CHAPTER VII.

CULMINATION OF THE OPPOSITION TO BANKING.

1. Petition for a Stock Bank at Iowa City.

In the special session of 1845, Mr. Downey, the representative of Johnson County, presented the petition of James Robertson and 55 others, praying the Legislature to charter a Territorial Stock Bank, and at the same time, previous notice having been given, introduced1 No. 31, H. R. File, “A Bill to charter the Bank of Iowa in Iowa City." The bill has not been preserved in the archives of the State, but fortunately the petition has been. This petition clearly states the condition of the times and the feelings of the people, hence it is believed to be worthy of introduction here.

To the Honorable the Council and House of Representatives of the Legislative Assembly, of the Territory of Iowa: The petition of the undersigned, citizens of said Territory, represent, That in their opinion the inhabitants of the Territory would be greatly benefited, and the interests of agriculture, commerce and manufacture much advanced, by the establishment of a STOCK BANK.

Your petitioners are aware that the systems of banking, which were unfortunately adopted in the South and West some years since, has been a tendency to prejudice the public mind against every species of bankpapers; but whatever evils may attend a paper currency, and it must be admitted that there are many, its policy cannot now be regarded as an open question. The State claims and exercises the right of creating Bank Incorporations, and they form and will continue to form a part of our commercial policy; and each new state will be bound in Defence to furnish her own paper currency. The specious plea of the opponents of all banks "that what is wrong in itself can not be made right by considerations of expediency," if

1 Journal of House, p. 81.

originally good, is not now applicable. A mixed currency is entailed upon us whether it be right or wrong, and it is the part of wisdom to legislate accordingly.

There are in Iowa almost twenty thousand families; each family, on an average, sustains a loss annually of at least two dollars, making an aggregate of $40,000!! The people ought not, and it is to be believed, will not submit, to be thus taxed for the use of a currency they had no voice in creating, and over which they can have no control.

Your petitioners believe that a bank charter can be so framed as to be acceptable to a large majority and eminently useful to all. And herewith submit a plan, in the form of a bill, which they request may be referred to the consideration of a Joint Select Committee of both houses. It has been framed in the spirit of compromise and concession and your memorialists pray that it may be reported and passed without material alteration or amendment. And your petitioners as ever pray.

Among the signers were: James Robinson, Wm. Penn Clark, Alex Grant and Morgan Reno. After the second reading it was referred to a Select Committee by the request 1 of Mr. Downey and was never reported back to the House.

I

The organ2 of the Democracy in its issue about the time of the introduction of the bill names it as "a bona fide incipient little monster, projected by our enterprising Whig population, but destined never to receive the animating influence of the Legislature, which is necessary to bring it into vital existence, and give it a local habitation as well as a name."

Commenting further, it enquired if it would not be a "beautiful piece of policy" for a Democratic Legislature to be coaxed into "giving birth to such a vampire upon the body politic," and thus create a "machine" for the swindling of "honest industry" out of its honest earnings for no other purpose, but to support in Iowa a "pampered bank aristocracy." It also saw in this a political scheme, for if a charter was granted, then it would become an "effective weapon" against the

I Journal of House, 7th Legislative Assembly of Iowa Territory, p. 83. 2 Capital Reporter, May 20, 1845.

Democrats in future political contests in the State. For all the time the Federalists had been crying out for a bank, they had been endeavoring always to "attach the odium of the bank policy" to the Democracy, and if they could be successful in this attempt it would be an available argument for further political contests. In conclusion the writer stated that the consideration of the possibility of the Legislature, as politically constituted, ever granting such a charter, was simply preposterous. The editorial was closed by a sentence which shows with what party feeling the bank question was considered by the radical Democracy of the time: "We bespeak for this hybrid little monster a warm reception, a summary disposal, and a speedy quietus."

