In any of these views of the price situation there was clearly an important public side of banking not ordinarily thought of by the customer or patron of the bank, and which consisted in the furnishing of what is ordinarily called "paper money," also usually described as "currency." There are several kinds of paper money of this sort, but only three need be mentioned at this point. One is the so-called irredeemable paper currency which is from time to time issued by governments that find themselves under the necessity of quickly getting some means of meeting pressing obligations. The well-known greenbacks issued by our own government during the Civil War afford an example of such currency. These were irredeemable for about seventeen years after they were first issued in 1862, but later the government, in 1879, began redeeming them in gold and has continued to convert them either into silver or gold practically at the will of the holder ever since.

There are many other examples of irredeemable paper currency issued in different countries of the world which might be cited as an example, but there would be no use in recapitulating them here. It is enough to say that such notes, when issued, are merely direct obligations of the government which issues them, and that they have no relation to banking. Indeed, under such circumstances banks usually find it necessary to receive and pay out such notes as if they were coin, holding them in their own vaults in the same way. The second type of notes or currency is seen in our gold and silver certificates. These are merely in the nature of warehouse receipts, evidencing the possession by the holder of a given quantity of gold or silver coin which the government is retaining behind them. Gold certificates are now legal tender, but in any case they merely represent a claim to a specified amount of coin which is held in trust behind them. The notes issued by a bank are, as has been seen in an earlier chapter, an entirely different kind of currency because they come out as the result of a need for means of transferring goods, and are thus protected by the obligations of business men, while at the same time they are limited in amount because they are presumably never issued without having a full backing or protection which keeps them sound and safe for the holder. Nevertheless, the fact that the notes themselves are issued and are used by the public means that a correspondingly smaller amount of coin is likely to be called for or used by the public. This is why the bank note is ordinarily spoken of as a "substitute" for money.

It is a supplement to, rather than a substitute for, money, but the fact remains that if it were not for the bank note there would be a greater need for other media of exchange, so that in a certain sense the bank note has a monetary function. It is for this reason that in countries which have carefully regulated banking systems special effort is made to protect the notes in an adequate way, and to make sure that innocent holders are subject to as little danger as possible. On the other hand, it is also true that there is a very general effort in all systems of legislation to make sure that bank notes, like money, are receivable everywhere throughout the country at their face value and without any charge for exchange.