reach of the guns of the Halifax, or being unobserved, the men rose upon the officer, and once threatened to throw him overboard; this, however, they did not do, but pulled for the shore, which they reached, and proceeded for this place, where they entered with an officer then engaged in the enlistment of men for the Chesapeak. A formal demand was made to have them delivered up. The civil authority refused to interfere, and the officer who had enlisted them did not think himself authorized to beliver them without orders from his superiours. The case was represented, we believe, at Washington, but what passed there on the subject we know not. The men were not delivered up, and were believed to be on board the Chesapeak. We are confident that a representation of the case was made to the British government, whose orders, we apprehend, were to take the men wherever they were to be found. Our readers will be informed that the Leopard arrived here only a few days since, and brought the orders of the admiral at Halifax, to take the men atall events, and under any circumstances.

"It may be objected, that there has not been time to hear from England since the circumstance respecting the Halifax occurred, which we think was about the 9th or 10th of March, but we know that answers to letters written to London as late as the 20th of March have been received here."

From this statement it is clear, that not only the civil but the military authorities of the United States treated the moderate and just demands of our officers in the most contemptuous manner; and left no other alternative to the British admiral than the employment of force, to assert our national rights. The officers of the two nations having acted in conformity with instructions which they had previously received, they are not in the least implicated in the propriety or impropriety of the transaction. It is a point which the respective governments must settle between themselves. But, it will not be difficult to justify the conduct of our officers upon the broad principles of the law of nations. Though the case was not strictly foreseen by the writers upon public law, yet the general maxims which they have promulgated for the intercourse of nations in amity, warrant the inference, that no nation has a right to detain the subjects of another, engaged in the service of the state, when actually reclaimed by the agents of the power from whom they deserted. Grotius and Vattel admit, that persous may quit their native country, and settle in another; but they argue strongly against the propriety of such a measure, when their country is engaged in hostilities, and requires the service of all its members. The reasoning, therefore, applies with tenfold force, when we consider that the men, who took refuge on board of the Chesapeak, did not relinquish their country in a civil capacity, but actually deserted their duty as military servants, who had received the pay of the public for the express purpose of defending its interests. Their desertion could not affect the right of Great Britain to reclaim them and as the principle was admitted by the American government itself, it became its duty to comply with the request of our officers, and its refusal was a violation of that friendship which subsisted between the two countries. Upon the whole, justice is on our side; and I entertain no doubt that the legislature of the United States, when they come to investigate the whole merits of the proceeding, will be sensible of the truth. At all events, Great Britain must not swerve from her principles. The Americans will bluster, but they will not fight. War would be as obviously their ruin, as the continuance of peace with Great Britain would tend to the promotion of their prosperity. We ought not, therefore, to be intimidated, or even discouraged, by the menaces of tumultuary bodies, whose hasty resolutions have been framed in a passion, and carried by acclamation; but we should make up our minds, that a nation which resigns a particle of its just rights, at the urgent request of a power which desires to take advantage of its ap parent difficulties, must soon expect, and, indeed, it will deserve, to forfeit them.

THEORY OF MONEY, Continued.-OF FREE PAPER MONEY.

By free paper money, is to be understood, that paper money which is issued by individuals, or public bodies, at the request and desire of the people of a country themselves, in order to supply the deficiency of a circulating medium in that country; and for which the issuers receive, at the time, an equal value, not on perishable commodities, or in unconvertible funds, but in funds again convertible into the medium, at a short, distant, and fixed period,"

