DISCUSSIONS PRELIMINARY TO THE ALTERATION OF THE RATIO.

MEMORANDUM OF A REPORT OF A COMMITTEE OF THE ПОГ8Е TO INQUIRE WHETHER IT BE EXPEDIENT TO MAKE ANY AMENDMENT I> THE LAWS WHICH REGULATE THE COIN OF THE UNITED STATES AM' FOREIGN COINS RESPECTIVELY.

On January 20, 1819, Mr. Lowndes (of South Carolina) presented »report of considerable length, the principal recommendations of whirl were that the Gold pieces be reduced in weight to 22.798 grains of ]>;m Gold to the dollar, that a seigniorage of 14.85 grains pure Silver to t!r dollar be charged for the Silver coins, and the legal tender of Silver pieces below the half-dollar be limited to five dollars.

It was intended by this measure that the ratio should be i-han^i from 15 to 15.00, but the deduction of the proposed seigniorage would have left the ratio of the coins a minute fraction lower than 15, wh-1. the ratio of 15.00 would have been realized only in the ratio of the mint price of Silver to the mint price of Gold.—И.

RETORT ON CURRENCY, MADE TO THE HOUSE OP BEPRESENTATIVES OF THE U. STATES, 24тн FEBBUABY, 1830, BY WM. H. CRAWFORD, SECRETARY OF THE TBEASUBY.

Treasury Department,

12fA February, l&».

Sir: In obedience to a resolution of the House of Representative*, passed on the 1st of March, 1819, directing "the Secretary of theТггл> iiry to transmit to Congress, at an early period in the next session, л general statement of the condition of the Bank of the United StaU-s ;л.п<1 its offices, similar to the return made to him by the bank; and a

statement, exhibiting, as nearly as may be practicable, the amount of

oapital invested in the different chartered banks in the several States

i i ml the District of Columbia, the amount of notes issued by those

V>anks and in circulation, the public and private deposites in them, the

;imouiit of loans and discounts made by them, and remaining unpaid,

und the total quantity of specie they possess; and, also, to report such

measures as, in his opinion, may be expedient to procure and retain a

sufficient quantity of gold and silver coin in the United States, or to

supply a circulating medium in place of specie, adapted to the exigen

c-ies of the country, and within the power of the government:" 1 have

the honor to submit the subjoined report and statements.

Statement A, exhibits the condition of the Bank of the United States, and its offices, on the 30th of September, 1819.

Statement B, exhibits the amount of bank capital, authorized by law, during the years 1814, 1810, 1810, and 1817. As this statement is founded upon the applications made to the Treasury under the acts imposing stamp duties, it is believed to be substantially correct. The average dividends upon which the stamp duty was paid, during those years, amounted to about 7¿ ]>er cent, upon the nominal amount of capital; it is, however, a matter of general notoriety, that the dividends upon bank capital, actually paid, exceeded that rate. If it is assumc-d, that the dividends declared, and щюи which the duty was paid, amounted, during those years, to 10 per cent., then the capital actually paid, in the year 1817, instead of being more than $li£j,UOO,000, as it is exhibited in Statement B, will be found to be about $94,000,000; but, when it is recollected that, after the first payment required by the charters of the different banks, they have generally gone into operation, it is probable that a considerable proportion of the remaining payments have added nothing to their active capital. This fact being assumed, ami a deduction being made of the amount of permanent accommodation enjoyed by the stockholders, in their respective banks, the active bank capital of the United States may be fairly estimated at a sum not exceeding $75,000,000. That these deductions ought to be made, in an attempt to ascertain the real amount of bank capital, cannot, it is presumed, be contested. If a stockholder, to the amount of 810,000, has a permanent accommodation in the bank, of $8,000, he has, in fact, but *_?.000 of capital in the bank. This is equally true when a portion of his subscription has been paid with his own note, however well endorse*!: so long as the note remains unpaid, it adds nothing to the real capital of the bank.

