could at any time be produced: the evils of over-issues being confined to the Banks upon which the demand for gold would arise.
"5. That besides this, if the Banks confined their loans to real bills of exchange and real transactions, they would not be liable to any excess of issues whatever."
"With these views of the working of our paper system, nothing," says Mr. Joplin, "could be more reasonable than his (Smith's) conclusions as to its value. It was evidently one from which much good might be derived, and no harm."
What Adam Smith had immediately in view, was the Scotch system of Banking, which is carried on by unincorporated companies, each of the members of which is responsible, in his whole personal and real estate, for the whole amount of debts due by the company: and the English country system, which is carried on by private co-partnerships, the members of which enjoy no special privileges or exemptions. His views afford little or no support to the American Banking System. To a small note circulation he was a decided enemy. His judgment was, that country Banks should issue no notes of a less denomination than five pounds sterling, or twenty-four dollars Federal money: and that city Banks should issue no notes of a less denomination than ten pounds sterling, or forty-eight dollars Federal money. The whole tenor of his book is in decided opposition to the practice of conferring peculiar privileges or exemptions, on any men, or any bodies of men, and is, consequently, in decided opposition to a fundamental principle of the American Banking System.
The principles of Smith were generally received till the year 1797. The Bank of England then suspended specie payments, and permission was given to it and to the country bankers, to issue notes of as low a denomination as one pound. The country Banks were required to make payment in notes of the Bank of England: while the Bank of England itself was placed under no restraint whatever but the discretion of its directors.
This state of things necessarily drew the attention of political economists to the subject; and, as Bank of England paper did not, for some years, undergo any sensible
