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EDITED Bl THOMAS HAYNES.
VOL. V. NO. 40.
of
IBY P. L. ROBINSON, State Printer,
And Publisher (by authority) of the Laws of the United State,
OFFICE NEAR THE CORNER OF WAYNE AND FRANKLIN STREETS.
ISSUED EVER! TUESDAY MORNING.
KF TERMS.—Three Dollars per annum. No subscription taken Tor less than a
year, and no paper discontinued, but at die option of tho publisher, until all arrear
ges are paid.
From the Correspondence of the Journal of Commerce.
BANKING.
New York, Ist May, 1838.
Condy Raguet, Esq.
Dear Sii:—The present condition of the commerce, currency
and commercial credit of the country, and the derangement of the
fiscal concerns of the Government, will, by every intelligent man,
be admitted to be the result of our pernicious banking system *, a
system, framed by State legislators, which sets at defiance those
immutable laws to which aH banks must submit, whether they will
or not, in spite, of legislative protection. You will see by a recent
act of our Legislature, some indication of its conviction of this
truth, and of its willingness to allow practical men to establish an
Institution upon principles which may be made to answer the great
end of regulating the exchanges, by restricting the issues of bank
notes so as to keep the exchanges under perfect control. This
being the only salutary use of any institution which can be formed
under the provision of this law; and knowing this to be a subject
on which your well disciplined mind has been long occupied, and
which you have fully examined and in its connexion with the prin
ciples of political economy, well considered, I should be happy to
receive from you an expression of your opinion upon the probable
influence of the Geneial Banking Law of this State, a copy of
which is enclosed, and particularly your ideas of the principles on
which an Institution should be lormeJ under this law, which might
be made with unerring certainty to exert a controlling influence on
the exchanges, by its action on the currency, and thus put in abey
ance those sedative and stimulating influences which grow out of our
present banking system. That system, if left uncontrolled, will
ever create vascillation and periodical convulsion in all the business
concerns of the country, at home and abroad. To propose a rem
edy for the-e evils, might well employ the pen which you have
wielded with so much ability. My own opinion is that Banking In
stitution must be so constituted, as to exert no other influence on
the commerce and exchanges if the country but what it exerts by its
action on the currency: and that its own preservation and existence
must be made to depend upon the unremitted exertion of that influ
ence, through the medium of sixty or ninety day notes, discounted
no faster than they are created by business—and to be punctually
paid at maturity, but never renewed-—returning for instant redemp
tion, the bank notes received in payment, from whatever source
they issue. The specie funds thus collected, should be deposited
in the vaults of the Bank, at its principal banking house, at which
place all its notes should be made payable on demand. This will
so effectually furnish the means of redemption, that the whole capital
may be invested in permanent securities. Any monied Institution,
organized under the General Banking Law of this State, or anv
other law, whether enacted by Congress or the States, that shall
aim at an object short of controlling the exchanges of the country,
in the mode suggested, or some other mode equally efficient, will, in
my judgment, have a direct tendency to aggravate rather than remove
the existing evils, inherent in our present vicious credit system.
I am, dear sir, with great regard,
Your most obed’t serv't,
ISAAC BRONSON.
Philadelphia, May 11th, 1838.
Isaac Bronson, Esq., New York.
Dear Sir, —Your letter of Ist inst, was duly received, enclosing a
copy of the recently enacted General Banking Law of New York,
and containing a request that I would furnish you with my opinion
upon the probable influence of the same, and particularly as to the
principles upon which an institution should be founded under it,
which might be made to exert a controlling influence on the exchan
ges by its action on the currency.
I feel highly flattered by the unmerited compliments contained in
your communication, which possibly refer to the articles on the late
crisis in our money affairs written last year by me under tho signa
ture of “An Examiner,” and shall endeavor to comply with vour
request, although I am not aware that any opinion of mine can ben
efit the cause in which you have been so long, so ably, and I may
now say, so successfully, engaged.
