have been attended with many inconveniences and losses; but in the state in which things then were, inconvenience and loss were inevitable. They have been suffered to a terrible extent; they are not yet over; and the question is, whether a different course pursued by the banks would not have diminished, rather than have increased them?

The suspension of a portion of the banks would have drawn a line at once between those that were in a condition to sustain themselves, and those which were not. It would have driven the suspended banks into an immediate course of liquidation, and it would have prevented all those disastrous speculations which were entered into by many banks and many individuals, in the vain hope of restoring prices to their old standard, and thus relieving their embarrassments.

No doubt the suspension of a portion of the banks, with the discredit of their issues, and the sudden stop which would have been put at once to all kinds of speculations, would have brought about a sudden fall of prices, which would have rendered many bankrupt, and would have reduced many more from affluence to poverty. But this was a result which no art could escape, and which the struggles of banks and individuals have only served to protract, without in the least averting. In fact, the efforts made to avert it, have only served to render the catastrophe more ruinous; and what portion, if any, of the banks of the south and west will be able to save themselves, is a problem yet to be solved.

That, however, is hardly the worst of the matter. If prices could have been reduced, in the course of 1837, to that standard to which they have since sunk, instead of floundering on from bad to worse in vain attempts to relieve themselves, those who have since sunk under the accumulated pressures of the last three years, would have been delivered from their misery at once, and trade having reached its lowest point, would before now have been re-organized upon a new basis. As it is, it seems hardly possible to tell when we shall finally escape the lingering embarrassments which the suspension of specie payments has tended so much to protract.

But this suspension of specie payments not only deranged the monetary affairs of the country, which were before sufficiently embarrassed, it tended to unsettle opinions upon a point which, amid all the other varieties of opinion existing upon the subject of banks, seemed to be conceded by all-the opinion, namely, that no paper currency is entitled to any confidence which is not payable in specie on demand.

Many men in high stations, both political and financial, in their zeal to uphold the suspended banks, or to bring the course pursued by the general government into disrepute, advanced opinions upon this point fatal to any stability in the currency. Those opinions were eagerly caught up, and the impression they had made upon the country was strikingly evinced by the rapid spread of the second suspension in 1839, and the great difficulty with which it was prevented from extending over the whole country. If the New York banks assumed a great weight of very doubtful responsibility when they took the lead in suspending specie payments in 1837, the firmness with which they sustained the shock in 1839, and their instrumentality in saving the country from a second and an indefinite suspension, is certainly entitled to the highest praise, and will go far to redeem and re-establish their reputation.

The present wavering state of public opinion on the all-important point

of the absolute necessity of specie payments at all hazards, gives an additional value to that portion of the book, the title of which stands at the head of this article, which treats of the history of banking and paper money.

This historical portion of the work, which seems to be compiled with great diligence and care, gives a clear and distinct view of the origin and progress of paper currencies. Paper currencies are of two kinds, and only two kinds; those redeemable upon demand in specie, and those not redeemable upon demand in specie. Paper of the former kind is properly known as a paper currency; it circulates instead of coin, and so far as the facility of exchanges is concerned, it performs all the offices of coin with. great economy, and with great convenience. It is a medium of exchange, but it is not the standard of value, which is wholly regulated by the coin which this paper represents, and which it will at any time command.

Irredeemable paper, on the other hand, is not a currency merely, but it assumes to be the standard of value. It is properly paper money. But it lacks that quality which alone enables the precious metals to serve as a standard of value. So far from being that substance of which the total amount on hand is the least of all things liable to sudden variations, paper money may always be increased at the pleasure of the issuers, and tends inevitably to a rapid increase, which is fatal to the interests of creditors, and in fact renders credit impracticable. It makes no sort of difference by whom this irredeemable paper is issued, whether by a government, a corporation, or an individual. The experiment has never been tried without the most disastrous results. To trade, and especially to credit, confidence is essential, but when the currency consists of an irredeemable paper, confidence is out of the question, because it is impossible to foretell, even for short periods, what fluctuations in prices may take place. This most important distinction, and the consequences which flow from it, are constantly kept in view by our author, who first gives an account of the old banks of Venice and Amsterdam, which were not banks of issue properly so called, though they furnished in fact a species of paper currency in the shape of certificates of deposit, called bank money. Bank of Hamburg, imitated from the Bank of Amsterdam, is still conducted on the same principle. The Bank of England first hit upon the expedient of circulating notes as distinguished from mere checks or certificates of deposit, and thus laid the foundation of the modern system of banking.

