Nashville union and American. [volume] (Nashville, Tenn.) 1853-1862, 1857-10-24


william and Mary. It Is the parent Of al SIMILAR
institutions throughout the world, aud under il
suspices mixed currency banking has become sol
ence.
The first Of these institutions established in this
country was the Bank of North America, founded
IN l1oz, at Philadelphia. Its nominal capital was
ten million dollars but it commenced operations with
only four hundred thousand dollars, of which amount
NJ Robert Norris the Superintendent of Finance
under the old Congress, subscribed two hundred and
nftyfour thousand dolIars-so that in some sort, il
was national institution, the government owned
iority Of the stock
A natienal bank, however, was established in l79l
now known as the sold Bank Of the United States "
It's charter expired in 1871, at which time eighty
eight State banks had grown up. A new national
bank was chartered in 1916, for twenty years. al
the expiration Of its charter, in 1886, there were
two hundred and forty-six State banks. These have
increased until there we're, on the LIST January,
1885, twelve hundred and fifty five Of these nstitu-
tions with hundred and forty millions dol
lars. OF this gigantic system we are now 10 speak,
and our hrst inquiry is, what is the true definition
Of ''mixed currencyS" 1t is, if we answer in
popular language, currency composed il part Of
specie and IN part of paper money. But this an
swer does not describe such q currency with sufh-
Gent defniteness and accuracy.
A ntred currency if We except the amount Of specie
ID the pockets of the people, used IS change for
SAaA Ldu6dCl1Ous1 u Wholly q puptF CuITt7tCy, yet
II does in fact consist of distinct elements-One
of Whica is Uatae money, or that which has value
within itself, and is therefore proper standard OF
value; and the other is credit money, which has no
value in itself, and therefore, though equally good
an instrument of exchange, has qualify that
can make il o true standard of value. One part OF
this currency represents actual money, the other
represents credit only. One is based ON specie in
the vaults of the bank, the other on the general
property of the debtors of the bank and however
homogeneous the whole mass Of paper money may
seem be, it in truth, in us nature and effects,
compound Of the two distinct and widely different
elements we have named.
With this statement OF the charter Of mixed cur
rency and our definition of the terms employed, we
proceed 10 give an illustration, in form simple
aad iutegen: as possible of the principle OH which
this currency is issued Suppose a community, in
which there exists $780, 900 OF specie with other
money, and that Sl00 600 CT tins is subscribed and
paid into bank as its capital stock, and supposing
that this bank issues 500 900 of its cir
culatoa instead gifts specie. These bank-noles are
loaned to individuals upon their notes, bills of
exchange, "dIscounted" by the bank. Now 100000
OF this money is in circulation From time to time
part Of these notes will be returned for redemption
in specie, but the whole amount, they circulate
wide extent Of country, will never be returned
at once. That quite impossible. What portion Of
them will be returned within given time, will de-
pend upon circumstances.
Should there be demand for the export of specie,
large part might come in at short notice, but this
is contingency. There is a chance that the greater
part will remain out long time If so, then it will
be safe for the bank TO promise more specie-that
s to issue notes than has specie in its vaults;
how much more must be coHjectursl. 1t is matter
of experiment; but a considerable amount may be
issued with comparative safety. This is the prin-
ciple and is founded the doctrine of chances On
this rests entirely-hoW securely will depend upon
the extent to which it is carried, and variety of
cOncomitant circumstances But acting on this
principle, mixed currency bank issues twice and
three times, it may be ten times, large amount
of bills it has specie in its possession; and for this
over-issue it receives the interest it derives
from the rest of its circulation and, of course, in
just far increases the profits of the bank and its
dividends to the stockholders.
Founded andconducted on this principle it becomes
matter of inquiry how far the operations of such
banks are beneficial te the business interests Of
society, and what are the legitimate consequences
and effects of mixed currency banking? These we
propose to consider in next chapter.