The plan of investing the whole or any large portion of the capi
tal of a bank in fixed securities, such as public stocks and mortgages,
as required by this new law, will be so novel to most of our fellow
citizens, that it is more than probable that a long time will elapse
before its superiority over our present banking system will be gen
erally admitted. The common impression, and it is almost universal,
is, that banks should make no loans on real estate, or, for a period
of years, but that all their transactions should consist in the dis
counting of promissory notes or bills of exchange, real or fictitious,
at comparatively short dates. This impression is most probably the .
result of a want of careful discrimination between the operations
of lending capital, and of leading credit; and as a proper under
standing of the difference between these two operations is absolutely
necessary to a correct apprehension of the true principles of bank
ing, I will take the liberty of troubling you with the process of rea
soning by which I have arrived at tho opinions I entertain, and
which with great deference are submitted to your superior judgment.
All the banks in the United States combine in their operations the
functions of banks of deposite, banks of disconnt, and banks of circu
lation. As banks of deposite they receive into their possession, re
payable on demand, or at specified periods, the money of all who
choose to open accounts with them. As banks of discount they
lend their own capital, as well as the capital of depositors, by the
discounting of notes or bills of exchange; and as banks of circula
tion, they lend their credit in the form of bank notes or of credits
transferable on their books; also by the discounting of notes or bills
of exchange. It is only for this last operation tnat banks have need
.of legislative sanction. Any individual or number of individuals
may at any time receive on deposite the money of others repayable
on demand, or at fixed periods as many of our brokers have always
been in the practice of doing; and if they possess capital, there is
nothing to prevent them from lending it, as well as the money so de
posited, to whom they please, for long or short periods, as best may
suit them. It is only when bankers propose to issue paper money
.that the authority of law is required for their issues, and that the
protection of the law is needed for the security of the the public; and
it is to meet this case that the present law has been enacted.
All the profits peculiar to banks of circulation, beyond the ordina
ry interests of money, are derived from the loan of the credit of a
Bank. From the lending of its capital, so far from there being a
profit, there is in reality a loss incurred, arrising from the expensive
process by which it is accomplished. Every one can see, that if a
hundred persons, each possessing ten thousand dollars, should unite
together in forming a bank for the sole purpose of lending their joint
capital of a million of dollars, they could not derive from its employ
ment as great an income as they derived from it before, when each
loaned out his own money himself, owing to the expense they would
incur in salaries to the President, Cashier and other officers, in the
rent of a banking house, in tha purchase of stationery, and in the
other various incidental charges which belong to the business of cor
porate banking. It is at the same time quite certain, that the secu
rity of loans made by a bank upon ordinary discounts, embracing
accommodation as well as business paper, would not be as solid as
that of the loans which the individual stockholders themselves would
have made as private capitalists seeking the the safest investments,
and it may therefore confidently he assumed, in accordance with the
fact before our eyes, that for tho mere purpose of lending capital,
such banks would never be incorporated.
It may then very naturally be asked, why do banks of circulation
. ca P lta l» at all, if the lending of capital through the agency of a
nia- 1 . ~ clly °* officers, is a losing business? The answer is very
P because without a capital such banks could not possess credit;
it i f* * i credit is the sole source of the profit sought for,
s or the interest of the projectors, in order to obtain that credit,
Standard of Union.
MILLEDGEVILLE, GEORGIA, TUESDAY MORNING, OCTOBER 23, 1838.
to submit to some loss on their capital, which may be regarded as a
part of the price they pay for the advantages they derive from having
credit to lend. These positions are so self evident, that it is not
seen how they can be controverted; and it would also seem to be
self evident, that inasmuch as the capital of a bank is only required
to furnish it with credit, its notes may freely circulate, it is for the in
terest of the stockholders that the capital should be loaned with the
greatest possible economy as to the expense of management, and
with the greatest possible caution as to the security of its investment,
for thereby it will be best adapted to the function it is ultimately des
tined to perform, which is that of being forthcoming to its full
amount, in cases of loss by the credit operations of the bank.
