THE UNIVERSITY 
 
 OF ILLINOIS 
 
 LIBRARY 
 
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 CONSIDERATIONS O 
 
 ON THE 
 
 CURRENCY AND BANKING SYSTEM 
 
 OP THE 
 
 UNITED STATES. 
 
 BY ALBERT GALLATIN. 
 
 CAREY & LEA.— CHESTNUT STREET. 
 1831.
 
 ADVERTISEMENT. 
 
 This Essay was prepared for the American Quarterly 
 Review of December, 1830. The labor of digesting and 
 condensing several hundred bank returns proved much 
 greater than had been anticipated ; and the time was 
 too short for a thorough investigation. They have been 
 now carefully examined, and the general results are, it 
 is believed, as correct, as can be expected from the ma- 
 terials on hand. Several transpositions and verbal al- 
 terations have also been made; some short explanatory 
 notes have been added; and tabular statements are 
 annexed, which could not be inserted in a Review, 
 
 New- York, January 1st, 1831.
 
 •^ 
 
 CONTENTS. 
 
 Introduction , Page 5 
 
 Precious metals 6 
 
 Paper money 19 
 
 not convertible into specie 20 
 
 convertible at virill 28 
 
 Banking system of the United States 39 
 
 Remedies — enlargement of metallic currency 55 
 
 suppression of small notes , 56 
 
 proper valuation of gold coins 57 
 
 miscellaneous provisions 65 
 
 Constitutional powers of Congress 71 
 
 Stamp duties 75 
 
 Bank of the United States 76 
 
 Objections answered , 84 
 
 Notes. A. Ratio of gold to silver 93 
 
 B. Banks of Scotland ib- 
 
 C. Restrictions on private banking 95 
 
 Statements. I. Banks in operation, 1st January 1830 97 
 
 II. Situation of banks (ascertained) January 1st 1830. . 101 
 
 III. Capital of other Banks " '^ " 103 
 
 IV. Banks which have failed ib. 
 
 V. Depreciation of bank notes during the suspension of 
 
 specie payments. 106 
 
 VI. Situation of the United States Bank, 1819 to 1829 ib. 
 VII. Distribution of the nett circulation of the United 
 
 States Bank, September 1830 ib.
 
 CONSIDERATIONS, &c. 
 
 THE framers of the Constitution of the United States were 
 deeply impressed with the still fresh recollection of the baneful 
 effects of a paper money currency, on the property and on the 
 moral feeling of the community. It was accordingly provided by 
 our National Charter, that no state should coin money, emit bills 
 of credit, make any thing but gold arid silver coin a tender in pay- 
 ment of debts, or pass any law impairing the obligation of con- 
 tracts ; and the power to coin money and to regulate the value 
 thereof, and of foreign coin, was, by the same instrument, vested 
 exclusively in Congress. As this body has no authority to 
 make any thing whatever a tender in payment of private debts, 
 it necessarily follows, that nothing but gold and silver coin can 
 be made a legal tender for that purpose, and that Congress can- 
 not authorize the payment, in any species of paper currency, of 
 any other debts but those due to the United States, or such debts 
 of the United States as may, by special contract, be made paya- 
 ble in such paper. AU the engagements previously contracted 
 at home, by the United States, were expressed in Spanish dol- 
 lars ; all the moneys of account of the several states, were esti- 
 mated and payable in that coin; there might be some uncertainty 
 as to the precise weight of pure silver which it contained ; and 
 the assays made at the time, may not, for want of proper means, 
 have had all the accuracy of which that process is susceptible. 
 But they were made in good faith ; and the Act of Congress of 
 the year 1791, which declared that the dollar of the United 
 States should contain 371^ grains of pure silver, has irrevocably 
 fixed that quantity as the equivalent of a dollar of account, and 
 as the permanent standard of value, according to which all con- 
 tracts must be performed. The relative legal value of gold and 
 foreign coins to that standard, may from time to time be varied, 
 provided that neither shall be so overrated, as to authorize the 
 payment of a debt witli an amount in such coin of a less actual 
 value, than that of the silver to which it may be made to cor- 
 respond. 
 
 The provisions of the Constitution were universally considered 
 as affording a complete security against the danger of paper
 
 6 BANKS AND CURRENCY. 
 
 money. The introduction of the banking system, met with a 
 strenuous opposition on various grounds ; but it was not appre- 
 hended that bank notes, convertible at will into specie, and which 
 no person could be legally compelled to take in payment, would 
 degenerate into pure paper money, no longer paid at sight in 
 specie. At a later date, although occasional bankruptcies had 
 taken place, and might again be anticipated, there was no ap- 
 prehension of a general failure of the banks in three-fourths of 
 the states. Still less was it expected, and it was the catastrophe 
 of the year 1814 which first disclosed not only the insecurity of 
 the American banking system, as then existing, but also, that 
 when a paper currency, driving away, and superseding the use 
 of gold and silver, has insinuated itself through every channel of 
 circulation, and become the only medium of exchange, every 
 individual finds himself, in fact, compelled to receive such cur- 
 rency, even when depreciated more than twenty per cent, in 
 the same manner as if it had been made a legal tender. The es- 
 tablishment of the Bank of the United States was recommended 
 by the Treasury, and that Institution was incorporated by Con- 
 gress, for the express and avowed purpose of removing an evil, 
 which the difference in the rate of depreciation, between the 
 paper currencies of the several states, and even those of different 
 places in the same state, had rendered altogether intolerable. 
 The object in view has been obtained. The resumption of specie 
 payments, which the state banks had been unwilling or unable 
 to effect, took place immediately after that of the United States 
 had commenced its operations. And it has, for a number of 
 years, supplied the country with a currency safer, and, it must 
 at least be allowed, more uniform, than that which the state 
 banks could furnish. The question, whether the charter, which 
 expires in a few years, should be renewed, has been brought by 
 the President before Congress, with a suggestion that a national 
 bank, founded upon the credit and revenues of the government, 
 might be advantageously substituted, to that now in existence. 
 Reports favorable to the continuance of the present bank, have 
 .been made by committees of both houses of Congress. Another 
 report, on the relative value of gold and silver, and intimately 
 connected with the subject of currency, has also been made by 
 the Secretary of the Treasury to the Senate. Availing ourselves 
 of the information afforded by those documents, and particularly 
 of the arguments adduced in Mr. M'Duffie's able report, we 
 intend to examine this important question, principally in refer- 
 ence to the currency of the country, considered as the common 
 standard, by which the value of all the other commodities is 
 estimated, and every contract is performed. 
 
 Whatever commodity or species of paper may, by law or 
 general consent, be universally received in any country, in ex- 
 change of every other commodity, and in payment of all debts,
 
 BANKS AND CURRENCY. 7 
 
 is the circulating medium or currency of such country, or in 
 other words, its common standard of the value of all commodities 
 whatever, and that which regulates the performance of all 
 contracts not specially excepted. It is therefore of primary 
 importance, that the commodity or substitute, which n,ay be 
 selected for that purpose, should be of a value as permaneit as 
 practicable, and the same in every part of the same counby ; 
 and it is also highly desirable, that the same circulating medium 
 should be common to all countries connected by commerce. 
 Gold and silver are the only substances, which have been, and 
 continue to be, the universal currency of civilized nations. It 
 is not necessary to enumerate the well-known properties which 
 rendered them best fitted for a general medium of exchange. 
 They were used, not only as ornaments and objects of luxury, 
 but also for that particular purpose, from the earliest times. We 
 learn from the most ancient and authentic of records, that Abra- 
 ham was rich in cattle, in silver, and in gold ; that he purchased 
 a field for as much money as it is worth, and in payment weighed 
 four hundred shekels oi silver, current (money) with the mer- 
 chant. And when we see that nations, differing in language, 
 religion, habits, and on almost every subject susceptible of 
 doubt, have, during a period of near four thousand years, agreed 
 in one respect; and that gold and silver have, uninterrupt- 
 edly to this day, continued to be the universal currency of the 
 commercial and civilized world, it may safely be inferred, that 
 they have also been found superior to any other substance in 
 that permanency of value, which is the most necessary attribute 
 of a circulating medium, in its character of the standard, that 
 regulates the payment of debts, and the performance of con- 
 tracts. 
 
 There is not, however, in nature, any perfect or altogether 
 permanent standard of value. There is not a single commodity, 
 the relative value of which, as compared to that of all other 
 commodities, is not subject to great and permanent changes as 
 well as to temporary fluctuations. But it will be found, that 
 the nature of the demand for precious metals, the comparative 
 regularity of the supply, and especially their much greater du- 
 rability and intrinsic value, than those of any other sub&tancd 
 otherwise fitted for a circulating medium, restrain the fluctua- 
 tions to which the relative value is liable, within far narrower 
 limits, than is the case with any other commodity which might 
 have been selected for a currency. 
 
 It is well known that the discovery of America was followed by 
 a great and permanent change in the price of the precious metals> 
 which reduced it to one-fourth of their previous relative value 
 as compared to all other commodities. This great revolution was 
 due to a simultaneous vast increase of the supply and correspond- 
 ing reduction in the cost of production of (he metals. The A me-
 
 8 BANKS AND CURRENCY 
 
 rican mines o( silver do not lie nearer the surface of the earth 
 than those of other countries ; the ore rarely yields more silver 
 than one-iburth per cent, of its w^eight; nor was there at the time 
 any im»rovement adopted that tended materially to lessen the 
 expepie of extracting the silver from the ore.* The superiority 
 of tie silver mines of America, appears to consist, principally, 
 in rtie magnitude of the beds, and the much greater quantity 
 of ore vsrhich can accordingly be dug out with the same labor. 
 The annual labor of one miner at the mine of Valenciana, 
 the most fertile of Mexico, was sufficient, in 1803, to extract 
 from the bowels of the earth, four hundred quintals of ore, 
 which produced one quintal of silver ; and the annual produce 
 of the mine exceeded three millions of dollars in value, (about 
 220,000 lbs. troy weight) : whilst, at the richest mine of Saxony, 
 the annual labor of eleven miners was necessary to extract the 
 ore sufficient to produce a quintal of silver; and the annual pro- 
 duce was less than ninety thousand dollars, (about 6,200 lbs. 
 troy weight). Although the money price of mining labor appears 
 to be five times greater in Mexico than Saxony, and notwith- 
 standing the want of fuel and other circumstances which in- 
 crease the current expenses, the cost of production was still 
 much less at the Mexican than at the Saxon mine, and left a 
 considerable rent to the owner. The Saxon mine, though prob- 
 ably as rich as any that was in operation in Europe prior to the 
 discovery of America, could not, on account of the difference in 
 the rate of wages, be worked if situated in Mexico. It follows, 
 that all the American silver mines are superior to it in fertility, 
 though in that respect differing from each other, and gradually 
 decreasing from that of Valenciana, down to the poorest, which 
 probably affords no rent to the owner. 
 
 The American mines, or washings of gold, are in the same 
 manner more fertile, or, with the same labor, produce much 
 greater quantities of pure metal than those of Europe. But the 
 difference must have been less with respect to gold than to silver 
 mines. The relative value of gold to silver was, before the 
 discovery of America, at the ratio of 11 or 12, and is now at 
 that of 15 or 16 to 1. If the depreciation in the value of silver 
 has been at the rate of 4 to 1, that of gold has been only at the 
 rate of about 3 to 1 ; and this may afford some reason to think, 
 that, of the two metals, gold is probably the most permanent 
 standard of value. It must be observed, that, though wanted 
 for similar purposes, the relative value of gold to silver does not 
 depend on any supposed similarity or connexion between the 
 two metals, but is the result of their respective prime cost, which 
 determines the value of each in relation to that of all other 
 commodities. 
 
 * Humboldt's New Spain.
 
 BA.\KS AXD CURRENCY. 9 
 
 As the total irtiportatioii of precious metals from America to 
 Europe had not, prior to the year 1596, exceeded a quantity 
 equal to that contained in eight hundred milHons of dollars, and 
 the depreciation was then already at the rate of about 3-^ to 1, 
 it is probable that the total amount of gold and silver existing 
 in Europe prior to the discovery of America, though worth then 
 four times as much, did not in quantity exceed that contained 
 ill three hundred millions of dollars, money of the present 
 times. 
 
 The total amount of gold and silver produced by the mines 
 of America, to the year 1803, inclusively, and remaining there 
 or exported to Europe, has been estimated by Humboldt at 
 about five thousand six hundred millions of dollars; and the 
 product of the years 1804 — 1830, may be estimated at seven 
 hundred and fifty millions. If to this we add one hundred mil- 
 lions, the nearly ascertained product to tliis time of the mines 
 bf Siberia, about four hundred and fifty millions for the African 
 gold dust, and for the product of the mines of Europe, (which 
 yielded about three millions a year in the beginning of this cen- 
 tury.) from the discovery of America to this day, and three 
 hundred millions for the amount existing in Europe prior to the 
 discovery of America, we iind a total not widely dilfering from 
 the fact, of seven thousand two hundred millions of dollars. It 
 is mucli more difficult to ascertain the amount which now re- 
 mains in Europe and An>3rica together. The loss by friction 
 and accidents might be estimated, and lesearches made respect- 
 ing the total amount which has been exported to countries beyond 
 the Cape of Good Hope ; but that wliich has been actually con- 
 sumed in gilding, plated ware, and other manufactures of the 
 same character, cannot be correctly ascertained. From the im- 
 perfect data within our reach, it may, we think, be affirmed, 
 that the amount still existing in Europe and America certainly 
 exceeds four thousand, and most probably falls short of five 
 thousand millions of dollars. Of the medium, or four thousand 
 live hundred millions, which we have assumed, it appears that 
 from ^ to f is used as currency, and that the residue consists of 
 plate, jewels, and other manufactured articles. It is known, 
 that of the gross amount of seven thousand two hundred mil- 
 lions of dollars, about 1800 millions or ;}th of the whole in 
 value, and ^Vth in weight, consisted of gold. Of the four thousand 
 five hundred millions, the presumed remaining amount in gold 
 and silver, the proportion of gold is probably greater, on account 
 of the exportation to India and China having been exclusively 
 in silver, and of the greater care in preventing every possible 
 waste in an article so valuable as gold. 
 
 In order, therefore, to produce a revolution in the price of 
 gold and silver, such ns was caused by that event, mines must 
 be discovered, which, in thirty or forty years, should produce,-
 
 10 BANKS AND CURRENCY. 
 
 in addition to the supply required by the increasing demand, 
 thirteen or fourteen tliousand millions of dollars, or three times 
 the quantity now existing; and this increased supply must be 
 accompanied with a corresponding reduction in the cost of pro- 
 duction. It is obvious, that the discovery of one hundred new 
 mines, even superior in magnitude, and equal in other respects 
 to that of Valenciana, would only cause mines of inferior fer- 
 tility to be abandoned, and could produce no greater effect on the 
 price of silver, than reducing it to the actual cost of production 
 at the mine of Valenciana. The expense of extracting the silver 
 from ore of a given quality, once brought to the surface of the 
 earth, bears too small a proportion to the whole expense of work- 
 ing a mine, to render it possible that any improvement in that 
 process should cause any great reduction in the price of the metal 
 It does not appear that such reduction can be effected, other- 
 wise than, either by the discovery of numerous and large beds 
 of ore, much richer in silver than any yet worked, or by a great 
 reduction in the money price of labor in America, Judging 
 from analogy, the first event, at least to a sufficient extent, is 
 altogether improbable; and the last contingency cannot take 
 place but slowly and gradually. On the other hand, the dimi- 
 nution in the annual supply for the last twenty years, having 
 been exclusively caused by the convulsions attending the revo- 
 lutions of the new American states, is but temporary ; and the 
 successive numerous discoveries of new mines, during the seven- 
 teenth and eighteenth centuries, render it highly probable, that, 
 after order and security shall have been restored in those states, 
 a similar progress will take place, and continue, as heretofore, 
 to produce an increasing annual supply, corresponding with the 
 increasing demand. This demand, also, being always propor- 
 tionate to the wealth and prosperity of the civilized world, can 
 increase but gradually. It is, therefore, highly improbable, that 
 any new revolution should again occur, producing effects in any 
 degree similar to those which followed the discovery of Ame- 
 rica, or that there should be any other permanent alteration 
 in the price of the precious metals, but such slow and gradual 
 changes as cannot substantially afTect the due performance of 
 the great mass of ordinary contracts. Before we examine the 
 temporary fluctuations in price, to which both gold and silver 
 are liable, it is necessary to inquire into the nature of the de- 
 mand for those metals. 
 
 Mines being, like tillable land, private property, and of dif- 
 ferent fertility, the rent of either, as well as the intrinsic value 
 of their respective produce, are regulated by analogous laws. 
 But there is an essential difference between the demand for 
 corn and that for the precious metals. That for corn, or the 
 ordinary article of food, is for an amount in quantity, without 
 much regard to value. That for gold and silver is for an amount
 
 BANKS AND CURRENCY. 11 
 
 in value and not in quantity. More food is consumed and may 
 be wasted in plentiful years, than in those of scarcity. But there 
 is always a certain quantity of corn, or other usual article of 
 food, determined by population, and which must necessarily be 
 supplied at any price, without any other limits than actual de- 
 ficiency in the supply, or absolute inability to pay the market 
 price ; and in either case a portion of the suffering population 
 must perish. In a country requiring annually at least fifty mil- 
 lions bushels, or any other quantity of corn, for the 7iecessary 
 subsistence of its inhabitants, there is a most imperative demand 
 for that amount, or a substitute for it ; and this must be satis- 
 fied, if the amount can be procured at all, and at any price, 
 provided the country can by any means pay for it. The demand 
 for corn is therefore for a certain quantity regulated by the 
 population, and not for a certain value proportionate to the in- 
 come, capital, or wealth of the country. 
 
 But the demand for gold and silver is, either for plate, jewels, 
 and other manufactured articles, such as plated ware, gilding, 
 &.C. ; in which those metals are used, or for currency. It is evi- 
 dent, that all, or nearly all those objects of demand being, with 
 the exception of currency, articles of luxury, the effective de- 
 mand for them, including both the wish to possess and the means 
 to pay, must be proportionate to wealth, and therefore for a cer- 
 tain amount in value and not in quantity. No individual can lay 
 out more than a certain portion of his income or capital in plate 
 and jewels. If the price of the precious metals is reduced to 
 one fourth of what it previously was, as happened during the 
 latter end of the sixteenth century, he will be able, with the 
 same income, to obtain four limes the quantity of plate and gold 
 ornaments which he formerly possessed, because their value re- 
 mains the same. But the increased cheapness will in a very 
 inconsiderable degree, if at all, have a tendency to increase the 
 amount in value of gold and silver articles which will be used. 
 An individual may be induced by such great reduction in the 
 price of silver, to substitute silver spoons or forks to those made 
 of inferior metal ; but so long as silver spo^^ns or forks are dearer 
 than those of any other metal, he cannot, his income remaining 
 the same, indulge his wish without retrenching his expenses in 
 some other respects, and without depriving himself of some other 
 comforts. What is true of every individual in every country, is 
 equally so of the aggregate of individuals, or of every country. 
 The demand for an increased value of plate, jewels, and other 
 articles manufactured, in whole or in part, of gold or silver, 
 with the exception perhaps of a few articles in general use 
 amongst all classes, will ever}'' where be nearly in proportion to 
 the wealth of each country respectively. And what is nearly 
 correct, as regards the demand for mamifacturcs of gold and
 
 12 BAI«JKS AND CURRENCY. 
 
 silver, is strictly true as applied to the demand for those metals 
 for currency. 
 
 As a silver dollar, or dollar bank note, passing from hand to 
 hand, effects in a given time, a year for instance, a great num- 
 ber of payments, the amount of currency wanted in any country 
 is always much less than the gross amount of payments made in 
 currency within the same time. The amount thus wanted is 
 that which is necessary and sufficient, for the payment of all 
 such purchases of land, labor and product of labor (embracing 
 every species of commodities and capital) as are paid with cur- 
 rency. Its value must always, therefore, bear a certain propor- 
 tion to the aggregate xalue of the land, labor, and all objects 
 whatever, thus paid for with currency. That proportion, as 
 well as that which the value of the annual purchases effected 
 with currency may bear to the value of the whole amount of 
 annual exchanges and purchases of the country, whether ef- 
 fected with currency or by any other means, must vary, and 
 cannot be precisely ascertained. But, whatever either of these 
 two ratios may be, the average value of the various objects pur- 
 chased, which are paid for in currency within a given time, a 
 year for instance, will always require a certain proportionate 
 value of currency. The average value of the objects, thus an- 
 nually paid for, determines the total average amount in value 
 of currency which is requisite, and in the case before us, the 
 average value of precious metals which is wanted for currency, 
 and for which there is an actual demand for that purpose. 
 
 Let it be supposed that the amount of currency wanted in a 
 country, is one-tenth part of the whole amount of the annual 
 payments made there in currency ; and that the currency con- 
 sisting exclusively of silver, there are annually in that country 
 one million of bushels of wheat sold and paid for in currency. 
 It is clear, that if the relative value of silver to wheat be such 
 in such country, that one ounce of silver is the equivalent and 
 common price of a bushel of wheat, one hundred thousand ounces 
 of silver will be necessary and sufficient to effect the payment of 
 all the wheat annually sold and paid for in currency. If on ac- 
 count of a reduction in the cost of its production, or from any 
 other cause, the value of silver, as compared to that of all other 
 commodities, should be reduced to one-half of what it previously 
 was, the value of wheat, as compared with that of all other 
 commodities, silver excepted, remaining the same as before, two 
 hundred thousand ounces of silver .would be necessary to effect 
 the payment of the one million of Oushels of wheat sold for cur- 
 rency during the year. But although the quantity of silver (or 
 nominal amount of currency) wanted, was twice as great as be- 
 fore, the value would remain precisely the same, two hundred 
 thousand having become worth no more than one hundred thou- 
 s.ind ounces had previously been. If, instead of this, the value
 
 BANKS AND CURRENCY. 13 
 
 of silver had undergone no change, and either the quantity of 
 wheat, annually sold and paid for in currency, had increased to 
 two millions of bushels, its price remaining the same, or, the 
 quantity thus sold remaining the same, the value of wheat as 
 compared to all other commodities had doubled, as the two hun- 
 dred thousand ounces of silver, wanted to effect the payments 
 of the sales of wheat, would actually be worth twice as much 
 as the one hundred thousand ounces had been, the value of cur- 
 rency wanted would be twice as great as theretofore. 
 
 What is true of the proportionate value of the currency, want- 
 ed to effect the payment of the quantity of wheat annually paid 
 for in currency, to the value of that wheat, is equally true of the 
 proportionate value of the currency, wanted to effect the payment 
 of the whole amount of land, labor, and products of labor, an-: 
 nually paid for in currency, to the aggregate value of all those 
 objects. Although the proportion may vary, according to the 
 rapidity of the circulation, and to the means used in order to 
 economize the currency, it is always that aggregate value, which 
 determines the value of the currency wanted in any country. 
 Whilst that aggregate value remains the same, any great varia- 
 tion in the amount in quantity of the currency must be due to 
 a change, or cause a change, in its value, as compared with that 
 of all other commodities. Where gold and silver are the only 
 currency, any great and permanent increase in the quantity of 
 those metals used as currency, (the aggregate value of the ob- 
 jects annually paid for in currency remaining the same,) must 
 be due to a corresponding reduction in the cost of production 
 of gold and silver ; which cost, leaving to the owners of mines 
 a greater or less rent according to their fertility, determines the 
 value of those metals as compared with that of all other com- 
 modities. Where a paper has been substituted to a metallic 
 currency, any similar considerable increase in its amount must 
 cause a corresponding depreciation in its value, if the aggregate 
 value of the objects, annually paid for in currency, remains the 
 same. 
 
 The amount in value of the currency wanted to effect 
 the necessary payments, though but a comparatively small por- 
 tion, is one of the most important, productive, and necessary 
 portions of the capital of a nation. Its use is substituted to ah 
 inconvenient barter or exchange of one commodity for another; 
 it enables every individual to dispose at all times, and with fa- 
 cility, of the whole surplus of the products of his industry, and 
 to purchase with the proceeds any of the products of the indus- 
 try of others which he may want ; it promotes the division of 
 labor, and vivifies the industry of the whole country. But when- 
 ever the precious metals used as currency exceed in any country 
 the value wanted to effi^rt fhe nercssarv pavmfMits, (he surplus 
 becomes a dead and unproductive stock ; and it will, according-
 
 14 BANKS AND CURRENCY. 
 
 ly, be either converted into manufactured articles of those 
 metals, or be exported to other countries. If on the contrary 
 the currency should consist of an irredeemable paper, having 
 only an artificial and local value, and none whatever, either 
 in other countries or for any other purpose ; it is evident that 
 any excess in the nominal value of such currency, beyond the 
 actual value sufficient to make the necessary payments, must 
 cause a corresponding depreciation in that nominal value. If 
 fifty-five millions of ounces of pure silver, at its present value 
 as compared with all other commodities, are sufficient on an 
 average to effect all the payments made in the United States in 
 currency, the whole quantity of a paper currency substituted to 
 silver, cannot, on an average, whatever its nominal amount may 
 be, exceed in value fifty-five millions of ounces of pure silver, 
 or about seventy-one millions of dollars in our present coin. 
 Whether such currency amounted nominally to seventy-one, one 
 hundred, or one hundred and forty millions of dollars, its value 
 would not, on an average, exceed that of the seventy-one mil- 
 lions of silver dollars wanted to elTect the necessary payments ; 
 and the paper money would generally depreciate at least in pro- 
 portion to the excess of its nominal amount beyond seventy-one 
 millions of silver dollars. Having recurred to numbers by way 
 of illustration, it is proper to observe, that we do not mean to 
 assert that the total value of currency wanted in any country 
 is a fixed sum. Even when no alteration has taken place in 
 the industry and commerce of a country, the amount of currency 
 may occasionally, to a certain extent, exceed that which is actu- 
 ally wanted, without affecting its price. An approximation of 
 the average amount, which always fluctuates within certain 
 limits, is all we pretend to give. 
 
 It is obvious that the aggregate value of the annual payments 
 made in currency, which regulates the value of the currency 
 wanted, must itself principally depend on the aggregate value 
 of the land, labor, products of labor, and in short of all the ob- 
 jects which are or may be annually sold or exchanged. The 
 amount of the value of currency wanted, or the demand for 
 currency in every country, depends therefore principally on its 
 wealth, but is modified in some degree by the state of society. 
 The wages of labor, and the rent of land, are, in most countries. 
 no inconsiderable portion of the objects which must be paid for 
 in money. Countries where slave is generally used instead of 
 free labor, or where, as in the United States, the greater part 
 of the land is occupied and tilled by the owners, or, when rented, 
 let generally on shares, will, therefore, with equal wealth, require 
 a less proportionate amount of currency in value. Less is also 
 wanted in purely agricultural countries, and everywhere by 
 those engaged in agriculture, than in any other profession. As a 
 far greater part of the income of almost every individual is ex-
 
 BANKS AND CURRENCY. 15 
 
 pended on articles of food, than on the product of any other one 
 branch of industry, farmers consume a much greater part of the 
 products of their own industry, and they therefore have a less 
 proportionate amount of those products to exchange for the pro- 
 ducts of the industry of others, than any other profession. Barter 
 continues also to be a principal mode of exchange in the country, 
 at least in a great portion of the United States, where the planter 
 and farmer obtain from time to time their supplies from the mer- 
 chant, and pay him annually with their crop. It may be said, 
 generally, that, with respect to the state of society, the want and 
 demand for currency increase in proportion to the density of the 
 population, the consequent multiplication and growth of towns, 
 and the division of labor. And these being almost exclusively 
 the result of the increasing growth, prosperity, and wealth of a 
 country, it may be correctly asserted, that the demand for cur- 
 rency in any country is generally proportionate to its wealth. 
 
 That demand increases in proportion to that of population, 
 only in as far as population is a principal element of wealth ; and 
 both will increase together, nearly in the same proportion, in a 
 country which in other respects is nearly stationary. But the 
 ratio of the population to the actual amount of currency, which 
 always corresponds nearly with the demand for it, will be found 
 to differ materially in various countries, according to the pro- 
 ductiveness of labor, to the accumulated amount of products of 
 labor or capital, and generally to the wealth of each respectively. 
 The perpetual melting of coins, makes, indeed, the amount of 
 coinage alone, and without many subsidiary investigations, a very 
 imperfect criterion of the amount of gold and silver coins exist- 
 ing in any country. A much more correct estimate may be made, 
 where paper or debased coin, neither of which can be advantage- 
 ously exported or used for any other purpose, constitute the whole 
 or greatest part of the currency. And resorting to both means^ 
 an approximation sufficient for the purpose may be obtained. 
 
 We learn from Storch, that the paper money of Russia, amount- 
 ed, in 1812 — 1814, to five hundred and seventy-seven millions 
 of rubles, and the copper currency to about twenty-five millions. 
 Both being depreciated to one-fourth part of their nominal value, 
 were equivalent to one hundred and fifty millions of silver ru- 
 bles; to which adding the estimated amount of twenty-five mil- 
 lions of silver rubles still in circulation, gives a total of one hun- 
 dred and seventy-five millions, equal to less than one hundred 
 and thirty-two millions of dollars. The paper circulates, almost 
 through the whole empire, from Archangel to Odessa, and from 
 the banks of the Dwina to the confines of Asia. Excluding Riga, 
 Courland, and the Asiatic provinces, the one hundred and thirty- 
 two millions of dollars are the total value of currency, for at 
 least thirty-five millions of souls, that is to say, at the rate of 
 less than four dollars a head.
 
 ieJ B.Vi^KS AiXD CURRENCY. 
 
 it will hereafter be shown, that the amount of currency of the 
 
 United States, did not, in 1829, probably exceed seventy-three 
 millions of dollars, or at the rate of about six dollars a head ; a 
 result nearly the Same as that of the year 1819. The reasons, 
 why the amount is less than might have been inferred, from the 
 extensive commerce of the United States, and the wealth of our 
 large cities, have already been briefly indicated. 
 
 In France, where great pains have been taken to ascertain 
 the facts, as far as it is practicable, in a country, nine-tenths at 
 least of the currency of which consist of the precious metals, the 
 estimates vary, for ditferent years and different amounts of popu- 
 lation, from two thousand to two thousand five hundred millions 
 of francs, but only from seventy-two to eighty francs, or from 
 thirteen and a half to fifteen dollars a head. 
 
 The bank notes of the Bank of England, and of country banks, 
 amounted, in the year 1811, to forty-four and a half millions 
 sterling, and those of Scotland to three millions and a half, equiva- 
 lent, together, to about forty-four millions specie, to which add- 
 ing about four millions' worth of debased silver, gives, on a popu- 
 lation of about twelve millions of souls, about £4 sterling, or 19 
 dollars a head. In 1829, the amount has be%n stated to be twenty- 
 two millions in gold, eight millions in silver, and twenty-eight 
 millions in English bank notes, to which, adding four millions 
 of Scotch notes, gives sixty-two millions, or about the same 
 result in proportion to the population ; since this, allowing the 
 same rate of increase since 1821, as between 1811 and 1821, 
 must now amount to between fifteen and sixteen millions of 
 souls. But, including the population and the bank notes of 
 Ireland, we would have a population of about twenty-three 
 millions, and a currency of about sixty -six millions sterling, or, 
 as in France, about fourteen dollars a head. 
 
 From these and more imperfect data, in relation to other 
 countries, we believe that the total amount of currency in 
 Europe and America, may be estimated at two thousand to 
 two thousand three hundred millions of dollars ; three-fourths 
 of which consist of the precious metals, and the residue of 
 bank notes and irredeemable paper money. 
 
 The amount in weight or quantity of gold and silver, is now 
 fifteen times as great in Europe and America, as it was prior 
 to the discovery of the last country. But the three hundred 
 millions previously existing, were then worth as much as twelve • 
 hundred millions at this time. The increase, so far as it con- 
 sists only in amount, and has been caused by the reduced cost 
 of production, is, with respect to currency, of no importance 
 whatever. It is quite immaterial to the community, whether 
 one thousand ounces of silver, will, on an average, purchase 
 one thousand or four thousand given measures or weights of 
 every other commodity. Had not that reduction taken place,
 
 BANKS AND CURREWeT. 17 
 
 four hundred .thousand millions of dollars in currency would 
 have answered the same purpose as is now effected by sixteen 
 hundred thousand millions, without any other difference, than 
 probably the use of coins of base metal, instead of our dimes 
 and half dimes. But the increase from twelve hundred mil- 
 lions, (the present worth of the former three hundred millions,) 
 to four thousand five hundred millions, is an increase in value, 
 and indicates a corresponding, and, on account of the numer- 
 ous substitutes for currency introduced by commerce and 
 credit, a still greater proportionate increase of the wealth and 
 prosperity of Europe and America together, during the two 
 last centuries. That increase of value has no otherwise con- 
 tributed to this increased wealth, than as far as it has added 
 to the amount of exchangeable commodities ; and the same 
 effect would have been produced by a similar increase in any 
 other commodity. The increased wealth and prosperity of 
 Europe and America are the cause, and not the effect, of the 
 iijcreased amount in value of gold and silver, which they now 
 possess. The causes of that great increase of wealth, are not 
 to be found in the fertility of the mines of America, but in the 
 general progress of knowledge, skill, and every species of in- 
 dustry, in the consequent improvement of governments, laws, 
 and habits, in all that constitutes what is called civilization. 
 The influx of precious metals follows in every country, and 
 does not precede the corresponding increase of wealth. 
 
 As the regularity of the annual supply of the precious 
 metals is not affected by the seasons, the changes in the amount 
 of that supply, had, during the two last centuries, been grad- 
 ual, and hardly sensible from year to year. That, which has 
 taken place within the last twenty years, has been greater 
 than had been experienced, since the first great revolution 
 caused by the discovery of America, The annual supply of 
 the mines of America, Asia, and Europe, had reached its high- 
 est point, in the years 1803-1810, and amounted then to fifty 
 millions of dollars, or to about one and one-fourth per cent, of 
 the whole quantity of precious metals then existing in Europe 
 and America. The convulsions of the former Spanish colonies 
 have, for the last twenty years, reduced the total annual sup- 
 ply to about twenty-seven millions, or to about three-fifths per 
 cent, of the whole amount now existing. A diminution of one- 
 half of the ordinary supply of any other commodity, the de- 
 mand remaining the same, would have produced a still greater 
 proportionate increase in its price. Continued during twenty 
 years, this diminished supply of the precipus metals, whilst the 
 demand is still gradually increasing, cannot but have aflected, 
 in some degree, their price ; and if prolonged much longer, the 
 effect would be visible ; but it has been gradual, from year to 
 year imperceptible, and affecting in no sensible manner the
 
 18 BANKS AND CURRENCY. 
 
 performance of contracts. This is obviously due to the Com- 
 parative small amount of the ordinary supply, which does not 
 exceed one hundredth part of the stock on hand, whilst the 
 annual supply of corn and of most other natural products al- 
 ways exceeds, and that of most manufactured articles often 
 equals, the amount of the old stock. The superior durability 
 and value of the precious metals, over every other substance 
 (including even iron, copper, and other metals) fitted for a cir- 
 culating medium, which produce and preserve the great accu- 
 mulation of gold and silver, are the principal cause of their 
 great superiority over every other commodity, as a permanent 
 standard of value. 
 
