The Madisonian. [volume] (Washington City [D.C.]) 1837-1845, 1841-05-08
EXCHANGE AND CURRENCY.
LETTER vi.

LETTER vi.
......u.. RICHMOND 9th April, ls41.
QUESTION What causes Bank notes TO be under
par? ~ /
ANSWER. There are tioo general causes that DO
duce this resultrst-Ifa bank suspcnds specie pay
ments, although the ability of the bank NAV be I'M
doubted still its inability to furnish specie reduces its
notes below the value of coin and second-If the bank
is so far distant as to render the credit of the nstitu
ton doubtful or too little known inspire confidence
QUESTION. What causes notes under par 10 cire,,-
late? a III
Bank notes under par will not circulate when there
is sufficient amount of par currency to supply the
wants of trade. Money is the medium between buyer
and seller. 1t is the creation of necessity. The rep
resentative of property. ~.
lfthe trade of the country is not supplied with the
best currency, its imperious demands will bring into
use currency of less value but if all the channels
trade are filled with the paper Of specie paying banks
at fair rate ofnerest, there will be no room lor any
of less value. Thus it may be in many sections
ofthe country, when very little money in aid of
the trader that they compelled to barter
and again individual paper is used in sections of
this State, under the of cash notes-which means
note given to be paid in money at a future day |
Some common medium must be had and public conve- |
nience will to the best that can be procured
Notes under par therefore, obtain circulation because
they the best ofwhich the community can obtain
supply to serve the wants oftrade.
QUESTION. HoU deprecated paper be dripen
out Of marked? IA Fl. r, .M....,.@ u. .,.a, gn..
ANSWER. This question is answered in part by the
| reply to the last inteIrogatory. ,,f..'". "."-.
Uncurrent money, or money below the par Of spe-
Gle, will cease to circulate when it to advance
the interest of indiv iduals who use it. ...as .,ar
In conseque of the want of system of Exchange
ny which the value Of money at different points be
equalized becomes necessary to have larger amount
of kind of currency to compensate for the slow
transmission of funds from section Of the country
to another. The result is. that nse-eh..ss, crackers,
and laborers content to take deprecated paper
because it is much better than medium Of trade.
From this cause, you will find distant banks apparent
y redeemng their notes at great mart Of trade.
While in TRUTH the bank does redeem its paper at
ALL but makes contract with some broker to loan him
certain amount of its bills upon condition that he
shall redeem them at a certain rate of discount. The
broker then adverses that the bills of the bauk will
be redeemed at and one half per cent This
gives the notes currency among the necesstous, and
accordingly the broker will loan out his uncurrent
bills contractors, builders manufacturers and
others who employ large number of laborers These
bills then paid out to the laboie and he again pays
them to the butcher baker, grocer and all others with
whom they trade These bills after going the rounds,
at last fall into the hands of those who need current
funds and they 60 to the broker and sell the bills at
the discount he has established and the broker loans
the bills before. Thus, in the absence of suffici
ent amount Of par currency the public compelled
h,ostt 49, &C. g Al cl.Isx-
If system of Exchange shall be established that
will equalze the value of funds in every section of
the country the banks will soon be able to resume
and bank notes will be brought to par, that
they will pass into the banks and Exchange dealers
possession in payment of notes, and being in the
hands of such dealers, they will be sent back to the
counter Of the banks from whence they issued to be
deemed for current funds. .. .--.. -.. .., Be- ,
This is Of the valuable features of the system,
and according to the laws of trade, will operate with
peculiar force now because there is so large amount
Of banking capital that, the exchanges are
regula ed and equalized there will be abundance
of current funds, more than the wants Of trade will
employ; consequently, but par funds will be
tolerated at any place.
There two causes that will produce this result
First The whole banking and individual capital will
be rendered available, and made to pass rapidly from
hand to hand throughout this vast Union, in the
channels of trade thereby enabling dollar to per-
form the service of two under the present want of
system; and, second if the specie is kept in quiet
state as will be the case if no demands made for
shipment transportation from section of the
country to another, the banks will be enabled to en-
large their loans upon specie basis Thus the
of par funds in every section of the country
will be abundant that there will be demand for
any other kind of currency and all deprecated paper
will be driven out Of market. .''.
Having gone thus far in the examination Of the
general principles of Exchange and Currency the next
inquiry will be,-How shall these principles be best
carried QUIT .,u-a
Question What kind of an institution will regulate
the exchanges and equaize the currency in the most
safe and permanent manner2
KENTUCKY ELECTIONS.
MEMBERS OF CONGRESS ELECTED.
Carrot Davis, (adm.) in the 18th District
Thomas F. Marshall, [adm.) in 10Th District
William o. Butler, (opp) 18th District
John White (adm \ 9th District