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Full text of "Western Maryland in the Revolution"

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JOHNS HOPKINS UNIVERSITY STUDIES 

IN 

Historical and Political Science 

(Edited 1882-1901 by H. B. Adams.) 

J. M. VINCENT 
H. HOLLANDER W. W. WILLOUGHBY 

Editors 



VOLUME XX 



COLONIAL AND ECONOMIC 
HISTORY 



baltimore 

Johns Hopkins Press 

1902 






COPYRIGHT, I902, BY 

THE JOHNS HOPKINS PRESS 




ZU Bovb Qg>afttmorc (pvtee 

The Fribdenwald Company 
baltimore, md., u. s. a. 



<fOL.73 
)9oZ 



TABLE OF CONTENTS 



PAGE 

I. Western Maryland in the Revolution. By B. C. Steiner 5 
II-III. State Banks Since the Passage of the National Bank Act. 

By G. E. Barnett 67 

IV. Early History of Internal Improvement in Alabama. By 

W. E. Martin 127 

V-VI. Trust Companies in the United States. By George Cator 269 
VII-VIII. The Maryland Constitution of 1851. By J. W. Harry . 387 
IX-X. Political Activities of Philip Freneau. By S. E. Forman 473 
XI-XII. Continental Opinion Regarding a Proposed Middle Euro- 
pean Tariff-Union. By G. M. Fisk 575 



WESTERN MARYLAND IN THE 
REVOLUTION 



H 

32 

Series XX No. i 

JOHNS HOPKINS UNIVERSITY STUDIES 

IN 

Historical and Political Science 

(Edited 1882-1901 by H. B. ADAMS.) 
J. M. VINCENT 

J. H. HOLLANDER W. W. WILLOUGHBY 

Editors 



WESTERN MARYLAND IN 
THE REVOLUTION 



BY 



BERNARD C. STEINER, Ph. D. 

Associate in the Johns Hopkins University 
Librarian of the Enoch Pratt Free Library 



BALTIMORE 
THE JOHNS HOPKINS PRESS 

PUBLISHED MONTHLY 

JANUARY, 1902 



Copyright, 1902, by 
JOHNS HOPKINS PRESS 



<£#e i;or& (§a(timott (pvtee 

THE FR1EDENWALD COMPANY 
BALTIMORE, MD. 



WESTERN MARYLAND IN THE 
REVOLUTION 



The western frontier of Maryland advanced but little 
beyond the head of the tide water until the sturdy German 
settlers, coming down through the valleys of the Blue 
Ridge, settled the fertile valleys of Frederick and Wash- 
ington counties. With their arrival, about the year 1735, 
a new and most important era opened in Maryland's his- 
tory. Previously there had been no doubt concerning her 
alliance with the South in her economic, social and political 
life. This new and alien influence tended to join the 
province closer to Pennsylvania, and, as Western Mary- 
land became more and more populous and as the city of 
Baltimore grew in commercial importance, largely through 
the influence of the same German settlers, there came to 
be a doubt in the minds of geographers whether Maryland 
should be called a Middle or Southern State. The life on 
the Western Maryland farms was far different from that 
on the plantations of the Chesapeake Bay, and the people 
of the latter had many economic, commercial and senti- 
mental ties to England, of which the Westerners knew 
nothing. After landing at Philadelphia, the Germans 
passed down the fertile lands of Lancaster and York coun- 
ties and settled all along the valleys as far as northern 
Georgia. So many of them came that in 1748 Western 
Maryland could be made a county, under the name of 
Frederick. In this county was contained, down to the 
Revolution, all Maryland west of Baltimore, Anne Arundel 
and Prince George's counties. 

The county was not entirely inhabited by Germans. 
Scotch Irish had also gathered there. Scions of some of 



6 Western Maryland in the Revolution. [6 

the prominent Maryland families had followed Berkeley's 
star of empire to carve out new fortunes for themselves. 
Quakers of steady habits were dwelling in the eastern part 
of the region. But outside of the lower section, what is 
now Montgomery County, Frederick County in 1770 was 
predominantly German. The settlers' husbandry was 
varied and their fields brought forth hemp, flax, wheat, rye, 
oats and Indian corn. In huge country wagons the sur- 
plus crop went to Philadelphia and Baltimore. In addi- 
tion to agriculture, manufactures sprung up on a small 
scale. They made 1 "linen goods, tow, thread; they 
knitted long yarn stockings; they tanned their leather and 
made horse collars and harness; they prepared honey, 
firkined butter, dried apples, apple butter," etc., and these 
products found their way to the port of Baltimore. Gov- 
ernor Eden, in a letter to Lord Dartmouth ' said of 
these German settlers : " They are generally an industrious, 
laborious people. Many of them have acquired a consid- 
erable share of property. Their improvement of a wilder- 
ness into well-stocked plantations, the example and benefi- 
cent effects of their extraordinary industry have raised in 
no small degree a spirit of emulation among the other 
inhabitants. That they are a useful people and merit the 
public regard is acknowledged by all who are acquainted 
with them." In the county were four or five settlements 
which might be called towns. Georgetown, on the Poto- 
mac, was an English town, and Skipton, or Old Town, on 
the edge of the wilderness, was a settlement of the hardy 
frontiersmen, who inhabited the extreme west. Frederick- 
town, Elizabethtown or Hagerstown, and Sharpsburg 
were, however, largely German settlements. Of the first 
town, Eddis, 3 writing to a friend in England just before 
the outbreak of hostilities, states that it exceeds Annapolis 



Scharf's Md., II, 61. 

Jan. 29, 1773, Mass. Hist. Coll., 4th Series, Vol. X, p. 694. 

Date of letter, Jan. 18, 1771, Letters from America, p. 98 ff. 



?] Western Maryland in the Revolution. 1 

in size and number of inhabitants, and that it possesses 
numerous warehouses and stores. " The buildings, though 
mostly of wood, have a neat and regular appearance. 
Provisions are cheap, plentiful and excellent. In a word, 
here are to be found all conveniencies and many super- 
fluities." This prosperity he rightly attributes to the 
Germans, whose " habits of industry, sobriety, frugality 
and patience were peculiarly fitted for the laborious occu- 
pations of felling timber, clearing land and forming the first 
improvements." Sharpsburg was of small size and im- 
portance, but Hagerstown, to which Jonathan Hager 
vainly endeavored to give the name of his beloved wife, 
contained " more than ioo comfortable edifices " * and did 
credit to the " discernment and foresight " of its founder. 
The events we are about to narrate proved that one of the 
most faithful of their sons made no rash speech when he 
said that these early German settlers " brought laborious 
habits, virtuous lives, truthful tongues, unflinching cour- 
age, an intense longing to do their duty to their families, 
the community and the State." 5 

With a strong desire for freedom and with no social 
connection with Great Britain, they eagerly sprang forward 
at the call to resist the British commands. Few of them 
were Tories, and in all Western Maryland we find com- 
paratively few who refused to sign the Association of the 
Freemen of Maryland and enroll themselves in the militia 
companies; unless they were Quakers, Mennonites or 
Dunkers, and so had religious scruples. 

The very children were patriots, 8 and a nine-year-old son 
of Capt. William Keyser begs " that God may prosper you 
and your united Bretheren, in your laudable undertaking 

* Letters from America, Eddis, p. 133. Hager wished it called 
Elizabethtown. 

6 Address of Lewis H. Steiner, Centennial Celebration in Fred- 
erick Co., p. 35. 

8 William Keyser to his father. Letter dated Hagerstown, Oct. 
12, 1776. Scharf, W. Md., p. 1035. 



Western Maryland in the Revolution. [8 

and in the end crown you with the laurels of a complete 
victory over the Enemies of the inestimable Rights, Liber- 
ties, and Privileges of distressed America and hand them 
down inviolate to the latest posterity. My Dear Father, 
my greatest Grief is that I am incapable of military Service, 
that I might enjoy the company of so loving a father and 
serve my country in so glorious a cause, but, tho' absent 
from you, yet my constant prayer is for your Safety in the 
Hour of danger, your complete victory over the Enemies 
of the United States of America and your Safe Restoration 
to the government of your family." 

In the struggle between Governor Eden and the popular 
party over the fee question, Frederick was heartily with 
the opponents of the proclamation, and we find an address 
from the freemen of the county to Charles Carroll of Car- 
rollton, 7 thanking him for his " spirited, manly and able 
opposition to that illegal, arbitrary and Unconstitutional 
measure " of the Provincial Government. 

They were no less active in passing resolutions of sym- 
pathy with Boston and of non-intercourse with Great 
Britain and the West Indies, until the act blocking up 
Boston harbor should be repealed, and " the right of taxa- 
tion given up on permanent principles " and not for ex- 
pediency. 8 

The county was growing so populous that it was becom- 
ing unwieldy and was preparing itself for a division into 
three parts. The lower part met first 9 at Hungerford's 
Tavern, on June n, 1774, adopted resolutions and ap- 
pointed a committee of correspondence of 10 members. 
The middle district, gathering at the court-house in Fred- 
ericktown, on June 20, under the chairmanship of John 
Hanson, followed with resolutions of stringent non-inter- 
course and with the appointment of a committee of corre- 

7 Signed by the county's four delegates. Scharf's Md., II, 134. 

8 Scharf's Md., II, p. 151. 

9 Henry Griffith, chairman. 



9] Western Maryland in the Revolution. 9 

spondence of 15 members. 10 The upper part of Frederick 
County waited until July 2, when 800 of its principal in- 
habitants assembled at Hagerstown," made John Stull 
moderator, chose a committee of correspondence of 1 1 
members and adopted resolutions, not only agreeing- with 
what the other parts of the county had done, but also 
approving of the plan of a Continental Congress and 
promising to " adhere to any measure that may be adopted 
by them for the preservation of our liberties." Believing 
that the " surest means for continuing a people free and 
happy is the disusing all luxuries and depending only on 
their own fields and flocks for the comfortable necessities 
of life," they resolve to kill no sheep, to begin to manu- 
facture their own clothing, and not to drink tea till the 
duty thereon be repealed. They next hang and burn Lord 
North in effigy and open a subscription for the poor in 
Boston. 

A number of the " mercantile gentlemen " solemnly de- 
clared they would send off what tea they had and would 
purchase no more. Among these was a " certain John 
Parks." He, poor fellow, seems not to have kept to this 
agreement, and so, on November 26, was forced to " go 
with his hat off and lighted torches in his hands and set 
fire to the tea " which was " consumed to ashes amongst 
the acclamations of a numerous body of people." The com- 
mittee furthermore declared, that " friends of liberty " 
ought to have " no further intercourse with Parks " and 
add, with delicious naivete, to the account of the matter 
which they send to the Maryland Gazette: 12 " N. B. The 
populace thought the measures adopted by the committee 
were inadequate to the transgression and satisfied them- 
selves by breaking his door and windows." 

The way of the Tory was indeed hard., Robert Peter, a 



10 Scharf's Md., II, 154. 
u Scharf's Md., II, 155. 
12 Dec. 22, 1774, Ridgely's Annals of Annapolis, p. 164. 



10 Western Maryland in the Revolution. [10 

merchant of Georgetown, was one of those to whom tea 
was consigned as part of the cargo of the Mary and Jane," 
which arrived in St. Mary's river in August, 1774. On 
hearing of this, the Committee of Correspondence met, 
summoned him and other consignees before them and, 
after hearing their statements, unanimously resolved, " that 
the importation of any commodity from Great Britain, 
liable to the payment of a duty imposed by an Act of 
Parliament, is in a high degree dangerous to our liberties, 
as it implies a full assent to the claim asserted by the 
British Parliament of a right to impose taxes for the pur- 
pose of raising a revenue in America." Therefore the 
" detestable plant " must be " sent back in the same ship." 
Of the meetings of these early committees of correspond- 
ence we have no manuscript record extant. 

The organization of a central committee of correspond- 
ence for the whole county took place on Nov. 18, 1774, 
when a meeting of the qualified voters was held at the 
court-house. Men were then selected to attend the Pro- 
vincial Convention, to carry into execution the association 
agreed upon by the Continental Congress and to act as a 
committee of correspondence. 14 This last committee was 
soon succeeded by an enormous Committee of Observa- 
tion, chosen at the court-house on January 22, 1775. This 
body numbered one hundred and fifty-four members, " with 
full powers to prevent any infraction " of the Continental 
Association and " to carry the resolves of the American 
Congress and of the Provincial Convention into execu- 
tion." 15 Any seventy-five of the committee were to be a 
quorum to act for the county and " any five in each of the 
larger districts " could " act in any matter that concerns 
such Division only." 

Western Maryland, though unsurpassed in her patriot- 
ism and devotion to the common cause, was not anxious to 

13 Scharf, W. Md., p. 127. 

14 Twenty-eight in number. 

15 Scharf, W. Md., I, 128. 



11] Western Maryland in the Revolution. 11 

break from Great Britain. In 1774, after the first Conti- 
nental Congress, the magistrates and the grand jury of 
Frederick County adopted addresses to the Provincial rep- 
resentatives in that body. These papers offer sincere 
acknowledgments to the delegates in the " Grand Conti- 
nental Congress," 16 and express the warmest esteem and 
gratitude for the regard manifested by that body for the 
" interests, the rights and liberties of your country." But 
the magistrates also praise the measures taken, because 
" the whole of the proceedings of that important assembly 
are so replete with loyalty to the king, with tenderness to 
the interest of our fellow-subjects in Great Britain, and, 
above all, with reverential regard to the right and liberties 
of America, that they cannot fail to endear you to every 
American and your liberty to your latest posterity." The 
" loyalty to the king," which was still associated with " the 
rights and liberties of America," was soon to be rudely 
dissevered from it, and Thomas Price, who signed the 
address, was to command a company of riflemen in the 
intrenchments around Boston before another year should 
pass. 17 

That was still in the future. Thomas Cresap, John Stull, 
William Beatty, William Luckett, Edward Burgess, and 
Upton Sheredine had as yet no difficulty in agreeing to 
the praise of the Continental Congress, for its " councils 
tempered with such filial loyalty to the Sovereign, such 
fraternal delicacy for the suffering of our friends in Great 
Britain, and, at the same time, with such unshaken zeal for 
the preservation of the inestimable privileges derived from 
our admirable Constitution." The men of Frederick were 
neither wavering nor craven. Thev believed that " the re- 



16 IV, Force's Archives, 1, 992, 993. 

17 As late as November, 1776, the minutes of the County Court 
Proceedings state that they were held in the " fifth year of the 
dominion of the Hon. Henry Harford, Esq., absolute lord and 
proprietary of the Province," and suits in the name of the Lord 
Proprietary were brought against persons accused of crime. 



12 Western Maryland in the Revolution. [12 

suits of the Congress cannot fail to give weight and in- 
fluence to the cause and must moderate and relax the 
minds of our most poignant enemies." 

The " most poignant enemy " was King George, and 
when the men of Frederick discovered that fact, all " filial 
loyalty " was lost and they girded themselves for the fray. 

It will not be our purpose in this paper to discuss the 
achievements of Frederick men outside of the county, but 
the names of Thomas Johnson, first Governor of Mary- 
land; John Hanson, President of the Continental Congress, 
and Richard Potts, a member of that body, may well be 
remembered. 

The Convention of December i, 1774, appointed $10,000 
to be raised for the purchase of arms and ammunition and 
apportioned $1333 of that amount on Frederick County. 
At the time of the choice of this large committee, in Janu- 
ary, 1775, men were selected in each hundred of the county 
to promote the subscriptions to this fund. These men 
were directed to " apply, personally or by deputy, to every 
freeman in their respective districts and to solicit a gen- 
erous contribution." The results of this solicitation and 
the names of those who should refuse were to be reported 
to the committee of Correspondence at Fredericktown on 
March 23. 

At the same meeting, delegates to the next Provincial 
Convention at Annapolis were chosen and preparations 
were made for the choice of a new Committee of Observa- 
tion. It was felt that the present unwieldy body was not 
satisfactory and that " a more proper representation of 
the people " should be had. To accomplish this, the col- 
lectors in each hundred were " desired to give notice to 
voters of the time and place of a meeting to elect members 
to a Committee of Observation." The number of members 
to be chosen from each hundred should bear some rela- 
tion to its population and returns were to be made when 
the results of the subscription were handed in. The new 
committee should then meet and the present one be dis- 



13] Western Maryland in the Revolution. 13 

solved. Thus far the people had largely acted on their 
own initiative; but, during the summer, the Provincial 
Convention assumed more power and the committee 
chosen in the autumn was elected, according to the regula- 
tions laid down by the Provincial body. 

For some reason, no new committee was appointed at 
the time named, 18 but the old one was continued until the 
tall, when three committees were chosen for the three 
districts into which the county had been divided. It was 
beginning to be uncomfortable to be a Tory, and the 
notorious Rev. Bennet Allen, who had complained a little 
previously that his living was three years in arrears, was 
summoned before the committee in June, 1775, and made 
to produce for inspection one of his sermons. 18 

During the autumn of 1774 and the succeeding winter 
collections were taken up throughout Frederick County 
for the families in Boston " whose means of sustenance 
have been so long and so cruelly cut off by an Act of 
British Parliament." The people of Western Maryland, 
though far distant from Massachusetts, considered " the 
people of Boston as standing in the gap, where tyranny 
and oppression are ready to enter, to the destruction of the 
liberties of all America," and the Frederick men felt it to 
be " the duty of every individual in America to contribute 
as largely as his circumstances will admit to their support." 
With wide liberality, therefore, they sent over £200 cur- 
rency to Massachusetts and received thanks therefor from 
Samuel Adams, chairman of the Boston Committee. 20 

When Thomas Johnson, of Frederick County, had nomi- 
nated George Washington to be commander-in-chief of the 
Continental forces and he had hastened northward at the 
noise of Bunker Hill, the Maryland delegates in Congress 
wrote to John Hanson, chairman of the Committee of 



18 June 21, 1775, IV, Force's Archives, II, 1044. 
" It was pronounced " not exceptionable." 
20 Scharf, W. Md., I, 127. 



14 Western Maryland in the Revolution. [14 

Observation in Frederick County, that two companies of 
expert riflemen were required to join the army at Boston 
and be " employed as light infantry." The committee 
met 21 on June 21 and resolved to raise the companies with 
the following officers: Captains — Michael Cresap and 
Thomas Price; Lieutenants — Thomas Warren, Joseph 
Cresap, Jr., Richard Davis, Jr., Otho Holland Williams, 
and John Ross Key. These companies, the first of the 
famous Maryland line, " armed with tomahawks and rifles 
and dressed in hunting shirts and moccasins," were so 
hardy that, setting out from Fredericktown on July 18, 
they arrived at Boston on the 9th of August, having made 
the journey of five hundred and fifty miles over rough 
roads in twenty-two days and without the loss of a man. 
Being the first soldiers from the South to reach New 
England, they excited much attention. 22 These famous 
marksmen did good service before Boston. One of their 
leaders, Cresap, marched with death impending over him 
and lived but three months from the time they left Fred- 
erick; the other, Price, survived to make an honorable 
record in subsequent campaigns. The companies were 
incorporated in the rifle regiment commanded by Stephen- 
son, of Virginia. After Stephenson's death, Moses Raw- 
lings, of Old Town, became colonel, and the deeds of 
Rawlings' regiment need not be repeated here. 23 Mention 

21 Scharf, W. Md., I, 130. The volume of Maryland Archives con- 
taining Muster Rolls of Maryland troops, edited by Bernard C. 
Steiner, has lists of three companies in the Flying Camp from 
the Lower District on p. 73, five from the Middle District on pp. 
73-74. and three from the Upper District on p. 73. Frederick 
recruits in 1778 are named on pp. 294, 314, 320, 324, and those in 
1780 on pp. 334 and 344. Montgomery County recruits in 1780 are 
on p. 341, and Washington County ones on p. 346. Invalid pen- 
sioners from Western Md. are on pp. 630 and 632. Select Militia 
lists are on p. 652, deserters in 1778 on p. 327, and Capt. John 
Kerschner's company guarding prisoners at Fort Frederick is on 
p. 328. 

22 Vide Maryland Papers published by the Society of '76. 

23 Scharf, W. Md., I, 131. 



15] Western Maryland in the Revolution. 15 

must be made, however, of the major of the regiment, Otho 
Holland Williams. The convention made him colonel of 
the Frederick County battalion in the Flying Camp, but 
he felt the lesser position was more suitable for him, 24 and 
participated in the gallant exploits of Rawlings' regiment. 
Captured with his command and held prisoner for some 
months, he was next appointed colonel of the Sixth Regi- 
ment of the Maryland Line and led that gallant body on 
many a Southern battlefield." 

This is not the place to follow out the career of the 
soldiers from Western Maryland. They could always be 
depended on from the time they were formed into a bat- 
talion in August, 20 1775. The names of some of their 
commanders come down to us through the years. Lodo- 
wick Weltner, Upton Sheredine, George Strieker, Morde- 
cai Beall, Peter Mantz, 27 Thomas Richardson, Charles 
Greensbury Griffith, George Poe, Thomas Frazer, Richard 
Baltsell, James Ogle, John Murdock, 28 William Keiser, 
Richard Crabb, Lemuel Barrett, Daniel Cresap, Valentine 
Creager, Zadock Magruder, Greenbury Gaither, Joseph 
Chapelaine, Peter Hanson, and many others. German 29 
companies, 30 surplus companies, a battalion for the Flying 81 
Camp, riflemen for the mariners, companies for the Mary- 
land line, militia companies to march to the aid of Wash- 
ington, whatever of soldiery was needed for the common 
cause was gladly furnished by Western Maryland. Of the 

24 Md. Arch. Council of Safety, II, 104. Vide Scharf, Hist, of 
Md., II, 264. 

25 Osmond Tiffany's Otho Holland Williams, Md. Hist. Soc. 
Pub. 

20 Md. Arch. Jour. Council of Safety, I, 18. 

27 Centennial of Montgomery Co., p. 32, gives names of officers 
in Md. line from that county. 

28 Nine companies, nearly one-quarter of the Flying Camp, were 
from Frederick Co. 

28 Council of Safety, I, 253. 
30 Vide Council of Safety, II, 399. 

81 Council of Safety, II, 92 and 330. Read the quaint letter of 
Peter Mantz, Council of Safety, II, 185. 



16 Western Maryland in the Revolution. [16 

county militia, the chief officer was Thomas Johnson, the 
first governor of the new State, who with noble self-denial 
declined the command of the militia sent to Washington's 
relief. He wrote to the Council of Safety: 32 " In a matter 
of so much consequence, I shall frankly give my opinion 
at every hazard, that it is not best to let our militia go out 
under any provincial Brigadier. . . . None of the rest of 
us have seen service and I fear we are not so competent, 
nor will the men have the same confidence in either of us, 
as in one who has had experience." The Council answer 
that they leave it to his discretion to march or not, 33 unless 
Congress appoints another commander, which they hope, 
in order that Johnson might take his " seat in that honor- 
able Body, where you may be of great service at present." 
Of such material were the officers and they commanded a 
body of men like Sergeant Lawrence Everheart. 34 

The resolutions of Congress, calling out the militia, were 
received in Frederick on the evening of December 19, 
1776. The committee of the Middle District at once re- 
solved, in language of noble firmness, " that the militia 
ought to equip themselves in the best manner they are 
able and march with all possible speed to Philadelphia and 
be subject to orders of the commander-in-chief there, but 
prudence directs that some be left behind," therefore, the 
field officers shall select from each battalion, those whose 
circumstances may render it most inconvenient to leave 
home, to be kept on duty as a guard and to enroll them- 
selves under officers to be appointed by the Committee. 
Though zealous for the common cause, they were not 
negligent of the care of matters at home, and to avoid 
danger, directed that " every person capable of bearing 

82 Dec. 19, 1776, Council of Safety, II, 541, 556. In his letters of 
Dec. 22. and 24, Johnson seems to regret his declination, and 
roused by the urgency of the situation to long for the command. 

33 Montgomery Co. seems to have been quite slow to respond to 
the call. Council of Safety, II, 558. 

34 Vide Md. Papers, published by the Society of '76, p. 42. 



17] Western Maryland in the Revolution. 17 

arms and hitherto exempt from marching, for age or other 
infirmities, now enroll to keep guard during absence of the 
militia. The Committee think that from iooo to 12,000 
men can march from Frederick County, if money be sent 
by Congress to equip them. The Committee will do what 
it can, but will not have guns for more than one-fifth of 
the men." " Nothing could indicate more clearly the lack 
of supplies. With great speed, notice was sent to the three 
battalions of Washington and the two battalions of Mont- 
gomery County. On the night of the 19th, a message was 
sent for supplies to Congress, then sitting in Baltimore. 
On the 21st, 36 Congress voted $18,000 to equip the militia 
of Western Maryland. On the 22d, SI the money was re- 
ceived by the Frederick Committee. No time had been 
lost, but there was still need of shoes, 33 stockings, tents or 
blankets. Johnson writes that the last named are especi- 
ally needed and if sent, " may save a good many poor 
fellows." Many commissions for the officers had failed to 
arrive at Frederick. Johnson complained a second time of 
this, in a letter written on Christmas " eve. He had not 
yet received sufficient supplies, which " were never more 
needed, than by those who now offer to turn out." But 
the lack of necessaries did not deter the Frederick men 
from doing their duty, even in the depth of winter. John- 
son thought it would be enough, if half the militia went to 
Washington's assistance, and that, if all should march, it 
would " leave the country rather naked " ; but the courage- 
ous Committee wished to have all the militia march. 

At the opening of the Revolution, Frederick County was 
growing so unwieldy that a speedy division was inevitable. 
The first step toward this was taken by the Convention 

35 V, Force Archives. III. 1288. 
30 V, Force Archives, III, 1603. 

87 V, Force, III, 1330. Congress highly approved of the zeal and 
activity of the committee. 

38 V, Force Archives, III, 1307. 

39 V, Force, III, 1395; Md. Arch., Com. of Safety, II, 540. 

2 



18 Western Maryland in the Revolution. [18 

on August 14, 1775, in its decree that, on the second Tues- 
day of September, when the freemen of each county should 
meet and elect the Committees of Observation, Frederick's 
large committee of 53 men should be chosen not at one 
place as in other counties, but in three places. 40 The county 
was now divided into three districts: the Lower one, 41 
corresponding with Montgomery County, should choose a 
delegate to Convention, a Committee of Correspondence 
of two members, and a Committee of Observation of 
seventeen. In the Middle and Upper Districts two dele- 
gates were to be chosen and an Observation Committee of 
eighteen. The Upper District, 42 probably from its remote- 
ness, had no Committee of Correspondence, the Middle 
District had one of three members. 43 All these committees 
served for a year. 

This subdivision of the county was not satisfactory to 
the frontier inhabitants, and, in response to their memorial, 
on January 17, 1776, the Convention voted to create a 
district, including all the county west of Licking river, 
and directed the freemen in this district to meet at Skip- 
ton 44 to choose "one discreet and sensible freeman" as a 
delegate and a committee of observation of 15 members. 
This was done and, for several months, Frederick County 
was divided into four parts, the Skipton District roughly 
corresponding to the present Allegany and Garrett coun- 
ties. 45 

For some reason, however, probably because of the scat- 
tered character of its inhabitants, the Skipton District did 
not remain separate from the Upper District, and on 
August 31, 1776, the Convention gave leave to bring in an 
ordinance to divide Frederick into three counties.™ The 



40 Md. Archives, Coun. of Safety, I, 27-29. 
"Poll at Hungerford's. 

Poll at Elizabethtown (Hagerstown). 

Poll at Fredericktown. 

Old Town, Allegany Co. 

Proceedings of Convention, pp. 46, 114. 
Proceedings of Convention, p. 234. 



19] Western Maryland in the Revolution. 19 

ordinance was passed " on September 6, and decreed that 
after October I, the Upper District should become Wash- 
ington and the Lower one Montgomery County. 48 Of the 
record of the Committee of Observation of the Old Town 
or Skipton District we know nothing save that Capt. 
Lemuel Barrett was its chairman. 

The Lower District 49 (Montgomery County) has left us 
but little more information as to its acts. The minute 
book is apparently lost, but the one action of this com- 
mittee known to us is more famous than any act of the 
other three committees. The occasion was dramatic. 
Independence hung in the balance. In May, 1776, the 
Provincial Convention had voted that it was not expedient 
to break away from the mother country. Should this vote 
stand as the expression of the opinion of the people of 
Maryland? Samuel Chase and Charles Carroll of Carroll- 
ton said nay, and traveled from county to county to arouse 
the people. In this they succeeded, and in one part of 
the province after another, resolutions were adopted favor- 
ing action with the other colonies towards declaring inde- 
pendence. We shall see that the Upper District took 
action; the Middle District, singularly enough, seems to 
have held her peace; while the Lower District, through 
its Committee of Observation, made a bold proclamation 
of its views on June 17. Catching with joy at this sign of 
popular support, Chase wrote to John Adams on the 21st: 
" Read the papers and be assured Frederick speaks the 
sense of many counties." 50 So did she, and seven days later 
the province resolved to be independent. These were the 
resolutions which were so unanimously passed by the Com- 



" Proceedings, pp. 242, 271, 344. On Oct. 11, part of Prince 
George's county petitioned to be annexed to Montgomery and that 
the county seat be Georgetown. 

48 The Middle District included part of the present Carroll Co. 

49 IV, Force Archives, III, 694, gives the list of members of the 
committee chosen on Sept. 12, 1775- 

60 J. Adams' Works, IX, 412. 



20 Western Maryland in the Revolution. [20 

mittee: 51 "Our sole and primary intention in appointing 
Delegates to meet in convention was to regulate the mode 
of opposition, necessary to be made by us internally against 
the arbitrary machinations of the British ministry, and to 
appoint delegates to meet our sister Colonies in Congress, 
to recommend such measures as, by a sense of the majority 
of the Colonies, would best secure the natural and inherent 
rights of the people." The resolutions were no less in 
favor of union. " What may be recommended by a ma- 
jority of the Congress, equally delegated by the people of 
the United Colonies, we will, at the hazard of our lives 
and fortunes, support and maintain and that every resolu- 
tion of Convention, tending to separate this Province from 
a majority of the Colonies without the consent of the peo- 
ple is destructive to our interest and safety and big with 
public ruin." 

Complaint was made that the proceedings of the Con- 
vention had been secret, and the Lower District states 
that " a knowledge of the conduct of the representative is 
the constituent's only principal and permanent security." 
Therefore they " claim the right of being fully informed 
therein, unless in the secret operations of war," and " shall 
ever hold the Representative amenable to that body, from 
which he derives his authority." 

The desire for a new and permanent constitution and 
the distrust of the Convention caused the Committee to 
urge the necessity of the separation of the powers of 
government and to state " that, in all counties where the 
power to make laws and the power to enforce such laws 
is vested in one man or in one body of men, a tyranny is 
established." In fine, the Committee's theory of the gov- 
ernment is " that all just and legal government was insti- 
tuted for the ease and convenience of the people and that 
the people have the indubitable right to reform or abolish 

"Jonathan Wilson. Chm.; Simon Nichols, Clk. IV, Force 
Archives, VI, 933. 



21] Western Maryland in the Revolution. 21 

a government, which may appear to them insufficient for 
the exigency of their affairs."' 

When men spoke thus, the final rupture from England 
was at hand. The Committee of Observation for the 
Upper District was also chosen, on September 12, 1775, 
and organized two days later, electing John Stull, Presi- 
dent, and Samuel Hughes, Secretary." It served until 
November 25, 1776, when a new committee was chosen. 
The second committee was composed of much the same 
men as the first and continued to exist until March 3, 1777, 
when the State Government being fully organized, the 
Committee " adjourned forever, Amen," as the record has 
it. The record book, now in the possession of the Mary- 
land Historical Society, has been twice printed in part, once 
for patriotic purposes in 1862, edited by the Hon. J. V. L. 
Findlay, and again in Scharf's History of Western Mary- 
land/ 3 This Committee was more fiercely radical than the 
Middle District Committee, and when the Convention of 
the Province passed resolutions laudatory of Gov. Robert 
Eden, the Committee was much disturbed. On June 25, 
1776, a week later than the Lower District, it unanimously 
resolved that those proceedings of the convention were 
unsatisfactory to it and that they be laid before " the good 
people of this district, when they meet in a battalion on 
Friday and Saturday next." A subcommittee was ap- 
pointed to draft resolutions to be submitted to the Com- 
mittee and the militia. 04 The resolutions were adopted. 
They recite as grievances that " the legislative, executive 
and judicial powers in this Province are at present exer- 
cised by the same body of men "; that " the administration 
of justice is confused and uncertain, places of the most im- 
portant trust held by persons disaffected to the common 

M Scharf, Hist, of Md., II, 185. 

03 Vol. I, p. 133. 

M Resolution brought in on June 28, amended, submitted to the 
people, adopted by them on the 28th and 29th, and ordered to be 
printed. 



22 Western Maryland in the Revolution. [22 

cause of America, the transactions of the Convention car- 
ried on in a secret manner," and that while the recommen- 
dations of Continental Congress were " unregarded " and 
" propositions of the utmost importance were determined 
without consulting the people." 05 They complain of the 
" adulatory address presented to Governor Eden, suppli- 
cating his interposition with a people that has hitherto 
treated our just petitions with the greatest contempt," and 
state that all the above-mentioned matters have " very 
much alarmed the good people of this district and filled 
their minds with deep concern for the honor and welfare 
of this Province in particular and the United Colonies in 
general." Because of these facts they declare the " pres- 
ent mode of government . . . incompetent to the exigencies " 
of the province and " dangerous to our liberties." Being 
willing to " support the union of the colonies with our 
lives and fortunes," they wish the present convention to 
be dissolved and a new one immediately elected to declare 
independence. 

The slow measures of the majority in the State still 
distressed the Committee in December, when they peti- 
tioned the Council of Safety to call the General Assembly 
immediately, " that a speedy establishment of the new 
government may take place for the support and good main- 
tenance of peace and good order." Among the early acts 
of the committee 6B were resolutions authorizing Henry 
Shryock and James Chaplain to enroll companies of minute 
men and appointing a committee to license suits. 57 The 
record book shows that this committee performed its duty 
well and, doubtless, all the business of the courts passed 
under their vigilant eyes. The Association of the Freemen 
of Maryland was speedily given into the hands of a tried 
man in each hundred, who should carry it to all freemen 
resident in his district. 

55 /. e., respecting independence and the seizure of Gov. Eden. 
BB Sept. 18, 1775. 
57 Oct., 1775- 



23] Western Maryland in the Revolution. 23 

As this document bound its signers to defend the patri- 
otic cause by arms, as well as by their influence, the 
Quakers, Dunkers and Mennonites declined to sign it, or 
to muster in the militia. The Committee felt " that it is 
highly reasonable that every person who enjoys the benefit 
of their religion and protection of the laws of this free 
country ought to contribute, .either in money or military 
service, towards the defence of these invaluable rights." 
They were of the opinion that " those who are prevented 
from mustering because of religious scruples would render 
an equivalent by paying two shillings and sixpence per 
week." M The enrollment and signing went on slowly, and, 
on March 4, 1776, the captains of each hundred were 
ordered to take an association paper to the people of their 
hundreds and to make record of those who refuse to sign, 
with their reasons for so doing. This was done, and, on 
April 29, the " several returns of non-enrollers and non- 
associators " were considered. These men were then sum- 
moned to appear on May 7 and show cause why they do 
not enroll and associate and " why they should not be 
fined and compelled to deliver up their fire arms except 
pistols." Already men had found it perilous to oppose 
the Association;" 9 one 60 had been put under a guard of 
six men until he could be sent to the Council of Safety for 
trial, or would " sign the association, enroll into some 
company, ask pardon of this committee and give good 
security for his good behaviour for the future." Two 
other troublesome Tories, 61 who spoke " unbecoming words 
against the association " had been brought before the Com- 
mittee, " acknowledged their fault and signed." 

On the appointed day, some were excused, but the most 

08 Vide Proceedings of Convention, Dec, 1775. 

M Nov. 11, 1775, John Swan appealed to the committee that John 
Shryock had aspersed his character by saying he was an enemy to 
America. Shryock was called in, and not substantiating his charge, 
Swan was honorably acquitted. 

60 March 4, 1776. 

01 March 18, 1776. 



24 Western Maryland in the Revolution. [24 

either did not appear or could not give satisfactory rea- 
sons. They were therefore ordered to pay a fine within 
a month and to deliver up their fire-arms, except pistols, 
to the persons appointed to receive them. 62 The Men- 
nonites and German Baptists petitioned that they might 
give produce instead of cash for their fines and the Com- 
mittee recommended this to the Convention. 

From time to time we catch glimpses of contumacious 
persons, 03 who were accused " of expressing sentiments 
inimical to the liberties of America and advising Captain 
Keller's company to lay down their arms," or of " being 
an enemy to the liberty of America." ft When the charges 
were proved, the penalty would consist of a severe repri- 
mand by the chairman, a public acknowledgment of their 
faults, the signature of a recantation, and payment of all 
expenses " accruing upon their apprehension and guard 
during the time of their confinement." The last was an 
almost indispensable preliminary to a discharge. 65 The 
Committee did not intend that the public purse should be 
drawn upon for the maintenance of Tories under guard. 

62 Persons were appointed and full instructions given them, May 
9, 1776. 

63 June 28, 1776. 

64 July 7, 1776. 

65 The especial case referred to above was that of Captain Jacob 
Kerr and Henry Worrel (Aug. 17, 1776). Their recantation stated 
that they " acknowledge to all friends of American liberty, that we 
have used expressions inimical to the liberties of America; that we 
do hereby publicly acknowledge our faults, expressing our sincere 
sorrow for our evil and malicious conduct and do promise, engage, 
and pledge our honors to conduct ourselves in a regular manner 
for the future; never acting, saying or doing, or, to our knowledge, 
suffering or permitting any thing to be said or done prejudicial or 
inimical to American liberty, but will, forthwith, to the utmost of 
our power, oppose every enemy thereof." See also the case of 
David Meek, Dec. 24, 1776; Christian Eversole, Dec. 18, 1776; 
Michael Peter, Jan. 16, 1777, Feb. 1, 1777. John Funday, charged 
with " speaking sentiments inimical to the United States," did so 
when " excessively drunk." Before and since he had spoken as a 
friend to the common cause. He is discharged on paying costs. 



25] Western Maryland in the Revolution. 25 

One case received somewhat different punishment. 6 " The 
culprit failed to sign the association or deliver up his fire- 
arms until November 24, 1776. For this he was fined, 
and inasmuch as he was charged " with altering a public 
newspaper, by making the number of the American army, 
in an attack upon their right wing, appear to lose 5000 
men instead of 500, he was ordered to give bond, in the 
penalty of fiooo, to appear to answer that charge, or be 
sent under safe guard to the Tory Gaol in Frederick, to con- 
tinue there until the meeting of the General Assembly." 87 

The Upper District had no jail of its own until that sec- 
tion was made a separate county. On December 22, 1776, 
the Committee resolved that the stone stable on Captain 
Hager's lot should be immediately fitted up in a good and 
substantial manner for the reception of the Tories. The 
first sheriff of the county had not yet been commissioned, 
but there was " no place of security in this County for con- 
fining persons disaffected to this State and the Tory Gaol 
in Frederick town is at present much crowded." There- 
fore the Committee took action at once, and a month later, 
when a man was brought before them charged with having 
lodged and secreted his son, a deserter from Captain 
Fames' company, the prisoner could be ordered in safe 
" custody to the Tory Gaol of this County," cs until he shall 
produce that son. Two days before this action, the Com- 
mittee had made a general resolve in this matter," 9 which 
was evidentlv causing trouble. " All those, who have put 
such of their sons, as have enrolled with any captain of the 
militia, out of the way or suffered them to conceal them- 
selves from their officers, shall call them home as soon as 
possible and deliver them to some of their officers, or to 



60 Capt. Samuel Finley. Dec. 18, 1776, he was sent to Frederick. 
07 He should pay for support there five shillings per day to the 
officer of the guard and three and nine pence to each private. 
""Jan. 2i, 1777. Vide Jan. 23. 
09 Jan. 19, 1777. 



26 Western Maryland in the Revolution. [26 

this Committee, otherwise to suffer the consequences of 
such neglect." 70 

At least one father came before the Committee and 
made it appear that " he had used his utmost endeavors 
to apprehend his son," n a deserter, " but could not pos- 
sibly perform the same." He was made to give bond of 
£1000 to appear before the Committee, when called upon, 
to use " all possible means to apprehend " his son, and to 
deliver him if found. Other Tories received due punish- 
ment for " having damned the Congress, General Washing- 
ton, and the Committee and wished success to King George 
and the Royal Family," 72 or for " drinking the King's 
health and expressing sentiments against the good of the 
State." 

There were two brothers, 73 who were always in hot 
water, and when they acknowledged that they had spoken 
and acted in a manner inimical to the cause, 7 * they were 
ordered to be kept under guard, until the militia should 
march and then to be taken to camp. The brothers pleaded 
that their stock must inevitably perish for want of attention, 
if both of them were to be thus forcibly enlisted, and the 
warm-hearted Committee permitted one of them to remain. 
Forcible enlistment, however, is not a good way to make 
soldiers, and we are not surprised to find that the second 
brother deserted from the militia and was brought before 
the Committee before the month was out. 75 

The Dunkers and Mennonites were obliged to pay their 
fines in December, and £206, 10s were collected from this 
source. An opportunity was, however, given to non-com- 
batants to avoid paying fines. The young men of these 

70 For instances of exemption from this resolve, see proceedings 
for Jan. 20, 1777. 

71 Feb. 8, 1777- 72 Feb. 22, 1777. 

73 Dec. 27, 30, 1776; Jan. 2, 1777. 

74 The Gainsbergers, Dec. 30, 1776; Jan. 2, 4 and 23, 1777. Vide 
Jan. 6, 1777; also Jan. 7, 9. The usual fine for non-enrolling was 
£10. See Jan. 11 and 17, 1777; Feb. S, 1777. 

76 Peter Gainsberger. He was to be kept in close confinement in 
the Tory Gaol until the return of the militia. Vide Feb. 4, 1777- 



27] Western Maryland in the Revolution. 27 

peaceful sects were " requested to march with the militia, 
in order to give their assistance in intrenching and helping 
the sick, and all such as will turn out voluntarily agreeable 
to the above request shall have their fines remitted." " 

During the winter of 1776 and 1777, Tories seem to 
have been much more plentiful than before and the neces- 
sity of punishing them and providing for the army in the 
field caused the Committee to hold almost daily meetings. 
Men were brought before them " charged with drinking 
the King's health and success to Lord and General Howe 
and the British army," " and with saying that " the King 
would have the country before the middle, of June next," 
and that " if he should be put in confinement at Elizabeth- 
town, he valued it not, for Lord Howe would soon release 
him." We must remember that, at the time this was 
done, Washington was just gathering his forces together 
for his crossing of the Delaware, and the country was 
passing through the times that tried men's souls., This will 
account for the boldness of the Tories and for the activity 
of the Committee. 78 One man was put in custody and kept 
there till he should give security that he would " neither 
say nor do anything inimical to the United States." The 
next day he volunteered in the Continental service and 
was released from prison. 

Another man published Lord Howe's declaration and 
other reports inimical to the United States. 79 He was put 
under safe guard till he produce the declaration and give 
bond for good behavior. Two more Tories publicly 80 said 
that they were determined not to march. " Go to the Tory 
Gaol," say the Committee, " until a proper guard can be 

70 Dec. 22, 24, 1776. "Jan. 13; Jan. 14; Jan. 20, 1777. 

78 By vote of Jan. 3, 1777, the Tories in custody were each allowed 
one pound and an half of bread per day. Bread and water were 
thought good enough for them. 

79 Jan. 15, 1777. 

80 Jan. 17, 1777. Vide David Hillen, Jan. 14, 1777. The latter 
had his apprentice enlist and was excused (Jan. 15). An instance 
of a proxy which failed was that of Ignatius Sims, who gave in 



28 Western Maryland in the Revolution. [28 

procured to march you to your respective companies." 
There was no laxity in the measures of the Committee of 
Washington County. Neither was there undue sternness, 
and when deserters from Captain Evan Baker's company 
were brought before the Committee on February 6, 1777, 
and agreed to march to their companies at camp, they were 
allowed to do so, provided they give security to appear 
when called for. 81 

The raising and equipment of the militia occupied much 
of the Committee's attention. Minutest details received 
great care, and the officers were held to rigid accountability 
for what they received." 2 Nominations for officers of the 
companies and the battalions which they raised were made 
to the Council of Safety and to the Continental Congress. 
Poor and sick soldiers of the Flying Camp were provided 
for by the Committee, 83 and quarters for recruits and sol- 
diers were furnished. In one instance, 84 the Committee 
offered to bury a poor soldier in a decent manner, at its 
expense, but the generosity of the citizens of Hagerstown 
prevented the necessity of this. When the winter cam- 
paign of 1776 and 1777 came on, with the pressing need 
of the Continental Army and the threatened insurrection 
on the Eastern Shore, the Committee ordered all militia 
to march, even those who were members of the Flying 
Camp. 

Hagerstown was a busy place at this time. On Decem- 
ber 30, 1776, the Committee sent all the militia of the 
county to Washington's assistance, to remain in service 
until March 15, unless sooner discharged. It was one of 
the miserable short enlistments which so distressed Wash- 



the name of John McKee. The latter came before committee on 
Jan. 27, 1777, and said he turned out on Battalion Day voluntarily 
without agreement with Sims. Ordered that McKee march for 
himself and not for Sims. 

81 Vide Feb. 8, 1777. Payment of Capt. Andrew Linck's expenses 
pursuing deserters. 

82 E. g., case of Capt. Henry Yost, Feb. 5, 1776. 

88 Jan. 1, 1777. M Dec. 24, 1776; Jan. 1, 1777- 



29] Western Maryland i>i the Revolution. 29 

ington's heart; but it showed the patriotic mind of Wash- 
ington County. The measure had been anticipated for 
some days and the Committee had resolved S5 that, " on 
the marching of the militia," those who were " well 
affected " and not capable of marching " shall be formed 
into companies witli proper officers for the protection and 
relief of such families as shall be left without assistance, 
officers of the companies so formed shall divide the settle- 
ment into certain circuits, and ride around such circuits 
as shall be assigned them once a fortnight, make particular 
inquiry into the distresses of the inhabitants and order 
them such relief as they shall think necessary. Should 
their companies not be sufficient for giving such relief, they 
are required to apply to the Tunkers and Mennonists 
residing nearest to give their assistance." 

Some of the recruits behaved " in a very riotous and 
disorderly manner " in Hagerstown, and the Committee 
had to tell all recruiting officers to have their men conduct 
themselves properly or expect a representation to Con- 
gress of their behavior. Servants, or negroes, were also 
ordered not to go without written permission from their 
masters any distance from home, while the militia were 
away, 86 on penalty of receiving " thirty lashes on the bare 
back well laid on." 81 Every measure was taken to prevent 
the spread of terrifying rumors. 

If private property was needed for public use, it must be 
given. When a man received a message, requesting him 
to send in his small farm-wagon, immediately, and neg- 
lected to do so, 88 a guard was sent at once to fetch the 
wagon and three horses, or oxen, if the horses could not be 
found, and the owner with them, to show cause why he 
had treated the authority of the Committee with so much 

85 Dec. 22, 1776. Vide Jan. 19, 1777. All able-bodied men must 
march or provide a substitute. 

88 There was to be no inoculation for smallpox in the absence of 
the militia, Jan. 2, 1777. 

87 Jan. 11, 14, 17, 1777. 88 Joseph Rentch, Jan. 6, 1777. 



30 Western Maryland in the Revolution. [30 

contempt. Other requisitions were on residents of the 
county for teams to draw cannon for Col. John Stull's 
battalion/ 9 or for axes 90 and blankets for Col. Davies and 
Major Swearingen's troops, or for horses to enable Capt. 
Evan Baker B1 to capture members of his company " who 
have absconded disagreeable to orders," or 02 for blankets 
for Capt. Keller's company. All was to be done decently 
and in order. No horses were to be pressed " without 
authority of the Committee," nor was any guard to be en- 
titled to pay unless they went out with written orders from 
the Committee and made return in writing thereto. 93 Three 
men complained that soldiers forcibly entered their houses 
and took blankets, which they could not possibly spare. 04 
The Committee at once declared such proceeding " without 
order and tyrannical," and ordered the captain of the com- 
pany to which the soldiers belonged to return the blankets. 
There should be no unnecessary hardship created. 

Men who were late in marching with their companies *° 
were ordered to give bond for £500, that they would march 
with the next company leaving Hagerstown, or were kept 
in close confinement in the Tory Gaol and then delivered 
to the custody of the captain of the first company going 
to the front. Robert and Henry Foard and Hugh Gilliland 
enrolled with Denton Jacques. 96 As he made no prepara- 
tion to march, they went to the Committee and were told 
that they might enroll the company, have a rendezvous 
appointed, choose officers and make return of all delin- 
quents. Clearly Jacques was unfit for his position. Let 
the more zealous take it. 

Long after the other companies had gone, 87 Capt. Abra- 
ham Baker acknowledged that he and most of his company 



89 Jan. 10, 1777. 

00 Only such to be taken as can be spared and payment to be made 
therefor at appraised value, Jan. 20, 1777. 

01 Jan. 22, 1777. 92 Jan. 21, 1777. 93 Jan. 25, 1777. 

94 Jan. 28, 1777. Vide case of Moses Reiley, Feb. 26, 1777. 

95 Jan. 15, 1777. 9a Jan. 30, 1777. " 7 Feb. 17 and 26, 1777. 



31] Western Maryland in the Revolution. 31 

had deserted, and with remarkable lenity, the Committee 
merely required him to give bond to appear when required, 
to use his utmost endeavors to bring back the other de- 
serters, and to march with his company to re-enforce Gen- 
eral Washington. 

Many of the Committee were captains of the companies 
which left for the field, and so. their places had to be filled. 
The remaining members elected men to fill the vacancies " 
and the work went on. New levies were made by the State 
to aid Smallwood in his task of subduing the Eastern Shore 
Tories. The Washington County Committee had just sent 
their best men to aid Washington. But " from a sincere 
affection for the common cause of liberty, ever willing to 
risk their lives and fortunes in defence thereof," they unani- 
mously resolved" to "give every assistance and encour- 
agement in their power to the speedy completing of every 
company under the said General's command." 

The Committee had also to see that proper provision 
was made for the people of the county. On June 18, 1776, 
a resolution was passed that no person should sell salt for 
more than four shillings and six pence above the cost of 
purchase, and that each seller should produce a certificate 
under oath of the prime cost, if required. This rule 
was enforced, 100 and to it a more stringent one was added, 
that, if any family had more than they needed, the rest 
might be seized and sold for the benefit of the community. 
In the winter of 1777, heavy penalties were laid on any 
miller who should grind wheat for distilling, or any distiller 

98 Jan. 25, 1777, Isaac Cooper admitted that "he had disputed the 
authority of the Convention and the Committee, in adding any one 
member to the said Committee," in the room of any who had re- 
signed. " He acknowledged his fault, promised a more friendly 
conduct for the future, " paid the expense of being summoned and 
was discharged. 

09 Jan. 21, 1777- 

100 June 25, 1776; Jan. 16, 1777. Hides of cattle slaughtered for the 
militia are not to be sold out of the county. 



32 Western Maryland in the Revolution. [32 

who should distil it, and these regulations were carefully 
enforced. 101 

Of this active committee, which sometimes adjourned in 
the evening to meet at 7 a. m., we have nothing but good to 
record from the time when they sent to Annapolis fifty- 
one blankets, 102 within five days of the time requisition was 
made for, them, to the time they broke up a gang of coun- 
terfeiters 103 of Virginia money, arrested some, prevented 
the rest of the "banditti" from rescuing the prisoners, 
and sent letters post haste to the committees of other 
counties, that the remaining members of the gang might 
be captured. A vigilant, sturdy, kind-hearted, zealous 
body of men, 104 they had a " sincere affection for the com- 
mon cause of liberty." 

The Committee of Observation for the Middle District 105 
was also elected on September 12, 1775, and consisted of 
17 men. Two days later, it organized by electing John 
Hanson, Jr. as chairman, and Archibald Boyd as clerk. 
We have the minute book of this committee; but not of 
its successor, 106 elected in the fall of 1776. This was a less 
radical body than the Committee of the Upper District, 
but not less vigorous. Like its fellow to the west, it 
appointed committees on licensing suits, and on corre- 
spondence, and named men to raise minute companies, 107 

101 Feb. 5. 8, 1777; March 1. 102 April 8, 13, 1776. 

103 Feb. 1,3,4,8,23. I777- 

10 * Committee of Sept. 12, 1775: John Stull, Charles Swearingen, 
Andrew Rench, Jonathan Hager, John Sellars, Col. Cresap, James 
Smith, John Rench, Ezekiel Cox, Samuel Hughes, William Baird, 
Joseph Smith, William Yates, Conrad Hogmire, Christian Orendorf, 
George Zwingley, Joseph Chaplain, Col. James Beale. Committee 
of Nov. 25, 1776: those italicised above and Peter Beall, Lodowick 
Young, David Schnebley, Christian Lantz, Joseph Sprigg, David 
Hughes, Dr. Hart, Michael Fackler, John Kerschner, Nicholas 
Smith. 105 Scharf, Hist, of Md., II, 185. 

306 Its successor was not elected at the close of the year, and on 
Sept. 10, 1776, the late committee met, induced by the resolves of 
Congress and the necessity of the case. 

107 March 5, 1776. Many have not enrolled through ignorance. 
Give them another chance till April 11. Vide April 12, 1776. 



33] Western Maryland in the Revolution. 33 

and to hand about the articles of association in the different 
districts. As in the Upper District, the Tories, who re- 
flected upon and upbraided in the most indecent manner 
those who enrolled, 108 " were forced to apologize." Those 
who spread false rumors, 100 " scandalous," and tending to 
injure the character of citizens and " create fears and jeal- 
ousies in the people," were reprimanded. Those who sold 
salt at a price above that fixed by the Committee were sum- 
moned before it and ordered to refund the surplus. 110 Men 
who were charged with endeavoring to sow discord among 
the " well affected people " 1U or with advising people to 
lay down their arms, 112 or with absence from muster, 113 met 
with punishment, as they were guilty of offences of " high 
and dangerous nature " which " tended to disunite the in- 
habitants in their present opposition." There seem to have 
been fewer Tories in the Middle than in the Upper District, 
though here we find one who grossly insulted the Com- 
mittee by a letter accusing them of being oppressors." 1 
Another talked very disrespectfully of the Americans, ridi- 
culing them and their warlike preparations, and asserted 
that " fifty British soldiers would drive out all the inhabi- 
tants of Frederick town." 111 Some, who were "suspected 
of unfriendliness," were compelled to give bond with 
approved security, or to go to gaol. Here, as in the 
Upper District, the costs are always borne by the Tories. 118 

108 Oct. 2. 1775- 

109 Andrew Grim and Jacob Houser, said Messrs. Booth. Carey 
and Edelen. tried to blow up the powder magazines. Oct. 2, 16, 
1775- 

1,0 Hoffman. Oct. 13, 1775, said his wife sold the salt in his absence 
and without his knowledge. Vide Dec. 12, 1775; June 18, 1776; 
July 16, 1776; July 2, 1776. m Jan. 6, Feb. 19, March 4, 1776. 

1,2 Vide March 4, 5. April 1, 12, 1776. 

113 March 5. April 12, 22, 1776. 

U4 Nathaniel Patterson, whose accomplices were John McCallister 
and John Kleinhoff. April 29, May 1, 9, 1776. 

"''June 6. 1776. 

110 E. g:, Dr. John Stevenson, John Stevenson, Jr., Capt. Hugh 
Scott, James Smith (iron-master), Joshua Testill Morgan, Charles 

3 



34 Western Maryland in the Revolution. [34 

Frederick, as the most convenient inland town for that 
purpose, early became a place where prisoners were sent 
for safe keeping. Connolly and his companions were 
seemingly the first consigned to the care of the Frederick 
Committee, 117 and on the very day when the news of their 
capture reached the Convention, 118 the Committee resolved 
to build a strong log gaol in Frederick town, at least thirty 
feet long and twenty in breadth, of two stories, " the upper 
story being divided into three rooms with a stove in each 
room." U9 

At the door of the gaol, a small house should be built for 
the guard. The Convention proposed to build the prison on 
private property. This did not suit the plans of the Fred- 
erick Committee, who suggested that the " free school lot " 
be used as a site for this building, which might be of use 
to the public, " after our unhappy disputes are at an end." 120 

The Convention did not agree to this proposition, but 
erected the gaol on Second street, a few rods east of the 
Farmers and Mechanics Bank. 121 The building was com- 
pleted by the beginning of June and found occupants 
awaiting it. On May 19, 13 Tory prisoners from North 
Carolina came and a constant guard of an officer and of 



Connett, Joseph Clarke, July 2, 1776. Jacob Coventry, July 4, 6, 
24, 1776. Joshua Testill, July 8, 16. George French relieved of 
fines for not enrolling by Convention, May 25, 1776. Proceedings 
of Conventions, p. 160. Jacob Geiger, Sept. 10, 1776. Thomas Tan- 
nerton suspected by Lower District Committee to be Moses Kirk- 
land advertised for in Pa., but freed, when Dr. Houblie testified 
he thought he was a different man, July 23, 24, 1776. 

U7 Dec. 8, 1775- 

lls Proceedings, p. 40. 

119 Rev. John Scott, of Somerset Co., was sent to Frederick as a 
Tory prisoner, Aug. 28, 1776. Proceedings of Conventions, p._230. 
Viae Md. Arch., Coun. of Safety, II, 118, 328. 

120 Dec. 26, 27, 1775. 

m After the war it was converted into a stable and part of it stood 
until 1846. The iron bolts fastening the logs together were said 
to have been made by Frank Mantz, a Tory blacksmith. Scharf, 
W. Md., I, 138. 



35] Western Maryland in the Revolution. 35 

men was set over them. 1 " These were part of a body of 
prisoners sent for safekeeping- northwards to Pennsylvania 
and Maryland. They were retained in Frederick at least 
until the end of the year, with the exception of six, who 
succeeded in escaping in September. 

A second band of prisoners 123 was received on July 26, 
1776, when 15 British officers taken at St. John's came with 
a letter from the Board of War at Philadelphia, stating 
that they might be admitted to parole, if they would give 
it, and, if not, they should be closely confined. Only three 
signed the parole then, but the other twelve soon became 
weary of confinement and followed on August 3. As they 
were allowed the " attendance of their servants and of the 
women and children belonging to them," their lot was not 
extremely hard. 

When the officers came, the Committee suggested to 
the Convention that as many of the Tory prisoners had 
offered security for their good behavior, they might be 
given wider liberty. The Tory Gaol *** is a " dreadful place, 
but the best we have, to be confined in and so crowded at 
present (being 27) that we fear it may be dangerous to 
their health." On August 28, the Convention allowed the 
prisoners in the Tory Gaol to be taken to the common 
gaol and walk in the yard. When the resolve of Conven- 
tion 125 came to Frederick the Tory prisoners were removed 
to the common gaol. When cold weather came on, the 
Committee again recommended that the Tories be per- 

122 The same day the Committee wrote to the Convention to send 
money to pay the guard. The regulations provided that the 
rations for the Tories should not be inferior to those given the 
guard. June 6, 1776; vide July 2; Md. Arch., Coun. of Safety, I, 
403, 405, 408, 445, 473, 480; II, 245, 295, 502. 

123 July 26, Aug. 3, 6, 13, 1776. These officers were sent to New 
Brunswick, N. J., for exchange in November. Md. Arch., Coun. 
of Safety, II, 456, 486, 502. 

124 V, Force Archives, I, 569; Md. Archives, Coun. of Safety, II, 
117; Proceedings of Convention, p. 230, 232, 251, 257. 

125 Sept. 3, Oct. 14, 1776. 



36 Western Maryland in the Revolution. [36 

mitted to give bond for good behavior and that those who 
were dangerous be transferred to the. Tory Gaol as a 
place of superior strength and preferable for. winter. 
Though the Committee was thus merciful, it was not care- 
less, and on three occasions 12G expressed disapproval of 
too great intimacy of non-associators with the prisoners of 
war. This might prove dangerous to the State and was 
forbidden. It might easily lead to an escape, like that of 
September 23, 1776, when seven Tories broke gaol at 
Frederick and escaped. 1 " 7 

The Upper and Lower Districts were discontented with 
the conservatism of the Convention and Council of Safety. 
It was otherwise in the Middle District. This Committee 
favored the policy of the Convention, that the " civil 
power " be supported in "the due execution of the laws, as 
far as consistent with the present plan of opposition." For 
the " maintenance of order and good government," the 
Committee recommended the people " to pay strict regard 
to the authority of civil magistrate in the just execution of 
law." They declare that the "duty and allegiance, enjoined 
by the oath necessary to be taken to constitute the magis- 
trates, comformably to the laws of this province, are not 
inconsistent with our present plan of opposition to minis- 
terial despotism." 128 There was no more patriotic place 
than Frederick, but the people there would not be the first 
to rush into a revolution. 

It is true that the Committee desired the publication of 
the proceedings of Convention, 129 but this was only that 
the people might be informed of what their representatives 
did. Just after the Declaration of Independence, which 

128 Sept. 2 [vide Council of Safety (Feb. 12, 1777), III, 132] ; Sept. 
3; Oct. 24; Sept. 12, 1776. Philip Thomas wrote to Tilghman that 
many deserters were concealed in the Middle District. V, Force 
Archives, II, 298. 

127 V, Force Archives, II, 457. They were advertised for. Six of 
these were from North Carolina. 

128 Oct. 17, 1775. 12t> March 19, 1776. 



3?j Jl'estern Maryland in the Revolution. 37 

was published in Frederick during August,'™ a man came 
before the Committee 131 to obtain damages for injury done 
to his peach orchard. The unanimous answer was that he 
should apply to the civil magistrate, " which will doubtless 
take order therein and that this Committee, on every 
occasion, will support the civil power in the due execution 
of law." 

Congress received equally steady support. When re- 
quested to have the preparations for the Flying Camp 
pushed, the Committee unanimously replied that it would, 
" and every militia captain and other member of this dis- 
trict ought to exert himself for the immediate equip- 
ment " of these Continental troops " with every necessary." 
In their zeal, they voted to pay the way to New York of 
several soldiers of the Third Virginia Regiment who had 
been left sick when the regiment passed through the town. 

In the great expansion of our country to the westward, 
we are apt to forget that Western Maryland was the 
frontier in 1775. The patriots of that time and place, how- 
ever, were not forgetful of that fact, and in July, 132 John 
Hanson, Jr., wrote to Peyton Randolph, President of the 
Continental Congress : " There is too much reason to be- 
lieve that an expedition will be set on foot by the British 
and Indians in Canada against the western frontiers of this 
State, Virginia and Pennsylvania. Agents and allies of 
the King and Parliament, of Gen. Gage and Lord Dun- 
more, it is believed in this place, are now operating with 

130 Aug. 21, 23, 1776. 

181 It cared for some sick soldiers of the Continental Army and 
received payment from Congress therefor. V, Force Archives, 
II, 298; III, 1571. 

132 July 16, 1776. On Sept. 10, Philip Thomas was told to inform 
Convention that several deserters from Col. Smallwood's battalion 
are in this and the Upper District, and that sick soldiers were left 
in Frederick by the Virginia regiment. Same day voted to expe- 
dite company of volunteers raised in this district. Three companies 
of the Flying Camp were raised in the Lower District, five in the 
Middle District and three in the Upper District. Muster Rolls of 
Md. Troops, pp. 73-74- 



38 Western Maryland in the Revolution. [38 

the Delaware and Shawnese Indians in Ohio and bands in 
Kentucky and Canada, with a view to destroy our frontier 
towns and desolate our homes and firesides. We are de- 
termined to keep a vigilant eye on all such agents and 
emissaries, but it would be highly prudent to take early 
measures to supply the arsenal and barracks at Frederick- 
town with arms and ammunition, to enable the male popu- 
lation to defend all the inhabitants, in case the emergency 
should arise, in which it will become our solemn duty to 
act." 1! ! Hanson's surmises were true, but the plans were 
even more extensive than he imagined. Dunmore, driven 
from the main part of Virginia and sheltered by the Brit- 
ish fleet at Norfolk, had planned a joint expedition with 
Dr. John Connolly, which was intended to cut the Colonial 
union in half, along the line of the Potomac. Connolly 
was a native of Lancaster County, Pennsylvania, and had 
been bred to the practice of physic, but his ambition to 
be a soldier led him to serve as a volunteer to Martinique 
and against the Western Indians in the French and Indian 
War. In a narrative of his experience, written some 
years after the close of the Revolution, 134 he states that, 
after the end of the former war, he explored the newly 
acquired territory, " visited the various tribes of native 
Americans, studied their different manners and customs 
and undertook the most toilsome marches with them 
through the extensive wilds of Canada and depended upon 
the precarious chace for my subsistence for months suc- 
cessively." This training fitted him for a "partisan offi- 
cer." Settling at Pittsburgh, which was then claimed by 
Virginia as a part of West Augusta County, he became 
commander of militia there and served as major of colonial 
troops in the Indian War, which was decided by the battle 
of Point Pleasant in 1774. 

