Chapter IV. Of Banks of Discount
Let us suppose that all the Banks in the country were destroyed, and that our circulating medium consisted exclusively of gold and silver coin. In such a state of affairs, every merchant would keep about his person, or in his house, his whole stock of money.
Chapter V. Of Banks of Circulation
Our American Banks are not contented with the profits derived from lending the money of depositors to other people.
As soon as the first instalment of the capital is paid in, the Bank commences issuing notes. To those who come to borrow, it lends paper or coin. The paper being exchanged for coin, serves, at least at the place where it is issued, the same purposes as coin.
Chapter VI. General Effects of this System
The rise of prices that follows an expansion of Bank medium, and the fall that follows a contraction, do not affect all descriptions of labor and commodities, at the same time, in an equal degree. The usual effect of an increase of issues, appears to be to raise still higher those articles which are rising from some natural cause; and the effect of a contraction, to sink still lower those which are falling from some natural cause.
Chapter VII. Effects on Credit
In a rising country, sound credit is of equal importance with sound currency. Through its operation, the advantages of capital are more equally diffused than would otherwise be possible. The man who has more capital than he wishes to employ in his own business, and the aged and infirm who possess wealth, lend it to the young and active. By these means, much capital is made productive, which must otherwise have remained unproductive; and many persons find employment who must otherwise have been idle.
Chapter VIII. The same Subject continued
It is a very pernicious kind of credit which Banking substitutes for the kind of credit which would exist, if we could escape the evils of government paper money, and of unnecessary alterations in our coinage.
Chapter IX. Of Banks as Corporations
Against corporations of every kind, the objection may be brought, that whatever power is given to them, is so much taken from either the Government or the people.
As the object of charters is to give to members of companies powers which they would not possess in their individual capacity, the very existence of monied corporations is incompatible with equality of rights.
Chapter X. Of the Popular Arguments in favor of Banking
The objections to the American Banks are tripartite. They are, first, such as arise from their substituting paper money for metallic. Secondly, such as arise from their introducing an unsound system of credit. And, thirdly, such as arise from their nature as corporations. If the reader will take a view of all the different operations of the Banks, connecting them together in his mind as they are connected in fact, he will require no refutation of the popular arguments in favor of the system.
Chapter XI. Of Restrictions on Banking Corporations
The evils which are produced by paper money Banking, are so great as necessarily to force themselves on the attention of those who are most deeply interested in the continuance of the system. To remedy these evils, they propose various restrictions on Banking corporations, or new modes of conducting their business.
Chapter XII. Of the Essential Qualities of Bank Notes
Bank notes are considered by some as “representatives of specie.” But, for every silver dollar they have in their vaults, some of the Banks have two paper dollars in circulation, some three, some five, some eight, and some thirteen. Bank notes cannot represent that which the Banks have not, and which is not in the country.
Chapter XIII. Of the ‘Convertibility’ of Bank Medium
Many who are inimical to paper money in every other form, are friendly to the use of Bank paper, because it is, they say, equal to specie, inasmuch as specie can be obtained for, it at the will of the holder.
