Lawrence John Lumley Dundas Zetland.

Cause of, and cure for, hard times: a definition of the attributes and qualities indispensable in money as a medium of commerce, and also an investigation of the effects of the banking system online

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Online LibraryLawrence John Lumley Dundas ZetlandCause of, and cure for, hard times: a definition of the attributes and qualities indispensable in money as a medium of commerce, and also an investigation of the effects of the banking system → online text (page 1 of 6)
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CAUSE OF, AND CURE FOR,



CONTAINING

JL 1JEFJJYITIOJY

OF THE ATTRIBUTES AND QUALITIES
INDISPENSABLE IN MONEIT

AS A MEDIUM OF COMMERCE 5



AND A1SO,



AN INVESTIGATION OF THE

EFFECTS OF THE BANKING SFSTEM.



PRINTED FOR THE PROPRIETOR.



1818.



INTRODUCTION.

IN proportion to the weakness of men's minds, they
become susceptible of delusions of every kind.

By whatever means (he imbecility is produced, whe-
ther pristine ignorance, luxury, or superstition, is im-
material, the effects thence resulting are the same.

Human nature, perhaps, cannot form a greater con-
trast, than between the old Roman republic and the mo-
dern dealers in beads and catgut, who disgrace the
same ground.

It staggers modern credulity to believe that men
could ever be so gulled or infatuated, as to multiply
their fancied deities, so as to assign guardians to the
seas, forests and brooks. Well might they, who wor-
shipped the deity of a brook, pay their adoration to the
sun ; and the first step being taken, the earth was soon
covered with deities, so that, at length, bulls, cats and
onions came to be worshipped. To do this, men must
have been devoid of the least mite of reason and common
sense, yet the superstitious enthusiasm that still pre-
vails in some countries, is quite as ridiculous, and con-
tinues a badge of spiritual tyranny an the one hand, and
slavery on the other, which infinitely surpasses all the
fabled superstition of pagan Rome. But in these states,
in this enlightened age, we boast of our liberality, and
of having divested our minds of all such superstitions
and prejudices. It is sufficient for us to swallow bank
transubstantiations of property ; and yet our infatuation
falls little short of the before-cited phrenzy, when we
can really believe that the wealth and power of a na-
tion, to be truly and substantially expressed and re-
presented by scraps of paper, which are so far from be-



M17454



IV

ing property, or the true signs of property, that they
signify nothing but im pester on the one hand, and cie-
dulity and folly on the other, which may he annihilated
by the most trifling circumstance even one breath of
suspicion would destroy millions in a moment. Whilo
we ridicule ancient superstition we have an implicit
faith in, the bubble* of banking, and yet it is difficult to
discover a greater absurdity, in ascribing omnipotence
to bulls, cats and onions, than for a man to carry about
a thousand acres of land, with a mansion house, out-
houses, &c. in his pocket-book, which is,, nevertheless,
done among us every day, with great self-complaisance
and security. And though we laugh at, him, who, pul-
ling a wafer into our mouth, cries Hock est corpus, we
have no suspicion of the bank juggler, who, putting
so?ne slimsey bits of paper into our hands, tells us it is
a freehold estate, a house, or a fine ship of five hun-
dred tons.

This gross bubble is practised every day, even upon
the infidelity of avarice itself ; this rather exceeds than
falls short of ancient illusions, because the objects it
converses with are sensible and more open to detection.
So we see wise and honest Americans, of the 19th cen-
tury, embracing phantoms for realities, and running
miid in schemes of refinement, tastes, pleasures, wealth
and power, by the soul aid of this hocus pocus. When
we contemplate paper gold, and paper land, and paper
bouses, and paper revenues, and paper government, we
are apt to believe the fairy tales of Gulliver, and the
Arabian Nights, as grave relations of historical facts.
Indeed, we live in an age that resembles neither the
gold, silver or iron ages tHl" the poets ; but may, with an
eui^hatical propriety, be called the paper age, and the
name fools-cap becomes iniiuitely more, appropriate.



CHAP. I.

* , J . J . - . " -

J. definition of the attributes and qualities
Indispensable in Money.

THE barter of commodities, or communication of the
fruits of industry, constitute fhe essence of commerce.

In the present state of society the partition of em-
ployments js almost infinitely diversified, and the fruits
of well directed industry, or things necessary and use-
ful in life, are what only can he called wealth.

