State Bank Notes. 73 



would scarcely be more, unless it depreciated, than if the 

 addition had never been made. A district within a coun- 

 try can no more enlarj^e its permanent circulation by issu- 

 ing paper than the country itself can; whatever nominal 

 enlargement may appear will be caused by depreciation. 

 Even a nominal permanent enlargement could be had only 

 through notes that were objectionable outside and were 

 issued in such volume as to exceed* the formerly normal 

 amount of money in the district; until they reached that 

 volume they would merely displace other money. With a 

 circulation thus enlarged, the district would enjoy all the 

 blessings of a depreciated paper currency and a varying 

 rate of exchange with the outside world; and unless the 

 district had a well defined frontier line, which is improb- 

 able, there would be a strip of country all around it where 

 the notes would be the cause of daily disputes and frauds. 

 If we want this state of things, we can have it; but we can 

 give the local banks free rein just as easily by national law 

 as by state law. 



IV.— EVILS OF THE TEN PER CENT. TAX. 

 The objection to the tax on state bank circulation ap- 

 pears in two forms. One of these, urging that individual 

 liberty is unfairly dealt with by a prohibitory tax on bank 

 notes that fail to conform to legally set rules, must be the 

 product of hasty writing without second thought. Surely 

 the creation of money is, like marriage, "affected by a 

 public interest," and subject to the right of the whole 

 community to protect its interest by prescribing conditions 

 for every such transaction. Does any one (except those 

 who follow their truth wherever it leads, with a Tolstoi- 

 like disregard of consequences and of other truths) pro- 

 pose that every mushroom bank or factory store shall 

 be left free to circulate its notes or "orders" as money 

 where it can? If not, some power must prohibit, and prac- 



* strictly, of course, allowauco must be made for the scattered remains of 

 the former money, and conversely for the increasing needs of trade. And to cause 

 the inflation the notes must become practically inconvertible. 



