Richmond enquirer. [volume] (Richmond, Va.) 1815-1867, 1830-05-04

whatever diversity Of opinion prevailed, to the proper
basis and organization Of bank, almost every one "a
SADLY to the country from the greatest
Of financial calamites.
The committee will present brief exposition
Of the state OF currency the close Of the Of the
injury which resulted from it, as well to the Govern
ment 10 the community and their for belicv-
ing that it could have been restored sound
don and cannot be preserved in that condition,
without the agency Of such an institution as the Bank
Of the U. States.
The price appended to this report will exhibit
scale OF depreciation in the local currency, ranging
through various degrees to twenty and even TO twenty
five per cent. Among the principal Eastern cities,
Washington and Baltimore, were the points at whchthe
depreciation greatest The paper OF the banks in
these places, from 90 To % per cent below par.
At Philadelphia the depreciation considerably less
though there IL from IL to Is per cent. In N
York and Charleston. il from to 10 per cent But
in the interior of the country where banks estab
hed the depreciation greater than at w ash
ngton and Baltimore. In the Western part OF Pcnasy
vania and particularly at Pts5urg it was % per cent
These statements, however of the relative depreciation
Of bank paper at various places compared with spec
Gle, give very inadequate idea OF the enormous evils
inflicted upon the community by the excessive issues
OF bank paper. No proposition is better established
than that the value OF money, whether II consists oil
specie paper is deprecated in exact proportion TO the
increase of its quantity in any given state of the de-
inand for it, IT, for example, the banks in 1916, dou
bled the quantity of the circulating medium by their
they produced gen raj degradation
OF the entire mass of the currency including gold and
silver proportoned to the redundancy OF the issues, and
wholly Independent OF the relative depreciation Of bank
paper at different places, compared with specie The
nominal money price OF every article OF course
hundred per cent higher than it would have been but
for the duplication OF the quantity of the circulating
dunn. Money Is nothing more nor less than the mea-
sure by which the relative value of all articles Of er
chandise Is ascertaincd. IT, when the circulating
dunn is fifty millions, article should cost dollar,
would certainly cost two, it, without any increase of
the uses OF circulating medium, its quantity should be
increased TO one hundred millions. This rise i'm the
price oil commodities, the value of
ncy, compared with them, would not be owing to
the want of credit in the bank bills, of which the
rency happened TO be composed Ii would exist, though
these bills of unloub,ed credit and convertible into
specie at the pleasure OF the holder, and would result
simply from the redundancy OF thsir quantity. 1t is
important TO just understanding of the subject, that
the relative depreciation of bank paper at different pa-
compared with specie should not be COMPOUNDED
with this general depreciation of the entire OF the
circulating medium, including specie. Though closely
allied, both in their and effects, they deserve 10
be separately considered
The evils resulting from the relative depreciation Of
bank paper at different places, easily traced to
their causes, more papable in their nature, and
seqnently more generally understood by the community.
Though much less ruinous than tho evils resulting from
the general depreciation of the whole currency, they
are yet of sufficient magnitude TO demand full cxposi-
ton.
A very serious evil already limited at, which grew
out OF the relative depreciation of bank paper at the
different points OF importation, its inevitable enen-
cy to draw all the mporatons of foreign merchandise
TO the cities where the depreciation greatest, and
divert them from those where the currency was COM
paratvcly sound. If the Bank of the United States had
not been established and tic Government had been left
without any alternative but TO receive the deprecated
local currency, it is difficult to imagine the extent 10
which the evasion OF he revenue laws would have been
carried Every State would have had interest TO en-
courage the excessive issues Of its banks and increase
the degradation OF its currency, with view attract
foreign commerce. Even in the condition which the
currency had reached in 1906, Boston, and New York
and Charleston, would have found il advantageous to
derive their supplies of foreign merchandise through
Baltimore; and commerce would undoubtedly have Ia
ken that direction had not the currency been corrected
To avoid this injurious diversion of foreign imports Mas
and New York, and South Carolina, would
have been driven, by all motives of sel-defence and
TO degrade their respective currencies at
east to par with the currency of Baltmore and thus
rivalry in the career OF depreciation would have sprung
up to which no limit can be assigned. As the enden-
~ of this state of things would have been the
largest portion of the TO be collected few
places, and in the most deprecated of the local
" it would have followed that very small part of that
evenue would have been disburscd at the points where
t collected. The Government would consequently
nave been compelled to sustain heavy loss upon the
transfer of its funds to the points Of expenditure The
annual loss which would have resulted from these
IS a,one cannot be estimated at less than two
millions of dollars.
But the principal loss which resulted from the reTa-
i've depreciation OF bank paper at different places and
Is want OF general credit, that sustained by the
in the great operations of commercial en-
change The extent of these operations annually nav
pc safely estimated at sixty millions of dollars. Upon
This the loss sustained by the merchants, and plan
ers, and farmers, and manufacturers, not probably
less than an average of ten per cent being the
IF the rate of exchange beyond its natural rate in a
sound state of the currency and beyond the rate TO
which has been actually reduced by the operations of
he Bank of the United States IL will be thus perceiv-
ed, that annual fax of six millions of dollars was le-
We'd from the industrious and productive classes by the
large moneyed capitalists in commercial cities who
were engaged in the business OF brokerage. various
" deprecated currency, and uctuatng state of the
open wide and abundant harvest to the
- al
hey should be opposed TO institution which, at the
same time that il has relieved the community from
the enormous tax just stated, has deprived them of
the profits which they derived from speculat-
ing in the business of exchange. I'm addition to the |
sustained by the community, in the great opera
lions of exchange, extensive losses suffered hro'-
out the interior OF the country in all the smaller opera
tons OF trade well by the failure of the numerous
paper banks pulled into Fictitious credit by fraudulent
arccs and having pc substantial basis of capital to en-
sure the redempdono Of their bills.
But no adequate conception be formed Of The |
evils Of deprecated currency, without looking he.
You'd the relative depreciation, at different places 10
the general depreciation ofthe entire II appears
from the report of Mr. Crawford the Secretary Of the
Treasury in 1920 that during the general Suppression
of specie pavments by the local banks in the wears
1915 and 1916, the circulating medium Of the United
States had reached the aggregate amount OF hun.
dred and ten millions OF dollars, and that in The year
1S9 had been reduced forty five millions of dol
lars, being reduction Of fifty nine per cent in The
short period of four years. The committee are incn-
ed TO the opinion that the and distressing opera
ton Of restoring vicious currency TO sound state
by the calling in Of bank paper and the curament Of
bank discounts had carried the reduction Of the
rency in 1919, TO point some what lower than