In establishing a mutual exchange of these, the first
thing necessary is a standard of computation, or com-
mon measure, by which to r.*imatc the several com-
modities that may be offered for sale, or may be desired
by purchasers. This standard, or common measure,
called money, must be something well known to the
parties and of general or common use.

It appears, in remote antiquity, that in the early
stages of society cattle were the first things made
use of as a standard, but from the disproportion of size
and fatness, measures of corn, wine and oil soon suc-
ceeded, the first of these being the least liable to varia-
tion is, of all others, from its nature, more intelligible
and unalterable than any money that ever was, or ever
will be made. The great alteration in the value* of
gold and silver is well known to the historian, and is
also known to many, by memory, in this country since
its first settlement. But after a standard of computa-
tion had been agreed on in commerce of the most moderate



6

extent, something farther is absolutely necessary. The
actual and immediate barter of commodities could in
few JQstaitce.3 fake place. A man might have the thing
| wanted to purchase ; but he might not need, or de-
ir.e, i!is t arfjclp 1 was willing to give for it ; another
might want what I had to spare, but not have what I
wanted to purchase with it ; besides, bulky articles
could not be carried about with convenience or safety.
Therefore, it became very early necessary that there
should be some sign or signs agreed upon to represent
the absent commodity, or rather should represent the
standard of computation in all its divisions and multi-
plications. These signs must be such as could be easily
carried about, and therefore could be readily applied
to every transaction connected with the commutation of
property.

These signs are in the nature of a tally that is to
say, they are intended to mark and ascertain a fact.
Kow the fact is, that the person who can show these
signs, having purchased them by his goods or industry,
is entitled to recieve from somebody a certain value to
a certain amount, which they specify of the standard of
computation.

These have always references to the standard of
computation, and, at last, by that known reference,
the distinction between them and the standard is lost,
and they become a secondary standard of computation
themselves. Thus a piece at first to be the value of a
measure of grain, but at last men come to make their
Bargain by the number of pieces, instead of the number
of measures, using the sign for the thing signified.
Thus, also, an ideal measure, generated by the other
tv/o, conies to be a standard of computation ; as the
pound was formerly the money unit, though there was
no coin precisely corresponding to it. Thus during the



revolution, in (he years 777 and 1778, paper being, as
now, the only circulating medium and greatly depre-
ciated, and legislatures, at that time, retaining some
sense of honor and honesty, made several attempts to
institute rules by which the just value should be ascer-
tained ; but finding, by experience, that their efforts
were fruitless, the people resorted immediately to tlife
original standard of measures of grain, that being the
best alternative ; and this mode of computation de-
termined the value of silver and gold themselves and
was practised in many of these states for some years
after the total annihilation of paper circulation, and I
am informed that it begins to be resorted to again in
some sections of the country.

Thus it being proved, by the experience both of an-
cient and modern times, that all men resigns labor under
material defects ; that they ultimately depend on the
faith and credit of the persons who are answerable for
them. Now whether these are individuals, chartered
companies, or even the ruling party of a nation, they
are attended with the greatest uncertainty. Therefore
something farther is necessary to make a complete
symbol or medium of commerce, that is, a pledge or
standard of value that may be a security or equivalent
for the thing given for it, and at all times and in all
places, especially in the same country, be sufficient to
purchase a like value of any thing that may be needed
by him that holds it. An absent commodity well known,
or even an idea well understood, may be a standard of
computation and common measure ; any thing may be a
sign, and since writing has been known it has been
used. It is, however, totally defective ; there is a total
want of value in paper, that shall give, not only a pro-
mise or obligation, but actual possession of property



8



fop property. Whatever may be made use of that fal!
short of this is totally unfit for a medium of comme.rce.

It has been found by experience, that in gold and silver
are united all the qualities requisite for such a stan-
dard they form the great desideratum. It cannot be
denied that they have been used for this purpose, in the
earliest times, and through every nation in the old
world and also in the new. The truth is, that they
alone possess, and in a superior degree, all the quali-
ties necessary for a standard computation : this will
more fully appear, by examining more minutely what
qualities a medium of general commerce ought to pos*
sess. It ought then to be, 1st. valuable 2d. rare 3d.
portable 4th. divisible 5th. durable 6th. equable.
"Whoever will examine the matter, with attention, must
perceive that any one of these qualities being wanting,
the system would be ruined.

