In reviewing the resources and condition of the Dominion we have purposely kept in view our own relative position in the respective details, because it appears to be thought good national policy to exclude our neighbors to a certain extent, from commercial intercourse with the United States. The physical conditions of Canada correspond very closely with those of the most active and prosperous sections of our own country. Its natural conditions for trading in the products of the forest, the field and the sea also compare favorably with our own; while as respects governmental burthens-a matter bearing very essentially upon the inducements to both labor and capital-it has important advantages over ourselves. Can it then be considered wise statesmanship to shut ourselves out from intercourse with a people thus circumstanced, and drive them as competitors into other markets where we are ourselves sellers? So homogeneous are the interests of the two countries that there has long been a latent feeling among our people in favor of the annexation of the Provinces. One motive of the repeal of the Reciprocity Treaty was an idea that the Canadians might thereby be made to feel their dependance upon our trade, and to infer hence the desirableness of political union. Events, however, have proved that the means we selected were ill-a lapted to the end sought. Canada has suffered little, while a heavy penalty has fallen upon some of our own interests. The imposition of a heavy duty upon timber has caused severe injury to our shipbuilding interest, otherwise subjected to embarrassing disabilities; while it has placed a premium on shipbuilding at St. Johns and in the ports of Great Britain. The returns of the former Province of Canada show that during the last fiscal year their imports increased six millions, and that the increase was entirely with Great Britain, while the purchases from the United States were below those of 1865-66; indicating that the diversion of the exports of the Province to other countries is attended with an increase of its purchases from such countries. The exports of the Province show a decline of about five mil lions upon 1865-66, the prospect of the abrogation of the treaty having induced large purchases by our people to save the subsequent import duties, but they are, at the same time, about fifteen millions in excess of the figures of 1864-5, showing that our neighbors are by no means dependent upon us for a market for their products. It was certainly a most unwise policy which led to the abrogation of the treaty. The fact of our being able, under the agreement, to exchange a much larger amount of products than had proved possible previously, was a sufficient evidence of its advantage to both parties, and no stronger argument for its continuance needed to be advanced, for ever exchange implies a mutual profit. Now, however, we are beginning to see the results of our act; and yet, in this year's trade returns we only have a slight indication of what we may expect in the future. The natural course of Canadian trade is to this country but as we have built a wall around ourselves, and thus obstructed the natural channel, a new one is being forced. The movement at first was hardly perceptible, but is at length beginning to indicate its course; and let it once work out for itself another route, and it will require more than the restoration of the reciprocity treaty to restore it. We have a good illustration of this idea in the course of Western trade, which formerly sought the seaboard by the way of New Orleans. The war shut up the

Mississippi and all trade was forced towards the East. Now, although that river has long been open, the new channel continues to carry off the prize.

But there are already among us palpable symptoms of a desire to negotiate a new treaty. Several interests complain of injury from the repeal, while none profess to be specially benefitted. Probably the question of resuming reciprocal relations with the New Dominion may be introduced into Congress at the coming session; and we trust will result in the re-opening of negotiations for that object.

EXTINGUISHMENT OF THE PUBLIC DEBT.

BY A NEW YORK MERCHANT.

Let Congress, at the next session, authorize the Secretary of the Treasury to call in the National Bank circulation, as fast as it can be done, say within sixty or ninety days, and issue United States legal-tender notes in place of it, the legal-tender notes to be paid for by the banks with coin interest bonds.

The Government to redeem these legal-tender notes, at the rate of five millions of dollars monthly in gold, to be paid to the banks pro rata on their circulation, said redemption to commence as soon as the bank circulation is all in, and all other paper money circulation to be prohibited, except the fractional currency.

This redemption to continue for five years, at the end of which time the banks are to resume specie payment, and thereafter to keep on hand one quarter of the circulation in coin.

Upon the resumption of specie payment, the circulation of the legaltender notes to be apportioned among the banks, and the Secretary of the Treasury to be authorized to increase the amount not exceeding one hundred millions of dollars, whenever two thirds of the banks in interest, by resolution, shall request him to do so. The increase to be paid for by the banks in coin interest bonds.

