Note (currency)

“ I was careful to make these notes identical, to stamp them all in the same place with my metal seal, and in every way to make them, so far as I could, a sort of currency, which, as you may imagine, they promptly became. When a man carrying one of these instruments might find himself called upon to pay, at some distance from my place of business, he would at first tentatively offer my note (perhaps at a small discount) to his creditor. ”

“ Now, he who receives paper money, is often placed under circumstances precisely the reverse.13 For, where the number of banks of issue is considerable, and the varieties of paper money in corresponding proportion, there are no valid tests within the reach of an average capacity, by means of which he may verify the genuineness of every note which he may happen to receive in the course of his transactions with the public. ”

“ B. placed great reliance upon the restoration of the gold currency for putting down a small note circulation. No man would choose to carry a bundle of small bank notes in his pocket, even new and clean ones, much less old, ragged, and filthy ones, when he could get gold in their place. A limitation upon the receivability of these notes, in payment of federal dues, would complete their suppression. ”

“ An issue of notes is a manifest gain to the issuers, who, until the notes are returned for payment, obtain the use of them as if they were a real capital: and so long as the notes are no permanent addition to the currency, but merely supersede gold or silver to the same amount, the gain of the issuer is a loss to no one; it is obtained by saving to the community the expense of the more costly material. ”

“ Is there a man here who expects that he, or his children, or his children's children, shall see the day when only gold coin, glittering through silk purses, will be the currency of the country, to the entire exclusion of bank notes? ”

“ April 8, 1898—"The truth is, we buy only with gold coin, to which alone the name of money ought to be applied. No bank note, treasury note or paper certificate, in any form or by whomsoever issued, is more than an instrument of credit. ”

“ Can anyone tell why a bank, under such circumstances, should not meet the peculiar demands of its customers, and furnish bank notes at a cost of one-sixth of what it must be, if the bank is compelled, as it is today, to rediscount its promissory notes, and buy gold certificates or United States notes to be used as currency, when its own bank notes would answer every purpose of currency just as well? ”

“ Every one of them expresses upon its face an engagement of the nation to pay to the bearer a certain sum. The dollar note is an engagement to pay a dollar, and the dollar intended is the coined dollar of the United States, a certain quantity in weight and fineness of gold or silver, authenticated as such by the stamp of the government. ”

“ But even now we realize very imperfectly what a power in the world paper-money is; for we are apt to think of it only as a circulating medium in the form of bank-notes, or treasury-notes, or of somebody's currency which has the merit of making no pretensions to the theoretical idea of a currency which represents gold, the representative of everything else. Bills of exchange and promissory notes are instruments quite as indispensable to modern commerce and civilization ”

“ Silver coin being very scarce, and the banks not being allowed to issue notes for a smaller amount than one dollar, several persons put out notes from 6 to 75 cents in value; these were called "Shinplasters." The Shinplaster was in the shape of a promissory note, made payable on demand. I have often seen persons with large rolls of these bills, the whole not amounting to more than five dollars. ”

“ No paper should circulate in a commercial country, which is not a representativ of ready cash; it must at least command punctual interest, and security of the principal when demanded. Without these requisits, all notes will certainly depreciate. Most of our public securities want all the requisits of a paper currency. [pg 111] But if they did not; if they were equal in value to bank notes or specie, still the sums are much too large for a circulating medium in America. ”

“ The Mode in which Credit is used as Money.—Economy in the employment of the precious metals is naturally suggested by ordinary experience; but the way in which states have profited by the expedient of depreciation affords a special inducement to follow what is practically the same course, and issue paper documents in place of the more costly metallic medium. In theory, as Ricardo explained, a paper currency is one in which the whole value has been appropriated as seigniorage. ”

“ When the people of any particular country have such confidence in the fortune, probity and prudence of a particular banker, as to believe that he is always ready to pay upon demand such of his promissory notes as are likely to be at any time presented to him, those notes come to have the same currency as gold and silver money, from the confidence that such money can at any time be had for them. ”

“ We will have the United States notes, the bank notes, and coin certificates, both gold and silver, together with the gold and silver itself, all in circulation. The actual amount of currency in circulation, I think, will be as large in specie times as now, and its equality and convertibility will rather increase than prevent the circulation of either. The depreciation of paper money is not necessarily caused solely by its excess, but by the uncertainty of its value and confidence in its redemption. ”

“ There are 80,000,000 natural persons in this country; there are 5,000 corporations called national banks! The 80,000,000 natural persons may sign promissory notes for five dollars each, and these notes are simply commercial paper, having no circulation as money. The 5,000 national banks sign their promissory notes to the same amount—$400,000,000—and these notes constitute, for all practical purposes, a national currency—a national money. ”

“ His first inquiry is, What is the market-value of the note offered? True, he knows that many of the notes he takes cannot be sold at all; but he also knows that the notes he is willing to take will in the aggregate be guarantied by a reservation of one, two, or three per cent., and that the note of the particular applicant for credit will tend to swell or to diminish the rate; and he cannot afford to exchange his goods for any note, except at a profit which will guaranty its payment when due,—which, in other words, will make the note equal in value to cash. ”

“ When a bank failed, the mass of its circulation being in small notes, sunk upon their hands. The gain to the banks from the wear and tear of small notes, came out of them; the loss from the same cause, falling upon them. The ten or twelve percent. annual profit for furnishing a currency in place of gold and silver (for which no interest would be paid to the mint or the government) , chiefly falls upon them; for the paper currency is chiefly under twenty dollars. ”