Holding royalist sentiments, he tells us he prevented 

133 Scharf, W. Md., I, 136. 

134 Published in the Penna. Hist. Mag., Vol. XII, 310, 407; XIII, 
61, 153, 281. 



39] Western Maryland in the Revolution. 39 

the choice of a Committee of Observation in West Augusta 
County and engaged " a formidable body of friends, at the 
risk of life and fortune, in support of the constitutional 
authority." According to his narrative, he also made 
secret loyalist treaties with the Indian tribes, while induc- 
ing the Virginians to believe that he was in favor of the 
Whig measures. He next planned to consult Dunmore in 
Norfolk about his future moves. Though somewhat de- 
tained by local patriots, he succeeded in his purpose 13J and 
a plan was concerted to have Connolly raise a body of 
troops in Canada and Western Virginia and an auxiliary 
band of Indians. These troops were to make a junction 
at Alexandria with Dunmore's troops, coming from the 
coast. During this time, the attention of the colonial army 
was to be occupied to the northward by the forces under 
General Howe. 136 General Gage was still commanding at 
Boston, and to him Connolly was sent by Dunmore, to 
gain the endorsement and authority of the British com- 
mander. The approval gained, Connolly left Boston on 
September 14 or 15 and rejoined Dunmore in the follow- 
ing month. The secrecy of the scheme was soon destroyed 
through the communication of the contents of a private 
letter written by Connolly to a friend near Pittsburgh and 
through information given the Virginia leaders by Con- 
nolly's servant, who escaped from the ship on the return 
voyage from Boston. 137 Ignorant of this fact, Connolly 
determined to start for Detroit, by the shortest way, 
through the Province of Maryland. His instructions and 
the commission as lieutenant-colonel given him by Dun- 
more on November 5, were " concealed in the sticks of 
his servant's mail pillion artfully contrived for that pur- 
pose." On November 13, with his servant and Dr. John 
Smith and Allan Cameron, he left Dunmore. The second 
of these three, a Scotchman, had resided some time in 

135 Arrived in Norfolk, July 25, 1775. 

186 The proposals of Connolly are found in Scharfs W. Md., I, 136. 

137 Md. Arch. Coun. of Safety, I, 93. 



40 Western Maryland in the Revolution. [40 

Charles County, Md., and being a Tory, had left that 
patriotic neighborhood for West Florida. Connolly in- 
duced him to turn back, with the promise of a surgeon's 
commission, and describes him as a man of " quick penetra- 
tion, firm loyalty, and intimate acquaintance with the lower 
parts of Maryland." Cameron was also a Scotchman, had 
left his country on account of a duel, and had become a 
deputy Indian agent in South Carolina. Having suffered 
much abuse there for his. unshaken loyalty and having 
gained some notoriety for a plan to incite the Creek and 
Cherokee Indians to fall on the colonists, 133 he was easily 
induced to join Connolly by the promise of a commission 
of lieutenant, and possibly of captain, and was valuable to 
his leader, through his acquaintance with the Indians. 

They set out in a flat-bottomed schooner, 139 intending 
to proceed up the Potomac river to a point near Dr. 
Smith's house, on Port Tobacco Creek. Driven by a 
storm into St. Mary's river, they disembarked, and went 
forward on horseback. On the very border of the fron- 
tier, about five miles beyond Hagerstown, they stopped 
at a public house for the night of the 19th of November. 
The landlord knew Connolly, but supposed he was return- 
ing to his home in Pittsburgh. During the evening, how- 
ever, Connolly tells us that a young man from Pittsburgh 
came to the tavern and then proceeded to Hagerstown. 
There he went to a " beerhouse " and " mixed with the 
officers of the militia men." In the conversation some one 
asked who the strangers were who had passed through 
the town that afternoon. The Pittsburgh man answered 
that one of them was Major Connolly of Pittsburgh. Two 
days before, word of Connolly's plans had come to the 
colonel of militia 14 ° there, and rejoicing at this opportu- 
nity, a party set out at once, broke into the room where 
the Tories were, about two o'clock in the morning, and 

138 Md. Arch. Conn, of Safety, I, 93. 

180 Scharf's W. Md., p. 137. 

140 Through the revealing of the private letter, says Connolly. 



41] Western Maryland in the I\c:\>littion. 41 

made them prisoners. Taken to Hagerstown, they were 
kept in separate houses and " suffered that kind of dis- 
turbance and abuse which might be expected from undis- 
ciplined soldiers and a clamorous rabble at such a crisis." 
When day came, the prisoners were brought before the 
Committee of Observation, who pronounced Connolly a 
" dangerous enemy to the colonies " from " certain papers 
produced to this committee and acknowledged to have 
been written by him " ; while they found Smith and Cam- 
eron " guilty of many equivocations " and suspicious from 
being in Connolly's company. All three were to be sent 
to the Council of Safety for further trial. 1 " Thus the 
danger was averted and the vigilance of the Western Mary- 
landers had prevented the success of the Tory machina- 
tions. 

The prisoners were taken to Frederick on the next day 
and were at once met by a colonel of militia, lately returned 
from Boston, who knew of Connolly's northern trip. This 
ended all hopes for release and vigilant examination of 
their baggage was ordered. Nothing was found on the 
first search, but, when Samuel Chase arrived in Frederick 
to preside at the prisoner's examination, a fresh search 
was directed by him. Dr. Smith said " they examined 
everything so strictly as to take our saddles to pieces and 
take out the stuffing and even rip open the soles of our 
boots." u The papers in the pillion sticks escaped detec- 
tion and were destroyed by the servant; but, in Connolly's 
portfolio, a rough draft of his propositions was found. The 
Committee of Observation put the prisoners under sepa- 
rate guards as soon as they were received and ordered 
that no person speak to them, save in the presence of one 



141 Scharf, W. Md., I, 133. Connolly's account differs from this 
and is very much more favorable to himself. He represents that 
they were only sent to Frederick and by a small majority. The 
record says the action was unanimous. 

m Scharf, W. Md., I, 137. Middle Dist. of Fredk. Co. Com. 
of Obs. Nov. 21, 22, 23. 



42 Western Maryland in the Revolution. [42 

of the Committee or by their permission. When the 
papers were found, copies of them were sent to the Con- 
vention of Virginia and Maryland and to Congress. 143 The 
Tories were kept in the house of the colonel of minute men 
under a constant guard. In addition to previous restric- 
tions, they were forbidden the use of pen and ink, save in 
the presence of a member of the Committee, 144 and any- 
thing written by them was directed to be examined by one 
or more of the committee. Connolly, who becomes quer- 
ulous at times in telling of the hardships of his captivity, 
admits that the prisoners had no reason to be dissatisfied 
with the lodging and diet they had in Frederick, but he 
complains bitterly of the " clamorous gabbling of this raw 
militia," as " eternal and noisy beyond conception." The 
guards 145 were ignorant and stupidly turbulent and gave 
nights " of entertainment to themselves and visitors and of 
tantalizing perturbation to me, whose heart was inces- 
santly panting after other scenes and different opinions." 

A negro girl who waited on the prisoners became their 
friend and brought them ink-horn and paper, which she 
left " between the bed and sacking bottom, unnoticed by 
the guard." With these, Connolly wrote letters to the 
garrisons in the west. It was decided that Dr. Smith 
should make an attempt to escape and take the letters to 
their destination. The prisoners had noticed " that, to- 
wards daylight, our guard, frequently, exhausted by their 
own noise and folly, were inclined to a momentary quiet 
and, as no centry was regularly relieved, but all were on 
duty at the same time," they concluded that an escape 
was possible. 

This was accomplished in the nick of time. On Decem- 



143 Received by Convention on Dec. 8, 1775. Proceedings, p. 40. 

144 Com. of Observation, Nov. 29, Dec. 26. The Committee asks 
Congress for reimbursement for expenses incurred in guarding 
prisoners. Dec. 27, instructions are given to the guard. 

"° Changed every 24 hours. 



43] Western Maryland in the Revolution. 43 

ber 29, a letter from John Hancock,"" president of Con- 
gress, was received, ordering the prisoners to be removed 
to Philadelphia. The Committee directed Dr. Adam 
Fisher 14T and ten men to escort them on the morrow. That 
very night, the prisoners unscrewed the lock and, while 
the guards were nodding, Smith slipt down stairs unob- 
served. Scarcely had they time to screw the lock on again 
when the guard entered, but seeing some of the prisoners 
in bed, concluded all were there, cried " all safe " and re- 
tired. When morning came Smith's escape was discov- 
ered and the others were loaded with " opprobrious epi- 
thets." Smith was recaptured by the Committee for the 
Upper District 14S and was brought to Philadelphia. 1 " There 
he made a second unsuccessful attempt to escape and, after 
being removed to Baltimore, finally succeeded in a third 
attempt, in December, 1776. Cameron was retained as a 
prisoner until the winter of 1778, while Connolly was not 

148 IV, Force Archives, IV, 216. Letter was dated Dec. 8, and 
stated that Congress highly approved of the acts of the Frederick 
Committee. 

147 Connolly says the " lowest and most irrational of the inhabi- 
tants " with a common surgeon barber for a captain. 

148 IV, Force Archives, III, 479, Dec. 30. Letter of John Hanson 
to John Hancock. Expenses of maintaining prisoners was over 
£27. The jail was altogether insecure, so the Committee had to 
hire rooms and as the militia finally refused to guard the prisoners, 
a guard had to be hired. 

149 Smith was taken at Little Meadows. Samuel Hughes was then 
chairman of the Upper District Committee. He had six letters 
from Connolly (IV, Force Archives, III, 615 ff). Three of these 
were addressed to British commanders in the west, one to a Tory 
friend at Pittsburgh, one to his wife and one to an unknown per- 
son. From them we learn that Connolly wrote " in bed with two 
sentinels at the door, with hourly apprehensions of death," and that 
he hoped to have his wife with him in Frederick, but the Com- 
mittee " altered their opinion after the man had horses saddled to 
go for you and the children." I am inclined to believe that Con- 
nolly invented this story to please his wife. He writes that " my 
guard consists of Germans, whose dissonant jargon of High Dutch 
is not only unintelligible to me, but also extremely disagreeable, 
by its cursed noise and harshness that it distracts my very soul." 
The letters are dated December 16. 



44 Western Maryland in the Revolution. [44 

released until July, 1780, when he was exchanged for Lt.- 
Col. Ramsay. 

Smith gives a curious account of his capture, in a narra- 
tive of his adventures, 150 published in 1784, but which is 
not very reliable. He says on their journey westward, they 
came to Frederick on a muster day and were ordered to 
appear the next morning before the Committee. They 
did not do so, but suddenly and secretly left the town. He 
calls the guard which captured him " unfeeling German 
scoundrels, upon whose brows are written assassination, 
murder and death." On the way to Frederick, they were 
preceded by drum and fife, playing the rogue's march. In 
that town they were dragged before " a committee which 
consisted of a tailor, a leather breeches maker, a shoe- 
maker, a gingerbread maker, a butcher, and two tavern 
keepers. The majority were Germans and I was sub- 
jected to a very remarkable hearing, as follows: 

" One said ' You infernal rascal, how darsht you make an 
exshkape from this honorable committee? ' ' Der fiuchter 
Dyvel,' cried another, ' how can you shtand so shtyff 
for king Shorsh akainst dis koontry.' ' Sacrament,' yelled 
another, ' dis committee will let Shorsh know how to 
behave himself,' and the butcher exclaimed, ' I would kill 
all the English tieves, as soon as ich would kill an ox or 
a cow.' " 

It is needless to remark that this story doubtless has a 
basis of truth, but is an evident caricature. 

Dunmore was driven from Virginia and the West was 
left to fall before George Rogers Clark. There was no 
other who could have raised the Western Loyalists and 
Indians as Connolly might have done. The vigilance of 
the Western Maryland patriots had caused the failure of 
a plan which seemed full of danger for the colonial cause. 

One of the great services of Western Maryland in the 
Revolution was rendered as a magazine of supplies. In 

150 " A tour through the U. S. of America," by J. D. F. Smyth. 



45] Western Maryland in the Revolution. 45 

August, 1775, a Committee of the Provincial Convention 
reported that of the twelve gtfn shops in the State, nine 
were in Frederick County. 131 One of these was in George- 
town, four were in Frederick town, and one was near it, 
two were in Hagerstown and one was in Jerusalemtown. 
Each of these was able to complete 20 muskets per month, 
and in these shops, doubtless, Charles Beatty placed the 
contracts for the 650 " good substantial, proved musk- 
ets " 1M which the Council of Safety authorized him to pro- 
cure. 

On December 28, 1775, the Convention appointed 
Charles Beatty, James Johnson and John Hanson, Jr., a 
committee to purchase ground, not over one-half acre, in 
Frederick town, and to erect thereon a gunlock factory. 
£1200, common money, were appropriated therefor, and 
the commissioners were requested to be " as frugal of the 
public money as may be." 15S The factory was erected and 
used for a time, but apparently was not wholly a success 
and it was sold in 1778. Bullets, gunflints, bullet pouches, 
powder horns, all seem to have been procured from the 
stores of Frederick town. Frederick being an inland 
town, it was a good depot for supplies, and we find that in 
April, 1777, a large quantity of gunpowder 1 " was sent 
thither from Baltimore and " placed in the market house 
until magazines can be built." Other supplies were kept 
at this magazine, whence six trumpets were taken for the 
use of the Continental Horse. 1 " 3 - 

Guns were not the only munitions of war supplied by 
Western Maryland. A large powder magazine 165 was kept 

m Council of Safety, I, p. 65; IV, 524, 530, 531, 546. 
162 Council of Safety, I, 75, 81; IV, 417. 

153 V, Force Archives, III, 1147, shows the difficulty the managers 
of the gunlock factory had in getting money. 

154 Council of Safety, III, 209, 211, 216, 295. More powder was 
sent in June. Ill, 297. 1Ma Council of Safety, III, 261. 

156 Proceedings Convention, p. 62; vide 205; Land Records Fred- 
erick, B. D. No. 2, folio 471; Act of 1778, ch. 4; Centennial Cele- 
bration at Frederick, p. 46. Land occupied in 1876 by Groshon's 
coal yard, Tyson's warehouse and Sifford's marble works. 



46 Western Maryland in the Revolution. [46 

in Frederick town and saltpetre works were carried on in 
the Lower and Middle Districts. The first cannon said to 
have been cast in this country were made at the foundry of 
Col. Daniel Hughes, 168 on the Potomac river one mile above 
Georgetown. A portion of the building yet remained in 
1880, while broken fragments of cannon were still to be 
found in the stream of water flowing at the base of the 
building. lc5a John Yost, of Georgetown, is also said to 
have cast cannon, and Hughes with his brother James and 
Samuel cast others at the Antietam Iron Works in Wash- 
ington County. As early as February, 1776, the Council 
of Safety was sending men to Antietam to prove the can- 
non manufactured there. 157 Hughes had a contract with 
the Provincial authorities to cast 20 nine-pounders and 50 
eighteen-pounders. Another most important foundry for 
shells and cannon was the Catoctin Iron Furnace, owned 
by James, Thomas, and Baker Johnson, a trio of notable 
brothers. Some of their cannon were said to have been 
used at the siege of Yorktown. 

The value of the Catoctin Furnace to the Province was 
seen as early as July, 1776, when the Council of Safety 
wrote to James Johnson asking him to furnish them with 
20 four-pound cannon, 20 three-pound cannon, 20 two- 
pound cannon, and forty swivels, as well as 200 iron pots 
to supply the place of camp kettles, some to contain 4 and 
others 2 gallons, with bales or handles. So satisfactory 
was Johnson's answer, that the Council increased the size 
of the contract. 168 

160 Scharf s W. Md., I, 135. Cannon for the frigate built in Balti- 
more in 1777 were cast by the Hughes foundry. Council of Safety, 
III, 247. 

ls " a Vide Council of Safety, I, 333, 424; IV, 382, 515, 516, 530; Pro- 
ceedings of Convention, p. 59. 

157 Council of Safety, I, 167, 175, 180, 187, 288; IV, 386. Jacob 
Schley was directed to furnish ten large rifles carrying a 4 oz. 
ball on April 19, 1776. Council of Safety, I, 353. Jacob Razor was 
directed to deliver 12 musquets a month till 100 be supplied at 
Frederick. Council of Safety, III, 376. 

108 Council of Safety, II, 55, 92, 114. 



47] Western Maryland in the Revolution. ±7 

The minutes of the Council of Safety are filled with ref- 
erence to military supplies ordered, sent for and supplied 
by Western Maryland. Virginia, as well as Maryland, 
made use of Frederick's gunshops. Blankets also were fur- 
nished in quantities, as well as broadcloth for the soldiers' 
clothing." To encourage the production of cloth, grants 
were made by the Council of Safety to Alexander Mc- 
Fadon, of Georgetown, 100 to enable him to carry on a linen 
manufactory, to Michael Cochinderfer 15 ° for a stocking 
manufactory, and to Robert Wood for a sheeting mill. 
In each case manufactured goods were to be returned to 
the Council in value equal to the grant. Not only cloth 
manufacturers were encouraged, but Jacob Myers also 
received a grant towards a wire factory. 162 

In fact, Frederick County was the manufacturing part 
of the State and believed that " especial encouragement 
should be given to country manufactures." 183 So far went 
this principle that when the paper mill was built near 
Frederick town, the Committee of Observation recom- 
mended all to " save their old linen and woolen rags and 
prefer paper made here to any foreign manufacture." Fred- 
erick was also a great granary and storehouse of pro- 
visions. 1 ^ 

With the spring of 1777 came permanent government 
for Western Maryland, as for the rest of the State. The 
Committee of Observation passed away, the regularly con- 
stituted officers and courts took its place. The best blood 

159 Vide Council of Safety, I, 102, 234, 245, 300, 400, 444; II, 8, 141, 
151, 188, 271, 327. So beef cattle, Council of Safety, III, 384. 

160 Council of Safety, I, 20, 190. 

181 Council of Safety, I, 473; II, 134. 

162 Proceedings of Convention, p. 266. 

103 June 21, 1775; IV, Force Archives, II, 1044. On Nov. 27, 1777, 
Council of Safety (III, 426) ordered clothing to be collected for the 
State's quota in the army and that what was obtained in Western 
Maryland should be brought to Frederick town. May 2, 1778, 100 
wagons for North Carolina service were passed in the County 
Council of Safety, IV, 66. 

im a Council of Safety IV, 187. 



48 Western Maryland in the Revolution. [48 

of the region was in the armies, and the records of the 
Orphan's courts show long lists of those wounded, dis- 
abled and slain in the conflicts with the British forces. 101 
Sudden alarms like the Brandywine campaign in the 
autumn of 1777 brought out the militia with arms, if they 
could be secured, but if not, then without arms, to relieve 
other militia men already on duty. 1G4a 

In the troublous days 105 which marked the beginning of 
1777, the whole Western Maryland militia were called out 
for Continental service, and Thomas Johnson writes that 
he learns that " Washington militia turn out well. J. John- 
son's and Bruce's Battalions (from Frederick County) do 
us honor. B. Johnson's not so much " and the " Mont- 
gomery militia muster very thin." John Stull, commander 
of the Washington County men, speaks of them as " spir- 
ited in the defence of liberty." 16 " a 

When three thousand troops were called for from Mary- 
land in March, 1778, Frederick's quota was 309, more than 
one-tenth of the whole number and more than any other 
county. In addition to this, 156 men were summoned from 
Montgomery and 120 from Washington County. 100 When 
Cornwallis advanced into Virginia in 1781, and Lafayette 
retreated before him, 500 militia were summoned from 
Frederick County and 250 from Montgomery County to 
go to Lafayette's aid, that he might make head against 



164 Centennial of Frederick Co., p. 46. Numerous orders were 
passed by the Frederick Co. Court appropriating money for the 
support of the wives and children of soldiers in the Maryland line. 
Scharf, W. Md., I, 144; Muster Rolls, 630, 632. For difficulty in 
obtaining recruits, see Council of Safety. IV, 26. 

IWa Council of Safety, III, 368, 386, 467. Rioting in Baltimore 
caused the militia of Frederick to be called out in October, 1777. 
Council of Safety, III, 389, 391. 

165 Council of Safety, III, 15. There was trouble about the com- 
missions for officers in the B. Johnson's Linganore Battalion. 
Ill, 236. 

185a Council of Safety, III, 42. 

306 Scharf's Md., II, 344; Muster Rolls, 294, 314, 320, 324, 328. 
Recruits of 1780 are given in Muster Rolls, pp. 334, 341, 344, 346. 



49] Western Maryland in the Revolution. 49 

the British. 107 In that same expedition against Cornwallis, 
which was to end at Yorktown so gloriously for the Ameri- 
can arms, Frederick County not only sent its citizens as 
volunteers, but also provided the allied armies with much 
needed stores of cattle and flour. 103 

Xo hostile force reached Frederick; but, in 1777, the 
Legislature ordered the erection of barracks there for the 
accommodation of two battalions. 160 The year before, the 
Committee of Observation had asked that a post be estab- 
lished at that point and this desire would now be gratified. 
These buildings were constructed on the eminence at the 
south end of the town, which bears the local name of Hal- 
lerstown hill, and long after the war remained unused, save 
when some militia encampment made the place gay for a 
few days. During the Civil War, the barracks became hos- 
pitals filled with the sick and wounded soldiers of both 
armies. At the close of the war, the State devoted the 
buildings and grounds to the use of the newly established 
Maryland School for the Deaf. Part of the buildings have 
been torn down to give place to more modern and con- 
venient structures; but a portion still remains, a relic of 
the days when Frederick was a frontier town. 18 " 1 

Baylor's continental cavalry 170 wintered at Frederick and 
Hagerstown in 1778 and 1779. The frontier post was soon 
made a prison. We have seen that prisoners were sent 
to Frederick early in the war. In April, 1777, Frederick 
was suggested to Gov. Johnson as " the most proper place 
for those now in Maryland of the Scotch regiment," and in 

"" Scharf, W. Md., I, 144; Md. II. 450. 

"" Scharf, Md., II, 455, 461; Muster Rolls, 652. 

108 Act of 1777, ch. 10. On June 27, Abraham Faw contracted to 
build the barracks for 8 per cent of the cost and was given £1500 
currency. On Nov. 20, he was given £1000 more. Council of 
Safety, III, 300, 418. 

"* a Trouble from Indians was feared in Western Maryland in 
1778. Council of Safety, IV, 80, 87, 88. So in April, 1779, Council 
of Safety, IV, 365. 

1,0 Scharf's Md., II, 34°. 
4 



50 Western Maryland in the Revolution. [50 

May, £300 were appropriated for the subsistence of pris- 
oners of Frederick. 17 " 1 

After the erection of the barracks, large numbers of Hes- 
sians, captured at Saratoga and elsewhere, were sent to 
Frederick and the Maryland part of the German regiment, 
Captain Brown's company of matrosses, and Col. Crockett's 
battalion of Virginia troops were ordered to act as their 
guards. 1 ' 1 As early as May, 1777, prisoners were sent to 
Hagerstown rather than to Frederick, " where there's al- 
ready some sort of provision," since " great part of our 
powder is at the latter place." 171a 

Before the barracks were completed, in December, 1777, 
Col. Beatty, who commanded the forces in the town, re- 
ceived 100 prisoners, whom he was compelled to confine 
temporarily in the jail. Late on the afternoon of Christ- 
mas day 172 they set fire to the jail and made an attempt to 
escape. Beatty ordered every man to arm himself as 
quickly as possible and repair to the jail-yard. The jailer 
opened the gate and about one-third of the prisoners 
attempted to rush out, but their ardor was quelled with 
the butt end of muskets. After the fire was extinguished, 
the prisoners were removed to the Tory jail. 

Though prisoners were in Frederick during the entire 
war, the greatest number arrived after Cornwallis's sur- 
render. 173 Two Hessian regiments and the Bayreuth Yag- 

1T ° a Council of Safety, III, 213, 248. 

171 Centennial of Fredk., p. 47. Address of the Hon. Jas. Mc- 
Sherry. Council of Safety, III, 450, 490, 506. 

1?la Council of Safety, III, 246, 384. 

172 Scharf, W. Md., I, 141. In Feb., 1777, owing to the alarm in 
Baltimore, the prisoners there were sent to Frederick and thence 
in August they were transferred to Sharpsburg. Scharf, W. Md., 
I, 141 ; Council of Safety, III, 346, 407. Certain Carolina prisoners 
sent to Frederick in 1777 were allowed to go at large within three 
miles of the town. Council of Safety, III, 336. 

173 In Sept., 1777, four prisoners were sent to Frederick to be 
kept in the " Logg jail, commonly called the Tory jail." Council 
of Safety, III, 368 (but see p. 380). An appropriation was made in 
July, 1777, to pay for removal of prisoners from Frederick to 



51] Western Maryland in the Revolution. 51 

ers were sent to Frederick at once, while the other Hes- 
sians, who were first sent to Winchester, Va., were soon 
transferred thither. " On the march through Maryland, 
the German settlers showed them much kindness and Ger- 
man speech and friendly hospitality gave them much com- 
fort." Their food, too, improved, " though during the en- 
suing winter provisions ran short " and complaints were 
made of " the bad food and the utter want of clothing." 
During the summer of 1782, the prisoners were more 
comfortable. Many were allowed to work on the neigh- 
boring farms, married daughters of the German settlers, 
ransomed themselves for about 80 Spanish milled dollars 
apiece, and remained in Frederick County. 174 If they could 
not raise the necessary amount for ransom, the Americans 
frequently advanced the money and kept the Hessians as 
" redemptioners." Others of the prisoners died, deserted, 
or enlisted in the American armies, so that the regiments 
became greatly reduced. In September, 1782, 300 English 
prisoners from Cornwallis's army came from Winchester 
to Frederick, escorted by an American volunteer corps 
made up of various nationalities, including 40 Anspach- 
Bayreuth soldiers, who had been released on joining the 
American army. 

The little Mountain City was truly cosmopolitan during 
that year. In addition to English, German and American 
troops, it was the station for some time of the French 
legion commanded by the Marquis la Rouerie. 175 His 
tribute to the State and town was most flattering. W T rit- 

Burlington. Council of Safety, III, 304; vide 467, 468; IV, 238. 
Eelking's German Allied troops in the North American War of 
Independence. As early as Feb. 1778, Col. Beatty suggested that 
some of the prisoners might be permitted to work for the inhabi- 
tants. Council of Safety, III, 490, 491. 

174 Between 1820 and 1840, there died in Frederick County no 
fewer than 15 foreign German allied troops. They made good 
citizens and their descendants were, for the most part, Union men 
during the Civil War. 

175 Centennial of Frederick, p. 48. This was Armand, the famous 
Chouan hero in the Vendee. 



52 Western Maryland in the Revolution. [52 

ing to Governor Paca, on December 28, 1782, he expressed 
the thanks of himself and his soldiers " for the friendly dis- 
positions and behaviour of the Marylanders towards us. 
The town of Frederick, in which we have made the longest 
station, has more particularly evidenced to us the worthy 
and high character of that country. Permit me to add 
here that, where people are sensible, as these, of the rights 
of military men to their attention and care, they do deserve 
having respectable troops as the Maryland line, and do 
create in others wishes for the opportunity to serve them." 

The barracks at Frederick town were not sufficient to 
hold all the prisoners, and so, on December 16, 1777, 
Joseph Nourse, of the War Office, from York, Penn., 
wrote to Col. Moses Rawlings, asking that he examine 
Fort Frederick and report as to its condition, accommoda- 
tions, etc., as Congress thought of sending prisoners of 
war there. Rawlings acted with promptness and found the 
old colonial fort 176 in such condition that it could easily 
be put in order for the desired object. As the country 
about the fort was thickly settled, a " pretty strong guard 
was found necessary." The Assembly resolved to repair 
the barracks and work was at once begun. Two years 
later, Pickering writes to Rawlings stating that it is im- 
possible to send prisoners to Fort Frederick for want of a 
guard. If Maryland will provide a standing guard there, 
the Continental authorities will obtain an escort guard 
from Pennsylvania and send prisoners there. 

Two months later, on December 28, a letter was sent to 



176 Council of Safety, III, 439, 443, 445, 450, 451, 453, 487, 506, 545, 
551, 555; IV, 148, 202, 336, 520, 524, 542, 546. On Feb. 23, 1778, 
the Council ordered the guard in Frederick to consist of one com- 
pany of militia, consisting of 60 non-commissioned officers and men, 
and in Washington County to consist of one company of fifty non- 
commissioned officers and men for each 150 prisoners. The guards 
should serve for two months. Council of Safety, III, 516, 517, 536. 
Through difficulty in obtaining proper guard there were numerous 
escapes. Council of Safety, III, 518, 530. Capt. John Kerschner's 
Company acted as guards in 1778. Muster Rolls, p. 328. 



53] Western Maryland in the Revolution. 53 

Rawlings which affords quite an insight into the keeping 
of the prisoners. " We wish you would let out as many as 
you think will behave with propriety, in order to save 
public provisions, for you will observe as a rule that no 
prisoner employed by a private person is allowed to draw 
rations. But if you perceive any desertions or any capital 
inconvenience from their being out of the garrison you will 
call them in, that no loss that prudence will prevent may 
arise to the public by lessening the means of redeeming 
our own subjects." 17Ca 

In the next year, on October 17, the Continental war 
office asks Rawlings to " call in all the prisoners in the 
neighborhood of your post or its dependencies and, as the 
practice of letting them out to farmers and suffering them 
to go at large is attended with great mischiefs, you will 
in future keep them in close confinement." Consequently 
the prisoners were variously employed within the fort, 
" daubing and underpinning the barracks, cleaning and re- 
pairing the well, etc., and with great leniency, they were 
paid for executing these tasks. After Cornwallis's sur- 
render with the plethora of prisoners thus in our hands, a 
large number of them were ordered to Fort Frederick. 
On October 26, 1781, the Light Infantry, the 17th, 33d, 
71st and 80th Regiments of the line, the Prince Hereditary 
Regiment, de Bose Yagers, the British Legion, and North 
Carolina Volunteers were sent thither. Field officers were 
allowed three enlisted men as servants, captains two, and 
other proper warranted officers one. I have found no 
record of the life of these prisoners at the old fort." 176b 

While kind to prisoners, the Frederick County people 
were ever severe towards their fellow-citizens who clung 
to their allegiance to Great Britain. It is true that the 
judgments of outlawry for treason pronounced on the 

™ a See also Council of Safety. IV, 348, 363. 

17 " b See Am. Hist. Reg., II, pp. 862-65, article on Fort Frederick 
by Judge Henry Stockbridge. 



54 Western Maryland in the Revolution. [54 

Dulaneys, the Episcopal clergy and other prominent citi- 
zens of the county 177 came from the General Court at Ann- 
apolis and the confiscation act of 1780, 178 whereby so much 
of the land of Frederick County found new owners, was 
passed by the Legislature of the whole State, but the local 
bodies were no less severe. Heavy fines were imposed on 
those who drank the " health of King George and damna- 
tion to Gen. Washington and the Congress of the United 
States," and who said they wished " all persons who went 
about warning the people on the militia duty, might be 
hanged not by necks but by the heels." The most famous 
proceeding against Tories was taken in 1781. In that 
year there was a second plan of the British to cut the 
colonies in half. Cornwallis was to march inland from 
the Chesapeake and was to be met by enrolled bodies of 
Tories, whose help would enable him to cut off the South 
from the North. 179 The tale which has come to us is that 
this far-reaching scheme failed; because, like the earlier 
one of Connolly, the plot was discovered in Frederick 
County. A disguised British officer was to meet a Tory 
messenger at a fixed place, to put him in possession of all 
of the details of the plan. The watchfulness of the Ameri- 
cans prevented the officer from fulfilling his part of the 
agreement, while the Tory's papers fell into their hands. 
These revealed the plot and the names of the prominent 
conspirators and they were accordingly arrested. On 
July 25, seven of the accused 1S0 were brought to trial at 
Frederick before a court consisting of Alexander Contee 
Hanson, afterwards Chancellor of the State, Col. James 
Johnson and Upton Sheredine. The defendants were 
found guilty of high treason in " enlisting men for the 
service of the king of Great Britain and administering an 
oath to them to bear true allesriance to the said king and 



177 Scharf, W. Md., I, 143. 17S Act of 1780, ch. 45. 

179 Scharf, W. Md., I, 142. 

180 Peter Sueman, Nicholas Andrews, John George Graves, Yost 
Pleckler, Adam Graves, Henry Shett, Caspar Fritchie. 



55] Western Maryland in the Revolution. 55 

to obey his officers when called on." We can imagine the 
crowd in and about the court room when the defendants 
were declared guilty 181 of the crime of doing what even 
the judges themselves would have done ten years before, 
and we are sure that the excited assemblage was hushed 
to awe-struck silence when the sentence was pronounced. 
Turning to the prisoners and calling each by name, Judge 
Hanson told them not to consider the proceedings a 
" solemn mockery," nor to look for a pardon. They had 
been convicted " upon the fullest and clearest testimony." 
" Had it pleased heaven to permit the full execution of 
your unnatural designs, the miseries to be experienced by 
your devoted country would have been dreadful even in the 
contemplation. The ends of public justice, the dictates 
of policy and the feelings of humanity all require that you 
should exhibit an awful example to your fellow-subjects 
and the dignity of the State, with everything that can 
interest the heart of man, calls aloud for your punishment." 
Then, after telling them to make their peace with God, 
he uttered the terrible words: " You shall be carried to the 
gaol of Frederick town and be hanged therein; you shall 
be cut down to the earth alive and your entrails shall be 
taken out and burnt while your are yet alive, your heads 
shall be cut off, your body shall be divided into four parts 
and your heads and quarters shall be placed where his 
excellency the Governor shall appoint. So the Lord have 
mercy upon your poor souls." Four were pardoned, the 
other three suffered the full vigor of the law. The tribunal 
which tried these was a special court of oyer and terminer, 
called to try Tories. 182 Many others were fined and im- 
prisoned. A month after the trial, on August 17, 1781, a 



181 There was a jury trial. 

182 Other persons were convicted of the lesser crimes of per- 
suading a man to return to and acknowledge dependence to the 
crown of Great Britain; of dissuading a man from supporting the 
independence of the United States, and of affirming that the King 
has power over this State. 



56 Western Maryland in the Revolution. [56 

meeting 1S3 of the citizens was called to determine what 
should be done with three men, 184 who refused to take the 
new paper money. They were excused on apologizing, 
and promising for the future to receive paper money at 
par with silver and gold; but, that there might be no mis- 
take as to the attitude of the county, the following resolu- 
tion was unanimously adopted: "That we will exert our 
utmost ender rs in supporting the credit and circulation 
of the said ne i.oer money at par and we will punish, by 
Tarring and 1 ering, and expulsion from the county, 
any person who snail hereafter be so hardy as to act con- 
trary " to these resolves. The purpose here was com- 
mendable, the proposition disgraceful. This resolve is the 
one blot on the revolutionary history of Frederick County, 
and it is to be hoped that its lawless intention never was 
carried out. Every other act of the Frederick County men 
was done decently and in order. 

At last the war ended. In March, 1783, the first news 
of the peace cam^ to Frederick town. There was great 
rejoicing among the citizens that the long struggle was 
over, among the prisoners that they soon would be re- 
leased. On April 22, General Lincoln, 185 who was com- 
manding in Frederick at the time, made official proclama- 
tion of peace, and a patriotic demonstration of a day and 
a night followed. The fireworks for the night's display- 
were prepared by a Bayreuth captain and his men, while 
the German musicians played at the ball given in honor of 
the occasion. There was general, fraternizing and many 
of the German officers were guests at all the festivities. 
The only shadow on the sun of joy was that an excitable 
French captain had his men charge the prisoners who 
cheered for King George. In this unfortunate occurrence, 
four German soldiers were mortally wounded. 

182 Col. Thos. Price in the chair. Scharf, W. Md., I, 144. 

184 A previous meeting on the subject had been held on Aug. 7. 

185 Eelking, op. cit. 



57] Western Maryland in the Revolution. 57 

Throughout the county there was rejoicing. At Israel's 
Creek/ 80 after listening to " an excellent sermon much to 
the purpose," the people enjoyed a most elegant entertain- 
ment, " drank thirteen toasts, fired a salute of thirteen pla- 
toons, and gave thirteen cheers. The evening saw an 
illumination and bonfires and the whole was concluded 
with propriety and decorum." In May, the German pris- 
oners were released and one of them put d' 1 in his diary, 
" that the people, and especially the v ,n, were very 
sorry to bid them good bye." 

• The quiet mountain town and the ricn country around 
it, the western settlements in the Alleghanies, the more 
level plains of Montgomery, saw no more of martial array 
nor heard any more rumors of war for nearly eighty years. 
They had done nobly in their country's cause, they had 
been steadfast in the struggle for independence, they had 
believed in the triumph of the new nation and they had 
their reward. In considering the history of a war, we 
often think too exclusively of the armns in the field and 
forget the people from whom the army was recruited and 
by whose support it was maintained. But in what- 
ever line of patriotic service we test the conduct of West- 
ern Maryland during the Revolution, the whole country 
has reason to be grateful for vigilant performance of duty. 

180 Scharf, W. Md. I, 145. 



STATE BANKING IN THE UNITED STATES 

SINCE THE PASSAGE OF THE 

NATIONAL BANK ACT 



Series XX Nos. 2-3 

JOHNS HOPKINS UNIVERSITY STUDIES 

IN 

Historical and Political Science 

(Edited 1882-1901 by H. B. ADAMS.) 

J. M. VINCENT 
J. H. HOLLANDER W. W. WILLOUGHBY 

Editors 



STATE BANKING IN THE UNITED STATES 

SINCE THE PASSAGE OF THE 

NATIONAL BANK ACT 



BY 

GEO. E. BARNETT, Ph. D. 

Instructor in Economics in the Johns Hopkins University 



BALTIMORE 
THE JOHNS HOPKINS PRESS 

PUBLISHED MONTHLY 
FEBRUARY-MARCH, 1902 



Copyright, 1902, by 

JOHNS HOPKINS PRESS 



Clje Both (§&Uimou (pvcee 

THE FRIEDENWALD COMPANY 
BALTIMORE, MD. 



PREFACE 

The following essay is a study of state banking in the 
United States as it has grown up since the Civil War. 
This movement may be viewed from two sides. In the 
one aspect it is a legal and in the other an economic phe- 
nomenon. Since the two are closely related, it has been 
impossible to keep their treatment entirely separate at all 
points, but in the main the first part of the work — State 
Bank Legislation — deals with the evolution of the present 
state banking laws. As it would have been wearisome 
and unprofitable to have described this legislation in all 
its details, only the main threads have been followed. It 
is believed, however, that the regulations concerning in- 
corporation, capital, real estate loans, stockholders' lia- 
bility, and supervision comprise those parts of the laws 
which are fundamental. While there are provisions on 
other points, they are not basic. In the concluding chap- 
ter of the first part, the statistics of state bank failures 
have been examined as furnishing the only practicable test 
of the efficiency of state bank regulation. 

In the second part of the work — The State Bank as 
a Credit Agency — attention has been given to the eco- 
nomic side of the movement, to the causes which have 
produced a large expansion of state banking at the ex- 
pense of other institutions for supplying credit. Through- 
out the earlier part of my work, I received constant aid 
from the late Dr. Sidney Sherwood. I wish also to ex- 
press my thanks to Dr. J. H. Hollander who kindly read 
my manuscript and made many helpful suggestions. 



CONTENTS 



PART I.— STATE BANK LEGISLATION. PAGE 

INTRODUCTION 

Growth of Legislative Activity 9 

Influences Determining the Form of Legislation 13 

CHAPTER I.— Incorporation 

Application of Referendum 15 

General Laws versus Special Charters 16 

Differentiation of the General Law 21 

CHAPTER II.— Capital 

Capital as a Safeguard to Creditors 25 

Minimum Capital Requirements 26 

Payment of Capital 34 

Impairment of Capital 36 

CHAPTER III.— Supervision 

Growth of Supervision 40 

Present Status of Supervision 49 

CHAPTER IV.— Real Estate Loans 

Contrast with National Bank Act 50 

Restrictions on the Amount of Real Estate Loans 51 

Propriety of such Loans 52 

Chapter V. — Liability of Stockholders 

For Unpaid Subscriptions to Stock 58 

Statutory Liability 58 

Difficulties in Enforcement of Liability 60 

Chapter VI. — State Bank Failures 

Lack of Adequate Statistics 65 

Bradstreet's Reports 68 

PART II.— THE STATE BANK AS A CREDIT AGENCY. 

Chapter I. — Growth of State Banks 

As Compared with National and Private Banks 73 

By Sections of the Country 75 

Chapter II. — Causes of the Growth of State Banks 

The State versus the Private Bank 79 

The State versus the National Bank 93 

Effect of Act of March 14, 1900 102 

APPENDIX. 

Explanatory Note 108 

Tables Showing Number of State and Private Banks by Years 

and States 114 



STATE BANKING IN THE UNITED STATES 

SINCE THE PASSAGE OF THE 

NATIONAL BANK ACT 



PART I.— STATE BANK LEGISLATION 

INTRODUCTION 

The term " state bank " has been used in the United 
States in many different senses. But whatever the va- 
riance in meaning, such banks have always had one com- 
mon characteristic — incorporation under state authority. 
" A state bank," says Morse, " is one organized under a 
state law or a charter granted by the legislature of a state 
and derives its power from state sovereignty." 1 In re- 
cent years, the " state banks " have sometimes been con- 
fused with private banks. This has come about from the 
fact that in some states, the same requirements are made 
of incorporated and unincorporated banks. Since both 
classes of banks are equally subject to state regulation 
they are all called " state banks." 

An unincorporated bank, however, is a private bank. 
The definition given in the Kentucky Statutes correctly 
represents present usage. " Private bankers," runs the 
law, " are those who without being incorporated carry on 
the business of banking." 2 Incorporation is an important 
feature and it is necessary to carefully distinguish the two 
classes. A failure to do this has sometimes caused erro- 
neous statements. 3 

1 Morse on Banks and Banking, 3d ed., sec. 16. 

2 Laws of Ky., 1893, chap. 171, sec. 32. 

3 See pp. 66, 67. 



10 State Bank Legislation. [68 

Not every incorporated bank, however, is a " state 
bank " in the sense in which the term will be used here- 
after. Stock savings banks and loan and trust companies 
are capitalized corporations erected by state law, but it is 
only with banks of discount and deposit that this essay 
deals. 4 It is to be admitted that in many states, savings 
banks with a capital stock as well as trust companies are 
included in " state banks " in popular and even, in some 
cases, in official language, but there seems a growing dis- 
position to classify these separately and to restrict the 
term " state bank " to banks of discount and deposit. 
Further justification of this use may be found in the fact 
that four-fifths of the capitalized banks incorporated under 
state laws are of this character, and it seems permissible 
to use the term without qualification to express the most 
numerous class. " State banks " then as the expression is 
used in the following pages, are banks of discount and de- 
posit (as distinguished from savings banks and trust com- 
panies) incorporated under state sovereignty (in contrast 
with private banks which are unincorporated and with 
national banks, which are formed under the national law). 

In i860 there were in the United States 1562 state 
banks. Owing to the repressive influence of the national 
bank act, hastened in its effect by the ten per cent tax on 
state bank notes, the number by 1868 had fallen to 247. 
Corresponding to this decline in numbers and importance, 
was the cessation of state banking legislation. The state 
banking systems became moribund; the old laws regulat- 
ing banks of issue were generally swept away by code re- 
visions, or remained unchanged on the statute books. 

The antebellum laws had been aimed solely at securing 
the safety of the bank note; the depositor was regarded 
as amply able to care for himself, just as the bank-note 
holder had been considered earlier when note issuing was 



* The separation of the statistics of stock savings banks and state 
banks has not been possible in all cases. See Appendix, p. 112. 



69] Introduction. 11 

a right at the common law. It is true that the depositor 
was protected by many of the regulations under which 
banks were placed, but this was purely incidental to the 
main purpose of the laws. In fact, by giving the note 
holder a prior lien on assets, the depositor's security was 
somewhat impaired. The feeling that note issue alone 
needed governmental oversight persisted for a consider- 
able time after 1868. The national banks had a monopoly 
of bank circulation, and the regulation of state banks was 
considered needless after the prime occasion for it had 
been taken away. As the importance of note issue de- 
creased, and the deposit function became prominent, it 
began to be apparent that governmental regulation of 
banks was of value in protecting depositors. It is a far 
cry from the Michigan bank act of 1857 to that of 1887, 
but the national banking law has undergone the same 
change of purpose. The Comptroller of the Currency, in 
his report for 1898, speaking of proposed reforms in the 
national banking act, says: "In their present form, they 
seem to ignore the interests of bank depositors with whose 
protection the Comptroller is peculiarly charged," ° and 
again, " it is the belief of the Comptroller that the pro- 
posed preference of the note holder over the depositor 
.... is not only inherently wrong and unjustified by any 
grounds of public policy." " And yet, the very law by which 
his office is created recognizes the superior right of the 
note holder, and his title indicates the view held of the 
duty of his office when it was established. 

For a considerable period the legislatures left the state 
banks free to make their own way. In some states, old 
laws unrepealed and adapted only to the needs of banks of 
issue, somewhat hampered their growth, but in the main. 



8 Report of the Comptroller of the Currency, 1898, Vol. I, p. XII. 

6 It is not intended, of course, to express any opinion as to the 
correctness of this view. It is simply pointed out that the present 
view of the aim of the national banking act varies widely from 
that held when it was enacted. 



12 State Bank Legislation. [70 

they were left with no interference. As late as 1892, Mr. 
Stimson said, " It seems unnecessary to incorporate the 
state banking laws in this edition. Nearly all the states, 
except the newer states and territories, have special chap- 
ters in their corporation acts concerning banks and 
moneyed institutions, but these chapters are usually of 
old date, and have practically been superseded for so long 
a time by the national banking laws that they have become 
obsolete in use and form." 7 A more careful examination 
would have shown a decided movement in the years im- 
mediately preceding 1892. Since that time, legislation has 
been abundant. There are very few states which have 
failed, in the last ten years, to do something in the way of 
enacting banking laws, and since the power of issue is 
taken away, the purpose of these laws, so far as they have 
dealt with present conditions, has uniformly been the bet- 
ter protection of depositors. 8 At present, the body of 

7 American Statute Law, Vol. II, sec. 9500, p. 572. 

8 It is of interest to note that in two states at least (Nebraska 
and Kansas) the question has recently been raised whether deposits 
cannot be secured by a guarantee fund. Just as in the case of 
note issue, there has been in many countries a transference of 
credit from the individual bank to the wider credit of a system of 
united banks, so it is thought that if the security of deposits can 
be based on the credit of many institutions, a larger number of 
depositors will be obtained. The experiment would be interesting, 
but its success is doubtful. There seems, despite their fundamental 
similarity, to be a substantial difference in the parts which credit 
plays in the bank note and in the deposit. The tendency of 
modern legislation is to make bank money equivalent to specie, so 
far as credit is concerned, by resting it either on the credit of one 
large state institution, or else on the joint liability of a number 
of banks. It seems probable, on the other hand, that individual 
credit is still of considerable importance in the matter of deposits, 
and that this is a safeguard. A depositor does not place his 
money in a bank, as a general rule, simply because it is a state or 
national bank, but because he knows something of that particular 
bank. It may be admitted that the system acquires relatively 
more and more importance as regulation progresses, and it is quite 
conceivable that deposits may some day be made on the basis of 
the credit of the system. It is undoubtedly true that many deposits 
are so made at present, but the number made on individual credit, 



71] Introduction. 13 

state banking laws is large in bulk and important in prac- 
tice. It is this legislation, its growth and characteristics, 
its causes and purposes which it is the aim of the present 
essay to describe. 

In the evolution of the state banking laws, four elements 
have actively entered. While each has acted continuously, 
their influence has not been equal at all times : 

(i) The national banking act has, especially in the ear- 
lier stages, been the model, to which the states have con- 
formed their laws. It represented the only body of legis- 
lation on the subject, which was well known to the people. 
With its provisions, restrictions, and methods of opera- 
tion, they were well acquainted, and it was natural that 
when the states adopted the policy of regulating banks of 
discount and deposit, they should follow closely its general 
plan. 

(2) It was found, however, that the great majority of 
the state banks were the product of economic needs which 
the national banks did not satisfy, and it was necessary to 
make such changes in the national act as were required 
by these conditions. 

(3) In the states, there was already a mass of laws re- 
garding corporations in general. Banks have not been 
differentiated as fully from other corporations as the 
adoption of the national bank act in its entirety would 
have required. In some important respects, the influence 
of the existing corporation law has been paramount, while 
in others, it has yielded more or less fully. 

(4) Recently there has grown up a strong interstate in- 
fluence. States about to legislate on the subject look to 
other states where similar economic conditions prevail, 
and where experience has already been had. The bank- 
ing laws of Kansas have been appreciably affected by the 

or to be more exact, not made because of lack of credit, is large 
enough to afford an important check on bankers. To guarantee 
deposits would result in giving the banker who is reckless a freer 
rein since public opinion would no longer be feared. 



14 State Bank Legislation. [72 

older legislation in Missouri, and Oklahoma has adopted 
to a considerable extent the methods of Kansas. Certain 
important improvements, adopted by one state and found 
to work well in practice, have been borrowed by others. 
This movement is as yet in its infancy, but it promises 
well. It may be said that at present in the systems which 
have been longer established, the influence of the laws of 
other states is far more important than any other factor. 
The national bank act has been already utilized as far as 
circumstances seem to allow, and in solving the remaining 
problems, nothing is so valuable as the experience of other 
states working under like conditions for a similar end. 



CHAPTER I 

INCORPORATION 

The power to charter banking, as well as other corpora- 
tions, is inherent in the legislatures of the various states, 
and is limited only by constitutional provisions. Many of 
the state constitutions, at one time or another, have pro- 
hibited charters for banking, but at the present time, in 
only one state is the legislature so restrained. The Texas 
Constitution of 1876, which is still in force, provides that 
" No corporate body shall hereafter be created, renewed, 
or extended with banking or discounting privileges." 1 
While Texas is unique among the states in its absolute 
prohibition of state banks, 2 there are in many of the state 
constitutions, provisions regulating the manner in which 
the legislature may exercise its prerogative. 

In the twenty years prior to the Civil War, the principle 
of the referendum was applied to banking charters in 
nearly all the states of the Middle West. Iowa, Wiscon- 
sin, Illinois, Michigan, Ohio, and Kansas, in quick succes- 
sion, inserted in their constitutions clauses requiring bank- 
ing laws to be submitted to popular vote for ratification. 3 

1 Constitution of Texas, 1876, Art. VII, sec. 30. The policy of 
Texas, from the beginning of its history as a state, has been almost 
invariably opposed to banking corporations. The constitutions of 
1845, 1861 and 1866 contain the clause cited above. The constitu- 
tion of 1868 did not prohibit bank charters, and a small number 
were granted during the period 1868-1876. 

2 It has sometimes been stated that Oregon should be placed 
with Texas in this respect, and Art. XI, sec. 1, of its constitution, 
seems capable of this construction, but the Supreme Court of 
Oregon, in the case of State ex rel. Hibernian Savings Bank, 8 Or. 
396, after an examination of the " Journal of the Constitutional 
Convention," held that only banks of issue were prohibited. 

*Iowa (1846), Art. VIII, sec. 5; Wis. (1848), Art. XI, sees. 4, 5; 



16 State Bank Legislation. [74 

In 1875, the same provision was adopted in Missouri, 4 so 
that, at the present time, it is to be found in the constitu- 
tions of seven states. But its force has been much weak- 
ened by the interpretation of the courts, several of which 
have held that the provision applies only to laws concern- 
ing banks of issue, and that legislative acts incorporating 
banks of discount and deposit need not be submitted to 
the vote of the people. 5 In Michigan, Illinois, 6 and Wis- 
consin, acts for the incorporation of banks of any kind 
must still be approved by the popular vote. Only the 
general banking law is subject to popular sanction in 
Michigan, but in Wisconsin 7 and Illinois, 8 every amend- 
ment of the banking laws must be so ratified. These pro- 
visions were intended to provide against conditions which 
no longer exist, and whatever their value may have been 
as a protection against the evils of an over issue of bank 
notes, their only effect at present is to render the adapta- 
tion of the banking laws to the changed needs of the pres- 
ent day slow and difficult. 8 

Of far more importance to the development of state 
banking in recent years than the referendum requirements, 
has been the gradual increase of general incorporation 
laws at the expense of special charters. It is needless to 

Mich. (1850), Art. XV, sec. 2; 111. (1848), Art. X, sec. 5; Ohio 
(1851), Art. XIII, sec. 7\ Kansas (1859), Art. XIII, sec. 8. 

4 Constitution of Missouri (1875), Art. XII, sec. 26. 

5 Decisions holding referendum provisions applicable only to 
banks of issue: Kansas, Pope vs. Capitol Bank, 20 Kansas, 440; 
Iowa, 70, N. W., 752; Ohio, 42, O. S., 617. In Missouri, the words 
of the constitution themselves restrict the application to banks 
of issue. 

It was held in People vs. Loewenthal, 93 111., 191, that the 
referendum clause in the constitution of 1848 applied only to 
banks of issue, but the constitution adopted in 1870 extended the 
principle to all incorporated banks. (Constitution of Illinois, 1870, 
Art. XI, sec. 5.) This was interpreted in Reed vs. People, 125, 
111., 592. 

7 Rusk vs. Van Nostrand, 21 Wis., 159; Van Steenwyck vs. 
Sackett, 17 Wis., 645. 

8 Reed vs. People, cited above. 9 See p. 27. 



75] Incorporation. 17 

say that this movement has not been confined to banking 
corporations. In fact, banking has been somewhat later 
than other business pursuits to receive freedom of incor- 
poration. Banking charters were granted at first in all 
the thirteen original states only by special acts. Early 
in this century, the substitution of general incorporation 
laws for special charters in some kinds of business became 
common in the New England and Eastern States, 10 but 
general incorporation laws for banking were longer de- 
layed. 11 In his report for 1849, Hon. Millard Fillmore, 
Comptroller of the State of New York, thus described the 
circumstances which led to the passage of the general in- 
corporation law for banks : " The practice of granting 
exclusive privileges to particular individuals invited com- 
petition for these legislative favors. They were soon re- 
garded as a part of the spoils belonging to the victorious 
party and were dealt out as rewards for partisan services. 
This practise became so shameless and corrupt that it 
could be endured no longer and in 1838, the legislature 
sought a remedy in the general banking law." According 
to the provisions of the Constitution of New York adopted 
in 1846, charters were to be granted under general laws, 
" except where in the judgment of the legislature the ob- 
jects of the corporation cannot be obtained under general 
laws," a but the desirability of incorporating banks by 
special charters was not left to the judgment of the legis- 
lature; they were in all cases to be formed under general 
laws. 18 As long as banking charters could be granted only 
to approved persons, who were able to maintain heavy 
specie reserves, there was difficulty in applying the general 



'"Political Essays," by Simeon E. Baldwin, p. 119. 
11 For general treatment of ante-bellum movement toward gen- 
eral incorporation laws for banks, see " Philosophy of the History 
of Bank Currency in. the United States," by Theodore Gilman, 
Banker's Magazine, Vol. 50, p. 347. 
u Constitution of New York (1846), Art. VIII, sec. 1. 
18 Constitution of New York (1846), Art. VIII, sec. 4. 
6 



18 State Bank Legislation. [76 

incorporation idea to banks but the bond deposit gave an 
automatic method of securing the safety of the notes and 
enabled banking to become free. 14 

The states of the Middle West followed the lead of New 
York, and " freedom of incorporation " became their set- 
tled policy, 15 but in nearly all of them, the constitution 
permitted also the establishment of a state bank with 
branches. With the extinction of state bank currency, 
however, the general law in all these states became and 
continues to be the sole form of bank incorporation. 16 The 
policy of general laws became the fixed rule of the West, 
and as each new state was added to the Union, it placed in 
its constitution clauses prohibiting the formation of cor- 
porations under special act, and giving the legislature the 
right to confer corporate privileges by general law. 17 

In the other sections of the United States, a very differ- 
ent state of affairs has existed. In the New England, 
Eastern, and Southern States," down to the time of the Civil 
War, the system of special charters was almost universal. 
Free banking on bond deposit had been adopted in many 



14 Michigan, in 1837, had inaugurated a system of " free " banks 
with a circulation based on real estate. See " Banking in Michi- 
gan," by Alpheus Fitch. Senate Ex. Doc. 38, pt. 1, 52 Cong., 
2d sess. 

15 Mich. (1850), Art. XV, sec. 1; Ind. (1851). sec. 201; Ohio (1851), 
Art. XIII, sec. 1; Kansas (1855), Art. XIII, sec. 1; Wis. (1848), 
Art. XI, sees. 4 and 5; Iowa (1846), Art. VIII, sec. 1; Minn. (1857), 
Art. X, sec. 2. 

16 In Illinois, special charters were used to a slight extent before 
1870, when the constitution required general laws. Constitution 
of Illinois (1870), Art. XI, sec. 1; vide P. & Chicago Gas Trust Co., 
130, 111., 268. 

17 Cal. (1849), Art. IV, sec. 31; Nev. (1864), Art. VIII, sec. 1; 
Neb. (1866), Corp's, sec. 1; Col. (1876), Art. XV, sees. 2, 3; N. D. 
(1889), sec. 131; S. D. (1889), sec. 191; Mont. (1889), Art. XV. sees. 
2, 3; Wyo. (1890), Art. X, sec. 1; Wash. (1889). Art. XII. sec. 1; 
Or. (1857), Art. XI, sec. 2; Utah (1895), Art. XII, sec. 1. 

18 The nomenclature of the groups of states followed in this essay 
is that used by the Comptroller of the Currency in his report for 
1899; the states included in each group may be seen by a reference 
to the tables in the appendix. 



77] Incorporation. 19 

of these states, but only in New York as an exclusive sys- 
tem. By the side of the specially chartered banks, the 
free banks played but an insignificant role, and when, by 
the imposition of the ten per cent tax on notes, no oppor- 
tunity was left for the issue of currency, these states re- 
turned to the exclusive use of special charters. 

In the New England States the system of special char- 
ters has held its ground, so far as banking is concerned. 18 
This has been caused by the fact that the national banks 
have filled entirely the needs of this section. Very few 
banking charters have been granted in any of the New 
England States during the past thirty-five years. Bank- 
ing corporations occupied an anomalous position in the 
Eastern States. While corporations for carrying on 
almost every other business might be organized under the 
general laws, it required a special act of the legislature to 
form an association for banking purposes. 20 The old free 
banking laws were retained in some of these states, but 
they were not suited to the needs of the banking business, 
and special charters were nearly always secured. The feel- 
ing for an assimilation of banking to other lines of busi- 
ness caused the prohibition of special charters in the Penn- 
sylvania Constitution of 1875, 21 and in the New Jersey 
Constitution of the same year. 22 Maryland has a general 
law for the formation of banking corporations, but it is 
little used, and practically all banks are formed under 
special acts. 28 Delaware alone of this group retains the 
old form of incorporation as the sole means of securing a 
charter, its recent constitution expressly exempting banks 

19 Vermont permits the organization of banks under a general 
law, which is antebellum in its main outlines. In Massachusetts, 
also, banks may be organized under its old law, but the conditions 
are too onerous for banks simply of discount and deposit. 

20 New York, of course, was an exception. 

21 Art. Ill, sec. 7. 22 Art. IV, sec. 7, clause 11. 

23 The Maryland Constitution of 1867 permits the legislature to 
use its discretion in the matter of special acts of incorporation. 
Art. Ill, sec. 48. 



20 State Bank Legislation. [78 

from the corporations which may be formed under general 
laws. 21 

The same tendency, but slower in operation, may be ob- 
served in the Southern States. The agricultural interest 
has always been predominant in the South. Until quite 
recently, commercial and manufacturing industries have 
not been of importance, and in consequence freedom of in- 
corporation has made but slow advance. Even ordinary 
business corporations were, in many of the states, char- 
tered by special act nearly as late as the Civil War, and in 
only a few states were there general banking laws. Until 
the period of Reconstruction, special charters were not 
forbidden in the Southern State constitutions. The 
framers of the Reconstruction constitutions were familiar 
with the provisions — then in force in the Middle West — 
requiring corporations to be formed under general laws, 
and they attempted to make that the policy of the South. 
In many cases the clauses inserted with this aim were 
either so limited in application as to leave the hands of the 
legislature practically free, or they were omitted in the 
constitutions adopted somewhat later; but in Tennessee, 20 
Arkansas, 26 and West Virginia, 27 they have remained in 
force. More recently, Louisiana, 28 Mississippi, 29 Ken- 
tucky, 30 and South Carolina 31 have, by constitutional pro- 
visions, adopted the general corporation act as the ex- 
clusive method of incorporation. An amendment to the 
constitution of Georgia, adopted in 1891, permits the Gen- 
eral Assembly to incorporate banking companies by gen- 
eral act. While these changes did not affect, in most 
cases, other lines of business, they marked, in nearly all 

24 Constitution of Delaware (1897), Art. IX, sec. 1. 
25 Tenn. (1870), Art. XI, sec. 8. 
28 Ark. (1868), Art. V, sec. 48. 

27 W. Va. (1872), Art. XI, sec. 1. 

28 La. (1870), Art. 46; also (1898), Art. 49. 
2 " Miss. (1890), sec. 178. 

80 Ky. (1891), sec. 59, subd. 17. 
31 S. C. (1895), Art. IX, sec. 9. 



?9] Incorporation. 21 

cases, a change in the method of granting banking char- 
ters. 3 ' Even in those states where special acts are still 
constitutionally possible, they are, with one exception, 
rarely used. Virginia, Florida, and Alabama all have free 
banking laws under which nearly all banks are incorpo- 
rated. In North Carolina alone does the special charter 
hold entire possession of the field. 

The net result of these changes has been a complete re- 
versal of systems of bank incorporation in the Southern 
and Eastern States. Where, as late as 1870, special char- 
ters were the almost universal custom, at present only two 
states, Delaware and North Carolina, do not permit the 
formation of banks under general laws, and in only a few 
others, Virginia, Alabama, Florida, and Maryland, is the 
special act used with more or less frequency. The labor 
imposed on the legislatures by the increase in the number 
of applications for banking charters has been the most 
potent cause in bringing about this change. 33 There has 
also been at work the continually acting tendency toward 
assimilation of state constitutions. 

Contemporaneously with the movement toward freedom 
of incorporation has gone what may be styled the differen- 
tiation of the " general incorporation law." S4 In nearly 
all the states, prior to the Civil War, there had grown up 
" general incorporation laws," under which, to use the or- 
dinary phraseology, " associations for carrying on any 
lawful business " might be formed. Before i860, banks 

33 Since 1885, banks may be incorporated by general act in S. C. 
Laws of S. C, 1885, XIX, 212. 

38 This is illustrated by the case of Georgia. The plan first 
adopted was the framing of a special charter, and then granting to 
all succeeding applicants the powers and imposing the liabilities 
and duties contained in it. Ga. Laws, 1891, p. 172. 

81 The " general incorporation law " has a technical meaning in 
American law. Previous to this, the term has been used in its 
larger sense in contradistinction to special charters, but hence- 
forward it will be used in its stricter meaning of the body of law 
under which the great mass of corporations are formed in the 
American States. 



22 State Bank Legislation. [SO 

were never formed in any of the states under the " general 
incorporation law " ; special restrictions were always im- 
posed, but these regulations related largely to the right of 
issue and its proper exercise. After the imposition of the 
ten per cent tax on state bank notes, it was apparently felt 
in many of the states that the business of banking 
could be left to individual enterprise without any special 
regulation. Consequently in many of the states the " gen- 
eral law " came to include banking in the lines of business 
for the conduct of which corporations might be formed. 
In some of the " free " banking states, the old provisions 
were retained unaltered, and in others, they were repealed 
and resort had to the " general incorporation law." The 
newer states in the West allowed banking corporations to 
be formed under the general law. While there were a few 
states which differentiated banking from other corpora- 
tions before 1887, the movement may fairly be considered 
as having begun about that time. Since then in nearly all 
the states, 3 " there has been a growing tendency to treat 
banking differently from other lines of business, and to 
recognize that it needs special regulation. This was un- 
doubtedly caused by the increase in the number of banks 
about that time, 38 and the consequent attention which the 
subject received. 

One difference between the national and the state laws 
concerning banking will be readily seen. In the states, 
the banking law is part of a larger whole; it simply em- 
bodies the differences which the legislature has seen fit 
to make between banking and other lines of business. 
The foundation on which the state banking laws rest is the 
general corporation law; as a general rule, therefore, the 
state laws are less exhaustive than the national, since it 



35 There still remain a few states having general laws, in which 
banks are under the same regulations in every respect as other 
lines of business. They are Arkansas, Idaho, Oregon, Nevada. 
In many others, the differentiation is slight. 

86 See p. 74. 



81] Incorporation. 23 

is not necessary to legislate specially on points which are 
already satisfactorily covered in the general law. The 
national banking law, on the contrary, except for judicial 
interpretation of the common law governing corporations, 
is full and complete in itself. In order to understand the 
development and the present status of the state banking 
laws, reference must constantly be had to the principles of 
the " general incorporation law." 

Three forms of incorporating state banks have been in 
use since 1865: (1) The special charter; (2) The undiffer- 
entiated general incorporation law; (3) The differentiated 
general incorporation law. While very few states have 
passed through all these, it is yet true that if we look at 
the country as a whole, we shall find each method pre- 
dominant at a given time. From 1865 to 1875, the special 
charter was in use in most states, and from 1875 to 1887, 
the " general incorporation law " was the controlling type, 
and since then the differentiated incorporation act has 
become the almost universal form of bank incorporation. 
It is to be noted that the special charter and the " general 
incorporation act " were contemporaneous, springing from 
different social and political conditions. A high degree of 
regulation may be built up under special acts, as was the 
case in most of the states prior to i860. The same thing 
may be observed in the Southern States. For example, 
North Carolina, while still keeping the special act, has a 
much higher degree of regulation than many states with 
freedom of banking incorporation. It is not therefore 
true that the stages described above represent a consecu- 
tive development; it is rather to be understood that it is 
into the last form that both the others directly transform 
themselves. Since, however, at the beginning of the pres- 
ent movement, the " general incorporation law " was the 
predominant type, especially in those sections where the 
influence of state banking has been greatest, it may be 
regarded as the starting point for the evolution of the 
present systems. Legislation is directed toward the cor- 



2i State Bank Legislation. [82 

rection of existing systems, and so the aim of the state 
laws may be comprehensively described as an attempt to 
amend " general incorporation laws " in those respects in 
which they have been found unsuited to the proper control 
of the banking business. 



CHAPTER II 

CAPITAL 

The " general incorporation laws " have very elastic 
provisions as to the amount of capital required. The 
" general law " is designed to fill the needs of many classes 
of enterprises, varying widely in their needs for capital, 
and it has been the rule in the states to leave the size of 
the capital almost entirely to the discretion of the incor- 
porators. 1 The special charter may be quite as liberal 
in its provisions with regard to capital as the " general 
law," but it is not likely to be so. No American legis- 
lature would be likely to grant a banking charter without 
requiring a capital, supposedly adequate to the needs of 
the corporation. Since the most glaring defect of the 
banks chartered under general acts was the absence, in 
many cases, of any proper capital, one reason may be seen 
why banking legislation has developed so much more rap- 
idly in the West than in the South. While the system of 
special charters did not furnish sufficient safeguards for 
the banking business, it was in many respects, very much 
superior to the " general law," and especially was this true 
with respect to capital requirements. 

