Chapter I: Part 1

THE ATLANTIC MONTHLY,

A MAGAZINE OF LITERATURE, ART, AND POLITICS.

* * * * *

VOL. I.--FEBRUARY, 1858.--NO. IV.

* * * * *

THE GREAT FAILURE.

The _crucial_ fact, in this epoch of commercial catastrophes, is not the stoppage of Smith, Jones, and Robinson,--nor the suspension of specie payments by a greater or less number of banks,--but the paralysis of the trade of the civilized globe. We have had presented to us, within the last quarter, the remarkable, though by no means novel, spectacle of a sudden overthrow of business,--in the United States, in England, in France, and over the greater part of the Continent.

At a period of profound and almost universal peace,--when there had been no marked deficit in the productiveness of industry, when there had been no extraordinary dissipation of its results by waste and extravagance,--when no pestilence or famine or dark rumor of civil revolution had benumbed its energies,--when the needs for its enterprise were seemingly as active and stimulating as ever,--all its habitual functions are arrested, and shocks of disaster run along the ground from Chicago to Constantinople, toppling down innumerable well-built structures, like the shock of some gigantic earthquake.

Everybody is of course struck by these phenomena, and everybody has his own way of accounting for them; it will not, therefore, appear presumptuous in us to offer a word on the common theme. Let it be premised, however, that we do not undertake a scientific solution of the problem, but only a suggestion or two as to what the problem itself really is. In a difficult or complicated case, a great deal is often accomplished when the terms of it are clearly stated.

It is not enough, in considering the effects before us, to say that they are the results of a panic. No doubt there has been a panic, a contagious consternation, spreading itself over the commercial world, and strewing the earth with innumerable wrecks of fortune; but that accounts for nothing, and simply describes a symptom. What is the cause of the panic itself? These daring Yankees, who are in the habit of braving the wildest tempests on every sea, these sturdy English, who march into the mouths of devouring cannon without a throb, these gallant Frenchmen, who laugh as they scale the Malakoff in the midst of belching fires, are not the men to run like sheep before an imaginary terror. When a whole nation of such drop their arms and scatter panic-stricken, there must be something behind the panic; there must be something formidable in it, some real and present danger threatening a very positive evil, and not a mere sympathetic and groundless alarm.

Neither do we conceive it as sufficiently expressing or explaining the whole facts of the case, to say that the currency has been deranged. There has been unquestionably a great derangement of the currency; but this may have been an effect rather than a cause of the more general disturbance; or, again, it may have been only one cause out of many causes. In an article in the first number of this magazine, the financial fluctuations in this country are ascribed to the alternate inflation and collapse of our factitious paper-money. Adopting the prevalent theory, that the universal use of specie in the regulation of the international trade of the world determines for each nation the amount of its metallic treasure, it was there argued that any redundant local circulation of paper must raise the level of local prices above the legitimate specie over exports; which imports can be paid for only in specie,--the very basis of the inordinate local circulation. Of course, then, there is a rapid contraction in the issue of notes, and an inevitable and wide-spread rupture of the usual relations of trade. But although this view is true in principle, and particularly true in its application to the United States, where trade floats almost exclusively upon a paper ocean, it is yet an elementary and local view;--local, as not comprising the state of facts in England and France; and elementary, inasmuch as it omits all reference to the possibility of a great fluctuation of prices being produced by other means than an excess or deficiency of money.[A] In France, as we know, the currency is almost entirely metallic, while in England it is metallic so far as the lesser exchanges of commerce are concerned; there is an obvious impropriety, therefore, in extending to the financial difficulties of those nations a theory founded upon a peculiarity in the position of our own.

[Footnote A: A failure of one half the cotton or wheat crop, we suspect, would play a considerable part among "the prices," whatever the state of the note circulation.]

If, however, it be alleged that the disturbances there are only a reaction from the disturbances here, we must say that that point is not clear, and Brother Jonathan may be exaggerating his commercial importance. The ties of all the maritime nations are growing more and more intimate every year, and the trouble of one is getting to be more and more the trouble of the others in consequence; but as yet any unsettled balance of American trade, compared with the whole trade of those nations, is but as the drop in the bucket. John Bull, with a productive industry of five thousand millions of dollars a year, and Johnny Crapaud, with an industry only less, are not both to be thrown flat on their backs by the failure of a few millions of money remittances from Jonathan. The houses immediately engaged in the American trade will suffer, and others again immediately dependent upon them; but the disturbing shock, as it spreads through the widening circle of the national trade, will very soon be dissipated and lost in its immensity. That is, it will be lost, if trade there is itself sound, and not tottering under the same or similar conditions of weakness which produced the original default in this country; in which event, we submit, our troubles are to be considered as the mere accidental occasion of the more general downfall,--while the real cause is to be sought in the internal state of the foreign nations. Accordingly, let any one read the late exposures of the methods in which business is transacted among the Glasgow banks, the London discount-houses, and the speculators of the French Bourse, and he will see at a glance that we Americans have no right to assume and ought not to be charged with the entire responsibility of this stupendous syncope. Our bankruptcy has aggravated, as our restoration will relieve the general effects; but the vicious currency on this side the water, whatever domestic sins it may have to answer for, cannot properly be made the scapegoat for the offences of the other side of the water. The disasters abroad have occurred under conditions of currency differing in many respects from our own, and we believe that if there had been no troubles in America, there would still have been considerable troubles in England and France, as, indeed, the financial writers of both these countries long ago predicted from the local signs.

