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 I. The utility of banks as a source of media of payment

Collection:: Economics Books

16 BANKING THEORIES IN UNITED STATES We turn now to a third interpretation of the functions of banks, and one that, again, concerns itself with matters more significant than the attempt to classify their operations! The colonial writers, in common with early English writers, often conceived of banks as places where payments could be effected by the transfer of book credits that had originated through the deposit of money, or of other valuables. The influ- ence of the early continental banks, such as those of Hamburg and Amsterdam, is, of course, obvious. ‘Banks emitting Bills of Credit, as they are at this time used in Hamburgh, Amsterdam, London, and Venice,” said Benjamin Franklin, are “the general Cashiers of all Gentlemen, Merchants and great Traders in and about those cities.” 2 Despite the allusion to so modern a bank as that of London, there seems to be little to warrant the belief that deposits were regarded as an extension of credit by the banks, and little analogy can be drawn with the activities of modern banks as clearing centers in the mechanism of making payments through the cancellation of debits and credits, repre- sented by checks. Indeed, this aspect of banking operations was virtually ne- glected® until close to the Civil War, when Stephen Colwell de- voted to it the most important volume of the period.* Banks, he believed, had been incorrectly viewed as being primarily in- stitutions with the privilege of issuing and lending notes for cir- culation as currency. They are, rather, the chief agencies in the process of making payments by the offsetting of debts with credits. Ninety-five per cent of all payments in this country and Great Britain, Colwell asserted, were already being made by 1 The conception of banks as agents in the distribution of credit raised one of the most vexing problems of the period — do banks, except to the extent that they have capital of their own to lend, serve merely as intermediaries between borrowers and lenders, advancing to the one the surplus funds they gather from the other; or do they, in addition, create something? Suffice here to say, that, while the former view was the one more generally held, the latter was not without its adherents. 2 Franklin, “A Modest Inquiry into the Nature and Necessity of a Paper Cur- rency’’ (1729). In A. M. Davis, Colonial Currency Reprints, ii, 347. 3 For a minor exception, see Gallatin, Letter to Maison (1836), in Gallatin’s Writings, ii, 515. 4 Colwell. Wavs and Means of Payment (1839).

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