pestilences, the only resource for the commercial community? May not crises be prevented from approaching, or mitigated when they are come? The preceding description of the origin and action of crises suffices to show how childish is the supposition that such a pressure, whenever it has laid hold on the banking and commercial world, can be relieved by bits of paper called bank-notes. They are not property, and they create no property: they do not bring one shilling's worth of additional wealth to repair the losses which have generated the disorder. They cannot do one single thing else than transfer the ownership of property, the power of buying, from one man to another. That is the very thing which is wanted, I shall be told: bank-notes can pay debts: the tottering firm can be propped up, if it can obtain a supply of bank-notes: the frantic trader asks no better than to get bank-notes for his discounted bills, and will not the ruin be thus averted? Will not credit, the credit assigned to the bank-note by the merchant's creditor who takes it in discharge of his claim, be a Jupiter Saviour to the man who has had the happiness to procure it? And what has it cost the bank to grant the note, but the expense of the print and paper? True-quite true and if this was the whole of the matter, every panic would be cured with a free application of bank-note plaster. But is this the whole of the case? What shall we say of the critical question-when the merchant's creditor has received the bank-note, what does he do with it? Use it in the same way himself, the City and Chamber of Commerce reply: pay his debts and buy with it: what can he wish for more? He is paid with that which will buy any goods he chooses: who was ever dissatisfied with money? Exactly but are pieces of paper money? and if they are, is there no such thing as too much money?

Can a man, or a collection of men called a nation, never have more money than they know what to do with? If a man received a heap of sovereigns, and was obliged to keep them, would they be of the slightest use to him? Is it otherwise, can it be otherwise, with a whole people? If there never could be too much money, then a country could not be injured if it bought a thousand millions worth of gold; and Midas must have been well off, when everything he touched turned into the precious metal. Euclid would say of this conclusion, 'Which is absurd;' and he would bid us look out for the error in the premisses. That error consists in that there is a strictly limited use of money, as of every other article under the sun. The bank-notes of which we speak, the bank-notes which are to cure the crisis, would be in excess, because no additional use would have been created for them. They would flow back to the issuing bank in a couple of hours, which would find that it had lent not notes, but property, whether metallic or other. No bank has a sovereign to lend from notes, except out of the means which the public has given it in buying the notes: and if the public will not buy the notes, that is, will not demand back the money they promised to give, the banker cannot issue the notes, and no help can come from that quarter to borrowers. The tendency in the public in crises is, generally, to require fewer notes, not more; for there is less buying and selling throughout the country, and consequently less need to buy and keep notes.

There is no specific for a crisis, then, when once it has established itself. The wealth consumed can be replaced but slowly by accumulated savings; for the present, banks and traders, debtors and creditors, must fight their way to a general settlement and liquidation as best they

can.

Institutions which possess great available means, like the

Bank of England or other great banks, may employ them with more or less judgment and effect, no doubt; but these are only the rising and falling of the waves of the storm, not the dashing of the great wind itself.

But with respect to the future, the case is wholly different. Prevention, if difficult, is at any rate not impossible. A nation or money-market which never lends or consumes more than what has been piled up by savings, will never fall into the agony of a crisis. It cannot, no doubt, avert the operation of causes beyond its own control. It cannot, in springs similar to that of 1846, say to the elements-the cotton crop shall be a full one; the potato disease shall not appear; but it may catch the signs of the impending pressure. And it can say to railways--you shall not be made in excess. Much depends upon bankers. The peril is upon them when they least suspect it. In easy times, when discount is cheap, when the balances to be employed are enormous, when the accumulation of the public wealth places unbounded stores in their hands, at such times they find the demand for loans slack, and both the difficulty of finding employment for their means, and the smallness of the remuneration, impels them to competition. This is the hour of danger. They feel as if there would be always time to make themselves safe; and that is true; but competition ordinarily betrays them into supporting, if not problematical, at least speculative schemes; and thus they both commit themselves and encourage their borrowers to plunge more deeply into liabilities. The lessons of prudence are not overlooked with impunity. The necessity to make additional loans, in the hope of saving the first, now comes upon the indiscreet lender, and the road to the final catastrophe is paved. What, then, are bankers to do? Keep strong reserves of gold, say some.

