portion the payment of some arrears of interest due was procured from the regent by Law, and the event was hailed by all the public creditors as the opening of a new era in the financial history of France. The news came like breath to the drowning; it inspired hopes which went a great way to remedy the very evils under which they most suffered, and which might probably have extricated the country from its unfortunate position, if the object had been only to benefit France, and not to play into the hands of those who managed its public affairs. It may here be noted, that up to this moment the peculiar theory of Law had not been in any degree practised upon; and yet the great majority of the French people had probably ascribed to it and its effects, the sudden and striking improvement which was perceptible every where, in the condition of trade; and this will serve to show upon what slight foundations a great reputation in financiering may be sometimes made to rest. The two measures already described, namely, the issue of notes representing a definite value, and the payment of interest upon a small part of the public debt, were in themselves not remarkable in conception, nor out of the reach of any man of ordinary practical sense. They were merely in correction of enormous evils that were afflicting the community, and by no means productive of positive benefit; and yet such was the consequence of their adoption in the revival of credit, that, had death or any accidental obstacle occurred to stop the farther career of Law, his name might have come down to us as among the most deserving of record on the rolls of fame, and his system could ever afterwards have been quoted and looked up to by the many as the ne plus ultra of financial wisdom. He had, in fact, worked a wonderful change with very small means. He had given a very powerful impulse to public opinion, even before he had put his hand to the working out of his experiment; and as it ever has been the nature of sanguine projectors not to wait to analyze effects, it is not unfair to suppose that he himself partook of the general delusion, and was therefore inspired with a more unhesitating confidence to dash into the execution of his schemes, even though injuriously modified by the regent, and destined to be productive in this shape even of greater disaster than could have been expected naturally to belong to them. But though Law was thus induced to overlook the evil influence which the regent was exerting over his plan, others, who look upon the history long afterwards with the single view of drawing instruction from it, should be careful to assign to each party the share of responsibility which properly belongs to them. It was the regent of Orleans who took the bank into his own hands, when he found how prosperously it was going on under Law; and it was he who, under pretence of making money fixed, altered the tenor of its promise in such manner as to make it redeemable only in current coin. This was bringing back the very evil which the former policy had avoided. It was making the bank paper no better than the issues of the treacherous mint; and it was doing this only as a preparative to a stupendous stockjobbing operation which the regent was to conduct, and Law to advise, for the benefit of the government, at the expense of the nation. It is needless, even if it was practicable within these narrow limits, to into any detailed explanation of the events which followed. Their general character may be gathered from the single fact, that the principal go result was a joint-stock company, in which the regent of France was a main subscriber, and the object of which was, by the engrossing of all possible privileges and monopolies in the power of government to confer, to create for it a sufficient degree of credit to enable it to advance an immense sum at very low interest. The operation was carried on by means of a great issue of paper money, with which the shares were paid for by the regent as well as others, and the return of this same paper furnished the sum which had been agreed to be advanced to government. Things went on swimmingly for a short time, but presently the necessity of redeeming these promises became urgent in order to support their credit. The regent had hoped to effect this by exchanging his shares, which he had subscribed at about 500 livres a piece, for $10,000, the price to which they had been forced up; but in this he was destined to be disappointed. A rush took place from all quarters to realize, which prevented his converting them, and thus left him with no other means of absorbing the paper he had so rashly issued. The great speculation failed, and twenty-two hundred millions of livres, in bank notes, were to be faced, without any thing to give for them but Mississippi company stock, of which there were already in the market many sellers but no buyers. The expedient actually adopted under these circumstances is too remarkable not to merit full notice in any thing purporting to treat of the phenomena of credit. A decree was issued, reducing at one blow the value of all the promissory notes issued by the bank to one half of the amount expressed on their face. Now, I pray you, gentlemen, particularly to observe the consequence of this measure. Instead of falling from twenty-two hundred millions of livres, the original sum issued, down to eleven hundred millions of livres, the value proposed to be assigned, the whole paper currency of France sunk down to nothing in a moment. A man might have carried a load of it on his back the next day, and it would not have bought him a breakfast. The reason of this was, that credit is not, polypus-like, to be cut in halves, and either half survive the operation. The same kind of trick had been played in coin often enough; and in so far as any