certificates at the depository. It was impossible; and the depository, with its numerous branches established for convenience in different parts of the country, all suspended payment. They could not do otherwise; for they had promised to deliver twice as much wheat as they actually had in their possession, and when called on to redeem their certificates, they could only call on those to whom the extra certificates were given, and who were bound to furnish wheat for the same on demand. But what could these debtors do? They could not make wheat at once, and nothing else would answer the demand. They might ultimately pay, but not now. With the failure of the depository all credit was annihilated. Universal bankruptcy, among all who were much indebted, took place. Everybody suffered, except the few cautious, wary, and wealthy individuals, who had the means to profit by the misfortunes of others. To them, as a matter of course, an immense amount of the hard earnings of the industrious was transferred, without an adequate equivalent. The rich were made richer, the poor poorer. That was not all, perhaps not the worst; for the observing mind might discover that a great amount of demoralization was inseparable from such a catastrophe. The expansion of the currency had caused a spirit of gambling and speculation, highly detrimental to public and private morals; and when the collapse came, the desperation and misery inflicted on multitudes made them reckless of all moral or legal obligations. They were ruined-they knew not why nor how. They did not feel to blame, and many of them were not to blame. They were the victims of a vicious system, and regarded themselves as absolved from all obligation to pay others when nobody would pay them, or when their property had fallen to a fraction of what it cost them. The words "I promise to pay " lost much of their sacredness. Gloom and despondency settled down upon the land-stagnation and paralysis reigned everywhere.

But this bad state of things could not last forever. Foreigners had suffered, for many of their cargoes had been almost a total loss. They were not in haste, therefore, to send more goods to so bad a market. Both parties had learned wisdom. The industry of the islanders was again renewed; more wheat was produced; men were engaged in useful enterprise, instead of idling and speculation; the recuperative energies of the people began to be felt; and gradually the country returned to a truly healthy and prosperous condition.

And now, certainly, both the government and people of Le Monde have become wise enough to avoid another such infliction. Alas! no. The illusion is too pleasing-the temptation too strong. The experiment is repeated; again the currency is inflated; foreigners again send their merchandise. True, there is more caution on both sides, but the result finally comes. The wheat of Le Monde must be shipped to pay the balance of trade, and another scene of distress and bankruptcy ensues; and another, and yet another.

It might seem quite surprising that these experiments should be repeated, but nothing was more natural, for the nature of money was not at all understood. The effects of such a currency as they had they did not comprehend. They did not see that the moment anything was put in circulation as wheat, which had no value in itself, or was not the actual representative or certificate of so much wheat in the possession of the depository, that had promised to redeem these certificates in wheat, that mo

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ment the standard of value had been vitiated, and all the disastrous consequences we have enumerated must follow.

Not having any adequate idea of the character of their currency, they failed to understand cases of frequent occurrence like the following:

Under the first currency, while there were no larger amount of certificates in circulation than of wheat in the vaults of the depository, A sold B 100 acres of land for 2,000 bushels of wheat, and took his note, payable in two years. Immediately afterwards the new system went into operation; the currency was inflated, and at maturity the note was paid in full. according to its tenor; yet, by the operation, A lost one-fourth part of the value of his land, as he found out when he came to reinvest his money, which would buy only three-fourths as much of any kind of property as when he sold his land. He could now, with his 2,000 bushels of wheat, buy only 75 acres of such land as he sold; or, if he would purchase oxen, he must pay 100 bushels per yoke for such as he could have bought for 75 bushels when he sold his property. He had clearly lost one-fourth of the value (or exchangeable power) of his lands.

Again; during the expansion, C purchased a house of D, and agreed to pay 3,000 bushels of wheat in two years. C was a manufacturer of hats, and when he bought the house 1,000 hats would, at the existing price, (three bushels each,) have paid for the house. The contraction came on; C's hats, like everything else, fell in price, and he had to pay D the value of 1,500 hats, to take up his note for 3,000 bushels of wheat, for his hats were now of the value of only two bushels each. So that, although he paid only 3,000 bushels of wheat, as he agreed, he lost 500 of his hats by the operation.

Circumstances like these, though of constant occurrence, made no impression in the minds of the people, for they never connected the cause with the effect. They never perceived that every time the currency was expanded or contracted, every existing obligation to pay or receive money was necessarily changed from its original intent; that expansion enabled all existing debtors to pay off their previous obligations with less property than they promised, and that contraction, on the other hand, compelled them to pay more.

Seeing nothing of all this, instead of turning their thoughts to the proper remedy, they only clamored for a greater proportionate over issue of certificates.

