wise than by receiving them in payment of the notes they discount; that, as all the bank notes issued are wanted to pay the notes discounted, and are, at short intervals after their issue,—say in two, three, or four months, on an average,—returned to the banks in payment of notes discounted, the bankers, as a general rule, have no need to provide for any other redemption; and that, consequently, coin, unless in very small amounts, is merely dead capital, for which the bankers have no use whatever.
And, if the practicability or utility of this system should be doubted, perhaps we may refer the doubters to the example of Scotland, where, for eighty years,—from 1705 to 1845,—all the banks of Scotland. with two or three exceptions, stood upon the principle of the individual liability of their stockholders; enjoying perfect freedom in the issue of their notes, subject only to these restrictions, namely, that they should issue no notes below one pound, and none except those made payable on demand.[1] The result was that Scotland had the best system of banks, or at least the best association of banks, for solvency, stability, and utility, that was ever known in Europe.[2] During all that period of eighty years, while the banks of England were failing by the hundreds, and many of them proving utterly rotten, and while all that did not prove rotten repeatedly suspended specie payments,—at one time for more than twenty years,—the banks of Scotland never suspended specie payments, and their notes were always equal to coin. And, by introducing manufactures, they raised Scotland, within that period, from a miserable poverty-stricken condition (the effect of her cold climate and barren soil) to a condition of prosperity and wealth second to that of no other people in Europe. These facts, and others that cannot here be enumerated at length, demonstrate that, where banks rest upon the individual liability of stockholders, or upon any other basis that gives to the public an absolute guarantee of the solvency of the banks, banking may be made perfectly free, and the amount of currency as great as can be kept in circulation, and yet that it will always be equal to coin. And they prove also that all the
