The Sun.
London, England, 1841-07-12 00:00:00

,)10,ND tY. JULY 12, 184 i.

A SYSTEM ; OF' BANKING
THE UNITE!) STATES OF AMERICA, AD-
, :DRESSED TO THE GOVERNOR OF EACH
STATE.

-Sxit,---As an alteration in the general system of bank-
ing in the United States is now under discussicn, I sub-
mit the following plan for consideration, which I think
will be found to remove all present difficulties, and to
4'itture prosperity, by preventing fluctuations in
-11 saleable commodities, in foreign ex-
time, be productive of consi-
T have long recommended
the Bank of
'.4:11 the

ensure--

the eurrenerh—,
changes, and, at the

deragle revenue to eatth Statfi

its adoption in this country, by supersct—__
England, and the country banking interest,
Bank Circular, are now urging it upon the,notiee of
Government, who have had it iii ciintetnpation•foryvars.
I Ur—

..en propose—
That each State should establish a Bank on its own ac-
count (to be called after the name of the State), because
all the ruin brought upon commerce is occasioned by in-
dividuals possessing the mischievous privilege of issuing
the currency of a nation. One thousand pounds are in-
sufficient to enable a private bank to circulate paper re-
presenting 200,0001. Thus such persons have two hun-
dred times the advantage to speculate and unsettle prices,
by fietitiouS capital, that all others have with only the
same primitive amount of real capital, which real capital
becomes depreciated in consequence.
That the affitirs of this Bank should be conducted by
Commissioners, to be chosen by the local Legislature, or
Executive, or as may be agreed on, to be under their
jurisdiction, supervision, and control, and all the trans-
actions of the said Bank should be published annually,
that every citizen might have the opportunity of ex-
amining them, and of seeing that the profits and benefits
were equitably disposed of.
That each State Bank should be the only ,bank of
issue, (not of general depeSit,) and should do no private
business on its own account, so as not to interfere 'With
the Joint,Stock Banks, nor with the eommercial .trans.‘
actions .of the locality. -
That each State Bank should discount the conunere'a
paper of all the Joint Stuck Banks *in the same'
endorsed by them, to an amount proportioned to the paid*.
up capital kif each separate Joint Stock Bank,
On this prineiPle the Bank of England discounts the.
paper of such Joint Stock Banks 'as do not issue their
own notes, at three per cent., generally' 'to the amount
of four times their rid-up capital.

That the State Bank being the only bank of issue,
d discounting the paper of all Joint Stock Banks
would be an e&ctual check against the over issue of .any
individual bank, either in imprudent discounts, which it
would detect, or in speculations ruinous to the general
welfare. • .1 .

Such unlimited issues occasion injurious fluctuations
in the currency, unsettle the prices of all saleable coin-
modifies, and render all commercial transactions a
cies of gaMing, by which a few become enriched, whilst
thousands are daily sacrificed.
That the State Bank, by receiving 3 pr cent. on
most of the local mercantile bills, thus discounted for
Joint Stock Banks, would realise a revenue which would
considerably diminish the local taxation, whilst it would
place every bank in the State upon an equality, differing
only in the extent of capital, not in principle, nor with
its results.
That all the notes issued by the State Bank in dis-
count to any Joint Stock Bank, might have the name of
the said Joint Stock Bank engraved on them, to show
that such Joint Stock Bank was responsible for all such
notes so issued, and in circulation on its own separate
account, the same as it would be had the said notes been
issued direct from the said bank as its own.
That these notes should be convertible at pleasure
when presented to the Joint Stock Bank whose name
was engraved thereon, in the same way that its own
paper would be convertible, if it were in circulation.
Or, as. is the case with the Bank of England,
That the State Bank notes should be all alike, and
should be declared a legal tender locally, for general
convenience, except at the State Bank itself, the same as
Bank of England notes are now declared throughout
this kingdom.
In the former instance it would throw the responsibi-

lity of conversion upon each separate bank, as though the
notes were its own, and which in reality would be. In the
latter the conversion would fall upon the State-Bank. In
this event it would perhaps be requisite for the said Bank
to issue a certain amount of its own paper in the pur-
chase of gold and silver for this purpose, which paper
would. be secured on the respOnsibility of the local Go-
vernment, as any trifling. public, loan would be. Each
State could, of course, adopt either of these forms most
in accordance with its own impressions. ,
That the Goiernment should receive all these notes in
payment of public dues and taxes, and its Treasury be
permitted to re-issue themigain, in the payment of public
disbursements, but should not be permitted . to „issue any
new notes belonging to the State Bank, not previously is-
sued in discounts to the Joint Stock Banks, or in the pur-
chase of gold and silver, as aforesaid. In fact'all GOvern-
ment assignats should be securely guarded against, no
note being admitted into circulation without its equiva-
lent being first deposited in the State Bank.
That the State Bank should never issue a note on its
own account in the payment of any of its commissioters,.
servants, or otherwise, except such as should arise from
the profitS and benefits of its own transactions, the
balance of which would, of course, be carried annually to
the Credit of the State's Treasury, on which it would'be-
more regular to draw for the aforesaid disbursements. ..
The foregoing is the mere outline of a system which
would keep a quantity of responsible and well-secured
paper in circulation, always sufficient for the exigencies
of commerce, but never superabounding, so as to occasion
disastrous fluctuations in prices generally.
I have the honour to be,
Your Excellency's obedient servant,
• W. A. KENTISH.
London, July 11, 1841: