ON THE ESTABLISHMENT OF A 
 
 IN THE DISTRICT OF COLUMBIA
 
 v 
 
 mi. 
 
 ESTABLISHMENT OF A NEW BANK 
 
 DISTRICT OF COLUMBIA; 
 
 NOTICE OF VARIOUS COLLATERAL OBJECTS, 
 
 DEEPLY INTERESTING 
 
 TO ITS INHABITANTS. 
 
 WASHINGTON, CITY: 
 
 PRINTED BY BENJAMIN HOMANS. 
 
 1835.
 
 ^ r j 4 v vr.
 
 ON THE 
 
 ESTABLISHMENT OF A NEW BANK 
 
 touring the last session of Congress, a memorial, very ge- 
 toerally signed by the citizens of Washington, was presented 
 to that body, which, after adverting to other important objects, 
 concludes with the following representation : 
 
 " Your memorialists would withhold any further applica- 
 tion to your honorable body, were it not for the existing con- 
 dition of the monetary concerns and Banks of the District, 
 which, at this time, call for a careful examination, that such 
 improvements may be adopted as the interests of the District 
 imperatively require. The local banks chartered by Con- 
 gress, have, it is cheerfully admitted, extended great benefits 
 to our citizens ; but their present situation is such as does not 
 enable them to continue to dispense those benefits in the de- 
 gree or manner in which they are needed. From their small 
 capitals and impaired credit, their operations have been great- 
 ly reduced, and must necessarily continue to be so, unless 
 radically modified. As might be expected, enterprize is pa- 
 ralized, industry fails to receive its due reward, and a circu- 
 lating medium entirely defective produces its invariably 
 deleterious effects. As all the charters of the local banks 
 expire on the 3d of March, 183G, it fortunately is in the 
 power of Congress, by a wise legislation at this session, to 
 relieve the District from these evils. This, in the opinion 
 of your memorialists, can most effectually be accomplished 
 by the establishment, in lieu of the existing banks, of one 
 sound institution, in the City of Washington, with branches 
 in Georgetown and Alexandria, whose capital shall consist 
 of the capitals of such of the other banks as may agree to thr
 
 union, received at their true values, to be ascertained by dis <* 
 interested organs, with the addition of subscriptions to a pru- 
 dent extent, by individuals or Congress. It is our firm belief 
 that such a plan, promptly sanctioned, will have the happiest 
 influence on the whole District, will awaken enterprize, sti- 
 mulate industry, by insuring to it its just reward, secure a 
 sound circulating medium, enable the District to meet ex- 
 igences that might otherwise overwhelm it in ruin, and to 
 assume a station becoming the Seat of Government of a great 
 and flourishing Commonwealth." 
 
 Similar memorials were presented from other sections of 
 the District. 
 
 Various causes, which it is unnecessary to recite, prevent- 
 ed the action of Congress, at their last short and excited ses- 
 sion, on this subject, a result aided, in some measure, by the 
 opinion of some of our most respectable citizens, that it was 
 expedient at that time to confine our requests to the removal 
 of the burthens that so immediately affected the interests of 
 the District. 
 
 Whatever force there may have been at that time in this 
 forbearance, the season has now arrived, it must be admitted 
 on all hands, when the vital interests of our whole commu- 
 nity call for the adoption of vigorous measures in respect to 
 our monetary system. 
 
 On the 3d of March ensuing, the charter of all the local 
 banks will expire ; at the same time the charter of the Bank 
 of the United States expires ; and already in the contempla- 
 tion of this event, a general and rapid curtail of its debts has 
 been demanded. 
 
 These debts must be discharged. Appalling as they are 
 in amount, where are the means for paying them? The mo- 
 ney is not to be found in the District ; the property, from 
 which alone it can be produced, cannot be sold except at 
 ruinous prices. Can the ingenuity of man devise any other 
 resort than that of loans which shall be gradually reimbursa- 
 ble ? Who will lend ? Not, as things now stand, those at a 
 distance. Unfortunately our credit is at a low ebb. These 
 loans, therefore, must be made among ourselves. There is 
 no effectual mode of doing this but by a radical reorganiza- 
 tion of our local banks. 
 
 These several points are nearly so self-evident as scarcely 
 to admit of illustration by argument ; as, however, there may 
 be a number of our citizens who have not looked at the sub- 
 ject in its practical bearings, it may be useful to offer some 
 brief details.
 
 it may be supposed, that, as one Bank, that of the United 
 States, in the present instance, calls in its debts, other banks, 
 in cases where its debtors are in good circumstances and en- 
 titled to credit, may extend an equivalent accommodation to 
 them. This is true in most cases, where all the banks, that 
 demanding payment and winding up its concerns, and those 
 still making loans, belong to and are based on the resources 
 of the same community. It is so in most of the other cities. 
 In these cases the money, paid by curtails to one bank, does 
 not diminish the resources of the place ; active from its very 
 nature, it is absorbed in the general circulation, and, as it in- 
 variably seeks a profitable investment, the payment of one 
 debt immediately and necessarily creates an ability to make 
 an equivalent loan. But, unfortunately, the money that may 
 be paid to the Bank of the United States in this District 
 must take a totally different direction. Instead of remaining 
 with us, and by its reloan, either continuing undisturbed the 
 existing state of things, or, perhaps, by a change of hands, 
 increasing enterprize, production and profit, it forthwith to- 
 tally leaves us, and is transferred to the Bank of the United 
 States at Philadelphia. Hence, every debt so paid, amounts 
 to an abstraction of so much money from us. The money of 
 our citizens is generally deposited in the local banks, or is 
 represented by their notes in their hands. When, conse- 
 quently, they pay a debt to the Bank of the United States, 
 it can only be paid, either in specie, the notes of the local 
 banks, or checks on the deposites of individuals in those 
 banks. If paid in specie, in proportion to such payment di- 
 minishing the amount in general circulation, which is inva- 
 riably that required for ordinary business, there will be a 
 demand on the local banks to replace an equivalent amount, 
 and if paid in their notes or in checks on their deposites y 
 there will be an immediate requisition by the Bank of the 
 United States for specie, or what can be immediately con- 
 verted into specie. Hence, every debt thus finally paid to the 
 Bank of the United States, is to all intents and purposes a 
 demand for specie. With this abstraction of specie, steadily 
 going on, the means of the local banks must, of necessity, be 
 impaired, and experience has proved that, under such cir- 
 cumstances, so far from being able to make new loans, they 
 have been compelled to call in their own debts, aggravating 
 with constantly increasing force the demand for specie. It 
 is easy to foresee that these causes will soon absorb all the 
 floating specie, and that, after this result, debts can only be 
 paid by the sale of property. And how is this to be effected ?
 
 6 
 
 Oh the failure of debtors to pay the demanded curtails, suits 
 will ensue and multiply, heavy legal expenses be incurred, 
 and, finally, real estate, in vast masses, be set up for sale by 
 auction. Who will buy it ? We have already seen that the 
 means of purchase by our citizens do not exist. It can only^ 
 therefore, be bought by persons at a distance, who, under 
 the existing circumstances, when the quantity thrown into 
 the market will be out of all proportion to the natural de- 
 mand, and the consequent result of such speculations be alto- 
 gether uncertain, will obtain it for prices so much below its 
 ordinary value as to involve the most ruinous sacrifices. 
 
 Such is a plain, unvarnished picture of that state of things 
 Which must inevitably befall this community, if it shall not 
 be averted by wise measures of precaution, which it is the 
 principal object of the writer to point out. 
 
 We shall be the better enabled to understand the measures 
 that it will be expedient to take by a statement of facts con- 
 nected with the existing state of the District, and a rapid 
 view, retrospective as well as prospective, of its affairs. 
 
 About the year 1800, Congress proceeded to carry into 
 effect the provision of the constitution for the establishment 
 of a permanent national seat of government, by assuming 
 exclusive jurisdiction over the District of Columbia, and 
 founding a national metropolis. At this time there existed 
 two flourishing towns, Georgetown and Alexandria, within 
 the limits assigned to the District. Georgetown, under the 
 guardianship of Maryland, and Alexandria, under that of 
 Virginia, were already seats of considerable commerce, and 
 rising apparently to no mean importance. Such, indeed, was 
 their progressive state, under the fostering auspices of those 
 States, that not a doubt can be entertained, had they remained 
 in their original state, of their continuing to grow in conse- 
 quence. But Congress, while it included them within the 
 limits of the District, considered it proper, under the advice 
 of Washington, to locate the national metropolis between 
 them, bounded by the Potomac, the Eastern Branch, and 
 Rock Creek, with the apparent view of giving it, as a seat of 
 commerce, all the advantages possessed by those two towns. 
 The effect was such as might have been, though it was not 
 at that time, predicted. The City of Washington became 
 the great object of interest and attention ; speculations in its 
 lots were entered into with heedless avidity and ruinous 
 effects to the adventurers ; a brilliant bubble was formed, 
 which, as usual, burst ; purchasers, including many of the 
 inhabitants of Georgetown and Alexandria, became the vie-
 
 tims of extravagant expectations ; and a great, if not the 
 greater part of the city lots, fell into the hands of bankrupt 
 speculators ; the fostering care of Maryland and Virginia was 
 withdrawn from those towns and lavished on rival cities ; 
 the National Government did little for them ; who, appre- 
 hensive lest the City of Washington might swallow them up, 
 soon experienced' the misfortunes of blighted hope and im- 
 paired enterprise. 
 
