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 2 of 6)
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products of society, and the other members of society
must go without them hence arises their poverty and
misery. The inequality in 'the laws is a perversion of
the laws of nature, and totally repugnant to the princi-
ples of equity, which nature ordained for the harmony
of her w.orks. The following considerations may fur-*
thcp elucidate the subject. It is a fact, than which no-
thing is more certain, that the prices of every article of
commerce is determined by the quantity of money in
circulation. Suppose, for instance, that the <.-ity of
New-York contains twenty thorifea.-id families, with an
income of one dollar per day each ; it must be evident
that the whole amount purchased on any one day could
not exceed twenty thousand dollars, for the purchasers
could pay no more money than they had. The sellers
could therefore 'get ro more ; the quantity of money
determines the prices, and the money buys all. The
amount of every day's sale would be twenty thousand
dollars, (Sundays excepted) : the whole amount of the
year would he about six millions two hundred a;id sixty
thousand dollars. But suppose the quantity of money



17

to be varied, and each family to have three dollars, in-
stead of one, per day ; then the prices of the articles
sold 011 any one day would be trehled ; they would sell
for sixty thousand instead of twenty, anil the whole
amount of the year would he about eighteen millions
seven hundred and eighty thousand dollars. If the
quantity of commodities in the market remained the
Game, the prices must have experienced a three-fold in-
crease : for what other use can he made of money than
to purchase commodities. If the increase of the one
does not keep pace with the other, the effect is sure-
either the prices of commodities must rise or the mo-
ney remain useless.

The experience of the whole civilized world demon-
strates that the quantity of money in circulation pro-
duces the effects before-stated. I would ask, what
other reason can be assigned, for the great increase of
prices of the productions of society in Europe, immedi-
ately after the discovery of America, than that it was
the immense influx of the precious metals plundered from
the Spaniards ? Every man that knows any thing, knows
that the prices, or raise of the market, depends on the
quantity of money which is brought into it. Money is
like every other article of commerce, when there is an
abundance of any article, it will be low ; when scarce,
it will be sought after and be high. These circum-
stances alone, determine the value of gold or precious
stones ; the diamond would be less valuable than mar-
ble, and gold than iron, were they obtained in as great
abundance.

Why do we complain of the high prices of provi-
sions ? It cannot be in consequence of scarcity that
prevents us from having as great a share as our
wants require. If we could increase the quantity of
our money at pleasure, we would be able to obtain as

8 /



groat a quantity and variety as we could wish ; but a$
there is* btt a limited quantity to increase our share, it
must be taken from some other person, who surely
wishes to retain what quantity lie has, so that it he-
comes impossible. If every man had it in his power to
increase his money at pleasure, every man would keep
pace with his neighbor ; this would he the same as bid-
ding at auction (he price would rise in proportion to
the money offered, as was the case with butter, pork,
&-. son-.e few years past. The value of money will al-
ways be in proportion to its quantity. It frequently
happens that those who increase the quantity of their
money, do not always increase their consumption;
but this does not alter the general effect of such
increase ; no man locks up his money or buries it
itf these days. He either uses it himself or lets it to
another ; the borrower would not take it if he did not
intend to make use of it and as the only use of money
is Jo purchase commodities er labor, and that part paid
for labor goes to the purchase of commodities, it is evi-
dent that it must ultimately ciniie to market ; through
ty ha tevT number of intermediate hands it may pass, it
must produce the same effect, of adding to the quantity,
as if the fabricator had increased his own consumption.
If it is admitted that the issuing of bank notes hag
enormously increased the money circulation of this
country ; it must also be admitted, that this increased
circulation has been the means, and real cause of in-
creasing the rates of provisions to their present exorbi-
tant prices ; for the former is not more evident than the
Isitter, and such being the ease, it must be no less evi-
dent that the bankers rob every other man in society,
bj circulating their notes, the same as they would by
taxing them, or by stealing their money out of their
pockets !