As soon as the states began to pay attention to the 
regulation of the banking business, the question of bank 
capitalization received attention. The national bank act 
and the surviving antebellum laws in the Middle West 
had special requirements of this kind; in fact, some kind 
of capital requirement was recognized as the central point 

1 A large majority of the states require neither a minimum nor 
a maximum capital. In some, however, a small minimum, rarely 
exceeding $1000, is required. The maximum permitted is generally 
so large as not to be a question of importance in banking charters. 



26 State Bank Legislation. [84 

in any regulation of banking. The capital stock is a buffer 
interposed between losses, which the bank may suffer, and 
the bank's creditors. If there is no capital, losses may 
fall directly on the creditor, and the larger the capital 
stock, other things being equal, the less the likelihood of 
loss to the depositor. 2 Wherever any state regulation of 
banking has been attempted it has been the universal rule 
to enact that banking corporations shall have a certain 
minimum capital. 

Amount of Required' Capital. — At the present time, only 
a few states, the remains of a large number, Arkansas, 
Mississippi, Tennessee, South Carolina, Oregon, Arizona, 
Idaho, Nevada, New Mexico, and Virginia, have no spe- 
cial requirements as to the capital of banking companies. 
In these states, so far as capital is concerned, banks are 
on the same footing as other corporations. The determi- 
nation of the amount of capital needed, rests entirely with 
the persons seeking incorporation, except that the Vir- 
ginia " general incorporation law " requires a capital of at 
least $500. 

The minimum capital requirement in the differentiated 
banking laws varies from $100,000 to $5000. These 
amounts have been determined in each state in one of 
three ways: (1) In the states which formerly had undif- 
ferentiated systems, banks generally established a mini- 
mum for themselves. For example, when California for 
the first time, in 1895, required a minimum, it was placed 
at $25,000, because, while there were a few banks oper- 
ating with a smaller capital, there was no large class of 
such banks, and it was thought that no great injury would 
be done by debarring them. In Nebraska, on the con- 
trary, the law of 1889 fixed $5000 as a minimum. 3 This 
was a necessity, because there were many banks with no 



2 This is not meant as a statement of the economic position of 
the capital of a bank; it is the view which the state systems of 
regulation take of capital stock. 

3 Laws of Nebraska (1889), chap. 37, sec. 1. 



SO] Capital. 27 

greater capital. Thus, these states have generally ac- 
cepted a status established by economic conditions. (2) 
In those states which have passed from the use of special 
charters to differentiated laws, the minimum required has 
been about equal to the capital of the smallest banks for- 
merly incorporated by special act. Here also the eco- 
nomic factor has dominated the situation. In both this 
and the first class, there has been little movement since 
the first placing of the minimum, and it is improbable that 
there will be any. unless changes should occur in eco- 
nomic conditions. (3) The minimum has been set in the 
last group in an entirely different way. As has been said 
before, certain states, in which " free banking " was most 
widely used before the war, retained their banking laws 
then in force, without lapsing into the use of " general in- 
corporation laws." These states were Indiana, Illinois, 4 
Ohio, Iowa, Minnesota, Michigan, Wisconsin, New York, 
Vermont, and Louisiana. The minimum requirement in 
none of these states was less than $25,000. In some of 
them, this has been lowered, but in others, it has remained 
rigidly at the same amount. As the need for small banks 
has sprung up, the old law has not changed so as to meet 
the situation fully. Probably the referendum provisions 
discussed above have given a fixity to the law in some 
states which it would not otherwise have possessed. There 
has also been undoubtedly a feeling against the incorpora- 
tion of very small banks in some states. Evidence of the 
economic need for banks of small capital is afforded by the 
fact that in these states, and more especially in the ones 
having high minimum requirements, the number of pri- 
vate banks is very large. 5 The antebellum policy was to 

4 The case of Illinois has been somewhat exceptional. It alone 
of this group was able to use special charters, but only under the 
restriction of the referendum. Its present law, adopted in 1887 
(Laws of Illinois, 1887, p. 89), followed the general trend of the 
Indiana law, which, passed in 1872-73, was practically the ante- 
bellum law remodelled. These states, while not strictly under the 
old law, are yet practically under its influence. 5 See p. 85. 



28 State Bank Legislation. [86 

give incorporation only to banks of issue, and it was be- 
lieved that only banks of a certain size could properly 
perform that function. The question now is not whether 
small banks of discount and deposit shall exist — they are 
already in being. The point is whether there is any ad- 
vantage in denying the right of incorporation to such 
institutions. 6 In Michigan, 7 Louisiana, 8 Minnesota, 9 and 
New York, 10 the old capital provisions have been reduced 
to meet this demand. 

There is a wide difference in the minimum required in 
the various states, and the variation is to a considerable 
degree a sectional one. In none of the New England and 
Eastern States can the capital be less than $50,000, except 
in the case of New York. The $25,000 group begins with 
this state, and includes New York, Ohio, Indiana, and Illi- 
nois. In the Middle States, except in the case of Missouri, 
where special charters prevailed, capital before 1865 was 
never less than $25,000, and in Illinois and Michigan, it 
was $50,000. Ohio and Indiana have never seen fit to 
lower this minimum, but in Illinois it has been reduced to 
$25,000. This is still the nominal requirement in Wis- 
consin 11 and Iowa, 12 but in Wisconsin, since only $15,000 
need be paid in, 'the minimum is lower for all prac- 
tical purposes; in Iowa, savings banks may be formed 
with a capital of only $10,000. These banks, for the most 
part, carry on a commercial business. There has been an 
apparent reluctance to face the situation frankly, and state 
banks still seem connected in the legislative mind with note 
issue. 13 Minnesota and Missouri require a capital of only 

6 See on this point, p. 87. 

7 Mich. (1887), Art. 205, sec. 1; also (1891), Feb. 26. 

8 La. (1882), chap. 80. a Minn. (1887), chap. 63. 

10 N. Y., (1874), chap. 126; (1882), chap. 409, sec. 29; (1892), chap. 
689. n Wisconsin (1861), chap. 242, sec. 14. 

32 Iowa, 15 G. A., chap. 60, sees. 2, 3. 

13 The same thing was done in the period immediately after the 
war by Kansas and Missouri. Banks, to be known as savings 
banks, were chartered with a capital of $50,000, but only ten per 



87] Capital. 29 

$10,000. Michigan until recently had a minimum of 
$15,000. So that the more westerly and northern of the 
Middle States require minimum capitals ranging from ten 
to fifteen thousand. The more distinctively agricultural 
states in the western group have the lowest capital re- 
quirements to be found in any of the states. In Kansas, 
Nebraska, North Dakota, South Dakota and Oklahoma, 
banks may be incorporated with capitals as low as $5000. 
The other states of the western group and the Pacific 
States do not permit, as a rule, a lower capitalization than 
$25,000." In the South, the necessary capital is $15,000 
in Georgia, Kentucky and Alabama. 1 " In Louisiana, the 
minimum is still lower, being only $10,000, while in West 
Virginia, capital may be as small as $2,500, since only ten 
per cent is required to be paid in, the remainder being 
subject to the call of directors. 

The United States may be divided, then, roughly into 
four great groups according to the capital which a bank 
must have in order to be incorporated under the state 
laws. 

I. The New England and Eastern States, requiring, 
with the exception of New York, capitals of at least 
$50,000. 

II. New York, Indiana, Illinois and Ohio, the Pacific 
States and Territories, and the less distinctively agricul- 
tural of the Western States, requiring $25,000. 

III. The Middle States (except Indiana, Illinois and 
Ohio) and the Southern States, requiring $15,000 or 
$10,000. 

cent of capital had to be paid in at once. This was a recognition 
of the needs of incorporation, but the old idea that banks of issue 
alone were to be incorporated, forced the states to meet needs 
by roundabout means. The " savings banks " in both states were 
really commercial banks. The names of many banks in Missouri 
still reflect this transitional period. 

14 In Montana the minimum is $20,000. By an act passed in 1890 
(chap. 31), banks may be formed with a capital as low as $10,000 
in Wyoming. 

" In Georgia and Alabama the minimum capital is $25,000, but 
only $15,000 need be paid in. 



30 State Bank Legislation. [88 

IV. The distinctively agricultural states of the western 
group, requiring only $5000. 

The reason for the regulation of capital is, as has been 
said, that capital is regarded as a safety fund for the pro- 
tection of the creditors; the larger the volume of busi- 
ness transacted by the bank, the greater the likelihood of 
a large loss. The attempt is made, therefore, to establish 
by law a relation between amount of business and capital. 
In the national bank act, the amount of capital required 
depends on the size of the place in which the bank is lo- 
cated. It is assumed that a bank in a place of 5000 inhabi- 
tants will be able to do a larger business than one in a 
smaller town. On account of the small size of the capital 
required in some states under the state laws, it has been 
thought expedient to carry this principle into minute de- 
tails. Thus, in all the states with a $5000 minimum, ex- 
cept Kansas, 16 a regular scale, advancing by small sums, 
is prepared. For example, in Nebraska, towns with less 
than 1000 population may have state banks with a capital 
of $5,000; less than 1500, $10,000; less than 2000, $15,000. 
The general tendency has been toward refinement in the 
capital scale. Before the beginning of the present move- 
ment toward the improvement of the state banking sys- 
tems, it was usual, in states where capital of a fixed amount 
was required, to have only one specified sum for places of 
any size, and this is still the rule in most cases where the 
capital requirement is high. There is much less tendency 
to discriminate in capital requirements when $50,000 or 
$25,000 is the minimum. Vermont, New Jersey, Pennsyl- 
vania, Indiana, West Virginia and Ohio make no distinc- 
tions. A minimum capital is fixed, and it is the same for 
large and small towns. The refined scales have arisen in 
three ways: (1) The uniform requirement was found un- 
suited to the needs of the state, since it was not low 
enough, and instead of making a lower uniform minimum, 

18 See below, p. 32. 



89] Capital. 31 

banks were allowed to be formed with less capital in small 
places. This has been the case in Minnesota, Georgia, 
.Michigan, Alabama, Louisiana and New York. (2) In some 
cases, in passing from the " general incorporation law " to 
a differentiated system, a very low uniform minimum was 
required, which was later found to be unsafe, and a differ- 
entiated scale adopted. This was the case in Oklahoma. 
(3) The " general incorporation law " having given rise to 
banks with capitals of varying size, the capital require- 
ment, at the outset was graded according to population, 
as in California, Nebraska, North Dakota, South Dakota. 

It is to be noted that the scales generally do not go very 
high. After the capital requirement reaches, in most 
states, $25,000, and in some, $50,000, no increase is made 
for larger towns. It is only in Kentucky, New York, Cali- 
fornia, Illinois, Michigan and Massachusetts that require- 
ments go to $100,000. As compared with the national 
system, the necessary capital is, generally, lower not only 
for small towns, but for places of any size. The gradation 
does not advance so rapidly, nor extend so far. The 
recognition of capital as a fund for the security of credit- 
ors did not figure often in our early banking history. The 
same idea, however, was the basis of the restriction of 
note issue according to capital. Looking, as the antebel- 
lum systems did, to the security of the note holder, it was 
natural that the capital should be considered a fund for 
their protection. These restrictions also served the pur- 
pose of keeping the note issue within bounds. 

It is evident that regulation of capital according to the 
population of the place in which the bank is located is a 
very crude way of securing any proportion between capi- 
tal and volume of business. The more elaborate the slid- 
ing scale is made, the more nearly on an average will an 
approximation be made to the desired result, but no scale 
can take into account differences in localities as to busi- 
ness, nor the more important question of competition. 
Even if towns of 1500 population had equal amounts of 



32 State Bank Legislation. [90 

business, it cannot be known among how many banks this 
is divided. So that if capital regulation is of any value, it 
seems worth while to secure a more regular proportion 
between capital and deposits than can be gotten by scales 
based on population. In this connection, the recent legis- 
lation in Kansas is worthy of notice. In 1897, the legis- 
lature being convinced of the utility of grading its capital 
requirement, which had previously been a uniform mini- 
mum of $5000, made use of a new method of applying the 
principle that capital should be regulated according to 
business. It was enacted that the total investments of any 
bank, exclusive of United States bonds, should not ex- 
ceed four times the capital and surplus actually paid in. 17 
The purpose and operation of this clause is thus described 
by the Kansas Bank Commissioner. 18 " One provision, 
which produced the greatest opposition, was the section 
which limited the total investments of every bank to four 
times its capital and surplus. The theory upon which the 
adoption of this section was urged, was that a bank's capi- 
tal should bear some proper proportion to the volume of 
business transacted by it; and there being no possible way 
by which the amount of deposits could be restricted, the 
idea of restricting the investments appeared to be, not 
only possible, but wise. It was argued, in support of the 
proposition, that it would result in an increase in the capi- 
tal of small banks, thereby giving greater protection to 
depositors; that it would not be a difficult matter to pro- 
cure additional capital when, for each thousand dollars 
thus invested, the bank could invest four thousand dol- 
lars, and above all, that banks should be content with re- 
ceiving an income on four dollars for every dollar in- 
vested. The operation of this section has resulted in 
nearly one hundred banks increasing either their capital 
or surplus. Many have carried their entire earnings to 

17 Laws of Kansas (1897), chap. 47, sec. 9. 

18 Report of Bank Commissioner, 1897-98, p. VIII. 



91] Capital. 33 

surplus, thereby adding to the strength of the bank and 
the security of depositors." 

It has been contended by an eminent authority that such 
legislation is of no value, being based on " a conjectured 
average too rough to be of service in any individual case," 
and that, " in this respect, as in so many others, the judg- 
ment of the persons most interested, acting under the law 
of self-preservation, is far more trustworthy than any legis- 
lative decision." 19 There seems, however, a general con- 
sensus of legislative opinion that some form of regulation 
of capital is necessary. The theory on which the state and 
national systems of bank regulation rest is that it is proper 
to prescribe those things which persons would do if they 
acted with good judgment. The majority of bankers 
would lay by a surplus fund if there were no legal require- 
ment, but it is none the less expedient to force others to 
do likewise. It is also to be noted that with regard to 
the size of capital, the interest of the banker runs counter 
to the protection of the depositor. The larger the busi- 
ness which can be built on a capital, the greater will be the 
dividends earned. The banking laws are built on aver- 
ages; if prescribing a certain capital will cause men, who 
otherwise would not, to make business and capital more 
closely correspond, and if this is desirable and can be 
accomplished without any ill effects, it seems a proper 
addition to the banking laws. 

There is one consideration, however, which deserves 
attention. Under the operation of the sliding scale, what 
might be termed a " capitalistic monopoly " is created. 
For„ example, in a town of 2000 people, if the capital re- 
quired is $50,000, there would probably be one bank only, 
since there is not enough business to justify dividends on 
two such capitals, and no smaller bank can be started. 
Under the Kansas system, another bank could be organ- 
ized with $5000, and as its business increased, its capital 

19 Dunbar, " Theory and History of Banking," p. 21. 
7 



34 State Bank Legislation. [92 

would grow. Evidently, competition is made freer, but it 
is doubtful if this is beneficial. While competition should 
be allowed, the economies of larger institutions ought to 
be preserved. The one bank would serve the people more 
cheaply in all probability than several smaller ones. It 
would appear then that a sliding scale is of importance, 
and should be supplemented, and not supplanted, by the 
Kansas method. It is necessary, of course, in any appli- 
cation of the Kansas law, that sufficient encouragement 
should be given to individual enterprise. If the capital 
requirement is heavy, the incentive to build up business 
will be reduced and deposits which might be secured, will 
not be obtained. To restrict investments to four times 
the capital and surplus is, however, not a hardship. The 
national banks, on the average, do not do nearly so profit- 
able a business. In 1899, their investments were only 
about three times their capital and surplus. 

Payment of Capital. — Under " general incorporation 
laws," there may be a wide difference between nominal 
and paid-up capital. The amount of the variance is left 
to the discretion of the directors, who have power to re- 
quire the payment of the remainder of capital at such times 
as they think proper. 20 As long as banks were allowed to 
be incorporated under the general law, it was possible for 
the authorized capital to be largely in excess of the sum 
actually paid in. It is assumed that persons having deal- 
ings with corporations will be able to ascertain the real 
capital; but the depositor in a bank stands on a different 
footing. As a general rule, he is unable to distinguish 
between the nominal and the authorized capital. He gives 
credit frequently on the basis of the published capital, and 
it has been thought expedient that there should be no 
possibility of deception in the matter. The working of a 
law undifferentiated in this respect has been forcibly de- 

20 In some states part of the capital must be paid in, e. g., in 
Vermont, one-half; a number of states require ten per cent, but 
in the great majority, no sum is fixed. 



93] Capital. 35 

scribed by the California Bank Commissioners as follows: 
" Licenses to conduct the business of banking have 
been demanded and received under the law, the Com- 
missioners being powerless to refuse them, when the 
amount of capital stock paid up was merely nominal, in 
fact, infinitesimal, and these concerns most loudly pro- 
claim their authorized capital." 21 

Again, if capital is regarded as a fund for the security 
of depositors, it is absolutely necessary that the capital 
should be paid up, or the purpose of the law is defeated. 
As has already been pointed out, in certain states the capi- 
tal requirements are considerably affected by the pro- 
visions for payment. It is useless to prescribe a minimum 
capital, unless some provision is made to secure payment." 
The case of West Virginia is in point; nominally the mini- 
mum capital is $25,ooo," 3 but practically, the law is entirely 
undifferentiated in this respect. Only ten per cent need 
be paid in before the certificate of incorporation is issued, 
and the remainder is subject to the call of directors. These 
conditions are the same as those prescribed under the 
" general law " for ordinary corporations. 

The national banking act has been the most powerful 
influence in determining the form of the state legislation 
designed to amend this evil. In the following states, fifty 
per cent must be paid in before beginning business, 
and the remainder in a specified time, ranging from five 
months to two years: Pennsylvania, South Dakota, 
Missouri, California, Oklahoma, Wyoming, Colorado, 
North Dakota, Massachusetts, Florida, Kentucky, Indiana, 
Michigan. 21 In the most recent legislation, a tendency to 

21 Twelfth Annual Report of Banking Commissioners of Cali- 
fornia. 

5J Such provisions may be of importance, however, in another 
way. See page 58. 

23 Laws of West Virginia (1872), chap. 215. 

"Slight variations from this rule are Ohio, 60 per cent; Utah, 
25 per cent, remainder in one year; Washington, three-fifths. 



36 State Bank Legislation, [94 

go somewhat farther in stringency has manifested itself, 
and in Maryland, New York, Iowa, Montana, Vermont, 
Minnesota, Nebraska, Illinois, New Jersey and Kansas 
the entire capital must be paid up before any business can 
be transacted by the corporation. In Georgia and Wis- 
consin, specified sums must be paid in, irrespective of the 
size of the capital. The remaining states are less rigid in 
their requirements. In those enumerated above as not re- 
quiring a minimum amount of capital, there are naturally 
no provisions for payment. It is quite conceivable, how- 
ever, that a state, which has no minimum capital require- 
ment, might yet endeavor to have authorized and real 
capital correspond in order that the depositor might not 
be deceived by a fictitious capital, but as the first step 
usually taken by a state in bank regulation is the fixing of 
a capital minimum, no such attempt has been made in any 
of the states. 

The only good reasons for allowing any part of the capi- 
tal to reman unpaid are: (i) That the bank cannot use 
all of its capital conveniently at first; (2) The convenience 
of the shareholders in paying by installments. Any pro- 
visions allowing a greater time than is required by these 
considerations are to be condemned as likely to lead to 
evils. 

Impairment of Capital. — Having secured the payment oi 
a capital considered requisite for the business, it is neces- 
sary to provide that the amount paid in shall not be im- 
paired in any way except by a decrease of stock, which 
shall not be so great as to reduce capital below the legal 
minimum. There are two ways in which capital may be 
impaired: (1) By payment of unearned dividends; (2) By 
losses being greater than profits. 

Under the " general incorporation law," it is the usual 
rule that dividends are to be paid only from earnings, but 
in providing a safeguard, the states may be divided into 
two great classes: (1) Those imposing a liability on di- 
rectors for dividends which impair capital; (2) States 



95] Capital. 37 

which make directors responsible only when dividends im- 
pair the capital to such an extent as to make the assets 
less than the liabilities of the corporation. The second 
class of states is by far the more numerous, and in them 
there is no restriction on the payment of dividends so long 
as the assets exceed liabilities. It is difficult in the case of 
the ordinary corporation to ascertain whether dividends 
are paid from capital or earnings, since such a calculation 
depends on the valuation of property. In the case of a 
bank, property is almost entirely in the form of debts due 
the bank, and the value of such assets is easier to esti- 
mate. 25 

Before the enactment of the national banking act, it 
had become a well-settled rule in state legislation that 
dividends could only be paid when the net profits of the 
bank exceeded its losses, and that if capital was impaired 
by losses, no dividends should be paid until the capital 
was restored to its proper amount. 26 The same principle 
has been recognized in the state banking systems since 
1864. Even in most of the states where the " general incor- 
poration law " does not restrain impairment of capital, it 
has been recognized that banks should be regulated differ- 
ently in this respect. 

The national law in its original form did not provide any 
better method of keeping capital up to its full value. It 
was not until 1873, that the Comptroller of the Currency 
received power to order the directors to assess share- 
holders when capital was impaired. 27 Previous to that 
time, the only remedy was to wait until profits made up 

25 According to nearly all the state laws, debts unpaid for a cer- 
tain length of time are not to be considered in estimating a bank's 
assets for the purpose of finding net profits. 

20 See, for example, New York (1838), chap. 260, No. 28; Wis. 
(1852), chap. 479, sec. 40; Minn. (1866), chap. XXXIII, No. 31; 
Ohio (1851), 49, v. 41, sec. 22; Ind. (1855), p. 23. If dividends 
were made, any person in interest might apply to the courts for a 
receiver. 

27 Sec. 5205, Revised Statutes of U. S. 



38 State Bank Legislation. [96 

for losses. In the state systems, the simple prohibition of 
dividends in case of impairment of capital was not ade- 
quate to the necessities of the case, but in nearly all the 
legislation it was the only remedy available, until within 
a comparatively recent period. Before any method of 
assessment could be put in force, it was necessary that 
there should be a satisfactory system of examinations, and 
in some cases, even after this has been provided for, there 
has been a slowness in giving the officials such summary 
powers. 28 In most of the states where inspection is thor- 
ough, this power has been given to the heads of the state 
banking systems. As soon as examinations were regu- 
larly made, it was found that in many cases the capital of 
banks was grossly impaired, 29 and it was urged that a sum- 
mary remedy be provided for this evil. In general, legis- 
lation has followed the lines of the national bank act as 
amended, and the state officials have been given authority 
to order directors to make an assessment, and if this is 
not done, to apply for a receiver for the bank. This is the 
provision of the law in New York, 30 Michigan, 31 Okla- 
homa, 32 Missouri, 33 Kansas, 34 Nebraska, 35 Pennsylvania, 35 
Minnesota, 37 Georgia, 3S Florida 3!) and Indiana. 40 In Illi- 
nois, the State Auditor, himself, assesses and collects the 
sum necessary to restore capital. 41 By the Iowa law if 
the directors of a bank do not assess on the order of the 
State Auditor, they are themselves responsible for any 

2S See for further discussion of this point, " Supervision." 

29 For example, see " Report of Bank Examinations in Missouri," 
1897. 

3U N. Y. (1890), chap. 429. 

81 Mich. (1889), chap. 205, sec. 42. 

32 Okla. (1899), chap. 4, sec. 43. 

33 Mo. (1895), P- 97- 

34 Kans. (1897), chap. 47, sec. 20. 

35 Neb. (1889), chap. 37, sec. 13. 

30 Pa., Feb. (1895), sec. 6. P. L. 4 

3T Minn. (1895), chap. 145, sec. 19. 3S Ga. (1895), p. 58. 

3a Fla. (1889), chap. 3864, sec. 34. 

40 Ind. (1895), p. 205. 41 111. (1887), p. 90. 



97] Capital. 39 

losses." The Wisconsin law simply provides for the pub- 
lication of the fact in a local newspaper, if any impairment 
is not made good. 43 In the other states, the only way by 
which losses must be made good is by the accumulation of 
profits. 

,2 Iowa. 25 G. A., chap. 29, sec. 2. The power is given by the 
code revision of 1897 to apply for a receiver if the directors do 
not comply. Code of Iowa, sec. 1877. 

"Wisconsin (1895), chap. 291, sec. II. The law of 1897, passed 
by the legislature, but rejected by a popular vote, gave the Exam- 
iner the right to apply for a receiver. 



CHAPTER III 

SUPERVISION 

As it has become necessary to differentiate banks from 
other corporations in the matter of capital, there has also 
arisen a need for supervision, partly to insure that capital 
requirements are observed; partly that other regulations 
peculiar to the business of banking are obeyed. Thus, 
while supervision may be considered, in itself, a differenti- 
ation of the " general incorporation law," it is set up in 
order that other differentiations may be effectively carried 
out. 1 As long as banking was on the same footing as 
other lines of business, supervision was rarely exercised. 

In its highest form of development, supervision includes 
adequate means of ascertaining whether the law is com- 
plied with, together with the bestowal of power on some 
state official to act when violations occur. In reaching a 
conclusion as to whether a bank is obeying the law, two 
means are used: (i) Reports under oath are to be 
made at intervals by the bank's officers; (2) Examina- 
tions are made from time to time by state officials. The 
only form of supervision widely in use in the states until 
the beginning of the present movement, was the require- 
ment of reports. In many of the states, the antebellum 
laws had imposed on banking corporations the duty of 
making reports of condition, and this legislation, for the 
most part, has remained in force during the whole period 
since the passage of the national bank act. Thus, in 1873, 
when the Comptroller of the Currency first began to pub- 

1 California is unique in this respect. Its system of supervision 
was originally imposed on a general incorporation law. Gradually, 
however, a considerable degree of differentiation has been brought 
about. 



99] Supervision. 41 

lish statistics of state banks, reports were made in nearly 
all of the New England, Eastern and Middle States. 

An examination of the table on page 49 will show 
the improvement since that time in this respect. It 
will be seen that in some cases, laws have been passed 
requiring reports but making no provision for examina- 
tions. Of this character, are the laws of Mississippi, 2 Colo- 
rado, 3 Washington 4 and Kentucky. 5 This was the status 
of supervision in a large number of states prior to 1887, 
and it may be considered as the first stage in the evolution 
of the present systems. Banks were usually required to 
publish these reports in some local newspaper, and thus 
a certain amount of what may be styled " public super- 
vision " was attained. 8 When used alone, however, re- 
ports furnish an inadequate basis for an efficient system 
of regulation. In the years preceding 1887, in the ma- 
jority of the states, reports were made on fixed days, 
and generally, not more than once a year. 7 Since the re- 
port has become a real means of supervision, its char- 
acter has changed; it is now made more frequently, and 
on days set by the state officials, and not known in advance 
by the bank's officers. So that there has been a rapid 
increase both in the number of states requiring reports, 
and an equally important advance in their efficiency. 

Bank examination has been always somewhat later than 



■ Miss. (1888), p. 29. 3 Col. (1877), Sec. 243. 

4 Wash. (1886), p. 84. 

5 Ky. (1893), chap. 171. The Secretary of State may require 
reserve to be made good, but evidently such a power can seldom 
be exercised simply on the basis of a report. 

* In Tennessee, while banks make no reports to state officials, 
they must publish statements of condition in a local newspaper. 
Tenn. (1875), chap. 142, sec. 17. 

7 A considerable part of this kind of legislation has had the aim 
of securing statistical information. The Comptroller of the Cur- 
rency, at various times, has urged on the state governments the 
expediency of requiring reports (see Report of the Comptroller of 
Currency, 1879, p. 59), and it was in compliance with his request 
that the greater part of the legislation prior to 1887 was enacted. 



42 State Bank Legislation. [100 

reports in making its appearance as a means of supervi- 
sion. Even at the close of the Civil War, it was only in 
the New England States that banks were regularly exam- 
ined by state officials.'' In the other states, examinations 
were made only when there was reason to suspect im- 
proper management, or on application of stockholders or 
creditors. The development of legislation on this subject 
in New York may serve as a type of that in the other 
states. Under the provisions of the Safety Fund Act, the 
Commissioners were to examine each bank quarterly; 9 the 
" free banks," however, were not subject to this require- 
ment, and were only examined by order of the Chancellor 
on application of persons interested. 10 During the years 
1842-1843, all banks were under the supervision of the 
Safety Fund Commissioners, 11 but in 1843, their office was 
abolished, and the Comptroller placed in charge of banks. 12 
He was not empowered, however, to examine them, unless 
he suspected their solvency, and it was not until 1884, that 
examinations were required to be regularly made. The 
first attempts at supervisory legislation after the Civil War 
generally followed the precedent set by the laws already 
in existence. Thus, in Virginia, 13 Florida, 1 * New Mexico, 15 
and North Carolina, 16 the examinations were to be made 
only on application, or when some state official considered 
the bank unsafe. The only laws passed prior to 1887 
which provided for regular examinations were those of 
New York, 17 Indiana, 18 Minnesota, 19 and California. 20 Since 

" Rhode Island was an exception, following the Eastern and 
Middle states in this respect. 

9 New York (1829), chap.' 94, sec. 5. 

10 New York (1838), chap. 260, sec. 25. 

11 New York (1841), chap. 363. 

12 New York (1843), chap. 218, sec. 6. 
18 Va. (1884), chap. 108, sec. 1. 

14 Fla. (1868), chap. 1640, sec. 12. 

15 N. M. (1884), chap. 36, sec. 7. 
10 N. C. (1887), chap. 175. 

17 N. Y. (1882), chap. 409, sec. 12. 

18 Ind. (1873), chap. VIII, sec. 18. 

19 Minn. (1878), chap. 84, sec. 14. 20 Cal. (1878), p. 840. 



101] Supervision. 43 

then, the movement has been rapid, until at present, regu- 
lar examinations are made in all the states, except Dela- 
ware, Virginia, South Carolina, Mississippi, Alabama, 
Arkansas, Tennessee, Kentucky, Ohio, Colorado, New 
Mexico, Washington, Oregon, Idaho and Nevada. It will 
be noticed that nearly all these states permit banks to be 
formed under the " general incorporation law." Ohio, Col- 
orado, Alabama, Washington and Kentucky are the only 
ones in the list requiring a specified capital for the forma- 
tion of banking corporations. On the other hand, Arizona 
is the only one of the states and territories incorporating 
banks under a general law which has regular examinations, 
and no capital requirements. 

The influence of the adoption of a system of supervision 
on the banking laws is marked. While the purpose of 
supervision is to carry into effect laws which without it 
would be inoperative, when once put into operation, it 
becomes itself an active force in promoting new legisla- 
tion. Examinations soon disclose evils which the law 
does not deal with, or for which the remedy provided is 
inadequate. New legislation is asked for, and usually 
granted by the legislatures. 

There are, then, fifteen states and territories in which 
there are no provisions for the examination of state banks. 
This statement gives, however, an erroneous impression 
of the extent to which state banking is unsupervised, since 
the number of banks in these states is somewhat below 
the average. Of 4200 banks incorporated under state 
laws, in operation in 1899, nearly 3100 were regularly ex- 
amined by state officials, so that while only about two- 
thirds of the states provide for supervision, the number 
of banks in those states is three-fourths of all the state 
banks in existence. In recent years, the extension of 
supervision has been much faster than the growth in num- 
bers: in 1887 there were 1526 state banks in all the states 
and territories, and only 341 were subject to regular ex- 
aminations. While state banks since that time have nearlv 



11 State Bank Legislation. [102 

trebled in numbers, about nine times as many banks are 
now under effective supervision as there were then. 

An examination of the list of states making no provision 
for periodical examinations, will show that they fall into 
two groups: (i) The states and territories in which settle- 
ment is very recent, and especially those in which mining 
and stock raising are more important than agriculture; 
(2) A considerable number of the Southern States. Dela- 
ware and Ohio are exceptions, falling in neither class. In 
the former group the number of banks is as yet small, and 
the matter has not been deemed of importance. On the 
contrary, there are in the South, a large number of state 
banks. Of the 1100 banks which are not examined, over 
800 are located in this section. The reason for the back- 
wardness of Southern banking legislation in this respect 
is not to be found in any peculiarities of the banking sys- 
tems in these states, although it is possible that the use 
of special charters continuing there later than elsewhere 
may have somewhat retarded the development of systems 
of supervision. That this cannot be the fundamental cause 
is shown by the fact that both North Carolina and Georgia 
began the examination of banks while using special acts 
of incorporation. Also some states, such as Mississippi 
and Arkansas, which have had the general act as the ex- 
clusive means of incorporation for a considerable time, 
have not yet developed any effective supervision. A truer 
explanation would probably be found in the general legis- 
lative tendencies of the Southern people. In no section 
of the country has there been less control of private busi- 
ness by the state governments than in the South. The 
policy of laissez faire has been, until recently, consistenly 
pursued. There are signs, however, that a movement 
toward bank supervision is in progress. The constitution 
of South Carolina adopted in 1895, 21 and the Louisiana 

21 Art. IX, sec. 9; also laws of 1896, No. 48. For some reason, 
however, this law has been inoperative, and there is as yet no 
bank examination in South Carolina. 



103J Supervision. 45 

constitution of 1898," both provide for the appointment of 
state examiners. 

In the method of paying bank examiners for their ser- 
vices, the state laws have made a noteworthy improve- 
ment upon the national system. A national bank exam- 
iner is paid entirely by fees. 23 In his report for 1887, 21 the 
Comptroller of the Currency said, " From many points of 
view, it would be expedient for the examiners to be paid 
out of the tax on national banks, and not by fees. The 
present system establishes relations between the bank and 
the examiner which are inconsistent with the functions of 
that officer, and with what ought to be his attitude toward 
the bank." Futhermore, under the fee system it is to the 
the interest of the examiner to make his inspection as rap- 
idly as possible, since the amount of his earnings depends 
on the number of banks he examines. Various methods 
have been used in the different states to overcome this de- 
fect in the national bank act. The most common has been 
to require the banks to pay fees to the state treasury, and 
examiners are paid an annual salary. This is the case in 
Michigan, 25 Oklahoma, 28 Wisconsin, 27 North Dakota, 23 Mis- 
souri, 28 and Minnesota. 30 In other states, the expenses of 
supervision are assessed on banks, usually in proportion to 
capital or deposits. This method is followed in New 
York, 31 California, 32 and Georgia. 33 The examiners are re- 
garded as state officials, and are paid by salary, but it is 
considered proper that the banks should pay all or part 

23 Art. 194; also laws of 1898, Art. 198. 

23 Revised Statutes of the U. S., sec. 5240. 

24 Page 9. See also to same effect, Report of Comptroller of Cur- 
rency, 1900, Vol. I, p. xxvii. 

" Michigan (1887), Art: 205, sec. 40. 

20 Oklahoma (1899), chap. 4, sees. 25, 26. 

27 Wisconsin (1891), chap. 295, sec. 7. 

28 North Dakota (1893), chap. 23. 
" Missouri (1897), P- 83. 

80 Minnesota (1893), chap. 41, sees. I, 2. 

" New York (1882), chap. 409. 

" California (1878), p. 740. M Georgia (1889), p. 65. 



46 State Bank Legislation. [104 

of the expenses. There are some states, usually those in 
which banks are few, where some state officer having other 
and more important duties is charged with bank supervi- 
sion, and no fee is imposed on the banks, the state paying 
all expenses. It may be said in general that nearly all the 
states in one way or another have avoided, the evils of the 
fee system. 

If then, by examinations or reports, it is disclosed that 
the bank has an impaired capital, is violating the laws, or 
is insolvent, what power is given to state officials to take 
action? It is usually required that notice shall be given, 
but if this proves ineffective, the proceedings for insolvency 
must be taken. It is here that a radical difference appears 
between the state and national systems. Under the state 
laws, the courts must be applied to for the appointment of 
a receiver, 34 while the Comptroller of the Currency has 
power, without the intervention of judicial procedure, him- 
self to appoint a receiver, who acts under his direction. 
The final power, then, to regulate state banks rests with 
the law courts, while national banks are under the control 
of the Comptroller. The one is a judicial, while the other 
is an administrative system. Receivers for all other cor- 
porations are judicial officers, and the legislatures of the 
states have been unwilling to distinguish, in this respect, 
banking from other corporations. Before the passage of 
the national bank act, the appointment of bank receivers in 
all the states was in the hands of the courts. The condi- 
tions surrounding the national act, made it necessary to 



34 The state official is not always authorized to apply for a 
receiver. In Wisconsin and Louisiana, publicity is relied on; the 
bank continues, but the people are warned by publication of its 
condition. The Bank Examiner of West Virginia reports to the 
Board of Public Works, which has power to revoke the bank's 
charter. The State Examiner of South Dakota simply reports to 
the Governor. Of course, in those states where there is no super- 
vision, action must be taken by the individuals concerned as in the 
case of the ordinary corporation. 



105] Supervision. 47 

give this power to the Comptroller. 3 ' The matter passed 
from the courts. In the national system, the decision of 
the Comptroller is final and no room is left for a contest 
on the part of the bank. 

As soon as state supervision became well organized, it 
was seen that the appointment of receivers by the courts 
failed to cover the needs of the case in one important par- 
ticular. In the time which must necessarily elapse before 
action could be taken by a judge, assets were frequently 
misapplied by the directors. Arrangements were entered 
into which seriously diminished the fund from which de- 
positors were to be paid. In order to prevent such a dis- 
persion of the assets, under the antebellum systems it was 
usually made the duty of some state official to secure an 
injunction forbidding the bank to carry on business or to 
transfer its assets. 30 To secure an injunction requires 
time, and speedy action is desirable. This would, how- 
ever, without any doubt, have been the direction which the 

35 It is of interest to note that the cases in which the Comptroller 
may appoint receivers have been steadily increased. Originally, it 
was only when a bank defaulted on its notes that he could take 
charge of it. In 1870, he was authorized to appoint receivers for 
banks with impaired capital, and it was not until 1876 that his 
power was extended to cover cases of insolvency. Even at the 
present time, violations of some provisions of the national bank act 
can only be punished by a resort to the courts for a dissolution of 
the corporation. 

88 The New Jersey act of 1889 for bank examination follows the 
old method, and may be taken as an example. It runs: "When- 
ever it shall appear as the result of examination that the affairs 
of any such corporation are in an unsound condition ... or that 
it is transacting business ... in violation of law, it shall be the 
duty of the Attorney-General, on notice by the Commissioners, to 
apply forthwith, by petition or bill of complaint or information, 
to the chancellor for an injunction restraining such corporation 
from the transaction of further business, or the transfer of any 
portion of its assets in any manner whatsoever, and for such other 
relief and assistance as may be appropriate to the case; and the 
chancellor being satisfied of the sufficiency of such application, 
or that the interests of the people so require, may order an 
injunction, and make other appropriate orders in a summary way." 
N. J. (1889), P- 368, chap. CCXXXIV. 



48 State Bank Legislation. [106 

state legislation would have taken, if it had not been for 
the example of the national bank act. The plan actually 
adopted has been to confer on state officials the power to 
take charge of a bank immediately, and hold its assets 
until a receiver is appointed, or the application refused. 
This authority, in most cases, has been given somewhat 
later than the power to apply for a receiver, and may be 
considered a movement in the direction of a more highly 
administrative system. 37 Many states, however, have never 
taken this step. 83 

37 In some states there is a slight control over receivers by the 
state bank officials. In Michigan, dividends are distributed under 
the order of the State Bank Commissioners, and insolvent banks, 
in a few states, are examined periodically, but it may be said in 
general that the administration of assets is an exclusively judicial 
duty. Even statistics of insolvent banks are printed in only a 
few of the state reports. 

38 The following table shows for each state the present stage and 
the development of its supervision. 



Table Showing Growth and Present Status of State Bank 
Supervision. 



WSJ£ , S S 



Power confer- 
red on State 
officials to 
apply for a 
receiver 



Power confer- 
red on State 
officials to 
take posses- 
sion of bank 
pending ap- 
pointment 
of a receiver 



Maine. 
N. H. . 
Vt. . . . 
Mass. . 
R. I... 
Conn. . 
N. Y. . 
N. J. . . 
Del. .. 
Md. . . . 
Pa. ... 
Va. . . . 
W. Ya. 
N. C. . 



S. C. 
Ga. .. 
Ala. . 
La. .. 
Fla. . . 
Miss. 
Tex. . 
Ark. . 
Tenn. 
Ky. . 
Ohio . 
Ind. . 
111. . . 
Mich. 
Wis., 
la.. . . 
Minn. 
Mo... 
Kan.. 
Neb. . 
N. D. 
8. D.. 
Okla. 
Mon. . 
Wyo. 
Col. . 
N 



Ante bellum Ante bellum 



Ante bellui 
1884 
1889 



Ante bellum 



1870 
Antebellum 
1884 
1891 
1887 

1889 

1882 
1869 

1888 



1870 
Ante bellum 




1877 
1891 
1877 
1890 
1891 
1897 
1887 
1888 
1877 
1884 
1885 

1878 

1888 

1893 



1898 
1891 



1891 
1889 



1889 



1898 
1897 



1873 
1887 
1887 
1895 
1891 
1878 
1895 
1891 
1889 
1S90 
1891 
1897 
1895 
1888 



1898 
1891 



1891 
1895 



1892 
1899 



1898 
1895 



1895 
1887 
1887 

Antebellum 
1889 
1895 
1891 
1889 
1893 

1897 
1899 
1895 



1878 



1895 
1887 
1893 

1897 
1889 
1895 
1891 
1895 
1893 

1897 
1899 
1895 



1895 



1893 



CHAPTER IV 



REAL ESTATE LOANS 



There is no more characteristic difference between the 
state and the national banking laws than the fact that 
almost without exception, state banks may loan on real 
estate security, while national banks are prohibited from 
doing so. 1 In the antebellum state laws, in only a few 
cases were the banks forbidden to loan money on landed 
property. As long as banks were chartered under the 
" general incorporation law," they had power to make loans 
on every form of security, and in the transition to a differ- 
entiated law, the legislatures of the various states have 
still allowed the same freedom. 2 In some cases, where the 
influence of the national act has been strong enough at 
the outset of state bank regulation to secure the insertion 
of the prohibition against real estate loans, it has later 
been found desirable, after some experience, to amend the 
law in this respect. 3 

While there has been no long-continued tendency in the 
state legislation to follow the national bank act in its pro- 
hibition of real estate loans, there has been, in a few states, 
a movement toward placing a limit on the amount of such 
investments. The law recognizes the propriety and safety 
of such business, but also endeavors to keep it within 
bounds. Thus, by the South Carolina law, not more than 
one-half of the capital and surplus may be loaned on mort- 
gages of real estate. 4 Similar restrictions are imposed by 

1 Revised Statutes of the United States, sec. 5137. 

2 The only exceptions are Oklahoma and Ohio. 

3 North Dakota (1899), chap. 28; South Dakota (1893), chap. 23. 

4 South Carolina (1887), No. 427. 



109] Real Estate Loans. 51 

the laws of North Dakota," South Dakota, and Michigan.' 
The most elaborate provision on the subject is that con- 
tained in the defeated Wisconsin act of 1897, in which it 
was enacted that " no bank should lend to an amount 
exceeding twenty per cent of its capital stock upon mort- 
gages or any other form of real estate security, except on 
the adoption of a resolution by a two-third's vote of the 
boad of directors, specifying some larger amount which its 
officers might loan upon real estate security; provided that 
in no event should any bank so loan an amount to exceed 
twenty-five per cent of its capital, surplus, and deposits, 
and provided that banks doing business in villages or cities 
having less than six thousand inhabitants under the last 
official census, might loan a sum not to exceed thirty-three 
and one-third per cent of the aggregate of its capital, sur- 
plus and deposits upon real estate security." 8 With the 
exception of these states, and of those in which real estate 
loans are entirely prohibited, the amount of such invest- 
ments is left entirely to the discretion of the officers of state 
banks. 

Real estate security, as a basis for bank loans, has been 
quite generally condemned by writers on the subject of 
banking. Mr. Horace White says, " The reason why lands 
and buildings ought not to form the basis of the loans of 
a commercial bank is that they are not quick assets. The 
liabilities of the bank being payable on demand, the assets 
must be converted into money within short periods. When 



5 North Dakota (1899), chap. 28. 
8 South Dakota (1893), chap. 23. 

7 Michigan (1887), Art. 205, sec. 23. Under the provisions of the 
Michigan law, no real estate loans can be made until a resolution 
stating the extent to which such loans may be made has been 
passed by a two-thirds vote of the directors. The amount must in 
no case be more than fifty per cent of the capital of the bank. 

8 Wisconsin (1897), chap. 303, II, sec. 23. This law was stren- 
uously opposed in some quarters on the ground that it did not 
provide sufficiently for real estate loans, and it was largely owing 
to this feeling that it was defeated by the popular vote. (Fifth 
Annual Report of the Bank Examiner of Michigan, p. IX.) 



52 State Bank Legislation. [110 

real property is given as security for a debt, both borrower 
and lender look to it, and not to the personal obligation, as 
the source of payment." 9 It will be seen that this theory 
is predicated on the assumption that the deposits are de- 
mand liabilities, but it is one of the salient features of state 
banking that a large part of the deposits are time liabilities. 
It is not possible to ascertain for all the states what pro- 
portion time deposits bear to those payable on demand, but 
the following table shows the relation in a few typical 
states : 

Demand Deposits. Time Deposits. 10 

Wisconsin (1899) Dec. 2, $19,803,760.83 $23,874,040.77 

Louisiana (1899) Dec. 31, 12,280,772.58 4,092,688.59 

Kansas (1898) July 14, 19,553,081.17 2,841,875.14 

N, Carolina (1898) Sep. 20, 3,822,990.44 389,560.88 

Missouri (1899) Aug. 22, 62,980,924.93 15,469,496.03 

Mississippi (1899) June 30, 9,031,982.28 797,100.12 

New Jersey (1899) Dec. 2, 8,711,107.52 39,044.83 

Indiana (1897) Oct. 20, 9,848,669.15 1,060,933.70 

Illinois (1899) Dec. 4, 94,223,716.40 12,969,561.30 

In the development of a community, there is a period 
when the functions of a savings bank and of a commer- 
cial bank are united in one institution, which has time lia- 
bilities, as well as demand deposits. In an agricultural 
section, these functions continue united, and the bank is a 
place of investment for a portion of its patrons. It seems 
perfectly safe that such a bank should have power to loan 
on real estate security. As industrial life develops, differ- 
entiation sets in, and two kinds of banks emerge — savings 
or investment banks, 11 and banks of discount and deposit. 

9 " Money and Banking," p. 409. 

10 Savings deposits are excluded wherever possible from these 
figures, and only deposits on time certificates included. 

11 Time deposits are usually made in large sums, and so differ 
from savings deposits, which are generally accumulated by degrees, 
but their fundamental similarity for the purposes of this discussion, 
consists in the fact that both kinds are regarded as investments, 
and consequently, are not demand liabilities. 



Ill] Real Estate Loans. 53 

It will be noticed in the preceding table that the state banks 
in New Jersey have practically no time deposits. In other 
words, the separation of the two classes is complete in that 
state. 

The national banking act was not designed to fill the 
needs of the country for banks of discount and deposit, 
except in so far as those needs might be incidentally filled 
by banks primarily intended as a means of note issue. It 
was supposed that banks with $50,000 capital would be 
located in places where they would have no considerable 
amount of time or savings deposits, and it was for such 
banks that the prohibition against real estate loans was 
designed. 12 

Other things being equal, the larger the town, the more 
complete is the separation of savings and commercial 
banks, 18 and consequently, the less ought to be the invest- 
ment in real estate securities. This is the principle adopted 
in the Wisconsin act of 1897 mentioned above, and it un- 
doubtedly ought to form the basis for any legislation as to 
the amount of real estate investments which a bank may 
make. There is reason, however, to believe that self-inter- 
est will effect this without legislation. In smaller places, 
real estate loans yield as high a rate of interest as any 
other investment, but in cities, the rate of interest ob- 
tained on commercial loans is higher than that which can 
be gotten by loans on land, and consequently, banks will 
lend on personal and collateral security by preference. An 
interesting analysis recently made by the Bank Examiner 
of Wisconsin shows that the matter thus works itself out. 
He says, "A classification of the loans and discounts indi- 

" There is a growing disposition to regard a reasonable amount 
of real estate loans as safe for a bank carrying only demand de- 
posits. In most cases, a mortgage, if well secured, is quite as 
convertible as are stocks and bonds, on the security of which all 
national banks freely loan. See, for recent discussion, Banker's 
Magazine, Vol. 54, page 12 (editorial). 

18 In several states in the Middle West, even in the largest cities, 
the banks retain this composite character. See Appendix, p. 112. 



54 State Bank Legislation. [112 

cates that $31,012,220.37, or 77 and 98-100 per cent of this 
class of assets, consists of paper with or without other 
personal security, and $8,749,881.51, or 22 and 1-10 per 
cent, on mortgage or other real estate security. By a 
further classification of the real estate loans, it may be 
noted that in cities of more than six thousand inhabitants, 
real estate loans constitute 8 and 26-100 per cent, and in 
towns and cities of less than six thousand inhabitants, 19 
and 91-100 per cent of the aggregate capital, surplus, and 
deposits." 14 Likewise, the real estate loans made by state 
commercial banks in San Francisco are only 11 per cent 
of the total loans and discounts, while in the state banks 
outside San Francisco, they are over one-third. 10 

There seems, on the whole, no disposition on the part 
of state banks to lock up any large part of their funds in 
real estate securities. Unfortunately, such investments 
are not separately classified in many of the state bank re- 
ports, but the following statistics are probably typical: 

Real Estate Loans. All other Loans. 

California (1899) July 31, $19,131,453 $56,395709 

Kansas (1899) Dec. 2, 1,002,360 18,214,679 

Missouri (1899) April 5, 6,396,005 62,310,630 

Louisiana (1900), June 30, 1,832,688 9,005,621 

N. Carolina (1899) June 30, 713,353 4,087,320 

There may, however, be individual cases where the di- 
rectors of a bank will exceed reasonable limits in this 
respect, and it would appear to be in accordance with the 
general theory of bank regulation that the amount of such 
loans should be limited. 

The power to lend on real estate is profitable to the state 
banks. In many communities, there is not enough com- 
mercial paper to employ the banking capital, and if banks 
are restricted to that form of investment, a large portion 



14 Fifth Annual Report of the Wisconsin Bank Examiner (1899), 
p. IX. 

13 Report of California Bank Commissioners, 1899. 



113] Real Estate Loans. 55 

of banking funds would lie idle, and just so much revenue 
would be lost to the banks. There is reason to believe 
that the national banks in the South and West, although 
located mostly in the larger places, labor under this disad- 
vantage. According to the report of the Comptroller of 
the Currency for 1899, reserves were held at various dates 
as follows: 







Feb. 4. 


Apr. 5. 


June 30. 


Sep. 7. 


Central Reserve 


Cities, 


28.9 


26.4 


25-7 


25 


Other Reserve Cities, 


36.5 


33-5 


31.6 


30.3 


Country Banks 












New England States, 


31-7 


30 


27.4 


27.9 


Eastern States, 




314 


30-3 


28.6 


29-3 


Southern States, 




35-9 


34-9 


32-4 


30 


Middle States, 




35-5 


33-9 


33-8 


33-9 


Western States. 




37-4 


37-7 


40.4 


40 


Pacific States, 




36.0 


38.0 


384 


39-o 



The theory on which the national law rests is that re- 
serve and central reserve cities should carry larger re- 
serves than country banks, while as a matter of fact in the 
greater part of the United States, the contrary is the case. 
The Western states deserve especial attention in this con- 
nection. In this group there are many national banks in 
the smaller towns, and it is here that reserves reach the 
abnormal height of forty per cent. It is not to be sup- 
posed that the average of a number of banks will show a 
reserve anything like so low as the legal minimum, but it 
is evident that when New England banks can use their 
funds so that they only keep about thirty per cent of re- 
serves, while banks in the West must keep forty per cent, 
there are important differences in the loans which can be 
made in the two sections. Very large reserves are by no 
means desirable. They are a standing temptation to un- 
sound banking; they increase the cost of banking and con- 
sequently tend to keep the interest rate high. If the reve- 
nue of the banks is diminished, the rate paid by borrowers 



56 State Bank Legislation. [114 

must, in the long run, be high enough to make up for that 
loss., 

It would be of interest to know for what length of time 
loans on real estate security are usually made by the banks. 
No statistical data bearing on this point can be obtained, 
but there is reason for believing that a large part of such 
loans are for a year or more. There is a great need in 
agricultural sections for loans to cover the time of pro- 
duction. At present, the banker is largely debarred from 
entering this field by the cost of examining titles and 
drawing mortgages. The expense is so great, considering 
the length of time the loan is to run, that credit is usually 
obtained from the merchant. Especially is this true in the 
South, where a large part of agricultural credit is thus 
furnished. This is the legitimate field of the banker, and 
if a system of real estate registration should be generally 
adopted by which the mortgaging of real estate would be 
safe and inexpensive, there can be no doubt that the banks 
would permit such credit, both to their own and to the 
farmer's advantage. In a considerable part of real estate 
loans the mortgage is only a collateral security. The 
bank looks primarily to the personal credit of the indi- 
vidual, but is further protected by an assignment of a mort- 
gage. In many communities, real estate mortgages are an 
important form of investment, and just as in other sections 
bonds and stocks are pledged as security for a loan, so 
here, mortgages are thus used. 18 

However profitable to the bank or economically bene- 
ficial to the community loaning on real estate may be, the 
final test which such a policy must meet is its effect on the 
safety of the bank. It would be difficult to find anywhere 
in the literature of state banks any opinion to the effect 
that such loans, to a moderate amount, tend to cause in- 
solvency. On the contrary, the opposite view is frequently 

19 The Comptroller of the Currency, in his report for 1887, p. 8, 
recommended that the national banking act be amended so as to 
permit this. 



115] Real Estate Loans. 57 

expressed." Whatever the theory may be on the subject, 
as a matter of practice, no complaint is made against real 
estate loans. 

17 " In some sections, it has not been easy to employ the bank's 
funds without taking occasional real estate loans. This class of 
loans is, in some communities, the best paper offered. ... Of 
course, banking institutions have failed, having among their assets 
large holdings of so-called real estate paper, however, where I 
have found opportunity to investigate such failures, I have uni- 
formly found that the cause of the failure was not security — real 
estate or any other — but the lack of it." Essay by J. P. Huston, 
read before the Missouri State Bankers' Association, 1897. Bank- 
ers' Magazine, Vol. 56, p. 869. 



CHAPTER V 
LIABILITY OF STOCKHOLDERS 

Under the common law, stockholders incurred no lia- 
bility in the event of the insolvency of the corporation. 
There has gradually grown up in the courts of the various 
states what is generally known as the " Trust Fund Doc- 
trine," under which it has been held that unpaid subscrip- 
tions to capital stock form a trust fund for creditors, and 
may be collected. The judicial view has been incorpo- 
rated in the statutes of many of the states, until, at the 
present time, this doctrine may be said to be a universal 
rule of law in the United States. Since, however, as has 
already been shown, the laws in nearly all the states re- 
quire stock in a banking corporation to be fully paid up 
either before active operations begin, or within a short 
time afterwards, the question of liability for unpaid sub- 
scriptions has become, except in a few states, of little im- 
portance, so far as banking companies are concerned. In 
Wisconsin, Georgia, Alabama, West Virginia, and Wash- 
ington, a minimum capital of $25,000 is required for banks, 
but only a part of this need be paid in. The same principle 
was applied in the Missouri and Kansas " savings bank " 
laws of 1864 and 1868 respectively. Such provisions affect 
the liability of stockholders only in banks with a smaller 
capital than the required minimum. The laws state, in 
effect, that banks having less than a certain capital need 
special regulation, and this is provided for by imposing 
an additional liability on the shareholders. There seems, 
however, no prospect of an increase of legislation of this 
character. The small bank is no longer an experiment, 
nor can it be shown that it needs special safeguards. 

While the liability for unpaid subscriptions has been one 



11 ;] Liability of Stockholders. 59 

of diminishing importance as banking has been differen- 
tiated from other corporations, the opposite has been the 
case with respect to " statutory liability," i. e., the liability 
of stockholders beyond the amount of the capital stock held 
by them. It was early recognized that banks occupied a 
peculiar position, differing widely from other corporations 
in the fiduciary relations which they maintained to their 
creditors. It was thought just, therefore, that their stock- 
holders should be charged with heavier liabilities. The 
first laws for the regulation of banking proceeded in this 
respect as in others on the principle that it was the note 
holder alone who was to be protected. Thus the antebel- 
lum laws of Maine * and Massachusetts ' imposed the stat- 
utory liability only for the benefit of the creditors who held 
the bills of the bank. In later legislation, the liability 
was restricted to stockholders in banks of issue, 3 but was 
for the advantage of all creditors. By the time of the 
Civil War, it had assumed its present form — a liability to 
the amount of the stock in addition to the stock. It has 
therefore become known as a double liability. 4 With the 
prohibition of state bank issue, and the consequent cessa- 
tion of state regulation of banks, the liability of stockhold- 
ers in banks tended to become the same as that of stock- 
holders in other corporations. With the acceptance of 
the principle that the depositor was entitled to the pro- 
tection of banking regulation, came the renewed imposi- 
tion of double liability as a part of the general scheme of 
banking legislation, 5 until at present, the double liability 

1 Maine (1841), chap. 1, sec. 8. 

2 Mass. (1828), chap. 96, sec. 13. 

3 Constitution of N. Y. (1845), Art. 8, No. 7; Pa. (1850), P. L. 
477. sec. 32. 

4 In a few states — Kentucky, Kansas, Minnesota, and Ohio — the 
double liability is imposed on the stockholders in all corporations. 
In California, they are chargeable with their proportionate part 
of the debts, and under the Indiana law. while not responsible for 
unpaid subscriptions, they are liable for a sum equal to the stock 
held by them. With these exceptions, the liability in the United 
States in other than banking corporations is usually a single one. 

6 In Georgia, the liability is for the exclusive benefit of depositors. 



60 State Bank Legislation. [118 

is imposed in nearly all the states G where state banking 
assumes any great importance. 7 

It cannot be said that the " statutory liability " in the 
state banking systems has proven of very great service as 
a protection to the creditors against loss., While it is im- 
possible to cite statistics on this point since none are in 
existence, an examination of cases adjudicated under such 
laws shows that very little benefit accrues to the depositor 
from such provisions. As yet, little has been done in state 
legislation to make the liability efficacious, but there has 
been a slight movement in that direction sufficient to indi- 
cate the reasons for the failure to produce the results in- 
tended, and to point out the course which future remedial 
legislation will probably take. 

In the first place, it has long been held by the courts 
that the statutory liability is directly to the bank's creditors 
and not to the bank itself as a corporation. In this re- 
spect it differs from an unpaid stock subscription, which is 
held to be an asset of the bank, and collectible by it before 
insolvency. As a consequence of this view, it has been 
held that in the absence of statutory provisions, the re- 
receiver of a failed bank, who succeeds to the rights of the 
corporation, can collect an unpaid stock subscription, but 
cannot enforce the statutory liability, since it is not an asset 
of the bank. 8 There are two distinct lines of decisions as 



"The list includes: Rhode Island, Pennsylvania, New York, Mary- 
land, West Virginia, South Carolina, Florida, North Carolina, 
Kentucky, Louisiana, Kansas, Nebraska, North Dakota, South 
Dakota, Oklahoma, Michigan, Minnesota, Wisconsin, Iowa, Illi- 
nois, Ohio, Indiana, Wyoming, Colorado, Utah, New Mexico, 
Washington. 

7 The most notable exception is Missouri, whose constitution, 
Art. XII, sec. 9, restricts liability to " the amount of stock owned." 
Some Southern states, notably Virginia, Mississippi, Louisiana, 
Tennessee, lack this feature of banking regulation. With the 
exception of Louisiana, these are states chartering banks under an 
undifferentiated incorporation law. 

8 The courts in Washington have taken an opposite view; Wat- 
terson vs. Brook, 15 Wash. 511. 



119] Liability of Stockholders. 61 

to the method which creditors must adopt in order to se- 
cure the payment of the liability. The first is that the 
remedy is by an action at law. In such a suit, the creditor 
sues for himself, some one or more of the stockholders of 
the bank. The creditor who first brings suit obtains a 
favored position with respect to others. This was the 
method followed under the New York antebellum law for 
some years." The objection to the law action is that the 
proceeds of the liability should be divided among all credit- 
ors, and one should not be permitted to get, by superior 
diligence, a more than proportionate share of whatever may 
be collected. In a struggle for priority, creditors for small 
amounts fare badly. Another objection to the remedy at 
law lies in the fact that suits are multiplied. Each creditor 
must maintain a separate suit. In a very early case in 
Massachusetts, 10 it was held that the suit at equity was the 
proper proceeding, since in this way, all parties could be 
joined in one action, and the proceeds might be distributed 
proportionately. The equitable remedy has proven so 
slow and costly in practise, 11 that it affords little security to 
the creditor, although more than the action at law, it seems 
in harmony with the general trend of banking legislation 
which is toward putting all creditors on an equal footing. 12 
The suit at equity has been adopted by the majority of the 
state courts as the preferable remedy. 

The impracticability of leaving the liability to be en- 

8 Bank of Poughkeepsie vs. Ibbetson, 34 Wend, 473. 

10 Crease vs. Babcock, 10 Metcalf, 125. 

"The Ohio Supreme Court said: " By reason of the great num- 
ber of stockholders, the frequent transfers of stock, the decease of 
parties, and of other causes, delays, vexatious expensive and 
almost interminable seem to be inevitable in such proceedings, so 
much so that such liability has grown to be looked upon as fur- 
nishing next to no security at all for the debts of the bank." 
44 Ohio St. 318. 

12 This tendency is seen in the prohibitions of executions and 
preferences contained in the national bank act and several of the 
state laws, the design being to have assets divided proportionately 
among creditors. 



62 State Bank Legislation. [120 

forced by creditors was recognized in the antebellum bank- 
ing laws of several states., The New York act of 1849 gave 
the receiver of an insolvent bank the power to enforce the 
liability. The same thing was effected in Massachusetts 13 
and Maine I4 by somewhat later statutes. The national 
banking act contains the same provision. In the majority 
of the states, however, the liability was enforceable until 
quite recently exclusively by the creditors. It has only 
been since the revival of state bank regulation that any 
improvement has been made in this respect, and the ten- 
dency is to continue the earlier line of development, and 
transfer the right to collect the liability to the receiver. 15 
There seems a general consensus of opinion that the re- 
ceiver can collect the liability more cheaply and quickly 
than the creditors." 3 

Unless there are statutory provisions to the contrary, it 
is a general rule of law, with few dissenting decisions, that 
the statutory liability is a secondary, and not a primary, 
one. The stockholder is not responsible to the creditor as 
a principal, but only after the assets of the corporation have 
been exhausted. The liability cannot be enforced until it 
has been ascertained, and it is necessary, therefore, that 
the affairs of the insolvent corporation shall be well ad- 

13 Mass. (i860), chap. 167, sees. 1, 2. 

14 Me. (1855), chap. 164. 

15 Such laws are: N. Y. (1897), chap. 441; Neb. (1895), chap. 8, 
sec. 35; Kan. (1898), chap. 10, sec. 14; la. (18 G. A.), chap. 208; 
Wis. (1897), chap. 303, I, sec. 7 (this act was defeated, however); 
Minn. (1895), chap. 145, sec. 201; Mich. (1889), Act. 205, sec. 46. 

16 The Supreme Court of Washington, in Watterson vs. Master- 
ton, 15 Wash. 511, said: "If any proof had been needed that the 
method pointed out in that opinion for enforcing the contingent 
liability (t. e., by receiver) was demanded by public policy, and was 
in the interest of all classes interested in the bank, such proof 
is furnished by the record in this case. After great expense, and 
the waste of much time for the purpose of establishing the facts 
necessary to authorize the enforcement of the liability in behalf 
of creditors against stockholders, such creditors were in no better 
condition than the receivers were before they had commenced this 
proceeding." 



121] Liability of Stockholders. 63 

vanced toward settlement, before the amount due can be 
ascertained. Usually, therefore, a considerable time must 
elapse before any action can be taken which will bind the 
property of the shareholder. In the meanwhile, it fre- 
quently happens that the liability can be evaded by the 
transfer of property. 17 An efficient way of remedying this 
defect is to declare the liability a primary one, accruing 
immediately on the insolvency of the bank. It is probable, 
however, that the passage of such laws would bring about 
an evil greater than the one cured. When a bank failure 
occurs, there is always a check to the business of the com- 
munity. A partial paralysis seizes its industrial life. At 
such a time, to proceed at once to collect the full liabilities 
of stockholders would prove a very great impediment to 
the rapid recovery of normal industrial activity. If in- 
solvency of the bank imposes a lien on the property of the 
shareholders, much the same effect would be produced. 
The power of readjustment would be hampered at the very 
time when there is greatest need of it. 

Despite the inconvenience of treating the liability as a 
primary one, there has been some movement in that direc- 
tion. Thus, in Nebraska, it was enacted in 1895 that " such 
liability may be enforced whenever such banking corpora- 
tion shall be adjudged insolvent, without regard to the 
probability of the assets of such insolvent bank being suffi- 
cient to pay all its liabilities." 1S In the interpretation of 

17 The same difficulty in the enforcement of liability was evi- 
dently felt in the antebellum systems. The appointment of a 
receiver in Maine constituted a lien on the real estate of share- 
holders to the amount of their liability. With the great increase 
in personal property proportionately to realty, it is doubtful if 
such a provision would now afford very much help. 

18 Neb. (1895), chap. 8, sec. 30. On account of constitutional 
provisions peculiar to Nebraska, this section has been held uncon- 
stitutional. Farmers Loan & Trust Co., 49 Neb. 353; State vs. 
German Savings Banks, 50 Neb. 735. The Nebraska court recog- 
nized, however, the motive leading to the passage of the act. It 
said: "The policy of the statute is to afford a speedy and some- 
what summary remedy for creditors of insolvent banks, and to 



64 State Bank Legislation. [122 

the Iowa statute, 19 the Supreme Court has held that the lia- 
bility created is primary, and it is not necessary to exhaust 
assets before enforcing it, but the assessment may be for 
the full amount, and any surplus remaining after the com- 
plete settlement of the trust, may be refunded. 20 The same 
view is taken of the statutes in California 21 and Wisconsin. 22 
As yet, however, the old doctrine requiring the preliminary 
exhaustion of assets is little touched by statutory innova- 
tions. 



enable the receiver for their benefit to promptly enforce all liabili- 
ties of stockholders; . . . the danger attending upon any process 
requiring securities to be immediately sold often on a falling 
market, or at a sacrifice, or if that danger be avoided, the still 
greater danger of delaying resort to proceedings against stock- 
holders until such a time that by death or insolvency the remedies 
become ineffectual. . . . We may further acquiesce in the position 
of counsel that for the effective winding up of insolvent banks, 
and the protection of depositors, a remedy against stockholders 
should be permitted before, by the slow process of liquidation, 
other assets shall have been exhausted. State of Nebraska vs. 
German Savings Bank, 50 Neb. 740. 
10 Iowa (18 G. A.), chap. 208. 

