The Online Library of Liberty

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• Preface of the Author.
• An Essay On the Danger of Too Much Circulating Cash In a State, the Ill Consequences Thence Arising, and the Necessary Remedies. [ Published In the Pennsylvania Evening Post of Oct. 5, 1776, Under the Signature of a Financier. ]
• An Essay On Free Trade and Finance. First Published In Philadelphia, July 1779, and Dedicated to Congress.
• A Second Essay On Free Trade and Finance. First Published In Philadelphia, August 1779, and Dedicated to the Several Legislatures of the American Union.
• A Third Essay On Free Trade and Finance. [ Published In Philadelphia, January 8 Th, 1780.]
• A Fourth Essay On Free Trade and Finance. First Published In Philadelphia, February 10, 1780.
• A Fifth Essay On Free Trade and Finance. First Published In Philadelphia, March 30, 1780.
• Strictures On Tender-acts. * [ First Published In Philadelphia, Dec. 13, 1780.]
• An Essay Or Humble Attempt to Examine and State the True Interest of Pennsylvania With Respect to the Paper Currency. [ First Published In Philadelphia, Dec. 13, 1780.]
• An Essay On the Economy, Policy, and Resources of the Thirteen States, and the Means of Their Preservation. [ First Published In Philadelphia , In January 1781.]
• A Dissertation On the Nature, Authority, and Uses of the Office of a Financier-general, Or Superintendant of the Finances. [ First Published In Philadelphia, Jan. 24, 1781.]
• Remarks On the Resolution of Council, of the 2 D of May, 1781, For Raising the Exchange to 175 Continental Dollars For 1 Hard. Humbly Offered to the Public. [ First Published In Philadelphia, May 9, 1781.]
• Strictures On a Publication In the Freeman’s Journal of May 16, 1781, Signed Timoleon. * [ First Published In Philadelphia, May 23, 1781.]
• Strictures On Two Publications In the Freeman’s Journal of May 30, 1781, Signed Phocion, and Impartial. * [ First Published In Philadelphia, May 23, 1781.]
• A Dissertation On the Political Union and Constitution of the Thirteen United States of North-america, Which Is Necessary to Their Preservation and Happiness; Humbly Offered to the Public. * [ First Published In Philadelphia, 1783.]
• A Sixth Essay On Free Trade and Finance. Particularly Showing What Supplies of Public Revenue May Be Drawn From Merchandise, Without Injuring Our Trade, Or Burdening Our People.
• A Seventh Essay On Free Trade and Finance; In Which the Expediency of Funding the Public Securities; Striking Further Sums of Paper Money, and Other Important Matters, Are Considered. * [ First Published In Philadelphia, Jan. 10, 1785.]
• A Plea For the Poor Soldiers: Or, an Essay to Demonstrate That the Soldiers and Other Public Creditors, Who Really and Actually Supported the Burden of the Late War, Have Not Been Paid, Ought to Be Paid, Can Be Paid, and Must Be Paid. [ Fir
• A Review of the Principles and Arguments of the Two Foregoing Essays, Viz. the Seventh Essay On Finance, and the Plea For the Poor Soldiers; With Some Observations On the Finances of the Union.
• An Essay On the Seat of the Federal Government, and the Exclusive Jurisdiction of Congress Over a Ten Miles District; With Observations On the Economy and Delicate Morals Necessary to Be Observed In Infant States. [ First Published In Philadelphia, Sep
• Remarks On the Address of Sixteen Members of the Assembly of Pennsylvania, to Their Constituents, Dated September 29, 1787. With Some Strictures On Their Objections to the Constitution Recommended By the Late Federal Convention. * [ First Publish
• The Weaknesses of Brutus Exposed: Or, Some Remarks In Vindication of the Constitution Proposed By the Late Federal Convention, Against to Objections and Gloomy Fears of That Writer. [ First Published In Philadelphia, Nov. 4, 1787.]
• An Essay On Credit: In Which the Doctrine of Banks Is Considered, and Some Remarks Are Made On the Present State of the Bank of North-america. [ First Published In Philadelphia, Feb. 10, 1786.]
• Strictures On the Net Produce of the Taxes of Great-britain, In the Year 1784, As Published By Order of Their House of Commons. [ First Published In Philadelphia, Aug. 4, 1785.]
• An Essay On Test-acts Imposed With Penalties. * [ First Published In Philadelphia, Sept. 12, 1781.]
• An Essay On the Extent and Value of Our Western Unlocated Lands, and the Proper Method of Disposing of Them, So As to Gain the Greatest Possible Advantage From Them. [ First Published In Philadelphia, April 25, 1781.]
• Scales of Depreciation of Continental Money.
• A Chronological Table of Remarkable Events.

AN ESSAY ON CREDIT: IN WHICH The Doctrine of BANKS is considered, AND Some Remarks are made on the PRESENT STATE of the BANK OF NORTH-AMERICA.

[First published in Philadelphia, Feb. 10, 1786.]

CREDIT is the confidence which mankind place in the virtue and good character of its object: so when we say of a man, ‘he is a person of credit and reputation,’ the meaning is, that he is a man in whose virtue and good character people in general place confidence.

Credit, in a commercial sense, is the confidence which people place in a man’s integrity and punctuality in fulfilling his contracts and performing his engagements. When we speak of a merchant of credit, we mean a merchant in whose ability, integrity, and punctuality in fulfilling his contracts and engagements, people have confidence, i. e. a man of integrity and truth, who is fit to be believed and trusted; the contrary or reverse of this is a man of no integrity in his dealings, who will quibble and shuffle, evade his contracts, violate his word and truth, delay his payments, disappoint his creditors, use deceit, chicanery, and falsehood, &c. i. e. is not fit to be believed or trusted.

From this view of the matter it appears, that credit is a most valuable thing in society, it gives hearts-ease, it gives wealth, it is a nurse of every social virtue, it makes a soil suitable for the growth of public spirit and every public virtue; the worth and value of this may, perhaps, be best illustrated by comparing it or viewing it in contrast with its contrary; how much better do we feel, how much richer do we grow, how much more easy, safe, and satisfied do we enjoy ourselves, when we live among citizens to whom we can give full credit, in whom we can have safe confidence, and whom we can trust, than when we find ourselves among people to whom we can give no credit, in whom we can have no confidence, and whom we cannot trust, and where every concern or contract we make with them is attended with anxiety, uneasiness, and fear, and commonly followed by deceit, loss, and disappointment? In this case, I desire, I can need, no better argument, no better proof, no better explanation of my subject, than an appeal to the instant feelings of my fellow-citizens.

But however valuable and excellent in society, however profitable and happyfying, however soothing to our warmest wishes, credit public or private may be, it is in vain to hope for it, or even to imagine the possibility of its existence, without its proper object, which is honesty or integrity; it can no more be forced by laws, it can no more be obtruded by authority, however high and puissant, than an article of faith can be forced on the understanding, without proper proof or evidence.

Credit and honesty are in their nature correlatives, and must and for ever will imply and support each other. Integrity will generate credit and confidence the moment it is known in any part of the world; and the moment that integrity or honesty is observed to cease, the credit or confidence which was generated by it, instantly ceases too; it dies, it can never be brought to draw another breath, after the integrity which generated it and supplied all its vital motions, is gone.

It is here to be noted, that however necessary and even essential integrity is to credit, yet in a commercial sense, i. e. as far as it relates to trade, money, or wealth, it is not the only thing necessary; power or ability thust be added; for however clear and plain it is, that an honest man will never contract beyond his power of performance, yet it often happens that his power of performance may be much lessened between the time of contract and the time of fulfilment, by many incidents which may and often do take place, which at once lessen his credit, or the confidence of his neighbours in his engagements.

These incidents often affect honest merchants so deeply, as to occasion their failure or bankruptcy, and their failure often produces another in their creditors, that a third, and that a fourth, &c. This succession of failures often originates in a swindler or rascal, who knowingly contracts vastly beyond his ability of performance, and, of course, ruins not only himself, but a numerous succession of honest men.

