52 BANKING THEORIES IN UNITED STATES
considered a merit, as it enables us to pay our foreign indebtedness
 when no other form of remittance is possible.!

FH

Like many of his predecessors, Hamilton failed to explain the
influence of banks on the amount of specie in a country through
the mechanism of prices. Later writers, who charged banks with
the expulsion of the precious metals, gave this matter its due.
Quite frequently the aspect stressed was not the loss of specie,
but the relation of banks to domestic industry. A paper currency,
raising domestic prices, was held to burden home producers with
a disadvantage in a manner similar to that in which a tariff protected
 them. By raising manufacturers’ costs it enabled the
foreign producer to undersell the domestic product. The argument
 was used alike by those who would return to a metallic
currency alone? and by the friends of protection, who found in
the existence of banks in this country a reason for demanding a
high tariff.?
The use that Smith, and, about 1810, a number of his American
 followers, had made of the argument that bank notes do
indeed tend to displace specie, but that they thereby effect an
economy, could hardly be ignored, however. Nor did it escape
criticism. Raymond, after quoting Smith at length, objected
that consumers’ goods, rather than productive capital, are returned
 for the specie exported; so that the exchange is that of a
spendthrift.! J. N. Cardozo, editor of the Southern Patriot, a
free-trade organ published in Charleston, South Carolina, offered
a specious argument to the effect that the country using bank
paper suffers an unfavorable balance of trade due to the inability
of the country from which it had been obtaining its gold and silver
to continue to purchase imports at its accustomed rate.? Charles

1 Report on a National Bank (1790), American State Papers, Finance, 1,170.
2 Niles’ Register (1818), xiv, 194; Samuel Hooper, Specie Currency (1855), Pp.
1-6; C. H. Carroll, “Money and Banking,” Hunt's Merchants’ Magazine (September,
 1857), xxxvii, 309; Amasa Walker, The Nature and Uses of Money and Mixed
Currency (1857), P- 39-3
 A P. Peabody, “Financial Crisis,” North American Review (January, 1858),
Ixxxvi, 176; “Speech of Buchanan in United States Senate,” 1837, Ibid., p. 134.
4+ Raymond, Elements of Political Economy (1823), ii, 152. See, also, p.135n.
5 Cardozo. Notes on Political Economy (1826), pp. 80-89.