The Madisonian. [volume] (Washington City [i.e. Washington, D.C.]) 1837-1845, 1841-05-21
THE OPERATION OF A MIXED CUR.
RENCY.

RENCY.
Il is said that paper money drives and keeps specie
out of the country to the amount or nearly TO the
amount, cfthe paper emissions and consequently that
lose the best and keep the worst without getting
any considerable increase This result it Is averred,
accords with established and long recognized prin-
cpIe Of political economy, that money, like water,
finds its iepei."
According to this theory, the specie which ef this
country from 1884 to 1885, inclusive being period o.
five years. and of the greatest paper money expan-
sion known in our history, should have been very
great. Blu, what was the fact2 The exports of spe-
Gle during this period were ST., 1928 ,63s; the imports
$50 0s3 495; difference $40 1857. That is, during
this period Of great paper money expansion, we ac-
qured $40 l54 1851 Of specie in addition TO what
had before, not reckoning the large amount which
came in the chests, trunks, and pockets Of emigrans
from Europe. And the most remarkable faci is, that
much the largest of hese imports Of specie made
in the years Of the greatest paper expansion.
But it will be said of States and other cor
porations borrowing largely all this while from
England and elsewhere and that accounts for this
cresse of specie Let how this borrowed mo-
ney is RENTED The State of Pennsylvania, for ex-
ample negoates loan Of IS 600 900 in London.
During each Of these years. from 1884 to 1888,
our country in debt to England, and 10 all the
world, by excess Of imports OF other commodities
over exports; consequently, the bills in England on
the United States were, on average to amount,
greater than the bills in the United States Eng
land consequently, all these remttances of borrowed
money made by bills for sale in the English
ket on the United States and paid here out ofour
circulating medium. The whole of this S5S Os3, 495
of specie which came into the country in the mean
time, and the ST. 92S 63S which out, came and
went as subject, and not agent Of commerce
1t was bought and sold much and truly other
commodities of trade. And the fact, that were
able to buy $40 1854 S59 of specie more than Sold
proves that specie, instead of geng Of the country
during the period of this great paper money expansion,
all the while flowing in
There is another class of facts illustrative of this
point. We have the authority of the Secretary ofthe
beginning of 1887 the currency of the country sup
piled by the banks 1928 600 600 In this esti-
mate is reckoned $ll5OO0OOO Of depos,es, which are
as much part Of the currency money in a far
mer's or merchants desk, or in pedars pocket.
The actual circulation of bank paper this time
$i40 100000 The amount Of specie in the banks
Of the probable of specie in the whole
try, at $50 900 600 stated in his message dated
Dec. ?, 1889, as a standard, and allowing gradual
increase for the years preceding, may be fair to
clude tina, the whole of specie in the country
in 1887 was not much less than $50, OO0, 600 say
SIS, 900 900. Now, according to this theory, that
bank paper must drive Of the country amount Of
specie equal to its amount in circulation, it is
nTNn
the Sl400000 900 in actual circulation should not only
have expelled the 75,OO00O0 of specie fiom the
try, but brought in debt at least for much
is the difference between sl4OOOO00O and S75,-
100000 That It's $650OO000
1t is not sufficient answer to this To say, that
in debt the full amount of this difference and Of
the specie in our possession long it is manifest
first, that this debt not incurred this account
or by the action Of this cause ; next that we have
quid pro quo and lastly, that the interest this debt
be discharged and the principal liqudated by the
of this qud pro quo. Or if the possession of the
quid pro quo be denied the result of bad specua
ton, of mistake, it could make no difference in
this argument, nor in any way affect it, Like veal
thy and prosperous merchant who and then makes
bad bargain, we can 60 on again, and make it up,
under good government. But the possession of the
quid pro quo cannot be denied at least the denial
cannot be sustained. For although it might doubt
less be shown that have not in fact hundred times
the worth of the money, as some expected and pre-
dcted we have yet fair consideration, after all due
allowances shall have been made for disappointment
in certain quarters. Moever if could be made
oappear that we have not the guild pro quo full tale
il also be shown that the of this deficiency
lies in the yexaous operation of the General Govern
ment against the parties engaged in these transactions
and therefore the fact would be deprived OF all force
for the intended application II still remains true that
in spite of these difficulties our wealth in specie has
increased.
The fact therefore, established that any specie
all be left in the country, in time Of free trade
under large emission OF bank paper is proof that
this theory, as applied is false The additional fact,
that specie continues flow into the country in the
state of things yet stronger demonstration of
this error.
Having established the Negative on the main point,
we might still 90 on to do the thing against the
hypofhesis-for it is nothing morc-tha,, il our bank
ing system and paper currency had not existed we
should have had greater, and much greater amour,
of specie, than we have. The whole circulating
medium of the world in the form of the precious
tails is perhaps little in excess Of 81 900, ,000.-
Will any one pretend, that relative Importance
a commercial nation will entte us to one-tenth OF
this Z Certainly, should think mo- to more than
one-,wentieth. But actually have nearly
tenth Every nation is doubtless entitled TO much
as il can fairly get in the way of commerce, and
are persuaded if all the statistics appcrtainng this
question were tangible the result would put