12 IV. G. Langworthy Taylor 



had been taught. Clearer ideas on any public topic involve a 

 modification of our ideals, and this modification, in turn, leads 

 us into a course of conduct more in conformity with the actual 

 conditions. These conditions, as already implied, consist not only 

 in the physical opportunities afforded by the physical plant of 

 modern life, but also in habits and customs which, whether they 

 be reasonable or unreasonable, are even more slowly modified 

 than the conceptions which we have just shown are changing to 

 suit circumstances. 



One such fixed form of thought is as to the special nature of 

 the banking business ; that it is much more important than any 

 other business, since it involves control of all businesses. While 

 that view is partly true, doubtless it is exaggerated and leads to 

 exaggerated conclusions. Is the banking business so different 

 from all other business that all the demand liabilities of the bank 

 should be guaranteed by the government? It has been customary 

 for some governments to guarantee the note issues of their banks, 

 or to provide, in banking legislation, that the state bank shall 

 itself put up a guaranty fund for the notes rather than the de- 

 posits. And from this the step seems very easy to the putting up 

 of a guaranty for all of the demand obligations, that is to say, 

 for the deposits also. Some countries, like France, do not guar- 

 antee even the note circulation. It is significant that the Bank 

 of France, which already has the largest note circulation and 

 whose business is practically entirely a note business, is subject 

 to no legal regulation, except a nominal upper limit of note issue, 

 and that this same bank carries the biggest reserve of any bank 

 in the world. In other words, without legislative provision, it 

 takes the greatest precautions to safeguard its demand obliga- 

 tion. It is only fair to say that the governor of the bank is ap- 

 pointed bv the government and that there is considerable room 

 here for government interference. 1 



But the business of raising potatoes is a business of public in- 

 terest, — everybody consumes potatoes. Potatoes are needed even 

 more than bank loans. Why should not the government guaran- 

 tee the price of the potato crop? The proposition for the state 



Dunbar. Chapters on Banking, 52. 



232 



