[E-Text Edition of Volume III - Part 1 of 2, Slice 3 of 3 - BANKS to
BASSOON]
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[v.03 p.0333] BANKS, GEORGE LINNAEUS (1821-1881), British miscellaneous
writer, was born at Birmingham on the 2nd of March 1821. After a brief
experience in a variety of trades, he became at the age of seventeen a
contributor to various newspapers, and subsequently a playwright, being the
author of two plays, a couple of burlesques and several lyrics. Between
1848 and 1864 he edited in succession a variety of newspapers, including
the _Birmingham Mercury_ and the _Dublin Daily Express_, and published
several volumes of miscellaneous prose and verse. He died in London on the
3rd of May 1881.
BANKS, SIR JOSEPH, BART. (1743-1820), English naturalist, was born in
Argyle Street, London, on the 13th of February 1743. His father, William
Banks, was the son of a successful Lincolnshire doctor, who became sheriff
of his county, and represented Peterborough in parliament; and Joseph was
brought up as the son of a rich man. In 1760 he went to Oxford, where he
showed a decided taste for natural science and was the means of introducing
botanical lectures into the university. In 1764 he came into possession of
the ample fortune left by his father, and in 1766 he made his first
scientific expedition to Newfoundland and Labrador, bringing back a rich
collection of plants and insects. Shortly after his return, Captain Cook
was sent by the government to observe the transit of Venus in the Pacific
Ocean, and Banks, through the influence of his friend Lord Sandwich,
obtained leave to join the expedition in the "Endeavour," which was fitted
out at his own expense. He made the most careful preparations, in order to
be able to profit by every opportunity, and induced Dr Daniel Solander, a
distinguished pupil of Linnaeus, to accompany him. He even engaged
draughtsmen and painters to delineate such objects of interest as did not
admit of being transported or preserved. The voyage occupied three years
and many hardships had to be undergone; but the rich harvest of discovery
was more than adequate compensation. Banks was equally anxious to join
Cook's second expedition and expended large sums in engaging assistants and
furnishing the necessary equipment; but circumstances obliged him to
relinquish his purpose. He, however, employed the assistants and materials
he had collected in a voyage to Iceland in 1772, returning by the Hebrides
and Staffa. In 1778 Banks succeeded Sir John Pringle as president of the
Royal Society, of which he had been a fellow from 1766, and held the office
until his death. In 1781 he was made a baronet; in 1795 he received the
order of the Bath; and in 1797 he was admitted to the privy council. He
died at Isleworth on the 19th of June 1820. As president of the Royal
Society he did much to raise the state of science in Britain, and was at
the same time most assiduous and successful in cultivating friendly
relations with scientific men of all nations. It was, however, objected to
him that from his own predilections he was inclined to overlook and
depreciate the labours of the mathematical and physical sections of the
Royal Society and that he exercised his authority somewhat despotically. He
bequeathed his collections of books and botanical specimens to the British
Museum. His fame rests rather on what his liberality enabled other workers
to do than on his own achievements.
See J. H. Maiden, _Sir Joseph Banks_ (1909).
BANKS, NATHANIEL PRENTISS (1816-1894), American politician and soldier, was
born at Waltham, Massachusetts, on the 30th of January 1816. He received
only a common school education and at an early age began work as a
bobbin-boy in a cotton factory of which his father was superintendent.
Subsequently he edited a weekly paper at Waltham, studied law and was
admitted to the bar, his energy and his ability as a public speaker soon
winning him distinction. He served as a Free Soiler in the Massachusetts
house of representatives from 1849 to 1853, and was speaker in 1851 and
1852; he was president of the state Constitutional Convention of 1853, and
in the same year was elected to the national House of Representatives as a
coalition candidate of Democrats and Free Soilers. Although re-elected in
1854 as an American or "Know-Nothing," he soon left this party, and in 1855
presided over a Republican convention in Massachusetts. At the opening of
the Thirty-Fourth Congress the anti-Nebraska men gradually united in
supporting Banks for speaker, and after one of the bitterest and most
protracted speakership contests in the history of congress, lasting from
the 3rd of December 1855 to the 2nd of February 1856, he was chosen on the
133rd ballot. This has been called the first national victory of the
Republican party. Re-elected in 1856 as a Republican, he resigned his seat
in December 1857, and was governor of Massachusetts from 1858 to 1861, a
period marked by notable administrative and educational reforms. He then
succeeded George B. McClellan as president of the Illinois Central railway.
