UNIVERSITY OF ILLINOIS LIBRARY Class 2>-ia.v Book Volume The person charging this material is re- sponsible for its return on or before the Latest Date stamped below. Theft, mutilation and underlining of books are reasons for disciplinary action and may result in dismissal from the University. UNIVERSITY OF ILLINOIS LIBRARY AT URBANA-CHAMPAIGN AN APPEAL TO THE PUBLIC ON THE CONDUCT OF THE BANKS IN THE CITY OF NEW-YORK. BY A CITIZEN. PRINTED, JVEW-YORK , DECEMBER, 1815, At the Office of the New- York Courier A HISTORY THE CONDUCT OF THE BANKS IN THE CITY OF NEW- YORK, SINCE THE SUSPENSION OF SPECIE PAYMENTS. BY A CITIZEN OF NEW-YORIL The advantages which many flatter themselves they derive, and the facilities which result to all, from unrestrained issues of a base, and there- fore a plentiful currency, will render it difficult, when that currency has “ insinuated ” itself, into all the pecuniary transactions of society, to per- suade it to undergo that self inflicted and corrective purgation, in which alone the remedy is to be found. Those who make this currency, and who are permitted to make as much of it, and of course to profit as much by it, as they which originally produced them. The tenden- cy is always from bad to worse. He, therefore, who hopes that the evils of the present extensive and complicated system of paper money, will cure themselves , when fos- tered by indulgence, and even cherished as use- ful, will not be lost for want of belief iu the doctrine of miracles. To all other evils, when once acknowledged to be evils, we invariably apply what we deem remedies. Criminals we imprison ; unruly chil- please, must be endowed with extraordinary idren we chastise; to fevers we apply medi- wisdom, as well as integrity, to forego advan- tages which, to most appear so palpable. And those, who are, from the nature of their pursuits, in daily need of some sort of currency, may be expected to cling long to a base one, if they shall have been made to fear, that a pure one cannot be produced in sufficient abundance. Much more reluctant will they feel, to abandon the base currency, if they have been induced tosus^ pect that the pure one has so entirely disap- peared, that it cannot be restored to the uses of business. The makers, therefore, and the users of bad money, will be united; and they consti- tute, with us, a very stroBg portion of the com- munity. All of these will confess, that a base currency is, undeniably and indisputably, a pub- 's lie evil ; but will insist, nevertheless, that it is im- possible to do without it. Having made up their „ minds on this point, they go a step further, and 5 think it unnecessary to attempt the reformation £ of the acknowledged evil. And, so rapid is the progress of error, when supported by interest, that very soon, you will find them enraged with 'ft those who deem the evil not incurable, and who would, therefore, attempt to apply the remedy. “ Not yet is the argument Hereafter we shall £ better be enabled to do it. But it is the sinner’s ^argument, ending in a repentance that comes j^too late, a death bed repentance. Neither in the physical nor the moral world, were diseases ever known to be removed by in- dulgence; rnueh less by adding to the causes ernes ; from undue heat we retreat to the cool shade; and from the biting frost we are reliev- ed by genial warmth. For all other evils we seek a remedy. But a base currency, an evil, as all experience a nd history prove, most ex- tensively and durably pernicious, must be left to itself: it will cure itself! Nay, it will be likely to find a cure, in the general encourage- ment which must be derived from the general belief, that its existence is necessary ! At no future time can it be less necessary than the present. Progress, by increasing the distance, increases also the difficulties of return. Our condition ia this respect, however deplo- rable, is not singular. It was always thus, every where. The public, every where, have been always so unwilling to undergo the temporary inconveniences, attending the reformation of a base, but plentiful currency, that reformation has scarcely ever been attempted ; reformation of base paper, never. It has been reformed only when it exploded. But, that explosion has in- variably produced effects, infinitely more tre- mendous, than the inconveniences that would have resulted from a regular and progressive system of reform. A Pamphlet has recently appeared in this City, entitled Letter to Albert Gallatin , Esq. on the doctrine of gold and silver , and the evils of the present banking system , in effect and tendency , By Pitblicola. Printed by Gould and Fan X /E /TV. .Pelt I IfeToOI 4 The author of this pamphlet, is a most wel- come, because he is a powe fu! auxiliary to those, who wish to see at least an attempt at re- form. And although, we cannot agree with him in the ultimate cause, to which (with some hesita- tion, however,) he attributes the evil, nor (which would be almost a thing of course) in th<= remedy he prescribes, yet his work has, in all other respects, so much merit, that no reader, we venture to say, can rise from a perusal of it, with- out great pleasure, and much instruction. Publicola considers the depreciation of the paper medium, below the universal standards, gold and silver, an evil. He ascribes and fairly traces depreciation to excessive issues, as its cause ; and so far is unquestionably correct. “ To d’velop^ with accuracy (says lie) the causes pf the present diseased condition of our currency, would doubtless afford a clue to the remedy. But inquisitive and sagacious men differ in opiuiou respecting them. Seme con- ceive that the ultimate causes were the loans to government, and the enormous demand for gold and silver occasioned during the war by the paucity of our exports and comparative roagni tudo o* our imports. Others suppose these are proximate causes, and that the source of the evil lies deeper. My own feeble opinion coin- cides with the latter class. If the drain was occasioned by the excess of our imports, the suspension of specie payment demonstrates that specie had not been provided to meet the previous issues of paper ; that our Banks were in the same condition as the Bank of England in the year 1797, and had over issued.” We shall endeavour hereafter to prove, and we venture to say, to demonstrate, that the loans made ‘o government were the single cause of the excessive issues, and that the retention by the banks of the stock received in exchange for their notes, was the cause of their inability to pay specie. We cannot but regret, that so q,ble a writer should have passed so lightly over a point of so much importance. For if our opinion be cor- rect, the removal of the cause would of course remove the disease. If, however, the ultimate object of the writer was rather to gain converts to the establish- ment of a grand national bank, than to relieve from decripitude the state banks, which exist already ; we are not disposed to detract from the address and ability, exhibited throughout the work But inasmuch as we are ffrmly persuaded, that bank notes we> e furnished to government lo an amount so far beyond what was necessa- ry for business , and of course beyond what could be kept suspended in circulation, as to produce an excess of issues ; and that such excess was the cause of depreciation , we are constrained to in- sist, that the remedy will be found m curtailing this excess, and may be effected without the establishment of a national bank ; although such an institution, simple in its construction and well administered, might afford a great se- curity against the evils, which this writer exposes with consummate ability. And yet w are persuaded he has gone back to first principles, and displayed in regard to ♦hose, a research and acuteness, which the oc- casion did not require. In the perusal of the following plan of investigation, the reader will and our author not less daring, than a perusal of the book, will prove him powerful in his la- bors. “ To probe the evil to the root, we must in- quire why banks possess the power to suspend specie payment, and by what means they can with impunity wield that power and ov rstep their cliai tered rights. To determine the ulti- mate causes of depreciation, and the scarcity of specie we must analyse doctrines the most intricate in the range of political economy. The doctrine o‘ money, as composed of specie and of paper; the principles that control the introduction of gold and ilver into, and their departure from a country ; their fluctuations ; the balance of trade ; the variations between the market and mint price of gold and silver ; o°, in other words the reciprocal vibrations of the mo- ney unit of the commercial world, and that of each commercial community ; and lastly, the science of banking in its three great divisions — Banks of deposit — Banks of circulation and short loans— Bauks of circulation and loans in- differently long or short. Our limits (we regret) do not enable us to give more than the design and plan ol tne work. But we earnestly recommend it to general pe- rusal. There are few men to whom it will not give some new and important ideas. That powerful efforts will be made to com- pel the banks to resume specie payments, is not to be doubted. Courts of justice have been and will again be resorted to. But the subject though cognizable by the judicial authorities, is one, ou which the public voice will ultimately decide. It will rest with the legislature. It is 5 ©1* great, it is of national concern. Its magnitude seems almost to defy tlie powers oi mere distri- butive justice. It will rest with the people to decide whether, if banks can pay, they shall be made to pay ; or whether if they cannot pay, they shall be permitted to sell their