function of
remitting money.]

These are all uses other than those of deposit banking, which banks
supplied that afterwards became in our English sense deposit banks: by
supplying these uses, they gained the credit that afterwards enabled
them to gain a living as deposit banks; being trusted for one purpose,
they came to be trusted for a purpose quite different,--ultimately far
more important, though at first less keenly pressing. But these wants
only affect a few persons, and therefore bring the bank under the notice
of a few only. The real introductory function which deposit banks at
first perform is much more popular; and it is only when they can perform
this most popular kind of business that deposit banking ever spreads
quickly and extensively.

This function is the supply of the paper circulation to the country; and
it will be observed that I am not about to overstep my limits and
discuss this as a question of currency. In what form the best paper
currency can be supplied to a country is a question of economical theory
with which I do not meddle here: I am only narrating unquestionable
history, not dealing with an argument where every step is disputed; and
part of this certain history is, that the best way to diffuse banking in
a community is to allow the banker to issue bank notes of small amount
that can supersede the metal currency. This amounts to a subsidy to each
banker to enable him to keep open a bank till depositors choose to
come to it....

The reason why the use of bank paper commonly precedes the habit of
making deposits in banks is very plain: it is a far easier habit to
establish. In the issue of notes the banker, the person to be most
benefited, can do something,--he can pay away his own "promises" in
loans, in wages, or in payment of debts,--but in the getting of deposits
he is passive; his issues depend on himself, his deposits on the favor
of others. And to the public the change is far easier too: to collect a
great mass of deposits with the same banker, a great number of persons
must agree to do something; but to establish a note circulation, a large
number of persons need only _do nothing_,--they receive the banker's
notes in the common course of their business, and they have only _not_
to take those notes to the banker for payment. If the public refrain
from taking trouble, a paper circulation is immediately in existence. A
paper circulation is begun by the banker, and requires no effort on