somewhat compromised by an injudicious, but very honest publication of his manuscript papers. Yet, however respectably he may have acquitted himself in any or all of these relations, we should hardly have expected them to fit him to appear advantageously as a political economist. We can scarcely define the reason why, but the fact will admit of little contradiction, that in the particular department of money, the public in the United States has not been in the habit of looking for sound practical judgments, among the leading minds of the state of Virginia. So far as we know, since the adoption of the constitution, although she has furnished more than her proportion of distinguished public men, she has not yet produced a single financier. The theory of Mr. Jefferson, in many respects entirely anti-commercial, and the fine spun metaphysical subtleties of the strict construction school, have been hitherto far more in accordance with the temper of her population than statistical tables. Trade is in its nature consolidating, because it will not recognise arbitrary geographical lines; it is creative of such strong common interests, wherever it once connects people in relations with one another, that local jealousies, and all narrow notions of exclusive independence, vanish before it. The ancient dominion has been nourishing her prejudices for many years at the expense of her power. It must be regarded as a sign that she is about to abandon them, when a gentleman like Professor Tucker, who has been brought up in the school of its straitest sect, is willing to avow the opinions upon credit and banking, which are to be found in this book. Forty years have made a great change in the relative position of the old states of our union; for whilst they have thrown forward most of its northern members in population and resources immensely, they have left Virginia not much better than they found her. It is time for her citizens to awake to a true sense of their situation. A proof that they are stirring, is to be found in the legislation of the last two or three years, as well as in the work of Mr. Tucker.

We do not propose, at the present moment, to go into an extended notice of this book more particularly of the questions of a debateable character that it contains. We are not aware that there is a single absurd or unreasonable proposition maintained in it, which is saying a great deal in this day of newfangled theories. The author is perfectly candid, and always moderate. His plan is to sum up the argument in favor and against any important point with great fairness, and to submit his own opinion afterwards. This makes his work valuable as a text book for elementary instruction, particularly as it contains few dogmas which a scholar will have, in process of time, and often at no small cost, to unlearn. The first part, or that which treats of the precious metals, as the material for money, contains little that will not at once command assent; and if the second, which is devoted to credit and banking, contains much that will be disputed, it is only because nothing is now admitted upon those subjects, by every body in the United States, as beyond question. The expediency of credit itself, is denied by some who, as the professor aptly remarks, would, if occasion required, equally deny the value of steamboats in Mississippi navigation. There is one thing which we like about the author, and that is, he takes no care to conceal his opinions. Although a Virginian, and of the Jefferson school, he is clearly in favor of a banking system, and a national bank. We all see plainly enough that at this time there is no prospect of the establishment of such an institution, but that is no reason why, in a fair and full examination of our system of money dealings, the propriety, and indeed the necessity of it, should not be freely displayed. Professor Tucker appears to be under no improper bias. He is not a

merchant, depending upon bank discounts, nor a politician, making denunciation of banks as stock in trade, but a retired gentleman, reflecting upon the combined lessons of theory and experience, and drawing his conclusions from his observation of results.

It is difficult to make any extracts which shall do justice to the author, inasmuch as he connects the sense in his paragraphs very closely. But as the probable operation of the present law of free banking in this state is regard. ed with general interest, perhaps our readers will be most curious to know what he has to say upon that. We therefore have decided to select the passage that treats of it as a specimen of his manner:

"Another expedient which has been viewed with favor, both in this country and England, for giving stability to banks of circulation, is, to require every bank to vest a part of its capital in public stock, or, in lieu of that, in mortgages, which, being of permanent value, would secure the creditors of the bank from loss under any supposable state of pecuniary embarrassment in the country, or of imprudence in the bank. And the state of New York has lately passed a general banking law, by which the ordinary privileges of a corporation are extended to any voluntary association of individuals, who are permitted to carry on the business of banking, and to issue notes to the extent that they have previously deposited stock, or mortgages, with the comptroller of the state.

