domestic or commercial purposes." He had cancelled $3.5 millions bonds which had been liquidated under the act of March 25, 1844, and the Bank of Louisiana and Mechanics and Traders' Bank had retired part of the bonds issued on their account, and were expected to retire more.
December 20, 1848, it was enacted that the stockholders of the Consolidated Association must pay their dues to it in specie, or by the delivery of State bonds, and that company was allowed to test in the court the liability of the State as a stockholder to share in the losses. In the case which was made up under this provision,[1] it was held that the State was not liable for the losses of the bank, by virtue of the shares which it possessed, because they were given as a bonus and would not be such if they carried a liability. The counsel for the bank in arguing this case (1850) said that Louisiana had, within a few years, made $1 million from her banks. Shall she evade a loss of one-sixth of that amount in "the only institution which has been unfortunate?"
There is no more eloquent commentary on the banking history of these States than the provisions about banking which they put in their Constitutions at the next subsequent revision. The Constitution of 1845 forbade the Legislature to pledge the credit of the State to anybody, and prohibited the creation of corporations with banking or discounting privileges.
Arkansas.—The Legislature ordered, December 22, 1840, that the banks should resume with those of Louisiana, Tennessee, and Alabama, "and shall not again suspend on any consideration whatever." At the same time they passed an appraisement law requiring two-thirds of the valuation or a stay of a year. In July, 1841, twenty men in Phillips County kidnapped the Judge before whom many executions were returnable so that he might not do his duty. The Real Estate Bank at Helena and the branch of the State bank at the Post having brought a great number of suits in that Court, the Judge was petitioned not to hold court. He insisted on doing his duty. Armed men took possession of the Court House and threatened to kill the Sheriff if he forced his way in. He desisted and the Judge was kidnapped.[2]
A Committee which was appointed in 1841 to examine the Bank of the State reported that they found at the Post of Arkansas a banking house which was one of the finest buildings in the State, but that the debts could not be collected, and that the banks could do no business for five years to come, except trying to recover the capital. They reported that at Fayetteville the books had disappeared, "alleged to have been stolen from the bank a few days before our examination commenced." The books had been found and were still legible, except that the cash book had been mutilated by cutting out all the pages which contained entries. The cashier, when interrogated, declared that he had made a false return of the specie, lest the fact should appear that the bank was in straitened circumstances. He was himself a defaulter.
