Constitutional Whig. [volume] (Richmond, Va.) 1824-1832, 1831-09-29

sscess. u riSeh ,!lo eo,nns nlry ha4 u lssp and
permanent interest. The importance Of these will
Justify few words OF explanation i'm REGARD 10
them.
The Bank Of the United States was established
tor The purpose of restoring specie payments which
had Tor long time been suspended throughout u
great part OF thc country.-ot furnishing u sound
circulating medium, and of giving more uniform
" to the exchanges between distant sections or,hc
Cn'on.-br importing moTc than seven millions %.
specie, and by free issue Of notes Immediately
oiicf it's establishment, the Bank with great sacri
ices succeeded ;Or time in attaining these oh
lcc's but II seems TO have been afterwards consid
cred that It's powers were exhausted blythe effort
and that the continuance oft would be entirely
''npracticablc Tho essential difficulty was prcsum
ed TO lie in the pro yiSon OF the charter maxine
the notes univcrs; " receivable for debts to the Go
vcrnmcnt whIchby obliging the Bank to provide
payment tor the same note at various places would
require il to retain CRATER amount of specie than
IT could issue OF notes. thus diminishing rather than
increasing the sound circulation. The consequence
as' inc Bank ISSUED ITS own notes sparin civ: more
especially i'll the Southern and Western States
where 1t often preferred the Issue of tho notes of
tao State Banks, being unwilling to issue freely it's
notes which 1t might be compelled to nav at some
one OF many places remote from the point of is
SUNG thoin However nnpcrious the necessity
which enforced this system, il was apparcnt TINT
It's Continuance would tend to defeat tho object of
ESTABLISHING the Bank, since by declining the issue
o. Its notes IT could not furnish tho circulating me-
diun expected from il; and b. rcssuinp the notes
OF State Banks. il surrendered its most efficient
means of control over tho curroncy. Its whole
circulation on the lSt Of January, 1923 was ONLY
/ $50 900 dollars.
Having, in compliance with the directions OF tho
stockholders III 1923, applied without success TO
Congress for modification of this disabling pcoyi
"oR IN tho charter, it became necessary for the
Eoard OF Director, to ro-eXamine the constitution
/ OF The BANK In order to discover whether there
was really any organic defect which prevented il
/ from performing the functions 10 which II w.,
tined, or whether some different combination of
| its powers might not overcome its difficulties.
Inc experiment was Interesting and hazardous.
1t was to try how far the institution could sue
coed i'll doing that which had never vet succeeded
elsewhere, IN ditiusng wide a surface Of
country currency Of largo amount and oflniorm
value at all places and under all circumstances;
and also whether could bring down to lis X RENE
limit the necessary expense of commercial inter
course between distant sections of country, whose
e1changcable productions were Of such various and
unequal values.
To accomplish thcso two obiccta two th;,rs
/ seemed necessary
lst. To make all the local currcncics equivalent
TO specie at tho place of their emission This by
rendering them competent for local PURPOSES would
require less amount of general currcncy, and al
the same tl!no tend to reduce the EXCHANGES be-
two2r distant places to the real commcrca expense
| OF transferring equal values Of coin.
I'd. To make the Bank scfthc great clinncl of
those commercial exchanges.
II the Bank is bound to transfer the wIDlc pub
lie revenue throughout the Union and to finnish
currency payable i'll various and distant PAGES it
mus; obviously provide funds i'll those PLACES and
tneSe can oi course be obtained only by purchasing
bills OF exchange payable at the points tt which
the course of trade naturally directs tho notes
There these bills having reached their maturity
await the coming of that portion of thd rotcs |
winch. having performed for i time the ftnction
oil circulating medium, carried by the demand
Tor duties out of the Immediate sphere of tier is
sue: lie greater proportion of funds, therefore,
when The BanE can employ in these operitions
tne more readily it sustain the notes Issued in
the course OF them. II is indeed thus, and thus 4
lone, that circle of sound banking opera,ions
founded on sound commercial operations, contains
within itself the means Of its own de fence at home
and OF providing for its which the demand for
duties may carryto distance. These operations
LOO, are fortunately OF tho highest benefit to tine
community; they give the most direct ENCOURAGE
n'eht TO industry, by facilitating the purchase and
interchange OF all its products, they bring tie pro
GuGers and consumes into more Immediate conflict
by diminishing the obstacles which separate tb.n
ana thcy specially adaPt The Bank to the wants and
interest OF each section of the Union by making il
alternately large purcha5cr among the sellers of
oi!,s' ana large seller among the purchasers.
: - par H''P"''on also in the foreign exchanges
form an essential part OF tho eystcn not mcr,,I,
as auxiliary to the transfer of funds by which tho
circulating medium is accompanied and protected
but as the best defence Of that currency from ex
ternaI Influences. 1t is the peculiarly of our mo-
nIed system, that i'll parts OF the country the
metals are excluded from the minor channels of cir
cliation by small paper currency, in consequence
OF which the greater portion of these metals is ac
cuinuIated IN masses ut the points of most conve.
mont expectation. Now, with widely diffused
metallic currency, the occasional demands fog e Y
portation are gradually fclt the portion cxpor
yea bearing small relation TO the whole occasions
less Inconvenience, and the excuses of eIporta
tlon can be more readily corrected without injury
hut'when tho great mass of the precious metals
OF the community lie thus accessible in the Banks
OF the Atlantic cities, liable to be Immediately de-
uandcd on notes previously issued in the confidence
OF i continuance ofthe same state of things which
caused the abundant issue Of them; at the first turn
III the tide Of the foreign exchanges-when the
supply OF itreign exchange is unequal to the daily
demand, the uits of the Banks may be exhausted
before any precautions can prevent it. These We
~ precautions, GOO, consisting they do almost
exclusively of curtailmen!s in their loans made
slddenIy-mostly without concert, and always I'M
der the influence ofanxiety if not alarrn NAV II
with oppressive weight the communitv by the /
pressure on which alone can be produced the ne |
c1SSarY re-acton. This Reaction, moreover is nc
ccSSaTHy slow, since our distance from Europo
makes II less eaey TO restore the equilibrium than
between adjoining countries in the same neul;s !
Pbere' AS this defect in our monicd system de !
pehds on the Legislature, the Bank has no power
10 remove 1t, md only strive to guard arainst
us dangers. lis tendency s to produce alrupt
transitions, and violent shocks injurious to private
credit, and which might prove subycrsve of the /
currency. 1T belongs then to the conservative
PoWor over the circulating medium which deyOIycs /
OH the bank, not to be passive observer of these
movements, bat to take ample share i'm all that
concerns the foreign exchanges. IT NAV thus fore