Washington sentinel. [volume] (Washington [D.C.]) 1853-1855, 1854-11-11

Cl0doo III Siolh totVj put surely ~ Couhos Nc
true. Tomorrow, however, must relieve all
anxiety.
PRESSURE AND PAPER MONEY.
Failures in different parts of the country in
dictate, that the currency is not in sound and
satisfactory condition. We have alluded to
this subject before, and expressed the opinion
that the stringency in the money market was
produced by the unfavorable operation of the
usury laws Of the different States; and that the
manufacture of bank notes, which, filling to q
great extent the channels of circulation, have
caused large imports and heavy shipments of
specie.
The prosperity of the country since the pres
ent commercial and financial system of the
United States went into operation, has created
confidence, given rise to speculation, and inn
parted a powerful impulse to credits. These,
in their turn, have induced many of the States
to add to the facilities for manufacturing paper
money. The supply furnished by the old banks
which were compelled to obtain an actual
money capital to begin with, was deemed in
sufficient by reckless fnancers; and new prin-
ciple Of banking and new process of making
paper money was invented and extensively
adopted.
This new principle of banking does not re-
quire specie capital before engaging in the
manufacture of paper money. 1t permits In
dividuals or associations to deposit the stocks
of the Federal or State governments with de-
signated State officer, and that officer must then
countersign the notes of those individuals or
associations to an amount equal to the stocks
thus deposited. Those notes gain currency at
once by virtue of the ultimate security which
the signature of the State officers is supposed
to give them. Frequently the individuals or
associations thus engaged in the manufacture
of paper money are but little known, and not
unfrequently the location of their banking
houses is matter of uncertainty. 1t will be
seen that by this process, instead of specie be-
ing made the basis, the evidences of State and
Federal Indebtedness are made the basis of pa
per issues.
These paper issues, emanating in smaller or
larger quantities from innumerable sources,
and being generally receivable in payment for
State taxes, and other State dues, are re-
ceived with but little regard to the sources
from which they emanated. This being the
case, triAing amount of specie is requisite to
keep them in circulation, whilst the stocks on
which they are issued, maintain their position
in the market. Whilst this is the case, and
confidence continues, these notes are rarely
presented for payment, except in small sums,
and Of course they take the place of specie,
which is sent abroad because its place is thus
taken. Thus it is that notwithstanding the
large specie product Of California, we are fast
obtaining currency, very large portion Of
which is based entirely on the Evidences of
State and Federal indebtedness, instead Of real
actual money.
This system has fair appearance in calm
times; and, therefore it is the more dangerous
to the community, and will be the more prolific
Of evil when revulsion comes When from
any cause there is q foreign demand for specie
beyond that created by the ordinary course Of
trade all bank paper must depreciate in value,
which is not issued by individuals or associa-
tons that keep themselves prepared to redeem
in specie. Notes issued on stocks, do not de-
rive their ability TO circulate, so much from the
idea that they will be promptly redeemed as
from the presumption that they are secured
ultimately by deposits Of stock. Therefore,
those who issue them do not keep themselves
prepared to redeem when such preparation be-
comes costly. Besides, the persons who de,
posite stocks for the purpose Of manufacturing
fictitious money, receive their dividends regu'
larry, whilst they profit to an equal amount by
their notes and receive thereby double share
Of the national production.
1t seems to be perfectly plain, from what we
have said, that when foreign demand for
specie or any other cause produces strin-
gency in the money market which makes the
stocks deposited fall below par, their holders
have no pecuniary motive to meet their notes
because they have no objection to have their
stocks sold to meet their notes. Then, when
the stocks are put up for sale, there is but little
specie in the country to buy them with They
must sink like lead, or the note holders mus
submit to ruin by taking them at par wher
they are at grievous discount
The truth is, the whole banking system
is dangerous. Human ingenuity has neve'
devised and, in our judgment, never will devise
sound system Of banking. The issue of fic
titious money, in any form, is oppressive Y
labor and perilous to the nation, and it breeds
corruption in hundred forms. In the pres
ent instance we have spoken more specially o
particular system, because il is more recen
in its origin, il less understood, and is th'
most dannarnra hacanaa "A ,paara Tho mos