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this State now call in no equivocal voice upon their Legislature to aid in accomplishing this object, by withdrawing from circulation a portion of the notes of our banks, with a view to facilitate the introduction and circulation of gold and silver coin. For this purpose it is recommended that provision should be made for prohibiting the issue and circulation of all bank notes under the denomination of five dollars. The benefits of such a measure would be manifold; it would give the public a better currency, composed in part of the precious metals; it would relieve, partially at least, the laboring classes from the losses and inconvenience to which they are exposed from uncurrent and spurious bills; it would, in some measure, prevent the ruinous consequences not only to individuals, but to the public, resulting from the sudden expansions and contractions to which a paper currency is constantly liable; and it would give greater stability to the business transactions of the country. Attempts have heretofore been made to adopt this measure, but were probably defeated by the apprehension that the small bills issued by the banks of adjoining States, although their circulation in this State was prohibited by law, would be substituted for those of our own institutions, and that the evil would be thereby continued, while the advantage of the circulation would be transferred from our own banks to those of other States. To remove this objection, and to render the measure effective, the Executive was directed by a resolution of the last Legislature, to open a correspondence with the Governors of the adjoining States, with a view of obtaining the adoption of a similar measure in each of them. This duty has been performed, and there is reason to believe that the subject is viewed by the people of those States, as it is here, in a favorable light, and that they will co-operate with us in this movement for remedying the evils of a paper circulating nedium, and procuring a sound currency.

Though I do not anticipate any serious objection to the measure of suppressing the circulation of small bills, there may be some diversity of opinion as to the time and manner of effecting it. In determining upon these, particular regard should be paid to the state of things as it now is, and is likely to be for some time to Within a short period, the concerns of an enormous monied institution, to which the people of this State owe several millions of dollars, will probably be closed, and it would not be prudent to assume that this will be done with any special regard to

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public convenience. A considerable portion of this debt, and of the business which has been done by this institution, will be necessarily and gradually transferred to the local banks. Such a transfer, under the most favorable circumstances, would cause some inconvenience, and it might become very serious, if the ability of these banks should be greatly impaired, or our present extended system of credit rudely shaken by any ill-timed measures in regard to them.

By a resolution passed at the last session of the Legislature, each bank in this State is required to report to you this day, the amount of the several denominations of bills under that of five dollars, which it had put in circulation, as money, and which were outstanding on the first day of December last. These are the bills which are proposed to be withdrawn; and the amount of them now in circulation is estimated at about four millions of dollars. The object in withdrawing them, is not to diminish the amount of the circulating medium, for that would operate injuriously, by reducing the wages of labor and the price of property, but to introduce instead of this paper money, a like amount of gold and silver coin. There should be no hesitation in providing at the present session of the Legislature, not only against the further issues of each denomination of these small bills, but also for the withdrawal of those now in circulation, at a proper time. The withdrawal should be made at a successive period for each denomination, with the view to secure an effectual substitution of the coins for the paper money withdrawn, and to prevent a sudden and injurious contraction of the circulating medium.

In relation to fixing these periods, it should be borne in mind that we have now an unusual quantity of the precious metals. This circumstance will facilitate the operation of substituting coin for the paper to be called in, and allow it to be conveniently done at an earlier period than that which could be prudently selected for executing this measure if there was a scarcity, or no more than the ordinary quantity of specie in the country. It is also proper that you should consider the inconvenience which might result from a too sudden withdrawal of the small bills from circulation, in connection with the unfavorable effects which the continuance of their circulation has upon our currency and business, and the advantages which their withdrawal will secure to the public at large. To en

sure success to the measure proposed, it will be indispensably necessary to make effectual provision for preventing the circulation, in this State, of the small bills issued by the banks of other States.

I conceive it to be my duty to repeat the recommendation which was made to your predecessors in relation to reducing the amount of circulation now allowed to the banks. It should not, in my judgment, be permitted, in any case, to exceed the amount of their respective capitals, nor should their credits be allowed to exceed twice that amount.

Charters of banks are applied for, and granted upon the alledged ground that they are required for the public good; but it is the nature of such institutions to be less regardful of this consideration than of their own pecuniary interests: their conduct is therefore very properly an object of constant scrutiny. Any contrivances which they may resort to, with a design to enhance their profits, should be promptly suppressed. I have reason to believe that in this respect, the public have had just grounds of complaint against some of our banks.

