certainly; but it is as superior to the American as can well be imagined. A radical reform of the latter, or, if that cannot be effected, its entire suppression, would be the greatest boon that can be conferred on the Union, and would be no small advantage to every nation with which the Americans have any intercourse.

The American banks are all joint-stock associations. But instead of the partners being liable, as in England, for the whole amount of the debts of the banks, they are in general liable only for the amount of their shares, or for some fixed multiple thereof. It is needless to dwell on the temptation to commit fraud held out by this system, which has not a single countervailing advantage to recommend it. The worthlessness of the plan on which the banks are founded was evinced by the fact, that between 1811 and the 1st of May, 1830, no fewer than 195 banks became altogether bankrupt, many of them paying only an insignificant dividend; and this exclusive of a much greater number that stopped for a while, and afterwards resumed payments. (Report from Secretary of the Treasury of the United States, 12th February, 1841.) The wide-spread mischief resulting from such a state of things led to the devising of various complicated schemes for insuring the stability and prudent management of banks; but, as they all involved regulations which it was impossible to enforce, they have been practically worse than useless. In Massachusetts, for example, it was provided that no bank for the issue of notes should go into operation in any way until at least half its capital stock had been paid in gold and silver into the bank, and been lodged in its coffers, and seen in them by inspectors appointed for that purpose; and the cashier of every bank was bound to make specific returns once a year of its debts and assets, on being required to do so by the secretary of state. But our readers need hardly be told that these elaborately contrived regulations are really good for nothing, unless it be to afford an easy mode of cheating and defrauding the public. Instances have occurred of banks having borrowed an amount of dollars equal to half their capital for a single day, and of such dollars having been examined by the inspectors appointed for that purpose, and reported by them, and sworn by a majority of the directors, to be the first instalment paid by the stockholders of the bank, and intended to remain in it!(Gouge's Paper Money and Banking in the United States.) We do not of course imagine that such disgraceful instances can be of common occurrence; but what is to be thought of a system which permits a company for the issue of paper money, founded on such an abominable fraud, to enter on business with a sort of public attestation of its respectability? The publicity, too, to which the American banks are subject is injurious rather than otherwise. Those who are so disposed may easily manufacture such returns as they think most suitable to their views; and the more respectable banks endeavour, for a month or two previously to the period when they have to make their returns, to increase the amount of bullion in their coffers by temporary loans, and all manner of devices. The whole system is, in fact, bottomed on the most vicious principles. But it is unnecessary, after what has recently occurred, to insist further upon the gross and glaring defects of American banking. Perhaps no instance is to be found in the history of commerce of such a wanton over-issue of paper as took place in the United States in 1835 and 1836. The result was such as every man of sense might have anticipated. The revulsion to which it necessarily led, after producing a frightful extent of bankruptcy and suffering in all parts of the Union, compelled, in May, 1837, every bank within the States, without, we believe, a single exception, to suspend specie payments! In 1838, such of them as were not entirely swept off resumed specie payments; but in 1839, by far the larger number of them, with the Bank of the United States at their head, again suspended payments; and this institution, with many of the others, has been found to be altogether insolvent.

It is stated, in the Report referred to above by the Secretary of the Treasury of the United States, that between 1830 and 1840, 150 banks, having an aggregate capital of 45,000,000 dol., became entirely insolvent; and it farther appears that between the date of the above Report and the 1st of September, 1842, no fewer than 161 additional banks had failed, having (including the Bank of the United States) an aggregate capital of 132,362,339 dol., with notes in circulation to the amount of 43,320,554 dol. (See the list of these banks in Downe's American Almanac for 1843, pp. 293-295.) And if we add to the losses thus occasioned the depression in the value of the stocks of the other banks and the diminution of their circulation, the bankruptcy of a vast number of railway, canal, and other joint-stock associations, the discredit of the stocks of most of the States, the avowed bankruptcy of some of those most able to pay their debts, and the violent shock given to all private credit, we may form some faint idea of the injury inflicted on the Union by this revulsion. But the loss to individuals in a pecuniary point of view, vast as it has been, is nothing to the influence of this wretched system on public morals. It bids fair to convert the whole people of America into a nation of gamblers and swindlers. "The greatest injury to society," says a writer in the American Almanac, "resulting from this state of things, is in the

upheaving of the elements of social order, and the utter demoralization of men by the temptation to speculation, which ends in swindling to retain ill-gotten riches. In illustration, the Journal of Banking chronicles thirty odd millions of plunder by bank defalcations in this single revulsion, as far as they have been discovered and have reached the eye of the editor."-(P. 257.)

