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Tu Ne Cede Malis

Advancing the scholarship of liberty in the tradition of the Austrian School for 30 years

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Organization of Debt into Currency and Other Papers
by Charles Holt Carroll

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Little is known of Charles Holt Carroll (1799-1890), the author of the thirty-six essays reprinted in this book. In the list of contributors in Hunt's Merchants' Magazine, where many of these essays appeared, Carroll is described as "A Merchant of Massachusetts." There are, of course, such scattered bits of information in business directories and newspapers as may be found for many nineteenth-century businessmen, but even when these are combined with the remarks he drops about himself in his essays, only a shadowy figure of a man emerges. One would like to know more about this merchant who wrote so vigorously on the currency question.

Carroll seems to have had no close associates. Possibly he was regarded as eccentric. In any event no one troubled to write his biography, and the members of his family did not bother to preserve his personal papers. Despite his claim to having discovered no less than three new truths as to the effects of paper money in an essay written in 1859, those around him evidently did not think he would achieve renown. It now appears that Carroll might have made broader claims, for in the aggregate his writings contain an abundance of interesting ideas.

Although Carroll insists upon a fresh approach to the currency problem, he is emphatic that his findings are based on accepted economic doctrine. He pauses frequently to praise the developing science of political economy, whose laws he insists are universally valid. He appears to have been a moderately careful student of Smith and Mill, and he was strongly, if not violently, anti-interventionist and antiprotectionist. On currency matters he was not a slavish follower of classical thought. Rather, he pursued his own path, rejecting, for example, Smith's dictum that an economy is realized by substituting paper money for the precious metals. He also quarrels with Mill's view that all forms of credit have the same effect. Yet in fundamental matters, such as the nature and source of value, Carroll adheres to orthodox teaching. Carroll's outright rejection of the ideas of Henry C. Carey is indicative of his basic approach.

There were, to be sure, other antibank and hard-money men in the middle of the nineteenth century, but, unlike some, Carroll was not content simply to repeat the slogans of the antibank faction of the Jacksonian era. He undertook to provide a reasoned argument for opposing banks, using the doctrines of the political economists; and while others had attempted to supply such a rationale, Carroll was possibly the most able.[1] His analysis of a fractional-reserve banking system contains penetrating insights; and although the economic scene has changed, much of what he has to say is still pertinent. Our money continues to be that same debt currency that Carroll abhorred. Even if one is not prepared to agree with all of his analysis or to accept any of his policy conclusions, one must admire the work of this nineteenth-century businessman who was unafraid of new ideas. The freshness of his views and the vigor of his style make these essays a pleasure to read.

An obituary in the Boston Evening Transcript of February 25, 1890, states that Charles Holt Carroll was born in Maryland in 1800 and belonged to the same family as Charles Carroll of Carrollton, signer of the Declaration of Independence. The Newton Journal of February 28, 1890, repeats this claim. In fact, however, Carroll was born October 25, 1799, in Charlestown, Massachusetts, of sturdy New England stock which can be traced back to the early 1600's.[2] It is uncertain who fastened to Carroll this American substitute for aristocratic lineage. There is no doubt that he did live in Maryland as a young man.

Possibly he went to Baltimore as a youth, but there is no direct evidence of his presence there until 1829. A number of young men named Charles Carroll attended St. Mary's College in Baltimore during the years when Carroll would have been of student age. It could hardly have been he who signed "Charles H. Carroll" in the Degree Book of St. Mary's College, July 2, 1813. That would mean that he earned the degree of A.B. when but thirteen years old. But when Carroll remarks in one of his many diatribes against the Bank of England that it was founded by the Protestants as part of the effort to displace the Stuarts, he may be revealing that he learned his history from a Roman Catholic teacher, as he certainly would have if he had been of the Maryland Carrolls. This, however, belies the Protestant background of his parents. Nor does it harmonize with the fact that Carroll's funeral was conducted by a Unitarian clergyman. In any event, Carroll's style of writing suggests that he had been trained under firm-handed schoolmasters. His thought is clear, his ideas are well organized, and his language is forceful. There are frequent classical allusions in his essays, but there is little of the excessively flowery style of the period. Although his eldest son attended Harvard, there is no record that he himself did.

Carroll, of course, may have been self-educated. If so, this might account for his frequently expressed scorn for closeted scholars. He says that only men who have had practical experience are qualified to speak on the question of the currency. One cannot be sure what meaning attaches to the aspersions he casts on scholarly deduction. While he does insist on first-hand knowledge of currency matters, he does not deny himself acquaintance with the writings of the political economists. At every opportunity he bolsters his views by appealing to their authority, although he does not hesitate to challenge them on doctrinal points.

