Essays upon several projects: or, effectual ways for advancing the interest of the nation.:
Defoe, Daniel, 1661?-1731.

Of the Multiplicity of Banks.

What is touch'd at in the foregoing part of this Chapter, refers to OnePage  58Bank-Royal, to Preside, as it were, over the whole Cash of the Kingdom: But because some People do suppose this Work fitter for many Banks than for One; I must a little consider that Head: And first, allowing those ma|ny Banks cou'd without clashing main|tain a constant Correspondence with one another, in passing each others Bills as Current from one to another, I know not but it might be better per|form'd by Many, than by One; for as Harmony makes Musick in Sound, so it produces Success in Business.

A Civil War among Merchants is always the Ruin of Trade: I cannot think a Multitude of Banks cou'd so consist with one another in England, as to join Interests, and uphold one ano|ther's Credit, without joining Stocks too; I confess, if it cou'd be done, the Convenience to Trade wou'd be Visible.

Page  59 If I were to Propose which way these Banks shou'd be Establish'd; I answer, Allowing a due regard to some Gentlemen who have had thoughts of the same, whose Methods I shall not so much as touch upon, much less discover; My thoughts run upon quite different Methods, both for the Fund, and the Establishment.

Every principal Town in England is a Corporation, upon which the Fund may be settled; which will suf|ficiently answer the difficult and charge|able work of Suing for a Corporation by Patent or Act of Parliament.

A general Subscription of Stock be|ing made, and by Deeds of Settle|ment plac'd in the Mayor and Alder|men of the City or Corporation for the time being, in Trust, to be de|clared by Deeds of Uses, some of the Directors being always made Mem|bers of the said Corporation, and Page  60 join'd in the Trust, the Bank hereby becomes the Publick Stock of the Town, something like what they call the Rents of the Town-House in France, and is Manag'd in the Name of the said Corporation, to whom the Directors are Accountable, and they back again to the General Court.

For Example:

Suppose the Gentlemen, or Trades|men, of the County of Norfolk, by a Subscription of Cash, design to Esta|blish a Bank: The Subscriptions be|ing made, the Stock is paid into the Chamber of the City of Norwich, and manag'd by a Court of Directors, as all Banks are, and chosen out of the Subscribers, the Mayor only of the City to be always one; to be mana|ged in the Name of the Corporation of the City of Norwich, but for the Uses in a Deed of Trust to be made by the Subscribers, and Mayor and Page  61 Aldermen, at large mentioned. I make no question but a Bank thus settled, wou'd have as firm a Foun|dation as any Bank need to have, and every way answer the Ends of a Cor|poration.

Of these sorts of Banks England might very well establish Fifteen, at the several Towns hereafter mention'd. Some of which, tho they are not the Capital Towns of the Counties, yet are more the Center of Trade, which in England runs in Veins, like Mines of Metal in the Earth.

  • Canterbury.
  • Salisbury.
  • Exeter.
  • Bristol.
  • Worcester.
  • Shrewsbury.
  • Manchester.
  • Newcastle upon Tyne.
  • Leeds, or Halifax, or York.
  • Nottingham.
  • Warwick, or Bir|mingham.
  • Oxford, or Rea|ding.
  • Bedford.
  • Norwich.
  • Colchester.

Page  62 Every one of these Banks to have a Cashier in London, unless they cou'd all have a general Correspondence and Credit with the Bank-Royal.