20 The Court said in the case of State ex rel Stone, Attorney- 
General, vs. Union Stock Yards Bank: "The liability for the 
payment to create the fund is not made to depend on the applica- 
tion of the fund, but on the fact of insolvency." " The liability is 
primarily for the full amount, subject to such an interest as will 
entitle him to any balance unexpended." 70 N. W. 772. 

21 Morrows vs. Superior Court, 64 Cal. 383; Hyman vs. Coleman, 
82 Cal. 650. 

22 Booth vs. Dear, 96 Wis. 516. 



CHAPTER VI 

STATE BANK FAILURES 

The final test of the safety of any system of banking is 
to be found in its statistics of insolvencies. The aim of 
legislation is to reduce the number of bank failures to a 
minimum, and, when they do occur, to procure the pay- 
ment of a maximum percentage of claims. Unfortunately, 
the data in the case of state banks are of such a character 
as to make it almost impossible to reach any very definite 
conclusions as to the rate of insolvency. The states, as 
has been said, have been reluctant to give the officers 
charged with the execution of the banking laws any con- 
trol over failed banks, and it is in only a few states that any 
official statistics are procurable on the subject. 

Various attempts have been made by the Comptroller of 
the Currency to procure information on this point. In his 
report for 1879, Mr. Knox summarized the results of an 
investigation into failures of state, private, and savings 
hanks occurring during the three preceding years. 1 The 
number of such banks failing in that period was 210, and it 
was estimated that 66 per cent of the claims would be paid. 
The eighty-one national banks which failed prior to 1879 
had paid a slightly smaller percentage of claims, but the 
national system showed a much lower percentage with re- 
spect to the number of failures. It must be borne in mind 
that these figures class together state, private, and savings 
banks in such a way that the statistics for each class sepa- 
rately cannot be ascertained. At that time, of 4312 banks 
other than national in existence in the United States, only 
1005 were state banks. 2 Consequently, these figures prove 

1 Report of Comptroller of Currency, 1879, p. 35. 
1 Report of Comptroller of Currency, 1879, p. 57. This includes 
trust companies. 
9 



66 State Bank Legislation. [124 

very little as to banks in the state systems, unless it is 
assumed that state, private and savings banks fail at the 
same rate. 

In 1895/ the Comptroller undertook another investiga- 
tion of similar character to that of 1879, and in 1896, the 
inquiry was continued., The banks reported as having 
failed, were not separated into classes, but were grouped 
together as " banks other than national." It was found, 
that as far as could be ascertained, 1234 banks of this 
character had failed since 1863, and that they had paid 
under fifty per cent of the claims against them. 4 Another 
inquiry into the same subject, but confined to the question 
of the percentage of claims, was made by the Comptroller 
in 1899; it was found that 283 state, private, and savings 
banks failing between 1893 and 1899, had paid 56.19 per 
cent of all claims against them. 5 Evidently the statistical 
information contained in the Comptroller's Reports, so far 
as we have yet examined, is useless for our purpose, since 
there is no possible way of separating state banks from 
other classes. This fact has not always been recognized, 
and erroneous statements as to the relative safety of the 
state and national systems have resulted. The Indianapolis 
Monetary Commission in its report said: " The total num- 
ber of national banks which have failed since the estab- 
lishment of the system was, at the end of 1897, 352 or 6.9 
per cent of the 5095 which had been organized. As against 
this, 1234 failures of state banks are known to have occur- 
red in the same period. The total number of state banks 
in operation during the year 1895-1896 was 3708, adding 
the 1234 failed banks, a total of 4942 is obtained, and 
though a certain number have doubtless gone into liqui- 
dation, or for some other reason do not appear in these 
figures, it seems safe to say that probably about twenty 

3 Report of Comptroller of Currency (1895), Vol. I, p. 20. Id. 
(1806), Vol. I. p. 52. 

4 Id. (1899), Vol. I, p. 648. 

The number of failures in these years was more than 283, but 
only for these was the information as to claims procurable. 



125] State Bank Failures. 67 

per cent of the total number of state banks organized dur- 
ing the period in question have failed. This would be a 
percentage nearly three times as high as that of the na- 
tional banks which failed during the period." 6 The error 
made, consists in considering all of the 1234 failures as 
those of state banks, while that number includes at least 
some private and savings banks. The term " state bank " 
is used in the Comptroller's report but synonymously in 
this case with " bank other than national." ' There is 
abundant internal evidence that private banks were consid- 
ered by some examiners as within the scope of the inquiry. 
Indiana, for example, is reported as having had JJ failures 
since 1873, while from reports to the State Auditor, it is 
certain that the number of state bank failures since 1873 
has not exceeded twelve, and before that time there were 
practically no state banks in Indiana during the period in- 
vestigated. It is uncertain how far private banks are in- 
cluded in the tables but many of them certainly are. 8 It 
is quite impossible to show from such data anything as to 
the relative rate of state and national bank failures. It 
may be doubted if any system of banking in this country, 
even in an entire absence of regulation would show as 
high a rate of insolvency as that ascribed to state banks by 
the Commission. Regulation of the banking business is 
undoubtedly helpful in keeping down the number of fail- 



6 Report of Monetary Commission, p. 277. 

7 The results of the investigation are to be found in the Report 
of the Comptroller of the Currency for 1896, Vol. 1, pp. 52-57. 
The paragraph is headed " Results of an investigation relative to 
insolvent state banks from 1863 to 1896 " but in the headings of the 
tables the expression " banks other than national " is uniformly 
used, and an examination of the letter of inquiry sent out to the 
bank examiners and on the answers to which the tables rest, shows 
that the two terms are used indiscriminately. In the first paragraph 
of the letter the investigation is said to be " relative to failed banks 
other than national " while later on the same banks are spoken of 
as " these State Banks." 

* It is significant that of the 1234 failed banks, 233 were reported 
as having had no capital. 



68 State Bank Legislation. [126 

ures, but to suppose that, if banks were left to go with a 
free rein, they would fail three times as often, is to overrate 
the value of governmental oversight quite as much as it 
has been common to undervalue it. 

Fortunately we have still another source of information. 
Since 1892 the Bradstreet Company has furnished the 
Comptroller annually with information by states as to all 
bank failures in the country. The banks are classified into 
state, savings, and private. The following table compiled 
from this source forms the only accurate body of statistics 
on the subject of state bank failures." 

According to the table, 336 state banks have failed since 
1892, but this does not include the entire number of insol- 
vencies, which may properly be classed as those of state 
banks: 1. State and savings banks are confused to a cer- 
tain extent in these returns. In some states, stock savings 
banks are classed as state banks, consequently a certain 
part of the bank failures, termed those of savings banks by 
Bradstreet's, should be included in state bank insolvencies. 
The total number of failures of savings banks was 92, and 
of these, 26 were in states where there was no possibility 
of confusion, because the state and savings banks are sepa- 
rated. There will, therefore, have to be added to the 336 
state bank failures, 66 of stock savings banks. 2. In one 
year, 1892, the returns of Bradstreet's, as given in the table, 
do not cover the entire period, but only extend over six 
months. The Comptroller, in his report for 1893, page 13, 
gave the number of state bank failures for the latter half 
of 1892 as eighteen. Making these additions, the total 
number of insolvencies of state banks for 1892-1899 is 

9 The statistics of assets and liabilities given by Bradstreet's are, 
from the nature of the case, merely estimates, and are not included 
in the table. The statements as to number of failures have been 
compared, wherever possible, with returns of insolvencies in 
official reports, and, with an exception noted below, found to be 
highly accurate. Since the method of collecting the returns used 
by Bradstreet's is the same everywhere, it seems probable that, 
taken as a whole, the reports are correct. 



127] 



State Bank Failures. 



69 



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70 State Bank Legislation. [128 

found to be 420. The average number of banks of this 
class in operation during these years was 3823.. It will be 
noted, however, that in the table no returns are given of 
insolvencies in North and South Dakota. 10 The average 
number of banks in these states for the past eight years 
has been 167. Deducting this amount from the average 
for all the states, we have 3656 as the number to be used 
in ascertaining the rate of insolvencies., It seems, there- 
fore, that over eleven per cent of the average number of 
state banks in operation failed during the period from 
J892 to 1899. In the same time, 225 national banks be- 
came insolvent, while the average number of such banks in 
operation was 3703, so that the percentage of insolvencies 
was six, or a little over one-half of that of the state banks. 
At first sight, this seems to prove conclusively the much 
higher safety of the national system, but some consideration 
will lead us to see that the difference is by no means as 
significant as it appears. The period which the statistics 
cover was an abnormal one. The most lengthy and se- 
verest depression known in the history of the United States 
extended over the greater part of these years, and it is a 
well-known fact that the crisis was most keenly felt, and 
had its greatest effect, in those parts of the country in 
which the state banks are numerically strongest. The 
mass of banks, incorporated under state laws, are found in 
the Southern, Western, and Pacific states. The state sys- 
tems are also comparatively strong in the Middle States, 
with the exception of Illinois, Indiana, and Ohio. Out of 
a total of 4200 state banks nearly 3500 are located in these 
groups. On the other hand, of 3590 banks in the national 
system in 1899, on ty I 57° are m these sections. The im- 
portance of this fact cannot be exaggerated in its effect on 
the statistics of insolvencies since 1892. On the one hand, 
five-sixths of the state banks are in those states which suf- 



10 This was caused by the fact that state laws forbid the collection 
of such information. 



129 J State Bank Failures. 71 

fered most from the depression, while less than one-half of 
the national banks are located there. Apart from any 
question of superiority of systems, economic conditions 
have powerfully affected the statistics of failures. 

It is possible to determine more exactly what effect this 
difference in situation has had on the figures embodied in 
the table. Of 225 failures of national banks, 164 were 
in the sections named, and as has been said, the number of 
national banks located there was 1570. The rate of fail- 
ures was, therefore, somewhat in excess of ten per cent. 
We may conclude then that section by section, the national 
system has a superiority over the state systems of little 
more than one per cent. 

It must also be borne in mind that the regulation of state 
banks is by no means homogeneous in efficiency. In the 
figures given, state banks are indiscriminately mingled. 
It is fair to assume that state regulation promotes safety, 
since on no other ground can the national system be sup- 
posed to be superior. The period from 1887 to 1899 was 
most prolific in laws providing for state inspection. Prac- 
tically, we may say state banking began as a system in the 
former year. It is reasonable to infer that this legislation 
has tended to the safety of banks. Considering all this, it 
may be safely asserted that the figures do not prove that 
state banking, wherever proper safeguards are provided, 
is any less safe than national. Even taking good with bad, 
the advantage of the national system in superior safety 
seems small. 

This view of the question is confirmed by the expressed 
opinion of the head of one of the largest state systems. 
The Superintendent of Banking of New York said some 
years since: 11 "The Comptroller of the Currency, in his 
last report to Congress, in making a comparative statement 
of the percentage of failures between national and state 
banks, seems to be unable to make the result favorable to 



Report of Superintendent of Banking (N. Y.), 1893, page XXI. 



72 State Bank Legislation. [130 

the national banks without including under the head of 
state banks, also private banks and bankers, and in many 
of the states, loan and trust companies .... which are 
under no supervision whatever. The comparisons should 
therefore be disregarded as unfair and unjust. From some 
knowledge of the subject, I venture to say that if a com- 
parison is made between national banks and the incorpo- 
rated state banks only of various states of the Union, the 
showing will not be unfavorable to the state banks." 



PART II.— THE STATE BANK AS A CREDIT AGENCY 
CHAPTER I 

THE GROWTH OF STATE BANKING 

During the past twenty years there has been a remark- 
able increase in the number of state banks. This growth, 
however, has been little remarked since correct statistics 
have not been readily accessible. 1 Thus, the Comptroller 
of the Currency recently said, 2 " By reference to the state- 
ment of the resources and liabilities of the state banks from 
1873 to 1897 it will be noticed that with but one exception 
there has been an uninterrupted increase in the number of 
banks reporting, which is due rather to legislative action 
providing for the collection of banking statistics than to 
an actual increase in the number of existing banks, 
although there has been a normal increase each year." The 
latter part of this statement is entirely inaccurate. The in- 
crease of state banks shown by the successive annual re- 
ports of the Comptroller is an actual growth and not a 
mere phantasm of increase caused by the increasing accu- 
racy of the reports. The Comptroller has neglected to 
consider the increase which took place in the majority of 
states before official reports were begun. For example, 
according to reliable unofficial sources, Tennessee had 
eighteen state banks in 1877 and one hundred and thirty- 
nine in 1899. 8 Up to the latter year, the Comptroller's re- 
ports, which are based almost exclusively on official data, 
showed only a small number of banks in this state. If in 

1 See below, p. 108, et seq. 

2 Report of the Comptroller of the Currency, 1897, Vol. I, 
p. xxxiii. 

3 See Appendix, p. 114. 



74 



The State Bank as a Credit Agency. 



[132 



1899, Tennessee had inaugurated a system of bank super- 
vision, the interpretation put by the Comptroller on the 
resultant increase in the number of state banks reported 
would be that it was caused by " legislative action provid- 
ing for the collection of banking statistics " ; that the banks 
had always been there but had only now come to be reck- 
oned. This would be very nearly a true explanation of the 
large apparent increase for that particular year but not of 
the growth since 1877. The true state of the case is that 
the numbers of state banks as given by the Comptroller 
for successive years, do show a real increase but they re- 
flect it only spasmodically and indirectly. The following 
parallel columns show this quite clearly. 

No. of state banks . . , 

as given in the Report Approximately 
of the Comptroller of correct number of 
Years. the Currency. state banks. 1 

1877 592 823 

1878 475 815 

1879 616 814 

1880 /620 816 

1881 652 820 

1882 672 848 

1883 754 937 

1884 817 1022 

1885 975 1120 

1886 849 1214 

1887 1413 1526 

1888 1403 1732 

1889 1671 2093 

1890 2101 2552 

1891 2572 3051 

1892 3191 3457 

1893 3579 3662 

1894 3586 3662 

1895 3774 3767 

1896 3708 3877 

1897 3857 3937 

1898- 3965 4008 

1899 4191 4215 

1 See explanatory note to appendix for method of obtaining figures in 
this column. 

Tt will be seen that the increase in the number of state 
banks has been especially rapid since 1886. In that year 
they were far outnumbered by both private and national 
banks, but in 1899, they formed the most numerous class 



133] The Growth of State Banking. 75 

of banks in the country'. The following" table shows the 
number of private, state and national banks at certain 
dates : 4 

1879 1884 1889 1894 1899 

National, 2055 2550 3158 3786 3590 

State, 814 1022 2093 3662 4215 

Private, 2545 3458 4215 3844 4168 

Of the whole number of banks of discount and deposit 
operating in the United States on January i, 1900, con- 
siderably over one-third were incorporated under state laws 
while in 1879 ^ ess tnan one-sixth were of that character. 
A class of banks which has gained so rapidly on its compet- 
itors cannot properly be said to have been experiencing 
merely a " normal " increase. 

The rate of increase of state banks, however, has by no 
means been the same in the different sections of the 
country.' In the New England States, the number of state 
banks is less than it was in 1877. Under the early pro- 
visions of the national bank act, the amount of circulation 
was limited and apportioned in fixed sums among the 
states. In the Eastern States this limit was soon reached 
and new banks were debarred from the profit to be ob- 
tained on note issue. The result was that the number of 
state banks was increased somewhat but on the removal of 
the restriction on circulation, the banks went over in con- 
siderable numbers to the national system. In 1877, there 
were 227 banks, organized under the state laws, in the 
Eastern States; by 1887, the number had fallen to 202. 
Since that time, there has been some growth of state bank- 
ing in these states but chiefly in New York. Of a total in- 
crease of 131 banks in the group since 1887 over two-thirds 

'The figures for national banks are from the Report of the 
Comptroller of the Currency, 1900, Vol. I, p. 255; the numbers of 
private and state banks are taken from the tables contained in 
the Appendix. 

5 This and the following observations are based on the statistics 
of state banks contained in the Appendix, pp. 114, 115. 



76 The State Bank as a Credit Agency. [134. 

are in that state. Compared with the growth in the country 
as a whole, this increase is almost negligible. It may be 
said that the New England and Eastern States seem to have 
no need for state banking. 

The case is not much different in the more southeasterly 
of the Middle States. The growth here, while apparently 
considerable, has been largely in savings banks in Ohio. 
Of the 144 state banks reported for that state in 1898 about 
90 were of that character. 6 In both Indiana and Illinois 
there has been a moderate increase in state banks, using the 
term in its strict sense. 

Leaving Illinois, one enters the field of greatest im- 
portance for the development of state banking. The re- 
maining states of the Middle West, the Southern, Western 
and Pacific States show since 1877 an enormous expansion 
in the numbers and importance of state banks. In all this 
great territory there is hardly a state with the exception 
of Texas, 7 in which the relative and absolute importance 
of state banking has not grown decidedly during the period 
under consideration. In the following table the number of 
state banks is given for each group of states for the years 
1877 and 1899: 



New England States, 
Eastern States, 
Ohio, Indiana, Illinois, 
Other Middle States, 
Western States, 
Southern States, 
Pacific States, 







Percent- 
age of 


1877 


1899 


increase. 


27 


22 


—19 


227 


333 


47 


87 


358 8 


312 


20I 


1 194 


495 


39 


956 


2351 


197 


1077 


446 


45 


275 


5ii 


823 


4215 


412 



8 Knox, " History of Banking in the United States," p. 690. 

7 See p. 15. 

8 Of these 358 banks, not more than 270 are banks of discount 
and deposit. 



DIAGRAM SHOWING NUMBER OF PRIVATE, STATE AND NATIONAL 
BANKS, 1877-1899. 



ft 






























































s 






^ 


^rr 












/ 








/ 


/ 




















y 






/ 












p»»£lL. 


/ 
























/ 






HATIOHAL^ 






























































/ 














a 


5TAT£ 










































































/ 


1877 18 


i9 /a 


81 /8 


83 18 


85 IB 


87 IB 


8? 18 


V 18 


?3 /a 


?S 18 


97 18 


?9 



135] 



The Growth of State Banking. 



It will be readily seen that the growth of state banks 
since 1877 nas Deen considerable only in the four last 
groups while in the first three it has been of small import- 
ance. 

Not only in the growth of state banks but also in their 
present importance compared with national and private 
banks the same broad division of the states may be made. 
The following table shows the relative strength in numbers 
and capital of the three classes of banks for the year 1899: * 

Table showing the Number and Capital of National and State 
Banks by Groups of States for the year 1899. 1 





National Banks 
(Dec. 1, 1898.) 


State Banks. 


Private 
Banks. 


Group. 


u 


a 
55 


" m do 

25 ° 
°a 


q-i 

~ zt E - 

<8p 




3 

3 


flo . 
pSo 




.0 

a 




583 
956 
583 
461 
538 
346 
123 


156.4 
192.1 
95 
62.1 
63.9 
31.1 
20 


268 
201 
163 
135 
119 
90 
163 


23 

333 

358 

1194 

1077 
956 

275 


3.7 

42.8 

26 

54.5 

60.7 

16.5 

35 


161 
128 
72 
45 
56 
17 
127 


198 




813 


Ohio, Ind., Ill 

Other Middle States. . . 
Southern 


1108 

1237 

416 

301 


Pacific 


95 



1 The figures for the number and capital of national banks are taken 
from the Report of the Comptroller of the Currency; those for the number 
of state and private banks from the tables in the appendix. The capital 
of state banks has been estimated from data in the Report of the Comp- 
troller of the Currency on the assumption that omitted banks have the 
same capital as those reporting in each group. 

In the New England, Eastern, and the more south- 
easterly of the Middle States, neither in numbers nor in 
capital do the state banks equal the national ones, although 
it is to be noted that they gradually increase in importance 
in the groups in the order named. In every other section 
of the country the state banks are at least twice as numer- 



8 Capital is not given for private banks since in only a few- 
states can even approximate estimates be obtained. 



78 The State Bank as a Credit Agency. [13G 

ous as the national banks and approximate them in the 
capital invested; in one case, that of the Pacific states, 
surpassing them. 19 

The growth of state banks shows three fairly well-de- 
fined periods since 1877. Until 1885 the increase was by 
no means rapid, the average yearly accessions being about 
forty. From 1885 to 1893, the growth was enormous. 
During this period, about 300 new banks came into the 
state systems each year. The consequence was that in 
those eight years the number was trebled. Since 1893 the 
increase has been slower. 



10 Prof. Dunbar pointed out the same facts in somewhat different 
form in an article in the Quar. Jour. Econ. for Oct., 1897. The 
statistics used by him were taken entirely from the reports of the 
Comptroller of the Currency and consequently differ in some 
respects from those used here. 



CHAPTER II 

CAUSES OF THE GROWTH OF STATE BANKS 
Since private and national as well as state banks are 
banks of discount and deposit, the disproportionate in- 
crease of state banks must be explained by their superior 
advantages over one or both of the classes competing with 
them. It must be noted, however, that the national and 
private banks have almost exclusive fields of operation, for 
very few private banks have a capital sufficiently large to 
enable them to organize under the national bank act. 1 The 
state bank on the contrary is a rival of both the other 
classes since its capital requirements are in many cases low 
enough to make it possible for private banks to become in- 
corporated if they desire to do so. The causes, then, which 
have led to the increase of state banks may be divided into 
two categories accordingly as they have been influential in 
giving the state bank an advantage over the private or the 
national bank. 

State versus Private Bank. — There are two distinct func- 
tions which private banks fulfill, (i) as an adjunct of the 
brokerage business in large cities; (2) as a means of fur- 
nishing credit in small communities, chiefly in agricultural 

1 According to the returns made to the internal revenue officials 
in 1882, the average capital of private banks in the United States 
was $33,000. In the Middle States, where they were numerically 
most powerful, the average capital was under $20,000. It is im- 
possible to ascertain for all sections the average capital of private 
banks at the present time, but it is improbable that it is higher 
than $15,000 for the whole country. This estimate is based on the 
returns made under the internal revenue law of 1898. (Report of 
the Comptroller of the Currency, 1899, Vol. I, pp. 298, 209,). State 
and private banks are confused, but since for many states the 
number and capital of state banks are known, that of private banks 
can be found. In the Middle States the average capital of private 
banks is estimated by this method to be considerably below 
$10,000. 



80 The State Bank as a Credit Agency. [138 

sections. It is in the latter of these capacities that they enter 
the same field, as the small state banks. The chief char- 
acteristic of both classes is small capitalization. In a sec- 
tion with a sparse population, if banks are to be had at all, 
they must be of small capital, since the business which can 
be obtained does not justify the investment of large sums. 
If the banks can issue currency, their field of operation can 
be somewhat extended beyond that of banks doing only a 
discount and deposit business and their average capital 
may profitably be somewhat higher. 

The westward extension of the settled area in this 
country has continually called into existence banks of small 
capital. In 1850 the banks of Ohio, Indiana and Illinois, 
even those issuing notes, were small compared with simi- 
lar credit agencies in the East. There is evidence also, 
although statistics cannot be cited that even the $25,000 
banks of Ohio, Indiana and Illinois, although they were 
banks of issue, were too large to be profitably operated in 
places having only a small banking business. 1 Private 
banks were, therefore, set up in many of the villages. When 
the national bank usurped the place of the state bank, a still 
wider field was created for the private bank since under the 
national act places which could not profitably employ a 
banking capital of $50,000 were forced to resort to private 
institutions. It is true that the old state banking acts re- 
mained on the statute books, but their provisions were en- 
tirely unsuited to banks doing only a discount and deposit 
business. The rapid settlement of the West which followed 
the Civil War required an ever-increasing number of small 
banks, and since the state laws were framed on the theory 
that the government could properly concern itself only with 
banks of issue, private banks had almost a monopoly of the 
banking business in the smaller centers. The following 

1 Thus in Davis vs. McAlpin (1858), Ind., 10; 137, the Court 
said: "Private banks of discount and deposit must have existed 
to a very limited extent, if at all, in the early period of our 
legislation. But in later years, they have become numerous and 
are discharging a large portion of the banking business." 



139] The Causes of the Growth of State Banks. 81 

table shows with what rapidity, under these conditions, the 
growth of private banks proceeded: 

NUMBER OF PRIVATE BANKS 2 

1877 2432 

1888 4064 

1899 4 J 68 

In the period 1877- 1888 the rate of increase was nearly 
sixty-eight per cent, but from 1888 to 1899 it was less 
than three per cent. This has come about despite the fact 
that the private banks in the larger cities have been con- 
tinually growing. The diminution in the number of pri- 
vate banks in the small towns has nearly counterbalanced 
the increase of broker's banks. That this check to the 
growth of private banks has been caused in considerable 
degree by the preference for the chartered bank is evident 
if one considers the growth of state banks of small size, 
as shown in the following table: 

NUMBER OF STATE BANKS HAVING A CAPITAL OF LESS THAN 

$50,000 3 

1877 187 

1888 747 

1899 2529 

The chief reason for the partial supplanting of the pri- 
vate bank is the advantage of the corporate form of organi- 
zation in giving greater security to the depositor and con- 
sequently increasing the credit of the bank. The desire to 
obtain a charter cannot become effective, however, unless 
the capital requirement is sufficiently low to permit the 
private banks profitably to make the transformation. If 
the business of a locality will only support a bank with a 
capital of $5000, and the state laws require a minimum capi- 
tal of $25,000 for an incorporated bank, the extra credit 
which might be obtained will not be a sufficient induce- 
ment to bring about the change to the state system. The 
lowering of the capital requirements 4 has consequently 

2 See table, p. 82. 8 See table, p. 82. * See ante, p. 27. 

10 



82 



The State Bank as a Credit Agency. 



[140 



been a potent cause in furthering the growth of small state 
banks. 5 The following self-explanatory table enables us 
to see in what sections and to what extent the state bank 
has displaced the private bank. 

Number of Private Banks and op small State Banks (i. e. having a 

CAPITAL OF LESS THAN $50,000) BY STATES FOR THE YEARS 1877, 1888, 1899. 





1877. 


1888. 


1899. 


States. 


State Banks, 

less than $50,000 

Capital. 


w 

M 

1 


o 
ciso- IS 

5g 


GO 

s 

m 

CD 
g 

Pm 


Ill 
s-£o 


DO 

M 

a 
pq 

S3 


Me 




8 




12 




8 


N. H. .. 




2 




3 




2 


Vt 




1 




2 




1 


Mass 




52 




74 




160 


Conn 




14 




19 




16 


R. I 




5 




7 




11 


Total N. E. 














States . . 




82 




117 




198 


N. Y 




289 


12 


256 


63 


446 


N. J 




10 


8 


6 




4 


Pa 


30 


306 




243 




316 


Md. ...... . 




23 


2 


19 


6 


43 


Del 




3 




3 




4 


Total East- 














ern States. 


30 


631 


22 


527 


69 


813 


Va 


IS 


30 


24 


30 


47 


27 


W. Va 


6 


8 


12 


3 


47 


4 


N. C 




9 


4 


23 


29 


24 


s. c 


2 


19 


8 


22 


29 


19 


Ga 


3 


39 


4 


71 


42 


42 


Fla 




8 


1 


27 


13 


11 


Ala 




17 


1 


49 


8 


34 


Miss 


o 


21 


3 


15 


56 


5 


La 




7 




14 


36 


8 


Texas 


3 


73 


3 


130 




187 


Ark 




12 


8 


20 


63 


14 


Tenn 


10 


10 


10 


20 


83 


9 


Ky 


11 


36 


27 


36 


76 


32 


Total South- 














ern States. 


55 


289 


105 


460 


529 


416 



5 A " small state bank," in the sense in which the expression is 
used here and in the following pages, is one having a capital of 
less than $50,000. - 



141] The Causes of the Growth of State Banks. 



83 





1877. 


1888. 


1899. 


States. 


5 St 


M 

a 

pq 
o 

> 


•8 

BIO 

fqnS 

lis 

Kg 


03 

© 
03 

> 


old 

S.O03 


w 

C 

a 
3 

03 

£ 


Ohio 

Ind 

Ill 

Mich 

Wis 

Mo 

Minn 

Iowa 


16 a 
2 

2 

12 

25 

6 

13 


219 
111 
282 
131 

70 
104 

49 
201 


15 a 

11 
2 
17 
28 
141 
29 
49 


250 
156 
441 
220 
102 
122 
152 
423 


51a 

47 

S6 ?> 

80 

87 
390 
114 
120 


287 
222 
599 
249 
120 
110 
239 
519 


Total Mid- 
dle States. 


76 


1167 


292 


1866 


975 


2345 


Kans 

Neb 

N. D 

S. D 

Mont 

Wyo 

Col 

N. M 

Okla 


14 
2 

2 

1 


84 
30 

8 

5 

5 

25 
4 


120 
104 

50 

1 
17 

2 


365 
306 

196 

11 
12 
69 
10 


259 

313 

I 103 

| 94 

5 

6 

20 

5 

56 


81 

65 

2 

57 

21 

12 

55 

7 

1 


Total West- 
ern States. 


21 


161 


294 


969 


861 


301 


Wash 

Or 

Cal 

Ida 

Utah 

Nev 

Ariz 


5 


2 
6 

65 
3 
7 

18 

1 


2 

2 
26 

2 

1 
1 


14 
21 
52 
16 

8 
10 

4 


17 24 

15 20 

44 29 

8 9 

4 11 
2 2 

5 1 


Total Paci- 
fic States. 


5 


102 


34 


125 


95 


95 


Total U. 8. 187 2432 i 747 


4064 2529 4168 



a Excludes savings banks. b Includes savings banks. 

Note. — The table is constructed from data found in the various state 
bank reports and in Homans' Bankers' Almanac. 



It will be seen that during the past twenty years private 
banks have been of small importance in the New England 
and Eastern States. The greater number of them are lo- 



84 The State Bank as a Credit Agency. [142 

cated in the cities. Similarly there are very few state 
banks in these sections with a capital of less than $50,000. 
It is only in New York that the small state bank is found 
in considerable numbers. This is partly accounted for by 
the fact that in Pennsylvania and New Jersey the minimum 
capital for state banks is $50,000. Whatever demand for 
small banks there has been in these groups has been met 
by private banks. That it has not been great is evidenced 
by the small number in existence. The stage of develop- 
ment reached makes small banks unnecessary. 6 The $50,- 
000 bank fills the needs of this section. Neither the small 
state bank nor the private bank appears to have any future 
so far as these states are concerned. 

In the Southern States the number of private banks in 
1877 was 289 while there were only 55 state banks of small 
capital. The gradual movement toward incorporation, fa- 
cilitated by the adoption of general laws, has caused a 
complete change in the relative position of the two classes, 
so that in 1899 the state banks were in the ascendancy, and 
if the large number of private banks in Texas is deducted, 
it appears that the small state banks are twice as numerous 
as their rivals. 

It will be noted that in 1899 considerably more than one- 
half of the private banks in the country were in the Middle 
States. Even in 1877, they were well established in this 
section, numbering 1167 as against 106 of the small state 
banks. It is here that the chartered bank has made rela- 
tively its least advance. The high capital requirements 
which have never gone below $10,000 in any state in this 
group, and in most of them not below $25,000 has kept the 



6 Under the amendment to the national act passed March 14, 
1900, up to Sept. 30, 1901, there were organized in the New Eng- 
land and Eastern States seventy four banks with a capital of less 
than $50,000. Of these, thirty-seven were in Pennsylvania and ten 
in New Jersey. It appears that there is but small room for the 
$25,000 bank in any state in these two groups. In all the New 
England States only four such banks were chartered. 



143] The Causes of the Growth of State Banks. 85 

greater part of the banking business in smaller communi- 
ties in the hands of the private bankers. That this has been 
the chief hindrance to the absorption of these banks into 
the state systems is clear from the fact that in those states 
where the required capital is placed at a high sum the 
number of private banks is relatively greater. 7 



No. of State 

Banks with 

less than 

$50,000 capital. 


Private 
Banks. 


Total 


Per cent of 
Private Banks. 


Minimum 

Capital 

required for 

State Banks. 


Ohio, 51 


287' 


338 


•85 


$25,0OO 


Indiana, 47 


222 


269 


.84 


25,OO0 


Illinois, 86 


599 


685 


•87 


25,000 


Iowa, 120 


5i9 


639 


.81 


25,000 


Michigan, 80 


249 


329 


.76 


I5,OO0 


Wisconsin, 87 


120 


207 


•58 


15,000 


Minnesota, 114 


239 


353 


.67 


10,000 



The Western Group is the one in which the conflict of 
the private and the small state bank has been keenest and in 
which the state bank has almost vanquished its rival. Since 
1888, the private banks in this section have declined rapidly 
in numbers. There have been two causes for this transfor- 
mation in the character of the banks. In the first place, 
the necessary capital for the organization of an incorpo- 
rated bank is low, being only $5000 for the distinctively 
agricultural states in this group. But there has been some- 
thing more than mere preference for the corporate form of 
organization which has brought about an almost complete 
abandonment of private banking. The growth of the small 
state banks has been much forwarded here by legislation, 
which has had the effect of causing the private banks in 
large part to become incorporated. In order to under- 
stand the purpose and cause of these laws, it will be neces- 
sary to examine them in some detail. 

7 Missouri is included among the Western States since it is 
similar to them in requiring private banks to have a capital. This, 
as will be shown below, has a considerable effect in influencing 
private banks to become incorporated. 



86 The State Bank as a Credit Agency. [144 

The regulation of the business of unincorporated bank- 
ers is an outgrowth of the general change in feeling as to 
the nature of the banking business. The view that bank- 
ing, even when confined to the discount and deposit func- 
tions is charged with a public use has caused restrictions to 
be imposed on it, although carried on by an individual. 
This regulation assumes several phases. In the first place, 
it has been urged in several states that a private banker 
should not operate under a corporate name. This argu- 
ment has had especial force in states where incorporated 
banks are under state supervision. It has been thought 
just that the public should know with what form of bank- 
ing institution it is dealing. It appears to be quite com- 
mon in some sections for private banks to assume names 
which indicate that they are incorporated. The Public Ex- 
aminer of Minnesota called attention to the fact that in 
1886, of 126 private banks carrying on business in that 
state, 116 had corporate names. 8 The laws of New York," 
Minnesota 10 and Washington u impose no other restriction 
on private bankers. In a few states the regulation of unin- 
corporated banks has gone no farther than the require- 
ment of reports. This is the case in California 12 and Miss- 
issippi. 13 This and the preceding provision evidently aim 
only at the information of the public; they do not profess 
to effectively safeguard the banking business. 

In still another group of states, private banks are put on 
the same footing with incorporated banks as to supervision 
and regulation. Such is the case in North Carolina," New 
Jersey 15 and Wisconsin " which require private banks to 

8 Seventh Report of Public Examiner of Minn., 1886; see also 
Reports of Commissioner of Banking (Mich.), 1892; 1893; 1894. 

9 Laws of New York (1882), ch. 409, No. 311. 

10 Laws of Minn. (1887), ch. 39. 

11 Laws of Wash. (1891), p. 130. 

12 Laws of Cal. (1887), p. 90. ls Laws of Miss. (1888), p. 29. 

14 Laws of N. C. (1887), chap. 175. 

15 Laws of N. J., (1895), chap. 361. 

13 Laws of Wis. (1895), chap. 291. 



145] The Causes of the Growth of State Banks. 87 

be examined and to make reports. 17 In 1897, Georgia sub- 
jected private banks to the same requirements that state 
banks were under, but this law was repealed in 1898. 13 

Supervision of private banks is carried on under diffi- 
culties which render it much more imperfect than in the 
case of incorporated banks. It has already been pointed 
out that the fundamental safeguard under the systems of 
bank regulation used in the United States is a capital. 
Our whole scheme of supervision is built on that require- 
ment, and under the laws in vogue in most of the states of 
the Union, a private banker is not required to have any 
specified amount of capital. In the last group of states to 
be considered it is this defect which an attempt has been 
made to remedy. Missouri was the first state to adopt this 
policy. By act of 1877, private bankers are prohibited 
from engaging in the business of banking without a paid-up 
capital of not less than five thousand dollars, and they can- 
riot employ their capital otherwise than as banks of dis- 
count and deposit are permitted to do. 19 By the act of 
1895 20 they are subjected to the same supervision as incor- 
porated banks, and it is made the duty of the examiner to 
proceed against them in case of impairment of capital. 
The same plan of securing a capital has been tried in Ne- 
braska. The capital required for incorporated and unin- 
corporated institutions for banking is of equal amount, and 
in every respect, except the ownership of real estate, the 
same restrictions are placed on the two classes of banks. 21 
When the first Kansas act for the regulation of the banking 
business was passed, it included, practically, the same fea- 
ture. 22 Section 35 makes private banks " amenable to all 

" Laws of Ga. (1897), p. 59. 18 Laws of Ga. (1898), p. 12. 

19 Private bankers were defined as those " who carry on the 
business of banking by receiving money on deposit, with or with- 
out interest . . . and of loaning money without being incorporated." 
Revised Statutes (1879), sec. 921. 

20 Laws of Mo. (1895), p. 97. 

21 Laws of Neb. (1889), chap. 37, and id. 1895, ch. 8. 

22 Laws of Kan. (1891), chap. 43, sec. 35. 



88 The State Bank as a Credit Agency. [146 

the provisions of this act," and this has been construed so 
as to require such banks to have capital of the same amount 
as incorporated banks. 23 More recently Kentucky has 
adopted the same policy: a minimum capital of $10,000 is 
required for private banks," and in the Utah Revision of 
1898 the Kentucky provisions are copied, 20 except that the 
amount of capital required varies with the size of the popu- 
lation of the place in which the bank is located. 

But in almost all of these states a difficulty has presented 
itself which seems to make the requirement of capital but 
a small protection to the depositor. The private banker is 
frequently engaged in other business besides that of carry- 
ing on the bank, and in the event of his failure, creditors 
other than depositors come in for a share of the assets. A 
corporation, on the other hand, cannot engage in business 
other than that prescribed by its charter. In Missouri and 
Kentucky the law forbids the private banker to use any of 
his funds in other business, but he may use other funds, and 
even without actually engaging in any other business, he 
may accumulate an indebtedness which may prove a severe 
charge on the banking assets. In a recent case in Ne- 
braska, it was held that under the law in that state, " an 
unincorporated bank, exclusively owned by a private indi- 
vidual, is not a legal entity, even though its business be 
conducted by a president and a cashier, and that in such a 
case, the assets of the bank represent merely the portion 
of the owner's capital invested in banking, and he may law- 



23 The Commissioner, in his report for 1892, p. 1, recommends 
that " as to the rights and duties of private banks, the law should 
be made more definite. While sees. 17 and 35 recognize the 
rights of individuals or partners to do a banking business without 
incorporating, yet the other sections of the law seem to have 
been framed for application to incorporated banks only; hence, in 
the construction of the law as to its application to private banks, 
it requires not only a constant recollection of sec. 35, but a vivid 
and analytical imagination as well." 

24 Laws of Ky. (1893), chap. 171, pp. 62, 63, 64, 65. 

25 Revised Statutes of Utah, 1898, sec. 380. 



147] The Causes of the Growth of State Banks. 89 

fully dispose of them to pay or secure the just claims of 
any of his creditors." M In Kansas this question was met 
by an enactment in the law of 1897 that " Any individual 
or firm doing business as a private bank shall designate a 
name for such bank, and all property, real or personal, 
owned by such bank, shall be held in the name of the bank, 
and not in the name of the individual or firm; all of the 
assets of any private bank .shall be exempt from attach- 
ment' or execution by any creditor of such individual or 
firm until all liabilities of such bank shall have been paid in 
full. No private banker shall use any of the funds of the 
bank for his private business." 2 This makes of the private 
banker in Kansas a corporation, to all intents and purposes, 
except that his liability is unlimited, and that he has no 
perpetuity. It is practically the creation of a new sort of 
corporation. The same difficulties have manifested them- 
selves in Wisconsin, where no capital is required for pri- 
vate banks. The State Examiner, in his report for 1899, 
page xii, says: "The main difficulty in supervising the 
private bank is that . . . the individual, or firm, or indi- 
vidual members of the firm may be indebted to outside 
parties to such an extent as to cause the person or firm to 
be insolvent." He doubts, however, whether it would be 
constitutional to prohibit a private banker from engaging 
in other business or to make depositors preferred creditors. 
South Dakota, North Dakota and Oklahoma have dealt 
radically with the problem. They have passed laws re- 
quiring all persons conducting a banking business to be- 
come incorporated. 28 In both South Dakota and North 
Dakota the law was contested as unconstitutional, but with 
different results. The Supreme Court of North Dakota, 
in State vs. Woodmansee, 28 held that the requirement of 

26 Longfellow & Barnard, 79 N. W. 255. 

27 Laws of Kan. (1897), chap. 47. 

28 Laws of N. D. (1890), chap. 23, sec. 27; Laws of S. D. (1891), 
chap. 27, sec. 27; Laws of Okla. (1897), chap. 4, sec. 2. 

29 1 N. D., 246. 



90 The State Bank as a Credit Agency. [148 

incorporation was constitutional, and was a legitimate exer- 
cise of the police power. The South Dakota court took 
an entirely different view of the question, the gist of its 
decision being that banking, except with the right of issue, 
was not a franchise at the common law, and had not been 
made one by the constitution of South Dakota. 80 " Whence 
then," asks the court, " did the legislature of the state de- 
rive its power to farm out these privileges to corporations, 
and to deny to the individual citizen the right to exercise 
them, which he and his ancestors have from time imme- 
morial possessed? " 31 

It is undoubtedly true that banking, even with the 
right of note issue, was not a franchise according to the 
common law. It is equally undeniable that at a compara- 
tively early period the right of issue was confined to incor- 
porated banks, and such banking became a franchise. The 
question would seem to be then by what means the trans- 
formation was effected, or, to put the matter more broadly, 
by what means a franchise may be created. Under our 
system of jurisprudence, is a constitutional provision neces- 
sary to create a franchise, or may it be done by legislative 
act simply? Looking at the question historically it is clear 
that note issue was made a franchise in many states with- 
out the intervention of constitutional provisions. In the 
case of Bank of Augusta vs. Earle, 32 the Supreme Court 
said, " The institutions of Alabama, like those of the other 
states, are founded upon the great principles of the common 
law, and it is very clear that at common law, the right of 
banking in all its ramifications belonged to individual citi- 

30 State vs. Scougal, 3 S. D., 55. The court also found the law 
unconstitutional as being in conflict with certain provisions of the 
state constitution guaranteeing individual rights. It was also 
held to be a violation of the 14th Amendment to the Constitution 
of the United States. These objections evidently depend on the 
answer to the question, "Is banking a franchise?" If that is 
answered in the negative, individual rights would not seem to be 
violated. 

31 Id. p. 57. 32 13 Peters, 595. 



149] The Causes of the Growth of State Banks. 91 

zens, and might be exercised by them at pleasure. And the 
correctness of this principle is not questioned in the case 
of State vs. Stebbins. Undoubtedly the sovereign author- 
ity may regulate and restrain this right, but the constitu- 
tion of Alabama purports to be nothing more than a re- 
striction upon the power of the legislature in relation to 
banking corporations, and does not appear to have been a 
restriction on individual rights. That part of the subject 
appears to have been left, as is usually, for the action of the 
Legislature to be modified according to circumstances, and 
the prosecution against Stebbins was not founded on the 
provisions contained in the constitution, but was under the 
law of 1827 prohibiting the issue of bank notes." 

The view of the North Dakota court was essentially in 
accord with the facts in the case. The purpose of the state 
in requiring incorporation was to exercise more effectively 
its police power. The decision of the South Dakota court 
looks rather at the creation of the franchise. It is this 
difference in the view point which causes the opposition 
in decisions: the one court regards incorporation in our 
modern way as simply an instrument or method of carry- 
ing on a business, while the other looks as it as an end. The 
question has never come before the courts in Oklahoma, 
so that of two decisions, one upholds, and the other denies, 
the right of the legislature to require the incorporation of 
private banks. Regulative acts, even those requiring a 
capital stock, have been uniformly upheld by the courts as 
an allowable exercise of the police power. 83 Even in State 
vs. Scougal, it was. said, "Assuming that the business of 
banking we are now considering is clothed with such a 
public use that it may be controlled by the State — and we 
think it so affected with a public interest, etc." 

The question is one which is evidently exciting an in- 
creasing amount of interest; it seems clear that the best 
plan for the regulation of banks under the present systems 

38 Blaker vs. Hood, 53 Kans., p. 499. 



92 The State Bank as a Credit Agency. [150 

of supervision lies in requiring incorporation. The Secre- 
tary of the State Board of Nebraska, in his Eighth Annual 
Report, commenting on the decision of the Supreme Court 
in Longfellow vs. Barnard, says, " The decision denies to 
an individual engaged in the banking business as a private 
banker the right to set aside any portion of his capital 
as bank capital upon which depositors or other creditors 
of his bank would be entitled to a prior lien, and makes the 
capital of his bank subject to all of his debts, bank and 
otherwise, and makes all of his property, bank capital and 
other, liable for any of his debts, thus placing a private 
bank owned by an individual as a part of any other busi- 
ness in which he may be engaged. If this decision is to 
stand as the law of this state, then should private banks 
owned by individuals be prohibited by law?" Also in 
Kansas, the present law, seemingly going as far in assimi- 
lating an unincorporated bank to a corporation as it is pos- 
sible to go without requiring incorporation, does not sat- 
isfy the Commissioner, for in his report for 1897-1898, 
p. xi, he says, " While some very good lawyers are in doubt 
as to the power of the state to require all banks to incor- 
porate, many of our ablest attorneys express the belief that 
it is within the power of the legislature to designate the 
manner in which this privilege may be exercised. I there- 
fore recommend that our banking law be so amended as to 
require all banks to incorporate. If this recommendation 
should fail of adoption, I recommend that private bankers 
be prohibited from engaging in other business, and that all 
private bankers be required to live within the state." 

The following table shows how important this legislation 
has been in changing the relative position of state and pri- 
vate banks in these states. 



151] The Causes of the Growth of State Banks. 



93 



Number of Private and Small State Banks in States Having Laws 
Prohibiting Private Banks, or Requiring Them to Have a Capital. 34 





1877 


1888 


1899 




Private 
Banks. 


Small 
State 
Banks. 


Private 
Banks. 


Small 
State 
Banks. 


Private ! fmf £ 
Banks. , £** 




84 
30 

8 

104 


14 

2 
25 


365 

' 306 

196 
122 


120 
104 

50 

141 


81 
65 

2 

57 

110 

1 


259 


Nebraska 

North Dakota. . 1 
South Dakota., j 

Missouri 

Oklahoma 


313 
103 

94 
390 

56 


Total 


226 


43 


989 


415 


316 


1215 



With regard to Missouri it will be seen that while small 
state banks are sixteen times as numerous as in 1877, pri- 
vate banks have hardly increased at all. 85 In the remain- 
ing states the number of private banks was at its highest 
in 1888. The decisive years were from 1888 to 1892, for 
it was during this period that the restrictive legislation was 
enacted. In those states of the Western Group in which 
agriculture is a less important industry than mining or 
stock-raising, and in most of the states of the Pacific Group, 
the movement toward incorporation is less marked. The 
capital minimum is higher and no great advance has been 
made in bringing private banks under supervisory control. 

State versus National Bank. — While, as has been pointed 
out, legislation has been a chief cause of the growth of 
small state banks at the expense of private banks, no factor 
of the same kind has operated against the extension of na- 
tional banks. Opposition to the national bank, a pro- 



u In Kentucky and Utah the effect of the legislation is not so 
appreciable, since in neither state is there any large number of 
private banks. In Utah, moreover, the act is too recent for its 
full influence to be seen. 

35 About one-half of the private banks of Missouri have a capital 
of less than $10,000. As has been said, the minimum capital for 
a state bank is $10,000, and many of the private banks would 
probably incorporate if the minimum were lowered. 



94 The State Bank as a Credit Agency. [152 

nounced feature of recent political alignments, has never 
taken the form of an attempt to promote a rival system. 
In so far as the state bank has won a place for itself by the 
side of the national bank, it has done so on purely economic 
grounds. The fundamental reason for the existence and 
growth of small state banks as well as of private banks is 
the small capital requirement. This is, however, quite in- 
adequate as an explanation of the growth of state banks as 
a whole since many of. them have a capital sufficiently large 
to enable them to enter the national system. Preference 
rather than necessity has made and keeps them state or- 
ganizations. 

There are three chief differences between the national 
and the state systems so far as their relative profitableness 
is concerned. In the first place, the national banks have 
the exclusive power and to a certain extent are obliged to 
issue circulating notes. It has frequently been shown that 
the provision of the national act requiring each bank " to 
transfer and deliver to the Treasurer of the United States 
. . . bonds ... to an amount where the capital is one hun- 
dred and fifty thousand dollars or less of not less than one- 
fourth of the capital and fifty thousand dollars where the 
capital is in excess of one hundred and fifty thousand dol- 
lars " 3e imposes a hardship on those banks which do not 
find their circulation a source of profit. From 1887 to 
1899 there was little if any advantage accruing to the banks 
of the South and West from the issue of notes. This result 
was due to the high price of U. S. bonds. The amount of 
circulation which could be secured was much less than the 
cost of the bonds which must be deposited. In order to 
issue $90,000 of circulation, a bank had to pledge $100,000 
of government securities, the cost of which at times ran as 
high as $128,000. The interest on the $38,000 of differ- 
ence was lost. Where the local interest rate was high, this 
loss was sufficient to destroy the profit on circulation. The 

88 U. S. Rev. Statutes, sec. 5159. 



153] The Causes of the Growth of State Banks. 95 

banks of the South and West found therefore in the privi- 
lege of issue no inducement to enter the national system. 37 

Secondly, the provisions of the state laws in regard to 
the character of the loans which may be made by the banks 
are more liberal than those contained in the national act. 
As has already been shown, 38 the state banks in nearly all 
cases are permitted to loan on real estate. Evidently, if the 
bank finds it to its profit to make such loans, other things 
being equal it will prefer the state system. 30 

Finally, since credit is the life-blood of the banking busi- 
ness, that system of regulation which is superior in giving 
to its banks the confidence of the community will attract 
to itself the major part of the business, unless there are 
counteracting forces. It is in only a few states and there 
within a comparatively recent period that the state sys- 
tems can compete with the national in this respect. Where, 
however, there are a large number of state banks and the 
supervision is of a high order, there seems little to choose 



87 The diminishing profit on national bank circulation has been 
discussed by many recent writers on banking and currency: White, 
" Money and Banking," p. 418 et seq. ; " Report of the Monetary 
Commission," pp. 180-191, and by the late Prof. Dunbar, " The 
Bank Note Question." Quar. Jour. Econ., Oct., 1892, p. 55. 

38 See ante, p. 50. 

39 In one other respect the state laws allow a freer extension of 
loans. The national act provides that " the total liabilities to any 
association of any person or of any company, corporation or firm 
for money borrowed, including in the liabilities of a company or 
firm the liabilities of the several members thereof, shall at no 
time exceed one-tenth part of the capital stock of such association 
actually paid in." (Rev. Stat's, sec. 5200). In most of the state 
laws there are somewhat similar restrictions, but usually the part 
of the capital which may be loaned to one person is larger than 
one-tenth. It does not seem, however, that this can be of very 
great influence in making organization under the state law desir- 
able, since the national banks violate this part of the law with 
impunity. The Comptroller of the Currency in his report for 1900, 
p. xx, says: " On June 29, 1900, 1575 banks of the 3732 that were 
active on that date, constituting nearly two-fifths of the entire 
number of banks in the system, reported loans in excess of the 
limit allowed." 



96 



The State Bank as a Credit Agency. 



[154 



on this score between the two forms of organization. The 
rapid growth of state legislation designed to secure more 
effective control of the banking business, has undoubtedly 
contributed much to strengthen the state institutions by- 
giving them better credit. 

These then are the main factors which must be consid- 
ered in attempting to understand the growth of state banks 
of large size as compared with that of national banks. It is 
to be noted that the importance of the first two considera- 
tions is largely determined by sectional conditions, since 
the rate of interest and the desirability of making real estate 
loans vary in different parts of the country. The last con- 
sideration is largely secondary, tending to intensify a pref- 
erence proceeding from one of the other two. When for 
any reason a class of banks has obtained an ascendancy, 
the public becomes accustomed to them and use gives 
confidence. The following table will enable us to weigh 
the influence of each of these factors. 



Number of Large State Banks [i. e. those having a capital of $50,000 

OR MORE) AND OF NATIONAL BANKS BY STATES FOR 1877, 1888 AND 1899. 



States. 


1877. 


1888. 


1899. 


State B'ks, 

$50,000+ 


National. 


State B'ks, 
$50,000+ 


National. 


State B'ks, 
$50,000+ . 


National. 


Maine 

N. H 

Vt 

Mass 

Conn 

R. I 


9 

I 

i 

15 


71 
46 
46 
237 
81 
62 


1 

's 

10 


75 
49 
49 
253 
84 
60 


8 
6 


82 
52 
49 
250 
79 
56 


Total N. E. 
States. . . . 


27 


543 


19 


570 * 14 


568 


N. Y 

N. J 

Pa 

Md 

Del 


81 
12 
83 
15 
6 


281 
69 

232 
32 
13 


110 

7 
4 


322 

85 

313 

48 

18 


144 327 

21 108 

90 436 

6 69 

3 19 


Total East- 
ern States. 


197 


627 


198 


786 


264 959 



155] 



The Causes of the Grozvth of State Banks. 



97 





18T7. 


1888. 


1899. 




State B'ks, • N r 0+ ,^ T , ol 
$50,000+ j Natl0nal - 


S $ a 5 t 0?aS+ 8 ' National. 


State B'ks 
$50,000+ 


National. 


Va 

W. Va 

N. C 

S.C 

Ga 

Fla 

Ala 

Miss 

La 

Texas 

Ark 

Ky 

Tenn 


22 

9 

3 

2 

24 

6 
5 
9 

10 
1 

43 
8 


19 

15 
15 
12 
12 
1 
10 

7 
12 

2 
46 
25 


40 

14 

10 

11 

27 

3 

8 

12 

6 

4 

5 

56 

35 


26 
20 
18 
16 
24 
13 
21 
12 
13 
100 
7 
69 
42 


42 
28 
16 
35 
71 
13 
34 
36 
18 

23 

129 

56 


36 
34 
29 
16 
27 
15 
26 
12 
20 
199 
7 
75 
47 


Tot. South- 
ern States. 


142 


176 


231 381 


501 


543 


Deducting 
Texas .... 


132 


164 


227 


281 


501 


344 


Ohio 

Ind 

Ill 

Mich 

Wis 

Minn 

Mo 

Iowa 


28 
11 
30 
24 
12 

76 
18 


165 
99 

144 
80 
41 
31 
30 
78 


10 

22 
29 
54 
36 
32 
97 
77 


219 
94 

182 

109 
59 
56 
50 

129 


51a 

47 

696 
108 

46 

35 
105 

87 


255 
115 
217 
80 
78 
69 
63 
172 


Total Mid- 
dle States. 


206 


668 


357 


898 


548 


1049 


Kans 

Neb 

N. D 

S. D 

Mont 

Wyo 

N. M 

Col 

Okla 


12 
6 

\ ;; 

4 


15 
10 

1 

5 

2 

2 

13 


57 
54 

24 

5 

2 
3 


160 
104 

58 

17 
9 
9 

34 


26 

{ I 

5 

2 
10 


98 
100 
23 
25 
21 
11 

6 
36 

8 


Total West- 
ern States. 


22 


48 


145 


391 


75 


32S 


Wash 

Or 

Cal 

Ida ....... 

Utah 

Nev 

Ariz 


38 
2 


1 
9 

1 

1 


2 

7 

75 

1 

2 
4 


24 

27 
38 
7 
7 
2 
1 


14 

15 
129 
4 
7 
5 
2 


31 

28 

35 

9 

11 

1 

5 


Total Paci- 
fic States. 


40 


12 


93 


106 


176 


120 


Total U. S. 


634 


2074 


1043 


3132 


1578 


3567 



a Excludes savings hanks. b Includes savings hanks. 

Note. — The table is compiled from the official returns whenever 
accessible, otherwise from data contained in Homans' Bankers' Alma- 
nac. The number of national banks is for October of each year. 



98 The State Bank as a Credit Agency. [156 

Grouping the states, we find a decided preference for the 
national system in the New England and Eastern States. 
The field is more equally divided in the Middle States while 
in the Southern and Pacific Groups the large state banks 
are in the majority. Lastly, the Western States have four 
times as many national as large state banks. It is quite 
clear that an explanation based solely on the lack of profit 
from note issue cannot satisfactorily account for such a 
distribution., The rate of interest is certainly as high in the 
Western States as in any other part of the country. If we 
enter the groups, the inadequacy of such a solution be- 
comes still more manifest. California prefers the state sys- 
tem while Oregon and Washington, with higher interest 
rates, have invested the larger part of their banking capital 
in national banks. If the profit made on circulation were 
the controlling force the preference for the state systems 
would be in direct proportion to the rate of interest prevail- 
ing. It is by no means true, however, that the declining 
profit on note issue has not been a powerful factor in caus- 
ing changes to the state systems. But this influence has 
rather been a negative one. As long as large profits could 
be made on circulation, the banks could afford to forego 
the advantages which might be obtained by incorporation 
under the state laws. This is well illustrated by the case of 
the Southern States. Until 1888, the national banks were 
in the majority in nearly every state in the South, but in 
1899 the state banks were much the more numerous class. 40 

Leaving out of count the great manufacturing states, if 
we arrange the other states of the Union according to their 
preference for the national as against the state systems 
we find that it is in almost exactly inverse ratio to their 
stage of economic development. Where the state as yet 
needs external credit for the exploitation of its agricultural 
resources the national bank is far more important than the 
large state bank. In North Dakota and South Dakota, for 

40 Excluding the Texas banks for reasons heretofore given. 



157] The Causes of the Growth of State Banks. 99 

example, the national bank has almost a complete monopoly 
of the field; the state banks being nearly all of less capital 
than $50,000, while in Michigan, Missouri, 11 California, and 
in nearly all the Southern States, the state systems are de- 
cidedly preferred by the larger banks. Wisconsin, Min- 
nesota, Iowa, Kansas and Nebraska form an intermediate 
class in which the two systems divide the business more or 
less evenly. 42 

That these differences are closely connected with varia- 
tions in the profit which can be made on real estate loans 
seems evident. While the amount of such loans cannot 
be ascertained for many of these states, the obtainable data 
point to the fact that in the newer states lending on real 
security is not practised by the banks to any large extent. 
In Kansas only five per cent of the total loans of the state 
banks are on such security, while in California the banks 



41 Mr. Thornton Cooke, in an article in the Quar. Jour. Econ., 
Vol. xii, p. 72, " The Distribution of State Banks in the West," 
after examining the states of North Dakota, South Dakota, Kansas, 
Nebraska and Missouri, finds that in Missouri alone of these states 
is the state banking system preferred. He attributes this to the 
fact that the state banks became firmly established in Missouri 
while the national bank circulation was restricted. While the 
long existence of a system of banking has undoubtedly powerful 
influences, a wider study would have shown that Missouri is only 
a type of a whole group of states. 

42 No particular stress is laid upon the exact order in which the 
states are placed. In some of them, the state banks are of a com- 
posite character, both receiving savings deposits and doing a com- 
mercial business. (See Appendix, p. 112). In such states the 
number of state banks is naturally somewhat larger proportionately 
than in those states where the two classes of banks are distinct and 
the savings banks are not included in state banks. There can be 
no question also that differences among the states in the banking 
laws and in the efficiency of their administration produce important 
results. Thus, the excellent system of state supervision in Mich- 
igan has promoted the growth of state banks. It is clear, how- 
ever, that between such states as Georgia, Missouri and California 
on the one hand, and North and South Dakota on the other, there 
are fundamental dissimilarities, affecting their preference for the 
state banks, and transcending minor causes of inequality. 



100 The State Bank as a Credit Agency. [158 

make over one-third of their loans on real property. 43 It 
is not without significance that it was not until 1899 tnat 
the laws of North Dakota permitted the state banks to make 
such investments of their money. Even now in Oklahoma, 
the law prohibits real estate loans by the banks. If in 
these states any considerable profit could be derived from 
business of this character such laws could not be passed in 
the face of the almost universal practise to the contrary in 
other states. 44 

It is not difficult to understand why in a state largely de- 
pendent on external credit, banks find it little to their in- 
terest to make loans on real estate. In such sections the 
chief form of property for a considerable time is personal, 
consisting of animals, implements, etc. Especially is this 
the case where stock-raising is the typical industry. Land, 
in such localities has so slight a value that it has little im- 
portance as a security for loans. But even after land has 
acquired a commercial value, it cannot always be made the 
basis for the extension of bank credit. Whether it can or 
not will depend on the condition of the locality as to its 
dependence on external capital. There is an unfavorable 
balance of trade against every new and rapidly-developing 
community. Capital is being brought in and invested in 
improvements which will ultimately perhaps more than pay 
for themselves but cannot do so immediately. It is land 
that is offered as security for this credit. If the banks in 
such a locality attempt to supply this need they must settle 
the balance against the section and consequently will be 
stripped of so much of their reserves. 

If a community has reached a stage where it is no longer 
dependent on capital from other sections or what amounts 
to the same thing, where it is no longer buying more than 
it is selling, the banks will no longer labor under the same 

43 See ante, p. 54. Note also the large real estate loans in 
Mo., Wis., etc. 

** It has already been mentioned that in Wisconsin a banking 
law was defeated in 1898 because it restricted real estate loans. 



159] The Causes of the Growth of State Banks. 101 

disadvantage with respect to real estate loans. What A 
sends out will be compensated for by what B brings in. It 
is an old saying that banks cannot create capital and it finds 
its practical application at the present time in the inability 
of Western banks to make long-time loans on real estate. 

There is also a positive reason for the preference exhib- 
ited in the newer states for the national bank — a reason 
closely connected with their need for external capital. The 
stock of national banks is probably a more attractive in- 
vestment for Eastern capitalists than the stock of state 
banks. The Eastern investor is well acquainted with the 
provisions of the national bank act and little informed as to 
the state banking laws. Consequently the promoters of 
banks needing a larger capital than they can secure at 
home, organize under the national system because by so 
doing they can attract foreign investors. In his report for 
1897 the Comptroller of the Currency analyzed the distri- 
bution of national bank shares. The following table shows 
the proportionate part held by non-residents for certain 
sections. 

Number of Shares held by 

Percentage held 

Residents of Non-residents. by 

the State. Non-residents. 

Southern States 556,483 115,169 20 

Middle States 1,380,223 225,228 16 

Western States 216,601 110,940 51 

Pacific States 128,422 49,728 38 

Also within the groups the less-developed states show 
a higher percentage of shares held by non-residents. Cali- 
fornia, for example, has less foreign investment in her na- 
tional banks than any of the other states in the Pacific 
Group. 

So far, then as the relative importance of the large state 
bank and the national bank is concerned, the states may 
be divided into three classes. In the first, comprising the 
New England and Eastern States together with Indiana, 
Ohio and Illinois, banking may be said to have reached a 
high degree of specialization so that banks of discount and 



102 The State Bank as a Credit Agency. [100 

deposit confine themselves exclusively to loans on personal 
security. 43 The feature of this group of states is that manu- 
facturing and commercial occupations are predominant. 
The banks are able to employ their funds fully in loaning 
on commercial paper. The agricultural states fall into two 
classes, in one of which the large state bank is preferred to 
the national bank because real estate loans can be profitably 
made, while in the other class, the national system is su- 
perior in numbers on account of the impossibility because 
of economic conditions of making long-time loans for per- 
manent improvements. 

A study of the effects produced by the recent amend- 
ments to the national bank act confirms the view that the 
decrease in the profit on circulation has not been the con- 
trolling factor in the growth of large state banks. The Act 
of March 14, 1900, lowered the minimum capital required 
for national banks in smaller towns to $25,000 and elimi- 
nated almost entirely the effect of differing local rates of 
interest on the profit from note issue. The latter end was 
accomplished by raising the amount of circulation which 
might be issued from 90 to 100 per cent of the par value 
of the bonds deposited and by refunding a considerable part 
of the national debt at two per cent, thus furnishing a bond 
on which the premium would be considerably less than on 
any formerly used as a basis for note issue. Thus the dif- 
ference between the cost of bonds and the circulation was 
reduced to almost nothing and consequently the profit on 
bank circulation was made very nearly as large in those sec- 
tions where interest is high as in those where it is low. 
There has resulted a considerable increase in the circulation 
of the national banks of the South and West. 46 

45 It is by no means intended to imply that a whole group of 
states, or even a single state, is of a uniform type. There are, of 
course, agricultural sections in New York as well as in Missouri 
or N. Dakota, and so there are some state banks in New York, 
but agriculture is not the industry which gives form to the greater 
part of the banks. 

48 See Report of Comptroller of Currency, 1900, Vol. I, pp. 343, 
344- 






161] The Causes of the Growth of State Banks. 103 

Two courses were open to the state banks, either to 
enter the national system and lose the advantage of lend- 
ing on real estate or to remain state banks and forego the 
profit to be made on note issue. Since the profit on circu- 
lation was practically the same throughout the country, the 
relative gains of the national system in the various sections 
furnish an index to the valuation placed by the banks on 
the privilege of making loans on real property. The fol- 
lowing table shows the result. 47 

State Banks with a Nat. Banks Organized 

Capital of $35,000+ from March 14, 1900 

active, Jan. 1, 1900. to Sept. 30, 1901. 

N. Y 207 27 

W. Va 55 12 

N. C 25 8 

Fla 13 2 

Ga 95 6 

Miss 65 2 

La 31 7 

284 37 

111 155 40 

Mich 157 9 

Wis 135 18 

Minn 57 28 

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Mo 197 9 

908 157 

Kans 84 21 

Neb 100 20 

N. D 12 12 

S. D 16 9 

Okla 6 37 

218 99 

California 147 9 

During the time the act has been in operation there has 
been in most parts of the country a steady betterment in 

47 The table is compiled from the state bank reports for the date 
nearest to Jan. I, 1900, on which the banks reported. Only those 
states are included for which official returns were obtainable. The 
numbers of national banks organized are taken from the leaflet 
issued by the Comptroller of the Currency on Sept. 30, 1901. 