The meager information about Carroll's life provides slight clue to the source of his ideas. By means of business directories it is possible to trace his career as a merchant.[3] He first appears in 1829 under the listing "Commission Merchants" in Baltimore. Subsequently the listing is "Dealer in Shoes, Hats, and Straw Goods." Beginning in 1840 his name appears jointly with George W. Tinges, who evidently continued the firm's business under his own name when Carroll moved to Boston in 1849. Possibly Carroll's marriage in 1832 to Rebecca White of Cambridge, Massachusetts, has a bearing on the family's moving to Boston, but either family ties or business opportunity could account for the transfer.[4] In any event, Carroll's residence for the next fifteen years was Cambridge, Massachusetts. One may amuse himself by speculating that Carroll may have been inspired to take up the writing of essays by observing the careers of some of his illustrious Cambridge fellow townsmen. While no evidence has been found to suggest that Carroll moved in the same circles as the Cambridge literary figures of the 1850's, Carroll's writing did begin about five years after he had established himself as a merchant in Boston with a residence in Cambridge.

Charles H. Carroll is listed among "Boot, Shoes, and Leather Dealers, Wholesale" in several Boston business directories beginning in 1850. The last entry in the series is for 1860, when the firm becomes Thayer and Carroll, suggesting that a partnership had been formed in anticipation of Carroll's retirement. It is clear that he had retired before he moved to West Newton, Massachusetts, in 1865, and he may have retired as early as 1860. The latter possibility is suggested by the change in the firm's name and by his no longer being described as a merchant in the list of contributors to Hunt's Merchants' Magazine after 1860.[5] At that time he would have been sixty years old, not an uncommon age for retirement from business. Carroll was undoubtedly engaged in business for at least thirty years. Frequent references in his writings to overseas transactions in hides suggest that his Boston business was the supplying of raw materials to the shoe industry.[6] How successful Carroll was as a businessman can be only a matter of conjecture. We know that he retired from business, but this could be accounted for by business success or by marriage or by inheritance. We know that he built a home when he moved to West Newton. That he was able to live without employment presupposes at least a modest amount of wealth.[7]

There were apparently eight children in the Carroll family. The oldest, a son named for his father, was born in Baltimore in 1832 and graduated from Harvard in 1853. This was the Charles Carroll who was professor at the University of the City of New York from 1871 to his death in 1889 and who contributed a number of articles and some verse to popular magazines in the seventies and eighties.[8] Another son, Arthur, went into business. We find him listed as a merchant on India Wharf and later as a dealer in mortgages and real estate. One son was killed in the Civil War, and one was an invalid. One of the daughters, Kate, founded the Carroll School, which is still operating in West Newton under that name. Another daughter, Blanche, married into the Howland family, who were paint manufacturers and dealers. Bertha became principal of a girl's school in Boston, and little seems to be known of the fourth daughter, Anna, who went to New York after her marriage to Richard Baring Gould, except that she had already died when her father made a will in 1884. Carroll's wife, Rebecca, outlived him by more than ten years. Carroll's only reference to his family is his frequently repeated complaint of the costliness of the then fashionable crinolines, which he condemned as an absurdity.

No evidence has been found that Carroll was active in community affairs. Following his removal to West Newton, when he might have been expected to devote some of the leisure of retirement to local activities, he seems to have kept to himself. West Newton had an active literary society, The West Newton Athenaeum, which met weekly to discuss and debate the popular issues of the day. Its meetings were reported regularly in the local weekly for the period 1866-1876. Yet, for this ten-year period, only one reference has been found to Carroll's expression of an opinion. This occurred during a debate on the question, "Resolved that the interests of the country require a liberal encouragement of immigration." The reporter says: "Mr. Chas. Carroll. . . . advocated the let-alone policy as the best and contended the government interfered too much in like matters."[9] This sounds characteristic, for Carroll was consistently anti-interventionist in his thinking.

Charles H. Carroll's name is not listed among the subscribers to the Newton Free Library, which was organized about 1870, but his son, Arthur, is later listed among the directors. However, only a few persons in West Newton were among the organizers, and the several miles that separate the two towns were then a greater barrier than would be the case today. No mention of the Carrolls is made in any of the several local histories of West Newton.[10] Carroll's name does not appear in the list of those West Newton residents who in 1869 paid $500 or more in local taxes. His near-by neighbors, according to the local directory, were a male stenographer, a teacher, an editor, and a bookkeeper. The best-known resident of that section of West Newton was probably Horatio King, Postmaster General in the Buchanan administration, but there is no evidence that Carroll and he were associated in any way.

