The last named allows 6 per cent. interest, some of on this side of the water, if we may judge from the disthe others 1 and 2, whilst others allow none, stipulat-cussions in the National Gazette. The English writers ing to pay on demand in current bank notes, when the amount presented is equal to five dollars. There are probably other domestic manufacturers of paper money which do not appear in this list. At all events, there are some foreign ones which have contrived to force their issues upon the citizens of Philadelphia. Among them are the following: have confounded bank eredits with the deposites, which the credits really represent, or are supposed to represent. Colonel Torrens comes nearer to the truth than any of them. He sets out with asserting that "deposites are a part of the medium of exchange." Had he said bank credits, he would have been right. He seems to have meant bank credits, but becoming confused between the primitive and metaphorical meanings of the word "deposites," he afterwards says, in The Burgess, Town Council, and Citizens of North- his very first note, "that a withdrawal of deposites in ampton. Corporation of the borough of Reading. City of Wilmington. Mayor and Common Council of the city of Newark. It is probable that the total amount of small notes now in circulation in Philadelphia, under the supposition that many have been absorbed by the payment of taxes, equals at least a million of dollars, all of which, on the resumption of specie payments, must be iminediately replaced with coin.. In noticing the existence of this monstrous evil, it is incumbent on us to record the fact, that every body deprecates it, as is proved from the opprobrious epithet which is applied to this vile currency not only by the popular will, but by grave legislators. In a bill lately before the senate of New York to authorise the emission of small notes, it was moved by a member, that in place of the words "small notes," should be inserted "shin plasters," the disgusting title by which this offspring of ignorance and of a disregard for the public convenience is almost universally branded. We have been waiting with much anxiety for the publication of the secretary of the treasury's annual report on the condition of the banks. By the proceed. ings in congress it appears that this report was handed in early in January, and, as far as we know, it has not yet been laid on the tables of the members. Another report, showing the condition of the late Bank of the United States at different periods during the existence of its charter, was also laid before congress and ordered to be printed. Statistical documents like these are very interesting at this period, and should be laid before the public without loss of time. SMALL NOTES IN NEW JERSEY.-The legislature has lately passed an act authorising the banks to issue notes of a less denomination than five dollars. For the Financial Register. gold, for exportation, would not cause a contraction of the currency," or medium of exchange, which is a manifest contradiction. Ricardo and Bennison follow in the same track. To me, it appears that a slight inspection of the table which Bennison gives, will explain the mystery. Whenever we find an increase in the amount of secu rities, we almost invariably find a corresponding de crease in the amount of bullion. Sometimes the ba lance is effected partly by an increase in the amount of deposites. The bank, we may suppose, paid for the securities in checks on herself. These checks were immediately presented, and either exchanged for gold, to be exported, or else they were added to the depo sites. ties rose, with occasional fluctuations, from 23 to 31 It appears from the table that the amount of securi millions. Here was an increase in the securities held by the bank, more than equal in amount to the gold abstracted. On the supposition that the bank bought American securities, or that those who received the checks, paid them away for such securities, it is easy Yet, during all this time, no material addition was to account for the drain of gold to the United States. made to the circulation (bank notes), which the finan ciers seem to have thought was the whole of the cur rency supplied by the bank. January 25, 1838. S. C. BANK OF ENGLAND.-Mr. King, of Georgia, in his speech delivered in the senate, during the extra session of congress, last summer, says that the drain of gold from the Bank of England had completely "puzzled her ablest financiers." This is true. And the English financiers seem to have puzzled some of the financiers street. Weeks, Jordan & Co., Boston; Adam Waldie, Carpenter Street, Philadelphia; periodicals and Newspapers, and for the Collection of Nond PUBLISHED BY WIRTZ & TATEM, General Agents for due in Philadelphia to non-residents, No. 97 South Second 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, FEBRURY 28, 1838. No. 18. which were not common to other countries. He says "It has since appeared that evils, similar to those suffered by ourselves, have been experienced in Great Britain, on the continent, and indeed throughout the commercial world, and that in other countries, as well as in our own, they have been uniformly preceded by an undue enlargement of the boundaries of trade, prompted, as with us, by unprecedented expansions of the system of credit." From the National Gazette of Sept. 14, 1837. THE PRESIDENT'S MESSAGE. Messrs. Editors-The