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a decent average of information or common sense, can suffer himself to be so preposterously deluded.
It is a great mistake to suppose that the number and amount of actual transfers of money as the medium of exchange in the vast and immeasurable business transactions of an industrious commer. cial community, bears any considerable proportion to the number and amount of those transactious. At the period of greatest expansion of our paper currency prior to the late convulsion—when the amount of transactions was so enormous, and the activity of business so morbidly rapid-its amount was not more than about a hundred and forty millions of dollars, and the actual circulation of specie was very limited, by reason of the almost universal use of paper medium, notwithstanding the quantity existing in the country. The great bulk of all such transactions are in truth conducted on credit between man and man. The same process takes place between individuals, and sections of country, as between distant nations, in the management of their commercial transactions. They consist mainly of the interchange of commodities, which must always in the long run nearly equal each other in aggregate value,-conducted through the various forms of personal credit, such as running leger accounts, sound promissory notes and bills of exchange representing real transactions; and it is only the comparatively small balances that are periodically settled by the actual payment of money. These credits are of a perfectly sound, healthy and natural character. They are founded upon real transactions, and depend on personal confidence, being entered into voluntarily, and with intelligent circumspection. They all refer themselves indeed to the existing standard of value-which in the commerce of nations is gold and silver, and nothing else, and which in the commerce of individuals, and of different sections of a country, though it may be made to fluctuate more or less from time to time by the use of elastic artificial substitutes, must always, after all, sooner or later be brought down again to that standard, by the regulating check of foreign commerce. But they refer themselves to it in the same manner in which in the measurement of the millions of yards of cloth fabrics of all kinds—and, in short, of all the manifold computations of the dimensions of length and breadth which are constantly taking place-the yard-stick or foot-rule is referred to, though comparatively rarely applied to the actual process of measurement.
But it may still be supposed by some, that the amount of the precious metals which any one country can possess, as its propor. tion of the whole common stock of the world, relatively to its population, industry and wealth, would still be insufficient for the purposes of actual circulation which may be required by its peculiar circumstances, of extent of territory, sparseness of population, and extraordinary business activity and enterprise of its inhabitants :
and that the advantage of convenience of form possessed by paper for distant transmission and rapid circulation in large amounts, over the metals, whose movements must be clogged by their weight and bulk, by the risk of transportation, and by the smallness of their subdivisions, is calculated to adapt it better than specie to such a coun. try and such a population, as a "currency” or “circulating medium.” Frequently as we hear this notion advanced, the sophism of its evasion of the true point of controversy is ridiculously shallow. For apart from the obvious considerations, that in the first place, for all purposes of personal expenditure, such as travelling, &c., gold and bilis of exchange are at least as convenient as bank notes-and, in the second place, that in all commercial communities where the metallic medium aloue is used, the larger amounts frequently required circulate constantly in commercial transac* tions without the actual process of counting, in kegs or sacks of which the seals are often unbroken for years--a part, we say, from these considerations, it is plain that nothing is easier than to combine the advantages of solidity of substance and convenience of form, to any extent that may prove desirable, by converting specie into the form of paper, through certificates of actual specie deposite, which would indeed afford a paper currency, as before suggested, entirely exempt from all the evils inseparable from every paper medium founded on any basis less broad and solid than the actual · dollar for dollar. And the quantity of money actually required for circulation --apart from those private forms of credit which would still constituie the medium of the great mass of private transactions
- would be but little beyond the actual amount of specie now in the country. The facility with which specie is to be obtained by the simple creation of a natural demand for it, is sufficiently shown by the increase of about seventy-five millions which has taken place - in our stock within the course of the last eight or ten years. This fact should be borne in mind by the friends of paper-money, that the only advantage which the candid and intelligent writers on that side of the question ( witness Mr. Gallatin ) claim for paper, is this, that by the substitution of paper, sustained by public confidence, for an equal quantity of specie, the use of the latter is left free as so much additional capital. In other words, the annual saving or gain is worth the interest on the quantity of specie superseded by paper. The answer to this argument is easy. In the first place, apart from the main evil of Auctuation, the cost of the paper-inoney machinery is much greater than this annual saving of a few millions; in the second place, a circulating medium is a great labor-saving machine, for the use of which we ought not to object to pay, performing as it does functions so useful and indispensable, as we do not grudge the interest on the capital invested in a steamengine; and in the third place, this annual saving, made at the expense of evils incalculably greater, is absolutely nothing in comparison with the annual income of production of this country, which is computed to exceed a thousand millions of dollars in value.
The greatest conceivable evil to an industrious and commercial community is an unstable measure of value. Pregnant as it is with moral evil of the most fatal character, the actual physical injury also, to its external prosperity and well-being, is, we are well satisfied, scarcely less great in amount, though incomparably less important in its character. This has been already too often experienced by us to need illustration. The natural fluctuations of commerce, in . a healthy state, under the action of the laws of trade, are in them. selves an evil serious enough ; but to superadd to them the gratuitous aggravation, of uncertainty in the measure of value to which , all its transactions refer themselves, would seem indeed the last ex. treme of folly. It is impossible for any imagination to conceive a full idea of the pernicious effects of such a system. It unsettles the basis of all contracts and all calculations; it gives to every business more or less of a speculating and gambling character, and taints the national heart in a greater or less degree with the fatal moral poison which pervades the atmosphere of the gaming-table. It presses like a dreadful incubus upon the poor man, and the plain laboring mass of the people, tending as it does constantly to keep up an inflation of the prices of the necessaries of life above the rates of the wages of labor, and exposing them to frequent vicissitudes, with the disasters with which the periodical revulsions attendant on the system agitate and derange all the movements of society. It stimulates an unhealthy and immoral spirit of speculation, which seduces countless thousands from the slow and laborious pursuits of productive industry to the more tempting avenues to speedy wealth, at the cost of the labor of others, which it seems to open to them. And even if it does from time to time excite enterprise and industry to a more rapid developement of a country's resources than might otherwise take place-which may well be doubted-it is but the morbid overaction of intoxication, and, in addition to the loss of the actual waste of luxury, the country is again thrown back by every periodical revulsion to a point less advanced than it would havo reached within the same time in a more healthy and natural pro. gress.