Lack of information that Carroll was a leader or even an active participant in the intellectual life of West Newton makes plausible the assumption that he busied himself with his books and his writing. He must have possessed a modest library, for he cites no less than three dozen authors.[11] In 1871, the local library listed among its 3,100 volumes only four works on political economy: those of Adam Smith, Thomas De Quincey, John Stuart Mill, and Jean Baptiste Say.[12] In one of his papers, Carroll remarks that he has before him twenty years of the Statistical Abstract of the United Kingdom. Elsewhere he professes to have examined with care Hansard's Parliamentary Debates for materials on the 1844 Bank Act, and he writes as if he were a regular reader of the London Economist. There may be some doubt that Carroll read all the writings of all the writers he mentions, but it does seem that he was a diligent student of the political economists of his day, that he was something of a student of history, and that he was well informed on current affairs.

This is about all that can be said about Carroll's life. It helps only slightly in understanding Carroll's ideas. Yet there is some value in knowing that Carroll was neither a political figure nor a banker nor even a college professor.

A search of the periodicals of Carroll's day yielded the thirty-six essays reprinted in this book. It did not yield the paper Carroll refers to in "The Currency and the Tariff," published in August, 1855. Both L. W. Mints and H. E. Miller describe Carroll as having contributed numerous papers to Hunt's Merchants' Magazine and to Bankers' Magazine in the period 1856-1860, although in fact Carroll's writing began at least in 1855 and continued until 1879.[13] It is quite possible that other writings of Carroll remain to be discovered.[14]

The accessibility of the appraisals of Carroll's early writings by Mints and Miller makes unnecessary a detailed review of the essays written before the Civil War. The resume of his writings that follows is intended only to direct attention to some of the more interesting of Carroll's ideas.

In the first paper that has been found, "Currency and the Tariff," Carroll sets forth the theme on which he dwelt for almost twenty-five years, namely, that a currency created out of bank debt contains, as he put it, "a fatal principle." His minor theme, that protectionism is an intolerable burden on productive activity, also appears in the first essay. This, too, recurs in later essays. His tendency to repeat himself leads one critic to treat him harshly, but Carroll himself warned his readers that he was given to saying over and over again what he regarded as important.[15] While reading these essays one after another emphasizes their sameness, it must be remembered that they appeared over a period of twenty-five years. Moreover, Carroll's approach was that of a would-be reformer of social institutions and not that of the writer of a treatise.

What he had to say is still of interest despite changes in the economic environment. In emphasizing the significance of bank deposits, he was well in advance of his contemporaries. Although he was not the first to perceive that bank demand deposits are money, he made clearer than almost anyone else the fact that these deposits arise from the making of bank loans. In observing that bank notes usually come into use through the withdrawal of previously created deposits, Carroll seems to have anticipated the modern view that monetary control should be directed at deposits rather than at bank notes. Indeed, Carroll makes this point explicitly. Carroll is most eloquent in describing the process of deflation and in pointing out its potentialities for destroying the fabric of business. He shows with vigor and clarity how universal ruin may threaten an economic system where the circulating medium consists of bank debts resting on short-term business indebtedness to banks. It is here that Carroll shows that he fully understood the working of the financial mechanism upon which we still depend.

Although almost all writers of the day laid the blame for panics on the banking system, few saw with Carroll that monetary expansion and contraction were the basic cause. John Stuart Mill's influence was very great, and Mill espoused the Banking School view that the banks were essentially passive. Only a person of Carroll's independence of mind would dare to question Mill's doctrine that it was the use of credit for so-called "speculative purposes" that brought on collapse and panic. Carroll emphatically denied that limiting bank lending to "legitimate" uses would prevent crises. His position was that market forces would serve to allocate capital appropriately among alternative uses provided that the linkage between money-lending and money-creating were severed. He opposed the regulation of bank lending or, for that matter, any sort of lending. Carroll was thus one of the few nineteenth-century economic spokesmen who wrote meaningfully on competition in banking.

Down to the time of the Civil War, Carroll was hopeful that improvement in monetary affairs could be achieved by persuading the State legislatures to abandon the chartering of banks. He makes abundantly clear his doubts that the States actually possess this power despite the Supreme Court's having ruled that State bank notes are not bills of credit and thus do not fall under the Constitutional ban on state issue of money.

In this early phase of Carroll's thinking he placed great emphasis on the voluntary establishment of what he called "bullion banking," meaning banking with adherence to the 100% principle. He argues that a trial of this system would prove so successful that note-issuing, fractional-reserve banks would disappear. He attempted to show by arithmetical examples that a bank that maintained 100% reserves would not be unprofitable. Savings banks, he thought, demonstrate that the power to issue debt claims that circulate is not indispensable to a moneylending institution. He had great hopes for the Bullion Bank of New York, the organization of which was publicly announced in 1859, but which apparently never began operations.[16] During the Civil War, Carroll abandoned his faith in voluntary action. He urged the suppression of fractional-reserve banking by punitive Federal taxation. In matters of money he did not fear coercive action by political authority, although in other areas he was vigorously anti-interventionist in his economic philosophy.

