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ciation of the currency, although in fact existing, did not necessarily manifest itself; at least up to the period of the crisis the progress which had been made in the depreciation of our currency, so far as described from the quotation of exchange, was unknown. The discovery was, however, none the less certain because deferred. It was a question of time simply, and bad the American crisis never occurred, we should, infallibly, have had, and that within a very short time, a Brazilian crisis. For, it was impossible that tbe export of the products of the country could bave continued, always with loss, and the senseless career of those engaged in this branch of trade once arrested, the same effect would have been manifested as that wbich was produced by the American crisis, to wit: a suspension of exports, an accumulation of the products of the country, for which there would have been maintained, by force of the redundancy of the currency, prices, which, estimated in foreign money, at the par of exchange, would not admit of their being exported, and, as an infallible consequence, to promote their exportation, it would have become necessary to recognize the depreciation of the currency, and there would then have been established a rate of exchange, below the par, corresponding with such depreciation.

Question 9. Did the bills of the extinct banks, Commercial and Brazil, established on the 10th December, 1838, and 12th October, 1808, and those of the provincial banks, as well as those of their respective branches, circulate as promissory notes before and after maturity? Did this occur also with the bills having less than ten days to run ?

Answer. As regards the bills of the “Commercial,” we reply affirmatively, and the same may be said of the bills having less than ten days to run. But it must be borne in mind that those bill had a very limited circulation, entering only into the more important transactions, and that they never circulated, properly speaking, as bank notes, they never had a general circulation, never substituted, in all transactions, the government issues.

Question 10. Was the rise in the price of coin owing to the redundancy of bank issues? If to other causes, what were they?

Answer. It is our opinion that the rise in the price of coin is due purely and solely to the redundancy of the currency, proceeding from an excessive issue of bank notes, in combination with the pre-existing government issues.

BANK COMPETITION,

In the United States, where the principle or operation of bank competition may be most closely studied, there is no doubt that the final result of their conflicts bas manifested itself in the substitution of the notes of one bank by those of another. But these conflicts culminating in a crisis, are suspended only momentarily, to be renewed with the reappearance of confidence. It is a perfect game, in which all the private interests of society are put at hazard; and in no wise should it be supposed that bank competition offers any guaranty against a redundancy of the currency, against an abuse of the issue power by banks. At various times this matter has been the subject of rigid investigations before committees of the British House of Commons, and from the result of these investigations we gather that the Bank of England, possessed as it is of a giant capital, and exercising in money matters a Herculean power, has never been

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able to control absolutely the monetary movement of the country. And if this be so in reference to the Bank of England, where should we hope to find a different result ? DIRECT OR INDIRECT INFLUENCE OF BANK EXPANSION AND CONTRACTION.

Banks certainly do exercise a most important influence, as well direct as indirect, upon the sum of transactions, in the rise or fall of the prices of merchandise, and upon the course of exchange. An expansion of the circulation signifies an increase of the currency, and by the law of supply and demand, the currency being rendered less valuable by this increase, everything which is exchanged for it increases in prices in the proportion of the depreciation. On the other hand, a contraction of the circulation signifies a decrease of the currency, and by the law of supply and demand, the currency being rendered more valuable by this decrease, ererything which is exchanged for its decreases in price in the proportion of its appreciation. We may hence infer the direct action of a bank expansion or contraction, and if the influence of the bauk movement were limited to this direct action-if it were in the direct proportion simply of the expansion or contraction-it would be less baneful. Unfortunately, however, this is not so. The indirect intluence of expansions and contractions of banks of issue is so injurious that, of itself, it should be sufficient to banish them forever from intelligent communities.

An expansion began, there arises amongst all classes, and especially when the expansion is sudden and rapid, a species of delirium ; credit assumes proportions of extraordinary development, inconsiderate engagements become the rule, and all in the conviction of an indefinite continuance of the millenium of bank expansion. The poor faithful! Disappointed hope! The expansion, as an infallible consequence, stimulating all prices, as well of the products of the country as of foreign merchandise, provokes an unbridled importation, whilst repressing the export trade. It is not long before the importer knocks at the bank-door for metal with which to make his remittances, seeing that the marvelous expansion maintains prices so disproportionable for the products of the country that they cannot be exported without a certain loss—the products of the country cannot be exported, and, as a consequence, there are no bills of exchange. For this reason the importer finds himself obliged to export metal. What do the banks do? Alarined, they refuse discounts precisely at the moment at which their previous action has rendered them the most necessary, and, not content with this, they increase the rate of interest, (not in the United States—for there, fortunately, this power has been denied to them,) and to that delirium of joy which was so recently witnessed there succeeds consternation—a general panic-and from all sides is heard the cry of, Sauve qui peut. The hearts of men are converted into stone, the very foundations of morality are undermined, fraud and bad faith appear in every form, and the world, awhile since so smiling that it seemed to be realizing the true millenium, is converted into a very pandemonium. It is scarcely necessary to observe that, having thus presented the reverse of the picture, there may be seen there painted the effects of a contraction.

