T^'lTv***^ ~ 2611 r 8 /Y4 Cornell University Library HG2611.I8M4 The early history of banking in Iowa 3 1924 013 951 870 Hntt OfoUcgp of 5\,0ticultu« At (Stovnell MttiwerHitH Cibcara BUI,I 3 Afterwards Cashier of an Illegal Bank in Illinois. 3 Charter, Sec. 2. 4, Ibid, Sec. 3. 5 Ibid, Sec. 7. 6 Ibid, Seven Directors, Sec. S. 7 Ibid, Sec. 7, 2d clause. 4 Early History of Banking in Iowa amount of deposits, the profits on hand, the amount of bills in circulation, the amount of debts due from the directors and stockholders, the amount due from other persons or cor- porations, not however, naming them, the amount of specie in bank, the amount of bills of other banks, the amount of their deposits in other banks, the amount of their real estate, and of other property not herein specified, the amount of capital actually paid in, and shall contain the true exhibit of the real state of said bank." The total amount' of all kinds of indebtedness of the bank at any time, over and above the amount of specie then de- posited, was restricted to three times the sum of the capital stock then subscribed and paid in; and in case of excess, the directors, under whose administration it should occur, were to be liable in their separate and private capacities "provided, the bank shall not be able to pay its liabilities ; and, -providedy also, that this shall not be construed to exempt the said cor- poration or any estate, real or personal, which they may hold as a body corporate from being also liable for, or chargeable with, such excess; but such of the directors as were absent, when the said excess was contracted, or who may have dis- sented from the resolution or act whereby the same was con- tracted, shall not be so liable." The management of the affairs of the bank was to be vested in a^board of directors^ of seven persons who were to be not only^ stockholders, but also residents and citizens of the Terri- tory. Public notice was to be given in some newspaper for at least sixty days previous to the time of holding the annual election on the first Monday in October. Directors^ were to be elected by a plurality of the votes* cast in person or by proxy. The directors were then to elect one of their number president. If a director ceased to be a stockholder, his office was to be considered vacant, and this or any other vacancy 1 Charter, Sec. 8. 3 Ibid, Sec. 12. 2 Ibid, Sec. S. ♦Ibid, Sec. 11. Organization of The Miners' Bank 5 was to be filled for the remainder of the year by the remain- ing directors. Provision was made that if, for any cause, the election of directors did not take place on the regular day, ' the corporation was not to be deemed to be dissolved; but the election could be held some other day as "regulated by the laws and ordinances of the said corporation." The bank was prohibited^ from holding any land, except such as might be necessary for the convenient transaction of its business, or bona fide conveyances in satisfaction of debts previously contracted, or purchases at judgment sales for the satisfaction of debts owing to it. Following the general course of bank charters of the time the corporation was denied the right of purchasing* or selling directly or indirectly, "any goods, wares, or merchandise,,un- less in selling the same when truly pledged by way of secur- ity, for debts due the said corporation, or purchasing the same at sal6s on judgments, which shall have been obtained for any debts previously contracted in the course of its dealings, and afterwards selling the same." A majority* of the board of directors were empowered to declare the semi-annual dividends; and the numbers of direc- tors to constitute the board of discount was to be regulated by the by-laws. General meetings* of the stockholders were provided for by three weeks previous notice in some newspaper printed in the county. Assignment? or transfer of stock was not to be considered valid until registration had been made on the stock-books of the bank. The bank was fully protected by the fact that no stockholder was capable of making any assignment or trans- fer of his stock until all notes, debts, dues or endorsements of whatever nature, either due or becoming due, to the corpo- ration were first paid. I Charter, Sec. 6. s Ibid, Sec. 14. a Ibid, Seo. 9. 6 Ibid, Sec. IS. 3 Ibid, Sec. 9. 7 Ibid, Sec. 16. 4 Ibid, Sec. 13. 6 Early History of Banking in Iowa The property' of individual members of the corporation, vested in corporate funds, was made liable in the same manner "as other personal property is liable by the laws of the terri- tory to the payment and satisfaction of his just debts to any of his bona fide creditors." Provisions were made for the levy and sale of the stock taken on execution, but before the sale could take place, it was provided : "that no property vested in the said corporate funds, shall be taken and sold until all the debts due or becoming due to the said bank, by such debtor, whether as a drawer or endorser or surety, shall be fully paid and dis- charged; and upon any execution being levied on any shares in said bank, it shall be the duty of the cashier of said bank to expose the proper book of the corporation to the officer, and to furnish him with a certificate, under his hand, in his official capacity, stating the number of shares the debtor holds in said bank and the amount of dividends declared and due thereon." The rate* of discount was restricted to not more than seven per cent, per annum on its loans and discounts, in advance. No notes or bill was to be issued of a less denomination than five dollars, and no bills were to be issued until forty thousand dollars in legal coin of the United States had been paid into the corporation by the^ stockholders as a part of the stock. Power was reserved to the Legislature to prohibit in four years from the date of the act the issue of notes of a less denomination than ten dollars, or in ten years of a less denom- ination than twenty dollars. No director* was to be indebted to the bank at any time, either by loans or endorsements, or in any manner, to an amount exceeding five thousand dollars. This acts was declared to be a public act for the time limited by the charter; provision was made: " that if sai^ cor- poration shall fail to go into operation, or shall abuse or misuse 1 Charter, Sec. 18. 4 Ibid, Sec. .22. 2 Ibid, Sec. 19. 5 Ibid, Sec. 4. Expired May 1, 1857. 3 Ibid, Sec. 20. Organization of The Miners' Bank 7 their privDeges under this charter, it shall be in the power of the legislative assembly of this territory, at any time, to annul, vacate, and make void this charter."' 3. Confirpiation of the Charter by Congress. Congress, in the Act^ confirming the banking laws of Wis- consin, amended the charter of The Miners' Bank of Dubuque in several particulars. The bank was forbidden to issue bills or notes for circula- tion until one-half of the amount of its capital stock was paid in; and, in order to enable the directors to comply with this limitation, they were authorized to make calls according to the pi;ovisions of their charter, to an amount not exceeding, at any one time, forty per cent, upon the whole amount of stock subscribed by each stockholder, instead of being re- stricted to ten per cent, at any one time, as provided in the charter. The privilege of determining whether the capital of the bank should be increased to more than two hundred thousand dollars was not left entirely within the power of the stock- holders, but the previous consent of Congress must be ob- tained. The bank must go into operation before the first of Jan- uary, 1838, or the charter would be deemed void and of no effect. 4. The Opening of the Bank. The commissioners readily accepted these provisions and immediately set in motion the necessary legal machinery to carry the modified charter into effect. In the Du Buque Visi- tor of May 17, 1837, we find in the editorial colpmns the statement that: "The books for the subscriptions of the stock of the Du Buque bank, chartered by the Territorial As- sembly and sanctioned by Congress, will be opened on the 22nd 1 Charter, Sec. 23, 2 Approved March 3, 1837. Chap. I/XXV, U. S. Statutes at Ivarge, Vol. V, p. 198, 26th Cong. 2d Sess. 8 Early History of Banking in Iowa inst. See advertisement." The advertisement furnished the information that the books for subscriptions would be opened at the store of Francis Gehon, in the town of Dubuque, on Monday, Tuesday and Wednesday, the 22nd, 23rd and 24th of May next, and at that time ten per cent, of the amount subscribed would be required to be paid to the commissioners, making the amount to be paid in at that time twenty thou- sand dollars, which, as far as any of the conditions of the accepted charter were concerned, might be in either currency or silver. In an editorial in the Iowa News of June 3rd, 1837, which felicitates the community upon the establishment and opening of a banking institution in their midst, it is said : " That we are happy to state that the whole of the stock of the Miners' Bank of Du Buque was subscribed for on the 22nd, 23rd and 24th, and 30th ult., on which days the books for the subscrip- tions were kept open by the commissioners of the bank." In an advertisement in the Iowa News of June 3, 1837, there is a call for the payment of forty dollars upon each share of the capital stock of the bank at their office on the second Monday of October next — fifty per cent, of said in- stallment to be specie. This was signed " By the order of the Board, E. Lockwood, President." In the same newspaper as above, at a later date, notice is given of an election of directors to be held in accordance with the provisions of the charter, on Monday, the second day of October, at the counting room of E. Lockwood. As this date would not give the necessary thirty days' notice required by the charter, there is in the issue of September 30, 1837, an additional notice postponing the election to October 14th, at the same place. Up to this date the notices in regard to subscriptions, pay- ment of subscriptions, and official organization, had been made in accordance with the legal requirements of the charter and its modifications by Congress. CHAPTER 11. The Legislative Investigations of 1837-38. I. The First Investigation. The bank opened' its doors for the transaction of business on October 31, 1837, with E. Lockwood as President, and G. D. Dillon as Cashier. The act of organization and select- ion of officers had been accompanied with, considerable friction. E. M. Bissell, one of the commissioners, had at first been chosen for the position of cashier, but for some cause the ap- pointment was revoked and G. D. Dillon substituted in his place. Charges as to an attempt upon the part of stockholders with large holdings to secure the shares of the small holders were freely made. Charges were also made that the full amount of the required capital was not paid before issuing notes; and that the specie was borrowed for the specie pay- ment upon the capital stock. These were followed with all kinds of rumors of corrupt action upon the part of the officers of the bank. The public mind was in a condition to be easily influenced by such rumors and by the very nature of the past actions of banks, to be easily, almost willingly, led to believe them. The little community of Dubuque was soon agitated over its bank war. These rumors soon reached the Legislative Assembly, then in session at Burlington, and on the fifteenth of November, 1837, Mr. Sholes, in the House of Representatives, moved that a committee of five" be appointed to inquire into the I It was first located in the house of I^e Roy Jackson, near the corner of Clay and Ninth streets. •- Iowa News, Nov. 2, 1837. 9 10 Ed-fly History of Banking in Iowa condition and acts of the banks of the Territory; This was mbdified and passed on the next day, and a committee of three,' Consisting of Messrs. Sheldon, Sholes and Engle, were appointed to make an examination of the Miners' Bank of Dubuque, Bank of Mineral Point and Bank of Milwaukee, and to report to the House at as early a date as possible. This committee immediately proceeded to discharge the duties assigned to them by the resolution of the House. The committee stated that in consequence of the excitement, exist- ing to some extent in the public mind, which had been propa- gated by rumors that were " calculated to affect injuriously: the interests of the public and of the institution," and becaulse the proper officers were not present from whom they would "receive the necessary information concerning the actual con- dition of the bank, they thought it necessary, and within the power vested in them by the resolution, to personally visit the bank." An additional reason was given for this course that by pursuing it there would be an opportunity afforded to the citizens of the town where the bank was located of stating to the committee the facts in their knowledge as to the character, management and operation of the institution. The committee, upon their arrival at Dubuque, submitted in writing a list of questions to the President and Cashier of the Miners' Bank of Dubuque. The President of the bank was absent from the town, but the questions were answered by the Cashier. From the answers returned by the Cashier to their inter- rogatories, they report that $100,000 of capital stock had been actually paid in, $41,147 of which was in specie, and the balance in the notes of the various banks of New York, Penn- sylvania, Illinois, Wisconsin and Michigan. The amount of specie on hand was reported to be $42,118. The bank at that time had a circulation of $11,435, of which $2,000 were in demand notes, and $9,435 in post notes of twelve months after date. The individual deposits were — only $3,043. The debts = Iowa News, December 9, 1837. Legislative Investigations of iSjj-jS 1 1 due the bank from all persons and corporations was $57,321. The bills of other banks in their possession were $12,177. The real estate holdings of the bank were $950, the bank building and lot. The statement was also made that no director of the institution was "indebted to it in a larger sum than that prescribed by the charter." That . the bank had always paid specie " when demanded at the counter." That the bank commenced discounting upon October 31st, and part of the discounts were made in its own bills and partly in the bills of other banks. Its own bills were partly demand and " some twelve months after date." The committee, in continuation of their report, stated that they were satisfied with the answers and that they did nbt deem it necessary nor " within the scope of their authority to inspect the books of the bank, or to count the money, although every facility for that purpose was offered to them by the Cashier." The committee i"emained in Dubuque for 28 hours, but no persons appeared before them to make any reports either in favor of or against the character of the transactions of the bank. The committee, from the investigation which they had made and from the facts which had come to their knowledge, reported' that they were of an unanimous opinion that the Miners' Bank of Dubuque was "in a sound and solvent con- dition." They also expressed the opinion that the bank had met all of the requirements of the charter. To this one of them dissented in regard to the issue of post notes, payable twelve months after date, upon which interest was charged at seven per cent., in advance, for loans made in these bills. The majority of the committee, while doubting the propriety of issuing such bills, did not look upon loans so made as an infraction of any of the provisions of the charter. I Iowa News, December 9, 1837. 12 Early History of Banking in Iowa 2. The Issuing of Post Notes. The issue of post notes by the Miners' Bank was one of the serious objections made against it, and in the minority report this was considered to be an infraction of its charter. In the •charter there was no provision for issuing them, nor was there a provision forbidding their issue. This bank simply followed the precedents, some legal, some illegal, established by many banks, in the issue of this class of notes. Leaving the question as to the legality or illegality of their issue for the present, let us turn to their early history, and as there is not a resume of the history of the issue of post notes in any one place, it may seem in some respects, at least, but proper to notice here in a fragmentary way, a few of the more important instances in which they had been issued in the past history of the country; and also some instances where the different states had prohibited them. The term "post note" has given rise to confusion because it was applied to notes payable at some future date, either " to bearer" or "to order," either "with" or "without" interest; so there were really four classes of them to which the same name was applied. At the close of the war for " Commercial Independence," * all of the banks had suspended specie payment. At the special session of the General Assembly of Connecticut, an act* was passed, on January 15th, 181 5, which empowered each of the incorporated banks within the state to issue bills to the amount •of one-half their paid up capital, payable on demand two years after the close of the war. These bills were to be receivable for all debts due to the banks. The bills of the banks were now put out under two forms : the first promised to pay the bearer in notes of New York banks, on deniand at the specified banks at New Yoi-k, or in specie two years after the war; the second promised to pay the bearer in specie two years after the war. By an act passed at the regular session ' 1812. 