Page:A History of Banking in the United States.djvu/470

 have "no power to authorize lotteries for any purpose, nor to revive or extend the charter of the State Bank or the charter of any other bank heretofore existing in this State." The credit of the State might not be loaned to anybody; furthermore "no State bank shall hereafter be created, nor shall the State own or be liable for any stock in any corporation or joint stock association for banking purposes, to be hereafter created. The stockholders in every corporation or joint stock association for banking purposes issuing bank notes, or any kind of paper credit to circulate as money, shall be individually responsible to the amount of their respective share or shares of stock in any such corporation or association for all its debts and liabilities of every kind." No act to grant banking powers should go into effect until after it had been approved by a majority of the votes at a general election.

Illinois adopted a general banking law on the New York model, over a veto, February 15, 1851. It was put to a popular vote and approved. It was amended, perfected, and extended February 14, 1857. A case arose in 1859, in which the Reapers' Bank, being called on to redeem two packages of notes of $500 each, refused to do it for the total sum, but spent more than a banking day on each package, redeeming only a part of it, one note at a time, in dimes and half dimes. The unredeemed notes were protested and sent to the Auditor for redemption out of the deposited bonds. The bank sought an injunction, but the Court refused it in terms which characterized the proceedings of the bank as improper, and unwarranted, and not a compliance with its lawful duty.

From 1859 to 1861 the bank note currency of this State fell into the utmost confusion and discredit, in common with the rest of the currency of the northern Mississippi valley. Apparently from a belief that the Bank of the State of Indiana had rescued that State from the similar condition into which it had fallen in the early fifties, a charter for the Union Bank of Illinois was passed February 20, 1861. It was a disguised Bank of the State which the Constitution forbade, and departed from the Indiana model in several very important respects, and in a questionable way. The law was rejected at the referendum in November, by a large majority.

In June, 1861, the Bank Commissioners made a call on twenty-three banks for additional securities, leaving only seventeen which were not under call. The "stump tail" currency, as it was called, was then disappearing; specie was coming into use, and bank notes were treated as merchandise. The Wisconsin paper was treated in the same way.

In August all new banks were required to redeem their circulation in Chicago or Springfield at not more than three-fourths of one per cent. discount, and after January 1st at not more than one-half of one per cent. The old banks were allowed to adopt the plan of central redemption and to increase their circulation by the deposit of Illinois bonds at par without regard to their market value.