The Sun.
London, England, 1835-02-05 00:00:00

AMERICAN AFFAIRS.

WASHINGTON, JAN. 3.—ln my last letter I stated that for
some years past the average circulation of this country might
be estimated at 110,000,000 dollars, of which amount
10,000,000 was in specie, 20,000,000 in notes of the United
States Bank, and 80,000,000 in notes of the State Banks.
That the number of the State institutions was about 550. I
added, that there was probably, in addition, about 20,000,000
dollars in specie in the different banks. Further examination
leads me to the conclusion that I have underrated the specie
in banks, and that it may be safely stated at 25,000,000 dol-
lars. These estimates are intended to apply to the year 1833,
and immediately preceding. The sum total of State banking
capital, during the same period, was about 170,000,000 dol-
lars. 30,000,000 more of stock was created by acts of incor-
poration, but not paid in. The principal part of the latter
institutions were intended to fill the vacuum that the supposed
withdrawal of the United States Bank would create.

From this view, it will be seen that a paper circulation of
100,100,000 dollars was based upon a capital of 170,000,000
dollars, exclusive of the United States Bank capital, and that
there was for its redemption about 25,000,000 dollars in specie.
This specie, however, was subject to a draught from the depo-
sitors, as well as for the redemption of bank paper. The
amount of deposits in the State Banks was equal to 65,000,000
dollars.

Most of the banks in the United States may be considered
perfectly sound; but some of them evidently require greater
restrictions than is now imposed as to the amount of paper that
they emit, compared with the specie on hand to redeem it.
There is great danger when► the specie capital is small, and
the paper circulation large ; because, if two or three banks
should fail, the panic would become general, and the pres-
sure, or run, would be upon the whole. The demand would
not only be for a redemption of the paper. but the want of
confidence would produce a like demand from the depositors,
and then the system must tumble into ruin. Believing that to
the political economist these details are not uninteresting, and
that they cast some light upon the banking institutions of this
country, I have prepared a bird's-eye view of their relative
situation in the seven States having the largest banking capital :

Sum total Per Cent. Per Cent.
~pecie.
of Paper Cir- of Paper . of Specie
Banking culation. on the on the
Capital. Capital. Paper.
- -
Dollars. Dollars. Dollars.
Massachusetts... 28,036,250 9,4, o,' 00 23 1,05- ,000 12
New York 27,755,2,4 20,000,00 , 70 2,600,000 13
Louisiano 23,664,735 3,900,1100 17 2,310,000 59
Pennsylvania 17,060,5'41 10,500,4,00 73 3,150,000 27
Maryland ... 9,2:0,01,0 1,8110,000 19 800,0,0 45
Rhode Islznd
Georgia 1;,534,091 3,6:,0, ,00 56 1,500,000 50

By the above table you will perceive that the State (Penn-
sylvania) and the State of New York have in circulation the
largest amount of paper in proportion to their capital. These
banks are all in full credit, and, with scarcely an exception,
they are believed to be solvent ; yet their system of business
is indiscreet and hazardous, and if they will not voluntarily
restrict their emissions of paper, it should be done by law.
But this remark applies more particularly to the interior than
to the city banks. These large issues, however, is an error in
the banking system of the United States. Another, and a
grievous error, is the smallness of some of the notes they
issue. In a few States they are prohibited from issuing notes

of a less denomination than 5 dollars, but this is only in two
or three States. In all the others the banks emit one and
three dollar notes. The effect of this is to drive out of cir-
culation all specie, and to substitute paper in its place.
There is probably about 10,000,000 dollars in the different
States in bank notes of a denomination less than 5 dollars.
An effort is now making in several of the Legislatures to pro-
hibit such bills. Should it succeed, it will materially benefit
the currency of the country. The national or general Go-
vernment have no controul directly over this subject, but they
can exercise indirectly an influence, and they are doing it.
With this view the Treasury Department proposes not to em-
ploy in the collection of the revenue any state bank that issues
or receives in payment notes of a less denomination than 5 dol-
lars. As every thing is done in the United States by party
arrangement, the proposition of the Treasury will be consi-
dered a party measure, and this consideration will also operate
on the faithful, and thus aid in putting an end to this descrip-
tion of paper.
In the State of New York there is, by law, what is termed a
" safety fund security." The idea of this fund has greatly in-
creased the confidence of the community in the paper of that
State. I have endeavoured to make myself acquainted with
the system; and if I understand it, there is little or no se-
curity in the fund. But many of the arrangements and re-
strictions connected with the system are beneficial. The fund
can never consist of more than 500,000 dollars ; and it is
created by each of the banks paying annually half of one per
cent. on their capital, until it amounts to the above sum. The
contributions then cease, unless there is a defalcation in some
bank. On such an event the contributions are continued, or
re-commence, as the case maybe, until the defalcation is made
good, and the fund amounts to the specified sum. In this way,
each bank is made liable, to a limited extent, for the paper of
the others. It has been supposed, that by thus linking them
together, a degree of watchfulness is created that otherwise
would not exist.

