Washington sentinel. [volume] (Washington [D.C.]) 1853-1855, 1854-10-12
THE MONEY MARKET.


Some days ago we submitted few COM
ments on the efforts which q portion Of the |
Wing press has made to attribute the present |
'tringency in the money market to an untayora- |
bic balance oftrade growing out Of the revenue
laws enacted in 1916. We think that We sue
ceeded in showing that the condition of the
money market had no connection with the rev
enus laws, and was not the result of an exces-
awe export of specie to pay off unfavorable
balances abroad, occasioned by the operation
Of those laws. IF the present state Of things
had been caused by greater expectation Of
specie, as the effect of the revenue system, than
the condition of the currency could bear, the
present high prices and large profits would not
exist. There would, in that event, be general
scarcity of money, which would reduce prices
and profits as the consequence of derange
ment ofthe currency
Commercial embarrassments are more fire.
quently produced by domestic than by foreign
credits. But in attributing the present strin-
gency in the money market to the fact that in
yestments offer to the capitalist more favorable
inducements than loans, we do not mean to say
that an undue export of specie could not take
place whilst Free-trade principles were in ope-
ration. Nor do we mean to say that high
prices could not exist for a while along with
such an export. But we do hold that the causes
of q ruinous specie export cannot be found in
low duties-more especially when it is accom-
panied by high prices and profits. The over
trading which produces such results originates
at home, and from causes which have no con-
nexion with foreign trade The confidence
which is produced by period of general pros
perity leads to the manufacture of fictitious cap
ital and to the other evils of the credit system,
which, in their turn, produce the evils which are
charged on our commercial policy. The regu-
iation of the currency presents different pro-
biem from that presented by the task of framing
tariffs and regulating our foreign commerce.
The Federal Government has done all it could
do TO check the evils which flow from fictitious
capital by establishing the Independent Treas
ury system, and divorcing the government from
the banks.
The trade of the country requires given
quantity of the circulating medium. Any ex.
cess over and above that quantity viii natu-
rally go abroad; but then it should be remem-
bered that in a mixed medium ike ours, the
excess sent abroad will be taken from the spe
Gle portion Of the circulation. None Of it will
be taken from the fictitious portion manufac-
tured by the banks, for that will not circulate
in foreign countries. In times of prosperity
like the present, when prices and profits are
high and credits are firm, the banks may Gre
ate redundant paper circulation. This re-
dundancy may lead to extrsvagant importations
and perilous drain of specie, leaving us with
a circulating medium in which the fictitious
paper element is entirely too large in proper
ton to the real substantial specie element.
That is the true source Of danger; and If too
much specie is being sent abroad, the cause of
the export must be sought for in the manufac-
ture Of paper money which is carried on by the
banks and by other corporations throughout
the country.
A currency, composed in great measure
Of fictitious issues, viii answer the exigencies
Of domestic trade, whilst confidence continues
and credit remains firm. But when confidence
IS destroyed by pressing the credit system too
far, or by any uStoward circumstance, then the
paper MEDIUM becomes almost valueless, and
nothing Is left but an inadequate amount Of
specie TO carry on our foreign and domestic
exchanges. Then the Monopolists, Protec-
tionists, and advocates Of the credit system will
rail against Free Trade, and charge it with the
calamities which banks and corporations have
prodnced by filing the channels Of circulation
with engraved paper, tothe exclusion Of stamped
coin. Then he country psreeives, when il is
too late, the superior benefits Of specie cur
rency, and the utter worthlsssness OF a paper
currency in times of commercial distress.
Not only does bank paper cause CONNER
cial revulsions by initiating prices, inviting ex-
eessive imports, and producing an export of
specie, but it gives to the capitalist an undue
share Of the national production, during the
time II performs the function OF circulating
medium. In our humble judgment, the whole
system is unjust TO labor, and dangerous 70
every interest Of the country. With sound
specie currency, it is difficult to conceive how
severe and lasting money pressure could be
produced, except By the agency Of war, polIti.
teal revolutions, sudden change in channels
of commerce, or a formidable obstruction to
commercial intercourse. Bat It is easy to per.
ceive that without any Of these calamities the
credit system and bank paper may spread
ruin throughout the republic. We may be
mistaken, yet we feel sure that there is ten
dency 10 increase fictitious issues 10 danger
Gus extent. Not only bank but other species
Of corporations are issuing paper which circu-
lates freely in their immediate neigborhoods,
because Of the confidence which pervadss the
country. In many Of the States a new species
Of banking has been resorted to, which makes
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