i182 ECONOMIC PRINCIPLES

need not always be the same in amount in two such cases.
The difference in disposition and habits, which makes some
men keep bank-notes by them while others satisfy themselves
with leaving the amount of the bank’s debt to them on
deposit at the bank, results in a difference in the probabilities
that the two forms of debt will lead to a demand for money
within a given time,
The depositors in any bank hold the bank’s debt to them
in the form of a deposit as the result of deliberate choice.
The holders of notes issued by the same bank are often involuntary
 creditors of the bank. They hold the evidence of
the bank’s debt because these notes have been circulated in
their neighbourhood, that is, because others have been
content to trust the bank. In general, the holders of the
notes give but little thought to the question of whether they
desire to trust the issuer, thinking only of being able to use
the notes for further payments. They cannot reasonably be
held to have brought loss on themselves, by culpable neglect,
if the bank should become unable to meet its payments
while they happen to hold some of its notes. As a consequence,
 the laws of most countries impose restrictions on the
issue of bank-notes, or of circulating credit notes payable
on demand, while restrictions of the freedom of creating
liabilities on deposits repayable on demand are far from
general. We proceed to examine the principles on which
such restriction of note-issue rests, and some of the most
important methods adopted for carrying it out.
In view of the influence of the money-supply on the level
of prices prevailing in a country, the unlimited issue of
paper currency presents the danger of arbitrary inflation of
prices. Such a danger is practically obviated if the paper
currency be required to be redeemed in standard coin on
demand, and the question of regulation thus turns on what
steps are requisite to ensure that such redemption shall not
be endangered.
Irredeemable paper currency has been used, at some
time, in almost every one of the leading countries of the
world. Some instances have been referred to in the preceding
 chapter, and others could be added were it necessary.