of parties took place. The ardent and aspiring political leaders participated largely in the universal tendency, and competed for the public favor by originating and maturing measures utterly inconsistent with their earlier opinions. A national bank was established. Magnificent schemes of internal improvements were projected a protective tariff was enacted. The Democratic administration of Mr. Monroe passed by an easy transition into the Federalism of that of Mr. Adams. A remnant of the old school of democracy raised an ineffectual protest; but their "constitutional scruples" excited derision, as an obsolete abstraction which was confined to Virginia, or was peculiar to a few antiquated politicians, like Mr. Macon-whose close personal friend and political ally Mr. Van Buren was. During this long season of general apostacy, he adhered to the original Democratic faith; and immediately upon his entrance into the Senate, arrayed himself with the small band who were then stigmatized as Radicals. His efforts to restore the ancient landmarks of the Democracy, and to revive and establish its primitive doctrine, called forth the grateful plaudits of Mr. Jefferson, the evening of whose days was so sadly clouded by the apprehension, that he had survived the principles and the cause to which his life had been devoted. These and similar events of his public career were his titles to that confidence and esteem of the Democracy, which conferred upon him the most splendid of political honors. They promised what was realized in his executive administration, of which you have spoken in such strong and just terms of commendation. But his entrance upon a wider sphere of action, in which he had to encounter great emergencies, and to assume vast responsibilities, enabled him to manifest the higher capacities and nobler attributes of the statesman, and to display a heroic moral courage which, while it has commanded the respect of his opponents, has won the enthusiastic attachment of the great party which supported him. Thinking that you have been misled by a want of sufficient familiarity with Mr. Van Buren's political career previously to his elevation to the Presidency, into a concession to the calumnies of his old opponents, unjust to his fame, as well as unpleasing to the feelings of not a few of your readers, I have ventured thus to address you with all the frankness of friendship, and of a full community of political sentiment. In doing so, I trust to the courtesy of the Democratic Review to give my criticism the same circulation already given to the Letter which has suggested it-a Letter in no other respects open to any exception from Your fellow-laborer in the cause of letters, THE CARRIER. MONTHLY FINANCIAL AND COMMERCIAL ARTICLE. THE months of January and February are those in which, probably, the least business is done of any period of 60 days throughout the year. It is at this season that, in ordinary years, the communications between the Atlantic States and the interior of the country are closed by reason of snow and cold; consequently, for the time, produce, the great liquidater of debts and promoter of trade, ceases to come forward. The Atlantic credits of the inland dealers no longer accumulate, and both the commercial and financial circles exhibit an appearance of deep repose, preparatory to the commencement of the spring campaign. The present year has, however, been marked by a continual excitement in monetary matters, arising from the constant depreciation of property, and the progress of public opinion throughout the South and West, in relation to the great questions of specie payments by the banks of those sections. It is now nearly five years since the banks of the United States all suspended specie payments. In one year thereafter, or nearly four years since, the banks of New York and New England resumed their payments, which they have ever since maintained. In the same period, the banks of the South have twice resumed, and as often again suspended. And now, at this moment, the local currencies are generally more depreciated, exhibiting a higher rate of inland exchanges than at any period during all that time. The following is a table, showing the rates at the time of the resumption of the New York banks, in May, 1838, at the time of the general resumption in February, 1839, of the resuspension in November, 1839, and at different times since the attempt at resumption in January, 1841, as follows: N. Y. resump- RATES OF DOMESTIC BILLS IN NEW YORK. General resump Boston,.... ..dis... .... -a. a fal. a 2. a 1. .1 a 2. .1 a 2. ...par.. •-a 41. a 2. a 2. Nov. 1839. April. Sept. Dec. ..par... а 1842. Feb. taj a 14....3 a 4...3 a 4....5 a 6.....7 a 8 -a 14....3 a 4....a 2.....4 a 4. .2 a 3 ..12 a 15....— a 41..3 a 3...6 a 6.9 a 12 -a 5..... a 4..3 a 3... 5 a 5.. .54 a 5 6 a 8.....13 a 2...I a 1... 1 a 1........1 a 1 .8 a 10....3 a 4....3 a 34... 2 a 3.....2 a 3 a 15....10 a 11.. 8a 8f...17 a 17..12 a 13 .9 a 10....5 a 6....4 a 6. 