loss may have been incurred by the Bank, the gross impropriety of loans to such an amount to officers of the Bank, is not the less evident. The sequel is well known. Other improvident loans were made. The Bank over-loaded itself, by purchase, or otherwise, with stocks of every possible description. It has been alleged that it was not the fault of the administrators of the Bank, if those stocks subsequently fell in value. The fault consisted in having converted the Bank into a stock-jobbing association. In the meanwhile, as other means were wanted, an enormous debt was contracted abroad.

On the 1st of April 1839, the foreign debt of the Bank amounted to twelve millions eight hundred thousand dollars, and the various stocks owned by it to near twenty-three millions (i). Its credit had indeed been artificially sustained; and its stock was selling at a considerable advance. It was nevertheless on the verge of destruction. In August of the same year, it was compelled to issue post notes, which soon fell to a discount of more than one per cent. a month. In September, the Bank drew largely on Europe without funds, and partly without advice. In order, if possible, to provide funds for that object, and also, as has been acknowledged, for the purpose of breaking the banks of New York, payment of the bills thus sold in that city was suddenly required in specie, and the amount shipped to Europe. The attempt was a failure in both respects; the banks stood, and the bills were dishonored. On the 9th of October, the United States Bank suspended its payments; and it is not improper to observe that, a fortnight later, another attempt was made, under its auspices, by the debtor interest of New York, to compel the banks to expand their discounts and thus prepare the way for another general suspension. The banks, as might well be expected, unanimously refused to yield.

From that time, the fate of that institution was considered as sealed by every impartial observer. Nevertheless, the other banks of Philadelphia still persevered in sustaining it, and suffered it to become largely indebted to them. The State protracted its existence, and, as an equivalent, exacted new

(i) $6,300,000 of which, consisting principally of Mississippi and Michigan stocks, and previously contracted for, were not yet entered on the ledger.

loans from it. In the meanwhile, it could no otherwise meet its liabilities abroad than by new loans, obtained on onerous conditions; and in order to sustain its expiring credit, a resumption was at last deemed absolutely necessary.

For that purpose, the other banks of Philadelphia agreed to return five millions of its circulation held by them, and to take in lieu thereof, post notes, payable in about twelve months after date. They thought that a loan of two millions and a half would be sufficient to enable them to grant that accommodation, and that with such aid they would be able to resume and maintain specie payments. The loan was obtained principally in Boston, partly in New York. As it was principally paid in checks upon Philadelphia and in Baltimore funds, it added but little to the available resources.

Besides this postponement of five millions of its debt, the United States Bank was, rather unexpectedly, assisted by a further loan obtained abroad, which added more than three millions of dollars to its immediately available resources. The attempt to resume nevertheless failed; and it was impossible that it should not have failed. The element indispensable for sustaining any bank, confidence, was utterly lost. It seems incredible that it should not have been foreseen, that, as soon as the United States Bank paid in specie, every person who held its notes would instantaneously seize the opportunity of converting them into cash (k).

The principal liabilities of the United States Bank, payable on demand, consisted of more than thirteen millions and a half of bank notes and post notes, which, by the arrangement with the other Philadelphia banks, were

(k) The opinion of the writer of this essay was asked, at the time when application was made in behalf of the Philadelphia banks for the loan mentioned in the text, It was decidedly against a compliance with the request; and the reason assigned, was the total impossibility, on the part of the United States

During the three weeks that the Bank paid in specie, its payments amounted to about five millions six hundred and thirty thousand dollars, viz.:

Of this last item, one million and a half were for notes in the hands of the other banks of Philadelphia beyond the five millions included in the agreement; five hundred thousand for post notes over-due, and eleven hundred thousand for accumulated notes which had been protested and sued for. The drain, instead of being extraordinary, and such as could not have been anticipated, was in reality less than, under all the circumstances of the case, might have been expected.

