The Journal of Banking
by William M. Gouge,


Vol. I., No. 4,
Philadelphia, Wednesday, August 18, 1841.


Wm.C. Bryant, and, we believe, nearly all our first-rate poets, are hard money men.  If it be true, as has been asserted, that a certain political party has sung itself into power, we put the question to our poets, whether they ought not to exert their talents in favor of sound currency, sound credit, and sound banking.  Send us a right good hard-money, or anti-paper money song, and we will have it set to music.

"Music in virtue's causes retain,
Rescue the holy pleasure."

In the mean time, having nothing original to offer, we copy the following from the Washington Globe.

EPIGRAM-IMPROMPTU.

Of modern books, the best I know--
The author all the world is thanking--
One written more for use than show,
Is quaintly titled, "Gouge on Banking."

But still improvements might be made,
Whilst books on books the world is scrouging,
Let Biddle try to help the trade,
And write one titled, "Banks on Gouging."

The author is a native of Virginia, and none but gentlemen south of the Potomac, will understand the full force of the epigram.

The first line may be thought to be hyperbolical;  but poets have licenses denied to prose writers.

It may be objected, that "scrouging" is not a "dictionary word."  The poet cannot help it.  If the dictionary makers are to be believed, there is no word in the English language that will rhyme with "Gouge," or "Gouging."

There are some other words, which are also in this respect "matchless."  But some of these may be made to jingle by putting two words together.  An English nobleman, it is said, offered a reward of fifty pounds to any one who could find a rhyme for "porringer."  This produced the following:--

"The king, he had a daughter fair,
He gave the Prince of Orange her,
And now, my lord, I hope you'll own.
I've found a rhyme for porringer."

In writing anti-bank songs, there will be no necessity for resorting to such contrivances.  "Banks" will rhyme with "pranks."


Gold and Silver Mines.

Quite a sensation has been occasioned at Matanzas, by the announcement that a gold mine, and also a silver mine had been discovered in the neighbourhood of that port.  The discreet editor of the Noticioso advises all Cubans in that quarter to exert their strength in cultivating the products of the rich soil, rather than be induced to plunge into the bowels of the earth after what may not be obtained.

The gold mines in the provinces of Ceara and Minas, in Brazil are becoming neglected, the people paying more attention than formerly to agriculture.  Several gold mines have recently been discovered, near the river San Francisco in Bahia, and a silver mine in the neighborhood of Rio Janeiro.


Currency in Havana, Cuba.

The currency of this island, though metallic, is in a sad state of confusion.  A doubloon, worth in reality $15.55½, according to the assays at the London and Philadelphia mints, is estimated as worth seventeen dollars.  And pistareens, worth in reality less than nineteen cents, pass in the market for twenty-five.  The effect of this has been to drive silver dollars out of circulation;  and the current practice is to do up pistareens, to the number of sixty-eight, into a rouleau, or little roll, and exchange them for a doubloon.

If the real value of the gold, and the real value of the silver be taken into consideration, it will be found that the pistareens are estimated twenty per cent. too high.  That they could for any length of time have obtained circulation at this rate, must have been owing to the supply of them being limited in proportion to the demands for retail trade, in the same manner that the market value of British silver coins is kept up in England, and that the market value of our own copper coins is maintained in these United States.  The supply would, however, seem of late to have exceeded the demand, as the pistareen currency is producing great practical inconvenience.  A reform of both the gold and silver currency is talked of, and certainly a reform is much wanted.

It is well worthy of remark that though the currency of Havana is in this disorderly state, trade is very prosperous there, and failures are of very rare occurrence.  Why is it so ?  Simply because they have no factitious credit system.


How the System Works.

One of the oldest and most frequently used reasons in favor of the special privilege conferred upon banks is, that through them small traders and beginners in business are enabled to procure the necessary amount of capital to enter into business as principals.  The following fact, stated by Mr. Clay, of Alabama, in a speech in the United States Senate the other day, proves that this reason, feeble as it is, is not always made a principle with the banks.  He said he had known an instance where the directors of a bank, with a capital of two millions of dollars, had loaned themselves, their relations, and those connected with them in business, to the amount of $2,800,000 -- about $800,000 more than the capital actually paid in !



Mr. Gallatin's Last Work.

This is a pamphlet, in octavo form, of one hundred and twenty pages, including the Appendix.  It is entitled "Suggestions on the Banks and the Currency of the several United States, in reference principally to the Suspension of Specie Payments."

It contains many propositions to which we must be permitted to enter our dissent, but many others have our most hearty concurrence.

In this work, as in the one published in 1830, Mr. Gallatin maintains that the only advantage gained by having banks of issue, is an addition to the capital of the country equal to the whole amount of their active circulation, after deducting the specie they retain in their vaults to support that circulation.  Supposing it to be so, the capital thus acquired, amounts, on his estimate, to sixty, or, at most, ninety million dollars.  At six per cent. sixty millions will yield an interest of three million six hundred thousand dollars a year, and ninety millions will yield five million four hundred thousand dollars.  Divide the first of these sums among the seventeen million persons who compose our nation, and each will get the enormous amount of twenty-one cents, one mill, and something less than three-fourths of a mill.  Divide the second sum in like manner, and each will get thirty-one cents and a fraction a year !