Instead of discounting notes according to the usual course of business, they have required drafts of their customers payable at some distant place, knowing that the drawers had not and did not expect to have funds at such place to pay them. When these drafts arrived at maturity, others were offered to the same banks, and taken in payment of the former. A discount of one per cent beyond the legal rate of interest has been exacted on these successive drafts; and by this mode of doing business, those who have been under the necessity of applying for accommodations to the banks which have resorted to this practice, have been subjected to pay an exorbitant sum for the use of the money thus obtained.— Such a mode of oppressive extortion did not long escape the vigilance of the Bank Commissioners, and I have reason to believe they exerted, to good effect, all the authority they possessed to cause it to be discontinued; but I doubt whether their powers are sufficient to enable them to check this practice, and prevent a recurrence to it. You have the power to correct not only this but all other practices inconsistent with fair dealings on the part of these institutions towards the public, and I presume you will consider it your duty

to exercise it promptly, by applying it directly yourselves, or through the agency of the Bank Commissioners. The practice to which I have alluded is distinct from the fair business of discounting drafts, and the remedy to be applied to it should leave the right to discount them, in the regular course of business, unimpaired.To give to the ordinary business of loaning money the form of buying or selling drafts, for the purpose of taking usury with impunity, or as a pretext for extortion, is the practice reprehended. I have no reason to believe it has prevailed in many institutions, and it should not be tolerated in any.

While on the one hand you should act with promptness and vigor in keeping all banks within the sphere of action allowed to them, and in guarding the public against the mischievous perversion or misapplication of their powers and privileges, by restraints, and, if necessary, by annulling their charters; good faith requires, on the other, that such as use their powers and privileges in strict subservience to the purposes for which they were bestowed, should be protected in the enjoyment of them, without any diminution or modification other than may be necessary to give effect to measures of general policy for the public good.

I ought not to pass from this subject without alluding to the conduct of the State banks during the late period of panic and distress. That they, in most instances, exerted their best abilities to administer to the necessities of a suffering community will not, I presume, be questioned; and as little can it be questioned that they would have done this effectually, in spite of the assaults made upon them and upon public credit, with a view to subserve the interests of a great monied monopoly, and to effectuate the purposes of a political party, had not a large portion of that class of our citizens, most interested in sustaining public confidence in our currency, and most exposed to losses by its derangement, been led, by a strange infatuation, to concur in these mischievous designs, and to lend their active efforts to increase the panic, and spread far and wide its ruinous effects.

It is exceedingly difficult to confer particular privileges on a few without derogating from the equal rights of all others. Public opinion requires of you more caution in relation to granting cor. porate privileges than has been heretofore observed. The right

of the Legislature to create corporations is recognized by the constitution, and it may be exercised in many instances harmlessly and even beneficially in regard to the people at large; but in no inconsiderable number of cases, corporate powers and privileges are sought for as furnishing means not allowed to all for acquiring property, or for managing it in a profitable manner without the hazards to which it is exposed in individual hands.

Among the various applications usually presented to the Legisla ture for acts of incorporation, those for banks have been urged with the greatest earnestness, and it is highly probable several of this kind will be made to you at the present session. One of the strongest arguments that will be offered to you in behalf of them, will be, that banks are attended with many local advantages; that the sections of the State which have none, or not so many as there are in others, and which present better considerations in favor of their particular applications than those that have been successfully urged in other cases, are entitled, on the principle of equality of rights, to a participation in these advantages; and that a departure from the course heretofore pursued on this subject, will be an act of partial legislation and unjust towards them. This argument, which is alike opposed to any temporary suspension and to a permanent change of the course heretofore pursued on this subject, will not be less cogent at any time hereafter than it is now, and, if it is permitted to prevail, the Legislature will still go on as heretofore, multiplying banking institutions, whatever may be the effects upon our present system, or upon our currency. It must be conceded, I think, that banks have been heretofore too freely granted, and that we have enough of them for all the legitimate uses for which they are now wanted; you will, therefore, in my opinion, best promote the public good by refusing to add to their number.

Recent occurrences have tended to restore the militia system to the public estimation which it justly deserves in our government. It has been necessary to resort, more than once within the last year, to the military force to aid the civil magistrates in the city of New-York, in protecting the persons and property of our citizens, and in preserving the public peace. The alacrity with which the several corps performed the duty required of them on these

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