And the principle seemed established in the house, that the more they could get in debt to each other, and especially to the money partner, the more money they might and would have, and the richer consequently they would be.

Interlocked, interlaced, mutually supporting and mutually dependent, the American house went ahead. Experience demurred; political economists said, "take heed;" but the reply was "no musty precedents for the American house. Our conditions, equally with our career of prosperity, are unprecedented. Go to financial men for knowledge of the laws of finance, and not to the school men. Practice is better than theory."

The American house went ahead, the money partner spread another sail, and the others let out canvas accordingly. Money grew plentier than ever, and faster than ever it was swallowed up in new schemes, by the partners.

The demand for money was still unsatisfied, unusual rates of interest (from 12 to 36 per cent) were given for the use of it by the other partners of the house-not indeed directly to the money partner, but to parties who borrowed of him. The general opinion was, that money was scarce because it drew such interest. Some thought, the old fashioned legislative restriction upon the rates of hire should be taken off, so that competition might have free play, and that thus the rates would come down. There were those, who shook their heads to this proposal as unavailing for the end desired. By the sure guidance of principles they knew, that high rates of interest denoted not scarcity of money, or the disproportion now between the money of a country and the exchangeable products of it; but disproportion between money and the debts which were to be discharged by it; and that high rates of interest proclaimed not insufficiency of money, but plentifulness of debt. But they were unheard in the general cry, that the train, though under prodigious headway, was on the track, and all right.

Let us review now the affairs of the partners between each other, and collectively, with the money partner.

The agricultural partner owes to the extent of all the mortgages which rest upon his lands. The railroad partner owes to the extent of his bonds and floating debts. The merchant and manufacturer owe a large amount of promissory notes. All the partners owe to each other, in these and other forms, as well as to the financial partner, a vast sum total, of which precise statistics are wanting or inaccessible. But the property of these partners exclusive of money is reckoned at $15,000,000,000-a vast sum, and on any supposition which could be reasonably made, an ample guaranty for the ultimate payment of the debts of the partners to each other, as well as their debt to the money partner; which latter, of course, amounts to the whole of the money partner's loans. These loans and discounts were in January, 1857, according to the latest returns then attainable, $813,000,000. The bank movement up to the middle of the year 1857, was an expanding one, which would somewhat increase the amount due the money partner from the other partners. To pay their debts of every sort to each other and foreign houses as they matured, the other partners had in metal and paper, say $600,000,000-($200,000,000 in specie, and 400,000,000 in paper of the money partner, also reckoned as money.) Their debt to the money partner, 'was, as we have seen, over $800,000,000. This debt alone, would sweep their till if called for at

once, and require $200,000,000 more from some quarter to make up the deficiency, and leave them moneyless to pay the first dollar of their debt to each other and abroad.

And how stand the money partner's affairs? By the same returns, the circulation and deposits of the money partner, (or the banks of the United States,) were $431,750,000; to pay that, he had specie to the amount of nearly $60,000,000, a per centage of 13 cents to the dollar, and large assets of various kinds. The bank movement up to the middle of the year, was an expanding one, and it is safe to estimate the proportion of money in the money partner's hands, to his obligation, as 1 to 10. If required to pay his debts at once, he could discharge $43,000,000 of them; but that would leave nearly $390,000,000 balance to be paid by the assignee after the property was disposed of to the highest bidder. Under the ordinary usage of the partners for twenty years, viz., to keep running accounts, and charge over balances-the money party was sound and had large and

valuable assets.

Such was the condition of the house in the summer of the year 1857. Every one of the partners had abundant assets or property, and large indebtedness. None of the partners had money enough to discharge their debts. All the partners had an ample property basis, and would be wealthy after the payment of their debts, collected and paid by a slow course of liquidation. But either and all the partners, if forced to pay instantly in money, were inevitably and hopelessly insolvent.

And now the money partner, who enjoyed vast influence in the American house, and was regarded with confidence, and whose sway had been undisputed for many years, sent out notice to all the other partners, that they must pay him his dues. There was no intimation given of his purpose-no discharge of blank cartridges preceding. The notice was a demand, decided and peremptory. All must liquidate their dues to him without delay. The other partners at once endeavored to comply with his demand. For so great was the preponderance of the money partner in the house, that his demand was equivalent to a command. It was he who held the scales in which all the partners were weighed; he apportioned to each and all the amount to which they might run in debt:if a partner was right with the money partner, he was right with all-if the money partner found him wanting, from that decision there was no appeal. Obedience, general and unhesitating, was therefore the common impulse and endeavor.

