The crop was an abundant one, and our articles of export and particularly of cotton in the early part of the market of that year, bore a fair price. Before half the crop had been disposed of the revulsion of 1837 came upon us. The price of cotton suddenly fell in Europe and in this country more than one half. The loss sustained by the fall of prices during that year upon the American crop of Cotton alone, is estimated at not less than twenty millions of dollars.

In the early part of the season our merchants purchased cotton at the high prices it bore, our planters made their calculations upon these prices, purchased property and contracted liabilities upon the credit of their crops, made improvements, and enlarged their expenses. Add to this the over action which pervaded the whole community in almost every branch of trade, the sudden discontinuance and withdrawal of American credit abroad, and the consequent suspension of specie payments by the Banks throughout the Union, and none will be at a loss to trace these causes, to the stagnation and embarrassment in trade and currency which followed. Though in Tennessee there was perhaps less wild and extravagant speculation than in many other parts of the Union, the effects produced by these causes were severely felt. The blow fell most severely upon the banks which had discounted bills drawn on produce, and upon the merchants and others who had drawn them, and who in consequence of the fall of prices and their own overtrading were unable to meet them. To add to the severity of the pressure in Tennessee, many of our citizens were in the habit of selling on credit in the south, live stock and other property, which had been purchased on credit at home, or with money raised on bills drawn on cotton or other produce, and sold to the banks; and when the revulsion came the southern debts could not be collected. These were, undoubtedly, among the chief causes of the pressure in the money market, from which we had not fully recovered when the late suspension of specie payments occurred at Philadelphia and at some other of the eastern cities. Upon the receipt of the information that some of the banks at the east in little more than a year from their last resumption had again suspended specie payments, the question immediately arose in the public mind, what had produced the suspension, and what would be the course proper to be pursued by the banks of Tennessee?

As far as we are informed, the suspension at the east is represented to have arisen "not out of a lack of power to continue specie payments, but of self-preservation, under the form of keeping the specie from being drained out of the country." Without the means of knowing how the fact may be, it is confidently affirmed that there can be no apology for a suspension of payments by the banks, but an absolute inability to meet their responsibilities promptly.

And whatever may have been the cause of the suspension of payment by the banks at the east, it can furnish no sufficient ground for the suspension of payment by our banks so long as they have an ability to pay. Like individual debtors, they should meet their liabilities honestly and promptly as long as they are able to pay. What is the effect if a contrary course be adopted? A few of the banks at the cast

suspend, and represent to the public that they are still solvent, and do so, not from necessity but to retain their specie; and, following their example, the banks in the interior, which are also represented to be solvent, suspend also, not because they are under the necessity to do so, but simply because the eastern banks have suspended. So that the suspension of the banks in a single city which may have indulged in excessive issues of bank paper and bank credits, and thus stimulated and promoted over-action in trade, or which may have ulterior objects in view, is made to operate as a suspension of payments by all the banks of the country. Surely if a bank suspend in Philadelphia, it is no reason for our banks to follow the example unless they are compelled by their condition to do so.

The apprehension of the drain of their specie can be no sufficient reason, for one of the conditions of their corporate privileges is, that they shall keep themselves at all times in a condition to meet their liabilities. When a suspension of specie payments takes place by banks, their circulation immediately depreciates in value, and the loss falls not on the banks but on the people. The labor of the country bears the loss, whilst the banks during a period of suspension are often doing their most profitable business. It was hoped that the Bank of Tennessee, of whose ability to pay specie no doubt is entertained, would continue to do so. She did pay for a day after the Union and Planter's Banks had suspended; but I regret to say finally yielded to the panic around her and stopped, not from inability to pay, but as a measure of prudence. Her course is much to be regretted, and an early resumption is in my judgment demanded by the interests of the State. By maintaining a firm stand, honestly meeting all her engagements, and at the same time extending to her debtors every possible indulgence compatible with her safety, her character as a state institution of undoubted credit will be maintained, and, to the extent of her means to furnish it, a sound currency will be preserved. In the future engagement of that institution, owned as it is exclusively by the State, and supported by the credit of the State, it should be a cardinal object constantly kept in view, to confine her operations within her means, to meet her responsibilities promptly and to preserve at all times her circulation in a sound state.

