In consequence of the severe pressure upon the business of the country, occasioning universal embarrassment, the foregoing banks were compelled to suspend paying specie for their bills and other liabilities in May, 1837. This suspension was permitted to continue no longer than the cause which occasioned it existed. In May, 1838, resumption generally commenced, and it is gratifying to believe, with means available and sufficient, promptly to discharge all their obligations to the public.

Domestic bills or drafts, form nearly one half the amount of the item, "bills receivable." The greatest proportion of these in amount will reach maturity at Boston, New York, Albany or Troy, where they are payable within sixty days. This paper, being generally founded on business transactions and paid in full when due, gives to the banks an easy remittance to those cities for the redemption of their notes-one which, in ordinary times, can be relied upon for this purpose. These domestic bills, with the immediate means in possession of the banks, show their ability to pay their liabilities to the public, while the balance of notes discounted, and other effects, seems to be quite sufficient to secure to stockholders a return of the capital, with a reasonable profit. The present arrangement existing between most of the country banks in New England and those at Boston, gives to these domestic bills or drafts an additional value:-compelled as they are to redeem almost the entire of their circulation at par, in that city, where cash funds are from week to week absolutely necessary, these drafts answer the full purpose of specie, saving to the institutions themselves the risk of a money remittance, or the expense, trouble, uncertainty and risk of keeping the necessary specie funds for a redemption at their counter. banks on the west side of the mountain are generally adopting the policy of keeping a considerable proportion of their debt in these domestic bills or drafts. It is one, which in the present state of the business of the country may be safely commended, and out of which no serious evils can be anticipated.

The

The capitals of the banks in this state are generally small, consequently they cannot accommodate individuals with permanent loans, and at the same time give the necessary facilities to the daily operations of the business community. The latter seems to be the legitimate object of their incorporation, and no course, it is believed, can more surely effect it, than by giving to these domestic bills or drafts a favorable consideration, the money arising from which, being almost exclusively devoted in aid of the industry and sale of the products of the state.

My attention was called to the Windsor bank on the 31st March last, and upon an investigation I found its condition to be as follows:

Total amount of bills issued
Amount cancelled and destroyed

$552,180

366,926

$185,254

There has been no alteration in the condition of the Windsor bank since my examination in April last, except the reduction of the bills receivable by payment in Windsor bills to the amount of $18,199 00.

From the best information I could obtain, I believe that $80,000 of the item "bills receivable" will not be realized, as also the item of $70,695 76 "funds in agent's hands, Boston"-making together a probable loss of $150,695 76. The failure of this bank, it is believed, may be charged to the practice adopted by the board of directors, permitting one of their number to control its operations and become its principal debtor to a ruinous extent and also, in placing its funds in Boston in the hands of an individual, and as it proves, irresponsible agent, instead of confiding them to the care of a banking institution of known and undoubted solvency. Believing it my duty to do so, I requested the State's Attorney for Windsor county, to present the case of the Windsor bank to the consideration of the Supreme court of this State, under the statute in such case made and provided.

In all cases where the practice of placing funds in the hands of inviduals, for the redemption of bills, has been adopted by banks, I have recommended a withdrawal of the funds and the appointment of some strong bank in their stead. The latter mode, it is believed, better secures the public, as also the banks themselves, against the probability of loss, which, as in the case of the Windsor bank, would be fatal to its continuance, or so diminish its funds as seriously to injure its credit. All of which is respectfully submitted.

Montpelier, Oct. 11, 1838.

HARRY BRADLEY, Bank Inspector.