In former times, when a man became a merchant, he required a capital fully equivalent to the trade he was to carry on, and when he had laid out that capital in the purchase of articles, he had to wait until he met with a person, who not only wanted these articles, but had a capital sufficient to pay for them. When credit was introduced, then a purchaser got three or four months to pay in, but, as he had to give as long a time when he sold, his receipts would not meet his payments any more than formerly, and, consequently, he required capital as much as ever. When sales upon credit, however, became general, to establish the debt, and to prevent any dispute as to the terms, bills were taken for the amount. A bill may be defined, "a written obligation to pay a certain sum, or certain proportion of the standard unit of the country, at a distant period therein specified." Bills were found so useful and necessary, that a summary mode of procedure, in recovering payment of them, was established by law; being thus a legal voucher of debt, and easily transferred, it became usual for the holders of bills, that they might be enabled to go to market again sooner than they otherwise could, to apply to their friends, to advance them the amount in cash, and to take these bills in security: at length, people of capital commenced a regular trade of giving cash for them, upon deducting the discount; for a long time gold coin continued to be given in exchange for these bills, and to be received for them when due, until the demand became, in consequence of the extended trade and commerce of the country, too great for the capitals of the dealers, and they were obliged to refuse many. At length it occurred to them to say: "We will give you, in return for these bills, our own promissory notes for a small proportion of the standard unit of the country, which will pass for a circulating medium, and when the bill shall become due, we will take these promissory notes back in payment." This appears to have been the legitimate foundation of banking, and of the issuing of bank notes as a circulating medium; and it is the only mode that can be followed, to ensure either safety to the public, or advantage to the individual: tried by the three rules laid down, it will be found perfectly correct, and conform thereto; for it is only at the desire of the public, that the notes are originally issued, the issue always receives security for them, which he retains in his hands until the notes are retired; and he is always ready to give that security for them.

The bank notes employed in the circulation of Great Britain, whether they be those of the bank of England, bank of Ireland, Scotch chartered banks, or private banks, rank indisputably under the head of free paper money, and may be quoted as examps thereof: this must be evident to every one the least acquainted with the mode universally adhered to in the issuing of these notes; but as some objections have been of late years started in regard to bank of England notes, in consequence of that bank having been freed from the absurd bondage of being obliged to give gold for their notes whenever demanded, which gave ignorant people occasion to say, that the public were forced to take the notes of that bank, and had no means of checking the quantity issued, or obliging the bank to withdraw them when once in the circle; it may be necessary to show, that bank of England notes are really free paper money, and that these objections have no solid foundation, but may truly be called frivolous and vexatious. Mr. Wenthrop, deputy governor of the bank of England, in his examination before the select committee of the House of Commons, in March 1804, declared positively, "That that bank never issues its paper, but for a valuable consideration, or what it deems to be such, in the way of discounting bills or advancing on exchequer bills;"-that is to say, upon application from a banker or merchant, the bank gives notes for a bill due in London, or for an exchequer bill granted by government; the first payable within two months, the other generally within nine; if, therefore, the bank issue notes only in this way, it must be evident, that the quantity issued will depend entirely upon the demand from the holders of these bills, which will never be more than the actual circulation of the country requires; and the notes can only continue out until these bills become due, when they will return back to the bank in payment; so that if the bank were to stop making fresh advances of notes, in two months the greatest part, and by the end of nine the whole, of those in the circle would be returned to the bank. But, say the writers on this subject, the bank makes advances to government, and government forces the creditors of the state to take these notes in payments. That the bank occasionally makes advances to

government, is very true; and that government pay away the notes so advanced to the creditors of the state, is also very true; but the bank advances to government only upon the credit of loans or taxes previously granted by parliament, though not collected; and the notes, thus paid away by government, are in due time returned to the bank in payment of these loans or taxes; so that when the bank makes these advances, it knows as well and as certainly when they will be returned, as if they had been made on bills or exchequer bills; and the creditors of the state, so far from requiring to be forced to take these notes, generally give a premium for them, because they know well that with these alone can they pay either their bills or their taxes. The mistakes, into which these writers have fallen, appear to be owing to their argu ing, as if the bank gave away its notes never to be returned, whereas the fact is, it only lends them, and before doing so it generally takes very effectual care to secure their return.

These statements, it is hoped, are sufficient to prove that bank of England notes are really free paper money, and as opportunities will afterwards occur to enlarge thereon, it is proposed to proceed to investigate a few of the erroneous doctrines which have been advanced upon this subject, and this will, at present, be confined to three of the principal, which are,

1st. That bills of exchange and promissory notes are not so sure a pledge to lend upon, as houses, lands, &c. and that, therefore, banks in issuing notes, ought always to prefer mortgages and real securities.

2dly. That banks ought always to be ready to give gold for their notes.

3dly. That bank notes (although free paper money) can be issued to such an extent, as to cause a depreciation in their value, and that, without affecting the credit of the issuers.