Carroll's views on monetary reform underwent modification in consequence of the financial changes wrought by the Civil War. His basic tenets, opposition to bank-debt currency and to protectionism, remained unaltered, but in presenting in 1863 an outline of an ideal monetary system, he developed some novel ideas. He said that only full-bodied coins and fully backed coin certificates should be permitted to circulate. Bank-debt currency should be eliminated entirely. For the accommodation of persons having small payments to make at a distance, Carroll suggested that the postmasters be authorized to sell drafts on the subtreasuries. Postal money orders were in fact introduced about a year after this article appeared, but Carroll had been talking about such drafts since 1858. The most interesting feature of his drastic reform plan was the proposal to eliminate the dollar as the monetary unit. He wanted to replace it with the troy ounce. Carroll reasoned that this change was required to destroy the illusion that it is possible to create dollars out of paper and give them value by some legerdemain. To him the only money that genuinely possessed value was specie. That alone had productive effort embodied in it to the same extent as the things for which money is exchanged. Carroll was firmly convinced that the basic monetary fallacies, such as the idea that paper money is wealth and that interest can be lowered by printing money, have their origin in the fact that the monetary unit has become separated from the monetary substance.

The proposed reform was to return to the monetary practice of an earlier time when the monetary unit was actually a unit of weight of precious metal. The troy ounce seemed to Carroll to be the logical unit to replace the dollar, which he held was fundamentally defective in that it did not even represent in the mind of the public any specific amount of specie. In subsequent papers Carroll did not urge this particular reform, but he continued to insist that the only form of nonmetallic currency that should be tolerated was the fully backed coin certificate issued by the government itself. As might be expected, he approved of the gold certificate that first appeared during the Civil War, although this new form of currency actually was not in widespread use because it commanded a premium over the greenback.

Carroll never tired of inveighing against "paper money," which to him meant any kind of circulating media not backed 100% by specie. One of his arguments against paper money is that the holder of a note in effect gives up command over capital to the issuer and thus really makes an interest-free loan. He applies this idea to the Civil War greenbacks, showing how their issue enabled the government to obtain resources to carry on the war. He also applies the same reasoning to bank deposits, insisting that it is the bank's depositors that furnish capital to the bank rather than the bank that supplies capital to its customers. While Carroll did not press on to develop the idea of forced saving, the distinction that he attempted to make between capital in money form and in the form of wealth is central to that concept.

In one of the essays published during the Civil War Carroll does concede that if paper money is to be used at all, it should be issued by the government and not by banks. Despite this grudging concession, at the war's end he urged the prompt resumption of specie payments. Fearful of the effects of a drastic fall in prices, which he noted Ricardo had failed to foresee after the Napoleonic Wars, and which many in this country felt must come if resumption was to become a reality, Carroll toyed with the idea of adopting a dual currency system. Under his proposal all existing contracts and obligations would be satisfied in greenbacks, but all new undertakings would be entered into on a specie basis. Although his arguments against deflation are persuasive, he fails to make clear how the two currencies could circulate side by side. In subsequent discussion of resumption he abandons the idea and takes the position that the stock of money is in excess of the nation's needs and therefore might safely be contracted without inducing the drastic fall in prices that he had feared. It is here that he returns to the idea of a fixed per capita stock of money that he had advanced in his early writings.

Basically Carroll was a metallist rather than a nominalist in his approach to the nature of money. He regarded anything but metallic money as a fiction, leading inevitably to disaster. Contrary to Knapp's dictum that money is a creature of the state, Carroll's view is that money arises from exchange between producers and gets its purchasing power and its capacity to circulate from the commodity out of which it is made. Like the classicists, he held that value is derived ultimately from labor. Therefore, only a commodity money could embody value in the sense of containing within itself the crystallized effort of past production. Carroll does not deny that debt money can circulate, but he insists that inflation and inevitable collapse will follow any attempt to substitute inherently valueless tokens for metallic money. Carroll, however, does not fall into the error that has commonly been made by metallists of holding that the precious metals are constant in value. In discussing the outpouring of gold from California, he makes clear that any increase in the ratio of gold to other commodities must lower the value of gold. At heart he was a quantity theorist, if of a low order. In this he differs from many who have insisted on a gold currency. Contrary to what might be expected, he does not make the value of money turn about the cost of producing gold.