This affords us one instance of the vast mischief which a community may and often does suffer, from one dishonest man residing among them; very many others might be produced of like mischief, effected in a great variety of ways, and to such a degree that a national character may be deeply stained by the iniquity and knavery of a few.

This shows that it is of most serious consequence to every State, to use every possible means, not only to preserve the national credit and character of their State in good purity and honor, but also to introduce, as far as may be, habits of integrity and honor among their citizens, and extirpate, as far as can be done, all such villainous and scandalous practices, as naturally tend to disgrace the national character, and ruin the fortunes of private citizens.

These observations will appear with greater force and advantage, if we recur for a moment to what I just now mentioned, viz. the great ease, satisfaction, and convenience of living in a State where the public finance is so managed, that all private citizens can safely rely on the justice and punctuality of the public engagements, and where the habits of honesty and integrity are so general among the private citizens, that they may safely trust one another, so that credit and mutual confidence in each other may prevail thro’ the community.

Thus circumstanced, every man may safely employ his stock in any business of advantage, either of merchandise, mechanism, or husbandary; whereas if he lived in a State, and among citizens, of contrary character, he would be afraid to let his stock go out of his own keeping, lest it should fall into hands, either public or private, which would retain it from him, so that he could not recover it again, tho’ the advantages of improvement both to the public and himself, might be very great and inviting.

In a State, and among citizens, so happily disposed, any man, with industry and economy, tho’ his means were small, might live very easy and comfortable, and the man of fortune might improve his estate very safely and happily, to the great advantage both of the public and himself. Strangers would have every encouragement to flock in to such a State, and thereby increase the population, and, of course, the commerce, manufactures, and husbandry of it.

From this view of the subject it appears strikingly evident, that credit, both public and private, and the mutual confidence of citizens in the public justice and in each other, is of most momentous advantage, of most capital convenience, both to the public and to the individual members of it; it contributes most decidedly and effentially to the internal establishment, security, and safety of the government, and to the ease, wealth, and happiness of private citizens; therefore, it follows, that it is the high interest and great duty of every State to adopt and pursue every practicable method of securing, enlarging, and extending to the utmost degree, all the advantages and blessings which can result from such public and private credit, and the mutual confidence of the subjects of the State in the public and in each other.

The wisest and richest nations of Europe, long before we were born, have seen this subject and its most momentous importance in a light so strong and glaring, as induced them to adopt every practicable method in their power, to secure to themselves such invaluable advantages. In their practice we have an example, and in their success we have encouragement, and very strong inducement to imitate it.

For this purpose, the richest trading cities of Europe long since adopted the plan of establishing publicbanks; this plan they formed upon the most deliberate consideration; they had the greatest opportunities of information, had the greatest experience in the subject; they knew the importance, operation, and effects of both cash and credit, the best of any men then in the world, as their trade and wealth were then the greatest of any in the world. It is not to be supposed that their first essays reached the perfection of the subject, but they found advantages enough in their first trial, to induce them to continue the practice ever since.

Genoa was the first State in Europe which established a public bank; their bank of St. George was established in 1407, by a public act of that republic. The plan was soon followed by Venice, whose bank, which continues to this day with the greatest advantage to the State, as well as to their private citizens, and has ever been in the highest reputation and credit both at home and thro’ all Europe, was established by a public act of their State.

The city of Amsterdam long after followed their example, and their present bank received a public establishment by an act of their States-General in 1609. The cities of Rotterdam and Hamburgh adopted the same practice; and England, who is always phlegmatic and late in adopting the example of the other European States, instituted and established its bank in 1694; and France, whose attention in those days was little turned to improvements in trade, came later into it; their royal bank at Paris was established by public authority in 1718.

Besides these, very many other banks of less extent and consequence, both public and private, are now established in the greatest trading cities and banks are become the great receptacles of the cash of Europe, and almost all mercantile receipts and payments are made thro’ them.

The bank of Genoa, indeed, failed in 1746, after that republic had, for a great length of time, enjoyed most signal and capital benefits from it; but its ruin was not brought on by any defect of its principle, or mismanagement of its directors, but by the madness of the rulers of that State; they were not mad enough, indeed, to decry it as an useless or dangerous institution, but they adopted the contrary extreme, they magnified its strength and power too much, and compelled the directors to make advances to the State, beyond what their funds would bear.

The other banks have continued to this day, and with such incredible and most acknowledged benefit to the several States in which they are established, that their credit or decline has generally been considered as a sort of sure criterion of the strength or weakness of the State in which they are established. When nations are at war, they ever have thought it a sure way to bring fatal embarrassments on an enemy, if they can by any possible means shake the credit of their bank; and every State has always been ready to go great lengths to support their bank, if, by any turn of affairs, it has happened to be in distress.

It must, therefore, be very absurd to suppose that such an institution can be hurtful or even useless, that has stood the test of such extensive and durable trial and practice, among so many nations of the greatest experience and most accurate knowledge of the subject; an institution thro’ which not only the cash of private merchants, but of the greatest and richest trading companies, and even the treasure of nations, has been so long negotiated, and which, thro’ so great a length of time, up to this very hour, supports its credit and character of vast utility, by the universal suffrage of nations, thro’ all ranks of people, from crowns and the most dignified assemblies of statesmen, and the most wealthy companies of merchants, down to the lowest dealer.

But all this notwithstanding, people may be found, little acquainted with the subject, and wholly unexperienced in it, who will give their opinion that such an institution isinjurious to a State, and incompatible with the safety of it. This may be considered as an instance and proof of that height of absurdity which people may arrive at, who grow zealous and positive in things they do not understand.

But however well the nature of banks may be understood in Europe, and however immense the advantages and profits which are derived from them may be, yet the thing is new in America, and by many people thought unfavorably of.

The BANK of North-America, tho’ established by act of Congress (December 31, 1781) which is the highest authority of the Union, and recognised expressly by many of the States, and implicitly by them all, is nevertheless treated by many people here as a most dangerous and injurious thing, utterly incompatible with the safety of the State, and, of course, they think it ought to be demolished without ceremony, and that even the common forms of dissolution are unnecessary, as people are not very nice in the manner, or delicate in the choice of means, of hunting down a beast of prey, or destroying a common enemy.

But as I suppose my fellow-citizens will ever be willing to hear before they condemn a thing that has once saved them, and very often afforded many of them a material convenience, I apprehend a short dissertation, showing the nature of a bank, will not be unacceptable.

Abankis a large repository of cash, deposited under the direction of proper officers (say, a president and directors) for the purpose of establishing and supporting a great and extensive credit, to be made use of in every case where an established credit will answer in exchange or payment as well as cash, or better than cash, as in many circumstances will manifestly and undoubtedly be the case: for instance, suppose this State should incorporate a bank, and order all the revenues of the State to be paid into it, and should direct that all the debts of the State should be paid in checks on the bank, or in bank-bills, payable to the bearer, which bearer should have liberty, whenever he pleases, to carry his bill to the bank, and receive cash for it, and should direct further, that if such bank-bills, in any circumstance, happen to suit any citizen better than cash, he should be at liberty to carry his cash to the bank, and take out bank-bills for it.

The effect or operation of such a bank, when its credit becomes established (i. e. when the people at large believed with full confidence that the fund or stock was sufficient, and the management fair and upright) I say, the operation or effect of such a bank would be, that very few of the people who should be possessed of such bank-bills, would carry them into the bank, and receive cash for them, because the bills would answer by far the greatest part of the purposes of cash as well as specie, i. e. they would purchase any kind of commodities, and pay any kind of debts, as well as cash, as we find is the case of the bank-bills of the Bank of North-America, at this time.

Further, such bills would not only be as good as specie for almost every purpose where cash is used or needed, but, on many accounts, they would be better than cash, as any sum of them is easier and more certainly counted than cash; the danger of counterfeits would be less; the carriage would be easier; they would be less exposed to thefts and robberies than cash (for a man can conceal from a thief 1000 dollars in bills, or run from a robber with them, easier than with 1000 dollars of silver); in case they are destroyed by fire, water, or other accident, they are not lost, but on proof made at the bank, they may be replaced, &c.