There are not wanting economists who believe they have found, in an increase of the rate of interest, a corrective of the over-action of trade. We do not share this opinion, but, on the contrary, consider it a pure

cruelty, without plausible excuse. The experience of the Bank of England bas demonstrated, at least in the view of intelligent economists, its entire futility.

THE TRUE THEORY OF EXCHANGE.

terms."

In the reply which we had the honor to make to the second question, we somewhat enlarged; but, that we may be well understood, we desire to subunit some further reflections upon wbat constitutes, in our judgment, the true theory of exchange.

The basis principle of monetary science was enounced by Adam Smith nearly a century ago. That profound philosopher seized, as if alınost by intuition, upon the great truth, the basis of all logical or philosophical deductions with reference to the science of money. The principle emitted by Smith is—" That it is impossible to maintain in any country a paper circulation, at the par of metal, greater than the amount of metal which would otherwise circulate in such country if there existed no paper in substitution of it.” The able Condy Raguet devotes a chapter of his work to the illustration of this principle, showing the process and the operation of the substitution of paper for metal.

From this principle, as Raguet well demonstrates, we deduce that, in an emission of paper money, we can never exceed the limits of the metal which would circulate in the absence of the paper without producing depreciation, and it may be considered an axiom of the science of money, that “ redundancy and depreciation, in reference to metal, are convertible

This being the case, and the true basis of the par of exchange between the two countries being the faithful maintenance of the relation between current money and metal, the fluctuations of the exchange above or below

par, in this case, can never exceed, for any length of time, the cost of transpor.ing metal. What, then, is the conclusion wbich should be deduced from the suspension of this infallible law of exchange? In our judgment, the exchange continuing for a long while, however little, below the par, demonstrates, without possible refutation, redundancy and the consequent depreciation of the currency. And this conclusion is the more striking when it is known that, amongst those who have given themselves the trouble of studying this question, however superficially, a permanent unfavorable balance of trade is a solecism-an impossibility; that the rigorous law of all foreign trade, involving imports and exports, is, "the active pursuit of the equilibrium;" this law becoming yet inore rigorous when, from any overtrading or misfortune in the way of short crops, a country may have lost its metal.

This is, in our opinion, the true theory of exchange. In reference to the fluctuations witbin the limits of the commercial value of a currency, and the causes which produce them, we have sufficiently enlarged in our answer to the second question.

Art. 11.—JAPAN: ITS RESOURCES, TRADE, AND CURRENCY.

ARRIVAL OF AMBASSADORS-COURSE OF MODERN TRADE - SITUATION OF JAPAN-SIZE-POPULATION

DIVISIONS-SURFACE OF THE COUNTRY - AGRICULTURE - PRODUCTIONS - MINERALS-MANTTACTURES-LARGE CAPITAL-ITSIGOYA-INLAND COMMERCR-DISCOVERY-DUTCH INTRIGUES--BRITISH ATTEMPTS--AMERICAN MISSION-PERRY'S ARRIVAL-TRKATIES-ENGLISH TRKATIES-LORD ELGIN - EMBASSY TO UNITED STATES-MR. ALCOCK-GOVERNMENT ORGANIZATION-YEUDAL PRINCES TRADITION ADVERSE TO TRADE-NON-INTERCOURSE-MULTIPLICATION OF TREATIES--RELATIVE VALUE OF MATSLS-TREATY STIPCLATIONS OF LORD ILOIN'S TREATY-EFFECT UPON CURRENCYEMBARRASSMENT OF THE GOVERNMENT-EXPORT OF GOLD-LOCATION OF MERCHANTI-YOKUUANA SUCCESS OF THE LOCATION-TRADE-STATE OP GENERAL ETFORTS.