Assuredly, the less the banks lend, the less is their risk of loss; and if they keep a part of their capital employed, not in the business of banking, but invested in the public funds, or joint-stock companies, or land, they are, to that extent, exempt from the hazards of banking, but to the same extent they must forego its profits, and substitute the dividends or profits derived from these permanent investments in their stead.

This exchange may give the public additional security, or it may not. If the stock purchased was part of a public debt to a government faithful to its engagements, it would afford higher security than any loans on personal credit; but there may be no national debt, as is now the case with the United States, and there may be no public debt in the state where the bank is to be established. If, then, the money be vested in the stock of canal, rail-road, insurance, or other joint-stock companies, as has been sometimes proposed, there would be the same uncertainty of profit, and the same hazards encountered, as in the ordinary business of banking. The stockholders would certainly prefer employing their capital in discounting such paper as they approved, both for profit and safety, to vesting it in the stock of a company, over whose management they had no control; and to the creditors of the bank, the security would be the

same.

Let us, however, suppose that stock issued by the states could be procured, although the bank may be somewhat more safe, yet as its profits will be proportionally diminished, it may be doubted whether capitalists will be disposed to advance their money for a bank, in which, to give greater security to the public, their means of profit are diminished, and their hazard of loss is increased. Let us see the operation of a bank on the plan proposed in New York.

We will suppose an association formed for the establishment of a bank with a capital of 2,000,000 dollars, for the whole of which the members must provide approved stock of the state to the same amount. As this is taken at is market value, it is the same to the proprietors as furnishing so much cash. For this stock they are entitled to receive notes for circulation, to the same amount, of the comptroller of the state.

But they must also provide a stock of specie. The law requires that the bank shall have in specie not less than one eighth part of its notes in circulation. Besides, they cannot get their notes into circulation without paying away a certain proportion of specie. From the moment they began to discount, a part of their notes will be returned to be converted into cash. What that proportion will be, nothing but experiment can determine. Let us, however, suppose that, for every four dollars in paper, one in silver has been required. Then to have lent out the $2,000,000, the sum of $500,000 was required in specie, to which must be added one eighth of the notes issued, or $250,000, to be retained in their vaults, agreeably to the requisition of the law. In that case, their profits would be as follows: Interest on $2,000,000 stock, at 5 per ct.....

$100,000

Dr. on $2,500,000, discounted at 6 per ct.....

.$150,000

$250,000

Which, on $2,000,000 stock and $750,000 specie, is something more than 9 per cent.,

from which, if we deduct 1 1-2 per cent. for expenses, would leave 7 1-2 per cent. for the net profit on the whole capital invested. The expenses, it must, however, be remembered, will be greater than in an ordinary bank, on account of its deposit stock both for legal advice, and in collecting the interest.

But, if the proportion of specie required by the bank should exceed what has been supposed, as it probably would, the dividends would be proportionally diminished. It must be recollected, that the means of circulating the notes have not been at all aided by the stock, except so far as, by increasing the public confidence, it may have extended their circulation. But this effect might be insignificant, and could not be much. Bank notes do not circulate at all, unless the public have entire confidence in the solvency of the bank that issued them; but, whatever may be the confidence, they will still be converted into specie for the various purposes of being sent or taken to a distance, of being wrought into plate and jewelry, and of being placed in another bank. It is then the $750,000 of specie, in the case supposed, which has put and keeps in circulation This was the real banking capital. But, to suppose that this sum would be adequate to loans or discounts for $2,500.000, or more than three times its amount, is against all experience. It might not be sufficient for more than two thirds of that amount; of course, to put the whole $2,000,000 of notes into circulation, a much larger amount of specie will be required.

the notes.

Nor is this all. The proportion of 12 1-2 per cent. of the notes in circulation for the specie―the minimum required by the law- although it might be sufficient for country banks in prosperous times, is not enough for them in ordinary times, and not enough for city banks at any time. The banks of the city of New York, on the 1st of January, 1837, when their loans were unusually great, had $3,854,453 in specie, to a circulation of $8,155,883; that is, 47 per cent., nearly four times as much as we have supposed. To be prepared, then, for the smallest fluctuations in the money market, the bank would find it necessary to increase the amount of its specie much above 121-2 per cent., and, if it should resort to the sale of its stock, in times of emergency, the same pressure for money which has driven them to this expedient will lower the market value of stock, and they may lose in one sale the amount of seven years' dividends. And, so far as real estate is substituted, the hazards of loss, as well as the expense of management, will be greatly enhanced; so that the plan does not seem calculated to invite prudent and substantial capitalists, who have no other purpose to serve than to make safe and profitable investments; in which case, the public must eventually find its best reliance is on a well-organized bank, with a capital of gold and silver, placed under the management of cautious, judicious, and experience 1 men."

