of functions were adopted, and strictly acted upon, by Iparation between its functions as a bank of issue, and the directors of the Bank of England, results identical its functions as a bank of discount and deposite, no with those described in the preceding paragraph would transactions, of whatever magnitude, between the necessarily ensue. The circulation, both of the metro-government and the Bank of England, could interfere polis, and of the provinces, would be maintained in the with the strict and uniform application of the only self saine state in which it would exist, were it exclu-sound principle upon which a paper circulation can be sively metallic. Occurrences similar to that of the regulated; namely, that of leaving it to contract or ex. great panic of 1826, or even to that of the mitigated pand, as the foreign exchanges become favourable or panic of the present year, would become impossible adverse :— events. And that should there exist, under the present ar With a view to the immediate reform of our rangements and circumstances of the Bank of England, monetary system, the practical question for considera- any practical obstacle to the establishment of a comtion is, are there any insuperable difficulties opposed plete separation between the business of issuing paper, to the adoption, by the Bank of England, of the di-and the business of holding deposites and making ad vision of employment, and of the complete separation vances, it will become necessary for the legislature to of functions above described? Some of the directors place the medium of exchange under the management of that establishment are masters, not only of the prac-of competent functionaries, appointed, not by the holdtical details of the money market, but of the scientific ers of bank stock, but by government; responsible, principles of money and exchange. The opinions of not to their co-proprietors, but to parliament; and these enlightened individuals, if known to be sanctioned having for their first object and primary duty the proby the approval of your lordship, and of the govern-tection, not of their own corporate property, but of the ment, would probably prevail in the deliberations of general interest of the nation. the bank parlour. But should the fact prove otherwise, should a majority of the directors of the Bank of England obstinately refuse to introduce a proper division of employment into their establishment, then the legislature will be called upon to determine the question, whether the medium of exchange should con. tinue to be entrusted to the management of twentyfour London merchants, qualified by being proprietors of bank stock, elected by their co-proprietors, and having for their first object and primary duty, the protection, not of the public interests, but of their corporate property? Experience would scarcely suggest an affirmative decision of this question. I shall briefly recapitulate, and conclude. The considerations which I have presented to your lordship, will, as I venture to believe, be found sufficient to establish the positions : That bank deposites, which may be drawn against at sight, perform the functions of money, and are com ponent parts of the general medium of exchange :That a given amount of circulating money becomes the basis of a much larger amount of bank deposites, or credit money : Trusting that the great practical importance of the subjects which I have now attempted to illustrate, will be received as my apology for thus addressing myself to your lordship, I have the honour to be, London, 1837. My lord, Your lordship's most obedient, R. TORRENS. From the New York Courier & Enquirer. We have received by the packet of the 16th Sept., various letters from London on the subject of the feel ing excited in that metropolis, by the deranged state of part of the mercantile community here to meet their our monetary system, and the consequent failure of engagements. We have already adverted to the communications had between the directors of the Bank of England and Captain Stockton, of our navy, on the subject, and now learn that our townsman, Mr. R. M. tions with the government of that institution-who are Blatchford, has also been invited to frequent consultaThat the recent disturbance in the money market directly the chief creditors of our merchants-and that was occasioned by the error committed by the directorsby explaining to them our laws, their operation, the of the Bank of England, in departing from the princourse of trade in this city, the dependence of one class on the other, the employer on the jobber, the jobber ciple of leaving the currency to contract or expand under the action of the foreign exchanges :on the country merchant, the country merchant on the farmer, planter, &c.-he fully satisfied them on the necial agent has been appointed by the bank to visit this cessity and advantage to them of forbearance. A spe. country, a Mr. Cowell, who was the bank agent at Gloucester. He will sail in the Independence on the 24th September, and is represented to us as very intel ligent and well fitted for the mission. That this error originated in the failure of the bank directors to distinguish between effects produced upon the general medium of exchange, by a diminution of their circulation, and by a diminution of their de. posites : That if the Bank of England were to regulate its issues of paper by the course of the foreign exchanges, the circulation would always remain in the same state, Bankruptcies in France.-At the inauguration of the both with respect to amount and to value, in which it new president of the Tribunal of Commerce, the day would exist were it wholly metallic; and that no over-before yesterday, the late president delivered an address, issue of paper by the provincial banks could have any permanent effect in rendering the currency of this country redundant in relation to the currencies of in which he stated that during the preceding judicial Russian Mines.