PRINCIPLES OF NOTE ISSUE

135

interest, and borrowers would have been able to obtain them at
a lower rate than that charged by the bank had they tended to
become excessive.!
The doctrine that bank notes need not be convertible, because
the manner in which they get into circulation precludes the possibility
 of their exceeding the needs of trade, received but little
support in this country, however. The one noteworthy statement
of it came at the end of the period, at the hands of Stephen
Colwell.* Colwell developed the argument for inconvertible bank
currency in a large volume devoted to this problem, which showed
him to be decidedly superior to any of his predecessors in capacity
for sustained analysis. His Ways and Means of Payment (1859) is
undoubtedly the most searching and original single treatise contributed
 to our subject during the period in which we are interested,
 and calls for a rather extensive treatment.
Colwell begins with an explanation of money of account, “the
language in which prices are expressed, and books of account are
kept.” * Though the unit of money of account originates from
some coin, or special weight of specie, it soon becomes so fixed in
the consciousness of men as a unit of value, that they “carry the
memory of that value in the mind, and use it with the same effect,
abstractly, as if referring to the coin.” ¢ And it need have, nay,
should have, no corresponding unit in actual coinage. ‘‘Whatever
 may be said of the policy of fixing the price of any article,
even that designated for money by law, it cannot be questioned
that it was a false step to endanger the steadiness of the money
of account by fastening it to any coin or quantity of gold.” When
gold depreciates as a result of its influx, it should be quoted at a
correspondingly lower price per ounce in terms of money of account;
 instead of which the unit of money of account now shares

! Suggestions on the President’s Message (1815), p. 12. Cp. Bollman, op. cit., p.
35, and Paragraphs on Banks (1810), p. 50.
? For minor discussions of an inconvertible currency, see Mathew Carey,
Essays on Banking (1816), pp. 163-181; A. B. Johnson, Treatise on Banking (1849),
p. 20; Anon., Currency Explosions (1858), pp. 7-10.
> Colwell, Ways and Means of Payment, p- 2.
' Ibid., pp. 31, 32.
5 Ibid., p. 50.