6. That profits are increased by whatever lessens the supply of capital, as taxation, dearth, or increased demand for it, as new avenues to trade, new modes of abridging labour, and the like. They are diminished by an increased supply of capital, as a long course of prosperity in commerce or manufactures; or by a diminished demand, as where former modes of employment are cut off, land, labour, and capital.

7. That though affected by different circumstances, all obey the great law of supply and demand, in the profits they severally yield. Thus, the profits of land, or rent, rise with the demand for raw produce. The profits of labour, or wages, fall with the increase of numbers. The profits of capital fall with the accumulation of capital.

The following table will illustrate the effect of an increase of population on rent, wages, and profits, according to the preceding principles. It supposes all the best lands to be taken into cultivation, improvements in husbandry stationary, capital to increase in the same ratio with numbers, and the raw produce to be equally divided into rent, wages, and profits, during the whole six periods of time supposed. The number of agricultural labourers are assumed to be one-tenth of the gross population.

It thus appears, that while the population had doubled, rents had increased 50 per cent. estimated in raw produce, and 100 per cent. estimated in labour, and that wages had fallen from two pecks a day to one and a half peck.

But as improvements in husbandry are rarely stationary in any country where art and civilization have made much progress, let us now suppose that they have been sufficient to make the progress of the soil keep pace with the population. In that case the last line of the table would stand thus:

If, however, capital had not accumulated as fast as population, its proportional part of the raw produce would have an increase correspondent to the deficiency, by which the amount of raw produce received for rent would be less than before; but as wages would also be farther reduced, the landlords might be able to command as much labour as before. The distribution of the annual produce would then be altered in this way, supposing it to be 15,000,000 bushels, and the profits of capital to be two-fifths of the produce,

On the other hand, if capital should increase faster than population, as it commonly does in intelligent and well-regulated communities, it would proportionally increase both wages and rents.

STATE CREDIT.

FROM THE DEMOCRATIC REVIEW.

THE Mississippi bonds must be paid. To the last dollar, the last cent, the last mill, every pledge of the public faith, whether by the collective whole of our glorious union, or by any one of its constitutent parts, must be honourably redeemed-be the consequences, be the cost what they may. Be justice done, though the firmament fall. It is true that the people of the state have been shamefully defrauded. But it is not less true that it is to a great extent their own fault. They have now to submit to the loss of about five millions of dollars as the natural retributive penalty of their own folly. And if they will but lay well to heart the lesson they have been taught, it is worth its price. They have bought their experience much cheaper than some of their neighbours. Illinois and Indiana, for example, and Pennsylvania, par excellence! We are not surprised at the feeling which has been excited in Mississippi in relation to this subject. We are not surprised that a powerful and respectable opinion has formed and declared itself against the payment of these bonds. It may perhaps be that of a majority of its citizens-though the recent election is by no means to be regarded as any decisive evidence to that effect. It is easy to suppose that, among those whose suffrages have elected Governor Tucker, a much larger number than that of his majority over his competitor may have had no serious idea that the bonds ought to be, or actually would be, repudiated. Yet even if it were the present will of a clear popular majority, we would ascribe it rather to a temporary though natural exasperation against the authors of this great fraud upon the state; blinding the eyes of the people to that more calm and just view of all the bearings of the question, which we should still feel certain that they would not fail to take after a brief season of "sober second thought."

Of one thing there is no doubt that the charge so angrily brought against the people of Mississippi, of a wilful and deliberate spirit of bad faith, of public dishonesty and dishonour, in the threatened repudiation of the bonds in question, is a gross calumny. Made originally by those whose pecuniary interest prompts their clamour on this charge, it is re-echoed by a party press, which seeks to turn it to a political advantage. In our own opinion the argument of the anti-bond party is an unsound one; yet is it by no means a clear case or a simple question. There is a great deal to be urged, and with more than plausibility, on both sides; and we are well assured that the great body of those among the democratic party of Mississippi who support the repudiation, would be found the last to attempt or desire to evade the payment of a just debt or an honourable obligation. No one would pretend that in a private transaction, parallel in all its features to the case in question, the slightest obligation, technical or equitable, would attach on the part of the principal, to pay the bonds so fraudulently issued by a dishonest agent, in violation of the express prohibition of the very authority under which the latter held all his legal existence. The principle of law in force in that state, moreover, is, that the transfer of choses in action, even to innocent third parties, can involve no prejudice to any rights or equities on the part of the obligor. If some one must suffer from the dishonesty of an unfaithful agency, it must be the party who trusts him without the proper and prudent scrutiny which he ought to have made into the nature and extent of his powers. If we apply to the state the analogy of a private transaction of the same character, the advocates of repudiation must stand unanswerably justified. And this view of the question-combined with a sympathy for the honest people that has been made the victim of the fraud of the case-has led several of the democratic papers of the north to sustain them in that position. But, like many similar applications of private analogies to public transactions, the argument is, we repeat, in our judgment an unsound one; and we should sadly belie the past character and course of the Democratic Review, if, entertaining this opinion we should allow ourselves to be checked by any partisan consideration, from its frank and free expression.

