Page:A History of Banking in the United States.djvu/427

 it to the benefits of the suspension acts of the previous winter. The same newspaper said that the Bank of Michigan owed the United States, in 1839, $80,000; it wanted suspension; it got it; raised the circulation from $150,000 to $200,000; bought flour and pork; sold them for enough to pay the debt, and then failed, leaving the circulation in the hands of the people. At the end of 1841, the people in the country districts of Michigan adopted the "Macon specific," whereupon specie reappeared.

In January, 1842, the law authorizing suspension was repealed, which forced the Bank of the State of Michigan into liquidation.

.—A stay and replevin law was adopted February 24, 1840, the delay being four months.

This State became involved in financial dealings with the Morris Canal and Banking Company. By joint resolution of February 24, 1840, the Legislature expressed their dissatisfaction with the security which had been taken by the president of the Bank of the State for $1 million State bonds, which had been delivered to that company. The Fund Commissioners were directed to require additional collateral. The amount of the stock of the State in the Bank of the State, as we learn from an act of February 6, 1841, was $1,304,950. The amount which it had advanced to pay the installments for private stockholders was $224,000. It was ordered that this should be set apart to redeem the bonds issued for the bank. The sinking fund was, at the time, loaned out on mortgages. It was to be recalled and invested in bank stock. The sinking fund was also to pay to the treasury all surplus over its interest and charges. These two grants from the sinking fund were to be loans to the State at six per cent. The Bank of the State might issue for five years not over $1 million in small notes, not less than $1.

An appraisement law was passed February 13, 1841. Rents and profits for seven years must first be offered for sale. The limit of valuation was one-half. February 15th, the college and other funds which had been loaned out were ordered to be recalled and invested in bank stock.

The Bank of the State of Indiana made losses until 1841, $58,000. In December, 1842, the bad and doubtful debts were nearly $200,000, but there was a surplus fund far exceeding this. The bank resumed specie payments June 15, 1842. Within a few months, at that period, the currency of Ohio, Kentucky and Illinois was reduced from $15 millions to $5 millions, and that of this bank from $2.7 millions to $1.7 millions. No convulsion at all was produced. The State had issued treasury notes of which this bank and its branches held $634,710 which they could not circulate. Two of the branches were very much crippled by them; two others were in similar difficulty from large loans to stockholders. The president did not take ground against the stay law, but said that it must be restricted so as not to apply to future contracts, if business was to recommence. He mentioned that within a short time specie had been transported in large amounts from Indiana to New Orleans.