2 Session I/aws, 181S. Legislative Investigations of iSjy-jS i j. of the General Assembly, in May, 1815,' the power of issuing these post notes by the banks was to cease on January ist,. 1816. For the purpose of adding the business of buying and selling London exchange to their regular banking business, the Suffolk Bank directors, on the fifteenth of August, 1818, appointed a committee' to secure the necessary funds by the means of a loan based upon post notes. On February 5th, 1819, the General Assembly of Ohio passed a law^ which had for its purpose the compelling of banks- to resume the payment of their notes in specie, it contained a provision which made it unlawful to issue bank notes payable at a future date. On December 24, 1824,4 the Bank of the State of Alabama was authorized to issue post notes payable to order; they were not to be for a period exceeding one hundred and twenty days and were to be redeemed in specie. The Massachusetts Legislature, in 1836,5 allowed banks to issue post notes up to fifty per cent, of their capital and in de- nominations not less than five dollars. Interest was to be paid; on these notes at the rate of four and one-half per cent, per annum ; interest was to cease when due. This act was re- pealed on February i, 1838. Dr. Dyott's Manual Labor Bank of Philadelphia, in 1836, issued* post notes in denominations ranging from one to twenty dollars. This bank was in existence for a period of only about three years, and then failed with almost total loss to its cred- itors, who were mostly from the laboring classes. On January 18, 1834, ^^^ Bank of Mobile and its branches were authorized'' by the Legislature of Alabama to issue post, notes, without interest, until a demand for payment was made. These notes were to be made payable to a specified person,. 1 Session Laws, 1815. 2 The Suffolk Bank, p. 6. 3 Session Laws, 1819. 4 Session Laws, 1824. 5 Session Laws, 1836. 6 Niles Register, Vol. 56, p. 36. 7 Session Laws, 1834. 14 Early History of Banking in Iowa and the longest time for which they could be issued was ninety days. By the act' of January 2, 1835, the bank and its branches were allowed to issue post notes only to the extent of one-half of the paid up capital; one-half of these being made payable at Philadelphia, New York and Boston, in specie. At a special session of the Legislature of Mississippi in 1837, an act^ was passed allowing chartered banks to issue post notes to bear interest at a rate not exceeding five per cent, and to be loaned at a rate not exceeding nine per cent. The period of time for which they were to be issued was from six to thirteen months, and if not redeemed when due, they were to be endorsed and draw twelve and one-half per cent, interest. The banks must receive them for their own debts, and they were to be receivable for taxes, provided the bank had not at any time failed to pay its notes in specie. In January, 1837, and again in October, 1838, the United States Bank of Philadelphia resorted to the use of sixty day post notes bearing six per cent, interest, and put them in cir- culation in those portions of the country where specie pay- ments were not made by the banks. The charter of the Union Bank of Mississippi was re-en- acteds on February 5, 1838, there was no specific provision in it for the issue* of post notes, but there was a provision that it could not issue post notes of a less denomination than five dol- lars. It put out a large issue of these notes claiming that they were based upon the backings of the state. It was of this bank that the eccentric Governor McNutt, in his Inaugural Message* of 1839, complained of its issuing depreciated post notes, thus forcing borrowers to pay at the rate of twenty-two per cent, per annum. The Bank of Arkansas issued post notes from the time of 1 Session Laws, 1835. 2 Acts, Special Session of lyegislature, 1837. 3 Acts of LfCgislature of 1838. 4 Section of Charter. 5 6 Howard (Miss.) p. 627. 6 See Inaugural Message, p. 2. Legisladve Investigations of iSj^-jS 1 5 its commencing business, and the Batesville Branch, in June 1838, had in circulation' $7,785 in demand notes, and $241,943 in post notes. In 184?^ a law" was passed in New York which defined the issuing of post notes as a misdemeanor, punishable by fine and imprisonment. In the same year the State of Mississippi, by an enactments of its Legislature, forbade the issuing of post notes by any bank, and any violation of this law was to be punished by a forfeiture of charter. "The subject referred to your committee* (post-notes) has received that attention which its importance demands; and although the Bank of Mineral Point has issued and is circu- lating a kind of paper which has given rise to some suspicions of her solvency and ability to meet her issues, we are not pre- pared to say that the policy pursued by her is not absolutely necessary to enable her to afford those facilities to the mining and commercial interests of the community in which she is located and which at this time are so much needed." — Com- mittee on irtcorporations, Wisconsin Council, August 6, 1840. Post notes were generally issued by the banks either as an expedient to tide them over until they were able to resume specie payment, or else under the guise of extending aid to the debtors while they were really borrowing from the would be borrowers from the bank. They may be well named "forced loans"; for the greatest portion of them bore no inter- est, and, if they did, it was always at a less rate than that charged the debtor for the loan of them. The borrowing of them was a transaction in which the debtor was always at a disadvantage. Upon the banks the effect of issuing post notes at the close of a speculative period, termi^nating in a panic, was to drive them lower and lower down into the depths of bankruptcy. 1 Report of Condition of Banks., 1852. 2 Session Lawa, 1840. 3 Acts of I director, and that he "intended to return the certificate when he ceased acting as director." He claimed that other direc- tors were qualified in the same manner as he was. He also testified as to the transactions between the bank and the St. Louis Gas Light Company; and as to the amount of bills yet outstanding which were about eight thousand dollars. Mr. Mobley of Springfield testified that the principal own- ers of the bank were Dr. Barrett and Thomas Mather; and that he had been hired by them before purchasing stock to investigate the condition of the bank. He gave an account of Mr. St. John's transactions with the bank whereby it lost the price of forty thousand dollars of the stock, and the fifty- seven thousand dollars which he had borrowed from it on his notes; he had become bankrupt and his debt to the bank was consequently a total loss. The report discussed the suggestion that had been made 66 Early History of Banking in Iowa that if the charter of the bank was forfeited by the Leg- islature, the real estate would revert to the former owners. The case cited' was tried upon the validity of a judgment rather than upon the question of reversion. The argu- ment was advanced that by its provisions the bank was permitted to purchase and hold real estate and that upon the forfeiture of the charter, this land would be assigned to the trustees for the benefit of the creditors of the bank. There was cited in support of this view the fact that the State Bank of Illinois held real estate to the value of one mil- lion dollars; and that the late U. S. Bank had real estate to the value of over six hundred thousand dollars, and if the doc- trine of reversion were true, all of this would be turned over to the individual owners who had sold lands to the bank. The committee drew the conclusion that "it will be seen that in three essential particulars, the charter of the Miners' Bank has long been violated and consequently forfeited." First, the bank violated Sec. 20 of its charter in regard to paying for the stock subscribed; the testimony showed that "the stock subscribed was never paid in any other manner than by the stockholders giving their notes to the institution." This was clearly a violation of the charter and therefore a cause for its forfeiture, because it had proceeded illegally and con- trary to its organic law. The community, at the time of its organization, naturally examined the stipulations of its charter as to the security of the notes before receiving them; and supposing that the bank would comply with its requirements, the community were induced to accept its notes. The amount actually paid in, the committee report that they have not been able to determine, "but are inclined to believe that the amount was small, compared with the amount stipulated for in the act granting the charter." They argued that if only a part of the capital stock was paid in "notes rather than in money, it would be fraudulent and justify the annulling of the charter." This being the case, they said, I State Bank of Indiana vs. the State, 1 Blackford, 267. Banking in Iowa hrom 184.1 to 1844 67 "it is clear that the charter was wantonly violated," and that a base fraud has been perpetrated upon the public by the bank's methods of organization and that it should meet with a "swift and effective correction." In the support of the second charge, the testimony of one witness is quoted that five of the directors instead of being bona-fide owners of stock previous to the time of elec- tion, had been given a $50 share of stock to permit them to make a technical qualification for the position of director, instead of following the spirit of the requirements of the charter, and that this act was an abuse of corporate power and repugnant to the public interest. "The third and greatest delinquency of the bank" in the words of the committee, was the entire suspension of specie payments, in violation of Sec. 10 of the law of incorporation. That by the violation of this section, the Legislature had the right under Sec. 23 to revoke the charter. The committee was of the opinion that the Legislature not only had the right to revoke its charter under Sec. 23, but that any subsequent Legislature had the authority to repeal any of the acts of a preceding Legislature, whether the acts of the preceding session have a repealing clause or not. That the Legislature had a right to repeal a law when it became "odious" to the people; and that the abuse of the privileges of the bank in suspending specie payments whereby it was swindling the people out of large sums of money by its depreciated notes made this law "odious" to the people; and therefore, upon this ground, this session of the Legisla- ture had a right to repeal the act of the previous one which constituted it. The committee indulged in the general opinion that beside the three particular fraudulent evasions of the charter enu- merated above, "all the proceedings of the bank in its cor- porate capacity, subsequently to the forfeiture of its charter by reason of either of the above abuses, have been fraudulent, and that the directors are subject to prosecution accordingly," 68 Early History of Banking tn Iowa but, whether this opinion is right or wrong, there could be no question of the forfeiture of the charter; and more especially that there could be no doubt as to the power of the Legisla- ture to annul it. {V) Minority Report of Select Committee of the House. On January 24th, the next day, the minority report' upon the same bill (No. 23, H. R.) was submitted. This report insisted Jthat by the unconditional repeal of the charter of the Miners' Bank all of the real estate would revert to grantor or his heirs, and the debts due to and from it were extinguished. In proof of this theory, Angel and Ames' Corporations, p. 513, Commercial Bank vs. Lockwood, administrator, Harrington's Reports, Vol. 4, p. 115, and Blackford's Indiana Reports, Vol. I, p. 216, were cited. Therefore, if the bill passed, the entire assets of the bank, amounting to over $60,000, would be lost to the bill-holders and creditors. The minority were opposed to the provisions of the bill vesting the appointment of trustees in the Judge of the Third Judicial District, because by the conditions of the bill the whole of the assets would be ultimately put in the hands of a single individual. They had the "fullest confidence" in the integrity of the Judge, but were opposed to concentrating such vast powers in the hands of any individual, unguarded by any checks against the abuse of that power. For the reasons stated, the bill was objectionable in nearly all of its provisions. It was cited from the testimony that the bank suspended specie payments in March, 1841, which was several months after the suspension of the banks in Illinois and elsewhere, the suspension continuing until June, 1842. During the time of the suspension the bank redeemed its notes in current funds "such as the bills of Illinois, Indiana and Kentucky banks"; and after its suspension it had made arrangements with the Land Office, by which its bills were to be received to "some small extent" in the payment for land entered, and to "some I Journal of House, p. 164 et seq. Banking in Iowa From 1841 to 1844 69 :ent" had paid specie to the citizens in exchange for its bills the denomination of five dollars. The bank in July, 1842, had made arrangements by which 0,000 had been deposited in the Galena branch of the State nk of Illinois, but $10,000 of this deposit had been counter- inded, and on account of this the bank had been compelled suspend again. At the time of this suspension there was [y $8,000 of its notes in circulation, not controlled by its ckholders. The Territory of Iowa then owed the bank ,876 and this sum, with the specie in the bank, would have en sufficient to have paid all the bank bills not controlled by : stockholders. A statement of the condition of the bank at this time had en procured by the minority of the committee from one of ; witnesses, Mr. Mobley, who had testified that it was taken >m the statement of the Cashier and that he had examined : books of the bank and counted the cash and knew that it LS correct. ;al Estate owned by Bank $16,387.13 rsonal property 1,481.37 nount due from other banks and in- dividuals on account 34,649.87 om Iowa Territory $5,876.25 " Wisconsin 803.33 " Dubuque County 500.00 7,179.50 ecie on Hand 1,032.33 Total Amount of Assets $60,730.20 LIABILITIES. hole amount of notes in circulation as per Cashier's Statement $113,190.00 this amount $105,190 is in the hands af the stockholders, leaving in other liands to be redeemed $ 8,190.00 I other immediate liabilities 7,897.27 16,080.27 Balance in favor of Bank. ... $ 44,649.93 70 Early History of Banking in Iowa The testimony of the witnesses in regard to the payment of the capital as required by the charter still leaves this question an open one, and as in former cases was simply hearsay. Two of the witnesses, Messrs. Fales and Davis, in reply to the question, "How much stock was actually paid in?" Submitted in writing the answer, "Don't know." To the question, "How was it paid in?" the same witnesses answered in writ- rin, " Heard that some paid in money and others gave stock notes." These questions and answers in the minority report were a partial rebuttal of the statement in the body of the majority report that "the stock subscribed was never paid in any other manner than by the stockholders giving their notes to the institution"; and the testimony of the witnesses sub- mitted in the majority report does not sustain their own statement. In fact, the evidence in regard to the original subscription of the stock was hearsay. This report shows that St. John bought $40,000 of stock of the bank "owned by men in New York or some of the Eastern cities" of the Cashier; and that these notes became the property of the bank; and that the bank loaned^ to him $S7>ooo; that the stock had been recovered by the bank, but that the money loaned him was a total loss. The losses by the stockholders had been a heavy one. The change of the ownership of the stock in June, 1842, had not been detrimental to the bill-holders, as there had been paid out $25,000 in the redemption of bills of the bank, and no bills had been put in circulation. It was generally acknowledged by those most opposed to the bank that "the present directors are men of unimpeachable integrity, in whose honesty and business capacity, the community have the fullest confidence." (c) Consideration of Reports by the House. Immediately after the reading of this report the bill was considered^ in the committee of the whole, several amendments 1 On September 2, 1843, judgment by default was rendered against Harry St. John for $42,870.97, Docket B, 3rd Judicial District (Dubuque County), p. 233. 