Arkansas true Democrat., 1858-01-12
Paper Media.


 CTS through stupidity, and by others through design. There are many persons in these Uni ted States who have an interest in preventing the great body of the people from seeing the great difference there is between paper money and other kinds of paper media. We not long since read an elaborate article in an eastern paper in which railroad stocks were spoken of as circulating medium. Just as reasonable would it be to include bonds and mortgages in this category.
 Not few confound the private bill of ex- change and the bank note. But, the bill of | exchange, though a commercial medium, is not, at least with us, a circulating medium. It does not pass from hand to hand as the bank note does. When it arrives at maturity it has to be paid in bank notes or their equivalent When a man receives a bill of exchange, he enqulres twill this be paid." When he receives bank note, his only thought is, "can pass thls on to some other man." There is here an essen- tial distinction between the bill ot exchange and the bank note, and it is one which 1t will be we'll for the reader to dwell upon
 What is true of the bill of exchange, Is true | also of the common note of hand. It Is com mercial medium, but not circulating medium i The treasury note when it bears such rate of interest as makes it an eligible commercial investment is neither commercial medium, nor circulating medium It is simply species of United States stock, distinguished from other species, by having but short time to run- | But when treasury notes bear so low rate of interest that the holders of them find it advan- tageous to pay them in for duties, they then be- come circulating medium, just as bank notes are circulating medium.
 The terms circulatinq medium and currency are fguratively used when applied to metallic money and its substitutes The identical gold piece, or the identical bank note that man passes away to-day, may after performing cir cult through hundred or thousand hands return to him month or year hence. It is, therefore, very properly called circulating me- dium. And 1t passes with so much ease and rapidity that it may, without impropriety, be called currency. But it is an abuse of language
 
 which do not not change hands once in the year, to bills of exchange which are simply or derS drawn in one place to pay currency in an- other, or to notes of hand which are simply promises made on one day to pay currency on some other day.
 1 It is astonishing that any man of int ,lli- | gence should confound the bill of exchange ! with the bank note, after the clear manner in 1 which the difference between them has been pointed out by Storch, and afterwards by Galla- tin and Raguet.
 "A bill of exchange drawn by an individual 1 or individuals who do not issue notes having the character of currency, appears to Us to be clearly distinguished from bank note, though 1t is substitute and lessens the amount of cur rency which would otherwise be required. A payment made in bank notes is a discharge of the debt, the creditor having no further re- course against the person from whom he has received :, unless the bank had previously | failed. The bill of exchange does not discharge the debt, the person who receives 1t having re- course against the drawer, and every preceding indorser, in the drawer should fail or re- fuse to pay. But the essential distinction is that bills of exchange promises to pay in currency, and that the failure of the drawers, drawecs and indorsers, does not in the smallest degree affect tte value of the currency itself or which the performance of all contracts is regu- lated"
 Thus speaks Gallatan, and the man who un- 1 derstands him, will be in no danger of confound- ing the bill of exchange with the bank note
 Our currency--our circutating naediuna-con- sists exclusively of coin, and those substitutes for coin which the banks have invented. Our bills of exchange, and our notes of haud are only promises to pay, nominally in gold and silver dollars, but really in evidences of bank credit.
 Bills of exchange serve greatly to economise 1 the use of currency, and so do common notes of hand; but as already said, they are not cur reucy.
 Some writers affirm that it is going too far even to say that all evidences of bank credits should be regarded as currency. They affirm that only bank notes should be so considered and that bank checks and bank drafts are sim ! ply means of cconomisng currency Ii We had, they subjoin, only solid money, we should have many means of economising the use of | that money, we have now of economising paper money. We should then have the bank check hp hank HraG nplv would be that the bank draft and the bank check would then be representatives of solid capital instead of being as now the representa-. tives of mere credit--too often of empty ere l dit
 This is true. But for own part we deem it best to regard all the engagements of the banks to pay on demand, as part of their current cre- dlto-as part of the currency. The bank check and the bank draft are just as effective as the bank note in the payment of debts. They are mere substitutes for the bank notes, just as the bank dollar is the substitute for the mint dollar An increase of the inscriptions of credits on their books, or an increase of their deposits, as the banks choose to call them, does just as much '' i"''0 P'iNS', aiu to encourage the spirit OI speculation, as does an increase of bank issues In the large cities especially, it is chiefly by the 1 increase and decrease of the credits inscribed on their books (their deposits" so caled) that the banks cause prices now to rise, and now to fall. The wholesale trade of the country is carried on chiefly by means of the checks of the merchants on the banks, and by drafts of the banks on one another. It is only the re- tail trade that is carried on by bank notes
 To conclude, stock of all kinds, whether rail. road, canal, bank, State, or United States, 50 far from being circulating medium, are not even commercial medium. Neither are treasury notes when they bear an adequate rate of in lerest. All these are mere monetary in