performed by a corporation, as when performed by an individual. But in either case, the party who grants the accommodation, must take care that in effecting it, he adheres to the rules of honesty. The means by which he effects his purpose, must be his own, which he has authority to dispose of. No creditor would have a right to indulge a debtor, by withholding money from a third party without his consent, and without paying him interest for the use of it, and especially if he was himself deriving an interest from the indulged creditor.

And now I would ask, if this be true in reference to individuals, upon what principle has a corporation a right, to accommodate its own debtors, for the purpose of securing its debts, at the expense of its creditors, the public? If, indeed, in the indulgence shown by banks to their debtors, there was a waiving of the interest, the public might have some corresponding return for their own loss, inasmuch as some bank creditors might also be bank debtors. But we never hear of any such generosity. Every dollar is demanded for every day's indulgence, where the parties are solvent; and when those who feel themselves aggrieved complain, that by the depreciation of the currency they have to pay an increased price for all they purchase, they are considered as quite unreasonable for not being willing to submit to some sacrifice for the public good, which means in this case the good of the stockholders of the banks.

Now cannot any one perceive, that, if the bank in question had acted with a strict regard to justice when it resolved to accommodate its debtors, it would at once have borrowed three millions of dollars, or such part of that sum as it could not have collected from its debtors, for such length of time as would have enabled it to afford the requisite relief? Cannot any one perceive, that such a course would have restored the currency, without depriving any one of his just rights? The matter is too plain to admit of dispute.

Why then is it not resorted to in such emergencies? Because, as I have said, it is not profitable.

But it may be said, that some banks could not borrow. This is highly probable. But it is hardly possible that any bank should be in such bad credit that it could not borrow its own notes or the claims of its depositors, upon some terms satisfactory to the holders, which is all that it wants to absorb the excess of its issues. If there should be any such banks, the sooner they are found out the better, and the sooner their notes are rejected from the circulation, the sooner would the currency be restored.

But this is not all. An inconvertible currency transfers from the pockets of creditors to those of their debtors without an equivalent, a sum equal to the extent of the depreciation. Thus in New York and Philadelphia, all notes for merchandise given before the stoppage of the banks in May 1837, and which fell due before the resumption, were paid in paper from ten to one per cent, depreciated according to the date, and in those cases where the receivers of this paper were indebted to foreign merchants, to whom they were obliged to make remittances, this loss was wholly uncompensated.* It was, in fact, an abstraction of this amount from their pockets, precisely of the same nature as would have resulted from the debasement of the coin to the same extent by the government. The same remark may with the same truth be made in reference to the payment of all other debts, the creditor being deprived of a certain portion of the gold or silver, or its equivalent, which by his contract he was entitled to receive. And how stands the case with reference to that large portion of the community who live upon fixed incomes, such as the interest upon mortgages, state loans, ground rents,

* One merchant informed me, that he had lost upon his remittances during the suspension of 1837, $20,000, in the exchange. Others lost much more.

salaries, and wages, which they have not the power to increase so as to meet the increased prices of food, clothing, fuel, &c.? They are all losers precisely in the same way and to the same extent as the creditors that have been referred to, to the whole extent of their receipts.

In refutation of these positions, it is all idle to say, that the expenses of living are not augmented by a depreciated currency. It is not possible that it can be otherwise, and although in small transactions the fact may not be very observable, yet no sound thinker will maintain that a ten dollar bank note worth in the market nine silver dollars, will buy as much of any thing as ten silver dollars, which can be converted when the owner pleases into eleven dollars of bank

notes.

In like manner, it would be equally idle to say, that the great mass of persons gain as much as they lose by the depreciation of the currency. This is only true of those who owe just as much as they are indebted to others at the time of the stoppage of the banks, and of those whose business is of such a nature, as enables them to charge for what they have to sell, an additional price equal to the depreciation. All others who cannot do this, are obliged to pay more for all the articles required for their subsistence, without any corresponding return, and have therefore just ground for complaining of a system which operates so greatly to their prejudice.

But there is one class of persons upon whom the depreciation of a currency falls, who have a paramount right to complain. I mean foreigners to whom debts are due by individuals, and who cannot, by any means, direct or indirect, remunerate themselves for the loss. Every one such whose debts are remitted in bills of exchange purchased with the depreciated currency, loses precisely the amount of the depreciation. And what shall be said of that large class of creditors, who constitute the foreign holders of the

public debt of one of our states, and who were compelled to receive, during the late suspension, the amount of their interest, not in coin or its equivalent, for the payment of which the faith of the state was pledged, but in depreciated paper? I blush for the credit of my native state, Pennsylvania, when I recollect that the governments of New York, Ohio, Indiana, and probably some other states, considered themselves bound in honor to pay the foreign interest on their debts in the equivalent of specie, whilst she, for a less sum than a hundred thousand dollars, was willing to be stigmatised all over Europe, as guilty of a breach of public faith, the notoriety of which cannot fail to influence the future value of her stock abroad, unless she makes the reparation so manifestly and so justly due.*

CHAPTER IV.

OF THE CRIMINALITY OF BANKS IN AUGMENTING THEIR ISSUES AFTER A SUSPENSION OF PAYMENTS.

But however culpable banks render themselves by not, immediately, after a general suspension, adopting measures for a resumption, accompanied by the payment of interest to all who are forcibly withheld from the possession of their property, yet they are far less culpable than those, which, after the removal of all checks upon issues, take advantage of the ignorance

*On the 10th of June, 1839, after the publication of the first edition of this work, the Legislature of Pennsylvania made provision for paying to the holders of her loans, the loss incurred by them on the depreciated paper given in payment of the interest falling due during the suspension of 1837, but the amount has not yet been paid. See Appendix, I.

or forbearance of the public, and expand their circulation, so as greatly to depreciate the currency below the rate at which the suspension found it. The effect of such a course is to re-produce, but with far more generality, the scene described in the first chapter of this book, under the head of the career usually run by banks before a suspension. Speculation, over trading, and extravagance, are all multiplied, as every new addition of the currency appears to augment what people suppose to be the mass of wealth. More especially is such a state of the currency apt to inflict misery and ruin upon the landholders throughout the country, who, by a rise in the paper money price of land, which they fancy to be a real rise in value, are induced to make purchases, upon credit, by giving mortgages payable at a future day in coin, for an amount perhaps double the metallic value of the property.

The only examples of the state of things here described, that need be referred to, are the following:

1. The suspension of cash payments by the Bank of England and all the county banks, which took place in 1797, and continued until 1821, in the course of which time the depreciation at one period was as great as twenty-five per cent.

During the gradual process of this depreciation, the prices of commodities gradually rose, by which means the actual incomes of persons living upon the funds or annuities, was proportionately decreased, whilst lands and rents also rose, so that long leases were renewed at higher rates than before. The revulsion resulting from this state of things, was disastrous in the extreme. The gradual contraction of the currency produced a fall of prices, a prostration of trade, and a general distress throughout the manufacturing districts. The new rents contracted for in a currency worth fifteen shillings in the pound, could not be paid in coin, after the resumption; and thus the agricultural interest was embarrassed, whilst the augmen