19

What difference can there be between inbancing the
price of my bxead and lessening the value of uiy Jabo?.
A man sustains tire same injury, by having the value of
bis money reduced, as by having a part of it stolen.
But the iniquity of banking may be rendered still more
obvious by the following considerations.

That every man will be able to obtain a share of the
productions of society, according to the quantity of his
money, is most certain. Therefore, as the amount of
liis money is increased, he will increase his share of the
fruits of labor ; and as the fruits of industry, in any-
country, are limited, what is added to one man's share
must be taken from another ; consequently, the increas-
ing the quantity of money in one part of nocivty, must
produce the same effect as taking it from the other
The banker haying it in his power to increase the quan-
tity of his money, at pleasure, it has the same effect as
taking so much from the other part of the community.
Suppose that the whole productions ^>f society were di-
vided into one hundred thousand parts, among the in-
habitants, in such a proportion that a day laborer
should have one part, and he that has ten thousand dol-
lars should have ten parts, and every other person a
certain number of parts, according to his iicome. If,
then, a number of these laborers were to increase fheir
money, by bank notes, to ten thousand dollars each,
they would be enabled to procure, or command, ten
times the quantity they did before. But where are the
additional parts to come from ? must not a new division
take place, and a portion be taken from every one of the
parts, into which the commodities were before divided,
in order to make up the additional number ? Most cer-
tainly.

Therefore, if every man in society had been robbed
of a part of his money, he would not have sustained



so

greater injury. If the additional sum had been fabrk
eated by those \vho had the greatest share before, in-
stead of the laborers, the effect would be exactly the
same, though perhaps more injurious to the poorer
class.

If the money be increased, it is immaterial \vhose
possession it is in $ the property must be divided in'o
an additional number of parts, to correspond with the
additional quantity of money.

Therefore, those men who increase their money by
issuing bank notes, might, with as much justice, put
their hands into their neighbors pockets and steal a part
of their money.

It is a fact, in which all men will agree* that every
member of society has a right to a share of the produc-
tions of society, according to his industry or mo-
ney. But when a part of the society are permitted
to increase their money at pleasure, by issuing paper,
instead of gold and silver, how can he enjoy that right?
The banker makes, out of one thousand dollars, ten
thousand dollars if he pleases.

Again, we will suppose that all the productions of a
country are divided into two equal parts, and that the
inhabitants of this country are equally divided, and
each part have an equal property ; then suppose one part to
double the quantity of their money by issuing bank
notes ; then that part of society would be able to obtain
two-thirds, instead of one half, of the productions ;
consequently the other part could have only one third
instead of one half. If the first part were to treble
their money, then they would be able to obtain three-
fourths of the productions, and the other only one-
fourth, and continue in that proportion) according to
the increase of money in that part of society, We
-will further suppose that all the purchasers in market



are one hundred, and each of them conies with an equal
sum of money ; then each ought to have an equal share
of all the commodities ; hut if fifty of them are hankers
and. find they can make a profit, they douhle their mo-
ney hy issuing their notes; they can then purchase two
thirds of all the commodities consequently, the other
fifty, who are no hankers, can have but one third, or
one third less than they would have had, if there had
been no bankers, or if they had not increased their mo-
ney.

The bankers, therefore, might as well have robbed
them, at the beginning, of one half of their money, for,
in that case, they would have been able to purchase one
third of the commodities, instead of one half, and they
could purchase no more after the bankers had doubled
their money by their notes.

The whole nation are purchasers in the market ; it is,
therefore, clear, that the bankers rob every other part
of the community or nation, as certainly, by issuing
their notes, but with more ease and safety, as by steal-
ing or by force, compelling them to give up a part of
their property or labor, and that abandonment of prin-
ciple in legislatures, in authorizing the fraud, might,
with the same propriety, authorize force.

Gold and silver, as has been before shown, are the
productions of nature ; possessing, in a supereminent de-
gree, all the qualities requisite for such an important
purpose, as the standard of justice in commercial ex-
change of property. As such a medium* it has been
used from time as remote as history reaches, and was
taken under the direction and guardianship of the ru-
lers of society, and coined into money at Argos, nearly
nine hundred years before the Christian ./Era. Their
qualities and weight were determined by the nicest
principles of equity. AH nations of the earth have been



extremely careful that their money should not he adul-
terated ; they have uniformly punished counterfeiters
with death, so that every man should be secure in his
right to the productions of society, in proportion to his
money or his labor. Hence it became the true repre-
sentative of labor.

