50 cents on $1. The president was arrested and imprisoned, but he compromised and was released.[1] There was a clause in the charter of this bank, of the kind mentioned above,[2] that various ecclesiastical and educational societies might at any time subscribe shares at par, with their funds, which shares should not be transferable, but should be withdrawable on six months' notice. In the first case of trouble, of course, the question arose whether these were deposits or shares in the capital, involving the question whether the owners were debtors or creditors in bankruptcy. In the case of the United Society against the Eagle Bank,[3] it was held that the society could not, after the insolvency of the bank, withdraw its shares or recover the amount as a debt of the bank. Its position was that of a stockholder. The case of the Bishop's Fund vs. the Eagle Bank,[4] involved the same point. The Eagle Bank had also $80,000 or $90,000 deposited by the New Haven Savings Bank, "all money which it had received," at four per cent. interest. An attempt to break down the special assignment in favor of the Savings Bank failed.[5]
New York.—The scandals which had occurred in the State of New York in connection with legislative charters for banks led the Constitutional Convention of 1821 to put a provision in the Constitution that a two-thirds vote of both Houses should be required to incorporate a bank. This provision proved entirely useless for its purpose. It only made it necessary to take more comprehensive and elaborate measures when attempting to secure charters, and strengthened the monopoly of note issue in the hands of the existing banks.[6]
In 1824 the charter of the Chemical Bank of New York was connected with great political and legislative corruption. It was also mixed up with the election of that year.[7] The lobbyists of the bank were indicted for using improper means to affect legislation.[8] Forty-seven charters were applied for in New York in 1824. Niles said, "It is to be feared that we are getting mad again." There were seventeen banks and forty insurance companies already.[9]
There was great prosperity at New York. Three thousand new buildings were being erected.[10] In the spring of 1825 the exchange with England showed that our currency was as good as theirs and our mint was reported well supplied with bullion silver and foreign coin.[11] There was abundance of capital, the stock of the Morris Canal and Banking Company was subscribed at Philadelphia twenty times over, and that of the Blackstone Canal at Providence three times over.[12]
In 1825, the banks of New York City agreed no longer to accept on deposit the notes of country banks which did not keep a deposit and an account with them. The "Evening Post" said that the city banks had, within twelve months, been at the expense of sending home $25 millions of country bank notes for redemption; they had suffered losses by the Eagle