Here the writer stops; but he might have added, that "swindling to retain ill-gotten riches" is no longer confined to bank clerks and bank agents. It infects and pollutes every order of society. The repudiating legislatures of Pennsylvania and other states may come into competition for the palm of dishonesty with the worst agents of the worst banking schemes in the Union.

The United States Bank, originally incorporated by Congress in 1816 for 20 years, had a paid-up capital of 35,000,000 dollars, or of more than seven millions sterling. The question, whether the charter should be renewed, was debated with extraordinary vehemence in all parts of the Union. The then president, General Jackson, was violently opposed to the re-incorporation of the bank; and rejected a bill for that purpose that had been approved by the other branches of the legislature. He also followed up this blow by removing the government deposits from the bank in 1833. But, notwithstanding this hostility on the part of the executive government, the credit of the institution continued unimpaired; and, in 1835 and 1836, the Bank of the United States, like other banks in the Union, made enormous additions to her issues; which went on increasing till the issue of the famous treasury circular of the 11th of July, 1836, directing that all deposits of money on sales of public lands (the speculations in which had been pushed to an unprecedented extent) should be paid in specie. This may be said to have been the first step in that extraordinary reaction that has overspread America with public and private bankruptcy, and from the effects of which she has not yet recovered (1843), and will not speedily recover.

But, despite the opposition of the president, the Bank of the United States succeeded, in 1836, in obtaining a charter of incorporation from the legislature of Pennsylvania. But there can be no doubt that its capital had been seriously impaired before it received this charter; and this diminution of its strength, combined with the reckless improvidence with which it made advances on state stocks, the stocks of public companies, and the cotton and other products of private individuals, completed its ruin. We have seen no very late statement of its affairs on which we should be inclined to place any reliance; but it is certain that the bankruptcy is of the very worst description, and that all, or nearly all, the capital belonging to the bank has been lost.

Out of the 350,000 shares into which the capital stock of the Bank of the United States was divided, it is understood that in the latter period of its existence about 84,000 were held by foreigners, and mostly by Englishmen. The question, whether the charter will be adequate to protect these parties in their limited liability, is one that may not improbably be mooted, should the bank not be able to discharge the various claims upon her. If they are protected, we incline to think that the sooner the law is changed the better.

Had the United States Bank not opened an agency office here, the case would have been different; but having opened an office, and transacted a large amount of business in London, it became to all intents and purposes an English establishment; and the partners belonging to it in England must, one should think, be amenable to English law, and not to the law of Pennsylvania. If this be not the case, it will necessarily follow that any institution, though consisting wholly of Englishmen, that obtained a charter from any foreign state, even though it were not generally known that it was chartered, as the foreign law might not require this to be divulged, might open places of business in London and Liverpool, and, after getting some hundreds of thousands of pounds into debt, might suspend payments, and laugh at the credulous dupes they had reduced to beggary and ruin. The legislature of England has wisely refused to allow of partnerships (excepting in extraordinary cases) being instituted here with limited responsibility, being well convinced that, despite every possible precaution, they would be sure, in many instances, to be perverted to the basest purposes. And is it to be endured that foreigners should acquire privileges in this country denied to natives? or that foreign governments should have power to organise and establish institutions amongst us on a principle which parliament justly regards as most objectionable? If the law of England authorise this, it is most certainly high time that it were amended, and that a check were given to what must otherwise be one of the safest and most profitable species of swindling. But we hardly think that such can be the law. British subjects who embark their capital in foreign trading associations may, in so far as respects their interest in them, be amenable only to the foreign law, provided the associations to which they belong restrict their operations to foreign countries. But should these associations send agents here, and open offices and carry on business within the United Kingdom, the case is altogether different the legislature of Pennsylvania may be omnipotent at home, but it is luckily

