The Madisonian. [volume] (Washington City [i.e. Washington, D.C.]) 1837-1845, 1842-03-15
nd one combining greater safety with equal co

ind one combining greater safety with equal co
venience.
Ii, then, the merchant in New Orleans can mr.
cnase' with his coin, bull, certificate, instrument
winch proclams to all the world that this coin is ac
tuaiiy IN Now Orleans, locked up for its redemption
ana 10 be kept there until this instrument present
ed ior redemption, and which instrument will also be
received lor Its nominal amount in payments to the
reuerai government, in any part of the Union, he
Will prefer such instrument to bill of exchange
or the transmission of his coin. So if citizen
Wishes 70 order newspaper from distant place, he
has the alternative OF sending coin by private
veyance, paper by mail and if he can procure an
instrument representing five dollars, actually locked
up for its redemption the publisher will prefer to
any note OF distant bank, although it be at par in
the place OF publication. In short, nobody will find
fault with paper, for the redemption of which coin
to the full nominal amount is always locked up and
preserved; and all prudent men, who have parti-
san ends to serve, will admit that such currency
would DC perfectly safe and eminently convenient.
1t is free from the principal objection to bank pro-
misses, expansibility In the banking by which the
country has been SO long and so much afflicted the
circulating medium is augmented, and often sudden
y and this produces instability in all prices and con-
sequently in all business 1t causes us to buy of
other nations more than we can SELL because it d.
minishes the foreign demand for our productions at
remunerating prices. If bank with capital of
million be allowed to issue two millions the circulat
lug medium is doubled, though one half of it is mere
y fictitious, and may be suddenly extinguished Tod
upon uliS SUBJECT Is ncculcSS, LOT we nave
said enough, for the last six years. to render it in
telligibe to all who read and think; but in the
scheme now before Congress, expansion is impossible,
because no paper dollar comes out unless metallic
dollar goes in, and the paper in circulation is always
just equal to the coin locked up for its redemption.
Thus if certificates of deposte should suddenly be-
come the only circulating medium in day, and
every one Of these certificates should be redeemed
the next day, prices could not be affected, because
the amount of circulating medium would be exactly
the same in both cases. So if any portion of the coin
should be locked up, it would be succeeded by the
same nominal amount of paper, and if any portion of
this paper should be redeemed, it would be succeed
ed by the same nominal amount of coin. If then,
der this system, the circulating medium cannot fuc
tlate in quantity, like bank paper, beyond the results
of productive industry, and every certificate always
represents the same amount of coin, and is always
convertible into coin at the place of ISSUE the system
is certainly free from of the greatest faults of
American banking.
Another fault of the banking system is its encou-
ragement of speculation and Overtradng, through ia
cility in borrowing The object of banks is to lend,
and, according to the SYSTEM they authorized to
lend more than they are worth, and to manufacture
substitute for the deficiency, and call money, up
on the false suppositon that it represents money.
But the system before Congress contemplates bor
rowing, because the institution will have nothing to
lend. 1t will have coin, but for this coin it is already
debtor to the certificates issued upon it, and must
keep it to redeem them on demand.
We shall hereafter examine other features of the
plan.