charter defeated. sition was based on constitutional objections. In the Renewal of House the bill was defeated by the close vote of 65 to 64. In the Senate Crawford (afterwards Secretary of the Treasury) favored the renewal, in a strong report, believing, like Gallatin, in the great practical utility of the bank. He obtained from Gallatin a forcible plea for his bill, in which the inability of state banks to serve the desired purpose was conclusively shown. Crawford pointed out that despite the admitted usefulness of the bank and its influences upon the country's prosperity, the legislators were being carried away by the supposed public sentiment against the bank. Henry Clay opposed the bill upon constitutional grounds; he also appears to have been afraid of foreign control. The vote in the Senate was 17 to 17, and Vice-President George Clinton gave the casting vote against the bill. So renewal was defeated. A petition from the bank for a brief extension in order to wind up its affairs was likewise negatived. Clay in the Senate made the committee report against the petition, saying that inasmuch as the original. act was unconstitutional, any extension would be equally So. In the House the same reason was given for refusal.1 The assets of the institution were acquired by Stephen Girard, who continued the business in Philadelphia as Girard's Bank, which still flourishes there under a national charter. of the bank. In the final liquidation it paid $434 for each of its Liquidation $400 shares, after having paid dividends averaging 8 per cent.2 In 1784 there were but three state banks with a capital of $2,100,000. From the meagre reports available it is gathered that the number increased by 1800 to 28 1 Clarke and Hall, History of Bank of United States. 2 Knox, History of Banking. Banks owned by states. with $21,300,000 capital, in 1805 there were 75 with over $40,000,000 of capital, and in 1811 there were 88 with nearly $43,000,000 of capital. Of these last mentioned 47 with $12,200,000 capital were in New England, where the laws imposed wholesome regulation, particularly in Massachusetts, which required public reports from 1803. Although the systems in other states were with rare exceptions very carelessly supervised, or not at all, and charters were granted as spoils of party in some, the circulation issued relative to the specie holdings was not excessive in volume until after 1811.1 In 1806 Vermont had organized a bank, with branches, owned and operated exclusively by the state. Kentucky in the same year, Delaware in 1807, and North Carolina in 1810, each chartered a bank in which the state took a substantial stock interest. That of Delaware is still in existence, under the old charter.2 Taken all together the period covered by the two decades during which the first United States Bank existed was one of prosperity, perhaps without parallel in any new country after an impoverishing war, and although natural advantages and the energies of the people had much to do with this prosperity, it is but just to give credit to the fathers of the Republic for their foresight in laying its foundations, and especially to the genius of Hamilton, who at the age of 32 took charge of the Treasury Department, and for about six years had the almost exclusive direction of the economic affairs of the new nation. His four reports on the Public Credit, the Establishment of a Coinage System, on the Bank, and on Manufactures and Tariff, constitute a monument to the incomparable ability of this greatest of all our financial ministers. 1 See Crawford's Report of 1820, also Gallatin, Currency and Banking System, 1831. 2 Knox, History of Banking. STATISTICAL RÉSUMÉ ESTIMATES OF BANK CAPITAL AND CIRCULATION, AND THE MONEY IN THE COUNTRY FOR VARIOUS DATES TO 1811 Compiled from Crawford's Reports and Elliot's Funding System It is reported that in 1811 the banks held about $15,000,000 of specie. Statements purporting to give specie holdings prior to that date are misleading. State bank currency. CHAPTER V 1812 TO 1836 THE Currency history of the country for the quartercentury following the expiration of the charter of the first Bank of the United States is divisible into three almost equal periods, - the disorganized condition of the currency during and following the War of 1812, and the struggle for its reformation, which extended to 1820; a period of sound currency under regulation by the second Bank of the United States followed and continued until 1829; then began the war upon the bank resulting in the failure to renew its charter and the downfall and breaking up of the system of which the bank had been the controlling influence. Statistics relating to banking and currency from 1812 to 1834 are exceedingly meagre. Subsequent to 1834, pursuant to a resolution of Congress directing the collection and reporting of information, the Treasury reports contain fairly satisfactory data. Secretary Crawford,1 and afterward ex-Secretary Gallatin,2 undertook to give some comparative figures for certain years. For the period from 1821 to 1828, inclusive, the only available statistics are found in the reports of the Massachusetts banks (required by state law from 1803) and those of the second Bank of the United States, also required by law. 1 Report of 1820, in full in International Monetary Conference, 1878, p. 502. 2 Currency and Banking System, 1831. The second war with Great Britain began in 1812. The government found it necessary to borrow money, and as predicted by Hamilton, Gallatin, and Crawford, the state banks proved unequal to the emergency.. Instead of the anticipated contraction of banking facilities after the liquidation of the first bank, a rapid ex- State banks. pansion had taken place, but much of the alleged bank capital was fictitious, a large number of banks having been organized upon capital represented by notes of hand of the subscribers. Crawford estimated that in the four years, 1811-1815, the number of banks increased from 88 to 208, the capital from less than $43,000,000 to over $88,000,000, and the circulation from $23,000,000 to $110,000,000. In 1816 there were 246 banks with $89,400,000 capital. Inflation and For 1817 the number of banks is not given, but the suspension. capital is estimated at $125,700,000. In 1820 there were 307 banks, but the capital was only $102,100,000. Adequate legal restrictions were wanting in most of the states, and notes were issued with ease and without regard to capital or specie holdings. In order to increase the volume as much as possible, since note-issues were their principal means of making loans and discounts, a mass of small denominations, some as low as six cents, were issued. Adding to this the stress of war and the consequent hoarding of specie, suspension of coin payments naturally followed. Most of the banks outside of New England suspended in August, 1814. The depreciation of Southern and Western bank-notes was most severe. At Baltimore, where notes from Southern banks were found in greatest abundance, the discount on some issues reached 23 per cent. In New York and Philadelphia 16 per cent was the maximum discount. Boston and New England notes alone were quoted on a par with specie. The range of the dis |