bankrupt credit at a re- gular and undisturbed profit, until like all paper of like sort, it sinks to nothing; a mere dead loss to the unfortunate, last holder. We shall now proceed in our endeavours to investigate those causes, which, in our judg- ment, first produced the “ diseased condition of our currency and of those also which have prevented its restoration to health. In per- forming this duty, for we esteem it imperative, neither fear, nor delicacy shall prevent us from speaking of men and things, as they are. Aware that we shall at first please but few, and per- haps irritate many, we approach the subject with a reluctance which nothing but a solemn conviction of the necessity of discussing it, could have overcome. The struggle for American independence forced into activity all the resources, phy- sical, moral and intellectual, with which Heaven, in its benignity, had blessed the United States. Even these, however, would probably have been unavailing, if recourse had not been had to means, the necessity of employing which, those, who would delight to behold the annals of Ame- rican patriotism, unsullied and unstained, can never cease to lament. We are not, however, at this distance of time, disposed to open wounds, which happily have ceased to bleed, by detailing the unequal effects which the final extinction of the supposed value of Continental Money , produced upon the various members of the community. But it is useful to remember that the support of that kind of “ Current Money” for we had then no other, was by all considered inse- perablv connected with the final establish- ment of our independence. The nation was not induced to give that support, by considerations of convenience or commer- cial profit, merely, but by every considera- tion which could make liberty and inde- pendence dear to them. Yet, experience has proved, not only that it could not be supported, at a moderate, nor even a great depreciation, but that it could not be pre- vented from losing entirely all estimation ef value. And hence will appear the dan- ger, and the absurdity, of relying upon what the common and universal anxiety may have united in calling and desiring to keep up as money, it it has no intrinsic value . One wholesome consequence, however, followed the extinction of Continental mo- ney. The whole community long felt and expressed a decided distrust ol all paper money ; and this distrust had a most salu- tary effect upon the conduct of those, who first engaged in the management of banking establishments. The first bankers had strong jealousies to overcome, for suspicion watch- ed them with eagle eye ; and hence in their early operations, emissions of paper were carefully regulated by the means ol the banks to redeem it. No paper was issued unless the directors felt an almost perfect certainty that it would be punctually re- deemed. It was by conduct thus uniformly and obstinately careful and honest, that the ap- prehensions, which the remembrance ot continental money had excited, were gra- dually soothed, and ultimately extinguish- ed. Bank bills became now an universal, because, an unsuspected and undoubted currency. And notwithstanding the wars, which for more than twenty years, contin- ued to increase the value of the precious metals in Europe, when compared with their various paper currencies, the specie in this country was never diminished, nor the ability of the banks to make good their engagements in that medium, impaired or suspected : a fact, which will some what con- fuse the speculations of those whimsical economists, who take it for granted, that when specie commands a premium in the de- preciated paper of one country, that it must necessarily be sent thither for profit from that, which permits no cheaper medium. It this were so, specie would al w ays be plenty, where the paper currency has depreciated. Yet we know, that at Washington, where if is worth twenty-five per cent in paper of that place it is much mote scarce than at Boston, where it is of equal value with bank notes. The rate of exchange between dif- ferent places, other things equal, will al- ways be governed by the degree of depre- ciation, in one of them. In Europe specie was for many years fluc- tuating in value, (taking bank of England notes as a standard of value) from ten to to twenty-seven per cent; but never was a scarcity of specie felt in this country, as a 6 consequence, because bills on that country, during the s:.me period, also fluctuated from ten to twenty seven per cent, below par, which of course took away all temptation to ship it. On the contrary, every man who held a - ank bill here, considered him- self as holding specie to the amount of it: because he could always obtain specie for it, when engaged in an operation to which specie alone was competent ; and this was the only sort of case in which it was ever demanded. So that practical men, in this state of undisturbed confidence, began to perceive, that so long as this confidence continued, a bank really required no more specie, than it would be called upon to pay in aid of those enterprizes, in which bank bills would not answer : and that a capital almost entirely fictitious, might go into operation, as securely, and more profitably, than one bottomed on actual and deposited funds. The confidence which the first bankers bad so universally established, by exercising caution and honesty ; and the consequent ease with which bank notes circulated every where, excited a spirit of speculation, which boldly encountering, overcame by the force of intrigue, bonussing, and bribing, obstacles, apparently insurmounta- ble. The discipline of party and t he remon- strances of leaders, in all things else despot- ic, w ere alike unavailing in their hostility. For now, in almost every state, new banks arose, in rapid succession. But few 7 , if any, these had any other capital than the rmtes of the Stockholders, the paper of other banks, and the public confidence. — Thus, while the amount of nominal hank- ing capital was encreased, the solidity of the old and honest banks was gradually un- dermined ; and ultimately, there was little difference, as to substantial means, between the old and the new banks. What specie there was, became so scattered, being dis- persed among so many different institutions, that actual means can hardly be supposed to have been now possessed by any. Banking became henceforth, a mere pa- per system. Distended to its utmost tension, more paper could not be produced with safety to bank solvency, t Banks having now become for the most part, mere incorporations of speculators — notoriously so — with scarcely any founda- tion hut public confidence, it behoved them to operate with Ihe most vigilant wariness and circumspection. As they had ceased to be capitalists, although they continued to be discounters , it behoved them not to go a step further, certainly not to become loaners, especially for long or indefinite periods, of their bank hills. It has been already remarked that the public confidence enabled the banks to keep afloat all their paper, except when, for par- ticular occasions, specie was wanted in place of it. It should be added here, that a very great part of their paper would neces- sarily be kept afloat by those who borrowed it for purposes of business. But in their actual condition, it became essential to their safety that the paper they issued, should be confined as much as possible to men in business; for these would keep it suspended in circulation , until it was repaid to the banks for debts due to them. It be- came important to their safety, that they should retain an uninterrupted eonlroul over ihe amount of their issues. By discounts, at sixty days , they would always have this controul; by loans for years, they would lose it, to the amount <>f those loans. If, in illustration, we suppose, that a bank discounts notes, af sixty days, and that it discounts or issues every day a six- tieth part of the total amount of its dis- counts, we know that it becomes every day repossessed of a sixtieth part of its issues, and may when danger is apprehended, avoid it, by not rediscounting or issuing what has been thus repaid to it. It is for this reason among others, that' all well regulated banks discount at short t dates, instead of loaning at long periods : : for in the latter case, having parted w ith • their bills, and having no controul over their debtors, they would have no means, with which to meet an unexpected call for specie. If a bank is sure to receive daily, as much of its paper, in payments as it issues daily, by discounting, it is very evident that it issues no more than is required for circu- lation. As long as the heart receives as much blood as it issues, circulation is kept up, and health and vigour secured to the system. But if a great part of what is is- sued, is let vuit by opening a vein, the principle of circulation is destroyed, and the si'slem decays. So long as hanks lend to those w ho must pay them again; so long as they lend al most exclusively to such; so long are they certain of having almost alt they issue kept suspended in circulation. This is not a 7 mere theory : upon no other principle can it be accounted for, that the banks were at one time able to contract debts io ten times the amount perhaps of the specie in then- vaults, without being ever disturbed. How then has it happened, trial they are able to do it no longer ? A correct answer to this question, is most important; because it ascertains the cause of the disease, and leaves the physician no other task, than to remove it, and thus to restore the patient to health. The banks have been obliged to stop payment, because they loaned their bank notes, payable on demand, to those who were not to repay these bank notes to