that in almost every instance in which unconnected parties have, under the idea of large profits, thrust themselves and their money into that business, they have pretty speedily retired, leaving their money behind them. In early life we were acquainted with a gentleman who at fortyfive retired from the wine-trade, having realized a fortune of thirty thousand pounds. He unfortunately visited Manchester, and on the Exchange there he could not cast his eyes on any side without their lighting on men who had been themselves operatives, or at most were only removed from that class by one generation, who were still in the vigour of mercantile life, and who were reputed to be worth eighty, one hundred, two hundred thousand pounds. He determined to be a manufacturer. He built a mill in the most approved form, and filled it with new machinery. In twelve years the mill stood for want of cotton; the broker and the banker were inexorable. Like Jeames de la Pluche, our friend was the 'soul of honour:' the relics of 30,000l. paid to his creditors fourteen shillings in the pound; and he finished his life in a country town as commission agent to a London wine-house. This is no solitary instance. We bring it forward to exemplify our statement that the manufacturing districts have been covered with their existing enormous amount of fixed capital-mills, warehouses, houses, shops, water and gas works, with a hundred etceteras-mainly by accumulations within the trade to which they administer."

"The accumulations of the purely mercantile and trading class have not merged so immediately in brick, mortar, iron, and timber, as those of the manufacturing class. A large portion of them has no doubt gone to create the British mercantile marine; another portion has been expended, at home, in the colonies, and in foreign countries, in creating establishments destined to increase the facilities of British commerce; but a portion has at all times floated on the surface of the money market, recurring to its owners from time to time by the maturity of the temporary investment, or easily revocable by its realization.

"Another class remains, exceedingly varied in its composition, but having this common quality-that they have been rendered by their occupations and habits an unbargaining class. In every pecuniary transaction they feel the suspicion which inexperience renders natural and reasonable. This class includes all professional men, civil, military, and ecclesiastical; all who depend on fixed salaries; those generally whose incomes are realized; trustees; and all those timid and very provident persons who are the modern representatives of the hoarders of a more ignorant and less secure state of society. This class is in the aggregate a vast accumulator. Every quarter-day presents a vast sum seeking interest without trouble and without risk. To have the Bank of England, with its unbounded and mysterious wealth, as a paymaster; to find the private bankers debited in the pass-book at the end of every

half-year 'To Divd, on £3630 Con. £;' to be able to invest through a broker for a small charge, his power of imposition being confined within very narrow limits by quotations in every newspaper;-these circumstances satisfy so many feelings, and obviate so many inconveniences, that our investors are reconciled to 3 per cent., and often, for a time at least, to less; for the banks of deposit in England and Scotland, which allow a low rate of interest, are mainly supported by this quiescent class. They are, in fact, merely its agents to bring this mass of money into the general market. Every monetary crisis confirms the propensities, justifies the wisdom, and recruits the numbers of those who, in their investments, make security and ease the first, and profit the second, consideration. Regular, though slow, when others fail, they flourish; they burst on the market with no gluts, but they keep up a constant pressure on the value of money; the silent plodding operation of compound interest is always there.”

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"Since the peace in 1815 money crises in this country have nearly conformed to a decennial recurrence. The grand exception of 1839 is manifestly referable to a failure of food. The years 1825, 35, and 45, with those immediately following each, have been marked by the same broad features-a glut of money, a wild speculation, scarcity, remorse, and suffering; and the nation starts again on confirmed principles of prudence and caution. One-pound notes have been suppressed; banks having more than six partners legalized; the Bank Charter has been tinkered more than once; banks of issue have been regulated and restrained. Time after time we have been assured that speculation and panics would cease, because the exciting causes of the former and the pabulum of the latter had been put down by Act of Parliament. But the course of 1825, recurring in 1835, repeated in 1845, and probably to be repeated again in 1855, holds on its way totally regardless of the quackery which, smothered in returns and statistics, has wholly passed by the simple principles by which mainly it is governed.

"Let us endeavour to trace this course, commencing with the period of prudence and caution to which a panic has brought the country. The engagements of the hot fit have, with whatever pain, been liquidated, compromised, or otherwise closed. From the walks of mercantile and manufacturing industry, two classes have disappeared-those who went too fast, and those who went too slow-those who without the requisite power and depth aspired to lead, and those who from old habits and connections were unable to follow-those who flashed into the front, and those who dwindled into the rear. Every one who has seen a large field of horses start in the same race will have observed that those which dash off at a pace which the main body cannot maintain, speedily join in the rear those whose natural rate will not bring them into an average place. The steady, deep, persevering runners carry on the race.

