Edgefield advertiser. [volume] (Edgefield, S.C.) 1836-current, 1840-01-01

alion. Now the addition of many noles
even while they are as good as coin, by be
ing always exchan2eable for coin, may
be injurious. because The increase of ibs
mixed mass of money generally occasions
rise in the price of all commodities
The consequence is, that the high price o
foreign productions Temps foreign II
send Us a large amount of their commod
tiles, while the high price of domestic pro
ductions prevents these Foreigners from
tnking in exchange large amount Of oui
commodities. When. therefore, you buy
from foreigners more than they buy from
you, as they cannon take The paper part
Of your currency they must take The coin
part. II this is dUue to considerable
extent. the danger is that the banks will
be obliged 10 pay so much Of their coin fol
their nOles, as To leave them no, sufli
cienl quantity 10 answer the demand for
II; in which case The banks fail, aud the
community is deirauded. To prevent
this. a prudent bank. the moment il per-
ceives all unusual demand for its notes.
and has reason to fear a drain on its vaults,
ah"@L! x iinniediatnly dimini-hi tie amoun;
Of its notes and call in part Of its debls.
So, on large scale, when the banks of q
country perceive such a demand for coin
Tor exp0raIion as ,liminishes TOO much The
stock of coin necessary for their banking
purposes, they should stop the expiration.
This they can always do if their affairs
have been well managed, aud here lies
Tho test Of bank management.
"The law of mixed currency of coin
and paper is, that When, from supcrahuu-
dance of the mixed mass, too much of
The cuin parl leaves the country, The re-
niainier must be preserved by diminish
ing the paper pari, SD rs TO make the mix
cd mass more valuable in proportion. 1t
Is Ibis capacity Of diminishing the pa
per which protects it. lis value consists
in its elasticiIy-is power of alternate
expansion and contraction 10 suit The state
oi The community; and, when il loses its
HexiLillty, il no longer contains withiu its,
elf The meHns of its own defence, aud is
tu' OF hazard. In truth. the merit of a
bank Is nearlyfn proportion TO The degree
"l his ilrxibIiry of its means. II bank
lends lis money on mortgages, on stocks,
ior long ern-, a:si Ia persons careless Of
protests, il incurs this great risk, that, on
Ihe one hand. It's notes are payable on de-
mand, while on the other, its debts can
not be called in without grra, delay-a
delay fatal to its credit and characler.-
This Is the general error of banks, who do
not always discriminate between two
things, especially distinct in banking, a
debt ultlnatel v secure. and debt certain
~ payable. But well managed bank
has lis funds mainly in short loans to per-
sous in bnsiness-lhe result of business
uansaclons-payabIe on day named,
which the parties are able to pay, and will
pay at any sacrifice, in order to escape
mercantile disllonor. Such bank has is
i"nds, therefore, constantly repaid into it,
and is able 10 say whether il will or will
mol lend Them uuI again.
"A bank so managed. if it finds too
much demand for its coin to go abroad,
hesins by MOI lending more than il receives
every day; and then goes farther, by not
lending aS much as its income, declining 10
renew the notes Of its dehtor1, and oblig
ins them to pay part of The whole. max
,ns II il rule 10. keep its discounts within
It's income. The operation proceeds thus:
ny issuing no new notes, hnt requiring
som thing from your debtors. you obliee
'iem 10 return Ia you the bank notes Won
lent 10 them. or their equivalent. This
makes the bank notes scarcer-this makes
them more valuabe-this makes The goods
fur which they are generally exchanged
less valuable; the debtor, in his anxiet,
to get your notes, being willing To sell his
goods al sarriIice. This brings down
The price of goods, and makes every thing
cheaper. 'rlien the remedy henns: The
foreigners. finds rha, his e0nds must lie
sold 50 low, sends no more The American
importer. liudiua thar he cannot make
money by importing them, imports nn
more. The remainder of The cain, Of
course, is not sent tut after new importa,
tons, but stays at home, where i, finds
better employment in purchasing these
cheap articles; and when :he foreigner
hears Of this state OF things he sends back
The coin he took away. He took it away
merely because your orn domestic pro-
were so high that he could not
make any profit in lis country by taking
them. But when tlie news reaches him
that his produclio's are very cheap in our
country, he will also learn that our produc-
tions are chea, 100; and he sends back
the coin to buy these cheap prolurrions of
ours. We, therefore, get hack to our coin
Ivy diminishing our paper, and it will stay
until drivn away by ano'her snperabun-
dance otpaper. Surh is The circle which
is always describing. Like
The r'wer of Steam, it is emiuenry useful
in I.'udcni hands, but Of tremedous hazard
wien not controlled and the practical wis |,
'om in managing it lies in seizing thu
proper moment to expand and contract =;
akins care, in working with such eSio-
i've material, whenever there is dord, TO
ncline 10 The side Of safety.