liquidate all its affairs. Two more acts are found forbidding unauthorized note issues, the first, March 12, 1845; the second, March 2, 1846, extended the time after which the State Treasurer should not receive or pay out such notes.
In 1845 the nomenclature of the Ohio currency was given as "yellow dog," "red cat," "smooth monkey," "blue pup," and "sick Indian."[1]
Michigan.—The Governor made a contract, June 1, 1838, with the Morris Canal and Banking Company,[2] by which they became the agents of the State, to sell the $5 millions loan. They sold and accounted for $1,187,000. July 1, 1841, the interest was not paid on these bonds. In February, 1843, an arrangement was made to fund the interest until 1845. As the bank could not sell any more and was urged by the Governor, it proposed that he should deliver all the bonds at once on a sale to the mentioned bank and the Bank of the United States, to be paid for in installments, one-fourth by the former and three-fourths by the latter. He agreed. One million was paid before both banks became bankrupt. In the meantime the bonds had been hypothecated in Europe by the Bank of the United States as security for its borrowings there. Michigan refused to pay more than she had received.
The Bank Commissioners in their report, January 18, 1839, said: "Standing, as Michigan does, upon the ruins of her credit and currency, it behooves her to carefully examine the causes which have precipitated to almost entire destruction the edifice so lately erected, and, by the light of other examples and her own experience, to rear upon a safer and surer foundation that which her present condition calls upon her to establish."
"On the 15th day of March, 1837, the act popularly entitled the 'general banking law' was passed, upon the plausible principle of introducing a free competition into what was considered a profitable branch of business heretofore monopolized by a few favored corporations. In a little more than year forty-nine banks were organized, with a nominal capital of $3,915,000, and about forty went into actual operation under its provisions. These institutions professed to have an actual and available capital of $1,745,000; thirty per cent. of the nominal capital being presumed to have been paid according to law, in gold and silver. They were authorized to issue and to put into circulation bank bills to the sum of $4,362,500, being twice and a-half the amount of capital paid in and possessed. The feature of the act which authorized banking under the suspension law (that is to say, giving the sanction of law to the issue of promises to pay, not liable to redemption in gold and silver on demand) gave an irresistible impulse to their career, by opening the door for the debtor to liquidate his liabilities by transferring to
- ↑ 68 Niles, 272.
- ↑ This company was founded in 1836. E. R. Biddle was president. He had no capital, but undertook iron smelting with anthracite coal, having borrowed from the Canal and Banking Company $180,000 on bonds payable in iron. These bonds were transferred to the State of Michigan with other securities to guarantee the unpaid part of the bonds of that State; which contract had been assumed by the United State Bank. (Gouge; Journal of Banking, 137.)
