming apparent that it is impossible for the government to adjust its transactions to the ordinary conditions of the money market; it is also impossible for the government to perform the functions of a bank of issue; the tension is now very great, and the conditions cannot possibly be continued for any length of time. the issue of certificates of deposit of gold or silver would not meet the varying conditions of supply and demand for instruments of exchange or circulating notes, and there will soon be no government bonds available as securities for{473} bank notes. there is a volume of other securities in existence—railroad, state and city bonds—which would form an absolute security for a circulating medium covered in part only by a reserve of actual coin. can the arrangements be made and the authority established for a selection among these securities of those which ought to be made available to secure the notes which might serve as instruments of exchange? can a central bureau, bank or other form of administration be established by a permissive act, with branches in different parts of the country, to supply an elastic, safe and suitable paper currency convertible into coin on demand, on a separate foundation and under a separate administration from that under which banks of deposit and discount may continue to be organized?”

the new york banks are naturally the richest and most powerful in the country, and new york, no doubt, always will be the monetary centre of this country. but her absolute dominancy of the rest of the country, which she held for so many years, is passing away. the severest blow to new york’s banking supremacy perhaps was the passage of the law permitting the importation of foreign goods in bond direct to interior points. formerly the grain from western fields was consigned to new york, and the contract for its shipment abroad made there. the new york banks were drawn upon for funds, and earned a{474} commission upon every bushel of wheat that went out through the narrows. in like manner, all goods brought from abroad found a resting-place there, and the duties were paid in new york, and it was new york capital which forwarded them to their destination.

but all that has been changed. the merchant in chicago or st. louis now buys his goods in manchester or paris and consigns them direct to his own city. the west reaches out over new york’s head and helps herself to whatever she wants in the old world. so, too, with what she has to sell in europe. a single rate is made from the western prairie to the dock at liverpool. wheat is rushed through without the intervention of any new york factor. as new towns and cities have sprung up in the interior, and new manufacturing centres have been established, and the mineral wealth of the country has been developed, the west has grown rich, and many of the banks in the interior now carry lines of deposit which would have seemed very large to the most important institutions in the east a few years ago. the increase in the number of “reserve cities” made by act of congress two years ago was regarded at the time as destined to increase the amount of funds in the western banks at the expense of those on the coast. up to that time there were but sixteen “reserve cities” in the united states. each of these was{475} required to keep on hand at all times, in loanable money, twenty-five per cent. of its deposits, while every bank outside of these cities was required to keep but fifteen per cent. of its deposits on hand. any of these fifteen per cent. banks were permitted to keep three-fifths of this fifteen per cent. in the banks of any of the sixteen cities referred to, and any bank located in the reserve cities might keep, if it wished to do so, one-half of its loanable money reserved in the city of new york. the theory was that new york was the monetary centre of the country, and the other fifteen cities were the respective centres of the sections in which they were located. the law, moreover, made provision for counting, as a part of the required reserve, a portion of the balance which it was supposed the conditions of trade would require them to keep at the local centres, and at the general centre.

the new law of 1887 added a number of other cities to the list, with regard to reserves which new york had held up to that time. the amendment, however, left money free to seek its natural channels and reservoirs, assuming that the drift of the current had changed since the passage of the original act. but experience since has shown that trade requirements bring a large proportion of the reserves to new york, and so the new legislation has wrought comparatively little change. the tendency to withdraw{476} funds from new york under the amended law has been checked by the fact that as soon as any city takes on its new dignity of a central reserve point, it can no longer keep a portion of its reserve in new york, but must keep its full twenty-five per cent. reserve in its own vaults idle. chicago and st. louis have become full central reserve cities like new york, and, as higher interest rates rule in these cities than in new york, it is natural that many accounts should be transferred from the latter city; and this has happened, as is demonstrated by chicago bank returns. the drift of currency from new york last fall for the purpose of moving the crops, demonstrates that, while the western banks hold more money for current wants, new york must still be drawn upon for the large sums needed to move grain and cotton harvests.