2 Journal of House, p. 167. Banking in Iowa From 1841 to 1844 71 made to it, and then reported back. The question upon the amendments was considered separately. The first section of the bill as offered provided for the revocation of the charter. The amendment offered provided that the act incorporating the Miners' Bank should be null and void as far as the act had granted to the bank " any privileges to loan money, discount paper or do any other banking privilege." To meet the argument in the minority's report in regard to the reversion of the land and the estoppal of the collecting or payments of debts by the Trustees to be appointed, a special provision was inserted as the concluding clause of this section. This pro- vision was that nothing in the first section of the bill should be construed in such a manner as to prevent the Trustees, provided for by the act, from collecting all debts due to the bank and all claims against it, or from the transaction of the business necessary for the closing up of the affairs of the banki This amendment was agreed to. An attempt' was then made to have the Judge of the Second Judicial District make the appointment of the two Trustees, provided for in the bill, who were to settle up the affairs of the bank. It was provided that all property of the bank which might be sold by the Trustees should be by "public outcry" after giving thirty days' notice of the sale. An attempt to regulate, by an additional section, the priority of claims failed. This additional section provided that the necessary expenses of winding up the affairs of the bank should be a fro rata division made on all the legal liabilities of the corporation, but no payment was to be made on the stock until all the other legal liabilities were first paid. An additional section provided that the present directors should act as Trustees for the stockholders and creditors until those provided for in this act were appointed. An attempt to pass an amendment, providing that no debtor of the bank should take advantage "by reason of the bank I Journal of House, p. 171. 72 Early History of Banking in Iowa having failed to comply with the provisions of the charter," was lost by a vote of 12 to 13. The question of the engrossment of the bill and the third reading' of it the next day passed unanimously. Upon the question of its final passage all of the twenty-five members of the House voted in the affirmative; and the bill was referred to the Council. (rf) Action by the Council. On January 25th the Council received" the bills passed by the House. On the next day it was read the first and second times and referred* to the Committee on Judiciary. On February i6th the committee was ordered to report upon the bill. In the evening session an order to reports was unanimously passed; and the report was made against its passage and laid ^ upon the table until the next day. A motion to take from the table the next day7 was lost by a vote of five yeas to seven nays. This being the morning of the last day of the session no farther action was taken by the Council upon the Miners' Bank. 6. The Claims of Improper Influences. In an editorial of the Iowa Standard of January 19th, 1843, it was stated that a very great change of opinion had taken place in relation to the Miners' Bank of Dubuque, for when the Legislature first assembled there was hardly a man to be found among the Legislators who did not expect the institu- tion to be put in Hquidation. But since that time the bill for the repeal of its charter had been in the hands of a committee and it had ascertained that men of capital were then in » Jourual of House, p. 173. 2 Journal of Council, p. 89. 3 No. 23, House File. 4 Journal of Council, p. 91. 5 Ibid, p. 177. 6 Ibid, p. 182. 7 Ibid, p. 183. Banking in Iowa From 1841 to 1844 73 possession of the bank and were ready to put $50,000 in specie into it, and were also willing to do business under any restric- tion or safeguard that the Legislature might see fit to impose. There had been received from the citizens of Dubuque a petition signed by more than one hundred and fifty business men, comprising persons from both political parties, asking that the charter of the bank be continued. These things had caused the matter to assume a very different form before the Legislature. It was further stated in the article that five- eights of the people of the Territory would desire to have the bank go into operation again if it were surrounded with sufficient safeguards to prevent any renewal of suspension. The desire for this continuation of the bank resulted entirely from the want of a circulating medium, under which the people of this state were laboring at that time. It was thought by very many conservative persons that if the bank should be put into a healthy condition again that it would furnish a currency by means of which men would be able to pay their debts. The Iowa Capital Reporter, in commenting upon the edi- torial, stated that in order to justify members of the Legislature " in a little better manner than it has been done, and to show that they are not altogether fools, it is necessary for us to state and inform the public that they have a much more substantial argument for so sudden and great a change. ' Some offers and promises of personal rewards and private advantage have, it is well-kr^*vn here, been made from a certain quarter to certain members of the Legislature in con- sideration that they will interpose to save the bank." This undoubtedly had more weight with the members of the Legislature than any expectation that the State Bank of Illinois, which had been in a state of suspension of specie payment for more than eighteen months and was still unable to redeem its own bills, would furnish money to carry on the I January 21, 1843. 74 Early History of Banking in Iowa business in this Territory. After a very exciting debate, a select committee was appointed by the Legislature, to investi- gate these charges. (a) The Majority Report of Select Committee. The Select Committee made their report' on February ist. This showed that each of the members of both houses, the editors of the Iowa Capital Reporter, and Mr. Mobley, of Springfield, Illinois, had been examined as to the information that they might possess upon the subject under consideration. This testimony showed that Dr. Barrett of Springfield, Illi- nois, had written four letters to different members^ of the Legislature who were personal acquaintances and friends. The general tenor of all of them was that he was negotiat- ing3 for the franchise of the bank and if it could be secured, a company would be formed and it would put in from $50,000 to $100,000 capital in specie. There were some incumbrances that could not be immediately removed and he did not wish the charter to be destroyed until the arrangement for remov- ing them had been made. All that he desired was that the charter should not be revoked, and in six or eight months time he could remove the incumbrances. In all of the letters he promised to make it one of the best banks in the Union; and in one he wrote it is well known that he would not "wild-cat" it. In one of the letters the statement is made that undoubtedly the State Bank of Illinois would be forced into liquidation, and if the Dubuque bank could be saved, it and the State Bank of Missouri would be all that there would be left in operation in Ihis western country. In two of them there are pledges that the bank shall be made useful not only to the whole territory, but the city of Burlington also would be benefited because of his interests in that city. The state- ment is made that the Dubuque delegation will be put right by Messrs. Cornell and Mobley if possible. It was clearly shown ' Journal of House, p. 209. 2 Morgan, Lieffler, Springer and Patterson. 3 See account of previous sale and testimony. Banking in Iowa From 1844. to 1844 75 by the evidence that no member of the Legislature had been approached in reference to the bank in any other manner than by the means of these letters, except Mr Cornell' had told Dr. Andros, previous to the session of the Legislature, that it would be his "political death" if he interfered with the bank, and that it would be easier for its friends to make loans than others. The report of the committee decided that there was noth- ing improperjin the letters to members of the council, except that the one to Mr. Morgan contains a promise of private advantage, which showed that Dr. Barrett had improperly sought to influence Mr. Morgen's action in relation to the Miners' Bank of Dubuque. But the statement is made that there was nothing to show that Mr. Morgan or Messrs. Rogers' and Andros had been influenced in the slightest degree; but that, on the contrary, their conduct had been such as to show that they had not. It appeared that the edi- tors had no grounds upon which to base the general charge. In a series of resolutions, the majority report censured Dr. Barrett for writing the letters, and deemed that Mr. Mobley was to "some extent accessory to the offence of Dr. Barret by delivering the letters after he knew the contents of them." In the final resolution, the committee regarded the charge, implicating the members with having been influenced in their legislative action by promises of personal reward or private advantage, as utterly untrue and highly reprehensible in char- acter, and therefore deemed the editors as deserving the cen- sure of the House. {b) Minority Report of Select Committee. On the following day a minority report was submitted by Mr. Hepner.3 It stated that offers of private reward had been made to members as printed in the Reporter. That a knowl- edge of this would awaken "a vigilant and faithful public 1 Cornell had no interest in bank except $500 as a bill-holder. Tes- timony of Mr. Mobley. 2 The Dubuque Delegation. 3 Journal of House, p. 225, February 2, 1843. 76 Early History of Banking in Iowa press," and that they should have been communicated to the public. The offers were corrupting, and as to what influence they might have on the members was not known to anyone, therefore the paper should not be censured for communicating them to the public. The other paper' in the city had ascribed fallacious reasons for members' actions in regard to the bank ; this had caused no comment. It was evident that the state- ment was made as an item of faith not fact. The opinion was given that this was not a subject within the jurisdiction of the House. "The public and the press had a right to speak of the conduct of the members of the Legislature," as freely, if not more freely, than of private men. This authority had been assumed one time by Congress,' but was speedily repealed. That for over forty years no State Legis- lature had dared to assume such powers, and it had long been regarded as dangerous to attempt it. The Judiciary depart- ment was the place to seek recourse if any was needed. The committee had been appointed to investigate as to "the innocence of the members of the Legislature, not for the pur- pose of punishing or censuring the press." In their minds it was doubtful if a committee would have been appointed by the House for the latter purpose if it had been so understood. That the "mover" for the investigation, under the guise of having his innocence declared, had taken advantage of it to assail the editors of the Reporter. This report was signed by Messrs. Hepner and Fleckner. The reports of the committees were received and no farther action in regard to the subject of the reports was taken by the House. 7. The Miners' Bank in the Sixth Legislative Assembly. The Sixth Legislative Assembly of the Territory of Iowa met on December 4th, 1843. The opponents to the continuance of the charter of the Miners' Bank were determined not to be 1 Iowa Standard, January 10, 1843. ' Sedition Laws of 1804. Banking in Iowa From 1841 to 1844 yy outwitted by its friends as they had been at the previous session. So we find that on the first day of the session, Mr. Rogers, Representative from Dubuque county, gave notice of the introduction of a bill' to repeal its charter; and in accordance with this motion presented "A Bill' to repeal the Charter of the Miners' Bank of Dubuque, and to provide for the winding up the affairs of the same," which was read' for the first time and ordered printed. The bill'* was called up on December loth, and after an attempt to refer it to the Committee on the Judiciary it was referred to the Committee of the Whole and made the order of the day for the nth; but upon that date consideration of it was postponed until December 15th. On that date it was considered^ in the Committee of the Whole and some minor amendments made to it and reported back to the House, which concurred in them. Mr. Rogers then sought to have the bill engrossed and read a third time on the next day and thus finish its consideration in the House. This action was defeated by a resolution introduced by Mr. Nowlin* that " Whereas, information has been received that there are now in circulation in the counties of Dubuque, Jackson «&c., memorials to the Legislature relative to the Dubuque Bank; therefore, Resolved, That Bill No. i, H. R. File, 'A Bill to repeal the Charter of the Miners' Bank of Dubuque, and to provide for the winding up the affairs of the same,' be laid on the table' until the 2nd day of January next." Under the rules of the House this resolution had precedence over Mr. Rogers' motion, was put and barely passed by a yea and nay vote of 13 to 12. 1 Journal of House, p. 4. 2 No. 1, House File. 3 Journal of House, p. 8. 4 Ibid, p. 19. 5 Ibid, p. 28. « One of Committee for examination of bank in 1839. 7 Journal of House, p. 29. 78 Early History of Banking in Iowa [a) Reception of Petitions. On January ist, "Mr. Grimes presented a letter of instruc- tion to the Des Moines County delegation.'" This instructed them to vote for the passage of a law which would compel the Miners' Bank to resume specie payment within thirty days, and in case that they would not, to authorize the appointment of commissioners by the Judge of the District Court to settle up its affairs. The petition was signed' by 1 172 citizens of the county. A point of order being raised, that the letter was not addressed to the House, and so could not be received, was sustained. Mr. Johnson presented a petition to the House from ^ citizens of Des Moines County, asking that the charter of the Miners' Bank be repealed, or that the stockholders be com- pelled to pledge real estate for the security of the notes that had been or might be issued by the bank. This petition was received and laid upon the table. On the next morning' the speaker stated that upon further reflection, although he was not fully satisfied that his decision of the previous day on the House receiving the letter of the Des Moines County delegation was incorrect, still he thought it right and proper to reverse that decision and gave for his reasons: 1st. Because there is some analogy between the present and the case of the receptions by Congress of instructions directed to members from particular states, by the Legislatures of the same. 2nd. And mainly because the Speaker conceives it the safer course in cases of this kind to leave the question of reception with the House. The instructions were again presented by Mr. Grimes and upon his motion that they should be received by the House, all the members present (20) voted in the affirmative. This day was marked by the reception of petitions in regard to the Miners' Bank of Dubuque. Mr. Brophy presented a 1 Journal of House, p. 38. 2 Ibid, pp. 39-41. Banking in Iowa From 1841 to 1844 • 79 letter of instruction from 173 citizens of Clinton County, urging that the Representatives from that county vote for a law which would force the bank to close up its business or resume specie payments by the ist of March, 1844. Mr. Rogers presented a petition from Dubuque, Delaware and Clayton counties, " praying that further time be given to the Miners' Bank to resume specie payment." This was signed by 559 persons. This, upon motion of Mr. Rogers, was referred to a select committee consisting of the delegation from Dubuque, Delaware and Clayton. Mr. Foley of Jackson County presented a letter of instruction from 213 of his con- stituents, instructing him to use his exertions for the passage of a law which would require the Miners' Bank to either resume specie payments in thirty days from its passage or force it to cease its business. This was referred to the select committee, to whom the petition presented by Mr. Rogers had been referred, and Mr. Foley was also added to that com- mittee. Later in this day's session' a bill to repeal the charter of the Miners' Bank, etc., came up and further action upon it was postponed until January 8th, 1844. The reasons given for this motion being the expected arrival^ of more petitions from Des Moines and Jackson counties. On the next morning Mr. Foley of Jackson County pre- sented the petition of 96 citizens of, that county asking that the Miners' Bank be compelled to resume specie payments upon April ist, or suffer a revocation of its charter; and a petition from 27 citizens asking that "the affairs of the bank be wound up." To the various petitions presented previous to this, there had been more than twenty-four hundred signers, all of whom had petitioned that the bank should be compelled to resume specie payments or as a last resort be compelled to wind up its affairs; but this petition was the first that asked for an absolute closing of the business of the bank as the only 1 Journal of House, p. 49. 