The Madisonian. [volume] (Washington City [D.C.]) 1837-1845, 1841-05-01
LETTER ".

RIcnMoNp April Oath, 1841.
Question. BY equalising the Exchanges, will the
currency be increased or diminished2
Answer. The currency will be diminished. A
very true saying has long been very current among
the people, that nimble sixpence is better than
slow shilling" The principle is very apparent. The
value Of money consists in its exchangeable character
and the quantity required, therefore, depends upon
the facility and rapidity with which it is used A
given amount only be used in any place,--when-
the supply exceeds the demand it becomes entiIe
" useless. No will keep in his possession more
bank notes specie than he has use for in the way
of paying debts, and buying and selling, if
he does SO, he will be loosng interest that amount
Thus wien farmer gets sum of money on hand he
is generally anxious to dispose of il in such manner
as to secure interest," and with persons of every
other profession and calling. Thus bank bills and
specie limited to the wants Of trade and the
active and rapidly they circulate, the less interest is
lost by each holder and the less amount is required
answer the purposes Of commerce. A plain case will
illustrate this position.
Suppose merchant banker residing in Rich
mond shall make contract to pay 81 900 per day to
merchant in Baltimore, long As the mail shall pass
between these cities in twenty -four hoursone thou
sand dollars only will be the road and, therefore,
only l 900 more is required than would be if the pay
ment should be made in Richmond, but suppose from
the bad state ofhe roads the mail pass through
in less than ten days-the merchant must use $50 900
more, because there will be $4,000 the road to
Baltimore, constantly, instead of one Thus il will
be that the rail roads and steamboats, and regu
larity of the mails, have very much essened the de-
mand for SO large a currency.
While the Exchanges are left to the extraordinary
action of thousand conflicting currents and incur
rent notes forced into among merchants in diff
ferent sections of the Union the consequence u.s. that
large must and will remain inactive, because of
the great discount at which they must be sold to
vert bank notes, deposits in distant banks, into
available funds in the place where the money re-
quired. s..
system of Exchange that will equaise and reduce
| the rate of Exchange on different sections of the
Union below the charge for transporting specie, will
render available all the money of the country and put
it into active circulation. The result will prove
that one dollar, under proper system, will perform
the Office that now requires two.
q. What is the practical operation Of t,co currer-
/ cies?
i A. Currency may be divided into convenient and
inconvenient-good and bad.
/ When two currencies are equally good, the most
convenient will be preferred Thus find that the
notes Of specepaying banks in the vicinity of the
bank always preferred to gold silver and hence
very unwise attempt is made to force upon the peo
pie the use of coin by abolishing bank notes under
the denomination of dollar. 1t is unwise, because
the people the best judges of their interest in
these particulars, and the attempt TO benefit the cur
rency by forced infusion of coin to the great incon
venience of the people, always fail of the desired
effect. Give the people the opportunity of choosing
between paper and coin and they will decide accord
ing to their interest.
Again, where there are two kinds ofcurrency equal
y convenient the least valuable will generally drive
out the better, provided the difference in value is
slight L. ....E.:
As long as the holder of an uncurrent note can find
some to take the paper At par he will continue to
take it also. And therefore, there debts due
to the banks in many places where the notes circulate
the notes that at par, at small discount, will be
collected to pay these debts in bank-whle the notes
that are greater discount will be passed off in the
ordinary course of trade without loss of discount and
thus to great extent become the currency of the
| neighbolhood.
q. What causes bank notes to be under par in this
countIy7
| q. What causes bank notes under par to be made
circulating medium
@. How can deprecated paper be driven out of cir