They are men of like passions with others, but without the healthy discipline of poverty and compulsory labor, and exposed to some of the severest temptations by which human virtue can be tried. Yet, as a class, they are far from despicable-nay, there have been instances of exalted virtue among them. They have the charge of a large portion of the small surplus of production which it is permitted to man to accumulate: no small risk, and no light responsibility is theirs. Yet, on the whole, they hold and distribute this invaluable deposit far better than would be done by the classes who are accustomed to envy and rail at them. Look at the latter in California. See their stores of gold dissipated in a week at the gaming-table, or in the gratification of every beastly propensity; while the wealth of the capitalist is poured out like water, to accomplish great national or social undertakings, to encourage the various branches of domestic industry, or to supply the wants of the people with the produce of foreign lands.

The property of capitalists has all been acquired by their own labor, or by that of others, who have voluntarily transferred it to them. Some was earned by bodily, some by mental labor--both which were beneficial to others, or were so esteemed, and recompensed accordingly. If gold, silver, or paper money had been unknown, these services would have been recompensed by other commodities, the skilful exchange of which might have produced much larger profits than those they actually receive in the shape of interest. Suppose Mr. Astor to have possessed a hundred bushels of wheat, and to have lent them for seed to an unthrifty neighbor, on condition of receiving half or one-third the produce. This is no imaginary case. I have known it done, and by a man who thought it sinful to take interest on money. The true way to remedy such usury is, not to prevent the frugal from laying up, but to reform the wasteful, and keep them from borrowing. All Mr. Kellogg's illustrations proceed on the assumption that one class of men will continue to accumulate, the other to spend and borrow, to the utmost of their power. If this be so, we may well despair of society.

But it is not so. There is a point beyond which accumulation becomes no longer possible, because it ceases to be profitable to borrow or to lend. As accumulation increases, rates of interest must fall. While I am writing, capital in London is said to be seeking investment at 1 per cent per annum. This is what Mr. Kellogg wants; but does it realize the effects he predicts from it? Do the laboring classes profit by it? Are the poor more independent there than here? Alas! we must make the tree good before the fruit can be good. Until men have learned industry, economy, and selfcontrol, they cannot safely be entrusted with wealth; and by the inevitable laws of their nature, wealth will be withheld from them.

But on the moral aspects of the subject I cannot at present enter. In my next letter, I propose to treat of banks and banking.

J. S. R.

Art. V. "FREE TRADE VS. PROTECTIVE TARIFFS."

FREEMAN HUNT, Esq., Editor of the Merchants' Magazine, etc.

ques

DEAR SIR-I beg leave to offer a review of the article of your correspondent R. S.-"Strictures upon the Report of the Secretary of the Treasury "-in your April number-not for the purpose of discussing the great question "Free Trade vs. Protective Tariffs," but to show with what egotism the advocates of "free trade" treat that great economical and financial tion of the age which now, and for the last twenty years, has occupied the attention and employed the pens of the first minds in Europe and America. An entire begging of the question seems the only method they are capable of adopting in disposing of the subject: that, together with a disposition to disparage the honesty and capacity of the advocates of "protection," seems to be the characteristic of the Manchester school of philosophers, and about all they are able to accomplish.

The first topic your correspondent takes in hand is the Secretary's argument in favor of the constitutionality of protection. Mr. Meredith assumes that the power to regulate commerce and collect taxes are expressly given, and the only question is whether they ought or ought not to be exercised for the general good. R. S. says, "this is precisely the question which no sane individual would have thought of asking." Mr. Meredith is therefore insane; yet every one acquainted with the course of the arguments on the subject knows that the constitutionality of protection has been long and vehemently denied; that sectional interests cannot legally be subjected to injury, even for the general good; that a tariff for the interest and protection of manufactures is unconstitutional, notwithstanding its assumed general utility. The Secretary further says "I find no obligation written in the Constitution to lay taxes, duties and imposts at the lowest rate of duties which will yield the largest revenue"-the favorite theory of his predecessor. R. S. admits it is not there, and immediately accuses the Secretary of stiltifying himself-of admitting it is there by implication, because he has admitted that the legitimate end of government is the general good; and having thus begged the entire question at issue-assumes that the Secretary is insane and incompetent to construct an argument to sustain his own theory-he runs on ad captandum, giving us the benefit of his extensive knowledge of the whole subject, which is really profound.

Next it is asserted that "the governments of the day believe the protective system to be a gross humbug, having tried it from time immemorial, and are now legislating in the opposite direction." What governments? Great Britain alone-all the rest of Europe, and all America, except, for a short period, the United States, still adhere to the system of protection. Then we have "the tendency of the age,"—that is, of the Manchester philosophers, rather a minute age. Next the Zollverein is attributed to "the smaller States of Germany," for the purposes of "free trade," while every tyro who has learned the alphabet of the subject knows that it was forced upon many of them by Prussia, for the sole purpose of "protection." Then we are told that "free trade" will continue that our tariff is high enough -all in the line of begging the question-and winding up the paragraph with a lament over the ignorance and incapacity of the Secretary.