The question then presents itself, what is the species of invest
ment for the capital of a bank of circulation, which combines the
greatest economy of management with the greatest security? In
Great Britain the answer would no doubt be, Government funds ;
and it is no doubt upon this principle that the whole of the capital
of the Bank of England is invested in a permanent loan to the Go
vernment, and has been so invested from the commencement of its
charter.* In the United States if there was a public funded debt in
existence, such a security would no doubt by most people be pre
ferred to all others; but in the absence of such, there is no choice but
between tha stocks of some of the most wealthy States, cities, or
counties, and mortgages on real estate. The management of in
vestments in either of these modes, after they are once satisfactorily
made, is attended, as every body knows with very little expense,
the labor consisting merely in a semi-annual collection of interest
and as to the relative solidity of the security, there will naturally
exist that difference of opinion amongst individuals which always
has existed, and which has led some to prefer public stocks, and
others mortgages on land.
It may perhaps here be said, that this view of the subject has re
gard solely to the interests of the stockholders of a bank and to those
of its creditors, and none whatever to the convenience and accom
modationof trade; and that if the capitals of banks were invested
wholly in public securities and mortgages the merchants would be
excluded from all participation in the benefits proposed by their es
tablishment. This certainly would be the case, except so far as
Merciiants could offer the security demanded for permanent loans.
But the Merchant would noton that account have any greater cause
of complaint than the owners of real estate have under the present
system of banking, which has excluded them almost altogether from
loans on mortgage, and obliged them, owing to the immense ab
sorption by bank charters of private capitals which were formerly
accessible to them, to borrow money of banks for short periods with
the uncertain prospect of renewal, for enterprises or improvements
which required permanent loans. The truth however is, that let
this fact be as it may, banks are private speculations intended for
profit, and they are not called upon by any considerations of public
duty, any more than individuals are, to lose the chance of a wide
circulation of their notes, by diminishing the quality of the securi
ty by which their redemption is guaranteed.
Individual capitalists may do as they please with their property,
and may if they find it to be their interest, accept of personal secu
rity, for loans of money, as they do for loans of capital in the form
of merchandize sold on credit; but banks which undertake to issue
paper money, are not only bound, but it is their interest, to protect
the public who give currency to their notes, by refusing to accept of
any security for loans of their capital short of the most substantial
that can be obtained. Nor, indeed, is it for the interest of merchants
that they should rely upon banks for loans of capital with which to
commence or carry on business. Those possessing good credit can
obtain sufficient capital for all their prudent operations by the pur
chase of merchandize on time, or by drawing billsof exchange upon
shipments of produce, which is the legitimate inode of borrowing
for those who engage in the hazards of commerce, seeing that those
who trust them are compensated for the risk they run, in the en
hanced prices of their goods, whilst banks are deprived by their
charters of any compensation for the risk of insolvency. Bank loans
upon accommodation notes, have been at all times the cause of half
the failures of our merchants, and did a General Banking Law ex
ist, which would prevent partial assignments to secure banks for the
sake of endorsers, we should rarely see bank dividends exceed the
lawful interest of money.
In thus denying however, the legitimacy of loans of capital to
merchants by banks of circulation, it is not to be inferred that they
are not to participate in the benefits of banking; so far from this be
ing the case, lam of opinion, that nearly the whole of the advan
tages resulting from the circulating part of the system, belongs to,
and must enure to, them, and this brings me to the question,—what
is the legitimate mode of lending the credit of a bank?
