there is hardly any other check on its issue but their own discretion. They cannot be sued; and as this paper money is usually the only financial resource in times of danger, it is seldom safe to investigate its depreciation. To instruct the public as to the danger attending this money, is to impede its circulation, and is therefore considered as an offence (sometimes amounting to treason) against the commonwealth. The directors of this mint are above control. The delusion

respecting it will therefore continue until its coinage becomes worthless. But the notes of such banks as ours are on a very different footing. Their directors, notwithstanding their great influence, may be censured or sued without ceremony, especially by those who are not engaged in trade. Of this the pamphlet before us is a proof. It is indeed one of the few privileges of an author in most countries not to dread the displeasure of bank directors. These gentlemen stand, like any other class of our citizens, under the inspection of the people and the authority of the government. But the most material distinction between the paper money of most govern ments and bank notes is in their respective securities. Government paper money seldom has any other security than the taxes mortgaged for its redemption. But these taxes are previously and necessarily pledged for the defence of the country, and the support of its political establishments. The claims for these objects precede and must be preferred to all others. No more, therefore, than the surplus-if there be any-of the public revenue can be spared to the creditors of the state: and if this be insufficient to pay them, they have no remedy whatever, and no consolation but hope or patience. But the notes of banks-besides being generally received in payment of taxes, when their directors maintain a good understanding with government-are further supported, as we have already observed, by the property for which they are exchanged, and by the capitals of the banks which issue them. From hence it has arisen that such notes have often been preferred to government securities. In England the

notes of the national bank, before they were made a legal tender, could command five per cent interest, when the government exchequer bills, which bore the same interest, were much below par; and in our own country, during the late war, the treasury notes, which were receivable for federal taxes, and bore an interest of upwards of five per cent, were depreciated sometimes from eight to ten per cent below bank notes, which bore no interest whatever, and were not convertible into specie. The difference in their value did not arise from disaffection to the government, nor from what our author calls the insolence of the banks, but from the circumstances we have just stated, and in some degree, no doubt, from an apprehension of the disastrous events which the continuance of the war might occasion.

In the following passage, which is the conclusion of the pamphlet, the writer thus sums up his opinions, and gives bis advice:

"Such is the present state and future prospect of the banking institutions, and the people who have permitted them to increase to such a fearful degree. The evils which will even now attend the bursting of this paper balloon, are such that I almost shrink from this attempt to accelerate the catastrophe. My apology must be that the catastrophe must certainly happen, and will be fatal in proportion as it is delayed by expedients that will only increase the tremendous explosion. The sooner it happens then the better. Every day, nay every hour, and every minute, new banks spring into a worthless, a pernicious existence; the quantity of ragged notes is even on the increase, and the delay of a moment may hereafter involve the ruin of thousands. Ere then it is too late to outlive the ruin, to weather and survive the storm. I warn the people of the United States, promptly and firmly to stand forth, and demand of their representatives to interfere in their behalf. If this is refused, let them with one impulse determine to refuse all notes, except those of chartered banks, that agree to keep their faith with the public, by redeeming the faith they have pledged to the public. When paper money ceases to command specie, there never yet occurred an instance in which it VOL. VI. New Series.

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did not immediately begin to depreciate; and whenever it began to depreciate, there never was an instance in which it did not continue to depreciate until it was worth nothing, unless its credit was redeemed by its again becoming the representative of specie. All the quackery of interested ingenuity operating on willing dupes, is insufficient to the task of propping up the patched credit of a parcel of pretty pictures engraved on fine paper. The grown up children will get tired of admiring what, they will at last find out, will not command a dinner, or keep them from poverty and rags. Let them look to it in time."

