18938. Bank of North America (Philadelphia, PA)

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# Repeatable Charters. BY PENNSYLVANIA. The Bank of North America was chartered by the continental Congress of 1781, but as the power of Congress was doubted it received a charter from the State of Pennsylvania also-capital not to exceed ten millions. It began business on $400,000 paid. It issued excessively; on being run upon, it run on its debtors. "The reduction of loans," says Homans in his Dictionary of Commerce, "occasioned a general pressure for money, bankruptcies, injurious extortions, the disappearance of specie, and the impossibility of procuring money at the legal rates of interest. Petitions were presented to the Legislature for a repeal of its charter. It was repealed. It continued to do business under its Congressional charter. In 1787 its State charter was revived its capital cut down to two millions, and it went to work on $800,000 paid in. In 1812, the Legislature chartered twenty-five banks; aggregate capital nine millions. Governor Snyder vetoed the bill, giving the reason that "it would invite to visionary speculations, divert men from useful pursuits, and demoralize the community." In 1814, a bill was passed over his veto incorporating forty-one banks; capital seventeen millions, of which one-fifth was only required to be paid in. These banks, were, of course, on the plan of the old system of the common stock banks; no individual responsibility; no security for the notes, and no specie required by law to be kept; and small notes. A complete trap to enable adventurers to gull the community, under the public sanction of respectability given by charters. "Thirty-seven went into operation, and in four years fifteen of them were officially announced as dissolved, and were insolvent."-Homans. "In 1820, there were thirty-six banks in operation, capital fourteen millions; and an indefinite number of freeboters. It is an unpleasant task," says Homans, "to run over the next decad'of ten years, from 1820 to 1830. Throughout almost this entire period, there was a rapid succession of untoward events, leading to embarrassments, insolvency, litigation, dishonesty and flagrant crimes. It is a continuous history of bankruptcy throughout a large portion of the country, and of frauds on the country without any previous parallel. Banks were bribed to fail, that their stockholders might pay their indebtedness in the currency of the same bank, after it had reached its lowest point of depreciation, commonly fifty per cent. Money mills were established in New York, Philadelphia, and other places, which were based on the system of the celebrated Melapar, the keeper of an oyster cellar in New York, who had the adroitness to swindle the community out of $500,000 by his notes of circulation, and whose motto was, 'make money honesily if we can, but rascally if we must.'" Such is the description of Homans of the period from 1820 to 1830. In 1837, the Pennsylvania Bank of the United States went down, with a total loss of its stock of thirty-five millions of dollars, and others too numerous to mention. The banks of Pennsylvania resumed nominally in January, 1839. In October they suspended again;-re-suued in January, 1841; suspended in February, and resumed in March, 1842. The last suspensions and failures are too late and fresh in the recollection of all to be noticed. These are the events which have led to the adoption of the great measure of reform more important, than all others to-wit: the iguominious expulsion from their system of bank legislation of all charter contracts, so as to enable the Legislature from time to time, to rectify the fraudsand blunders of those engaged in this pursuit of making a cheap currency for the people. The general law in Pennsylvania, regulating banks, contains the following clause: "The Legislature reserves the right to alter, revoke, or annul the charters of all such banks, whenever in their judgment, it may be necessary for the public welfare; in such manner, however, as to do no injustice to the incorporators."-Purdon's Digest, p. 76, sec. 6. The Legislature of Pennsylvania could say, at any time when in their opinion it became necessary to secure the public against loss by failing banks, that the stockholders should be in lividually liable, as other traders are, for the whole amount of their notes and debts, as they are in England, Scotland, and Ireland; and as they are in some of the States "of the Union; or that they should be liable for double the amount of their stock, to be held as a reserved fund for the payment of debts, as in many of the other States. The Legislature could say that they should deposit bonds in the hands of a public officer as security for the redemption of their notes, or order an increase of their bonds, if necessary. The Legislature may, if in their judgment it be necssary, order them to withdraw all notes under ten, or twenty, or fifty dollars, if that should be necessary to secure a sound currency; or may order them to keep ten per cent of their debt in specie, or twenty per cent, or thirty-three per cent, or fifty per cent, if such amount be necessary in their judgmennt to secure their notes against suspension and depreciation; or it may declare that they shall issue no more noles, make no more loans, and gradually withdraw their capital, colleet their claims, pay their debts and close their concerns The Legislature owes it to the people to make the paper currency secure and to make it sound and convertible into gold; and to surrender the power to do so for long terms of years, to sell out for the period of a whole generation to a few individuals a monopoly of the most vital pursuits of the people, is a surrender of legislative power which may well be questioned and which is sure to result in abuses of the worst kind. No other pursuit is sold out to monopolists and placed beyond legislative control. Why should banking be? Why not grant by chartered right the sole right to manufacture and vend soap or salt in Tennessee for a term of years, for so much per tou, to be paid into the treasury, as Charles the First did in regard to the manufacture and vending of the former article in the city of London. Pennsylvania resolved that she would no longer sell out the profits of this business She would make no more contracts with a portion of her citizens, that her Legislature should not regulate or prohibit the manufacture of paper money, whenever in her judgment such business should bere gulated or prohibite 1. The tendency of this system to abuse was great, and the correcting power was proper to be reserved. But that State, like many others, did not stop in regard to that branch of business, in which the correcting power is of all others the most necessary; it extended this power further. The general law in regard to the creation of manufacturing incorporations, declares that the Legislature reserves the right to alter, amend, or repeal the act, in such manner as to do no injustice to the corporators; but such amendment, alteration or repeal shall not take away, alter, or impair the remedy against the company, its officers or stockholders,