establishing American independence. It came into existence as the result of a meeting of citizens of Philadelphia, which was called to consider plans for the purpose of raising money for the relief of the Revolutionary Army. At this meeting, held June 17, 1780, a resolution was adopted to open a security subscription to the amount of £300,000, Pennsylvania currency real money. The following articles were incorporated in the plan submitted by the promoters of the bank to Congress.

enacted by the authority aforesaid, that the said corporation to be made and created by this act shall not, at any time during the continuance thereof, deal or trade, or permit or suffer any person or persons whatsoever, either in trust or for the benefit of the same, to deal or trade with any of the stock, moneys, or effects of or any ways belonging to the said corporation, in the buying or selling of any goods, wares, or merchandise whatsoever," except bullion. The penalty for a violation of the foregoing prohibition was declared to be a forfeiture of treble the amount of the goods or merchandise so purchased or traded for, to be recov ered by action of debt, wherein no privilege, injunction, restraint, protection, or wager of law should be allowed. § 27.

LOANS TO THE KING PROHIBITED. By section 30 the bank was prohibited from loaning or advancing any sum of money to their Majesties, their heirs or successors, without the authority of Parliament; and from purchasing lands or revenues belonging to the Crown; and the penalty for a violation of this prohibition was a forfeiture of treble the amount loaned, one-fifth to go to the informer. TRADING IN BULLION ALLOWED. By the 28th section it was provided that the bank might buy and sell gold and silver bullion, and bills of exchange; and might sell goods really and bona fide left or deposited for money lent thereon, if not redeemed at the time agreed on, etc. Statutes at Large, quarto ed., Vol. III, p. 558.

THE BANK OF SCOTLAND. The act of the Scotch Parliament, creating this institution, declares "that it shall not be lawful" for the managers, etc., of this bank, "on any pretense whatever, to follow any other trade with the joint stock to be employed in said bank, or any part thereof, or profits arising therefrom," than that of banking, and the same act provides that if the directors should be found guilty of lending, on account of said bank, any money to the KING, they shall be liable for every such fault, to triple the value of the money so lent. THE BANK OF IRELAND. The act of Parliament establishing this corporation prohibited loans to the KING, and provides, "that to the intent that the subjects of the King may not be oppressed by the said corporation, by their monopoly of any goods, wares or merchandise, it shall only be lawful for the corporation to deal in bills of exchange or in buying or selling bullion, gold or silver, or in selling any goods, etc., really and bona fide left or deposited with the said corporation for money lent or advanced thereon and not redeemed at the time agreed on." THE BANK OF FRANCE is "forbidden to traffick in anything except money." Rees' Encyclo., article "Bank; Cleveland's Banking Laws, ix.; Lawson's Hist. of Banking, 362; 1 McCulloch's Dict., 121; Levi's Mercantile Law, 157.

Moulton's History of Banks, 1.

"Item. That the board at every quarterly meeting shall choose two directors to inspect and control the business of the bank for the ensuing three months. Item. That the inspectors so chosen shall, on the evening of every day, Sundays excepted, deliver to the Superintendent of the Finances of America a state of the cash account, and of the notes issued and received."

The capital stock was divided into shares of $400 each, in money of gold and silver, to be procured by subscriptions. Twelve directors were appointed to manage the affairs of the bank.

Whether from the want of capital in individuals, or from want of faith in the institution, in the fall of the year 1781, of the one thousand shares proposed, two hundred had not been subscribed, and it was some time after the business of the bank was fairly begun before the sum received, upon all the subscriptions put together, amounted to $70,000. Under these circumstances the Superintendent of Finance subscribed above $250,000 of the bank stock, for account of the United States. Upon this fund principally the operations of the institution were commenced. The bank was soon viewed as the source and as the support of credit, both private and public. In the beginning of the year 1782, the United States owed considerable sums of money. The requisitions of Congress for $8,000,000 for the expenses of the coming year did not call upon the States to pay before the first of April, and in fact they produced no effect for some time after, and even on the 30th of June the sum paid in did not amount to $30,000. "At that period the public credit had gone to wreck, and the enemy built their most sanguine hopes of overcoming us upon this circumstance; but at that crisis our credit was restored by the bank." The treasury of the United States was so much in arrear that scarcely was the public money paid in with one hand, before it was necessary to borrow it with the other. On the 1st of April, 1782, the United States possessed stock in the bank to the amount of $252,918 28-90, and they were then indebted to the bank for money borrowed, $300,000. On the 1st of July, 1782, the United States held $253,000 28-90 in stock, and were indebted to the bank $400,000. The directors some time after becoming uneasy at this heavy loan, called for payment; in consequence of which the Superintendent of Finance sold out stock held by the United States to the amount of $200,000, and paid $300,000, in part of the debt; so that

on the 1st of January, 1783, the United States held stock for not quite $54,000, and owed the bank $100,000.

On the stock owned by the United States, they received a dividend. from ten to sixteen per cent. per annum, and paid but six per cent. upon what they borrowed, but the direct loans of the bank were obtained by discounting the notes of individuals, and thereby anticipating the receipt of public money; besides which, the persons who had contracted for furnishing rations to the army were also aided with discounts upon the public credit.

