Table II.-continued.

N. B. The name of this Bank was altered in 1837 to the "Glasgow and Ship Bank," when it was joined to the private Bank Carrick, Brown, & Co., or the Ship Bank.

226

774

785

Note. No. 1. being established by Act of Parliament, and Nos. 2, 3, 4 and 5. incorporated by Royal Charter, do not require to lodge List of Partners, in pursuance of the Act 7 Geo. 4. c. 67. The date of establishments of Nos. 6, 7, 8, 9, 10, 11, 12, 13, 14, 15 and 16. uot ascertained, but licensed to issue Notes in the year 1808, when the Licence Duties were first imposed.

3 A Return of Joint Stock Banks existing in IRELAND on the 5th day of January, 1839; specifying the Date of the establishment of each Bank, the Number and situation of its Branches, and the Number of Partners in each Bank, in the years 1836, 1837, and 1838.

II.-An Account of the aggregate Number of Notes circulated in England and Wales by Private Banks, and by Joint-Stock Banks and their Branches, distinguishing Private from Joint-Stock Banks. From Returns directed by 3 and 4 Will. c. 83.

BANKS (AMERICAN). The system of banking in America has recently attracted a great deal of attention in this country; and it certainly deserves to be carefully studied and meditated, were it only for the incontestible evidence which it affords that, how flourishing soever in other respects, a country cursed with a vicious banking system may be every now and then involved in the greatest difficulties, and reduced almost to a state of bankruptcy. Considering the peculiarly favourable circumstances under which the United States are placed, the boundless extent of their fertile and unoccupied lands, the lightness of their public burdens, and the intelligence, enterprise, and economy of the people, it might be presumed that distress and bankruptcy would be all but unknown in the Union, and that she would-be exempted from those revulsions which so seriously affect less favourably situated communities. But the very reverse of all this is the fact: discredit and bankruptcy are incomparably more prevalent in America than in any European country; and all sorts of industrious undertakings and monied fortunes are infinitely more secure in Russia, and even in Turkey, than in the United States! This anomalous and apparently inexplicable state of things is entirely a consequence of the American banking system, which seems to combine within itself everything that can make it an engine of unmixed evil. Had a committee of clever men been selected to devise means by which the public might be tempted to engage in all manner of absurd projects, and be most easily duped and swindled, we do not know that they could have hit upon anything half so likely to effect their object as the existing American banking system. It has no one redeeming quality about it, but is from beginning to end a compound of quackery and imposture. Our own banking system is bad enough certainly; but it is as superior to the American as can well be imagined. A radical reform of the latter, or, if that cannot be effected, its entire suppression, would be the greatest boon that can be conferred on the Union; and would be no slight advantage to every nation with which the Americans have any intercourse.

The American banks are all joint-stock associations. But instead of the partners being liable, as in England, for the whole amount of the debts of the banks, they are in general liable only for the amount of their shares, or for some fixed multiple thereof. It is needless to dwell on the temptation to commit fraud held out by this system, which has not a single countervailing advantage to recommend it. The worthlessness of the plan on which the banks are founded was evinced by the fact that, between 1811 and the 1st of May, 1830, no fewer than a hundred and sixty-five banks became altogether bankrupt, many of them paying only an insignificant dividend; and this exclusive of a much greater number that stopped for a while, and afterwards resumed payments. The wide-spread mischief resulting from such a state of things led to the devising of various complicated schemes for insuring the stability and prudent management of banks; but, as they all involve regulations which it is impossible to enforce, they are practically worse than useless. In Massachusetts, for example, it is provided that no bank for the issue of notes can go into operation in any way until at least half its capital stock be paid in gold and silver into the bank, and be actually existing in its coffers, and seen in them by inspectors appointed for that purpose; and the cashier of every bank is bound to make specific returns once a year of its debts and assets, on being required to do so by the secretary of state. But our readers need hardly be told that these elaborately contrived regulations are really good for nothing, unless it be to afford an easy mode of cheating and defrauding the public. Instances have occurred of banks having borrowed an amount of dollars equal to half their capital for a single day, and of such dollars having been examined by the inspectors appointed for that purpose, and reported by them, and sworn by a majority of the directors, to be the first instalment paid by the stockholders of the bank, and intended to remain in it.* We do not of course imagine that such disgraceful instances can be of common occurrence; but what is to be thought of a system which permits a company for the issue of paper-money, founded on such an abominable fraud, to enter on business with a sort of public attestation of its respectability? The publicity, tou, to which the American banks are subject is injurious rather than otherwise. Those who are so disposed may easily manufacture such returns as they think most suitable to their views; and the more respectable banks endeavour, for a month or two previously to * Gouge's Paper Money and Banking in the United States.

