PREFACE

THE reason for being of this work is the growing interest in the United States in financial and economic subjects and the fact that they promise to be the paramount issues of American politics for many years to come. My purpose has been to bring together, in compact form, the leading facts regarding the banks of the world authorized to issue circulating notes and the history of the financial and economic crises through which they have passed. There is no work in English covering exactly the ground covered by the History of Modern Banks of Issue. The materials for such a history are accessible in public records as well as special works, but they have never before been brought together in a form easily accessible to the American and English reading public.

The functions and character of history have changed with the changes in the character of national development. The historical development of the human race has passed through two essential stages and has entered upon a third. The first was the struggle for the existence of civilization and national life ; the second was the struggle for the legal and political freedom of the individual within the state ;
the third is the struggle for the complete development, according to sound economic laws, of the producing capacity of the community. The Muse of History has followed no unreasoning whim in turning her pen to the story of each successive stage of the world ‘ s progress. In the first stage of her work, her theme was the history of nations and the acts of their sovereign powers. In the second stage, the history of value to the community became the history of the people and the contest for popular rights. The historians of each age have been logical in looking to the dominant spirit of that age.

The issue of the present and of the immediate future, — and the subject with which the Historic Muse must most concern herself, — is the best means of developing the possibilities of individual and national life. This issue is essentially an economic one and the history of economic development must, in the very nature of events, be in future the principal study of practical thinkers and workers. The Massachusetts Senator who declared that of late years the American people had given ” too much attention, perhaps, to economic questions, and too little attention to those great and far-reaching questions on which the future of the republic depends,” spoke out of the education and out of the political theories of the past and with his face to the past rather than to the future. The pursuit of the best means of increasing wealth, not for its own sake, but for the wider opportunities of intellectual and moral development which it places in the hands of the community, is the mission of the student of public affairs for the future, and the public man who seeks different political ends subjects himself to the judgment pronounced upon himself by Lord Stanley a generation ago, that he was brought up in the pre-scientific period.

Political economy is still in a large measure an experimental and a disputed field, but this is less true of financial administration than of the questions of taxation and the distribution of wealth, which still perplex economic students. The modern banking community have already learned, during the past hundred years of the history of banking, the leading lessons of the failures and experiments of that period.
There is doubtless much yet to be learned, but the system of a banking currency and of the management of banking operations is now a practicable and workable system. The results of the experiments of the century can be summed up and their lessons indicated in a clear and certain manner, subject to little dispute by those who have given unprejudiced study to the subject. It is these experiments which I have endeavored to describe in the following chapters, leaving their lessons for the most part to be derived from a comparison of their results with the rules of sound banking policy.

The purpose of this work is historical rather than controversial and I have even refrained from discussing the problem of the single or double standard, because the rules which govern a banking currency apply with equal force, whatever metal constitutes the standard money of redemption. I have thought it proper to state, as simply and as clearly as possible, the theory of a banking currency, but I have endeavored to avoid all digressions which were not essential to an understanding of the history of banks of issue and of recent events in the financial world. Systems of coinage, the history of public loans and political events, the many forms of mortgage, deposit and popular banks, and the new problems relating to the uses of speculation and the part played by negotiable securities in modern economic life, are such important subjects of discussion that each is worthy of separate treatment, and they are only referred to here where they seem to form a necessary part of the history of one of the great banks of the world. It has been necessary to refer in several cases to the history of government paper money, because it is related to the origin and growth of banks of issue, but my plan excludes the systematic treatment of paper money, which would of itself fill a volume. My chief object, beyond that of a narrator, will be accomplished if the study of the dismal record of government interference with monetary laws shall convince thinking Americans of the axiomatic truth that — The currency of a commercial country should be regulated by commercial conditions and not by the whims of politicians.

CHARLES A. CONANT.
Washington, D. C, April 1, 1896.

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