paper, and by other facilities for the acquisition and enlargement of credit. At the commencement of the year 1834, the banking capital of the United States, including that of the national bank then existing, amounted to about two hundred millions of dollars; the bank notes then in circulation to about ninety-five millions; and the loans and discounts of the banks to three hundred and twenty-four millions. Between that time and the 1st of January, 1836, being the latest period to which accurate accounts have been received, our banking capital was increased to more than two hundred and fifty-one millions; our paper circulation, to more than one hundred and forty millions, and the loans and discounts to more than four hundred and fifty-seven millions. To this vast increase are to be added the many millions of credit, acquired by means of foreign loans, contracted by the states and state institutions, and, above all, by the lavish accommodations extended by foreign dealers to our merchants.

subject. 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 expan. sions of the system of credit. A reference to the amount of banking capital, and the issues 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. With this redundancy of the paper currency, there arose in that country also a spirit of adventurous speculation, embracing the whole range of human enterprise. Aid was profusely given to projected improvements; large investments were made in foreign stocks and loans; credits for goods were granted with unbounded liberality to mer. chants in foreign countries; and all the means of acquiring and employing credit were put in active operation, and extended in their effects to every department of business, and to every quarter of the globe. The reaction was proportioned in its violence to the extraordinary character of the events which preceded it. The commercial community of Great Britain were subjected to the greatest difficulties, and their debtors accustomed and expected credits, but called upon for payments, which, in the actual posture of things here, could only be made through a general pressure, and at the most ruinous sacrifices.

The consequences of this redundancy of credit, and of the spirit of reckless speculation engendered by it, were a foreign debt contracted by our citizens, esti mated in March last at more than thirty millions of dollars; the extension to traders in the interior of our country of credits for supplies, greatly beyond the wants of the people; the investment of thirty-nine and a half millions of dollars in unproductive public lands in the years 1835 and 1836, whilst in the preceding year the sales amounted to only four and a half mil-in this country were not only suddenly deprived of lions; the creation of debts, to an almost countless amount, for real estate in existing or anticipated cities and villages, equally unproductive, and at prices now seen to have been greatly disproportionate to their real value; the expenditure of immense sums in improve- In view of these facts, it would seem impossible for ments which, in many cases, have been found to be sincere enquirers after truth to resist the conviction, ruinously improvident; the diversion to other pursuits that the causes of the revulsion in both countries have of much of the labour that should have been applied to been substantially the same. Two nations, the most agriculture, thereby contributing to the expenditure commercial in the world, enjoying but recently the of large sums in the importation of grain from Europe highest degree of apparent prosperity, and maintaining -an expenditure which, amounting in 1834 to about with each other the closest relations, are, suddenly, in two hundred and fifty thousand dollars, was, in the a time of profound peace, and without any great nafirst two quarters of the present year, increased to more tional disaster, arrested in their career, and plunged than two millions of dollars; and, finally, without into a state of embarrassment and distress. In both enumerating other injurious results, the rapid growth countries we have witnessed the same redundancy of among all classes, and especially in our great commer-paper money and other facilities of credit; the same cial towns, of luxurious habits, founded too often on spirit of speculation; the same partial successes; the merely fancied wealth, and detrimental alike to the same difficulties and reverses; and, at length, nearly industry, the resources, and the morals of our people. the same overwhelming catastrophe. The most mate. It was so impossible that such a state of things rial difference between the results in the two countries could long continue, that the prospect of revulsion was has only been, that with us there has also occurred an present to the minds of considerate men before it actu- extensive derangement in the fiscal affairs of the fedeally came. None, however, had correctly anticipatedral and state governments, occasioned by the suspenits severity. A concurrence of circumstances inade- sion of specie payments by the banks. quate of themselves to produce such wide-spread and The history of these causes and effects, in Great calamitous embarrassments, tended so greatly to aggra- Britain and the United States, is substantially the hisvate them, that they cannot be overlooked in consider-tory of the revulsion in all other commercial countries. ing their history. Among these may be mentioned, as most prominent, the great loss of capital sustained by our commercial emporium in the fire of December, 1835,-a loss, the effects of which were underrated at the time, because postponed for a season by the great facilities of credit then existing; the disturbing effects, in our commercial cities, of the transfers of the public moneys required by the deposite law of June, 1836; and the measures adopted by the foreign creditors of our merchants to reduce their debts, and to withdraw from the United States a large portion of our specie.

