Page:A History of Banking in the United States.djvu/60

 in the second, and the Southwest in the fourth, and the Ohio States in the sixth.

In 1808 Andrew Dexter bought up all the outstanding shares of the Farmers' Exchange Bank, giving for them his own notes or notes which were the property of the bank. He then put in a new set of directors. During January, 1809, he was writing constant letters from Boston to urge the cashier to sign notes as rapidly as possible and send them to him in great quantities, with complete secrecy. He also gave orders that notes should be redeemed only by drafts on Boston, or with vexatious delays. When at last the attention of the Legislature was drawn to the matter, Dexter tried to persuade the cashier to pay no heed to its summons. The Committee of Investigation found in the bank $86.48 in specie. The books were in such confusion that the actual outstanding circulation could not be definitely ascertained, but it was thought to be $580,000. "It is impossible for us to picture the ruin and distress that followed, the effects of which are still remaining. It is said, and we presume correctly, that in one county of this State there were $100,000 of the bills of the Farmers' Exchange Bank in circulation at the time it failed, and probably in the State there were $400,000 or $500,000, all of which, after being bartered at various discounts, became a total loss to the last holders, which, in most instances, were the poorer and less informed parts of the community. There is no doubt that thousands of farmers will be ruined, and leave their families in poverty, in consequence of the facility with which they obtained money at the banks by mortgaging their estates."

It was in the name of the Boston Exchange Office that Dexter first approached the Farmers' Exchange Bank. He had seen how the notes of one bank could be played off against those of another, especially if they were at a distance from each other. The second bank with which he was operating was the Berkshire Bank at Pittsfield. If a bank issued its own notes in very great quantities, they would become very abundant in the country around it. This would excite attention, and they would be brought in for redemption; but if the Berkshire Bank issued notes of a Rhode Island bank, and vice versa, and if they were widely scattered, these dangers could be averted. The Boston Exchange Office in fact accomplished this on a large scale for its constituents. It is also noticeable that amongst the notes which Dexter sent to the Farmers' Exchange Bank, in order to strengthen it, were notes of the Marietta Bank, Ohio. He thought them quite available, because there was such a demand for remittance to Ohio. We learn from other facts that the circulation of bank notes from one end of the Union to the other was, at that time, wide and easy, far beyond what one would have believed possible.