amount paid, as interest, for the use of the increased amount of free bank circulation, had absorbed all the surplus proceeds of the labor of many previous years. The community had been consuming more than it had produced; or, in other words, more were trying to live on the interest of what they owed, than could do it. This was the cause of the "panic;" at least, such a cause was adequate to such a result. Yet no author, whose writings we saw on the panic of 1857, made any mention, or any allusion, to the great amount of interest collected by the bankers, as the cause of the community failing or coming to want. The people seemed not to understand that they had been gambling--or in more fashionable phraseology, speculating. with professional bankers, until the table had. won all the money staked on the game. Financial revulsions may seem spasmodic to those who suffer by them; yet there is about their occasional visits a sort of periodicity. Since the introduction of banking into this country their periodical returns have been about as regular as the paroxysms of ague and fever, after due exposures to autumnal miasmas; and this regularity will probably continue, so long as their cause is permitted to exist. To remove this, the people have only to authorize the use of government interest-bearing notes, as a currency, instead of demand State bank-notes; on the one, the holder may receive the interest, while on the other, the banker receives it; especially under the "National Currency Act." United States Treasury notes based on the indebtedness of the government, would decrease, when business is good, and increase when it is bad, and thus prevent "panics," which State Banks promote and aggravate by increasing the currency when business is good, and decreasing it when it is bad. Should any, at first sight, deem it strange, that a monetary system so useful and so simple, has not been adopted by the United States Government, especially in this crisis, they will probably perceive, after a little examination and some consideration, that it would have been more strange if the government had adopted it; for the practice, for many years past, in this country, has been for bankers to select their agents or attorneys, as the legislators of the people; to have them regularly nominated; and then to secure their election by using money to induce laborers to vote for them. Bankers have not rested here, but have used their influence in legislative halls to have their agents placed on committees, if not at the head of them, before which all business that affected their interest was likely to come. Therefore, those who will examine and consider the practices of the past, will not perceive any thing strange in the fact that the government has not adopted the useful and simple method of supplying the people with Treasury notes that bear interest, which would answer all the purposes for which they need money in this crisis. The government has the power to coin money, and to regulate the value thereof; and it will exercise this power, if the laboring portion of the community will attend to their own needs when they go to the ballot-box, instead of the wants of politicians.

As we have seen that men of business could, under the sanction of State Free Banking Laws, duplicate their capital and use it to the public injury; that stock speculators could use State banking departments to make the people carry their stocks for an advance; that bank speculators, or those who made a business of establishing free banks according to law, and then selling out the shadows of them, have been engendered and hatched into life; that those who had no capital of their own, and who hardly deserve the name of men, could establish themselves legally as free bankers, and then receive the interest paid by the people on the securities pledged; and that the above described operations resulted in a panic: we conclude that those who form their opinions, as we have been compelled to entertain ours, by what they have learned of banking, or getting interest on money owed, from history and by what they have learned from experience and observation, regarding the free banking that has been sanctioned by State legislatures, will not entertain any very high expectations, except they be free bankers, regarding the results of our "National Cur

rency Act." Is the moral atmosphere of the capital of the Nation more pure than that of the capitals of the States? Is the distance from Wall Street to Washington any greater or more difficult to pass over, than that from there to Lansing and Indianapolis? Can we expect better banking in the one than we have had in the others?

In the absence of any positive knowledge regarding results, which we deem it probable our National Currency scheme will force upon us, perhaps we will be justified in assuming that our National Free Banking Law will neither allow nor permit such "operations" as have been sanctioned by the States. Yet it has been stated, and in a public manner too, by those whose positions as bankers, seem to entitle their sayings to some consideration that our "National Currency Act"

"is only a modified form of the New York Free Banking Law of 1838, with the best points of the State law left out."

Whether or no this statement be correct, we have already seen that it contains no specie clause. By examining it a little further, we can learn that it does not contain even the ideal of a redemption in specie of the pledge tickets it authorizes the use of as money. Bankers, in accordance with the National Currency Act, are required to redeem

in the lawful money of the United States, **** when payment thereof shall be lawfully demanded, during the usual hours of business, at the office of the Association"

that issues them. (See Act, Sec. 25.) Any neglect in complying with these conditions regarding redemption, subjects an Association to the penalty of missing the receipt of the interest in gold, payable on the securities pledged; and perhaps, but not very likely, (unless a nincompoop should commence banking), to the loss of the ten per centum margin, retained by the Comptroller as a difference between the amount of securities pledged and the amount of tickets issued to be used as money. By this it appears that the national bankers will not need any specie to redeem their pledge tickets; for the lawful money of the United States is demand Treasury notes that are a legal tender. Bankers are not even required to use, for banking purposes, the specie which the government has promised to pay them on the securities pledged. Again, The National Currency Act, Sec. 41, requires

that every such Association shall at all times have on hand, in lawful money of the United States, an amount equal to at least twenty-five per centum of the aggregate amount of the outstanding notes (pledge tickets) of circulation and its deposits."

