Richmond enquirer. [volume] (Richmond, Va.) 1815-1867, 1820-03-14
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NATiOSAL CURlESCT.
Retors OF HsS,crstary ofthe IreQS4yy lConfinued.l
In . conItry where the currency Is purely
metallic, no considerable addition can be made
10 II, without giving, al the time of Its aaqui-
SitIon, articles III exchange OF eaHal value
N addition ct0 he iiade Ia the cur reucy ~ ith.
ohi affecting, 1" the extent OF such addiuoa,
are eBJoNm6nis OF the community, The a
nioant SO added will. 70 The same extent, d.
niii.Sh the quantity ct articles which would
oihrr~lse be imported into the country for
domtsuc CONSUMPTION. OF for te-eXpoTtatiou.
Ordinarily. tie C0rrency ofone country will
not be txpurted TO another because its value
In every country Is nearly The same. Ii will
nat, therefore, ike cther commodities com.
mAHd a maerctsl prohl upon expu,tatiou.
~ VIII he taken from one country 10 another,
only vines Inc price OF commodities in tie
toiiner is so high a. 10 proauce loss IN tiie
tdtter, equal To the expense OF transporting
specie 1t Is this condition, annexed IN every
acquisition 10 The currency o: state when Il
is purely metallic, OF diminishing, 10 the same
extent tue enjoIm ents of the community
Wnicn AFFORDS the most efficient protection d.
gdinst It's becoming redundant. Il is equally
s'hcient IN guarding agaInst deficiency, 10 an
SAtent that can seriously ahect the interest of
the community. Bat tins condition is not an
ueAed 10 the Increase OF The currency, 10y the
iSSnr 0i bank nOtrn, even when convertible iu-
10 specie: lac notes, by which the currency
Is udJenly Augmented. do not. in any degree
hmlnINh the Equipments OF the community
No equivalent ~, by such issue, transferred TO
snothfr coinmuaiiy, d. is Invariably done
gIteu al acquisition IS made TO met ,I,c cur-
fency, Whenever the currency Can be aug
mentSd, exempt from such transfer, il must
be SubJsrt 10 some degree OF huctua,ion IN
quantity Every addition IN AIDE 10 The curren
cS by the issue OF bank notes changes The re-
taiion which previously existed setween the
arnnilnt OF the currency, aud the amount of
sac commodities which are 10 be exchanged
thipugh IFS agency. Ther issue depends hot
IL on Receiving, IN exchange, articles of equal
valne but, npon pledge OF the credit OF one
or more individuals. To The amount of such
issue. No evil can result TO the community
nom the advance of the capital of bank IN
exchange TOY the credit of Individuals In
ihdt case, no addition is made 10 The amount
at the currency previously in circulation. 1t
IS perfectly imrnaterial 10 society whether this
capital be lent by individuals or by corpora
lions. The relation between the Currency aud
Tie eXchan.eable commodities of the state IL
potdisiurbed. But, when their credit il great
extended, the currency Is expanded, aud
thht relation II deranged. An expansion of
fRe currency, through the agency of banks,
"lii generally occur only in periods OF pros
Pen|y. During such periods, epierprize will
Re tostered, industry stimulated, aud the conl-
fort aud happiness of the people advanced
fith0ut the tactitiOuS aid of an expansive cur
ithcy. But there can be no doubt that IA sud-
zen increase OF the currency during periods Of
prosperity, through the agency OF bank issues
give additional force and activity to the ma.
tondt enterprise Such increase viii he
followed ny general rise in the value of all
articles especially OF those winch cannot be
exported - The price Of lands, houses, and
pubic stock will be augmented in greater
d. gree than 1t no such increase had taken
place
Il these prices could be maintained; if they
cold even be protected against sudden re-
uGfuon thrt would be cause Of gratu;atIon
Fdtnef thda IT complaint Bat. The expau-
SION - the currency by The issue pG paper. IN
period Of prosperity, will inevitably be sHc
ceeded Uy It's es"tr5ctiGH ia periods - aIver-
SIiy. The rXtent 10 which the currency may
se contracted, through the aseHcy IT bdn,s.
oereEjs hpOn tie use which they may have
made OF der Ccgdit. The excess or tl,fir Dis
s1Hhts beyond then capital actually paid d.
trInines iRe amoDAt Of the credit which drew
nave employed, ihHs, IN 1918 the capital Of
tbc banks 10 The UEited States has bFen esti-
mated al 56j .OJg. 900, and their discounts az
olU OGOVJ. tie extent C. which their zee. .
az " ~ then employed ~ So 600. Their
c'rcuia ion. At lie same pe,Icd uae been es
nut'ted AZ S52 10000 Iu this estimate no
allowance vas faAds for notes stated TO ne ,u
circulation, bni which were probably ia the
possrsSiOn Of other banks. 4 reasonable de-
drcton beng made OIL that account il is pio-
bdDIe that tue paper circulation did not much
eScesd so, CU,JJJ BG. To" liability of the
Danks toF PecIe, was equal 10 tue whole
amount - n0tes Represented % bt iu Circuia-
ion esI res live Ind Viludi depnsiies. 10
meet an immediate demand, they're estimated
- have had - 0OJ, OJJ 10 specie. II The de-
POS Tea ~ 8" liVid'ifis shOgld be estimated Al
VI
the deunid of to OJj, 900, without sacrIlicino
thtir capital, would cOssist OF $40 OOO. 900 ia
specie. aud So OOO 900 scared by the notes
OF lndigjdnals tins sum being tie excess Of
lheig Eisc0outs over fheir capital. Under or.
rinny circumstances, tie basis upon which
the credit of this circulation rested migit be
eOnsidsied sufficient 10 sgstaiH il. 4 debt OF
Sii7 .00O.0O0 could not, under The most ad verse
circumstances, be considered Inadequate 20
Iacel 0ne Of Sl20JOO 900. But, ~ the case of
currency, the capacity Of ultimate redemp-
tiop 10 not sufficient Tile capacity TO redePn;
II a. n + presented is indispeixabl1. Whene-
yer the public confidence. im fhIs capacity, is
impaired. AZ Immediate demand for specis
van be created aud, fit IL not promptly met
appreciation will eBsue. But even in circum.
ptaucss ~ some degree adverse to the opers
tons Ut banks, II their discounts consisted
principally Of mates iOpnded upon real trans.
actions, IN which the idea Of feuewal wasex
elhded; AVID " specie formed considerable
opOriion OF the cIrculatiou, the capacity OF
ihe bankstO meet the demands upon them for
~pcce uHgk have been sufficient 10 sustain
ibe credir If the currency If, on the Other
hand, the debts due TO the banks cOusistsl
clieHy Vt fixed or permanent loans, generally
terommdted accommodation paper # specie