OBITUARY NOTICE. Isaac Bronson, Esq., was a native of Middlebury, a small township in the county of New-Haven, in Connecticut. His father was a farmer of very respectable character, and often a member of the Connecticut legislature. A small farm was his only source of revenue, and the expenses of his family required all his industry and economy for their support. For this reason neither of his sons received a collegiate education; but they had the best advantages which his limited means would afford. There are few country places where intellectual culture was so generally and successfully sought as in Middlebury. The people were considerate, industrious, and moral; and united their efforts to provide means for the general diffusion of valuable know. ledge among themselves. Few persons of regular education were more familiar with the history of the world, and with those branches of information which constitute useful and practical intelligence. The influence of such a community was favourable to the development of the talents and virtues of youthful minds, and doubtless had a salutary effect in forming the character of Mr. Bronson. While a youth he pur. sued the study of medicine with the late Dr. Lemuel Hopkins of Hartford-a gentleman highly distinguished in his profession-and entered the army as a junior surgeon early in the revolutionary war; in which service he continued until the peace of independence. About the year 1792, having abandoned the profession of medicine, he went with his family to Philadelphia, and after about two years residence in that city removed to New York, where he continued settled till his death. In 1796 he purchased the beautiful seat of the late President Dwight, on Greenfield Hill, in Connecticut, for a summer residence, to which he retired with his family during a large portion of every year. In this place he died on the 19th of May last, in the 79th year of his age. THE LATE ISAAC BRONSON, ESQ.-Departed this life on the 19th of May last, at his country residence at Greenfield, Connecticut, in the 79th year of his age, Isaac Bronson, Esq., of the city of New York, a gen- Mr. Bronson was distinguished for uncommon inteltleman extensively known for his intimate acquaintance lectual power, and the most scrupulous integrity. Upwith the principles of banking, currency and finance, on every subject to which his attention was at any and the same, whose last letter on his favourite sub-time directed, his views were clear and profound. His ject, written to a friend, will be found in this number large fortune was the fruit of financial wisdom. Among of the Register. The following short biographical other items in his extensive field of business, was a notice of this respectable and much lamented citizen, monied institution in Connecticut, of which, for near has been furnished at our solicitation, by a distinguish- thirty years he had the entire control. This he made ed gentleman of New England, who enjoyed for many a sort of laboratory, for illustrating his favourite system years an intimate and confidential acquaintance with of banking. Simple as that system is, and long as he the deceased, and whose opportunities of forming a laboured to evince its utility, it has but recently comjust estimate enable him to speak with certain know.manded public attention. Its outline is this. He never ledge of his worth and financial skill. In corroboration of what this gentleman asserts in reference to Mr. Bronson's sagacity and foresight, we publish on another page, a letter written by him in the year 1832 to a member of congress, predicting what has since actually occurred, and as an additional evidence of the same, we can assert as within our own knowledge, that the late suspension of specie payments at an early day was foretold by him, before the subject had been even hinted at by any individual in Philadelphia with whom we had conversed. discounted paper at his counter for a longer credit than sixty or ninety days, and would not in any instance, consent to a renewal; consequently after the bank had been a short time in operation, the payments made on the discounted paper would equal the emissions of bank bills. Thus the means of redeeming all the paper he issued would soon become ample, by the fruits of discounts only, without the employment of any capital. Every bill which remained in circulation, would soon be represented by its equivalent in specie in the vaults of the bank. During all this time, he would be gra dually investing, on good security, and on half yearly | ton and other distinguished men connected with the interest, the specie capital of the bank; so that two federal government in its early annals, confided in his classes of customers would be accommodated-those talents and virtues; and often consulted him, with who needed discounts of sixty or ninety days with great deference for his opinions, epecially in regard to bills advanced on indorsed notes, at the counter; and