MARCH 20, 1832.] Coins and Currency. [H. OF R. use of specie was, as many gentlemen around him well On referring to the price current of Boston for some time knew, the condition of our gold coin. Gold, by our laws past, he found the premium on American gold usually regulating the mint, was undervalued, most probably by stated at four to five per cent. 0 er cent. He in error in the original calculations, at least four per cent.; The first topic of inquiry proposed by his resolution of course it did not circulate, but was exported to countries was the expediency of prompt payment in coin for bullion where it was more justly appreciated. The whole coinage delivered at the mint. At present the mint was wholly of the United States, from the establishment of the mint supplied with bullion, by banks or individuals. Governo 1831, inclusive, was about forty-one millions. About ment did not purchase or import the precious metals. A me-tenth of this, or four millions, was in gold, of which, merchant who sent bullion to the mint to be coined, must robably, a very small part remained in the country, and wait for some time before it could be returned to him in one in circulation. The expense of coining gold, as coin. The period varied according to the pressure of tated by the director of the mint, was about a half of one business or demand for coinage, from thirty to ninety days. We had, therefore, incurred upon our gold It might, perhaps, be stated on an average at forty days. oinage an expense of $20,000, without any correspond- Here, then, was a loss to the merchant of the interest on ng benefit. The gold coined in 1830 amounted to about his money during that period, which amounted, practically, ix hundred and forty thousand dollars, and in 1831 to so far as he was concerned, to a seignorage of one-half of even hundred and fourteen thousand. Of the latter, up. one per cent., although the Government derived no correards of half a million was the product of our own mines. spondent benefit. When bullion was delivered at the mint, ccording to the best accounts, these mines were becom- a certificate was issued, as soon as it was assayed, for the g more productive. New discoveries of the metal were return of the proper quantity of coin. These certificates ade, and better modes of working employed. It was were cashed by the banks at a discount of half of one bviously useless to go on coining, at much expense, half per cent. Now the Government had always, and always million or a million of gold annually, only that it might would have, on deposite in Philadelphia, over and above e sent abroad and melted down. These considerations what was wanted for current expenditures, a sum more fluenced the deliberations of the Committee on Coins of than sufficient to answer the purpose of prompt payment e last session, of which he had had the honor to be a for all the bullion that might be delivered. Indeed, it was ember, and the whole subject was treated with great apparent that, after a few of the first payments, the fund ility by the chairman, the honorable gentleman from would renew itself, falling in as fast as it went out. ew York, [Mr. C. P. WHITE,] in the report which he understood from the director of the mint that a hundred ade, and to which Mr. W. begged leave to refer gen- and sixty thousand dollars would answer the purpose. men for much valuable information. In the general Placing this sum at the disposition of the officer, under such inclusions of that report, Mr. W. then, and still concur- checks as already secure his present much higher respond, with one exception, which he felt bound to state. On sibilities, would enable Government to charge a seignorage e impossibility of maintaining gold and silver in concur- of half of one per cent. without any increase of expense nt circulation, assumed by that report, and, at that period, to those who deposited bullion to be coined, beyond what lieved in by himself, his faith had been somewhat shaken. they incurred under the present system. This had been The experience of France, and the opinions of such dis- more than once pointed out in the reports from the direc guished writers on the currency as Mr. Gallatin and Dr.tor of the mint, and it was to be presumed that the condiheatly, had led him to doubt the conclusion arrived at tion of the old mint, and the pressure of more urgent the committee, though sustained by the elaborate re- business, had alone prevented some legislation on a matter rt of the late Secretary of the Treasury on the subject of such obvious public advantage. It was to be consia double standard. Were it admitted, however, that dered, however, that the usual depositors, for coining, were simpossible to preserve gold and silver in simultaneous, the banks, to whom prompt payment was not commonly ncurrent, and promiscuous circulation, the conclusion of so much consequence as to individuals, and