In 1838, on the foundation of the Bank of Commerce under the free banking law of the State of New York, the presidency of it was first tendered to Mr. Gallatin. The directors of this bank were among the most distinguished financiers of the city, and its object was to provide a conservative institution with sufficient power and capital to act as a regulator upon the New York banks. Profit to the stockholders was secondary to the reserve power for general advantage.
In June, 1839, Mr. Gallatin resigned his post as president of the National Bank of New York. In 1841 he published a financial essay, which he entitled "Suggestions on the Banks and Currency of the United States," a paper full of information, but from the nature of the subject not to be compared in general interest with his earlier paper, which is as fresh to-day as when it was written. Mr. Gallatin condemned paper currency as an artificial stimulus, and the ultimate object of his essays was to annihilate what he termed the "dangerous instrument." He admitted its utility and convenience, when used with great sobriety, but he deprecated its tendency to degenerate into a depreciated and irredeemable currency. This tendency the present national banking law arrests, but the law rather invites than prohibits the stimulus of increased issues. The last word has not yet been said on national currency, which, though the basis of all commercial transactions, has necessarily no other relation to banks than that which it holds to any individual in the community.
Economic questions have interested the highest order of mind on the two continents. Sismondi published a paper on commercial wealth in 1803, and in 1810 a memoir on paper money, which he prepared to show how it might be suppressed in the Austrian dominions; Humboldt made a special study of the sources and quantity of the precious metals in the world, in which Mr. Gallatin aided him by investigation in America. Michel Chevalier was interested in the same subjects; surviving his two masters in the art and witnessing the marvelous effects of the additions made by America to the store of precious metals, he continued the study in the spirit of his predecessors, and favored the world with instructive papers. Mr. Gallatin's contributions to this science are remarkable for minute research and careful deductions.