ABSTRACT
This chapter identifies the basic or "ideal" forms of bank, which seem to lie at the origins of the history of banking. It discusses the ways in which these forms tended to merge the diverse types of activity and the action of regulators to limit this integration. The chapter attempts to discover the origin of modern commercial banks in the interaction between this tendency for banks to merge the ideal forms of activity and the regulators attempts to keep them separate. Investments in capital banks soon came to be used as means of payment, and eventually these banks raised funds for investment by issuing notes and then selling deposits. Most of these expedients to impose safety and stability were adaptations of the clearinghouse principle used by the giro banks. The "capital" bank formed to generate Income did not provide the aspects of banking, which Clapham called "Convenience and Security."
