our religious, moral and intellectual improvement, and freely spend money for such purposes, not under the dictates of fashion, but when and where experience shows it may be spent with profitable results.

It will require ten times as much of moral courage to cut loose from the dominion of fashion as it did to secede from and fight the multitudinous North. In that contest the women were by far our best and most devoted soldiers. They were ready to give up to their country their husbands, children, friends and relatives, and their properties, but we fear they will not be willing to give up the Fashions.

ART. V.-PROPOSED BANKING SYSTEM FOR THE SOUTH.

UNCONSTITUTIONALITY AND VICES OF THE PRESENT NATIONAL BANKING SYSTEM.

THE author of the following article, which he sends us in manuscript and addresses to the Hon. Secretary of the Treasury, sends also an able pamphlet, in which he very fully presents and expounds a New Banking System, proposed for the adoption of the country, and more especially for the South. He will be happy to furnish the pamphlet to all who may desire to study the system.*

Though the experience of some of our States has been unfavorable to the property instead of specie basis (for example Louisiana), which is advocated, we have never been very clear that the measure has had a fair test, but rather in

*The principle of the system is, that the currency shall represent an invested dollar, instead of a specie dollar.

The currency will, therefore, be redeemable by an invested dollar, unless the bankers choose to redeem it with specie.

Theoretically the capital may be made up of any property whatever. But, in practice, it will doubtless be necessary, in order to secure public confidence in the currency, that the capital shall be property of a fixed and permanent nature, liable to few casualties and hazards, and yielding a constant, regular, and cer tain income, sufficient to make the PRODUCTIVE STOCK, hereafter mentioned, worth ordinarily par of specie in the market.

The best capital of all will probably be mortgages; and they may perhaps be the only capital, which it will ever be expedient to use.

This capital is to be put into joint stock, held by Trustees, and divided into shares, of one hundred dollars each, or any other sum that may be thought best.

This Stock may be called the PRODUCTIVE STOCK, and will be entitled to the dividends.

The dividends will consist of the interest on the inortgages, and the profits of the banking.

Another kind of Stock, which may be called Circulating Stock, will be created, precisely equal in amount to the PRODUCTIVE STOCK, and divided into shares of one dollar cach.

This Circulating Stock will be represented by certificates, scrip, or bills, of various denominations, like our present bank bills-that is to say, representing one, two, three, five, ten, or more shares, of one dollar each.

These certificates, scrip, or bills of the Circulating Stock will be issued for circulation as a currency, by discounting notes, &c., as our bank bills are now. This Circulating Stock will be entitled to no dividends; and its value will consist wholly in its title to be received, at its nominal value, in payment of debts due to the bank, and to be redeemed by the PRODUCTIVE STOCK unless the bankers chose to redeem it with specie, and the Circulating Stock will be in the nature of a lien upon the Productive Stock.

cline to think that, with proper guards and restrictions there is merit in it. This is a favorable opportunity to examine the whole subject, for in a little while the question of the currency will be the most absorbing and exciting one which ever addressed itself to the attention of any people.-EDITOR.

I

I take the liberty of sending you two pamphlets relative to “A. New System of Paper Currency," and of enquiring whether you see any good reason why the Government should be in any way unfriendly to the establishment of banks on this plan in the South. think that such banks, in great numbers, would speedily be established, and be of the greatest utility in reviving the industry and promoting the prosperity of the South, if it could but be understood that the United States Government would be in no way unfriendly to them.

Under this system, land—that is, mortgages upon land-is the best of all possible capital. Mortgaged at only half its ordinary value, the real estate of the country (according to its last valuation in 1860), would furnish five thousand. millions of loanable capital; five thousand millions of capital, which, as loanable capital, is now lying idle. All this could be loaned in the form of currency, the best possible form in which credit can be given. And this currency would all be perfectly solvent-specie in, or specie out of, the country; would all be substantially equal in value, dollar for dollar, with gold; and could all be redeemed on demand, according to its terms—that is, in the capital itself, if not redeemed with specie.