2. Repeal of the Charter of the Miners' Bank. (a) In the House.

The Seventh Legislative Assembly met on May 1st, 1845; and on the 8th of May Mr. Wilson, previous leave having been given, introduced' in the House, No. 2, H. R. File, "A bill to repeal the charter of the Miners' Bank of Dubuque, and to provide for winding up the affairs of the same." This bill was read the first time; and on the succeeding day was read a second time, and referred to the Committee of the Whole for its consideration on May 12th. It was considered in the Committee of the Whole on that day3 and reported back without amendment. The rules were then suspended, and it was read a third time. The vote on its final passage being unanimously in the affirmative. It was then referred to the Council. (b) In the Council.

It was read for the first time in the Council on May 13th, and after an unsuccessful attempt by Mr. Hempstead to have

1 Journal of House, p. 13.

2 Ibid, p. 24.

3 Ibid, p. 48.

4 Journal of Council, p. 33.

it referred to the Committee of the Whole, it was referred to the Committee on Incorporations.

On the next day the Committee on Incorporations submitted its report through its Chairman, Mr. Hempstead.1

The report recites that the first section of the act provides for the repeal of the bill incorporating the Miners' Bank of of Dubuque; "and as it had been urged on a former occasion, that the Legislative Assembly of the Territory of Iowa, 'upon its own motion and upon facts which itself fixes upon a strictly legislative bearing,' has no legal authority to repeal the charter of this or any private corporation." The committee then examined and ascertained the powers with which the Legislature was invested. They found power to legislate upon this subject in the 6th section of the Organic Law of the Territory of Iowa which provides "that the Legislative power of said Territory shall extend to all rightful subjects of legislation." Under this provision of the Organic Law they contended that it would be a rightful subject of legislation; but that in addition to this, that it would be "an act of justice to the people of Iowa," many of whom had suffered great loss and injury on account of the mismanagement by the officers of the corporation. As an additional evidence that this is a rightful subject of legislation, it is shown by the 22nd section of the Act of Incorporation that the Legislature in granting the charter has reserved to itself the right "at any time to annul, vacate and make void the charter if said corporation should fail to go into operation, or should abuse or misuse their privileges."

In order to determine whether the corporation had abused or misused its powers and privileges, and for the purpose of establishing the fact of gross mismanagement and a wanton abuse of the privileges granted," they incorporated in the report the testimony of John T. Fales, Timothy Davis, a director, M. Mobley, Cashier of the bank since June, 1844. This testimony was given before a committee of the House of

I Journal of Council, p. 40.

2 Ibid, p. 217, et seq.

Representatives in the session of 1843. The testimony as submitted with the report is but an abstract of that given in the majority report of committee of the House, and as the essentials of the testimony have been stated above it is not necessary to insert the abstract here.

The testimony is summed up as showing:

Ist. That the corporators have misused their charter, because they had perpetrated a fraud upon the people by not paying in the capital stock in accordance with the law of Congress confirming the charter, which provided that no bills or notes should be issued until one half of the capital stock shall have been actually paid in. That until the capital stock was actually paid in by the stockholders in the legal currency of the United States it did not have a legal existence as a corporation. That this was a condition precedent to legal existence; but instead of paying in legal coin of the United States, they gave their own notes and commenced the business of banking. They claimed at that time, and now claim, the right to exercise the corporate privileges conferred upon them in direct defiance of the law granting the corporate existence.

2nd. Persons have been elected directors of the bank who were not bona fide owners of the stock, when the law of Congress, confirming the charter, declares that "the directors shall all be stockholders in the institution." That the law did not contemplate nominal stockholders-persons who did not really have an interest or a responsibility in the affairs, who were merely directors for the owners of the bank; but the spirit of the law was that they should be persons who had an interest in the business affairs of the bank through a real ownership of its stock.

3rd. That the bank had suspended specie payment from March, 1841, to July 1st, 1842, and after paying specie for a week "again suspended for a great length of time." This was contrary to the provisions that the bills "obligatory, and of credit, notes and post notes, when demanded at their banking house should be paid in the legal coin of the United States."

The refusal to pay specie for its bills was clearly a violation of this provision. As evidence that the suspension of specie payments by banks having similar charters had been considered by the Legislatures of many different States, it was only