11. Though a banker is bound theoretically to repay every one of his customers instantly on demand, yet as no man whatever would spend all his money if it were in his own possession, but would keep a store of it, and spend it gradually: so when he keeps it at his banker's, he will not be likely to require it all at once, but will keep a store of it there, just as he would have done if he had kept it at home: and the banker is able to trade with it in a variety of ways, if he takes care to keep by him sufficient to meet any demand his customers are likely to make on him. The different methods in which a banker trades with the money left with him by his customers depend very much on the class of his customers and their occupations and the general business of the locality he lives in. He must adapt his business in such a way as may be most suitable for the class of customers he has to deal with, so that he may never fail for an instant to meet any demand. If his customers are chiefly country gentlemen, whose rents are remitted regularly, and who draw them only for family expenditure, he may calculate pretty accurately on the demand likely to be made on him, and he may lend out his funds on more distant securities than are proper to other cases. Such are chiefly country bankers in agricultural districts and those at the West end of London.

But when a banker does business in a trading community who are in constant want of their money, and whose demands are much more frequent and unexpected, he must adopt a very different line of business. He must then have his funds within reach at a very short notice, and he ought to have them invested in such property as he can re-sell on a very short notice; to meet any unexpected pressure on him. The business of such a banker will chiefly consist in discounting bills of exchange, and is of a distinct nature from that of lending money on mortgage.

We must now consider the various methods in which bankers trade: they are -

1. By discounting bills of exchange.

2. By advancing to their customers on their own promissory notes, with or without collateral security.

3. By means of Cash Credits or overdrawn accounts.

4. By lending money on mortgage.

5. By purchasing public securities, such as Stock or Exchequer bills.