Page:A History of Banking in the United States.djvu/24

 for the study of our subject, because we shall find that from that day to this the same train of thought, speculation, and effort has been repeated clear across this continent, whenever the same economic circumstances have existed. Circulating notes, which are put in the place of money, are more useful and convenient for many purposes than specie, provided their value can be assured. If they take the place of money, they become cash. They deteriorate, however, into negotiable instruments and not cash so soon as the slightest shade of difference arises between their value and that of specie. Notes issued on the security of anything but specie, or on specie, if not strictly held to the standard, are negotiable instruments. No matter how great and good the security behind them may be, it is always possible that for some reason, a divergence may arise between the paper instrument and cash. The persons who possess land in a new country are under an absolute necessity for some capital. The amount of capital that can be employed on the land is small, because no high culture would pay; but the amount of capital that is necessary for superficial culture is absolutely indispensable. On the advancing margin of new settlement, breaking the way into the wilderness all the way across the continent, the circumstances of the first settlers on the coast have been repeated. The want is capital. They always think that the want is money. Any community of people who had been educated on a money economy, and who meant to remain on it, would have money, because that would be one of its first and most fundamental needs. It would be forced to go without other things in order to get money, because the lack of money would arrest the operation of the industrial and commercial organization on which its members would depend for the supply of all needs. But new settlers, destitute of everything, begrudge the investment of capital in money, which is only a tool of exchange. They want to put all the capital they can get into the circulating capital which is turned over in every period of production and brings the full business rate of profit. If, therefore, they get any money, they part with it, as far as they possibly can, in the purchase of the real capital which they need. This is what the colonists of North America did. They got plenty of silver in commerce. They spent it all for products of civilized industry from England. They were able to do this because they gave up the money system of traffic and fell back upon barter. Then they could do without money, but when they had made arrangements to do without money, they had to do without it. It is not possible to do without it and keep it too. Their own interpretation of the facts, in consonance with such economic theories as then prevailed, was that "the balance of trade drew away all their specie." Then they thought it necessary to do something to "provide a medium," and we find them planning a bank for the purpose. Land was the one thing which they possessed in abundance and they wanted to make this a security for the