As one

effect of the crisis just passed, stocks of everything, except the raw produce of the earth in its first shape, are light. Perhaps, nationally, this is its worst effect. Pecuniary difficulties can only be overcome by producing more, whereas the tendency of a crisis is to make the nation produce less. In the mercantile and manufacturing classes the rate of accumulation has been retarded, or, more probably, accumulation has been altogether suspended. But the earth goes on producing. We have heard of many factories which have ceased to produce calico because the hire of money was eight per cent. per annum. We seldom hear of a field which has ceased to produce wheat for the same reason. Cattle and sheep procreate and rear their young, heedless of the dismay which reigns in Capel Court and Threadneedle Street. Here, then, the foundation is laid; and where peace prevails, and property and person are secure, men will produce, and trade, and accumulate. But, passing by the state of the mercantile and manufacturing classes in this early stage of revival, let us see how it fares with the quiet class of accumulators. We see several things which will accelerate their rate of accumulation-nothing occurs to us which will retard it. Indeed, we are inclined to think that with this class accumulation goes on fastest in times of pecuniary pressure, and slowest in times of abundance. In the first place, when great abundance reigns, large sums always lie idle, as far as the first hand is concerned, yielding him nothing. He, somewhat spurning three per cent., has not yet acquired sufficient hardihood to venture on a novel, or more hazardous, or more troublesome security, and leaves his money in the Bank of England, or at his private banker's, by whom a portion of it is cautiously employed at the existing low rate. But five, and still more eight, per cent. calls all these sums into use. From time to time moneys come in which were lent at a low, and go out again at an enhanced, rate of interest. This is a complicated subject. When employment is curtailed, of course accumulation by the working classes must be curtailed also. We are inclined, however, to think that the case of the manufacturing and that of the saving classes generally was pretty accurately summed up the other day by a Manchester gentleman who belongs to both (being a great cotton-spinner, and employing also a large sum of money in temporary investments), who, in answer to the remark that cotton-spinning was bad, said 'Yes; but lending money on railway shares is good.' "On the whole, we think no one will be disposed to deny that this saving class does accumulate during and after panic at a very rapid rate; and that their accumulations do press and must press on the rate of interest. The first assault is usually made on Consols; they are beset on every side, and must rise in price. Consols contain within themselves no principle of expansion, and though Chancellors of the Exchequer have done as much to expand them as could reasonably be expected after thirty years of peace, by dint of twenty millions for the Negroes, and eight for the Irish, and two or three at different times for Whig defi

ciencies; still Consols are a fixed quantity. When a sale of them takes place, as much comes out as goes in, and the pressure on the rate of interest is not relieved. Then there is the money of the irresolute, who cannot forget that Consols have been at par and below 80 within a short period, and will not touch them. Their money falls, for the time, into the hands of the dealers, and its first effect is to stimulate trade. 'Mr. A.,' says the discount-broker, 'you were naming, a short time back, some longdated bills. The state of the market did not permit our touching them at that time, but we should be happy to see you now.' And so Mr. A., getting his long bills discounted at a rate which, when tested by the prices current, appears likely to leave a profit, enters into some adventure which he would otherwise have let alone. But even to this there is a natural limit. Draw and discount as you will, you can but effect the exchange of all the goods which exist and recent events in corn and cotton have shown us how nearly consumption treads on production. Meanwhile, the exaggerated prudence produced by the last crisis has lasted six or seven years. Accumulation has gone on; the earth has yielded its average produce; manufacturing and mercantile industry have provided for their own extension. There is no use in continuing to knock at the door of the discount-houses, or of Consols, Exchequer-bills, or mortgages. You may, indeed, drive up the price till you have little more than the honour of possessing the security; but, invest as much as you will in these securities, there is no less unemployed money, there is no more interest to be paid. If more interest must be paid, more money must be employed in some way which will yield it. Willing or unwilling, directly or indirectly, you must-we should say speculate, if it had not pleased Chancellors of the Exchequer to make that word disreputable. We will say, as less offensive, that you must enterprise. You must drain morasses, or subdue wilds, or embank estuaries, or cut through isthmuses, or make some new work, or improve some old one, in a manner which will give a return on the money expended."

NOTE C.

Mr. Fullarton on the Process of Depreciation.

In the extract from Mr. Fullarton's work on currencies, given at page 66, the slowness of the early stages in the depreciation of the assignats in France, is contrasted with the rapidity with which the process ultimately proceeded. That rapidity was partly the result of the manner in which the paper was issued. It was not issued

as capital upon loan, but for Government payments; and each new portion, as it was created, being immediately employed as income, went as so much new demand, of the most active kind, against preexisting stocks and services. Further, the assignats had nothing to sustain them in public opinion but the arbitrary will of the Government; and in addition to these two causes, the depreciation was not resisted by the machinery of a monetary system, like that which exists in England, and which interposes the greatest possible obstacles to any considerable disturbance of the relations between the currency and the general mass of commodities. Mr. Fullarton has expressed the opinion, that with our present Bank and Mint regulations, that is to say, while every portion of new bullion that arrives may be exchanged for bank-notes and coin, with only a deduction of 1d. per ounce, there can be no rise whatever in the level of prices. This appears to me to be an error, for the reasons explained in the chapter on "The New Gold;" because it is conceivable that a higher bullion value of English labour and its product may get established in foreign markets; but this will by no means prevent such an enormous accumulation as was anticipated by Mr. Fullarton when he wrote in 1844, and such as is now actually going on from week to week. In view of such a state of things Mr. Fullarton made the following remarkable observations :—

"Were such a state of things to continue for a sufficient length of time, I certainly do not take upon me to say, that there could be no action on prices, though, barring any extraordinary contingency, my belief undoubtedly is, that long ere this action could be produced, the market would be partially relieved by the fall of the rate of interest inducing capitalists to send their capital abroad. Circumstances, however, political or financial, might not be propitious for this solution of the difficulty; and it might become an important question how it could be most beneficially dealt with. It would be of no use to suspend the purchases of bullion by the Bank, unless the Mint were also to be shut against the reception of any more gold for coinage, and the importers of the metal thus driven at once to submit to a reduction of prices, or to send their commodity abroad in quest of a better market. I own I am inclined to think it might be more expedient to adopt this course, than to wait the tardy results of any remedial action through prices on the exchanges. But whatever might be the determination in this respect, no enterprise, as it seems to me, could be more Quixotic or absurd than for this country to engage in a struggle to sustain the value of the precious metals at a higher level than that warranted by the cost of their production."