The advantage would be still greater, if, instead of bank-bills, the owner would take a bank credit, and draw checks on the bank whenever he needed his money; this would enable him to pay any sum exactly, without the trouble of making change; he would be able in any future time to prove his payments, if he preserved his checks which he received cancelled from the bank, as every man ought to do; this would at once free him from all danger of loss by fire, robbers, mislaying, dropping them on the road, &c. &c. This practice is found by experience to be so very convenient, that it is almost universally adopted by people who keep their cash in our present bank.

These and many other advantages which bank-bills or bank-credit have beyond what cash can have, would doubtless induce most people to prefer bills or bank credit to cash, and, of course, very few possessors of either would demand cash at the bank; the consequence of which would be, that at the end of the year much of the cash would remain in the bank, tho’ the whole amount of the bank-stock should have been paid out in bills, and been constantly circulating among the people, with every advantage that cash could have, and many other very valuable advantages that cash could not have, as has been just now shown.

The benefits or uses of the bank, when thus established, are various: 1. The bank gains all the lost paper, i. e. all such bank-bills as are lost (where the loss cannot be proved) and, of course, can never be brought to the bank for redemption or payment.

2. The bank can, on any public emergency, emit bank-bills beyond the amount of the cash or stock in the bank, and, of course, can have the benefit of a considerable sum to circulate or use for the public benefit, without paying interest, or having it known to an enemy that they are embarrassed or in debt. Or,

3. If the exigencies of the State should not require this, they may accommodate their citizens with discounts or loans on interest, to the great increase of the bank-stock or revenue, as well as doing great favor to individuals, and increasing the trade, manufactures, and husbandry of the State; this is the best and perhaps the only proper way of supporting a public loan-office in a State. And,

4. If the revenues should increase beyond the expenditures of the State, they will accumulate in the bank till the amount may be very great; and a rich State, like a rich individual, derives many and great advantages from wealth, and even from the reputation of wealth.

These advantages have been found by experience to be much greater, vastly greater, than a sanguine speculator, upon a bare view of the nature of the subject, would imagine. The force and energy of credit, perfectly well established and permanent, is vast almost beyond conception; it is found by experience to supply the place of cash, and much better than cash, in almost all transactions, except in small expenses, where small change is necessary, such as travelling expenses, market-money, &c.

It is also found by experience, that any sum of money in the stock of a bank well regulated and managed, is sufficient to support the credit of double or treble its amount in bank-bills, whilst each of those bills is indisputably as good as cash, because the possessor may at any time exchange them at the bank for solid hard money, whenever, either thro’ distrust of the bank, or his own conveniency, he may choose to do it; it follows then,

5. That a good bank may increase the circulating medium of a State to double or treble the quantity of real cash, without increasing the real money, or incurring the least danger of a depreciation. And,

6. A good bank will receive no money but good coin of standard weight and fineness, and this will naturally and unavoidably keep the current coin, cash, or medium good, or discover its defects; for if, by any means, a debased or light coin, or public bills of depreciated value, should gain a currency in any State (all which have often happened) the standard of the bank will discover their defects, and an exchange or agio of such depreciated money and that of the bank, will at once determine the true or real value of such depreciated currency.

7. Another capital use and advantage of a bank is, that it makes one of the best repositories for money that is designed to lie for any great length of time on interest, as it affords a much better security than can be found in the hands of any private man, and the half-yearly dividends are more than equal to any profit that can be derived from them when put to interest on mortgage, and the punctuality of payment better secured, and the trouble of collection much less.

Such monies as are here intended, are legacies or any other provision which is made for young children, to be paid to them with the interest, at their full age; any provision which a man may wish to make for himself or wife, against old age; the funds of public institutions of religion or charity, such as churches, hospitals, poor-houses, widows’ fund, sea-captains’ fund, &c. any accumulation of cash, which a man may choose to prepare, in order to complete some great payment, or accomplish some great purchase at a future day, such as a house, a farm, &c. &c. And as bank-stock of a good bank can at any time be sold for cash, the bank becomes the surest fund to produce the principal cash reposited in it, when needed, and also the interest in the mean time, which may be used, if needed, when it is paid in, or may be added to the principal in the bank.

This will appear to be a very important use of a bank, if we attend to the subject a little, especially to the case of orphans and infants, and see in how many ways they are defrauded or somehow deprived of the cash, which their parents have carefully laid up for them, whilst their infancy prevents their taking care of it themselves.

8. Another great use of a good bank is, that it probably may very much promote economy and industry, as particularly in many of the fore-mentioned instances, viz. when a man is engaged in accumulating any sum of money for any capital purpose, such as making provision for his infant children, or himself in old age, or for a heavy purchase, or any other design which lies near his heart, he will be very industrious, and his economy will be very good, till he has made up his heap, or got the necessary sum together, and by that time he may perhaps have acquired such habits of industry and economy, that he may not stop at the acquirement of the sum first proposed, but may be induced to keep on and enlarge it beyond the original design.

The bank gives a sure operation to such a scheme, at least in point of safe keeping and punctual payment. Neighbours may see the example and its advantages, and fall into it themselves, and so on till the instances of such accumulations, and, of course, of such economy and industry, may become general among monied men thro’ the State, to the great advantage and strength of the State, the bank, and themselves.

These are only a few of the benefits derived from a bank, which our short experience will enable us clearly to understand, and which in point of fact or reality are demonstrated by the same experience so clearly and fully, as to put the matter beyond a doubt. I do not pretend to comprehend the great subject enough to explain all the infinite uses and advantages which the long experience of the greatest cities of Europe has found resulting from banks, or the still greater advantages which a further experience may discover either to them or to us; but these are certainly sufficient to induce every friend to the integrity, wealth, and honor, interest and genuine respectability of his country, to think favorably of the subject, and to exert all proper endeavours to participate of its uses.

But to pursue the matter further—suppose a number of private citizens form a bank, each of whom puts in one or more shares, and raise in that way a bank-stock of any proper sum (say, 1,000,000 dollars) for a fund to support a large and extensive credit, for the purpose of deposits, loans, and discounts, and appoint proper officers to manage the same, and obtain a public establishment by a charter, or other public act of the government; this will be a private bank, because the stock of it is the money of private men, and the officers or directors are appointed by private stockholders; but it may in some sense be deemed public, both on account of its extensive utility and public importance, and the public patronage and establishment it receives from government.

This bank will have a nature and operation similar to the other, and will afford the same kind of convenience to the citizens who choose to be concerned in it, and in both cases the particular profits of the bank will go to the stockholders, i. e. to the private stockholders, whose contributions compose the stock, or to the State, as far as the public funds are vested in bank-stock, if it should be thought proper to vest any part of the public treasure in such stock, but the management of it would be exclusively under the conduct of its own stockholders and directors.

Of this kind is the BANK of North-America, and has a much greater capital (about 900,000 dollars) than any state-bank can have in the present condition of our finances, and its operation, effects, and uses are much more extensive, and its accommodations to the citizens, and even to the State, much greater than a state-bank could have; this may afford one answer to an objection which some may raise against the present bank, viz.

That it would be better to discontinue the present bank, and erect a state or public bank in its stead; another answer may be, that no plan of this sort can be so sure of a proper management under the State, as it would be under the direction of its own proprietors. A bank is a sort of mercantile institution, or at least has such a close connexion with the whole mercantile interest, that it will more naturally and properly fall under the direction of merchants, than of any other sort of men less acquainted with its nature and principles, and less interested in its success.

Another reason is, that a bank, whose stock is made up by the subscription of private men, and managed by the stockholders, is the surest antidote or preservative against tyranny in the government, that can be named; its owners are the rich men of the State, who will never be concerned in needless popular clamors or sedition against the government, but, at the same time, have both influence and inducement enough to be a check and restraint on government, when it becomes oppressive, and really verges towards tyranny.