that the ght to be, that we should not coin gold at all, unless, delay might possibly be somewhat less than he had estileed, for the purpose of making it a limited tender in mated it when the new mint went into full operation. all payments only. This the report of the last session When the mint was first established, it was computed it oposed to do, and so far was consistent with itself. The would supply all the coin necessary for the circulation of Tupon the table, he believed, made gold a tender to an the country in three years. The failure of that expectalimited amount, and to pass it, the House must believe, tion would show there was some defect in our system of he now felt inclined to believe, that it was not imprac-coinage and currency. At present, Mr. Gallatin estimated able to maintain a double standard. In relation to the the specie in circulation at ten millions. The director of e adopted, some gentlemen might imagine gold was still the mint, a short time since, computed the whole of our timated too low, and that he, [Mr. W.] in stating it to be coin remaining in the United States at seventeen millions. dervalued only four per cent., was in error. This This amount, he stated, might be doubled by the operapposition might derive countenance from the higher tions of the new mint in three years. But it was clearly emium sometimes stated for American gold. But gen- useless to go on coining merely for exportation. If we men must remember that a portion of this premium is retained only seventeen millions out of a coinage of fortyen the difference between the real and apparent par of one, we had incurred an expense of two hundred and change. They must consider that the pound sterling, twenty thousand dollars, independent of buildings, to very imated by our revenue laws at four dollars and forty-four little purpose. nts, was, in reality, worth four dollars and eighty cents; The second topic of inquiry proposed by the resolution d that silver in England was subject to a seignorage of was the expediency of requiring a seignorage not exceedout six and one-sixth per cent., sustaining the whole ing the expense of coining. The House had seen, by the pense of coinage, while gold was coined free of any explanations he had had the honor to give already, that arge to the owner. Another cause also frequently the delay attending the process of coining amounted to a creased the premium on gold, and that was the excessive seignorage of one-half of one per cent. to all practical ues of paper. Wherever a paper currency was in purposes, except the profit of the Government. The cess, although nominally redeemable in specie, or even expense of coining silver, he found, was nearly one per ally paid in metallic money of some description, it would, cent., that of gold half of one per cent. The annual course, always be paid in the description of specie expenditure of the mint had been about thirty thousand hich was least wanted for exportation, and that which dollars. Upwards of fifty thousand would be required as most wanted would, therefore, command a premium. during the present year; but this included incidental ex VOL. VIII.-139 H. or R.] Coins and Currency. [MARCH 20, 1832 him, therefore, that a high seignorage or tax upon com would prevent its exportation. Upon the whole, then, considering the extreme danger of tampering with the currency, of which no one could be more fully aware than himself, he was not disposed to ex tend the charge for seignorage beyond the actual expense of coining. The mode in which this seignorage should be charged, was a matter of some consequence. penses which would not again recur. The coinage of the ling, at the par of exchange, say four dollars and eight past year was nearly four millions; that of the present was cents, before cost forty-eight eagles, it would now cos expected to reach six. The whole expense of the esta- fifty-two eagles, and it would be the same thing to the blishment, since its commencement, exclusive of buildings, merchant whether he took the fifty-two diminished eagles was about one million. To the extent of substituting a and sent them abroad, or employed them at home to bu charge for seignorage not exceeding half of one per a bill for one hundred pounds, which he might have bough cent., with prompt payment, in place of a free coinage, before for forty-eight. He spoke, of course, in round num with the present delay, he had no difficulty. Beyond bers, without reference to freight and insurance, for which that he was unwilling at present to go. He had inserted a deduction would always be made. It did not appear to this branch of the inquiry, from a clear conviction to that extent, and would have been willing to enlarge it in deference to the opinion of other gentlemen of great ability, particularly the chairman of the Committee of Ways and Means, could he have seen the propriety of doing so. He