104 The State Bank as a Credit Agency. [163 

business conditions, in consequence of which many new 
national banks would have been formed without legislation; 
but it is clearly true that to some extent banks have been 
induced to leave the state systems and organize under the 
national law. The noteworthy point is that the gains have 
been made in those states where the national bank was 
already strong. The newer states have transformed their 
$25,000 state banks into national banks. Thus in North 
Dakota and South Dakota, of the twenty-one banks organ- 
ized, twenty were of less capital than $50,000 and the only 
reason seemingly that they were not in the national system 
before was that the capital requirement was too high. The 
states which formerly preferred the state system still pre- 
fer it. While there were 500 and more state banks in Mis- 
souri, Michigan and California of sufficient capital to or- 
ganize as national banks if they had desired only twenty- 
seven new national banks have been formed. The same re- 
sult is seen in the South, the national system has gained but 
little and that mostly in those states which formerly used 
national banks to a considerable extent. 

It seems clear that the lack of profit on circulation has 
been a minor element in determining banks to go into the 
state system. Far more important is the power to loan on 
real estate, the ability to combine in one institution the func- 
tions of a savings bank and of a bank of discount and de- 
posit. This is the fundamental cause for the growth of 
large state banks. 

The future of state banking will depend on several things. 
In the first place, it is evident that if the profit on circula- 
tion is increased by Congressional legislation, the gain to 
be obtained may be sufficient to draw the larger state banks 
into the national system. At the present time, the increas- 
ing premium on the two per cent bonds is making note 
issue less profitable and it is difficult to see how, if the pres- 
ent plan of securing the notes by bond deposit is retained, 
any further changes in the law can give the banks more 
profit. If that system is abandoned, and a method of issu- 



163] The Causes of the Growth of State Banks. 105 

ing notes upon the basis of banking assets is adopted, the 
banks now operating under state charters may find it to 
their interest to give up the business of loaning on real 
security in order to obtain a greater gain from circulation. 
Whether they will do so or not will evidently depend upon 
the provisions of the new law. Until there are radical 
changes in the national bank act, the circulation privilege 
will not be a sufficient incentive to induce changes to the 
national system in the South and the more fully developed 
states of the West. 

It seems likely that as such states as Kansas and Ne- 
braska become less dependent on external credit for the 
development of their agricultural resources they will find 
their needs better met by banks which can loan on real 
estate., There are signs that this movement is in progress. 
In his report for 1899-1900 the Kansas Bank Commissioner 
says : " Believing there is no better security than a first 
mortgage on good Kansas land, where reasonable judg- 
ment is exercised with respect to the amount of the loan 
I have been disposed to favor this class of loans and have 
urged our banks to carry a reasonable amount of same 
. . . the amount of real estate loans held by our banks is 
gradually increasing, being $300,000 greater at this time 
than at the date of my last report." The time is not per- 
haps far distant when the large state bank will dominate the 
banking business in such states as fully as it does in Geor- 
gia or in Missouri. 

The Act of March 14, 1900, in so far as it drew into the 
national system banks formerly organized under state laws, 
had a tendency to weaken the forces making for the better 
regulation of state banking. The growth of state super- 
vision has gone pari passu with the increase in the number 
of state banks; while there were few of such institutions it 
was only natural that their regulation should be more or 
less neglected. As they have increased they have become 
more and more the objects of legislative attention. It is 
not an accident that supervision reaches its highest devel- 



106 The State Bank as a Credit Agency. [164 

opment in those states where the state banks are most nu- 
merous. With a further lowering of the capital minimum, 
the national system would probably absorb still more of the 
state banks in some states. The evolution of state super- 
vision would thus receive a set-back. The question is thus 
raised whether it will be advisable to bring into the na- 
tional system still smaller banks. The answer must de- 
pend on what conception is entertained of the function of 
national banks. If it is considered desirable to have a 
national system of supervision for as many banks as pos- 
sible and this is regarded as the primary aim of legislation 
there seems no good reason why the very smallest banks 
should not be admitted into the system. 

But the national bank is not only a bank of discount and 
deposit, it is also a bank of issue. Up to the present time 
we have been able to have small banks of issue because the 
safety of the note has been secured by the bond deposit. 
Before the introduction of this method of guarantee, in 
none of the states were the banks of issue of small capital. 48 
To permit $25,000 banks to issue a credit currency would 
probably be hazardous. 49 

It was the invention of the bond deposit as a security for 
note issue which made it possible for the small bank to 
become a note-issuing bank; it is the failure of a bond-se- 
cured circulation to supply the needs of the country which 
makes it impossible for the small bank to continue as a 
note-issuing bank. If the national bank is to be considered 
primarily as a bank of circulation, and it is to issue notes 
based on banking assets, the minimum capital seems 
already too low. It is a mistake to suppose that every 
bank of discount and deposit must also be a bank of issue. 
It is pertinent, therefore, in view of the urgent need of a 
reform in the method of note issue to ask why it would not 

48 They were either large independent banks, or branches of large 
banks. 

49 See Taylor, " The Object and Methods of Currency Reform 
in the United States," Quar. lour. Econ., Vol. XII, p. 307. 



165] The Causes of the Growth of State Banks. 107 

be best in future legislation to have a single eye to the one 
truly national function of the national bank and to leave to 
the state systems the regulation of all other banks. Already 
the states supervise savings banks, trust companies and 
such of the banks of discount and deposit as find their needs 
more fully met than under the national system. It has 
been shown in the first part of the present essay how 
promptly and efficiently the state legislatures have re- 
sponded to the need for bank supervision. That they could 
be safely trusted with the control of whatever banks it was 
thought best to exclude from the national system is certain. 
The smaller banks remaining national are a hindrance to 
the better regulation of the banking currency; in the state 
systems they would give added impetus toward better state 
supervision. 



APPENDIX 

Explanatory Note. 

The accompanying table, showing the number of state 
banks by years and states, is based on three sources of in- 
formation : 

I. Reports of the Comptroller of the Currency. 
II. Reports by state banking officials. 
III. Unofficial statements. 

(a) " Homans' Bankers' Almanac and Register."' 

(b) " Rand and McNally's Bankers' Guide.," 

I. Reports of the Comptroller of the Currency. 

The first official attempt to collect statistics of banking 
for the whole country was made in 1833 under a resolution 
passed by the House of Representatives on July 10, 1832. 
From that time until 1863, with the exception of some few 
years, the Secretary of the Treasury regularly included 
in his reports information regarding the number of state 
banks in the United States. In his annual report for 1863, 
Secretary Chase recommended the discontinuance of the 
practise, and no further information with regard to state 
banks was given in the succeeding reports of the Treasury 
Department. By act of Congress in 1873, 1 the Comptroller 
of the Currency was required to report to Congress, " a 
statement exhibiting under appropriate heads the resources 
and liabilities of the banks, banking companies and sav- 
ings banks organized under the laws of the several states 
and territories, such information to be obtained from the 
reports made by such banks, banking companies and sav- 

1 Rev. Stats, of the U. S., sec. 333. 



167] Appendix. 100 

ings banks to the legislatures or officers of the different 
states and territories, and where such reports cannot be 
obtained, the deficiency to be supplied from such other 
sources as may be available." 

Until 1887, the Comptroller included in the tables of 
state banks only those banks which made returns to some 
state official. 2 These statistics were reported to the Comp- 
troller by the authorities in the various states. From 1887 
to the present time, information has been gathered by direct 
correspondence, concerning banks located in states whose 
laws require no reports. The fullness of these returns 
has depended entirely on the disposition of the banks to 
give the information asked for. As a matter of fact only 
a few banks have made the reports. The statistics con- 
tained in the Comptroller's Reports, in so far as they are 
based on unofficial data are therefore quite incomplete. 

From 1875 to 1882 the reports of the banks to the Com- 
missioner of Internal Revenue, given as a tax return, were 
tabulated by the Comptroller and included in his reports. 
It was only in the summaries for 1880, 1881 and 1882 that 
the numbers of private, state and savings banks were shown 
by states. Since the repeal of the law imposing an internal 
revenue tax on banks no complete official enumeration of 
banks other than national has been made. 3 

II. Reports by State Officials. 

The state reports are the primary source of information 
with regard to state banks. They are compiled from re- 
turns made by the banks under law and consequently are 
entirely accurate. The statistics contained in the Comp- 



2 There was a sporadic attempt in 1876 to gather information as 
to other banks, but it was abandoned in 1877. 

8 The internal revenue law of 1898 imposed again a tax on banks 
and afforded an opportunity for the compilation of a similar table, 
and this has ostensibly been done (Report of Comptroller of 
Currency, 1900, Vol. I, pp. 297-300), but in reality private and state 
banks are inextricably confused. 



.110 Appendix. [168 

troller's reports are valuable only in so far as they are 
based on the state reports. 

In the compilation of the accompanying tables the state 
reports have been used to correct and supplement the 
figures given by the Comptroller of the Currency in the 
following ways: 

(i) In some cases, when official statistics as to the num- 
ber of state banks were obtainable, they have not been used 
by the Comptroller. For example, since 1891 state banks 
in West Virginia have been required to make reports to 
the State Auditor. The number of state banks in West 
Virginia are thus given by the Comptroller and by the 
Auditor: 

Comptroller's Report. Auditor's Report. 

189I 19 42 

1892 27 45 

1893 ....45 55 

1894 26 56 

1895 58 58 

1896 59 60 

1897 66 68 

1898 41 74 

1899 75 75 

Evidently for several of these years the Comptroller, for 
some reason, has not availed himself of the information col- 
lected by the state authorities, but has relied on incomplete 
voluntary returns. Wherever, as in this case, a discrep- 
ancy has been found between the numbers given in official 
state reports and those in the Comptroller's reports the 
former have been used. 

(2) In several states the returns of private and state 
banks as given by the Comptroller are not separated. It 
has been found possible in most cases by resorting to the 
state reports to remedy this defect. In Mississippi, how- 
ever, a few private banks are included in the number of 
state banks as given in the table. 



169] Appendix. Ill 

(3) The Comptroller's office has pursued a varying policy 
with regard to the classification of stock savings banks in 
Iowa and Michigan. Until 1886, all banks in Michigan 
operating under state charters were classed as state banks 
but in that year they were divided into state and savings 
banks. Again in 1887 they were all reported as state 
banks, but in 1888 the division was again made and retained 
until 1893. Since that time the early method of classing 
them together as state banks has been followed. The 
banks of Michigan are nearly all banks of discount and de- 
posit, many of which carry on in addition a savings bank 
business. Whatever classification is made of them should 
be a uniform one, and it has seemed most in accordance 
with the facts to consider them all as state banks. Conse- 
quently the numbers for 1886, 1888, 1889, 1890, 1891, 1892 
given in the Comptroller's reports have not been used in 
the tables but the numbers given by the Bank Commis- 
sioner of Michigan for all state banks have been substi- 
tuted for them. A similar situation presented itself in the 
case of the Iowa banks. Since 1875 savings and state 
banks have been classed separately by the state officials. 
Until 1886 they were grouped together as state banks by 
the Comptroller but after that time they were separated. 
The numbers given for the earlier years by the Comptrol- 
ler have been replaced in the table by those of the State 
Auditor. 4 

In many cases the official reports do not separate stock 
savings banks and state banks. 8 The amount of this con- 
fusion may however be defined. According to " Rand and 
McNally's Bankers' Guide" for 1899, there were in the 



* Since the Auditor's reports up to 1887 were biennial, returns 
are only obtainable for alternate years; the intervening years have 
been filled by taking an average of the preceding and succeeding 
numbers. This method of interpolation has been used in several 
other places in the table. 

B This is true also of " Homans' Bankers' Almanac," the use of 
which in the preparation of the table is explained below. 



112 Appendix. [170 

United States in that year 1331 savings banks of all kinds. 
Of these, none of the mutual savings banks of the New 
England States, N. Y., Pa., Del. and Md., amounting to 
663 banks are included in the table as state banks. 
Also in the following states the stock savings banks are ex- 
cluded from the enumeration of state banks: Fla., Col.. 
Iowa, La., Minn., N. C, Texas, Utah and 111. These 
amount to 308 banks. So that of 133 1 savings banks 360 
are classed with the state banks in the table. There are 
very few savings banks in the Southern and Western States. 
The states in which the number of savings banks which 
cannot be separated is largest are Pa.,, 6 Ohio., Mich., Wis. 
and Mo. In the last three states there are no distinct sav- 
ings banks/ Many of the state banks combine the func- 
tions of savings banks and of banks for discount and de- 
posit. To some of them the savings bank business is im- 
portant, but in the greater number it is subsidiary. 

III. Unofficial Statements 

Even after the statistics given by the Comptroller have 
been supplemented and corrected as far as possible by the 
official state reports, there still remains a considerable num- 
ber of states for the banks of which official information is 
lacking either for all or a part of the period 1877-1899. As 
has been said before, the Comptroller since 1887 has col- 
lected statistics for such states by direct communication 
with the banks, but he has secured returns from such a 
small part of the banks that the information given is of no 
value in determining the number of banks. 

In order to fill in these gaps unofficial data have been 
used in the preparation of the table. Since 1873 " Homans' 
Bankers' Almanac and Register " has given annually the 
number of state banks in each state. There are reasons for 
believing that the numbers given by " Homans' " are ap- 

8 Stock savings banks. 

7 There is one such bank in Wisconsin. 



171] Appendix. 113 

proximately correct. They closely correspond for the years 
1880, 1881, 1882 with the numbers contained in the official 
enumeration made by the Commissioner of Internal Reve- 
nue. The substantial accuracy of the " Homans' " statis- 
tics is also indicated by the fact that whenever a state has 
adopted a system of bank supervision the exact returns 
thus obtained show that the " Homans' " figures for pre- 
vious years were very nearly correct. 



The table showing the number of private banks by years 
and states has been made up entirely from data contained 
in " Homans'." Official statistics of the number of pri- 
vate banks can be obtained for only a few states, and with 
regard to those for only a short period. It has seemed 
best, therefore, to use throughout the unofficial information. 





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(117) 



INTERNAL IMPROVEMENTS 
IN ALABAMA 



Series XX No. 4 

JOHNS HOPKINS UNIVERSITY STUDIES 

IN 

Historical and Political Science 

(Edited 1882-1901 by H. B. Adams.) 

J. M. VINCENT 

J. H. HOLLANDER W. W. WILLOUGHBY 

Editors 



LNTERNAL IMPROVEMENTS 
IN ALABAMA 



By WILLIAM ELEJIUS MARTIN 

Professor of History in Emory and Henry College 



BALTIMORE 
THE JOHNS HOPKINS PRESS 

PUBLISHED MONTHLY 

APRIL, 1902" 



Copyright, 1902, by 

JOHNS HOPKINS PRESS 



Zfc £orb (gaUimoxt (pre 

THE FRIEDENWALD COMPANY 
BALTIMORE, MD. 



PREFACE 

This paper is an effort to trace the development of the 
public highways of Alabama, and to point out their in- 
fluence upon immigration and settlement. It indicates 
briefly what has been done within the state by the Fed- 
eral Government in improving rivers and harbors and in 
aiding the construction of railroads ; and discusses finally 
the policy of Alabama respecting public aid to such works. 

I wish to acknowledge my indebtedness to the late Pro- 
fessor Herbert B. Adams and to Professor J. M. Vincent, 
from both of whom I received helpful instruction in the 
methods of historical study; also to Dr. J. C. Ballagh for 
the suggestion of this topic and for his continued interest 
during the progress of the work. 

Johns Hopkins University, 
June, 1901. 



CONTENTS 



Chapter I.— Development of Highways. 

Indian Paths 9 

Trading Roads 12 

Federal Roads 15 

Stage and Express Lines 27 

Road System of Alabama 29 

Chapter II.— River and Harbor Improvements. 

State Aid 33 

Improvements by the Federal Government 42 

1. The Tennessee -42 

2. The Chattahoochee 48 

3. The Tallapoosa 48 

4. The Choctawhatchee 49 

5. The Coosa 50 

6. The Cahaba 52 

7. The Conecuh and Escambia 52 

8. The Alabama 53 

9. Mobile Harbor 54 

10. The Tombigbee 57 

n. The Warrior 60 

12. The Black Warrior 61 

Chapter III. — Construction of Railroads. 

Federal Land Grants 64 

The Two and Three Per Cent Funds 68 

State Aid : Policy Prior to the Civil War 72 

State Aid Since the Civil War 79 



INTERNAL IMPROVEMENTS IN ALABAMA 



CHAPTER I 

THE DEVELOPMENT OF HIGHWAYS 

Indian Paths. 

From Indian trails to trade routes, from trade routes to 
pioneer roads has been the line of evolution along which 
the public highways of Alabama have developed. When 
the curtain of Alabama's history first rises the Cherokee 
Indians were dwelling in their mountain homes in the 
northeastern portion of the state. West and southwest of 
the Cherokees were the Chicasas whose territory included 
the greater part of the Tennessee Valley, embracing the 
northwestern tier of the present counties of Alabama, 
reaching westward as far as the headwaters of the Yazoo 
River in the state of Mississippi. 

The western and southwestern portions of the state 
were occupied by the Choctaws, " The Maubilians with 
whom De Soto came in collision on the lower Alabama 
and the Tuskaloosa, and partly exterminated." * Their 
territory, reaching westward from the Tombigbee River, 
covered all that part of the present state of Mississippi 
which lies south of latitude 33 ° 30'. 

East of the Choctaws were the Muscogees or Creeks. 
" When first known to the white colonists," says Brewer, 
"this domain stretched from the Tombigbee to the At- 
lantic, but they were gradually driven west of the Ocmul- 
gee and Flint. Their principal towns were on the Talla- 

1 Brewer, Alabama, p. 16. 



10 Internal Improvements in Alabama. [128 

poosa and Chattahoochee. Their war trail extended to 
the Mobile Bay and the Florida Everglades." " The 
Hillabees," the same author continues, " Autaugas, Cusse- 
tas, Eufaulas, Ocfuskees, Uchees, etc., were names which 
attached to the Muscogees residing in those towns." 2 

We thus have a general line of Confederated Creek 8 
towns, dotting the territory of Alabama and Georgia, the 
most easterly of them being located on the site of the 
present city of Augusta.* Each town had its own " Micco " 
or King, but there was a Grand Chief of the Confederation, 
who presided over the National Councils and led them to 
battle. The capital of the nation was Tookabatcha, on 
the Tallapoosa River, a few miles above its confluence with 
the Coosa, and here the chiefs and representatives of all 
the towns gathered annually, in May, to consult on matters 
of general interest. The towns were brought in touch 
also by social features, it being a regular custom, for 
example, for warriors of one town to challenge those of 
another for a game of ball, their national amusement. 
The challenge having been accepted, the contestants would 
repair to the appointed spot, followed by throngs of their 
respective townsmen, and the battle would be fought amid 
the shouts of their enthusiastic spectators. This constant 
contact, town with town, not only resulted in a network 
of paths running from village to village, uniting the 
" Upper Creeks " on the Coosa and the Tallapoosa rivers 
with the " Lower Creeks " on the Chattahoochee, but also 
produced a well beaten, clearly marked line of communi- 
cation from the eastern boundaries of Georgia to the west- 

3 To gather in village communities was characteristic of the 
Creek Indians. Thus, Bartram in his Travels (p. 462), tells us 
that there were in 1777 " Fifty-five towns, beside many villages not 
enumerated." 

8 The Muscogee Indians were all called " Creeks " by the English 
explorers and traders on account of the many beautiful rivers and 
streams which flowed through their extensive domain. Pickett, 
vol. i, p. 29. 

4 Pickett, vol i, p. 81. 



129] The Development of Highways. 11 

ern portions of Alabama. This main path, known as the 
" Southern Trail " led in early times probably from the 
site of the present Augusta, crossing the Oconee River 
just below Milledgeville, striking the Ocmulgee at the foot 
of the Ocmulgee fields, 5 proceeding westward to Coweta 
(near Columbus) where the Chattahoochee was crossed, 
thence across the Tallapoosa at Tookabatcha, then almost 
due west to the Coosa, then up the river to " Coosa Old 
Town " (in the fork of the Talladega and Kiamulgee 
Creeks) and from here moving westward across the Cahaba 
River near Cahaba Old Town and thence into the settle- 
ments along the Tombigbee, and running still further to 
the northwest reaching the Chicasas in northwest Alabama 
and northeast Mississippi. From Coosa there was also a 
trail running southwestwardly into the Mobile Country. 6 

Another route leading from the Georgia Country, called 
the " High Town Path," " started from High Shoals on 
Apolachi River, which is the southern branch of the Okone 
River, and went almost due west to ' Shallow Ford ' of 
Chattahuchi River, about twelve miles north of Atlanta, 
Georgia, in the river bend." 7 

Continuing, the trail led to High Town or Etowah, and 
the other towns bordering on the Cherokee district and 
finally reached the Chicasa Country. There were many 
other similar paths but for our purpose these are the two 
most important, as the traders from the Carolinas and 
Georgia followed this general system of paths in penetrat- 
ing the interior of Alabama and reaching the various 
Indian tribes with their wares. 



5 Bartram, Travels, p. 52. These fields were about 70 or 80 miles 
above the confluence of the Oconee and Ocmulgee rivers. 

8 See map in American Gazetteer, vol i, London, 1762. Repro- 
duced in Winsor's Westward Movement, p. 31. 

7 Gatschet, Migration Legend of the Creek Indians, p. 151. Here 
the path is called " High Tower Path," but should be as above, as 
is shown in Carey's American Atlas (Philadelphia, 1795). Repro- 
duced in Winsor's Westward Movement, p. 383. The path was 
so called from the village " High Town/' the most northerly town 
of the Creeks. 



12 Internal Improvements in Alabama. [130 

Trading Roads. 

In 1702 the French established on the Mobile Bay, at the 
mouth of Dog River, " Fort St. Louis de la Mobile," the 
first white settlement ever made in what is now Alabama. 
These French Colonists, anxious to gain the friendship of 
all the Indians on the Mobile River and its tributaries, 
proceeded at once to send out emissaries that treaties of 
peace and trade might be made. This point, Mobile, 8 
early became the capital of French-America. Their plan 
was to form a strong line of forts," along the Mississippi 
Valley, from the Gulf to the Great Lakes, and thus pre- 
pare themselves to resist the pressure of the expansive 
English, and to control the trade of the Indians. 

But the colonists of Carolina, as is characteristic of the 
English stock, had already heard " the voice of duty," 
had already taken up the " white man's burden " and were 
carrying some of the " blessings of civilization " to these 
Indian tribes. These pioneer traders had two paths, one 
leading from Charleston by the Indian town Keowee (near 
the source of the Savannah River and where Fort Prince 
George was built in 1755) thence westward along the 
ridge dividing the tributaries of the Tennessee and Savan- 
nah Rivers, thus practically following the boundaries be- 
tween the Creek and Cherokee towns, and then follow- 
ing at will the " High Town Path," already described, and 
leading ultimately into the Chicasa Country. 

Another route, and the one most formidable to French 
interests, was the old Indian trail mentioned above as the 



8 In 1711 the fort was moved further up the bay to the mouth 
of Mobile river, thus establishing the present site of Mobile. 

8 Among others may be mentioned Fort Toulouse, established 
in 1714, at the confluence of the Coosa and Tallapoosa; Fort Tom- 
becbe, in 1735 on the Little Tombigbee river, at what is now 
Jones' Bluff; Fort Assumption, on the Chicasa Bluff, now Mem- 
phis, here a trading post was established by LaSalle as early as 
1673; Fort Duquesne, at the mouth of the Monongahela, near 
Pittsburg, in 1754. 



131] The Development of Highways. 13 

" Southern Trail " and which Bartram in his " Travels " 
calls the " Great Trading- Path." At a very early date the 
Carolinians had established Fort Moore, near where the 
present Augusta, Georgia, is situated, as a frontier trading 
post. Hard by, on the same river, was Silver Bluff, " A 
pleasant villa, the property and seat of G. Golphen, 
Esquire, a gentleman of very distinguished talents and 
great liberality, who possessed the most extensive trade, 
connections and influence, amongst the south and south- 
west Indian tribes, particularly with the Creeks and Choc- 
taws." 10 This being the site of an old Creek town, as al- 
ready mentioned, and being the terminal point of the old 
Creek trail, accounts in a measure for the location of these 
three points. Along this trail the traders and emissaries 
from Carolina pushed their way into the Creek Country, 
and the Georgians after the founding of their colony in 
1732, at once proceeded to add to their numbers in pushing 
the Red Man westward and following him with their wares. 

The French usually carried on their trade from Mobile 
by river; there was, however, a land route to Fort Tou- 
louse. 11 There was also a good road running through the 
Choctaw Country west of, and not far from the Tombigbee 
and Mobile rivers by which the Choctaws traded with the 
French. Another road ran from Mobile to the Chicasa 
towns." There were, likewise, routes by which the traders 
from Pensacola reached the Choctaws and Creeks. 

These main routes, intersected as they were by many 
hunting paths, were not easily followed by any but a " good 



10 Bartram, p. 312. 

11 Fort Toulouse was built by Bienville in 1714, near the junc- 
tion of the Coosa and Tallapoosa rivers, a strategic position for 
controlling the Indian trade. Upon its abandoned site was 
erected Fort Jackson a century later. To checkmate this French 
move the Georgia colonists built a stockade about forty miles 
further up on the Tallapoosa, and this fort, Ocfuskee, for several 
years served as the rendezvous of the British traders. Pickett, 
Alabama. Adair, American Indians. 

12 Dow's Life and Works, p. 101. 



14 Internal Improvements in Alabama. [132 

woodsman " as the pioneer Methodist preacher, Lorenzo 
Dow, notes of his trip in 1803 from the Oconee River to 
the Natchez Country. Although he had provided himself 
with a map and with a compass he frequently lost his way, 
the one on whom he " depended as guide knowing nothing 
about the roads." The distance of four hundred miles 
from the Oconee to the Alabama Rivers he made in thir- 
teen and a half days. 

In 1776 the English botanist, Bartram, joined a com- 
pany of traders in Georgia, and with them made the trip 
through the Creek Country to Mobile. Of this he gives 
us an interesting sketch, 13 from which we may gather some 
idea as to the modes of travel along these roads. The 
band, consisting of twenty men and sixty horses, fording 
the Oconee, the Ocmulgee, and the Flint, pushed westward 
to the Chattahoochee at Uchee Town (near the present 
Columbus) where the Indians carried their goods across 
in canoes. Then the traders dispersed among the Indian 
towns while Bartram wended his way to Mobile. Passing 
Coolome, a trading center near the junction of the Coosa 
and Tallapoosa, he moved along parallel with the Alabama 
near the present site of Montgomery. Here the trail 
bears away to the south, leaving the Alabama at some dis- 
tance, crossing the head waters of the " Schambe " 
(Escambia) River and finally reaching Taensa about thirty 
miles above " Fort Conde " or " City of Mobile." 

He returned in November, 1777, by practically the same 
route, with another trading band consisting of the " chief 
trader," two packhorsemen, with twenty to thirty horses, 
sixteen of which were alternately loaded with packs of 
one hundred and fifty pounds each. " They seldom de- 
camp," the author declares, " until the sun is high and hot; 
each one having a whip of the toughest cow skin, they start 
all at once, the horses having ranged themselves in reg- 
ular Indian file, — then the chief drives with the crack 

1B Bartram' s Travels, pp. 372-461. 



133] The Development of Highways. 15 

of his whip and a whoop or shriek, which rings through 
the forests and plains — when we start all at once, keeping 
up a brisk and constant trot, which is incessantly urged 
and continued as long as the miserable creatures are able 
to move forward, — every horse has a bell on which being 
stopped when we start in the morning with a twist of 
grass or leaves, soon shakes out and they are never 
stopped again during the day. The constant ringing of 
the bells, smacking of whips, whooping, and too frequent 
cursing these miserable quadrupeds cause an incessant up- 
roar and confusion inexpressibly disagreeable." The 
merchandise was conveyed across the swollen streams on 
rude rafts made of trunks of trees and bundles of cane 
bound together by vines and withes. A narrower stream 
they would cross by a " sapling felled across it, which is 
called a raccoon bridge." Over this the traders could 
lightly trip with a load of a hundred pounds, while Bartram 
" was scarcely able to shuffle himself along over it astride." 
"A portable leather boat about eight feet long, of thick 
sole-leather, folded up and carried " on their horses was 
another device these traders employed in crossing streams. 
These boats with the help of a few saplings for " keels and 
gunwhales " could be rigged up in half an hour and would 
carry " ten horse loads " according to Adair. The latter 
tells us that " few take the trouble to paddle the canoe, 
for as they are commonly hardy and also of an amphibious 
nature, they usually jump into the river and thrust it 
through the deep part of the water to the opposite shore." " 

Federal Roads. 

The clauses in the Constitution of the United States 
which empower the Federal Congress " To provide for 
the Common Defense and general Welfare " of the nation 

14 Adair, American Indians, London, 1775. 

Adair was an English trader who resided for forty years among 
the Creeks and long held them to the English side in spite of the 
efforts of the French. 



16 Internal Improvements in Alabama. [134 

and " To establish Post Offices and Post Roads," subject 
as they have been to very elastic interpretations, form the 
basis upon which have been founded the policy and practice 
of internal improvements by the Federal Government. 
We find that James Madison in 1796 advocated the ex- 
amination and survey of a " general route most proper for 
the transportation of the mail from Maine to Georgia." l3 

By act of May 17, 1796, it was declared that "three 
tracts of land, not exceeding one mile square each " should 
"be granted to Ebenezer Zane for opening a road from 
Wheeling to Limestone (Maysville, Kentucky) and for the 
"establishment of ferries over the Muskingum, Hocking, 
and Scioto Rivers. 18 This road, as will be seen, lay 
throughout its entire length in territorial lands, and was 
the first item of internal improvement to receive aid from 
the Federal Government. " From that day to the present " 
(1824), says Benton, " Congress has been making these 
roads without reference to the Constitution, because uni- 
versally held that the Constitution did not extend to terri- 
tories. In my thirty-two years of congressional service 
I can well say, I never heard a question raised about the 
right of Congress to make in the territories the local im- 
provements which it pleased. I have seen members of all 
political schools constantly voting for such objects — the 
^strict constructionist generally inquiring if the road was 
limited to the territory, and voting for the bill if it was." 1T 

The theory was that no state sovereignty would thus be 
infringed upon. Territories are the " property of Con- 
gress, subject only to the conditions upon which they 
were ceded by the states or foreign nations, and Congress 
acted with them without reference to the Constitution of 
the United States," 18 but according to the Territorial ordi- 



Benton, Debates of Congress, vol. i, p. 637. 

United States Statutes at Large. 

Benton, Debates of Congress, vol. vii, p. 617. 

Ibid. 



135] Tlie Development of Highways. 17 

nance of July 13, 1787, which had been given them by 
Congress and which the latter could modify. 

Under Act of May 1, 1802, the Secretary of the Treasury 
was empowered to have " viewed, marked and opened such 
roads within the territory northwest of the Ohio as, in 
his opinion, will best serve to promote the sale of the public 
lands in the future." 19 For this purpose six thousand dol- 
lars were appropriated from the moneys received from the 
sale of public lands. 

Now if it is good for the " National welfare," to provide 
roads within a territory why is it not also advantageous to 
construct roads leading from the states into the territories? 
Immigration would thus be encouraged, values of public 
lands enhanced, and close commercial relations would de- 
velop a strong feeling of national unity. The step was 
easily made; and on March 29, 1806, came the Act auth- 
orizing the opening of a road from Cumberland, in Mary- 
land, to the Ohio River in Ohio. For the opening of the 
road thirty thousand dollars were appropriated from the 
proceeds of public land sales. If the funds derived from 
the sale of public lands could thus be constitutionally ap- 
plied why not any other funds in the treasury? 

Thus was driven the entering wedge. The precedent 
was established, and gradually the strict constructionists 
surrendered their position as sticklers for the Constitution 
and joined the pellmell rush, the game of grab. This, of 
course, developed at a much later period than the one with 
which we are now dealing; but we see that the idea was 
already in the public mind. 

By 1800 the Spanish government had at last (in 1795) 
acceded to the claims of the United States to all the terri- 
tory north of the thirty-first degree, Colonel Ellicott had 
marked this southern boundary line (in 1798-9), the Span- 
ish garrisons had evacuated Fort St. Stephens 20 and Fort 

19 United States Statutes at Large. 

20 Established by the Spanish about 1786. 

2 



18 Internal Improvements in Alabama. [136 

Tombecbe 21 (called by the Spanish Fort Confederation) and 
Congress (in 1798) had organized the Mississippi Territory. 
The white population of that part of the Mississippi Terri- 
tory which afterwards became Alabama were confined to 
the settlements around Tensaw (near Nannahubba Island), 
St. Stephens, and Tombecbee." It consisted of those who 
had been stranded from the French colonies (who held 
the region till 1763), of those who remained from the 
Spanish colonies (who claimed and held these districts 
from 1783 to 1798) and of the few Americans who had 
filtered through the wilds from Georgia. 23 To protect 
these isolated colonists from the surrounding Indians and 
from the intriguing Spaniards just below them, and to en- 
courage immigration into the territory the Federal Govern- 
ment soon proceeded to construct two roads, one leading 
into the Natchez settlement on the Mississippi River, and 
another leading into the settlement along the lower Ala- 
bama. On October 24, 1801, a treaty was made with the 
Chickasaw Indians (approved by the United States Senate 
May 1, 1802) by which a "wagon road" was allowed 
through their lands from " The Mero District in the State 
of Tennessee " to the Natchez settlements. For this priv- 
ilege " The Commissioners of the United States give to the 
Mingco of the Chicasaws and the deputation of that nation 
goods to the value of seven hundred dollars." ' 4 On the 

21 Established by the French in 1735. Near the present Jones' 
Bluff, Sumter County. 

22 The population of the whole county of Washington, then ex- 
tending from the Pearl to the Chattahoochee, was only 733 whites 
and 517 negroes. The population of what is now Mobile and Bald- 
win counties, then Spanish territory, was probably as large. 
Brewer's Alabama, p. 26. 

23 Bartram in 1777 speaks of meeting " A company of immigrants 
from Georgia; a man, his wife, a young woman, several young 
children and three stout young men, with about a dozen horses 
loaded with their property." He was informed that they were 
" to settle on the Alabama a few miles above the confluence of the 
Tombigbee." These were among the earliest immigrants to Ala- 
bama. Bartram's Travels, p. 441. 

24 United States Statutes at Large, vol. vii, p. 65. 



137] The Development of Highways. 19 

17th of the following December a treaty was likewise se- 
cured by the same commissioners granting the right to 
continue this road through the lands of the Choctaws. 
For this concession the Choctaws were paid " the value of 
two thousand dollars in goods and merchandise, nett cost 
of Philadelphia," 2! and " three sets of blacksmith's tools." 
This road called the " Nashville to Natchez " road had 
been the line of an old Indian trail, 20 crossing the Ten- 
nessee River at Muscle Shoals where the United States by 
treaty of January 10, 1786, had obtained a grant of land 
for a trading post. 27 A treaty of November 14, 1805, 
granted the United States " the right to a horse path 
through the Creek Country from the Ocmulgee to the 
Mobile — and to clear out the same and lay logs over the 
creeks." The Indians were to provide boats at the several 
rivers for conveyance of men and horses, and also houses 
of entertainment for the accommodation of travelers; for 
all. these accommodations the prices should be regulated 
by " the present Agent, Colonel Hawkins, 28 or by his suc- 
cessor in office." By act of April 21, 1806, appropriations 
were made for the opening of these two roads; six thous- 
and dollars for the one from Nashville to Natchez, and six 
thousand four hundred dollars for the one from frontier 
of Georgia on the route to New Orleans to the intersection 
with 31 ° of north latitude. 29 Both were duly opened up 

M Ibid., p. 66. 

26 History of Tennessee, Phelan, pp. 171, 179, 277. 

27 United States Statutes at Large, vol. vii, p. 24. 

28 Colonel Benjamin Hawkins was appointed by President Jeffer- 
son as_agent to the Creeks. He established what became known 
as the " Old Agency " at the point where the trade route crossed 
the Flint river. Around this settlement grew up the town Fran- 
cisville, so called from Francis Bacon, who married the daughter 
of Colonel Hawkins, and who infused new life into the little set- 
tlement. After the completion of the railway from Columbus to 
Macon the business of Francisville was absorbed by other points, 
and the little town soon passed into oblivion. " Dead Towns of 
Georgia," in vol. iv of " Collections of Georgia Historical Society," 
p. 241. 

" United States Statutes at Large. 



20 Internal Improvements in Alabama. [138 

and the former long continued the post road into the Nat- 
chez district, while the latter became the great thorough- 
fare of early Alabama. 

Fort Stoddard was a post which had been built in 1799 s0 
by the Federal Government as a port of entry just above 
Ellicott's line (31 °) and this became the terminal point of 
the Georgia-Alabama Road. From Fort Stoddard (the 
site of the present Mt. Vernon) the road crossed Mim's 
Ferry. 31 Nannahubba Island and Hollinger's Ferry, then 
following, in general, the ridge which divides the tribu- 
taries of the Alabama from those of the Gulf (thus prac- 
tically the line of the old trade route) to Columbus on the 
Chattahoochee. With these small appropriations the 
roads were merely blazed through the woods, though at 
once honored with the dignified title of " Federal Roads.'' 

For the extension and improvement of these roads ap- 
propriations were made, from time to time, as follows: 32 

For the Nashville-Natchez route; 33 

Act of April 21, 1806 $6,000 

Act of April 27, 1816 5,000 

Act of March 27, 1818 5.000 

Act of March 3, 1823 7,020 

For the Georgia- Alabama route; 

Act of April 21, 1806 6,400 

Act of February 17, 1809 5,000 3i 

Act of April 27, 1816 5,000 35 

30 Pickett, vol. ii, p. 179. 

31 Established in 1797. Pickett, ii, p. 179; also Publications of 
Alabama Historical Society, vol. ii, p. 167. 

32 Statutes at Large. 

33 This road was of more importance to Mississippi. Its influence 
upon the settlement of the northwest portions of Alabama will, 
however, warrant the above summary. 

34 The President, empowered by an Act of March 3, 1807, had 
obtained permission from Spain to continue the road from Fort 
Stoddard to New Orleans. For this purpose the above appropria- 
tion was made. 

35 The importance of a better road, affording better military con- 
nections with this section had been impressed on Congress by the 
recent events in the southwest during the closing days of the War 
of 1812. House Report 61, 13th Congress, 3rd session. 



139] Ttw Development of Highways. 21 

Act of March 27, 1818 $ 5,000 

Act of April 14, 1820 3,300 

Act of May 20, 1826 6,000 

Act of February 20, 1833 j 2,0 °° 

J ' °° I 20,000 
Act of July 7, 1838 1,945.50 

The Act of February 20, 1833, authorized the opening of 
a new post road through the Indian Country from Line 
Creek in Alabama to the Chattahoochee opposite Colum- 
bus. The three thousand dollars were to repair the old 
road (which had become well-nigh impassable, especially 
through the swampy lowlands during the winter season) 
for use till the new one could be put through. The Presi- 
dent was authorized to employ a superintendent, upon an 
annual salary of a thousand dollars, who should supervise 
the construction of this new road. " To close the accounts 
for laying out and construction of this ' Mail Route ' and 
to pay the ' balance due the contractor and workmen ' ' : 
the appropriation of July 7, 1838, was made. The new 
road, called " The Upper Federal Road " was to the 
north of the old route, was on higher ground, and was 
generally used during the rainy season; the old road con- 
tinued in use during open weather. 

These amounts, together with three thousand dollars 
appropriated 36 " for the completion and improvement of the 
military road " from Pensacola by Blakely to Mobile, and 
one thousand one hundred and thirty-eight dollars for mil- 
itary road from Pensacola to Fort Mitchell, opened in 
1824, sum up the federal aid to road building in Alabama. 

Lieutenant McLeary, in 1799, had opened a rough mil- 
itary road from Natchez to St. Stephens when he marched 
across to take charge of the latter place after the evacu- 
ation of the Spaniards. 37 At an early date a road was cut 
from St. Stephens, crossing the Alabama at Claiborne, and 



86 Act March 2, 1829. Statutes At Large. 

37 Pickett, vol. xi, p. 179; Publications of Alabama Historical 
Society, vol. xi, p. 166. 



22 Internal Improvements in Alabama. [140 

joining the Federal road to the east. A horse path had 
been opened through the Chickasaw territory, intersecting 
the Nashville-Natchez road at Colbert's Ferry (Muscle 
Shoals); 38 the road from Georgia had been extended from 
Fort Stoddard to Natchez. 39 

In 1805 was obtained the right to a road from " Tellico 
to Tombigbee " inasmuch as the " mail of the United 
States from Knoxille to New Orleans " had been " ordered 
to be carried through the Cherokee, Creek, and Choctaw 
countries." 40 On this road the little village of Huntsville 
began in 1806. It was known as the " Knoxville Road " 
and was of much importance in the settlement of the north- 
ern part of Alabama. Thus by 1810 the St. Stephens Dis- 
trict was fairly well connected with the older states by 
rough, pioneer roads and immigrants began to flock in 
from all quarters. The principal immigrant route, how- 
ever, was that from Georgia, through the Creek Country 
to Fort Stoddard. Along this route came settlers from 
Virginia, the Carolinas and Georgia; some on horse-back, 
their effects on pack-saddles, and others used the rolling 
hogshead. 41 

An idea of the difficulties under which immigrants 
labored along these pioneer roads may be gathered from 
descriptions in books of early travel. In 1810 Peggy Dow 
gives us a description of her trip from the Natchez Coun- 
try 42 into Georgia. As she passed the last house of Natchez 
and entered the " vast wilderness " she tells us " my 
heart trembled at the thought of sleeping out in this place 
with no companion but my husband." Coming to a place 

88 Pickett, vol. xi, p. 234. 

89 By Act of the Legislature of the Mississippi Territory. Ham- 
ilton: Colonial Mobile. 348. 

40 Treaty with Cherokees, October 27, 1805. 

a Goods were packed in a hogshead, trunnions, or the equivalent, 
put in the ends, and to them were attached shafts by which an ox 
or horse would draw it along. P. J. Hamilton: Publication of the 
Alabama Historical Society, vol. xi, p. 50. 

42 Dow's Life and Works, pp. 221-223. 



141] The Development of Highways. 23 

where were found water and plenty of cane for the horses 
they struck camp for the night, built a fire, ate a supper of 
coffee and hard biscuit, then rested for the night on their 
blankets, " the wide extended concave of Heaven be- 
spangled with stars" affording a majestic scene; while 
the " lonely desert uninhabited by any creature but wild 
beasts and savages " made her feel very much alarmed. 
Proceeding the next day forty miles they crossed the Pearl 
in a ferry-boat and slept " in a house, such as it was, that 
belonged to a half-breed." Passing by " Hell Hole, a 
dreadful slough," they crossed a creek (probably Leaf 
River) and becoming involved by the many little divisions 
of the road secured the services of an Indian guide and late 
at night reached the home of one Noles on the Chickasowha 
River about " thirty miles from the settlement on the 
Tombigbee." The next day, proceeding " through some 
delightful country " they reached " the first house that was 
inhabited by white people." The Tombigbee was crossed 
by ferry-boat at St. Stephens, the Alabama was crossed at 
a " ferry 43 kept by a man who was a mixture," where they 
stayed that night, and the next day they " struck the road 
that had been cut out by the order of the President." 

" This made it more pleasant for traveling " the author 
continues, " and then we frequently met people removing 
from the states to the Tombigbee and other parts of the 
Mississippi Territory." Following as guide the " fresh 
marked trees " they crossed Murder Creek, the Chatta- 
hoochee " and reached Colonel Hawkins ' " where the 
writer " felt grateful to the God of all grace for his tender 
care over us while in this dreary part of the land where 
our ears had been saluted by the hideous yells of the wolf, 
and had been surrounded by the savages more wild and 
fierce than they." 

In 1818 Rev. John Owen moved with his family and 
effects, by wagon, from near Norfolk in Virginia to Tus- 

48 At Fort Claiborne. 



24 Internal Improvements in Alabama. [142 

caloosa, Alabama. Passing through Beauford's Gap of 
the Alleghanies, down the Holston Valley, by Knoxville, 
thence to the Tennessee River, crossing possibly at Nick- 
ajack, by Jones' Valley (near Birmingham of our day) he 
reached his destination after " nine weeks traveling, over 
broken roads, and exposed to every danger." He thought 
the roads in old Virginia were bad, but even his experience 
tEere had not prepared him for the shocks and jostles to 
be endured along the " infernal roads " of this new terri- 
tory.'" 

The Federal Road from Georgia to Alabama soon be- 
came the continuation of the stage line which connected 
Washington with the Southern States. In 1820 Adam 
Hodgson, an Englishman, traveled along this line from 
Washington to Mobile and in his " Letters from North 
America " (London, 1824) gives us a good idea of those 
days of westward movement. He left Washington on 
January 20th, 1820, in the " Mail stage, a mere covered 
wagon, open at the front " to which were attached four 
horses. Passing through Richmond and Petersburg (Vir- 
ginia), Raleigh, Fayetteville and Lumberton (North Caro- 
lina), Georgetown and Charleston (South Carolina), he 
reached Savannah, Georgia, the stage having made an av- 
erage on the trip of three and three quarter miles per hour. 

" This," he complains, " is wretchedly poor traveling 
in the only public conveyance between Washington and 
the Southern States, yet this vehicle is dignified by the 
title of the ' United States Mail,' although it is only an 
open wagon and four, with curtains which unfurl; and the 
mail bags lie lumbering about your feet, among the trunks 
and packages which the passengers smuggle into the 
carriage " to obviate the danger of their falling off or being 
stolen, all baggage usually being merely " thrown on be- 

44 The Journal of Rev. John Owen, published by Thos. M. Owen 
in the " Publications of the Southern History Association," April, 
1897, vol. i, p. 89. Quoted in " Publications of the Alabama 
Historical Society," vol. xi, p. 53. 



143] The Development of Highways. 25 

hind." From Savannah Hodgson passed up the river by- 
boat to Augusta and from here proceeded to Mobile on 
horseback. Milledgeville, then the Capital of Georgia, Fort 
Hawkins on the Ocmulgee, the Indian Agency on the 
Flint, Coseta on the Chattahoochee (modern Columbus), 
Fort Bainbridge, Caleebe and Cubahatchee swamps, Line 
Creek, Point Comfort, Pine Barren Springs, Fort Dale, 
Murder Creek, Burnt Corn, and Blakely are all succes- 
sively mentioned, some of which may be seen on the map 
of Alabama to-day, and enable us to trace the route of 
the old Federal road along which the early settlers moved 
from Virginia, Georgia and the Carolinas into the Gulf 
States. 

" The road, though tolerable for horses," he thought 
would be regarded in England as utterly impassable for 
wheels. Lonely stretches undotted for forty or fifty miles 
by a single house, often came into the experience of our 
traveler, the occasional inns were rude in structure, fur- 
nished in no very pretentious manner. As an example of the 
hotel facilities to be enjoyed, Hodgson describes the inn at 
Coweta as having only one bed room " with three beds such 
as they were," a log building, with clay floor and no win- 
dows. The proprietor of the inn, an adventurer from Pnil- 
adelphia, arranged his prices so as to carry the conviction 
that he was not in the business merely for amusement but 
had come to exploit the necessities of the traveler. 

To avoid wounding the feelings of the kind hearted hosts 
and hostesses he would sleep in these rather crowded and 
camp-like apartments when often he really envied his ser- 
vant who had been compelled to seek his night's repose in 
the hay loft. 115 

In January, 1835, Featherstonhaugh, another English 
tourist, passed along the same route from Montgomery, 
Alabama, to Richmond, Virginia. At Montgomery he 
learned that the mail stages, owing to bad roads, were 

45 A. Hodgson: Letters from North America. London (1824). 



26 Internal Improvements in Alabama. [144 

unable to run and mails were, therefore, sent on horse- 
back. Unwilling to wait until late in the spring to secure 
passage, " after a good deal of chaffering " he finally- 
agreed to give sixty-five dollars, as hire, for a " miserable 
vehickle and a pair of wretched horses " to conduct him to 
Columbus, Georgia, a distance of ninety miles. The road 
was found " quite answering to the description " wnich 
had been given, " being so frightfully cut up as to render 
it much more preferable to walk wherever the road was 
sufficiently dry. The black fellow who drove seemed to 
take it quite philosophically, observing nothing unusual 
in the kind of rocking and bouncing motion " and seemed 
to think the traveler not quite in his senses for preferring 
to walk when he had paid so much for riding. 

By the close of the first day's travel he was reconciled 
to the liveryman's high charge of four shillings per mile, 
for they were only able to make fourteen miles during 
the day and he was persuaded that " such a performance 
could not be gotten up for less money in any part of the 
world." Almost unbroken lines of immigrants were daily 
passed, bringing with them their negro slaves. The women 
and children were drawn slowly along in heavy wagons 
while the hardy and dusky men, on foot, trudged wearily 
over the heavy road to their new and more southern 
homes. A thousand slaves moving thus, on foot, would be 
passed in a single day. 48 The distance to Columbus, ninety 
miles, was made only after four days of tedious travel. 
The greater portion of the road thus traversed lay within 
the lands yet occupied by the Creek Indians and over which 
the state of Alabama, therefore, had no jurisdiction; from 
the description given of this road we see that the appro- 
priations from the Federal Government in 1833 and 1838 
were made none too soon. 

48 Featherstonhaugh: The Slave States. 



145] The Development of Highways. 27 

Stage and Express Lines. 

From 1832 to 1838 the Indian tribes of Alabama were 
being pushed to their more western homes and by 1839 the 
last of these aboriginal tribes had passed beyond the Mis- 
sissippi. 47 We have already seen the tides of immigration 
flowing in, anticipating the throwing open of these vacated 
lands. The population had now become sufficiently dense, 
and the travel and traffic sufficiently great, to justify the 
conduct of three separate lines of stages along the old 
Federal road from Columbus to Montgomery, the " Mail 
Line," the " Telegraph Line " and the " People's Line." " 

The coaches, usually built open for summer use, were, 
during the winter, closed in with painted canvas, or oil 
cloth, " but so loosely as to let in the cold air in every 
part," and were made as heavy and strong as the union 
of wood and iron could make them. These coaches 
usually contained three seats, the middle often provided 
with a broad leather strap to lean back upon and 
which was generally reserved for the ladies. To this ve- 
hicle two, four, or on the worst roads six horses would be 
attached. The driver and team were changed at the suc- 
cessive stages recurring at distances of from twelve to fif- 
teen miles. The passengers, at the call of the driver, 
would sway their bodies to right or left, and even lean far 
out of the windows as the necessity arose, to keep in bal- 
ance the coach as it was about to be upset. Delays at the 
small post offices and occasional " break-downs " kept the 
speed down to about four or five miles an hour. To 
the complaints of the passengers the patient driver 
would often reply that even the locomotive (which was 
already beginning to threaten his future) could do no 
better if put on these swamps and that the most that can 
be said is " that each kind of vehicle runs fastest on its own 
line of road." For these comforts and conveniences the 

" Brewer: Alabama, pp. 50-54. 
48 Buckingham: Slave States. 



28 Internal Improvements in Alabama. [146 

passengers usually paid a dollar for eight or ten miles with 
no extra charge for delays, bumps, and occasional injuries. 
The fare often varied, however, according to the sharpness 
of rivalry between competing lines. For example, while 
the " Mail Line " was the only one in operation the charge 
from Macon to Columbus, Georgia, a distance of ninety 
miles, was twenty dollars. A second line reduced it to 
ten dollars. A third line followed and reduced it to five 
dollars. The two former lines then reduced their rates 
to one dollar. The latest company then carried their 
passengers for nothing, while the hotels furnished them 
with dinner and champagne at the expense of the coach 
proprietors. The three lines soon tired of this " cut 
throat " rate, and forming a " combine " adopted a uni- 
form schedule of ten dollars per ninety miles. 49 

Along this old Federal Road was established the " Ex- 
press Mail," a device for rapid transmission of news and of 
market reports of sufficient importance to warrant the 
extra expense in their conveyance between the different 
towns and cities. The terminal points of this line were 
New York and New Orleans. Between these two points 
five hundred horses and two hundred boys, as riders, 
were employed. Each boy rode a distance of twelve miles 
out and twelve miles back. By thus placing a relay of 
horses at each of these successive intervals an average 
speed was maintained of about fourteen miles per hour. 60 

Both the expensive " Express Mail " and the stage-coach 
system which had spread its network of lines throughout 
the state were soon destined to succumb to the railroad, 
which had already made its appearance in Alabama. 61 



48 Buckingham: Slave States, 1839. 

60 Buckingham: Slave States. 

61 The first railway laid in Alabama was completed in 1833. 
irewer's Alabama, p. 98. 



147] TJie Development of Highways. 29 

Road System of Alabama. 

By act of Congress approved May 10, 1798, the land 
between the Chattahoochee and the Mississippi rivers and 
lying between 31 ° and 32 ° 28' north latitude was created 
into the Mississippi Territory. At an early date B2 the ter- 
ritorial legislature enacted a road law. This system was 
inherited by the territory, and later by the state, of Ala- 
bama, and remains in vogue to-day, practically without 
change. 63 

The Courts of County Commissioners have original 
jurisdiction over the establishment, discontinuance, change, 
and repair of roads, bridges, causeways and ferries within 
the county. Four Commissioners, elected by the quali- 
fied voters of the county every four years, with the Probate 
Judge constitute the court. This court selects apportion- 
ed for each election precinct and these apportioners divide 
the roads within their precincts into sections designating 
a certain number of hands and appointing an overseer for 
each section. Not more than ten days labor may be re- 
quired annually of every able-bodied man between the ages 
of eighteen and forty-five, for keeping roads in repair, 
and in some counties special acts allow this service to be 
commuted in money. It is hardly necessary to state that 
this system has not produced any earnestness of purpose 
for the improvement of highways, and the economy of 
good roads has been unappreciated and certainly has never 
been realized in Alabama. 

During the early years of the state many companies 
were incorporated for the purpose of constructing turn- 
pike roads. They were chartered for a limited number of 
years (often twenty), toll-gates were authorized at inter- 
vals of five miles, and the charges were fixed by the act 
of incorporation. An estimate of tolls charged may be 



52 Act of March 1, 1805. Turner's Digest of the laws of the 
Mississippi Territory. 
"Acts of Alabama Territory, 1818. Code Alabama, 1896. 



30 Internal Improvements in Alabama. [148 

gathered from an act of January 13, 1826, authorizing 
W. H. Ragsdale and his associates to build a turnpike road 
in Franklin County. 

Rates were stipulated as follows : 55 

Each loaded wagon and team $1.00 

Each empty wagon and team 75 

Each cart, wagon and team 50 

Each pleasure four-wheel carriage 1.00 

Each pleasure two-wheel carriage 50 

Man and horse 12^ 

For each led horse o6j4 

Cattle per head 04 

Goats, sheep and hogs per head 01 

" The Blakely and Greenville Turnpike Company " incor- 
porated in 1824, was authorized to charge for every five 
miles. 56 

For each pleasure four-wheel carriage $ -SO 

Each horse or ox wagon 25 

Man and horse 12^ 

Loose horses, cattle, hogs and sheep per head 02 

By terms of this charter the Legislature was empowered 
at any time it might see fit, to examine the books of the 
company; the tolls received were never to exceed twenty- 
five per cent (annually) on the capital actually invested, 
nor should they fall below twelve and a half per cent of the 
same. The County Courts were to supervise the repairs 
of the roads, no tolls were to be allowed when the roads 
were out of repair, and the tolls should be raised or lowered 
as found necessary to keep the profits within the stated 
limits. The mails, express messengers, troops of State 
and Federal governments, all footmen, persons going to 
and from public worship, laborers going to and from 
their fields were usually exempted by the charters from 
all tolls. 

From 1847 to 1853 may be called the era of plank-road 



55 Acts of Legislature, 1825-26. 
58 Acts of Legislature, 1824. 



149] TJie Development of Highways. 31 

building in Alabama. Twenty-four companies, for ex- 
ample, were incorporated by the Legislature during the 
session 1849-50 for the purpose of constructing plank- 
roads. 87 Some of these projected plans were put into ex- 
ecution, 68 but the same session of the Legislature incorpor- 
ated several new railroad companies thus indicating that 
the active railroad spirit was already present before which 
the impulse to plank-road building was soon to decline, in 
fact to disappear. 

The people of Alabama during the thirties and forties, 
manifested a spirit of nervousness, feeling that they were 
being outstripped by the sister states, many of whom were 
lending substantial aid to works of internal improvement. 
Pressure was, therefore, repeatedly brought to bear upon 
Legislature and Governors to induce them to embark in 
a policy of state aid to river and canal improvements, turn- 
pike and plank-road building. 

That this enthusiastic spirit was held in check is due 
largely to the fact that the state was in great financial 
straights, resulting from the failure of the Bank of Ala- 
bama. An approximate loss of seven million dollars was 
entailed upon the state by the collapse of this institution, 
all of the debts of the Bank having been assumed by the 
state. 68 In Alabama during the decade 1845-55 a high rate 
of taxation was necessary to meet the interest on the pub- 
lic debt. A depleted State Treasury, a high tax rate and 
the permanent impression that the state, judged either as 
to efficiency or integrity, was not the best manager and 
promoter of financial enterprises, — all served as influences 



67 Acts of the Legislature, 1849-50. 

'" s Governor Collier's Message, November, 1851. 

59 Alabama's State Bank: Article by J. H. Fitts in Bankers' Law 
Journal for June, 1895. Brewer: Alabama, p. 53. Messages of 
Governors, December 3, 1838, and December 16, 1845. J. L. M. 
Curry: Tract on " Hon. Francis M. Lyon as Commissioner and 
Trustee of Alabama." Garrett's Reminiscences, pp. 43, 63, 212, 217, 
255, 258, 267, 275, 278, 670. 



32 Internal Improvements in Alabama. [150 

to discourage the policy of public aid throughout the entire 
period ending with the Civil War. 

State aid to internal improvements was thus regarded 
as infeasible in Alabama during the very period when other 
states were most active in such work. Only small appro- 
priations and loans were made to plank-road companies 
from the " two and three per cent funds " and these will 
be discussed at a later point. 

In recent years several counties of Alabama have been 
empowered by the Legislature to issue bonds for the im- 
provement of roads, and powers of taxation granted by 
which these bonds are to be retired. In other counties 
power has been granted of assessing a road-tax, which 
must be paid out of the general levy. The counties of 
Montgomery, Jefferson, Madison, Colbert, and Lauderdale 
many miles of macadam road have thus been built and the 
manifest advantages bid fair to increase the spirit and fur- 
ther the work of improvement. 



CHAPTER II 

RIVER AND HARBOR IMPROVEMENT 

State Aid 

Alabama ranks among the first states of the Union in 
the number, extent, and value of her magnificent water 
lines. Every section, and nearly every county, of the state 
is watered, and afforded commercial facilities by some one 
or more of its navigable rivers. Professor Tuomey, the 
first State Geologist of Alabama, said in one of his reports: 
" There is scarcely an extensive and really valuable agri- 
cultural tract in the State that has not its navigable stream." 
This region is traversed by two great systems of waterways, 
(i) the Tennessee with its tributaries, connecting North 
Alabama with the Mississippi; and (2) that group of rivers 
which drain much the largest part of Alabama together 
with considerable portions of Georgia and Mississippi also, 
and find a common outlet into the Gulf of Mexico through 
the waters of the Mobile Bay. 

This latter system, converging at Mobile, spreading out, 
fan-shaped over magnificent timber regions, over fertile 
agricultural districts, and reaching into the center of the 
inexhaustible coal and iron deposits of North Alabama, 
affords a field for improvement the merits of which are 
probably unsurpassed by any water system within the 
United States. The improvements which have been made 
upon these waters have been due almost exclusively to 
the Federal Government, the state of Alabama having 
done practically nothing along this line. Rivalries be- 
tween the different sections of the state caused hitches in 
legislation which for a long time prevented application 
even of the three and two per cent funds to the purpose 
3 



34 Internal Improvements in Alabama. [152 

for which they were set apart by Congress. In the early 
days of settlement no adequate system of revenue existed, 
the citizens were heavily burdened to meet the maturing 
payments for public lands which they had purchased. The 
population, too, was more or less shifting, and the spirit 
of internal improvements, so prominent in other states, 
was not so enthusiastically felt in Alabama. The impor- 
tance of improving the rivers was realized, no doubt, but 
the movement was held in check by the drain on the cur- 
rency for public lands and later by the financial convulsions 
and heavy taxation resulting from the disastrous banking 
scheme in which the state so early embarked. The Con- 
stitution under which the state was admitted to the Union 
provided for obtaining " accurate knowledge of such 
objects as may be proper for improvement and for making 
a systematic and economical application of means appro- 
priated to them." 1 Governor Bibb, in his message of Oc- 
tober 26, 1819, 2 recommended " the appointment of a 
skilled engineer, whose duties it shall be to examine the 
rivers within our limits with reference to the expediency 
and expense of improving navigation of each, and also the 
nearest and most eligible approach which can be made 
between the waters of the Tennessee and Mobile rivers." 
The Legislature, accordingly authorized the examina- 
tion, under the supervision of the executive, of some of the 
most conspicuous points of improvement. A competent 
engineer was employed and some examinations were made 
but no improvements materialized. In 1821, Governor 
Pickens recommended the establishment of a permanent 
board of internal improvements, and suggested that such a 
board could act without friction from sectional rivalry and 
would be free from " hauling " influences. He again em- 
phasized the necessity of a canal by which the Tennessee 
and the Alabama rivers were to be connected. 3 This canal 

1 Constitution of 1819, Article vi, Section 21. 

2 House Journal, 1819-20. 

3 Message of Governor Pickens: House Journal, Nov. 9, 1821. 



153] River and Harbor Improvement. 35 

project was a plan long cherished by the people of Alabama 
as a means of more closely uniting the northern and 
southern sections of the state. The mountain barriers 
which separated the Tennessee Valley region from the 
more southern portions of the state prevented that full 
unity of interest and harmony in feeling which are so 
essential to the life of a government, and in the formation 
of which close commercial relations are so potent. Com- 
mercially, North Alabama was more closely connected with 
Louisiana than with South Alabama. Their products were 
shipped down the Tennessee, Ohio and Mississippi rivers 
to New Orleans a distance of 1500 miles, and from the 
latter point the greater portion of their supplies was pur- 
chased. On account of the shoals in the Tennessee River 
even this means of transportation was blocked for a 
great part of the year, and markets had to be sought at 
Savannah, Augusta or Charleston. The approximate dis- 
tance from the Tennessee Valley section to these three 
points was six hundred miles. From fifty to one hundred 
and fifty miles of this route had to be covered by wag- 
ons for at least one-half of the year. 4 This inconven- 
ient and expensive method of transportation for many 
years proved a heavy incubus to the industrial develop- 
ment of the North-Alabama section. Emphasizing the 
importance of this canal scheme, Governor Gayle, in 
his message of 1834, stated that such a canal, uniting the 
Tennessee and the Alabama systems would carry to Mobile 
annually 150,000 bales of cotton "which go now to other 
states by dangerous and expensive routes." Not only was 
Mobile, the emporium of the state, being deprived of that 
share of the state's traffic to which she was actually en- 
titled, but heavy losses were being sustained also by the 
citizens of North Alabama on account of the lack of trans- 
portation facilities. For example in 1833 cotton was worth 

4 Speech of Hon. R. W. Cobb in House of Representatives, Cong. 
Globe, vol. xxiii, Appendix, p. 157. 



36 Internal Improvements in Alabama. [154 

in New Orleans and Mobile fifteen cents per pound, but 
before the high water season had come, thus admitting of 
the navigation of the Tennessee River through the shoal 
portions, cotton had fallen to ten cents per pound. Before 
the farmers of this region could get an outlet their cotton 
had seen a decline of five cents per pound. During this 
year alone it is estimated that the loss thus entailed upon 
the Tennessee Valley counties was not less than $2,265,- 
ooo. 6 Not only was it difficult to find an outlet for cotton, 
but markets for provisions and general supplies were often 
inaccessible. These facts created the necessity for self 
sustaining farms, tended to prevent exclusive cotton cul- 
ture in North Alabama, resulted in a more diversified sys- 
tem of crops demanding smaller holdings of land and a 
smaller number of slaves than were found in the more 
southern portions of the state. As the result of these con- 
ditions the two sections were somewhat divided in senti- 
ments respecting slavery. This lack of harmony of inter- 
est and feeling continued till the beginning of the Civil 
War, and came near rending the state asunder on the ques- 
tion of secession. For quite awhile the Tennessee Valley 
counties were projecting the formation of another state, 
" Nickajack," which should remain with the Union. The 
fate of Virginia, however, was averted by the rapidity of 
invasion which caused the two sections to present a united 
front. 

That " geographical and sectional names might be anni- 
hilated " that the state might become really " one people," 
" identified in interests, assimilated in character and har- 
monized in feelings" 6 was then, one of the strong reasons 
which prompted the efforts to connect North and South 
Alabama by some line of transportation. There were pro- 
jected two plans by which this might be accomplished. 
Both involved the cutting: of a canal between the two rivers. 