its financial interests. those who wanted loans, for months or years, with the specie capital, on giving safe security. The specie capital was all soon lent on half yearly interest; and the discounts could be indefinitely extended as they supplied the means for redeeming all the bills of the bank, without resort to the capital. The revenues of the bank, from these two sources, made an average dividend of ten per cent. yearly, during the whole of Mr. Bronson's administration. This bank, without resort to its capital, although its discounts were liberal, was one of the few which sustained specie payments during the last war with England. An exception, however, occurred for a few days in consequence of the specie being withheld by a bank in New York, where it was deposited to avoid the enemy, whose ships were hovering on the defenceless harbour where the bank was located. Mr. Bronson's liberality was great, but little known to the public. Whenever he conferred a favour, he endeavoured to conceal it from the world, and, if possible, from the individual on whom it was bestowed, But the writer of this memoir from a long acquaintance with certain branches of his business, has know. ledge of his munificent charities to a very great amount. In his own family he was beloved for all that could endear a husband and father. About seventeen years ago he devoted his attention to the Christian religion, and has ever since entertained a full convic. tion of its truths. He died in the hope of a happy immortality through the merits of the Saviour. His great age cast no shade over his mental powers; but they continued in unclouded strength, to the close of his life. We this day commence the second volume of the Register. New subscribers can be supplied with the first volume half bound or in sheets. For the information of those who have not seen it, we state that it contains, The Bullion Report of the British Parliament of 1810. The seven British pamphlets on the late money crisis, by J. Horsley Palmer, S. Jones Loyd, R. Torrens, Samson Ricardo, J. Horsley Palmer, W. Bennison, and David Salomons, reviewed in the Edinburgh Review for April, 1837, with the review itself. Mr. Nicholas Biddle's five letters on the currency, addressed to Mr. Adams. The bill-holder had a double security-the specie in the vaults and the invested capital. The stockholders had the same. The borrowers were accommodated in a manner which the common system does not admit. By keeping the specie, resulting from discounts, resting in the vaults; an accumulation of the amount of currency in circulation, and the consequent augmentation of prices, if the system were general, would be prevented to a great degree. The banks would be subject to commerce, not commerce to the banks. The laws of trade would be supreme, and less subject to the artificial influence of paper money. Bereft of the use of their capital, and prohibited from renewing discounted paper, the banks would be comparatively The seventeen essays which were published last powerless in stimulating to that speculation and ex-year in the National Gazette, under the signature of travagance, which has so often resulted in extensive "An Examiner." desolation. In short, the system which Mr. Bronson practised, if generally adopted, would produce all the benefits, with comparatively few of the evils, of monied institutions. The demonstration which he gave the world by his long and laborious efforts of the practicability and superior utility of that mode of operation, ought, long since, to have given it a decided preference The report of the director of the mint for 1837. over every other in the public mind. It has been par-tember and December, 1837, and various other public The reports of the secretary of the treasury of Septially adopted in the act lately passed by the empire documents required for occasional reference. state, and must ultimately become universal, if the nation is saved from the convulsions so often resulting from the present system. Mr. Bronson's discernment in whatever related to political economy, has been seldom equaled. He would foretel the effects of a given measure upon the general system of trade, with all the precision of a history of past events. The fulfilment of his predictions, in regard to the result of any momentous step taken by the banks or by the government, has scemed almost to indicate the supernatural gifts of prophecy. No political bias, or regard for public opinion, or sinister motive connected with his own interest, ever seemed to influence his judgment. In all his opinions and actions he aimed at truth and rectitude. Hamil. A copy of the acts for the distribution of the surplus revenue, of the specie circular, and most of the acts passed at the extra session of congress. The monthly statements of the Bank of the United States for the year 1837. Official statements of the condition of all the banks of the United States at the latest dates. The work of Mr. Quin, on the trade of banking, which we this day commence, and which will be regularly continued until it is finished, fills upwards of 400 pages of the English edition, and costs in London fifteen shillings. OF THE UNITED STATES. DEVOTED CHIEFLY TO FINANCE AND CURRENCY, AND TO BANKING AND COMMERCIAL STATISTICS. "It is the interest of every country that the standard of its money, once settled, should be inviolably and immutably kept to perpetuity. For whenever that is altered, upon whatever pretence soever, the public will lose by it. "Men in their bargains contract, not for denominations or sounds, but for the intrinsic value."