We shall probably take an occasion very soon to go more fully into an examination of the present work, in the course of which we propose to give some ideas of our own upon the effect of the free banking law, and to controvert the opinion maintained by our author, of the expediency of more than one national bank. In the mean time, however, we freely recommend it to all who are already interested in the subject, as a work full of excellent views, and to those who desire to make themselves acquainted with it as a good guide and authority. The author has appended, also, several very valuable and convenient tables.

ART. VIII. COMMERCE AND PROTECTION.

[We insert with pleasure the following communication, as it is our object to present to reflecting minds, both sides of a vexed question; one which has extensively agitated the country, and is destined to agitate it again; but not to so great a degree as at the time the Tariff Compromise Bill was passed by Congress, in 1833. In the interim, both parties have had time for reflection, and ultraists on both sides are now, we believe, few and far between. The South has realized the value of a domestic market for its cotton, on which it could fall back, when prices declined in Europe; and manufacturers have become convinced that extravagant and unreasonable duties are not the best protectives of home industry.

We are in favor of a full and fair protection to our manufacturers and mechanics to every thing which can call out the skill, and develope the resources of our country,

as contributing to our prosperity in peace, and our independence in a state of warfare. But high duties act as encouragement to reckless and injurious competition in the branches of industry they are meant to foster, and by the idea of extraordinary profits, divert labor and capital from natural and healthful channels, and the domestic productions of a country may be as injuriously increased by artificial stimulants, as imports may be made to exceed our ability to pay for, by the recklessness of commercial men, grasping at shadows, and losing the reality. The "juste milieu" applies to all things.

The free trade system advocated by the English theorists, is, like the majority of their manufactures, intended for exportation, and not for home use, other nations are to furnish the raw material, but they are to have the profit on the manufactured article. There, every thing that can stimulate production, is applied with unsparing hand, until at last the system has become so complex and interwoven with the existence of the government, that like her national debt, and her privileged aristocracy, an attempt at change might shake the whole social fabric to its foundation. Fortunately for the United States, we are placed in a position in which we can select the good and reject the evil. No one interest can be built up in our republic, at the expense of another; not only the spirit of the constitution forbids it, but the state of things, as we find them, renders it impossible. The agriculturist, the manufacturer, the merchant, and the mechanic, all the productive, as well as what economists call the unproductive classes, are represented in Congress, by delegates generally chosen specially by themselves. We recognise no privileged order, but that of industry, intellect, and worth; we bow to no supremacy but that of mind; no law can be passed, unless a majority of the great interests represented, shall agree that it is of a national and advantageous character. Our growth in some particular departments may, in this way, possibly be retarded, but it is more natural and healthy. And if the great national edifice progresses less rapidly, the foundation is surer, and the proportions will be more just and beautiful.

-

We do not believe in the opposition of commercial men to a just protection to home industry. They have realized the value of the internal trade the deep root taken by the manufacturing interest of the country -the importance of the coasting businessand the vast impulse which these united, give to domestic and foreign commerce. The raising of a revenue for the support of government, by means of a Tariff, is the least onerous to all, indeed, the only one acceptable to the genius of the people, for direct taxation is out of the question; this point conceded, the only difficulty to be disposed of, is the amount of duties to be imposed on foreign commere, commensurate to the wants of the government, and fully and fairly favoring the different branches of domestic industry; but on this head we do not feel ourselves called on to express our opinion at the present moment.