The

After an account of the origin and early history of the Bank of England, we have an account of the rise of the English private banks, and of the Scotch system of banking. The sixth and seventh chapters contain a very clear and interesting history of Law's plan of a land bank, and of the speculations, fraud, and distress which followed the experiment tried in France under his direction. Next we have a continuation of the history of the Bank of England, with a full and distinct account of the stoppage of specie payments in 1797, and the resumption again in 1823, with the arguments and reasonings upon both sides, to which those measures gave rise, and the views in which they originated. The ninth chapter contains the recent history of the English private banks, the institution of jointstock banks, and the establishment of branches by the Bank of England. The tenth and eleventh chapters contain a statement of the principles upon which the Bank of England is now professedly conducted, and of the

present state of public opinion in Great Britain on the subject of banks and banking.

After a chapter upon government paper money in general, and another upon the colonial and continental paper money in America, our author passes to the history of American banks. He gives a brief but comprehensive account of the controversy respecting the charter of the first Bank of the United States; the stoppage of specie payments during the war of 1812-14; the recharter of the second Bank of the United States; the resumption of specie payments; the disasters which attended the early management of the second Bank of the United States; and the great commercial crisis of 1819, which destroyed almost all the banks of the south and west, and which can only be compared to the crisis through which the country is now passing. The twentieth chapter treats of banking in America, from 1819 to 1830. We then reach the commencement of that controversy which grew up touching the recharter of the second Bank of the United States, from which moment the mercantile affairs of the country became so unfortunately entangled with politics. The suspension and resumption of 1837-38 form the subject of the twenty-second chapter. The twenty-third chapter treats of the partial suspension of 1839. We then have an account of the situation of the American banks at the close of that year; the present state of public opinion in the United States, on the subject of banks and paper currency; and a short summary of the New York free-banking law. The twenty-sixth chapter gives a brief account of banks on the continent of Europe.

In giving the recent history of banking operations in the United States, and particularly of the violent controversy respecting a national bank, our author preserves a commendable coolness and impartiality; nor does he give any indications of any merely political bias. It appears to be his aim to give a clear, distinct, and candid statement of the facts of the case, and to treat the subject, not as a question of party politics, but as a great question of statesmanship and political economy.

Having treated the subject historically in the first part of his book, and having made a collection of all the principal facts which are known with respect to banks and paper money, our author proceeds, in the second part, to discuss the subject theoretically. This second part is entitled, "Argument for open competition in banking."

This second part contains a series of discussions which show great ingenuity and much dialectic skill. The author considers the origin and practical operation of the monopoly system of banking; he then passes to the theory of paper currency, in which he very successfully shows the advantages of paper over the metals, considered merely as a medium of exchange, and, at the same time, appears to show that there is nothing in the nature of banking operations so different from the ordinary processes of trade, as to afford any ground for rendering the issue of circulating notes a monopoly, whether in the hands of the government or of a few favored individuals. He maintains, in fact, that for the government to require of bankers, whether individuals, copartnerships, or joint-stock companies, security for the payment of their circulating notes, as a condition previous to their issue, is the only restriction that can be of any practical benefit to the community; and he maintains that justice to the holders of the notes, who, to a great extent, become so almost involuntarily, and who, for the most part, can have but inadequate means of knowing

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the solvency of each particular bank, imperatively requires such a provision.

He next discusses the effect of competition in banking upon fluctuations in trade, and the connection between the currency and the foreign exchanges. It is a very common idea that the multiplication of banks tends to produce speculation; but our author gives good reasons for believing that this opinion is wholly destitute of any solid foundation. In times of speculation, when trade is active, and commercial prosperity apparently great, new banks come into existence exactly as new mercantile establishments of other kinds, and for the same reason-because they are, or seem to be, called for. They afford new facilities to the transaction of business, just like new railroads, new canals, new wharves, new warehouses, new lines of packets, facilities which those who employ them may, and sometimes do employ, as men may and do employ every thing else, to their own damago,—a result, however, which does not arise from the inherently vicious nature of those facilities, but from an injudicious use of them.

