In September the Illinois banks were not able to maintain their circulation. The Chicago "Times" said: "We believe the fiat has gone forth, and that all banks organized under the present banking law are worse than useless, either to the public or the owners."
In September and October, under the influence of the political disturbances, a very thorough reform of the currency of the Northwest was accomplished.[1]
The Illinois Constitutional Convention of 1862 adopted an article which forbade the creation of any banking corporation for any of the functions of banking. Notes under $10 were forbidden at once; those under $20 after 1864; and all bank-notes after 1866. Upon the submission of this Constitution to a popular vote, the banking article was rejected by about four thousand majority; and the whole Constitution by about six thousand.
In July, 1862, the Auditor of Illinois advertised the rates at which he would redeem the notes of ninety-three free banks. Five were at par, the others at from 49 to 95 cents—most of them at from 50 to 60 cents on the dollar.[2]
Missouri.—A general banking law was passed at the session of 1856-7; probably over a veto, since it is not dated. There might be no bank with less than $1 million capital, and no notes under $5; if any bank suspended for ten days, its charter was to expire; one-tenth of the capital must be paid in in specie before beginning; every bank, within one year of its beginning, must invest ten per cent. of its capital in bonds of the State, and also ten per cent. of any capital subsequently paid in; it must also save two per cent. of its net gains every year and invest them in State bonds, as a contingent fund. It might not loan on its own stock, nor employ more than five-eighths of its capital in exchange dealings; it must pay a bonus or tax of one per cent. of its capital and. issue not more than three times the specie on hand. Every bank of $1 million capital must have-two branches. A Bank Commissioner was to inspect the capital of every new bank, and to cause the notes to be printed and delivered to each bank to the lawful amount. There was no provision for the deposit of bond security. Nine banks were organized under the act, and it was provided that the Bank of the State might come in as the tenth. This law was suspended November 5, 1857, until November 1, 1858, on behalf of the Bank of Missouri and the others which had suspended specie payments. Debtors to the banks were to have an extension, on the payment of twenty per cent., giving security. The suspended bank paper might circulate, but the notes issued after the passage of this act must have a distinguishing mark.
Missouri currency, which had, through all the first half of the century, been amongst the very best in the Union, became, in 1859, one of the worst. It became uncurrent in Indiana, Kentucky, and Ohio, except Cincinnati.[3] The State was busy during this decade with "public improvements,"
