rised to take from any persons, or associations of persons, wishing to issue bank-notes, pledges of state stocks yielding dividends, and "mortgages upon improved, productive, and unencumbered lands," and to give them in return notes, certified by them as thus secured, to be used by them at their own discretion as currency.

The articles pledged, although hypothecated to the comptroller, remained the property of the currency vendors, who drew the profits and dividends of them for their own advantage as long as no demand was made on the comptroller for liquidation of the notes. The annual returns of the things pledged may be stated at 7 per cent.; and the bank-notes, when lent out in discounting bills, or on mortgages, brought other 7 per cent.—this being the common rate of interest in the United States.

Jonathan was not slow in discerning that this was a capital speculation. For 190,000 dollars of capital he obtained the profits of 200,000 dollars, minus the expenses of the paper on which his notes were printed, and those of his establishment of cashiers, clerks, and porters for carrying on the cir

culation.

There was immediately a rush towards pledging "securities" and issuing bank-notes, and money became exceedingly abundant; the price of every commodity rose with a rapidity corresponding to the issue of the notes; every man who bought and sold believed himself enriched. In New York the bottom of the sea next to the streets was actually mapped into lots and became a subject of extensive dealing.

In our country similar results would inevitably ensue from similar proceedings. If the things hypothecated as security for the currency yielded a revenue, and if the currency makers were allowed to draw it, and at the same time the profits of its value in currency notes, a direct inducement would be given to them to swell their issues as extensively as possible; and, from obtaining a double return for their capital, they could afford to encounter risks in doing so which no capitalist enjoying only a single return could face. They would naturally, therefore, become the patrons of adventurers and speculators, who would circulate their notes extensively and keep them long afloat. Such issues would certainly have the effect of raising the prices of commodities to an extent corresponding to their amount.

The Chamber of Commerce will, we hope, acknowledge that, according to their views, America was then a commercial paradise. Bank-notes issued ad libitum, security not questioned, and confidence universal!—what more could be desired? But America consists of different states, as Britain does of different kingdoms; and, like Britain, it also trades with foreign nations. The people of Ohio and Missouri, whose pockets were full of paper currency, gave very large orders for goods to the merchants of New York, Boston, and Philadelphia, who duly executed them. The bills given for the purchases were payable in those eastern cities; and when the western debtors went to their own bankers for bills of exchange on those places in return for their own local currency, the bankers discovered that their home customers had bought more from the eastern cities than they had sold, that they had already drawn on the east for every dollar which the east was indebted to them, and could draw no more. The western merchants then sent their own currency notes to the eastern cities in payment; but, unfortunately for them, the merchants there had already paid all they owed to the west, and nobody in New York or Philadelphia wanted western notes for any pur poses of use, and nobody was disposed to travel 600 or 700 miles to request the cashiers of the western states to pay their notes, or, in those states in which security had been given, to require the comptroller to sell the pledged securities and pay them the money produce. Moreover,

every one knew that it was physically impossible in either case to obtain the amounts in money; for there was no currency in which the pledged property, when sold, could have been paid, except bank-notes, resting on securities or on the mere promise of the banker.

Jonathan now found himself in a fix, and became alarmed. A friend was in Albany at the time, and intended to visit Cincinnati. He obtained as many Cincinnati bank-notes as he desired, at a discount of 25 per cent., in exchange for New York bank-notes, which were still paid in gold. These western notes were then current in Ohio as sound currency, and he used them as such in paying his travelling expenses. What followed? When the eastern merchants declined to receive the western notes in payment, the very evil which the Chamber of Commerce asserts to be the result of the obligation on the Bank of England to redeem its notes in gold actually ensued. Every one rushed to the banking houses, and demanded payment of the notes in specie, for the notes bore to be payable, not in securities, but in dollars. The bankers had neither gold nor silver, and those who had pledged stocks and given mortgages told the holders that the comptroller held securities, and that the notes were perfectly safe, and equal in value to dollars in hard cash. Jonathan, however, could not believe this, for two reasons, which bear directly on our present circumstances, and which we shall state in the course of some further remarks we intend to offer on the subject,

In speaking recently of the present aspect of the currency question, in relation to the recent strange resolutions of the Edinburgh Chamber of Commerce, we used, as illustration, the experience of the United States, and brought up the narrative to the point at which Jonathan found that the banks could neither give him silver nor gold for the notes, but referred him to the amount of "securities," such as state stock and mortgages, which they had deposited in the hands of the "Public Comptroller." Let us now see the two reasons-reasons bearing closely on our own circumstances at this moment-for which Jonathan found himself unable to believe these assurances :

1. He found that bank-notes secured on property situated in one state did not command confidence in another. In like manner, bank-notes not payable in specie, but secured on Scotch property, would not command confidence in England and Ireland, and vice versa. 2. Jonathan had bought to a larger amount than he had sold in the markets of Europe, and he discovered that nobody in Europe would receive his bank-notes, secured or unsecured, in payment of the balances due by him. In a similar way, banknotes, not payable in gold, but secured on property situated in Great Britain, would not be received as currency in France, Germany, the United States, Italy, India, and China (the notes of the Bank of England are now received by the money-changers and the bankers of the Continent, only because they are payable in gold). When, therefore, Britain owed a balance to these nations, or wished to buy from them at a time when they did not desire to buy from her, if she had nothing to offer them except bank-notes not payable in gold, but only secured on British property, her commerce with them would be reduced to barter, or come altogether to a close.

