three millions, we have a circulation amounting to upwards of one hundred millions. The solvency of a bank does not depend upon the amount of specie it contains, but on its general capital.

2. The currency furnished by banks is more economical and convenient than specie.

1. It is more economical, because there is less loss of value by the destruction of bank paper than by the destruction of gold and silver; and by substituting paper, the precious metals may be used in values of another form.

2. It is more convenient, because it is more portable, less liable to robbery and destruction in transportation, and much less expensive.

3. Banks afford a convenient medium through which merchants may collect their distant debts. What would be the risk, loss of time, and cost, of receiving debts by the transmission of specie; and how much specie would be kept out of circulation by the act of transportation, or in various ways lost or destroyed? Now the whole business of exchange can be done through the banks "by a dash of the pen," and almost without risk or expense.

4. Banks afford a convenient place in which merchants and others can deposite their surplus funds without withdrawing their money from circulation. If there were no banks, every person must keep on hand as much specie as would meet his current demands; and this would render it dead stock, and so much loss to the community, beside increasing the temptation to robbery and house-breaking. Now he can place it in the bank, where provision is made for its security. Besides, while in the bank it can be kept in trade by the directors; and it is not dead stock, as it would be in private hands.

5. Banks afford great facilities to industry by discounting notes and making loans. A person has on hand a note for a thousand dollars, due in three months. Meanwhile he is in immediate want of funds. He takes his note to the bank and gets the cash, minus the interest for the time it has to run; viz., three months. Or, a mechanic or merchant has skill and industry, but wants capital. The bank, on his furnishing adequate security, will advance the capital on loan. The bank, therefore, performs the functions of a loan-office.

6. The advantage of banks as loan-offices over individuals is, that they collect into one place the scattered surplus funds of the community, and, by doing business on a larger scale, can do it with less expense; e., with less consumption of time and labor. And,

moreover, as the bank directors are selected for their skill in financial affairs, and their knowledge of the pecuniary condition of their neighborhood, they generally know whom to trust and what security to demand. Many private persons place their surplus funds in the banks to be loaned by the directors, whereby the community is benefited, who would be afraid to loan it on their own judgment. Thus widows and minors, and persons unskilled in finances, can buy bank stock, who would be incompetent to manage their own loans.

7. Banks save a great deal of time, and labor, and friction of coin, by the facilities they afford in making payments between individuals. If payments had to be made in specie, how much would it cost a merchant, in time and labor, to count over and minutely examine

fifty thousand dollars? And suppose all the payments in a large commercial city had to go through this process, how much dead loss would it occasion? Now, a merchant gives a check upon his banker, and the specified amount is transferred from one to the other by an entry in the books of the bank, while not a dollar of the money is fingered.

Thus, banks come under the general and important principle of the division of labor. A hundred persons find it cheaper to employ a bank to transact their money affairs for them than to do it themselves, and it costs the nation less. The individuals profit by the knowledge and skill which are acquired by those who devote themselves to a single branch of business, just as in all other cases.

These are some of the leading advantages of the banking system. By applying them and looking at their bearings, the reader will see how it is that the system has such an influence on national prosperity. Every one will see that they adjust the amount of the currency to a nation's demands; they economize capital; they collect the idle funds together and turn them to profitable account; they save time and labor; they furnish facilities to industry by loans and discounting; and, in all these ways, stimulate national production.

Hence, it is not surprising that nations enjoying great commercial prosperity should have early felt the need of those facilities which banks afford. The ancients, as we are informed, found some accommodation in bills of exchange; but only a very small part of that supplied by banks. In that period, however, they could be more easily dispensed with, on account of the greater proportion which the amount of precious metals in use bore to the demands of trade. That the proportion was greater than now is evident from the fact, that while the quantity of silver and gold in the world is now ten times greater, its value is only three times depreciated. Were there no greater demands for it now than then, it would have sunk to one-tenth of its former value; but the wonderful expansion of trade has prevented its sinking lower than to one-third. The demand, therefore, has increased faster than the supply, in the ratio of ten to three. Now there was no method, as far as we see, of meeting this increased demand but by the institution of banks. Hence, in all countries distinguished for commerce, opulence, and general comfort and enjoyment, banks have been instituted and paper money used. They seem to be inseparably connected with a high degree of commercial prosperity, and great productiveness of human industry. We may cite as evidences, on the one hand, Eng land, Scotland, and the United States, who use a paper currency; and, on the other, Spain, Portugal, and Italy, who have only a specie circulation, and are proverbially poor and degraded. France seems to occupy a middle ground; for the institution of her bank gave a wonderful impulse to trade and industry,* which are now fettered and restricted, if our information be correct, by the want of a sufficient circulation.

