In the past there has been a disposition among writers on the subject to deal with banking as if it were in some way an expansion or application of monetary theory. There would seem to be little justification for this view. Banking might exist much in its present form without any dependence upon the use of money, while theories of money have comparatively little bearing, except in an indirect way, upon theories of banking. The practice of viewing banking as a phase or development of monetary science has tended to narrow the discussion of the subject and to prevent the application of those general economic ideas with which it is properly to be grouped.

When banking is thought of as a specialized mechanism for the exchange of goods, and when the theory of banking is viewed as a phase or element in the general theory of exchange, the underlying principles which apply to it become clear. They are essentially the same as have been explained by the economists in their analyses of exchange. In this aspect they are, therefore, familiar, and need no detailed review further than the mere reminder that the basis for a sound understanding of banking is found in the analyses of value, particularly of exchange value, which have been recognized by economists.