110 BANKING THEORIES IN UNITED STATES 
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advance of their English contemporaries. Of the latter, James 
Pennington, in 1829, seems to have been the first to insist that 
deposits be given a codrdinate importance with notes as a part of 
the currency.! The contrary view was still so widely accepted as 
late as 1844 as to be generally assumed in the arguments made in 
behalf of the Bank Charter Act of that year, which sought to 
eliminate fluctuations in the volume of the currency by rendering 
bank notes inelastic in quantity.’ 
In the United States, on the other hand, the doctrine that bank 
deposits must be reckoned a part of the currency appeared much 
earlier. We find it in Hamilton’s Report of 1790 and in Hare's 
significant essay of 1810° A committee of the Pennsylvania 
legislature, headed by Condy Raguet, incorporated in its report 
of 1821 the principle that “The right to draw a check upon a 
bank, payable on demand, is as much a part of the currency as a 
bank note.” * In all his later works > Raguet insisted upon the 
inclusion of bank deposits in the currency. Gallatin, in his Con- 
siderations of 1831, wrote: ‘We can in no respect whatever per- 
ceive the slightest difference between the two: and we cannot, 
1 Silberling, British Theories of Money and Credit, 1776-1848, pp. 124, 31°. (Un- 
published Harvard thesis.) See Tooke, Letter to Grenville (1829), pp. 117-127. 
2 Peel’s Act, and the currency principle upon which it is based, are often said to 
have been founded upon failure to appreciate the fact that bank deposits, no less 
than bank notes, function as currency. (Cp. Pierson, Principles of Economics, 
p. 457; Andreades, History of the Bank of England, p. 276; Palgrave’s Dictionary of 
Political Economy, i, 473.) To a certain extent this is true. But the currency prin- 
ciple might logically have been advocated by one who recognized that bank de- 
posits share equally with bank notes the functions of currency, but who believed, 
as did many American writers, that while bank notes may be created by the banks 
more or less at their own discretion, bank deposits represent sums of preéxisting 
media of payment placed in the bank by its patrons. In that case there would be no 
reason to regulate deposits so as to prevent their volume from fluctuating; while 
there would be reason to restrict note issues. 
3 Hamilton, Report on a National Bank (1780), American State Papers, Finance, 
i, 68; Hare, Brief View of the Policy and Resources of the United States (1810), 
Pp: 63. 
4 The report was printed in virtually all of Raguet’s later publications, e. g., 
Examiner (1835), p- 340. It seems to have been little more than an expression of 
Raguet’s own views. 
5 Financial Register (1838), 1, 406, ii, 208, 200; Carrency and Banking (1839), PP: 
82 ff.