would assure the value of such representatives of value, and under such checks and restrictions as would insure the expansion and contraction of issue in accordance with the law of supply and demand, not only in particular localities but throughout the nation. But as it is vital to the prosperity of the entire nation that its currency he incontestably and unquestionably secure, the guarantee of the whole people given through their Government should be the ultimate assurance of the security of their currency. The checks and restrictions upon its issue by banks should provide, therefore, that the liability for loss lie as far as possible with the banks, reducing to a minimum the responsibility, in any event, of the Government. To insure elasticity, these checks should be such as to necessitate the expansion and contraction of the currency in accordance with the law of supply and demand, by providing that, should there be insufficient currency, the banks would suffer loss, and that they also would suffer loss should there be an overabundance. The issue of currency by banks under governmental regulation and control should secure to the people the benefits that flow from competition reacting upon enterprise, and the benefits that come from the solidity of governmental backing. It should avoid the evils of overissue and speculative issue into which private enterprise is apt to be induced by greed and overcompetition, and the evils of that inertness which is characteristic of operations conducted entirely under bureaucratic control.
That such a system is not impossible of attainment, may be disclosed by an examination of different banking systems in force at different times and places, each of which has been characterized by one or more of the points of excellence which have just been specified.
Under the Scotch banking system, which has bravely stood the test of time, circulating notes are issued directly against the assurance of the forthcoming of human effort given by the drawers and indorsers of promissory notes. These promissory notes are paid with the results of the effort elicited by the circulating notes obtained in exchange for them. Although many of the old State banks are of unhappy memory, the Bank of Indiana and the banks of Louisiana were efficient in supplying currency for the commercial needs of their sections and are of honorable record.
An existing banking system of admirable performance is that of the Dominion of Canada. Under the Canadian banking act, adventurers and light-weight financiers are debarred from establishing banks by the fact that a charter is not issued for less than a capital of five hundred thousand dollars, of which at least two hundred and fifty thousand dollars must be paid up, and the character of the applicants is subjected to close scrutiny by the Minis-