TABLE III. The following Table exhibits the Composition of the Mixed Currencies of the several States of the Union, Jan. 1, 1860; that is, the Percentage of Specie to the Circulation and Deposits in the Currency of each State: But there are variations, not only in the general currency of the United States, such as we have indicated, but also in the currency of each State, at different periods. We take that of Massachusetts, in illustration: -- TABLE IV., exhibiting the Quality of the Currency of Massachusetts. Year 1835. 1837. 1840. 1843. 1851. 1857. 1859. 1860. 8.9 14.6 15.1 7.1 8 184 44.1 7.5 From this it appears that the highest proportion of specie was in 1843, which year marked the termination of the great monetary convulsion that commenced with the failure of the banks in 1837, at which date the banks of Massachusetts had but eight per cent, as shown above. The severe pressure began in 1836, when the specie was seven. By a law of that Commonwealth, passed in 1858, the banks are required to keep at least fifteen per cent of specie. This law has much increased the average amount of specie. Another fact may be noticed in this connection; viz., that the banks of Massachusetts were, to a considerable extent, responsible for all the mixed-currency circulation in New England, because the banks of the neighboring States had all their bills redeemed in Boston. Those of Vermont, for example, whose average specie is only four or five per cent, kept bank balances (not actual specie, as often supposed) with certain banks which were under obligations to redeem all their bills as fast as presented. This, of course, greatly enhanced the responsibilities of the Massachusetts banks, and decreased the strength of their currency. The currency of New England was thus made a complete unit. The system of redemption, first established by the Suffolk Bank of Boston about forty years ago, was so perfected, that, while the banks of each State might act independently, they were bound together by a common tie, and involved in a common fate. This was known as the "Suffolk-Bank system." Volumes of statistics might be given of the same general character; but these, it is presumed, are sufficient to show the fluctuating character of the mixed currency of the United States, both in quantity and quality; and of course, in degree, of all other countries where such a currency exists: for it is, at all times and everywhere, the same in its general characteristics. The quality may and does vary greatly in different communities, as we have seen it in the different States of the American Union. But this is merely a question of degree. CHAPTER VIII. MIXED CURRENCY AS A MEDIUM OF EXCHANGE. HAVING shown that a mixed currency is certain to expand and contract, without reference to the healthful and harmonious provisions of value, and to a degree more extreme and dangerous than a currency composed of real money, we are prepared to answer summarily the principal question. Does a mixed currency perform satisfactorily the functions of money? 1st, Does it act efficiently as a medium of exchange? Currency, regarded merely as a medium of exchange, may be said to perform two offices: (a) To transfer commod ities from one person to another. For this purpose, a mixed currency, having a circulation wholly of paper, is found to be portable, readily counted, easily carried, safely kept, and is, consequently, as convenient as any agent that could reasonably be desired. (b) To discharge indebtedness between different parties. For this purpose, the thing to be desired is, that currency should be reliable; that is, that there should be nothing in its own nature, which disqualifies it to act fully, at all times, as a means of discharging obligations. Coin is always perfectly reliable for the payment of debts. When one debt has been discharged by it, the coin is just as available and acceptable for the discharge of a second or any succeeding debt. If gold and silver are called for by foreign obligations, they retain their full power to discharge them. There can never be a scarcity of them that an earnest demand will not create a supply for. If a community wants them very much, it will certainly get them. They crowd to their best market, as truly as cotton or wheat. We here make two principal statements: A foreign demand is the only cause that can take away the real money of a people. We have seen that an indefinite number of causes may take away a currency based, in any degree, on credit. But, again, a foreign demand can only take away its own amount of real money. We have seen that such a cause takes away an amount of mixed currency of which the quantity required abroad is only one factor; the other factor being that number which represents the proportion between the bulk of the currency and the specie basis. In these two statements are clearly shown the entire unreliability of mixed currency to discharge indebtedness. The man who promises to pay money can never know what may be the demand for specie, arising from a want of confidence in the banks, |