The ruin and disaster that can be brought about by an absence of proper control over banks of issue-whether exercised by the State or a distinct corporation-is proved by the crash which took place among the American banks in 1857, when all the banks in the Union stopped payment, from the Gulf of Mexico to the frontiers of Canada. The kind of security which was demanded of the American issuing banks may be judged of from the following extract from a letter of the sub-secretary of the treasury of the United States, dated November 27, 1854, which we quote from Mr. M'Culloch's 'Commercial Dictionary:'-" The policy of many of the State governments has of late years consisted in encouraging the issue of small notes, by sanctioning the establishment of what are popularly called 'free banks,' with deposits of stocks and mortgages for the ' ultimate' security of their issues. This 'ultimate' security is, it may be admitted, better than no security at all. The mischief is, that it is least available when most wanted. The very causes which prevent the banks from redeeming their issues promptly cause a fall in the value of the stocks and mortgages, on 'the ultimate security' of which their notes have been issued. The 'ultimate security' may avail something to the broker who buys them at a discount, and can hold them for months or years; but the labouring man who has notes of these 'State security banks' in his possession finds, when they stop payment, that the 'ultimate security' for their redemption does not prevent his losing 25 cents, 50 cents, or even 75 cents in the dollar. In a circulating medium we want something more than 'ultimate security ' -we want also 'immediate' security; we want security that is good to-day and will be good to-morrow and the next day, and for ever after. This security is found in gold and silver, and in these only." If, therefore, banks of issue generally are to be compelled to keep a stock of the precious metals as security against the paper money they issue, there must be a controlling power of the very highest order that will keep a constant check upon all banks, and guarantee the community against any loss from the confidence they may place in such institutions.

Good banks add to the wealth of society. A first-class merchant, instead of lending money, gives his name upon paper, which circulates as so much more capital until it is retired. The advantages to be gained by such a process led to the formation of banks of issue, who coined-so to speak - their own credit. The wealth which such banks have amassed is quite inconsiderable as compared with the benefit which has been derived by the community generally, by the addition of so much more capital with which various enterprises have been carried out. The issue of bank-notes forms an entirely distinct increase of capital, beyond that which is furnished by the paper money which is termed bills of exchange and promissory notes; and there is a wide difference between the two classes of paper. The bank-note is circulated entirely upon the faith of the issuing bank, without redress should the bank fail. If it could be proved that a note had been received from A, and that the bank had stopped payment before the recipient B had time to present it, using ordinary diligence, B could legally recover from A; but we believe, in practice, such has seldom succeeded. The bill of exchange is almost always drawn payable at some distant period, and each person handing a bill of exchange to another has to endorse it, thereby making himself responsible for the amount, unless his indorsement be "without recourse." Some pass them on immediately; others retain them for the sake of the interest that accrues upon them. On the other hand, the note possesses the advantage of commanding cash at a moment's notice. The bill, if of first class, may also do the same, with deduction of interest; but there is no certainty. Payment by a bill of exchange does not extinguish a debt in the same way that payment by a bank-note does; until the bill has arrived at maturity, and has been duly honoured, all parties to it are liable. Banks being the great depositories for cash, are naturally always in possession of large numbers of bills of exchange; but it does not follow that when they discount these bills - if they be asked to do so-that they pay, in cash. English bankers, as a rule, only discount for people who keep their current accounts with them; and in this manner credit is still further coined. The amount of the discounted bills, minus the interest, is placed to the customer's credit, who draws a cheque for it; this cheque is sometimes negotiated and returns to the banker who discounted the bills, never having been converted into cash at all. Very many banks have branches in various parts of the country and abroad, and all banks have agencies at most cities of importance. By this means payments may be made simply by the agency of paper all over the world. A payment of any reasonable sum may now be made to a bank in London, with orders to hand it over to a certain firm in India or China, and the whole transaction be completed in a few hours. The use of an English bank, besides affording the before-mentioned facilities to the public, is to take care of valuable documents, deeds, and such like; to collect the money for all documents a customer may desire to have realised and credited to his account. The public are disposed also to look upon their banker as useful in recommending them good investments. This, however, we are of opinion a banker should not allow himself to go too far in, as he gets no thanks if the investment turn out well, and unpleasantness often arises if the contrary be the case.

The principal sources from which a bank derives its profit, and in return for which it renders important services to the public, are the following: 1. The employment of the capital subscribed by the partners or shareholders, and upon which the establishment is based. 2. The current and fixed deposits. 3. The amount of paper it is able to keep in circulation in the form of notes. 4. The commission derived from accepting against document bills. 5. The moneys collected in payment for drafts and bills sent by other banks or merchants. 6. The small charges made for working drawing accounts upon which the balance kept is not commensurate with the number of checks drawn. All the money which the bank can obtain by these means is employed for discounting loans, the purchase of securities which can be immediately realised in case of urgent pressure for funds, and cash credits, excepting what must be kept in the ' till' for immediate use. The amount required for such purpose can only be judged of from hour to hour, as the bank works; and this is one of the most important features in management, requiring much experience, depending upon the nature of the business, and many peculiarities which must be dealt with by the manager himself.