are still circulated in those parts of the united kingdom, nevertheless publicity would place the community around them in a situation much better fitted to resist all incitements to alarm, especially to political alarm, than they would be under any system of secrecy.

security in the way of publicity. There is no reason why banks that are not banks of issue, but merely of deposite, should be required to divulge their accounts, because they deal only with specific individuals, and have no trust reposed in them by the general public. If the accounts of the country banks of The promulgation of their accounts by issue were withheld, the Bank of England country bankers would not compel them to would be deprived of a most important piece keep in reserve a greater proportion of gold of information with reference to the regulation than they ought in prudence to retain under of their own issues, and would be compelled the circumstances in which they are now to keep a greater average reserve of bullion, placed. They ought at all times to be posas a general protection against drains from sessed of a stock adequate to meet the chance the country, the probability of which they of a drain, from whatever cause it might prowould have no means of accurately ascertain-ceed; and if the system of publicity were to ing. The difference which the want of that be established, no bank would suffer its affairs publicity would make with respect to the to be in a condition which would, to a reasonbank, would be determined by the increased able man, convey the least apprehension of store of bullion which they would be obliged its failing. to reserve against the unknown provincial It has been supposed that many country demand to which they would be exposed; but banks, if they were to be compelled to proit would be no good reason for a similar want mulgate their affairs, would prefer giving up of publicity on the part of the bank. That their issues, and becoming mere banks of depublicity would still be productive of much posite. There seems to be no good reason benefit, though not by any means so great as why they should discontinue their issues on if full accounts were returned by all establish- that account, if they were solvent and their ments engaged in the issue of paper money. affairs flourishing. But if any bank did so It would enable the private bankers to man- determine, there is no doubt that the place of age their own affairs better; it would inform its notes would be soon filled up by other them when they might expect a contraction wealthy bankers, who would find the obliga or an enlargement of the bank's circulation, tion of publicity neither burdensome nor disand it would consequently tend to diminish creditable. the danger to the bank itself from the issues

of country paper.

The publication by private banks, situated in the neighbourhood of large joint-stock banks, of the amount of cash and notes in their possession, would not put them in greater danger from the rival operations of those establishments, than they are in at present. It is generally known now to all the rivals of small bank, that its capital is very small; and the disclosure of the facts respecting that bank, provided it were in a satisfactory state of solvency, would only show a perfect proportion between its liabilities and its means

a

to meet them. Such a statement, far from aggravating any undeserved mistrust of the small bank, would rather tend to increase public confidence in its stability. No bank, in fact, wherever situated, which deserved good credit, would be injured by publication, though it might undoubtedly destroy a bank which was not perfectly solvent.

The principle of publicity should apply also to the banks of Scotland and Ireland;* for although one-pound and two-pound notes

IV. ONE-POUND NOTES.

of the policy of returning to the currency in Mr. Grote was asked, what view he took [Grote, 4,746,] To which he answered in England of one-pound and two-pound notes? these terms:-"I am disposed to consider in coin on demand, are so liable, during periods that one-pound and two-pound notes, payable of pressure, to create derangement and to extend alarm, that the benefit derived from them in the way of cheapness is not an adequate liar periods. On that ground I am disposed compensation for the mischief at those pecu

to think that there is a balance of evil, on the whole, against them, and that it would not be

wise to restore them."

V. STATE PAPER CURRENCY.

[Grote, 4,747 to 4,750] With reference to the question, whether it would be proper for government itself to become an issuer of paper, in preference to the bank, and thus take to itself the profits which the bank derive from furnishing so great a portion of the cur

* See Appendixes K L for a brief account of the rency, Mr. Grote conceives that it would be Scotch and Irish Banks.

better to leave the directors to manage the

From the Boston Courier of Feb. 17, 1838.

THE KILBY BANK.

The following history of the rise, progress, and downfall of the Kilby Bank is from the report of the legislative committee, made to the senate on Tuesday last:

circulation as they now do, than to have national commissioners appointed for the purpose; always understanding that the bank should be under the check of continuous publicity. It would, he thinks, be farther essential that the country should share much more Trial balances of the books of the bank for the 27th largely in the profits of the circulation than of January and the 3d of February were exhibited by it now does. If the bank be intrusted with the cashier, the latter of which is taken by the comthe function of providing a circulation, un-mittee as the basis of their report, they being satisfied questionably that circulation ought not to be that no material variation between the two exists— considered as bank property, but as national except that occasioned by the regular transaction of business. By this it appears that the liabilities of property; and the bank should be allowed to the bank on that day were as follows:receive no more of the profits, than would be considered as a fair remuneration for the trouble and risk of administering the details of the currency.