The Secretary of the Treasury to loan to the banks, in case of panies, to the extent of thirty or fifty millions of gold, whenever necessary to sustain them, upon Government bonds as security, and at such rates of interest as will induce its return to the Treasury at the earliest practicable

moment.

Upon the return to specie payment, United States notes to cease to be legal-tenders.

The three hundred millions of legal tenders to be issued in place of the National Bank circulation, could be apportioned at the time of issue, and the old issue be redeemed. This would save much expense, as it would leave but one hundred millions of the old issue to be changed.

This plan will release the reserve of legal-tenders now he'd by the banks, and will make the entire circulation in United States legal tender notes about seven hundred millions, and some ninety millions more than at present.

The legal tenders, when redeemed in gold, will be in effect paying the bonds which were taken from the banks in gold, and will definitely settle the question as to how the principal of the coin interest-bonds is to be paid. This being settled, an immediate rise in our securities might be looked for, both in Europe and this country, and for such an active demand from Europe as would, to a large extent, prevent the shipment of gold for some considerable time to meet the trade indebtedness.

The gradual return to specie payment would not seriously affect the values of merchandise, and thereby create distress; but, on the contrary, we might look for an active and increasing trade in all branches of business, and a revival of that confidence which a feasible and definite policy will surely bring.

We shall

The banks will find their compensation for the loss of their circulation, and the interest on the bonds, in the sale of the gold, which they can dispose of for the first three years, as they will receive for the legal-tenders, during the five years, three hundred millions; and also in the increase in the value of the balance of the securities now held by them. place our financial affairs upon a sound and firm basis, and give to the people a uniform currency, which will be recognised throughout the United States as being beyond the possibility of ever becoming worthless. That the Government should supply the circulation, is now generally conceded; and it must also be conceded, that there is no more reason why the Government should supply the banks with capital, in the shape of circulation, in order that they may profit, both by the securities held for its redemption and the circulation, upon the plea that the interest of the manufacturer and the trader, and through them, the country is largely benefited, than that capital should be furnished by the Government to the country merchant. Wherever these facilities are needed, there capital will locate, and will afford them at such rates as will be satisfactory to the banker and the accommodated.

Now, let us see whether the Government can pay the interest on the coin interest indebtedness, and redeem the legal-tender notes, as proposed. When all of the Seven-Thirties are converted, as they soon will be, the coin interest indebtedness will be about twenty-one hundred millions. This, by the issue of the three hundred millions of legal-tenders, will be reduced to eighteen hundred millions.

The annual interest will be....

The annual redemption legal tenders.

To be paid annually in coin..

The receipts from customs..

Leaving to be provided for.....

$108,000,000 60,000,000

$168,000,000

150,000,000

$18,000,000

Which can be taken from the gold reserve now in the Treasury. As the receipts from the customs are rapidly increasing, and the one hundred and fifty millions being considered the lowest point they will be likely to reach under the present tariff, the reserve, in all probability, would not be touched for this purpose.

With the revival of business, and the general confidence restored, the Government will be able to reduce the rate of taxation, and with an eco

nomical administration of its affairs, a thorough enforcement of the Internal Revenue laws, and with no unnecessary appropriations by Congress, the whole of the currency interest and floating indebtedness could be paid by the time specie payments are to be resumed, and the entire debt, if we have no war, within twenty years.

The resumption of specie payment will be to the consumer equal to a reduction of the tariff of forty per cent., as he will save, in the cost of the goods, the premium it now takes to purchase the gold to pay for them; and as the redemption of the legal tenders will cease at the end of the five years, a further reduction of the tariff could be made.

It may be asked why the banks, with no circulation of their own, should be required to redeem the circulation of the Governmont? Because their location and facilities would make them the best agents the Government could use.

To establish sub-treasuries all over the country, to afford equal facilities, would require a large increase of Government offices and great expense, and would tend to centralise the power in the Government, and give the banks really no right to have any voice in deciding the necessity of an increase in the circulation.

