Marshall County Republican. (Plymouth, Ind.) 1856-1878, 1857-10-01
OF paper Money and its Effects.

I
spirit of speculation, which is productive
of so many disastrous consequences in the
ranks of our business men, is to be found
in the legalized issue of paper money-the
attempt, on the part of bankers and legis-
lators combined, to give the value of mo-
ney to that which is destitute of intrinsic
value. Admitting that to some extent
such is the case, there are those who still
contend for the establishment of banks of
issue, upon the grohnd that the benefits
conferred by an enlarged currency are suf
ficient to more than compensate for the
mischief which they heget. These benefits
are supposed to consist in the fact that such
institutions supply what is assumed to be
equivalent to capital in adding facilities TO
business operations, increasing the amount
of wholesome trade, supplying wings to
INDECENT enterprise, and adding to the ex-
tent and value of industrial production. A
writer in the September number of Hunts
Merchants Magazine discusses this branch
of the subject of "Money and Banking"
with much learning and ability. Referring
to the idea entertained by many business
men who have not paid any particular at
teution to the science Of political econo-
my, that in paper money and bankers
credits there is great addition to the cur
rency and to the facilities of business, he
says:
''It is not so. Ii, however, it were true
that money is permanently increased there
by, it would be precisely the reverse of the
true policy, for the less the volume Of the
currency, the greater will be the value of
the dollar, the lower will be the prices of
commodities, the greater will be the ex-
ports, and the consequent employment of
navigation, the more the employment of
the people in the production of property,
and in fine, the greater will be the prosper
ity and wealth of the nation. The wealth
is in the commodities and property, not in
the money which determines their price
Their poiue is quite independent of their
price, and would be precisely the same with
onetenth of the currency we now employ
! In their exchange, as with the whole of it,
. only at one-tenth of the name in money;
which would be an advantage, inasmuch
as the bulk of the precious metals wonld
be less cumbrous. 1t would save nine
tenths of the trouble and expense of their
transportation for the settlement of balan-
ces. The world gains nothing by the in
crease of gold, but the trouble of handling
more OF it for the transaction of business
at higher prices. except in plate and trink-
ets.''
Money" the writer continues--and it
is an organic fact in political economy.
Which should never be lost sight Of by those
who think upon the subject of banks and
/ cnrrency-''is not the leader of commerce
but the foliower. 1t comes, 1egitimately,
only to the individual or to the communi-
ty as the result Of industry and good man.
agement; industry and good manage
ment do not result from the possession
Of money" 1t Itisplcasant to observe that
our writers upon financial subjects are
manifesting disposition to return to the
true doctrines of the old standard writers.
and the views of ADAM SMITH-who has OF
late years been repudia,ed by m odern advo-
Gates OF paper money-are regaining their
old ascendcney.i 1.-The fact of paramount
importance, says the author of the article
in the Magazine, s"of which our merchants
and bankers seem to be almost profoundly
ignorant, is distinctly stated and clearly
demonstrated by ADAM SMITH, that the
whole paper money of every kind, which
can easily circulate in any country, never
can exceed the value Of the gold and silver
OF which it supplies the place-or which,
the commerce being supposed the same
would circulate there if there was no paper
money In the following extract from
the Wealth of Nations" the author pro-
cceds to illustrate his idea Of the effect of
paper issues upon the economical condi-
ton of country in manner that would
seem as if he had gained prophetic view
of things as they exist in the United States
-an unsound currency of paper, producing
its natural effect of over trading, depletion
Of the precious metals and general feel
! ing of unsafety throughout the entire mer-
camille community: es.e s.fu ~
LET us suppose, for example, that the
whole circulating money Of some particu-
lar country amounted at a particulars time,
to one million sterling. that sum being then
sufficient for circulating the whole annual
produce of their land and labor. Let us
suppose, too, that some time thereafter, diff
ferent banks and bankers issued promisso-
ry notes, payable to the bearer to the ex-
tent ofrone million, reserving- in their diff
ferent Golfers two hundred thousand pounds
for answering occasional demands. There
would remain, therefore, in circulation,
eight hundredtbodsand pounds gold and
silver. and a million, of bank notes, or, eigh-
teen hundred thousand pounds of paper
and money together. But the annual pro-
! dueo the land and 7labor-of the country
had before required only one million to cir
= c,,lafo and <l..t~,l.~xn .t xi.xx u. z.-L