PRINCIPLES OF NOTE ISSUE 161
embodying his viewpoint. His Credit System in France, Great
Britain, and the United States (1838) is a unique argument for a
policy of complete laissez faire with respect to banking. Not the
least remarkable feature of it is Carey’s confident assertion (one
year after the panic of 1837) that our own banking system was
easily the best in the world, by an arithmetic law based upon
relative freedom from restriction. Like Hildreth, Carey thought
that “there is no more propriety or necessity for regulating who
shall or who shall not issue his note, to be exchanged with those
who are willing to take it, than there is for regulating who shall
or who shall not grow potatoes or make shoes.” ! With the development
of the idea of a bond-secured note issue, free banking
upon the condition that security be offered for circulation became
generally popular.
Restriction of banking privileges to corporations with exclusive
charters was defended by relatively few writers. Gallatin thought
that the power of note issue should be so restricted, but that the
other operations of banks should be left free to all.2 Tucker refuted
the absurdities of Hildreth and Carey by observing that the
interest of the community is not served when the banker manufactures
his product in as large quantities as possible? And the
holders of bank notes are unable to exercise much choice as to the
notes they will receive. H. F. Baker objected to the free banking
system as adopted in New York and elsewhere on the score that
it “invites the inexperienced, as well as others, to enter upon a
business which requires skill, experience, and talents.”
The defenders of free banking had to contend, in order to be
logical, that multiplying the number of banks within the limits
to which private capital found it profitable to do so would be advantageous
to the community. At the very beginning of our
national history some seem to have believed that the Bank of the
* Carey, The Credit System, etc. (1838), p. 118.
* Gallatin, Considerations (1831), p. 95; ““ Suggestions” (1841), Writings, iii, 446.
* Tucker, Theory of Money and Banks (1839), p. 244.
\ Ibid., p. 245.
’ H.F. Baker, “Banking in the United States,” Bankers’ M agazine (July, 1854),
Xs. 14.
