The

This

notes in specie for any foreign or domestic broker.1 next year these conditions were mitigated to considerable extent by a reduction of the cost of license to $50. was brought about by the inconvenience arising from the mass of depreciated and uncurrent paper money, chiefly of banks of other States, which by means of the brokers could be exchanged for reliable currency.

In 1837 there was further legislation to prevent the fraudulent manipulation of stock in the election of officers. It provided that stockholders intending to canvass the votes must notify beforehand an officer of the bank; this officer, in turn, had to notify all the stockholders residing in the State. Upon voting, each stockholder had to swear that the stock which he was voting was his bona fide property, or was held by him in some fiduciary relation, and was not transferred to him to increase the number of votes. Persons voting by proxy had to make this oath before some qualified officer of the State. Directors had to make oath that they had not acquired shares to qualify themselves for office.

General permission was extended to all the banks in 1844 to make loans upon promissory notes or obligations under seal, secured by mortgage, for any period up to five years at 6 per cent.'

In 1833 an act was passed subjecting stocks and funded property to attachment and execution for debt. The proceedings were similar to those regarding real estate.

18. Increase of Banking Capital, 1843–62.

By the middle of the century the financial troubles of Maryland, brought on by its participation in the construction of internal improvements, had been adjusted, and the fruits of these public works were being realized in the rapid development of its resources. The canals and railroads were making Baltimore the commercial center and shipping point for the coal, lumber and agricultural products of Western Pennsylvania and the Ohio region. The Southern States, 1 Md. Laws, 1841, ch. 302, sec. 8. 'Ibid., 1842, ch. 257. Ibid., 1843, ch. 269.

which were almost entirely devoted to cotton and tobacco culture, drew from Maryland a large part of their breadstuffs. From 1848 to 1858 the South American trade of Baltimore was at its zenith.

After the industrial revival which followed the disturbance of 1837-42 had begun, the inadequacy of Baltimore banking capital became a matter of common concern among merchants, and various means were adopted within a few years to stimulate its increase. Old banks were allowed to enlarge their capitals; new ones were incorporated, and savings institutions were changed to regular banks of discount and issue. Some savings banks were allowed the power of issue. Effort was made to secure the passage of a free banking law.

The formation of new banks proceeded gradually from 1843 to 1862; from 1853 to 1858 the rate of increase was a little greater than before. The total number of new banks incorporated, exclusive of those which had been operating before as savings banks, was seventeen, and the amount of capital allowed them by their charters was $3,000,000. One of these banks failed to go into operation, and the charters of two others were repealed by the Legislature, deducting in all $350,000 from the total just mentioned. Two of these banks, representing $800,000 nominal capital, were located in Baltimore.

Seven savings institutions were regularly incorporated as banks and allowed all the privileges usually given to banks under the laws of the State. The conversion of savings banks to regular banks had occurred in two cases previously to this time. The Western Bank of Baltimore had been formed in 1835 from the Mechanics' Saving Fund Society, and at the same time the Fell's Point Savings Bank was authorized to become the Eastern Bank of Baltimore; the latter, however, did not change. The total authorized capital of these seven banks was $1,800,000, of which $1,400,000 belonged to the four located in Baltimore. The chief advantages gained by these banks were the power of issue and less restriction in their investments. The savings banks

were generally limited to investing in bonds and securities; some were allowed to discount up to two-thirds the amount of their deposits. In making the change they became subject to the laws controlling banks generally. Two of them were allowed to continue the practice of receiving weekly deposits and paying interest on them up to 6 per cent.1 The practice of paying interest on deposits left for a specified time had already become general among the banks.

It is impossible to conjecture the extent of the business done in Maryland by savings banks, except so far as their number gives an indication. Though two or three had been incorporated before 1830, about that time they first became of importance in Maryland. The increase of their number corresponds in time to the increase of the regular banks. Up to 1842 nineteen had been established in the counties and eleven in Baltimore. In most cases they simply invested their deposits and had no capital stock. Between 1842 and 1861 twenty-nine were chartered, eight of which were in Baltimore. Of the total number a capital limit was fixed for sixteen, aggregating in all $2,800,000. They were required to send no reports to the State treasurer, and the magnitude of their operations is unknown. A very small number of failures occurred, only two or three.3

One peculiar feature of Maryland savings banks which appears to have developed in no other State, was the right given to some of them to issue notes to circulate as money. This privilege was first conferred by the Legislature in 1844, and by 1860 nine savings banks had acquired this power. In nearly every case it was the subject of a special act of the Legislature, and was not included in the charter. The limit for issues was usually, as for other banks, the amount of the capital paid in. For the Howard Street Savings Bank it was fixed at one-fourth of the deposits, and one-fourth of the deposits was not subject to withdrawal, but formed a

1 Md. Laws, 1856, ch. 109. Ibid., 1856, ch. 340.

'That of the Maryland Savings Institution in 1834 was the most important. Niles, 1834, May 10 and June 7. Scharf, History of Maryland, Vol. III, p. 176.

fund for note redemption. The Fredericktown Savings Institution was allowed to issue up to $30,000, provided it kept as a redemption fund $15,000 in certificates of Maryland, Baltimore, United States or Chesapeake and Ohio Canal stocks. Others were required to keep a redemption fund of State stocks or specie equal to one-half the issues. In each case the school fund tax was required, twenty cents on the hundred dollars of capital paid in or of notes issued, as the case might be. In one or two cases a bonus also was required, as likewise was an annual report to the treasurer.*

To encourage the growth of banking capital the Assembly made a general law, March 8, 1854, allowing the banks of Baltimore to increase their capitals at times suiting their convenience, simply upon reporting the increase to the State Treasurer and paying the school tax fund. Not less than $100,000 might be added at any one time, and the maximum amounts were as follows:

Banks of $1,000,000 capital and over might enlarge to $2,000,000; banks of $900,000 to $1,000,000 might enlarge to $1,500,000; banks of less than $900,000 might enlarge to $1,000,000.

Between the time of resumption in 1842 and the passage of the above act the old banks had added $289,000 to their