Page:A History of Banking in the United States.djvu/420

 was allowed to discount notes for sums under $50, and to continue reductions on other notes till they were brought down to $50. Loans to bank directors were restricted and security was to be taken for those which they already had. In July, the Attorney-general had sued out a scire facias against the Union Bank and the Planters' Bank for not paying specie; but these suits were now discontinued because these banks had resumed August 1st.

The Bank of the State and the internal improvement Commissioners of East and West Tennessee could not agree on the construction of the law which required that the bank should pay $100,000 to each section for improvements. The act of November 12, 1842, distributed the money which the bank was called upon to pay.

The Bank of East Tennessee was chartered December 27, 1843, at Knoxville; $800,000 capital; on the model of the Union Bank.

The president of the Bank of Tennessee, in his report of 1843, anticipated a deficit in the following year, because the interest on the internal improvement bonds had been steadily increasing every year, and more bonds were to be issued, so that the profits of the institution could not equal what it would be called upon to pay. He complained also of the burden laid upon the bank to pay the above $200,000 for river improvement, which, he says, will have to come out of the capital. He proposed that expenses should be reduced by discontinuing some of the branches, and that the bank should be relieved from the arbitrary charge placed upon it for the school fund. Of the internal improvement companies in which the State held stock, only one had paid any dividend, the amount being $3,696. The Commissioners appointed to examine one of the branches declared that they could not understand how, if private individuals whose interests were identified with the bank they managed could only make five per cent., it could be expected that a bank owned entirely by the State, and managed by men, however skillful and honest, "whose private interests are in direct opposition to that of the institution which they have been appointed to direct and govern," can make as much for the State. They proposed to wind up the bank and invest all that could be saved in bonds of the State, which were at an important discount. They gave as another reason for this course that it could not "have escaped the observation of the most casual observer that if this institution is continued, under whatever system of re-organization might be adopted, it would be a bone of contention between two rival political parties, the ins and outs, each of which will be contending for the spoils, like vultures for the carcass, so long as any portion of the capital remains."

The president of the bank, in 1845, declared that it had afforded the relief which it was founded to give and ought to be wound up.

.—A convention of a large number of banks of Kentucky, Indiana, Illinois, and Ohio was held at Louisville, January 25, 1841, to consider resumption. It adjourned without action and without day, but