154 BANKING THEORIES IN UNITED STATES
avoid infraction of the law in case of an unexpected demand for
specie.
After the crisis of 1857 the banks were more commonly criticized
 for keeping insufficient reserves than had been the case
before. The tendency of surplus funds from all sections of the
country to flow toward New York had already become pronounced,
 and it was against the New York banks in particular
that most of the criticism was directed. The bank vaults of New
York, Hooper observed, were the great depositories of the nation’s
reserves, and upon the policy of the directorates of that city the
credit structure of the country depended. But the independent
action of the several boards could not be relied upon.> “The law
must secure the uniform ability of the banks to meet their engagements
 by making it imperative upon each one of them to
hold the requisite amount of specie as a condition of their power
to discount.” 3 The Boston banks and those of other minor
money centers, as well as the New York institutions, should hold
such ample reserves for their several regions of the country, that
balances placed in them by country banks might be confidently
regarded as the equivalent of specie. Edmund Dwight, who had
written to the same effect in 1851, now found it opportune to repeat
 his views at greater length.’
The evil effects of paying interest upon the deposits of other
banks — in particular the tendency that such a practice has to
force the depository bank to expand its loans in order that costly
resources may not lie idle — had been remarked upon earlier in
the eighteen-fifties.® It was not until after the disastrous crisis of

1 Hooper, Specie in Banks (1860), p. 27.
2 The notion of a central bank, in the present-day sense of one charged with the
responsibility of maintaining the reserves upon which rests the credit of the whole
banking community, was almost entirely wanting. One or two writers, however,
took the exceptional view that the second Bank of the United States had such a
function. See below, pp. 165-167.
3 Hooper, Specie in Banks (1860), pp. 43, 44. It will be recalled that Hooper
believed that the passage of a minimum reserve law would bring about the keeping
of surplus reserves by all prudent bankers.
4 Hooper, 0p. cit., p. 46.
5 Dwight, “The Progressing Expansion,” Hunt's Merchants’ Magazine (1851),
xxv, 152; ‘‘ Financial Revulsion,” Ibid., xxxviii, 159-162.
6 Silex, Letters (1853), p. 8.