The times. [volume] (Richmond, Va.) 1890-1903, 1893-11-07

Ing account Of the Michigan banks in bis
history OF Michigan which viii serve as
! sample in all the new States.
Michigan became a State in 1887 One
Of the first acts OF her Legislature was
the passage OF a general banking law
( which allowed any ten or more freehold
ers in any county TO organize themselves
into a bank Of issue. only ten per cent.
| OF the nominal capital was required to
/ be paid IN specie when subscriptions TO
| the stock were made. and twenty per cent.
more when business was commenced. The
rest OF the law was as loose as this In
its requirements. The act was passed In
March, 1897. and the Legislature adjourned
10 November 9th. Meantime a financial
panic came over the whole country. the
Michigan Legislature met It by amending
the banking law 80 as to authorize any
number OF persons from one, up to be-
come a bank and to issue any number oil
notes they chose. as thirty per cent. OF
their capital was paid up In specie ana
the rest OF It as bonds secured by mort
gage on real estate. the real estate 10 be
valued as the parties pleased and the
banks to pay their notes when called on
or not. as they pleased.
Everybody who was in debt and all
the rascals became banks Of issue. Wher-
ever two roads crossed a bank was es-
tablished. one was found in a saw MILL
and one OF the official records OF The
period says every village plot with a
house, or even without a house, II II
had a hollow stump to serve as vault |
was the site OF a bank" Many OF them 1
had no Offices, no books ard no capital. |
cent. in specie to be paid, this was easily |
evaded, for as the payments were to be |
made to the banks themselves the same |
specie could be used many times over. Some |
times small sum in specie was paid IN |
and taken out, and the process repeated |
over and over until the amount required |
was made TO appear as having been re- /
ceived. The law pi divided for nominal |
bank examiner. AS soon as ne had seen |
the specie TO be used at one bank II was
hurried into q wagon and taken with /
feet horses 70 another bank, where It
again cid duty as capital 'God and
silver" says the official chroniclers, "hew
about the country like magic; its sound
was heard in the depths Of the forest,
yet, like the wind, one knew not whence
IL came or whittier It was going" Some
times what seemed TO the eye OF the
examiner to be kegs OF specie was really
kegs Of nails or window glass with q
hin layer of coin on top This is no fancy
sketch. Its details are proved by the
public records.
Within one year forty-nine banks were
organized, and forty went into operation
With a professed capital of $,745OCO, Of
which thirty per cent. was claimed to have
,een paid in specie. over 100000 Of
paper was distributed
throughout the State, Of which probably
ot dollar was based on bona fide cap
tai paid In for legitimate purposes. AS
5as inevitable, there was no public con-
dcnce in any of it, and it was always
{ a great discount in a year and a
alf the craze had run its course and all
I the banks but four were in the hands
# receivers.
This is what popular prejudice against
state banks has grown out Of, but now
bsurd to suppose that such a state Of
Kings could arise in the old and settled
communities that now compose all the
states! The wild cat" bank is a thing
( the past, belonging to the era of new
ounfTies and new settlements.