9a 9...6 a 7 a...15 a 16..10 a 10..15 a 16...14 a 143 8... .6 a 7....61 a 7.....11 a 11...9 a 10 a 16...9 a 10...8 a 9....13 a 14....15 a 16 This table presents pretty accurately the fluctuations that have taken place in the value of the local currencies, consequent upon the movement of the banks; as they found it necessary, in accordance with public opinion, to make some show of a desire to return to specie payments. The banks themselves have conceived it more profitable to remain suspended than to resume, as long as they could do so and preserve that conventional credit, which would enable them to keep up among the people the circulation of their irredeemable paper. This could be done, however, only by amusing the public with the prospect of resumption at some short specified period, on the arrival of which they again sought and found some excuse for postponing the event. Such a state of things, it is manifest, could not last for ever. If the banks did not resume, they must sink sooner or later under the discredit created by their own acts. This latter alternative is now rapidly taking place, as is evident in the greatly increased discount on southern points, exhibited in the above table, without any palpable increase in the issues of the local banks; although the contraction on the part of the institutions in the specie-paying districts, causes an increased disparity between the relative values of the currencies. The progress of events in the suspended dis tricts is best illustrated by that which has occurred in Philadelphia during the past two years. When the United States Bank failed, in the fall of 1839, great efforts were made to induce the New York banks to suspend also, but without success. Two parties were then formed in Philadelphia among the banks. Those which felt themselves strong and in a sound condition wished to return to specie payments as speedily as possible; while the United States Bank, the Girard, and others, feeling their inability to resume, at least for years, not only made their dispositions to that effect, but endeavored to prevent any consummation of that object by the other banks. In accordance with this policy, the United States Bank continued to expand, and by its overshadowing capital and still undoubted credit, easily controlled the direction of affairs in Philadelphia and at the South. The result of this policy was, that after the success of the now dominant party at the Presidential election in the fall of 1840, public opinion set strongly in favor of resumption, great hopes of a revival in the state of affairs having been promised by the politicians. The United States Bank found it impossible to resist this current, and at the same time so far preserve its credit, as to render its hopes of being restored to its national character successful. (This event would undoubtedly have taken place, had the concern been able to preserve its standing 60 days longer than it did.) It therefore became incumbent upon it to resume specie payments on the 1st of January, 1841. It was then discovered, however, that in consequence of its expansive policy, and of its having furnished the whole circulation of Philadelphia for over one year, the deposites of the other banks consisted mostly of its paper, and it was therefore indebted to them collectively over $5,000,000. This it confessed its inability to pay, and at the same time resume. Then it was that the other banks made a fatal error. They consented to give up their present claim upon the Bank for $5,000,000, and receive therefor post notes at 9 and 12 months. This was, of course, locking up so much of their active means, and all in vain. The resumption lasted but six weeks, and all again was insolvency and chaos. Even then the banks of Philadelphia continued to receive United States Bank notes, and they became saddled with an additional amount of $2,800,000. They were then obliged to discredit it altogether, and it went down in debt to them near $10,000,000. The bills of the Girard Bank, the next largest capital, then supplied the circulating medium, until she became so heavily in debt to the banks, that they were obliged to discredit her, and she followed the United States Bank. Her place was then supplied by the Bank of Pennsylvania, which struggled on until the approaching payment of the State interest on the 1st February, when, the indications being that if that interest, amounting to near $1,000,000, was paid, it must be in the bills of the Pennsylvania Bank, an operation that would, to the same extent, bring her in debt to the remaining banks; she was discredited in her turn, and the State of Pennsylvania failed in its dividends. Thus, three banks that had successively controlled the markets and supplied a circulating medium, broke down under the accumulating weight of debt, each leaving a large liability to the other banks, as follows: Debt of the United States Bank to other institutions,.. $7,500.000 1,011,300 745,000 $9,256,300 This result was brought about by the fact, that the sound banks, wishing to do a snug business in order to resume as speedily as possible, issued no notes. Having none of their own outstanding, they were, therefore, compelled to receive on deposite, and in payment of notes falling due to them, the notes of other institutions that constituted the circulating medium. Unable to obtain any settlement for VOL. X., No. XLV. — 39 these bills, they accumulated rapidly in their hands, until, unwilling to trust the issuing banks any longer, they refused to take them. This, of course, involved the stoppage of the banks uttering them. This has been the general operation of suspension throughout the South. The practical operation is gradually to change the assets of the banks which issue no bills, consisting of individuals' notes, into the bills of other banks; that is, to convert their claims upon good individuals into a claim upon a bad bank, consequently depreciating their assets and ruining their property. The remedy was to be found in legislative enactments, compelling resumption or a forfeiture by a specified day. In all the States this remedy has sought to be applied, and in nearly all of them has been defeated in the (if it may be so termed) aristocratic branch of the State governments; there is too much reason to fear, by the influence of bank corruption. In the following States resumption bills have been passed in the popular branch of the Legislature :Pennsylvania, Maryland, New Jersey, Michigan, Tennessee, Indiana, Ohio, Alabama. In Ohio and Michigan the resumption bills have been perfected, and in the others they have been defeated in the Senates. In the State of Ohio the 4th