Page:The Atlantic Monthly, Volume 14.djvu/122

112 of the mint are continued, with the avowed object of creating a specie currency. This practice is, however, of some use. It serves to show that mind and matter are governed by the same general laws,—that either being put in motion wilt continue to move in the given direction, though the original intention may have ceased. That the original intention of coining has ceased when the use of the precious metals is confined almost exclusively to ornamentation and security is a plain case.

The National Government issues coin for currency, and the States create banks, with the privilege of using the coin as security, and of issuing in its stead a larger quantity of notes. These, diluted in value to the extent of the difference, form, with the authority derived from State laws, a species of currency that, because of its great convenience, derived from its representative character, has become, notwithstanding its defects, one of the greatest powers known to man. The defects of a bank-note currency are, that, being based on specie, it is necessarily inconstant, and being insufficiently based, it is necessarily insecure.

The precious metals are desired for three distinct uses,—ornamentation, security, and currency; they have, therefore, three distinct elements of value. By the creation of banks a portion of the currency is converted into security, and another portion undergoes the same change by reason of the insecurity of bank-notes. Thus, by the influence of banks, the precious metals are deprived of most of the value they had as currency, the specie and the notes depreciating together, and maintaining an equilibrium of value, until the exportation of the former to countries where its value is not thus impaired becomes profitable. Then, if the notes continue to depreciate, as is sometimes the case, the equilibrium is destroyed, and specie commands a premium. This causes the remainder to be hoarded, so that it then commands an additional premium as security, in view of the increasing insecurity of bank-notes.

A result of the inconstancy of a bank-note currency is exhibited in each of its several states,—as a diluted, as a depreciated, and as an irredeemable currency; but more especially in this its third state. But as it is not intended to be redeemed, except to a very limited extent, and as these several states are proper to it, and differ only in degree, it will be sufficient to point out the final result or climax. This is depreciation in relation to specie, because of the demand for that article, first for exportation, and then for security; and, at the same time, appreciation in relation to every other article of merchandise, because of the reduction of its own quantity, necessary to the restoration of the lost equilibrium,—necessary to the reëstablishment of its essential element, credit. Thus it appears that the results of a bank-note currency are similar to those of a specie-currency, but as much more disastrous as its expansions and contractions are greater and more sudden.

To avoid these disasters, it is proposed to issue a national currency that is constant, and that is therefore a standard measure of value,—an instrumentality that commerce has never yet been furnished with, though it is the only one capable of affording to the industry of the country proper, that is, invariable, encouragement. Not being empirical, it will make no pretence of furnishing the precious metals at less than the market-rate, either for exportation or hoarding; but it will have the effect of reducing them to their true position, that of merchandise, so that they may be exchanged for the products of other countries with profit. For the same reason it will not be redeemable. To redeem a currency is to replace it by another. What other? Specie? That is out of the question. However desirable specie may be as wealth, as a currency, except for change, it is a nuisance. Accordingly, merchants prefer a representative currency, even though its representative character be somewhat problematical. And government failing to supply a