This requires no specie, and not even the demand Treasury notes without interest; for, since the passage of this National Currency Act, the Treasurer has issued Treasury notes, payable one and two years after date, that bear interest at five per cent. per annum, and which are a legal tender for the amount they are drawn for: hence these are lawful money of the United States, and can be used by the bankers instead of demand notes that bear no interest. Whether these were issued for the special accommodation of the bankers is more than we know, but that they intend to use them for redeeming their pledge tickets, is evidenced by the statement made in a circular soliciting subscriptions for a national banking concern in the city of New York, which is signed by the parties interested in putting it into "operation." This interest-bearing lawful money the bankers will probably at all times have on hand equal to at least twenty-five per cent. of the whole amount of pledge tickets they may have in circulation, or outstanding, and of all their deposits besides, provided they can get any; because these notes will always be a legal ten

*"National banks are not required to lose the interest on a large amount of gold kept on hand to meet their circulation, but may keep in lieu thereof legal tender notes which bear five per cent. interest." Fourth, advantage over State banks, as set forth in a circular dated New York, February, 1864.

der, to pay depositors when they call, or to redeem their pledge tickets,should they be presented for redemption, and it will be a good business to keep them on hand to the whole amount of their pledge tickets. Thus, bankers who pledge one hundred thousand dollars, in five-twenty bonds, will receive interest at six per cent. per annum in gold, for the whole amount, and pledge tickets which they are authorized to use as money for ninety thousand dollars. These pledge tickets they can loan to the government directly, for the National Currency Act, Sec. 20, says they

"shall be received at par in all parts of the United States in payment of taxes, excises, public lands, and all other dues to the United States, except duties on imports."

Hence, they can make the loan of them direct, because "all other dues” must necessarily include loans from those who agree to make them. And if the government should refuse to receive them directly, they can be loaned indirectly, by exchanging them for the five per cent. interestbearing notes that are a legal tender. Such an "operation" would pay bankers about ten and a half per cent. per annum-six on the one hundred thousand pledged, and five on the ninety thousand received in tickets; which will be a tolerably fair business, especially for such as have no capital of their own. The expenses of office and clerk hire in such kind of banking need not be much.

As those who have money on deposit in banks, without interest, may possibly prefer having it in their own possession or on special deposit, in five per cent. interest-bearing legal tender notes, our National Banks possibly may become banks of circulation only; which, being interpreted according to present practice, means the magic of putting into the people's pockets, and keeping them there as money, pledge tickets which bear no interest, while the bankers are receiving the interest on the securities pledged, which the government collects from the people who hold the pledge tickets. This will not be the way the bankers under the charter scheme got the interest on what they owed out of the people's pockets without their knowing it, or how it was done; but an improvement on it; for this makes the people pay interest on the money they really loan, and pay it too to those who have none to loan, and makes the government an agent of this injustice. And this is not all, for the National Currency Act makes the government the redeeming agent for all who bank under it. It says, Sec. 20, that the pledge tickets issued under it

shall be received at par in all parts of the United States, **** for all salaries and other debts and demands owing by the United States to individuals, corporations, and associations within the United States, except interest on public debt.

Hence, as the government pays them at par, as we have seen before, and also receives them at par for all taxes, excises, public lands, &c., it becomes the National bankers's agent for receiving and paying out his pledge tickets. As it thus agrees to receive them from everybody, and says it will pay them to everybody, even to senators and members of Congress, nobody will think of sending them for redemption to the bankers who issued them, any more than they would think of sending for redemption a gold coin to the mint that issued it. If we assume, however, as possible that some National bankers may issue a greater amount of these pledge tickets for circulation, as money, than they provide of interestbearing legal tender notes to redeem them, which are lawful money of the United States; and that a contingency may arise which may cause this surplus to be sent to them for redemption, at their office during the usual hours of business, they can pledge them for the lawful money of the United States, with those who have it, for nearly the full amount for which they were issued, for they will be good security to raise on, being well secured by United States storks. The extra expense of the second pledge will not be much, when compared with the interest received on the first, because they can be very soon taken out of the second, and again put into circulation, as they will always be in good credit, being a

National Currency, and not like the notes of chartered banks that have once failed and been resuscitated by a purchaser.

We have been told, as we have before stated, that this "National Currency Act" is "no mere paper-money scheme, but, on the contrary, a series of measures looking to gold and silver" (probably a great way off) as the only permanent basis, standard, and measure of value recognized by the constitution." Yet we have failed in discovering in any of the series of measures looking to gold and silver, any specie consideration, except in the interest paid on the securities pledged; and the National banker is not required to use even that in his banking business. The whole series of measures: the issuing of demand legal tender notes; the loaning of them to the government; the receipt of interest-bearing bonds in their stead; the pledging of these bonds, and the receiving of pledge tickets that can be used as money; and the redeeming of the pledge tickets with the lawful money of the United States, when they may be presented in a legal manner for that purpose, are only paper measures, by which National Bank magicians, who may or may not own the stocks pledged, may receive the interest, which the government collects from the people who use and hold the pledge tickets, and who are really the owners of the loan for which they are compelled by the government to pay interest to bankers. As the present lawful money of the United States is paper-either demand or interest-bearing notes,—there is nothing about this "no mere paper-money scheme” but paper; therefore, if it is possible to consummate the "experiment," it may "reflect the highest honor upon all who are connected with it, and be of incalculable benefit to the country; but which, if unsuccessful, will be a reproach to its advocates, and a calamity to the people."