 For the same reasons, any accidental inequality in the dis- 
 tribution of the precious metals, amongst the several countries, 
 in proportion to their respective wants, is promptly and easily 
 repaired; and any extraordinary demand from a particular 
 country met without difficulty, or sensibly affecting the price 
 of the metal required. The general supply of stock on hand, 
 is always sufficient to meet such demand, and the expenses 
 and charges of transportation are, on account of the greater 
 talue of an equal bulk, far less than those of any other com- 
 modity, hardly ever exceeding in time of peace one per cent, 
 on the value, even when brought from the most distant countries 
 of the civilized world. During the four years which immedi- 
 ately followed the resumption of specie payments in England, 
 that occurrence caused an extraordinary demand of more than 
 twenty millions sterling in gold, or about twenty-four millions 
 of dollars a year, being near three times as much as the annual 
 supply of that metal ; and this demand was met without any 
 difficulty, or sensibly enhancing the price of gold. As the gold 
 coins of France are, by the mint regulations of that country, a 
 little overrated in relation to those of silver, they always com- 
 mand a small premium, varying generally from one-fifth to 
 one-half per cent. This premium never exceeded the last 
 rate during the years of that demand ; which is a conclusive 
 proof that it could not at most, and at any time, have en- 
 hanced the price of gold more than three-tenths per cent.; 
 since, in that case, the advance would have also taken place 
 in France, whence, in fact, a considerable portion of that de- 
 mand was supplied. This decisive fact also shows, that it is 
 erroneously that the exportation of American gold coins, which 
 commenced in the year 1821, has been ascribed to that extra- 
 ordinary demand. The exportation has been continued unin- 
 terruptedly, after that cause had ceased to operate, and, as 
 will be seen hereafter, is due to the alteration from that epoch 
 in the rate of exchanges. 
 
 But it is nevertheless true, that as the value of the various 
 objects exchanged or sold annually in a country, and, what is
 
 BANKS AND CURRENCY. Itt 
 
 still more important, as the proportion of that value to the 
 amount of the actual payments which must be made in cur- 
 rency, are both subject to variations, the amount of currency 
 wanted in a country does, exclusively of the gradually increas- 
 ing demand caused by an increasing prosperity, vary at differ- 
 ent times in the same country. That amount ought, therefore, 
 in prosperous seasons, to exceed that which is then necessarily 
 wanted, in order to be able to meet the greater demand which 
 at times takes place. There are, in every country, banks, 
 bankers, and great dealers, in whose hands the currency of the 
 •country accumulates, to be thence again distributed amongst 
 the members of the community, according to their respective 
 ^vants. Obliged to meet those demands, it is their interest 
 •and duty to keep always those reservoirs sufficiently full. In 
 countries where no artificial substitute has rendered the task 
 more difficult, and where specie is the sole or principal cur- 
 rency, although there may be occasional varieties in its value, 
 they are of rare occurrence and restrained within narrow 
 limits ; and an actual want of specie is hardly ever known. 
 
 The substitution of a paper currency to the precious metals, 
 does not appear to be attended with any other substantial ad- 
 vantage than its cheapness; and the actual benefit may be cal- 
 culated with tolerable accuracy. If in a country which wants 
 and does possess a metallic currency of seventy millions of dol- 
 lars, a paper currency to the same amount should be substituted, 
 the seventy millions in gold and silver, being no longer wanted 
 for that purpose, will be exported, and the returns may be con- 
 verted into a productive capital, and add an equal amount to the 
 wealth of the country. If the banking system, founded on the 
 principle of a paper currency convertible at will into specie, 
 should be adopted, and notes of a very low denomination be ex- 
 cluded, it will be found, that the circulation would consist of about 
 sixty millions in bank notes and ten millions in silver.* But in 
 that case the banks, in order to sustain specie payments, must, on 
 an average, have in their vaults about twenty millions in spe- 
 cie. This is believed to be nearly the state of things at this 
 time in the United States, if, according to common usage, 
 we consider bank notes as constituting the whole of the paper 
 currency. There have been, therefore, on that principle, only 
 forty millions of dollars saved and added to the productive capi- 
 tal of the country. This, at the rate of 5 per cent, a-year, may 
 be considered as equal to an additional annual national profit of 
 
 • It has been lately slated, that the bank notes of every description in Kngland, 
 amount to fwenty-eijrht millions sterling; and the bullion in the vaults of tlio bonk, 
 to thirteen millions. If this is correet, the capital saved is only fifteen millions, and 
 the annual profit,denved from the pniwr currency, six iiundrcd thoimand jiounds sterling.
 
 laO BANKS AND CURftENCY. 
 
 two millions of dollars. The substitution of bank notes to d 
 metallic currency produces the same effect, as an addition of 
 two millions a-year, to the exports of the United States, or as a 
 diminution of taxes to the same amount. Being inclined to 
 think that the credits on the books of the banks, called deposits 
 in the United States; constitute to all intents and purposes a 
 part of their currency, we believe that the benefit derived from 
 the banking system is still greater, and is tantamount to an an- 
 nual national saving, or additional profit, of near five millions of 
 dollars.* This is certainly an important advantage, provided the 
 system is conducted so as to afford complete security ; and it 
 would be altogether free of objection, if the banks were only 
 banks of deposit and issued no paper. Barns are certainly a 
 vety expensive implement of agriculture. The capital expended 
 on those buildings, in the middle and northern states, is more 
 than the value of one year's crop of the farms, and causes there- 
 fore a deduction of more than 5 per cent, on the annual gross 
 produce of the earth. To dispense with barns would be a greater 
 annual saving, than that which arises from the substitution of' a 
 paper to a metallic currency. Some favorable seasons occur, 
 when the farmer might thresh his wheat on a temporary floor 
 exposed to the weather, and dispense with a barn. Yet, in our 
 climate, every prudent farmer prefers security to a precarious 
 advantage, and would consider it a most wretched economy, not 
 to incur the expense necessary for that object. Similar is the 
 economy of that expensive instrument, the precious nfietals, if 
 the substituted paper currency is insecure. To unite that secu- 
 rity, which is derived from a uniform and permanent standard 
 of value, with the acknowledged and considerable saving arising 
 from the substitution, is the difficult problem to be solved, in 
 every country that resorts to that cheaper species of circulating 
 medium. 
 
 A paper currency is either convertible at will into specie, or 
 redeemable at some future time, or altogether irredeemable. The 
 two last descriptions are excluded by the Constitution of the 
 United States, and require examination, only because experience 
 has shoVv-n, that a currency of the first description may degene- 
 rate into one not convertible into specie, without, on that ac- 
 count, ceasing to be the only currency of the country. Some 
 persons are yet found who contend for issues of paper money 
 to an indefinite amount, without regard to the fundamental 
 principle, that the demand is for value, and that it is impossible 
 
 * We do not fake into consideration the annual amount wanted to repair the loss 
 occasioned by friction in gold and silver coins. This has been greatly overrated by 
 respectable British writers, bat according to the various opinions deduced from ac- 
 tual experiments, cannot exceed, taking the highest computation, and is probably 
 less, than seventy thousand dollars a-year, on a coinage of forty millionei.
 
 BANKS AND CURRENCY. 21 
 
 $0 Increase the amount of currency beyond certain limits, with- 
 out producing a corresponding depreciation in its value. A 
 recurrence to that principle is sufficient to dissipate the singu- 
 lar illusion under which that opinion is advanced. 
 
 We find, in a paper laid before the Senate during their last 
 •session, that, according to the increase of population since the 
 year 1820, there ought to have been, since that time, a demand 
 for thirty-two millions of acres of the public lands, which, at 
 the present price of 1^ dollars per acre, would have yielded 
 forty millions of dollars, (or four millions a-year,) whilst the 
 annual sales amount only to one million, " the reason for which 
 is want of money to purchase." The remedy proposed in the 
 sequel, is an issue of paper money by government, the general 
 benefit of which, according to the writer, would be stupendous. 
 "Were our own government to increase our circulating medium 
 only fifty millions of dollars, income-yielding property would rise 
 two thousand millions of dollars." 
 
 The word " money" is used as synonymous with specie and 
 currency. But as currency is the thing by which every thing 
 else is valued, the value of every species of property is expressed 
 in currency. A planter, possessed of property, which, in usual 
 times, might be sold for one hundred thousand dollars, is accord- 
 ingly said to be worth one hundred thousand dollars, though he 
 may not, at any one time, have in his possession one thousand 
 dollars in currency. The word money comes thus to be used as 
 synonymous with wealth ; and, in that sense of the word, M'e 
 agree with the respectable writer of the paper in question, that 
 the reason why the sales of the public lands have not far exceed- 
 ed one million of dollars a-year, has been the want of money, 
 that is to say, of wealth on the part of those who would have 
 wished to purchase. From the other writings of the same author, 
 we had concluded, that he was in favor of issues of paper money 
 almost to an indefinite amount. But it appears by this paper, 
 that he is perfectly aware, that a very limited amount of currency 
 is sufficient ; since he avers that an additional issue of fifty mil- 
 lions would produce, on the value of tbe productive property of 
 •the country, an effect forty times as great as that issue. This re- 
 duces the question to one of quantity, and whether the amount 
 of currency supplied by the banking system now existing is 
 insufficient, and ought to be increased by an issue of government 
 paper. As it is the interest of the banks to issue as many notes 
 as can be kept in circukition, and as they arc authorized by their 
 charters to issue more than three times the present amount, it is 
 ■clear that the obligation to pay their notes in specie on demand 
 is the sole reason why that :imount is not greater. It is, there- 
 fore, absolutely necessary, in order to enlarge it, that the pro- 
 posed new issue should consist of a government paper money, 
 not convertible into specie on demand. It coula not, accord-
 
 <23 BANKS AND CURRENCY. 
 
 ing to the Constitution, be made a legal tender for the payment 
 of debts between individuals, and might only be made receivable 
 in payment of debts due to the United States. It is evident that 
 such paper could not circulate a single day in competition v^'ith 
 that of the banks, which is received not only for that purpose, 
 but in payment of all debts, and is at all times convertible into 
 specie. The new paper would be immediately depreciated in 
 proportion to its amount, and produce no other effect than that 
 of lessening the revenue of the United States in the same pro- 
 portion. It would be much more simple, if that was the object, 
 to reduce the rate of existing taxes ; with respect to the public 
 lands, to reduce the price at which they are now sold. We be- 
 lieve that this last measure would be equally just and consistent 
 with sound policy, and that the great change of circumstances 
 which has taken place, and principally the superabundant sup- 
 ply of public lands, compared with the effective demand at the 
 present price, imperatively require a reduction of that price. 
 Those lands are the property of the people of the United States 
 at large, and cannot be given gratuitously either to particular 
 individuals or to particular states. But they should not be kept 
 out of market by persevering in a price, that was adapted to the 
 time when it was fixed, and no longer accords, either with the 
 ,greatness of the supply, or with the wealth of the natural pur- 
 chasers, of those who want them for their own use, and who 
 may, if the expression is admissible, be considered as the con- 
 sumers of that commodity. 
 
 But supposing, for the sake of argument, that this additional 
 issue of paper by government should not experience any depre- 
 ciation, and should circulate at the same rate, as bank notes 
 convertible on demand into specie, not the slightest advantage 
 would accrue to the purchaser of public lands, or to any other 
 individual. If not depreciated, the same quantity of labor, of 
 wheat, or of any other commodity, will be necessary, and must 
 be given, in order to obtain an equal quantity either of that 
 paper, of bank notes, or of specie. If depreciated and circu- 
 lating, the farmer might indeed obtain two dollars of that paper, 
 instead of one in specie, for a bushel of wheat, and the laborer 
 receive one dollar nominal, instead of half a dollar in specie, 
 for a day's labor. But what benefit would arise to either? 
 Since the farmer would be obliged to pay also a double nominal 
 price for the labor he wanted, and the laborer a similar double 
 price for the farmer's wheat, and since both would likewise be 
 .obliged to give a double price for any article they might want, 
 when paid with that paper. This is so simple and obvious, that 
 we are entirely unable to understand on what grounds the con- 
 trary doctrine can be sustained. After having tried to discover 
 what was meant by those who pretend to argue in support of 
 excessive issues of paper money, we have found nothing but a
 
 BANKS AiND CURRENCY. 23 
 
 repetition of the erroneous assertions, on which the famous Law 
 attempted to build the stupendous scheme which bears his name 
 and desolated France in the year 1720. He asserted, 1st, that 
 gold and silver were only the representative or sign of wealth ; 
 2d, that paper might be that sign as well as the precious 
 metals; 3d, that by doubling or trebling the amount of that 
 sign, the national wealth would be increased to that amount ; 
 4th, that such increase of the currency would reduce the rate 
 of interest, and thereby promote industry. It is hardly neces- 
 sary to show that those assertions are a series of errors. The 
 precious metals are not merely the sign or representative of 
 Wealth ; they have an intrinsic value, on account of the cost of 
 their production, and of the demand for other uses than cur- 
 rency, and are therefore wealth itself. It is because they have 
 an intrinsic and comparatively stable value, that they have 
 become the standard of the value of every other commodity, 
 or, according to Law's vocabulary, the representative or sign 
 of wealth. A certain quantity of those signs is necessary for a 
 circulating medium ; but the quantity used adds nothing more 
 to the wealth of any country, than the intrinsic value of that 
 quantity. Paper having no intrinsic value, never can, whatever 
 its amount may be, add any thing directly to the national 
 wealth. Its utility consists in the substitution of a sign of no 
 value for a sign which has an intrinsic value, and which may, 
 on that account, be used advantageously for other purposes 
 than that of a sign. Having performed that office, the increase 
 of paper, beyond the amount of the valuable sign of which it 
 takes the place, neither adds nor produces any wealth. The 
 multiplication of the signs, beyond the amount in value wanted, 
 can have no other effect than that of depreciating their nominal 
 value, and has none on the rate of interest, which depends, not 
 on the amount of those signs, or of currency, but on the pro- 
 portion between the amount or supply of capital which may 
 be loaned, and the demand for that capital. The result of 
 Law's scheme was a fatal illustration of his doctrines. By a 
 series of arbitrary acts on the part of government, and by con- 
 necting some splendid and illusory schemes with the bank, he 
 succeeded in putting in circulation about four hundred and 
 twenty millions of dollars in bank notes, or more than twice 
 the amount of the currency then wanted in France. This 
 paper was made a legal tender, to the total exclusion of the 
 precious metals. But the laws, and all the power of the French 
 government, were unequal to the task of sustaining that excess 
 of currency. The price of every species of merchandise natu- 
 rally rose 100 per cent. Government, with a view probably 
 to prevent a total catastrophe, reduced by a decree the notes 
 to one half of their nominal value. The bubble burst' instan- 
 taneously- The whole currency of the country, the four htm-
 
 94 BANKS AND CURRENCY. 
 
 dred and fifty millions dollars of bank notes, could not, the next 
 day, have been sold for the value of the paper on which they 
 were printed. They were subsequently funded at the rate of 
 eighty for one. The public creditors, who had been paid in 
 notes, lost one hundred and fifty millions of their capital. Some 
 speculators in shares were enriched ; all the actual stockholders 
 were ruined ; and the calamity extended to all the industrious 
 and productive part of the community. Since that time banks 
 have not been connected with such gross commercial bubbles. 
 But in England, the South Sea scheme, and the joint stock 
 companies of the year 1825, were erected on the model of the 
 Mississippi Company of Law ; and the Assignats of the French 
 revolution, as well as all the other attempts to substitute an 
 excessive issue of pure paper money to a metallic currency, 
 have been but copies of his bank notes. 
 
 It has been contended by distinguished writers of a very dif- 
 ferent description, that an irredeemable paper currency, not 
 exceeding in its nominal amount that in value which is actually 
 wanted, might be altogether substituted to gold and silver, pro- 
 vided that government should always regulate the issues so as 
 never to exceed or fall short of that amount. The advantage 
 of such paper, over notes convertible on demand in specie, 
 would consist in saving the expense of the gold and silver ne- 
 cessary to pay such notes at the will of the holders, and in pro- 
 tecting the currency against both a panic, and the consequences 
 of any great drain of the precious metals from abroad ; dangers 
 to both of which notes payable in specie are exposed. It must, 
 in the first place, be observed, that the unavoidable eifect of 
 an increased or diminished value of the currency, arising from 
 contraction or excess of its amount beyond certain limits, is ul- 
 timately to sink or to raise the price of every other commodity. 
 But this change may not affect immediately the price of the 
 commodities or of the labor applied to objects not susceptible 
 of being exported ; and that of exportable commodities is 
 often affected by variations in the relative amount of supply 
 and demand, which are altogether foreign to the state of the 
 currency. The wisest government, with the purest views, 
 never has any other means of ascertaining, whether the amount 
 of a paper money is too limited or excessive, than the price of 
 the precious metals in such paper, because those metals are, of 
 all others, the commodity least liable to variations in its value. 
 The rate of exchanges may occasionally be a more sensitive 
 test, but is in reality a more circviitous and less certain mode of 
 resorting to the same standard of value. Thus government has 
 no means to ascertain, whether its issues are too contracted or 
 too large, till after the evil has actually taken place ; whilst 
 banks, ojjjiged to pay their notes in specie, and skilfully direct- 
 ed, are constantly employed in preventing its occurrence. But
 
 BANKS AND CURIIENCT. 35 
 
 supposing government to be endowed with such skill as to be 
 able always to adjust the proper amount of currency; an amount 
 which, if this is metallic, adjusts itself, and which, by banks 
 properly conducted, may be tolerably well regulated ; there is 
 still an ingredient, inherent to paper not convertible on demand 
 in specie, which no human skill can control. This is public 
 opinion, with respect to future contingencies, and therefore 
 purely conjectural. 
 
 It has been asserted, that the value of an irredeemable paper 
 money is altogether regulated by its amount, and does not, or at 
 least ought not, to depend on confidence in the solvency of the 
 government by which it is issued. The last assertion may be 
 strictly true, though we believe, that in point of fact, there has 
 hardly been any issue of paper, which in its origin was not 
 founded on an explicit or implied promise to redeem it. But, if 
 not depending on confidence in the solvency, the value of the 
 paper will most certainly be atfected by the public confidence 
 in the skill, discretion, and probity of government, these being 
 the only guarantees against excessive issues, and experience 
 having but too well proved the natural disposition of every gov- 
 ernment which ever did issue paper, to resort, whenever pressed 
 by its exigencies, to that resource, without regard to amount 
 and consequences. Our principal concern, however, is with 
 paper, originally convertible on demand in specie, and which 
 has degenerated into a paper, the redemption of which is in- 
 definitely postponed. It is evident that the value of such cur- 
 rency must depend, at least in part, on the probability of its 
 being ever redeemed, or of specie payments being resumed, and 
 of the time when this will take place. And as there lies the 
 danger to which the currency of the United States is exposed, 
 we will illustrate that position by some instances. 
 
 The paper money issued by Congress during the war of the 
 American independence, experienced no sensible depreciation 
 before the year 177G, and so long as the amount did not exceed 
 nine millions of dollars. A paper ciirrency, equal in value to 
 that sum in gold or silver, could therefore be sustained so long 
 as confidence was preserved. The issues were gradually in- 
 creased during the ensuing years, and in April 1778, amounted 
 to thirty millions. A depreciation was the natural consequence; 
 but had the value of the paper depended solely on its amount, 
 the whole quantity in circulation would have still been equal in 
 value to nine millions, and the depreciation should not have 
 been more than 3^ to 1 ; instead of which, it was then at the 
 rate of six dollars in paper for one silver dollar, and the whole 
 amount of the paper in circulation was worth only live millions 
 in silver. It is obvious that the diflTerence was due to lessened 
 confidence. The capture of Burgoyne's army was followed l)y 
 ♦he allinnre with Franco, and her becoming a party to the war
 
 26 BANKS AND CURRENCY. 
 
 against England. The result of the war was no longer consid- 
 ered as doubtful, and sanguine expectations were formed of its 
 speedy termination. The paper accordingly rose in value ; and 
 in June, 1778, although the issues had been increased to more 
 than forty-five millions, the depreciation was at the rate of only 
 four to one. From the end of April of that year, to the month 
 of February, 1779, although the issues had been increased from 
 thirty-five to one hundred and fifteen millions, the average value 
 in silver of the whole amount of paper in circulation exceeded 
 ten millions, and it was at one time nearly thirteen millions, or 
 considerably more than that which could be sustained at the out- 
 set of the hostilities. But when it was discovered, that the war 
 would be of longer continuance, confidence in the redemption 
 of a paper money, daily increasing in amount, was again sud- 
 denly lessened. The depreciation increased from the rate of 6 
 to that of 30 to 1 in nine months. The average value in silver 
 of the whole amount of paper in circulation from April to Sep- 
 tember 1779, was about six millions, and it sunk below five 
 during the end of the year. The total amount of the paper was 
 at that time two hundred millions; and although no further 
 issues took place, and a portion was absorbed by the loan offices 
 and by taxes, the depreciation still increased, and was at the 
 end of the year 1780 at the rate of 80 dollars in paper for 1 in 
 silver. The value in silver of the paper currency, was then 
 less than two millions and a half of dollars ; and when Congress, 
 in March following, acknowledged the depreciation, and offered 
 to exchange the old for new paper at the rate of 40 for one, the 
 old sunk in one day to nothing, and the new shared the same 
 fate. 
 
 The aggregate of bank notes of the Bank of England and 
 country banks was nearly the same in the years 1810, 1813, and 
 1818, being, for each of those years respectively, about forty- 
 six millions, forty-six millions two hundred thousand, and forty- 
 six millions seven hundred thousand pounds sterling ; and 
 the value in gold of the aggregate amount of notes was, for each 
 of those years respectively, forty, thirty-five and a half, and for- 
 ty-five and a half millions. A result nearly similar, will be 
 found by comparing periods of years. The average amount of 
 the notes in circulation was about forty-six millions for the years 
 1810, 1811 ; forty-five millions two hundred thousand for the 
 years 1812 to 1816; and forty-four millions four hundred thou- 
 sand for the years 1817 to 1819; and the average value in 
 gold of those notes, for each of those periods respectively, was 
 forty-one, thirty-six, and forty-three millions. It is obvious 
 that those differences, in the respective value in gold of the 
 whole amount of the currency, did not depend on its amount, 
 but on the opinion entertained, either of the probable increase 
 or contraction of the notes, or of the resumption of the specie
 
 BANKS AND CURUliNCY. 27 
 
 payments. Had the depreciation of the notes depended solely 
 on their excess, it would have been nearly the same in the years 
 1810, 1813, and 1818, when that amount was nearly the same. 
 Reducing into gold the value of the whole currency, no other 
 reason can be assigned but a greater or less degree of confidence, 
 why a paper currency worth forty-five and a half millions could 
 be sustained in 1818, whilst no greater value than thirty-five 
 and a half millions circulated in 1813. Itisnideed evident, that 
 the confidence in the resumption of specie payments must have 
 been greater in 1810, and much greater in 1818, than in 1813; 
 and that, independent of the intrinsic value of the bank notes, 
 as regulated by their amount, they must, whenever depreciated, 
 acquire some additional value, according to the opinion enter- 
 tained of their being again converted into specie, and of the prox- 
 imity of that event. 
 
 A still more striking instance of the sudden alterations in 
 value, to which notes not convertible into specie are liable, is to 
 be found in that which took place in England, in the spring of 
 1815, on the landing of Bonaparte from the Island of Elba. The 
 bank notes had gradually risen in value since the peace, and 
 were not depreciated more than 12^ per cent, in the beginning 
 of March. Towards the end of that month, and within less than 
 a fortnight, the depreciation was 25 per cent, although there 
 had been, during that time, neither additional issues of paper, 
 nor exportation of the precious metals. We will quote only one 
 more instance of a similar nature. During the general suspen- 
 sion of specie payments in the United States, the depreciation 
 of the bank notes varied in the several sea-ports. Those of the 
 Baltimore banks were at 20 per cent, discount in January 181.'). 
 The Treaty of Peace was ratified and published in the month of 
 February ; and as the suspension of specie payments had not 
 lasted six months, and was caused by the war, a general expec- 
 tation immediately prevailed, that those payments would be 
 forthwith resumed. Accordingly, bank notes rose everywlure 
 in value, and, in March, the discount on those of Baltimore was 
 only 5 per cent. As that expectation was disappointed, the notes 
 again sunk in value, and, in July, those of Baltimore were again 
 at a discount of 20 per cent. It is believed, that no doubt cnn 
 remain, that a paper currency liable to fluctuations like those, 
 and originating in causes that bafile all calculation, never can, 
 by any skill wliatcver, be made a stable standard of value. 
 
 The paper currency of the United States is of a very dif- 
 ferent character, and, according to the general acceptation of 
 that term, consists almost exclusively of bank notes payable on 
 demand in specie. It may however be questioned, whether thfre 
 are not other species of paper founded on credit, which ought 
 to be considered as making part of the currency, and not merely 
 as substitute-.
 
 2S BANKS AND CURRENCY. 
 
 There are in England, where incorporated country banks, 
 issuing paper, are as numerous, and have been attended with 
 the same advantages and the same evils as our country banks, 
 some extensive districts, highly industrious and prosperous, where 
 no such bank does exist, and where that want is supplied by 
 bills of exchange drawn on London. This is the case in Lan- 
 cashire, which includes Liverpool and Manchester, and where 
 such bills, drawn at ninety days after date, are indorsed by each 
 successive holder, and circulate through numerous persons be- 
 fore they reach their ultimate destination, and are paid by the 
 drawee. It has been contended that these substitutes for cur- 
 rency, and in one respect performing its office, must be consid- 
 ered as forming part of it ; and this assertion has been carried 
 so far, as to insist that there was in England a circulation of one 
 hundred and fifty millions of dollars in bills of exchange, which 
 was of the same character. As this view of the subject would 
 materially affect the result of any inquiry respecting currency, 
 the question must be examined, and extended to private notes 
 and to bank deposits. 
 
 It is difficult to distinguish a note on demand drawn by a pri- 
 vate individual from a bank note, in countries where every in- 
 dividual is left at liberty to throw such notes in circulation as 
 part of the currency. The discrimination has always been made 
 on the Continent of Europe, where it is not believed that any 
 paper of that description has ever been permitted to be issued 
 by any person or company not specially authorized to that effect. 
 We are not aware that any similar general restriction exists in 
 Great Britain, or that others are to be found there, than the 
 clause, in favor of the Bank of England, which forbids banking 
 associations to consist of more than a limited number of part- 
 ners, and the late laws forbidding, except in Scotland, the issue 
 of notes under five pounds. The same liberty seems to have 
 originally existed in the United States, but has subsequently been 
 restrained by their several laws to incorporated banks. A soli- 
 tary exception is to be found in Mr. Stephen Girard's Bank, 
 which was previously established, and which, from his great 
 wealth, skilful caution, and personal character, is justly entitled 
 to as much credit as any chartered bank in the United States. 
 Congress has not, however, passed any law preventing the issue 
 of notes by the corporation of the city of Washington, and there 
 is still a small amount of paper in circulation, issued by the state 
 of North Carolina. In every other respect, the currency of the 
 United States, so far as it consists of notes, is strictly confined to 
 bank notes issued by chartered companies. 
 
 A bill of exchange, drawn by an individual or individuals, 
 who do not issue notes having the character of currency, ap- 
 pears to us to be clearly distinguishable from a bank note, though 
 it is a substitute, and lessens the amount of currency which
 
 BAIVKS AND CURIIENCY. 29 
 
 would otherwise be required. A payment made in bank notes 
 is a discharge of the debt, the creditor having no further re- 
 course against the person from whom he has received the notes, 
 unless the bank had previously failed. The bill of exchange 
 does not discharge the debt, the person who receives it having 
 his recourse against the drawer and every preceding indorser, 
 in case the drawee should fail or refuse to pay. But the essen- 
 tial distinction is, that the bills of exchange are only a promise 
 to pay in currency, and that the failure of the drawers, drawees, 
 and indorsers does not, in the slightest degree, affect the value 
 of the currency itself, or impair that permanent standard of 
 value by which the performance of all contracts is regulated. 
 The case is, however, quite dilferent, when the bills are drawn 
 by a bank authorized to issue bank notes which make part of 
 the currency. We perceive no dilFercnce between such drafts, 
 particularly when paid at sight, and cither post notes or ordinary 
 notes. Five dollar drafts, drawn by the branches of the Bank 
 of the United States on the bank, circulate at this moment in 
 common with the usual five dollar notes. Similar drafts, varying 
 in amount to suit the convenience of purchasers, are daily 
 drawn by the bank on its offices, and by those offices on each 
 other, or on the bank. Many of those drafts pass through sev- 
 eral hands, and circulate several months, in distant parts of the 
 country, before they are presented for payment. The holders 
 of those bills have the same recourse against the bank, as the 
 holders of bank notes. Those, bills are of the same character, 
 depend on the same security, and in case of failure would share 
 the same fate with bank notes. Though not usually included 
 in the amount of the circulation of the bank, we cannot but 
 consider the average amount in actual circulation, as making 
 part of the currency of the country. A question somewhat more 
 difficult arises with respect to credits in account current on the 
 books of the banks, commonly designated in the United States 
 by the name of " deposits," and which may perhaps be more 
 easily solved by reducing it to its most simple form, that is to 
 say, by first considering banks purely of deposit. 
 
 That of Hamburg, which still exists, is the most perfect of 
 the kind. It neither issues bank notes, nor discounts notes or 
 bills of exchange, but only receives silver in bars on deposit 
 For every bar containing a certain weight, called " marc of 
 Cologn," (equivalent to 3,008 grains troy weight,) of silver of a 
 certain standard,* the bank gives a credit on its books of 44"2 
 lubs B'^"- (27 marcs 10 lubs B*^" ) money of account Any person 
 having a credit on the books of the bank, may be paid in simi- 
 lar bars at the rate of 444 lubs B"^" for a marc weight of Co- 
 
 • Containing, according to nuwt authorities, forty-sflven parte puro siJvpr, and on« 
 port of alloy.
 
 30 BANKS AND CURRENCY. 
 
 logn of silver of the same standard. The difference, which is 
 less than one-half per cent, defrays the expenses of the estab- 
 lishment. All the large payments are effected in Hamburg 
 by checks on the bank, and by a corresponding transfer of the 
 credit on its books from one individual to another. The utility 
 of the establishment consists not only in the greater convenience 
 and rapidity with which the payments are effected, but also in 
 having substituted silver of an uniform standard, to a currency 
 which consisted of German coins, varying in standard, weight, 
 and denomination. The aggregate amount of credits on the 
 books of the bank, being at all times precisely equal, at the rate 
 above mentioned, to the quantity of silver in its vaults, it would 
 be incomprehensible, and, indeed, absurd, to suppose, that such 
 large capital, having an intrinsic value, should voluntarily be 
 buried in the vaults, unless its representative, or the credits on 
 the books of the bank, performed every office of currency. It 
 is undeniable that this is the fact in every respect, every pay- 
 ment being effected by transfers of those credits, and their con- 
 vertibility at any time into a determined weight of pure silver, 
 affording the best possible standard of value. This indeed regu- 
 lates exclusively the value of all the coins, whether in circula- 
 tion for small payments, or brought to market as bullion. 
 
 Let it be supposed now, that it had been found from long ex- 
 perience, that the quantity of silver in the vaults, through all 
 its fluctuations, had never been less than a certain sum, equiva- 
 lent, for instance, to two millions of dollars. The directors of 
 the establishment might conclude that this amount would, under 
 no circumstances whatever, be withdrawn, or in other words, 
 that this sum was the minimum of the currency wanted to effect 
 the payments made in bank. They might therefore think them- 
 selves justifiable, in withdrawing that dormant capital from the 
 vaults, and converting it into an active capital, by lending it to 
 individuals. In this case, the amount of credits on the books of 
 the bank would remain the same, as if that sum in silver had 
 not been withdrawn from its vaults ; and all the payments ef- 
 fected by the transfers of those credits would continue to be 
 made precisely as theretofore. The amount of those credits 
 would therefore continue to be, in every respect, the currency 
 of Hamburg, differing from what it was formerly, only in being 
 sustained by a less amount in specie, and in depending, for its 
 ultimate security, on the solidity of those to whom the silver 
 withdrawn from the vaults had been loaned. 
 
 What we have stated as a supposititious case, actually took 
 place in the Bank of Amsterdam, constituted on nearly the same 
 principles as that of Hamburg ; and from which the directors 
 secretly withdrew more than four millions of dollars, which they 
 lent principally to the Province of Holland and to the City of 
 Amsterdam. And it is, as is well known, what is always done
 
 BANKS AND CURRENCY. 31 
 
 openly and in perfect good faith by all our banks, as well as by 
 the Bank of England and by that of France. The credits in 
 account current or " deposits" of our banks are also, in their 
 origin and effect, perfectly assimilated to bank notes. Any per- 
 son depositing money in the bank, or having any demand what- 
 ever upon it, may at his option be paid in notes, or have the 
 amount entered to his credit on the books of the bank. The 
 bank notes and the deposits rest precisely on the same basis ; 
 for immediate payment on the amount of specie in the vaults ; 
 for ultimate security on the solidity of the debtors of the bank. 
 In case of a run upon a bank, or of its failure, the security of 
 the holders of notes is lessened in proportion to the amount of 
 deposits due by the bank. We can in no respect whatever per- 
 ceive the slightest difFerence between the two : and we cannot 
 therefore but consider the aggregate amount of credits payable 
 on demand, standing on the books of the several banks, as being 
 part of the currency of the United States. This, it appears to 
 us, embraces not only bank notes, but all demands upon banks 
 payable at sight, and including their drafts and acceptances, 
 out in order that such deposits, bills of exchange, or other paper 
 founded on credit, should make part of the currency, it seems 
 necessary, that they should constitute a demand upon banks 
 that do issue currency, or that, as at Hamburg, a transfer of 
 credit on the books of the bank should be a legal tender. If, in 
 comparing the amount of currency in different countries, we 
 have only included specie and actual issues of paper, it was 
 partly in conformity with received usage, and partly from want 
 of information respecting the amount, in other countries, of the 
 bank credits, which may be considered as perfectly similar to 
 our deposits. 
 
 Credit is essential to commerce: but whenever it receives a 
 shock, a commercial revulsion and distress must necessarily 
 ensue. This will always affect the currency to a certain ex- 
 tent, since there must be a greater demand for it, in propor- 
 tion as the resources arising from credit are impaired. But 
 where, as in the United States, the currency itself rests on 
 credit, and the same institutions which issue that currency are 
 those from which accommodations are expected, want of 
 credit is most liable to be mistaken for a want of currency. 
 
 Although the causes of such distress, and of a real or pre- 
 sumed scarcity of currency, arc of the same nature, they may, 
 as somewhat dissimilar in their immediate effects, be distin- 
 guished as external or internal. As the imports and exports 
 of a country are now but rarely effected by the same persons, 
 there are always, in consequence of the commercial intercourse 
 between two countries, creditors and debtors on both sides- 
 It is obviously the interest of both to exchange or sell those 
 debts, when the exporter does not want to import, nor the im-
 
 82 BANKS AAD CURRENCY. 
 
 porter to export merchandise. A bill of exchange, drawn from 
 the United States on England, is an obligation on the part of 
 the drawer to exchange, for a sum paid to him in the United 
 States, an equivalent in England. When the credits and debits 
 respectively payable at the same time are nearly equal, 
 the exchange is made on equal terms. In proportion as the 
 debt of the United States to England is greater than that of 
 England to the United States, the demand for bills on England 
 will become greater than the supply ; and the drawer will ob- 
 tain a greater sum in the United States, than that which by 
 his bill he obliges himself to pay in England. Whenever the 
 difference becomes so great, as to exceed the expense and risk 
 of transporting precious metals to England, those metals will 
 be exported in preference to a remittance in bills. When the 
 commercial transactions between two countries are compara- 
 tively small, and the stock of gold and silver large, their ex- 
 portation, particularly in neighboring countries, soon pays the 
 balance and restores the equilibrium. When, as between the 
 United States and England, the respective imports and exports 
 are very large, the balance due may be increased in propor- 
 tion ; and as the stock of the precious metals in the United 
 States is comparatively small, the exchange may remain for 
 years unfavorable, and the precious metals continue to be ex- 
 ported, until the balance is actually paid from the proceeds 
 of the exports generally, or converted, by the sale of American 
 stock, into a debt not immediately demandable. This appa- 
 rently continued drain was considered, in former times, as an 
 evil of great magnitude ; and severe laws were, in most coun- 
 tries, enacted against the exportation of specie. Experience 
 has shown, not only that those laws were inefficient, but also 
 that the best, if not only means, to insure a uniform and suffi- 
 cient supply of any foreign product, when there is no other 
 object in view, is to lay no restraint whatever on its importa- 
 tion and exportation. Commerce, when not interrupted by war, 
 or other causes, is always found to supply the amount of pre- 
 cious metals which may bo wanted. Numerous striking proofs 
 might be adduced : it is sufficient to recollect, that the average 
 rate of exchange on England, from the beginning of 1821 to the 
 end of 1829, has been $4 87 cents per pound sterling, (about 
 Qj per cent, premium on nominal par,) or 2| per cent, above 
 the true par; that it never was, during the whole of that 
 time, below $4: 60, at which rate, gold being underrated by our 
 mint regulations, commences to be exported, and that that pe- 
 riod was in no degree remarkable for scarcity of specie. 
 
