Since we have thus touched upon the suspension of specie payments by our banks, add have pointed out one of the causes thereof, it may not be amiss to pursue the subject a little further. Whilst our banks, from a general spirit of over trading, and particularly in that kind of loan for long periods, which cannot fail to paralize the power of a banker, they were induced, either from motives of pa triotism or of speculation, to make con siderable loansto the government. These loans called for an issue of bank notes, the same as if they were made to indi viduals, and the circulation being sur charged with paper, more of these notes were returned for payment than the banks could meet, with their immediate resources. The excess occasioned by these loans to government might, it is true, have been absorbed by reversing the operation, that is, by selling the stock for the very notes with which it was purchased ; but the banks, influenc ed in this respect by a sordid spirit of avarice, preferred the disreputable alter native of stopping payment, whilst they possessed ample means to support their credit. But this was not all. During a state of war, it was an easy matter to palliate the disgraceful measure, by re presenting to the public that it was one of choice, and not of necessity; but what ought to have been the course of the banks after the restoration of peace ? Surely to return to the practice of cor rect and honourable principles, by pay ing their notes with the punctuality which they demand from others. So far, how - ever, from pursuing this course, they plunged themselves deeper into disgrace and the public into distress. Consider ing themselves as no longer bound to the fulfilment of contracts, no longer obliged to limit the amount of their loans, they extended their purchases of government stock, and their discounts of notes, to an excess, which created a de preciation of their paper from 15 to 30 per cent.
In vain were they told, that the system pursued by them was dishonourable and ruinous. That the prices of commo dities were elevated, just in the degree that bank notes were depreciated ; that helpless, aged, and labouring people, who were living upon fixed incomes, or wages, were deprived by them of their and that a system of over-trading, ruin ous to the merchant, would be the re sult. Still they persevered, and still would they continue to persevere, if a resolution of Congress, and the establish ment of a formidable rival, the Bank of the United States, had not compelled them to recur to the moral obligation of contracts. That institution, which com. menced its operations at Philadelphia on the first of January, 1817, effected an ar rangement with the banks of that city, New York, Baltimore, and Richmond, for the resumption of specie payments on the 20th of February following, which engagement has been thus far complied with, (March 1817.) During the deplorable anarchy which so long prevailed amongst the banks, a number of curious particulars were ex hibited, in relation to foreign as well as domestic exchanges. The course of ex change between all the different cities, measured in paper money, showed pre cisely the degree of the different depre ciations, and the difference in price, at different cities, of a bill upon Boston, where money was standard, was always equal to the relative degree of deprecia tion. Specie also bore at every place, upon an average, the same relation to pa per as a bill upon Boston, and this was of itself sufficient to show, that all the talk about balance of trade was idle anal deceptive.