BANKS CAUSE PRICE FLUCTUATIONS 57
large sums they have raised the price of public securities, and of
other articles in the market; and by refusing again to loan, have
brought on an artificial scarcity of money, and sunk the price of
the same articles.” !
With this alleged power still concentrated in relatively few
banks, it was inevitable that some should believe that it was being
exercised in the speculative interests of the owners of the banks
and of their friends. Such a charge was first made, apparently,
against the Bank of the United States. Having ‘a monopoly of
the bulk of the circulating medium,” the bank, it was asserted,
might readily reduce prices by contracting its note issue, purchase
 property, then raise prices by a policy of expansion, and
sell, at greatly enhanced prices, what it had previously purchased.2?


The causing of price disturbances became, from this time on,
the most frequent and the most serious count in the indictment
against banking. A currency of bank notes was said to be subject,
not only to the “natural” variations in value characteristic of a
metallic medium, but to “artificial” variations as well.? That a
government which regulated minutely the quantity of bullion in

! Sullivan, Path to Riches (1792), p. 47.
* Anon., Enquiry into the . . . Tendency of Public Measures (1704), p. 73. Similar
charges, that bank directors arbitrarily alter prices in their own interest, continued
to be made after the great increase in the number of banks must have made the necessary
 unity of action seem highly improbable. Raymond, Elements of Political Economy
 (1823), i, 12, after explaining that banks can determine the price level through
their control over the volume of the currency, added, ‘ Whether bank directors will
exercise this power, with a view to their own speculations, is not for me to say —
[f they do not they exercise a very unusual degree of forbearance.” Vethake was
more dogmatic (Principles of Political Economy, 1838, p. 178). On the other hand,
George Bancroft ridiculed the opinion of the McDuffie Committee of Congress
(Report, 1830, p. 11) that banks can so manipulate the currency, and observed
further that, even if they were able to do so, to distress their customers in the manner
 contemplated ‘‘ would be but a sorry imitation of the woman of classic celebrity
who killed her best hen. The golden eggs are worth more than the carcass.” A
later writer (George Dutton, The Present Crisis, 1857, pp. 18-21) made the more
plausible explanation that it is only the great capitalists, such as the controllers of
the Second United States Bank and of the Bank of England, who wield such a
power; the ordinary banker is victim, rather than participant, in the scheme.
3 Baldwin, Thoughts on the Study of Political Economy (1809), pp. 39-43; Gouge,
Short History of Paper Money (1833), p. 58; etc.