banks in Pennsylvania, and of three large banks in Massachusetts, and of all the banks in Rhode Island, amounted to $ 11,808,650, and the notes in circulation from these banks, at that time, was only $4,487,702, being a little more than onethird of the amount of the capital. This appears from statements made by the directors of those banks to the legislatures of those states respectively. In January of the present year, the capital of all the banks in Massachusetts was $ 11,575,000, and the notes in circulation amounted only to 4,117,118 dollars. If we suppose the bank capital of Massachusetts to be one-sixth of the whole banking capital of the United States, and that the other banks circulated notes in the same proportion to their capital as the banks of that state, the amount of all the notes now in circulation will be only 24,702,708 dollars. As the banks farther south have probably more notes in circulation, in proportion to their capital, than the banks in Massachusetts, the notes in circulation may exceed this amount by two or three millions*. § 4. The debate on this subject continued upwards of two weeks, the speakers on both sides taking a most extensive range. The plan of this work does not admit of our giving the debate at length, but we shall endeavour to give a correct summary of the arguments on both sides, on some of the most important topics canvassed on this occasion, arranging them, for the sake of perspicuity, under the different heads of-finance-cause of war and justice of its continuance-retaliation and allegiance-distinction between offensive and defensive war-and rights and duties of the opposition.

$5. Mr. Sheffey said, that it was necessary to consider not only whether there existed a capacity and disposition in the country to furnish the present loan, but whether this system of loans and expenditure could continue till the professed objects of the war were accomplished. If not, said he, this is surely the best moment to arrest our progress. To continue the effusion

* Bank notes form but a small part of the circulating medium. In the commercial cities of the United States it consists partly of specie and bank notes, but principally of bank credit. The former are seldom made use of but for small payments, large payments being almost always made by a transfer of bank credit from one person to another on the books of the bank, a transaction which is executed by means of what are called checks. Mr Pitkin correctly observes, that the principal banks in Massachusetts and Pennsylvania issue notes to the amount of little more than one-third of their capital. And yet those very banks, though they charge their customers only about 6 and two-fifths per cent. per ann., divide from eight to ten per cent. per annum on the whole amount of their capital, after paying all expences, which may be reckoned at one per cent. more. Mr. Pitkin calculates the bank capital of the United States at 60 millions of dollars. If this be correct, the circulating medium arising from banks alone (bank notes and bank credit) must amount to between eighty and a hundred millions. EDITOR,

of blood and the waste of money without hope, would be wanton

and cruel.

To elucidate this subject, Mr. Sheffey made an estimate of the number of our military force for the year ending the 30th of September, 1813, which he calculated to average 25,000 men. The disbursements on account of the military service for that period amounted to upwards of eighteen millions of dollars, and Mr. Sheffey contended, that the floating debt on that account would amount to more than five millions, which together would make upwards of twenty-three millions of dollars. Nothing is more fallacious, said he, than the idea that the expenditure is limited by the appropriation. The actual payments only are so limited. If there is an excess of expenditure, it constitutes a debt which is paid out of the next appropriation. To prevent the whole sum appropriated for the military service from being paid as demands may require, and thereby prematurely exhaust the means of payment, the treasury department has interposed a restriction, by which but one-twelfth part of the amount appropriated can be drawn monthly. Thus the appropriation for the last year being about eighteen millions, the treasurer as agent for the war department received a monthly credit of one million and a half: beyond this sum no payment could be made, whatever the demand might be. Should there have been any application within the month, after the sum set apart was exhausted, the claimant would be postponed, he would have to wait until the waters were again moved, and if he was not preceded by others, or thrown back in the scramble, he might be satisfied.

The deduction drawn from these premises was, that the expence of the army for the present year, would amount to upwards of fifty millions, instead of twenty-four and a half, as had been estimated by the secretary of the treasury, or else we should have but half the army, past experience having shown that the average expence did not fall much short of $1000 per

man.

Mr. Sheffey next entered into an examination of Mr. Eppes' statements of the national wealth, income, and circulating medium, the two former of which he was not disposed to question, but could not see how any result connected with the present question could follow. If we were deliberating on the propriety of imposing a tax on income, it would be very proper to enquire into the resources of individuals, without reference to any surplus, because it would constitute the basis of the tax, and regulate its product. But the present question can be influenced neither by the amount of capital nor income. As to the amount of the circulating medium, Mr. Sheffey said, from the

manner in which banks were created, any estimate predicated on the amount of bank capital would be altogether illusory.

But even supposing Mr. Eppes' estimate to be correct, continued Mr. Sheffey, his conclusion is totally irreconcileable with any idea I have on the subject. That the utmost wants of the country cannot require more than a given sum, and yet more than double that sum be actually employed, is beyond my comprehension. The circulating medium of a country is the representative of property, and can represent but such portion as periodically becomes the subject of exchange; and though it An excess of may fall short of that, it cannot go beyond it. circulating medium cannot long continue (if it ever can exist). If it consists in specie, it will find its way to a place of greater scarcity; if of paper, it will return to the place of its emission or depreciate.

