THE FARMERS' REGISTER. 



281 



JX. The most prosperous condition of the bank- 

 ing system. 



In ihe previous view taken, we hr\<\ reached a 

 point in the progress of s^neral bankinii in whicii 

 the operations would be ilie nio.<t highly profita- 

 ble to the banks, and, lor such profit, the least in- 

 jurious to Ihe public ihat could bo expected under 

 any such circumstances. It is true that, even on 

 this supposition of the most perlect condition o( 

 things lor ihe system, the public interest, (other 

 than the separate banking interi'si) had gained 

 almost nothing by ihechan<xe. With all our hor- 

 ror ol' a currency either exclusively or principally 

 of paper, (because of the certain and inevitable 

 evil tendency and consequences,) we may freely 

 admit that, on our supposed case, no very im- 

 portant injury has yet been sustauied by the coun- 

 try, when its banking operations have only gone 

 thus lar, and when no foreign or oiher cause has 

 yet assailed the unsubstantial fabric of an almost 

 exclusive paper currency. The condition of 

 thinirs supposed above was, that the banks had 

 cleared the additional profit of the interest of 5 

 millions of factitious paper issues, and lhat the 

 public had so lar lost nothing, and had rained 

 all the benefits and conveniences, such as ihey 

 may be, of a paper currency subsututed lor a n<e- 

 tallic currency. 



The only important gain, so far, by this entire 

 change of currency, is the new paper money capi- 

 tal of 5 millions created and employed by thu 

 banks. The interest on this newly creaied ca[ i- 

 tal is so much clear profit to the issuers. The 

 public has gained only so far as the whole com- 

 munity is always benefited by the liiir profits of 

 eacfi individual ; and as the increase ol' individual 

 wealth is also the increase of public or national 

 wealth. The issue and use of this 5 millions ul 

 paper, in addition to the amount of the capital 

 stock of the banks, has perniiited, and indeed 

 compelled, the exportation ol 5 millions of specie. 

 Now, by thus dispensing with Ihe costly use ol 

 ihisamount of specie, as currency, and by substitut- 

 ing a currency which costs almost nothing to sup- 

 ply at first, there is made an annual saving to the 

 community equal to the interest of ihe 5 millions 

 of specie, or ihe price paid for its Ibrmer use.* 



* It is to give full weight to the advantan;es claimed 

 for banking by its advocates, and to avoid laisinjj any 

 doubtful objection to thena, that the above admission 

 is made, that a paper currency is ranch cheaper in use 

 than a metallic currency. Our argument can afford 

 to yield this point, and therefore we do not care now 

 to dispute it. But, if fairly examined and compar- , 

 ed, we think it not an improbable issue that a paper 

 currency would be found to have not much, if indeed 

 any advantage in regard to cheapness. The price 

 paid for a bank currency is not merely (as usually 

 counted) the cost of the paper, the engraving, the 

 printing, and signing, and the repeating these as of- 

 ten as required by the wearing of the frail material. 

 This is the cost to the bank only. To the community, 

 there are other and much greater sources of loss, in 

 the greater liability of paper money to be destroyed 

 by fire or other accidents, (all of which losses are so 

 much clear gain tothe banks,) and the cost of the mis- 

 direction and waste of skill, talent and labor, in counter- 

 feiting, and the losses by receiving counterfeit notes, 

 the cost of executing justice upon such new crimes, 

 and also the evil to" society in the inducing of 

 such crimes. All these different ingredients of price 

 Vol. IX.-19 



Now the question is, and the only questionable 

 matter, whether this amount of gain to ihe na- 

 tion is more or less than equal lo the risk and 

 danger incurred by giving up the use of a sub- 

 stantial metallic currency, having an intrinsic 

 value that can never be lost, or even materially 

 impaired, lor the unsubstantial, uncertain and 

 Hiictuating value of a paper currency. If the true 

 answer should be that the profit of the substitu- 

 tion is indeed greater than compensates (or the 

 danger, then there is a balance of national bene- 

 fit and gain. Eut if not, ihen is there no pub- 

 lic or general benefit, nor any other benefit ex- 

 cept to the banks, which create and issue the pa- 

 per money. There is high authority (or the lor- 

 mer opinion ; but we enteriain no question that 

 the latter is more generally true, even if the dif- 

 ference of cost of the two currencies be never S3 

 great. 



X. Some exceptions to previous general positions 

 and statements. 



From the wish to be as concise as was con- 

 sistent with clearness, we have passed over, 

 witliout alluding to them, some exceptions lo ge- 

 neral positions, and partial deviations from gene- 

 ral conditions of things, Avhich every thinking 

 reader would allow for and supply, but which 

 may be seized upon as false, and as vital objec- 

 tions to our general statements, by that class 

 of personswho always seek to find and to op- 

 pose merely the weak and immaterial, and not 

 che strong parts of an argument. To exclude 

 such cavilling, it will be mentioned here, once 

 for all, that, in our illustrations by supposed cases, 

 we have described things as entire and complete, 

 W'hich in fact can never be otherwise than in- 

 complete—and quantities and values as fixed 

 and known, which are unknown and continually 

 fluctuating in amount. Thus— though there 

 must be at any one period a certain amount of 

 currency necessary for the healthy and proper 

 exchanges, trade, and business of a country, 

 the amount so needed can not possibly be known ; 

 and even if ascertained fairly for a certain day, 

 it would be diflferent perhaps the next day— ex- 

 panding with the growth and prosperity of busi- 

 ness, and contracting under adverse circumstan- 

 ces. And the actual amount of currency, if left 

 to itself and not affected by the abuses of paper 

 issues, will be regulated and properly and speed- 

 ily adjusted in every commercial country ; so 

 that there will never continue long either a de- 

 ficiency or redundancy of currency, for the ex- 

 changes and healthy trade of the country. If 

 the currency be more plenty than in the com- 

 mercial world generally, it will depreciate in va- 

 lue, and be sent abroad to be used where more 

 highly valued and prized, until the balance is re- 

 stored by the exportation of the redundant quan- 

 tity. If an exclusive metallic currency be defi- 

 cient in amount, it will appreciate, and make it 

 profitable to bring specie from other countries 

 where it is cheaper, to be used in purchasing 

 commodities in the country needing specie and 



would probably make up an annual amount not less 

 than the interest of the whole circulation, which, add- 

 ed to the wearing, would constitute the annual cost 

 of an entire metallic currency. 



