498 THE POPULAR SCIENCE MONTHLY. 



It is true that notes which pass from hand to hand as money are 

 not scanned as closely as are other evidences of debt, nor can there be 

 the same discrimination exercised in their use. They must, if circu- 

 lated in small denominations, of necessity be taken by many who have 

 no means of forming correct conclusions as to the soundness of the 

 issues, and who can least afford to suffer loss. But the circulation of 

 small notes of any sort is to be deprecated. Adam Smith pointed out 

 the difference in the forms of money required for dealers and for con- 

 sumers ; that for the uses of the latter, paper money is not fitted, no 

 matter what its form or security. The soundness of this view has 

 been largely discussed since his time, but the preponderance of opin- 

 ion has been in its favor. Mr. McCulloch, in his recent report, recom- 

 mended the discontinuance of small notes. It would bring out a large 

 amount of silver and small gold, which furnish the best kind of money 

 for the smaller transactions of trade, and afford the best possible pro- 

 tection for the small dealers, the wage-earners men, women, and 

 children who suffer most from a defective currency.* If small notes 

 were retired, the smaller savings, the stocking-hoards, would consist 

 of gold and silver, and obviously it is best that this part of the coun- 

 try's reserve no inconsiderable part should be of specie. The ag- 

 gregate issue of legal-tender and national-bank notes of denominations 

 under ten dollars is about two hundred and twenty million dollars. It 

 is probable that nearly this entire amount could be replaced with gold 

 and silver before the point of specie saturation would be reached. Such 

 a volume of hard money would supply the best obtainable guarantee 

 against currency disturbances. 



That, if relieved from the function of furnishing wage and pocket 

 money, a bank currency, suited for the larger operations of trade, and 

 yet not handicapped with the obligation of special bond deposits, could 

 be established with safety, may be asserted. That banks of issue can 

 be safely conducted and furnish a sound currency has been sufficiently 

 shown under conditions far more unfavorable than now obtain in the 

 United States. The Scotch banks are examples. So well have they 

 been conducted that Professor Jevons admitted that their system 

 would be an excellent one for general adoption, " if we were all 

 Scotchmen." It may be fairly doubted, however, whether the satis- 

 factory results in Scotland are wholly due to exceptional integrity, 

 sagacity, and caution on the part of Scottish managers. May it not 

 be that the bank-currency system, properly conducted, has had a fairer 

 trial in Scotland than elsewhere ? 



One does not need to be very old to remember when this country, 

 especially the West, was dependent upon a paper currency that was, 

 for the most part, of a very trashy kind ; and to remember, also, that 



* That the forced circulation of a debased coinage, by this or any other method, is 

 not intended to be advocated, need hardly be explained ; but a discussion of the silver 

 question is no part of this paper. 



