The Madisonian. [volume] (Washington City [i.e. Washington, D.C.]) 1837-1845, 1837-10-24

wards each other now Where is Van Trompl Where
Is de Ruyter What is become Of the mighty fleets
which disputed the dominion Of the with England
and France Poor Holland her deienceless ports
blockaded BY British squadrons-her court browbeacn
by British diplomacy-shorn of all her strength and
glory she seems almost sinking again into the waters
out Of which she emerged So much for the innovation
But what is the objection to the system Let
derstand each other will put case. The quantity
of the precious metals required in any transaction,
any number Of transactions between countries, Tor
two individuals for comes to the thing depends
not only upon the balance OF payments between them,
but also upon the confidence they have each other
Thus Hamburger imports corn for England in season
of dearh from Prussia II trade be prosperous and the
world peace she will probably pay for this corn by
bill at six months with interest, and when tho time
comes for meeting her engagement. she will do so by
sending Danzic cargo Of colonial produce. But
should the times be such from war; cornmoon, &c,)
make commerce uncertain, or to impair credit, the
purchase he made only for cash. aud paid for gold
and silver. Now, sir, commerce being mere ex-
change of commodities every body must see, glance,
that il is very mnch promoed'by state of peace
and order than by Of war and commoon by state
OF Confidence, than by of distrust, lby state of
things that admits Of payments in bills than by one that
requires payments in cash In simple operation, like
the one described, this is quite manifest, and yet the
whole theory Of money and Of banking is contained IN
! that simple operation. ..
Sir il explains at why is that in countries very
far dvanced in commerce and civilization the precious
metals for all purposes Of currency superseded by
commercial paper IS particularly the case IN England
whose paper circulation Of all sorts is something like
200 millions, resting upon basis OF only 80 millions
of speciet Money nothing more than what is called
by the brokers "a bought and sold note"it is token
which shows that its holder has parted with commod-
ties 10 that amount, and that he is entitled to receive
their equivalent 10 other commodities whenever it shall
be his pleasure do so Why should that token be Of
| gold Why should title or evidence Of debt,
be itself of material costly the thing OF which It is
| the symbol and the evidenced
IL is clear that there any of insuring soc
ETY. against Of paper, besides It's con-
vertbility gold and slyer-wcre not that the only
practical test hitherto discovered by which prices in diff
terent countries can be compared-ali commercial ma
tons would dispense with the precious metals as me-
dunn of exchange But yet there is no such means
and the currency theoretically the most perfect, is for
the present mpractcable The nearest approximation
has certainly been made occasionally in the u States,
where the specie basis has just answered the purpose OF
asceralnng that currency was on level with that
| OF other nations.
| But there is another step in the commercial OPP
| Grafton lust mentioned The holder Of the Bill
of Exchange received in payment of corn, stands
| in need of some other commodity which, his own
cred, does enable him to procure, lie ap-
plies to broker or any other capitalist for the
cash. or what will answer his purpose Just well,
has credit the shape of note payable on de-
mand, short date, for which the original bill at
months is given in exchange, with reasonable dis
This last operation is what is considered as the
great abomination Of banking. The bank receives
discount on giving its own bill payable demand
short date, (for which therefor is compelled
to reserve prepare fund.- for bill payable at q
months of which Of course payment cannot be demand
ed until the expiration of that term. And, now ask
where is the difference between the first operation,
which every body must perceive is eminenty condu-
Give to the extension OF commerce and the last What
objection be made to it that does not lie equally
l. 81 Ia 81 ,ha.,,,
an Improvement of which Europe has been boasting
for at least six hundred years. and Of which the adyan-
tages have my knowledge been questioned be-
fore Why is not credit founded property as good
in the one case in the other! and why should gold
and silver be used in either when they not wanted
The banking system sir, is only one form Of that d.
vision Of labor which takes place IN all opuent coun
tries. lt.leads to great economy both OF time and
money-of the former because the business OF a whole
community in receiving and paying away can be trans
acted by the clerks of single institution, well by
100 or 1000 times the number, IN the separate employ
ment Of individual merchandise the latter because
stead of each individual in community reserv!ng the
quantity of gold and silver necessary to meet current
demands, much smaller proportional amour, kept by
banking house has been found tho wants of
the whole society. But the utility of that system is
not confined to the advantages just mentioned 1t ap
pears very clear the first place, that the credit
carried to the extent in which exists in Eng
and the United States could not possibly be made 10
rest upon any thing liable to be disturbed by foreign
demand, and by other contingencies, as the metallic ba
sis, and of which given quantity cannot therefore he
counted OH at any given time What is commonly
called the currency Of country, that is to say, bank
paper and the precious metals really constitutes very
small portion Of it, but it may be considered the test
touchstone OF all the rest, and If engagements IN
bills of exchange, &c be not met according to their
tenor what is considered cash. 1t is difficult to cal
culate the effects of the alarm that may But
there is another poin, of view in which banks ap
pear to me quite essential to our commercial system.
1t is that, according to the remark of excellent wr-
ter the appreciation OF the credit OF number OF per-
engaged in commerce has become science and to
the height to which that carried treat
Britain (and in this country that country small
d.gree indebted for the hourlshing state of its inter-
nal commerce. for the general reputation OF its mer
chants abroad and for the preference which in this
spect they ENJOY the traders of all other nations
Sir, have been driven to this elementary way of
considering the subject by the which the argn
men has taken here and elsewhere and because, in
lemny reviewing, as we are now compelled to do, the
whole monetary of the country of the very
last Importance, that the subject all its aspects,
should be fairly presented to the people shall there
fore proceed briefly consider the question, how far
is practicable or desirable to substitute metallic
rency for bank paper or even very materially to widen
the metallic basis OF our present circulation.
presume will hardly be disputed that by general
return to the precious metals the only medium Of
change for the whole commercial world the operations
| OF trade would be every where embarrassed and I'M
pedcd, and the value of money enhanced, or which is
the same thing the prices Of commodities reduced in
incacuabe degree. How far similar effect has al
ready been produced By the dlmnuton OF the supply
from the Mexican and South American mines. within
the last twenty years ia Of the most difficult and
controverted questions of the day This is not fit
cason for stating the arguments advanced by the advo
Gates of different views OF that subject, but will men
ton to the committee that in very able work which
have already referred having been recently sent to
me, the author, who xamnes this point with perfect
candor, advances the opinion that thousands have with
in the period alluded to, been precpitated into enibar
easements from that cause alones IL it be true
alleged by Jacobs, that the whole stock of coin in
j cla t,, -, ln.. L.. -