Pennsylvana.—The Bank of Pennsylvania was incorporated March 30, 1793, for twenty years. Its charter was renewed in 1810 for twenty years longer. At one time it had four branches, but they were not all maintained. In 1796, the State obtained from this bank, as dividends on the shares owned by it, about $100,000 per annum, which paid nearly all the State expenses.
In 1796, a defalcation was discovered in this bank, amounting to $111,000, and overdrafts for $100,000 more. This was a republican bank, some of the leading republican politicians of Pennsylvania being in control of it. As all banks in this period had a political character, their doings and fortunes were discussed in the partisan newspapers just as the personal qualifications of candidates were discussed.[1] In the financial distress of 1796, Madison thought that the banks were powerful to persuade people to sign petitions in favor of Jay's treaty, on account of the general dependence on bank accommodation.[2]
The Philadelphia Bank was chartered March 5, 1804, having previously been in operation as a partnership. Its first period was ten years; renewed in 1806 for ten more; in 1809 it was authorized to institute branches, of which it established four, but not all were maintained. At this time the farmers had come to believe that the prosperity of cities was largely due to banks. In 1810, the Farmers' Bank was established in the county of Lancaster, and others in other parts of the State. March 19, 1810, unincorporated associations were forbidden to issue notes; but they continued to do so, and circulating notes were emitted by bridge and turnpike companies. The Farmers' Bank of Lancaster made such large issues that it paid dividends of more than 12 per cent. per annum. This greatly stimulated the desire for banks.
In 1810, the State of Pennsylvania owned $1 million in the Bank of Pennsylvania, $523,300 in the Bank of Philadelphia, and $75,000 in the Farmers' Bank, which had just been chartered. It also had shares in the Mechanics' Bank. In 1810 it subscribed $396,920 to the Bank of Pennsylvania, whose capital was then raised to $2.5 millions.[3] Perhaps the most influential publication on financial matters during this period was Blodgett's Economica, 1805. It favored an increase in banks, the use of public securities as money, land security for bank notes, etc.
The Farmers' Bank of Delaware was chartered February 3, 1807, with a capital of $500,000, of which the State took one-fifth. It was to be the State bank, but was free from fantastic features.
Virginia.—The Bank of Virginia was incorporated January 30, 1804, to last until 1818. It was to have $1.5 millions capital, of which the State subscribed $300,000, borrowing that amount from the bank at four per cent. The lowest denomination of notes was $5. In the following year it was made unlawful to pass a note of an unchartered bank. The next bank chartered by