It was an obvious dictate of mercantile courtesy, and scarcely less than a right, in a house where confidence played so large a part, that a running account of twenty years' standing, should not be forced to a settlement, full of disaster to one or more of the partners, implying total withdrawal of confidence, except upon the most cogent and decisive reasons. Favors had been given and received on both sides; if mercantile paper-less the interest had been received for bank paper; bank paper on the other hand had drawn the wages of money in interest from the confidence which commerce had extended to it. From no source whatever was it apparent that the present was any more the fit, proper, and necessary time for general liquidation than any other of the preceding six, twelve, eighteen, or twenty-four months. Why make to-day universal pay-day instead of yesterday, or to-morrow? The question was unanswered, and remains so. No answer can be given which does not criminate the money partner for

past negligence in suffering the currency of the country to be eviscerated of its money and sent abroad-a result it was entirely in his power to bring about, or hinder, in spite of tariffs high or low. Since he had undertaken to furnish a currency which should have all the functions of money, not only to exchange commodities at home, but to be a steady measure of values, and convertible at any moment, and in any quantity, into the money of the commerce of the world, it was his business to do it. With this negligence, and the immeasurable consequences to every interest of the American house, he is justly chargeable. Nor can the charge be avoided, unless he is ready to plead guilty to the indictment that he has made nefarious alliance with the " bears" of Wall-street to play out, on the broader arena of the American continent, by the destruction of all values, the desperate game of depreciation to which the railroads were devoted earlier in the season. By him the question will remain unanswered.

Instantly a great and terrific change passed over the American house. Commerce, external and internal over a continent, ceased; manufactures ceased; the gathered harvests of the land were locked up, and tens of thousands, from store and factory, were turned adrift to face hunger and cold through the winter. A nation's industry, itself worth three thousand five hundred million dollars per year, or nearly a million a day, was paralyzed. To vast indebtedness, which will task the sinews of labor for years to lift, is added the enormous waste and demoralization of enforced ness. The fiat, "let every man leave his work and set about paying debts," went forth. The eager pursuit of wealth gave place to the n d and ineffectual pursuit of debtors, who had nothing to pay with out property, (which now, by that same fiat, was made inconvertible,) andwho, at the word, start off on the same hopeless errand and with the same fruitless results.

9

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What ostensible reason did the money partner give for his course. He said he needed to "strengthen his position" by reducing his liabilities.) No special opposition was offered to that at the outset; it was a good thing, certainly, for the money partner to be thoroughly solvent, since the welfare of all the other partners depended on his stability, and the withdrawal of his indebtedness, until he could reach a safe position, a matter of prime necessity. All acquiesced therefore. What, in the money partner's judgment, would constitute a safe position, the others became curious to know.

A million per week began the contraction; another week, another million of withdrawal; a third week, four millions; a fourth week, four millions more. Heavens! what is the money partner about? Is he madis he malicious-is he not in a safe position yet? At the end of the fourth week the New York city banks (for they, by their location at the commercial metropolis of the country, as well as from their number and capital, virtually controlling the finance movements of the country, do fitly represent the money partner at this juncture) were in as good position as they were January 3d of the year. The money partner regarded himself as safe then-nay, so safe that he could advance his loans from one hundred and nine millions, at which they stood January 3d, to one hundred and twenty-two million dollars-their figure August 8th, the beginning of the contraction. With a larger capital by nine millions than he had at the beginning of the year, with a specie reserve and deposits substantially

the same they were then, surely the money partner was as sound as a nut. Nobody doubted his solvency then, nor was it questioned now. Bankruptcy in the other houses had already reached an alarming figure, and the wheels of commerce and industry were everywhere greatly impeded. The attitude of the New York city banks was imposed upon all other banks throughout the country by the inevitable connections of commerce. The stone cast in the water there, sent its waves in ever enlarging circles to the remotest point. Through a period of thirty-one weeks, from January 3d to August 8th, an expansion had been going on which put into the currency nine million dollars. In four weeks this had all been withdrawn!

But not yet had the money partner got into a safe position. Another three millions of withdrawal marked the end of the fifth week; two more weeks, four millions more; at the end of the eighth week, four millions more. In eight weeks of contraction, the fifty odd banks of New York city alone withdrew twenty-one millions of bank debt! and the remaining 1,350 banks of the United States did likewise. How dreadfully unsound our money partner must be, or judge himself to be, if his case requires such vigorous treatment!

