is permitted to administer justice to himself against another; nor are there any, where in doing it he necessarily disturbs the public peace.

CHAPTER XXV.

Banking, Promissory Notes, Bills of Exchange, Notaries.

304. BANKS are, and are likely to be, an interesting subject to the citizens of this and of neighboring states. Banks are supposed to derive their name from the kind of seat, or bench, on which the Jews sat as money-dealers in the market-places of cities in the East. When a Jew failed, or was discredited, his bench was broken or destroyed; from whence is supposed to be derived the word bankrupt, now so commonly understood in commercial countries. There are different sorts of banks;-(1.) banks of deposit (from depono, to leave, or intrust a thing to be kept); (2.) banks of deposit and discount; (3.) banks of deposit, discount and circulation.

305. A Bank of Deposit is merely a place for the safe keeping of money. If any one man in a town or city should make such a place, and it should become a place of general deposit, the owner of the deposit might give his creditor an order on the banker to pay the bearer of the order. The order, being worth the money it expressed, might pass from hand to hand as money thus the necessity of counting and carrying from place to place, and the danger of losing, would be avoided. This is supposed to have been the sort of public bank that first came into use. The oldest bank was at Venice, about the year 1170, and is said to have been established as a place of deposit for those who engaged in the wars for the recovery of the Holy Land.

306. Bank of Deposit and Discount. This comprises the sort of bank already described; but, in addition thereto, the banker, having the custody of money, discounts, that is, advances money on written promises given to pay money at some time, then future. Thus a holder of a written promise to pay money, which will be due after some days or months to come, wants the money immediately. A banker takes the written promise as his own, and pays the sum mentioned in it, taking out of the whole sum the interest thereon from the time of advancing the money to the time when the money is

to be paid, according to the written promise. This is called discounting. When the money is due, the banker receives it, and gives up the written promise to the maker of it, and is thus repaid.

307. Bank of Deposit, Discount and Circulation. This is the sort of bank in use in this country. It comprises the two first, but adds thereto, that, when a written promise to pay money, or, as usually called, a note of hand, or promissory note, is discounted, the bank does not pay in gold or silver coin, but in its own bills; that is, in its own promises to pay money on demand. In Massachusetts, the way in which banks are enabled so to do, is this :—

308. An act of the legislature, passed in 1799, prohibited all banks, not established by law, under severe penalties. No bank can now exist but by public law. When a number of persons want a bank, they petition to be incorporated. If the legislature see fit, they make a law, enabling the petitioners to have a bank, usually for a certain number of years. The capital, or sum of money to be paid in, to constitute the fund on which the bank is to do business, is mentioned in the act; also the number of shares into which this capital is divided. The petitioners and their associates, or owners of shares, are enabled by the act to be a corporation, by the name of the "President, Directors and Company of the - Bank." The owners of shares, or stockholders, are empowered to meet, and choose directors. The directors choose a president from their own number. The president and directors choose a cashier and clerks, and get a banking-house. The act authorizes this corporation to issue its own promissory writings, or bank bills, signed by the president and cashier. Supposing every stockholder, or owner of shares, to have paid in his proportion of the capital, the bank would have in its vaults, in gold and silver, the whole amount of its capital, deducting the charges of establishing the bank, of which charges the cost of the banking-house would be part, if the bank owned the house in which the business is transacted. The bank being thus prepared to do business, notes are discounted; or, in other words, the bank loans money, and pays, not in gold and silver coin, but in its own bank bills, which are written promises to pay the bearer thereof, on demand, the sum therein expressed. This promise of the bank circulates as cash, because the bearer of it can turn it into cash whenever he pleases, by carrying it to the bank. A bank may derive from its operations of lending, or discounting, a profit

above or below six per cent. (the lawful rate of interest) on its capital. The law allows a bank to issue, in bills, double the amount of its capital, and to discount notes to double the amount of its capital. If there were but one bank, and it used its privileges to its full extent, it would get twelve per cent. on its capital, from which are to be deducted the expenses of carrying on the institution. But in practice, owing to the great number of banks, and consequent division of business, and the speedy return of their bills for cash, and the check which banks have on each other, a bank rarely has in circulation one half, and some of them not one fourth, of the amount of its capital in bills, and rarely has owing to it much more than the amount of its capital, and one third of the capital in addition thereto. That which is owed to banks is intended to be always, and usually is, owed by trustworthy persons.

309. When a bank issues more bills than it can redeem,— which sometimes arises from having taken notes which prove to be bad, and sometimes in consequence of mismanagement,-it is said to fail, or be broken. The holders of notes are the losers of so much as the bank cannot pay, unless the stockholders are able to pay the difference. The law makes them personally liable, not exceeding the amount of their respective shares, when the loss arises from the official mismanagement of the directors. When the act of incorporation expires, the holders of shares are liable, personally, for the redemption of all bills issued by the bank, which then remain unpaid, in proportion to the stock which they respectively hold.

