the following brief exhibit, in round numbers, and in a tabular form, prepared partly from actual returns, and partly from estimates, may be useful:

At all those periods, except the 1st of January last, twenty millions of paper have been computed as issued, but not in active circulation among the people, being held by other banks, and so far considered as equivalent to a deduction of a like amount from their own circulation, liable to be redeemed in specie. On the 1st of January last, the amount so held was about thirty-two millions; and in July last, the active paper circulation was also probably some millions larger than it now is. This exhibit makes the whole active circulation, of both paper and specie, about $6 50 per head of our whole estimated population in October, 1833; about $6 50 in January, 1834; about $7 in January, 1835; about $8 50 in January, 1836; and near $10 at the present time. Though this is a less proportion of circulating medium than is now usual in the countries of Europe which are most commercial, and where specie is more used than bills, yet it is a larger ratio than has ever been supposed to be necessary in the United States, considering the character of two or three millions of our southern population.

The average here has usually been about $6 per head; nor has the amount ever, before 1811, been supposed much to exceed $5; and at no time since has exceeded about $7 per head, except under the excessive paper issues towards the close of the late war, by which, in 1816, it was estimated to have reached $11 per head.

While our country has, of late years, become more commercial and wealthy, and has a larger portion of specie in use, which circumstances would somewhat increase the necessary and proper amount of circulation per head, it has, as counteracting causes to these, greatly increased in the ease and quickness of communication, whether by mail or otherwise, and in the use of bills of exchange and drafts instead of money, for distant operations.

Hence our circulation, during the past twelve months, at $8 50 and $10 per head, is deemed excessive, and, as in 1816, one great cause of the exorbitant prices which have prevailed in relation to almost every article, as well as of the extraordinary propensity to overtrading and speculation which has pervaded almost every section of the country. It is true that, during a few months past, the paper portion of our circulation has, as before suggested, been considerably reduced; but till that, with our present large amount of specie in circulation added, falls as low as about $7 per head, or the bank notes to about $80,000,000, instead of $120,000,000, the

currency may be considered as too redundant, and in an unnatural and inflated condition.

The credit system has not only undergone an unusual expansion among individuals and States, but it has, by means of these inordinate paper issues, penetrated more deeply than is safe into the whole currency of the country, and rendered that which, as money, is and should be deemed the substitute or antagonist of credit, dependant too much on credit itself, and subject to many of the dangers and fluctuations in value inseparable from mere credit, rather than possessing the intrinsic and uniform value attached to specie. This condition is believed to have been produced chiefly by numerous incorporations of new banks, without suitable legal restrictions, in many States, on the amount either of discounts or of paper issued, in proportion to the specie on hand, and by the excessive demands for money thus tempted and stimulated to aid an unusual number of extravagant adventures in lands, stocks, and trade.

These, acting together, and in some degree influencing and exciting each other, have induced many banks to hazard unreasonable and indiscreet issues, as well as loans, to supply the wants of such an extraordinary crisis, and which there is good reason to believe (however large a proportion of specie fortunately exists in the country, and which may tend sooner to avert the usual evil consequences from the above state of things) will produce much distress, embarrassment, and ruin, before this specie can be duly equalized, the excesses of paper sufficiently curtailed, and the exorbitant discounts gradually lessened to their safe and proper limits.

This increase of about forty millions, or one-third of the paper circulation, in a year and a half, is a sudden and a great fluctuation, which never could occur in a currency entirely metallic, and which would probably during the past year, as in 1811, have been much greater, had not the larger proportion of specie now in the country, and the increasing disuse of small bills, operated strongly as preventive checks.

But, even now, the excess has been sufficient to constitute the chief cause for the artificial augmentation in prices-an unnatural stimulus to speculation, and a rapid vacillation in the regular modes of doing business, which cannot, under sound views of political economy, be too greatly deprecated, or their recurrence too carefully guarded against.

These sudden and great vibrations in the value of property, labor, and debts, however produced, or however flattering to many at first, are in the end dangerous to all classes, as well as ruinous to commerce and every species of regular industry.

