Report of the Bank Commissioners of great banking interest of the Union from a total shipwreck, the State of New York. The commencement of the last year exhibited not only a great reduction in the loans and circulation of the chartered Banks, as compared with the like period of the preceding year, but also a disorganised condition of our domestic exchanges, and considerable depreciation in the value of the notes of a large portion of the banks in the interior of the State. which would, in all probability, have resulted from a second general suspension--but served to prevent the entire prostration of American credit in Europe, at the most important crisis which has, perhaps, yet occurred in our financial history. The depreciation of the notes of the country banks, which commenced early in the fall of 1839, materially contributed to aggravate the other difficulties and embarrassments of that period, by throwing into confusion the internal exchanges, and country paper, which is at all times essential to the healand deranging that uniformity of relative value between city thy action of business operations. ex-discontinuance of the voluntary arrangement under which This depreciation arose, in the first instance, from the the notes of the country banks had been purchased in the city of New York, and which had produced the most beneficial effects in maintaining steadiness in the value of the currency throughout all parts of the State. On the first of January, 1840, the reports of the various chartered banks, showed a curtailment of loans and discounts to the amount of $15,512,000, within the twelve months then past-whilst the circulation of the same institutions had perienced, within that time, a diminution of $8,743,365. Although the pressure consequent upon these reductions was in some degree alleviated by the new loans and circulation of the different banking associations under the general law, yet still the rapidity, as well as the actual amount, of this contraction, produced an intense degree of distress and embarrassment throughout the country, materially aggravated perhaps, by the former abundant, if not excessive, bank issues, which had taken place after the resumption of specie payments, in the spring of 1838. The causes which induced the city banks to abandon this arrangement, had their origin, as well in the necessity then existing for the possession and control of all their funds, to insure their own preservation, as also in the extraordinary amount of the notes of country banks which was suddenly thrown upon them for redemption, and which, in connection with other adverse circumstances, probably produced a want of confidence in the soundness of the country institutions. The contraction in the loans and issues of the Safety Fund Banks, which commenced about the 1st October, 1839, arose from a combination of general causes, which operated with great force and severity upon all the banks of the Union at that particular period--together with all other reasons of a local character, having reference to the peculiar and some-sociations under the general law during the summer and fall what dissimilar, system of our own State. The second suspension of the banks south and west of New York, which occurred about that time, was, without doubt, sufficient in itself to render a large reduction, on the part of our banks, not only an act of prudence, but one which became essential to their own stability and credit. But without regard to the causes which created a necessity for this sudden and extraordinary contraction-when it is considered that it was effected in the short period of about ninety days-great cause for surprise, as well as gratification, will exist, not only at the firmness by which it was sustained by the commercial public, but also at the sound condition of our banks at that period, by which they were enabled to control their large circulation, and maintain their credit, while those in a great portion of the other States of the Union had been compelled to submit to the suspension of cash payments. It has been supposed that the loans and circulation of the country Safety Fund Banks were greatly reduced in the fall of 1839, by reason of the forced efforts made by the as of that year, not only to substitute their own circulating notes in place of the others, but also by the practice which it was said some of them had pursued, of purchasing their bills in the New York market, at a discount-thereby employing their funds in this operation, instead of making loans in their ordinary course of banking, and causing a reduced action on the part of the Safety Fund Banks, by the large and rapid redemptions which they were compelled to make in the city of New York under this state of things. If these practices existed to any extent, it is not difficult to perceive that their inevitable effect would be to force the currency out of its ordinary channels of circulation to the point where it was to be redeemed, with a rapidity and frequency never occurring under the healthful and natural operations of trade, and which could not fail to disturb the harmonious action of any system of currency, and seriously embarrass those institutions whose issues were exposed to such a process. It will also be remembered, that our banks had a short time before, risen from a state of prostration consequent upon a To this cause may be assigned, in part, the breaking up general suspension, with a large amount of