knew many gentlemen entertained an opinion that the mint ought at least to support itself. He was aware that some believed a seignorage of four or five per cent., or even higher, might be imposed without inconvenience; Any alteration in the fineness or quantity of the metal that it would be merely in the nature of a tax upon coin, in the coins ought to be avoided. By all that he could and, like a tax on any other commodity, would have no learn, the best way of levying the tax was to take one other effect than to increase the price of the thing taxed. piece out of every two hundred pieces of gold, and one That it would, therefore, merely make coin dearer rela-out of every one hundred pieces of silver; or, perhaps, tively to bullion, and of course tend to prevent the ex-three pieces out of every four hundred of silver, as the portation of coin. He could not concur in these opinions, expense of the silver coinage in the new mint might not though he felt the full weight of Mr. Lowndes's authority. amount to more than three-fourths of one per cent. The question of seignorage was, in fact, open to many The next and most important subject of inquiry propes difficulties. It was, in some respects, equivalent to a de-ed by the resolution was the expediency of imposing a basement of the coin, and consequent depreciation of the duty on bank bills of small denominations. Six of the currency. It was true the coin would continue to circu- States already prohibited the circulation of these bills late at its nominal value, in spite of a deterioration much Pennsylvania, Virginia, Kentucky, Tennessee, Mississippi, more than equivalent to such a seignorage, at least if it were a tender only to a limited amount. The proof of this was to be found in the average deterioration of the smaller Spanish silver coins in use in this country, which might be safely stated as follows: Quarter dollar, and Louisiana. [Mr. HOWARD informed Mr. WILDE that Maryland had a few days since passed an act interdicting them.] He rejoiced to hear it. It was an act of wise and provident legislation; a mark of the good sense of that State, in whose welfare he should always feel the livelies 3 per cent. interest. Seven States, then, maintained the policy of 10 per cent. entire prohibition. Fourteen States had not yet adopted 17 per cent. it. Bills under five dollars were permitted to circulate The English silver coins were, at one period, and pro- Maine, New Hampshire, Massachusetts, Rhode Island, bably yet remained even still further deteriorated; their Connecticut, Vermont, New York, New Jersey, Delaware average deficiency was- Eighth of a dollar, Sixteenth of a dollar, Crowns, Half crowns, Shillings, 3 North Carolina, South Carolina, Georgia, Ohio, and Al per cent.bama. There were no State banks, he believed, in 9 per cent.nois, Indiana, or Missouri; and the United States' Bank, per cent. was well known, was restricted by its charter from issuing 38 per cent. bills below five dollars. Having visited most of thes 24 This merel Mr. W. begged leave to read a short extract from a de- States, he was enabled to say, as a matter of personal obe servedly celebrated writer on money, in confirmation of servation, that coin was plenty in those States where s his own notions respecting seignorage: "Dr. Adam Smith," notes were prohibited; but in the States where they were says Dr. Wheatly, "also conceived, with Sir James Stew- allowed, no metallic money was to be seen. art, that the excess might be obviated by the imposition of confirmed what had been repeatedly recognised as a a seignorage, from a natural conclusion that a duty on the of circulation by all eminent writers on the subject coin would have the effect of advancing its value above namely, that notes drove out specie, and an inferior pape bullion, in proportion to the extent; but as the value of currency superseded a better one. Thus it had frequent money exclusively depends upon its relative quantity, and ly been remarked, that wherever a depreciated pape as a seignorage can have no power to prevent a partial existed, it usurped the whole circulation; and, in sonie excess of currency, either by the produce of mines or the our large cities, it would be seen that the small note c overissue of paper, it can have no power to prevent the rency consisted almost entirely of the paper of count same sum from measuring in one country a less value than banks. The city banks in some of the cities, if he it measures in others, and, therefore, can have no opera- correctly informed, did not receive or redeem these sh tion to prevent a premium on foreign bills, and a conse-notes; and, as it was seldom worth the holders while quent excess in the market price of money. "A considerable duty has long been levied on the coin in Spain and Portugal; yet the impost has had no effect to raise the value of their money above its value elsewhere, when