Page:Inquiry into the Principles and Policy of the Government of the United States.djvu/354

344 effected by a depression of price. And thus a field of competition to the vast amount of six per centum, is shut against hank currency, and open to coin; of course coin will produce better prices than bank currency, unexceptionably according to the criterion of value, and generally according to a nominal computation. Whenever it has hoarded or banished specie, it has gained the exclusive regulation of prices, as there does not exist a specie currency able to rival corporate currency; and then it becomes so poWertul a regulator of price?, as to produce most of the effects of an exclusive privilege.

After the banishment or incarceration of fifty millions of specie, and the substitution of one hundred millions of bank currency, the latter would render all the commercial duties, previously rendered by the former; but as it could not render more than all, so it cannot perform more duty than the preceding sum of specie; if it was miraculously turned into specie, half of it would fly away into other parts of the commercial world, because half could perform the whole duty. Still the hundred millions, though half of it is useless, cannot afford to give as good prices as the fifty, because the hundred millions is burdened with the payment of eight on ten millions annually to the bankers and their officers, whereas the fifty, like an owner of land in fee, has no such rent to pay. Whence it happens that the price and value of the products of labour is higher in South America, than in England and North America, although the latter countries have a greater quantity of circulating currency in proportion to population; but then the former has more specie currency.

Bank currency, being in its nature a monopoly, must inevitably be governed by the innate law of monopoly. This is to enhance its ow n value, by diminishing value in some other quarter. It cannot otherwise subsist. If bank currency gave a better price than coin, the coin would be drawn from the bank for the purpose of buying cheaper, and the moment it performs its promise of outbidding coin, it perishes by depreciation.