Carroll was not a sophisticated quantity theorist. He recognized the V and the T terms of the equation of exchange, but he made no effort to go beyond Mill's simple statement of their nature. He did, however, set forth some interesting views about the rate of flow of currency in the economic system. He makes much of the idea of an invariable normal relationship of 1 to 25 between total currency and total wealth or property, terms which are used by him without distinction. The basic idea he attributes to John C. Calhoun. Although Carroll makes use of this idea repeatedly, he never explains why this ratio exists. To him it is a simple empirically determined relationship. He also held that a similar normal relationship of 1 to 10 holds between total currency and total circulating capital. This seems to have been of his own invention. Again he fails to make clear why this ratio is constant. Carroll does not deny that there are departures from these normal values, but he insists that they are useful empirically to determine if the currency is in excess. Since he explicitly recognizes the phenomenon of hoarding, it is clear, at least by inference, that he recognized that velocity is a variable. But Carroll can hardly be said to have contributed to the understanding of the phenomenon of velocity.

The three words, "price without value," which Carroll never tires of repeating are the key to his thought. His central idea was that currency generated by bank lending pours forth only to drive up prices without creating additional value. This he found philosophically repugnant because it involved a fiction; more important, he held that the rise in prices was only temporary and inevitably culminated in collapse and wholesale bankruptcy. When the banks attempt to collect the loans that generated the currency that drove up prices, debts contracted when prices were high would be defaulted, and ruin would descend. The burden would be heaviest upon the merchant group, because they are accustomed to financing themselves by borrowing at banks. Carroll describes in great detail the effects of alternately expanding and contracting the currency, pointing out the effects of price changes on the distribution of wealth and income and also condemning the transfers of property that accompany bankruptcy. He observes that creditors are frequently defrauded by bankrupts, and this type of loss must be added to the losses assignable to changes in the value of money.

A further consequence of debt-currency expansion is to check exports by raising the prices of domestically produced goods to a level where foreigners find them unattractive. Imports flow in despite the tariff wall erected to protect domestic industry, and specie flows out. The effort to strengthen the nation's currency through adopting a policy of protectionism consequently produces precisely the opposite of the intended effect. Moreover, the monetary expansion that accompanies the early phase of the sequence of events serves only to weaken the credit structure. Collapse with an inevitable wave of bankruptcies follows, even if with a lag, each expansion in the currency. This is the theme of the first essay, and it recurs again and again.

Toward the end of the series of essays Carroll takes up some of the special problems of international finance when he considers the effect of resumption on the nation's gold holdings. In discussing the mechanism of specie flows, he finds it necessary to develop a theory of foreign exchange rate determination. His explanation sounds much like the purchasing power parity theory advanced by Gustav Cassel.[17] That is, changes in relative prices in the two countries account for changes in the exchange ratio of their currencies. Carroll, however, rejected the idea that the balance of trade determines the exchange rate. He saw clearly the importance of elements other than commodity transactions in the balance of payments, and his discussion of exchange rate behavior in connection with the problem of retaining metallic money shows an awareness of the central issues. To contemporary students it may seem puzzling to find Carroll saying that the exchanges are at par when the premium on London is 9½ per cent, but this is no barrier to understanding the fundamentals.[18]

Carroll's interest in exchange rate theory grows in part out of his antiprotectionism. In several of the papers written after the Civil War he attempts to show that the nation need not rely on a high tariff to build up its gold holdings preparatory to resumption of specie payments. This leads him to comment on the revenue aspects of the tariff. After denouncing the tariff because it interferes with economic specialization, he undertakes to develop the argument that raising revenue through import duties results in allocating the burden of taxation inequitably. As in his discussion of specie flows, his analysis runs in terms of the shifts in relative prices required to achieve a new equilibrium once something has occurred to change an existing pattern of resource utilization. Carroll unquestionably saw clearly the distinction between general price changes and relative price changes, and he certainly understood the importance of relative price movements in shifting from one equilibrium to another.

Carroll's explanation of why high interest rates and high prices occur together reminds one of Keynes' discussion of what he called the Gibson paradox.[19] It was Carroll's opinion that the explanation was to be found in the use of bank debt as currency. In order to get banks to acquire the paper tendered by businessmen, that is, to make more loans, higher interest rates are required. The additional money created in the lending process forces up commodity prices. Carroll thought in terms of a model in which interest is the price paid for debt claims. It will be noted that this approach to interest theory is employed by some contemporary theorists, and Carroll deserves credit for making an ingenious suggestion.

