1835.] 



FARMERS' REGISTER. 



69 



more sink, from loss of confidence and credit, and 

 stagnation in circulation, below their average level, 

 to be brought up again by the operation of causes 

 already pointed out. Whenever the pendulum of 

 price, (if I may use the expression,) has either by 

 the operation of the natural course of events, or 

 by the unwise and unskilful tampering of govern- 

 ment, been thrown far into one extreme of the arc, 

 it will, in its effort to regain its natural position, 

 go almost so far into the opposite extreme; and the 

 vibrations will frequently last through a long pe- 

 riod of time. 



Do these fluctuations depend entirely upon the 

 banks? 



Some suppose these fluctuations depend entirely 

 upon the operation of the banking system. This 

 however, is not the fact. Hanks may do a great 

 deal, but are by no means omnipotent in the regu- 

 lation of a currency. For example: when loss of 

 confidence, stagnation of circulation, and fall of 

 prices derange the whole credit system, banks 

 are affected like individuals; they are obliged to 

 curtail their operations, and check the farther 

 emission of paper, lest a run upon them may 

 break them. They may not, under these circum- 

 stances, have the ability to relieve the distress, 

 however strong the inclination; the relief must 

 come through the wasting process of buying me- 

 tals from abroad. Again: when prices begin to 

 mount upwards, banks by seizing upon the favor- 

 able moment, may enlarge their issues, and thus 

 swell still farther the already bloated state of the 

 currency. But they cannot prevent, if they be spe- 

 cie paying banks, the correction of the evil by ex- 

 portation of the metals; for so soon as these are 

 redundant they will be gathered up for a foreign 

 market; a necessary run will then take place on 

 the banks for the purpose of making the col- 

 lection, and these banks must either suspend spe- 

 cie payment, curtail their issues, or break. On 

 the first, supposition, the evil would have to cor- 

 rect itself by a rise in exchange against us with 

 foreign countries, to the amount of Ihe deprecia- 

 tion caused in the currency by suspension of spe- 

 cie payment. In the second case, prices would be 

 lowered by contraction of the currency from cur- 

 tailment. In the third, by contraction from the 

 withdrawal of all paper which had emanated 

 from the broken banks and a loss of confidence in 

 the whole banking system, which would, by the 

 runs made upon them, force all to curtail, or break. 

 And thus may we always confidently look for- 

 ward sooner or later lrom causes, whose operation 

 I have pointed out, for either a rise in prices when 

 they are very low, or fall when they rise very high. 

 Whenever prices are disturbed, it is a long time 

 before the equilibrium is again restored. 



Effect of foreign demand for some of our agri- 

 cultural products, on present prices. 



So far, I have been arguing as if the present 

 state of things were the result solely of that reac- 

 tion which must sooner or later take place after 

 great depression and stagnation of trade. But the 

 rise in prices may be rapidly accelerated by an ex- 

 traordinary foreign demand for some of our great 

 staples. Most undoubtedly the rise in the price 

 (f cotton has at this moment very great agency in 



the high prices, and rage for speculation manifest- 

 ing themselves every where. The price /)f cotton 

 in this country is regulated by the prices abroad, 

 because the foreign market taking up about four- 

 fifihs of the whole product of the United States, 

 it is evident that the value of the article must be 

 determined by the foreign, and not by the home 

 demand. What is the cause of the immense rise 

 which has taken place in the price of cotton with- 

 in a lew months I am unable to say. I am not at 

 this moment in a condition to get at. the statistical 

 information, required for the investigation of this 

 subject, and my mind not being particularly direct- 

 ed to it, until within a day or two past, I have not 

 noticed from time to time in the papers such arti- 

 cles as might perhaps have given me a clue to the 

 explanation of this interesting phenomenon. — 

 Whatever may be the cause however, whether 

 a general deficit in the cotton crops over the 

 world, or in the United States particularly; or to 

 the rapidly increasing demand for cotton fabrics 

 all over the world; or to a spirit of speculation in 

 England; or to the gradual reduction of the tariff; or 

 to all these causes combined; certain it is, that the 

 price of this most important agricultural staple, 

 is now at a height which well indemnifies the 

 planter for his labor, and will, if it could con- 

 tinue, diffuse wealth and prosperity over the 

 whole of our southern country. 



Let us now examine into the influence exerted 

 by this rapid rise in the price of cotton. And in 

 the first place it is manifest, that the rise in the 

 price of cotton must have had a most important 

 influence on the foreign exchanges. This arti- 

 cle, alone constitution; a very large proportion of 

 the whole of our exports — say two-thirds, a rise in 

 its price has therefore tended to swell the value 

 of our exports, and of course, to make money flow 

 more rapidly into the country — through the agen- 

 cy of a favorable balance cf trade. From this 

 cause then, the late money pressure may have 

 lasted a shorter time than it would under other 

 circumstances. 



Influence of the price of cotton on the value of 

 slaves. 



Again: the rise in the price of cotton has most 

 undoubtedly given an impulse to the price of 

 slaves. Cotton is the great agricultural staple 

 throughout almost the whole of our southern 

 slave-holding states, and consequently, the mar- 

 ketable value of slaves will ever be determined by 

 the value of the principal product of their labor. 

 In Virginia and Maryland the price of slaves will 

 always depend upon the external demand, and 

 not on their intrinsic value in those two states. 



If the price depended on the real demand ari- 

 sing among themselves, I doubt whether those 

 states could afford to raise them even: so little 

 would be their marketable value. 



But there is another cause which I believe at. 

 this moment is operating in raising the price of 

 slaves, and will exert a still more powerful influ- 

 ence in future. I mean the late emancipation of 

 the slaves in the British West Indies. That act is 

 certainly indefensible upon every ground of ex- 

 pediency, morality, and religion. But its impoli- 

 cy appears most glaring when considered in a po- 

 litico-economical light. Now whatever may be 

 said about the relative efficacy and value of free 



