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ON TIIK lith I»AY OK FF.IIRr\HY. 1*34,









R E P O R T , 6LC.

T I I " Union Committee" appointed by the meeting of
merchants and others (signers of the memorial to Congress)
held on the 11th day of February, 1834, at the Merchants'
Exchange of New-York, submit the following report: in
which as the only means in their power of inducing a reconsideration of the subject by the State Legislature, the Committee have imbodied their views respecting the removal of
the public deposites and a National Bank.'
The Committee, anxious in the first instance to ascertain
Che situation of the State Banks and of the Branch Bank in
this city, and the probable amount to which their accommodations might be extended, applied to them for that purpose.
The Banks have, almost universally, cheerfully complied with
that request, although some delay has necessarily taken
place ; and the statement annexed to this report which exhibits their situation on the 1st of October, 1833, and the
1st of February 1834, respectively, shows that, so far from
any curtailment having taken place, the accommodations
given by the Banks have, during that period, been increased
more than five millions, and, on the 1st of February amounted
to almost forty millions of dollars.
On the 1st of October last the loans and discounts
of the three Banks, which have since been
selected to collect the revenue of the United
States, amounted to
. . .
Those of the other 16 Banks, then in operation to 18,953,183
And those of the Branch of the United States
On the 1st of February last those of the three
selected Banks amounted to
Those of the 17 other city Banks then in operation to
And those of the Branch Bank to



It was evident from that statement, that the City Banks
had extended their loans and discounts to the utmost extent
consistent with their safety. The liabilities of the eighteen
Banks of which we hare complete returns, including the
aggregate amount of their circulation and public and private
deposites, and deducting that of their own notes and checks
drawn upon them, in the possession of the several Banks,
and not returned and exchanged till the ensuing morning,
amounted on the 1st of February last, exclusively of the balances due to Banks out of the city, to 15,500,000: and the
aggregate amount of the specie in their vaults to 1,652,000
dollars. This proportion is known from experience to be
sufficient in ordinary times, and will prove so now, so long
as the amount of public deposites shall not be materially
diminished ; and especially at a time when there is not and
cannot be anv foreign demand for specie: but this amount
of specie could not be sensibly lessened without endapgering
the safety of the Banks.
Even if willing to encounter the risk of still further lessening the ratio of specie to liabilities payable on demand, it is
not in the power of the Banks to do it at pleasure ; since the
ability to extend their discounts beyond the amount of their
capital depends entirely on that of their circulation and deposites, and these are regulated by the wants of the community, and not by the operations of the Banks. Should they,
by a simultaneous effort, increase at this time their discounts
b'y two millions of dollars, they must to the same extent
issue an additional amount of bank notes, or open additional
credits on their books (eommonly called deposites) in favour
of those whose notes they might discount: and by far the
greater part of this excess of issues, or book credits, beyond
the amount wanted to effect the payments of the city, would
be almost instantaneously returned upon them, either by
transfers of the surplus amount to other cities, or in some
other way.
In the present state of public excitement and apprehenr
sion, the slightest incidents may produce fatal effects. An
unfounded alarm as to the situation of the country Banks,
has shown the necessity imposed on those of the city to husband their resources, In that instance, we are gratified
to find that the measures of relief which were immediately
adopted have been attended with complete success: and
that the Banks of the interior by a salutary though painful
curtailment of their issues, and by judicious measures for the
redemption of their notes, enjoy now the same confidence as



The preceding observation* are strictly applicable to all
the City Banks which rely exclusively on their own resources. The late great increase in the amount of loans
and discounts belongs almost entirely to the three Banks
selected to collect the public revenue, and is due partly to
the increase of about one million of dollars in the amount of
public deposites in this city, since the first of August last; but
principally to the fact that the selected Banks have increased
their discounts almost to the whole extent of the public
moneys in their hands. Whether they will be able to continue their accommodations to the same amount depends on
a contingency, which it is not yet in their power to ascertain,
viz., whether their receipts derived from the United States
revenue, which may be collected during the ensuing months
at New-York, will be equal to the amount of the Treasury
drafts for the public service during the same period.
The city of New-York has had no reason to complain
of the curtailments made here in its discounts by the Bank
of the United States. Notwithstanding a decrease of more
than four millions of dollars in the amount of the public and
private deposites in the New-York Branch since the first
of August last, the loans and discounts here do not vary
essentially from the amount allowed, either on the first of
August or the first of October, 1833. But it was presumed
that the same reasons which had induced the Bank to
strengthen this important place, had lost nothing of their
force; and it was the opinion of the Committee that the
capital of two millions and a half, originally assigned to the
Branch of this city, which is but one-fourteenth part of the
whole capital of the Bank, was much less than is now due
to the principal centre of the commerce and moneyed transactions of the country. Strong representations were there­
fore made for the purpose of obtaining from the Bank positive
assurances, that no diminution at least of their discounts, or
in the purchase of bills of exchange, should take place in this
city, and that the forbearance in calling for balances due by the
city banks, should be continued to the same extent as hereto­
fore, during the two ensuing months.
A disposition to comply with this request was early mani­
fested : but an intervening incident induced the Bank to
postpone a definitive answer, \Nhich was not received till yes­
terday. It will be seen by this, that the Bank of the United
States accedes to the course proposed by the Committee of
Correspondence, *' that no diminution up to the first of May
pext, be made in the present amount of loans and discounts



in the -city and state of New-York, and, if practicable, that
an increase be made in the line of domestic bills of exchange,
discounted at the office in that city, and that the Bank will
not call for the payment of such balances as may become due
to it by the City Banks up to the first of May next," it being
understood that, in case the Bank of the United States should
become indebted to the City Banks, a similar forbearance on
their part is to be observed. The arrangement to be subject
to be changed by the Bank, in case of further hostile action
of the Executive, or any unforeseen event.
Upon the whole, the Committee entertain a confident
hope that the accommodations now given by the banks will
not be lessened during the ensuing months ; but cannot hold
out the expectation of any material increase. The only
mode by which some relief can be obtained from that source,
without increasing the liabilities of the Banks payable on de­
mand, which suggests itself, is some uniform plan for an
increase of special deposites, bearing a moderate rate of
interest, and not to be withdrawn before stated periods according to agreement.
The object of this measure must not be misunderstood.
It cannot bring into action any considerable portion of inac­
tive moneyed capital, since there is hardly any which is not
at this time actively employed, either directly, or indirectly,
as ordinary Bank deposites. Its only effect would be to sub­
stitute, for the private credit which from want of confidence
is now withdrawn, bank credit in the shape of certificates of
deposite, which the holders might negotiate.
would be more convenient, but seem to be forbidden by law.
That plan has been successfully adopted in Massachusetts,
and several foreign countries. The City Banks are the only
proper judges of its practicability, safety, and utility, here,
and at this time ; and they have accordingly been requested
to take it into consideration.
In other respects the Committee could recommend to
them nothing more than to take also into consideration the
propriety of the following measures:
An agreement between the several Banks, founded upon
equitable principles, not to demand from each other, for the
present, payment in specie of the balances which may re­
spectively become due to any of them ; unless such balance
should exceed a certain sum in proportion to their respective
A uniform and efficient plan for the redemption of coun­
try* notes in this city, together with such means as may be




devised for the purpose of facilitating, at this time, the coun­
try remittances.
An application to our representatives in Congress, urging
the necessity of passing immediately the bills now before
that body, for making the silver coins of Mexico and the
states of South America a legal tender, and for raising the
value of the gold coins to their market price ; suggesting, in
reference to the last subject, that, for the sake of uniformity,
and of avoiding delay, the same rule should be adopted as
in the estimation of duties on foreign importations.
An application to Congress for a moderate and permanent
appropriation, which may enable the mint to pay in American
coins, without delay or expense* for the gold and silver bul­
lion, or uncurrent foreign coins which may be brought to that