But what is the use now of their wise and honest
laws? while particular men are permitted to encrease
their money by means of bank notes ? Does it require
more labor to fabricate a note than to coin false money ?
a counterfeit dollar cannot possibly be fabricated, in a
state of perfection, sufficient to make it pass, short of
twenty-five cents, in precious or pure metal ; whereas t
the banker will fabricate one hundred dollars with less
cxpence ; do not, then, the bankers enjoy the benefit of
labor and the -fruit of fraud, without laboring them-
selves, or running any risk of that punishment which
fraud deserves ? They rob the laborer as effectually
of the fruits of his industry as the coiner could do. It
has been remarked, that the coiner receives immedi-
ately the whole amount of all the pieces he puts in cir-
culation, whereas the bankers receive only a part ; but
it will appear, by a strict examination of the case, that
the difference is by no means in favor of the coiner, on
the scale of profit, but the reverse.

It was stated by Gov. Tompkins, in his speech, at
tlie opening of the session of the legislature in 1812,
that if the bank capital, then about to be solicited, was
granted, in addition to what had been before granted, it
would enable the bankers to contract debts, or in other
words, legally to issue their notes to an amount sixteen
times greater than the whole specie capital of the state.

Although the immovable patriotism of that man,
seconded by a few worthy adherents, at that time pre-
vented the grant, it was beyond their power to teniove



ifce golden charm ; it may be seen, by the records of
subsequent legislatures, that bank capital has been ex-
tended to an amount equal to what was then solicited,,
This being the fact, a dollar, in bank notes, cannot be
worth more than six pence, or One sixteenth of its no-
minal sum ; all above six pence must be ideal and to*
tally visionary. The eXpence of materials and fabrica-
tion cannot exceed one cent on a dollar, and the banker
receives, annually, about ten cents interest, at common
discount, for seven pence principal, and as he can vend
his paper without restraint or risk, it is evident that the
advantage of the banker is vastly greater than that of
the coiner, for the banker, in reality, realizes the whole
amount and more, the moment it passes from his bauds,
or at least in one year, for a redemption in specie gene-
rally, at more than six pence on a dollar, is an impossi-
bility.

As the bankers of Gloucester, in Massachusetts, set
an example, some years ago, which has been followed
by Messrs. M*Keon & Cheesman, in this state, for the
redemption of their notes ; the facility and convenience
of which will, undoubtedly, recommend it to the adop-
tion of others, whenever a general demand shall be
made.

But whatever difference there may be in the profits,
the injury, to the public, is the same ; for, provided an
additional sum is brought to market, whether the fabri-
cators reap all the profit at once, or from time to time,
or whether they share it themselves or divide it with
associates, a certain proportionate rise must necessarily
take place in the prices of the necessary articles of life
or trade, and though the banker should make but 1000
dollars, by the emitting 10,000 dollars in bank notes,
yet the whole 10,000 dollars is brought to market the
prices of commodities will be raised in the same propor-



iion as the ten thousand dollars bears to all the money
before in the market, or in circulation, and, of course,
the other members of society must be as much deprived of
their properly or the produce of their labor as they would
have been by the circulation of an equal sum of counter-
Ceit money. In fact, the whole sum of bank notes are
a deception ; they are false and a counterfeit and that
majority in legislatures who have authorized them, a
band of mercenary swindlers, bought in and leagued
with individual companies to rob the industrious, poor
and fatten on the spoil.

Is it, then, surprising, that the laws should regard
seemingly different professions, so very differently, that
while it sends the poor man to the state-prison for life,
(who may be actually in distressing want,) it per-
mits the rich man, or banker, to fabricate millions with.
impunity ! Tt may, perhaps, be asserted, that there is
a farther difference between banking and coining, that
the one robs the individual, and the other the public at
large. Admit it to be so ; sure it is not saying much
in favor of the banker.