By the foregoing illustration we have endeavored to show the nature of money and currency, and the difference between them; that the one is an accurate standard of value, while the other is false and delusive; that while with the use of money there will be occasional vibrations in trade, which, like the tides of the ocean, are salutary, and come in obedience to natural causes, with the latter there must ever be frequent, unnatural, and violent convulsions; that the laws of trade are before and above all human enactments; and that when the latter are in contravention of the former, they can only injure and derange the industrial interests of a community.

The edict of government which established an over issue of certificates, in the case supposed, did not give any new strength, activity, or skill to a single citizen, or impart any additional power or disposition to labor; and as all values are created by labor, it did not, as it could not, add one iota to the production or prosperity of the island. All it did was to give an

abnormal stimulus to trade, by increasing demand without increasing the supply, and of course to give rise to speculative operations. While the depository issued no larger amount of certificates than it received of wheat, it acted simply as a trustee, holding the money of the individual for the general good; when it issued more, it became a manufacturer of

currency.

In our next we shall speak of the actual currency of commerce.

Art. III.--EUROPEAN COMMERCIAL CORRESPONDENCE.

NUMBER IV.

SPECULATION SCHEMES AND BUBBLES OF FORMER TIMES, AND HOSE OF THE PRESENT DAY-DEFALCATIONS IN FRANCE AND ENGLAND-FINANCIAL IMMORALITY PREVALENT-FINANCIAL PROSPERITY OF FRANCE-ASSOCIATION, A FEATURE OF MODERN ENTERPRISE-BANKING ON A GRAND SCALE THE AIM OF MODERN FINANCIERS-BANKING AND BANKERS IN ENGLAND-NATHAN MEYER ROTHSCHILD -THE BANK OF ENGLAND MR. GILBART AND THE JOINT-STOCK BANKS-INTERNATIONAL BANK OF PARIS, AND ITS GIGANTIC PROJECTS-PRODUCTION OF THE PRECIOUS METALS-FREE TRADE IN ENGLAND-STATISTICS OF WOOL TRADE-COTTON TRADE-DANISH SOUND DUES-WAR POLICY OF ENGLAND-CHINA — SILK —GUANO TRADE-PROGRESS EVERYWHERE-LATE FAILURES-CREDIT AND BUSINESS SOUND.

PARIS, FRANCE, April 1, 1857.

To FREEMAN HUNT, Editor of the Merchants' Magazine:

MY DEAR SIR:-The "tulip mania" of Holland, the "Mississippi land scheme" of France, and the "South Sea bubble" of England, are landmarks in the history of the stock exchange. The journals of those days have recorded the madness of the times. The Arabian Nights' Entertainments are not more romantic, for there is a certain wildness in reckless speculation.

Fraud in high places was the word of the hour; money in trust vanished with the air; and mercantile morality was hardly known among the pullers of the wires.

Think of paying thousands of pounds for a tulip root; millions for paper land; and tens of millions for ventures in the South Sea! And when this last bubble swallowed up all its rivals, and burst; when, like Alexander, it had nothing more to conquer, the explesion spread misery throughout the kingdom! The thousand per cent dividend was a myth, and the rich man was poorer than the pauper!

A century and a half have passed since then; England has rolled up a national debt that would sweep away 40 per cent of the entire national domain, individual and public wealth, to liquidate it; but America, in the meantime, has lived and flourished through three wars, and many rumors of wars," and placed her fifteenth President in the White House!

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Great as is the lapse of years since the old world was speculation mad, some of the elements of the present day are not so unlike. Bubble companies may have a sounder bottom, but little less morality. Schemes as desperate, on a smaller scale, find daily birth; neat circulars, glowing advertisements," splendid results," meet you everywhere. Speculation marks our day as well as theirs. Forgery, breach of trust, fraud among the

leaders, seems to be as prevalent now as then; but not on so grand a plan. Each day the London editors chronicle some new instance of crime. The press of France is voiceless, hence French bubbles are seldom seen floating upon the waters. The water runs too deep-the plans are not worked out. 'Tis true that Charpentier and Greler took a few hundred thousand dollars out of the Northern Railway, but what of that? And Cusin, Legendre, and Duchesne de Vere managed to cheat the shareholders of the "Docks Napoleon" out of $1,400,000-a refined swindle-but, with this exception, the bubbles are not quite ripe. In England, however, we get them every mail. The shameful frauds of the "Tipperary" and the Royal British banks are not yet cold, when crash on crash increases the malady that keeps the money market so sleepless. No wonder shareholders tremble and grow pale under such terrible responsibilities. A dozen bubbles have exploded since I wrote you in February-each more than its neighbor. The public was disquieted to find that the directors of the Paris and London Bank had squandered $70,000 in preliminaries before the bank had opened its doors; still more so, to see the Australian Agricultural Company run through its capital of $1,900,000, with nothing to show for it; but what is now their surprise, to see that the London and Eastern Joint-Stock Bank in such a mess-only three years old—with a capital of $1,250,000, loaning one director, Col. Waugh, on his rotten securities, $1,200,000, within $50,000 of its whole stock in trade! The community is indignant, and well it might be. More misery for shareholders and depositors; more spoils for the lawyers; more distrust; less confidence; a general inquiry of What next?

