14 BANKING THEORIES IN UNITED STATES
These writers did not all agree in the interpretation they gave to
the three operations which they assigned to banking; but this
matter must be left for consideration elsewhere.
Not only did other functions than note issue receive attention,
but the desirability of permitting banks to exercise the very
power that many still regarded as synonymous with banking came
to be questioned. The prominent part which the circulation of
banks played in their early history, just as it led some to identify
note issue with banking, led others to ascribe to this function all
the evils of banking. It was inevitable, then, that some of those
who recognized that banks could exist without the power of issu-
ing notes should urge that they be deprived of that privilege.
Such were the suggestions of Appleton, for example, and of Ray-
mond, Gouge, Hare, Vethake, as of many others; accompanied,
usually, by the proposal that the government should reserve for
itself the privilege of issuing paper money.'
Meanwhile another line of analysis, upon a different and, per-
haps, more significant plane, was being developed. This studied
banks not with respect to their more obvious types of activity,
but with respect to their underlying influence upon the distribu-
tion of credit. Robert Hare was apparently the first to break
out the new path. Credit, he tritely remarked, enables those
who can employ the means of production most advantageously,
to gain possession of them. But individuals with loanable funds
are not always in a position to know who merits their confidence.
“Hence, to give a more general efficiency to the credit of indi-
viduals, banking institutions are established; which, by the noto-
riety of their wealth and punctuality, obtain universal credit:
and by their extensive means of information, are enabled duly to
estimate the degree of confidence to which traders may be en-
titled.” 2 Banks, then, furnish credit that is generally accepted,
on the one hand. and determine who merits credit, on the other.
1 Appleton, Examination of the Banking System of Massachusetts (1831), p. 7;
Raymond, Elements of Political Economy (1823), p. 129; Gouge, Paper Money
(1833), p. 119; Hare, Suggestions Respecting the Reformation of the Banking System
(1837), pp 9, 10; Vethake, Principles of Political Economy (1838), p. 209.
2 Hare, A Brief View of the Policy and Resources of the United States (1810),
n. 6o.
