12 



W. G. Langii'orthy Taylor 



Role of the 

 phrase " an 

 asset cur- 

 rency." 



Academic 

 analysis slowly 

 spreads 

 through the 

 community. 



Is the bank- 

 ing business so 

 important as 

 to be singled 

 ont for state 

 control? 



of the note to the deposit, through the efforts of a few states- 

 men, influenced by academic models, like the Hon. Charles N. 

 Fowler of New Jersey. 



As usual in any campaign of education, it has been necessary 

 to cajole the banker up to this point by inventing the new and 

 again inaccurate expression, " an asset currency." This phrase 

 has taught the bankers of the United States that bank notes are 

 merely issued in exchange for individual notes, in precisely the 

 same sense as deposits are so exchanged — a point that was fully 

 explained by Dunbar and McLeod, thirty and forty years ago. 

 It remains to educate the banker and the public as to the peculiar 

 guaranty that this exchange involves. 



In legislation on the subject of banking, one expects to find 

 some progress, and, as already intimated, not without realization. 

 Distinctly, the discussions of the nineteenth century have led to 

 clearer ideas and to some improvements in legislation. The 

 influence of professors of political economy and of close students 

 of finance has been, of course, quite indirect. Even what college 

 undergraduates have learned on this subject, in the last twenty- 

 five years, has not been clearly retained by them when, in the 

 later hurlyburly of life, and under the pressure of the practical 

 needs of the moment, they have too often lost the general bear- 

 ings of what they had been taught. Clearer ideas on any public 

 topic involve a modification of ideals, and this concession, in turn, 

 leads to a course of conduct more in conformity with actual 

 conditions. These fixed circumstances, as already implied, con- 

 sist not only in the physical plant of modern life, but also in 

 habits and customs which, whether they be reasonable or un- 

 reasonable, are even more slowly modified than the conceptions 

 which have just been shown to be undergoing change. 



§ II. One such environing form of thought is as to the special 

 nature of the banking business : that it is much more important 

 than any other, since it involves control of all businesses. While 

 that view is partly true, it is too frequently exaggerated. Is that 

 calling so different from others that all the demand liabilities of 

 the bank should be warranted by the state? It has been cus- 

 tomary for some governments to guarantee the note issues of 



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