Other advantages would be derivable to the public from a circulation managed by directors, being commercial men, which would not be afforded by government commissioners. Persons chosen by government might equal the directors in commercial knowledge and power of accommodating the trading world; but it might not be so easy for government commissioners to equal the directors in reputation for incorruptible integrity, even if their conduct were just as pure in reality. The function of administering the currency is one peculiarly likely to provoke suspicion, which the directors have always escaped, chiefly from their actual merit, but to a great degree also because their commercial position shuts out the idea of intentional dishonesty. The principal advantage, apart from this, of a bank circulation in preference to a direct government circulation, consists in its affording greater security against violent interference and intentional debasement on the part of government, which the history of all states shows to be too probable during any period of embarrassment. Moreover, under a bank circulation, there is a great mass of private or corporate funds pledged to the holders of notes in addition to the security arising from the vast capital of the bank lent to govern ment. Finally, a bank circulation has long been the only known and habitual circulation in the metropolis; a sufficient motive for continuing it, in preference to a government circulation, unless there were special motives for determining in favour of the latter.

(Continued at page 193.)

The Detroit Daily Advertiser says, that Michigan will this year be able to export at least half a million of dollars worth of bread stuffs.

Within the last eighteen months the banks in Cincinnati have reduced their line of discounts a million and a half of dollars.

Bill in circulation, of which $110,000 are
Balances due other banks,
Deposites, of which $13,000 are on inte-
rest at the Savings Institution in Bos-

in the associated banks,

ton,
Post notės,

Unpaid dividends,

$158,730 00 15,000 00

59,394 86

6,000 00

1,860 00

$240,980 86

$677,508 20

8,916 00

6,007 81

6,771 70

6,000 00

28,788 83

9,602 58 $743,595 12

amount of bills in circulation, the committee counted
the blank bills remaining in the vault of the bank, and
the bills issued on hand; the sum of those deducted
from the amount received from the engraver, as shown
by his bill, showed the amount in circulation, which
of this sum $110,000 were ascertained to be in the
agreed with the cashier's record within a few dollars
possession of the associated banks, leaving but $48,730
in active circulation. Of the other items of the lia-
bilities of the bank, their nature would admit of no
borated by the oath of its officers.
other feasible proof than the books of the bank, corro-

As the best evidence that could be obtained of the

The first item of assets the committee examined with considerable care, opening, with the exceptions that the note or draft was present, and comparing the hereafter mentioned, every envelope, and ascertaining amount of the notes had been previously deposited sums with the list furnished by the cashier. A large with the committee of the associated banks, as security for the Kilby bills in circulation; and a small amount with other banks as collateral security for balances due them. As proof of the existence of these, the committee considered the certificate or statement of the cashiers of the banks in which they were deposited, sufficient; a list of them being also furnished. notes and drafts sent abroad for collection, no other evidence could be given, than the memoranda of the cashier, accompanied by his oath.

Of the

The following is a classification of the notes made by the committee :

Notes given to the East Boston Com.
pany for sales of land at East Boston,
secured by mortgages of the land sold,

In the item of accounts overdrawn are included the transfer of the mortgages to the bank, $115,136 85 overdrafts of banks, and of the India Marine and Fire

It is due to those of the present board of directors who put this bank in operation, to state that several of them testified before the committee, that within their own knowledge the same course had been pursued by several other banks which have been established within the last few years, and that they believed it to have been adopted by others chartered for this city, within that time. The practice they say, has been thus: A few individuals associate for the purpose of establishing a bank; they obtain a charter, subscribe for the stock, put the bank in operation, as was done in the case of the Kilby Bank, obtain loans to the amount of the stock subscribed, and have them renewed until the shares are disposed of to those who have capital to invest. How extensive this practice has been, your committee have not the means of deciding. It is alleged by the directors of the bank, that it has been of late quite common in this city, and that however they may have violated the law, they have only conformed to

After the bank commenced operations, the directors proceeded to do what business they could upon their small amount of available capital, their circulation, and a considerable issue of post notes.

|for though it did not supply it with funds for imme diate operations, it converted one half of its capital, which before was merely nominal, into securities which will probably be eventually available. At the time the operation was made, moreover, it was in con. templation to convert the greater part of these securities into cash, by obtaining a loan upon them, and thus to create a fund for the immediate use of the bank, but the continuance of the pressure in the money market has hitherto prevented the realisation of this object. Had these notes been offered for discount to any bank with an active capital, sound policy would undoubtedly have rejected the proposition, but as this bank was situated, the same policy dictated its acceptance.