2 Iowa Standard, January 4, 1844. 8o Early History of Banking in Iowa course. On January 8th' a similar petition to the last one was received; signed by 30 residents of Clinton and Jackson coun- ties; and again on the loth a petition* from Jackson County with 188 signers asked that the Legislature would take no other action than to " repeal its charter and wind up its affairs." On the next day a petitions from Des Moines County with 57 signers was received praying that the "affairs of the bank be wound up without further indulgence." [h) The Discussion in the House. On January nth,'* after considering the bill in the Com- mittee of the Whole without making any amendments, Hackleman from Des Moines County moved to amend the bill by inserting after the enacting clause, the following: — "That the Stockholders of the Miners' Bank of Dubuque, be and they are hereby required to redeem and pay specie for all notes issued by said bank, that may be presented at their counter within thirty days after the passage of this act, and continue at all times thereafter to pay specie when called for, and if they refuse so to do, then said charter shall be wound up according to the provisions of this act. "Provided, That unless the stockholders of said bank shall within thirty days after the passage of this act, mortgage to the Territory of Iowa, four hundred thousand dollars worth of real estate, lying and being situated in the Territory of Iowa, which shall be valued at a fair value, to secure the payment of the notes that are, or may be hereafter issued by said bank, and that the Judge of the Third Judicial District have power, and it is hereby made his duty to appoint three disinterested Commissioners to value said land under oath, to the best of their judgment, who shall take and receive said mortgage in the name of the Territory of Iowa, and that they have the same made a matter of record, in the Recorder's Office of the County of Dubuque, in said Territory, and that said bank pay all charges for the same, and further, it shall be the duty I Journal of House, p. 64. 3 Journal of House, p. 73. » Ibid, p. 72. 4 Ibid, p. 75. Banking in Iowa From 184.1 to 1844 81 of said Commissioners, to examine into the affairs of said bank, and report to the said Judge every three months.' This motion was lost by a vote of 4 to 21. An attempt was made to amend the bill by the insertion after the enacting clause of what was practically a new bill and one that was in accordance with the spirit of the majority of the petitioners and letters of instructions sent to the House and to the different delegations. It consisted of three sec- tions ;' the first required that the bank should resume specie payments within thirty days after its passage; the second, that in case of failure to comply with the first provision, the District Attorney should sue out a writ of quo warranto against the bank and prosecute the same to final judgment ; the third made provision that in case the bank did resume and afterwards at any time failed to pay its "legal liabilities in gold and silver coin, it shall be the imperative duty" of the District Attorney to proceed as directed in the second section. An attempt was made to amend this amendment by the addition of a clause substantially the same as the "land mort- gage clause" quoted before.^ This amendment to the amend- ment was decided in the negative, having upon its second presentation gained only one vote — the vote being 5 yeas to 21 nays. Further action upon the amendment went over until the next day. The report* of the Select Committee was made upon the petitions from Dubuque County. This report stated that of the 559 signers some were found to be "not natur- alized, some not of age, some living in Illinois, some in Jack- son and Jones Counties," and that many of the names were unknown to the chairman and he was unable to describe where they lived. After calling attention to the wording of the petition, Mr. Nowlin states'* that he feels himself to be instructed by a "large and respectable portion" of the citizens of his district to support any measure that will compel the I Journal of House, p. 75. 3 Journal of House, pp. 77-78. Ibid, p. 76. 4 Ibid, p. 78. 82 Early History of Banking in Iowa Miners' Bank to resume specie payment within a short time and compel it to do a safe business for the people. His opinion was that the only way to do this was by the mortgag- ing of land for security of the issues of bank notes. The consideration' of the amendment was then taken up, and an amendment was offered by providing that upon failure of the bank to resume specie payments, that persons holding such liabilities could proceed against the stockholders and collect out of their private property as in the case of indi- vidual debts, this was accepted as a part of the amendment and the vote upon its passage was lost by a vote of 8 to 17. The bill as it was now left required that the charter of the bank should be repealed and its affairs closed up and the engrossment of the bill in this form was decided in the affirmative. In the interval between its engrossment and final passage, Mr. Rogers presented the petition^ of several citizens of Iowa City, praying the Legislative Assembly to pass a law to resus- citate the Miners' Bank of Dubuque, provided, that the Stockholders caused to be paid into the office of the Secretary of the Territory the sum of $10,000 as a bonus; the said sum to be appropriated for the encouragement of the emigration of marriageable females from New England to this Territory. This was referred to a select committee. On January I3th3 the bill was passed by a vote of 18 to 7, a strictly party vote; and then referred to the Council. (c) The Discussion in the Council. In the Council,* on January 15th, there were presented petitions and remonstrances from Des Moines County for and against the passage of a law to compel the Miners' Bank to resume specie payments. On the same day the House bill s repealing the Charter was received and read the first and I Journal of House, p. 78. ^ Ibid, p. 81. 3 Ibid, p. 84. 4 Journal of Council, p. 73. 5 No. 1, House File. Banking in Tow a From 1841 to 184.4. 83 second time, and it and the petitions and remonstrances were referred to a Select Committee. The next morning the Select Committee' made a report amending the bill; these amendments made it practically a new bill as they changed the whole tenor of it. All after the enacting clause was struck out and the first section required that the Miners' Bank should resume specie payment within thirty days after the passage of the act. The second that if the bank did resume specie payments, it should make its notes redeemable at par in gold or silver in the cities of Bur- lington, St. Louis and New York; and a provision was made that the Cashier should make sworn statement of the condition of the bank every ninety days and have the same printed in the newspapers of Dubuque. The third section provided that if the bank failed to resume specie payments or at any time should fail to continue the payment at any of the places where they were made redeemable, the District Attorney of Dubuque was to swear out a writ of quo warranto and prosecute the same. The act was to be in force immediately upon its passage. This bill as it had passed the House was in consonance with the principles of the Democratic party in regard to banks at this time — that was to close them up as soon as possible by the Legislature revoking the Charter; but the bill as reported back by the Select Committee was completely in accordance with the Whig ideas in regard to banks — that was to make their currency safe; and if that were not safe to proceed against them by legal action. On January 17th, the bill came up as reported' back for consideration by the Committee of the Whole, and no amend- ments were made to it; but in its consideration by the Council an attempted amendment was lost by a vote of five to eight. This required that the bank before commencing business should transfer in trust to the Territory $150,000 worth of real 1 Journal of Council, p. 77. 2 Journal of Council, p. 81. 84 Early History of Banking in Iowa estate for the protection of the note holders "in case of sus- pension of specie payment or a violation of any kind," this real estate was to be held under the direction of the Governor. An amendment was then made, "That the President, Direc- tors and Stockholders of said bank shall be liable in their individual estates and in case of a failure to pay specie at all times, they shall be liable to be sued and recovered from at all times and places wherever they may may be found." This was an unlimited individual liability clause, and the most dras- tic measure that had ever been proposed, or had been passed by any Legislature for the protection of the note holders. A further section' was added by an amendment which pro- vided that if the bank should import into the Territory any note of a less denomination than five dollars, "or notes of any size not equally as good as specie in Du Buque," the charter was to be forfeited and the bank was to be closed up as pro- vided. This amendment was changed by striking out "or notes of any size not equally as good as specie in Dubuque, etc.," which simply left it as a prohibition upon the importa- tion and vending of bills of a less denomination than five dol- lars, and permitted them to bring in and pass depreciated bank notes as was the general custom of banks. An attempt was made to further amend the bill by requir- ing that the bank within a year should pay a bonus^ of $io,- ooo to the Territory. This was lost by a vote of 5 yeas to 8 nays. The engrossment of the bill was ordered. On the farther consideration^ of the bill, the unlimited lia- bility clause was restricted to the amount of the respective shares owned by the stockholders. The report as to the condition of the bank was to be made by the Cashier, and it was attempted to amend it so as to show the names of the stockholders, and the number of their respective shares, "and such a statement shall be frima facie 1 Journal of Council, p. 82. 2 Ibid, p. 83. 3 Ibid, p. 91. Banking in Iowa From 1841 to 1844 85 evidence of their liability in all cases;" but the last clause was struck out and all that was changed in making the report was that the names and respective shares of the stockholders should be inserted in the report. On January 20th' the bill passed the Council without further amendment by a vote of 10 yeas to 3 nays. The bill as it had passed the House provided for the revo- cation of the charter and the winding up the affairs of the bank. As it passed the Council it provided for the resump- tion of specie payment in 30 days ; the making the bills equiv- alent to specie not only at Dubuque but also at Burlington, St. Louis and New York; in case of failure to comply with the above, "the winding up the affairs of the bank;" that the stockholders should be liable to the amount of their stock ; that the bank should not import and vend the bills of a denomina- tion less than five dollars ; that a report of the condition should be printed at least once in ninety days, which should show the names and respective shares of the stockholders; and that it was to be in force after the passage of the act. The bill in this form would have afforded a reasonably safe circulating medium in prosperous times, and when at the same time its stockholders were men of property. By the con- ditions of the charter the bank was allowed upon a capitaliza- tion of $100,000 to issue notes to the amount of $200,000. The only guarantee back of these notes being the capital of the bank, hence by the restrictions of the charter there was, considering the capital not to be in any way impaired, a guar- antee of only 50 per cent on the maximum of circulation. By the restrictions added by this act, conceding that each of the stockholders owned property (not exemption proof) to the amount of his respective stock, an additional safeguard of 50 per cent was added to the maximum circulation. That is, under the most favorable circumstances, the note holders were fully secured. Under the most unfavorable circum- stances when there was a total impairment of capital and an I Journal of Council, p. 95. 86 Early History of Banking in Iowa entire lack of legal liability upon the part of the stockholders the security of the notes became nothing. But it is probable that under the management of conservative business men of responsibility that the notes in ordinarily prosperous times would have always been current at par. The demand for them to use instead of exchange' on St. Louis and New York, the principal trading centers of the Territory, under certain circumstances, would have caused them to have been above par. The notes would have been far superior in regard to safety to most of the circulating medium found throughout the Territory at this time, as practically all in circulation were at a discount. In summation it may be said that if this bill could have been passed, and if it then should have been accepted by the bank and put in operation by such a company as secured control of it in the following April, it would have been a blessing to the business interests of all classes of citizens in the Territory of Iowa. (rf) The House Refuses to Concur. The House, on January 23, 1844, refused to concur' in the amendments made to the bill by the Council by a vote of 11 to 14; and on the next day the Council passed a motion to postpone action upon the bill until the next "Fourth day of July." This was the death blow to any farther legislative action upon the affairs of the bank at this session. 8. Resumption of Specie Payments by Miners^ Bank. The Miners' Bank of Dubuque suspended' specie payments on March 29, 1841, and resumed the payments of its liabili- ties in gold and silver on the 19th of April, 1844. "^^^s re- sumptions was made soon after the election of M. Mobley as Cashier, formerly connected with the State Bank of Illinois at Springfield. From this time until the day that the charter of the bank was repealed, the bank met all of its obligations in specie, if so desired. During the period of its suspension its I Journal of House, p. 122. a See Iowa Standard, April 16, 1841. 3 See Iowa Standard, April 26, 1844. Banking in Iowa From 1841 to 1844. 87 liabilities depreciated very much. It was claimed that they had been bought in at a very great discount by the non- resident stockholders of the bank, and that in this manner they had realized a large sum. Shortly before this we find that a number of citizens of Dubuque and adjoining counties had petitioned Governor Chambers to direct the district attorney to file quo -waranto proceedings against the bank; but the governor refused to grant the request. The radical anti-bank paper of the Terri- tory, the Iowa Capital Reporter,' could see no reason why this reasonable request was refused, for the bank would have a chance to defend itself in a court of law, and if, as its friends claimed, there had been no violation of the charter, no forfeit- ure could be declared, and the bank would come out of the ordeal with a better credit than it had ever had since its organ- ization. If the governor had permitted this prosecution to have been commenced, the bank would have had the advan- tage of a strong federal bank Whig to prosecute the case against it, which many deemed would have been a decided advantage for the bank over its opponents. It also stated that those persons who had attempted to bring the bank to justice had been defeated three times and that they were about to make a petition to the district court to bring it to trial. This case, after various delays, came up for trial in the May term of court in 1845. The case was ready for the jury when it was dismissed. The friends of the bank claimed that it was be- cause the prosecution was unable to prove fraud or misman- agement in its corporate affairs. The prosecution claimed that the reason why the case was dismissed was because the books of the bank were so mutilated that it was an impossi- bility to tell what the character of the earlier organization of the bank had been. I March 19, 1844. CHAPTER VI. The Question of Banking Before the Constitutional Convention of 1844. I. The Majority and Minority Reports on Banks. The first constitutional convention met at Iowa City, on October 7, 1844, and on the morning of the nth the Com- mittee on Incorporations made a majority and minority re- port' on banks. The majority report provided for a bank with branches, but not more than one branch could be organ- ized for every six counties. The bill to establish such a bank and its branches was to be passed by the majority of mem- bers elected to both houses of the Legislative Assembly, to be signed by the governor, and then to be approved by a major- ity of the " qualified electors " of the state before it became a law. One-half of the capital stock was to be " actually paid in gold or silver," and this amount was to be in no case less than one hundred thousand dollars. The bank and the branches were not to issue any notes of a less denomination than ten dollars. The remedy for the collection of debts was to be reciprocal against the bank and its branches. The legis- lature reserved to itself the power " to put an end to the cor- porate powers and privileges " if the bank or its branches refused to pay on demand any " bill, note, or obligation issued by the corporation, according to the promises therein ex- pressed." The Legislature also reserved the power to alter, repeal, or amend the charter, at any time that they might deem that the public good required it. The stock- holders were to be respectively liable for the debts of the bank and its branches. I Journal of Convention, p. 28. 