His next show of argument is that derived from experience. The single fact stated, is, that during the period from 1831 to 1841 our average imports

and exports increased annually fifty millions over those of the ten preceding years. Now, if there was any truth in this very general statement, the fact that during these ten years there occurred an enormous export of American credit, the terrible revulsion of 1836-7, which overthrew the whole financial structure of the nation, demonstrates that nothing is proved in relation to the beneficial effect of his theory, but quite the contrary. In his opening he states, "that it is one thing to collect a mass of ascertained facts, and. quite another to draw logical inferences from such facts." He has beautifully illustrated his theory; his facts, whether real or imaginary, are of small consequence; so that he is able to draw his inferences, whether logical or otherwise, is unimportant.

His next proposition is," that the greatest amount of wealth"-the ultimate end of Manchester philosophy-"will always be produced by the fullest development of territorial and individual facilities; and this can only be done by an unrestricted and universal commerce." This is somewhat muddy, but it forms an introduction to his favorite syllogism, the repetition of which forms the staple of his argument. "Anything which retards this development must conflict with the general good-consequently duties ought to be levied at the lowest productive rate." This very logical sequence is about as clear as the sum in proportion with which a country schoolmaster once puzzled his pupils:-If three bushels of corn cost 12s. 6d., what will half a load of turnips cost?

The splendid assumption which succeeds will surely settle the question. Our foreign commerce of $300,000,000, and our 3,000,000 of tons of shipping are to be destroyed by protection; surely we shall not do this! But suppose it should be demonstrable, as it clearly is, and has been done, that both commerce and the shipping interest have been most extensive and prosperous during the periods of our history when "protection" has been most efficient; why, then, the assumption is ridiculous-that is all.

The Secretary's theory of manufacturing our own cotton into cloth forms the subject of a long paragraph, in which all descriptions of suppositions are indulged. The theory of the Secretary was unhappily illustrated by extreme cases; its practicability, however, R. S. admits, though "at such a sacrifice as the American people would never submit to." The argument was simply that cotton manufacturing being a more profitable business than cotton growing, our interest would be promoted by dividing our labor and capital to the two pursuits; but to R. S. such a procedure would involve all sorts of miseries to poor humanity, both in Europe and America.

An intelligent writer in the Merchants' Magazine, says R. S., has demonstrated that cotton manufacture is a poor business after all; that it pays less than 5 per cent upon the capital invested, and is often "a total loss to the original proprietors." But another, quite as intelligent, has demonstrated just the reverse of this-that it is quite profitable, and will be more so when "cotton-mills can be set by the side of the cotton plantation," or the Secretary's idea can be carried into operation so there are other questions beside that of "free trade vs. protective tariffs" which are yet undecided.

Not content with waging war upon the Secretary, R. S. attacks Adam Smith, the former friend of the "free traders," and flatly denies the truth of what he terms his old fallacy, that "the home trade is more profitable than the foreign." In the former portion of his article he is greatly in favor of "the domestic divisions of labor, which cause so much exchanging of pro

ducts from hand to hand, from village to village, and from city to city"the home trade. If, now, we have 20,000,000 of people, and the annual amount of these transactions of home trade are thirty dollars to each individual, estimated in double quantities, like his estimate of our foreign commerce of $300,000,000, we shall have a home trade of $1,200,000,000. From this a large discount may be made, without reducing it to the amount of his foreign commerce of $300,000,000, to say nothing of the fact that both profits are to remain to ourselves.

But his theory of profits excels; and here I doubt not is the motive of his advocacy of free trade-his eye sees profits, not production. According to his theory, one simple act of transportation affords five profits. He might as well have made it seven, by adding to the merchants at each end two in the middle; if, now, he should add a second transportation, which sometimes occurs, he would have had fourteen profits, if the original substance did not fall short of these numerous quantities-a question in algebra which R. S. will no doubt be able to solve. The benefits of profits seem to be assumed by R. S., while "giving implies taxation." Query-do profits do the same?

G. B.

MERCANTILE LAW CASES.

ENGLISH LAW OF BILLS OF EXCHANGE AND PROMISSORY NOTES, WITH THE LATEST DECISIONS THEREON.

WE continue, in the present number of our Magazine, the publication of a series of articles from the London Bankers' Magazine, relating to the English law of bills of exchange and promissory notes.* The English law on this subject, as we remarked in previous numbers of our Journal, is very generally adopted in the United States-at least the decisions under that law are cited or referred to in all our courts as authority.