precious metal was left in its composition, the same result had been prevented-but in paper it would not answer in the least. Its whole value depended upon public opinion, which had no other basis than the probability of its being in some way or other absorbed by the government. When, therefore, the fact was distinctly presented before the community, that this probability had failed, and the government was seeking relief in breach of faith, there was no greater reason for depending upon one valuation of that breach than upon another. The entire edifice of credit was prostrate in France, and the pecuniary affairs of that country remained to be organized, just as much as if it had been a new one; subject, however, to drawbacks from the operation of human passions, which at a much later period, and among a new generation of actors, caused the final settlement of the account to be written out in blood. But why need I quote one instance and another, of the abuses to which credit has been exposed in the hands of the sovereign power of the state, when history furnishes them at every turn? Indeed, it may be affirmed, that there is no record of any issue of paper currency, made by any known government, which has not been perverted from the true purpose, of promoting the exchanges of value among members of the same community, to the more narrow and unsafe one, of helping the necessities of those who for the time manage the public affairs. They surely, then, cannot be constituted a safe depository for any such power. Credit may safely be left in the hands of those who are most interested to preserve it-the capitalists of the country; and its extent may be regulated by the demands of a natural and productive industry directed to useful ends. The law of demand and supply may be left to take care of the whole matter, with perfect confidence of a happy result, provided, always, that sound public opinion, and an energetic and uniform system of restraint upon fraud, shall always co-operate to keep private enterprise from running into hurtful and extravagant excess. Yet let it not be supposed, that this or any other method of using credit that may be devised, can have the effect of preventing the fluctuations which frequently take place in the transactions of commerce. It is too much the tendency of the present age, to consider credit as wholly responsible for effects, the origin of which is really to be seen in trade. The very law of supply and demand, which has been already alluded to, is one which can never be arranged according to any known scale, for the reason that it is impossible to foresee the direction which human wants and passions in civilized life will next take. There will, therefore, be frequent fluctuations, which may defy the sagacity of the wisest merchant; and although to the calm observer these may appear always to work themselves out in the long run, within very clear and definite limits, and to subside into a tolerably regular channel, yet this process may, to the industrious merchant, be not unfrequently attended by extremely trying and critical conjunctures. The course of trade does not run much more smooth than that which the poet has singled out to make into a proverb. And whether credit is employed in it to a greater extent, or whether it is not, every commercial community must calculate upon it as a fact of the highest probability, that some periods will be periods of particular success, and others, again, will make themselves remembered as signally disastrous. To quarrel with credit upon this account, would be about as reasonable as to impeach the Deity because we are not consulted in the disposition of good and evil. What, then, is the general practical inference which I would draw from the whole doctrine I have endeavored to explain this evening? Is it not, that credit being no thing of involuntary origin in a state, but rather a consequence of certain preceding causes, which must coincide to give it a true and proper efficiency, the true object for our exertion is to regulate our action to those causes, rather than to be spending time in counteracting effects. There is doubtless a tendency to some abuses in the present day, which it is the duty of a prudent community to check if not prevent. But after all, the only true preventive will be found by going to the fundamental principles. There can be no security against error, where there is no effort made to distinguish it from truth. There must be clear notions formed of the difference between capital and credit, as well as of the dependence in which the latter stands upon the former. There must above all be a rigid attachment to the dictates of the moral sense, and a uniformity with it in the co-operating restrictive policy of the sovereign authority. These, and these alone, will answer as a perfect protection from the attacks of avarice and sensuality. You may pile statute upon statute on your legislative tables, you may put a bar here and a padlock there, but your house will never be the stronger against any combination of cunning and fraud, without you take pains to force the mask from the face of the hypocrite. In that public opinion is the greatest safeguard, which will not overlook or pardon dishonesty-which will break up at once the haunt of the gambling speculator-and above all, and most of all, which will suffer no violation of promise to the honest and innocent of the community to be repeated, without effective interference and permanent prevention. When I look round, gentlemen, and observe the relative situation of the great countries of the world-when I consider that the credit which some enjoy and make use of is an unfailing index of their prosperity, while the adversity of others appears to go hand in hand with its disuse,it is with not less amazement than regret that I see