The same train of remark may be applied to those who impute the existing embarrassments to our want of a protective tariff; for, granting that to be an adequate explanation of our own difficulties, it is not therefore an adequate explanation of those in Europe. The external characteristics of the phenomena before us are everywhere pretty much the same, namely,--a prosperous trade gradually slackening, an increasing demand for money, depreciation and sacrifice of securities, numerous failures, disappearance of gold, panic, and the complete stagnation of every branch of labor; and it should seem that the cause or causes to be assigned for them ought also to be everywhere pretty much the same. At any rate, no local cause is in itself to be regarded as sufficient, unless it can be shown that such local cause has a universal operation. But who will undertake to contend that the absence of a protective system here is enough to prostrate both Great Britain and France,--the nations which the same theory supposes to have been chiefly benefited by such deficiency? The scheme of free trade is often denounced by its opponents as British free trade; but we respectfully suggest that if its operations lead to so serious a destruction of British interests as is now alleged, the phrase is at least a misnomer. No! as the characteristics of the crisis are common to the United States, England, and France, so the causes of that crisis are to be sought in something which is also common to the United States, England, and France.

Now the one thing common to all these nations, and to all commercial nations, is the universal use of Credit, in the transactions of business. We conceive, therefore, that the existing condition of things may be most correctly and comprehensively described as a suspension of credit, and the consequent pressure for payment of immense masses of outstanding debt. This, we say, is the central fact, common to all the nations; and the solution of it, as a problem, is to be sought in some vice or disturbing element common to the general system, and not in any local incident or cause.

Credit has gained so enormous an extension within the last two centuries, that it may almost be pronounced the distinctive feature of modern times. It existed, undoubtedly, in ancient days,--for its correlative, Debt, existed; and we know, that, among the Jews, Moses enacted a sponging law, which was to be carried into effect every fifty years; that Solon, among the Greeks, began his administration with the _Seisachtheia_, or relief-laws, designed to rescue the poor borrowers from their overbearing creditors; and that the usurers were a numerous class at Rome, where also the Patrician houses were immense debtor-prisons. But in ancient times, when the chief source of wealth (aside from conquest and confiscation by the State) was the labor of slaves, and the principal exchanges were effected either by direct barter or the coined metals, the system of credit could not have been very complicated or general. As for the lending of money on interest, it appears to have been looked at askance by most of the ancients; and the prejudice against it continued, under the fostering care of the Church, far down into the Middle Ages. With the emancipation of the towns, however, with the splendid development of the Italian republics, with the noble commercial triumphs of the cities of the Hansa, credit was recovered from the hands of the Jews, and began a career of rapid and beneficent expansion. It was in an especial manner promoted by the magnificent prospects unfolded to colonial and mining enterprise in the discovery of the New World, by the stimulus and the facilities afforded to industrial skill by the researches of natural science, and by the emancipation won for all the activities of the human mind through the free principles of the Reformation. Thus, by degrees, credit came to intervene in nearly every operation of commerce and of social exchange, from the small daily dealings of the mechanic at the shop, to the larger wholesale transactions of merchant with merchant, and to the prodigious expenditures and debts of imperial governments. Credit by note of hand, credit by book account, credit by mortgages and hypothecations, credit by bills of exchange, credit by certificates of stock, credit by bank-notes and post-notes, credit by exchequer and treasury drafts, credit, in short, in a thousand ways, enters into trade, filling up all its channels, turning all its wheels, freighting all its ships, coming down from the past, pervading the present, hovering over the future, reaching every nook and affecting every man and woman in the civilized world.

Such is the extent of credit; but let it be remarked in connection, that, in all these innumerable and multifarious forms of it, in all the stupendous interchanges of Mine and Thine, the ultimate reference is to one sole standard of value, which is the value of the precious metals. The civilized world has adopted these as the universal solvent of its vast masses of obligation. It is assumed that some standard is indispensable; it is asserted to be the imperative duty of governments, if they would not make their exactions of taxes arbitrary, unequal, and oppressive,--if they would render the dealings of individuals mutual and just,--if they would preserve the property and labor of their subjects from the merciless caprices of the powerful, and keep society from reverting to a more or less barbarous state,--to supply a fixed and equable money-measure; and the majority of the governments have selected gold and silver as the best. As seemingly less changeable in quantity and value than anything else, as imperishable, as portable, as divisible, as both convenient and safe, the precious metals challenge superiority over every other product; and accordingly every contract and every debt is resolvable into gold and silver. From this fact, the reader will see at once the prodigious significance of those materials in the economy of trade, and the prime necessity that they should be not only uniform in value, but so equally distributed that they may be easily attainable when needed. Every change in their value is a virtual change in the value of the vast variety of obligations which are measured and liquidated by them; and every apprehension of their scarcity or disappearance, by whatever cause excited, is an apprehension of embarrassment on the part of all those who have debts to pay or to receive.

