on loans and discounts to five per cent. per annum, I refer to the fact, stated by Colwell in his able work on the ways and means of payment. He estimates the payments made through the banks, in 1857, at ninety thousand millions of dollars. If we divide this sum by six, estimating the several discounts at sixty days, it will give the sum of fifteen thousand millions of dollars under discount; the saving upon which, at the rate of two per cent. per annum, will be three hundred millions of dollars per annum ; and this sum, as Does he own a mine? He could obtain the funds. to open and work it. Does he own a water power? He could obtain the funds to erect a factory, to purchase machinery, and to pay the wages of labor. Does he wish to build a railroad? All that will be required will be an exhibit showing that such a road will benefit the public, and pay more than five per cent. dividends. Does he wish to build ships to compete with European combinations for the trade of the Pacific? All that will be required will be to show that the productive industry of America has so an annuity compounded at six per cent., far progressed in the manufacture of will give twenty-seven thousand two articles suited to the trade of China, hundred and sixty-four millions of dolNorthern Asia, and the South Pacific lars, a sum sufficient to build nine hunIslands, as to require American ships dred and eight thousand eight hundred to carry our surplus manufactures to miles of railroad, estimating the cost an appropriate market; and the six at thirty-thousand dollars per mile, as per cents. will become four per cent. the saving in thirty-two years on the convertible bonds, and furnish the discount on bank loans, without takfunds to build the ships, and, if neces- ing into account the immense amount sary, to furnish and maintain the navy of interest paid on transactions which that may be required to protect them do not go into the bank accounts. in every sea against every combina- These are sums which may well startle tion, whether English, French, or Ger- persons accustomed to estimate the man, or all combined. AN ABUNDANT AND CHEAP CURRENCY. transactions of the whole people of the United States by the standard of their own private dealings. But the data are within the comprehension of the simplest intelligence, and the conclusions are deduced by the plainest rules That some estimate may be formed of the saving which will result from the reduction of the rates of interest of arithmetic. CHAPTER XIX. SPECIE PAYMENTS. WIT ITH such data and these conclu- dead stock into active and productive stock, sions before us, the question of which produces something to the country." the currency resolves itself into the Mr. Calhoun, in his speech on the reinquiry of whether we should resume charter of the bank in March, 1834, specie payments before, by fostering said: our home industry, we have created a foreign export trade, creating a balance in our favor, which will prevent the export of specie in payment of the large tribute which we would otherwise pay to foreign creditors. Jacobs says: "The gold and silver in a country, contrary to the opinions of the vulgar, are the the least part of its wealth. They can "If we take the aggregate property of a community, that which forms the currency constitutes in value a very small proportion of the whole. What this proportion is in our country and other commercial and trading communities is somewhat uncertain. I speak conjecturally in fixing it as one to twenty-five or thirty, though I presume this is not far from the truth." Adam Smith tells us that: "A paper money consisting in bank notes, scarcely, under any of the changes of metal-issued by a people of undoubted credit, lic value which they may cause in other payable on demand without any condition, commodities, amount to a hundredth part and in fact always readily paid as soon as of the wealth of the country; and in a presented, is, in every respect, equal in value prosperous state, they will bear a much less to gold and silver money." proportion. The possession of them is real wealth only in a small degree, though every addition to them produces real wealth by the stimulus which the apparent advance of prices gives to every kind of industrious exertion." Adam Smith says: Ricardo says: "If there was perfect security that the power of issuing paper money would not be abused; that is, if there was perfect security for its being used in such quantities as to preserve its value relatively to the mass of circulating commodities nearly uniform, the precious metals might be entirely discarded from circulation." This we assume to be the real and PROPER TEST OF THE VALUE OF PAPER "The gold and silver which circulates in any country, and by means of which the produce of its land and labor is annually circulated and distributed to the proper consumers, is, in the same manner