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There were in the United States in 1790 four banks of issue with a capitalization of two and one-half million dollars, and an issue of paper money equal to the amount of that capital. At the close of the year 1810, eighty-eight banks were in operation, and in the next six years 138 more banks were organized. The total capital of all banks at this time was $89,822,422, with a circulation of $68,000,000, and a specie reserve of $19,000,000.
The period from 1816-20 was a period of general suspension of specie payments, accompanied by the evil results of a depreciated currency. By 18202 the circulation had decreased to $48,000,000 and loans and discounts in an even larger proportional amount. Debts were contracted in this depreciated paper money that after 1820 had to be paid
By 1830,3 there were in operation 329 banks; in 1834, 506; in 1835, 706; in 1836, 713. Many of these banks were organized with but a nominal capital, and of the paid-up capital much of it was in the form of stock notes of the directors. The issues of notes were very often from two to three times the nominal capital of the banks. The banks were in many instances located, if in existence at all, in places inaccessible to the general public.
1 Blodgett's Economica. These were: Bank of North America, Bank of Maryland, Bank of Massachusetts, Bank of New York. The last was operating without a charter. A charter was secured in 1791.
Sec. Crawford's Report to Congress, Comptroller's Report, 1876,
It was under such conditions of the rapid growth of banks, governed only by very lax regulations, that the citizens of Dubuque applied to the Legislature of the Territory of Wisconsin in November, 1836, for the granting of a charter for a bank.
They were actuated not only by the general principles stated above, but also by local reasons. The mining region of the Fever River had its commercial needs satisfied by the Branch of the Bank of the State of Illinois at Galena ; Mineral Point was making application to the Legislative Assembly of Wisconsin Territory for a charter for a bank to meet the supposed requirements of her commercial needs, and this movement to establish a bank at the Dubuque lead mines was simply the logical sequence of the commercial habits of the time,
The charter granted to them was modeled after the usual forms of bank charters of the previous decade.
The act incorporating “The Miners' Bank of DuBuque" was approved on November 30th, 1836. Its capital stockwas to be two hundred thousand dollars, divided into shares of one hundred dollars each, and the “subscriptions toward the stock" were to be opened as soon as convenient after the act had been approved by the Congress of the United States. Permission was granted to the commissioners not only to open the subscription books in the county of Dubuque, but also at such other places as they might think proper, and were to be kept open until the stock was subscribed.
Ezekiel Lockwood, Francis Gehon,5 John King, William
1 Act No. 7, Laws of the Territory of Wisconsin, 1836, p. 27. For a full copy of the text of the charter, the reader is referred to Appendix A.
2 Charter. Sec. 1.
3 Required by Chap. CCXXI, U. S. Statutes at Large, Vol. 5, p. 61, 24th Cong., 1st Sess., approved July 1, 1836.
4 Merchant, Dubuque.
5 Marshal of the Territory of Wisconsin; Captain in the Black-Hawk war; elected Delegate to Congress 1839, never acted; Member of Council of 6th Legislative Assembly.
Myers, Lucius H. Langworthy, Robert D. Sherman, William W. Corriell," Simeon Clark and E. M. Bissell were appointed as commissioners to receive the subscriptions, and also to be the first directors; one of their number was to be chosen president. They were to hold their offices until the first election for president and directors should take place. Thirty days' notice of the time and place of opening the subscription was to be given by publication in one or more newspapers in the county
In case subscriptions were made for more than the amount of the capital stock within the first three days after the books were opened, the commissioners were empowered to apportion the stock in a rateable proportion to the amount subscribed.
One tenth of each share was to be paid to the commissioners at the time the subscriptions were made, and the balance in such installments and at such a time as the majority of the the directors should direct; "provided, that whenever the payment of any installment 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 a newspaper published in the territory the nearest to the said bank, but no one installment shall exceed ten dollars on each share."
Power was given to the majority of the board of directors 6 to make the necessary by-laws for the management of the bank, in so far as they should be in consonance with the constitution and laws of the United States and of the Territory.
Power was given to the legislative assembly to require? at any time a sworn statement from the president and cashier of the bank as to the condition of the bank in regard to "the amount of deposits, the profits on hand, the amount of bills in circulation, the amount of debts due from the directors and stockholders, the amount due from other persons or porations, not however, naming them, the amount of specie in bank, the amount of bills of other banks, the amount of their deposits in other banks, the amount of their real estate, and of other property not herein specified, the amount of capital actually paid in, and shall contain the true exhibit of the real state of said bank.”
i Lawyer; Proprietor of the Du Buque Visitor--first paper printed in what is now Iowa.
2 Afterwards Cashier of an Illegal Bank in Illinois.
The total amount of all kinds of indebtedness of the bank at any time, over and above the amount of specie then deposited, was restricted to three times the sum of the capital stock then subscribed and paid in; and in case of excess, the directors, under whose administration it should occur, were to be liable in their separate and private capacities "provided, the bank shall not be able to pay its liabilities; and, provided, also, that this shall not be construed to exempt the said corporation or any estate, real or personal, which they may hold as a body corporate from being also liable for, or chargeable with, such excess; but such of the directors as were absent, when the said excess was contracted, or who may have dissented from the resolution or act whereby the same was contracted, shall not be so liable.”
The management of the affairs of the bank was to be vested in a board of directors of seven persons who were to be not only stockholders, but also residents and citizens of the Territory. Public notice was to be given in some newspaper for at least sixty days previous to the time of holding the annual election on the first Monday in October. Directors3 were to be elected by a plurality of the votes4 cast in person or by proxy. The directors were then to elect one of their number president. If a director ceased to be a stockholder, his office was to be considered vacant, and this or any other vacancy
Charter, Sec. 8. 2 Ibid, Sec. 5.
3 Ibid, Sec. 12. 4 Ibid, Sec. 11.
was to be filled for the remainder of the year by the remaining directors. Provision was made that if, for any cause, the election of directors did not take place on the regular day,' the corporation was not to be deemed to be dissolved; but the election could be held some other day as "regulated by the laws and ordinances of the said corporation.”
The bank was prohibited from holding any land, except such as might be necessary for the convenient transaction of its business, or bona fide conveyances in satisfaction of debts previously contracted, or purchases at judgment sales for the satisfaction of debts owing to it.
Following the general course of bank charters of the time the corporation was denied the right of purchasing3 or selling directly or indirectly, “any goods, wares, or merchandise, unless in selling the same when truly pledged by way of security, for debts due the said corporation, or purchasing the same at sales on judgments, which shall have been obtained for any debts previously contracted in the course of its dealings, and afterwards selling the same."
A majority4 of the board of directors were empowered to declare the semi-annual dividends; and the numbers of directors to constitute the board of discount was to be regulated by the by-laws.
General meetings of the stockholders were provided for by three weeks previous notice in some newspaper printed in the county.
Assignment or transfer of stock was not to be considered valid until registration had been made on the stock-books of the bank. The bank was fully protected by the fact that no stockholder was capable of making any assignment or transfer of his stock until all notes, debts, dues or endorsements of whatever nature, either due or becoming due, to the corporation were first paid,
i Charter, Sec. 6.
5 Ibid, Sec. 14.