And for this the nation is to be periodically convulsed, man set against man, and brother against brother !  For this, prices are to be made to fluctuate like the waves of the sea !  For this we are to endure all the evils of suspension of specie payments, and the scarcely less evils attendant on their resumption !

Well may Mr. Gallatin exclaim:

"It may with truth be affirmed that the present situation of the currency of the United States, is worse than that of any other country.  The value even of the irredeemable paper money of Russia has, during the last forty years, been more uniform;  and in its fluctuations, the tendency has been to improve, and not to deteriorate that value.  No hesitation is felt in saying that, whatever may be the presumed advantage of a moderate use of paper currency, convertible into specie on demand, to have no issue of paper would be far preferable to the present state of things."

It is always extremely gratifying to us to hear such truths as these, uttered by men who occupy such stations in society as are filled by Mr. Appleton and Mr. Gallatin.  Truth, whispered in the faintest tones by a bank President, will reach the ear of many a one, who would be utterly deaf to the same truth proclaimed with the voice of a trumpet by one filling a private station.


Bentham on Usury.

This is an old friend in a new dress --and a very neat dress.

The reputation of the work is so well established, that any commendation from us would be superfluous.  It is free from those peculiarities of phraseology which render other of Bentham's works sealed books to the great maw of readers.

In this little work, --it is so small that it can be carried in a waistcoat pocket,-- in this little work Mr. Bentham maintains that the rent, or the interest, if you will, of money, ought not to be regulated by law, but left to be settled by free competition, just as men fix the rent of the houses and the lands which they buy with money.

However excellent this argument may be in the abstract, it will hardly apply to such a state of things as exists in the United States, where the lending of money is principally by irresponsible corporation, which have the privilege of making the money they lend.  Mr. Bentham had no such state of things as this in view.  His argument proceeds on the supposition that the money lent is real money, and that the lenders are private individuals in the enjoyment of no privileges.

Messrs. Manly & Orr, 43 Chesnut street, are the publishers.


Presbitery of Ohio.

"The Presbytery returned two calls on the ground that the salary promised was incompetent support.  By this course we suppose the Presbytery had two objects in view;  1st, to bring up the churches to the competent support of their pastors;  and 2d, to cut off all necessity for their ministers engaging in any secular employment." --Protestant and Herald.

This paragraph would have received from us but little attention, if we had not, a few hours before seeing it, had a conversation with a gentleman who accidentally mentioned the case of a lawyer residing in Washington, Penn., having a wife, child, and servant, and who lived in comfortable, and as is said "genteel style," in the year, 1824, on 400 dollars a year.  What is the reason that in the year 1824, four hundred dollars a year would support a lawyer and his family, in the west, and will not in 1841, support a clergymen, perhaps without a family ?

Bills of Suspended Banks.

A gentleman from Alabama informs us, that there the people are coming very generally to repudiate all bank notes which are not payable in specie on demand.  They have suffered by the depreciation of bank notes, and by the failure of one bank after another, and have been wronged in so many ways by the banks, that they are becoming determined in their resistance to the farther continuance of the fraudulent system.  Gold and silver are coming again into circulation, for the people will part with their property for nothing else.  A few private banks, paying specie, are getting into operation, which furnish a sound paper currency;  but they are not much known. --Journal of Commerce.


Mississippi Bonds.

In a recent correspondence between Governor McNutt and Messrs. Hope & Co., bankers of Amsterdam, relative to the dishonored bonds of Mississippi, the Governor openly declares that neither the principal nor interest of said bonds will ever be paid by the State of Mississippi;  and that the holders of them must look to the United States Bank and the Mississippi Union Bank for payment.  The State, he says, denies all obligations to pay the bonds held in trust by Messrs. Hope & Co., for the following reasons:--
1st.  The bonds or mortgages were sold on a credit.
2d.  The currency in which the bonds were made payable was changed from current money of the United States to pounds sterling of Great Britain, at the rate of four shillings and sixpence to the dollar.
3d.  The contract of sale was fraudulent.
4th.  The Bank of the United States was not authorized to make the purchase.
5th.  The bonds were sold at less than their par value, in violation of the charter of the bank.
"The money paid for these bonds," he goes on to add, "did not come into the State Treasury.  The officers of this Government had no control over its disbursements.  The bonds were disposed of in August, 1838, by collusion and fraud, in violation of the constitution and laws of this State.  The Mississippi Union Bank and the Bank of the United States were parties to this unlawful transaction.  You have the endorsement of both these institutions, and to them you must look for payment."  The Governor contends that the State has lost by selling the bonds on credit, and by a change of the currency in which the bonds were negotiated from dollars to pounds sterling, $1,048,781.


Virginia.

