William Gouge
An Inquiry


To place the subject fairly before the reader, we shall bring together the principal propositions that have been supported in this essay, and leave the decision to his candid judgment.

We have maintained :

1.  That real money is that valuable by reference to which the value of other articles is estimated, and by the instrumentality of which they are circulated.  It is a commodity, done up in a particular form to serve a particular use, and does not differ essentially from other items of wealth.

2.  That silver, owing to its different physical properties, the universal and incessant demand for it, and the small proportion the annual supply bears to the stock on hand, is as good a practical standard of value as can reasonably be desired.  It has no variations except such as necessarily arise from the nature of value.

3.  That real money diffuses itself through different countries, and through different parts of a country, in proportion to the demands of commerce.  No prohibitions can prevent its departing from countries where wealth and trade are declining;  and no obstacle, except spurious money, can prevent its flowing into countries where wealth and trade are increasing.

4.  That money is the tool of all trades, and is, as such, one of the most useful of productive instruments, and one of the most valuable of labor saving machines.

5.  That bills of exchange and promissory notes are a mere commercial medium, and are, as auxiliaries of gold silver money, very useful: but they differ from metallic money in having no inherent value, and in being evidences of debt.  The expressions of value in bills of exchange and promissory notes, are according to the article which law or custom has made the standard;  and the failure to pay bills of exchange and promissory notes, does not affect the value of the currency, or the standard by which all contracts are regulated.

6.  That Bank notes are mere evidences of debt due by the Banks, and in this respect differ not from the promissory notes of the merchants;  but, being received in full of all demands, they become to all intents and purposes the money of the country.

7.  That Banks owe their credit to their charters;  for, if these were taken away, not even their own stockholders would trust them.

8.  That the circulating quality of Bank notes is in part owing to their being receivable in payment of dues to government;  in part to the interest which the debtors to Banks and Bank stockholders have in keeping them in circulation;  and in part to the difficulty, when the system is firmly established, of obtaining metallic money.

9.  That so long as specie payments are maintained, there is a limit on Bank issues;  but this is not sufficient to prevent successive "expansions" and "contractions," which produce ruinous fluctuations of prices;  while the means by which Bank medium is kept "convertible" inflict great evils on the community.

10.  That no restriction which can be imposed on Banks, and no discretion on the part of the Directors, can prevent these fluctuations;  for, Bank credit, as a branch of commercial credit, is affected by all the causes, natural and political, that affect trade, or that affect the confidence man has in man.

11.  That the "flexibility" or "elasticity" of Bank medium is not an excellence, but a defect, and that "expansions" and "contractions" are not made to suit the wants of the community, but from a simple regard to the profits and safety of the Banks.

12.  That the uncertainty of trade produced by these successive "expansions" and "contractions," is but one of the evils of the present system.  That the Banks cause credit dealings to be carried to an extent that is highly pernicious – that they cause credit to be given to men who are not entitled to it, and deprive others of credit to whom it would be useful.

13.  That the granting of exclusive privileges to companies, or the exempting of companies from liabilities to which individuals are subject, is repugnant to the fundamental principles of American Government;  and that the Banks, inasmuch as they have exclusive privileges and exemptions, and have the entire control of credit and currency, are the most pernicious of money corporations.

14.  That a nominal responsibility may be imposed on such corporations, but that it is impossible to impose on them an effective responsibility.  They respect the laws and public opinion so far only as is necessary to promote their own interest.

15.  That on the supposition most favorable to the friends of the Banking system, the whole amount gained by the substitution of Bank medium for gold and silver coin, is equal only to about 40 cents per annum for each individual in the country;  but that it will be found that nothing is in reality gained by the nation, if due allowance be made for the expense of supporting three or four hundred Banks, and for the fact that Bank-medium is a machine which performs its work badly.

16.  That some hundreds of thousands of dollars are annually extracted from the people of Pennsylvania, and some millions from the people of the United States, for the support of the Banks, insomuch as through Banking the natural order of things is reversed, and interest paid to the Banks on evidences of debt due by them, instead of interest being paid to those who part with commodities in exchange for bank notes.

17.  That into the formation of the Bank capital of the country very little substantial wealth has ever entered, that capital having been formed principally out of the promissory notes of the original subscribers, or by other means which the operations of the Banks themselves have facilitated.  They who have bought the script of the Banks at second hand, may have honestly paid cent. per cent. for it;  but what they have paid has gone to those from whom they bought the script, and does not form any part of the capital of the Banks.

18.  That if it was the wish of the Legislature to promote usurious dealings, it could not well devise more efficient means than incorporating paper money Banks.  That these Banks, moreover, give rise to many kinds of stock jobbing, by which the simple-minded are injured and the crafty benefitted.

19.  That many legislators have, in voting for Banks, supposed that they were promoting the welfare of their constituents;  but the prevalence of false views in legislative bodies in respect to money corporations and paper money, is to be attributed chiefly to the desire certain members have to make money for themselves, or to afford their political partisans and personal friends opportunities for speculation.