The rich have an interest in their poor fellow-citizens, and (as some men use their wives) however tyrannical they may be themselves, they will not suffer any body else to tyrannize over them. Trade and banks cannot flourish in a despotic government, and, of course, where they do exist, they will keep despotism, as far as possible, out of the State. The stockholders are too numerous, too much scattered, of sentiments and connexions too different, to admit any danger of becoming tyrants themselves. I never heard an instance of a State whose government was corrupted by a private bank.

But a state-bank, if we could possibly suppose that it would be well managed, and grow rich, would tend immediately and directly to tyranny in the government, because it would give the minister or ruler the command of a vast sum of money; and I never knew a rich treasury at the command of a minister, whose head was not turned by it, and the insanity never fails to take a direction towards tyranny.

The better way, I should think, would be to join both together, so as that all the state-revenues may be paid into the bank, and all public payments be made by checks on the bank, and let the State become stockholders as far as they please, and take sums out of the bank to the amount of their stock, whenever it is necessary.*

This will answer every purpose of the State as well as a state-bank, will increase the stock of the present bank, and, of course, extend the power and energy of it so much, that it will be able to supply the necessities of the State with any loans of cash, which (without the most violent convulsions) can ever be necessary; and, at the same time, would be able to afford most ample accommodations to private citizens or companies, to the vast benefit and increase, not only of private fortunes, but of our trade, manufactures, and husbandry in general.

The present funds of the BANK of North-America, or the cash which supports it, is, 1st. the bank-stock, or the money paid in by the stock-holders, which is about 900,000 dollars: and, 2d. the money deposited by men of all descriptions, who may draw it out by checks on the bank whenever they please.

These sums are variable, indeed, but always very considerable, as no person ever draws checks beyond his deposit, very few ever draw quite up, and very many people have large sums there, because their cash lies in the bank not only more secure, but is more convenient for payments there, than it could be in the keeping of its owner.

Some objections have been made to the present bank, which it may be proper to consider—

I. Such vast sums of money are hoarded up in the bank, that cash is become scarce in town and country. I answer,—This is not true in fact:

1. Because the bank circulates daily more cash than it has in the bank, and, of course, makes cash plentier than it would be, if we had no bank. And,

2. A very great part of the bank-stock, on the strength of which the bank issues and supports the circulation it gives out, belongs not to this State or its neighbourhood, but to people who live in distant parts, to whom it must be remitted if the bank should be broke up.

II. Another objection is, that monied men find a greater advantage in purchasing bank-stock than in letting their money on interest to people in the country, as formerly was done, and, of course, tho’ the monied men in town may gain by the bank, yet the country-people suffer by it.—This is a strange sort of sentiment to appear in form of an objection; because the bank enhances the value, or increases the use, of cash or any other property, so that the possessor can be more benefited by it than before; therefore, the bank is hurtful.

The same cause (i. e. the bank) raises the price of wheat and flour, to the benefit of the country former, indeed, but to the damage of the merchant in town, who must pay more for them than before; if our country produce was all consumed in the State, these mischiefs and benefits would balance one another; because what one citizen lost, another would gain; but a very considerable part of our produce is exported and paid for by foreigners; and therefore the higher the price, the greater is the benefit to the State.

But this evil complained of does not originate in the bank, but in quite different causes; many monied men who used to lend money on interest, have lost their money by the war, by the enemy, or by the depreciation of money, or by evasions of payment which have been introduced since, and, of course, have no money to lend; and all who have any, have found the danger of letting it in the old way so great, that few will venture into it again; and, lastly, the objection is hardly true in fact; because any man in the country who has credit enough in town to get a good indorser, can have money out of the bank, as well as a merchant of the city.

III. Another objection to the bank is, that the discounts of the bank make money of such easy acquirement, that it induces merchants to over-trade their stocks, and dissipating young fellows to spend their money faster than they would do, if it was harder to get it. I believe this is all true, and not only arises from, but is an actual proof of, the great convenience and public utility of the bank.

This is just of the nature of all other objections against a good thing; because it may be made an ill use of; and will prove that a good farm is worse than a bad one, because it makes the farmer lazy, in as much as a little work on good land will raise his bread; good victuals and drink are worse than bad, because gluttons and drunkards will eat and drink to excess; a loving wife is worse than a cross one, because her husband will be apt to lie in bed too long with her; and riches are worse than poverty, because they introduce luxury, &c. &c. But I cannot be made to believe that blessings ought to be driven out of the State, because some people will make an ill use of them.

I shall ever believe that it is easier living in a place where a man can raise a sum of ready cash on any emergency, without delay or difficulty, than where such a thing cannot be obtained without, great delay, trouble, or perhaps selling property to great disadvantage for it. Such a facility is an advantage which, I think, is not to be despised or easily parted with.

IV. Another objection is, that all the benefits of the bank centre in the city and near confines of it, but the country reapsno advantage from it. I answer,—suppose this was true (which cannot well be admitted) as it costs the country nothing, why do they begrudge the advantages of it to the city? I dare say the inhabitants of the city would all rejoice most heartily to see the country in full enjoyment of every advantage and convenience of life, that could be derived from nature or art.

But it is very evident that the country derives a great advantage from the bank, for the richer the merchants are, and the greater their trade, the better market they afford for the produce of the country. This is a particular of capital consequence to the country, for their husbandry is animated and supported by their market; indeed, the husbandman and the merchant ever mutually support and benefit each other: and it is scarcely possible that either of them should be benefited or hurt, but the other will be affected by it.

V. Another objection is, that the great wealth of the bank will give it an undue influence on the government. There is no doubt but wealth creates influence; but it is that sort of influence which has ever been found safe to the State. Our bank is a sort of mercantile institution, and the influence of merchants is the safest of any that can affect a government.

The parson lives on the sins of the people, the doctor on their diseases, and the lawyer on their disputes and quarrels (and, I suppose, they all think they ought to pray for their daily bread) but the merchant lives on the wealth of the people. He never wishes for a poor customer or a poor country; the richer his customers are, the more they can purchase, and the better payments they can make to him. The merchant has every inducement to seek and promote the wealth of the State.

Wealth rarely begets sedition; that baneful production generally springs from poverty, vice, and disappointment. These are the characters which find an interest in fishing in troubled waters. We have, perhaps, no instance of a nation ruined by its merchants. I never heard of a State distressed by a private bank; but instances are plenty enough of States served and saved by such a bank.

On the whole, I think it absurd to banish wealth from a State, for fear it should gain too much influence in government, or generate faction in the State; but of all kinds of wealth, a bank would be the least likely to produce these effects, because the stock-holders of the bank are made up of all parties, and are as likely to balance each other’s influence there, as in any other part of the State. It would, in my opinion, be much more politic, to make a levelling act, to prevent the great wealth of individuals, who are much more likely to become dangerous to the State, than any aggregate bodies of men, however wealthy they may be.

VI. Another objection is, that the general benefits of a bank depend on the integrity of the directors, who may, in many ways, by a corrupt or partial management, destroy these uses, or make the whole stock of the bank subservient to the interests of a few favorites, and, of course, the great body of the people must be excluded from the advantages of it. I answer,—this is an objection that may be made with equal force against every institution on earth; none of which are so good and beneficial, but their uses may be lessened or destroyed by corrupt management; and when our directors are called upon to vindicate themselves against any such charge, it will be time enough to think of an answer: in the mean time, the present internal strength and good condition of our bank demonstrate, that the management of the directors has been conducted with great prudence.

I here beg leave to subjoin a short history of the Bank of North-America, with an account of some great difficulties it hath had to struggle with from its first commencement (four years ago) down to this time, and to make some remarks on its present state.