unavailable debt of the system of the purchase of country notes by the city on hand, growing out of the excessive operations of preced-bills of the banks in most parts of the interior to rates of disbanks-thereby leading to the immediate depreciation of the ing years, and which, of course, greatly lessened their ability to protect themselves against the disastrous effects of a second revulsion in the moneyed affairs of the country. These considerations, in addition to the integrity and promptitude which our banks have since generally exhibited, in discharge of their obligations to the public, should give them strong claims to favorable confidence. It cannot be doubted, that the honorable and firm position assumed and maintained by the banks of the State of New York, at the period above referred to, not only saved the VOL. IV.-13 count, varying from two to six per cent.-producing general confusion in the exchange, and preventing, in a great measure, either collections by the banks, or the remittance of funds from the country to the city, through the cheap and ordinary medium of drafts. This state of things existed at its highest point of severity at the commencement of the last session of the Legislature; and well grounded fears were at that time entertained, that this derangement would result in consequences disastrous to the credit of the country institutions, unless an adequate and 98 legalized mode could be devised to produce uniformity in the value of our bank paper-a mode not dependent on mere conventional arrangement-which experience had shown was liable to be dissolved, when the interest or necessities of either party required it—but deriving its permanence and value from the force of legislative enactment. This subject very justly received that consideration on the part of the legislature which was due to its importance-and after a careful examination of the various measures suggest ed, a law was passed on the 4th of May last, requiring all the banks out of the cities of New York, Albany or Brooklyn, to appoint an agent, on or before the first day of July thereafter, who should keep an office in the cities of New York or Albany, for the redemption of the circulating notes of the respective banks, at a rate of discount not exceeding one half of one per cent. Although the rates of discount on country paper were materially lessened before this law went into effect, by the intervention of other favorable causes, yet the law itself has operated with extraordinary success in attaining the full object for which it was enacted, and producing a general uniformity and steadiness in the value of a country paper, heretofore unknown under any voluntary arrangement between the city and country banks. The prompt manner in which the banks have, with a few exceptions, continued to redeem their circulation, under the requirements of this law, has pro luced great public confidence in the soundness of their condition, and operated with happy effect upon the interests of the country at large, by giving free scope to the undisturbed action of both systems of banking-by facilitating business transactions-and rendering them more secure from the dangers incident to the fluctuations in the value of the currency. The associations under the general banking law, were Bubject to the inspection and supervision of the Bank Commissioners, by virtue of an act passed at the last session of the legislature, and we have accordingly visited and examined these institutions, except in one instance, where the officers in charge declined to submit their affairs to our inspection, upon the alleged ground, that the law, under which the Commissioners derived their authority, was unconstitutional. This ground, indeed, was almost universally assumed and insisted upon by those associations which permitted us to examine their condition—and such examination was acceded to under a protest in regard to the right of the legislature to compel a submission to our visitation. The act in question directs, that in case any of the assoeiations, or individual bankers, shall refuse to submit its books and affairs to the inspection of the Commissioners, or whose officers shall refuse to submit to be examined upon oath, in relation to said affairs, that such associations or individual banker, shall be liable to be proceeded against by the Commissioners, in the same manner, and with the like effect, as any incorporated bank may be proceeded against for a violation of its charter. In conformity with this law, we have instituted proceedings against the association thus refusing, by procuring an order from the court of chancery, requiring cause to be shown, at a time and place stated in the order, why an injunction should not issue, suspending its further operations, and also, why the association should not be dissolved. The day for showing cause has not yet arrived. It is well known, that a general opinion prevails among the proprietors of the free banks, that the provisions of the act of the last session, above referred to, cannot be constitutionally extended to associations which went into operation before the passage of the law; and it is expected that this important question will be presented to the Court of Chancery, for determination, in the case already instituted. Since the act took effect, requiring the appointment of agents at New York or Albany, for the redemption of the circulating notes, not only of the free banks, (the