the other
big banks, however, both of Europe and of Canada, competition has
resulted in very rapid expansion during the last half century,
probably as rapid as could be desired.

Regarding adequacy of service, the method of granting charters and the
attitude of the government towards private banking is important. If
banks are allowed to spring up spontaneously, like manufacturing and
commercial establishments and farms, they are likely to be plentiful
and to be located wherever needed. Experience, however, has shown that
private banks cannot be adequately regulated in the interest of the
public and that incorporation under public auspices should be
required.

Two methods of incorporation are employed, those of the special
charter and of the general law. Except in the case of special
institutions, like central banks, the former is objectionable, since
it opens the doors to political favoritism and is likely to result in
bad distribution, lack of uniformity in regulation, and lack of
steadiness and regularity in development. Incorporation under general
laws, or the free banking system, as it is sometimes called in this
country, is unquestionably the best from every standpoint. All the
necessary checks and balances can be incorporated in these laws, and
the supervision of public officers, together with the necessary
administrative machinery, provided for. This is the only practicable
method to employ in an independent system like ours.

The special charter method works best in connection with the branch
bank system, in which the question of chartering new institutions only
occasionally arises, and in which delay is not so serious.

CHAPTER IV

COMMERCIAL BANKING IN THE UNITED STATES

The commercial banking system of the United States consists of several
elements which have been contributed at different periods in our
history. The most important of these are state banks, national banks,
and the independent treasury system.

_1. State Banks_

From the very beginning of our national history institutions enjoying,
among others, the privilege of commercial banking have been chartered
by our states. For several years after the adoption of our
constitution it remained an open question whether the incorporation of
such institutions was not their exclusive privilege, but in the case
of McCulloch v. Maryland, in 1819, the Supreme Court decided that the
federal government also had this right.

During the years