STATE BANK NOTES. 



ny \V. M. HAI^L. 



The proposal to restore the privile.fjeof note-circulation 

 to banks outside of the national bank system, by reniovint; 

 the practically prohibitory ten per cent, tax, is supported 

 chiefly by the following doctrines: 



I. That the probable extinction of the national bank 

 circulation will leave a gap in the money-supply that must 

 be filled by notes of some kind. 



II. That a well-guarded system of state bank notes 

 would give us an " elastic '■ circulation. /. e., one that 

 would increase with each high tide of business, and con- 

 tract when business slackened. 



III. That state bank notes would give a larger perma- 

 nent money-circulation to parts of the country that are 

 now scantily supplied with money. 



IV. That the present prohibitory tax on state bank 

 notes violates the spirit of the Constitution if not its letter, 

 and is a dangerous encroachment upon State powers or 

 individual liberty or both. 



I.— jSTOTES to fill a VACAN(1Y. 



The first of these doctrines could be summarily dis- 

 missed, in view of the well-known habits of the interna- 

 tional flow of gold, except so far as the shrinkage of the 

 whole money-supply of the world would affect the scale of 

 prices a little; a shrinkage that can be avoided by other 

 means than bank notes. Yet the recent experience of the 

 United States with money is not only an illustration of 

 the international flow, but it is worth examination because 

 it offers striking and encouraging proof that the substitu- 

 tion of coin for national bank notes is not likely to be a 

 painful process. 