But it is by no means always the case ; for the mo-
ney of a skilful coiner circulates in the same manner,
and produces the same effects, as bank notes do ; and
whenever the bank fails, the individual is robbed as well
as the pnblic. Ask those who hold Gloucester, M'Keon
& Cheesman's notes, and let their individual answers
settle the question. Failures of banks frequently hap.
pen, and the calamity may become general, for their
solvency depends solely on the confidence that is placed
on them ; the least suspicion would infallibly run every
Lank in the country ; in this respect the analogy be-
tween bank paper and counterfeit coin is strongly mark-
ed. As long as false coin is not suspected, it passes as



S5

the true ; but the moment suspicion arises the cheat is
at an end, and the possessors most be loosers. This is
exactly the case with bankers ; general suspicion would
overset them all : and more individual injury is annu-
ally sustained by the total failure of some banks, and
the depreciation of the notes of others, than has beta
sustained by false coin since the settlement of America.

Of what consequence arc laws against monopolizers
and furestallers. The law establishing a bank is a law
establishing a monopoly, granting to bankers a privi-
lege to monopolize the very sinues of all commerce, to
take all legitimate mono) out of circulation, and to sub-
stitute false promises, expressed on scraps of paper, in
its place, and may also circulate ten. or twenty times the
amount in their notes that they have specie to pay ;
they may thereby receive a hundred per cent, on their
real capital, instead of seven, which is lawful interest.

AVhut is the use of laws against monopoly, but to pre-
vent individuals from engrossing the necessaries of life,
and thereby compelling the necessitous to pay an exor-
bitant price. It is in consequence of the banker being
enabled to emit large sums in paper, that large- sums
ean be obtained for speculation and monopoly, and it is
only making paper pass for gold and silver that large
can be obtained. There is but a limited quantity



of gold and silver in any country ; it cannot be increas-
ed at pleasure, to suit the convenience of the speculator,
as the paper can.

While this is the cac it will be impossible to pre-
vent monopoly ; so long us we permit men to increase
the quantity of their money by means of paper, all ar-
ticles of the first necessity wi ; l bear an exorbitant price.
Jn vain are the fruitfulness of our seasons ; in vain are
the bounties of nature overflowing our country. The

4



6

pious and thankful heart which has been pouring out
its gratitude to. the Beneficent Dispenser of all good,
for causing the earth to overflow with fruitfulness, and
felicitating itself with the cheering hope that a com-
fortable supply might fail to his lot, which the pretend-
ed scarcity of former seasons prevented him from en-
joying. But, alas! the avidity of the monopolizer is
sharpened, and increases with the quantity of produc-
tions, and the hopes of the labourer is disappointed.
Every necessary of life is as far beyond his reach as
ever ; the fruits of his labor must first pass through the
hands of the monopolizer, to be dealt out to him in
quantities proportionate to his money, at fifty or a hun-
dred per cent, advance.*'

* To consider merely the present order of human society,
it is evident that the first offence must have been his who
began a monopoly, and took advantage of the -weakness of
his neighbors, to secure certain exclusive privileges to him-
self.

The man. on the other hand, who determined to put
an end to this monopoly, and who peremptorily demanded
what was superfluous to the possessor, and would be of the
greatest benefit to himself, appeared to his own mind to be
merely avenging the violated laws of nature and justice.
The plausibleness of this reasoning, beyond a doubt, is the
original cause of all the crimes in the world. The fruitful
source of crimes consists in this circumstance one man's
possessing in abundance, of that which another is destitute,
and we must change the nature of mind before we can pre-
vent it from being powerfully influenced by this circum-
stance, when brought strongly hqrne to its preceptions by
the nature of its situation. Man must ceuse to have senses;
the pleasures of appetite and variety must cease to gratify,
before he can Jook tamely upon the monopoly of these plea-
sures. He must cease to have a sense of justice, before he
can clearly and fully approve of this accursed prostitution of
legislative power, which fosters and supports such a scene
of superfluity and distress.



