Bank charter

“ In the Constitution of the State, it was provided that one State bank might be established, with such branches as the Assembly might deem expedient. No branch and no bank charter was to be renewed, except by a two-thirds vote of both Houses, and only one bank or branch might be chartered or renewed at the same session of the General Assembly. At least one-fifth of the shares of every bank must be reserved for the State, which was also to have a number of directors in proportion. ”

“ Not that a banking corporation has under its charter a constructive power to follow another independent branch of business, such as manufacturing or foreign trade, but merely the business of banking, and to do such acts as are necessary and proper or usual to carry that business into effect, and such as are in harmony with the letter and spirit of its charter. ”

“ Moreover, charges for other banking services, such as service charges for checking privileges, are free of governmental regulation, state or federal.
Entry, branching, and acquisitions are covered by a network of state and federal statutes. A charter for a new bank, state or national, will not be granted unless the invested capital and management of the applicant, and its prospects for doing sufficient business to operate at a reasonable profit, give adequate protection against undue competition and possible failure. ”

“ The attempt failed, but an article was put into the new Constitution requiring six months public notice of an intended application for the enactment or extension of a bank charter; no charter to run more than twenty years; every charter to reserve to the Legislature the right to amend or annul it, if injurious to citizens, though without injustice to corporators; no one law to create or extend the charter of more than one corporation. ”

“ It will be necessary at that time, to look carefully at the condition both of the bank and of the union. To ascertain, if the public debt shall, in the mean time, be paid off, what effect that will produce? What will be our then financial condition? what that of local banks, the state of our commerce, foreign and domestic, as well as the concerns of our currency generally? I am, therefore, not now prepared to say, whether the charter ought, or ought not, to be renewed on the expiration of its present term. The bank may become insolvent, and may hereafter forfeit all pretensions to a renewal. ”

“ The Bank Charter Act, separating the issue and banking departments, as well as regulating the note issue of the Bank of England in proportion to its securities, also became law. Meanwhile the dissensions in the Conservative party were increasing, and the Ministry were defeated on a motion made by their own supporters to extend the preferential treatment of colonial produce. ”

“ It would appear that powers which in 1791 and in 1816, in the time of Washington and in the time of Madison, were deemed "necessary and proper," are no longer to be so regarded, and therefore the bank is unconstitutional. It has really come to this, that the constitutionality of a bank is to depend upon the opinion which one particular man may form of the utility or necessity of some of the clauses in its charter! If that individual chooses to think that a particular power contained in the charter is not necessary to the proper constitution of the bank, then the act is unconstitutional! ”

“ When we speak of an act to be done by a bank or banks, we mean an act to be done by those who have the authority to do it. If it be an act within the franchise for banking, or the ordinary power of the bank to contract, and it is done by the president and directors, or by their agent, we say the bank did it, and every one understands what is meant. If, however, an act is to be done relative to the institution, by which its charter is to be in any way changed, the stockholders must do it, unless another mode to effect it has been provided by the charter. ”

“ Drain of gold continues,—panic and universal mercantile depression,—Bank refuses discounts,—forced sales of all kinds of property,—the Bank Charter suspended.
1857. The experiences of 1847 repeated on a more injurious scale, with another suspension of the Bank Charter Act.
Now this record does not show a brilliant success in banking; it does not encourage the hopes of those who place great hopes in a national institution; for the Bank of England is the highest result of the financial sagacity and political wisdom of the first commercial nation of the globe. ”

“ Is it not essential to constitute a bill of credit, within the constitution, that it should be emitted by a state? Under its charter, the bank has no power to emit bills which have the impress of the sovereignty, or which contain a pledge of its faith. It is a simple corporation, acting within the shere of its corporate powers; and can no more transcend them than any other banking institution. The state, as a stockholder, bears the same relation to the bank as any other stockholder.
The funds of the bank, and its property of every description, are held responsible for the payment of its debts ”

“ Those interested in the State banks were at first exceedingly hostile to it. The proposition to tax their circulation two per cent. in addition to the three per cent. imposed upon incomes by the new law was considered harsh and unjust. The object was to compel the retirement of the State bank circulation. In no other way could a national system be at once generally instituted. The courts had repeatedly held the authority of the States to charter banks with power to issue and circulate notes as money, to be constitutional. Congress could not abridge this right in any way by direct legislation. ”

“ Our prosperity, individually and nationally, depends upon a close adherence to the settled rules of law, and especially to the great fundamental law of the Union.
Having considered this case in its legal aspects, as presented in the arguments of counsel, and in the views of the Supreme Court of the State, and especially as regards the rights of the bank under the charter, we are brought to the conclusion, that in the acceptance of the charter, on its terms, and the payment of the capital stock, under an agreement to pay six per cent. ”

“ No words have been found in the charter, which, in themselves, would justify the opinion that the power of taxation was in the view of either of the parties; and that an exemption of it was intended, though not expressed. The plaintiffs find great difficulty in showing that the charter contains a promise, either express or implied, not to tax the bank. The elaborate and ingenious argument which has been urged amounts, in substance, to this. The charter authorises the bank to employ its capital in banking transactions, for the benefit of the stockholders. ”