impotent in England; it may, if it choose, institute trading companies with limited responsibility, or with no responsibility at all; but if these be joined by Englishmen, make England the scene of their operations, and issue their balance sheets in the city of London, what are they in practice but English companies? And such of our countrymen as have embarked in them would seem to have but slender grounds of complaint, should they be taught that they are responsible to our law; that the law of a foreign country cannot protect them; and that they will be made liable, in the event of the concern becoming bankrupt, to the utmost shilling of their fortunes for its liabilities to British subjects.

Owing to the privilege claimed by the different states, and exercised without interruption from the Revolution downwards, it is, we fear, impossible to effect the suppression of local paper in America, or to establish a paper currency which should at all But the states have it in their times vary in amount and value, as if it were metallic. power to do that which is next best: they may compel all banks which issue notes to give security for their issues. This, though it would not prevent oscillations in the amount and value of the currency, would, at all events, prevent those ruinous and everrecurring stoppages and bankruptcies of the issuers of paper money that render the American banking system one of the severest scourges to which any people was ever subjected. Common sense and experience alike demonstrate the inefficacy of all the regulations enacted by the American legislatures to prevent the abuse of banking. It is in vain for them to lay it down that the issues shall never exceed a certain proportion of the capital of the bank, and so forth. Such regulations are all very well, provided the banks choose to respect them; but there are no means whatever of insuring their observance, and their only effect is to make the public look for protection and security to what is altogether impotent and worthless for any good purpose. If the suppression of local issues be impossible in America, there is nothing left but to take security from the issuers of notes. The reader may be assured that all schemes for the improvement of banks, by making regulations as to the proportion of their issues and advances to their bullion, capital, &c., are downright delusion and quackery.

Owing to the extensive destruction of bank paper, and the still more extensive destruction of bills and other substitutes for money, occasioned by the total prostration of private credit, there has latterly been a great scarcity of currency in the Union, and very large quantities of specie have been imported, most of which has found its way into the coffers of the existing banks. We may, therefore, at no distant day, expect a revival of credit and of all sorts of speculations in the Union. Whether Englishmen will be again stupid enough to adventure their money in the new projects that will then, no doubt, be set on foot, remains to be seen; but if they do, they will certainly deserve to lose every farthing they may so invest. They may be assured that unless the present banking system be cut up by the roots, of which there is not the smallest prospect, an increase of specie in the banks is only giving them the means of entering on a new career of over-issue and swindling.

Comparative View of the Condition of all the Banks in the United States, near the Commencement of

each Year, from 1835 to 1st September 1842.

and branches in oper

713

788

829

840

901

ation

Capital paid in

Loans and discounts

Specie

Circulation

Deposits

704 231,950,337 251,875,292 290,772,091 317,636,778 327,132,512 358,442,692 335,469,514 203,107.1.5 365,163,831.487,506,080 526,115.702,485,601,687 492,278,015 452,596,523| 330 02 43.937,6251 40,019,594 37,915,310 35,184,112 45,132,673 33,105,155) 37,131,522 26,812, 50 | 103,692,195 140,3 1,038 149,185,800 116,138,910 135,170,995 106,968,572|115,905,312 63,871290 83,081,365 115,104,440 127,397,185 84,691,184) 90,240,146 75,696,857) 40,000,000-1

It is seen from this table that while the loans and discounts, specie, circulation, and deposits, amounted near the 1st of Jan. 1839, to 762,821,821 doll., they did not amount, in September 1842, to 460,000,000 (for the estimated numbers are known to be very near the truth), showing a decrease of no less than 302,000,000 doll. !

