the business of the association is carried on and conducted. § 32. The legislature may at any time alter or repeal this act. § 33. No association of persons authorised to carry on the business of banking under this act, shall at any time, for the space of twenty days, have on hand at their place of business, less than twelve and a half per cent. in specie on the amount of the bills or notes in circulation as money. State of New York, Secretary's Office. This bill having been approved and signed by the governor of this state, on the 18th of April, 1838, I do hereby certify that the same became a law on that day. JOHN A. DIX, Secretary of State. [See Appendix J.] E. LETTER FROM THE AUTHOR TO JOHN W. COWELL, ESQ., AGENT OF THE BANK OF ENGLAND IN THE UNITED STATES. MY DEAR SIR: Philadelphia, April 15, 1839. As you are upon the eve of departure for England, after, as I understand, a highly successful issue to your financial mission to this country, I take occasion to hand you a copy of the "Treatise on Currency and Banking," of which you have seen a few of the early chapters, in the hopes that you will find them, in the main, in accordance with your own views of those important subjects. I am the more inclined to this expectation, from recollecting the tenor of the CAL frequent conversations I have had with you, from which I need hardly say, I derived much valuable, instructive, and practical information, as well as from a perusal of the unpublished pamphlet, with a copy of which you favored me, setting forth your individual opinions upon the best system of reform for the paper currency of England. In regard to the latter subject, I am free to confess, that the United States have a deep interest in its discussion, and they will owe much to the political economist or statesman, who shall be so fortunate, as successfully to advocate a reform that shall prevent fluctuations in the currency of Great Britain. It was some years since remarked in our congress, by a member, that the barometer of the money market of the United States was hanging up in the stock exchange of London. Since the conflagration of that building, I would say that the barometer has been hanging up in the "parlour" of the bank of England; and in truth, so closely allied are our two currencies by the ill-advised change in our gold coinage, which took place in the year 1834, that it is impossible that any expansion or contraction of the currency can take place in England, that will not be felt here; in the one case, inviting our banks to extend their discounts, and thereby excite overtrading and speculation, and in the other case, compelling them to contract their loans, and thereby produce a general commercial embarrass ment. The plan you have suggested, and to which I have above referred, appears to me to be eminently adapted to accomplish the end proposed; and if the paper currency of this country were under the control of a single legislative body, as it is in England, instead of thirty bodies, as it is, I would recommend it as the best plan I have yet met with, for enabling the public to enjoy all the benefits of a paper circulation, without any of its evils. According to that plan, as I understand it, the mint is to issue certificates for sums of one pound, five pounds, and any greater denomination, upon a deposite of gold of equal amount; and such fixed proportion of the gold so deposited, as may be ascertained, from experience, to be the amount that may, with the most perfect safety, be withdrawn by exportation from the metallic portion of the currency, is to be immediately invested in the public funds, by commissioners appointed for that purpose. By this process, the following results will be effected: First. The mixed currency, after the exportation of the gold above referred to, will be precisely equal to the quantity of coin that would have existed in the country, had there been no mint certificates. Secondly. The country would derive the profits resulting from the employment of a certain amount of capital in commercial pursuits, which would otherwise have been unprofitably employed as currency. Thirdly. The public, and not private corporations, or individuals, would enjoy a profit resulting from the circulation of the paper money, precisely equal to the accruing interest on the public debt held by the commissioners; and, Fourthly. The country would be entirely exempted from any fluctuation in the currency, other than that to which a metallic currency is liable; it being necessarily incident to the plan, that whenever mint certificates should be returned for payment in gold, the commissioners should obtain in the market, by a sale of public securities, an amount of coin precisely equal to that which was invested, on the issue of the notes so returned. Against the soundness of this plan, I am not able to see any objections. How far a general panic, arising from war, or domestic disturbance, might render it difficult to sell public securities in a time of emergency, you are better able to judge than I am. Certain is it, however, that no depression of the stock market could result from a reaction of an expanded state of the currency, the most frequent cause of depressions at the present day, for, as there would be no expansion, there could be no reaction. Before parting, I can not omit the occasion to say to you, that, although the political horizon is, at this moment, somewhat over cast, I can not persuade myself that two countries like Great Britain and the United States, so peculiarly adapted to supply each other's wants, and whose mutual interest it so manifestly is to maintain an eternal friendship, can, at this enlightened day, be guilty of the folly of going to war. And now, wishing you a safe and expeditious voyage, I subscribe myself, very truly and respectfully, Your friend and servant, CONDY RAGuet. 22* |