Daily Iowa State Democrat. [volume] (Davenport, Iowa) 1856-1859, 1857-12-11

eests NO argument. II IL not el1rmed
that the limit is too liberal, or that the ex-
cess Of notes thus permitted over gold - too
great. The cry against the Bank Charter
Actor the Act embodying these provis'
ions--has always assumed and opposite
character, and has been levelled, not 1t the
magnitude Of the paper issues but at their
alleged insufficiency. 1t 10 the resfvsctton TO
ga 600, 900 which is complained OF, and
which is said to keep the county 80 short,
and to make money. from the scarcity thus
prevailing, so dear. that at the first moment
of pressure the system breaks down, the
Bank Charter Act has TO be suspended, and
the artificial limit imposed upon lite paper
issues has to be removed. Such. indeed,
was the result In lsAT, and the same event
occurred last week. The week after next
Parliament will meet TO consider the whole
question and the circumstances by which 1t
has thus been opened.
The first question is purely one Of prici-
ple Very possibly the limit Of Ella 100000,
which must needs have been somewhat ar
bitarily fixed, may admit Of some expansion,
but that is a minor consideration altogether.
Whether the amount be settled at fourteen,
fifteen or sixteen millions, signifies little 20
is reasonable in itself and the principle of
convertlbility maintained. II Is nothing
lees than this very principle which is i'm
pugned by the thorough going opponents OF
the Bank Charter Ac'. They know that II
a bank lies under the constant obligation to
find gold for its notes, these notes must be
limited in amount, though the Limitation
NAV be more or less severe and they con-
tend, therefore, for inconvertibiiity. or an
indefinite increase in the note circulation, II
respective of any gold equivalent But
would such "a system either obvlate CONNER
cial panics, or increase the real wealth OF
the country, or even facilitate trade =
There is not the smallest ground for assum-
ing that it would insure any one OF these re-
suits For the first we have an example be
fore our eyes 80 absolutely desisive OF the
whole question that not a word need be ad-
ded to II. If unlimited paper issues could
prevent pancs, there would be no panlcs In
America, for there every State Ia Hooded
with paper money s.and yet this chronic In
undaton Of notes does not preserve them,
as we see from far worse and more frequent
con vulsious than our own. For the second.
national wealth cannot be created by mere
limitations of the reality. Unless the paper
circulation represents something which,
like gold, possesses essentiel and universal
value, it will never be really equivalent to
money. This point also needs no argument
The French Government Of 1890 set 1t at
rest forever. But would the transactions
of commerce be facilitated by a greater
abundance Of notes in circulation This
question is answered in the last. Unless
CONNER e is conducted with sound cur
rency it cannot be safely conducted at ALL
If more notes were in the market they would
doubtless be more readily obtainable; glut
would make them cheaper, as 1t does all
other things, any traders might get FURNISH
ed with accommodation on easier term; but
this would not be cheap money 1t would
merely be cheap paper, and upon the hrst
rush to exchange sham money Tor real mon
ey. the crash whoud be ten times worse
than before Either the notes. being nonl-
nally convertible, but not really covered by
gold, would be presented in such numbers
that the Bank, unable to cash them, would
be bankrupt; or, being legally lnconvertl-
bic, would depreciate IN value like the
French ussiguauts. The risk OF panics, and
the evils of panics themselves, would simply
be increased together.
| But there is another question OF very great
Importance: What have been the clrcum-
stances attending these panics, and especial
lv that now eubsldlng? We heard, day at
ter day, Of the stoppuge of large banking es-
tablishments in Scotland, for example, but
we have not heard enough of the system or
practice under which these catastrophes be
came producib.e, and which seem likely to
be resumed with the same liabilities IL be-
! fore No arrangements or system of any
kind consistent with active commerce or the
profitable employment OF money can be
proof against the effects OF "a panic when
once created fla bank, tor example is to
! give one class of its customers interest upon
their deposits, and provide another class with
pecuniarv accommodation by means of those
deposits, thus oblgiLg two parties at once,
it can clearly never be able to return the
whole of these deposits at given moment.
| This is the strongest case of the necessity of
| credit, but there are countlass others of diff
ferent kinds Credit in fact, must enter in
to the dealings OF a country like ours rs well
"a money itself, and CONNIE. cial panic sim
ply means the depreciation of this credit for
the time Gold and notes can never be kept
in sufficient quantities to satisfy every obi
cation outstanding in every part of the king
DOM for the gold Is not to be had, and the
multiplication of notes otherwise than on a
gold basis would simply destroy their value
proportionally and prevent them from going
80 far. Fivepound notes might be increased
to any imaginable number, but the only end
would be that it would be that it would take
a hatiull of them to buy sovereign. The
question at this point is whether any discov-
cradle features in the prevailing system of
trade will account at all for the occurrence
Of panics, which produce so much misery
and alarm. There Is no prima tacis case es-
tablished against any system of currency
by the fact of panic, for panics occur un-
der all
Balances in the U. s. Treasury.