Governor Grimes, coming directly from the people, recognized and stated the wants and demands of the people in his message' of Dec. 9, 1854. There could be no doubt, he said, of the wishes and demands of the people in regard to the amendment of the Constitution of the State; and that it would be a waste of time to reproduce the arguments in favor of a change. The amendments could by the terms of the present instrument, be made only by a Constitutional Convention; and the only question for discussion was, "Should the people have the privilege of determining for themselves at the ballot box whether they want revision or amendment at all." No valid excuse could be given against the submission as it would not cause any expense; for in accordance with the terms of the present Constitution it must be settled at a General Election. Consequently a decision against the amendment would cause the State no injury; and if in favor of the revision, "The genuine doctrine of popular sovereignty would be vindicated."

At this session of the General Assembly there was set in motion the machinery to call a constitutional convention that should amend the Constitution of 1846, so that a banking system might be established and also that internal improvements might be made by the state. The result was, the law2 that gave the permission for the people to vote3 upon the question of "Convention" or "No Convention," which was carried, and the subsequent meeting of the Constitutional Convention of 1857.

This Convention soon found that the attempt to amend the organic law so as to make it acceptable would be futile and it proceeded to form a new Constitution. In this provision was made that the General Assembly could establish with subsequent approval of the people:

A state bank with branches to be founded upon a specie basis and the branches to be mutually liable for each other's issues.

1 Journal of House, p. 45.

2 Approved January 24, 1855, Laws of Iowa, 1855, p. 115.

3 On August 16, 1856.

A general free banking law with the restrictions and limitations imposed by Article 8, Section 8 to 12 of the Consti

tution.

Laws were passed by the General Assembly of 1858 authorizing the establishment of both systems of banking; and were ratified by the vote of the people.

No banks were organized under the "free banking law," but a State Bank was established in 1858, during the closing hours of a serious financial panic and continued in business until it suspended as the result of the National Bank Act in 1863. During this period it was one of the few banks in the United States which did not suspend specie payments and whose notes were always quoted, throughout the land, at par.

Throughout the period from 1846 to the establishment of the State Bank of Iowa-while the political events noted above were taking place, the people of Iowa were experiencing the evil results of a circulating medium composed in the greater part of a depreciated paper money issued under the generally lax laws governing the banking systems of the different states. The West had no Suffolk Bank and with poorly developed markets for her products it followed, as a result of "Gresham's Law," that this State was flooded with some of the worst money of the Union. During this period it was the place of circulation for the notes of discredited banks; the depreciated notes of banks in which the public had partially lost confidence; the worthless notes of "Wild Cat Banks"; and, in rare instances, the notes of solvent banks of the Eastern States or some of George Smith's money. Even these last two were, during the greater part of the year, subject to the discount of exchange in returning them to their respective banks. Gold and silver money was scarce and was either hoarded to pay taxes or to be used as "Land Office Money." Iowa during this period was the experimental ground for several interesting attempts to secure a circulating medium, sufficient to meet the commercial wants of her people. As types of the more important of these there may be cited:

the Nebraska Bank money; the A. J. Stevens money; and the different issues of scrip in cities.

On March 16, 1855, the Nebraska Territorial legislature incorporated the "Western Fire and Marine Insurance and Exchange Company, with the power to deal in exchange which enabled it to go into the "wild cat" banking business as the Western Exchange Bank of Omaha. In the second legislative assembly of Nebraska Territory five banks were chartered. Their charters were all of the same form; their stock was to be either $50,000 or $100,000, to be increased to $500,000 at will; they had power to issue notes and bills for the redemption of which the stockholders were individually responsible; there was no provision for a fixed reserve nor other guard against incompetency or rascality. The bills of three of these banks were circulated to a very considerable extent by the owners of the bank charters who were doing a banking business in this state. The bills away from the places of distribution always circulated at a discount. For a time B. F. Allen kept the money of the Bank of Nebraska at par along the line of the Western Stage Company by making arrangements to have the company receive the bills at par.

A. J. Stevens & Co., of Des Moines, following the plan of George Smith, secured a large amount of bills of the defunct Agricultural Bank of Tennessee, and put them in circulation, guaranteeing their redemption; but the firm failed with a consequent total loss to the bill holders. During the latter part of the period under consideration, cities, towns, companies and individuals commenced the issue of scrip. Over a million dollars of this kind of money was in local circulation in the state. In each case, shortly after its issue, it depreciated from ten to fifty or more per cent.

All of these, as well as the character of the outside money in circulation in the state, aided in bringing about the establishment of a banking system in Iowa for the emission of a paper money that would not have to be circulated at a discount and the character of which could be readily ascertained by the people of the state.

APPENDIX A.

AN ACT to incorporate the stockholders of the Miner's bank of Dubuque.

SECTION I. Be it enacted by the council and house of representatives of the territory of Wisconsin, That a bank shall be established in the town of Dubuque, in Dubuque county, and territory, aforesaid, the capital stock whereof be two hundred thousand dollars, to be divided into two thousand shares of one hundred dollars each, and the subscriptions towards said stock shall be opened as soon as may be convenient, after this act shall be approved by the congress of the United States. The subscription shall be opened in the said county, and at such other places as the commissioners may think proper, and be kept open until the stock is subscribed, under the superintendence of Ezekiel Lockwood, Francis Gehon, John King, William Myers, Lucius W. Langworthy, Robest D. Sherman, William W. Corriell, Simeon Clark and E. M. Bissell, who are hereby appointed commissioners, to receive the subscriptions to the said capital stock, and the said commissioners shall be the first directors; they shall choose one of their number for president and they shall give at least thirty days notice of the time and place of opening said subscription, in one or more newspapers printed in said county, and they shall hold their offices until the first election for president and directors takes place.

SECTION 2. The commissioners shall proceed to distribute the capital stock of the said corporation, among the subscribers thereto, and in case there shall be subscriptions for more than the amount of such stock, within the first three days that the books are opened, it shall be the duty of the commissioners to apportion the same among the subscribers thereto in rateable proportion, to the amount subscribed by the respective individuals; but in case the whole of the capital stock shall

not have been subscribed at the expiration of the three days, the commissioners shall continue the books open as long as they may deem necessary, to have the whole of the remaining shares subscribed.

SECTION 3. That one tenth of the amount of each share, shall be paid to the said commissioners at the time of subscribing, and the balance shall be paid in such instalments, and at such times as the directors or a majority of them, for the time being, shall direct and appoint: provided, that whenever the payment of any instalment is required by the directors, they shall give at least ninety days notice thereof, in a newspaper, printed in the county, if there should be any published at the time; if not, then in the newspaper published in the territory the nearest to the said bank, but no one instalmeut shall exceed ten dollars on each share.

SECTION 4. All such persons as shall become stockholders of said bank, shall be, and are hereby ordained, constituted and declared to be, until the 1st day of May, which will be in the year of our Lord 1857, a body corporate and politic, in fact and in name, by the name of the president, directors and company of the Miners' bank of Dubuque, and by that name, they and their successors shall and may have continual succession during the term aforesaid, and shall be persons in law capable of suing and being sued, pleading and being impleaded, answering and being answered unto, defending and being defended in all courts and places whatsoever, and they and their successors may have a common seal, and may change and alter the same at pleasure; and they and their successors, by the name of the president, directors and company of the Miners' bank of Dubuque, shall be in law capable of purchasing, holding and conveying any estate, real or personal, for the use of said corporation: provided, that it shall not be lawful for the said corporation to hold real estate for an amount exceeding one-tenth part of the capital stock actually paid in, excepting, however, the banking house and lot necessarily appurtenant thereto.