them. They loaned their bills, to be repaid at long or indefinite periods ; instead of issu- ing them in consequence ol discounts at short periods, as had always been their practice* and ascertained to be a safe one before. These bills, thus loaned, did not return to the banks in payment of notes falling due to the banks : the holders had no dealings with the banks. They returned, accompanied by a demand of speck. The amount, issued in consequence of loans to government was greater than all the specie in their vaults Added to this, the public confidence, not so much perhaps in the ulti- mate ability , as in the punctuality of the banks was shaken, as soon as it was know n that they had lent vast sums to (hose, who notonly were for the present unable, but who were not even obliged, to pay. Deposits were now withdrawn; specie was demand- ed, not only from want of confidence in the punctuality of the banks, but because it be- gan to be supposed that it would soon com- mand a premium. Alarm on one side, and the love of gain on the other, brought many demands on the banks, in addition to those which arose from notes loaned to govern- ment. It was impossible for the banks to resist such a stream of demands; and they very prudently closed their vaults. The banks stopped payment indeed : but they were not insolvent. From that day to this they have never been insolvent. They possessed more, much more, than ail they owed; very much more than they would be called upon to pay, considering how much of their paper was constantly re- quired for circulation. They had stopped payment- — what had they to pay their debts with ? They had the notes of individuals which had been discounted by them; and the public stock, for which they had issued their notes, hot^j left unpaid, though demanded. The banks were solvent then, fully and! abundantly. They had overruled ti e < las- f ticity of public confidence, and the capuci-j ty of the circulating world. They haddis-j covered, th t there was an excess of their; paper — that there was more than was need- ed for actual use. What then, became their duty ? Clear-' ly, by some system or ether to produce! means for absorbing this excess. It was certain that the bills they had issued for the public stock they took, could not be kept in circulation. What th n was their duty ? Clearly, to take back those bills, and how could that be done: by setting their stock for them. It may be said, indeed, that the market was glutted with this stock duriug the war, and that it could not have been sold, ex- cept at great loss; and hence it may be contended, perhaps, that it could not have been reasonably demanded of th ru that they should incur a loss merely becaqse they had loaned money from patriotic con- siderations, to the government. This idea can have weight only with those, who have persuaded themselves to believe, that banks were established as pa- triotic loan offices, and not for commercial purposes. It may also be inquired, in what the pa- triotism consisted, if there could not, by any possibility, be a sacrifice ? These patriotic banks subscribed for stock, u on exactly the same terms, that patriotic individuals, of like sort , did. W hen it seemed to assure a profit to subscribe at par, they subscribed at par— when they were able to get stock at eighty eight, and eighty, for a hundred, they took it at eighty r -eight and eighty. But when they were requested to lend, though for the de- fence of their own city, they refused treasu- ry notes — all but the Bank of America, but were patriotic enough, nevertheless, to lend on corporation bonds. But even on Bai- ted States stock their patriotism played a secure, and always a profitable game. li the interest should be punctually paid, they were sure to receive interest for more than they had advanced. If it shou^l not be so paid, they had only to slop payment themselves; a secure resource against he worst that could happen. But the fact is, that the interest has been, and continues to ye, punctually paid—** *r usurious interest. To obtain a right to this interest, they have issued bills, which they Refuse to pay. The effect is, that on their own debts, which they do not dis- charge, they pay no interest; while on the stock, the holding of which keeps them in debt, they draw a regular and certain inter- est. This is unquestionably turning pa- triotism to a very profitable account ; if w e must needs dignify with that appellation, a conduct which is nothing but mere rank speculation. If however, it should he conceded that it was but due to their patriotism, to con- sent that they should not lose, because they had exercised this great virtue, with so little regard to their actual means : if they are to be excused for not selling their stock, to enable them to pay their debtsy by what logic will it be attempted to jus- tify loans, and the receipt of public securi- ties, bearing interest, be it remembered , subsequently to their bankruptcy, as declar- ed themselves. As honorable institu- tions, guardians of public puctuality, how are they to be justified for tbe hideous ex- ample they exhibited to the community, when they contracted new engagements, by which they were to secure new profits, at a time when they were confessedly una- ble to make good their old engagements ? Was it patriotism , that disinterested, magnanimous inspiration, patriotism ? If it was indeed that, how much is it to be regrett- ed, that the making of large gains should have been the consequence. Full divi- dends, realized by bankrupts; large profits divided among stockholders, who refuse payment of their debts ; may be evidences of modern patriotism, but they cannot be reconciled to old fashioned honesty. W hether the original bankruptcy of the banks was the result of patriotism, or of rank speculation, is not perhaps a point so important to be ascertained, as whether, since their bankruptcy, they have fairly and honourably applied their means to do justice to their creditors, and thus to restore the general currency to value. If it shall appear that they have not : and especially if it shall appear, that so far from attempt- ing: it, they have plunged on, heedless of every consideration, hut that of mere gain, increasing their issues, by receiving public securities, bearing interest, denying both payment and interest to their creditors, and ah this, after promises deliberately made, and solemnly reiterated, whatever other 1 considerations may arise, that which re- gards them, will not, it is presumed, be fa- vourable. The active capital of the Banks in this city, by which ismeant that portion actually employed in banking, is about thirteen millions and a half; and is employed as fol- lows, by the Mechanics’ Bank $2,000,000 Union 1,800,000 Manhattan 1,850,000 Merchants’ 1,490,000 New- York 965,000 Bank of America 3,300,000 City Bank 1,410,000 Manufacturing Company, 700,000 Total $13,515,000 In order to make a tolerably distinct es- timate of their profits, it is now necessary to ascertain the amount of the loans which have been, in various forms, made by them; the consequent amount of paper which they have in circulation, and (which is but the same thing) the credits on their books, for all which they receive inter- est. These may be safely stated at twenty-three millions ; and from a cause which shall be hereafter explained, this a- mount is continually increasing and increas- ing too, beyond all calculation, because the banks themselves have no longer a controul over it. Twenty-three millions : — but a late advocate of the banks insists that it is only twenty-two millions. Admitting that amount, for the sake of expedition, to be the correct one, it follows, that the banks make dividends on a sum, which exceeds their active capital, about eight millions and a half, yielding its stockholders about half a million in dividends. This profit is derived from their mere credit, without any cost or consideration whatever. Of the eight and an half millions excess beyond their capital, five millions have been issued in the purchase of, and in exchange for, go- vernment securities, of various sorts, bear- ing interest. We have been speaking hitherto of “the batiks,” as if no distinctions were to be made between them. It is now time to make the proper discrimination. Among each other the directors have already, in their conversations, fallen into the familiar distinctions of tbe “ debtor banks and the “ creditor banks” By the former are meant, those, whose paper has accumulated in the latter, to an amount, which cannot be take* 9 up . The debtor banks, the banks who are Indebted to the others, have become so in- debted because they hold large amounts oi public securities, bearing interest, tor which they have issued their bank notes to go vcrnmcnt, and which notes have found their way into the other banks. To keep the cre- ditor banks quiet, however, and as much as possible, in good humour, it has been stipu- lated that they shall charge interest on these accumulations. The practical effect therefore, is, that the debtor banks make their profit by trusting government ; and the creditor banks make theirs by trusting the debtor banks. The debtor banks give out their notes in exchange for treasury notes, bearing interest ; and the creditor banks Charge” interest on the notes they receive of the debtor banks. But if these notes accu- mulate in the hands of individuals, no in- terest is allowed them , unless they compel its payment by law. And thus the banks have established a rule of justice towards each other, in itself very correct, but which they refuse, however, to extend to toe rest of the community. ^ ? It is important to our subject, that toe reader should correctly understand the course of the banks in relation to treasury notes. We hope, therefore, to