Every body knows, that when a bank acquires the confidence of
the community, its notes are circulated as money, without immedi
ately returning for payment, and that the wider this confidence ex
tends, the more extensive will be the circulation. Banks can there
fore discount notes or bills of exchange beyond the amount of the
capital at their disposal, to an extent proportioned to their credit;
and as their circulation is greater at some times than at others, it is
manifest that no bank could be always prepared to meet all possible
demands upon it for specie, unless the notes it discounted were at
such short dates as not to be very far off from the period of maturi
ty. WFat is the greatest length of time that notes discounted by a .
bank of circulation should have to run, is more a matter of practi
cal experience than of politic-economical adjustment. It is very
clear that if a bank were to discount no note having more than thirty
days to run, it could never be in danger of embarrassment, seeing
that in case of a run, the mere suspension of all fresh discounts would
■enable it in 30ds. to collect an amount equal to the whole of its lia
bilities. On the other hand, it is equally clear, that if a bank were
to discount chiefly paper having six months and upwards to_uin, it
would be in no condition to meet any extraordinary demand for spe
cie, either f»r exportation, or, in consequence of a domestic panic,
and would in all probability stop payme.nt from the necessarily slow
process of its collection. A safe medium lies between these two
terms.
The banks of France or Great Britain never discount paper that
has more than ninety or a hundred days to run, and thirty years ago
it was not the general practice of the Banks of Philadelphia to dis
count notes that had more than sixty days to run. Os late years the
competition of banking, in connexion with the augmentation of bank
capitals, employment for which on short paper, could not be found,
has introduced the custom heie and elsewhere, of discounting paper
at four and six months, and it would not be hazarding too much to
say, that to this practice may be ascribed the suddenness of the ca
tastrophe which overwhelmed us in May 1837, by a general suspen
sion of specie payments, as well as the pernicious extent of credits on
merchandize sold, to which our importers and manufacturers are re
luctantly obliged to submit. If we are to look to experience as fur
nishihg any safe guide in the matter, it appears to me, that the oper
ations of the Bank of France present a conclusive demonstration on
the subject. That institution during the latter months of 1836, and
the early months of 1837, which embraced a period of great com
mercial disaster in Great Britain and the United States, the effects
of which were sensibly felt in France, experienced no extraordinary
reaction. The short periods at which all her loans fell due, gave her
a control over the currency which enabled her in a short time to
check the demand for specie, and ultimately to bring it back again
into her coffers.
In order, however, that a bank may have that control of its issues,
which is absolutely essential to its solvency, and to the good of both
creditors and debtors, the paper discounted by it must not only have
but a short time to run, but it must be founded upon an actual trans
fer of property, and must be payable without renewal. There are
many persons who do not perceive any difference between the secu
rity of an accommodation note, and one founded upon a real ttansac
tion, and on that account do not see why the latter should be prefer
red to the former in the operations of Banks. They say, for in
stance, that an accommodation note drawn by Stephen Girard and
endorsed by John Jacob Astor, would be better security than a real
note drawn by John Smith and endorsed by Dobbs &, Co., given for
a hundred hogsheads of sugar. This no doubt might be the case;
but every applicant for an accommodation at bank is not a Stephen
Girard or a John Jacob Astor, such applicants indeed being very
rare. It may happen that Dobbs &. Co. may want an accommoda
tion for a similar sum, besides the amount discounted on the sugar
note, and might offer Mr. Smith as endorser. Now what wonld be
the difference between the security of these two notes? Why pre-
• The Capital of the Bank of England does not appear in the monthly atatemant
published in the newspnpers, of its Assets, which comprise besides bullion, only the
securities received in exchange for the notes or credits of the Bunk. The Capital is
held in reserve, as a guarantee for the faithful discharge of its oblijiitions held by the
public, in ease of any lore arising from it* commoreie!
