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amounting to 24 millions, the average for the other years being only 5 millions. The reason for this excess appears in the amount of domestic produce exported that year, which was 150 millions, or at least 35 millions more than could have been anticipated from the natural rate of increase of our exports. This sudden enlargement of the exports was caused by the great amount of bread-stuffs, (68 millions, or more than double the average quantity,) shipped from our ports that year, to make up for the famine in Ireland and the dearth throughout Western Europe. This large amount of coin and bullion received made our currency redundant, and we perceive that an effort was made the next year to get rid of the superfluous money. But no action of the government, no combination of individuals, was requisite for this purpose; the matter regulated itself. England had sent away a considerable portion of her currency, and therefore the prices of her commodities fell; the United States had received what England had lost, and therefore prices in America rose. Thus it became profitable to purchase goods in England and sell them in the United States; and thus our imports in 1848 suddenly rose to 140 millions (an excess of 16 millions over the average of 1847 and 1849); and, to pay for these goods, we exported nearly 16 millions of coin and bullion, which restored the balance of the currency. A severe commercial crisis in England was the consequence of this drain of specie, in 1847, caused by the necessity of buying food, though the effect was probably somewhat aggravated by excessive investment in railways. But the mismanagement of the banks, or an excessive circulation of banknotes, was certainly not the cause of the evil, the act of Parliament passed three years before being an insuperable obstacle to any extension of the paper currency. On the contrary, Mr. Tooke rightly argues, that a moderate increase of the amount of bank-notes in circulation might have obviated the calamity in part, or altogether, by filling up the vacuum in the currency created by the exportation of specie.

When, in the course of international trade, one country becomes indebted to another, the question whether the deficiency shall be made up by remittances of money or of goods, is one that determines itself, on the same principles which usually cause one commodity to be preferred to another as an article

of export. The merchant will send the one which he thinks is less valuable at home, and more valuable abroad, than any other commodity. If coin and bullion answer this condition, - that is, if other commodities are dearer at home than abroad, then coin and bullion will be sent. But, as Mr. McCulloch remarks, "though the premium on foreign bills should increase, so as to equal the cost of exporting the precious metals, (for it cannot exceed this sum,) it does not by any means follow that they would therefore be exported. That depends entirely on the fact, whether bullion be, at the time, the cheapest exportable commodity; or, in other words, whether a remittance of bullion be the most advantageous way in which a debt may be discharged. If a London merchant owe £ 100 in Paris, he sets about finding out the cheapest method of paying it. On the supposition that the real exchange is two per cent below par, and that the expense of remitting bullion, including the profit of the bullion merchant, is also two per cent, it will be indifferent to him whether he pay £2 of premium for a bill of £ 100 payable in Paris, or incur an expense of £ 2 by remitting £100 worth of bullion directly to that city. If the prices of cloth in Paris and London be such, that it would require £ 103 to purchase and send as much cloth to Paris as would sell for £100, he would undoubtedly prefer buying a bill or exporting bullion. But if, by incurring an expense of £101, the debtor be able to send as much hardware to Paris as would sell for £ 100, he would as certainly prefer paying his debt by an exportation of hardware. By doing so, he saves one per cent more than if he bought a foreign bill or remitted bullion, and two per cent more than if he exported cloth. It follows, then, that the balance of payments might be a hundred millions against a country, without depriving it of a single ounce of bullion. No merchant would remit £ 100 worth of gold or silver from England to discharge a debt in Paris, if he could invest £98, £ 99, or any smaller sum, in any other species of merchandise which, exclusive of expenses, would sell in France for £100. Those who deal in the precious metals are, we may depend upon it, as much under the influence of self-interest, as those who deal in coffee or indigo. But who would attempt to discharge a foreign debt by exporting coffee which cost £100, if he could effect the same object

by sending abroad indigo which cost only £97? No person in his senses would export a hat to be sold for 20s., provided he could sell it at home for a guinea; nor would any person export an ounce of bullion, if its value were not less in the exporting than in the importing country, or if there were any other commodity whatever that might be exported with greater advantage."

Bills of exchange, or the transfer of debts, may take the place of money to an almost incalculable extent. The instances thus far adduced relate only to foreign bills of exchange, or the adjustment of our trade with other countries. But domestic bills of exchange are also drawn to vast amounts, to represent and balance the items in our account current with the other States and cities of this Union; they are not, indeed, always called by this name; they generally appear under the form and appellation of drafts and checks. But they all amount to the same thing; they are really bills of exchange, because they are written orders for the transfer or sale of debts. They are distinguished from paper currency, properly so called, or bankbills, by this single circumstance, that a proper bill of exchange, draft, or check must usually be indorsed by each party through whose hands it passes, and every person who indorses it incurs a modified responsibility for its payment; while bankbills, as we all know, pass from hand to hand without any indorsement.