I. I shall attempt to give a short history of our bank.—It being observed that the finances of the wisest and best regulated States of Europe, have for a long time been negotiated thro’ their banks, or at least been so closely connected with them, as to derive the most capital benefits and assistances from them, mr. Morris, in 1781, when our finances were in a crisis almost desperate, I say, mr. Morris, being then Finencier-General, adopted the scheme of forming a bank in America, which was proposed to and approved by Congress, to which a thousand shares, of 400 dollars each, were soon subscribed, and application was made to Congress for a charter of incorporation, which was granted by their public ordinance of December 31, 1781. It appears by the preamble of said ordinance, that Congress approved and adopted the scheme from a conviction of the support which the finances of the United States would receive from a national bank, and that the exigencies of the United States made it indispensably necessary that such a bank should be incorporated.

Tis’ this act of incorporation passed in Congress, Dec. 31, 1781, yet it was no new or sudden thought; for the Financier-General had laid the plan of a national bank before them as early as May 17, preceding, and on the 26th day of the same month Congress approved the same, and engaged to grant an act of incorporation, as soon as the subscription should be full; nor was the thing new to any of the States, for the scheme of the bank, and the resolution of Congress of May 26, were published in all the States, and subscriptions were publicly opened in them all.

In the resolution last mentioned, Congress recommended to all the States to make all necessary laws for support of the BANK, and in particular to make it felony to counterfeit the bank-notes, seal of the bank, &c. &c.

All the States recognised the act of Congress for incorporating the bank, many of them most explicitly, the rest implicitly, as none of them objected to it, but all made use of the bank, and participated of the benefits of it, as far as their opportunity and convenience prompted them.

The State of Pennsylvania recognised not only the said recommendations, by their act of March 18, 1782, against counterfeiting bank-bills, &c. but by another act of April 1, 1782, counting upon the act of Congress incorporating the bank, did grant an act of incorporation to the bank, similar to, and in the same words of, that of Congress, enacting that those who are and those who shall become subscribers to the said bank, be and for ever hereafter shall be, a corporationand body politic, by the name and stile of the President, Directors, and Company of the Bank of North-America.

By these public acts, the subscribers to the bank consider themselves and their property in the bank for ever, under the most solemn and sacred sanction and protection of the law, and guarantied in the most effectual manner conceivable by the public faith, pledged to them both by Congress and the State; for it is not possible that the public faith can be plighted more solemnly and more effectually by any supreme or subordinate authority, than by a formal public act.

Under this sacred sanction of the law, and fully confiding in the honor, justice, and even contract, of our Legislature, the Directors, in January 1784, resolving to make their institution as extensive and useful as possible, opened their books for new subscriptions. Under the inducement and encouragement of these firm establishments, very many persons, both citizens and foreigners, became subscribers, and placed their money in our bank; the amount of the new subscriptions, after the charter of this State was obtained, was above 500,000 dollars. Old men placed the money designed for the support of their old age in the bank; the money of widows and orphans likewise was lodged there, as well as the montes of the merchants, and every other description of men.

The amount of the old and new subscriptions arose up to the vast sum of 900,000 dollars, which is the present amount of the stock of the bank, a vast sum indeed for the new beginnings of America, tho’ small when compared with the immense stock of some European banks.—With the deposits and this great capital stock (which was permanent, and not liable to be withdrawn by the proprietors, as the deposited monies were) with the deposits and the permanent stock, I say, the bank was in condition with great safety to make such extensive negotiations, as could afford very capital accommodations both to the public and to private citizens, whenever their occasions and exigencies made the assistance of the bank necessary to them.

So great was its success, and so amazing were its effects, that it appears by the bank-books, that its cash-account in one year, viz. from January 1, 1784, to January 1, 1785 (the third year of its operation) amounted to the almost incredible sum of 59,570,000 Mexican dollars; and tho’ the attacks upon the bank, and many other difficulties which much diminished its negotiations in the succeeding year, were so great as seemed almost fatal, yet such was its great internal strength, and the energy of its very nature, that its transactions from January 1, 1785, to January 1, 1786, amounted to about 37,000,000 dollars.

II. I now proceed to give some account of the difficulties which the bank has had to struggle with, from its first beginning down to this time.

1. The first difficulties arose from the novelty of the thing. The Directors were engaged in a business in which they had no experience (nothing of the kind having ever before been practised in America) and tho’ they acted with the greatest consideration, care, and caution possible, yet all this notwithstanding, it is hardly supposable but some errors in management must have been committed. These (if any have happened) by experience will be discovered, and by prudence may be corrected and avoided in future time, but they form no conclusion against the principles of the bank or its natural utility.

The same novelty of the thing prevented a general confidence in the bank at first among the people.

It was further unlucky, that the bank was first opened at a time when the people had so often been disappointed and deceived in every species of public propositions and engagements relative to money, that they knew not whom they could trust; they hesitated lest they should be taken in by the bank, as they had often been by very numerous proposals to which their confidence had been courted. But the fidelity of the Directors, and the perfect punctuality of all payments at the bank, soon got the better of this diffidence, and the bank gained an almost universal credit and confidence among the people, even among its professed and bitterest enemies.

2. Another difficulty with the bank has ever been, that the balance of foreign trade has been against America, ever since the bank was first established. This has occasioned such great exportations of cash as render it scarce, and, of course, embarrasses all cash business. This must deeply affect the bank, as it is obvious at first sight to every one.

3. Another sort of difficulties arose from numerous enemies, who, from different motives, embarrassed the operation of the bank much; they began with crying up the public utility of the institution, and its great profits to the stock-holders, and thought that one set of men ought not to monopolize the reputation and opportunity of doing so much good, and engrossing such great profits to themselves, and withal threw out hints, importing that the Directors were haughty, partial, and not obliging enough, &c.

To remedy all which, in 1784 they set on soot a scheme for a new bank, by the name of the Bank of Pennsylvania, got large subscriptions for a fund to begin with, and petitioned the Assembly of this State for a charter, &c. not a word was heard all this time against the bank, as an institution hurtful to the States or individuals, but its mischiefs were made to grow out of its great utility and salutary effects.

The Directors, with much trouble, put a stop to this plan, by strongly urging the fatal consequences arising from two capital banks operating in one city, which might, perhaps, act in opposition to each other, and, of course, destroy each other. They finally persuaded the subscribers to the new bank to relinquish their scheme, and join the old bank, and add their subscriptions to it, which they at last agreed to, and so that difficulty was got over.

But the bank did not rest long, for soon after this last mentioned difficulty subsided, there arose a pretty numerous party in the State who adopted the scheme of paper money to be issued by our General Assembly. All the difficulty was to make it pass equal to hard money, and they had little hopes of this, unless the bank would give it a currency, which every body saw plain enough that the Directors could not do. The bank, therefore, and the scheme for paper money, were considered as inconsistent with each other, and one or the other, of course, must fall. The party for paper money determined at once that the bank must be sacrificed, and united with all its other enemies to decry it as an institution injurious to the State, and incompatible with the public safety.

They raised (and declaimed upon) many objections to it, the most material of which (that I heard of) I have considered already in the foregoing pages of this Essay. The matter was carried so far, that an act of the Legislature of this State was obtained, and passed September 13, 1785, repealing the act of April 1, 1782, which granted the state-charter to the bank, and also the act of March 18, 1782, which made it felony to counterfeit the bank-bills, &c. and thus stands the matter at present.

III. I now proceed to make some remarks on the present state of the bank.

1. Notwithstanding all the difficulties above-mentioned, the bank is now in good condition; its internal strength is not weakened; its funds are not diminished, tho’ its energy and extent of operation has been indeed somewhat lessened, as was observed before.

2. The present funds or wealth of the bank consists in, 1st. the bank-stock, about 900,000 Mexican dollars. 2d. In the discounted bills now in the bank, and payable to it. 3d. The cash deposited in the bank for safe keeping, and which the owners may draw out whenever they please. 4th. The furniture and utensils of the bank, and any small profits which may have lain over or arisen since the last dividend.

The debts of the bank to be paid out of their stock are, 1st. All the bank-bills now in circulation. 2d. All the bank-credits or balances due to such persons as have deposits in the bank. N. B. When both these are deducted from the stock, they leave a balance of about 900,000 dollars in favor of the bank.

