was the Bank of the United States' increase of circulation from August,
1822, to August, 1828. From $5,400,000 it had become $13,000,000 without
adding anything to the circulation, merely displacing an equal amount of
local bank notes through drafts of branches that it put into
circulation. These branch banks' drafts were in form of bank notes,
signed by the chief employees of the branches, drawn, it might be, on
each other or on the main bank. A great issue of paper was thus brought
about; without this roundabout method it would have been impossible to
have forced the issue of the notes from the mere physical inability of
the president and cashier to sign so large a number. Congress had always
refused to delegate this power to any other persons; in consequence of
this practice the inevitable result occurred in 1828, as might have been
foreseen, and a conflict between notes of the Bank of the United States
and that of the local banks occurred.

These drafts circulated everywhere; the branch banks received them on
deposit, but did not redeem them: hence it was necessary to guard
against panic by keeping hold of cash. This course increased the issue
of the Bank of the United States, and of the local banks which
discounted the paper of the central bank as if it were so much cash. The
local banks, then, whose paper did not widely circulate, exchanged their
bank notes for drafts, thus reducing the amount of circulation of the
first, increasing that of the central bank, and hence that of the total
issue of its bank notes; the local banks continued to exchange their
paper with its narrow and limited circulation for drafts of this latter,
which passed everywhere.

There occurred, then, in 1828 and 1829 an accidental and very brief
scarcity of cash, whose cause we have just indicated; but since the
second half of the year difficulties arising from metallic circulation