60 Colorado College Studies. 



bonds costing much more than the reserve that the banks 

 would voluntarily hold, with only partial compensation for 

 the difference in the low interest received on the bonds. 



7. Taxes on circulation; another mode of reducing the 

 profit. Under the present national bank law, not only 

 does the tax on the notes of outside banks extinguish the 

 profit and jjrevent their issue, but the tax upon national 

 banks of one per cent, on circulation contributes materially 

 to the well-known unprofitableness to many of them of their 

 notes. 



8. Legal requirements hampering the ready circula- 

 tion of notes. For instance, that they shall be of large 

 denominations only, that they shall bear interest (this 

 cuts into the profit also), or that they shall be of cumbrous 

 size. Requirements that they should be indorsed on pass- 

 ing, that they should be on some easily damaged kind of 

 paper, that they should be presented for redemption within 

 a certain time or lose part of their face value, would have 

 similar effect. 



9. Agreement among hanks to set limits similar to 5, 6 

 and 8. In view of the number of American banks and the 

 difficulty of making and enforcing such an agreement, it 

 would be a waste of time to discuss this as a possible check 

 upon future issues here; at least till it is seriously proposed 

 to have a few large banks monopolize the bank-note issue. 



Depreciation may in times of inconvertibility act as a 

 check upon issue, but no one now proposes to have a sys- 

 tem subject to enough depreciation to come within the 

 range of that check. Another check, now practically out 

 of the field, probably acted upon the bank-note circulation 

 in America early in the century: scarcity of capital and 

 high rewards for its use in other ways than banking. Some 

 men who might have been attracted by the high returns of 

 bank-note issue were still more attracted by other enter- 

 prises that would employ their time so fully as to make 

 inconvenient the attempt to conduct a bank. 



Turning back now to see what are the checks that keep 

 our national bank note circulation comparatively small, 