 If the effects of the establishment of the seat of Govern- 
 ment were so disastrous on these towns, it was little less so 
 on the destinies of Washington. Never, perhaps, has hu- 
 man wisdom been more wofully baffled than in this instance. 
 The very elements, in the eyes of Washington and Congress, 
 of its success and greatness, became as many incubi on its 
 prosperity. The towns of Alexandria and Georgetown very 
 naturally and wisely clung to their own interests, while 
 Washington as naturally and wisely clung to hers. Hence, 
 three rival antagonist powers were forthwith created. In- 
 stead of uniting their resources and efforts on one common 
 object, by which success would have been certain, divided, 
 neutralised, or lost by mutual opposition, defeat was the al- 
 most inevitable consequence. Like a'family, whose members 
 were divided, its fate was scarcely to be averted. 
 
 Looking especially at Washington, a magnificent plan of a 
 city was devised, capable of containing within its limits half 
 a million of inhabitants, with streets, avenues, and public 
 reservations, covering nearly a moiety of the whole area, 
 the streets and avenues varying in width from 80 to 160 feet. 
 Instead, moreover, as a cautious policy would have dictated, 
 opening, for the purpose of building a limited area at a time, 
 thus making this the centre from which the buildings would 
 extend, the entire area of more than ten square miles was 
 thrown open. The ground plot having been derived from 
 several distinct proprietors connected with a reservation to 
 them of one-half of the lots, great rival interests became, as 
 it were, the germs of four different towns separated from 
 each other by extensive unimproved spaces. The great pub- 
 lic establishments for the accommodation of the legislative, 
 the executive, and the naval departments, were, in a like 
 spirit, located more than a mile from each other. Thus pub- 
 lic and private interests combined to destroy unity and co- 
 operation, and to substitute diversity of interests and even 
 hostile feelings. The inevitable consequence was that im- 
 mense sums of money were uselessly expended, with the
 
 8 
 
 view of promoting local interests, on buildings and other 
 improvements only made to fall into a premature decay. 
 
 The extent of these malign influences can scarcely be ima- 
 gined. They destroyed capital, paralyzed enterprize, sub- 
 verted confidence. 
 
 It became necessary to open and keep in repair streets and 
 avenues of boundless extent at an immense expense, at the 
 least quadruple of that which has been incurred in any other 
 American town of the same population. 
 
 The remote and scattered population of the city, particu- 
 larly during the almost tropical heat of our summers, ren- 
 dered a carriage, not only convenient, but indispensable, to 
 men of business, without which their health would be im- 
 paired, and their time consumed in exposed and endless walks. 
 It is not an over estimate to set down this single extraordi- 
 nary expense at one hundred thousand dollars a year, which 
 at six per cent, interest, represents a capital of more than a 
 million and a half of dollars. 
 
 From the above causes, the taxes, from necessity, became 
 heavy and oppressive, independently of those which have 
 arisen from the subscription to the Chesapeake and Ohio 
 Canal, and the payment of prizes in the lottery. These 
 were aggravated and increased to an amount nearly double 
 what they otherwise would have been by the exemption of 
 public property from taxation, although this property was 
 equally benefitted and enhanced in value, ( and at such en- 
 hanced value actually sold, ) by the taxes exclusively im- 
 posed on private property. 
 
 Now, let the case be plainly put and fairly answered : who 
 were the authors of this scheme and its necessary develop- 
 ments ? There cannot be a doubt on this head. It was en- 
 tirely and exclusively the Government of the United States. 
 What was its object ? To promote the interests of the citi- 
 zens of Washington ? Was it not, on the contrary, to cany 
 a great constitutional injunction into effect, on which it was 
 thought by our best and wisest men, that, in no inconsidera- 
 ble degree, depended the unity of the American people. If, 
 then, this constitutional injunction is considered sacred, is it 
 not the duty of the General Government, not merely to the 
 citizens of Washington, but to the whole American nation, 
 to carry it into effect in such a manner as justice and honor 
 dictate ? If, so far, in the measures taken, errors have been 
 committed by the Government, is it not its duty to correct 
 them ? If the citizens of Washington have been oppressed, 
 ought they not to be relieved ? If they have exhausted all
 
 their means, is not the nation bound to extend a helping 
 hand ? The people of Washington will, it is true, be bene- 
 fitted by such aid ; but it will not be confined to them ; there 
 is not a citizen in the wide extent of the Union that will not 
 be likewise benefitted. 
 
 There is, it is believed, a general disposition in Congress, 
 viewing this question as really a national question, to give 
 this relief. In what should this relief consist? 
 
 The same memorial, to which reference has been had, so 
 far as regards the Chesapeake and Ohio Canal and taxation, 
 presents the subject to Congress ; and memorials, with a like 
 object, have been presented by the several District Corpora- 
 tions. Leaving this branch of the subject with its present 
 depositories, it is the principal end of these remarks to ex- 
 pose the present state of the monetary concerns of the Dis- 
 trict, and point out the proper remedies for the existing evils 
 that flow from this source. 
 
 The facts here stated, abundantly show the causes of the 
 present depression of the District. Happily, the remedy is 
 to be found in a wise legislation suited to the existing state 
 of things. And to obtain this, the citizens of the District 
 have only to unite in one common scheme. 
 
 The resources of the District, as bestowed by the hand of 
 nature, are so abundant as only to require the same intelli- 
 gence and energy as have signalized other places, to insure 
 prosperity and progressive improvement. The accomplish- 
 ment of the great enterprize, which must produce here the 
 same effect as similar enterprizes have invariably produced 
 elsewhere, is no longer doubtful. Already the products of 
 the interior are coming down the canal in large and increas- 
 ing masses, and will find a market in the ports of the District, 
 if a sufficient capital is provided to excite competition and 
 insure prompt sales and fair prices. If such a capital is not 
 provided, the trade must centre in Baltimore. 
 
 It is manifest, then, that our affairs have reached a serious 
 crisis. Credit must be restored and extended. Capital must 
 be created by the usual means of attraction and concentration. 
 Capital is necessary for three purposes. First, for the im- 
 mediate purpose of meeting the curtails of the Bank of the 
 United States. Secondly, to make useful and available the 
 operations of the existing local banks. And, thirdly, to pur- 
 chase the produce that, with its aid, will find a market in the 
 District, through the Chesapeake and Ohio Canal. The first 
 object will require at least one million of dollars. It is not 
 to compute the sum that will be requisite to effect th 
 2 

 
 second. The third, it is obvious will demand a very large 
 sum. To accomplish these ends something must be done* 
 and that promptly, on a large scale. 
 
 There is but one mode of doing this ; by the establishment 
 of one or more respectable banks. Whatever diversity of 
 opinion there may be on this head on abstract ground, there 
 can be none in any practical view of the subject. Banks 
 have become the universal means of attracting and concen- 
 tring capital, and of diffusing it so as to produce the greatest 
 effect. They are to be found in almost every State and town 
 in the United States, and Congress, as the exclusive legisla- 
 tors of the Dirtrict, are morally bound to establish them here 
 in such a manner and to such an extent as shall place the 
 District on as good a footing as other portions of the Union. 
 
 Without this there is no probability that the capital will 
 be drawn here which is essential to make the District either 
 extensively commercial or manufacturing, on which alone its 
 progressive prosperity can be founded. 
 
 Prudent men will not enter on such establishments, al- 
 though their own means may be considerable, without the 
 assurance of being able, by the means of banking institutions, 
 to anticipate their ordinary resources that must principally 
 depend on the proceeds of their sales. 
 
 This is a self-evident proposition to men of business : but 
 there are many other men of good minds to whom a brief 
 illustration may be necessary. Trade and manufactures are 
 the aliment of towns, as agriculture is that of the country. 
 The former require skill, industry and capital. Other things 
 being equal, profit will be in proportion to capital ; that is, 
 the larger the capital of a merchant or manufacturer, the 
 greater will be his relative profit compared with other mer- 
 chants and manufacturers. It is the accumulation of this 
 capital that constantly tends to reduce the profits by cheap- 
 ening commodities. Competition has become active in the 
 United States, and where the most is to be made, the enter- 
 prizing resort. They carry with them some capital, such as 
 is generally sufficient to meet losses to which they may chance 
 to be exposed ; but to a great extent they rely on their cre- 
 dit. Generally they buy and sell on credit, and if, as is often 
 the case, their sales do not bring in sufficient money to pay 
 for their purchases when due, they borrow from some capi- 
 talist. This resource is the more important, as its assurance, 
 when needed, enables them to withhold from the market 
 their commodities on hand until they can obtain for them fair 
 and remunerating prices. These capitalists are now exclu-
 
 11 
 
 sively banks, which are constituted of the money of men 
 whose acquisitions, enabling them to live on their incomes 
 without business, induce them to vest their money in them. 
 Hence it is the capital of these banks that is principally thus 
 used in commerce and manufactures ; and it probably at this 
 time constitutes two-thirds of the moneyed means through 
 discounts of men in business. While in good credit they 
 depend on obtaining such discounts whenever they want them. 
 Thus, their entire means are active, none remain unemploy- 
 ed. Instead of filling, as in old times, their strong boxes, to 
 have money at command, when wanted they invariably resort 
 to banks. If there be no banks or inadequate ones, com- 
 merce and manufactures must languish. 
 