But it happens that this standard is not an accurate standard. It does not _stand_, while other things alone move, but moves itself; its value is changeable,--fluctuating from time to time according to the relation of supply and demand, and from place to place according to the perturbations of the trade of the world. Moreover, its very preeminence of function--the universality and the durability of its worth--renders it peculiarly sensitive to accidental influences, or to influences outside of the usual workings of trade. A great war or revolution occurring anywhere, the loss by tempests or frosts of an important staple, such as wheat or cotton, the fall and reaction consequent upon some great speculative excitement, are all likely to produce enormous drains or sequestrations of this valuable material. When the revolt of 1848 broke out in Italy, every particle of specie disappeared as effectually as if it had been thrown into the Adriatic or the mouth of Vesuvius; when the corn crop failed in England in 1846, the Bank of England lost ten millions of dollars in gold in less than nine days, and the country five times that in about a month; and in our own late experiences, with three hundred millions of gold among the people, we have seen it so put away, that no charm or bait could allure it from its hiding-places.

Need we go any farther, then, than these simple truths, to lay our finger on the primal fact which underlies all financial embarrassments and panics? The mass of the transactions in commerce rests upon credit; the solvent of that credit is gold; and gold has not only a sliding scale of value, but is apt to disappear when most wanted. While business is moving on in the ordinary way, it is more than ample for every purpose; but the moment any event arises, such as a rapidly falling market, inducing hurried sales, or a drain of specie, disturbing the general confidence, everybody gets apprehensive, everybody calls upon everybody for payment, and everybody puts everybody off,--till a feeling of _sauve qui peut_ becomes universal.

If there were no currency anywhere but a metallic currency, this liability to sudden revulsions would still hang over trade, provided credit and paper tokens of credit continued to be the media of exchanges; and the instinctive or experimental perception of this truth, combined with other motives, is what has led men to their various attempts to provide a money substitute for gold and silver. Lycurgus, in Sparta, found it, as he supposed, in stamped leather; but modern wisdom has preferred paper. The degree of success attained by Lycurgus we do not know; but of the success of the moderns we do know, by some one hundred and fifty years of recurring disaster. There are some steeds that cannot be ridden; they are so fractious and intractable, that, put whom you will upon their back, he is thrown, and invent what snaffle or breaking-bit you may, they will not be held to an equable or moderate pace. And of this sort, judging by the past attempts, is Paper Money. All the ingenuity and efforts of the most skillful trainers of the Old World, and of the most cunning jockeys of the New, have been tasked in vain to devise an effective discipline and curb for this impatient colt. Paper Money either refuses to be ridden, and runs rampant away, or, if any one succeed in mounting him for a time, he performs a journey like that which Don Quixote took on the back of the famous Cavalino, or Winged Horse. In imagination he ascended to the enchanted regions,--but in reality he was only dragged through alternate gusts of fire and of cold winds, to find the horse himself, in the end, a mere depository of squibs and crackers.

Paper money has been issued, for the most part, on the one or the other of two conditions, namely: as irredeemable, when it has been made to rest on the vague obligation of some government to pay it some time or other in property; or as convertible into gold and silver on demand. But under both conditions it seems to have been impossible to preserve it from excess and consequent depreciation. Nothing would appear to be safer and sounder, on the face of it, than a money-obligation backed by all the responsibility and property of a government; and yet we do not recall a single instance in which an irredeemable government-money has been issued, where it did not sooner or later swamp the government beyond all hope of its redemption. No virtue of statesmanship is proof against the temptation of creating money at will. Even where there has been a nominal convertibility on demand of the bills of government banks, they have worked badly in practice. In 1637, for instance, the monarch of Sweden established the Bank of Stockholm; yet in a little while its issues amounted to forty-eight millions of roubles, and their depreciation to ninety-six per cent. In 1736, Denmark created the Bank of Copenhagen; but within nine years from its foundation it suspended redemptions altogether, and its notes were depreciated forty-six per cent. We need not refer to the extraordinary issues of French _assignats_, or of American continental money,--nor to the deluges of paper which have fallen upon Russia and Austria. During all these experiments, the sufferings of the people, according to the different historians, were absolutely appalling. One of these experiments of paper money, however, begun under the most promising auspices, and on a professed basis of convertibility, was yet so stupendous and awful in its effects, that it has taken its place as a Pharos in History, and is never to be forgotten. We refer, of course, to the banking prodigalities of the Regency of France, undertaken in connection with the scheme known as Law's Mississippi Bubble,--although the Bank and the Bubble were not essentially connected. We presume that our readers are acquainted with the incidents, because all the modern historians have described them, and because the more philosophical impute to them an active agency in the origination of that moral corruption and lack of political principle which hastened the advent of the great Revolution. Louis XIV. having left behind him, as the price of his glory, a debt of about a thousand millions of dollars, the French ministry, with a view to reduce it, ordered a re-coinage of the louis-d'or. An edict was promulgated, calling in the coin at sixteen livres, to be issued again at twenty; but Law, an acute and enterprising Scotchman, suggested that the end might be more happily accomplished by a project for a bank, which he carried in his pocket. He proposed to buy up the old coin at a higher rate than the mint allowed, and to pay for it in bank-notes. This project was so successful that the Regent took it into his own hands, and then began an issue of bills which literally intoxicated the whole of France. No scenes of stock-jobbing, of gambling, of frenzied speculation, of reckless excitement and licentiousness ever surpassed the scenes daily enacted in the Rue Quincampoix; and when the bubble burst, the distress was universal, heartrending, and frightful. With millions in their pockets, says a contemporary memoir, many did not know where to get a dinner; complaints and imprecations resounded on every side; some, utterly ruined, killed themselves in despair; and mysterious rumors of popular risings spread throughout Paris the terror of another expected St. Bartholomew.

