THE sovereignty and independence of the United States of America being established, it becomes an object of the utmost importance to them to adopt, and steadily to pursue, such a system of national policy, as may most effectually promote the prosperity, strength and duration of that establishment. Nature has done her part for this rising empire:—The wisdom and virtue of its citizens must accomplish the rest.

THE objects which conduce to the well-being of a people are so numerous and extended, as to render the consideration of them all, a task too great and too com­plex for an individual. A rational scheme of civil polity, executed in a faithful administration of government, is, doubtless, one of the most momentous and essential of these objects: but even this comprehends a great variety of interesting concerns. We shall, therefore, confine our observations, in the course of this Essay, to some of those points which appear more peculiarly connected with the circumstances of this country, and our national happiness.

A CIVILIZED nation, without commerce, is a sole­cism in politics. It is in the rudest state of mankind [Page 2] only, that a people can exist, without any communica­tion with other societies, or commercial intercourse among themselves, every one supporting himself by his own labour. Indeed so absolute a state of nature can only be conceived, but has scarcely existed in reality. The wants, the fears, the weakness, nay the very nature of man, necessarily constitute him a social animal: And, in the very origin of society, their mutual necessities, with the various talents, means and opportunities of indivi­duals for supplying them, must have produced a recipro­city of services, and an occasional interchange with one another of that property, which each had acquired by his own exertions.

COMMERCE may then be considered as coeval with man himself, and barter as its first stage.

IT is obvious, however, that the exchange of one kind of commodity for another must have proved too imperfect a species of traffic to answer the purposes of so­ciety, after civilization had multiplied their wants, and extended the objects of them beyond their mere ne­cessities.

IN order, then, to remedy the inconvenience of barter, certain substances have been adopted, amongst the various nations of the earth, as the scale or standard for measuring the value of every species of property; thereby to ascer­tain the relative worth of every commodity, compared with others, and with this common standard.

THE substances, most universally employed for this purpose, are silver and gold, though the former is esteemed the standard. These metals possess an ^* intrinsic value, [Page 3] by reason of their extraordinary purity and scarceness;— and certain other qualities render them suitable materials for receiving such criteria, as that they may be readily distinguished, in the transactions of men, for that standard, whereby the relative worth of all commodities is ascer­tained. The distinguishing marks given, by the autho­rity and sanction of a State, to certain portions of metal, denominate them coin. These, which we call actual-money, are graduated (if we may use the expression) ac­cording to the proportion and quality of metal they con­tain, by an arbitrary scale, termed money of account; which, in every country respectively, ‘represents an invariable scale for measuring value.’

BUT it is to be observed, that gold and silver coin de­rives not its intrinsic value from performing the office ^† of money; but possesses it as a commodity. For, as ^‡ Mr. Anderson expresses it, ‘Money, considered in itself, is of no value.—But among civilized nations, who have found how convenient it is for facilitating the barter or exchange of one commodity for another, it has received an artificial value.—So that, although useless in itself, it has come to be accepted among all civilized nations, as a token proving that the person who is possessed of it had given something of real value in exchange for it; [Page 4] and is, on that account, accepted of by another in exchange for something that is of real utility and in­trinsic worth.’—In strictness, therefore, the em­ployment of gold and silver-coin, in alienation, is no more than bartering one commodity for another of equal value, or rather price. The intrinsic value of such coin, does, in fact, render it in some degree an imperfect me­dium of alienation; for, being itself a commodity, it is liable to rise and fall in value, like every other article of commerce:— And, accordingly, we find that the price of silver is continually varying in the London market; and the English East-India Company send silver to China, in order to purchase gold.

THUS money, formed of the precious metals, may be considered in a two-fold point of view—as a merchant­able commodity, and as a medium of alienation. In the former capacity, it adds to the riches of a country, merely in proportion to its intrinsic value: But, as mo­ney, it can no otherwise produce this effect, than paper or leather-money, or any other sign of property.

IF we recur to the original use of money,—as an instru­ment by the intervention of which alienation might be effected, and the necessity of barter superseded,—it must appear evident, that we judge very erroneously, when we suppose intrinsic value to be inseparably connected with it. At the same time it must be acknowledged, that species of money, which possesses intrinsic value, has one ad­vantage that does not appertain to symbolical money; namely, that being itself a merchantable commodity, it may be bartered, at a foreign market, for other commo­dities. This advantage, however, as shall be shewn in the sequel, is not more than equivalent to those that are deducible from a well founded symbolical money, which is capable of answering all the domestic and internal purposes of a circulating medium in a nation.

