Page:A History of Banking in the United States.djvu/444

 stockholder was fixed at double the amount of his stock. The receiver of a broken bank was to make a dividend on what he had realized at the end of six months, and then to proceed against the stockholders, under this liability, for a deficiency in the amount requisite to redeem the circulation. It was also enacted that all banks and bankers under this law should be institutions of discount and deposit as well as of circulation; but as no penalty was prescribed, the Comptroller, in 1850, reported that this provision had been evaded.

"It was not until 1849 that the general bank law became a fixed fact in the minds of the capitalists of this State." Until that time they tried to use it to create unsound institutions, or banks of mere circulation. In 1851, it was required that country circulation should be redeemed at New York, Albany or Troy, at one-fourth of one per cent. discount. "This act literally closed the door to illegitimate banking in this State."

In 1851 two Wall Street banks had their nominal place of issue at Tom's River, New Jersey. Besides the two banks, the village consisted of four stores and a public house. The landlord of the public house was president of one bank, and the keeper of one of the stores president of the other. It took three days to go there, present demands, and return to New York. The New Jersey law allowed a bank three days' grace. The bank could therefore send to New York for specie after the demand was made.

In 1851, it was found that the duties of the Comptroller were too numerous and various, and the Banking Department was organized independently under a Superintendent.

The Metropolitan Bank was started in 1851, in order to introduce the Suffolk system, the old troubles with the country notes being still experienced. The circular of the Metropolitan Bank set forth that it would receive all New York State country bank notes, crediting them on the following day at one-fourth of one per cent. discount, and all New England notes, good at the Suffolk, at one-fifteenth of one per cent. discount, provided that the par-redeeming banks should keep a deposit of not less than $5,000 each, paying seven per cent. on any over-draft with respect to that sum, and the Metropolitan paying four per cent. for any excess beyond it.

An attempt was made in 1855 to establish a co-operative system amongst the New York country banks for the redemption of their notes, but it failed. They did not propose to put the currency at par, but to keep it at the legal limit of one-fourth of one per cent. discount.

In the New York system of redemption, the legal limit of one-quarter of one per cent. was not taken as a maximum of toleration, but as a standard of perfection, although there were some country banks which established a par redemption for their notes. The difference between par redemption and discount redemption was thus stated by the Supreme Court of