That "bills of exchange and promissory notes are not so sure a pledge to lend upon, as houses and lands, and that, therefore, banks ought to prefer mortgages and real securities," is a doctrine that was very early advanced, and continued to be upheld in the time of Sir James Stewart, who avowedly supports it, although he might have seen its fatal effects in many instances. When a bank issues notes upon bills of exchange, or inland bills, these being due in two, or at most, three months, the note will return by that time, so, that although an over issue should be made, it is always possible to check and remedy it in the course of three months at farthest; whereas, when an over issue of notes is made on mortgages or landed securities, it is impossible to remedy it immediately, or indeed for some considerable time; for however good these securities may be, yet it may be years before they can be turned into convertible funds to place against these notes, which in the mean time must remain in the circle unreturned. Many examples of the bad consequences of this doctrine, when put in practice, may be produced; the issues to the American settlers is a strong one, but two in this country will be stated, "the case of the bank of England in 1697, and that of the Air bank in Scotland sixty years afterwards;" these two examples are more particularly pitched upon, because they have been already quoted by others, and most egregiously misapplied. In the year 1697, being very soon after the establishment of the bank of England, the directors of that bank issued a greater quantity of notes than was really required for the circulation of the country, and this they were enabled to do, because the issue was made not upon bills at a short date, but upon mortgage and real securities, at five per cent. per annum, and to government without any security." As the common rate of interest was at that time higher, all, who had good security to offer, took advantage of the bank's willingness to lend; thus an over issue actually took place, and from the mode in which it was done, it required a long time before it could be corrected, by the notes returning in a regular way into the bank. In consequence, a considerable discount or depreciation upon them ensued, and the bank was obliged to have recourse to extraordinary methods of calling them in, it increased its capital and took the notes in payment, and it got government to appropriate certain funds to discharge the advances it had made. Now, allowing it to have been possible that the superabundance of notes had been issued upon the security of good bills due in two or three months, the bank would have been able to check it at the end of three months at farthest, because, when these bills became due, the notes would be returned for them, or, what would have been equally the same, other funds which could have been exchanged for them.

The Air bank erred in a similar manner, but to a greater extent; a spirit of industry and improvement having sprung up in Scotland, about the middle of the last cen tury, the people took it into their heads, that the banks, then in existence, were not liberal enough, and they, therefore, determined to have a new one; which, accordingly was formed, under the title of the Air bank. This bank set out upon the most liberal principles to be sure, but they were very mistaken ones; every gentleman who held a share, was allowed a credit with the bank to the extent of that share; to explain this it may be necessary to state, that it is a practice with the Scotch banks to advance money upon bonds of credit, that is to say, if a merchant, or manufac turer, require a sum of money, not permanently, but occasionally; upon applying to a bank, and granting a bond along with two sufficient securities, the bank allows him to draw out, from time to time, such sum as he may require, provided always, that the whole does not amount to more than the sum specified in the bond, and that he repay the money in a short time, drawing it out again as he needs it. This practice is peculiar to Scotland, and has been of very great service in that country, where capital is so much wanted; but it requires to be managed with great prudence and caution. Two essential rules ought always to be observed: the first is, that the bank granting these credits, be careful that the total amount of them be considerably less than its capital; and the second is, that frequent operations be performed on these accounts. In both these particulars the Air bank failed. By allowing, as above stated, every partner to hold a cash credit equal to his shares of stock, it was at once deprived of its capital almost entirely, as most of the partners availed themselves of this permission; indeed it was the means of many improper persons becoming partners; any man who could borrow 500, or 1000l. for five or six days, had only to buy one or two shares, apply next day for a credit, draw the amount out, repay the loan, and thus become a partner of the bank, without advancing a sixpence of capital. The loans advanced in this manner became completely permanent ones; not satisfied with this, however, the next step the bank took was to grant a credit to every respectable person who applied and brought two securities; as the professed object, in establishing the bank, was to encourage improvements in the country, and more particularly agricultural ones, in granting these credits, landed gentlemen were principally preferred; the consequence was, that most of that description, who got credits, set about improving their land, with great spirit, and, in a short time, laid out the amount of the credit thereon, very much to the benefit of the lands no doubt, but very little to that of the bank, which soon found that landed security may do very well for some folks, who have money to lay out at interest, but not for a bank to issue notes on. By granting so many credits, the bank issued many more notes than the circulation of the country required, and, in consequence, what remained of its capital was soon completely swallowed up in restoring them; so that when it began to discount bills, which was also done very freely, there were no funds to answer the over-issue of notes upon that head. The resource fallen upon was, drawing and re-drawing from London, and as that could not last long, he bank was soon under the necessity of stopping payment.These two instances may suffice to shew the absurdity of this doctrine, and how much it is contrary to the true principles of banking;* indeed it is now carefully guarded against by all