the proceeds of their American mines occasioned a relative excess in its quantity." return them to the banks that issued them, they were practically convertible into specie. He need not enlarge on the mischiefs of an inconvert ble paper currency, especially of small notes. E gentleman present, he presumed, would admit them Some of them were: Thus, for an example, said Mr. W., if one hundred 1. Loss to the public by the wear and tear, or rather th eagles were coined into one hundred and ten, the curren-destruction of the notes themselves. These notes laste cy would be increased, insofar as it consisted of eagles, ten about two years; some of them hardly as long. He woul per cent., and an equivalent depreciation must take place. hereafter attempt some estimate of that loss; for the pr The price of our commodities in eagles must rise. Bills sent he contented himself with stating the undeniable f on foreign countries would command a premium. If a that it fell principally upon a class of persons who were hill of exchange on England for one hundred pounds ster- least able to bear it. MARCH 20, 1832.] Coins and Currency. [H. OF R. 2. Loss from the insolvency of banks issuing small stood in 1826, their circulation was to cease in April, notes. 3. Loss by forgery. Of both these an estimate would also be submitted. They, too, fell most heavily on the poor and ignorant. urrency. 8 30 4 millions. 5 to 6 millions. 7 millions. 1829. This law did not extend to Scotland or Ireland. In 1828, it being found that the Scotch notes under £5 took the place in the North of England of the English small notes withdrawn, an act of Parliament was passed to 4. Sudden and extreme changes and revulsions of the prevent their circulation in England. The small note currency might, therefore, be said not now to exist in EngThese operated on the whole community, and their ex-land, though it was still allowed in Scotland and Ireland. ent and the degree to which they were increased by a It was true the returns for 1830 showed about £300,000 mall note circulation, could only be collected from a long of Bank of England notes outstanding; but, he presumed, and close examination of the vicissitudes of commerce and unless there had been some alteration in the law, with arrency. That they were great evils, would not be de- which he was unacquainted, they were only nominally ied; and that, if they were not in some degree produc- outstanding, having, in reality, been lost or destroyed. d, they were at least greatly aggravated, by the small The effect of suppressing the small note circulation in Eng. ote system, was a fact resting upon the authority of almost land, it was believed, had been highly salutary. The the best writers on money, and confirmed by the expe- amount of the metallic money in use had become equal to ience of the first commercial nation in the world. An that of the bank notes of every description. et of Parliament was passed in 1819, prohibiting the cir- It consisted of gold, - 22 millions. ulation of small notes in England after a certain period. Silver, receivable in payments under forty I consequence of the agricultural distress, they were al- shillings, wwed again in 1822; and the increase of small notes of te Bank of England, the country banks, and specie, soon mounted to an addition of forty per cent. on the whole rrency. To this cause, principally, some very ingenious He hoped to be pardoned for a short statement relative thors had attributed the overtrading and extravagant to the extent of the English small note currency. The eculations of 1824--'5. The amount of country bank Bank of England notes under £5 stood, from 1804 to tes of all denominations in circulation in England for 1809, at about me time prior to that year, as far as could be estimated 1810, om the stamp office returns, was about twelve millions. 1819, 1825 they had risen to between eighteen and nineteen illions. £4,400,000 sterling of gold was exported in one ar: part of it to South America, the country from which ually supplies of gold had been received. Prices of urse rapidly advanced, on some articles doubled, and, ith the advance of prices, increased the spirit of specution. Then came the reaction, the panic, as it was still led; the week when seventy-three banks failed, and e Bank of England itself was in danger, and saved only an accident; the state of things described by the e Mr. Huskisson, which, as he said, "if it had lasted week longer, must have put an end to all dealings beeen man and man, except in the way of barter." [Mr. HUBBARD, of New Hampshire, here inquired of . WILDE whether he would not prefer finishing his marks to-morrow, and Mr. W. professing an entire inference, Mr. H., who was anxious to proceed with the nsion bill reported by the committee of which he was airman, moved that the House proceed to the orders of e day, which was carried. On Wednesday the 21st, en