· none none. DOMESTIC Societies, Corp. &c. 126 holding 14,309 Shr's. It further appears that the sum of 54,286 shares, being much more than one-fourth of the whole domestic stock, is owned by females, trustees and executors, and by religious, benevolent, and other associations. The Capital thus owned is divided for the purposes of business between the Bank and the following twenty-five offices: Norfolk, The number of Offices established in 1817 was eighteen; since then two offices have been discontinuedMiddletown in Connecticut, and Chillicothe in Ohio,and nine others have been established. Portland in Maine; Burlington in Vermont; Hartford in Connecticut; Utica and Buffalo in New York; St. Louis in Missouri; Nashville in Tennessee; Natchez in Mississippi; 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 establishment of Branches from more than thirty places in various parts 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. Funded Debt, various DR. Bills Discounted on Personal Security, 41,585,298 70 Funded debt, 19,700 00 'Bank stock, 779,458 07 -42,384,456 77 Domestic Bills of Exchange, 14,409,479 72 -56,793,936 49 Foreign Bills of Exchange, 121,214 60 Debts chargeable to Contin Real Estate, 2,491,892 99 gent Fund, 3,452,976 16 Due from Bank U. S. and of -60,509,083 88 1831.] And on the remaining, REPORT OF THE BANK OF THE UNITED STATES. The estimated loss after a rigid examination, is Now, the contingent Fund to meet this loss, is The total of the actual and estimated losses, is Leaving an excess of Provision, over the estimate, of 5,613,173 15 187 4,398,305 66 own notes sparingly; more especially in the southern and western States, where it often preferred the re-issue 1,851,034 42 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 enforced this system, it was apparent that its continu ance would tend to defeat the object of establishing the Bank, since by declining the issue of its notes it could not furnish the circulating medium expected from it; and by re-issuing 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 $4,589,000. 309,162 57 That this sum will be fully adequate for the purpose will be apparent from the facts, 1st. That amongst the estimates of loss is $236,829 77, for the losses of the Agency at Cincinnati, which will in all probability be entirely retrieved by the increasing value of the Real Estate there. 2d. That the arrears of interest on the debts at the four western offices are expressly appropriated to the increase of the Fund. And 3d. That something may yet be received from the mass of debts now considered hopeless, and from the arrears of interest on the whole mass of suspended debt, now amounting to $1,433,761 34. Having in compliance with the directions of the Stockholders in 1822, applied without success to Congress for a modification of this disabling provision in the charter, it became necesary 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 elsewhere, in diffusing over so wide a surface of country a currency of $587,102 38 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 com. mercial intercourse between distant sections of country, whose exchangeable productions were of such various and unequal values. -1,904,790 61 Making the present amount 2,491,892 99 This amount is the price at which the Real Estate has been taken, and experience warrants the expectation, that it will be sold for more than its cost. The general result of the condition of the Bank is, That the whole of the bonus of $1,500,000 paid for the Charter, and the premium of $205,880 given for the five per cent. Stock, purchased in 1821 from the Government is now extinguished. That the fund to meet losses exceeds by $309,000, the estimate of those losses. That there is a surplus fund of profits amounting to $1,750,000, being five per cent on the Capital. And that with these provisions against casualty, its profits, after defraying its expenses and making an annual reservation of $120,000 to extinguish the cost of the Banking Houses, yield a dividend of seven per cent. a year. But gratifying as the prosperity of the Bank may be to the stockholders, it is an object of more general concern as being the result of measures in the success of which the community has a deep and permanent interest. The importance of these will justify a few words of explanation in regard to them. The Bank 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 of 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 Bank with great sacrifices 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 impracticable. The essential difficulty was presumed to lie in the provision of the charter, making the notes universally receivable for debts to the Government, which by obliging the Bank to provide payment for the ame note at various places, would require it to retain a greater amount of specie than it could issue of notes; hus diminishing rather than increasing the sound circution. The consequence was, that the Bank issued its 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 expense 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 currency payable in various and distant places, it 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 having performed for a time the functions of a circulating 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 itself the means of its own defence at home, and of providing 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 encouragement to industry, by facilitating the purchase and interchange of all its products, they bring the producers and consum ers into more immediate contact by diminishing the obstacles which separate them, and they especially 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 circulating medi vent it. 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, taking care to protect and provide for them by the discount of bills of exchange-and they received freely the notes of the solvent State Banks, with whom periodical and convenient but certain settlements of ac um is accompanied and protected, but as the best defence of that currency from external influences. It is the peculiarity of our monied system, that in many parts of the country the precious metals are excluded from the minor channels of circulation by a small paper currency, in consequence of which the greater portion of these metals is accumulated in masses at the points of most convenient exportation.