148 BANKING THEORIES IN UNITED STATES
amount of notes, preferably uniform for all banks and officially
certified.!
With the passage of the general banking law of New York in
1838, subsequent suggestions for a bond-secured issue lose most
of their interest, and the arguments pro and con alone become
significant. Raguet thought that this system of note issue was,
on the whole, the best3 It did not, however, provide any certain
guaranty against excessive issue.’ Hildreth, who had urged free
banking without any government interference in his History of
Banking (1837), modified his position three years later to the
extent of sponsoring the deposit of security for notes.?
Barnard objected in the New York legislature to such a plan
of note issue as recurring to the old land-bank fallacy of confusing
ultimate security with redeemability.® Security, he said, in com-
mon with Charles Francis Adams, Gallatin, and others, is no
guaranty against an unhealthy expansion of the currency.” At
best, it was pointed out by one critic, it is only note issue that is
limited; deposits are left free to expand indefinitely.® Tucker
thought that the necessity of investing capital at a relatively low
rate of return would deter capitalists from engaging in banking.’
On the other hand, McVickar and Lord sought to show that the
1 Principles of Currency and Banking (1829), p- 107.
2 A bill was introduced in Maryland in 1831 for the establishment of free bank-
ing based upon the investment of the bank’s capital in real estate, and a copy of it
is said to have been before the New York legislature in 1838. The Financial Register
(1838), ii, 400. Michigan enacted a free banking law in 1837. It called for the de-
posit with the government of bonds and mortgages and personal bonds as security
for both notes and deposits. The law was declared unconstitutional, however.
See Knox, History of Banking, pp. 95, 410.
3 Raguet, Currency and Banking (1839), pp. 200-204.
4 Letter to Bronson (May 11, 1838), Financial Register, i, 10.
5 Hildreth, Banks, Banking, and Paper Currencies (1840).
6 Barnard, Speeches (1838), p. 193. Barnard was opposing the New York
General Banking Bill, which made mortgages as well as stocks acceptable as se-
curity, but his criticism applied also to the latter.
7 Adams, “Theory of Money and Banks,” Hunt's Merchants’ Magazine (1839),
i, 122; Gallatin, “ Suggestions’ (1841), Writings, iii, 441; South Carolina, Report
of the Special Committee of the General Assembly (1849), p- 13.
8 Publius, Remarks (1840), p- 30. .
9 Tucker, Theory of Money and Banks (1839), p- 226. In 1858 Tucker wrote in
favor of stock-secured notes. Hunt's Merchants’ M agagine, XxXxviii, 151.