Message of Governor Gayle, November 18, 1834. 
Message of Governor Clay, 1835. 



loo] River and Harbor Improvement. 37 

One of these, known as the " Tennessee and Tombigbee 
Canal," was to run from Fort Deposit on the Tennessee 
River to Tuscaloosa on the Black Warrior River. 7 Owing 
to the length of this proposed route and the expense which 
would be involved the feasibility of this plan was more 
visionary than real. Another and doubtless more feasible 
route for a canal to unite the two river systems was the 
" Hiwassee and Coosa Canal," and was to extend from a 
point on the Okou, a navigable branch of the Hiwassee, 
to a point on the Conesaugo, a navigable branch of the 
Coosa, near the Georgia and Tennessee line, where these 
waters approach each other to within about twelve miles. 8 
At a meeting held in Cahaba, Alabama, on May 20, 1823, 
this project was recommended as a means of laying open 
a passage for boats from the headwaters of the Tennessee 
River, in Virginia, through the Coosa and Alabama Rivers, 
to Mobile and the Gulf of Mexico. It was thought that 
by such a canal the trade from the eastern part of Tennes- 
see, the western portions of Virginia and North Carolina 
and from the northwestern sections of Georgia that enor- 
mous district drained by the tributaries of the Tennessee 
and the Coosa rivers would all be drawn to Mobile. 9 The 
Governor of Alabama in the following November recom- 
mended to the Legislature that a corporation be encour- 
aged to carry out the proposed plan, showing that finan- 
cial conditions would not authorize the state to embark in 
any pronounced work of improvement at that time. The 
Legislature passed an act 10 incorporating the " Coosa 
Navigation Company," naming nine towns particularly, 
and appointing for each town three superintendents who 
should open books for subscription on the first Monday in 
June, 1824. The plan met the approval of the Federal 

7 A connected view of the whole Internal Navigation of the 
United States (1830), p. 377. 

8 Internal Navigation of the United States (1830), p. 389. 
* Message of Governor S. B. Moore, November, 1831. 

10 Approved December 30, 1823. 



38 Internal Improvements in Alabama. [156 

Government, but it seems that the people were not so en- 
thusiastic over the plan as were the authorities; at any 
rate the capital was not raised and no canal resulted. 

A later act incorporating the " Alabama and Tennessee 
Canal Company " u met with the same fate. Both com- 
panies were still-born. In 1828 this project was examined 
under the auspices of the United States Government, a 
route was levelled and surveyed for the proposed com- 
munication which should pass through the most favorable 
depression of the ridge which divided the two tributary 
valleys, and which should have as terminal points Hilte- 
brand's boat-yard on the Okou and McNair's boat-yard 
on the Conesaugo, a length of twelve miles. The plan 
was pronounced feasible, but promised to be very expen- 
sive on account of the requisite deep cutting at the sum- 
mit level, together with other local difficulties which would 
have to be overcome. 12 This plan, when completed, was 
to form but a part of that greater system known as the 
" Southern Route " which was to connect the whole of the 
Tennessee Valley with the Atlantic seaboard. This canal, 
connecting the Tennessee and the Coosa, together with 
another canal joining the Etowah with the Ocmulgee 
would complete the line by which, after improvements of 
various river channels, it was hoped to obtain continuous 
navigation during at least eight months of the year from 
the Mississippi River to the Atlantic Ocean. The Ohio, 
Tennessee, the Etowah, the Ocmulgee and Altamaha, to- 
gether with the canals which supplied the missing links 
were to constitute this Southern system of navigation, a 
plan more beautiful in theory than easy in practice, and 
destined to pass into oblivion as a dead scheme before the 
absorbing interest which was soon to be awakened in 
railroad building. 13 



11 Approved January 11, 1827. 

"Internal Navigation of the United States, p. 391. 
18 Internal Navigation of the United States (Edition 1830), pp. 
390-92; Report of Major Mahan, Corps of Engineers, 1894. " 



157] River and Harbor Improvement. 39 

The Tennessee-Coosa Canal, however, is still periodic- 
ally mentioned and discussed as a future possibility. 
Major McFarland, reporting to the chief of engineers in 
1872, asserted the feasibility of a canal from Gadsden, on 
the Coosa, to Guntersville, on the Tennessee, a distance 
of thirty-five miles. He estimated that it would require 
$11,570,607 to execute the project. This plan, together 
with the improvement of the Coosa, would empty into the 
Bay of Mobile by an easy and cheap water route, the agri- 
cultural and mineral wealth of immense stretches of coun- 
try now shut out from the sea except by costly railroad 
transit or by the three thousand miles of water route 
through the Tennessee and Mississippi. It would open to 
its natural and nearest seaport one-fifth of the state of 
Alabama, a large section of North Georgia and the whole 
sweep of the Upper Tennessee with its score of important 
tributaries. 14 Toward this important object the state of 
Alabama has contributed nothing and the Federal Govern- 
ment has never been induced to make appropriations for 
its execution. The Legislature, by Act of January 15, 
1830, organized a body known as the " President and 
Directors of the Board of Internal Improvements." 15 
This Board was to consist of six commissioners, to be 
elected biennially by a joint vote of the two houses of the 
Legislature. To avoid discriminations as to sections the 
act stipulated that these commissioners should be chosen 
one from the section below the junction of the Tombigbee 
and Alabama rivers; one from section below junction of 
Coosa and Tallapoosa rivers; one from the section below 
junction of Tombigbee and Black Warrior rivers; one 
from the section above the junction of the two last named 
rivers; one from section between the Coosa and Cahaba 
rivers; one from the Tennessee Valley section. 

The Governor was made ex-officio president of the 

14 Report of Captain Price to Chief of Engineers July. 1890. 

15 Acts of Alabama, 1829-30. 



40 Internal Improvements in Alabama. [158 

Board. The members of the Board were to receive the 
same per diem and mileage as were paid to members of 
the Legislature. In them was vested the contracting for, 
and superintendence over, such works of internal improve- 
ment as might be directed by the Legislature. A report 
of progress and expenditures, together with recommenda- 
tions for further work, should be made annually to the 
same authority. It was declared by the act that all 
expenditures should be paid from the " three per cent 
fund," and that this fund should be held by the State Bank 
subject to the drafts of the " President and Directors " of 
the Board. This act, bearing upon its face the impres- 
sion that it would result in some positive efforts toward 
improved navigation, accomplished no material results, 
the scheme passed off as vapor, and the act was repealed 
by the Legislature on January 21, 1832. In 1839 the Gov- 
ernor in his message to the Legislature said of the state's 
policy toward internal improvements: " If it should be 
said that we are behind other states in this respect, it may 
be replied that if we are destitute of those ready and agree- 
able means of communication which abound and greatly 
facilitate traveling and transportation in some of the 
states, we are at least free from the weight of those mon- 
umental debts that have been contracted to carry on their 
works of internal improvement." He expressed a strong 
" preference for the opening and improving the naviga- 
tion of rivers over every other description of internal im- 
provement," and still adhered to the old " determination 
of effecting some permanent connection between the 
waters of the Mobile Bay and the Tennessee River," add- 
ing, however, that " circumstances seem to forbid our en- 
gaging in it at present." 16 At the beginning of the ses- 
sion of 1840-41 a committee was appointed on inland navi- 
gation, and a resolution was adopted instructing the 
committee to " inquire into the propriety and expediency 

16 Message of Governor Bagby, December, 1839. 



159] River and Harbor Improvement. 41 

of appropriating the whole of the three per cent fund to 
the completion of the Selma and Tennessee Railroad; or 
of some other mode of appropriating said fund so as more 
closely to indentify the Northern and Southern parts of 
our state." After some deliberation the committee re- 
ported back that it was inexpedient to legislate on the 
subject. The House refused to concur and the resolution 
was recommitted. On January 5, 1841, the committee 
made their report in which were discussed, pro and con, 
the various suggested methods or projects by which North 
and South Alabama should be connected." For the ac- 
complishment of this end the committee pronounced a 
macadamized road as infeasible. For such a road the 
proper rock is not obtainable, and, even if constructed, 
" would not divert the commerce of the North from its 
now accustomed channel." The most practicable method, 
the committee declare, would be to connect the Tennessee 
with the Coosa by a railroad, of not more than twelve 
miles in length, to extend from the Hiwassee to the Con- 
esauga Creek. Owing to the embarrassed condition of 
the state's finance they " repeat the expression that it is 
now inexpedient to legislate on the subjects," and ask to 
be discharged. This report shows that from the three 
per cent fund had been expended the following amounts: 

December 19, 1837, for improving the Coosa $30,000 

December 19, 1837, for improving the Tombigbee 25,000 

February 1, 1839, for improving the Coosa 30,000 

February 1, 1839, for improving the Paint Rock 10,000 

February 2, 1839, for improving the Choctawhatchee 10,000 

February 2, 1839, for improving the Elk 10,000 

February 7, 1839, for improving the Black Warrior 20,000 

Total $135,000 

These amounts were, by far, too small for the accom- 
plishment of the purposes to which they were appropri- 
ated, and no permanent improvements resulted. The 
" three per cent fund," including interest which has ac- 

17 House Journal, 1840-41. 



42 Internal Improvements in Alabama. [160 

crued while invested in the State Bank, then amounted to 
$545,737.53. Deducting from this the above $135,000 
leaves an unexpended balance of $410,737.53. The state 
being involved, no further appropriations were made for 
improving navigation facilities, and at a later date the fund 
was expended as subsidies to railroad companies. 

Improvements by the Federal Government. 

For the purposes of improvement by the Federal Gov- 
ernment the rivers of Alabama fall into three divisions: 
(1) the Northern system (consisting of the Tennessee and 
its tributaries), which is now in charge of Captain King- 
man, Corps of Engineers, with headquarters at Chatta- 
nooga; (2) the rivers which drain the more eastern portion 
of the state, now in charge of Captain Flagler, Corps of 
Engineers, with headquarters at Montgomery: in this 
system are comprised the Alabama (with its tributaries, 
the Cahaba, the Coosa and the Tallapoosa), the Chatta- 
hoochee, the Choctawhatchee and the Conecuh; (3) the 
Mobile Bay, Harbor and River with the Tombigbee and 
Warrior: this system drains the western and north-central 
portions of the state and is now in charge of Major Ros- 
sell, Corps of Engineers, with headquarters at Mobile. 

In discussing the efforts which have been made to im- 
prove the navigation on these streams we will treat each 
separately, beginning with 

(1) The Tennessee. — This stream receives its water 
from Virginia, North Carolina, Georgia, Tennessee, Ala- 
bama, Mississippi and Kentucky, seven different states. 
The total area drained by it is forty-four thousand square 
miles, an area almost equal to that of England. This 
river, with the navigable portion of its tributaries, gives 
a system of water transportation of thirteen hundred and 
eighty-two miles navigable by steamboats plus ten hun- 
dred and fifty-three miles navigable by rafts and flat- 



161] River and Harbor Improvement. 43 

boats, making, in all, a system of internal water ways of 
twenty-four hundred and thirty-five miles. 13 

Less than five hundred and fifty miles of this extent 
have ever been surveyed and no project has been formed 
for the system as a whole, but the improvements have 
been limited to the main trunk with three or four of its 
tributaries. This river enters the state of Alabama in the 
extreme northeast corner, flows southwestwardly to Gun- 
tersville, a distance of seventy-four miles; thence north- 
westwardly to Waterloo, in the extreme northwest corner 
of the state, a distance of one hundred and thirty-three 
miles, from which point it forms a part of the boundary 
between Alabama and Mississippi before re-entering the 
state of Tennessee. The chief obstruction to the naviga- 
tion of this river is the barrier between Brown's Ferry and 
Florence and known as the Muscle Shoals. Here Elk 
River Shoals, Big Muscle Shoals, and Little Muscle Shoals 
present a series of obstructions extending, with interven- 
ing pools of deep water, a distance of thirty-eight and a 
half miles, and until recently prevented navigation during 
a great part of the year between hundreds of miles of navi- 
gable waters above and over two hundred and fifty miles 
of open river below. We have already noted 19 the incon- 
venience and losses which were entailed upon the North 
Alabama people by these obstructions. In the counties of 
Madison, Morgan, Limestone, Lawrence, Franklin, and 
Lauderdale thousands of acres of land had been relin- 
quished by purchasers of public lands who were unable to 
meet the maturing payments. By law approved May 23, 
1828, Congress granted 20 to the state four hundred thous- 
and acres of these " relinquished lands," the proceeds to 
" be applied to the improvement of navigation of the 
Muscle Shoals and Colbert's Shoals in the Tennessee 



18 Report of Captain Kingman, 1896. 

19 Page 63. 

20 In accord with a Memorial from the Legislature of Alabama 
(January 15, 1828) asking such a donation. 



4A Internal Improvements in Alabama. [162 

River and such other parts of said river within said state 
as the Legislature thereof may direct." 21 If there were not 
found four hundred thousand acres of relinquished land in 
the counties named above the deficiency was to be sup- 
plied from any unappropriated lands in Jackson County. 
Thus these lands lay in seven counties of the state. The 
act provided also that the improvements should be made 
according to the plan recommended by the United States 
engineers who should be appointed to survey and report 
a plan. The Legislature of the state created " " the 
Board of Tennessee Canal Commissioners," consisting of 
five men, in whom was vested the power to make con- 
tracts for the execution of plans recommended by the 
engineers. The proceeds from the lands aggregated $i,- 
400,ooo. 28 In 183 1 work was begun under the auspices 
of this board, and a canal was cut around Big Muscle 
Shoals fourteen and a quarter miles long, sixty feet wide 
and six feet deep. By 1836 the canal had been completed, 
and was thrown open for navigation, but continued in use 
for about one year only. Too little attention had been 
given to its terminal approaches and boats could enter the 
canal only at certain stages of the water. The following 
year the canal was closed for want of funds. Being thus 
abandoned the canal fell gradually into ruin till work 
was resumed by the Federal Government about forty 
years later. 

Since 1868 appropriations have been regularly made 
for the improvement of the Tennessee in each river and 
harbor act. The appropriations divide the river into two 
sections, Chattanooga being the dividing point. 

(1) That portion of the river above Chattanooga is used 
principally for rafting lumber and logs, though it is also 
plied by flat-boats and steamboats of light draft. In 1832 
the state of Tennessee undertook the improvement of 
certain points above Chattanooga; the work, however, 

21 United States Statutes at Large, vol. iv, p. 290. 

22 By Act approved January 15, 1830. 

23 Memorial from Legislature to Congress, December 23, 1868. 



163] River and Harbor Improvement. 45 

did not prove of any lasting value. The plan adopted by 
the Federal Government has been to obtain a three-foot 
low water navigable channel between Chattanooga and 
the French Broad by excavating rock and gravel, by re- 
moving boulders, and by the construction of wing dams. 
For this purpose appropriations have been made between 
April 10, 1869, and March 3, 1899, aggregating $39i,ooo. 24 
The expenditures have resulted in giving a lengthened 
season of navigation and improving the channel at many 
of the places of obstruction. 25 

(2) For the improvement of the Tennessee below Chat- 
tanooga the following appropriations have been made: 

March 2, 1827 $ 200.00 (survey) 

May 23, 1828 1,400,000.00 (400,000 acres land) 

August 30, 1852 50,000.00 

June 9, i860 1,350.00 

June 12, i860 1,406.94 

July 25, 1868 85,000.00 

April 10, 1869 5,095.00 

July 11, 1870 80,000.00 

June 10, 1872 50,000.00 

March 3, 1873 100,000.00 

June 23, 1874 100,000.00 

March 3, 1875 360,000.00 

August 14, 1876 255,000.00 

June 18, 1878 300,000.00 

March 3, 1879 210,000.00 

June 14, 1880 300,000.00 

March 3, 1881 250,000.00 

August 2, 1882 250,000.00 

August 7, 1882 3,970.18 

July 5, 1884 350,000.00 

August 5, 1886 262,500.00 

August 1 1, 1888 250,000.00 

Sept. 19, 1890 475,000.00 

March 17, 1891 3.91 (transfer settlement) 

July 13, 1892 500,000.00 

August 17, 1894 400,000.00 

June 3, 1896 50,000.00 

March 3, 1899 235,000.00 

Total $6,324,526.03 

24 Reports of Engineers; and United States Statutes at Large. 
26 Report of Captain Kingman, July 18, 1896, and Statutes at 
Large. 



46 Internal Improvements in Alabama. [164 

In 1867 an examination was made of this part of the 
river (from Chattanooga, Tennessee, to Paducah, Ken- 
tucky). Upon this survey the present project was de- 
cided upon, though subject to subsequent modifications. 
It was determined that attention should first be directed 
to Muscle Shoals, as navigation here was effectually 
closed, and the river would be practically useless unless 
this barrier be overcome. Consequently the greater part 
of the above appropriations has been expended on this 
section of the river. 

From Chattanooga to Decatur, a distance of one hundred 
and forty-five miles, occur a number of reefs and bars 
which tend to obstruct navigation. The approved project 
for this section " is to remove obstructions so as to obtain 
a depth of at least three feet at low water " by blasting, 
dredging, and by removing boulders, snags and gravel. 
The work done in pursuance of this plan has rendered up- 
stream navigation easier, and the dangers of down-stream 
navigation have been materially remedied, though the dif- 
ficulties are not yet entirely overcome. 

From Decatur to Florence. — The object of the improve- 
ment on this section of the river is to obtain continuous 
navigation around the three sets of shoals which obstruct 
the greater part of the distance of forty-eight miles be- 
tween these two points. The approved project, based on 
the survey made in 1872 and modified in 1877, is : (1) to 
enlarge, rebuild and straighten the old canal around Big 
Muscle Shoals (built in 1831-36, and which had been aban- 
doned in 1837) so as to give a canal fourteen and a half 
miles long, with nine locks having a total lift of eighty-five 
feet, the canal to be six feet deep and seventy to one hun- 
dred and twenty feet wide at the water surface. (2) To 
construct at Elk River Shoals a canal one and a half miles 
long, with two locks with a total lift of about twenty feet. 
(3) To blast at Little Muscle Shoals a channel through 
the bed-rock of the river and to construct stone wing 
dams and retaining walls to contract the waterway; to 



165] River and Harbor Improvement. 47 

construct a lateral canal fifteen thousand feet long with 
a guard lock at the head and a lock at the foot having a 
lift of twelve feet. Up to June 30, 1895, there had been 
expended on these works $3,191,726.50 in addition to the 
original land donation of 1828. Owing to the fact that 
appropriations have not been adequate for rapid and con- 
tinuous work, progress has been somewhat slow. How- 
ever, Big Muscle and Elk River Shoals have been rendered 
navigable at all seasons of the year, the channel at Little 
Muscle Shoals has been much improved and work is still 
in progress. 

From Florence to the foot of Bee Tree Shoals (30 miles). — 
The obstructions here found are the Bee Tree and Colbert 
Shoals which begin about twenty-two miles below Florence 
and extend a distance of eight miles with a total fall of 
twenty-five feet at low water, at which stage the available 
depth is about one and a half feet. To June 30, 1890, for 
surveys, excavations, removal of rock from the channel and 
construction of dams only $62,243.41 had been spent on 
this section of the river. In this year a new project was 
adopted which, as modified in 1891 and 1892, contemplates 
the construction of a canal 7.8 miles long, one hundred 
and fifty feet wide with a depth of seven feet. A guard 
lock is to protect the upper end of the canal and at the 
lower end a lock of twenty-five feet lift is to be con- 
structed. Under this project, to June 30, 1895, had been 
expended $149,735.42 and work is still in progress under 
an appropriation (made by Act of Congress March 3, 
1899) of $100,000 toward this item. 

From the foot of Bee Tree Shoals to Paducah, Kentucky. — 
Along this section of the river comparatively little has 
been expended owing to the attention attracted to the 
more serious obstructions above. To August 17, 1894, 
only $62,043.32 had been allowed (from the general ap- 
propriation) for the improvement on this section. To this 
add $200,000 appropriated by acts of August 17, 1894, and 
March 3, 1899, gives a total of $262,043.32 expended below 



48 Internal Improvements in Alabama. [166 

the foot of Bee Tree Shoals. Snagging, making surveys, 
and improving Livingston Point (which with two small 
islands below it forms the harbor of Paducah) constitute 
the work done here. This portion of the river, being 
below most of the large tributaries, affords the best navi- 
gation of the whole stream, and three-fifths of the entire 
business of the river and its tributaries is done on this 
division. 

The river is not yet navigable for the entire year, but 
the success of the improvements already made warrant the 
assertion that the main trunk of the river can be rendered 
so, and the navigable season can be greatly lengthened 
on all the tributaries. 28 

(2) The Chattahoochee. — This river rises in the ex- 
treme northern part of Georgia, flows southwestwardly 
until at West Point it strikes the boundary line between 
Alabama and Georgia; thence it flows nearly due south, 
forming the boundary line between these two states, and 
further on in its course between Georgia and Florida until 
it joins the Flint, forming thus the Apalachicola. The 
Chattahoochee does not become navigable till it reaches 
Columbus, about two hundred and twenty-five miles above 
its junction with the Flint. Between these two points the 
plan of improvement (adopted in 1873 and still in force) is 
to get and maintain a channel four feet deep and one hun- 
dred feet wide. For this purpose $377,000 have been ap- 
propriated and expended, beginning with the first appro- 
priation of $2000 (February 24, 1835) and including the 
last appropriation of $50,000 (March 3, 1899). 27 

(3) The Tallapoosa. — Under an act of Congress ap- 
proved June 14, 1880, an examination and partial survey 
of this river was made which resulted in a project for im- 
provement designed to obtain a navigable channel from 

28 Reports of Major Kingman in Annual Reports of the Chief of 
Engineers, War Department. 

27 Reports of Major Mahan, July 13, 1896; and of Major Mahan 
and Captain Flagler, September 28, 1899. 



167] River and Harbor Improvement. 49 

its junction with Coosa River to the foot of Tallassee 
Reefs, a distance of forty-eight miles. The work done 
consisted in the removal of logs and snags, deepening 
shoals and cutting overhanging timbers. For this pur- 
pose appropriations have been made aggregating $44,000 
between August 2, 1882, and September 19, iSox).^ The 
Tallapoosa flows through rich cotton lands, largely culti- 
vated, with many thousands of acres of arable and well 
timbered uplands adjacent. The falls of Tallapoosa fur- 
nish magnificent water power which is partly utilized by 
cotton-mill industries. The river, however, is not sus- 
ceptible of permanent improvement, and Captain Price in 
his report of July 10, 1893, states that no commercial use 
is made of the improved channel. Pursuant to his recom- 
mendations no further appropriations have been made for 
this river and work has been therefore suspended. 28 

(4) The Choctawhatchee. — The commerce of this 
stream is mainly cotton, saw-logs, timber and lumber. 
That part of the river considered for improvement is that 
from its mouth to Newton, Alabama, a length of 162 miles. 
The most of the commerce of this stream is done between 
Geneva, Alabama, and Caryville, Florida. Below the latter 
place the Choctawhatchee runs through a sparsely settled 
country where the business is almost exclusively that of 
cutting and rafting timber. 

The project for improvement as adopted in 1880, and 
amended in 1890, provides for the securing of a channel 
navigable in low water from the mouth of the river to 
Newton, Alabama. Appropriations for this river began 
as early as March 3, 1833. From that date other amounts 
have followed from time to time, making a total of $162,000 
up to, and including, the appropriation of March 3, 1899. 80 



Report of Captain Black for Fiscal Year, ending June 30, 1890. 
Report of Captain Price, July 10, 1893. 
By Act February 2, 1839. 
4 



50 Internal Improvements in Alabama. [168 

To this amount must be added the $10,000 appropriated 
by the State Legislature from the three per cent fund. 31 

(5) The Coosa. — This river is formed by the junction 
of the Oostenaula and the Etowah. The Etowah is not 
navigable. The Oostenaula and its tributary, the Coosa- 
wattee, are navigable the year round for light draft boats 
from Rome, Georgia, at the junction of the Oostenaula 
and Etowah, to Carter's Landing, Georgia, on the Coosa- 
wattee, a distance of 105 miles. There would be a con- 
tinuous water route of transportation from Carter's Land- 
ing, Georgia, to Mobile, Alabama, were it not for the 
shoals and rapids on the Coosa River distributed over a 
distance of 137 miles in Alabama between Greensport and 
Wetumpka. This reach, covering 776 miles, would thus 
include the Coosawattee, the Oostenaula, the Coosa, the 
Alabama and the Mobile rivers. 32 Realizing the import- 
ance of this route to the commercial and industrial life of 
the state the Legislature of Alabama in 1823 passed an 
act looking forward to the improvement of Coosa River.* 8 
The plan was, however, to be executed by private capital. 
The project was approved by Congress in 1824 and four 
years later Congress enacted that any surplus from the 
grant (400,000 acres of land) for the improvement of the 
Tennessee River should be applied to the improvement 
of the Coosa, Cahaba and Black rivers. No private capi- 
tal was subscribed to the Coosa Navigation Company, "nor 
was there any surplus from the Tennessee land grant," 
so the whole scheme was abortive. Other efforts were 
made by the state in 1837, an ^ m x 839, when in each year 
$30,000 were appropriated from the " three per cent fund " 
for improving the Coosa. 34 With these small amounts, 

31 Reports of Major Marian, 1897; and of Major Mahan and Cap- 
tain Flagler, 1899; also Statutes at Large, vol. xxx. 

32 Report of Major Mahan, 1894. 

33 Acts of Alabama: "Coosa Navigation Company," incorporated 
by Act, December 30, 1823. 

34 Acts of Alabama, 1837 and 1839. 



169] River and Harbor Improvement. 51 

however, no permanent work resulted. In 1876 the work 
of improvement began by the Federal Government. The 
river is divided into two sections: (1) that lying between 
Rome and the East Tennessee, Virginia and Georgia Rail- 
road Bridge and (2) that lying between this bridge and 
Wetumpka. On the first of these divisions the plan pro- 
vided for eight locks and dams at the points of greater 
obstruction and for works of contraction and channel ex- 
cavation for points less troublesome. It is on the second 
of these sections that the most serious difficulties are en- 
countered. Here a series of twenty-three locks and dams 
must be constructed, and the accomplishment of this end 
is the present plan. Appropriations from the Government 
have been as follows : 3B 

From Rome to E. T. V. & G. R. R. Bridge: 

August 14, 1876 $ 30,000.00 

June 18, 1878 75,000.00 

March 3, 1879 45,000.00 

June 14, 1880 75,000.00 

March 5, 1881 60,000.00 

August 2, 1882 83,700.00 

July 5, 1884 50,000.00 

August 5, 1886 45,000.00 

August 11, 1888 60,000.00 

September 19, 1890 150,000.00 

July 13, 1892 130,000.00 

August 18, 1894 1 10,000.00 

June 3, 1899 20,000.00 

Total $983,700.00 

From Bridge to Wetumpka: 

September 19, 1890 $150,000.00 

July 13, 1892 100,000.00 

August 18, 1894 1 10,000.00 

June 3, 1896 50,000.00 

Total $410,000.00 

Work was not begun on the lower of these two sections 
until after 1890, for in this year the first appropriation was 

35 Reports of Engineers and Statutes at Large. 



52 Internal Improvements in Alabama. [170 

made for the specific work. The Coosa River flows 
through the mineral regions of North Alabama, the agri- 
cultural belt of Middle Alabama and the timber districts 
of Southern Alabama, and its importance as a commercial 
route can hardly be overestimated. The appropriations 
for this river have been so small that very little of the 
work to be done has been yet effected, and it has been 
estimated that at the present rate "it will be 150 years be- 
fore this section will have water transportation for its coal 
and iron to Mobile." 36 

(6) The Cahaba. — Above Centreville, Alabama, the 
Cahaba River, though flowing through the extensive Ca- 
haba coal fields, cannot be utilized. The river in this sec- 
tion consists of a series of pools and rapids which can be 
overcome only by extensive use of locks and dams, a plan 
too expensive to be feasible. Surveys of this stream were 
made in 1875 and 1881, and under recommendations then 
made a plan was adopted which contemplated obtaining 
a navigable channel from its mouth to Centreville, a dis- 
tance of 88 miles. This was to be accomplished by the 
removal of snags and logs, by excavating gravel bars and 
deepening sand bars by works of contraction and shore 
protection. For this purpose the Government appro- 
priated $45,000.00 between August 2, 1882, and July 13, 
1892. Two railroad bridges without draws, one ten miles, 
the other twenty-two miles, above the mouth of the Ca- 
haba, prevent any commercial use being made of the 
river, and as no efforts have ever been made to compel 
the placing of draws in the bridges, work has been sus- 
pended and no further allotments made to this river. sr 

(7) Conecuh and Escambia. — This river, north of 
Florida and Alabama line, is known as the Conecuh; south 
of that line as the Escambia. This stream is of more im- 
portance probably to Florida than to Alabama. It sup- 

88 Report of Major Mahan, 1894. 
87 Report of Major Mahan, 1894. 



171] River and Harbor Improvement. 53 

plies two-thirds of all the timber, which is the principal 
export product of Pensacola. The commerce of this 
stream in 1895 was estimated at $2,000,000.00, consisting 
almost exclusively of timber products. The project of im- 
provement provides for securing and maintaining a 
channel sufficient for the passage of timber rafts from 
the mouth of Indian Creek in Alabama to Pensacola, 
Florida. To this end $102,500.00 have been appropriated 
between March 2, 1833, and March 3, 1899. 

(8) The Alabama. — For the improvement of this river 
the appropriations have been as follows: 35 

June 18, 1878 $ 25,000.00 

March 3, 1879 30,000.00 

June 14, 1880 25,000.00 

March 3, 1881 20,000.00 

August 2, 1882 20,000.00 

July 5, 1884 10,000.00 

August 5, 1886 15,000.00 

August 1 1, 1888 20,000.00 

September 19, 1890 20,000.00 

July 13, 1892 70,000.00 

August 18, 1894 50,000.00 

June 3, 1896 40,000.00 

March 3, 1899 50,000.00 

Total $395,000.00 

The original project for improvement was to obtain a 
channel four feet deep at low water with a minimum width 
of two hundred feet from Wetumpka to the junction of 
the Alabama and Tombigbee rivers, a distance of three 
hundred and twenty-three miles. This plan, adopted in 
1876, was amended in 1891 so as to provide for a depth 
of six feet. In its original condition, owing to logs, snags, 
fallen trees, bars and shoals, the navigation of this river 
was difficult and tardy. The work done has been to re- 
move these obstructions, to blast and dredge rock and 
gravel bars and to deepen sand bars by works of contrac- 
tion and shore protection. The channel has been much 

88 Report of Major Mahan July 10, 1897; and Statutes at Large. 



54 Internal Improvements in Alabama. [172 

improved and is now navigable from Montgomery to Mo- 
bile during the greater portion of the year. The com- 
merce of the Alabama River is important, averaging an- 
nually from six to nine million dollars. 39 

(9) Mobile Harbor. — The Mobile Bay from its mouth 
to the city wharves is thirty miles ; its width at its entrance 
from the Gulf is three and a quarter miles, at its lower 
anchorage about twenty miles and at its northern extremity 
it again narrows down to a width of about eight and a half 
miles." In the original condition of this bay the wharves 
of Mobile could not be reached by a vessel of any consid- 
erable size owing to obstructions in the channel, particu- 
larly at the points known as Choctaw Pass, where the 
channel was only five and a half feet deep, and Dog River 
Bar where the depth was only eight feet. 41 All vessels ex- 
cept those of very light draft were forced to lie in the lower 
anchorage twenty-seven miles from the city. All cargoes 
had to be transported to and from there by lighters at an 
annual cost of not less than $100,000.00. Cotton and other 
goods in passing up and down the bay were " liable to 
damage from exposure to weather and it is fair to suppose 
that it was a prominent reason for the Liverpool cotton 
merchants assuming, as they did, that cotton going by way 
of New Orleans arrived in better order, and so should bring 
a better price than when they went by way of Mobile." 4S 
This was the status when work was begun by the Federal 
Government in 1827. Since that date there have been five 
different projects of improvement: (a) Under the original 
plan between 1827 and 1857 an unobstructed channel was 
obtained ten feet deep and about two hundred wide from 
Mobile to the Gulf of Mexico, (b) In 1870 the second 



89 Reports of Engineers, 1896, 1897 and 1899. 
40 Berney: Hand-Book of Alabama, p. 504. 

41 Report of Major Rossell, 1896. 

42 Memorial and Proceedings of the Rivers and Harbors Improve- 
ment Convention assembled at Tuscaloosa, Alabama, November 
17, 1885, p. 38. 



173] River and Harbor Improvement. 55 

stag'e was entered upon when a channel was planned 
from the city to the gulf thirteen feet in depth and 
three hundred feet wide, (c) The plan was again amended 
in 1878 to provide for a channel of seventeen feet depth 
and two hundred feet width. This project was com- 
pleted in 1889. (d) While the plan was nearing com- 
pletion another was adopted. In 1888 work began 
under the fourth project which provided for a channel 
twenty-three feet deep at mean low water. The upper 
end of this proposed channel was moved from Mobile 
to the mouth of the Chickasabogue Creek, thus adding 
a little more than two miles to the length of the chan- 
nel, (e) The River and Harbor Act of March 3, 1899, 
appropriated $100,000 for continuing this improvement: 
" provided, that a contract or contracts may be entered 
into by the Secretary of War for such materials and work 
as may be necessary with the view of ultimately securing 
a channel twenty-three feet deep and one hundred feet 
wide at the bottom, with appropriate slope, to be paid for 
as appropriations may from time to time be made by law, 
not to exceed in the aggregate $500,000.00, exclusive of 
the amount herein and heretofore appropriated." Under 
this provision the contract has been awarded and accord- 
ing to this plan work is now in progress. 43 

The appropriations for this work have been as follows: " 

May 20, 1826 $ 10,000.00 

March 2, 1829 20,000.00 

June 23, 1834 10.000.00 

March 3, 1835 17,997.60 

March 3, 1837 50,000.00 

July 7, 1838 50,000.00 

August 30, 1852 50,000.00 

March 3, 1857 20,833.08 

(Relief claim) 

July 11, 1870 50,000,08 

March 3, 1871 50,000.08 

48 Report of Major Wm. I. Rossell, July 20, 1896; and July 20, 
1899. 
44 Reports of Engineers and Statutes at Large. 



56 Internal Improvements in Alabama. [174 

June io, 1872 § 75,000.00 

March 3, 1873 100,000.08 

June 23, 1874 100,000.08 

March 3, 1875 26,000.08 

June 18, 1878 10,000.08 

March 3, 1879 100,000.08 

June 14, 1880 125,000.08 

March 3, 1881 100,000.00 

August 2, 1882 125,000.00 

July 5, 1884 200,000.00 

August 6, 1886 90,000.00 

August 11, 1888 250,000.00 

September 19, 1890 350,000.00 

July 13, 1892 212,500.00 

March 3, 1893 500,000.00 

August 18, 1894 390,000.00 

March 2, 1895 291,300.00 

March 16, 1896 160,000.00 

June 3, 1896 60,000.00 

June 4, 1897 25,000.00 

July 1, 1898 30,000.00 

March 3, 1899 100,000.00 

Total $3,748,630.68 

As will be seen from the above appropriations this work 
was neglected by the Federal Government between the 
years 1857 and 1870. The channel was found to have 
shoaled to seven and a half feet at Choctaw Pass in i860. 45 
The matter was brought to the attention of the State Legis- 
lature and an act was passed on February 21, i860, ap- 
pointing a " Board of Harbor Commissioners " who were 
to " deepen and improve the bay and harbor." Funds with 
which to operate were to be raised by issuing bonds of 
Mobile County not to exceed $800,000.00. To meet these 
bonds and accruing interest the county officials were em- 
powered to assess the people of Mobile County at the rate 
of twenty cents on every hundred dollars. The state as 
an aid to the work, was to give one-fifth of all revenues 
collected by the state from that county. When the im- 
provements made should enable vessels of eight feet 

45 Acts of Alabama, 1859-60. 



175] River and Harbor Improvement. 57 

draught to approach the city wharves, at low tide, then six 
cents per ton were authorized to be charged on all cargoes 
until the debt was discharged. The act required that the 
consent of Congress should be obtained. It appears that 
Congress did not approve the plan and nothing was done. 

In 1867, the citizens of Mobile County procured the 
passage of another act of the Legislature appointing a 
Board for the prosecution of this work and requiring that 
the Revenue Commissioners of Mobile County should issue 
bonds (county) to the amount of $1,000,000.00 46 for this 
purpose. About $200,000.00 4T were thus raised and ex- 
pended by Mobile County before the repeal of the act by 
the Legislature of 1872-3. From these efforts no per- 
manent improvements resulted. In 1870 the work was re- 
sumed by the Federal Government and since that date has 
gone steadily forward, gradually admitting to the city 
wharves vessels of heavier and heavier draft. A letter 
from Mr. A. C. Danner, of Mobile, to Major Rossell, on 
June 9, 1896, states that " Mobile's tonnage movement for 
a period of nine years shows an increase of 458 per cent 
up to September 1, ultimo, and every month during the 
current, year shows a steady and continuous increase of 
use for the channel." 48 Between 1896 and 1899, there was 
an increase of 32 per cent in the tonnage of timber, lumber, 
shingles, staves and cotton passing through this port. 48 

(10) The Tombigbee. — The work done on this stream 
is divided into the following sections: 

(a) From Walker's Bridge, Mississippi, to Fulton, Mis- 
sissippi, a distance of two and three quarter miles; 

(b) From Fulton to Columbus, Mississippi, fourteen 
miles; 



46 Acts of Legislature, 1866-67, P- 5°7- 

47 Memorial and proceedings of the Rivers and Harbors Improve- 
ment Convention: Assembled at Tuscaloosa, Alabama, 1885, p. 35- 

48 Report of Major Rossell, 1899. 

49 Report of Major Rossell, 1899. 



58 Internal Improvements in Alabama. [176 

(c) From Columbus to Demopolis, Alabama, one hun- 
dred and fifty six miles; 

(d) From Demopolis to the mouth of the Tombigbee, 
at its junction with the Alabama, a distance of one hundred 
and ninety-one miles. The improvements thus cover a 
distance of five hundred and fifteen and three quarter 
miles. 50 

(a) The plan on this portion has been to secure and 
maintain a channel for high-water navigation by the re- 
moval of snags, logs and overhanging trees. Appropri- 
ations toward this end began with the act of August n, 
1888, and from that date to the last River and Harbor bill 
of March 3, 1899, have amounted to $14,000.00 for this 
section. Work was promptly begun in 1888 and a channel 
has been secured which, at a rise of three feet above low 
water, is navigable by boats of light draft and by the many 
rafts of timber which are sent down the river to Mobile 
from this section, (b) The plan for section (a) is practi- 
cally the same as that for section (b), from Fulton to Co- 
lumbus. Work on this second division, however, began 
earlier than on the first, and dates back to the survey au- 
thorized by act of June 10, 1872. This project was com- 
pleted in 1882 with a total expenditure to that date of 
$27,293.65, from the funds allotted to the Warrior and 
Tombigbee Rivers. 61 For the maintenance of this improve- 
ment separate appropriations began with the act of July 
13, 1892, and aggregated $23,000.00 including the amount 
carried by act of March 3, i899. 52 

(c) From Columbus to Demopolis the plan is to obtain 
a channel six feet deep at low water and maintain it by 
snagging and dredging and by constructing locks and 
dams. 03 Up to the year 1890 work was done from the 



60 Report of Major Rossell, 1896. 

61 Report of Major Rossell, 1896 and 1899. 

52 Report of Major Rossell, 1899: and Statutes at Large, vol. xxx, 

P- "39. 
58 Rossell's Report for 1899. 



177] River and Harbor Improvement. 59 

appropriations made to the " Warrior and Tombigbee 
Rivers " and (after 1880) to the " Tombigbee from Colum- 
bus to Vienna." In 1890 specific appropriations began for 
this section and from that date, September 19, to March 3, 
1899, inclusive, $160,000.00 have been allotted this division, 
(d) From Demopolis to the mouth of the Tombigbee 
was improved by works of a temporary character between 
1870, when the first surveys were made, and 1888. In the 
latter year an act, of August 11, directed a new survey to 
be made. The project adopted under this survey is to 
obtain by snagging and dredging a channel of six feet at 
low water, and to overcome the chief obstruction, McGraw 
Shoals one hundred and eleven miles above Mobile, by 
locks and dams. To 1890 the funds for this section were 
allotted from the appropriations to the Warrior and Tom- 
bigbee rivers, and the exact amount expended here is not 
known. In this year the appropriations become separate 
for this division and including the amount of March 3, 
1899, aggregate $380,000.00. 

A summary of the appropriations for the Tombigbee 
River would then be as follows: 
For Warrior and Tombigbee from 

March 3, 1875, to March 3, 1879 M $110,000.00 

For Tombigbee 

June 14, 1880 $ 31,000.00 

March 3, 1881 15,378.00 

August 2, 1882 21 ,000.00 

July 5, 1884 25,000.00 

August 5, 1886 18,750.00 

August 11, 1888 12.500.00 

On Section (a) 1886-1809 14,000.00 

On Section (b) 1892-1899 23,000.00 

On Section (c) 1890-1899 160,000.00 

On Section (d) 1890-1899 380,000.00 

Total $810,628.00" 



'"* Between these dates appropriations were made to those two 
rivers collectively and it is impossible to determine from the re- 
ports submitted the amounts expended on each separate river. 

"Acts of Alabama. December 19, 1837. 



60 Internal Improvements in Alabama. [178 

To this amount must be added the $25,000.00 appro- 
priated by the State Legislature from the three per cent 
fund. 

(11) The Warrior. — This river extends from its junc- 
tion with the Tombigbee at Demopolis, to Tuscaloosa, 
a distance of one hundred and thirty miles. Above 
Tuscaloosa the stream is known as the Blaov Warrior. 
In its original condition the Warrior was so obstructed 
that its channel was not navigable except during high 
water and then navigation was extremely difficult and 
hazardous. The first survey was made in 1874. The first 
appropriation was made and in June following, work was 
begun. The improvements made up to 1890 were of 
a temporary character. In that year a new plan was 
adopted which proposed to obtain a channel of six feet 
depth by the removal of logs and snags and overhang- 
ing trees and by the construction of locks and dams.™ 
Six of the latter will be required between Tuscaloosa and 
Demopolis. The act of March 3, 1899, provides for the 
making of contracts for the construction of three of these 
locks and dams "next below Tuscaloosa" BT and under these 
conditions work is now in progress. 

Prior to 1879 tne work done was by funds from the 
appropriations to the Warrior and Tombigbee. 58 Since 
that date separate appropriations have been made for the 
Warrior as follows: 59 

June 4, 1880 $ 20,000.00 

March 3, 1881 10,622.00 

August 2, 1882 11 1,000.00 

July 5, 1884 12,000.00 

August 5, 1886 18,750.00 

August 11, 1888 18,000.00 

September 19, 1890 45,000.00 

July 13, 1892 75,000.00 

66 Report of Major Rossell, 1896. 

57 Statutes at Large, vol. xxx. 

68 Summarized above under the Tombigbee. 

59 Report of Major Rossell, 1879. 



179] River and Harbor Improvement. 61 

August ii, 1894 $ 40,000.00 

June 3, 1896 70,000.00 

March 3, 1899 220,000.00 

Total $539,372.00 

(12) The Black Warrior. — A large section of North 
Alabama, estimated at eight thousand square miles 
is drained by this river. The lands which skirt the 
river are fertile and productive and along its banks are 
found large and valuable deposits of coal. To get water 
transportation from the " Warrior Coal Fields " to 
Mobile is the main object for which improvements 
have been undertaken, both on the Black Warrior and 
the Warrior rivers. The improvements on the Black 
Warrior cover a distance of fifteen miles, from Tuscaloosa 
to Daniels Creek. The present project for improvement 
was adopted in 1887 and proposes to construct five locks 
and fixed dams with a total lift of fifty-two feet. Work 
toward this end began in 1888 and three of the locks have 
been completed. On March 3, 1899, provision was made 
for the construction of the fourth lock and work is now 
in progress. 60 

The appropriations have been as follows: 

July 5, 1884 $ 50,000.00 

August 1, 1886 56,250.00 

August 11, 1888 100,000.00 

September 1, 1890 150,000.00 

July 13, 1892 200,000.00 

August 18, 1894 37,500.00 

June 3, 1896 10,000.00 

March 3, 1899 50,000.00 

Total $653.7So.oo 

The State Legislature appropriated," 1 in addition to 
this amount $20,000.00 to this river from the three per 
cent fund, as has been already mentioned in another con- 
nection. 

60 Report of Major Rossell, 1896 and 1899. 
81 Acts of Alabama, February 7, 1839. 



62 Internal Improvements in Alabama. [180 

Including the original land grant for the Tennessee 
River, the amounts expended by the Federal Government 
upon these items of improvement as above enumerated 
aggregate $14,186,106.71. Thus Alabama has received 
about two-thirds of one per cent of the amount which has 
been expended by the government upon such works in the 
various states of the Union. 02 In the projects now in exe- 
cution for the improvements of the Alabama rivers the 
chief object is to accelerate the development of her mineral 
resources by giving water transportation to the gulf. It 
is estimated that when the present plans are completed 
coal can be carried to Mobile at a charge of twenty-five 
cents per ton, while the present rate by rail is one dollar 
per ton. With this reduction in freight rate coal can be 
delivered to vessels in Mobile at not exceeding $1.25 per 
short ton, and Alabama would be enabled to compete with 
England as an exporter of coal to South America and in 
the East, and West Indies. 63 In paging through the acts 
of Alabama one is impressed with the fact that water trans- 
portation has been of vital importance to the state. In 
the early days her rivers and their small tributary creeks 
served as her chief arteries of trade. Numerous acts in- 
corporating " Navigation Companies " show that practi- 
cally all the rivers in the state, even the smallest, were once 
used as lines of transportation. During the twenties, thir- 
ties and forties we find the tributaries to these rivers, the 
majority of them insignificant creeks, are declared by 
successive acts of the Legislature as " public highways " 
and to fell trees across them, to throw logs into them, or 
to otherwise obstruct their passage was declared a public 
offense and punishable by law. With the development of 
Alabama's railroad system the great majority of these old 
lines have been abandoned and only the fittest have sur- 

82 Proceedings of the Rivers and Harbors Improvement Conven- 
tion (Tuscaloosa, 1897), p. 48: Address of General Joseph Wheeler. 

68 Proceedings of the Rivers and Harbors Improvement Conven- 
tion, 1897, pp. 35-36. 



181] River and Harbor Improvement. 63 

vived. With this transformation has come a shifting of 
trade and business from the old conservative villages which 
slumber on the river's edge to the more active and spirited 
railroad points. While the greater portion of the business 
in Alabama is now done by railroads yet the influence of 
the rivers as competitors is most potent in guaranteeing 
reasonable rates. When the rivers are in boating order 
freights are low and, vice versa, low rivers make high 
rates." Thus in Alabama as in other states of the Union, 
observation and experience point to the fact that the 
maintenance of a good system of water transportation 
affords the most effective safeguard against the potential 
evils of railroad consolidations which tend to throttle com- 
petition. 

64 This fact is illustrated in the report on the Tombigbee for 1881. 
When the river, a competing line with the Mobile and Ohio Rail- 
road, is navigable, freight charges are reduced by the railroad. 
In 1879-80 the charge on cotton per bale was $3.25 by rail during 
the low-water season. When the Tombigbee became navigable 
rates prevailed ranging only from 50c. to $1.25 per bale. Memo- 
rial and Proceedings of Rivers and Harbors Improvement Conven- 
tion, 1885, pp. 53-54. 



CHAPTER III 

CONSTRUCTION OF RAILROADS 

Federal Land Grants 

The policy of Federal aid to railway building as with 
other forms of internal improvement has been a gradual 
growth. Legislation has proceeded not by sudden and rad- 
ical measures differing from all precedent, but by small be- 
ginnings which gradually prepared the public mind for the 
more elaborate schemes which were to follow. From the 
policy of aid to wagon roads, canals, river and harbor im- 
provements, we have been brought to the idea of small en- 
couragement of railroad building. The granting of "rights 
of way " through the public domains to various railroad 
companies together with small lots of land for the erection 
of stations served as the precedents upon which was to be 
based the system of more positive aid by large grants of 
public land. Congress by act of March 2, 1827 1 gave to 
the state of Indiana a large tract of land to aid in 
constructing the Wabash and Erie Canal. On March 2, 
1833 2 Congress authorized the state of Illinois to divert 
its canal grant and to use the proceeds from these lands 
in the construction of a railroad should the latter seem 
preferable to a canal. This was the first congressional 
enactment providing for a land grant in aid of a railroad. 8 
This privilege was not utilized by the state, but the act 
serves to show the growth of the feeling that if Congress 
could aid in making canals it could also aid in building 



1 U. S. Statutes at Large, vol. iv, p. 236. 

2 U. S. Statutes at Large, vol. iv, p. 662. 

3 Public Land Commission, Exec. Doc, 3rd Sess., 46th Cong.. 
Pts. i and iv, p. 261. 



183] Construction of Railroads. 65 

railroads, and points to the fact that public aid will increase 
to such works as enthusiasm mounts higher for improve- 
ments of this character. The first right of way (thirty feet 
on each side of its line) through the public lands for a 
railroad, from Tallahassee to St. Marks, with use of tim- 
bers and other building materials and ten acres of land as 
the terminus, was granted to a Florida company by act 
of March 3, 1835. 4 From this time forward similar priv- 
ileges were granted to various other railroad companies 
up to 1850 when was passed the first railroad act of any 
real importance. This act was skilfully engineered through 
Congress by Senator Douglas of Illinois in the interest of 
the Illinois Central Railroad, and initiated that system 
of Congressional land-grants which prevailed until after 
July 1, 1862. On the latter date a new system was in- 
augurated in aiding the Pacific railroads. Formerly the 
grants had been made to the state as guardians or trustees 
for the roads, thus yielding to the old contention that 
Congress could not create a corporation to do business 
in a state without the consent of that state. After 1862 
this claim was disregarded, as were many others of the old 
State's Rights theories; the grants are now usually made 
to the corporation direct thus brushing aside the state as 
trustee or agent of transfer. 6 Under these two systems 
(the granting of alternate sections 7 either to the state or 
to the corporation direct) the Federal Government to June 
30, 1880, had made railroad grants amounting to about two 

* U. S. Statutes at Large, vol. iv, p. 778. 

6 Public Land Commission, pts. i and iv, p. 261. 
8 Public Land Commission, pts. i and iv, p. 257. 

7 This system was based on the claim that when the alternate 
sections were thus granted along the line of the railroad the 
sections retained by the Government would be enhanced in value. 
The price per acre, therefore, of the remaining contiguous sec- 
tions was doubled, being raised from $1.25 minimum price to $2.50 
per acre; thus it was contended the Government lost nothing by 
the grants. Speech of Senators Douglas and Shields, Cong. Globe, 
vol. xxi, pt. i, pp. 844-48. 

5 



G6 Internal Improvements in Alabama. [18-1 

hundred and fifteen million acres of land. In 1881 it was 
estimated that the amount would be reduced by forfeitures 
to 155,504,994 acres. 8 

The pioneer railroad bill was passed only after it had 
been closely debated. 9 Senator Douglas, some years 
later, in speaking of its passage, remarks: "If any man 
ever passed a bill I did that one. I did the whole work 
and was devoted to it for two years." The bill was in- 
troduced in Congress in 1848 and was bitterly opposed by 
many (the Representatives and one of the Senators of 
Alabama among the number) both on account of inexped- 
iency and because of constitutional objections. 10 Senator 
Bagby of Alabama committed himself firmly to the oppo- 
sition, " For myself," he said when speaking of the bill, 
" I shall consider it my duty to resist such propositions to 
the last — there is no soundness in the proposition and it 
is in vain to tell us that the constitutional question can be 
settled by precedent." 11 From the tone of the debates, 
however, it seemed to be a foregone conclusion that Sen- 
ator Douglas's bill though fettered by constitutional ob- 
jections, would finally be passed, and others manifested a 
desire to secure some of the good things while they were 
going. Thus while Senator Bagby was planting himself 
firmly in the opposition his colleague, Senator King, was 
busying himself with introducing bills carrying similar 
grants for prospective railroads in Alabama. 12 The bill 
in 1848 passed the Senate but failed in the House. In 1850 
the project came forward again with brighter prospects. 
Senator King was one of the most ardent advocates while 
his colleague was no longer heard in the opposition. To the 
Mississippi representatives also the bill seems to have be- 
come less objectionable. In the meantime Senator Doug- 

8 Public Lands, pts. i and iv, p. 268. 

9 Cong. Globe, vol. xxi, pt. i, pp. 844-54 and 867-74. 

10 Cong. Globe, Appendix to vol. xi, pp. 534-37. 

11 Cong. Globe, 1st Sess. 30th Cong., Appendix, p. 535. 

12 Cong. Globe, 1st Sess., 30th Cong., 1848, pp. 999, 1038, 1051. 



185] Construction of Railroads. 67 

las had heard that the Mobile Railroad, then building-, had 
failed for want of means. Going to Mobile he met the 
directors of the railroad company and proposed to procure 
a land grant for that road by making it a part of his 
Illinois Central Railroad bill, provided the Representatives 
and Senators from Alabama and Mississippi (the two states 
most interested in the success of the Mobile Railroad) 
would support his measure. The proposition was accepted, 
Senator Douglas returned to Washington, and through 
the influence of the directors of the Mobile road the legis- 
latures of Alabama and Mississippi instructed their Con- 
gressmen and Senators to support the bill after it had been 
so amended as to carry for these states privileges propor- 
tionately equal to those gained for Illinois. 13 With all dig- 
nity and deference the amendment offered by King 14 was 
accepted by Douglas. The bill now assumed, in the eyes of 
some, a more constitutional aspect. The opposition was 
so weakened that by further skilful manipulation it was 
finally passed by a ,small majority and became a law on 
September 20, 1850. The act granted to the state of Illi- 
nois, for the purpose of aiding in making the Illinois Cen- 
tral Railroad and its branches, " every alternate section of 
land designated by even numbers, for six sections in width 
on each side of said road and branches," 15 and carried for 
Illinois 2,595,053 acres of land. 16 The amendment (section 
7 of the act) is as follows : " And be it further enacted,, 
that in order to aid in the construction of said Central 
Railroad from the mouth of the Ohio River to the City of 
Mobile/all the rights, privileges and liabilities hereinbefore 
conferred on the State of Illinois shall be granted to the 
States of Alabama and Mississippi respectively, for the pur- 
pose of aiding in the construction of a railroad from said 
City of Mobile to a point near the mouth of the Ohio River, 

13 Public Land Commission, pts. i and iv, p. 263. 

14 Cong. Globe, vol. xxi, pt. i, p. 845. 

15 Public Land Commission, pts. ii and iii, p. 180. 

16 Public Land Commission, pts. ii and iii, p. 180. 



68 Internal Improvements in Alabama. [186 

and that public lands of the United States, to the same 
extent in proportion to the length of the road, on the same 
terms, limitations and restrictions in every respect, shall 
be, and are hereby, granted to said States of Alabama and 
Mississippi respectively." Under this act and others 
based upon it as precedent the state of Alabama has re- 
ceived the following amounts of land granted as aid to 
lailroad building:* 

ACRES. 

Mobile & Ohio, September 20, 1850 419,528.44 

Alabama & Florida, May 17, 1856 399,022.84 

Selma, Rome & Dalton, 18 June 3, 1856 858,515.98 

Alabama & Chattanooga, June 3, 1856 652,966.66 

South & North Alabama, June 3, 1856 445,158.78 

Mobile & Girard, 19 June 3, 1856 302,181.16 

Total 3,077,373-S6 *° 

The Two and Three Per Cent Funds. — Congress by act 
providing for the admission of Ohio into the Union de- 
clared that 21 " One-twentieth part of the net proceeds 
of the lands lying within the said state sold by Congress, 
from and after the thirtieth day of June (1802) .... shall 
be applied to laying out and making public roads leading 
from the navigable waters emptying into the Atlantic to 
the Ohio, to the said state and through same, such roads 
to be laid out under the authority of Congress, with the 
consent of the several states throusrh which the roacl shall 



17 Taken from Report of Secretary of Public Lands, 1897. House 
Documents, vol. xii, p. 225. Amounts indicate the number of acres 
granted up to June 30, 1897. 

18 The original act made the grant to aid the Alabama and Ten- 
nessee Railroad; a later act transferred the lands to the Selma, 
Rome and Dalton road. 

19 The original grant carried 504,145.86 acres, but owing to for- 
feitures this was reduced to the above amount by an adjustment 
made April 24, 1893. 

20 In addition to this, 67,784.96 acres were granted Alabama for 
the Coosa and Tennessee road. Of the construction of the road 
there was no evidence found in the General Land Office up to 1897 
and the grant is supposed to have lapsed. 

21 Statutes at Large, vol. ii, p. 173, April 30, 1802. 



187] Construction of Railroads. 69 

pass." All public lands in Ohio were to be exempt from 
taxation by the state for a term of five years from the 
date of their purchase by settlers and this five per cent of 
the land sales was offered as one of the items of com- 
pensation to the state for this relief given to her immi- 
grants. The people of Ohio in accepting the terms for her 
admission requested that three-fifths of this fund might be 
applied to making roads within her borders under the con- 
trol and supervision of the State Legislature, while the re- 
maining two-fifths was to be expended by Congress in mak- 
ing roads leading to the state. This proposal was accepted 
by Congress and found expression in the modified act for 
Ohio's admission into the Union." Thus originated the 
custom according to which so many of our states, upon 
their admission, were given their " two and three per cent 
funds " on the same condition under which Ohio received 
hers. On March 2, 1819, Congress passed the act pro- 
viding for the admission of Alabama into the Union. 
Under this law five per cent of the net proceeds of the 
lands lying within the territory of Alabama and sold by 
Congress from and after the first day of September, 1819, 
was " reserved for making public roads, canals, and im- 
proving the navigation of rivers " three-fifths to be applied 
within the state under the direction of the State Legislature 
" and two-fifths to the making of a road or roads leading 
to the said state under the direction of Congress." 2: Thus 
originated what was designated the " two and three per 
cent fund " and which was the subject of so much discus- 
sion and controversy in the history of Alabama's legis- 
lation. Congress constructed no road leading to the state 
and up to September 4, 1841, no disposition had been 
made of the two per cent fund. On that date Congress 
passed an act 24 relinquishing this fund to the state of 



Act of March 3, 1803, Statutes at Large, vol. ii, p. 225. 
Statutes at Large, vol. 3, p. 491. 
Statutes at Large, vol. v, p. 457, sec. 17. 



70 Internal Improvements in Alabama. [188 

Alabama on condition that the fund should be " faith- 
fully applied under the direction of the Legislature of Ala- 
bama, to the connection by some means of internal im- 
provement, of the navigable waters of the Bay of Mobile 
with the Tennessee River, and to the construction of a 
continuous line of internal improvements from a point 
on the Chattahoochee River opposite West Point, in Geor- 
gia, across the state of Alabama, in a direction to Jackson 
in the state of Mississippi." The terms were accepted and 
the state became thus the sole trustee for both funds. The 
Legislature by act of December 10, 1823, invested the 
three per cent fund in the State Bank of Alabama, mak- 
ing it an integral part of the capital of that institution and 
only $i35,ooo 25 was expended in efforts at internal improve- 
ments. With the failure of the bank the whole of the 
fund was lost. In 1859 a joint Committee from the two 
Houses of the Assembly reported that the state of Ala- 
bama as trustee was responsible for all moneys which had 
been received, together with interest at six per cent, from 
the dates upon which the amounts had been paid by the 
United States. According to this view the state owed to 
this three per cent fund $858,498. With this report the 
Legislature concurred. The amount assumed by the state 
as her indebtedness to the fund, was distributed, as loans, 
to various railroad enterprises as follows." 

North East and South West Railroad Co $218,135.00 

Wills Valley Railroad Co 75,000.00 

Selma and Gulf Railroad Co 40,000.00 

Cahaba, Marion and Greensboro Railroad Co... 25,000.00 

Opelika and Oxford Railroad Co 50,000.00 

Montgomery and Eufaula Railroad Co 30,000.00 

Tennessee and Coosa Railroad Co 195,363.00 

Alabama and Tennessee River Railroad Co 225,000.00 

Total $858,498.00 

25 Acts 1837-39. Spent on rivers in the state, as detailed in the 
previous chapter. 
28 By Act approved February 18, i860. 
27 Auditor's Report, October 12, 1869. 



189] Construction of Railroads. 71 

These loans were to bear interest at the rate of six 
per cent and were secured by bonds. By act of December 
30, 1868, the " South and North Alabama Railroad Co." 
was given the entire fund. All the bonds, securities and 
obligations belonging to this fund were transferred to the 
company, and the state was released from all liabilities, and 
control over the fund passed to this railroad as sole bene- 
ficiary. 

The two per cent fund passed to state control in 1841 
under the conditions which have been already given. From 
this fund loans were made as follows: 28 

Montgomery and Eufaula Railroad, March 1, 1845 $116,782.64 

Marengo Plank Road Co., December 13, 1853 9,477-47 

Alabama and Mississippi Rivers Railroad Co., Feb. 27, 

1855 28,963.72 

Alabama and Mississippi Rivers Railroad Co., Feb. 15, 

1858 23,178.74 



Total $178,402.57 

The above amounts contributed to the completion of the 
East and West line of internal improvements across the 
state. 



Alabama and Tennessee River Railroad, May 3, 1851.. 
Alabama and Tennessee River Railroad, May 5, 1852.. 
Alabama and Tennessee River Railroad, April 26, 1855. 
Alabama and Tennessee River Railroad, Feb. 15, 1858. . 
Tennessee and Coosa River Railroad Co., Feb. 15, 1856. 



65,961.73 
62,179.83 
17,726.47 
23.178.78 
33,5i3-25 



Total $202,560.06 

These amounts contributed to the completion of that 
plan so long discussed and cherished by the people of 
Alabama — the connection of North and South Alabama by 
some line of transportation. Thus, too, were fulfilled the 
conditions upon which the two per cent fund was surrend- 
ered by Congress to state control. By act of December 
30, 1868, the South and North Alabama Railroad was 
declared the beneficiary of the two and three per cent funds. 

■ " s Auditor's Report, October 12, 1869. 



72 Internal Improvements in Alabama. [190 

The greater portion of this two per cent fund was now in 
the hands of various railroad companies to whom loans 
had been made for the purpose of encouraging the several 
railroad projects throughout the state. In accordance 
with this act of 1868 the bonds and securities executed by 
these railroad companies were delivered to the " South and 
North Alabama Railroad Co." and were as follows: 

North East and South West Alabama Railroad Co $306,468.00 

Wills Valley Railroad Co 87,375.00 

Alabama and Mississippi Railroad Co 66,500.00 

Montgomery and Eufaula Railroad Co 36,051.84 

Opelika and Oxford Railroad Co 66,500.00 

Cahaba, Marion and Greensboro Railroad Co 38,611.75 

Total $6oi,5o6.59 20 

Thus the bulk of the " two and three per cent fund " was 
bestowed upon the " South and North Alabama Railroad." 
This road was put in operation in 1872. It connects De- 
catur, Alabama, on the Tennessee, with Montgomery, on 
the Alabama River. The road has one hundred and eighty- 
five miles 30 of track and is now operated as a part of the 
Louisville and Nashville system. 81 

State Aid: Policy Prior to Civil War. 

In 1832-3 was constructed the first railroad in Alabama. 
This road ran from Decatur to Tuscumbia. 32 This was 
followed by the construction of the Western Railroad from 
Selma by Montgomery to the eastern boundary of Ala- 
bama, the second line of the state. From this time an 
interest in railroad building grew apace, and there de- 
veloped a strong feeling among the people that the state 
should render some positive aid towards improvements of 
this character. 33 Various obstacles, however, prevented 

20 Auditor's Report, October 12, 1869. 

30 Berney's Hand-Book of Alabama, p. 385. 

31 Report of the Alabama Railroad Commissioners, 1898. 

32 Brewer: History of Alabama. 

38 Governor's Message of November, 1834, November, 1835, No- 
vember, 1836, December, 1839. 



191] Construction of Railroads. 73 

this feeling from finding expression in any legislative acts. 
In 1 85 1 the Committee on Internal Improvements made 
their report to the Legislature of Alabama in which the 
policy of the state was reviewed as follows: 

" The history of Alabama from the first of the state to 
the present period exhibits not one serious effort on the 
part of the Legislature to advance the great interests of 
agriculture, commerce or manufactures, which by the form 
of our government are subjected to its protection and 
control. Other states are rich because they are old, but 
our destiny seems to be to grow old and poor together. 
The caravan of the emigrant tells the fate of a young state 
falling into premature decay and deserted for fresher lands 
which in time will probably be doomed to the same fate." 
The state, it is urged, must do something to " consolidate 
her northern and southern sections," she must give her 
citizens an " access to market," that her people become 
" anchored to the soil " and lose their " desire for wander- 
ing to the Far West," 34 The report mentioned the fact that 
other states were forging ahead in such works. To items 
of internal improvement Virginia had recently subscribed 
eight million dollars; Maryland five millions; New York 
three millions as a bonus to one enterprise alone, the Erie 
Railroad; Massachusetts six millions; Missouri two mil- 
lions to the St. Louis and Pacific Railroad; Tennessee one 
million three hundred thousand loaned to the Chattanooga 
Railroad; Georgia three and a half millions to one road. 
The report urged that Alabama should enlist in aiding 
similar enterprises and recommended that the existing Leg- 
islature endorse railroad bonds to the extent of two million 
dollars. Regardless of this enthusiastic appeal the Legis- 
lature would not commit the state to a positive policy of 
internal improvements. Several causes may be assigned 
as explaining the persistent lethargy or conservatism or. 



84 Report of F. Phillipps, Chairman of Committee on Internal Im- 
provements: House Journal, 1851-52. 



74 Internal Improvements in Alabama. [192 

the part of the state. In the first place the state's finances 
Had not yet recovered from the collapse which came with 
the failure of her bank; taxation was still high, the people 
were sensitive to every touch of the tax-gatherer and many 
of them stood ready to oppose any measure which threat- 
ened a higher tax rate. Again the management and suc- 
cess of the old state bank had not been of such a nature as 
to inspire confidence in the integrity or ability of the state 
as an undertaker. Those who opposed the policy of state 
aid used this as one of their strongest arguments, remind- 
ing the people very effectively that the state's past record 
as an entrepreneur was one not altogether glorious. A 
third cause may be found in the fact that there was a 
strong element in the population of Alabama which was 
restless, roving, shifting, and actuated by a spirit of ex- 
ploitation rather than development, not feeling sure that 
they were permanently located, but thinking of the more 
distant West as the place of final destination. 35 This ele- 
ment acted as a check to the spirit of internal improve- 
ments; for a system of such works, whose completion will 
require an extended period of time, and whose fruits must 
be reaped at some future date, will be advocated only by 
those who feel themselves permanently at home and deeply 
rooted to the soil. There are traces also of sectional 
jealousies creating friction and retarding legislation. Fin- 
ally Alabama was proverbially of the '• strict construction " 
school; many of her leading statesmen firmly adhered to 
the principle that taxation should only be employed for 
carrying on government and that the promotion of works 
of internal improvements should be left to private capital. 
In 1853 tne subject of state aid to railroads was made 
one of the issues of the state's political campaign. 58 John 

35 In 1845-47 there was a strong tide of emigration from Alabama 
to Texas. In 1846 Monroe County alone is said to have thus lost 
1500 of her inhabitants. Lyell: Travels in the United States, vol. 
ii, PP- 55-65- 

3li Garnett: Reminiscences, pp. 577, 580-82. 