After the sale to the East Boston company, and the accession of several of its members to the direction of the bank, measures were adopted to put its affairs in as good a condition as its circumstances would admit. It was voted to issue no more post notes, those outstanding to the amount of $89,000 were called in, leaving but one of $6000 unpaid; it was voted that no officer of the bank should receive memorandum checks, except under certain circumstances, and then the fact to be made known to the directors at their next meet

fested by the board a desire and a determination to do all in their power to sustain the credit of the institution, and to secure the public from inconvenience or loss. But the redemption of so large an amount of post notes, though intended to strengthen the bank, occasioned necessarily a considerable increase in its immediate circulation, and this at a time of considerable excitement, created a suspicion of weakness; the associated banks called for security, and though the call was promptly complied with, other circumstances occurred which occasioned the rejection of its bills by the association. Since that event, the bank has re deemed, in current bills, all its own under the denomination of ten dollars, which have been presented, and in some instances those of larger amount.

On the 7th of February, 1837, according to the tes-ing; and generally there seems to have been manitimony of the president of the bank, an arrangement was made with the India Marine and Fire Insurance Company, by which the latter agreed to take eight hundred shares of the Kilby stock, with the understanding that the directors of the bank, as individuals, would make efforts to dispose of an equal amount of the insurance stock, but with no agreement for an ex. change of stock between the bank and the insurance company. In pursuance of this arrangement, 500 shares of the Kilby stock were transferred by the holders to the insurance company, on the 7th of February, 1837, for which the president gave his check of that date, drawn upon the Fulton Bank, for $50,000. This is the check before alluded to, as forming a part of the assets of the bank. On the 30th of September following, three hundred shares more were transferred in the same manner, and another check of $30,000 received by the bank therefor. This last check has since been paid, partly by means of the deposites which the insurance company had in the bank, and partly by carrying the balance to their debt on the books of the bank; making the overdraft of $11,551.61 before mentioned as having been secured by an attachment of the property of the company.

Several of the present board of directors are personally known to some of your committee, and they take pleasure in bearing testimony to the fact, that their character for respectability and honour is of a high order in this community, and would of itself afford a guaranty that nothing of a fraudulent or dishonest nature would with their knowledge be permitted in the institution; and as far as your committee have been able to examine, the transactions of the bank of late appear to have been conducted with a due regard to the rights and to the safety of the public. The principal difficulties which it has experienced, have resulted from the improper, and as your committee think, illegal manner in which the attempt to create its capital was made. Should the bank continue to exist, those difficulties must also continue to be experienced until the radical cause is removed, by the ex change of its nominal and inactive capital, for that which is active and real.

On the 19th of May following, a proposition was made by the East Boston Company, to take 2,500 shares of the Kilby stock, and to pay for the same in part by the notes and mortgages taken by said company, for sales of their East Boston land, and to give their corporate note for the balance, payable on the first of the next October, with an understanding that it should be renewed at the convenience of the company. This proposition was accepted by the directors of the bank and carried into effect on the 20th of the same month, the individuals holding the stock trans- Believing that the spirit of the law was violated in ferring the same to the company, and the company the commencement of the existence of this institution, transferring its notes and mortgages to the bank to to an extent that renders the example a pernicious one the amount of about $215,000, and giving its own note to the community, your committee recommend that for the balance. At the time of this negotiation, it was the Bank be summoned to show cause why its charter understood that the East Boston Company should be should not be declared forfeited. represented in the direction of the bank, and accordingly, at the annual election in October last, the board was enlarged from the number of six to ten, and five of the stockholders in that company were made directors in the bank.

With regard to this transaction the committee observe, that it was undoubtedly a good one for the bank,

foreign intelLIGENCE.

