Richmond enquirer. [volume] (Richmond, Va.) 1815-1867, 1815-11-18


creasng too rapidly for the medium OF circulation,
since the very operation of trade is tn bring IL with
in the country rs fast the demand il incress
es Thus, it we had no other circulation than sie-
Gle, \ q the quantity insufficient for our wants,
would Immediately rise in value. and b. transpo-
| ted. OF course, by mercantile To this market,
from IN countries where its value wasless. The
! great danger 10 be apprehended and oac which
never could have existed, but for the Banking S>s
teu, is, that the medium nay he aug,ne nted I'm rd
bidy in proportion ,he increase of the wealth OF
a nation; aud, this is peculiarly hazardous, when,
TO use the language OF the celebrated author just
quoted, the commerce o. the country is suspend
ed, upon the Dse,lasn wings s. pap er-money, in
stead Ut travelling about the solid ground clgold
| and silver
, The bossi6iity ofincrcssng the circulating
dunn ofs country, appears to he contested in that
part of DIR. Smiths work. in Which he contends, that
% the ehsnne OF circulation only contain
tai1 quantity" add, "ttat whatever is poured ntoit
beyond that quantity, canuot in Il, but must o.
veriow"(b) In the history however, ola Scotch
bank, C (Which will be found peculiarly interes
tiny from the great similarity of the which
gave rise TO that and To the banks among u.s.
he admits, that paper issued than the cir
culation could easily shsorb employ, and lie
peatedy admits elsewhere, that both the Scotch *
English Banks, have, on many occasions, over-tr0-
ds9 in ether words, issued more paper than the
circulation demands.
The pssticablty of this augmentation, by an in
iuA of sbec.e cannot be denied; "rhe discovery of
the mines in America, redsce' in the 16,h century,
TIE value OF goid and silver in Europe to about
third OF what It had been betore,'' Cd effect
which proceeded from the increase ofthe guam
tity Of the circulating medium. This influx
did not then flow back useless, hu; q poured
into tie channel OF circulation" and produced
great depreciation oil the value o!the precious me-
ta's.
Bat this encrease orthe quantity of the circulot-
ing medium May also occasionally take place, i,na
CINE, in consequence otinmocrate issues OF paper.
IL the satc Of society indeed be such thar conf
dence is felt in hsnks-that when individual re-
ceives mite he Immediately places il in a to
demand payment, no imuo!erate issue cnnld take
place But in such state of Thugs backs could not
long exit anil then emissions vi paper rapidly
returning upon thea world not merely check
enlarged issue o nnes but totally eriharrass their
proceedings. Such then, is not the state of things
when Banks do exist On the contrary, blind con-
fdence seemsgene;aly peryade society il relation
TO them, and the nature of the transactions by which
they circulated, tends farther 20 confirm their
currency. A great proportion OF the holders of
notes almost ready 20 take the Noes of one
| house calling itself a bank another. They have
generally few fjudgng OF their compa alive
credit, and rarely ii ever, contemplate demand of
paymentat the bank. Events passing before
prove, that will pass which
pecte; Even the who doubts about is disposed
to take it IL the confidence OF passing off to- another
The time he intends expects to hold it is very
short and the amount OF each note Is small that
who is borrower ofthe backs, receives his loan in
their paper, and is thus in every point of view in
tereste1 in f0rcirg II into circulation. He who Dor
rows t. pay de'ts, generally finds difficulty in get
ting rid oil any paper; since most creditors are
| dy to receive any thing Ike money in payment,
rather than postpone collection which at future
| day might be more difficult All these circumstan-
sss combine III pouring into circulation almost ai
| the paper the banks disposed TO issue. Hence
too, it is that at the present perisd even the bank
Sffpf-I M puua 10 Of
| cry description are in circulation and tho some
are at discount, yet it too trivial, materially to
affect the position contend for viz. that causes
sometimes conspre to give an artificial currency to
| bank paper which enables those establishments to
pour into circulation than the natural quantity
! ofcXchsnge able InctuIn.
Dr. ihJown authority indeed in rel ltion to TN
Scotch banks, authOrisesus To SAL, that banks can
Occasionally throw too great quantity ofpsper into
market. Iouse his expression, they occasionally
| uer-frdde; and tits is always the case, presume,
when they lend their capitsl for the necessary
purposes OF trade, but to ehimeicai projectors, and
Spectators, and spend -thIts.-lt must require, in
deed, no little skill in bank direction, preserve
the bank emission uniform, aud tn old trading,
when surrounded by numerous institutions engaged
| In the same pursuit. The great desideralum is TO
Init dist happy medium which will enable them tn
make good div dends, withouta hazardous emission
| OF paper.
Poitical economists appesr to differ however as
to the effects Of the ineerese ot the quantity of pa
| per in circulation. DR.. Smith &c expressly de-
mics, that it produces any increase Of the money
price of commodities contendng that specie dissp-
pears as pa passes into creulition and That If
tie circulation be o. fiiH the sHperfuty will imme-
diately return upon the banks from which il Issued.
Thornton u on the contrary contends that "eyery
encrease Of paper enhances the price If goods q
which advanced price affortng employment TO a
larger quantity OF circulating medium the circulate
ON can neUer be sad IS be ouerfisL'' And " this
advanced price of goods" says the author is
the same thing as reduced price of coin"
Our own experience appears to justify the opini-
ons OF Mr. Thornton. 1t IS believed that none will
deny that the circulating medium of the United
States is very mu CHI increased, and all may bear
testimony to the corresponding rise in the price of
sorry species OF property, and proporGonate de-
probation OF the value of money.
The natural effect on society of this depreciation,
IS TO raise the nominal price OF commodities to effect
all contracts that to be performed in future,
destroy public confidence in the n. lium ITSELF and
To throw the whole commercial world into oosfus-
o..
Csl Smiths Wealth ofNaions, vol. l, 200.
(c) Ibid. 81, to 316--also 800.
I'D Smith, vol. page 81.
(e) Vol. I, page 323.
O) Page 77see also page l67, and indeed the chapter
generally.
Lg) rhI he explains in another passage at Lore length
trn the subject seemed to require.
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