62 BANKING THEORIES IN UNITED STATES
in fact, offered as an objection to the doctrine when it did appear.!
The poor homing power that bank notes then had, owing to the
absence of channels through which they could be readily presented
for redemption, is, of course, notorious. Nor were the
banks reluctant to add to the difficulties. ‘Some new writer
upon the wealth of nations,” C. F. Adams observed, ‘might
make an edifying chapter by explaining in more detail all the
tricks that have been resorted to for puffing up the circulation.” *
Not only were there no facilities, prior to the spread of the principle
involved in the Suffolk Banking System, for sending home
notes that came from many and widely scattered banks, but the
practice of demanding payment for notes was as unpopular as it
was difficult. It was but recently, Appleton wrote in 1831, that
“brokers, who sent home the bills of country banks, were denounced
as speculators and bloodsuckers, whose extirpation
would be a public benefit.”
Ere we pass from the matter of convertibility, it should be
noted that the importance of clearing operations — virtually a
means of aiding the community in presenting notes and checks
for payment — as a preventive of unsound expansion by any one
bank, was well understood. Mathew Carey was full of mournful
forebodings of the general contraction on the part of all banks
that the liquidation of the first United States Bank would necessitate.t
Bollman gave similar warning.® “It is a fact corroborated
1 See, for example, Report of New York Bank Commissioners, United States
House of Representatives, 25th Congress, Second Session, Document No. 79, p. 236.
2 Adams, Reflections upon the State of the Currency (1837), p- 10.
3 Nathan Appleton, Examination of the Banking System of Massachusetts (1831),
p. 4. “The habit of calling for specie,” Sumner informs us, had never been formed,
and it was sternly discountenanced by public opinion.” [History of American Currency,
p. 157.] “A polite fiction” is the term the same writer applies elsewhere to the
convertibility of our bank notes during these decades. [The Forgotten Man, p. 376.]
When “good temper exists among them,” wrote the president of the South Carolina
State Bank, “banks do not present each other’s notes for redemption, but rather reissue
them over the counter. To do otherwise is to ‘manifest a spirit of hostility.””’
(Report to the Senate and House of Representatives of the State, November 1, 18109,
p. 67.)
4 M. Carey, Letters to Seybert (1810), pp. 45-50; Desultory Reflections (1810),
pp. 10 fi.
5 Bollman. Paragraphs on Banks (1810), pp. 29 fi.
