What comes in consequence of all this? The nation is obliged to carry on its vast pecuniary operations with a broken-down currency. This, of course, involves the finances in great embarrassment, vastly increases the public expenditures and the national indebtedness. The whole financial system of the country is crippled, and becomes as weak as its currency.

No better illustration of the truth of this statement was perhaps ever afforded than that found in the experience of the United States during its great struggle.

The country was suddenly involved in a stupendous war, — technically, only a civil war, but, practically, a great international struggle, so vast were its dimensions, so strictly was it sectional; a conflict between two different civilizations, on different though contiguous portions of the American continent.

At the commencement of the struggle, the currency, as we have before said, amounted, circulation and deposits, to four hundred and sixty millions against eighty-three millions of specie. Upon the mere threat of secession, so greatly did it impair public confidence that the banks at the South began to suspend; and their example was followed until most of the Western, and many of the Eastern, were in a state of suspension. After the first shock had passed by, most of the banks in the loyal States resumed specie payments; but the large demands of the government, in the course of about a twelvemonth, compelled a universal suspension by both the national treasury and the banks, and the whole country was thrown upon an irredeemable paper currency.

All this happened, not because the currency was so redundant, but because it was so unsound. Had it been based in full on specie, this disastrous result would have been avoided.

Now, if it ever could be supposed politic or safe to send away the real money of a country and live on credit, if this could ever be regarded as good economy or statesmanship, when should it be done? When the nation is in prosperity, and does not need this little gain, or when it is strained to agony in the struggles of war? If this is really a resource, should it be spent in time of peace for extra imports of wine and silks, or reserved to the great trial of life for the people, when it may bring back the munitions of war?

If we were to dispense with three hundred millions of gold that form our material currency, was it wise to send it off in years of quiet and prosperity, instead of reserving it to the decisive hour of our nationality?

In time of war, a mixed currency always becomes an unmixed paper currency. Being at all times really inconvertible, any disturbance in public affairs which destroys, or even essentially impairs public confidence, will cause a general suspension of the mixed-currency banks, and, of course, of the government, and the substitution of a credit for a value currency.

If this is true, — and all the facts of history go to prove it, — then every nation, which, in time of peace, relies upon a mixed currency, must, in time of war, suffer all the disasters incident to an irredeemable paper currency; must pay a great deal more in all its purchases, require larger loans, and accumulate greater debt, — greater in proportion as the currency is deficient in the element of value.

" A nation may almost as well go to war with paper guns as a paper currency." — J. Y. Smith.

The truth of this was certainly very strongly exhibited in the experience of the government of the United States during the Rebellion. The failure of the currency compelled the national legislature to adopt the arbitrary measure of making its own irredeemable notes legal tender.

This was a palpable violation of the most sacred rights of the people, and involved the treasury in a labyrinth of embarrassment and wasteful expenditure. Necessity, which knows no law, demanded all this; and there may be little or no blame on the immediate agents. The law of value had already been violated by the introduction, in peace, of the element of credit into that currency, which the government was obliged to make use of in time of war. It was not easy to change its character at such a crisis, and it was allowed to go on to its proper consequences.

If these are the natural and inevitable results of a mixed currency in such an event, is it not true that a people imposing on themselves a mixed currency can never be financially " prepared for war "?

IV. A mixed currency discourages domestic manufactures, disturbs the proper relation of exports and imports, and puts the balance of. trade against the people employing the greater proportion of credit.

These effects will be recognized as injurious by all classes of persons; but those who are so solicitous for the positive encouragement of domestic manufactures, and for the restraint of imports, as to favor the enactment of prohibitory or protective laws imposing duties on the foreign article, will, of course, most fully appreciate and deeply feel this tendency of a mixed currency.

The course of this will be best observed in an illustration from the manufacture of a specific article: —