" Having, in compliance with the directions of the stockholders in 1822. applied without success to Congress for a modification of thin disabling pro vision in the charter, it became necessary for the board of directors to re-examine the constitution of the bank, in order to discover whether there was really any organic defect which prevented it from performing the functions to which it was destined, or whether some different combination of its powers might not overcome its difficulties.
" The experiment was interesting and hazardous. It was to try how far the institution could succeed in doing that which had never yet succeeded else where, in diffusing over so wide a surface of coun try a currency of large amount and of uniform value at all places and under all circumstances; and also whether it could bring down to its extreme limit the necessary expense of commercial intercourse be tween distant sections of country, whose exchange able productions were of such various and unequal values.
"To accomplish these two objects two things seemed necessary.
" 1st. To make all the local currencies equivalent to specie at the place of their emission. This, by rendering them competent for local purposes, would require a less amount of general currency, and at the same time tend to reduce the exchanges between distant places to the real commercial ex pense of transferring equal values of coin.
"2d. To make the bank itself the great channel of those commercial exchanges.
If the bank is bound to transfer the whole public revenue throughout the union, and to furnish a cur rency payable in various and distant must obviously provide funds in those places, and these can of course be obtained only by purchasing bills of exchange payable at the points to which the course of trade naturally directs the notes. There these bills, having reached their maturity, await the coming of that portion of the notes, which hav ing performed for a time the functions of a cir culating medium, are carried by the demand for duties out of the immediate sphere of their issue. The greater proportion of its funds, therefore, which the bank can employ in these operations, the more readily can it sustain the notes issued in the course of them. It is indeed thus, and thus alone, that a circle of sound banking operations founded on sound commercial operations contains within it self the means of its own defence at home, and of pros iding for its notes which the demand for duties may carry to a distance. These operations too are fortunately of the highest benefit to the community; they give the most direct encourage ment to industry, by facilitating the put-chase and interchange of all its products, they bring the pro ducers and consumers into more immediate contact by diminishing the obstacles which separate them. and they specially adapt the bank to the wants and interests of each section of the union, by making it alternately a large purchaser among the sellers of bills, and a large seller among the purchasers.
" A participation also in the foreign exchanges forms an essential part of the system, not merely as auxiliary to the transfer of funds by which the cir culating medium is accompanied and protected, but as the best defence of that currency from external influences. It is the peculiarity of our moneyed system, that in many parts of the country the pre cious metals are excluded from the minor channels of circulation by a small paper currency, in conse quence of which the greater portion of these metals is accumulated in masses at the points of most con venient exportation. Now with a widely diffused metallic currency, the occasional demands for ex portation are more gradually felt, the portion ex ported bearing a small relation to the whole, occa sions less inconvenience, and the excesses of export ation can be more readily corrected without injury. But when the great mass of the precious metals of the community lie thus accessible in the banks of the Atlantic cities, liable to he immedi'ately de manded on notes previously issued in the confidence of a continuance of the same state of things which caused the abundant issue of them; at the first turn in the tide of the foreign exchanges---when the sup ply of foreign exchange is unequal to the daily de mand, the vaults of the banks may be exhausted before any precautions can prevent it. These very precautions, too, consisting as they do almost ex clusively of curtailments in their loans, made sud denly---mostly without concert, and always under the influence of cnxiety if not alarm, may fall with oppressive weight on the community, by the press ure OH which alone can be produced the necessary re-action. This re-action moreover is necessarily slow, since our distance from Europe makes it less easy to restore the equilibrium than between ad joining countries in the same hemisphere. As this defect in our moneyed system depends on the legis lature, the bank has no power to remove it, and can only strive to guard against its dangers. Its ten dency is to produce abrupt transitions, and violent shocks injurious to private credit, and which might prove subversive of the currency. It belongs then to the conservative power over the circulating me dium which devolves on the bank, not to be a pass ive observer of these movements, but to take an ample share in all that concerns the foreign ex changes. It may thus foresee, and either avert or diminish an approaching danger—it can thus break the force of a sudden shock, and supplying from its own accumulations or its own credits in Europe the more pressing derriands, enable the state institu tions to provide for their own safety, and thus pro duce the necessary alteration in the state of the ex changes with the least possible pressure upon the banks or the community.