 The evil will not stop here. Capital will go to those 
 places where banks exist, if they are not found in the Dis- 
 trict the capital of its citizens will go to other places where 
 they do exist. 
 
 Nor is this all. As bank notes have become the circula- 
 ting medium of the country, the District, unless its own 
 banks supply this medium, will have to use the notes of other 
 banks and virtually pay them interest on their amount. 
 
 We repeat, then, that, as without respectable banks in the 
 District capital will not be embodied in or attracted to it : 
 their existence is essential to its prosperity. 
 
 It may be useful here to notice one observation that-is fre- 
 quently made. It is said that the constant expenditure of 
 public money in the District supplies an abundant capital 
 without any further aid. The amount thus expended is cer- 
 tainly not inconsiderable. But let us trace its course. In 
 the first place it may be assumed as undoubted that the whole 
 amount is within the year expended by those that receive it. 
 This arises from the fact that public men, at the Seat of Go- 
 vernment, almost invariably live up to their incomes. Mo- 
 ralists may rail, but the evil, if it be such, is too deeply 
 rooted in the strongest feelings of the human heart to admit 
 of eradication. Capital, therefore, which is the surplus of 
 production over consumption, is not from this source created. 
 And what becomes, in the second place, of this money? If 
 there were flourishing mercantile and manufacturing esta- 
 blishments in our bosom it would undoubtedly tend to invi- 
 gorate and extend them. But as those unfortunately do not 
 exist, it necessarily goes to aid like establishments elsewhere, 
 and elsewhere to embody capital. 
 
 If banks are essential to the prosperity of the District, it 
 will be admitted that, to have this effect, they must be based
 
 12 
 
 on a solid foundation, and be of a sufficient magnitude. With- 
 out the former they cannot command that confidence which 
 is the lifeblood of credit ; as, without the latter they will but 
 inadequately supply the moneyed wants of the District. 
 Upon their credit will depend the amount of deposites by 
 Government and individuals, and the circulation of their 
 notes, which measure the extent of their business. 
 
 What plan will best promote these ends ? 
 
 The component parts of any plan that may be devised 
 will consist of, 1, the amount of the capital; 2, its distribu- 
 tion among the towns of the District ; with 3, the mode of 
 administering it. 
 
 1. The amount of capital. There are no certain data for 
 fixing this. It depends upon a great variety of circumstan- 
 ces, the principal of which are population, commerce, and 
 manufactures. If regulated by the former, the population of 
 the District, and of the country of which its towns may, 
 commercially considered, be viewed as the centre, may be 
 estimated at two hundred thousand dollars, which, supposing 
 the aggregate capital of the banks in the United States to be 
 two hundred millions, would give about three millions. If 
 regulated by the latter, which would seem to be the true 
 criterion, the amount of capital required will be much greater. 
 We can only on this point aim at an approximation to the 
 truth.* It will not much, it is believed, deviate from this, to 
 compute the products of the country brought to the towns 
 of the United States at two hundred millions of dollars, and 
 to compute the value of the products that will be brought to 
 the towns of the District as follows : 
 
 Tobacco, - - $1,000,000 
 
 Flour, - 2,000,000 
 
 Whiskey, 300,000 
 
 Lumber, 400,000 
 
 Coal, - 1,000,000 
 
 Other articles, 300,000 
 
 $5,000,000 
 
 This would consequently require a banking capital of five 
 millions of dollars. 
 
 That this would not be too large a capital at present would 
 seem further to follow from the following facts : 
 
 As long as twenty years ago, the following amounts of 
 capital were authorized by law :
 
 13 
 
 In Georgetown, $2,250,000 
 
 In Alexandria, - 2,700,000 
 
 In Washington, - 1,250,000 
 
 $6,200,000 
 
 To which if there be added the capital em- 
 ployed by the Bank of the United 
 States of 7 juf - - 1,000,000 
 
 We have the amount of - - $7,200,000 
 
 If the amount of capital necessary be tested by the exist- 
 ing capitals, we will have the following results, after deduct- 
 ing from the capitals paid in the respective amounts of capi- 
 tal stock owned by the banks : 
 
 ( 
 
 In Georgetown Far's and Mechanics Bank, $401,000 
 
 Union Bank, - - 309,000 
 
 In Washington Bank of Washington, - 359,000 
 
 Bank of Metropolis, say - 400,000 
 
 Patriotic Bank, say - - 150,000 
 
 Bank of United States, say 1,000,000 
 
 In Alexandria Bank of Alexandria, say - 300,000 
 
 Bank of Potomac, - ' v 400,000 
 
 Far's Bank of Alexandria, 310,000 
 
 Making in the aggregate $3,629,000 
 
 From these general views of the subject, it may be as- 
 sumed that a capital of between three and five millions of dol- 
 lars would be requisite to place the District on as good a foot- 
 ing as other towns in the United States. As, however, its 
 solid and permanent interests must be most effectually promo- 
 ted by keeping credit within prudent bounds, it is better that 
 the amount of bank capital should be below rather than above 
 its true dimensions, as it will be always easier to extend 
 than to reduce it. 
 
 There is, however, on this point, one important conside- 
 ration. The progressive and expansive character of the Dis 
 trict will require a gradual increase of capital. If its interests 
 shall be fostered by Congress with the same wisdom and re- 
 gard as the interests of other towns are fostered by the State 
 Legislatures, this expansion will at the least keep pace with 
 the population of the whole Union. 
 
 It is, moreover, a maxim consecrated by the established
 
 14 
 
 principles of political economy, that those communities are 
 the most flourishing in which there is a steady gradual in- 
 crease of money. 
 
 If, then, as it has been shown, this increase of money con- 
 stantly seeks investment in bank capital, it would appear to 
 be the part of wisdom in any legislation on this subject to have 
 a prospective view to this tendency, and to provide for it by 
 authorizing, under suitable restrictions, the augmentation of 
 the banking capital from time to time as circumstances shall 
 call for it. 
 
 Another consideration, of no small moral force, is connect- 
 ed with this, as well as other branches of the subject. If 
 Congress shall decline establishing a national bank, the fiscal 
 arrangements of the Government must, to a certain extent, 
 be managed by the local banks of the District.- If these ar- 
 rangements should be limited to the business immediately 
 connected with the District, even with such a limitation, as 
 there will be a large and steadily augmenting amount of pub- 
 lic money placed under their care and passing through their 
 hands, it is important, as well for the security of the Govern- 
 ment, as for the efficient discharge of the duties of the banks, 
 that their capitals should be commensurate with these objects, 
 in addition to the ordinary banking objects, and that they 
 should from time to time be augmented, as the Government 
 business increases. It will be obvious that this consideration 
 will be still further strengthened, and that to no mean extent, 
 if it shall be thought expedient, for the better and easier ad- 
 ministration of the finances of the Government, to make a 
 District Bank the principal organ of the Government with 
 the other banks of deposite of the several States. 
 
 Under all these aspects of the subject, a banking capital, 
 respectable as well for its solidity as its magnitude, should 
 be established equal to the present wants and prospective 
 claims of the District. 
 
 From the views and facts already presented, its immediate 
 amount should not be less than three or more than five mil- 
 lions, with authority to extend it to six millions with the 
 approbation of and at such time as the President of the United 
 States should approve. Whether it should approximate to 
 the former or the latter sum, may depend on the legislative 
 order taken in regard to the existing banks. If they shall 
 form component parts of the new scheme, a capital of, per- 
 haps, four millions, if excluded, a capital of three millions, 
 might suffice, as in the event of their inclusion it is manifest 
 that their contributions of capital will be in a great degree
 
 15 
 
 nominal, as they will only contribute debts due by indivi- 
 duals not readily convertible into money. 
 
 2. The second point is the distribution of the capital among 
 the towns of the District. 
 
 This involves the important consideration, whether there 
 shall be established one bank for the whole District ; or whe- 
 ther there shall be separate and independent banks in each- 
 town. 
 
 If there be one bank for the whole District, the principal 
 institution will, of course, be located at the centre in the 
 City of Washington, with branches in the other towns. The 
 advantages of this plan will be, 
 
 1. The respectability of the capital. The object will be 
 one of importance, not merely in the eyes of our own citi- 
 zens, but also in the estimation of those at a distance. Its 
 magnitude will command attention, and the capital requisite 
 will be the more likely to be obtained. 
 