193] Construction of Railroads. 75 

A. Winston planted himself firmly on the side of opposition 
to public aid and was the successful candidate for Gov- 
ernor. In his inaugural address on December 20, 1853, 
he declared his unwillingness that the state should engage 
in works of internal improvement, or become security for 
such, until the whole public debt should be paid. During 
this session of the Legislature this question was one of 
the chief topics of discussion. The spirit of conservatism, 
however, again prevailed and the Governor's views were 
sustained. The election in 1855, showed that the policy 
of the administration was highly endorsed by the people: 
Governor Winston was reelected by a large majority, hav- 
ing received the largest popular vote that had ever been 
cast in the state for any candidate for the Executive." 
The Legislature which met in the following December 
came fully determined to launch the state into a policy 
of public aid to railroads. The Governor was more de- 
termined that such a principle should not be established, 
and by his frequent exercise of the veto power he became 
known as the " Veto Governor " of Alabama. During this 
session of the Legislature he returned, without his ap- 
proval, thirty-three bills which carried loans or other ad- 
vantages to railroads. In vetoing one of these bills,' 3 
the Governor expressed his views at some length and 
assigns the following reasons for withholding his ap- 
proval: (1) By the bill the tax-payers of Limestone County, 
many of them without consenting, will be forced to be- 
come stockholders in a private corporation. " Many able 
jurists and profound statesmen are firm in the conviction 
that such a forced law, or investment, is unwarranted by 
the constitution or by any legitimate influence from the 
principles of our government." The bill cannot be justi- 

S7 Garnett: Reminiscences, p. 616. 

88 The bill was to enable Limestone County to subscribe $200,000 
to the capital stock of the " Tennessee and Alabama Central Rail- 
road Co." and was passed over the Governor's veto on December 
14, 1855. Acts of Alabama. 



76 Internal Improvements in Alabama. [194 

fied by precedent, for to the enlightened statesman be- 
longs " the duty of correcting errors, which, though con- 
secrated by centuries of toleration and backed and propped 
by a thousand precedents, are but errors still." 

(2) It is better " that the construction of railroads, as 
well as all other improvements of supposed public utility 
be left to the slower and safer details of interest, rather 
than resort to the doubtful power of making the people 
involuntary builders." The objects, " few and simple," of 
our government are to " protect every man in the legal 
pursuit of wealth and happiness and in the enjoyment of 
the fruits of his own labors." This proposition defeats 
such objects, it opens the door to " anarchy and to the 
legislative and judicial confiscation of the labor and prop- 
erty of the individual for the use of others. It is an act 
of legislative usurpation, and destructive of a government 
founded on justice." Thus deeming the measure both in- 
expedient and unconstitutional he was assured that his 
disapproval would be vindicated both by results and by pop- 
ular approval. 38 Again on January 9, 1856, 40 he reiterated 
the doctrine that " the only purpose for which the govern- 
ment has a right to tax is to carry on the affairs of the 
government and to pay obligations already existing. 
The experience of Alabama is fruitful of the bitter conse- 
quence of making expediency paramount to principle. The 
proposition to use the credit of the state to promote the 
pecuniary interests of any class of citizens has, almost 
without any opposition, been pronounced against by the 
people of Alabama;" for he had been elected to the Execu- 
tive with the " full understanding " that he would not 
" sanction any measure using or pledging the credit of the 
state for any purpose whatever." Again, there was no 
money in the Treasury available for loans to railroads 
unless the bills of the old state bank and branches ue 

39 Message of December 13, 1855. House Journal, p. 162. 

40 Senate Journal, p. 146. 



195] Construction of Railroads. 77 

reissued. To reissue these bills of banks long since put 
in liquidation would be an unconstitutional measure u and 
would result in giving the state a depreciated currency, 
a policy most ruinous to financial interests. Regardless 
of the Governor's firm opposition and over his unequivocal 
vetoes laws were passed granting loans to railroads as 
follows : 

Alabama and Tennessee Rivers Railroad Co., January 21, 

1856 $200,000.00 

Memphis and Charleston Railroad Co., January 21, 1856 300,000.00 

The acts provided that the loans should be secured by 
first mortgage interest bearing bonds and also by " per- 
sonal securities to be approved by the Governor." The 
impression prevailed that the Governor had little confi- 
dence in the solvency of railroad companies and that he 
would be rather exacting in applying the " personal secur- 
ity " clause. At any rate the loans were never called for 
before later acts " repealed the laws authorizing such 
loans. Governor Winston in his annual message of 1857 
rather congratulated himself upon the prosperity and suc- 
cess which had resulted from the triumph of the policy 
to which he had persistently adhered. " By a firm and 
steady course of patient endurance and economy, the 
greater portion of an enormous debt incurred by financial 
empirics and a departure from the legitimate purposes 
of government has been liquidated; and the credit of Ala- 
bama not only sustained untarnished, but restored to that 
high position which it should be our first duty to maintain 
for it. By a steady resistance to the policy of over-zeal- 
ous enthusiasts and interested incorporations, we have 

41 The position was held that it would now be the state issuing 
" bills of credit " since the banks were in process of liquidation. 
Up to this time, however, the bills had continued in use and no 
serious objection had been raised, though the constitutionality of 
the practice had been often questioned. U. S. Constitution: Art. 
i, Section 10. 

12 Passed February 6, 1858. 



78 Internal Improvements in Alabama. [196 

been enabled to avoid that load of responsibility and debt 
which has been incurred by older and greater states, and 
which for generations must rest upon their people and 
retard their progress. The correctness of the principle of 
an entire separation of state from private enterprises and 
speculations, and leaving to individual energy and private 
capital the construction of such works as the facilities of 
commerce may require, is being established by time and 
the experience of other states, to such a degree as to give 
us abundant cause for congratulation that we have been 
able to resist a popular error, though subjecting ourselves 
to the taunts and reproaches of those who adopted a differ- 
ent policy. It is well for states and individuals to be be- 
hind the spirit of the age when that spirit impels us only 
to embarrassment and bankruptcy. When we see works 
of magnificent extent and grandeur, constructed at a cost 
almost too great for belief pronounced, as state works, 
failures, and thrown upon the market for the purpose of 
relieving the people of the expense of keeping them up, 
we have abundant cause to be thankful that we are not in 
a like predicament, and that we took warning in time." 
The people of other states were burdened with taxation 
to support works which they had been persuaded would 
give relief from all taxes and " furnish the revenue for the 
carrying on of the state government." " The constitution," 
he continued " gives no power to tax the masses that any 
particular class or interest may be advanced. The only 
just object of taxation is to meet the wants of government, 
economically administered, and to secure the ends of pub- 
lic justice. Whenever a government extorts more than is 
absolutely necessary for these purposes it becomes an op- 
pression." 

" The first duty of the state is to pay what she now owes 
and then avoid the accumulation of any surplus by a 
speedy reduction in the rate of taxation. The loans 
granted the several railroad companies, by acts of the last 
Legislature, have not been called for; and had application 



197] Construction of Railroads. 79 

been made it would have been in vain on account of lack 
of funds, and to have re-emitted the bills or notes of the 
old state banks, long since in liquidation would have been 
violating the Constitution of the United States." * Thus 
subsided the strongest wave of enthusiasm that had yet 
made for state aid to internal improvements in Alabama. 
This, too, was the last effort made prior to the Civil War 
to launch the state into such a policy. 

State Aid: Since the Civil War. — In 1867 the agitation 
was renewed and Alabama, for the first time in her history, 
adopted a policy of public aid to railroad building. Dur- 
ing the session of 1866-7 the Legislature passed an " Act 
to establish a system of internal improvements in the 
State of Alabama." The act declared that " whenever 
any railroad company now incorporated by the General 
Assembly of the state of Alabama, should have finished, 
completed and equipped twenty continuous miles of road at 
either or both ends of the road it should be the duty of the 
Governor of the state, and he is hereby required to endorse, 
on the part of the state, the first mortgage bonds of the 
said railroad company to the extent of twelve thousand 
dollars per mile for that portion thus finished, completed 
and equipped, and when a second section of twenty miles 
is finished, completed and equipped, it shall be the duty 
of the Governor, and he is hereby required to endorse the 
first mortgage bonds of the said railroad company, upon 
the presentation of said mortgage bonds by said company, 
to the extent of twelve thousand dollars per mile for the 
second section of twenty miles, and this rate and extent of 
endorsement shall be continuous upon the same condition 
for each subsequent section of twenty miles until said 
railroad is completed." On August 7, 1868 44 the above 
act was amended. After the completion of the first 
twenty miles the bonds should be endorsed as under the 



House Journal, p. 18, Session 1857-58. 
Acts of Alabama, 1865, p. 17. 



80 Internal Improvements in Alabama. [198 

original act, " and when a second section of five miles 
is finished, completed and equipped it shall be the duty 
of the Governor and he is hereby required to endorse the 
first mortgage bonds of said railroad company to the 
extent of twelve thousand dollars per mile for the second 
section of five miles, and this rate and extent of endorse- 
ment shall be continued upon the same condition for each 
subsequent section of five miles, until said road is com- 
pleted." 45 In 1868 William H. Smith, the Provisional 
Governor of the state, in his message to the Legislature 
reviewed the policy of the state toward internal improve- 
ments under the old regime, and suggests that more pro- 
gressive measures be adopted in the future. " The same sys- 
tem of labor which imposed ignorance heretofore upon the 
masses of the community led our law makers to neglect the 
elements of wealth with which Alabama is blessed beyond 
almost any other state — to change our policy in regard to 
these interests, to foster every enterprise that seeks to 
develop the natural wealth of the state and attract hither 
a great portion of the great tide of the foreign immigra- 
tion as well as of the skilled laborers and capital of the 
North will be a pleasant and profitable task, and will doubt- 
less engage your early and earnest attention." " The 
legislative halls were thus filled with that spirit of progress 
which was born in the first flushes of the new regime. 
There are evidences, too, that some of the members were 
peculiarly susceptible to those mercenary influences which 
have been quite potent in the legislative history of so 
many of our states when dealing with large corporate 
interests. A plan yet more positive was adopted by act 
approved September 22, 1868. The rate, or extent, of 
endorsement was now increased to sixteen thousand dol- 
lars per mile. After the completing and equipment of the 
first twenty miles the first bonds should be endorsed and 
the endorsement should be repeated at the completion 



Acts of Alabama, 1868, p. 198. 
Governor's Message, July 14, 1868. 



199] Construction of Railroads. 81 

of each subsequent five mile section. At this session of 
the Legislature was also passed "an Act to authorize the 
several counties and towns and cities of the State of Ala- 
bama to subscribe to the capital stock of such railroads 
throughout the state as they may consider most conducive 
to their respective interests." 47 The question of " Sub- 
scription " or " No subscription " was to be determine by 
the vote of " qualified electors " of the counties and 
towns whenever the president and directors of a railroad 
company should signify to the authorities (county com- 
missioners, or mayors of municipalities) their desire to 
obtain loans on subscriptions to stock; then the said 
authorities were to order elections to be " conducted in 
the same manner and by the same officers as are now 
provided by law." If the vote should declare for " No 
subscription " it is declared lawful for the authorities 
to order a second election if the interested railroad 
company should make another application within twelve 
months. If a majority of the qualified voters declare 
for " Subscription " then bonds, to the extent of the 
amount voted, are required to be issued to the company in 
exchange for certificates of stock. The interest on the 
bonds is to be met by a tax levied and assessed by county 
commissioners or municipal authorities. The latter were 
given full power of procedure against the " tax-assessors 
and collectors and their sureties " for the amount of said 
taxes which they might fail or refuse to assess and collect. 
To put these loans or subscriptions on a firm basis the 
Legislature, by act approved March i, 1870, 48 "legalized, 
ratified and confirmed in all respects " all acts and things 
of every kind heretofore done and performed in this state 
for railroad purposes, in substantial compliance with the 
provisions of the act of December 31, 1868. Under this 
act of 1868 many of the counties and municipal localities 

47 Acts of Alabama, 1868, p. 514. 
iH Acts of Alabama, 1869-70, p. 286. 
6 



82 Internal Improvements in Alabama. [200 

in Alabama became liberal subscribers to railroad enter- 
prises and incurred debts from which many have not even 
yet succeeded in extricating themselves, and no dividends 
have, as a rule, accrued to the shares owned in the railroad 
stocks. 

The above loans authorized to be made by the state were 
to be secured by " first mortgage bonds." In 1869 the 
State Auditor referred to the fact that the value of roads 
which had secured loans, including all main and side tracks, 
all rolling stock, in fact, " everything that could be em- 
braced by a first mortgage bond," was less than thirteen 
thousand dollars per mile, " full, fair and just valuation as 
per affidavits of the Presidents and Secretaries of the roads." 
He emphasizes the danger threatening the state from mak- 
ing loans at the rate of sixteen thousand dollars per mile, 
and urges that the law should be repealed. 40 Governor 
Smith, though an enthusiast for state aid, thought the law 
was too broad, and forced the state to aid in constructing 
local schemes of rival and jealous communities. As no end 
to the loans was in sight he recommended that the law be 
repealed. 60 The Legislature, however, did not concur in 
this view. " The railroads again triumph in the struggle. 
It is not my province to inquire how that triumph was 
effected," said Governor Lindsay in referring to the pro- 
ceedings of this body. 51 

The general endorsement system was re-enacted, 62 and 
additional and special aid was granted to four railroads as 
follows: 

South & North Alabama Railroad Company, $6,000 per 
mile added to former endorsement, thus making $22,000 
per mile for this road. 53 

49 Auditor's Report, October 1, 1869. 
so Message of Governor, November 16, 1869. 
51 Message of Governor Lindsay, January 24, 1871. 
62 Act approved by Governor Smith, February 21, 1870. Acts of 
Alabama, 1869-70, p. 149. 
cs March 3, 1870, Ibid., p. 374. 



201] Construction of Railroads. 83 

Alabama & Chattanooga Railroad Company, granted a 
loan of $2,ooo,ooo, M this in addition to the endorsement 
already made by the state. 

Montgomery & Eufaula Railroad Company, granted a 
loan of $300,000 in addition to the regular endorsement of 
$16,000 per mile. 55 

Mobile & Montgomery Railroad Company, Governor to 
endorse on the part of the state bonds to the extent of 
$2,5oo,ooo. 56 

In his message of January 24, 1871, Governor Lindsay 
informed the Legislature that it was impossible to ascertain 
" to what extent bonds under the various statutes have 
been endorsed and issued by the state. Neither in the 
executive office, nor in any other office of the government, 
can be found a record of the action of the executive in 
this regard. I have no knowledge of the form of the 
bonds, except those of the Montgomery & Mobile and of 
the Montgomery & Eufaula Railroads; and, unless from 
rumors or unofficial information, I cannot even suppose 
the number of bonds endorsed to any company, the time 
when and where payable, or whether endorsed or issued 
according to law." 57 In this state of confusion the finances 
of Alabama remained until final adjustment was made 
during the administration of Governor S. Houston. The 
latter, on December 7, 1874, in a message to the Legisla- 
ture, 58 recommended the enactment of a law providing for 
the ascertaining and final adjustment of the state's in- 
debtedness. In practical conformity to the plan there sug- 
gested, the Legislature passed an act 59 authorizing the 
Governor to act as an " ex-officio member," with two others 
whom he should appoint, of a " board of commissioners," 



M February 25, 1870, Ibid., p. 175. 
65 March 3, 1870, Ibid., p. 376. 

56 February 25, 1870, Ibid., p. 175. 

57 House Journal, 1870-71. 

68 Senate Journal, 1874-75, P- 106. 

B9 Approved December 17, 1874. Acts of Alabama, 1874-75, P- I02 - 



S-i Internal Improvements in Alabama. [202 

whose duty it should be to " ascertain, liquidate and adjust 
the subsisting legal liabilities, of the State of Alabama" the 
adjustment and settlement to be " approved and ratified 
by the General Assembly " before it becomes binding on 
the state. Levi W. Lawler and T. B. Bethea were appointed 
by Governor Houston and with him constituted the Board 
of Commissioners by which the settlement was finally 
arranged with the railroad companies. 

The Commissioners, after having been engaged about 
twelve months in this work, submitted their report 60 to the 
Legislature on January 24, 1876. Owing to the incom- 
pleteness of the records of the bonds issued and endorsed, 
the Commissioners addressed inquiries to the bondholders 
through papers published in Alabama, New York and 
London. All creditors of the state were requested to 
present their claims for adjustment. It was thus ascer- 
tained that the indebtedness of the state was $30,037,563, 
an amount " equal to one-fifth of all the property of the 
people " of the state. 61 Of this amount a large share was 
incurred in the interest of railroad building, and was dis- 
tributed as follows: 62 

Alabama and Chattanooga Railroad G3 $7,300,000.00 

Selma, Marion and Memphis 765,000.00 

New Orleans and Selma 320,000.00 

Selma and Gulf 640,000.00 

East Alabama and Cincinnati 400,000.00 

Montgomery and Eufaula 84 1,580,000.00 

Savannah and Memphis 142,000.00 

$11,147,000.00 
Unpaid interest due on these bonds to January 24, 

1876 $3,474,000.00 

$14,621,000.00 



60 Senate Journal, 1875-76, p. 202-32. 

61 Ibid., p. 218. r '"- Ibid., p. 214. 

03 Endorsed bonds $5,300,000 plus $2,000,000 straight bonds. The 
endorsed bonds exceeded by $580,000 the maximum amount author- 
ized by any possible construction of the laws. 

C4 Endorsed bonds $1,280,000 plus $300,000 straight bonds. 



203] Construction of Railroads. 85 

In addition to this amount, straight seven per cent inter- 
est-bearing bonds were held by the following railroads: 65 

South and North Alabama $ 732,000.00 

Grand Trunk 220,000.00 

Savannah and Memphis 204,000.00 

$1,156,000.00 

We thus have an indebtedness of $15,777,000.00 to be 
adjusted by the Commissioners. The latter in their report 
recommend the following plan of adjustment: For the 
$5,300,000.00 endorsed bonds of the Alabama & Chatta- 
nooga Railroad were to be issued $1,000,000.00 in "new 
state direct bonds," bearing interet at four per cent and 
maturing in thirty years from their date. The $2,000,000.00 
of " straight " bonds loaned to the Alabama and Chatta- 
nooga Railroad were to be returned and delivered to the 
state of Alabama, and in exchange for these bonds the 
state should surrender all bonds and mortgages he id 
against the road. Thus Alabama was to relinquish all 
claims to lands m and all other property belonging to the 
road, and in return was to be released from all liabilities 
to the road except the $1,000,000.00 new bonds to be issued. 67 



65 An act of April 21, 1873 (Acts of Alabama, 1872-73, p. 45) au- 
thorized the Governor to issue these straight bonds atTthe rate of 
$4,000 per mile to such roads as would relinquish all their endorsed 
bonds. Only the above three roads saw fit to make the exchange. 
These direct bonds of $1,156,000 were received by these roads in 
exchange for $5,103,000 of endorsed bonds. This latter amount 
added to the above sum $11,147,000 gives us a total of $16,250,000 
of bonds loaned to, and endorsed for the various railroads during 
this period. 

66 The state held mortgages on the lands donated by the Federal 
Government for the construction of this road. 

67 These were " the terms of a proposed settlement by way of 
compromise, arrived at after prolonged discussion " between the 
Board of Commissioners " and Mr. T. W. Snagge, the standing 
counsel of the corporation of foreign bondholders, acting under the 
council of the corporation, to confer with the Governor and other 
Commissioners." Report of Commissioners, Senate Journal, 
1875-76, p. 224. 



86 Internal Improvements in Alabama. [204 

As to the other five roads for which bonds had been en- 
dorsed — (a) Montgomery & Eufaula, (b) East Alabama & 
Cincinnati, (c) Selma & Gulf, (d) New Orleans & Selma, 
(e) Selma, Marion & Memphis — the Commissioners report 
" that there is litigation pending in the courts of this state 
and Tennessee of an important character, involving points 
of law that will in all probability very materially change the 
aspect of what is claimed as the liability of the state upon 
its endorsement of the bonds of tho'se companies; and we 
trust may result in convincing the holders of said bonds 
that their true interest will be best advanced by their accept- 
ance of a transfer of the lien of the state created by statute, 
and giving to the state a full discharge from these pre- 
tended claims against it." 6S 

For the $1,156,000.00 direct bonds issued in exchange 
for the endorsed bonds under the act of April 21, 1873, 
the report recommended 09 that new bonds be substituted 
" on the basis of fifty cents in the dollar of the principle of 
those outstanding, the new bond to have thirty years to 
run at five per cent per annum." This plan was adopted 
by the Legislature. An act " to ratify and confirm the 
settlement of the existing indebtedness of the state, as 
proposed in the report of the commissioners " was passed, 
hy which the liabilities of the state were reduced to $1,596,- 
000.00,™ while it left " open for further settlement the liabil- 
ity of the state upon outstanding endorsements for the 
five other railroad companies " enumerated above. 71 These 
latter claims were deemed by the state to be invalid and 



68 Senate Journal, 1875-6, p. 217. 09 Ibid., p. 210. 

70 $1,000,000 in new bonds to be issued to the Alabama and Chat- 
tanooga Railroad Company, designated as " class C " plus $596,000, 
the limit set as the aggregate of the bonds (designated as " class 
B ") to be substituted for these bonds issued under Act of April 
21, 1873. Sections vi-vii and ix-x of the act approved Feb. 23, 
1876. 

71 Report of the Committee by which the bill was drafted. Senate 
Journal, 1875-76, p. 319. 



205] Construction of Railroads. 87 

were never recognized, though efforts were made for their 
collection. 

Upon the terms of this law settlement has been made as 
the bonds have been presented for exchange, the process 
having covered a number of years. 72 On September 30, 
1897, there were outstanding of these " B " and " C " bonds 
$i,544,ooo.oo, 73 which now form a part of the bonded debt 
of Alabama. By acts approved December 14, 1874, and 
March 17, 1875, the Legislature repealed the acts which 
had authorized county and state aid to internal improve- 
ments. 74 The constitution of Alabama, which became opera- 
tive December 6, 1875, forbids the state or " any county, 
city, town or other subdivision of the state from engaging 
in, or encouraging works of internal improvement either by 
loans of money or credit, or by becoming stockholders in 
such enterprises." Ts And thus ended the last chapter in 
the history of public aid to internal improvements in 
Alabama. 



72 The Auditor's Report (p. 5) of 1893 shows that there had been 
issued of "class B" $578,000, leaving $18,000 still to be issued; 
and of " class C " $963,000, leaving $30,000 still to be issued. 

73 " Class B " $578,000; " class C " $966,000. Auditor's Report, 
1897, p. 29. 

74 Acts of Alabama,- 1874-75, p. 269. 

75 Constitution of Alabama, Article iv, Sections 54-55. 



TRUST COMPANIES IN THE 
UNITED STATES 



Series XX Nos. 5-6 

JOHNS HOPKINS UNIVERSITY STUDIES 

IN 

Historical and Political Science 

(Edited 1 882-1 901 by H. B. Adams.) 

J. M. VINCENT 

J. H. HOLLANDER W. W. WILLOUGHBY 

Editors 



TRUST COMPANIES IN THE 
UNITED STATES 



By GEORGE CATOR 



BALTIMORE 
THE JOHNS HOPKINS PRESS 

PUBLISHED MONTHLY 
MAY-JUNE, 1902 



Copyright, 1902, by 

JOHNS HOPKINS PRESS 



THE FRIEDENWALD COMPANY 
BALTIMORE, MD. 



PREFACE 

This paper is not intended to be an exhaustive treatise on 
trust companies or on any particular feature of them, but is 
simply a brief discourse giving a general outline of the 
subject. The first chapter is of a historical character; it 
notes, among other things, the use of the term " trust " in 
titles of different corporations and refers to the develop- 
ment of trust companies in New York, Philadelphia, Bos- 
ton and Chicago. Then follows a discussion of the func- 
tions exercised by trust companies and of their regulation 
by the State. The concluding remarks are a summary of 
what precedes, along with suggestions as to some of the 
causes leading to the growth of these institutions and the 
present place occupied by them; in this part, and else- 
where, a few criticisms and speculations are ventured. The 
appendices comprise sketches of two of the early trust 
companies, schedules of legislation and tables of statistics. 
The main paper and the appendices are in a great meas- 
ure independent, and yet are somewhat connected, for the 
former advances many statements based upon the authori- 
ties which are quoted in the appendices, and the latter, in 
turn, owe their conception to the impressions formed by 
the writer while collecting materials for the essay. 

The author realizes that the history of the trust com- 
pany movement in the various sections of the country has 
been too much neglected in his study, and that the defi- 
ciency will be evident even in the rough analysis which he 
has attempted. The chief authorities consulted in the 
preparation of this work have been the laws of the differ- 
ent states and territories, the reports of the banking de- 



6 Preface. [270 

partments of New York, Pennsylvania and Massachusetts, 
of the Auditor of Illinois and of the Comptroller of the 
Currency of the United States, the Bankers' Magazine and 
the Commercial and Financial Chronicle of New York. 
The two journals named publish the proceedings of the 
annual meetings held by the Trust Company Section of 
the American Bankers' Association and contain many other 
items relating to our subject. They have supplied the 
principal data for the accounts given of the companies in 
New York and Philadelphia, the comments made upon the 
functions of the institution in general, and much stated 
throughout the essay. 

I desire to thank Dr. George E. Barnett of the Johns 
Hopkins University, and Mr. Charles H. Porter of Bal- 
timore, for their services. I am under obligation to 
the Farmers' Loan and Trust Company of New York and 
Mr. Albert W. Rayner of Baltimore for the sketches fur- 
nished by them. These articles, in Appendices I and II, 
give a short history of the two companies, each of which 
is often referred to as the oldest trust company in America. 
The story of the New York Company is told by that com- 
pany, the one of the Pennsylvania Company is mostly a 
compilation from its published history. I want to make 
particular recognition of the assistance rendered by Dr. 
J. B. Phillips of the New York State Library at Albany, 
New York, who, besides aiding me in other respects, pre- 
pared for me the schedules, in Appendix III, of bank and 
trust company legislation. 

I must also make grateful acknowledgment for their 
many helpful suggestions to those of my friends who were 
kind enough to read my manuscript. 

Baltimore, May, 1902. 



CONTENTS 



PAGE 

Introduction 9 

CHAPTER I.— Historical. 

Institutions with Word Trust in Titles 10 

Sketch of Companies in New York 13 

Sketch of Companies in Philadelphia 15 

Sketch of Companies in Boston 18 

Sketch of Companies in Chicago 19 

CHAPTER II. — Descriptive and Critical. 
Functions 

(a) Trustee under Will, &c 21 

(1) For Real Estate 2.2 

(2) For Personal Property 23 

(b) Assignee and Receiver 24 

(c) Trustee under Mortgage Deed 25 

(d) Trustee under Private Agreement 27 

(e) Transfer Agent and Registrar 27 

CHAPTER III. — Descriptive and Critical — Cont. 
Auxiliaries to Trust Business 

(a) Fidelity Insurance 32 

(b) Title Insurance 33 

(c) Safe Deposit 34 

(d) Fiscal Agency 35 

(e) Savings Bank 36 

(f) Deposit and Discount Bank 37 

(g) Promoting 45 

CHAPTER IV. 

State Regulation 47 

CHAPTER V. 

Conclusion — Place and Cause of Development 60 

Appendix I.— The Farmers' Loan and Trust Co. of New York . 67 

Appendix II .—The Pennsylvania Co. for Insurances on Lives, &c. 73 

Appendix III.— Schedules 77 

Appendix IV.— Tables 106 



TRUST COMPANIES IN THE UNITED 
STATES 



INTRODUCTION 

Trust companies act as trustees and execute other forms 
of trusts. 1 Corporations exercising such powers are not 
entirely unknown elsewhere; 2 but on account of their re- 
markable growth and success in the United States they 
have become distinctively an American institution. 

Trust companies have existed in this country for more 
than three-quarters of a century; their great development, 
however, has been within very recent years. They are 
not noticed in such books of general reference as the 1883 
edition of Appleton's Cyclopedia or the ninth edition of 
the Encyclopaedia Britannica. About the time of the issue 
of these works, trust companies began to attract more at- 
tention, and articles upon them are found in Appleton's 
Annual for 1885 and in the American Supplement of the 
Britannica. 



1 Standard Dictionary; trust company, "a corporation whose 
business is to receive and execute trusts." 

2 Bankers' Magazine, New York, vol. 59, page 714. vol. 63, page 
844. Commercial and Financial Chronicle, New York, vol. 70, 
No. 1802, page iii. Bankers' Magazine, London, vol. 56, page 165. 



CHAPTER I 
HISTORICAL 

Institutions with Word Trust in Titles. 

For a long time there appears to have been a more or 
less vague meaning attached to the word " trust " in the 
titles of corporations. In some respects there is at pres- 
ent greater confusion than ever, for the great industrial 
combinations which now occupy public attention are gen- 
erally known as trusts. 3 Part of the popular prejudice 
existing against trust companies is due to this fact. The 
term in the sense of an industrial combination has a differ- 
ent meaning from what it has when used in connection with 
trust companies. A trust or combine conducts business 
solely on its own account, whereas a trust company, as 
such, manages the property of others. 

A trust company is at present a distinct institution, 
nevertheless it must not be supposed that, because a com- 
pany has the word trust in its official name, this necessarily 
indicates a corporation with the power to act as trustee. 
The term trust has long been used for titles of financial 
institutions, and has often been adopted with no other idea 
than that of signifying strength and inspiring confidence. 
The choice has not always been a proper one. Such was 
the case with the North American Trust and Banking Com- 
pany of New York, whose failure some fifty years ago was 
referred to in the London Times of that day, as one of the 
numerous instances in the United States where there had 

8 Standard Dictionary: trust, "a combination of interests for the 
purpose of regulating and controlling by means of a common au- 
thority the use, supply, or disposal of some kind of property." 



275] Historical. 11 

been gross mismanagement in financial matters. 4 The 
company had given its notes, bearing interest and secured 
by collateral, for a loan negotiated in England; and after it 
had failed, long litigation ensued for the possession of the 
collateral securities. The court at first held that the trust 
was void, and that the securities must be surrendered to 
the receiver; as a bank could only issue notes which were 
payable on demand and bore no interest. 5 This decision 
was finally reversed, and the English creditors were afford- 
ed protection. 6 It is interesting to note that there has 
been litigation in recent years on account of trust com- 
panies receiving deposits subject to check. 7 

As another example, we may refer to the Ohio Life 
Insurance and Trust Company, whose suspension in 1857 
precipitated the panic of that year. 8 There are many illus- 
trations in the past, as at present, that the titles of banks 
are often misleading, and that their names have at times 
been selected for the purpose of deception. In the list is 
the Wisconsin Fire and Marine Insurance Company, 9 of 
Milwaukee, a corporation that operated largely as a bank 
O'f issue in Chicago before the Civil War, and continued as 
an important financial institution in the West until it failed 
during the panic of 1893. The famous Manhattan Com- 
pany 10 was formed in 1799 ostensibly as a company to sup- 
ply the city of New York with water, and now under the 
perpetual charter that was granted a century ago does a 
large banking business. 

4 Bankers' Magazine, New York, 1847, vol. 1, page 524. 

5 Bankers' Magazine, New York, 1847, vol. 1, page 227; 1849, vol. 
4, page 596; 1852, vol. 7, page 340. 

Bankers' Magazine, New York, 1857, vol. 12, page 141 ; 1858, 
vol. 13, page 202. 7 Note no. 

8 History of Banking, Knox, 1900, p. 684. Bankers' Magazine, 
New York, vol. 13, p. 567; vol. 15. p. 313. 

9 Rhodes Journal of Banking, vol. 20, pp. 810, 886. Money and 
Banking, Horace White, 1896, p. 387. History of Banking, Knox, 
1900, p. 740. 

10 Bankers' Magazine, New York, vol. 3, pp. 137, 678. Report 
of New York Superintendent of Banking, Dec. 27, 1899, p. 134- 



12 Trust Companies in the United States. [276 

It is not surprising that, with this freedom in the choice 
of names for banks, trust, a term of attractive significance, 
has been employed. A company with such a title readily 
suggests to the mind a safe depository for trust funds. 
The Attorney-General of New York in 1850, in a written 
opinion, spoke of savings banks as trust associations acting 
under corporate powers for the security of deposits. 11 In 
the Encyclopaedia Britannica 12 a trust association is des- 
cribed as an institution which borrows money on deben- 
tures and invests the proceeds in loans of foreign states or 
similar securities. A high rate of interest is promised the 
investor, on the principle that the numerous investments 
of the association are on the average safe and yield a good 
income. As stated, the regular trust companies are not 
noticed in the Britannica. 

When the early corporations were formed with powers 
to act as trustees, the feature was not considered of suffi- 
cient importance to constitute an independent business of 
itself or to establish a peculiar institution. The first char- 
ters, allowing the trust privilege, were given to insurance 
companies; 13 and for a long time the trust and insurance 
businesses were carried on together. Even when they be- 
gan to be conducted separately, they were popularly re- 
garded as the same class of operations; and this was 
particularly the case as to life insurance. 

The United States Trust Company of New York was 
chartered in 1853; and, although it did not underwrite in- 
surance risks, it was regarded at the time much the same 
as a life insurance company. The Bankers' Magazine 14 
of 1856 calls the latter institution a trust company. It is 
an important trust, the magazine says, for it holds the 
savings of thousands of people to whom it has issued 

11 Bankers' Magazine, New York, vol. 4, p. 954. 

12 Encyclopaedia Britannica, Article " Banking, - ' vol. 3, page 328. 

13 Farmers' Fire Ins. and Ln. Co., note 21. N. Y. Life Ins. and 
Trust Co., note 22. 

14 Bankers' Magazine, New York, vol. 9, p. 324. 



2??] Historical. 13 

policies, and so assumes contracts which will in the end 
involve the payment of millions of dollars of trust funds. 

At present a trust company is something more definite. 
With the growing importance of corporate bodies, the 
trust company has its part to perform. It is a corpora- 
tion that receives and executes different forms of trusts; 
although, with many companies bearing the title, the word 
has not this significance. 

In some states where no regulation exists to prevent, 
small concerns formed for advancing loans on furniture 
while in use, on salaries, and on such classes of security, 
select high-sounding names for their titles, and " trust," 
" guaranty," " loan," and the like, serve their turn with 
them. In New York 15 there existed for some years a re- 
striction which prevented, except under the Banking or the 
Insurance Law, the formation of corporations with certain 
terms in their titles; until 1900, trust was not included in 
the list. 16 The omission was taken advantage of in the 
meantime, and, although under the Banking Act a trust 
company could not be organized in the Empire City with 
a capital of less than a half million dollars, under the Stock 
Corporation Law a company, having the word trust in its 
name, was formed to do an agency business with a capital 
of one thousand dollars. 

Trust Companies in New York. 17 

The claim has been made that the first trust company in 
the United States was the Pennsylvania Company for In- 
surances on Lives and Granting Annuities, a corporation 
started in Philadelphia and still located there. 18 This com- 
pany was chartered in i8i2, 19 but did not receive definite 

15 Report of New York Superintendent of Banking, Dec. 27, 1899, 
p. xxix. 

16 New York Corporation Law, 1900, Sec. 6. Schedule xviii. 

17 Bankers' Magazine, New York, vol. 59, p. 718. 

18 Report of Pennsylvania Bank Commissioners, Part I, 1901, 
p. 655. Appendix II. 

19 Laws of Pennsylvania, March 10, 1812, Chap. 64. 



14 Trust Companies in the United States. [278 

powers from the legislature to act as trustee until 1836; 20 
whereas the privilege was granted in New York to one 
company in 1822, and to another in 1830. 

The Farmers' Loan and Trust Company, of New York, 
was incorporated in February, 1822, under the title of the 
Farmers' Fire Insurance and Loan Company, and later in 
the same year was empowered to execute all lawful trusts. 21 
This appears to have been the first corporation in the 
United States to' act as trustee. Another company in the 
state to be granted the power was the New York Life 
Insurance and Trust Company, 22 which was chartered with 
the right in 1830, and consequently antedated the Penn- 
sylvania Company in this respect. The United States 
Trust Company 23 was chartered in 1853, and the Union 
Trust Company 24 in 1864. These four corporations are 
still in existence and among the great companies of the 
metropolis. 2 " 

For a number of years there continued to be very few 
trust companies in New York; and in 1874, when they 
had become more prominent and were first brought by a 
general law under the supervision of the Banking Depart- 
ment of the state, 26 only eleven 27 of them were in that 
city. Ten or twelve years after this, 28 the period set in 
that marked their growth, and in 1901 there were in New 
York and Brooklyn forty companies with combined capi- 
tal, surplus and undivided profits of about one hundred and 
forty million dollars and resources of over nine hundred 

20 Laws of Pennsylvania, Feb. 26, 1836, Act 25. 

21 Laws of New York, Feb. 28, April 17, 1822, Chap's 50, 240. 
Appendix I. 

22 Laws of New York, March 9, 1830, Chap. 75. 

23 Laws of New York, April 12, 1853, Chap. 204. Note 14. 

24 Laws of New York, April 23, 1864, Chap. 316. Note 146. 

20 Report of New York Superintendent of Banking, July 1, 1901. 
28 Bankers' Magazine, New York, vol. 61, p. 787. Schedules VII 
and VIII. 

27 Commercial and Financial Chronicle, New York, Jan. 10, 1885; 
vol. 40, No. 1020, p. 42. Table I (N. Y. State). 

28 Bankers' Magazine, New York, vol. 43, p. 659; vol. 45, p. 852. 



279] Historical. 15 

million dollars, exclusive of the enormous amount com- 
prised in the trust estates under their control. 29 

Prior to 1887 trust companies we created by special 
charters. 30 In this year the Trust Companies Act was 
passed providing a general law for their formation. With- 
in five years thirteen new companies were incorporated 
under this law and one company with an old charter com- 
menced business. 

Subsequent amendments to the laws of the state have 
placed the trust companies on an equal footing with the 
banks in regard to loans and discounts. 31 By the act of 
1901 the rates of taxation are fixed about the same for 
both institutions." 

The first corporations ^ that acted as trustees were not 
permitted to engage in banking, or, if allowed to accept 
deposits, were apparently given the power only for trust 
purposes. The trust companies of the present day make 
banking a main feature, and are not restricted as the banks 
are, in regard to investments or reserves for deposits. 34 

Trust Companies in Philadelphia. 35 

The first two trust companies in Philadelphia were the 
Pennsylvania Company, 36 already alluded to, and the Girard 
Life 37 Insurance, Annuity and Trust Company, chartered 

29 Companies in New York and Brooklyn; Report of New York 
Superintendent of Banking, July 1, 1901. 

30 Laws of New York, June 8, 1887, Chap. 546; Bankers' Maga- 
zine, New York, vol. 59, p. 718. Schedule V. 

31 Laws of New York, May 18, 1892, Chap. 687, §19. Banking 
Law of New York, Art. IV, Sec. 156, 2. Bankers' Magazine, New 
York, vol. 59, p. 719. Schedules II and XIII. 

32 Bankers' Magazine, New York, vol. 62, p. 741. Schedule XVII. 

33 Notes 19 to 23. 

34 Banking Law of New York, Art. II, Sec. 43 and 44. Political 
Science Quarterly, June, 1901, p. 250, article " Trust Companies," 
by A. D. Noyes. Schedules XII and XIV. See pages 43, 44. 

35 Bankers' Magazine, New York, vol. 59, p. 713. 

36 Notes 19 and 20. 

37 Laws of Pennsylvania, March 17, 1836, Act 41. 



16 Trust Companies in the United States. [280 

in 1836. Both corporations were empowered in the last 
named year to receive real and personal property in trust, 
but were forbidden to exercise banking privileges. After 
the Pennsylvania Company had been granted the right to 
execute trusts, the Girard Company was chartered with the 
same powers. In 1853 the former 38 was authorized to act 
as administrator and executor, and in 1855 the latter 39 was 
allowed to do so. By the law of 1856 40 foreign trust com- 
panies could, under certain conditions, be represented in 
the state, but none took advantage of the privilege; and as 
no other domestic companies entered the field until 1865, 
the two original companies remained without competitors 
up to that time. In the eight years following about thirty- 
seven new charters were granted; very few of them, how- 
ever, were used. It was at this period that the life insur- 
ance and trust businesses began to be carried on separately. 
In 1866 the Fidelity Insurance, Trust and Safe Deposit 
Company a was incorporated. It was the first company in 
Pennsylvania that had the power to underwrite fidelity in- 
surance. This business " has since constituted an import- 
ant branch in most Pennsylvanian companies." In some 
states *" the two classes of operations are not combined. 

The constitution of Pennsylvania of 1873 43 required that 
all future corporations should be formed under general 
laws, and this provision led to the passage of the General 
Corporation Act of 1874. 44 No reference was made in that 
act to trust companies, an omission which has been held 
to be due to a lack of interest in the matter and not to any 
hostility to such companies. This apparent oversight pre- 
vented the formation of new companies until 1881, when 

38 Laws of Pennsylvania, March 26, 1853, Act. 164. 

39 Laws of Pennsylvania, Feb. 15, 1855, Act 40. 

40 Laws of Pennsylvania, April 9, 1856, Act 300, Sec. I. 

41 Laws of Pennsylvania, March 22, 1866, Act 257. 

42 Schedule I. 

43 Constitution of Pennsylvania, Art. Ill, Sec. 7. 

44 Laws of Pennsylvania, April 29, 1874, Act 32, Sec. 2 



281] Historical. 17 

the law was amended to correct the defect. In 1881 there 
were eight trust companies in the Quaker City. In 1901 * 
there were forty-four companies with combined capital, 
surplus and undivided profits of about seventy million dol- 
lars. 

By the amendment of 1881 to the Corporation Act the 
title insurance companies were given trust, surety and safe 
deposit powers, and were permitted to receive on deposit 
and in trust both real and personal property. 46 The law 
of 1881 forbids trust companies doing a banking busi- 
ness, 48 * and requires them to keep trust funds separate from 
their own assets. 47 

Trust companies in Philadelphia receive demand de- 
posits, but it has been until recently a mooted question, 
whether they have had the legal right to do so. The Bank- 
ers' Magazine, 48 in 1898, called attention to the fact that 
under the provisions of the constitution of Pennsylvania 
no corporation with banking and discount privileges could 
be organized without three months' public notice at the 
place of intended location. 48 The legislature, this authority 
remarked, could not dispense with a constitutional require- 
ment, and on general principles it was to be supposed that 
the trust companies had not given the necessary notice. 
No decision construing the term " banking," as used in 
the constitution, had come under observation; but the 
opinion was expressed that it would be held to mean, among 
other things, receiving, like the banks, deposits subject to 
check. The law of 1885 gave additional powers to trust 
companies; necessarily this particular privilege, the article 

45 Report of Commissioner of Banking of Pennsylvania, 1901, 
Part I. 

4 * Laws of Pennsylvania, May 24, 1881, Act 26, Sec. 1. Schedules 
I and V. 

^ Laws of Pennsylvania, May 24, 1881, Act 26, Sec. 1. 

47 Laws of Pennsylvania, May 24, 1881, Act 26, Sec. 5. Bankers' 
Magazine, New York, vol. 59, p. 717. Note 29. 

43 Bankers' Magazine, New York, 1898, vol. 56, p. 100. 

49 Constitution of Pennsylvania, Art. 16, Sec. 11. 
20 



18 Trust Companies in the United States. [282 

said, would not be implied if in violation of the constitu- 
tion. Under a decision, rendered by a federal court in 
1900, trust companies in Pennsylvania may legally receive 
demand deposits. 60 Such being the case, these companies 
have full banking powers, 51 except those of discounting 
paper and of issuing bank notes. 

Trust Companies in Boston. 

The first trust company in Massachusetts was the New 
England Trust Company, chartered in April, 1869, by a 
special act of the legislature. 52 It was empowered to exe- 
cute trusts, to receive money on deposit and to make loans 
on real estate and other securities. The following compa- 
nies were later granted similar privileges by the legislature ; 
the Northampton Loan and Trust Company 53 in 1870, 
(this became in 1875 the Massachusetts Loan and Trust 
Company, of Boston), 54 and the Boston Safe Deposit and 
Trust Company in 1874. 55 These companies were required 
by their charters to make reports to and be examined by 
the Commissioners of Savings Banks. In 1874 the Com- 
missioners stated in their report that the companies named 
did an ordinary banking business, except the Northampton, 
which did not receive deposits. 56 

A general law was passed in 1888 providing for the in- 
corporation and regulation of trust companies. Under 
this act, corporations may be formed with powers like those 
of the earlier trust companies; they may invest in the same 

50 105 Federal Reporter (U. S.), 491. (Case of Bank of Saginaw 
vs. Title and Trust Co., U. S. Circuit Court of Penna., Dec. 26, 
1900); Bankers' Magazine, New York, vol. 62, p. 561. 

01 Schedule II. 

02 Laws of Massachusetts, 1869, Chapter 182. 
58 Laws of Massachusetts, 1870, Chapter 323. 
M Laws of Massachusetts, 1875, Chapter 16. 

65 Laws of Massachusetts, 1867, Chapter 151; 1874, Chapter 373. 
60 Report of Massachusetts Commissioners of Savings Banks, 
1874, P- 176. 



283] Historical 19 

securities as the savings banks — the only state banks in 
Massachusetts — and may loan money on collateral. Trust 
companies are under the supervision of the commissioners 
of savings banks." 

In 1898 there were thirty-four companies in the state 
authorized to execute trust powers, but only eleven had 
trust departments. 58 In 1901 59 there were in the state 
thirty-six companies of the former and fifteen of the latter 
class, and in the city of Boston the figures were respectively 
seventeen and eight. 

Trust Companies in Chicago. 

Many banks were incorporated by the legislature of 
Illinois between 1855 and 1870 with the word trust in their 
titles. Although these institutions were generally em- 
powered to " accept and execute trusts," banking was the 
main feature of their charters. 

The Merchants' Loan and Trust Company, chartered in 
J 857, was one of the earliest companies of importance in 
the state to act as trustee. 00 As was the case with other 
companies of this class, it was authorized to engage in 
banking, except the issue of notes. Among the early cor- 
porations exercising similar banking and trust powers were 
the Chicago Loan and Trust Company, 61 chartered in 1857, 
and the Real Estate Loan and Trust Company, 82 in 1861; 
both are out of existence. 63 

The constitution of 1870 M required the incorporation of 
banks and trust companies under a general law. No action 

57 Laws of Massachusetts, 1888, Chap. 413. Schedules VII and 
VIII. 

58 History of Banking, Knox, p. 370. 

69 Report Massachusetts Commissioners of Savings Banks, 1901. 

60 Private Laws of Illinois, 1857, p. 82. 

61 Private Laws of Illinois, 1859, p. 401. 

62 Private Laws of Illinois, 1861, p. 462. 

63 Not in Report of Auditor of Illinois, Dec. 11, 1901. 

64 Illinois Constitution, Art. XI, Sec. 5, 6, 7, 8. 



20 Trust Companies in the United States. [284 

was taken in regard to trust companies until 1887, when 
banking laws were passed under which banks and other 
authorized companies were granted trust powers upon the 
proper deposit of securities with the auditor of the state. 05 
In Illinois the trust companies, as such, do not have bank- 
ing powers, but banks may qualify under the trust act, thus 
combining the powers of a bank and trust company. 

In 1901 eighteen home banks and companies and six 
foreign companies were qualified to execute trusts in the 
state. In the same year there were two Chicago trust 
companies operating under the General Corporation Law 
and six under the Banking Law; the latter class had 
capital, surplus and undivided profits amounting to about 
$i8,ooo,ooo. 60 

65 Illinois Revised Statutes, 1901, Chap. 32, §§129-147. 

66 Report of Auditor of Illinois, Dec. 11, 1901. 



CHAPTER II 

FUNCTIONS OF TRUST COMPANIES 67 

Trust companies exercise, among other powers, those 
of trustee, executor, administrator, guardian, committee, 
receiver, assignee, transfer agent, registrar, investment 
agent, fiscal agent, promoter, underwriter, &c. They do 
also a guarantee, safe deposit and general banking busi- 



(a) Trustee under a Will, Executor, etc. 68 

In former times, when a man was about to make a will 
disposing of his property after death, he would recall to 
mind his acquaintances, and from their number would 
make a choice of one or more, best qualified in his opinion 
to settle his estate, or to act as trustee or guardian for 
certain wards. On account of unwise selections, the bene- 
ficiaries under wills frequently suffered loss. 

It is said that this difficulty has been overcome by hav- 
ing corporations with large capital to act in such capaci- 
ties; and, without doubt, much good has been accomplished 
by these institutions. A great trust company has a capital 
and surplus which are imposing. With the large volume 
of business under its charge it can establish special and 
well organized departments, by means of which trust 
estates may be intelligently managed and complete records 
in regard to them kept. A bonding company, however, 

67 Commercial and Financial Chronicle, New York, Bankers' and 
Trust Supplement, Sept. 3, 1898; Articles of Trust Co. Section. 

68 Commercial and Financial Chronicle, New York, Bankers' and 
Trust Supplement, Sept. 3, 1898, pp. 63, 71. Bankers' Magazine, 
New York, vol. 57, pp. 528, 536, 545. 



22 Trust Companies in the United States. [286 

may now guarantee the financial responsibility of an indi- 
vidual, and, at times, it is proper to select an individual 
rather than a corporation as executor or trustee. 

(i) Trustees for Real Estate. 

Differences of opinion exist as to whether an individual 
as the trustee, or a trust company, manages real estate 
better. The impression prevails with some that an individ- 
ual generally gives more attention to small details, and 
makes closer investigations when tenants desire changes or 
repairs made to property. The result is, it is contended, 
that frequently he either refuses altogether the request for 
an improvement on a house, or makes a less expenditure 
answer; whereas, under similar circumstances, a trust com- 
pany grants all that is asked. 

On the other hand, the claim is made that the agent of a 
corporation is not likely to consent to extravagant outlays. 
The reason advanced is that this person must submit his 
work to the supervision of higher officials who are removed 
from the influence of sentiment and regard all transactions 
from a business point of view. It is further held that the 
individual as trustee, having the sole authority to render 
a final decision, is more subject to be swayed in an un- 
guarded moment by the personal appeal of an applicant to 
whom he is easily accessible. 

It may be that the individual as trustee makes greater 
effort than a trust company to reduce expenditures, never- 
theless a more liberal policy may, as a rule, be wiser. Lib- 
erality may tend to keep tenants, while the opposite course 
may drive them away. When an old tenant leaves, usually 
the property must be improved to secure a new one, and 
possibly at greater expense than may have been necessary 
to have kept it occupied; besides, there is to be considered 
the loss of rent, while the premises have been idle. 

The question resolves itself at last in this, as in other 
business matters, into one of honest and intelligent man- 



287] Functions of Trust Companies. 23 

•agement of each particular case. It is, however, a belief 
of some whose opinion should have weight, that better 
results are generally obtained from this class of property 
under the care of individuals than under that of corpora- 
tions. 

(2) Trustee for Personal Property. 

Some contend that a trust company as trustee may dis- 
pose of the houses and lands at a sacrifice in order to dis- 
tribute the proceeds of an estate without delay, or to make 
investments in personal property, because the latter can be 
handled with less trouble and at greater profit. 

A trust company is in a favorable position to decide in- 
telligently about the various securities on the market. It 
should unquestionably be better informed in this respect 
than is ordinarily a private individual, most of whose time 
is occupied with matters of an entirely different character. 
The point is made that a company may use its office as 
trustee to unload securities in which it is interested. The 
weakness of human nature may be counted upon, and 
perhaps the judgment of officials is at times influenced in 
an undue manner to turn over to an estate securities with 
which their company has been connected in floating. The 
dividends of a trust company are often largely increased 
by the liberal commissions which it receives for under- 
writing various schemes; and it is advantageous to have 
a place to dispose of the investments acquired. Injury 
may be done to an estate in this way; but such is not 
necessarily the case, for transactions of this kind may 
occur without loss to the beneficiaries of a trust. 

A claim made in favor of the companies as executors, 
trustees, guardians, etc., is that their great wealth and 
prominence put them in position to command ample funds 
for the protection or development of interests committed 
to their care. Individuals in these capacities have often 
acted liberally, and, on account of friendship, have made 
large advances and assumed personal risks. An individual, 



24 Trust Companies in the United States. [288 

as guardian of minors or of incompetent persons, may, for. 
special reasons, feel a deeper concern in his ward than will 
the officials of a corporation. 

An individual may be better able than a corporation to 
evade the payment of taxes upon an estate. 68 This fact, at 
times, has its influence in the selection of an executor or 
trustee. 

As seen in the brief survey, advantages rest in certain 
instances with an individual in these fiduciary relations. 
Nevertheless, if one will weigh the uncertainties as to ca- 
pacity, responsibility, integrity and duration of life, it will 
often be decided that better results may be expected from 
a large and conservatively managed trust company than 
from an individual, especially in cases covering long 
periods of time. 

(b) Assignee and Receiver. 70 

Much that has been said in this discussion relative to 
executors and trustees under wills applies to assignees and 
receivers. In the receivership of railroads the choice has 
usually fallen upon individuals. Many of the great rail- 
road systems of the country have in late years gone into 
the hands of receivers; and although trust companies 
have been prominent during this period, individuals have 
generally, if not always, been appointed by the court to 
take charge of affairs. Under the present arrangements, 
by cooperating with the receivers, trust companies and 
other banking concerns have reaped great benefits, and in 
reorganizations of bankrupt railroads they have found a 
lucrative business. 



00 Laws of Maryland, 1890, Chap. 544, p. 658. (Trust companies 
are required to report to the Tax Commissioner the trust funds 
in their care, so that these funds may be assessed for taxes.) 

70 Commercial and Financial Chronicle, New York; Bankers' and 
Trust Supplement, Sept. 3, 1898, p. 68. Bankers' Magazine, New 
York, vol. 57, p. 533. 



289] Functions of Trust Companies. 25 

(c) Trustee under Mortgage Deed. 71 

Trust companies have almost entirely absorbed the busi- 
ness of acting as trustees under the mortgage deeds of 
railroad and industrial corporations. This is an improve- 
ment over the old practice of having individuals serve in 
this capacity. 

Bonds are frequently issued for long terms, and trustees 
without a corporate existence would probably not live to 
the expiration of the trust. A company has generally a 
greater prominence than an individual, and its legal resi- 
dence may be more easily determined. The bonds of rail- 
roads and other corporations have often a market of more 
than national extent, and it is important as regards the sale 
of the securities, as well as the protection of the eventual 
holders, to select proper trustees. But a trustee, as such, 
does not act as a guarantor of the bonds in case of default. 

In certifying to an issue of bonds, the trust company 
that acts as trustee affixes to each bond a trustee's cer- 
tificate. The form of such certificate may be: 

Trustee's Certificate 

(i) This bond is one of the series of bonds described in 
the mortgage or deed of trust within mentioned, 
(name of trust company) 

Trustee. 
Or the body of the form may be somewhat as follows: 

(2) It is hereby certified that this bond is one of a series 

bonds of dollars each, secured by the within 

mentioned mortgage or deed of trust. 

(3) (Name of trust company) as trustee hereby certifies 
that this bond is one of a series of bonds men- 
tioned and described in and secured by the mortgage within 
referred to. 

n Bankers' Magazine, New York, vol. 61, p. 780. 



26 Trust Companies in the United States. [290 

(4) (Name of trust company) hereby certifies that this 
bond is one of a series of bonds described in the mortgage 
or deed of trust within mentioned, and has been certified by 
this company in accord with the terms of said deed of 
trust. 

(5) This bond is one of a series bonds of 

Company issued under the mortgage executed by said 
company to the undersigned as trustee, dated and referred 
to in such bond. 

Some trust companies have a word like " guarantee " in 
their titles. 72 When this is the case, the trustee's certificate 
may be specially misleading as an indication that it is a 
guarantee of the payment of the bond. 

A trustee may limit very narrowly his liability by a state- 
ment of the fact in the deed of trust. It is the business of 
a trust company to protect itself when serving in this ca- 
pacity. Nevertheless, as a particular trustee may be 
chosen to give standing to a security, the limitations of the 
liability should be so stated that the terms may be easily 
observed and understood by an ordinary purchaser. There 
should be used no equivocal or misleading expressions. 
As regards a certain class of bonds, it may not be right to 
obligate the trustee to attend to the recording of the deed. 
But, if a trust company assumes the office of trustee under 
a mortgage deed of a railroad or industrial corporation, it 
seems proper to make it the legal duty of the trustee to see 
that the deed has been recorded in due form, and that the 
recitals contained in the same are substantially correct. 
Where securities change ownership simply by delivery of 
hand and are extensively dealt in, as is the case with these 
bonds, each indorsement that is made upon them by a re- 
sponsible company to promote their sale should carry with 
it the proper legal liability. There should be no escape 



72 Guaranty Trust Co. of New York; Baltimore Trust and Guar- 
antee Co. 



291] Functions of Trust Companies. 27 

through the employment of indefinite terms, or of expres- 
sions, clear in themselves but easily overlooked or misun- 
derstood on account of the manner of presentation. 

(d) Trustee under Private Agreement. 73 

Trust companies act as trustees under private agree- 
ments, and almost their entire trust business, except that 
which is done under the order of the court, is of this char- 
acter. Their powers in these numerous instances neces- 
sarily vary with the conditions of the trust. Whether an 
individual or a corporation may be the proper choice will 
especially depend upon the circumstances attending each 
particular case. 

Where large corporate and individual interests have 
been concerned, trust companies, in recent years, have 
occupied a conspicuous place as trustees. In the reorgani- 
zations that have resulted from railroad and industrial com- 
binations and in the promotion of new industries, these 
companies have become the depositories of bonds, titles and 
equities of corporations, firms and individuals. Although 
they have not been absolutely necessary for the develop- 
ment of the enterprises with which they have been con- 
nected, they have been important factors. 

Trust companies act under private agreement as transfer 
agents and registrars of corporations; and this feature will 
be discussed next under a separate head. 

(e) Transfer Agent and Registrar. 74 

The duties and responsibilities of transfer agents and 
registrars are similar. A transfer agent transfers the 

TS Commercial and Financial Chronicle, New York, Bankers' and 
Trust Supplement, Sept. 3, 1898, p. 70. Bankers' Magazine, New 
York, vol. 57, p. 525. 

74 Commercial and Financial Chronicle, New York, Bankers' and 
Trust Supplement, Sept. 3, 1898, p. 58. Bankers' Magazine, New 
York, vol. 57, p. 514; vol. 61, p. 756. 



28 Trust Companies in the United States. [292 

stock of a corporation; that is, upon request, it passes 
upon the evidence of the transfer of title, and when such 
evidence is considered satisfactory, issues a new certifi- 
cate. A registrar keeps a register or record of all the 
stock issued. A corporation may employ both agencies, 
the registrar acting as a check upon the transfer agent. 

The practice of having transfer agents, though older 
than that as to registrars, appears to be modern. The 
growth is on* incident to business requirements. It may 
not always be convenient for a company to have the dele- 
gated officers at hand to transfer the stock. It may be de- 
sirable to have a transfer office in a different place from 
the main office, or to have more than one transfer office. 

The custom of employing a registrar is due, according 
to one authority, to the fact that in New York, some 
years ago, a transfer agent of a railroad company, who 
was also its president, was guilty of an over-issue of the 
stock of the company. 75 Disclosures made in the investi- 
gation of this affair and irregularities of a similar character 
in other corporations finally had effect. In 1869 the New 
York Stock Exchange passed a rule requiring all stocks 
dealt in upon that exchange to be properly certified to by 
a responsible registrar. 

The appointment to such positions may be made simply 
by a resolution of the directors of the corporation for 
whom these agents act. In the absence of expressed agree- 
ments, uncertainty exists about the measure of legal re- 
sponsibility assumed in these transactions, except in regapd 
to loss arising from glaring neglect of duties. An attorney, 
connected with a trust company, has expressed the follow- 
ing view: if one of these agents, desiring to protect him- 
self, asks his principal for instruction how to act and the 
principal refuses to give any orders, on the ground that 

75 Commercial and Financial Chronicle, New York. Bankers' and 
Trust Supplement, Sept. 3, 1898, p. 61 (New York & New Haven 
R. R. Co.). 



293] Functions of Trust Companies. 29 

the agent in accepting the office is supposed to have known 
its duties, it will be difficult to assail the position." 5 

The investing public is deeply concerned in the work of 
these agencies. A certificate of stock, for instance, is 
issued; upon it is the indorsement of a well-known bank or 
trust company that the certificate is genuine and is what it 
is represented to be on its face. Afterwards there proves 
to be some irregularity in the issue. In such a case the 
innocent holder will, no doubt, feel that he has a just 
claim against the party making this authentication; that 
the claim should be enforcible by law, and should not be 
debarred by a plea set up that the agent has used care in 
executing the duties of his office, but has himself been de- 
ceived. The statement is made that certain brokers of 
prominence have been under the impression that a se- 
curity has been guaranteed to some extent by the indorse- 
ment of a registrar, and that the use of this agency has 
represented " many things beside the fact that the certifi- 
cate " has been " within the stated issue." 7% 

Specimens of the forms used on certificates of stock by 
trust companies or other corporations acting as registrars 
or transfer agents are as follows : 

(i) Countersigned and registered 

this day of 190 

(name of Trust Company) Registrar. 

by 

(officer). 

(2) Registered this day of 190 

(name of Trust Compnay) Registrar, or Transfer 
Agent. 

by 

(officer). 

78 Bankers' Magazine, N. Y., vol. 61, p. 762. 
7 " a Commercial and Financial Chronicle, New York, Bankers' 
and Trust Supplement, Sept. 3, 1898, p. 62. 



30 Trust Companies in the United States. [294 

(3) Countersigned and transferred this — day of — 190 

(name of Trust Company) Transfer Agent. 

by ' 

(officer). 

(4) Countersigned this day of 190 

(name of Trust Company) Transfer Agent. 

by ' 

(officer). 
Some certificates have a paragraph in them which reads : 
" this certificate is valid only when countersigned by (name 
of Trust Company) registrar or transfer agent." 

Where bonds may be registered, the fact is generally 
stated and the following form is always used: 



Date of Register. 



In whose name registered. 



Transfer Agent 



Bonds are usually registered as to principal only, but in 
some cases a corporation will, on surrender of a bond and 
coupons, issue a registered security, covering the principal 
and interest. 

If the trust companies which act in these capacities de- 
sire to disclaim all liability for their certification, the ques- 
tion naturally suggests itself, why are not the indorse- 
ments made in such a way as to signify this without any 
room for doubt? The reason assigned for the omission 
is that the public have become accustomed to the present 
form, and that a different character of certificate if intro- 
duced may possibly be viewed with suspicion. A change 
that may injure the market for securities is not likely to 
be adopted, especially when there is strong competition 
among trust companies to obtain the business. As the 
present form of certification may indicate to an ordinary 
buyer a certain guarantee, this fact, it seems, if a case arises 
for judicial determination, ought to have great weight in 
fixing the legal liabilities of the parties who use it. 



295] Functions of Trust Companies. 31 

The matter is complicated, as the transfer agents and 
registrars may be residents of different states from the 
companies which they represent; and these states may have 
more or less conflicting laws. It is recognized by their 
counsel that trust companies in performing these functions, 
as they frequently do, may incur great liabilities, and that 
the small charges made for the services are by no means 
commensurate with the risks assumed. 



CHAPTER III 
AUXILIARIES TO TRUST BUSINESS 

(a) Fidelity Insurance. 77 

Trust companies conveniently carry on, as auxiliaries 
to their regular business, other branches — such as one 
for fidelity insurance — which may prove profitable. An 
individual under bond is, at times, preferred as a trus- 
tee or executor to a corporation. A trust company which 
can bond the individual for the office may often not only 
extend its transactions into a new field, but also retain old 
business that will be otherwise lost to it. 

Fidelity insurance is guaranteeing the honesty or finan- 
cial ability of parties. It is a kind of business which, in the 
opinion of many, a trust company should not conduct, 
and in some places is not permitted to do so. 7S A com- 
pany was started in London, 79 fifty years or more ago, 
especially to furnish surety bonds. Experience in the past 
seems to have demonstrated the advantage of different con- 
cerns acting as trustees from those underwriting fire and 
life insurance; and the indications now appear to be that 
the trust and fidelity businesses will be mostly developed 
apart. 

There are at present only a few large American fidelity — 
or as they are also called surety, guarantee or bonding — 
companies. 80 Some of these perform all the functions 81 of 

7T Schedule I. 78 Schedule I. Note 46. 

78 Bankers' Magazine, New York, vol. 4, p. 249 (Guarantee 
Society). 

80 Handy Chart, published by Spectator Co., New York, 1902. 
The Spectator, New York, vol. 67, No. 15, p. 177. Baltimore Sun, 
May 28, 1901. 

81 Fidelity and Deposit Co., Baltimore, Laws of Maryland, 1890, 
Chap. 263, p. 282. 



297] Auxiliaries to Trust Business. 33 

trust companies, except executing certain forms of trusts, 
and some have the word trust in their titles. 82 As bonding 
companies compete in many ways with trust companies and 
a number of trust companies act as bondsmen, there is no 
wonder that the public mind confuses the two institutions. 83 

(b) Title Insurance. 84 

It has already been noted that trust companies are 
formed in Pennsylvania under a general law allowing title 
insurance companies to exercise trust powers. In some 
states 85 the two features are not combined, and distinctive 
title insurance companies exist; these latter confine them- 
selves to the title business, or make it their main one in 
case they carry on banking and other operations. 

Title insurance requires a special plant for the work. 
Either a trust or a bonding company can acquire this plant, 
and each is in a favorable position to conduct a title insur- 
ance department. The former may examine or guarantee 
titles for the estates under its charge, or offer its services 
to its numerous patrons who constantly consult it about 
such matters. The latter is in close association with at- 
torneys to whom it furnishes bonds, and through this 
means may cooperate further with them. The business 
appears to be well suited to both institutions; but many 
contend, and with force, that a trust company should not 
engage in an insurance business. 

82 American Bonding and Trust Co., Baltimore (American Bond- 
ing Co. by law of 1902), Laws of Maryland, 1894, Chap. 252, p. 335. 
Corporations in Maryland, acting as trustees without usual bond, 
cannot incur liability of surety: Laws of Maryland, 1892, Chap. 279, 
p. 391. Schedule I. 