There is a chapter upon the effects of the usury laws, on bank loans, and commercial fluctuations, which contains some judicious remarks. It cannot be doubted that the idea of always being able to obtain money at legal interest-an idea which originates wholly in the regulation of interest by law-has no inconsiderable influence in inducing men to enter upon speculations about which they would be much more cautious, did they but consider the really fluctuating value of money, and the doubtfulness of the actual rate of interest for any considerable length of years in succession.

With respect to a national bank and a uniform currency, our author. maintains that under the system of open competition in banking, the banks, as a body, or rather those of the leading commercial cities, would soon perceive that it was for their interest as well as for the interest of the community, that the currency should be rendered uniform; and this object he maintains might easily be accomplished by extending throughout the country that system so successfully adopted in New England, by which all the banks of the six eastern states are compelled to redeem their bills in Boston. He is opposed to a national bank, on the ground that it would be a monopoly, and would throw into the hands of the directors of such a bank, in addition to that power and influence to which their capital and skill entitled them, a quota of additional influence growing out of their exclusive privileges, which influence they would be no more likely to use skilfully and honestly than would any other board of directors, and from which no advantage to the country could be reasonably expected, but, at most, only an advantage to the stockholders of that particular bank.

With regard to the duty of the federal government to regulate the currency, our author maintains that all congress has to do, is, to enact a uniform law of bankruptcy, including banks; thus preventing the states from dispensing with the obligation of contracts, and guarantying the country against the curse of an irredeemable paper.

The system of banking which it is our author's object to vindicate in this second part of his book, as that best adapted to the wants of the community, and attended with the slightest disadvantages, is substantially the same with that introduced by the late free-banking act of the state of New York. The institutions established under that act commenced their opera

tions at a most disastrous period. Indeed, it would scarcely be possible to select from our history a time less favorable to the trial of new commercial experiments, whether in banking or any thing else. Notwithstanding those disadvantages, these institutions have so far succeeded in sustaining themselves, as to give the greatest room for anticipating their perfect

success.

The third part of our author's book is entitled, "An Apology for Onedollar Notes." It consists of three chapters; in the first of which he explains the origin of the prejudice against small notes; in the second, he replies to the argument commonly urged against small notes; and in the third he states the precise advantages and disadvantages of a small-note currency. . It is shown, in these chapters, with sufficient distinctness, that the arguments commonly urged against small notes, are, in fact, arguments against any paper currency whatever; and that if they are valid against small notes, they are much more valid against large ones, a large note being, "in fact, neither more nor less than precisely a compressed bundle of small

notes.

Nor does practice in this case show a result different from theory. Scotland and New England are the two countries in which small notes have circulated ever since the introduction of the system of banking; and they are certainly the two countries in which the banking system has encountered the fewest mischances, and has been conducted with the most uniform success.

The system of free competition is not a system which, in the first instance, and previous to experiment, is likely to strike men favorably. There is a universal passion for regulating things, and a very general impression that it is impossible for things to regulate themselves. It is no doubt true that, within certain limits, human regulation is useful, and even necessary. There are some zealots for free competition, who are ready to carry the principle so far as to be willing to abolish all laws on the subject of trade. To be consistent, they ought to go for abolishing all legal process to compel the payment of debts, or to enable the creditor to seize the property of the debtor.

Regulation, within a certain limit, is necessary; but, in general, that limit seems to be the prevention of force and fraud. Violence is pretty well restrained by modern laws. One merchant does not think of seizing the goods of another by force. It is fraud which is a much more danger. ous and much more troublesome enemy. A great many regulations are necessary, and a great many new ones, it is to be hoped, will be invented to prevent men from cheating each other. Beyond this, it does not, in general, seem desirable for government to interfere. However great the folly of men may be, upon whatever unwise speculations they may enter, and however injudiciously, when left to themselves, they may expend their time and labor, the experience of ages has sufficed to establish that nothing is gained by putting them under the tutelage of a select few, who, if they be in fact wiser than the rest, will be certain-such is the infirmity of human nature to employ that wisdom rather for their own advantage than for the benefit of the whole.

We cannot conclude this article without recommending the book which stands at the head of it, to the attention of every merchant who has any taste for the theory of his profession, and who aspires to be something more than a mere shopman or a mere bookkeeper. The perusal of books