In a letter to Mr. Webster. the .1meriean lawyee anti

Senator, Messrs. Baring Brothers and Company, request( il a reply to the follow-

ing- 'itll'rY lis time I.egislature erotic of the American States lencl .i!al coo. it utional power to contract loans at home and abroad." .11r. ■Vebster's reply is worthy or intent: tee not only foe the ex- oil the important twilit pin to him, but as explchdlig dis- tinctly the d'art:rent powers beloaging to the States composlog the American Union, anti to the General Government.

" ItAltritt 1111oTILEIIS AND CO.

1_oadon.r,b1.1.•tober„

" Gentlemen-1 InlVe received your letter, awl lose no tittle in Ai.. ing yott My

OpilliMIL 011 till 1111CS11011 you hare subalittol for any consideration. The assertions awl sugg t odious to %kilial \ till l'tfer, 1111\ ing :Tie:area in stint,' of the }midie prints, had liot eseap.al my hit m's.

tt Your foot inquiry is. Whether the legislat lire of one of the States has legal mid coastitutioual power to contract luaus at home and abroad? ' " To this I answer, that the Legislature of a State has such power ; and how .sriy doubt could have arisen on this point it is difficult tor me to conceive. Every Mate is an independent, Sovereign, political community, except in so far as certain powers. which it might otherwise have exercised, have been conferred ,on a General Government, established under a written constitution, and exerting its authority over the people of all the States. This General Government is limited government. Its powers are specific and enumerated. All powers not conferred upon it &till remain with the States and with the people. The State 'Legislatures, Cu the other hand, possess all usual and ordinary powers of goyera- mein. subject to any limitations which may be impoied by their own constitu- tions, and, with the exception, as I have said, of the operation on those powers, of the constitution of the United States. The powers conferred on the General Government cannot of course be exercised by any individual State; nor can any state pass any law which is prohibited by the constitution of the United States. Thus no State can by itself make war or conclude peace, nor enter into alliances or treaties vvith foreign nations. In these and in other im- portant particulate, the powers which would have otherwise belonged to the State eau eine be exercised only by the General Government, or Govennnent of the United State, Nor can a State pass a law which is prohibited by its own constitution. 13ut there is no provision in the constitution of the United States, nor, eo far as I know or have understood, in any State constitution, prohibiting the Legielature of a State from contracting debts or making loans either at home or ahroad. Every State has the power of levying and collecting taxes, direct and indirect, of all kinds, except that no S! ate can impose duties ou goods a:A mach:iodise hi:ported, that power belonging exclusively to Con- gress by the constitution. That power:of taxation is exercised by every State, habitually and constantly, accenting to its own diecretien, and the exigencies of its govern:neut. ‘".rhis is the general theory of that mixed system of government which pre- vails in Anterica. And us the CO11E60.111011 of the United States contains no prohibition or reetraint On State Legislatures in regard to making loans, and as tie State cute :itution, so far as known to me, contailis any such prohibition, it is clear that, ifi this respect, these Legielateres are left in the full possession of this power, ae an oridnary and usual power or government. 0 I have seen a suggestion, that S:me loans in ust he regarded as unconstitu- tional and illegal, i mein uel, as the emestit Lit ion uf he United S■ates Las declared that no S,itte ehall emit bills of credit. It is certain that the constitution of the United S■ates dees contain this salutary prohibition ; but vhat is a bill of credit ? It hus no resembleace whatever to a bond, or other security given ffir the payment of money borrowed. TI e term Bill of Civdit ' is familiar in our political history, and its meaning well ascertained and eettled, nut only by that history, but y judicial interpretations and decisions front the highest source. For the moven: of tbis opinion, it may be suflirient to say, that bills of er (lit, th : s ,bject of the prohibition iit the constitution of the United S ates, were eeseetielly paper billy. They were paper issues, intended for circulation, end for receipt into the treasury. as caeln and wen? sometimes _made a tender 1,1 payment of debts. To put ail end at once, and for ever, to 'evils of this surt, mal to da:.geN from this source, the constitntion of the United. Stato lies declared, that ' no State shall emit bille of ete di t, nor make any thing bet gold and silver a tender iti payment of debts, nor pass ally law which shall impair the oh ligation of contracts.' All this, however, proves not that Sta:es co ii contract debts, but that, when eiintracteil, they must pay them in coil, 'e hug ta th, iv stipulations. The several States pcmsf3.sj the power of borroiving ittieity thr their ONVI1 111terlild el.:melons of expeediture, as luny as Core,s pie:sess the p.nver to borrow in be !.all of the l ti ed States, for the puranee efraising armies, equipping navies, or performbig it: ,y other of its constitm heed duties. It inay be added, that Congress itself rally recog- -Lazes this put er ii the SM,es, as it has authorized the invtstmen" of large .funds which it held in true:, the very hnportant purposes in certificates of State Stocks.