Carroll was tireless in blaming the Bank of England for introducing fractional-reserve banking, although he is careful to point out that at first the practice was restricted to note issue. In no less than twenty of his essays Carroll has occasion to speak harshly of the Bank of England for the part it played in demonstrating to the world that banks may operate with fractional reserves. In one place, as was noted earlier, he uses as the basis of his criticism the Protestant origins of the Bank, but ordinarily he attempts to rest his case on analytical reasoning. Carroll urges that there is no necessary reason for America to copy slavishly European financial practices, which on occasion he holds as unacceptable as European political practices. Here his American patriotism comes to the surface. Carroll was one of that group of midnineteenth-century Americans who saw a vision of a genuinely new social order. But Carroll was not above using European examples to bolster his case when that was convenient. The final essay, for example, lauds France for sticking to the use of gold coins as a medium of exchange. He was not always consistent, but few reform-minded persons are.

On two matters of banking theory which were widely discussed in the nineteenth century and which are still of interest, Carroll expressed himself with characteristic originality as opposed to the dominant view of his day. He ridiculed the idea that real bills are preferable to other kinds of bank assets, and he rejected the notion that elasticity in the currency is necessary. On both these matters the discussion is brief, but the clarity with which the subject is treated leaves no doubt that Carroll has a just claim to recognition. Here, as in his observation that a war debt's burden falls on the present generation, the treatment is such as to indicate that Carroll could see beneath the veil of money.

The editor may possibly be forgiven for refusing to say just where Carroll should rank among nineteenth-century monetary theorists. Clearly, if one may judge from the paucity of references to his writings, Carroll never became a major prophet. Along with a surprising number of other nineteenth-century Americans whose ideas are not markedly inferior to current thought, Carroll is known only to those familiar with the history of monetary and banking theory. But even such excellent studies as those of Mints and Miller leave one unaware of much that Carroll wrote.[20]

In his own time, his writings did not go wholly unnoticed, as is shown by the comments evoked from other contributors to Hunt's Merchants' Magazine.[21] Despite Carroll's vigorously expressed ideas on national financial questions, we have no evidence that he influenced public policy. Those who criticized his views are no better known than he is.[22] One obstacle to the wider diffusion of his ideas springs from the fact that he left behind no books. Any writer who limits himelf to essays in periodicals risks being soon forgotten. A further possible factor is that Carroll's ideas were both too orthodox and too radical. When explanations were sought for the financial distress after the Civil War, mass support could easily be mustered for programs that required no understanding of the subtleties of monetary theory.

Despite the apparent neglect of Carroll's ideas by his contemporaries, they are important enough to justify their being disinterred from the yellowed pages of the journals where the essays first appeared. Carroll's proposals for monetary and banking reform may have no greater chance of adoption now than when he wrote, but no one can deny that the financial problems with which he concerned himself are still unresolved.

One essay, "The Monetary Unit and Financial Economy," has been included in this book even though it lacks Carroll's signature. The paper that preceded it foretold its coming, and its content leaves slight doubt that it is from the pen of Charles Holt Carroll. Occasional changes of spelling and punctuation have been made to facilitate reading. Otherwise the text is unchanged.

To a number of people thanks are due for assistance in preparing this collection of the writings of Charles Holt Carroll. Deserving particular mention are: Mrs. Catherine J. Pierce, Duke University Library; Miss Rosalie A. Lang, Boston Public Library; and Miss Elizabeth C. Litsinger, Enoch Pratt Free Library, Baltimore. Valuable assistance was also rendered by members of the staff of the Library of Congress and of the New York Public Library. My wife, Glenna Sherman Simmons, assisted me in my efforts to trace Carroll's family background. Mr. Richard H. Nolan of Boston deserves special mention for his assistance in searching official records. My heaviest obligation, however, is to my colleague, Professor Robert S. Smith of Duke University, who provided wise counsel.

Durham, North Carolina October 20, 1961

[1]Cf. L. W. Mints, A History of Banking Theory (Chicago: University of Chicago Press, 1945), p. 161. An account of the ideas of the period is given by this author.

[2]His parents were Jared Carroll and Elizabeth Holt. See Charlestown Births [1779] 1800-1843, Vol. II, pp. 22-23 (record deposited in Bureau of Vital Statistics, City of Boston). Until about 1800 the spelling of the family name varied among New England families. There were six younger children in the family.

[3]The following directories list Carroll's name: Matchett's Baltimore Directory, 1829-1849/50; The Boston Directory (Geo. Adams), 1855-1860; The Boston Almanac (Coolidge and Wiley, Mussey), 1850-1860; The New England Business Directory and Gazetteer, 1856-1860; The Cambridge Directory, 1849-1863/64. The Newton Directory, 1871-1891, allows one to establish Carroll's whereabouts following his retirement.