 2. In proportion to the importance of the object, and the 
 interest taken in it will be the facility of commanding the 
 services of directors of integrity and talent. This end will 
 be further promoted by the enlarged field of choice, which, 
 instead of being confined to one of the towns, will embrace 
 the whole District. 
 
 3. It will have the happy effect of uniting in one common 
 interest, the three towns, instead of creating in each a dis- 
 tinct, rival, and, it may be feared if we are to judge from ex- 
 perience, a hostile interest. 
 
 4. It will be productive of no inconsiderable economy, as 
 the fewer the number of banks, the smaller will necessarily 
 be the expenses. 
 
 5. It will greatly diminish the risk of bad debts. There 
 are at this time eight banks in the District, all acting inde- 
 pendently of each other, so that no one of them, when called 
 upon to loan money to an individual, knows how much he 
 may be indebted to the other banks. The inevitable conse- 
 quences are a liability, in some cases, to make insecure loans 
 where the applicant is already involved in heavy debts to 
 other banks, and in others to decline safe loans where the 
 applicant is erroneously apprehended to be so indebted. 
 Both these evils will be avoided by this plan, and it is highly 
 desirable that they both should be, as it is not easy to decide 
 which is the greater, the granting a profuse, or the denying 
 a just credit. Every one will obtain what his standing in. 
 society, his business, his talents, his enterprize, and his 
 known means entitle him to.
 
 16 
 
 6. These considerations will insure a large degree of con- 
 fidence, not confined to the limits of the District, but co-ex- 
 tensive with the Union. Deposites will be made without 
 distrust, and its notes be circulated extensively ; and in di- 
 rect proportion to these will be its profits. 
 
 7. The very capital of such a bank will have many of the 
 most useful features of money, viewed as a safe and profita- 
 ble investment, it will readily at any moment be convertible 
 in our principal towns into cash, or be a pledge on which 
 money can be raised, and men in business, who hold portions 
 of it, may confidently calculate upon it as a resource in their 
 enterprizes, so as to reap this benefit from it at the same time 
 that they are in the receipt of the dividends declared upon it. 
 
 8. It will command a premium in the market considerably 
 above its par value, which, so far as sales of it shall be made 
 to those at a distance, will, to the extent of such premium, 
 be a positive gain to the District. 
 
 If, instead of the adoption of this system, the existing 
 scheme be adhered to, let us contrast its comparative effects 
 under the foregoing heads. 
 
 1. The capital of each bank will be too inconsiderable to 
 be viewed as important by ourselves, or, still more so, in the 
 estimation of moneyed men out of our limits. It will want 
 the requisite magnitude to command their attention, and the 
 capitals will not be filled up. Exclusive of all other views 
 this should be decisive. The capital, that is indispensable to 
 the re-invigoration of the District, is not among us. To ob- 
 tain it, such a plan must be devised as will command the atr 
 tention and secure the confidence of those at a distance. 
 Nothing short of an enlarged and liberal plan can have this 
 effect. 
 
 2. In the smaller banks, each object will sink in compara- 
 tive importance ; the field of choice for directors will be 
 greatly abridged, and the requisite virtue and talents for the 
 directors will be often wanting. 
 
 3. Instead of harmonizing and cementing the jarring in- 
 terests of the District, which have been, and still are, the 
 most prolific source of our embarrassments, it will create in 
 the multiplicity of banks, so many centers of division and 
 repulsion. Instead of effecting large objects by a union of 
 means, they will be wasted by dispersion, or neutralized by 
 opposition to each other. The flame of local prejudice will 
 be fed until it becomes a consuming fire. 
 
 4. The number of banks, with their separate presidents, 
 cashiers, clerks, porters, attorneys, and banking houses, and
 
 17 
 
 incidental expenses, will be a dead weight en their clear pro 
 fits, and will to that extent diminish the dividends and tho 
 value of the capital stock. 
 
 5. The comparative effect of the two plans on the incurring 
 of bad debts has been already sufficiently exposed. 
 
 6. It will be idle to expect that the existing banks, if re- 
 incorporated, will, with their small capitals, command the 
 public confidence in any degree comparable with one large 
 and liberal institution. Their business will be proportionably 
 small. Their deposites will be limited, and, above all, their 
 circulation will be altogether of a local character, which, from 
 this very circumstance cannot be relied upon for making loans, 
 as it may on the slightest apprehension without notice be 
 presented for redemption. 
 
 7. The capitals of these small banks will be solely the ob- 
 jects of local sale and purchase. Possessing, at best, but a 
 doubtful character, out of the District, they will not be rea- 
 dily convertible into money, or be the basis on which men 
 in business can safely rely in an exigency to meet their en- 
 
 ' gagements. 
 
 8. Their capital stock, from the causes enumerated, will 
 command but an inadequate price in the market ; and while 
 the stocks of other banks are readily sold at a premium of 
 ten, twenty, or thirty per centum, will not, if we are to 
 judge by experience, be easily disposable at even their par 
 values. 
 
 To this plan of one large institution, various objections 
 have been urged, which, it is believed, on a dispassionate 
 examination, will turn out, to be, either totally illusory, or 
 to have a weight altogether insignificant, compared with its 
 countervailing benefits. As this, however, is the point on 
 which the scheme may founder from a diversity of opinions 
 in the towns, it is important that it should be discussed fairly 
 and fully, that a just and impartial conclusion may be reached. 
 That this may be done with the more precision, let us, in the 
 first place, sketch a plan of an institution, so far as it involves 
 its organization and general administration, considered the 
 most advantageous. 
 
 The leading features of such a plan will be 
 
 1. A capital of four millions of dollars, to be apportioned 
 equitably among the towns of the District. 
 
 2. The principal bank to be located at Washington. The 
 directors to be elected by the stockholders, to be 
 
 in number, of which a proper proportion shall, if it is thought
 
 18 
 
 advisable, be allotted to each of the towns. The Govern- 
 ment to appoint directors in addition. 
 
 3. A branch to be located in Georgetown and one in Alex- 
 andria. Each branch to be managed by directors, 
 to be appointed by the directors of the principal bank, of 
 whom at least shall be inhabitants of the town in 
 which the bank is located. 
 
 The first objection suggested is, that, as under this plan 
 there will be but one bank in each town, its affairs may be 
 managed in a tyrannical or partial manner, an evil only to be 
 effectually counteracted by establishing two or more banks 
 in each town. It is unhesitatingly admitted that no institu- 
 tion productive of this effect ought to be established. Ex- 
 perience in this, as in most other cases, will be our only 
 safe guide : and fortunately on this head we can appeal to a 
 wide experience. There are in the United States at least 
 seven hundred and twenty banks, located in about five hun- 
 dred and sixty-six towns. Of these towns, there are about 
 one hundred and two in which there are more banks than 
 one, leaving about four hundred and sixty-four towns, in each 
 of which there is but one bank. Has this tyranny and par- 
 tiality been practised generally in these latter towns ? It 
 may be safely answered that it has not. It might be going 
 too far to say that there is not a single instance in which they 
 have been practised, but it does not transcend the truth to 
 say, that wherever they have been practised an effectual an- 
 tidote has been applied by the legislative power in the crea- 
 tion of another bank. The certainty that Congress wxmld 
 promptly interpose here would be the most effectual preven- 
 tive, as the establishment of new banks would necessarily 
 diminish the profits of the old ones. The truth is that the 
 only danger of this kind that has arisen is of a political com- 
 plexion and origin. Where banks have been of this cha- 
 racter, there may have been favorites and victims. Here 
 they cannot be exposed to this deleterious influence. We 
 have no great political schemes to promote. However we 
 may individually sympathize with one or the other of the 
 great rival parties that may divide the country, our influence 
 is too trifling to be felt or to be sought for. Devoid of all 
 direct political power, our means of influencing those who 
 possess this power will be too unimportant to be voluntarily 
 enlisted or harshly extorted. Our interests, our habits, and 
 our feelings all unite in a desire to live on friendly terms 
 with both sides. Such has hitherto been the character of 
 /our towns, and it will without doubt continue to be so.
 
 19 
 
 But should this evil, by possibility, exist to a moderate 
 extent in either of our towns, the individual who feels it 
 may apply for loans to a bank in one of the other towns, and 
 if entitled, he can scarcely fail to obtain them. The rival 
 feelings of the towns will naturally prompt the bank of one 
 of them to redress any injury committed by the bank of an- 
 other. Our three towns, although municipally distinct, are, 
 by vicinity, interest and social intercourse, closely knit to- 
 gether ; and there is hardly an individual of any considera- 
 tion in one town that is not known in another. This is now 
 so much the case that many individuals have bank accommo- 
 dations in two, and sometimes in all the towns. In many 
 respects, therefore, the three towns may be considered as 
 forming but one community, and, consequently, the three 
 institutions, though distinctly located, may be viewed as ap- 
 purtenant to the same community. Should then a citizen of 
 Georgetown or Alexandria feel himself aggrieved by his 
 branch bank, he will naturally appeal to the principal bank 
 at Washington, which will in all probability be exempt from 
 any sinister influence that may have predominated in the 
 branches. 
 
