Indiana State sentinel. [volume] (Indianapolis) 1841-1853, 1850-03-28
From the american Railroad Journal
Banking Laws of New York.

circulation general rule, is the true measure Of
the profits of banking. This circulation is greater
or less, according to the measure Of confidence felt
by the community the ability of the banks to
deem their bills. This may be stated the general
laws affecting banking, modified, of course, by the
laws of trade and such circumstances influence
particular sections or localities
Chartered banks hsve been long established on the
idea of specie basis, with certain exclusive priv-
leges.
In 1888, an attempt was made in the State of New
York to arrange n system of banking, under general
laws. open TO all parties on equal terms. Who was
the father or originator of this system,
not able to say, though have heard its paternity
attributed TO Sas nj. SiIlwel, Esq, of this city.
Whoever he may have been who gave to the world
this new scheme for banking. he has the sais-
faction OF witnessing its successful application to all
purposes of business, and To nd its principles incur
poraied into the Constitution of the State of New
York, as appears by the following extract from the
Constitution of the State of New York, adopted
1916 -
81. Corporations may be formed under general laws
but shall be created by special act, except for num-
cipal purposes and n where, the Judgment Of
the Legislature the of The corporation cannot be
obtained under general laws All general laws and spe
cia passed pursuant this section may be altered
from time TO time repealed.
g Dses from corporations shall be secured by such
individual liability of the coporators and other
may be prescribed by law.
s3. The term corporations used in this article,
shall be construed include all associations and joint
Of corporations possessed by individuals partne
ships. And all corporations shall have the right
and shall be subject to be sued in all natural
a The Legislature shall have power to pass any
act granting any special charter for banking purposes
but corporations associations may be rmed for such
purposes under general laws.
5. The Legislature shall have power pass any
law sanctioning in any manner, directly or indirectly,
the suspension OF specie payments by any person. asso
citation or corPoraon issuing bank notes of any descrp
ton.
g. The Legislature shall provide by law for the reg
sry of all bills issued put circulation
money and shall rquire ample security for the redemp
ton of the same IN specie
81. The stockholders every corporation and juut
stock association for banking purposes issuing bank
any kind Of paper credits to circulate money, after
the first day Of January thousand eight hundred and
fifty, shall be individually responsible to the amount Of
their respective share shares OF stock IN any such
poraon association for all its debts and liabilities
tracted after the said frs, day of January thousand
eight hundred and flty
association, the bl-hoders thereof shall be entitled
preference in payment all other creditors Of such
bank association.
O. IL shall be the duty of the Legislature provide
for the organization Of cities and incorporated villages
and restrict their power of taxation assessment, bor-
rowing money, contracting debts and loanng their cred
IL, TO prevent abuses in assessment, and in
iractIng debt by such municipal corporations.
The main feature of this Free Banking law is the
increased security required for The redemption of the
i bills. The principal means held by the chartered
promlssory bills aud notes of Its customers II these
convertible into specie short notice. the banks
regarded in sound condition. If the paper of
lis customers proves valueess, to the extent is
the bnnk weakened.
The New York Banking law, under the new Con-
situon, requires the security for the redemption of
the bills To be placed in the office of the State Comp
roller. This security never be surrendered ex-
cept the return of the bills. Under this law, the
State takes the security into its hands. In the
of the old chartered banks it trusted the secur
ty In the hands of it's directors for the time being
These directors had only 10 substitute worthless pro-
misses for good ones, and the bills of the bank be-
worthless, and the bill holders had remedy.
Under the old system, the circulation expard-
ed contracted at the pleasure of the banks Under
the present system, il is subject 1uctuation but
| the laws of trade
/ The Law of April Is, 1888, section L, authorized
the Stale Comptroller to prepare bills to be counter
signed by the Register.
/ Section 2 auhurzed the issuing of these bills on
deposit of the stocks Of any of the States of
the United States.
This section was amended in ls40, by substituting
4 the following -
i Whenever any person association of persons,
formed for the purpose of banking under the provisions
! Of this act shall lawfully transfer Comptroller any
portion Of the public stock issued be issued by this
SIae such person association of persons. shall be
titled 10 receive from the Comptroller equal amount
of such circulating of different denominations
gstered aud countersgned aforesaid but such public
stock shall in ell be, be made to be, equal 10
stock Of this producing five per cent. per annum
aud shall be lawful for the Comptroller take
such stock at above its par value, above its
current market value.
Section 3, is $ follows:
Such persons association Of persons hereby
ihorized after having executed aud signed such circu-
lating notes IN the required by law, To make
them obligatory promIssory notes payable demand, al
the place Of business within this State Of such person
association, loan and circulate the money,
cordng The ordinary of banking business as
. regulated by the laws and usages of this State.
Section A. is follows:
In case the maker or makers of any such circulating
notes coantersgned and registered aforesaid
shall any time hereafter, lawful demand, during the
usual hours of business between the hours Of and
three o'clock the place where such note
are payable, fail refuse redeem such note in the
lawful money Of the United States, the holder of suci
notes making such demand may cause the sams
to be protested for onpayment by notary public unde
his seal of Office in the usual manner; and the Comp
troer, receiving and filing in his office such protest
shall forthwith give notice in writing to the maker o.
makers Of such pay the same; and ii h
I, they shall omit do for days alter such notice
the Comptroller shall Immediately theeupon (unless h
shall be satisfied that there is good and legal detenc
against the payment Of such note notes give notice
the State paper that all the circulating issued b.
such person association will be redeemed out OF tn
funds in his hands for that purpose and the Comp
toer shall be required apply the said trust funds be
longing the maker makers of such protested note
the payment pro rata Of all such circulating notes
whether in circulation by the make
makers Of such protested notes, pursuant to the pro
visions of this ac and adopt such for th
he payment OF such will in his opinion most efec
,- tualy prevent loss TO the holders thereof
!, 5. The Comptroller may give TO any person or asso
citation Of persons transferring stock IN pursuance
the provisions o this act, powers of attorney to recev
~ interest dividends ihereon which person OF sssocis
ton may receive and apply TO their own use but sue
powers may be revoked upon such association
lat failing 10 redeem circulating issued wher
in the opinion Of the Comptroller. the principal