These Banks in their respective Counties should be a General Staple and Factory for the Manufactures of the said County; where every man that had Goods made, might have Money at a small Interest for Ad|vance; the Goods in the mean time being sent forward to Market, to a Warehouse for that purpose erected in London, where they shou'd be dispos'd of to all the Advantages the Owner cou'd expect, paying only 1 per Cent. Commission. Or if the Maker want|ed Credit in London either for Spanish Wool, Cotton, Oyl, or any Goods, while his Goods were in the Warehouse of the said Bank, his Bill shou'd be paid by the Bank to the full Value of his Goods, or at least within a small Page  63 matter. These Banks, either by Cor|respondence with each other, or an Order to their Cashier in London, might with ease so pass each other's Bills, that a man who has Cash at Plymouth, and wants Money at Ber|wick, may transfer his Cash at Ply|mouth to Newcastle in half an hours time, without either Hazard, or Charge, or Time, allowing only ½ per Cent. Exchange; and so of all the most distant parts of the Kingdom. Or if he wants Money at Newcastle, and has Goods at Worcester, or at any other Cloathing-Town, sending his Goods to be sold by the Factory of the Bank of Worcester, he may remit by the Bank to Newcastle, or any where else, as readily as if his Goods were sold and paid for; and no Exactions made upon him for the Convenience he en|joys.

This Discourse of Banks the Rea|der Page  64 is to understand to have no rela|tion to the present Posture of Affairs, with respect to the Scarcity of Currant Money, which seems to have put a stop to that part of a Stock we call Credit; which always is, and indeed must be the most essential part of a Bank, and without which no Bank can pretend to subsist, at least to Ad|vantage.

A Bank is only a Great Stock of Money put together, to be employ'd by some of the Subscribers, in the name of the rest, for the Benefit of the Whole. This Stock of Money subsists not barely on the Profits of its own Stock, for that wou'd be incon|siderable, but upon the Contingences and Accidents which Multiplicity of Business occasions: As for Instance; A man that comes for Money, and knows he may have it To-morrow, perhaps he is in haste, and won't take Page  65 it to day: Only that he may be sure of it to morrow, he takes a Memo|randum under the Hand of the Offi|cer, That he shall have it whenever he calls for it; and this Memorandum we call a Bill. To morrow when he Intended to fetch his Money, comes a Man to him for Money; and to save himself the labour of Telling, he gives him the Memorandum or Bill aforesaid for his Money; this Second Man does as the First, and a Third does as he did, and so the Bill runs about a Month, Two or Three; and this is that we call Credit; for by the Circulation of a quantity of these Bills, the Bank enjoys the full Bene|fit of as much Stock in real Value, as the supposititious Value of the Bills amounts to; and where-ever this Cre|dit fails, this Advantage fails; for im|mediately all men come for their Money, and the Bank must die of it Page  66 self; for I am sure no Bank by the simple Improvement of their single Stock, can ever make any consider|able Advantage.

I confess a Bank who can lay a Fund for the Security of their Bills, which shall produce, first an Annual Profit to the Owner, and yet make good the Passant-Bill, may stand, and be advantageous too, because there is a Real and a Supposititious Value both, and the Real always ready to make good the Supposititious; and this I know no way to bring to pass, but by Land, which at the same time that it lies Transferr'd to secure the Value of every Bill given out, brings in a separate Profit to the Owner; and this way no question but the whole King|dom might be a Bank to it self, tho' no ready Money were to be found in it.

I had gone on in some Sheets Page  67 with my Notion of Land, being the best bottom for Publick Banks, and the easiness of bringing it to answer all the Ends of Money deposited, with double Advantage; but I find my self happily prevented by a Gen|tleman, who has publish'd the very same, tho' since this was Wrote; and I was always Master of so much Wit, as to hold my Tongue while they spoke who understood the thing bet|ter than my self.

Mr. John Asgill of Lincolns-Inn, in a small Tract, Entituled, Seve|ral Assertions prov'd, in Order to Create another Species of Money than Gold and Silver, has so distinctly hand|led this very Case, with such strength of Argument, such clearness of Rea|son, such a Judgment, and such a Stile, as all the Ingenious part of the World must acknowledge themselves extremely Oblig'd to him for that Piece.

Page  68 At the sight of which Book I laid by all that had been written by me on that Subject; for I had much rather confess my self incapable of handling that Point like him, than have con|vinc'd the World of it by my imper|tinence.