From that excellent periodical, the Farmers' Register, published at Petersburg, Virginia, we make the following extract:

The Banks of Virginia, by law, are to resume specie payments next January.  But their authorities seem to have no thought of doing so, and have been making no more recent preparation for resumption, than previously, since the beginning of the suspension in 1837: They must count confidently that their present exemption by law from the obligations of faith and honesty is again to be renewed;  and will be renewed, session after session.  Banks that have not prepared to pay specie in five years, never will prepare.  There will be offered the same and as strong reasons to the next legislature, to extend indulgence to their continued bad faith, (for the benefit of the people, of course,) as at every previous session;  and there ever will be the same and as strong reasons.  The plain inference, from the whole procedure, and course of false assertion and argument, is, that the banks and the thorough paper money men go for the suspension of specie payments as a permanent and general policy.  The promises made and expectations given to the public for resumption of payments are intended merely to deceive and to keep quiet the long suffering and grossly cheated people.  A new proof of this intended policy will be seen next winter, when another year of indulgence and impunity to the non-paying and swindling system will be certainly proposed, (and as certainly carried, if the people shall still permit the banks to legislate,) and upon precisely the same grounds that have served for that purpose at every session since May, 1837.


United States Bank.

It is said that the Bank of the United States at New York, a branch of the Pennsylvania Bank of the United States, will close in all this month, and the business of the institution be settled up.  The Journal of Commerce says:-- "The gentlemen who have been its managers, Messrs. Griswold and Alsop, make a good thing of it.  They made a bargain with Mr. Biddle while he was in his glory, to act as agents for the U.S. Bank of Pennsylvania during the continuance of its charter, at a certain salary.  Now the bank wishes to wind up its affairs and terminate its agencies;  but the agents here claim to go on, according to the bond.  A suit was commenced in the case, which has been settled by allowing the agents some two hundred thousand dollars to give up the contract.  The money for the purchase of the lot and the erection of the bank building was furnished by the bank in Philadelphia, and a show of capital made by depositing here a large amount of "loans and discounts," already made, a large part of which still remains as it was when placed here.  It will, perhaps, be known now what the peculiar character of this bank was, and its relation to that in Philadelphia, which enabled those who knew, to swear that it was, and was not, until the metaphysicians were confounded.  The building, we suppose, has been the real estate in New York referred to in the statements of the mother bank."

We mentioned in our last, that the stock of this institution had fallen from 18 to 17½, but added that "such was the uncertainty of the money market, that it might rise again before we could get our paper to press."

Instead of rising, the stock continued to fall, and on the 5th of August, the day after our last publication, sunk to 14¾, Philadelphia currency.  This was lower than it had ever been before.  It afterwards rose a little.

The notes of this bank have also undergone an additional depreciation.  One day last week when we were in a broker's office, we found that they were at 25 per cent. discount in currency, or 28 in specie.  Sales have since been effected at the brokers' board at 23 discount, in currency.

The fall in the price of stock is said to be owing to the English stockholders having thrown shares into the market.  The fall in the price of notes is attributed to a panic, which has seized the holders of certificates of deposit.  These certificates bear interest, and are payable, both principal and interest, in the notes of the bank.

Attacks continue to be made in the daily papers on the new administrators of the bank.  Perhaps they are made by some of the old Board of Directors, or at their instigation.

It is said that Mr. Jaudon will return to Europe as agent of the bank.

Mr. Drayton has resigned his situation as President, on account of ill health.  And Mr. James Robinson, formerly Cashier of the branch at Richmond, has been chosen in his place.  A better selection than this, could not probably have been made.


Bank Failures.

Tuesday, August 3, was the day fixed on by the Comptroller of New York, for the sale of the bonds and mortgages deposited with him as security for the redemption of their notes, by twelve of the so-called "Free Banks" of that State.  The names of the banks which have failed to redeem their issues, and thus forfeited their securities, are as follows:

Bank of America,
United States Bank,
Merchants' Exchange Bank,
Mechanics' Bank,
Erie County Bank,
and Phoenix Bank,
all of Buffalo.  Pretty well for one town.

Staten Island Bank at Port Richmond,
Cattaraugus County Bank at Randolph,
James' Bank at Jamesville,
Binghampton Bank at Binghampton,
Bank of Lodi in Seneca County,
Bank of Olean.

The amounts which the securities brought, as compared with those for which they were pledged, are as follows:--
Cattaraugue County Bank--Mortgages on Buffalo property, pledged for $27,600, and sold for $15,225.
Bank of Lodi--Mortgages on property in Lodi, Hector and Ovid, pledged for $19,153, sold for $18,086.
Erie County Bank--A mortgage on Buffalo property, pledged for $15,500, brought $3,000.
Phoenix Bank of Buffalo--Mortgage on Buffalo and Black Rock property, pledged for $13,725, sold for $7,975.
Merchants' Exchange Bank, Buffalo--Two mortgages on Buffalo property, pledged for $10,000, brought $6,350.
Mechanics' Bank, Buffalo--Mortgages on Buffalo property, pledged for $48,800, sold for $21,235.
Bank of America, at Buffalo--Mortgages principally on Buffalo property, pledged for $34,762, sold for $25,245.
Such of these mortgages, says the Evening Journal, as were upon improved farms, sold promptly for their face;  but upon the mortgages covering unproductive city property, in Buffalo, there were heavy losses.