Millers' Bank of New York, at Clyde,) has neglected to make such redemptions, and we have in consequence applied to the court of chancery, and obtained an injunction suspending its further action, and its affairs are now in the process of liquidation, through the agency of a receiver. Notwithstanding the practical operation of the free banking-system has not thus far been attended by all the successful results which were anticipated at the time of its adoption, it is still believed, that nothing has yet transpired, in the fair experience of the system, by which it shall be considered as having failed to effect the legitimate objects of its establishment by the Legislature-either in discharging the various functions of banking with safety and convenience to the public, or in yielding to the capital employed in its operations an adequate and remunerating profit. It will be recollected that the general banking law went into effect at a period, in the financial affairs of the country, marked by many peculiar and adverse circumstances. The Safety Fund Banks, immediately on the suspension of specie payments, in the spring of 1837, with a commendable regard to the great duty of a resumption within the shortest possible time, consistent with their own future credit and the public interest, commenced and continued the contraction of their loans and issues-which had previously been extended to an inordinate degree-until they succeeded in consummating the object in view, by a return to cash payments in the following spring. The natural and necessary consequence of this severe but salutary contraction, was to produce great distress throughout the community, by deranging all the various and multiplied business relations of the country-by impairing that confidence which was essential to the successful prosecution of commercial enterprise-by depressing the value of all property, and rendering impossible, in a great degree, the fulfilment of pecuniary engagements. At this particular period, when the want of moneyed facilities was felt with greater intensity than perhaps at any previous time in the history of the country, the general banking law was adopted, and a hasty and premature establish. ment of many associations took place under its authoritynot so much with a view to the profits to be derived from the employment of capital in banking, as to create immediate means to relieve the embarrassments of individuals by whom the associations had been instituted. The deposit of that part of the capital which the law required in the form of state stocks, was rendered comparatively easy by the large amount of these securities which had been issued by many of the states, and which could be readily purchased on private credit, at prices considerably above their market value, as well as above the rate at which they would be received by the Comptroller. The mortgages on real estate were also, in many instances, transferred to the associations by individuals, whose necessities required from the bank, when established, and who imposed on it as a condition to the transfer, the obligation to make immediate accommodation loans on long time, perhaps to the greater part, if not the whole amount of the securities thus deposited. It must be quite obvious, that in such cases—although the public might be secure as it regards the ultimate redemption of the circulating notes-yet the association so organised could scarcely be expected to yield a profit to its stockholders, when the securities which formed the basis of its circulation, were not only purchased on credit—and that, too, at prices greatly exceeding their available value—but where its discounts were either chiefly appropriated to the payment of the debt contracted for the securities, or employed in the form of long accommodation loans, to be applied, perhaps, to the discharge of old liabilities, having their origin in any other operation than that of present legitimate business. It cannot be doubted, that under the most favorable circumstances in all other respects, no banking institution, under any system, could either permanently sustain its credit, or yield an income to its stockholders, where its action is founded on a basis so wholly fictitious and delusive. It is also probable that the removal of the restrictions upon the business of banking, which existed before the passage of a general law, caused the formation of an excessive number of those associations at points where the fair demands of business did not require their establishment. The free banking system has been considered by many experienced and able financiers, as combining in its peculiar features certain great advantages over any other now in operation-so far, at least, as it respects the safety of its circulation, and its comparative inability to produce fluctuations in the currency by excessive issues. The great and distinctive principle by which this system is marked, may be found in the want of power to loan, in the form of discount and circulation, that part of the capital which the law requires to be invested in securities, and deposited with the Comptroller, and in the restriction of the circulation to a mere loan of credit, to an extent only equal to these securities-which are placed beyond the control of the association itself, as a guaranty to the public for the ultimate redemption of its notes. The securities in the form of public stocks, are required to be-under the law as amended