amount of the capital stock paid in, the contribution of an amount equal to the amount of the respective shares of stock.11

As nearly every State bank issued circulating notes when this act was passed, its provisions afforded a valuable safeguard for the protection of the creditors of State banking institutions. But Congressional legislation in the year 1866, imposing a tax of ten per centum on the circulation of State banks, has resulted in driving such circulation out of existence.

The Attorney-General transmitted an opinion to the Superintendent of the Banking Department, September 3, 1884, holding that the provisions of the act, the language of which made the responsibility of stockholders depend upon circulation, no longer afford any practical benefit to such creditors. It will thus be seen that under this and other interpretations of the law, there was no liability except theoretically. Only stockholders of banking corporations issuing circulating notes were ratably responsible for the debts of the corporation according to their shares of stock. This liability has now been extended to the stockholders of all banks of discount and deposit, and is the same as the liability of stockholders of national banks. The stockholders are also subject to the liability imposed by the stock corporation law, but this liability ceases when the capital stock has all been paid in, and a certificate of such payment filed as the statute requires.

It should be noted that when the above mentioned Convention assembled a practice had grown up under the General Banking Law, of establishing banks in obscure places, in remote parts of the State, where little or no business was done, with a view of obtaining a circulation merely, and doing no other business. This circulation was then redeemed in New York or Albany by the agent of the bank, at one-half of one per cent. discount, and again put in circulation without being returned to the bank, thereby enabling the bank to redeem its own paper at a discount, and again put it in circulation in the same place where it was redeemed.

A statute passed April 12, 1848 (ch. 340), appears to be enacted for the purpose of breaking up that practice; and to insure obedience to its requirements. the legislature provided that the president and

41 Empire City Bank, 18 N. Y. 199; 17 How. Pr. 323; 15 N. Y. 9; 21 id. 9; 22 id. 9.

cashier should, in every report made to the Comptroller, state that their business had been transacted at the place required by that act, and that such report should be verified by their oaths.

By an act passed April 10, 1849 (ch. 313), incorporated banks were authorized to reorganize under the General Act of 1838.

OFFICE OF SUPERINTENDENT OF THE BANKING DEPARTMENT. The banks continued to make their reports to the Comptroller until 1851, when a law (ch. 164) was passed, April 12, creating the office of Superintendent of the Banking Department. He was vested with the general supervision of all moneyed associations, except insurance corporations, existing or operated under State laws, and with supervision of individual bankers operating under the banking laws. Reports were made to him quarterly, and when they issued circulating notes, they deposited security for their redemption. The act of March 20, 1857, placed the savings banks of the State under his supervision. Trust, loan, mortgage, guaranty and indemnity companies or associations were required to report to him semi-annually by chapter 324 of the Laws of 1874. By an act (ch. 613, Laws of 1875), passed June 21, 1875, corporations for the safe-keeping and guaranteeing personal property were also placed under his supervision. The institutions over which he has supervisory powers are regularly examined, savings banks biennially, all others at least once each year, may also be examined whenever in his discretion he deems proper. (Sect. 8, ch. 689, L. of 1892.) The Superintendent gives a bond, in the sum of $50,000, for the faithful discharge of the duties of his office, and is prohibited from being interested in any corporation in the class under his supervision, and is prohibited from being interested as an individual banker. He makes digests of the reports of the various institutions, which are incorporated in his two annual reports to the legislature. The expenses of the department are paid by the institutions under its supervision. By an amendment (ch. 54) adopted in the year 1902, it is made his duty to appoint a second deputy whose especial province is the supervision of building and lot associations and of mortgage, loan, or investment corporations. The amendment of the law by ch. 143 of 1908 placed in the hands of the Superintendent of Banks the same power with reference to the

and

liquidation of delinquent corporations as is given to the Comptroller of the Currency with relation to national banks. The Superintendent receives his appointment from the Governor and Senate, and holds office for three years. Those who have been appointed to the office

INCREASE OF BANKING CAPITAL.

