dering their spontaneous occurrence at home, or their introduction from abroad equally impossible.

"Nor is it undeserving of mention, that the metallic currency which here affords such manifestations of the influences inseparable from its nature is far from being a perfect one. It consists of the gold ounce and its fractions, half, quarter, and eighth, at the arbitrary value of seventeen dollars; while the silver in circulation consists altogether of the two lowest silver fractions of the dollar, the eighth and the sixteenth in the small quantities requisite for making change: and beyond this, of the peseta of Seville, at the arbitrary value of four to the dollar, while their real value is of five; so that in the purchases, which occur at every instant, to the amount of the lowest coin in circulation, the purchaser, if he has not that coin about him, gives a peseta and receives his purchase, together with change to the same identical amount, almost, as that of the peseta. Disadvantages of the same nature attend every exchange of a gold piece for pesetas; and others of a more serious character are silently but more surely working their appropriate effects.

"But, notwithstanding these imperfections, it has sufficed to exercise the influences. above described; and with regard to it merely as a circulating medium, for the hourly purposes of society, I have never, in a single instance, experienced or witnessed the slightest detention in making change; nor have I ever heard any inconvenience of any kind mentioned in connexion with it, by resident, or by traveller from any part of the globe. On the other hand, I do not recollect to have met with one who had visited our country, who, however agreeable all his other recollections might be, did not speak with the deepest disgust of our 'shocking' currency."

For the purpose of throwing additional light upon the subject we subjoin an extract from a recent letter from the most unquestionable mercantile authority, relative to the currency of Brazil, upon which some remarks were made in our third Article on the production and manufacture of cotton, in our Number of last June. "The wretched state of the finances of our country has been for many years a source of great anxiety to people engaged in the Brazil trade, and unless speedy measures are adopted by the Legislature I see no chance of immediate improvement.It is true the country possesses immense resources, if properly called forth, and well managed by government, but in all young countries there is too much competition for power, to admit of much unity of purpose on the part of the representatives of the people, and hence it is that hitherto so little has been done in Brazil to improve the circulating medium. Our currency consists entirely of paper and copper, and its amount, in round numbers, is about 40,000,000 milreas, or, at the exchange of 40d. the milrea, to £6,666,666 sterling. This sum is not by any means too much for the necessities of business, but it wants the desirable attribute of being convertible into precious metals at the will of the holder, which is the only sure foundation for a paper currency."

The artifice has often been repeated by those who have determined to destroy the successful exercise of the great principle of self-government, to push its doctrines to the extreme of licentiousness in order to create the necessity for placing political power in arbitrary and irresponsible hands. This was done with great effect in France during the disorders brought upon that nation by mistaken policy with regard to currency at two periods,-first while Louis XVI. was on the throne, which led to his decapitation-and again during the Republic, which led to the despotism of Napoleon. In our own country we have lately seen a class of politi cians whose principles and practice, whenever they have been able VOL. V. NO. XV.—MARCH, 1839.

to employ either, have invariably led to the regulation by the General Government of the paper currency-all at once denouncing any restraints upon the issue and universal receipt of paper, by whomsoever manufactured, in payment for public taxes, and accusing those who, like ourselves, have advocated a fixed and settled measure of value, of being favorable to the interference of the Government with paper currency. We are wholly opposed to such interference. We think, however, that the means of protection to the community through the judicial tribunals should be afforded against the excess of paper currency becoming an engine of fraud, like false weights and measures. An efficient bankrupt law for the manufacturers of paper currency would soon put a stop to the profligate expansions and contractions which have so often overwhelmed all classes of the community in unexpected embarrassment. Individuals, before entering into contracts, to be performed at future periods, might be able, were such a law in operation, to calculate with some precision the amount of property which would be required to fulfil them. For want of this regulation of the system, the power of individuals to meet their obligations wholly depends upon the erratic movements of the makers of paper currency. If it suits their purposes to make currency plentiful, property is sold at enormous nominal prices, and debts are paid at half their intrinsic values, compared with the value of property when they were contracted. But, on the other hand, should the paper coiners determine to create a panic, for the purpose of raising excitement against the Government, or for increasing their own profits, they have only to suddenly restrict their issues, require their customers to pay up their notes, and the whole community is at once convulsed with distress, from the sacrifices of property which become compulsory upon those who wish to preserve their own credit and that of their sureties.

