The Bank of the United States has generally in its vaults about ten millions in specie, but during the struggle with General Jackson, it had, at times, a sum equal to its bills in circulation, or from sixteen to eighteen millions. The Bank of England endeavours to keep on hand from forty to fifty millions, but it sometime sinks as low as thirty. The Bank of France always has at least twenty and sometimes more than forty millions; in 1832, it had fifty-three millions, or more than its whole paper circulation.
The Bank of the United States does not discount notes of above four months' date, although this restriction is voluntary; the great mass of its discounts is on paper of two months date. The Banks of France and England cannot discount bills of more than 90 days date.
The bills of the United States Bank circulate throughout the Union; the revenue officers are obliged to receive them on the same footing as specie. The Bank, in return, is obliged to redeem them in specie on demand, under penalty of paying interest on the sum demanded at the rate of 12 per cent. per annum, and of forfeiting its charter. It is not, however, bound to redeem the bills of the branches, except at their respective counters, although it does so in fact. The bills of the Bank of England are a legal tender in England, and with the exception of those of the branches, are redeemable in gold and silver only in London. The bills of the Bank of France are current only in Paris, and are not there a legal tender.
The Bank of the United States and the Bank of France only issue bills payable to bearer; the Bank of England has a certain amount of Bank post-bills, or bills payable to order at seven days sight, being equivalent to about one tenth or one twelfth of its whole circulation.
The Bank of the United States receives deposits, on which it pays no interest. The Scotch banks pay interest on deposits at the rate of 2 to 2½ per cent. The Banks of England and France do not pay interest on deposits, but the latter gets bills on Paris cashed for its depositors without charge.
The number of accounts current opened by the Bank of the United States is indefinite; in that country and Scotland almost all persons have an account with the banks, and are thus freed from the necessity of keeping any considerable sums on hand. They hardly keep enough in the house to defray the expenses of the household for a few days, and payments are made by checks on a bank. The banks are, therefore, the cashiers of the whole community. This concentration of the whole disposable fund of the country in the banks, gives them the means of extending their operations greatly, and renders the capital, which would otherwise be scattered about and lie idle, active and productive.
The dividends of the Bank of the United States have been regularly at the rate of seven per cent.; those of the Bank of France vary from eight to ten on the original capital; those of the Bank of England are at present eight per cent. on the nominal capital, which is the original capital successively modified by acts of parliament. Independently of the ordinary dividends, which were originally seven per cent., afterwards rose to ten, and are now eight, the Bank of England has made several extraordinary dividends, and it increased the nominal capital on which the dividends are paid, twentyfive per cent. in 1816. Mr McCulloch makes the total sum of the extraordinary dividends and of the reserved profits carried to the extension of the capital, from 1799 to 1832, eighty-two millions, which with the reimbursements required by the new charter, amounts to one hundred and five millions. The Bank of France has divided beyond its ordinary dividends, the sum of four and a half millions.
The Bank of the United States, previous to 1834, was charged with the keeping of the public moneys, which were remitted to it by the collectors and receivers and of which it was the legal depository, with the transfer of funds for the service of the Treasury, and with the payments on the public debt and of pensions. It is forbidden to lend more than 500,000 dollars to the Federal government, and more than 50,000 to any State. In this respect it differs from the Banks of France and England, which make, and especially once made, enormous advances to the state. This is the principal object of the Bank of England, the whole capital of which is lent to the government at the rate of three per cent. Besides this the Bank of England receives the Exchequer Bills, and the Bank of France the Treasury Certificates (bons du Tresor), which bear a low rate of interest. These banks have made inconceivable loans to the state in time of war; in 1814, the advances of the Bank of England amounted to 165 millions, inclusive of the public deposits, which sometimes amounted to 60 millions. The Bank of France, however, has at present little connexion with the government, and has, therefore, greatly extended its commercial operations. In 1836, it had on hand notes to the value of 27 million dollars, without reckoning four millions advanced on deposits of public funds; from 1830 to 1835 the amount had not exceeded seventeen millions.
The local or State banks in the United States are organized on principles analogous to those of the National Bank. They are incorporated companies, receiving their corporate privileges from the States, and, therefore, confined to the limits of the State. Sometimes their bills are not current out of the town or county in which they are situated. They are institutions of credit and circulation almost exclusively for the use of merchants. Not having the resource of exchanges, and rarely having any deposits, they aim to enlarge their profits, by extending their circulation through excessive discounts and loans, which often floods the country with an excess of paper money. Their capitals seldom exceed one million dollars, and are often much less; but several have lately been established in the South with capitals of from three to ten millions.
In England the private bankers have the right of emitting bills payable to bearer, except, if there are less than six partners in the house, within the distance of sixty miles of London; in point of fact there are none issued within that space. The bills issued by private bankers amount to about 8,500,000 pounds. In Paris, the Bank of France has the exclusive privilege of issuing bills payable to bearer.