VII. BANKS FOR SAVINGS,

by the poorer class of They are managed by All monies paid into

Are banks established for the receipt of small sums deposited persons, and for their accumulation at compound interest. individuals who derive no benefit whatever from the deposits. any Savings Bank established according to the provisions of the act 9 Geo. 4. c. 92. are ordered to be paid into the Banks of England and Ireland, and vested in Bank annuities or Exchequer bills. The interest payable to depositors is not to exceed 24d. per cent. per diem, or 31. 8s. 5d. per cent. per annum. No depositor can contribute more than 354., exclusive of compound interest, to a Savings Bank in any one year; and the total

deposits to be received from any individual are not to exceed 1507; and whenever the deposits, and compound interest accruing upon them, standing in the name of any one individual, shall amount to 2001., no interest shall be payable upon such deposit so long as it shall amount to 2001. The commissioners for the reduction of the national debt have the disposal of the sums vested in the public funds on account of Savings Banks.

This system began in 1817; and on the 20th of November, 1842, there was due to depositors, including interest accruing on deposits, 25,319,3364. It farther appears that from the 6th of August, 1815, down to the 20th of November, 1842, the public paid on account of interest and charges on the sums due to Savings Banks and Friendly Societies under the act 9 Geo. 4. c. 92., 14,070,3414. 2s. 6d., and that the dividend received during the same period on the stock and other public securities in which the commissioners for the reduction of the national debt invested the said sums, amounted to 12,039,7817. 8s. 6d., leaving a balance of 2,030,5594. 148., which consequently may be said to be the sum which the system has cost the public. (Parl. Paper No. 258. Sess. 1843.)

The principle and object of Savings Banks cannot be too highly commended. In the metropolis, and many other parts of England, public banks do not receive small deposits, and until recently they did not pay any interest on them. And even in Scotland, where the public banks allow interest upon deposits, they do not generally receive less than 51. or 10l. But few poor persons are able to save even this much except by a lengthened course of economy. The truth, therefore, is, that until Savings Banks were established, the poorest classes were every where without the means of securely and profitably investing those small sums they are not unfrequently in a condition to save; and were consequently led, from the difficulty of disposing of them, to neglect opportunities for making savings, or, if they did make them, were tempted, by the offer of high interest, to lend them to persons of doubtful characters and desperate fortunes, by whom they were, for the most part, squandered. Under such circumstances, it is plain that nothing could be more important, in the view of diffusing habits of forethought and economy amongst the labouring classes, than the establishment of Savings Banks, where the smallest sums are placed in perfect safety, are accumulated at compound interest, and are paid, with their accumulations, the moment they are demanded by the depositors. The system is yet little more than in its infancy; but the magnitude of the deposits already received, sets its powerful and salutary operation in a very striking point of view. We subjoin a copy of the rules of the St. Pancras Savings Bank, which may be taken as a model for similar institutions, inasmuch as they have been drawn up with great care, and closely correspond with the provisions in the act 9 Geo. 4. c. 92.

1. Management. This bank is under the management of a president, vice-presidents, trustees, and not less than fifty managers, none of whom are permitted to derive any benefit whatsoever, directly or indirectly, from the deposits received, or the produce thereof. One or more of the managers attend when the Bank is open for business.

2. Superintending Committee. - A committee of not less than ten managers, three of whom form a quorum, is empowered to superintend, manage, and conduct the general business of this Bank; to add to their number from among the managers; to fill up vacancies in their own body, and to appoint a treasurer or treasurers, agent or agents, auditors, an actuary and clerks, and other officers and servants, and to withdraw any such appointments, and to appoint others, should it be considered necessary so to do. The proceedings of this committee are regularly laid before the general meetings of the Bank. 3. Elections The superintending committee is empowered to add to the number of managers, until they amount to one hundred and twenty, exclusively of the president, vice-presidents, and trustees. And any vacancies of president, vice-presidents, and trustees are to be filled up at a general meeting. 4. General Meetings. A general meeting of the president, vice-presidents, trustees, and managers of this Bank shall be held once a year, in the month of February. The superintending committee shall lay before every such meeting a report of the transactions of the Bank, and state of the accounts. The superintending committee for the succeeding year shall be elected at such general meeting; and failing such election, the former committee shall be considered as reappointed.

