The Madisonian. [volume] (Washington City [D.C.]) 1837-1845, 1841-05-22

llams, of Connecticut
THE OPERATION OF A MIXED CUR.
RENCY.
Il is said that paper money drives and keeps specie
out Of the country to the amount or nearly 10 the
amount, ofthe paper emissions and consequently that
we lose the best and keep the worst without getting
any considerable increase. This result it is averred,
accords with an established and long recognized prin-
cipe Of political economy, that money like aoatsr,
finds 10 lepelp
According to this theory, the specie which left this
country from 1884 to 1885, inclusive being period Of
five years and Of the greatest paper money expan
sion known in our history, should have been very
great. But what was the fact The exports of spe-
Gle during this period were ST., 1926, 63S the imports
$5S,0S3 495; difference $4O,l54s57 That is, during
this period of great paper money expansion, we ac-
quircd $40 1851 Of specie in addition to what we
had before, not reckoning the large amount which
came in the chests, trunks, and pockets Of emigrans
from Europe And the most remarkable fact is, that
much the largest Of these imports fspece were made
in the years of the greatest paper expansion.
Butt will be said Of our States and other cor
porations were borrowing largely all this while from
England and elsewhere and that accounts for this in
cresse of specie Let us see how this borrowed mo-
ney is RENTED The State Of Pennsylvania, for ex-
ample, negotiates loan Of SIS 100000 in London.
During each one of these years, from 1884 to 1888,
our country was in debt to England and 10 all the
world, by an excess Of imports Of other commodities
over exports; consequently, the bills in England on
the United States were, average as TO amount,
greater than the bills in the United States on Eng
land consequently all these remittances of borrowed
money made by bills for sale in the English mar
ket the United States and paid here out ofour own
circulating medium. The whole of this 1858 Os3, 495
Of specie which came into the country in the mean
time, and the 1898 63S which went out, came and
went as subject and not agent Of commerce
1t was bought and sold much and truly as other
commodities of trade. And the fact, that we were
able to buy $40 l54 $50 Of specie than sold,
proves that specie instead of geng Of the country
during the period Of tn great paper money expansion
was all the while flowngin.
There is another class Of facts illustrative Of this
point We have the authority Of the Secretary ofthe
Treasury Of the United States for saying that in the
beginning of 1887 currency of the country sup
piled by the banks 1928 100000 In this esti-
mate is reckoned Bis 900 of deposites which are
as much part Of the currency as money in a far.
mers or merchants desk, or in a pedlai's pocket.
The actual circulation Of bank paper this time was
$l4O,OOO,OOO. The amount of specie in the banks
100000. If we take Mr.. Van Buren's estimate
of the probable amount of specie in the whole coun-
try, at $s6,OOO,O00, stated in his message, dated
Dec. 2, 1889, as standard, and allowing gradual
increase for the years preceding may be fair to con-
cude that the whole amount Of specie in the country
IN 1887 was not much less than $50, COO, 600 say
$75 10000 Now, according to this theory, that
bank paper must drive out of the country an amount Of
specie equal to its own amount in circulation il is
evident that this 1928 900 Of paper currency or
the in actual circulation should not only
have expelled the 750O0OOO Of specie om the couu-
try, but brought in debt at least for as much more
as is the difference between $l4O 1000 and $75,-
100000. That is ss65 10000
1t is not sufficient answer to this to say that we
in debt the full amount of this difference and of
the specie in our possession, long it is manifest
first that this debt was not incurred this account
or by the action of this cause next that we have
qud quo and lastly that the interest on this debt
can be discharged and the principal quidaed by the
use Of this guild quo Or if the possession Of the
qud pro quo be denied as the result of bad specuIa
ton, Of a mistake, it could make no difference in
this argument, nor in any way affect it, Like veal
thy and prosperous merchant who now and then makes
bad bargain we can 60 again, and make il 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, some expected and pre-
dicted have yet fair consideration, after all due
allowances shall have been made for disappointment
in certain quarters Moreover even il il could be made
to appear that have not the q.d pro quo full tale
can also be shown that the of this deficiency
lies in the vexatious 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. It still remains true that
in spite Of these difficulties our wealth in specie has
increased.
The fact therefore, established, that any specie at
all be left in the country in time Of free trade
under large emission bank paper is proofth
this theory asappiied is false. The additional fact
that specie continues to flow into the country in the
state Of things yet stronger demonstration Of
this error
Having established the negafipc on the main point
might still go to do the same thing against the
hypothcsis-for 1t is nothing more--that II our bank
ing system and paper currency had not existed, we
should have had greater and much greater amount
Of specie, than we now have The whole circulating
medium Of the world, in the form of the precious me-
tails, is perhaps little in excess Of 81 0OO0OO0 OO
Will any pretend, that our relative Importance as
commercial nation will entitIe to one-tenth of
this Certainly, we should think, to more than
onc-twenteth. But we actually have nearly one
tenth. Every nation is doubtless entitled TO as much
as il can fairly get in the way Of commerce, and we
persuaded IL all the statistics appertanng to this