see that the youth of our country are fitted to do the duties of citizens of a republic? Must not the state, if it would secure the good of its people, if it would hope for permanency, look to this? The purses of the rich have been largely taxed to render the condition of the outcast tolerable. If the other be the right method, would they not more cheerfully give for that, and thereby not render degradation tolerably intolerable, but form contented men and good citizens? To do this would be to remove many of the causes of crime; to do this, would add to the number of good citizens; to pursue this for a length of time, would greatly benefit the republic. Before a state can reach the class which we have just been considering, and elevate them above crime, and through them confer on itself a benefit, the public mind must approve of, and desire it. The lowest should not excite our disgust, but our pity; and if we leave this class to elevate themselves, it will never be done. The interests of the state call us to the task. Such a course will be, to decrease the need of laws, for there will be fewer objects of legislation to purify the state of crimes, for their inducements have been removed, to diminish the evils which it receives from the ignorant, who are incapable of doing their duties towards it to advance the best; for numerous impediments to their progress have been removed to increase the aggregate of virtue; for those possessed of power for good have been elevated by exercising it, and the indigent and degraded have been advanced, where, if they do yet but little for the state, are above doing it an injury. Instead of regarding the state simply as a wall of defence, we would have its whole aim to ennoble its citizens. If the mass are already intelligent and well disposed, they need only to have their rights defined, and to be protected from outward invasion. A healthy state of morals precludes the necessity of numerous superadded laws; but where this is not the condition of the mass, no effort should be counted too arduous, no exertions or talents, no time or expense be considered misapplied, that tends to raise them from their degradation. Our broad territory has been wisely partitioned into states, counties, towns and districts, or wards, that public or private efforts may not be exhausted or rendered availless from the vast space over which it shall become spread; but each of these divisions have it in their power, by the co-operations of individuals, with authorized regulations, to remove the evils which have crept into society. Much has already been done, but a numerous class in every densely populated place. are yet unreached. It is the first, the last duty of the state, to watch with jealousy that its members, nor poor, nor outcast child, omitted, become worthy of citizenship. It requires no superior goodness to be earnest in this it is the requirement of prudence-it lies at the very basis of the social fabric. Is it a question of "right, of expediency, of necessity?" is all of these. Will the offer be declined? Will they decline the benefit? Their duty to comply is equally imperative with yours to offer. We are all under equal obligations to the state. Will the reception of emigrants defeat the success of such a course? So many coming among us who are very poor, while very few come who are rich, puts a very unfavorable appearance on our poor generally. No employers come, but a multitude who desire to be employed; hence the competition among this class the beggary, the misery, the crime. We have all the resources, the benevolence and the beneficence among us that is needed to raise the national standard; but what resources are sufficient for so great a mass as are constantly thronging in upon us. And yet we boast to have received with open arms the oppressed of every land; and if they come among us, they should become both the subjects and the recipients of our wisdom and our goodness. May injuries to our peace never creep in under the mantle of be

nevolence. Our country first! our country last! whose foundation is only laid sure, whose prosperity is only secured, when the minds of the children of the hovel and of the alley shall have been illumined with the sun of intelligence, and their hearts been unfolded to the charms of goodness; when, instead of the brier, the myrtle tree shall spring up and diffuse its fragrance.

BANK CIRCULATION.*

to

THE use of promissory notes, issued by corporate companies, and payable on demand, as money, has been carried to a far greater excess in the United States than in any other country of the world-with the exception of Scotland; and experience has developed the manifold evils with which the system is fraught, as hitherto conducted. These evils seem flow from a misunderstanding of the nature of money, and of the degree of influence which it exerts upon the industry and wealth of a nation. Money of itself, whether it be gold and silver, or their substitute, bank paper, is instrumental in the transaction of a very small proportion of the whole business of a nation. Almost the entire business of any commercial country may be said to be transacted through the operation of individual bills of exchange, each one of which represents a specific commodity, the delivery of which fulfils the obligation of the bill, and completes the transaction without the use of money at all. As thus, in the year 1846, the United States exported $109,583,244 worth of goods and produce to other countries. For this no money was paid, but individual bills followed each separate shipment, requiring on the face payment of money. Instead of money being paid, however, the demands of the bill were satisfied by the delivery of goods, which, to the amount of $117,934,065 invoice valuation, were imported into the country. It is true, that $3,905,268 of the precious metals were exported, and $3,777,732 were imported, nearly balancing each other; but the main international business was transacted without money at all. That is to say, $227,517,309 of commodities were interchanged by means of individual bills, each of which was created by the possession of a specified quantity of an article, and cancelled by the delivery of another in exchange. This is true to a much greater extent in the case of the internal trade of the country, because the magnitude of exchanges of the products of industry, turning on individual bills, far exceeds that of the external trade. Not only are all exports, amounting, as in 1846, to $109,583,244, the basis of individual bills, but all the produce consumed on the Atlantic border, sent down from the interior, are also the basis of individual bills. Thus the deliveries of raw produce from the Erie Canal, in 1847, amounted to $73,092,414, and from the Mississippi, at New-Or

