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present time, suffering, as they are, from the unusual amount of maritime disaster which has marked the last three years. It is easy, with a little reflection, to see how the loss of capital to the shareholders in such concerns will tell upon the public interest, as all diminutions of the capital of a country are so much taken from the means of employing labor and producing further wealth. And it is equally easy to see how even the owners of shipping, however fully they may insure, have an interest in minimising loss at sea, as the smaller the average of such loss, the smaller must be the premiums required for insuring sea property. The losses, therefore, of marine and fire insurance companies, are losses in which the public is reasonably called to sympathise, and which it is their interest to see reduced to the smallest possible amount.-Chambers' Journal.



From Chambers' Journal, published at Edenburg, 1848.


"The learned orientalist, Klaproth, in his Memoirs Relative to Asia, gives a curious and interesting account of the origin of paper-money, which he traces to the Chinese.* It must be premised, that the Chinese annals are more complete than those of any other nation, because the keeping of them has always been a state affair, and not left to the industry of private individuals; and from these authentic records Klaproth translates the following facts :- The earliest trace of a currency having a nominal instead of a real value, occurs during the reign of the emperor Ou-ti, in the year 119 before the Christian era. It appears that the treasury of that sovereign got into so low a condition, that the expenses of the state exceeded its revenues. He was fortunate, however, in the services of a financial minister, whose genius planned and executed a system of nominal currency. This consisted of pieces of deer-skin, about a foot square, ornamented with paintings and highly-wrought borders.-These represented the value of 40,000 deniers (about £12 sterling,) but were only current amongst the grandees and at court. Out of them a revenue was collected in a manner characteristic of the people:—from time immemorial, every person who is admitted into the presence of the • Sun of Heaven' covers his face with a screen, or small tablet, for he is supposed to be quite unable to bear the blazing light of the emperor's countenance; and, at the time we refer to, whoever was honoured with invitations to his repasts and entertainments, was obliged to cover his screen with one of these phi-pi, or value in skins, which he was condescendingly allowed to leave behind him. This plan, once set on foot,

*Sur l'Origine du Papier-Monnie.'-Memoires Relatifs a l'Asio, par M. J. Klaproth, vol. ii. p. 375.

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appears to have been often followed in after-years. We find between, and for some time subsequently to, the years 605–617, disorder prevalent in China to such an extent, that the country was nearly without a coinage, and all sorts of things were used as money; such as round pieces of iron, clothes cut up, and even pieces of pasteboard; but it is not till nearly three centuries after, that the history of regular paper-money commences. Hian-tsoung, of the Thang dynasty, whose reign commenced A. D. 807, was the founder of banks of deposit and issue; for he obliged rich families and merchants who arrived in the capital to deposit their valuables and goods in the public treasuries, for which paper receipts or acknowledgments were given, and made current under the name of fey-thsian, or voluntary money.' Thai-tson, who reigned in 960, adopted the same plan.

Between the years 997 and 1022, we find that the paper-money system was established in China, such as is at present followed in Europe—that is to say, the issue of credit papers as currency, without being guaranteed by any substantial pledge or mortgage whatever. These primitive banknotes were called tchi-tsi, or “coupons. From that time to the present, bank-notes have been in use in China under various names—those current at present being called pao-tchhao, or precious paper-money.' Thus the Chinese have had a banking system, with all its attendant advantages and evils, in full operation at a far earlier period than any other nation: and bankrupts, forgers, and monetary crises, have been rife in China for ages. We learn from Gutzlaff* that, a few years ago, some new financial arrangements were made, with a view to putting the paper currency on a better footing, but they were much impeded by a low state of public and private credit. Banks, both of deposit and issue, exist in every large Chinese town, conducted by companies or private individuals, who issue pian-thsian, or cheques—the precious paper-money' being only circr lated by the government. Bills of Exchange are not very often used, on account of a prevalent bad faith in commercial transactions.

