law, would avoid all the objections to the new system, and secure to the State a large revenue from the surplus profits, which such a bank would make in furnishing the whole circulation for the State. I submit the plan, as originally written twelve years ago. After this plan was submitted to Mr. Clay, several of its features were adopted in the revised charter of the Bank of England, whose bills have been substituted for those of private bankers, which formerly filled nearly all the channels of circulation throughout the kingdom.

The General Government has tacitly conceded to the States the right to create banks of issue, and thereby lost one of its chief attributes of a general sovereignity. In permitting this, it has resigned one of the principal powers of creating and controlling the currency of the country. The resumption of this attribute of its sovereignity is essential to the future stability and uniformity of the circulating medium. Whether this power can be retrieved by Congress is a question which public opinion must decide. The season may not be a proper one to try it, but it is all important that it should be effected, and I believe it can be accomplished in the following manner :—

Let Congress create a bank of the United States, with branches at every large commercial point of trade, giving to it the exclusive right to issue notes for circulation, and confine its business to the collection and custody of the public funds, and to dealing with the State and local banks. Restrict it from all business with individuals, or companies, other than chartered banks or banks organized under some State law, either in the way of deposits or discounts. It should be the duty and right of this general institution to furnish the whole paper currency of the country. Its notes should be issued in payment of public expenditures, received in payment of public dues, and loaned to the State and local banks at a rate of interest not exceeding 3 per cent per annum, upon such securities as the directors of the National Bank, or its branches, should approve, and under such general rules for their redemption and final return to the principal bank as they might mutually agree upon. These notes the local banks would use instead of, and in the same manner as they now do, their own, or as the free banks of New York do those which they procure from the State controller. The notes should be made redeemable either at the local bank from which they were circulated, or at the branch of the United States Bank from which they were first issued to the local bank. And the principal national or mother bank should be responsible for the final redemption of all the notes issued, in case of the failure of the local bank borrowing them, and the United States Branch issuing them, to redeem them promptly in specie. The notes issued by the National Bank itself, in payment of government dues, would be received by the government in its revenues, and would be redeemable at all its branches, and form a national currency of as universal and uniform value as gold or silver. The State or local banks borrowing the notes of the National Bank, or its branches, would hypothecate for them public stocks, bonds, and mortgages, as is done with the New York controller, or such other undoubted and available security as the National Bank should approve, she being ultimately liable for their redemption, might be trusted to judge of the value and availability of the pledge.

A bank thus organized might be created with a large or small capital. All the capital it would absolutely need would be sufficient to give the

public confidence in its ability to redeem finally its notes, in case of the failure of the security pledged to it by the local banks for the loan of its bills. A small capital would oblige it to keep itself and all other banks under watchful and rigid restraint; a large capital might be of great public service to enable it to grant indulgencies, and to aid local banks in times of severe pressure, and seasons of general commercial embarrassment. But the necessity which a small capital would impose upon the directors to manage its affairs with great caution and prudence, compelling them to insist on a strict and rigid performance of their contracts by the local banks, making them furnish promptly, or in advance, funds to redeem the notes loaned to each one of them, as those notes were presented to the National Bank and its branches for redemption, would correct the greatest evil of a paper currency-its tendency to become redundant-and confer benefits upon the public by giving uniformity and stability to our circulating medium, which would outweigh all the contingent advantages of a large capital.

The principal excellence of a paper medium is to have the amount supplied exactly adapted to the sum required by the necessary exchanges of the community; that its tendency, in the operations of trade, to return to the source of its issue, should be free and unchecked, nor countervailed as has been heretofore the case under our old system, by strong efforts to press it back upon the community, thus disturbing its natural current, and causing, in a great degree, the frequent inflations and derangements of the currency. Under the system proposed, the bank redeeming it would have little interest to return it into circulation.

As the principal portion of the profits of a National Bank thus constituted would be derived from its exclusive privilege of furnishing the paper circulating medium of a country-a right it would acquire from the public without an equivalent-it would be proper that a good portion of them should come into the public coffers, either in the form of an annual bonus, or the payment into the treasury of a portion of its profits above a certain per centum, or by making the government a large stockholder to the amount of one-half to two-thirds of its whole stock, and thus securing the profit derived from the people, in the shape of dividends to the government. But private interest should be permitted to exercise the principal control in its management. Government fiscalities, managed by public officers, are dangerous and unprofitable institutions. Government should have no other than a general supervisory control over it, and that should be confided principally to the legislative department.