We have not yet, however, exhausted the American experiment. The enormous rise in the prices of goods and property of every description, consequent on this issue of bank-notes, led the merchants of the commercial ports of the United States to give very large orders for goods in Europe. At the same time, these extravagant prices deterred the European merchants from buying largely in the American markets. The consequence was the creation of a large balance due by America to Europe. The American bank-notes were of no avail in paying this balance; but for a time Jonathan

sent the bonds of his states in payment, and as these were taken freely by capitalists in Europe for investments, they, for some time, served as a means of paying American debts to European merchants. The bonds, however, came in such overwhelming quantities, that European capitalists became alarmed about their value, and ceased to purchase them. The American merchants then besieged their bankers for gold in payment of their notes, with a view to send it to Europe in extinctness of their debts. The banks of Massachusetts, Connecticut, and New York had contracted their issues in time, and accumulated specie, and paid their notes in gold to the last. Most of the banks in the other states had relied on "confidence" and "securities," and had not taken these precautions, and consequently had no gold to give for their notes. They passed a de facto “Bank Restriction Act," for they suspended cash payments without professing insolvency. And what followed? According to our Chamber of Commerce, this practical Bank Restriction Act should "have secured the country against a panic in monetary affairs; " but it had a diametrically opposite effect. The demand for gold had arisen from the necessity of paying debts to countries which declined to receive bank-notes; and when the bank-notes of the three states just mentioned, which could be exchanged for gold, continued to be received as equal in value to gold, the bank-notes of Pennsylvania and other states, whose banks had suspended specie payments, fell to a large discount. In 1839, the bank-notes of Philadelphia, current in that city, were at a discount of thirteen per cent. in New York; and every man who owed 100 dollars in New York was under the necessity of giving his banker 113 dollars of Philadelphia currency for a bill of exchange to that amount. The bank notes of Missouri were at a discount of thirty per cent. compared with those of New York, and the rate of exchange was 130 dollars in Missouri currency for every 100 dollars payable in that city.

Another consequence ensued. When the bank-notes ceased to be redeemed in gold, every one lost confidence in them; and when those who had issued them on "securities" offered those securities for sale, nobody in the suspending states had a currency of the value of gold in which to pay for them, and nobody was willing to sell for depreciated bank paper. The prices of all stocks and property, measured by gold, or by the paper of gold-paying banks, fell as rapidly as they had previously risen. Ruin enveloped every man who was in debt, for his creditors forced him to sell as long as he possessed any saleable commodity; and the pressure of sales and paucity of purchasers brought prices to the lowest ebb. So far did the ruin extend, that almost all the banks of Pennsylvania, including the United States Bank, with a capital of seven millions sterling paid up, failed; and actually there was not a currency in that State which commanded "confidence" adequate to the daily wants of the community in trade. In the country, the people were forced to resort to barter; and in the city of Philadelphia, the solvent merchants gave orders on the few banks that remained solvent, which the bank on which it was drawn marked as "good;" and the others took it as money, crediting the person who presented it in their books, and debiting the bank on which it was drawn with the amount. The banks settled between themselves the balances arising on these transfers as they were best able.

The fall of prices, and consequent ruin, were not confined to the banksuspending States. The bankers of New York, Connecticut, and Massachusetts, who continued to pay gold for their notes, did so only by diminishing the quantity of them in circulation; in other words, by declining to accommodate with loans or discounts customers who were unable to pay for the large stocks of goods which they held. These customers were consequently forced to dispose of their stocks at very depreciated prices, fre

quently involving them in insolvency, and thus the evil was equally widespread and disastrous.

How did this convulsion terminate? The insolvent merchants, and their impoverished customers in the west, limited their purchases in the east to the barest necessaries, and laboured hard until they had sent produce to the Atlantic cities to an amount which rendered these cities debtors to them. They then resumed their purchases to the extent of the balance in their favour. The Atlantic cities, again, limited their purchases from Europe to a low amount, and sent forward as much produce as they could command for sale in the European markets, until the balance was again turned in their favour, and then gold was returned to them in liquidation of it. The return of gold enabled the banks to extend their issues, prices of commodities rose in proportion to the amount of gold returned, and the increase of bank circulation and prosperity again dawned on the Union.