The securities of the Staten Island and James' Bank, were withdrawn;  and it is announced that some new arrangement will be made by these institutions, under which they will continue their business.


Flour.

It is a fact well worthy of note, that our exports of flour and wheat in 1840, exceeded those of any previous year, and were about double the average of the forty years from 1800 to 1839, inclusive.  The exports of flour and wheat in 1840, were equal to 1,855,086 barrels.  In 1839, they were equal to 942,416.  But though the quantity was nearly doubled, the aggregate value was increased but little more than one half.  The gross value in 1839, was $7,079,361: in 1840, $10,985,644.  This shows the effect increasing the quantity of a commodity has on its price --a very plain truth, but one which some people do not seem to understand.

Great as was the quantity we exported in 1840, it was small when compared with the quantity of foreign wheat and flour entered for consumption in England and Wales in the year 1839.  It amounted to upwards of four millions five hundred thousand barrels, or more than four times the annual average of our export.  In the enormous quantity required for the supply of that country, the render can discover the reason why a short crop always produces so sensible an effect on moneyed operations in Great Britain.  The whole consumption of the island is estimated at 104 million bushels of wheat, or more than 21 million barrels of flour in each year.


Bank Defaults.

Wm. Wiley, Justice of the Fifth and Eighth Ward Courts of the city of New York, was arrested on the 11th of August, on a bench warrant, and held to bail in three sureties of $10,000 each, to answer the charge of receiving valuables, knowing them to have been stolen from the President and Directors of the Frederick County Bank of Maryland.

In our last, we gave an account of the destruction of the books of the Jacksonville branch of the State Bank of Illinois, and the abstraction of a large amount of money from its vaults.  It has since been discovered that Mr. Town, the teller, was the perpetrator of these offences.  He destroyed the books that there might be no evidence left of depredations he had long been in the habit of committing.  He is said to be of a very respectable family --the son of a Presbyterian clergyman.

Col. Mather, the President of the parent bank at Springfield, received, it seems, an anonymous letter, which disclosed the different places, in and about Jacksonville, where the money was secreted.  Unattended by any one, he left Springfield for Jacksonville, and succeeded in recovering all the money but $2,300.  He then engaged a conveyance for Springfield, but before leaving Jacksonville, he told certain persons that the affair was ended, and that they need not take any further trouble about it, as he had got the money, and was going to take it to the mother bank at Springfield.  The secret was too good a one to be kept by those to whom it was confided.

"The citizens, upon hearing the disclosure, were so outraged at not knowing how the money was obtained, or who perpetrated the robbery, that some twenty or thirty of them immediately set out in pursuit of the Colonel, and succeeded in overhauling him, after killing two or three horses in the pursuit.  Upon coming up, they took up the, order of command, by ordering the Colonel to halt;  right about face, march, quick time, and with a guard on either side, the old Colonel, with the stolen fund, was escorted back to Jacksonville.  He was taken into a room, followed by some eight or ten stout hearted, chivalrous fellows, who, after laying upon the table divers pistols and bowie knives, demanded of him the name of the person who perpetrated the robbery.  Now, it would seem, that the Colonel's courage or pluck is, in some degree, proportionate with his corporation, as he did not appear intimidated, but coolly told them that when taken before the proper tribunal and authority, he would then disclose a history of the facts."

A correspondent in one of the Western States, informs us that "Town was looked upon, up to the discovery of the robbery, as a pattern of sanctity.  The President of the bank, Col. Mather, is much censured for endeavoring to effect the escape of the robber, after the money was recovered."

Wm. McK. Ball, cashier of the branch bank of the State Bank of Arkansas, at Fayetteville, is stated, in the Baltimore Patriot, to have recently absconded to Texas, leaving the bank minus some $64,000.  No doubt Mr. Ball is, as well as Mr. Town, of a very respectable family.

The sudden death of one of the tellers of the Canal Bank, New Orleans, caused an investigation into his accounts, which, as far as the examination had proceeded, had, at the date of the last advices, disclosed a deficit of over 80,000 dollars.

A letter from New Orleans, states that the cashier of the Carrollton Bank has been found to be a defaulter in the sum of $30,000.

The writers of the money articles in the New York Herald and Philadelphia Ledger, have, between them, made out the following list of bank defaults, which have recently occurred, or rather been recently discovered.

U.S. Bank, suspended debt, lent to politicians, $20,000,000
U.S. Bank, taken by Officers--no vouchers, 1,200,000
Schuykill Bank, Levis, 1,300,000
Manhattan Bank, Newcomb, 50,000
Do. do. Officers and family, 500,000
Virginia Bank, Dabney, 500,000
Georgia Bank, Barker, 80,000
Frederick Bank, Maryland, 186,000
Norwich Railroad, President, 10,000
Bank at Louisiana, Teller, 60,000
Bank of Orleans, do. 80,000
Canal Bank, New Orleans, do. 100,000
Bank of Michigan, Officers, 100,000
Illinois Bank, Mr. Town, 90,000
Merchants' Bank, Baltimore, Clerk, 10,000
Tennessee Bank, at Nashville, do. 7,000
Frankfort Bank, President, 100,000
State Bank, Arkansas, Mr. Ball, 64,000
23 New York free banks, 1,500,000
Pennsylvania Bank, Smith, clerk, 100,000
Wertern Bank, Israel, cashier, 15,000
Camden Bank, N.J., Peterson, clerk,       13,000
$26,065,000

"These are," says the Ledger, "but a small part of the losses that have recently occurred.  That the public may be fully enlightened to the real amount of cost in this particular which the people bear for the benefits of paper money, we trust that the press in various sections of the country will make such additions as come within their knowledge and are here omitted."