Although while governor he had been a strong advocate of peace, he was one
of the earliest to offer his services to President Lincoln, who appointed
him in 1861 major-general of volunteers. Banks was one of the most
prominent of the volunteer officers. When McClellan entered upon his
Peninsular Campaign in 1862 the important duty of defending Washington from
the army of "Stonewall" Jackson fell to the corps commanded by Banks. In
the spring Banks was ordered to move against Jackson in the Shenandoah
Valley, but the latter with superior forces defeated him at Winchester,
Virginia, on the 25th of May, and forced him back to the Potomac river. On
the 9th of August Banks again encountered Jackson at Cedar Mountain, and,
though greatly outnumbered, succeeded in holding his ground after a very
sanguinary battle. He was later placed in command of the garrison at
Washington, and in November sailed from New York with a strong force to
replace General B. F. Butler at New Orleans as commander of the Department
of the Gulf. Being ordered to co-operate with Grant, who was then before
Vicksburg, he invested the defences of Port Hudson, Louisiana, in May 1863,
and after three attempts to carry the works by storm he began a regular
siege. The garrison surrendered to Banks on the 9th of July, on receiving
word that Vicksburg had fallen. In the autumn of 1863 Banks organized a
number of expeditions to Texas, chiefly for the purpose of preventing the
French in Mexico from aiding the Confederates, and secured possession of
the region near the mouths of the Nueces and the Rio Grande. But his Red
River expedition, March-May 1864, forced upon him by superior authority,
was a complete failure. In August 1865 he was mustered out of the service,
and from 1865 to 1873 he was again a representative in congress, serving as
chairman of the committee on foreign affairs. A personal quarrel with
President Grant led in 1872, however, to his joining the Liberal-Republican
revolt in support of Horace Greeley, and as the Liberal-Republican and
Democratic candidate he was defeated for re-election. In 1874 he was
successful as a Democratic candidate, serving one term (1875-1877). Having
rejoined the Republican party in 1876, he was United States marshal for
Massachusetts from 1879 until 1888, when for the ninth time he was elected
to Congress. He retired at the close of his term (1891) and died at Waltham
on the 1st of September 1894.
BANKS, THOMAS (1735-1805), English sculptor, son of a surveyor who was land
steward to the duke of Beaufort, was born in London on the 29th of December
1735. He was taught drawing by his father, and in 1750 was apprenticed to a
wood-carver. In his spare time he worked at sculpture, and before 1772,
when he obtained a travelling studentship and proceeded to Rome, he had
already exhibited several fine works. Returning to England in 1779 he found
that the taste for classic poetry, ever the source of his inspiration, no
longer existed, and he spent two years in St Petersburg, being employed by
the empress Catherine, who purchased his "Cupid tormenting a Butterfly." On
his return he modelled his colossal "Achilles mourning the loss of
Briseis," a work full of force and passion; and thereupon he was elected,
in 1784, an associate of the Royal Academy and in the following year a full
member. Among other works in St Paul's cathedral are the monuments to
Captain Westcott and Captain Burges, and in Westminster Abbey to Sir Eyre
Coote. His bust of Warren Hastings is in the National Portrait Gallery.
Banks's best-known work is perhaps the colossal group of "Shakespeare
attended by Painting and Poetry," now in the garden of New Place,
Stratford-on-Avon. He died in London on the 2nd of February 1805.
[v.03 p.0334] BANKS AND BANKING. The word "bank," in the economic sense,
covers various meanings which all express one object, a contribution of
money for a common purpose. Thus Bacon, in his essay on _Usury_, while
explaining "how the discommodities of it may be best avoided and the
commodities retained," refers to a "bank or common stock" as an expression
with which his readers would be familiar. Originally connected with the
idea of a mound or bank of earth--hence with that of a _monte_, an Italian
word describing a heap--the term has been gradually applied to several
classes of institutions established for the general purpose of dealing with
money.
[Sidenote: Banking as a business.]
The manner in which a bank prospers is explained by David Ricardo, in his
_Proposals for an Economical and Secure Currency_, in a passage where he
tells us that a bank would never be established if it obtained no other
profits but those derived from the employment of its own capital. The real
advantage of a bank to the community it serves commences only when it
employs the capital of others. The money which a bank controls in the form
of the deposits which it receives and sometimes of the notes which it
issues, is loaned out by it again to those who desire to borrow and can
show that they may be trusted. A bank, in order to carry on business
successfully, must possess a sufficient capital of its own to give it the
standing which will enable it to collect capital belonging to others. But
this it does not hoard. It only holds the funds with which it is entrusted
till it can use them, and the use is found in the advances that it makes.
