In the extraordinary issue of "greenbacks" during the civil war, the purchasing power of a paper dollar was reduced to less than half, and gradually appreciated in value as the expectation of early redemption increased. The effect of such issues upon government revenues will be treated in its proper connection. As currency, it certainly robs each creditor and holder while depreciating, and as surely robs each debtor while appreciating. As wage earners are universally creditors, according to prevailing customs, they suffer most in a depreciation of money values: i. e., they work for dollars at one value and a week or a month later receive them to expend at a less value. Speculative debtors, on the other hand, always thrive on depreciating currency, paying their debts in what costs less exertion. Under appreciating currency, the creditors gain, be they bankers or workmen.
_Banking._--The peculiar convenience for saving found by experience in the use of each of these methods of settlement in exchange leads to a natural commingling of all. Coins serve some purposes best, and accounts have a limited range; notes of hand are often desirable, and paper money, if safe, is universally convenient. This natural combination has led to a more systematic arrangement for handling various kinds of currency, called banking. The most obvious addition to the machinery of exchange in the system of banking is the possibility of immediate transfer of property right in a bank deposit by check and account, or by a draft in account between banks, or by bills of exchange in more distant transactions. The bank deposit is made up of individual wealth, or titles to wealth, supposed to be immediately available for use in exchange. It may consist of all the kinds of currency described or conceivable. Checks are orders upon these individual accounts or deposits, and by their means exchanges are made with great ease and little risk between individuals in the same neighborhood or even in distant cities or distant countries. The cost of storing, handling or transferring any form of currency is reduced to a minimum. So far-reaching is this comparatively modern machine of exchange that it is properly assumed to be the means of settling 90 per cent of all exchanges, domestic and foreign, with almost no use of money in any of its numerous forms. Its importance as a machine of commerce entitles banking to a more distinct consideration, and chapter XI will be devoted to the subject.