-Locke on Money. Vol. II. No. 2. WEDNESDAY, JULY 11, 1838. THE TRADE OF BANKING IN next [1708] to the 1st of August, 1732.* A further sum of £400,000 was advanced by BY MICHAEL J. QUIN, ESQ., BARRISTER AT the bank to the government; and it was pro LAW. (Continued from page 4.) CHAPTER I. vided, that during the continuance of the corporation, it should not be lawful for any body politic, other than the Bank of England, Origin, privileges, and functions of the Bank of England-Its or for more than six persons united in part. power with respect to private bankers. 1. ORIGIN. nership, in England, to borrow, owe, or take up any sum of money, on their notes payable at demand, or at any less time than six months from the borrowing thereof. Under the authority of various other acts,‡ 1713 to 1816,] more or less connected with the bank, the charter has been from time to ine extended or renewed, and the rights and privileges of the corporation have been secured in very strong terms. Considerable embarrassment having been experienced by the government, in its endeayours to meet the exigencies of the public service soon after the accomplishment of the revolution of 1688, Mr. William Patterson, a Scotish gentleman of eminent ability and enterprise, proposed to the treasury to raise, for its accommodation, upon certain terms,† The bank has been recently [1826] fura voluntary loan of one niillion two hundred ther authorised to establish branch banks in thousand pounds. His project having been accepted, the loan was realised; and under the country; and although banking companies the authority of the 5th and 6th W. and M. consisting of more than six partners may c. 20, [1694,] a charter was granted to the now be formed, upon the joint-stock prinsubscribers, by virtue of which they were in- ciple, yet in deference to the privileges of the Bank of England, such companies have been corporated under the denomination of "The Governor and Company of the Bank of Engmand in London, or within sixty-five miles of prohibited from issuing notes payable on deland." Under the provisions of the same act, it, and from drawing bills on London, or the sum thus raised was advanced to govern ment at a specified rate of interest; in addi- making notes payable there, for less than The notes of the Bank of tion to which, a sum of four thousand pounds fifty pounds.** per annum was allowed to the bank, for the management of the public debt and the payment of the dividends. II. PRIVILEGES. Upon the security of the capital thus lent to the state, the bank were authorised by their charter to issue notes, convertible on demand into gold. The charter, which fully specified the powers of the corporation, and the mode of managing their affairs, was redeemable upon the expiration of twelve months' notice, to be given after the 1st of August, 1705. The period of notice was [1697] subsequently extended to the 1st of August, 1710,‡ and * M'Culloch's Commercial Dictionary-Art. "Bank of England." + Subsequently comprehended in the charter.-See Appendix, A. 8 and 9 W. 3, 20. * 7 Ann, c. 7. + 7 Ann, c. 7. 12 Ann, stat. 1, c. 11; 3 G. 1, c. 8; 8 G. 1, c. 21; 1 G. 2, c. 8; 2 G. 2, c. 3; 15 G. 2, c. 13; 19 G. 2, c. 6; 4 G. 3, c. 25; 21 G. 3, c. 60; 39 and 40 G. 3, c. 28; 48 G. 3, c. 4; and 56 G. 3, c. 96. See also the loan acts, and those relating to the public securities; the public balances in the hands of the bank; restriction and resumption of cash payments; restraining the negotiation of promissory notes under a limited sum; the circulation of tokens; the protection of the property of the bank; the punishment of persons guilty of forgery, and of counterfeiting tokens; those regulating the mode of transacting business with the bank, in relation to accounts to be opened there for greater security. The mere titles of these various acts extend to about 200 pages of the general collection of statutes. § 7 G. 4, c. 46, s. 15. || 7 G. 4, c. 46. But country banks, consisting of a number of partners under six, though they cannot issue notes in London, or within sixty-five miles of it, may legally make them payable there.-Norman, 2,580. See "Summary of Law," post. ** The latter part of this rule, however, has been England are, moreover, received exclusively such scarcity of money, or when no commerby government in payment of the revenue.