Money

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Monograph

Identifikator:: 1819853969

URN:: urn:nbn:de:zbw-retromon-207464

Document type:: Monograph

Author:: Cannan, Edwin http://d-nb.info/gnd/118666916

Title:: Money

Edition:: 6. ed.

Place of publication:: [London]

Publisher:: King

Year of publication:: 1929

Scope:: XII, 120 Seiten

Digitisation:: 2022

Collection:: Economics Books

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Chapter

Document type:: Monograph

Structure type:: Chapter

Title:: Part II. Further elucidations

Collection:: Economics Books

BANKS AND PRICES 79 § 3. Banks and Prices. Some writers contend that bankers control prices, forgetting apparently that prices existed and rose and fell for ages before there were any banks. It may therefore be well to recapitulate and emphasize the doctrine taught in Part I about the relation of banks and banking policy to prices. Modern banking began to be important in this respect when people first found it convenient to hold bankers’ notes for sums of money instead of gold and silver coins. The practice economized the metals, inasmuch as the bankers did not find it necessary to keep coin equal to more than a moderate fraction, perhaps a third at most, of their liability on their notes. So the invention and introduction of convertible banknotes tended to reduce the demand for the precious metals, to keep their value down, and consequently to keep general prices up. But the actual effect was small for a long time, because the demand for the metals was world-wide, while the area in which bank-notes was used was not large. Later, when the bank-note area grew in size and importance, the ability of banks to economize metal was very much restricted by legislation which insisted upon their keeping large holdings of metal against their notes. If the necessary holding ap- proached closely to 100 per cent. the metal would not be economized at all, since the fact of being able to hold considerable sums in convenient paper encourages people to hold larger amounts of currency than if they could have nothing but coin. Legis- latures have also sometimes prohibited the banks from issuin~ =ctes as small ‘n denomination as the public wor’ have been ready to accept and hold. In spite of these restrictions, however, the aggregate economy of metal arising from the use of convertible .

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