Knowledge that Transforms

Albert Gallatin (1761—1849) believed that a stable and secure money was both an economic necessity and moral obligation of the monetary authority. He would have preferred that the supply of money be limited to that furnished by a purely specie system. His proposal to bring about the elimination of paper money anticipated by thirty-five years the prohibitive tax on state bank notes in the United States. If a purely metallic system was impractical, and there was to be paper money, Gallatin insisted that it must be payable in specie upon demand. A national bank, in addition to serving as a fiscal agent for the federal government, also would check the note issues of state banks and enforce convertibility.