 Being obliged to refer to the rate of exchange, it must be re- 
 collected, that what is universally meant by par, is the promise 
 to pay, in another place, a quantity of pure silver or gold, equal 
 in weight to the quantity of pure silver or gold contained in
 
 BANKS AND CUIlRENCy 33 
 
 the coins, with which the drawer of the bill of exchange is paid. 
 When bills are drawn at long dates, and payable at a distant 
 place, the time which elapses between the purchase of the bill 
 from the drawer, and its payment by the drawee, must be taken 
 into consideration, in order to calculate what would be an equal 
 exchange, as distinguished from the par of exchange. There is 
 no other difficulty, but that of ascertaining their respective 
 weights, in order to calculate the par of exchange between coun- 
 tries having the same standard of value, or in which payments 
 are usually made with the same metal. This being the case in 
 the United States and in France, and the French kilogramme 
 being equivalent to about 1.5,435 grains, troy weight, the par 
 of exchange of the United States on France, is at the rate of 
 about 5 francs and 34^ centimes for a dollar, since the French 
 franc contains 4^ grammes, and the United States' dollar 37 In- 
 grains of pure silver. Allowing 1^ per cent, on account of the 
 90 days which will usually elapse between the day on which 
 the value of a bill payable 60 days after sight is, in our country, 
 paid to the drawer, and the day on which that bill is paid in the 
 other country by the drawee, it will be found that the equal ex- 
 change between the United States and France is, on such bills, 
 at the rate of francs 5,41 if drawn from the United States on 
 France, and at the rate of francs 5,28 for one dollar, if drawn 
 from France on the United States. 
 
 But if one of the two metals is, by mint regulations, under- 
 rated or excluded in one country, whilst the other metal is in 
 the same manner excluded in another country, the usual pay- 
 ments will be made in different metals in those two countries ; 
 and the par of exchange between them must, then, as is the case 
 between the United States and England, depend on the relative 
 value of gold and silver at the time, and vary with every fluc- 
 tuation of that relative value. These fluctuations are, however, 
 confined within narrow limits; and the medium par of exchange 
 between the United States and England, deduced from the aver- 
 age premium on gold over silver coins in France, is about S4 75, 
 for one pound sterling, or near 7 per cent, above the nominal 
 par assumed in the usual quotations of exchange. It is in those 
 quotations supposed, that one pound sterling is equal to 84 44 4-9, 
 or, in other words, that one dollar is equal to 4.f. Gd. sterling. It is 
 not necessary to investigate, whether this presumed equality or 
 par was derived from the intrinsic value of some ancient Span- 
 ish dollar, no longer current, or whether it was adopted as con- 
 venient for the conversion of most of the currencies of the Brit- 
 ish colonies into British currency. It is certain that this imagin- 
 ary par does not even correspond with that which, though 
 erroneously, might be deduced from comparing separately the 
 gold and silver coins of the two coimtrics with each other respec- 
 tively ; since this would be, if comparing gold to gold, about 
 
 X
 
 84 BATIKS AND CURRENCY. 
 
 84 56, and if comparing silver to silver, (at the former rate of 
 62 shillings sterling for one pound troy weight of silver, old British 
 standard.) about $4 63 for a pound sterling. The dealers in ex- 
 change are at no loss to make their calculations, whatever rate 
 may be assumed as par in the usual quotations : but this puzzles, 
 and, in various respects, misleads those who, without investiga- 
 tion, naturally suppose that what has been assumed as such is 
 the true par of exchange. 
 
 The causes of the fluctuations of exchange between distant 
 places in an extensive country, or between different countries, 
 are of the same nature, and may occasion a similar transporta- 
 tion of the precious metals from one place to another. We will 
 hereafter examine how that from one part of the United States 
 to another has been affected by the Bank of the United States. 
 But there is this difference, betv\'een a commercial distress and 
 presumed scarcity of currency, due to internal causes, whilst 
 the foreign exchanges remain favorable, and a similar distress 
 arising from large foreign debts, and accompanied by an unfa- 
 vorable rate of exchange, that, in the last case, there is an ex- 
 portation of the coins of the country which cannot take place 
 in the first. If the same effects, in other respects, are never- 
 theless the same in both cases ; if in both, the same, and some- 
 times general distress equally prevails; if the same difticulty 
 occurs in the payment of debts ; if the same complaint is made 
 of want of money, whether specie is exported or not, it is obvi- 
 ous that there must be another cause, besides an actual scarcity 
 of currency, for the real distress which is felt ; and that what is 
 called " want of money," is not " want of currency." It will be 
 found that this cause is universally overtrading, and that the 
 want of money, as it is called, is the want of exchangeable or 
 saleable property or commodities, and the want of credit. The 
 man who says that he wants money, could at all times obtain 
 it, if he had either credit or saleable commodities. 
 
 Overtrading consists in undertakings or speculations of every 
 possible description, which fail altogether, or of which the re- 
 turns are slower than, under sanguine expectations, had been 
 calculated, or the proceeds of which, (too many, tempted by 
 temporary high prices or profits, having embarked in the same 
 branch of business,) greatly exceed the demand, and glut the 
 market. A great loss may be experienced by those who have 
 entered into any such undertakings with their own resources. 
 But when resting principally on credit, and pursued at the same 
 time by a great portion of the dealers or men of enterprise, a 
 general impossibility of fulfilling previous engagements takes 
 place, which affects even those who are ultimately solvent. 
 When that mutual confidence, which is the sole foundation of 
 credit, is once shaken, the capitals that are usually loaned can 
 no longer be obtained, the usual amount of bills of exchange,
 
 BANKS AND CURRENCY. 35 
 
 discounted notes, or other commercial papers founded on credit, 
 is lessened, and specie or currency itself becomes comparatively 
 scarce, partly because some is hoarded, principally because a 
 portion of its substitutes is withdrawn from circulation. Yet 
 specie, under those circumstances, acts but a subordinate part, 
 its scarcity being the etiect, and not the cause, of the evil, and 
 the remedy to this consisting in restoring credit and confidence, 
 which will always procure a sufficient amount of currency, and 
 not in an attempt to increase the quantity of currency, which 
 can produce no substantial benefit until confidence is restored. 
 When it consists of paper founded on credit, any increase is 
 inefficient for remedying the evil, unless it be issued by an insti- 
 tution, the credit of which has, in the general wreck, remained 
 unaflTected and unimpaired. 
 
 The commencement of the year 1793, was, in England, a 
 season of great and universal commercial distress. It had, as 
 usual, been preceded by a period of great apparent prosperity, 
 which had stimulated overtrading ; and this had been followed 
 by its unavoidable consequences. More than one hundred coun- 
 try banks failed, or suspended their payments ; the distress was 
 general, the credit of solvent houses was affected, the usual ac- 
 commodations, which enabled them to have their bills discount- 
 ed, and to meet the demands against them, were withdrawn, 
 and the complaint of uant of money was universal. Under 
 those circumstances, government interfered, and loaned, or of- 
 fered to loan, to solvent dealers, five millions sterling in exche- 
 quer bills. The remedy was effectual ; the whole amount offered 
 to be loaned was not even applied for ; and, in a very short 
 time, confidence was restored, and every one who was not ac- 
 tually insolvent w^as able to meet his engagements. But exche- 
 quer bills are not currency, but only a promise to pay currency 
 at the end of one year. Government did not lend currency, or 
 add a single shilling to its amount. The credit of individuals 
 had received a severe and general shock, and that of govern- 
 ment, which was unimpaired, ^vtls substituted for private credit. 
 Those who had capital to lend, and would not advance it on pri- 
 vate security, or who, in other words, would not discount the 
 bills of individuaJs, lent that capital, or the currency which was 
 wanted, on public security, or, in other words, discounted the 
 exchequer bills, that is to say, the bills of government. The 
 distress, the pretended want of money, was relieved, not by any 
 additional issues of currency, the amount of which must there- 
 fore have been sufficient, but by restoring private confidence 
 and private credit. 
 
 It is also evident, that what was then effected by government, 
 might have been done by the Bank of England, had that insti- 
 tution, more sparing of its resources, during the preceding pe- 
 riod of prosperity and incautious enterprise, been enabled, when
 
 9a BANKS AND CURRENCY 
 
 the revulsion took place, to lend its credit to solvent houses, by 
 discounting their bills, and increasing its issues of paper curren- 
 cy. It may be presumed, that, having already overstrained its 
 resources, the bank could not have done this, without endan- 
 gering its own credit, and running the risk of being unable to 
 pay its own notes, if their amount was increased. But the mode 
 adopted by government, and which proved so efficacious, makes 
 it obvious, that, had the bank been enabled, without the aid of 
 the treasury, to relieve the distress, and, what was called the 
 want of money, the relief afforded would have been the result, 
 much less, if at all, of the enlarged issues of bank notes, than of 
 the bank lending its credit to those solvent dealers whose credit 
 was impaired. 
 
 As a bank cannot increase its discounts without increasing its 
 circulation, the two operations, being in its hands inseparable, 
 are generally confounded. The manner in which the British 
 government afforded relief in the year 1793, conclusively proves 
 that they are essentially distinct, even in a country where the 
 currency consists principally of paper founded on credit, and 
 that the demand always made on banks in times of pressure, for 
 enlarged issues of bank notes, is not a demand for currency but 
 for credit. Cautious and well-directed banks will always afford 
 great relief in such times, if enabled by the previous prudent 
 administration of their affairs to lend their credit to solvent deal- 
 ers ; which cannot be done without enlarging their issues. If, 
 on the contrary, this has already been done to its utmost extent, 
 if during a period of high prices and great apparent prosperity, 
 the spirit of enterprise, naturally excited by that state of things, 
 and which required then to be checked, has, on the contrary, 
 been stimulated by incautious loans and consequent issues of 
 paper on the part of the banks, the result will be, and has every- 
 where always been, as fatal as unavoidable. When the revul- 
 sion takes place, when, from excessive competition or imprudent 
 speculation, the market becomes glutted with a superabundance 
 of any species of commodit}'-, often in the United States of land 
 itself, or when, from want of skill or any other cause, undertak- 
 ings have altogether failed, or when the slow returns of such 
 undertakings require years to be reahzed, and both capital and 
 credit are exhausted ; at the very time when the aid of banks 
 would be most wanted, those institutions, prematurely disabled, 
 instead of simultaneously enlarging their issues, and lending 
 their credit to solvent but embarrassed dealers, manufacturers, 
 and farmers, are compelled in self defence to contract their 
 issues and loans, and thus greatly to aggravate the evil, which 
 they had at least neglected to check, if they were not instru- 
 mental in its growth. 
 
 In countries, therefore, the currency of which consists princi- 
 pally of bank paper, banks will have a beneficial or pernicious
 
 BA^rivS AND CURRENCY. 37 
 
 influence on credit, and on a currency depending on credit, ac- 
 cording to tiie manner in which they may be a(hninistercd ; use- 
 ful when their operations, in prosperous times and whilst under 
 their control, are regulated by probity, great discretion and 
 skill, pernicious when their adrnhiistration is defective in any of 
 those respects. But in countries, where the currency consists 
 wholly or principally of the precious metals, and where hankers 
 lend money or discount bills, but do not issue a paper currency, 
 the two operations are never confounded; and although not ex- 
 empt from commercial revulsions, these will be of less common 
 occurrence, and have little or no influence on currency itself* 
 It may be confidently aflirmed, that the precious metals, under 
 any circumstances whatever, and amidst all the temporary 
 fluctuations arising from a disproportion between supply and 
 demand, continue to be a more permanent standard of value 
 than any other commodity, or any species of paper riCsting on 
 an element so variable as credit. 
 
 We cannot conceal from ourselves, that specie-paying banks 
 are not only exposed to extraordinary drains from abroad, but 
 are also occasionally controlled by moral causes, the effects of 
 v/hich cannot be calculated, nor without great skill and discre- 
 tion be always prevented. These never afiect a metallic cur- 
 rency, which has an intrinsic value, varying less than that of 
 any other comm.odity, and not at all depending, as paper, on 
 confidence, fear, conjectures, or any of the fluctuations of pub- 
 lic opinion. It is tMpially clear, that extraordinary drains of 
 specie, occasionally inconvenient when the currency is purely 
 or principally metallic, may be fatal to one which consists of 
 bank notes convertible at will into specie. Supposing the cur- 
 rency of a country to consist of one hundred millions, a drain of 
 twenty millions from abroad would produce great inconvenience, 
 but nut beyond that of contracting the metallic currency to 
 that extent, until commerce had supplied the deficiency. But, 
 if consisting of bank notes, sustained by twenty millions of specie 
 in the vaults of the banks, the basis being withdrawn, the whole 
 fabric is at once overthrown, and specie payments must be sus- 
 pended. 
 
 One of the most fatal efTects of that suspension is the great 
 and unavoidable distress, which attends a return to a specie 
 currency, particularly when the suspension h^is been of long 
 continuance. Whilst this lasts, the loss falls on the creditors : 
 but new contracts are daily made, founded on the existing state 
 of the currency ; and should the suspension continue twenty 
 years, as was the case in England, as almost all the contracts in 
 force, and not yet executed, at the time when specie payments 
 
 • Soo hornnnpr Mr. Baring's evidence, and Mr. Tooke, respecting the eflcct of a 
 metallic currency, m France.
 
 38 BAitKS AND CURRENCY. 
 
 are resumed, must have been made when the currency waa 
 depreciated, the obligation to discharge them in specie is con- 
 trary to equity, falls on the debtors, who are always the part 
 of the community less able to bear the burthen, and proves 
 more calamitous than the suspension had been. Short in dura- 
 tion as this had been in the United States, the effect was sensi- 
 bly felt : and to this cause, which also occasioned the failure of 
 a number of new banks, must in a great degree be ascribed the 
 general distress of the years 1818 — 1819. The relief laws of 
 some of the States, and in England the corn laws, may be traced 
 to the same source. In that country, after so long a suspension 
 of specie payments, the calamity has necessarily been far more 
 extensive and lasting. It is yet felt, and may still seek for 
 remedies worse than the evil, and call for small notes, excessive 
 issues, and all those measures which would necessarily lead 
 again to an inconvertible paper money. 
 
 Considerations of this nature may well have suggested to the 
 committee of the House of Representatives, the question, whether 
 a metallic currency would not, in the United States, have been 
 preferable to one consisting of bank notes. We would incline 
 to the affirmative, if the system was not already established, 
 and if we believed, that an attempt to return to a pure metallic 
 currency, which could not, without producing great evils, be 
 carried suddenly into effect, was at all practicable. Were not 
 this the case, we would think, that a system of commercial credit, 
 founded on deposits, bills of exchange, and other negotiable 
 paper, such as is carried on by the bankers of London, and by 
 all the bankers of the Continent of Europe, neither of whom 
 issues any notes in the shape of currency, would afford to com- 
 merce, at least in commercial cities, nearly, if not altogether, 
 the same accommodations and advantages which are found in 
 the present system. Commercial revulsions, and numerous fail- 
 ures amongst dealers, as they may occur wherever there has 
 been excessive overtrading, though less frequent, do neverthe- 
 less occasionally take place in countries which have only a me- 
 tallic currency. But their effect is generally confined to the 
 dealers, extending but indirectly and feebly to the community, 
 and never afFecting the currency, the standard of value, or the 
 contracts between persons not concerned in the failures. It 
 must be allowed at the same time, that, in the country, where 
 the system of deposits cannot exist to the same extent as in cities, 
 banks soberly and skilfully administered, stimulate industry by 
 the facility which their loans afford to men of enterprise, and 
 that the ability of those banks to make those advances, would 
 be much curtailed, if altogsther precluded from issuing notes. 
 
 A very ingenious plan was proposed by Mr. Ricardo, and has 
 since been expounded and defended with great talent by Mr. 
 M'CuUoch, intended to afford security against the dangers to
 
 BANKS AND CURRENCY. 89 
 
 wliich every system of paper currency heretofore devised is 
 exposed. It is not applicable to the United States, as it is founded 
 on the exclusion of gold and silver coins, which, by our Consti- 
 tution, are alone a legal tender. Some plausible objections have 
 been made to it, which, for that reason, it is not necessary to 
 discuss ; and we will only give the outline of the plan. 
 
 It consists in the total exclusion of a metallic currency, with 
 the exception perhaps of the silver necessary for small pay- 
 ments, in making the notes of the Bank of England a legal ten- 
 der, and in imposing on that institution the obligation to pay 
 them, on demand, in gold bars of the proper standard. This 
 last provision would be sufficient to prevent any depreciation of 
 the notes, whilst, on the other hand, the gold bars paid by the 
 bank could not, either directly, or by being converted into coin, 
 take their place and add any thing to the amount of the cur- 
 rency. Any call on the bank for gold, would therefore necessa- 
 rily lessen that amount, and must also necessarily cease, when- 
 ever this was somewhat less than the amount in value, which is 
 indispensable in England for the payments in currency. For 
 whenever this point is reached, the notes must be worth at least 
 as much as their nominal value in gold at its ordinary price; 
 and, in the case of unfavorable exchanges, the drain must alto- 
 gether cease, as soon as the currency is sufficiently contracted 
 to have raised its value to a rate corresponding with that of ex- 
 change. The inconvenience of that contraction would not, it 
 seems, be greater than if the currency was purely metallic. 
 Supposing forty millions sterling to be the minimum of the ab- 
 solutely necessary currency under an unfavorable state of for- 
 eign exchanges, the community would be protected against the 
 danger of any depreciation in the nominal value of the notes, 
 and the bank, under any circumstances whatever, against a 
 drain that could compel it to suspend its payments, provided the 
 value of the gold bars in its vaults was always equal to the ex- 
 cess of its issues over forty millions. The plan was carried into 
 efTect, during a short period, by the Bank of England, and then 
 discontinued, for reasons which have not been explained, and 
 which it would be interesting to understand- 
 
 It is well known that the Bank of England, three banks in 
 Scotland, and the Bank of Ireland, are the only chartered bank- 
 ing institutions in the United Kingdom. The capital of the Bank 
 of England, amounting now to fourteen millions pounds sterling, 
 has been loaned altogether to government, at an interest of 3 
 per cent, and is not to be reimbursed till the expiration of the 
 charter. All the other banks of England, commonly called 
 country banks, consist of private copartnerships, without any 
 determined capital, and the members of which are liable to the
 
 40 BAKKS AND CURRENCY. 
 
 same responsibilities as any other commercial houses. With the 
 exception of Mr. Girard's Bank, ail the banks established in the 
 United States arc joint stock companies incorporated by law, 
 with a fixed capital, to the extent of which only the stockliold- 
 ers are generally responsible.* The business of all those banks 
 consists, in receiving money on deposit, in issuing bank notes, 
 and in discounting notes of hand or bills of exchange. A por- 
 tion of the capital is sometimes vested in public stocks; but 
 this is not obligatory ; and in this they difler essentially from 
 the Bank of England. The capital of this institution, being 
 loaned to government, and not depending on the solidity of the 
 paper discounted, affords a stable guarantee to the holders of 
 notes and to the depositors. The bank can loan to individuals, 
 or advance to government (beyond its capital as above mention- 
 ed) nothing but the difference, between the aggregate of its 
 notes in circulation, and of the credits in account current on its 
 books, and the amount of specie in its vaults. But the Ameri- 
 can banks lend to individuals, not only that difference, but also 
 the whole amount of their capital, with the exception only of 
 such portion, as tbey may find it convenient, but are not obliged 
 to vest in public stocks. It follows that the security of the 
 holders of notes, and of the depositors generally, rests exclu- 
 sively on the solidity of the paper they have discounted. It 
 might seem, on the other hand, that, as the Bank of England 
 cannot apply its original capital to any immediate use, whilst 
 the American banks may, by curtailing their discounts, call in 
 their capital on any emergency, they might, without risk, put 
 in circulation a greater proportionate amount of notes. But 
 such curtailment can never be made to any considerable extent, 
 without causing much distress; and, in point of fact, a large 
 portion of their loans consists of what the merchants consider 
 as permanent accommodation, and, in the country, often rests 
 on real security. This departure from what has been generally 
 deemed the true banking principle, must, it is believed, be as- 
 cribed to the original disposition of the capital. 
 
 Whenever therefore an American bank is in full operation, 
 its debts generally consist, 1st, to the stockholders, of the capi- 
 tal ; 2d, to the community, of the notes in circulation and of the 
 credits in account current, commonly called deposits: and its 
 credits, 1st, of discounted notes or bills of exchange and occa- 
 sionally of public stocks; 2d, of the specie in its vaults and of 
 the notes of, and balances due by, other banks; Sd, of its real 
 estate, either used for banking purposes or taken in payment of 
 debts. Some other incidental items may sometimes be intro- 
 duced ; a part of the capital is occasionally invested in road, 
 canal, and bridge stocks, and the debts, secured on judgments, 
 
 * The stockholders are made personally responsible, in some of the stales.
 
 3,338,000 
 
 BANKS AND CURRENCY. 41 
 
 or bonds and mortgages, are generally distinguished in the offi- 
 cial returns of the banks. In order to give a clear view of the 
 subject, we annex an abstract of the situation of the thirty-one 
 chartered banks of Pennsylvania, in November, 1829. 
 
 ♦Capital, $12,032,000 
 
 Notes in circulation, $7,270,000 J i^noonnn 
 
 Deposits, 8,758,000 i " ' 1^,028,000 
 
 Surplus funds, 1,142,000 
 
 $29,202,000 
 
 Bills discounted, $17,526,000 
 
 Public stocks,! i 
 
 Road, canal, and bridge stocks, r " " " 4,620,000 
 Debts secured on mortgages, &.c. ) 
 
 Real estate, 1,310,000 
 
 Notes of other banks, ) 
 And due by other banks, ) 
 Specie, 2,408,000 
 
 $29,202,000 
 
 It will be easily perceived, 1st, that >vhat is called the surplus, 
 and sometimes the reserved or contingent fund, is nothing more 
 than that which balances the account, or the diiference between 
 the debits and credits of the banks ; and that, in order to be 
 enabled to repay, at the expiration of the charter, to the stock- 
 holders, the full amount of their stock, that fund or difference 
 ought, in every sound bank, to be sufficient to cover all the bad 
 debts, and all the losses, which may be incurred on the sale of 
 the various stocks held by it, and of its real estate : 2dly, that 
 the deposits may at any time be converted into bank notes, and 
 that both ought, in correct language, to be included under the 
 denomination of circulation ; 3dly, that the notes of other 
 banks on hand, form no part of the circulation, and ought, when 
 considering the banking system as a whole, to be deducted from 
 the amount of the notes in circulation ; and that, for the same 
 reason, inasmuch as the balances due to other banks by the 
 several banks, are included in the deposits, the balances due by 
 such other banks ought also to be deducted from that item, 
 which would reduce the aggregate of those two items, in the 
 preceding statement, from 16,028,000 to 12,690,000 dollars: 
 4thly, that the capital is the only item in the account apparent- 
 ly invariable, though it may occasionally be increased by legis- 
 lative permission, and lessened by purchases of their own stock 
 
 * Dcdiicling ao much of their own stock as has been purchased by the banks. 
 Fur want uf materials, it similar deduction has nui been made in the subvcquent 
 statcmeiiis. 
 
 t The jiiiblic slnck.s are not dislLnguishcd from others in the slatenveiU of the 
 Bank of Pennsylvania. Those held by the other banks amount to $l,588j00O. 
 
 F
 
 42 BANKS AND CURRENCY. 
 
 by the banks ; and that all the other items are variable, and do 
 vary according to the operations of the banks : 5thly, that sup- 
 posing the second and third items of credits to remain the same, 
 the circulation, or aggregate of deposits and notes in circula- 
 tion, cannot be either increased or decreased, without a corre- 
 sponding decrease or increase, either of the bills discounted, or 
 of the specie, or of both ; 6thly, that by limiting by law the 
 amount of the debts due to the banks, as included in the two 
 first items of the credits, to a sum bearing a certain ratio to the 
 capital, and by likewise limiting, in a similar manner, the gross 
 amount of the notes in circulation, both which limitations are 
 always under the control of the banks, excessive issues may 
 be prevented : 7th]y, that if the situation of the banks of 
 Pennsylvania in the aggregate be taken as a proper basis for 
 those limitations, the whole amount of debts due to a bank 
 ought not to exceed twice, nor the gross amount of its notes in 
 circulation, two-thirds of the amount of its capital. But it 
 must not be forgotten, that, although those limitations would be 
 useful in checking the amount of loans and issues, the ultimate 
 solvency of a bank always depends on the solidity of the paper 
 it discounts. 
 
 The capital of the state banks existing in the year 1790, 
 amounted to about 2,000,000 of dollars. The former bank 
 of the United States was chartered in 1791, with a capital of 
 10,000,000. The charter was not renewed; but in January, 
 
 1811, immediately before its expiration, there were in the 
 United States eighty-eight state banks, with a capital of 
 42,610,000 dollars, making then, together with that of the na- 
 tional bank, a banking capital of near 53,000,000. In June, 
 
 1812, war was declared against England ; and in August and 
 September, 1814, all the banks south and west of New-Eng- 
 land suspended their specie payments. 
 
 It has always been found difficult to ascertain with precision 
 the causes which, in each special case, produce an extraordinary 
 drain of specie, and compel a bank to suspend its payments. 
 Although it clearly appears that very large and unforeseen ad- 
 vances to government were the immediate cause of the suspen- 
 sion of the payments of the Bank of England in the year 1797, 
 it would seem, at this distance of time, to have been easy to 
 prevent that occurrence. The bills of exchange from abroad on 
 government, or any other floating debt, for the payment of which 
 the bank was required to make those advances, might with fa- 
 cility have been converted into funded debt. And when we 
 find, that, in less than seven months after the suspension, the 
 bank declared, by a solemn resolution, that it was enabled to 
 issue specie, and coidd with safety resume its accustomed func- 
 tions, if the political circumstances of the country did not ren- 
 der it inexpedient, it is hardly possible to doubt that the sus-
 
 BANKS AND CURRENCY. 43 
 
 pension, in its origin, as well as in its continuance, was a volun- 
 tary act on the part of government. Opinions are however di- 
 vided to this day on that subject ; and some distinguished Eng- 
 lish writers ascribe that event to some unaccountable panic. 
 There can be no doubt, that there was a great and continued 
 run on the bank for specie prior to the suspension ; and what 
 renders the transaction still more inexplicable, is, that, almost 
 immediately, and during some years after the suspension had 
 actually taken place, the bank notes, though no longer converti- 
 ble into specie, were at par. The question is not free of diffi- 
 culty as respects the similar event in the United States. 
 
 The following reasons were assigned by the directors of the 
 chartered banks of Philadelphia, in an address to their fellow- 
 citizens, dated the 30th of August, 1813. 
 
 " From the moment when the rigorous blockade of tlie ports of the United 
 States prevented the exportation of ovir produce, foreign supplies could be paid 
 for in specie onl3', and as the importation of foreign goods in tlie Eastern States 
 has been very large, it has for many months past occasioned a continual drain 
 from the banks. This drain has been mijeh increased by a trade in British Gov- 
 ernment Bills of Exchange, which has been extensively carried on, and has 
 caused very large sums to be exported from the United States. 
 
 " To meet tliis great demand for specie, the course of trade did, for a considera- 
 ble time, enable us to draw large supplies from the Southern States — but the un- 
 happy situation of affairs there, having deprived us of that resource, and circum- 
 stances having occurred, which have in a considerable degree occasioned alarm 
 and distrust, it became a serious consideration, whether the banks should con- 
 tinue their exertions to draw within their vaults tlie specie capital of the country, 
 and thus facilitate the means of exporting it from the United States, — or whether 
 they should suspend the payment of specie, before their means were exhausted." 
 
 The great drain from the east, alluded to by the Philadelphia 
 banks, is proved by the comparative view of the specie in the 
 vaults of the banks of Massachusetts, in Jimc 1814, immediately 
 before the suspension of payments, and on the same days of the 
 preceding and succeeding years, — 
 
 This amounted on the 1st of June 1811 
 
 1811 
 
 to 
 
 f5il,7On,00O 
 
 1812 
 
 
 3,ni .'3,000 
 
 1813 
 
 
 0,171,000 
 
 1814 
 
 
 7,326,000 
 
 1815 
 
 
 3,01.5,000 
 
 1816 
 
 
 1,270,000 
 
 And the fact, that a large amount of British government bills 
 was sent to this country from Canada in the years 1812 — 1814, 
 and sold at 20 and 22 per cent, discount, is corroborated by au- 
 thentic information from several (juarters. Other causes, how- 
 ever, concurred in producing the suspension of specie payments. 
 1. The circulating capital of the United States, which must 
 supply the loans required in time of war, is concentrated in the 
 large cities, and principally north of the Potomac. The war 
 was unpopular in the Eastern States: (bev contrihufed lc«sthan 
 from their wealth might have been antiripnt^'d : and fhe bur- 
 then fell on the Middle States. The proceeds of loans, (exclu-
 
 44 BANKS AND CURRENCY. 
 
 sively of Treasury notes, and temporary loans,) paid into the 
 Treasury from the commencement of the war to the end of the 
 year 1814, amounted to forty -one millions ten thousand dollars. — 
 Of that sum the Eastern States lent, - - - - $2,900,000 
 New- York, Pennsylvania, Maryland, and the ) ok -yon ooo 
 
 District of Columbia, ) ' ' 
 
 The Southern and Western States, _ _ _ 2,320,000 
 
 The floating debt, consisting of outstanding Treasury notes and 
 temporary loans unpaid, amounted, on the 1st of January 1815, 
 to eleven millions two hundred and fifty thousand dollars, about 
 four-fifths of which were also due to the Middle States. Almost 
 the whole of the large amount, advanced to government in those 
 States, was loaned by the cities of New- York, Philadelphia, and 
 Baltimore, and by the District. The banks made advances be- 
 yond their resources, either by their own subscriptions or by 
 enlarging their discounts in favor of the subscribers. They, as 
 well as several wealthy and patriotic citizens, displayed great 
 zeal in sustaining government at a critical moment ; and the 
 banks were for that purpose compelled to enlarge their issues. 
 
 2. The dissolution of the Bank of the United States deprived 
 the country of a foreign capital of more than seven millions of 
 dollars, vested in the stock of that institution, and which was 
 accordingly remitted abroad during the year that preceded the 
 war. At the same time, the state banks had taken up a con- 
 siderable part of the paper formerly discounted by that of the 
 United States. As the amount of this exceeded fifteen millions, 
 their aid in that respect was absolutely necessary, in order to 
 prevent the great distress, which must have otherwise attended 
 such diminution of the usual accommodations. 
 
 3. The creation of new state banks, in order to fill the chasm, 
 was a natural consequence of the dissolution of the Bank of the 
 United States. And, as is usual under such circumstances, the 
 expectation of great profits gave birth to a much greater num- 
 ber than was wanted. They were extended through the inte- 
 rior parts of the country, created no new capital, and withdrew 
 that which might have been otherwise lent to government, or 
 as profitably employed. From the 1st of January 1811, to the 
 1st of January 1815, not less than one hundred and twenty new 
 banks were chartered and went into operation, with a capital 
 of about forty, and making an addition of near thirty millions of 
 dollars to the banking capital of the country. That increase 
 took place on the eve of, and during a war which did nearly 
 annihilate the exports, and both the foreign and coasting trade. 
 And, as the salutary regulating power of the Bank of the Uni- 
 ted States no longer existed, the issues were accordingly in- 
 creased much beyond what the other circumstances already 
 mentioned rendered necessary. We have obtained returns of
 
 BANKS AND CURRENCY. 
 
 45 
 
 the circulation and specie, for tlie latter end of the years 1810, 
 1814, and 1815, though not all of the same precise date, of a 
 sufficient number of banks to enable us to make an estimate of 
 the whole, which cannot vary essentially frcmi the truth. Our 
 returns of the amount of deposits are too partial for insertion ; 
 our authentic returns embrace generally the states of Massa- 
 chusetts, New-Hampshire, Rhode Island, Pennsylvania, Mary- 
 land, Virginia, and the District of Columbia, and give the fol- 
 lowing result : 
 
 On or near Ist Jan. 1811 — 50 State Banks 
 1815—120 " 
 1816—134 " 
 
 Capital 
 
 Notes in 
 circulation 
 
 Specie 
 
 24,618,551 
 45,272,076 
 47,987,826 
 
 13,170,401 
 23,617,090 
 31,702,050 
 
 5,673.442 
 
 11,505,077 
 
 8,758,133 
 
 Having the amount of the capital and a few general returns 
 of all the other banks, partly guided by analogy, and partly 
 by their respective dividends, we annex the following estimate 
 of the whole : 
 
 Ist Jan. 1811— Bank of the U. S 
 
 88 State Banks 
 
 Total 
 
 1815—208 State Banks 
 
 1816—246 " " 
 
 Capital 
 
 Notes in 
 circulation 
 
 Specie 
 
 10,000,000 
 42,610,601 
 
 5,400,000 
 22,700,000 
 
 5,800,000 
 9,600.000 
 
 52,610,601 
 82,259,590 
 89,822,422 
 
 28.100,000 
 45,500.000 
 68,000,000 
 
 15,400,000 
 17,000,000 
 19.000,000 
 
 The unequal distribution of the specie on the 1st of January, 
 1815, must be recollected. 
 
 At that time the banks of the four ' 
 states of Maine, Massachusetts, Rhode 
 Island, and New-Hampshire, had 
 
 The states of Pennsylvania and Mary- 
 land, with the District of Columbia, had 
 
 And all the other states 
 
 Capital Circulation Specie 
 
 $15,690,000 5,320,000 8,200,000 
 
 26,000,000 13,750,000 3,000,000 
 40,930,000 25,630,000 5,800,000 
 
 The increase of issues, from forty-five and a half to sixty- 
 eight millions, or of about 50 per cent., within the first fifteen 
 months of the suspension of specie payments, was the natural 
 consequence of that event. We must observe, that, where we 
 were obliged to resort to an estimate, the amount of bank notes 
 is set down rather too low than too high. Yet, we are confident, 
 that for the three dates we have given, the actual amount can- 
 not have exceeded thirty, forty-seven, and seventy millions re- 
 spectively. This last sum falls very short indeed of the one 
 hundred and ten millions which were supposed to have been 
 put in circulation by the banks, but is quite suflicient to ac- 
 count for the depreciation. It is equal to the present amount 
 of the currency ; and as the increase of wealth during the last 
 fourteen years has at least been in the same proportion as that 
 of the population, the amount which could have been wanted
 
 46 BANKS AND CURRENCY. 
 
 at that time may be estimated at about forty-six millions, in- 
 cluding both paper and specie. It is therefore clear that the 
 equal amount in bank notes alone, which had been put in cir- 
 culation by the state banks before the year 1815, were more 
 than could have been long sustained, preserving at the same 
 time their convertibility into specie. Under those circumstances, 
 the alarm caused by the capture of Washington, and the threat- 
 ened attack on Baltimore, was sufficient to cause a suspension 
 of specie payments. It took place at that particular crisis, and 
 appears to have originated in Baltimore. The example was 
 immediately followed in Philadelphia and New-York ; and it is 
 indeed known, that an attack was apprehended on both those 
 places, and that some of the banks of Philadelphia had sent 
 their specie to Lancaster. 
 