The bank was established at the close of 1781 with a recommendation by Congress that the several States should grant charters to the

"And in addition to all this it must be acknowledged that the credit and confidence which were revived by means of this Institution, formed the basis of that system through which the anticipations made, within the bounds of the United States, had upon the 1st day of July, 1783, exceeded $820,000. There was due also upon that day to the bank (directly) nearly $130,000. If, therefore, the sums due (indirectly) for notes of individuals discounted, and the like, be taken into consideration, the total will exceed $1,000,000. It may then be not only asserted, but demonstrated, that without the establishment of the national bank, the business of the Department of Finance could not have been performed." But the United States were not alone benefited by this institution. The legis lature of the State of Pennsylvania, being unable to pay the officers of the army, granted them certificates, and mortgaged the revenue of the excise for payment of the interest. When the interest became due the revenue was not collected, and the distress of the officers was great. On that occasion, without any particular application, the bank advanced the money and took the reimbursement when the revenue was collected. Afterward, on the application of the legislature, they advanced £5,000 for the defense of the frontiers, when the enemy's row-boats took vessels within the very ports of Philadelphia, and the State had not the means of granting protection against so inconsiderable though insulting an enemy; on that occasion the bank, by an advance of about £25,000, enable the merchants to fit out a ship which, within a few days, not only cleared the bay and river, but captured a cruiser of twenty guns belonging to the British fleet. Opposition to this bank gradually increased in Pennsylvania. This antagonism was largely due to demagogism, and to fear arising from the fate of the Continental currency. In 1785, petitions poured into the Pennsylvania legislature praying that body to repeal the bank's charter, and in September of that year, the legislature, powerless to resist the popular demand, repealed the charter. Two years later, however, in March, 1787, the bank obtained a new charter from the State, limiting its existence to fourteen years, and after successive renewals it became, December 3, 1864, a national bank, with a capital of $1,000,000, and it is still in existence. Official Statement of the Accounts of the United States; Lalor's Encyclo., 207; Rees' Encyclo., article 'Bank; " Lewis' Hist. Bank of North America; Hildreth's Hist., Vol. III., 405; Lossing's Encyclo.

institution. This was done by Pennsylvania on the 1st of April, 1782.

April 11, 1782, an act was passed by the legislature of the State of New York, entitled "An act to prevent the establishment of any bank within the State, other than the Bank of North America, and for incorporating the same within this State." The act begins thus: "Whereas, the United States, in Congress assembled, did on the 26th day of May, 1781, resolve in the words following" the act then recites the ordinance of the Continental Congress, and adds the following section:

"I. Be it, therefore, enacted by the people of the State of New York, represented in Senate and Assembly, and it is hereby enacted by the authority of the same, That the said bank mentioned in the said ordinance, shall be, and is hereby, incorporated and made a body. politic within this State, by the name and style of The President, Directors, and Company of the BANK OF NORTH AMERICA, with all and singular the powers, privileges and immunities in the said ordinance specified, and that no other bank, public or private, shall be established within this State during the present war with Great Britain, on pain of the forfeiture of one hundred pounds for every offence, by every person concerned in such bank or banks, being thereof convicted in the Supreme Court of judicature of this State; which forfeiture shall go one-half to the complainant, and the other half to the treasury of this State."

Two other sections follow, making it felony without benefit of clergy to counterfeit its notes, or for any of its officers or servants to convert any property of the bank to their own use, and it concludes with the following proviso: "Provided always, and it is further enacted, that nothing in this act contained shall be construed to imply any right or power in the United States in Congress assembled to create bodies politic or grant letters of incorporation in any case whatever."

FIRST AND SECOND BANKS OF THE UNITED STATES.

The first bank of the United States was incorporated February 25, 1791. The capital stock was fixed at $10,000,000; $2,000,000 of

7 Greenleaf's Ed. Laws, Vol. I., 50; Lalor's Cyclo., 207; Flagg's Banks of New York, 1.

which was subscribed by the government, to be refunded in ten annual instalments. Twenty-five United States citizens constituted the board of directors, who served without pay. The notes of the bank were receivable for all debts due to the United States. The bank immediately went into operation. The government disposed of its $2,000,000 of stock within the specified time, realizing a profit of fifty-seven per cent. on the original investment.8

The second bank of the United States was incorporated April 10, 1816, and began business January 7, 1817. The capital was not to exceed $35,000,000 and the charter required the directors to be resident citizens and to serve without pay. The bank was a public depository, and allowed to establish branches and issue circulating notes receivable in payment of debts due the United States, and, in consideration of the sum of $1,500,000 to be paid to the United States, it was agreed that no other bank, outside of the District of Columbia, should be established during the ensuing twenty years, the period of its charter. During the first three years of its existence it encountered numerous obstacles, which almost resulted in failure, but after 1820 it gradually recovered and surmounted all opposition until July 16, 1832, when President Jackson vetoed the bill granting a recharter.

During the year 1833 the government deposits were removed from the Bank of the United States to various State banks, by the order of the Secretary of the Treasury. The bank continued its existence by obtaining a charter from the State of Pennsylvania, February 18, 1836. The disastrous history of the bank under this charter, from 1837 until its last failure in 1843, is shown by the enormous decline in the value of its stock from 137 in 1837 to 13 in 1843. On finally closing the affairs of the first bank of the United States, the stockholders received a premium on the par value of their stock of eight and one-half per cent. The second bank of the United States paid nothing to its stockholders, the entire capital of $28,000,000 having

With the expiration of the existence of the institution, a large number of State banks were created. In the course of four years (1811-15) one hundred and twenty-three State banks were created, with an aggregate capital of $$40,000,000, and an estimated emission of notes to the amount of $200,000,000, a large portion of which, in the Middle States, were issued as loans to the government. Lossing's Encyclo.