The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1854-12-24

lge experts. 6ome q tAe years in which o. sx-
,ess q imports has been greeteae have beea thoss
n he loog run, IL banks are moro benehted ~
he public mosey bsisg retained IN tAs treasury
han they would b II were placed In thar om
vaults. II IN their vaults, II would lead 70 new m
IL it viii como to their aid n times Of emergency.
II the banks think that the amount Of gold and sl-
yer in the public treasury y at any time too large,
III they have to do u to dminiah their discounts
This viii diminish imports, and at the same time,
The amount Of duties to b paid to government
Then the drain Of gold from the banks to the trea-
sury ceases, and drain from the treasury to the
banks commences. This must necessarily DO the
daily expenditures. though its receipts from Gus
toms should be daily diminished.
in other ways has tho constitutional treasury sys-
tenn contributed towards giving banking operations
greater stability than they would otherwise have
Il is an unyielding law Of currency that, where
there ore two circulating mediums Of the same de-
but Of unequal intrinsic value, that
other. The reasons Of this are obvious. TIE mate
rial Of which gold and silver money Is composed
can be applied to useful or ornamental purposes In
the arts. The material Of which paper money i
performs Il homo ali the functions in exchange
which gold and silver perform; but it will not per-
form them abroad. The bank note is therefore re-
tanned ct home, while the gold and silver are OK.
II
and the other States in which the Issue Of dollar
notes ID allowable there Is 20 little specie in crcu
lation, compared with Pennsylvania and the other
States in which the issue Of notes Of less demo-
mnation than five dollars Is prohibited.
Where the currency OF bank notes il firmly e.
tabished, there is little active home demand for
specie except for transactions Of less amount than
the smallest bank note allowed to be issued, and
bank TO another. Under such circumstances, the
only effective check ON the issues of banks ia the
demand for specie for expectation. But this ID un
certain and irregular, depending ON the ever vary
As HI. Nicholas Biddle has said, "the constant
tendency Of banks is to lend too much-to put too
many notes in circulation" They therefore require
q constant check, and this constant check is sup
rates. not as does the foreign demand, ct uncertain
intervals Of months and years, but daily, nay hour
~ And the only rati onsl obes ton to Il u.s. that as
check it is not half strong enough.
vaults that the banks arc sustained in their opera
tions. It is by the whole amount Of specie in the
country. The larger this lie, the more they can
draw into their possession by, requiring payment
constitutional treasury system the amount Of specie
in the country has been more than doubled Aud thus
while it has in one way diminished the number and
amount of bank promises TO pay" it has, in ano'
banks can, II 80 disposed, make payment according
to promise.
Great, indeed, are the benefits which the c0nsti-
tutiona treasury system has conferred on tho coun
try. But it cannot do everything. Il cannot pre-
vent or correct those evils which are produced by
wars, causing capital to flow from Europe 10 Asia,
instead of its taking its usual course from Europe
to America. Neither can 1t correct al the evils
ing system. It cannot compel those who institute
banks with no other capital than stock notes. to pay
those notes in full in gold and silver. It cannot
keep State stocks always at par, and thus enable
culation on demand. It cannot cause An abundant
circulation Of gold and silver in those States in
which the currencyof small notes is allowed by law
or sustained by custom II cannot correct the evils
having their origin in false principles Of banking
Il cannot even prevent expansions and contrac
lions on the part Of tie banks From the nature Of
things this is impossible The extent to which our
ducts We can sell abroad, added to the amount we
can run In debt abroad. The limit varies with every
great change that takes place in the political or
commercial world. So long a. We can sell abroad
long a. foreign creditors do not press for what
we owe to them and are willing even to extend tie
amount Of credits granted to rs, 20 long there is
beyond tho surplus produce Of our own minesl IT.
can the banks 60 on increasing their paper issues,
raising prices, making money plentiful in every
mans pocket, and inducing every man to run in
debt to the greatest amount possible.
But let change take place. Let our domestic
exports bring low price abroad, or let our foreign
cIeditos press Us for what we owe them, even re-
fuse to grant us new and additional credits. Then
tie banks sre Obliged 70 contract. Then prices I
fall. Then money becomes scarce; and debts con-
tracted during the previous expansion cannot DO
Those who suppose that the fluctuations Of q
"mixed currency" are no greater than those of
purely metallic currency would be, arc under an iu.
sion. Requiring banks to pay specie on demand
history in which our mixed currencyV has been
more than doubled, while, under the circumstan-
ces then existing, the variations Of Q purely me-
talic currency would not have amounted to Eve per
cent.
little reflection will convince any man that it Is
impossible for government to prevent ruinous
fluctuations in currency resting ON such princpes
Its varying condition 10 dependent moro On the
home, and Is therefore beyond the rescs Of ordius.
what, however, the United States government has
had power to do IL has done. It has withdrawn the
ssas Issd 70 yield sys 70 s.aE
upon and BY refusing to receive their notes in pay
Ment OF public dues, or to pass them to the public
creditors 1t prevents expansions being . great a.
they would otherwise be, and thus diminishes the
Having separated itself entirely from paper money
banks, tie United States government is no longer
responsible for the evils they produce For the cor
rection Of those evils the people must look TO- the
state governments by viii these institutions have
been created, and by which they are sustained. The
action of the United States government is necess-
ssry negative in its nature, and consists in having
nothing to do with the fabficators Of papM money.
The action Of the State governments may be posi-
tive, and apply the axe to the root Of the evil.
II the State governments will, after giving due NO
tice Of the change intended simply prohibit the IT,
sue Of notes Of less denomination than ten dollars,
the wages Of working men will be paid in gold and
silver the specie basis of the banks be wdened and
strengthened and though fuctuations Of paper cur
rercy will not be entirely prevented, they win be
lees sudden less frequent and less vlolen! Than they
have hitherto been.
Some iHconvepiepce would attend change from
On unfound to relatively sound currency. but II
would be small compared with the evils With which
the country viii continue to be afflicted, so long as
small note currency is sanctioned or tolerated.
The gold now boarded ia probably equal in amount
to the one, two. three and five dollar notes In cir
culation Prohibit the issue Of notes Of less de-
nomination than ten d0llara and this 90ld viii be