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.

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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. — Conclusion.

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.

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V.

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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 circulation
 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, generally
 ignored. — But a few writers did give attention to it.

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