at the last session of the Legislature-exclusively those issued by this State, and to be equal to a stock producing five per cent. per annumand in no case to be taken by the Comptroller at a rate above its par value, nor above its current market value. If any part of the securities consist of bonds and mortgages upon real estate, such mortgages are required, by the original law, to be only upon improved productive unincumbered lands within this State, worth, independent of any buildings thereon, at least double the amount for which they shall be so mortgaged, and bearing at least six per cent. in terest. It must therefore be evident, that with proper precautions in regard to the true value of the property described in the mortgages, to be deposited, the public have, in the above provisions, a degree of safety from ultimate loss, in reference to the circulating notes, which would seem to be equal at least, to that of the banks under the other system. Although it is stated that a loss has been sustained in the sale of the mortgages deposited with the Comptroller, in a single instance, yet we do not consider it certain that the loss arose from the unavailable character of such securities in general. making of loans by banks, on what is usually called accommodation paper, yet it is not difficult to perceive that issues upon such loans whenever made, must of necessity he excessive-constantly producing in themselves an increased demand for new issues of the like kind-contributing to disturb those equal relations between currency and trade which are essential to the prosperity of every community, and producing fluctuations in the prices of commodities, violations of pecuniary engagements, and unnatural depression of expansion of business. But under the general banking law, the ability of making excessive issues is, at least, materially restricted by the limitation prescribed in the law itself; but the tendency also to loans of this description, is generally circumscribed by the consideration that the bank making the loan cannot in any manner depend upon or receive aid from the securities deposited with the Comptroller, in providing means for the redemption of its notes, but must rely on the payment of sums due to it for notes discounted-thereby creating a necessity, in reference to its own credit and solvency, of confining its loans to business paper having but a short time to run, and always to be paid at maturity. It is not pretended that all of the free banks have conformed in their operations to this salutary and indispensable rule of management. But this is not the fault of the sys tem; nor should the difficulties or complaints of institutions in regard to sustaining their credit or making their stock profitable afford any ground for doubt as it regards the success of this mode of banking-unless it shall appear that they have been conducted in conformity to the true principles and spirit of the law under which they were established. Indeed, from the opportunity we have had in learning the operations of barking under this law, we have reason to believe that those banks which are established in places re quiring the use of such facilities-owning the securities de posited with the comptroller free from indebtedness on account of their purchase-having a fair proportion of cash capital, The indisposition to purchase those particular mortgages and principally employed in the discount of business paper at their face, may have arisen from a depreciation in the val--are yielding to their proprietors fair profits, and realising ue of the property since the mortgages were executed-or it may have grown out of other causes which would not thus injuriously affect the like securities of other associations. to the public all the benefits which can reasonably be expected from any other banking institution. Time and experience are daily developing not only the advantages and defects of the system itself, but exposing also those errors in practice, which are so apt to occur in the first attempt to carry out any new and untried theory. In several instances the stockholders in these associations having discovered that the business has not fulfilled their expectations in regard to profits, are gradually winding up their affairs, and receiving the securities deposited with the Comptroller. In other cases they are making laudable of forts to correct the mistakes originally committed in refer store themselves to a position where they can be able to confine their operations chiefly to business paper, at short date. Besides, although it may be true, that under the peculiar restrictions that prohibit the loan of the capital in discount and circulation, the profits of the stockholders may be somewhat diminished, yet the increased security arising from the permanent and safe investment of this capital-set apart and exempt, as it is, from the great and ordinary hazards of banking-may perhaps be regarded, by prudent men, as better, upon the whole, than larger profits with greater risks. It is well understood that the banks under the other sys-ence to the character of their loans and discounts, and to retem take charge, and have entire control, of their own capital, and employ it actively, in conjunction with their credit, in the business of discounting paper, and issuing a circulating medium to a certain limited amount beyond the capital. Although under the peculiar feature of the Safety Fund, by which this