be pardoned, for what to some may appear to be unneces- sarily minute. Some months since, the secretary ot the Treasury proposed to all the banks m the U. S. that they should receive treasu- ry notes when offered them, and give then own notes in Exchange for them; and also that they should receive their own notes when required and give treasury notes in exchange; accompanying this proposition at the same time by a threat, that Ihe trea- sury should not receive the paper of those banks, which did not receive treasury notes ! At a meeting of a select committee of our banks, appointed to consider these propositions, it was resolved not to agree to them. Three of the banks, and of course they are the three who have been called, because they have become, the debtor banks , did afterwards however, by a private and separate arrangement, made by agents, sent to Philadelphia on purpose, agree to those propositions without the consent, or knowledge of the five other banks ; so that these banks now receive treasury notes from any one who presents them, and issue their bills in exchange for them, when re- quired, And here we submit to the read- er whether it does not follow* necessarily and inevitably, that these uanks have p ed with all power of control;; ou.; . ;eujt issues ? That department of the ban: ha? been abandoned to the secretary of th treasury ; for it is very clear, that iv may to-morrow, if he pleases, cause these bank to add, if he pleases, twenty si millions that excess of paper, which is the trie cause of depreciation. That tins excess!: continually increasing, is most notorious to what extent , is one of those bank secret which all their caution has not prevented us fcom penetrating. Among others, this singular and ludi crous consequence has followed ; The U States take only the bills of those banks which cannot keep their accounts ever with the other banks ; and refuse to ref ceive the bills of those banks which ar« immense creditors ol the banks whose hill are received* And the practical result will be, that long as the notes of these banks continue t be deemed worth more than treasury notes; so long will treasury notes-eontirme to 1 presented and bank notes issued in e: change for them. When these bank note from the quantity afloat, become degrade! below treasury notes, this practice wil cease. But the affairs of the banks will b« by that time, utterly irretrievable, and they will follow the fate of all banks, whicS have been the mere machines of govern menf. These explanations being essential U a correct understanding of the whole sub ject, we now recur to the facts that, th w hole amount of loans of all sorts made by our banks, is say $22,000,00( Their active capital, 13.500,00 creasing like the velocity of a falling body. When the channels of commerce at e filled with paper, specie is expelled from the count y, and the quantity of depreciated r *aper, to supply the demands of commerce, $must be inverse!* as its value. Hence it is very evident, that if scarcity of specie prevents the redemption of paper, the former will be diminished, and the latter incal- culably increased, by the mere existence of the present system ; and of course, that which is already difficult, will soon become impossible, it is now as easy to foresee, as it will soon be painful to experience, the impending crisis. The great premium on specie, as well as other considerations, will prompt the creditors ot the hanks to legal coercion. Whatever sound poli- cy might dictate, we believe it not in the power of the state legislatures, to afford banks any protection against suits at law. The constitu- tion of the United States* has disabled them from impairing the obligations ot contracts , and the laws of the union have provided for re- moving to the national courts, in the last resort, all cases, which turn on the construction of die constitution. We cannot, therefore, expect pro- tection from the state authorities. But were we secure against any attempt to enforce pay- ment of our bank notes by legal process, other considerations sufficiently prove the impolicy m refusing to fulfil our contracts. Specie being expelled from the country, the paper of our debtors will be no better than our own. rro pertv in the shape of contracts will be of node terminate value : industry will be paralized , morals corrupted ; banks dishonored ; commerce greatly embarrassed ; and credit, both public and private, annihilated. But with whatever I success , the system might be pursued ^ we think that considerations of justice would alone be sufficient to decide the point. Why should di- vidends be made on a principal, which requires no capital, and large emoluments received by the stockholders, while their creditors are de- nied both principal and interest ? Bnt we for- bear further to pursue a detail of considerations, already so obvious to the enlightened gentle- men, whom we have the honor to ado ress. We trust that you deplore, equally with ourselves, || ^he evils which are felt and anticipated ; and with no less anxiety, the general ruin, which we are solicitous to prevent. We believe also, gentlemen, that yon will acknowledge the vital interest which our respective states in general, •and our monied institutions in particular, have in the speedy adoption of some course, which will gradually conduce to the security and re- demption ol the bank paper in circulation. But while our mutual interests, a sense of jus- tice, and a regard to the common welfare, com- pel us to press this subject on your considera- tion with great earnestness, we wish to be dis- tinctly understood, not to claim the immediate adoption of specie pa> ments. That would pro- bably be impossible. We do however most decidedly declare our opinion, that the present course, if persevered in, will result in expensive injustice and ruin. If discounts are but reason- ably contracted, and the immense mass of pa- per in circulation consequently diminished, spe- cie will return to the country, and supply its place. The embarrassment of the merchant, if he is previously notified, will be very inconsi- derable, when contrasted with the desolating calamity, which otherwise awaits him. The sacrifice of profits by the banks themselves, can- not for a moment deter them from the mea- sure, while those profits result, in so great a degree, from the creditor’s capital, and not their own. If in the mean time, no dividends are made among the stockholders, until specie payments shall be resumed, the preservation ot the whole funds by the corporations will en- hance the security to which the creditor is just- ly entitled. Under such an arrangement, the ultimate redemp tion of the paper, and preser- vation of the entire funds, as a security, would be attained ; specie, gradually restored to the country; the depreciation of the currency checked ; and tho^e public convulsions, which CdCriitu 9 am* ^ r . are apprehended with dismay, be no longer an object of alarm. We, therefore, respectfully submit for your consideration, the follow jpg proposition, which, from its very reasonable character, we confidently trust, will be cheei- fully agreed to: That the banks respectively ado at a resolution, to be persevermgiy adhered to, to redeem their loans at the rate ot two per cent per month, until specie payments are re- sumed.” Signed , &c. REPLY. “ The General Committee of the banks in New- York, have considered the communication from the Convention of sundry banks in Connec- ticut, with the attention due to representations from a source so respectable. The Committee are fully sensible of the necessity of a vigilant at- tention to the amount of the paper in circulation , and of the importance of preventing any on- due emission. BUT, after mature considera- tion of the subject, they are of opinion, that tile reflation of it must be left to the banks ml fit city , unrestrained by any specific V} e *& € ® subject. The banks in the city of New- York had already greatly reduced the usual amount ot their loans, at the period when a suspension of » 13 specie payments was rendered necessary by the difficulties of Ike times ; but deeply impressed with the necessity of limiting the issues of a pa- per , as the only means of preventing its deprecia- tion, they entered into an association, not to in- crease the amount of the loans, then actually made, except by general consent, or in cases, where banks were bound by their charters, to lend to the state. “ At a meeting of the citizens of New-York, held on this subject, the general committee of the banks, gave a pledge to the public, to the same effect The course then agreed upon, has been rigidly adhered to ; and notwithstanding loans to a large amount have been required by the state, under the provisions of the charters, of sundry banks, and heavy advances have been made to the corporation of the city, for defence against expected invasion, as well as to the United States, for the express purpose of pay- ing the interest on the public debt, due in this city : objects, which the Committee are decid- edly of opinion, met the countenance and ap- probation of all classes of their fellow citizens which have altogether amounted to about three millions of dollars. Yet, the amount of loans, made by the banks collectively, at this time , does not exceed the amount at the period of sus- pending specie payments , more than three per cent, on the capitals of the banks. It results from these facts, that the commercial loans have been diminished by nearly three millions of dol- lars. The general committee, continue as much as ever impressed with the necessity of watching, with the utmost solicitude, the amount of issues , and of being ready to embrace any opportu- nity of safely resuming payments in specie ; which alone in the