De Gulgnes, in his work on China, gives an engraving of a Chinese bank -nole. It is a square paper, having on one side an inscription which states the amount it is issued for (1000 deniers, or cash,') and that it is a note of the emperor Zong-King, of the Ming dynasty. On the other side, the Chinese equivalent of the following sentence is printed: At the petition of the treasury board, it is ordained that the paper-money thus marked with the seal of the imperial dynasty of the Mings, shall have currency, and be used in all respects as if it were copper-money.Whwever disobeys, will be beheaded!

The researches, then, of M. Klaproth prove that, besides the discovery of the proprieties of the magnet, the invention of writing-materials, printing, and gunpowder, we owe to the Chinese the basis of our present systems of bank-notes and banking.

*China Opened, vol. ii.

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Report to the Honorable General Assembly of the State of Connecticut, now in sessioo

in the City of New Haven. The undersigned, Bank Commissioners, respectfully Report :

That soon after our appointment, we addressed blank forms to the several banks in the State, to be filled out by the cashiers, showing the condition of each bank on the first of October, December, February and April, and to be returned to us as soon as filled out. These returns have been made with a tolerable degree of promptness. We have also visited each bank in the State at least once during the year, and most of them twice, and from the certified returns made, and from personal examinations, we have the satisfaction of saying to your honorable body, that all the banks are in a sound and safe condition, and that the public need have no fears of their ability to meet all demands that can reasonably be made upon them. With but few exceptions they have been managed with commendable fidelity to the interests of the public as well as of the stockholders. Under the existing laws, a very great improvement has been made in the condition and management of all the banks in the State. Although during the past winter considerable financial embarrassment has prevailed throughout the country, but little pecuniary distress has been felt by the business part of the community in our own State. It is true, that, during the fall, and early part of the winter past, the discount line was high, and the circulation comparatively much larger than usual; yet under these circumstances, the banks were well prepared to sustain themselves, and take care of their customers.

We have said, that with few exceptions the banks were managed with commendable fidelity to the interests of the public as well as the stockholders. We ground our exceptions on those cases where banks have divided their earnings too close, and where they have gone abroad for paper, while declining accommodations to those of our owa citizens, who are of right entitled to them. It is true the public do not suffer when a bank divides its last dollar of earnings, provided it is otherwise sound, but great injury may be inflicted on the stockholders by such a course; for it will be seen, by a reference to the statement in the latter part of this report, that a large amount of the stock in our banks is held by females, trustees, schools, ecclesiastical and other societies, the school fund and the State ; and a bank that divides all its earnings every six months, and has not a fund in reserve, should it meet with any considerable loss, must, under existing laws, pass one or more dividends. Under such a state of things, all those stockholders who depend upon the earnings of the bank in which they own stock for the means of their support, (and there are many such in the State,) must suffer; and not only they, but all who derive any benefit from that portion of stock held by the school fund, or the State, must suffer in a greater or less degree by an increase of taxes.

That it was the intentions of the Legislature, that the banks should retain siom their earnings a reserved fund, is evident from the fact that they hava prohibited any bank from declaring a dividend, unless the capital is entirely sound; and have provided that all losses should be made up, and all :xpenses for plates, furniture, &c., should be charged over to profit and loss, and they repealed a law which prohibited a bank from retaining more than five per cent. surplus.

It is very gratifying to stockholders to receive large dividends, and equally so to the financial officers of banks to show their skill in making money; but it is a gratification obtained at too great a hazard for the permanent interest of stockholders, and an ambition hardly worth gratifying for a financial officer of a bank. We should never wish to see any bank in Connecticut with less than five per cent. surplus, and those of smaller capital, more than that proportion.

Those banks that go abroad for paper, to tlie neglect of our own citizens who are worthy of credit, are not in the discharge of the legitimate objects for which they were created. Whenever a bank charter is called for, it is on the ground that more banking capital, and banking facilities, are required for the accommodation of the people within the vicinity of its location. That some of the banks do go abroad for paper, to the neglect and inconvenience of our own citizens, we are bound to believe. Complaints are made, and we sear with too much reason. We believe, however, that the cases are few. It is an error that public opinion will be very apt to set right.