relation in which the actual President of the United States stands to his "illustrious predecessor," and the influence which he is understood to have exercised in the financial measures of the late administration, rendered it quite certain that the former, in detailing the causes of the re- The meaning of this language unquestioncent pecuniary distress of the country in his ably is, that the evils under which Great Brimessage to congress, would cautiously omit to tain and other countries have laboured were ascribe any portion of it to the action of the ex- simply cotemporaneous with, and not resultecutive. Accordingly,we find in that document ing from, our "over-action;" and, conscthat the whole of the embarrassments of the quently, if it can be shown that the assump treasury, the banks and the people, are declar- tion is altogether gratuitous and not sustained ed, in substance, to be the result of a widespread by the well attested facts of the case, the system of over-trading, over-banking, and over-foundation of the message will be underspeculating, whilst not a syllable is permitted mined and all its superstructure overthrown. to escape in relation to the causes which en- That embarrassments have been experigendered that system. It is true that the mes-rienced "in Great Britain, on the continent, sage admits that "a concurrence of circum-and indeed throughout the commercial world," stances," such as the loss occasioned by the is too notorious to admit of dispute. The great fire in New York, "the transfer of the writer of this article is in daily intercourse public moneys required by the deposite law of with merchants and has access to the most June, 1836, and the measures adopted by the intelligent sources of commercial informaforeign creditors of our merchants to reduce tion, and he is able to assert upon the authotheir debts and to withdraw from the United rity of those who have relations with all parts States a large portion of our specie," had of the world, that nearly if not quite the whole aggravated the evils, but still the public is of the commercial disasters which have been left in total ignorance of those "antecedent experienced abroad are confined to those who causes" to which allusion is made, as having have had transactions with the United States, "perhaps" given the first impulses to "the or who have been directly or indirectly conover-action," which was stimulated to such fatal consequences by the issues of the banks. In giving this imperfect view of the state of the case, it very naturally occurred to the writer of the message, that intelligent men, who believe that what the president styles causes were themselves but the effects of prior causes, would as naturally probe the matter a little deeper, in order to see what particular circunstances should all at once have created a spirit of over-action, exceeding in intensity side of the water, or to the non-payment of the any thing that we had ever before witnessed, and he accordingly forestalls this investigation by asserting that there were no peculiar circumstances operating in the United States nected with such. In London and Liverpool not a failure of magnitude has been announced, with the exception of the bankers and commission merchants who were involved by credits granted to American houses. The same is true of France, Germany, and Switzerland. The merchants and manufacturers in all those countries, who have been greatly embarrassed, owe their distress to the bankruptcies that have taken place on this bills on Europe which have been remitted to them from this country, or to the failure of their solvent debtors here to remit, owing to their inability to collect from the merchants of the interior, or to procure bills without too [time, or perhaps for ever, a mass of debt great a sacrifice. That the reader who is which they were not prepared to meet. In not conversant with commercial operations addition to these defalcations, those who had may understand the mode by which the com- been flying kites were cut off by the stand mercial world has been deranged by its trans- made against American paper by the Bank of actions with America, I will enter into some England, from any further continuation of details. their loans, which in some instances left the last acceptors of their bills without funds to meet them. A large part of the manufactures of Great Britain imported into the United States have for some years past been pur- Whilst these operations have been going chased of the manufacturers by agents of the on in the way of a direct intercourse between American importers residing in England, the United States and Great Britain, another who have paid for them by bills at four vast amount of transactions has been carried months, drawn by them on London and Liver on through indirect channels, all, however, pool bankers and merchants with whom the founded upon the open credits of the English American houses had opened credits. On houses. Thus A. obtains an open credit for the arrival of the invoices in this country, twenty thousand pounds sterling upon the payments have been made here, to the agents house of W. & Co., of London, by which his of the English houses, which had accepted agent at Rio de Janeiro, or Havana, is authose bills; or bills drawn upon shipments of thorised to draw a bill, the proceeds of which cotton or other produce, have been remitted are