MATC

"admits Farmers to borrow money on twelve months credit, they giving landed security." But the public did not respond, and the enterprise did not reach the stage of application for corporate powers.1 It is doubtful, however, whether any serious attempts in such directions secured capitalist support sufficient to justify seeking charters. The fact is that by 1795 the commercial centres were fairly well furnished with banking facilities, and that the latter years of the century were not marked by such business expansion as called for considerable increases in these facilities. The sporadic instances of incorporation of small local banks attest merely the initiative of certain groups of citizens and the absence of abuses of banking privileges which would have made legislatures cautious in granting charters.

An examination of the census report for 1800 makes clear the degree to which the bank was naturalized in New England. Its seventeen institutions (not to count the federal branch) were scattered through sixteen towns. Except Marblehead (sufficiently near Salem) and Bridgewater, Mass., and Norwalk, Conn., every New England town of over 5000 population had its bank (these three towns had hardly more than 5000); while all the bank towns had over 5000 population except Portland (3704), Me., Bristol (1678) and Westerly (2329), R. I., and Norwich (3476), Conn. To the southward, on the other hand, banks were almost wholly confined to the larger centres, Hudson, N. Y., and Wilmington, Del., being the clearest exceptions.

It is further to be noted that, in the main, the functions of discount, deposit, and issue were exercised almost solely by these incorporated institutions. There were of course local capitalists who accommodated their neighbors, but did not make a business of money lending. There were also numerous examples of "ticket currency," or small notes for change, issued (especially before 1796) by individuals or corporations for the accommodation of their workmen or customers.2 But apparently only New Hampshire and Massachusetts found need, before

1 New Brunswick Advertiser, Sept. 14, 1795, and other contemporary local gazettes.

2

1 Wansey, Journal of an Excursion, 227; Essay III, 497, and infra, 275.

the end of the century, to prohibit unincorporated establishments from performing banking functions.1 The only conspicuous instances of unincorporated banks are those of the Bank of New York (1784-91), the Essex Bank (1792-99), and the Bank of South Carolina (1792-1800).

Reliable statistics of capital and operations cannot be secured.2 It is clear, however, that nearly all of the banks went successfully into operation. The Richmond and Middletown institutions did not open during the century. The Nantucket and New Haven banks were delayed. All of the others were in successful operation in 1800. In size the Bank of the United States was by far the largest, though its $10,000,000 capital was divided among the Philadelphia parent office and the branches at Boston, New York, Baltimore, Norfolk (after 1799), and Charleston.3 Next to it stood the Bank of Pennsylvania, with $2,000,000, and the Manhattan, with a total of the same, followed by a group consisting of the Union of Boston, the New York, the North America, the Baltimore, and the Columbia at Washington, with capitals of a million or a little more or less. No other at this time had more than $500,000, except possibly the unincorporated Charleston bank. The little institutions, with less than $100,000, were at Gloucester, Bristol, Westerly, and New Haven. In all the paid-in banking capital was probably between twenty-two and twenty-four millions in 1800.

Of the profitableness of the banks there is no question. The accompanying table shows the dividend rates for the period 1782-1800 for a number of the institutions here discussed. It

1 N. H. MS. Laws, xii, 164 (Index, 33); Mass. Laws (ed. 1801), ii, 883-884. 2 The table given in Blodget's Economica, 159, upon which is based that in Knox's History of Banking, 307, is unreliable, and Knox has used it incorrectly.

The distribution of capital between the bank and its branches was not generally known. The state in 1810 is given in American State Papers, Finance, ii, 479. Rochefoucault Liancourt, in his Travels, ii, 161, said the capital of the Boston branch about 1796 was thought to be $500,000. Cf. also supra, 98.

