are prohibited from associating for the purpose of lending it themselves, because the charter of the Bank of France secures to it almost a monopoly of the right of trading in money. Deprived of the right of opening shops at which they might receive the applications of manufacturers or traders who desired the aid of capital, and whose operations they might facilitate by re ceiving, guarding, and transferring to their order, the small amounts that the latter might occasionally have unemployed, they are permitted to asso ciate themselves for the vastly more complex operations of making hats, or shoes, or publishing books and newspapers. They are thus driven from the superior modes of investment to those which are inferior in product and security. The consequence is, that when the bank has rendered money very abundant, Paris overflows with schemes for joint-stock companies, into which all rush, expecting to realize fortunes. The result is a vast waste of capital. The time for contracting the currency arrives. The bank turns the screw, and the joint-stock fortunes vanish, leaving not a trace behind. Were the restrictions upon the superior modes of investment abolished, men would manage their own capital, either by embarking in trade or manufactures, or by lending it out on mortgage, or by associating for the purpose of lending it out themselves to the manufacturers or traders, upon whose integrity and punctuality they could rely, and there would be few, perhaps none, of such associations as have, within the last few years, spread ruin throughout Paris, and perhaps France.* The quantity of currency would be greatly diminished-there would be less liability to change-and the speculative tendency would gradually cease to exist.

In ENGLAND, there are many restraints upon the application of capital, among which tithes and corn laws are very conspicuous. The difficulty attendant upon making loans upon mortgage is great, because of the want of record offices. The owner of capital is not permitted to associate with his neighbors, for the purpose of receiving applications for loans, unless he will hold himself individually liable for all moneys that may be placed with the association for safe keeping and transfer. He cannot trade in money unless he performs all the duties of such a trade, because it is to the profit derivable from the performance of those duties that he must look for reimbursement of the expenses of business, and consequently he places his capi. tal on deposit, at small interest, until he can find some mode of investment that will afford him the usual rate of interest, free from risk, except that of the loss of what he has invested. He is, consequently, always ready to receive applications from those who desire to sell Poyais bonds, or the stocks of Spain, Portugal, Mexico, or Buenos Ayres. Sometimes he purchases shares in gold or silver mines: at others, shares in the canals and railroads in the United States: when he would gladly take 4 per cent at home, if permitted so to do. If he unite in the formation of an association, he finds himself denied the power of examining into its management,† and if he pur.

* It is stated that in the present year, no less than 255 joint-stock companies have become bankrupt, and 141 have discontinued business. Nine-tenths of those would never have existed, had the trade in money been perfectly free.

+ "The principle of close management, in some companies, is carried out so far, that the influence of many good practical men in the direction becomes nugatory; this is effected by the appointment of a sub-direction, a sub-committee of, perhaps, not more than five directors, and these are invested with unrestricted powers, so that, in fact, the whole management passes from the board of directors to these sub-directors; what they please they communicate to the other directors, and what they please they keep

chase a share in any of those already existing, the reports that are made are of such a nature that he is always in a state of ignorance, as witness the proceedings of meetings of stockholders in the bank, the East India Company, &c.

Whenever capital is dammed up in one place, it will be sure to overflow in another, and thus, during the last twenty years, we have seen English capital seeking investment in every sort of scheme, at home and abroad, because the owners have been denied the exercise of the right of selecting for themselves their own mode of investment, and their own mode of trading with each other. The force with which it is driven abroad is precisely equal to that of the power of expansion possessed by the bank; and the force applied to compel its return, is that of the power of contraction possessed by that institution. The investments so much sought after at one time, are then sold at a loss of 20 or 25 per cent, and their owners are ruined. The waste of capital has been great, but it has not been greater than the injury to morality that attended these sudden changes.

During this period, the average amount of deposits in the banks of Great Britain could not have been less than forty millions of pounds, and was probably much more. They were lent out by the bankers while the owners were seeking profitable employment for that portion of the currency, the consequence of which was, that the prices of securities were high, and the rate of interest was low. The bankers received 4 per cent, and paid sometimes 2 per cent, but more frequently no interest, and they obtained for themselves, by aid of these deposits, 8 per cent on their own capital. Why, then, did not the owners of this vast amount of currency become partners in joint-stock, or in private banks, lending out their own capital, and taking this large rate of interest? Because, that mode of investment had been surrounded by regulations which imposed liabilities such as they were unwilling to incur, and therefore they preferred taking 2 per cent, or even nothing, until they could find some mode of investing it in another country, in which trade was more free. Had they been permitted to trade on the same footing as the Bank of England, their capital would have been lent out for their own profit, instead of that of others; it would have at once been permanently invested, and would have ceased to be currency; a necessary consequence of which would have been that the prices of securities would have fallen, and the rate of interest would have so far advanced, that capitalists could readily and steadily have obtained 4 per cent, while the dividends of bankers would have fallen to that rate.

