66 



FARMERS' REGISTER. 



[No. 2. 



this deficiency, by the vast amount of it which is 

 in circulation. In England, tor example, it has 

 been computed that the bills of* exchange alone 

 in circulation are ten times more in amount than 

 the whole money in the country: while the latter 

 is estimated at £40,000,000, the former reaches 

 the enormous aggregate of £400,000,000. In 

 our country, the Bank of the United States alone 

 does a business in exchange, amounting in the 

 year to more than $250, 000,000; while its own 

 paper in circulation has never reached one capital, 

 or $35,000,000. Now the bonds, or promissory 

 notes of individuals, may be looked on as rising, 

 in amount, infinitely beyond the aggregate of the 

 bills of exchange and money together. Com- 

 paring then all the items of the circulating me- 

 dium," exclusive of money, with the money, we 

 shall be astonished to see how insignificant in 

 quantity the latter is, when compared with the 

 former. The fact is, money performs but lew of 

 the exchanges of society, by actual passage from 

 hand to hand. "In England,'' says Mr. Wade, 

 "by the use of bills of exchange, bills of lading, 

 checks, scrip notes, clearing houses, and a variety 

 of other contrivances, aided by a vast fabric of 

 credit taken and given in open account, money (in 

 its common acceptation,) hardly ever enters into 

 mercantile affairs; it is the substance really meant 

 and shadowed forth; but it rarely, as one may say, 

 bodily passes from hand to hand." In our own 

 country every one too, must have observed how 

 rarely the exchange of large masses of property 

 are effected by the intervention of money, in the 

 great majority of cases, the property is paid for by 

 the passage of bonds, bills of exchange, stocks, 

 &c. and but a small portion by actual money. 

 Hence what are called cash sales, if too frequent 

 all of a sudden, in a particular neighborhood, even 

 in times of great prosperity, will cause the pro- 

 perty to be sold at a sacrifice, because of the great 

 difficulty of commanding the actual money to 

 make the purchase. 



Effect of rapidity of circulation. 



Having thus explained my notion of the compo- 

 nenrs of the circulating medium, and shown that 

 money is vastly inferior in amount to all the other 

 items combined, let us now look a moment to the 

 effect produced on the circulating medium by a ra- 

 pid or sluggish circulation. And it is very evident, 

 that while the quantity of the currency remains the 

 same, its apparent amount and real efficacy may 

 be either increased, or diminished, merely by an 

 increase or diminution of the rapidity of circula- 

 tion. For example, $10 passing through ten 

 hands, in the course of the day, will accumulate 

 as much property as $100 passing only once from 

 hand to hand. Now, supposing the whole circu- 

 lating medium to remain stationary in amount, but 

 that the rapidity of its circulation is suddenly dou- 

 bled throughout the whole country, then its" appa- 

 rent amount, and its real efficacy would be dou- 

 bled likewise. With the help of these incontro- 

 vertible principles, let us now proceed to examine 

 into the effect of the late money pressure in the 

 United States. 1st. On the rapidity of the circu- 

 lation—and 2ndly. On the amount of the circula- 

 ting medium. 



1st. Effect on circulutitm. 

 I shall not pretend to enter into an investigation 



of the causes which produced the late pressure in 

 the money market. The nation has already been 

 full}- and completely enlightened upon this sub- 

 ject, by men whose minds can compare with any 

 which the world can furnish. Moreover, it would 

 require me to enter more fully into the field of po- 

 litics, I ban would he agreeable to myself" or suita- 

 ble to an agricultural journal. Suffice it to say 

 that the pressure did every where take place; that 

 a general difficulty of procuring money existed 

 throughout the country; that prices, for a season, 

 li'll every where; and that confidence and credit 

 for a short time, in the great commercial towns, 

 were almost entirely destroyed. First let us see 

 ih>' effects of all this on the exchanges in society, 

 and then on the rapidity of circulation in the cur- 

 rency. 



During a pressure of the kind just spoken of, 

 the loss of confidence and fall of prices, force a 

 great deal of real and other property in the mar- 

 ket, to be sold for payment of debts, which or- 

 dinarily remains stationary in the hands of its 

 owners. Lands, houses, negroes, stocks of goods, 

 &C.j are thus forced to change hands, and of 

 course increase the exchanges. Perhaps the 

 sinking of prices generally may have a tendency 

 to diminish the sales of the annual products of 

 the soil; such as corn, wheat, tobacco, and sugar; 

 but not of cotton, for the foreign market is the 

 regulator of the price of this very important ar- 

 ticle. Hence it may be said, that a money pres- 

 sure at first has a tendency, by the great quantity 

 of property forced into the market for sale, rather 

 to increase, than diminish the number of ex- 

 changes. "Whilst, however, the number of ex- 

 changes increase, the circulating medium suddenly 

 becomes much more sluggish, taking the whole 

 aggregate, in performing the functions of circula- 

 tion. The great capitalists who are in the habit 

 of purchasing produce with a view to sell with a 

 profit, when prices are falling, rather keep aloof 

 from the purchase of raw produce, lest a further 

 till! may injure them — their capital then circulates 

 more slowly, and in consequence of it, the annual 

 productions of the country are not distributed with 

 that regularitj-, and adaptation to the various 

 wants of the community, as under ordinary cir- 

 cumstances. The body politic in this situation, 

 is like a patient suffering congestion in one part of 

 the system, while there is a depletion almost to 

 the loss of vitality in another. 



Again — bonds, bills of exchange, &c, ordi- 

 narily performing the larger portion of the circu- 

 Iniion of every country, have now a much slower 

 circulation, and consequently less efficacy in ef- 

 fecting the exchanges; because as there is a ge- 

 neral loss of confidence and credit, A, who has 

 sold to B, is distrustful of his bonds, his bills, in 

 fine of credit in every shape — he wants money. 

 Money too has generally a sluggish circulation on 

 such occasions, for every one getting possession 

 of it. is disposed to hold it as long as possible — 

 hard money seems to be almost the only true 

 friend which one can get hold of in such times as 

 those, and is consequently held with a miserly 

 grasp. Persons will not venture it out without 

 the best security, and on high rate of interest, 

 obtained cither directly or indirectly.* 



*An inconvertible bank paper is never hoarded in 

 this manner. It is like fire in each man's hands, he 