The arrival of the Japanese ambassadors in this country with the treaty for ratification marks a new era in the commerce of the world, and one which may be productive of great advantages in the future. In the rapid progress of modern industry it bas been the case that most of the nations of Eastern Europe and of North America have come to rival each other in almost all the products of manufacturing skill, and while communication and information are prompt and free, a degree of perfect liberality in respect of new inventions and processes has taken the place of that extreme jealousy which formerly guarded every petty trade secret from prying eyes, and which caused the arts to languish for so many ages. Each nation is able, or nearly so, to supply itself with all the comforts luxury required in the way of manufactures. The common want of all has come to be raw materials and raw produce, which the prolific soil of tropical climates gives in the greatest abundance. Hence, intercourse with those nations has become of more general importance. Chinese exclusiveness has been partially broken down, and events have now brought the hitherto little-known empire of Japan within the range of commercial intercourse, and European nations flock round the astonished tycoon in increasing numbers. The Empire Zipangu, or sunrise kingdom, is formed of a group of islands, lying between lat. 31° and 49° V., and long. 129° and 150° E. It is bounded north by the Sea of Okhotsk, east by the Pacific, south by China Sea, and west by the Sea of Japan, and is distant 5,000 miles from California, and 420 from China. The islands were discovered in 1542 by the Portugniese Governor of Molacca, who was driven thither by a storm. The chief islands are Sikokf, Kiusiu, and Niphon, the last named being the largest island of the world, having an area of 100,000 square miles, and being 900 miles in length by 100 in average breadth. The whole number of islands is about one thousand, and the area of the empire 170,000 square miles, or nearly equal to the New England States, with New York, Pennsylvania, and New Jersey. The political distribution is, 8 divisions, 68 provinces, and 622 districts, and the chief cities are Jeddo, the seat of government, Miako, and Osaka, in Niphon; Nagasaki, Saga, Kokura, and Toa Kanabe, in Kiusiu ; Simoda, Kotsi, Takamatsu, and Matsugama, in Yesso. The people are Mongolian, and their numbers are estimated at 40,000,000, assuming the same density as China. Nothing is known, however, upon the subject. The rocky coast is indented with bays, and subject to gales and fogs. The face of the country is mountainous, giving birth to numerous rapid streamsnone of great length. Rain is abundant, and is aided by systematic irrigation, conferring great fertility upon the soil, which is not allowed

much rest, since a law exists that land remaining unused for more than a year becomes forfeited to the public. Under such a rule the land is put to its proper use, and husbandry occupies all the valleys, climbing the ridges of the bills, until the useless plow is supplanted by hand labor on terraced slopes. The summer beats rise as high as 100°, and the cold of winter is frequently lower than the freezing point.

The intervales, or bottom lands, are in constant cultivation, and in the southern portion of the empire yield two crops annually, one of summer and one of winter grain. These boitoms are naturally level plains, or made so artificially. The great staple of the empire is rice, and whererer irrigation can be made available the land is planted with it. The accessible portions of rising ground and bills, as they recede from the plain, are graded, or if possible leveled, and planted with such vegetables as do not require moisture beyond what is usually supplied by the rains alone. Next to rice, tea is of the most importance, it being the almost universal beverage of the people.

Each family, or laborer, seems to have an allotment, divided from those adjoining by only a furrow, or even an imaginary line drawn from one landmark to another. These are all very small, apparently containing from half an acre up to two acres. The preparation of the land for the crops is principally by hand. The implements are nearly all of wood. The plow has the point shod with iron, but hoes and harrows are entirely made of the former material. The plow is not large, and is used only in light soil. A single bullock or horse is attached and driven by one man, while another holds the plow. The same is true of the harrow, which is used to reduce the soil to a perfect pulp, preparatory to transplanting rice shoots, which are treated in the same way as in China and other countries where it is cultivated. All their crops appear to be planted in drills, the distance between them being about a foot, and watered with liquid manure, which is collected in vats or pits, dug at suitable intervals on the side of paths and roads, and covered by light thatched roofs, which exclude too much heat and prevent excessive evaporation. In the region of Simoda, wheat and barley reach their maturity in April, and are harvested in June. No cotton or sugar-cane was noticed, but nearly every other production with which we are familiar in our climate was found, including potatoes, corn, fruits, and tobacco of a mild quality.

The mulberry tree is cultivated in great abundance, both for the purpose of rearing silk-worms and the manufacture of paper. This last article is used in the greatest quantity, and made available for innumerable purposes.

It is made from the inner bark of the tree, and is of every degree of thickness and fineness, from a stout, strong article, down to a delicate silk-like texture. Much of the finer kind is beautifully stamped with figures, and portions with colored designs, like our muslins. The coaser sort serves for pocket handkerchiefs, and the finer is pasted upon frames to make light-shades. It enters into the structure of every house. It is fixed to large, light, sash-like frames, which extend from the ceiling to the floor. These are placed in grooves, along which they slide upon little chinaware wheels. In many houses they form most of the partitions, and by removing them, or replacing them, the apartments may be enlarged or diminished at pleasure. When used for the outside walls, they answer for windows, and the paper is protected from rain by the roofs projecting in the form of a portico.

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