134 BANKING THEORIES IN UNITED STATES

six per cent bonds of the government would prevent overissue of
the notes, since no prudent man would keep paper money for
which he had no good use if he could convert it into such bonds.
Bollman, who would have preferred a paper currency completely
 divorced from the fluctuating metallic standard, thought
that, since the adoption of such a completely inconvertible currency
 was politically impossible, the plan of the contributor to
the Analectic Magazine should be followed.!

We turn now to those advocates of an inconvertible currency
who saw in the nature of the lending operations of the banks
themselves a sufficient safeguard against excessive issue and depreciation.
 The doctrine that bank notes, as distinguished from
government paper forcibly injected into the circulation in payment
 of public expenditures, could not be issued in excess of the
needs of trade, has already been discussed elsewhere.? It afforded
an attractive argument to the anti-bullionists, in America as in
England. Bollman inclined toward it, although he doubted that
the directors of numerous independent banks could permanently
be trusted to avoid forbidden accommodation loans? If issued
against real business paper, he contended, bank notes can never
be redundant, since ‘their amount in circulation can never be
greater than the amount of approved, discounted, commercial
bills in the possession of the banks . .. so that, in the regular
course of things, banks are always ready to absorb all the paper
which emanated from them.” * The bank notes of the day, an
anonymous writer asserted during the period of irredeemability,
were not superfluous since they had been issued through loans at
1 Bollman, Plan of an Improved System, etc. (1816), p. 33. See also, Thomas Law,
and Thomas Mendenhall in my bibliography, and Robert Hare, Suggestions Respecting
 the Reformation of the Banking System (1837), for more or less fantastic
presentations of like schemes. Mathew Carey pronounced Bollman’s proposal for
an inconvertible currency a “magnificent” one, which “would be a sovereign remedy
for all the financial difficulties of the country.” Carey later changed his views as to
the desirability of inconvertible paper; not so Bollman. See Carey’s Letter to the
Directors of the Banks (March 27, 1816).
2 See Chapter VI.
3 Bollman, Plan for an Improved System, etc. (1816), pp. 4, 10-24.
t Ibid., p. 14.