FROM what has been premised we may infer, that mo­ney, in its ^* proper signification, is not wealth, but the [Page 5] sign, token, or representative of it. The absolute riches of a country consist in the abundance of those productions of nature, that minister directly to the support, the con­veniency, and the enjoyment of mankind. Where na­ture has bestowed these gifts with a liberal hand, the na­tion, collectively, may justly be termed rich, though destitute of money: On the other hand, where these blessings appear to have been dealt out to a people in a more sparing manner, they are comparatively poor, not­withstanding their country may abound with gold and silver-mines. For if we consider the former country as totally unconnected with any other; it is evident that the wants of all its inhabitants may be supplied by the means of bartering; but if we place the other in the same un­connected state, it is equally plain, that their gold and silver can be of little use to them;—the real, inherent worth of those metals being very small, and the country deficient in those things which constitute true and sub­stantial riches.—In the one case, the necessity of bar­tering among themselves is attended with inconvenience. In the other, the scarcity or want of the necessary articles themselves, excludes, in a great degree, the possibility of barter and the use of money, and occasions proportion­able distress.

LET us now view each of these countries as opening a commercial intercourse with the other and with foreign nations.—The wealthier country, by exporting the superfluous quantity of its produce, would be enabled to procure in return, either gold and silver, or such other commodities as they might require to supply those arti­ficial wants, which refinement of manners may have created. Thus the wealthy State might increase its riches.

BUT the poorer country would be obliged to send abroad their gold and silver, to purchase a sufficiency of those articles which their more immediate necessities might require. Should the quantity of these metals, fur­nished by such a country, be only adequate for this pur­pose, its inhabitants would certainly continue poor; or, if the quantity should be so great as to introduce amongst [Page 6] them, from other countries, not only the necessities and conveniencies, but luxuries and the superfluities of life; the effect would be a prevalence of ignorance and ^* sloth, the parents of wretchedness.

HENCE we see that the real riches of a nation do not consist in money; but that they may subsist without it.

COMMERCE and money are so intimately connected, that, to form a just idea of either, we should consider both. The former, as we have already observed, origi­nated from the necessities of mankind; the latter was in­vented as an expedient, for conducting the operations of the other with the greater facility, by removing the dif­ficulties and inconveniencies of barter. Commerce, consist­ing in the continual exchange and mutual transfer of those things amongst men, which their respective wants, whe­ther natural or artificial, have rendered desirable; and the use of money being introduced, as the medium or in­strument by which this was to be effected; it follows, that these two objects should bear a due proportion to each other. The more extensive the alienation of pro­perty is in any country, the greater will be the quantity of money, caeteris paribus, requisite for carrying it on.

HENCE we may trace the fallacy of that opinion, maintained by some, that it is immaterial, whether the quantity of money in a nation be great or small, as the value of all the labour and commodities within it, taken together, must be equal to the whole sum of its money. —Were such a nation cut off from all communication with every other, there might be some truth in the posi­tion: [Page 7] But as money is a medium, not only of the inter­nal commerce of every nation, separately considered; but of their commercial intercourse, one with another; it is plain that the quantity of this universal medium in each country must not only bear a certain proportion to the alienation within that country, but the entire quantity therein must also be in a relative ratio to the quantities in all the other trading countries of the world between whom there is an intercourse, collectively, compared with the amount of the alienation in them all.

A COMMERCIAL intercourse between nations would have a tendency to give to each a quantity of this univer­sal medium, proportionate to its share in such negociations. But either the natural advantages, or those resulting from political institutions, which one country possesses above another, destroy this kind of equilibrium in the commerce of nations, and create that difference which constitutes one rich and another relatively poor: — The manner in which this effect may be produced, has been briefly pointed out.

AS the riches of a country do not absolutely depend on the quantity of money it possesses; but on the extent and productiveness of its lands, the number and industry of its inhabitants, and the plenty and intrinsic value of its natural produce—the abundance or scarcity of these denominate it really rich or poor. And as the ali­enation and interchanging of these real riches of a coun­try constitute its trade; the utility and indeed necessity of employing some substance which may represent these riches, as the medium of transfer, demonstrate likewise the necessity of ^* proportioning that medium to the de­gree of alienation, according to the great commercial scale of price and value.

NOW as, in the commerce of nations, certain natural and political causes, either separate or conjunct, destroy [Page 8] that equilibrium before spoken of; and make the ba­lance so preponderate on one side or the other, as that some enjoy the balance of trade in their favour, while others have it against them, the use of COIN, as an uni­versal medium, is evident—answering as an equivalent to make up those deficiencies that arise from a wrong ba­lance in the foreign commerce of countries.

THIS, indeed, is the chief preeminence which gold and silver possess, as a circulating medium of trade, over symbolical money. In many respects they are inferior to it. The immense quantities of these ^‡ metals which are continually procured from the bowels of the earth, and introduced into the dealings of men, under the mo­dification of coin, render them, in some degree, impro­per substances to be the^* invariable measure of value. They have suffered a progressive depreciation in the estimation of nations, in consequence of their great increase: Be­sides which, they are liable to perpetual fluctuation of price, owing to their being a commodity; and being, as such, in demand among trading nations, may be drawn away from that country where it was employed as an in­strument of facilitating its commerce.

IF we take a retrospective view of our subject, this inference may be deduced—that the principal use of coin, is the enabling a nation the more easily to pay an unfavorable balance on its foreign trade. This, how­ever, should it not proceed from any natural deficiencies on the losing side, a wise State will take care to rectify: if the contrary, such adverse trade should be entirely discontinued.

