382 Jones—Relation oj Economic Crises to Legislation. 
Out of the close connection between a controlling bank and 
the government of a country it was shown that additional evils 
might arise. If the government was often strengthened the 
bank was as often weakened. Such an institution, owing its 
position to the favor of the law, is not independent and can op¬ 
pose less resistance to the exorbitant demands which the finan¬ 
cial department of the state may make upon it than can any one 
of a number of independent competing banks. 1 Its strength will 
in this way be easily over-taxel and its solidity endangered. The 
connection is an unwholesome one as the state finds an easy means 
of obtaining money and the bank, with a reasonable claim to 
protection in case of financial difficulty, feels comparatively 
small concern. 2 
The course of the money market is then subject to the most 
violent agitations by whatever endangers public credit. The 
fact was cited that in the earlier history of the Bank of France, 
the government had persisted in making the capital of that 
institution too large, presumably with the intention of draw¬ 
ing together idle funds which should make the bank more will¬ 
ing to listen to the proposals of the government. When then 
from such or purely industrial reasons a crises comes, the bank, 
weakened by government demands or laxity due to a feeling of 
too great security, solicits the suspension of specie payment 
and the business knot is again cut instead of being untangled. 3 
1 E. Nasse. Conrad’s Handworterbuch, Bd. II, p. 32. 
a M. Chevalier says in reviewing Horn’s book, “La Liberte des Banques” 
in Journ. des Econ., vol. 3,1866, p. 857: “Avec l’esprit d’analyse le distingue, 
M. Horn a recherche pourquoi les grandes banques privilegiees avaient 
ete si sou vent en def aut; il en constate, la cause, cause a peu pres uniforme, 
il faut le dire, et qu’on retrouve identiquement la memo dans les deux 
hemispheres. Cette cause, c’est 1’immixtion du gouvernement dans les 
affaires des banques; pour parler avec plus de precision, ce sont les 
complaisances que les gouvernements ont demandees aux banques, les 
avances exorbitantes qu’ils se sont fait faire par elles, tandis qu’en prin- 
cipe une banque ne devrait faire des avances qu’au commerce. Les ban¬ 
ques privilegiees n’ont pu refuser ces complaisances, parce qu’elles 
etaient priviLgiefes.” Cf. Horn, “La Liberty de Banques,” p. 395. 
3 A. Wagner “Lehre von den Banken,” p. 15, argues that if the state 
always came to the rescue of competing banks with a grant of legal ten¬ 
der powers in case of financial difficulty as is done with privileged 