And the other partners-it was curious to see the force of habit and custom over them. Though ruin was descending upon them thicker and faster every hour, and the integrity of their own houses was the very stake at hazard, applauded the money partner's movements, and said he was a brave fellow, and they must stand by him!

But the dramatic applause of the other partners began at length to be quenched by the imminency of their own fortunes. The public journals had bawled themselves hoarse with the stereotyped phrases, always current in such bewilderments of finance, of "panic," senseless and stupid; of private extravagance, and, loudest of all, were preaching "confidence" as the universal panacea, which would have been all well enough if it had been aimed in the right direction; but they were discharging right into the breasts of those whose weakness had been that they "loved, not wisely, but too well," instead of into the bank parties. Here, if ever, during the eight weeks reign of terror which the banks had inaugurated, in the steady support which the other partners had yielded the money partner, was exhibited the spectacle of a "confidence" grand enough in its proportions to stand beside the lakes and rivers, the cataracts and mountains, the resources, enterprise, and universal grandeur of the American continent. There was no confidence wanting anywhere but in the bank parlors of the money partner towards the other partners of the house, or in his own solvency; and the confidence game began therefore to be a worn out affair, and men began to feel as well as think in prodigious earnest.

Let us return a step for explanations. The movement of the money partner to strengthen himself, abstractly considered, was right enough. If he could get his debtors to a settlement, and with the avails curtail his own debts, he would undoubtedly be stronger; but the debt of the money partner-viz., his circulating notes-was, in great part, the other partners' money to pay their debts to him, and to each other, with. The faster the money partner got out of debt, the less money the other partners had to pay theirs with-for two-thirds of all the money of the house consisted of the money partner's debts, or circulating notes; and as the aggregate property of the other partners was much larger, and their aggregate debts

much larger, than those of the money partner, every dollar of his debts which the money partner got retired, made it vastly more difficult for the other partners to pay theirs. It became evident, therefore, that the other partners could not pay their indebtedness to the money partner, to each other, and the indebtedness of the American house abroad, with a currency diminished by the amount of the money partner's debts, or any considerable part of them, and that total and absolute ruin of their estates was inevitable.

The common bond of indebtedness to one another, under which they had long been living and prospering, and which, by common consent, was regarded as the Archimedean lever, by which the vast fortunes of the American house had been lifted up, was found to be also a terrible power for ruin. The two-edged sword which they had reckoned all potent to cut a way through the natural obstacles of a new country, had also a back-stroke which could cut most keenly. Give the money partner his way, let him call in his dues, pay his debts first, and the solvency of his house was indeed assured and his property impregnable; but then every other interest, mercantile, manufacturing, agricultural, railroad, &c., must be leveled to the earth. Fifteen thousand millions (for the property of the other partners, as we have seen, foots that) must be unsettled in its values, change hands, and be subjected to the losses of forced liquidation for what it might owe.

Whatever therefore the abstract right of the money partner to collect his dues, retire his debts, and maintain the vaunted solvency of his house, he was using it tyrannously. As a co-sharer in the common prosperity which had come of their mutual indebtedness, he ought to have had some forbearance towards his friends. But to such representations the reply was, that it was his business to make profits for his own house, and the rest must take care of themselves.

But neither mercantile courtesy to his friends, nor his rights as an isolated individual, were by any means the full measure of the money partner's obligations to the other partners. By the terms of the partnership, their exclusive business was to create values and exchange them-his to provide them a currency stable at all times, and available for every purpose of money. It was no part of their duty to buy, more or less, of foreign houses, or to trouble themselves about the exchanges or balance of trade with them. It was enough, if they had commodities saleable abroad, to sell them there; and if they wanted commodities from abroad, to buy them while their money lasted. Good faith towards the money partner required them to treat his debts, (i. e., his promissory notes,) which made up part of the currency, no otherwise than as money, in their estimates of what they had, for foreign adventures. And their obligations had been scarcely observed. It was for him to keep his notes collected, at all times, with all the functions, and to serve in all the offices of money, and obedient to the laws of that natural or value money, which they had displaced, in all its flexible adaptation to SUPPLY and DEMAND-receding before these great tidal movements of commerce at the full, and returning upon the ebb, tide, as do the rivers which empty into the sea. This he had solemnly engaged to do, and the State was his bondsman that he should do it. Not by pouring himself upon the flood side in expansions, or receding to his fountains at the ebb, by contractions, was he filling out the just measure of his engagements. And least of all might he, in time