Banking theories in the United States before 1860

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Monograph

Identifikator:: 1755492553

URN:: urn:nbn:de:zbw-retromon-133529

Document type:: Monograph

Author:: Miller, Harry Edward http://d-nb.info/gnd/1055250875

Title:: Banking theories in the United States before 1860

Place of publication:: Cambridge

Publisher:: Harvard University Press

Year of publication:: 1927

Scope:: XI, 240 S.

Digitisation:: 2021

Collection:: Economics Books

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Document type:: Monograph

Structure type:: Chapter

Title:: Part II. The utility of banks as agencies in the distribution of loanable funds

Collection:: Economics Books

SUMMARY IOI automatically regulated by the requirements of business generally meant thereby that the currency is thus made to vary in amount exactly as it would were it entirely metallic! There were a few, however, who saw that the ebb and flow of modern commerce call for a more elastic currency. In this respect, they held, a mixed currency of bank notes and specie is better than one com- posed of specie alone. Yet the verdict of an overwhelming ma- jority was that the ideal norm is that of a metallic currency, and that neither their convertibility, nor the manner in which they are issued, prevents a currency of which bank notes compose a part from deviating from this standard. In part the prevalence of this view may be attributed to the fact that accommodation loans figured largely in American banking practice, and in part to the obstacles in the way of the prompt redemption of bank notes. Even Gallatin, a sane and friendly critic of banking, was inclined to think that the use of bank notes, because of their fluctuating character, is attended by a net disadvantage. On the currency side, then, banking was credited by most of the writers with offering an economical substitute for coins of the precious metals, and to this advantage a half-dozen writers added that of introducing a desirable elasticity into the media of pay- ment. Against this was placed the disadvantage of a fluctuating monetary standard. With respect to those aspects of banking that have to do with the provision of general media of payment, the most important and most wholesome influence was exerted by the doctrine that bank-note inflation merely raises prices. With respect to banking as the source of loans to business men, the influence of the quan- tity theory was to hamper the development of sound principles. Even to the end of the period but few freed themselves from the notion, illogically derived from the quantity theory, that banks can lend to their customers only so much effective purchasing ! The doctrine that a currency composed of both paper and specie should at all times correspond in quantity to one wholly metallic is often denominated the cur- rency principle. (E. g., see Palgrave’s Dictionary, i, 472.) But not all the disciples of the banking principle would have dissented; the two schools differed mainly in their opinion as to the need of regulation to achieve the desired end.

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