as the ready money of the dealer, all dead stock; it is a very valuable part of the capital of the country which produces nothing to the country. The judicious operations of bank- its value relatively to the mass of cir ing by substituting paper in the room of a culating commodities? If the quantity great part of this gold and silver, enables in circulation, be so restricted by makthe country to convert a great part of this 'ing it convertible into specie, or into Is the quantity such as to maintain four per cent. convertible bonds, as to and although the coinage of gold for preserve the same relative value to the the year 1857 was $114,512,245, the mass of circulating commodities, then bank of France was compelled, bethe fact that the same quantity of paper tween the 1st of July, 1855, and the will purchase the same quantity of 1st of January, 1858, to purchase these commodities, is proof that the $212,000,000 in gold. Whence did quantity is not in excess, and vice versa. France get her supply of gold, and By making the bank note convertible why did she export her silver? The into currency, we prevent an over-custom-house returns show that durissue of bank notes; and by making ing the seven years ending July, 1857, the currency convertible into four per cent. convertible bonds, we prevent an over-issue of currency; and by mak ing the bonds convertible into currency, we prevent a ruinous contraction of the currency; and, by maintaining the proper quantity in circulation, we prevent the depreciation of the exchangeable values of property; which was took our gold to pay for it. the purpose of the Constitution when the export of gold from the United States was $320,000,000; and the official statements show that, during the years 1856 and 1857, England sent to India, by one steamboat company, chiefly in silver, $154,591,885. England took the French silver to pay the expense of her war in India, and she the power of regulating the value of WHAT WAS THE EFFECT OF THIS LARGE EXmoney was given to Congress. And PORT OF OUR GOLD? as the value of money depends on the Gibbon, in his account of the crisis quantity, the question is, can Congress of 1857, says: so regulate the action of the bank of England, and of the "money mer-banks had mostly been suspended, and the "The regular discount of bills by the chants" of Europe, as to prevent an street rates for money, even on unquestionundue export of specie, under a sys-able securities, rose to three, four, and five tem of specie payments? I believe per cent. a month. On the ordinary securi that Congress cannot do this other- ties of merchants, such as promissory notes wise than by giving us a legal tender, which will not be a legal tender in London. We need not go beyond the crisis of 1857 to demonstrate this. THE CRISIS OF 1857. and bills of exchange, money was not to be had at any rate. House after house, of high commercial repute, succumbed to the panic, and several heavy banking firms were added. to the list of failures." The New York Commercial Agency The money unit of England is gold. tells us that they had on their books. In France it was silver, until the dis- statements showing the commercial covery of gold in California and Aus- transactions and condition of 204,081 tralia. The average annual coinage firms; and that the loss by 337-frauduof silver in France, for a series of lent firms was $5,222,500; by 542 years preceding 1848, was $16,200,000. firms unable to pay, was $20,300,000; During the eight years ending Decem- by 5,123 failures, $143,780,000; that ber, 1857, it was but $8,091,400 per the commercial debt of the country annum, and from January, 1852, to merchants was $2,282,000,000; and January, 1858, the export of silver was that the business transactions during $225,400,000 more than the import; the year was $4,564,000,000. Now what was the cause of these ruinous in the several industrial employments losses? Gibbon tells us that "the of a prosperous community. banks suffered depletion in coin to the amount of $5,483,864; and that they could not withstand such an onslaught!" The cause of the crisis is manifest. The loans, on August 8, 1857, were $122,077,252; on November 28, they were reduced to $94,963,130. The loans were predicated, not on the ability of the borrowers to pay their indebtedness in specie, but upon the exchangeable values of the mass of commodities under their control, and upon the sale of which they relied for the means of payment. The pressure for money in London caused by the The value of her real estate. ... 417,952,228 9,812,197 The value of her personal prop erty was...... 239,069,108 The value of farms was...... 371,696,211 The value of farming imple ments and machinery....... 7,021,772 47,794,256 11,212,616 794,024 That her product of Indian (in bushels)..... 