 We have stated all the immediate and remote causes within 
 our knowledge, which concurred in producing that event ; and 
 although the effects of a longer continuance of the war cannot 
 be conjectured, it is our deliberate opinion, that the suspension 
 might have been prevented, at the time when it took place, 
 had the former Bank of the United States been still in exist- 
 ence. The exaggerated increase of state banks, occasioned by 
 the dissolution of that institution, w^ould not have occurred. 
 That bank would, as before, have restrained within proper 
 bounds, and checked their issues : and, through the means of 
 its offices, it would have been in possession of the earliest symp- 
 toms of the approaching danger. It would have put the Trea- 
 sury Department on its guard ; both acting in concert, would 
 certainly have been able at least to retard the event ; and, as 
 the treaty of peace was ratified within less than six months 
 after the suspension took place, that catastrophe M'ould have 
 been altogether avoided. 
 
 We have already adverted to the unequivocal symptoms of 
 renewed confidence shown by the rising value of bank notes, 
 which followed the peace. This would have greatly facilitated 
 an immediate resumption of specie payments, always more easy, 
 and attended with far less evils, wdien the suspension has been 
 of short duration. The banks did not respond to that appeal 
 made by public opinion ; nor is there any evidence of any pre- 
 parations, or disposition on their part, to pay their notes in 
 specie, until after the act to incorporate the new Bank of the 
 United States had passed. We are inclined to ascribe this prin- 
 cipally to the great difficulty of bringing the various banks, in 
 our several commercial cities, to that concert which was indis- 
 pensable. But it cannot be concealed, that, in such a situation, 
 the immediate and apparent interest of the banks is in opposi- 
 tion to that of the public. It is well known, that the Bank of 
 England, though apparently disposed at first to resume its specie 
 payments, found a continued suspension extremely convenient
 
 BANKS AND CURRENCY. 47 
 
 and profitable ; that during that period of twenty years, its ex- 
 traordinary profits, besides raising the usual dividend from 7 to 
 10 per cent., amounted to thirteen millions of pounds sterling, 
 and that it accordingly threw obstacles in the way of the re- 
 sumption. The state banks of the United States were only in- 
 active in that respect, and did not impede that desirable event: 
 but they used the advantages incident to the situation in which 
 they were placed ; and to what extent their issues were gene- 
 rally increased, has already been shown. 
 
 It will not be asserted, that any reasonable expectation could 
 have been entertained of a voluntary return on the part of the 
 state banks to a sound currency, unless the depreciation had 
 become so great as to induce the community at large to reject 
 their notes. Whether this arose from inability or unwillingness, 
 a remedy was equally necessary. Congress does not appear to 
 have inquired whether they had the right to exercise any im- 
 mediate control over the issues of those banks ; and the question 
 seems to have laid betAveen the establishment of a national 
 bank, and an attempt to force the state banks to pay in specie, 
 by the refusal of their notes in payment of debts and duties due 
 to the United States, so long as those notes were not on demand 
 discharged in specie. It is clear that such an attempt must have 
 failed altogether, during the year that followed the peace, and 
 so long as the expenses of government greatly exceeded its 
 receipts. The bank was chartered in April, 1816, and it must 
 for ever remain conjectural, w-hether, if that measure had not 
 been adopted, and after the floating debt, and all the arrearages 
 of the war had been paid or funded, and the receipts of the trea- 
 sury had become greater than its disbursements, an attempt, on 
 the part of the government, to collect the revenue, and to dis- 
 charge the public expenses in specie, would have compelled the 
 state banks to resume generally specie payments. It cannot, at 
 all events, be doubted, that the result was quite uncertain, and 
 that the attempt might have failed at the very outset, from the 
 want of any other currency than bank notes. It is indeed quite 
 probable, that, in that case, the impossibility to collect the re- 
 venue, might have induced government merely to substitute an 
 issue of its own paper to that of the banks. 
 
 It will be found, by reference to the Report of the Secretary 
 of the Treasury of December 1815, that his recommendation to 
 establish a National Bank was, in express terms, called " a propo- 
 sition relating to the national circulating medium," and was 
 exclusively founded on the necessity of restoring specie pay- 
 ments and the national currency. He states it as a fact incon- 
 testably proved, that the state banks could not at that time be 
 successfully employed to furnish an uniform national currency. 
 He mentions the failure of one attempt to associate them with 
 that view ; that another attempt, by their agency in circulating
 
 48 BANKS AND CURRENCY. 
 
 Treasury notes, to overcome the inequalities of the exchange, 
 has only been partially successful ; that a plan recently pro- 
 posed, with the design to curtail the issues of bank notes, to fix 
 the public confidence in the administration of the affairs of the 
 banks, and to give to each bank a legitimate share in the circu- 
 lation, is not likely to receive the general sanction of the banks ; 
 and that a recurrence to the national authority is indispensable 
 for the restoration of a national currency. Such was the con- 
 temporaneous and deliberate opinion of the Officer of the Gov- 
 ernment, who had to struggle against the difficulties of a paper 
 currency, not only depreciated, but varying in value from day 
 to day and from place to place. 
 
 *It was not till after the organization of the Bank of the 
 United States, in the latter part of January 1817, that delegates 
 from the banks of New- York, Philadelphia, Baltimore, and A^ir- 
 ginia, assembled in Philadelphia, for the purpose of agreeing to 
 a general and simultaneous resumption of specie payments, A 
 compact proposed by the Bank of the United States, acceded to 
 by the state banks, and ratified by the Secretary of the Treasu- 
 ry, was the result of that convention. The state banks engaged 
 to commence and continue specie payments, on various condi- 
 tions, relative to the transfer and payment of the public balances 
 on their books to the bank of the United States, and to the sum 
 which it engaged previously to discount for individuals, or under 
 certain contingencies for the said banks, and also with the ex- 
 press stipulation, that the Bank of the United States, upon any 
 emergency which might menace the credit of any of the said 
 banks, would contribute its resources to any reasonable extent 
 in support thereof, confiding in the justice and discretion of the 
 banks respectively, to circumscribe their affairs within the just 
 limits indicated by their respective capitals, as soon as the inter- 
 est and convenience of the community would admit. To that 
 compact, which was carried into complete effect, and to the im- 
 portation of more than seven millions of dollars in specie from 
 abroad by the Bank of the United States, the community is in- 
 debted for the universal restoration of specie payments, and for 
 their having been sustained, during the period of great difficulty 
 and of imexampled exportation of specie to China, which im- 
 mediately ensued. 
 
 Among the difficulties which the bank had to encounter, must 
 be reckoned the effort made to alleviate the distress which 
 always attends the return from a depreciated, to a sound cur- 
 rency. The Western States having less capital, are, in the course 
 of trade, generally indebted to the Atlantic seaports. Whether 
 owing to larger purchases of public land than usual, to an ex- 
 
 * The following details are borrowed from the pamphlet signed "Monitor," 
 which is well known to have come from an authentic source.
 
 BANKS AND CURRENCY. 
 
 49^ 
 
 cited spirit oC enterprise, or to any other cause, it appears, that 
 at that time, the amount of debts due by the West, either to the 
 East or to Government, was unusually large. The several west- 
 ern offices of the Bank of the United States discounted largely^ 
 probably to too great an extent. The eastern creditors were 
 generally paid, the western state banks relieved, and the debt 
 transferred to the Bank. Thus we find that the issues of the Bank 
 of Kentucky, which, in 1816, exceeded one million nine hundred 
 and fifty thousand dollars, were, in 1819, reduced to six hundred 
 and seventy thousand dollars. This could not be done, without 
 large issues of branch notes, or of drafts on the Parent Bank 
 and the northern oflices which drained these of their capital.* 
 Although great curtailments had taken place, near six millions 
 and a half of dollars of the capital of the bank were, in the 
 spring of the year 1819, distributed amongst the interior western 
 oflices, whilst the whole amount allotted to the offices north and 
 east of Philadelphia, was less than one million. The proper 
 equilibrium could not be reinstated without a revulsion and an 
 uncommon pressure on the west, in order to lessen the amount 
 of its debt. The attempts to counteract that effiict by the cre- 
 ation of a great number of local banks, could not but fail, and 
 must have aggravated instead of relieving the evil. The unpopu- 
 larity which attached to the Bank of the United States, when 
 it found itself compelled to enforce the payment of such a large 
 debt, and the attempt to alleviate the distress by relief laws, 
 which, though injudicious, ought not, in that state of things, to 
 be too severely judged, are well known, and were the natural 
 consequences of the course which had been originally pursued. 
 The year 1819 having been one of great difficulty, we annex 
 an estimate of the situation of the banks for the latter end of it. 
 The Secretary of the Treasury gave a partial one, in his report 
 on currency of the year 1820, to which we have made some 
 additions and corrections from bank returns of a nearer date to 
 the 1st of January 1820, than he had then obtained. The por- 
 tion, on estimate, embraces almost the whole of the banks of 
 Connecticut, New Jersey, New York, and Maryland, Mr. S. 
 Girard's, about one-half of those of South Carolina, Louisiana, 
 and Alabama, and one-fourth of those of Kentucky. The re^ 
 turns of those of the other states arc complete. 
 
 1st January, 1820. 
 
 Capital 
 
 Notes in 
 circulation 
 
 Deposits 
 
 Specie 
 
 212 ascertained State Banks 
 95 estimated " " 
 
 62,735.842 
 39,374,769 
 
 26,641,574 
 14,000,000 
 
 19,444.959 10.672,263 
 11,800.000 6.000,000 
 
 307 State Banks 
 
 United Stales Bank . . . 
 
 102,110,611 
 35,000,000 
 
 40.641,574 
 4,221,770 
 
 31,244,959 16,672,263 
 4,705,511 3,147.977 
 
 Total 
 
 137,110,611 1 44,863,344 | 36,950,470 | 19,820,240| 
 
 • Mr. Chaves's Exposition.
 
 50 BANKS AND CURWENCy. 
 
 It appears from that statement, that the amount of notes irf 
 circulation was only about one million less than immediately 
 before the suspension of specie payments, whilst on the other 
 hand, the amount of specie in the vaults of the banks was nearly 
 two millions greater. But it has been seen, that, on the 1st of 
 January 1816, the paper currency amounted to sixty-eight 
 millions. So great a reduction in the issues of the banks, could 
 not have been effected without a corresponding diminution of 
 their discounts. Debts contracted during the suspension of spe- 
 cie payments, and whilst the currency was depreciated, became 
 payable at par. The distress, therefore, that took place at that 
 time, may be clearly traced to the excessive number of state 
 banks incorporated subsequently to the dissolution of the first 
 Bank of the United States, and to their improvident issues. 
 Those of the country banks of Pennsylvania alone, amounted, 
 in November 1816, to $4,756,460, and had been reduced in 
 November 1819, to $1,318,976. A committee of the Senate of 
 that state, appointed in December 1819, to inquire into the 
 extent and causes of the present general distress, ascribe it, as 
 we do, to the improvident creation of so many banks, as will 
 appear from the following extract from their report : — 
 
 " At tlie foUov/ing- session, the subject was renewed with increased ardor, and 
 a bill authorizingf the incorporation of forty -one banking institutions, with capitals 
 amounting to upwards of seventeen millions of dollars, was passed by a large ma- 
 jority. This bill was also returned by the governor, with additional objections ; 
 but two-thirds of both houses (many members of which were pledged to their 
 constituents to that elfcct) agreeing on its passage, it became a law on the 21st 
 of March 1814, and thus was inflicted upon the commomoealth an evil of a more 
 disastrous nature than has ever been experienced by its citizens. Under this law, 
 thirty-seven bnnks, four of which were CKtablislicd in Philadelpliia, actually went 
 into operation." 
 
 The numerous failures which had preceded the year 1819, or 
 have since taken place, have also been principally due to the 
 same causes. We have an account of 165 banks that failed 
 between the 1st of January 1811 and the 1st of July 1830. The 
 capital of 129 of these amounted to more than twenty-four mil- 
 lions of dollars stated as having been paid in. The whole 
 amount may be estimated at near thirty millions ; and our list 
 may not be complete. The capital of the state banks now ex- 
 isting amounts to about 110 millions. On a total capital of one 
 hundred and forty millions, the failures have amounted to thirty, 
 or to more than one-fifth of the whole. Of the actual loss in- 
 curred, we can give no account. There are instances in which 
 the stockholders, by paying for their shares in their own notes^ 
 and afterwards redeeming their notes with the stock in their 
 name, suffered no loss ; and this fell exclusively on the holders 
 of bank-notes and dej)ositors. In many cases, where the whole 
 stock has been lost, the holders of notes have nevertheless ex- 
 perienced a partial loss. In the most favorable cases, the stock- 
 holders lost a considerable portion of tlicii- stock; and all the
 
 BANKS AND CURRENCY. 51 
 
 debts will be ultimately paid. But even then there has been 
 a heavy loss on the community ; the notes having been gene- 
 rally sold by the holders at a depreciated rate, at the time when 
 the failure took place. We believe that the pecuniary loss sus- 
 tained by the government, on the loans raised during the sus- 
 pension, and froTn bank failures, exceeded four millions of dollars. 
 The active industry of the country has enabled it to recover 
 from that depressed state ; and we will now give a view of the 
 situation of the state banks and of that of the United States, 
 at the close of the year 1829. We have returns of two hunr 
 dred and eighty-one state banks, which have a capital of 
 95,003,557 dollars. Of the forty-eight other banks we have 
 only the capital, amounting to 15,188,711 dollars, and some 
 incomplete returns ; and of thirty banks of the state of New- 
 York, of which we have complete returns, fourteen only are 
 for the 1st of January 1830, the sixteen others being for the 
 1st of January, 1828. This last circumstance makes the 
 amount of specie appear probably one million of dollars less 
 than it actually was at the end of the year 1829. The forty- 
 eight banks, of the situation of which we have no return, are 
 distributed as follows, viz. 
 
 In Connecticut, 3 
 
 New- York, 7 
 
 New-Jersey, -- --.-13 
 
 Pennsylvania,* 1 
 
 Delaware, -... i 
 
 Maryland, 4 
 
 South Carolina, 4 
 
 Louisiana, - - - (branches of) 1 
 
 Alabama, 1 
 
 Ohio, (all) 11 
 
 Michigan and Florida, 2 
 
 Estimating these in the same manner as in the preceding 
 statements, we have the following results : 
 
 1. For the states of Maine, New-Hampshire, Vermont, Mas- 
 sachusetts, and Rhode-Island, 
 
 Capital, 1130,812,692 
 
 Notes, 7,394,566 
 
 Deposits, 4,203,895 
 
 Specie, 2,194,768 
 
 For the states of Connecticut, New-York, and New-Jersey, 
 
 Capital, 26,585,539 
 
 Notes, 12,737,539 
 
 Deposits, 14,594,145 
 
 Specie, 2,841,746 
 
 • Mr. Girard's bank, the capital of which is rnte<l at 81,800,000, being the Biim on 
 which the stamp duly won formerly pnid.
 
 53 
 
 BANKS AND CURRENCY. 
 
 For th6 states of Pennsylvania, Delaware, Maryland, and 
 the District of Columbia, 
 
 Capital, - * $25,566,622 
 
 Notes, 11,274,086 . 
 
 Deposits, 10,850,739 
 
 Specie, • 4,170,592 
 
 For the four Southern States, 
 
 Capital, $17,600,129 
 
 Notes, 12,183,863 
 
 Deposits, ........... 6,952,194 
 
 Specie, -----......., 3,046,141 
 
 For the Western States,* 
 
 Capital, 
 
 Notes, ...... 
 
 Deposits, . . * . - 
 Specie, 
 
 9,629,286 
 4,684,860 
 4,180,146 
 2,686,396 
 
 II. Distinguishing the cities of Boston, Salem, New-Yorkj 
 Philadelphia, Baltimore, Charleston, and New-Orleans, fi'om 
 the rest. 
 
 Seven cities. 
 
 Capital, .... $53,211,605 
 
 Notes, 17,144,422 
 
 Deposits, .... 23,137,129 
 
 Specie, .... 7,258,025 
 
 Remainder 
 of the United States. 
 
 56,98,0,663 
 31,130,492 
 17,643,990 
 
 7j681,618 
 
 III. Situation of the Bank of the United States, on the 1st 
 .of November, 1829. — 
 
 jCr. 
 Funded debt. . . - 
 Notes discount- 
 ed, - - - $39,541,124 
 Domestic bills, 7,476,321 
 
 Foreign account, ... 
 Due from banks, 843,551 
 Notes of ditto, 1,531,528 
 
 $11,717,071 
 
 40,017,445 
 1,161,001 
 
 2,375,079 
 
 Specie, 7,175,274 
 
 Real estate, 3,876,404 
 
 66,322,274 
 
 Dr. 
 
 Capital, $34,996,270 
 
 Notes in circulation, - - 13,048,984 
 
 Deposits, 14,778,809 
 
 Balance in transitu from 
 bank and offices on each 
 other, ..-.-. 732,082 
 Surplus fund, after deduct, 
 ing losses already charge- 
 able to it, including that 
 of Baltimore, .... 2,766,129 
 
 €6,322,274 
 
 IV. The progressive impr6vement of the Bank of the United 
 States, and the talent with which it has been administered, 
 are exhibited in the following comparative view of the princi- 
 pal items of its situation, on the first days of November, 1819 
 and 1830:— 
 
 * There are not now any state banks in operation in the states of Kentucky, In- 
 i^iana, Illinois, and Missouri.
 
 BANKS AND CURRENCY. ^ 
 
 November 1. 1819. 1830. 
 
 Notes discounted on Bank Stock, - $7,759,980 719,195 
 
 Notes discounted on personal security, 21,423,623 32,665,035 
 
 Domestic Bills, 1,386,174 7,954,290 
 
 Deposits, 4,705,512 12,650,752 
 
 Specie, 3,147,977 11,436,175 
 
 Due to Baring, Brothers & Co. - - 2,333,937 
 
 Due from ditto, 2,778,653 
 
 Bank notes issued, 4,221,770 18,004,680 
 
 deduct in transitu, .... 411,659 2,823,135 
 
 In actaal circulation. 
 
 J,810,lll 15,181,545 
 
 V. The following estimate gives the general result for the 
 end of the year 1829 — 
 
 £81 Banks ascertained, 
 
 48 do. estimated 
 
 329* 
 
 Capital 
 
 Notes 
 
 Deposits 
 
 Specie 
 
 95,003,557 
 15,188,711 
 
 39,174,914 
 9,100,000 
 
 32,531,119 
 8,250,000 
 
 11,989,643 
 2,950,000 
 
 110,192,268 
 35,000,000 
 
 48,274.914 
 13,048,984 
 
 40,781,119 
 14,778,809 
 
 14,939,643 
 7,175,274 
 
 United States Bank . . . 
 
 145,192,268 1 61,323,898 | 55,559,928 | 22,114,917| 
 
 It will be perceived, by the last item of No. IV., that there 
 ifi always a large amount of the notes of the Bank of the United 
 States, issued and inserted in the usual returns, which are not 
 in actual circulation. They consist of notes received in pay- 
 ment of duties, or otherwise, by other offices than those by which 
 they had been issued, and transmitted back to them. The 
 amount, at the end of 1829, in No. IV., is that of the nett circu- 
 lation. On the other hand, the drafts from the bank on offices, 
 and from these on the bank and on each other in actual circu- 
 lation, should, as has been observed, be considered as making 
 part of it. The total annual amount of those drafts is about 
 twenty-four millions of dollars, and they are on an average paid 
 within fifteen days after being issued. The amount always in 
 circulation may therefore be estimated at one million, which, 
 added to the thirteen millions of bank notes, gives fourteen mil- 
 lions for the actual circulation of the bank. We may therefore 
 estimate the total amount of the paper currency of the United 
 States, on the 1st of January, 1830, at about sixty-two millions 
 and a half. 
 
 All the banks receive notes issued by the other institutions, 
 the returns of which, that have been obtained, being incom- 
 plete, have not been inserted in the preceding statements. Fr6m 
 an examination of a number of these, in various sections of the 
 
 • Wo have not included in tUis nmoimt ncvornl hunks -Jfiloly tlinrlcred, but not la 
 OTwmtion on the iM of .Innimrv, 1830.
 
 54 BANKS AND CURRENCY. 
 
 country, and embracing banks with an aggregate capital of, 
 more than twenty milHons of dollars, we think that the notes 
 of that description make more than one-fifth of the total amount 
 of their issues, in those situated north of the Potomac, and about 
 one-eighth in the Southern States. The average of notes of 
 state banks on hand, in the Bank of the United States and its 
 offices, amounted, during the year 1829, to about one million 
 and a half. There is, therefore, always a sum of about nine or 
 ten millions of dollars, or not less than one-seventh part of the 
 \vhole amount issued, which is not in actual circulation. If the 
 banks did not receive any notes but their own, it would seem 
 that a nearly equal amount of these would be returned upon 
 them, and that the real amount of those in actual circulation 
 should not be estimated at more than fifty-three and a half mil- 
 lions of dollars. We have however adopted throughout the 
 usual mode of computation. 
 
 If to the amount of notes we add the deposits, we will have 
 a total of either one hundred and eighteen, or one hundred and 
 nine millions, according to each of those two modes of compu- 
 ting, for the circulation of all the banks. This is sustained by 
 a sum of twenty-two millions in specie, which makes no part of 
 the circulation. There are no means of ascertaining correctly 
 the portion which consists of the precious metals. The silver 
 coinage of England forms nearly one-seventh part of the whole 
 circulation of that country. At that rate, that of the United 
 States, allowing for the various considerations which may affect 
 the question, cannot be estimated at more than ten millions. It 
 is well known, that gold has been altogether excluded by the 
 mint regulations. 
 
 We have therefore the following results, according to the 
 ,view of the subject, which may be adopted : 
 
 Gross amount of notes issued, $62,500,000 
 
 Silver coins, 10,000,000 
 
 Usual mode of computing, 1, . - - . 72,500,000 
 And if deposits are included, 55,500,000 
 
 2, .... 128,000,000 
 
 But if the bank notes of other banks on hand are 
 
 deducted, the notes in circulation will be - $53,500,000 
 Silver, 10,000,000 
 
 3, - - - - 63,500,000 
 And if deposits are included, 55,500,000 
 
 4, - - - - 119,000,000 
 
 Which last appears to us the most correct mode of compu- 
 tation.
 
 BANKS AND CURRENCY. 65 
 
 Although we have freely expressed our opinion, that, taking 
 into consideration all the circumstances which belong to the sub- 
 ject, it might have been preferable in the United States to hav6 
 had nothing but a metallic currency, we are quite aware that 
 this is not at this time the question. We are only to inquire, 
 whether any other or better security can be found, than that 
 which is aiibrded ])y the Bank of the United States, against 
 either the partial failures of banks, the want of an uniform 
 currency, or a general suspension of specie payments. The 
 great difficulty arises from the concurrent, and perhaps debate- 
 able jurisdiction of the general and state governments : and we 
 are to examine, not only what are the provisions necessary to 
 attain the object intended, but also by what authority the 
 remedy must be administered. 
 
 The essential ditferencc between banking and other commer- 
 cial business, is, that merchants rely, for the fulfilment of their 
 engagements, on their resources, and not on the forbearance of 
 their creditors, whilst the banks always rely, not only on their 
 resources, but also on the probability that their creditors will 
 not require payment of their demands. We have already seen, 
 that this probability is always increased or lessened, in propor- 
 tion as the issues of the banks are moderate or excessive. One 
 of the most efficient modes to reduce the amount of bank notes, 
 as compared to the total amount of the currency of the country, 
 consists in the increase of the metallic currency which circulates 
 amongst the people, independent of that which is kept in reserve 
 in the vaults of the banks. It is evident, that, inasmuch as only 
 a certain afhount of sound currency is wanted, and can be sus- 
 tained, that part which consists of bank notes must be lessened, 
 and thereby made safer, as the metallic portion is increased. 
 Whenever also the specie of the banks is drained by any extra- 
 ordinary demand whatever, delays, and often difficulties, may 
 arise in the importation of a supply from abroad ; which is, 
 however, the only resource, when the circulating metallic cur- 
 rency has nearly disappeared. 
 
 We have had an opportunity to witness in France the salutary 
 effects of a currency consisting principally of the precious 
 metals, not only in cases of great national difficulty, but also for 
 the specific purpose of reinstating a bank momentarily endan- 
 gered by over issues of paper. IJut we prefer referring to the 
 evidence of a verv able and practical witness, who was also 
 deeply interested in the issue, and we will extract this, from the 
 work of another distinguished and practical writer.* 
 
 " Of the comparative facility with which the coffers of a bank 
 which has suffered too great a reduction of its reserves by im- 
 prudent issues of paper may be replenished out of a circulation 
 
 * Tooke on Currency.
 
 S6 BANKS AiSm CURRENCY. 
 
 consisting in great proportion of coin, notwithstanding a coinci- 
 dent demand for large payments abroad, a strong instance is af-' 
 forded in the case of the Bank of France, in 1817 and 1818. 
 The circumstance is thus stated in Mr. Baring's evidence in 
 March 1819. (Vide Report of Lord's Committee on the resump- 
 tion of cash payments, p. 103.) Speaking of a drain which that? 
 bank had experienced, he says :~ 
 
 " Their bullion was reduced, by imprudent issues, from one hundred and sev- 
 enteen millions of francs, to thirty-fpur millions of francs, and has returned, by 
 more prudent and cautious measures, to one hundred millions of francs, at which 
 it stood ten days ago when I left Paris. This considerable change took place 
 since the first week in November, when the amount of specie in that bank was 
 at its lowest. It must, however^ be always recollected, that tliis operation took 
 place in a country, every part of the circulation of which is saturated with specie, 
 and, therefore, no inference can be drawn in favor of the possibility of so rapid 
 an operation in this country, wliere, owing to the absence of specie in circulation, 
 the supply must entirely come from abroad ; for in Paris, tliough some portions 
 may have come from foreign countries, the great supply must undoubtedly have^ 
 come through all the various small channels of circulation through that kingdom." 
 
 " Again, in the same evidence, p. 105 : — 
 
 "Q. Has not France, after two years of great scarcity in corn, and two years 
 of foreign contribution, been able to contribute a proportion of the precious, 
 metals to the wants of Russia and Austria ? 
 
 " A. Undoubtedly, the precious metals have been supplied from France to Rus- 
 sia and Austria, and shipped, to a considerable amount, to America, notwith- 
 standing the payments to foreign powers, and very large payments for imported 
 corn, whilst, at the same time, wine having almost totally failed for several years 
 past, they were deprived of the most essential article of their export." 
 
 " And, in reference to these payments, in the preceding an- 
 swer, Mr. Baring states, that they 
 
 ' Produced no derangement whatever of the circulation of, that country 
 (France.)' 
 
 " It may not be unimportant further to remark, that the state 
 of the currency in France, ever since the suppression of the 
 assignats, appears to be decisive of the great advantages attend- 
 ing a metallic circulation, in times of political difficulty and 
 danger. On no one great occasion did her efforts appear to be 
 paralyzed, or even restricted, by any derangement of the cur- 
 rency ; and in the tvvo instances of her territory being occupied 
 by an invading army, there does not appear to have been any 
 material fluctuation in its value." 
 
 We perceive but tvA^o means of enlarging the circulating me- 
 tallic currency, 1st, the suppression of small notes; 2d, the 
 measures necessary to bring again gold into circulation. 
 
 The first measure is that, which, after long experience, a most 
 deliberate investigation, and, notwithstanding a strenuous oppo- 
 sition by the parties interested, has been finally adopted and per- 
 severed in by the government of Great Britain. By the sup- 
 pression of all notes of a denomination less than £5 sterling, in 
 England, Wales, and Ireland, the amount of the circulating 
 metallic currency has become equal to that of bank notes of
 
 BANKS AND CURRENCY. 57 
 
 every description. That metallic currency consists of eight mil- 
 lions sterling in silver, which is receivable only in payments not 
 exceeding forty shillings, and of twenty-two millions sterling in 
 gold. This measure has given a better security against fluctua- 
 tions in the currency, and a suspension of specie payments, than 
 had been enjoyed during the thirty preceding years. In France, 
 where the Bank of France is alone authorized to issue bank 
 notes, and none of a denomination under five hundred francs, 
 its circulation hardly ever reaches ten millions sterling, or about 
 one-tenth part of the currency of the country. In the United 
 States, all the banks issue notes of five dollars. The states of 
 Pennsylvania, Maryland, and Virginia, and perhaps some 
 others, haA'e forbidden the issue of notes of a lower denomina- 
 tion, to the great convenience of the community, and without 
 experiencing any of "the evils which had been predicted. We 
 have seen, in Pennsylvania, the chasm occasioned by that sup- 
 pression instantaneously filled by silver, without the least dimi- 
 nution in the amount of currency. We cannot but earnestly 
 wish, that the other states may adopt a similar measure, and 
 put an end to the circulation of the one, two, and three dollar 
 notes, which is of no utility but to the banks. Those small notes 
 are, as a currency, exclusively local, and a public nuisance : 
 and, in case of the failure of any bank, the loss arising from 
 them falls most heavily on the poorest class of the community. 
 We have no other data to estimate the proportion they bear to 
 the whole amount of notes, than the returns of the banks of 
 Massachusetts and Maine, subsequent to January 1825; by 
 which it appears, that, in those states, those small notes make 
 one-fifth part of the whole paper currency. But we would 
 wish to go further than this, and, in order to bring gold more 
 generally into circulation, that all notes under the denomination 
 of ten dollars might be suppressed. The five dollar notes of the 
 Bank of the United States, constitute less than one-sixth part of 
 its circulation, and amount in value to two-thirds of that of its ten 
 dollar notes. From those data, taking into consideration the 
 amount of currency of the states where the small notes do not 
 circulate, and allowing that a portion of the five would be sup- 
 plied by ten dollar notes, the reduction in the amount of the 
 paper currency, arising from a suppression of the small notes, 
 may be estimated at six, and that produced by the suppression 
 of the five dollar notes at about seven millions. Both together 
 would probably lessen the paper currency by one-fifth, and sub- 
 stitute silver and gold coins in lieu thereof. 
 
 We have already adverted to the erroneous value assigned to 
 gold coins by the laws which regulate the Mint of the United 
 States. The relative value of that metal to silver was, by the 
 law of 1790, fixed at the rate of 15 to 1. In England it was at 
 ♦hat time at the rate of 15.2 to 1 ; and it had in France, after 
 
 ■ u
 
 58 BANKS AND CURRENCY. 
 
 an investigfitlon respecting the market price of both metals, 
 been established at the rate of 15^ to 1, as early as the year 
 1785. From that to this time, gold corns have never been be- 
 low par in that country, and have generally commanded a pre- 
 mium, varying from one- fifth to one per cent., but which, on an 
 average, has been rather less than one-half per cent. This ratio' 
 in all those instances is that of gold to silver coins, but the dif- 
 ference is greater between gold and silver bullion. Whether 
 the expense of coinage is defrayed gratuitously by government, 
 or a seignorage is charged to individuals, coins not debased or de- 
 teriorated will almost always command a higher price than bul- 
 lion containing the same quantity of pure metal, on account of 
 their greater utility, and of the cost of coinage. It is only when 
 there is at the same time a redundancy of coin, a scarcity of 
 bullion, and a great demand for plate or other manufactures, 
 that, when the general coinage is sound, coins will be melted, 
 and the price of bullion be equal to that of coins. Should, 
 however, the coinage be deteriorated, new good coins will be 
 melted as soon as they issue from the mint, and there is no rem- 
 edy but a general recoinage at the public expense. According 
 to the mint laws of England, an ounce of standard gold (contain- 
 ing, like ours, eleven-twelfths pure and one-twelfth alloy) is 
 coined into £3 17s. lO^d. sterling; and, in the present sound 
 state of its gold coinage, the average price of bullion of the 
 same standard may be estimated as 775.7^. No solid reason can 
 be assigned, why the actual cost of coinage should not be charged 
 by government. In point of fact, the delay of two months, which 
 elapse between the deposit of bullion in the Mint of the United 
 States, and the delivery of the coins, is nearly equal to a charge 
 of 1 per cent; but does not assist in defraying the expenses of 
 the mint, and has the disadvantage of being the same on both 
 metals. When the annual silver coinage of our mint reaches three 
 millions of dollars, the expense may be estimated at 1 per cent. 
 The expense on the same value of gold, no silver being coined, 
 would amount to about one-half per cent. The coinage of six 
 millions, half in silver and half in gold, might be estimated at 1 
 per cent, on the first, and one-fifth per cent, on the gold. It is 
 obvious, indeed, that it is more expensive to coin five silver 
 pieces, worth one dollar each, than one gold piece worth five 
 dollars. A seignorage at the last-mentioned rate might be ad- 
 vantageously substituted to the present mode, and would only 
 require a moderate constant appropriation, that might enable 
 the mint to pay for the bullion at the time, or at least, within 
 ten days of its delivery. 
 
 In France, the mint allows 3091 francs for each kilogramme 
 of standard gold. This is coined into gold coins of the nominal 
 value of 3100 francs, being a deduction or seignorage of less than 
 three-tenths per cent. The mint price of standard silver is 197
 
 BANKS AND CURRENCY. 59 
 
 francs the kilogramme, which is coined into silver coins of the 
 nominal value of 200 francs; the deduction or seignorage 
 amounting to 1^ per cent. This is too great, and is, at least in 
 part, the cause of the almost constant premium on gold coins. 
 Whilst the relative value of gold to silver coins is lixed at the 
 rate of 15^ to 1 ; that of gold to silver bullion, is at the rate of 
 3.091 : 197, nearly equal to 15.G9 : 1. This last ratio cannot 
 essentially differ from the true average market relative price of 
 the two metals, since the mint has been abundantly supplied 
 with both for the last forty-five years. 
 
 But whether we estimate that relative value, by deducing it 
 from the premium on tbe French gold coins, or by assuming 
 that of gold to silver bullion as purchased by the French mint, 
 or at the apparent market rate in England during the three or 
 four last years, which would give respectively the ratios of about 
 15.(), 15.7, and 15.2.5 to 1 ; it is evident that our gold coins are 
 underrated at least 4 per cent. The necessary consequence is 
 tiie disappearance of gold coins, and their exportation to Eu- 
 rope, whenever the exchange will admit of it. According to 
 that regulation, a ten dollar gold coin, or Eagle, contains 270 
 grains of standard gold ; and as the 20 shillings sterling gold 
 coin, or Sovereign, contains 123^|i grains of gold of the same 
 standard, about $4.56 in gold coin'of the United States, contain 
 a quantity of pure gold equal to that contained in a Sovereign. 
 Allowing 1 per cent, for charges and transportation, our gold 
 coins may commence to be exported to England as soon as the 
 exchange rises to $4.61 per pound sterling; which rate corre- 
 sponds with nearly 3| per cent, above the nominal, and 3 per 
 cent, below the true par. calculating this at the ratio of near 
 15.6 to 1, or $4.75 per pound sterling. We find by the tables 
 of exchange annexed to the report of the Secretary of the Trea- 
 sury, that, with (he exception of the year of the embargo, un- 
 less incidentally for a few days, the exchange on London, from 
 1795 to 1821, never rose to 84.62 per pound sterling, or about 
 
 4 per cent, above the nominal par; or in other words, that dur- 
 ing the whole of that period, the exchange was constantly fav- 
 orable to the United States, having never been higher, with the 
 exception aforesaid, than 2 per cent, below the true par. This 
 is the reason why our gold coins, though underrated, were not 
 exported, till the year 1821; when the exchange rose from 
 $4.60 to 84.98 per pound sterling ; and our gold coins began to 
 be exported, a premium of one-half per cent, upon them being 
 given, when the premium on the nominal par of exchange was 
 
 5 per cent, corresponding to an exchange of near 8^1.67 per 
 pound sterling. From that time to the end of the year 1829, the 
 exchanges have, with few short exceptions, been tmfavorable to 
 the United States; and the exportation has continued, not oidy 
 during that period, l)ut also during the Last nine months, though
 
 60 BANKS AND CURRENCY. 
 
 the exchange has this year been but little if any above the true 
 par. It is perfectly clear, that, whilst our gold coins are thus 
 underrated, they will be exported, whenever the exchange 
 rises above $4.61 to $4.64 per pound sterling; and that, if rated 
 according to the true or approximate relative value of gold to 
 silver, they would not be exported to England till the exchange 
 had risen to at least $4.80 to $4.83, or more than 1 per cent, 
 above the true par. 
 