Since it was obvious that the pressure on the money market in this city was not due to any curtailments in the usual
accommodations by the Banks, but to an increased demand
for money, or, to speak more correctly, for credit; the attend
tk>n of the Committee was called to an investigation of the'
causes to which this state of things must be ascribed.
The causes which have been suggested as more specially
affecting this city, are the effects of the Tariff, and of the pur-'
chase of foreign stocks on its capital. Public opinion assigns
the removal of the Deposites, and the curtailment by the
Bank of the United States, as the general and immediate
causes of the present crisis throughout the whole country.
1. It was found impracticable during the last session of
Congress to arrange the existing differences on the subject of
the Tariff by an act that should embrace all the details per­
taining to that intricate subject. In order to remove a press­
ing and imminent danger, it became necessary to discard all
the details, and resort to a compromise embracing only gen­
eral principles. It could not but be expected that defects
might be discovered and consequences ensue, not perceived
or contemplated at the time when the act was passed. It is
believed that the great importance to one party, and the
great sacrifice required from the other, by the conversion of
duties payable at a distant day into cash, or short duties,
were not estimated at their full value. That sacrifice falls
most heavily on that city in which more than one-half of the



revenue is collected. The duties did not, under the old sys­
tem, become payable till about the time when the importer
was paid by the consumer. At present, the New-York im­
porters not only collect as heretofore, but in fact advance to
government one-half of the whole amount of duties on im­
portations, which is ultimately paid by the consumer.
Without entering into a critical analysis of the subject, it is
sufficient to observe, that an additional amount 01 capital,
equal to that of the duties, is now required, in order to carry
on the same quantity of business in articles on which the du­
ties are now payable in cash, or at much shorter periods than
The Committee are unanimous in the opinion, that the prin­
ciples of the Tariff compromise ought to be strictly respected,
and no modifications proposed but such as are consistent with
its true intent and spirit. A Warehousing System, founded
on the principle, that the time at which the duties shall be paid
shall be computed from the time when the merchandise is
withdrawn by the importer from the warehouse, and not from
the date of importation, the Committee believe to be entirely
of that character, similar to that adopted in every other com­
mercial country, and absolutely necessary for the protection
of commerce. As a bill having that object in view is now
before Congress, a sub-committee has been appointed, for
the purpose of collecting all the information connected with
the subject, and of corresponding with the representatives of
this city in that body.
2. New-York has become the principal centre of all the
moneyed transactions of the United States. Large amounts
of stocks, principally from the south-west, have been pur­
chased here, with a view, in a great degree, to their sale in the
English markets. This has not of late answered the expecta­
tions of the contractors. They may indeed have been ena­
bled to borrow abroad to a considerable extent on the credit
of those stocks ; but it cannot be doubted that a large amount
remains on hand, and has absorbed a corresponding portion
of the capital or credit of this city. For this there is no rem­
edy. But a still greater evil has grown out of the speculations
on some of those and several other stocks foreign to the city.
Ceasing to be legitimate investments of money, frequent and
large sales, on time, of stocks not held by the seller, and where
the principal generally remains unknown, have degenerated
into pure stock-jobbing; a most pernicious species of gam­
bling ; the cause of artificial and sudden falls in the price of



stocks, ruinous to innocent individuals, and generally to those
engaged in it; and which has tended at this crisis to increase
the want of confidence. The Committee has thought it its
duty to pass a resolution, earnestly recommending to the Board
of Brokers to discontinue the practice, and has requested the
co-operation of the Banks to carry that measure into effect.

In approaching the subject of the removal of the public deposites,the first observation that occurs is, that the measure, con­
sidered only in its connexion with the fiscal arrangements, the
currency, commerce, and public or private credit of the coun­
try, was at least wholly unnecessary and uncalled for. Ab­
staining from the discussion of any question, either concerning
the rights of the Bank, or at issue between the Administration
and that institution, or relating to the respective powers of the
executive, legislative, and judicial departments of Government,
it is only as they are of a commercial and fiscal nature that
the Committee intends to examine the reasons assigned by
the Secretary of the Treasury for the removal.
The first reason was, that, judging from the past, it was
highly probable that "the public deposites would always
amount to several millions of dollars; and that it would evi­
dently produce serious inconvenience if such a large sum were
left in possession of the Bank until the last moment of its ex­
istence, and then be suddenly withdrawn, when its immense
circulation would be returning upon it to be redeemed, and
its private depositors removing their funds into other institu­
tions." It may be observed, in the first place, that no incon­
venience was felt in March, 1811, when the charter of the
former Bank of the U. States expired, from the fact, that as
late as the 1st January of that year the public monies in that
institution exceeded six millions, and on the day of the termi­
nation of the charter amounted to two and a half millions of
dollars. But the Secretary of the Treasury, in his annual re­
port on the finances, estimates " the balance that would be
left in the treasury (that is to say, the whole amount of the
public deposites) on the 31st D e c , 1834, at less than three
millions of dollars; and that the receipts of 1835 will be less
than those of 1834." The Secretary could not, on the 28th
Sept., when he removed the public deposites, have been aware
that such would be the result of his further investigations, and
that since the public deposites would naturally and gradually
be lessened between the 1st of October, 1833, and the 31st



D e c , 1834, from near ten millions to less than three million*
of dollars, and would probably be liable to a still greater
reduction during the year 1835, it was quite unnecessary to
order an immediate removal, in order to avoid the danger of
their magnitude in the spring of the year 1836. This single fact,
thus officially announced,—the natural and gradual reduction
of the public deposites, in the course of the present year, to
less than three millions of dollars,—refutes all the arguments,
of every description, urged in justification of that measure.
The second reason assigned is, however, of a more complex
nature. The secretary is of opinion, that the superior credit
of the notes of the Bank of the United States is occasioned
altogether by the provision in the charter to receive them in
all payments to the United States; that they will be subject to
an immediate depreciation at the expiration of the charter,
and ought to be previously and gradually withdrawn; and
that the same engagement in favour of the notes of any State
Bank would give them equal credit, and render them equally
convenient. And he considered the immediate removal of
public deposites necessary for the double purpose of prevent­
ing the inconvenience of the sudden withdrawing of the whole
circulation of the Bank of the United States, when its charter
shall expire, and of preparing in time the substitution of an
equally sound and uniform currency to be furnished by the
State Banks.
The Committee is of opinion that the superior credit enjoyed
by the notes of the Bank of the United States is due princi­
pally to the general confidence in its management and solidity;
that they have occasionally, in the interior districts of country,
a greater value than the notes of specie paying local banks,
not for local payments, but as remittances to the sea-ports;
and that the principal effect of their being received every­
where in payment of all debts due to the United States has
been to enable the Bank to increase the amount of its notes in
circulation. Those notes alone may, at the expiration of the
charter, experience a depreciation, which being payable at
distant places in the interior, may at that time be found in the
sea-ports, unless the Bank, a<? is probable, should find it their
interest to pay them wherever presented.
But the obv ious mode to lessen the gross amount of these
notes would be a repeal by Congress of the provision which
makes them receivable in payment of debts due to the .United
States. The removal of the public deposites, by compelling
the Bank to curtail its discounts, and only on that account, has
an immediate effect on the amount of its private deposites, but



cannot alone have the slightest on the circulation of its notes.
W e find, accordingly, that while the individual deposites of the
Bank have been lessened between the 1st of August, 1833, and
the 1st of February, 1834, by a sum of near three millions and
a half dollars, the nett circulation, as appears by the following
table, has remained the same.
Loxni ami Diicounti

