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THE SECRETARY OF THE TREASURY,
IN OBEDIENCE TO A RESOLUTION OF THE HOUSE OF
REPRESENTATIVES OF 1st MARCH, 1819,
IN RELATION TO THE CONDITION OF THE
BANK OF THE UNITED STATES
AND ITS OFFICES;
ALSO STATEMENTS IN RILATION TO THE SITUATION
OF THE DIFFERENT
IN THE DIFFERENT STATES, AND THE DISTRICT
OF COLUMBIA, &c.
NOW FIRST PRINTED IN THIS COUNTRY.
12th February, 1820. Sir: In obedience to a resolution of the House of Representatives, passed on the 1st of March, 1819, directing “the Secretary of the Treasury to transmit to Congress at an early period in the next session, a general statement of the condition of the Bank of the United States and 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 capital invested in the different chartered banks in the several states and the district of Columbia, the amount of notes issued by those banks and in circulation, the public and private deposits in them, the amount of loans and discounts made by them, and remaining unpaid, and 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 exigencies of the country, and within the power of the government:" I 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 authorised by law, during the years 1814, 1815, 1816, 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 per 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 assumed, that the dividends declared and upon 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 125,000,000 dollars, as it is exhibited in statement B, will be found to be about 94,000,000 dollars; but, when it is recollected that after the first payment required by the charters of the different banks, they have generally gone
operation, it is probable that a considerable proportion of the remaining payments have added nothing to their active capital. This fact being assumed, and 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 dollars. 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 10,000 dollars has a permanent accommodation in the bank of 8,000 dollars, he has, in fact, but 2,000 of capital in the bank. This is equally true when a portion of his subscription has been paid with his own note, however well indorsed: so long as the note remains unpaid, it adds nothing to the real capital of the bank.
Such, it is believed, has been 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 without active capital wanted the means of obtaining loans, which their standing in the community would not command from banks or individuals having real capital and established credit. Hence, the multiplicity of local banks, scattered over the face of the country, in particular parts of the Union ; which, by the depreciation of their paper, have levied a 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 which returns have been received, or have been transmitted by the Secretaries of State of different states, in conformity with the request of the Treasury Department. By comparing this statement with statement B, it will be perceived that it is very imperfeçt. Independently of the banks which have been created since the year 1817, it will be discovered that bank capital to the amount of more than 18,000,000 dollars, comprehended in statement B, is not embraced in it. As the amount of bank capital exhibited in statement C, is 72,000,000 dollars, and its specie 9,828,000, the whole specie possessed by the state banks may be estimated at 12,250,000 dollars; if to this sum be added the specie in the possession of the bank of the United States and its offices, the specie capital of all the banks in the United States may be estimated at 15,500,000 dollars. There are no means of ascertaining, with any degree of precision, the amount of specie in circulation; it is probable, howeyer, that it does not exceed 4,500,000 dollars. ' Assuming this amount to be nearly correct, the whole metallic currency of the Union may be estimated at 20,000,000 dollars. Applying the same rule for ascertaining the circulation of the banks, not embraced by statement C, which has been employed to determine their specie, the whole amount of bank notes in circulation may be estimated at 46,000,000 dollars. It is probable, however, that this estimate is too high; as, according to the general practice of banks, all notes issued are considered in circulation, which are not in the possession of the bank by which they were issued. A reasonable deduction being made from the notes supposed to be in circulation, but which are in fact in the possession of other banks, it is probable that the actual circulation both of paper and specie, is less at this time than 45,000,000 dollars. By the same mode of calculation, the whole amount of discounts may be estimated at 156,000,000 dollars.
The destruction or loss of the returns made to the Treasury, before the year 1816, by the banks in which the public money was deposited, prevents any satisfactory comparison being drawn between their condition before and since that period. Comparative statements, however, have been received from sixteen banks in different parts of the Union, showing their situation on the 30th day of September, in the years 1813, 1815, and 1819. By statement D it appears that those banks, at the first period, with a capital of 6,903,262 dollars, and with 3,059,140 dollars of specie in their vaults, circulated 6,845,344 dollars of their notes, and discounted to the amount of 12,990,975 dollars: at the second period, their capital was 8,852,371 dollars; specie, 1,693,918 dollars; circulation, 9,944,757 dollars; and discounts, 15,727,218 dollars ; and at the third period, their capital was 9,711,960 dollars; specie, 1,726,065 dollars; circulation, 4,259,234 dollars; and discounts, 12,959,560 dollars.
By statement B, already referred to, it has been shown, that, in the year 1814, the nominal bank capital in the United States ex.