1st. Vindication of the Free Banking System; Investigation of the principles which ought to be the basis of Paper Money. By L. Bonnefoux, proprietor of the New-York State Stock Security Bank. 2d. Safety Fund Bank Law, State of New-York, passed 1829. 3d. Free Banking Law, State of New-York, passed April, 1838. 4th. Act to regulate Safety Fund Bank issues, passed April, 1848. 5th. Act passed April, 1848, to amend Free Banking Law of 1838. 6th. Draft of a new system of Banking, with a full explanation of its principles. By a Practical Banker. 7th, General Banking Law of Ohio, passed 1845.

leans, $90,033,256, making at these two points alone, $163,125,670, all of which was followed by internal bills, drawn from the shippers, payable in the cities, and cancelled by the purchase of goods, foreign and domestic, in those cities to carry back to the country. Money enters very little, if at all, into these transactions. As thus the producer of cotton, on the banks of the Mississippi, as an instance, sends his cotton to his factor at NewOrleans, who furnishes the supplies for the plantation, and the goods sent up will generally balance the cotton sent down. The goods are paid for by a check against a bank credit, and this credit is obtained by the sale of the cotton to the shipper, who, in sending it forward, draws against it a bill which will probably be sold in New-York; and the proceeds of the bill will be drawn against from New-Orleans at 60 days. This bill, inland, may be sold for the bank credit, transferred by check from the cotton shipper to the factor. On its maturity in New-York it becomes a bank credit, to be transferred to a seller of goods by his country debtor, who purchased it probably from some bank in the valley of the Mississippi, that had procured it from New-Orleans. This credit is again transferred to the importer of goods, by whom it is made over to the seller of the sterling bill which he requires to remit to England in discharge of his debts for goods. In all this matter, not a dollar of specie or corporate promises is required. The individual bills perform the whole. All western produce follows a similar process; and it is probable that one thousand millions of merchandize are bought and sold in a year, exclusively through the medium of private bills, while the bank circulation for the Union is not $100,000,000. The proportion which this description of paper bears to the money transaction, may be gathered from a return made by Mr. Leatham, an English banker, who discovered from the stamps issued by the stamp office, that there was circulated in one year £528,493,842 of private bills of exchange-near 2,500 millions of dollars; or that the amount outstanding at one time was £132,123,460, while the gross bank circulation of paper money was £27,272,000 or 20 per cent. only. This represents the enormous disproportion of paper money to the actual money of a country. The business currency of England is thus composed of three classes of money, viz: £132,123,460 of private bills, £30,000,000 of gold, and £27,272,000 of bank promises. Now, in all discussions upon currency, and all action of the government in regulating and restraining, reference is had only to the last mentioned and least important class. To the operation and influence of that class of currency has been ascribed all the fluctuations of commerce, most of the speculations that have preceded revulsions, and the disorders that have interrupted the regular course of industry. This, to a great extent, is true. Many, if not most of the financial evils that arise, grow out of that comparatively unimportant, as far as amount goes, part of the currency of the first commercial country in the world. And the reason is obvious; it represents only credit, while every individual bill in circulation represents some specified commodity, every movement of which cancels the bill, and may at the same time give rise to a new one. This requires no regulation, and carries with itself the safeguard against disaster. The gold represents nothing; it is itself the article sought in exchange for all other commodities, and therefore not susceptible of discredit. On the other hand, bank promises originate in nothing. They promise to pay gold, but they are based upon no commodity, the delivery of which will consummate and cancel the obligation expressed on the face of the paper. The promisor has not the thing he promises, and his operation is based upon the hope that fulfilment of the obligation will not be required, and that if required, he will be able to procure the means of meeting it. This hope proves

fallacious always at the moment of necessity. It is obvious, on mature re lection, that neither the precious metals nor paper constitute the money of a country. They form a very small part of it. The real money consists of all exchangeable products of industry, and the individual bills based on them. Money is, therefore, abundant or otherwise, not in proportion to the quantity of gold and silver that may be on hand, but in proportion to the quantity of produce on one hand, and of goods on the other, which may be interchanged. When either of these is deficient, money is scarce, although the precious metals may be as abundant as over. As, for instance, last year the British crops were short, and £33,000,000 worth of grain was imported. This was followed by a revulsion unprecedented in commerce; and it was ascribed to the fact, that of 16,000,000 specie held by the bank in 1846, £8,000,000 was exported, and the institution held but £8,000,000 at the moment of extreme pressure. It is self-evident that this extreme pressure was not the result of parting with £8,000,000 of the precious metals, because the bank still held a larger sum than formerly, when money was very abundant. The pressure arose from the fact, that at least £50,000,000 worth of commodities, that usually form the basis of individual bills, had been lost. It was the annihilation of £50,000,000 of commodities, other than the removal of £8,000,000 of gold from vaults where it had lain idle for two years, that produced the disasters.

