4 
BANKING THEORIES IN. UNITED STATES 
century, showed that they understood the quantity theory, still 
retained with it this crude idea of a given volume of media of 
payment that would “fill the channels of circulation.” 
Throughout most of the period, indeed, the problems that were 
discussed were more like those which had concerned Smith than 
the new ones to which the contemporary discussion in England 
had advanced. Quotations from English works were still pre- 
ponderantly from the early master! The noteworthy debates 
aroused by the British Restriction Period were not without their 
influence in America, especially in the latter decades; but, with 
few exceptions (in particular, Colwell’s Ways and Means of Pay- 
ment), its more subtle aspects found little counterpart here. The 
American theory remained, on the whole, less sophisticated than 
the English. 
Not that there was lack of progress. About 1820 the con- 
sideration of banking became more philosophical. Hitherto 
nearly all the writings had been distinctly occasional, called forth 
from hurried pens by some special question of the day. First we 
have the controversy in Philadelphia precipitated in 1785-1786 
with respect to the Bank of North America; then Hamilton’s 
Report on a National Bank and the arguments centering around 
the Bank of the United States; next, the problems of suspended 
specie payments, beginning in 1814. To be sure, it was in just 
such an atmosphere that the English writers had contributed so 
markedly to the progress of banking principles. But our problem 
was different: we were too new at the business of banking to de- 
velop sound theories at first hand; our experience had been too 
1 As late as 1837 the scholarly Senator Rives of Virginia declared Smith to be 
the best authority upon currency problems, and asserted that “the general prin- 
ciples he has laid down on the subjects of banking and currency continue still to 
be appealed to by the enlightened writers who have followed him, as affording the 
soundest exposition of those subjects, whatever modifications of subordinate points 
may have been made by subsequent inquirers.” William Cabell Rives, Speech 
in the Senate on the Currency of the United States (January 10, 1837), pp. 6, 7. 
Not all the unlearned writers were as candid as one pamphleteer of 1826, who 
pleaded that any error in his argument be attributed “to the head and not to the 
heart,” since his knowledge of the subject of banking, like that of a purchaser 
“sight unseen,” was “more from the outside of books than a correct knowledge of 
their content.”