Right

enough, when the weather looks dangerous; only let us understand what that means. The virtue does not lie in the gold; for this decisive reason, that if the bankers have lent on securities which are absolutely capable of being realised immediately, and without loss under all circumstances, there never will be, and there never has been, the smallest difficulty in their getting the amplest supplies of gold. But to keep a strong reserve, means to lend less, to curtail business, to do less banking, to convert the bank into a strong room, to make the banker the guardian of his customer's coin, and not a banker. This, I freely grant, may be a very desirable precaution at times; the curtailing of their business may be demanded by safety. If a foreign invasion were reckoned really possible, we should see banking reserves vastly augmented.

Let them further watch the movements of gold. This is a good rule, as I have explained in my lectures; but only as a guide for short movements. It must never be forgotten, that the influx and efflux of gold are effects, and not causes. The export may reveal to a banker trade movements which otherwise he might have been slow to discern; but in other respects, the movement of the metal is not worth much by itself alone. The causes, on the contrary, which shape its course outward or inward, are of the highest moment. They may indicate excessive investments abroad, or excessive purchases from foreigners. In both cases there is a balance of loss of wealth to England, whether that wealth goes away as gold or as goods. Of the two, it is far less injurious to the country that the export should be made in gold than in capital, if the store of gold is more than is required for daily use in business; for gold unused and lying in a cellar, however it may figure in an account of the state of a bank, is not capital. Superfluous

sovereigns are pure waste till they are exchanged for something which can serve some useful or agreeable end. Sovereigns have no other end, possess no other intention, than to transfer property from one man's possession to another's. They are wealth only as a tool performing the one work for which they were created.

The banking community, collectively, are the body which wields the greatest power over the creation or prevention of crises; for their will controls the employment of those uninvested funds which constitute the chief resources of the moneymarket. What rules, then, are to guide them in the discharge of such a mighty function? How are they to learn when it is expedient to expand the flowing sail, when to contract it? What studies must they pursue to qualify them for so arduous a task? Manifestly, they must study the laws of the wealth of nations. They ought to be political economists. The abundance or the scantiness of the resources which they command, depends directly on the national wealth, and the extent and the mode of application of capital. How many bankers are political economists? How many have grasped firmly the difference in the future aspect of the moneymarket, whether the national capital has been largely applied to works reproductive immediately or at a distant period; and, if they are aware of this distinction, how many have trained their minds to apply it to the management of their banking? How many, when the civil war in America broke out, bethought them of its bearing on the gigantic cotton trade of the South, and of its possible influence over English trade, English profits, and the English money-market? Some are indeed aware, that a bad harvest tends to raise the rate of discount; but when the corn has not been gathered in England's fields, and

England's people, like Jacob, send their gold to buy corn abroad, how many bankers are there who regard this outflow as a calamity to be repressed by heavier discount on merchants, and cold looks in their parlours? Their name is Legion. But which of them understands that, if loans must be more difficult and discount much harder under such circumstances, the fault is not in the exportation of gold, in the healthy exchange of food for metal, but in the causes which rendered these purchases of grain indispensable; in the tillage wasted in the fields; in the cost of the labour which brought the corn into ear; and in the climate which destroyed the crops, by which all this expended wealth would have been recovered? When bankers betake themselves to the study of political economy, they will think more of wealth and less of gold; they will watch the ebb and flow of the products of a nation's labour, and heed little the mere instruments by which they are transferred from hand to hand; they will make the application of that wealth get more than its amount; they will lay aside empirical rules of superficial observation, and be guided by the laws of reason and reflection. Lord Overstone, himself a banker, has recently told them that this country accumulated savings annually to the extent of 150 millions! That information-I say nothing of its correctness here— by itself alone will profit them little; but let each banker ask himself, pointedly and honestly, where these savings are to be found; in what form they exist; where he can put his finger upon them; what portion is available for him, and what not; and then he will have placed himself face to face with causes which tell mightily on the money-market; and he will learn the extent of his own capacity to estimate and apply them.

BONAMY PRICE.

WE

E have traced in successive books the mode in which Mr. Oliphant established himself on the throne of Reinsber, and the measures he adopted when his power was at its height, his authority undisputed, and his state at peace. Alas! that I have now to record the gradual decline of his influence, first with the people, then with his aristocracy, and to depict him, always great indeed, but great henceforth amid growing hostility, ceaseless war, and ultimate defeat-presenting a magnificent spectacle to gods and men of nobility in misfortune.