There is another fault with many of the banks in the State, and that is, the deficiency of specie. Although a bank may have a large amount of what is denominated specie funds, that is, funds in the hands of banks and agents in New York and Boston, which they can draw for at sight, yet, should there be a suspension of specie payments in those cities, these specie sunds would not be available as such; and the consequence

would be, that our banks would be driven into a suspension, a state of things most deeply to be deplored. We know very well that specie in the vault of a bank carns nothing, and officers of banks are not very apt to feel quite willing to have so much dead capital on hand. We are of the opinion that no bank should have less than ten per cent. in specie on the amount of circulation. Many of them have more than that proportion now. This subject of keeping a larger amount of specie on hand has been frequently pressed upon the officers of the delinquent banks, not only by personal solicitation, but through published reports to the General Assembly. It would seem that no reasonable complaints could be made should a law be passed requiring a certain amount of specie to be always on hand, corresponding with the circulation.

There probably has never been a time when the banks have had a better opportunity to fortify themselves against any ordinary crisis or revulsion in the monetary affairs of the country, than during the past three or four years. Business of all kinds has been active, and generally prosperous, and many of the banks have improved the opportunity afforded them, and by charging off bad debts, reduced the amount of real estate, increasing the amount of specie, and accumulating a surplus fund, have placed themselves in a very strong position. It would be very gratifying if we could say as much of all.



The theory and principles of banking are probably as little understood by the people as almost any subject that is within the ordinary reach of inan. It is a system whose good or bad administration is most intimately connected with our interests, involving transactions that have great influence on trade, commerce, and labor. It is believed, if the true theory were more generally understood than it is, there would be less opportunity for demagogues and political agitators to do mischief. There is no branch of legislation in which they will take more or deeper interest, than that which relates to currency. All are interested in that which, either directly or indirectly, affects the value of property or labor. The extremes of opinion, within the last few years, have been so great, and so far apart, that the true theory, or any thing like a rational judgment, were among the things most difficult to be obtained. It has been most strenuously maintained by some, that all banking was a monopoly, given to a favored few, and that the institutions under which it is our happiness to live, should be under no restraint whatever; that all should have the right of banking, and depend entirely on the confidence they might acquire for their success. Others have maintained, with no little zeal, that all economy of capital was wrong, and that we should go back to a strict specie circulation. Notwithstanding all the high wrought panegyrics that have been bestowed upon this, that or the other theory, that has been started, Connecticut has pursued the even tenor of her way, and only sought by her legislation to correct such abuses as grew up, and guard with careful vigilance the system early adopted; and while other States have been almost without any currency of their own, and the property of their citizens depreciated to a very great extent at one time, and at another inflated to the extreme by a redundancy of paper, without any substantial basis, we have gone along with but little variation. The free banking system has had its advocates in this State, but from recent developments made by the late Comptroller of the State of New York, we think the people of this State will be satisfied to let well enough alone, for a time longer at least, before they enter upon any new theory that does not promise better results than any that have been recently adopted and partially tried in other States. It is very doubtful whether, under all circumstances, there is any better system of banking than that of a bona fide paid up capital, managed by an honest cashier and board of directors, and circulation held in check by par redemptions, and a reasonable amount of specie corresponding with circulation.

It is claimed by some that the banking capital in this state is already more than adequate for the necessary accommodation and legitimate business of the people of the State, and the fact, that the returns show a large amount of discounts for citizens of other States, is proof conclusive to their minds. It is true that the amount, as appears by the returns, is large; but it should be borne in mind, that a considerable proportion of that sum is for individuals who, though they reside out of the State, are concerned in business in the State. There are many manufacturing establishments in the State, owned or carried on by people who reside out of the State; so that a part of the amount which purports to be for citizens out of the State, is in fact used in the State, and our own citizens derive the benefit of it. Besides, is it not for the advantage of our own citizens, that the banks should be able, at times, to use some



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