 If the intention is to exclude the gold coins altogether, it is 
 quite unnecessary to coin gold. If it is intended that they should 
 make part of the circulation, they must be rated at or near their 
 true relative value. Unless this is done, the circulating metallic 
 never can be sufficiently enlarged to insure to the country a 
 sound currency. The question, whether the two metals should 
 circulate simultaneously, has never been made a matter of doubt 
 when there has been no paper currency. Both are then indis- 
 pensable, gold for large payments and principally for remittances 
 and travellers, and silver for small daily payments. The Secre- 
 tary of the Treasury correctly states, that, " if there were no 
 paper medium hke that of the Bank of the United States, cir- 
 culating freely in all parts of the Union, and everywhere con- 
 vertible into the standard, at a very moderate discount, gold 
 coins would be almost indispensable. Without them, every trav- 
 eller, even from state to state, and often from one county to 
 another, must encumber himself with silver, or be exposed to 
 vexatious embarrassments and impositions." A country which 
 wishes to make gold the only standard of value, is still compelled 
 to admit a silver coinage for small payments. Where silver is 
 the standard, gold would still be found necessary unless supplied 
 by paper. It is true, that so long as five dollar notes exchange- 
 able everywhere for specie do circulate, gold, though rated at 
 its value, will be less in demand, and that many persons will 
 prefer the notes. But even in that case, both may at least be 
 permitted to circulate concurrently, leaving to every individual 
 the option of either. At all events, if thus rated, they would 
 assist in filling the vaults of the banks, and thereby throw a 
 larger quantity of silver in circulation. 
 
 It has been objected to the simultaneous circulation of the two 
 metals, that the fluctuation in their relative price, increases the 
 uncertainty of the standard. This is true, but not to the extent 
 which a first view of the subject may suggest, and, even to that 
 extent, producing so small an effect that it may be altogether 
 neglected. 
 
 There are four contingencies which may cause a fluctuation 
 in the relative price of gold and silver, as either may either rise 
 or fall, as compared to the value of all other commodities. 
 Supposing a country where silver is made the only legal tender, 
 it is clear that in two of those contingencies, namely, if the
 
 BANKS AND CURRENCY. 61 
 
 price of gold should rise, or if that of silver should fall, every 
 payment would have still been made in silver, if both metals 
 had been a legal tender, and the option given to the debtors to 
 pay with either. As the probability of those several contingen- 
 cies is perfectly equal, it follows that, in one-half of the fluctua- 
 tions which may take place in the relative price of the two 
 metals, it is perfectly immaterial, whether one or both are made 
 a legal tender. With respect to the two other contingencies ; if 
 the price of silver should rise, that of gold remaining the same 
 as compared to all other commodities, the debtors in the coun- 
 try where both metals were a legal tender, would pay in gold, 
 and therefore in perfect conformity with the original contract ; 
 whilst, in the country where silver alone was a legal tender, 
 they would be obliged to pay in that metal, that is to say, to 
 pay a greater value than according to the original contract ; 
 and, on the other hand, if the price of gold should fall, that of 
 silver, as compared to all other commodities, remaining the 
 same, the debtors would, in the country which admitted only 
 silver as a legal tender, be obliged to pay in that metal in con- 
 formity with the contract ; while in the country where both 
 metals were a legal tender, the debtors would pay in gold, that 
 is to say, a sum less than according to the contract. Whatever 
 may be the amount of fluctuation, the stability of the standard 
 of value is not, by adopting only one metal as such, improved 
 to a greater extent than has now been stated. But the fact is, 
 that the fluctuations in the relative price of gold and silver 
 coins are so small in a country where the mint is open to all 
 individuals, and under proper regulations, that, when compared 
 with the variations to which coins issuing from the same mint 
 are liable, they may be altogether disregarded. 
 
 It has been sometimes erroneously supposed, that governments 
 might alter by their own regulations the actual relative value 
 of the two precious metals. This might be done to a considera- 
 ble extent, if these had no intrinsic value ; that is to say, if they 
 could be obtained without capital or labor, or if, whatever the 
 cost of production might be, they were of no utility whatever 
 except for currency. In the first case, governments might at- 
 tach any value they pleased to either metal, in the same manner 
 as is now done with paper money. In the latter case, there 
 being no other demand except that of governments, the price 
 of either metal might be reduced so low, as to compel an aban- 
 donment of all the poorer, but not lower than the cost of pro- 
 duction at the most fertile mines. But the intrinsic value, of 
 the precious metals, combined with the general demand for 
 them, determines their market price. Governments are among 
 the principal, but not the only consumers. If the demand for 
 either gold or silver for the purpose of currency was to cease 
 altogether, it would have an eifecf on the market pri( e of the
 
 62 BANKS AND CURRENCY. 
 
 metal excluded ; but a government, which uses both as cur- 
 rency, cannot affect their permanent relative value. It may, 
 however, to a certain extent, prevent great fluctuations, by 
 coining at all times for all individuals who may bring in bullion, 
 allowing always the same regular price, and paying for it with- 
 out delay, and without any other charge than the actual cost 
 of coining. 
 
 It has already been stated, that the relative mint price of 
 gold and silver bullion in France (about 15.7:1) is very near 
 the average market price of those two metals. And by giving 
 always the same regular price for each, government has, to a 
 certain degree, prevented any great fall in the price of either. 
 It is only during short and extraordinary periods, that the fluc- 
 tuations have been so great, as that the gold coins did, either 
 fall to the par of silver coins, or rise to a premium of one per 
 cent. During by far the greater part of the period of forty- 
 five years, which has elapsed since that regulation took place, 
 this premium has fluctuated from one-fifth to one-half per cent. ; 
 so that the variations in the relative price of the two metals 
 have, with the few exceptions above mentioned, been less than 
 one-third per cent. And even these would have been less, had 
 not, as has already been stated, the silver coins been overrated 
 by charging about one-half per cent, too much on their coinage. 
 
 It is believed that there is no mint which issues more faithful 
 and perfect coins than that of the United States. The ex- 
 treme variation from standard fineness, as determined by the 
 annual assay, does not exceed one-fifth per cent, on the silver 
 coins ; on the gold coins it is too small to be appreciated. On 
 a large sum as delivered from the mint, the weight, if not pre- 
 cisely accurate, would almost uniformly be found to fail in ex- 
 cess. But trivial deviations in weight on single pieces are una- 
 voidable : they rarely exceed one-third per cent, on the hea- 
 viest silver, and are less than one-sixth per cent, on the gold 
 coins. If, to those unavoidable deviations, be added the loss 
 which coins experience by friction, it will be found that they 
 exceed in value the fluctuations in the relative market price 
 of the gold and silver coins issued under proper mint regula- 
 tions, and therefore that these are a quantity which may be 
 neglected, and which, in fact, is never taken into consideration 
 at the time of making the contract. 
 
 The importance of preserving a permanent standard of value 
 is the leading principle, which we have tried to enforce in this 
 paper ; and it is for that express purpose that we consider an 
 alteration in the mint regulations, which alone can bring gold 
 into circulation, as absolutely necessary. The rate heretofore 
 adopted had its origin in a mistake, and was not at all intended 
 for the purpose of excluding gold. It did not produce that effect 
 for thirty years, on account of the favorable rate of exchanges.
 
 BANKS AND CURRENCY. 63 
 
 To persist in it, now that experience has shown the evils it pro- 
 duces, and amongst others the undeniable exportation of gold, 
 and of gold coins, at a time when the exchanges may be three 
 per cent, under the true par, instead of being adherence to the 
 original plan, is an obvious deviation from its avowed object. 
 We are sacrificing reality to a pure shadow, when for the sake 
 of an abstraction, and in order to avoid a contingent and doubt- 
 ful fluctuation of one-half per cent, in (he standard of value, 
 we promote, by the total exclusion of gold from circulation, that 
 increase of the paper currency, which alone can materially en- 
 danger that standard. 
 
 But even this objection may be removed by raising the mint 
 price of gold only to that rate, which will render it almost im- 
 possible that its legal value should ever be higher than its mar- 
 ket price. We would, therefore, suggest the adoption, in the 
 relative legal value of the gold and silver coins, of a ratio not 
 much above that of 15.6:1, rather than one nearer to the aver- 
 age relative value of the two metals. As the exchange must 
 rise more than one per cent, above the true par derived from 
 the legal relative value which may be adopted, before Ameri- 
 can gold coins can be exported, this would not take place to 
 England, until the exchange had risen to at least S4 81 per 
 pound sterling. On the other hand, that ratio being lower than 
 that of the relative value of gold and silver bullion either in 
 England or in France, there would be no danger of the price 
 of the gold falling below that of the silver coins. On the con- 
 trary, it is extremely probable, that the gold coins would gene- 
 rally, as in France, command a sm.all premium, and be used 
 with great convenience as subsidiary to silver, which would re- 
 main as heretofore our standard of value. Either of the ratios 
 of 2700:173 (equal to about 15.6009:1), and of 125:8 (equal to 
 15.625:1) would answer that purpose. According to the first, 
 the weight of the eagle would be in standard gold, 259.5; and 
 according to the second 259.2 grains. The last ratio is the most 
 simple, and is capable of a (lefmite expression in decimals. The 
 only advantage of the first, the expression of which, though less 
 simple, is however perfectly definite, consists in making the cor- 
 responding value of the pound sterling almost equal to §4 75, 
 (nearly 4.7505,) which would adord much convenience in the 
 calculations of duties and exchange. The corresponding value 
 of the pound sterling, according to the second ratio, would be 
 near $4 75.6. We think, that at all events, the ratio should 
 not exceed that of 675:13, (nearly espial to 15.7:1,) which would 
 give two hundred and fifty-eight grains for the weight of the 
 eagle in standard gold, and about $4 77.8 for the corresj)onding 
 value of the pound sterling.* 
 
 * See Note A.
 
 64 BANKS AND CURRENCY. 
 
 Another consideration may be adduced in favor of the pro- 
 posed reform of our gold coins. It seems to be well ascertained 
 that the United States contain one of the most extensive deposits 
 of gold that has yet been discovered. It extends from the central 
 parts of Virginia, in a south-west direction, to the state of Ala- 
 bama. It is said to have yielded the value of near half a mil- 
 lion of dollars this year, and it is not improbable that it will ere 
 long aflbrd an annual produce of several millions. It appears 
 but just to aiford, to those employed in collecting that natural 
 product, a certain and the highest home market of which it is 
 susceptible. This cannot be the case, so long as gold is only a 
 merchandise for exportation, and will be effected by making it 
 a current coin, and reducing the charge of coinage in the man- 
 ner which has been before suggested. In every point of view, 
 we consider this last measure, that of enabling the mint to pay 
 immediately for the bullion, and of substituting, to the delay of 
 two months, a small duty on the coinage not higher than its cost, 
 as of no» inconsiderable importance. 
 
 Great Britain, in adopting gold as the sole standard of value, 
 has found it, however, absolutely necessary to admit silver coins 
 for payments not exceeding forty shillings. This limitation 
 would, it seems, have been sufficient for the object intended. 
 But, whether in order to prevent the exportation, or only the 
 better to assert the adherence to an abstract principle, the new 
 silver coinage has been overrated about nine per cent, by coin- 
 ing the troy pound weight of standard silver into sixty-six in» 
 stead of sixty-two shillings. This debased coin is attended with 
 the same inconvenience as a paper currency issued by govern- 
 ment. There is, on account of the profit, a temptation to issue 
 too much ; and no sure means can be found of ascertaining the 
 amount wanted for effecting the payments to which that por^ 
 tion of the currency is applicable. It is worthy of remark, that 
 England, from a scrupjulous adherence to a single standard, should 
 have actually established two distinct standards of value, one 
 for wholesale and the other for retail transactions. It is obvi- 
 ous, that since a debased coin can be neither profitably exported 
 nor applied to other purposes, any considerable excess, beyond 
 what is actually wanted for effecting small payments, must cause 
 a depreciation. Should government be ever so moderate in its 
 issues, the facility with which that coin may be, not counter- 
 feited, but illegally imitated and put into circulation, must ulti- 
 mately defeat the object intended. In the meanwhile, should 
 the excess be such, that the retailers of every description, who 
 are obliged to take in payment silver inapplicable to wholesale 
 purchases, could not dispose of the surplus, they must, to indem- 
 nify themselves, add something to their prices. We believe this 
 to be already the fact, and that this, like every other depreci-
 
 BANKS AND CURRENCY. 65 
 
 ated currency, operates as a tax, which affects principally all 
 those who are compelled to purchase every thing by retail. 
 
 These two measures, suggested for the purpose of enlarging 
 the circulating metallic currency, recommend themselves by 
 their simplicity, and are founded on the beneficial experience 
 of almost every other country. In Europe, England alone has 
 resorted to a single standard, and that nominally, since her silver 
 circulation amounts to eight millions sterling, or to more than 
 one- third of her gold, and almost to one-third of her paper cur- 
 rency. We believe that small notes, or tokens, circulate no 
 longer anywhere but in Russia, Sweden, and Scotland. The 
 situation of two of those countries is in nowise parallel to that 
 of the United States. Twenty shilling notes continue to circu- 
 late in Scotland; but the solidity of the banking system of that 
 country offers an anomaly which has not been satisfactorily ex- 
 plained. The numerous failures of country banks in England 
 have been sometimes ascribed to their not being incorporated 
 companies; which is disproved by the solidity of the numerous 
 Scotch banks of the same description, and by the repeated fail- 
 \ires of our own chartered banks ; and sometimes to their not 
 being permitted by law to consist of a sufficient number of part- 
 ners. But of the twenty-nine banks of Scotland which are not 
 chartered, seventeen are voluntary associations, consisting of 
 from three to nineteen partners, the credit of which is as good 
 as that of the other twelve unincorporated, and of the three 
 chartered banks of that country. We believe, that independent 
 of the peculiarities which distinguish the Scotch banking sys- 
 tem, its superior stability must be principally ascribed to the 
 persevering but cautious enterprise, to the great frugality, and 
 generally to the habits of that nation.* 
 
 It is difficult to devise the more direct means by which the 
 over-issues of banks may be checked. Several of the states have 
 as yet taken no measures to that effect. Many appear to have 
 tried to apply rather penal than preventive remedies. The laws 
 by which it has been attempted to limit either the loans or the 
 issues made by the banks, have generally been intended to pre- 
 vent what never can take place. Amongst more than three 
 hundred banks, either now existing or which have failed, and 
 of which we have returns, we have not found a single one, the 
 loans of which amounted, so long as specie payments were in 
 force, to three times, or the issues to twice the amount of their 
 capital. It is clear, that provisions applicable to such improba- 
 ble contingencies are purely nominal. The statements we have 
 given show that the average amount of notes issued by the 
 state banks docs not, taken together, exceed forty-four per cent, 
 nor the aggregate amount of their notes and deposits, eighty-one 
 
 ♦ See Note B. 
 I
 
 66 BANKS AND CURRENCY. 
 
 per cent, of their capital. The loans made by those banks, of 
 which we have returns in that respect, amount to 129,815,441, 
 and their aggi egate capital to 89,779,557 dollars. Those facts 
 aflbrd sufficient data to form an opinion of the necessary pro- 
 visions in that respect. The restrictions can only be made in 
 reference to the capital actually paid in, and to apply to the 
 amount of loans and issues, which, with the exception of de- 
 posits, are the only items that can be always limited by the 
 banks. And the deposits, independent of being voluntary, could 
 not without much inconvenience, both to the banks and their 
 customers, be restricted to a fixed amount. We think that no 
 bank should be permitted to extend its loans, including stocks 
 of every description, and every species of debt in whatever 
 manner secured, beyond twice the amount of its capital. We 
 find provisions to that effect in the laws of Massachusetts and 
 Louisiana. That proportion is forty per cent, greater than that 
 of the banks above mentioned, and greater, as we think, than 
 is consistent with the safety of almost any bank. The aggre- 
 gate of the loans made and of the stocks owned by the former 
 Bank of the United States, never amounted to seventy per 
 cent., nor that of the existing bank to fifty per cent, beyond 
 the amount of their respective capitals. This restriction alone 
 necessarily checks the aggregate amount of the issues and de- 
 posits of a bank ; which, in that case, never can together ex- 
 ceed the amount of its capital, beyond the specie in its vaults, 
 and the nominal value of its real estate. But we believe that 
 a positive restriction on the issue of notes, so that they never 
 should exceed two-thirds of the capital, would be highly bene- 
 ficial. The only objection is, with respect to country banks, 
 which have not the same proportionate amount of deposits as 
 the city banks, and may on that account claim a greater latitude 
 with respect to notes. But it will be perceived by the following 
 statement, which includes thirty banks of the state of New- York 
 that have more than three-fourths of the whole banking capital 
 of the state, and all the chartered banks of Pennsylvania and 
 Massachusetts, that, taking into consideration both notes and de- 
 posits, the proportion of these to the capital is far greater in the 
 country than in the city banks. The relative proportions are, 
 in New- York and in Pennsylvania as seven to four, and in Mas- 
 sachusetts as three to two. A reduction in the amount of notes 
 to two-thirds of that of the capital would not afifect this state, 
 and would still leave in Pennsylvania and New-York, the pro- 
 portion of notes and deposits to capital, much greater in the 
 country, than in the city banks. The circulation of these is, in 
 both states, less than their capital. The restriction proposed 
 would still leave the circulation of the country banks, in Penn- 
 sylvania, of 4,2.35,000 on a capital of 3,506,000 dollars, and in 
 New-York of 6,737,000 on a capital of 4,926,000 dollars.
 
 BANKS AND CURRENCY. 67 
 
 Massachusetts, 
 
 Specie, - - 
 Capital, - - 
 
 City. 
 
 $ 747,684 - - . 
 13,450,000 - - . 
 
 Cotintry. 
 
 ■ - $ 239,526 
 . - 5,702,400 
 
 Notes, - - 
 Deposits, - - 
 
 2,357,678 - - • 
 2,202,092 - - . 
 
 . - 2,160,000 
 . - 658,190 
 
 Circulation, - 
 
 4,559,770 - - . 
 
 . - 2,818,190 
 
 Pennsylvania, 
 Specie, - - 
 Capital, - - 
 
 $1,639,134 - - . 
 9,903,930 - - . 
 
 . . $ 775,537 
 . - 3,506,403 
 
 Notes, - - 
 Deposits, - - 
 
 3,648,719 - - . 
 5,046,183 - - . 
 
 . - 3,659,650 
 . - 1,795,266 
 
 Circulation, - 
 
 8,694,902 - - - 
 
 . - 5,454,916 
 
 New-York, 
 
 
 
 Specie, - - 
 Capital, - - 
 
 $1,169,581 - - . 
 10,711,200 - - . 
 
 . - $ 390,710 
 . - 4,926,153 
 
 Notes, - - 
 Deposits, - - 
 
 3,394,257 - - • 
 6,662,174 - - - 
 
 . - 4,567,023 
 . - 3,692,326 
 
 Circulation, - 
 
 10,056,431 - - - 
 
 . - 8,259,349 
 
 We do not wish, by the preceding observations, to be under- 
 stood as objecting generally to the extension of the banking 
 system to the country, but only to the indiscriminate establish- 
 ment of banks, without regard to the actual wants and means 
 of the districts which may apply for that purpose. There is a 
 general spirit of enterprise in the United States, to which they 
 are greatly indebted for their rapid growth ; and it is difficult 
 to ascertain, in all cases, to what extent it should be encouraged, 
 and when it ought to be checked. The remarks apply particu- 
 larly to the newly settled parts of the country, which present a 
 state of things, different from that found in any other part of the 
 civilized world, and to which, therefore, even the most generally 
 admitted principles of political economy will not always apply. 
 
 Amongst the tirst- emigrants, there are but few possessed of 
 much capital ; and these, generally employing it in the purchase 
 of land, are soon left without any active resources. The great 
 mass bring nothing with them, but their industry, and a small 
 stock of cattle and horses. A considerable portion of the annual 
 labor is employed in clearing, inclosing, and preparing the land 
 for cultivation. Those difficulties, and all the privations incident 
 to their new situation, are encountered with unparalleled spirit 
 and perseverance. Within a very short time, our numerous new 
 settlements, which in a few years have extended from Ibc Mo- 
 hawk to the great western lakes, and from tbe Alleghany to the
 
 68 BANKS AND CURRENCY. 
 
 Mississippi and beyond it, aflford the spectacle of a large popu- 
 lation, with the knowledge, the intelligence and the habits which 
 belong to civilized life, amply supplied with the means of sub- 
 sistence, but without any other active capital, but agricultural 
 products, for which, in many instances, they have no market. 
 It is in this last respect, that their situation essentially differs 
 from that of any other country as far advanced in civilization. 
 We might even add, that there is, in several ancient settlements 
 of the United States, a less amount of active capital, than in the 
 interior parts of many European countries. The national indus- 
 try, out of the seaports, has, at least till very lately, been exclu- 
 sively applied to agriculture ; and circulating capital will rarely 
 be created, out of commercial cities, without the assistance of 
 manufactures. 
 
 With the greatest abundance of provisions, it is impossible 
 for a new country to purchase what it does not produce, unless 
 it has a market for its own products. Specie is a foreign product, 
 and, though one of the most necessary, is not yet always that 
 which is most imperatively required. We may aver from our 
 own knowledge, that the western counties of Pennsylvania had 
 not, during more than twenty years after their first settlement, 
 the specie necessary for their own internal trade and usual 
 transactions. The want of communications, and the great bulk 
 of their usual products, reduced their exports to a most incon- 
 siderable amount. The two indispensable articles of iion and 
 salt, and a few others almost equally necessary, consumed all 
 their resources. The principle, almost universally true, that 
 each country will be naturally supplied with the precious metals 
 according to its wants, did not apply to their situation. House- 
 hold manufactures supplied the inhabitants with their ordinary 
 clothing, and the internal trade and exchanges were almost ex- 
 clusively carried on by barter. This effectually checked any 
 advance even in the most necessary manufactures. Every spe- 
 cies of business required the utmost caution, as any failure in 
 the performance of engagements in the way of barter, became, 
 under the general law of the land, an obligation to pay money, 
 and might involve the party in complete ruin. Under (hose 
 circumstances, even a paper currency, kept within pioper 
 bounds, might have proved useful. We know the great diffi- 
 culties which were encountered by those who first attempted to 
 establish the most necessary manufactures, and that they would 
 have been essentially relieved, and some of them saved from 
 ruin, by moderate bank loans. Yet there were instances where 
 those difficulties were overcome, and the most successful manu- 
 factures of iron and glass were established and prospered prior 
 to the establishment of any bank : but the general progress of 
 the country was extremely slow, and might have been hastened 
 by such institutions soberly administered. It is obvious that in
 
 BANKS AND CURRENCY. 69 
 
 this and other similar cases, where there is an actual want of 
 capital, tiiis should, in order to insure success, be obtained from, 
 the more wealthy parts of the country, cither by subscriptions 
 to local banks, or by the estabUshment of branches of the city 
 banks. 
 
 Some of the first settlements in other parts of the country, 
 were, for a length of time, in a similar situation. The progress 
 of others, under more favorable circumstances, has been much 
 more rapid. The western parts of the state of New- York havC' 
 always enjoyed a nearer and more accessible market. The ac- 
 quisition of Louisiana, the invention of steam-boats, and the im- 
 proved communications by land and water, have entirely changed 
 the state of things west of the Alleghany mountains. Still, and 
 notwithstanding the unparalleled increase of population, and the 
 rapid progress in every respect of the new states or settlements, 
 their wealth does not, in any degree, correspond, either with 
 that population, or with their advances in agriculture. All new 
 colonies, either from Europe to America, or from the ancient 
 settlements to the more interior part of America, have, under 
 different modifications, been ever placed in a similar situation. 
 To this must be ascribed the issues of paper money l)y the seve- 
 ral states, whilst imder the colonial government. This currency, 
 in many instances useful, was, as usual, often cariicd to excess, 
 and depreciated accordingly. The same causes continue to pro- 
 duce similar effects. The eagerness for country banks is natural, 
 but often mistakes its object. They may be safely established 
 in flourishing towns or villages, either commercial or manufac- 
 turing, provided their issues are restrained within proper bounds. 
 It is to the abuse, and not to the use, that we object. The profits 
 of agriculture are so moderate, at least in the middle states, and 
 the returns so slow, that even loans on mortgages are rarely use- 
 ful. But when made by banks, on notes at sixty days, without 
 any other substantial security than real estate, they never can 
 be relied on as an immediate resource, and, when payment is 
 urged, they almost always prove ruinous to the borrowers, and 
 are often attended with heavy losses to the banks. The example 
 of Pennsylvania has clearly shown, that the calamities inflicted 
 by the failures of country banks, established in unfit places, or 
 for want of experience, improperly administered, have been still 
 more fatal to the inhabitants of the districts in which they were 
 situated, than to the state at large. It is well known that the 
 same observation apj)li<^, with equal, if not greater force, ta 
 other states than Pennsylvania. 
 
 The revised statutes of the state of New- York, besides several 
 salutary provisions for the bona fide payment of the stock sub- 
 scribed, to prevent any dividend greater than the actual profits, 
 and generally for the prevention of frauds, contain one of pri- 
 mary importance, adopted also in Maryland and some other
 
 70 BA.\KS AND CURRENCY. 
 
 states, by which the charter is forfeited, whenever the bank re- 
 fuses or declines to pay on demand, its notes or deposits in specie. 
 But the restriction on loans and discounts, which limits their 
 amount to three times that of the capital, is purely nominal ; and 
 the responsibility imposed on stockholders, though already adopt- 
 ed in some other states, has been considered as objectionable. As 
 a substitute, and with a laudable intent to protect the community 
 against partial failures, a " safety fund" has since been establish- 
 ed by law, consisting of a tax of one-half per cent, on the capital 
 of every bank, and which is applicable to the payment of the 
 notes of any that may fail. This must have a tendency to en- 
 courage excessive issues of paper, which could not be sustained 
 if resting only on the credit of the bank by which they are made. 
 But, unacquainted as we are with the reasons alleged in favor 
 of that measure, it appears to us unjust; 1st, by making insti- 
 tutions properly managed, responsible for the conduct of others 
 at a great distance, and over which they have no control ; 2d, 
 because, on account of the disproportion between the aggregate 
 of the circulation and deposits of the city and country banks re- 
 spectively, the first are made to pay, in the safety fund, about 
 twice as much in proportion as the country banks. This will 
 appear evident by referring to the last statement, and does not 
 accord with the principles of a government founded on the equal- 
 rights of all.* 
 
 One of the most efficient securities afforded by the state laws 
 against improvident issues of notes, is to be found in that of Mas- 
 sachusetts, by which banks are obliged to pay interest at the 
 rate of 24 per cent, a year, on all notes or deposits which they 
 may neglect or refuse to pay in specie on demand. A similar 
 provision, but at the rate of 12 per cent., has been enacted by 
 the state of Louisiana, and is also inserted in the charter of the 
 Bank of the United States. Another great guarantee against 
 improper management, is the obligation to make and publish 
 annual statements of the situation of the banks. The mystery 
 with which it was formerly thought necessary to conceal the 
 operations of those institutions, has been one of the most prolific 
 causes of erroneous opinions on that subject, and of mismanage- 
 ment on their part. It is highly desirable that this measure 
 should be adopted in the states where those returns are not yet 
 made obligatory. The annual statements of the Bank of the 
 United States, and of the banks of all the New-England states, 
 of Pennsylvania, Virginia, Georgia, and others, to Congress, 
 and to the states respectively, have in*o instance injured any 
 institution that was properly administered. Publicity is, in raost 
 cases, one of the best checks which can be devised : it inspires 
 
 • See Note C.
 
 BANKS AND CURRENCY. 71 
 
 confidence, and strengthens credit; whilst concealment begets 
 distrust, and often engenders unjust suspicions. 
 
 There is still another measure, better calculated perhaps 
 than any other, to give complete security against the danger of 
 insolvency. It has been already observed, that the original 
 capital of the Bank of England, amounting to more than four- 
 teen millions sterling, has been loaned to government, and, re- 
 maining in its hands, affords the best security to the holders of 
 notes and to depositors. The propriety of extending a similar 
 provision to country banks h^ts been strongly urged in England ; 
 and the same measure, with respect to our banks, generally, 
 has also been suggested. It is quite practicable, and seems un- 
 objectionable in a country possessed of so large a capital as Eng- 
 land, and where the large amount of public debt would enable 
 the banks to comply with the condition without any difficulty. 
 But this might not be practicable here, where the banking 
 capital is much larger than the amount of all other public 
 stocks, and we apprehend that mortgages on real estate must, 
 if such provision becomes general, be resorted to for want of 
 such stocks. We must also refer to our former observations 
 respecting the nature of our banking capital. Should this be 
 permanently vested in mortgages or stocks, the accommodations 
 which the banks afford to individuals might be too much cur- 
 tailed. If these objections can be removed, the plan proposed 
 would give to the banking system of the United States a so- 
 lidity, and inspire a confidence, which it cannot othei'wise pos- 
 sess. 
 
 The constitutional powers of Congress on the subject, are the 
 next and principal object of inquiry. 
 
 We have already adverted to the provisions of the Constitu- 
 tion, which declare, th'^it no state shall either coin money, emit 
 bills of credit, make any thing but gold and silver coins a ten- 
 der in payment of debts, or pass any law impairing the obliga- 
 tion of contracts, and which vest in Congress the exclusive power 
 to coin money, and to regulate the value thereof, and of foreign 
 coin. It was obviously the object of the Constitution to consoli- 
 date the United States into one nation, so far as regarded all 
 their relations with foreign countries, and that the internal 
 powers of the general government should be applied only to ob- 
 jects necessary for that purpose, or to those few which were 
 deemed essential to the prosperity of the country, and to the 
 general convenience of the people of the several states. Amongst 
 the objects thus selected, were the power to regulate commerce 
 among the several states, and the control over tjie monetary 
 system of the country.
 
 72 BANKS AND CURRENCY. 
 
 This last-mentioned power is, and has ever been, one of pri- 
 mary importance. It is for want of such general power, that 
 Germany has always been inundated with coins often debased, 
 and varying from state to state in standard and denomination : 
 the same defect was found in the former United Provinces of 
 the Netherlands: and the banks of deposit of Hamburg and 
 Amsterdam, were originally established for the purpose of cor- 
 recting that evil. Even under the articles of confederation, 
 Congress had already the sole and exclusive right and power of 
 regulating the alloy and value of coins struck by their own au- 
 thority, or by that of the respective states. It was on a most 
 deliberate view of the subject, that the same powers were con- 
 firmed and enlarged by the Constitution, and the individual 
 states excluded from any participation, which might interfere 
 with the controlling power of the general government. With 
 the exception of those which are connected with the foreign re- 
 lations of the United States, either in war or in peace, there are 
 no powers more expressly and exclusively vested in Congress, of 
 a less disputable nature, or of greater general utility, than those 
 on the subject of currency. Arbitrary governments have, at 
 various times, in order to defraud their creditors, debased the 
 coin, whilst they preserved its denomination, and thus subverted 
 the standard of value by which the payment of pubUc and pri- 
 vate debts, and the performance of contracts, ought to have 
 been regulated. This flagrant mode of violating public faith 
 has been long proscribed by public opinion. Governments have, 
 in modern times, substituted for the same purpose issues of paper 
 money, gradually increasing in amount, and decreasing in value. 
 It was to guard against those evils, that the provisions in the 
 Constitution on that subject were intended : and it is the duty, 
 not less than the right, of the United States, to carry them into 
 effect. 
 
 The first paragraph of the eighth section of the first article, 
 provides that Congress shall have power " to lay and collect 
 taxes, duties, imposts, and excises, to pay the debts and provide 
 for the common defence and general welfare of the United 
 States ; but all duties, imposts, and excises, shall be uniform 
 throughout the United States." 
 
 It has sometimes been vaguely asserted, though, as we be- 
 lieve, never seriously contended, that the words " to provide for 
 the common defence and general welfare," were intended, and 
 might be construed, as a distinct and specific power given to 
 Congress, or, in other words, that that body was thereby in- 
 vested with a sweeping power, to embrace within its jurisdic- 
 tion any object whatever, which it might deem conducive to 
 the general welfare of the United States. This doctrine is ob- 
 viously untenable, subversive of every barrier in the Constitu- 
 tion which guards the rights of the states or of the people, ex-
 
 BA?JKS AND CURRENCY. 73 
 
 pfes^ly contradicted by the tenth amendment, which provides, 
 that the powers not delegated to the United States by the Con- 
 stitution, nor prohibited by it to the states, are reserved to the 
 states respectively, or to the people ; and tantamotmt to an as- 
 sertioti, that there is no Constitution, and that Congress is om- 
 nipotent. Mr. Jetierson stigmatizes this construction as <' a 
 grammatical quibble, which has countenanced the general gov- 
 ernment in a claim of universal power. For, (he adds,) in the 
 phrase, to lay taxes, to pay the debts and provide for tJie gejierat 
 Tt-elfare, it is a mere question of syntax, whether the two last 
 infinitives are governed by the first, or are distinct and co-ordi- 
 nate powers; a question unequivocally decided by the exact 
 definition of powers, immediately following." 
 
 The words " to provide for the common defence and general 
 welfare of the United States," are as obligatory as any other 
 part of the Constitution ; they cannot be expunged, and must 
 be so construed as to be etfective. Mr. Jetlcrsoii did not deny 
 this, which is indeed undeniable,' and he only contended, that 
 the words did not convey a distinct power, but were governed 
 by the preceding infinitive ; that is to say, that this clause in the 
 Constitution, instead of giving to Congress the three distinct pow^ 
 ers, 1st, to lay taxes, &c., 2dly to pay the debts, 3dly to provide 
 for the common defence and general welfare of the United 
 States, gave only that " to lay and collect taxes, duties, imposts, 
 and excises, in order to pay the debts and provide for the com- 
 mon defence and general welfare of the United States." He 
 states the question as one of syntax, susceptible of only two con* 
 structions; one which would give, as a distinct, a sweeping power 
 inconsistent with the spirit and other eJrpress provisions of the 
 Constitution, and which he accordingly rejects; the other, which 
 he adopts, and which admits, but confines the application of the 
 words " to provide for the general welfare," to the only power 
 given by that clause, viz. that of laying taxes, duties, &c. 
 
 This appears to have been the construction universally given 
 to that clause of the Constitution, by its framers and contempo-' 
 raneous expounders. Mr. Hamilton, though widely dilfering in 
 another respect from Mr. Jefferson in his construction of this 
 clause, agrees with him in limiting the application of the words 
 '* to provide for the general welfare," to the express power given 
 by the first sentence a( the clause. In his report on manufac* 
 lures, he contends for the power of Congress to allow bounties 
 for their encouragement, and, after having stated the three 
 qualifications of the power to lay taxes, viz. 1st, that duties, im- 
 posts, and excLse-s, should be unifbrm throughout the United 
 States; 2nd, that no direct tax should be laid unless in propor- 
 tion to the census; ."id, that no duty should be laid on exports; 
 he argues on the constitutional question in the following words :
 
 74 BANKS AND CURRENCY. 
 
 " These three qualifications excepted, the power to raise money is plenary and 
 indefinite ; and the objects to which it may be appropriated, are no less compre- 
 hensive than the payment of the public debts and the providing for the common 
 defence and general welfare. TJie terms 'general welfare,' were doubtless in- 
 tended to signify more than was expressed or imported in those which preceded ; 
 otherwise numerous exigencies, incident to tlie affairs of a nation, would have 
 been left without a provision. The phrase is as comprehensive as any that could 
 have been used ; because it was not fit that the constitutional authority of the 
 Union to appropriate its revenues, should have been restricted within narrower 
 limits than tlie ' general welfare ;' and because this necessarily embraces a vast 
 variety of particulars, which are susceptible neither of specification nor of defi- 
 nition." 
 
 " It is therefore of necessity left to the discretion of the national legislature, 
 to pronounce upon the objects which concern the general welfare, and for which, 
 imder that description, an appropriation of money is requisite and proper. And 
 there seems to be no room for a doubt, that whatever concerns the general inter- 
 ests of learning, of agriculture, of manufactures, and of commerce, are within 
 tlie sphere of the national councils, as far as regards an application of money. 
 
 " The only qualification of the generality of the phrase in question, which seems 
 to be admissible, is this ; that the object to which an appropriation of money is 
 to be made, be general and not local ; its operation extending, in fact^ or by pos- 
 sibility, throughout the Union, and not being confined to a particular spot." 
 
 " No objection ought to arise to this construction, from the supposition that it 
 would imply a power to do whatever else should appear to Congress conducive to 
 the general welfare. A power to appropriate money with this latitude, which is 
 granted too, in express terms, would not carry a power to any other thing not 
 authorized in the Constitution, either expressly or by fair implication." 
 
 Mr. Hamilton insisted that the power to lay and collect taxes 
 and duties, implied that of appropriating the money thus raised,, 
 to any object which Congress might deem conducive to '* the 
 general welfare." But he confines throughout the application 
 of those words to the power given, as he understood it, by the 
 first sentence of the clause. Mr. Jefferson, who agreed with 
 him in that respect, denied altogether that the power to lay 
 taxes implied that of applying the money thus raised to objects 
 conducive to the general welfare. It cannot be objected to this 
 construction, which is the most literal, that the words " for the 
 general welfare" are thereby rendered of no effect. For there 
 are several cases, in which the laying a tax or duty does alone 
 effect the object in view, without the aid of an appropriation 
 or of any other distinct act of the legislature. On that point, 
 however, and on that alone, they differed. But it is foreign to 
 the object now under consideration, and we do not mean to dis- 
 cuss it. All that is necessary for us is, that, as admitted by both, 
 the power to lay duties and taxes, is vested in Congress, and may 
 be exercised, to provide (or, in order to provide) for the general 
 welfare of the United States, without any other limitation than 
 the three qualifications specified by the Constitution, and above 
 stated. 
 
 It has indeed been lately contended by some distinguished 
 citij^ens, that the words "general welfare," referred only to the 
 powers expressly vested in Congress by the Constitution: or, in 
 other words, that the power to lay duties and taxes could not be 
 exercised but for the purpose of carrying into effect some of
 
 BANKS AND CURRENCY. 75 
 
 those specific powers. It seems to us, that this, if intended, 
 "would have been distinctly expressed, instead of using the words 
 ** general welfare." And although it is undeniable, that a con- 
 structive power cannot be legitimately claimed, unless neces- 
 sary and proper for carrying into execution, or fairly implied 
 in, a power expressly delegated; we do not perceive why it 
 should be necessary, in order to justify the exercise of a power 
 expressly given, that it should be exercised in reference to an- 
 other similar power. But we do not mean to discuss this ques- 
 tion, which is also foreign to our object. Allowing, for the sake 
 of argument, the validity of the objection, it does not apply to 
 cases where the object, in reference to which the duty or tax is 
 laid, is clearly embraced within the powers of the general gov- 
 ernment. Although, because the power to protect manufactures 
 is not expressly vested in Congress, that to lay taxes in order to 
 effect that object should be denied, the power of laying a tax 
 or duty, for the purpose of carrying into etTect an express pro- 
 vision of the Constitution, would still be undeniable. 
 
 Congress has the power to lay stamp duties on notes, on bank 
 notes, and on any description of bank notes. That power has 
 already been exercised ; and the duties may be laid to such an 
 amount, and in such a manner, as may be necessary to ellcct the 
 object intended. This object is not merely to provide generally 
 for the general welfare, but to carry into effect, in conformity 
 with the last paragraph of the eighth section of the first article, 
 those several and express provisions of the Constitution, which 
 vest in Congress exclusively the control over the monetary sys- 
 tem of the United States, and more particularly those which 
 imply the necessity of a uniform currency. The exercise of the 
 power for that object is free of any constitutional objection, pro- 
 vided the duties thus laid shall be uniform, and applied to the 
 Bank of the United States as well as to the state banks. The act 
 of laying and collecting the duties, which is expressly granted, 
 is alone sufticient to effect the object. As no appropriation of 
 money is wanted for that purpose, the exercise of power which 
 is required, is purely that of laying duties; and it is not liable 
 to the objection, that to assert that the authority to lay taxes 
 implies that of ap[)ropriating the proceeds, is a forced construc- 
 tion. It is equally free of any objection derived from any pre- 
 sumed meaning of the words " general welfiire," since the power 
 to lay duties will, in this instance, be exercised, in order to carry 
 into efi'ect several express provisions of the Constitution, having 
 the same object in view. Congress may, if it deems it proper, 
 lay a stamp duty on small notes, which will put an end to their 
 circulation. It may lay such a duty on all bank notes, as would 
 convert all the banks into banks of discount and dej)osit only, 
 annihilate the paper currency, and render a Bank of the United 
 States unnecessary in reference to that object. But if this last
 
 76 BANKS AND CURRENCT. 
 
 Kieasure should be deemed pernicious, or prove impracticable^ 
 Congress must resort to other and milder means of regulating 
 the currency of the country. The Bank of the United States, 
 gs has already been shown, was established for that express pur^ 
 pose. 
 
 An act incorporating a bank, is not an act either to raise or 
 appropriate money. The power to establish the bank cannot, 
 in any way, be founded on that clause of the Constitution which 
 has reference to the general welfare of the United States. It is 
 sanctioned exclusively by that clause which gives to Congress 
 power to make all laws, which shall be necessary and proper 
 for carrying into execution any of the powers vested in the 
 government of the United States. And the first object of in«i- 
 quiry is the meaning of the words " necessary and proper" in 
 that clause. 
 
 We are aware, that it has at times been suggested that the 
 word " necessary," in its strict sense, means *^ that without 
 which the specific power cannot be carried into effect," and 
 ought to be so construed. If appeal be made to verbal criticism, 
 it may be answered, that if such was the meaning of the word 
 " necessary," in that sentence, the word " proper" would not 
 have been added ; since that which is necessary in that strict 
 sense is of necessity proper. This last expression must, there» 
 fore, be taken in connexion with the first ; and since it was con- 
 templated, that what was called necessary might be proper or 
 improper, the words " laws necessary and proper" do not ap- 
 pear to have been intended in that most limited sense, which 
 implies absolute impossibility of effecting the object without the 
 law, but to mean such laws as are fairly intended, and highly 
 useful and important for that purpose. We believe this to be the 
 fair, and to have been the uniform construction of the Constitu- 
 tion, and that indeed without which it could not have been car- 
 ried into effect. In order to prove that this has ever been deem- 
 ed the natural and clear construction, we will not resort to the 
 establishment of light-houses, or to other numerous precedents, 
 the authority of which may be disputed. We will appeal to the 
 most general and important law of the United States, such as it 
 was enacted from the first organization of the government un- 
 der the Constitution, and to a provision in it, which, under its 
 various other modifications, has uninterruptedly, and without 
 any constitutional objection, remained in force to this day. 
 
 The laws to lay and collect duties on imports require, and 
 have always required, a variety of oaths, and particularly that 
 of the importers or consignees, with respect to the correctness 
 of the invoices of goods imported, both as to quantity and as 
 to cost or value. Yet this provision, however useful and im- 
 portant, is not so absolutely necessary, in that strict sense of 
 the word, as that the laws could not possibly be carried into ef-
 
 BANKS AND CURRENCY. 77 
 
 feet without it. There are countries, France for example, where 
 those duties are efficiently collected without the assistance of 
 similar oaths. This may be done at least as effectually by an ap- 
 praisement of the merchandise, as by resorting to the oaths of 
 the parties. In point of fact, there has always been a discretion- 
 ary power to appraise, which has lately been enlarged. Since it 
 is on that provision, and not on the oath, that the ultimate re- 
 liance for the faithful collection of the duties is placed, those 
 duties might be collected without the assistance of oaths, by sub- 
 stitutir^ in every instance an appraisement or valuation. Oaths 
 are not, therefore, necessary for the -collection of duties, in that 
 strict sense which is contended for : they are not that, without 
 which the duties could not be collected. The observation indeed 
 applies to various other provisions of the revenue laws. Any 
 one who will give them a perusal, will find several implying 
 powers not specially vested in Congress, the necessity of which 
 was not absolute, and without which the object of the law might 
 still have been effected. The oaths and various other provisions- 
 have been resorted to, as means only highly useful, important, 
 and proper, but not as being of absolute necessity for carrying 
 the law into effect.* 
 
 Whenever it becomes the duty of Congress to carry into ef- 
 fect any of the powers expressly defined by the Constitution, it 
 will generally be found that there are several means to effect the 
 object. In that case, and whenever there is an option, each of 
 the means proposed ought not to be successively objected to, a» 
 not being strictly necessary because other means might be re- 
 sorted to, since this mode of arguing would defeat the object 
 intended, and prevent the passage of any law for carrying into 
 effect the power, which it was the duty of Congress to execute. 
 If every provision of a revenue law was successively opposed 
 on that ground, no efficient revenue law could be passed. In the 
 present case, it is proposed to resort, either to a stamp duty or 
 to a Bank of the United States, in order to regulate the cur- 
 rency. Unless some other equally efficient mode can be sug- 
 gested, this important object will be defeated, if both means are 
 successively rejected, as not strictly necessary. But, on the 
 other hand, the means proposed for carrying into effect any spe- 
 cial ox expressed power vested in Congress, should be highly 
 useful and important, having clearly and bona fide that object in 
 view which is the avowed purpose, and not be intended, under 
 color of executing a certain special power, for the purpose of 
 effecting another object. 
 
 It was on this ground, that the former Bank of the United 
 
 • The opinion of the Supreme Court, in the cane of M'CuUoch vs. Stale of Mary- 
 land, harl not been «npn by the writer of this f-(i«ay, when it wnn committed to th« 
 press : and the important inferfncp, drawn from the use of the wordi " nbaolulcljr 
 necesfiary," in anotJier claiiao of ilie Constitution, had escaj)od Uis D0lic«
 
 78 BANKS AND CURRENCY. 
 
 States was at first opposed. That Bank had not been proposed 
 for the express purpose of regulating the currency, but as inci- 
 dent to the powers of regulating commerce, of collecting the 
 revenue, of the safe keeping of public moneys, and generally, 
 of carrying on the operations of the Treasury. There had been 
 at that time but three banks established in the United States ; 
 their operations were confined within a very narrow sphere; 
 there had been no experience in the United States of the utility 
 of a bank in assisting the operations of government, but that 
 which, during a short time, had been afforded by the Bank of 
 North America, incorporated, in the first instance, by Congress, 
 under the articles of confederation. The Bank of the United 
 States was considered by its opponents, as not being intended 
 for the purpose alleged, but as having for its object the consoli- 
 dation of a moneyed aristocracy, and to further the views at 
 that time ascribed to a certain party and to its presumed leader. 
 And the fears then excited respecting that object, and the sup- 
 posed influence of the Bank in promoting it, though long since 
 dissipated, have left recollections and impressions which may 
 still have some effect on public opinion in relation to the consti- 
 tutional question. 
 
 Experience, however, has since confirmed the great utility and 
 importance of a Bank of the United States, in its connexion with 
 the Treasury. The first great advantage derived from it, consists 
 in the safe keeping of the public moneys, securing, in the first 
 instance, the immediate payment of those received by the prin- 
 cipal collectors, and affording a constant check on all their trans- 
 actions ; and afterwards rendering a defalcation in the moneys 
 once paid, and whilst nominally in the Treasury, absolutely im- 
 possible. The next and not less important benefit is to be found 
 in the perfect facility with which all the public payments are 
 made by checks, or Treasury drafts, payable at any place where 
 the Bank has an office ; all those who have demands against gov- 
 ernment, are paid in the place most convenient to them ; and 
 the public moneys are transferred, through our extensive terri- 
 tory, at a moment's warning, without any risk or expense, to the 
 places most remote from those of collection, and wherever pub- 
 lic exigencies may require. From the year 1791 to this day, 
 the operations of the Treasury have, without interruption, been 
 carried on through the medium of banks ; during the years 1811 
 to 1816, through the state banks; before and since, through the 
 Bank of the United States. Every individual who has been at 
 the head of that department, and, as we believe, every officer 
 connected with it, has been made sensible of the great difficul- 
 ties, that must be encountered without the assistance of those 
 institutions, and of the comparative ease and great additional 
 security to the public, with which their public duties are per- 
 formed through the means of the banks. To insist that the ope-
 
 BANKS AND CURRENCY. ?» 
 
 rations of the Treasury may be carried on with equal facility 
 and safety, through the aid of the state banks, without the in- 
 terposition of a Bank of the United States, would be contrary to 
 fact and experience. That great assistance was received from 
 the state banks, while there was no other, has always been freely 
 and cheerfully acknowledged. But it is impossible, in the nature 
 of things, that the necessary concert could be made to exist be- 
 tween thirty different institutions; and in some instances, heavy 
 pecuniary losses, well known at the seat of government, have 
 been experienced. To admit, however, that state banks are ne- 
 cessary for that purpose, is to give up the question. To admit 
 that banks are indispensable for carrying into effect the legiti- 
 mate operations of government, is to admit that Congress has 
 the power to establish a bank. The general government is not 
 made by the Constitution to depend, for carrying into effect 
 powers vested in it, on the uncertain aid of institutions, created 
 by other authorities, and which are not at all under its control. 
 It is expressly authorized to carry those powers into effect by 
 its own means, by passing the laws necessary and proper for 
 that purpose, and in this instance, by establishing its own bank, 
 instead of being obliged to resort to those which derive their 
 existence from another source, and are under the exclusive con- 
 trol of the different states, by which they have been estab- 
 lished. 
 
 It must at the same time be acknowledged, that, inasmuch as 
 the revenue may be collected, and the public moneys may be 
 kept in public chests, and transferred to distant places without 
 the assistance of banks, and as all this was once done in the 
 United States, and continues to be done in several countries, 
 without any public bank, it cannot be asserted, that those insti- 
 tutions are absolutely necessary for those purposes, if we take 
 the word " necessary" in that strict sense which has been al- 
 luded to. All this may be done, though with a greater risk, 
 and in a more inconvenient and expensive manner. Public 
 chests might be established, and public receivers, or sub-trea- 
 surers, might be appointed in the same places where there are 
 now ofKces of the Bank of the United States, and specie might 
 be transported from place to place, as the public service requir- 
 ed it, or inland bills of exchange purchased from individuals.* 
 
 * With the exception of the i)ovvpr of receiving private deposits, the object of 
 v\lii(h provision is not perceived, this is precisely the species of National Bank, 
 which has been suggested in tlie President's last message. The question, whether 
 the purchase of drafts would, as we think, be a charge on the Treasury, or prove, oh 
 eccins to be ex|iected, a source of [irofil, is one of secondary im|Kjrtance. Il is sufTi- 
 cieiit lo observe, that the issues of the state banks could not, nor indeed is it antici- 
 pated in the message that they would, be checked by this plan. It woidd not, thorc- 
 fiire, effect the groat object contrm|ilni<,'d by the Constitution, l« carry which into 
 effect is enjoined by that instnimenl, and for which wo principally contend, viz. thai 
 of securing a sound and uniform currency.
 
 80 BANKS AND CURRENCY. 
 
 The superior security and convenience afforded by the bank, in 
 the fiscal operations of government, may not be considered as 
 sufficient to make its establishment constitutional, in the opinion 
 of those who construe the word " necessary" in that strict sense. 
 
 But it is far from being on that ground alone, that the ques- 
 tion of constitutionality is now placed. It was not at all antici- 
 pated, at the time when the former Bank of the United States 
 was first proposed, and when constitutional objections were rais- 
 ed against it, that bank notes issued by multiplied state banks, 
 gradually superseding the use of gold and silver, would become 
 the general currency of the country. The effect of the few 
 banks then existing, had not been felt beyond the three cities 
 where they had been established. The states were forbidden by 
 the Constitution to issue bills of credit : bank notes are bills of 
 credit to all intents and purposes ; and the state could not do, 
 through others, what it was not authorized to do itself: but the 
 bank notes, not being issued on the credit of the states, nor guar- 
 antied by them, were not considered as being,- under the Con- 
 stitution, bills of credit emitted by the states. Subsequent events 
 have shown, that the notes of state banks, pervading the whole 
 country, might produce the very effect which the Constitution 
 had intended to prevent, by prohibiting the emission of bills of 
 credit by any state. The injustice to individuals, the embar- 
 rassments of government, the depreciation of the currency, its 
 want of uniformity, the moral necessity imposed on the commu- 
 nity, either to receive that unsound currency, or to suspend 
 every payment, purchase, sale, or other transaction,- incident to 
 the wants of society, all the evils which followed the suspension 
 of specie payments, have been as great, if not greater, than 
 those which might have been inflicted by a paper currency, 
 issued under the authority of any state. We have already ad- 
 verted to the several provisions of the Constitution, which gave 
 to Congress the right, and imposed on it the duty to provide a 
 remedy ; but there is one which deserves special consideration. 
 
 Whatever consequences may have attended the suspension 
 of specie payments in Great Britain, there still remained one 
 currency which regulated all the others. All the country bank- 
 ers were compelled to pay their own notes, if not in specie, at 
 least in notes of the Bank of England. These notes were, as a 
 standard of value, substituted for gold : and, if the currency of 
 the country was depreciated, and fluctuating in value from 
 time to time, it was at the same time uniform throughout the 
 country. There was but one currency for the whole, and 
 every variation in its value was uniform as to places, and at 
 the same moment operated in the same manner everywhere. 
 But the currency of the United States, or, to speak more cor- 
 rectly, of the several states, varied, during the suspension of 
 specie payments, not only from time to time, but at the same
 
 BANKS AND CURRENCY. 81 
 
 time from state to state, and in the same state from place to 
 place. In New-England, where those payments were not dis- 
 continued, the currency was equal in value to specie : it was, 
 <it the s<ime time, at a discount of seven per cent, in New-York 
 and Charleston, of lifteen in Philadelphia, of twenty and twenty- 
 tive in Baltimore and Washington, with every other possible 
 variation in other places and states. 
 
 The currency of the United States, in which the public and 
 private debts were paid, and the public revenue collected, not 
 only was generally depreciated, but was also defective in respect 
 to uniformity. Independent of all the other clauses in the Con- 
 stitution which relate to that subject, it is specially provided, 1st, 
 that all duties, imposts, and excises, shall be uniform through- 
 eut the United States ; 2d, that representative and direct taxes 
 shall be apportioned among the several states, according to their 
 respective numbers, to be determined by the rule therein speci- 
 fied ; and that no capitation or other direct tax shall be laid, 
 unless in proportion to the enumeration. Both these provisions 
 were violated whilst the suspension of specie payments con- 
 tinued. It is clear, that after the quota of the direct tax of each 
 state had been determined, according to the rule prescribed by 
 the Constitution, it w^as substantially changed by being collected 
 in currencies dilTering in value in the several states. It is not 
 less clear, that the clause which prescribes a uniformity of du- 
 ties, imposts, and excises, was equally violated by collecting 
 every description of indirect duties and taxes in currencies of 
 tlilFerent value. The only remed}^ existing at that time, was 
 the permission to pay direct and indirect taxes in treasury notes. 
 But those notes did not pervade every part of the country in the 
 same manner as bank notes; they were of too high denomina- 
 tion to be used in the payment of almost any internal tax; they 
 were liable also to vary in value in the diilerent states; and 
 they could operate as a remedy, only as long as their deprecia- 
 tion was greater than that of the most depreciated notes in cir- 
 culation. 
 
 We will now ask, whether, independent of every other con- 
 sideration, Congress was not authorized and bound to pass the 
 iaws necessary and proper for carrying into effect, with good 
 faith, those provisions of the Constitution ? and wliether that 
 ^ould or can be done, in any other manner than, either by re- 
 verting to a purely metallic, or by substituting a uniform paper 
 currency to that which had proved so essentially defective in 
 that respect, and which, from its not being subject to one and 
 the same control, is, and for ever will be, liable to that defect ? 
 The uniformity of duties and taxes of every description, whether 
 internal or external, direct or indirect, is an essential and funda- 
 mental principle of the Constitution. It is self-evident, tbat that 
 »iniformitv cannot be carried info pffcrt wifboiit a rorrc^ponding 
 
 I
 
 82 BANKS AND CURRENCT. 
 
 uniformity of currency. Without laws to this effect, it is abso^ 
 lutely impossible that the taxes and duties should be uniform, a* 
 the Constitution prescribes : such laws are therefore necessary 
 and proper, in the most strict sense of the words. There are but 
 two means of effecting the object, a metallic, or a uniform paper 
 currency. Congress has the option of either ; and either of the 
 two, which may appear the most ehgible, will be strictly con- 
 stitutional, because strictly necessary and proper for carrying 
 into effect the object. If a currency exclusively metallic is pre- 
 ferred, the object will be attained by laying prohibitory stamp 
 duties on bank notes of every description, and without excep- 
 tion. If it is deemed more eligible, under existing circumstances, 
 instead of subverting the whole banking system of the United 
 States, and depriving the community of the accommodations 
 which bank loans atibrd, to resort to less harsh means ; recourse 
 must be had to such, as will insure a currency sound and uni- 
 form itself, and at the same time check and regulate that which 
 will continue to constitute the greater part of the currency of 
 the country. 
 
 Both those advantages were anticipated in the establishment 
 of the Bank of the United States ; and it appears to us that the 
 bank fulfils both those conditions. As respects the past, it is a 
 matter of fact, that specie payments were restored and have 
 been maintained through the instrumentality of that institution. 
 It gives a complete guarantee, that under any circumstances, 
 its notes will preserve the same imiformity which they now pos- 
 sess. Placed under the control of the general government, rely- 
 ing for its existence on the correctness, prudence, and skill with 
 which it shall be administered, perpetually watched and occa- 
 sionally checked by both the Treasury Department and rival 
 institutions; and without a monopoly, yet vcith a capital and 
 resources adequate to the object for which it was established ; 
 the bank also affords the strongest security which can be given 
 with respect to paper, not only for its ultimate solvency, but also 
 for the uninterrupted soundness of its currency. The statements 
 we have given of its progressive and present situation, show 
 how far those expectations have heretofore been realized. 
 
 Those statements also show, that the Bank of the United 
 States, wherever its operations have been extended, has effectu- 
 ally checked excessive issues on the part of the state banks, if 
 not in every instance, certainly in the aggregate. They had 
 been reduced, before the year 1820, from sixty-six to less than 
 forty millions. At that time, those of the Bank of the United 
 States fell short of four millions. The increased amount re- 
 quired by the increase of population and wealth during the ten 
 ensuing years, has been supplied in a much greater proportion 
 by that bank than by those of the states. With a treble capital,^ 
 they have added little more than eight millions to their issues-
 
 BANKS AND CURRENCY. 83 
 
 Those of the Bank of the United States were nominally twelve, 
 in reality about eleven millions greater in November 1829, than 
 in November 1819. The whole amount of the paper currency 
 has, during those ten years, increased about forty-five, and that 
 portion which is issued by the state banks only twenty-two and 
 a half per cent. We have indeed a proof, not very acceptable 
 perhaps to the bank, but conclusive of the fact, that it has per- 
 formed the office required of it in that respect. The general 
 complaints, on the part of many of the state banks, that they 
 are checked and controlled in their operations by the Bank of 
 the United States, that, to use a common expression, it operates 
 as a screw, is the best evidence that its general operation is 
 such as had been intended. It was for that very purpose that 
 the bank was established. We are not, however, aware that 
 a single solvent bank has been injured by that of the United 
 States, though many have undoubtedly been restrained in the 
 extent of their operations, much more than was desirable to 
 them. This is certainly inconvenient to some of the banks, but 
 in its general effects is a public benefit to the community. 
 
 The best way to judge whether, in performing that unpopu- 
 lar duty, the Bank of the United States has checked the opera- 
 tions of the state banks more than was necessary, and has abused, 
 in order to enrich itself at their expense, the power which was 
 given for another purpose, is to compare their respective situa- 
 tions in the aggregate. In order to avoid any erroneous itifcr- 
 ence, we will put out of question those banks of which we could 
 only make an estimate, and compare, with that of the United 
 States, those only of wliich we have actual returns. 
 
 The profit of banks, beyond the interest on their own capital, 
 consists in that which they receive on the difTcrence between 
 the aggregate of their deposits and notes in circulation, and the 
 amount of specie in their vaults. We have given the aggregate 
 situation for the end of the year 1829 of 281 banks with a capi- 
 tal of 95,003,557 dollars, the deposits and circulating notes of 
 
 which amounted together to $71,700,03;} 
 
 from which deducting the specie in their vaults, - 11,989,(W:) 
 
 leaves for the said difference, 59,710,300 
 
 or G2.8 per cent, on their capital. 
 
 The notes in circulation of the Bank of the United States 
 (adding one million for its drafts in circulation) amounted in 
 November 18-29, to §14,042,984, and together with the deposits, 
 
 to $28,827,793 
 
 from which deducting the specie in its vaults, - - 7,175,274 
 
 leaves for the difference. 21,052,519 
 
 or 01.8 on its capital.
 
 84 BANKS AND CURRENCY. 
 
 It is clear that those state banks, taken in the aggregate, have 
 no just reason to complain, since that of the United States im- 
 poses no greater restraints on them than on itself. It will also 
 be perceived that it had in specie, more than one-fifth part of 
 the aggregate of its notes in circulation and deposits; whilst the 
 state banks had little more than one-sixth ; and the Bank of the 
 United States had in addition a fund of about one million of dol- 
 lars in Europe. The difference would have been more striking, 
 had we taken a view of the situation of all the state banks, in- 
 cluding those on estimate; for the difference between the aggre- 
 gate of their notes and deposits, and their specie, is 67\ on their 
 capital. 
 
 This view of the subject applies to the present time, when 
 the Bank of the United States has surmounted the difficulties 
 which it had, in its origin, to encounter, and has reached a 
 high degree of prosperity. It did not go into operation till the 
 commencement of the year 1817, and such were the losses which 
 it first experienced, that its dividends, during the first six years 
 of its existence, fell short of 3^ per cent, a year. The dividend 
 has since gradually increased from 5 to 7 per cent. ; but the 
 average, during the thirteen years and a half ending on the 1st 
 of July 1830, has been but 4x^/0 per cent, a year. An annual 
 dividend of about 9 per cent, during the residue of the time to 
 which the cliarter is limited, would be necessary, in order that 
 the stockholders should then have received, on an average, 6 
 per cent, a year on their capital. The dividends of the state 
 banks vary too much, and our returns are too imperfect in that 
 respect, to enable us to estimate the average ; but it has certain- 
 ly far exceeded that of the Bank of the United States. 
 
 The manner in which the Bank checks the issues of the state 
 banks is equally simple and obvious. It consists in receiving the 
 notes of all those which are solvent, and requiring payment 
 from time to time, without suffering the balance due by any to 
 become too large. Those notes on hand, taking the average of 
 the three and a half last years, amount always to about a mil- 
 lion and a half of dollars ; and the balances due by the banks in 
 account current' (deducting balances due to some) to about nine 
 hundred thousand. We think that we may say, that, on this 
 operation, which requires particular attention and vigilance, 
 and must be carried on with great firmness and due forbear- 
 ance, depends almost exclusively the stability of the currency 
 of the country. 
 
 The President of the United States has expressed the opinion, 
 that the bank had failed in the great end of establishing a uni- 
 form and sound currency, and has suggested the expediency of 
 establishing " a National Bank, founded upon the credit of the 
 government and its revenues." He has clearly seen, that the 
 uniformity of the currency was a fundamental principle derived
 
 BANKS AND CURRENCY. 85 
 
 from the Constitution, and that this, unless the United States 
 reverted to a purely metallic currency, could not be effected 
 without the aid of a National Bank. But it appears to us, that 
 the objection of want of unifornnity, which may be supported in 
 one sense, though not in the constitutional sense of the word, 
 applies generally to a paper currency, and not particularly to 
 that which is issued by the Bank of the United States. And al- 
 though we are clearly of opinion, that the United States at 
 large are entitled to the pecuniary profit arising from the sub- 
 stitution of a paper, for a metallic currency, we are not less 
 convinced, that this object cannot be attained in a more eligi- 
 ble way and more free of objections, than through the medium 
 of a National Bank, constituted on the same principles as that 
 now existing. On both those topics we will make but few ob- 
 servations, those branches of the subject having been nearly 
 exhausted, in their report, by the Committee of the House of 
 Representatives. 
 
 It has already been observed, that the substitution of paper 
 to gold and silver is a national benefit, in as far as it brings into 
 activity an additional circulating capita!, equal to the diflerence 
 between the amount of paper, and that of the reserve in specie 
 necessary to sustain tlie par value of that paper. But it is clear, 
 that the community derives no other immediate benefit from 
 the substitution, than the accommodations which the banks arc 
 thereby enabled to afford, and for which the borrowers pay the 
 usual rate of interest. The immediate profit derived from the 
 papercurrency,is received exclusively by the banks; about three- 
 fourths by the state banks, and one-fourth by that of the United 
 States. So far as relates to profit, it is only to that one-fourth 
 part of the whole, that the measures of the general government 
 are intended to apply. Several of the states, by levying a tax 
 on the capital or on the dividends of their own banks, receive 
 the public share of those profits. Other states have resorted to 
 the mode suggested by the President, and have established 
 banks of the state exclusively founded on its resources and 
 revenue. 
 
 The proposition has not been suggested to resort to a third, 
 though the most simple mode, that of issuing, without the aid 
 or machinery of any bank whatever, a government paper pay- 
 able on demand in specie. We unite in considering it altogether 
 inadmissible. Government may put its paper in circulation by 
 lending it, like banks, to individuals ; and this is, in fact, the 
 proposition which has been suggested. Hut unless this mode is 
 adopted, to issue paper in any other way, is to borrow money ; 
 and the United States at this time wish to disrharg(> and not to 
 contract a debt. Nor would such a pnprr. without a mixture 
 of banking operations, control in the lea';t the iv^urs of state 
 banks, and assist in establishing a grnrral «onnd rurrencv.
 
 86 BANKS AND CURRENCY. 
 
 The general objections to a paper issued by government, have 
 already been stated at large. Yet it must be admitted, that 
 there may be times when every other consideration must yield 
 to the superior necessity of saving or defending the country. If 
 there ever v^'as a time, or a cause which justified a resort to 
 that measure, it was the war of the independence. It would be 
 doing gross injustice to the authors of the revolution and found- 
 ers of that independence, to confound them with those govern- 
 ments, which from ambitious views have, without necessity, in- 
 flicted that calamity on their subjects. The old Congress, as the 
 name purports, were only an assembly of plenipotentiaries, 
 delegated by the several colonies or states. They could only 
 recommend, and had not the power to lay taxes ; the country 
 was comparatively poor ; extraordinary exertions were neces- 
 sary to resist the formidable power of Great Britain ; those ex- 
 ertions were made, and absorbed all the local resources ; the 
 paper money carried the United States through the most ardu- 
 ous and perilous stages of the war ; and, though operating as a 
 most unequal tax, it cannot be denied that it saved the country. 
 Mr. Jefferson was strongly impressed with the recollection of 
 those portentous times, when in the latter end of the year 1814, 
 he suggested the propriety of a gradual issue, by government, 
 of two hundred millions of dollars in paper. He had, from the 
 imperfect data in his possession, greatly overrated the amount 
 of paper currency which could be sustained at par ; and he had, 
 on the other hand, underrated the great expenses of the war. 
 Yet we doubt whether, in the state to which the banks and the 
 currency had been reduced, much greater issues of Treasury 
 notes, or other paper not convertible at will into specie, would 
 not have become necessary, if the war had been of much longer 
 continuance. It is to be hoped that a similar state of things 
 will not again occur ; but at all events, the issue of a govern- 
 ment paper ought to be kept in reserve for extraordinary exi- 
 gencies. 
 
 The proposition then recurs, to issue a paper currency paya- 
 ble on demand in specie, through the medium of a bank, found- 
 ed on the revenue of the United States ; or, in other words, to 
 convert the general government, or its treasury department, 
 into a bankine; institution. The experiment has been made in 
 four of the states, and may have succeeded on a smaller scale, 
 and where all the agents are personally known to government, 
 and are not merely in name, but in reality, under its immediate 
 superintendence. But if thirty-five millions of dollai-s are to be 
 placed at the disposal of three hundred bank directors, selected 
 by the government of the United States, and living in twenty- 
 five different states or territories, with the authority to contract 
 debts in behalf of the public to an equal amount, and to lend 
 the whole to individuals at their discretion ; we must inquire.
 
 BANKS AND CURKEINCY. 87 
 
 how and over whom that enormous power will be exercised. 
 However they may have differed with respect to removals from 
 office, the various administrations, with some exceptions, com- 
 manded by the public interest, have all preferred, in appoint- 
 ing to office, their friends to their opponents; and in making the 
 selections at a distance, there is not perhaps, out of ten officers 
 who are appointed, one who is personally known either to the 
 President or to any of the heads of the departments. It is mor- 
 ally impossible that the direction of the branches of the pro- 
 posed bank shoukl not fall into the hands of men generally se- 
 lected from pohtical considerations, often of a local nature. 
 Without salary, or any personal interest in the concern intrusted 
 to their care, they would also be altogether irresponsible. The 
 duties of the other officers of government may always be, and 
 always are, delined by law : for any wilful official misconduct, 
 for any act of oppression towards individuals, they may be prose- 
 cuted and punished. But tlie power voted in a bank director 
 is in its nature discretionary, and error of judgment may always 
 be pleaded, for having improperly granted or withdrawn an ac- 
 commodation. The exercise of that arbitiary power over the 
 property and private concerns of individuals would be so odious, 
 that, if the attempt was made, we are confident that it would 
 not be long tolerated. Considered as a source of profit, which 
 is its only recommendation, it is equally obvious, that the plan 
 could not succeed ; that whenever there was a temporary pres- 
 sure, and what is called a want of money, the debtors would ask 
 and obtain relief, and that the same measure of indulgence 
 would gradually be extended to every quarter of the Union. It 
 seems indeed self-evident, that a government, constituted like 
 that of the United States, cannot by itself manage and control 
 a banking system spread over their extensive territory ; and 
 we know, on (lie other hand, that the same object may be at- 
 tained through the means of a bank governed and controlled 
 as that of the United States. It may be added, that, if an ob- 
 jection is raised against that institution, because the power to 
 incorporate a bank is not expressly granted by the Constitution, 
 it appears to be equally applicable to the plan that has been 
 suggested ; since there is no clause in that instrument, that ex- 
 pressly authorizes the government of the United States to dis- 
 count the notes of individuals, or to become a trading company. 
 The United States are, liowever, justly entitled to participate 
 in the advantages which the bank derives from its charter, by 
 being permitted to issue paper, and to extend its operations over 
 the whole country ; and that institution must also be allowed,' 
 in addition to the usual interest on its capital, a reasonable profit? 
 since it incurs all the risks, and is liai)le for all the losses inci- 
 dent to those operations. The government ri'ceives already a; 
 portion of the profits, in the slnpc of those services, which are
 
 88 BANKS AND CURRENCY. 
 
 rendered here gratuitously, and form in England no inconsidera- 
 ble part of the benefit allowed to the bank. But for the residue, 
 we would prefer to a bonus, either a moderate interest on the 
 public deposits, or a participation in the dividends when exceed- 
 ing a certain rate. There can l)e no doubt, that, independent 
 of perfect security, the United States would, in that way, derive 
 greater pecuniaiy advantages, than from any bank managed by 
 its own officers. 
 