* cial discredit exists, if the bank were to found [Norman, 2,581.t] In the bank also are their issue principally upon commercial bills, kept the deposites of government, which sel- they would be under the necessity of entering dom fluctuate, in time of peace, [Palmer, into competition [477,] with all other parties 344,] below four millions upon the average of in the purchase of bills of exchange, at the the whole year. market rate of interest. Such competition would be justly deemed objectionable. [478.] All banking business is better done by private bankers than by public bodies. More facilities are afforded in the way of credit by the former, than can be offered under the existing regulations by the bank directors, who give no credit to any one, and exact an adherence to forms which are not required by private bankers. III. FUNCTIONS. The principal functions which it is the ordinary duty of the bank to perform, consist in its furnishing the public with paper money, [Palmer, 181,] convertible on demand into coin and bullion, and in affording a place of safe deposite for the money of the government, as well as for that of individuals who may prefer it to a private bank. It is admitted, that during the greater part It is not deemed desirable that, in ordinary of the war, when the interest demandable by times, the Bank of England [477,] should the bank was limited to five per cent. [191, systematically regulate the amount of its 197,] while the market rate of interest was issues, through commercial discounts in Lon- frequently above that amount, the bank disdon. There are usually in the possession of counted commercial paper largely, and even the bankers of London, and other individuals, to excess. That, however, could only have large deposites waiting for employment, with been done under the restriction act; for if which it would not become the bank to inter- the bank had been obliged to pay in specie, fere. But upon occasions when there is a they could not have discounted under the scarcity of money, or when a season of comprevailing rate. The bank can never issue mercial alarm occurs, it is then the duty of upon bills below the market rate, without the bank to step forward to the aid of public leading to excess. and private credit, by discounting commercial No inflexible rule indeed exists, that the bills. The bank, for this purpose, occasion- bank shall not, even in ordinary times, afford ally fix, by official notice, a public rate of in-accommodation to the commercial classes. terest, at which they are willing to receive But the bank do not, in general, [198,] found approved bills of a given description. Being the only body issuing money ad libitum, within the sphere of the circulation of such bills, the bank defines the maximum rate of interest, by such notice, during its continuance. The consequence is, that all persons having money to employ must necessarily offer to lend it under that rate, unless, by the pressure of the moment, the market rate of interest advance to that fixed by the bank. But in ordinary times, when there is no relaxed in practice. Mr. Stuckey says, 947, that the cash notes of his Joint-stock company in Somersetshire are payable on demand, not only in the country, but also in London. And being asked, 952, "Is not yours the only joint-stock company that makes its notes payable in London ?" he answers, "I am not aware that it is. Many bankers do not make their notes payable in London at all. I took the opinion of government and of the Bank of England on the subject, and was told by both of them that they had no objection, and it was accordingly done; but the law should be made clear." The rule, however, against a country bank having more than six partners drawing any bill upon London for less than fifty pounds, still prevails.-See "Suminary of Law," post. The numbers in brackets refer to the paragraphs in the evidence taken by the committee, except where they denote the years. + See "Summary of Law." Ac their issue upon commercial discounts. cording to their present principles of management, they extend their assistance in that way only when any serious exigency arises. Being required to provide a requisite supply of money, for the average circulation of the sphere in which they act, it is also their duty to uphold public and private credit when called upon; and when so appealed to, it is then that the resources of a great body, like the Bank of England, may be rendered available to the commercial stability of the country. In the latter part of the year 1825, when the great panic occurred, the discounts of the bank rose to about fifteen millions: [Norman, 2,809,] the interest was raised from four to five per cent. [Palmer, 634,] with a view to limit the issue, but it did not produce the desired effect. On other occasions it might be more successful; and it seems much better, when possible, to diminish the issue upon bills by raising the rate of interest, [Norman, 2,437,] than by capriciously rejecting a portion of the paper that is offered. [Glyn, 3,062.] Mr. Glyn being asked, whether, some years * The bank had then at one period £23,000,000 in discounts.