the mass of circulating coin. Every one knows, that although not literally, it is nearly true, that every paper dollar emitted banishes a silver one from the circulation. A nation, therefore, making its purchases and payments with bills fitted for circulation, thrusts an equal sum of coin out of circulation. This is equivalent to borrowing that sum, and yet the vendor receiving payment in a medium as effectual as coin for his purchases or payments, has no claim to interest. And so the nation may continue to issue its bills as far as its wants require, and the limits of the circulation will admit. Those limits are understood to extend with us at present, to two hundred millions of dollars, a greater sum than would be necessary for any war. But this, the only resource which the government could command with certainty, the States have unfortunately fooled away, nay corruptly alienated to swindlers and shavers, under the cover of private banks. Say, too, as an additional evil, that the disposal funds of individuals, to this great amount, have thus been withdrawn from improvement and useful enterprise, and employed in the useless, usurious and demoralizing practices of bank directors and their accomplices. In the war of 1755, our State availed itself of this fund by issuing a paper money, bottomed on a specific tax for its redemption, and, to insure its credit, bearing an interest of five per cent. Within a very short time, not a bill of this emission was to be found in circulation. It was locked up in the chests of executors, guardians, widows, farmers, &c. We then issued bills bottomed on a redeeming tax, but bearing no interest. These were readily received, and never depreciated a single farthing. In the revolutionary war, the old Congress and the States issued bills without interest, and without tax. They occupied the channels of circulation very freely, till those channels were overflowed by an excess beyond all the calls of circulation. But although we have so improvidently suffered the field of circulating medium to be filched from us by private individuals, yet I think we may recover it in part, and even in the whole, if the States will co-operate with us. If treasury bills are emitted on a tax appropriated for their redemption in fifteen years, and (to insure preference in the first moments of competition) bearing an interest of six per cent. there is no one who

would not take them in preference to the bank paper now afloat, on a principle of patriotism as well as interest; and they would be withdrawn from circulation into private hoards to a considerable amount. Their credit once established, others might be emitted, bottomed also on a tax, but not bearing interest; and if ever their credit faltered, open public loans, on which these bills alone should be received as specie. These, operating as a sinking fund, would reduce the quantity in circulation, so as to maintain that in an equilibrium with specie. It is not easy to estimate the obstacles which, in the beginning, we should encounter in ousting the banks from their possession of the circulation; but a steady and judicious alternation of emissions and loans, would reduce them in time. But while this is going on, another measure should be pressed, to recover ultimately our right to the circulation. The States should be applied to, to transfer the right of issuing circulating paper to Congress exclusively, in perpetuum, if possible, but during the war at least, with a saving of charter rights. I believe that every State west and South of Connecticut river, except Delaware, would immediately do it; and the others would follow in time. Congress would, of course, begin by obliging unchartered banks to wind up their affairs within a short time, and the others as their charters expired, forbidding the subsequent circulation of their paper. This they. would supply with their own, bottomed, every emission, on an adequate tax, and bearing or not bearing interest, as the state of the public pulse should indicate. Even in the non-complying States, these bills would make their way, and supplant the unfunded paper of their banks, by their solidity, by the universality of their currency, and by their receivability for customs and taxes. It would be in their power, too, to curtail those banks to the amount of their actual specie, by gathering up their paper, and running it constantly on them. The national paper might thus take place even in the non-complying States. In this way, I am not without a hope, that this great, this sole resource for loans in an agricultural country, might yet be recovered for the use of the nation during war; and, if obtained in perpetuum, it would always be sufficient to carry us through any war; provided, that in the interval between war and war, all the outstanding

paper should be called in, coin be permitted to flow in again, and to hold the field of circulation until another war should require its yielding place again to the national medium.

But it will be asked, are we to have no banks? Are merchants and others to be deprived of the resource of short accommodations, found so convenient? I answer, let us have banks; but let them be such as are alone to be found in any country on earth, except Great Britain. There is not a bank of discount on the continent of Europe, (at least there was not one when I was there,) which offers anything but cash in exchange for discounted bills. No one has a natural right to the trade of a money lender, but he who has the money to lend. Let those then among us, who have a monied capital, and who prefer employing it in loans rather than otherwise, set up banks, and give cash or national bills for the notes they discount. Perhaps, to encourage them, a larger interest than is legal in the other cases might be allowed them, on the condition of their lending for short periods only. It is from Great Britain we copy the idea of giving paper in exchange for discounted bills; and while we have derived from that country some good principles of government and legislation, we unfortunately run into the most servile imitation of all her practices, ruinous as they prove to her, and with the gulph yawning before us into which these very practices are precipitating her. The unlimited emission of bank paper has banished all her specie, and is now, by a depreciation acknowledged by her own statesmen, carrying her rapidly to bankruptcy, as it did France, as it did us, and will do us again, and every country permitting paper to be circulated, other than that by public authority, rigorously limited to the just measure for circulation. Private fortunes, in the present state of our circulation, are at the mercy of those self-created money lenders, and are prostrated by the floods of nominal money with which their avarice deluges us. He who lent his money to the public or to an individual, before the institution of the United States Bank, twenty years ago, when wheat was well sold at a dollar the bushel, and receives now his nominal sum when it sells at two dollars, is cheated of half his fortune; and by whom? By the banks, which, since that, have thrown into circulation ten dollars of their nominal money where was one at that time.