3. The legal establishment of this bank is derived from the charter of Congress, of December 31, 1781; from the charter of the State of Massachusetts-Bay, of March 9, 1782; from the charter of Delaware State, of February 2, 1786; from the recognisance of the charter of Congress, publicly made by the State of Pennsylvania, in their act of March 18, 1782, and their charter of incorporation of the bank, by their act of April 1, 1782: but it is to be observed, that these two last mentioned acts of the State of Pennsylvania were repealed by their act of September 13, 1785. This repeal of the said two acts of the Legislature of Pennsylvania has given rise to several very important questions.

Question I. Whether Congress has a right to establish a national bank, so as to make it such a legal institution as the laws of the States of the Union are obliged to acknowledge or recognise?

1. I answer,—this objection is grounded principally on the second article of the Confederation, viz. “Each State retains its sovereignty, freedom, and independence, and every power, jurisdiction, and right, which is not expressly delegated to the United States in Congress assembled.” But the answer is easy; for,

1st. A power of incorporating a national bank never did exist in any of the States. They might erect banks, or any other corporations, and call them by what name they pleased; but their authority, like that of all their other laws, must be limited by the bounds of the State, and could not extend beyond them. Nor,

2d. Does this act of Congress limit the power of any of the States?—They still retain and may exercise every power, jurisdiction, and right of incorporating banks, as fully as ever they had them: for,

3d. The said second article of Confederation does not restrain Congress from having or exercising any sovereignty, power, jurisdiction, or right, whatever; it only restrains them from exercising it in such manner as to deprive the States of it. Notwithstanding all the sovereignty and power of Congress, they shall ever be so limited, that each State shall retain its own sovereignty, power, &c. even concurrent jurisdictions (if these can be called such) often exist together without the least restraint of each other.

2. The act of Congress incorporating the bank, is an act of finance; they considered it most expressly as a means, a very important means, of finance, which is a branch of power that most undoubtedly falls within their authority or jurisdiction. They are not expressly empowered, indeed, to appoint a Financier, give him instructions, receive his plans, or form a bank. But, as all those were necessary means of promoting the general interest, the liberties, and general welfare of the States, which are the grand and most acknowledged objects of the Confederation, they are doubtless comprehended within its powers.

3. The Confederation (article 9) empowers Congress to borrow money on the credit of the States, and this certainly implies a power to find or procure somebody who will lend it to them; and this they effected to a great degree by incorporating the bank, which supplied them to a very large amount.—They owed the bank at one time 400,000 Mexican dollars, for money lent them by the bank; and all the monies lent at different times to Congress, and to the different departments under their direction, amounted to above 2,000,000 Mexican dollars; and these loans were of such capital and essential service in that most deranged and weak state of the public finances, that (in the opinion of those best acquainted with the matter) the war could not have been continued without them.

The bank also lent at different times to this State, for its defence and other public purposes, above 130,000 dollars, which certainly proves that the bank was very convenient to the public, and very necessary to the general welfare and general interest of it; and, therefore, must be comprehended in the powers granted to Congress, to manage the general interest, and secure the liberties, defence, and general welfare of the States.

4. The independence, defence, and almost the very existence, of our present political establishments must depend on the bank, in case of an invasion of an enemy; for it is very certain, that, in such case, due and necessary opposition and defence could not be made by a depreciating currency; nor do I think it would be possible for the Congress or States to borrow elsewhere monies sufficient, and in season, for our defence; or to issue paper bills enough for that purpose, which would not depreciate.—I apprehend I shall not be called on for any proof of this.

I therefore go on to infer, that Congress, who are expressly empowered to secure the defence, liberties, welfare, and general interests of the States, are, of course, empowered to institute a bank, which is so apparently and essentially necessary to all these great purposes.—It follows then, that those who oppose the bank, oppose the essential means of our defence, and, of course, lay us open to destruction, the first time any enemy shall invade our country.

5. If we should admit that there was a defect in the powers of Congress to incorporate the bank, yet that defect is amply supplied by the subsequent recognisance of the States, their acquiescence in the institution, and participation of the benefits of it, for a course of years; for a subsequent consent of the principal is as good as a previous order, to every purpose of establishment or legitimation of any act of a substitute.

On the whole, then, I conclude that the Bank of North-America, by the ordinance of Congress for its incorporation, is a well-established and legal institution, and as such ought to be considered and recognised by all the States, both in their laws and all judicial proceedings, as far as the same may affect the said bank.

Question II. What is the meaning, energy, and operation of the act of this State of March 18, 1782, making it felony to counterfeit the seal or bills of the bank?—I answer—

1. It carries in it the strongest recognisance or acknowledgment of the legal establishment of the bank; and, of course, of the authority and lawful force of the ordinance of Congress for its incorporation, on which alone the legality of the bank then depended; for it is trifling, it is ridiculous, it is infamous, to suppose that the Legislature of this State would, by a most solemn act, make it felony, i. e. death, to counterfeit the seal and bills of any number of men, who had no legal right to make a seal, issue bills, or assume to themselves any other powers, liberties, or privileges of a corporate body.

2. That act implies the most solemn consent of this State to the aforesaid ordinance of Congress, and carries in it further the nature and energy of a solemn stipulation and compact of this State with Congress, i. e. with all the States, to support that public measure of the Union, with all the weight and authority which this State could give to it, in all the particulars or clauses mentioned or enacted in the said law.

The public and vigorous support of the particular States gives great force to an act of Congress, tho’ it might be considered as fully legal without it, gives confidence in the public measures, and is a good reason and strong inducement to engage the public councils of the particular States, as well as individuals, strongly to exert themselves and risk their fortunes therein. Therefore,

3. That act cannot, of right, be repealed by this State, without consent of Congress, i. e. of the other States of the Union. It is a part of that support of a public measure of of the Union, on which the other States have, and ought to have, dependence and confidence. Mutual confidence is the end of the Union, as that alone can produce defence and other exertions for the public welfare; all the States have therefore an interest in that support, a very great interest, indeed, and cannot be deprived of it, without a violation of the union; it is a part of that band of union, which holds the States together; to take it away, therefore, is to weaken the union, and, of course, to lessen its power of operation, and the benefits resulting from it.

Indeed, if this State can repeal the said act without consent of the other States, I do not see why they may not go on to repeal all the acts they have ever made in support of the union, and all the powers of it, even up to that act of theirs which consented to and adopted the Confederation itself.

Question III. What is the meaning, energy, and effect of the act of this State of April 1, 1782, incorporating the bank? I answer,—

1. It carries in it the most public and full acquiescence and satisfaction of our Legislature in the act of Congress for incorporating the bank; because it counts upon that act, without the least censure, but with most apparent approbation of it.

2. It imports their approbation, because they show a readiness to give it all the support which the authority of this State could give, and add to its establishment the further sanction of a charter of this State, conceived in the very words of Congress.

3. Tho’, as I take it, this state-charter did not add any thing to the legality of the bank’s establishment under the charter of Congress, yet it served to obviate and satisfy the prejudices of many people, who had formed an opinion, that it would be safer to trust their property in the bank, with a state-charter, than without one, and, on that account, withheld their subscriptions till the state-charter was made.

I never heard that any body, at that time, disputed or called in question the legal authority of Congress to give a charter to the bank; but the public faith, plighted by Congress, relating to money, had been at that time so often and recently violated, that very little confidence was placed by many people in their public acts or resolutions of any sort, who therefore thought themselves more secure under a state-charter, than they should be under a charter of Congress, without such support.

This I take to be the true reason why the President and Directors of the bank applied to our Assembly for a state-charter, which manifestly removed many prejudices and obstacles which operated against the bank, as it was plain that subscriptions to it were offered faster, and bank-stock was more coveted, after the state-charter was obtained than before: therefore, I think it very evident that,

4. This act operated by way of strong inducement and encouragement to very many citizens, as well as strangers, to subscribe to the bank, and trust their property in it; and that the act was purposely made with intention that it might have this operation and effect; and therefore ought to secure the proprietors from any disappointment, as far as the whole force of the act can do it; for certainly it cannot be justifiable in any State to hold out encouragement to the people, to draw them into a snare, and then leave them in the lurch.