“ The one class may, under the laws of Congress and the laws of most of the States, be organized under general laws, and by the voluntary action of those desiring to associate for gain, and they choose their own trustees or directors. 'Banks for savings' are created by special charter, and the trustees or directors named by the legislature, and provision is made for the filling of vacancies in the management by the board itself. ”

“ Now, I do not know whether this be true or false—neither do I believe any honest man cares. I know that the seventh section of the charter expressly guarantees to the Bank the right of making, under certain restrictions, such by-laws as it may think fit; and I further know that the requiring an oath of secrecy would not transcend those restrictions. What, then, if the Bank has chosen to exercise this right? Whom can it injure? Does not every merchant have his secret mark? ”

“ There was not a politician at their board, nor a man who gave himself up to anything but the performance of duty to his trust."
The debate in Congress on the renewal of the charter added very little to these arguments. The petition of the Bank for a renewal was presented March 26, 1808, but no action was taken upon it. ”

“ As stated in the opinion of the court, the bank was chartered in 1884, with a provision that its life should continue for 30 years, and that a payment of 50 cents on each $100 of stock should 'be in full of all tax and bonus thereon of every kind.' This charter fell under the provisions of the prior act of 1856, declaring that all such charters should be subject to amendment or repeal at the will of the legislature. ”

“ Congress has power to charter a national bank as one means of carrying on the fiscal operations of the national government; the States cannot by taxation impede Congress in the exercise of any of its constitutional powers; if the end is legitimate and within the scope of the Constitution, any means may be employed which are appropriate and not prohibited. It remained uncertain whether the operations of discount and deposit were included under the affirmation of this decision. ”

“ The admission of the constitutionality and validity of the act of 1824, only raised a question of construction of two State statutes, one of which it was said would be repugnant to the other, if its penalty should be applied to the bank, in addition to that imposed by its charter, without words implying that the bank would not be liable to an universal statute, passed before the bank was chartered, which imposes six per cent. upon all banks which should refuse to pay their notes in specie. ”

“ Much of the capital of the present bank was obtained from Europe. We are told in the report of the committee, that foreigners own stock to the amount of seven millions. Is it probable that these capitalists will be as ready to venture their money in the state banks, as in one chartered by the general government? Would they even venture it again in a national bank, after we had shown so vacillating a policy? We establish a bank of that description in 1791—we put it down in 1811, as unconstitutional—we charter another, five years afterwards, 1816, and discontinue that in 1836. ”

“ The charter required the bank to take paper which was 'payable and negotiable at the bank.' How negotiable? The law merchant describes this quality as passing from hand to hand by indorsement and delivery. The object must have been to give the bank the best kind of paper, such as it could use in an emergency by selling. It has been said that the word 'enjoy,' in the charter, does not imply the power of selling property; but how can a hungry man enjoy a dollar in his pocket without spending it?
It is an error to say that notes were not negotiable at common law. ”

“ Banks might issue their notes, and pay not over six per cent. dividends, as if paying specie, until the day set for resumption.
In May the Legislature reassembled, when the House ordered the Bank to lend to the State $4 millions at four per cent. or forfeit its charter; $3 millions being at the same time appropriated to public works. The Senate struck out the compulsion on the Bank and left the loan to be raised by ordinary methods. ”

“ These powers are such as are required to meet all the legitimate demands of the authorized business, and to enable a bank to conduct its affairs, within the general scope of its charter, safely and prudently. ”

“ The mode of investing need not be published, as the power of the inspector to demand an examination would be a sufficient check on immorally-disposed offices. Nor is such a case unprecedented, as by a clause in the Bank Charter Act of 1844, commissioners are empowered to search into and examine the books of those bankers who issue notes. ”

“ That language is broad enought to cover everything which, during its existence, should enter into and make part of the capital of said bank.
'By the twenty-ninth section of the original charter, 'all the profits made by said corporation shall be added to and made a part of its capital,' except a certain fraction of any excess of profits over what was necessary to pay the bonds issued by the bank. It is not pretended that any such excess of profits exists, or ever has. As a matter of fact, the bank has never declared a dividend to its shareholders. ”

“ The new law, also, conferred in substance on the maker a new right to defeat any action so brought, which he would otherwise have been liable to. These results vitally changed the obligation of the contract between him and the bank, to pay to any assignee of it, as well as changed the obligation of the other contract between the State and the bank in the charter, to allow such notes to be taken and transferred. ”

“ Loans or discounts may be made that cannot be met at maturity. Compromises to avoid or reduce losses are oftentimes the necessary results of this condition of things. These compromises come within the general scope of the powers committed to the board of directors and the officers and agents of the bank, and are submitted to their judgment and discretion, except to the extent that they are restrained by the charter or by-laws. Banks may do, in this behalf, whatever natural persons could do under like circumstances. ”

“ The more prudent, though they held their shares, began an agitation for reform, which gave birth to the Act of 1879. We need not discuss this Act; though it may just be said that every joint-stock bank in the three kingdoms which is not limited by [8] its charter is now a bank of limited liability under the Companies Acts.
At this juncture, perhaps, a few words may be said with reference to the Bank of England, which, with a contempt for evidence that is truly British, the public is convinced cannot suspend payment; yet the Bank’s career has been decidedly checkered ”