1st. * It must be valuable in itself; that is, it must
have an intrinsic value, or worth, in substance distinct
from form/' By value or intrinsic worth here, must be
understood precisely the same thing that gives to e^ery
other commodity its commercial value: This is, their
being either necessary or remarkably useful for the
purposes of life, in a social state, or supposed to be so,
and therefore the object of human desire ; without this
it could be no more than a bare sign, nor indeecj so use-
ful in this view as many other signs. But we want
something that must not only be a standard of com-
putation, but a standard of \alue. and therefore, capa-
ble of being a pledge and security to the holder, for the
property or labour he has exchanged for it. GoM and
silver have intrinsic value, as metals, because fro'n their
ductility, durability and other qualiti -s. they are ex-
ceedingly fit for domestic utensils, and many oth >r pur-
poses in life \ this was the ftmndatioa of their nse, as a



9

medium of commerce, and was inseparable from it ; a
clear demonstration of this arises from their being
weighed in l*\e earliest limes, before they were divided
into sma'l.T pieces and passed by tale, and their value
determined by their bii'k or quantity proportionality.
This circumstance as a sign made them worse 5 but as
a valuable metal made them better.

The same thing appears clearly from the practice of
modern times. Even when tiiy are taken under the
management of the rulers of society, and stamped under
various denominations, there must be an exact regard
hud to their commercial value. The stamp upon them
is the sign; the intrinsic worth of the metal is the va-
lue. It is now found, and admitted by every nation,
that they must give to every piece Wiat ^denomination
and value in legal currency, that it bears in bullion,
and if any do otherwise, their is neither force nor au-
thority sufficient to make it pass.

2d. That it must be rare, will be more fully illustrat-
ed hereafter. Permit me, however, hereto observe,
that the medium of commerce mnsjt not only be sa rare
as to bring it within commercial value, in ordinary
cases, but if must be much more rare than most other
things, that its value may 'be increased, and a small
quantity of it mr=y represent goods of considerable va-
riety and bulk. If gold and silver were only twenty
times ;s plentiful a s^ they were before the establishment
of bank monopoly, they would still have a proper value ;
could be bought and sold, and be applied to many useful
purposes, but would be twenty times as unfit for a medium
of commerce, or indeed totally unfit for general circula-
tion.

3d. The circulating medium must be portable. It
must be capable of being, carried to a dhtuir-e with lit-
tle trouble 01- expense, and of passing from hand to hand
with ease and expedition.

2



10

itli. The medium of commerce must be divisible;
tliis is necessary to answer the division of many com-
modities, arid to the convenience of people of different
eircurssstattces in life. It is of such importance, that,
in the calculation of a complex and diversified com-
merce, we fin?! divisions and fractional parts, even of
the smallest coins that have ever yet been "brought into
general use.

5th. -The medium of commerce ought to be durable.
Tliis quality is necessary ; first, that in passing con-
tinually, from hand to hand, it may not be broken or
wasted; and. secondly, that if it is preserved, or fayed
up. as may be, sometimes necessary, desirable, or pro-
fitable, it may not be liable to be speedily corrupted or
consumed.

6th. Equiblc that is, these metals are said to differ
from most, or all others ; they, in their virgin state,
are exactly the same whether found in Asia, Africa or
America. This, in an eminent degree, fits them for a me-
dium of circulation, and is an attribute, belonging to no
other production of nature, that we are yet acquainted
with. It is pSain, therefore, that there is nothing* yet
known to mankind, in which all the necessary qualities,
in a medium of commerce, are so fully united as in sil-
ver and gold, and this is the true reason why these me-
tals have been applied as the instruments o commerce,
since the beginning of the world, or as far back *as his-
tory enables us to penetrate.

It is a fact that will not be contradicted, that gold,
sisvcr and brass, or rather copper, were the most an-
cient metals, and all of them antecedent to iron These
rnetals beings, applied to all (J;. % purposes of life, came
of course to constitute a great part of the wealth of the
people of ancient times. Brass being one of the metals
earliest known, was made use of for money by ancient



11

nations. Its being now left out, in a great measure, i*
on account of wanting one of its very necessary quali-
ties, viz. variety. That it was used for money amoug
the Hebrews, is evident ; for we read of go!d, silver and
brass, being brought as contributions to the tabernacle
in Moses* time, und to the building of the temple in the
time of David.