to be invested in a cargo of coffee or to their principals in England, intended to sugar to go to Europe, subject to the order of meet the payment of the four months' drafts. W. & Co., for reimbursement. Such a transThus far the trade has been legitimate and action being legitimate, is rarely attended profitable to all parties: to the British manu- with risk to the party on whom the bill is facturer, because on the delivery of his goods drawn. But in many cases, the cargoes purhe has been paid in a negotiable bill, con- chased in this manner, instead of going to vertible at all times into money, instead of Europe, have been brought to the United waiting, as formerly, for a remittance from his States, with the understanding, that on their American customer at the end of six months arrival, a sum equal to the amount of the bills to the American importer, because he has drawn for their purchase, should be remitted received the benefit of prompt payment in a to England in time to meet those bills. Undiminished price for his goods; and to the fortunately it has sometimes happened that British banker, because he has received a on the arrival of these cargoes in the United commission for accepting bills without the States, their nominal owners had failed and advance of any capital. Unfortunately, how-could not make good their remittances to ever, the facility of obtaining open credits in England; or, the value of the cargoes has England became so great, that they were re-been remitted to England in bills on London, sorted to as a means of raising money; and which bills have been protested for nonhence arose the practice, limited however in extent, called "flying kites," by which an American house with a credit upon several different English houses, could pay one set of bills drawn upon A. by another set drawn upon B., and so on for an indefinite term. The suspension of remittances from the western and southwestern country to the Similar to these, another class of operations merchants of Philadelphia and New York. has been carried on in China and Calcutta. prevented that punctuality in payments to Bills have been drawn by merchants residing the agents of the British houses residing there on London, on credits obtained by Ame here, or in remittances to their principals in rican merchants, for the purchase of cargoes England, upon which they relied, aud conse-destined for the United States and other coun quently the latter were obliged to provide for tries, which have not been saleable on their the payment of the four month drafts, for arrival, owing to the general embarrassment. which they were under acceptance to the Similar defalcations to make the accounts manufacturers, out of their own resources. A considerable number indeed of the American importing houses suspended payment, and by that means accumulated upon the shoulders of their English correspondents for a long payment, thus imposing upon the house upon whom the credit was obtained, the necessity of raising twenty thousand pounds, or, what has in some cases happened, they have been unable to meet the bills and have suffered them to go back to Rio Janeiro and the Havana. good in England, have had similar results, and by the final failure of three of the London bankers and several merchants in London and Liverpool, a large amount of bills have gone back to Canton, Calcutta, Rio de Janeiro, and Havana, which has caused the failure or em- That this decline in price was occasioned barrassment of the houses who drew or en- by the derangement in the currency of Engdorsed the bills on London, or who purchased land, will scarcely be denied by any one; and them to remit. The aggregate amount of if the reader is desirous of understanding the American credits outstanding in England at causes of that derangement, he will find them one period within the last twelve months, has detailed at full length, in an article headed been variously estimated at from thirty to "The Constitutional Currency, No. 2," which sixty millions of dollars, and whilst the Eng- originally appeared in the National Gazette lish bankers and merchants have been brought of April 8th, 1837. It was the result of the to a stoppage by defalcation on the part of efforts to force gold into the United States one portion of our merchants, another portion from Europe.* of our merchants has been embarrassed or ruined by the return of bills drawn upon the former. Having thus briefly shown the mode by which the commercial operations of the United States have produced embarrassments It is well known that the great fund with in all parts of the trading world, it now rewhich our importations from Europe are paid, mains to examine another proposition asis the crop of cotton. The fall in the price serted in the Message. The president, after of this article, which has taken place in Eng-stating the simple fact that "over-action" had land within the last year, will explain, in part, not been confined to our country, undertakes the reason why a foreign debt, larger than to explain the simultaneousness of the moveusual, has accumulated against us, and will ment by showing a similarity in the exciting also explain why many of the bills drawn upon causes. over-valued cotton shipments were returned protested. From a table before me it appears that the prices at two different periods, reduced into currency at two cents for the penny sterling, were as follows: : June 7, 1836. June 7, 1837. 