Page:Short History of Paper Money and Banking.djvu/17

 AN INQUIRY INTO THE PRINCIPLES OF THE

AMERICAN BANKING SYSTEM.

CHAPTER I.

Importance of the Subject. In an address to the stockholders of the United States Bank, at their meeting in 1828, Mr. N. Biddle, the President of that institution, stated, that, of five hundred and forty-four Banks in the United States, one hundred and forty-four had been openly declared bankrupt, and about fifty more had suspended business.

Mr. Gallatin, in his "Considerations on the Currency and Banking System," published in 1831, gives a list of 329 State Banks then in operation, having nominal capitals of the amount of $108,301,898, which, added to the capital of the United States Bank, made the whole nominal capital of these institutions, upwards of one hundred and forty-three millions of dollars.

These Banks issue notes which serve as substitutes for coin.

They grant credits on their books, and transfer the amount of credit from one merchant to another.

They receive money on deposit.

They buy and sell bills of exchange. They discount mercantile notes. They buy and sell public stocks. All these are important functions, and if only one of them be ill performed, the community must suffer inconvenience. 2