 In order to attain perfect uniformity, the value of a paper 
 currency should, in the United States, be always the same as 
 that of the gold and silver coins, of which it takes the place. It 
 is impossible to fulfil that condition better, than by making that 
 currency payable on demand in specie and at par. This cannot 
 be done but at certain places designated for that purpose. The 
 holder of a bank note cannot, at any other place, give such note 
 in payment of a debt, or exchange it for specie, without the 
 consent of another party. Strictly speaking, it is not, there- 
 fore, at any other place, of the same value with specie. This 
 is equally true of any bank note, or convertible paper, in any 
 other country. A note of the Bank of England, being only paya- 
 ble in London, will not be of the same value with gold or silver 
 in Scotland, Ireland, or even at Liverpool, unless the exchange 
 between those places respectively and London should be at par. 
 This defect is inherent to every species of paper currency, even 
 when payable on demand. There were three hundred and 
 twenty-nine state banks, and twenty-two offices of the Bank of 
 the United States, in operation on the 1st of January, 1830. 
 We had therefore three hundred and fifty-one distinct curren- 
 cies, all convertible into specie, but each at diffi^rent places. A 
 note of the Bank of the United States, or of the Bank of North 
 America, both payable at Philadelphia, was no more exchange- 
 able for gold or silver, at Bedford, in Pennsylvania, than at Cin- 
 cinnati; the only difference consisting in the greater distance 
 from the place of payment, which renders a fluctuation in the 
 rate of exchange more probable. V/hen, therefore, it is ob- 
 jected as a want of uniformity, that the notes issued by the 
 Bank of the United States, and its several offices, are not indis- 
 criminately made payable at every one of those places, the ob- 
 jection does not go far enough. In order to attain perfect uni- 
 formity, or to render those notes everywhere precisely equal in 
 value to specie, they should be made payable at every tovyn or 
 village in the United States. But, although it may be admitted, 
 that the notes of the Bank of the United States now consist 
 nominally of tv/enty-four currencies, each payable at a distinct 
 place, they still fulfil the condition of uniformity required by the 
 Constitution : and the defect complained of is not peculiar to 
 (hem, ])ut would equally attach to any other possible species of 
 bank notes or paper currency.
 
 BANKS AND CURRENCY. 60 
 
 Those notes, wherever made payable, are, by the charter, re- 
 ceivable in all payments to the United States : and as the bank 
 is obliged, without any allowance on account of difference of 
 exchange, to transfer the public funds from place to place within 
 the United States, any loss arising from that cause falls on the 
 institution. For that purpose, therefore, all the notes issued by 
 the bank constitute but one uniform currency, with which all 
 the duties, taxes, imposts, and excises, may be paid. Not only 
 the condition of uniformity imposed by the Constitution is strict- 
 ly fulfilled^ but by far the greater part of the notes which may 
 happen to circulate out of the states in which they are made 
 payable, is also absorbed by that operation. The objection is 
 reduced to the simple fact, that individuals who may still hold 
 such notes, cannot always exchange them at par at a place dis- 
 tant from that where they are payable. In answer to this, it 
 must, in the first place, be observed, that notes are never found 
 in that situation, but by the act of the parties themselves. The 
 bank and its offices never issue or make payments in notes pay- 
 able at another place than that of issue, but at the request of 
 individuals, whose convenience it may suit to apply for such 
 notes. Through whatever channel a man residing in New-Or- 
 leans may have come in possession of ten thousand dollars in 
 notes payable at Charleston, it has always been with his own 
 consent, and never by the act of the bank. When this objec- 
 tion is made, what in fact is complained of, is, that the bank 
 will not, or cannot, transfer the funds of individuals, as well as 
 those of the public, from place to place, gratuitously ; an opera- 
 tion which has no connexion with the uniformity of currency. 
 Supposing there were no bank notes in circulation, and there 
 was no other but a uniform metallic currency, the man who 
 had taken a cargo of flour from Louisville to Nevv-Orleans, must, 
 in order to transfer the proceeds back to Louisville, either have 
 purchased a bill of exchange, or transported the specie. This 
 he may still do, since the institution of the bank ; and he has 
 no more right to ask from the office at New-Orleans, to give 
 him, in exchange for the specie, bank notes payable at Louis- 
 ville, than to require that it should pay the freight of his flour 
 from Louisville to New-Orleans. 
 
 But supposing there was any weight in the objection, it is in- 
 herent to the nature of a paper, which cannot, in that respect, 
 be made better than a metallic currency. If A contracts to pay 
 a certain sum to B, it must be at a certain specified place. He 
 cannot engage to do it at five or six different places, at the 
 option of B, since it would compel him to provide funds at all 
 those different places, and therefore to five or six times the 
 amount of his debt. It is true, that the Bank of the United 
 States has, through its extensive dealings in exchange, facilities 
 to give accommodations in that respect, which no individual 
 
 M
 
 ^0^ BANKS AND CURRENCY. 
 
 can have. But it is its interest to extend, as far as is safe ana 
 practicable, the circulation of its notes ; and one of the best 
 means to effect that object, is to pay everywhere their notes, 
 wherever issued, whenever that is practicable. The five dollar 
 notes are already made thus payable ; and, in reality, payment 
 of notes of every denomination, wherever made payable, is rarely 
 refused at any of the offices. The bank may be safely trusted 
 for giving the greatest possible extension to a species of accom- 
 modation, which it is its interest to give : but the condition can 
 never be made obligatory, either on that institution, or on any 
 other bank, by whatever name designated, or on whatever 
 principle constituted, without endangering its safety. It is ob- 
 vious, that no bank which has branches, can have funds at 
 every place sufficient to meet a sudden demand for the payment 
 of a large amount of notes payable elsewhere, which may for- 
 tuitously or designedly have accumulated at some one place. 
 Even supposing this to be practicable, the condition imposed 
 must necessarily occasion an additional expense, much greater 
 than the benefit derived from it ; and if this was done through 
 the means of a bank founded on the public revenue, it would be 
 a tax laid on the community, for the advantage of a few indi- 
 viduals. 
 
 A similar objection has been made with respect to the deal- 
 ings ill domestic exchange of the bank. These consist of two 
 correlative but distinct operations. The bank purchases at Phila- 
 delphia, and at every one of its offices, bills of exchange pay- 
 able at different dates, and on all parts of the United States 
 where there are such offices ; and the bank and its offices sell 
 their drafts on each other, payable at sight. The amount of both 
 has been progressively increasing, to the great convenience of 
 the public. That of bills of exchange was 29,335,254, and that 
 of bank drafts 24,384,232 dollars, during the year 1829. In the 
 same year the transfers of public moneys, which are effected by 
 treasury drafts, analogous to bills of exchange at sight, have 
 amounted to 9,066,000 dollars. The three items together make 
 a total of 62,785,486 dollars, transmitted by the bank in one 
 year, through the medium of bills and drafts, which are thus 
 substituted to the transportation of specie to the same amount. 
 The purchase of bills of exchange is an operation similar, as re- 
 lates to interest, to the discounting of notes. The interest ac- 
 cruing, from the time of purchase or discount to that when they 
 become due, is equally allowed in both cases. Deducting this, 
 the gross profit, on the purchase of bills, arising from the rate 
 of exchange at which they were purchased, amounted in the 
 year 1829 to 227,224 dollars, or less than three-fourths per 
 cent. The premiums on the sale of bank drafts amounted to 
 42,826 dollars ; but to this must be added the interest accruing 
 on the drafts actually 4n circulation, and which, estimating, as
 
 BANKS AND CURRENCY. 91 
 
 before stated, the time during which, on an average, they re- 
 main so, at fifteen days, amounts to near sixty -one thousand dol- 
 lars. The profit on those drafts is therefore near one hundred 
 and four tliousand dollars, or about three-sevenths per cent. The 
 interest lost by the bank on the treasury drafts, is from fifteen 
 to twenty thousand dollars ; and the charges for transportation 
 of specie, postage, and incidental expenses, amounted, in the 
 year 1829, to 49,847 dollars. The nett profit of the bank, on 
 the aggregate of those transactions, is, therefore, about two 
 hundred and sixty-four thousand dollars, or a fraction more than 
 two-fifths per cent, on the whole amount. 
 
 There is not, it is believed, a single country where the com- 
 munity is, in that respect, served with less risk or expense. It 
 is obvious that no one will sell his bills to the bank, unless that 
 institution purchases them at a higher, or at least as high rate 
 as any other person ; and that no one will purchase its drafts, 
 unless they are as cheap as any others at market, or are con- 
 sidered safer. There is no other ground of complaint, unless it 
 be that the bank can afiford to purchase bills dearer, and to sell 
 its drafts cheaper, than any body else. This is certainly a pub- 
 lic benefit ; and the only consideration which has been urged 
 with some degree of plausibility, is, that one of the reasons 
 which enables the bank to obtain a higher price for its drafts, 
 is the greater degree of security which they oflTcr ; whilst, at the 
 same time, its peculiar situation would enable it to sell them 
 cheaper than other persons. Without admitting the vahdity of 
 this observation, or denying that the current rate of exchange 
 ought to regulate the price of those drafts, we would wish that 
 they might be sold at par, whenever it hap])ens that the opera- 
 tion, from the situation of its funds, is in no degree inconvenient 
 to the bank. Government receives its full share of the profits on 
 those operations. As its business is done gratuitously, it not only 
 saves the interest as above stated, but also the premium which 
 it vVould otherwise have to pay on the sale of its drafts. This, 
 calculated at the same rate as for other bills of exchange, would 
 amount to more than seventy, and together with the interest, to 
 about ninety thousand dollars a year. 
 
 We have also heard complaints made against the purchase of 
 foreign l>iHs by the bank at the south, and the sale of their own 
 bills on Europe at the east. That this may interfere with the 
 business of capitalists who deal in exchange, is true ; but the 
 principal public consideration seems to be, whether the bank 
 confers a benefit on the southern planters or merchants, by en- 
 tering into competition for the purchase of their bills, and on the 
 public i)y otfering for sale cheaper or safer means of making 
 remittances abroad. Another great advantage is found in the 
 facility, thereby afibnled to the bank, of having a fund in Eng- 
 land on which it rrcoives interest, and whirh. on an ernorgcncy,
 
 92 BANKS AND CURRENCY. 
 
 answers the same purpose as specie. That branch of business, 
 either for the year 1829, or for the average of that and the two 
 preceding years, amounted to 3,580,000 dollars. 
 
 The principal advantages derived from the Bank of the United 
 States, which no state bank, and, as it appears to us, no bank 
 (established on different principles, could afford, are, therefore : 
 First and principally ; securing with certainty a uniform, and, 
 as far as paper can, a sound currency : Secondly ; the complete 
 security and great facility it affords to government in its fiscal 
 operations : Thirdly ; the great convenience and benefit accru- 
 ing to the community, from its extensive transactions in domes- 
 tic bills of exchange and inland drafts. We have not adverted 
 to the aid which may be expected from that institution in time 
 of war, and which should, w^e think, be confined to two objects. 
 
 First. The experience of the last war has sufficiently proved* 
 that an efficient revenue must be provided, before, or immedi- 
 ately after that event takes place. Resort must be had, for that 
 purpose, to a system of internal taxation, not engrafted on taxes 
 previously existing, but which must be at once created. The 
 utmost diligence and skill cannot render such new taxes pro- 
 ductive before twelve or eighteen months. The estimated 
 amount must be anticipated ; and advances to that extent, in- 
 cluding at least the estimated proceeds of one year of all the 
 additional taxes laid during the war, may justly be expected 
 from the Bank of the United States. 
 
 Secondly. It will also be expected, that it will powerfully 
 assist in raising the necessary loans, not by taking up, on its own 
 account, any sum beyond what may be entirely convenient and 
 consistent with the safety and primary object of the institution, 
 but by affording facilities to the money lenders. Those, who, 
 in the first instance, subscribe to a public loan, do not intend to 
 keep the whole, but expect to distribute it gradually with a 
 reasonable profit. The greatest inducement, in order to obtain 
 loans on moderate terms, consists in the probability that, if that 
 distribution proceeds slower than had been anticipated, the sub- 
 scribers will not be compelled, in order to pay their instalments, 
 to sell the stock, and, by glutting the market, to sell it at a loss: 
 and the assistance expected from the bank is to advance, on a 
 deposit of the scrip, after the two first instalments have been 
 paid, such portions of each succeeding payment, as may enable 
 the subscribers to hold the stock a reasonable length of time. 
 As this operation may be renewed annually, on each successive 
 loan, whilst the war continues, the aid afforded in that manner 
 is far more useful than large direct advances to government, 
 which always cripple the resources, and may endanger the 
 safety of a bank.
 
 NOTES AND STATEMENTS. 
 
 NOTE A. 
 
 RELATIVE VALUE OF GOLD AND SILVER. 
 
 It has already been observed, that the intrinsic value and average market 
 price of current coins are greater than those of bullion of the same weight 
 and standard ; and that the difference is, on account of the greater compa- 
 rative expense of coinage, greater with respect to silver than to gold coins. 
 The ratio of 15.7 to 1 is nearly that of gold to silver bullion in France, and 
 it has been found to correspond, during a long period, with the market price 
 in that country ; whilst the average price of the gold and silver coins has 
 been in the ratio of about 15.6 to 1, making a difference of about f per cent, 
 between the two ratios. The English market is, with respect to silver, 
 much more uncertain, from the want of a constant demand and uniform 
 mint price. Silver is accordingly exported in preference to France, and 
 gold to England. The respective prices, as quoted in England, give the 
 ratio of gold coins to silver bullion. If this average ratio is taken at 15.85 
 to 1, and the average English market price of standard gold bullion at 
 7717^, the ratio of gold to silver bullion will be found to be less than 15.8 
 to 1 ; and, making the above-mentioned allowance of f per cent, for the 
 difference between the two ratios, that of gold to silver coins, as deduced 
 from the British average market prices, does not exceed 15.7 to 1. It is, 
 in order to guard against any exportation of silver, in preference to gold 
 •coins, and any possible danger of altering the present standard of value, 
 that we are desirous that this ratio should not be exceeded. The premium 
 on gold coins in France, has, in the text, been generally rated at one half 
 per cent. The true average taken for six years was only one-third per 
 cent 
 
 NOTE B. 
 
 ON SCOTCH BANKS. 
 
 Chiefly extracted from the Report of the Select Cormnittee of the House 
 of Commons on Promissory Notes of Scotland and Ireland, May 26, 
 1826. 
 
 EXTRACT. 
 
 "There are at present thirty-two banks in Scotland, three of which are 
 incorporated by act of Parliament, or by royal charter, viz. The Bank of 
 Scotland, the Royal Bank of Scotland, and the Bank called the British Linen 
 Company. 
 
 The National Bank of Scotland has 12.38 partners. 
 
 The Commercial Bank of Scotland has 521. 
 
 The Aberdeen Town and County Bank has 446. 
 
 Of the remaining banks there are throe in which the number of partners 
 exceeds 100; six in which the number is between 20 and 100; and seven- 
 teen in which the number fillp s^hort of 20. 
 
 Tho gr.MtPr part of tlm Srotrh l>anks have l.rnnriios in ronnoxion with 
 the priiicipnl os^tablislmiont, pjtcli branch inaRaifcd liy na i\^p{M noting under
 
 94 BANKS AND CURRENCY. 
 
 the immediate directions of his employers, and giving security to them for 
 his conduct. 
 
 The Bank of Scotland had, at the date of the last return received hy 
 your committee, sixteen branches, established at various periods between 
 the year 1774 and the present. 
 
 The British Linen Company had twenty-seven branches. 
 
 The Commercial Banking Company in Edinburgh, thirty-one. 
 
 The total number of branches established in Scotland from the southern 
 border to Thurso, the most northerly point at which a branch bank exists, 
 is one hundred and thirty-three. 
 
 Speaking generally, the business of a Scotch bank consists chiefly in the 
 receipt and charge of sums deposited with the bank, on which an interest 
 is allowed, and in the issue of promissory notes upon the discount of bills, 
 and upon advances of money made by the bank upon what is called a cash 
 credit. 
 
 The interest allowed by a bank upon deposits varies from time to time, 
 accordmg to the current rate of interest which money generally bears. At 
 present the interest allowed upon deposits is four per cent. 
 
 It has been calculated that the aggregate amount of the sums deposited 
 with the Scotch banks amounts to about twenty or twenty-one millions. 
 The precise accuracy of such an estimate cannot of course be relied on. 
 The witness by whom it was made thought that the amount of deposits could 
 not be less than sixteen millions, nor exceed twenty-five millions, and took 
 an intermediate sum as the probable amount. 
 
 Another witness, who had been connected for many years with different 
 banks in Scotland, and has had experience of their concerns at Stirling, 
 Edinburgh, Perth, Aberdeen and Glasgow, stated that more than one-half 
 of the deposits in the banks with which he had been connected were in sums 
 from ten pounds to two hundred pounds." 
 
 " On sums advanced by the banks on the discount of bUls of exchange, 
 and upon cash credits, an interest of five per cent, is at present charged. 
 
 A cash credit is an undertaking on the part of a bank to advance to an 
 individual such sums of money as he may from time to time require, not 
 exceeding in the whole a certain definite amount, the individual to whom 
 the credit is given entering into a bond with securities, generally two in 
 number, for the repayment on demand of the sums actually advanced, with 
 interest upon each issue from the day on which it is made. 
 
 Cash credits are rarely given for sums below one hundred pounds ; they 
 generally range from two to five hundred pounds, sometimes reaching one 
 thousand pounds, and occasionally a larger sum. 
 
 The bank allows the party having the cash credit, to liquidate any por? 
 tion of his debt to the bank, at any time that may suit his convenience, and 
 reserves to itself the power of cancelling, whenever it shall think fit, the 
 credit granted." 
 
 The amount of deposits, on which the Scotch banks allow interest, may 
 be estimated at about £18,000,000 sterling. One-half is said to consist of 
 small sums deposited by mechanics, fishermen, and laborers ; and that part 
 of the system may be considered as analogous to that of the Saving Banks, 
 and as having the same beneficial effect. 
 
 The cash credits are generally for simis from 200 to 500 pounds, some- 
 tunes as high as £1000, and sometimes as low as £50. The total amount, 
 for which credits are opened, is estimated at six, and the average amount 
 actually dravra, and due to the banks, at four millions sterling. They are 
 generally granted to shopkeepers commencing business, and to tradesmen 
 generally. The great advantage of this system, which is thus far substi- 
 tuted to the discounting of notes, is, that the borrower never draws more
 
 BANKS AND CURRENCY. 95 
 
 from the bank than what is absolutely necessary for the purposes of his 
 business. The banks require that tlie capital loaned should be actively and 
 constantly employed. One of the witnesses says, " I would say that no 
 cash account is at all well operated upon, unless, at the close of it in a year, 
 the amount of the transactions on each side is, at the very least, five times 
 the amount of the grant. When the account continues stagnant for any 
 length of time, we intimate to the holder, that, at a fixed period, he must 
 pay it up." 
 
 The total amount of the notes in circulation is stated for 1825 : 
 
 in notes of £5 and upwards 1,230,000 
 
 in do. of under j£5, never lower than £1, . 2,080,000 
 
 at £3,310,000 
 
 The great and efficient method of preventing the over-issuing of bank 
 notes, and the depreciation of their value, consists in the practice, rigorously 
 adhered to by all the banks, of exchanging each other's notes twice a week, 
 and paying immediately the balances. For that purpose, " all the banks of 
 Scotland have agents at Edinburgh, who exchange their notes twice a 
 week, Monday and Friday ; . . . . and the balances (are) paid by short dated 
 bills (ten days) on London. The state of those balances is looked at by the 
 banks, with the utmost jealousy and attention ; if any thing in any de- 
 gree wrong were to appear, the banks would instantly correct it, and force 
 a bank acting improperly to alter its mode of conduct." This method is 
 the same which, though with less rigor and uniformity, is successfully used 
 by the allied banks of Boston, and by the Bank of the United States, for 
 preventing excessive issues of paper. 
 
 It is asserted, that the whole loss sustained in ScotlEind by the public, by 
 bank failures, through more than a century, has amounted to no more than 
 £36,344 ; and this result seems to be altogether ascribed to the peculiar 
 features briefly noticed in this note. 
 
 NOTE C. 
 
 RESTRICTIONS ON PRIVATE BANKING. 
 
 It is also provided by a law of the State of New-York, (1818,) that " no 
 person, association of persons, or body corporate, except such bodies corpo- 
 rate as are expressly authorized by law, shall keep any office for the pur- 
 pose of receiving deposits, or discounting notes or bills, or issumg any 
 evidence of debt to be loaned, or put in circulation as money : nor shall 
 they issue any bills or promissory notes or other evidences of debt as private 
 bankers, for the purpose of loaning them, or putting them in circulation as 
 money, unless thereto specially authorized by law." 
 
 The prohibition to issue any species of paper, that can be put in circula- 
 tion as money, is perfectly proper, and indeed necessary : but that of receiv- 
 ing deposits, or discounting notes ox bills, must have had some special and 
 temporary object in view, and does certainly require revision. Why indi- 
 viduals should not be permitted to deposit their money with whom they 
 please, is not understood. In such cases, interest is generally allowed, and 
 this practice promotes frugality, and should rather be encouraged tlian for- 
 bidden. So long as credit is deemed essential to commerce, tlie discounting 
 of notes or bills, by private individuals, creates competition, and is a public 
 benefit. Incorporated banks cannot conveniently alter, cither the rate at
 
 ^^ BANKS AND CURRENCY. 
 
 which they discount, or the time at which the notes discounted must be 
 paid or renewed. Private capitalists may and do modify their loans, in both 
 respects, according to the state of the money market, and to the wants of 
 the community. They will discount at the rate of four or five per cent.> 
 when the use of capital is worth no more ; and, being still controlled by the 
 general law of the land, they never can legally receive more than the legal 
 rate of interest. And they may, to the great benefit of commerce, discount 
 business notes due at three and six months date. The advantages, if not 
 the necessity, of this accommodation are such, that it is understood, that the 
 law in question is, in that respect, daily disregarded. The prohibition al- 
 luded to has no other effect, than that of deterring some prudent capitalists 
 from engaging in that business, and of enhancing the premium, which, 
 those who, in order to meet their engagements, negotiate the evidences of 
 debt due to them, must pay for the discount.
 
 BANKS AJTD CURRENCY. 
 
 97 
 
 STATEMENT I. 
 
 A List of the State Banks in operation on the 1st of January, 
 
 1830. 
 
 Capital. 
 
 MASSACHUSETTS. 
 
 Massachusetts 800.000 
 
 Union 800.000 
 
 Phoenix 200.000 
 
 Gloucester 120.000 
 
 Newburyport 210.000 
 
 Beverly 100.000 
 
 Boston 900.000 
 
 Salem 250.000 
 
 Plvraouth 100.000 
 
 Worcester 200.000 
 
 Marblehead 120.000 
 
 Pacific 200.000 
 
 State 1.800.000 
 
 Mechanics 200.000 
 
 Merchants, (Salem) 400.000 
 
 ] Taunton 175.000 
 
 New-England 1.000.000 
 
 Hampshire 100.000 
 
 Dedham 100.000 
 
 Manut: & Mech's. (Boston) . . . 750.000 
 
 Springfield 250.000 
 
 Lynn Mechanics 100.000 
 
 Merrimack 150.000 
 
 Pavvlucket 100.000 
 
 SutTolk 750.000 
 
 Commercial, (Salem) 300.000 
 
 Bedford Commercial 250.000 
 
 Agricultural 100.000 
 
 American 750.000 
 
 Andover 100.000 
 
 Asiatic 350.000 
 
 Atlantic 600.000 
 
 Barnstable 100.000 
 
 Blackstone 100.000 
 
 Brighton 150.000 
 
 Bunker Hill 150.000 
 
 Cambridge 150.000 
 
 Central 50.000 
 
 Citv 1.000.000 
 
 Columbian 500.000 
 
 Commonwealth 500.000 
 
 Danvers 120.000 
 
 Eagle 500.000 
 
 Exchange 300.000 
 
 Fall River 200.000 
 
 Falmouth 100.000 
 
 Farmers 100.000 
 
 P'ranklin, (Boston) 100.000 
 
 Franklin, (Greenfield) 100.000 
 
 (Jlobe 1.000.000 
 
 Hampden . • 100.000 
 
 Hampshire Man 100.000 
 
 Honsaionic KW.OOO 
 
 Leicester ItW.OOO 
 
 Lowell 100.000 
 
 Man. & Mech's. (Nantucket) . 100.0<X) 
 
 .\fendon 100.000 
 
 .Mercantile 200.000 
 
 .VlfrchnnUj, (New.Bcdf()rd) . . . 250.000 
 
 Milll)iiry 100.000 
 
 N'orfolk 200.000 
 
 North Bank 750.000 
 
 Capital. 
 
 Oxford 100.000 
 
 Sunderland 100.000 
 
 Sutton 75.000 
 
 Washington 500.000 
 
 66 Banks.... 20.420.000 
 
 MAINE. 
 
 Portland 200.000 
 
 Saco 100.000 
 
 Cumberland , 200.000 
 
 Bath 100.000 
 
 Lincoln 100.000 
 
 Augu.sta 100.000 
 
 Kennebunk 100.000 
 
 Gardiner 100.000 
 
 Waterville 50.000 
 
 Bangor 50.000 
 
 Cai'co 200.000 
 
 Canal 300.000 
 
 Manufacturers 100.000 
 
 Merchants 150.0.0 
 
 South Berwick 
 
 Thomaston 
 
 Union 
 
 Vassalborough . 
 
 60.000 
 50.000 
 50.000 
 60.000 
 
 18 Banks 2.000.000 
 
 NEW-HAMPSHIRE. 
 
 Union 150.000 
 
 Concord, (Lower) 80.000 
 
 Portsmouth 100.000 
 
 Exeter 100.000 
 
 Strafford 100.000 
 
 Cheshire ,. 100.000 
 
 New-Hampshire lOS.-'JOO 
 
 Rockingham lOO.OCO 
 
 Commercial 100.000 
 
 Piscalaqua 150.000 
 
 Dover 128.070 
 
 Merrimack Co 100.000 
 
 Farmers 65.000 
 
 Winnepisogee 83.100 
 
 Pemigewasset 50.000 
 
 Grafion 100.000 
 
 Claremont 
 
 Connecticut River 
 
 60.000 
 60.000 
 
 18 Bonks.. 
 
 1.791.670 
 
 VERMONT. 
 
 Burlington 63.000 
 
 Windsor 80.000 
 
 Braftlettorough ."iO.OOO 
 
 Rutland (KUKX) 
 
 Montnelier 
 St. Albans . 
 Caledonia.. 
 Vorgennes . 
 
 .30.000 
 
 20.000 
 SO.fHXl 
 S0.0(«
 
 98 
 
 BANKS AND CURRENCY. 
 
 STATEMENT 1.— Continued. 
 
 Orange County , 
 Bennington — 
 
 Capital. 
 29.625 
 40.000 
 
 10 Banks. 
 
 432.625 
 
 RHODE ISLAND. 
 
 Providence 500.000 
 
 Rhode Island 100.000 
 
 Exchange 500.000 
 
 Bristol 150.000 
 
 Washington 75.000 
 
 Warren 105.350 
 
 Smithfield Union 60.000 
 
 Newport 120.000 
 
 Roger Williams 499.950 
 
 Rhode Island Union 200.000 
 
 Narragansett 50.000 
 
 Commercial, (Bristol) 150.000 
 
 Manufacturers 220.000 
 
 Union, (Providence) 500.000 
 
 Pautuxet 87.858 
 
 Burrill ville Agr'l. and Man'g. . . 37.360 
 
 Cranston 25.000 
 
 Eagle, (Providence) 300.000 
 
 Eagle, (Bristol) 50.000 
 
 Franklin 38.000 
 
 Freeman's 67.000 
 
 Kent 20.000 
 
 Landholders 50.000 
 
 Merchants, (Newport) 50.000 
 
 Merchants, (Providence) 500.000 
 
 N. E. Commercial, (Newport) . 75.000 
 
 Phcenix, (Westerly) 42.000 
 
 R.I. Central 66.275 
 
 Scituate 15.660 
 
 Warwick 20.000 
 
 Bank of N. America 100.000 
 
 Mechanics 394.600 
 
 Mechanics and Man'g. (Prov.) . 103.990 
 
 HightSt. Bank 70.000 
 
 Smithfield Exchange 60.000 
 
 Village Bank 40.000 
 
 Smithfield Lime Rock 100.100 
 
 Cumberland 65.750 
 
 R. I. Agricultural 60.000 
 
 Mount Vernon 40.000 
 
 N.E.Pacific 83.750 
 
 Union (Bristol) 40.000 
 
 Hope, (Warren) 100.000 
 
 North Kingston 44.485 
 
 Centreville 25.000 
 
 Vi'^oonsocket Falls 51.269 
 
 Mount Hope (Bristol) 75.000 
 
 47 Banks.... 6.158.397 
 
 CONNECTICUT. 
 
 New-London 146.437 
 
 Norwich 150.000 
 
 Hartford 1.252.900 
 
 Phoenix 1.218..'300 
 
 Bridgeport 100.000 
 
 Union (New-London) 100.000 
 
 Windham Co 104.390 
 
 Capital. 
 
 Thames 153.500 
 
 Fairfield Co 133.000 
 
 Mechanics of N. Haven 333.850 
 
 Middletown 400.000 
 
 New-Haven 339.600 
 
 Stonington 53.000 
 
 13 Banks.... 4.485.177 
 
 NEW-YORK. 
 
 State Bank at Albany 369.000 
 
 Geneva 400.000 
 
 Utica 500.000 
 
 Mech's. and Farmers, Albany . 312.000 
 
 Catsldll 1 10.000 
 
 Phcenix 500.000 
 
 New- York 1.000.000 
 
 Merchants 1.490.000 
 
 Mechanics 2.000.000 
 
 Farmers, (Troy) 278.000 
 
 Albany 240.000 
 
 Mohawk 165.000 
 
 Union 1 .000.000 
 
 America 2.031.200 
 
 City Bank l.OOO.OOO 
 
 Troy 352.000 
 
 Ontario 500X)00 
 
 Chenango 100.000 
 
 Middle District 406.153 
 
 Auburn 184.000 
 
 Central, (Cherry Valley) 86.000 
 
 Jefferson County 74.000 
 
 Trad esmens 480.000 
 
 Dry Dock Co 200.000 
 
 North River 500.000 
 
 Commercial 225.000 
 
 Duchess County 75.000 
 
 Rochester 250.000 
 
 Long Island 300.000 
 
 Franklin 510.000 
 
 Newburgh 120.000 
 
 Orange County 106.000 
 
 Lansingburgh 220.000 
 
 Manhattan Co 2.050.000 
 
 Delaware and Hudson 700.000 
 
 Fulton 750.000 
 
 Chemical 500.000 
 
 37 Banks.... 20.083.353 
 
 NEW-JERSEY. 
 
 State Bank Camden 266.050 
 
 '• " New-Brunswick... 71.984 
 
 " " Elizabethtown 132.550 
 
 " " Newark 280.000 
 
 " " Morris 93.700 
 
 Farmers Bank New Jersey . . . 100.000 
 
 New-Brunswick 90.000 
 
 Newark Bank'g. and Ins. Co. . . 350.000 
 
 Sussex 27.500 
 
 Trenton Banking Co 214.740 
 
 Cumberland 52.025 
 
 Commercial 30.000 
 
 Far's. and Mecli'.s. Rah way 30.000
 
 BANKS AND CURRENCY. 
 
 99 
 
 STATEMENT l— Continued. 
 
 Capital. 
 
 Orana:* Bank 50.000 
 
 People's do 75.000 
 
 Salem Banking Ca 30.000 
 
 Salem and P. Man'g. 30.000 
 
 Washington Bank 93.460 
 
 18 Banks.... 2.017.009 
 
 PENNSYLVANIA. 
 
 Pennsylvania 2.500.000 
 
 Philadelphia 1.800.000 
 
 North America 1.000.000 
 
 Farmers and Mechanics 1.250.000 
 
 Chamber.sburgh 247.228 
 
 Chester County 90.000 
 
 Delaware County 77.510 
 
 Getiysburgh 125-318 
 
 Pittsburgh 346.155 
 
 Carlisle 171.466 
 
 Easton 187.380 
 
 Farmers of Bucks Co 60.000 
 
 Farmers of Lancaster 400.000 
 
 Farmers of Reading 300D00 
 
 Harrisburgh 158..525 
 
 Lancaster 134.235 
 
 Monongahela Bank of ) 102.1''3 
 
 Brownsville ) 
 
 Northampton 1 12.500 
 
 Westmoreland 107.033 
 
 York 168.720 
 
 Germantovvn 129.500 
 
 Montgomery County 133.340 
 
 Northern Liberties 200.000 
 
 Coramcrcid 1.000.000 
 
 Mef hariics of Philadelphia .... 529.3.30 
 
 Schuylkill 500.000 
 
 South wark 249.630 
 
 Kensington 124.990 
 
 Penn Township 149.9HO 
 
 Columbia Bridge 395.000 
 
 Miners Bank of Potts ville 40.000 
 
 Erie 20.000 
 
 Girard's .., 1.800.000 
 
 33 Banks.. 
 
 14.609.963 
 
 DELAWARE. 
 
 Delaware Bank, Wilmington.. UOJOOO 
 
 Farmers Bank of Del 500.000 
 
 Wiluiington and Brandywine. . 120.000 
 
 Hank ol Smyrna 100.000 
 
 ComruorrialBank of DeL ... Not known. 
 
 Wilmington (to. 
 
 4 Banks 830.000 
 
 2 not known. 
 
 6 Bank.*). 
 
 MARYLAND. 
 
 Bank of Bakimoro 1.197.5.% 
 
 I'nion l.SOO.OfX) 
 
 Me( hamcs .384.(X)0 
 
 Commercial and Farmers .... 318.400 
 
 Capital 
 
 Farmers and Merchants 414.045 
 
 Franklin 406.500 
 
 Marine 235.000 
 
 Hageistown 250.000 
 
 Farmers of Mary land 820.000 
 
 Susquehannah Bridge 175.000 
 
 Westminster 175.0(10 
 
 Frederick County 175.000 
 
 Bank of Maryland 200.000 
 
 13 Banks.... 6.250.495 
 
 DISTRICT OF COLUMBIA. 
 
 Washington 479.120 
 
 Union, (Georgetown) 47a2.30 
 
 Alexandria 500.000 
 
 Potomac 500.000 
 
 Mechanics of Alexandria 372.544 
 
 Farmers of do 310.000 
 
 Metropolis 500.000 
 
 Farmers and Mechanics ) .qj. ann 
 
 of Georgetown y " 
 
 Patriotic 250.000 
 
 9 Banks.... 3.875.794 
 
 VIRGINIA. 
 
 Bank of Virginia 2.740.000 
 
 Farmers of Virginia 2.000.0C0 
 
 Bank of the Valley 654.000 
 
 North- Western Bank ) , — ,r,n 
 of Virgmia ^ 
 
 4 Banks.... 5.571.100 
 
 NORTH CAROLINA. 
 
 Cape Fear 79.5.000 
 
 Newbern 600.000 
 
 Slate Bank l.fOO.OOO 
 
 SBanis.... 3.195.000 
 
 SOUTH CAROLINA. 
 
 Bank of State of S. Carolina.. . 1.156.000 
 Planters and Mech.inics, ) 1 (XX) 000 
 
 Charleston S 
 
 State Bank 800.000 
 
 South Carolina 675.000 
 
 Union 1.000.000 
 
 Banks. 
 
 4.631.000 
 
 GEORGIA. 
 