In this case the phenomena were the more striking because they were gathered within a short compass of time, and took place among a people proverbial for the versatility and extravagance of their impressions. The French are an excitable race, who carry whatever they do or suffer to the last extreme of theatrical effect; and for that reason it might be supposed that the tremendous revulsions we have alluded to were owing in part to national temperament. But similar effects have been wrought, by similar causes, among the slower and cooler English, with whom commercial disturbances have been as numerous and as disastrous as among the French, only that they have been distributed over wider spaces of time, and controlled by the more sluggish and conservative habits of the nation. Some twenty years before Law made his approaches to the French Regent, another Scotchman, William Patterson, had got the ear of Macaulay's hero, William, and of his ministers, and laid the foundations of the great Bank of England. It was chartered in 1694, on advances made to the government; and gradually, under its auspices, the vast system of English banking, which gives tone to that of the world, grew up. Let us see with what results; they may be expressed in a few words: every ten or fifteen years, a terrific commercial overturn, with intermediate epochs of speculation, panic, and bankruptcy.

We cannot here go into a history of this bank, nor of the various causes of its reverses; but we select from a brief chronological table, in its own words, some of the principal events, which are also the events of British trade and finance.

1694. The Bank went into operation.

1696. Bank suspended specie payments. Panic and failures.

1707. Threatened invasion of the Pretender. Run upon the Bank,--panic. Government helped it through, by guarantying its bills at six per cent.

1714. The Pretender proclaimed in Scotland. Run upon the Bank,--panic.

1718-20. Time of the South-Sea Bubble. Reaction,--demand for money,--Bank of England nearly swept away,--trade suspended,--nation involved in suffering.

1744. Charles Edward sails for Scotland, and marches upon Derby. Panic. Run upon the Bank,--is obliged to pay in sixpences, and to block its doors, in order to gain time.

1772. Extensive failures and a monetary panic. The Bank maintains the convertibility of its notes for several years, at an annual expense of £850,000.

1793. War with France,--drain of gold,--Bank contracts,--panic,--failures throughout the country,--universal hoarding,--one hundred country banks stop,--notes as low as five pounds first issued,--general fall of prices.

1796. An Order in Council suspends specie payment by the Bank.

1799. Numerous failures,--chiefly on the Continent. The pressure in England relieved by an issue of Exchequer bills.

1807-9. Great speculations in flax, hemp, silk, wool, etc.

1810. Recoil of speculation,--extensive failures, and great demand for money.

1811. Parliament adopts a resolution declaring a one-pound note and a shilling legal tender for a guinea.

1814-16. Heavy losses and bankruptcies,--failure of two hundred and forty country banks,--the distress and suffering of the people compared to that in France after the bursting of the Mississippi Scheme.

1819. Law passed for the resumption of specie payments in 1823,--after a suspension of twenty-seven years.

1822. Great commercial depression throughout Europe,--agricultural distress,--famine in Ireland.

1824. Speculations in scrips and shares of foreign loans and new companies, to a fabulous amount.

1825. Recoil of the speculations,--run upon the banks,--seventy banks stop,--a drain of gold exhausts the bullion of the Bank.

1826. Depression of trade,--government advances Exchequer bills to the Bank.

1832. A run for gold,--bullion in the Bank again alarmingly reduced.

1834-7. Jackson vs. Biddle in America produces considerable derangements in England,--drain of gold,--great alternate contractions and expansions,--severe mercantile distress.

1844. Renewal of the Bank Charter, limiting its issues,--great speculations in railroad shares, to the amount of £500,000,000.

1845. Recoil of the speculations,--immense sacrifice of property.

1846. Drain of gold,--large importations of corn,--alarm.

1847. Drain of gold continues,--panic and universal mercantile depression,--Bank refuses discounts,--forced sales of all kinds of property,--the Bank Charter suspended.

1857. The experiences of 1847 repeated on a more injurious scale, with another suspension of the Bank Charter Act.

Now this record does not show a brilliant success in banking; it does not encourage the hopes of those who place great hopes in a national institution; for the Bank of England is the highest result of the financial sagacity and political wisdom of the first commercial nation of the globe. A recognized ally of the government,--at the very centre of the world's trade,--enjoying a large freedom of movement within its sphere,--conducted by the most eminent merchants of the metropolis, assisted by the advice of the most accomplished political economists,--sanctioned and amended, from time to time, by the greatest ministers, from Walpole to Peel,--it has had, from its position, its power, and the talent at its command, every opportunity for doing the best things that a bank could do; and yet behold this record of periodical impotence! Its periodical mischiefs we leave out of the account.

In the United States, we have suffered from similarly recurring attacks of financial epilepsy; we have tried every expedient, and we have failed in each one; we have had three national banks; we have had thousands of chartered banks, under an infinity of regulations and restrictions against excesses and frauds; and we have had, as the appropriate commentary, three tremendous cataclysms, in which the whole continent was submerged in commercial ruin, besides a dozen lesser epochs of trying vicissitude. The history of our trade has been that of an incessant round of inflations and collapses; and the amount of rascality and fraud perpetrated in connection with the banks, in order to defeat the restrictions upon them, has no parallel but in the sponging-houses. A Belgian philosopher, from the study of statistics, has deduced a certain order in disorder,--or a law of periodicity in the recurrence of murders, suicides, crimes, and illegitimate births; and it appears that a similar regularity of irregularity might be easily detected in our cyclic bank explosions.

