and, France,
Germany, and other countries since the outbreak of the war in 1914.

No two countries have quite the same system and kind of bank notes.
It is well to consider first, therefore, the qualities of typical bank
money. This consists of notes issued by banks on the credit of their
general assets, without special regulation by law. With such a form of
note we have had until 1914 no experience in the United States since
1866, at which time a federal tax of 10 per cent on state bank notes
made their issue unprofitable. Since the passage of the Federal
Reserve Act we have temporarily two kinds of national-bank notes, the
old bond-secured notes, in use since 1863 (very different from the
typical form),[10] and the new kind of Federal reserve notes very
nearly typical in character but issued only by the Federal reserve
banks, not by individual banks.

A bank, by the issue of notes, puts into circulation as money its own
promises to pay. The customer, in borrowing money or in withdrawing
deposits or cashing checks and drafts from other banks, is paid with
the bank's notes instead of with standard money. These notes may be
returned to the issuing bank either to be redeemed in specie or to be
paid in some other form of credit, such as deposits or exchange. The
limit of the issue of such notes is the need of the community for that
form of money, and if they are promptly redeemed in standard money on
demand, they never can exceed that amount. A holder of a note (in the
absence of special regulations) has the same claim on the bank that
a depositor has. As it is to the interest of the bank to keep in
circulation as many notes as possible, there is a temptation to abuse
the power of note issue, to which many banks in America yielded in the
period of so-called "wild-cat" banking before the Civil War.

Sec. 10. #Divergent views of typical bank notes#. Some persons seeing in
bank notes but a form of ordinary commercial credit (like a promissory
note or an individual's check) have contended that their issue should
be entirely unlimited and unregulated except by the ordinary law of
contract which makes the bank liable to redeem the notes on demand.
Such bank notes would not be legal tender, and every one would be free
to take or refuse them as he pleased. Each bank would thus put into
circulation as many notes as it could, and as they would constantly
be returned for redemption when not needed as money their volume would
expan