The Remedy.

Travellers who miss their way and discover they are not going in the direction they intended, usually extricate themselves from such difficulties, by retracing their steps as well as they can; and, perhaps, we may be allowed to assume, without being considered absurd, that wise statesmen may, possibly, do likewise, in relation to the nation's monetary difficulties, when by so doing they can, at least, palliate the evils of the present, and possibly prevent them from becoming aggravated in the future. The results arrived at by the violation of the laws of trade, in monetary transactions, are as well known to business men, as the results which follow the violation of the laws of gravitation are known to civil engineers; and it seems highly probable, that our bankers knew, when our government first missed its way. We have already seen that issuing demand Treasury notes, payable by the Assistant Treasurers, receivable for all public dues to the government, which were used by the people as money, was followed by a consultation of bankers; that the consultation was followed by an agreement "that no other government stocks, bonds, or Treasury notes" than those which bore seven three-tenths interest, which the bankers had agreed to "shall be negotiated or paid out by the government until Feb. 1st, 1852, (except notes payable on demand, &c.);" that this agreement led to or was followed, before the specified time by a suspension of specie payments by the banks, and on the 1st of March, by a violation of the laws of trade-by an issue of demand Treasury notes that are a legal tender, and made of paper a measure of value. By taking the back track from the Treasury note that is a legal tender to the demand, Greenback, payable by the Assistant Treasurers, the evidence is pretty clear that the point of departure from that financial track which is sanctioned by the laws of trade, was in the wording and not in the issuing of the demand Treasury note, that did not bear interest, but which was made payable by the Assistant Treasurers, and receivable by the government for all dues to the United States. Had these been made payable on time, with interest, instead of payable on demand, probably, no consultation would have been held,―certainly none

would have been needed-for the understanding and agreement not to issue Treasury notes, "except on demand, &c.," for such would have been already issued; and would have answered all the purposes for which money is needed by business men, who are not engaged in trade with foreign countries. Had time notes been issued, instead of demand notes, the government would not have had, probably, any occasion for suspending specie payments, even though the State banks might have suspended; because, time notes, which are good, payable with interest, are more desirable than gold and silver. They would have been received by the State banks, as evidenced by their acceptance of the seven and three-tenths loan, already noticed, or as they have received United States Certificates of Indebtedness, bearing interest, in exchange for their own promises to pay the bearer on demand. They would have been received by the merchant, in preference to State bank-notes or checks, such as he had been accustomed to der osit without interest, because on them he would receive interest, until he used them for replenishing his stock in trade, or in the payment of a time purchase. They would have been received in preference to gld by those who had money to invest, because they would have been an investment already made in the best of securities. They would have been received by everybody in preference to State banknotes, because they would have been a better measure of value, than those are or ever have been; for they could have been used by the traveller, at par, in all parts of the United States, without the assistance of an exchange broker. Again, the moral effect of the issuing of small Treasury notes, bearing interest, would be to inspire the young and the weak with confidence in the National Government; for such currency would protect them against the acts and the arts of the strong and the wealthy, the scheming and the cunning, by securing to them the little surplus they might produce, instead of depriving them of it, as the State Governments have done, by authorizing the issue of bank-notes, as money, and then refusing to redeem them, after the bank that issued them had failed. State Bank failures have been to laborers direct robbery, legalized; and the effect of this kind of robbery has been, extravagance and demoralization. When the laborer has finished his work for the week, and has received the payment for it in notes of State Banks, of doubtful responsibility, his practice has been to pay them away immediately, while he could get something for them, whether his needs required their use or not, for to-morrow they might be worthless; and the consequence has been, that laborers are victims of extravagance and dissipation. Once more: small Treasury notes issued by the National Government would affect the business of the people, as a balance-wheel affects a steamengine, it would keep business movements as steady as the expenses of the government. When business is good, and the receipts of the government large, its notes, as a circulation, will decrease; and when business is bad, and its receipts small, they will increase. This effect on business would be the reverse of that produced by State Banks, whether chartered or free; and as State Banks have done, National Free Banks will do. They will increase circulation when business is good, and thus stimulate speculation; and decrease it when business is bad, and thus bring on financial revulsions.

Certificate of Indebtedness.

On the 1st of March, 1862, it was "enacted by the Senate and House of Representatives in Congress assembled, that the Secretary of the Treasury be, and he is hereby authorized to cause to be issued to any public creditor, who may be desirous to receive the same, upon requisition of the head of the proper department, in satisfaction of audited and settled demands against the United States, certificates for the whole amount due, or parts thereof, not less than one thousand dollars; ***** which certificates shall be payable in one year from date, or earlier, at the option of the government, and shall bear interest at the rate of six per centum per annum.