[4]Carroll's marriage is listed in Cambridge, Massachusetts, Vital Records to 1850. The birth of the eldest son is also given. The names of the other children (except the son, Howard, killed in the Civil War) are given in the will of Charles Holt Carroll, which is filed at the Middlesex County Mass.) Courthouse, Cambridge, Mass. The eldest son, Charles Carroll, was graduated from Harvard College in 1853. In connection with the family's moving to Cambridge, it is interesting to speculate on the identity of the "Charles Carroll of Maryland" mentioned in an 1849 letter of Amos Lawrence. See William R. Lawrence, Extracts from the Diary and Correspondence of the Late Amos Lawrence (Boston: Gould and Lincoln, 1856), p. 276.

[5]During the 1870's the Newton Directory lists the occupation of Charles H. Carroll as "merchant," but this does not ring true. No business address is given. Nor do Carroll's writings suggest that he was actively engaged in business after the early 1860's.

[6]Leather dealers were numerous in the 1850's. Ninety-five names are given in the 1860 edition of the New England Directory and Gazetteer in its Boston section under this heading. Interestingly, Amasa Walker, whose ideas and Carroll's are strikingly similar in many respects, was of a family engaged in the leather trade. See Seth Bryant, The Shoe and Leather Trade of the Last Hundred Years (Boston: Author, 1891), p. 43. Whether or not Carroll and Walker were personally acquainted is not apparent from Carroll's treatment of Walker's ideas in "The Currency Theories of the Day."

[7]At his death Carroll's estate amounted to only a few thousand dollars, but this is not necessarily indicative of his financial position thirty years earlier. It is conceivable that Carroll may have experienced financial difficulties before he retired but managed to preserve enough of his wealth to live in comparative ease. He makes so frequent mention of bankruptcy as to make one wonder if he himself did not experience it. The leather trade was very hard hit by the panic of 1857. Carroll himself mentions failures of leather dealers in "Financial Heresies." See "The New York Hide Market in 1860," Hunt's Merchants' Magazine, XLIV (July, 1861), 42-44. There is, however, no direct evidence that Carroll failed in business. A search of petitions in bankruptcy filed before the Massachusetts Court of Insolvency at the Sussex (Mass.) Courthouse did not support the hypothesis, but these records are not indexed and may not be complete.

[8]This is somewhat confusing, for both the father and the son were writing about the same time. The father, however, always signed himself "Charles H. Carroll"; "C. H. Carroll"; or "C.H.C."; the son, simply as "Charles Carroll." The following items seem to be from the son's pen: "A Tramp with Tyndall," Scribner's Monthly Magazine, V (Dec, 1872), 182-190; "Paying Debts," ibid., VI (Sept., 1873), 665-670; "Renunciation" (poem), ibid., XII (June, 1876), 187; "Concerning Cheapness," ibid., XIII (Jan., 1877), 314-317; "New York in Summer," Harper's New Monthly Magazine, LVII (Oct.,1878), 689-704; and "Narraganset Pier," ibid., LIX (July, 1879), 161-177. See also Charles Carroll (ed.), The Salon: A Collection of the Choicest Paintings Recently Executed by Distinguished European Artists. Edited by Professor Charles Carroll, Assisted by Rene Doloreme, Armand Silvestre, Gaston Boelschy, and Other Foreign Experts. 2 vols. (New York: S. L. Hall, 1881). An obituary for Professor Charles Carroll appeared in the New York Daily Tribune, Feb. 16, 1889 (p. 2). This states that Charles Carroll wrote musical articles for the New York Mirror for the previous two years, that he was professor of German and French, and that he was versed in Latin, Greek, and Italian. That he had a scientific bent is suggested by a long letter to the New York Daily Tribune, Oct. 9, 1881 (p. 5) concerning electrical machinery at an international exposition.

[9]Newton Journal, Jan. 18, 1868, p. 2.

[10]See Samuel F. Smith, History of Newton, Massachusetts (Boston: American Logotype Co., 1880); Lucy Ellis Allen, West Newton Half a Century Ago (Newton: Graphic Press, 1917); The Mirror of Newton Past and Present (West Newton: The Newton Federation of Women's Clubs, 1907). The leading family appears to have been the Aliens, who operated the Newton English and Classical School, which is described in Catalogue of the West Newton English and Classical School, 1883 (Boston: Warren Richardson, 1883). One of the Carroll daughters, Bertha, is listed as a former student.

