Richmond enquirer. [volume] (Richmond, Va.) 1815-1867, 1835-06-30
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n. sent RAGE ron SrEcuLATIos.-[C oaeiudcdl
THOMAS H. DET o nSes 81 w Fl Posa Economy &C. in the
Combined effect of these causes
What then. let me ask is the effect of the combined
operaton Oh an increase in the number of exchanges,
greater suggshness in the circulation and dimuuon
the whole circulating medium; Most undoubtedly a
continued aii IN prices, until certain thrown
into operation, which will counteract the downward mo-
hon Mr. Hume, in his History of England saws there
Is point IN the depression Of nations in the scale of
circulation, below which they canno, sink Amel;,r,
ton will then spring of the very disorder itself So
would say, in the disasters of trade and agriculture
,nere is certain point of Depression below which they
cannot CO. The elfsustaning energies of commerce
are called into play and apply the healing balm without
the interference of government Thus the causes whose
operation have just been considering, gave a down
ward motion to prices in country until they reached
mat point which made this of the worst markets
~ Tue word TO sell IN and one of the best TO sell
FROM, Inc erect OF this on foreign exchange will
readily be perceived. More commodities were exported
than imported money balance created in favor of
the tAon Hence rapid and full current of the metals
was flowing steadily into the country and sn,
plying the vastde tfci tlserirculatlng dun
ed by suggshness of circulation and n H.
quantity from general destruction fconfdence red
we all very well recoec that short time since almost
every paper announced the fresh arrivals cargocs of
GOA and silver land we know that at this moment we
have foreign coins in circulation than have been
seen The country for past The Banks too seem
geeay 70 nave drawn to their wants large portions of
the precious metals.
Effect Of importation ofpreious metals and of resora
- ton 81 confidence.
NOW whilst the importation of the metals from abroad
Is gradually adding TO the circulating medium and
therefore, partially relieving by this means the pccuni
~ dstresscs OF the country, the number of exchanges
IN society occasioncd by forced sales will of cnuTse
have tendency diminish because those sales will he
come less and less frequent after the violence of the
storm has already Frustrated all that could not stand
against it, Affairs will soon settle down TO This new,
state OF things Many of the wealthy men of the former
epoch ma themselves bankrupts at the commencement
OF the new others again who could command little
ready cash during the crisis, find they have suddenly
become wealthy From this point the operations OF
eommerce once more begin TO extend themselves Con-
hdence is gradually restored, and with it the credit sys
TEN begins TO be buiit up again. and the large accession
of money from abroad makes the money me rho, ,h
easier than before The effect of all this is at first to
raise prices gradually and then rapidly as spirit
OF speculation is generated When prices are sinking
the spirit Of speculation sinks likewise because each in
aivdua Is fearful OF purchasing lest be injured bv
farther tall in prices The credit system likewise is
greatly contracted because the rapid fan in prices and
the frequent bankruptcies occurring from day to day de-
stroy the confidence fman in man
NOW, rise In prices is accompanied with effects the re-
verse OF ihese is The credit becomes instant
~ enlarged When prices rising all OH the alert:
the energies of man drawn forth, his hopes which
ever have an undue influence, thrown into pa e. and
the Imagination spreads enchanting schemes and projects
DC Espnzed under those circumstances 10
rush into business get pos5ss0n pFopertv whose
enhancement in value from the rising tide Of general
prosperity, IS alone expected to make him wealthy The
borrower now can much more easily get money on loan
tfun before bernnse general confidence is restored and
tne constant rise in prices makes property GOOD sccur
ty which before would have been deemed very made
quae. Buying and selling, too under these crcInson.
ces, will generally be on credit more and more extended
in proportion 10 The restoration Of confidence Now Tho
immediate effect ofthe credit and the
ed velocity given to the circulating medium 10 produce
superabundance OF money. For recOec have prcvi-
ousy shown that sluggish circulation and the destruction
otthe system generated extraordinary demand for
money winch flowed into the country through the me
Sum OF iinporlatlons The increased velocity of circu-
!aton and the re-establshment of the credit system
just the opposite ettec' viz ipeiease the apparent
amount. Nu. the real efficacy of the whole circulating
medium. Now, iahcn reflect that the currency has
received immense additions during the money pres.
sure from abroad that the portions boarded 5y ndi-
so Tho
subsdes--that the Banks which have rode tbr,nnL
the storm are beginning to increase their business and
push out their paper, and thus add To the circn.
latng medium that the United States Bank Lac re-
covered from the shock which it sustained by The r
moya OF the dePosites, aud consequently enabled TO
more lnera ana extended business, thereby enabling
oher banks to enlarge likewise; we are moi 10 wopdrr
uhder these circumstance, that have a redundant
cii"uidhhg medlut especially, when rccoIlect that
TINS Increased eDcy is circulating with orratv IN
creased velocity and the effect Of these combined causes
must be vast enhancement Of prices and couseouen,
rage Tor speculation. | will exempiify this by &C.,
simple Illustration set suppose a particular ns,6
exchanges IN ordinary times effected
by $1,000 Now have shown ifany causes operate 10
make the circulation only onehal az Did as tie ordipa
~ circulation, then the $1,000 will appear to our t.
tie district to be more in amount in real efficacy dian
S2VV. In TINS state ct things, throwing out Of all
other causes, prices in the ncigborhood suppoSed yoe
ial TO haf their former amount Now Us farther sun
pose that this fall in prices should cause an
oil 500 additional into the neiqhborhOOd and that the
rapidly Of circulation was agan restored. DO we moi
clearly see that should have a currencv redundant
by $5OO' And this would not only on the great nrnci
pie Of supply md demand carry up prices to er forne
level, but would increase them the case suppsed so m
cent beyond That level Now, what have been Ga sine
here OF neighborhood may with equal propfjec be- ie
Ola whole nation Let suppose for example f crcD
lating money Of this country 10 be 500 600 900 in or
binary tines that the circulation becomes suddenly on
~ one-hah as rapid before then the whole sf0600O
OOO, even suPposing the quantity kept n circulation mn
diminished VIII perform more exchanges than $50
OOOOOO would with lie former rate of velocity b tb,
circulation. Prices then would generally sink 10 hal
theiriorncr amount money would aow 10 LEI is ston,,
@SoOOODOO and imme datcy afterwards, the rcstofster
Of confidence, and the nspqucnt rc-cslablsient N
the credit system would communicate b. The ccnatina
medium the same velocity before; you would fltDI
nave redundancy Of twenty-five millions Of dollars
and consequent rise Of prices least twenty five n
cent upon the principle OF supply AID demand alone
Bot the probability - prices would rise 0rcsfv bevoo,
this point ia consequence Of tbe effect produced H.
spcculatng mania-i0r when prices ere rising oy,.,,
one wants 10 purchasc-cw are capable of fe,e.n
ing upon the causes, hence an artificial coenoot
ton y generated among the buyers and property rise,
greatly beyond what IL should do upon tie 6rncite "a
actual supply, and efficient demand The reason of mar
on these occasions seems 10 be completely nnhiored
re iooks forward 70 the realization Of wealth by cRano
e. ~ the price Of property which be holds in his hands
and almost every s disposed 10 turn spccnlator -
And ms specnafng mania is generally first fcl, in 70