But should paper issues, according to anticipation, continue to be reduced, as during the four months past, by the natural and conservative reaction of commercial causes at home and abroad, and by the general wise and increasing discontinuance of the use of small bank notes, through State legislation, and provisions of a similar character and tendency by Congress, as at the last session, in the general appropriation act, and in the deposite law, and by the diminished receipt of all bank notes, the last few months, at the different land offices for the sales of the public domain, a sounder and a less artificial state of things will ere long return,

The prospect on the subject of the currency is therefore, on the whole, becoming more satisfactory, even without further legislation. But if all the States would unite in repressing entirely the circulation of small notes, and in rigidly restricting all paper issues, so as not in any case to exceed three

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to one of specie on hand, which would be about two of paper in active circulation to one of specie on hand, and would add a few judicious limitations on the amount of discounts, as compared with the capital and deposites, and on the safe kind of security to be taken for them, with the requirement of frequent publicity of their condition in detail, and of rigid accountability to periodical examinations by legislative authority, the time is not distant Indeed, it deserves conwhen our currency would become quite stable. sideration whether, under such circumstances, the whole monopolies of banking might not, with public advantage, be entirely abolished, and the banking privilege, under the above general restraints, securities, limitations, and requirements, particularly if the personal liability of the stockholders is superadded, might not safely be thrown open to all.

A larger amount of tax or bonus to the States would probably be thus collected, without any increase in the usual rate; and it is believed that the interest now paid by borrowers would, by these changes, become, at an early day, sensibly reduced. But, without the most careful and rigid restrictions, such a measure in this country, whatever may have been its operations elsewhere, would, under our different institutions and habits, probably increase rather than diminish any existing evils in the currency.

It is conceded that these disproportionate issues by banking institutions are, in fact, much more frequent in regions where the number of banks is small than where it is large, provided their charters be similar in omitting prudent limitations; because, in the former case, there is less vigilance, caution, and correction, produced by the jealousies and interests of rival institutions, to prevent excessive issues and irregular and dangerous dis

counts.

But the tendency to excessive trading, excessive credits, and rash enterprises is so strong, and sometimes ungovernable, in individuals, and in some respects equally or more so in corporations, as to endanger the stability of both banks and business, unless the power to manufacture paper money is carefully restricted and wisely regulated. The present amount of bank capital, as well as its increase for some years past, is another kindred topic of some interest.

But space does not exist on this occasion for its full exposition, and at the same time it is not very alarming, except where it has been authorized without proper limitation on paper issues, and without other prudent bank restrictions.

The whole bank capital in active operation is computed to have been. over $200,000,000 in 1833-4; $231,000,000 in 1834-5; $250,000,000 in 1835-6; and near $50,000,000 more has been authorized, most of which is supposed not yet to be in full operation.

More facts will be exhibited on these points, and particularly on the amount of bank capital in each State, in a special report soon to be presented from the department to Congress, concerning the detailed condition of the State banks near the 1st of January, 1836.

Had it not been for large sales of American stocks abroad, and the very high prices given there for our principal staples, a demand for specie for exports would doubtless have arisen ere this from our overtrading, and have greatly enhanced the present difficulties which some of the banks now experience, chiefly from the great excess of paper in circulation. The comparative value of specie being reduced by such excesses, the evil would have been still more aggravated if those excesses had not become some.

what diminished, and specie had not become in greater demand here, in consequence of the circular as to the kind of money receivable for the public lands, issued by direction of the President in July last. This demand has contributed to retain and diffuse it wider, and to make its great and early export less probable than it otherwise would have been. The other objects of that circular were gradually to bring back the practice, in those payments, to what was deemed to be the true spirit as well as letter of our existing laws, and to what the safety of the public money in the deposite banks and the desirable improvement of our currency seemed at that time to unite in rendering judicious. The reasons, more in detail, for the measure, are contained in the document itself, of which a copy is annexed, (G.) Our moneyed operations have also been somewhat affected by a few difficulties abroad, in the nation with which our commercial intercourse is greatest, and whose monetary system of late years, often beating with a pulse like our own, is under influences nearly corresponding.

