public stocks, evince that money has not been more difficult to be obtained at any time within the last five years, than during the first fifteen days of April, 1839, with all these associations in full operation. It has therefore become a matter of demonstration, that the act we are discussing, and most of these associations, have in view other purposes than to aid the operations of commerce, or furnish the community with a sound paper currency.

To illustrate this view of the subject more fully, we shall briefly describe the usual modus operandi (for it is a technical art) in the formation of these associations.

In the first place, the stockholders in these institutions are generally persons in want of money themselves, and not capitalists able to loan money. Foremost in the class are speculators in real estate, jobbers in fancy stocks, and merchants of questionable credit.

It would naturally be supposed that persons of this description should be excluded, by the restrictions of any sound banking law, from taking the lead in conducting money affairs; but the provisions of the act we are discussing seem to have been expressly contrived for the benefit and advantage of this suspicious class.

The first step is, to settle upon articles of association among themselves, in which they generally provide for the continuance of the association for at least half a century, and for a prospective capital of from twenty-five to fifty millions of dollars.

When these particulars have been arranged, a certificate, according to the act, is filed with the county clerk, and another with the Secretary of State. The association then becomes a bank, in due form, under the provisions of the act, with every advantage except the right to issue its own notes as money. And here it is to be observed, that the issuing of its own notes is by no means a profitable or desirable branch of the business of such an association. As soon as the certificate is duly filed, a pompous advertisement appears in the newspapers, setting forth the title and style of the new bank, its officers and directors, and such portions of its articles of association as may be calculated to attract public attention, and capitalists or owners of real estate are invited to subscribe to the stock. Here opens the field for the operation of speculators. It is not necessary that any money should be paid in by the stockholders. Bonds and mortgages, or over-valued real estate, fancy stocks, and securities of all sorts, come before the board of directors, to be transferred to the bank in exchange for certificates of stock, or the bonds of the association. Of the value of these securities, the directors are the sole judges. Neither the Comptroller, nor any other public officer, is entitled to exercise any supervision over the nature of the securities thus received. Moreover, it generally happens that the directors themselves have kindred interests with the applicants. They

are all common owners of the fancy lots in some village, or some section of a city, and have a common interest in exaggerating the nominal price of the mortgaged lands proposed. Again, they are not confined to lands in the State of New York, but are allowed to embrace village lots, or wild lands, from Maine to Florida. In this way the capital stock is soon distributed. The holders of the stock then take it into market, and either borrow money upon it, or sell it on speculation, holding out the most extravagant promises of enormous profits and dividends to the unsuspecting purchasers. The certificates of stock and the bonds of the association go into the stock exchange, and are subjected to the operations of all those cunning devices which have rendered stock-jobbing odious in Europe and in this country.

Meantime the association, with its mortgages and other securities received in exchange for its certificates of stock and bonds, is carrying on another and parallel course of operation. It borrows money, when needed, upon its securities. This money it employs in exchanges and discounts. It must be miserably deficient in credit, if it do not receive considerable amounts on deposit. With this fund also it operates. Possibly some of its bonds, payable at long dates, may suffice to raise temporary loans. It becomes the centre and engine of every kind of speculation and illegitimate money operation, and the ingenuity of its directors must be small indeed, if a sufficient amount be not derived, either from the credulity of the public, or the necessities of its customers, to afford respectable dividends to the holders of its stocks.

All these operations may be conducted under the much praised banking law of 1838, without pledging a dollar with the Comptroller, or issuing a single bank bill. And, as we have seen, of the 812,319,175 capital, reported by the Comptroller on the 3d of Janu ary last, $10,716,185 is employed in this manner, and only $1,592,990 applied to the ostensible purposes of the act, to wit, a paper circulation.

We know among these associations there are honorable exceptions, not coming within the scope of these strictures, but organized and conducted by honorable men, in accordance with the professed intentions of the law, and for the benefit of commerce. But such is the general bad character of the new associations, and so fatal are the facilities afforded to rotten speculators by the legal provisions we have detailed, that the sound associations have hitherto not been able to command public confidence, or essentially to relieve the commercial community.

Some few of the associations have deposited securities with the Comptroller, and thus qualified themselves to issue notes to the extent of a small proportion of their capital. But by far the greater part have regarded this part of their privileges as not worth atten

tion, and have not, indeed, had the power, to furnish either State stocks, or bonds and mortgages, which the Comptroller could approve. The banks in the western part of the State have much greater inducements to avail themselves of the right to issue notes, than those in the city of New York. We subjoin, from the Comptroller's report of January 3d, an account of the bills proposed to be circulated by some of these banks.

The Bank of Western New York, at Rochester, with a capital of $500,000, has ordered $93,000 of bills.

The Lockport Bank, with the same capital, had ordered $200,000. The Bank of Gennessee, at Batavia, capital $100,000, ordered $20,000 of bills.

The Merchants' and Exchange Bank, at Buffalo, capital $200,000, ordered $50,000 bills.

These proportions are much larger than the proportions of the city banks, many of whom have deposited no securities at all, and others not more than one hundred thousand dollars, on capitals of from two to twenty-five millions.