Governor Wolcott, of Connecticut, in an address to the Legislature of that State, in May, 1826, made some remarks which, if they had been properly attended to, would have prevented many a bank default.  We republish them for the benefit of the concerned.

"The stations of president, cashier, teller and book-keeper, are incompatible, and yet some two or more of these are united in the same persons, contrary to established maxims of responsibility, prudence, and even justice to the individuals who are so entrusted.  If, at the close of the hours of business in every day, fill accounts of all the funds issued, and of securities obtained and discharged, are not immediately stated, their accuracy ascertained, and their results extended into records, which are regularly continued, by persons whose peculiar duty it is made, to note all these facts, according to established forms: then the transactions of different days will become blended, and soon all individual responsibility will be irrecoverably lost."


Incidents.

A meeting of about 1500 persons opposed to the establishment of a National Bank, has been held in this city.  Considering the season of the year, the shortness of the notice given, and other circumstances, this was, "a pretty fair turn out," though it embraced but a small portion of those who are opposed to such an institution.  Opposition to a National Bank with us is not confined to the hard money men.  We have conversed with several gentlemen connected with the local banks, who say they wish not to see a National Bank established, or, at least, not at present.

An association has been formed in Philadelphia of persons opposed to paper money banking.

At the first meeting of the Democratic Delegates of Philadelphia, held August 9th, it was resolved not to consider the claims of any one who shall offer himself as a candidate for a seat in the Legislature, unless he shall first avow himself "opposed to granting any new charter for a monopoly of any description, or to the establishment of a branch of a National Bank within this State, and also to favor the repeal of the charter of any such institution, should it be created, and the discontinuance of all charters as they expire."


On Tuesday, August 9th, the sum of three hundred dollars was abstracted from the pocket of Nicholas Biddle, Esq., as he was standing in front of the Post Office window.  If the pocket of Mr. John Smith had been picked in this way, the daily papers would probably have been content to narrate the events in language as plain as that which we have used.  But as it was the pocket of Mr. Biddle that was picked, they become quite rhetorical in describing the affair.  The Spirit of the Times, for example, calls it "a removal of the deposits," and exalts the pick pocket to the rank and dignity of "a financier."  "It is said," remarks the Pennsylvanian, "that when he discovered his wallet was gone, he exclaimed 'I am robbed,' and as 'cool and as calm as a summer's morning,' went to the bank and drew for three hundred more.  Great financiers disregard trifles, and in this instance Mr. Biddle displayed his usual philosophy."

It is stated that the Governor has ordered the Attorney General to issue a quo warranto against the Kensington and Southwark banks, because they refused to subscribe to the State loan.

The Philadelphia County Prison is at this time crowded to overflowing with prisoners.  The number charged with petty larceny, says the Spirit of the Times, was never greater than at present.  The Inspectors fear that the prison must become unhealthy, unless some discharges be made.

The attention of the people of the city of New York has been, in some measure, diverted from the prices of stocks, and variations in the value of commodities, by a horrid murder.  The victim was a Miss Mary C. Rogers, a beautiful young woman, in humble circumstances.  Her body was found on the shore of the North river, at Hoboken, opposite the city, horribly mutilated.  A mystery hangs over this murder.

A gentleman of the name of Joseph K. Weed has been trying his hand at financiering on a small scale in Ulster county, State of New York.  He took three genuine notes of hand, amounting in the aggregate to $218.60, and altered them in such a way that he succeeded in drawing from the Banks of Poughkeepsie and Newburg, the sum of $1,918.  He then took two genuine notes of hand for $900 each, that had been paid, altered their dates, and presented them for discount.  Suspicion was excited, and he fled with his wife and six children, borrowing some of a neighbor's horses for the occasion.  He took a very devious course, frequently changing his dress and his manner of travelling, but he was finally traced to Ohio city, near Cleveland, in Ohio, where he was arrested, the officer in pursuit having travelled between 2700 and 2800 miles.

Harrington, the late President of the Gallipolis Bank, was, says the Spirit of the Times, sent to jail in Gallia county, Ohio, on the 5th inst., for fifteen years, having been convicted of extensive swindling transactions behind the counter.


Congress.

Congress has been proceeding rapidly of late, so rapidly, indeed, that we hardly have time to say that a bill is under discussion, before we bear that it is passed.

Considering the nature of the subjects they have before them, it may be doubted if the people at large will consider this rapidity quite commendable.

