BANKS INCREASE THE COUNTRY’S CAPITAL 31

circulate a greater sum than the amount of its stock in coin, are,
to all the purposes of trade and industry, an absolute increase of
capital.” 1

Again, Hamilton believed that the establishment of a bank
would facilitate the payment of taxes, by “the increasing of the
quantity of circulating medium, and the quickening of circulation.”
 The quickening of circulation is another instance of what,
““to the purpose of business, may be called greater plenty of
money and it is evident that whatever enhances the quantity of
circulating money, adds to the ease with which every industrious
member of the community may acquire that portion of it of which
he stands in need.” *
Views no more sound than those of Hamilton persisted for
some time, buttressed, in many cases, by resort to the favorite
assertion of the writers of the colonial period, that the supply of
metallic money was insufficient. Thus, the committee on banks
of the House of Delegates of Virginia reported in 1816:
It has been said, that the currency of any country bears a fixed proportion
to its commerce, and consequently that a Bank cannot circulate notes, to a
greater value than the gold and silver coin which it displaces. But the institution
 of a Bank, not only promptly supplies any pre-existing defect of
specie, but increases the commerce and circulating medium of the nation,
bv the same operation.?

And Raguet’s committee of the Pennsylvania legislature reported,
in rueful retrospection of the period following 1811:

! Hamilton, p. 68. The italics are mine.
2 Ibid. Hamilton reasons similarly in his Argument on the Constitutionality of
the Bank of the United States (February 23, 1791), p. 26. Yet in opposing ‘paper
currency issued by the mere authority of the government” as distinguished from
convertible bank notes, he observes that “in the first case, there is no standard to
which an appeal can be made, as to the quantity which will only satisfy, or which
will surcharge the circulation; in the last, that standard results from the demand.
If more be issued than is necessary, it will return upon the bank.” The Government’s
 issue of paper money is limited only by the government's discretion. (Report
 on a National Bank, American State Papers, Finance, i, 71.)
The apparent inconsistency between this view and that in the text, which holds
that banks increase the volume of media of payment, is probably removed by his
support of the old contention that the country was suffering from lack of an adequate
 supply of money.
3 Niles’ Register, ix (Sup.), 157.