Our Conscience—Our Country—Our Party.
this; the Bank, after it has discounted the real note, and paid
Dobbs & Ce. the nett proceeds, knows that Dobbs & Co. have $lO,-
000 tn money, less the discount, and that Smith has a hundred hogs
heads of sugar worth SIO,OOO, and that consequently there is a
double seenrity for the payment of the note. In the case how
ever, of the accommodation note, the bank only knows of the
existence of the single SIO,OOO, less the discount, paid to Dobbs
&• Co. and although it is possible that Smith may have SIO,GUO
worth of property in some shape, not pledged for some other debt,
yet the existence of that fact is by no means certain, and it is even
possible that all the property of which Smith is in possession, mav
be SIO,OOO, received by him at another bank upon the discount o's
an accommodation note with Dobbs <k Co’s endorsement. The dif
ference therefore, in point of security, is precisely the same, as that
between a bill of exchange drawn upon a shipment of cotton to Liv
erpool, and one drawn upon a credit obtained from a London house,
known by the name of a Kite; a difference which has been too pal
pably demonstrated within the past year, to render any elucidation
necessary. It is no doubt impossible for a bank at all times to as
certain from the appearance ofa note whether it is real or fictitious,
but if the ruleoT granting no renewal, be rigidly adhered to as an
indispensable requisite to a sound system of banking, deceptions
would very soon be detected, and it is even possible, that in times
of high speculation, the same property may be sold over uind over
again,so as to give rise to a number of notes representing the same
commodities; but any one can perceive that these speculative notes,
if offered for discount, are, so long as the actual holders is in debt
for the property, for which they were issued, are nothing but anoth
er form of accommodation notes. This mode of raising monev is a
well known expedient, and one which banks are bound to discounte
nance, if they wish to consult the security of their loans.
In the management of banks of circulation, there are five distinct
interests to be consulted; namely, those of the community, of the
holders ol bank notes, of the depositors, of the stockholders, and of
borrowers. Banks established upon the plan here suggested, and
under the provisions of the New York law, it appears to me would
promote the interests far more certainly than those established upon
our present system.
The interests of the community would be promoted by a greater
stability in the value of the currency, seeing that expansions and
contractions would not be so liable to occur under a system found
ed upon a capital placed for the time being beyond the reach of the
directors, and upon a credit to which limits would be prescribed by
the prohibition to issue notes beyond the amount of the property
pledged in the hands of the Comptroller, and by the known fact on
the part of the directors, that in case of an excess of issues, they
would have nothing to rely upon to meet the reaction, and to save
the bank from the penalty of fourteen per cent, per annum interest,
besides forfeituie of existence, but the discounted notes and bills.
The interest of the holders of bank notes would be promoted by
having as a guarantee for their redemption the double security of
the promissory notes and bills of exchange, in the discounting of
which they were issued, and of an equal amount of public Stocks or
Mortgages pledged for the specific object, thus placing the certainty
of ultimate, if not immediate redemption, beyond the contingency of
commercial disasters.
The interest of depositors would be promoted by having the right
at all times to draw out specie, or bank notes, and thereby to enjoy
the benefits of the security afforded to note holders; or, in'case of a
suspension of payment by the bank, they would have for their reim
bursement, the entire amount of the assets existing in the form of
discounted paper and of specie, and of such portion of the invested
capital as was not pledged to the note holder.
The aggregate amount of these assets, could under no conceivable
circumstances, if the fixed securities were adequate to meet the notes
as they ought to be, be less than double the amount of the deposits,
unless the deposits should exceed the amount of notes in circulation;
a circumstance which is not likely to happen, if we can judge from
the statements contained in the Secretary of the Treasury’s report
of Bth January last, by which it appears that at four periods named,
viz. January Ist of the years of 1834, 1835,1836 & 1837, the ag
gregate circulation of all the banks in the United States uniformly
exceeded the deposites, notwithstanding the large amounts at some
of those periods standing to the credit of the Government.*
The interests of the stockholders would be promoted by lending
their capital on the safest security to be obtained, and their credit
with the greatest certainty of prompt reimbursement.
