A petition for a charter was presented to the Senate at the November session, 1784. A committee of the House of Delegates reported favorably upon it, and a bill was brought in to charter a bank, but it was finally laid over until the next session of the Assembly, and was not called up again.

For six years no further attempt was made to start a bank in Maryland. 1789 and the early part of 1790 formed a period of considerable depression in the State. A revival, however, began in the spring of 1790, when the extraordinary demand in Europe for food products, resulting from the breaking out of the French Revolution, began to be felt in America. Baltimore, the first grain and flouring port of America, received great stimulus from the rapid rise in the price of wheat, and all branches of industry were greatly quickened.

Credit facilities at this time were very meagre. An advance could usually be obtained upon tobacco after it had been placed in the warehouses which were regulated by the State. The State inspectors issued warehouse receipts stating the quantity and quality of tobacco in custody; these inspectors' bills could always be exchanged for good bills in London, and they furnished the medium for the large commercial transactions. This means of anticipating the return from crops was, however, limited, since the State undertook the inspection of tobacco only, and not of wheat and flour also, which at this time exceeded the former in amount.

As a result of these conditions an application was made by sundry citizens to the November session of the Assembly for a charter for a bank to be called the "Bank of Maryland." In this case the petitioners did not organize a partnership under articles of association before applying for a charter. Perhaps this may have been due to a desire to prevent public discussion of the project by enemies of banks who had been so effective in preventing the passage of the charter in 1784. Very slight notice of the bank appears in the papers before it had received a charter.

The assistance of industry and commerce was stated to be

the motive in establishing a bank. The bill had little difficulty in passing; the final vote in the House of Delegates was fifty-one affirmative to seven negative. The capital stock was fixed at $300,000. Subscriptions were opened in Baltimore, December, 10, 1790, and within fourteen days $200,000 was subscribed, the amount necessary to be subscribed before the election of directors might occur. During the ensuing year this amount was paid in, and the bank began operations. The remainder of the capital stock was called in within the following four years. Subscriptions were paid in foreign gold coins at 6s. or 6s. 8d. the pwt., depending upon the fineness. Few of the notes of the Bank of North America at Philadelphia, and none of those of the banks of New York and Massachusetts had reached Baltimore at this time.

An addition to Baltimore's .banking capital occurred in 1792, when the Bank of the United States established a branch at that place which usually operated a capital of about $500,000.

In 1793 the Maryland Legislature granted a charter to the Bank of Columbia, which was to be located in the District of Columbia. The avowed object of the formation of the bank was to assist in the preparation of the District for occupancy by the National Government. The nominal capital was $1,000,000. It immediately passed from the jurisdiction of Maryland.

During the years 1790 to 1800 the Bank of Maryland was able to declare annual dividends of 12 per cent. Its capital was far below what it might with ease have employed. In 1795 an unsuccessful attempt was made to double this capital. As a substitute it was proposed to establish another

1Journal of House of Delegates, 1790, p. 34. Md. Laws, 1790, ch. 5. * Griffith, Annals of Baltimore, p. 128.

• Md. Journal and Balto. Advertiser, April 5, 1791.

• Md. Laws, 1793, ch. 30.

Griffith, Annals of Baltimore, p. 128. Brief exposition of the leading principles of a bank.

bank, which might consolidate with the Bank of Maryland, upon the consent of both parties. This clause was stricken out and an entirely separate institution received a charter in 1795 as the Bank of Baltimore,' although the Bank of Maryland became a subscriber to its stock.

The petition for a charter, signed by sixteen parties and submitted to the Legislature, declares that the Baltimore banks from the inadequacy of their capital to the trade of the country, do not come up to the end for which they were instituted, and it states further that the stimulation of industry, the extension of commerce, a more favorable balance of trade, a lower interest rate, the collection of capital, are advantages invariably following from the establishment of banks.2

The capital of the bank was fixed by the Legislature at $1,200,000, though the petitioners wanted the limit placed at $3,000,000, with provision for increasing it ultimately to $9,000,000, as the growing character of Baltimore trade demanded more banking accommodations.