Public l>poiitu

Individual Drpoiilei

Nrtt Circulation

1838,1 Aug. $64,160,000 $7,600,000 $10,152,000 $18,890,000
Sep. 62,653,000 9,186,000
9,457,000 18,413,000
Oct. 60,094,000 9,869,000
8,009,000 19,128,000
Nov. 57,210,000 8,232,000
7,285,000 18,518,000
Dec. 54,453,000 5,162,000
6,827,000 18,651,000
1834, Jan. 54,911,000 4,230,000
6,735,000 19,202,000
Feb. 54,843,000 3,126,000
6,715,000 19,260,000
No effect whatever has been produced by the withdrawing,
between the 1st of October and the 1st of February, public
deposites to the amount of $6,743,000. If the removal can
in no way lessen the circulation, it was certainly unnecessary
to resort to that measure for that purpose. But it is worthy
of notice, that at the very time, when the curtailments by the
Bank were alleged as a cause for the immediate removal of
the public deposites, the attempt should have been made to
justify that act, on the ground that it was necessary for the
purpose of lessening the Bank circulation, and thereby com­
pelling it to lessen still more the amount of its discounts.
The Committee will not discuss here either the propriety
or the practicability of the substitution, for a national, of an
Executive Bank, formed by the association of State Banks,
selected for that purpose by the Treasury. But, if, as the
secretary asserts, the privilege of being received in payment
of all debts due to the United States is sufficient to render the
notes of State Banks equally convenient, and entitled to the
same credit as those of the Bank of the United States, there
was certainly no necessity for intermediate preparation. It
was quite unnecessary to remove, for that purpose, the public
deposites, which at all events must, within a year, according
to the Treasury estimates, have been reduced gradually and
without effort to a very moderate amount. The State Bank
notes are always abundant and readj: and an act investing
them with the privilege of being received everywhere in pay­
ment of debts due to the United States, and passed the month
before the charter expired, would, if the opinion of the Secre­
tary of the Treasury is correct, at once bring them into circu­
lation, and effect the contemplated substitution. But if pre-



paration were requisite, the removal of the deposites was still
unnecessary. There is nothing to prevent, and the proper
and obvious mode of effecting the object is, an early Act of
Congress to the same effect. It is not quite certain that the
Executive is not of opinion that this may be done by his sole
authority, and without any legislative sanction. An anxious
wish and design to concentrate all the powers of government
in that department, and to subject the public purse, the cur­
rency, and the commerce of the country to the will of one
man, is apparent through all the arguments and acts of the
administration in relation to that subject.
The curtailment of its discounts by the Bank of the U.
States, during the months of August and September, 1833,
appears to have been alleged in justification only of the
immediate removal of th Deposites. Those curtailments
were evidently made in anticipation of the proposed removal,
and would have ceased, of course, had the plan been aban­
doned. But it is necessary to observe, that the pressure,
which the secretary states to have become so intense before
the first of October in the principal commercial cities, and
the presumed curtailments by the State Banks, had no exist­
ence in the city of New-York. It appears by returns of the
Bank commissioners that the loans and discounts of the four­
teen city Banks, under the safety fund, amounted on the 1st
January, 1833, to 20,742,000; and on the 1st April ensuing
to 21,180,000 dollars. On the 1st of October of the same
year, they amounted to 21,766^000 dollars: and the increase
of capital in operation between the 1st of January and the
1st of October was only two hundred thousand dollars, this
being the amount added to that of the Butchers* and Dro­
vers' Bank. He was equally mistaken when he supposed
that the balances due by the City Banks to the Branch in
the city, would, on the first of October, amount to 1,600,000
dollars; and that it was apprehended that the immediate
payment of that balance would be insisted on by the Branch.
The balances due on that day to the Branch by the city Bajiks
amounted to less than $602,000: and the apprehension of an
immediate den\and for payment proved entirely groundless.
It must be kept in view that in all that precedes, the Com­
mittee has assumed the position asserted by the secretary,
that the Bank would not be rephartered. It is in that/view
of the subject, and on that supposition, that the reasons as­
signed for the propriety or necessity of a removal of the
public deposites, prior to the expiration of the charter, appear
wholly insufficient.



It has indeed been suggested, that there was an intimate
connexion between the immediate removal of the deposites
and the non-renewal of the charter; and that to suffer them
to remain in the Bank implied an obligation of rechartering
that institution. This assertion is purely gratuitous and al­
together disproved by positive facts.
At this moment the State of Virginia expresses its opinion
that the Bank is unconstitutional and ought not therefore to
be rechartered, and reproves at the same time, in the most
explicit terms, the previous removal of the public deposites.
A President avowedly hostile to the whole of our banking
system, and particularly so to the former Bank of the United
States, and whose term of office expired only two years
prior to the termination of its charter, never intimated a desire
that the public monies should be withdrawn from it, although
there was not at that time any law directing that the public
monies should be placed in that institution.
Those deposites remained in that Bank to the last moment
of its existence. This circumstance did not prevent the re­
fusal by Congress to renew the charter, and was not alluded
to, by any of those who were in favour of a continuance, as a
reason why the Bank should be rechartered.
The Committee can see nothing in that assertion, but an
attempt to divert public attention from the true question at
issue, and the admission that the removal of the deposites
cannot be defended on its own merits.
A curtailment of its discounts by the Bank of the United
States was a necessary consequence of the withdrawing of the
Public Deposites. The author of this measure is responsi­
ble for all the effects that may have flowed from the curtail­
ments. It is idle to say that they have been greater than was
expected, or made at a different time, or in a different man­
ner from what had been anticipated. If it was impossible for
the Executive, or for any human being, to foresee what the
Bank, under those circumstances, might be compelled or in­
clined to do, and the effects which its acts might have on the
currency and commerce of the country, that was a sufficient
reason for not adopting with precipitation a measure in itself
wholly unnecessary. But we are quite satisfied that the re­
sult which has taken place was not, and could not have been
anticipated by the Executive. And we believe, that although
general apprehensions were entertained of the effect which
might be produced by that change in the relations between
government and the Bank, no one foresaw the extent of the
evils which have ensued. In the act we only blame the bold-



ness of having unnecessarily tampered with the paper cur­
rency and credit of the country. This important view of
the subject seems indeed to have entirely escaped the notice
of the Executive. Among the inquiries which preceded the
removal, we see none that might have elicited the opinions of
practical men on the probable effects of that measure on
commerce and on the community at large. The inquiry was
confined to the laudable, but secondary object of ascertain­
ing what conditions might be imposed on the State Banks se­
lected for collecting the revenue. But, if there is an excuse
for want of foresight, no apology can be found for obstinately
persevering in an erroneous course, after the error had been
discovered, and the fatal effects of the measure had become
The gross amount of curtailments made by the Bank has
not in the whole much exceeded the decrease in its public and
private deposites. There are fluctuations depending on the
season of the yeaif and the course of trade. The fairest
mode of computation is a comparison of similar periods of
the year. The preceding tabular statement
shows that the decrease in the discounts
amounted during the year to -$7,010,000,
and the decrease in its public and private de­
posites to
If the comparison is instituted between the
1st of August, 1833, when the discounts of the
Bank had reached the highest point and it
began to curtail, and the 1st of February, 1834,
the result will be
Discounts on 1st August, 1833, on 1st February, 1834, Decrease,



- $64,160,000,
- $ 54,843,000.



