Page:A History of Banking in the United States.djvu/396

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374
A HSTORY OF BANKING.

prepare for resumption." They tried to find out the value of the assets. The amount of paper under protest was $4.6 millions, of which there was in suit $1.9 millions. Of the bills discounted, not under protest, twenty per cent. had been extended, under the relief law of February, 1840. Of the remainder, $1.7 millions, a large part consisted of paper which had been extended under the relief law of 1837, "which will take its place at maturity among protested paper or paper further extended. It follows that of the immense debt due to the bank, hardly ten per cent. exists in a form which justifies any calculation upon its being made available or active within any definite period. * * * The new transactions within the last year or two have been few, and they are generally safe; but it is the load of debt accumulated in former years, under which the bank broke down, in 1837 and 1838, that has, under the State policy of extension, been weakening its resources and eating out the substance of its assets constantly."

A report of the president of the Mobile branch, at the same time, stated that the errors which had been discovered in the bills discounted amounted to $378,036, and in the bills protested to $52,853. As the notes which had been discounted by that bank since it began amounted to $48 millions, he thought these errors comparatively slight.

The Commissioners on the Decatur branch reported that they found its books "kept in a style of the utmost clerkly accuracy." "From all the information they have been able to obtain, they have ascertained the amount of bad debts to have swollen to a fearful and an enormous height." They estimate them at $1 million. The amount of debts in suit was $981,966. The Commissioners are afraid that the plan of demanding security on property for accommodation loans will arouse the animosity of the public against institutions, and they find that, in spite of care, "the property substituted has been at the most inflated rate of valuation." The president of this branch reported that he had hoped, under the extension law, to recover all the debts "which had the least appearance of being good," but he regrets to say that "many of undoubted character have been suffered to remain suspended, without any apparent effort being made to comply with the requisitions of the bank." This is valuable testimony to the only natural and inevitable effect of the extension laws,—namely to induce the honest and solvent debtors not to pay, lest they should, in that way, fail of some indulgence which their negligent comrades would get. If any did pay, there would be a glaring case of that inequality which the advocates of Banks of the State were always trying to avoid.

The president of the Bank of the State, in 1840, said of the independent Bank of Mobile: "It has successfully withstood all the commercial and financial derangements the country has recently suffered, and now deservedly sustains a high character for credit and strength surpassed by none in any section of the country."

The suspension of the Bank of the State was sanctioned April 27, 1841, until the Legislature should otherwise order. The requirement in the act of