With the sad experiences of other nations before us,--with the rocks of danger standing high out of the water, and covered all over with the fragments of former wrecks, we have yet persisted in following the old wretched way. What a humiliating confession! what a comment on the alleged practical discernment of this practical people! what a text for radicals, socialists, and all sorts of Utopian dreamers! If the mischiefs of these monetary aberrations were confined to a mere loss of wealth,[B] which is proverbial for its winged uncertainty, we might regard them as a seeming admonition of Providence against putting too much trust in riches; but they are to be considered as something infinitely worse than mere reverses of fortune: the disorders they generate shake the very foundations of morals; and while shattering the industry, they undermine the economy and frugality and rend the integrity of mankind. We doubt whether any of the great forms of evil incident to our imperfect civilization--the slave-trade, debauchery, pauperism--cause more individual anguish or more public detriment than these incessant revolutions in the value and tenure of property. Those afflict limited classes alone, but these every class; they relax and pervert the whole moral regimen of society; and if, as it is sometimes alleged, the present age is more profoundly steeped in materialism than any before,--if its enterprise is not simply more bold, but more reckless and prodigal,--if the monitions of conscience have lost their force in practical affairs, and the dictates of religion and honor alike their sanctity, it is because of the uncertain principle, the gambling spirit, the feverish eagerness, and the insane extravagance, which beset the ways of traffic. Living in a world in which days of golden and delusive dreams are rapidly succeeded by nights of monstrous nightmares and miseries, society loses its grasp upon the realities of life, and goes staggering blindly on towards a fatal degeneracy and dissolution.

[Footnote B: Yet this is not to be lightly estimated. Seaman, in his _Progress of Nations_ says the direct losses by paper money, within the last century and a half, have equalled $2,000,000,000.]

The question, then, is, whether this melancholy march of things should be allowed to proceed, or whether we should strive to do better. Our good sense, our moral sense, our progressive instincts, conspire with our interests in proclaiming that we ought to do better; but how shall we do better? "Why," reply the great Democratic doctors,--Mr. Buchanan, the President, and Mr. Benton, the Nestor of the people,--"suppress the issue of small bank-notes!" Well, that nostrum is not to be despised; there would be some advantages in such a measure; it would, to a certain extent, operate as a check upon the issues of the banks; it would enlarge the specie basis, by confining the note circulation to the larger dealers, and so exempt the poorer and laboring classes from the chances of bank failures and suspensions. But if these gentlemen suppose that the extrusion of small notes would be in any degree a remedy for overtrading, or moderate in any degree the disastrous fluctuations of which everybody complains, they have read the history of commerce only in the most superficial manner. Speculations, overtrading, panics, money convulsions, occur in countries where small notes are not tolerated, just as they do in countries where they are; and they occur in both without our being able to trace them always to the state of the currency. The truth is, indeed, that nearly all the great catastrophes of trade have occurred in times and places when and where there were no small notes. Every one has heard of the tulip-mania of Holland,--when the Dutchmen, nobles, farmers, mechanics, sailors, maid-servants, and even chimney-sweeps and old-clothes-women, dabbled in bulbs,--when immense fortunes were staked upon the growth of a root, and the whole nation went mad about it, although there was never a bank nor a paper florin yet in existence.[C] Every one has heard of the great South-Sea Bubble in England, in 1719, when the stock of a company chartered simply to trade in the South Seas rose in the course of a few weeks to the extraordinary height of _eight hundred and ninety per cent.,_ and filled all England with an epidemic frenzy of gambling, so that the recoil ruined thousands upon thousands of persons, who dragged down with them vast companies and institutions.[D] Yet there was not a banknote in England, at that time, for less than twenty pounds, or nearly a hundred dollars.

[Footnote C: Mackay's _History of Popular Delusions._]

[Footnote D: Doubleday's _Financial History of England_, p. 93.]

More recent revulsions are still more to the point. In 1825, in England, there were enormous speculations in joint-stock enterprises and foreign loans. Some five hundred and thirty-two new companies were formed, with a nominal capital of about $2,200,000,000, and Greek, Austrian, and South American loans were negotiated, to the extent of $275,000,000. Scarcely one of these companies or of these loans ever paid a dividend; and the consequence was a general destruction of credit and property, and a degree of distress which was compared to the terrible sufferings inflicted by the Mississippi and the South-Sea Bubbles. Yet there were no bank-notes in circulation in England under five pounds, or twenty-five dollars. Again, our readers may recall the monstrous overtrading in railroad shares in the years 1845-6. Projects involving the investment of £500,000,000 were set on foot in a very little while; the contagion of purchasing spread to all the provincial towns; the traditionally staid and sober Englishman got as mad as a March hare about them; Mr. Murdle reigned triumphant; and, in the end, the nation had to pay for its delirium with another season of panic, misery, and ruin. Yet during all this excitement there were not only no small notes in circulation, but, what is most remarkable, there was no unusual increase in the issues of the banks, of any kind.

Let us not hope too much, therefore, from the suppression of small notes, should that scheme be carried into effect; let us not delude ourselves with the expectation that it will prove a satisfactory remedy, in any sense, for the periodical disease of the currency; for its benefits, though probable, must be limited.[E] It is a remedy which merely plays round the extremities of the disorder, without invading the seat of it at all.