Pub. and indiv. deposites on 1st Aug., 1833,
1st Feb., 1834,


- $ 17,752,000,
- $ 9,781,000


But the curtailments of the Bank commenced in August,
and continued till the 1st of December, when its discounts
had reached the lowest point; while the revenue did not



begin to be collected by the State Banks before the 1st of
October; from which time the public deposites have been
gradually withdrawn. The Bank, therefore, did not decrease
its discounts at the same rate and in the same proportion as
its deposites were withdrawn. A comparison between the
1st of August and the 1st of December shows the greatest
amount of difference between the respective decrease of
Its discounts were, on the 1st of August, 1833, $ 64,160,000,
on the 1st D e c , 1833, $ 54,453,000.

$ 9,707,000.

Pub. and indiv. deposites on 1st Aug., 1833, $ 17,752,000,
1st Dec, 1833, $ 11,989,000.
Decrease only


The Bank had in fact curtailed their discounts more than
four millions between the 1st of August and the 1st of Octo­
ber. It cannot be doubted that this measure produced a de­
rangement in the business of certain sections of the country,
and had its share in producing the distress which afterward
ensued. But that curtailment began only after the agent of
the treasury appointed to make the preparatory arrangements
for the removal, had commenced his inquiries. The object
of his mission was one of public notoriety; and it was a
natural course on the part of the board of directors, when
they had lost the confidence of the administration and were
threatened with an early withdrawing of the large funds be­
longing to the public in their hands, to prepare themselves for
the event, and provide in time the necessary funds. It may
be that the precautions were carried farther than may now
appear to have been strictly necessary. The decidedly hos­
tile attitude assumed by the Executive' and the necessity of
protecting twenty-four branches against attacks, which, if not
intended, were at least threatened, under certain vague con­
tingencies, and, at a later period, the contingent drafts and
other circumstances, were calculated to impose on the Bank
the necessity of effectually providing for its own safety. The
Committee is perfectly satisfied that the Executive is wholly
incapable of having countenanced any plan for dishonouring
any of the branches of the Bank; nor do they know the cir­
cumstances which led to the sudden call of more than 300,000



dollars in specie on that of Savannah. But the fajpt is a matter
of great regret; and the*y must be permitted to say, that if this
blow had been successful (or if a similar one had been aimed
one month ago, at the Country Banks of this State, and before
they were prepared lor the present state of things), it would
have been most fatal and might have been attended with a
general suspension of specie payments. Any premeditated
attempt of that kind, on whatever pretence and by whomsoever made, must originate in gross ignorance of the system of
credit which connects all the monied interests of the United
States, and in the detestable maxim, that the end justifies the
The Banks selected for collecting the revenue after the 1st
of October commenced immediately to extend their discounts ; and from an examination of their returns, it appears
probable, that the whole amount of discounts by all the Banks
in the United States, including that of the United States, has
not in the aggregate been lessened at any time more than four
millions of dollars since the 1st of August, 1833. The Committee is confident that there has been no very sensible diminution since the 1st of October, that it could not at any time
have amounted to six millions, that there has been a gradual
increase since the 1st of December, and that the aggregate of
Bank discounts and loans, including the purchase by Banks of
bills of exchange, through the United States, is at this time
nearly, if not altogether, equal to what it was on the 1st of
August, 1833.
These facts and all the symptoms of the present crisis
clearly prove, that it is not in the amount alone of lessened accommodations of the Banks, that we are to seek for the immediate cause of general distress; and render it highly probable that the previous state of the commercial transactions
and of commercial credit, made it liable to be disturbed by
what may appear comparatively slight causes.
Credit is indispensable to commerce, and to every species
of active business. To the proper use of credit, in supplying
the want of an adequate capital, the United States are in a
great degree indebted for their truly astonishing progress in
navigation, commerce, and manufactures; for their stupendous
internal improvements ; for the stimulus given to agriculture,
and the price obtained for every species of agricultural produce ; for the employment and adequate compensation of
labour. But the abuse of one of the most powerful elements
of its prosperity is, in this energetic and enterprising country,
almost unavoidable. Successive years of prosperous enterprise hardly ever fail to produce a further extension of busi-



fiess beyond the actual capital; and it may be that this wag
the case during the period which immediately preceded the
present crisis. There were, however, no apparent symp­
toms of what is generally designated by the term of " over
trading ;" and the state of the foreign exchanges has not given
any indication of an excess in our importations. Still, and at
all times, in no country, has the extension of credit, in all its
forms, been carried farther than in the United States. The
currency of the country, founded on a specie basis generally
too narrow for the superstructure, rests almost exclusively on
the confidence placed in the solidity of the notes discounted by
near four hundred Banks of issue. A similar disproportion is
to be found between the actual capital of merchants, manufac­
turers, mechanics, and of almost all men engaged in the active
pursuits of life, and the amount of their business. All those
men are at the same time debtors and creditors for sums
generally far exceeding their respective capitals. All depend
for the ability of punctually discharging their engagements on
the punctuality of each other.
The increased facilities of communication and inland ex­
changes have, within the last years, multiplied to an ex­
tent heretofore unknown, the transactions, contracts, and
responsibilities, between the several cities, and between the
cities and even the most remote parts of the country.
The regularity with which the enormous mass of engage­
ments resulting from those transactions spread over the whole
country, and all intimately connected together can be dis­
charged, depends entirely on an uninterrupted continuance of
the ordinary sales, payments, remittances, and credits. The
whole machinery, by which business in all its various branches
is carried on, is credit extended to its utmost limits. What­
ever lessens the general confidence, on which credit is
founded, must necessarily produce a fatal derangement and
interruption in every branch of business.*
It is with this state of things, that, without any necessity or
investigation, the Executive thought proper to interfere. The
* Some notion of tho magnitude of these engagement* may be formed
by a view of those of this city. Tho statement annexed to this report
shows the amount of the daily exchanges of the Banks, consisting of the
daily payments for the 1st of October and the 1st of February respectively, in the several Banks, in notes of the other City Banks, and checks
drawn on such Banks. It does not include the payments made in each
Bank in notes of that Bank or in checks upon it. The medium of the two
days is about four millions and a half a day,—and adding the payments
omitted, may be estimated at five millions a day, or more than fifteen hundred of millions of dollars a year.




Bank of the United States, from its capital and the ground it
occupies, must, while it exists, act a prominent part in the
commercial concerns of the country. The measures which
that institution was obliged to take for its own safety must
necessarily have caused some derangement in the ordinary
operations of commerce. But the fatal injury inflicted by the
Executive measure, was its effect on general confidence.
The threat of the removal of the deposites, and especially
their actual removal, created apprehensions of danger, immediately to the Bank itself, and more remotely to all the
moneyed institutions and concerns of the country. Retrenchment at all, and rigorous enforcements of its claims at some
Soints, were presumed to be indispensable to the safety of the
tank; and the extent being conjectural, was exaggerated by
timid capitalists, who, as a class, are perhaps more fearful than
men of less wealth. Men saw that the relations between
the Government and the Bank were thenceforth to be hostile;
that between it and the selected Banks they were to be those
of mistrust, and that without a National Bank the stability and
safety of the whole monetary system of the country would be
endangered. This was the first instance in the history of our
Government of a direct interference of the President with
one of its officers, in the performance of the duties which by
law devolved exclusively on that officer. It was the more
dangerous, as being made in defiance of a solemn vote of the
late Congress at their last session : and as if with the intention
to forestall the opinion of that which must meet within sixty
days after the interference was made, and as if to encroach
on its legitimate rights. But nothing could be more alarming
to men of business, who rely for the success of their operations, on that stability in those of Government which can only
be guaranteed by law, than unexpectedly to discover that the
commerce, the currency, and the moneyed institutions of the
country, its credit, and their own credit and fortunes, were
thenceforth to depend on the private opinions, the presumed
wisdom, and the arbitrary will of one man. Other minor causes
increased the apprehensions, and restricted more and more
the use of private capital and private credit; and the alarm
became a panic, not dependent upon, or to be explained as a
matter of ordinary reason. The Banks, indeed, protected by
the impossibility of exporting specie without loss, have preserved their credit, and been enabled generally to continue
their usual accommodations. It is private credit which has
been most deeply affected; and the leading feature of the
present distress is the consequent interruption, and in many
cases cessation, of business.



