The spirit of democracy. [volume] (Woodsfield, Ohio) 1844-1994, 1846-07-18

Monroe.
In 1880, another expansion Of the
paper system commenced, which ar.
rived tits aim in / 1856, when the cir
culation of the banks amounted to
Sls9,O00,ooo. All remember the tre-
mendous collapse of the system in 1887
when every bank ir the Union failed.
The usual scenes Of distress and suffer-
ing followed, which | have neither
time nor space to describe.
BY the winding up of some hundred
or two banks and by the curtailment
oil the issues of others, the amount Of
paper money in circulation was reduc-
ed to $58,563,6O8 in l843. At the
close of l845 it had expanded to $780,
G0S,7ll, and probably at this time. it
approaches, if it does not exceed $780,
100000. The results are seen in en-
larged imports, higher prices, and new
schemes of speculation. That another
revulsion will follow, is as certain as
the tides obey the influence Of the sun
and moon. II not speedily checked,
as it would be, by the Independent
Treasury, a crash is inevitable, and
then again will the debtor become the
victim Of this knavish system which
will bring upon him inevitable ruin,
compelling him to sacrifice his property
at less than its value, and bring himself
and family out beggars upon a cold
and unfeeling world.
3. Paper money deranges the &C.
changes.
When the currency Of country is
composed Of specie, The value Of itis
The same otaH The points Of trade in that
cOunhy.> A silver dollar possesses the
same value in New York which ii pos
sesses in New Orleans. But if it be-
comes necessary to transmit that dollar
from New York to New Orleans, it will
cost something to transport it, besides,
there will be little risk Of loss which
will be covered by an insurance. All
this may amount to one per cent; and
that is the difference Of value, (or rate
of exchange,) between dollar in New
York and one in New Orleans, if
the balance of trade is against New
York and in favor of New Orleans, and
specie has to be transported from New
York to New Orleans to pay it.
When the credits are equal between
the two cities, in other words, when
the merchants of New York we the
of New Orleans as much as
the latter owe the former, there is no
balance either way, no money to be
transmitted, and consequently exchang-
es are al par, that is, equal.
But, if the merchants Of New York
owe those of New Orleans balance.
that balance must be transmitted in
cash, or ITS equivalent and when the
currency is specie it will cost some-
thing 10 transport it to New Orleans
and to pay for the risk, and that some
thing is called the rate Of e,rchange.-
Of course it cannot be much, and sell
dom exceeds one per cent.
But, suppose the currency of New
York is paper, and that Of New Or
leans is specie. And suppose farther,
that the banks in New York which
have issued this paper money haze sus-
pended specie payments, and that their
notes in consequence of such suspen-
sion, have fallen ten per cent below par,
that is. the specie standard in New Or
leans. In such an event the merchant
in New York, in order to pay S1oo in
New Orleans, where the currency is
sound, has got to send $1lo of New
York bank paper money.
Or, if the payment is made by bill of
exchange it is done in this way. A.
merchant in New York has specie funds
in New Orleans. B., another mer.
chant in New York, owes 500 IN
New Orleans which he must pay. He
must either get the specie and send to
his creditor in New Orleans, or he must
purchase bill OF exchange and send
him. He chooses the latter, and goes
to a. who demands Sllo of him in the
papermoney OF New York. for his (A's.)
$loO in specie in New Orleans. And
This is The difference in the uaiues Of cur
rencies, or rate oferchange bst,oeen Ne,r
York and Ne,o Orleans. 1t is ten per
cent in favor Of New Orleans against
New York.
Ihave put no imaginary case. Thous-
ands of them have occurred within the
memory of every man with beard up
on his chin. By the universal suspen-
sion of specie payments by the banks
in 1897, the exchanges of the whole
Union were deranged. And the rates
Of exchange upon given points, varied
according to the value Of the respective
paper currencies, or bank notes at
hose points. Thus, at one period fol-
owing the event referred to. between
New York and New Orleans, the rate
was fen per cent. against the latter |