, 1874-06-10
EMAIL N0TEH.

SMALL NOTES.
We hayo remarked that tho Prosidant's rccom-
mondation that At aomo future time, after specie
payments arc restored, bank-notoB Of less do
nomination than $10 shall bo abolished Is In our
Judgment unnecessary and unHciontino. This
Recommendation Ia obviously worry small part,
moro incident. Of the plan suggested by him in
hts memorandum to Senator Jones on tho aub-
1eot of tho currency. Nevertheless, It seemB to
llavo boon pitched upon az tho most asaailablo
part OF tho who1c plan. In fact 1t ie Tho only
aasatablo part, and It happens that all tho other
parts might bo adopted and this one left out.
without producing any incougruity whatovor.
The chiof purpose had in Wow by tho prosi-
dont in tho abolition Of amall notoB ia to acou-
muIato stock Of gold In the oountryas q ballast
to prevent future panics or to mitigate their
eToota. Would tho abolition of amall notes No.
comp1ish this ond7 At first blush tt would Seem
80, but tho teachfngs OF history, no leas tha,l
those Of economic acience, shdw tho contrary.
Commercial orisss, OF panics, occur in England.
whore thoro ia no paper currency OF loss denomi-
nation than G5 Ctho equivalent Of S25), with as
great frequency aud severity as In this country,
whoro wo have nothing but paper currency.
They occur in countries whore there are
no bank-notea whatsoever. The panic of 1867,
Which swept over the greater part Of tho civil
izad world, visited it's sevorest Objects upon tho
City OF Hamburg, in Germany, whore thoro was
nothing but gold and silver In circulation. We
may infer from these facts that small notes l,ave
nothing to do with tho production Of panios and
that their nbsenco would not tend to alleviate
their conaoquoncoB. II tho currency Of = ooun-
try ie tsolf vaueloBs, then all tho notes In e1iBt
once-tho small AS woll as the large-,sill entall
lossos upon tho holders, and in ouch case 1t
would havo boon most wise and humane pre-
caution to have previously prohibited tho
circulation Of small notes, which arc always
found In the pockets Of the poorer c1aaaos Of
tho community and those loast ablo to
protect themselves In times Of panic. Tho no.
called panic OF 1861 (which Was not genuine
commercial crisis) Was ono Of tho eyents in
which gu anti-amall- l-note law would Aayo boon
most desirable. The currency Of most Of tho
Western States was at that timo socurod by
State stocks, md largely by Southern State
stocks, and not being bottomod upon actual
capital In the ban1s issuing It, the notes declined
In value pari passu with the decline Of the stocks
hold as security thercfor-whicI, decline was
canaod by tie outbroak Of hostilftiea between
tho North md the South. Tho notos OF tho
Btato Banks Of Ohio and Indiana, which had
paid-1p capital and no security whatovor
deposited for their redemption. did not de-
cline at al, but remained at par with
go'd throughout the Hurry. And indeed some
oi tue notoa OF Illinois banka remained at par,
Notwithstanding the decline OF their security
oohas' pecauao tne oahks themselves wero bona
''oo inFtituslons, na7lng pald-up capital, aud
uol"B "1oals'mase ous'nees' II, at and bofore
Il'as s1no' thefe had beon law prohibiting the
e'fcu'aton OF amal' notes' tho money in tho
uanus u INC common people would have con-
''nuea sood. AMI 30 1t would hive been II their
s'nan noses had consisted Of tho Issues of the
91ate naaks OF ohto and Indiana, or the iogtti-
nato anu coma )9de banks Of Illinois.
Iho advantage OF using bank notes. whetlier
small or largo, il two-fold. Tho gold which they
llBplRce is itsolf capital and eau bo sont abroal
Tor the purchase Of things that We want moro
'han We want gold, and thus tho interest on
hat much capital can bo eayod. They are also
moro easily carried about than gold and aro
generally moro convenient. Notes Of loas de-
nomination than $40 constitute tho major part
'f tile circulating medium. II wo choose to
'onaiHt Of gold, we can hayo it BY having for #.
md not otherwise. A very small amount of I
;old will anAwor for all purpoaos of couyorti-
,ility, because when a currency in a,tua,v nj
,ar with gold nobody wants gold anil wlou tho
Ingredients OF a commercial orjatu oro ot ,o,,,
II