ON POINTS RELATING TO THE Form of bills oF EXCHANGE AND PROMISSORY NOTES.

There are many instruments drawn in such a peculiar form that it is difficult to decide whether they amount to bills of exchange or promissory notes, or come under some other designation. An instrument which appears, on common observation, to be a bill of exchange, may be treated as such, although words be introduced into it for the purpose of deception. Alian vs. Mawson, (4 Campbell's Reports, 115.) Where a note expressed to be "for £20 borrowed and received, which I promise never to pay," it was held that the word " never might be rejected, because a contract ought to be expounded in that sense in which the party making it apprehended that the other party understood it. The following cases are offered as examples of the decisions with regard to the requisites of bills of exchange and promissory notes:

A letter in this form is a promissory note:-" Gentlemen, I have received the

*For the first of this series of articles see Merchants' Magazine for March, 1850, (vol. xxii., page 314,) relating to the points connected with form and requisites of bills, notes, and letters of credit, and to the rights and liabilities of different parties to these instruments. The second article appeared in our number for May, 1850, (vol. xxii., page 543,) and relates to joint and several bills of exchange and promissory notes, and foreign bills and notes as distinguished from inland bills.

imperfect books which, together with the costs over-paid on the settlement of your account, amounts to £80 7s., which sum I will pay you within two years from this date. I am, gentlemen, your obedient servant, Thomas Williams.” Wheatly us. Williams, (1 Mason and Welsby, 533.)

A promise to pay, or cause to be paid, is a good note. Dixon vs. Nuttall, (6 Carrington and Payne, 320.)

In Jervis vs. Wilkins, (7 Meeson and Welsby, 410,) the following instrument was held to be a guarantee, and not a note:-"September 11, 1839.-I undertake to pay to Mr. Robert Jervis the sum of £6 4s. for a suit of clothes ordered by Daniel Page." The court observed that the expression "ordered" showed that the consideration was executory.

“I, R. J. M., owe Mrs. E. the sum of £6, which is to be paid by instalments, for rent. Signed, R. J. M." Held not to be a promissory note, as no time was stipulated for the payment of the instalments. Moffat vs. Edwards, (1 Carrington and Marsham, 16.)

The following instrument was held to be a promissory note:-" John Mason, 14th February, 1836, borrowed of Mary Ann Mason, his sister, the sum of £14 in cash, a loan in promise of payment, of which I am truly thankful for." Ellis vs. Mason, 7 Dowling, 598.)

An action was brought by the payee against the drawer of a written instrument in these words:-"Seven weeks after date, pay A. B. £ out of W. Steward's money, as soon as you receive it." It was objected, that it was payable out of a supposed fund at a future time, which was uncertain, and might or might not happen. The court gave judgment for the defendant, and said:"The instrument or writing which constitutes a good bill of exchange, according to the law and custom of merchants, is not confined to any certain form of words, yet it must have some essential qualities, without which it is not a bill of exchange; it must carry with it a personal and certain credit given to the drawer, not confined to credit upon anything or fund; that the payee or indorsee take it upon no particular event or contingency, except the failure of the general credit of the person drawing or negotiating it."

There is a document bearing some resemblance to a promissory note, which is usually given as an acknowledgment, when money is borrowed from one person by another, and which is called an I. O. U. It requires no stamp unless words are inserted in it which convert it into a promissory note, or an agreement. It is evidence of a debt from the party signing it to the party to whom it is given The nature of an I. O. U. was discussed in the following recent case.

The action was brought for work and labor, money lent, and on an account stated. At the trial an I. O. U was put in as evidence of money lent, and an account stated. Baron Rolfe directed that it was no evidence.

Watson now contended that an I. O. U. was evidence of money lent, and cited Douglas vs. Holme, (12 Adol. and Ellis.)

Parke, B.-"It is no evidence of money, but it might be for goods sold and delivered."

Watson then contended that it was also evidence of an account stated, Curtis vs. Richards, (1 Manning and Grainger, 46.)

Pollock, C. B.-"The Court is with you on that point; it is evidence of an account stated."

Alderson, B.-The I. O. U. is not evidence of money lent; and this ought particularly to be reported, to correct the error in Adolphus and Ellis, (Douglas vs. Holme.) Fensemnays vs. Adcock, (Law Times, January 30th, 1849.)

BANKRUPTCY.-FRAUDULENT PREFERENCE TO BANKERS.

Wakely and Others, Assignees, vs. Crow, Public Officer. Court of Exchequer, (London,) Wednesday, February 27, 1850.-This was an action by the assignees of Messrs. Langdale and Son, of Stockton, bankrupts, against the registered public officer of the Darlington Joint-Stock Banking Company, to recover a sum of between £6,000 and £7,000, the value of property deposited with the banking company on various occasions, shortly before the fiat, the validity of which trans