" The security for State loans is the plighted faith of the State, as a plaice] co»unenity. It rests on the same baeie as other contracts with established .governmetite—the same basis, for example, as loans made to the United States under the authority of Congress—that is to say, the good faith of the Go- vernment inakin,g the loan, and its ability to fulfil its engagements. These State loans, it is known, have been contracted principally for the purpose of Inakiirg told. canals ; and in some eases, althoughI know not how ,geeerally, the income or revenue expected to be derived from these works is di- rectly and specifically pledged for the payment of the interest and the redemp- tion of the debt, in addition to the obligation of public faith. In several State,: other branches of revenue have been specifically pledged, and, in others very re:in:hie teacta of land. It cannot be doubted that the general result of these works of internal improvement has been, and will be, to enhance the wealth and ability of the States.

" It has been said that:the States cannot be sued on these bonds. But nei- ther could the United States be sued, nor, as I suppose, the Crown of Eng- land, in a like emu. Nor would the power of suing, probably, give the creditor riII y eimenantial uffilitemal security. The solemn obligation of a government, arlaing ou its own acknowledged bond, would not be enhanced by a judgment rendered on such bond. If it either could not, or would not, make. provision for paying the bond, it is nut probable that it could, or would, make provision for satiel;yine the judgment. " The States cannot rid themselves of their obligations otherwise than by the

honest payment of the debt. They can pass no law impairing the obligation of their own contracts ; they can make nothilig a tenderiu discharge of such con- tracts lint gold and silver. They possess all adequate power of providing for the Case by taxes and internal means of revenue. They cannot get round their duty, nor evade its force. Any failure to fulfil its undertakiugs would be an open violation of' public faith, to be followed by the penalty of dishonour mill disgrace— apenalty, it may be presumed, which no State of the American Uaion would be likely to incur.

"I hope I may be justified by existing circumstances to close this letter

with the expression of an °elide,' of a more general nature. It is, that I lailieve the citizens of the Imited States, like all honest nien, regard debts, -whether public or private, and whether existing at home or abroad, to be of moral as vell as legal obligation ; and I trust I may appeal to their history, from the moment when those States took their rank among the nations of the earth to the present time, for proof that this belief is well founded ; and if it were possible that any of the States should at any time so entirely lose her 14dr-respect and forget her duty as to violute the faith solemnly pledged for her pecuniary engagements, I believe there is no country upon earth—not even that of the injured creditors—in which such a proceeding would meet with less countenance or indulgence than it would receive from the great mass of the American people.

" 1 have the honour to be, gentlemen, your obedient servant, DANIEL WEESTEE."

The Philadelphia correspondent of the Morning Chronicle, writing on the 25th of October, has some remarks on the money crisis, and the ability of the New York banks to continue the payment of specie-

" The pressure continues; the panic increases; and the crisis, I hope, has reached its worst. Of this, however, I have doubts; for, although this city is chiefly floating in paper-currency, and therefore much relieved, the suffering smdxfistress of' merchants and traders of every class in New York is extretne. stocks have declined still further. In fact, it has become useless toquote

them, for they .do: nut remain steady even for an:hour ; and if the packet be detained ever so short a time after. the closing of the mail, the priees 1 sboult1 forward you would be all wrong. As a specimen of the very extraorilmary fluctuations in the money-market, I will only instance one fact. On Monday last, in Wall Street, Philadelphia drafts and paper were discounted at seven-- teen per cent. On Tuesday, the rates were only (4.;ht per cent.; yesterday, the quotations were nine to ten. Three, and even four and five per cent, a month are paid in New York on good merchants' paper; the banks are not discounting a dollar, and several heavy failures have c,:carred. Meanwhile, the merchants cannot obtain payment from the stispent7ed cities, except at cia enormous sacrifice., As an instance of the great set erily of the pressure, I quote the following passage from a letter published yesterday in the Phila- delphia United Slates Gazetic—a paper of high respectability, and thereffire to be mentioned as good authority. In referring to a meeting of the New York dry-goods merchants, held at the City Hotel, the writer says—, They avow, I understand, that unless some relief be afforded by the banks, or tlie English agents or importers, they must in a Lady suspend all payments"

The same writer refers to a prevalent opinion respecting the best means oh' preventing the recurrence of these ditfieulties in the American. mon ey -market.

" I honour the wish of the honks to pay specie : but if that wish cannot be accomplished without a desolation to trade of the inest sweeping eharaut en, surely, surely their policy is erroneous, and not sufficiently modified by flue dictates of humanity. It may be satbly laid down, I believe, as a postulate, attd. that too on the authority of all our best financial writers, that no com- mercial nation can have a specie currency sufficient for its wants. Even England has found her difficulties on this very score. Can it, them he woe- dered at, that a new country, so extensively commercial as the 'United States of America, is not able to continue specie payments, when her imports sim. largely exceed her exports, and the balance Mr many years has been peid. taut in gold and silver ? This brings me to an important sign of the times—a very important sign to the merchants and manufacturers of England :I mean, to the eXpreSsiOn of public opinion, now everywhere celmed—through the press, the Legislatures, and the people—from the humblest individual up to the hiehest in all the Northern and Middle States—te the effect that the tariff is too low ; the imports are too large : that we are too deeply in debt to Europe; and that the only remedy will he to increase the 'tariff considerably, Mr the itiiritriet‘e.c,tion of home industry and the encouragement of American mantilla:-