In order to show that this country was not able to support the system of loans, of which that now required only constituted a part, Mr. Sheffey contended, that the loans in Great Britain consisted only of the surplus profits of the industrious occupations, and in the United States of their capital. That the profits of the British commercial and manufacturing capital were greater than the natural means to extend their employment. All the commerce, said he, which her relations with the rest of the world permits, can be carried on, and all the fabrics can be manufactured that can be vended, and a surplus of annual profit remains for the use of the government. But this was by no means the case in this country. The rude state of agriculture in many parts of our country, the slow progress of internal improvements, and the high rate of interest, all show that the money capital of the country is far from being redundant.

To those who are not content to look to the present moment only, continued Mr. Sheffey, but who deem it their duty to cast their eyes over the whole extent embraced by the financial or rather borrowing system, it will be an object of some importance, to know how long it can continue, admitting it practicable for the moment. It is a matter beyond all doubt, that every loan subtracts from the money capital of the country employed in the industrious occupations, and is not supplied by the profit arising from its use. Indeed it would be preposterous to talk of the profit of such capital, when the greater portion of it is thrown out of employment. Even admitting Mr. Eppes's positions, the whole disposable means will be exhausted in a very short period. Supposing even the whole commercial capital to be convertible to such purposes, a few more loans will bring gentlemen to the end of their means; what will be done

then? They themselves predict the consequences. They tell you that ruin to the public credit, and every possible calamity to the country, await the refusal to provide the means now asked. And surely those evils will not be mitigated when a heavy accumulation of the public debt has been effected.

In the course of his speech Mr. Sheffey also slightly noticed the evils which, he said, would arise from the stock falling into the hands of foreign capitalists, thus making the United States tributary to a foreign nation. The industry of the community will have to provide the revenue of persons not members of it, and which will be spent in another country. So long as it is inconsiderable, it will not be materially felt. But should the system of loans continue until the amount shall greatly increase, it will become a serious evil.

Mr. Hanson said, that the men now in power had not only endangered public credit, by making enormous loans without providing ways and means for their extinguishment, but deliberately violated the public faith, by pledging the eight million sinking fund (which had been appropriated for the payment of the old public debt), for the payment of the new loans and treasury notes. He quoted Gallatin, Hamilton, and other writers on finance, to show that it was an anomaly in political economy, a departure from the fundamental principles of public credit, to create a debt, without at the same time creating and pledging a fund for the punctual payment of the interest and ultimate reimbursement of the principal. To show that this had not been done, and that the present system of ways and means was a deception, and not even founded on the plan of finance which had been avowed, namely, to make the revenue equal to the expenses of the peace establishment, and the interest of the old and new debt, he entered into an examination of Mr. Eppes' exposition.

The acknowledged deficit, said he, admitted by the head of the treasury department, is $770,000, to which ought to be added $ 1,180,000, the balance in the treasury at the commencement of the current year, as it cannot be fairly said to form a part of the revenue. It cannot be considered a part of the income of the year 1814, because it has heretofore been appropriated, and must be wanted to satisfy unsettled claims, that have accrued the last year. So that a real deficit of nearly two millions exists, for which no funds are provided by law to make good. But Mr. Hanson contended that this was not the total deficit. That the estimate of revenue to arise from commerce and sales of public lands ought to be reduced at least one third. During a war, said he, which has caused the devastation and depopulation of the frontiers, it is evident that much cannot be

expected from the sales of land; and during an embargo, reinforced by an extensive and rigorous blockade, and during a rigid enforcement of the non-importation law, it is equally evident that but little revenue can be expected from commerce. The estimate of the customs and sales of land, then, being $6,600,000, one-third of this sum added to the acknowledged deficit and balance in the treasury, will make a total deficit of upwards of four millions of dollars. For this deficit no provision is made or prepared.

Mr. Hanson also enlarged on the difficulty which would attend the raising the loan at the present moment. The eastern states, said he, being free from blockade, have become the depot of most of the foreign articles imported into the United States, for the supply of the whole American continent. These articles, owing to the combined effects of the efforts of the public enemy and the embargo, cannot be paid for in the produce of the southern and middle states, and must be met by specie. This causes such a pressure from the east, on the banks of the middle and southern states, as will deprive them of the means, if they have the disposition, to fill the loan. The accumulation of capital in the state of Massachusetts alone, enables that state, by pressing New York, to reach the extreme southern end of the chain of banks. It cannot be concealed or denied, that a very general alarm is felt for the critical situation of the banks, produced by an accumulation of capital to the north in the manner mentioned. The consequence is, that the whole circulating medium of the country is in danger. Gentlemen seem not to be aware of the difficulties with which they are beset. I do not wish to ruffle their serenity, by exciting apprehensions; but they should be prepared to encounter troubles which they have hitherto been strangers to. They should be prepared for an explosion, the noise of which may not reach their ears in time for their retreat. The very foundations of the government tremble beneath it. The ground on which ministers stand is hourly washing from under their feet. Let them fail in their loan, and they are undone. They have no excuse for not providing the ways and means called for by the public exigencies but the fear of offending the people, and yet the popularity of the war is the favourite theme of its authors. A crisis has arrived in the finances of the government, which, unless promptly and vigorously met by efficient measures, will bring on certain ruin. The credit of the government, once destroyed, cannot be easily reinstated. It must be destroyed if this system is pursued.

Mr. Ingersoll said, that there was something very extraordinary to his mind in the financial horrors which were conjured