[Footnote E: It is very curious, that, while our leaders are in favor of exorcising small notes, many of the French and English Liberals are calling for an issue of them!]

We have endeavored, in the foregoing remarks, to point out (for our limits do not allow us to expound) two things: first, that in the universal modern use of credit as the medium of exchanges,--which credit refers to a standard in itself fluctuating,--there is a liability to certain critical derangements, when the machinery will be thrown out of gear, if we may so speak, or when credit will dissolve in a vain longing for cash; and, second, that in the paper-money substitutes which men have devised as a provision against the consequences of this liability, they have enormously aggravated, instead of counteracting or alleviating the danger. But if these views be correct, the questions to be determined by society are also two, namely: whether it be possible to get rid of these aggravations; and whether credit itself may not be so organized as to be self-sufficient and self-supporting, whatever the vagaries of the standard. The suppression of small notes might have a perceptible effect in lessening the aggravations of paper, but it would not touch the more fundamental point, as to a stable organization of credit. Yet it is in this direction, we are persuaded, that all reformatory efforts must turn. Credit is the new principle of trade,--the _nexus_ of modern society; but it has scarcely yet been properly considered. While it has been shamefully _exploited_, as the French say, it has never been scientifically constituted.

Neither will it be, under the influence of the old methods,--not until legislators and politicians give over the business of tampering with the currency,--till they give over the vain hope of "hedging the cuckoo," to use Locke's figure,--and the principle of FREEDOM be allowed to adjust this, as it has already adjusted equally important matters. Let the governments adhere to their task of supplying a pure standard of the precious metals, and of exacting it in the discharge of what is due to them, if they please; but let them leave to the good sense, the sagacity, and the self-interest of Commerce, under the guardianship of just and equal laws, the task of using and regulating its own tokens of credit. Our past experiments in the way of providing an artificial currency are flagrant and undeniable failures; but as it is still possible to deduce from them, as we believe, ample proof of the principle, that the security, the economy, and the regularity of the circulation have improved just in the degree in which the entire money business has been opened to the healthful influences of unobstructed trade,--so we infer that a still larger liberty would insure a still more wholesome action of the system. The currency is rightly named _the circulation_, and, like the great movements of blood in the human body, depends upon a free inspiration of the air.

Under a larger freedom, we should expect Credit to be organized on a basis of MUTUAL RESPONSIBILITY AND GUARANTY, which would afford a stable and beautiful support to the great systolic and disastolic movements of trade; that it would reduce all paper emissions to their legitimate character as mere mercantile tokens, and liberate humanity from the fearful debaucheries of a factitious money; and that Commerce, which has been compelled hitherto to sit in the markets of the world, like a courtesan at the gaming-table, with hot eye and panting chest and painted cheeks, would be regenerated and improved, until it should become, what it was meant to be, a beneficent goddess, pouring out to all the nations from her horns of plenty the grateful harvests of the earth.

THE BUSTS OF GOETHE AND SCHILLER.

This is GOETHE, with a forehead
Like the fabled front of Jove;
In its massive lines the tokens
More of majesty than love.

This is SCHILLER, in whose features,
With their passionate calm regard,
We behold the true ideal
Of the high heroic Bard,

Whom the inward world of feeling
And the outward world of sense
To the endless labor summon,
And the endless recompense.

These are they, sublime and silent,
From whose living lips have rung
Words to be remembered ever
In the noble German tongue:

Thoughts whose inspiration, kindling
Into loftiest speech or song,
Still through all the listening ages
Pours its torrent swift and strong.

As to-day in sculptured marble
Side by side the Poets stand,
So they stood in life's great struggle,
Side by side and hand to hand,

In the ancient German city,
Dowered with many a deathless name,
Where they dwelt and toiled together,
Sharing each the other's fame:

One till evening's lengthening shadows
Gently stilled his faltering lips,
But the other's sun at noonday
Shrouded in a swift eclipse.

There their names are household treasures,
And the simplest child you meet
Guides you where the house of Goethe
Fronts upon the quiet street;

And, hard by, the modest mansion
Where full many a heart has felt
Memories uncounted clustering
Round the words, "Here Schiller dwelt."

In the churchyard both are buried,
Straight beyond the narrow gate,
In the mausoleum sleeping
With Duke Charles in sculptured state.

For the Monarch loved the Poets,
Called them to him from afar,
Wooed them near his court to linger,
And the planets sought the star.

He, his larger gifts of fortune
With their larger fame to blend,
Living, counted it an honor
That they named him as their friend;

Dreading to be all-forgotten,
Still their greatness to divide,
Dying, prayed to have his Poets
Buried one on either side.

But this suited not the gold-laced
Ushers of the royal tomb,
Where the princely House of Weimar
Slumbered in majestic gloom.

So they ranged the coffins justly,
Each with fitting rank and stamp,
And with shows of court precedence
Mocked the grave's sepulchral damp.

Fitly now the clownish sexton
Narrow courtier-rules rebukes;
First he shows the grave of Goethe,
Schiller's next, and last--the Duke's.

Vainly 'midst these truthful shadows
Pride would daunt her painted wing;
Here the Monarch waits in silence,
And the Poet is the King!

THE LIBRARIAN'S STORY.

