commerce of the country for a time destroyed, and innumerable lives sacrificed, upon pretexts no more to be justified than resistance to restraints imposed upon any lawless passion or act. Who, at the time of which we are speaking, were the least dangerous classes, in other words, who were the great conservators of the peace and order of society? Merchants, manufacturers and bankers, who always had the greater part of what they possessed in the hands of the public, and who suffered from the slightest social or political disturbance. A commercial people are necessarily pacific and orderly. Such have been throughout history the upholders of freedom, as production and trade are in ratio to the degree in which this is enjoyed. The preceding remarks will find complete confirmation in an examination of the methods and operations of the Bank of the United States. It established branches in all the more important towns of the country. Wherever established, they received the notes and credits of all the State Banks in good standing, both on deposit and in the payment of their bills, as a means of increasing the amount of their loanable capital. Without such deposits, there would be no inducement to their establishment, as without them their profits would not equal the ordinary rates of interest on their own capital employed. The greater the degree of the general welfare, the greater would be the amount of their deposits, the greater their loans, and the greater the certainty of their payment. The healthier the condition of production and trade, the greater the profit, has come to be an axiom among men of affairs. It is for the interest of great institutions, like the Bank of England and the Bank of the United States, to sustain all smaller ones. They cannot oppress them, so long as the latter are adequately managed. A Bank with a capital of $100,000 may be just as strong in ratio to its liabilities as a Bank of $100,000,000. Each are equally independent and each equally at the mercy of the other. As the money in which the Bank of the United States dealt was largely created by smaller Banks and bankers, it was always for its interest that it should have an actual equal to its nominal value: otherwise it might directly lose by taking it. It was for its interest that every Bank should remain in a sound condition. If any became embarrassed, the bills of merchants would be less promptly paid. These merchants might be the customers of the United States Bank, which might have a portion of the bills that would not be paid under discount. Merchants, manufacturers, and bankers, in fact, constitute one great firm. The loss of one is the loss of all. The loss suffered by any one member will be in ratio to the extent of his operations. As those of the United States, or of its branch, wherever it had one, were usually greater than those of any State Bank, where the former was established, it took the largest share of any loss that might be sustained. It would, consequently, have the same motive for sustaining State Banks as it would for sustaining one of its own customers, and would do all that it could properly do to keep them from failing. If it erred at all, it would, as toward its own customers, always err on the side of leniency. With it, duty, inclination and self-interest would always go together. It would always desire to see an improvement in the morals of a community, as the welfare of the nation would always be in ratio to its good conduct. It would always desire to see it become more intelligent, that its labor might be more profitably employed. It would always desire to see freedom promoted, as the essential condition of production and trade. General Jackson could charge that underwriters would insure rotten ships, or put in command of their risks ignorant, drunken, and dishonest captains and crews, nay, would set them on fire, knowing that they themselves would have to pay the losses, with the same reason that he asserted that the managers of the Bank were in conspiracy to destroy the wellbeing and morality of society. So far from this being the case, there is no morality, using the word in its broadest sense, so high as that of merchants, bankers, and manufacturers, for the reason that, from the elevated positions they occupy, they can see more clearly than others the consequences of any immoral act; and, from the magnitude of their transactions, have vastly more at stake than others in the result. - Early in 1832, four years before it was to expire, the Bank memorialized Congress for an extension of its charter. This application at once brought the controversy to a direct issue. General Jackson not only declared the Bank to be unconstitutional, that its existence was incompatible with the liberties of the country, but that it was insolvent, and an unsafe de RAPID INFLATION OF THE CURRENCY. pository of the public moneys. To these charges, the House of Representatives, in which the administration had a very large majority on other matters, replied, by a vote of 110 to 46, that the public moneys were safe in the Bank; and by a vote of 106 to 84 extending its charter for twenty years. The Senate concurred in the last measure by a vote of 28 to 20. It was promptly vetoed by the President. - neces As the re-election of General Jackson, with a largely increased majority of the House in his favor, for a second term, which would not expire until after the termination of the charter of the Bank, precluded all expectation of its renewal, the necessity of filling up the vacuum which was so soon to be created by the withdrawal of $35,000,000 of banking capital, of $21,355,724 of notes, and $22,671,431 of deposits, making a total circulation of $44,027,155,- equalling fully one-third of the amount of that of all the Banks in the country, sarily attracted the attention of the legislatures of the several States. It was natural that each one should feel called upon to make provision for a portion of the capital and circulation that were so soon to be withdrawn. In this way, without perception of its