the period when they have to make their returns, to increase the amount of bullion in their coffers by temporary loans, and all manner of devices. The whole system is, in fact, bottomed on the most vicious principles. But it is unnecessary, after what has recently occurred, to insist further upon the gross and glaring defects of American banking. Perhaps no instance is to be found in the history of commerce of such a wanton over-issue of paper as took place in the United States in 1835 and 1836. The result was such as every man of sense must have anticipated. The revulsion to which it necessarily led, after producing a frightful extent of bankruptcy and suffering in all parts of the Union, compelled, in May, 1837, every bank within the States, without, we believe, a single exception, to suspend payments! In 1838, such of them as were not entirely swept off resumed specie payments; and in 1839, by far the larger number of them, with the bank of the United States at their head, again suspended payments!

The United States Bank is not merely, however, unable from temporary embarrassments to pay its notes in specie; it is entangled in more serious difficulties, and is believed by many to be substantially insolvent. If it be really in this predicament, it is what we did not anticipate. It was originally incorporated by Congress in 1816 for 20 years, and had a paid-up capital of 35,000,000 dollars, or of more than seven millions sterling. The question whether the charter should be renewed was debated with extraordinary vehemence in all parts of the Union. The late president, General Jackson, was violently opposed to the re-incorporation of the bank; and rejected a bill for that purpose that had been approved by both the other branches of the legislature. Ultimately, however, a majority of Congress came round to General Jackson's views, and the charter was definitively refused. The bank afterwards succeeded in obtaining a charter from the state of Pennsylvania. This, however, merely enables it to carry on business in that state, but it has since obtained leave from some of the other states to establish branches within their limits.

The embarrassments in which this institution has been involved are believed to have been mainly caused by the improvidence with which it has made advances on state stocks, the stocks of public companies, and such like securities. The extreme facility with which money, or rather what was called money, might be borrowed from the different banking establishments in America, in 1835 and 1836, created quite a mania for all sorts of joint stock and other speculative projects, such as banks, canals, railways, &c.; and this rage has been still farther promoted by the different state governments embarking deeply in the same sort of projects, and borrowing largely to carry them on. (See FUNDS, AMERICAN, in this Supp.) The bank of the United States is believed to have made very large advances on this sort of securities; and after the revulsion in America in 1836 and 1837, this bank and every other institution in the Union that had any stock of any kind to dispose of, sent it over to England, where the temptation of a high rate of interest made vast quantities be sold in 1837 and 1838. But notwithstanding the proverbial gullibility of John Bull, and his determination to confide in every thing of which he knows little or nothing, the market here was beginning to be overloaded with American securities, and the collision that took place in Maine, in March, 1839, put a complete stop to their further sale. The agent of the U. States Bank is understood, when this occurrence took place, to have had a very large amount of such securities on his hands; and he has since had the greatest difficulty in raising money upon them, except at a great sacrifice.

The bank of the United States is also believed to have been materially injured by the advances she made to the holders of cotton. It has been alleged, too, that these advances were made, not so much in the view of supporting credit in America as of procuring consignments for a particular house in Liverpool. But it is hardly possible to suppose that such should have been the case, or that an institution with 7,000,000l. of capital should have been perverted from its legitimate purpose, and brought into jeopardy for so paltry and disgraceful an object. Since the stoppage of the U. States Bank the following statement has appeared: Statement of the Affairs of the Bank of the United States in Pennsylvania, Oct. 1. 1839.