In 1807 the Treasurer was authorized to subscribe for the shares which had been reserved for the State in the Cape Fear and Newbern Banks, paying in three annual installments, with four per cent. interest. After paying the last installment, he might borrow the same amount from each bank "until the dividends received be sufficient to pay off the sum borrowed." A law of 1809 seems to show dissatisfaction with the Banks of Newbern and Cape Fear. As they were forbidden to issue notes under $1, it must be inferred that they had done so. The Governor was ordered to appoint State directors, according to the power reserved in the charters, in virtue of the State subscription. Annual reports were to be made of the outstanding circulation. If notes were issued beyond the lawful limit, the charters were to be forfeited. The banks were not to issue notes on account of their deposits beyond the minimum amount of them in the previous year. In the same year £5 penalty was imposed for passing any note under 10 shillings, because, as the preamble states, "the circulation of promisory notes or due-bills, by individuals, for small sums, has become so general in some parts of the State as to be very inconvenient and injurious to travellers and others."
At the following session, it is ordered that the banks be proceeded against for the tax laid on them in 1809, as delinquent sheriffs are proceeded against, and the State directors are ordered to examine the cash in the vaults of the banks as often as they think proper, and to report to the Legislature annually, whether the published statements are correct.
In 1810 it was enacted that a bank should be established "in the State." It was to have $1.6 millions capital, of which the State might subscribe $250,000; three-fourths of the subscriptions were to be in gold and silver, and one-fourth in the paper currency emitted by the State in 1783 and 1785, which was not afterwards to be a tender either to or from the bank. All judgments for and against the bank were to be in gold and silver. The State dividends were to go to redeem the paper currency. The State was to pay its subscriptions in United States stocks or in specie. There were to be six branches; it was to last until 1830, and no other bank was to be chartered during that time. It seemed to be hoped that it would absorb the two existing banks, for their stockholders were allowed a priority in subscribing to the stock of the Bank of the State. They did not avail themselves of it. The State Bank was to issue no notes under $1.
The subscriptions to this bank disappointed expectations, and the paper currency could not be retired. Accordingly at the next session greater inducements were offered; four per cent. might be reserved from the dividends due to the State, and the charter, with monopoly, was extended to 1835, if the bank would redeem the State paper by 1817, giving either its own notes or specie, at the option of the holder, and at the rate of $1 for 10 shillings. When this was accomplished the Governor was to make proclamation that the State paper was no longer a tender, and it was to cease to be such except to the bank; but if the funds did not prove sufficient to redeem it all before the bank expired, it was to be once more a good tender. Dividends