And lastly, the interest of borrowers would be promoted by lend
ing capital to those who could give the security required for capital,
for as long a term as would enable them to consummate their en
terprises, and by lending credit to those who could offer the security
required lor credit, with such ceitainty that the rejection of a good
business note at 60 or 90 days, could scarcely ever take place, seeing
that the average daily income of the bank would be equal to the av
erage daily demand for discounts, and would no part of it be pledged
to the renewal of old notes. And here let me remark by the way,
that a bank, however, great its capital, should not overlook small
dealers, but should imitate the example of the bank of France, which
in 1836 discounted 254,635 notets (out of 406,187) for sums less than
S2OO each, without losing fifty dollars in the whole course of the year.
Many small dealeis give more circulation to notes, th ah a few large
ones. s
Although the New York plan appears to me to be the greatest im
provement in banking, which has yet been introduced into our coun
try, and which we are likely to see, so long as there exist nine and
twenty separate Governments authorized to grant banck charters, it
possesses imperfections, like every other that has been tried. But the
semi-annual statements of the affairs of each Association requited by
the law, to be published, together with the power conferred on the
chancellor of inspecting the affairs of the institution upon the applica
tion of creditors, or shareholders interested to the amount of a thou
sand dollars, will apprise the public from time to ti n e of their actual
condition, and it is hardly possible, that under thislaw, which requires
capital to be paid up, and not promises to pay, there can be any frau
dulent Associations organized, like many or those which have risen
in some of our States under regular charters, and which have brought
such calamitous losses upon the holders of their notes and stocks.
But, I am bound to say, that in my humble judgement, the sys
tem does not possess in itself any certain guarantee against over is
sues of paper. Private interest is always apt to influence the con
, duct of those who have charge of monied institutions; and notwith
standing the penalties denounced by your law for suspending specie
payments, it is not to be expected that a multiplicity of banks, inde
pendent of each other, and all striving to push their credit to the ut
most limits, will not at times cause great derangement in the curren
cy, and pet haps stop payment, by departing from the rules laid
down as the only safeguard against exccsss. I therefore entirely
agree with you in the position, that without the agency of a power
ful institution to keep the issues of the other banks within prudential
bounds, the anticipated benefits of the new law cannot be fully re
alized. And this brings me to the second branch of your communi
cation, as to “the principles on which an Institution should be foun
ded under this law, which might be made with unerring certainty, to
exert a controlling influence on the exchanges by its action on the
currency.”
A Bank with a capital of twenty or more millions of dollars, loca
ted in the city of New York, the commercial centre of the Union,
designing to have the whole of it gradually invested in fixed securi
ties, would undoubtedly possess a credit, adequate in process of time,
to give the widest possible circulation to its notes and bills at home
and abroad; butjlie extent to which she could issue notes if conduc
ted on the principles above laid down, of discounting no paper ex
cept that representing business transactions having not more than
ninety days to run, would bo limited perhaps, for some time to come,
to a comparatively small sum. I have no opportunity of forming an
estimate of the probable amount of such paper created at New York
in the course of a year, or, the proportion of it which wotdd be likely
to fall to the share of a new bank, and of course am not able to judge
what would be its power over the currency. It appears to me, how
ever, that when the average discount line of such a bank should reach
five millions of dollars, it could exercise a salutary control over the
issnes of the other banks. This, I think, would be evident to any
one who adverts to thedact that the reduction of bank discounts and
loans in the city of New York between the Ist June; 1837, and the
Ist of April, 1838, to the extent of nine millions of dollars, raised the
* Thia position in proved thus; ft Bank with ft capital of $1,030,000 can onlv issue
notes at the amount of $1,000,000, which would be done in the discount of bills. If
the depositor amount to $1,000,000, they would be represented by specie, unless they
were loaned out in the discount of other hills. Lot us suppose that half of the de-
• nofiitos, that is, §300,000, were loaned out, the result would be, that whilst the note
holders would look to the public Stock? and Mortgages for payment, the. depositors
P. L. ROBINSON, PROPRIETOR.
value of the currency from a depreciation of ten per cent nearly to
par.t
I need hardly say to you, who as a practical banker understand
this subject so well, that the refusal of a powerful bank to join in a
general race of expansion, would throw balances in its favor through
the means of deposits and collections, against all the banks that
should be guilty of that folly, and render them liable to a demand for
specie, which the creditor bank, if it faithfully performed its duty to
itself and the public, could not postpone for more than twenty-four
hours, thereby nipping in the bud the earliest symptoms of excess.