The two banks had an aggregate capital of $1,500,000, to which there were added by the United States branch bank at Baltimore about $500,000. This amount could be very actively employed in a town whose export trade alone was of an annual value of more than $9,000,000, and which was rapidly growing, to say nothing of other commercial and industrial operations. Manufacturing was at this time advancing apace. A climax was reached at the end of the eighteenth century. Maryland's total exports for 1799 were $16,300,000. After this time there was a decrease, due chiefly to the narrowing of the market for American breadstuffs by the restoration of peace in Europe in 1802, and also to the competition of Philadelphia and New York for Baltimore's trade. By 1803 the lowest point had been reached; exports had fallen to $5,100,000; there was a general stagna

1 Md. Laws, 1795, ch. 27.

2 A brief exposition of the leading principles of a bank, etc.

tion. The relapse was in large measure charged to Baltimore's lack of banking facilities in comparison with her sister cities.1 It was estimated that $120,000 of good paper was weekly rejected by the Baltimore banks. The parties seeking accommodation were compelled to patronize brokers who charged them excessive rates. Trade was thus driven away. The rivalry with Philadelphia and Alexandria, Va., was very keen. Pennsylvania at this time had six banks, four of which were in Philadelphia, whose total capital was $10,000,000; the banking capital of New York was $6,500,000, operated by seven banks; yet the trade of these places was normally about the same as Baltimore's. Within ten years the circulating medium of Virginia, Pennsylvania and New York had increased about 50 per cent., it was estimated, whereas in Maryland it had remained almost stationary. Baltimore saw Philadelphia drawing part of her Western and Northern trade. A considerable amount of her Eastern Shore products were going to Alexandria.

To assist Baltimore from the depression, and to render her more nearly equal to her rivals in banking capital, the Union Bank of Maryland was organized. The articles of association appeared February 24, 1804. On April 10 of the same year books were opened for subscriptions of stock, and the amount requisite to enable them to proceed with the election of directors was subscribed in one day. It began business in June, 1804, as a limited partnership or company, and it was thus the first bank in Maryland to begin operations without first having procured a charter.

The capital stock of the bank was $3,000,000, in shares of $100, of which $2,312,150 was paid in. Subscription books were opened in the counties, and 500 shares were allotted to each county (1000 to Anne Arundel) for subscription. Senators and delegates were made county commissioners in

1 Federal Gazette and Balto. Daily Advertiser, Jan. and Feb., 1804. • Federal Gazette and Baltimore Daily Advertiser, Feb. 23, 1804. • Ibid. Ibid., Feb. 24, 1804.

charge of the subscriptions. Five thousand shares were reserved until after incorporation, so that the State, if it desired, might subscribe. The two latter measures were probably taken with a view to procuring votes for the charter, though there appears to be no evidence that other inducement was offered.

The articles declared the liability of the company to be limited to their capital stock, but directors were personally liable for dividends declared in excess of profits. Land, ships, and merchandise could be held only as security. The partnership was to terminate in 1825, unless a charter was received before that time.1

All of the banks thus far established were in Baltimore, and were preeminently for the aid of its commerce and manufactures. The agricultural needs had not yet received the necessary attention. With a view to assisting the farmer class especially, the Farmers' Bank of Maryland was organized in August, 1804, at Annapolis, and a branch bank was located at Easton, and later (1807) another at Frederick. In addition to benefiting the agricultural interests, it was hoped that it would also assist in Annapolis a commercial development parallel to that of Baltimore, and that it would divert from Baltimore to Annapolis the amassing of the free capital of the State. Easton, too, it was hoped to develop into an entrepôt for the southern part of the Eastern Shore, and thus cut off the flow of Maryland produce to Alexandria.

It started as a private partnership. The articles of association appeared early in August, 1804. A lively discussion was provoked. It was urged that the agricultural interest did not require and could not support such an institution, and that the commerce of Annapolis and Easton was not of sufficient magnitude to need it. At this time the

1 Other provisions related to voting and the election of directors and are essentially the same as those of the charter to be described in the next section.