ate the abuse, they are permitted to levy a tax, in the shape of discounts and interests, on this enormous and expanded circulation of $160,000,000.

Now, while banks have this power, without limitation, the requiring of security for the circulation, to protect the billholder, is a mere mockery; for we may anticipate a succession of expansions and contractions of the currency, overthrowing all credit, and prostrating every branch of industry.

is obvious. First come the issues of state stocks, created by the contraction of debts exceeding the revenue. Upon these are built the banks; the credit of the state being converted into a sort of reservoir, from which the faint and exhausted credit of individuals is refreshed and renewed. Speculation, which the previous want of capital so strongly prohibited, now springs up with an unnatural and redoubled power. The credit extended by the bank to its friends spreads through every Free banking is one thing-free trade ramification of commerce, enhancing noin the manufacture of paper-money is a minal values, and giving large profits to very different affair. Free trade in the the bold and daring adventurer. Pruissue of paper-money has never succeed- dent men are at length caught in the tide, ed any where. The more free the manu- and larger obligations and greater debts facture of paper-money, the more it is are contracted. Finally, however, payenlarged, and as the amount increases, day will come round, as come it must. the danger of revulsions becomes more The note-payers find their means locked imminent. It is true there cannot be an up in their speculations. Their profits are indefinite expansion of a currency which still too small to realize, and new loans is convertible into coin. The liability of must be contracted. The banks soon find the paper to be returned home for coin themselves immeasurably expanded. Motends, we know, to keep it at the same ney becomes a little scarce, and there is a average. Nevertheless, the vibrations of cry for more banks and more paper money. an elastic currency are sometimes consi- To establish new banks, new public derable before the check of the law of debts and new stocks must be created. supply and demand can operate. Other The old stocks have been absorbed, and causes may tend to sustain exchange, and thus to maintain an inflated paper issue. In 1837 we saw those causes at work, and the expansion reached an increase of nearly fifty per cent. on the whole amount of the currency, which was followed by contractions to less than the former circulation.

Whilst we are busy in providing, lest a man should lose a one-dollar note, we have made no provision against a fluctuation which changes the value of his property one-half, reduces a claim he may have to receive one-half, or doubles the debt he may have to pay. The remedy of this evil has received too little attention from our modern legislators; and yet, it is of the first importance in a sound banking system, and should at once control our legislation.

No banking statutes should be sanctioned which do not limit, by some fixed and proper standard, the extent of our paper circulation. This is the grievous evil, to the removal of which Ricardo addressed his clear and able intellect, and which finally resulted in the famous Bullion Act of Sir Robert Peel.

It is therefore plain, that stocks in themselves are no proper securities against an inflated currency.

The practical operation of the system

the demand for them has carried their value to an inflated and fictitious height. The idea of large premiums on six per cent. loans soon fascinates the legislature, and new improvements are devised, and new debts contracted. Extravagant schemes are projected, and great systems of railways and canals are set on foot. Thus it is that a huge debt is created, an expanded currency created, and heavy taxation originated, which must ultimately result in pecuniary disaster of the severest character.

Let us look at New-York and see if we have not here sketched the outline of her recent banking career. In the convention of 1846, her finances were the subject of grave and anxious debate. In the records of that convention, the reports and speeches of Hoffman, Cambreleng, Chatfield and others, all bear on two great subjects-the public debt and the currency. They were, in fact, the great objects which the convention had assembled to arrange. After a most searching discussion, the able views of Mr. Hoffman were adopted. He contended that the state debt should be paid at the earliest moment, and with the least possible charge of interest. "If we want," said he, "a great charnel-house of pauperism, go on with these debts and taxation.

Go

on and borrow money to squander it all inflated currency and an endless public over the state again in internal improve- debt. And will the pay-day never come ments. *** It was the accursed round? Are these "Dædalian wings" power of taxation which made pauper- of paper money always to bear us aloft? ism, produced crime, misery and distress in all countries, and he looked to his children as a parent, when he said that he desired not to see their limbs fettered, or their bodies withered, by any accursed debtor system, by whomsoever begun."

These stocks must one day be paid or renewed. Interest on interest will accumulate. In seventeen years the debt will be doubled. Taxation must grow oppressive, and the wages of labor, the rewards of agriculture, and the returns of commerce will dwindle and droop. Speculation will cease and "hard times" will become household words. Once stricken with panic the whole fabric of credit will totter, and the flimsy free banks, whose foundations are paper, will fall around us

"Thick as autumnal leaves that strew the banks In Valombrosa."

