PRINCIPLES OF NOTE ISSUE 155
1857, however, that the problem seems to have attracted much
attention. The New York Clearing House Association appointed
a committee to consider the matter at the beginning of 1858. The
committee reported in favor of abolishing the practice of paying
interest on current deposits, and especially upon those of country
banks.! All but a few of the members of the association supported
the report, but the minority could not be persuaded to discontinue
paying interest.
Practically all the earlier discussion of reserves referred to their
relation to circulation only. It was not until the difficulties of
handling the deposits of country banks arose, and especially
after the panic of 1857, that deposits received much attention in
the consideration of reserve policy.2
2. SUFFOLK BANK SYSTEM
The Suffolk Bank system of New England remedied one of the
weakest aspects of our early banking — the poor homing power
of notes. The underlying principle — that country banks should
provide for the par redemption of their notes in the commercial
center of the districts in which the banks were situated —
promptly became popular with writers on banking, upon its
adoption by the New England states. It was even suggested that
there was no reason why notes should be redeemed at the place
of issue if redemption were provided for at the center to which
remittances had frequently to be made.3
Opponents of the system as adopted in New England, besides
asserting the unfairness of requiring country banks to redeem
their notes at two places, contended that it gave Boston, as the
point of redemption, an artificial advantage, and caused her trade
to prosper by reason of the arbitrary force drawing bank notes to
t Bankers’ Magazine (April, 1858), xii (old series), 822-830. A fuller discussion
is given below, in Chapter XVIL
* Tucker, Theory of Money and Banks (1839), should be excepted (see pp. 207,
208). Also the reserve laws of a few states, such as Louisiana, early required reserves
of a definite ratio to notes and deposits. Dewey, State Banking Before the
Civil War, pp. 217-224.
Wilkes, “Banking and the Currency,” Hunt's Merchants’ M. agazine (Aug.,
1858), xxxix, 193.