Mr. WILDE was about to continue his remarks, Mr. AMBRELENG, who was obliged to leave the city that ɔrning, as one of the committee of inquiry on the affairs the United States' Bank, begged leave of Mr. W. to ggest an amendment, and offer a few observations on it. r. W. yielded the floor for that purpose, and Mr. C. ggested a modification of the resolution, so as to direct inquiry into the expediency of making gold a legal der in large, and silver a legal tender in small payments ly; the propriety of which he enforced by some approiate arguments. Mr. W. adopted the modification, and en resumed.] A brief sketch of British legislation on this subject might t be useless. The amount of English country bankers' notes under £5 were, in 1825, £7,800,000, which, in 1828, had been reduced to £2,150,000. Previous to 1795, the number of bankers in England and Wales was only 250 or 300. In 1808, they had increased to about 750. Between 1812 and 1814, to above 900. In the four succeeding years, they were so much diminished, (chiefly owing to failures,) that, in the year 1818 to 1819, the whole number was only about 600. After that, they increased so much, that in 1825 they were above 750, and in a very few months since that time about 100 of them failed. The circulation of Scotch notes under £5, (in Scotland,) from 1815 to 1825, varied from a million and a half to two millions. In Ireland, the average circulation of the Bank of Ireland notes under £5, from 1820 to 1825, was about £1,600,000. The average of the Irish country bankers' notes under £5, in circulation, from 1820 to 1824, was less than half a million; in 1824, it rose to nearly one million, and in 1825 to upwards of a million. In 1826, it fell to about £663,000. Scotch and Irish notes, of small denominations, did not appear to have entered into the circulation of England, until after 1826, when the Scotch small notes made their appearance in the North of England, and occasioned the act of 1828, as before stated. Mr. W. apologized for the length and dryness of this array of figures, which, however, was, in some respects, necessary to a proper understanding of the subject. Whatever, he continued, might be the other inconveniences and expense of a small note currency, which had already been in part adverted to, and would, by and by, be more minutely stated in reference to our own country, the sudden and violent fluctuations which it caused or agThe issue of notes under £5 was prohibited by law, at gravated was a capital objection. He was aware that e suggestion, it was said, of the justly celebrated Adam there was a difference of opinion as to the influence of a nith, from the year 1772 to the period of the bank re- small note circulation upon those ruinous revulsions to riction in 1797. From 1797 it was permitted until 1819, which a paper currency was peculiarly subject; but it was hen arrangements were making for the resumption of a difference of degree, rather than of principle. The ecie payments, and among them the prospective prohi- voice of almost every respectable writer on political ecoon of small notes. This policy was unfortunately de-nomy, from Adam Smith to Mr. Senior, and of nearly ted from in 1822, when the period of their circulation every politician of sagacity, from Mr. Burke to Mr. Gallasextended. It was resumed in 1826, after the expe- tin, was decidedly against them. The difference of opience of their evil consequences in 1825; and as the law nion was only as to the extent to which the fluctuations of H. OF R.] Coins and Currency. [MARCH 20, 1832 price, overtrading, the spirit of insane speculation, and largely. The demand was accordingly improving, and by the occasional widely spread destruction of trade and cre- degrees the prices would have risen as the gold came in. dit, so frequent of late years, was to be imputed to the usc But the issue of small notes increased the demand suddenor abuse of paper of low denominations. ly and surprisingly; this, with the further augmentation He, and some of the writers whose works he had con- in the currency, raised our prices and increased general sulted, might seem inclined to overrate their effect. But production, which, by giving employment to a great num it must be remarked, that whatever might be the cause to ber of persons connected with our manufactures, (who which different authors were disposed to impute the had been only partially employed,) caused a further extengreatest degree of energy and consequence, nearly all sion of demand. Had the currency been left to increase agreed in believing that a circulation of small notes was an by the natural importation of gold, prices would have risen important accessory. Thus, Mr. Tooke, in his able and more slowly and to a less extent: as it was, they rose from popular work on high and low prices, while imputing an undue degree of depression to the opposite extreme, mainly to