be continued, as well as the publication of such specifications as appear to merit being given without abridgment. The Committee will endeavour, at the earliest possible date, to procure such notices of the various manufacturing establishments, machine shops, &c. of Philadelphia, as may serve to give an idea of the state of industry in the city, without bringing individual interests into conflict, and would invite the contribution of similar notices from other parts of the Union. They again urge mechanics to contribute practical matters to the journal, and thus to render their knowledge conducive to the general progress of the arts in which they are interested. Besides the view given of the progress of mechanical science by original articles and selections from journals at home and abroad, the Committee are promised notices and abstracts, exhibiting this progress in a more condensed form, by John C. Cresson, Professor of Mechanics of the Institute.

Original articles in chemical and physical science, will, as heretofore, be sought for. As an instructive mode of presenting the condition of particular branches, original essays upon them will be published, and their progress will be recorded by abstracts of the more important investigations in them. The department of general and practical chemistry will be under the charge of Dr. John Griscom, James C. Booth, Professor of chemistry applied to the arts, in the Institute, and John F. Frazer, Professor of general chemistry in the Institute. Translations of interesting articles from the French and German, will be made by Dr. Griscom and Professor Booth. The notices of physical science including astronomy, will be furnished by Professor A. D. Bache, and Sears C. Walker, Esq. The Committee have already incurred a debt to the last named gentleman of obligation for furnishing, in conjunction with Professor Kendall of the Philadelphia High School, the calculations of occultations for several years past. These will still be furnished by the care of these gentlemen from their own calculations or those of Mr. Downes, of Worcester, Mass., whom the Committee are gratified to add to the number of their correspondents.

To improve the mechanical execution of the journal, an entire new fount of type has been provided, by arrangement with the enterprising printer, Mr. Jesper Harding.

These improved arrangements entitle the Committee to ask, from the public generally, and especially from mechanics, an extension of the patronage heretofore given to the journal. The addition of one hundred subscribers to the present list would enable them to support entirely the expenses of the journal, which have heretofore been borne by the Franklin Institute at a small annual loss. Two hundred addi

tional subscribers would enable them to reduce the price of the journal, which they pledge themselves to do in the event of such an increase to the present list. The object of the Franklin Institute in establishing the journal, was to diffuse knowledge, and not to reap pecuniary profit, and in that spirit the past and present arrangements have been made.

A liberal compensation will be paid, as heretofore, for articles accepted for publication in the journal.

The journal will, in future, be published on the first of every month, the delay in the first number of the new series is unavoidably connected with the arrangements already referred to.

Hall of the Franklin Institute of the state of Pennsylvania, for the promotion of the Mechanic Arts.

December, 1840.

Civil Engineering.

Letters from the United States of North America on Internal Improvements, Steam Navigation, Banking, &c., written by FRANCIS ANTHONY CHEVALIER DE GERSTNER, during his sojourn in the United States, in 1839.

(Translated from the German, by L. KLEIN, Civil Engineer.) (Continued from Vol. XXVI., page 363.)

LETTER VII.

Louisville, Kentucky, June 5, 1839.

The Banking System in the United States.

The Banks have acquired such an extension and importance in the United States, and they are so intimately connected with every thing here, that no day passes without their being an object of conversation in almost every circle, and without observations being made about them in the public press, or Reports of Banks appearing in the papers. One would imagine, that the United States could not exist without banks or without credit, and if you ask, how so many populous, wellbuilt towns have been erected in such a short period; how the im

penetrable forests in the West have been cleared and cultivated; how the swampy lands on the Mississippi have been transformed into the finest sugar and cotton plantations; how, finally, this general prosperity, which is everywhere visible, has been produced in such a few years; the answer is, "we derive all this from our banking, our credit system; because credit is the first element of the welfare of the Union!"

I once visited a car builder in Philadelphia, who is pretty well known for his ability, but until now did not acquire any property, on account of his expending too much in constantly making experiments for improvements in the construction of rail road cars.

"Are you able to take a large order for rail road cars?" I asked the man. "Yes," replied he," "I can take an order to the amount of $20,000 and more, and require the payment to be made only at the delivery of the cars, in bills at six months." "But how are you able to accomplish this, without being in possession of capital?" "Nothing easier than that. After having made my contract with you, I go to a large timber yard and select what I want in lumber and boards; the timber merchant, on seeing my contract, gives me credit for at least eight months, during which time I fulfil my order. In the same manner, I get the iron, leather, brass, and whatever I want, also on a credit of eight months. I further want cash, to pay my workmen every week, to obtain which, I sell my note, which I get endorsed by one or two friends, to some bank; in this manner I go on with my work, and when I am paid at the delivery of the cars, in bills at six months, I settle my accounts with the lumber merchant and the other individuals, and pay them with the bills I have received. The lumber merchant himself, continued the car builder, has not paid for the whole of his stock; he obtained the timber from the proprietors of forests in the interior, who obtained advances from the banks, when they commenced cutting the timber; it is the same with the iron merchant and all others, who give me credit; they sell me articles which they have not yet paid for themselves, and the first producers have already obtained on their account considerable advances from the banks. This is the course every business takes here; we undertake every thing on credit; whoever has learned a business, and is active and honest, finds credit and money to accomplish every reasonable enterprise. It sometimes happens, that the speculation fails, and the speculator in consequence; he then settles with his creditors, pays them what is left, and commences anew. There are men who have failed four or five times in their lifetime, always recommenced, and again found credit, because they were known to be active and honest; some of them acquire at the end of their life, a considerable property, while others remain poor. The banks and other creditors