system is distinguished in our own state, the public may have more than an ordinary degree of security for the redemption of the notes, yet there are some prominent evils connected with the power on the part of the banks to employ their capital and credit in discounting bills, and issuing a circulation, which may be regarded as inherent and which it is very difficult, if not impossible, to counteract entirely, either by legislative restrictions or by experience and skill in management. The extraordinary profits which are derived from the exercise of this privilege on the part of banks, produce an unavoidable tendency towards excessive issues, by making loans not only to facilitate the common and just demands of trade, but also in too frequent instances, to be used by the borrower in enterprises which from their nature, render re-payment, at short time, impossible, having no relation to the sale and exchange of commodities, but to objects which require for a long period the undisturbed use of real capital before they can be attained. Although it is perhaps impossible to avoid wholly the We have received various suggestions from individuals engaged in banking under the general law, proposing material changes and modifications of different parts of the system. Although it cannot be doubted that imperfections exist, to a great or less degree which might possibly be obviated by legislation, yet it is by no means certain that the amendments proposed may not, as they have done in other cases, create additional and opposite defects from those sought to be remedied, and increase, rather than remove the apprehensions which are already entertained, to some extent, of the practical efficiency of any system of free banking. Besides, we conceive, that unless the changes suggested for the ac tion of the Legislature shall be of such prominent and obvious utility, as to leave no doubt of their beneficial effects when adopted, it will be far better that stability will be given to the system, by that experience under it, which will not probably fail to produce an appropriate and successful conformity to its present provisions, although they are not in the opinion of all, as perfect as they might be made by fur ther legislation. The desire to improve is always the motive professed, and perhaps the one entertained, in most cases by those who seek to make changes and innovations in any established system. But we are not to forget the great and salutary lesson which experience is constantly teaching us, that changes are not always improvements, and that a state of transition from one mode of business to another, is not so well calculated to attain success, as the steady pursuit of the object in view by accustomed means and practices. a careful examination of its condition and affairs, which resulted in a conviction on our part that the capital stock was in a great measure, if not wholly exhausted; and that it was by no means certain that the available assets would meet its other debts. Although its nominal resources considerably exceed all its liabilities, yet the collection of a large amount of debts due to the bank is rendered doubtful by reason of the insolvency of the debtors-whilst other demands held, to some extent, against other individuals who are supposed to be responsible, are considered to be insecure on account of pretended legal objections which are claimed to exist to the validity of the paper discounted by the bank. Man is so constituted, that by stability in one course of action he can generally conform to things as they may exist around him, with all their imperfections, in such manner as to prosper; but if instead of trusting to this conservative process of nature, he becomes impatient of continuance in a regular and uniform mode of conduct, and makes frequent changes in his position, he too often defeats his own exami-ed with regard to the amount of the assets of the bank, nations, and fails of that success which forms the inducement to all his efforts. For these reasons it may be well to doubt whether a change in any important feature of the present general banking law would, at this time, conduce either to the interest of the public, or of those engaged in this business. An attempt to make such changes will almost of necessity produce alarm and uncertainty with regard to its results. The country requires gradually improving confidence and undisturbed repose. These are essential to its relief for the evils and disasters it has already suffered by an access of legislation on the subject of the currency. There is, however, one slight modification of the general banking law which might be made without any violation of the rule above prescribed, and which has, in some measure, become necessary, in consequence of amendments made to the law at the last session of the Legislature. We allude to that provision requiring the making and publication of detailed semi-annual reports of the state and condition of the respective associations. It will thus be seen, that no definite opinion can be formwhich may ultimately prove unavailable from these causes -inasmuch as a portion, at least, of those debts which are considered doubtful, on account of the embarrassed circumstances of the debtors, will probably be realised by prompt and effective legal measures-whilst the other portion referred to may also turn out to be good, by the failure to establish any legal defence to a recovery. At the time of the