The largest bank of discount in the world is that of

England, its capital and specie deposits are nearly, 18,000,000 And its notes in circulation will average,

12,000,000

Sterling, 30,000,000

The bank of Amsterdam is of a different kind, being only a bank of deposite for what is called safe keeping; but as it cannot be supposed to be very safe with such neighbours as a Lewis the 14th, or any other as enterprizing and as sudden visitors, it is remarkable that they thus wrap their talents in a napkin when they might make more of them with less risk, by discounting; then those who may be tempted to plunder them in their present state, might be obliged or induced to support them, on account of their notes in circulation, if they would condescend to improve by the experience of the rest of the world; in this many of the principal burghers of Amsterdam agreed with the author, when once on a visit at this bank, the stock of which is either a secret or unknown to any but its officers.

Among the most striking features in a full account of the benefits derived from our American banking system, are the following: First, PUNCTUALITY IN ALL COMMERCIAL TRANSACTIONS, which alone is the saving of many millions annually to the United States. Second, It reduces usury, wherever there is a sufficient number of rival banks, to prevent a monopoly of its benefits.

Third, It increases the facile money at least one-third and often one half in the amount in circulation.

Fourth, It affords well known strong and convenient places for safe keeping, and this prevents even a temptation to robbery.

Fifth, It saves an incalculable sum in a fair estimate of the time saved in counting large notes instead of silver and other coins.

Sixth, It saves the expenses of carriage, which when calculated for a long distance, on large sums, are great, and the post, or half note, by mail, is always a safe mode of conveyance.

Therefore, every town eligibly situated for business, with near 4,000 inhabitants commercially and mechanically employed, may find immediate benefit arising from a bank with a moderate capital. In a town of 7 or 8,000 inhabitants, a banking capital of a million divided into two parts, or even more, rather than all in one, will be found more beneficial for the average of the community, though, perhaps not so advantageous to the stock-holders; thus, twice our present number of banks, if judiciously placed, would give the present dividends of 8 per cent. and more general assistance to the whole community.

The character of a valuable work will justify the followng extracts from Smith's Wealth of Nations:

"Every saving in the expense of collecting and supporting that part of a national capital which consists in money, is an improvement

X

of the revenue, hence the utility of paper bank circulation, which supplies the place of an expensive instrument of commerce with one less COSTLY and more convenient. The credit of a banker gives his notes all the value of money in circulation, and twenty thousand pounds in cash being generally sufficient to answer all the occasional demands which may arise from the paper circulation of an hundred · thousand:* by this operation twenty thousand pounds performs all the operations of an hundred thousand, and the whole will be carried on with one-fifth of the specie necessary without it." "Where this paper money is employed in the increase of materials or employment for labourers, it promotes industry and wealth, this use of an over-plus of money is most prevalent. It is, therefore, of advantage to society to increase the quantity of currency by bank notes, as it gives an opportunity of increasing the quantity of materials, tools and maintenance for labour, and consequently of the produce of labour."

"The increase and riches of commercial and manufacturing towns contribute to the improvement of the country three ways, by affording a great and ready market for the natural produce of the country, by providing purchasers of land among the wealthy citizens, and by establishing order and good government, liberty and security,” of life and property.

"The judicious operations of banking, by substituting paper in the room of a great part of the gold and silver, which was dead stock, and hereby enabling the country to convert this part into active and productive stock, are exceedingly beneficial to commerce."

"Money, though a valuable part of the capital, is no part of the stock of a society." "A guinea may be considered as a bill for a certain quantity of necessaries, or conveniences, "the portion of wealth consists not in the bill, but in the valuable commodities it will command."

"Stock lent at interest is always considered as a capital by the lender, and is generally employed as such by the borrower."

The character of our banks and of our insurance companies is now so fully established, that every one will agree with the learned and indefatigable Mr.N.Webster. "Having seen these institutions are so well conducted, that their credit has remained unimpaired amidst enormous depredations on our commerce by the belligerent powers, and the numerous bankruptcies occasioned by those depredations, and the vast speculations of our citizens; these facts, while they inspire confidence in the institutions, evince a degree of ability, diligence and integrity, highly

We ought here to observe that Dr. Smith wrote his elaborate and highly useful work before the business of banking was well understood; it is now found that a bank, to be perfectly secure, ought never to loan double its capital; and that even 30 per cent. on an average, will divide 8 per cent. per annum.

honourable to the directors and to the commercial character of the United States."

If they were so safe and well conducted before they were so numerous, they are now rendered more stable by the increase of their numbers, for instead of circulating two or three times the amount of their capital, and thence dividing above 12 per centum, they cannot now extend their notes in circulation beyond 50 per cent. on their capital, as may be seen by their dividends, which are now on an average not more than thirty-three and one-third, or at 8 per centum, while their legal interest on loans, by discount, are 6; hence there can be little danger of any failure of these institutions, now universally acknowledged to be among the safest and best conducted in the world. When they were first instituted they excited many unreasonable jealousies, but these have subsided in a great degree, since it is known that banks counteract usurious practices, and tend to make of every sixty dollars a circulation of eighty, thereby increasing the facile money of the community one-third beyond its real amount in specie with no risk; and yet as it is the nature of man to imbibe prejudices, it is incompatible with the general interest of a large community of freemen that either a single set of bank direc tors, or a single company of bankers, should have an extensive controul over the necessaries most essential to our natural or political existence; hence, by equitable divisions, the banking principle should be distributed over every quarter of a city, with a capital of not more than one million of dollars to one company.

