"In addition to the ordinary causes of fluctuation in the metallic currency, there was another of great importance in the character` of the trade to China and India, which, requiring annually many millions of the precious metals, very frequently caused ab rupt and inconvenient changes in the amount of the currency and of private credit, by forcing the state banks to sudden curtailments as an act of necessary self-defence. To abate the pressure of this de mand, the bank offered as a substitute for the ship ments of coin, to supply its own bills on Europe, which in the India and China markets were often more valuable than the coin itself. This experi ment proved successful, alike to the merchants and to the community, who were thus less incommoded by sudden diminutions of the currency. Owing to the operation of general causes, that trade has within a few years greatly declined,—but should it revive, the bills of the bank will doubtless constitute a considerable portion of the remittances from this country. Even in its present comparatively inac tive state, the amount of bills furnished by the bank within the past year for the trade of India, China and South America, amounts to 5, 8 3 , 5 0 0 .
" By this combination of the soundness of the lo cal currencies, and a thorough identification of the bank with the real business and exchanges of the country, it was hoped to accomplish the purposes for which it was established. With this view it began by giving to its whole funds an active and business character, for which purpose all the stock of the bank which had been forfeited was sold, and the proceeds applied to the commercial operations of the country. The bank and the branches then issued freely and exclusively their own notes, tak ing care to protect and provide for them by the dis count of bills of exchange•and they received freely the notes of the solvent state banks, with whom pe riodical and convenient but certain settlements of accounts were made.
"This system has now been in operation for seve ral years. It was at first experimental and of doubt ful issue, and as the consequences were equally important to the bank and the community, its pro gress has been watched with deep solicitude. Its success,therefore, has been seen with proportionate satisfaction. Time and experience have now de monstrated that the bank has been able to accom plish all the purposes for which it was created, to rectify the disorder's of the currency, to sustain a large and sound circulation, and to reduce the commercial exchanges within the most economical limits, and this by means in themselves highly ad vantageous to the community, not in any degree in jurious to the state institutions, and at the same time profitable to the bank itself. The evidences of this can be best observed by comparing the past and present situation of the currency, the ex changes, the country and the bank.
1. Before the establishment of the bank, the cir lating medium of the middle, western and southern states consisted exclusively of an inconvertible paper money; every part of that country suffered under the most oppressive of all taxes on industry, a depreciated 'currency; the commercial exchanges between different states and even different neigh bourhoods, were burdened with the fluctuations of their respective representatives of money, while the government itself, unable to make its funds received in one section available for its expendi tures in another, was embarrassed in the midst of its nominal excesses of revenue. These disorders
are now remedied. The local currencies generally are equivalent to specie -within their respective spheres of circulation, and a larke mass of general currency is superadded for general circulation. That this effect was produced directly by the ope rations of the bank requires no demonstration. The extent of its contribution to the general cur rency, will be seen in the facts..
" 1st, That since January 1,1823, it has furnished to the mint, to be converted into American coin, bullion to the amount of - - 6,12,046,415 35 " 2d, That the gross circulation of the bank on the 1st of January 1823, was - 4,589,446 90 And on the 1st of August 1831, 22,399,447 52 Making an increase of 17,810,000 62 "From both periods a deduction is to be made of the notes in their passage between the bank and the branches. The total amount known to he in actual circulation on the 1st of August was $'19,577,910.
" This circulation is in all respects equal, and in most respects superior, in value, to any metallic currency of the same amount. Indeed there is not now, and probably never has been, in any other ex tensive country, a paper currency comparable to this for the union of all the qualities of a good cir culating medium—perfect security—easy converti bility into the metals—and general uniformity of value.
"The notes of the bank, moreover, not only afford a sound currency themselves, but they sustain and purify the much larger mass of circulating medium into which they are infused. By receiving freely the notes of the state banks within convenient reach of the bank and its branches, and by frequent set tlements with them, these institutions are kept in the habitual presence of an accountability, which naturally induces them so to apportion their issues to their means, as to secure the soundness of their currency. Of the manner in which they have exe cuted this extremely delicate part of their duty, which connects them with the state institutions, it is not for the board of directors to speak. But they bear a willing testimony in favour of the up rightness and intelligence which generally charac terize the administration of those institutions, and the support which they have always yielded to any measures calculated to maintain the soundness of the currency.