April, 1838, to $2,322,186, and the deposites to $11,492,486.

I apprehend that no merchant in New York, who felt the pressure of that process, considered that a reduction of the deposites to the extent of four and a quarter millions of dollars, was no diminution of the currency; and if we take into consideration the large amount of these notes, which must, at all times, be circulating at a distance from the city of New York, we shall also be satisfied, that deposites not only form a part of the currency of that city, but a very large part of it.

An examination of the condition of the banks of Philadelphia, would also show an excess of deposites over circulation. By a statement of the condition of the fifteen banks of the city and liberties, on the 3d of November, 1838, (exclusive of the Bank of the United States), made to the legislature, it appears that the amount of their notes in circulation was $4,522,883, whilst the amount of their deposites was $6,813,503. On the 1st of November, of the same year, the circulation of the Bank of the United States (exclusive of post notes), was $8,499,378, and the deposites $8,591,235, but of these notes, by far the largest proportion were circulating at a distance from Philadelphia, and, consequently, formed no part of the currency of that city.

Having thus, as I conceive, established the propositions laid down in the early part of this chapter, I will, in the next, endeavor to elucidate a matter of very great practical importance, to which the attention of congress and the state legislatures has never yet been particularly directed, relating to the aggregate amount of the currency at any particular period.

lions would be necessary, and not merely the absorption of the notes, which might have been in the mean time added to the mass in circulation.

Again, suppose at a period when the currency was in a sound condition, money being neither too abundant nor too scarce, the banks of New York should, from some unfounded apprehensions, all at once reduce their loans to the extent of two millions of dollars, by which means their debtors should be obliged to raise funds in the market from that class of persons who had deposites in the banks, and who would of course draw checks upon them, and thus extinguish the liabilities of the banks existing in the form of deposites, to the extent of two millions. Would the currency of New York be contracted? Would money be scarcer than before? Would competitors in the market with ready cash in hand be diminished? A negative answer could hardly be given to either of these questions, and hence the conclusion would seem to be self-evident, that deposites form a part of the currency.

Indeed, it is through the deposites of banks that the most powerful action is exercised upon the currency, where contractions are resorted to. Debtors who are called upon to pay up large sums, would find it very difficult to procure them, if they were obliged to hunt up bank notes, scattered all over the country; and if a city bank were fearful of being hard pressed, she would have very little concern about her notes, if she could only get clear of the demands of her depositors. Deposites, in fact, in large commercial cities, constitute the largest portion of the currency. In the city of New York, on the 1st of June, 1837, shortly after the stoppage of specie payments, the amount of notes in circulation outstanding for all the city banks, was $5,283,950, whilst the amount of deposites, public and private, was $15,843,171.

By the contraction which subsequently took place, the notes in circulation were reduced, by the 1st of

April, 1838, to $2,322,186, and the deposites to $11,492,486.

I apprehend that no merchant in New York, who felt the pressure of that process, considered that a reduction of the deposites to the extent of four and a quarter millions of dollars, was no diminution of the currency; and if we take into consideration the large amount of these notes, which must, at all times, be circulating at a distance from the city of New York, we shall also be satisfied, that deposites not only form a part of the currency of that city, but a very large part of it.

An examination of the condition of the banks of Philadelphia, would also show an excess of deposites over circulation. By a statement of the condition of the fifteen banks of the city and liberties, on the 3d of November, 1838, (exclusive of the Bank of the United States), made to the legislature, it appears that the amount of their notes in circulation was $4,522,883, whilst the amount of their deposites was $6,813,503. On the 1st of November, of the same year, the circulation of the Bank of the United States (exclusive of post notes), was $8,499,378, and the deposites $8,591,235, but of these notes, by far the largest proportion were circulating at a distance from Philadelphia, and, consequently, formed no part of the currency of that city.

Having thus, as I conceive, established the propositions laid down in the early part of this chapter, I will, in the next, endeavor to elucidate a matter of very great practical importance, to which the attention of congress and the state legislatures has never yet been particularly directed, relating to the aggregate amount of the currency at any particular period.

CHAPTER III.

ON THE IMPORTANCE OF HAVING UNIFORM PERIODI. CAL STATEMENTS OF THE CONDITION OF THE

CURRENCY.

WHEN We consider the importance which the present banking system of the United States is capable of exerting over the property and industry, and consequently the prosperity of the country, it would seem to be but reasonable that the public, who must always be the victims of a vicious course of policy, should at least be furnished with some means of acquiring a knowledge of their position, in order that they might be prepared to escape from a threatened catastrophe, or at least to mitigate its force. Such, however, is not the fortunate condition of the people of this country, and they seem to be destined to be for ever deprived of all opportunity of becoming acquainted with those premonitory indications, which usually precede a convulsion in the money concerns of a nation. The truth of this remark will occur to most people, who recollect the fact, that the suspension of specie payments in May, 1837, came upon the country, like a sudden clap of thunder on a clear day, and overwhelmed every body with surprise. I say, every body, for the exceptions were extremely rare, of those who, a month before it occurred, had the slightest apprehension of such an event.

This want of knowledge arises, from the circumstance, that the nine hundred banks and branches now operating in the United States, are the offspring of six and twenty states, three territorial, and one general government, between which there has never been any system of uniform action in relation to the terms of charters of banks, or in reference to uniform periodical returns of their condition as to liabilities