The importers diminish greatly their orders and their purchase* of foreign exchange. The intermediate wholesale mer­
chants, fearful to contract new engagements, are only anxious
about the remittances necessary to discharge those already
contracted. Those engaged in the exportation of the produce
of the country, doubtful whether they can sell the foreign
bills on which that exportation depends, give but limited
orders for it. The country merchants and the manufacturers
are no longer permitted to draw as formerly in advance on
the cities for the products of the soil or of their industry.
Men with small capitals, if at all extended, when disappointed
in the remittances they naturally expected, are crushed. New
enterprizes and engagements of every description are avoided,
and, in many instances, workmen are discharged, or a reduc­
tion of wages required. We state only what we see and feel.
If correctly informed, the effects of the distress are still more
extensive in other places. The actual evils are aggravated
by general apprehension, and the alarm may be greater than
the true state of things justifies: in every aspect of the sub­
ject, the true and eflicient remedy consists in restoring confi­
dence and credit.
It is obvious that the most prompt and effective mode of
attaining that object is to remove the cause of the evil; and
that confidence would be almost instantaneously restored, by
replacing the Bank during the remainder of its existence in
the situation it had heretofore occupied, and thus enabling it
to resume its functions to their usual extent. It is in the
power of the Executive to do this at once; and the Com­
mittee deeply regrets to find itself compelled to say that there
is hardly any hope of relief from that quarter. Our reliance
is on the representatives of the people in Congress, in whom
the power of ultimately deciding the question is clearly vested,
and whose acts, will not, we trust, disappoint the expectations
of a suffering community.
In the mean while, the Committee entreats their fellow
citizens not to despair, and to reflect that there are limits to
the injuries which any Administration can inflict on the people.
The usual channels of circulation are indeed obstructed: but
the products of the national industry though stagnant are
abundant: the actual capital of the country still remains un­
impaired, though the nominal value of property is for a time
lessened. There is no foreign pressure, and the skill and
activity of our intelligent merchants must, after a while, renew
that chain of operations which has been interrupted. The
evil, through a painful process, is gradually working its reme­
dy. In proportion as no new engagements are contracted,



the whole mass is daily lessened, and we must, after a period
of severe suffering unnecessarily inflicted, be placed in a
situation better adapted to a new order of things.
Among the sources from which relief ere long may be ex­
pected, the attention of the Committee has been naturally
turned towards the Bank of the United States. Since the
object of the President was to cripple an institution which he
considered as pernicious, he must have calculated the extent
of the injury which that measure would inflict on the Bank;
and he might have anticipated that it would in one respect
produce a result, the reverse of that which it was his object to
effect. The extent of the injury to the Bank was to lessen
its discounts eight or ten millions a year, and to cause a pro­
portionate reduction in its profits during the remainder of its
existence ; but it might have been anticipated, and it was pre­
dicted by calm observers, that, though the Bank might be an­
noyed so long as it remained liable to greater Treasury drafts
than it was convenient to pay, the power of the Treasury
would be exhausted whenever the process of withdrawing
the public monies should be at an end; and that the Bank,
though deprived of the public deposites, would still remain with
great comparative strength, derived from its capital, its
specie, its Branches, and its superiority in facilitating inland
exchanges. It might therefore have been justly apprehended,
that, according to the opinion entertained of the Bank by the
Executive, that institution, no longer restrained by the fear of
losing the public deposites, and released from every obliga­
tion to Government, might exert its power in a manner most
injurious to the community.
But that power may also be exercised for the best of pur­
poses, and as the means of affording relief. That such is the
fact is now most clearly acknowledged both by the clamour
incessantly raised against the line of conduct heretofore
adopted by the Bank, and by the repeated declarations of the
President himself. It is indeed a most singular feature in the
conduct of the Executive, after a most express declaration,
that one of the avowed objects of its measure was, to com­
pel the Bank gradually to withdraw its circulation and reduce
its discounts, (in order to prevent the general distress that
might ensue if this was not done in time before the expiration
of the Charter,) that those who apply for relief should now
receive for answer that their application should be made to
the Bank; ♦that is to say, that it is not only in the power of that
institution, but that it is bound to relieve the community by
an increase of its discounts. Leaving to others the task of
explaining this contradiction, the Committee is of opinion,



that the time is not far distant, when, after the remaining de­
posites shall have been entirely withdrawn, the Bank will find
itself in a state of perfect safety, which will enable it, though
with far less efficacy than if they were restored, to resume to a
certain extent its usual operations, and to afford considerable
relief to the commerce of the country : The perfect safety of
the Bank must necessarily be the primary object of the Board
of Directors. Our opinion, that a moderate extension of its
accommodations, and a fearless application of its means within
proper limits will, at no very distant time, be compatible
with that object, is derived from a view of its liabilities and
cash resources at this time, as compared with its situation
prior to the removal of the deposites, and with that of the other
Banks at this moment.
The following statements exhibit the situation of the Bank,
on the 1st of February and 1st of August, 1833, and on the
1st of February, 1834 ; that of the Banks selected to collect
the revenue at the last mentioned date ; and that of a great
portion of the Banks of the Atlantic States north of the Poto­
mac on the 1st of January, 1834.
Bank of the United States.
1st February, 1834.
Liabilities payable on demand,
Notes net circulation
Deposites and unclaimed Dividends







Apparent surplus


Cash resources,
Funds in Europe and Foreign Exchange . .
Due by State Banks and Notes of do. . .
Loans, Discounts, and Bills of Exchange .
Real Estate Banking Houses, and sundries .




1st August, 1833.
Liabilities Payable on demand,
Notes net circulation
Deposites and unclaimed Dividends





Cash resources,
Funds in Europe and Foreign Exchange .
Due by State Banks and Notes of ditto .



Loans, Discounts, and Bills of Exchange



1st February, 1833.
Liabilities payable on demand,
Notes net circulation
Deposites and unclaimed Dividends




Cash resources,
Funds in Europe and Foreign Exchange .
Due by State Banks and Notes of ditto .


Loans, Discounts, and Bills of Exchange



Approximate situation of the Banks of Maine, Massachusetts,
Rhode Island, Connecticut, New-York, Pennsylvania, Baltimore, and District of Columbia.
1st January, 1834.
Liabilities payable on demand,
Notes, net circulation
Sundry Debts not on demand
Apparent surplus



Cash resources,
Due by banks


Loans and Discounts
Real Estate and sundries


Approximate situation of the Twenty-five Banks selected to
collect the U. S. Revenue, from the latest returns to February, 1834.
1st February, 1834.
Liabilities payable on demand,
Notes, net circulation
Public Deposites
Individual do


Debts not payable on demand


Cash resources,
Due by Banks
Loans and Discounts
Real Estate and sundries


N. B. Various items are so blended in some of the returns,
that in attempting to separate them, some errors must have
been unavoidable.