Between such a national institution and the local banks, a connection something like the following would be formed:-The local bank wanting bills for circulation, would apply to the United States Bank for a loan of its notes to an amount which the State bank could use to advantage, which the National Bank would furnish on a pledge by the former of public stock, bonds, and mortgages, or, if it deemed proper, on a discount of bills of exchange or negotiable notes, or such other securities as the National Bank should deem perfectly secure and readily available, charging therefor, say 2 per cent per annum, with stipulations similar, perhaps, to those existing between the Suffolk Bank in Boston and the other banks of New England for the redemption of their notes. This arrangement, so simple in its plan, has given a uniformity and stability to the circulating medium of that section of the country unknown elsewhere, and made ex

change and notes of every bank of exact uniform value in every town within the borders of the five States. The bills of the remotest bank in Maine or Vermont are of equal value in the most southern town of Connecticut as the bills of its own village bank.

The notes of the National Bank loaned or issued to a particular local bank would be made payable to the order of such bank, so as to be easily distinguished from notes issued to other local banks. The United States Bank, or the branch making the loan, would stipulate with the local bank that the latter should keep on deposit, or furnish the National Bank, from day to day, funds to redeem whatever amount of notes payable to the order of such local bank, as should be presented to the National Bank daily for redemption; and the bills thus redeemed by funds furnished by the local bank should be returned to the local bank, if required, for re-issue and use; or, if not again taken, the amount would be credited in the account of the securities originally taken for the loan. The holder of the bank note would have the option to demand payment either of the branch of the National Bank loaning it, or the local bank issuing it. If redeemed by the local bank she could re-issue it, or send it to the National Bank and have it credited in the account of the original loan, and take up the security given for it.

At each branch of the United States Bank an account would be opened with each local bank dealing at that branch, in which the notes issued to each local bank and redeemed for it would be charged, and the funds received from it credited. And should there be, occasionally, a balance against the local bank, interest should be charged on the balance at the rate of 4 or 5 per cent in addition to the interest of 2 per cent on the original loan of the notes. Temporary balances would be constantly in favor and against the local banks, and the capital of the National Bank, and the funds derived from the surplus deposits of the public money, might be employed, at an interest of 6 or 7 per cent, in making good the temporary deficits of those banks which might require a few days' indulgence in meeting their circulation. In certain cases the balances might be permitted to increase, by stipulation, to an amount sufficient to employ the whole capital of the National Bank, or the public funds in its possession. In cases of severe pecuniary pressure in one part of the country, or for a short period throughout the whole country, this discretionary power might be exercised for the public benefit. Nearly the whole of the capital of the Suffolk Bank in Boston is thus absorbed by balances against its correspondents. It is found to be the most secure and profitable investments the bank can make, as in the proposed national institution it would be a debt against the State banks, guarantied by the securities originally deposited, and instantly available, being subject to call, by draft on the debtor at all times.

The advantages to the public of an organization of our banking institutions upon this plan appear to me so numerous, that I fear I may tire your patience by an attempt to enumerate them in detail. I will briefly state the most prominent. Congress having the right to investigate the affairs of the National Bank, and exercising an influence or a direct control in its management through the government directors, who should be elected by Congress, would have the whole subject of the currency under its inspection and direction, and would be guided in its legislation upon the subject by the certain data gathered in this reservoir of the currency of the

whole country, where its daily, weekly, monthly, and annual fluctuations could be marked, like the rise and fall of tides in a gauge in a harbor.

The security of the medium, thus doubly guarantied by the United States Bank issuing it, and the local bank circulating it, would be placed beyond all hazards. We could derive from the circulation of the mother bank, whose issues would be made in the payment of government expenditures, and which would be redeemed by her through all her branches in every part of the country in specie, or be returned to her in the payment of the public revenue, that national, universal curreucy, of uniform value in every district of the country, which was once afforded by the old United States Bank; while we should obtain a local circulation of greater security and uniformity than we have ever had. We should extend to the utmost corners of our wide empire what is of vast consequence to the whole, a currency not only equally secure and uniform, but one equally full and abundant in every district, giving equal stimulus to labor throughout all its parts, and making interest uniform by making the supply everywhere equal to the demand for capital. A national currency thus based, and allowed free circulation, would expand and contract itself with the regular pulses of Commerce.

