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 III. Bank notes and bank deposits

Collection:: Economics Books

PRINCIPLES OF NOTE ISSUE 143 his £5 note wide circulation may yet engage in banking if small enough notes be permitted. Small notes pass mainly into the hands of the poor and any loss from their unsoundness is, accord- ingly, more regrettable. And, finally, there will be a less complete displacement of specie from circulation if no notes of small de- nomination are allowed.! Legislation restricting the denominations of notes dates prac- tically from the beginning of our bank laws,? and agitation of the problem began quite as early.® It was pointed out by those who would suppress small notes that they are more liable to be un- sound because they are received with less discrimination than notes of higher value, thus lending themselves more readily to the operations of the unscrupulous banker and of the counterfeiter; * and that losses from bad notes, in the case of small denominations, fall chiefly upon the poor.® The commonest argument was that the prohibition of small notes would help to keep some specie in circulation. Such notes remain in circulation longer, making it easier for banks to maintain an excessive issue. They cause metal- lic money to leave the channels of circulation and flow into the vaults of the banks, whence, “being already collected, it is silently and suddenly withdrawn; and before the public at large can have any sufficient notice of its being gone, the banks are obliged to stop their issue, and the paper previously in circulation is with- drawn also, being returned to the banks by their debtors.” ? Small notes, since they are held largely by the poor and less in- formed people, increase the danger of an alarmist run upon the banks for payment.8 Before 1850, five or ten dollars seem to have been the minimum ' Wealth of Nations, book II, chap. 2 (vol. i, pp. 305-307). * See Dewey, State Banking Before the Civil War, pp. 63-73. * [Witherspoon], Essay on Money (1786), pp. 49, 54, for example. Niles bitterly lubbed the small notes of the times “filthy dowlass.” Register (1825), xxix, 177. * Raguet, Report of 1821, Examiner, ii, 341; Lord, Principles (1829), p. 115. 5 Cooper, Lectures (1826), p. 147; Gallatin, Considerations (1831), p. 57; etc. > [Witherspoon], Essay on Money (1786), p. 54. M’Cready, Review of Trade (1820), p. 40; Appleton, Examination of the Banking System (1831), p. 47. " Lord, Principles (1829), p- 113. See Hildreth’s answer in Banks, Banking, and Paper Currencies (1840), pp. 103, 104. 8 Southern Review (Nov., 1831), viii, 25. eh 1a dh La

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