 The second objection that has been urged is that in such 
 an institution, Georgetown and Alexandria will not have the 
 bank accommodations to which they are entitled. From the 
 location of the principal bank in Washington, it is appre- 
 hended that it, as well as the branches, may be so directed 
 as to give undue advantages to Washington. Let us look at 
 this point in detail. Even if it be admitted, for the sake of 
 argument, that such a hostile feeling of the towns towards 
 each other will exist, can this effect be the consequence ? 
 The directors of the principal bank will be chosen by the 
 stockholders, with the exception of the directors to be ap- 
 pointed by the Government. It is probable that a larger por- 
 tion of the stock will be held by citizens of Washington thair 
 by citizens of either Georgetown or Alexandria, but that the 
 amount of stock held collectively by the citizens of George- 
 town and Alexandria will considerably exceed that held by 
 the citizens of Washington; from which it will follow that 
 the direction of the bank will depend on a union of the in- 
 terests of two of the towns. Now, we may confidently ap- 
 peal to all analogous cases to decide whether such a union is- 
 not more likely to arise between the two weaker parties, 
 than between the strongest and one of the weaker parties. 
 The strongest party will be naturally, viewed with jealous^ 
 f>y the weaker parties, who, in case of any attempted op-
 
 20 
 
 pression, will, from a community of interests, make a com- 
 mon cause, and by their union oppose an effectual resistance. 
 If there should be danger of oppression, Washington will 
 be most likely to feel it. The majority of the board of the 
 principal bank will probably consist of citizens of George- 
 town and Alexandria, and, consequently, the controlling 
 power, in case of a conflict, will be with them. But in the 
 event of any such collisions, the Government directors, from 
 their exemption from local interests, will not fail to act as 
 mediators, and will be sufficiently strong, from the small 
 number of the board, by throwing their weight into that 
 scale which justice calls for, to insure impartiality between 
 all the parties. 
 
 It should be held in mind that in the principal bank loans 
 will be made not only to the inhabitants of Washington, but 
 may be likewise made to those of the other towns. That 
 this will be the case, their share in the direction will be an 
 effectual guarantee. They will, therefore, have this recourse, 
 in addition to that rendered by their particular branch. In 
 this last case, as nearly, if not all the directors will be citi- 
 zens of the town in which it is located, they will have* the 
 power of confining the loan's to their own citizens. So that 
 in fact Georgetown and Alexandria will in this respect have 
 a most decided advantage over Washington, by possessing an 
 absolute control, each within its own sphere, while Wash- 
 ington will, in its sphere, possess only a divided power, to 
 be exercised in concurrence with the other towns. 
 
 The course pursued by the branch of the Bank of the 
 United States in Washington furnishes a not^altogether in- 
 apposite illustration of this point. The direction of this 
 branch has generally been composed of a number of direc- 
 tors, residing in Washington, equal to those of both the other 
 towns. No local jealousy has been experienced in its ad- 
 ministration. Neither town has complained of not getting 
 its fair share of accommodation. No conflict of local inter- 
 ests has sprung up at its board of directors. Each applica- 
 tion for a loan has been considered, not in reference to its 
 locality, but to the business and credit of the applicant ; and 
 when it has happened that larger loans were applied for than 
 could be made, an invariable effort, it is well known, has 
 been made to distribute the fund at its disposal with strict 
 impartiality. That this has been habitually practised, is pro- 
 ved by the absence of all complaint on the subject. This 
 objection may, therefore, be pronounced altogether illusory. 
 
 The third objection to this plan, which although not open-
 
 21 
 
 ly avowed, will be most sensibly felt, will be its effect in 
 depriving a number of persons of the little offices held by 
 them in the existing banks. 
 
 This is a result, so far as regards many of those that may 
 be affected by it, to be regretted. It is probable that most of 
 them are worthy and respectable men, and such of them as 
 may be thrown out of employment may be exposed to con- 
 siderable inconvenience. But the evil will not be extensive 
 or likely to fall on many. In the existing banks, indepen- 
 dently of the directors, there are about forty persons engaged. 
 Under the new plan this number may be reduced to twenty. 
 These latter will be most of them taken from the former. 
 So that the reduction will only fall on about twenty persons. 
 Among these are the presidents of existing banks, who, even 
 if not transferred to the new bank and its branches, from 
 their circumstances and standing in society, will either not 
 feel the effect at all, or so lightly as not to render it to them 
 an object of much importance. The number likely to be 
 much affected will be thus considerably reduced ; and if it 
 shall be the effect of the new plan, as it cannot be doubted 
 it will be, to give an impulse to business, this will create 
 more new clerical places to be filled than the suppression of 
 the old banks will vacate, for which the present bank clerks, 
 if qualified,* will be the natural candidates. Practically, 
 then, the effect will be inconsiderable, even if the sole ques- 
 tion rested on personal considerations. Is there, however, a 
 disinterested high-minded man in this community, who will 
 say that the accomplishment of a great object, on which its 
 vital interests depend, should be for a moment arrested by 
 such considerations ? Abject, indeed, must be the public 
 sentiment, and remediless the evils that menace us, if the 
 trifling interests of a few men shall be suffered to paralize 
 and frustrate an enlarged scheme of general benificence. 
 
 But it cannot be disguised, and should not be concealed, 
 that this is the fatal source in which salutary reforms find 
 their most potent adversaries. Sympathy for misfortune is a 
 common and honorable feeling implanted in the human heart. 
 Directed by a virtuous mind and sound judgment it invaria- 
 bly leads to useful results. Under different influences it as 
 certainly leads to those of a deleterious character. It be- 
 hooves us to beware of it on this subject. In the eloquent 
 language of Burke, " the individual good felt in a public 
 service is comparatively so small, comes round through such 
 an involved labyrinth of intricate and tedious revolutions ; 
 whilst a present personal detriment is so heavy, where it
 
 22 
 
 fells, and so instant in its operation, that the cold commen- 
 dation of a public advantage never was, and never will be, 
 a match for the quick sensibility of a private loss." 
 
 Those who have witnessed the working of this feeling, 
 and its operation, will vouch for the astonishing influence it 
 has exerted on projected measures of the most salutary cha- 
 racter. The writer of these remarks could, were it not in- 
 vidious, specify several of the most important measures that 
 have been devised for the general benefit of the Di.-trict that 
 have been frustrated by it. Sometimes the solitary interest 
 of a single incumbent, surreptitiously exerted, has outweigh- 
 ed and overpowered the general opinion of the whole com- 
 munity. This influence is the more insidious and fatal from 
 the chamelion character it assumes. Although purely selfish, 
 it takes the garb of patriotism ; and sometimes it acts the 
 more adroitly from producing the impression, however false, 
 that those who urge a measure of expanded benefit do it from 
 personal views to their own honor and emolument. To dis- 
 arm this feeling of its injurious influence, it is absolutely 
 necessary the public sentiment should be on its guard, that 
 it should realise that this is a season when the general wel- 
 fare should be exclusively consulted, and all personal inter- 
 ests that may conflict with it be frowned down. 
 
 Another objection that has been advanced under like cir- 
 cumstances, and which may be again brought forward, is that 
 under the proposed plan, from the reduced number of the 
 directors, the power of controlling the funds of the bank 
 will be in the hands of a few persons, and more likely to 
 abuse, than it is at present. This point has been already ad- 
 verted to ; but it deserves a more detailed examination, which 
 cannot fail to lead to a directly contrary conclusion. At pre- 
 sent the number of bank directors in the District cannot be 
 less than one hundred and twenty. Under the proposed 
 plan they will not probably exceed thirty-six. The faithful 
 discharge of this office requires intelligence, conversance 
 with men and things, integrity, firmness and independence, 
 with sufficient time at command to devote at least a few hours 
 weekly, it may be twice a week, to the concerns of the bank. 
 Now, every one connected with the local banks, knows how 
 difficult, it may be added how impracticable it has often been, 
 to obtain a competent number of men so qualified for the di- 
 rections of the different banks. The consequence has been 
 the frequent introduction of men not duly qualified, and 
 hence the contracting of bad debts, and various other evils 
 that have befallen these institutions. It has been considered?
 
 23 
 
 a favor to obtain the consent of a respectable man to serve ill 
 a board of directors, connected with the understanding that 
 his punctual attendance would not be expected. This has 
 arisen not merely from the circumstances just stated, but also 
 from the little comparative interest that will be necessarily 
 taken in an institution of a trifling capital. Where the capi- 
 tal is only one hundred and fifty thousand, or three hundred, 
 or at most five hundred thousand dollars, there cannot be 
 expected to be that enlarged interest that will not fail to ac- 
 company an institution of several millions. The adminis- 
 trations of the present banks have consequently often fallen 
 into the hands of second rate men. It must, moreover, be 
 obvious that with men of this grade, the principal induce- 
 ment to a seat in a board of directors being to obtain loans 
 for themselves and their friends, the amount of these loans 
 will be infinitely greater when divided among one hundred 
 and twenty than among thirty-six. So far, therefore, as fa- 
 voritism and partiality are apprehended, the danger is much 
 greater in a number of small banks, than in one large one. 
 