In accordance with such ideas, the VIIth article of the New-York Constitution was adopted by a large vote. That article contemplated the entire payment of the state debt by the year 1862, and positively prohibited the Legislature from contracting any debt, except in the extraordinary events of war, invasion, &c., unless the law authorizing such debt at the same moment provided for its liquida- There is really no limit to the system, tion, in 18 years, by direct annual taxa- but its own destruction. Its great curse tion. And, as if to guard still further is its constant tendency to excess. What against abuse, all such laws were required then is worse adapted to the peculiar exito receive the sanction of a direct vote of gencies of Louisiana than such a plan? It the people. With these restraints and has no merit for our state, whose greatchecks, it was hoped that that great state est aim should be to set her currency would avoid all the calamities of an enor- and credit on the soundest basis, so that mous public debt. But alas! the same foreign capital will be invited to us, and convention which adopted these re- thus the limited means, now possessed, straints, also adopted the free banking be left free to the pursuit of more active clause, making the stocks of the state enterprise and commerce. And here the basis and security of the currency, we will say-because it is true for us, as The same instrument which prohibited it is true for all-that no scheme of the creation of a new debt, made it the finance-no new plan of getting rich interest of the all potent moneyed power to fast-no quick road to prosperity, will have an unending and illimitable state avail us aught. There is one way and debt. only one, and that is stern and rigid economy-economy personal, municipal and state. These royal roads to wealth will always lead to the slough of despond. Let us get up from our apathy-call not Only six years after the adjournment on Hercules-but help ourselves, in the of the convention a large majority of the only way, by which true men ever help legislature passed the Canal Enlarge- themselves-economy, perseverance and ment Bill-an act which, violating the industry. These are better than all the spirit and letter of the VIIth article of captivating schemes of finance. Withthe Constitution, creates a new debt of out them neither banks nor credits can $7,000,000, and authorizes banking on de- help us. posit of the scrip or certificates of the debt. It is true that an enlightened judiciary decided the bill unconstitutional, but the machinery of party has been brought to bear on the subject, and the VIIth article has been evaded, and the bill will now succeed, and the labors of the convention to free the state from "the accursed debtor system," be utterly and forever lost.

What was the consequence? Why, state stocks soon got scarce and high. New banks were wanted, and bankers began to seek new sources of security.

Now, what is true of New-York will be ten-fold more true of Louisiana. If we have free banking, we will have an

The history of free banking in NewYork demonstrates not merely that a public debt is necessary to the existence of the institution, but also and principally demonstrates that free banking generates a tendency to create debt and to indulge in unwise and extravagant improvements. Where it exists, all conservative and restraining tendencies (which are feeble enough at best) are taken from the legislature, and a proclivity is engendered to borrow money and saddle posterity with a load of debt, from which

they may never recover. For free bank- and development of republican principles. ing is but a temporary policy, unless the Bad enough is it when a perpetual debt state is always in debt. It has its ex- is entailed on a people by an extravagant istence only as long as the debt shall and dissolute ancestry; but grievous and last, and however remote may be the accursed is such a debt when it chains day of our deliverance from such a bur- the people down to bad laws and bad den, we certainly ought not to build our government, which they dare not disturb monetary system on a basis so temporary lest they be impoverished in the agitation that in a few years more we may be they create. Long distant be the day called on to remodel it entirely, because when our government is upheld by such there are no longer public debts or stocks considerations. Its true foundation is in to build it on. Either the one or the the affections of the people, not in their other alternative will occur-that the use fear. A national debt is a national evilof stocks for banking will breed a system sometimes necessary, but always to be of extravagance, which will plunge us into avoided if possible. It were better, often, the most desperate calamity, or that if nay, most of the time, that the government our legislature wisely resist all the influ- should raise the required funds within ences of a potent moneyed power and con- the year and by the cheapest system of stantly curtail the debt and pay off the taxes. The man of commerce may freinterest and principal, that then, sooner quently do well to borrow money at or later, free banks must themselves interest. His occupation and his profits stop; and thus the country be thrown permit it; but a nation, except in case of back to the starting point and be forced war, &c., had far better raise her revenue to adopt some new system, which will by taxes than loans. When a governestablish the currency and secure the ment commences to borrow she is first to public. pay her brokers and agents, and then So that, take it at best, free banking year after year an accumulation of is but a scheme for to-day, and can interest.* That interest is an annual never be looked to as "a final settlement of all the questions" pertaining to the currency. How much better then would it be to start some other plan which could stand every change, and not depend on the ever-shifting and changeful policy that may prevail in our state. But perhaps some will contend that no conceivable period can occur when the state or federal government will be out of debt, and that it is not moreover desirable to hasten such an event.