service of the injunction in this case, the notes in circulation of this bank amounted to the sum of $139,392, including notes of every description, either in cated. actual circulation, or which had been previously hypothe It is understood that the doubtful debt in this case, had its origin in transactions occurring chiefly during a space of about four years, ending in 1839, and connected with the overtrading and speculations of that period-by a reckless and improvident appropriation of its funds to a variety of siness-and by the highly culpable conduct of its chief chimerical enterprises, having no relation to legitimate bu financial officer, in making loans to individuals in large amounts, without taking care that the securities were such as to fully protect the institution, or by permitting those securities, when good, to be withdrawn and others less safe substituted. The 26th section of the act in question prescribes various and minute statements to be inserted in these reports! under eleven different heads-and provides that each report, when By reference to the law establishing the Safety Fund, it made, shall be published by the Comptroller, in a newspa per printed in the county where the place of business of will be found, that in case of the insolvency of any institu such association is situated, and in the State paper-the ex- tion subject to its provisions, not only the circulating notes, pense of which shall be paid by the association. It is ob- but all its debts, exclusive of the capital stock, are a charge vious that the Legislature designed that the making and upon the fund, to the amount of any deficiency which may publishing of these semi-annual reports should be in sub-exist above its assets. This peculiar feature of the law does not seem until restitution of the mode prescribed by the Safety Fund system, requiring the periodical visitation of a Bank Commissioner-cently, to have been generally understood, either by the puband as by the law of last winter, the free banks are subjected lic at large, or even by those engaged in the business of bankto this visitation, it is submitted, whether they should be re-ing-and great doubt is entertained in regard either to its justice or expediency. quired to incur the labor and trouble of making these statements, and also the expense of their publication, in addition to that which they now sustain, in paying the salary of a Commissioner. The cost of printing these semi-annual reports alone, it is understood, amounts to a sum nearly sufficient to pay this salary. Besides, the other general expenses which the law already imposes upon these institutions, form the subject of much complaint among their proprietors. Again we consider these reports as in a great degree useless, from their complexity, and from the indefinite and obscure manner in which the true condition of the associations is therein represented. It is impossible, we think, to state a balance or determine with ordinary accuracy the condition We therefore reof any bank from one of these reports. commend that the 26th section of the original law be repealed, and that provision be made that each of the associations shall transmit to the Bank Commissioners an annual statement of its affairs at the time, and in the form prescribed in This will produce a the case of the Safety Fund Banks. uniformity in the statements of all our banking institutions, by which their actual and relative condition may be better understood and contrasted than at present. In the month of December last a temporary injunction was issued, on our application, by the Court of Chancery, suspending the operations of the Wayne County Bank, at Palmyra. Since that time the original injunction has been continued by order of the court-and the affairs of the bank have been duly placed under the charge of a receiver. The proceedings against this institution were based upon The Safety Fund act was primarily designed to secure bank note holders, and not depositors or other creditors.The nature of our currency is such, that the notes of banks must be received in the ordinary transactions of business, from the very necessity of the case, without any particular knowledge of the condition of the institutions by which they are issued and for this reason it seems entirely proper that those who are thus compelled to receive them, should be shielded from loss, in the event of inability on the part of the bank to redeem them. But in reference to deposits, or other debts, the case is widely different. No man is bound to deposit in a bank unless he pleases; and if he voluntarily assumes in this manner to make it his debtor, no good reason can be perceived why he should be entitled to greater security than that of the bank to which he gives the credit. Again-while the law carefully provides against the liabilities of a bank on account of its circulating notes, by declaring they shall not exceed a limited sum, it throws no guard around the amount it may owe for deposits or other debts. Hence, an institution, with small capital, whose contributions to the Safety Fund are trifling in amount, may thus involve it, to a ruinous extent, either for deposits, or by reason of special loans or bank balances. The whole bank capital subject to the Safety Fund is now $32,551,460. The amount which can be added to the fund in any one year, by contributions from the banks, on ac count of any loss, is only one half per cent. on the