The kernel of the banking question for the United States, then,
as it seems to the writer, is to be found in the future of the deposit
system. If this is settled upon the best plan practicable, the sub-
stance of the question will have been disposed of; and, for the
purpose of such settlement, the continuance or perhaps it should
be said the revival, of the right of issue might well be allowed as a
makeweight. It is not within the scope of this paper to discuss



1 86 ESSAYS

the various propositions for meeting the practical difficulty arising
from the extinction of the national debt. It may be said of these
propositions in general, however, that they are expedients for pro-
longing the existence of the national bank-note issue for such time
as any part of the national debt may remain unpaid^ postponing
the main question, which must present itself with the disappear-
ance of the debt. In this part of the discussion, as in others, the
impression created by the success with which the present secured
circulation has worked is so great, that it is hard to bear in mind
that, after all, the kind of security held is not of the essence of the
system. Evidently, the fundamental point is that the notes shall
be secured by a preferred claim upon some sufficient portion of the
property of the issuing bank. This portion of property, now re-
quired to consist of United States bonds, may, however, equally
well consist of other securities of assured value. It is, indeed, en-
tirely conceivable, so far as the principle of the system is concerned,
that here, as in Germany, a solid circulation might be issued, of
which the basis should be those general securities and commercial
obligations of short date, which are found sufficient to guard the
credit of a bank with its own customers and the public. In short,
if we once recognize the fact that the particular set of details
which have marked our system so far are obsolescent, the market
is not without securities and the world is not without examples, on
which a substituted system of circulation could be safely estab-
lished.