However unwilling any of our citizens may hereto fore have been to assign to these causes the chief instrumentality in producing the present state of things, the developments subsequently made, and the actual condition of other commercial countries, must, as it seems to me, dispel all remaining doubts upon the

The present and visible effects of these circumstances on the operations of the government, and on the industry of the people, point out the objects which call for your immediate attention.

They are to regulate by law the safe keeping, transfer, and disbursement, of the public moneys; to designate the funds to be received and paid by the government; to enable the treasury to meet promptly every demand upon it; to prescribe the terms of indul gence, and the mode of settlement to be adopted, as well in collecting from individuals the revenue that has accrued, as in withdrawing it from former deposi. tories, and to devise and adopt such further measures, within the constitutional competency of congress, as will be best calculated to revive the enterprise and to promote the prosperity of the country.

For the deposite, transfer, and disbursement of the

But when it became necessary, under the act of June, 1836, to withdraw from them the public money, for the purpose of placing it in additional institutions, or of transferring it to the states, they found it, in many cases, inconvenient to comply with the demands of the treasury, and numerous and pressing applications were made for indulgence or relief. As the instalments under the deposite law became payable, their own em. barrassments, and the necessity under which they lay of curtailing their discounts and calling in their debts, increased the general distress, and contributed, with other causes, to hasten the revulsion in which, at length they, in common with the other banks, were fatally involved.

combining great intelligence, activity, and influence, and the system promised to be permanently useful. are no doubt sincere in their belief that the operations of trade ought to be assisted by such a connection; they regard a national bank as necessary for this purpose, and they are disinclined to every measure that does not tend, sooner or later, to the establishment of such an institution. On the other hand, a majority of the people are believed to be irreconcilably opposed to that measure: they consider such a concentration of power dangerous to their liberties; and many of them regard it as a violation of the constitution. This collision of opinion has, doubtless, caused much of the embarrassment to which the commercial transactions of the country have lately been exposed. Banking has become a political topic of the highest interest, and trade has suffered in the conflict of parties. A speedy termination of this state of things, however desirable, is scarcely to be expected. We have seen for nearly half a century, that those who advocate a national bank, by whatever motive they may be influenced, constitute a portion of our community too numerous to allow us to hope for an early abandonment of their favourite plan. On the other hand, they must indeed form an erroneous estimate of the intelligence and temper of the American people, who suppose that they have continued, on slight or insufficient grounds, their persevering opposition to such an institution; or that they can be induced by pecuniary pressure or by any other combination of circumstances, to surrender principles they have so long and so inflexibly maintain-country by resorting to adequate taxation for the ed.

My own views of the subject are unchanged. They have been repeatedly and unreservedly announced to my fellow citizens; who, with full knowledge of them, conferred upon me the two highest offices of the go. vernment. On the last of these occasions, I felt it due to the people to apprize them distinctly, that, in the event of my election, I would not be able to co-operate in the re-establishment of a national bank. To these sentiments, I have now only to add the expression of an increased conviction that the re-establishment of such a bank, in any form, whilst it would not accomplish the beneficial purpose promised by its advocates, would impair the rightful supremacy of the popular will; injure the character and diminish the influence of our political system; and bring once more into existence a concentrated moneyed power, hostile to the spirit, and threatening the permanency, of our repub. lican institutions.

