138 BANKING THEORIES IN UNITED STATES

drgdwn for export. The logical action would be to increase the
volume of other devices of payment at such times, in order to fill
the void left by the outflow of specie. Our banking system is
falsely predicated upon the assumption that whenever our importers,
 in consequence of having overtraded, must meet a heavily
adverse balance, the business community as a whole should be
denied its usual bank accommodation; that the whole country
should be wrecked in order to save importers from the necessity
of paying heavily adverse exchange rates.!
By way of solution of the problem, Colwell urged that a bank’s
notes should be receivable at all times in payment of debts to the
bank, but that the latter should be bound to pay specie in no
other respect than that in which payment is due from its patrons
— at the maturity of the loans which brought the notes into circulation.
 Thus the bank notes would be absorbed in payment of
debts to the bank, and such as were not so returned could be presented
 for payment only after the borrower had given the bank
specie in lieu of the notes themselves. The issue of such post
notes would offer some difficulties, but Colwell did not doubt that
they could be surmounted.?

1 Colwell, Ways and Means of Payment, pp. 162, 170, 221-228. Those who opposed
 any fiduciary currency whatever, also made much of the manner in which such
a currency aggravated the hardships of an outflow of gold. Colwell’s position bears
a certain resemblance to that taken by the colonists who urged that it was lack of
gold and silver which called for the issue of paper money, in that both tend to
overlook, or deny, the relation between an enlarged circulating medium and the
balance of trade. In this connection it is well to observe that Colwell assigns to
bank credit but little influence on prices. See supra, Chapter VI.
2 Jbid., pp. 470, 492495.