Travelers from Europe and from the North came to New Orleans as to a new El Dorado, spending six months in our delightful climate, to make as much money as possible out of our cotton, sugar, our exports and imports, which kept the Mississippi, Ohio and Missouri river boats busy with the traffic and interchange of commodities.

The St. Louis Hotel was erected by the Improvement Bank, chartered in 1834, at a cost of $900,000, in the center of the old city, or French Quarter, in the square bounded by St. Louis, Toulouse, Chartres and Royal Streets.

In 1834, the Exchange Bank was chartered with a capital of $2,000,000 and the charter obligated the corporation to erect the St. Charles Hotel, which was the first of the great buildings erected in the American quarter above Canal Street.

The St. Charles was designed by Gallier & Dakin, architects, who also designed the City Hall and the French Opera House. It was begun in 1835, and completed in February, 1837, at a cost of $616,775, and formally opened on Washington's birthday with a grand ball.

Locating the St. Charles above Canal Street, marked a period of great rivalry between the old French quarter and the new American district. Around it immediately sprang up a new business center, which has continued to grow in importance.

This suggests an examination of the conditions of the banks. EXTRACTS FROM THE JOINT COMMITTEE OF FINANCE OF THE SENATE AND HOUSE, JANUARY 18, 1837.

Statement SA shows that the nominal banking capital of the State of Louisiana amounts to $54,554,000.

Actual capital paid in and now in use for banking...$36,769,455

It may not be out of place here to compare the banking situation of the banks of the State of Pennsylvania and New York and the Bank of England with that of the banks of New Orleans.

BANKS OF PENNSYLVANIA.

(See Auditor's report for January, 1837.) Capital......$57,916,681

Circulation..$23,902,658
Deposits.... 14,144,418

or 17.03% of their cash responsibilities.

BANKS OF NEW YORK.

.$38,047,036
6,479,040

Our property banks, having obtained their capital from Europe on State bonds, are secured by $25,000,000 of mortgages on the most valuable property in this State, worth upwards of $40,000,000, and of a large accumulating sinking fund growing out of banking profits, which are only divided in the proportion of the redemption of said bonds, and their banking movement is sustained in the same manner as that of the Bank of England. The position of New Orleans is unique. There is no place on the globe possessing so many elements and sounder materials for banking.

This takes us up to the causes which precipitated the panic of 1837.

The Second Bank of the United States, which had been chartered for only twenty years, had been prosperous, and in its exercise of power as a controlling factor over the State bank currency issues, had unfortunately become unpopular in the politics

of the country bankers, whose influence in electing Congressmen was a potential factor in the refusal of President Jackson to sanction a renewal of its charter. The withdrawal of the government deposits, coming at a time when the directors of the Bank of England, in 1836-37, becoming alarmed at the great diminution of precious metals, prescribed the paper of even the most eminent American bankers in London, with a view of contracting suddenly their business to force the exportation of gold and silver from the United States.

The inflation of note issues by the State banks soon precipitated the hoarding of specie and demonstrated the unsoundness of our financial system as soon as the restraining influence of the Central Bank was removed.

The message of his excellency, Governor E. D. White, of Louisiana, December 11, 1837, graphically describes the conditions which obtained in Louisiana, and in fact, throughout the United States. The message is particularly notable in that it places the responsibility for maintaining a stable currency upon the national government.

"The currency is a national issue under our federative system-the power to regulate the currency is one of the most essential attributes of the general government."

The message of Governor White, the father of Chief Justice White of to-day, sounded the keynote for the systematic examination, regulation and control of the banks of Louisiana. The Louisiana banking law of 1838, which was drafted under his inspiration, provided a board of currency to carry out the provisions of the act, limited the note issue by requiring State banks should have at all times in their vaults specie equal to one-third of their note issue, and that the maximum note issue should not exceed one-fifth of the paid-in capital.

The Louisiana banking law became a classic and the pattern of all other State banking laws, as well as the foundation stone for our national banking system at the close of the Civil War.

EXTRACTS FROM MESSAGE OF GOVERNOR WHITE,

"An almost universal and simultaneous suspension of specie payments by the banks having taken place, their bills, no longer convertible into specie, and, in exemplification of the received axiom in political economy that a sound and a vitiated currency cannot exist together, the precious metals speedily disappeared

from circulation to become a mere object of merchandise, while their place was usurped by paper of various kinds, having no fixed standard of value. In many places the notes of individuals or of corporations, issued without the sanction or authority of law, have become almost the only medium through which the smaller daily local exchanges are affected, forming, indeed, a very inconvenient and unsatisfactory kind of currency, but in which, from necessity of the case, men are compelled to acquiesce for the time.

"If it be in the power of the Legislature to redress the wrongs under which the body public is suffering, you are called upon by every motive which the sense of duty or the love of country can supply, to adopt such measures as may bring about the happy. consummation. Your jurisdiction over the subject matter is generally supposed to reside in the control inherent in the supreme power of a State over institutions deriving their existence directly from the exercise of its creative will.

"In originating any plan to suit the exigency of the case, the great end to which all other steps should conduce, must be the resumption of specie payment. Nothing certainly could be more desirable to all, than to be able to look forward to some given time as the auspicious epoch when this was achieved. It cannot, however, be denied that speculation on this matter is involved in great complexity and doubt."

Experience has shown that when the financial affairs of people become seriously deranged, it requires the utmost exertion of prudence and the best directed concert of action to bring them back to a state of soundness and stability. To expect such harmony of movement and correspondence of legislation among twenty-six independent State sovereignties, as may accomplish this most desirable end, would, it is feared, reasoning from the past, be utterly idle and Utopian. Nothing can effectually redeem the currency from its present derangement but the hearty co-operation of the individual monied capital of the people of the United States, and that of the national government operating through the medium of a national bank, and such is the extent and magnitude of the mischief that even the efficacy of co-operation has become a theme of conjecture and doubt. To compel our banks to resume, while the banks elsewhere pursued a different course, would have little other effect than to drive them promptly back, crushed and exhausted, with their vaults drained of every dollar, to a fresh suspension not voluntary, but compulsary, from which they could never reasonably hope to rise again.