Die Industrie des Königreichs Württemberg

Banking theories in the United States before 1860

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Monograph

Identifikator:: 832772666

URN:: urn:nbn:de:zbw-retromon-75011

Document type:: Monograph

Title:: Die Industrie des Königreichs Württemberg

Place of publication:: Prag

Publisher:: Mercy

Year of publication:: 1873

Scope:: 1 Online-Ressource (111 S.)

Collection:: Economics Books

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CHAPTER XIII PRINCIPLES OF NOTE ISSUE (Continued) The currency principle. — The question of small notes, — Bond-secured issue. — I'he safety-fund system. 1. THE CURRENCY PRINCIPLE THE weightiest as well as the commonest criticism of bank notes was that they fluctuate in quantity, causing great variations in prices. An obvious method of preventing such disastrous changes in the volume of the currency was to require that notes be issued only against an equal amount of gold and silver, thus withdrawing one type of money from circulation just as rapidly as the other type was put into it. This principle was stated at the very outset of the discussion of commercial banking, but rather, it is probable, from a naive prejudice against allowing banks to lend more money than they had in their actual possession than from an intelligent understanding of the difficulties of banking upon a partial reserve. A bank, in the opinion of an anonymous writer of 1787, “should not emit a single note beyond the sum of specie in its possession.’’! James Sullivan, in his Pat’ to Riches, roused by the desire of those who wanted to establish banks “to spring a mine of wealth with- out labor,” urged the same view? and as much was implied by many of the early writers who opposed lending upon the basis of a fractional reserve largely because they were mystified by it. Proposals for an inelastic currency began to be made in the eighteen-twenties. In 1823, the year in which Joplin first clearly stated the currency principle in England, Raymond wrote that the government should never delegate to private individuals and corporate bodies its prerogative of furnishing the circulating ! Nestor, “Thoughts on Paper Currency,” American Museum (1787), ii, so. The article was a reprint, and may have been written a year or two earlier. * Sullivan, Path to Riches (1 792), Pp. 71-73, passim. Silberling, British Theories of Money and Credit, 1776-1848 (unpublished Harvard thesis), pp. 234-236.

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