Now, let us see what the prospects are of resuming specie payment under the present banking system. The National Bank circulation being redeemable in legal-tenders, it devolves upon the Government to provide the coin to redeem its circulation. Conceding that no financial system can be sound or safe, unless based upon that, whose value is unchaugeable, and which is recognized throughout the civilized world as the true standard of values, we cannot expect to reach that stability and prosperity so essential to the development of our resources, until we have placed our system of finance upon this standard. The question then arises how this object can be accomplished. I can see but two ways. The first is, for the Government to accumulate sufficient gold in the Treasury to justify the redemption of the circulation now out. This must result in a rapid advance in the price of gold, which is needed for duties, and in its attendant evil, inflation, and a sudden and disastrous reaction upon the resumption of specie payment. To save these inflated values, I doubt not a run would be made upon the Treasury, taking the time of the payment of the interest, as the most favorable moment, to such an extent as would deplete it of every dollar in less than a week's time.

The second way is to go on and contract the circulation to such a point as it can be readily and surely met by the gold that can be accumulated without seriously affecting the market. This course must inevitably result in such stringency in the money market, as will necessitate the enforcement of sales of merchandise and securities at any price, in order to realize to meet engagements; all will be sellers, and the inporter having no purchasers for his goods, must cease his importations and allow the goods now in bond to remain, and the Government, instead of obtaining gold from its custom duties to redeem its bills, will find it difficult to pay the interest upon its indebtedness. Already the cry is loud and earnest for more circulation, and any further considerable contraction must result in disaster and ruin. Under this state of affairs the burden of taxation will become doubly oppressive, and the people, seeing no prospect of relief, will be driven to repudiation as the only remedy left them.

The next question that presents itself is-Is it the present policy of the Government to redeem the legal tenders in specie at all! Such would not appear to be the intention, if the following extracts from the letter of the Secretary of the Treasury, dated October 7th, 1867, are to be taken as an indication. He states- "The United States notes were issued under the pressure of a great necessity, and are, by authority of Congress, being rapidly withdrawn from circulation. No more can be issued under existing laws, nor can I believe that any considerable number of the members of Congress would favor an additional issue for any purpose whatever, much less for the purpose of paying bonds in violation of the express understanding under which they were negotiated."

"The policy of contracting the circulation of United States notes by Congress, and being steadily pursued by the Secretary, should of itself, even if the honor of the nation were not involved in the question, satisfy holders that Five-Twenty bonds will not be called in and paid before maturity in a depreciated currency."

It is very evident, from the foregoing, that the policy is to retire all the legal-tenders, and leave to the National Banks the entire circulation; and should their present issue be found insufficient, as it will be, to transact the business they will be authorized to increase it, with still further profit to themselves.

What assurance have we that the banks will resume specie payment, when all of the legal-tenders are withdrawn from circulation, other thau the general supposition that the matter will regulate itself? It certainly will not be found in the result already exhibited. Some fifty millions have now been withdrawn, and instead of the premium on gold having been correspondingly reduced, it is some ten per cent. higher than it was before the contraction commenced. Under this policy, with the National Bank circulation increased to five hundred millions-the amount considered necessary to transact the business of the country by some of our best financiers-we may abandon all thought of resuming specie payment, and console ourselves with the flattering idea, that because this currency is secured by Government bonds it is "the best the world ever saw."

Shall the receipts of the Internal Revenue be used to retire the legaltenders, instead of reducing the national interest-bearing indebtedness! Shall the people be borne down with taxation to retire a circulation which the Government alone should furnish? Shall the old banking system be revived, to be periodically followed by distrust and suspension? Or, shall we have a system that will reduce the national indebtedness three hundred millions at once, lighten the burden of taxation, and give us a sound and stable currency, based on gold?—are the momentous questions here with presented.

This plan will accomplish the following results:

First.-It will cancel three hundred millions of the coin interest indebtedness.

Second. It will redeem, within the five years, three hundred millions of the legal tender notes in gold.

Third. It will virtually cancel four hundred millions of the floating indebtedness, by retaining that amount of the United States notes