:

On having seen the question, how far the banking principle may be carried without danger to the community? We have naturally turned our attention to this subject, and believe the practice of the first commercial country in the world, may assist in the answer. There are in England, besides the bank of England, seventy-three private banks in London, and four hundred and seventy-eight in the country it is computed that the bank bills of exchange and notes now circulated as facilities by these banks, are on an average more than two hundred thousand pounds from each bank. An intelligent American of acute observation in finance, has estimated the bank accommodations of England to average six hundred millions of dollars, for eight millions of people. According to this rule, if we have only fifty millions and six millions of people, we have yet a great deal to do before we reach the experience of England; we are, therefore, of opinion that the principle should not be disturbed by legis lative authority, but left to regulate itself, especially since it is found that where banks are not wanted the subscriptions will not fill.

At the time of the establishment of the national bank the author of these remarks proposed, in addition, that the nation should take half the institution, and by its charter, the secretary of the treasury should be allowed to subscribe as often and as long as the shares, so subscribed, would sell at not less than 25 per cent. advance, provided the

cash paid therefor did not exceed the value of two thousand shares in any one year, and that government should reserve the right to stop these subscriptions for additional stock whenever all the larger towns in the union (according to the federal rule of apportionment) should be supplied with branches and capital sufficient for all their regular commercial transactions.

All institutions of this kind should, in a growing country, be so constructed as to admit of their increase in proportion to that growth, or there cannot be a moral fitness for any length of time.*

The only objection to such a plan is the vast influence of such a bank with subordinate branches, and the jealousies or real injuries it might occasion to a republic; but if these be unimportant compared with the great benefits that might have been, and still may be gained; then, on the expected application of a renewal for a charter for the United States' bank, if this may be deemed worthy of reconsideration, another equally beneficial to the community, and not in the least dangerous, would be for government to anticipate a few millions of acres, by a sale of 3 per cents. loans, sufficient for the purpose, to grant a charter for twenty years, to a bank for every compact commercial town, of at least, three thousand inabitants, and by subscribing for any amount not exceeding one half the stock to the new banks that might be formed in due time, and to the existing banks that will gladly admit subscriptions, for the return of a charter, when the existing exclusive privilege to the present bank of the United States is omitted on the renewal of their charter now nearly expired. The advantages to the United States from such financial measures may be better illustrated by a recurrence to the great profit already realized, in dividends and by sales of their stock in the bank of the United States; but the extent to which the principle may be carried to advantage, time and experience alone can evince; it would, however, be productive of many millions within a few years. In anothe part of this work we have mentioned that, on the fifth of the bank of the United States, subscribed by government, near a million had been gained. It will be easy to perceive the general benefits to be derived by a further prosecution of the same or similar plans, proportioned to the progressive improvement of the states, and consequently necessary increase of banks throughout the union. The immense product of such measures in finance need no comment.

Account of the Bank of the United States, by N. Webster, esqr. "After the establishment of the present constitution of government for the United States, and a regular and efficacious system of finance, the gentleman at the head of the treasury, whose distinguished talents had been occupied in bringing order out of confusion, projected the plan of a national bank, to facilitate the operations of the system, and furnish to the government, the means of procuring loans,

This principle has been tried at the suggestion of the author in two banks.

as occasion might require. The project was not well received by the party opposed to the general system of finance, and the measures of the first administration; but an act of incorporation was obtained and approved by the president, February 25, 1791. By this act the capital stock consists of ten millions of dollars, in twenty-five thousand shares of four hundred dollars each, one-fourth of which was paid in specie, and three-fourths in funded 6 per cent. stock. The sums subscribed were paid in four equal instalments, the first on subscribing and the others at the distance of six calendar months from each other. The duration of the charter is limited to the 4th day of March, 1811; and the amount of property, real and personal, (including the capital stock) which the company is permitted to possess, is limited to fifteen million of dollars. None but citizens of the United States can be directors, and three-fourths only of the directors can be elected the next succeeding year. The corporation is not permitted to contract debts, of any kind, beyond the amount of ten millions of dollars, over and above the monies then actually deposited in the bank for safe keeping, unless previously authorized by law. In case of an excess of debts, the directors under whose administration it happens, are liable for the same in their private capacities.

The corporation may sell any or all of its public stocks, and it is understood, that a considerable part of it is sold, but they cannot deal or trade in any thing except bills of exchange, gold or silver, bullion, or in goods pledged for debts due to the corporation, or produced on their lands. The interest they are permitted to take for their discounts cannot exceed 6 per cent. per annum. No loan can be made by the corporation, to the government of the United States, to an amount exceeding one hundred thousand; nor to a state exceeding fifty thousand dollars, unless previously authorized by law.

The United States subscribed, as by the act was permitted, two millions of dollars to the capital stocks of the bank; and a part of the funded stock subscribed has been sold.

Several branches, or offices of discount and deposit, are established by the directors, in the principal commercial cities of the United States, viz. one at New York, one at Boston, one at Baltimore, one at Norfolk, one at Charleston, S. Carolina, and one at Washington, the seat of government. The bank declares half yearly dividends, which, from its establishment, have been 4 per cent. with two surplus dividends, one of 1 per cent. and another of 2 per cent. It discounts notes for sixty days.

The seat of the bank is in Philadelphia, where a superb building has been erected for its accommodation.*

The bank is governed by twenty-five directors, chosen annually on the first Monday of January. The branches have their own directors elected annually by the stock-holders. Once in three years, a statement of the concerns of the bank is to be laid before the stockholders."

*The plan was by the author of this book; but its brick sides are an injurious deviation.