 If the foregoing views and reasoning be correct, there is 
 not a single solid argument that can be sustained in favor of 
 a continuance of the present numerous small banks in pre- 
 ference to the establishment of one enlarged institution. But 
 it may be inquired how the present system, if so indefensi- 
 ble, came to be adopted, and to receive the sanction of Con- 
 gress. The answer is very easily made. When the Seat of 
 Government was established here, there were already two 
 banks ; one in Georgetown, the Bank of Columbia, with a 
 capital of one million of dollars, and one in Alexandria, the 
 Bank of Alexandria, with a capital of half a million of dol- 
 lars. They were both at that time doing a good business. 
 Things remained in this state until the year 1811, when an 
 act was passed by Congress incorporating the Bank of Wash- 
 ington, with a capital of half a million of dollars. In favor 
 of this act it was represented that the City of Washington, 
 although it had attained a population beyond that of either 
 of the other towns, was without any bank, and would ne- 
 cessarily become entirely dependent on the other towns for 
 all bank facilities as soon as the then Bank of the United 
 States should wind up its concerns, which it had already 
 commenced doing. About the same time acts were passed 
 incorporating the Farmers Bank of Alexandria and the Bank 
 of Potomac in the same place, and the Union Bank of George- 
 town, each with a capital of half a million of dollars. In 
 1812, the Mechanics Bank of Alexandria, with a capital of
 
 half a million, was incorporated. In 1817, the Farmers and 
 Mechanics Bank of Georgetown, with a capital of half a 
 million, and the Central Bank of Georgetown and Washing- 
 ton, with half that capital, both in Georgetown ; the Bank 
 of the Metropolis, with half a million capital, and the Patri- 
 otic Bank, with half that capital, both in Washington, and 
 the Union Bank of Alexandria, with half a million capital, 
 were incorporated by Congress. 
 
 From this view it appears that without any systematic 
 plan, from time to time bank was added to bank, until, in the 
 year 1817, when the population of the District was much 
 below its present amount; the total capital authorized amount- 
 ed to the enormous sum of six millions two hundred thou- 
 sand dollars. In this action by Congress there appears to 
 have been little deliberation ; every application made was 
 received with favor, and it seems to have been a sufficient 
 reason for adding a bank in one town, that a bank in one of 
 the other towns had been recently authorized. There was 
 in fact a race between the several towns, each striving to 
 out-do the others. The inordinate multiplication of these 
 banks unquestionably sprung from the general suspension to 
 pay specie. For although the latter banks were not then 
 incorporated, they existed, without incorporation, during that 
 period. 
 
 How shall the proposed enlarged institution be formed ? 
 Shall it be by the creation of a bank whose capital shall be 
 entirely new, or by the establishment of one in part com- 
 posed of the capitals of such of the existing banks as may 
 agree to subscribe their capitals, and in part by additional 
 subscriptions in specie ? This is a point of great importance 
 to the citizens of the District, and ought to be examined in 
 the most dispassionate spirit. While it becomes the inhabi- 
 tants of the District to give their preference to that plan 
 which will best advance their general interests, it will, it is 
 presumed, be conceded by Congress that a moral obligation 
 exists on their part to give effect to this preference. There 
 can, indeed, be scarcely a doubt that this will be cheerfully 
 done if such preference be decided and manifest. To insure 
 a general concurrence of opinion, prejudice, whether local 
 or personal, must be discarded, and the best judgment formed 
 of what will be of the most diffusive and permanent advan- 
 tage. In the attainment of this decision, abstract opinions, 
 however specious, must be rejected, and those plans exclu- 
 sively adopted which shall be dictated by the existing state 
 of things and the peculiar interests of the District. It will
 
 25 
 
 not do to build up a splendid theory which will end in cap- 
 tivating the imagination. If good is to be the result, the 
 plan adopted must be practical, and to be practical it must 
 be fitted to our peculiar circumstances. A mere abstract 
 scheme, however philosophical and generally applicable to 
 communities, will not answer. It must, to be successful, 
 embrace, consolidate, and harmonize the existing interests. 
 In the degree in which they are excluded, it will fail to ob- 
 tain the general assent and be likely to be abortive. 
 
 Were it not for the existing state of things, there would, 
 it is believed, be a general concurrence i favor of an en- 
 tirely new bank. The ground would be unoccupied, and it 
 would be only necessary to raise a suitable structure. But 
 the case is very different. There are in existence eight 
 banks with nominal capitals, amounting to two million six 
 hundred and twenty-nine thousand dollars, and probably 
 sound ones of two million two hundred thousand dollars, 
 equal to one-sixth of the assessed property of the District. 
 This capital is owned by inhabitants of the District, or by 
 those who are deeply interested in its welfare. Each bank 
 is the centre of a large business, and roost of our citizens 
 stand in the debtor or creditor relation to them. It would, 
 perhaps, be a sound position, that the action now to be had 
 on the subject should be without reference to the peculiar 
 interests of these banks. Most clearly their interests should 
 not outweigh or control the general interests. But it must 
 be recollected that these banks are merely associations of in- 
 dividuals, that these individuals form probably the larger 
 portion of the inhabitants of the District, whose means ena- 
 ble them the most efficiently to promote its interests, and 
 that, consequently, any plan which may materially injure 
 them will be sure to injure the District. It must hence be 
 evident that, before taking any step which shall operate 
 harshly in this way, there should be a clear perception of 
 the gain being greater than the loss. How far this is likely 
 to be the case can only be decided by a detailed view of ef- 
 fects. 
 
 If a bank be established with an entirely new capital, the 
 existing banks must all close their concerns. Has such an 
 incident ever occurred in this country ? Who is prepared, 
 in the absence of experience, to anticipate the effects of such 
 a measure ? Many of them may be foreseen, but who will 
 undertake to say that, in an event so totally unprecedented, 
 there may not be evils unthought of. All changes partake 
 4
 
 26 
 
 of much uncertainty. How unexpectedly great may it not 
 be in such an extraordinary case as this ? 
 
 Looking at the effects that may be foreseen, one of the first 
 will be to impair the market values of the stocks of the ex- 
 isting banks, to render them less the objects of sale, and in 
 this way to reduce the means of their proprietors. So much 
 as this reduction may amount to will, for the season, be ab- 
 stracted from the moneyed means of the District. ^There 
 will be also a general uncertainty as to the value of the 
 stocks, which will therefore become the objects of a wild 
 speculation. A great many of the stockholders being widows 
 and orphans, or other descriptions of persons, whose sole or 
 great reliance is on the regular dividends derived from these 
 stocks owned by them, will be either deprived of this re- 
 source, or be unable to calculate with any certainty on the 
 amount of their incomes. That these circumstances will 
 produce extensive embarrassments and much misery cannot 
 be doubted. 
 
 Further, as the banks will be obliged to close their con- 
 cerns within a limited time, they will be under the necessity 
 of immediately disposing of their real estate, even at the 
 sacrifice of forced sales, and of compelling their debtors to a 
 prompt discharge of their debts. From what has been al- 
 ready said, it is most evident that the moneyed means do not 
 exist among us to make such payments. Hence they can 
 only be generally effected by the creation of new debts in- 
 curred with the new bank. Those who shall be so fortunate 
 as to possess credit or favor may, perhaps, be able to transfer 
 their debts, in the shape of new loans, to the new bank. So 
 far as this goes it will, in its effects, be identical with the 
 absorption of the old banks into the new one, with this 
 marked difference, however, that while the former plan 
 would be attended with great uncertainty and consequent 
 embarrassment and delay, the latter could be arranged prompt- 
 ly and easily without any shock to the existing relations of 
 debtor and creditor, by the subscription to the capital stock 
 of the new bank by each of the existing banks to the amount 
 of its bona fide capital. But the effects will be widely dif- 
 ferent on those debtors who shall not be able to command 
 credit or favor in the new bank. Unable to discharge their 
 debts to the old banks with the requisite promptness, they 
 will inevitably become the victims of the law, their property 
 will be sold at prices greatly below its value, from the great 
 quantity suddenly thrown into the market, and from the 
 short credits allowed, and their persons exposed to incarce-
 
 27 
 
 ration. And while this will be the inevitable effect on the 
 debtors of the banks, an effect equally disastrous will be felt 
 by the banks themselves. Owing to the depreciation of pro- 
 perty, and the great pressure on the debtors, many debts will 
 be but partially paid, and others totally lost, which, managed 
 with prudence and a lenient hand, might have been secured. 
 On this head there is one important consideration. A bank 
 in successful operation possesses the most efficient means of 
 collecting its debts, and of converting those which are doubt- 
 ful into good ones. It can give time in virtue of increased 
 security ; it can aid the debtor by new temporary loans and 
 enable him to improve or retrieve his affairs ; it can insure 
 payment from a knowledge of its future power to extend or 
 refuse credit. All these powerful agents are wanting to ex- 
 pired or expiring institutions. 
 
