6367. PAPER MONEY, Plan to reduce.—
The plethory of circulating medium which
raised the prices of everything to several times
their ordinary and standard value, in which
state of things many and heavy debts were contracted;
and the sudden withdrawing too great
a proportion of that medium, and reduction of
prices far below that standard, constitute the
disease under which we are now laboring, and
which must end in a general revolution of property,
if some remedy is not applied. That remedy
is clearly a gradual reduction of the medium
to its standard level, that is to say, to
the level which a metallic medium will always
find for itself, so as to be in equilibrio with
that of the nations with which we have commerce.
To effect this: Let the whole of the
present paper medium be suspended in its circulation
after a certain and not distant day. Ascertain
by proper inquiry the greatest sum of it
which has at any one time been in actual circulation.
Take a certain term of years for its
gradual reduction. Suppose it to be five years;
then let the solvent banks issue 5-6 of that
amount in new notes, to be attested by a public
officer, as a security that neither more nor
less is issued, and to be given out in exchange
for the suspended notes, and the surplus in discount.
Let 1-5 of these notes bear on their
face that the bank will discharge them with
specie at the end of one year; another 5th at
the end of two years; a third 5th at the end of
three years; and so of the 4th and 5th. They
will be sure to be brought in at their respective
periods of redemption. Make it a high offense
to receive or pass within this State a note of
any other. There is little doubt that our banks
will agree readily to this operation; if they refuse,
declare their charters forfeited by their
former irregularities, and give summary process
against them for the suspended notes. The
Bank of the United States will probably concur
also; if not, shut their doors and join the other
States in respectful, but firm applications to
Congress, to concur in constituting a tribunal
(a special convention, e. g.) for settling amicably
the question of their right to institute a bank,
and that also of the States to do the same.
A stay-law for the suspension of executions,
and their discharge at five annual instalments,
should be accommodated to these measures. Interdict
forever, to both the State and National
Governments, the power of establishing any
paper bank; for without this interdiction, we
shall have the same ebbs and flows of medium,
and the same revolutions of property to go
through every twenty or thirty years. In this
way the value of property, keeping pace nearly
with the sum of circulating medium, will descend
gradually to its proper level, at the rate
of about 1-5 every year, the sacrifices of what
shall be sold for payment of the first instalments
of debts will be moderate, and time will
be given for economy and industry to come
in aid of those subsequent. Certainly no nation
ever before abandoned to the avarice and jugglings
of private individuals to regulate, according
to their own interests, the quantum of
circulating medium for the nation; to inflate,
by deluges of paper, the nominal prices of property,
and then to buy up that property at 1s. in
the pound, having first withdrawn the floating
medium which might endanger a competition
in purchase. Yet this is what has been done,
and will be done, unless stayed by the protecting
hand of the Legislature. The evil has been produced
by the error of their sanction of this ruinous
machinery of banks; and justice, wisdom,
duty, all require that they should interpose and
arrest it before the schemes of plunder and
spoliation desolate the country. It is believed
that Harpies are already hoarding their money
to commence these scenes on the separation of
the Legislature; and we know that lands have
been already sold under the hammer for less
than a year's rent.—
To W. C. Rives. Washington ed. vii, 145.
Ford ed., x, 150.
(M.
Nov. 1819)