How the cloud arose between him and his people, it is hard to say; for at first, like that seen by Elijah from the top of Carmel, it was no bigger than a man's hand. Some chroniclers assert that all the disputes sprang from the disposition of the Reinsber people, who had many wrong notions about equality and independence, and who at last got tired of submitting to a selfappointed monarch, even though his kinging it was all for their good and at his own expense. Others again have said that it was Mr. Oliphant, who initiated an entire change of policy about eighteen months after his accession to the throne; that then, feeling himself firmly seated, he became perceptibly more imperious, taking less care to hide his power under the semblance of popularity; and that he unconsciously acted on some one of the following maxims.

First: Princes ought to make the art of war their sole study and occupation; for that is the only profession worthy of a prince.'

Secondly: That it is better for a prince to be feared than loved; 'for it depends on the inclinations of the subjects themselves whether they will love their prince or not; but the prince has it in his own power to make them fear him, and if he is wise' (which Mr. Oliphant was), 'he will rather rely on his own resources than on the caprice of others.'

And again: 'Fortune cannot more successfully elevate a new prince than by raising enemies and confederacies against him, thus stimulating his genius, exercising his courage, and affording him an opportunity of climbing to the highest degree of power. Many persons are therefore of opinion that it is advantageous for a prince to have enemies." Mr. Oliphant, therefore, according to some of my authorities, set himself to work,

with remarkable wisdom and the greatest success, to make every one his enemy.

But whatever the cause may be, it is certain that the remainder of his reign was passed in a state of civil war, gradually increasing on both sides in fierceness and malignity; and it is not difficult to discover the first outbreak of these

angry feelings. This, then, I proceed to describe, not sorry to escape from the quagmires of conjecture to the solid ground of facts.

October had come round again, and one fine afternoon Jabez had been enjoying a long walk on the hills with Mr. Truman, who usually got on well with the monarch of Reinsber by the simple expedient of letting him have everything his own way, and even at this price was

not sorry to purchase his valuable friendship.

'I cannot make it out, Mr. Truman, why this Society of ours for the Propagation of Virtue does not attract more members. It is very odd,' said Mr. Oliphant, as they struck into the turnpike road. 'Probably the Reinsber people do not like change.'

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'No doubt and another cause may be that, in spite of my entreaties, the few actual members will not wear their badges of red ribbon in public. Even the prize-holders themselves the very persons, sir, who have won the bronze medalseem too indolent to put it on. One would think they should be as proud of it as of a Victoria clasp, and what noble emulation they might inspire if they would only wear the thing instead of locking it up in a drawer for safety!'

'But you have several members already.'

'Yes, old women to whom we are kind at the Hall. Others say they will think of it. "Think of it," the sluggards! Ay, for months and for years they content themselves with thinking, while all the time Satan is not thinking but actingdragging the Reinsber people down every day faster and faster to perdition.'

'Remarkably fine field of potatoes there, Mr. Oliphant,' said Joseph, pointing over the wall: 'I had a famous crop this year myself. Do you know that corner of my garden'

'Potatoes, sir! How can you think of such things when so many immortal souls are in peril?'

'Well, but really now, Mr. Oliphant,' replied the other, his simplicity somewhat startled, 'potatoes are very good things-especially when they are new; you can't deny that ?'

'Of course they are good: everything that the Almighty has given to man is good-in its place; and

the place of the potato is the dinner-table. Let us keep it there, and not intrude it on higher subjects on the highest subjects which we can possibly discuss, the promotion of virtue and beneficence. You will excuse my vehemence, Mr. Truman, but I am deeply interested in this question; and I was about to ask your opinion on the best means of increasing our society.'

'I can hardly say, I'm sure. How would it be to give some really good prizes, or, talking of gardens, to let the members have a bit of land to work in at nights for themselves? There's nothing so steadying as a garden; I've worked in mine these twenty years-dear me, it looks like yesterday when I came here from St. John's! I don't care much about flowers, you know, but for prize-peas and broccoli-sprouts

"The notion would not be a bad one,' interrupted Jabez, if I could bring myself to pay men for being virtuous; but that I cannot and will not do. Besides I should be encouraging what I have observed to be one of the chief failings of the carles, their greed of money-the greatest curse, surely, that can be fall any one.'

Mr. Oliphant stopped for his companion's reply, and was gratified to observe that he seemed to be at last reflecting on the matter, for his eyes were fixed either on distance or vacancy. Joseph, however, had caught sight of a figure near the beck and was about to exclaim, 'I declare, there's Jim Stewart been out to-day he can't have caught anything, surely, when he fortunately remembered the unpleasant results of his late excursion into the potato-field, and checked himself in time.

:

'Certainly, certainly,' he replied, turning towards Jabez with much less excitement in his face.

'No, Mr. Truman; I begin to think I must take other methods