This mode of preventing these evils has the authority of the most distinguished financiers this country has ever produced in its favor. In view of the manifold evils in which the commerce and industry of the country were involved by the profligacy of banks, Mr. Dallas in 1815, and Mr. Crawford in 1821, while respectively at the head of the public finances, explicitly recommended to Congress to subject the banks to the penalties of an efficient bankrupt law, as the only adequate restraint upon issues of paper, which had at those periods involved the whole country in embarrassment. Neither of these distinguished statesmen was inimical to banks acting within their proper sphere. They regarded this measure as essential to protect the well managed banks from the profligacy of those conducted by gamblers and speculators. From the combinations clearly manifested in various quarters, at this time, the necessity for this check is daily becoming more urgent.

One of the greatest lights of the present age-who is generally admitted both in Europe and in this country to be one of the most powerful and brilliant writers that America has ever produced*— within a few years past has published an essay upon the injurious effects, upon the welfare of society, of the universal rage for associations which has lately developed itself. He appears to regard the Temperance Societies, Anti-Slavery Societies, Missionary Societies, and all that infinite catalogue of machinery put into operation for the ostensible purpose of improving the condition of mankind, as threatening greater danger to the freedom of our political institutions than standing armies. A system of self-government can only be maintained among a people accustomed to independence of thought and action, and deeply impressed with the responsibilities of individual decision. Societies, whose ramifications extend from a great centre into every village, and which are wholly controlled by a few individuals, become in effect but so many seminaries for systematically teaching multitudes to submit themselves to the implicit management of designing leaders.

If such be the operation of societies formed for benevolent purposes, what must be the consequence of associations entered into for the express design of concentrating and gratifying the love of gain? The selfish passions are sufficiently ardent in most men. They require no additional stimulus to increase their intensity. Their means of gratification may indeed be extended by machinery for obtaining the control over the opinions and conduct of those who are intended to be made victims. This effect has been witnessed on a vast organized scale in this country, within the last two or three years. We have seen the industrial and commercial interests excited to a degree little short of absolute delirium, and then paralyzed at once. We have also seen the individual at the head of the institution by the management of which these results of combined action were produced, publicly declare to an outraged community his determination to keep the productive interests in a state of depression until the people should be compelled by their sufferings to change their political agents..

Whatever invidious appeals are made to the cupidity of unreflecting men, it is impossible that such management should be long sustained by the intelligent part of the community. Those who suppose that its aggravations in a tenfold degree-through the banishment of all specie from the country by the universal substitution of a measure of value which costs nothing, and which by its abundance loses its quality of a measure-will be sanctioned, have greatly underrated the discernment as well as the sense of justice which prevails among our citizens. Luxury and corruption may have debased some of them; but the great mass of the people are too

* Dr. Channing.

well apprised of their true and permanent interests, and of the value of their hard-earned property to suffer them to be sported with by gamblers. The welfare of posterity is too dear to our citizens to suffer the overthrow of our political institutions and the moral feelings which are their main support, merely for the sake of aggrandizing a few speculators by the unlimited issue of paper-currency freed from all efficient obligations for its redemption.

As the most appropriate close to these suggestions, we propose to insert an elucidation which will satisfy every impartial mind how little of originality or ingenuity have been manifested in the management of the banks of this country. Much has been said of great modern improvements in the science of currency. It will be seen that the author of the SYSTEM from which the "credit system" derived its name, was as fully aware of these advantages as any of his present disciples. We take the account which forms the succeeding Article to the present paper, from a work of deservedly high European reputation which is but little known in this country, Storch's "Exposition des principes qui déterminent la prosperité des nations," which was prepared for the instruction of the present Emperor of Russia and his brothers. It is translated from the fourth volume of the Paris edition of 1823, begin. ning at the 130th page.

LAW'S SYSTEM OF FINANCE.

In the course of the eighteenth century, the French nation have been twice the victims of paper money-originally under the regency of the Duke of Orleans by the famous System of Law-afterwards during the Revolution, by the Assignats.