5. Whatever might be the effect of this act on the bank, by way of aiding the legality of its establishment, or giving it support as a Continental institution, there is no doubt but it had this one perfect effect, viz. it incorporated the subscribers to the bank into a legal company, and instituted a complete, established, and legal bank of Pennsylvania, tho’ by the name of the President, Directors, and Company of the Bank of North-America; for any State may give what name or title they please to their coporations, tho’ they cannot extend their authority or privileges beyond their own jurisdiction.

This act, therefore, undoubtedly brought the bank under the cognisance of the laws of Pennsylvania, and entitled the Company, and every proprietor of it, to the full protection of these laws. Whether this put them into any better condition than they were before, made their establishment any more legal, or increased their right to the protection of the laws of Pennsylvania, or not, may be a question; but it can be no question, that very many people were of this opinion, and governed their conduct by it.

It is further certain that this state-charter may eventually prove of most capital service to the stockholders; for it is possible that Congress may repeal their ordinance for incorporating the bank, or, by some other act of sovereignty, may vacate its charter (for strange things happen sometimes) or the union of the Thirteen States may, by some means or other, be dissolved (which, I think, would soon happen, if each State should withdraw its supports) and, by that means, the authority of all their acts might cease, and, of course, their charter of the bank might fall with the rest.

Yet, I say (all these mishaps notwithstanding) under the charter of Pennsylvania, the bank would continue to be a legal state-establishment, and might go on with its negotiations, and, in short, pursue the whole business which the great interests of the concern might make necessary.

Question IV. Can the act of March 18, 1782 (making it felony to counterfeit bank-bills, &c.) and that of April 1, 1782 (incorporating the bank) I say, can these acts, of right, be repealed by our Legislature, without consent of the parties interested.—I give my answer in the negative, and for this my opinion I beg the reader’s candid attention to the following reasons, which appear to me to deserve great consideration, even by those who may not think them of sufficient force to justify my conclusion.

1. These acts vest a right, privilege, and interest, i. e. a valuable property in all the stockholders of the bank, and therefore cannot, of right, be repealed by any act of the Legislature, without the consent of the stockholders. These acts are of the nature of bargains or contracts between the Legislature and the stockholders, in which the stipulations were, that in consideration that the stockholders had or should put their money into the bank, the Legislature would give such support and legal establishment to the bank, as should enable them to make and enjoy all the advantages and profits which should result from it, under the firm protection of the law.

On this encouragement, the stockholders held or placed their fortunes in the bank, and the Legislature passed the said acts in support of it, and so the bargain was finished. I take it that when the act of the Legislature vests in or grants to any individual or company of men, on valuable consideration (i. e. for which the grantee pays his money) any valuable right, interest, or property, the grantees instantly become legally seized of such right, which thereby becomes as much guarantied or warranted to them by the law of the land, as is any other property whatever which they may or can possess; and, therefore, they cannot be devested or deprived of it by any act of the Legislature, any more than of their lands, cattle, furniture, or any other estate, of which they are lawful owners, and which they hold under the full protection of the law.

The sort of acts of the Legislature which I here mean (that vest a right or interest in any individual or company of men) are such as these, viz. an act granting a commission of sewers to owners of meadows, who expend much money in banking and ditching them, to make them useful to the public and their owners; an act granting toll to persons who shall build a bridge, for which they contribute their money; an act granting wild lands to people who will cultivate and improve them, and who expend their money for that purpose; any acts for supporting and incorporating the subscribers of a bank, in confideration of large sums of money subscribed or contributed to it, and in prospects of great benefits resulting from it, both to the public and to the stockholders; an act for incorporating churches, universities, hospitals, schools, &c. in confideration of money paid or to be paid by the contributors, &c. &c.

I conceive that all acts of this kind vest such rights, privileges, or interests in the grantees (who thereby gain such protection of the laws in the enjoyment of them) that they cannot be rightfully devested or deprived by any act of repeal of the charters or acts which give their title, or by any other act of the Legislature whatever.

2. The second great reason of this is, that the declaration of rights (which is part of the Constitution of this State) gives every citizen a right to be protected in the enjoyment of his property. It knows but two ways by which the subject can be devested of his lawful property; 1st. by crime and forfeiture; and, 2d. by his own contract or consent: if his property is challenged or demanded of him in either of these ways, or by any other way, let the controversy be of what nature soever, respecting property, he is entitled to a fair trial by jury. [See articles 8, 9, and 11.] This can be had no where but in a judicial court.

The General Assembly are not such a court; they have the legislative, but not the executive or judicial, power of the State; they can neither empannel a jury, nor make a judicial decision without one, much less can they deprive any individual or company of subjects of any of their legal rights, interests, property, or privileges, without any trial, summons, or examination at all, by any act or repeal of acts whatever, which they can make.

3. I take it, that the declaration of rights is of superior authority to any act which the General Assembly can make, and will control and even render totally null and void any act of the Assembly which infringes it; and will and ought to be considered so by the judges of our courts, whenever the same may be pleaded before them: for when two contradictory laws are pleaded before a court, it is impossible but the one or the other must be judged void; and if one of these laws appears to be grounded on a superior authority to that of the other, there can be no doubt but the superior authority must control the lesser.

I consider the Assembly as the mere creatures of their constituents, and acting merely by a substituted power; and the declaration of rights I consider as the capital instructions which they receive from their constituents, by which they are bound to regulate their conduct, and by which their power and authority are altogether limited. This doctrine ought to be brought into full view, and to be recognised by every subject, in its whole importance and energy, whenever we see our Assembly infringing the declaration of rights, in so capital and alarming an instance, as to make any act whatever, which will, in its operation, unavoidably and eventually deprive any subject, or number of subjects, of any right, interest, or property, without trial by jury.

The very persons whose wishes or prcjudices may be gratified by such acts of the Legislature, ought to tremble at their consequences, for the two-edged sword, which has one edge turned against our enemy, has another which may be turned against ourselves, i. e. it can cut both sides alike, and is equally qualified to wound both parties, whenever it may be applied to them.

Charters (or rights of individuals or companies secured by an act of the State) have ever been considered as a kind of sacred things, not to be vacated by a bare holding up a few hands, and soiling a page of paper, without any further previous or subsequent forms or ceremonies; but in all wise States have ever been considered as securities of such capital consequence, that any attempts to destroy them have ever excited a general alarm, and have rarely happened but in times of great corruption of government and dangerous encroachments of arbitrary power.

I think it, on the whole, very manifest, that a Legislature, which, for valuable consideration paid, has by public act sold and granted certain valuable rights, privileges, or interests to any individual or company of men; I say, such Legislature have no more right by repeal of their act to vacate the title and destroy the estate of such grantees, and to release themselves, than any private contractor has to release himself, and refuse to execute his own contract, whenever he grows sick of his bargain.

Indeed, I think the sacred force of contracts binds stronger in an act of state, than in the act of an individual, because the whole government is injured and weakened by a violation of the public faith, but the vacillation of a private man can produce no more than private damages.

But as public faith is an old threadbare topic of argument, and is as much out of fashion as going to church or reading the bible, and has been dinned in the ears of some folks, till, like the doctrine of repentance to sinners, it rather nauseates than convicts, I will sorbear pressing it further at this time, as I wish not to disgust but to persuade.

4. The ordinance of Congress for granting the charter of the bank is a measure of the Union, solemnly recognised by this State (in the two repealed acts) in which all the States are interested, and is, therefore, of such high authority as controls all the States to such a degree, that any attempts of this State (by an act of repeal, or any other act) to withdraw their support, and thereby weaken and embarrass such measure of the Union, must be void, ipso facto, in itself.