Figures are based on the following sources: letters, April, 1916, from officers of the banks or their successors (North America, New York, Providence, New Haven, Rhode Island); personal inspection of records (Massachusetts and Union banks, Boston); Holdsworth, First Bank of the U. S., 137; Bryan, State Banking in Md., 20; Woodward, Hartford Bank, 162; Woolsey, New Haven Bank, 314-316; Rochefoucault Liancourt, Travels, i, 573-574. Dividends declared in January are, in the case of the Bank of the United States and the Union Bank, included in the figure for

indicates that typical dividends were eight to ten per cent per annum, usually paid semi-annually. The table shows the influence of the different phases of the business cycles, but makes clear that the banks generally were able to pay good dividends even in dull times. As a result of the steadiness and fair size of these dividends, bank stocks had become, by the end of the period, recognized as standard investments and generally sold above par.1

The charters differed in different states, but after the first ones they tended to follow somewhat the same form in any one state. The charter of the Massachusetts Bank (1784) was very loose. No term of franchise, no capital, no par value of stock, no creditors were mentioned. Voting privileges were made one vote per share. The legislature might appoint a person to examine the books and records of the bank at any time. None of the corporation's funds were to be employed in trade. These were virtually the sole restrictions. Property held might be as much as £500,000. Thereafter, in Massachusetts, the capital was specified, varying in each case. Par value was $100 except in the Essex Bank ($500) and the Union Bank ($4-$8). Directors numbered twelve (Union, Nantucket) or seven (later). These were required to be stockholders, citizens, and residents of the state and (except in case of the Nantucket Bank) might not be directors in any other bank. One-fourth at least were ineligible for reëlection. Voting privileges were one vote per $100 in stock, one vote for each $200 additional, up to a maximum of ten votes. Inspection by a committee of the legislature was provided for, and if such investigation showed violation of the charter, the governor might forthwith declare it void. Beginning with the Nantucket Bank the directors were required to make a statement semi-annually (Portland and Essex annually), or oftener if requested, to the governor and council, of the capital, debts, deposits, notes, and cash on hand. Debts the year preceding. Cf. also Washington's memoranda in his will, regarding his shares in the banks of Columbia and Alexandria: "the stock usually divided from eight to ten per cent per annum": Works (Ford ed.), xiv, 307; and supra, 80 n. 1 Cf., e.g., Mass. Magazine, 1792-94; Holdsworth, First Bank of the U.S., 136; Munsell, Annals of Albany, iii, 157, 167, 173, 186; and supra, 60 n.

might not exceed twice the capital stock, "in addition to the simple amount of all monies actually deposited in said Bank for safe keeping," the directors being personally liable for any excess. Only in the case of the Union Bank were provisions inserted permitting branches, reserving to the state rights of subscription or privileges of loans, or requiring loans to agricultural interests. This charter also contains the peculiar proviso that loans to a foreign prince or state may not be made unless authorized by law. These provisions, while not to be regarded as describing charters in other states, sufficiently indicate the form of common regulations.

Besides the Massachusetts Bank and the Bank of North America by its earlier charters, the Bank of Maryland (1790), the Union Bank of Boston (1792), and the Rhode Island and Connecticut banks had no time limits fixed in their charters; but the Connecticut charters in 1795 and after reserved to the state the right to alter or repeal. In other cases a twenty-year period, such as the Bank of the United States had, was most common, though the Bank of North America (1787) had fourteen years set, and several Massachusetts banks had ten years. Cases of extended liability of stockholders were rare. the case of the Bank of Alexandria, Va. (1792), stockholders were to be liable after the directors, in proportion to their holdings, if debts were allowed to exceed four times the capital.

In

Besides the Bank of the United States the Union Bank of Boston (1792), the Bank of Richmond (1792), and the Bank of Pennsylvania (1793) were authorized to establish branches within the state which chartered them. The Richmond charter further provided

that any town holding three hundred shares, shall have a right to an agent, who shall at the risk and expence of the bank forward bills offered for discount to the directors, and if approved make the advance, and when due collect the money. Provided, that no office established in any town as aforesaid, shall be discontinued, unless there shall be for the space of three months a deficiency in the number of shares required by this act to entitle such town to an office of discount. And that no office of discount established by virtue of this act, shall be compelled to pay in specie any other notes than such as shall or may be issued by such office."