Reflect, if you please, on these ideas, and use them or not as they appear to merit. They comfort me in the belief, that they point out a resource ample enough, without overwhelming war taxes, for the expense of the war, and possibly still recoverable; and that they hold up to all future time a resource within ourselves, ever at the command of government, and competent to any wars into which we may be forced. Nor is it a slight object to equalize taxes through peace and war.' Ever affectionately

yours.

* * *

I The two following letters of Jefferson to Eppes continue the subject of this. POPLAR FOR. Sep. 11. 1813. DEAR SIR,-I turn with great reluctance from the functions of a private citizen to matters of state. The swaggering on deck as a passenger, is so much more pleasant than clambering the ropes as a seaman, & my confidence in the skill & activity of those employed to work the vessel is so entire that I notice nothing en passant but how smoothly she moves. Yet I avail myself of the leisure which a visit to this place procures me, to revolve again in my mind the subject of my former letter; & in compliance with the request of yours of to add some further thoughts on it. Though intended as supplemental to that, I may fall into repetitions, not having that with me, nor paper or book of any sort to supply the defect of a memory on the wane.

The fondest wish of

The objects of finance in the US. have hitherto been very simple; merely to provide for the support of the govmt on it's peace establishment, & to pay the debt contracted in the revolutionary war, a war which will be sanctioned by the approbation of posterity through all future ages. The means provided for these objects were ample, and resting on a consumption which little affected the poor, may be said to have been sensibly felt by none. my heart ever was that the surplus portion of these taxes, destined for the payment of that debt, should, when that object was accomplished, be continued by annual or biennial re-enactments, and applied, in time of peace, to the improvement of our country by canals, roads and useful institutions, literary or others; and in time of war to the maintenance of the war. And I believe that keeping the civil list within proper bounds, the surplus would have been sufficient for any war, administered with integrity and judgment. For authority to apply the surplus to objects of improvement, an amendment of the constitution would have been necessary. I have said that the taxes should be continued by annual or biennial re-enactments, because a constant hold, by the nation, of the strings of the public purse, is a salutary restraint from which an honest government ought not to wish, nor a corrupt one to be permitted to be free. No tax should ever be yielded for a longer term than that of the congress wanting it, except when pledged for the reimbursement of a loan. On this system, the standing income being once liberated from the revolutionary debt, no future loan nor

TO JOHN WILSON.

J.MSS.

MONTICELLO, August 17, 1813. SIR,-Your letter of the 3d has been duly received. That of Mr. Eppes had before come to hand, covering your MS. on the future tax would ever become necessary, and wars would no otherwise affect our pecuniary interests than by suspending the improvements belonging to a state of peace. This happy consummation would have been achieved by another eight years' administration, conducted by Mr. Madison, and executed in its financial department by Mr. Gallatin, could peace have been so long preserved. So enviable a state in prospect for our country, induced me to temporize, and to bear with national wrongs which under no other prospect ought ever to have been unresented or unresisted. My hope was, that by giving time for reflection, and retraction of injury, a sound calculation of their own interests would induce the aggressing nations to redeem their own character by a return to the practice of right. But our lot happens to have been cast in an age when two nations to whom circumstances have given a temporary superiority over others, the one by land, the other by sea, throwing off all restraints of morality, all pride of national character, forgetting the mutability of fortune and the inevitable doom which the laws of nature pronounce against departure from justice, individual or national, have dared to treat her reclamations with derision, and to set up force instead of reason as the umpire of nations. Degrading themselves thus from the character of lawful societies into lawless bands of robbers and pirates, they are abusing their brief ascendency by desolating the world with blood and rapine. Against such a banditti, war had become less ruinous than peace, for then peace was a war on one side only. On the final and formal declarations of England, therefore, that she never would repeal her orders of council as to us, until those of France should be repealed as to other nations as well as us, and that no practicable arrangement against her impressment of our seamen could be proposed or devised, war was justly declared, and ought to have been declared. This change of condition has clouded our prospects of liberation from debt, and of being able to carry on a war without new loans or taxes. But although deferred, these prospeets are not desperate. We should keep forever in view the state of 1817, towards which we were advancing, and consider it as that which we must attain. Let the old funds continue appropriated to the civil list and revolutionary debt, and the reversion of the surplus to improvement during peace, and let us take up this war as a separate business, for which, substantive and distinctive provision is to be made.

That we are bound to defray its expenses within our own time, and unathorized to burden posterity with them, I suppose to have been proved in my former letter. I will place the question nevertheless in one additional point of view. The former regarded their independent right over the earth; this over their own persons. There have existed nations, and civilized and learned nations, who