All payments to, and by government, to be made in national notes.

National bank notes to be legal tender, and their genuine

ness to be established by reference to competent authority. Government to be intitled to no more than one half of the profits; so that each individual stockholder would draw. one and a half dividend per share. This will be proper, because the individual stockholders will have their funds actually engaged; the general government will draw dividends only in consideration of its guarantee, charter, giving extensive circulation to the notes, &c.

The institution to have a right of establishing branches, wherever they may think proper. These branches to discount with their own notes, payable on demand, in national notes, or specie, at their option.

These are the outlines of the plan of a national bank, such as we have in view. Let us cast a rapid glance on its probable operations.

With a capital of thirty millions, and a specie fund of ten millions, the institution might, with great propriety, employ their credit, to the amount of thirty millions. We request our readers to bear in mind, that we speak of a perpetual bank. If it could not do business to the extent mentioned, immediately, its means, nevertheless, would be soon no more than commensurate with the exigencies of an increased, and more opulent population.

Of these thirty millions, fifteen, perhaps,would be employed in discounts by the mother bank.

With the remaining fifteen millions, five branch banks might be established, each with a capital of three millions, in national notes.

Supposing these to employ their own credit to the amount of six millions each, then the aggregate amount, of the discounts of the branches, would be thirty millions. The discounts of the mother bank we have stated at fifteen millions. Of course the institution would draw profits on a sum employed in discounts, amounting to forty-five millions.

The discounts of the late bank of the United States, with its branches, averaged about fifteen millions, which enabled

occasion, after Hamilton had thus written on the subject, bespeaks a wanton neglect of duty, or an unpardonable degree of ignorance.

* We prefer this expression, as it includes both-bank credit, given on the books, and notes issued.

them to divide eight per cent. on ten millions, or eight hundred thousand dollars, which is five and one third per cent. on fifteen millions.

The expenses of the new institution, and its branches, would scarcely be greater. Consequently, if fifteen millions, employed in discounting, yielded annual dividends to the amount of eight hundred thousand dollars, forty-five millions would yield two millions and four hundred thousand dollars: which would bring a revenue to the general government of one million and two hundred thousand dollars annually.

We must moreover observe, that, after the new plan of discounting with national notes has been once introduced by the branch banks, all the incorporated banks, now existing, will gradually fall into the same plan, prompted by their own interest, because they will find it more convenient, more safe, and cheaper. If the terms of their charters present at first a difficulty-they will cause them to be modified. They will then apply to the national bank for their notes-because they will find this more suitable than to purchase them for specie-which the national bank will furnish, either by discounting their promissory note at twelve months, drawn in their corporate capacity, or on some other expedient plan, that may be devised; and the national bank will thus have an opportunity of employing all the national paper it can with propriety issue!

We have yet to say a word on public credit.—Its elements are, an ample revenue, and an inviolable observance of good faith. To these an additional support has been added in modern times; called a sinking fund, which, under the steady form, which the new sinking fund has assumed in England, since first proposed by Mr. Fox in 1792, is nothing else than a regular provision for the gradual discharge of a public debt, coeval in its operation with the creation of the debt itself. Each contracted portion of debt, acquires, thereby, a fixed term of extinction, like our late six per cent. stock.

Viewed on general grounds, this is certainly an admirable arrangement; because it exempts the discharge of public debts, even from the possible capriciousness of legislative appropriations. Every contrivance, which gives steadiness to the operations of the government, is, for that sole reason, highly beneficial, and approximates its character to the wisdom of nature.

When, therefore, the Secretary of our treasury observes"No artificial provisions, no appropriations or investments of particular funds in certain persons, no nominal sinking fund, however constructed, will ever reduce a public debt, unless the

"*

net annual revenue shall exceed the aggregate of the annual expenses, including the interest on the debt," we agree with him in the general correctness of the sentiment. There is no real amelioration of circumstances, no general reduction of debt, as long as the new loans contracted, must be proportionably larger, on account of old loans paid off. On the face of the case, it would have been as well to pay off less, and to borrow less. But, if he concludes from this, as we must suppose that he does, since no provision for a sinking fund has been attached to the contemplated loan, that sinking funds are useless, we cannot help thinking, that he errs, and that he pays too little attention to general principles, and to the vast political importance of steady measures.