20.  That the banking interest has a pernicious influence on the periodical press, on public elections, and the general course of legislation.  This interest is so powerful, that the establishment of a system of sound currency and sound credit is impracticable, except one or other of the political parties into which the nation is divided, makes such an object its primary principle of action.

21.  That through the various advantages which the system of incorporated paper money Banking has given to some men over others, the foundation has been laid of an artificial inequality of wealth, which kind of inequality is, when once laid, increased by all the subsequent operations of society.

22.  That this artificial inequality of wealth, adds nothing to the substantial happiness of the rich, and detracts much from the happiness of the rest of the community.  That its tendency is to corrupt one portion of society, and debase another.

23.  That the sudden dissolution of the Banking system, without suitable preparation, would put an end to the collection of debts, destroy private credit, break up many productive establishments, throw most of the property of the in dustrious into the hands of speculators, and deprive laboring people of employment.

24.  That the system can be got rid of, without difficulty, by prohibiting, after a certain day, the issue of small notes, and proceeding gradually to those of the highest denomination.

25.  That the feasibility of getting rid of the system, is further proved by the fact, that the whole amount of Bank notes and Bank credits, is, according to Mr. Gallatin's calculation, only about one hundred and nine million dollars.  By paying ten or eleven millions a year, the whole can be liquidated in the term of ten years.  If, however, twenty or thirty years should be required for the operation, the longest of these is but a short period in the life time of a nation.

26.  That it has not been through the undervaluation of gold at the mint, that eagles and half-eagles have disappeared;  but from the free use of Bank notes.  Nevertheless, a new coinage of pieces containing four and eight, or five and ten dollars worth of gold is desirable, to save the trouble of calculating fractions.  The dollar being the money of contract and account, no possible confusion or in justice can be produced by an adjustment of the gold coinage to the silver standard.

27.  That incorporating a paper money Bank is not the "necessary and proper," or "natural and appropriate" way of managing the fiscal concerns of the Union;  but that the "necessary and proper," or "natural and appropriate" way, is by sub-treasury offices.

28.  That incorporating a paper money Bank is not "the necessary and proper," or "natural and appropriate" way of correcting the evils occasioned by the State Banks, inasmuch as a National Bank, resting on the same principles as the State Banks, must produce similar evils.

29.  That "convertible" paper prevents the accumulation of such a stock of the precious metals as will enable the country to bear transitions from peace to war, and insure the punctual payment of war taxes, and that the "necessary and proper," or "natural and appropriate" way of providing for all public exigencies, is, by making the Government a solid money Government, as was intended by the framers of the Constitution.

30.  That if Congress should, from excessive caution, or some less commendable motive, decline passing the acts necessary to insure the gradual withdrawal of Bank notes, they may greatly diminish the evils of the system, by declaring that nothing but gold and silver shall be received in payment of duties, and by making the operations of the Government entirely distinct from those of the Banks.

31.  That, on the abolition of incorporated paper money Banks, private Bankers will rise up, who will receive money on deposit, and allow interest on the same, discount promissory notes, and buy and sell bills of exchange.  Operating on sufficient funds, and being responsible for their engagements in the whole amount of their estates, these private Bankers will not by sudden and great "expan sions" and "curtailments" derange the whole train of mercantile operations.  In each large city, an office of deposit and transfer, similar to the Bank of Hamburgh, will be established, and we shall thus secure all the good of the present Banking system, and avoid all its evils.

32.  That, if the present system of Banking and paper money shall continue, the wealth and population of the country will increase from natural causes, till they shall be equal for each square mile to the wealth and population of Europe.  But, with every year, the state of society in the United States will more nearly approximate to the state of society in Great Britain.  Crime and pauperism will increase.  A few men will be inordinately rich, some comfortable, and a multitude in poverty.  This condition of things will naturally lead to the adoption of that policy which proceeds on the principle that a legal remedy is to be found for each social evil, and nothing left for the operations of nature.  This kind of legislation will increase the evils it is intended to cure.

33.  That there is reason to hope that, on the down fall of monied corporations, and the substitution of gold and silver for Bank medium, sound credit will take the place of unsound, and legitimate enterprize the place of wild speculation.  That the moral and intellectual character of the people will be sensibly though gradually raised, and the causes laid open of a variety of evils under which society is now suffering.  That the sources of legislation will, to a certain extent, be purified, by taking from members of legislative bodies inducements to pass laws for the special benefit of themselves, their personal friends and political partisans.  That the operation of the natural and just causes of wealth and poverty, will no longer be inverted, but that each cause will operate in its natural and just order, and produce its natural and just effect – wealth becoming the reward of industry, frugality, skill, prudence, and enterprize, and poverty the punishment of few except the indolent and prodigal.