“ Under cognisability we may properly include what has been aptly called impressibility, namely, the capability of a substance to receive such an impression, seal, or design, as shall establish its character as current money of certain value. We might more simply say, that the material of money should be coinable, so that a portion, being once issued according to proper regulations with the impress of the state, may be known to all as good and legal currency, equal in weight, size, and value to all similarly marked currency.... ”

“ But the proportion of sound notes became at length so great that the new plan was adopted as an evident measure of economy, and now no piece of paper money is withdrawn from circulation until worn out, unless at the desire of the bank. Many financial institutions within easy reach of the capital make a custom of forwarding for redemption all their receipts of currency for the day, getting in return new notes just from the printers. ”

“ German gold, English bank-notes, letters of credit, foreign bills of exchange, bankers' cheques—untold wealth in every form and variety of currency. The man must have carried some seven or eight hundred pounds about his person. And that wasn't all either. There were letters in the purse, too—letters which, of course, Guy couldn't dream of looking at ”

“ This is done in a very convenient manner by lending their own promissory notes payable to bearer on demand—the borrower being willing to accept these as so much money, because the credit of the lender makes other people willingly receive them on the same footing, in purchases or other payments. These notes, therefore, perform all the functions of currency, and render an equivalent amount of money, which was previously in circulation, unnecessary. ”

“ Instead of using actual coins of gold, silver, or bronze, it is common to make use of paper notes containing promises to pay money. When the sum of money to be paid is large, a bank note is much more convenient, being of far less weight than the coins, and less likely to be stolen. A five-pound bank note is a promise to pay five pounds to any person who has the note in his possession, and who asks for five pounds in exchange for the note at the office of the bank issuing the note. ”

“ For small trading and at home, metal money answers well. But there is great trouble and risk in sending coin hundreds of miles to pay for goods bought at a distance. An easily carried substitute for gold and silver is the bank-note, a promise to pay so much, issued by the treasury or some banker, and passing as money from hand to hand. ”

“ To perceive that a pa-per representative of value so secured will perform every function of a coin of equal value needs only an instant's reflection. A five-dollar national bank note, for example, one of hundreds of such notes, drawn from a bank by the paymaster of a woolen mill, may be paid to one of the operatives as the measure and reward in part of the expenditure of his effort in guiding the loom. It may be paid by him to his grocer, thereby measuring and rewarding in part the efforts of men expended in producing and bringing to him potatoes, flour, coffee, sugar, bacon. ”

“ Currency is a word much more comprehensive than the word money, as it may include bank bills and even bills of exchange as well as coins of gold and silver, but the word money, as employed in the grant of power under consideration, means the coins of gold and silver, fabricated and stamped as required by law, which, by virtue of their intrinsic value, as universally acknowledged, and their official origin, become the medium of exchange and the standard by which all other values are expressed and discharged. ”

“ The first and most obvious method of attaining the object is to issue a paper currency which shall be redeemable, not in gold dollars of fixed weight, but in such quantities of gold and silver bullion as shall suffice to make the required purchases. ”

“ If they prefer to have gold spoons, or gold candlesticks, or gold watches, or gold anything else; or if, as traders, they require to make purchases in any parts of the world where their notes would not pass current, or where those from whom they buy do not require any commodity manufactured in this country, then they can have their gold at the Bank any day by presenting their notes. As, moreover, the holder of every bank-note has an equal claim, pro tanto, on the bullion in the Bank coffers, the more gold there is in them, the more will his note represent. ”

“ Specie payments having been resumed by the Government and banks, all notes or bills of paper issued by either of a less denomination than $20 should by law be excluded from circulation, so that the people may have the benefit and convenience of a gold and silver currency which in all their business transactions will be uniform in value at home and abroad. ”

“ They are fully understood by our people to whom such notes have been distributed as currency, and have inspired confidence in their safety and value, and have undoubtedly thus induced their continued and contented use as money, instead of anxiety for their redemption. ”

“ As the medium of exchange that antedated notes and that has not been entirely superseded by the issue of notes is coin; as coin has a definite intrinsic value, which notes have not; as coin is durable, portable, and readily exchangeable—it follows that a natural and practical immediate test of a note's security is the readiness with which it may be exchanged for coin. ”

“ These three are gold, silver, and paper. Gold and silver are generally used in the form of coins of definite weight and fineness. Paper money is a promissory note issued by the government, or by authorized banks, promising to pay the bearer, on demand, the amount of coin specified on its face. ”

“ These promises are called bank notes; and when the person or body issuing them is known to be able to fulfil the pledge, the note will circulate for a long time before it gets into the hands of any person who may wish to make use of the gold it represents. These paper representatives supply the place of a certain quantity of gold; and, being much cheaper, a large portion of the expense of a metallic circulation is saved by their employment. ”

“ The opposers of a solvent paper currency either ignorantly overlook, or craftily and dishonestly attempt to keep out of sight, the vital fact that, in all safe, legitimate, solvent, and prudent banking, all the notes issued for circulation will be wanted to pay the notes discounted, and will come back to the banks in payment of notes discounted; and that it is only rarely that any other redemption-redemption in coin-will be demanded or desired. ”

“ Each, therefore, serves equally to supply means of speculation to the merchant. So far, moreover, as bills and notes constitute what is called the circulating medium, or paper currency of the country, and prevent the use of guineas, the fictitious and the real bill are upon an equality; and if the price of commodities be raised in proportion to the quantity of paper currency, the one contributes to that rise exactly in the same manner as the other. ”