A banker is primâ facie influenced by the respectability of his own customer, who is the drawer or indorser of the bill. He ought however to acquire specific information regarding the persons upon whom his customers are in the habit of drawing, and satisfy himself that they are likely to be genuine bills. And this vigilance should never be relaxed in any case whatever. We hold it to be utterly contrary to all sound banking to take bills merely on the supposed respectability of the customer. But we believe it to be far too common a practice to look merely to the customer's account. Customers begin by getting the character of being respectable - they bring perhaps good bills at first - and keep good balances: and their bills are punctually met. This regularity and punctuality are very apt to throw a banker off his guard. He thinks his customer a most respectable man doing a good business: all the bills are taken to be trade bills. By and by the customer applies for an increased discount limit, on account of his flourishing business. The banker is only too happy to accommodate so promising a customer. His discounts swell and his balances diminish, but still his bills are well met. However the time comes, perhaps when the banker thinks it prudent to contract some of his accounts, and this may be one which he thinks it expedient to reduce: and then, perhaps he makes the pleasant discovery, that there are no such persons at all as the acceptors, and that the funds for meeting all these bills have been got from himself!

Such cases as these are not unlikely to happen when London houses supply small country tradesmen and draw upon them. When a man has established a good character, it is impossible to require information about every bill before it is discounted: but we do not hesitate to say, that it is of the first importance that a banker should be constantly probing his customer's accounts, and get information of the persons they draw upon. It was wittily said by some one (Lord Halifax we believe) "that man in this world is saved chiefly by want of faith." This is eminently true of banking. A banker should be the most suspicious of mortals: he should have implicit faith in no man. The amount of villainy and rascality which is practised by means of accommodation and fictitious and forged bills would exceed belief, if such disclosures were made public. However it is contrary to the policy of bankers to allow it to be known how they are robbed and cheated. Their interest covers a multitude of sins. If criminals were prosecuted according to their merits the calendar would swell up to a frightful extent. There is, probably, no class of persons who see felonies committed so frequently as bankers, and are necessitated to let them go unrepressed and unpunished. And there is reason to fear that such things are encouraged by the too easy faith reposed in their customers by bankers. If bankers laid out more expenditure in the "Intelligence department," we believe it would be amply repaid, and many would have been cut short in a career of crime, of accumulated robberies, which generally terminate in disaster to the bank.

As it is contrary to all sound principles of banking to discount bills solely on the customer's respectability, as appearing from his account, so any customer should be regarded with suspicion who is not ready and willing to communicate information to his banker about his affairs. If he will not do so, how can he expect him to give him assistance in the day of trouble? Some customers however are mightily indignant if their banker will not discount their bills on the strength of their names, without regard to the acceptor. But as such a practice is contrary to sound banking, so it will invariably be found that these are not desirable customers to have, and it would be well for a banker quietly to shake off his connection with them, as in the long run, they will probably bring him more loss than profit.

So much for discounting bills of exchange, which consists of buying debts, and not lending money. A banker however may not always be able to find a sufficient quantity of eligible debts to buy, to absorb all his disposable funds, or he may not choose to employ them all in that way: and some of his customers may want a loan on security, who have no bills to sell. The banker takes his customer's promissory note for the sum payable, at the date agreed upon, and also a deposit of the convertible security as collateral. He does not advance on the goods or security itself - that is the business of a pawnbroker - but on the personal obligation of his customer, and the securities are only to be resorted to in case of the failure of his customer to pay his debt. These convertible securities are chiefly Public Stock, Bank Stock, India bonds, Shares in commercial companies, Dock Warrants, Bills of Lading. Whenever he takes any of these as collateral security, he ought to have a power of sale from his customer in case he fails to discharge his obligation. These loans, though they may be sometimes made to respectable customers, are not desirable advances for a banker to make, and he should be chary in encouraging them too much, for they frequently are demanded from the borrower having locked up too much of his funds in an unavailable form. There is then the danger of the obligations not being paid at maturity, and then come requests for renewals, and the banker is either driven to the unpleasant necessity of realising the security, or else having his temporary advance converted into a dead loan.

Persons who seek for such advances habitually are most probably speculating in joint stock companies' shares. They buy up shares on speculation, which they hope will advance in price: they then wish to pledge the shares they have already bought to purchase more: then perhaps a turn in the market comes, and the value of the securities goes down rapidly: they are unable to pay their note: and the banker may perhaps have to realise the shares at a loss. During the railway mania of 1845, a number of banks, called Exchange banks, were founded expressly on this principle of making advances on joint stock companies' shares, especially railway shares. But they were all ruined, and some of them, we believe, suffered frightful losses from the great fall in the value of railway stock.