MONTHLY FINANCIAL AND COMMERCIAL ARTICLE. It is with regret that with each number we have to announce some new evidence of mercantile embarrassment and of national discredit, growing out of the progressive movement in the financial revolution that has been going forward throughout the commercial world during the past few years. Such, however, must continue to be the case, probably for months to come, until the ruins of the paper fabric, which had reached such colossal dimensions, shall have been cleared away. Since our last, great results have been produced in all parts of the country in the great struggle to throw off the irredeemable paper system. In spite of individual forbearance, and legislative countenance, the irredeemable policy of the suspended banks has broken down by its own weight, and several of the State governments have been forced to fix a day for the resumption of their banks. In others, the banks have utterly failed, and are going into liquidation, leaving the constitutional currency to find its way again into the channels of trade. The position of affairs in the suspended districts may be summed up as follows:Ohio, resumed March 4th, according to law. Philadelphia, resumed. Maryland, resumption required May 1st. S. Carolina, " Michigan, banks ceased to exist. Illinois, one bank only doing business. Alabama, Kentucky, and Tennessee, no movement. Virginia will probably follow Maryland. In Philadelphia four banks failed under the operation of resumption, as follows: Penn Township,... Mechanics,.. Capital. ..467,574 .1,600,000 Manufacturers and Mechanics,.. Capital. ..401.300 250.000 At New Orleans the operation of the new law of the State, placing restrictions on the banks, caused the stoppage of five of the worst, as follows: Five others have been proceeded against whose capitals amount to..... Total capitals closed and proceeded against... This clearly indicates that within the year, all banks doing business will be ⚫obliged to pay specie-the discredit of insolvency working its own cure. This process cannot, however, be gone through with without carrying in its train great distress, numerous failures and disasters among all business in any way connected with or dependant upon bank credits. The necessity to curtail as much as possible in all parts of the country, in order to resume, is an absolute bar to the extension of any accommodation on the part of the banks of the interior to dealAt the same time, from a combination of causes, those dealers have been unable to dispose of their fall purchases of goods, consequently they are deprived of the means of making their remittances. It has, therefore, come to be true that a large proportion of the collection notes of the banks have been protested for non-payment even in this State. The mildness of the weather during the winter has caused a great diminution in the consumption of woollen goods, while the anticipated damage to the crops from the same cause, and the low prices which those crops command, have decreased the inclination to buy more than necessity ers. requires. The consequence is, that the shop dealers of the interior find spring advancing upon them and their city obligations falling due, while yet their stocks of goods are scarcely diminished. In this emergency, the banks can afford them no relief, therefore they are not only unable to meet their fall purchases, but they have no means of making new ones for the summer. This state of things is beginning to be felt in the city; and although the discounted notes of our banks have been met hitherto with a remarkable promptitude, it cannot continue if our merchants are deprived of their remittances from the country. With this pros pect of the trade before them, the importers have very large stocks of goods on hand, imported under the impression, that with the spring, trade would revive, and alsc goods sent out on foreign account by manufacturers, in order to raise money on them at all hazards. The extent to which this exportation from England to this and other countries has been carried on, in order to raise money to meet the present distress of the manufacturers, may be seen in the following figures up to January, 1842: Decrease of consumption, 3000 bales per week..... In the same period the exports have increased as follows: bales. .1,274,729 1,118,717 ..156,012 yds. .25,077,132 ..65,106,416 The decrease in the raw material is about 9 per cent., consequently the large increase in exports consists mostly of those goods intended for the home trade, but which from the prevailing distress were forced abroad for sale, to meet the demand for money which the manufacturers could not procure at home. The great cause of the decreased sales in England, was owing to the increased price of bread, caused by the iniquitous protective system, and the decreased demand for labor, which always attends high prices of food. The following figures will show the enormous decrease in the power to purchase goods which a rise in bread creates. The average price of bread for six years was as follows: This enormous sum, amounting to $600,000,000, was diverted from the purchase of goods by the simple rise in wheat. The consequence was, of course, the necessity to send the goods abroad for sale at any price. The proportion which came to this country is seen in the fact, that up to Oct. 1841, the imports exceeded those of the former year $21,000,000, and from Oct. to Feb. 1842, the increase has been in a greater ratio. These goods are now filling the stores of our importers and jobbers at a moment when the wholesome contraction of the banking system forbids the sale of more than the consumers have present means of paying for. It was in view of the facts here pointed out, that in our last article we alluded to the prevailing apprehensions of fresh disasters during the ensuing 60 days. Nothing has transpired during the month to relieve the disgrace which hangs over the credit of our national and State faith; on the contrary, fresh causes of humiliation have arisen. In former numbers we have alluded to the dishonor of the drafts of the government upon its own agents, and those authorized from its creditors upon the proper departments. The past month has, however, been marked by the dishonor of the Treasury notes of the government, that have for five years well supplied the temporary deficiencies of the Treasury. The first issues of the notes were authorized in October, 1837, and have up to the present year, for reasons explained in our March number, cheaply and advantageously answered the purpose for which they were created. The following is a table of the amounts outstanding on the 1st of each month, from 1837, to the first of March, 1842: TREASURY NOTES OUTSTANDING ON THE FIRST OF EACH MONTH. May.............4.000,000. 