-Now with a widely diffused metallic currency, the occasional demands for exportation are more gradually felt, the portion export-counts were made. ed bearing a small relation to the whole, occasions less This system has now been in operation for several inconvenience, and the excesses of exportation can be years. It was at first experimental and of doubtful is more readily corrected without injury. But when the sue, and as the consequences were equally important to great mass of the precious metals of the community the Bank, and the community, its progress has been lie thus accessible in the Banks of the Atlantic cities, watched with deep solicitude. Its success therefore has liable to be immediately demanded on notes previously been seen with proportionate satisfaction. Time and exissued in the confidence of a continuance of the same perience have now demonstrated that the bank has been state of things which caused the abundant issue able to accomplish all the purposes for which it was of them; at the first turn in the tide of the foreign ex- created, to rectify the disorders of the currency, to sus changes, when the supply of foreign exchange, is tain a large and sound circulation, and to reduce the unequal to the daily demand, the vaults of the Banks commercial exchanges within the most economical limmay be exhausted before any precautions can pre-its, and this by means in themselves highly advantageous These very precautions too, consisting as to the community, not in any degree injurious to the they do almost exclusively of curtailments in their loans, State Institutions, and at the same time profitable to the made suddenly-mostly without concert, and always Bank itself. The evidences of this can be best observed under the influence of anxiety if not alarm, may fall by comparing the past and present situation of the curwith oppressive weight on the community, by the pres rency, the exchanges, the country and the B.nk. sure on which alone can be produced the necessary re- 1. Before the establishment of the Bank, the circu action. This re-action moreover is necessarily slow, lating medium of the middle, western and southern since our distance from Europe makes it less easy to States consisted exclusively of an inconvertible paper restore the equilibrium than between adjoining coun money; every part of that country suffered under the tries in the same hemisphere. As this defect in our mo- most oppressive of all taxes on industry, a depreciated nied system, depends on the legislature, the Bank has currency; the commercial exchanges between different no power to remove it, and can only strive to guard States and even different neighbourhoods, were burdenagainst its dangers. Its tendency is to produce abrupted with the fluctuations of their respective representatransitions, 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 medium which devolves on the Bank, not to be a pas-ive observer of these movements, but to take an ample share infall that concerns the foreign exchanges. It may thus forsee, and either avert or diminish an approaching danger-it can thus break the force of a suddon shock, and supplying from its own accumulations or its own credits in Europe the more pressing demands, enable the State Institutions to provide for their own safety, and thus produce the necessary alteration in the state of the exchanges with the least possible pressure upon the Banks or the community. tives of money, while the Government itself, unable to make its funds, received in one section available for its expenditures 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 large mass of general currency is superadded for general circulation. That this effect was produced directly by the operations of the Bank requires no demonstration. The extent of its contribu tion to the general currency, 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 $12,046,415 35 2d, That the gross circulation of the Bank on the 1st of January, 1823 was And on the 1st of August, 1831, es.-The total amount known to be in actual circulation on the 1st of August, was $19,377,910. 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, $4,589,446 90 which, requiring annually many millions of the precious 22,399,477 52 inetals, very frequently caused abrupt and inconvenient 17,810,000 62 changes in the amount of the currency and of private From both periods a deduction is to be made of the credit, by forcing the State Banks to sudden curtail-notes in their passage between the bank and the branchments as an act of necessary self-defence. To abate the pressure of this demand, the Bank offered as a substitute for the shipments 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 experiment 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 inactive state, the amount of bills furnished by the Bank within the past year for the trade of India, China and South America, amounts to $883,500. By this combination of the soundness of the local 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 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 extensive country, a paper cur rency comparable to this for the union of all the quali ties of a good circulating medium-perfect securityeasy convertibility into the metals-and general unifor mity 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 settlements 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 executed this extremely delicate part of their 1831] REPORT OF THE BANK OF THE UNITED STATES. 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 favor of the uprightness and intelligence which generally characterize the administration of those institutions, and the support which they have always yielded to any measures calculated to maintain the soundness of the currency. On the few occasions where it has become necessary to insist on the performance of their obligations, from which either a want of judgment or the pressure of urgent necessity had induced them to depart, the Bank has endeavoured to perform its own duty with all the forbearance consistent with the thorough execution of it, and those institutions themselves, have generally found in the increased credit arising from fidelity to their engagements, a full compensation for all the temporary inconvenience which that fidelity required. It is indeed confidently believed that the solvent State institutions, recognize in the Bank its true character, as a common friend, not a jealous competitor; and that the good feelings uniformly entertained for them by the bank, are reciprocated. They know that the duties of its position make it only a more prominent agent in preserving the soundness of the currency, on which their own stability and prosperity equally depend; and that if its competition sometimes appears to prevent more abundant profits, they find an indemnity in the general security of property which its operations are designed to protect. Undoubtedly these operations have been so far beneficial to them, that if its own notes are equivalent to specie, it has contributed to make those of the State institutions equally valuable within their respective spheres, and that many of these institutions earn larger profits than the Bank itself. 