The view here exhibited affords on the one hand a con­
clusive proof of the solidity of the Bank and of the safety
of the public monies while permitted to remain in its pos­
session.—But it also shows that the ratio of the cash resour­
ces of the Bank to its liabilities payable on demand, was on
the 1st February last as 1 to 1 T \ ; while the same ratio was
on the 1st February, 1833, as one to 2r%, and on the 1st of
August last, as 1 to 2T4T ; While the cash resources of the
Northern Banks to their liabilities payable on demand is in
the ratio of one to near 7 ^ ; and the banks selected to collect
the revenue, and in which all the power of the Treasury is
concentrated, are nearly as powerless, since the ratio is near
that of 1 to 7.
W e admit that in ordinary times and with the great un­
certainty respecting the renewal of its charter, it would be
expedient for the Bank rather gradually to reduce than to
extend its discounts; but the present crisis calls for extra­
ordinary exertions, and the Bank of the United States having,
though unconnected with, government, a common interest
with all the other members of society in its welfare, and the
same duties to perform towards the community which at
such times are imposed upon every other monied institution,
will most undoubtedly alter as far as practicable the course
which prudence has heretofore dictated, so soon as it shall
see itself in a state of perfect safety; and provided that no
new and unforeseen acts of hostility shall be committed by
the Executive against it.
It is, however, much less in the amount of increased ac­
commodations by the Bank of the United States, than in the
confidence which the fact that it has resolved to extend its
operations to a certain extent will inspire, that we look for
some relief. The amount itself, so long as the Bank continu­
ing to be deprived of the public deposites shall be unable to
resume its ordinary functions, can be but moderate. It is
evident that its discounts cannot be increased without a pro­
portionate increase of its circulation, or individual deposites,
or without lessening its stock of specie by an equal amount.
The increase either of its circulation or of its private de­
posites does not depend on its own acts : and, in the present
state of things, it is absolutely necessary, not only for its own
safety, but for that of all the state Banks, and as the ultimate
means of sustaining through the crisis the general currency
of the country, that the specie in its vaults should not be con­
siderably diminished. The Committee is informed that the
Bank has taken measures for increasing the amount through



the means of its foreign funds. It does not appear from the
situation of the Banks selected to collect the revenue, that
any measures have been taken by the Treasury with a view
to that object: and we beg leave again to insist on the neces­
sity, in order to render the whole amount of the precious
metals in the country available, of passing without delay the
acts intended to make all the American foreign silver coins
a legal tender, and to raise the gold coins to their real
The Committee is aware that, in order to restore public
confidence, more is wanted than temporary expedients, and
is also aware of the anxiety which prevails concerning the
prospective views of the administration in reference to the
currency of the country.
Without dwelling on the danger of recurring to hazardous
and premature experiments, at the expense of the commu­
nity, we will only submit some cursory observations on plans
hardly digested and which have not yet been developed in
their details. Two have been suggested; a currency founded
exclusively on the precious metals, or a paper currency
consisting exclusively of that issued by Banks incorporated
by the several States.
It is not necessary at this time to discuss the respective ad­
vantages and inconveniences of a metallic and of a paper
currency. It is evident that the first could be established
but gradually, and at a considerable expense; since the pur­
chase of sixty to eighty millions of dollars, in gold and silver,
would be necessary to supply the place of the existing paper
currency. But the Banking system and its appendage of
paper issues now pervades every district of the Union;
and a total change in the habits of the people must take
place, before the plan can be carried into effect. The im­
possibility of attaining the object through the action of the
revenue alone is palpable, and results from the immense dis­
proportion between the mass of payments for the ordinary
and current business of the country, and those which are
effected by the general Government.
It has already been stated that the daily payments in the
banks of this city amounted to near five millions on the first
of October, and exceeded four millions on the first of Febru­
ary last. This includes neither the payments made in each
bank in its own notes, or in checks drawn upon it, nor any
portion of the retail business of the city, or of any of the other
payments made without the intermediate agency of the banks.
The daily payments, in this city alone, amount to at least five



millions of dollars a day, or near sixteen hundred millions of
dollars a year. The annual revenue collected in New-York
cannot now exceed fifteen millions: and the action of government cannot extend beyond its receipts and its disburse­
ments ; that is to say, to more than thirty millions of dollars,
or less than one fiftieth part of the whole. All that govern­
ment could do would be to accumulate an amount of specie
equal to the permanent public deposites. It might, at most,
establish a separate metallic currency for government, by
compelling importers and purchasers of public lands to
pay in specie, and by paying its creditors in the same cur­
rency. But this metallic currency would be used for that,
and for no other purpose. It could have no control over the
general currency of the country, nor prevent its depreciation,
or a general suspension of specie payments. It might only
enable government, if such a catastrophe should ensue, to
preserve, through the general confusion, the public faith
towards the creditors of the public. We must aim only at
what is practicable ; and the only rational plan, for the pres­
ent, must be, without excluding the paper currency, to re­
strict it within proper limits.
The objects and expectations of the administration, in the
attempt to establish a sound currency through the agency of
State banks, have not been distinctly explained and are not
thoroughly understood.
If we recur to the past, we may say that the experiment
was already made in the year 1811, at the termination of the
charter of the former Bank of the United States ; and no dis­
appointment, though some inconvenience, was experienced
in carrying on the ordinary operations of government, so long
as no untoward event disturbed the ordinary state of things.
During the two or three ensuing years, no loss occurred in
the collection of the revenue, or in the safe keeping and
transmission of the public moneys. But the currency had
been left to the sole control of twenty different State legisla­
tures : the mania of establishing new banks without restric­
tions, or under restrictions purely nominal, pervaded the
whole country, and terminated in that suspension of specie
payments, and the confusions incident to it, which induced
Congress, in 1816, to recur again to a National Bank; with
what success, for the purposes intended, the event has shown.
The observation already made, with respect to the hardmoney experiment, is applicable to that of establishing a
general, uniform, and sound currency through the agency of
State banks, in the manner which seems to be contemplated.



The action of the Treasury is confined to the collection and
the disbursement of the revenue. Through those means,
and supposing that the plan should succeed, its effect, at the
utmost, could only be to regulate, by some special contract,
the currency of the few selected banks : and this could have
no control over the general currency of the country, or re­
strict its amount in the slightest degree. But to the plan itself
there are two insuperable objections.
Although the terms upon which a contract shall be made
with any State Bank selected for the purpose, may be regulated
by law, the selection of the banks, from the necessity of the case,
and, according to the views intertained by the administration,
the removal of the public monies, from one bank to another,
must be intrusted to the discretionary power of the Treasury,
or of the President. An Executive will be substituted for
a Legislative Bank, subject to the abuses incident to arbitrary
power, increasing the patronage of the Executive, and giv­
ing to the administration, not only a power over the public
purse not intended by the Constitution, but even if it chooses,
that of interfering, in the most direct manner, with the pri­
vate concerns and interests of men in business. To that
concentration of power in one man we most decidedly ob­
ject. It is no argument to say, that the power did formerly
exist, and was^not abused. Even then, it proved ultimately
the cause of a loss of one or two millions of dollars to the
public, in what is called the dead money in the Treasury.
We wish ever to live under a government of laws, and not
of men. The provision in the act incorporating the present
Bank, which designated the place where the public moneys
should be deposited, was in every respect proper and salu­
tary ; not less acceptable to the Secretary of the Treasury,
who must always wish to be governed by law rather than
to be clothed with discretionary powers, than beneficial to
the public interests, by guarding against the danger of the
control of the public purse being converted into an engine
of power, if Government should ever fall into improper
hands. W e have only to lament, that, in order to guard
against an imaginary danger, the provision was expressed
in such terms as to have permitted the act of which we now
But while the selected State Banks shall be under the
Executive control in the manner above stated, they cannot
be regulated by either Congress or the Treasury in any
point connected with the currency of the country, that may



