PRINCIPLES OF NOTE ISSUE 163

banks would be likely to lead to runs upon their neighbors.! Niles,
who at first had given rather little attention to banks, suddenly
began to harp upon the necessity of reducing them “to a proper
number.” “After the evils entailed upon our country by negro
slavery,” he wrote, ‘‘ there are none, in my opinion . . . so fatal to
the freedom and prosperity of the people as the multiplication of
the banking establishments.” 2
“Under any system of paper money,” Gallatin wrote to the
English banker, Horsley Palmer, ““a single bank of issue, such as
that of England was sixty years ago, such as that of France [is]
now, is to me the beau idéal.” * And H. F. Baker wrote in his
history of American banking that, when the number of banks has
been sufficiently enlarged to secure to the public the benefit of
competition, “it appears to be as unwise to multiply them any
farther as it would be to make any unnecessary addition to the
number of our colleges.” * Tucker, Raguet, and a number of
minor writers agreed that “The increase of banks of issue when
the supply of their paper is already equal to the demand, is a loss
to the community, in as far as it is an increase of expenditure without
 any increase of utility.” ® There is a certain amount of work
for banks to do, and competition is desirable, but as soon as
enough banks have been established to accomplish the work and
secure competition, further increase in the number of banks only
adds to the expense at which the bank services will be furnished.

The question of a national bank, which played so prominent a
part in our banking discussion, was largely a political issue. The
underlying factors were economic, however. In some respects the
problem was intimately tied up with that of the most advantageous
 number of banks to have. This was especially true when
the establishment of a national bank enjoying a monopoly of note
issue was favored.

! Baldwin, Thoughts on the Study of Political Economy (1809), p. 46.
' Niles’ Register (June, 1817), xii, 263.
* Gallatin, Letter to Palmer (May 1, 1833), Writings, ii, 462.
! H. F. Baker, “Outline History of Banking in the United States,” Bankers’
Magazine (Oct., 1856), xi, 255.
8 Putnam, Tracts on . . . Political Economy (1834), p. 9. Cp. Tucker, Theory, etc.
(1839), pp. 217-219; Raguet, Currency and Banking (1839), p. 79.