the seasons the deficiency or anticipated deficien- and this led to a violent reaction." cy of crops, the consequent advance of price and spirit Mr. Yeates, therefore, insists, in another part of his of speculation, the increase of private bills of exchange work, that "where a large part of the currency of a and promissory notes, the overtrading, further increase of country consists of bank notes, of such small amounts as prices and subsequent revulsion, did not by any means to supply the place of specie, the quantity of money, as omit the influence of the country banks in mischievously well as the rapidity of circulation, will fluctuate more fre swelling the circulation at one period, and ruinously con- quently and extensively than if it consisted of the precious tracting it at another. Mr. Yeates, in his essay on currency, metals only." And he subsequently asserts: "On this did not think Mr. Tooke attached sufficient importance to subject all are agreed. It is, in fact, one of the most this latter cause, and insisted that the increase of private serious inconveniences attached to the use of such a bills of exchange, promissory notes of individuals, or even species of paper currency as is supplied by the country bank bills of large denominations, would be inadequate bankers of England, that it is extremely apt to be, on the to affect, to any dangerous degree, the retail trade of the one hand, suddenly and unduly contracted, in periods of country, and that the greater portion of the rise in prices revulsion, or when the price of any large class of com in that trade was to be imputed to the small notes. modities is on the decline; and that, on the other, it is very apt to be as unduly enlarged in periods when confidence is high and prices generally on the advance." Mr. W. begged permission to read a short passage from this author, in illustration of his peculiar opinions. "There is every reason to think that, at the end of the year 1822, or the beginning of 1823, the quantity of currency in Great Britain was extremely small; it had gradually decreased since 1818, (when it was very high,) and it was at the lowest about the latter end of 1822. From that time, it increased so rapidly during the next two years, that there was an increased circulation, on the whole, including specie and bank notes, of about 40 per cent. By the returns, (Appendix C,) it appears that the increase of country bankers' notes was from £12,000,000 to £19,000,000 or £20,000,000; these consisted of £1, £2 and £3 notes, circulating almost entirely amongst the consumers, shopkeepers, and small dealers; the metallic circulation was increased in the same period, probably from £7,000,000 or £8,000,000, to £14,000,000 or £15,000,000, after deducting the quantity exported again. The Bank of England notes were at the same time increased about £3,000,000 in notes of £5 chiefly. It therefore appears that the whole currency which circulates the retail trade of the country increased about 40 per cent, in two years. The revulsion of 1824-1825 was not, by any means, confined to Great Britain. Similar causes produced similar effects in this country; and extravagant specula tions, the increase of paper, and rise of prices, terminated here, as they did there, in bankruptcy and ruin. Ther operation in the cotton trade came more immediately within his knowledge. In the spring of the latter year, he was in one of our largest cities when the rage for specu lation was at its height. He conversed with some of the most prudent and intelligent merchants who had been seized with the general frenzy. They attempted to persuade him, by a series of ingenious arguments and calculations, that nothing could be better founded than the adventures they were carrying on; that the advance of prices rested on the most solid grounds, and large pretts were infallible. Fifty, eighty, one hundred, two hundred thousand dollars, made, or certain to be made, were spoken of as familiarly as possible. Nothing wanting but to realize it. He endeavored in vain to im j press his own conviction on some of his friends that the whole was illusory, and that the violence of the recul would be proportioned to the overtrading and expansion of the currency. Both parties, as is common, continued a their own opinion. Some of them would probably s remember the conversation. on cotton No one a "Now it would be impossible for this extravagant increase to take place if our currency had been metallic; we could not have obtained the specie requisite for this purpose, without exporting £10,000,000 or £12,000,000 more of manufactures and other goods than we did, which would have been out of our power; we did actually export Mr. W. embarked in May for home, and on his arrival more in 1824 and 1825 than the usual quantity, and, in or- there found all the external signs of most extraordinary der to make such large additional