[Page 9]IT being evident, that a ^* symbolical money is capable of answering all the purposes of a circulating medium within a State; we shall proceed to examine, how far this country may be benefited by such a currency; and on what principles it had best be instituted, to advance the true interest of the whole community.

THAT excess of the real riches of any country which belong to its inhabitants, beyond what their own use and consumption may need, is as unprofitable to the proprie­tors, without the means of alienation; as treasure, in the possession of the miser, is useless to his neighbour: In both cases, it is the alienation of the property that con­tributes to its value. Thus, although the American [Page 10] States comprehend a great and fertile territory, capable of yielding an almost infinite variety of valuable produc­tions, and inhabited by a very large number of enter­prising, industrious people, who possess the products of their labor; yet, if destitute of a circulating medium which should represent these real riches, the country might with propriety be called poor. But how is this represen­tative value of the real riches of a nation to be obtained, by the people, in the first instance?

THIS question opens to us the nature and use of CREDIT. Money being the representative of real value, the possession of it denotes, that the owner had given some equivalent for it. Therefore, as the acquisition of money must necessarily be subsequent to the means of ac­quiring it, those means (which must have consisted of some of the constituents of real riches, equivalent to the money) must have been obtained by the aid of a credit. As coin, or real money, as it is sometimes stiled, is con­sidered as the representative of actual, coexistent value; so credit may be said to represent anticipated value;—and symbolical or paper-money may be termed the evidence or token of credit:—Hence this kind of currency is deno­minated paper-credit or bills of credit.—The obvious use of credit is to supply the place of actual money. It fur­nishes a mode of conducting the operations of alienation or commerce, without the immediate intervention of money or occasion of barter. But being used merely as a substitute for actual money, it should be regulated by the same scale: and this evinces the propriety of a State not issuing a greater sum in a paper-money (which is the evidence of credit) than is wanted to supply the deficiency of its actual money; so that the amount of its coin and paper-credit might form a sum sufficient for its aliena­tion. If, therefore, those things that constitute real riches, abound in a country where there is little coin, that country will need a large supply of paper-credit to represent that proportion of its riches which the dispro­portionate quantity of its coin could not effect, in or­der to enable it to carry on an alienation adequate to its riches.

AS too extensive a credit must needs operate in a manner similar to the circulation of too much money, the great end to be obtained, with respect to this point, is, to determine on the best possible standard for ascer­taining [Page 11] the requisite proportion. This may vary in dif­ferent countries, according to the nature of the com­merce and other circumstances peculiar to each. For this reason, we shall apply the principle to these States; to which our enquiries more immediately relate.

MONEY, and consequently credit, being instrumental to commerce, it should be subservient to its interest. The extensiveness and fertility of the lands in this country render ^† agriculture the main source of its wealth. But, as this fund can only be productive, in proportion to the degree of labor employed in drawing forth its riches; and as that labor must also be antecedent to even that share of its products which is necessary to afford the agent the means of exertion, and to subsist him in the in­termediate time; the anticipation required is produced, by the instrumentality of credit.

THE productions of the earth being essential to the existence of man, makes the possession of lands the most valuable species of property; and they are esteemed the best security for any credit given. The lands of this country may be considered as our great staple, and the culture of them as our principal ^* manufacture. In this point of view, they may be justly deemed the best standard for determining what amount of a circulating medium the exigencies of the State may demand, and its abilities support:—For the same reason, they are the fund on which that species of credit ought to be established, which [Page 12] applies in a manner peculiarly beneficial to the interest of this country, and suitable to its circumstances.

IT will be readily understood, that we here allude to that credit which is furnished by a State to the culti­vators (or, what is, in America, much the same, the proprietors) of landed estates; to enable them, by anti­cipating the products of several years labor, so to aug­ment industry and multiply the means of carrying it on, as to accelerate improvements; and thereby enrich both individuals and the State. Such a credit is that created by means of a State LOAN-OFFICE. This is an ^* in­stitution [Page 13] so admirably adapted to the circumstances of this country, so well calculated to relieve its necessities, founded on such sound principles of national policy, and the prosperous effects of which have been so fully experienced, that it is indeed much to be wondered, how the people of America remain so inattentive to the most important interest of their country, as not to have it established in every State in the Union! We are well aware of the prejudices that have been entertained against a paper-currency; and, indeed, the manner in which it was issued, during the late war, afforded too much grounds for such prejudices. But arguments drawn from the abuse of a thing, do not militate against the excellence of the thing itself or its use: And this obser­vation will strongly apply to the subject before us.

ACCORDING to the principles before laid down, our circulating medium ought to keep pace with the advance­ing improvement of the country: Yet we know that the balance of our trade with foreign nations is adverse; and, consequently, that the gold and silver-monies of the country must diminish in the same degree. Here, then, is the great and direct source of that distress and embarrassment, which pervade the United States, arising from the insufficiency of a medium of alienation. While the cause continues, it is in vain to look for a ces­sation of the effects; and it is greatly to be feared, that unless a timely stop be put to the evil, the country will be involved in a general calamity. The remedy is in our own power. Should we neglect to apply it, or suffer ourselves to be so far either influenced or deceived, by false representations and partial interests, as to sacri­fice the general good to private views, we would nei­ther deserve nor enjoy those means of national happiness that now lie within our reach.

