This function is the supply of the paper circulation to the country; and it will be observed that I am not about to overstep my limits and discuss this as a question of currency.  In what form the best paper currency can be supplied to a country is a question of economical theory with which I do not meddle here:  I am only narrating unquestionable history, not dealing with an argument where every step is disputed; and part of this certain history is, that the best way to diffuse banking in a community is to allow the banker to issue bank notes of small amount that can supersede the metal currency.  This amounts to a subsidy to each banker to enable him to keep open a bank till depositors choose to come to it....

The reason why the use of bank paper commonly precedes the habit of making deposits in banks is very plain:  it is a far easier habit to establish.  In the issue of notes the banker, the person to be most benefited, can do something,—­he can pay away his own “promises” in loans, in wages, or in payment of debts,—­but in the getting of deposits he is passive; his issues depend on himself, his deposits on the favor of others.  And to the public the change is far easier too:  to collect a great mass of deposits with the same banker, a great number of persons must agree to do something; but to establish a note circulation, a large number of persons need only do nothing,—­they receive the banker’s notes in the common course of their business, and they have only not to take those notes to the banker for payment.  If the public refrain from taking trouble, a paper circulation is immediately in existence.  A paper circulation is begun by the banker, and requires no effort on the part of the public,—­on the contrary, it needs an effort of the public to be rid of notes once issued; but deposit banking cannot be begun by the banker, and requires a spontaneous and consistent effort in the community:  and therefore paper issue is the natural prelude to deposit banking.

JENS BAGGESEN

(1764-1826)

Jens Baggesen was born in the little Danish town Korsoer in 1764, and died in exile in the year 1826.  Thus he belonged to two centuries and to two literary periods.  He had reached manhood when the French Revolution broke out; he witnessed Napoleon’s rise, his victories, and his fall.  He was a full contemporary of Goethe, who survived him only six years; he saw English literature glory in men like Byron and Moore, and lived to hear of Byron’s death in Greece.  In his first works he stood a true representative of the culture and literature of the eighteenth century, and was hailed as its exponent by the Danish poet Herman Wessel; towards the end of the century he was acknowledged to be the greatest of living Danish poets.  Then with the new age came the Norwegian, Henrik Steffens, with his enthusiastic lectures on German romanticism, calling out the genius of Oehlenschlaeger, and the eighteenth century was doomed; Baggesen nevertheless greeted Oehlenschlaeger with sincere admiration, and when the ‘Aladdin’ of that poet appeared, Baggesen sent him his rhymed letter ‘From Nureddin-Baggesen to Aladdin-Oehlenschlaeger.’