Had the people of England obtained readily 4 per cent at home with perfect security, would they have wasted their money in loans to Mexico, Peru, Chili, Spain, Portugal, and Greece? Would they have squandered it among the mines of Mexico? They would not. Finding a demand, at a fair rate of interest, for all capital as fast as it was accumulated, they

to themselves, and the latter is generally of the greatest importance to the company, and in this they think they are borne out by the deed of settlement; and no doubt in many cases the deed is drawn carefully, so as to include this vicious power. I have recently examined several deeds of settlement, and have three now before me, (not all of banks;) in one is a clause, giving the directors power to continue, or re-elect them. selves for the first seven years, without reference to the proprietors; in a second is a clause giving the majority of directors a power to appoint a sub-direction of any num. ber of directors or managers, (say three or more,) with the fullest powers, so, as if acted upon, to negative entirely the powers and influence of the other directors."-London Atlas. November 16, 1839.

would never have purchased any description of foreign stock, unless absolutely certain of its value. Hundreds of millions of dollars have been wasted by the people of Great Britain, in the last twenty years, in the attempt to obtain abroad, from hazardous and uncertain enterprises, the remuneration that, under a different system, they would have obtained from loans on the best security to their own countrymen. To estimate the loss of that period, arising out of the monopoly of the Bank of England, at one hundred mil lions of pounds, would be far within the mark.

The systems of England and France have thus a direct tendency to prevent individuals from applying their capital in the manner they would deem most advantageous, and to compel them to place it under the management of others, when they would gladly manage it themselves, rendering it far more productive.

In SCOTLAND, the restraints upon association are similar to those which now exist in England, but until 1826 the Scottish system was far the most free, and consequently the most steady. The low rate of interest has a direct tendency to cause the export of capital, and thus we find large sums are employed in the London stock market, that would be productive of much more advantage at home.

In the states of NEW YORK* and PENNSYLVANIA,† we find few restraints, except those on banking. Capital may be freely and safely applied in the purchase of mortgages, but the restraints upon the opening of shops for the loan of money are so great as to produce, to a certain extent, a monopoly in favor of existing institutions. They expand their operations, and the currency becomes redundant. Large sums are then invested in distant banks, in mining and railroad companies. The currency is then contract. ed, and the shares of those banks fall from par to 30, 50, 60, or 70 per cent. Even when permitted to associate for the purpose of lending their capital, receiving and transferring deposits, and performing the other duties of a banker, the people are not permitted to judge for themselves what is the amount of capital required, nor, when the amount is once settled, are they permitted to increase it, if found expedient, without further application to the legislatures. In those bodies it is frequently held that small banks are injurious, and therefore small places are deprived of the convenience of a money shop. The owners of capital are compelled to invest their means in large institutions in New York or Philadelphia, when they would greatly prefer employing it in smaller ones nearer home. The consequence is that they are compelled to trust altogether to the management of others, giving them their proxies to vote for directors, and thus accumulating power in the hands of individuals. The direct effect of the system of these states is to produce violent changes in the amount and value of the currency, causing large quantities of capital to remain unemployed until means of investment are found at the west, when, withdrawn from the direct control of the owner, it is frequently wasted.

In RHODE ISLAND and MASSACHUSETTS, the owners of capital enjoy a

The period referred to throughout is 1830. The passage of the free banking law in New York has made a change, the results of which will be highly important in preventing the recurrence of such difficulties as those which have grown out of the past system.

+ In this state the people impose a tax upon banks, and sometimes demand large sums by way of bonus. They thus sell the privilege of overtrading, and are then surprised that the currency is unsteady.

degree of freedom that is elsewhere unknown, and the consequence is, that little goes abroad, although in no part of the world does it increase so rapidly in amount. The people of those states have little to do with the formation of banks in Mississippi, Kentucky, or Louisiana, because permitted to make them at home. In no part of the world is capital so directly under the control of its owners; and, consequently, in none is it so productive. Every restriction upon the perfectly free application of capital, tends to increase the quantity remaining in the form of currency,* while it diminishes the amount of production, and every step towards freedom tends to diminish the quantity of currency, and increase the amount of production.

Having thus considered the economical effects of the various systems, we now come to the moral ones, and doubt not we shall arrive at a similar result.

Whatever tends to promote a disposition for labor, tends to promote morality, while every thing that tends to produce a desire for speculation, has a directly contrary effect.