 There is another somewhat independent consideration : 
 How is the proposed capital of the new bank to be obtained ? 
 In the present rage for speculation, the entire four millions 
 might perhaps be subscribed in specie. But let us not con- 
 fide in the continuance of this extraordinary state of things. 
 It is stimulating the creation of banks without regard to pru- 
 dence. A reaction must soon ensue, when there will be as 
 much caution as there is now rashness. It may, then, be 
 possible to obtain one or, at most, two millions of specie sub- 
 scriptions ; but will there be any likelihood of obtaining such 
 subscriptions to the full amount of the capital? All must 
 own that, at best, the result will be extremely doubtful. 
 Shall then a plan be adopted whose success in this funda- 
 mental point is so uncertain ? 
 
 Suppose it, however, to be so subscribed, and that four 
 millions of specie dollars are at once placed at the disposal of 
 the new bank. The consequence of such a sudden influx of 
 money it is not difficult to predict. Abundant experience in 
 this country qualifies us to judge. There will be a general 
 rush on the vaults of the bank ; a moral epidemic will ensue ; 
 and it will not fail to rage, as it has, under like circumstances, 
 every where else raged. Wild, and, in the end, ruinous 
 speculations will take the place of business transactions. De- 
 lusive bubbles will be created, and will, as usual, burst, 
 leaving behind them nothing but the traces of disappointed 
 hopes. Of all evils this would be the greatest that could 
 befal us, among which its pernicious effects on the new 
 bank would not be the least, as bad debts would, in the ex- 
 tensive credits given, as a matter of course, be multiplied to 
 an indefinite amount. Rest assured, if there be truth in anj-
 
 28 
 
 maxim, it is in that which connects deleterious consequences 
 with sudden changes. 
 
 Two objections, worthy of some notice, have been made 
 to the amalgamation of the existing banks with a new bank ; 
 the one especially applicable to the banks which recently 
 suspended specie payment, the other applicable to all the 
 banks. The first represent the former as broken institutions, 
 at the same time that it makes their failure voluntary, and 
 ascribes it to a design to produce a political effect. It is evi- 
 dent that these attributes are inconsistent with each other. 
 If the banks be really broken and bankrupt, their failure 
 flowed not from their own volition, but from the necessary 
 force of circumstances. The fact, however is, that neither 
 of these allegations is correct. These banks are not broken,, 
 nor was their temporary suspension to pay their notes in 
 specie a voluntary and premeditated act. That they are not 
 broken is proved by their having long since honestly dis- 
 charged every debt demanded from them, and by the re- 
 stored confidence in them. The suspension occurred in 
 April, and the resumption by the several banks within six 
 months thereafter. All debts due by them, that have been 
 claimed, have been faithfully discharged, often with interest. 
 No man can say he has lost a dollar by them. The stock- 
 holders, that is, the proprietors of the banks, have been the 
 only sufferers. Although they cannot expect otherwise than 
 gradually to regain the public confidence, they stand pre- 
 cisely in the situation of a merchant, who, through unlocked 
 for misfortunes, is for a short time rendered unable to pay his 
 debts, but who at an early day so manages his affairs as faith- 
 fully to discharge them. What is the judgment of mankind 
 in such cases ? Kind and honorable, emphatically honorable 
 to the sufferer ; so much so, that he generally resumes his 
 station in the mercantile community with increased credit 
 and character. In adversity his integrity remains untainted. 
 This ought to be the position of these banks in the public 
 opinion. It not only ought to be, but it is believed actually 
 to be so in the opinion of the inhabitants of the District, who 
 are unquestionably the best judges. 
 
 Nor was there, as far as the public have been informed, 
 any moral turpitude in the failure of these banks. A com- 
 parison of the state of their affairs at the time of their failure, 
 with those of the most respectable State banks, will show 
 that they had not swelled their loans to immoderate dimen- 
 sions, that their circulation and deposites compared with their 
 specie means were not so great as those of the State banks,
 
 29 
 
 and that, under like circumstances, they had maintained an 
 unimpaired credit for more than twenty years. 
 
 Take the three banks in Washington and Georgetown,* 
 that failed, and the following, appears, from official state- 
 ments, to have been collectively their situation on the 1st of 
 January 1834. 
 
 Their notes in circulation amounted to - $ 525,747 
 Their deposites - 296,209 
 
 Other debts 141,378 
 
 Making an aggregate of - - $963,334 
 
 To meet which they had specie means amounting to four 
 hundred and eighteen thousand eight hundred and thirty- 
 eight dollars, the latter being forty-three one-hundredths o 
 the former. 
 
 In regard to the State banks of New York, Pennsylvania, 
 and Massachusetts, we perceive their situation to have been. 
 as follows: 
 
 Notes in circulation - $33,658,056 
 
 Deposites - 32,901,134 
 
 Other debts 14,300,137 
 
 Amounting to - - $80,859,327 
 
 To meet which they had specie means amounting to thirty- 
 one million eight hundred and ninety-seven thousand three 
 hundred and fifty-eight dollars, the latter being only forty 
 one hundredths of the former. 
 
 From these views it appears that the District banks were 
 in a safer condition than the banks of New York, Pennsyl- 
 vania, and Massachusetts. 
 
 That they made great exertions to avert the disaster that 
 befel them is most certain, from the large reduction of their 
 debts at the time of their failure. It appears that between 
 the first of January, 1834, and of April following, the time 
 of their failure, the Bank of Washington, the Patriotic Bank, 
 and the Farmers and Mechanics Bank of Georgetown, had 
 reduced their debts from nine hundred and sixty-three thou- 
 sand three hundred and thirty-four to six hundred and eight 
 thousand five hundred and sixty-nine dollars. 
 
 The writer does not possess accurate information respecting the Bank of 
 Alexandria.
 
 30 
 
 The truth is, they failed from the pressure of the times, 
 and yielded to a convulsion which no ordinary prudence 
 could withstand. This arose, perhaps, from their isolated 
 state; they stood alone, without any State government or 
 wealthy community to shield and protect them ; and being in 
 the very vortex of political excitement, its influence upon- 
 them was greater than upon the State institutions. 
 
 As to the other allegation, that their failure was voluntary 
 and premeditated, it is of so singular a texture as may render 
 it no easy task to remove an impression from minds imbued 
 with it. It is important, however, that if unfounded it should 
 be removed. It is understood to have existed in the minds 
 of several respectable members of Congress, and others con- 
 nected with the Government, who took a deep interest in 
 the agitating scenes of the first session of the last Congress. 
 
 The banks that suspended specie payment are the Bank 
 of Washington and the Patriotic Bank in Washington, the 
 Farmers and Mechanics' in Georgetown, and the Bank of 
 Alexandria. It is alleged that these banks were hostile ta 
 the administration of the General Government, and permitted 
 themselves to be used as the instrument of the Bank of the 
 United States in producing and extending a panic through 
 the country. Let facts speak for themselves. It will be ad- 
 mitted that at that time there prevailed a serious alarm 
 through the country. The removal of the Government de- 
 posites from the Bank of the United States must, indepen- 
 dently of all other circumstances, have produced no incon- 
 siderable derangement, for a time, in our moneyed concerns. 
 To this was added its connexion with political and party ob- 
 jects of high moment. The effects were felt all over the 
 Union. The Bank of the United States through the curtail 
 of its debts increased the anxiety. Its curtails compelled 1 
 the local banks, particularly in this District, themselves to 
 curtail. The condition of these banks, as we have seen, 
 though not so strong as they should have been, was at least 
 equal to the average condition of the State banks. Their 
 circulation returned, it is well understood, periodically by 
 far the larger portion of it through Baltimore, whose banks 
 were the recipients of their notes. 
 
 It so happened that at this time the Bank of Maryland 1 
 failed to a large amount, and under circumstances of pecu- 
 liar aggravation. The other banks in that place became ne- 
 cessarily the objects of suspicion, and, to save themselves, 
 were driven to the necessity of drawing heavily on the Dis- 
 trict banks. It also happened, from some accidental cause,
 
 31 
 
 that a rumor arose that the Patriotic Bank and the Bank of 
 Washington were deeply injured by the failure of the Bank 
 of Maryland. This rumor, though unfounded, produced an 
 immediate run upon them. What did they do in this crisis? 
 Were they supinely indifferent to the dangers that menaced 
 them? Instead of this, they resorted to curtails, and they 
 borrowed to the extent of their means. Their first applica- 
 tions were to the Bank of ttye United States, where, as their 
 statements prove, they all obtained loans to such extent as 
 would, in common times, have saved them. But these were 
 no common times. The Bank of the United States was ac- 
 tually, as thought, itself exposed to danger. The effect of 
 the transfer from its vaults of ten millions of dollars, was not 
 to be calculated upon ; and, as a measure of proper precau- 
 tion, it was drawing in instead of putting out its specie re- 
 sources. Is it then surprising that, under these perils, it 
 declined, as it is said to have done, extending its loans to 
 these banks further? The length to which it had already 
 gone was surely evidence that it entertained no unfriendly 
 feeling to them, and still stronger evidence that it had no 
 hand in their failure. What was the step taken by the 
 banks under these circumstances? Still more and more 
 pressed by the run upon them, they applied to the Bank of 
 the Metropolis, the deposite bank of Government at this 
 place, to whom its funds had been transferred, and obtained 
 a limited assistance. This not being sufficient, they applied 
 to the President, the Secretary of the Treasury, and other 
 high influential officers, to secure their interposition with 
 that bank. This either did not obtain, or was not sufficiently 
 available to save them. 
 