The suspension of payment by the Union Bank and Planter's Bank, presents a grave question for the consideration of the General Assembly in regard to the action which should be had in relation to them. If it shall be ascertained that they have by a suspension of specie payments in 1837, or by the more recent suspension, or by any other act, subjected themselves to a forfeiture of their charters, and it shall be deemed proper to continue their corporate existence, it is suggested that the occasion may be a fit one to impose upon them such additional restrictions as the public safety may require, and as experience may have shewn to be necessary and proper, as conditions of the continuance of their corporate privileges. They should be required at an early day to be fixed by law, to resume specie payments, and restricted from declaring any dividends to the stockholders for a period of at least six months after their resumption. It is believed that they are entirely

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solvent, and that they could conveniently and safely make their means available, to resume payment at an early day, and it is not doubted that they would readily yield their voluntary assent to such restrictions as the General Assembly imposed. If the conditions imposed shall not be assented to, it will remain for the General Assemby to consider what further proceedings it may be proper to institute consistently with the provisions of their charters.

It is an error to attribute the revulsion of 1837 and derangement of the currency in the United States to the action of the Federal Government, whilst there is no pretence that the late suspension in the eastern cities has been produced by any such cause.

Similar revulsions have occurred in every commercial country, and especially in those where the credit and paper system has prevailed.They have occurred in Great Britain, where there exists a National Bank of immense capital, more frequently and to a more ruinous extent than in most other commercial countries. Similar revulsions to that of 1837, occurred more than once in the United States, during the existence of both banks of the United States. These revulsions were not attributed at the time to the action of Government in either country, and it will not do to conclude that a National Bank in either, as a regulator of currency, could prevent them, for in both it has failed to perform this function. During the revulsion of 1837 the extent of the commercial derangement and the intensity of suffering was greater in England, where there was a National Bank, than it was in the United States. It pervaded with more or less severity the whole commercial world. The cause lies deeper than in the action of Government.They are to be found in over-action in all branches of trade, and in excessive credits, and bank issues, which had stimulated to wild, adventurous, and disastrous speculation.

The action of the Government of the United States, confined as it was within its constitutional and legitimate sphere to the managementof its own finances, not only did not produce the late revulsion through which we have passed, but the Government possessed no power to have prevented it. No Government can, without the exercise of despotic power, control or restrain the individual enterprize of its citizens. In a government like ours the attempt to exercise such a power would be wholly incompatible with individual freedom. The government possessed and could have exercised no power to prevent the rage of speculation and extravagant adventure in trade during the year 1836, when the merchants were importing into the United States sixty millions of dollars worth of merchandize more than the country exported produce to pay for, or, than was demanded for the current consumption of the country during that year.

The government possessed, and could have exercised no power to have prevented her citizens from purchasing more than twenty millions of acres of wild and unproductive public land, chiefly upon speculation during the same period. And if it possessed no such power to restrain its own citizens in the free exercise of their faculties and will, in their trade and enterprize, much less did it possess or could it have exercised

any power to prevent a like indulgence in wild speculation abroad, which brought upon England and other commercial countries the sudden revulsion under which they suffered in common with the United States.

To relieve the pressure growing out of the revulsion of 1837, which continues to be felt to some extent in Tennessee in common with other sections of the Union, and to restore to the state as far as it may be within the competency of the General Assembly to do so a sound state of the currency, are objects of deep solicitude. The only substantial and permanent relief is to be found in habits of economy and industry, and in the productive labor of our people. By an observance of these, another crop would more than liquidate our eastern debt. We must bring our expenses within our income. Our merchants and traders must cease to indulge in hazardous and wild speculations which they are unable to meet.

