their irredeemable bills even after the termination of the war; and a circulating medium, altogether without value in other countries, became the currency of the Union, with the exception of the Eastern States. By the large issues of the bai.ks that had suspended payment, the circulating medium had been so much augmented, that it exceeded the wants of the community and fell greatly in value, the whole currency in 1816, being estimated at $110,000,000, when $45,000,000, were all that was needed. This evil was still further aggravated by the different values of this currency in the several States being in some five, in some ten, in others twenty per cent below par. A debtor, therefore, in paying a debt contracted before the general depreciation of the currency, would, in that state of affairs, pay less value than he agreed to pay; and a debtor by moving from the eastern to the southern and western face of the constitution, would have been inconsistent with the duty of Congress. A remedy was necessary. Congress could no longer regulate the value of the currency by declaring, that current coin in silver and gold should be of a specified weight and purity. A paper was substituted in the place of a metallic currency, and it was essential to obtain a control over the local banks, and to bring their issues within proper limits. This might have been done by positive enactment, or by imposing a stamp duty on bank notes; but in the then existing state of the currency, it was deemed hazardous to resort to direct interference. It was also proposed to remedy the evil by investing the receiving officers of the revenue with the power of discriminating between the notes of the several banks. This addition to the power and influence of the revenue offices was wisely deemed expedient as augmenting too directly the powers of the treasury department; and the short experiment, which was made of this mode of controlling the local banks, resulted in bringing into the treasury more than a million of dollars, of what were denominated unavailable funds, consisting of the notes of broken banks. States would, in effect, diminish the amount of his indebtedness twenty per cent. Nor was this all. By the federal constitution it was provided, that all duties, imposts and excises, should be uniform throughout the United States. So long, however, as bank notes were received by the revenue officers at Boston, New The only mode remaining conYork, and Baltimore, the impor-sisted in establishing a United ter at Baltimore during this peri-States Bank, with capital suffiod paid one fifth, and at Newcient to control the local banks, York one tenth less than at Bos-which should by degrees compel ton, where bank notes were equivalent to specie. To permit the longer continuance of this state of things in the them to reduce their issues to an amount proportionate to their means, and thus bring the paper currency to the par of silver and gold. This mode was adopted, and the present United States Bank was chartered in 1816, for twenty years, with a capital of $35,000,000, to which the federal government subscribed one fifth. The notes of this bank and its branches, were made receivable for any debt due to the United States, and its capital and solidity soon gave a currency to its notes, to the exclusion of those local banks, that did not redeem their paper in specie. They were immediately compelled to reduce their issues with a view to the resumption of specie payments, and within three years after the opening of the United States bank, the currency of the Union was reduced from $110,000,000, to $45,000,000, and made equivalent to gold and silver. The local banks found the United States Bank notes were preferred, and they were compelled to furnish as good a currency, in order to preserve those customers who were worth having. Since this restoration of the currency to a healthy state, it has been kept so, by the constant action of the national bank upon all local banks, evincing a disposition to depart from the true rules of banking. Occasional deviations have indeed taken place, as in Tennessee and Kentucky, where the Legislatures undertook to create capital by pledging the public credit, and to force an unnatural quantity of bank notes into circulation. These attempts resulted, as was predicted, in the bankruptcy of the banks, and in the general dis tress of that part of the country. In Kentucky, indeed, the legislature sought to alleviate the distress flowing from this policy, by relief and tender laws. But this only aggravated the evil, and finally produced a contest between the friends of law and order, and the partizans of the 'relief system,' that for violence and acrimony has been seldom witnessed in the United States. The relief and tender laws were declared unconstitutional by the State Court of Appeal, and their advocates having obtained possession of the Legislature, abolished the court and constituted a new court in its place. The old court, however, refused to yield, and being sustained by the sound part of society, finally prevailed in the contest; and after a conflict of six years, the legislative and executive departments were rescued from the hands of the relief party, and law and justice, which for a short time had been driven from the judgment-seat, resummed their sway over the State of Kentucky. The history of the banking institutions of that State, affords a striking illustration of the mischiefs resulting from any interference of a State government with the currency, and furnishes a complete demonstration of the wisdom of the federal constitution, in vesting the whole power over this subject in the general government. During the short period that elapsed between the first usurpation on the part of Kentucky upon this prerogative of Congress, and the termination of the contest, the currency of the State was depreciated; private and public credit destroyed; a bankruptcy almost universal produced; the principles of sound morality and civil order disregarded; the most valuable institutions of the State temporarily overthrown; and the community brought to the brink of civil war and anarchy. The right side having triumphed, means were taken to redeem this depreciated currency; and the notes of the United States Bank furnishing a currency that was universally preferred, the paper of the Commonwealth bank was driven from circulation, and gradually redeemed and destroyed. To prevent the recurrence of such a state of things in other States, is one of the objects of a national bank. In a country like this, the temptation to excessive Issues of bank paper is too strong to be resisted by banking institutions in the new States, unless they are checked by a vigilant superintendence, beyond the effect of local influence. The United States at the present moment furnish a complete epitome of the progress of civilization in a wilderness, and until the whole continent shall be occupied, this republic will always possess within its limits all the varieties of human society, in its advancement from the savage to the civilized state. On the Atlantic coast are cities and States which, in commerce, in capital, and in all the productions of wealth and skill, are not far, if at all, behind those of Europe. Advancing through New York and Pennsylvania, a traveller enters the New States beyond the