Such, it is believed, has l>een the process by which the capital of most of the banks has been formed, which have been incorporated since the commencement of the late war. Since that period, banks have been incorporated, not because there was capital seeking investment; not because the places where they were established had commerce and manufactures which required their fostering aid; but,because men, witb.a: active capital, wanted the means of obtaining loans, which their *uu.i ing in the community would not command from banks or indiviilu¿-having real capital and established credit. Hence the uiultiplicin v local banks, scattered over the face of the couHtry, in particular par;.of the Union; which, by the depreciation of their paper, have levitsl tax upon the communities within the pale of their influence, exceeding the public contributions paid by them.

Statement C, presents the condition of the State banks from returns have been received, or have been transmitted by the of State of diflerent States, in conformity with the request of ury Department. By comparing this Statement with Statement L, -• will be perceived that it is very imperfect. Independently of the which have been created since the year 1817, it will be discovered, bank capital to the amount of more than $18,000,000, comprehended iij Statement B, is not embraced in it. As the amount of bank capit^i exhibited in Statement С is 872,000,000, and its specie $9,82S,o»»>. the whole specie possessed by the State banks may be estimât«*! +; $12,200,000; if to this sum be added the specie in the possession of tinBank of the United States, and its offices, the specie capital of all iLbanks in the United States may be estimated at $15,500,000. There ¿r-no means of ascertaining, with any degree of precision, the amount of specie in circulation; it is probable, however, that it does not с-х«ч>$4,500,000. Assuming this amount to be nearly correct, the who!-metallic currency of the Union may be estimated at $20,000,000. Applying the same rule for ascertaining the circulation of the banks, n- •'. embraced by Statement C, which has been employed to determine tbfir specie, the whole amount of bank notes in circulation may be estimate, at $4(3,000,000. It is probable, however, that this estimate is too hi^rii. as, according to the general practice of banks, all notes issned are consi«! ered in circulation, which are not in the possession of the bank by wh«-L they were issued. A reasonable deduction being made from the note« supposed to be in circulation, but which are, in fact, in the poe««si..t. of other banks, it is probable that the actual circulation, both of paf»-: and specie, is less, at this time, than $45,000,000. By the ваше пхмК of calculation, the whole amount of discounts may be estimated a: $156,000,000.

The destruction or loss of the returns made to tho Treasury, boforv the year 181G, by the banks in which the public money was deposit«-«!, prevents any satisfactory comparison being drawn between thtir «uni; tiou before and since that period. Comparative statements, howev. r. have been received from sixteen banks in diflerent parts of the Vui».1:. showing their situation on the 30th day of September, in the year» 1813, 1815, and 181Í). By Statement D, it appears that those banks, at th. first period, with a capital of $(5,903,202, and with $3,059,1 l'J of spv< i111 their vaults, circulated $0,845,344 of their notes, and

to the amount of $12,990,975: at the second period, their capital was *s,s52,371; specie, $1,693,918; circulation, §9,944,757; and discounts, €115,727,218; and at the third period, their capital was $9,711,960; >!K-cie, $1,726,065; circulation, $4,259,234; and discounts, $12,959,560.

By Statement B, already referred to, it has been shown that, in the year 1814, the nominal bank capital in the United States exceeded £.40,000,000. It is understood that a large addition was made to it, in that year, in several of the States. If it be admitted that such addition amounted to $15,000,000, the bank capital in operation, in the year 1813, may be stated at $05,000,000. Allowing to this capital the same amount of specie, circulation, and discounts, as was comparatively possessed by the banks comprehended in Statement 1), the estimate will be, specie .* 28,000,000; circulation $62,000,000; and discounts $117,000,000. In 1815, the bank capital had increased to $88,000,000; whilst, upon the sanie principle of calculation, the specie would have been estimated at §16,500,000, circulation at §99,000,000, and discounts at $150,000,000. Applying this principle to the $125,000,000 of bank capital in operation during the year 1819, the specie possessed by all the banks would amount to $21,500,000, circulation $53,000,000, and discounts $157,000,000.

