Instead, then, of yielding to
the cries of scarcity of medium set up by speculators, projectors, and
commercial gamblers, no endeavors should be spared to begin the work of
reducing it by such gradual means as may give time to private fortunes
to preserve their poise, and settle down with the subsiding medium; and
that, for this purpose, the States should be urged to concede to the
General Government, with a saving of chartered rights, the exclusive
power of establishing banks of discount for paper.
To the existence of banks of discount for cash, as on the continent of
Europe, there can be no objection, because there can be no danger of
abuse, and they are a convenience both to merchants and individuals.
I think they should even be encouraged, by allowing them a larger than
legal, interest on short discounts, and tapering thence, in proportion
as the term of discount is lengthened, down to legal interest on those
of a year or more. Even banks of deposite, where cash should be lodged,
and a paper acknowledgment taken out as its representative, entitled
to a return of the cash on demand, would be convenient for remittances,
travelling persons, he. But, liable as its cash would be to be pilfered
and robbed, and its paper to be fraudulently re-issued, or issued
without deposite, it would require skilful and strict regulation. This
would differ from the bank of Amsterdam, in the circumstance that the
cash could be re-demanded on returning the note.
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