158 BANKING THEORIES IN UNITED STATES

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of issue.! The committee on money and banking of the Pennsylvania
 legislature recommended the plan in 1821.2 Gallatin
thought not only that such a tax would make for more conservative
 banking, but that the profit from note issue was one in which
it was peculiarly appropriate that the government participate.
This latter notion was of course common, although those who
shared it seem to have preferred, like Raymond, to go further and
have the government reserve for itself the very power of note
issue.
Nathan Appleton advocated a tax levied directly upon circulation,
 proportioned to its authorized volume. As a member of the
House of Representatives he proposed such an amendment to the
bill for rechartering the second Bank of the United States. This
he thought, “would take away the inducement of profit, which
every Bank now has, to increase its circulation to the utmost.” °
An anonymous critic pointed out the fallacy of basing a tax seeking
 that end upon the maximum amount of note issue authorized.
Instead, the amount of circulation actually outstanding should
be made the basis of the tax.®
More frequently, however, propositions to tax note issues for
regulative purposes would impose the tax only when the notes
were inconvertible. Massachusetts enacted such a tax in 1810,
and the charter of the second Bank of the United States imposed
a penalty of twelve per cent interest on deposits as well as notes
for failure to redeem them on demand.” Tucker would limit the
dividends of banks to six per cent whenever they suspended specie
payments, and reduce the percentage still further in case of prolonged
 suspension.8

1 Raymond, Elements (1823), ii, 157.
2 Report (1821), Examiner and Journal of Political Economy, ii, 342.
3 Gallatin, Letter to Biddle (Aug. 14, 1830), Writings, ii, 436.
4 Appleton, Remarks (1841), p. 44.
5 Ibid.
8 Remarks on Mr. Appleton’s ‘“ Remarks” (1841), pp. 42-44.
7 Dewey, State Banking Before the Civil War, p. 75. The Massachusetts tax was
at the rate of 24 per cent.
8 Tucker, Theory of Money and Banks (1839), p. 200.