According to a contemporary, the leading measures of the session, are--

1. Distribution bill, giving to the States, per annum, ..... $3,000,000
2. Loan bill, creating a public debt of .... 12,000,000
3. Revenue bill, increase of annual tax, ..... 8,500,000
4. Bank bill, borrowing new capital, .... 30,000,000
5. Bankrupt law, an abolition of new debts, equal to ..... 350,000,000

If it were as easy for the people to pay new taxes as it is for Congress to impose them, and if it were as easy to discharge debts, as it is to contract them, this haste might be excusable.  But every man of sense knows that additional taxes, though in the disguised form of increase of duties, must diminish the incomes of some members of the community: and as the United States affords the only example on record of a Government that once got fairly into debt, ever getting fairly out of it;  it would seem the part of prudence not to rush too rashly into debt again, lest the second experiment might not prove as successful as the first.

But it is useless, we suppose, to reason this subject now.  The word has gone forth.  The nucleus of a new funded debt is already formed.  The script is in the market.  And new taxes are to be laid:-- laid, too, in such a manner that no one can tell the precise effect they will have on existing business arrangements.

The bill for the repeal of "the Sub-Treasury law," which had been previously passed by the Senate, was passed by the House, Monday, August 9th, by a vote of 134 to 87 --majority, 47.

Previous to the taking of this vote, the House amended the bill by adding two new sections to it.  By the first of these, "the deposit act," so called, is repealed, its 13th and 14th sections only excepted.  By the second, those regulations which make it illegal to offer small notes to revolutionary soldiers in payment of their pensions, are abrogated.

On Wednesday, August 11th, these amendments were concurred in by the Senate, by a vote of 26 to 23.


The Fiscal Bank.

The House has, Anaconda like, swallowed whole the fiscal bank bill, just as it came from the Senate.  Such of the members as did not like it were gagged.

Gagginq them in the House will not, however, prevent their speaking their sentiments freely when out of it.  And one of the dissatisfied, Mr. Irwin, a Whig member from the western part of Pennsylvania, has published a letter, the tenor of which may be judged of from the following extract:

"The determination to vote down all amendments was so rigidly enforced by the majority, that a bill of forty pages passed the House as it came from the Senate, without alteration or amendment in a single feature, sentence, word, or letter !  An incident without parallel, perhaps, in the history of legislation.  And although the amendments offered were numerous, they had to be voted upon in most instances, without the opportunity afforded for a word of explanation.  Nor was the poor privilege accorded to a member of showing to his constituents how he voted on such amendments.  The bill passed from the Committee of the whole into the House: the previous question was immediately ordered, and thus the vote by yeas and nays on the amendments was entirely cut off."

This event occurred, Friday, August 6th.  The vote was as follows:

Yeas-- Messrs. Alford, Allen, L.W. Andrews, S.J. Andrews, Arnold, Aycrigg, Babcock, Baker, Barnard, Barton, Birdseye, Black, Blair, Boardman, Borden, Botts, Briggs, Brockway, Bronson, M. Brown, J. Brown, Burnell, Wm. Butler, Calhoun, Wm.B. Campbell, Thomas J. Campbell, Caruthers, Childs, John C. Clarke, S.N. Clarke, Cowen, Cranston, Cravens, Cushing, G. Davis, Wm.C. Dawson, Deberry, John Edwards, Everett, Fessenden, Fillmore, A.L. Foster, Gamble, Gentry, Giddings, Goggin, P.G. Goode, Graham, Green, Greig, Habersham, Hall, Halsted, W.S. Hastings, Henry, Howard, Hudson, Hunt, James Irvin, James, Wm. Cost Johnson, I.D. Jones, John P. Kennedy, King, Lane, Lawrence, Linn, Samson Mason, Mattocks, Maxwell, Maynard, Meriwether, Moore, Morgan, Morris, Morrow, Nisbet, Osborne, Owsley, Pearce, Pendleton, Pope, Powell, Proffit, Ramsey, Benjamin Randall, A. Randall, Randolph, Rayner, Rencher, Ridgway, Rodney, Russell, Saltonstall, Sergeant, Shepherd, Simonton, Smith, Sprigg, Stanley, Stokely, Stratton, Stuart, Summers, Taliaferro, John B. Thompson, R.W. Thompson, Tillinghast, Toland, Tomlinson, Triplett, Trumbull, Underwood, Van Rensselaer, Wallace, Warren, Washington, E.D. White, J.L. White, Thomas W. Williams, Lewis Williams, C.H. Williams, J.L. Williams, Winthrop, Yorke, Augustus Young, John Young --128.