[Page 14]LET us then (to use the expression of an ^§ anony­mous writer) coin our lands, and thereby obtain from those most valuable of all mines, a sufficient circulating medium of commerce. for this purpose let LOAN-OF­FICES be instituted in the several States, on principles similar to those whereon the loan-office of Pennsylvania was established for many years. The medium furnished by means of this institution, is founded on the basis of credit; and, as it is expressly calculated to promote, in the first instance, the extension of agriculture, that great staple manufacture of this country, which of course forms the greatest part of its commerce.—at least that branch which tends most to its interest,—it is the best medium we can employ to advance the national welfare. It is, besides the only species of money partaking of the nature of credit, that is not liable to abuse.

FOR, being established on that kind of it denominated ^* private credit, it cannot exceed, in quantity or no­minal value, the actual and real worth of the security which it represents. The demand for money must ever be proportionate to its uses; and thus the necessary quantity may be easily accommodated to the demand. Nor can there be any doubt of this being a proper standard of regulation with respect to a loan-office mo­ney; because, the uses originating from, and being ap­plicable to, funds of the most valuable and substantial nature, namely lands, the borrower would not be willing to pay interest for a greater sum than he could reasonably suppose might be employed to his advantage. Added to this, that the sum lent would not exceed one half the estimated value of such fund, pledged as a secu­rity for its repayment or redemption.

[Page 15]THE value of lands is usually computed at the pur­chase of a certain term of years; that is, being them­selves a fund, the profits accruing from its employment within a given portion of time, will determine the value of the stock producing those profits, compared with the profits arising from the use of money, the measure of that value, in the same country. So that, if the circu­lating medium of a country be duly proportioned to its commerce, and if that medium or money will yield an average profit of six per centum per annum, to those who make use of it, the value of lands in that country may be estimated at about sixteen years purchase: On the same principle the interest of money is regulated, by a comparison with the productive value of labor and lands. This suggests the use of a well-regulated credit; which, by operating as stock, augments the profit on the actual capital employed in conjunction with it.

HERE we trace the beneficial effect of the credit ob­tained by the agriculturist from a loan-office, in a sym­bolical money. The lands, in an improved country only, can be valued at any certain number of years pur­chase. But in this new country, the progressive im­provement of the lands from year to year, is continually increasing the capital of the landholder. And this effect,—this immense source of national wealth and fund of credit,—will not cease, until the cultivation of our lands shall have arrived at such a height and become so general, as that the annual profits of farming will not surpass the interest of money. The very low price which improvable lands bear in this country, is no criterion of their value; but arises solely from the insufficiency of the means necessary for acquiring and improving them; for an uncultivated soil is of as little use, as a diamond in the bosom of the mine.

As money derives its value from its uses, it is evident, that, when the quantity does not exceed those uses, its value will not be impaired. The difficulty, with respect to a symbolical money in general, is to ascertain the pro­ductiveness and to secure the certainty of the fund, which creates the uses. Taxes are a sufficient fund for support­ing the credit of a paper-money, provided due regard be had to these essential points. The credit of paper issued by Banks founded entirely on mercantile credit, in those com­mercial countries which enjoy a favorable balance of trade, [Page 16] may also be rendered sufficiently stable, by prudence and circumspection in the managers. But in both instances, neither can the productiveness of the fund be ascertained, nor its certainty be secured, by any real standard. The operations of a merely mercantile Bank are, in a peculiar manner, liable to extend credit beyond its proper bounds, in countries which carry on a disadvantageous foreign trade: because the interest of the proprietors will lead them to circulate a fictitious money, in their paper-cre­dit, to as large an amount as they may suppose consistent with their own safety; and this very credit adds to the means of accelerating that trade, already prejudicial to the nation. The notes of such a Bank are issued on mer­cantile credit. "This," says Sir James Steuart, "is esta­blished upon the confidence the lender has, that the bor­rower, from his integrity and knowledge in trade, may be able to replace the capital advanced, and the interest due during the advance, in terms of the agreement." It is this kind of credit that the same author stiles, ‘the most precarious of all.’

THE great temptations that lie in the way of Banks on mercantile credit, on the one hand, and of States on the other, to issue their paper on their respective funds of mere confidence, in too great quantities; by over-rating the productiveness of those anticipated funds on which that confidence is grounded (and which are, necessarily, subject to some uncertainty, from the nature of them)—those very circumstances tend to render the credit of such paper very delicate.

BUT that species of paper-money, that is issued on the security of lands, which are made an actual equivalent deposit for its redemption, from the moment of its going into circulation, is not liable to any objections on this score. The fund itself, that is, the land, is actually existing; and the credit, established on it, represents the value of this fund, and not of the anticipated profits to be derived from the employment of it. The more firmly to establish the credit of a loan-office money, no person can borrow from the State more than one half the estimated value of his land: And in order to disseminate the advantages of this credit the more extensively, and to enhance its usefulness, mo­derate sums only (not exceeding, perhaps, two hundred pounds) are loaned to individuals, let the value of their [Page 17] lands be what they may;—by which means, this insti­tutition is peculiarly adapted to benefit the new settlers and lesser proprietors of lands, a class of people who most stand in need of encouragement in this country.