-Norman, 2,438. since, the bank had not refused to discount | sides in the whole court of directors, [Palmer, good paper for respectable merchants who 199,] any one of whom may originate a new called upon them, answered, that he did not measure. [224, 201, 206.] The court meet recollect any instance of the Bank of England weekly, when a statement is read to them of having sent away paper which a private banker the actual position of the bank, in every dewould think it proper to receive. The bank partment of its securities, bullion and liabilihad rejected paper drawn for accommodation ties. [202.] The directors have all equal purposes, or for that of keeping up the price power, and should a majority of them disapof a particular commodity. Such instances prove of the system of management, [205,] had come to his knowledge, and they had they might alter it in any way they should been unjustly made the subject of complaint think expedient. [201.] They are all aware against the bank. [3,063.] But his general of the state of the accounts, and nothing of impression was, that with respect to advances any consequence can be done [262,] without made on bills, the bank uniformly exercised their full knowledge and concurrence. [244.] a very wise and liberal discretion. The rate Eight directors go out, eight new directors, [Loyd, 3,326,] (four per cent.) at which they elected by the court of proprietors, come in had discounted for several years past, has annually. [227.] The system upon which been, upon the average, higher than the cur- the affairs of the bank are conducted is of rent amount of interest. [3,324.] The result course liable to change, inasmuch as new diis, that bills usually go to other parties. In practice, [Easthope, 5,957,] the bank are not at present ordinarily applied to for discounts to any considerable extent. IV. POWER OF BANK WITH RESPECT TO PRI- rectors may exercise their individual influence upon it. [247-8.] But in practice it is not found that any prejudicial effect is produced by the mode of election and change of directors. There is no regular public canvass for a seat in the court: [246,] a list of candidates sanctioned by the directors is transmitted to Unquestionably the power would exist on the court of proprietors; [243,] eight indi. the part of the bank, of injuring the private viduals on that list are recommended by the banker, if they chose to abuse that power. directors to be elected, and the eight so reTheir credit is so extensive, [Palmer, 480,] commended uniformly come in. It is a rule that they might probably, by improvident ac- in the charter (admitted, however, to be a commodation, drive out any private banker in most absurd one,) [245,] that dissenters, such their immediate neighbourhood. But although as Quakers and Jews, [Loyd, 3,485,] amongst they possess that power, they cannot use it whom there are many persons eminently con[482,] upon the principles on which their af-versant with money transactions on a large fairs are now conducted, [483,] nor does the scale, should be excluded from the direction exercise of it enter into their contemplation. of the bank. There has been no contested [485.] The East India Company are supposed, election for many years, unless it be considerby trading, to interfere with private industry.ed as such, that one vote was given at the The Bank of England and the East India last election for a proprietor [Palmer, 240,] Company, however, are manifestly different whose name was not included in the list of in principle; the latter are traders in compe- candidates. Before the individuals proposed tition with private merchants; but the Bank to be the new directors are nominated, [253,] of England do not offer that accommodation it is the invariable practice to scrutinise their which the private banker affords, and there- private characters in every point of view; if fore they can never obtain that hold upon the result be not perfectly satisfactory, they the private business of the country, [Loyd, do not obtain the influence of the court of di3,317,] which is now possessed by the private rectors. [254.] banker. The latter, moreover, occasionally enters into transactions which the Bank of England would not undertake; and it is certainly advantageous to the public that some party should embark in them. [3,318.] The qualification of a director is the possession of bank stock to the amount of £2000. For many years past [242,] the directors have not thought it right to be themselves large holders of bank stock. It is understood that no director retains more than the amount of his qualification. In the month of May, 1816, when a bonus of £2,910,600, being an increase of twenty-five pounds per cent. on the capital, was distributed among the pro * * See the Appendix, B. |