cated system of credit which has made commercial growth possible, nor is there any reason why this particular form of banking obligation, constituting, as it does, but a minor part of the total, should, when created, have other or better safeguards than the remainder. The security furnished by the capital of the banks, by the ability and integrity of their management, aided by governmental supervision, which must needs serve for the greater part of their liabilities, should be adequate for the whole. The checks and precautions, the discrimination, which are applied to the use of credit in other branches of banking, the protection which is found to answer for depositors and holders of checks and drafts, should also be sufficient for the holders of that particular class of "memoranda of claims" known as bank-notes. That this protection can be made practically efficient is amply proved by the history of the national banking system in the United States. During an experience of more than twenty years the average annual loss to depositors has been only one twentieth of one per cent of the total.
The public have become so accustomed to the use of a bond-secured currency, and have so generally credited the satisfactory results to the feature of special security, that the suggestion of an unsecured currency, or, rather, a currency not secured by special deposits, is not likely, at the outset, to be received with favor. To many it will recall the days of wild-cat banking, when the country was flooded with money that was practically irredeemable, and wide-spread and serious loss was inflicted on the community, especially upon the poorer classes, by having worthless issues forced upon them. But there is little danger and no need of a revival of that vicious system.
The lessons of the past have not been wasted; nor are we a "nation of rascals," in spite of sundry recent revelations of rascality and weakness. More and more, as civilization advances, does the tendency of people to trust each other increase. Yearly the average of prudence and trustworthiness grows larger. If not because of a stronger sense of moral obligation, then because of a better appreciation of the necessity therefor in the conduct of business, men show a growing respect for each other's rights, and place a greater reliance upon the relations of contract.
Mr. Spencer says, "Given a nation of perfectly honest men, and nearly all trade among its members may be carried on by memoranda of claims." We have not, it is needless to say, reached an ideal state of perfect honesty—far from it. The adoption, therefore, of an absolutely free banking system, without limitations or restrictions, would be an experiment too hazardous to be tried. There is, however, a degree of honesty which suffices to maintain a credit system of great extent and complexity, involving the use of enormous sums of promises to pay, and the extension of that system to cover the use of the particular form of promises to pay known as bank-notes is logical, natural, and, with proper restrictions, safe.