In the United States, paper as a circulating medium has been used from the earliest times-originally in the pernicious form of issues by the colonial government, not redeemable in specie, but receivable for government dues. These were known to the constitution as "bills of credit." They were supposed to be necessary as a circulating medium, because it was thought that for the colonies to import sufficient of the precious metals with which to form a currency, would be beyond their means. The constitution of the United States prohibited the renewal of this description of issues by the states. The states, in their own right as sovereignties, however, had in every case exercised the power of granting to corporations the power of issuing paper promises to circulate as money, subject only to the condition, that whenever demanded, it should be redeemed in coin. This paper money is designed only for, and used mostly by, the retail trade of the country. It is the means by which produce is collected by dealers into quantities for shipment, and by which consumers purchase of the retailers the quantities of each commodity required for daily consumption. In all the wholesale business of the country, it, as we have seen, takes no part. That turns altogether upon the private bills of dealers, payable at a fixed day. It has always been alleged that there is a necessity for paper money, because there is not sufficient gold and silver to transact the business. This idea is by no means accurate as is evident in the fact, that as paper money has become substituted, the precious metals have fallen in value; and to such an extent, that very many mines in Mexico, that were formerly worked to advantage, are now abandoned as no longer profitable. It has been the comparative disuse of the precious metals, that has made them less abundant. Of late years, however, the abundance of the Russian mines is such as to threaten a still farther serious fall in the relative value of gold to other products, and may still farther affect the productions of Mexico.

In the year 1844, according to the official statements, prepared by order of the Secretary of the Treasury, all the banks of the United States issued $75,167,646. They had on hand $9,122,000 of notes, making a net

circulation outstanding of $66,045,646, and they held $49,898,269 of specie; the difference, $16,147,377, expressing the actual amount by which their operations increased the money of the country. Since then, there has been a net importation of $22,213,550, and the coinage of the mints has been over forty millions. Taking this latter as the amount by which the money of the country has been increased, there would now have been in the country $23,000,000 more money than in 1844, had the banks entirely withdrawn their paper and disbursed the coin they held. In this case, it is to be observed, that the demand for coin, as a currency, would not only have promoted its import, but have checked its re-export. These figures refute conclusively the idea of deficiency of precious metals for business purposes, since, if $66,045,646 of paper sufficed for the wants of trade in 1844, when it was alleged the home trade was very active under the tariff of 1842, $89,898,269 of gold and silver would suffice for that of 1848.

Inasmuch, however, as that the furnishing of corporate paper promises to circulate as money has ever been persisted in, it has ever been found that on the occasion of every pressure, the promissors failed, and the public were large losers by the outstanding promises. It was, of course, always necessarily the case that the loss fell upon poor persons, because, as the money is used only in retail trade, those only are holders, who obtain it for labor or goods, to make small purchases. To guard against this evil became imperative, and in 1829, in the state of New-York, a law called the Safety Fund Act was passed. The leading features of this law were a requirement that no bank should issue more than twice its capital in bank notes, and that such bank should subscribe, annually, a sum equal to half per cent. of its capital, and these payments should, together, constitute a fund, out of which should be redeemed the notes of any bank which might fail. The immediate effect of this law was to promote confidence in the notes, and therefore to enable the banks greatly to extend their circulation. It is not necessary to follow the fortunes of the banks under this law; suffice it to state, that the circulation increased until general suspension resulted in 1837, by which all the bank charters were forfeited. The legislature saw proper, however, to legalize the suspension, on condition that the circulation should thereafter be restricted to amounts proportioned to capital, and less than the extent allowed by the safety fund act. As the limits of the safety fund act had never been reached by the actual issues, the wisdom of reducing the limit was not manifest. All the banks resumed in 1838, and so continued, until in 1841-2, ten of them failed, throwing upon the safety fund a charge of $2,577,926 67. This was a sum far above the means of the fund, which was not only entirely exhausted, but all the contributions of the remaining 83 banks, up to the expi ration of their charters, will be insufficient by $44,573 to discharge the demands of bill-holders for the banks already broken; hence, if any more fail, there is nothing from which to discharge their claims. The entire operation of the fund, from its commencement, to September, 1847, was as follows:

There now remain 79 banks and two branches; consequently their circulation, which in November reached $16,926,918, out of a total of $26,237,256,

is utterly without any security.