expected than the sound situation and general character of the banks to which the stock may be sold; but it should not be thus sold to any that is not sound and of good standing. Hence the necessity of a discretion in the public officers.

The conditions also must in part depend on circumstances, and cannot be well defined beforehand. The essential condition will always be, in substance, that the stock shall be exclusively applied to the object for which it is sold to the banks. That generally will be the sale or pledge of it for specie; but there may be other modes equally efficient to apply it, and on the whole it will, I think, be best to leave the conditions to the Executive discretion. When speaking of the soundness of a bank, I must say that, though wounded, it may be perfectly sound so far as relates to its creditors. Thus, though the Mechanics' Bank should lose two or three hundred thousand dollars of its capital, it would with the remaining seventeen or eighteen hundred thousand be as perfectly safe as if its capital had originally amounted to that sum. I mention this because I wish government to lend it three or four hundred thousand dollars, without which it may be difficult for it to resume specie payments with safety to the whole banking concern. If you should have an occasion, mention this to the Governor.

I wish also that the fatal effect of a repeal of the charter of the Phoenix Bank taking effect immediately, on its discounters and depositors, and on the general banking and commercial interest of the city, may be taken seriously into consideration.

What is meant by the report of the bank committee to the Senate to permit banks to receive deposits payable in current bills? This presupposes current bills not payable in specie, or, in other words, a protraction of the suspension of specie pay

ments.

With great respect, &c.

GALLATIN TO WM. L. MARCY, GOVERNOR OF THE STATE OF NEW YORK.

NEW YORK, 9th April, 1833.

DEAR SIR, I hear with regret that the committee of merchants who had gone to Albany have returned without doing anything decisive, and without even addressing you a letter which might lay the foundation of a message to the Legislature if that message appeared to you proper. It is also reported that it is intended to postpone the subject till after the meeting of the bank convention; but for what reasons I do not understand. For that Philadelphia, and of course Baltimore and some other places, had determined not to resume, was known at Albany; and the want of co-operation on the part of Philadelphia alone would render the aid of the State necessary. On the other hand, the knowledge that the State of New York would support the banks in their earnest effort to resume specie payments cannot fail to have a powerful effect on the convention; it will encourage the timid and decide the wavering. I am so well satisfied of this, and, now when there is not time for a decisive action of the Legislature, that even your message would be sufficient to produce that effect, that if you think it necessary as a basis for recommending the measure to the Assembly, you may consider yourself at liberty to communicate the letter of the bank committee of seven to you. For the reasons stated in my letter of the 27th March, I would rather, if it can be avoided, that that of the committee should not be published; but, if necessary in support of your immediate message, I would waive the objections.

I have the honor to be, with great respect, dear sir, your most obedient servant.

GALLATIN TO SAMUEL B. RUGGLES.

NEW YORK, 9th April, 1838.

DEAR SIR,-I am told that it is intended at Albany to postpone the consideration of the application for aid by the State of a sale of stock on credit to enable the banks to sustain specie payments till after the meeting of the general bank convention, which meets on the 11th inst.

If the committee of which you are chairman, and to whom was referred the memorial of certain merchants on that subject, is against the application, I have nothing further to say.

But if it is intended to report in favor of the memorial, permit me to say that it is of great importance that the report should be made at once, so as to produce the desired effect on the convention. There will be found in that body many timid and undecided men. The knowledge that the great State of New York will sustain and aid the resumption cannot fail to have a powerful influence; and the report of the committee, since it is too late to expect a timely vote of the House, will alone be of great utility to promote our object.

Yours, &c.

GALLATIN TO B. C. HOWARD, M.C.

NEW YORK, 7th May, 1838.

SIR,-I had the honor to receive your letter of 1st of this month.

The balances due on the 7th of April by the banks of Baltimore to those of this city amounted to less than 300,000 dollars, and the amount has since that time been rather lessened than increased.

Whatever the amount may be, I have no doubt that the banks here would agree to any reasonable postponement, provided those of Baltimore resume specie payments. No difficulty is, I think, to be apprehended from that cause.

Nothing would, in my opinion, more effectually remove ob

jections, and promote an early and general resumption of specie payments, than an abandonment, for the present at least, of the sub-treasury plan and a repeal of the specie circular.

It seems to me that you may wait till a surplus revenue does exist before you make new provisions for its safe-keeping; and, as the question becomes important and difficult only in case of a large accumulated revenue, I agree entirely with the President in the opinion that the true remedy consists in reducing the revenue, as far as it may be estimated, to the amount of the current expenditures of the nation.

The specie circular is now a dead letter; but its effect, after the resumption, is a subject of actual apprehension to the Western banks which wish to resume; and it is used as a pretence for not resuming in other quarters. The claim on the part of the Executive to make a distinction as to the kind of currency in which different branches of the revenue shall be collected is really untenable; and a joint resolution, substantially such as that proposed by Mr. Clay, would at this moment be extremely desirable.

My great anxiety for an early and general resumption of specie payments, so essential to public and private credit and indeed to the character of the country, must be my apology for submitting those suggestions to your consideration.

I have the honor to be, &c.

GALLATIN TO BATES COOKE, COMPTROller.

NEW YORK, March 2, 1839.

SIR,-Your letter of 25th ult. did not reach me till yesterday. I was under the impression that the general banking law of the State, by declaring that the stocks pledged for the redemption of circulating notes should consist of such public debts created by the United States, or by this State, or such other of the United States as should be approved by the comptroller, had left it discretionary with that officer to reject those stocks the value of which he had not the means to ascertain.

The intrinsic value of a stock depends on the wealth and resources of the State which issues it compared with its expenditures and debt, and on the opinion entertained of its fidelity in fulfilling its engagements and of the stability of its government. The market price may be considered as the expression of the general opinion in those respects, and is the criterion to which we generally resort in all stock transactions. But in the case under consideration there are other circumstances which require attention.

1. The ordinary rate of interest in the United States is so much greater than that in England and that on our State stocks, that the market price of these depends entirely on that which they command in the London market. It is therefore regulated, not by our brokers and money-dealers, who would be the most competent judges, but by men abroad, whose knowledge of all that may affect the intrinsic value of the American stocks is necessarily imperfect.

2. That foreign market is always governed in a great degree by the comparative value of the European, and principally of the English, stocks. It is not because our stocks are thought safer, but on account of the higher rate of interest they yield, that they command the present prices. The French 5 per cent., notwithstanding the constant apprehension of a reduction in the rate of interest, sell 5 to 10 per cent. higher than ours. Thus the market value of American stocks is affected not only by changes in our situation (war, excess of debt issues, &c.), but by those in Europe; and the fluctuations arising from that source are enormous, depending principally on war and peace and on the greater or shorter duration of peace. The price of the English 3 per cent. was, in 1781, 55 per cent.; in 1790, 81; in 1795, 64 to 70; in 1813, 56; in 1819, 80; in 1838, You will at once perceive that a war between England and any other nation would cause a fall both in their and in our own stocks, and that the best of these would afford a less valuable and much less available pledge for the circulating notes than the commercial paper on which alone rests the safety of the paper issued by the old banks.

3. That the market value of a new stock is not settled until it