From the London Times, July 23.
Messrs. George Wildes & Co., one of the three great
Money Market, &c.-A notice has been issued by
American houses which stopped payment in June

1837, requesting all persons who have any claims upon them, whether as bill holders or otherwise, to present them at their counting-house for payment. The amount of claims to which this notice can apply is understood in the city to be about £60,000, but that it does not, as that amount would imply, include either the claims of the Bank of England for advances made to the firm, or of the parties who are under guarantee for the repayment of those advances. This it is material to make known, as the affairs of these houses have been held all along to be a subject of very great public interest, in order that the fuct may be come at, which is the most important part of it, to what extent the assets of the firm, as given in their original balance-sheet, have been realised in the Uni-valuation, moreover, appears to rest solely on the out. ted States.

The experience of similar undertakings in this country is not calculated, perhaps, to hold out much encouragement to hope for more beneficial results elsewhere. It is a lottery in which the prizes have borne but a very small proportion to the blanks, and people will scarcely be so sanguine as to believe that American enterprises will establish, or have yet done, the exception to the rule. Where shares in the stocks of these companies are found not to be saleable, it is proposed to raise money by way of mortgage, divided into bonds, with the interest payable here in sterling. Notwithstanding the flattering estimate set forth of the security, it will be remembered that there are no means of testing a valuation made so far off. Such lay already expended on the mines and works, which, for anything that is really known, may turn out to be of little worth, if the outlay be not absolutely wasted on an unproductive adventure. We have never thought highly of any of the American securities, but against such as these especially, the public ought to be upon their guard.

men.

As that account, when delivered in, stated the pros. pect of a large surplus, exceeding, if we recollect right, £400,000, and as the bank are believed to be still creditors to nearly a similar amount, it is clear that the progress made in the realisation, the interval being above thirteen months, has been slow and unsatisfactory. That an act of substantial justice has London, July 28-The singularly anomalous apnow been done, however, to the creditors not holding security, and who are necessarily included in the no-pearances which have prevailed during the past few tice referred to, cannot be denied, and it is a proceed days in the state of the money market have been and are creating some considerable degree of enquiry reing highly honourable to all concerned. To be com plete, it should have been done from the first, when specting the causes of the present pressure, both on the bank and the guarantees of the house took up market, with our leading monetary and commercial the stock exchange and in the commercial discount their affairs, without waiting for those remonstrances which such unfairness naturally called forth, both from the press and from the parties who were thus threatened with a total loss. Still the boon, late as it is conceded, is a considerable one. There is only one circumstance to be regretted in it, which is, that the only remaining creditors being the bank and the private guarantees, there are no parties left likely to take such a step, who are entitled to call for an account of the final winding up of the enormous transactions out of which the panic of 1837 arose, and which would have been a most valuable document to the commer. cial interest. The negotiation with the bank, out of which the present arrangement has arisen, is under. stood to have been for some time on foot, but that the directors now consider that they at least are perfectly secured.

The easiness of money in this market has not escaped the notice of speculators so shrewd as those of the United States; and consequently, since, through the payment of the dividends, capital has become still more abundant, the most active exertions are being made to introduce and push various descriptions of American securities and speculations on the stock. exchange. With several of the state and bank stocks the money market is yet familiar to some extent, and according to recent accounts more and new creations of the sort are or may shortly be expected. Two new state loans have already been recently alluded to, one of them contracted with Mr. Biddle, and both assort. ed by special agreement, so as to suit the taste of pur chasers here, in the shape of bonds reduced into ster. ling money, with the dividends payable here at a fixed rate of exchange, and interest. In addition to these, however, there are other kinds of securities of a more objectionable character, in which it was sought to tempt people to invest, or where that may be difficult, to raise money upon them by way of loan or mortgage. These partake of the nature of private enterprises, such as coal-mining, rail-road, and canal companies. Of the insecurity of investments in such speculations, and of the chances of success, the public here can hardly be sufficiently well qualified to form a judgment in a country so remote as the United States.

that government have been selling exchequer bills It is now fully understood on the stock exchange with a view to take advantage of the high rate of premium which has lately prevailed. The Scotch jointstock banks, which have made very profitable investments, have also been realising, and as these two operations must doubly absorb a large amount of bank paper, or its representative, it goes a very great way to account for the present pressure for money. Yet, amid all this, the leading discount brokers can obtain money from the bankers from day to day at 2 to 3 per cent., which, however, establishes a market value between the like parties for a short time at about 4 for money under the most favourable circumstances per cent. per annum.

By the usual returns of the quarterly average of the weekly liabilities and assets of the Bink of England, it will be seen that the circulation has increased 239,000l., the assets 247,000l., and the bullion 73,000l. The deposites have decreased 2000l.

From May 1 to July 24, instant: