PRINCIPLES OF NOTE ISSUE

Py
Roh io

139

wf
i

-

4. BANKING STRUCTURE

Discussion of the question by whom banks should be governed
ran mostly in terms of commonplaces. The relative merits of
public and private banks was a moot question in the colonial
period, but the later writers were largely of one opinion. Hamilton,
 while urging public participation in both the ownership and
control of the first Bank of the United States, had no doubt that
it was undesirable that a bank be managed wholly by the government.!
 Despite experiments by some states in government banks,
— experiments that were not always happy, — the opinion of
practically all writers on banking, if we except those with fanciful
socialistic notions, was against banks managed by public officials.
Jackson’s proposal for “a national bank, founded upon the credit
of the government and its revenues,” * was rebuked by the Committee
 of Ways and Means with the decisiveness of an Adam
Smith. “There is no species of trade,” thought the committee,
“in which it would be wise for the government to embark; but of
all the variety of pursuits known to human enterprise, that of
lending money by the government to the citizens of the country
would be fraught with the most pernicious consequences.” ?
There was some suggestion of a prophetic eye in the committee’s
contention that every depression would bring an irresistible demand
 for extension of discounts, and that inflation would become
the platform of every demagogue.!
We have noted in an early chapter the wide-spread distrust of
even privately owned banks, and the fear of the sinister influence
of a “‘monied aristocracy.” Various measures for mitigating the
supposed danger were proposed. Hamilton and Tucker favored
rotation in electing directors.® Efforts to avoid concentration of
share-holdings and provision for regressive voting power were
! Hamilton, Report on a National Bank (1790), American State Papers,
Finance, i, 73, 74.
! First Annual Message (Dec. 8, 1829), Richardson, Messages of the Presidents,
 ii, 462.
Report of the Committee of Ways and Means (April 13, 1830), p. 27.
Ibid. ,p. 28.
Hamilton, Report on a National Bank (1790), American State Papers,
Finance, i, 72; Tucker, Theory of Money and Banks (1839), p. 216.