But to explain these proposals, and to gain a full understanding of many arguments that have been used, we must look more in detail at the component parts of Lombard street, and at the curious set of causes which have made it assume its present singular structure.

CHAPTER III.

How Lombard Street Came to Exist, and Why It Assumed Its Present Form.

In the last century, a favourite subject of literary ingenuity was ‘conjectural history,’ as it was then called.  Upon grounds of probability a fictitious sketch was made of the possible origin of things existing.  If this kind of speculation were now applied to banking, the natural and first idea would be that large systems of deposit banking grew up in the early world, just as they grow up now in any large English colony.  As soon as any such community becomes rich enough to have much money, and compact enough to be able to lodge its money in single banks, it at once begins so to do.  English colonists do not like the risk of keeping their money, and they wish to make an interest on it.  They carry from home the idea and the habit of banking, and they take to it as soon as they can in their new world.  Conjectural history would be inclined to say that all banking began thus:  but such history is rarely of any value.  The basis of it is false.  It assumes that what works most easily when established is that which it would be the most easy to establish, and that what seems simplest when familiar would be most easily appreciated by the mind though unfamiliar.  But exactly the contrary is true.  Many things which seem simple and which work well when firmly established, are very hard to establish among new people, and not very easy to explain to them.  Deposit banking is of this sort.  Its essence is that a very large number of persons agree to trust a very few persons, or some one person.  Banking would not be a profitable trade if bankers were not a small number, and depositors in comparison an immense number.  But to get a great number of persons to do exactly the same thing is always very difficult, and nothing but a very palpable necessity will make them on a sudden begin to do it.  And there is no such palpable necessity in banking.  If you take a country town in France, even now, you will not find any such system of banking as ours.  Cheque-books are unknown, and money kept on running account by bankers is rare.  People store their money in a caisse at their houses.  Steady savings, which are waiting for investment, and which are sure not to be soon wanted, may be lodged with bankers; but the common floating cash of the community is kept by the community themselves at home.  They prefer to keep it so, and it would not answer a banker’s purpose to make expensive arrangements for keeping it otherwise.  If a ‘branch,’ such as the National Provincial Bank opens in an English country town, were opened in a corresponding French