opinion of the general com- mittee can form any effectual permanent basis for a paper circulation. The committee are, desirous still to pursue the course, most condu- cive to the attainment of this object, and to make as great and rapid a reduction of loans, as may be found practicable with a due regard to the general state of commerce, and the safety of the banks, so much dependant on the support of commercial credit. “ With these views of the subject, the gene- ral committee have invariably recommended to their respective boards of directors, to pursue the cause originally adopted ; but they are of opinion, that the banks in the city are, alone, competent to decide upon the rate of reduction ; and it is therefore unanimously resolved, that it is inexpedient to make any specific pledge on the subject of a reduction of loans.” Signed, &c. ^On the 4th of October, 1815, three gen- tlemen, to whom the general committee of the banks had referred a certain resolution of the Bank of America, made a report, which was sanctioned by all the city banks. The reader will find that this document re- cognizes all the doctrines for which we con- tend. But he will find too, that w hile it cOi tains no allusion to the public securities hel by the banks, it assumes, as matter of cours that the restoration of paper can be effect' only by a reduction of loans : REPORT. The committee, to whom was referred by t!r general committee of the banks in New-York, resolution of the Bank of America, relating the resumption of payments in specie, consid themselves called upon to inquire only how banks shall prepare for the resumption of tl payments and when it will be feasible. They do not consider themselves called iipo to discuss the question of the expediency of return to specie payments, knowing that th public have full right to claim such return, an that it is the imperious duty of the banks to prt pare, within a reasonable time, for the satisiat tion of that claim, yet they cannot but expres their firm conviction, that the interest of th stockholders of the several banks, would be es sentiaily promoted, by replacing the banks early as possible, on a specie establishment In the opinion of the committee, the prepare tion must consist in a reduction of loans , wber by the demands upon the banks, will be i to bear a smaller proportion, than at present to the amount of their metallic means, an whereby also bank notes will be rendered more valuable, and the inducement to cal! on th. banks for specie be, in consequence, greatly di minished. The time, when the banks can re sume their payments in specie, must depeni upon the extent and rapidity of the reduction vj loans, and also upon the question, whether tin banks ofPhiladelphia and Baltimore will co-op erate in measures for this purpose. The com- mittee are not informed that the subject ha< received any attention in Baltimore, but they are informed that the banks in Philadelphia have appointed committees jointly to take ii into consideration. Should the banks in eithei or both those cities concur with the banks o! New-York, a much smaller reduction of loam would be required, than if the banks of this city proceed alone. The committee, therefore, raus! decline naming a day for the full resumption oi specie payments, hoping that the concurrence of the Southern banks wili enable their general committee, hereafter th name an earlier day than can now be safely designated. They woul gladly propose a specific reduction of loans and a fixed time for recommencing payments in spe- cie — but under present circumstances, they content themselves with proposing to the gene- ral committee the adoption of the following' preamble and resolutions, subject to the appro- bation of their respective boards of directors. Whereas it is deemed both just and expedient , that the banks in the city of New-York should recur, as early as practicable, to the payment of specie. And whereas it is deemed essentially necessary to the fair attainment of this object that a large reduction of their loam be made , 14 jind so made, as to be duly apportioned to the Relative situation of the several banks of the 'city ; a: d whereas also, it is considered highly [Important to btain the concurrence of the Shanks of Philadelphia and Baltimore. Therefore, resolved, that the banks in the |>ity of New-York, will so far reduce the amount of their loans , a* may be necessary to enable them to resume their payments in specie. Resolved, that no bank in the city of New York, shall in the aggregate, be in debt to the 'other banks on, or after the first of January next, more than $400,000— nor on or after the first of March next, more than $250,000— nor on or after the first of May next more than $100,000— and that on the first of July next, or as much earlier as the banks may resume their specie payments, the debt , then existing be- tween them, shall be liquidated in specie to the amount of the balance, which each debtor bank may owe in the aggregate. Resolved, that the copy of the proceeding preamble and resolutions, be transmitted to the chairman of the joint committees, of the banks of Philadelphia, and to any committee repre- senting the banks of Baltimore, requesting their concurrence in the adoption of measures, for the requisite and fair reduction of loans, and in- .viting them to name, jointly, with the banks of New-York, a day, beyond which, the payment ©f specie shall not be suspended. New-York, 4th Oct. 1325. Signed, LYNDE CATLIN. D. I GREENF. GEO. NEWBOLD. A cartful perusal of what has been said, and of the different documents now laid before the public, will establish, and we trust, have satisfied every reader, That the “ diseased condition” of the paper currency is a deplorable evil ; That it lias been occasioned by excessive issues of bank notes ; That these excessive issues have been the consequence, not of discounts to mer- chants , but of loans to government; and therefore, That it is in the power of the banks to retrench the excesses ; simply by undoing that which has been injudiciously done; and that they will thereby render them- selves able to resume specie payments. That inasmuch as the exchanging of bank notes, for public securities, produced an ex- cess of bank notes : so, to exchange public securities for bank notes, "will draw in, and destroy the excess. But it has been advanced in behalf of these banks, that the sale of their public se- curities would involve them in great loss . This might he satisfactorily enough answered, by saying, that they continue to receive these public securities ; and therefore, that the directors of the banks do not under- stand the value of them, in which case, they ought, for the good of all parties, to be stopped from receiving more of them; or, that they are good and substantial proper- ty, in which case, they may be disposed of, at the same they cost, at least. But further, it may be remarked, that the restoration of our national credit has ren- dered this stock one of the most eligible investments of money-capital in England, and the only reason why it does not now command a premium in that country, is the depreciation of the currency of this. The holder there is obliged to receive his interest in the United States, and sustain a loss proportioned to the depression of our medium. But this difficulty is obviated by the very operation itself. The offers for sale might be accompanied with a guaran- tee, that the interest should be paid in that country, or in an undepreciated currency in this. Iff however, due allowance is made for its original cost, the revenue it has al- ready yielded, and the advantage deiived from paper emissions, for which nothing has yet been given in return, it is hardly pos- sible but that the whole transaction should yield a profit to the banks in its direct re- sult, in addition to the important objects which the sale would promote. It has been said, however, that the ba- lance of trade is against the United States and that to resume payments, will certain- ly send specie out of the country. .At the time we are writing, dollars, which in Eng- land are not legal tender, are about four per cent below par. And at the time, when a very indecent and scurrilous attack was made in the National Advocate, upon one of the creditors of the banks ; they were but four, although that writer stated them to be twelve per cent above par ; and con- tended that, in case the banks paid specie, remittances might be made to England twenty-three per cent cheaper than in bills of exchange. The fact is, that at that verv time, dollars were at 4-8 in England, their standard value being 4-6 ; and bills of ex- change on England could be purchased at five per cent below par, for specie, in New- York. From these facts it follows, that one hundred dollars would buy 164 of bank of England paper, in England. But the freight, insurance and. commissions, wouli 15 be at least Jive per cent, so that they would actually nett, in England, 99 dollars. At that very time, 100 dollars in specie would purchase here, a bill on England, payable in English bank bills, for 105 dollars, which, with the reduction of one per cent for GO days discount after sight, leaves 104 dol- lars ; exactly Jive dollars more than a ship- ment of specie would have produced ! At this moment, however, dollars are below par in England; and we presume, that there can now be no conceivable temp- tation to ship them to that country. Having showed, that upon a restoration of the currency, stock might be sold at a profit in England ; and, that there is no dan- ger of our dollars being drawn thither, we return to the conduct of the banks. When they stopped payment, the banks made a pledge, which produced a general confidence, that they would then retrench. When the legislature