While however we avoid all temporary expedients, or a breach of faith to our eastern creditors, there is a manifest propriety, if not necessity, for the adoption of such measures as will in all probability enable our merchants and traders to relieve themselves from the immediate pressure under which they are suffering. We have purchased at the eastern cities, and brought into the state, a greater amount of merchandize than we have exported produce to pay for, and the consequence is that an unliquidated eastern debt hangs over us. When the

banks, previous to the late suspension, were applied to for relief, they were unable to afford it, because, as they represented, they were pressed for the redemption of their circulation in coin or eastern exchange, and had been for some time drawing in their circulation and contracting their discounts.

The General Assembly created "The Bank of Tennessee," and by the provisions of the act the "surplus federal revenue" now on deposite in the other banks of the State was directed to be withdrawn therefrom "in two yearly instalments; the first instalment to be drawn on the first day of January, 1839, each instalment to be drawn in specie or funds convertible immediately into specie at par value," which when withdrawn is directed to be paid over to the Bank of Ten. and to constitute a part of its capital stock. It is understood that the banks in which the last instalment is deposited, and from which it is to be drawn on the 1st of January, 1840, being the sum of $678,373 12, in order to place themselves in a condition promptly to meet the call, have, during the present year, considerably curtailed their discounts and drawn in their circulation. While they have been curtailing, in order to furnish the means of meeting their liability, "the Bank of Tennessee" has not been in possession of this additional means upon which to extend her business; and will not be until the first of January next, if indeed in the present suspended state of the Union and Planter's Banks in which it is deposited, she can then be.

By the act creating "the Bank of Tennessee," the Governor was directed "on behalf of the State to execute the bonds of the State for two and a half millions of dollars, bearing an interest not exceeding six per

centum per annum, payable thirty years after date," and to "deliver the same to the president and directors of the Bank of Tennessee," which bonds were directed to "be sold and disposed of by the president and directors of the bank for specie, or funds convertible into specie without loss, and shall not be sold at a discount."

The bonds of the State to the amount of two and a half millions of dollars were issued and delivered to the president and directors of the bank, in conformity with the provisions of the act shortly after the bank went into operation. The bank sold and disposed of one million of the bonds, but retained and still holds the remaining million and a half unsold. Had they been sold and disposed of, one million and a half in specie or its equivalent would have been added to the available means of the bank, and the bank would thereby have been enabled not only to supply the vacuum created by the curtailments of the other banks, in order to enable them to meet the call upon them for the half of the deposite of the "surplus federal revenue" required to be paid on the first of January next, but might safely have extended some additional accommodations to the community, and thereby have mitigated the severity of the pressure in the money market. It was manifestly the intention of the General Assembly when they created the bank that the bonds should be sold and disposed of as soon as it could be done at their par value. They intended by the act to furnish sufficent banking capital vesting on a solid specie basis, to answer the reasonable demands of the trade of the State, and at the same time to supply the vacuum created by the withdrawal from the State of the branch of the Bank of the United States. The General Assembly were the exclusive judges of the policy of the measure, and when by law they directed the State Bonds to be sold, it was the duty of the president and directors of the bank to sell them as soon as it could be done upon the terms prescribed. It is respectfully submitted, that if the million and a half of State Bonds authorized by the act and remaining unsold, be now sold, that the bank would be enabled by the increase of her available metalic capital, safely to afford such additional facilities as would be required to relieve the immediate pressure, until the proceeds of the sales of the present crop will afford more solid and durable relief. If in the present state of the money market in the United States, they cannot be sold at par with the interest payable as at present authorized within the United States, it is worthy of consideration whether if they were made Sterling Bonds, with the interest payable abroad, and without any increase of the rate of interest, they may not in a short time be sold at par, if not for a premium. It would be a matter of no greater inconvenience to the bank to pay the semi-annual interest abroad than at the eastern cities, and in order to make the bonds available at an early day, it is recommended that they be authorized to take that form.

It is an axiom in political economy, that, whenever a State or country imports more than it exports to pay for, or buys more than it sells, exchanges will be against it. The exports of every country constitute the basis upon which bills of exchange are drawn to pay for its imports. Exchanges will always be at high rates and difficult to obtain wher