89 90 Early History of Banking in Iowa On the 19th the reports of the committee came up for con- sideration, and a motion' was made to strike out the majority rfeport and insert the minority report, which was: " No bank or banking corporation of discount, or circulation, shall ever be established in this state." The debate upon this motion commenced early in the morning session and continued through that and the afternoon session. In the warmth of debate, the question of party politics was introduced, and an attempt was made to draw the lines and force the delegates to vote accord- ing to the principles laid down by the democratic or whig party. The convention was democratic in politics, but many of the delegates elected by the democrats had been, or at least felt that they had been, pledged to vote for a well regu- lated and safe-guarded system of banks of issue. The dis- cussion of these questions of actual and implied pledges called forth from one of the delegates the remark,* " that if the del- egates were pledged, he supposed that they would have to vote against their principles, and the result would be that this democratic convention would pass a whig constitution." But the final result of this day's attempt to draw party lines was unsuccessful; the strongest argument against the dragging in of partisan politics was made by Lowe^ of Muscatine county, and Lucas of Johnson. The strongest argument made against the majority report was that many abuses could creep in under the regulations as they had been made in it. The difficulty of ascertaining whether the required amount of specie was paid in or not, was pointed out, and it was shown that these requirements had been evaded in Massachusetts by the directors borrowing the specie until after inspection was made by the State Commis- sioners and then passed on to other banks for their use. The individual liability clause was attacked on the ground that if a "swindling concern" was to be organized that the stockholders and officers would be found exemption proof as I Journal of Convention, pp. 89-90. a Iowa Standard, October 24, 1844. 3 Ibid. Banking Before the Convention of 1844. 91 they had been when connected with like concerns in the past. The history of the abuses of different banking systems was fully discussed; but the conclusion was reached that judicious amendments of the majority report should be attempted before it was rejected. The question of the substitution of the minority report was defeated and farther consideration of the possibility to form a banking system for Iowa was assured. When this report came up for consideration again, an attempt was made to strike out all the bill after the first provision, requiring the law to be submitted to a vote of the directors, and leave the regulation of the details of the banking system to Legislative authority rather than to incorporate them into the Constitution. The central ideas of those in favor of striking out the provisions seemed to be a desire to give freedom to legislation, and that the Legislature, was the proper body to devise special restrictions; another was that no plan of restrictions that could be inserted in a Constitution would be sufficient to procure complete safety to note holders. One argument introduced was that if the unlimited individual liability clause was retained the effect of it would be that only men of great means would invest money in legitimate banking business; by reason of the large number of shares owned by them, they would be able to control the management of the business and in this way protect themselves against loss. This would have a tendency to prevent men of limited means, such as laborers, artisans, etc., from investing their surplus money in the banks. To place the banking system of an entire state in the hands of a few persons would tend to make the whole system insecure; for where the most stable banking systems were formed, in the Eastern states, the capital of the banks was owned by small stockholders. Objections were made to the repeal of the amendment or repeal of the charter by the Legislature, but in support of this provision the laws of Mas- sachusetts were cited to show that such action was not based on a new principle. The debate upon this brought out the position of the Whigs 92 Early History of Banking in Iowa to be that of keeping of all restrictions out of the Constitution, leaving to the future Legislatures, before which the chartering of a bank might come, the deciding of the character of the details in the light of all the knowledge the Convention now had and that might be gained in the interval. The Democrats occupied two positions. Those of that party who had been in favor of the minority report were in favor of not only the restrictions in the majority, but others and stronger ones. Those in favor of the restrictions of the majority report were in general men who either favored a well-regulated banking system from principle, or who considered themselves pledged to assist in devising a well-regulated system, and they were in favor of having some of these restrictions in the Constitu- tion and leaving some of them to be provided by legislative action. The result of this division of opinion among the Democrats and a portion of them combining with the Whigs led to a division of the question and a consideration of each restriction separately. The motion to strike out the second section,' providing that the bank and branches should not commence operations until half of the capital stock subscribed for shall be actually paid for in gold and silver, when it came to a vote produced a curious result. No hard money Democrat could vote against such a proposition; and only five votes of Whigs who held extreme views upon leaving restrictions to the legislative action votpd to strike out the provision. The amendment to the third section, changing the denomi- nation of the smallest bill to be issued from ten to fifty dollars, caused eighteen persons, mostly radical anti-bank Democrats, to cast their vote in favor of it. An attempt to reduce the size of the smallest bill from ten to five dollars was lost^ by a vote of twenty-four to forty-five. The great majority voting in the affirmative were Whigs. On the next mornings the attempt to strike out entirely the provision, providing that the 1 Journal of Convention, p. 93. 2 Journal of Convention, p. 94. 3 October 22, 1844. Banking Before the Convention of 1844 93 bank "shall not have the power to issue any bank note of a less denomination than ten dollars," only received fifteen votes in the affirmative, all Whigs, while fifty-two were cast against it. The section in regard to the remedy for the collection of debts being reciprocal was not struck out. An attempt was made to amend' the section " The stock- holders shall be liable respectively, for the debts of said bank and branches," by the addition of two clauses. They were : In any sum not less than double the amount of the capital stock described in their charter, in good real estate, to be valued by persons appointed by the Legislature of the State, approved and signed by the Governor and Secretary of State, and they shall never be allowed to take any security, either directly or indirectly, for any money loaned by them in their corporate capacity. That no bank chartered^ under the regulations of this Con- stitution shall ever lend any money or any bank note or bank notes to any member of the Legislature, or any other officer in any civil department of the State. This amendment was defeated by a vote of 14 to 52; and from that one requirement, that of forbidding the taking of security for debts, it seems as if the vote against it should have been greater. But the fifth section^ was amended by inserting "jointly and severally " for " respectively " and by adding to at the end of the section "whether they hold the stock in their own names or by trustees, to the full extent of the debts of such bank." The motion to strike out the amended section was lost by a vote of 17 to 52. The sixth section'' was amended by striking out "according to the promise therein expressed" by a vote of S3 to 16. This section, as amended, would make it impossible for a bank organized under the law to issue any post note, or any other kind of an obligation than a demand obligation. 1 Journal of Convention, p. 96. 3 Journal of Convention, p. 97. 2 Ibid, p. 96. ■♦ Ibid, p. 98. 94 Early History of Banking in Iowa An additional section' was offered to be inserted after the sixth, which provided that " No bank shall be allowed to issue a greater amount of bank notes than double the amount of capital stock actually paid into such bank in gold and silver," but it was rejected. The seventh section,^ which secured to the legislative assem- bly the power to amend or repeal the charter, was attempted to be amended by a provision requiring the act of repeal to be passed by both houses, approved by the governor, and sub- mitted to the people at the next general election, and if a majority of the qualified electors approved it, the act of repeal was to become a law. The amendment was not agreed to; and the section was not struck out. An additional sections was added, which was that "Any violation of, or non-compliance with the provisions and restrictions contained in this section, by the stockholders, com- missioners or officers, or persons connected with the creation of any such bank or its management, in any of its accounts, exhibits, certificates of stock paid, or by embezzling its funds or property, shall be punished by fine or imprisonment in the penitentiary, and shall subject the offender to the same dis- qualification as conviction for infamous crimes." The vote upon this additional section was 37 yeas to 33 nays. An amendment requiring the pledging in real estate or United States stock to three times the capital, as a security for the redemption of the liabilities of the bank was voted down by a decisive vote. As decisively, an additional clause* was passed forbidding the State of Iowa from becoming either directly or indirectly a stockholder in any bank or corporation. By a votes of 27 to 29, there was rejected an amendment which provided that only one bank charter should be passed by the same Legislature. The report^ of the Committee on Incorporations as now I Journal of Convention, p. 99. \ Journal of Convention, p. 103. » Ibid, p. 99. s Ibid, p. 104. 3 Ibid, p. 100. 6 Ibid, p. 107. Banking Before the Convention of 1844. 95 amended was finally referred' to a Select Committee,' after unsuccessful attempts to refer it to the Committee on Judiciary and to the Committee on Incorporations. 2. Heport of the Select Committee on Banks. On October 25th the Select Committee on Banks submitted its reports to the convention. They recommended that the portion of the amended report of the Committee on Incor- porations that referred to one bank (Sec, i) be indefinitely postponed, and added section 4. The report as amended and re-arranged by the Select Com- mittee now consisted of the following sections: Sec. 2. The assent of two-thirds of the members elected to each house of the Legislature, shall be requisite to the passage of every law, for granting, continuing, altering, amending, or renewing any act of incorporation. Sec. 3. No act of incorporation shall continue in force for a longer period than twenty years, without the re-enactment of the Legislature, unless it be an incorporation for public improvement. Sec. 4. The General Assembly shall create no bank or banking institution, or corporation with banking privileges in this State, unless the charter with all its provisions shall be submitted to a vote of the people at a general election for State officers, and receive a majority of all the votes of the qualified electors of the State. Sec. 5. The personal and real property of the individual members of the corporation hereafter created, shall at all times be liable for the debts due by any such corporation. Sec. 6. The Legislative Assembly shall have power to repeal all acts of incorporations by them granted. These sections followed very closely the different articles of other State Constitutions and the principles of the bank- ing laws of other States. The second section followed very closely the requirements* of the Constitution of New Jersey. The period of incorporation was, of course, common in nearly 1 Journal of Convention, p. 107. 2 Hall, Galbraith, Bailey, I/angworthy, Evans, Chapman, Randolph. 3 Journal of Convention, p. 121. ♦ Required 3-S for granting-, altering, continuing or renewing. g6 Early History of Banking in Iowa all charters granted by the different States. The, fifth section was found in the laws of Massachusetts, Rhode Island and Connecticut. It is almost an exact copy of the law of Massachusetts. In Pennsylvania the power was reserved to the Legislature to repeal charters as provided in the sixth section of this report. The provisions of the fourth section in regard to submitting the question to the people is found in many of the constitutions, and also in many of the laws in regard to the establishment of banks. This report was taken up for consideration by the Conven- tion on the 28th of October. An attempt was made to change the provision of the fourth section requiring that the vote giving assent to the incorporation of a bank should be a majority of all qualified electors in the State to a majority of those casting a vote upon the question; but this was lost by a vote of 21 to 44. This was followed by a series of amend- ments of all kinds and conditions. Seemingly every delegate with a "pet provision" sought to have it inserted. An especial attack was made by the means of amendments, to have the restrictions already adopted applied to banking corporations alone, leaving other corporations exempt from them. In the debate upon the different amendments exempting corporations from the restrictions applied to banks, a special appeal was made by the Whig members to the delegates from the southern portion of the State as to the need of corporate bodies for carrying on the internal improvements of the State,, such as slack-water navigation of Des Moines river. But all attempts to pass amendments to exempt other corporations than banking institutions from these restrictions were futile. The radical anti-bank delegates were defeated in an attempt to amend so that "no bank of circulation shall be established in this State" by a vote of 16 to 52. An attempt to postpone the establishment of any bank until i860 was also defeated. The requirement of a "two-thirds" vote to charter a bank was changed to a "majority;" and in the same section sub- mitting the charter to the vote of the electors the phrase "and Banking Before the Convention of 1844 97 receive a majority of all the votes of the qualified electors of the State," was changed by the addition of "cast for and against." A substitute section' was inserted in place of the sixth which declared that "The property of the people of this State shall never be used by any incorporated company without the con- sent of the owner." Another section' added was that the state should never, directly or indirectly, become a stockholder in any bank or other corporation. A substitute for the whole report was offered which only differed from it in some minor particulars; this was rejected by a very large majority. The report was ordered engrossed. 3. Report of Committee on Incorporations. The reports of the Committee on Incorporations was called up again on the 31st and read a third time. An attempt to refer the report to a Select Committee with instructions to make the restrictions applicable to banking institutions alone was lost by a vote of 21 to 41. A motion^ to postpone indefi- nitely was lost; and the article on Incorporations was passed by a vote of 45 yeas to 22 nays. The final form of Article 9, Incorporations,5 as left by the Committee on Revision was as follows: — 1. No act of incorporation shall continue in force for a longer period than twenty years, without the re-enactment of the Legislature, unless it be an incorporation for public improvement. 