by means of its credit, the operations being so covered up by the system of exchanges. The bank for many years anterior to these transactions had been a seller of bills on London, and by continuing to act in that capacity did not excite any suspicion— no one seemed to be aware that it was placed in funds at London by the proceeds or hypothecation of the cotton shipments, instead of, as previously, by sales of Government stocks and produce bills; and, from the fact that the larger portion of the consignments were from the new cotton country, it appeared is if the enterprise of the 'dashing young house' at Liverpool had taken advantage of the new trade. It turned out, however, that nearly all, if not all, the officers of the Bank of the United States were interested in the shipments, which, as far as those made against the crops of 1836 and 1837 were concerned, were successful in consequence of a considerable portion of the latter year's production being withheld from market, and enabling them to divide large profits among themselves. The number of pounds of cotton grown in the entire South in those years was 570,000,000 and 720,000,000 respectively, while the crop of 1838 was only 545,000,000 pounds, which, with the remainder of that of 1837 held over, sold for low prices at Liverpool, notwithstanding the bank managers resorted to every means to keep up the market quotations; but they had not only the depressing influence of superfluous quantity to contend with, but the commercial world was in a paralysed condition, not having recovered from the panic of 1837. The losses thus made by the officers of the bank outbalanced their profits, and they were compelled to make a compromise with its shareholders, who, as well as many of the directors, had been kept in ignorance of the whole affair, and were very slow to believe it, even when they heard of the wrongdoings charged upon the guilty parties. There is no doubt that the bank was first led astray by its desire to obtain political influence; then its officers carried on the business as a financial operation, and it was not until afterwards that they became sharers in the profits and the losses. The first intimation the public received of these questionable transactions was through a communication which appeared in the New York 'Evening Post' of August 24, 1839. This was shortly after the shipment of specie, the proceeds of the sales of the bills

on Messrs. Hottinguer and Co., to Mr. Jaudon, which created a great commotion in Wall Street, the rate of exchange not warranting the transmission of the precious metals to Europe. The withdrawal of so large a sum, without a legitimate reason, from the vaults of the New York banks, caused much surprise, and Mr. Biddle was charged with wishing to 'break' those institutions; they in turn were charged with being jealous of the power of his bank. Here is the information furnished by the Post':

BANK OF THE UNITED STATES.

'The merchants of this city and Philadelphia feel the severity of the times, but are puzzled to know to what cause to ' ascribe it. They are like a blind man in the street struck

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by a brickbat; they feel themselves hurt and bruised, but see 'not the hand that dealt the blow. It seems to them a stale ' and poor fetch after all to ascribe it to the Administration.

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The following statement has been drawn up by a person 'whose situation has given him an opportunity to observe the 'proceedings of the banks which have engaged in the cotton monopoly. The extent to which they were concerned in that 'unlucky speculation was already known, but the manner in ' which they had involved themselves in the unfortunate affairs of 'the south-western banks has not before been described. The 'first of these errors led to the second, and both have had the ' effect of disturbing and confounding the natural course of 'trade. No wonder, when these great associations enter upon the ' business of buying and selling merchandise- no wonder that the regular merchant, with his comparatively small resources, is crushed under their footsteps.

The winding up of these transactions is yet to come, but it is approaching. From all appearances it is likely to be one which the community will acquiesce in without regret, and which 'will again leave the field of commerce open to individuals.

6 THE PRESENT CRISIS AND ITS CAUSE.

The disasters which are now grinding the business men in this city and Philadelphia have been produced solely by the

speculations in Wall Street and Chestnut Street, but more 'particularly in the latter, as their operations were on a gigantic scale. In 1837 and 1838, Mr. Biddle threw a large amount He

' of funds into the South, and invested them in cotton.

sent his son, a youth of about twenty years of age, and an ' unsuccessful merchant, May Humphreys, to Liverpool to sell this cotton, and to transact a general commission business. This mushroom house, though new, and without a knowledge either of the business or the people of England, at once ob'tained a larger amount of business than William and James Brown & Co., the Barings, the Lizardis, or any other of the 'old established and substantial houses of that great commercial 'mart. Early in 1838 it was discovered that the cotton crop would be short-that Mr. Biddle held up a large amount of 'the previous crop. In the meantime he, by granting facilities to Southern banks, induced them to make advances on cotton, ' and ship a large portion of it to his son's house at Liverpool, 'which would more effectually enable him to control the cotton 'market, and carry out the principle of monopoly which the 'Wall Street bankers had so successfully maintained for three or four years in the flour trade. But, as all monopolies must be maintained by extending the sphere of their operations, Mr. Biddle found it necessary to strengthen the Southern 'banks, which had, as his indirect agents, swindled the planters out of the cotton to be sacrificed in Liverpool at their expense, 'while they were compelled to receive depreciated and depre'ciating paper for their labour. These banks had lost their character, their paper had fallen 28 per cent. below par in the summer of 1838, and it was seen at once that they could not • obtain control of the last crop unless they would resume specie 'payments and raise the value of their paper.