For I take it, that every act of Congress appointing or directing any measure of the Union, when recognised by the States, either by their express act of approbation, or by long acquiescence and practice, is of superior authority to any act of any of the States, nor does it remain in the power of any particular State to withdraw their support from it, or to release and discharge themselves from their obligations to it, or to make any act which shall, in its operation, lessen the energy and effect of it. But I have touched on this before, and so need not enlarge on it further in this place.

5. The act of repeal (Sept. 13, 1785) deprives a great number of our citizens and strangers of their rights, privileges, and property, to a vast amount, and to the utter ruin of many families; rights, privileges, and property which were guarantied and secured to them for ever, by the most solemn act of our Legislature, and, of course, by the whole force and power of the law; and all this by an act of mere sovereignty, without so much as alleging against them any crime by which they have forfeited, or contract by which they have alienated, them, and without any summons, or trial, or judgment of court, or verdict of jury.

This is so directly in the very face of our declaration of rights, as manifestly infringes it, and, of course, renders the act void. This is, indeed, rather an epitome of what I said before than a new argument, but the immensity of the loss or damage occasioned by the said act of repeal, may, perhaps, engage the reader’s attention, and set the subject in a stronger light of importance, than it might appear in, were the consequences less fatal and ruinous both to the Union in general, to each of the States, and all the individuals who are concerned in the bank.

But admitting that the act of Sept. 13, 1785, for repealing the said acts of March 18, 1782, and of April 1, 1782, is to all intents and purposes valid in law, and, of course, that the bank is thereby deprived of all the support and legal establishment which it once received from the said laws, when they were in force, there arises another question, viz.

Question V. In what condition does the said act of repeal leave the bank? I answer,—

1. In point of its legality, the said act of repeal leaves the bank just where the said repealed acts found it, when they were first made; the repeal takes away no more than the acts themselves gave, and, of course, if the bank was a legal establishment before these acts were made, it continues so still after the repeal of them: therefore,

2. The President, Directors, and Company of the Bank remain a legal corporate body, under the charter of Congress, and may do all acts as such in the same manner as before the said repealed acts of this State were made.

Upon the whole matter, I think it very plain that the supreme authority of all States under all forms of government, whether monarchical, oligarchical, or democratical (a theocracy only excepted) is lodged in the body of the people.

1st. Because the rights to be secured by, and which are the sole end of, all civil government, are vested in them: and,

2d. Because the great force or strength which must support all civil governments is lodged in them; and, of course, all pacta conventa or capital constitutions established by them, do bind and control all authorities whatever which act under them, and, of course, it appears that the Legislature of this State have not an original but a derived authority, which, of course, is not absolute but limited; it is limited,

1st. By the laws ofGod:

2d. By the Constitution of this State: and,

3d. By the confederation or union of the Thirteen States, and, of course, by every legal act of Congress under that union, for the general welfare of the States: therefore, if our Legislature should make an act to repeal the ten commandments, or to infringe the Constitution, or to destroy or weaken the Union, or any legal measures of Congress, it would, of course, be ipso facto void.

Further, I take it that our General Assembly are limited and tied down to the sort or kind of authority which is given to them; all acts proper for a legislative body, they are empowered to do, subject to the aforesaid limitations, but they cannot assume to themselves or exercise the judicial or executivepowers of government; these powers are totally out of their commission or jurisdiction, and they can no more intrude on, or exercise the authority of these departments, than a sheriff can obtrude himself on the judge’s seat, or a chief justice serve a writ.

Therefore, it follows that if the Legislature should pass an act, which, by its operation, takes away the life, liberty, or lawful rights, privileges, or property of any subject, i. e. such as the subject holds under the protection and sanction of the law, it must be void; for if any thing of this sort is to be done in the State, or if any controversy or question about it, is to be decided, the Constitution has ordained a different method, a quite different court or authority, in and by which it must be done.

It is no objection to this, to say that much and many important things must be left to necessity and the discretion of the Assembly; for such necessity must exist, before it can operate, or justify any act grounded on it; and because much is left to the discretion of the Assembly, it does not follow, that they have a right to throw by all discretion, and act without any.*

But waving all questions of law, I beg to consider the bank one moment in the light of prudence. Supposing the bank and all its operations could be broke up and entirely stopped on March 1, next, what would be the consequence?

1. The great and usual circulation of cash (thro’ which 37,000,000 dollars were negotiated last year) would at once be stopping.

All discounted bills must immediately be paid or sued, which would ruin very many, I think I may say, scores of substantial families; and their failures would occasion,

3. A great loss to the bank, and, of course, to the stockholders. And,

4. The stockholders must lie out of their money till the bank-accounts could be settled, which would probably be some years.

5. All the monies belonging to subscribers out of the State, must be carried out of it as fast as they could be collected: and,

6. A most fatal wound would be given to our credit, as well as to all our trade, and every kind of business which depends on the circulation of cash.—Who but an enemy would wish for such calamities, or promote the means of them?

I will conclude my Essay on this very important and interesting subject, with only observing, that I have stated the facts with all care and the best information, and, I believe, with exactness and truth; should I have erred, I am ready to submit to better information; the sentiments and reasonings are open and obvious to every one, and, I wish, may be received and considered in the same light of importance in which they appear to me. I have no interest in the subject distinct from that of my fellow-citizens, and as I would not be willing to be mifled myself, so neither do I wish to lead them into error. Magna est veritas et prævalebit.

[* ] Many advantages would arise from this method:

1. The bank is more responsible for any deficiency than any private man can be.

2. It has the best convenience and security for safe keeping the cash deposited in it.

3. No minister or other man can pay away public money otherwise than by a check on the bank, which is in some degree a matter of notoriety, and involves a responsibility.

4. The receipts and payments would be settled up to a shilling (according to the custom of the bank) at least once a month.

5. The commission or allowance to a treasurer for this service would be saved, as the bank would be very willing to undertake the business of receiving all or any part of the public revenue, and paying the same out, without any commission or salary, i. e. without any allowance or charge for the service; this would be a great saving, even if the commission allowed to a treasurer was not more than a real compensation for the service.

[* ] There is no doubt but such a combination and concurrence of events may happen, as will make a departure not only from the ordinary course of administering justice, but even from the common maxims of justice itself, necessary.

Such a necessity was found in France, when a remedy was to be provided for the flagrant mischiefs of the Mississippi scheme.

The South-Sea bubble produced a like necessity in England, in order to obviate the enormous and complex mischiefs of that fatal excess of speculation.

The National Assembly in France have found a like necessity in order to reduce the enormous accumulation of the wealth of the community into few bands (viz. of their nobility and clergy) and to liberate the nation from the distress, weakness, and ruin thence arising.

Perhaps every cession of territory from one nation or state to another involves in it some such necessity.

And we may probably meet the same necessity, if our nation should see fit to exonerate itself from the immense burden of proviaing about 30,000,000 dollars, to pay speculators who never carned a shilling of it, nor ever rendered any services or valuable consideration whatever to the nation or any body else, for any part of it.

But it is to be here noted with great care, that such necessity must exist, before it can operate, or be pleaded in excuse of the extraordinary measures which it will justify; but a pretence of such necessity, when it does not really exist, is not only ridiculous, but very dangerous. This is arguing on salse position, a sad example of which we have in the troubles of Charles I. of England.—The King, or rather his court, held out,

1. The vast powers and prerogatives of the crown in cases of extreme necessity, i. e. when the country was invaded, or otherwise in imminent danger; and,

2. That the King, holding the supreme executive power, was the legal and proper judge of that necessity.

On these positions they proceeded to justify the power at that time claimed and practised by the King, of raising money without act of Parliament, such as ship money, coal and conduit money, &c. &c. i. e. it was only saying that the King judged the existing necessity sufficient to warrant these measures, and the matter was all legal; that was the clincher that finished the business. I am told, this argument of necessity and imminent danger was often cailed up and urged in the Assembly of Pennsylvania, when the repeal of the charter of the bank was debated there.