Lynchburg daily Virginian. [volume] (Lynchburg [Va.]) 1852-1861, 1856-02-19

! smaller scale and less generally known, at Ham
! burg. Rotterdam. L. some other commercial points
| in Europe.
! Next came banks of deposit. discount and cri.
cuation. II not until 1894 that the Bank OF
England the first hank of issue, was lncorporat
ed. Soon after in ZIG. was established the
! ROYAL Bank Of France, so well known Wy the
evils it produced aud by its connection with
| Laws disastrous schemes Of speculation Inc
| present bank of France beginning IN lSW, with
| a capital of about six millions of dollars, has
! since increased its capital aud circulation, hil
| it is now second in power and influence only tn
! the great Bank of England. Large banks oil
| circulation have grown up elsewhere IN Europe
! the Bank of Russia, of Vienna at the Neither
! lands, Of Berlin, of Copenhagen. tho Amsier-
dam National Bank the Royal Bank Of Den
mark and others less considerable. In Eu-
rope and Great Britain, during the last cen
fury. banks have existed under various hrfns,
small and great private and public independent
of government, and connected with government.
with charters and without charters. Our own
country gives still more varied experience III
banking. In l7si, the first bank III the United
States was established by the old Congress, with
capital of 81 .2O0.0O0. Now our banking cap
ital is about $500, OO0O 900. tho paper circulation
Of our banks more than 5000, OOOO 900, and their
number upwards OF twelve hundred.
Surely, then. with such lights from experience.
should now the way Have these banks,
upon the whole. been productive Of good or cvil|
The banks Of circulation not confined 10 the
proper functions OF hnnks-recelviDg deposits
and transmitting fund.- have acted also as agents.
in Distributing by their loans aud discounts, the
capital of the community, aud they have cxcr-
cised the important privilege OF issuing paper
currency. What have been their effects!
They have. by the issue of paper money, eco
nomlzed the use Of the precious metals; but they
have rvinced everywhere II uniform tendency to
effect an undue substitution of their notes for
specie. Here is good aud evil to be balanced
together.
Bank notes supply, in part. the place of specie
and render necessary smaller circulation Of the
precious metals. They thus economic their
use. To the extent OF the substitution. specie,
no longer needed in exchanges, leaves the c"un-
try and sends baek il equivalent Of value to en-
large the capital of the community. Thus this
substitution, 10 certain extent, may be pub
lie benefit
But it is evident that there must be n limit to
this substitution of bnnk notes for specie Tor, be-
tween specie and bank notes. there isu wide diff
ference. The former Is mere sign or repre-
sentative of valae. II wts its intrinsic val.
ue which first gaye it currency as money and
now sootains 1t. But the luttcr have no value
except as representatives Of gold aud silver
they are but forms oft credit which to GER
tain extent, has come 10 be substitute for mon
cy -ls money first came 10 be substitute for
barter They differ III this only from other coed
its such IA bills Of exchange, notes of individ-
uals and other securities that they perform di-
rccly the functions NJ money. But II is only aS
representatives of gold mud silver that they pos
sess the confidence of the community, and they
circulate as money only upon the faith OF their
ready oonvertbiity iuro specie. If then their
substitution for geld aud silver be carried be-
yond certain limits, they will cease to be reHd-
" convertible or AT all convertible into specie,
aud when this occurs, they will no longer he cur
reut at their nominal value, II they be current at
all.
Banks have constantly overstepped these lin
its and never without mischief to the community.
John Law held that paper would answer the pur-
pose of money as well rs the precious metals, aud
that the currency of n country might be increased
to the whole value OF lis lands: and his ceehra
ted bank in France put in circulation according
ly much larger amount of aux notes than the
whole current coin of the kingdom. Its effect
was to exprl coin from the country to the amount
of one hundred millions of dollars; to inHiot ulti-
matey n loss of about two hundred millions on
the unhappy holders of lis notes; to rake PENN
less the governments 10 destroy confidence be
tween man aud man. and 10 reduce France from
atfuencc and prosperity 10 poverty and wretch
cdness The history OF the other principal banks
of Europe has been history of excessive issues
Of their notes followed by alternate expansions
aud contractlons of currency, by depreciation of
paper money and scarcity Of specie. The great
bank OF Vienna alone. caused To the community,
by the depreciation Of lis notes, loss of more
than Sl0O,O 900, and the note holders Of the
bank of Russia, the principal bank of circulation
in that Empire. sustained. by the same cnuse, the
stu heavier loss of about $500 ll0O, 600. But two
a. Al.
Of England, lis notes sold at discount of from
ID e. 20 per cent; and suffered yet greater de
probation during its suspension Of specie pay
nentS continued for II yeas. In Thu, country,
before the Revolution, There no banks But |
ne emission OF pnpfr money by the Provincial |
governments, CAUSED, III the same way, heavy
osses TO the people Of some of the colonies. Nlr
,'nia issued no paper aud happily escaped Bat
The bills OF Massachusetts, issued to an enormous
amount, deprecated In less than tenth Of th r
nominal value and utterly expelled gold and sill
yer from her horders. The experience of other
colonies was similar, aud the evil in them, as
well as IN Massachusetts, greatly uggrav ltcd hy
1raduleht tender laws, making depreciation pa
per money the1egal tender i'll payment of debts
During our Revolutionary MAR. from l176 TO
1851. three hundred and fifty millions f CONT
mental money We're issued by Congress- aud at
tn" close of the period, it had ceased to circulate
ana was valueless i'll the hands that held it. Such
adInonion from experience led to the clause in
our Federal Constitution which lorhidS any State
81" emit bills of credit pass any law vi ,lating
the obligation of contracts or make ANYTHING but
gold aud silver legal tender in payment of
debts But since the adoption of the Federal
Constitution, our governments, both State, and
Federal, have abundanly conferred upon bank
ing corporations the power which they do not
themselves possesof issuing apaper currency:
ana our banks ike other hanks Wbpr, ,l $50
have abusedit, us has been fully attes,rd hy
their numerous failures by their millions of de
preciated notes, aud their general stoppage of
payment throughout the Union in 1874 and Is37