seemed disposed to charge them with double interest, be- cause they were making double profits, they again promised to retrench. So far from disguising the fact, they uniformly confess, what is in itself palpable, that retrench ment is the only cure for the disease. But how shall this be brought about ? The banks uniformly insist that it must be by a reduction of loans. We insist, on the contrary, that we have demonstrated, that it can and ought to be done, by a sale of their stock ; and not by retrenching their loans to individuals. The first will merely lessen the amount of divi- dends : the latter would unnecessarily and unwarrantably embarrass the merchants. It appears, from the reply to the Connec- ticut banks, that in July, the commercial loans had already been reduced nearly three millions , below what their amount was, when pajrments were suspended. But it is at the same time acknowleded, that the whole amount of loans had been increased three per cent, on the capitals of the hanks ; and this before the system of receiving treasury notes was adopted. The effect of that system, as we have been recently en- abled to ascertain, has been to produce in the creditor banks, an accumulation of the notes of the debtor, banks of between two and three millions: although the balances, when payments were suspended, were less than three hundred thousand. To what end then, are commercial loans reduced, if the whole amount of issues is regularly increased ? As to the debtor banks what reliance can be placed upon their engagements to the public if so far from endeavoring to fulfil them, they have put it utterly out of their power to do so ? And as to the creditor banks, what reliance can be placed upon their pledges, if they indulge their debtors in these dreadful ex- cesses, to participate in the profits Z. The different documents we have laid before the reader uniformly admit, that the liquidation of the balances due to the creditor banks must necessarily precede the resumption of specie payments. And as uniformly is the hope encouraged that they shall be liquidated: but the practice has been no less invariable, advisedly and inimitably to increase them. The resolutions of August, 1814, recon- ciled us to the suspension of payments. Those of April, 1815, prevented legisla- tive interference. Those of October promise as fairly, but how can we confide in them ? The promises of August, 1814, and of April, 1815, it was in the power of the banks to perform. But they were disre- garded. Those of October cannot be performed, so long as bank notes are exchanged for treasury notes. How then can we rely upon them ? On one side the most solemn engage- ments are made, violated, and renewed with the public. On the other, engagement* are made with the secretary of the trea- sury, performance of which renders per- formance of the others impossible. To demand confidence under such circumstan- ces would he as preposterous, as it would he ridiculous to yield it. So long as Mr. Dallas can pump up their notes at pleasure, so long will it be in vain to hope a correc- tion of --that excess of paper, which is the cause oif its depreciation . In the mean time, honest and merito- rious creditors can receive neither payment nor interest, from those who riot in the full delights of nine per cent dividends ! and whose dividends will increase exactly in proportion as their paper becomes worth- less ! For it is as ludicrous, as it is lament- able, that while their notes are twelve per cent below par , their stock is from fifteen to thirty per cent above par. The more paper the more depreciation, it is true but the more profit, also. If the community are disposed to indulge them, in this course, they will hardly feel 16 'j a motive to abandon it. A sense of justice [i might prompt to it ; but as corporations i have no souls, they can commit no crimes. I Is there then a hope that the banks will rc- | same specie 1 payments witkoat being compel- led ? Unreservedly and unhesitatingly, we answer, no! We have proved them to have , been unwilling at the outset; and by the arrangements with the treasury, unable ; at the conclusion. i The evils attendant on such a state of 1 filings have been so uniformly confessed hy the banks themselves, that it seems al- !' most unnecessary to speak of them further. We hope, however, for the readers patience, while we particularize a few of them. The rise in prices has been commensu- rate with the depreciation of paper, in al- most all cases ; in many, far beyond it. All those, whose revenues are fixed by law, by contract, or custom, sustain a loss on their incomes, equal to the rise in prices. The expenses of living have been increased at least twenty-five per cent; and just as great as this increase is, the actual value of fixt incomes and earnings is diminished. The operations of the treasury are de- ranged by the general evil, and in various forms, inevitable injustice is done, both to ffie debtors and the creditors of government. Equality of taxation cannot be preserved, while in one section of the country public revenues must be paid in a currency more J valuable than is received in another. The | very faith of the nation is violated, when teuenuesy pledged for the redemption of the public debt, are collected in a currency be- low the standard of gold and silver; for the pledge is thereby annihilated, and the notes of government, or some other mere credit, substituted in its place. In addition to this we have seen, in the official communications of the secretary of the treasury, many of the extreme embar- rassments of that department, both in the collection and disbursement of the public treasures. Loud have been the complaints of government, and severe the losses and sufferings of our citizens. The reputation of bank paper is drawing j to a crisis. The hope of specie payment f being ever resumed, is almost extinguished. When that hope shall be entirely extin- guished, those who are acquainted with what constitutes the value of money , will calculate the worth of a currency, which is neither property, nor evidence of property ; and of which no use can be made, but to pay debts due to banks, but which all other creditors may refuse: A currency, there- fore, valuable only to debtors, and that only in certain cases ; but utterly useless to cap- italists. To the merchant, while he lias no capi- tal, such a currency may be as good as any other. But when his profits should make him a capitalist, he cannot realize them. The balance of trade is now r between twelve and twenty millions in favour of this city. If specie payments were to be resumed, that balance would have to be paid in specie, or in paper estimated at specie value. This would more than coun- terbalance any inconvenience resulting from a diminution of the amount of curren= cy, and would enable the banks to go on with liberality, and in security. We hope to be pardoned if we now de- clare our absolute conviction, that we have fully established, 1. That the banks ought to pay. 2. That they can pay. 3. That they will not pay. And we trust, in conclusion, that every reader will agree 4. That they ought to be made to pay. To those who assent to these positions, it will be evident, that every fair act of co- ercion is laudable, and entitled to applause and support. And every man who shall lend his aid in it, is entitled to be considered a public benefactor. Having discussed some of the general points in relation to the banking system of the present day, and exhibited the conduct of the banks, towards the public at large, w r e hope to merit their approbation by pla- cing before them the history of a particular transaction, not merely because it will be found ia itself interesting, but to repel the basest of all calumnies ; as false, as they are unprovoked; as malicious, as the subject of them has been unoffending and merito- rious. Those who want, and who therefore borrow money, bring profit to a bank. Those who are worth money, themselves, and who receive bank notes as money, are they who give character and credit to the bank notes. If enough borrowers do not apply, lean dividends are the consequence. If actual capitalists will not take bank notes, depre- ciation follows. The first affects the inter- ests of the bank ; the latter is a public injury. Although we are much in the habit of considering banks as distributors oi favors y 17 yet we should not forget that they have also duties to perform. And although it is most commendable to be generous, it is of primary obligation to he just. To be. generous at the expense of others, to grant j favours to many , while you deny justice to all, argues but little moral refinement. But to deny justice, wautonly, obstinately, per- severingly, when it -would be as easy to render, as to deny it, is a conduct, which the public w ill find amply detailed in the following narrative. And after its perusal, the reader will be at no loss to determine how unfounded the aspersons are which have been cast upon the motives and con- duct of Mr. Bronson, for having endeav- oured to obtain mere justice at their hands, by a legal prosecution, after all other means had been exhausted : and when all possible hope of a voluntary performance of their en- gagements, had, as we have shewm, been utterly dissipated. We have been at some pains to obtain a correct knowledge of the circumstances, because they give a practical view of the effects upon individuals, of a rigorous non paying system by the banks. And we think we may venture to assure our reader, that every fact set forth, is susceptible of direct proof. During the prosperity of our mo- nied institutions, several country banks, that they might render their paper a better medium, by enlarging the sphere of its cir- culation, deposited funds