The salutary part of the system consists in requiring that the
whole amount of the nominal capital of a bank shall be ac-
tually paid up before it commences operation ; that it shall re-
port to.the Legislature annually, under the oath of its officers,
the true situation of the institution; that its books and vaults
shall be open at all times to the inspection of bank commis-
sioners, that are permanently appointed for the purpose of
examining the state of these institutions; that the Chancellor
of the State, on the report of these commissioners, purpOrting
that they are not satisfied, may suspend the business of a bank
until a full and complete examination can be had ; and that they
are all prohibited from making loans on their own stock.
An objection has been urged against this plan with great
warmth. It is said, that the commissioners are mere politi-
cians, subservient to the views of the dominant party ; and
that being so, they possess and exercise an undue influence on
the directors of these banks ; and that, in point of fact, the
whole plan is a piece of pnlitical machinery. This charge,
on the other hand, is stoutly denied. The prevailing opinion
out of the State is, that the project is quite as much political
as it is financial.

In the United States there are no private bankers that issue
paper. In the State of New York, and some other States,
they are prohibited by law. In all the charters which are
granted, with' a few solitary exceptions, the stockholders in
the bank are protected from any perscnal liability if the insti.
tution abould become insolvent. The views which have been
given, it is believed, will afford a foreigner a tolerably correct
idea of the character and amoont of the circulating medium of
this country previous to 1834.
In October, 1833, the Piesident caused the public funds to
be removed from the Bank of the United States and its
branches, and deposited in state institutions, selected by the
Secretary of the Treasury for that purpose. The effect of
this Movement is well understood in England. It created ou
this side of the Atlantic a political, which terminated in a com-
mercial, panic. It was ruinous to many p€rsons trading on
small capitals in an extended business. The loss of confidence
induced those who were wealthy to retire temporarily from
trade. gvery description of stocks, and in some instances, of
other property, having fallen in the American market, brought
back specie instead of merchandise in payment for the exports
of the country. In addition to this, foreigners also sent here
for itivettruent larpfe sums in gold and silver.
In June, 1834, congress passed an act regulating the standard
value of gold, by virtue of which the Mint there was added to
the new coinage about five per cent. of alloy. This arrange.
tlittrit ceased the importation of gold in unusual quantities, as
it afforded a small profit. All these circumstances combined
have, during the last year, greatly increased the amount of
gold and silver in the United States. Heretofore the eagles
and half-eagles have been exported almost as rapidly as they
were coined. Under the new arrangement they cannot be ex-
ported, having a nominal, beyond their read, value as bullion in
foreign markets. If, therefore, the cireulatimi of bank-notes
under five dollars should be prohibited, their place will be
supplied partly in gold ; and to meet that demand at the Mint,
an importation of from 3,000,000 to 5,000,000 dollars will be
required during the present year.
Since the Ist of October, 1833, there has been imported into
the United States, beyond the amount exported during the
same period, about 21,000,000 dollars. Of this sum
18,500,000 dollars were in silver, coin and bullion, and the re-
maining 2,500,000 dollars in gold. Within five months there
has been issued from the Mint, of the new gold coinage,
nearly 3,500,000 dollars, principally in half and quarter eagles.
It is now proposed by the Treasury Department to coin and
issue gold pieces of the value of one dollar. This would be a
popular coin, and would tend to increase the gold circulation.
The present specie capital of the United Statics varies, at this
time, but very little from 56,000,000, gold and silver ; of which
sum, at least 50,000,000 dollars is in silver.
A GENEVESE TRAVELLER.

THE MARKETS.

COUNTRY CORN MARKETS DURING THE WEEK•

Wheat. Barley. Oats. Beans. Pease.
Per Quarter. s. to s. s. to s. a. to s. a. to s. s. to 5.
Abingdon--.... 54 60 30 24 22 30 38
Andover
Birmingharn —.... 56 58 30 40 16 .22 33 --
BFidport '3B 50 32 36 26 \.30 39.
Cirencester :31 49 24 22 23 27 40
Faringtion-- 51 66 36 40 26 34 441 --
Guildford . 38 54 28 35 20 30 46
Henley, 42 58 26 32 23 26 43
Hereford —. 50 56 26 32 24 27 46
Highwort h 42 60 32 42 28 34 50 --
Maidenhead 56 68 34 44 22 30 36 37
Monmouth— 39 42 29 31 22 30 31 --
Reading 30 58 22 36 28 32 40
36 50 30 28 36 45
Southampton 54 58 33 40 28 32 42
Strond 35 44 23 36 20 24 46 ---
Tewkesbury 36 26 22 32 40 --
Uxbridge ---. 40 48 28 32 17 98 44 42
Watitage---- 30 57 24 30 19 32 34 42 --
W:irminster 32 52 28 36 24 27 34 40
Windsor—.....—. 59 —' 21 22 35 --
Worcester„---..... 36 48 30 32 24 19 40
CHELTENHAM MARKETS.
l'er 13ushel. s. d. to s. d l'et lb. d. to
Wheat
Barley.
Oats 2(l 3 3 Veal
Beans
Pease • 5 0 7 0 Lamb 0 0
Hay 3l. 155 to 4!. 10s. Pd. fgt. ton.

LEWES 31 AR K ET.— Feb. 3.
s. d. to s. d. I'er Quarter. s. d. to s d.
42 0 46 0 Oats IS 0 25 0
39 0 43 0 Pease 0 40 0