§ 940. In the state of New York, a law was enacted in 1830, by which a fund, called a safety fund, is provided, to indemnify the holders of bills against losses by the failure of banks. This fund is raised by collecting from the banks a yearly tax of one half of one per cent. on their capital stock, until such fund shall have amounted to three per cent.; and the law provides, that, whenever this fund shall have become exhausted in the payment of the debts of broken banks, taxation shall again be resorted to in order to replenish it.

§ 941. In 1838, a general banking law was enacted in the same state, which not only secures the holders of bills against loss, but it has in view, at the same time, the additional object of extending the privileges of banking to all who wish to engage in the business. By complying with the provisions of this law, any person or persons may estab lish a bank, without application to the legislature for a special law granting the privilege.

§ 942. Several benefits are anticipated from this law. The privilege of banking being free to all, more capital will be brought into active employment, and, consequently, the productive industry of the country will be increased. Again, it is presumed, that, there being more money to be loaned, usurers will have less frequent opportunities of extorting oppressive rates of interest from those who are obliged to borrow.

§ 943. At least one half of the capital of a bank established under this law, must consist of state stock, or public debt, that is to say, debt against the state; which is to be purchased, and transferred to the comptroller of the state. The remainder of the capital may consist of bonds and mortgages on real estate, which is to be taken at half of its estimated value, exclusive of the buildings thereon. The public debt must produce, or be made equal to five per cent. a year; and the bonds and mortgages must draw at least six per cent. a year.

banks? 940. How is security provided by the safety fund act of New York? § 941. What are the objects of the general banking law of New York? When was it enacted? § 942. What benefits does this law propose? § 943. How is the capital of these banks

§ 944. The notes to be issued by these banks, are to be furnished in blank by the comptroller, so engraved as to guard against counterfeiting, and countersigned by him or some other person duly authorized. But the comptroller may not furnish any bank with a greater amount of such blank notes or bills than the security pledged in public stock, or in public stock and real estate. The plates on which the bills are printed, are to remain in the custody of the comptroller. And these banks are required to have on hand at least twelve and a half per cent. in specie of the amount of their notes in circulation.

§ 945. The owners or assignors of the securities pledged, may receive the interest on them, unless default shall be made in the payment of their bills. But if the banks fail to redeem their bills, the comptroller disposes of the secu rities, and pays the holders of the bills, who are, in such case, entitled to receive for damages fourteen per cent., instead of the legal interest, from the time of the refusal of payment. Thus we perceive, that this law affords security to the community against those losses which are often suf fered from the fraudulent failure of banking companies, which has always been deemed one of the principal disadvantages

of banks.

946. There is, however, one disadvantage attending a paper currency, against which no remedy is provided, viz. the fluctuation in the value of the circulating medium. The effect of an abundance and scarcity of money in changing its value, has been noticed. This fluctuation is frequently produced, to a greater or less extent, by sudden withdrawals and over issues of bank paper. This inconvenience, how. ever, is considered unimportant, compared to the advantages of a paper currency. Hence we find, that, in all commercial and prosperous countries, paper-money constitutes the greater portion of the circulating medium. Its value is considered equal to that of gold and silver, as a currency, because the

constituted? 944. What provision is made for the protection of the community against losses from their failure? § 945. How are holders of bills compensated for damages sustained by the failure of these banks? 946. What are the disadvantages of banks and a paper currency?

banks are bound to redeem their notes with specie on de mand; and it is generally preferred to specie, on account of its convenience.

CHAPTER XIX.

Distribution.-Wages, or the Price paid for Labor.

§ 947. Ir has already been stated, that wealth, or the value of products, is created by the union of capital and labor; and also, that products are, in general, the result of the industry and capital of different persons. The avails of the land of a farmer may be produced by the labor of other men. A master-shoemaker may have all his work performed by journeymen. But the proceeds of the sales of the grain and the shoes, do not all go to the farmer and master mechanic, nor to those who have performed the labor. As neither the capital nor labor alone would have produced any thing, it is evident, that the avails are to be divided among the capitalists and laborers.

§ 948. The division of the profits of the industry and capital employed in production, and the principles by which this division is regulated, are called distribution, or the dis tribution of wealth. Sometimes a laborer lends his industry to a person who has capital only. The price of the labor, in this case, is called wages. Another may loan his capital to one who has industry. The price paid for the use of the capital, when it consists of money, is called interest: when it consists of land, buildings, machinery, &c. it is usually called rent.

§ 949. The price of labor is affected by several circum. stances. Labor will be high or low, according to the pro

§ 947. How is wealth created? Among whom are the profits of capital and labor divided? § 948. What do you understand by dis tribution? What are wages? Interest? Rent? § 949. What effect has the abundance of capital upon labor? What is the effect of a

portions which capital and labor bear to each other. When capital is abundant, there is usually a demand for labor, and then the price of labor rises. When, from any cause, the number of laborers in any community has been diminished, while the capital remains the same, capitalists will overbid each other for workmen, and the price of wages will be raised. But if the capital should be diminished, and the number of laborers continue the same; or if the population of a country should increase more rapidly than its capital, the price of labor would gradually fall, unless kept up by some special counteracting cause.

§ 950. A man who invests a capital of ten thousand dollars in any business, must necessarily employ a greater number of laborers than one who has but half that amount invested in the same business; and he is capable of rendering a greater benefit to the community, by furnishing the means of support to a greater number of persons. Therefore, the greater the amount of capital there is in a country, the more labor will be required.

Where

§ 951. Hence we find, that a country increases in population, in proportion as it increases in wealth. capital is abundant, the means of living are easily obtained; and where the comforts of life are abundantly enjoyed, a greater number of children will be reared, as observation infallibly proves; and a greater number of laborers also will emigrate to such a place from other countries, where the price of labor is lower, and the means of living are less casily acquired. And if the supply of labor thus furnished increase more rapidly than the capital of the country, the price of labor will gradually be reduced.

§ 952. Wages are affected by the danger, fatigue, or disagreeableness of the labor to be performed. If the performance of any kind of labor be easy and pleasant, many will desire to engage in it; and wages in this employment will be low. On the other hand, if labor in any business be performed with difficulty, or if it be in its nature un

diminution of capital? § 950. Why is a rich man capable of render. ing a greater benefit to community than a poor man? § 951. What effect has the increase or the abundance of capital upon the population of a country? § 952. What effect has the disagreeableness of any

pleasant and disagreeable, a supply of labor will not be obtained without the offer of higher wages.

§ 953. The regularity or irregularity of the occupation of the laborer also affects the price of labor. If a man's trade does not give him constant employment, he must receive more for an hour's labor, than he whose occupation demands incessant labor. Thus a trader, who performs but one or two operations during the day, though but an hour's time may be occupied in their performance, must receive a profit at least equal to the interest on his capital for a whole day, and the ordinary price of labor for the same time. A physician or a lawyer charges for attending to a single call, as much as is charged for a day's labor in other occupations; because his services may not be again wanted during the day.

§ 954. Wages are generally in proportion to the skill of the laborer. The highest degree of skill, whether acquired by a long course of practice, or whether it is the result of a peculiar aptitude for a particular kind of business, is possessed by a small proportion of laborers. And those who possess this skill, will be enabled to obtain higher wages than are paid for ordinary labor.

§955. So also persons to whom responsible trusts are committed, command higher wages than others. The business of a master-agent, for example, often requires extraordinary qualifications. To secure the confidence of his employer, he must possess moral character, prudence, and what is commonly termed, a "natural talent" for business. as few persons singly possess all these qualifications, these few will ask for their labor a higher price than is paid for labor which can be performed by a greater portion of laborers.

And

§ 956. The price of labor is often determined by the degree of profit which a particular kind of business affords. When any business becomes profitable, more capital will be

kind of labor upon the wages of labor? § 953. Show by example the effect of the inconstancy of an occupation upon the price of labor. 954. Why does a skilful laborer receive higher wages than an unskilful one? §955. Why do persons of good character and of good abilities, command higher wages than those of the opposite character? $956. Why does the profitableness of any business raise the price of