It is a great mistake to imagine that credit is at all depen·lent on the use of bank paper. This error, which is so prevalent, arises from a confusion of ideas between credit, proper, and credit-money. It by no means follows, that because credit is a good thing in itself, it ought to enter into the standard of value, and thus establish a universal system of double or compound credit. On the contrary, since confidence on the part of those who give credit is its first element, it is plain that every cause in operation tending to un
settle the basis on which the business of the community is conducted, and thus to increase its uncertainties and multiply its risks. is a serious injury to a healthy and legitimate credit. The fact is. that under our much vaunted "credit-system,” we have comparatively little of a sound and natural credit. Credit is a thing essentially personal in its nature, having reference to the character and competence of the individual to whom it is given; yet who ever hears of personal credit being given to any extent among us? It is rarely given but for very short terms, accompanied with a practice of suretyship, which is, after all, entirely nugatory, giving rise to that of interchanging endorsements, which thus makes each loan dependent on the means of the single individual, and not on the double security. Or who ever hears of credit being given to character-to the personal worth and integrity of young men commencing business? A very different system of credit prevails in those commercial communities in which it has a sound currency to rest upon; and it can never be until we reform amongst ourselves this radical evil of a fluctuating currency, that we can realize half of the benefits of this all important principle of commerce and civilization, Credit.
Suppose the present state of things reformed, and a sound cur. rency introduced, founded strictly on the metallic standard, by some gradual process that should guard against any sudden derangement of the basis of existing contracts— that is to say, specie alone, and paper representing specie, dollar for dollar-what would be its effect? The nominal value of all property would be somewhat reduced, though much less than is commonly supposed. The general scale of prices would be lowered, including the necessaries and comforts of life, which would remain moderate and uniform, regulated solely by the natural laws of trade. We should enjoy an immense advantage over all foreign nations using paper currency, in producing at low specie prices. Our exports would be vastly increased in quantity and profit. We should manufacture not only for ourselves at lower cost than the foreign manufacturer could afford, but should be able to undersell him in the market of the world. Of those articles of foreign production desirable for comfort or luxury, which we could not so advantageously produce at home, the exchange of our staples and products would bring us back a larger amount than at present, under our high prices of production at home; and all foreign nations with which we should have dealings would pay us an annual tribute of a balance of trade constantly in our favor. And as money would be of so much more worth in such a country than under a régime of paper money, we should have an ample command of foreign capital invested permanently in our industrial establishments, and in aiding enterprise and industry in the developemerit of the teeming and inexhaustible resources of our soil.
The imagination can with difficulty realize a conception of the spectacle of rapid, healthy, steady, and universally diffused prosperity which this country would exhibit, accompanied with an extent and facility of natural and sound credit, then indeed truly deserving the name, of which the deluded partisans of our present wretched “credit system” have never formed an idea.
However, the actual state of things must be taken as we find it. Our system of bank-note currency we regard as about the very worst possible; being not only in a state of constant fluctuation, ever tending to expansion, followed up necessarily by severe contraction, but being issued by a limited number of favored indivi. duals, whose private interests artfully invest themselves with a certain quasi-public character through a legislative charter, and who are able in their private business to derive immense advantage over, and at the expense of, the rest of the community, by presiding over the working of this great machine of the
We deplore its existence, and the strength of the hold which it has acquired over the public mind, through the countless hosts of the most influential persons in society who are interested in it. We tremble at the thought of all the suffering and evil which the country will yet have to experience from it, before public opinion will have matured itself for its thorough reform. It is impossible to foretell when the day will come, which most surely is approaching, that shall witness the extinction of the element of credit in the currency or measure of value of the community. It may be half a century or a century, or a longer or a shorter time—in our opi. nion, a much shorter time—no human sagacity can prophecy; and the opinions of those who have reflected on the subject differ about it. It is a process to be accomplished only by public opinion, matured by free discussion, and aroused by suffering. It is one with which we consider that the Federal Government has little or nothing to do. It is not for it to reform the currency, or the bank. ing systems of the States. Nor is it any part of its policy, under the administration of the present dominant party at least, to attempt the task. In fact, we do not know to what extent the views here stated on the general subject, as an abstract question, are entertained by others. The advocacy of the “Specie Clause” hy no means implies a coincidence of opinion with them, in relation to paper currency, or credit-money, in general. We are not afraid of the unpopularity of the declaration, that we have no faith in it at all; and have gone rather beyond the proper limits of our subject to illustrate strongly the evil of a fluctuating currency. To that extent, at least, all honest opinions : ust go with us. The highest merit which the most blinded dupe of the “paper-money humbug?