The state of things at the end of 1844 was thus described in the Governor's message: "A depreciated currency then universally prevalent has been withdrawn, and gold and silver and the paper of solvent banks have been substituted in its place." He attributed this to the laws which had put the banks in liquidation, and which had "demonstrated the grand truths which have been doubted by many; that banks are wholly unnecessary to supply a local currency; that money will, in the main, exist and circulate in every country in proportion to its exchangeable property; and that local banks, in fact, impede the equalization of the currency and manifestly tend to derange the exchanges." Banks may be useful in commercial communities, "but if former experience is to be any guide for the future, we must be satisfied that we, in the State of Illinois, are better without them than with them. * * * We ought now to be satisfied that without a greater and more general punctuality in the payment of private debts, it will ever be impossible to administer the affairs of a bank with safety to the people."
The trustees of the old State Bank of Illinois, in 1862, advertised a final auction of its remaining assets.[1]
This State also had a loss through its bankers. Bonds were hypothecated to McAlister & Stebbins, which were lost through their bankruptcy. An attempt to make an adjustment having failed, resolutions were adopted, February 27th, 1845, that those bonds should not be receivable for debts to the State, except at the amount which the State had realized from them, 26 cents on $1, with interest from June 17, 1841.
Delafield, a New York banker, contracted to take bonds for $583,000, but paid only $170,000 on them. He refused to return the bonds even if repaid. The State claimed that the sale by its agents had been illegal, in that the bonds had been sold on credit and for less than par. The case further resembled the Mississippi case in that the State won five per cent. by exchange which was alleged to offset the loss of interest in making it run from a date earlier than that on which the cash was paid to the State. The Court held that the agents had exceeded their powers; that the sale was below par, and on credit; that the State was bound in faith and honor to third parties, but that the second party was bound to scrutinize the credentials and commission of the agents.[2] This decision was made in 1841 and gave great encouragement to the Mississippi repudiationists.
Missouri.—The Bank of the State of Missouri was chartered February 2, 1837, for twenty years; capital, $5 millions, half by the State; the private subscriptions were payable in specie or certificates of the deposit of specie, in deposit banks of the eastern cities; the State subscription to be made by bonds payable to the bank after twenty-five years; the State funds to be invested in the bank; no notes to be issued until seventy per cent. of the private subscription paid up; the Governor to inspect the paid-up capital;