And this leads us at once to an explanation of the true nature of a bank-bill; like a bill of exchange, it is simply evidence of a debt, which debt is transferred from hand to hand, or exchanged for merchandise. The bank which pays out one of its own bills, simply acknowledges that it is indebted for a specified amount to the person who receives it, or to any other person to whom he may transfer it; and it promises to pay this debt on demand in specie. If the politicians who, at various times, have given themselves so much trouble about the repression of the banks, and the establishment of an exclusively metallic currency, had known how little difference there is between bank-bills and the various forms of bills of exchange, the two really performing the same functions, they might have saved their labor. I hazard nothing by the assertion, that, if the circulation of bank-bills in this country should be entirely stopped

by law, the number and value of these other evidences of debt (less convenient, indeed, than bank-bills, because they require indorsement) would be so largely increased, as to prevent the necessity of importing a much larger amount of specie. Already, in England, where the circulation of bank-bills of a lower denomination than five pounds sterling, or twenty-five dollars, is prohibited, numerously indorsed bills of exchange have come to circulate to an immense amount as currency. They are drawn to as small an amount as ten pounds sterling, are used by the country farmers in making their purchases of merchandise, and often come into the hands of the person in London by whom they are finally payable, with no less than forty indorsements upon them. The average amount of them in circulation at any one time was calculated by Mr. Leatham, an eminent banker, to be over 132 millions sterling, say, 640 millions of dollars. Imagine the loss of interest, and expensiveness in other respects, of an attempt to replace this amount of what is virtually paper currency by silver and gold!

And it is a curious circumstance, that these domestic bills of exchange are finally paid off, or cancelled, without occasioning the transfer of more than an insignificant fraction of money. They are made payable by some one of the numerous bankinghouses in London, and when they approach maturity, they are paid into, or left to be collected by, some other banking-house. "But the convenience of business," says Mr. Mill, "has given birth to an arrangement which makes all the banking-houses of the city of London, for certain purposes, virtually one establishment. A banker does not send the checks and bills, which are paid into his banking-house, to the banks on which they are drawn, and demand money for them. There is a building called the Clearing-House, to which every city banker sends, each afternoon, all the checks and bills on other bankers which he has received during the day, and they are there exchanged for the checks on him which have come into the hands of other bankers, the balances only being paid in money. By this contrivance, all the business transactions of the city of London during that day, and a vast amount besides of country transactions, represented by bills which country bankers have drawn upon their London correspondents," amounting in the daily aggregate nearly to fifteen millions of dollars,

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are liquidated by payments of money not exceeding on the average one million." The process is so convenient, and saves the handling of so much money, that Clearing-Houses have recently been established in the cities of New York and Boston, where the various banks effect their settlements with each other by exchanging bank-bills as well as checks, and paying off only the balances in cash.

As the territory of the United States is very extensive, and different portions of it have their peculiar staple products, the dealings of our merchants in drafts or domestic bills of exchange are necessarily very heavy. The extent of the transactions in these bills must be proportioned to the number and value of the commodities which are interchanged. The South furnishes cotton, rice, sugar, and tobacco, for consumption at the North, and for export to foreign countries; and she needs in return the manufactured goods of the North, and the foreign commodities which are imported chiefly into the Northern ports. The West sends to the Atlantic States her surplus product of bread-stuffs, beef, pork, hemp, and lead, and also receives manufactured and foreign goods in exchange. It is easy to see, that this immense internal traffic takes place in great part without the intervention of money, whether in the form of coin or bank-bills. Drafts or domestic bills of exchange are here the great instruments of commerce, or the circulating medium that facilitates the interchange of commodities. The farmer in Illinois or Michigan forwards by railroad his wheat and Indian corn to a miller at Rochester or a merchant in New York, and draws upon him for the value of the consignment at current prices. This draft he transfers to his neighbor, a Western merchant, in payment for articles of household use and other commodities, with which he has been supplied throughout the year; and the merchant, when he goes to New York to purchase a fresh stock of foreign and manufactured goods, gives up this draft to pay for them. The whole series of transactions, representing all the complex interchanges of commodities between the East and the West, might be completed without the intervention of a bank-bill or a piece of coin in any part of the business, except perhaps to "make change," or settle a small fractional part of an account. The business of the Southern planter is managed nearly in the

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