Librarians are a singular class of men,--or rather, a class of singular men. I choose the latter phrase, because I think that the singularities do not arise from the employment, but characterize the men who are most likely to gravitate toward it. A great philosopher, whom nobody knows, once stated the Problem of Humanity thus: "There are two kinds of people,--round people, and three-cornered people; and two kinds of holes,--round holes, and three-cornered holes. All mysterious providences, misfortunes, dispensations, evils, and wrong things generally, are attributable to this cause, namely, that round people get into three-cornered holes, and three-cornered people get into round holes." The librarian is not only a three-cornered person, but a many-cornered one,--a human polyhedron. And he is in his right place,--a many-cornered man in a many-cornered hole; especially if the hole be like that which I am thinking of,--an Historical Library.

The only bibliothecarian peculiarity in point at present is, a gift to root up, (country boys, speaking of pigs, say _rootle_; it is more onomatopoeian,) to rootle up the most obscure and useless pieces of information; not, like Mr. Nadgett, to work them into a chain of connected evidence for some actual purpose, but merely to know them, to possess a record of them, either as found in some printed or manuscript document, or as recorded by the librarian himself; and to keep the record pickled away in some place where it will be as little likely as possible to be found or read by anybody else.

So much concerning Librarians; a word now about Character.

Bad blood is hereditary. I don't mean scrofulous, but wicked blood. Vicious tendencies pass down in a family, appearing in the most various manifestations, until at last the evil of the race works its only possible remedy, by resulting in its extinction. There is, in some sense, an absolute unity amongst the successive generations of those of one blood; at least, so much so that our feeling of poetical justice is rather gratified than otherwise when the crimes of one are avenged, it may be a century after, upon the person of another of the name. This was the truth which underlay the vast gloomy fables of the ancient Fates, and the stories of the inevitable destruction of the great ancient houses of Greece. It is the same which the Indian feels when he revenges upon one of the white race the wrongs inflicted by another. Succession in time does not interfere with the stern promise of Jehovah to visit the sins of the fathers upon the children.--The reader will see presently how I have been led into this train of reflection.

My predecessor in office had a strong fancy for Numismatology. I have, too; nobody would more enjoy a vast collection of coins; but, oddly enough, I should prefer contemporary ones. He was simple and almost penurious in personal expenditure; yet, besides a great collection of books, he had, from his scanty income, got together, in the course of a long life, a large and very valuable collection of coins and medals, especially rich in gold. These coins lay--they do not now, for I assure you I keep them pretty carefully out of sight latterly--luxuriously imbedded in a neat case, among the great collection of antique objects, weapons, ornaments, furniture, clothing, etc., which usually accumulate within the precincts of an Historical Society's Library.

In the one under my charge there is an astonishing number of them; and naturally, where the long series of the ancient Indian wars, and later ones with civilized foes, form together so strong a strand in the thread of our history, there is a very great number proportionally of warlike weapons.

I like to read old books, both _ex officio_ and _ex naturâ_. But I need not enlarge upon this liking. For my part, however, they please me most when I am wholly alone, in that deep silence which by listening you can seem to hear, and in a place well furnished,--especially in such a place as the Historical Library is, with many full bookshelves, and a great multitude of ancient portraits, grim curiosities, and weapons of war.

It may be unfortunate to be sensitive, but I am. The few things that do excite me excite me easily, and by virtue of the trooping together and thronging on of the procession of my own imaginations, thus awakened, I am prone to reveries of the most various complexion.

In one of the secret repositories where during his latter years my venerable predecessor used with senile cunning to hide, indiscriminately, the coins of the Romans and of the Yankees, rags, bottles of rhubarb and magnesia, books, papers, and buttons, I had found, one night, an ancient MS. I had been all the evening reading a High-German Middle-Age volume, illustrated with wood-cuts, cut as with a hatchet, and being, as per title-page, _Julius der erste Römische Kayser, von seinen Kriegen_,--"Julius the first Roman Emperor, of his Wars."

Buried in the extraordinary adventures of the Kayser, not to be found in any Roman historian, and full of quaint and ludicrous jumbles of the ancient and the modern, I was suddenly stopped by finding that the last folios were missing.

After a moment of ineffectual vexation, I bethought me of several repositories in which I had seen portions of _débris_,--leaves, covers, brazen bosses, and other _membra disjecta_; in one of these I might very probably find the missing pages.

I fumbled through half a dozen; did not find what I sought, but did find the aforesaid MS. I was interested at once by the close but clear penmanship, and by the date, February 29, 1651/2; for this day, by its numeral, would be in leap-year, according to old style, but not according to new. How did they settle it? I asked; and what was to determine for lovelorn maidens, whether they might or might not use the privilege of the year?

I returned to my desk, and sat down to read; and, as I remember, the heavy bell of the First Church, close by, just then struck eleven, and I listened with pleasure to the long, mellow cadence of the reverberations after each deliberate and solid stroke.

Beginning at the beginning, I read until past midnight. The contents, after all, were not remarkable. It was a collection of copies of papers relating to various matters of accounts and law, all pertaining to a certain Beardsley family, of high and ancient fame in the Colony, and afterwards in the State. Somewhat beyond the middle, however, I lighted upon a document which attracted my more particular attention. It was a transcript from the State Records, and, as the date showed, from a very early volume of them, now missing from the office of the Secretary of State. It immediately occurred to me that this volume was strongly suspected to have been purloined by one Isaac Beardsley, an unscrupulous man, of some influence, who used, for amusement, to potter about in various antiquarian enterprises of no moment, but who had now been dead for some fifteen years. I then also recollected that he had an only child, a graceless gallows-bird of a son, who broke his father's heart, then wasted his substance in riotous living, and, after being long a disgrace and nuisance at home, had sunk out of sight amid the lowest strata of vice and crime in New York.

