Supreme Court of the United States held that these laws withdrew the assets of the bank from the note-holders, who were entitled to payment by contract. If the charter had been repealed, which it had not, this would make no difference. The State had no right to withdraw the assets. If the construction of the State Court was good, "the bank had no proper capital which was bound by its contracts, and this would render it extremely difficult to maintain the validity of the charter" since its notes would be bills of credit.[1]
The law of the matter was then summed up to that date as follows: "The cases of Briscoe vs. the Bank of Kentucky and Darrington vs. the Bank of Alabama have settled the question [of the power of the States to make corporations to issue notes] in reference to such banks as were involved in those cases; but the principal ground on which such bills were distinguished from bills of credit emitted by the State was that they do not rest on the credit of the State, but on the credit of the corporation derived from its capital stock."
When, in 1846, the trustees of the Real Estate Bank were asked why the collections were so tardy, their secretary replied that the loans were first used to pay old debts; that credit was so easy that many were seduced into borrowing imprudently; that many mortgaged their land at such a high valuation that they would now rather surrender it than pay; that some were waiting for a further depreciation of the State securities, forgetting accumulating interest; that many hoped in some way to escape payment. The Governor at that time was alarmed at the repudiation sentiment and at the irritation produced by the collections for the State Bank.
In 1846, an amendment was adopted to the State Constitution: "No bank or banking institution shall be hereafter incorporated or established in this State." When this amendment was put to vote in the Legislature there was not a vote against it.
The State Auditor, in his report of 1848, called attention to the fact that $154,000 of the bonds of the State had been sent to Washington eight or nine years before, to be sold to the Secretary of War, who refused to receive them. They were still lying in a Washington bank.
J. M. Curran instituted ninety-four suits against the bank, in 1849, for State Bank notes to the total amount of $9,355, and recovered that amount, with $5,314 damages. He won at every step up to the Supreme Court of the United States. With accumulated interest the amount became $20,883. Assets of the bank, which stood on the books at $109,720, were sold under judgment to satisfy this debt.
It appears that the banking houses which were built by the Bank of the State of Arkansas were extravagant and also were such buildings as could not be converted to other uses. The one at Little Rock which cost about $28,000, in 1840, was sold in 1845 for about $200. The others sold at very much the same loss. The one at the Post cost $16,000. It was bought
- ↑ 15 Howard, 304. (1853.)