18 32 8 24 16 23 9 15 16 24 9 16 14 201 8 He says "A reference to the amount of banking capital and the extent of paper credits put in circulation in Great Britain by banks and in other ways, during the years 1834, 1835, and 1836, will show an augmentation of the paper currency there, as much disproportioned to the real wants of trade, as in the United States." In this declaration the Message is, I ap40 to 72 cts. 30 to 60 cts. prehend, in great error. It has fallen to the lot of the present writer to sec several statements of the banking concerns of Great Britain, which have been recently published, all of which establish the fact that during the years 1834, 1835, and 1836, the extent of paper credits there put in circulation by the banks, compared with those in the United States, was as a molehill to a mountain. 12 9 17 At one period since the first of January last, the prices of cottons have even been lower than here stated, but estimating the decline at only five cents a pound upon an average upon one million of bales of four hundred pounds weight each, the amount would be $20,000,000.* Mr. J. Horsley Palmer, one of the directors of the Bank of England, in his late pamphlet, entitled "The Causes and Consequences of the Pressure upon the Money Market, with a Statement of the Action of the Bank of Eng. land from 1st October, 1833, to the 27th De * The calculation by which I have arrived at this cember, 1836," tells us that the issues of the estimate is as follows: The exports of cotton from the United States between October 1, 1833, and October 1, 1834, was, bales, October 1, 1834, and October 1, 1835, The quantity exported between October 1, And the quantity exported between January 1, 1837, and September 7, inst. has been Bank of England and its branches, at the 1,021,765 1836, and 243,766 883,080 Making an aggregate of bales, 1,126,846 exclusive of the quantity which will go forward between September 7 and October 1. Now, as the fall in the price of cotton in England began in the middle of February, and sooner in France, before any portion of the cotton which left the United 46 Making a stock of bales, 45,551 250,141 of which, if we suppose that 116,920 bales were American which remained unsold until the 15th of February, there will appear to have been one million of bales of our last crop which felt the reduction of price. This, it will be observed, is a reduction in addition to that which has taken place on the stock of cotton consumed in the United States, amounting probably to 250,000 bales. * See this Register, page 82. "It next remains to be shown what was the amount of paper money in circulation in England, and Wales, and Ireland, other than that issued by the Banks of England and Ireland. The average in England and Wales on the 29th of March, 1834, was £10,200,000, and in June, 1836, £12,200,000. In Ireland, the average iu June, 1834, was £1,300,000, and in June, 1836, £2,300,000. In both cases the greatest extension took place within the last year. It thus appears that there was a total increase in this portion of the paper money of the two kingdoms, in 1836, over 1834, of no less than three millions, or more than twenty-five per cent." From the statement of this writer, it would thus appear, that after deducting the contraction made by the Bank of England between the 1st of April, 1834, and the 27th of December, 1836,-equal to £1,700,000-the aggregate amount of expansion by all the banks in Great Britain was but £1,300,000-not quite $6,500,000; whereas in the United States, according to the documents of the secretary of the treasury, the increased circulation of bank notes, for the year 1834 and 1835 alone, was $46,000,000. 1836-June 25, £10,152,004 10,518,682 10,659,828 10,939,801 11,134,414 12,202,197 12,011,697 But why multiply authorities, when one is at hand, which no friend of the president's fame can dispute? In the secretary of the treasury's report on the condition of certain banks, made to congress on the 4th of January last, will be found at page 204, a document in these words: "The following statement gives the aggregate amount of notes circulated in England and Wales, by the Bank of England, by private banks, and by joint stock banks and their branches, at the dates annexed:Quarters ending 1833-December 28. 1834-March 29, June 28, £27,621,104 28,735,827 29,207,682 September 27, 28,591,112 December 28, 27,729,828 1835-March 28, 28,572,160 28,576,801 27,740,623 27,698,414 29,116,919 29,386,196 "Mem. The later advices show a still larger increase But it may be said that Mr. Palmer has of circulation in paper, and diminution in specie on made an error in his statement. Let us, there-hand; but are not in a form so accurate and authentic as to be used safely for details." fore, see what Colonel Torrens, an opponent of the bank, has to say on the subject, in his late pamphlet, entitled "A Letter to the Right Hon. Lord Viscount Melbourne, on the causes of the recent derangement of the Money Market, and on Bank Reform." Upon what authority this memorandum of the secretary is founded, I am unable to say, but it does not appear to have the sanction of Mr. Palmer, as above quoted, nor that of the Edinburgh Review. The former gives the circuWe learn from him that on the 29th De-lation of the Bank of England on 28th June, cember, 1833, the circulation of the Bank of 1836, at England was |