80 BANKING THEORIES IN UNITED STATES 
hands of the active and capable man of business,” thus giving 
existing capital greater ‘activity and a more enlarged sphere of 
utility.” 1 They can no more increase capital, he added, than a 
mill-dam increases the amount of water when it gathers together 
many little rills that would otherwise serve no useful purpose, and 
causes them to turn the wheels of industry. 
One of the principal benefits afforded by a bank, Thomas Paine 
had written at an earlier date, in a pamphlet prompted by the 
debate over the repeal of the charter of the Bank of North 
America, is that “it gives a kind of life to what would otherwise 
be dead money.” Each merchant has frequently “remnant 
money,” which can be of use to him only when more has been 
added. Half of the money in a city, Paine estimated, would lie 
thus in useless driblets, in the absence of banks to collect it and 
render it capable of being used.” 
Throughout the whole of our period, the school that denied 
that banks can do more than lend on the one hand what they 
borrow on the other was very large.? Francis Bowen put the case 
succinctly when he said that banks, in their deposit and loan opera- 
tions, “only play the part of brokers in this matter, bringing 
borrowers and lenders together.” Quite frequently this operation 
was coupled with that of providing a cheap currency in substitu- 
tion for costly metallic money, and the two were held to exhaust 
the possible advantages to be derived from banks. 
1 Tucker, Theory of Money and Banks Investigated (1839), pp- 199, 200. This 
rather obvious doctrine was an old one. See, for example, Henry Robinson, ‘“Eng- 
land’s Safety, in Trade’s Encrease” (1641), in W. A. Shaw’s Select Tracts, etc., 
pp. 55, 56. It is also found in Benjamin Franklin’s “ Modest Inquiry into the 
Nature and Necessity of a Paper Currency” (1729), Davis's Reprints, ii, 347. 
2 Paine, Dissertations on Government, etc. (1786), pp. 167, 168. Cp. Mathew 
Carey, Debates and Proceedings (1786), p. 104, for a similar view. 
3 “The legitimate object of banking, if it has any object at all, is for those pos- 
sessed of money to lend it on favorable terms to those who need it in the furtherance 
of their business, and who pay the lender a fair rent for its use. The incorporation 
of banks had for its object the collection of many small capitals into a common res- 
ervoir, to be applied in the same way.” T.P. Kettell, “The Money of Commerce,” 
De Bow’s Review (1848), vi, 253. That bankers can do no more than this was the 
view of S. P. Newman, Elements of Political Economy (1835), pp- 113, 114; D. D. 
Barnard, Speeches (1838), p. 162; Vethake, Principles of Political Economy (1838), 
pp- 170, 171; and many others. 
4 Bowen. Principles of Political Economy (1856), P. 449.