CHAPTER IV.

ON THE IMPOLICY OF ADHERING TO OUR PRESENT MINT PROPORTIONS BETWEEN GOLD AND SILVER.

It may be assumed as a principle that will hardly be disputed, that the soundness of a mixed currency of coin and paper such as we are likely ever to have in the United States, does not depend upon the fact whether gold or silver be the basis. A currency may be quite as sound where silver is the only or chief metal that circulates, as where gold is the only or chief metal. This is evident from the well known fact, that the currency of France which is of silver, is not more liable to fluctuate than that of Great Britain which is of gold. I might even argue that it was in point of fact less fluctuating, but as all I wish to establish is equality, it is not necessary that I should take that ground.

It would seem that the great object of our act of June, 1834, was to establish a gold currency, under the belief that the tendency of gold to drive paper out of circulation would be stronger than that of silver; and on that account the mint proportions were changed with the professed object of drawing gold into the country in preference to silver, when the course of trade should lead to the importation of the precious metals. There can be no doubt, that had congress possessed the right of prohibiting the circulation throughout the United States of bank notes of a less denomination than ten dollars, a gold currency could have been introduced in the place of five dollar notes; but as it possessed no such power, and as there was not the slightest probability that all the state legislatures would have co-operated in bringing about such a result, the measure was, to say the least of it premature.

But even admitting that all notes of a less denomi

nation than ten or even twenty dollars could have been proscribed, I would ask, whether such a measure would have exempted the currency from all liability to fluctuations? This question can perhaps best be answered by referring to the experience of Great Britain. In that country, no note is issued by the Bank of England, or by any joint-stock or private bank, of a less denomination than five pounds sterling, equal to upwards of twenty-four dollars, and yet England has been subject to many great fluctuations in her currency, one of which, that of 1797, brought all her banks to a stoppage of specie payments; and another of which in 1825, was very near bringing about the same result. It is not then the fact, of a mixed currency having gold or silver for its basis, which determines its stability. Our own experience of forty-five years out of fifty-one since the establishment of the government, during the whole of which time silver was almost the exclusive metal that circulated, is sufficient to settle that question, and no one, it is presumed, will maintain the proposition, that the interests of the great mass of the people are not as well promoted by the right of demanding silver for a bank note, as of demanding gold. Indeed, if we take into consideration the universal knowledge which prevails as to silver coins, the familiarity of every body with dollars and half dollars, the vast number of persons who seldom have five dollars in money on hand at a time, the less liability of being cheated with silver than with gold, and the additional fact that many existing ground rent deeds, bonds, and mortgages, expressly call for payment in silver dollars, it would not be hazarding too much to say, that silver is a more convenient coin for the people of the United States than gold. If then it can be shown, that the possession of a gold currency in preference to a silver one, would be not only productive of no positive benefit to the community, but would be attended with positive mischief to the great interests of the country, all parties ought to unite in abandoning the project.

And this brings me to the point, to which the preceding remarks were designed to be introductory.

Prior to the passage of the gold bill above referred to, the metallic currency of the United States had been virtually, as above stated, a currency of silver since the establishment of the government, gold very rarely appearing, whilst that of Great Britain was of gold. The consequence was, that the currency of each was independent of the other, and the contraction or expansion of each did not necessarily act upon the other. The contraction in England, which preceded the resumption of specie payments, in 1821, after a long suspension of twenty-four years, produced no convulsion on this side of the Atlantic; nor did our contraction, distressing and durable as it was, after the removal of the public deposites from the Bank of the United States, on the 1st of October, 1833, which brought down the prices of stocks from 20 to 50 per cent., and led to the importation of 3,793, 293 dollars in silver from England alone, during the year ending on 30th September, 1834, produce any convulsion whatever in that country.* Such would have

* During the contraction last referred to, which occasioned a panic that continued from October, 1833, to July, 1834, exchange upon London, at New York, the market of which regulates the rate for all the other cities, fell greatly below the ordinary limits. In February, 1834, the pressure for money was so great, that bills were sold, for a short period, as low as one to two per cent. below the nominal par of that period, which was, in reality, nine to ten per cent. below the true par. A great fall, also, took place in every species of stocks, property and merchandise, whilst the discount on good commercial paper rose to two or three per cent. a month.

Notwithstanding this great pressure, however, it was not felt at all in England, except, perhaps, in the diminished remittances of merchants, so that her currency remained not only without the slightest contraction, but actually experienced an augmentation, to the great advantage of our shippers, whose cotton

+ Aggregate amount of notes circulated in England and Wales, by the Bank of England, by private banks, and by joint stock banks and their branches, at the following dates, as published in a table appen

continued to be the case, had the mint regulations remained without alteration; but no sooner was gold, by a change in its relative value to silver, rendered the most profitable of the two metals to import, than we found the currency of England disturbed to a degree that rendered necessary an immediate reduction of her paper issues, although the amount of gold drawn from her between the passage of the law in June, 1834, and the 30th of September, of the same year, was but 1,922,960 dollars. To the importations of gold in the years 1835 and 1836, instead of silver, may be ascribed that further contraction of the British currency, which led to the crisis of the latter year, that was so fatal to American credits and American cotton, by which millions of dollars were lost to the country.

Now as like causes will produce like effects, it behoves us to examine well into this matter, and if we find that we have committed an error, it is our duty to retrace our steps. Thus far very little progress has been made towards introducing gold into actual circulation, notwithstanding that a large amount has been.

was sold without any reduction in price, as will be evident from the following quotations for uplands of the best quality, contained in letters from Liverpool houses of the greatest respectability. 1833.

ded to the report of the Secretary of the Treasury of 3d January,

1837, on the condition of the state banks.

imported,* still a long perseverance in the law will give us a gold currency, but it will be most dearly purchased. It will so closely ally our fortunes with those of Great Brittian, that no convulsion can take

*Tables of the imports and exports of gold and silver coin and bullion, for the last five years.