6346. PAPER MONEY, Contraction.—[continued].
I had been in hopes that good old Virginia, not yet so far embarked
as her northern sisters, would have set the
example this winter, of beginning the process
of cure, by passing a law that, after a certain
time, suppose of six months, no bank bill of
less than ten dollars should be permitted.
That after some reasonable term, there should
be none less than twenty dollars, and so on,
until those only should be left in circulation
whose size would be above the common
transactions of any but merchants. This
would ensure us an ordinary circulation of
metallic money, and would reduce the quantum
of paper within the bounds of moderate
mischief. And it is the only way in which
the reduction can be made without a shock
to private fortunes. A sudden stop to this
trash, either by law or its own worthlessness,
would produce confusion and ruin. Yet this
will happen by its own extinction if left to
itself. Whereas, by a salutary interposition
of the Legislature, it may be withdrawn insensibly
and safely. Such a mode of doing
it, too, would give less alarm to the bankholders,
the discreet part of whom must wish
to see themselves secured by circumscription.
It might be asked what we should do for
change? The banks must provide it, first
to pay off their five-dollar bills, next their
ten-dollar bills and so on, and they ought to
provide it to lessen the evils of their institution.
But I now give up all hope. After
producing the same revolutions in private
fortunes as the old Continental paper did,
it will die like that, adding a total incapacity
to raise resources for the war.—
To Joseph C. Cabell. Washington ed. vi, 300.
(M.
Jan. 1814)