the frequency of paragraphs in the daily papers announcing the departure of another cashier for canada demonstrates that there is something loose in the methods of banking institutions. the president of the bank does not give sufficient attention to the actual transaction of business. he is usually too familiar and easy-going with his cashier and other important officials. it is seldom that he emerges from his parlor to go behind the counter and see what is actually going on. as for the so-called examinations made from time to time by directors, they{477} are in ninety-nine cases out of every hundred simply farcical. the president of the bank tells the cashier some fine morning: “get things straightened up now, jimmy, the directors are coming to-morrow, and we want everything in good shape.” the advent of the directors being thus heralded, everything presents a fair appearance on the occasion of their visit. they chat and chaff each other, glance casually over the statements presented by the president, and then adjourn to indulge in a luxurious luncheon on the floor above. so ends their examination.

it is because cashiers are relieved from all practical surveillance that so many of them are led to ultimately test the climate of canada. a broker, speaking to the cashier some fine morning, says: “by the way, jones, erie is going to have a big rise; you’d better buy yourself a couple of hundred.” “oh, i never speculate,” says jones; “haven’t got the money to do it with.” “that’s all right,” says the broker, “i’ll buy a couple of hundred for you, and if there’s any loss you can make it good; but i’m sure you’ll make money on it.” possibly the cashier accedes to this proposition, but more frequently, if he be a cautious and circumspect man, he uses the broker’s point in a different way. he has possibly seen the broker grow rich within a few years and envies him. here is a tempting opportunity to make a handsome turn, for his salary{478} is comparatively small, and he could put a few thousand dollars to exceedingly good use. it may be, then, that he borrows from a friend, or draws upon his own savings for money which he secretly deposits as margin with some stock firm and buys two hundred erie. it goes down. his margin is exhausted. the brokers tell him it will probably decline very little more. but they want more margin. right under his hands are big fat packages of bills of large denominations. what shall he do? if his brokers sell him out, the savings of years are gone in the twinkling of an eye. if he is a weak man, he argues, “why not take a thousand dollar bill out of this package marked $50,000? it would never be missed.” erie is sure to go up to-morrow, when he can withdraw the amount from his brokers and put it back in the bundle. he will be saved from every loss and nobody the worse for it. unfortunately, things do not turn out that way. erie goes lower. the thousand dollars is gone. what shall he do? his theft, for such it now plainly has become, will probably not be discovered for some time. what shall he do? speculate in some other stock and try to make up the loss. and he does it. it is useless to pursue the theme any further. grown more desperate from day to day, he plunges; his losses become too large to be longer concealed, and one day, fearing exposure, he takes to flight, possibly{479} carrying off additional funds of the bank. it may be that the first money he took was not to speculate with but to pay some household bill. but it leads to the same result in the end.

now, if the president were in the habit of casually dropping around to the cashier’s desk and looking over his cash, the initial step in this march to ruin would be prevented. suppose the president picks up hap-hazard any one of the many packages of bills and counts them over to see that they tally with the total marked on the wrapper. the knowledge that he is liable to do that at any time will deter the cashier from abstracting that first bill, and he is saved from the subsequent crime and disgrace.

unfortunately, dishonesty in banks is not confined to cashiers. many a bank director amasses large sums by means which are quite as disgraceful as embezzlements, although they are not so harshly punished. mr. moneybags, for instance, is a director in several large banking institutions. he is also in all probability a very heavy speculator in the stocks of railroads in which he has inside information. as director of bank no. 1 he sees that a certain man has pledged a block of the stock of a certain corporation as collateral security for a heavy loan. as director in bank no. 2 he perhaps learns that the same man is borrowing largely from that institution and on another block of the same stock. it{480} is clear that the speculator in question is very heavily loaded—probably carrying more of that stock than is prudent. anything which would seriously depreciate the market value of that stock would probably force him to throw overboard a considerable portion of his holdings. the director of easy conscience quietly puts out a line of shorts in the stock in question at the ruling high prices. at the next directors’ meeting of bank no. 1 he tells his fellow-directors that he hears rumors affecting mr. speculator’s credit, that he is overloaded with the stock of the road in question, and suggests to the president that it would be prudent to invite mr. speculator to return the money he had borrowed and take away his stocks. possibly he causes similar action to be taken by the other bank of which he is a director. mr. speculator, so unexpectedly called upon to return very large sums of money, is embarrassed. he is obliged to go into the market and sell a large amount of the stock in question. the price falls sharply in consequence and the director covers his shorts at a handsome profit. it is doubtless true that a majority of bank directors are above this sort of thing; but there are bank directors, and not a few of them either, who contrive to turn their official positions to their personal profit.