334 



THE FARMERS' REGISTER. 



enter very largely into circulation, or takg the 

 place of specie in frequent transactions, and lor 

 small amounts. Thfir bearing interest would 

 form an inducement to every possessor to retain 

 these certificates of deposite; and the trouble of 

 calculating interest would of itself be a sufficient 

 obstacle to their general circulation, or even fre- 

 quent change from one person to another. There- 

 fore, under such a general system of banking, 

 limited to the operations of discount and deposite, 

 the country would enjoy all the safe and solid be- 

 nefits of the banking system, and be secured 

 from all the dangers and evils, by prohibiting the 

 particular and illegitimate operation of issuing 

 paper money. And yet, even where the latter 

 dangerous and always injurious operation allords 

 convenient facilities to the public, the like or as 

 valuable facilities might be aliorded, and without 

 danger or evil, by the interest-bearing certificates 

 of deposites in banks of deposite and discount 

 simply. The operations of these banks would be 

 as extensive in all solid and safe business as the 

 present banks of circulation ; and the responsi- 

 bility of such banks as we propose would be much 

 more sure than if they were further privileged 

 with the (to the banks; very profitable, but dan- 

 gerous power of circulation. Therefore, such 

 banks of mere discount and deposite, in magni- 

 tude and extent of sound and useful business, 

 would occupy as large a space and as prominent 

 a position as the now existing banks of circula- 

 tion, (after the suppression of the latter ;) and as 

 the business of the lormer would be as undoubt- 

 edly safe, and the responsibility as perfect, as the 

 present banks are deficient in both these respects, 

 it would follow that the certificates of the former 

 banks would be in better credit abroad as well as 

 at home, than are the notes of the latter. The 

 banks of mere deposite and discount, if honestly 

 and properly conducted, (which the law could 

 compel,) would never fail to pay their certificates 

 promptly ; whereas the banks of circulation can- 

 not possibly avoid suspending payment some- 

 times, and it will now be long before they will 

 even pretend to pay their notes. 



Thus, we infer" that the dangerous function of 

 creating and issuing a currency of bank notes, as 

 is now universal in this country, is not required, 

 even to a limited and guarded extent, nor to the 

 smallest extent; and that, without it, all tlie valu- 

 able operations of banking, and of a necessary 

 and safe paper currency, can be used, and to their 

 fullest extent. And if so, the limited power to 

 issue, which was left in the foregoing plans 

 of bank reform, might be dispensed with as soon 

 as a really sound currency had been restored, by 

 a sufficient infusion of the metalUc ingredient. 

 Then all that would be necessary to restrain the 

 circulation generally of bank notes, emitted by 

 banks within the state, would be to make them 

 bear legal interest from their date, (or, if dated 

 earlier, from the passage of the law ;) and some 

 other and stiU more operative restriction upon all 

 foreign notes, except such as were, by similar 

 law of the states where they issued, made subject 

 to pay the same rate of interest. Then, if so 

 arranged, there would be nothing to forbid the 

 fullest interchange of such paper money between 

 different states closely connected in trade, (as 

 Virginia and North Carolina,) and by which the 

 state issuing the notes (or some of its citizens) 



would, in fact, have the benefit of borrowing sa 

 much money as the notes promised to pay, and 

 the holders of the notes would have the benefit of 

 the interest accumulaiing thereupon. And we 

 repeat, that because of the new, just and benefi- 

 cial feature of bearing interest, these notes never 

 could enter so largely into circulation as to make 

 their injurious effects to the community exceed 

 the benefit to the community. 



There would be only two restriclions necessary 

 to inipot^e, and to keep always in (o(ce, upon lhi» 

 system of otherwise li^ee but uii()rivileife(l bank- 

 ing. One would be lo forbid the circulalion of 

 noieg, as money, of less than a ceriain denomina- 

 tion — wheiher 85, §10 or ^20. This would be 

 to prevent ihe imisiince to tlie couniry ol a small 

 note currency in tiny shape, and lor winch there 

 would be i»euher need nor excuse, when the ge- 

 neral sysiem would operate lo preserve enough 

 specie lor all small denlings. And neither would 

 It be difficul , under such circumstances, lo efi'eci- 

 ually prohibit ^rnall iioies. They have not been, 

 and caniiut bi^, driven from circulation at present, 

 even by ihe severest penalties imposed by law — 

 and all such laws become a dead leiier — because 

 the operation of law itself has served to expel sil- 

 ver Irom circulation. Smaller sums than S5, or 

 even ^1, must be used; and if the legal penalty 

 lor circulaiing any such were made inlamy and 

 deaih, ihe law would be as powerless as are the 

 present pecuniary |)eiialiies. But if specie be but 

 permitted by law to circulaie, iheie would never 

 be any difficulty in preveniing by law ihe circula- 

 tion of eiiher /breign or doinesiic bills lor small • 

 amounts. 



Tiie next rcstrittion on all banks should be, to 

 compel the perlormaiice by them ot' whatever 

 ihey had undertaken to do, and were pledged to 

 the couniry and the government lor ; and especi- 

 ally in regard to ihe prompt payment of specie 

 lor all nnies payable on demand, or certificates ol 

 deposite at the limit of time fixed by themselves 

 for the redempiion. ti is now a liashionable and 

 favorite assumption in defence of banks that fad 

 to pay their notes, that they then stand upon the 

 same ground, and ought to be considered precise- 

 ly as individual debiors who cannot convenit-nily 

 pay their bonds on the day when they become 

 due — and that the holder of the bank note has 

 the same remedy at law, as ihe person to whom 

 the bond was executed and is due. But the cases 

 are aliogelher different. The contingency of the 

 payment of a Lond not being punctual is under- 

 sitoud, and the consequent injury, and the remedy, 

 are duly weighed bclorehand ; and these consi- 

 derations very generally are in effect insured 

 against by an additional amount being given to 

 the bond, if lor the purchase of commodities. 

 Thus all purchases on time, for which bonds are 

 given, are at a greater advance upon the cash 

 price than merely the amount of legal interest lor 

 ihe time of credit. Bui bank notes were issued, 

 and passed into circulation, and, by expelling spe- 

 cie, became Ihe general or sole currency of the 

 couniry, so that every man is compelled to receive 

 and to use them as money, when no matter how 

 much depreciated subsi-quemly, upon the ground 

 of the perliect confidence of the early receivers ot 

 the notes that they wonid al any time be paid in 

 specie on demand. Wiihoul this general confi- 

 dence, the notes could never have obtained circu- 