5. Special Meetings. — The superintending committee are authorised to call special general meetings when they think proper; and also, on the requisition of any ten managers, delivered in writing to the actuary, or to the manager in attendance at the bank; and of such meeting seven days' notice shall be given.

6. Liability of Trustees, Managers, Officers, &c. -No trustee or manager shall be personally liable except for his own acts and deeds, nor for any thing done by him in virtue of his office, except where he shall be guilty of wilful neglect or default; but the treasurer or treasurers, the actuary, and every officer intrusted with the receipt or custody of any sum of money deposited for the purposes of this institution, and every officer, or other person, receiving salary or allowance for their services from the funds thereof, shall give good and sufficient security, by bond er bonds, to the clerk of the peace of the county of Middlesex, for the just and faithful execution of such office of trust.

7. Investment and Limitation of Deposits. — Deposits of not less than one shilling, and not exceeding thirty pounds in the whole, exclusive of compound interest, from any one depositor, or trustee of a depositor, during each and every year ending on the 20th of November, will be received and invested, pursuant to 9 Geo. 4. c. 92. s. 11., until the same sha!! amount to one hundred and fifty pounds in the whole; and when the principal and interest together shail amount to two hundred pounds, then no interest will be payable on such deposit, so long as it shall continue to amount to that sum. But depositors, whose accounts amounted to, or exceeded, two hundred pounds, at the passing of the said act, on the 28th of July, 1828, will continue to be entitled to interest and compound interest thereon.

8. Interest to be allowed to Depositors. — In conformity with the 24th clause of the 9 Geo. 4. c. 92., an interest at the rate of 24d. per cent. per day, being 31. 8s. 54d. per cent. per annum (the full amount authorised by the said act), will be allowed to depositors, and placed to their accounts as a cash deposit, in the month of November in each year. Depositors demanding payment of the whole amount of their K

deposits in this Bank, will be allowed the interest due on such deposits up to the day on which notice of withdrawing shall be given, but no interest will be allowed, in any case, on the fractional parts of a pound sterling.

9. Description and Declaration. Every person desirous of making any deposit in this Bank, shall, at the time of making their first deposit, and at such other times as they shall be required so to do, declare their residence, occupation, profession, or calling, and sign (either by themselves, or, in case of infants under the age of seven years, by some person or persons to be approved of by the trustees or managers, or their officer), a declaration that they are not directly or indirectly entitled to any deposit in, or benefit from, the funds of any other Savings Bank in England or Ireland, nor to any sum or sums standing in the name or names of any other person or persons in the books of this Bank. And in case any such declaration shall not be true, every such person (or the person on whose behalf such declaration may have been signed) shall forfeit and lose all right and title to such deposits, and the trustees and managers shall cause the sum or sums so forfeited to be paid to the commissioners for the reduction of the national debt; but no depositor shall be subject or liable to any such forfeiture, on account of being a trustee on behalf of others, or of being interested in the funds of any Friendly Society legally established.

10. Trustees on behalf of others. - Persons may act as trustees for depositors, whether such persons are themselves depositors in any Savings Bank or not, provided that such trustee or trustees shall make such declaration on behalf of such depositor or depositors, and be subject to the like conditions in every respect, as are required in the case of persons making deposits on their own account, and the receipt and receipts of such trustee or trustees, or the survivor of them, or the executors or administrators of any sole trustee, or surviving trustee with or without (as may be required by the managers) the receipt of the person on whose account such sum may have been deposited, shall be a good and valid discharge to the trustees and managers of the institution.

11. Minors. Deposits are received from, or for the benefit of, minors, and are subject to the same regulations as the deposits of persons of 21 years of age and upwards.

12. Friendly and Charitable Societies. - Friendly Societies, legally established previous to the 28th of July, 1828, may deposit their funds through their treasurer, steward, or other officer or officers, without any limitation as to the amount. But Friendly Societies formed and enrolled after that date are not permitted to make deposits exceeding the sum of 3004., principal and interest included; and no interest will be payable thereon, whenever the same shall amount to, or continue at, the said sum of 3001, or upwards.