10,184,865 That her product of tobacco EXPENDITURES OF THE ARMY IN INDIA, Caused so great a demand for specie to be remitted to London, as to so reduce the exchangeable value of the commodities which were the means of payment, as to destroy that private credit upon which the $4,564,000,000 of the business transactions of that year were predicated. If we assume that the depreciation of the price of the products of the soil, and of labor given in payment by the consumers of WHY THE GOVERNMENT SHOULD PROTECT the $4,564,000,000 worth of commodities was but twenty-five per cent., it will be seen that the loss of less than six millions of dollars in specie by the banks of New York, caused a depreci- 3,540 females, employed in manufacation in the exchangeable values of American property of more than one thousand millions of dollars. RELATIVE SUM OF CASH AND OTHER ... $11,438,441 VALUE OF CREDIT. If to this vast aggregate of capital be added $51,300,000, given as the product, in 1860, of 33,050 males and tures in the state, and we compare the transactions connected with the capital thus invested in this mass of property, with the sum of the specie held by, and the circulation of the banks, we will see how small is the sum of money as That the sum in cash required to pay compared with the credit used in these wages and develop the agricultural, transactions; proving conclusively mineral, and manufacturing resources that the business and credit of the of the country is much less than many country is not predicated on the specie believe, will appear by a careful analy-held by the banks, nor upon the bank sis of the uses of money and of credit notes, but upon the property, the prod eight millions of specie would be taken uct of the soil and of labor, in transitu from the producer to the consumer. It should be the especial duty of the government to protect and sustain the value of this credit while engaged in of the heart contains one ounce of the production of the mass of commod-blood. The heart contracts four thou ities which constitute the elements of sand times every hour, consequently commerce, and to maintain the values there passes through it two hundred of those commodities while they are and fifty pounds of blood every hour. being placed upon the market. For it The blood is the vital principle of aniis upon the maintenance of the value mal life, and, therefore, as the heart, of the credit thus used, and not upon by the force of its contraction, drives the small sum of specie held by the the whole of the blood of the human banks, that the stability of the values system, ten times every hour, through of property, and, consequently, the all the thousand ramifications of veins prosperity of the community, depends. and arteries, so does a proper use of Their credit rests upon the mass of the money of the country, acting their property-the credit of the banks through the avenues of trade, mainis made to rest on the pitiful sum of tain the vitality of credit, as the mespecie held by the banks! I again dium of commercial exchanges, giving ask the reader to contrast the value of a healthful stability to the values of the specie held by the banks with the property; and, therefore, as the sudvalue of the few articles as given in den loss of blood will prevent the acthe above extract from the census; tion of the heart and cause the system and I ask-emphatically ask-whether to sink until, by air and food, the that is a wise system of finance which requisite quantity is restored, so an attempts to regulate the value, not undue export of the money of any only of the mass of property indicated country will so depress the prices of by the extract, but of all our property, commodities as to destroy the credit by the small sum of specie held by the which is the indispensable agent in banks, and leaves that small sum of the transfer of the products of the soil specie subject to a foreign moneyed and of labor from the producer to the corporation, managed and controlled consumer. by an association of foreign capitalists, jealous of our progress, our rivals in power, in manufactures and commerce? Such I assert and maintain would be the inevitable consequence of compulsory specie payments. WHAT WAS THE CAUSE OF THE CRISIS OF 1857? JACOBS TELLS US THAT THE QUANTITY Of money, as compared with the values of the property of a prosperous community, is not more than one per cent., and hence, although the average quantity of specie in the bank of England, requisite to maintain its value at the proper level, is not more than ten millions of pounds sterling, there were at one time in 1857 in circulation, as appears by the official statement of the The city banks of New York reduced their loans in a few days from one hundred and twenty millions of dollars to ninety-four millions of dollars. Why did these banks so reduce stamp-office, nine hundred millions of their loans? They feared that their dollars of bills of exchange; and by |