The enquirer. [volume] (Richmond, Va.) 1804-1815, 1804-08-08
o " B II N K S.
NO. III.


his works the attributes Of perfection. II would
indeed be fubiett of great f,rprife, if banks,
which we have already fecn to be productive of
fuch comfortable benefits both to foc.ty and to
its own members ihould not be liable to many
objections. Among the objections however,
which have been brought forward agant them
there appear TO be feveral, which have not been
fIppOrted by Ea:isfaaory evidence and perhaps
there are none that are completely accurate in
all the extent to which they may have been car
RED.
There is one clafS of obie6tors, who admit the
tendency of banks to increafe the internal wealth
OF the country, but who aliert that they lel1en
it's external trade and wealth, by incrcaling the
relative price of commodities. Another fet of
ubicStors contend, that banks however they may
increafe the productive labour andwealth of a
country, are founded upon monopoly; that they
give an advantage to the parts of the country,
which are contiguous to them, above all the o.
ther parts and that they ALTO give an advan-
tage to the ockholders, to thofe who hold
flares in the bank, above ali thofe individuals
who have no intereit in it. A third fet of OBJ
jectors admit that banks increafe the wealth of 4
nation, but they at the fame time aHert, that
they have tendency to ncreafs the luxury of a
rate in nearly the fame proportion. A fourth
clafs of objettors have attempted to point out
the improper connection, which mutt inevitably
fubiin between government and fuch infttuti-
ons they have aierted that under every poiii-
bic modification they will become the mere in
ftruments in the hands of government to increafe
its expences, or its power and its patronage.
Let us examine each of thofe objections in the
order, in which they have been mentioned.
cit is obvious" fay the firft clafs of obiettors
that banks will ncreafe the relative price of
commodities, in any one nation, and will thus
iniure its trade with all the reft. In Virginia &
N. Carolina, the price ofcorn and all proviiions,
of raw materials, and finilhed work is at the
preient time nearly the fame. AS foon as the
Bank of Virginia commences its operation, it
throws into circulation more money in the
form of paper, than it withdrew in the form of
fpecie. There will consequently be more circu-
lating. medium in Virginia in proportion to the
quantity ofits exchangeable commodities, than
there is in the markets of N. Carolina. Every
commodity will thus be dearer in Virginia, than
they will he in n. Carolina. In ell the foreign
markets, Virginia will be underfold and even in
fOme OF her own markets, the commodities of
N. Carolina which were RATED at a fmaller ex-
pence, will take the place OF her own. What
advantages can bank produce, that will COM
pentate for this great inconvenience H'*
This objection has been already refuted by
one of the ftatements OF the fecond etfay. 1t
was proved in that eHay that fcarcey more cir
Culating medium could exit in one country in
proportion to the quantity of its exchangeabe
quantities. than in any other, where the trade
between thefe countries was perfectly free
When the bank-paper, for intance, fhalI be
emitted by hebank of Virginia, it will at iiril
have the effe4 of rafting the price of all the
commodities i'll the fate. Every commodity
will be dearer in Virginia than in N. Carolina.
But the equilibrium will be foon reftored. Mo-
ney being of lefs value in Virginia than in N.
Carolina, it will naturally flow from the former
to the latter, from the fate which has too much
IL. n L. =
plus may conff either of the paper OF the Vir-
ginia bank, or of fpecie. If the paper has as
much value in N. Carolina AS it has in its own
fate, part Of this furplus vii! coniift of paper.
Fit has lefs value, the greater part of this furpus
will be in fpecie. The fame caufes will produce
the fame effects, in the coure OF its trade with
all the other hates, and with all foreign coun-
tries. In its trade with all thefe tates and coun-
tries, the high price OF all its commodities, or
what is the fame thing, the low price of its mo-
ncy will neceiiarily occaiion the expectation ola
part of it, and will thus reftore the equilibrium
Of money and commodities, which the efabfh.
ment of the bank and the introduction of its
notes had originally defroyed.-But although
the introduction of notes will not after
certain period occaiion any difference in the
fyo53orfionai price of commodities in Virginia
and IN other countries, it will fill have the
effef of increaling the mammal price of all
world contains. The quantity of exchangeable
commodities remaining the fame, and the guam
tity of money in the form of fpecie and paper
becoming greater, the fame quantity ofcommodi-
ties comes at length to be Represented by great
er fun of money and each commodity will
thus become dearer in all thofe commercial
countries which partake ofthe effect. Yet even
this ee6i will not be 70 comfortable, as this ap-
parent increale in the quantity of money would
femto indicate. Forths iDcreafein the quantity
of money will not really be 70 great as it appears
to be. The whole circulating medium in the
commercial world will not be increafed by the
whole quantity of the paper, that is thrown in
to circulation. Each new emifIion of the paper
will be attended by new depreciation in the
value Of the gold and FLYER. More gold and
FLYER will be appropriated to the other purpofes
ofiife. A greater quantity of thefe metals will
begin to appear in the form Of trinkets or other
elegant ornaments, and Gnaller quantity will
continue 20 appear in the form of coin. The
introduction ola certain quantity Of paper into
any one country, therefore, appears not only to
b. unacconpauied by any increafe in the nomi-
nal value OF commodities in that country above
their vilue in all others, but it app.ats alto to
produce no very coiifiderable iucreafe in the
nominal value of commodities in all the Coun-
tries Ofthe commercial world.
There is another way, however in which banks
may appearto ncreaie the nominal price of com