2. The personal and real property of the individual mem- bers of all corporations hereafter created, shall, at all times, be liable for the debts due by any such corporation. 3. The Legislature shall create no bank or banking insti- tution, or corporation with banking privileges in this State, 1 Journal of Convention, p. 52. 2 Ibid, p. 183. 3 Journal of Convention, p. 183. 4 Ibid, p. 184. 5 Journal of Convention, p. 199. gS Early History of Banking in Iowa unless the charter with its provisions shall be submitted to a vote of the people at a general election for State officers, and receive a majority of the votes of the qualified electors of this State, cast for and against it. 4. The Legislative Assembly shall have power to repeal all acts of incorporation by them granted. 5. The property of the inhabitants of this State shall never be used by any incorporated company, without the consent of the owner. 6. Corporations of a public nature, such as counties, towns, villages, and the like, shall not be subject to the foregoing provisions. 7. The State shall not, directly or indirectly, become a stockholder in any bank or other corporation. 4. The Constitution of 1844., as Viewed by the Press and Peofle. The Constitution of 1844 as a whole gave general satisfac- tion to the people and the press. The amendment by Congress, changing the boundaries and very much diminishing the area of the proposed state, caused its rejection by the people. The only paper which from the very first opposed the proposed Constitution was the Dubuque Transcript, which opposed it upon a number of grounds, one of them being that the provisions in regard to banks, and especially private cor- porations, were not liberal enough. It is quite certain that the leaders of the Whigs, for political reasons alone, were opposed to the Territory of Iowa becom- ing a State at this time; but only general opposition was made to it by them. The Democratic press of the Territory were in favor of it, at least up to the time of the change of the boundaries by Congress. There were many of the provisions that they were not in complete accord with, but they accepted the Constitution as a whole and supported it. The whole of the Democratic press was especially pleased with the article on Incorporations. One' of them in its editorial columns contained the following: I Capital Reporter, November 9, 1844. Banking Before the Convention of 1844 99 " The Constitution contains many sound provisions which will, we doubt not, exclude most of the prominent curses which have overrun the new States. Amongst these, the limitations on corporations stands first and foremost. These soulless monsters have tyrannized enough and we rejoice that Iowa, in the outset has bound the hydra hand and foot, for all pur- poses of mischief, and left its friends, if they are disposed to test its virtues, properly restrained by law, an ample field for experiment." The Cincinnati Enquirer,' one of the ablest Democratic journals of the West at that time, published the following in regard to corporations: "They have also decided to give the power in the constitution for a banking system, but with all the restrictions which have at all times been contended for by the Democrats, and are so essential in making them perfectly safe, or as near safe as can be, viz: making the stockholders personally liable, the charter to be submitted to the people to be voted for or against, the Legislature the right to alter, repeal or amend * * * *." The Ohio Statesman* published the whole Constitution in one of its issues, and in the editorial column the following is found: "Its provisions in relation to corporations and banks, and common schools, are admirable and show that intelligence and jealousy of incorporated wealth go hand in hand. We are rejoiced to find that the public mind is waking up to these subjects, and that they consider them of sufficient magnitude to engraft them upon the Constitution." After quoting the provisions in regard to submission to the people, the individual liability clause, and that the State shall not become a stock- holder in any bank, etc., the editorial continues: "Let this provision be remembered by our own speculators who would make our own State a scape-goat for their schemes, and the people dupes for their plunder. * * * The whole is filled with provisions which show the progressive character of insti- I November 20, 1844. 3 November 22, 1844. 100 Early History of Banking in Iowa tutions and the increasing jealousy of the public mind on the subject of the anti-republican dogmas of Federalism. Thou- sands will emigrate to Iowa from their admiration of its Constitution, and the love of unadulterated liberty." The Cincinnati Globe' published the Constitution in its columns and also the Indiana State Sentinel,' the latter claim- ing that it was the best State Constitution "in the confederacy." In all points of the Territory there was no really serious opposition to the Constitution, and it is quite certain that if there had been no change of boundaries by Congress the Constitution would have been adopted by the people at the time it was first submitted to them. In the special session of the Legislature of 1845 during the debates upon the question of the resubmission of the Consti- tution to the vote of the people, there was no objection offered to the clause on Corporations in the many speeches that were delivered. The inevitable conclusion to draw, from a close study of this period, is that the articles on corporations were not an obstacle to the adoption of the Constitution, and that the majority of the people and practically all of the press were not seriously opposed to it. I November 28, 1844. » November 24, 1844. CHAPTER VII. Culmination of the Opposition to Banking. I. Petilion for a Stock Bank at Iowa City. In the special session of 184S, Mr. Downey, the represent- ative of Johnson County, presented the petition of James Robertson and 55 others, praying the Legislature to charter a Territorial Stock Bank, and at the same time, previous notice having been given, introduced' No. 31, H. R. File, "A Bill to charter the Bank of Iowa in Iowa City." The bill has not been preserved in the archives of the State, but fortunately the petition has been. This petition clearly states the condition of the times and the feelings of the people, hence it is believed to be worthy of introduction here. To the Honorable the Council and House of Representatives of the Legislative Assembly, of the Territory of Iowa : The petition of the undersigned, citizens of said Territory, represent. That in their opinion the inhabitants of the Terri- tory would be greatly benefited, and the interests of agriculture, commerce and manufacture much advanced, by the establish- ment of a Stock Bank. Your petitioners are aware that the systems of banking, which were unfortunately adopted in the South and West some years since, has been a tendency to prejudice the public mind against every species df bankpapers; but whatever evils may attend a paper currency, and it must be admitted that there are many, its policy cannot now be regarded as an open question. The State claims and exercises the right of creating Bank Incorporations, and they form and will continue to form a part of our commercial policy ; and each new state will be bound in Defence to furnish her own paper currency. The specious plea of the opponents of all banks "that what is wrong in itself can not be made right by considerations of expediency," if I Journal of House, p. 81. 102 Early History of Banking in Iowa originally good, is not now applicable. A mixed currency is entailed upon us whether it be right or wrong, and it is the part of wisdom to legislate accordingly. There are in Iowa almost twenty thousand families ; each family, on an average, sustains a loss annually of at least two dollars, making an aggregate of $40,000 ! ! The people ought not, and it is to be believed, will not submit, to be thus taxed for the use of a currency they had no voice in creating, and over which they can have no control. Your petitioners believe that a bank charter can be so framed as to be acceptable to a large majority and eminently useful to all. And herewith submit a plan, in the form of a bill, which they request may be referred to the consideration of a Joint Select Committee of both houses. It has been framed in the spirit of compromise and concession and your memorialists pray that it may be reported and passed without material alteration or amendment. And your petitioners as ever pray. Among the signers were: James Robinson, Wm. Penn Clark, Alex Grant and Morgan Reno. After the second reading it was referred to a Select Committee by the request ' of Mr, Downey and was never reported back to the House. The organ' of the Democracy in its issue about the time of the introduction of the bill names it as "a bona fide incipient little monster, projected by our enterprising Whig population, but destined never to receive the animating influence of the Legislature, which is necessary to bring it into vital existence, and give it a local habitation as well as a name." Commenting further, it enquired if it would not be a "beauti- ful piece of policy" for a Democratic Legislature to be coaxed into "giving birth to such a vampire upon the body politic," and thus create a " machine" for the swindling of " honest industry" out of its honest earnings for no other purpose, but to support in Iowa a " pampered bank aristocracy." It also saw in this a political scheme, for if a charter was granted, then it would become an "effective weapon" against the ' Journal of House, 7th lycgislative Assembly of lo-wa Territory, p. 83. 2 Capital Reporter, May 20, 1845. Culmination of the Opposition to Banking 103 Democrats in future political contests in the State. For all the time the Federalists had been crying out for a bank, they had been endeavoring always to "attach the odium of the bank policy " to the Democracy, and if they could be successful in this attempt it would be an available argu- ment for further political contests. In conclusion the writer stated that the consideration of the possibility of the Legislature, as politically constituted, ever granting such a charter, was simply preposterous. The editorial was closed by a sentence which shows with what party feeling the bank question was considered by the radical Democracy of the time: "We bespeak for this hybrid little monster a warm reception, a summary disposal, and a speedy quietus." 2. Refeal of the Charter of the Miners^ Bank. (a) In the House. The Seventh Legislative Assembly met on May ist, 1845; and on the 8th of May Mr. Wilson, previous leave having been given, introduced^ in the House, No. 2, H. R. File, "A bill to repeal the charter of the Miners' Bank of Dubuque, and to provide for winding up the affairs of the same." This bill was read the first time; and on the succeeding day was read a second time,' and referred to the Committee of the Whole for its consideration on May 12th. It was considered in the Committee of the Whole on that days and reported back with- out amendment. The rules were then suspended, and it was read a third time. The vote on its final passage being unani- mously in the affirmative. It was then referred to the Council. (b) In the Council. It was read for the first time* in the Council on May 13th, and after an unsuccessful attempt by Mr. Hempstead to have I Journal of House, p. 13. = Ibid, p. 24. 3 Ibid, p. 48. 4 Journal of Council, p. 33. Ip4 Early History of Banking in Iowa it referred to the Committee of the Whole, it was referred to the Committee on Incorporations. On the next day the Committee on Incorporations submitted its report through its Chairman, Mr. Hempstead.' The report' recites that the first section of the act provides for the repeal of the bill incorporating the Miners' Bank of of Dubuque ; " and as it had been urged on a former occasion, that the Legislative Assembly of the Territory of Iowa, 'upon its own motion and upon facts which itself fixes upon a strictly legislative bearing,' has no legal authority to repeal the charter of this or any private corporation." The committee then examined and ascertained the powefs with which the Legis- lature was invested. They found power to legislate upon this subject in the 6th section of the Organic Law of the Territory of Iowa which provides "that the Legislative power of said Territory shall extend to all rightful subjects of legislation." Under this provision of the Organic Law they contended that it would be a rightful subject of legislation; but that in addition to this, that it would be " an act of justice to the people of Iowa," many of whom had suffered great loss and injury on account of the mismanagement by the officers of the corpora- tion. As an additional evidence that this is a rightful subject of legislation, it is shown by the ?2nd section of the Act of Incorporation that the Legislature in granting the charier has reserved to itself the right "a^ any time to annul, vacate and make void the charter if said corporation should fail to go into operation, or should abuse or misuse their privileges." In order to determine whether the corporation had abused or misused its powers and privileges, -'and for the purpose of establishing the fact of gross mismanagement and a wanton abuse of the privileges granted," they incorporated in the report the testimony of John T. Fales, Timothy Davis, a direc- tor, M. Mobley, Cashier of the bank since June, 1844. This testimony was given before a committee of the House of 1 Journal of Council, p. 40. 2 Ibid, p. 217, et seq. Culmination of the Opposition to Banking 105 Representatives in the session of 1843. The testimony as submitted with the report is but an abstract of that given in the majority report of committee of the House, and as the essentials of the testimony have been stated above it is not necessary to insert the abstract here. The testimony is summed up as showing: 1st. That the corporators have misused their charter, because they had perpetrated a fraud upon the people by not paying in the capital stock in accordance with the law of Congress confirming the charter, which provided that no bills or notes should be issued until one half of the capital stock shall have been actually paid in. That until the capital stock was actually paid in by the stockholders in the legal currency of the United States it did not have a legal existence as a corporation. That this was a condition precedent to legal existence; but instead of paying in legal coin of the United States, they gave their own notes and commenced the business of banking. They claimed at that time, and now claim, the right to exercise the corporate privileges conferred upon them in direct defiance of the law granting the corporate existence. 2nd. Persons have been elected directors of the bank who were not bona fide owners of the stock, when the law of Congress, confirming the charter, declares that " the directors shall all be stockholders in the institution." That the law did not contemplate nominal stockholders — persons who did not really have an interest or a responsibility in the affairs, who were merely directors for the owners of the bank; but the spirit of the law was that they should be persons who had an interest in the business affairs of the bank through a real ownership of its stock. 