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instead of carrying their gold and silver with them, merchants left their money at the bankers. then, when merchants wanted to pay a seller for goods they were buying, they wrote an order addressed to their bank. the order directed the bank to deliver a specified amount to the person or the place of the seller’s choice. the bank compared the merchant’s signature (and perhaps a seal) on the order with the signature left at the bank. the bank would comply with such written orders because, once the merchant had made a deposit, the bank was legally indebted to the depositor for that amount. consequently, if the merchant demanded return of the deposit, the bank had to give it back. the same is still known as demand instruments because they allow depositors to get their money out of banks or have it paid in accordance with the depositors order.
