1. Definition Of Banker

A banker has been defined as "a dealer in capital, or, more properly, a dealer in money. He is an intermediate party between the borrower and the lender." This definition applies to a banker who deals with the money of others; but he often lends his own money, and when thus acting he is one of the two original parties.

A public or incorporated bank, like a banker, receives and lends money. It always has a capital of its own to lend, besides the money or deposits of individuals.

2. Classification Of Banks

Banks may be private, and public or incorporated banks. A private bank belongs to one or more individuals. When several are associated, as often happens, they are related as partners, and the law applying to partnerships applies to them. Some of the oldest and largest banking houses are private banks. Rothschild & Co. have long been known in every part of the mercantile world. Private banking is the oldest form of conducting the business of banking, and records exist of banking transactions among the Assyrians.

3. Further Classification Of Public Banks

Public or incorporated banks are divided into state and national banks. The latter exist by virtue of national laws; the former by the laws of the different states. State banks are again divided into banks of discount and deposit, savings banks, and trust companies. One more division may be noticed. State banks may exist by special acts or laws, called charters; or by general laws, whereby every bank thus organized possesses the same rights and liabilities.

Twice in our history the national government has established by charter for a period of twenty years a bank with branches; from 1791 to 1811, and from 1816 to 1836. An attempt was made during President Tyler's administration to establish another, but he vetoed the bill, and this was the last serious attempt to found such an institution. It has been proposed on several subsequent occasions, but no bill has ever been prepared and advocated in Congress. National banks that have relations more or less close with their respective governments exist in France, Spain, Italy, Austria-Hungary, Belgium, Russia, and other European countries. Several state banks also have been founded in our own country, closely identified with the state of their origin, especially the state banks of Ohio, Illinois, and Indiana.

4. Banks Created By Special Charter

Many state banks exist by virtue of special charters granted by the legislature. This was the original mode of creating banking institutions. But the difficulties in obtaining them were often great. First, they were costly, as the legislature would not grant them until after healing or inquiry, eon-ducted like a legal trial before a committee composed of members of the legislative body, for the purpose of ascer mining whether the proposed bank would be a public benefit. Second, charters could be granted only when the legislature was in session; consequently, if individuals wished at any other time to organize a bank, they were obliged to wait until that body convened. Third, the granting of them was a prolific source of corruption.

Applicants often sought to obtain questionable privileges, which were secured by paying a heavy price. Many a conscienceless legislator knew the worth of his vote.