Atlantic Monthly | Page 7

present age is more profoundly steeped in materialism than any before,--if its enterprise is not simply more bold, but more reckless and prodigal,--if the monitions of conscience have lost their force in practical affairs, and the dictates of religion and honor alike their sanctity, it is because of the uncertain principle, the gambling spirit, the feverish eagerness, and the insane extravagance, which beset the ways of traffic. Living in a world in which days of golden and delusive dreams are rapidly succeeded by nights of monstrous nightmares and miseries, society loses its grasp upon the realities of life, and goes staggering blindly on towards a fatal degeneracy and dissolution.
[Footnote B: Yet this is not to be lightly estimated. Seaman, in his Progress of Nations says the direct losses by paper money, within the last century and a half, have equalled $2,000,000,000.]
The question, then, is, whether this melancholy march of things should be allowed to proceed, or whether we should strive to do better. Our good sense, our moral sense, our progressive instincts, conspire with our interests in proclaiming that we ought to do better; but how shall we do better? "Why," reply the great Democratic doctors,--Mr. Buchanan, the President, and Mr. Benton, the Nestor of the people,--"suppress the issue of small bank-notes!" Well, that nostrum is not to be despised; there would be some advantages in such a measure; it would, to a certain extent, operate as a check upon the issues of the banks; it would enlarge the specie basis, by confining the note circulation to the larger dealers, and so exempt the poorer and laboring classes from the chances of bank failures and suspensions. But if these gentlemen suppose that the extrusion of small notes would be in any degree a remedy for overtrading, or moderate in any degree the disastrous fluctuations of which everybody complains, they have read the history of commerce only in the most superficial manner. Speculations, overtrading, panics, money convulsions, occur in countries where small notes are not tolerated, just as they do in countries where they are; and they occur in both without our being able to trace them always to the state of the currency. The truth is, indeed, that nearly all the great catastrophes of trade have occurred in times and places when and where there were no small notes. Every one has heard of the tulip-mania of Holland,--when the Dutchmen, nobles, farmers, mechanics, sailors, maid-servants, and even chimney-sweeps and old-clothes-women, dabbled in bulbs,--when immense fortunes were staked upon the growth of a root, and the whole nation went mad about it, although there was never a bank nor a paper florin yet in existence.[C] Every one has heard of the great South-Sea Bubble in England, in 1719, when the stock of a company chartered simply to trade in the South Seas rose in the course of a few weeks to the extraordinary height of _eight hundred and ninety per cent.,_ and filled all England with an epidemic frenzy of gambling, so that the recoil ruined thousands upon thousands of persons, who dragged down with them vast companies and institutions.[D] Yet there was not a banknote in England, at that time, for less than twenty pounds, or nearly a hundred dollars.
[Footnote C: Mackay's _History of Popular Delusions._]
[Footnote D: Doubleday's _Financial History of England_, p. 93.]
More recent revulsions are still more to the point. In 1825, in England, there were enormous speculations in joint-stock enterprises and foreign loans. Some five hundred and thirty-two new companies were formed, with a nominal capital of about $2,200,000,000, and Greek, Austrian, and South American loans were negotiated, to the extent of $275,000,000. Scarcely one of these companies or of these loans ever paid a dividend; and the consequence was a general destruction of credit and property, and a degree of distress which was compared to the terrible sufferings inflicted by the Mississippi and the South-Sea Bubbles. Yet there were no bank-notes in circulation in England under five pounds, or twenty-five dollars. Again, our readers may recall the monstrous overtrading in railroad shares in the years 1845-6. Projects involving the investment of ￡500,000,000 were set on foot in a very little while; the contagion of purchasing spread to all the provincial towns; the traditionally staid and sober Englishman got as mad as a March hare about them; Mr. Murdle reigned triumphant; and, in the end, the nation had to pay for its delirium with another season of panic, misery, and ruin. Yet during all this excitement there were not only no small notes in circulation, but, what is most remarkable, there was no unusual increase in the issues of the banks, of any kind.
Let us not hope too much, therefore, from the suppression of small notes, should that scheme be carried into effect; let us not delude