Mr. Goulburn, then Chancellor of the Exchequer, who took part in the debate, spoke as follows:

"Was there not, then, in the United States a paper that was perfectly convertible? Was there not, then, a precise regulation that every note should be payable on demand in coin? Still, in consequence of competition, there was an excess of issues; and this, though there was a perfect publicity as to accounts, a rigid inspection by the government, and a rigorous control; and yet from the competition of issues they reduced the country to that state, that, as the honorable gentleman himself had said, they overlooked morality, and suspended cash payments. There was no want, then, of a convertibility of paper enforced by law; but the competition of issues defied all law, and made every man in the community anxious to increase the circulation, in order that he might be able to promote his own wild speculations."

Schoolboys in England who should repeat such stuff as this should be sent to the bottom of their forms. That men at the head of a great empire should fabricate or utter it exceeds belief. At that time the United States, as a nation, had no more relation to the Banks within it than it had to the Bank of England. It was held, at the time, to be unconstitutional for the nation to establish Banks, or, indeed, any corporate company whatever. The extension of the charter of the United States Bank, which expired in 1836, was refused on this very ground. In the twenty-nine States, of which the nation was composed, there were as many systems. The operation of these might be said to prove almost every thing except the assertions made in reference to them, or to the assumed one of the United States. The States of Arkansas, Florida, and Mississippi had systems peculiar to themselves, which consisted of borrowing large sums of money for the ostensible purpose of founding Banks, squandering it, and winding up by repudiating payment. Their systems were a full proof of the barbarous and dishonest character of their people. They had neither capacity to manage Banks, nor, in Mississippi at least, the integrity to admit even a legal liability for the money borrowed, which they seized and made way with as lavishly and absurdly as if they had been tribes of savages. Sir Robert Peel and his associates should have known something about the systems of these States, as the money to found them had been in great part borrowed in London, and the whole city was then ringing with denunciations of the defaults that had

been made. The Banks nominally set on foot in these States were, according to Sir Robert, among those for the publication and audit of whose accounts, and for the payment of whose notes in coin, such wonderful provisions had been made, provisions, unfortunately, rendered wholly inoperative by the competition of the issuers. In some of the Western States there were what were very appropriately termed "wild-cat systems, no wilder, however, than that which only a short time ago prevailed in every part of England. The object of such Banks in the United States, and, indeed, everywhere else, was, in the first place, to impose their notes upon the public, and then to provide for their redemption as could best be done. If there were no downright dishonesty in these systems, they were entirely without any stable foundation, and in the United States they all disappeared like a growth of mushrooms. Fortunately, very little money was borrowed to set them up. The principal sufferers were the note-holders. Other States, like that of New York, had, in fact, two systems: one in the cities, founded on adequate means and well conducted; the other in districts far removed from the sea-board, in which the wild-cat element largely prevailed. This element, however, in this State as through the country, steadily tended to disappear with the increase of wealth; for this always brings with it the lessons proper for its management, to those by whom it is acquired, whether it be a Bank, or some industrial enterprise, in which it may be invested. The systems of Pennsylvania, and of the States lying to the South, repeated in their double character that of New York; some parts of them very good, some very vicious. Legislation could do little in those States, nor can it anywhere, unless seconded by integrity and business training. That which is to render a system perfect far transcends legislative skill or power. The best system, if perfect freedom be allowed, grows naturally out of, and is thoroughly adapted to the wants of production and trade, like all other contrivances having similar objects. Such a system, resting wholly upon the voluntary consent of its members, and as perfect as is possible in all its important features, had existed in the New England States for twenty years previous to the Act of 1844. It continued in operation down to the establishment of the national system of 1861, which, being purely a creation of law, is vicious in every part, and