for its redemption in the city of New- York. This was mu- tually beneficial. While on the one hand, the currency thus redeemable was melio rated ; the city banks, on the other, enjoy- ed the benefit of loaning such portion of these deposits as the nature of the arrange- ment might admit. Some years previous to the late war, an agreement was made, and went into operation, between the Bridgeport and the Mechanics' Bank, that the former should make a specific deposit with the latter, the full amount of which should be maintained during the existence of the arrangement — that the latter should redeem the Bridgeport bills made paj^able there by special contract, whenever they should be, from time to time, presented; and that all the monies thus advanced by the Mechanics’ Bank, should be weekly re- imbursed, without impairing the deposit, by an agent of the Bridgeport Bank in the city of New-York. At the commencement of the war, the insecure situation of the bank- ! ing house at Bridgeport, on a defenceless harbour ; induced the directors to transfer ! the entire funds of the corporation to the | city of New-York, where they were all ac- j cordingly deposited with their agent, or held in the paper of the various banks. — • These funds were about equal £o all their bills in circulation, and destined to redeem them. In this condition the greatest part remained until the suspension of their pay- ments. The bank of Bridgeport was then exposed, with very limited means in its possession, to the demands of its creditors, i now made eager by the shock, which all bank credit had sustained from the newly adopted measure. Disposed, as far as pos- sible, to do perfect justice, the directors or- dered the cashier to allow interest on all demands made upon the bank — to confess judgment, without process, whenever re- quired — to desist from all loans and reissues of paper- — to cal! on debtors for a fair ex- ertion cf their ability to pay, and to ex- change, for their own bills, the paper of the city banks at a reasonable discount. Thus every effort was made to do justice to their creditors, and no suit was in any instance commenced against the debtors of the bank. Meanwhile the bills of the Bridgeport bank which were received in the course of busi- ness, by banks wdiose paper it held, were by some means withdrawn from those banks, and specie demanded therefor. And w hat is still more oppressive, its funds in the Me- chanics’ Bank, and bank notes, at their specie value, are continually applied to the redemption of its bills, and the loss (which is the difference between specie and paper) is borne by the Bridgeport Bank. Let us pause a moment, and examine the charac- ter of this proceeding. We ought never to forget, that the same rules cf justice which govern the inter- course of individuals, are applicable to ci- vil corporations. Although questions of general policy may sometime arise, w hich render doubtful the expediency of a strict fulfilment of contracts by a monied corpo- ration, even where its own interests might not be essentially endangered, yet the con- siderations on which such doubts are ex- cited, do not involve the present point of enquiry. The scarcity of specie, or the liberality of mercantile loans, cannot af- fect the question, or be affected by its re- sult. After certain given acts (as the re- demption of these bills) are performed, and have yielded all the consequence which 18 I they have a tendency to produce, the ac- count between the parties remains to be adjusted, and in the settlement of that, the most entire justice may be observed, with- out varying the state of atTairs which the question of policy exclusively regards. In j testing the above transaction, then, the I principles of justice are alone to be con- sidered. It would seem a plain proposition, that | the Bridgeport Bank was entitled to as good money as it gave, and was no t justly ; compelabie to allow more for paper than it was worth. If one has taken paper under par , he sustains no loss by its redemption at the same rate ; but it 1 have given my : correspondent Cash to redeem my notes, shall he, on losing his credit, take (hem up with his own at the rate of two for one, and charge me with the difference ? He might as well have done nothing, for my debt is not diminished a cent by the operation ; nay, better, for lie lias virtually embezzled my funds. He compels me to re-advance what was already paid. Now what is in this cage true of one hundred per cent, is equally true of ten, where that is the real difference. This question, we think, is sa- tisfactorily resolved ; and ifit is, the Bridge- port Bank has suffered, and is daily suffer- ing, the most obvious injustice. Is not the •? truth too clear to be resisted by the most inveterate prejudice, that if A agrees to pay' one hundred dollars for me, and does pay it in depreciated paper, he has paid one hundred dollars only ? Have I more than one hundred to pay him in return ? If I have previously paid that in specie, or in his ow n notes of equal value, which I received j as specie, are we not equal in the scale of justice ? Shall I, in addition to the one hun- | dred dollars which I have paid, and which is equal to the debt to which it was to be appropriated, be further compelled to pay him for a loss of his own credit, however in- evitable, to which I was in ho degree ac- , cessary ? To return to the narrative : the great amount of Bridgeport notes in circulation, and the depreciation of the paper of the j city received at par and paid away at a dis- count to redeem its bills, subjected the ! Bridgeport Bank to constant and heavy sa- crifices. Neither public opinion nor judi- cial favour afforded any protection. The legislature, by a public act, compelled the banks in Connecticut to confess judgment, at their own expense, on all bills under 100 dollars or submit to the costs of prosecu- tion, and to pay nine per cent interest on all executions after sixty days, if not previous- ly levied by the creditor. Thus bereft of means and reduced to ex- tremity, the condition of this faithful but unfortunate institution, was, in February last, represented to the general committee of the city banks in the following letter. New-York, February 10th, 1315. Chas. Wilkes , Esq. SIR, It will be seen by the law lately passed by the legislature of Connecticut, that every bill issued by the banks in that state under $100, if not paid in specie on demand, can, at the ex- pense of the bank, be changed into a judgment and an execution, and put on interest at 9 per cent, and the payment enforced at the pleasure of the holder. This oppressive act is aimed at, and bears principally, if not entirely on the Bridgeport Bank, it being, as is believed, the only one in the state which can materially suffer by it. It is situated in the centre of a populous dis- trict connected wholly with the New-York mar- ket, in which district there is probably 6 or $700,000 of the paper of the New-York banks in circulation, being now the only medium in use ; which owing to its always having been received without discount at the bank there, passes at par by common consent, the same as in the city of New-York. The bills of Bridgeport Bank being all under $100, subject it to the expense of a judgment and execution on each one, which together with the 9 per cent interest, all paya- ble in specie, is sufficient at the present time to ruin the institution. To refuse taking New- York bills of our debtors in that state and this, or to demand the difference between those bills and specie, would create in the country as well as in the city, a corresponding claim on the banks here that issue them, and possibly give rise to a state of things that might derange the whole system of business. No one can be more solicitous than I am to avoid such an evil, and .great sacrifices have been made already with that view; but, since we are all on a footing as to the legal obligation to pay in specie, it seems rather unreasonable that one institution should be sacrificed to ward off the evil Irom all the rest; especially if a remedy can be found, not incompatible with the general interest. Our unredeemed circulation is about 150,009 dollars ; with our own means we can master 80 of that, with 70,000 dollars in specie more than we have, we can redeem our outstanding paper, which will enable us to receive in pay- ment the bills of the New-York banks as usual. Our debtors then will have no pretext for de- manding specie of your banks to enable them to make payment to purs ; and the paper ot the former w ill continue to be current through a large and populous district, over which our debtors are scattered. 