-The amount of precious metals ob- $6,210,288 660,800 1,357,552 From the N. Y. Journal of Commerce. ber, is $3,280,357 less than it was on the 1st of January. BANK STATISTICS. From the returns of the bank commission- That their debt to the United States for deers for the 1st of January, 1st of June, 1st of posites is reduced from $7,176,031, to the July, 1st of August, 1st of September, and trifling sum of $431,290; having been dimi1st of October, we have prepared the annexed nished $155,357 in the month of September. table, showing the condition of 21 banks in That the amount of individual deposites in this city (out of 24) at the different dates their keeping, is greater by $1,494,025 than mentioned, and also the condition of 95 banks, it was on the 1st of September, and greater being all the banks in the state, except the by $874,322 than on the 1st of January. Manhattan, Dry Dock, and Delaware & Hudson. The Sackett's Harbour Bank, and the CITY AND STATE. Lockport Bank, being defunct, are not includ-counts of 95 banks, comprising all now in It further appears that the loans and dised in the statement at either date. Discounted bills and notes.. $72,134,123 864,391,299 $62,318,556 $60,911,714 $59,367,815 $58,391,999 4,057,112 3,828,937 38.434,213 37,724,632 36,988,076 35,308,245 33,723,575 4,047,101 1,711,409 1,709,652 1,782,164 1,965,832 Notes of other Banks.. 7,809,851† 3,328,713 3,682,965 4,921,479 3,888,852 4,789,048 Due to United States Treasurer 8,821,695 5,283,950 5.574,808 6,061,024 5,492,349 7,176,031) 3,907,731 3,152,330 Individual Deposites ..... 12,509,788 11,300,440 10,928,530 707,510 586,647 11,890,085 Profits...... 3,138,954 3,454,459 3,517,349 3,704,169 Individual Deposites.. Profits..... 6,807,106 †These are the figures for the Safety Fund Banks on the 1st of January. The amounts for the Banks included in this table, would have Due United States Treasurer... 7,833,039† 4,143,389 3,402,792 1,531,125 728,571 516,937 16,854,684 14,516,813 14,059,441 14,756,729 15,134,968 16,779,897 5,875,461 6,329,726 6,432,577 6,751,846 6,538,260 CITY BANKS. been something greater. It is seen from the above statement, that the loans and discounts of 21, out of 23 city banks in operation, have decreased since the 1st of January, $5,941,859; and since the 1st of September, $1,584,670. That their specie has increased during the past month, $183,678. operation in the state except the Manhattan, and Delaware & Hudson, have diminished since the 1st of January last, $3,581,663, and during the month of September, $756,633. That their specie has increased within the same month, $185,467. That their circulation has increased $1,398,847 during September, although it is less by 7,843,587 than it was on the 1st Jan'y. That their indebtedness to the United States is reduced from $7,833,039 to 516,937; showing a diminution of $211,634 within the month of September. That their (individual) deposites have increased $1,644,829 within the month, and are within $74,787 of what they were on the 1st of January. The Albany Argus is wrong in saying that the reduction of loans and discounts since the first of January is $13,742,124. The $72,134,123, which the Argus states as the amount of loans and discounts on the first of January, includes all other loans, as well as those on discounted notes; whereas the $58,391,999, with which it compares, includes only discounted notes. The other loans of the banks on the first of October were $5,160,461. There is therefore an error to this amount, in the Argus's statement. The real diminution of loans and discounts since the first of January, is $8,581,663. The comparison of these items with the corresponding particulars of some other banks as recently published, shows the following results: Bank of the United States, Circulation. Specie. $6,777,264 44 $3,016,230 55 96 banks of the state of N. York, 15,139,145 00 2,933,109 00 851,663 97 That their circulation, though it has increased $48,989 during the month of Septem-Two Virginia banks & branches, 5,008,692 31 DEVOTED CHIEFLY TO FINANCE AND CURRENCY, AND TO BANKING AND COMMERCIAL STATISTICS. "It is the interest of every country that the standard of its money, once settled, should be inviolably and immutably kept to perpetuity. For whenever that is altered, upon whatever pretence soever, the public will lose by it. "Men in their bargains contract, not for denominations or sounds, but for the intrinsic value."-Locke on Money. Vol. I. WEDNESDAY, NOVEMBER 8, 1837. From the National Gazette of April 29, 1837. PUTTING THE SADDLE ON THE No. 10. millions, the southern states ten millions, and the western country ten millions. He finds RIGHT HORSE, OR "I TAKE THE the merchants and people of the United States RESPONSIBILITY." in the pursuit of a regular business, the banks in safe and easy circumstances, with ability to discount all the good real paper that is of fered, and private capitalists with an abundance of money to lend in the market at six per cent., or on landed security at five per for the ordinary operations of business; when all at once, a cry is heard, "I have millions to lend, who wants to borrow?" The novelty of this sound to people who generally had to run after money instead of having money running after them, could not fail to set the spe culative faculty at work, to find out some mode of employing money by which more than six per centum could be made by it. It is soon ascertained, that almost every body is willing to borrow, and Rothschild makes his loans for an indefinite term; but with an understanding that possibly he may not call them in for several years. The "constitutional currency" papers, all over the United States, sensible of the misery which has been brought upon the country by the unwise measures of General Jackson, and anxious to save their party from the conse-cent. Nobody is in reality in want of money quences of the reaction of public opinion which must inevitably take place, when the presumption of their leaders in meddling with things they could not comprehend, shall be fully exposed, are incessantly occupied in the endeavour to make it appear that the storm which is raging throughout the land, is solely to be ascribed to speculation and overtrading. In this sentiment, it is to be regretted that many respectable and worthy citizens of the opposite party unite, who without taking the trouble to trace back the evil to its original source, are disposed to rest satisfied with mere secondary causes, and to flatter their self-love by contrasting their own extreme prudence, with what they term the wild imprudence of others. That there has been a great excess of speculation, an inordinate degree of overtrading, and a wide-spread system of credits, entirely beyond the limits of ordinary discretion, is not to be disputed. But the question occurs, and this is the whole pith of the matter at