Such an amount of credit, furnished in the form of currency, would supercede the necessity for all other forms of credit; would introduce cash payments in all transactions between man and man; would give such an impulse, as has never been given, to manufacturing industry; would induce manufacturing laborers to migrate to this country in immense numbers; would speedily double, triple, or quadruple our machinery, and introduce it into the South and West; and would be, in short, all that is needed, in addition to our present facilities, for making our country the greatest manufacturing country in the world.

I think, for the reasons given in some of the chapters, that, as a matter of constitutional law, the system stands on the same footing with patents; and that (if the opinions of the courts on such subjects are sound) the faith of the United States is therefore pledged to protect the system, and the full and free enjoyment of it, not only against all taxation and interference by the State Government, but also against all taxation and interference by the General Government. If this legal position be sound, all questions are settled, and the faith of the United States is pledged, not only that the Government will not obstruct, nor in any way oppose, the adoption of the system by the people, but that it will, in all legal ways, protect them in the full and free enjoyment of it. And the people have no occasion to consult either Congress or the State Legislatures as to whether it shall be adopted; but may at once establish as many banks as they please.

But, independently of that consideration, why should the United

States Government be unfriendly to the system? I will attempt to anticipate your reasons, and answer them.

1. Perhaps you will say that the system would make too much currency. I answer that there is no such thing as having too much paper currency, provided every separate piece of paper represents a separate piece of property, which can be delivered on demand in redemption of the paper. All the trouble that has ever heretofore arisen from a paper currency, has resulted solely from the fact that the paper was either irredeemable on demand, or not redeemable in full, or not redeemable at all.

The commercial value of paper currency does not depend, as so many suppose, upon the nominal amount there is in the market, but upon the simple fact of its redeemability-that is, upon the certainty of its being redeemed, upon the time when it will be redeemed, and upon the commercial value of the property with which it will be redeemed. Paper that will certainly be redeemed on demand, with gold, has the same commercial value with the gold. Paper that will certainly be redeemed on demand with wheat, has the same commercial value with the wheat. Paper that will certainly be redeemed, on demand, with any other property, whose market value is known, has the same commercial value with such other property. And if the commercial value of such other property be as fixed as that of gold, and as well known as that of gold, the paper representing it has as much commercial value, and makes as good a currency, as paper that should represent gold. And the amount of such paper in the market has nothing to do with its value. A large amount has the same value, dollar for dollar, as a smaller amount; for each separate piece of paper represents a separate piece of property, one of which is as valuable as another. If it were possible that all the property in the world could be thus accurately represented, at its true and known market value, by paper that would certainly be redeemed, on demand, by a delivery of the property it represented, no harm could come of the amount of currency thus furnished; for no more of it could be kept in circulation than was wanted for legitimate purposes; and every species of property would stand in, and only in, its just and true relations to every other species of property. All property cannot be thus represented; but there is no harm in being as much of it thus represented as possibly can be, or as may be found convenient by those who choose to buy and sell, borrow and lend, property in that manner. No contracts ever made between man and man, are intrinsically more just and legitimate than those by which such paper is bought and sold, lent and borrowed; and Government has as much right to prohibit all contracts whatsoever between man and man, as it has to prohibit contracts in such paper.

Under my system, there is always a dollar in bank for every dollar in circulation; and the entire currency of the country can all be redeemed at ouce, if not in specie, then in the capital which the currency represents, which is of substantially the same market value

with specie, which will generally be preferred to specie, and which is promised in default of specie. So that the bankers' contracts can always be fulfilled to the letter.

When (as under my system, by means of mortgages, it may be) one half the real estate of the country can be cut up into parcels, and represented by a paper currency, and the commercial value of these parcels will be as fixed, and as well known, as the commercial value of gold, is it not stark folly and suicide for a nation to deny themselves the use of all this currency and credit, and rely instead upon a contemptible quantity of gold and silver, which is here to-day and gone to-morrow?