The history of the system comprehends so great a number of facts, and these facts are so complicated, that it is exceedingly difficult to find a clue which shall carry us through this labyrinth: but as it is less important for you to know the historical detail of the system, than to appreciate its spirit and understand its consequences, I shall confine myself to those circumstances alone which possess interest in this point of view, and overlook every thing which is not indispensable for this object, however otherwise curious.

France at the death of Louis XIV. found herself burdened with a public debt of three thousand one hundred and eleven millions livres tournois, bearing an interest of eighty-six millions. There was nothing to meet this debt but the excess of the revenue beyond the ordinary expenditure in time of peace; which excess was but nine millions. The Regent established a Commission, the Visa, which by operations the most arbitrary reduced the principal of the debt to two thousand millions, and the interest to eighty. The Government, however, was in no better condition to pay the pay the debt thus reduced, than it had been able to meet it before the reduction.

At this crisis, Law, a Scotchman by birth, presented to the Regent a scheme to liberate the State from the burthen of this immense debt by means of CREDIT, and without injury to the interests of any one. Before entering upon the details of this scheme and its execution, it is necessary to explain the principles of its author in relation to the nature and effect of CREDIT. This explanation becomes the more important, since the notions of Law on this subject are yet widely spread, and a vast number of persons of every rank still entertain the erroneous principles of this famous system, although they profess the greatest horror for the consequences which flow from it.

Currency, said Law, and so say his disciples of the present day, is but the sign which represents wealth in circulation. Gold, silver, brass, leather, notes, shells, and all other materials which we use as the measure of actual wealth, become wealth, by that confidence or opinion which we call credit. A Louisd'or and a crown piece are but notes upon which the effigy of the prince is the signature, and as things only receive value by the uses for which they are employed, it is perfectly indifferent whether a Louisd'or, or a note for that sum, or even shells, are employed to represent all other values.

Is it necessary, my Lords, to refute this sophism? You perceive that Law places metallic currency upon the same footing with fictitious or conventional currency. But there is this radical difference between them-the one has a direct, necessary, and essential value, while the other possesses neither. Hence the former is not simply a sign, but is real wealth, while the latter on the contrary is nothing but a sign. Metallic currency needs neither confidence nor credit to maintain its value, because it of itself is wealth; but fictitious currency only exists by credit—that is, by the belief that it may be exchanged for metallic currency or for other actual wealth. Things no doubt receive their value only from the uses to which they are destined; but metallic currency possesses double uses-that of answering for money, and that of being employed as important and precious materials-while fictitious currency can be used for no purpose whatever but currency.

Besides, gold and silver are not to be obtained but by long and painful labor, which must require great expense of production. The materials for ficticious currency on the other hand employ nearly no labor whatever, and of course the quantity may be augmented at pleasure. Finally, the value of gold and silver is stable, at whatever rate their value may be fixed, while that of paper changes with popular caprice. It is not, therefore, perfectly indifferent, as Law maintained, whether we use Louisd'ors, or notes, for the purpose of representing all other values.

Law, having taken as the foundation of his system, the false principle we have just examined, found himself carried into the most absurd consequences. In any country, said he, where no currency exists excepting gold and silver, wealth may be augmented by introducing paper money. This consequence, true in a certain sense to a limited extent, he assumed to be universal in its widest sense. You have seen, my Lords, that paper money can never increase national wealth but by supplying the place of the metallic currency which, relieved from its use as money, shall become employed for other objects, or be exchanged against other wealth. Law on the contrary supposed that metallic currency, after paper money should be brought into general use, would continue to circulate as money; he did not apprehend that too much currency could exist in any country; or that the abundance of paper would expel its specie; or that paper augmented beyond the wants of circulation would lose its value. He thought that the increase of currency could have no other effect than to lessen the rate of interest, and that it would be absorbed by the encouragement it would give to industry, and in this light saw in the profusion of paper money nothing but the means of public prosperity. But the rate of interest, as you are aware, never depends upon the quantity of money in circulation, nor does the abundance of currency promote industry, excepting where it may be transferred into capital.

In a State, said Law, where the people have not been accustomed to credit (as