lizing the precious metals, in a time of scarcity, as already indicated, there are no limits to the political power of such an institution, in the hands of the national executive, to subvert the liberties of the country. It is a union of purse and sword, such as was never even dreamed of by the most sagacious vaticinations of the far-seeing framers of the government. It is a power not only to control the currency, while professing to have nothing to do with it, but to draw into its hands all the gold and silver of the country, to pass through, only in such a way, and for such purposes, as may please those who have charge of it. It is absolute power, and may be used at will. If it does not, at some future day, perpetuate the will of one man, and impose it on the country, for ages, perhaps for ever, it certainly will not be for want of ability, with such an engine of power in his hands.

With the evidence which we now have of the tolerable adequacy of the state banks to furnish a currency, there could be no urgent necessity for the re-establishment of a national bank, unless the state of things brought about by the operation of the Subtreasury system, should create that necessity in its abrogation. That the state-bank system will be materially unhinged, and its operation more or less deranged, by the Subtreasury, can not but be certain. The federal government, by this measure, has resumed the powers of banking with a stronger hand than ever, and instead of doing it by proxy, through a corporation with limited powers, it has taken the business into its own charge, with unlimited powers, and made a treasury-bank. In falling back from this high-handed measure, it may be a question, as to where will be the best stopping-place, and whether the state banks, after such a derangement, will be fully competent, and well fitted, to discharge the functions which they might, perhaps, otherwise have done. It is an instinctive quality, and a natural right, in every nation, to regulate its own currency, by the national authorities, and it may well be doubted, whether it can ever be properly done, without such an elevated supervision. The return of the federal government to banking, in the Subtreasury mode, is proof of its propensity that way; and when the Subtreasury can no longer be endured, to remedy the evils which it shall have created, it may possibly be found necessary to readopt the usual mode of all nations, which has been approved by universal experience. Certainly, it will never be pretended by those who have made the treasury-bank, that there is no banking power in the federal constitution.

CHAPTER XVII.

THE GAIN OF INDIVIDUALS NOT ALWAYS THE GAIN OF THE

COMMUNITY.

Views of Free Trade Economists on this Point-M'Culloch's View of Capital as formed out of Profits.-M'Culloch's Hobby. -The Doctrine of Equivalents in Trade considered. --Equivalents in Kind.-Money, as "Tools of Trade," not an Equivalent in Kind-How this affects the Doctrine of Free Trade.-Difference, economically, between Importations for Consumption of Value, and Importations to be improved in Value or otherwise used for Increase of Wealth.--The Values added to the raw Material by manufacturing.Every Commercial Transaction independent.-Answer to some Points made by M. Say.

THE Free-Trade economists aver, that, as the wealth of a nation is composed of the aggregate wealth of all the individuals in it, whatever an individual gains, the nation gains. We propose to show that this rule is often false.

M'Culloch has well and truly shown, that, as a general rule, the profits of producers of value, are the measure of increasing wealth, as follows:

"That capital is formed out of profit, and that profit is itself the surplus obtained from industrious undertakings, after the produce expended in the carrying them on has been fully replaced, is a proposition, which, though universally true, is at variance with the common notions on the subject. Instead of supposing profits to originate in the manner now stated, they are almost uniformly supposed to depend on the sale of the produce, and to be made at the expense of the purchaser. Thus, to take a familiar instance, the hatmaker who sells a hat for thirty shillings, which costs him twentyfive shillings outlay, believes himself, and is universally believed by others, to have made the five shillings of profit at the expense of the individual who bought the hat. In truth and reality, however, he has doue no such thing. He produced, in a given time, a hat equivalent to or worth, in silver, thirty shillings, while the various expenses necessarily incurred in its manufacture, only amounted to twenty-five shillings. But, then, it must be borne in mind, that, speaking generally, the various individuals who deal with the hat-makers, are placed in the same situation: the farmer, the clothier, the boot-maker, &c., are all making the same profits, in their respective businesses; or, in other words, they are all pre

ducing quantities of corn, cloth, boots, &c., equal to thirty shillings, by an outlay of twenty-five shillings. It is clear, therefore, that, in exchanging the precious metals for accommodation, or in exchanging one sort of commodities for another, the one party gains nothing at the expense of the other. Profit is, in all cases, the result of more being produced in a given period, than has been consumed in that period. The introduction of exchanges would not be advantageous, if it merely enabled one set of individuals to prey upon some other set. This, however, is not the effect. By enabling labor to be divided, it gives individuals the means of employing themselves, in preference, in some one pursuit, and consequently causes commodities to be produced and distributed in the best and cheapest manner; but it does nothing more.

"If the popular opinion with respect to the source of profits, were well founded, it would inevitably follow-inasmuch as they take for granted that all producers make their profits at the expense of some one else who buys their commodities-not only that no additions could be made to capital, but that the capital now in the world would be very soon annihilated. If such were really a correct view of the circumstances under which mankind are placed, our lot would be anything but enviable. Happily, however, this is not our situation. The produce of the labor we exert, during any given time, is almost always greater than the produce we are obliged to consume during the same time, and the surplus or profit being accumulated, becomes, in its turn, an instrument of vast power, and adds prodigiously to the productiveness of industry.