In FRANCE, men are debarred from employing their labor or their capital, and large quantities of both are unproductive. The number of companies of every kind is immense. Gambling in shares, and in the public stocks, is carried on to an extent unknown in any other part of the world. The youthful and the aged, male and female, the duchess and her chambermaid, all are gamblers.†

The publication of the returns of the banks of Massachusetts, enables us to give a view of the operations of that state, at three important periods, viz:-1, at the height of the excitement at the close of 1836; 2, in October, 1838, shortly after the resumption of specie payments; and 3, in November, 1839, when payment was again suspended in all the states south and west of New York.

The circulation continued almost unaltered, because it never could be more than is wanted for daily purposes. The deposits changed, because the imposition of a tax of 1 per cent prevents the daily investment of capital as it accumulates, and renders it necessary for bankers to make 8 per cent of gross profit instead of 7. Had no such impediment existed, the deposits would, like the circulation, have been limited to the amount required for daily use, and no change could have occurred in them. As it was, the high price of money at the south induced the transfer of capital to New York and Philadelphia, and its owners were obliged to demand it of the bankers, who, in their turn, were obliged to call it in from those to whom they had lent it, and thus the pressure became universal. The system of Massachusetts would be almost perfect were the tax abolished, but until it shall be so, it must continue liable to be affected by errors of the banks of New York and Philadelphia and London.

+ The following is the picture given by the "Courrier Français," of the state of trade in France :

"FRENCH TRADE.-Habits of piracy and fraud have been introduced into French commerce, once famed for its honesty. M. Duchatel, when Commerce Minister, was obliged to denounce in a public circular the shameful tricks practised by French traders in South America. A day or two ago, the Bordeaux papers published a letter from Martinique, complaining of the way in which the flour sent from France was adulterated. The English buy our wines at Bordeaux, and supplant French wine merchants, not only abroad, but even in Paris. Cloth we can no longer sell abroad, since it is

In ENGLAND, Stock-jobbing exists to a wonderful extent. Shares of every description are made to sell. Real del Monte, worth at one time fourteen hundred pounds, falls at another to a merely nominal price. Se. duced by the large profits of joint-stock banks, which largely overtrade, men become interested in them, and wake to find their whole property liable for the payment of debts amounting to double or treble the capitals. In NEW YORK and PENNSYLVANIA, gambling in stocks is carried on upon a scale somewhat extensive, though moderate when compared with England and France. When a charter is obtained for the establishment of a bank, it is taken up by speculators, who calculate to sell it at an advance, and it often floats about for years in the stock market, before it is settled in the hands of the real capitalist, who has means to become the absolute owner of it. Gambling is attended with the usual consequences. He who has a fortune to-day is to-morrow a beggar. This state of things tends to the destruction of moral feeling, and produces occasional frauds, which are easily perpetrated, because of the great confidence that is reposed in those whose situations are such as facilitate their commission.

In RHODE ISLAND and MASSACHUSETTS, banks are made and owned by people who have money to lend. The stockholders do not borrow much, because nothing is to be made by holding a 6 per cent stock while paying 6 per cent interest. In no country in the world do the sales of stocks bear so small a proportion to the amount held. In none is there so little gam bling. In none does the system so much tend to the promotion of morality, because in none is it so free.

If the necessity for exporting capital tends to the deterioration of moral feeling, not much less is the effect produced by the ability freely to import it. In the states of the west, much injury has been produced by the sudden introduction of large masses thereof from Europe, and from the middle states. Had they been left to grow up gradually, making their own banks as there was capital to be invested, their growth might have been more slow in appearance, but it would have been more steady, and would have been attended with an improvement of moral condition; whereas, the sudden influx of wealth, followed by violent changes, has tended to produce moral deterioration.

A similar effect was observed in regard to the public deposits. No cir. cumstance could have been more injurious than was the power of distribut ing among friends and favorites the vast amount of public money placed in the hands of presidents, cashiers, and directors, to remain there until Congress could be induced to agree to a distribution of it. In Massachusetts, it produced more derangement and more fraud than had been known in the previous quarter of a century.

Every increase in the amount of unemployed capital tends to produce

known that French manufacturers send cloth without solidity, and fraudulent measure. Everywhere and in every branch, French reputation is discredited by greedy men, anxious merely for momentary gain. France keeps only the commerce of mode and fashions. The speech of the President of the Tribunal of Commerce proves how low commerce is fallen. The dividends in bankruptcies have been but 15 per cent, on an average, for the last two years. In four hundred and ninety-six bankruptcies, the primi tive capital was not more than six millions of francs, (or two hundred and forty pounds) per individual; whilst the debts incurred amounted to forty millions of francs. Thus the average that each of these persons, with a capital of six thousand francs, contrived to spend, was eleven thousand three hundred francs each year, for six years."