Take a certain term of years for its gradual reduction, suppose it to be five years; then let the solvent banks issue ⅚ of that amount in new notes, to be attested by a public officer, as a security that neither more or less is issued, and to be given out in exchange for the suspended notes, and the surplus in discount.
Let ⅕th of these notes bear on their face that the bank will discharge them with specie at the end of one year; another 5th at the end of two years; a third 5th at the end of three years; and so of the 4th and 5th. They will be sure to be brought in at their respective periods of redemption.
Make it a high offence to receive or pass within this State a note of any other.
There is little doubt that our banks will agree readily to this operation; if they refuse, declare their charters forfeited by their former irregularities, and give summary process against them for the suspended notes.
The Bank of the United States will probably concur also; if not, shut their doors and join the other States in respectful, but firm applications to Congress, to concur in constituting a tribunal (a special convention, e. g.) for settling amicably the question of their right to institute a bank, and that also of the States to do the same.
A stay-law for the suspension of executions, and their discharge at five annual instalments, should be accommodated to these measures.
Interdict forever, to both the State and national governments, the power of establishing any paper bank; for without this interdiction, we shall have the same ebbs and flows of medium, and the same revolutions of property to go through every twenty or thirty years.
In this way the value of property, keeping pace nearly with the sum of circulating medium, will descend gradually to its proper level, at the rate of about ⅕ every year, the sacrifices of what shall be sold for payment of the first instalments of debts will be moderate, and time will be given for economy and industry to come in aid of those subsequent. Certainly no nation ever before abandoned to the avarice and jugglings of private individuals to regulate, according to their own interests, the quantum of circulating medium for the nation, to inflate, by deluges of paper, the nominal prices of property, and then to buy up that property at 1s. in the pound, having first withdrawn the floating medium which might endanger a competition in purchase. Yet this is what has been done, and will be done, unless stayed by the protecting hand of the legislature. The evil has been produced by the error of their sanction of this ruinous machinery of banks; and justice, wisdom, duty, all require that they should interpose and arrest it before the schemes of plunder and spoliation desolate the country. It is believed that Harpies are already hoarding their money to commence these scenes on the separation of the legislature; and we know that lands have been already sold under the hammer for less than a year's rent.
TO JOHN ADAMS.
Monticello, December 10, 1819.