Alleghanies, and although Cincinnati, Lexington, Louisville and Nashville are inferior to but few cities on the sea-coast, still the population is not so dense, and the country shows fewer signs of cultivation. The roads become worse, the towns smaller, until in the far west he comes upon the log hut, the half cleared field, and finally reaches the ultima thule of civilization, in discovering the trapper's tent not far distant from the Indian's wigwam. The effect of this condition of society, upon the internal commerce of the country, is striking and characteristic. In settling in the interior, whether in one or more families, the whites take with them little more than their clothing, furniture, agricultural implements, and a small stock of domestic cattle. In a few years the fertility of the soil enables them to send surplus produce, in exchange for European or West India productions to the stores of the country traders in some neighboring town, who in their turn transport it to the sea-coast for home consumption or exportation. In this manner an active trade is maintained between the sea-ports and the interior, and as the new settlers stand in actual need of many foreign articles, which they require on credit, to be paid for from the next year's crop, it follows, that the interior is invariably in debt to the merchants on the sea-board. These debts, however, they are enabled to discharge through the great fertility of their soil, and the advance of their property in consequence of the improvement of the country; and contrary to an old maxim, they grow rich, although they continue in debt- that is, they are daily augmenting the value of their farms, and each year they are enabled to purchase some additional comfort or luxury, which they do not hesitate to buy on credit, because they are certain of being able to pay for it before the lapse of another year. The invariable course of business between old and new countries- always showing a balance in favor of the former, and bringing the latter in debt-demonstrates, that this habit is beyond the reach of legislation. The truth is, that new countries are deficient in capital. They are in want of all the luxuries and many of the necessaries, to which the emigrants were accustomed at home. They, however, advance in wealth and population faster than older states, and for the advance of capital or the credit, which they require, they are able and willing to pay. Thus both parties are satisfied with their mutual relations of debtor and creditor, and find their respective interests promoted by the proper adjustment of these relations. The same principle is equally applicable, to the capital required in the new States for a circulating medium. If they can borrow at a fair rate of interest from the Atlantic cities, or from Europe, capital for this purpose, it is as advantageous a loan as if procured for any other object. It enables them to appropriate an equal amount of It capital to the clearing of new towns, building better houses, improving the roads, and generally promoting the prosperity of that portion of the Union. obviates the necessity, that so often impels them to excessive issues, on a limited capital of their own, and thus lessens the danger of a derangement of the currency. This object was effectually attained in the establishment of the United States Bank. Founded upon real capital, which was large enough for its proposed ends, it furnished through its branches a sound paper currency to these new States; and by the supervising care of the mother bank, those branches were sufficiently guarded against the tendency to over issues. By the same agency, the local banks were compelled to conduct their business with prudence and to keep their circulation within proper limits. Whenever their issues were too much augmented, the national bank interposed a direct check, in demanding the redemption of their paper; and an indirect check was also given by the superior credit of its bills, which are receivable in all places in payment of duties. Since the establishment of this bank, consequently, the business of domestic exchange has been transacted upon the basis of a sound currency, and the rate of exchange, between the western and the middle States, has been reduced to one fifth of its price before that event. It was not, however, in this manner alone that the rate of exchange was lowered. It was equalized by the obligation assumed by the federal government, to receive the notes of the United States in payment of duties. The revenue paid to the United States in each year amounts to about $26,000,000, of which about one half is receivable at the Custom House in New York. The exchange being always in favor of that city, whenever it became too high, remittances were made by the western merchants in Branch notes to their New York creditors, who used those notes in paying their custom house bonds. The exchange was thus equalized without any expense to the community, and this operation has been felt through all the branches of the domestic exchange business. Its effect has been so great, that exchange between the different parts of the Union has been generally kept below the expense of transporting the specie, and the branch notes have seldom been at a greater discount, than one fourth per cent in any part of the country. As an equivalent for these advantages, the national bank, besides a bonus paid to the government when the charter was granted, has collected the public revenue and transported it without expense to any part of the Union, where it was wanted. It has also disbursed it, and thus formed an efficient arm of the treasury department. During the time it has been in existence, it has performed these duties without any expense to the government, and has saved it from all losses from the insolvency of State banks. As an agent of the treasury department in collecting and disbursing the revenue, it has proved itself efficient and eminently useful; and in that point of view, the establishment of the United States Bank by Congress, has been vindicated as one of the means necessary and proper to carry into effect the powers constitutionally vested in the federal government. In its operation upon the federal currency of the country, however, its constitutionality is still more unquestionable. It is through a national bank alone, that Congress can exercise that control over the monetary system of the Union, that is vested in it by the federal compact. In order therefore to regulate the currency, and to render the taxes and duties imposed by Congress uniform throughout the United States, it is absolutely necessary, that a national bank should be established with sufficient capital to control the State banks, and to compel them to keep their notes equivalent to specie. It can in this manner only discharge that duty, which for wise and salutary ends, was exclusively vested in Congress at the formation of the government. In performing these highly responsible duties, the United States Bank has necessarily gone counter to the wishes of various classes of the community. By compelling the local banks to control their issues, it has diminished the dividends of the stockholders; by reducing the rate of domestic exchange, it has lessened the profits of the brokers and capitalists, carrying on that branch of business; and by in |