Under these circumstances, foreign capitalists would have 'flocked to the South and purchased the cotton at a fair price, and thus, by throwing it into the Liverpool market, would have compelled Mr. Biddle to do the same, or borrow money ' and risk the market another year. Accordingly, Mr. Biddle, in August and September 1838, commenced rebuilding the Southern banks that had engaged in the cotton trade, and he purchased the bonds of others to enable them to go into

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' operation, and to continue the cotton monopoly. He and a 'few of his gambling associates in Philadelphia, principally the ' officers of the Girard Bank, commenced the purchase of State ' and Bank bonds; and in one week they invested about $10,000,000 in the State of Mississippi. $5,000,000 of this money on credit were distributed among four insolvent banks ' at a nominal interest of 7 per cent., to be repaid in three ' annual instalments. These banks were the Commercial and Railroad Bank of Vicksburg, the Planters', the Agricultural and Commercial Bank of Nachez; the former has again suspended, and it is believed that not one of them can now pay 'the interest, much less the first instalment, which, we believe, is due about this time.

Besides, the Agricultural and the Planters' Bank of Nachez owe the Federal Government nearly $1,000,000; and the Go'vernment owe it to the people to force its collection, and to that ' extent, at least, abridge the power of the unprincipled speculation. In purchasing the bonds of these banks, Mr. Biddle and his compeers had other strong personal inducements. They had purchased an immense amount of their notes at 28 per cent. discount, and by the operation were enabled to 6 use it at par.

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The other $5,000,000 were invested in Mississippi State 'bonds, to establish the Union Bank at Jackson; and in one C month this new institution was flooding the country with post

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notes, and was found also in the cotton trade advancing $60

a bale. By thus holding back the crop, Mr. Biddle might be ' enabled to realise a large profit on the crop of 1837 and 1838, 'which he had purchased, and in the meantime the planters of the South would be left to bear the whole of the loss from a 6 falling market, after the monopoly had become too heavy for the credit system and the gambling system to sustain it any 'longer. Well, this Union Bank is now prostrate, though not 'a year in operation, and commencing with $5,000,000 of 'capital; its paper will now sell for 75 cents on the dollar, even 'when bearing 5 per cent. interest.

'The bonds on which the bank was established are now remaining unsold in the vaults of the bank in Chestnut Street' [they had been remitted to Mr. Jaudon, in London, which was the

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same thing, as they were still in his hands], and if put into the market would not bring 20 cents on the dollar.' [The United States Bank had purchased them on credit, and, before the second payment was made upon them, the Governor of Mississippi proclaimed the fraud that had been practised upon the State, and cautioned all persons against negotiating them; but Mr. Biddle did not heed his advice, but continued his payments to the Union Bank. In fact, it was simply paying out of one pocket into the other-robbing Peter to pay Paul.]

In Arkansas, Alabama, Georgia, and New Orleans, the same 'system was resorted to; and now we have its glorious results ' in Philadelphia and New York. The bankers and speculators have been disappointed in not getting returns from their 'Southern coadjutors; the action of the great "mammoth " (United States Bank) in England has forced cotton into 'market, and reduced its price from the monopoly standard; ' and to make up the money to keep the Girard Bank, the United States Bank of Pennsylvania, and the speculating con'cerns of Wall Street, from again suspending, the honest dealer ' and the regular merchant are compelled to throw their paper ' into market, and sacrifice from 2 to 24 per cent. per month to 'maintain their credit and carry on their business.'

The warning contained in this communication was not heeded by the people of Philadelphia; on the contrary, they condemned every man that said aught against the Bank of the United States. The presidents and directors of the other banks of Philadelphia were, in fact, so stupid and blinded that they came to the rescue of the mammoth,' after its bills had been dishonoured in Paris, and not only loaned it money, but concluded to suspend specie payments with it on October 9, 1839. The utter insolvency of the Bank of the United States was thus covered up for many months. So wanting are many of the bank presidents in America in the knowledge of the ordinary principles of finance, that they have several times all 'suspended' in order to shield from view the rottenness of one of their number. As well might all the merchants in London fail when one concern happens to be unable to meet its engagements. On that occasion all the banks were compelled by legislative enactment to resume

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