The rapidity with which banks multiplied from 1848 to 1853 is shown by the remarkable increase of banking capital, as compared with previous years. From 1843 to 1848, the increase was $735,512, while from 1848 to 1853, the increase exceeded $32,000,000. The stability of our banks during those years is also apparent from the fact that during the financial embarrassment of 1854, the banks of this State, with only a single exception, satisfied the demands of their bill-holders, without resort to the securities deposited with the Banking Department.

REDEMPTION OF BANK NOTES.

By the act for the Redemption of Bank Notes (ch. 202, Laws of 1840), each bank was to appoint an agent in Albany or New York to redeem its circulating notes, and the holder was authorized to present them at such agency for redemption, and if the agent failed to

redeem them at one-half of one per cent. discount, then the bank was to pay interest at the rate of twenty per cent., and if such redemption and payment of interest was not made at such agency within twenty days from the time when the first demand was made, then the Comptroller was to give ten days' notice to the bank to redeem, and if it failed to do so then, he was to give notice that he would redeem out of the securities in his hands. Thus requiring, when the demand was made at the agency and not at the bank, that the demand should. be repeated at the agency on the twentieth day thereafter, to authorize the Comptroller to act. No proceedings, therefore, could be had by that officer until after the second demand was made. The only penalty for non-payment on the first demand at the agency was the liability to pay interest at twenty per cent., but when the second demand was made on the twentieth day, then the bank was clearly in default; the Comptroller gave it notice to redeem, and if it did not within the ten days, he further gave notice that he would redeem out of the securities in his hands.

It was enacted in 1851 (ch. 203), that it should be the duty of every corporation, banking association and individual banker outside of the cities of New York, Albany, Brooklyn and Troy to redeem and pay on demand all circulating notes issued by such corporation, banking association or individual banker, presented for redemption or payment at the office of their said agent, in the city of New York, Albany or Troy, at a rate of discount not exceeding one-quarter of one per

cent.

The provision to be found in section 7 of the act of 1838, that to secure the payment of one-half of the whole amount of circulation bonds and mortgages might be transferred to the Comptroller, was not well considered, and this mistake of judgment was not remedied until April 29, 1863, when it was enacted (ch. 241), that from and after the passage of this act, the securities hereafter to be deposited with the Superintendent of the Banking Department for notes for circulation to be issued to any corporation or joint-stock association for banking purposes, or individual banker, should be stocks of this State and of the United States, in the following proportions, that is to say, not to exceed two-thirds per centum in United States stocks, and not less than one-third per centum in stocks of this State; both stocks to be equal to or be made equal to stocks yielding interest at

the rate of six per centum per annum; and the securities then held by the Banking Department, so far as the same consist of United States stocks and stocks of this State, might be adjusted on the application of any party concerned, so as to be in accordance with the provisions of this law.

In 1854, the banks had on deposit in the Banking Department bonds and mortgages to the amount of nearly $7,000,000.

TAXATION.

Bank stock was first taxed in this State in 1823, in which year the legislature enacted (ch. 262, §§ 14, 15 and 16), that all incorporated companies receiving a regular income from the employment of capital were to be considered as persons and liable to taxation on the amount of their real and personal property, deducting from the latter the amount of stock held by the State or by any literary or charitable institution. The tax or assessment was made, levied and collected in the same manner as in the case of individuals, and was deducted from the dividends of the stockholders. A bank, however, was given the privilege of paying directly to the treasurer of the county in which it transacted business, ten per cent. of its income, and, if it availed itself of this privilege, no tax could be imposed.

Commenting on this statute, 42 Mr. Justice HUNT remarks that it was passed at the instance of the then Comptroller of the State, and that the banks were averse to it. It nevertheless remained in force till superseded by the Revised Statutes in 1828. No decisions of cases arising under this act have been reported.

The Revised Statutes provided that the capital stock of all moneyed or stock corporations, deriving any income from their capital or otherwise, should be taxed and assessed in the same manner as other real and personal estate of the county, excepting stock held by the State and literary and charitable institutions.

The first reported decision arising under this act was that of Ontario Bank v. Bunnell,43 in which it was decided that a banking corporation located in a village authorized by law to raise money by tax for certain purposes was liable to pay its proportion of the village taxes; and when such taxes were directed to be assessed on the free42 People v. Dolan, 36 N. Y. 59. 43 10 Wendell, 186, Sup. Ct. 1833.