PRINCIPLES OF NOTE ISSUE 157

of the plan claimed that a more uniform currency would result,
the danger of an excessive amount of currency would be lessened,
and, finally, the clearings would be economically conducted.
Gallatin, however, thought the country was too large for a unified
clearing and collection system.!
The question of par redemption of notes at points other than
those at which they were issued was the subject of considerable
controversy in connection with the second Bank of the United
States and its branches, and in connection with the Suffolk system.
 Such considerations as the elimination of “shaving shops”
and of wild-cat banking lent strength to the demand for par redemption
 at Boston, New York, and other commercial centers;
and yet it was pointed out that for a country bank to redeem its
notes at par in a distant city was to force it to give its notes a
property which specie itself did not possess. Gallatin regarded it
as improper to make ‘“‘any attempt whatever to regulate exchange,
 to compel banks to redeem their notes at par or at a
certain discount at any other place than that specified on the
face of the notes, or in any way to give a uniform value in different
places to bank notes, which are in their nature a local currency.”
It is unjust to exact of paper currency “that which gold and silver,
of which it is the representative, cannot perform.” 2

3. TAXING BANKS FOR REGULATIVE PURPOSES

A fairly popular suggestion was that which would remove the
motive for excessive note issue by having the government appropriate
 all profits above a certain percentage of the bank’s capital.
Raymond urged this as a substitute for government monopoly

Colwell, Ways and Means of Payment (1859), pp. 636-642. Colwell would include
checks and bills of exchange in the clearings. A writer in Hunt's Merchants’ M. agazine
 for 1856 proposed the establishment of a national bank with many branches to
serve other banks as a collection agent for checks and commercial paper. (E.Y. C.,
in vol. xxxiv, p. 26.)
¢ Gallatin, “Suggestions” (1841), in Writings, iii, 425.
! Idem, Letter to Flagg (Dec. 31, 1841), Writings, ii, 568. Cp. Report of
the Committee of Ways and Means on the Bank of the United States (April 13, 1830),
p. 13; “Bank of the United States,” American Quarterly Review (March, 1831), ix,
226; Tucker, Theory of Money and Banks (1839), pp. 203-302.