it, on the then population of four and a half millions of inhabitants, to be thirty-seven and a half millions sterling, or one hundred and sixty-eight and three fourths millions of dollars. See Cooper's Political Arithmetic, page 47. According to the same estimate, for our present population it will be three hundred millions of dollars, one thirtieth of which, Smith's minimum, would be ten millions, and one fifth, his maximum, would be sixty millions for the quantum of circulation. But suppose, that, instead of our needing the least circulating medium of any nation, from the circumstance before mentioned, we should place ourselves in the middle term of the calculation, to wit, at thirty-five millions. One fifth of this, at the least, Smith thinks should be retained in specie, which would leave twenty-eight millions of specie to be exported in exchange for other commodities; and if fifteen millions of that should be returned in productive goods, and not in articles of prodigality, that would be the amount of capital which this operation would add to the existing mass. But to what mass? Not that of the three hundred millions, which is only its gross annual produce; but to that capital of which the three hundred millions are but the annual produce. But this being gross, we may infer from it the value of the capital by considering that the rent of lands is generally fixed at one third of the gross produce, and is deemed its nett profit, and twenty times that its fee simple value. The profits on landed capital may, with accuracy enough for our purpose, be supposed on a par with those of other capital. This would give us then for the United States, a capital of two thousand millions, all in active employment, and exclusive of unimproved lands lying in a great degree dormant. Of this, fifteen millions would be the hundred and thirty-third part. And it is for this petty addition to the capital of the nation, this minimum of one dollar, added to one hundred and thirty-three and a third, or three fourths per cent., that we are to give up our gold and silver medium, its intrinsic solidity, its universal value, and its saving powers in time of war, and to substitute for it paper, with all its train of evils, moral, political, and physical, which I will not pretend to enumerate.

There is another authority to which we may appeal for the proper quantity of circulating medium for the United States. The old Congress, when we were estimated at about two millions of people, on a long and able discussion, June the 22nd, 1775, decided the sufficient quantity to be two millions of dollars, which sum they then emitted. According to this, it should be eight millions,

*Within five months after this they were compelled, by the necessities of the war, to abandon the idea of emitting only an adequate circulation, and to make those necessities the sole measure of their emissions.

now that we are eight millions of people. This differs little from Smith's minimum of ten millions, and strengthens our respect for that estimate.

There is, indeed, a convenience in paper; its easy transmission from one place to another. But this may be mainly supplied by! bills of exchange, so as to prevent any great displacement of actual coin. Two places trading together balance their dealings, for the most part, by their mutual supplies, and the debtor individuals of either may, instead of cash, remit the bills of those who are creditors in the same dealings; or may obtain them through some third place with which both have dealings. The cases would be rare where such bills could not be obtained, either directly or circuitously, and too unimportant to the nation to overweigh the train of evils flowing from paper circulation.

From eight to thirty-five millions then being our proper circulation, and two hundred millions the actual one, the memorial proposes to issue ninety millions more, because, it says, a great scarcity of money is proved by the numerous applications for banks; to wit, New York for eighteen millions, Pennsylvania ten millions, &c. The answer to this shall be quoted from Adam Smith (B. 2, c. 2, page 462); where speaking of the complaints of the traders against the Scotch bankers, who had already gone too far in their issues of paper, he says, 'Those traders and other undertakers having got so much assistance from banks, wished to get still more. The banks, they seem to have thought, could extend their credits to whatever sum might be wanted, without incurring any other expense besides that of a few reams of paper. They complained of the contracted views and dastardly spirit of the directors of those banks, which did not, they said, extend their credits in proportion to the extension of the trade of the country; meaning, no doubt, by the extension of that trade, the extension of their own projects beyond what they could carry on, either with their own capital, or with what they had credit to borrow of private people in the usual way of bond or mortgage. The banks, they seem to have thought, were in honor bound to supply the deficiency, and to provide them with all the capital which they wanted to trade with.' And again (page 470): When bankers discovered that certain projectors were trading, not with any capital of their own, but with that which they advanced them, they endeavored to withdraw gradually, making every day greater and greater difficulties about discounting. These difficulties alarmed and enraged in the highest degree those projectors. Their own distress, of which this prudent and necessary reserve of the banks was no doubt the immediate occasion, they called

the distress of the country; and this distress of the country, they said, was altogether owing to the ignorance, pusillanimity, and bad conduct of the banks, which did not give a sufficiently liberal aid to the spirited undertakings of those who exerted themselves in order to beautify, improve, and enrich the country. It was the duty of the banks, they seemed to think, to lend for as long a time, and to as great an extent, as they might wish to borrow.' It is, probably, the good paper of these projectors, which, the memorial says, the banks being unable to discount, goes into the hands of brokers, who (knowing the risk of this good paper) discount it at a much higher rate than legal interest, to the great distress of the enterprising adventurers, who had rather try trade on borrowed capital, than go to the plough or other laborious calling. Smith again says, (page 478,) That the industry of Scotland languished for want of money to employ it, was the opinion of the famous Mr. Law. By establishing a bank of a particular kind, which he seems to have imagined might issue paper to the amount of the whole value of all the lands in the country, he proposed to remedy this want of money. It was afterwards adopted, with some variations, by the Duke of Orleans, at that time Regent of France. The idea of the possibility of multiplying paper to almost any extent, was the real foundation of what is called the Mississippi scheme, the most extravagant project both of banking and stockjobbing, that perhaps the world ever saw. The principles upon which it was founded are explained by Mr. Law himself, in a discourse concerning money and trade, which he published in Scotland when he first proposed his project. The splendid but visionary ideas which are set forth in that and some other works upon the same principles, still continue to make an impression upon many people, and have perhaps, in part, contributed to that excess of banking which has of late been complained of both in Scotland and in other places.' The Mississippi scheme, it is well known, ended in France in the bankruptcy of the public treasury, the crush of thousands and thousands of private fortunes, and scenes of desolation and distress equal to those of an invading army, burning and laying waste all before it.