Some of the deposits merely lie with the bank till the customer draws what
he requires for his ordinary everyday wants. Some, the greater part by far,
of the deposits enable the bank to make advances to men who employ the
funds with which they are entrusted in reproductive industry, that is to
say, in a manner which not only brings back a greater value than the amount
originally lent to them, but assists the business development of the
country by setting on foot and maintaining enterprises of a profitable
description. It is possible that some part may be employed in loans
required through extravagance on the part of the borrower, but these can
only be a small proportion of the whole, as it is only through reproductive
industry that the capital advanced by a banker can really be replaced. A
loan sometimes, it is true, is repaid from the proceeds of the sale of a
security, but this only means a transfer of capital from one hand to
another; money that is not transferred in this way must be made by its
owner. Granted that the security is complete, there is only one absolute
rule as to loans if a bank desires to conduct its business on safe lines,
that the advance should not be of fixed but of floating capital. Nothing
seems simpler than such a business, but no business requires closer
attention or more strong sense and prudence in its conduct. In other ways
also, besides making loans, a well-conducted bank is of much service to the
business prosperity of a country, as for example by providing facilities
for the ready transmission of money from those who owe money to those to
whom it is due. This is particularly obvious when the debtor lives in one
town or district and the creditor in another at a considerable distance,
but the convenience is very great under any circumstances. Where an easy
method of transmission of cash does not exist, we become aware that a "rate
of exchange" exists as truly between one place and another in the same
country as between two places in different countries. The assistance that
banking gives to the industries of a community, apart from these
facilities, is constant and most valuable.
[Sidenote: Historical development.]
With these preliminary remarks on some main features of the business, we
may pass on to a sketch of the history of modern banking. Banks in Europe
from the 16th century onwards may be divided into two classes, the one
described as "exchange banks," the other as "banks of deposits." These last
are banks which, besides receiving deposits, make loans, and thus associate
themselves with the trade and general industries of a country. The exchange
banks included in former years institutions like the Bank of Hamburg and
the Bank of Amsterdam. These were established to deal with foreign exchange
and to facilitate trade with other countries. The others--founded at very
different dates--were established as, or early became, banks of deposit,
like the Bank of England, the Bank of Venice, the Bank of Sweden, the Bank
of France, the Bank of Germany and others. Some reference to these will be
made later. The exchange banks claim the first attention. Important as they
were in their day, the period of their activity is now generally past, and
the interest in their operations has become mainly historical.
In one respect, and that a very important one, the business carried on by
the exchange banks differed from banking as generally understood at the
present time. No exchange bank had a capital of its own nor did it require
any for the performance of the business. The object for which exchange
banks were established was to turn the values with which they were
entrusted into "current money," "bank money" as it was called, that is to
say, into a currency which was accepted immediately by merchants without
the necessity of testing the value of the coin or the bullion brought to
them. The "value" they provided was equal to the "value" they received, the
only difference being the amount of the small charge they made to their
customers, who gained by dealing with them more than equivalent advantages.
Short notices of the Bank of Amsterdam, which was one of the most
important, and of the Bank of Hamburg, which survived the longest, its
existence not terminating till 1873, will suffice to explain the working of
these institutions.
The Amsterdamsche Wisselbank, or exchange bank, known later as the Bank of
Amsterdam, was established by the ordinance of the city of Amsterdam of
31st January 1609. The increased commerce of Holland, which made Amsterdam
a leading city in international dealings, led to the establishment of this
bank, to which any person might bring money or bullion for deposit, and
might withdraw at pleasure the money or the worth of the bullion. The
ordinance which established the bank further required that all bills of 600
gulden (L50), or upwards--this limit was, in 1643, lowered to 300 gulden
(L25)--should be paid through the bank, or in other words, by the transfer
of deposits or credits at the bank. These transfers came afterwards to be
known as "bank money." The charge for making the transfers was the sole
source of income to the bank. The bank was established without any capital
of its own, being understood to have actually in its vaults the whole
amount of specie for which "bank money" was outstanding. This regulation
was not, however, strictly observed. Loans were made at various dates to
the Dutch East India Company. In 1795 a report was issued showing that the
city of Amsterdam was largely indebted to the bank, which held as security
the obligations of the states of Holland and West Friesland. The debt was
paid, but it was too late to revive the bank, and in 1820 "the
establishment which for generations had held the leading place in European
commerce ceased to exist." (See _Chapters on the Theory and History of
Banking_, by Charles F. Dunbar, p. 105.)