Deposits are received from the trustees or treasurers of Charitable Societies, not exceeding 1007. per annum, provided the amount shall not at any time exceed the sum of 3007., exclusive of interest.

13. Deposits of Persons unable to attend. - Forms are given at the office, enabling persons to become depositors, who are unable to attend personally; and those who have previously made a deposit, may send additional sums, together with their book, by any other person.

14. Depositors' Book. The deposits are entered in the books of the Bank at the time they are made, and the Depositor receives a book with a corresponding entry therein; which book must be brought to the office every time that any further sum is deposited, also when notice is given for withdrawing money, and at the time the repayment is to be made, so that the transactions may be duly entered therein.

15. Withdrawing Deposits. — Depositors may receive the whole or any part of their deposits on any day appointed by the managers, not exceeding fourteen days after notice has been given for that purpose; but such deposits can only be repaid to the depositor personally, or to the bearer of an order under the hand of the depositor, signed in the presence of either the minister or a churchwarden of the parish in which the depositor resides, of a justice of the peace, or of a manager of this Bank.

The Depositor's Book must always be produced when notice of withdrawing is given.

16. Money withdrawn may be re-deposited. -Depositors may withdraw any sum or sums of money, and re-deposit the same at any time or times within any one year, reckoning from the 20th day of November, provided such sum or sums of money re-deposited, and any previous deposit or deposits which may have been made by such depositor in the course of the year, taken together, shall not exceed, at any time in such year, the sum of 301. additional principal money bearing interest.

17. Return or Refusal of Deposits. - This Bank is at liberty to return the amount of the deposits to all or any of the depositors, and may refuse to receive deposits in any case, where it shall be deemed expedient so to do.

18. Deposits of a deceased Depositor exceeding Fifty Pounds. In case of the death of any depositor in this Bank, whose deposits, and the interest thereon, shall exceed in the whole the sum of fifty pounds, the same shall only be paid to the executor or executors, administrator or administrators, on the production of the probate of the will, or letters of administration.

19. Deposits of a deceased Depositor not exceeding Fifty Pounds. In case a depositor in this Bank shall die, whose deposits, including interest thereon, shall not exceed the sum of fifty pounds, and that the trustees or managers shall be satisfied that no will was made and left, and that no letters of administration will be taken out, they shall be at liberty to pay the same to the relatives or friends of the deceased, or any or either of them, or according to the statute of distribution, or require the production of letters of administration, at their discretion. And the Bank shall be indemnified by any such payments from all and every claim in respect thereof by any person whatsoever.

20. Certificate. In all cases wherein certificates shall be required of the amount of deposits in this Bank belonging to depositors therein, for the purpose of obtaining, free of stamp duties, a probate of will, or letters of administration, such certificate shall be signed by a manager, and countersigned by the actuary for the time being, as a true extract from the Ledger of the institution.

21. Arbitration of Differences. In case any dispute shall arise between the trustees or managers of this Bank, or any person or persons acting under them, and any individual depositor therein, or any trustee of a depositor, or any person claiming to be such executor, administrator, or next of kin then, and in every such case, the matter so in dispute shall be referred to the barrister at law appointed by the commissioners for the reduction of the national debt, under the authority of the 9 Geo. 4. c. 92. s. 45.; and whatever award, order, or determination shall be made by the said barrister, shall be binding and conclusive upon all parties. and shall be final, to all intents and purposes, without any appeal.

Purchase of Government Annuities by Depositors in Savings Banks. The act 2 & 3 Will. 4. c. 14. enables depositors in Savings Banks and others to purchase government annuities for life or for years, and either immediate or deferred. At present these annuities are limited to 20l. a year. The money advanced is returnable in case the contracting party does not live to the age at which the annuity is to become payable, or is unable to continue the monthly or annual instalments. That this measure was benevolently intended, and that it may be productive of advantage to many individuals, cannot be doubted; but we look upon all attempts, and particularly those made by government, to get individuals to exchange capital for annuities, as radically objectionable; and as being subversive of principles which ought to be strengthened rather than weakened. (See FUNDS.) We subjoin

-