The consequences of abolishing paper money may be very easily gathered from what has been said. Its first effect would be to raise the value of money just in proportion as it would diminish the quan

* See Stoddard on the Banking Institutions of Europe and America.

tity. Suppose our specie to be one-third the amount of our circulation: let bank notes be banished, and the value of money will rise, or the prices of all other things will fall, just two-thirds. The effect on existing contracts would be deplorable. If a person had paid two-thirds of the purchase money on any property, it would then only sell for the remainder. Of course he would lose what was already paid. If a person had previously borrowed a thousand dollars, he would have to pay what would be equivalent to three thousand; since one thousand would go as far, and be as difficult to procure, as three thousand were at the time of the loan.

But what would be the effect of limiting bank notes to a given sum, say of twenty dollars? This measure evidently could not create silver and gold. It could only draw from the banks the specie necessary to replace the notes that would be called in. Now, to substitute specie for all the notes under twenty dollars, would require more specie than the country contains. Thus the banks, being bereft of their specie, which forms the basis of their circulation, would be obliged to close business. The result, therefore, so far as I can see, would be the same as prohibiting bank notes altogether. The same objection, however, would not exist, I apprehend, against prohibiting notes under three, or perhaps five dollars. True, it might create a little inconvenience at first, but it would be more than repaid by the advantages resulting. The principal of these would be the greater steadiness it would give to money prices, by an increase of the amount of specie in circulation. The fluctuations in the money market could not be as sudden or as violent if there were such an addition made to the permanent currency.

"But banks," we are told, "have been abused." And so has every other human advantage. But it is worthy of observation, that the benefits of banking are necessary and inevitable; the evils and abuses are only contingent and avoidable. Let them, therefore, be placed under such legislative restriction as shall guard, as far as possible, against the evils; and for the rest we must trust to the capacity and integrity of the directors, just as we confide in men in all other kinds of business.

"But banks," says another, "should be on the credit of the government." Then they will most assuredly be abused. When did governments ever conduct pecuniary affairs with as much economy and security as individuals? All government transactions are necessarily expensive; and as the risk encountered would not affect the rulers individually and personally, the security would be thereby diminished. It is well known, that as long as the Bank of France was in private hands, it continued to prosper. In 1718 the king took the bank into his own hands, and it was thenceforward carried on by government. In two years it exploded, and came near overwhelming the throne in its ruin. Such was the issue of governmental banking. On the contrary, the Bank of England, which has always been managed by a company under a charter from the king, has remained, notwithstanding the vicissitudes and embarrassments through which it has passed, and the burdens thrown upon it by a government immensely in debt, in successful operation to this day, and is likely to continue so while the government itself shall endure. But we hasten to a conclusion. The third book is devoted to the

subject of Distribution. It exhibits the mode in which the profits of production are distributed among the several producers.

Book IV. treats on Consumption, including that of individuals and that of the public. Individual consumption is a most important part of the subject, since all are consumers, though all may not be producers. Besides, on the proper regulation and direction of this matter among individuals depend the accumulation of wealth and increase of comfort in the nation. It is to little purpose that production be in a flourishing condition, if there be a wasteful and prodigal consumption universally prevalent. For it is much easier to consume value than to create it; and one man may destroy more than ten can produce.

But do not let us mistake on this point. Economy does not consist in consuming as little as possible, any more than in consuming recklessly and to no purpose. If the former were economy, savages would be the most economical people in the world. One essential distinction between the savage and the civilized state is, that the latter has more wants, together with greater means of satisfying them. We hear, indeed, a great many changes rung upon the hackneyed phrase, "Man wants but little here below;" but, for the most part, this is little better than mawkish sentimentalism. This is not the way the Scriptures teach. They urge contentment with our lot, and patient submission to privation; not on the ground that privation is no evil, but because the will of God is supreme, and we must acquiesce in his appointments. Contentment on any other ground is not a Christian virtue. That is the best human condition in which there is the largest amount of rational wants, with the highest capacity wisely to gratify them.

