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

104 BANKING THEORIES IN UNITED STATES ® Granting that those who thought that banks can, for a con- siderable period at least, raise prices by inflating the currency, were inconsistent when they denied banks the ability to lend more efiective purchasing power than they received from depositors, is the same to be said of those who held that the export of specie promptly checks the tendency of bank notes to alter the volume of media of payment and prices? Their self-contradiction was no less real, if, perhaps, a little less obvious. They conceded that banks, while they may not enlarge the currency, supplant a part of its metallic portion by their own issues. Now, unless the indi- viduals who receive the bank notes simply hand over the specie that is displaced and exported, a readjustment of relative pur- chasing power has occurred. But, obviously, these individuals do nothing of the sort. The specie that is exported represents the relinquishing of command over the nation’s wealth, not by these individuals, but by the community at large, as ultimate consumer of the foreign products that are accepted, in the stead of domestic products, by virtue of the price changes resulting from the infla- tion of the currency through the issue of bank notes. Gold move- ments may restore the preéxisting number of units of media of payment, but the banks’ borrowers now hold a larger proportion of them. Again, if all the leading countries in the world were to enlarge their media of payment pari passu, practically no gold move- ments would follow. The laws governing the international distri- bution of currency would merely indicate a higher level for each country. A few writers discussed this case, and asserted that “no result of any moment would ensue, except an universal rise of prices.” 1 In believing that banks would still serve but as inter- mediaries between borrowers and lenders, they made the same that sudden contraction, perhaps precipitating numerous business failures, becomes necessary. Whatever benefits resulted from the preceding expansion are then liable to be offset. At best no nice quantitative determination of the influence of bank loans upon a country’s wealth is possible. Our thesis probably has its clearest sig- nificance in explaining the advantages of having a well-regulated commercial banking system as compared with having none at all. 1 Eleazar Lord, Principles of Currency and Banking (1829), p- 18. Cp. Raguet, Currency and Banking (1839), pp- 83, 84.

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