The point then once attained of keeping the currency of New
York in a sound condition, and thereby depriving the spirit of over
trading of its usual aliments, the next question to be examined, is,
what influence would this exercise over the currencies of other cities?
In meeting this question, one cannot be at a loss. Jr is easy to per
ceive that the slightest depreciation of any neighbonrig currency, as
for instance that of Philadelphia, would shew itself in a rise in the
prices of stocks, bills of exchange and merchandize over those of
New York ; the consequence of which would be, that those articles
which be sent from New York to Philadelphia for sale, by which
means the banks of the latter city would become indebted to those
of the former, and a demand for payment in specie would compel
them to reduce their issues until the Philadelphia currency should
become as valuable as that of New York. It is from this mutual
action of the currencies of the different cities upon each other, that
under a bona fide system of specie payments, the exchanges be
tween them cannot long exceed the mere expense of sending coin
from one place to the other; precisely on the same principles that
the currencies of different countries operate upon each other, and
as we shall see proved on the day that the banks of Philadelphia
resume specie payments. It is not necessary to say further on this
head, than simply that a sound and uniform condition of the curren
cies of the commercial cities on the atlantic, exercises a control over
the currencies of all the inrerior cities and towns where specie
payments in reality exist, owing to the constant demand for remit
«ances to pay debts to the Eastern Merchants, which must be done
in specie if bills cannot be had at par or a little above it. A Bank
established upon the plan here suggested, if it could attain an aver
age discount line of ten or fifteen millions of dollars, which it might
do, by discounting Boston, Philadelphia and Baltimore, as well as
New York paper, would have the entire control over the exchanges
of the country through its action on the currency, and keep them so
nearly at par, that the premium or discount on a bill of exchange,
domestic or foreign, would never in ordinary times exceed the ex
pense of the transmission of specie.
But in ascribing so vast a power to a bank possessing no branches,
and the notes of which would consequently all be payable on New
York, let it never be lost sight of, that this power belongs solely to
the elastic principle of the bank, which can only be preserved by a
strict adherence to the rule of discounting none but business paper
at short date not renewable, and by a rigid demand of specie from
all. other banks against which balances accrue in the course of its
daily transactions. And now we have arrived at the most difficult
problem to be solved in the whole range of this investigation. How
can the stockholders ensure on the pai» of any set of managers, an
undeviating adherence to these cardinal rules ? Upon this subject
there will of course be a variety of opinions. Some will imagine
that restricting the rate of dividends of the banks to a specified
moderate rate would effect it, by taking away all motives for expan
sion. Others may fancy that prohibiting discounts to the managers
would be effectual; and some may suppose, that making the mana
gers liable in their individual capacities for losses resulting from a
departure from their instructions, would accomplish the object; but
who would render gratuitous services under such a responsibility ?
For myself, I should prefer a plan resembling somewhat the one
recommended for the bank of England by Mr S. Jones Lloyd, in
his first pamphlet in reply to Mr J. Horseley Palmer. It would be
that of having two sets of managers, each elected by the Stockhold
ers, independent of each other, one a Board of Trustees to super
intend the investment of the capita), and to determine from time to
time the amount that should be loaned out on discount, so as to avoid
at the threshhold the danger of an over issue in case a spirit of
speculation should give rise to an undue extension of business; the
other a Board of Directors to decide upon the choice of the paper.