Since 1833, the paper circulation in England is supposed to have increased over sixteen millions of dollars, while the specie possessed by the banks has diminished over twenty-three millions. The whole circulation of private banks, joint-stock banks, and the Bank of England, is now probably about one hundred and fifty two millions of paper to less than twentysix millions of specie on hand; whereas, in 1833, it was only about one hundred and thirty-seven millions to fifty millions of specie; or now from five and six to one, but then only two and three to one; consequently, an alarm and pressure have arisen there, which are operating unfavorably here, though they have arisen not so much from an excessive amount of both the paper and specie currency united, as from the greatly increased disproportion, being quite doubled, between the paper issues and the specie on hand by all the banks.

What portion of their paper was or is now held by each other, is not known; but as the bills of the Bank of England are a tender by all the private and joint-stock banks, the amount is probably large.

Their banking system, as a whole, with every supposed benefit to be derived from a national bank, is believed to be under much more defective regulations as to excessive issues, excessive discounts, and secrecy of condition and proceedings, than is our own, in most of the States of the Union. Indeed, so unsatisfactory have been its operations, that they have recently become the subject of parliamentary inquiry, which it is proposed to resume and push much further at a subsequent session.

VIII. LAND OFFICE.

Immediately after the passage of the law at the last session reorganizing the General Land Office some doubts arose whether it still remained attached to the Treasury Department, and the opinion of the Attorney General was taken on the question. In consequence of his opinion, that the supervision over its concerns remained here, and of the direction of the President of the United States, under whose control that law now places all the affairs of the General Land Office, steps were taken by me to carry it into immediate effect. The result, thus far, has been a sensible diminution in the pressure of the business of that office, a better system of supervision and despatch for most of it, and much less delay in completing titles to the public domain. Should the sales not continue very large during a few

ensuing years, it is believed that the whole arrearages of business can be disposed of, and the promptitude in all its future operations secured; which is so immediately important to the great western and southwestern sections of the country, and more or less beneficial to all, as well as creditable to the administration of the Government.

The report of the Commissioner will speedily be laid before Congress in a separate communication, and contains inany suggestions which seem to deserve careful attention.

IX. MISCELLANEOUS.

Great inconveniences have been sustained in many parts of the country by an omission to repeal or modify the provisoes in the tariff act of 1832 A detailed report on this subject has once been submitted by this depart ment; and the interests of the community connected with the articles of hardware affected by these provisoes, and convenience in the execution of the revenue laws, appear to require the earliest attention of Congress to the subject.

The revision of the present system of compensation to custom-house officers, with the various changes in our collection laws heretofore recommended in connexion with that revision, is deemed very important to the mercantile community as well as the Treasury, and, at the same time, to the just and ratable compensation for arduous and responsible duties to many collectors and other officers who are now inadequately paid, while some receive an amount disproportioned to their situation and labors.

In connexion with this subject, and in addition to former recommendations to Congress, as well as the valuable report on the safety of steam-boilers, submitted at the last session, from the Franklin Institute, it seems proper to urge earnestly for consideration the necessity of some provision for the more careful management of steamboats navigated under papers from the custom-houses-subjecting their commanders, and in suitable cases their owners, to the forfeiture of their papers, and other severe penalties, in cases of carelessness or neglect destructive to property or life.

The security of the public money would be promoted, in many cases, by requiring bonds from district attorneys, through the hands of some of whom large sums pass in collections, without any collateral obligation being given for the indemnity of the United States, as required in most analogous cases of public officers.

The act in respect to insolvent debtors, the execution of which is placed in the charge of this department, expires in June next; and the propriety of the further continuance of its provisions is suggested to Congress.

The first four instalments due under the French treaty have been paid in Paris since my last annual report. The sum claimed by our agent, and by this department, exceeds that paid by the French Government in the amount of more than a million of francs, and the difference is now the subject of correspondence and negotiation.

What was actually paid has been remitted to this country in gold, and divided among the claimants. From the rates of exchange and price of gold, it was deemed most advantageous to the claimants to have it sent home in that form, though a direction was subsequently given to substitutei bills of exchange, or other modes of remittance, if more profitable; but which the agent did not find it expedient or beneficial to do.