, 1841-04-03
"EXTRACT."
From Gouges Inquiry into the principles
Of the American Ban king System:
CHI ,PTER Y.
Of the Popular Arguments in .farOr Of
Barking


Barking
TIE objections ., -. american Banks
are al three kinds. Frs. >ucI a, arise from
Secondly. such as arise from their introIu.
cing an unsruad system Of credit. And
thirdly, such us arise from their nature as
corporations. Ii the reader will take a view
OF all the different operations of the Blnks.
connecting them together in his mlnd rs they
are Connected in fact. he VII require no re-
~futrir,n OF the popular in favor
of the sv,tem. Nevertheless. il NAV not he
amiSS. Tor the satisfaction al some. 10 conSid-
err these arguments IN the form in which iney
are commonly presented.
..Bunks make money phenty.:
NJ, they make real money scarce. As Bank
notes are circulated. gold and silver are dir
ven AWAY. 1t is contrary 10 the laws OF
nature frr two material bodies to fill the
sane sp ace q; ine same tune: and no fact
is Ie,t-, 81 ,i.li-h-l than that. where there
are tn" kind al currencv au;il"rIzDd ~ lnw
or sanctioned nv cuSin . that which las the
leas, value Will di>pIace the orher. l. Bunk<
al any lin" make money NOR. plentiful I'm
it would he IT only Gold and silver cirrrI-
lated, they ii j - - riiuc IN incrra inu
its quantity. T.; y-'ufi1a.. "r ~rel.tIve c>
t~mnati,n 80 lhinG>.i l. = g cnv rriirnceI. hut
moi an a'"m is aiiet to the We 'ifh of the
communitv.
Bank dinli. iSh he r0fc Of INTEREST,"
81 far is this from being true. that the
Ban1S tend 10 increase The rate of interest
ty collecting capital into large masses. and
diminishing the competition among money
lenders. They also, by their various opera
tons. immedilte and remote. give rise to a
multirud' of u~>urinus transactions.
"Banks do mucE good By hHdiag money
TO tx liri i"Glx."
BIT much ie,> = ."i 'lrr would hn done.
by The owners al this m"ry l"l 4, - i."su.
selves. Banks. as W.. ohSr"vei ~ a p.r-
vI,us chapter. do not Increase the iriuaAle
capital of the country. hu' only take it out
of the hani>" a. rs u pIctrr and place it
under the crnt"r "f Irresponsible Bank D.
rector.
"F Ec'" ,r"re no Bn"k no's. specie
mus If 4"c.:eiy BE- .fPg1o1Fy h0nspor,et
10 anl from H$t'at pu,S NJ NE coan ry. n!
great erpan.;s an great ri,k."
The trade etween drf rent p,r's of the
country l. nrf N 't'''"hnnn" II B:rk n"irs
or If specie. hu; "f rrr mIa"'- al -" S..Ii
and the industr. "f Ia: Ima,hr,nis. By
private bills Of c~xrhan-e. the Sums due 10
one trader could ie tr,nsfrrred To another;
and il w.uid he necessary only occasionally
TO discharge b~,lances in specie. This is. in
fact, the present custom of trade, Bank
Notes being TO only a limited extent, subsi-
tutes for bills Of exchange.
- Banks diminish the rate of exchange be-
ttCeen different parts Of the counirY."
Then they do great evil. The rate of ex-
change is The natural baIance-wheel Of trade.
Banks cannot interfere with this, without
doing harm. When they lessen The rate of
exchange. they Remove Il natural check on
overriding.
"Baaks giur greoter security than indriau-
ais in buying an! selling erchange.'
If they do. IL is because the other opera
tions of Banking have rendered all kinds of
business uncertain. In countries where pa
per money is unknown, no more risk attends
dealings in exchange than attends other
kinds of dealings.
"Such are the customs Of trade in the
United States, that Banking SEEMS necessaru.'
But the customs herein referred to have
their origin in an improper system of Bank
ing. and as they are. pernicious, ought 10 be
abolished.
All commercial countries hare some says-
TEN Of Banking
And nnne have a worse system than the
United States. In all commercial countries.
thore are men who receive money on depos-
II, lend money, and deal in exchanges; but
the system of Banking IN paper money, is
Of modern origin. . The cities of Greece and :
Rome, and Egypt, and ancient Asia, attain.