* One objection in favour of this doctrine ought to be stated, it is, that banks, like individuals, may employ their own capital, in any manner of way they please; as far as it goes, they may, with safety, lend upon mortgages, landed securities, personal securities, or on permanent loans to government, because, should they, in the first instance, make these advances in notes, they have always their capital ready to replace these notes when returned upon them; thus, as has been stated, the Scotch banks advance money upon personal bonds; and it is well known, that the bank of England have made a permanent loan to government, of above eleven millions sterling, which it could easily do, because the whole sum is capital, and therefore no notes are in the circle on account thereof; but, were that bank to come forward just now, to make government another permanent loan of eleven millions, and, in order to pay it, give government at once the amount in their own potes; these notes might be passed away by government to the creditors of the state,

proper banks, and by none more so than by the bank of England, which has gained knowledge by experience; and yet lord Lauderdale, in a recent publication, has brought forward this mistake, committed by the, banks in 1697, as a proof that bank notes may be issued to depreciation, without in the least adverting, that the quotation which he gives from a Mr. Godfrey, one of the directors of the bank at that time, as an evidence of the fact, expressly states the cause which produced the over-issue, "for they have lent money on mortgages and real securities."-To be continued.

REDUCTION OF THE MILITIA.

Sir, I am ablunt man, and therefore the more to be excused for the sincerity of my sentiments. I do not approve of the measure for reducing the militia, and had I been a member of the House of Commons, I would have expressed myself in parliament to the following effect :-after having stated what I conceived to have been the policy, and still to be the military policy of this country, I would have concluded thus:"But, Sir, lest it should be said that I have condemned one plan without proposing another, I must beg leave to say, that there is a method by which you can reconcile all difficulties, and make the character of all your forces subservient to one general and useful system. In the first place, I would grant a bounty of two guineas per man to enlist again, and extend his services throughout the three kingdoms. This, I have no doubt, from my knowledge of the militia, would be gladly, and abundantly accepted. In the next place, I would ballot for the line. Sir, the advantages of this plan would be, that, in the first place, you would improve the importance and the discipline of the militia, and you would infuse fresh vigour into a system, which the right hon. gentleman (Mr. Yorke) contends is on the decline. In the second place, you would increase your positive strength, as you could not only have more confidence and greater numbers in Ireland, by the exchange of the militias, but you could disengage from Ireland, a considerable proportion of those well-disciplined regulars whom you now are obliged to retain in that country. In the third place, you would increase your commercial strength, as there would be no competition to act against the ballot for the line. But, by the plan of the noble lord, you will relax the zeal of militia officersyou tell them that, in the course of a few years, you will again have recourse to this circuitous expedient-and you check, in the first instance, every motive to discipline the remainder, and the men of the new levies. You do not increase your positive strength, as you will still be obliged to retain, even from the very reduction of the Irish militia, a considerable body of regulars in Ireland, and you will eventually injure your general recruiting, by the baneful operation of the ballot contending against the bounty. Now, sir, in balloting for the line, you are guided by precedent and policy;-you have precedent in the Additional Force Act, when you did 'ballot for the line-you have policy for your object, since a direct augmentation must be preferable to a circuitous increase. By the union, therefore, of the extension of the service, and of the direct ballots, you not only act on a more economical plan, but you harmonize the several parts of your military system-and, by rendering each more useful, you improve their respective discipline, and your own general strength." I am, sir, your's, A. D. Y.

STATE PAPERS.

CONDITIONS OF PEACE BETWEEN HIS MAJESTY THE EMPEROR OF THE FRENCH AND KING OF ITALY, AND HIS MAJESTY THE KING OF PRUSSIA.

His majesty the emperor of the French and king of Italy, and protector of the confederation of the Rhine; and his majesty the king of Prussia, animated with the same desire of putting an end to the calamities of war, have, for that purpose, appointed plenipotentiaries, namely:-On the part of his majesty the emperor of France and king of Italy, and protector of the confederation of the Rhine, M. C. Maurice Talleyrand, prince of Benevento, his great chamberlain, and minister for

but there they would remain, the bank holding no convertible funds opposed to them, they could by no means be retired from circulation, and would therefore become really and truly forced paper money, and a depreciation would ensue upon them.