Chapter XIV. Of the ‘Elasticity’of Bank Medium
“The value of Bank medium,” says a writer on this subject, “consists in its elasticity—in its power of alternate expansion and contraction to suit the wants of the community. In truth, the merit of a Bank is nearly in proportion to the flexibility of its means.”
Chapter XV. Is Paper Money cheaper than Specie?
The events of the last thirty years, have created a suspicion in most men’s minds, that there is something not exactly right in our Banking system. Indeed, the very head of the system, the President of the United States Bank, seems at times half a sceptic as to its utility. He acknowledges that it is attended with great danger; but then he says, “the substitution of credit for coin, enables the nation to make its exchanges with less coin, and of course saves the expense of that coin.”
Chapter XVI. Of the Tax paid by the People to the Banks
The thirty-one chartered Banks of Pennsylvania had, in November 1829, according to the statement of Mr. Gallatin, a nominal capital of $12,032,000.
Chapter XVII. Of the Formation of Bank Capitals
When the uninitiated hear of Banks having capitals of 500,000 or of 1,000,000 dollars, they suppose that these institutions had at their commencement, or some time after, real money to this amount. It is a very natural supposition; but not a true one. The Banks create their own capitals in the same manner that they create the money they lend to the people.
The usual method of proceeding is as follows:
Chapter XVIII. Of Speculations in Bank Stock, and of other Stock Jobbing
It is well worthy of remark, that, though the Banks derive as much profit as private capitalists, from so much of their capital as is invested in real estate and public securities, however they may have got that capital, and however they may have formed it: and though they derive from 12 to 18 per cent. from so much of their capital as is employed in discounting, they do not, on an average, divide more than six per cent.
Chapter XIX. Of the Ways and Means by which Charters are Obtained and Renewed
When a bill was under consideration in the year 1828, to renew the charter of the New York State Bank, General Root, then speaker of the Senate of that Commonwealth, made a speech, from which the following is an extract:
Chapter XX. Summary View of the Advantages which the System gives to some Men over others
If two individuals should trade with one another, on the same principle that the Banks trade with the community, it would soon be seen on which side the advantage lay. If A should-pay interest on all the notes he gave, and finally pay the notes themselves with his own wealth, and if B should receive interest on all the notes he issued, and finally pay the notes themselves with A’s wealth, A’s loss and B’s gain would be in proportion to the amount of transactions between them.
Chapter XXI. Of the Remote Consequences of the System
Our view of the extent to which paper-money Banking affects our social condition, will be very imperfect, if we confine it to the direct operations of the system. These are, as it were, but the first links of a long extended chain. Each effect becomes in its turn a cause; and the remote consequences are of more importance than the immediate. To prove this, a few plain truths will suffice.
Chapter XXII. Effects on Moral Character
The practices of trade seem, in most countries, to fix the standard of commercial honesty. In the Hanse towns and Holland, while they were rising to wealth, this standard was very high. Soldiers were not more careful to preserve their honor without stain, than merchants were to maintain their credit without blemish.
Chapter XXIII. Effects on Happiness
The inferences the intelligent reader must have drawn from what has already been stated, preclude the necessity of much detail in this part of our inquiry.