310. Banks are subject to an annual tax of one per cent. on the amount of their capitals, one half of which tax is to be paid, within ten days after each semi-annual dividend, into the state treasury. It is said by some persons, that such a tax is not a reasonable one, and that, if any tax be laid on banks, it should be on the amount of dividends, and not on capital. Dividends are the half-yearly division of the interest money, among owners of shares, acquired by lending. Shares are bought and sold. The owner holds a certificate, issued by the corporation, signed by the president and cashier, stating that he is proprietor.

311. Banks take money to keep for any one who requests it, without charge for keeping. This is called depositing. One who has money in a bank, draws it out as he pleases, by writing a short order to the cashier to "pay

dollars to

or bearer." This is called a check. Once a month, the bank and the depositer settle an account, and the checks are given up. The balance remaining to the depositer, is carried to his credit in new account, and is the fund for future checks. A depositer adds to this fund during the month, as he pleases.

312. Promissory Notes. These are written promises, made by one man to another, to pay to him, or to him or his order, a sum of money. If in the latter form, the note is negotiable, and the person to whom the promise is made (who is called the promisee) may order the money to be paid to any person, by writing his own name on the back of the note, which act is called an indorsement, from a Latin word signifying back. Such indorsement and delivery of the note, is an authority to the indorsee (as he is called to whom the note is transferred) to write an order (over the indorser's name) to pay the money to himself. The indorsee may transfer the note, by writing his name on the back of it, and so become an indorser himself. Thus a note may pass through many hands. The usual practice is, to write the names merely, on the back, and not to write the order thereon; and when once indorsed, a note may go through any number of hands, like a bank bill, with or without any further indorsement. The engagement of the promiser is, to pay the money to any person who holds the note, when it becomes due. The engagement of each indorser is, that he will pay the note, if payment be punctually demanded of the promiser, and if the indorser be duly notified of non payment. The indorser is entitled to such notice, that he may enforce payment from the promiser to himself, since he has become liable from the promiser's inability or neglect to pay.

313. Bills of Exchange. These are like indorsed notes, and subject to exactly the same legal rules. A bill of exchange is an order drawn by A on B, to pay to C, or his order, a sum of money. C, or the person to whom C indorses, must present the bill to B for acceptance. When accepted, it is like an indorsed note; because the promiser of a note, and the accepter of a bill, stand in the same relation as to all other parties. Bills of exchange are not used between persons who dwell in the same place, as notes are; but the principal use of them is, between merchants who dwell in different cities. An American merchant, for example, has money in the hands of a merchant in Europe. The American draws his bill in favor of any one, who wants money in the place

where the American's money awaits his order; the purchaser of this bill sends it to be presented to the European, to be accepted. If not accepted, or if accepted, but not paid, it returns to the American, who must pay it; if he does not pay, any indorser, who has been duly notified of such nonpayment, is liable to pay. The convenience of the commercial world has made it necessary, that there should be public agents, whose certificate of the presentment of bills of exchange for acceptance or payment, and of refusal to accept or pay, should be legal evidence of such fact, everywhere. This certificate is called a protest, the literal meaning of which is, for proof.

314. These agents are found, in all commercial countries, under the name of notaries public. They are appointed by the government, and sworn, and authorized to use an official seal. In some countries, as in France, they exercise a very extensive authority. They take memoranda, or notes (notæ, in Latin), of contracts, and reduce them to form, and record them; and their certificate of copies, from their own records, is legal evidence of the contract. Their name is derived from the above-mentioned Latin word. Notaries are empowered to receive declarations from masters of vessels and their mariners, of accidents, damage and losses, occurring in a voyage, and reduce them to writing, and administer an oath as to the truth thereof, and make a record of such declaration. This act is called a protest. The act done on the first application to a notary, in such case, is called noting a protest; when the notary has written out the declaration, and it is prepared for signature and oath, and is so verified, it is called extending a protest. In the United States, no act of a notary is legal evidence in court, except in the case of protests for non-acceptance of bills of exchange, and for non-payment thereof. Protests relating to voyages are sometimes admitted as evidence, by consent of parties. When the master, or mariners, are called as witnesses, a protest made at their request may be used to show, that the story therein told, and that sworn to by them as witnesses, do not agree. This is nothing but an application of the common rule, that any discordant statement of the same matter, made by a witness, at any other time, may be offered to discredit him. In all cases, except those before mentioned, as to bills of exchange, a notarial certificate is of no more legal force, in the United States, than a certificate made by any other citizen. Yet, in many cases, it is expedient to employ notaries, where evi