1839. ..6.813,862. .6,552,946. .7,590,492.. .6,963,554.. June.............5,730,240. .....6,062 288........2,052,056.. ...2.123,717. August...........7,986,582........5,160,430........3,476,937. September.......8,097,310........3,707,384.. .....4,966,502. ..4,560,689. November........8,609,760........3,394,180........4,664,200.. ..6.862,990 ..8,063.563 ..8,345,695 ..8.305.336 ..7,265,660 ..7,373,024 .....7,371,703 December........7.754,560........2,998,071........4,433,823........7.226,837 This gives a full view of the use of the notes, and it appears that the amount now outstanding is greater than ever before; and in all the discredit and disorders of the market, they never until the past year fell to a discount. The 6 per cent. notes are now quoted at 3 a 4 per cent. discount. On the first of March last year, when the now dominant party came into power, the total actual debt was— Treasury notes...... This enormous increase of debt has been the result of one year's “relief, retrenchment, and reform." Not only has this debt been created, but the government faith has been broken, and its paper actually protested - and this during a year when the imports, the principal source of revenue, have exceeded those of the previous one $23,000,000, and those of 1828 by $11,000,000. So deep a disgrace was never sustained by any government, even when involved in the most disastrous wars. If the national dishonor was the only evil which grows out of the abominable mismanagement of the finances, it would be comparatively light, and might be easily remedied. But the influence of the example at a time like this, when the paper system has fallen into decay, carrying down with it States, corporations, and individuals, when the former openly and boldly repudiate their debts, honestly contracted, and the latter seek in an unconstitutional bankrupt law a release from those debts in which for the most part their own extravagance has involved them presenting to the astonished gaze of the foreign creditor a chaos of insolvency, discredit, and disgrace at such a moment the Federal Government steps forward ostensibly to" relieve the people." But alas! for such relief. Instead of setting an example of economy and probity, curtailing its expenses, redeeming its liabilities, and promptly meeting the claims that mature upon it, rising high above the disorder around it, and proving a rallying point for national credit and commercial integrity it has madly thrown itself into the vortex of insolvency, and sunk amid the tumultuous whirl of destruction, leaving no trace of that fair fame of the Republic that but few years since was held up as a pattern to the nations of the earth. The financial committees of both the House and the Senate have reported plans of a national system of finance, differing from each other, and also from that reported by the Secretary of the Treasury at the commencement of the session. The bills have all of them objectionable features, of the same character, but of different degrees. They all of them involve the general features of issuing a government paper money, receiving individual deposites, and exchange transactions. On the plan of the Secretary we made some remarks at the time of its appearance. It is perhaps a worse plan than any that ever was proposed, inasmuch - as it authorizes the issue in a time of peace of a government credit paper, which inevitably would become depreciated, and also the exchange of these government credits for those of individuals by the purchase of exchange; thus uniting all the worst features of a vicious banking system, without offering any offset for the evil which it threatens. The Secretary has in a subsequent report acknowledged that the authority to issue credit paper was proposed as a borrowing measure, in order to assist the Treasury in its emergencies. A more weak, futile, and dangerous expedient could not possibly have been pitched upon. The plan of Mr. Tallmadge, from the Senate's committee, offered some modifications of this plan, viz., that the paper should not be issued on credit, but only one dollar for every dollar of specie actually on hand; to receive the deposites of individuals at small charge, and issue currency therefor, dollar for dollar; to sell and accept bills of exchange at a fair premium; and to collect bills on distant places, to be paid only when the collection was actually made, but not purchase or advance money on any bills. This bill, however, has the monstrous feature of allowing of the employment of a bank as an agent or depository for the funds of the Treasury. Such a feature would render utterly nugatory all of good that the plan proposes. Mr. Cushing's bill, from the committee of the House, proposes to utter paper money on the plan of Mr. Tallmadge's; to receive the deposites of private individuals without charge; to sell and accept bills; and also to purchase bills, under the restriction that they are to be only for the necessary transmission of the government funds. This latter is a great objection, and liable to great abuse and losses. All three of the bills restrict the deposites of individuals, the most harmless feature of the bills, to from 10 to $15,000,000. Now is it not a little remarkable that all three of these bills are based