3rd. That the bank had suspended specie payment from March, 1841, to July ist, 1842, and after paying specie for a week "again suspended for a great length of time." This was contrary to the provisions that the bills '• obligatory, and of credit, notes and post notes, when demanded at their banking house should be paid in the legal coin of the United States." The refusal to pay specie for its bills was clearly a violation of this provision. As evidence that the suspension of specie payments by banks having similar charters had been consid- ered by the Legislatures of many different States, it was only 1 06 Early History of Banking in Iowa necessary to recall the large number of acts legalizing suspen- sion " that had been passed by them in the last few years." And then the committee added — "acts which will stand forever recorded upon their statute books to condemn and disgrace those who passed them." The Miners' Bank of Dubuque does not deny but what it has so abused and misused its charter by the suspension of specie payments; still its officers had urged that the Legis- lative Assembly of Iowa does not have the power "to annul, vacate and make void the charter until the acts of forfeiture have been judicially investigated and declared by a court of competent jurisdiction." The rule here contended for by the bank does not hold in that the right is specifically reserved to the Legislature. The committee quote in substantiation of their ground Chancellor Kent: "If a charter be granted and accef>ted with that reservation, there seems to be no ground to question the validity and efficacy of the reservation." To hold that forfeiture could not be worked until judicial sanction was given would render inoperative the provision of the charter authorizing the Legislature, under certain conditions, to revoke it. Was it the intention of the Legislature to simply reserve the right for its successors to confirm the decrees of the courts revoking the charter, or to reserve the power to revoke it themselves? The spirit of the charter is to reserve the right to the Legislature to repeal it " whenever they ascertain the conditions of the same to be violated." The committee deem that under the Organic Law the repeal of the charter is a rightful subject of legislation; that the cor- poration has abused the provisions of the charter by not paying in the capital stock as provided by law, and by the election of directors with no real interest in the bank, and by the refusal to pay specie, when demanded, for its notes. On these grounds the committee feel that the charter should be repealed, "that the people of this Territory may not be hereafter injured &nd defrauded by an institution which has heretofore been so regardless of the law and the interests of our citizens." The report of the committee was concurred in; and the bill was then read the second and third time and passed' by a vote of 12 yeas to i nay. ' Journal of Council, 7th Legislative Assembly of the Territory of Iowa, p. 40. Culmination of the Opposition to Banking 107 On motion two hundred and forty copies of the report of the Committee on Incorporations were ordered printed for distribution. As shownQby the certificate' of the Secretary of the Terri- tory, dated|May[2i, 1845, the act repealing the charter of the Miners' Bank was presented to the Governor on the 15th of May, and after being retained by him for three days, "was returned to the committee from which it was received, without his signature." Under these conditions, by the provisions of the Organic Law of the Territory, the act became a law. (c) Provisions of Bill. The Judge of the Third Judicial District was authorized to appoint two trustees. These trustees were to have full power to settle up the business of the bank, "to sell and convey the personal and real estate," and also "to collect and pay the debts." They were to have authority to sue for and recover any debt or property of the bank in the name of " The Trustees of said Bank;" after paying the debts and necessary expenses they were to divide the money and remaining property among the stockholders. Provision was made that the trustees should receive in payment for debts due the bank, the bills of the same at their face value. All real estate was to be sold on a credit of four, eight and twelve months with equal payments. The purchasers were to give a mortgage on the property and also a bond with security, which was to be approved by the trustees. If there were any failures to comply with these requirements within two days after the sale, the property, after giving twenty days notice, was again to be sold; if any loss was sustained as a result of this second sale, the first purchaser should pay the deficiency and the costs. Before entering upon the discharge of their duties, the trustees were to give a bond in such a sum and with such I Chapter 31, L,aws of the 7th I,egislative Assembly of the Territory of Iowa. io8 Early History of Banking in Iowa security as should be approved by the Judge of the Third Judicial District; and were to be held "jointly and severally responsible to the creditors and the stockholders of said bank to the extent of the property and the effects of the said bank as shall come into their hands." Any suits pending in the courts of the Territory, *of which the bank was a party, should not be discontinued or "in any way effected" by the repeal of the charter, but were to be prosecuted to a final termination by the trustees. The trustees, on receiving their appointment, were to take possession of the property and make a " complete schedule" of it and file a copy in the office of the clerk of the District Court of " Du Buque " County. The affairs of the bank were to be closed up within a reasonable time, not to exceed two years, unless by special consent of the Judge upon the showing of a good cause. They were to make a final report to the Judge, and to make such reports from time to time of the con- dition of their trust as he might require. The amount of their compensation was to be fixed by the Judge. The act was to take effect in twenty days after its passage. 3. Provision for Payment of Debt Due the Miners^ Bank by the Territory of Iowa. On May 21, 1845, Samuel Murdock of Clayton County introduced in the Council a resolution' requiring the Committee on Territorial Affairs to report at an early date how much the Territory is indebted to the Miners' Bank of Dubuque; when the debt was contracted and for what purposes, also as to what means the Territory has for paying the same. The committee made their report^ in the form of (No. 55, C. F.) "A Bill to provide for the payment of the debt due to the Miners' Bank of DuBuque." It was read and referred to the Committee of the Whole, and by them reported back I Journal of Council, 7th Legfislative Assembly of the Territory of Iowa, p. 65. » June 4, 184S. Culmination of the Opposition to Banking 109 ithout any amendments, and was finally passed by the Council 1 June 7th. The bill as passed by the Council was received in the House id referred to Committee on Judiciary, and was reported ick without any amendments on June pth and sent to the overnor for his signature. On June loth, 1845, this act' was signed, to provide pay- ent for the long past due account of the Miners' Bank of 'uBuque against the Territory of Iowa, which had been jntracted under the provisions of the act of the 15th of inuary, 1841. By this act the Territorial Treasurer was to give a three lonths' notice, published in at least two papers in the Terri- iry, and in some one paper in St. Louis and Cincinnati, of a ublic sale of lots belonging to the Territory on the first [onday in May, 1846. There were to be enough of these lots sold to the highest bid er, upon 6 and 12 months credit, to pay the debt due to the Miners' Bank of Du Buque." The purchasers were to make bond with sureties to secure these payments, and when they ere made the Treasurer was to execute a deed for the lots.. ls soon as these bonds matured the Territorial Treasurer 'as to collect them and pay the debt. This act was to take effect after its passage, which was pon June loth, 1845. It will be seen by the provisions of this act that notes given ) the bank for money loaned could not be paid at the earliest ate possible, before May 1847. Six years after they were iven and over four years after the last one was due. 4. Protest Against Provision for Banks in Constitution. Before the vote was taken on June 2, 1845, upon the "Bill ) submit to the people the draft of a Constitution formed by le late convention," nine members submitted a written pro- I Chapter 18, Laws of the Legislative Assembly of the Territory of ma, 184S. no Early History of Banking m Iowa test' to its passage. The objections as to boundaries were given and a number of others, including that it would prohibit the Legislature from adopting a system of internal improve- ments, the creation of corporations for manufacturing and other useful purposes, and that no bank could ever be con- stituted under it. They admit that there are provisions for the establishment of State banks under certain conditions, but that the very provisions are a " mockery." The members of the convention must have known that without an alteration of the Constitution "no sane man" would become a stockholder in a bank where he was liable not only to the amount of stock owned, but to an unlimited extent. But the strongest argument, one that proved to be the true condition of Iowa under the same circumstances later, was that if the citizens of the Territory were deprived of the privileges of banking and the issuing of paper money the inevitable result would be a flood of paper money from the adjoining states of the worth of which but little could be known, and over which the Legislature of this Territory would have no control. It was apprehended that the "annual loss to our citizens" from such a currency would more than exceed the tax necessary to support a State government. "Every tyro in politics knows that the meaner the paper currency, the scarcer will be the precious metals." The adoption of this Constitution would cause an inflow of this depreciated paper money and the consequent disappearance of gold and silver. A little gold and silver would remain, but was sure to become an "article of merchandise," and could be bought of " those consistent advocates of a hard money currency, called brokers or shavers" at the market price "which even now ranges from twelve to fifty per cent." ' Journal of House, p. 167 et seq. The persons sigfning' this protest were : Stephen S. Shelleday, Joseph M. Robertson, Richard Noble, James Anderson, Charles Stewart, N. Munger, Hug-h D. Downey, Charles Clifton, and S. D. Woodworth. Culmination of the Opposition to Banking III 5. Address by Directors of the Miners' Bank ^'■To the People of Iowa" On June i6th, 1845, ^^ directors of the Miners' Bank issued an address' " To the People of Iowa." This stated that a concise statement for the information of the public of the past history and present condition of the bank had been made necessary by the "strenuous efforts which some people have made, and are now making, to destroy this institution." It was an able, and in the historical part, a fair statement of the bank's position. The legal position taken by it was proven later to be wrong. It was widely circulated over the State and had a considerable influence upon the minds of the people ; but this reaction in its favor came too late to be of any service to tile bank. After summarily disposing of the reasons (or rather, the motives) of the persons who had so long pursued the bank with unrelenting hostility, by the statement that these in no way concerned the conduct or the merits of the bank; it then pro- ceeded to discuss the bank's political history. It stated that the charter was granted by a Democratic Legislature and of the nine commissioners, under whom it went into operation, and who, by the provisions of the act of incorporation, were its directors, "a majority were men whose democracy no man dares question." It went into operation in 1837 at the inception of a great financial panic which resulted in nearly a complete prostration of the business of the country. Within a year many of the merchants and all the banks in the Mississippi Valley had suspended with one exception. It had suffered with the others; but had sustained itself until 1841, several years after every bank West of the Alleghanies, with the exception noted, had suspended. That in 1842 it resumed and paid out specie until a draft had been protested and was forced to suspend again. The statement is made that the first suspension I Executive Document, 1st Sess. I9th Cong-., Vol. VIII, 1845-46. Doc. 226, p. 1228. 112 Early History of Banking in Iowa was the result of an "inevitable participation in a common calamity, rathtir than from any design to defraud." The interests of the bank prompted it to pay specie, if pos- sible, during the entire period of this " universal suspension ;" for if it could only have accomplished this, the very fact that it was the only bank that had been successful in conducting its business upon a specie basis would have conduced to greatly extend its business, so that its profits would have exceeded those that it could have made by suspending on its then limited business. If it could have gained by fraud the time to have perpetrated it was at the time of the commencement of the general suspension before its specie funds had been exhausted, as it could have refused the specie to the note holders, realized the premium upon it and afterwards refused to resume specie payments. Instead of doing this it exhausted itself of specie in the redemption of notes, and then resumed at the earliest opportunity; and the bank could have sustained the payment of specie if the Territory had paid its debt past due to it, and still unpaid. But the most decisive evidence of the lack of an, attempt to commit a fraud is shown by the bank in leaving its property and debts, more than enough to meet the demands against it, exposed to the legal action of its creditors without any attempt of removal or concealment. During this period of second suspension the bank, while not doing any business or making any money, paid off over one-half of the indebtedness against it. The bank resumed business again in April, 1844, under the present board of directors and cashier, and since that time it had promptly met all of its liabilities. And the claim is made that since that time no charge as to any discrimination, either political or class, can be substantiated, because no preference in any form or shape had been shown. In discussing the section of the charter as to the provision "that hould the bank fail to go into operation, or should it abuse or misuse its privilege \ under the charter, the Legislature might annul, vacate and make void the charter," reserving to Culmination of the Opposition to Banking 113 itself in this form the provisional right to repeal the charter; there is given an account of the different legal attacks upon the bank, giving the attempts to revoke the charter by the Legislatures of 1842 and 1843, Then follows the account of the suit against the bank in the summer of 1844, when it was sought to close up the bank by a writ of quo -warranto showing a forfeiture of the charter. In this trial, it is said, that Judge Wilson decided that suspension of specie payments or refusal to pay on demand, "did not of itself -work a forfeiture of charter; that fraud must he combined^'' The statement was made that "the good sense of every man must commend this decision and distinguish between the participation in a common calamity, involving alike corporations and individuals, and a premeditated design to defraud." The suit was withdrawn because of the "conviction that no evidence of fraud could be presented." It seemed to the directors that this inability of the prosecution to find any evidence of fraud should have been enough to have forever settled the question of the revocation of the bank's charter, as there was no more proper place to determine its forfeiture than in the courts wl^ich are familiar with law and the weighing of evidence. But before these attacks were made, the Legislature, through two of its committees, had made an investigation of the bank with reference to viola- tions of the charter. There was " no doubt," but that these committees made a thorough examination and had reported the facts to the Legislature, and that the different sessions of the Legislature were satisfied that there had been no violation of the charter. Any wrongs complained of, with the exception of suspension, were done before these examinations took place; and these examinations should be accepted by everyone as better evidence than "the report of Mr. Hempstead" wherein "the mere ofinion of one or two individuals" is given that the charter had not befen complied with in regard to the payment of the stock; that this matter, having been once settled, was final until changed by some mode known in law. "The secret attempt of the Legislature to go behind those reports 114 Early History of Banking in Iowa is believed to be unprecedented by any body of enlightened men." The public faith was pledged to continue the charter until 1858; and the "violation of public faith has ever been deemed most disreputable in despotism, how base must it be, then, in a republic, professing to rest upon the virtue of the people and to exist only for their good?" Because of this lack of ability to show fraud arose the unwillingness to permit the bank to be heard in its defence " before any tribunal." "Every principle of law, justice and honor" demanded that the fraud be shown before the forfeiture of the charter by the Legislature or by the courts, and that the officers of the bank be permitted to appear in its defence. That the session of the Legislature which purported to repeal the charter "called for no evidence, summoned no witnesses." The Legislators were misled by the "members from the North" as to public opinion towards the bank and as a result of this "no ceremony was used at the immolation." And " without trial or witnesses, the victim was condemned to death." The Constitution was designed not only for the protection of life, but also of property. If the directors of a bank can be condemned without being heard or notified to appear, they are liable at any time to be declared guilty of a higher crime. " Who is safe ?" Granted that misuse and abuse of the provisions of the charter had arisen, this did not empower the Legislature to depute the power to appoint trustees to take charge of the bank property, as no such provisions are found in the charter and they can not seize it any more than they can any farm " without a stipulation to that effect." The property of the corporation did not come into its possession by any legislative enactment, hence it can not be taken away by such enactment. They obtained this property by purchasing the same as a citizen, and hold the same under law. The Territory has no^ authority over the bank beyond that expressed in the charter. Culmination of the Opposition to Banking 1 1 5 except the "authority it has over the farm and shop," and that does not extend to the closing up of their business. "The directors felt perfectly competent" to manage the affairs of the bank; even if it should be "agreeable" to the "trustees in expectancy" to have control of the property for a number of years until it "might suit their convenience to return the remaining property to its owners." The directors felt it their duty towards the stockholders to offer legal resistance to such an illegal attempt. The case may be summed up on their part by the statement that: "The trustees claim the right to take possession of the property belonging to the bank. The directors deny the existence of such a right. Let the courts decide. If the bank should be defeated, it will submit." In the closing sentence the directors leave the whole matter of the right or wrong of the pertinacious attempts of certain persons to destroy the institution and appealed from the prejudice of the past to facts ; "from the hostility of the few to the justice of the many; from the condemnation without trial to the right of audience in the sacred precincts of the court room; from the artifices of the demagogue to the integrity of the bench, and the incorruptness of the jury-box." This report was signed by John Wharton, Timothy Davis, J. P. Farley, Patrick Quigley, Directors, and M. Mobley, Cashier. 