This is not the place for a detailed plain for such an institution,
but it appears to me, that if the Trustees and salaried officers were
prohibited from borrowing from the institution directly or indirectly,
as the managers of the principal Savings Bank in this city are, and
if the salaried officers were appointed by the Trustees and not by
the Board of Directors, and the President and Cashier were invested
with an absolute veto upon discounts made in manifest violation of
the standing rules, a safe and prudent management of the institution,
might be calculated upon, especially if these rules were made stipu
lations in.the articles of association, and thus not alterable by Trus
tees or Directors.
I find, dear sir, that I have extended this letter to a much greater
length than I anticipated when I began it, but the difficulty of ma
king myself intelligible in fewer words, must be my apology. If it
be found to contain opinions which generally coincide with your
own, it will be to me a source of much gratification: believing as
I do, and have believed during tho seventeen years of our acquaint
ance, that your practical experience as a banker, and your familiar
knowledge of the principles of finance, give our judgment in such
matters, claims to the highest respect.
lam, dear sir,
Very respectfully,
Your obd’t. serv’t.
CONDY RAGUET.
♦' ,he disfco « nts of ‘he 22 City Banka on 1 June,
amounted to $31,351,536
And the loans to 4,082,657—38,434,193
The discounts of the 21 City Banks on 1 April,
1838, amounted to $26,620,701
And the loans to 3,107,979—29,728,6J0
Total reduction $8,705,513
MILLEDGEVILLE COURSE, GEORGIA.
—THE Annual Jockey Club
Fall meeting will commence
ci on Monday, the 12th of No-
vember next, and continue
s * x< lays. The followingpur
l.ji Jimi W&sk ses be given.
INt - day—A Post Stake
four mile bouts, entrance five
hundred dollars, two hundred
and fifty forfeit—3 or more to
make a race; to close the first of October, and name at the stand.
Iverson & Bonner, -------J
Love! & Hammond, ------ - ]
2d day—Mile heats, for a fine Silver Pitcher and Cup, worth S2OO,
for colts and fillies, 2 or 3 years old, $25 dollars entrance—3 or more to
make a race.
3rd day—Two mile heat, free for all, Purse, $ 300.
4th day—Three “ “ “ “ Purse, 500.
sth day—Four “ “ “ “ Purse, 1000.
6th day—One mile heats, best 3in 5, Purse, 400.
11. F. YOUNG, & CO. Proprietors.
Milledgeville July 31st, 1838. 28—wilt.
NEW GOODS.—The subscriber has the pleasure to inform his friends
and customers, that in addition to his former stock, he is now re
ceiving a new and general assortment of Fall and Winter, Fancy and
Staple Goods, which has been carefully selected by himself in the
Charleston, New-York, and Boston markets, from the latest arrivals
from Europe, which he will dispose of at the lowest prices, to responsi
ble customers, at the usual credit. Thankful for the past patronage of
his friends and the public, he hopes to merit a continuation of the same
—and respectfully invites them to call and examine his stock, which will
he coustantlo replenished by frequent and regular remitanccs from his
friends in New-York and Charleston.
Ho also has on hand, a large lot of the best Cotton Bagging—Negro
Shoes—Blankets—Wool Hats, &c. &c. &c.
JAMES T. LANE.
September 11. 34 Qt
KFI ™8.3v.~ FORCE &Tc 6.
WHOLESALE SHOE DEALERS,
s™* FA””® 'I ugusta, Georgia.
1000 — One Thousand Packages Boots and Shoos, oomprising
every article in the line, which enn be sold ns low a i.i the Northi in cities—nil ai
rangrinents being with miinulucturcs direct. A full assortment of all hinds ts
Leather.
Augusta, March 20. B. W. FORGE & CO.
tAW. —The subscribers has removed from Clarksville to Cassville, mid will prut
i tioe Law in all the Counties < f the Cherokee Circuit, and in the Counties of
Cherokee and Banton, Alabainu. His office is in the Wing of Dyer’s Store.
April 21 14—ts WM. H. STEELMAN.
WHOLE No. 248.