a paper currency, being entirely independent of commercial discounts, equally, if not more secure, and where the notes issued are likely to remain longer in circulation. In this way, persons unconnected with trade, may be accommodated; and by this new source of circulation, the Bank of England might become as useful to the agricultural class of the community, as originally it was intended to have been, when it was anticipated that it would render "the gentry rich, and the farmer flourishing."

Dr. Adam Smith, in his "Wealth of Nations," (book ii. chap. 2.) has taken some trouble to explain the advantages of granting these credits, which he considers to be, perhaps, the principal cause, both of the great trade and circulation of these banking companies, and of the benefit which the country has derived from them. With the advantage of such a credit, he observes that a merchant can, without any imprudence, have at all times in his warehouse a larger quantity of goods than otherwise he could venture upon; and can thereby make both a greater profit himself, and give constant employment to a greater number of industrious people, who prepare his goods for the market.

In a recent publication,* the nature of these credits is more minutely explained. Such credits, we are informed, merely give the option to the principal in the bond, of drawing out upon interest, the notes of the bank; and the very great proportion of these credits are frequently unused, from the inability of the parties to employ the money profitably. The bankers exercise due deliberation before any credit of this kind is granted; and as it is generally found to exist for a considerable number of years, it is only given upon such security as is likely to continue permanently good for their amount. The bank account of the principal is always open to the inspection of the sureties, who may withdraw their guaranty, if the principal is mismanaging or imprudent.

* Muir's Review of the Banking System of Great Britain.

The sureties are also liable for bill transactions with the bank, to the amount of the whole sum subscribed, but no further. Among the many numerous advantages attending credit accounts, they enable many to enter upon useful undertakings, requiring outlay for a considerable period, who might otherwise have been unable, or afraid to do so. If a young man gets his sureties to sign a bill at three or four months date, instead of signing a bond for a credit account, he must be dependent upon the caprice or convenience of the bank for its renewal for such periods as might be desirable, in any protracted operations he may have embarked in, upon the faith of this credit by bills; whereas in the case of bonds, the banks seldom if ever call them up, so long as the principal continues to keep an operative account, or the sureties and himself remain good for the amount. At all events it is provided for in the bond, that such warning shall be given before it is put in force, as may enable the parties to get a similar accommodation at some other bank, or to dispose of their property, without the disadvantages of sudden or pressing demands for repayment. Since the act of George 3, c. 74., cash credits have been frequently granted on the security of lands, and this practice might certainly be greatly extended with much public benefit.

On the whole, the granting of cash accounts cannot be too strongly recommended to the attention of the Bank of England. If the plan were adopted, it might resolve to discount bills under 60 days at 4 per cent.: and all bills of a longer duration at 41 per cent.—and might charge 5 per cent. on all money advanced on cash accounts. This would place the system of granting loans or credits on the most advantageous footing possible, and would prove equally beneficial to the bank and to the public.*

*From the author's experience as a director of the Bank of Scotland, he is fully satisfied of the great advantages derivable from cash accounts.

The preceding article leaves nothing to be wished for, as well with regard to the history of the most prominent banking institutions in Europe, as to the correctness of the general view of these operations, and their beneficial influence on industry and commerce.

We now proceed to detail the institutions of the United States.

The first of these is the BANK OF NORTH AMERICA. It owes its origin to the vigorous mind and enterprising genius of Robert Morris, Esq. who conceived the idea of it when superintendent of the public finances, and submitted to congress in the month of May, in the year 1781, the plan for establishing a national bank of North America.

Agreeably to this plan, the capital was to consist of 1000 shares, of $400 each, $400,000,

payable in gold and silver, to be increased by new subscriptions, from time to time, at the pleasure of the directors. The directors, twelve in number, were to be chosen by the stockholders, and were to be intrusted with the management of the institution. The notes of the bank, payable on demand, to be made a legal tender in the discharge of duties and taxes, &c. On the 26th May, of the same year, congress approved of the plan, and passed several resolutions, by which they pledged themselves to support the proposed institution; to incorporate the subscribers, under the name of the president, directors, and company of the Bank of North America; to recommend to the several states the prevention of similar establishments within their respective jurisdictions, during the war; to receive the notes of the institution in payment of taxes, duties, and debts, due to the United States, and to use their influence with the several legislatures, to have laws passed, which should make it felony to counterfeit the notes of the bank, &c.

After this, subscriptions were immediately opened, during the summer and autumn of the same year. In November, directors were chosen. In December, congress, conformable

to their former resolves, passed an ordinance which created the subscribers to the bank a corporation for ever, under the title of "The President, Directors, and Company of the Bank of North America." The original features of the plan were preserved, but the bank was restricted from holding property exceeding the amount of $10,000,000.

The institution commenced its operations in the month of January following, and Robert Morris, who may be justly styled the father of the system of credit, and paper circulation, in the United States, succeeded in securing to it the good will and confidence of the people at large, by various judicious measures, of which a circular letter, addressed to the governors of the several states, explaining the object of the institution, and the certain advantages to be derived from it, was not the least effectual. Thus the first bank in the United States came into existence, and such was its happy and immediate influence on the public finances, and on commercial concerns in general, that it may be justly doubted whether, without its seasonable aid, the revolutionary struggle for independence could have been brought at all to a satisfactory termination. The United States, for several years, were constantly indebted to the bank, to a larger sum than the stock they owned; nor could the various devices for creating a revenue have answered their end, or the army have been fed and clothed, or any degree of order and punctuality maintained in the dispatch of public affairs, but for the great facility in the management of business, and the restoration of confidence, which were created by this institution. The sense of the great utility of the bank, was so universal, that Massachusetts and Pennsylvania corroborated the ordinances of congress, by additional charters, and Rhode Island, Connecticut, and Delaware passed laws for the purpose of preventing the counterfeiting of its notes. Yet when peace had been concluded, and the pressure of the times was over, there were not wanting those who viewed the prosperous state of the affairs of the bank with a jealous eye, and conjured up

imaginary fears of an overbearing oppression, an alarming foreign influence, and fictitious credit, from temporary punctuality; of a created scarcity of specie; possible commercial convulsions, from the stopping of discounts; partial favors, and comparative disadvantages, under which distant traders labored as if, in a moral community, the bare possibility of abuse could ever furnish a good argument against the decided utility of a thing; or as if a benefit were to be relinquished, because all cannot be benefited alike. And so effectually were these objections against the institution urged, that on the 13th of September, 1785, the legislature of Pennsylvania actually repealed their charter!

The repeal was persevered in by the succeeding legislalature, notwithstanding innumerable petitions to the contrary, and vast efforts to enlighten their proceedings.

The bank, however, continued its usual operations under the charter from congress, and in the enjoyment of corporate rights, which, it was presumed, could not be arbitrarily wrested from them, after having been once legally bestowed.

The legislature which met in December, 1786, at last thought proper to renew the charter of the bank, and passed an act to that effect, on the 7th March, 1787, by which, however, the term of the charter was limited to fourteen years, and the capacity of the corporate body of holding property, restricted to two millions of dollars. The same charter was extended for the term of fourteen years more, by an act passed on the 20th March, 1799.

The capital of this bank has been from time to time increased. It is now 2,000 shares of $400 each--$800,000. It has usually divided 12 per cent. on the original price of the shares; which, taking the medium capital from the commencement, will make the sum total of the dividend amount to $3,456,000.

Thus has this institution existed under the double security of a perpetual charter from congress, and a charter from the states, with laws in its favor from several states, after having