5362. MONEY, Circulating Medium.—[further continued].
But what is one-thirtieth
of the value of the annual produce of the industry
of the United States? Or what is
the whole value of the annual produce of the
United States? An able writer and competent
judge of the subject, in 1799, on as
good grounds as probably could be taken, estimated
it, on the then population of four and
a half millions of inhabitants, to be thirty-
seven and a half millions sterling, or one
hundred and sixty-eight and three-fourths
millions of dollars. According to the same
estimate for our present population, it will
be three hundred millions of dollars, onethirtieth
of which, Smith's minimum, would
be ten millions, and one-fifth, his maximum,
would be sixty millions for the quantum of
circulation. But suppose that instead of our
needing the least circulating medium of any
nation, from the circumstance before mentioned, we should place ourselves in the
middle term of the calculation, to wit: at
thirty-five millions. One-fifth of this, at the
least, Smith thinks, should be retained in
specie, which would leave twenty-eight millions
of specie to be exported in exchange for
other commodities; and if fifteen millions of
that should be returned in productive goods,
and not in articles of prodigality, that would
be the amount of capital which this operation
would add to the existing mass. But to what
mass? Not that of the three hundred millions,
which is only its gross annual produce,
but to that capital of which the three hundred
millions are but the annual produce. But
this being gross, we may infer from it the
value of the capital by considering that the
rent of lands is generally fixed at one-third
of the gross produce, and is deemed its net
profit, and twenty times that its fee simple
value. The profits on landed capital may,
with accuracy enough for our purpose, be
supposed to be on a par with those of other
capital. This would give us, then, for the
United States, a capital of two thousand millions,
all in active employment, and exclusive
of unimproved lands lying in a great degree
dormant. Of this, fifteen millions would be
the hundred and thirty-third part. And it is
for this petty addition to the capital of the
nation, this minimum of one dollar, added to
one hundred and thirty-three and a third or
three-fourths per cent., that we are to give up
our gold and silver medium, its intrinsic
solidity, its universal value, and its saving
powers in time of war, and to substitute for
it paper, with all its train of evils, moral,
political, and physical, which I will not pretend
to enumerate. There is another authority
to which we may appeal for the proper
quantity of circulating medium for the United
States. The old Congress, when we were estimated
at about two millions of people, on
a long and able discussion, June 22, 1775,
decided the sufficient quantity to be two millions
of dollars, which sum they then emitted, [335]
According to this, it should be eight millions,
now that we are eight millions of people.
This differs little from Smith's minimum of
ten millions, and strengthens our respect for
that estimate.—
To J. W. Eppes. Washington ed. vi, 234.
Ford ed., ix, 408.
(M.
Nov. 1813)
See Banks and Debt.
