Morning herald. [volume] (New York [N.Y.]) 1837-1840, 1837-05-30

profit depends consists in issuing greater amount
OF notes than it has of specie IN IT'S vaults nut .ns
system is regularly progressing under the impulse Vi
OF the laws that govern It, from It's present ior 70
mere paper machne--a machine for faencaillS anu
issuing notes, not convertible INTO specie. Already
has II once reached this conditions, both IN E.Hgiahu
and the United States, and from which II mas peen
forced back, in both redemption OF It's notes WIN
great difficulty.
This natural tendency of the system IS accelerated
in our country by peculiar causes, which have great
ly. increased It's progress. There are two power
ful causes In operation The one resulting rom
that rivalry which take place IN States SIT
uated ours are under one general government and
having free and open commercial intercourse The
introduction OF the banking system IN one state ne
cessarly on this principle introduces II INTO all others
of which we have seen striking illustration on the
part of Virginia, and some OF the other southern
states, which entertained, on principle, strong aver
sion 10 the system yet they were compelled, after
long and stubborn resistance to yield their oDJecuons,
or permit their circulation be furnished by the sur
rounding states at the expense OF tier own capital
and commerce. The same cause which thus eoinpels
state to initiate the example OF another IN miro
ducng the system from self defence, will compel the
other states like manner and from the same cause
TO enlarge and give increased activity 10 the banking
operation whenever any OF the states sets the eX-
ample of so doing on Its part and thus, by mutual
action and reaction, the whole system - rapidly
accelerated to she final destiny which have assigned.
This is strikngly exemphhed in the rapid progress
of the system since It's first Introduction into our
country At the adoption of our Constitution, pc
Rod of forty five years, there were but three banks
in the United States, the amount or whose capital
do not now recollcct but it was very small. In tins
short space they have increased TO four hundred and
fifty, with a capital of one hundred and forty five
millions, as has already been staed-an increase ex-
cceding nearly a hundred fold the proporonate IN
crease of our wealth and population, great as they
have been.
But il is not in numbers only that they have increas
cd; there has in the time been rapid advance IN
pt,n n
the specie in their vaults or thirty years
ago was considered safe Tor the ISSUES 10 exceed
the spece by more than two and half or three for
one; but now, taking the whole, and excluding The
Bank of the United States with the State Banks the
proportion is about six to one; and including that
bank il would very greatly exceed that proporuon-
This increase of paper IN proportion 10 metal results
from cause which deserves much more notice than
1t has heretofore attracted. Ii originates manly in
the number of the banas. will proceed to illustrate
II.
The Senator from New York, (Mr. Wright) in
signing his reasons for his believing the bank Of the
United States TO be more dangerous than those OF the
States, said that one bank was more dangerous than
many. That in some respects, may be true; but IN
one, and that most important one, Il IS srkngly the
opposite; mean IN the tendency OF the system to m
Where there but one bank, the tcndency,s
lncreases not near SO strong where there are many
as Illustrated in England where the system has adj
vanced much less rapidly in proportion to the wealth
and population of the kingdom than in the u. States.
But wnere there is no limitation as 10 their number,
the increase will be inevitable long banking
tnues to be amsng the most certain, eligible and pro-
ftable employment OF capital, as IS now the CASE
With these inducements, there must be constant APP
picaton for new banks, whenever there Is the least
prospectof profitable emplo yment-banks TO be found
ed mainly on nominal and icticous capital, and adj
ding but little 10 that already IN existence-ans with
our just and natural aversion 10 monopoly, II Is difl
cult principles Of equality and justice TO resist
such application. The admission OF a new bank tends
..Id and h.ftsg Tho
aversion of The old 10 reduce their income, and the de-
sire Of he TO acquire profits, the result is
largemen of discounts, effected bya mutual spirit OF
torbearance; lndsposlon on the part OF each 10
Cypress the other and finally, the creation Of a com
munty offeelng TO sngmatlze and oppose those whe-
Their banks individuals who demand specie IN pay
ment for their notes. This community OF feeling
which Ultimately Identifies the wholea s peculiar and
distinct interest in the community increases and be-
comes more and more intense Just in proportion as
banks multiply; as they become, If may use the ex-
preston, too popuous and from the pressure OF IN
creaslng numbers IN maintaining Their existence,
there results corresponding increase OF issues IN pro-.
portion 10 their means which explains the present
traordlnary dsproporton between specie and notes,
in those States where banks have been most muiipl-
cd; equal to sixteen 10 one.Ihere results,
| fro this state Of things, some political cOnsdcra-
tons which demand the profound attention Of all who
value the liberty and peace of the country.
While the banking system rests on a solid fOunda-
iion ere will be- on her part, but little dependence
on the government and bat little means by which the
government can influence hem, and rs little DISPOSE
ton on the part Of the banks e be connected with
but in the progress of the SYSTEM when their number
is greatly msitipled and their issues IN proportion TO
their means, correspondingy increased the condi
ton of the banks becomes more and more crItlcal-
Every advt event IN the commercial world, or po
litical movement that dstbs the present state OF
things, agifatcs and endangers them. They become
timld aad anxious for their safety, and necessarily
court those in power in order their protec-
ton Property is, in its nature tmid and seeks pro-
tectlon and nothing Is grateful TO government
than 10 become protector. union Is the result -
and when that UNION takes place-when the govern
ment in fact becomes the bank direction, regulating
itsfavors and accommodation, the downfall of liberty
IL at hand Are there not indications that not
far removed from this state Of thngsl DO we not
behold, in those events, which have so deeply agta-
ted us within the last few months and which have
interrupted all the business transactions oil this COM
munty a strong tendency 10 this union on the part
Of one department of this government and portion
of the banking system2 Has not this union been, IN
fact csnsummated in the largest and most CONNER
cal of the staesl What is the safety fund system
Of New York but union between the banks and the
state and consummaon by law OF that community
Of feeling IN the banking system, which | have at
tempted 20 illustrates the object OF which Is to extend
Their discounts and 10 obtain which, the interior
banks # that state have actually put themselves un-
der the mmedat, protection ofthe government.
The effects have been striking. Already have they
become substantially mere paper machines-several
having not more than from to two cents in spe-