process, a sentiment in favor of the creation of Banks got hold of the community, a sentiment of all others the most to be dreaded, for the reason that their creation to supply an anticipated deficiency of the currency, and not for the purpose of loaning capital, is always attended by the most disastrous consequences. After a people have for a long time been habituated to a sound currency, they are in a condition most favorable for the imposition of an unsound one. The precedents of the past are accepted as a guide for the present, so that adventurers who in such a state of the public mind can obtain authority for the issue of paper money are likely to reap a rich harvest. The currency, from 1826 to 1830, whether furnished by the National or State institutions, had suffered so few fluctuations that its value was In 1830, there were 329 assumed as a matter of course. Banks, including the National one, in operation in the country, having a share capital equalling $145,192,268. Their note circulation, at the time, equalled $61,328,898; their deposits, $55,559,928: making a total circulation of $116,888,826. The number of Banks in the United States on the 1st of January, 1820, equalled 307; their share capital $137,110,641; their note circulation, $44,863,344; their deposits, $35,950,479: making a total circulation of $80,813,823. The rate of increase of the number of Banks in the ten years equalled 7 per cent; that of their capital, 6 per cent; that of their circulation, including notes and deposits, 47 per cent. The rate of increase of the circulation undoubtedly corresponded very nearly to that of the production and trade of the country. It is a significant fact in favor of the general soundness, that this increase was not accompanied by any considerable increase in the number of Banks, or in the amount of their nominal capital. The increased demand for money was met by the existing institutions, by an increase of their reserves. So long as this is the case, the money market will always be in great measure free from disturbance. Those who supply the banking accommodations, so long as they are not distracted or interfered with by any new or hostile elements, will always proportion their operations to their means. Their nominal may have no relation whatever to their available capital. The rapid creation of new Banks is always followed by great monetary disturbances, for the reason that their issues do not proceed regularly and normally, bearing a proper relation to the wants of the public, but to the real or fancied interests of those who control them. There are no means of ascertaining the rate of increase of the number, capital, and operations of the Banks from Jan. 1. 1830, to Jan. 1, 1834. We are indebted to Mr. Gallatin's "Considerations on the Currency" for their number, capital, and circulation, at the former date. His estimates, which were made with great care, are probably very near the mark. In 1832, Congress directed the Secretary of the Treasury to procure and publish, annually, statements of the number of Banks in each State, with the amount of their capital, and of the nature and extent of their operations. The returns first obtained and published were those which represented their number and condition on the 1st of January, 1834. Since that time, similar statements have been annually made. At the date last named, the number of Banks in operation equalled 506, against 329 on the 1st day of January, 1830,-the time that General Jackson began his attack upon the United States Bank, and his "experiments for the reformation of the cur i rency." The rate of increase in their number during the four years equalled 53 per cent. The amount of their capital increased, in the same time, from $145,192,268 to $200,005,944, or at the rate of 37.7 per cent. Their circulation increased from $61,328,878 to $94,839,570, or at the rate of 54.6; their deposits, from $55,559,928 to $75,666,986, or at the rate of 36.2 per cent. The increase of their circulation, including notes and deposits, equalled 45.2 per cent. The preceding statements show the magnitude of the inflation which had taken place so early as Jan. 1, 1834. The period from 1830 to 1834 was distinguished by no remarkable advance in the industries or commerce of the country. It is not probable that any greater rate was required from 1830 to 1834 than from 1820 to 1830. At the rate of increase during the latter period, the number of Banks which would have been in operation on the 1st day of January, 1834, would have been 338; their share capital, $151,190,380; their note circulation, $70,330,348; their deposits, $63,404,856. The excess of increase in the number of the Banks equalled 168; of their capital, $48,815,664; of their note circulation, $24,509,222; of their deposits, $12,262,130. It will be seen that the excess of circulation was in great part made up of notes. The inflation must in a great measure have been caused by new Banks, which were set on foot mostly in small towns. The circulation of such necessarily consisted of notes. The inflation, which began so soon as it was seen that the attack upon the Bank might succeed, became excessive in the early part of 1833. It was then in a condition to be greatly affected by any untoward event. This speedily came, in October of that year, in the order for the removal of the public moneys then held by the Bank, on deposit, to the amount of about $10,000,000. The transfer at that time of so large a sum from one institution to others could not have taken place without creating great disturbance, even had the act been a perfectly legal and proper one. As it was considered highly revolutionary as well as injurious, a great shock was given to public confidence, and great monetary stringency was the necessary result. People did not dare to lend, or Banks to discount, till matters assumed a more satisfactory shape. The act was strongly opposed by the best men of the President's own party. Both Mr. Van Buren and Mr. Wright believed it was ill-advised, and doubted its legality. Mr. Duane, then |