specie shall be paid unless an oath is taken that the notes do not belong to the Bank of the United States and are not presented in its interest.
December 24, 1821, it was enacted that State bank notes presented by the Bank of the United States for specie should not be paid unless the agent would take oath that they were not collected for this purpose. If an officer of a State bank suspected that a person who demanded specie was an agent of the Bank of the United States, he might demand of him to take an oath before a magistrate that that Bank had no interest. If such person refused to take this oath, he might be refused redemption of the notes. Whenever the Bank of the United States demanded specie, it must send with the notes a schedule of their numbers, date, letter, amount, and page, dated the same day. The notes of the State banks in the Bank of the United States should not bear interest on account of any refusal to redeem them.
This law was repealed December 20, 1824.
In April, 1822, the branch at Savannah was taking no Georgia notes except on special deposit, "inasmuch as an act of the Legislature authorizes ' them to refuse specie payments to the Bank of the United States or offices thereof, and interest, if sued."[1]
In South Carolina, at the session of 1819-20, "nothing but the great exertions of some able and distinguished men probably prevented a system of State paper money from being adopted." In the opinion of Cheves, the motive was to get a currency the redemption of which could not be enforced by the Bank of the United States.[2]
A similar quarrel occurred at Cincinnati. In August, 1818, the Bank called on the banks of Cincinnati to pay 20 per cent. of their debt to it monthly, and to pay interest on it. The local banks replied, through a committee, in a tone of astonishment and indignation, saying that they were ready to meet all demands in the ordinary course of business, but "are not prepared to redeem, at a few months' notice, all the paper they have issued for years past." They have paid to the branch $1.4 millions in eighteen months, which has forced them to withdraw almost all their circulation. They are called upon to pay, either in specie, United States notes, or eastern funds, none of which can be had. "We consider the liquidation of an interest account at the expiration of every thirty days as a grievance unprecedented. An interest account, it is believed, is not usual between banks. In the western country it certainly is not." To this Jones replied: "He must be a sturdy debtor indeed who boldly withholds both principal and interest, and defends it as a matter of right."[3]
The office at Cincinnati was discontinued in September, 1820. In 1822 the debt to the Bank in Ohio and Kentucky had been reduced not quite $1 million.
These cases show why it was that, during the years of liquidation, the Bank of the United States found it impossible to maintain any circulation in
