Page:A History of Banking in the United States.djvu/67

 that State was the Farmers' Bank of Virginia, incorporated February 13, 1812, with a capital of $2 millions. Of the shares 3,334 were reserved for the State, if it should choose to take them. It was to last until 1827 and have four branches. It might not own more than two and two-third times its capital, nor owe more than three times its capital besides deposits, unless authorized by the State. By a subsequent law it was allowed for two years to make loans to the United States, in view of the impending war. It was forbidden to buy any stock but its own.

The banking history of begins with the Mutual Fire Insurance Company, incorporated in 1803, which appears to have issued notes, although this is not certain. In the following year the Newbern Marine Insurance Company was incorporated, of which the same may be said. The president and directors were authorized to "direct the issuing of policies, notes, and all and every instrument in writing that may be necessary and proper in the transaction of the affairs of the company." In the same act a bank was established at Newbern, with a capital of $200,000, to last until 1820; $50,000 to be raised at once; the debts, exclusive of deposits, never to exceed three times the capital. In the earlier part of the century this ratio was the usual one in the southern States. The State reserved the right to subscribe $25,000. If it did so, the note issue might be increased in proportion. In the same year the Bank of Cape Fear was established at Wilmington, as was said, on account of increasing population and commerce, to last until 1820; capital, $250,000. The State might subscribe, within three years, $25,000. This bank might become a branch of the Bank of the State, if one should be founded.

A legislative Committee of Investigation, in 1828-9, reported: "It is in evidence to the undersigned that soon after they [these two banks] went into operation, they contrived to get possession of nearly all the paper money which had been issued on the faith of the State, which, being at the time a legal tender, enabled them to evade demands for specie, which they did by thrusting this ragged paper at those who presented their notes for specie." In 1814, the two banks were authorized to increase their capital to $800,000 each; which increase, this same committee said, was taken in the stock notes of favored individuals.

The State Bank of North Carolina was first incorporated in 1805. It was repealed in the following year, and is therefore important only as showing the trend of ideas at the time. The most peculiar provision was that the bank might open an account with any farmer, mechanic or manufacturer, for any sum between $100 and $1,000, on which he might draw or deposit not less than $50 at a time, paying interest on debit balances and receiving interest on credit balances. He must give security of land or other property satisfactory to the bank, and not over one-fifth of the capital of any bank or branch might be in these accounts at one time.