, 1861-06-17
Cbitaau Gtitatte :!
MONDAY, JUNE II, 1851
-urrv wKRSpB FTOT1TI0Ug CUR
mqrMSHt SHtYx1saN0THER AHTKMEI

ftom 1e to aoper cent Of their demard lia-
h;litiee, including balances due to other
banks; and with this reserve they manage
to maintain their loans ut an average Of
three fhfths more than their capital This
Tsss about their condition according to off,
cih returns at Washington Jan. i; 1850
and is fair average Of their general busi-
ness. OF course their profits are embraced
in the income Of this three.ffths excess Of
loan over capital. They borrow so much
debt for nothing, and charge interest on
their debt in exchange as money; this is /.
the only source of profit in the present ab- !
normal system, for the capital earns inte-:
rest in any case, Their loan is crippled
and awarfed to this limited excess by the
constant pressure Of demand. liabilities in
inscribed credits, called g deposits,n = and in
circulating notes, and balances due to
other banks, which they have no money
to par; and in every attempt to extend the
loan they bring trouble, by its subsequent
inevitable contraction. upon themselves
and the community. This excess Of de-
mand liabilities oFsr the money in their
Golfers, and not the notes aloLe, constitutes
the debt currency. We're this fiction Of
value removed, capital would Immediately
flow through its natural channels Of circu-
1ation; the sale Of goods and reaux Of mon
ey would soon I'll the full measure of the
currency with gold and silver; the incubus
upon the bank loans would be Gfted, and
the screw Of contraction abolished for
ever The currency would then be cap
ital, standing upon the foundation Of true
value, as independent Of banks as Of brok-:
era, and being no longer manifested by
bank loans; would be no longer disturbed
by them, but would increase with the In
crease of capit1l and circulating property
requiring its use as the medium OF e1-
change. So long as We produced more
capital than ne consumed, we should in
fallib1y have an increase Of money, because
such increase Of capital would constitute
an effective demand for it, and it could not
be forced or Kept out Of the country.
Common sense confirms this, now that the
fact is discovered, but science is indebted
for the discovery to Adam Smith, who
eays Of gold and silver: III, in any
particular country, their quantity fall short
Of the efectual demand, so as to raise their
price lealu0 above that Of the neighboring
countries, the government would have no
occasion to take any pains to import them.
II it we're eren to take pains to prevent
their importation, it would not be able to
efectuate it. Those metals, when the
Spartans had got WhereWithal to purchase
them, broke through all the barriers which
the laws of Lycurgus opposed to their en-
trance into Lacednmon," In another
place he says: "Gold and silver, whether
in the shape Of coin OF. Of plate, are uten-
sis, it must be.remember as much as the
furniture Of the kitchen Increase the use
Of them, increase the consumable COM
moditics which are to be circulated, man
aged and prepared by means OF them, and
you will infallibly increase the quantity ;
but if you attempt by extraordinary means
to increase the quantity, you will as infal-
libly diminish the use, aud even the quan-
tity, too, which in those metals can never
be greater than what the use requires y
aThe value Of goods annually
bought and sold in any country, requires
certain quantity Of money to circulate and
distribute them to their proper consumers,
and can give employment tono more. The
channel Of circulation necessarily draws
to itself sum sufficient to fill it, and never
admits any more" Its to be regretted
that DR.. Smiths views were not as correc
with respect to what he calls "pape'
money" and which n call no money at all
as they are With respect to metallic money
We find that the notion prevails that th'
aggregate Of bank loans is restricted by
or cannot exceed, the volume Of the cur
rency; this is q mistake. Even under th'
present cripple sytem, the loans Of tn
the banks of issue in Massachusetts amour
to more than double the whole sum Of th
local currency. What the banks woult
deal in undera eound currency is loanabl
capital, and money is merely an instru
mcnt of traffic, in banking as in all othe
business The same money transfers Ii
ownership Of successive portions Of cap
talto the banks, and their loans, under
normal system, would be limited only b.
the loanab1e capital Of the country. Their
is no conceivable limit to the loan whe
freed from the embarrassment of th