THE NATURE OF BANK DEPOSITS 111

therefore, but consider the aggregate amount of credits payable
on demand, standing on the books of the several banks, as being
part of the currency of the United States.” !
H. C. Carey contended, with wearisome repetition, that bank
deposits are, indeed, the troublesome part of the currency that
banks issue. The quantity of bank notes in circulation, being
dependent upon the wishes of the public, is relatively stable; it is
the book credits of banks that work mischief with their wide
variations in quantity.” And Carey criticized Peel’s Act of 1844
for overlooking the major cause of price disturbances.?
There were many, on the other hand, who discussed fluctuations
in prices, the necessity of keeping large reserves, regulation of
banking, and like problems, with reference to bank notes only.
In part this marked a failure to perceive that deposits are an
element of the currency; in larger degree, it seems to have arisen
from a misconception of the nature of bank deposits (whether
they be included in the currency or not) — namely, from the
tendency to regard them in all cases as credits for money actually
brought to the bank.
In England the inclusion of such items as bills of exchange in
the currency had been urged by some writers, and the merits of
the contention received some consideration in this country. Usually
 the wide circulation of bills of exchange in Lancashire was
cited, and the whole discussion was but a frank echo of the English
 one. Professor Dew thought that it was an error, in discussing
 the currency, to “lose sight of those other items, bills of exchange,
 private promissory notes, bonds, stock, etc., which do, in
fact, perform, though sluggishly, the functions of a circulating
medium.” Their great volume more than offsets their sluggish

t Gallatin, Considerations, etc. (1831), p. 31. Gallatin had reached the same
conclusion in 1809. See Report to the Senate (March 3, 1809), American State Papers,
Finance, ii, 351.
* H. C. Carey, Past, Present, and Future (1848), pp. 187-204; Principles of Social
Science (1838), ii, 392, 421; etc. Cp. Bank Notes and Specie (Anon., 1856), pp.
5, IO.
* H. C. Carey, Past, Present, and Future, p. 180; Principles of Social Science, ii,
303.