Believing ourselves that sinking funds are of great importance, and that their establishment, or, in other words, the establishment of legislative provisions for the steady, and gradual discharge of public debts, coeval with their creation, should become a fundamental law of the financial code of the Union, we could still wish the following regulations to be incorporated with the law creating the national bank.

Government, by the tenor of the constitution of the national bank, should be debarred from ever applying the annual amount of its dividends, to any other purposes than the discharge of the principal of the public debt, in conformity with eventual legislative provisions to that effect.†

When not so applied let the institution be bound to invest the amount in gold and silver, to be retained in their vaults, the more to increase the solidity of the establishment.

Finally, it would be expedient to enact, that the rates of discount shall be lowered, agreeable to a certain fixed ratio, in proportion as the unappropriated funds of government, in the national bank, accumulate.

With a system of taxation, that could never fail to be productive, such as we have proposed, gradually introduced; with a currency-convertible, abundant, and of general circulation; with a pre-organized, constantly augmenting sinking

See the Report of the Secretary of the Treasury of the 10th January, 1812.

Dividends, to the amount of one million of dollars per annum, thus applied, would extinguish in twenty-one years, forty millions of debt at par, if funded at six per cent., and the interest payable yearly. If payable every six months, or quarterly, the process of extinction will be more rapid in proportion.

fund; with unbounded credit-such as must necessarily result from the above circumstances, and moreover supported by a well-constituted, national bank-what might not be our financial power? With our customhouse duties annihilated; our resources of whisky taxes, &c. &c. untried; our public credit, equivocal; holding sinking funds, in contempt; deeming a national bank unnecessary, and, therefore, unconstitutional; so circumstanced every way, that even a successful loan may enrich us only with a debt, and leave our hands as empty as before-how great is our financial impotence!

294

WE are about to present our readers with a brief Memoir on the circumstances of Spain at the commencement of the struggle, in which she is now engaged. It was written in the autumn of 1808, by a gentleman, who had been an eye witness, of the transactions at Bayonne to which he refers, and who resided, as well there as in Spain,-under auspices which opened to him the best possible sources of information. The most entire reliance may be placed on the facts he communicates. We have but to regret, that considerations of a private nature, have rendered it necessary for him, to suppress a multitude of others still more curious and important. The Memoir, even in its present shape, was not originally intended for the press. The manuscript in our possession is autographical, and of unquestionable authenticity. This document will be deemed valuable in an historical point of view, and we are anxious that nothing should be lost to the world, which can serve to throw light upon a subject destined, we have no doubt, to form hereafter, the most interesting and instructive portion of human annals.

We do not fully coincide with the author, in his enthusi astic admiration of the conduct of the Spanish nation, nor in his sanguine anticipation of the final discomfiture of her oppressors. Yet he is one to whose opinion we would readily subscribe, in any case where our own judgment was not almost peremptory, and we must confess that he has displayed a very imposing sagacity, in his predictions concerning the progress of the Spanish struggle, to its present stage. This is not the place for us to inquire into the aspect which it may hereafter assume. It would be now, after what we said elsewhere, worse than idle, as indeed it must be at all times on this subject, somewhat presumptuous, to attempt to draw back the curtain of futurity. If any positive prophecies are allowable, they are certainly those that accord with the vehement aspirations of every honest heart, and tend to raise the spirit of philanthropy which may be said, together with "the best hopes of our better nature," to droop and die away, under the prospect of a sinister dispensation of the Almighty Providence, in the case of the Spaniards. At every such cheering augury, coming from a quarter to which deference is due, we most heartily rejoice, and are ready to ejaculate with the utmost fervency of desire,-" quod felix faustumque sit."