Money, Bank Credit, and Economic Cycles - The Ludwig von Mises ...

Historical Violations of the Legal PrinciplesGoverning the Monetary Irregular-Deposit Contract 101Therefore, we see that the Bank of Amsterdam did not tryto attain disproportionate profits through the fraudulent useof deposits. Instead, in keeping with the dictates of Saravia dela Calle and others we have mentioned, it contented itself withthe modest benefits derived from fees for safeguardingdeposits and with the small income obtained though theexchange of money and the sale of bars of stamped metal.Nevertheless, this income was more than sufficient to satisfythe bank’s operating and administration costs, to generatesome profit and to maintain an honest institution that fulfilledall of its commitments.The great prestige of the Bank of Amsterdam is also evidencedby a reference to it found in the incorporation charterof the Spanish Banco de San Carlos in 1782. Although thisbank, from its very inception, lacked the guarantees of theBank of Amsterdam, and it was created with the intention ofusing its deposits, authority, and clout to help finance theTreasury, it could not escape the immense influence of theDutch bank. Thus, its article XLIV establishes that privateindividuals may hold deposits orequivalent funds in cash in the bank itself, and whoeverwishes to make deposits shall be allowed to do so, either inorder to draw bills on the money or to withdraw it gradually,and in this way they will be exempt from having tomake payments themselves, their bills being accepted aspayable at the bank. In their first meeting, the stockholderswill determine the amount per thousand which merchantsmust pay the bank in relation to their deposits, as they do inHolland, and will establish all other provisions concerningthe best dispatch of discounts and reductions. 106106 We quote directly from a copy of the Real Cédula de S. M. y Señores delConsejo, por la qual se crea, erige y autoriza un Banco nacional y general parafacilitar las operaciones del Comercio y el beneficio público de estos Reynos ylos de Indias, con la denominación de Banco de San Carlos baxo las reglas quese expresan (Royal Charter of H.M. and Members of the Council, bywhich a universal, national bank is created, erected and authorized, topromote trade and the common good of these kingdoms and the NewWorld), printed by Pedro Marín (Madrid, 1782), pp. 31–32; italics added.There is an excellent profile on the history of the Banco de San Carlos by