That brass was made use of as money, in the early
times of the Greeks and Romans, evidently appears, both
from history and from the language of ooth nations ,
for thA'e it, is made use of to signify money in general..
That it eeased to serve that purpose afterwards must
have been on account of its abundance. It cun be ac-
counted ibi- in no other way, as the disuse of it is just
as universal as the use of it was formerly.

It is also evident from history, that all these metals
were estimated and passed by weight. We are tuld in
Genesis, that Abraham gave to Epron for the cave of
Machpelah, four hundred &efeefc of silver. The Greek
money was of different weights,/ from the lowest sorts
to the talent, which was the largest. The old liomati
word Pondo was, as it were, the standard, and the divi-
sions of it, constituted their different denominations
From this we seem to have derived the word pouiid.-r
It was not long, however, before they came to have
either coins, or, at least, small pieces reckoned by
number. Abimeleeh gave to Abraham, as Sarah's bro-
ther, one thousand keseph and Joseph was sold for
twenty keseph. As the word keseph is said to signify
silver, they must have been reckoned by tale, and are
probably very justly translated pieces. Antiquarians
and historians tell us, that some barbarous nations have
made use of baser metals : such as lead, iron* tin, c. also
leather, shells, bark of certain trees, ^c, und we know in.



IS

these days, paper, far inferior in many respects to the
\vorst of the former, is made use of for money. Some
mat.ions might, indeed, use lead, iron, c. upon the same
principles as others use gold and silver, but all this is
usi'-.g the sign s parate from the standard, and that en-
lightened Americans should be imposed on by bank
paper, worse by far thai) savage trinkets, shocks all
common sense.

I. think the above definition will enable every intelli-
gent person to determine what is, or ought to be, the
meaning of the circulating medium. This phrase is in
evt'r\ body's mouth, arid we frequently meet with it in
spp-cl:es, in legislative assemblies, and newspaper pub-
lications.

This pretended want of a circulating medium has
been successfully urged in favor of the banking system,
than which nothing ever was, is, or can be more false.
It never was believed by those who urged it in fnvor of
banks, nor by those who granted their chapters, if they
possessed common sense, and the least share of infor-
mation. Those who did, or do believe it, must be to-
tal'} ignorant of the mesning of the expression. The
circulating. medium is not yours or mine ; it is not the
riches of Peru or the poverty of Lapland. It is that in-
dc.H site quantity of the precious metals made use of
among the nations connected in commerce. Whether
any particular person, city, or nation, is rich or poor
ha 3 more or less of it comparatively, is nothing to the
purpose. Kvery one ought, and will receive, of the
circuiting medium. th<:i qzmntlf} which he is entitled
to, by his property or industry, unless, it is diverted
from its natural channels by the knavery of banking
.hiri'9. which is the case in this country, as will
fully appear hereafter. It has been shown that
rarity is one of the attributes of a circulating medium.



13

If there were nothing but gold and silver in circulation,
a less quantity would be sufficient to represent, a stated
measure of property, and the more plentiful it is, the
greater is the quantity necessary to represent the 'same
property or commodity ; but the comparative riches or
poverty of the person, chy, or* nation, would be the
same. I well remember the time when I could pur-
chase a bushel of wheat, in Dutchess County, for three
fourths of a dc^ar, for which I must now p-iy tTvo d-/l-
lars. Was not six shillings then as good as sixteen
now ? and was not the man just as rich who hud it in
his pcsscssion ? It would be easy to point out countries
where there has been a greater quantity of the. c; u-
lating medium, even in gold and bi:vr-r, than any w 1 ;-e
else, and yet, at the same time, greater personal pover-
ty, and also public want, and undoubtedly for the same
reason.