 Is there in this course a scintilla of evidence, or even of 
 probability, either that the Bank of the United States co- 
 operated in the catastrophe, or that the local banks were its 
 voluntary instruments? What were these local banks? Were 
 they political associations interested in effecting particular 
 political ends? Had they ever been distinguished by politi- 
 cal character? Had they ever taken any part in political 
 affairs? Were their officers and directors exclusively com- 
 posed of men hostile to the Administration ? No such thing. 
 They were instituted exclusively for commercial and mo- 
 neyed purposes; they had never taken any political attitude 
 or mingled in political affairs. Their directors were indis- 
 criminately drawn from both parties, and in one of them, at 
 least, a majority of the direction was politically friendly to 
 the Administration.
 
 32 
 
 And what could have been the inducement to this act of 
 suicide'? Where was the benefit to be derived from it? What 
 remuneration could the Bank of the United States make for 
 the evils inflicted on the banks by their failure? It could, at 
 best, only enable them to resume specie payments. It could 
 not erase the radical injury of impaired credit and confidence. 
 But, did it enable them to resume specie payments? So far 
 from this, it is well known in the District that the means of 
 doing this were derived from temporary loans made of the 
 State banks. 
 
 Let then this undeserved reproach no longer be urged. 
 Honestly as it may have been imbibed, it is the offspring of 
 prejudice, is totally unfounded, and those who may have 
 urged it should, after this exposition, be the first to repu- 
 diate it. 
 
 In accordance with the above ideas the following plan is sug- 
 gested: 
 
 1. One bank to be established for the whole District, with 
 a capital of four millions of dollars, constituted as follows : 
 A commission of nine disinterested persons, three to be taken 
 from each of the towns, to be formed, which shall examine 
 the affairs of such of the existing banks as may agree to this 
 plan, and ascertain the bona fide value of the capital stock 
 of each bank ; the aggregate of which shall be received as a 
 part of the capital stock of the new bank, and which may be 
 estimated at - - $ 2,000,000 
 
 To this add two millions to be created as fol- 
 lows: By the subscription of individuals, the 
 whole of which shall be made by individuals, 
 and paid for in specie. 
 
 In case such subscriptions shall not be made, 
 the United States to make such subscriptions 
 as shall supply the deficiency. The subscrip- 
 tion of the United States to be made in specie, 
 in stock of the Bank of the United States at its 
 market value, in new stock bearing five per 
 centum interest, or by means of a loan guaran- 
 teed by the United States, 2,000,000 
 
 $4,000,000
 
 33 
 
 2. The assets of the subscribing banks to be transferred 
 to the new bank, which shall be held answerable for their 
 responsibilities. 
 
 3. The bank to be located in Washington, with branches 
 in Georgetown and Alexandria. 
 
 4. To be managed by directors, elected by the individual 
 stockholders, and by the United States, according to its sub- 
 scription or aid; of which, if considered expedient, a pre- 
 scribed number shall be taken from each town. 
 
 5. The capital to be divided among the towns, so that each 
 town shall be entitled to at least one million of dollars. 
 
 6. The dividends not to exceed seven per centum per an- 
 num, excepting where the average previous annual dividends 
 shall have been less than seven per centum, in which case 
 such dividends may be made as shall make such average divi- 
 dend equal to seven per centum. 
 
 7. No real estate, except the necessary banking houses, 
 or stocks, and excepting such as may have been received 
 from the subscribing banks, to be held by the bank; but either 
 to be pledged as security for loans or debts. 
 
 8. Any surplus of profits that may accrue, after making 
 the above dividends among the stockholders, to be divided 
 every five years, with the approbation of the Secretary of 
 the Treasury, among the corporations of the District. 
 
 9. Monthly statements to be made to the Secretary of the 
 Treasury, exhibiting the amounts of debts due by and to the 
 bank, classified as he may prescribe, with the value of its 
 real estate and stocks, and the amount of its specie ; which 
 statements shall be published. 
 
 10. The power at any time to modify the charter to be re- 
 served to Congress. 
 
 The several features of this plan have been sufficiently 
 illustrated, with the exception of that which provides for a 
 contingent subscription by the United States. 
 
 In regard to this, it may, in the first place, be observed 
 that, in all human probability, the very existence of this 
 provision will supersede the necessity of resorting to it, as 
 the confidence of moneyed men would scarcely fail to follow 
 that of the Government. But there are, besides, two strong 
 grounds on which the expediency of the provision may be 
 made apparent. The District is under the exclusive govern- 
 ment of Congress. This is a constitutional injunction from 
 which there can be no escape. Congress is therefore bound 
 to promote its welfare. Now, there is perhaps no public 
 measure, subject to the action of Congress, by which this 
 5
 
 34 
 
 welfare can be more efficiently promoted, than by the esta- 
 blishment and faithful administration of a bank. Congress 
 can alone establish a bank ; its administration it may devolve 
 on others. On this, more than on the general plan, will it 
 depend whether it be a blessing or a curse. And what can 
 so effectually secure a faithful administration, as the holding 
 by the Government a part of the capital, and participating, 
 in virtue of such proprietorship, in its government ? This 
 would seem to be the more important from the probability of 
 this bank being an important organ of the fiscal administra- 
 tion of the Government. Such a subscription, too, will be 
 strictly analagous to those of the several States in their larger 
 banks. When to this national consideration its beneficent 
 effects on the District are added, it becomes almost a duty of 
 moral obligation, the more especially as it can be fulfilled 
 with so much ease and with such a freedom from loss, as to 
 render it free from objections on these grounds. According 
 to the sfi^ytested alternations: 1. The subscription may be 
 made in money, in which case the United States will be fully 
 remunerated by an annual dividend of six or seven per cen- 
 tum, and will be probably able to sell the stock at any amount 
 above its par value. 2. It may make the subscription in stock 
 of the Bank of the United States, thus, in no wise, affecting 
 the fiscal concerns of the Government by the creation of new 
 debt or obligation. 3. It may create a new stock, bearing 
 five per cent, interest, which will insure a gain to the Go- 
 vernment of the difference between five per cent, and the 
 dividends that may be made. 4. Or, it may guarantee a loan 
 by the bank, which could probably be made abroad at tjiree 
 or four per cent. This would be decidedly the best arrange- 
 ment for the bank, as on a calculation of annual dividends of 
 six and seven per centum, the difference between them and 
 the interest on the loan would yield an annual sum, which, 
 operating as a sinking fund, would in less than twenty years 
 extinguish the principal of the loan, and be, consequently, a 
 gain to tho District to that amount without the least injury to 
 the United States. 
 
 Such is the result of the best reflection which the writer 
 of these remarks has been able to give to the subject. They 
 flow from an earnest desire to promote the interests of this 
 community, unmingled, if he knows himself, with local or 
 personal views, and from a thorough conviction that unless 
 something effectual shall be soon done, incalculable evils 
 may ensue. Decided as his impressions have been, he has 
 waited for a long time in the hope that the subject would be
 
 35 
 
 taken up by some abler pen. Having waited in vain, he 
 considers it his duty, so far as he is able, to rouse his fellow- 
 citizens from their supine feelings, to convince them that 
 something must be soon done, and that this must be done by 
 themselves. This he has attempted to do, not by subtle rea- 
 soning or splendid diction, but in the plain terms of truth 
 and common sense. What he here suggests is not olFered in 
 a spirit of dictation ; the plan proposed may not be the best; 
 let it be weighed with such others as may be presented, and 
 that one adopted which, after full consultation and mature 
 deliberation, shall be found most acceptable to the whole 
 District. VVhen this shall be accomplished, let every one 
 surrender his own peculiar ideas, and a united community 
 claim from Congress, what, under such circumstances, it 
 cannot fail to obtain a legislation suited to its situation.
 
 PAMPHLET BINDER 
 Syracuse, N. Y. 
 Stockton. Calif. 
 
 THfc u D ^ U . UO 736 636 2 
 UNIVERSITY OF CALIFORNIA 
 Santa Barbara 
 
 STACK COLLECTION 
 
 THIS BOOK IS DUE ON THE LAST DATE 
 STAMPED BELOW. 
 
 10m 6,'62(C97 1 24s4)476D