exports, prices must have prosperity. Every one had grown suddenly rich. One been lower than they were, and new markets must have had made sixty, another ninety, another a hundred and been found. If, therefore, the small note act of 1822 fifty thousand dollars. Some of his mercantile friends, had not been passed, our circulation in 1825 would pro- young men just set up in business, with a small capital, bably have been not much above £45,000,000 altogether, had become independent in one winter. (about five millions increase on that of 1822,) instead of knowledged a profit of less than twenty thousand dollars. about £55,000,000, which it appears to have been. The Every one had his project for the enjoyment of his newly prices of goods would, with such a small increase of mo- acquired affluence. One intended to buy a plantation ney, adapted to the retail trade of the country, have risen and retire. Another had made his arrangements to trave much less than they did; for commodities cannot be raised over Europe. The least fortunate or ambitious looked to in price by the will of the producers; the dealers will not a neat country box and an equipage, or a family trip to give them advanced prices, unless the consumers can give a corresponding advance. In 1820 to 1823, indeed prices of most goods were so low, that the producers did not generally realize fair profits, and there was every motive for the dealers to increase their stocks, and for the customers, both in the foreign and home markets, to consume more Saratoga and the lakes. Mr. W. almost began to doubt his senses, and to blame the folly which had kept him un profitably delving in the gloomy depths of law and politics, while fortune had been showering down her gifts on al around him. In one little month, he lamented to say, all their delightful visions were destroyed. Consternation and ruin took their place; failures for immense sums were of daily occurrence, and he was perpetually obliged to sympathize, as he did most sincerely, in the distress of those who, but a little while before, he had as cordially congratulated. Nor was this a solitary instance. In the years 1818-1819, something of the same sort, and from cau-es similar, in some degree, took place. Gentlemen might remember it, and the shades of difference. He did not feel justified in detaining the House by an enumeration of them; but would pass to the most curious, and, perhaps, the only original part of his subject—an attempt to estimate the comparative expense of a small note and specie circulation. [H. of R. circulation, was that arising to the holders of small notes, from the insolvency of banks issuing them. This Mr. W. estimated at one and one-eighth of one per cent. per annum, which, upon a circulation of ten millions, for a hundred years, amounted to eleven million two hundred and fifty thousand dollars. The grounds on which he made this estimate were these: From 1811 to 1830, (nineteen years and a half, being from January of one year to July of the other,) according to Mr. Gallatin's table, one hundred and sixty-five banks failed. The capital of one hundred and twenty-nine of these amounted to a little upwards of twenty-four millions. This would give for the whole a capital of thirty millions. Every one who heard him was well aware that the great If it were supposed that they issued notes to the amount recommendation urged in favor of a paper currency was of their capital, thirty millions, and the loss by their failits cheapness. By using it, a large proportion of specie ure was fifty per cent., or fifteen millions, allowing onecould be dispensed with, and, by being exported, might fifth of this to fall on the small notes, it would be three be added to the productive capital of the country. Mr. millions. Three millions, for twenty years, would be in Gallatin estimated the annual saving by the use of paper a hundred years fifteen millions, or one and a half per money, instead of specie, upon a circulation of one hun-cent. per annum, on a small note circulation of ten mildred and nine millions, (including deposites,) at five millions lions. A medium between these two calculations gave one and one-eighth of one per cent. per annum, or eleven million two hundred and fifty thousand dollars loss on a circulation of ten millions for one hundred years, which had been adopted. per annum. The notes of five dollars and under, in cir- If it were supposed that they issued notes to only half culation in the United States, were estimated by Mr. the amount of their capital, and the loss on their failure Gallatin at one-fifth of the whole paper of the banks, or was fifty per cent., then the loss on small notes, arising about ten millions. This estimate was certainly not too from insolvency, would be three-quarters of one per cent. high-perhaps it was rather below the mark. The amount per annum, or seven million five hundred thousand of