The weekly pioneer and Democrat. [volume] (Saint Paul, Minn. Territory) 1855-1865, 1858-01-28


longs the true paternity Of commercial NJ.
vulsions with all their attendant evils tina,
alternate expansion and contraction is ne
ccssary law Of paper money that even
while the expansion process is going gu no
one is really benefited thereby whereas, MS
soon as the contraction commences, every.
body must suffer, and before il ceases, myr-
lads will be ruined.
No one, We apprhend, will, at this day,
dispute that paper money expands credit;
indeed, that this is the design and obec, OF
paper money and that this expansion i'm.
parts an artificial and undue stimuant to all
kinds of business. If paper money did not
expand credit III it did not enable credit
to pass as money!, would no, be issued.
The issue of paper money involves consider.
able expense, and it would be difficult to
find Bankers so philanthropic as 10 incur
this expense merely for the convenience If
the public if they intended, or We're com
pellcd to keep specie in their vaults for eve
ry dollar OF paper they circulated. OF
course, before they would do this Banks
would cease TO be Banks of issue and be.
come only Banks of deposit, discount and
exchange very profitable and honon
bic kind of Banking. by the way, when he.
ultimately aud wisely practiccl, aud the
only kind of Banking which, in our opinion.
the wants Of the world at presen, require.
1t is idle, therefore, as every practical Bank
cr and intelligent man Of business very wei!
knows, 10 talk of Banks OF issue which shall
keep on hand dollar in coin for every dol.
lar Of their issue; in other words, tina, shall,
at all times, be able, with the specie in their
vaults, TO redeem their entire circulation. It
Is absurd TO cxpatiate upon the great fan
cicd commercial pauacca paper currency,
every dollar Of which shall represent dol.
lar in coin. Such u thing is impossible in
the nature of things, excepting Us an .occa-.
sional accident. For what Bank will go to
the expense of manufacturing and keeping
up paper money il it can as well pay out
the coin? The mere suggestion will pro.
woke derisive smile upon the face Of the
shrcwd practical Banker. Paper money is
issued, because il enables credit which il
not money, and which does not represent
money, to pass and circulate as money. If
paper money did not effect this Object. il it
did not to n certain extent substitute credit
for actual money,--if it did not partially
superccrle gold and silver coin, which is the
only lawful money, il would not be- used
There would be no motive or object for its
use. II is 10 enable the Bank a. gain the
profits upon the loan of ia credit that it
issues paper money. If Bank which has
10000 in coin keeps out circulation Of
100000, land in prosperous times that H.
when the expansion il going OMIT may,
and often does do this the Bank gain. the
interest on slS00O0. Banks therefore,
viii ordinarily keep out all the circulation
they possibly can, in order that they may
reap the profits Of the interest which they
receive upon the excess of their paper issues
over and above the real money which they
have in nae.
The whole design, object and eff ct OF pa
per money, therefore, j, TO extend and expand
credit This expansion necessarily gives 10
all business transactions an artificial s,imu-
lns. 1t creates the belief that there is more
money than there actually il. and men act
upon this bciieI--they enter into ~ ended
transactions. form new prorcts, and embark
in enlarged enterprises, under this erroneous
belief In consequence Of this abundance
Of money, the prizes Of labor and Of all com.
modltie-, and Of all kinds Of property, are
greatly appreciated But all this il an arii-
fca and not natural condition of things.
Transactions increase. and prices 90 up Il.
long as the expansion continues. But the cS.
pansion csnno, CONTINUE forever There mus,
be limit 10 tho use and circulation Of credit
a. money. The extreme tension oi the system
is at length reached, and then CONES tn re.
coil The bankers can loan no more d
their credit. Those who relying upon the
aush state Of the money market, have been
extending their Transactions aDd mourning
fresh responsibilities, Unexpectedly hnd them
selves cB-tailc,i in their accustomed bank nc
coumoda,ious The money market tigh,ens.
The notes Of the banks begin TO come home
for relemp,ion The contraction which has
commenced, Increases, and viii continue M
I'll the opposite extremity Of tie arc 10 which
the great pendulum Of commercial trans
actions under the creii, moDcy syy'cm for.
ever oscilla,ts, has be,.n reached. The debts