issue, could such a state of things have occurred, had General Jackson not tried his hand at various "humble efforts to restore the constitutional currency?" I answer that it was impossible that such a state of things could have occurred, and this I will now undertake to prove. Any man with half an eye can see the immediate effect of these loans. An army of speculators and dealers is at once raised up at all the different points where the loans are made, with cash in hand, looking out for objects to deal in, and bidding against each other. The notoriety of this fact, at once induces every body who possesses any real estate, stocks, merchandise or other property, which is sought after, to raise their prices. Sales are made, the money changes hands, but in the possession of its new owners it is probably still a capital seeking a fresh investment. New banks and rail-roads are projected, and public lands applied for. The prices of every And first, I will suppose, for the sake of species of property and commodity augment, illustration, the following case. The banker and as prices rise, a universal spirit of overRothschild arrives in this country, and gives trading seizes upon the community, and purout on his arrival that he has come to settle chases on credit follow to a very great extent. here, and that it is his intention to draw bills It is by no means unreasonable to suppose upon Europe for forty millions of dollars, for that a loan of forty millions of dollars, made the purpose of lending out the proceeds in this manner, might in the course of two amongst the good people of the United States. years, create debts in the shape of bonds, He proposes to let Philadelphia have five mil- mortgages, promissory notes, bills of exlions, New York ten millions, Boston five change, &c., to the extent of four hundred millions of dollars, beyond the usual ordinary But it may be further asked, could not the debts of the community. At length, Mr. 320 old banks, which had been the growth of Rothschild, all at once, and quite unexpected- forty-eight years, and which General Jackson ly to his debtors, calls for his money in four found in operation when he came into office, quarterly instalments, for the purpose oflending in conjunction with the 357 new ones which it out again, not merely at some fifty or sixty were brought into existence by his seven years' points, but all over the United States, at as "humble efforts to restore the constitutional many points as there are counties or town- currency," have afforded similar facilities for ships. What think you, reader, would be the overtrading and speculation? The answer to effect of this movement? Nothing short of this question is, first, that of these 357 new general ruin. The demand for money to banks, 186 were the offspring of his first meet the engagements for the forty millions" humble effort," namely, his declaration of of dollars due Rothschild, would operate upon war against the bank of the United States; the whole four hundred millions, and upon all and secondly, that the remaining 171 were other existing contracts besides. Prices would fall. Bankruptcies and sacrifices of property would take place all over the country. In short, we should see precisely the state of things which we have now before our eyes, resulting from the lending and collecting of forty millions of the public money. directly engendered by his second "humble effort," to wit, the removal of the deposites, a part of them being designed to scramble for a share of the public money, and a part of them being built upon the loans of the surplus revenue. As far, therefore, as the new banks are concerned, no facilities could have been afforded by them, and for the simple reason, that they would not have been in existence; and as for the old banks, we have the evidence of near half a century, with the single exception of a period of war, to show, that with all the temptation to expand their issues to an undue extent, to which banks are at all times liable, they did not do it up to the period of the removal of the deposites. For this, however, they deserve no credit. They were not able to do it, and for the fol lowing very plain reason: But it may be asked, how could General Jackson have prevented this state of things? If forty millions of dollars of public revenue had accumulated in the treasury, was it not better that it should have been loaned out, than that it should have been locked up? The answer to these questions is a very simple one, and it is this-Had the deposites not been removed, there could have been no surplus revenue. It was the act of sending part of those deposites to the western states, which furnished the means for the first speculations in public lands. The public money was lent to per- Where the currency of a country is left un sons to buy lands with, and the same identical disturbed by the action of the government, it money being returned to the deposite banks is not possible in times of peace for banks to by the receivers of the land offices, was loaned augment their issues for any great length of out over and over again, until the amount time, so as to effect a depreciation of any arising from the sales was upwards of forty great extent. A depreciation cannot fail to four millions of dollars in three years, being be detected by the rate of exchange, which, seven millions of dollars more than the amount as soon as it rises above par to an amount distributed amongst the states, as may be seen particularly detailed in an article furnished by the present writer on the 22d of March last.* equal to the expense of transporting coin to foreign countries, occasions the return upon the banks of their notes for payment, and this obliges them to contract their issues. The foreign exchange is the index of a currency, and will as certainly point out its excess or deficiency, when not interrupted by disturbing causes, as a thermometer does the preponderance of heat or cold. It is owing to the well-known truth of this axiom in political economy, that in ordinary times the opera tions of the banks in the United States have been carried on without any disastrous fluctu. ations, and they would have continued in the same career had not THE AMERICAN NECKAR deranged the whole machinery of commerce by forcing the wheels to work the wrong way. If I have not, in the foregoing articles, fully proved the measures of General Jackson to |