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

44 Money, Bank Credit, and Economic CyclesIsocrates explains that his client, who was planning a trip,deposited a very large amount of money in Passio’s bank.After a series of adventures, when Isocrates’s client went towithdraw his money, the banker claimed he “was withoutfunds at the moment and could not return it.” However, thebanker, instead of admitting his situation, publicly denied theexistence of any deposit or debt in favor of Isocrates’s client.When the client, greatly surprised by the banker’s behavior,again claimed payment from Passio, he said the banker,after covering his head, cried and said he had been forced byeconomic difficulties to deny my deposit but would soon tryto return the money to me; he asked me to take pity on himand to keep his poor situation a secret so it would not be discoveredhe had committed fraud. 8It is therefore clear that in Greek banking, as Isocrates indicatesin his speech, bankers who received money for safekeepingand custody were obliged to safeguard it by keepingit available to their clients. For this reason, it was consideredfraud to employ that money for their own uses. Furthermore,the attempt to keep this type of fraud a secret so people wouldconserve their trust in bankers and the latter could continuethey go to withdraw their money they do not dare ask for cash,but leave the money with you in order to collect much largerand more infernal profits. (Instrucción de mercaderes, p. 183)Richard Cantillon mentions a list of tricks used by bankers to delaythe payment of deposits in his Essai sur la nature du commerce en général(London: Fletcher Gyles, 1775), pp. 425–26. Finally, Marx also mentionsthe fear and reverence bankers inspire in everyone. He cites the followingironic words of G.M. Bell:The knit brow of the banker has more influence over him thanthe moral preaching of his friends; does he not tremble to besuspected of being guilty of fraud or of the least false statement,for fear of causing suspicion, in consequence of which his bankingaccommodation might be restricted or cancelled? Theadvice of the banker is more important to him than that of theclergyman. (Karl Marx, Capital, vol. 3: The Process of CapitalistProduction as a Whole, Friedrich Engels, ed., Ernest Untermann,trans. [Chicago: Charles H. Kerr and Company, 1909], p. 641)8 Isocrates, “Sobre un asunto bancario,” pp. 114 and 117; emphasisadded.