132 BANKING THEORIES IN UNITED STATES
Coady Raguet, in his first essay on money and banking, written
in the year 1815, argued that the specie had risen in value and
that paper money had not fallen.! He found no cause for concern
in the fact that the banks had suspended specie payments. They
had never been in a position to redeem all their notes at one time,
and they had then the same means of discharging their notes that
had been theirs before, namely, their claims on borrowers, ‘who
are now as able to pay as they ever were, if not in specie, in merchandise
of equal value. — Some banks may indeed be insolvent,
but that insolvency cannot arise from mere inability to pay specie,
but from the inability of their debtors to pay in anything.” ?
He granted, however, that the absence of the check imposed by
convertibility increased the danger that an excessive quantity of
notes would be issued, but felt that, if the banks would exercise
the same prudence in their issue of notes that they did when
under the restraint of specie payments, nothing was to be feared.?
In 1820 Raguet thought that the banks had not acted with this
desired moderation, and he laid great stress upon the importance
of retaining convertibility. He later accepted the doctrine that
the rates of exchange on foreign countries and the market price
of specie were conclusive tests of the degree of depreciation of an
irredeemable currency.’
“ An inconvertible circulating medium of paper, resting on the
real substantial property of the nation,” asserted another writer
Period. Colman (Distressed Stale, etc., 1720), and others, urged that silver had appreciated
because of an extraordinary demand for it. (See Davis’s Reprints, ii, 68,
60, 108; iii, 421 and 429; and iv, 8.) On the other hand we find Wigglesworth
contending in 1720 that the premium on silver was caused by depreciation of the
bills (A Letter from One in the Country, etc., Davis's Reprints, i, 419). The most
able exposition of this second opinion is found in Douglass’s Discourse (1740). The
colonial paper was not issued against commercial loans, and care must be taken in
comparing the early discussion with that which referred to the later bank notes.
1 Raguet, Inquiry into the Causes of the Present State of the Circulating Medium
(1815), pp. 14, 15, 43.
2. 107d. pp: 35, 30-®
Ibid., pp. 44, 45.
4 Report as Chairman of Committee on Banks, Pennsylvania legislature (1820),
Free Trade Advocate, ii, 345-347. About 1815, the report tells us, the commonly
received theory that the paper currency was not depreciated began to be abandoned.
5 Currency and Banking (1830), p. 141.
po HIP