easily sustain single losses of this kind, because the mass of their business is so great, that in the whole, they always realize great profits. Thus we proceed in the new world; in the old world, they say, every hing is established upon a solid, durable foundation, and therefore an able and active young man finds no support, if he is deprived of capital; therefore so few undertakings are brought to maturity, as only such, which promise a secure and certain success, are taken up; but experience has shown there, that with all these precautions, they are sometimes found to have made a wrong calculation, and as at the same time the mass of business is proportionally so much smaller, the profits of individuals must be considerably less in the old world, than with us, and the general prosperity of the country must be far less on the increase than in the new world, under an active, industrious, and unprejudiced population, giving each other a mutual support." Such were the words of the car builder; six months have since elapsed; I have almost daily recalled to myself his words, and daily I found new proof of their truth. But the American credit system is such an enormous structure, it is so differently practiced in the twenty-six Sovereign States of the Union, and like every other good thing, so much misuse has been made of it, that much time, conversation with well instructed individuals, and mature reflection are required, justly to comprehend the system in its principles, and to judge, how far the same would be practicable for our European institutions. It is the same with this as with the rail road system, the Americans have, in the course of ten years, completed 3000 miles of rail roads, and are always making new alterations and improvements; they have, in the last twenty-five years, established over 700 banks, and in almost every one of them have made some new experiments and amendments. There is no plan of construction of rail roads, there is no system of banking, that has not been tried here, and as the reports of most of the banks as well as of the rail roads, are published annually, . we may find here, in regard to banking, instruction not to be obtained in any other part of the globe.

I have had occasion to speak in my last two letters of some banking institutions in the States of Georgia and Louisiana; this letter will contain a short history and description of the American banking system in general, and in my future letters I shall give a more detailed account of the establishment and management of Banks in the different States of the Union.

National Bank, or Bank of the United States.

The Americans had already, while they were English colonists, several banks; but after having made themselves independent of the

English sovereignty, they became more enterprising, wanted more credit, and therefore increased the number of their banks. Every State of the Union granted, at its discretion, bank charters, by which incorporated companies became authorised to issue notes and transact all business connected with banking, within the precincts of the respective States. They soon felt, however, that to obtain an uniform circulating medium, a common central institution was required, and they established in the year 1791, a national bank, called "The Bank of the United States," for which the charter was granted by Congress, and which was therefore recognised throughout the whole Union. The capital of this bank was $10,000,000, of which the general government paid in one-fifth; the term of the charter was twenty years. As most of the banks in the different States (State banks,) had only a capital of some few hundred thousand dollars, the bank of the United States not only did the largest business, but soon acquired a control over all State banks; as soon, namely, as any of these banks brought into circulation too great an amount of notes, or entered into unsafe speculation, the national bank refused its credit, and either did not accept the notes of that institution or sent them to be redeemed in specie. The national bank thereby obtained a powerful influence upon the money matters of the Union, a general complaint about its monopoly arose, and after the expiration of the term of its charter in the year 1811, the latter was not renewed.

In the year 1812 the war commenced between the United States and England; as a natural consequence, credit and enterprise declined, the public rushed to the banks to convert their notes into specie, and the banks were compelled to suspend specie payments. When peace was re-established, in the year 1815, the Union contained over 200 banks, whose notes were, according to the credit of the different institutions, taken at a discount of from 20 to 50 per cent., a great number of private individuals, at the same time, had emitted small notes or obligations, which circulated in the neighbourhood; the whole country was inundated with paper money-gold and silver had entirely disappeared. A plan for a national bank was presented to Congress by Alexander James Dallas, then Secretary of the Treasury, and after a long deliberation in that body, a law was passed in the year 1816, incorporating the second bank of the United States with a charter for twenty years; the capital of this bank was $35,000,000, paid in 350,000 shares, at $100 each, to which the general government again contributed the fifth part. The bank was administered by twenty-five Directors, five of whom were appointed by the federal government; the Directors elected from amongst themselves a President, the latter had a salary, but not the Directors. The principal bank was in Phi