tax on labor, which makes the bread of the poor man bitter with the ill-paid sweat of his brow. Let us beware, then, how we build up a currency on so dangerous a basis-dangerous, not because it is insecure, but doubly, trebly dangerous, because of its tempting premiums, which gild the bitter pill of debt, and make us put off the day of redemption to "a more convenient season."

And do the people know the cost of a public debt? If not, let them hear the words of wisdom:

The peculiar condition of Great Britain has of late years drawn great atten- "Taxes upon every article that enters tion to the general subject of a public into the mouth, or covers the back, or is debt. It is now urged that a national placed under the foot; taxes upon everydebt is an essential element in modern thing which it is pleasant to see, hear, feel, civilized states, affording convenient in- smell or taste; taxes upon warmth, light vestments for the widow, orphan and and locomotion; taxes on everything on learned professions, and furthermore, se- earth and the waters under the earth; curing by the tie of interest, direct and taxes on the sauce which pampers man's personal, the devotion of the citizen to appetite and the drug which restores him good order and strong government. How to health; taxes on the ermine which far this may be true of Great Britain it is decorates the judge and the rope which not necessary to discuss. Two things hangs the criminal; on the poor man's are clear: first, that the stocks of judiciously managed railways and canals afford quite as good a security for investments as many of our state stocks; and secondly, that a government which has to preserve itself from rebellion and riot We learn that the late loan of $2,000,000, effected by the timidity and caution of its citizen by the city of New-Orleans, cost her, for negotiating it, the round sum of $20,000. creditors, is not fit for the dissemination

salt and the rich man's spice; on the brass nails of the coffin and the ribbons of the bride; at bed or board, couchant or levant, we must pay."†

+ Sidney Smith to Brother Jonathan.

Debt, filth and sin have been termed feverish and unnatural tract of excitethe great enemies of man; and well ment." It was just such prosperity as does debt deserve its bad pre-eminence, this which waited on England during all when even to England, whose life seems her contests with Napoleon. During the well nigh immortal, and whose resources whirl and excitement of that war, her have been as exhaustless and whose commerce was flourishing, her finances vigor as fresh as if she were gifted with well ordered, and her manufactories reapperennial and unfailing youth-when ing a golden harvest. But when the war even she, with all her untold energy and and its excitements were over, and the noble people, has sunk under its withering interest on the debt grew onerous, how and prostrating power. deplorable was her condition? Her commerce was paralyzed, her manufactories were closed, and posterity was bequeathed an heir-loom of debt, which now crushes the hopes of her most ardent

Unless suggested by necessity and controlled by prudence; unless administered with economy and followed by frugality, borrowing is to nations as well as to individuals the high road to ruin.

It is the ease of borrowing, compared with the difficulty of paying; the natural disposition to get a present command of money, and leave the task of paying it off to posterity, which is the temptation that so often proves irresistible. There is, moreover, this extraordinary and peculiar danger in the lavish contraction of debt by a government, that by the present great expenditure with which it is attended, a very great impulse is communicated at the time to every branch of industry, and thus immediate prosperity is generated out of the source of ultimate

ruin.

But if this feverish and inflated prosperity is created by the mere contraction and spending of loans, what must be its still greater increase, when those loans are made the basis of our currency, and when every dollar of loan sets into circulation another dollar of paper, which in its turn sets in motion the whole expanding and extending machinery of banking credits!

Under the combined influence of a vast contraction and disbursement of loans and an extensive paper circulation, the resources of the nation will seem to be increased in a rapid and unparalleled progression. Prices will advance, profits will grow higher, and all who make trade their pursuit will find themselves in a state of amazing prosperity. But is this prosperity real? Do they not know that "these floods of wealth are obtained by exhausting the reservoirs of future affluence, and that a long period of depression and languor must follow this

sons.