The North of Europe Steam Company is also in the papers-$2,500,000 was a respectable capital, but lately one man has relieved them of a handsome sum, and it seems that their last was a bogus dividend! Bogus directors-bogus auditors-no wonder the bubbles ripen so rapidly! Redpath coolly takes $1,200,000 out of the Northern Central, (an English Schuylerism,) and gives a portion to his church-the rest to charities! Noblemen shake hands with the $1,500 clerk who could give such dinners, and was so good! Robson was more modest. His frauds had not matured. The Crystal Palace-poor bubble-did not need this last stab to sink it. While these pleasant transactions were taking place in England, Huntington was gaining popularity on forged notes in Wall-street.

The moralist has room for work. Go on the Bourse, and look at the starting eyes of some of the operators-what a life is that of the Rouge et Noir! M. Proudhon, the Socialist writer of 1848, has the pen-"wild luxury-sumptuous debauchery-vice reveling in gold-prostitution attired in silk-are the consequences of fortunes made without labor!"

The present century cannot record more financial immorality than the journals have announced during the last six months. Then you hardly note one fraud a year-now 'tis every week. When Robert Ashlett robbed the Bank of England, in 1803, of $1,600,000, wild was the excitement; but when Henry Fauntleroy, in 1824, forged for $150,000, he was arrested, tried, convicted, and hung in the presence of one hundred thousand persons! When Rowland Stephenson, in 1828, gambled away $1,350,000, and broke his bank, the public was indignant. The shock to public morals was most severe-"'twas more than half a dozen failures," wrote the Times on the 10th of January, 1829.

Such cases were very rare till lately, when the mania breaks out anew.

M. Proudhon uses strong language when writing on the Bourse. He says all France is stock mad. No matter the company, it is sure to sell. Gold is the Archimedean lever with which Napoleon moves the machinery of his empire!

Pensioned generals; salaried colonels; well-paid soldiers; gold on all sides a golden shower. Bonaparte made his throne, and holds it well. Ministers, bankers, and the Bourse-a goodly company. Notwithstanding the ruinous depreciation in the public fortunes of France during the revolution of 1848-a drop of 50 per cent; in spite of short crops, famine, inundation, and two war-years, the outward sign of prosperity stands more prominent than ever:

In 1833, the entire public fortune of France was but $4,000,000,000, (the sum of England's unpaid notes.) This amount was represented bysecurities, $3,350,000,000; metallic currency, $650,000,000. To-day, the same returns show an increase of 75 per cent; for the national wealth has rolled up to $7,000,000,000! Can this be a sound state of finance? In 1826, there were but 32 companies, with a capital of $11,000,000. Twelve years later, just after the crisis of 1838, there were 1,039 companies, representing a capital of $350,000,000. Railway shares alone have increased since they were first issued some $212,000,000! Will this continue? The Budget will best show the returns. In 1829, just before the Bourbon tried his hand as king, it amounted to $180,000,000; now it is nearly twice that, and yet taxes are collected as easily as thirty years ago. Association is also one of the traits of the present age. A certain joining of forces-a combination of interests-union of capital. Europe is swarming with companies-a prospectus for everything in Christendom -from supplying a theater with actors to building a church. What an odd idea-putting a church into shares and stock! But so it is. Where individuals fail, companies lose larger, and bring wider ruin. Government the prop of all; and when it trembles, down tumbles the house of cards -the credit of the bourse! Corporations take the poor man's money, and the nation prospers. See what association has done for the United States our railways never would have been built by individuals. The farmer's real estate advances to make up the loss on stock. Foreign iron must be imported in the hold, and able-bodied Irishmen between decks come with it which gave employment to a fleet of ships, and mechanics prospered in launching them. The labor itself was a fortune. If a black man will sell under the hammer for a thousand dollars, the several millions of able-bodied workmen brought over from the old country to make our Western roads, at Southern prices, would be worth more than a cotton erop. Association covers a wide field, and rules our time, while individuals rule it. The grand company, after all, follows the beck of the originator. As Palmerston rules England, Napoleon France, Alexander Russia, Biddle ruled the bank. So one mind in the board of directors has everything his own way-one head generally manages the board. Enterprise, talent launches the scheme; outsiders throw in the money; dividends are paid for a few years, and then comes another phase of association-companies assisting each other; a wider range of kiting.

Literary clubs, political reunions, public charters, are some of its fruits. When you reflect, you find but a few men rule the world; a few men formed the Fremont party, and a few men elected Buchanan! Association of governments gave us war, and afterwards peace. I wish they