The document was a complaint to the "Generall Court" against "Goodman Joab Brice"--the complainant being designated by the honorable prefix of "Mr."--"for y't hee, the s'd Goodman Brice, had sayd in y'e hearing of" various persons mentioned, "and to the verry face of y'e s'd Mr. Isaac Beardslie, y't y'e s'd Mr. Beardslie did grind y'e faces of the poor, and had served him, the s'd Brice, worse than anie Turk w'd serve his slaves; and this with fearfull and blasphemous curses, and prayres that God would return evill upon the heads of this complaynant and his children after him," etc.

The transcript was long, alleging various similar offences. Its perusal recalled to my mind several hints and obscure allusions, and one or two brief histories of the proceedings in this case, which may be found in ancient books relating to the Colony. These proceedings between Beardsley and Brice were famous in their day, and were thought little creditable to the head of the Beardsley family. That he himself partook of the general opinion is shown by the circumstance that the matter was diligently hushed up in that day; and those most familiar with the ancient records of the State averred, that upon the pages of the missing volume was spread matter amply sufficient to account for its theft and destruction by the late Col. Isaac Beardsley.

The details of this ancient quarrel have perished out of remembrance. The chief substance of it was, however, a lawsuit which ended in the rich man's obtaining possession of the poor man's land. Brice, a yeoman of vindictive, obstinate, and fearless character, had insulted his opponent, who was a magistrate, had threatened his life, and otherwise so bore himself that his oppressor procured him to be whipped at the cart's tail, and to be held to give large sureties for the peace, with the alternative penalty of banishment. The bitter vehemence of Brice's curses was remarkable even among the dry phrases of the complaint; and tradition relates that his fearful imprecations even caused his dignified opponent, the magistrate, to turn pale and tremble.

I was sure, too, that among the stores of the Library I had seen some memorial of Brice as well as of Beardsley; but could not at the time call up any remembrance more definite than an impression that this memorial was something which had belonged to a descendant of Joab Brice, who had been in his youth a soldier in the old French War, and later a subaltern in the "State line" during the Revolution.

The Library room, in which I was reading, is a large, lofty hall, fitted with dark bookcases, heavy and huge as if for giants, singularly perfect in point of inconvenience and inaccessibility, and good only in that they bore a certain architectural proportion to the great height and expanse of the dark room. My desk was so placed that my back was toward the entrance, which was the balustraded opening, in the Library floor, of a wide staircase; and close at my side and before me were racks with muskets and spears, cases of curiosities, and other appurtenances of the room. It being now past the middle of the night, when sleep is heaviest, the stillness was perfect. My two shaded lamps made a small sphere of dusky yellow light, which I felt to be surrounded and, as it were, compressed by the thick darkness, which I could easily fancy to be something tangible and heavy, settling noiselessly down from beneath the lofty arches of the roof. The ancient penmanship and curious contents of the faded pages before me carried my thoughts backward into the old Colonial times, with their rigid social distinctions, lofty manners, and ill-concealed superstition; and I mused upon grim old magistrates, wizened witches, stately dames, rugged Indian-fighters, and all their strange doings and sayings in the ancient days, until, between drowsiness and imagining, I fell into a tangled labyrinth of romance, history, and reverie.

Then all at once I seemed half to awake, and fell into one of those fits of foolish nervous apprehension to which many even of the coolest and bravest are liable in deep solitude and darkness,--and if they, how much more an excitable person like myself! My heart throbbed for no reason, and, sitting with my head bowed down upon my hands, I fancied the most impossible dangers,--of men taking aim at me with the antique firearms out of the far dark corners, or casting heavy weights upon me through the skylight overhead. How easily, I fancied, could it happen. Did not the cellar-door open just now?

I half arose, almost frightened. I believe I should have taken an old rapier and a light and gone to look, but for very shame. And besides, there were two thick floors between me and the door, and that itself was set in the heavy wall between the cellar of this wing of the building and that under its main body; so that if it had been opened, I could not have heard it. Accordingly I resumed my posture and my painful intense musing. But now I could have almost sworn that I heard soft steps coming up the staircase, and whispers floating upon the air of the great solitary room:--_I did!_

But not soon enough. At the sound of a distinct, heavy footstep behind me, I sprang up and turned about, but only to find myself pinioned by one of the arms of a rough-looking, vicious-faced man, who pressed his other hand tightly over my mouth. A confederate was busy at the case of coins.

Although only a librarian, I have in my day been something of an athlete; much more than the person who had rushed into so sudden an intimacy reckoned upon. And I was pretty well strung up, too, with my nonsensical fancies.

Being face to face with me, therefore, my assailant had mastered my right arm, and was clasping my back with his left hand, while his right was over my month. So driving back my left elbow, I struck him a sharp and cruel blow in the right side, just above the hip-bone. It is a bad place to strike; I would not hit there, unless unfairly attacked. The sudden pain jerked a groan out of him, and surprised him into slackening his hold; so that I wrenched myself loose, and gave him a straight, heavy, right-hand hit in the nose, sending him reeling against the old chest that came over in the Mayflower, which saved him from a fall.