Southport telegraph. [volume] (Southport, W.T. [i.e. Kenosha, Wis.]) 1840-1850, 1847-03-31
Il Z = q 7 Z
From the Racine Aduecate.
THE CONSTITUTION.
The SIXTH SECTION.

| When the restrictions against Banks were under
consideration in the Convention the opponents OF
| them urged one argument of much force.
III we are to haven home banks" they argued
we sk4 be flooded with worthless small bills from
the Banks OF other States, which our people will
| be unable to obtain the specie, the solvency Of
which car State authorities will not be able TO reg
ulate or enforce, and which will be constantly de-
preciatiag on our hands. There was considerable
reason in the argument-the Sixth Section was pro-
| posed, and carried the Bank Article.
Now, the opponents of the Bank Article say lit
tie Of the restrictions against Banks but devote al
most the whole force OF their argument against the
! exclusion of small bank notes of other States.
| Had the Sixth Section been omitted, we should
have heard the same arguments against the restrc
! tons, used in the Convention; being out, our oppo
! nents would have urged its principle as necessary
feature the article being IN they assa 1t almost
! alone
The Whole resolves itself into this they want
| Banks ard are afraid or ashamed to say And
this is rot only the main issue on this article but
the main issue in the adoption or rejection OF the
| Constituion,--Ba no Banks.
| And we fnd loudest and most prominent in the
denuncia' on of this Article, Oh this Lake board,
those wL5 have paid out all sorts of deprecated pa
per to tie producers OF this Territory 4or their pro-
duce; and more than one prominent scribler against
the Bank article has been IN other States deeply I'M
plicated IN some of the most outrageous bank frauds
| ever perpctrated in the west.
! 1t is an nvariabe law OF currency that the worst
circulation will drive out the better,
Eastern bank bills viii drive outspecie Western
bankblls will drive outEasten small bills will drive
out large bills the worse will always drive out the
| beJ,er
-Four or FIVE years ago very large proportion of
the circulation on the Lake board of this Terrific
ry, perhaps 70 or 50 per cent, was specie; now,
| there is not perhaps per cent.
Year after year. an abundance of specie was bTo't
| here from the East; year after year large quanti-
| ties Were disbursed here by the United States An
abundance OF specie, enough and more than enough
to fill all ne smaller channels of circulation was
! here sud aas constantly coming; but it has been
driven away by small bank bills. 1t has found its
way to tia vaults OF banks, who have replaced it
Gs,..es ~ al geec- he ralccnaad K I'll
MANY of the banks making these issues have alrea-
DIV broken and ell are on the same road,-the III
trnate destination of all bank depreciation
| And this upon principle well settled, that pa
per and specie of the same denomination can not
circulate together to any extent. The paper may
be as convertible into specie as You please but the
| paper will drive the specie out OF circulation, be-
| cause the worse will always drive out the better
This experiment has been fully and fairly tried.
During the great French war in the year 1897, the
| Bank of England suspended specie payments; Be
fore that time that bank could make no issues I'M
der pounds sterling But in the act legalizing It's
suspension, authority was given it to issue notes OF
one pound. The sovereign, the specie pound, and
all coin OF greater value, wholly disappeared from
circulation.
In 1921, they resumed specie payments
but the power to issue small bills not recalled
until 1929 The sovereign still remained banished
from circulation
1t was argued there and then by the anti-bulion-
lists as they called that paper Convertible into
o0Ld was as good as gold itself, and that it would
be impossible to do without the small bills.
This doctrine passed current, and was followed
by two consequences. LIST, the great commercial
and financial panic OF 1925, caused by the over is
sues by the banks OF paper, which was c0nceTttbfe
but never concerted into gold and I'd, by the fact,
that from 1900 TO 1929, the average value OF the
gold sovereign in paper 25 shillngs sterling,
its par value being 20
In 1929. these evils called for the interposition
of the British PariamentWh abrogated the small
law.
Upon that occasion, the most eminent living En-
glish statesman used this emphatic language-"Ex-
perence has we'd the iallacy OF theory which
stated that paper currency was perfectly safe,
as long as it was convertible into gold and
silver Experience has proved this theory not to
be true 1t has likewise proved another theory
not true-thc theory that one pound notes and SOW
eTegpS could circulate togelher.
Another statesman made this remark-"that
those persons who considered paper money as an
excellent thing to be established III country, he
was disposed to view as heretics. The superstition
attached to paper money, was the most dangerous
heresy Of all heresies.
Such opinions were endorsed by Huskisson Grant,
King Liverpool Wellington and many other dis
tinguished statesmen after TAR and impartial tr-
al OF what they considered an almost wholly paper
,q+;s,, r,f (rtab
S4,S4.
After the small bill law was thus abrogated,
small bills disappeared and were replaced in just
proportions by large bills and specie; and all chan
nels of trade and currency worked far better under
a restriction OF paper money to the denomination
of S24.2Q, than they had done before under issues
of 81, 81 nor did money become percepubiy scaTcer
under the change The banks had so much the
less specie in their vaults: the community had so
much the more specie IN use.
In 1914 New York tried the experiment ofsup-
pressing the circulation of small bills This was
there great undertaking against the vast power OF
the Banks in that state which OF course did all IN
their power directly and indirectly, TO resist and
| embarrass the reform. The banks OF nelghbormg
States too fearful of the spread of reform, contrib
uted all they could to defeat the trial But IN the
main il worked well; all small bills were not IN
| all places excluded but the proportion OF specie
circulation was very greatly increased and every
thing promised most successful reform IN the cur
rency of the State, when sufficient time should be
given to the experiment In less than four years
however. in 1897, came the general failure OF all
the banks in the United States; and an experiment
| of REFORM which was working admirably, as 1t had
done before in England, fell under the general evil
of paper circulation legally well actually IT.
| redeemabe.
In the West our circulation IS miserable. Six
month. sgo, every honest bushes man would nave