The anti-bond argument is this :-In the first place, the constitution of the state expressly requires that every law for the pledge of the public credit shall receive the distinct sanction of two successive legislatures. Now it is true that a certain law was passed at one session, and duly confirmed at the next, authorizing the loan of the credit of the state, to the amount of fifteen millions of dollars, to the great "Union Bank," which it was then determined to create. But a supplementary law was passed shortly after, involving a material change of the original law, and autho

rizing a direct subscription by the state to the stock of the bank; and it was under this law, which had not passed through that ordeal of popular ratification prescribed by the constitution of the state, that the transaction in question took place. At the time of the passage of this supplementary act, a minority in the legislature (at the head of which stood the recently elected governor, Mr. Tucker) entered a formal protest against it, as unconstitutional and void. In the second place the provisions of this very act itself were palpably violated in the issue of the bonds, by a fraudulent collusion between the Union Bank, the commissioners appointed by it for the negotiation of the bonds, and the bank of the United States, by which, through the name of Mr. Nicholas Biddle, they were purchased. They were sold at a credit instead of for cash, and instead of being made payable, according to the terms of law, in " current money of the United States," were made payable in London, in sterling currency, at a rate of 4s. 6d. to the dollar, involving a heavy loss, and a departure, as it is alleged, from that standard of " par value," which was prescribed by the law. The total amount of loss thus sustained by the state, through the bank, by the departure from this double requisition of cash and par, is computed by Governor McNutt, in his celebrated Letter to the Hopes of Amsterdam, at the enormous sum, on the five millions of bonds sold, 1,084,781 dollars. Now, it is contended that the express conditions on which the public faith was plighted, as represented in these bonds, having been thus violated, no obligation affecting the state was created by the transaction; that these violations of condition were not of an immaterial character, but substantially affecting the rights and the safety of the state, as the obligor on the bonds; the ability of the bank to pay them, as well as to fulfil the objects of its creation, being prejudiced to the amount of the sacrifice thus illegally and improperly incurred by it in the operation;-that the constitution of the state, and the law under which the bonds were issued, were public documents, of which all parties interested were bound to take notice, and to inform themselves, at their own peril if they should neglect so obvious a duty of prudence;—that it is therefore to the Union Bank which issued, and the bank of the United States which purchased and resold, or pledged, the bonds in question, endorsed with its own guarantee, that the European holders of them must look for their redemption, and not to the people of the state of Mississippi;—and finally, that inasmuch as no portion of the proceeds of the bonds ever came into the treasury of the state, or under the control of any of its officers, there is no equity in the case against it so as to counteract the undeniable technical illegality of the transaction on the part of the two banks, and to impose on the state an obligation of honour to redeem the bonds.

