The banking system of the United States is simply this: The legislatures of the several states exercise the power of granting charters of incorporation for banks, which are created by a subscription of individual capital, the subscribers having no personal liability beyond the amount contributed by each, and the corporation under the manage ment of a Board of Directors, chosen for the most part annually, proceed to lend out this accumulated capital, receive deposits, and issue notes .payable on demand in gold or silver.
The number, the capitals, the notes and the specie of these banks, as far as they have been ascertained, are stated in the excellent work by Mr. Gallatin on banks and currency, from which we extract the following interesting table: The most important banking establishment in the United States is the Bank of the United States, an institution incorporated for twenty years by Congress, in the year The situation, and the general movements of that institution, were fully detailed in the report of the president of the bank to the meeting of the stockholders, 1st September 1831, the greater part of which we here insert.
‘, The capital of the bank consists of 350,000 shares, of which 70,000 are owned by the govern ment of the United States. The government ori ginally provided for its subscription by giving to the bank a stock bearing interest at five per cent. This stock has been for some time in a course of redemption, and in July last the whole of it was reimbursed, so that the government has now fully paid for its shares. This capital is divided among the stockholders as follows : The capital thus owned is divided for the pur poses of business between the bank and the follow ing twenty•five offices : Portland, Fayetteville, Portsmouth, Charleston, Boston, Savannah, Providence, Hartford, Natchez, Burlington, New Orleans, New York, St. Louis, Utica, Nashville, Buffalo, Louisville, Baltimore, Lexington, Washington, Cincinnati, Richmond, Pittsburgh.
Norfolk, "The number of offices established in 1817 was eighteen; since then two offices have been discon tinued—Middletown in Connecticut, and Chilli cothe in Ohio, and nine others have been established. Portland in Maine; Burlington in Vermont; Ha•t ford in Connecticut; Utica and Buffalo in New York; St. Louis in Missouri; Nashville in Ten nessee; Natchez in INlississippi; Mobile in Alabama; making an addition of seven offices within the last fourteen years. These points were selected out of
applications from thirty-eight places. There are now under consideration applications for the estab lishment of branches from more than thirty places in various pat'ts of the United States.
" The employment of the capital will be seen in the following statement of the condition of the bank on the 1st of August.
" The hank of the United States was established for the purpose of restoring specie payments, which had for a long time been suspended throughout a great part of the country,—of furnishing a sound circulating medium, and or giving more uniformity to the exchanges between distant sections of the union. By importing more than seven millions of specie, and by a free issue of notes 'immediately after its establishment, the hank with great sacri fices succeeded for a time in attaining these objects; but it seems to have been afterwards considered that its powers were exhausted by the effort, and that the continuance of it would be entirely im practicable. The essential difficulty was presumed to lie in the provision of the charter, making the notes universally receivable for debts to the govern ment, which by obliging the bank to provide pay ment for the same note at various places, would re quire it to retain a greater amount of specie than it could issue of notes; thus diminishing rather than increasing the sound circulation. The consequence was, that the bank issued its own notes sparingly; more especially in the southern and western states, where it often preferred the re-issue of the notes of the state banks; being unwilling to issue freely its notes which it might. be compelled to pay at some one of many places remote from the point of issuing them. However imperious the necessity which en forced this system, it was apparent that its con tinuance would tend to defeat the object of estab lishing the hank, since by declining the issue of its notes it could not furnish the circulating medium expected from it; and by reissuing the notes of state banks, it surrendered its most efficient means of control over the currency. Its whole circulation on the 1st of January 1823 was only S4,589,000.