On Banking Definitions

Peter Bruegel the Elder, The Tower of Babel (1563), Kunsthistoriches Museum, Vienna.

Peter Bruegel the Elder, The Tower of Babel (1563), Kunsthistoriches Museum, Vienna.

Whenever someone leaves something into the custody of another, usually but not necessarily against a fee, the contract between the two parties is said to be a deposit and that something must be surrendered on demand. The custodian cannot use the thing delivered or, if goods are fungible, must at all times keep the same quantity of the good under custody. When someting is delivered for another to use, usually but not necessarly against a fee, then the contract arising is called a loan. The loan is not callable on demand but has an agreed term for the delivery of the thing lended.

Regardless of definitions, whenever someone makes a bank deposit, it is actualy lending that money to the bank. He may feel this is unfair or incorrectly so. But it is unwise to treat the matter differently.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s