, 1840-03-28
Each of these bank:

udS us own lmiteo sphere Oh ClICuidIlOn, ana
they are not compelled to receive the paper
of each other. In point of fact this is not
generally done /; nor could any bank Of the
United States be required to receive all the
notes which these eight hundred paper man.
uiactofles arc constantly pouring out upon the
public, From the law which regulates cur
rency, that which is the worst has always
the most extensive circulation. individuals
will always hold fast by the gold and silver,
and pass away the bank notes; and OF these
notes they will pay out the doubtful, and pre-
serve those which are above suspicion. No
bank Of the United States, however great
its capital, and extended its powers, could
ever reach the evil. It could never trans
act business with one bank in ten, | might
say in twenty, Of the whole number.
But it is vain to speculate upon this sub
ject. Experience is the best teacher. One
fact is worth one hundred arguments. In
dependently Of the adverse experience Of
our own country, the experiment has been
tried by the Bank of England under the
most suspicious circumstances, and it has Ut
terly failed.
The real capital of the Bank Of England
is about seventy millions of dollars, and it
has ten branches at the most commercial and
manufacturing points Of tie kingdom. In
1886, the rate of foreign exchange was large
ly against England. The specie Of the bank
was, therefore, gradually drawn from its
vaults for expectation. 1t became necessa-
ry, for its own salvation, that it should make
a vigorous effort 10 diminish the amount Of
the circulating paper medium, and thereby
raSfpra tho anrnlIbrInpo nf tho f,rn.yp nv
changes. The bank credits and currency OF
England had become SO inflated, and, in con-
sequence, the prices Of all articles mad ad-
vanced 10 such a standard, thai, 10 use the
language Of q British statesman, it had be-
come the best country to sell inland the worst
country to buy in throughout the world. 1t
was profitable, therefore, 10 import every
foreign production which could be admitted
TO entry, and, on account of the high paper
prices Of their domestic productions, their
exports were greatly diminished. The con-
sequence was, a continued and ruinous drain
81 specie from the Bank Of England to ad-
just the balance Of the trade against hat
country. The bark well knew that, If it
could limit the amount Of the paper ~circula-
ton, it would reduce the price Of their home
productions IN lie same proportion, and thus
render it profitable for foreign merchants to
&c export British manufactures instead Of
specie. For this purpose il contracted its
loans and issues, in the vain hope that the
joint stock md private banks would be COM
PEELED 10 follow its example. In our slang,
it put the screws upon them. What was
the result? | shall not enter upon a detail
of particulars. 1t is sufficient 10 say, that,
as il contracted. the other banks OF the king
dom expanded their loans and their issues;
and that, too, 10 a greater proportion than IFS
loans and issues were diminished. Prices
still continued to rise, and bullion still con-
tinued to be drawn out of the bank for eI-
portation. The utter impotency Of this
the other banks and keep the paper curren-
CIV Of the kingdom within such limit, as to
arrest the expectation Of gold and silver, has
thus been so clearly demonstrated that ma
ny of the ablest British statesmen despair OF
accomplishing the object in any other mar
ner than by restricting the issues Of paper
money 10 q single bank, and regulating their
amount by the agency of the government
Here, then, is an important fact incontesta-
bly, established. If this be true-and there
can be no question Of its TRUTH would ask
the senator how a national bank, even with
a capital Of fifty millions Of dollars, could
regulate and restrain. within proper limits,
the loans and issues Of eight hundred state
banks, scattered over the whole extent Of
this vast countryf The thing is impossible.
1t could not be accomplished by such a bank.
And what is the condition of the Bank Of
England at the present moment9 Accord.
ing 10 the testimony of Mr.. I1orsly Palmer.
its president, given before the secret com.
mlttee Of the house Of commons, previous
to its recharter in 1888, the principle on
which it had proceeded in regulating its is
sues wos TO keep as much coin and bullion in
its Golfers as amounted to a third part Of its
Liabilities, including sum- deposited as well as
notes in circulation. Experience had estab.
lished the fact that this rule Of one for three
of circulation and deposites was the safe pro-
portion. Its necessities have compelled it &c
depart widely from this rule Of its own crea'
ton. Instead Of being able to regulate the
loans and issues of other banks, it has with
difficulty been able to save itself. II ha:
been going down and down, until, according
10 the last quarterly statement OF its condi