Page:A History of Banking in the United States.djvu/44



CHAPTER III.

HE act of 1789, laying duties on imports, provided that they should be received in gold and silver only. In April of the following year, Hamilton made a report on the operation of this law, in which he construed it to mean that he might receive the notes of banks "issued on a specie fund;" and he thought that this would be advantageous to the government, the banks, and the public. Hence he had ordered bank notes to be received where banks existed, but the measure was understood to be temporary, and would be changed whenever a national bank was founded.

One of his pet ideas was a national bank. He submitted a paper to Congress, December13, 1790, to prepare the way for the proposition he wished to offer. This paper shows that he had very much developed his ideas on this subject since the earlier plans made by him, which we have already noticed. The charter of the Bank of New York, which came from his hand, became the model on which numberless charters were afterwards constructed, and the charter of the Bank of the United States, which he now proceeded to make, was taken as a model by so many others that we must attribute to his opinions on banking a predominant influence in forming the banking institutions of this country. The first great advantage which he sees in a bank is that it augments "the active or productive capital of a country."

In the explanation of this, which he gives, he entirely avoids the fallacy which would seem to be involved in the statement. He illustrates it by the case of a man who deposits a surplus while waiting to put it to use, so that it "is in a condition to administer to the wants of others, without being put out of his own reach when occasion presents." He has in view, therefore, not any creation of capital, but a more effective organization of capital, by which small and scattered amounts are so concentrated as to be made effective instead of being idle. Upon this view it would follow that when one man wanted his capital some other man would probably be desirous of