It is well known to the historian that the troops of
Philip second, of Spain, inufinized in Flanders, for want
of pay, and plundered the city of Antwerp, when Ame-
rica and the East-Indies are said to have furnished him
\vith inexhaustable resources. What dees it signify to
the day-laborer, that he gets eight, or. even ten shil-
lings per day, when it will scarcely purchase provisions
sufficient to prevent himself and family from perishing ?
Are not these things true ? Are they not known to be
. so? Are not gold and silver a circulating rhodium of
universal currency ? Are they too scarce for the pur-
pose when the trappings of a banker's horse, or the col-
Jar of a favorite dog, is ornamented with more of these
precious metals, than furnishtd out the stadthclder,
Dohiliiy and army, of the seven United Provinces, for
the whole forty years that they were struggling against
Spanish tyranny. 1 have only to observe, in this place,
that my reader may be like juj-scii', a very poor man ;



14

\ve want property, vents, resources and credit ; but we
may rest assured that bank notes will never bring re-
lief, but increase our poverty and consequent misery.

If every man could with facility obtain the necessa-
ries of life, and, obtaining them, feel no uneasy crav-
ings after superfluities, temptation would lose its power,
private interest would accord with public good, and nu-
merous crimes would cease. The greatest impediment
lo such a state of things is, inmost countries, the ir-
regular transfer of property, either lirst by violence,
or secondly by fraud, and made perpetual by laws of
primogeniture. The first and last of these being un-
known in these states, we might suppose that the inor-
dinate tiesire of individuals to possess themselves of the
substance, or property of another, by means inconsis-
tent with justice, would undoubtedly be restrained, nay
prohibited, and fraud only known by report. Sot iety
coiiies recommended to us by its tendency to promote
our happiness, but most of the miseries of our species
may be traced to political institutions as their source.

In a government originating as ours has, and where
all its force and autiiority is delegated temporarily by
the people to then 1 representatives j it would be natural
to conclude, that all its laws would be predicated upon
the eternal* unchangeable principles of justice and
equality, wliich'flows from nature, and which alone can
be the infallible guide and foundation of civil law, and
all that can be right am) excellent in government. AH
exercise of authority ought to be in exact conformity
equal justice, and must have for its object the felicity
of all under its control/'to entitle it to respect and obe-
dience. Public happiness, therefore, is the only motive
why authority should be exercised, and why the will of
the legislature should be obeyed and respected. When
lawsprove to be contrary to public good; or partial in their



15

operation, they should cease to beiir llic sacrcd'eharac-
tor oflaws, and have no respect paid to them.

The public .felicity is, nevertheless, so iusepcrahly con-
nected with the observance of order, that it is advisa-
ble, nay necessary, that the ruled hear patiently, a
temporary inconvenience, and pursue the most gentle
means for the redress of grievances; yet there is such a
thing as a laudable jealousy on the part of the govern-
ed, which should keep pqce \vith the situation of public
affairs, which aims at an inviolate enjoyment of cur na-
tural and political rights. Every good citizen will not be
incessant, but prudent, in his endeavors to seek a happy
change in every thing that has not a benign influence
on public happiness, and none should be more vigilant,
ready, or willing for such a change, than men bearing
authority who have power to rectify what is improper.
They should anticipate wrongs and administer redress
when any public measure has taken place which is in-
computable with public good. Is it not for this very
end that power is delegated to them ? Men. of true
wisdom are always'sensiblc of their own fallibility the
guardians of the laws should be first to discover their
defects. It is no disgrace to any government to recti-
fy abuses ; it is, on the contrary, a circumstance no.*
altogether honorable to the understanding, or the hearts
of rulers, if grievances are continued ; but there is no
epithet strong enough to convey the idea of detestation
and abhorrence which that government deserves which
persists in increasing arid perpetuating them.

The right of acquiring and holding property obtain-
ed by virtuous industry, free from the invasion of others,
is next to that of liberty, the most ssered. Any in-
fraction of this right o'Jght to be immediately repaired
and the injured restored to the full enjoyment of this right.



16

and the transgressor punished in exact proportion to the
injury done.

From what has been said, we may form ideas of the
justice of laws, and the duties of government, in carry-
ing those laws into execution, so as to render eqiml justice
to every man.

But it does so happen that government does not al-
ways abide by those maxims. They lavish favors with
an unsparing hand on one part of the 'community and
withhold them from the other part. They grant to
bankers the power to pass paper instead of gold and
silver thereby to increase their money, to any amount
they please, by their notes. They are thereby enabled
to obtain a great deal more than their proportion of the


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Online LibraryLawrence John Lumley Dundas ZetlandCause of, and cure for, hard times: a definition of the attributes and qualities indispensable in money as a medium of commerce, and also an investigation of the effects of the banking system → online text (page 1 of 6)