Under these circumstances, it becomes our solemn duty to enquire whether there are not, in any connection between the government and banks of issue, evils of great magnitude, inherent in its very nature, and against which no precautions can effectually guard. Unforeseen in the organisation of the government, and forced on the treasury by early necessities, the practice of employing banks, was, in truth, from the beginning, more a measure of emergency than of sound policy-When we started into existence as a nation, in addition to the burdens of the new governmen, we assumed all the large but honourable load of debt which was the price of our liberty: but we hesitated to weigh down the infant industry of the

necessary revenue. The facilities of banks, in return for the privileges they acquired, were promptly offered, and perhaps too readily received, by an embarrassed treasury. During the long continuance of a national debt, and the intervening difficulties of a foreign war, the connection was continued from motives of convenience; but these causes have long since passed away. We have no emergencies that make banks necessary to aid the wants of the treasury; we have no load of national debt to provide for, and we have on actual deposite a large surplus. No public interest, therefore, now requires the renewal of a connection that circumstances have dissolved, The complete organisation of our government, the abundance of our resources, the general harmony which prevails between the different states, and with foreign powers, all enable us now to select the system most consistent with the constitution, and most conducive to the public welfare. Should we, then, connect the treasury for a fourth time with the local banks, it can only be under a conviction that past failures have arisen from accidental not inherent defects.

Local banks have been employed for the deposite and distribution of the revenue, at all times partially, and, on three different occasions, exclusively; first, anterior to the establishment of the first bank of the A danger, difficult, if not impossible, to be avoided United States; secondly, in the interval between the in such an arrangement, is made strikingly evident in termination of that institution and the charter of its the very event by which it has now been defeated. A successor; and, thirdly, during the limited period sudden act of the banks intrusted with the funds of which has now so abruptly closed. The connection the people, deprives the treasury, without fault or thus repeatedly attempted, proved unsatisfactory on agency of the government, of the ability to pay its each successive occasion, notwithstanding the various creditors in the currency they have by law a right to measures which were adopted to facilitate or insure its demand. This circumstance no fluctuation of comsuccess. On the last occasion, in the year 1833, the merce could have produced, if the public revenue had employment of the state banks was guarded especially been collected in the legal currency, and kept in that in every way which experience and caution could sug-form by the officers of the treasury. The citizen gest. Personal security was required for the safe. keeping and prompt payment of the moneys to be received, and full returns of their condition were, from time to time, to be made by the depositories. In the first stages the measure was eminently successful, notwithstanding the violent opposition of the Bank of the United States, and the unceasing efforts made to overthrow it. The selected banks performed with fidelity, and without any embarrassment to themselves or to the community, their engagements to the government,

whose inoney was in bank receives it back, since the suspension, at a sacrifice in its amount; whilst he who kept it in the legal currency of the country, and in his own possession, pursues, without loss, the current of his business. The government, placed in the situation of the former, is involved in embarrassments it could not have suffered had it pursued the course of the lat ter. These embarrassments are, moreover, augmented by those salutary and just laws which forbid it to use a depreciated currency, and, by so doing, take from

the government the ability which individuals have of out for their own profit, while they were permitted to accommodating their transactions to such a catas-substitute for it a credit in account. trophe.

In expressing these sentiments, I desire not to unA system which can, in a time of profound peace, dervalue the benefits of a salutary credit to any branch when there is a large revenue laid by, thus suddenly of enterprise. The credit bestowed on probity and in. prevent the application and the use of the money of dustry is the just reward of merit, and an honourable the people, in the manner and for the objects they have incentive to further acquisition. None oppose it who directed, cannot be wise; but who can think, without love their country and understand its welfare. But painful reflection, that, under it, the same unforeseen when it is unduly encouraged-when it is made to inevents might have befallen us in the midst of a war, flame the public mind with the temptations of sudden and taken from us, at the moment when most wanted, and unsubstantial wealth-when it turns industry into the use of those very means which were treasured up paths that lead sooner or later to disappointment and to promote the national welfare and guard our national distress-it becomes liable to censure, and needs corrights? To such embarrassments and to such dangers rection. Far from helping probity and industry, the will this government be always exposed, whilst it takes ruin to which it leads falls most severely on the great the moneys raised for, and necessary to the public ser- labouring classes, who are thrown suddenly out of emvice, out of the hands of its own officers, and converts ployment, and by the failure of magnificent schemes them into a mere right of action against corporations never intended to enrich them, are deprived in a moentrusted with the possession of them. Nor can such ment of their only resource. Abuses of credit and exresults be effectually guarded against in such a sys- cesses in speculation will happen in despite of the most tem, without investing the executive with a control salutary laws; no government perhaps can altogether over the banks themselves, whether state or national, prevent them; but surely every government can rethat might with reason be objected to. Ours is, pro-frain from contributing the stimulus that calls them bably, the only government in the world that is liable, into life.

