CONTENTS OF NO. I., VOL. XXXIV. ARTICLES. ART. L A SYSTEM OF NATIONAL CURRENCY.... РАСИ. 19 IL COMMERCE OF THE UNITED STATES.-No. xxI. Passage of the Stamp Act-Its III. MERCANTILE BIOGRAPHY: ALEXANDER HENRY.................... IV. ABBOTT LAWRENCE: THE MAN, THE MERCHANT, THE STATESMAN V. THE TRUE MERCANTILE CHARACTER, By J. H. ALLEN, Esq........... VI. THE LAW MERCHANT.-No. 111. The Application of Voluntary Payments-(Con- cluded.) By ABBOTT BROTHERS, Counselors at Law, of New York. Libel for Materials alleged to have been used in the construction of a Ship.. Contract-Waiver of Condition.-A New Doctrine of Prize Law in England... Lien of Builder upon a Ship-Maritime Law-English Law-Contract-Attachment... Of Banks in State of New York receiving the Bills of other States......... EMBRACING A FINANCIAL AND COMMERCIAL REVIEW OF THE UNITED STATES, ETC., ILLUSTRA- Excitement in the Money Market-Causes of Commercial Disquiet-Difficulties with England- Indications of General Prosperity - The Crops North and South-The Stock Market, and Movements in Foreign Exchange - Bank Difficulties, and the Bank Movement in New York and Boston-Deposits at the New York Assay Office-Imports at New York for November, and since January 1st-Cash Duties received at New York-Imports of Foreign Dry Goods -Exports from New York to Foreign Ports for November, and from January 1st-Compara- tive Exports of Leading Articles of Domestic Produce-Probable Demand for Bread- stuffs in Europe, etc................... New York Cotton Market. By ULHORN & FREDERICKSON, Brokers, New York ...... 76-83 Art. I-A SYSTEM OF NATIONAL CURRENCY. THE following sheets were written in 1841, when the subject of a National Bank was before Congress, under the first year of Tyler's administration, to embody the writer's speculations on the absorbing topic of that day. They were submitted to Mr. Clay during the session in which the bank bill passed. In a letter acknowledging their receipt, he expresses his approbation of the plan in the following words :-"I have received your plan of a bank of the United States, embracing a system of banking for all the States. I have perused it with much pleasure, and with much more satisfaction than I have derived from the examination of any other plans, of which I have received a great number." After discussing its details, and showing the points of coincidence with his own plan submitted to the Senate, he adds:-"I cannot give you a better proof of my estimate of the good sense which characterizes your communication, than by having written so much about it. After all, it is very doubtful whether our labors will be of any avail-whether the state of public opinion is such as to admit, for some time to come, the establishment of any effectual regulation of the paper currency. I advise you to preserve your plan, and at the proper period submit it to the consideration of the public. It will receive my approbation and support." There is, perhaps, less prospect now than in 1841, of the adoption of a national bank by the country, but the plan, by a slight variation, can be adapted to a system of State banking. Free banking under State laws being at present the popular plan, the chief difficulty appears to be to devise some basis for the security of the circulation. A State bank of issue, that should have the exclusive right to issue bills for circulation, and which should be restricted in its dealings to bankers and banks under the general law, would avoid all the objections to the new system, and secure to the State a large revenue from the surplus profits, which such a bank would make in furnishing the whole circulation for the State. I submit the plan, as originally written twelve years ago. After this plan was submitted to Mr. Clay, several of its features were adopted in the revised charter of the Bank of England, whose bills have been substituted for those of private bankers, which formerly filled nearly all the channels of circulation throughout the kingdom. The General Government has tacitly conceded to the States the right to create banks of issue, and thereby lost one of its chief attributes of a general sovereignity. In permitting this, it has resigned one of the principal powers of creating and controlling the currency of the country. The resumption of this attribute of its sovereignity is essential to the future stability and uniformity of the circulating medium. Whether this power can be retrieved by Congress is a question which public opinion must decide. The season may not be a proper one to try it, but it is all important that it should be effected, and I believe it can be accomplished in the following manner : Let Congress create a bank of the United States, with branches at every large commercial point of trade, giving to it the exclusive right to issue notes for circulation, and confine its business to the collection and custody of the public funds, and to dealing with the State and local banks. Restrict it from all business with individuals, or companies, other than chartered banks or banks organized under some State law, either in the way of deposits or discounts. It should be the duty and right of this general institution to furnish the whole paper currency of the country. Its notes should be issued in payment of public expenditures, received in payment of public dues, and loaned to the State and