bank notes in circulation, at present, was assuredly dollars. greater than when Mr. Gallatin wrote; since the returns of the banks of four States only added to those of the Bank of the United States, showed a circulation, including deposites, in round numbers, of about ninety-four millions. Taking the small notes, however, at Mr. G.'s estimate of ten millions, the saving by them could not exceed four to five hundred thousand dollars, upon the principle of Mr. Gallatin's computation. Mr. W. had been led into a minute calculation on this subject, and attempted to frame, upon the best data he could collect, an estimate of the comparative expense of a circulation consisting of coin, and one consisting of small notes of the like amount, viz. ten millions, and maintained for the same period, one bundred years. This, to be sure, was a long time in the life of an individual, but not in the existence of a nation. He was not apprised that the length of time, however, made any material difference in the calculations, except to render them more striking. He presented this estimate with some confidence in the correctness of its principle, but much diffidence in the accuracy of its details; though he had spared no pains to collect information. His errors, however, would be harmless, since he should lay before the House the whole of the data on which his computations were made, and every gentleman who thought proper to investigate the subject could, therefore, detect them. In confirmation of this estimate, he would add that the returns to the Parliament of Great Britain showed the failure of two hundred and seventy-four banks in England from 1790 to 1818. If the loss by each were estimated at twenty thousand pounds sterling, this would be, per annum, one hundred and ninety-five thousand seven hundred and fourteen pounds, which, on a circulation of fifteen millions of notes, about the average of that description of paper, was more than one and a quarter per cent., giving, for three millions of small notes (that is, one-fifth of the whole) one-fifth of £195,714 or £39,142. This would make the loss on ten millions of small notes, for a hundred years, one and a quarter per cent. per annum, or twelve million five hundred thousand dollars. It would be recollected that the United States had sustained a loss, in the collection of their revenue, arising from insolvent banks, of one million of dollars. This loss, it was believed, might be said to have occurred within the five years from 1814 to 1818, both inclusive. The receipts into the treasury, during those five years, were upwards of one hundred and ninety-eight millions of dollars; The first reflection that was apt to strike us in relation the loss, therefore, over one-half of one per cent. on the to a small note currency, was, that the people paid an in- whole period, or one-tenth of one per cent. per annum terest on these notes, which, on ten millions, at six per on the whole receipts. But if it were considered, as cent. per annum, amounted to six hundred thousand dol-doubtless it ought to be, that of these receipts sixty-eight lars annually, and in a hundred years to sixty millions. millions and upwards were from loans and treasury notes, There was no doubt of the fact; the banks received the and ninety-three millions from the customs, on the notes interest, and it was precisely for the sake of that interest received from none of which sources was any loss sustainthat the small notes were issued. But, on the other hand, ed, then the whole loss was incurred upon the paper reit was to be considered that, if a specie currency of the ceived in payment of the public lands, direct taxes, intersame amount were to be used for the like time, the in-nal revenue, and other incidental receipts, amounting, in terest upon ten millions of specie must be lost: or, to make the matter plainer, let it be supposed we should be compelled to borrow this ten millions of specie from a foreign nation: in that event, we must pay interest for it. So that the interest paid to the banks, though it must be estimated in their profits, to show what they gained by the small note system, could not be taken into account as part of the loss or charge to the public on a small note currency, that being equal either way. The first item of loss to the public by the small note all, to a little above thirty-six millions, upon which amount the loss of one million makes more than one and threequarters per cent. per annum. If such were the loss to the Government itself, in spite of all its opportunities of information, its priority of payment, and the vigilance and sagacity of its officers, could it be doubted that the loss to the poor and ignorant must be much greater? Upon all these facts taken together, he had estimated the loss to the public, arising from the insolvency of banks issuing small notes, as equal to eleven million two hun- |