interfere with their charters, or not be permitted by the lawi
of the State.
The State Banks are artificial bodies, deriving their exist­
ence from the several States by which they have been incorgwrated, and subject to the laws and to the control of each
tate respectively. They may, or may not, be permitted to
accede to the terms prescribed by Congress, or by the Exe­
cutive, for becoming the collectors and the depositories of the
public moneys. If any State shall think that a compliance,
on the part of the selected Bank, with the Legislative or
Treasury regulations shall interfere with the banking sys­
tem, or currency, which that State wishes to maintain, it will
forbid the Bank to accept those terms. Whether any Bank
may, on any terms, become a subordinate branch of the
Treasury of the United States, depends entirely on the will
of the several States.
It has been asked, if State Banks were deemed necessary
for carrying into effect the legitimate powers of the National
Government, whether this was not an admission that a
National Bank was authorized by the Constitution? But
without discussing the constitutional question, it is impos­
sible to suppose that the Government of the United States is
so constituted, that it cannot perform its most legitimate
functions through its own officers and agents; that, even for
collecting its own revenue, it is compelled to resort to State
institutions. Why not at once recur to the Treasurers of
the several States, and make them sub-treasurers of the
United States ? Should any one, startled with such a sup­
position, charge us with having stated an impossible case, we
reply that this is not a supposition, but a fact.
Among the Banks selected by the Secretary of the Treas­
ury is the Mobile Branch of the Bank of the State of Ala­
bama. Neither in that Bank or its Branch is there a single
individual stockholder. All the funds are furnished by the
state; the business of the Bank is carried on solely for the
benefit and at the risk of the State, whose credit is pledged
for the ultimate redemption and payment of all notes issued,
and all debts contracted by said Bank: and it is managed
by a President and fourteen Directors, annually elected by
joint vote of both Houses of the Legislature. Whether the
notes issued by that Bank of the State are not to all intents
and purposes " bills of credit emitted by that State" it is not
our province to inquire: we only state the fact, that the Sec­
retary of the Treasury has selected as an agent of that De-



partment, a branch of a branch of the treasury of one of the
It is principally because Congress either has not or will
not exercise the power of regulating and restraining the
currency issued, under the authority of the several states,
that resort has been had twice to a National Bank. Until a
more direct and efficient mode shall have been suggested,
we must look to that institution as the only means through
which a sound and uniform paper currency can be issued
under the authority of the national government, and as the
best instrument for regulating, thdugh indirectly and but par­
tially, the whole currency of the [country ; but no substitute
will answer thcpurpose, unless thd power of Congress to reg­
ulate the currency of the states spould be admitted and ex­
ercised. W e know from the eixperience of nearly forty
years, that so long as a Bank of the United States has been
in operation we have had a sound currency; and that it was
thrown into utter confusion, when left to the control of the
several states, each acting according to its particular views
of the subject. Experience has also shown in what respects
the powers with which the Bank was invested may be
abused, and what modifications may be necessary, in order to
remove well grounded objections, and, without lessening its
utility, to adapt it better to the wishes and the wants of
the people. W e abstain at this time from any expression of
the views of the committee respecting the several modifi­
cations which have heretofore befcn suggested, as we believe
the discussion would be premature, and the time unpropitious
for a calm investigation of that important subject. In the
mean while, and while the question, whether Congress shall
ultimately charter a National Baijik remains in a state of un­
certainty, the attention of the committee has been forcibly
turned towards the banking system and the currency of this
It is incontestible, that the defects in the laws of the sev­
eral states on that subject, the excessive issues of paper by
some of the State Banks, and the consequences felt or appre­
hended to ensue, furnish the strongest argument in favour of
a Bank of the United States. It is highly probable that if
at the termination of the charter of the former Bank, the
several states, instead of indulging the mania which prevailed
for multiplying unrestricted Banks, had each passed the
necessary laws for regulating and restraining their own pa­
per currency, the present Bank of the United States would
not have been called into existence. We are ready to ad-



mit that even with a National Bank, the co-operation of th«
several states would be highly useful, for the purpose of es­
tablishing a sound currency throughout the whole country,
so long as the power of Congress to regulate it by law in a
direct manner shall be either denied or not exercised. In
every view of the sujbject, it is highly important that the
defects of our own system should be corrected. It is not
judging by the result that we are disposed to think it worse
than that of most of the other states. The disproportion
between specie and issues is as great in Massachusetts and
Virginia as in New-York. But the affairs of our own state
are our own concern ; and we believe that, considering its
population, geographical position, wealth, and commercial
connexions, its example would have a happy influence over
the other states.
The first observation we beg leave to submit, is the pro­
priety of repealing that law of the State which forbids every
Sjrson or association of persons, other than incorporated
anks, not only to issue any bank notes or bills and put them
in circulation as money (a prohibition equally proper and
necessary), but which extends the prohibition to the " keeping
of any office for the purpose of receiving deposites or dis­
counting notes or bills." This last restriction on the common
and legitimate use of private capital, is, we believe, peculiar to
the State of New-York, and is not to be found in the code of
any of the other States, nor indeed of any other commercial
country. Instead of making the lending and borrowing of
money for commercial purposes an exclusive privilege, it is
the policy of every commercial country, and far more consist­
ent with the spirit of our institutions, to set private capital free
from any unnecessary restriction, as the best means of
producing competition, and of reducing by natural means the
price pajd for the use of money.
W e concur also in the opinion of the Bank commissioners,
that the number of Banks ought not to be increased but with
great caution; that the natural tendency of an increased num­
ber is to increase bank issues beyond what is necessary and
proper; that if any additional banking capital is wanted it is
for the purpose of increasing bank accommodations in favor
of the community, and not for that of increasing bank issues
and bank profits; and that for that purpose, the increase of
the capital of existing banks, so as to equalize as far as prac­
ticable that of banks in the same locality, is preferable to
the creation of new banks.
We must add, in reference to that equality of capital between
banks in the same locality or placed under similar circum



stances, that the only reason for giving to the Bank of the
United States its large capital was, besides the extent of terri­
tory over which its operations must be carried, the necessity
of investing it with power sufficient to check and regulate the
issues of the other banks. And the power was thus given,
only because Congress was presumed not to have the authority
of restraining those issues, by laws directly applicable to that
object. But the States are under no such restrictions. They
have the full and unlimited power to regulate and restrain their
own banking system, and the circulation of their own banks,
to any extent and in whatever manner they please. There
is, therefore, no necessity or reason for the erection by the
State, of a bank with a capital superior to that of all its other
monied institutions, enabled thereby to govern and oppress all
of them, and obnoxious, without any apology for it, to all
the objections which have been raised against the Bank of the
United States. Free competition, as it now exists between
the several banks, is highly useful: and there are few things
more to be deprecated than a powerful monied institution, not
merely regulated by a general law, but kept in its operations
under the immediate control of Government, and liable to be
used as an engine by those who administer Government.
The laws of the state contain many provisions well calcu­
lated to prevent and to punish fraud, and to insure, so far as
it can be done by legal enactments, the ultimate solvency of
the banks. And the Act, commonly called the " Safety
Fund Act," has provided for annual and intermediary investi­
gations, which we consider as salutary, and which we wish
only to see accompanied by annual, clear, and complete state­
ments of the situation of every bank subject to the pro­
visions of the Act. We see indeed no reason why every
bank in this state, without exception, should not be made sub­
ject to the same investigation and publicity, and to all the gen­
eral laws of the State respecting monied corporations, save
only such as may impose the payment of any money, or ren­
der them liable to any monied responsibility, not within the
purport of their respective charters.
But although gross mismanagement may produce some
exceptions, it is not the ultimate insolvency of the banks
which is to be apprehended. The great danger to be guarded
against is, that general suspension of specie payments, which
both immediately and afterwards, when such payments are re­
sumed, is attended with the utter subversion of existing con­
tracts, and with calamities which affect every class, and none
more than the poorer classes of society.
The fundamental and objectionable provision of the Safety



