210 POPULAR SCIENCE MONTHLY. 



■would assure the value of such reiDresentatives 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 pro- 

 vide, 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 govern- 

 mental backing. It should avoid the evils of overissue and specu- 

 lative 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 bureau- 

 cratic 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 com- 

 mercial 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 estab- 

 lishing 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 char- 

 acter of the applicants is subjected to close scrutiny by the Minis- 



