Competitive Banks of Issue. 
885 
In this way under the regime of “ laissez faire” a tendency to 
the gradual employment of methods which must inevitably lead 
to a crisis is checked in its first development by a stronger 
opposing force; the self-interest of competitors. Such in out¬ 
line are the arguments that have been employed, in France, in 
the discussion of the privileges enjoyed by the bank of France. 
The experience of the United States has furnished material 
to both sides in the discussion of the question of bank note 
issue. Coquelin writing in 1848, cited New England as having 
a large number of banks and yet being particularly free from 
the disturbances that trouble the rest of the world. * 1 Juglar in 
answering Coquelin’s argument in 1891, affirms that financial 
crises in America have not only been as frequent as elsewhere 
but of even greater violence. 2 
A most valuable means of securing to a system of numerous 
privileged banks, such as exists in the United States at pres¬ 
ent, the advantages of the power and confidence of a single 
great bank, in times of crises, lies in voluntary combination. 
This has been effected in this country, by the grouping of a num¬ 
ber of important banks, through clearing house associations. In 
New York such unions were effected in 1873, 1884, 1890 and 
1893. During the last panic this method of union was also suc¬ 
cessfully adopted in Boston, Philadelphia, Pittsburg and else¬ 
where. The importance of these experiments for the future of 
financial prosperity can scarcely be over-estimated. 
The financial conditions of this country during the crises of 
1857 have been made the subject of thorough study by European 
writers. In his message to the thirty-fifth congress President 
Buchanan denounced in the strongest terms the “extravagant 
and vicious system of paper currency and bank credits, exciting 
the people to wild speculations and gambling in stocks. ” 3 The 
charge here made of reckless bank-note issue has not been sus- 
moins egaies a celles qu’el rencontre dans le commerce pour les autre 
op rations de credit.” Journ. des Econ., vol. 42, pp. 173-174, Art. “De 
Liberte des Banques.” 
1 He in particular mentions Rhode Island which, in 1830, had 47 banks 
or one for every 2,064 of its inhabitants, op. cit. pp. 448, et suiv. 
2 Art. “ Crises Commerciales,” § 2 in Say’s “ Dictionnaire.” 
3 Sen. Exec. Doc. No. 11, 35th Cong., 1st session, Wash., 1858, p. 4. 