Fund Act is that which lays* a yearly tax of one half per­
cent, on the capital of all the banks, for the purpose of applying the proceeds to the payment of any part of its debts, which
any bank, by its own misconduct, may become unable to
This tax is unjust, inasmuch as it renders banks responsible
for others over which they have no control; and in that it
offers a premium in favor of misconduct or unskilful manage­
ment, at the expense of those which are wisely and cautiously
managed. It is more particularly unjust in reference to this
city; inasmuch as the tax is laid in proportion to the capital
and not to the circulation. It will be seen by the report of
the Bank Commissioners that the apparent circulation of the
city banks amounted on the first January last to 4,900,000,
and that of the country banks to 10,500,000 dollars: while
the tax being laid on the capital, the city banks pay annually
more than 03,000 dollars towards the fund and the country
banks less than fifty-one thousand. The disproportion would,
it is true, be considerably less by including the deposites. But
the report does not enable us to state the precise amount of
the aggregate of the circulation and individual deposites in
the city and country respectively.
What renders the tax still more unjust, is the total want
of reciprocity. The notes of the city banks did not require the
guarantee of those in the country : and, so far from their circu­
lation being increased by that provision, it haa in fact been les­
sened, within the city itself, by the introduction of country
paper, to which the guarantee of the city banks has given an
artificial value.
It is this last circumstance which, apart from its injustice,
renders the system unsafe and dangerous to the community at
large. Instead of suffering the circulation of each bank to
rest on the confidence to which it was naturally entitled, each
one has been enabled to extend its circulation as far as its
local situation permitted, without regard to its capital, its re­
sources, its management, and to the degree of confidence
to which it was entitled by all those circumstances; and
solely on account of the artificial confidence arising from the
guarantee of more responsible institutions which has been
created by the law. Jlence the extravagant issues of some
of them, the disproportion between their specie and their is­
sues, and the imminent danger of suspension of specie pay­
ments which threatens the whole system, whenever any un* The tax is for six years certain, and contingent for the ensuing years un­
til the charter expires.




toward event, such as must necessarily occur in the course
of human affairs, may disturb the ordinary state of things.
It is perfectly natural that every bank should avail itself of
the advantages derived from its situation, whether natural or bestowed on it by the laws of the land. Each will naturally try to
increase its profits to the utmost limits. We find, accordingly,
by the report of the Bank Commissioners of the 10th day of
March, 1833, that, while the average dividends of thirteen
city banks amounted to little more than six per cent.; those
of seven of the banks in Albany and Troy were nearly at
the rate of eight per cent, and the average of the thirty-two
other banks, included in the report, wai almost nine and a
half per cent, on their capitals. It is not to be wondered at
that, under such circumstances, perpetual applications should
be made for new banks; that they should be at last considered less in reference to their utility to the community,
than as special favors granted to the applicants; that there
should be a perpetual and unnecessary increase of new
banks, and that, as has been conclusively proved by the Bank
Commissioners, this should have been attended with a dangerous and immoderate increase of the bank issues.
W e think it, therefore, of the highest importance that those
defects in the existing system, which endanger the soundness
of the currency, and which may render the rechartering of
the Bank of the United States, on any terms, absolutely
necessary, should be corrected; and the remedies for that
purpose are most simple and obvious.
They consist merely in restricting the amount of the loans
and circulation of each Bank, by substantial, and not by
nominal, restrictions. The suppression of notes of a less
denomination than five dollars, we believe, is generally de­
manded. It will have, among others, the great advantage
of causing all small payments, those for articles daily brought
for sale at market, and those for the daily compensation of
labour, to be made in specie, and of lessening the injury
which the*suspension of specie payments, or failure of any
Bank, always inflicts on the poorer classes. But this mea­
sure will afford but a partial remedy against the general
danger. The amount is variously estimated—at one-fifth,
or one-fourth part of the whole circulation: but no incon­
siderable portion of this would be soon again supplied by
five dollar notes. W e repeat, that the true and efficient
remedy is only to be found in a substantial restriction on the
issues and loans of the Banks.
According to the existing laws, the loans are restricted to
twice and a half, and the amount of bank notes to twice

Albert Gallatin, President, The National Bank
James Broun, Brown Brothers


Philip Hone, civic leader, Whig
Gardiner G. Howland, merchant, Whig
James G. King, Prime, Ward, & King, Whig
D. W. C. Olyphant, China merchant
John A. Stevens, 1st President, Bank of Commerce





the amount of the capital. The first restriction is insufr
ficient; and the last can hardly be called a restriction.
There is no Bank which may not divide more than six per
cent., if its loans are limited to twice the amount of its capital.
Under proper management a much smaller amount is suffi­
cient. The total amount of notes issued by all the Banks of the
Northern States is less than one-third part of their capital.
It will be seen by the last Report of the Bank Commissioners,
that the gross amount of all the notes issued, that is to say,
the whole of the apparent circulation of the Banks under
the Safety Fund, amounted to 15,400,000, on a capital of
22,700,000 of dollars. The disproportion between the lia­
bilities and resources is to be found in the extraordinary
amount of issues by some of the Banks. It is not for the
purpose of enabling Stock-holders to make extraordinary
profits, but for the public good, that Banks are instituted.
W e are perfectly satisfied, that a restriction which would
limit the issues of every Bank to two-thirds of its capital,
would be amply sufficient to secure to each a dividend of six
per cent, and, in a great degree, to the State a sound cur­
rency, independent of the acts of any other legislative body.
By the instruction given to the Committee at the public
meeting, by which they were instituted, it became their duty
to endeavour to effect an union of the Chamber of Commerce
and the Board of Trade. This subject has been committed
to a sub-committee, and has been brought by them to the
consideration of those associations. It is understood that no
definite plan of union has yet been agreed upon; but the
Committee trust, that as there are so many objects of great
and mutual interest, some plan may be devised by which an
efficient action, and united efforts of both may always here­
after be secured, without the loss of any distinctive powers
which .either may desire to retain.
New-York, March 18th, 1834.

1st October, 1833.
The 3 selected Banks
15 other city
U. States Branch



Public Depotitea.

Bank Note*; ap- j City B u b ; notei
Indi»idual Depot- parent Circuliand checks oa


Including all lha City B I M H a H f t t U . 8 . Branch
Balancea trltfc City BantoT"
Due to tb* V.
Diebjr. ,
S Braaeb.

2,896,416 1,194,117 1,316,688 513,937 208,925
6,051,000 9,189,153
5,884,713 3,776,189 3,028,355 816,047 392,077
9,610,000 18,467,259
2,500,000 6,180,833 4,130,322 1,354,256 982,217 608,031 2,008,42

19 (complete) Banks
1 Bank (1st Jan. 1834)

18,161,000 33,837,245 4,130,322 10,135,385 5,952,523 4,953,074 3,337,407 601,002
200,000 485,924

20 Banks (Loans)

18,361,000 34,323,169



95,000 696,602

The Seventh Ward Bank was not in operation on 1st October, 1833.
1st February, 1834.
The 3 selected Banks
15 other city
U. States Branch

6,051,000! 13,769,552 4,946,326 3,238,883f 1,345,145 1,140,159 776,270] 123,398
5,925,689 3,287,671 2,480,303 875,433 252,872 572,193
2,500,000' 6,458,540 258,350 1,081,421! 975,407 490,239 1,841,320

19 (complete) Banks
2 Banks (19th Feb. 1834)

18,161,000! 38,521,144 5,204,676 10,245,993 5,608,223 4,110,701 3,493,023
700,000 1,201,143

21 Banks (Loans)

18,361,000 39,722,287

19th February, 1834.
Apparent Circulation of 19 City Banks


Actual Circulation after daily exchanges


* Including #232.000 loaned out of the State.

376,270j 572,103 048,463