This section is from the "Practical Banking" book, by Albert S. Bolles.
You should become acquainted with the laws relative to banking, and especially with those of your own State; and should be familiar with some work which treats of notes and bills, of the liabilities of sureties, drawers and indorsers. I recommend, as the easiest way to obtain, and to retain, knowledge in these particulars, that you make a manual, or brief digest, with marginal references to the authorities which you consult. The best books are Daniel on Negotiable Instruments, and Morse on the Law of Banks and Banking. To master these works, or even to obtain common knowledge of the immense learning which they contain, will require time—much time. But the leading principles applicable to promissors and other parties to commercial paper, are easily fixed in the memory, and no time should be lost in consulting the latter treatise, at least. I recommend to the young cashier to devote a part of his leisure to professional reading of a more general nature. The history of the system of credit is not only curious, but interesting and instructive. Strangely enough, as he will find, banking owes its origin to the Crusades, for the earliest institutions of which there is any account was a mere bank of deposit, established at Venice, late in the twelfth century, for the purpose of aiding those who fought to win the Holy Land from its unholy possessors. Such was the first element, and the degree of security and facility of commercial transactions of the period may be seen in the fact that, in England, contracts between individuals were discharged by payments in cattle, horses, dogs, and even hawks; and that rents, fines, and taxes due the crown were paid in the same kinds of property, in products of the soil, and in merchandise generally. In a word, the idea of paper money based on the precious metals, or on personal estate and credit, or on lands, had not been conceived, we may fairly conclude, anywhere. Next, if the notes of my own reading be accurate, and equally strange, we hear of some sort of paper credit, early in the thirteenth century, not in any trading country of Europe, but in far-off, and, as we commonly say, in barbarous China. So, again, toward the close of the lastmentioned century, we are told that the hated and hunted Jews and Lombards invented the bill of exchange, which afforded means for the silent and secret transfer of funds from country to country, to the infinite discomfiture of robber kings and of robber outlaws. Next, probably, in chronological order, was the promissory notes, which strange device, grave and learned judges, in solemn wig and ermine, dared at length to pronounce to worn and weary litigants, might, if traffickers so willed, pass current from one person to another, and be lawfully collected by the final owner.* Still, again, about the middle of the fourteenth century, we meet with the origin of public scrip in the governmental certificates of Florence, which, I suppose, were the first ever issued in Europe. Thus, we have five elements in modern banking. Two others, namely, those of discount and circulation, were yet wanting. Neither power was conferred upon the Bank of Amsterdam, which, founded near the opening of the seventeenth century, was designed merely, as it would seem, to check the evils of a clipped and worn metallic currency. Nor was the Bank of Hamburg, which was established immediately after, hardly more than an institution for deposit and transfer. In the progress, however, of civilization, or commercial dealing and necessity, we come at last, and toward the close of the seventeenth century, to the Bank of England, which was invested with authority to receive deposits, to buy and sell exchange, to aid in the management of public securities, to discount promissory notes, and to issue a paper currency. And so it appears from this rapid view, that more than five hundred years elapsed before all the elements of modern banking are combined, arranged, and reduced to a system in which statesmen and merchants reposed confidence.
* As late down as the reign of William and Mary, the courts of England refused to consider an inland bill of exchange a legal instrument; nor was it until the time of Anne, that a promissory note, in the hands of an indorsee, could be collected by law, of the maker.
The young cashier having, by his researches, convicted me of inaccuracy, or having established the truth of the foregoing outlines of bank history, may, as opportunity occurs, pursue the subject still further. The first charter of the Bank of England is accessible, and he may study it with profit, and to ascertain the immense progress which has been made in the principles of banking, whether as relates to rights of stockholders or to public convenience and safety. He will find valuable lessons in the legislation of his own country; in the issue of paper money prior to the revolution, which at times flooded the colonies, and which in spite of the clamors of our fathers, was suppressed by Parliament; the mar velous tales and traditions which have come down to us of the never-to-be-forgotten "continental money," without which the bonds of colonial vassalage would not have been broken when and as they were; in the earlier charters of the different State Governments, and in the two charters of Congress of the great National institution which has now ceased to exist.