upon the suggestions of General Jackson contained in his second annual message, Dec. 1830? As the paragraph is short, we quote it, as follows: "It is thought practicable to organize such a bank with the necessary officers, as a branch of the Treasury Department, based upon the public and individual deposites, without power to make loans or purchase property, which shall remit the funds of the government, and the expenses of which may be paid, if thought advisable, by allowing its officers to sell bills of exchange to private individuals at a moderate premium. Not being a corporate body, having no stockholders, debtors, or property, and but few officers, it would not be obnoxious to the constitutional objections urged against the present bank; and having no means to operate on the hopes, fears, or interests of large masses of the community, it would be shorn of the influence that made that bank formidable." It will be seen at a glance that these suggestions contain the basis of all the bills. The reputed authors of them have only taxed their ingenuity to ingraft upon it a borrowing and expanding principle, that will be open to corruption, and allow of those violent fluctuations which throw the property of the industrious into the hands of the designing, in spite of all the foresight and prudence that can be exercised. It is not a little singular, that, after a struggle of twelve years, those financial principles for which the democratic party have fought should at last have so far worked their way as to become the basis of the measures of the opposition. This has been the result of the incontrovertible truth of those principles. When the successful leader of the democratic party, in 1828, struck the first blow at the monstrous paper system, it was in the zenith of its strength. A National Bank was at its head, with an overshadowing capital; a credit co-extensive with the commerce of the earth. With the Hongs of China its bills were as current as silver dollars. Its branches stretched into the remotest corners of the Union. Its roots struck deep into all the channels of trade, and were interwoven VOL. X., No. XLVI.-51 with all the transactions of a mighty people. And yet the inherent corruptions of this immense machine were such as caused it to moulder away before the silent dissemination of truth, until the whole fabric tottered and fell into ruins so noxious to the gaze, that even its own friends turn from it with disgust. The evil effects of the banking system in an agricultural country have been made sufficiently manifest in the disasters and dishonor that have overtaken this country during the past few years. The cause of the difficulties is very clearly traced in the fact, that generally in those sections of the Union where banking has been most redundant, the existing evils are most severely felt; that is to say, in those sections the indebtedness is greatest, and the proportion of productive wealth to population is the least. These facts are clearly indicated in the census tables furnished by order of the late administration. In order to form a just estimate of the operations of banking upon the industry of the country, we have constructed the following table of the products of the Union, valued at the market rates, divided into different geographical sections; together with the leading features of the banks of each section, from official sources for the same year, 1839, in which the census was taken; also the active population employed in the development of those products, as well as the gross population: AGGREGATE PRODUCTS, IMPORTS, FOPULATION, AND BANK MOVEMENT OF EACH SECTION OF THE UNITED STATES IN 1839. Population employed,......582,694.......994,108.......683,445.......1,028,318.. total,.........2,235,022......4,131.370.....2,245,602..... .5,117,329.. 64 Manufactures,..... .108,204,879.....59,934,431....13,784,598. .2,859,289......3,300,127.. .872,786.. S. Western. Southern. .1.029,892 3,373,483 Forest.... Horticulture,. ....598,000. .486,099. .379,880.. 1,336,518. ..278,907 .510,589,720.....213.310.042 .62.212,321.....31,940,989....81,943,086. Exchangeable values,...233,094,618....175,578,840....134,945,802. Bank capital,... loans,......... .81,152,708.....43.348,256...135,128,206. currency,.........24,405,076.....40,041,157....46,341,157. specie.. .......... 3,270.838......7,909,792.....7,919,792. Ratio of currency to values, 1 to 10.........1 to 4........1 to 3.. This table in a remarkable manner illustrates the truth, that the greater amount of capital there is employed in banking, the less is there employed in productive labor, or trade is stimulated while production is retarded. The reason is evident. Commercial banking, to be safe and healthy, requires that the loans should be made on actual values, and punctually repaid at short intervals, so that the institution may always receive as much with one hand as it loans out with the other. This operation admits not of loans for a length of time sufficient to produce the values from the soil or to manufacture them, but the circle of banking operations being sound, no actual employment of capital in it is necessary, its credit which it loans on the note of the dealer being cancelled by the payment of that note at maturity. The legitimate use of banking is, therefore, only to supply to dealers and producers the necessary sum to make a purchase, until that the goods or produce so purchased can be converted into money, in order that the dealer or producer may invest his whole capital in his individual business, without being obliged to have any money lie idle on his hands in anticipation of purchases he may be obliged to make. As an instance, we may suppose a miller who is in the habit of purchasing the grain grown in his neighborhood. Without any bank he would be obliged to keep on hand certain sums of money, at a loss. On the other hand, he keeps no money on hand; but when the farmer brings his wheat for sale, the miller's note for 60 days is discounted by the banks. With the proceeds, the |