in the management of its fiscal concerns, to occurrences like these. But this imminent risk is not the only danger attendant on the surrender of the public money to the custody of local corporations. Though the object is aid to the treasury, its effect may be to introduce into the operations of the government, influences the most subtle, founded on interests the most selfish.

(To be continued at page 337.)

For the Financial Register. INFLUENCE of the CURRENCY ON EXCHANGES.

The use by the banks, for their own benefit, of the money deposited with them, has received the sanction of the government from the commencement of this That foreign exchanges are affected by the degree connection. The money received from the people, of fulness of the currency, is a principle which is asinstead of being kept till it is needed for their use, is, serted by some, denied by others, explained by none, in consequence of this authority, a fund, on which dis- and acted on by all. The Bank of England is believed counts are made for the profit of those who happen to to have adopted and practised this principle previously be owners of stock in the banks selected as depositories. to the beginning of this century; but when the eviThe supposed and often exaggerated advantages of dence was taken before the bullion committee in 1810, such a boon will always cause it to be sought for with the officers of that institution vehemently denied all avidity. I will not stop to consider on whom the connection between the currency and exchanges, and patronage incident to it is to be conferred; whether it appeared from their statements, and those of several the selection and control be trusted to congress or to eminent merchants, that the principle was entirely lost the executive, either will be subjected to appeals made sight of, and, in truth, forgotten. John Whitmore, in every form which the sagacity of interest can sug- Esq., governor of the bank, said that they had no regest. The banks, under such a system, are stimulated ference to exchanges in their issues, "it appearing to make the most of their fortunate acquisition; the upon a reference to the amount of our notes in circu deposites are treated as an increase of capital; loanslation and the course of exchange, that they frequently and circulation are rashly augmented, and, when the have no connection." (Ev. 111.) My opinion," he public exigencies require a return, it is attended with continued, "is that the amount of our paper circulation embarrassments not provided for, nor foreseen. Thus has no reference at all to the state of exchange." (p. banks that thought themselves most fortunate when 112.) Mr. Pearse, deputy governor of the bank, said, the public funds were received, find themselves most throughout, the same thing, and went into long calembarrassed when the season of payment suddenly culations to prove, that the Hamburgh exchanges arrives. showed no sympathy with the issues of the bank. "I Unfortunately, too, the evils of the system are not must very materially alter my opinions," said the inlimited to the banks. It stimulates a general rashness telligent and informed Mr. Jeremiah Harman, bank of enterprise, and aggravates the fluctuations of com- director, and general merchant," before I can suppose merce and the currency. This result was strikingly the exchanges will be influenced by any modifications exhibited during the operations of the late deposite of our paper currency." (Ev. 221.) By what process system, and especially in the purchases of public lands. of reasoning or experience, the bank has been led to a The order which ultimately directed the payment of change in its policy I am not aware, but at present its gold and silver in such purchases, greatly checked, but constant guide, and the sole limit of its general circucould not altogether prevent, the evil. Specie was in-lation, as I understand, is the state of the foreign exdeed more difficult to be procured than the notes which the banks could themselves create at pleasure; but still, being obtained from them as a loan, and returned as a deposite, which they were again at liberty to use, it only passed round the circle with diminished speed. This operation could not have been performed, had the funds of the government gone into the treasury, to be regularly disbursed, and not into banks, to be loaned

changes. Very recently the Hon. Mr. King, of Georgia, in his powerful and brilliant speech before the senate of the United States, remarked that "the only way in which a redundancy of currency or credit depreciates foreign exchanges, is by producing a specu lative rise in prices, and a consequent overtrading." I differ from this opinion, positively, by holding that there is an influence exerted by currency on exchange,