Manhattan Company's business was banking and nothing else. It is very prosperous to this day.

Among the famous New York Banks created during the first quarter of this century were included the Merchants' Bank (1804), and the well known Chemfcal Bank (1825), which began as the "Chemical Manufacturing Company." In 1819, there were, in New York State, thirty-three banks in operation, when occurred the first failure. Down to 1830 there were forty-three Banks and only eight failures altogether.

In 1838, the New York Legislature passed a free Banking Act.

Pennsylvania.-The Bank of North America, of Philadelphia was founded by Act of Congress in 1782 and rendered great service to the Revolutionary cause. Robert Morris, Washington's Superintendent of Finance, was instrumental in creating this institution which provided for the most urgent needs of the Government. Later the Bank of North America operated on a Pennsylvania Charter, repealed by political intrigues in 1785, but renewed with increased power in 1787. When it joined the National system it obtained from Secretary Chase the unique favor of keeping intact the old name of Bank of North America without the statutory addition of the word "National."

'South Carolina.-The Bank of South Carolina was started by act of the Legislature in 1812; its capital being furnished by the State, which stood sponsor for all its acts and drew upon its resources whenever it felt like it. The Bank, having a monopoly of the circulation of notes, made a great deal of money. In 1848 an official report showed that the Bank had handled enormous sums of money, and while sustaining the State credit and issuing as high as $1,460,000 of bank notes, had never suspended specie payment. It went through the war without faltering, and yet in 1870-one year before its charter expired-it was put in liquidation by the Legislature. It could boast of a succession of exceptionally good, honest, capable managers, and its career was an honor to the State.

Many other State Banks could be mentioned which did business either with monopolistic charters or as direct representatives of the States that created them, or simply as private cor

A MODERN BANK BUILDING-THE ILLINOIS TRUST AND SAVINGS BANK, CHICAGO.

porations organized under the laws then existing. The State Bank of Indiana was one of the most successful among them, and the name of Secretary of the Treasury McCulloch was for years connected with it, to the honor of both. In 1857, all Banks in the United States suspended payment, except the Chemical Bank of New York, the Kentucky Banks and the State Bank of Indiana.

But we must limit ourselves, as space is precious in a Handbook of this kind, and we will close these historical remarks by just adding some facts, generally forgotten nowadays, concerning the two attempts made, early in this Century, to organize and preserve, as a permanent institution, a Bank based somewhat on the principles of the Bank of England and the Bank of France.

II. THE TWO "BANKS OF THE UNITED STATES." Alexander Hamilton, Washington's Secretary of the Treasury, was instrumental in creating the first "Bank of the United States," chartered by Congress in 1781. The capital was $10,000,000: $8,000,000 of which was subscribed by the public in one day, paid, part in cash, part in 6% Government obligations. The United States subscribed the balance, paying it in ten annual installments, with interest at 6 %, and preserved the right of inspecting the Bank's affairs, whenever it cared to. The Bank was permitted to issue notes up to the total amount of its assets. Curiously enough, the deposits were included in the assets as far as the limit to the issuing of notes was concerned. The Bank was such a great success that, in 1809, it was officially reported that the United States had sold out their shares with a profit of $671,860, besides receiving 8% % yearly dividends. The circulation was small, the assets enormous and the Bank had not dealt in real estate loans or such slow-realizing assets. The charter was to expire in 1811, and the two parties in presence at the time, the Federalists and the Republicans, took issue concerning its renewal, the latter having steadily protested since Washington's days against any Bank being chartered by Congress.

War with England and perhaps France was in the near

contingencies, and Secretary of the Treasury Gallatin recommended the renewal of the Bank's charter with a capital increased to $30,000,000. provided it would lend three-fifths of its capital to the Government in case of need. Jefferson headed the bitter fight against Gallatin's plan and the Bank charter renewal. The fact that a large number of shares of. the Bank were held in England helped its adversaries to make out a pretended case of anti-patriotism against this institution. Henry Clay was among the strongest opponents of the institution. On the 20th of February, 1811, on a tie vote in the Senate upon the motion passed by the House by a majority of one not to renew the charter, Vice-President Clinton gave the casting vote against the Bank, which went forthwith into liquidation. It paid the stockholders $434 for each $400 share. The country went to war depending upon State Banks for the needed resources, and of these, all but a few suspended specie payment in September, 1814. During that short period (1811-1814) which ended in a calamitous financial crisis, over 120 Banks were chartered by the States and proved themselves unworthy of the confidence granted them by the public. Their notes were issued broadcast, and, beginning by losing from their par value, they gradually became totally worthless.

As early as October, 1814, Secretary of the Treasury Dallas recommended the creation of a new Bank of the United States with a capital of $50,000,000, but the first scheme was vetoed by President Madison in the form given it by Congress. The next year a similar plan, vigorously urged by President Madison, Secretary Dallas, Webster, Calhoun and other prominent Congressmen and Senators was passed by both houses and signed by the President April 10, 1815. It provided for another United States Bank, with $35,000,000 capital, one-fifth subscribed by the Government. A bonus of $1,500,000 was paid the United States for the granting of the charter. Special provisions were made against foreign stockholders voting their stock.

The new Bank, through terrible mismanagement and especially through the nefarious practice of loaning as much as 120% of the face value of the stock to shareholders, with the said bank stock as the collateral, became practically insolvent