3. That too much money in a commercial country will inevitably produce a scarcity.
4. That the wealth of a country does not consist in cash, but in the produce of industry, viz. in agriculture and manufactures.
5. That in a commercial country, where people are industrious, there can never be, for any long time, a want of cash sufficient for a medium.
The first proposition is universally acknowleged to be true.
The second is less obvious, but equally true. Too much money raises the price of labor and of its effects; deprives us consequently of a foreign market; produces indolence and dissipation; than which greater evils cannot happen to a State. The sudden increase of money, by large emissions of paper credit, at the beginning of the late war, produced more luxury, indolence, corruption of morals, and other fatal effects, than all other causes that ever took place in America. We feel these evils to this moment. On the other hand, a scarcity of cash, tho it cramps commerce for a moment, always checks the evils before mentioned, lowers the price of labor, and produce will of course find a profitable market; it produces economy and industry, and consequently preserves the morals of the people; for industry goes further in preserving purity of morals, than all the sermons that were ever preached.
This leads to an illustration of the third proposition. If too much money in a country raises the price of labor and of produce, the consequence is, that people will go abroad for articles, because they are cheaper in foreign markets, and they will purchase as long as they can get cash. Importations will be multiplied till the country is drained of cash, and then business will return to a new channel. The history of trade in America, the last two years, is an illustration of this proposition.
The fourth proposition, also, is illustrated by facts. I will suppose that ten millions of dollars are sufficient for a medium in America: Let that sum be instantaneously augmented to twenty millions, and the country is not a farthing richer, for the price of goods will be immediately doubled. Two dollars, in the latter case, purchase no more than one in the former. People ignorantly suppose that goods rise in value; when the fact is, money falls in value. Continental currency was a proof of this. There was cash enough for a medium in the country before the war; and the addition of two hundred millions of dollars did not increase the wealth of the country one farthing; nor would the whole purchase more than the ten millions of specie which circulated before the war. Had the paper all been Spanish milled dollars, the effect would have been the same, had they continued in the country, and not been hoarded.
The fifth proposition depends on this simple fact, that money is a fluid in the commercial world, rolling from hand to hand wherever it is wanted, and there is any thing to purchase it. Let the produce of a country excel, in the least degree, the consumption, and it will never want money.
Admitting the foregoing observations to be true, both the necessity and policy of emitting paper, vanish at once. Supposing paper currency to preserve its credit, still so far from increasing the medium of trade, that in a few months it will drive all the specie from the country. Bank notes and bills of exchange are useful in facilitating a change or conveyance of property; but to issue paper credit, merely with a view to increase the circulating medium, in a country where the people may have just as much gold and silver as they are pleased to work for, is the height of folly. If people are indolent, or extravagant, all the paper currency under heaven will not make them rich, or supply their wants of cash. If people are industrious and frugal, and purchase no more foreign goods than they can pay for in superfluous produce, they will ever have cash enough. Their whole system of commerce stands on these single facts.
If the merchants bring more goods than people want, business must be dull; money with them must be scarce. At the close of the war, cash was plentiful and goods scarce. This made business lively, till people had procured a supply. Remittances were made in cash, so long as it could be obtained. That period is past, and the merchant must now look for remittances where alone they ought ever to be found, in the produce of the country. Business is just now returning into its proper channel, from which it had been diverted by the violence of war, and the fluctuations of paper credit. The rapid population of a country is an agreeable circumstance; but every profession ought to increase in a due proportion. Supposing ten thousand carpenters were to land in Baltimore at once, would they have business? Or would they not exclaim, business is dull, money is scarce? Every one might have a trifle of business, but they could not all make fortunes.