New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1874-06-09
THE SMALL BILL BUSINESS.

in suDDOrt of his recommendation that paper
money of n less denomination than ten dollars
be dispensed with within two years after the
resumption of specie payments. In the second
CHAPTER of his second book Adam Smith dis
cusses this matter with his usual clearness.
He remarks that paper money may be so
regulated as to confine its circulation mainly
TO wholesale dealers, or to extend itself like
wise TO those whose incomes and purchases are
small. In London, where at the time he wrote no
bank notes circulated under ten pounds equal
in value to 500 in specie at the present day.
paper money did not often go out OF the
hands of dealers. Where the issuing of bank
notes for such very small sums as five and
ten shillings 81 IS and So SOY is allowed and
commonly practiced, "many mean people are
both enabled and encouraged to become
"bankers. But the frequent bankruptcies to
which such bcggarly bankers must he liable,
may occasion very considerable IncOnven-
"iency, and sometimes even very great ca
"lamity to many poor people who had received
their notes in payment Such experiences
have not been entirely unknown in this
country. The deposit of United States bonds
required as security by the present law, may
in ordinary times afford sufficient protection
to holders of bank notes, but if we suppose
the legal tenders to be entirely withdrawn
and their place supplied by National bank
notes. what effect would be produced on this
mass of capital and currency by the out
break of great war, requiring enormous
fresh loans to be contracted by the
Government Would not the security be
:I,co 10 Of
itself a sufficient reason for introducing gold
and silver INTO the circulating medium IN
quantities corresponding with those in which
we find them i'm the currencies of the great
nations of Europe. In times of peace we
should be preparing for war. No more effect
i've preparations can be made than the reduc-
ton of debt and the substitution of gold and
silver coin for paper as money.
Adam Smith goes on to say that where
paper money is not issued in denominations
sufficiently small to be used in petty dealings
there is always plenty of gold and silver.
Where the reverse is the case-and it has
always been so in most of the States of this
Union and the colonies out of which they
grew-gold and silver are almost entirely
banished from the country. Writing from
Philadelphia in January, 1894, Chevalier clearly
pointed out the rOttenness of our banking
system-that very system which so many of
our currency quacks are anxious to restore.
1t provided indeed, that the banks shall pay gold
for their paper demand; but by the side of this
clause which tends keep certain quantity Of specie
in the country is inserted another which neurazes
1t IS the power OF emitting bills In any number and of
the sum Of one two, three. or five dollars In prosper
Gus times the emission OF paper is abundant. indenitc
az the necessity of metallic standard TO be felt
in proportion the confidence which prevails specie
disappears before the of there Is scarcely
any left in the country. Since I have been In
the United States l have not piece of
gold except in the mint. No Is 1t struck off than
the gold Is exported TO Europe and melted down.
When q crisis comes the demand for the precious
metals increases rapidly because every attaches
more value positive standard than to paper and
the later the application OF the remedy for the scarcity
of Specie the longer does the crisis last and the more
serious does it become.
NJ. Chevalier said that we would find it to
our advantage to put some check on ourselves
in this matter by raising the minimum of bank
notes to ten. fifteen, or twenty dollars. Since
1929 no bank notes for less than five pounds
have been permitted in England and Wales.
"The suppression Of one pound notes. says
McCullOch, "shut up one of the easiest and
safest outlets by which the inferior class of
country bankers contrived to get their paper
into circulation" At the beginning of this
century the quantity of gold coin in the money
of Great Britain was not much more than one
hundred million dollars. Now it is estimated
at five or six hundred millions, or three times
the quantity of the bank note circulation.
In France the prepOnderance Of coin before
the outbreak of the war with Germany was
much greater than in England, and even now
the Bank of France, with a note circulation
of five hundred million dollars, holds more
than two hundred million dollars in specie.
Since we have no single great bank
invested with power to control and req.
ulate the currency, and since the principle of
unlimited competition, or free banking IA
it is called, never afforded US any security
in former times, the use of specie instead
of bank notes for all payments Of less than
at any rate five dollars is little enough to ask
as safeguard. We are fully sensible that il
will cost us something to use to this extent
specie instead of paper, but it will save us
much more. 1t may also be more inconyenient
to handle coin than paper, but great MANY
things both necessary and salutary are trouble
some to attend to. The labor of carrying about
q few gold and silver coins is to be Offset
against the evils which always have been Incl.
dent to the issue of small notes, and the lesser
evil must be submitted to if we would save
ourselves from the greater. We are not san.
guine enough TO hope for the adoption BY
Congress- within any time that can 30 speci.