It is evident, therefore, that the hanking system ren-
ders the laws against monopoly equally ineffectual with
those against counterfeiting awl usury. Thus we pull
dowu with c:r own hands the only partition and barrier,
that divided and secured every man in the fruits of in-
dustry ; under such an order of things, we might he
led to conclude that laws are made rather to regulate,
systemise and encourage, than to suppress fraud and
rohhery.

We are frequently insulted hy heing told, hy oui 1
wooden-headed and rotten-hearted legislators, that
the robberies committed* by bank notes difier from all
others, that they tend to enrich the nation. Admitting
that to be the case, (though palpably IV.lse) and that
such a thing were desirable, still it is not less an evil
to them who are robbed of their property, or of the
fruits of their labor.

Enriching the nation, as it is called, is by no means de-
sirable. Such a wish can only originate in narrow,
perverted minds, who wish to represent the nation in
their own characters, and obliterate the history of all
others, and by forming their judgment by the deceptive
appearance that riches produce. Riches appear to
bring many conveniences to those who possess them ;
they therefore conclude, that a nation increasing in
wealth must, consequently, increase in happiness, than
which nothing can be more false and absurd, since it is
as impossible for one part of society to grow rich with-
out making the other part poor, as for one arm of a ba-
lance to be raised without (Jepressing the other. Had
all men an equal property, al] would have an equal
share of the productions of society, and all would be
obliged to labor alike, of course there would be neither
rich nor poor. Riches, therefore, is merely a compa-
rative term. The rich avo only those who can com-



28

mand a greater share of the productions of society,
than falls to the share of the common people ; and as
the number of the wealth? are increased, so will the
poverty of the others increase. In exact proportion as
the luxuries of one part of the community are increas-
ed, so must the comforts of the other part be diminish-
ed, and if it does not tend to lessen the number of in-
habitants, it augments the number of poor. I know a
town, in the vicinity of New-York, that, twentv years
ago, had but one person in it who required any assis-
tance from the public ; the same to\Vn, though very lit-
tle increased in population, has increased their poor an
hundred fold. No person who will take the trouble to
examine the Poor-House books and Soup House bilb,
and other institutions for the relief of the poor, will en-
tertain a doubt that the increase of poverty and distress
has kept pace with our riches, or paper money.

In the New- England states the effects are the most
conspicuous, because they are more populous, and their
paper systems, heretofore, far the most numerous ; be-
sides the increase of their poor, thousands are compel-
led to emigrate to the western wilderness in a most for-
lorn condition, to make room for their more Wealthy
neighbors. In fact, an amount equal to the whole ac-
tive capital of the states is vested in banking companies,
turnpike companies, or some other chartered compa-
nies, and the whole of them leagued against all honestv
many of the judges of their courts openly engage in
shaving notes. But we need not go abroad for exam-
pies of knavery, or the effects of papei* money ; do we
not see a considerable part of this city taken up by
those who have thus enriched themselves, from which
mechanics and other useful citizens are driven forever?
Such has been the necessary consequence of suffering
men to increase their money, by means of bank notes



89

and similar means, that they have been thereby ena-
bled to engroee so large a share of the productions of
society, as have ekhej 1 reduced those to beggary, or
forced them to emigrate, who have hud no such means
of increasing their incomes.

The effects Of this accursed system, of making paper
pass for gold and silver, has been so art.fully disgnisvrf,
that little attention has been paid to it by the communi-
ty at large. The evils, thence arising, have beer, de-
signedly attributed to other causes, purposely to con-
ceal the real ones.

In England it has been attributed to the taxes, andib
this country to commerce, and that commerce has been
the cause of the great rise in the prices of the produc-
tions of society ; but on examination it will be found a
falsehood.

Were all taxes levied on income directly, they could
produce ho effect whatever on the prices of convmddi-
ties ; for, as the prices must depend on the demand,
and as every man's demand rests with hrs income, the
whole demand, or the prices of all the fcrnnmodrties,


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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 2 of 6)