 Bank of State of CJcorgia 1.30.3.436 
 
 Planters Bank of do .Wi.OOO 
 
 Marine and Fire Insurance Not en von 
 
 Augusta roO.tHK) 
 
 Daricn -184.276 
 
 Central 922.317 
 
 Augusta Insurnnro 1 10 000
 
 100 
 
 BANKS AND CURRENCY. 
 
 STATEMENT L— Continued. 
 
 Capital. 
 
 Macon $ 75.000 
 
 Merchants and Planters 142.000 
 
 9 Banks.... 4.203,029 
 
 LOUISIANA. 
 
 Louisiana State Bank 1.248.720 
 
 Orleans 424.700 
 
 Bank of Lou isiana 2.992.560 
 
 Branch of Bank of Louisiana . . 1.000.000 
 
 4 Banks.... 5.665.980 
 
 ALABAMA. 
 
 Bank of State 
 
 " of Mobile 
 
 495.503 
 148.000 
 
 2 Banks.... 
 
 MISSISSIPPL 
 
 Bank of State of Missis- > 
 sippi and Branches ) "' 
 1 Bank. 
 
 TENNESSEE. 
 
 Bank of State of Tennessee 
 
 1 Bank. 
 
 643.503 
 
 950.600 
 
 737.817 
 
 Capital. 
 OHIO. 
 
 Chilicothe 500.000 
 
 Steubenville 100.000 
 
 Western Reserve Bank 82.386 
 
 Belmont Bank of St. Clairsville 100.000 
 
 Commercial of Scioto 100.000 
 
 Farmers of Canton 100.000 
 
 Farmers and Mechanics > nviArtn 
 
 of Steubenville S" 1^"W 
 
 Franklin of Columbus 100.000 
 
 Lancaster Ohio Bank 100.000 
 
 Mount Pleasant 100.000 
 
 Marietta 72.000 
 
 11 Banks.... 1.454.386 
 
 MICHIGAN. 
 
 Bank of Michigan 100.000 
 
 1 Bank. 
 
 FLORIDA. 
 
 Bank of Florida 75.000 
 
 1 Bank. 
 
 RECAPITULATION. 
 
 Massachusetts 
 
 Maine 
 
 New-Hampshire .... 
 
 Vermont 
 
 Rhode Island 
 
 Connecticut 
 
 New- York 
 
 New-Jersey 
 
 Pennsylvania 
 
 Delaware 
 
 Maryland 
 
 District of Columbia . 
 
 Virginia 
 
 North Carolina 
 
 South Carolina 
 
 Georgia 
 
 20.420.000 
 2.050.000 
 1.791.670 
 432.625 
 6.118.397 
 4.485.177 
 
 20.083.353 
 2.017.009 
 
 14.609.963 
 830.000 
 6.250.495 
 3.875.794 
 6.571.100 
 3.195.000 
 4.631.000 
 4.203.029 
 
 Louisiana . 
 Alabama.. 
 Mississippi 
 Tennessee 
 
 Ohio 
 
 Michigan , 
 Florida . . . 
 
 Delaware , 
 
 Do 
 
 328 
 1 
 
 329 
 1 
 
 330 
 
 5.665.980 
 . 643.503 
 ; 950.600 
 ■ 737.817 
 1.454.386 
 10.000 
 75.000 
 
 110.101.898
 
 BANKS AND CURRENCY. 
 
 101 
 
 
 STATEMENT II. 
 Situation of State Banks, of which returns have been obtained. 
 
 
 1st of January, 1811. 
 
 
 STATE 
 
 No. of 
 Banks 
 
 Capital Circulation 
 
 Specie 
 
 
 Massachusetts 
 
 Maine 
 
 15 
 
 6 
 
 13 
 
 1 
 
 4 
 6 
 4 
 
 1 
 
 50 
 
 6.292.144 
 1.250.000 
 1.917.000 
 269.760 
 6.153.050 
 4.895.202 
 2.341.395 
 1.500.000 
 
 2.082.331 
 496.077 
 542.508 
 227.423 
 
 3.221.948 
 
 2.730.000 
 927.397 
 
 2.942.717 
 
 1.354.666 
 255.998 
 394.470 
 49.474 
 819.322 
 850.000 
 450.000 
 
 1.499.512 
 
 
 Rhode Island 
 
 New- York 
 
 
 Pennsylvania 
 
 Maryland 
 
 
 District of Columbia . . 
 Virginia 
 
 
 
 
 24.618.551 
 
 13.170.401 
 
 5.673.442 
 
 
 
 1 
 
 
 1815. 1 
 
 
 Massachusetts 
 
 Maine 
 
 20 
 
 8 
 
 10 
 
 14 
 
 4 
 
 37 
 
 17 
 
 7 
 
 2 
 
 1 
 
 120 
 
 10.950.000 
 
 1..380.000 
 
 941.152 
 
 2.027.000 
 
 2.41.3.230 
 
 11.678.238 
 
 7.832.002 
 
 3.266.457 
 
 4.029.097 
 
 754.900 
 
 3.022.112 
 
 1.046.783 
 
 596.323 
 
 549.405 
 
 1.194.439 
 
 6.100.248 
 
 3.970.000 
 
 1.546.540 
 
 4.616.240 
 
 975.000 
 
 6.753.669 
 444.816 
 
 475.688 
 431.859 
 308.199 
 1.330.829 
 740.000 
 259.074 
 760.943 
 
 
 New-Hampshire 
 
 Rhode Island 
 
 New- York 
 
 
 Pennsylvania 
 
 Maryland 
 
 
 District of Columbia . . 
 Virginia 
 
 
 Louisiana ••• 
 
 
 
 
 45.272.076 
 
 23.617.090 
 
 11.505.077 
 
 
 
 
 
 1816. 1 
 
 
 Massachusetts 
 
 Maine 
 
 25 
 
 11 
 
 10 
 
 10 
 
 4 
 
 38 
 
 20 
 
 7 
 
 2 
 
 1 
 
 134 
 
 11. .575.000 
 
 1.410.000 
 
 998.121 
 
 2.317.320 
 
 2.273.000 
 
 12.880.397 
 
 8.406.782 
 
 3.311.544 
 
 4.090.762 
 
 724.900 
 
 1.126.743 
 
 901.991 
 
 627.817 
 
 576.526 
 
 1.322.684 
 
 11. 401. .390 
 
 5.615.000 
 
 2.173.453 
 
 6.031.446 
 
 925.000 
 
 1.270.469 
 312.079 
 259.549 
 358.160 
 303.167 
 
 4.005.644 
 760.000 
 283.838 
 774.031 
 431.246 
 
 
 New-Hampshire 
 
 Rhode Island 
 
 New-York 
 
 
 Pennsylvania 
 
 Maryland 
 
 
 District of Columbia . . 
 Virginia 
 
 
 Louisiana 
 
 
 
 
 47.987.826 
 
 31.702.050 
 
 8.768.183 
 
 
 
 1
 
 102 
 
 BANKS AND CURRENCV. 
 
 STATEMENT 11.— Continued. 
 
 1st of January, 1820. 
 
 STATE. 
 
 Massachusetts 
 
 Maine 
 
 New-Hampshire . . . 
 
 Vermont 
 
 Rhode Island 
 
 Connecticut 
 
 New- York 
 
 New-Jersey 
 
 Pennsylvania 
 
 Delaware 
 
 Maryland 
 
 District of Columbia 
 
 Virginia 
 
 North Carolina .... 
 South Carolina .... 
 
 Georgia 
 
 Louisiana 
 
 Alabama 
 
 Tennessee 
 
 Kentucky 
 
 Ohio 
 
 Indiana 
 
 Illinois 
 
 Missouri 
 
 Mississippi 
 
 Capital 
 
 Circulation 
 
 Specie 
 
 10.485.700 
 
 1.654.900 
 
 1.005.276 
 
 44.955 
 
 2.982.026 
 
 467.937 
 
 2.068.790 
 
 214.740 
 
 12.881.780 
 
 974.900 
 
 86.290 
 
 5.525.319 
 
 5.212.192 
 
 2.964.887 
 
 2.475.000 
 
 3.401.510 
 
 924.000 
 
 321.112 
 
 1.545.867 
 
 4.307.431 
 
 1.697.463 
 
 202.867 
 
 140.910 
 
 250.000 
 
 900.000 
 
 2.460.697 
 
 1.380.582 
 
 589.114 
 
 185.342 
 
 738.192 
 
 138.234 
 
 1.058.769 
 
 110.624 
 
 3.282.020 
 
 405.972 
 
 44.435 
 
 838.030 
 
 2.733.746 
 
 3.851.919 
 
 1 063.873 
 
 3.477.071 
 
 459.850 
 
 166.686 
 
 898.129 
 
 815.406 
 
 1.203.869 
 
 276.288 
 
 52.021 
 
 135.258 
 
 275.447 
 
 212 62.735.842 26.641.574 19.444.959 10.672.163 
 
 3.378.565 
 278.924 
 117.441 
 46.121 
 503.512 
 75.780 
 876.633 
 152.603 
 
 4.297.034 
 
 211.454 
 
 27.153 
 
 1.444.902 
 882.056 
 635.761 
 825.305 
 
 1.268.982 
 339.375 
 958.381 
 279.869 
 
 1.035.672 
 454.452 
 216.748 
 151.604 
 773.652 
 212.980 
 
 1.337.172 
 521.317 
 228.831 
 
 49.090 
 406.867 
 
 44.645 
 301.009 
 
 21.413 
 
 2.003.295 
 
 115.502 
 
 21.030 
 265.234 
 993.673 
 705.582 
 395.791 
 813.750 
 290.543 
 192.708 
 343.882 
 693.381 
 433.612 
 
 86.350 
 
 74.715 
 252.563 
 
 79.608 
 
 \st of January, 1830. 
 
 Massachusetts 
 
 Maine 
 
 New-Hampshire 
 
 Vermont 
 
 Rhode Island 
 
 Connecticut 
 
 New- York 
 
 New-Jersey 
 
 Pennsylvania 
 
 Delaware 
 
 Maryland 
 
 District of Columbia. 
 
 Virginia 
 
 North Carolina 
 
 South Carolina 
 
 Georgia 
 
 Louisiana 
 
 Alabama 
 
 Mississippi 
 
 Tennessee 
 
 Total.... 
 
 Capital on which 
 loans are not given. 
 New- York 4.394.000 
 Delaware 830.000 
 
 Capital on which 
 loans are given 
 
 281 
 
 20.420.000 
 
 2.050.000 
 
 1.791.670 
 
 432.625 
 
 6.118.397 
 
 3.692.577 
 
 15.637.353 
 
 844.284 
 
 12.810.333 
 
 830.000 
 
 5.525.495 
 
 3.875.794 
 
 5.571.100 
 
 3.195.000 
 
 1.156.000 
 
 4.203.029 
 
 4.665.980 
 
 495.503 
 
 950.600 
 
 737.817 
 
 95.003.557 
 
 5.224.000 
 
 89.779.55': 
 
 4.747.784 
 
 549.110 
 
 743.457 
 
 680.379 
 
 673.836 
 
 1.503.460 
 
 7.959.280 
 
 374.799 
 
 7.308.368 
 
 376.000 
 
 1.733.659 
 
 946.059 
 
 3.857.964 
 
 1.431.543 
 
 1.175.000 
 
 2.719.356 
 
 1.301.483 
 
 522.637 
 
 540.190 
 
 30.550 
 
 .39.174.914 
 
 2.545.230 
 497.072 
 173.682 
 124.880 
 861.031 
 452.44-i 
 10.354.500 
 307.201 
 
 6.841.448 
 300.000 
 
 1.864.397 
 .564.894 
 
 1.974.171 
 452.389 
 793.000 
 
 1. 382.634 i 
 
 2.016.560 
 136.656 
 647.756 
 339.174 
 
 987.213 
 208.921 
 226.428 
 428.817 
 343.389 
 337.788 
 
 1.560.291 
 83.667 
 
 2.414.669 
 170.000 
 777.009 
 228.914 
 832.732 
 179.268 
 129.000 
 
 1.305.141 
 
 1.492.674 
 
 127.596 
 
 77.665 
 
 78.461 
 
 32.531.119 
 
 11.999.643 
 
 28.590.894 
 2.565.256 
 2.466.291 
 856.814 
 6.909.705 
 4.195.690 i 
 
 20.370.693 
 1.153.407 
 
 21.474.173 
 
 not known 
 6.627.270 
 3.837.272 
 7.698.906 
 4.621.810 
 2.605.504 
 6.252.474 
 6.796.351 
 237.060 
 1.927.435 
 628.436 
 
 129.815.441
 
 BANKS AND CURRENCV. 
 
 103 
 
 STATEMENT III. 
 
 Number and Capital of the State Banks, of the situation of 
 tohich returns have not been obtained. 
 
 STATES. 
 
 Massachusetts. . . 
 
 Maine 
 
 New-Hanipsliire . 
 Connecticut. . . . . 
 
 New-York 
 
 New- Jersey 
 
 Pennsylvania . .. 
 
 Delaware 
 
 Maryland 
 
 Dist. of Columbia 
 
 Virginia 
 
 North Carolina . • 
 South Carolina . . 
 
 Georgia 
 
 Louisiana 
 
 Alabama 
 
 Mississippi 
 
 Tennessee 
 
 Kentucky 
 
 Ohio 
 
 Indiana 
 
 Illinois 
 
 Missouri 
 
 Michigan 
 
 Florida 
 
 1811 
 
 Fij-st of January, 
 1815 1816 1820 
 
 1830 
 
 Capital No. CapiUl No. Capital No. Capital 
 
 No. Capital 
 
 815.250 
 1.933.000 
 7.253.00(1 
 
 739.740 
 
 1.576.600 
 
 3.475.000 
 
 210.000 
 
 754.000 
 
 100.000 
 240.460 
 895.000 
 
 1 100.000 1 75.000 
 3 450.000 
 
 3.C55.750 
 lG.533.0tiH 
 2.121.932 
 
 3.3yo.5t;o 
 
 966.9'JO 
 
 811.838 
 
 92.000 
 
 1.576.600 
 
 3.730.900 
 
 623.580 
 
 677.400 
 
 100.000 
 
 212.962 
 
 959.175 
 
 1.434.719 
 
 4.017.575 
 10493 756 
 2.072. J 15 
 2.504.200 
 974.500 
 
 982.469 
 
 421.415 
 
 2.776.600 
 
 3.832.758 
 
 1.502.600 
 
 697.400 
 
 '100.000 
 
 815.281 
 
 2.057.000 
 
 2.061.92 
 
 38 17.992.050 88 36 987.514 112 41.834.596 95 39.474.769 4815.188.711 
 
 3.221.400 
 16919.984 
 1.916.209 
 l.f 00.000 
 
 6,621.841 
 
 2.000.000 
 
 1.673.420 
 148.000 
 
 573.915 
 
 4.500.000 
 
 100.000 
 
 792.600 
 4.446.000 
 1.172.725 
 1.800.000 
 
 not known 
 
 725.000 
 
 3.475.000 
 
 1,000.000 
 148.000 
 
 100.000 
 75.000 
 
 * And Bank of Wilmington, not included 1 
 
 49 
 
 STATEMENT IV. 
 
 A List of the Banks which have failed, or discontinued their 
 business, from 1st January 1811, to 1st July 1830. 
 
 Capital. 
 MASSACHUSETTS. 
 
 Essex 300.000 
 
 New-Bedlord 150.000 
 
 Northamplon 75.000 
 
 Farmers, (Belcherlown) 100.000 
 
 Brighton 150.000 
 
 Sutlon 75.000 
 
 6 Bank.s . 
 
 850.000 
 
 MAINE. 
 
 Maine 300.000 
 
 Peiiobsi ot . . 150.000 
 
 Wistanjict IOOjOOO 
 
 Hallowel 150.000 
 
 Kenntl>eck 100.000 
 
 I'a8.sama()uud(ly ,50.000 
 
 Castiiie 100.000 
 
 Lincoln and Kennebeck 200.000 
 
 8 Banks. 
 
 1.150.000 
 
 RHODE ISLAND. 
 
 Fanners and Mechanics, ) 
 
 Pawtuxet J ■ ■ ■ 
 
 Ear's. Exchange, Gloucester. . 
 
 1 Bank.... 
 
 Capital. 
 
 200.000 
 
 200.000 
 
 NEW-HAMPSHIRE. 
 
 Coos 100.000 
 
 Concord 29.600 
 
 2 Banks.. 
 
 129.600 
 
 CONNECTICUT. 
 
 Eagle 500.000 
 
 Derby 100.000 
 
 2 Banks. 
 
 600.000
 
 104 
 
 BANKS AND CURRENCY. 
 
 STATEMENT W.— Continued. 
 
 Capital. 
 NEW-YORK. 
 
 J. Barker's Exchange 495.250 
 
 Utica Insurance Co 100.000 
 
 Columbia 167.650 
 
 Hudson 110.000 
 
 Niagara 108.000 
 
 Plattsburgh 300.000 
 
 Washington and Warren 400.000 
 
 New-York Manufacturing Co. 700.0Q0 
 
 Franklin 510.000 
 
 Middle District 487.776 
 
 Calskill Aqueduct Association 
 
 10 Banks.... 3.378.676 
 
 NEW-JERSEY. 
 
 Jersey City Bank 200.000 
 
 Patterson 160.000 
 
 State Bank, Trenton 92.400 
 
 Protection and Lombard 200.000 
 
 Franklin 300.000 
 
 Monmouth 40.000 
 
 Manufacturing 150.000 
 
 Salem and Philadelphia 
 
 Hoboken 
 
 7 Banks.... 1.142.400 
 
 PENNSYLVANIA. 
 
 Washington 92.070 
 
 Farmers and Mechanics > ha 4ar. 
 
 ofGreencastle y-' ^^'^''^ 
 
 Do. do. of Pittsburgh 65.337 
 
 Juniata 164.478 
 
 Marietta and Susquehan- ) con Aon 
 
 nah Trading Co. \-- '^■^^•^•^O 
 
 Pennsylvania Agr'l. and ) nmno 
 
 Man'g. Bank \-- ^1"-^"- 
 
 Delaware Bridge 99.715 
 
 Allegheny 144.807 
 
 Beaver 78.985 
 
 Swatara 75.075 
 
 Centre 159.610 
 
 Huntingdon 123.122 
 
 Northumberland, Union ) ,,~ „Qn 
 
 and Columbia ]•■ "''•y»" 
 
 North- Western Bank 77.688 
 
 Union of Pennsylvania 124.792 
 
 Silver Lake 64.882 
 
 Fayette, New-Salem 
 
 Harmony 
 
 Wilkesbarre Branch 
 
 16 Banks.... 1.811.558 
 
 DELAWARE. 
 
 Farmers and Mechanics ) 
 of Delaware J ' ' 
 
 1 Bank. 
 
 45.000 
 
 Capital. 
 MARYLAND. 
 
 Elkton 110.000 
 
 Conococheague 157.500 
 
 Cumberland 107.862 
 
 Somerset and W 90.000 
 
 Somerset 195.850 
 
 Caroline 103.045 
 
 Havre de Grace 132.075 
 
 City 838.540 
 
 Planters, P. George's County . . 86.290 
 
 9 Banks.... 1.821.162 
 
 DISTRICT OF COLUMBIA. 
 
 Columbia 901.200 
 
 Union of Alexandria 340.000 
 
 Central 252.995 
 
 Franklin 163.265 
 
 4 Banks . 
 
 1.657.460 
 
 VIRGINIA. 
 
 Ohio Co 60.000 
 
 Charleston M. and C. Co 32.580 
 
 Winchester 122.930 
 
 Monongaha 25.000 
 
 Farmers and Mechanics, > ,g .gn 
 
 Harper's Ferry y'' 
 
 SouthBranch 25.000 
 
 Farmers, Merchants, and ) np, Aor. 
 
 Mech's. Jefferson Co. S'' 
 
 Warrentown 60.000 
 
 Leesburg Union 20.000 
 
 Loudon Co 30.000 
 
 lOBanlis.. , 
 
 421.415 
 
 NORTH CAROLINA. 
 
 Fayette ville 
 
 Bertie 
 
 SOUTH CAROLINA. 
 
 Cheraw 20.000 
 
 Hamburg 
 
 IBank.... 20.000 
 
 GEORGIA. 
 
 Darien 480.000 
 
 1 Bank. 
 
 LOUISIANA. 
 
 Planters Bank 200.000 
 
 Bank of Louisiana 724.000 
 
 2 Banks . 
 
 924.000
 
 BANKS Ai\D CURRENCY. 
 
 105 
 
 STATEMENT IV.—Contmued. 
 
 Capital. 
 ALABAMA. | 
 
 Planters nnd Merchants 104.175 
 
 Tombeckbe 156.037 
 
 Steamboat 16.000 
 
 3 Banks . 
 
 337.112 
 
 TENNESSEE. 
 
 Fayetteville Transfer 1 10.000 
 
 Farmers and Mechanics > ,gQ gy^ 
 of Nashville ^ " ' 
 
 Nashvillo and Branches 994. 5G0 
 
 Tennessee Bank, (old) 371.107 
 
 3 Branches of <lo 300.000 
 
 iNashvillo Branch of do 206.775 
 
 RoKcrsvilie Branch do 67.140 
 
 4 Banks and 5 Branches . 2.229.782 
 
 489.7C0 
 
 46.640 
 54.700 
 
 KENTUCKY. 
 
 Farmers and Mechanics \ 
 
 of Lexington, {slock ^ > . . 
 
 voles at par) ) 
 
 Versailles 111.180 
 
 Kentucky and Branches 2.756.220 
 
 Flemingsburg 61.626 
 
 Limestone 135.825 
 
 ShcpherdsviUe 55.880 
 
 Hinksion Exporting Co 50.120 
 
 New-Castle 40.520 
 
 Cynthiana 47.900 
 
 Centre Bank of Kentucky.. .. 120.000 
 
 Union of Elizabethtown 39.400 
 
 Farmhig and Commercial Bk. 37.219 
 
 Greenville 
 
 Newport 
 
 Southern Bank of Ky 1 17.222 
 
 Farmers of Harrodsourg 81.000 
 
 " " Somerset 22.379 
 
 Lanca-ster Exporting Co 39.900 
 
 Insurance 
 
 Barboursville 
 
 Cumberland Bank of Burkville 
 
 Burlington 
 
 Bank oi Columbia 
 
 Frankfort 
 
 (Georgetown 
 
 Greunsburgh 
 
 Green River 
 
 Christian Bank 
 
 Bank of Henderson 
 
 " of Washington 
 
 Commercial Bank of Louisville 
 
 Mount Sterling 
 
 Morgantown 
 
 Monticcllo 
 
 F'armers Bank of Jessamine 
 
 Owmg.sville 
 
 Petersburg Steam Mill 
 
 F'armers Bank of Gallatin 
 
 Far's. and Mechanics of Logan 
 
 Do. do. of Shelby ville 
 
 Amount carried forward 2.307.431 165 
 
 Capital. 
 Amount brought forward 2.307.431 
 
 Far's. and Mech's. of Springfield 
 
 Winchester Com'l 
 
 Commonwealth Bank 2.000.000 
 
 (nominal.) 
 
 18 Banks.... 4.307.431 
 
 OHIO. 
 Miami Exporting Co. > 
 
 Cincinnati S " 
 
 Columbia, New Lisbon" 
 
 Granville Alex'n. Soc 
 
 Farmers Bank of New Salem. 
 
 German of Wooster 
 
 Muskingum 
 
 Farmers and Mechanics > 
 
 of Cincinnati S " ' 
 
 Cincinnati 
 
 Dayton Manufacturing 
 
 Lebanon Miami Bank'g. Co.. . 
 
 Urbana Banking Co 
 
 Farmers and Mechanics > 
 
 Man'g. Chilicotlie y" 
 
 Hamilton 
 
 Zanesville Canal and 
 
 Manufacturing Co. 
 
 West Union 
 
 Lake Erie 
 
 Steubenville 
 
 Muskingum of Zanesville. 
 
 Jefferson Co 
 
 Bank of Xenia 
 
 f 
 
 468.966 
 
 60.000 
 12.002 
 57.000 
 25.000 
 97.800 
 
 184.776 
 
 216.430 
 61.622 
 86.491 
 49.685 
 
 99.575 
 
 22.707 
 
 79.125 
 
 100.000 
 100.000 
 100.000 
 100.000 
 
 18 Banks.... 1.911.179 
 
 INDIANA. 
 
 Farmers and Mechanics Bk.. 
 Bank of Vincennes 
 
 130.000 
 127.624 
 
 2 Banks... 
 ILLINOIS. 
 
 257.624 
 
 Illinois 
 
 Edwardsville 
 
 105.720 
 57.190 
 
 2 Banks. 
 
 162.910 
 
 MISSOURI. 
 
 Bank of Missouri 250.000 
 
 " " St. Louis 150.000 
 
 2 Banks. 
 
 400.000 
 
 MICHIGAN. 
 
 Monroe 10000 
 
 1 Bank. 
 
 RECAPITULATION. 
 
 129 Banks $24,212,339 
 
 36 do not known.
 
 106 
 
 BANKS AND CURRENCV. 
 
 STATEMENT V. 
 
 Depreciation, per cent., of Bank Notes, during the suspension 
 of specie payments. 
 
 1814. Seplember . 
 October .... 
 November . 
 December . 
 
 1815. January . . . 
 February .. 
 
 March 
 
 April 
 
 May 
 
 June 
 
 July 
 
 August 
 
 September. 
 October . . . 
 November. 
 
 1 Balti. 
 
 Philadel- 
 
 New- 1 
 
 1 Djore. 
 
 pliia. 
 
 Yurk. 1 
 
 20 
 
 
 10 j 
 
 15 
 
 
 10 
 
 10 
 
 
 11 
 
 14 
 
 
 11 
 
 20 
 
 
 15 
 
 5 
 
 
 2 
 
 5 
 
 
 6 
 
 10 
 
 
 ^ 
 
 14 
 
 5 
 
 5 
 
 16 
 
 9 
 
 iH 
 
 20 
 
 11 
 
 14 
 
 19 
 
 11 
 
 m 
 
 20 
 
 15 
 
 13 
 
 21^ 
 
 16 
 
 15 
 
 16 
 
 12J 
 
 I Pbiladel- 
 1 phia. 
 
 1815. December 
 
 1816. January .. 
 February . 
 March. ... 
 
 April 
 
 May 
 
 June 
 
 July 
 
 August .. . 
 September 
 October . . . 
 November 
 December 
 
 1817. January . . 
 February . 
 
 18 
 
 14 
 
 15 
 
 14 
 
 13 
 
 14 
 
 18 
 23 
 20 
 
 12A 
 Hi 
 14 
 
 20 
 
 17 
 
 15 
 
 15 
 
 12 
 
 10 
 
 10 
 
 7. 
 
 8 
 
 9, 
 
 9 
 
 7 
 
 9 
 
 7 
 
 3 
 
 2J 
 
 f 
 
 STATEMENT VI. 
 
 Average amount, for the years 1819 — 1829, of the principal 
 
 items of the Situation of the Bank of the United States. 
 
 1819 
 1820 
 1821 
 1822 
 1823 
 1824 
 1825 
 1826 
 1827 
 1828 
 1829 
 
 211.074 
 808.267 
 099.050 
 574.893 
 584.919 
 478.255 
 327.219 
 592.103 
 948.592 
 820.944 
 703.280 
 
 336.760 
 1.526.600 
 1.598.473 
 2.394.688 
 2.588.245 
 2.563.672 
 3.270.099 
 3.592.145 
 4..'i68.297 
 6.018.784 
 8.417.021 
 
 7.236.153 
 8.258.701 
 11.859.296 
 13.116.004 
 10.911.700 
 13.373.095 
 19.807.665 
 17.885.210 
 17.724.192 
 17.127.077 
 13,925.701 
 
 39.784.587 
 38.593.568 
 40.556.619 
 44.085 785 
 44.084.864 
 45.4J5 022 
 52.405.583 
 51.069.4.58 
 50.244.081 
 53.966.805 
 55 046.002 
 
 Real Estate. Specie. 
 
 245.846 
 
 579.152 
 736.370 
 ..393.193 
 
 .566.728 
 .745.566 
 .118.560 
 ,298.352 
 .474.750 
 
 2.743.834 
 5.214.773 
 G.469.224 
 3.711.143 
 4.899.686 
 5.909.351 
 4.686.557 
 5.174.643 
 6.327.758 
 6.205.107 
 6.411.998 
 
 Deposits. ^f"^ 
 
 5.734.682 
 6.581.628 
 6.990.073 
 6.365.570 
 10.401.786 
 12.918.108 
 12.885.829 
 12.578.523 
 13.727 274 
 14.454.169 
 15.172.164 
 
 5.056 
 
 4 410. 
 
 5 009. 
 
 4 671 
 5.935 
 8.836. 
 10.235 
 10.808, 
 12.414. 
 15.011, 
 
 ♦ The actual amount of ciiculation is generally four-fifths of the gross amount, 
 rest being notes in transitu, or accumulated in offices where they are not payable. 
 
 STATEMENT VII. 
 Actual circulation of the Bank of the United States in Septem- 
 ber, 1830, showing where the Notes were payable. 
 
 Where payable. 
 
 Notes in 
 circulation. 
 
 Bank United States 1.367.180 
 
 Portland 79.280 
 
 Portsmouth 101.985 
 
 Boston 271.180 
 
 Providence 113.920 
 
 Hartford 171.532 
 
 New- York 834.733 
 
 Baltimore 528.638 
 
 Washington 647.602 
 
 Richmond 469.440 
 
 Norfolk 532.400 
 
 Fayetteville 713.760 
 
 Charleston 835.840 
 
 Savannah 622.605 
 
 Amount carried forward 7.190.095 
 
 Where payable. 
 
 Notes in 
 circulation. 
 
 Amount brought forward 7.190.095 
 
 Mobile 940.825 
 
 New-Orleans 2.623.320 
 
 'St.Louis 228.700 
 
 Nashville 1.235.275 
 
 Louisville 662.375 
 
 Lexington ...4».. 908.625 
 
 Cincinnati 647.240 
 
 Pittsburgh 5.'>4.102 
 
 Buffaloe 258.130 
 
 Burlington 96.595 
 
 Agencies Cincinnati > « okk 
 
 and Chilicothe ' '^'"^ 
 
 I 
 
 15.347.657
 
 Philadelphia, February, 1831. 
 
 Just Published, by Carey <Jj' Lea, 
 
 And sold in Philadelpliia by J?. L. Carey S( A. Hart ; in New- York by G. «^ 
 C. iV H. Carvill; in Boston by Carter Sf Hendee — in Charleston by W.H. Berrett 
 —in New-Orleans by W. M'Kean ; by the principal booksellers throughout the 
 Union, 
 
 AND IN LONDON, BY JOHN MILLER, ST. JAMES'S STREET. 
 
 VOL. V. 
 
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 expressions used in books or conversation. Such a work must obviously be of 
 great utility to every class of readers. It has been found so much so in Germany, 
 ihat it is met with everywhere, among the learned, the lawyers, the military, arf- 
 ists, merchants, mechanics, and men of all stations. The reader may judge how 
 well it is adapted to its object, from the circumstance, that tlwugh it now consists 
 of twelve volumes, seven editions, comprising about one hundred thousand copies, 
 iiave been printed in less than fifteen years. It lias been translated info the 
 Swedish, Danish and Dutch languages, and n French Iranslation is now preparing 
 in Paris.
 
 108 ENCYCLOPiEDIA AMERICANA. 
 
 A great advantage of this work is its liberal and impartial character ; and there 
 can be no doubt that a bt)ok like the Encyclopedia Americana will be found 
 peculiarly useful in this country, where the wide diffusion of the blessings of 
 education, and the constant intercourse of all classes, create a great demand for 
 general information. 
 
 In the preparation of the work thus far, the Editors have been aided by many 
 gentlemen of distinguished ability ; and for the continuation, no efforts shall be 
 spared to secure the aid of all who can, in any way, contribute to render it worthy 
 of patronage. 
 
 The American Biography, which is very extensive, will be furnished' by Mr. 
 Walsh, who has long paid particular attention to that branch of our literature, 
 and from materials in the collection of whicli he has been engaged for some years. 
 For obvious reasons, the notices of distinguished Americans will be confined to 
 deceased individuals: the European biography contains notices of all distin- 
 guished living characters, as well as those of past times. 
 
 The articles on Zoology have been written expressly for the present edition by 
 Dr. John D. Godman; those on Chemistry and Mineralogy, by a gentleman 
 deeply versed in those departments of science. 
 
 In relation to the Fine Arts, the work will be exceedingly rich. Great atten- 
 tion was given to this in the German work, and the Editors have been anxious to 
 render it, by tlie necessary additions, as perfect as possible. 
 
 To gentlemen of the I5ar, the work will be peculiarly valuable, as in cases 
 where legal subjects are treated, an account is given of the provisions of Ameri- 
 can, Englisli, French, Prussian, Austrian, and CivU Law. 
 
 The Publishers believe it will be admitted, that this work is one of the cheapest 
 ever publislied in this country. They have been desirous to render it worthy of 
 a place in the best libraries, while at the same time they have fixed the price so 
 low as to put it within the reach of all who read. 
 
 Tliosc who can, by any honest modes of economy, reserve the sum of two dollars anil fifty 
 cents quarterly, from their family expenses, may pay for this work as fast as it is published ; 
 and we confniently believe that they will find at the end that they never purchased so much 
 general, practical, useful Information at so cheap a rate. — Journal of Education. 
 
 If the encouragement to the publishers should corres|ioiid with the testimony in favor of 
 their enterprise, and the beautiful and faithful style of its execution, the hazard of the under- 
 taking, bold as it was, will be well compensated ; and our libraries will be enriched by the 
 most generally useful encyclopedic dictionary that has been offered to the readers of the Eng- 
 lish language. Full enough for the general scholar, and plain enough for every capacity, it is 
 far more convenient, in every view and form, than its more expensive and ponderous prede- 
 cessors. — American Farmer. 
 
 The high reputation of the contributors to this work, will not fail to insure it a favorable 
 reception, and its own merits will do tlie rest. — Silliman's Journ.' 
 
 The work will be a valuable possession to every family or individual that can afford to 
 purchase it; and we take pleasure, therefore, in extending the knowledge of its merits. — 
 J\ra>ional Intelligencer. 
 
 The Eiicyclop;Edia Americana is a prodigious improvement upon all that has gone before 
 it ; a thing for our country, as well as the country that gave it birth, to be proud of; an inex- 
 haustible treasury of useful, pleasant and familiar learning on every possible subject, so ar- 
 ranged as to bo speedily and safely referred to on emergency, as well as on deliberate inquiry; 
 and better still, adapted to the understanding, and put within the reach of the nmltitude. 
 * * * The Encyclopaedia Americana is a work without which no library worthy of the 
 name can hereafter be made up. — Yankee. 
 
 The copious information which, if a just idea of the whole may be formed from the first 
 volume, this work afibrds on American subjects, fully just.'fies its title of an American Die 
 tiouary; while at the same time the extent, variety and felicitous disposition of its topics,', 
 make it the most convenient and satisfactory Encyclopajdia that we have ever seen.-—' 
 jYalional Journal. 
 
 If the succeeding volumes shall equal in merit the one before us, we may confidently antici- 
 pate for the work a reputation and usefulness which ought to secure for it the most flattering 
 encouragement and patronage.— i^'crfera/ Gazette. 
 
 The variety of topics is of course vast, and they are treated in a manner which is at once 
 to full of information and so interesting, that the work, instead of being merely referred to, 
 might be regularly perused with as much pleasure as \mtt\l.-j-BaUimore American. 
 
 We view it as a publication worthy of the age and of^tlie country, and cannot but believe 
 the discrimination of our countrymen will sustain the publishers, and well reward them fot 
 tliis contribution to American Literature. — Baltimore Patriot. 
 
 We cannot doubt that the succeeding volumes will equal the first, and we hence warmly 
 recommend the work to the patronage of the public, as being by far the best work of the kind 
 ever offered for sale in this country. — U. S. Gazette.
 
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