Imagens da página
PDF
ePub

as individual bankers, to issue, "loan and circulate as money" a certain kind of promissory notes, still leaving the prohibitions of the Restraining Act in full force as to every other evidence of debt. (x)

We proceed to state some of the distinctive principles of the third and, as yet, the latest system of New York Banking, introduced by the General Bank Act of 1838.

The systems of 1829 1838

trasted.

Under the safety fund system of 1829, banks possessed, with other specified powers, the express & 1535 conpower to carry on the business of banking "by issuing bills, notes and other evidences of debt," payable on demand and without interest. (y) They had the power to create paper money at pleasure, within the statutory limit as to the amount. (2)

But the general banking law of 1838 excludes this power from the banking system which it establishes. This is effected; [1] by separating the issue department from the banking department, and placing the former under the exclusive direction of a

(2) Chancellor Walworth, in Safford v. Wyckoff (4 Hill, 444), said, “The Act of 1838, which only authorizes a certain kind of notes to be put in circulation as money, leaves the restraining law in full force as to every other evidence of debt. These banking associations, therefore, are prohibited from Issuing any bills or promissory notes, or other evidences of debt, for the purpose of loaning them, or having them put in circulation as moneywhatever forms such evidences of debt may assume." See, also, Warner v. Beers (23 Wendell, 115, 158, 159, 188).

See 3, 6, of the Restraining Act, pp. 41, 42, post; also §§ 1, 2, 3, General Bank Act, pp. 81, 82, post.

(y) See note, 38 pp. 94, 95, post.

(z) See § 27, p. 36, post.

State Officer; and [2] by withholding from corporations and individuals organized or acting under the general law, any grant of power to loan or circulate any promissory notes except such as shall be received from the issue department, countersigned and registered in that department, (a) and bearing on their face the stamp of the government.

The two systems differ widely in the modes prescribed for securing bank issues. Under the system of 1829, the "bank fund" was created solely by an annual contribution of one half of one per cent. (not exceeding in all three per cent.) upon per cent.) upon the aggregate amount of bank capital. (b) This fund was liable for the payment of all the debts, exclusive of capital stock, of any of the safety fund banks that should become insolvent. (c)

By the system of 1829, the indemnity fund was limited to a certain sum, and was applicable to the payment of all the debts of insolvent banks exclusive of capital stock.

But by the system of 1838, securities in value, equal to the full amount of circulating notes issued, must be actually transferred to the Issue Department before any such notes can be given out or put

(a) The first fourteen sections of the general law relate exclusively to issues and to regulations for the creation and government of the Issue Department at Albany. See §§ 1 to 15, pp. 81-91, post.

(b) See §§ 2, 3, 4, pp. 29, 30, post.

(c) See §§ 4, 9, 10, pp. 30, 31, 32, post.

in circulation; and these securities are to be held in pledge exclusively for the redemption in specie of such circulating notes. (cc)

Under the one system, the fund was raised by a small percentage upon capital, without reference to the amount of issues; under the other, the fund held in pledge is proportioned to the issues, without any reference whatever to the amount of capital. (d)

The monopoly of banking, which had been created by the Restraining Acts of 1804, 1813, 1818, and 1830, was swept away by the general law of 1838.

Banking had become a franchise, derived only by special grant from the government. Hence, bank charters had become "the motive and the means of corruption." (e) The legislature of 1838 broke up this monopoly by authorizing banking corporations to be organized under a general law. In other words, it was made lawful for any number of persons, without application to the government, to organize as corporations, for the purpose of "establishing offices of discount, deposit, and circulation," upon the terms and conditions and subject to the liabili

(cc) See § 12, p. 90, post.

(d) As early as 1837, Mr. Lloyd advocated in England the principle of separating the issue department from the banking department. But it was not until 1844 that Sir Robert Peel adopted it (coupled with the pledge of securities), in reference to the Bank of England on the renewal of its charter in that year. (Stat. 7 and 8 Vict. c. 32.) See note 29, pp.

82, 83, 84, post.

(e) See 23 Wendell, 185.

ties prescribed by the general law (f), and subject also to all general enactments of the State applicable to moneyed corporations which are not inconsistent with that law. (g)

By the general bank act, each corporation is authorized, without application to the legislature, to fix for itself its corporate name; to designate the particular city, town, or village, where its operations of discount and deposit shall be carried on; to determine the amount of its capital, and the number of shares into which it shall be divided; to fix the period of its corporate existence; and to provide by its articles for an increase of its capital, and the number of its associates, from time to time. (h)

Immediately upon the passage of the general bank act of 1838, the question as to its being a constitutional law was raised and discussed in the courts. The constitution of 1821 declared that the assent of two thirds of the members elected to each branch of the legislature should be requisite to every bill "creating, continuing, altering, or renewing any body politic or corporate." (j)

(f) See § 15, p. 91, post.

(g) In Talmage v. Pell (3 Selden, 328, 340, 341, 347), Gardiner, J., said, "If the legislature intended to authorize the creation of banking corporations, we cannot suppose they designed to provide for a privileged class, by exempting them from restrictions imposed upon all others, and deemed necessary to protect the public and stockholders against the fraud or improvidence of the agents who controlled them."

(h) See §§ 16, sub. 1, 2, 3, 4, 5, pp. 92, 93, 94, post; and § 20, p. 98, post. (j) See note 77, p. 297, post.

The general banking law did not receive such assent. It was passed by a majority vote only. The Supreme Court and the chancellor held that associations organized under the general law were in fact corporations. (k)

But the Court of Errors adjudged that they were not bodies politic or corporate within the spirit and meaning of the constitution; and that the law was constitutionally passed, although it did not receive the assent of two thirds of the members elected to each branch of the legislature. (1)

Afterwards, the Supreme Court held that they were corporations within the meaning of the Revised Statutes (1 R. S. 414, § 1), and like other moneyed or stock corporations, were liable to taxation on their capital. (m)

The Court of Errors affirmed the judgment of the Supreme Court, in Supervisors of Niagara v. The People, and held that associations under the general banking law were corporations within the meaning of 1 Revised Statutes, 414, § 1. (n)

It has now been directly and expressly adjudged

(k) Thomas v. Dakin (23 Wend., 9); Willoughby v. Comstock (3 Hill, 389); De Bow v. The People (1 Denio, 9); Talmage v. Pell (9 Paige Ch. R., 410). (1) Bolander v. Stevens (23 Wend., 103); Gifford v. Livingston (2 Denio, 380).

(m) Bank of Watertown v. Assessors of Watertown (25 Wend., 686; S. C. 1 Hill, 616) The People v. Supervisors of Niagara (4 Hill, 20).

(n) Supervisors of Niagara v. The People (7 Hill, 504). See 1 R. S. 414, § 1, p. 224, post.

« AnteriorContinuar »