Alexandria gazette. [volume] (Alexandria, D.C.) 1834-1974, 1834-03-28

of fact. the mint of the United States. They
coin the actua! money, (for sech we mus
call bank notes. and regulate It's ISSUE ana COZ .
seouentlv its value. IF we enquire as TO thelf
number th, amount of their issue, and other
circumstances calculated to show thelr actual
condition we shall find that, so RAPID mas peeh
their increase. and so various their changes,
that no accurate information can be mad.
According to the latest and pest ina. l nave
been able to ascertain, they NUMBER at least ioul
bb ,,ndred and fifty. with a capital of not less than
one hundred and forty-five millions OF dollars,
with an issue exceeding seventy millions; ana
fine whole of this immense fabric standlnS upon
| q metallic currency, of less than hiteeh nliiliohs
of dollars, of which the greater paftls hela ny
the Bank Of the United States. Ii we compare
the notes in circulation with the metalllc cufleh-
CIV in their vaults, we shall find the propoItloh
about six to one; and if we compare the latter
with the demands that may be made upon the
banks, we shall find that the proportion is about
one to eleven. If we examine the tendency OF
the system at this moment, we shall Ind thatltls
| on the increase-rapldly on the increase. Ihefe
is now pending a project Of a ten million Dank
before the Legislature OF New 4ork; but recent
| w one of five millions was established In Ken
lucky; within a short period one of a large Cap
ital was established in Tennessee, besides 9th
ers in agitation in several of the other States
Here Mr.. PORTER, of Louisiana, said that one
of eleven millions had just been established In
that State.
This increase is not accidental. 1t may be
laid down as d law, that where two currehcies
are permitted to circulate in any country, one
ofa cheap and the other of a dear material, the
former necessarily tends to grow upon the lat
ter, and will ultimately expel itfrom clrculahon
unless its tendency to increase be restrained by
a powerful and efficient check. Experience
tests the truth of this remark, as the history OF
the banking system clearly illustrates. The
Senator from Massachusetts truly said that the
Bank of England was derived from that OF Am
sterdam, as ours in turn are from that OF EE-
gland. Throughout its progress the truth OF
what | have stated to be a law of the system rs
strongly evinCed. The Bank Of Amsterdam
was merely d bank of deposite-a store-house
for the safe. keeping ofthe bullion and precious
metal brought into that commercial metropolis,
through all the channels of its widely extended
trade. 1t was placed under the custody OF the
city authorities; and, on the deposite, a certltl-
cate was issued as evidence ofthe fact, which
was transferable, so as to entitle the holder to
demand the return. An important fact was
soon disclosed; that a large portion of the de-
posites might be withdrawn, and that the resi-.
due would be sufficient to meet the returning
certificates; or, what is the same IN effect, tina
certificates might be issued without making a
deposite. This suggested the idea OF a bank OF
discount as well as deposite. The fact thus dis
closed fell too. much in with the genius of the
system to be lost, and accordingly, when trans
planted to England i it suggested the idea OF a
bank of discount and of deposite; the very es-
sence of which form of banking, that on which
their profit depends, consists in issuing a great
er amount of notes than it has Of specie in its
vaults. But the system is regularly progressing
under the impulse Of the laws that govern it
&C. 4, Enrp, + q rnara nonpr machine
"a machine for fabricating andissuing notes.
not convertible into specie. Already hasit once
reached this condition., both IN England and the
United States, and from which it has been for
ced back, in both, to a redemption OF It's notes
with great difficulty.
This natural tendency ofthe system is accel-
Grated in our country by peculiar causes, which
have greatly increased its progress. There are
two powerful causes in operation. The one re-
sulting from that rivalry which must ever take
place in States situated as ours are, under one,
general Government. and having a free and
open commercial intercourse. The introduc-
ton Of the banking system in one State neces-
sarily, on this principle, introduces 1t into all the
others, of which we have seen q striking Illus
tration on the part Of Virginia and some of the
other southern States, which entertained, on
principle, strong aversion to the system; yet
they were compelled, after a long and stubborn
resistance, to yield their objections, or permit
their circulation to be furnished by the surround
ing States at the expense Of their own capital
and The same cause which thus
compeIs one State TO initiate the example Of an
other, in introducing the system from self de-
fence, will compel the other States, in like man
ner and from the same cause, to enlarge and
give increased activity to the banking opera
ton, whenever any one Of the States sets the
example ofso doing on its part; and thus, by
mutual action and reaction, the whole system is
rapidly accelerated to the final destiny which
have assigned.
This is strikingly exemplified in the rapid pro.
gress of the system since its first Introduction
into our country. At the adoption ofour Con-
s%titution, a period of forty-five years, there were
but three banks in the United States, the amount
of whose capital | do not now recollect, but it
was very small. In this short space, they have
increased to four hundred and fifty, with a ca
| pital of one hundred and forty-five millions, as
has already been stated-an increase exceeding
nearly an hundred fold the proportionate in
crease Of our wealth and population, as great as
they have been.
But it is not in numbers only that they have
increased; there has, in the same time, been a
rapid advance in the proportion which their
notes in circulation bear to the specie in their
vaults. Some twenty or thirty years ago it was