"It is clear, therefore, that there is no class of industrious individuals who live at the expense of any other class. The retail dealer, for example, is in no respect more indebted to his customers, than they are to him. It is not his, but their own, interest that they have in view, when they resort to his shop. Society is, in truth, as M. Destutt Tracy has remarked, nothing but a continued series of exchanges."

As a general rule, or, as M'Culloch himself says, in the above citation, "generally speaking," and as the development of a principle, not unimportant, but often useful in application, this reasoning is excellent, and the doctrine sound. It shows how wealth increases, and the only way in which it can increase, in direct opposition to first-sight notions or popular opinion. But Mr. McCulloch is always so anxious to draw everything into the vortex of his FreeTrade theory, that he is rarely contented to let well alone. In all

his writings, on every topic, in a dictionary of commerce, or whatever he is about, he is sure to be seen on this hobby. It seems to be a mental disease with him. He could not even finish the above excellent argument, without winding up with the absurdity, that "full equivalents are always given for whatever is received in exchanges." It was because he had his eye on trade between nations, and was afraid, either that this principle of equivalents in exchanges would be forgotten in that application; or that some one would presume to think or say, that it does not apply there; or because he thought proper to anticipate the application. We, certainly, shall have no controversy with Mr. M'Culloch, or any one else, for all that this principle is worth to them, in either domestic or foreign exchanges. We will concede to them the principle beforehand, for the sake of argument, and give them all the advantage of it, though we do not believe in it. We grant, then, that "full equivalents" are rendered, from side to side, in exchanges between nations. The question at issue between Free Trade and a Protective System, does not fall within the scope of this proposition; but it lies in the kinds of equivalents passed, and in the relative proportions of the kind called money.

But let us see whether these exact equivalents, asserted by Mr. M'Culloch, with so much concern about another question not involved in this after all, are exactly true. It is not, perhaps, very material for the augmentation of general capital, whether bargains are always equal or not; but unequal bargains are so common, that most persons will very readily believe, that they constitute the great majority. But except as they afford those who get the best bargains an undue advantage over those who have the poorest, and impair the position of the latter most essential to public wealth, it is not easy to see why the principle of Mr. M'Culloch, so well elucidated above, so far as the general augmentation of capital is concerned, does not apply to unequal as well as to equal bargains. The design of trade, doubtless, is the exchange of equivalents, though it rarely happens with perfect exactitude. No matter. Where it is not a cheat, both parties are accommodated, obtain a profit, and general wealth is enhanced.

It makes no difference to the nation, in domestic trade, when one party gives money in exchange. It is supposed that he obtained the money by some other commodity sold at a profit on the cost of production, and the profit is a fraction of the money paid in such a case. In the rounds of domestic trade, therefore, though

exact equivalents are rarely exchanged, Mr. M'Culloch's principle of increase of wealth by exchange, holds good. But his eagerness to anticipate and decide another question, enticed him into the fault of asserting what every one knows is not true, viz., exact equivalents in exchanges.

Nor will we, as before intimated, insist on Mr. M'Culloch's giving up what he has seized upon without right, truth, or logic, even in application to foreign exchanges. Let him have it. We grant him that equivalents are exchanged in foreign trade, as long as it can honestly be carried on. When bankruptcy or suspension comes, of course the equivalents are suspended.

The question between us and the Free-Trade economists, is, about equivalents in kind. If they will be content to let us pay in kind, that is all we want. They reply, that they will allow us this privilege; but they say, at the same time, that money is an article in kind; that it is one of the commodities in trade, and occupies the same position as others; and that it makes no difference with us as a nation, whether we pay money or corn. They say we get an equivalent, which we do not deny; but we say it will be to our inconvenience, if we exchange our "tools of trade," so that we can not trade any more. Here is the point. They say, that money is nothing but a commodity, and that it makes no difference with a nation, whether money or any other commodity be parted with in trade. We say, that money is more than a commodity; that it is the instrument or "tools of trade;" and 'hat, in parting with these "tools," by an imprudent foreign commercial policy as we necessarily must, from the position we occupy, without a protective system-we part with the means of trade, both domestic and foreign, as effectually, as truly, and in the same manner, as a mechanic parts with his means of living, when he sells his tools. They say, there is no need of guarding these tools; that they will take care of themselves; that, if they go away, they will come back again, in the natural course of things. We say, that they will certainly go, unless taken care of (which they do not deny); that when a mechanic's tools are gone, he must stop work; that he loses time, and suffers loss, till he can supply himself again; that, for these reasons, it is unwise to sell his tools, though he gets an equivalent; that it may be a long time, and very hard work, for him to be well set up in his business again; that, in the meantime, he will have lost all the wealth he could have