which, until repealed or modified in every important particular, will be found to be an insuperable barrier to the restoration of the currency of the country. From the New England system, English statesmen and financiers might have learned whatever could be known of the principles of a paper currency, and of their application. All they had to do to secure the best possible system for themselves was to copy the example set them, which was equally adapted to their country as it was to the New England States. The latter formed a geographical and commercial unit, with Boston for its centre. As that city was the creditor of them all, the issues of all their Banks naturally tended toward it. All that was wanting, under such conditions, to a perfect currency, was for every Bank to make good all its issues in coin, at the point at which the greater part of them were used, and to which, by a law of gravitation as it were, whatever was issued tended constantly to flow, as the most convenient point at which to hold it, while it was awaiting employment. To this end, all the Banks of these States, numbering at one time five hundred, entered into an agreement to make daily redemptions of their notes and credits, in coin or its equivalent, at the Suffolk Bank, Boston, from which Bank the system, if such it may be called, took its name. A homogeneous currency was thus created everywhere within such territory, the equivalent of coin, and everywhere accepted by the Banks and by the public as such. Whatever was the equivalent of coin in Boston was equally so in every part of the territory dependent upon it. By being so in Boston, the notes of every Bank belonging to the system were the equivalent of coin in every part of the United States, less the rate of exchange or cost of remitting coin, wherever such notes circulated, to that city. As a rule, they were, throughout the whole country, preferred to coin, from the greater ease and safety of their remittance; and for the reason that they were the equivalent of coin in New York, whenever the exchange between that city and Boston was in favor of the former. While the issues of these Banks were thus everywhere the equivalent of coin, the system from its perfection required the least possible amount of coin, as the daily redemptions of the issuers rendered it impossible that any considerable excess of currency should at any time get into circulation, or that any considerable balances should arise in production and trade. It has already

been shown that were all the interests of a community or nation maintained in perfect equilibrium, its exchanges might be effected almost wholly by the use of symbols. Such a condition of equilibrium, as perfect as is possible in any country, was, probably, obtained in the New England States under the system described. Only a small amount of specie had to be maintained at the central point; while such country Banks as had sufficient credit in Boston, or an abundance of good bills which could be readily sold in the market, had to keep on hand only such amount as was required by way of change. As the contracts or bills upon which the currency was issued ran off on an average every ninety days, the currency was retired within the same periods. So perfect was this system, that it is not probable that at any period there was a necessity for the suspension of the Banks composing it, arising out of their own condition. In 1837, 1847, and 1857, they followed the suspension of the Banks of other parts of the country, only for selfprotection. They were, in all instances, the last to suspend and the first to resume. With the adoption of this system for the whole country, with New York as the central point, the issuing of the currency might, without the least danger or apprehension, be thrown open without regulation or restraint. The public, for their own safety and convenience, would impose limitations upon issue and provisions for redemption far more stringent and adequate than can ever be provided by law. The currency so issued would reflect, and be entirely adapted to, the wants of the country; and would be regulated as to its quantity by the same laws by which the quantity of a metallic currency, or of bills of exchange, is regulated. For Englishmen to draw their reasons against competition of issue, and in favor of a single issuer, from the assumed system of the United States, is as absurd and inadequate as for a traveller to describe London from observations made among the mud huts of Ireland, or the New England States from those made among the tribes of savages of the Pacific coast.

The Act of 1844, among other things, provided:

1. That on and after August 31, 1844, the issue of notes by the Bank should be wholly distinct from its general banking business, and managed by a Committee of Directors, under the name of "The Issue Department of the Bank of England."

2. That there should be transferred to the Issue Department securities to the value of £14,000,000 (since increased to £15,000,000); of which the debt owed by the government to the Bank, amounting to £11,015,100, was to form a part; and also such gold coin and gold and silver bullion as the Bank at that time possessed, not needed to conduct the operations of the Banking Department. In exchange therefor, the Issue Department was to deliver over to the Banking Department an amount of notes equalling in nominal value the securities held by the former, that is, £14,000,000, and the bullion so transferred to it. No increase was to be made to the securities in the Issue Department. Their amount, however, might be decreased to any extent, and again increased, but not beyond the limit prescribed. The amount of securities and coin and bullion transferred to the Issue Department at the time equalled £28,351,295; that is, £14,000,000 of securities, £12,656,200 of gold coin and bullion, and £1,695,095 of silver bullion. The notes delivered at the time to the Banking Department equalled £8,175,025; the balance, that is, £20,176,070, being at the time in the hands of the public. The amount of gold and silver coin retained by the Banking Department equalled £857,765; making the total capital with which it began business £9,032,790. The only mode by which this department, as well as the public, could draw coin from the Issue Department was a presentation of notes, which were cancelled as they were taken in. The coin and bullion drawn, in theory, entered into circulation in ratio to the amount of notes withdrawn. The Department of Issue was required, upon an increase of its coin or bullion, to issue to the Banking Department a corresponding amount of coin. By these contrivances the circulation was, in theory at least, to be always uniform in amount; such amount to depend not upon the action of the Bank, but upon that of the public.

3. The amount of silver bullion in the Issue Department was never to exceed one-fourth part of the gold coin and bullion held by it.

4. The Issue Department was required to purchase, in exchange for its notes, all standard gold bullion, at the rate of £3 178. 9d. the ounce.

5. If any banker issuing notes on the 6th of May, 1844, should cease such issue, the Bank might, by the permission of