to aid by means of discounts and exchange the various commer. cial interests of the state.

Our free banking law has now been in operation two years and under its provisions twenty-four banks have been organized, with an aggregate capital of $1,450,000, and a circulation amounting to $937,592, all of which is secured by the deposit in this office of $1,033,000 of the stocks of the most substantial states in the Union. The operation of the law has thus far fully equalled the expectation of its friends and has given to the state a sound and well secured currency. If the affairs of this office are prudently conducted and all the requirements of the law faithfully enforced, little danger need be apprehended of any considerable loss being sustained by the public from currency based upon it.

The only securities that our banking law admits as a basis for banking, are state stocks and a limited amount of the first mortgage railroad bonds, of railroad companies, duly organized under the laws of this state.

The Milwaukee and Misssissippi Railroad is the only road in the sta: hat is so far completed as to come within the provisions of the law. That company, in the year 1853, made application to my predecessor in office to have its bonds admitted as banking securities. That officer caused the proper examination into the finances and condition of the road to be made, as required by law, with much care and attention, and very properly admitted the bonds of a portion of the road as banking securities.-See Table F.

The ability with which the affairs of that company have been managed, the large and profitable business that the road is doing,. and the uniform promptness with which it has met all its engagements, has caused its securities to be sought after as safe as well as permanent investments; and the bonds of this company have, in consequence, ranged in the New York market within a small margin of state stocks. These reasons, and in consideration of the reduced amount of circulation that can be issued upon that class of securities under the law, have not caused them to be sought after as

banking securities. Only five thousand dollars of the first mortgage bonds of the Milwaukee and Mississippi railroad company have been deposited in this office as a basis for banking; and from the limited amount of circulation which the bank comptroller issued upon them, they were soon withdrawn, and state stocks substituted in their place.

The bank comptrolller has in every instance rejected such securities as have been offered as a basis for banking under the law, as do not clearly come within its provisions, as well as the stocks of far distant and doubtful states, which have been construed as coming within the meaning of the act, and has only admitted as banking securities the bonds of such states as are considered most safe and convertible, and whose reputation for the integrity with which they have for a long period of time met their engagements, may be deemed a sufficient guarantee for the future..

The constitution having limited the whole amount of the public debt of this state at one hundred thousand dollars ($100,000), the greater part of the currency of our banks must continue to be based upon the bonds of other states, which are generally issued in liberal amounts to aid in the construction of various works within their own borders; and it may hereafter, if, indeed, it has not already, become a question of serious financial import, as to how far the policy of our state should be restricted to the basing of nearly its entire currency upon the debts of other states, over which our own government has no supervision or control, either in limiting the amount, or the provision of means for their ultimate payment, or for the accruing interest thereon. In times of universal prosperity it may be well enough, but when commercial and financial revolutions occur, as occur they must, it would seem that the greatest degree of power should be held by our own government, consistent with its general financial policy, over the securities for the curréncy authorized by its laws.

It is believed that the business of this State requires a circulating currency of not less than $4,000,000, in order to facilitate the various exchanges of produce, minerals, lumber, merchandise,

and other commodities, less than one-fourth part of which is furnished by the banks of our own State; and it rests with our Legislature to determine whether it is proper for our channels of circulation to be filled with the doubtful and depreciated currency of far distant States, whose currency is neither secured by the "pledge of public stocks," or anything else, and whose banks pay no taxes towards the support of our government. Is it not wrong to require of our own banks the most undoubted securities, and to oblige them to contribute largely to our treasury, and then to place them into competition with the doubtful and unsecured currency of other states.

The poorer currency will generally take the place of the better, as the precious metals seldom circulate in company with paper money, so the more doubtful class of paper currency will generally drive from circulation the better kind. Our own currency is more easily converted into coin or exchange, and is therefore returned to the banks for redemption, whilst the more doubtful, which is not so readily converted, is left to circulate among the people. It has been a subject of great complaint with our farmers and business men, that it is with difficulty they can dispose of their produce and obtain in exchange the notes of the banks of our own state, but that the notes of distant and almost unknown banks, are offered them in payment, which has been the cause of no inconsiderable losses in the converting of such currency into coin or the bills of our own banks, and it remains with the legislature to adopt such measures as will secure our citizens a good currency as well as to protect our banks from the evils of this illegitimate competition in their business.

Our banking law having been enacted by the legislature with much care, and in accordance with the provisions of the constitution submitted to and approved of by a large majority of the electors of the state before it became operative; the power of the legislature to amend or to change any of its provisions is generally questioned, and if no doubt upon the point existed, it is to be hoped

that the power will not be exercised except for good reasons, and then only with caution and great deliberation.

The bank comptroller will propose no material change in any of its provisions, but will only advise the enactment of such laws as in his opinion will have a tendency to perfect the original instrument which will be proposed through the appropriate committee of the Senate and Assembly.

SEC. 39 of the banking law requires that all the circulating notes of banks returned to the Comptroller's office, shall be destroyed by him, after he shall have made a record of the same, which record shall specify the number of each bill, so returned, its date, and by whom it was countersigned. The same section further directs that duplicate records shall also be kept in the office of the state

treasurer.

The legislature at its last session directed the bank comptroller to procure suitable books for the purpose of carrying the foregoing provisions into effect, and made ample provision to defray the expenses of the same. The books have accordingly been procured, and opened with much care by a competent book keeper employed for that purpose, and the records are now nearly completed. The expense attending it, although considerable, will be more than com pensated for by the additioanal safeguard that provides against fraudulent issues of countersigned notes.

Chap. 62 of the general laws of the session of 1854, created the office of bank register and vested the appointment with the bank comptroller. In pursuance of that law, Adolphus Menges, Esq., has been assigned to that station, and this opportunity is taken to bear testimnny to the ability, fidelity, and industry, in which he has performed the arduous duties of that office as well as the of fice of deputy bank comptroller, an appoinment which he has held since the present incumbent has had charge of this department..

BANK TAXES.

The sixteenth section of the banking law of this state requires that every banking association organized under its provisions, shall on the first days of January and July, in each year, pay into the

state treasury a semi-annual tax of three fourths of one per cent. on the amount of the capital stock of such banking association, which tax shall be in lieu of all other taxes except upon the real estate of such banking association.

The first banking association organized under the said act was in January, 1853.

The whole amount of taxes collected from the banks during the year 1853, was $7,097 92.

The whole amount of taxes collected from the banks during the year 1854, was $18,165 63.

It will be safe to estimate the revenue to the state from the bank tax for the year 1855, at $30,000.

The following statement will show the amount of taxes due from each bank on the first day of January, 1855.