74 BANKING THEORIES IN UNITED STATES 
a! 
date itself to the state of commercial wants. . . . From this view 
of the subject, it may easily be seen, that all the benefit, which 
the public derives from banks of circulation, arises from their 
elasticity.” ! Elsewhere Raguet laid emphasis on the harm done 
by long-term loans through their rendering the banks incapable 
of properly adjusting the volume of media of payment. Bank 
currency thus loses the elasticity that is its peculiar merit.’ 
Richard Hildreth also regarded the elasticity of bank notes as 
one of their principal advantages. International trade, he ob- 
served, fluctuates considerably in amount, and if coin were its 
only medium of payment, prices would fluctuate correspondingly. 
But the use of bills of exchange, which vary in quantity with the 
seasonal needs of trade, modifies the price fluctuations. Being 
equally flexible with respect to their geographical distribution, 
bills of exchange lessen local price variations in similar manner.’ 
Now a currency of convertible bank notes, Hildreth thought, 
represents merely an application of the same principles to domes- 
tic trade. By giving seasonal and local flexibility to the currency, 
causing the latter to expand and contract with the requirements 
of trade, bank notes, like bills of exchange, greatly improve the 
quality of the precious metals as a measure of value.” * 
Stephen Colwell carried this view to its extreme. Bank notes 
should be governed as to their quantity, not by the supply of the 
precious metals, but by the necessities of the business for the use 
of which they are issued.” To regulate a currency consisting in 
part of bank credit so that it will operate like one composed 
wholly of specie, is as absurd as it would be to regulate the speed 
of locomotives by that of the horse and wagons that preceded 
them. The “whole substance of the positions taken in this vol- 
1 “Principles of Banking,” Free Trade Advocate (July 4, 1829), ii, 5, 6. 
2 “The Currency,” Free Trade Advocate (May 23, 1829), p- 321. Cp. Currency 
und Banking (1839), p- 92. 
3 Hildreth, History of Banks (1837), pp. 116, 117. 
4 Jbid., pp. 121, 122. Cp. Banks, Banking, and Paper Currencies (1840), p. 142. 
J. N. C. [Cardozo?], Southern Quarterly Review (Sept., 1850), xviii, 132, also held 
that the “flexibility to the influences of movement and pressure from without” is 
the chief excellence of mixed currency. 
5 Colwell. Ways and Means of Payment (1859), p. 37C.