332 



THE FARMERS' REGISTER. 



XXI. Measures of thorough reform. Banks wUh- 

 out circulation, or very limited circulation. 



Bal ihough the adoption of these several de- 

 fences would prevent all the petty and most dis- 

 lionest and scandalous of abuses, which now 

 constitute nearly the whole of the wreat body 

 of banking operations, it would still leave in ex- 

 istence, and in danjjerous force, the great and in- 

 herent evils of the banking system in this coun- 

 try ; and which not bins short of </ioro«g/i reform 

 can eflectually guard against, and render the bank- 

 \i)S. system altogether beneficial in its o[>pralion. 

 There are two jireai principles of the established 

 banking system which are the sources of all their 

 inherent evil effects; and it is vain to hope fjr 

 exemption from great danger to public interests, 

 and great (rauds upon, and losses by, the commu- 

 nity, until these sources of evil are either closed, 

 or much more effectually regulated than now. 

 These are, first, the privilege of creating paper 

 money, and the power o\ filling therewilh the 

 ivhole circulation of the country ; and, secondly, 

 the freedom ol the banks and their stockholders 

 from responsibility and efficient penalties, when 

 ibe.y fail to comply with the obligations assumed. 

 Either to regulaie or put down these privileges 

 and exemptions, would be ihe main object of 

 our plan of thorough t)aid{ reform. Bui, even if 

 if there were any chance to procure a lliorough 

 reform, and we could have anv influence in direct 

 ing the plan, we would not aim to reach that end 

 by multiplying regulations and resirictions, and 

 encumbering the statute book with numerous ad- 

 ditional provisions, and penalties for violation ol 

 obligaiions by banks. Our system of reform would 

 be very concise. It might indeed be almost com- 

 prised in these few words — " let the trade in mo- 

 ney be free" — or if that be unattainable, (hen, 

 " let the banking trade be just as free, and not 

 more privileged, than is the trade in money as le- 

 gally exercised by individuals." In other words, 

 we would have free banking in iis fullest sen.=e — 

 but, at the same time, banking fully amenable to 

 the laivs, and strictly bound by the general re- 

 straints of the law. This general system, (if 

 without any exception or limitation,) would put 

 every bank note upon the fooling of a bond from 

 an individual, and of which the credit and cur- 

 rency would be determined by the reputation of 

 the individual or banking company by which the 

 note was issued. And each individual [ artner in 

 a banking company would be severally responsi- 

 ble lor the payment of every note issued, and 

 debt incurred by the company. 



But though the individual responsibility ofstock- 

 holders is strictly just, its exaction by law might 

 be waived, as an unnecessary safeguard, in regard 

 to banks on a properly reformed system. And 

 the great and profitable privilege to the banks, of 

 issuing notes as currency, not bearing interest, 

 and which must always be dangerous to the pub- 

 lic interests, and a tax levied upon (he community 

 for the profit of the bank, might be also granted 

 under proper restriciions, as a kind of middle 

 ground, or transition resting place, between the 

 present vicious system of exclusive paper cur- 

 rency, and a safe and solid currency principally 

 metallic, and the balance of it strictly and fully, 

 and always and truly representing as much exist- 

 ing specie. The paper money thus permitted 



should never be more than equal to the capital of 

 the bank, or twice the amount of iis specie ; 

 and no note to be for less than $20 ; and we 

 would prefer that the lowest perjiiitted denomi- 

 minaiion should be afterwards raised to $50. The 

 bank might, as all individuals may, in the absence 

 of either legal restriction or legal privilege, issue 

 notes to serve as currency for any less denomina- 

 tion. But they would carry interest, like all other 

 bonds, if not exempted by law, and this would be 

 perhaps a sufficient bar lo their excess. 



XXII. Paper money not necessary to make re- 

 mittances. 



Inasmuch ns when a country is furnished with 

 a sufficient specie currency, (as every country 

 producing commodities lo exchange for specie 

 would have, if not using paper money,) as 

 we have before slated, the issue of redeemtdile 

 paper does not permanently increase the amount 

 of the general currency, but only substilutcs, and 

 causes tlie sending abroad as much specie as there 

 is currencj' supplied of paper — it follows that the 

 great benefit which most persons expect from pa- 

 per issues, that of " making money more plenty," 

 is altogether liillacious and delusive. It is only af- 

 ter the suhsiit iiiion of specie by paper is complete, 

 and the paper is irredeemable and depreciated, 

 that a greater amount of paper money, even in 

 nominal value, can be kept afloat than the former 

 specie circulation, under like circumstances of ex- 

 tent of trade and of general wealth. Then, in- 

 deed, any amount of paper can be poured into 

 and kept in circulation ; but its depreciation will 

 inciease in proportion to the excess; and the 

 exchangeable value of the whole currency will 

 not be materially, and certainly not beneficially 

 changed; and none but the fabricators of the 

 paper currency will derive profit from either a 

 moderate and redeeniable, or the most excessive 

 and depreciated emission of paper money. Then, 

 putting aside this vain and delusive, but very ge- 

 neral expectation of increasing the amount of 

 sound currency by bank issues, there is no benefit 

 to the general and public interest to be gained 

 from paper money, except its greater convenience 

 for transmission. This is, indeed, a very great 

 and valuable convenience. But it may be availed 

 of very nearly as well by other means, as by 

 transmitting bank paper money. For all large 

 payments, even now, bank notes are very rarely 

 sent to distant places. For such purposes, bills of 

 exchange, (as we have before explained,) are 

 preferable, and always will be used. And if ex- 

 change on New York (for example) could not be 

 bought here, for the reason that no one here had 

 funds in New York, (or money due for commodi- 

 ties sold there) then our bank notes would not best 

 serve instead — or if forced to serve, they would be 

 sent back immediately to draw specie — and there- 

 fore it would at last be the specie, and not the 

 bank notes, that would be remitted to make pay- 

 ment. But there is another mode more usual and 

 still better than to send specie — which is to send 

 our products, tobacco, flour or cotton, in the ordi- 

 nary course of trade. Such exportaiions continu- 

 ally provide to Ihe shippers here funds in New 

 York, or other places with which we trade ; and for 

 these funds, bills of exchange are drawn, and sold 

 to those persons who have to pay debts, or to buy 