2d. The reduction in the exchanges effected by the Bank from the extravagant charges on internal trade 189 to the present moderate limits need not now be particularized. A single fact will be sufficient to illustrate it. Before the Bank was organized the differences of exchange in favour of or against Philadelphia; in its relation with the other commercial cities was as follows. With Boston, 17 per cent.-with New York, 9 per cent.-with Baltimore 44 per cent.-with Washington 7 per cent.-with Charleston, 64 per cent. At present these exchanges are generally, either at par or at the utmost, one half of one per cent. This has naturally followed the rectification of the currency. As long as the general circulation of the United States consists of specie or its equivalents, the rates of exchange between any two places in it can never much, nor permanently vary from the expense of their transportation from one place to another; and a reduction to nearly that rate was the inevitable consequence of the resumption of specie payments. The Bank has, however, been able to do more than this. The large mass of its operations in exchanges, by giving to it funds in various parts of the Union which the course of its own business, as well as that of the Government, requires to be transferred, furnishes it with the means of transferring at the same time the property of individuals at a very reduced expense. Accordingly funds are transferred to the remotest points of the Union, sometimes at no expense whatever, and always with charges so moderate, as to afford facilities of interior communication, probably not equalled by those of any other country. The following table exhibits the amount of domestic and foreign exchange purchased at the Bank, and the several Branches, the amount of the drafts furnished by them on each other respectively, and the amount of transfers made on account of the Government, during the year ending on the 1st of July last. Stalement exhibiting the Exchange operations of the Bank of the United States and Offices, for the year ending June 30, 1831. Funded debt, 51,897 07 $53,504,196 99 DISTRIBUTION. 13,020,469 27 22,072,405 46 67,928 13 Loans, viz:- Funded debt, Domestic Bills, 2,713,760 30 24,599 76 5,974,725 80 Debt of Smith & B. 1,357,457 23 From this it will appear, that the purchases of bills Profit and loss, of exchange, amount to more than forty four millions, the drafts issued by the Bank and the Branches on each other exceed forty-two millions; and the transfers on account of the Government were upwards of twelve millions. If to these be added the amount of bills not purchased in the first instance by the Bank but collected through its agency, the aggregate will represent an actual movement in the business of the Union, much exceeding one hundred millions of dollars. This has been conducted at a very moderate expense, and with a facility which has caused so large a displacement of funds, to be almost imperceptible in any of the interests of the community. More experience and a greater mass of operations may enable the Bank to reduce still further, even these slight charges; but should it be able only to retain them at their present rates, it will have accomplished all that is necessary or perhaps desirable. 3d. The influence of these measures on the country has been in every stage of them eminently salutary. The substitution of a sound currency for a depreciated and irresponsible circulation, which was hastening to involve in confusion, all public and private interests, is of itself an advantage, which can scarcely be over-estimated, conferring as it does, stability on property, and security on all the rewards of industry; while the interior commerce of the whole Union is relieved from the oppressions of a multifarious and fluctuating paper money, requiring at each step some new sacrifice which, however, disguised, fell ultimately as a charge on the productive industry of the country. The means, moreover, by which these objects have been attained, the restraint on the over issues of other institutions—the ex tensive operations in domestic and foreign exchange-the bringing of the institution into immediate contact and sympathy with the real business of all parts of the country, are in themselves direct and positive benefits to the community. They form too the natural occupation of a Bank of the United States, which divested of all local influences and interests, finds its appropriate sphere in facilitating the commerce of the States with each other and with foreign nations. Accordingly, it may be assumed with safety, that there has never been in the history of this country, any period when its monied concerns were more steady and equal-its interior trade transacted with more economy and convenience, and the necessary fluctuations incident to its foreign commerce less sensibly felt, than during the last eight years. This term is sufficiently long and various to test the efficacy of the system. It embraced a period, when, in addition to its habitual causes of fluctuation the monied system was disturbed by the reimbursement of many millions of the public debt, a great portion of which was to be remitted to Europe, and more especially it included the year 1825, one of the most critical in our own history, and probably the most disastrous to the banking system of England. 4th. Having explained the effects of this system on the currency, the exchanges, the state banks, and the community, it remains to show that these purposes have been accomplished without any sacrifice of the interests of the Stockholders, but that the bank itself has shared Due by banks, &c. 8,000 00 -32,218,876 68 1,650,869 73 587,102 38 1,180,880 00 834,922 15 664,642 56 State of the Bank Auguel 1st, 1831. 3,346,434 22 $53,504,196 99 35,000,000 00 22,399,447 52 16,368,085 89 168,372 72 7,252,249 42 Contingent fund to meet losses, Funded debt, 251,766 03 5,613,173 15 614,685 07 1,750,048 51 $82,165,578 89 DISTRIBUTION. 3,497,681 06 Personal security, 41,585,298 70 19,700 00 Domestic bills, Foreign do. Bills chargeable to con. Real estate, Due from sundry offices and banks, The analysis of these statements will present the fol in the benefits it communicates. This will be perceiv-lowing differences in the situation of the bank at these ed by contrasting the present state of the institution, respective periods: with its condition at the triennial meeting of 1822. Discount, exchange, & interest, since July, 388,237 01 In August, 1822, of the loans of $53,160,235 65 32,218,876 68 |