Banking Principles and Practice (Volume 2); The Banking System of the United States (Paperback) details from bookadda
This historic book may have numerous typos and missing text. Purchasers can download a free scanned copy of the original book (without typos) from the publisher. Not indexed. Not illustrated. 1921 Excerpt: ...the notes for redemption is minimized, so that most of them are presented only when they become unfit for redemption. 4. When business becomes more active, the volume of cash transactions increases as well as the volume of credit transactions, but, since the bank notes are not increased, the extra money required is drawn from the bank reserves or till money by the public withdrawing from the banks more money than is deposited; this results in "tight money," high interest rates, and contracted accommodation at a time when just the opposites are needed; the inelasticity of the bank notes therefore not only throws upon deposit currency the burden of providing elasticity of credit, but also tends to defeat the natural elasticity of that deposit currency. 5. The want of a bank note issue which can be expanded and contracted locally, with the seasonal needs for variation in the currency, makes necessary the transportation of coin, greenbacks, or certificates from one geographical area to another--an expensive, cumbersome, speculative, and unsatisfactory operation. Accordingly the relief of currency deficiencies is always likely to be tardy; and as soon as the business activity that occasioned the shipment subsides, the currency flows back to money centers, causing low money rates and fostering speculation on the stock and produce exchanges. After 1900 and up to 1913 the volume of bank notes expanded almost as fast as did business transactions and deposit currency, but, as shown above, this expansion was due to the extension of national banks in new areas which either had been without banks or had depended upon deposit currency. In the old business areas the supply of bank notes did not expand with business needs. The relative growth and elasticity of ba...
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