money," and reached a maximum amount of $1.5 millions. The certificates were redeemed in specie at Milwaukee, and there were agencies at Chicago, Detroit, Buffalo, and St. Louis, at which the notes were redeemed with drafts on New York. The notes were unflinchingly redeemed. In 1846 the Legislature repealed the charter of the Insurance Company, but did not instruct the Attorney-General to institute proceedings for forfeiture. The company was re-organized under the free banking law of Wisconsin. Its original founders having either died or left it, it failed a few years ago.[1]
The Secretary of the Territory reported to the Secretary of the Treasury in 1848, in regard to Smith's money: "It constitutes, in a great measure, the paper circulation of the eastern portion of the Territory, and indeed of northern lllinois."[2] This currency was often denounced, and the bankers of Chicago appear to have made constant war on it, but we get the impression that it was the best currency there was in the Northwest before the civil war.
In the Constitution of 1848, the Legislature was forbidden to create any bank in any way, unless the question of bank or no bank should have been decided at a general election in favor of banks. Then it might create banks by general or special law, but every such law must be ratified by a majority at a general election, before it should be valid.
A free banking law was passed in 1853. Under it the deposit of first mortgage bonds, on a first-class railroad, at not over 80, and not more than $8,000 per mile, as a security for circulation, was allowed. In this State also the possibilities of mischief in this free banking system were amply manifested. It would be a very great mistake to suppose that that system, where it had been tried before the war, had inspired confidence. In the majority of cases the contrary was the case.
Out of $5.3 millions on deposit in the Banking Department, in 1858, $2.3 millions were Missouri bonds, which were losing credit on account of the large issues.
In August, 1858, a number of the private bankers of Chicago threw out the notes of twenty-seven Wisconsin banks because the currency had been greatly increased by banks, "located at inaccessible points, having no capital, doing no banking business, providing no means whatever for the redemption of their issues, and in many instances having not even an office or known place of redemption."[3] This led to the formation of an Association of forty-five Wisconsin banks to enforce redemption on a number of their comrades, specified by name, which were considered "wild."
On account of the depreciation of stocks the Banking Department found it necessary to call on the banks for more stocks or a reduction of circulation, October 15, 1860. The Legislature, however, in February recommended the Comptroller to refrain from such demand, in accordance with existing law, until it could act. The Department held more than $3 millions
