Page:A History of Banking in the United States.djvu/441

 specie in hand, and circulation was limited to capital. In 1863, Amasa Walker declared: "I know that the banks of Massachusetts are almost entirely regardless of the law which requires them to keep fifteen per cent. in specie."

In a banking law of, of 1845, one-half of the capital was taken as a measure of what might be considered the permanent circulation of a bank, which would not be presented for redemption, and banks were required to hold in specie one-third of any issue beyond this amount.

The charters of all the banks in Maine expired by law, October 1, 1857. Sixty-five enumerated banks were re-chartered, April 14, 1857, for ten years, subject to a tax for schools of one per cent. per annum on their capital. The relation of specie reserve to circulation was kept as in the law of 1845. The reserve in the Suffolk Bank, not exceeding $3,000, might be counted as in the vault, but at least five per cent. of the capital must be actually on hand in specie.

The Bank Commissioners, in 1862, stated that the banks found that their redemption in Boston was not nearly so prompt as in former days. The only explanation the Commissioners could give was that, in the unsettled state of public affairs, the people had more confidence in the local currency than in any other paper currency.

.—Under the system of deposit-stock, the civil list fund of the State, amounting, in 1852, to $406,000, was deposited in banks; likewise $359,900 belonging to the school fund. The income for that year was at the rate of eight and fifteen-sixteenths per cent.

When the national bank system was established the question of the status of these "qualified" shares became serious. The Supreme Court of the State decided that a bank which had surrendered its State charter, as a preliminary to becoming a national bank, must pay the State a share in its surplus, as it would do if winding up. Another bank, which had somewhat hastily included the State in its articles of organization as a national bank, was held to have waived its chance to exclude the State, and it was obliged to retain the State in the national bank. In general the transition to the national system put an end to this old Connecticut arrangement.

A general banking law was passed in this State in 1852, after a hard struggle of two years' duration. A special stress was laid upon the provision that every bank must be one of discount and deposit, and not simply of circulation. This law, however, was so modified in 1855 as to be in effect repealed, by converting all the free banks into joint-stock banks under a general law. The notes were to be surrendered and the securities taken up. Circulation was limited under the new law to one hundred and fifty per cent. of the capital. In case of failure, the note-holders "shall have a lien on all the estate of said corporation of every description." No more banks might be formed under the law of 1852. June 26th, all the