cause, in the course of its adoption, a collision between specie and paper, there would be experienced but one shock; and that over, another could not be apprehended; so that a remedy would be preferable to the present rotten system, that yearly threatens a return of the same shock, even on the supposition, that the remedy would produce an inconvenience, equal in extent and degree; which, under no circumstances, could it produce. But after all, what is the inconvenience, or damage, that a corrective of the excess of paper credits would lead to ? Is it a general or merely a partial damage, that would not affect society in general, and only levy an inconsiderable loss upon a few heavy capitalists, who live on the interest of their mortgages and bonds, and grow rich by accumulating compound interest? Upon investigation, it will be ascertained to be the latter; a very partial disadvantage; for how small, in comparison with the great mass of the industrious classes, is that select few who hold mortgage bonds, or lots on ground rent? Should the great interests, then, of society, and the fountains of national wealth, be suffered to clog up, because a few proprietors of bonds and ground rents, would be subjected to the risk of a possible depreciation of their capital? It is only necessary to put the question, in order to settle the argument. An affirmative answer cannot be given !

But it does not necessarily follow, that these proprietors of mortgage bonds and ground rents would suffer any loss it is a possible contingency, but not a certain disaster. It may be entirely averted, even as a possible contingency, by an expedient which was adopted, I am informed, immediately subsequent upon the depreciation of the continental money—that a court of equity shall adjust the real value of the nominal amount

of the bond, according to the current rate of money at the time being-and the difference between its value at the time of payment, and the delivery of the bond. By this method, all possible chances of detriment to any portion of the community will be avoided.

Currency is the instrument of exchange-the active representative of labour, or wealth;-and in this country we possess two kinds, paper and specie: bank bills, and gold and silver. As the nature of this subject does not appear to be very generally, or familiarly known, I shall at some length show my thoughts upon this topic; for nothing can be more interesting to the public, than that which affects every man's business more or less; which causes property to fluctuate in value; prices to rise and fall; and the profits of trade to vary with the scarcity or abundance of certain little pictures, denominated bank bills, ornamented with the head of Washington at one end, and that of Franklin at the other, without, however, attempting to typify the wisdom and patriotism of the one, or the economy and wit of the other.

The scarcity of specie being produced, as I before proved, by the enormous quantity of our paper credits, as the primary cause, and the wrong balance of trade, as the secondary one; for the former in a great and essential manner begets the latter; the public soon grow distrustful of the stability of those very riches, which they were themselves so eager to create. Public credit is established, or overturned, by public opinion. If the precious metals are observed to be scarce, the mere preference, in individual transactions, of selling for specie, instead of bank notes, gives a motion to the wheel of credit which every successive turn increases, till it whirls round with destructive velocity; and like the

windlass, it only stops when it has run to the end of the chain—that is, till paper credits have lost all their value, and are universally refused in payment of commodities. Such was the dreadful shock experienced by the American people, with the continental money. The depreciation at first was scarcely observable; as soon as it was observed it spread like contagion, and the most opulent and virtuous men were suddenly reduced to all the pinching straits of unexpected poverty.

A mere preference of specie, is a depreciation of paper credits. A merchant will dispose of his goods, to be paid in hard money, at one half or one per cent. less, than for bank notes. This depreciation daily extends itself; for every one is eagerly striving to obtain specie-some for the purposes of trade, others to hoard-and the scarcity augments with the demand, till it ultimately disappears entirely from circulation.

In this case the scarcity of the precious metals, is not to be distinguished from the redundancy of paper, so far as it regards the consequence. There is, however, a real difference between the two exigencies. There may exist an actual scarcity of specie-when little is to be found hoarded, or secreted in the country. This produces the effect above described. There may exist a comparative scarcity only. Thus, there may be ten millions of the precious metals in the country, out of general circulation, and a redundancy of the paper credits amounting to one or two hundred millions may cause a depreciation în the latter, and give rise to a premium for the former. The two causes, operate conjointly to prostrate public credit at the present moment.

The vast addition recently made to our banking capital, now incommodes the community, but it is in a manner to which they will not be sensible, till it grows

to a more serious head. It requires five, and in some instances, ten times the sum now, to purchase an acre of land, or any other necessary commodity, that it did twenty, or even ten years ago. The reason is, that money, or the substitute for money without its intrinsic value, has augmented in a greater ratio, than the products of industry; by money, I mean artificial capital, paper credits, which do not represent the precious metals. If we were without paper credits, or banks, the products of industry would be precisely equal to the amount of our specie supposing we owed no balance of trade to foreign countries; if we owed such a balance our specie would be so much less. In this case, our wealth is substantial, our capital real. The creation of a bank gives place to an artificial currency-for we have no example, where a bank represented the precious metals, to the full amount of its capital; and to be deluded by the idea of any such thing existing, is to suppose that profit is to be made by the mere operation of exchanging one equal value for another equal value. This is an erroneous impression, and deserves to be exploded. If its notes did represent gold or silver, we must suppose the bank to have always in its vaults, a quantity of specie equal to its capital, which is an absurdity, for in this case, the bank could make no adequate dividend, and get very little profit on its money. On the contrary, they would lose the greater part of the interest, as well as their labour. Now, whatever bonds and debts they may possess, they never can be identified with, or convertible into specie. Nor does the interests of trade require it; but the very reverse is the fact. If the bank did not give capital an artificial extension*, it could be of no

*I am aware of the arguments which may be stated against this position that a bank increases an active capital of the country by

possible utility to trade. This requires no proof, for it is self-evident-you cannot increase 5000 dollars to more, by taking that amount from the pockets of 5000 men, and placing it under the direction of sixteen men! But if those sixteen men are authorized by government to issue their paper, and lend money to traders, it benefits both the lender and the merchant: the one makes six per cent. on his money, and the other sends a ship to China, and by making 20,000 dollars he makes the country so much richer, as well as himself. These sixteen men, however, must lend 10,000 dollars to make much by it. Suppose they lend but 5000, the interest is 300-they might as well lend the specie, as it regards the merchant, and better, as it regards themselves; for they would save their expenses. But the object of a bank is to circulate 10,000 or 50,000 instead of 5000 dollars.

It cannot be denied, that a bank augments the active capital, by keeping all the money of its customers lodged on deposit, in constant circulation; which, without a bank, would be useless, idle, and unproductive. But this is not a positive extension of real capital by artifi

discounting on its deposits. But it must be remembered, that these deposits when discounted on, possess all the qualities of its own capital, that is when they are drawn out, the bank must pay them

in its own notes, or in specie. Now, in either case, it renders it necessary that these deposits should be made in specie. But at the present day this is seldom or never the case. Therefore, this mode of reasoning cannot affect the question. Bank paper maintains its own credit, so long as a sufficient amount of specie remains in the country for all the current purposes of trade. Bank credits may in this case be issued to four times the amount of the bank's capital without injury, supposing no redundancy of such credits to exist previously. This redundancy however exists now, hence every bank should reduce its business to its capital or close its business. Nothing short of this can correct the evil.