conditions is the unlimited individual liability of the issuing parties.

Let it be observed, however, that whilst the unlimited responsibility of individuals is, with entire propriety, represented as furnishing to the public a very strong guarantee against fraud; and as holding out to noteholders and to depositors increased protection against all danger of ultimate loss; the principle affords little or no security against those alternate expansions and contractions in the volume of the currency, and those fluctuations in the value or purchasing power of its denominations, which tend to give to all commercial undertakings a gambling character; but which are inseparable from the issue, by trading associations, of paper substitutes for metallic money; and which necessarily flow from a system of banking and of currency essentially vicious in its constitution, and defective in the very elements of its organisation. We admit the correctness of the assertion of Sir H. Parnell: "That all the public has lost by bank failures in Scotland, since banks were first established, amounts to £36,444, and that no such thing ever occurs in Scotland as a panic." We are satisfied of the truth of the facts stated by Mr. M'Culloch, that "In 1793 and in 1825, when so many of the English country banks were swept off, there was not a single establishment in Scotland that gave way." And we may very satisfactorily account for much of this superior stability, by the then greater freedom in Scotland of the banking business: this freedom being enjoyed upon the only proper condition of the thorough responsibility of the associated parties. We are convinced of the accuracy of the statement made by the first Lord of the Treasury and by the Chancellor of the English Exchequer: "That the Scotch banks have stood firm amidst all the convulsions in the money market in England." It is, no doubt, true, as affirmed by Mr. Gilbart, a bank manager of great experience and a practical writer of established reputation, that "The

enactment which renders the whole property of every shareholder answerable for the debts of the bank is very just and satisfactory. It is satisfactory to the public and satisfactory to the shareholder." It can not be denied that whilst in 1837 and 1838, bank creditors were every where in this country defrauded by the depreciation of bank paper, and by the non performance of bank promises; and whilst the same thing has again partially occurred in 1839; in Great Britain "neither depositors nor noteholders have lost a shilling." Mr. Bailey, a writer of the very highest character for power of logical discrimination, and for penetrating sagacity and analytical skill, is clearly in the right when he asserts that the legislature "acted wisely in not interfering to lessen," by the grant of exceptions, "the liability of individuals." Mr. Norman, a prominent director of the Bank of England and a writer of signal ability, was, no doubt, correctly informed, when he admitted the "general solidity of the Scotch banks," when he stated, that " insolvency was almost unknown among them;" and when he referred to their well established reputation as "secure places of deposite."

All these authorities (and their number might easily be extended) are direct in the testimony which they bear to the justice and the expediency of the principle of the unrestrained liability of individuals; and their evidence is conclusive as to the beneficial nature of the results springing from its practical application. It is, however, not on that account the less true that the only infallible test of the soundness of any scheme of paper issues, is to be found in the identity of the phenomena with those which would take place with a currency purely and exclusively metallic, and "it is as issuers of paper money that the Scotch banks are chiefly open to criticism. In times of prosperity they push out their notes and credits to an undue extent, and are consequently compelled to diminish them as violently when circumstances alter-thus in

flicting on the public oscillations in the currency much more violent than could occur with a metallic circulation, or with paper regulated on sound principles."

Of the Scotch banks, as of all others assuming the discharge of incompatible functions, and organised upon the unsound and pernicious system of making their credit issues in competition, and in the discount of commercial securities bearing interest, it may with truth be affirmed that "in periods of excitement and rising prices, they stimulate speculation unduly, and afford a spectacle of specious and factitious prosperity; while, when the recoil takes place, they sweep the solvent and comparatively prudent trader into the same net with the rash adventurer, and lead to awful and wide-spread ruin." Hence it is that in periods of commercial difficulty, "no country is said to suffer from insolvency more severely than Scotland, whilst of Manchester, "where banks of issue have never existed until recently, and then to a small extent," it is remarked that "it furnishes an interesting and instructive contrast."

It is also notorious and not denied that in Scotland the use of gold is almost unknown, and that under the appearance of a nominal competition, a real combination exists against demands for specie and for the maintenance of an exclusive paper currency.

"There is no principle in the law better settled than that whatever has an obvious tendency to encourage guilty negligence, fraud or crime, is contrary to public policy." And such, in the very nature of things, is the tendency of allowing the trader, and especially the banker, to limit, to throw off, or in any way to restrict his natural responsibility or his legal liability. From this liability there should be no escape, "not even by express promise or special acceptance any more than by notice."

H.

HISTORY OF THE MONEY CRISIS OF 1818.

Extracts from the report of the Committee of the Senate of Pennsylvania, appointed to inquire into the extent and causes of the present general distress.

IN the Senate of Pennsylvania, December 8, 1819. A motion was made by Mr. Raguet and Mr. Grosh, and read as follows, to wit:

Whereas it appears that a scene of distress and pecuniary embarrassment unexampled in former years, has been of late exhibited throughout this commonwealth. And whereas, at a period of general calamity, it is natural for the people to expect from the legislature such an investigation into the causes which have produced the evils under which they labor, as may be likely to mitigate their sufferings, or at least to prevent their recurrence. And whereas, a proper regard for the interests of posterity, as well as of our constituents requires, that an exposition of the actual condition of our suffering fellow citizens, as well as of the causes which have been instrumental in producing their distress, should be recorded in durable characters on the journals of this house. Therefore,

Be it resolved, That a committee be appointed to inquire into the extent and causes of the present general distress, and to recommend to the consideration of the legislature, such measures as in their opinion may be calculated to alleviate the public suffering, and to prevent the recurrence of a similar state of things.

On motion, made on the 10th of December, said resolution was again read, considered and adopted, and

Ordered, That Messrs. Raguet, Hurst, Eichelber

ger, Markley, M'Meens, Rogers and Breck, be a committee for the purpose therein expressed.

January 29, 1820. Mr. Raguet from the foregoing committee, made report, which was read as follows, to wit.

In the performance of a duty of such high importance as that which has been entrusted to your committee, they have felt it incumbent on them to enter at large into the investigation of the subject contemplated by their appointment, in order that the people of the present day may be correctly informed as to the extent and causes of the evils by which they are oppressed, and that the records of the house may be furnished with a document, which may afford evidence at a future day of the miseries which it is possible to inflict upon a people by errors in legislation and by the bad administration of incorporated institutions.

In ascertaining the extent of the public distress, your committee has had no difficulties to encounter. Members of the legislature from various quarters of the state have been consulted in relation to this subject, and their written testimony in answer to interrogatories addressed to them by the committee, has agreed with scarcely an exception, upon all material points. With such a respectable weight of evidence added to that which has been derived from the prothonotaries, recorders and sheriffs of the different counties, from an intercourse with numerous private citizens residing in different parts of the state, as well as from the various petitions presented to the legislature, your committee can safely assert, that a distress unexampled in our country since the period of its independence, prevails throughout the commonwealth. This distress exhibits itself under the varied forms of

1. Ruinous sacrifices of landed property at sheriff's sales, whereby in many cases lands and houses have been sold at less than a half, a third, or a fourth of