Front Page Titles (by Subject) 1. Simple Deposit. - Money and the Mechanism of Exchange
The Online Library of Liberty
A project of Liberty Fund, Inc.
1. Simple Deposit. - William Stanley Jevons, Money and the Mechanism of Exchange 
Money and the Mechanism of Exchange (New York: D. Appleton and Co. 1876).
About Liberty Fund:
Liberty Fund, Inc. is a private, educational foundation established to encourage the study of the ideal of a society of free and responsible individuals.
The text is in the public domain.
Fair use statement:
This material is put online to further the educational goals of Liberty Fund, Inc. Unless otherwise stated in the Copyright Information section above, this material may be used freely for educational and academic purposes. It may not be used in any way for profit.
1. Simple Deposit.
This method is perfectly represented by the ancient deposit banks in the Italian commercial republics, by the banks of Amsterdam and Hamburg, or by the London goldsmiths, so long as they only acted as safe keepers of the specie committed to their care. Notes issued on this system have a purely representative character, like dock warrants or pawn tickets, as I have already fully explained. The performance of promises is rendered certain so far as legislation can provide for it. The amount of such a currency will vary exactly like that of a metallic currency, and there can be no fear of paper replacing specie, and driving it out of the country, because the specie must be in the vaults of the issuing bank before the notes are issued.
At the same time the advantages of the method are comparatively slight, because the use of paper representatives merely saves the abrasion of coin, and the trouble and risk of carrying it about and counting it. The community loses the interest of the whole sum held in pledge, and this forms by far the largest part of the cost of the currency, as we have seen (p. 164). The coin, too, may be safer in the hands of the people. When lying apparently useless within the reach of an arbitrary government, it often proves an irresistible temptation. Charles I. seized the money in the Tower. When the French invaded Holland in 1795, a large part of the specie supposed to be deposited in the vaults of the bank of Amsterdam was not forthcoming, having been secretly lent to the Dutch East India Company, and the city authorities. The Russian government diligently collected a bank reserve in the citadel of St. Petersburg, which was under the cognizance of members of the Exchange, until the troubles of 1848 forced the emperor to assume the control himself. In innumerable instances governments, including the English government in 1797, have made use of bank deposits, under the form of suspending specie payments.