THIS kind of money, being established on permanent and certain funds, is extremely well calculated not only for a circulating medium within the particular State which issues it, but also as a medium of trade between the several States; for, as Sir James Stuart observes, ‘it is the interest of every trading State to have a suf­ficient quantity of paper, well-secured, to circulate through it, so as to facilitate payments every where, and to cut off inland exchanges, which are a great clog upon trade, and are attended with the risque of receiving the paper of people, whose credit is but doubtful.’

IT is a trite objection to paper-money, that it ba­nishes gold and silver from the country where it ob­tains. This has been often invalidated. Dr. Frank­lin (in his remarks on the report, &c.) has shewn, that it is an unfavorable balance of trade that draws the gold and silver out of the country, and that the "necessity of substituting some medium in their stead has induced the making of paper-money which could not be drawn away." So far is the paper-money the cause of this ef­fect, that, by increasing alienation and the means of exciting industry, it has a direct tendency to increase the stock of coin ih the country. And, as the quantity of paper-money in a country will not suffer any dimi­nution of its value while it does not exceed its uses, this currency can have no effect in raising the price of labor and commodities, while kept within those bounds.

A LOAN-OFFICE money being employed in the im­provement of lands becomes realised in a species of pro­perty which, in these states, is productive of much greater emoluments, both to the public and to the pro­prietors, than can be derived from the use of small mo­nied capitals, in any manner of trade, honorable to an individual, or consistent with the common weal.

AT the same time that the cultivator of the soil is, by this means, enriching himself, and increasing the real wealth of his country in a direct point of view, other salutary consequences result from a loan-office credit. Its circulating paper, by filling up the chasm in the medium [Page 18] of alienation, occasioned by the scarcity of coin, encou­rages industry and genius, promotes arts and manufac­tures; enlivens commerce, gives the means of comfort­able subsistence to the poor, and enables all classes of people to contribute to the support of Government and establishment of public credit, by a regular and liberal payment of taxes. Indeed the revenue that might be obtained from the interest on a loan-office money, would, of itself, form a very considerable fund, applicable to public uses.

THE numerous and important advantages, accruing from this kind of institution, are by no means exaggerated. On the contrary, a little reflection will suggest, to any person acquainted with this country, many other instances wherein its operations must be extremely serviceable: But the nature of the institution need to be only under­stood to demonstrate its utility.—Neither is it a scheme founded on mere theoretical principles, as the experience of ^* Pennsylvania can testify: She, as well as some of her sister States, has heretofore felt the invigorating influence of this cheering political sun.—May it speedily arise to re-enlighten this western world; and, by dif­fusing its benign rays throughout our infant empire, quicken the feeds of industry, art, manufactures, and commerce!

IF we compare the nature and effects of this loan-office money with the paper circulated by a mercantile Bank, how great is the contrast!—We have shewn in what manner the circumstances of this country require an in­creasing currency; while, at the same time, the unfavor­able balance of its foreign trade is continually draining away its coin.^§ From thence we inferred the necessity of [Page 19] calling in the aid of credit, as a substitute for money, and plainly pointed out lands as the proper fund for sup­porting that credit.

WHEN we consider for what purposes a credit is use­ful and necessary, in this country, we must be convinced that that species of it which is furnished by a mercantile Bank, is so far from answering the end, that it has a direct tendency to defeat it. The use of credit being to supply the place of real funds, it is obvious that it can only prove beneficial to a nation, when those funds are employed in promoting and extending such branches of its commerce as tend to enrich it, by increasing its ex­ports and diminishing its imports. This is the effect produced by the paper-credit, created by Government, by means of a loan-office.

BUT a mercantile Bank cannot lend on any other se­curity than mere confidence, grounded on opinion only. The farmer, who is desirous of borrowing a little pe­cuniary capital towards enabling him to improve or cul­tivate his estate, cannot obtain a farthing from the Bank, on the security of his lands, be their value what they may: Whilst the merchant, whose property is of the most pre­carious and delusive nature, may readily procure a ficti­tious capital to facilitate his importation of foreign mer­chandise. Thus, the farmer being excluded from this credit, with which the importer is so easily accommo­dated, the balance of trade against the country will in­crease by the very means which ought to operate in its favor.

