The Caledonian. [volume] (St. Johnsbury, Vt.) 1837-1867, 1838-04-24
MR. BSTER'S SECOND
SPEECH.
ON THE sUB-TREASURY BILL.
CoNTINU ED.l


state of the currency.
The most recent Treasury estimate, which have
seen, supposes thar there are eighty millions OF me-
talic money now in the country-Fh believe,
however, to be good deal too high; cannot be-
leve it exceeds sixty, at most; and supposing one
half of this sum to be in The banks, thirty millions
are in circulation or in private hands. We have
seven hundred banks and branches, with capitalists
signed for the security ofheir notes " billS amount
ing to two hundred and eighty millions The a
of bank notes in actual circulation is suppos
ed TO he hundred millions, ihat our whole
circulation is about and hundred thirty millions.
The amount ofdebs due 10 the banks, or the amount
of their loans and discounts, may be taken at four
hundred and fifty millions
Now, sir, this very short statement exhibits al
general outline of existing system OF
currency and credit. We a great amount of
money or pr ,perty, in banks, their assigned and
appropriate capital, and we see great amount due
to these banks. These bank debtors generally be-
long the classes OF active business or are such as
have taken up credits for purposes of investment
in lands or merchandise, looking future proceeds
the means prepayment. If we compare this
state of circulation, of bank capital and bank debt,
with the same things in England, important dferen-
" i'll not fail to strike us.
The whole paper circulation OF England, by the
latest accounts, is % millions sering--made mp OF
is millions ofbank Of Eng notes and 10 millions
otiIe notes of private bankers aud joint stock com,
panes; bullion in the bank, l-2 millions; debts
due the bank Of England, % IL millions. The It.
mount Of loans and discounts by private bankers and
joint stock companies is not usually stated believe,
in the public accounts. If it bear the same proper
ton to their notes in crculatian, as in the case of
the bank OF England it would exceed ~ millions.
We may, therefore, take the amount of bank debts
in England to be 30 millions But suppose that,
of the securities held by the bank of England, ex-
chequer notes constitute large part in other words
that large part of the bank debt IS due by govern
ment, The nmoun, Of coin IN actual circulation is
estimated to be 80 . millions The whole amount
of crcul alton in England, metallic aud piper is us
nIlyc cd utcIyIv mill
which rating The pound sterling at 81 80, is equal 10
$2SS, Gu000i.
i, viii he seem sir, TINT our paper circulation is
one hall less than that Of England, but our bank
debt is, nevertheless, much gre iter; since 80 mil
lions sterling amount to only one hundred and six
~ eight millions OF dollars; and this sum, too, in
clud.s the unt un Of eXchequer bills, or Govern
debt in the form otsucil bills, which the Bank
holds. These facts are very material to any just
comparison of the STATE of things in the two
tries. The whole, or nearly the whole capital of
the Bank Of England, is lent TO Government, not by
means OF exchequer notes, but permancnt,loan.
And as To private Banks and joint stock companies,
though they Issue bills for circulation, they have
no assigned or appropriated capital whatever. The
bills circulate on the private credit OF the individual
banker, or of those who compose the joint stock
companies. In the United States, amoDnt of
capital supposed to he sufficient to sustain the cred
it of the paper and secure the public against loss, is
provided by law, in the act of incorporation for each
bank, and is assigned as trust fund for The pay
ment of the liabilities of the bank. And if this cap
ial be fairly and substantially advanced, it is "A
proper security; and in most cases, do doubt, it is
substantially adv anced. The Directors trustees
of this fund, and they are table, both civilIy and
criminally, for mismanagemeni, embezzlement, or
breach of trust.
This amount of capital thus secured is the basis
of loans and discounts; and this is the why
permanent at least long loans not considered
so Inappropriate TO banking operations, with us, as
they are in England. Withus, it is evident that the
directors are agents holding fund intended to be
I'D
and this form Of loan been found exceedingly
convenient and useful in the country.
In some States, it is greatly preferred to mortgages
sghough there are others in which mortgages are u.s.
ruai Whether exnc,ly conformable to the true no
tion of banking. not the truth is, that the object
and operation of our banks is to loan money; and
this is mostly on personal security. The system,
no doubt, is liable to abuse in particular instances.
There may be directors who will loan too freely to
themselves and their friends. Gross cases of this
kind have recently been detected and exposed, and
hope will be suitably treated; but, considering the
great number of banks, these instances, think
remarkably few. In general, the banks have been
well conducted, and are believed to be solvent and
safe.
We have heard much, sir, in the course of this
oe'a!e OF excess in the issue OF bank for cir
"cu'auon. have doubt, sir, that there was very
improper expansion some years ago When Presi-
oen' jackson, in 1882, had negalived the Bill for
-conuhoing the Bank of the United States (Which
act esteem as the true original of all the
cuTfeDcy) a VAST a0dltiOn was I'M
mediately made to the number of State Ranks In
1885, me public deposites actually removed
from the Bank of the United States, and placed in
selected state Banks And for the purpose of show
ing how much better the public would be accommo
dated without, than with, Bank of the United
States these banks were only encouraged. bur
admonshed TO be free and liberal in loans and dis
counts, made on the strength of the public moneys G
to merchants and other individuals The circular +
letter from the Treasury department, addressed to :
the new deposita banks, under date of 26th Septeu
Der, 1888, has this significant clause, which could
not have been misunderstood - I
The deposites of public money will enable Won \
20 afford increased facilities commerce. and TO ex- a
tend your accommodation to individuals; and as the
oules which are payable :he Government; arises
,,o me business and enterprise Of the merchants
."ey should be preferred in the additional accom- t
n"mn which the public deposites will enable a
''ui institution TO give whenever it can be done