At the time we were funding our national debt, we heard much about a public debt being a public blessing'; that the stock representing it was a creation of active capital for the aliment of commerce, manufactures, and agriculture. This paradox was well adapted to the minds of believers in dreams, and the gulls of that size entered bona fide into it. But the art and mystery of banks is a wonderful improvement on that. It is established on the principle, that private debts are a public blessing;' that the evidences of those private debts, called bank-notes, become

active capital, and aliment the whole commerce, manufactures, and agriculture of the United States. Here are a set of people, for instance, who have bestowed on us the great blessing of running in our debt about two hundred millions of dollars, without our knowing who they are, where they are, or what property they have to pay this debt when called on; nay, who have made us so sensible of the blessings of letting them run in our debt, that we have exempted them by law from the repayment of these debts beyond a given proportion, (generally estimated at one third.) And to fill up the measure of blessing, instead of paying, they receive an interest on what they owe from those to whom they owe; for all the notes, or evidences of what they owe, which we see in circulation, have been lent to somebody on an interest which is levied again on us through the medium of commerce. And they are so ready still to deal out their liberalities to us, that they are now willing to let themselves run in our debt ninety millions more, on our paying them the same premium of six or eight per cent. interest, and on the same legal exemption from the repayment of more than thirty millions of the debt, when it shall be called for. But let us look at this principle in its original form, and its copy will then be equally understood. A public debt is a public blessing.' That our debt was juggled from forty-three up to eighty mil lions, and funded at that amount, according to this opinion, was a great public blessing, because the evidences of it could be vested in commerce, and thus converted into active capital, and then the more the debt was made to be, the more active capital was created. That is to say, the creditors could now employ in commerce the money due them from the public, and make from it an annual profit of five per cent., or four millions of dollars. But observe, that the public were at the same time paying on it an interest of exactly the same amount of four millions of dollars. Where then is the gain to either party, which makes it a public blessing? There is no change in the state of things, but of persons only. A has a debt due to him from the public, of which he holds their certifi cate as evidence, and on which he is receiving an annual interest. He wishes, however, to have the money itself, and to go into business with it. B has an equal sum of money in business, but wishes now to retire, and live on the interest. He therefore gives it to A, in exchange for A's certificates of public stock. Now, then, A has the money to employ in business, which B so employed before. B has the money on interest to live on, which A lived on before and the public pays the interest to B, which they paid to A before. Here is no new creation of capital, no additional money employed, nor even a change in the employment of a single dollar. The only change is of place between A and B, in which

we discover no creation of capital, nor public blessing. Suppose, again, the public to owe nothing. Then A not having lent his money to the public, would be in possession of it himself, and would go into business without the previous operation of selling stock. Here again, the same quantity of capital is employed as in the former case, though no public debt exists. In neither case is there any creation of active capital, nor other difference than that there is a public debt in the first case, and none in the last; and we may safely ask which of the two situations is most truly a public blessing? If, then, a public debt be no public blessing, we may pronounce a fortiori, that a private one cannot be so. If the debt which the banking companies owe be a blessing to any body, it is to themselves alone, who are realizing a solid interest of eight or ten per cent. on it. As to the public, these companies have banished all our gold and silver medium, which, before their institution, we had without interest, which never could have perished in our hands, and would have been our salvation now in the hour of war; instead of which, they have given us two hundred millions of froth and bubble, on which we are to pay them heavy interest, until it shall vanish into air, as Morris's notes did. We are warranted, then, in affirming that this parody on the principle of a public debt being a public blessing,' and its mutation into the blessing of private instead of public debts, is as ridiculous as the original principle itself. In both cases, the truth is, that capital may be produced by industry, and accumulated by economy: but jugglers only will propose to create it by legerdemain tricks with paper. I have called the actual circulation of bank paper in the United States, two hundred millions of dollars. I do not recollect where I have seen this estimate; but I retain the impression that I thought it just at the time. It may be tested, however, by a list of the banks now in the United States, and the amount of their capital. I have no means of recurring to such a list for the present day but I turn to two lists in my possession for the years of 1803 and 1804.

Dollars.

In 1803, there were thirty-four banks, whose capital was 28,902,000 In 1804, there were sixty-six, consequently thirty-two

additional ones. Their capital is not stated, but at the average of the others (excluding the highest, that of the United States, which was of ten millions) they would be of six hundred thousand dollars each, and add

VOL. IV.

Making a total of

28

19,200,000

$48,102,000