THE FARMER 



EGISTER. 



Vol. III. 



JUNE, 1S35. 



No. 2. 



EDMUND RUFFIN, EDITOR AND PROPRIETOR. 



ON PRICE THE CAUSES AND EFFECTS OF 



THE FLUCTUATIONS CONSIDERED, AND THE 

 PRINCIPLES MAINTAINED APPLIED TO THE 

 PRESENT RAGE FOR SPECULATION. 



By Thomas R. Df.w, Professor of Politic-al Economy, 

 &c, in the College of William and Mary. 



[The following communication was intended by its 

 author to appear anonymously — and it may be observed 

 that its form still accords with that intention — though 

 we have obtained permission to give the author's name. 

 This mark of its origin was desirable, not only for 

 reasons which are sufficiently obvious, but also be- 

 cause the facts treated of are in some degree effects of 

 the causes considered by the same writer inhis "Essay 

 on Usury," in Vol. II. of Farmers' Register — and the 

 reasoning of the two communications have a corres- 

 ponding connexion. 



The exhibition of the principles which constitute 

 price in general, and the investigation of the causes of 

 unfounded and ruinous fluctuations, may be serviceable 

 to the agricultural community at this time, when there 

 is every indication of the approach of one of those fits 

 of national delusion or madness, such as occured in the 

 time of non-specie paying banks in this country, and 

 such as every commercial country is sometimes liable 

 to suffer from. 



In addition to the close connexion of this and many 

 other subjects of political economy with agricultural 

 interests, we find ground for especial approbation of 

 Professor Dew's manner of inculcating his doctrines, 

 by showing their bearing on current events, and of- 

 fering tests of their truth, in accessible and striking 

 practical proofs. Without resort to some such mode of 

 attracting attention to what is generally (though in- 

 correctly) deemed a dry and repulsive study, the ab- 

 stract truths of political economy will continue un- 

 known to governments and to nations, long after having 

 been established and undoubted in the opinions of 

 reading men. Thus Adam Smith's exposure of the 

 restrictive (or commercial) system of Europe, had 

 delighted and convinced the learned and literary com- 

 munity, for half a century before it had any effect on 

 the action of the British government — and his admira- 

 ble work had long been a text book in the colleges in 

 the United States, while our legislators still continued 

 to act, in defiance of its truths, on questions of national 

 policy and in accordance with the notions on trade of 

 the past ages of darkness and ignorance. 



Having thus expressed general approbation of the 

 author's views, it is proper to mention an exception — 

 which expression of dissent would otherwise be un- 

 called for, and unnecessary. It relates to the effects 

 anticipated to Virginia from the present high price ot 

 slaves. That such consequences, whether immediate 

 or remote will follow, we have not been convinced 

 by the author's argument. — Ed. Farm. Reg.] 



For the Farmers' Register. 



But a little while since, as we all but too well 

 remember, the country was plunged into the ut- 

 Vol. Ill— 9 



most distress from want of money, lowness of 

 prices, and lailure of credit every where; now we 

 seem to be fast rushing into the opposite extreme 

 — money is becoming very plentiful, prices have al- 

 most doubled, and commercial credit seems every 

 where re-established. A speculating mania has 

 been generated in our large commercial cities, 

 and seems rapidly spreading itself through our 

 country. If then this be a season of prosperity, 

 it is one of hazard likewise. Now is the time lor 

 the exertion of that prudent foresight and calm 

 deliberation, which alone can carry the man of 

 wealth safely through those great, and sometimes 

 rapid fluctuations of prices, always attendant on 

 the rage for speculation. 1 propose briefly in this 

 communication to point out the operation of those 

 causes, which are calculated to make money plen- 

 tiful or scarce, (as it is commonly termed,) and to 

 show their operation on prices at this moment. 

 This investigation cannot, I think, fail to be in- 

 teresting at this time, and I hope will call forth 

 the speculations of others much more competent 

 to do justice to the subject than myself. 



Circulating medium. 



The first subject, undoubtedly, to which we 

 must turn our attention in an investigation of 

 this kind, is to the currency. What is the cur- 

 rency? What are the items which compose it? 

 Every thing which passes from hand to hand, and 

 will perform the function of money, must be re- 

 garded as currency. First then come the gold 

 and silver coins, and bank paper; these of course 

 form a part of the circulating medium, but not the 

 only, or even the greatest or most important por- 

 tion. Bonds, promissory notes, scrip notes, bills 

 of exchange, stocks of every description, form like- 

 wise a portion of the circulating medium. All of 

 these pass from hand to hand, and represent value, 

 and therefore perform the functions of money. 

 For example, I buy a tract of land, for which I 

 give $ 10,000, and pay for it by passing to the sel- 

 ler ten bonds of a thousand dollars each. Now 

 this exchange is effected without a single dollar of 

 real money, merely by the agency of credit: in 

 the same way I might have paid for it in stocks, 

 or by giving bills of exchange, &c. But although 

 these are to he looked on as circulating medium, 

 it is evident that equal quantities of them will not 

 perform as many exchanges as money; for the 

 value of money is well ascertained — it bears no 

 interest whilst in our hands, and therefore it cir- 

 culates rapidly and effects many exchanges: where- 

 as the value of bonds, promissory notes, bills of 

 exchange, stocks, &c, have a value more indefi- 

 nite; and most of this species of paper too, bears 

 an interest while in our hands. Its circulation 

 is therefore comparatively sluggish, in conse- 

 quence, first, of the difficulty of fixing its value; 

 and second, because we make a profit on it whilst 

 lying in our hands, and therefore are in no hurry, 

 generally, to get rid of it. But although this por- 

 tion of the circulating medium be greatly inferior 

 to money in the performance of the functions of 

 circulation, yet it much more than makes up for 