As we have before said, the ultraists of free trade, are few and far between; we believe our talented friend has engaged in a fanciful contest with imaginary opponents -but as he poises a sharp and polished lance, we have no objection to let him throw it, and if he can find an ultraist any where, to let him hit him - we belong to the "juste milieu."]

IT has ever been the special effort of the foes of the protective system, to enlist the mercantile interest, as such, in the support of their cause. The merchants, as a body, are calculated on to furnish the vanguard of the anti-protective army, and to supply it with the sinews of war. However other classes may break or waver, they are expected to constitute an immoveable phalanx. Others may need argument and demonstration, but their anti-tariff prepossessions are assumed as a matter of instinct. To be a merchant, and to be hostile to laws for the protection of home industry, are regarded as identical.

Not that merchants are known or believed to be, in fact, universally hostile to protection. Every man's observation teaches him the contrary. It is well known to every writer on the subject, that many of the most enlightened, able, and efficient advocates of protection, have been found in the mercantile class. But the assumption of the free trade doctors avers, that commerce is, in the very nature of things, hostile to the protective system; that, though individuals may be induced to favor that system, by personal and peculiar interests, these are but eddies in the great stream of commercial feeling and in

terest, while the current bears unequivocally and powerfully in a contrary direction. This question of fact is one of lesser moment; but that of absolute interest and policy, is one of vital importance. For, be it known to all, the great controversy of protection versus free trade, is by no means at an end. Suspended in 1833, by a nine years' truce, it will be renewed after 1842, with an intensity equal to any that this country has ever yet experienced. It must, in the nature of things, be so. The free traders, flushed by an advantage achieved for them in 1833, mainly, if not solely, by the force of circumstances wholly extraneous from the proper controversy, are running into the wildest ultraism. They are disporting their fancies in a region never adventured upon by them in the earlier stages of the controversy. Hitherto the clamor on that side has been for a reduction of imports to a revenue basis — to the measures of the fiscal wants of the government. We have already reached that point-nay, gone beyond it and the cry is still onward. Free trade now strikes at the root of revenue duties also. No tariff-no imposts absolute freedom of importation, is now the demand. Throw open your ports, tear down, or convert to other uses, your custom-houses-banish the very idea of customs - raise your revenue by direct taxation. Such are the present modest demands of the free trade theorists. How soon they may be extended to require the government to furnish ships for the importation, free of cost, of such foreign products as the country may prefer to its own, is a question rather out of the scope of the present essay.

Suffice it that in its present shape, the doctrine of free trade strikes at the existence of all duties on imports whatever. It will be satisfied with nothing short of this. Abolish all discriminating duties, (which was the extent of its earlier demand,) and we still have a revenue impost which, in view of the largely increased expenditures of the federal government, can hardly be estimated below twenty, certainly not below fifteen per cent. This still operates, to its extent, as a protection and a stimulus to domestic industry. It is still an evesore and an abomination to free trade. Mordecai the Jew still sits in the king's gate, and the wrath of Haman is unsated. Nothing less than the abolition of customs and custom-houses, and the overspreading of our whole land with a locust tribe of tax-gatherers, will satisfy its urgent aspirations.

Thus, then, stands the question between the free trade theorists, and the advocates of protection; and we are now prepared to consider to which side the interests of commerce should incline its votaries. Is it commercially expedient that the great producing interests of the country be fostered and stimulated to their highest possible activity and force, or that they be left entirely to take care of themselves, and in each department to encounter the depressing and disastrous rivalry of whatever portion of the globe may be able to undersell our productions in its particular staple? Shall our producers of grain be exposed to an equal competition for their own market, with the serfs of Russia, who are content to labor for a supply of the coarsest necessaries of life? Shall our cities be supplied mainly with the potatoes of Ireland, because the Irish laborer is thankful for a shilling a day, while the American receives five or six? Shall the vast manufacturing interest of this country, which gives direct employment to one fourth of its commerce and navigation, and consumes the surplus products of one half its agriculture, be exposed to certain prostration and ruin, in a competition with the older and wealthier manufacturing interests of England, France, and Germany, backed by an unlimited command of capital, at four or five per cent. per annum, and of labor at ten to forty cents a day? Is it possible that the interests of American com