Banks, without question, if rightly managed are, or may be, of great advantage, especially to a trading people, as the English are; and, among many others, this is one particular case in which that benefit appears: that they bring down the interest of money, and take from the goldsmiths, scriveners, and others, who have command of running cash, their most delicious trade of making advantage of the necessities of the merchant in extravagant discounts and premiums for advance of money, when either large customs or foreign remittances call for disbursements beyond his common ability; for by the easiness of terms on which the merchant may have money, he is encouraged to venture further in trade than otherwise he would do. Not but that there are other great advantages a Royal Bank might procure in this kingdom, as has been seen in part by this; as advancing money to the Exchequer upon Parliamentary funds and securities, by which in time of a war our preparations for any expedition need not be in danger of miscarriage for want of money, though the taxes raised be not speedily paid, nor the Exchequer burthened with the excessive interests paid in former reigns upon anticipations of the revenue; landed men might be supplied with moneys upon securities on easier terms, which would prevent the loss of multitudes of estates, now ruined and devoured by insolent and merciless mortgagees, and the like. But now we unhappily see a Royal Bank established by Act of Parliament, and another with a large fund upon the Orphans' stock; and yet these advantages, or others, which we expected, not answered, though the pretensions in both have not been wanting at such time as they found it needful to introduce themselves into public esteem, by giving out prints of what they were rather able to do than really intended to practise. So that our having two banks at this time settled, and more erecting, has not yet been able to reduce the interest of money, not because the nature and foundation of their constitution does not tend towards it, but because, finding their hands full of better business, they are wiser than by being slaves to old obsolete proposals to lose the advantage of the great improvement they can make of their stock.
This, however, does not at all reflect on the nature of a bank, nor of the benefit it would be to the public trading part of the kingdom, whatever it may seem to do on the practice of the present. We find four or five banks now in view to be settled. I confess I expect no more from those to come than we have found from the past, and I think I make no broach on either my charity or good manners in saying so; and I reflect not upon any of the banks that are or shall be established for not doing what I mention, but for making such publications of what they would do. I cannot think any man had expected the Royal Bank should lend money on mortgages at 4 per cent. (nor was it much the better for them to make publication they would do so from the beginning of January next after their settlement), since to this day, as I am informed, they have not lent one farthing in that manner.
Our banks are indeed nothing but so many goldsmiths' shops, where the credit being high (and the directors as high) people lodge their money; and they--the directors, I mean--make their advantage of it. If you lay it at demand, they allow you nothing; if at time, 3 per cent.; and so would any goldsmith in Lombard Street have done before. But the very banks themselves are so awkward in lending, so strict, so tedious, so inquisitive, and withal so public in their taking securities, that men who are anything tender won't go to them; and so the easiness of borrowing money, so much designed, is defeated. For here is a private interest to be made, though it be a public one; and, in short, it is only a great trade carried on for the private gain of a few concerned in the original stock; and though we are to hope for great things, because they have promised them, yet they are all future that we know of.