In the preceding sketch, the acts of the Bank have been considered only in reference to their effect on the currency of the country. It may be affirmed that, in this respect, that bank, subsequent to the first general suspension of May 1837, has been the principal, if not the sole, cause of the delay in resuming, and of the subsequent suspensions. In every respect it has been a public nuisance. The original error consisted in the ambitious attempt to control and direct the commerce of the country; in the arrogant assumption of a pretended right to decide on the expediency of performing that which was an absolute duty; and in a manifest and deliberate deviation from the acknowledged principles of sound and legitimate banking.

It is not intended here to investigate the facts of a more culpable nature which are laid to the charge of the administrators of the Bank. The application of nine hundred thousand dollars secret service money, should be made public. The mismanagement and gross neglect, which could in a few years devour twothirds of a capital of thirty-five millions, are incomprehensible, and have no parallel in the history of banks. The catastrophe has had an injurious effect abroad on the securities of the several States,

Bank, of sustaining specie payments now that confidence was entirely lost. The writer added that, if the other Philadelphia banks would discard that of the United States and resume alone, not one, but three millions ought to be advanced for that purpose by the banks of the city of New York.

impaired commercial credit, and shaken confidence between man and man. It is natural that the shareholders, so deeply injured, should cling to the hope of preserving the institution, and of thus partly repairing their losses. Every facility consistent with the public good should be granted, every forbearance practised, every delay allowed, which may enable them to save the remnants of the wreck. But it is due to the moral feeling of the country, not less than to the security of its fiscal concerns, that this disgraced and dangerous corporation should not be permitted any longer to exist. How, after so many violations of its charter, its existence has been so long protracted, is indeed unintelligible!

REMEDIES.

STATE LEGISLATION.

It can hardly be expected that twenty-six independent States should all adopt such systems of legislation, as may secure a sound and uniform currency. But there are some great centres of commerce, which necessarily control the banking operations of the greater part of the country. In the present course of trade, the great importing sea-ports are generally creditor places; and the principal centres alluded to will be found to be, Boston, New-York, Philadelphia and Baltimore, Charleston, and NewOrleans. Providence, on account of its manufactures, Savannah and Mobile, on the sea-coast, Cincinnati, Louisville, and St. Louis, in the interior, are the next most important points. Some approximation of the relative importance of the great centres may be derived from the aggregate of the foreign imports and of the exports of each of them respectively. Supposing the whole to consist of one hundred parts, Boston has about twelve, New-York forty-seven, Philadelphia and Baltimore fourteen, Charleston and Savannah seven, New-Orleans and Mobile

twenty. The influence of domestic manufactures, of mines, and of other considerations, must of course vary the result.

Of those great centres, the two first are secure; and Charleston appears to have adopted a correct course. The banking system of New-Orleans is founded on principles so different from those of the Atlantic States, particularly in reference to the large amount loaned on real estate security, that it is difficult to form a correct opinion of it. But the elements of wealth are so great, and the interest of sustaining a sound currency so obvious, that, notwithstanding the embarrassed situation of the adjacent States, great hopes are entertained of an ultimate favorable result in that quarter. Under all the circumstances of our present situation, it seems that, provided a correct course should be adopted by the banks of Philadelphia, and by the Legislature of Pennsylvania, an early and nearly general resumption of specie payments would naturally take place.

The first step that appears absolutely necessary does not apply to Pennsylvania alone. All the States which have incurred debts, and which have not yet adopted efficient measures in that respect, must provide for the punctual payment of the interest and the gradual extinguishment of their debt. This must be done by providing an actual revenue, by taxes whenever necessary, and not by any new loans, or any other temporary expedient. The States must rely on their own resources, neither on any direct or indirect assumption of State debts by the General Government, nor on any assistance to be derived from the banks: neither must the banks depend on the aid of the States for carrying on their operations. The difficulties are greater in some States than in others. A great error has been committed by those which have advanced their credit for the especial purpose of establishing banks, in places where a very moderate banking capital was sufficient for all legitimate purposes. Sanguine expectations have induced others to undertake premature, and far too extensive, internal improvements, which, in their unfinished state, are nearly or altogether unproductive. The honor and interest of every State require, and justice demands, that its credit should be restored. Public and private credit are intimately connected. That of individuals is impaired when public faith is not preserved. A resumption of specie payments, on the part of banks