Shall this example, and all the demonstrated conclusions of the profoundest thinkers and most experienced practical men in Parliament and out of it, tested during half a century, be abandoned on the mere assertions of the men who, in this instance, have led the Chamber of Commerce? We know there is no panic at present among our people inducing them to draw and hoard gold. The demand for it, therefore, is for exportation. Now, this demand cannot arise unless England is in debt to the countries to which the gold is sent; and it is easy to discover how this has happened. We are buying food and raw produce abroad extensively, and the Government is spending largely in foreign countries; and while this is going on, prices are so high at home that foreign purchases in our markets have declined; a number of our mills are on half time, and our exports, in relation to our imports and to the Government expenditure, taken altogether, have diminished. The contraction of the currency will force us to limit our purchases abroad; and it will also cause the prices of goods to fall at home the consequence of which fall will be increased purchases by foreigners in our markets, and the balance of trade will turn in favour of England, after which gold will again return.

;

As no mortal power can avert this sequence of causes and effects, the inconsiderateness with which public bodies commit themselves to opinions they have not weighed is most injurious to the welfare of the country, and to their own weight with Parliament and their fellow-citizens. They appear to do this at the instigation of those of their members who, apparently, are the least capable of leading them to sound conclusions. Do they not perceive that gold is recommended as a currency, and also as a security for bank-issues, by the following advantages? 1st, It cannot be increased and diminished in quantity arbitrarily; 2dly, It is accepted as a standard of value, and as a medium of payment, by all trading nations, foreign and domestic; and, 3dly, While held as a security for paper-issues, it yields no return itself, and thus removes the temptation to increase the issues for the sake of the double profit-first, the revenue of the security; and, secondly, the interest on the notes issued.

In this instance the Edinburgh Chamber has made no attempt to grapple with the principles of the currency question; and, apparently from not comprehending these, they have dawn erroneous inferences from the few facts and figures which they quote. It is absurd to be always assuming that in a question such as this, the legislature, which has no separate or sinister interest, after the most anxious inquiry and deliberation, makes and maintains laws designed to impede or injure commerce. The causes, we repeat, which regulate the phenomena of currency and exchange, are as completely natural and as certain in their operations as the force of gravitation itself; and it is folly to ignore these in the way exhibited in this

memorial. It is only by omitting the principles, or misinterpreting the facts, that confusion can be created on this subject; and how can we expect effect to be given to the petition of persons who obviously do not know what or wherefore they are asking?

OUR FUTURE GRAIN SUPPLIES.

THE result of the late harvest, and the prospect of our supplies for the current season, have created a discussion which has drawn forth a great deal of information respecting the position of the grain trade. Although of course different parties advocate different views, the opinions elicited will prove valuable for future guidance. The discussion opened by Mr. J. Caird in the Times, and the replies to his letters in other journals, only more strongly testify than ever to the necessity of obtaining official agricultural statistics, which would set at rest the doubts periodically raised with regard to the vital question of the aggregate yield of cereal produce.

Mr. Caird's first letter appeared on the 3rd of November, in which he remarks as follows:

In the continued absence of authentic agricultural statistics, it is not surprising that the uncertainty regarding the productiveness of the last harvest should cause much public anxiety. At the same time last year I published an estimate of the crops, the accuracy of which has been singularly verified by the result; and, as I have this year had unusual opportunities of observation (having since harvest traversed the entire island from the Solent to John o'Groats), I venture again to submit an entire estimate of the wheat crop of 1855, which will, I trust, in some measure contribute to allay the public anxiety on the food question.

The English wheat crop of 1854 proved one of the best on record. It appeared a large crop at harvest, but it thrashed out even better than it promised. The fineness of the harvest weather perfected a bountiful crop. This was followed by a continuance of the same propitious weather during seed time, and, as wheat was then selling at such a price as most farmers hardly expected to see again, every acre that could be got ready was sown with wheat. So much for the autumn seed time. When spring came, one bushel of wheat was worth two of barley, and the advantage was plain enough of substituting the one crop for the other wherever practicable. Accordingly, an unusually large breadth of spring wheat was sown last season. If we suppose that only one-fourth of the usual breadth of barley land was sown with wheat, that on the four-course system, would add onefourth to the average breadth of land under wheat.

The weather during May and June was too cold for the wheat crop, with late frosts, and at this period the crop suffered considerably, especially in the south. It was fully fourteen days later than usual in coming into ear, in some places three weeks. But July was warm and forcing, and the weather on the whole was favourable while the crop was in bloom. Towards the end of the month the effect of blight made its appearance, and it then became manifest the ear was partially defective. On the 4th of August harvest was commenced on the Sussex coast; by the 15th it was general over the south of England; and during the next six weeks the weather was everything that could be wished for the cutting and in-gathering of the crops throughout the kingdom. Within that time all the valuable wheat crop was secured, and in excellent order.