Such are the leading points of the anti-bond argument. It is not to be denied that they constitute at least a strong prima facie case in favour of the proposed repudiation; and that they ought to silence the clamour we have heard against the people of Mississippi, as desiring to evade the redemption of the public faith of the State, fairly and legally plighted. That is precisely the hinge of the question, and to assume that the public faith is so plighted, is nothing more nor less than a complete petitio principii. And to infer from the present agitation of this controversy, that there either exists now, or is likely to arise, in any of the states of this union, anything like a formidable disposition to repudiate their public debts, is as absurd as it is calumnious. We are profoundly and perfectly convinced, that every dollar of the public stocks of every state in the union will be eventually paid, to the last jot and tittle of the redemption of their plighted honour. Fearful as may be the demoralization, with respect to the sanctity of contracts, which has been the worst of the fruits of our paper-money credit system, we have no fear that it has proceeded to such a length as this. And of one thing are we especially certain that the democratic party, which is and must continue in the long run the dominant power in the country, will be the very last portion of the whole people, with whom the base infamy of such a proposition will be ever likely to meet a favourable reception. For we are the party which, throughout the struggles and discussions of the last ten or twelve years, about these questions, has placed itself in opposition to the excesses and abuses of credit-the party of moderation, of prudence -the paying, in contradistinction to the borrowing, party. In private affairs, it is always on the part of those the most bold and speculative in their calculations on credit and chance, that the most lax morality prevails in regard to the redemption of the obligations they are so adventurous in hazarding. And in public, it is from your "Credit System" parties that proceed your retroactive bankrupt laws, your bank suspensions, tolerated by opinion, and sanctioned by legislation, &c.—and from them, too, if ever from any, that can alone proceed such a public act of state bankruptcy, as is here in question, if ever the pressure of a public debt shall become too

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heavy to be sustained by the industrial energies of the people, If that day is ever to arrive in any of our states, the public creditor, whether he may reside at the antipodes, or in our own midst, may rely upon the assurance which, in the name of the American democracy, we feel authorised to give him, namely,-that when he will find himself abandoned to his fate by those who now profess to be his peculiar friends, it will be the democracy which will surrender to him everything but honour; which will cast to the winds everything but conscience; and which will sell out the fee simple of the last foot of earth covered by the last hearth-stone, if necessary, for the payment of the last cent of principal or interest on the public debt.

But to return to the Mississippi Bonds-we repeat that they must be paid. The analogy, derived from the legal relations of a corresponding private transaction, on which the repudiation argument rests, is in our opinion deceptive, though specious, in its application to the circumstances of the present case. In the first place, no great force can be claimed for the argument of the unconstitutionality of the law in question. That the attention of the legislature of 1838 was fully drawn to that point, is apparent from the fact of the protest against its passage by the minority, on that ground. Their act was an expression of their own judgment that it was constitutional; and representing, as they did by their majority, the people of the state, it is too much to expect that the foreign creditor, when in the act of lending his money, should undertake to revise and overrule their decision upon a point of that nature, made under their own high political and moral responsibilities, to the people and their own oath of office. Faithfully and honestly or not-yet actually it cannot be denied that they represented the people; and the doctrine would be absurd, that when in the interval between the passage of a law, of perhaps disputed constitutionality, and a judicial decision to that effect, equitable rights have arisen under its operation, involving the public faith to innocent private parties, a subsequent change of majority should justify the legislature in repudiating all such obligations, on the ground of the different view now taken by it of the constitutional question. A legislative body must stand as the sole authoritative judge of its own constitutional powers, until the action of the judiciary supervene, in some controversy of private rights. Aud though a law may of course be declared void for unconstitutionality, as affecting injuriously the rights of others; yet it would be monstrous to claim for the people of a state as represented and embodied in its regularly constituted legislature, the right themselves to take advantage of such a subsequently declared unconstitutionality, to repudiate, to their own benefit and the injury of innocent third parties, obligations assumed by them with all the solemn formality of an act of legislation, claiming to be for an object of public interest, and in the very act positively asserting its own constitutionality. They cannot thus take advantage of the dishonesty or ignorance, as the case may be, of their own elected representatives. If they will be guilty of the folly of sending such a set of men to their legislative halls, they must for the present submit to the consequences for which they have themselves chiefly to blame, and for the future profit well by the experience for which they have been thus made to pay. The unconstitutionality of the law, then, clearly will afford no justification to the anti-bond party for the course threatened by a large part of the press of Mississippi,-assuming that unconstitutionality to be beyond question, and putting out of view the important fact that Governor McNutt, the prime mover of repudiation, himself signed the law referred to, and himself partially carried it into execution.

