pointment. And the same principle is applicable to the pecuniary concerns of an individual; a single bank; to the banks of a particular section of country, and to the banking interest collectively: a slight cause deranges the pecuniary affairs of an individual; a more serious one, those of a bank; and still more extensive one, those of a number or the whole.

Suppose a cause of more universal pressure-as a revulsion in trade directly affecting the whole country-an overtrading with other nations, such as distinguished the period succeeding the late war, and a consequent accumulation of balances beyond the ordinary means of payment by exportation. The deficiency must be supplied and the equilibrium restored either by the exportation of specie, or by obtaining a credit in Europe which will answer the purpose of specie. If no timely provision for such a credit were made the consequence would be a demand for specie to export to the place where payment was required. A pressure of this description is first and most severely felt by the city banks, but rapidly extends itself through the whole monitary interest of the country. The specie is drawn from the vaults of the different banks and collected for exportation; the stocks of the government are purchased and remitted, and when these are exhausted, and such other means of remittance as can be commanded for the purpose, if a deficiency still remains, a suspension of payment must ensue.

Such a state of things necessarily begets a distrust of banking institutions as will as individuals, and the evil is increased by a general panic, which, however much it may be mitigated by the assurance of the eventual solvency of the banks or security of the public, is not to be entirely averted by the present system, and perhaps by no other within the power of legislation.

It arises from the operation of commercial principles, and it is the peculiar business of a banker to keep his observation constantly fixed upon the operations of trade, and by a prudent and timely forecast, to endeavor to provide funds or credit, wherever its exigencies may require balances to be paid.

Still, however, the causes alluded to, produce only a temporary embarrassment, and the public in the mean time have every guaranty that the debts of the banks will be ultimately paid.

The commercial character of this country and of this state preeminently, must ever render it subject to those revulsions which affect a currency composed, as ours is, principally of paper.

But we have now become to such a degree independent of other nations for our supplies of manufactured articles, that the pressures which we may anticipate, may be expected to be, rather for credit to sustain individuals at home, than for money to pay our national balances abroad.

At present, at all events, there would seem to be a sufficiency of coin to relieve any just apprehensions of the effects which may result from the fluctuations of trade.

In a late report made to the Senate of the United States, it is estimated that there is

In circulation,...,.. 8,000,000

The reviewer above quoted, estimates that on the 1st of January, 1830, there was

In the banks,

$22,094,000

In circulation, ... 10,000,000 We incline to the opinion that both these estimates are now too low.

The report of the banks in Pennsylvania and Massachusetts, shew an accumulation in their vaults of $1,324,000 during the last year, and the amount held by the United States Bank, has accumulated during the same period, $4,184,000. It now possesses near eleven and an half millions.

The rapid diminution of the stocks of the government, which have always furnished a convenient means of obtaining credit in Europe, will probably tend to render a larger amount of specie necessary to be retained, to sustain the currency of the country, than heretofore has been found necessary. But on the other hand, the diminished demand for the Asiatic and other foreign trade-the restoration of quiet among the South American states-and the increased supply of gold from our own rich mineral region, (should an equalization of its standard to that of silver prevent its exportation) may be expected to produce a countervailing operation.

Giving due weight to all the just causes of apprehension for the safety of our banks, we still think they are not of a character which

should render us dissatisfied with the policy of adopting a currency essentially of paper.

And notwithstanding there may be causes of temporary embarrassment, arising from the operations of trade, against which our system may not be calculated effectually to guard, yet we may claim with fairness, that our banks are no more exposed to such embarrassments than others, and that in this respect our bank policy is as safe, while in other respects we claim for it more safety than has been found under any other system devised to suit our peculiar situation.

So far as the public is concerned, the principal objections to it have been, its supposed tendency to encourage excessive issues of paper, by giving it an undue credit, and the excessive multiplication

of banks.

If it be true that excessive issues of bank paper do not essentially depreciate the currency so long as such paper is easily convertible into specie, and if it be true that our law is pre-eminently calculated to enforce such payments, there would seem to be no great weight in the first objection, nor any well founded ground of complaint that our currency should be in good credit. But if any further security is required against excessive issues of paper, it will be found to be most ample in those provisions which limit the loans and discounts of cach institution to twice and an half, and the issues of paper to twice the amount of capital.

It will very rarely happen that the circulation of an institution can be raised to the amount authorised by law, while the loans and discounts are kept within it. Both these provisions are salutary in their operation upon individual institutions, although, looking at the aggregate statement of the banks, they would seem to be inoperative.

The other objection to the system has been, its supposed tendency towards the excessive multiplication of banks, in consequence of a reliance upon the fund, rather than the solidity and good management of the institutions themselves. Probably such is in some degree the tendency of that feeling of security which we are apt to indulge in a system that promises much, though not entire safety.

The business of banking has already progressed so far as to have become interwoven with all our business relations, and to have given

a permanent character to our currency. If it were desirable, therefore, it would be impossible, to effect an essential change of the leading features of our policy.

So far as the requirements of actual business demand, it will undoubtedly be reasonably safe to extend the facilities of banking; but it is equally true that the security upon which we rely may be overloaded; and we should deceive ourselves in supposing that the present, or any other system which can be established by law, would afford perfect security against every evil that might result from an excessive and improvident increase of bank capital.

C. STEBBINS,
J. REES,

G. R. DAVIS,

January 24, 1831.

NOTE.

Bank Commissioners.

In the table, page 8, the amount of specie held by the banks of this State, is not stated, in consequence of the amount in New-York being unknown. It has since been ascertained that, an the 31st December last,

These data enable us to calculate that the amount of specie held by the banks of this State, on the 1st January inst. was $3,435,000.