The republic. [volume] (Washington [D.C.]) 1849-1853, 1851-03-06
JESSE MERwIN, esq.
Free Banking.

The example of New York, in the establishment
of the free banking system, seems to DO extending
it, influence to other States. The prevalence OF
general disposition to expand the currency 10 well
calculated to render this system attractive yet so
long az specie is made the basis of currency and
the standard by which values are to be ultimately
measured the obligations imposed by that test are
to be taken into strict account in estimating the
tendencies and results of the system in question.
In profering to bil-holders the security of by
.c,r;tu IL JonhtIs.. nrov;ded which in The esse
of United States stocks, or the stocks OF solvent,
interest-paying State, will be substantially and
eventually good. But while specie remains q COM
modify subject to the laws Of trade which may
compel its expectation, and while the tendency of
paper issues is to dispace specie from circulation,
and for time to make its loss unfelt, the danger
of a sudden recurrence to the specie standard, to
which currency is always liable, is too serious to
be overlooked In the face of large importations
creating and accommodating balances against US,
and affecting unfavorably the rates of foreign ex
change. the danger of a currency panic, and OF a
prccipiate return to the rigid specie standard, be-
comes still more imminent and moro alarming.
One hundred thousand dollars in stocks of tho
United States may be regarded as affording an am
pie security for the same amount of bank bills for
the redemption of which the stocks are pledged.
But If the attempt should be made to convert these
stocks into money during steady cbb OF specie
from the country and If the necessity of realizing
specie to redeem bank issues founded upon stocks
should become general, in the case of panic it
probably would be, them in proportion to the prev
AIcuCc VI tu0 bybteIu ~ IOuuucu, WOW0 NC
the revusion that would deprecate property by the
sacrifice of it to meet the memorable acquisitions of
an impracticable standard.
These results belong to the first principles of a
mixed currency, composed ours is Of two consti-
tutuent elements, specie and paper, the tendency
Of of which 10 to displace the other, while the
one 90 displaced continues TO form the actual mea-
sure of value, which becomes higher and higher in
proportion to its disappearance from the currency.
Large importations and an expanded currency OF
paper compelled the expectation of specie and the
suspension of the banks in 1887, few months after
General jackson had announced on his retirement
from the Presidency, that he left "this great peo.
pie prosperous and happy" Immense sacrifices Of
property; the forced expectation Of products to be
sold at any price; diminished importations, for
want Of means credit to make them; General
Bankrupt law; these measures of depletion reduced
tho sudden plethora which preceded that terrible
collapsed and the tariff of 1S42 resuscitated the pro-
ductive energies Of the country, and started the
nation once more career of prosperity. The
recollection of our period Of adversely, however,
might be useful just now.
How far the introduction of largo amounts of
gold from California may operate to maintain a
specie basis for an expanding paper currency, and
thus TO put off or avert the reaction which seems
impending, must depend upon other things than
the golden acquisitions themselves. Increased
amounts of gold brought from California may
main in the country or may go TO Europe, accord
ing as production and the laws of trade shall d-
rect. The country that produces most by combi-
nations Of intelligence with industry-most in &C
tual values-can always command gold or silver,
whether dug up originally on it's own soil or on
that of another country.-Baif. american.