There is another authority to which we may appeal for the proper
quantity of circulating medium for the United States. The old Congress,
when we were estimated at about two millions of people, on a long and
able discussion, June the 22nd, 1775, decided the sufficient quantity to
be two millions of dollars, which sum they then emitted.* According to
this, it should be eight millions, now that we are eight millions of
people. This differs little from Smith's minimum of ten millions, and
strengthens our respect for that estimate.
* Within five months after this they were compelled, by the
necessities of the war, to abandon the idea of emitting only
an adequate circulation, and to make those necessities the
sole measure of their emissions.
There is, indeed, a convenience in paper; its easy transmission from one
place to another. But this may be mainly supplied by bills of exchange,
so as to prevent any great displacement of actual coin. Two places
trading together balance their dealings, for the most part, by their
mutual supplies, and the debtor individuals of either may, instead of
cash, remit the bills of those who are creditors in the same dealings;
or may obtain them through some third place with which both have
dealings. The cases would be rare where such bills could not be
obtained, either directly or circuitously, and too unimportant to the
nation to overweigh the train of evils flowing from paper circulation.
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