The currency question : considered in relation to the Act of the 7th & 8th Victoria, chap. 32, commonly called the Bank Restriction Act / by George Combe.

  • Combe, George, 1788-1858.
Date:
1856
Catalogue details

Licence: Public Domain Mark

Credit: The currency question : considered in relation to the Act of the 7th & 8th Victoria, chap. 32, commonly called the Bank Restriction Act / by George Combe. Source: Wellcome Collection.

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    it, and at the same time the profits of its value in currency-notes, a direct inducement would be given to them to swell their issues as extensively as possible; and from obtaining a double return for their capital, they could afford to encounter risks in doing so, which no capitalist enjoying only a single return could face. They would naturally, therefore, become the patrons of adventurers and specu- lators, who would circulate their notes extensively, and keep them long afloat. Such issues would certainly have the effect of raising the prices of commodities to an extent corresponding to their amount. The Chamber of Commerce will, we hope, acknowledge that, according to their views, America was then a commercial paradise. Bank notes issued ad libitum, security not questioned, and confidence universal! What more could be desired ? But America consists of different States, as Britain does of different kingdoms ; and, like Britain, it also trades with foreign nations. The people of Ohio and Missouri, whose pockets were full of paper-currency, gave very large orders for goods to the merchants of New York, Boston, and Phila- delphia, who duly executed them. The bills given for the purchases were payable in those eastern cities; and when the western debtors went to their own bankers for bills of exchange on those places in return for their own local currency, the bankers discovered that their home customers had bought more from the eastern cities than they had sold; that they had already drawn on the east for every dollar -which the east was indebted to them, and could draw no more. The western merchants then sent their own currency notes to the eastern cities in payment; but unfortunately for them, the merchants there had already paid all they owed to the west, and nobody in New York or Philadelphia wanted western notes for any purposes of use, and nobody was disposed to travel six or seven hundred miles to request the cashiers of the western States to pay their notes, or, in those States in which security had been given, to require the comptroller to sell the pledged securities and pay them the money produce. Moreover, every one knew that it was physi- cally impossible in either case to obtain the amounts in money; for there teas no currency in which the pledged property, when sold, could have been paid, except bank notes, resting on securities or on the mere promise of the banker. Jonathan now found himself in a fix, and became alarmed. A friend was in Albany at the time, and intended to visit Cincinnati. He obtained as many Cincinnati bank notes as he desired, at a dis- count of twenty-five per cent., in exchange for New York bank notes, which were still paid in gold. These western notes were then current in Ohio as sound currency, and he used them as such in paying his travelling expenses. What followed ? When the eastern merchants declined to receive the western notes in payment, the very evil which the Chamber of Commerce asserts to be the result of the obligation on the Bank of England to redeem its notes in gold actually ensued. Every one rushed to the banking-houses and demanded payment of the notes in specie ; for the notes bore to