Democratick Editorials

Part Two

~ PARTTWO ~ Separation of Bank and State BANK OF UNITED STATES In answer to the many objections which are urged with great force of argument against the United States Bank, and against any great national institution of a similar character, there is little put forth in its defence, beyond mere naked allegation. One of the assertions, however, which seems to be most relied upon by the advocates of the Bank, is that it has exercised a most beneficial power in regulating the currency ofthe country. Indeed, the power which it was supposed it would possess to regulate the currency, furnished one of the chief grounds of the support yielded to the original proposition to establish a United States Bank, and the same topic has occupied a prominent place in every subsequent discussion of the Bank question in Congress. It is maintained, in favour of the present institution, that it not merely possesses that power, but that it has exerted it in the most prudent and salutary manner. This is made the theme of many high-wrought panegyrics. It is triumphantly put forth by the journals in the interest of the Bank; it drops from the lips of every Bank declaimer at political meetings, and is asserted and re-asserted by all the orators and editors of the Bank party, with a confidence which should belong only to truth. Many persons, indeed, who are strongly opposed to the United States Bank on moral grounds; who view with dismay its prodigious means of corruption; and shudder with abhorrence at the free and audacious use it has made of those means; yet accede to it the praise of having at least answered one great purpose of its creation-namely, the regulation of the currency of the United States. It is to be feared that men in general have not very precise notions of what constitutes a regulation of the currency. If the meaning of this phrase is to be limited to the mere sustaining Evening Post, date uncertain. Sedgwick gives simply "March, 1834." Attempts to locate the original have been unsuccessful. 63 64 DEMOCRATICK EDITORIALS of the credit of the Bank at such a point, that its notes shall always stand at the par value of silver, then indeed must it be admitted that the United States Bank has, for the greater part of the time performed its functions in that respect. Yet no praise is to be acceded to it on that score; since such an effect must naturally and almost inevitably flow from the selfimposed obligation on the government to receive its notes at their nominal amount, at all places, in payment of debts due to the United States. There is not a bank in the country, accredited and endorsed by the Government to an equal extent , that would not as certainly maintain its paper on a par with the precious metals. Indeed, most of the well-conducted institutions in the Atlantic cities, without the advantage of such countenance from the Government, have preserved their paper in equal credit; or, in other words, have been equally successful in regulating the currency, so far as the term implies the affording of a convertible paper substitute for money, which shall pass from hand to hand as the full equivalent of silver coin. The doing of this certainly constitutes an important branch of the regulation of the currency; but there is another and more important branch, and in this the United States Bank has totally and most signally failed. What is regulating the currency? It is the furnishing of a medium of circulation, either metalic or convertible at par, equal in amount to the real business of the country, as measured by the amount of its exports and the amount of actual capital employed in commercial business. It is the furnishing of that amount of circulation, which is actually absorbed by the commercial transactions of the country-by those transactions which rest on the basis of the exchange continually going on of the commodities of one country for those of another. When bank issues are limited within this circle, the notes of the bank in circulation are founded on the security of the notes of merchants in possession of the bank, and the notes of the merchants rest on the basis of goods actually purchased, which are finally to be paid for with the products of the soil or other BANK OF UNITED...