What, then, is economy? It is simply the judicious regulation of consumption, or extracting the largest amount of advantage and enjoyment out of a given amount of expenditure. It does not consist in the amount spent, but in the manner of spending it. It consists in making a given sum go as far as possible.

The rules of economy have reference to two branches of the subject; viz., productive consumption and unproductive. In the former, value is destroyed in one shape, and reproduced with increase in another. Thus, value in the shape of horns is destroyed by the comb-maker, and reproduced in the shape of combs. In the latter the object is only the gratification of desire, or the satisfaction of human wants. This includes all domestic and personal expenses of every kind.

Economy in either of these modes of consumption is to be governed by substantially the same rules. It is to be remembered in both cases that the expenditure is always to be proportioned to our means, and is to be so disposed of as to bring the largest return of utility. Upon this subject Dr. Wayland has some very important observations, to which we cordially direct the attention of our readers.

It is surprising that there should be so much lack of wisdom in a matter of such every day and universal necessity as that of indivi dual and domestic expenditure. For instance, it is a sound rule in economy that the value of every object be fully extracted; or, in other words, that nothing be wasted. Now, let a person walk along

the streets of our cities on a winter's morning, and observe the coalashes that are placed on the pavement for the carts; and he will find that nearly one-fifth, or perhaps more, of what was paid for fuel is thrown away. A coal-sieve that would cost a dollar would save, in one year, perhaps several times its value in cinders. Again, in families that burn candles, the last inch of candle is almost uniformly wasted. In England, I suppose, a save-all is as essential an article of domestic use as a fire-shovel. By this means the candle ends are burned in the kitchen. No less indispensable is the soapbox, in which all the fragments too small to be used are deposited, until they become numerous enough to make, when boiled together, a large lump. And who can tell how much value is destroyed simply by the habit of taking on the plate more than is eaten? The remnants are, generally, thrown away. If it be a private family, the owner loses it; if it be a public house, the boarders pay for it; because the price of boarding is in proportion to the consumption. Small as this may seem to some, it is, in reality, a detestable and wicked practice. No family that are guilty of such criminal waste can be called economical, even if they go without shoes to their feet, and dress in coats of homespun; or send their children to cheap schools, or employ cheap physicians.

Another important principle, and especially to persons of small means, is to buy nothing that is not necessary. Every thing unnecessary is dear, whatever the price may be. We are to take necessity, however, in a liberal sense, to include what possesses solid advantage in enjoyment or improvement. There are many persons and families who deny themselves household conveniences and important benefits on account of the expense, who yet spend more than their cost in things unnecessary; it may be in mere trifles and knickknacks. Such people cannot enjoy the comforts and decencies proper to their circumstances, merely because they cannot keep in mind that a hundred cents make a dollar. It is, after all, the little outlays that make great holes in small incomes. If every penny were spent to the best advantage, it would make, in the course of a year, a vast difference in the amount of domestic or personal enjoyment, comfort, and happiness.

We shall mention but one more rule: it is, that articles of the best quality are usually most economical in the end. Many persons do not know how it is that they spend so much, when they buy the cheapest things they can get, and yet are neither as decent nor comfortable as their neighbors in the same circumstances. They make a great mistake. Parsimony is not economy. Dr. Wayland observes, "It is a given amount of utility we want, and not the mere form in which it happens to reside. It is cheaper to purchase a dollar's worth of utility for a dollar, than half a dollar's worth for seventy-five cents." If a cloth, at four dollars the yard, wear eight months, and one at six wear twelve, the latter is the more economical; for, though the wear of the cloth is the same, you save in the making and trimmings.

We may, however, notice one exception to the rule above given. It is, when an article of the best quality is in the newest fashion. In this case you must distinguish between what you pay for the quality and what you pay for the fashion. Fashion must, necessa