Nays-- Messrs. Adams, Arrington, Atherton, Banks, Beeson, Bidlack, Bowne, Boyd, Aaron V. Brown, Charles Brown, Burke, Sampson H. Butler, Wm.O. Butler, Green W. Caldwell, Patrick C. Caldwell, J. Campbell, Cary, Chapman, Clifford, Clinton, Coles, Cravens, Daniel, R.D. Davis, Dean, Dimock, Doan, Doig, J.C. Edwards, Egbert, Ferris, J.G. Floyd, Charles A. Floyd, Fornance, Thomas F. Poster, Gilmer, William O. Goode, Gordon, Gustine, Harris, John Hastings, Hays, Holmes, Hopkins, Houck, Houston, Hubbard, Hunter, Ingersoll, William W. Irvin, Jack, Cave Johnson, John W. Jones, Keim, Andrew Kennedy, Lewis, Littlefield, Lowell, Abraham McClellan, R. McClellan, McKay, McKeon, Mallory, Marchand, A. Marshall, T.F. Marshall, J. Thompson Mason, Matthews, Medill, Miller, Newhard, Oliver, Parmenter, Patridge, Payne, Pickens, Plumer, Reding, Rhett, Riggs, Rogers, Roosevelt, Sanford, Saunders, Shaw, Shields, Snyder, Steenrod, Sweeny, Turney, Van Buren, Ward, Warterson, Weller, Westbrook, J.W. Williams, Wise, Wood --97.


Foreign News.

At Vienna, the stoppage of the banking house of Steiner, has been followed by that of Guymuller & Co.  Their liabilities are reported to be very heavy, and the prospect of recovering much from the assets is said to be small.  This stoppage happening so soon after that of the Messrs. Steiner, caused a complete panic in the money market at Vienna;  but as the Messrs. Rothschild and other leading capitalists, were freely discounting business paper, confidence was rapidly improving.

N.B. Austria is a paper money country.  Its principal bank issues notes of as low a denomination as two dollars fifty cents of our currency.

Lord Sydenham, the Governor of Canada, has a plan for depriving all the incorporated banks of the United Province of the privilege of issuing paper money.  His wish is, that there should be but one bank of issue, and that all the profits arising therefrom should go to Government.  The incorporated bankers will prove too strong for his Lordship.

It is said that Lord Sydenham, in private conversation, speaks of the United States as "the land of shin-plasters."  His Lordship must learn to use more decorous language towards a friendly power, or else expect to be recalled by the Government at home.


Capture of Canton.

The capture of Canton by the British, is an event of no small importance.  On the 15th of April, they still retained possession of the city.

The Chinese tried to frighten them away, by means of lanterns shaped like tigers' heads, but the British would not be frightened.

The chain of cause and effect is longer than many people imagine.  The bank convulsion in England in 1825, caused a scarcity of money at the Cape of Good Hope, and bankruptcies in Calcutta.  A "great financier" gave the "opium war" as one of the causes of the suspension of specie payments in 1839.  He was laughed at, at the time, and perhaps he was disposed to attribute more importance to the cause than it deserved.  Yet we do know that one of the oldest and most intelligent merchants of this place, looks upon its dealings in foreign exchanges, and especially its sales of bills on Canton as among the causes that brought ruin upon the United States Bank.  Any one may see that it thereby extended its long credit operations, and short credits are all that a bank can deal in with safety.

Besides this, it is asserted that moral reasons were not all that induced his Celestial Majesty to interdict the opium trade, it was, it is alleged, draining the country of specie, and hence part of his horror at the traffic.

Be this as it may, the capture of Canton by the British, must have an important effect on some branches of commerce, and whatever affects commerce, affects banking.  We note the event.  Its consequences will reveal themselves in due season.


Small Notes.

The Attorney General of Pennsylvania has issued a circular to his deputies, enjoining on them, "on and after the 10th of September next, to institute the proper proceedings against all corporations or persons who have issued and not redeemed, or shall continue to issue, or put and keep in circulation, any bills, notes, checks, tickets, or other evidences of debt prohibited by the acts of Assembly."

The Attorney General "talks like a local preacher" concerning the evils produced by trash currency.  He accompanies this circular with a copy of his circular of October 10th, 1839, and also with a copy of the Governor's letter to him, under that date.  From the circular of October 10th, 1839, we extract the following passage:

"No species of speculation holds out such strong temptation to violate the law as that of manufacturing at will, and paying out bills, notes, tickets, or something that resemble and passes for money.  The master motive of human action is appealed to, and the honor and honesty of too many are found to yield.  It is generally those of desperate condition, that avail themselves of the opportunity of palming off upon the community large nominal amounts of small notes, during the suspension of specie payments by the bank, because they have little to risk in setting the laws at defiance, and can obtain a circulation for their spurious money, as a substitute for specie, which is withheld from circulation.  In the end the imposition is discovered, or the resumption of specie payments takes places, and the citizens, often those least able to bear it, are the sufferers.  Similar inconveniences, though not in so great a degree, are experienced by the public, even when small notes are issued by corporations and individuals perfectly solvent, and willing to redeem them.

"They become worthless a few miles from the place where they are issued, or must be passed at a great sacrifice -- are soon multiplied to such a degree as to expel much of the better money from circulation, and so debase and taint the currency of the country, as to render its purification and reform extremely difficult, if not impracticable."


Gold and Silver.