Nor is the argument of illegality, derived from the mode of executing the law, much stronger than that of the unconstitutionality of the law itself. The state subscribes to the stock of the bank, and the five millions of bonds are delivered over to the officers of the latter, for the purpose of affording it the capital necessary to set it in operation; this being esteemed by the false and morbid popular opinion of the day, an object of high public concern and interest. Grant that, in the sale of them, the bank, through its agents, the commissioners, may have in some respects transgressed the provisions of the law; the state ought not to have entrusted them to such unfaithful agents. The circumstance of their being changed in form, from " current money of the United States" to sterling currency, is immaterial in its nature, unless the former expression is fraudulently meant to give the state the advantage, in the payment of its interest, of the depreciated condition of the paper current money" of some portions of the United States. This is not to be supposed; and no other honourable interpretation can be put upon the expression than that of the true constitutional current money of the United States," gold and silver. The translation of the one currency into the other may or may not have been at the just rate of the par of exchange. We all know that extremely vague and loose ideas have been of

late years very prevalent of the meaning of that little monosyllable. "Par" has had a very different meaning with the one of our political parties than with the other. With the Whigs, including a great majority of the commercial community, the current value of a suspended bank-note circulation has constituted the local standard of "par," while specie has been at a greater or less "premium;" while with the democratic party the currency of the constitution and of the world, the precious metals, have alone afforded the standard level from which the depreciation of the respective paper circulations of different sections have been measured downward. We cannot perceive in this feature of the transaction, taken even in its strongest shape, a just or honourable ground for the proposed repudiation. It ill becomes a sovereign state, and that state a republic and a democracy, to contest on petty technical grounds of such a character as this, the payment of debts, however unwisely contracted and trusted in the hands of unfaithful agents, on the faith of which an innocent foreign creditor has been induced to part with his property; to place it, if not in the coffers of the state treasury itself, at least in those of an institution in which the state was the largest stockholder, and which it created as a valuable object of public policy, for the presumed benefit and "relief" of its great commercial and agricultural interests. Nor does it appear by any means clear that after the delivery of the bonds to the bank, in payment of the subscription of the state to its stock, the state has any further right to scrutinize the terms of any arrangement that may be made by the bank to realize upon them the highest price admitted of by the condition of the market, provided that the state is credited with them at the full value of their face, at par and as cash, on its subscription to the stock. And this we understand to be the fact. That the directors of the Union Bank have wasted their capital in the false and dishonest system of banking and financiering which has prevailed in that state, is no fault of the foreign creditor, who lent his money on the credit, neither of the bank, nor of its companion in iniquity, the bank of the United States, but on that of the state of Mississippi. The state has doubtless sunk its money, as many a stockholder in many a bank, in that as in other parts of the country. This has not been caused by the fact of the loss sustained by the bank on the sale of the bonds, be the true figure of that loss more or less. The same would have been the case had the bonds in question commanded a premium, instead of having been sold at the rate of five and six per cent. depreciation. The same would doubtless have been the case had the entire fifteen millions, originally contemplated, been consigned to the same destination. Happily for the people of Mississippi, and thanks to the intelligent firmness of Governor McNutt, the state has lost only five millions, where it might have lost fifteen. It deserved richly the smaller loss-it would have deserved richly the greater--for the folly of which it was guilty in creating the bank, and thus endowing it with the means of evil from the public treasury. It would have made no practical difference in the result, whether the contribution of the state had been in the form of a loan of its bonds to the bank, as contemplated in the original act, or in that which was given to it by the supplementary act authorising a direct subscription to the stock. Substantially the transaction was the same. The former was fully authorised by the required constitutional ratification. The truth is, that the public opinion of the state in relation to banks and banking facilities was radically wrong. The people of Mississippi are now only paying the natural and usual penalty of human folly; and instead of complaining instead of staining the fair scutcheon of the public faith and honour with the disgrace of this threatened repudiation-they ought rather to consider themselves fortunate in escaping with but one-third of the loss which they might have sustained, and which they so unwisely hazarded.

The bonds must be paid, then; and that they will be eventually paid, whatever may be the action of the legislature recently elected, we have no more doubt than we have that they ought to be.

One good result, however, at least, may be ascribed to the agitation of this question in Mississippi-and we are duly and sincerely grateful for it. We allude to the total destruction of the European market for our public stocks. Our only fear is, that this effect may prove but temporary, and that a revival of the confidence of the foreign capitalist may renew yet again this pernicious system of national borrowing, from which through the last ten years we have suffered so much. Our public credit is down now to so low a point that we can borrow no more- -Heaven forefend that it should rise again !-except to the extent of doing justice to the creditors on our actual existing debt. Such a state of things we often hear spoken of as a national calamity; it is rather a national blessing. In fact, the doctrine of public credit may be regarded as one of the most pernicious inventions of modern times. Witness its