WHO, then, are to be benefited by this Bank?— We have seen that the farmer is not; neither are the people at large. The State might, indeed, be occasionally obliged and indulged with favors from the directors: But, we would ask, would it be consistent with the dig­nity, the interest, nay the safety of Government, to lay themselves under obligations to, and render themselves dependent on a private trading company?—Every in­dependent man will answer—No. The State has funds of credit of a much superior kind; and is not under the necessity of submitting to such an indignity. The only class of people who could derive any advantage from a mercantile Bank among us, would be those connected with the institution itself; except, perhaps, in some com­paratively few instances. The wrong balance of our [Page 20] trade, by increasing the demand for money, would raise the price above its value as a circulating medium and common standard. And, by this means, the stock­holders might draw an interest on their Bank property, far beyond its just level. We have already seen the Bank in Philadelphia making a dividend to the proprietors of its funds, of more than double the legal interest of money. It is not, therefore, to be wondered, that some of these proprietors, especially those most intimately con­nected with the institution, should be extremely anxious to support what is so very subservient to their private interests.

BUT let us turn our attention to the tendency of this Bank, in some other respects.—The farmer can bor­row nothing from thence.—When he applies to a mo­nied man for a loan from his private fortune, on the se­curity of his lands, he cannot succeed; because no per­son will lend his money even on landed security, at six per cent per annum, while he can invest it in a fund which will yield him twice that interest. What then must be the consequence? The farmer, finding himself un­able, with all his toil, to cultivate his lands to any advan­tage, without the assistance of some credit; being debar­red from the acquisition of it; and observing the superior emoluments derived from banking, without any labour; sells his lands, and becomes a Bank-stockholder. This inducement will have a general operation, and the same cause which leads the farmer to sell, produces a disincli­nation in the monied man to purchase, landed estates: Consequently, the value of lands must sink; and agricul­ture, the great support of our country, must decline.

NOT only the cultivation of lands is obstructed by these means, but also the improvement and extension of our ci­ties and towns. Many who possess unimproved town-lots would erect houses on them, if, by mortgaging their ground, they could obtain money for the purpose; but the Bank renders this impracticable. Even monied men, who own property of this kind, will not employ it in build­ing, when bank-stock will afford them greater profits than the rents of houses, on the same amount of fund. In this manner, the Bank has a direct tendency to keep house-rent high; and to prevent the employment of ma­sons, carpenters, smiths, and all that numerous and use­ful body of mechanics, who derive their subsistence, al­most [Page 21] wholly, from the construction of houses. The pro­prietors of houses in Philadelphia were formerly very well satisfied to receive the legal interest of their money in rents; but, while twelve per cent per annum can be ob­tained by banking, the landlord may exact double rent for his house. Yet were he to sell it, he would probably not procure more than the capital of the legal interest. So that the Bank may be justly considered as an auxiliary cause of our exorbitant rents; a circumstance so grievous to the tenants, so necessarily productive of the high price of labor among our artisans and mechanics, and so pre­judicial to the whole community.—In short, such a train of evils result from the high interest of money, alone, that its baneful effects may be traced every where, and every class of our citizens must ultimately experience them. A few monied men and private individuals derive, indeed, an immediate benefit from this source; but the cultivator of the soil, the industrious manufacture and mechanic, in fact the State itself, become inevitably sufferers.

It is easy to conceive, why persons, who have em­barked their funds in the Bank, are so averse to a cur­rency issued by Government. In proportion to the scarcity of money, will be the demand for credit; and while the Bank can monopolize this credit, it may also monopolize the emoluments accruing from it. Any competition with the proprietors of the Bank would lessen their profits; and, for that reason, will be opposed. This opposition to a State paper-money was exhibited in a striking manner by the friends and supporters of the Bank, when the Legislature were about issuing the bills of credit now in circulation; but, notwithstanding the fears that were suggested of its depreciation, the suffi­ciency of the funds appropriated for their redemption have fully supported their credit.

IF it be the interest of the State to issue a paper-cur­rency, which, we presume, is incontrovertible; and if the primary object of the Bank, namely its own immediate profit, be incompatible with the interest of the State, in that particular, is it not reasonable to suppose, that every species of influence which the Bank possesses, will be exerted against so advantageous and necessary a measure of Government?—Apprehensions of an undue exercise of influence from so powerful and uncontroul­able [Page 22] a combination of property in private hands cannot, therefore, be ill-grounded, in the infant state of our public credit. Such apprehensions have existed in old, trading nations, where the consequences could not prove so dangerous to the State.—When the British Parlia­ment extended the term, for which the Bank of England held its charter, only ten years beyond its ordinary dura­tion of twenty-one years, Mr. David Hartley sounded the alarm; and, in his letter of the 22d of June, 1781, to the Lord Mayor of London, on that occasion, (pub­lished in Almon's Remembrancer for that year) has pointed out the injurious tendency, with respect to Government, of the additional influence given to the Bank, by that measure.

IN the year 1721, an attempt was wade to institute a Bank in Ireland. Upon that occasion, the House of Commons, by a majority of 150 to 80, "resolved, that the erecting or establishing of a public Bank in that kingdom would be of the most dangerous and fatal con­sequences to his Majesty's service, and the trade and li­berties of the nation." Addressing the King on this subject, they say, "As this was a matter of universal and national concern, your dutiful Commons took the same into their most serious consideration, and not find­ing any solid or good foundation for establishing a pub­lic Bank, so as to be beneficial to the nation, or even consistent with the welfare or liberties of it, think them­selves obliged in duty to your Majesty, and justice to themselves and those whom they represent, to offer their humble opinion to your Majesty, that the establishing of any public Bank in this Kingdom, will be greatly prejudicial to your Majesty's service, and of most dan­gerous and pernicious consequence to the welfare and liberty of this nation. Your faithful Commons do therefore most humbly beseech your Majesty, out of your tender concern for the good of all your subjects, to deliver them from the apprehensions they lie under, of the POWER and INFLUENCE of a public Bank, if once erected, by giving such directions as your Majesty shall think proper, to prevent the establishment of the same in this Kingdom."