These last results, with the exception of the discounts, very materially differ from those which have been obtained by the mode of calculation previously adopted. They nevertheless furnish materials which may be useful in the progress of this inquiry. From them the following deductions may be drawn:

1st That, in the year 1813, the circulation of bank notes was nearly equal to the bank capital.

2d. That, in the year 1815, it exceeded the capital by one-eighth.

3d. That, in the year 1819, it was less than the capital, nearly in the proportion of 1 to 2.5.

4th. That, whilst the amount of bank capital has increased since 1813, from 65. to 125., the metallic basis, upon which the circulation of notes it* founded, has decreased in the proportion of 15.5 to 28; being equal to 44.6 per cent.

5th. That the circulation of notes in the year 1819, in proportion to the specie in the possession of the banks, exceeded that of 1813, 25.9 per cent.

6th. That, in the year 1813, the discounts, in proportion to the bank capital employed, exceeded those of 1815, in the ratio of 18 to 17, and tbose of 1819, in the ratio of 18 to 12.

7th. That the increase of bank notes in circulation, between the years 1813 and 1816, exceeded the increase of discounts during the same period by $4,000,000; whilst the specie in the vaults of tho banks was diminished $11,000,000.

8th. That whilst, between the years 1815 and 1819, an addition of $37,000,000 has been made to the nominal bank capital, but $6,000,000 have been added to the aggregate amount of discounts.

It is probable that, between the year 1811 and the year 1813, a tv.s siderable addition was made to the paper circulation of the соошгг. From a return of the former Bank of the United States, made to tЬ Treasury in 1808, it appears that, with 815,300,000 of specie, it cir< -i lated only $4,787,000 of notes. Another return made in 1810, show> itcondition was not materially changed. Shortly after the expiration >: its charter, bank capital, to a great amount, was incorporated in *un* of the States. The expenditures produced by the war, which was .•!•clared in 1812, without doubt contributed in some degree to produce H:difference between the condition of the sixteen banks already refem-d to, and that of the former bank of the United States. If it be admit ¡"I. however, that the circulation in 1813 was not redundant, it must have become excessive in 1815. An increase of the currency, in the s¡iac-e < i two years, in the proportion of 99 to 62, even if it had been win ilk metallic, could not have failed to have produced a very great «1ерпч ;.» tiou; but when it is considered, that not only the increase, but tLf whole circulation consisted of paper, not convertible into specie, sun»idea of its depreciation may be formed. The depreciation, however, was not uniform in every part of the Union. The variation in the de^n-of depreciation depended not only upon the greater issues of bank> ¿:¡ one section of the nation, than in others; but, also, apon the local advantages which they enjoyed as to commerce. It is impossible to dfirt mine, with precision, where the most excessive issue of bauk-ii"t. occurred. Statement Б, which exhibits the rate of exchange bet»e«i the principal cities to the east of this place, and London, and the \*r,< of bills at Xew York upon Boston, Philadelphia, and Baltimore, dnr.r.: the years 1813, 1814, 1815, and 181C, may be considered presuniprv evidence of that fact. So far as it can be relied upon for that pnq»~. Baltimore was the point of greatest depreciation among the abmv-тн: tioned places. This is probably true; as it is known that the banks i that place made greater advances to the government in the loans win. jt obtained during the late war, in proportion to their capitel, than thos> of Philadelphia, New York, and Boston. But the greatest depivri.tü' ¡ of the currency existed in the interior States, where the issues were net only excessive, but where their relation to the commercial cities greatlr aggravated the effects of that excess.

This statement may also assist in explaining the cause of the neoes.- r. which existed in 1814, for the suspension of specie payment» by tht banks. From the commencement of the war until that event, a br_v amount of specie was taken out of the United States, by the sok- • •!' English government bills, at a discount, frequently of from 15 to Jli i»: cent. Immediately after the suspension, they commanded a premium in those places where the banks had suspended payment, which jau-l ually rose to 20 per cent.; whilst at Boston they remained at a of about 14 per cent, until February, 1815.

Whatever may have been the degree of depreciation of the