a disposition manifesting itself among us to preach up a crusade against it. It is most especially on this account that I would earnestly recommend it to you who live in this great city, promising as it does to be the commercial centre of our northern continent, ever to bear in mind the indispensable requisites for its natural support. In adherence to them as landmarks, credit may ever be relied upon as a safe and efficient adjunct to all great enterprises; by neglect of them, a resort to it as an instrument of power must at best be playing a game of chance. The strict adherence to truth, the unfailing redemption of promises, the untiring exercise of human energy, are what form the groundwork of all the valuable success of mercantile life. And when these are once joined with a portion of capital, however small, credit will come in to extend the field of operation and facilitate the gathering in of the harvest. But a little more than two centuries since, and a few patient and plodding Hollanders were to be found on this spot, who could send home only four thousand beaver skins as the evidence of their surplus industry; and now, your daily operations in your magnificent Exchange set in motion huge masses of wealth over every part of the habitable globe. This change, extraordinary as it is, cannot have resulted from the slow process of accumulating the savings of labor. Credit has come in to facilitate and advance the work, and this the most obviously during the last half century, in which she has had the freest play. She has concentrated the powers of all the producing classes upon the discovery and pursuit of the boldest paths, as well of maritime as domestic adventure. She has stepped in to inspire the navigator with confidence in spreading every sail over the ocean of fortune. And when I perceive on every side the palpable results which have followed-when I think of the almost magical transformation of this petty island into a rich and multitudinous city—when I reflect that the sum of the heaviest losses yet endured is nothing to the gains which stand piled up in your streets,—it is with no small astonishment that I hear the commercial system under which all this has taken place pronounced even here to be irredeemably vicious. Such doctrine as this strikes at the root of improvement, and demands revolution. It seeks for perfection, and goes backward in the search. There are great spots in the magnificent orb of day, but its heat is not the less a genial, vivifying, creative influence upon our earth. There are evils attending the use of all the great agents in nature, but these do not prevent man from controlling them to great and beneficial purposes of human progress. The great secret, after all, gentlemen, is in the mind. And most happy will that commu nity become, which most steadily unites with its industry, content. Within a few years last past, you have been visited with not a few trials of your fortitude; and it is among the most encouraging circumstances that surround us, that you have passed through them with so little shrinking. It rests with you to persevere only in the same policy, to remember that credit is a moral property as well as an economical instrument, and to go on unswervingly in the support of it through evil report and good report, here and elsewhere, and the unfailing consequence will be, that to you will the honor be due of saving the name of America from becoming synonymous with faithlessness all over the world; and to your moral courage under temptation, will this city be indebted for the proudest pedestal of its future fortunes. Now like a maiden queen she will behold, From her high turrets, hourly suitors come- ART. II.-THEORY OF PROFITS.-No. II. HAVING Seen that Mr. Ricardo and his followers have erred in their analysis of rent, and that, by mistaking a common accompaniment for one of its elements, they have needlessly embarrassed a subject which admits of an explanation as simple as it is just, let us now see how they have connected it with the theory of profits. Their reasoning on this part of the subject is briefly this: The price of raw produce consists of that portion of the labor and capital expended on the soil which pays no rent. This portion, commonly that which is last expended, is therefore divided between the wages of labor and the profits of capital, and determines the rate of each. Now, as in the progress of society it is necessary to resort to soils of less and less fertility, and as the returns made to equal portions of capital applied to the same soil must also gradually diminish, it follows, that the fund which is thus divided between wages and profits, must, in like manner, experience a gradual decrease when estimated in the quantity of raw produce. But as the laborer must receive as much raw produce as is "sufficient to subsist, and perpetuate his race," when this, the natural price of his labor, is deducted from a constantly decreasing fund, the necessary consequence is, that his proportional part of that fund is continually increasing, and that the residue, which constitutes the profits of capital, is continually diminishing. In this way, the gradual fall of profits, as exhibited in the market rate of interest, which had taken place in England and some other parts of Europe, was accounted for, contrary to the explanation of Adam Smith, who referred it to the increasing competition of capitalists, in consequence of the growing accumulation of wealth. There is more than one error involved in the preceding rationale of profit. In the first place, it assumes that the laborer must always receive the same amount of raw produce; but this supposition is contradicted by the past history of society. We know that it greatly varies in different countries; that it is in general more than twice as much in the |