HENCE it is plain, that the Legislature of Pennsyl­vania have not been singular, in their dread of the con­sequences of a Bank.

[Page 23]UPON the whole, if we trace the ^* effects of a pu­blic Loan-office money, through its various operations, it will be found in every respect highly beneficial, and in no instance detrimental, to the State: Whereas, those of a great mercantile Bank, in the present circumstances of our commerce, are totally opposite.

COMMERCE is so intimately connected with money, that the importance of a well regulated commercial system is to obvious to need any comment. It is a subject highly interesting to this country, especially under its present circumstances, and claims the serious attention of every good citizen. Our internal prosperity,—our strength and respectability among nations,—depend so much on the right management of this great concern, that there is no duty more incumbent on those who have the administra­tion of our public affairs, than to watch over its operations with an eagle-eye.

WHEN the circulating medium bears a due proportion to the alienation, or, in other words, the commerce, of a nation, the course of exchange, may justly be deemed the criterion of the state of its foreign trade. If the balance be adverse, exchange will be high; and if it be favorable, bills will be low. For should the commodities imported into a country exceed in value those exported from it, in any given time, the demand for bills would raise their price above the par of exchange; and the exports surpas­sing the imports would produce a contrary effect. But if the excess of the latter were so far to overbalance the former, as to render the remittance of bills more unpro­fitable than that of gold and silver; coin and bullion would then be exported to pay the balance due to the foreign country.

[Page 24]THIS, as we have before observed, is the use of coin, and the cause of the superior worth attributed to it in the capacity of a money. The substance of which it is made being in universal estimation among mankind, it is a com­modity conveniently transportable from one country to another to make up those deficiencies in its foreign trade, which the country exporting it cannot otherwise supply. When, therefore, coin is in demand for this purpose, a premium will be offered for it; and its price will rise, like that of any other commodity in similar circumstances, according to the demand. Now, as the sum of a circu­lating medium, necessary for the purposes of alienation within a prosperous country, must be greatly beyond that of the coin any occasions can require for its negotiations with foreign nations; any cause which might contribute to ^† advance the price of coin, above the rate of the ge­neral currency of that country, (suppose a paper-money) ought to be considered as raising the price of the coin, in its quality of a commodity, and not as a depreciation of the currency, in its office of a money. Because, in such a case, the high interest or premium that coin would command, would occasion a diminution of the price of even ^* landed property, the truest riches of a people, and [Page 25] one of those species of property of which money is de­signed only to represent the value: Yet the intrinsic value of the lands would continue unaltered; nor could they, with any propriety, be said to have depreciated.

BUT this is merely a supposable case; as that favor­able balance which constitutes the commercial prosperity of a country, excludes the possibility of that compe­tition, which advances the price of coin above its value as a money.

THE foregoing considerations sufficiently shew, that the grand desideratum in the commerce of a nation, is to maintain a favorable balance in its foreign trade; which is evidenced by a general course of low ^* exchange.

THOSE measures, therefore, that tend to increase the exports and diminish the imports of a nation are the essential means of obtaining that end.

FOR this purpose, the internal commerce of the coun­try [Page 26] must be promoted, by increasing its real riches.— ^* Agriculture must be extended, population encouraged, the acquisition of raw materials facilitated, and domestic manufactures, especially of the natural productions of the country, established:— The commercial prosperity, and consequently the real independence, of the Ameri­can States, will be accelerated or retarded, according to the progress of these.

WE have already endeavoured to enforce the necessity of establishing a circulating medium, on the fund of our lands, as a primary step to advance the interest of the whole community, by putting in the hands of the landholder the means of improving his estate. But im­provements in agriculture will avail but little, unless a demand be kept up for the products of landed estates. The demand for the supply of foreign countries, de­pending on a combination of various circumstances, must prove extremely fluctuating. For this reason, the more it can be rendered independent of such extraneous causes, the more regular will be the demand. And, therefore, the nearer the number of tradesmen, mechanics, artists, and all that description of people who usually inhabit towns, approaches that of the agriculturists, by so much the less will the interest of the latter be affected by the precarious operations of foreign trade. Also, the fuller the population of the nation is,—provided a suffi­cient proportion of the inhabitants be employed in useful handicraft trades, mechanic arts, and as merchants in con­ducting the business of alienation,—the more beneficial will be the nature of its commerce, considered in a na­tional point of view. In such circumstances, the export-trade of the country will be enlarged, while its im­portations of foreign manufactures will be lessened in the same rates; and thus the interest of the ^§ merchant [Page 27] will be made to coincide with that of his country:— Otherwise, however patriotic principles a merchant may possess, he will find them assailed by his private interest. A few individuals in a nation may be actuated by such exalted sentiments of public virtue, as to sacrifice their own interests to the general welfare; but these instances must be rare; and professional men of every description are necessarily, as such, obliged to pursue their imme­diate advantage.