19 The banks, being thus situated, there seems to be no alternative but for the directors of the Bridgeport Bank to submit to a sacrifice of its capital, or to adopt a system ot collection which in its consequences may seriously injure the banks in this city, unless they can on some terms obtain a loan of specie. If the gentlemen composing the general committee, in considera- tion of the peculiar situation of the respective banks, can find it expedient and compatible with the interest of the banks to advance on loan to Bridgeport Bank 70.000 dollars in spe- cie, the most perfect and ample security shall be given to the satisfaction of the committee for the return of the specie with an interest of six per cent whenever the banks in the city shall resume their specie payments; and the com- mittee may designate the person with whom it shall be placed, so that it be subject to redeem the bills of the bank as they shall be demanded, to be all paid out in the city ; and the transac- tion shall be strictly and entirely confidential ; trusting that this communication will be so considered whether approved or not; as the disclosure of its contents, if the proposition is rejected, might subject the bank to inconve- nience. By the terras proposed it will be perceived that when the specie can be of any use to the banks it will be at their command, and that in the mean time it will be producing them an in- terest. — The stipulation can provide that each bank shall receive its advance at the time it resumes its payments in specie. If you ' ill have the goodness to request the general committee of* the banks to take this subject into consideration, yon will greatly oblige Your respectful bumble servt. (Signed, Sic.) This reasonable proposition, however, was unnoticed, and the directors were left lo re- gret the generous confidence w hich had sur- rendered their means, instead of imitating the example of the more eastern institutions, in withdrawing all funds, in gold and silver, before payments were suspended. They are now disabled to issue paper or conduct the business of the institution— compelled to forego their emoluments and to withhold from merchants in the vicinity, their ordi- nary accommodations, and subjected to un- reasonable losses and perpetual vexations. It will result from this simple statement of facts, that the Bridgeport bank is a most meritorious creditor. Palpable is the injus- tice which it suffers. We will now attend to another consideration, namely, whether its preliminary measures have been just and honourable. The address made in July last by several banks in Connecticut, occasioned the an- swer we have seen; which assumed a sort of legislative independence, and seemed (c intimate that the measure was intrusive. Though respectful, it gave no definib en- couragement whatever to the applicants. We mention the address in this place, as the first of those measures which bad a direct view to such an arrangement with the banks as might avoid the necessity of coercion. But in October last, Isaac Bronson, Ksq* the president of the Bridgeport bank, who was deeply interested as a stockholder and bore a principal share in the privations and losses it sustained — -whose individual sacri- fices had been very great, and who was subjected to a constant loss of interest on a large amount of their bills, which had been taken at par for specie, or in payment of debts incurred by the loan of Specie, made a claim on the banks, accompanied with three propositions, cither of which he de- clared would be satisfactory, if accepted. They were presented in writing through bis attorney. Of these the following is a transcript. I. “ To allow sis, or even nine months, 44 for the payment of this demand on the 44 transfer of stock to trustees to be agreed 44 on, to be sold if not then paid. II. “ To accept a stipulation on their 44 part to reduce the loans of the banks at 44 the rate of irvo per cent, per month , to be 44 persevered in, until it shall result in aa 44 ability to pay, with a like transfer of “ stock, to be sold only in case this stipula- 44 tion be violated — the interest to be paid “ monthly, and the principal whenever 44 (hey shall be able to resume specie pay- 44 ments generally. III. 44 To accept a stipulation, that no “ dividends shall be made until this demand 44 be satisfied, the interest to be paid month- 44 lv, and stock to be transferred, in like 44 manner, as a pledge for an adherence to 44 this stipulation, but not to be sold so long 44 as it shall be observed with good faith.” It is in the first place observable, that those propositions were made m e than a year after specie payments were suspended, and nearly eight months after reasonable efforts had been made to get redid a y a loan in the manner already stated. T. de as they were, had they required loe ns-tcil payment of specie, accord our to the veer of the contract on every bilk it might hve been said that due regard was not bad tfo the convenience of the institutions. Had time been given only on condition of pay- ing arrearages of interest, it would hav* 28 seemed a reasonable exaction ; For the city j banks, in the resolutions adopted in August, | 1814, expressly stipulated to pay interest | to each other , but wholly overlooked the meritorious claims of other institutions. The first proposition, authorises nine months forbearance, and merely exacts a i pledge to secure payment at that period. The two others were not more favourable to the party, than to every other creditor, and in that respect, were grounded, not only on fairness, but generosity. They left the banks to pursue the courses suggested, just as long as their own interests and discretion might prescribe. The abate- ment of discounts, if adopted, would be | so gradual, as to produce the smallest evil possible from a measure of that character; and the well known means of abreviating the period, which I have al- ready mentioned, would leave it in the power of the banks to make the pressure so light as to be hardly perceptible at all. The sentiment so uniformly declared, in all their resolutions, that a decrease of mer- cantile discounts was indispensable, seemed to make that a necessary article in the pro- posals, though it was known and insisted that a sale of their stock would render such decrease unnecessary. All the hazard of procrastination, from the very small ratio ol the abatement, was to he encountered by the claimants, while the election of that measure, in preference to the others which were submitted, or in preference to selling their stock, must rest solely with the banks themselves. It they had the regard which they professed for the mercantile interests ot the city, and considered them endanger- ed by the two per cent abatement of dis- counts, the third proposition relieved them from all painful severities of that sort, while it was enforced by their love of justice, and would evince the sincerity of their profes sioris. It is not, indeed, to be doubted, if any confidence is to be placed in the most respectable asseverations, that of those two proposals, the last would have been prefer- red by the banks. The pursuance of it must have inevitably resulted, in an ability to satisfy, not only this demand, but the claims of their creditors in general. The mere suspension of dividends is not the loss of them, and their application to the fulfil- j men t of positive engagements, is neither I nor unjust. We wish the public to i subject these proposals to the severest scru- 1 imy, and they will find in them, a mode- j ration hardly to be expected from a deeply injured party, as well as a due regard to the interests and convenience of the mer- cantile community, and even of the banks themselves. It was on many accounts rea- sonable that pledges should he exacted. In a body, composed of several independent corporations, and they, again, of numerous individuals ; corporations already subject to all the obligations of mere promise, and liable to legal coercion directed by gentle- men, of honourable character indeed, but subject to the changes of elective office; the same dependence on assurances is ne- ver exacted, as in cases of private and in- dividual responsibility. But for this prin- ciple, we never should have witnessed the sevenfold increase of the arrearages of the debtor banks under the strongest assurances of their reduction, nor the consequent con- tinuance of the piesent unhappy cause. Societies consider their obligations as arti- ficial, and are less sensible than individuals to the refinements of casuistry. No hard- ship could be involved in placing stock in the hands of trustees, wdth power to do summary justice, without the delay, ex- pense, and embarrassment of legal reme- dies. It would be no less productive in their hands, than in the possession of the several corporations. The trust might have been confided to the general committee, with the sole power, under either of the two last prohibitions, of deciding on the fidelity of the banks, or of simply selling the stock at the end of six or nine months, as men- tioned in the first. If any bank had not stock to pledge, it must have been a credi- tor bank of course, and in such case the claimant consented to substitute the bills of its debtors. We trust, the public are now satisfied, that the suits in question were not part of a system of speculation on bank paper, a spe- culation rendered impossible by the nature of the propositions , but were grounded on most righteous and honourable claims ; and that every reasonable attempt was made before their commencement, to prevent a resort to the la" s of the land. If it was admissible to make pronosals at all, can we conceive of any, more temperate or fair than were made on this occasion? If injustice must he patiently borne, 'merely for the profit of those who inflict it, of what use are the i laws and institutions! of civil society ? Is 1 the complaint reasonable, that these suits ! tend to curtail bank discounts, when the 21 consent of the banks to suspend their own dividends until they had done justice to creditors, would have superseded their use ? creditors too, whose only error, was c#nh- denee in those who resist their claims ? So far otherwise, that the more liberal the discounts, within any prudent limits, the greater the means which such a measure •would afford, and the stronger the tempta- tion to apply them. If the emolument of banking operations were consecrated to those creditors who own a large portion of the capitals employed, and who have hitherto been denied a share in the pro- ducts ; the continued zeal of the banks for mercantile accommodations, would be no less honourable than disinterested and just. The public will now have perceived how destitute of foundation were the assertions, that Mr. Bronson had combined with an “ eastern faction ” to embarrass the banks, by drawing off their specie 5 and that the / %