of March has been fixed upon for a return to specie payments, and in Michigan it is required of the institutions to resume immediately. The agitation of the subject has caused a diminution of the currency furnished by those banks which intend to resume, and an increased depreciation in that of those which do not intend it, and which therefore take no steps to prepare for it. The general operation has been, therefore, to increase the difficulty in the means of remittance North, and to induce the failure of a great number of commercial houses at the South and South-West, in the valley of the Mississippi particularly, to a degree that has caused the banks of New Orleans to be very cautious of purchasing the northern bills of the dealers. The reaction of this upon New York is causing great embarrassment among those dealers, and they are not few, who, in spite of all past experience, have sold at 4 to 6 months to the southern trade; and as the spring payments fall due, some trouble is apprehended. More particularly, as the banks of this city and other specie-paying districts begin to feel the pressure of the movements toward resumption, in the natural demand for specie caused by it. The foreign drain has but lately subsided, and should a resumption become general, that from the interior is likely to be more embarrassing. While the people of those sections continued to be satisfied with irredeemable paper for a circulating medium, the precious metals flowed toward New York; now that they demand specie for the same purpose, the current sets the other way. It is, therefore, of the highest importance, that while this process is going on, the imports of foreign goods should be kept at their lowest points, both to prevent a foreign drain of specie at the end of the year, when bills are exhausted, and to assist resumption, by diminishing the amount due the North from the suspended sections for those imported goods. The rates of sterling bills are now low as usual at this season of the year, when the supply is greatest and the demand least. The prices usually advance toward the close of the year, as the demand outruns the supply, until the deficiency is made good by the export of specie. The following is a table of present rates :— From this season of the year until mid-summer, there is generally an precious metals, consequent upon the low price of the exchanges. influx of the In average years, there is a balance of imports; in the year ending October, 1841, there was an excess of exports, as is seen in the following table of the movement of the precious metals, from official sources : IMPORTS AND EXPORTS OF THE PRECIOUS METALS IN THE UNITED STATES. From this condition of the financial affairs of the country, and its effect upon business, the imports of the year are likely to prove small, the influence of which upon the finances of the Federal government may lead to new difficulties, arising from its attempts to raise money in a restricted market. In our last number, we alluded to the disgraceful state of affairs, and the numerous protests under which government paper is lying, for want of means in the Treasury. The same state of things still exists. Government drafts upon the several deposite banks daily suffer protest, while the payments that are made to the government consist mostly of Treasury notes; which, being at a discount of per cent., afford some small saving to the government debtor in making them the medium of payment: at the same time the government creditors, in receiving them, have to submit to a loss. In the present state of the money market, the issue of Treasury notes is preferable to a direct loan; for the reason, that they relieve the market, where the latter would increase the pressure. Thus, the government creditors have claims upon it at the same time that their own obligations are maturing at the banks. On receiving Treasury notes they sell them in the market, and with the proceeds take up their obligations. The government debtor buys the notes in the market, and pays them into the Treasury, whereby no money is taken out of the market, although a chain of credits four or five times the amount of the notes issued has been cancelled. A direct loan to the same amount would have settled the same credits, but the government debtors would then have paid money into the Treasury, which would have been paid out in other directions, causing a pressure upon the market to the amount of the loan. In this view, Treasury notes are the best form in which to supply a temporary deficiency in the revenue. A permanent one can be supplied only by the common sense one of reducing expenditures, husbanding resources, and, if need be, increasing the means of revenue. To create a national debt in time of peace is not advisable, and in the present crisis of the national credit is not feasible. The government 6 per cent. stocks, authorized at the Extra Session, are at a discount in the market, and it is impossible for it now to borrow at a reasonable rate. As we anticipated in our last number, the State of Pennsylvania has been added to the list of States delinquent on their interest. Virtual repudiation is also extending itself throughout the Western States. The Legislature of Indiana adjourned on the 4th of February, after a session of eight weeks, in which they did nothing toward meeting the claims upon the State. On the contrary, they have formally adopted the report of the committee of Ways and Means, in which the inability of the State to pay its debt, as well as the supposed injustice of the debt, are set forth in strong language; also a declaration that, in the opinion of the committee, the inhabitants will never submit to be taxed for its payment, and recommending a reduction of taxes to 20 cts. on the $100 of valuation, which is estimated to yield $200,000, |