2. But perhaps you will say that so much paper currency would inflate prices. I answer that there is no such thing as an inflation of prices above their true standard, by a paper currency that is certainly solvent, and will certainly be redeemed on demand, according to its terms-whatever those terms may be. The paper then necessarily passes only at its true value-that is, at the value of the property that can be delivered in redemption of the paper.

All currency, whether coin or paper, is mere merchandise, like any other property. It is simply exchanged for other property, just as other property is exchanged for it. And the Government has no more right to prohibit such an exchange, or to interfere with the prices at which currency is bought and sold, than it has to prohibit the sale of any other property, or to interfere with the prices at which such other property is bought and sold. The prices which currency of all kinds will maintain in free and open market, are the true measures of its value relative to other commodities; and, what is the same thing, are the true measures of the value of all other commodities relative to the currency. Consequently there can never be such a thing as an inflation of prices, unless where there is some deception or ignorance as to the true character of the currency.

3. Perhaps you may say that the introduction of this system would tend to postpone specie payments. I answer, that the system, if established both North and South, instead of postponing specie payments would substantially restore them at once. This it would do for these reasons:-First, it would supersede, in a great measure, all demand for specie, by furnishing a currency that the people would generally prefer to specie. Secondly, it would always be redeemable on demand, according to its terms-that is, the bankers could always fulfill their promises to the letter. And when bankers fulfill their contracts to the letter-whatever that may be-specie payments are, to all practical purposes, restored. If, for example, all currency promised wheat on demand, and wheat could always be delivered on demand in redemption of the currency, specie payments would be, to all practical purposes, restored. A suspension of specie payments, by the banks, means simply a refusal to fulfill their contracts, whatever they may be. Under my system, a bank would never have any motive or occasion to refuse to fulfill its contracts. It always has the means to fulfill them. And it could gain nothing, and save nothing, by refusing to fulfill them.

Under my system, therefore, specie payments, instead of being postponed, would be, to all practical purposes, restored at once; and not only without any disturbance to credit, or depression of industry, but while furnishing the greatest amount of credit and currency, and stimulating industry to the highest degree.

4. Perhaps you will say that, under my system, specie would leave the country. I answer, first, that no harm would be done if it should; and, secondly, that no system would tend so much to bring specie into the country. It would bring specie into the country, because it would tend to develope, to the highest degree, the industry of the country; and the greater the industry of the country, the more we have to sell, and the less we have to buy; and consequently the greater the balances of specie brought into the country. The specie thus brought in, however, would neither go into circulation nor be held by the banks, except in very small amounts; inasmuch as the paper currency would generally be preferred for circulation, and the banks would have very little use for specie. The specie, therefore, would, for the most part, be held in the seaports as merchandise, or be consumed in the arts.

5. Perhaps you will say that the establishment of this system. would supersede the necessity for banks under the national system. Admitted. But what of that? Even if it be conceded-contrary to all judicial opinion on this subject that Congress have power to incorporate the national banks, still they have no constitutional power to force that system upon the country by prohibiting, or making war upon, all other systems which the people may prefer.

Another reason, and a practical instead of a legal one against any such attempt on the part of Congress, is, that the South is wholly unable to adopt the United States system, because she is too poor to purchase United States stocks for that purpose. This is a patent and notorious fact, and presents an insuperable obstacle to any general adoption of the system at the South. And the question, as a practical one, therefore, arises, whether you are going to forbid their having any banks at all, until, without the aid of banks, they shall become able to purchase United States stocks to be used as capital?

Under my system, land is the best of all possible capital; and the South has that in abundance; and it is the only suitable capital she has. If permitted to use that capital, without molestation from the United States, she can at once place herself on the high road to prosperity. If deprived of the use of this capital, her industry can be revived but slowly, very slowly compared with what it otherwise might be. Will the United States attempt to deny her rights to the enjoyment of this her legitimate and indispensable resource for promoting her prosperity? What motive have the United States to adopt such a course? Will the South be better enabled to pay taxes by having her industry crippled by the United States? Will the South love the Union any better for having her prosperity arbitrarily obstructed by the United States? Will peace and