THE FUTURE OF NATIONAL BANKING. 497 



cated system of credit which has made commercial growth possible, 

 nor is there any reason why this particular form of banking obligation, 

 constituting, as it does, but a minor part of the total, should, when cre- 

 ated, have other or better safeguards than the remainder. The security 

 furnished by the capital of the banks, by the ability and integrity of 

 their management, aided by governmental supervision, which must 

 needs serve for the greater part of their liabilities, should be adequate 

 for the whole. The checks and precautions, the discrimination, which 

 are applied to the use of credit in other branches of banking, the pro- 

 tection which is found to answer for depositors and holders of checks and 

 drafts, should also be sufficient for the holders of that particular class 

 of " memoranda of claims " known as bank-notes. That this protec- 

 tion can be made practically efficient is amply proved by the history 

 of the national banking system in the United States. During an ex- 

 perience of more than twenty years the average annual loss to deposit- 

 ors has been only one twentieth of one per cent of the total. 



The public have become so accustomed to the use of a bond-secured 

 currency, and have so generally credited the satisfactory results to the 

 feature of special security, that the suggestion of an unsecured cur- 

 rency, or, rather, a currency not secured by special deposits, is not 

 likely, at the outset, to be received with favor. To many it will re- 

 call the days of wild-cat banking, when the country was flooded with 

 money that was practically irredeemable, and wide-spread and serious 

 loss was inflicted on the community, especially upon the poorer classes, 

 by having worthless issues forced upon them. But there is little dan- 

 ger and no need of a revival of that vicious system. 



The lessons of the past have not been wasted ; nor are we a " na- 

 tion of rascals," in spite of sundry recent revelations of rascality and 

 weakness. More and more, as civilization advances, does the tendency 

 of people to trust each other increase. Yearly the average of pru- 

 dence and trustworthiness grows larger. If not because of a stronger 

 sense of moral obligation, then because of a better appreciation of the 

 necessity therefor in the conduct of business, men show a growing 

 respect for each other's rights, and place a greater reliance upon the 

 relations of contract. 



Mr. Spencer says, " Given a nation of perfectly honest men, and 

 nearly all trade among its members may be carried on by memoranda 

 of claims." We have not, it is needless to say, reached an ideal state 

 of perfect honesty far from it. The adoption, therefore, of an abso- 

 lutely free banking system, without limitations or restrictions, would 

 be an experiment too hazardous to be tried. There is, however, a de- 

 gree of honesty which suffices to maintain a credit system of great ex- 

 tent and complexity, involving the use of enormous sums of promises 

 to pay, and the extension of that system to cover the use of the partic- 

 ular form of promises to pay known as bank-notes is logical, natural, 

 and, with proper restrictions, safe. 



TOL. XXVII. 32 