6. Petitions to Congress to Disaffirm the Acts Granting Banking Privileges to Citizens of Territories. In January, 1846, after a five years' struggle over the question, the Legislature of Wisconsin repealed the charter ' of the Wisconsin Fire and Marine Insurance Company, which had been doing a banking business at Milwaukee. The com- pany issued a manifesto claiming that it had in no way violated the conditions of its ''barter, and as the charter would not expire until 1868, it should still continue its banking business. The charter of the Miners' Bank of Dubuque had been for- Incorporated February 28, 1839. 1 16 Early History of Banking in Iowa feited before this, in 1845, and it had also stated its intention to continue in business. The persons in both Territories actively opposed to these two banks circulated petitions and forwarded them to Congress, and on February 17, 1846, the Delegate from Wisconsin, M. L. Martin, introduced the following resolution:' " Resolved, That the Committee on Territories inquire into the expediency of disaffirming and annulling every act now in force in either of the Territories of Wisconsin or Iowa, under which individuals or companies claim to have banking priv- ileges." It was referred" to the Committee and on May n, 1846, its chairman, Stephen A. Douglas, reported^! a bill dis- affirming and annulling these, charters. It was read and referred to the Committee of the Whole House on the State of the Union and reported from it and passed the House of Representatives on June pth.-t In the Senate it was referred s to the Committee on Territories and reported back on July 9th, with the recommendation that it do not pass.* It was taken up for consideration on August 7th, and after a considerable time spent in debate upon it, was, after several ineffectual attempts, laid upon the table by the close vote of 26 to 24. The reason for this action is found that it was near the close of the session. During the consideration of the bill strong opposition to the principle of the bill had been shown to be held by many of the Senators, and any attempt to force its passage through the Senate would cause a loss of much time, through debate, that was necessary for the transaction of more important business. So the disposal of it was settled by the question of expediency. This was the last attempt by Congress to interfere with the banking question of these Territories, as both of them soon after became States. 1 Journal of House, 1st Sess. 29th Cong., p, 421. 2 Ibid, p. 782. 3 Ibid, p. 930. 4 Ibid, p. 1123. s Journal of Senate, 1st Sess. 29th Cong., p. 341. 6 Ibid, p. 396. Culmination of the Opposition to Banking 117 7. The Closing of the Bank. On the i6th day of August, 1845, Judge Wilson appointed Benjamin Rupert and John G. Shields trustees to settle up the affairs of the Miners' Bank of Dubuque ; and approved their bonds.' The trustees sought to obtain possession of the bank but the directors refused to turn it over ; and at the November term of court a suit was brought in the name of the United States by James Grant, relator, which raised the question of the constitutionality of the act that repealed the charter of the Miners' Bank of Dubuque. This case was appealed to the Supreme Court of the Territory of lowa^ from the ruling of Judge Wilson in not sustaining the demurrer of the defendants ; the ruling of the lower court was sustained. The case was then tried upon its merits in the lower court and the act repealing the charter of the Miners' Bank was decided to be constitutional. The directors appealed the case to the Supreme Court. It was tried at the July term of 1848 and the decision of the lower court was sustained.^ The results of these decisions was to legally put the affairs of the bank in the possession of the Trustees ; but in the three years intervening between the passage of the act repealing the charter and the final trial, the affairs of the bank had been settled and it had passed out of existence. On February 25, 1849, ^ meeting of the directors was called to close up their connection with the affairs of the bank. 8. Constitutional Convention of 184.6. («) Shall the Delegates be Elected by a Party Vote .'' The act* providing for the Constitutional Convention of 1846 was passed on January 17th, 1846. Immediately after its passage the question of whether the delegates to it should 1 Docket B, 3d Judicial District (Dubuque County) p. 444. 2 Morris Reports, p. 482. 3 Green's Reports, Vol. I, p. SS3. 4 Chapter 37, t,aws of the 8th Legislative Assembly of the Territory of Iowa, p. 31. ii8 Early History of Banking in Iowa be elected as political partisans was agitated. The Whig press was opposed to a Constitutional Convention to which the delegated had been elected by a party vote. As a typical statement' of the Whig position, the following from a prominent Whig paper of the times maybe taken: "They cling to a party Constitution — and why ? Because they think they are in a majority and can carry out their views. If we are right in this assertion, and we believe that we are, they are tyrants. What is tyranny ? It is the exercise of authority of the strong against the weak. We draw our inferences and call the actions of our opponents tyranny." The Whig party claimed* that they were not contending for a bank in Iowa, and that they did not demand a Constitu- tion providing for one; but they wished to have this question left open for the consideration of the people that they might determine it later for themselves. They believed that the people had good sense enough to act upon this subject with- out the necessity of any constitutional restraint to prevent them from doing mischief. Whig conventions, held for the nomination of delegates, did not adopt resolutions in favor of banks. On the other hand, the larger portion of the Democratic nominating conventions for delegates adopted resolutions instructing the delegates, if elected, to provide a prohibiting clause against banks, and in all cases denouncing them as intolerable nuisances. (b') Resolutions of the Democratic Nominating Con- ventions. As a typical example of one of these is a resolutions passed by the Democratic mass meeting, held at Fairfield on February 21, 1846; it was: " No bank or other institution is ever to be erected by the Legislature with the power of issuing its own 1 Iowa Standard, January 26, 1846. 2 Bloomington Herald, January 31, 1846. 3 Resolutions upon this subject are found in the Capital Reporter, March 11, 1846, and succeeding issues. Culmination of the Opposition to Banking 119 notes, or the notes of any other bank, public institution or private individual; and a further prohibition against issuing by any individual, or individuals, of bills, checks or promissory notes, or other paper to circulate as money." If this resolution had been followed it would have kept out of the state much of the "wild cat" banking that abounded in Iowa in the "Fifties," as it would have prevented the circula- tion of the "Nebraska Bank" money, the issues of the broken Agricultural Bank of Tennessee and of the defunct Talledegah Bank of Georgia. Two of the resolutions passed at Marion, March 1846, throw light upon the opinion held as to the effect of a circulation of bank paper; they were: Resolved, that this meeting is opposed to banks and char- tered monopolies, believing such institutions to be detrimental to the great mass of the community, by creating a fictitious value upon property, and corrupting to the moral tone of society, by causing men to depend more and more upon loans and discounts than upon industry. Resolved, that we are opposed to the circulation amongst us of bank notes of other states, believing it to be an evil from which we have suffered much, knowing that where such bills are circulated, specie disappears. Johnson County, as the seat of government, having within its confines the leading politicians of the party in the Territory, at its convention held on March 14th, 1846, passed the most elaborate and withal the most radical protests against banks, of any of the counties. The three resolutions' devoted to banks follow: 7. Resolved, that believing, as we do, that there is gold and silver enough in the world to answer the purposes of a circulating medium, we utterly repudiate the doctrine advanced by our opponents that banks are necessary institutions and promote the public prosperity; and further, that we regard them as the most deadly enemies to the true interests of the laboring and producing classes, and as tending to sap the foundations of our liberties, as vipers warmed in the bosom of I Capital Reporter, March 18, 1846. 120 Early History of Banking in Iowa the body politic, to sting it to death, as splendid schools for bribery and corruption and as stalking horses for vice and demoralization. 8. Resolved, that a State can not delegate that power to individuals which it does not possess itself; and that, therefore, no bank charter can be granted without a violation of that clause of the Constitution of the United States, which declares that no State shall have power to emit bills of credit or make anything but gold and silver a legal tender for the payment of debts. 9. Resolved, that experience having taught us, that when corrupting money power enters the field against the people's rights and the federal constitution, the latter forms no adequate safeguard to the former, but is trampled under foot with impunity, we are in favor of the incorporation into our consti- tution of a provision expressly prohibiting the incorporation of banks and other institutions with the power of issuing its own, or the notes of any other institution or individual to circulate as money." The election of delegates was fought out on party lines, (c) The Constitutional Convention. The Constitutional Convention of 1846 met at Iowa City on May 4th and continued in session until May 19th. There were thirty-two delegates; of these ten were Whigs and twenty-two were Democrats. The Committee on Incorporations consisted of Bates, Dible, Grant, Olmstead and Ross, all Democrats. As the result of their labors they made their report' upon Incorporations on May 7th; it was as follows: 1. No corporate body shall be hereafter created; renewed or extended, with banking or discounting privileges. 2. The stockholders in all private corporations, except corporations for the purposes of education, charity or religion, shall be responsible in their individual and private capacity for all debts and liabilities of every kind, incurred by such corporation. 3. The Legislature shall have the power to amend, alter' or repeal all laws creating private incorporations. I Journal of Convention, p. 38. Culmination of the Opposition to Banking 121 These provisions were in consonance with the political action of the party to which the committee belonged. In the Constitutional Conventions of this year, where that party was in power, we find nearly the same provisions were put in the constitutions — Missouri and Louisiana. These sections came up for discussion and a motion was made to substitute for the report' : "Whereas, all sovereignty resides in the people, and the creation of a corporate body is one of the highest acts of sovereignty, therefore, this Conven- tion conclude, that the people have the right, through their representatives, to grant such corporate privileges as may be deemed conducive to the public good." This was laid on the table until the 12th and was then amended by adding: "or the right to prohibit them altogether through this Convention, their representatives, if they, the people, should deem such prohibition for the public good;" but the amended substitute was lost. A substitute for the first section^ was offered in the follow- ing form: 1. No corporate body shall hereafter be created, renewed, or extended, with the privilege of making, issuing, or putting in circulation, any bill, check, ticket, certificate, promissory note, or other papers, or the paper of any bank, to circulate as money. 2. Corporations shall not be created in this State by special laws, except for political or municipal purposes, but the Leg- islature shall provide by general laws for the organization of all other corporations, except corporations with banking or discounting privileges, the creation of which is prohibited. The stockholders shall be subject for such liabilities and restrictions as shall be provided by law. An amendment^ to this first section was offered in the form of an additional clause by which the law creating such body renewing or extending its privileges should be published in the newspapers for four months before a general election for 1 May 9, Journal of Convention, p. 56. 2 Journal of Convention, p. 71. 3 Ibid, p. 72. 122 Early History of Banking in Iowa county officers and should receive a majority of all the votes cast. It was lost by a vote in which the party lines were quite closely drawn. A substitute for the first section' was then offered by Mr. Dible; it was as follows: 1. No corporate body shall hereafter be enacted, renewed or extended with the privilege of making or issuing or putting in circulation any bill, check, ticket, certificate, promissory note, or other paper, or the paper of any Bank to circulate as money, except the question of Corporation with the law enacting the same, before it become a law, shall have been submitted to a vote of the whole people at some convenient election, the the majority of whose votes shall be deemed a confirmation, of the same. This was passed by a vote of i6 yeas to 15 nays. This section conferred the power of granting charters for banking purposes and is very similar to the third section of the article on Incorporations in the Constitution of 1844. This change from the ultra anti-bank provision of the report of the Com- mittee on Incorporations was effected by the Democrats who held a conservative position upon the question of banks, unit- ing with the Whigs in voting for this substitute. After this substitute was passed, the anti-bank men joined with the con- servative Democrats and Whigs in placing strong restrictions in any charters that might be granted under the preceding section. For by a vote of 28 yeas to 3 nays there was added as a second section' the following: 2. The General Assembly may at any time propose alter- ations or a repeal of any such corporation that may have been created, and such proposition shall be submitted to the people as provided in the foregoing section, and shall be confirmed in like manner." An attempt to make this still stronger by giving the Legislature the power of immediate repeal met with failure. In the next morning's session the details of the method of 1 Journal of Convention, p. 72. > Ibid, p. 72. Culmination of the Opposition to Banking 123 granting charters was provided for' in that "No act of incor- poration shall be submitted to the people, until the same shall have been published at least twelve successive weeks at least in twelve of the weekly newspapers published in this state, provided, that that number of newspapers are published at the passage of such act, nor shall such publication be made until the party applying shall have deposited with the State Treas- urer, a sum sufficient to defray the expenses of such publica- tion." This was V»=