CONTENTS 
INTRODUCTION =. . - a mame wy =, 
General characteristics of the period. — Relativity of its banking 
theories and practices. 
PART I 
THE UTILITY OF BANKS AS A SOURCE OF MEDIA 
OF PAYMENT 
I. THE FUNCTIONS OF BANKING . . 
Tendency to make banking synonymous with note issue. — Banking 
operations classified as deposit, discount and issue. — Is note issue 
essential? — Banks considered as agencies in the distribution of loanable 
funds. — Banks as clearing houses for the cancellation of debts and 
credits. — Summary. 
EARLY MINOR ARGUMENTS CONCERNING THE MERITS OF 
BANKS 3. , SR. . 
The desirability of banks a moot question. — Minor advantages 
ascribed to banks. — Arguments of their early critics. 
BANKS INCREASE THE COUNTRY’S CAPITAL. . . . . . . 
Inflationist notions in the colonies. — Their revival with the appearance 
of modern commercial banks. — Their general refutation after the first 
few decades.— The doctrine that bank-note inflation lowers the 
interest rate. — Douglass’s doctrine of appreciation and interest. 
T 
IG 
FT. 
26 
IV. 
BANKS PROVIDE AN INEXPENSIVE SUBSTITUTE FOR METALLIC 
CORRENCY Jo hai he il i ome bt ey Sa oH es 
Smith’s statement of the doctrine. — Minor corrections at the hands of 
American writers. — Critics of this alleged benefit of banking. — Con- 
clusion. 
Banks Drive Specie Out oF THE COUNTRY . . . . . . 
Colonial treatment of the doctrine. — Its influence at the end of the 
eighteenth century. — The views of later writers. 
ou 1) 
320 
V. 
48 
VI. 
Banks Cause Price FLucTUuATIONS . . . . af 
Introductory. — The charge that banks cause price fluctuations. — 
The doctrine that convertibility prevents overissue. — Criticism of this 
thesis. — Theory that the manner in which notes are placed in circula- 
tion prevents overissue. — And that the amount of notes in circulation is 
a result of conditions of trade. — A just adjudication of the dispute. — 
Colwell’s well-considered views. — Summary. 
VII. Banks ProviDE AN E1aASTIC CURRENCY. . . . . . . . 
The elasticity of bank currency, except in its mischievous aspects, gen- 
erally ignored. — But a few writers did give attention to it. 
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7C