The Indianapolis sentinel. [volume] (Indianapolis, Ind.) 1880-1904, 1885-03-12
Banking Under the indiana Constitution.


Communicated
There are two prohibitory clauses in Article
II Of the Constitution which are clearly ex-
pressed and absolute. The first prohibits
Section y the establishment or incorpora-
ton by the General Assembly OF banks or
banking companies, whether new or already
existing, for the purpose OF issuing paper
money, Except under the conditions pre-.
scribed under this Constitution" These
conditions require them (Ssctions . and 81
either to be established under the general
banking law Gree banks IS they were caIled)
giving ample security for the redemption Of
their paper money; or Sections 2, f. 81 to
become members Of the "bank with
6lsnchee"-si Dilar TO the old State Bank,
al of the branch banks being mutually re-
sponsible for the redemption OF all of their
PAPER money.
The other prohibitory clause (Section .,
Article IL, } enacts that mo banks" shall be
established by the General Assembly,
whether they issue paper m1ney or not; un-
less such banks come within one of the two
classes of banks just described; con-
not designed TO issue paper mon
| sy, can not be Incorporated. No
| doubt is left on this subject, because Sec
| tons 8, q and prescribe exactly what the
general banking Law and the law for the
! bank with branches shall be. These two
| classes of banks, the free banks and the
! bank with branches, are the only ones which
can be incorporated or established by the
| General Assembly. Unincorporated bank
ing companies, not issuing paper money,
| have, however, existed for centuries. They
| did not originate in wisdom of statesman
ship but in the wants OF commercial enter
| prise. They need no Incorporation, because
| in receiving and loaning money, and in
iesuing or paying drafts, they only exercise
part OF the natural right of private
| property. But this business may be more
| extensive than that of incorporated banks;
and their stockholders or partners may be
as numerous as those Of incorporated banks;
and may have ss little to do with the man
agemert Of their companies as the partners
in Incorporated banks, or e. the partners or
stockholders in railroad or mining COM
| psnies; and, therefore, their rights
| should be as extensive. Il may be
said that the name corporation gives
notice that partners in corporations
are not Individually liable beyond q certain
limit. The answer is that the Constitution
OF the State itself gives this notice with re-
gard to banking companies in Section G. Ar
ticle IL, which reads thus: "The stockhold-
ers in every bank or banking company shall
be individually responsible, to an amount
over and above their stock equal to their
respective shares OF stock, for all debts or
liabilities Of said bank or banking COM
pany."
Understanding the Constitution as it reads,
sDd we have the right to do so, Section 6
makes the individual liability OF the stock
holders in banking companies, not designed
to issue paper meney, and which can not be
Incorporated, the same as the individual
| liability OF the stockholders in incorporated
banks. Whether we regard the recognition
by name OF the banking companies in Sec.
ton 6, SIS placing them in the list Of quasi
| corporations, or merely construe Section 6
o. u reads the result is the same.
With regard 10 the meaning OF the name
bank, Tomlins Law Dictionary, volume
1, page l6S. A. d. 1886. says: "a bank, in
common acceptance, signifies place where a
great sum OF money is deposited, returned BY
exchange, or otherwise disposed OF to profit y
Abbott's Law Dictionary volume 1, page
I'D, A. d. 1879: Banks. il the commercial
sense, are of three kinds: ID or deposit;
(2) Of discount CD OF circulation. An in.
| slltutlor exerc sing oDe only Of these func-
tons may be bank in the strictest com.
mercial sense. (OClton vs.. Savings Institu-
ton, L Wall, 100 D
Rspslje and Lswrence's Law Dictionary.
volume l. page 100, A. D. 1888: Banks are
Of three kinds-banks Of deposit, which in
elude savings banks, and al others which
receive money on deposit; banks of discount,
being those which loan money on collaterals,
or by means OF discounts Of commercial
psper; and banks OF circulation. which issue
bank notes payable to beaIer. Bat the same
bank generally performs all these several
operations"
Wharton's Law Lexicon. page 81, seventh
edition, A. ID. 1888. "Bank: Commercially
i is place where money is deposited fol
the purpose Of being let out to interest re-
turned by exchange, disposed OF 20 profit, OF
to he drawn out again as the owner shall
call for it,
The reason assigned in the debates IN the
Constitutional Convention for limiting ths
individual liability of the stockholders IL
banks and banking companies, was that the
public interests often required the concsn
trstion Of large amounts of capital in such
| Institutions. If Individual atockholdar,