[11]Carroll cites the following: President John Adams, Francis Bowen, John Gr Calhoun, Henry Ct Carey, Michael Chevalier, George S. Coe, Charles D'Avenant, Thomas De Quincey, Thomas Doubleday, Ralph Waldo Emerson, Edward Everett, John Francis, John Fullerton, Albert Gallatin, J. W. Gilbart, Michael Godfrey, William Gouge, James Guthrie, Joseph Harris, Samuel Hooper, Joseph Hume, H. J. Klaproth, William Lawson, James A. Lowell, Charles Mackay, J. R. McCulloch, John Stuart Mill, Lord Overstone, Francois Quesnay, David Ricardo, J. B. Say, Adam Smith, Goldwin Smith, Richard Sulley, Henry Thornton, Robert Torrens, Amasa Walker, Daniel Webster, and David A. Wells.

[12]Catalogue of the Newton Athenaeum Library, 1871 (Boston: Kingman, 1871). It is possibly significant that only the first ten volumes of Hunt's Merchants' Magazine are listed in the catalog. Bankers' Magazine is missing entirely. Carroll's writings would thus have been entirely inaccessible to anyone dependent on the resources of the Newton Library.

[13]See L. W. Mints, A History of Banking Theory (Chicago: University of Chicago Press, 1945), pp. 128-129, 135-138, 155-157, 161, and 298. Also see H. E. Miller, Banking Theories in the United States before 1860 (Cambridge: Harvard University Press, 1932), pp. 37, 53, 65, 71, 118-119, 140, 176, 195, and 229. Charles H. Carroll is not mentioned in Joseph Dorfman, The American Mind in American Civilization (New York: Viking Press) in the sections on monetary writers of the nineteenth century in volume II (1946) or in volume III (1949). Nor is there any reference to Carroll in Fritz Redlich, History of American Business Leaders, Vol. II, Pt. ii, The Moulding of American Banking, Men and Ideas, 1840-1910 (Ann Arbor: Edwards Brothers, 1951). Carroll's name is also missing from the standard biographical dictionaries.

[14]Carroll's obituary in the Boston Morning Journal (Feb. 26, 1890) states that he wrote on bimetallism, but this has not been possible to substantiate. Carroll showed no interest in this topic up to the last of the essays in this book, and when it appeared, he was eighty years old. I surmise that his health began to fail about this time. After 1879 the Newton Directory entries indicate that he was no longer head of the household.

[15]H. E. Miller, op. cit., p. 37 n. On the whole, however, Miller's appraisal of Carroll is not adverse.

[16]Bankers' Magazine during 1859 printed several items about the Bullion Bank, one an article from the New York Evening Post which spoke in an approving tone. The prospectus for the bank, together with the names of the incorporators and the seventeen directors may be found in Bankers' Magazine, XIII (Dec, 1858-April, 1859), 409, 440-449, 757-760, 821. See also Hunt's Merchants' Magazine, XL (Feb., 1859), 203-204. Among the organizers of the Bullion Bank the name of George Opdyke stands out. On Opdyke, see L. W. Mints, op. cit., pp. 127-131, 142-143, 146-147, 153-154. The observation that the bank never operated is supported by the absence of any record of its activity in the New York State Banking Report, 1860-1863, q.v. (Four separate annual reports are contained in this volume.)

[17]On the relation of Cassel's doctrine to nineteenth-century exchange rate theories, see Jacob Viner, Studies in the Theory of International Trade (New York: Harper, 1937), pp. 379-381. It is not apparent from Carroll's writings to what extent he was familiar with the exchange rate controversies of early nineteenth-century England, but in many respects he follows the Bullionist and the Currency School views.

[18]When Carroll was writing, it was customary to quote London exchange in terms of the Spanish dollar. This yields a par of $4.44. Illustrations of the computations involved are given in Thomas P. Kettel, "Mints," United States Magazine and Democratic Review, XXVII (July, 1950), 54-55.

[19]Treatise on Money (New York: Harcourt Brace, 1930), II, 198-208.

[20]A possible explanation may be the lack of a comprehensive index of periodical literature for the middle of the nineteenth century. Of the thirty-six papers reprinted in this book, only fifteen are listed in Poole's Index to Periodical Literature. Mints, op. cit. lists only ten papers, none of which appeared after 1860. H. E. Miller, op. cit., also lists ten, but three titles differ from Mints' list. Neither Mints nor Miller cites "Currency and the Tariff," although Poole's Index carries this title. Miller limited himself to literature up to 1860. It is not clear whether or not Mints and Miller examined Carroll's later writings.

[21]See Henry C. Baird, "Considerations on Value and the Precious Metals," Hunt's Merchants' Magazine, XXXIX (May, 1859),570-573; Richard Sulley, "Money or Currency in Relation to the Principles of Political Economy," ibid. (Oct., 1869), pp. 374-385.

[22]Richard Sulley wrote numerous papers. He is mentioned briefly by H. E. Miller, op. cit., p. 89 n.

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