to the debts from which they had been partially extricated, and of involving others who had hitherto escaped, was continued for a time; but the dreadful day of retribution at length arrived. The bank discovered almost too late, that its issues had been extended beyond the limits of safety, and that it was completely in the power of its creditors. It also foresaw that the payment of that portion of the Louisiana debt, redeemable on the 21st of October 1818, which was held by foreigners, might occasion a demand for a considerable amount of coin, that the enhanced prices of China, India and other goods occasioned by the depreciation of the currency from the over issues of itself and the state banks, would lead to a demand for specie, and that as it was professedly a specie bank, liable, under a penalty of 12 per cent. per annum to pay its notes on demand, the same delicacy and forbearance would not be extended towards it as to the state banks. These considerations impelled it to seek its own safety, and from that moment a system of reduction commenced. This reduction operating upon the state banks, which had not profited by the opportunity afforded them of contracting their loans whilst the other was extending, obliged them also to diminish their transactions, and a general curtailment ensued, which has not yet had its consummation. The severity of the second pressure commenced in the city in October 1818, and was continued without intermission for a year; at the expiration of which time it is said that the reductions made there by the national bank alone have exceeded seven millions of dollars, and those by the other banks probably two or four more. The reductions of the country banks during the three last years may be inferred from the following statement which exhibits the amount of their notes in circulation at four different periods. November 1, Do. Do. 1819, 1,318,976 From the foregoing history it will be seen, what influence has been produced upon the affairs of the community by the operations of the banking system. Real property has been raised in nominal value, and thousands of individuals have been led into speculations, who without the facility of bank loans would never have been thus seduced. The gradual nominal rise in the price of land, has produced an artificial appearance of increasing wealth which has led to the indulging of extravagance and luxury, and to the neglect of productive industry. Foreign importation and domestic consumption have thus been carried to an extent, far beyond what the actual resources of the country and people would justify, and in pursuing a shadow the community has lost sight of the sub Your committee is sensibly impressed with the dangers which may hereafter arise from the renewal and creation of bank charters, and as they have deemed it to be within the limits embraced by the resolution under which they act, they take the liberty of giving to the Senate their ideas of the provisions which should be incorporated in every charter of a bank hereafter sanctioned by the legislature. They are as follows: First. A penalty of twelve per cent. per annum in addition to a forfeiture of the charter, should be imposed upon the amount of all notes and deposits not redeemed in specie on demand. Secondly. No bank should be allowed at any time to loan more than fifty per cent. beyond the amount of its capital. Thirdly. All profits above six per cent. should be equally divided between the stockholders and the state, the amount accruing to the latter to be specifically appropriated to internal improvements. The justice of this provision is founded upon the consideration, that although high dividends have been made, yet none but the original subscriber gets the benefit of them, for all subsequent purchasers are compelled to pay for the stock a speculative advance upon its par value, at least equivalent to the extraordinary interest. Fourthly. No director except the president should be re-eligible for more than three years, in any period of six, and none should be entitled to loans beyond a limited amount. Fifthly. The affairs of the bank and the private accounts of the directors should at all times be open to the inspection of the legislature. Sixthly. No note for less than five dollars should be issued, inasmuch as no solid system of paper credits can any where exist, unless the minor channels of circulation are exclusively supplied with coin. Without such provisions as these, the propriety of which has been established by the dear bought experience of the past, your committee conceive, that it will be impossible to guard the public in future, against the evils of excessive issues, which, whenever they are made, must sooner or later re-act upon the community, with effects in a greater or less degree, similar to those which our fellow citizens now so unhappily experience. I. PRICES AT LONDON OF AMERICAN SECURITIES, AT THE DIFFERENT DATES MENTIONED. N. York Fives, 1845 to 1860, 86 to 87 95 66 66 April 30th, 1840. 93 66 94 From the New York American. Extract from a letter dated London, April 30th, 1840. "We are in some respects mending in the American Stock Market. United States Bank shares are done at 157. 15s. to day, and there are two or three buyers at 157, 10s. Pennsylvania stock is very heavy, and holders are loud in their expressions of dissatisfaction at the legislature for not passing the bill for taxes. Several parties have sold in alarm-and there is now some in the market of 1856, at 75. This is a bad state of things, when we have four millions of dollars pledged here for the United States Bank, and $400,000 for the Girard, and new loans making. If there had been any care evinced by that state for maintaining its credit, no doubt we should have had a considerable and rational improvement. The state of money, and the opening of the continental market for the stock, would have enabled the French bankers to add Pennsylvania to their administration of American stocks, and it would have given satisfaction to all. J. NEW YORK GENERAL BANKING LAW. Extract from the annual Report of the Comptroller made to the Legislature of New York in January, 1840. OPERATIONS UNDER THE ACT TO AUTHORISE THE BUSINESS OF BANKING. THE press of business under this act existing at the time the present comptroller came into office and which continued to increase until very recently, rendered it indispensably necessary to employ additional aid. There are now engaged five registers and a bookkeeper, and yet it has been necessary to pay a large amount to clerks for services out of office hours, and to other individuals for numbering circulating notes. At times, with all the force which could with propriety be put in requisition, the demand for notes could not be supplied promptly. That demand has now abated and it is supposed that hereafter a less number of registers may be able to answer all calls for bills within a reasonable time. With a view to arrive at some degree of certainty in regard to the title and value of the real estate mortgaged, and to the accuracy of the conveyances, all the bonds and mortgages, with the deductions of title and appraisals of the land, which had been received in security or deposite, previous to the period when the present comptroller took charge of the office, were |