The old Bank of Pennsylvania, founded in 1793, failed and went into bankruptcy in August, 1857. Its stock was very largely held by charitable companies and other associations of a like character, by trustees, guardians, and women. Charges of criminal conduct against the officers were, upon a trial, not sustained.
In 1858 the banks of Philadelphia tried to enforce a redemption of country notes; all notes of banks east of the Alleghanies being redeemed at the Farmers and Mechanics' Bank at one-fourth of one per cent. discount. The banks, however, became restive under this arrangement in May, 1859, and it came to an end. In 1861 an attempt was made again to enforce it by law, reviving the old law which had been repealed by the relief legislation of 1857.[1]
The Philadelphia clearing house was established in February, 1858.
The South escaped from the crisis of 1857 comparatively unscathed. Business was said to be healthy in that section, and there had been little wild speculation. The worst effects of the panic were not felt there until after January 1, 1858. Virginia was to some extent excluded from this description.[2]
Virginia.—A great number of banks were chartered in Virginia in 1851, 1852, 1853, and 1856, with a system of stock deposit on the New York plan. March 18, 1856, a law was passed to sell all the State stock in banks. It was re-affirmed April 3, 1858, with the expression of a determination to separate bank and State. An attempt was made to obtain a more uniform currency, April 2, 1858, by a provision that the branches should redeem at the parent bank, and that the independent banks should have a redemption agency at Richmond. The banks were all required to resume on the 1st of May or pay one-half of one per cent. penalty on that day, and the same amount monthly, retrospectively from the 1st of January.
Governor Wise, in 1857, held that, by the experience of that State, it was demonstrated "that an issue of bank notes is a heavy burden to a State without a center of trade," because all currency tends towards such centers. "This makes the issue of bank paper immensely costly to a purely agricultural people."
Another large group of new banks were organized in 1860.
The banks of North Carolina appear to have been prosperous about 1850. The Bank of the State paid eight and one-half per cent. dividend in 1849, and the Bank of Cape Fear six per cent.
By a law of 1850-1, each bank with its branches was regarded as a unit against every other bank with its branches. If one makes demands on another, it may be paid in its own obligations or those of any of its parts. Any person presenting a demand for redemption may be required to state whether he is acting on behalf of any bank. If he refuses to answer, he may be refused. Payments under this act are to be made in the notes of