UNTIL the country becomes pretty fully populated, the price of labor will continue high; and, although this would be no disadvantage to a wealthy country, if cut off from foreign trade, yet it would be a considerable obstruction to the establishment of domestic manufac­tures; which, we have shewn, are ^§ essential to a flou­rishing state of agriculture.

IN order, therefore, to create a demand for domestic manufactures among us, the introduction of those foreign ones, which interfere with them, must be laid under cer­tain restrictions; and these must be continued, until the competition, occasioned by the disparity of prices in the foreign and domestic articles of the same kind, shall be destroyed, by a gradual reduction of the price of labor at home.—These restrictions may consist in duties on the [Page 28] imported ^* commodity, bounties on the domestic manu­facture, and, in some cases, both co-operating, with rela­tion to the same article.—Sir James Steuart has so well expressed our sentiments on this head, that we will con­vey them in his words. Treating of the means of insti­tuting manufactures in a State, he says—"The ruling principle which ought to direct a statesman is to encou­rage the manufacturing of every branch of natural pro­ductions, by extending the home consumption of them; by excluding all competition of strangers; by permit­ing the rise of profits, so far as to promote dexterity and emulation in invention and improvement; by relieving the industrious of their work, so often as demand for it falls short. And, until it can be exported to advantage, it may be exported with loss, at the expense of the public. To spare no expense in procuring the ablest masters in every branch of industry, nor any cost in making the first establishments; providing machines, and every other thing necessary or useful to make the undertaking succeed."

THE carrying trade of the United-States is also an ob­ject of great national importance. The country abounds with naval stores; and ship-building is, or may be, one of our most beneficial employments.

THIS species of manufacture is of such a magnitude as to demand the attention of Governments in a particular manner. The same principles on which those measures are founded, which have been mentioned as necessary to promote domestic manufactures, generally, may be ap­plied to the encouragement of this.—Sir Josiah Child (in his discourse on trade) declares himself of opinion, that, in relation to trade, shipping, profit and power, the [Page 29] ^§ English Navigation-Act is one of the best and most politic laws that ever was made in England; and without which, that country would not have had one half the number of shipping, or trade, nor have employed half the number of seamen, which it did at the time he wrote. Our policy undoubtedly dictates the propriety of imposing extraordinary duties on dutiable commodities impo [...] from foreign countries into these States, in vessels [...] abroad or owned by foreigners; especially on articles of mere luxury: Although some considerations may render particular exemptions and discriminations indispensable and proper. In ^* some instances, certain kinds of mer­chandise ought, perhaps, to be exonerated from all duties, whether imported in American or foreign bottoms: But in other cases, such exemption might properly be restricted to goods imported in American vessels only.

BUT a very obvious and important reflection arises here:—And that is, that every effort which can be made by individual States, for placing our foreign trade on an advantageous footing for this country, is liable to be frustrated, by other States counteracting them, or not coinciding in similar measures. The want of that uniformity, which is necessary to give efficiency and per­manency [Page 30] to the commercial system of a nation, will ren­der, in a great degree, ineffectual, all partial regulations for the advancement of our trade. A power must ne­cessarily be lodged somewhere, for adjusting the com­mercial, as well as the political, interests of the several States in the Union, to one general scale; and, according to the principles on which our foederal Constitution is framed, this power ought to be vested in the SUPREME HEAD OF THE UNION, in order to establish the com­merce of the United States on the solid basis of national system.

IN the mean time, the unsettled state of our foreign trade lays us under a double obligation assiduously to promote our ^† inland commerce and home-consumption. The United-States occupy a vast extent of fertile coun­try, lying in various climates, yielding the necessaries of life in the utmost abundance, and furnishing a great diversity of commodities, and raw materials for manu­facturing.

THE commercial intercourse carried on between the several States, by sea, should be restricted to American vessels; and the communication from one part of the country to another, inland, ought to be rendered as easy and convenient as possible, by improving the roads, opening canals, and removing all obstructions to the navigation of the rivers, where practicable,—in order to facilitate and promote the interior commerce of the United-States.

[Page 31]THE influence of example, manners and fashion, may also greatly contribute to our success, in the pur­suit of these great objects of national prosperity. Here the real patriot is enabled to testify his love to his coun­try; and this he may evidence in a variety of ways,— according to his talents, his opportunity, or his station.

WE have endeavoured, in the course of these ob­servations, to fix the public attention on some of those momentous concerns, on which the prosperity of this country so much depends. The circumscribed limits of an Essay would not suffer us, even had other circum­stances permitted, to enter into so full a discussion of the subject, as its importance merits. But the reasoning, so far as it goes, will, we apprehend, be fully satisfactory to every disinterested and unprejudiced reader.—