capital, being $162,775 73. It is therefore easy to perceive, that in case of the failure of one of the large banks in the city of New York, the loss might and probably would be so great that the whole annual contributions would not pay the interest on the sum lost-and in this manner, the Safety Fund might be annihilated, and afford no further security for the payment of circulating notes, or any other indebtedness. The liabilities of a single bank in the city of New York, as reported to the Commissioners in 1838, were $7,677,944; and if the General Government should again deposit in some bank in that city, such liabilities may reach that amount hereafter. Besides, we conceive that the effect of this provision is, to give weak, and perhaps insolvent institutions, a fictitious credit founded upon the right of the creditor to reimburse himself out of the fund, and in this way not only to place the whole fund at hazard, but to render those banks which are prudently and skillfully managed, sureties against the improvident, if not fraudulent, conduct of the opposite class, over whom the law places no control in reference to the amount of liabilities they may assume. The Safety Fund is now, in all probability, adequate to the protection of the public against the circulating notes; but this primary, if no exelusive object in its original establishment, may be wholly defeated, by retaining the present provision in regard to other liabilities. It is therefore submitted, whether the law should not be amended in such a way as to exclude all debts, except circulation, from becoming a charge on this fund, which any bank may incur after such amendment takes effect. Commissioners are required by law to submit their annual report. The following table will present a comparative view of the resources and liabilities of the chartered banks of the State, for the last two years, excluding the City Bank of Buffalo. Resources. Loans and discounts..... Real estate....... Stocks.. Total... Circulation Due Canal Fund. Due other banks. Total...... $37,147,069 $45,600,492 41,387,056 $86,987,548 .$78,453,642 During the past year, and particularly since the redemption law went into operation, the banks have gradually, but Add capital and profits....... 41,306,573 with great prudence, enlarged their loans and issues as they were from time to time required for actual business operations. And it is believed that since the last summer, at least no want of moneyed facilities has in general existed, either for the purpose of sending forward the abundant products of the country, or for any other object connected with the sale and transfer of commodities. During the past year ending the first of the present month, the loans of the chartered banks have increased $2,605,696. This comparatively small advance over the extreme reduction, as contrasted with the preceding year, existing on the first of January 1849, did not arise from any inability or indisposition on the part of the banks to extend their loans in business operations. The annexed tables will exhibit the general soundness of their condition, and the large amount of available means on hand. The low prices of the staple products of the country requiring much less capital for their purchase than in former years, and the difficulties and embarrassments growing out of the revulsions of 1837 and 1839, by which commercial enterprise has been greatly reduced, in its actions, will sufficiently account for this moderate extension of bank loans. In the resources as above stated, the item of Bank balances includes the funds of the country banks in deposit in New York and Albany, amounting to $3,469,231, being an increase over last year of $1,413,387. The cash items appear to be large in amount, but a considerable proportion is in treasury notes of the United States, which are convertible at any moment. The following table presents, in a concise manner, the proportions of capital to loans, and of specie to circulation, of all the chartered banks of the state for the last five years. Capital. Loans. 1st Jan. 1837..$37,101,460 $79,213,188 Proportion of capital to loans. $1 to 2,13,7 1 to 1,63,0 46 1839.. 36,801,460 68,300,486 1 to 1,85,5 Specie. Circulation. specie to cir Besides, although the debt of the banks has not been great- 1st Jan. 1837...$6,557,020 $24,198,000 ly increased in amount, its character has undergone, in our judgment, a material and beneficial change, by transforming a large portion of that which existed in long accommodation loars into active commercial paper. The circulation of the chartered banks has increased, since the last annual report, $4,606,056-whilst the notes issued to the associations under the general banking law have been reduced within the year ending on the first of December last $658,442-making the increase of the whole circulation $3,669,231. We cannot present a statement of the affairs of the free banks as they stood on the first of the present month, for the reason, that by the law they are required to transmit to the Comptroller such statement on the first Monday of January, in each year-and a penalty is imposed for neglecting to transmit the same for one month beyond the period when it is required to be made. On application to the Comptroller for these statements, we ascertained that but a small number had yet been received, and that, in all probability, the whole would not be sent in till after the time had elapsed in which the Bank | |