Here again the writer is incautious in his assertions. His statement that there never was an instance in which a depreciated paper money did not continue to depreciate until it was worth nothing, unless its credit was redeemed by its again becoming the representative of specie, is incorrect. The paper of the bank of England, whose history is very nearly that of our own banks, has varied in its depreciation during the last seven years, from three to thirty per cent, according to the state of commerce and political events. It fell with the triumphs and rose with the disasters of Bonaparte. For some months after the treaty of Paris, its value was on the increase: on the restoration of Napoleon it fell again, and since his second abdication it has risen almost to a par with specie. Yet it never was, at any time, during the period of these events, the representative of specie. It is not then unreasonable to expect that our bank notes may follow the fortunes of their prototypes in their advancement as well as in their depreciation.

From the best information we can obtain on the subject, we apprehend that the immediate redemption of our bank notes. with specie, which our author recommends as the only means of safety, is not practicable. There is not probably in the whole united republic as much specie as would redeem one fourth part of the paper money now in circulation, or even of that amount of it which will be necessary for commerce, until its place can be supplied by some other medium. What then is to be done? Must the banks remain altogether unchecked in

their issues of notes? Is the discretion of their directors a sufficient security to the public? We think not. We cannot pay them a compliment which we refuse to all other persons. We cannot place unlimited confidence in their patriotism and integrity, while it is our duty to distrust and watch every other branch of the administration of public affairs, and guard against the misconduct of our rulers by every practicable precaution.

The power of making money at discretion, if it could be bestowed, would, in the present state of society, make the possessor a despot. Fortunately, however, no such power can, in the nature of things, be granted. The convertible value of money depends on its comparative scarcity. When we make too much of it, the diminution of its value keeps pace with the excess; and the only consequence of the operation is that one part of the community is enabled for a time to defraud the other. To prevent this evil from extending further than it has already done, and gradually to remove it altogether, we shall suggest a plan for checking the banks, and securing their creditors; a plan which, if not adopted as a permanent system, may serve, at least, as an useful temporary expedient.

To maintain the public credit, and facilitate the means of public defence, the funding system has been established and continued in the United States. The funded debt of the nation necessarily occasioned a burden in the taxes levied to pay its annual interest and gradually reimburse the principal. But experience has proved that the weight of this burden is greatly diminished-if not quite compensated-by the benefits which this funded capital has produced. "Public funds," says the able statesman and financier,* by whose advice ours were established, "answer the purpose of capital, from the estimation in which they are usually held by monied men; and consequently from the ease and despatch with which they can be turned into money. This capacity of prompt convertibility into money causes a transfer of stock to be, in a great

* General Hamilton.

number of cases, equivalent to a payment in coin; and where it does not happen to suit the party who is to receive to accept a transfer of stock, the party who is to pay is never at a loss to find elsewhere a purchaser of his stock, who will furnish him, in lieu of it, with the coin of which he stands in need. Hence, in a sound and settled state of the public funds, a man possessed of a sum in them, can embrace any scheme of business which offers, with as much confidence as if he were possessed of an equal sum in coin."

From this representation, the correctness of which is indisputable, it is evident, we think, that the public funds may render to the community a still more important service: that they may serve, in the absence of specie, as the basis, and support, and limit of a paper currency. The plan we would propose is, that the banks be obliged, until they can resume their specie payments, to pay the holders of their notes to a certain amount (not less, perhaps, than a hundred dollars) in six per cent stock at par, or when below that rate, at the usual selling price, as the same should from time to time be publicly announced by competent authority:—that of the commissioners of the sinking fund would probably be the least objectionable. This would be a certain check against the immoderate issue of paper money. The banks allege, and we believe with truth, that they cannot procure sufficient cash to fulfil their engagements. But they ought not to be at a loss to obtain funded stock enough for that purpose. Most of them possess considerable property in the funds, part of which they purchased at a low price. It has now risen in value, and they will therefore gain by paying their debts with it. Those banks which have not been so fortunate as to subscribe largely to the late loans, will find plenty of stock in the market, notwithstanding the demand for it in foreign countries. The Baltimore and district of Columbia banks are said to hold a large amount of the stock created during the late war; a stock which now sells in those places above par. Let the proposed convertibility be de