March 8, 1861. On account of the depreciation of the stocks in the Bank Fund, the rate of redemption of the notes of failed banks, in 1862, was from 16 to 35 cents on the dollar.
Kansas.—The Constitution of 1859 provided that no bank should be established except by a general law providing for a deposit of stocks as security. The State might not be a stockholder in any bank. All banks must have offices of issue and redemption at convenient places in the State, to be named on the notes. No note might be allowed for less than $5. Every banking law must be submitted to the people, and might be amended or repealed.
The report from Nebraska, in 1860, was that the Territory had had six banks, all of which were broken. A Judge of the Third District of Iowa declared all the banks of Nebraska illegal in 1859.[1] The Secretary of the Territory calls it a "disastrous" system. He construes the act of Congress of July 1, 1836, as forbidding any Territory to incorporate a bank, but says that some hold that the Kansas-Nebraska act has repealed that prohibition. He appears to think that the prohibition would be very salutary.
Arkansas went through 1857 without sharing in the troubles. The people of that State were "enabled to laugh at the storm which makes the rest of the country tremble." They thought that it was because their Constitution would allow them to have no banks.[2]
A law of that State, February 8, 1859, forbade the use or circulation in any manner whatever of notes under ten dollars after the following July 4th. After the same date in 1860 no note under $20 might be circulated.
California.—During the first years after the gold discovery some private firms coined gold. Only one of them kept up to the standard of the United States. Proof was offered that gold coins, under such circumstances, could become merchandise, requiring negotiation, and not money, and that their presence could deprive a community of any money of account, just as we have seen that bank notes could operate, under similar circumstances, of depreciation. We are told that some silver coins having been imported, they were at one hundred per cent. premium; an interesting statement which is unfortunately not further explained.[3]
Technical definitions are largely a matter of expediency and convenience, but this case brings out into strong light the inexpediency and unfitness of a definition of money, which makes it a generic term for all media of exchange. That definition bridges over the gulf between money, properly speaking, on the one side, and any securities or commodities, on the other side, in the use of which some preliminary transaction is required, or some incidental transaction is involved, before they can be employed as makeshifts for the functions of money. The function to be defined is specific, positive, and sharply distinguished from any other; therefore the first step towards scientific accuracy and productive treatment is to give that function a precise definition and an unambiguous name. For popular use, in connec-
