Richmond enquirer. [volume] (Richmond, Va.) 1815-1867, 1840-04-28
Hon. GEORGE NJ. KEN,
Chairman Of the Committee on the Militia,
House of Representatives.
CT RRENCA'

House OF representatives
(! CURRENCY.
We would call the attention Of readers to an es.
say on the currency by Mr.. Bdde, which will be found
in another part of our paper II the course which
should be pursued IN Banking TO keep the currency m
a sound condition, and keep business IN prosperous
situation 1t shows that excessive importatlons ana
yh prices result from ISSUES OF Bank paper,
and excessive have the effect TO destroy busI.
ness large foreign debt, by causing large m
portaons and diminishing the exports OF our surplus
products and that the only means by winch those evils
can BE- corrected, is reduction oil the Bank issues
And trust the Wings will hardly undertake 10 al
I~gc that Mr.. Bidde was in error IN expressing the
views contained IN tins document.
/ II, then, we compare the course which Mr.. Bidde
describes the proper for Banks TO pursue to pre-
sound currency, proven, excessive mportlhons
and encourage the expectation ." our surplus products,
therrb creating high prices for the products OF our
sol, and reducing the prices Of foreign fairies and
other articles the growth ~ Foreign countries, vain
the course which has been pursued by our Banks the
Of present difficulties Will br clearly ecrccr.
ed Ia have resulted from the acknowledgement OF the
Banks aud from the measures Of the Government,
as ridlcniDnsly asserted hy the Wings Mr.. Bdde
in the essay before makes reference to any action
on the part the Government calculated to produce
any effect upon the currency but h. attributes the con
troll OF the currency and the rendering Of Il sound or M
sound entirely Ia the wise or unwsr management OF
the Banks Take then, the Which he describes
the proper he pursued by The Banks, and com
pare it with the which they known 20 have
pursued, and the OF the present depression, the
ow price Of our products the heavy "rrign debt,
the SUSPENSION of succc payments hv the Banks,
clearly seen TO have resulted from the
dance Of paper winch the Banks have put III clrcua-
ton. Both men and the Banks have imposed son the
community by promises which they cannot pay. And
is the which has been pursued by the l.rgiSa-
tire Of Pennsylvania, with which the Wings are 50
much delighted, IN inducing the Banks to increase the
amount Of their issues calculated To remedy The evils
complained Of? Most assuredly it is not. We ask our
readers pcrusc this document acntecy, and ponder
upon j, seriously and then rl them draw their "wn
conclusions respecting the truth and honesty Of the
Wings in sv,bunr TIC existing evils to the OF
n" Administration. They have not only encouraged
the excessive issues OF Bank paper: but they still at.
tempt to Justify it, and adc"cat" continuance Of the
same svstrm-- iat:more Eynjiir"n
ES<Gy tho GnrrrHcY--br Si:. y. RinniL.
'sIhc currency of the tn:1cd States cons,Sts OF
!, CON, and of bank notes promising t" pay com rs
iuro the banks always pas the CON they pro-
mise they useful, because, in country where the
mon,vri capital il disproportIoncd 10 The means OF
EMPLOYING capital, the substitution of credits for coin
enables the nation TO make It's exchanges with less
coin, and of course the expense oi tIat CON-.
But this advantage has by its side great danger.
Banks are often directed by needy persons who bor-
row too much, by sanguine persons ANXIOUS only
TO increase their profits, without much pccuniary IN.
tcrcst or personal responsibility in the admInistra-
ton The constant tendency Of banks, therefore, Is
10 lend too much and to put too many notes IN CIR
cuation Nov, the addition of many notes, even
while they are good coin, bv being always ex-
changrabc for CON, may he injurious. because the
increase of the mixed Of money generally oc-
casons rise in the price Of all commodities The
consequence that the high price OF foreign poduc-
tons tempts toreigner TO send large amount OF
their commodities while the high price OF domestic
productions prevents the fore gners from taking III
Exchange large amount Of our commodities. When
fhpr.fDre voub uy than they buy
from you they take the paper part of your
currency they must take the coin part II this IS done
10 considerable extent, the danger IS that the banks
will be- obliged to pay much of their coin for their
notes TO leave them not sufficient quantity to an
swcr the demand for it, in which the banks fail
and the community is dr:rauded. To prevent this
Ia prudent bank the moment II percciveS all unusual
demand for lis notrs. and has TO fear drain or
liz vaults, should immediately diminish The amount
Of its notes, and call in part GIFTS cbs. So on the
f large scale, when the banks of country perceive
such demand for coin for expectation as dimlnIshes
much the stock of coin necessary for their bank
ing purposes, they should stop the exportaton. This
they always do if their affairs have been we'll man
aged; and here lies the test Of bank management.
1.-THE law of mixed currency Of coin and paper IS
that when from superabundance of the mixed mass toe
much of the coin part leaves the country, the remain
der must be preserved by diminishing the paper part sc
as to make the mixed mass valuable in prnpnron
II is this capacity of diminishing the paper which pro
ccts ii. It's value consists in its e!1scIty-lts powe
of alternate expansion and contraction to sn The state
f of the community; and when IT loses It's heS,bhity u
longer contains within itself the means of its owl
defence, and Is full ofazard. In truth the merit oil
bank is nearly in proportion to the degree OF THIS rS
bility Gifts II bank lends IT'S money on mort
cages stocks, for long terms and 10 persons care
less Of protests incurs this great risk that the one
hand its notes payable demand, while on the other
E ts debts cannot be called in without great dcaya de
lay fatal lis credit and character. THIS is the genera
Of banks whA do not always discriminate hrtwcrr
two things, especially distinct in bankng-a debt ut
natcly secure, and deb, certainly payable. But {
well managed bank has lis funds mainly in short loans
10 persons in busnrSs-te result of business ransac
2 tons payable day named, which The parties arc
able to pay, and will pay at any sacrifice in order tc
escape mercantile dishonor Such bank has is funds
rcorc, constantly repaid into it, and is able say
whether it will or will not lend them out again
? "a bank managed. if it finds loo much demand
for its coin to 20 abroad, begins by not lending moro
than il receives every day. and then goes further, BY
not lendingas much as lis income, declining to renew
the notes Gifts debtors and oblignJ them to pay par
the whole, making il rule 10 keep lis discounts with
IN its income. The operation proceeds thus: by issu
ing no new notes, but requiring something from YOU
Debtors you obge them TO return to you the bank notes
r you lent to them, or their equivalents This makes
the bank notes scarcerthis makes them valuable
this makes the goods for which they generally
exchanged less valuable; the debtor, in HIS anxiety t.
&c, yonr notes, being willing to sell his goods sac
rhce This brings down the prices Of goods, ane
$ makes every thing cheaper Then the remedy begins
the foreigner finding that his goods must be sold Sc
low, sends more; the American importer finding tina
he cannot make money by importing them, imports
more The remainder of the coin. course not sem
out after new ImportatIons but stays at home, where
it finds better employment in purchasing these cheap
articles and when the foreigner hears Of this state
things, he sends back the he took away. He took
away merely because your domestic productions
were so high that he could not make any profit in hf
country by taking them. But when the reaches
him that his productions very cheapin our country
he will also learn that productions are cheap too
and hc sends back the coin BY diminishing our paper
and it will stay until driven away BY another snper
abundance of paper. Such is the circle which mixed
! currency is always describing. Like the power o.
steam it is eminently useful in prudent hands, but o.
tremendous hazard when not controlled; and the prac
teal wisdom in managing it lies in seeing the proper
moment to expand and contractt taking care in work
ing with such explosive material, whenever there il
/. doubt, to incline to the side Of safety.