The profits of the banks in New Orleans are specified on page 12, and they appear to average at least twelve per cent per annum.

From this state of things Mr. Hooper infers:

"This law of Louisiana carried their banks safely through the panic of 1857 without distressing the customers of the banks; in fact, the financial panic of 1857 scarcely affected the monetary affairs of New Orleans." (p. 9.)

"The New Orleans banks can, by the same general course of business, and with double the amount of specie in their vaults, accommodate their customers, the merchants and others, with a larger amount of loans, and earn much larger profits for their stockholders, than the New York city or the Boston banks." (p. 10.)

Are these inferences just?

In the first place, cotton, the great staple in New Orleans, nearly escaped the effects of the crisis, and there was, in consequence, scarcely any panic there in 1857.

In the second place, no just comparison can be made between the business of New Orleans and that of Boston, so different in kind and in amount.

An example will show the fallacy of such comparisons.

The Union Bank of Australia has a capital of £1,000,000.

Ratio of specie to liabilities, 19.3 per cent.
Loan, five times the capital.

Now, in comparing the banks of New Orleans with those of Boston, Mr. Hooper argues that the loans are less and the profits less, in Boston, because of the greater specie reserves required by law to be kept by the banks in Louisiana.

Let us apply this style of reasoning to the case of the Bank of Australia, as compared with the same New Orleans banks. The impertinent and useless requisitions, we might say, of the Louisiana law, while they reduce the accommodation of the public in the ratio of 95 to 52, at the same time diminish the profits of the shareholders as 16 to 12.

I beg that it may be remembered that this is not my reasoning, but Mr. Hooper's.

In the third place, twelve per cent dividends do not remunerate capital better in New Orleans than eight per cent in Boston. Probably not so well. At all events, either capitalists are not so desirous of establishing banks there as here, or charters are granted with much more reluctance. From whichever cause it may arise, the banking capital is much less in proportion to the business to be done.

The condition of the banks in New Orleans, exclusive of the free banks, December 31, 1859, was,

Nineteen millions of capital to supply a demand of fifty-two millions.

I have not included an item of "distant balances," of one and a half millions, although Mr. Hooper tells us (p. 11) that these balances are usually on interest.

The Boston banks, with a capital of thirty-five millions, sustain a loan of only sixty millions. The simplest operation in arithmetic will show that, if the Boston banks could do as much business in proportion to their capital as the New Orleans banks, they would earn about twelve and a half per cent. Yet they have not the advantage of six and a half to eight per cent on that portion of their loan representing the capital, as have the banks in New Orleans (p. 55), nor of distant and profitable exchange. So that, after all, the figures show, as might have been foreseen, the effect of the law of Louisiana in lessening the profit of the banks.

To the Bank of England Mr. Hooper applies, no doubt by inadvertence, a standard, the insufficiency of which he has himself distinctly admitted.

"The amount of specie a bank holds," he says (p. 14), " is important only in reference to the amount of its liabilities which are due and payable on de

mand."

Yet in speaking of the Bank of England (p. 32, and again, p. 48) he compares the reserves to the capital, without giving us the liabilities of that institution.

I will endeavor to supply the deficiency. The capital of the Bank of England is £14,553,000.

Its deposits, January 11, 1860, were
Circulation,.

Less issued, but not employed,

£ 21,920,833

£ 30,002,060

8,170,740

21,831,320

£ 43,752,153

Gold and bullion, £16,224,129, or about 37 per cent on the liabilities.

The Bank of England practically furnishes the specie basis for the monetary and commercial transactions of the whole kingdom, government as well as people; and 37 per cent on its liabilities is found to be amply sufficient; yet Mr. Hooper thinks that 50 per cent, if not absolutely necessary, would not be extravagant for New York, which sustains no such relations.

"When the New York city banks," he says (p. 47), "are by law obliged to keep in their vaults an amount of specie equal to one half, or at least to one third, of their liabilities for circulation and

deposits, (and not until then,) they will command unlimited confidence throughout the United States."

This statement of the Bank of England, though showing specie reserves a little higher than those required by law to be kept by the New Orleans banks, but not higher than they actually hold, scarcely justifies the language:

"It is these vast amounts of specie, as they appear to us, that give to the Banks of England and of France the ability to sustain an amount of liabilities, and to furnish to the people and to the governments of those countries an amount of loans, so much beyond what our banks can do." (p. 32.)

"When the specie in the Bank of England,” says Mr. Hooper (p. 45), "is reduced below £10,000,000, it is considered almost a public calamity, and, whenever it occurs, the commerce of the whole world is affected by it."

This is perfectly true; but the specie bears to the liabilities, in that case, a ratio less than 22.85 to 100; and it is to be borne in mind that the Bank of England is the great repository of specie for the whole kingdom; they are the first to sound the alarm; and it is not, therefore, until all other sources are exhausted, that a serious drain on the Bank begins.

At the same time the discounting operations of the Bank of England do not probably represent one