THE GENERAL BANKING LAW OF THE STATE OF NEW YORK.

The "Act to authorize the business of banking," enacted by the Legislature of the State of New York on the 18th of April, 1838, is so important in its influence upon the commercial transactions of the ration, through the great capital of commerce, and has attracted so much attention, likely to result in extensive imitation in different sections of the Union, that we can hardly fail in rendering some service to our readers by laying before them the provisions of the act, together with such suggestions as the act itself, and the experience of a single year, may give rise to.

The measure itself was a concession of the Whig party to the progress of Democratic sentiments. The flagitious corruption of the close banking system; the intrigue and bribery employed to obtain exclusive charters; the extortions and oppressions practised by the corporations; the losses sustained by the community from their frauds; and their final universal violation of their solemn contracts, both with the Government and the community, in the spring of 1837, at last aroused the attention and indignation of the people, and demonstrated the full truth of those arguments and principles for which the Democratic party had been many years contending. The hollow and corrupt system of close banking was at length exposed. The curse of monopolies appeared, in effects, too palpable to be denied. The Federalists, or Bank party, found themselves clinging to the fragments of a wreck which they could never again hope to refit and render useful. They found that some concession must be made to public opinion. The arguments and illustrations which had for years been urged with such force and eloquence by a few bold champions of equal rights-among whom William Legget deserves honorable mention-and which had been derided and scoffed at as the hideous ravings of "infidels, radicals, and agra

rians," were now shown to be the quiet conclusions of sound sense and philosophy. They had taken deep root in the public mind, and soon obtained the authority of truth, when the incorporated banks by their memorable" suspension" of their obligation to pay their notes the only obligation that gave them value, or even existenceat last threw off the mask and laughed to scorn their public and private creditors.

It was, however, the careful study of the Whigs to be carried no farther by public opinion, and regard for equal rights, than absolute necessity should require. They still clung to their monopolies and special privileges. The problem, to which their ingenuity applied itself, was to concede, if possible, the form of free banking, but retain the spirit of monopoly. The whole tribe of speculators and stock-jobbers still struggled to retain the machinery and mystery of their lucrative occupations, and to throw around the measure of concession, which public sentiment demanded, as many of the restraints and formalities of the close corporate system as the nature of the case would allow.

The Democracy demanded free banking, in its widest sense. They wished to rescue the branch of commerce, pertaining to money, from the shackles of corrupt legislation and favoritism, and to leave it to the control of the ordinary laws of trade. Such a triumph of the principles of sound political economy and Democratic equality would have been as fatal to the craft of the money-changers, as was the preaching of St. Paul to the shrine-makers of Ephesus. "Sirs, ye know that by this craft we have our wealth," was the cry of remonstrance which arose from Wall street, and was re-echoed by the petty speculators of every village bank in the State.

During the summer and autumn of 1837 the subject of free banking was much discussed in private circles and in the public prints; and the Whigs, by hollow professions of an inclination to adopt its principles, made for their party some political capital in the autumnal elections. But at this moment, most unfortunately for the cause of truth, a portion of the community which before that time had acted with the Democratic party, but was deeply involved in Whig speculations and banking, found its interests in danger from the progress of Democratic principles, and threw the weight of its numbers and influence into the Whig ranks. The defection of the Conservative party, though unimportant in itself, derived a momentary influence from the critical state of the times. When men, who had long professed the Democratic faith, affected alarm at the demands of the popular voice, it could not but awaken some distrust in timid minds. The ardor of reform was checked; the enemies of equality took courage, and the monopolists found themselves able to maintain a position much more favorable to their interests than they had hitherto expected. The remaining restraints

upon the natural laws of trade may be set down to the account of the Conservatives.

In this condition of affairs, in January, 1838, the Legislature of the State convened. The Whigs, prospering by a prevalence of unexampled public calamity, had secured an overwhelming ascendancy in the House of Assembly, and the Senate was modified by the influence of many members who leaned to the doctrines of the Conservatives. Early in the session many financial schemes were brought forward, none of which found much favor with the Monopoly party. The Legislature was, as usual, surrounded by a horde of interested out-door advisers, to enforce the claims of the broken chartered banks, the stock-jobbers, speculators, and "credit system merchants. The Board of Brokers and Chamber of Commerce had their agents and committees in regular attendance, and the owners of real estate were fully and incessantly represented at the capitol, by the same class of wily operators who had so successfully enhanced its nominal value.

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After three months of intrigue, discussion, and political manœuvre, the "Act to authorize the business of banking" was concocted and produced; and, considering the influences which attended at its birth, it is a matter of congratulation and surprise that its provisions are not more fatally tainted by the spirit of restriction and monopoly. The following are the essential provisions of the act:

Any person, or number of persons, may establish an office of discount, deposite, and circulation, by recording in the county clerk's office, or filing with the Secretary of State, a certificate, under their hands and seals, duly proved or acknowledged, setting forth the following particulars:

1st.

The name of the association; 2nd. The place of its operations;

3rd. The amount of capital stock, and number of shares; 4th. The names, residences, and shares of the stockholders; 5th. The period when the association shall commence and terminate.

A certified copy of this certificate shall be evidence in all legal proceedings.

The aggregate capital stock shall not be less than one hundred thousand dollars.

"The association shall have power to carry on the business of banking, by discounting bills, notes, and other evidences of debt; by receiving deposites; by buying and selling gold and silver bullion, foreign coins, and bills of exchange; by loaning money on real or personal security, and exercising such individual powers as may be necessary to carry on such business."

It may provide, in its articles of association, for an unlimited increase of its capital and associates, from time to time. It may hold real estate

1st.

For its accommodation in the transaction of its business;

2nd. Mortgages, to any extent, for money loaned by it; 3rd. Real estate received in the satisfaction of its debts; 4th. Real estate purchased at sales under judgments, decrees, or mortgages, held by the association.

The association is required to make a semi-annual report to the Comptroller, on the first Mondays of January and July, containing1st. The amount of capital stock paid in or secured; 2nd. The value of real estate held by the association;

3rd. The shares of stock held by the association, and how held; 4th. The amount of debts due to the association;

5th. The amount of debts due from the same;

6th. The amount of claims against it, not acknowledged by it as debts;

7th. The amount of notes, bills, or other evidences of debt, issued by it;

8th. The amount of losses of the association, and of its dividends;

9th. The average amount of debts due to and from the association, during the preceding six months; and the average amount of specie on hand, and of notes and bills issued;

10th. The average amount, in each preceding month, due to the association, from all the share-holders;.

11th. The amount to which the capital has been increased during the preceding six months, and the names of new associates, and of any who may have withdrawn.

The attentive reader will have perceived that thus far no provision has appeared for the issue of any bank notes of the association, or for the pledging of any securities, stocks, or bonds and mortgages with the Comptroller; nor, indeed, are any requisitions contained in the act with respect to what the capital stock shall consist of, or how, or when, it shall be paid in or secured. We desire to call particular attention to this fact, which is the great secret of the whole contrivance, and has been so artfully devised as hitherto entirely to elude the public. We know of no other equally curious and instructive instance of Legislative cunning and deception. It will be perceived that any person, or association, by filing the proper certificates, and announcing a capital stock of one hundred thousand dollars-(of what, it does not appear)—" shall have power to carry on the business of banking, by discounting bills, notes, and other evidences of debt; by receiving deposites; by buying and selling gold and silver bullion, foreign coins, and bills. of exchange; by loaning money on real and personal security; and by exercising such incidental powers as shall be necessary to carry on such business."

All this may be done by merely filing a certificate with the Comptroller, and conforming to the other regulations we have heretofore