It is even well understood and announced, that some of the most sound associations in the city of New York, like the North American Trust and Banking Company, never intend to issue any more bills than their own convenience or necessity requires, but will confine their operations to the other departments of banking, and especially to the establishment of such a credit in England as may enable them to borrow money on their stock or bonds in that market at low rates of interest, and for long periods, and reloan the same, at home, at higher rates, and for shorter periods.

It will have been seen that no portion of the bonds and mortgages, or other securities, received and held by these associations, passes under the inspection of the Comptroller, except that part which may be tendered to him to obtain bills for circulation. Hence the bondholder, or stockholder, of the association, is left entirely at the mercy of the board of directors, as the fund for which he looks depends for its value entirely on their discretion; the law providing that all securities transferred to the Comptroller shall be exclusively applied to the payment of the bank bills issued by the association.

Such is a rapid outline of the stupendous system devised by the Whigs, under the name of free banking, to aid broken-down speculators in real estate, and desperate gamblers in fancy stocks, in associating to defraud the community.

Let us now briefly consider the act in the aspect it is intended at first view to bear, namely a plan to furnish a safe paper substitute for money.

The first and most obvious benefit of the law in this respect is, that its privileges, whatever they may be, are equally open to the whole community. It will put an end to the granting of close

chartered banks, and the attending evils of favoritism, lobby corruption, and intrigue, in obtaining such charters, and of gross abuses in the distribution of their stock. This is certainly one important advantage. The two systems cannot live together; and bad as the General Banking Law may be in some of its provisions, it is much to be preferred to the odious monopolies and exclusive privileges connected with the close corporations. It is avowedly a concession, on the part of the Whigs, to the demands of public opinion. It is an admission of the corruption and incompetency of the old system, which they have been so many years defending and maintaining.

The Legislature cannot hereafter grant any new close charters, or renew those which may expire, without virtually repealing the General Banking Law. We are by no means certain that bank influence will not prevail over good faith and public policy in some particular instances. The charters of at least six close banks will expire between the present time and 1845. One of these has already applied for a renewal of its charter, but we believe the application has met with but little favor.* But it is not so much to the present deceptive law, as to the progress which it indicates in public opinion, that we look for an improvement in legislation on this subject. The existing institutions will cling with a desperate grasp to their expiring privileges. But their days are numbered, and correct public opinion will not recede into the old errors on this subject.

It is a matter of dispute among able financiers, whether a bank organized under the new law, or a close charter bank, will possess the greatest facilities for making money. So far as the profits of one institution under the general law may flow from its issues and circulation, and the use of that portion of its capital set apart for this purpose, it must obviously labor under comparative disadvantages. The securities lodged with the Comptroller will not yield beyond the average rate of interest, and cannot as readily be turned to profitable account as the capital of an ordinary bank; but in every other branch of banking operations, the power to increase the stock to any extent, and to modify the articles of association at pleasure, and the perfect independence of all legislative favor and control forever, afford no inconsiderable advantages. Moreover, the new banks start without any of that distrust and prejudice which the profligate conduct of many of the old banks has brought

As this article is passing through the press, we learn with surprise that the application of the Bank of Rochester for the renewal of its charter (alluded to in the text) has been successful in the Assembly. Thus has the Whig Legislature openly avowed their insincerity in passing the general banking law, and their intention, notwithstanding the pledges given by that act, to perpetuate the present monopoly system.

upon them. No doubt, the progress of public opinion will eventually proceed beyond the present temporizing measure, and throw open to individual competition this branch of trade; in which event no incorporated institution can long compete with unshackled private enterprize. We may therefore consider the extinction of bank charter monopolies as certain, and not very remote; a consummation, the approach of which is to be hailed with joy, whatever temporary evils we may pass through to attain it.

Another undeniable advantage of the General Banking Law is, the unquestionable security afforded to the bill holders. Without the grossest misconduct in the Comptroller, the bills issued by the banks must be as secure as the value of real estate or any of our public stocks. The pledge of the public credit of the State for their redemption, although expressly withheld by the terms of the law, if superadded, would scarcely enhance the security. Bonds and mortgages, and public stocks, are in the hands of the Comptroller to the full amount of the issues of bills, in addition to the notes discounted, or securities held by the bank itself and all its other property, including twelve and a half per cent. in specie, on the amount of issues which it is required to keep constantly on hand; and these together constitute a fund which cannot, in any ordinary case, but be ample for the ultimate redemption of all its circulation. The security of the bill holder is, therefore, complete; and this, so far as the community is concerned, is an immense improvement upon the old system.

The prompt redemption of the bills in specie is by no means so effectually secured. The association is liable to pay fourteen per cent. interest on all bills which are not redeemed on demand, but no security is afforded by the provisions of the act against a general suspension of specie payments.

On this head, the friends of the measure contend that the suspension of specie payments will be avoided

1st. By the public confidence in the perfect security of the bills, which will prevent panics or runs upon the banks for specie.

2d. That a stoppage of specie payments from the exportation of the precious metals, where the balance of trade is against us, will be guarded against, by the firm credit of these institutions abroad, which will at all times make their bonds or post notes available in a foreign market, either to pay a foreign debt or borrow money. There is much force in the former of these reasons. The importance of the latter remains to be shown, by the success or failure of the attempts now making to establish for the institutions a foreign credit. We are inclined to believe that the end may be attained, and that foreign capital in the way of long loans will be largely introduced into the country by the measures now in progress in behalf of the new banks. Indeed, it is understood that some of them