And yet this mountain of debt reared its head less than two centuries ago. Like the small vapor of the fairy tale, it has gradually swelled forth and up into its present huge and giant-like proportions, standing ready to crush all beneath and around it.

Let us take heed, then, how we, even indirectly, encourage a public debt. In itself a curse, it will be doubly so, if we make it the basis of our currency.

No trivial objection to free banking, is the intimate connection it begets between the government and the banks. All the evils of a United States Bank, with few of its benefits, are attendant on the system.

The action of a government must be strongly affected by her system of finances. Whatever class of her people holds her debt, will exercise an overwhelming influence in shaping her policy. Talk as we may, if banks become the creditors of government, either the one or the

ART. IV.-SOUTHERN AGRICULTURAL EXHAUSTION

AND ITS REMEDY.*

THE great error of southern agriculture it is not my purpose to treat. My presis the general practice of exhausting cul- ent business is with errors and defects of ture-the almost universal deterioration southern agriculture, and with its points of the productive power of the soil- of admitted excellence-as, for example, which power is the main and essential the elaborate system of rice culture, and, foundation of all agricultural wealth. for other tillage, the very general and The merchant or manufacturer, who was commendable attention paid to the colusing (without replacing) any part of his lection of materials for putrescent mancapital to swell his early income-or the ures. Nothing has appeared to me more ship-owner, who used as profit all his re- remarkable in the agriculture of this ceipts from freights, allowing nothing for region than the close neighborhood, (ofrepairs or deterioration of capital-would ten, indeed, seen on the same property,) be accounted by all as in the sure road to of the best husbandry in some respects, bankruptcy. The joint-stock company and almost the worst in most others. that should (in good faith, as many have done by designed fraud) annually pay out something of what ought to be its reserved fund, or of its actual capital, to add so much to the dividends, would soon reach the point of being obliged to reduce the dividends below the original fair rate, and, in enough time, all the capital would be so absorbed. Yet this unprofitable procedure, which would be deemed the most marvelous folly in regard to any other kind of capital invested, is precisely that which is still generally pursued by the cultivators of the soil in all the cotton-producing states, and which prevailed as generally, and much longer in my own country, and which, even now, is more usual there than the opposite course of fertilizing culture. The recuperative powers of nature are indeed continually operating, and to great effect, to repair the waste of fertility caused by the destructive industry of man, and but for this natural and imperfect remedy, all these southern states (and most of the northern likewise) would be already barren deserts, in which agricultural labors would be hopeless of reward, and civilized men could

The great error of exhausting the fertility of the soil is not peculiar to cotton culture, or to the southern states. It belongs, from necessity, to the agriculture of every newly-settled country, and especially where the land, before being brought under tillage, was in the forest state. When first settled upon, forest land costs almost nothing, and labor is scarce and dear. Even if labor is more abundant, it still will be long before enough land can be cleared to allow changes of culture and rest to the fields; and for some years after each new clearing, it would be even beneficial to continue the tillage of corn, tobacco, or cotton, so as effectually to kill all remains of the forest growth. But as soon as enough land can be brought under culture, and has been put in clean condition, so as to allow space for change of crops and due respite from continual tillage, the previ ous exhausting course will no longer be best even for early profit. Even in a new country, while land is yet fertile, it is cheaper to preserve that fertility from any exhaustion, than it is to reduce it considerably. And in an older agricul tural country, like South Carolina, having abundant resources in marl and lime for Let me not be understood as extend- improving fertility, it would be much ing censure to all southern agriculture, cheaper, and more profitable, to improve and charging this great defect as being an acre of before exhausted land, than it universal. It is truly very general-but is to clear and bring under culture an there are numerous exceptions, of which *This interesting paper was read by Edwin Ruffin, Esq., of Virginia, the justly celebrated American agriculturist, at the late Fair of the South Carolina Institute, in Charleston, S. C., which we had the pleasure of attending. The author has kindly fur

not exist.

acre of ordinary land from the forest state, allowing that both pieces are to be brought to the same power and rate of production.

New settlers are not censurable for benished us a corrected copy, which we hasten to lay ginning this exhausting culture. But before our readers, omitting only the introductory portions, which are of local or personal character.

they and their successors are not the less