We not long since made a small purchase from one of the principal dry goods dealers, in a city which lies some distance south of Philadelphia.  After paying him in the currency of that region, we shook a purse, containing a few half-eagles, before his face, and told him "that was the true kind of money."  "Ah," replied he, eyeing the purse with a look of affection, "ah, if every man the country had only one piece of that kind, this would be the richest country in the world."  "Why, Mr. Dowlas," we exclaimed, in amazement, "as there are but two or three million men in the country, the whole sum would be no more than ten or fifteen million dollars.  You must mean every person in the country.  Even then, we have, according to the calculations of those who have paid most attention to the subject, taking gold and silver together, nearly five dollars for every man, woman, and child."  Mr. Dowlas shook his head incredulously, and thus confirmed what had been told us by a member of Congress from Alabama, namely, "that ignorance of the true amount of gold and silver in the country, and in the world at large, is one of the principal obstacles to bank reform."

The banks have, in some years, if credence is due to their statements, had as much as from forty to forty-five millions of gold and silver in their vaults.  The amount in the pockets of the people, or hoarded by them in old stockings, and old chests, cannot be readily ascertained.  But from comparisons of the custom house returns of the exports and imports, and from other data, it has been estimated that it would swell the total to eighty millions.  Perhaps due allowance has not been made for the consumption of the precious metals in manufactures.  Put down the total at seventy millions, and it will amount to four dollars for each man, woman, and child in the nation.

Yet this is but a small sum, compared with what we ought to have, and what we would have, if the laws of supply and demand were not interfered with.  Mr. Gallatin, as we showed in a former number, estimates the whole quantity of gold and silver in Europe and America, at between four thousand and five thousand million dollars.  Taking this as our basis, we have proved that if we had the proportion to which our wealth and population entitle us, the amount would be between five and six hundred millions.  Of this, about one hundred and seventy millions should be in coin, and the rest in plate and jewelry.

We may seem to some extravagant in estimating the amount of coin we ought to have at ten dollars a head.  But "we go for plenty of money" --plenty of real money.



Joint Stock Banks.

Mr. Gallatin, in his last publication, makes the following judicious observations on the nature of joint stock banks:--

"The present situation of the banking system has proved, but too conclusively, the general inclination to increase immoderately the banking capital and the number of banks;  and also the general tendency of all the banks to extend their loans and discounts beyond what prudence and their primary duty would dictate;  and it is believed that this defect is inherent in all joint stock banking companies.

"Not only is it the interest of the shareholders, so long as they are not personally responsible beyond the amount of their shares, to obtain as large a dividend as possible, but the evil grows out of the manner in which joint stock companies must be governed.  The direction must necessarily be placed in the hands of a few men, who have comparatively but little interest in the bank.  Most of them are selected amongst men in active business, in order that they may be able to judge of the solidity of the paper offered for discount;  and as they are not paid, it is impossible to expect that they should attend without deriving some compensation for the sacrifice of a portion of their precious time.  This may consist in part from the discounts they obtain for themselves, which may always be kept within reasonable bounds.  But the power and consideration attached to the office can be obtained only by granting favors;  whilst, on the contrary, a refusal renders the directors unpopular.  To this may be added a want of sufficient moral responsibility.  The honorable merchant, who would feel disgraced by his own individual failure, is not affected by that of the bank of which he may be director.  It is well known that this general observation does not apply to bank directors alone, but to all public bodies.  Of all the causes, however, which contribute to an improper extent of discounts, the most general and efficient, the most prolific source of the errors of bank directors, is the natural sympathy which they feel for men who are engaged in similar pursuits to their own.  It may, upon the whole, be affirmed, that banks, though money lenders, are in fact governed rather by the borrowers than by the lenders."


Free Banking.

The observation of Mr. Gallatin on Free Banking, will be a very proper accompaniment to his remarks on Joint Stock Banks.

"The right of issuing paper money as currency, like that of issuing gold and silver coins, belongs exclusively to the nation, and cannot be claimed by any individuals.  If it be insisted that Government has no right to part with it, unless it be granted to all, it must be recollected that a right which from its nature cannot be exercised by an individual, is for him a nullity.  The right in question can be exercised only by men of wealth, or by impostors.  The poor classes cannot enjoy it: the right claimed is only, that all wealthy persons should be placed on an equal footing."

"The proposition, that a paper currency may be issued by all, without any legislative restrictions, appears to be founded on an erroneous application of the principle of free trade.  Free competition, in producing or dealing in any commodity, causes a reduction in the cost, or an improvement in the quality of the commodity.  In money dealings, the same competition furnishes the use of money, and procures discounts of negotiable paper on the cheapest possible terms.  But, issuing a paper currency is not dealing in money, but making money.  The object, with respect to such currency, is not to produce a commodity cheaper, or varying in value, but, on the contrary, to furnish a substitute perfectly equal to gold or silver, and therefore of comparatively invariable value.  Competition cannot make a cheaper currency, unless by making it worse than the legal coin of which it is the representative.  In that case, it becomes analogous to a debased coin;  and, if permitted to circulate, the bad generally drives away the faithful currency."



President Tyler.

The President has signed the bill to repeal "the Sub-Treasury act," and vetoed the bill to incorporate a fiscal bank.

The result is, the revival of "the pet bank system" --the worst of all possible systems.