local banks at a rate of interest not exceeding 3 per cent per annum, upon such securities as the directors of the National Bank, or its branches, should approve, and under such general rules for their redemption and final return to the principal bank as they might mutually agree upon. These notes the local banks would use instead of, and in the same manner as they now do, their own, or as the free banks of New York do those which they procure from the State controller. The notes should be made redeemable either at the local bank from which they were circulated, or at the branch of the United States Bank from which they were first issued to the local bank. And the principal national or mother bank should be responsible for the final redemption of all the notes issued, in case of the failure of the local bank borrowing them, and the United States Branch issuing them, to redeem them promptly in specie. The notes issued by the National Bank itself, in payment of government dues, would be received by the government in its revenues, and would be redeemable at all its branches, and form a national currency of as universal and uniform value as gold or silver. The State or local banks borrowing the notes of the National Bank, or its branches, would hypothecate for them public stocks, bonds, and mortgages, as is done with the New York controller, or such other undoubted and available security as the National Bank should approve, she being ultimately liable for their redemption, might be trusted to judge of the value and availability of the pledge. A bank thus organized might be created with a large or small capital. All the capital it would absolutely need would be sufficient to give the public confidence in its ability to redeem finally its notes, in case of the failure of the security pledged to it by the local banks for the loan of its bills. A small capital would oblige it to keep itself and all other banks under watchful and rigid restraint; a large capital might be of great public service to enable it to grant indulgencies, and to aid local banks in times of severe pressure, and seasons of general commercial embarrassment. But the necessity which a small capital would impose upon the directors to manage its affairs with great caution and prudence, compelling them to insist on a strict and rigid performance of their contracts by the local banks, making them furnish promptly, or in advance, funds to redeem the notes loaned to each one of them, as those notes were presented to the National Bank and its branches for redemption, would correct the greatest evil of a paper currency-its tendency to become redundant-and confer benefits upon the public by giving uniformity and stability to our circulating medium, which would outweigh all the contingent advantages of a large capital. The principal excellence of a paper medium is to have the amount supplied exactly adapted to the sum required by the necessary exchanges of the community; that its tendency, in the operations of trade, to return to the source of its issue, should be free and unchecked, nor countervailed as has been heretofore the case under our old system, by strong efforts to press it back upon the community, thus disturbing its natural current, and causing, in a great degree, the frequent inflations and derangements of the currency. Under the system proposed, the bank redeeming it would have little interest to return it into circulation. As the principal portion of the profits of a National Bank thus constituted would be derived from its exclusive privilege of furnishing the paper circulating medium of a country-a right it would acquire from the public without an equivalent-it would be proper that a good portion of them should come into the public coffers, either in the form of an annual bonus, or the payment into the treasury of a portion of its profits above a certain per centum, or by making the government a large stockholder to the amount of one-half to two-thirds of its whole stock, and thus securing the profit derived from the people, in the shape of dividends to the government. But private interest should be permitted to exercise the principal control in its management. Government fiscalities, managed by public officers, are dangerous and unprofitable institutions. Government should have no other than a general supervisory control over it, and that should be confided principally to the legislative department. Between such a national institution and the local banks, a connection something like the following would be formed:-The local bank wanting bills for circulation, would apply to the United States Bank for a loan of its notes to an amount which the State bank could use to advantage, which the National Bank would furnish on a pledge by the former of public stock, bonds, and mortgages, or, if it deemed proper, on a discount of bills of exchange or negotiable notes, or such other securities as the National Bank should deem perfectly secure and readily available, charging therefor, say 2 per cent per annum, with stipulations similar, perhaps, to those existing between the Suffolk Bank in Boston and the other banks of New England for the redemption of their notes. This arrangement, so simple in its plan, has given a uniformity and stability to the circulating medium of that section of the country unknown elsewhere, and made ex |