, 1840-09-26
LETTER FROM Mr.. JEFFERSON
TO JOHN W. EPPES.
Monticello, November 6, 1918.


1t is a liiisa'e e question. whether the cir,
'culation of paper, rather than OF specie. Is q
good or :tn evil. In the opinion Of England
and of English writers it is a good; 10 that
of all other nations it is an evil; and except
England and her c,pviSt. the United States
there is not a nation existing. | believe, which
t~olerates a paper circulation. The expert
ment is going on, however, desperately in
England. pretty boldly with u, and at the
end of The chapter. We shall see which opin
ion approves: for | believe it To he one al
those cases where mercantile clamor will
bear down reason. until it is corrected by ru.
in. In the mean time, however. let us reason
on this new call for a national bank.
After the solemn deciSi"n of Congress
a. ainst the rene ,al of tre char,er of the
bank of the United Staies, and the grounds
of that decisinn, (the want of constitutional
power.) | had imagined that question AT rest.
and TINT no nnre applications would he
made 10 them or the Incorporation of banks.
The opposition on HAT ground To- IT'S first eS-
Establishment, the snll! m~iinritv hv which IL
was nverhorne. and the me ms Practl>ei f"r
obtaining il. cannot he already f"r1oiten.-
The law having pissed, however, by a ma
IHf ~ 'tf'h'iN- = - ~ = iS'NH lAhi-
cipIe of submission Ia a majority, Suffered
the ltw to flaw through lis term without oh
struction. Daring this. the milton had time
Ia cen ider the constitutional question, and
when the renewal was pr"pnsrd. they con.
deDned il, not bv their representatives 10
Congress only, but ty express instructions
from different organs Of their will. Here
then we mi hit stop, and con .idpr the memo
-
apart, we Will examine whether the legusla-
ture ought 10 comply with it, even if they
had the power.
ProceedinI to reason on this subject. some
principles must be promised as forming It's
basis. The adequate price of thing depends
on the capital and labor necessary to pro-
dnce it. lin the term capital. ! mean 10 in
clude science, because capital as well as la
Dor has been employed 10 acquire it, Two
things requiring the same capital and labor,
should be Of the same price. II a gallon of
wine requires for its production the sam
capital and labor with a bu<hel Of wheat.
they should be expressed by the same price,
divided from the application 10 a common
measure To them. The comparative prices
of things being thus to be estimated, and ex-
pressed by n common measure, we may pro-
coed to observe, that were a country SD in
sulated as 10 have no commercial intercourse
with any other, to confne the interchange
Of NIL its wants and supplies within itself.
the amount of circulating medium, as a com.
mon measure for adjusting these exchanges,
would be quite immaterial. IF their ~circuIa-
ton, for instance, were of a million Of dollars,
and the annual produce of their industry
equivalent to ten millions Of bushels Of
wine It. the price Of a bushel of wheat might
be one dollar. II, then, by a progressive
coinage, their medium should be doubled, the
price of a bushel Of wheat might become
progressively two dollars, and without incon
yenience. Whatever be the proportion of
the circulating medium to the value of the
annual porduce of industry, it may be con-
Sidered as the representative of that indus.
try. In the first case, a bushel of wheat will
BY represented by one dollar; in the second
BY two dollars. This is well explained by
Hume, and seems admitted by Adam Smith.
B. 2. C. 9 436. 490. But where a nati"n
is in a full course OF interchange of wants
and supplies with all others. the proportion
Of its medium to its produce is no longer In
different. 10. AL. To trade on equal
terms, the common measure OF values should
be as nearly as possible on a par with that
of its corresponding nations. whose medium
i. in a sound state; that is to say. not IN an
acct IentaI state OF excess or defciency.-
Now. one of the great advantages of specie
AZ q medium is. that being of universal val
ne, il will keep itself at a general level, flow
ing out from where it is too high ito parts
'vhsre il is lower. Whereas, If the medium
be OF local value only, as paper money, if
too litde, indeed, gold and silver will flow in
to supply the deficiency; bot # too much,