Under an organization like this of our banks, we could extend to the the whole country, however wide and extended it may become, from the shores of the Pacific to the Atlantic, the benefits of the excellent system which has prevailed for the last twenty years in New England, where notes of the remotest bank in Maine, embraced within the Suffolk Bank system, are in Hartford, or any other town, of equal value with the notes of its own bank. For the Hartford Bank eagerly gathers up the Maine and all other bank notes, and sends them to Boston, where they are passed to its credit on the books of the Suffolk Bank, and are an equivalent, to their amount, in specie, in redeeming its own notes; and when thus received by the Suffolk Bank the various other banks are charged with their notes sent in by the Hartford Bank. The Maine bank does the same with the Hartford and other banks. Each bank, throughout the circuit of this system, is gathering up the notes of all the other banks and sending them to Boston, and the whole circulation of this section of the Union is thus tending daily to one focus, its great central commercial mart. A perfect system of exchanges is thus effected, and the currency is kept in a healthful state, and not a dollar can be kept afloat but what the business of the community requires for its exchanges, for each bank is striving to pick up the notes of all others with which to redeem its own. So in the plan proposed, every commercial point where a branch of the National Bank should be located, would become also the center of exchanges for the currency of the country embraced within the circuit of its trade. That portion of the bank bills required for local purposes, would perform a series of exchanges around the local bank circulating them, and would be finally returned to it for redemption or in payments at its own counter; while those required for more distant operations would pass beyond the sphere of the local bank and find their way to the United States Branch Bank from which they were first issued, to be redeemed there, and again returned to the local bank that borrowed them, again to be issued.

Not only would the bills be current and equivalent to specie in the vicinity of the branch issuing them, and the local bank to which they were made payable, but the bills circulated by all the local banks, deriving their

circulation from the same United States Branch Bank, would be equivalent to specie in any section of the region embraced by these local banks, for each one would be eager to collect the bills from all the others to remit to the issuing branch bank to redeem its own notes as they were presented there, in the same way that the Hartford and Maine banks are engaged in collecting each other's bills for remittances to Boston, to be mutually exchanged, one paying for the other, the Suffolk Bank keeping the accounts between them, and with them and the public. And as all trade is but a system of barter, in which every community buys as much as it sells, the exchanges between one and the other are very nearly equal, and the debts of one are an offset to those of the other. They require but a common focus where these accounts can be settled. Boston is the financial center of New England-Philadelphia was of the United StatesParis is of continental Europe-London is of the world-New York is now the financial focus of this country, and soon will be of the world.

While we secured this perfect uniformity of currency through large districts of country, connected by intercourse and trade, we should attain another important object, which the Boston system does not secure to the community. The Suffolk Bank, the great depository of all other New England banks, does not guaranty the bills of any bank beyond the amount of funds in its possession. When one of the local banks fails in New England, the community endure the loss, and the deposit bank, whose countenance gave the bills of the defaulting bank circulation and credit, is made secure by the funds in possession. It is the first to discover the weakness of the insolvent bank, and it takes timely precaution to save itself from loss. Having no interest in the success of the local banks, and owing no obligation to the community as a public servant to take care of the public interests, it may often, in the wanton or heedless exercise of the arbitrary power which its position gives it, or to subserve some temporary interests of its own, crush a weak institution which it might by its aid and fostering care have saved from failure, and the public from loss. But in our contemplated institution, the depository bank would itself be the payer of the whole circulation of an unfortunate local bank, for it would be its own bills issued to the State Bank that would have to be redeemed.

Another advantage; the local banks need not restrict themselves to the use of one particular branch of the National Bank, but each one might furnish a currency suited to the wants of each class of its customers. For instance, the local banks of Kentucky and Indiana might procure a portion of their bills from the National Branch Bank in New York, a portion from the National Bank at New Orleans, and a portion from the home branch; and the bills from the New York bank they would pay to those wanting Eastern funds, to those wanting Southern funds they would pay bills of the New Orleans branch, and reserve the bills of the home branch for home circulation. By remitting their bills of exchange on New York as they were purchased to the National Branch in that city for collection, an advance might be obtained on them in the notes of that branch, at a rate of interest of 2 or 3 per cent, which notes could be used in discounting other bills, and these bills of exchange would furnish the means to redeem the bank notes obtained on them before the bank notes would reach, by the circuits of trade, the point of their redemption at the branch in New York. Such an arrangement would render the unmatured paper held by the local banks, drawn on time and on distant points available to