Similar banks had been established in Middelburg, (March 28th, 1616), in
Hamburg (1619) and in Rotterdam (February 9th, 1635). Of these the Bank of
Hamburg carried on much the largest business and survived the longest. It
was not till the 15th of February 1873 that its existence was closed by the
act of the German parliament which decreed that Germany should possess a
gold standard, and thus removed those conditions of the local medium of
exchange--silver coins of very different intrinsic values--whose
circulation had provided an ample field for the operations of the bank. The
business of the Bank of Hamburg had been conducted in absolute accordance
with the regulations under which it was founded.
The exchange banks were established to remedy the inconvenience to which
merchants were subject through the uncertain value of the currency of other
countries in reference to that of the city where the exchange bank carried
on its business. The following quotation from _Notes on Banking_, written
in 1873, explains the method of operation in Hamburg. "In this city, the
most vigorous offshoot of the once powerful Hansa, the latest
representative of the free commercial cities of medieval Europe, [v.03
p.0335] there still remains a representative of those older banks which
were once of the highest importance in commercial affairs. Similar
institutions greatly aided the prosperity of Venice, Genoa, Amsterdam and
Nuremberg. The Bank of Hamburg is now the last survivor of these banks,
whose business lay in the assistance of commerce, not by loans, but by the
local manufacture, so to speak, of an international coinage. In a city of
the highest rank of commercial activity, but greatly circumscribed in
territory, continually receiving payments for merchandise in the coin of
other countries, a common standard of value was a matter of primary
necessity. The invention of bank money, that is, of a money of account
which could be transferred at pleasure from one holder to another, enabled
the trade of the place to be carried on without any of those hindrances to
business which must have followed on the delay and expense attendant on the
verification of various coins differing from each other in weight,
intrinsic value, standard of purity of metal, in every point in fact in
which coins can differ from each other. By supplying a currency of
universal acceptation the Bank of Hamburg greatly contributed to the
prosperity of that city." The regulations being strictly carried out, the
currency was purely metallic; the "Mark Banco" being merely the
representative of an equal value of silver.
For the earliest example of a bank for the receipt of deposits carrying on
a business on modern lines, we must turn, as in the case of the exchange
banks, to a great commercial city of the middle ages. Private banking in
Venice began as an adjunct of the business of the _campsores_ or dealers in
foreign moneys. "As early as 1270 it was deemed necessary to require them
to give security to the government as the condition of carrying on their
business, but it is not shown that they were then receiving deposits. In an
act of the 24th of September 1318, however, entitled _Bancherii scriptae
dent plegiarias consulibus_, the receipt of deposits by the _campsores_ is
recognized as an existing practice, and provision is made for better
security for the depositors." From this act it becomes clear that between
1270 and 1318 the money-changers of Venice were becoming bankers, just as
the same class of men became in Amsterdam a couple of centuries later, and
as later still the goldsmiths in London.
[Sidenote: The first public bank in Europe.]
Of the early banks in Europe, the bank in Venice, the Banco di Rialto, was
established by the acts of the Venetian senate of 1584 and 1587. This
appears to have been the first public bank in that city and in Europe. The
senate by the act of the 3rd of May 1619[1] established by the side of the
Banco di Rialto a second public bank known as the Banco Giro, or Banco del
Giro, which ultimately became the only public bank of the city and was for
generations famous throughout Europe as the Bank of Venice. Earlier than
this the _campsores_ or dealers in foreign moneys had carried on the
business. The Bank of Venice (Banco del Giro) appears to have been called
into existence by the natural developments of trade, but some banks have
been established by governments and have been of great service to the
development of the countries in which they have carried on their business.
Of these, the Bank of Sweden (the _Riksbank_), established in 1656, is the
earliest. This bank still exists and has always been the state bank of
Sweden. It was founded by a Swede named Palmstruck, who also invented the
use of the bank note--perhaps adapted for use in Europe is the better
expression to employ, as notes were current in China about A.D. 800. The
first bank note was issued by the _Riksbank_ in 1658. An _enquete_ made by
the French government in 1729 recognizes the priority of Sweden in this
matter, and declares the bank note to be an admirable Swedish invention,
designed to facilitate commerce.