83 In Philadelphia the trust companies do surety business. Note 
46. Schedule I. 

84 Schedule I. 85 Schedule I. 



34 Trust Companies in the United States. [298 

(c) Safe Deposit. 86 

Although safe deposit companies are said to be an 
ancient institution, it has only been within recent years 
that they have become of importance. Much, at present, 
called wealth is in the form of evidences of debt, paper 
securities, a large amount of which changes ownership by 
delivery of hand. The great growth of this class of prop- 
erty, which may be easily lost or destroyed, has created a 
demand for specially guarded vaults for its safekeeping. 
Before the existence of modern safe deposit companies the 
vaults of regular banks were to an extent employed for the 
storage of valuables, and perhaps generally without cost. 
Some banking concerns still offer these accommodations, 
free of expense, to their patrons, but, in the main, safe 
deposit companies now perform this service and charge for 
the same according to the space occupied or the value of 
the property stored. 

To prevent improper visitations, one of the earlier of the 
modern companies established a code of pass-words and 
other formalities. 87 This rigid system is no longer, as a 
rule, if at all, in operation, and it now requires little diffi- 
culty on the part of any respectable person to rent a box 
in such an institution and gain entrance into its vaults. 
Private watchmen and detectives may be employed to guard 
the buildings of safe deposit companies, and a system of 
mechanical enunciators may be used. But, aside from 
these arrangements, the only additional precautions of the 
kind that are taken — and they appear in their results to 
be all that are necessary — are to station, during business 
hours, special guards at the doorways and in the interior 
of the vaults. The doorkeepers are on duty to note the 
exit and entrance of visitors and to stop those not entitled 
to pass. The inside keepers are to observe that the indi- 

86 Bankers' Magazine, New York, vol. 21, p. 316; vol. 26, p. 
632; vol. 61, p. 769. Schedule I. 

87 Bankers' Magazine, New York, vol. 26, p. 163. 



299] Auxiliaries to Trust Business. 35 

viduals who enter the vaults get into their own safe deposit 
boxes and into no other. 

The safe deposit business, though at times conducted as 
a separate and distinct one/" may be and is satisfactorily 
carried on by trust companies. Those who use the safe 
deposit vaults of a trust company get into the habit of visit- 
ing its office, and, when in want of information about an 
investment, a trusteeship, or some other matter, are likely 
to consult one of its officials. A trust company has often 
a large number of estates under its charge, and is compelled 
to supply a safe place of deposit for the securities belonging 
to these various trusts. In furnishing places of this order 
to the public it advertises itself and gains a revenue at little 
extra expense. 

A person may enter the safe deposit vaults of a trust 
company, open his box, clip off his coupons and deposit 
them afterwards with the banking department for collec- 
tion. He may buy securities from the trust company, when 
he desires to make investments; he may employ it virtually 
as a broker, solicitor and policeman, and may secure 
through it protection from outside attacks and from the 
mistakes of inexperience. 89 He may during his life trans- 
act his whole financial business through this one office, and 
after his death the same institution may take complete 
charge of his affairs. 

(d) Fiscal Agency. 

Trust companies keep in close touch with varied interests 
of the country. They act as fiscal agents of states, coun- 
ties, municipalities, and railroad and industrial corpora- 
tions. They become large depositories of funds and ne- 
gotiate extensive loans. The securities which they obtain 
they may offer to clients or turn over to estates under 
their charge. But the estates receiving the securities are 

s3 Table II. Schedule I. 

89 Bankers' Magazine, New York, vol. 58, p. 506. 



36 Trust Companies in the United States. [300 

not always properly protected. 80 Brokers also distribute 
investments acquired by trust companies and, on account 
of their influence, are often directors of these companies. 

(e) Savings Bank. 

Trust companies enter into competition with other 
financial institutions of the country. They take an active 
part in promoting railroad and industrial enterprises and 
engage largely in the general banking business. They 
receive small sums of money at interest, and have in some 
places diverted deposits from the savings banks. The 
latter have a strong hold upon the public confidence, but 
they may later feel, to a greater extent, the effects of the 
changes which have taken place in financial conditions. 

Formerly savings banks invested particularly in real es- 
tate mortgages. They put, at present, much of their funds 
in government, municipal, railroad, street railway and like 
securities. Investments of this kind are widely advertised 
by trust companies and other dealers, and, no doubt, many 
who once deposited in savings banks no longer do so, but 
buy stocks and bonds. Savings banks work on a narrow 
margin and may soon be forced to reduce their dividends. 
Even if trust companies, as has been insisted, 91 are sub- 
jected for this class of deposits to the requirements made 
of the savings banks in some states, they may still afford 
to pay a higher rate of interest than their competitors, for 
the expense of operating a savings department, as a branch 
of a large banking business, is relatively small. 

Many of the savings banks are conducted on the mutual 
basis, their resources being supplied entirely by their de- 
posits and accumulated earnings. By the side of this, the 
capital and surplus, and the additional liability 92 of stock- 

80 Page 23. 

81 Bankers' Magazine, New York, vol. 46, pp. 695, 931. Rhodes 
Journal of Banking, vol. 18, p. 167; vol. 20, p. 1190. 

03 Schedule XI. 



301] Auxiliaries to Trust Business. 37 

holders of the great trust companies, make an impressive 
showing. The large savings banks, with enormous de- 
posit lines 9 " and volume of business, can keep down the 
expenses of operation to a small percentage; having this 
advantage and prestige, they may long be able to maintain 
their leading position. On the other hand, it is different 
with the smaller mutual savings associations. These have 
a struggle for existence ; and, although many new ones are 
continually springing up — as it is easy to start a bank of 
this character — their future is not bright. The banks 
whose charters allow a wide field of operation have a better 
chance of success. 

(f) Deposit and Discount Bank. 

Prior to 1873, leading financial journals made little ref- 
erence to trust companies/ 4 About this time the banks, 
feeling the competition, began to complain that they were 
taxed more heavily and subjected to greater restrictions 
than their rivals. 95 

From the period beginning with, say 1885, there was a 
further development of trust companies in New York and 
some other places. Among these corporations were ones 
which were principally engaged in floating and guarantee- 
ing Western loans, and were really mortgage, loan or in- 
vestment companies. 95 * But many of them conducted a 
regular banking business and were of the type that now 
prevails. At this time the complaints of the banks became 

83 Report of the New York Superintendent of Banking, Feb. 26, 
1901, p. 160, Bowery Savings Bank, New York, deposits $70,000,000, 
surplus $10,000,000; p. 173, Emigrant Industrial Savings Bank, New 
York, deposits $60,000,000, surplus $10,000,000. 

94 Commercial and Financial Chronicle, New York, Jan. 20, 1883, 
vol. 36, No. 917, p. 65. Note 141. 

95 Rhodes Journal of Banking, vol. 13, pp. 741, 788. Bankers' 
Magazine, New York, vol. 59, p. 472. 

95a History of Banking, Knox, page 347. 



38 Trust Companies in the United States. [302 

decidedly pronounced. 90 It was especially observed that 
certain large deposits, which had been carried with the 
banks without interest, were decreasing. What was the 
cause? The trust companies paid interest ST on deposits 
and consequently attracted them. Opposition still con- 
tinues against trust companies, but not to the same extent 
as formerly; indeed, in some quarters, where there was hos- 
tile criticism, there is now favorable comment. 93 In 1897 
the American Bankers' Association inaugurated a special 
section for trust companies. 98a 

Possibly sentiment in regard to trust companies has 
changed, because it is realized that they are now firmly es- 
tablished, and that, although they compete somewhat with 
the older corporations, the interests of the two are closely 
allied. 99 In the first place the same men 10 ° are often con- 
nected with both, and in the second the trust companies are 
among the largest depositors of the banks. 101 Through the 
banks the companies use the clearing house — an import- 
ant agency in facilitating exchange and one exercising con- 
siderable influence upon financial affairs. No trust com- 

86 Table I. Bankers' Magazine, New York, vol. 43, pp. 659, 721 ; 
vol. 45, p. 852; vol. 46, p. 695; vol. 50, p. 599. Commercial and Finan- 
cial Chronicle, New York, Jan. 10, 1885, vol. 40, No. 1020, p. 42. 
Rhodes Journal of Banking, vol. 18, p. 301. 

97 Bankers' Magazine, New York, vol. 43, p. 721; vol. 45, p. 852; 
vol. 50, p. 600. Rhodes Journal of Banking, vol. 13, p. 818. Com- 
mercial and Financial Chronicle, New York, vol. 67, No. 1728, p. 
251- 

88 Bankers' Magazine, New York, vol. 50, p. 599; vol 58, pp. 506, 
507; vol. 59, pp. 471, 472; vol. 61, p. 157. 
98a Page 6. 

98 Commercial and Financial Chronicle, New York, vol. 69, No. 
1780, p. 260; Bankers' Magazine, New York, vol. .59, p. 346. 

100 Rhodes Journal of Banking, vol. 16, p. 1178. Commercial and 
Financial Chronicle, New York, vol. 70, No. 1804. 

101 Rhodes Journal of Banking, vol. 13, p. 959- Bankers' Maga- 
zine, New York, vol. 50, p. 599. Report of New York Superin- 
tendent of Banking, July 1, 1901, Note 117. 



303] Auxiliaries to Trust Busimss. 39 

panies belong to the New York Clearing House. 102 In 
1899 this association passed a rule that the trust companies, 
which employed its service, should be subject to examina- 
tions and make reports similar to those exacted of non- 
member banks. 103 This regulation seems to be reasonable, 
and also that passed in 1902 in regard to cash reserves, yet 
these requirements, if they conflict with certain interests, 
may possibly not be strictly enforced, as the trust com- 
panies have friends in the association. The trust com- 
panies, moreover, have apparently sufficient power to 
establish, should it be necessary, a separate exchange, but, 
at present, too great a community of interests may exist 
for such an action. 104 

Trust companies perform many of the functions of the 
regular banks, and although they do not possess the right 
of note issue, like the national banks, they are not ham- 
pered to any extent on this account, for note issue is not 
the profitable feature it was. 105 In place of this privilege 
that they lack, they have some advantages over these banks. 

Trust companies in late years have usually accepted de- 
mand deposits, even in states where there has been a 
question whether they have had the legal right. Refer- 
ence has already been made to the status of the case in 
Pennsylvania. 106 In Minnesota, 107 during a period of ten 
years previous to 1894, a number of conferences between 
representatives of the trust companies and the attorney- 
general of that state took place in regard to the powers of 
the companies to receive these deposits. The statutes of 
1883 allowed trust companies to do a banking business as 

102 Bankers' Magazine, New York, vol. 61, p. 712. Clearing 
Houses, by J. G. Cannon, New York, 1000. 

103 Commercial and Financial Chronicle, New York, vol. 69, No. 
l 794, P- 99 T - Bankers' Magazine, New York, vol. 59, p. 777. Clear- 
ing Houses, Cannon, p. 157. Note 120 3 -. 

101 Bankers' Magazine, New York, vol. 59, p. 472. 

105 Note 168. 

106 Note 50. Schedule II. 

107 Bankers' Magazine, New York, vol. 48, p. 392. 



40 Trust Companies in the United States. [304 

therein provided; but the provisions were so indefinite 
that a conflict of opinion prevailed as to the proper con- 
struction. Some companies received demand deposits, 
others refused them. By the law of 1894 the companies 
are not permitted to engage in banking. 108 

In 1894 the Supreme Court of Missouri decided that a 
trust company hacl no legal power to take deposits subject 
to check, and that by doing so it violated its charter. But 
this act, according to the court, did not make the com- 
pany a bank. 109 The officers who received such deposits, 
when the company was insolvent, were held not to 
be criminally liable, as they might have been, had the 
institution been legally empowered to do a banking busi- 
ness. In 1898 no the court in that state decided that a 
trust company had no power to receive deposits payable 
by check on which interest was not paid. The Bankers' 
Magazine, 111 in commenting upon the matter, said that 
as no rate of interest was fixed by the law, it would re- 
quire little ingenuity to overcome the effects of this decis- 
ion; for instance, by allowing a nominal rate of interest. 
In fact, trust companies in Missouri now receive demand 
deposits. 112 

These and other illustrations rather indicate that trust 
companies have, in some states, developed their banking 
departments outside of their recognized powers under the 
law. A reference to the charters of the first companies in 
New York and Pennsylvania emphasizes this fact, for it 
is there seen that banking is forbidden. It appears that 
the companies were originally established to manage es- 
tates and not to be banks, the latter being an institution 
which, according to the public sentiment of the time, 
should be under special regulations. 113 

108 Schedule II. 

109 Bankers' Magazine, New York, vol. 50, pp. 60, 200. 

110 Ibid., vol. 57, P. 85. 

111 Ibid., vol. 57, p. 16. 

112 Schedule II. 

113 Note 33. Page 18, Trust Co.'s in Boston; p. 19, Trust Co.'s in 
Chicago. 



305] Auxiliaries to Trust Business. 41 

As clear ideas did not always prevail as to what con- 
stituted banking operations outside of note issues; 114 and 
as at times laws were passed and charters were given 
that were susceptible of different interpretations, some 
trust companies began to claim and exercise powers that 
were originally not intended to be allowed, if not strictly 
forbidden. In this way it would appear that they escaped 
regulations under which the banks were placed. 

Legal exactions have been made of one institution that 
have not been of the other. The trust companies are not 
generally required like the national banks to hold reserves 
for the protection of deposits; and in some of the states, as 
in New York, 115 where the state banks must keep reserves, 
the companies are more leniently treated. They have thus 
an advantage over their competitors, as they are not com- 
pelled to have on hand the same amount of idle funds 
yielding no revenue. They have profited by the freedom 
from restraint and have kept little cash 116 in their vaults, 
most of what they have counted as cash being in reality 
money on deposit at interest with the banks. In the sum- 
mer of 1901 m the forty trust companies in New York and 
Brooklyn had a reserve of only seven and a half million 
dollars and had deposited with the banks nearly a hundred 
million. On the other hand, sixty one-banks in that city 
had at the same time a reserve of over two hundred and 
sixty million dollars. The reserves of the banks cover 
both their own deposits and those of the trust companies. 118 

114 Rhodes Journal of Banking, vol. 13, p. 788; Bankers' Maga- 
zine, New York, vol. 2, p. 495 (Lockport Bank and Trust Co.); vol. 
4, p. 100 (Duncan vs. Maryland Savings Institution, 10 G. & J. 
346); vol. 53, p. 141. 

115 Schedule XII. 

116 Bankers' Magazine, New York, vol. 59, p. 599; vol. 58, p. 505; 
vol. 59, p. 472. 

117 Report of New York Superintendent of Banking, July, 1901. 
Baltimore Herald, Aug. 13, 1901, quoting New York Journal of 
Commerce. 

118 Rhodes Journal of Banking, vol. 13, p. 818. 



42 Trust Companies in the United States. [306 

Similarly the reserve of the Bank of England U9 operates in 
regard to the deposits of the great joint stock companies of 
London, and the resources of the Imperial Bank of Ger- 
many aid the other banks in the empire. 120 

In 1902 the New York Clearing House, as observed, 
passed resolutions requiring the trust companies clearing 
through that association to keep reserves in cash like the 
national banks. 12 ° a 

The trust companies loan considerable on collateral se- 
curity and compete with the banks for this class of busi- 
ness. The same forty companies, 121 just referred to, had 
loans of this kind out amounting to five hundred and ten 
million dollars and loans on personal security amounting 
to only thirty-eight million dollars. These companies, 
therefore, loan little in the latter way; it is the reverse with 
the banks. 

Trust companies in a number of states underwrite various 
enterprises; national banks do' the same, but probably not 
so extensively. At times the two institutions may cooper- 
ate as a syndicate in the same work, or the banks may ad- 
vance largely on securities brought into existence by the 
schemes of the trust companies. Many of the companies 
have exercised a relatively free hand in making loans and 
investments; they have not been subjected to the same 
legal restrictions 122 as the national banks, 123 and, in some 
instances, as the state banks. 124 The national banks are for- 
bidden to advance more than one-tenth of their capital to 

119 Rhodes Journal of Banking, vol. 13, p. 959. 

120 Bagehot, Lombard Street (Scribner Edition), pp. 309, 336. 
Quarterly Journal of Economics, Feb., 1900, p. 272, article. " The 
New German Bank Law," by Prof. Sidney Sherwood. 

12 ° a Commercial and Financial Chronicle, New York, May 3, 
1902, vol. 74, No. 1923, p. 917. 

121 Note 117. 

122 Political Science Quarterly, June, 1900, p. 250, article, " Trust 
Companies," by A. D. Noyes. 

123 National Banking Act, Revised Statutes of the United States, 
Sec. 5200. 

124 Schedules XIII and XIV. 



307] Auxiliaries to Trust Business. 43 

one party, to loan money on real estate, or to own real 
estate except in a limited way. Although the requirements 
as to the limitation and character of loans have not always 
been observed, their existence has possibly had effect and 
prevented these banks from engaging in some profitable 
operations that have been open to the less hampered 
institution. 

Trust companies have now grown to be of great im- 
portance, and in 1899 so many new ones were formed that 
it looked as if they were about to overshadow the banks 
in some places. In the following year there was an arrest 
of the rapid progress. 125 The set-back in New York was 
temporary; for, although in 1901 there was a decrease in 
the number of trust companies in that state, the gains 
in resources of those in existence were large. 125a The banks 
made progress during the last few years; they reaped a 
benefit from the active trade of the merchants, and shared 
in the general prosperity of the country. 126 A factor tend- 
ing to make an unfavorable showing for trust companies 
for the six months ending January 1, 1900, was that a 
large number of new companies had come into existence 
during the early part of 1899. 127 This produced a greater 
supply than was needed, and in the struggle to get business 
some concerns under the management of inexperienced 
men engaged in undertakings which resulted in heavy 
losses. 

The banks have a prestige in regard to the safety of 
deposits which the trust companies do not enjoy. There 

125 Commercial and Financial Chronicle, New York, vol. 70, No. 
1808, p. 302; and report of New York Superintendent of Banking, 
Feb. 26, 1901, p. 17; Trust Companies in New York State, July, 
1899, resources, $722,000,000; Jan., 1900, resources, $672,000,000; 
Jan., 1901, resources, $798,000,000. Tables I and II. 

12B * Table I. 

m Tables II, III, IV and V. 

127 Commercial and Financial Chronicle, New York, vol. 70, No. 
1808, pp. 303 and 306. Report of New York Superintendent of 
Banking, Feb. 26, 1901, p. 17. 



44 Trust Companies in the United States. [308 

is a general impression that government examinations of 
the national banks make them especially secure. No doubt, 
these inspections have rendered great service; nevertheless 
they are not thoroughly effective. Disclosures, at times, 
make it apparent that defalcations can escape notice for a 
long period during which a number of official examinations 
of the banks have taken place. The remark is occasionally 
heard from those in a position to know, that the federal 
inspectors are liable to accept with too much faith the cal- 
culations which they find in the bank records. It is believed 
by many that state inspection can be made, and is in some 
states, where trust companies are subjected to regulations, 
just as thorough as the system in operation in regard to 
national banks. Notwithstanding the fact that much of this 
claim in regard to state supervision must be admitted, the 
general public feel, and with reason, that a federal inspec- 
tion usually gives greater protection than one conducted by 
a state 128 ; and the national banks get the benefit of this 
confidence. 

In order to secure the prestige possessed by national 
banks and at the same time have greater freedom, the 
Chestnut Street National Bank and the Chestnut Street 
Trust and Savings Fund Company conducted business to- 
gether in the same office in Philadelphia. 129 The close co- 
operation afforded a great opportunity for the practice 
of fraud and for the concealment of an insolvent condition 
by the temporary transfer of funds from one institution 
to the other. The final results exposed the evil of such a 
combination. 

The advantage that prestige and previous possession of 
the field give to the old banks may long allow them to 
maintain their supremacy. But new financial institutions 
will be called into being by the growth of the country, 

128 Rhodes Journal of Banking, vol. 20, p. 1159. 
120 Bankers' Magazine, New York, vol. 59, p. 717. History of 
Banking, Knox, 1900, p. 464. 



309] Auxiliaries to Trust Business. 45 

and these are likely to be especially among that class which 
is subject to least restriction. 130 

(g) Promoting. 

Trust companies with their large accumulation of funds 
are ever on the alert to get business, and afford an effective 
instrument in developTng enterprises. 131 But this is not a 
new character of work for financial corporations, either in 
this or in other countries; and trust companies have followed 
a course which has been pursued previous to their exist- 
ence. Sometimes a corporation has been formed simply 
to finance a particular enterprise. Such was the case with 
the Credit Mobilier, 132 which, operating under a charter 
of a Pennsylvania company, undertook to build the Union 
Pacific Railroad. It will be remembered that the Credit 
Mobilier became notorious in 1872 on account of one of 
the greatest political scandals which ever occurred in the 
United States. 

Trust companies and other financial corporations greatly 
aid and encourage the development of large enterprises, but 
they usually engage in the undertakings in answer to some 
demand for them; and were they not the promoters, indi- 
viduals or firms might, as often happens, take their place. 
When the financial corporations, interested in promoting 
railroad enterprises, went down in the crash of 1873, two 
great private banking firms concerned in similar operations 
failed at the same time. 132a At present the names of certain 
individuals and banking firms, in connection with great 
railroad enterprises, industrial combinations and other 
schemes of a gigantic character, are far more prominent 
than those of any trust company or other financial corpo- 

130 Rhodes Journal of Banking, vol. 21, p. 70. 

331 Commercial and Financial Chronicle, New York, vol. 70, No. 
1810, pp. 10, 410. 

132 Lalor's Cyclopedia, vol. 1, p. 709. Appleton's Cyclopedia, An- 
nual, 1873, PP- 213 and 671. 

132a Note 147. 



46 Trust Companies in the United States. [310 

ration. It is, however, a well-known fact that these men 
and firms are interested in and identified with banks and 
trust companies and use them largely as instruments to 
carry out their various operations. 183 

133 Commercial and Financial Chronicle, vol. 72, No. 1855, p. VI. 



CHAPTER IV 
STATE REGULATION 

It is the decided opinion of many persons that the 
less supervision or regulation by a government which 
any business receives, the better will be the results. But 
whether the laissez faire doctrine be strongly cherished 
or not by its advocates, the idea is rapidly losing force in 
this country in the practical conduct of affairs and in the 
continual extension of governmental interference. The 
people of the United States have for years been accustomed 
to the supervision of national banks and have for a longer 
period been familiar with that in regard to state banks. 131 
Trust companies have largely developed without these re- 
strictions. In some states they have been brought under 
the same supervision as the banks, in others thev have 
not. 130 

Should trust companies be under state supervision? If 
it is admitted that banks not exercising the right of note 
issue should receive regulation, and if trust companies can 
and do perform all the functions of such banks, then it is 
difficult to see why they should escape the same exactions. 13 * 

The companies have under their charge the funds of 
widows and orphans and trusts of a character around which 
every safeguard should be thrown. They have also large 
lines of deposits subject to check, 137 nevertheless they are 
not required to the same extent as the banks to keep 
reserves proportionate to deposits. In this respect they are 

13< History of Banking, Knox, New York, p. 404, etc. 

135 Schedules VII and VIII. 

136 Bankers' Magazine, New York, vol. 58, p. 507; vol. 59, p. 472. 
Rhodes Journal of Banking, vol. 13, p. 741. 

137 Note 117. Tables I, III. 



Trust Companies in the United States. [312 

generally more favored than the national banks and, in 
New York, Kentucky and several other states than the 
state banks. 137a Texas has a unique place; under the consti- 
tution of 1876 no corporation with banking privileges can 
be created or extended. Trust companies in New York 
and elsewhere have claimed that much of their deposits 
have been trust funds, and on the other hand that those 
of the banks have been of a kind which are more subject to 
an early or a sudden withdrawal; hence, that the restriction 
upon the banks has been more necessary. 133 In the summer 
of 1901, 139 however, a larger portion of the three-quarters 
of a billion dollars on deposit in forty trust companies in 
New York and Brooklyn was subject to check. There is 
not a great distinction at present between the deposits of 
the two institutions, nor should such be expected, for trust 
companies solicit all classes of deposits and allow interest 
on the same in order to obtain them. 140 The companies in 
some places have been so active in their efforts to get busi- 
ness that the banks, although disclaiming that they give 
interest on money placed with them by local depositors, 
are frequently compelled to offer this inducement to retain 
patrons. The trust companies are said to borrow, at times, 
money on collateral and reckon the sums thus received 
with their so-called deposits, in order to make a more favor- 
able showing and thereby further attract similar funds. 
This practice, it is claimed, obtains also with other financial 
institutions. The foregoing instances are cited to show the 
force of competition in often compelling those who seek 
the same class of business to adopt the same methods. 
The concerns that are not subject to strict inspection are 
usually the first to resort to these means. Sooner or later 



" 7 * Schedules II, XII. 

138 Bankers' Magazine, New York, vol. 58, p. 506. 

139 Note 117. 

140 Report of New York Superintendent of Banking, July, 190] 
(interest paid on all but a small fraction of the deposits). 



313] State Regulation. 49 

what is done leaks out, as it is difficult to keep such things 
secret; and what in the beginning is confidentially allowed 
as a special inducement to a few, becomes in the end a com- 
mon practice. 

It is evident that any regulation to be fully effective for 
the deposits of banks must have some application to those 
of trust companies. Should there come at the present 
time a financial panic, or a severe strain upon the money 
market, the trust companies, in some of the great cities, 
with their large lines of deposits and small or merely nom- 
inal reserves, would rather contribute to than check a 
catastrophe. 

The superior organization of a trust company should 
not necessarily exempt it from regulation, for it is not 
unlike that of other corporations. It comprises a presi- 
dent, possibly one or more vice-presidents, and a board of 
directors ; from this latter body is usually selected a smaller 
number who constitute an executive committee. In some 
instances the board of directors consists of twenty-five 
members. Frequently directors know, and are apparently 
expected to know, as little about the affairs of their com- 
pany as outsiders. Some of them are put on the board 
on account of their prominence in the community, their 
names being used to produce a favorable impression upon 
the public, and others owe their position to the fact, that 
they can command business for the company. But whether 
appointed for these or other reasons, many of the directors 
may be nothing more than figure-heads, and may exercise 
little or no influence upon the policy of the company. The 
directors meet at more or less extended intervals, probably 
once a month, or not so often, and each may, according to 
a growing practice, receive about five dollars, or more, 
for every meeting attended. They usually transact busi- 
ness in a perfunctory manner, leaving the management of 
affairs entirely with the president and one or two control- 
ling spirits of the executive committee. Much the same 



50 Trust Companies in the United States. [314 

comment as to the inefficiency of a directory, will apply 
with equal force to all classes of corporations, with the 
exception to an extent, of the banks. The directors of 
the latter may meet weekly, or oftener, to pass upon the 
paper offered for discount^ and have an opportunity of 
performing this class of their duties with some degree of 
intelligence. Any security which is afforded to the deposi- 
tors and stockholders by publicity of operations rather 
seems to be with the bank than with the trust company. 

Although secrecy in the conduct of a business allows a 
wrong action to be easily concealed, close management is 
particularly effective, when capable men are in charge who 
direct their efforts solely to the development of their com- 
pany. The opportunity for fraud, due to the concentration 
of power in the hands of one or two men and to the absence 
of state supervision, have led in some cases to unfortunate 
results. Public attention, at such times, has been directed 
to the matter, and the sentiment created that a need exists 
of protecting the interests committed to the care of these 
institutions. 

A short time before the panic of 1873, the Brooklyn 
Trust Company failed under circumstances indicating gross 
mismanagement. The company had done a lucrative busi- 
ness, but was bankrupted by the defalcations of its president 
and secretary, both of whom had made heavy losses in 
speculations. Trust companies were then regarded as in- 
stitutions that should be even more conservatively man- 
aged than banks, and it was not strange that there should 
have arisen — and especially after the financial crisis of 1873 
— a demand for the passage of laws to subject them to 
regulations similar to those under which banks had been 
placed. 

The Commercial and Financial Chronicle, 141 in the sum- 
mer of 1873, in referring to the failure of the Brooklyn 
Company, stated editorially that the directors of a trust 

141 Commercial and Financial Chronicle, New York, July 26, 1873, 
vol. 17, No. 422, p. 102, and Aug. 30, 1873, vol. 17, No. 427, p. 269. 



315] State Regulation. 51 

company were not looked upon as managers of an ordinary 
bank, but as guardians of trust funds. The investments 
of this institution, it contended, should be like those of a 
savings bank, only such as were solid and safe beyond 
question. 

In 1874 142 the Bankers' Magazine, reviewing the report 
of the Comptroller of the Currency, said that trust com- 
panies were intended as repositories for trust funds, for 
the accumulation of deposits to be loaned on mortgage 
or invested in government bonds; that is, to be savings 
banks on a large scale. The article stated further that 
trust companies had at that time been converted into stock 
jobbing concerns, thus becoming factors of demoralization 
and defeating the original purpose for which they had been 
established. 

In his report of December, 1873, the Superintendent 
of Banking of New York, in alluding to the rapid increase 
of the moneyed corporations which, he stated, were vari- 
ously styled trust, loan, indemnity, guaranty, exchange, 
or safe deposit companies, recommended that they be 
brought under stricter state supervision. The designation, 
trust company, had not, at that time, the full significance 
which it has since obtained, and there was then in New 
York no system for regulating these companies. Previous 
to 1874 148 — the year in which trust companies were placed 
under the charge of the state superintendent of banking — 
some of them were under the supervision of the comp- 
troller, some reported either to the comptroller, to a judge 
of a supreme court, or to the superintendent of banking, 
while others did not report at all. The majority, if not all 
of them, were exempt from making stated reports to a 
supervisory department of the state, as the banks were 
required to do; and none were liable to an examination 

142 Bankers' Magazine, New York, vol. 28, p. 520. (This is a 
review of the Report of the U. S. Comptroller of Currency that is 
referred to in Note 146). 

143 Schedules VII and VIII. 



52 Trust Companies in the United States. [316 

by any authorized state officer. The Superintendent urged 
that there was no reason why these companies should not 
be subject to regulation like the banks, for they did a 
deposit and savings bank business, and in some instances 
discounted paper. 

The Comptroller of the Currency, in his report of 1873, 144 
stated that the beginning of the monetary crisis of that 
year might be reckoned with the failure of the New York 
Warehouse and Security Company. Up to the time this 
company closed its doors, it had stood well. It had been 
established several years before to make advances on grain 
and produce shipped to New York; it afterwards under- 
took to finance a railroad which had a good foundation, 
but the enterprise proved to be too great for the resources 
of the Warehouse Company." 5 Such, at least, were the 
views expressed at the time. 

Among the suspensions during the panic of 1873 were 
those of the Union Trust Company, and the National 
Trust Company, of New York, 146 and of the great banking 
houses of Jay Cooke & Company, and Fisk & Hatch. The 
two firms named, as also a number of financial corpora- 
tions, had been largely interested in the negotiation of 
railroad securities. 147 In commenting upon the conditions 
of that period, the Comptroller of the Currency remarked 
that the money market had become overstocked with debt, 
that debt based on almost every species of property — rail- 
road, state, city, and manufacturing and mining companies 
— had been sold in the market. The panic of that year, 
he said, might, in a great degree, be based upon the inti- 



144 Report of the U. S. Comptroller of Currency for 1873, p. 
XXVI. 

145 (Mo., Kas. & Tex. R. R.); Commercial and Financial Chron- 
icle, New York, Sept. 13, 1873, vol. 17, No. 429, p. 341. 

146 Report of U. S. Comptroller of Currency, 1873, P- XXVI. 
"'Report of U. S. Comptroller of Currency, 1873, p. XXVI. 

Commercial and Financial Chronicle, New York. Sept. 20, 1873, 
vol. 17, No. 430, p. 375. 



317] State Regulation. 53 

mate relations of the banks of New York City with the 
transactions of the stock board; from one-fourth to one- 
third of the bills received by the banks up to that time, 
since the Civil War, had consisted of demand loans to 
brokers and members of the Stock Exchange. These oper- 
ations, the report continued, had a tendency to impede and 
unsettle, instead of facilitating the legitimate transactions 
of the whole country; the rule of business was to make 
money — to make it honestly, if possible, but at all events 
to make money." 8 

If a financial crisis were to occur in the United States 
at the present time, much the same criticism as made in 
1873 would be heard; but trust companies would come 
in for a greater share of the comment. 

The trust companies and the state banks in New York, 149 
as also in some other states, are now under similar regu- 
lations. Both institutions in New York are obliged to 
make reports to the banking department of the state and 
are subject to examination by official inspectors. 150 When 
state supervision 131 was first inaugurated in New York in 
1874, it was the cause of three trust companies ceasing tG 
do business. 152 The depositors, with claims amounting to 
six million dollars, were paid in full, but, if the state ex- 
aminations had not been made, and only reports of the 
officers of the companies had been submitted, these con- 
cerns might have continued to operate until a worse con- 
dition of affairs had developed. A company, it is said, 
had seldom failed whose recent published statement — in 
case it was the practice to make the same — had not shown 
a surplus. The statement of a trust company in New 



148 Report of U. S. Comptroller of Currency, 1873, p. XXVIII. 

149 Bankers' Magazine, New York, vol. 61, p. 787. Schedules 
VII, VIII, XI, XII, XIII, XIV, XV, XVI, XVII. 

150 Note 128. 

151 Notes 26, 27. 

152 Bankers' Magazine, New York, vol. 61, p. 787. 



54 Trust Companies in the United States. [318 

York, that is now published in the reports 153 of the state 
superintendent of banking is comprehensive, and with the 
system of examination in force allows considerable state 
supervision of the institution. The same comment may 
be made in regard to the companies in some other states. 



153 Report of New York Superintendent of Banking, Feb. 26, 1901, 
pp. 521, 522. Bankers' Magazine, New York, vol. 61, p. 788. 
Form of Statement Rendered by New York Trust Companies, 
resources. 

Bonds and mortgages. 

Stock and bond investments (itemized). 

Amount loaned on collaterals. 

Amount loanecl on personal securities, including bills purchased. 

Overdrafts. 

Due from directors of the institutions. 

Due from banks. 

Due from brokers. 

Real estate, estimated present value. 

Cash on deposit in banks or other moneyed institutions. 

Cash on hand. 

Amount of assets not included under any of the above heads 
(accrued interest receivable, etc.). 

LIABILITIES. 

Capital stock paid in. 

Surplus fund. 

Undivided profits. 

Deposits in trust. 

General deposits (by individuals, associations or corporations, 
payable on demand). 

Other liabilities not included under any of the above heads (ac- 
crued interest payable, etc.). 

SUPPLEMENTARY. 

Total amount of interest, commission and profits of every kind, 
received during the year. 

Amount of interest paid to and credited depositors during the 
year. 

Amount of expenses of the institution during the same period. 

Amount of dividends on capital stock declared during the year, 
payable, etc. 

Taxes paid during the year. 

Amount of deposits on which interest is allowed at this date 
(January 1st). 

Total amount of such deposits. 

Rate of interest on same. 

Amount of bonds and mortgages invested in during the year. 

Amount received from bonds and mortgages paid or sold during 
the year. 



319] State Regulation. 55 

Among the failures of loan companies was one, some 
years ago, in Minneapolis where little funds were found 
by the receivers to pay off its debts. 104 It was at first 
thought that the great office building which bore its name 
would be an important asset, although a mortgage for part 
of its value was recorded against it. A closer investigation 
revealed that' the company had not an equity in this prop- 
erty. Another corporation had been formed with the 
same officers as those of the loan company, and through 
this means the interest of the latter in the building had 
been disposed of without exciting suspicion. Such trans- 
actions can be carried on without difficulty, and no doubt 
many of the large office buildings, that are supposed to be 
owned by the trust companies, belong to separate and dis- 
tinct corporations. 

As referred to above, a national bank and a trust com- 
pany with similar names, occupied the same office in Phila- 
delphia 100 and juggled accounts. The American Loan and 
Trust Company, of Omaha, 106 was bankrupted in 1893 by 
speculations in lands in Texas carried on by a local com- 
pany of that state. 

Corporations which do not act as trustees have, at the 
present day, the word trust in their titles. In commenting 
upon the practice, the Superintendent of Banking of New 
York recommended, in his report of 1899, the adoption of 
a regulation that would apply not only to corporations 
created by the laws of New York, but also to foreign trust 
companies which did some kinds of business in that state, 
although not permitted to act there as trustees. The sug- 
gestion was partially acted upon, and an amendment to the 
Corporation Act was passed in 1900 governing companies 
formed under the laws of New York. 157 



104 Rhodes Journal of Banking, Oct., 1893, vol. 20, p. 11 14. 
155 Note 129. 

168 Rhodes Journal of Banking, vol. 20, p. 760. Schedules VII 
and VIII. 
m Note 16. Schedules VI, XVIII. 



56 Trust Companies in the United States. [320 

The argument is advanced in some quarters that the 
directors and officers of a corporation, and the public also, 
should not be taught to rely simply upon government in- 
spections; for at best these examinations are ineffective, 
and it is well for those who are interested to make investi- 
gation for themselves. The officials of a national bank 
in Baltimore 1 " employed, a year or so ago, special experts 
to supplement the federal examination. Many contend 
that it is better for a people to be educated to be self-reliant, 
and attention is called to the fact that in some states where 
savings banks and trust companies have virtually received 
no regulation they have been conservatively and success- 
fully managed. This may be admitted, but numerous in- 
stances of frauds and failures clearly demonstrate that such 
a statement of the case is by no means complete. A good 
system of banking is of extreme importance to all classes 
of people. It is, therefore, easily understood why a public 
demand exists for the regulation of financial institutions; 
and why some persons advocate this measure, who are 
generally opposed to an enlargement of the sphere of the 
State. 

There is a wide difference in the laws throughout the 
Union in regard to trust companies, and the suggestion 
has been made that in order to get a uniformity, it may be 
well to have a constitutional amendment and bring trust 
companies under federal jurisdiction. This plan is in har- 
mony with that of having all corporations regulated by the 
general government; and in the view of some it will not be 
a great step in extending the exercise of this power from 
the deposits of national banks to those of other financial 
institutions. 

With the rapid changes, now occurring in industrial and 
financial conditions, it is impossible to forecast with any 
degree of confidence the political action, which may in 



Merchants National Bank. 



321] State Regulation. 57 

consequence follow. 159 Nevertheless it may be said that, 
from present appearances, no extension of federal authority 
over trust companies may be expected in the near future. 
Any uniformity which may be obtained in the laws will, 
probably, be brought about by similarity of conditions in 
the different parts of the country and through efforts made 
by the citizens in the individual states. 

There is always opposition to any increase of gov- 
ernmental interference, and often it is well to be slow in 
bringing about radical changes. Trust companies have in 
some states been placed under little regulation, and the fact 
that they have exercised a wide latitude of action, has 
enabled them to build up large and successful businesses. 
In many instances it may be a hardship and injustice to 
subject these institutions suddenly to great restrictions. 
When legislation of this character is undertaken, a con- 
servative course in the beginning seems to be the wise 
one; and later, if it becomes necessary, more stringent 
measures may be adopted. 

The success of trust companies seemingly indicates, that 
the need exists for an institution with the power to advance 
large sums to a single concern and to engage in what may 
be regarded as speculative ventures. If it be deemed better 
that another corporation with more limited privileges shall 
manage trust estates, separate companies may be estab- 
lished for the purpose. Some trust companies are already 
in existence — that is, one of each of the two classes may be 
mentioned — which have built up a large business in one or 
the other of these operations and have mostly, if not 
entirely, confined themselves to it; if they have acted 

159 Baltimore News, Sept. 16, iqoi ; extract from the speech of 
Vice-President Roosevelt (now president), delivered Sept. 2, 1901, 
at Minneapolis: "The vast individual and corporate fortunes, the 
vast combinations of capital, which have marked the development 
of our industrial system, create new conditions, and necessitate a 
change from the old attitude of the state and nation toward prop- 
erty." 



58 Trust Companies in the United States. [322 

as trustees under wills, 100 they have not devoted their 
efforts to promoting enterprises, or the reverse. 101 This 
being the fact, the separation of the two functions can, of 
course, be accomplished, but such an action would have 
the effect of retarding the development of the institution. 

It is often difficult, if not impossible, to observe the drift 
of public sentiment and to determine the factors at work 
producing results. It is only speaking in a broad way, 
when it is suggested that judging from surface indications 
there is little demand at present for a law to prevent the 
same company acting both as trustee under a will and as 
promoter of enterprises. Regulations requiring trust com- 
panies to deposit security with the state to protect trust 
funds, and those placing them much on the same basis as 
state banks, are the ones, it appears, likely to be sooner or 
later adopted where such a regulative system is not already 
in operation. 102 The action, in 1902, of the New York 
Clearing House, in regard to cash reserves for deposits in 
trust companies may be significant. 102 * 

Trust companies are either formed under special acts 
of a state legislature or under a general law of a state. In 
New York both methods are in force, and when the General 
Law is made use of, the superintendent of banking is em- 
powered to refuse incorporation to any new company if, 
in his opinion, there is a sufficient number in existence. 
The power is delegated to this officer of limiting the num- 
ber of trust companies in the state, unless the legislature 
exercises its right and creates additional ones. 

In the states where charters for these corporations have 
been granted by special acts, they have sometimes been 
obtained in an unfair way and procured to be sold to the 

100 Safe Deposit and Trust Co., Baltimore. 

161 Maryland Trust Co., Baltimore; Laws of Maryland, 1892, Chap. 
168, p. 263. Has, however, absorbed Guardian Trust Co. with pow- 
ers of executor; Laws of Maryland, '90, Chapter 539, page 631. 

102 Schedules VII, VIII, XI, XII, XIII, XIV, XV, XVI. 

102a Notes I20 a , I37 a . 



323] State Regulation. 59 

highest bidder. In addition to the general evils of private 
legislation, there is always a danger in such legislative 
grants of a privilege being included that was not intended 
and was concealed by a " snake in the bill." Many of the 
states, after having tried the other system, have adopted 
a general law under which corporations of this kind must 
be chartered in order to get an existence. Maryland is an 
example of the opposite policy. 163 

163 Schedule V. 



CHAPTER V 

CONCLUSION 

Place and Cause of Development. 

A slight review will aid in fixing more clearly upon the 
attention what is the place that is now occupied by trust 
companies, and what are some of the causes that have led 
to their development. 

It has been noted that corporations with power to exe- 
cute all lawful trusts have existed a great many years in 
the United States. The earlier ones exercising this privi- 
lege were insurance companies which were authorized to 
act as trustees, but only engaged in such operations as an 
auxiliary to their insurance business. Trust companies still 
continued to be classified with insurance associations, even 
when they began to be operated as separate institutions. 

According to general impression the trust powers were 
originally extended in some of the states to corporations 
merely to allow them to manage trust funds, and not to 
establish banking concerns. 104 This latter idea appears to 
be correct, for the earliest companies empowered to act as 
trustees were forbidden by their charters to engage in 
banking. In spite of this fact, trust companies have be- 
come banking institutions and have large lines of deposits; 
they compete with the national banks, but are not subjected 
to the same restrictions. They have been formed and suc- 
cessfully operated in the smaller towns, but it is in the large 
financial centres that they have more especially developed ; J8> 
in New York and Chicago, some of them have deposits 

164 Bankers' Magazine, New York. vol. 59, p. 471. Nation, New 
York (Sept. 21, 1899), vol. 69. p. 220. 

3,15 Bankers' Magazine, New York, vol. 58, p. 505. Table VII. 



325] Conclusion. 61 

ranging from fifty to seventy million dollars. 106 In Chicago, 
however, they are state banks with trust powers. 

There seems to have been a recognition on the part of 
the banks in New York for the first time, about 1873, that 
there was a new and serious competitor against them in the 
field. After the financial panic of that year the banks felt 
the pressure of the hard times; and, therefore, being sensi- 
tive to the effects of competition, they more keenly realized 
that deposits were diverted from them, and that some enter- 
prises in which they were engaged were in process of 
absorption by another institution. Naturally they com- 
plained of any unfair advantages that worked against them. 
It was, however, not until 1885 or 1887 that the great de- 
velopment of trust companies in New York took place. 18 "' 
About this time the profits derived from note issue were 
lessened and banks commenced to decrease their circula- 
tion. 168 

The deposit system was formerly of minor importance 
to that of note issue in banking; the condition has changed. 
In England and the United States the habit of depositing 
money in bank and withdrawing it by check is highly 
developed, and in parts of the continent of Europe the 
custom has greatly extended. In Germany some banks 
which issued notes have preferred rather to surrender this 
power than to submit to the government restrictions inci- 
dent to it. They have found it advantageous to have a 
relatively free hand in the management of their affairs and 

16S Report of New York Superintendent of Banking, July, 1901. 
Commercial and Financial Chronicle, New York, vol. 70, No. 1820, 
p. 924. Report of Auditor of Illinois, Dec. 11, 1901, p. 43. 

167 Bankers' Magazine, New York, vol. 43, pp. 659, 721. Table I. 

168 Report of the Monetary Commission, Chicago, 1898, Chart II, 
opposite p. 206; note circulation of national banks in U. S.; Re- 
ports of the U. S. Comptroller of Currency: Dec, 1884, $280,000,000; 
Dec, 1885, $260,000,000; Dec. 1886, $200,000,000; Dec, 1890, $120,- 
000,000; Oct., 1897, $200,000,000; Oct., 1900, $332,000,000; Oct., 1901, 
$360,000,000. Bankers' Magazine, New York, May, 1902, vol. 64, 
P- 653. 



62 Trust Companies in the United States. [326 

have not seriously felt the loss of the right to issue notes, 
as their deposit lines have grown to large proportions. 
Some of the great banks in Germany occupy much the 
same place respecting large enterprises, as do the trust 
companies in the United States. 109 

It is readily seen how trust companies have been aided 
in their growth by the increased importance of the deposit 
system, for the monopoly by ,the national banks of note 
issue is no longer the great advantage that it was. 170 Trust 
companies have been favored by freedom from the regula- 
tions to which the banks have been subjected. They have 
consequently been allowed to engage more than the re- 
stricted institutions in the huge schemes which the changes 
in the industrial organization and the rapid development of 
the country have required to be undertaken. 

Conditions, in general, have no doubt made a place for 
an institution which advances large sums in a single venture 
and is free from restrictions as to the character of its 
investments. All trust companies, however, may not en- 
gage in financing enterprises, for at least one of them 171 
devotes itself to what was originally considered the legiti- 
mate operations of a trust company and what may be called 
a strictly trust business; that is, acting as trustee or execu- 
tor and managing estates and trust funds. It appears, 
however, to be true that the enormous development of 
trust companies has largely been due to their relations with 
railroad and industrial corporations. 172 

The idea has been advanced that trust companies owe 
success not merely to the state of affairs, but also 
to the fact that they have been managed by more enter- 

109 Bankers' Magazine, New York, vol. 63, p. 855. Commercial 
and Financial Chronicle, New York, vol. 72, No. 1855, p. 4. Note 
120. 

170 Commercial and Financial Chronicle, New York, vol. 70, No. 
1808, p. 303. 

171 Note 160. 

172 Commercial and Financial Chronicle, New York, vol. 70, No. 
1803, p. 59; vol. 70, No. 1812, p. 508. 



327] Conclusion. 63 

prising and capable men. The success of the large banks 
of New York clearly demonstrates the contrary without 
the necessity of further evidence. 

Among other functions which they perform, trust com- 
panies execute various trusts, manage estates and promote 
enterprises. They do a safe deposit business; this is a 
feature that may be adopted and carried on conveniently 
by almost any financial institution in connection with its 
other departments, or it may be conducted by a separate 
corporation. In some states trust companies insure the 
titles of property, in some they act as bondsmen. Title 
insurance and bonding companies are regarded inlhe pub- 
lic mind as trust companies; they are generally, but not 
always, distinct concerns. 

Trust companies engage in general banking operations. 
They do not restrict their deposits to trust funds; they 
solicit and receive the same kinds as are sought by other 
banks. The old savings banks occupy a position which 
they will probably long retain. It may, nevertheless, hap- 
pen that their rivals will in time make gains by offering 
higher rates of interest and extending inducements in the 
way of greater conveniences. The small savings banks 
will be placed at considerable disadvantage in the contest. 

At present, the trust companies in New York confine, 
for the most part, their call and time loans to those secured 
by collateral, they advanee relatively small amounts on 
personal security. The companies in Philadelphia are not 
permitted to discount paper, those in Chicago are princi- 
pally banks with trust powers. The national banks 
engage more largely than formerly in certain classes of 
operations and seek to accommodate themselves to the 
changed conditions. With discrimination against them, 
banks of issue will continue to have a place in the business 
world; but from the outlook it seems that, in the formation 
of new financial concerns, the tendency will be more to 
organize them upon a basis that affords the broadest priv- 
ileges. The trust companies offer some advantages over 



64 Trust Companies in the United States. [328 

other existing institutions; they are allowed a wider scope 
of action than the national banks, and with their diversified 
interests, may make one department aid the development 
of another. 173 

Some trust companies have branches. 174 Three compa- 
nies of New York, and one of Boston, were authorized, in 
1901, to act as trustees under the General Corporation Law 
of Illinois. 175 The North American Trust Company, of 
New York, 176 established financial institutions under its 
management not only in different parts of the United 
States, but also in Cuba. A great company operated on 
this principle with capable officers would have large re- 
sources at its command; it would have a wide field of oper- 
ations and could conduct business at a low rate of expense. 
A lack of legal provision or legal prohibitions in regard to 
such extensions may, in a measure, be overcome, through 
different companies under the control of a single interest. 1703. 

The same influences that have operated to combine 
railroad and industrial corporations have tended to pro- 
duce similar effects among financial institutions. 177 Con- 
solidation has taken place not only among trust companies 
that have already been established, but also among con- 
cerns whose organizations have not been completed. 178 The 
Produce Exchange Trust Company of New York " 9 sus- 
pended in 1899 and afterwards reorganized under a differ- 

173 Political Science Quarterly, June, 1901, p. 250; article "Trust 
Companies," by A. D. Noyes. Note 123. 

174 Bankers' Magazine, New York, vol. 62, p. 258; vol. 63, p. 855. 
Commercial and Financial Chronicle, New York, vol. 70, No. 1807, 
p. 262. Schedules III, V. 

175 Report of Auditor of Illinois, Dec. 11, 1901. 

170 Commercial and Financial Chronicle, New York, vol. 70, No. 
1812, p. IX; vol. 70, No. 1820, p. 925; vol. 72, No. 1854, p. 29. 
17 " a Baltimore Sun, June 16, 1902 (editorial). 

177 Bankers' Magazine, New York, vol. 63, p. 315. 

178 Commercial and Financial Chronicle, New York, vol. 70, No. 
1806, p. 213; No. 1811, p. 460; No. 1813, p. 564. 

179 Commercial and Financial Chronicle, New York, vol. 70, No. 
1800, p. 108. 



329] Conclusion. 65 

ent management with a son of the late Mr. Jay Gould 
as president. This reorganization caused the abandonment 
of a new company that was about to be formed to take 
care of the large interests of the Gould family — interests 
which comprise great telegraph and railroad properties. 
The Produce Company, under the title of the Bowling 
Green Trust Company, 1 "' in a short time built up a large 
deposit line and became established upon a solid founda- 
tion. This case gives some idea of the operations that are 
engaged in by these companies, and serves as one of the 
many evidences of the great power of wealth controlled by 
a single directing force. 

In Illinois the state banks are granted trust powers upon 
the proper deposit of funds with the auditor of the state. 
In other words, trust companies may be created in this way 
with banking privileges, and such concerns are regarded 
primarily as banks. The principle that trust companies 
are banks is becoming more fully recognized. Although 
differences may long continue to exist, it appears that the 
trend of legislation in New York and in a number of other 
states is to place upon an equal footing these two financial 
institutions that operate under state franchises. 

There is, as is well known, a general tendency of corpo- 
rations to supersede individuals in performing certain func- 
tions and, if the conclusions advanced in this paper are cor- 
rect, it appears that the following may also be mentioned 
among the causes for the development of trust companies: 

1. The place for an institution making large advances 
in a single venture and exercising a Tree choice in its in- 
vestments — one not hampered with the restrictions to 
which the national banks have been subjected. 181 

2. The increased importance of deposits relative to the 
issue of bank notes, and the payment of interest 182 on 
demand deposits. 

180 Report of New York Superintendent of Banking, July i, 1900, 
p. 445: general deposits, $10,000,000. 

181 Rhodes Journal of Banking, vol. 21, p. 70. 

182 Bankers' Magazine, New York, vol. 28, p. 518. 

23 



66 Trust Companies in the United States. [330 

3. The growth of investments in government and corpor- 
ate securities, and the demand for an institution to manage 
estates largely consisting of these. 

4. The combination in one company of various classes of 
financial business, each aiding to build up the other. 

In the analysis of social problems some factors are 
easily overlooked and others given undue value. As to 
what will come to pass, uncertainty necessarily prevails; 
the present system of exchanges may be much altered, 
and indeed the fundamental principles regarding property 
rights may be modified. But whatever may have been 
the cause of their growth, or whatever may be their future, 
it can be said without question that trust companies are. 
at present, important financial institutions in parts of the 
United States. 



APPENDIX I 

The Farmers' Loan and Trust Company of New York. 
(Sketch prepared by the Company.) 

Although the majority of the trust companies of this 
country have been organized within the past twenty-five 
years, it should not be concluded that the financial world 
had not felt their need before then, for as early in the 
last century as February 28, 1822, the first trust company 
was incorporated and a charter granted to The Farmers' 
Fire Insurance and Loan Company, of New York, which 
name was changed by an act of the legislature passed 
April 30, 1836, to The Farmers' Loan and Trust Company. 
The original twenty-one directors held their first meet- 
ing March 9, 1822, and elected John T. Champlin Presi- 
dent, and at subsequent meetings Archibald Mclntyre was 
elected Secretary and John Ely, Jr., Assistant Secretary. 
In the order of their election, the following persons have 
served as President: 

John T. Champlin, Lewis Curtis, 

Oliver H. Hicks, Charles Stebbins, 

Fred A. Tracy, Robert C. Cornell, 

Elisha Tibbets, D. D. Williamson, 

Henry Seymour, Rosewell G. Rolston, 

Edwin S. Marston. 

The original act of incorporation gave to the company 
power to make loans on mortgages, which authority is 
emphasized by being stated first in the act, and having 
proportionately a larger part 'of the act devoted to the 
matter of making such loans and of foreclosing the mort- 
gages, but at the same time the feeling that was then 
prevalent, that corporations should not hold real prop- 



68 Trust Companies in the United States. [332 

erty, any further than was absolutely necessary for their 
corporate purposes, was manifested by the provision that 
any mortgaged property which was taken on foreclosure 
should not be held longer than five years, and that if held 
for a period beyond that term, the title should immediately 
be forfeited to and vested in the people of the State of 
New York. 

Authority was also given to this corporation to pur- 
chase and hold any stock or foreign debt, or the stock of 
any corporation; which is interesting in view of the sub- 
sequent history of corporations, in reference to which legis- 
lation for some time practically forbade their acquiring 
stock in other corporations. 

The corporation also originally had power to insure 
against loss by fire and to grant life insurance and 
annuities. 

By an act passed April 17, 1822, the same session of the 
legislature which passed the act of incorporation, it was 
provided: "That the said corporation shall also have 
authority to receive and take by deed or devise any effects 
and property, both real and personal, which may be left 
or conveyed to them in trust and to assume, perform 
and execute any trust which has been or which may be 
created or declared by any deed or devise as aforesaid; 
and the said corporation are authorized to receive, take, 
possess and stand seized of, and to execute any and all 
such trust or trusts in their corporate capacity and name, 
in the same manner and to the same extent as trustee or 
trustees might or could lawfully do, and no further." 

This grant of power to act as trustee is undoubtedly 
the earliest bestowal of such powers upon any corporation 
in the State of New York, if not in the country. The lan- 
guage employed is of the broadest character possible. 

The early acts relating to this trust company are also 
interesting as reflecting to a considerable degree the feel- 
ing of jealousy which was prevalent in this country in the 
early part of the last century, to the formation of banks 



333] Appendix I. 69 

and moneyed institutions. The original act of incorpora- 
tion of the trust company provided that nothing in the 
act should be so construed as to authorize the said corpo- 
ration to receive any deposit or deposits, nor to discount 
any promissory note, bond, due-bill, draft, or bill of ex- 
change, nor shall it be so construed as to allow any banking 
privileges or business whatever. 

The subsequent history of this trust company has em- 
phasized the truth that persons in creating business insti- 
tutions are often unable to foretell the course of develop- 
ment of those institutions in the future. It is well known 
that at least one of the banks in New York City at the 
present time was established under a charter, the main 
object of which was to supply the city of New York with 
water. That corporation long years ago ceased to supply 
any water, but the bank has continually grown, and to-day 
is one of the important financial institutions of the city. 

So in the case of the Farmers' Loan and Trust Com- 
pany, which was organized as an insurance and loan com- 
pany, the last outstanding life insurance policy, which was 
issued on February 23, 1838, was not paid until February 
28, 1898, — sixty years after the date of its issue. As we 
have already stated, the very first power given to the 
Company was that of making loans on mortgages, and 
the purpose of this power was set forth clearly in the act, 
showing that the design was to aid the citizens of the state, 
residing in the country. Under its charter the Company 
was required, within one year from its incorporation, to 
make loans on the security of real estate within the State 
of New York and within the limits of the Southern Dis- 
trict of New York, to the amount of at least one hundred 
and fifty thousand dollars, and when the capital stock 
of the Company was increased from five hundred thou- 
sand dollars, which it was originally, to one million dollars, 
such increase was made conditional on the investment 
of an additional one hundred and fifty thousand dollars 



70 Trust Companies in the United States. [334 

in bonds and mortgages on lands within the city and county 
of New York. 

Through its operations in farm lands this Company ac- 
quired title to large tracts of lands in various counties in 
the State of New York. Regarding the land located in 
Erie County and bordering on Lake Erie, there has arisen 
in recent years a question both unique and interesting. 
We quote from a report published not very long ago: 

"After the American Revolution a controversy between 
New York and Massachusetts, as to which state had the 
fee of and dominion over all the western New York terri- 
tory, became acute, each claiming under a separate grant 
from the English Crown. This controversy was settled 
by what is known as the ' Treaty of Cession,' which was 
executed in December, 1786, according to the terms of 
which the western boundary line of the lands ceded to 
Massachusetts in this vicinity was the center of Lake Erie. 
To the State of New York was ceded all the claim, right 
and title which the Commonwealth of Massachusetts had 
to the government, sovereignty and jurisdiction of the 
lands and territories claimed by the State of New York. 
On May 11, 1791, the Commonwealth of Massachusetts 
conveyed to Robert Morris a great tract of these ceded 
lands. Whatever title Robert Morris obtained from Mas- 
sachusetts passed through various intermediate convey- 
ances to the Holland Land Company about the year 1798, 
and on January 27, 1838, the Holland Land Company con- 
veyed to The Farmers' Loan and Trust Company all its 
unsold lands in Erie County. The question in dispute 
is whether the conveyances made in 1838 by the Holland 
Land Company to this Company gave it title to the lands 
under water, due to the encroachment of the water on the 
land since the time of the ceding of the lands to New York 
State by the Commonwealth of Massachusetts under the 
terms of the treaty." 

The trust functions of the corporation, which are given, 
as we have said before, by a supplemental act passed at 



335] Appendix I. 71 

the same session of the legislature which incorporated 
the Company, have been exercised at an increasing rate, 
and the accumulation of wealth in recent years has de- 
manded more and more the exercise of those powers. 

The change from established customs is always at- 
tended with many misgivings, but more especially is this 
true in respect to any thing having to do with financial 
transactions. For years individuals have been acting as 
executors and trustees, but the substitution of trust com- 
panies for individuals, which was made gradually at first, 
is now taken as a matter of course, and persons having 
large estates to a great degree prefer trust companies to 
individuals. Experience has shown that the appointment 
of individuals to the office of executor does not, in many 
instances, successfully accomplish the results desired by 
the testator. The person appointed may die before the 
testator, requiring a change in the will, or may die after 
the testator, leaving the estate only partially administered, 
necessitating confusion and the appointment of an admin- 
istrator with the will annexed. Sometimes even the con- 
tinuance of the executor in office is worse than his death. 
He may be stricken with disease, his faculties become im- 
paired, or for other reasons he may become incompetent, 
and then he must be removed and another appointed in 
his place. All these changes involve an expense to the 
estate and more or less anxiety to those interested in it. 
The Farmers' Loan and Trust Company can act as exe- 
cutor, and a testator in appointing it will know that the 
executor of his own appointment will administer his estate. 

The corporation, through its years of dealing with 
trusts and trust estates, has accumulated an experience 
which no individual ever could hope to have. This 
experience has resulted in improved methods of dealing 
with estates, and has developed a corps of officers 
and clerks whose time and attention are being constantly 
directed to the questions arising, and who are not dis- 



72 Trust Companies in the United States. [336 

tracted, as individual executors and trustees generally 
are, with the cares and annoyances of their own business. 

The growth of the Company is evidenced by the increase 
in its deposits as shown by the following comparative 
statement, covering a period of twenty years: 

Deposits. 

January I, 1880 $ 6,270,892.06 

January 1, 1890 23,964,838.50 

January 1, 1900 41,519,851.25 

April 1, 1902 61,079,287.23 



APPENDIX II 

The Pennsylvania Company for Insurances on Lives 
and Granting Annuities. 

(Article compiled by Albert W. Rayner principally from 
the sketch of the Company by H. S. Morris.) 

A group of men gathered at a coffee house in Phila- 
delphia in the winter of 1809 and discussed the feasibility 
of organizing a company the main objects of which were 
to be the insuring of lives and granting of annuities. Sev- 
eral companies devoted to marine and fire insurance were 
already in existence. Notwithstanding this fact, the Penn- 
sylvania Company was slow to organize and did not suc- 
ceed in procuring a charter until March 10, 1812. 

During the period between 18 12 and 1829, the progress 
of the Company was steady. The first president was Joseph 
Ball, who was elected March 17, 1812. Mr. Ball served in 
1791 as a director of the Bank of the United States, was 
connected with the Batsto Iron Works and was one of the 
original Board of The Insurance Company of North 
America. 

It is of especial interest to economists to mention the 
name of Condy Raguet, who was at the head of the Penn- 
sylvania Company from 1816 to 1819. One critic, in 
speaking of him says that some of his writings on financial 
and economic topics were the best ever produced in Amer- 
ica. Condy Raguet suggested and helped to carry to com- 
pletion the earliest savings bank in Philadelphia; he was 
also editor of " The Philadelphia Gazette and Common 
Intelligencer." 

Another President of the Pennsylvania Company was 



T4 Trust Companies in the United States. [338 

Robert M. Patterson, who served from 1822 to 1826. Mr. 
Patterson was especially honored for his intellectual at- 
tainments. He had been educated abroad and completed 
a course of chemistry under Sir Humphrey Davy. Upon 
returning to this country, he was identified with academic 
institutions and societies of learning, and for several years 
occupied the position of Director of the United States 
Mint at Philadelphia. 

These names are but a few of the prominent ones that 
have been connected with the Pennsylvania Company. 

In 1831 attention was attracted to the great success of 
a new undertaking in India, called Agency Houses, which 
were concerns organized to transact business for trustees, 
receive money on deposit, administer estates, etc. It was 
the desire of the managers of the Pennsylvania Company 
to invest their organization with' these powers; but on 
account of their conservatism there was a delay of several 
years before this was done. 

Mr. Harrison S. Morris says in his sketch of the Penn- 
sylvania Company: 

" In the early part of 1836, the most important advance 
made in the affairs of the Company, since its organiza- 
tion, was finally consummated when the Governor of the 
State, in whose honor the corporation was named, approved 
a supplement clothing the Pennsylvania Company with 
authority to enter into the business of executing trusts. 

" This new privilege greatly widened the usefulness of 
the Company in every way. The fullest powers were given 
it for carrying on the trust business. Under the terms of 
the supplement, it is allowed to receive property, real and 
personal, in trust, and to accept trusts of every descrip- 
tion, while the courts are permitted to appoint the Com- 
pany to the offices of Trustee, Assignee, Guardian, and 
Committee of Lunatics. 

" It is thus plain that a new career was open to the al- 
ready prosperous organization, and its efficient manage- 
ment was not slow to reap the rich harvest in store." 



339] Appendix II. 75 

The new branch of the Pennsylvania Company's business 
was taken up with energy and before many years the 
trust transactions were among the most profitable as 
well as the most important ones of the institution. The 
gradual decline of the life insurance branch followed, and 
with the rivalry of new insurance organizations, which were 
adopting methods of competition not desirable for the 
Pennsylvania Company on account of its trust business, 
the ultimate relinquishment of underwriting insurance be- 
came an advisable policy, and the Company, after 1872, 
issued no new policies of insurance. 

During a long period of years, the Company has fre- 
quently changed location. It is interesting to note, in 
view of the fact that its inception took place in a coffee 
house, that it eventually secured for its established home 
a site which was formerly occupied by a wayside inn. 

Statistics strengthen comments. In regard to the trust 
estates under its charge it may be said that in 1895, the 
Company controlled one hundred and thirty-six millions 
of securities, taken at their par value, and received, during 
the year, more than a million dollars for rentals. In 1901 
the deposits were eleven million five hundred thousand 
dollars, and the trust funds amounted to one hundred 
and fifty million dollars. The capital was originally five 
hundred thousand dollars, it was afterwards increased to 
two millions of dollars. In conclusion, it may be stated 
that between 1875 and 1896 it loaned over one hundred 
and twenty million dollars without incurring loss. 



APPENDIX III 



Schedules 

Trust Company Legislation in the United States, with 
some comparisons in regard to State Banks. 

Prepared for George Cator by John Burton Phillips, 
Ph.D. 



Index to Appendix III 

SCHEDULE. PAGE 

I. Auxiliaries. 

Safe Deposit 79 

Fidelity Insurance 79 

Title " 79 

II. Banking Privileges SO 

III. Branches 80 

IV. In same Office with Bank 80 

V. Incorporation 82 

VI. Foreign Companies 83 

VII. Reports 84 

VIII. Examinations 86 

IX. Receivership 88 

X. Deposits with State 90 

XI. Double Liability 90 

XII A. Reserves, Banks 92 

B. " Trust Companies 92 

XIII A. Loans, Banks 94 

B. " Trust Companies 95 

XIV A. Investments, Banks 96 

B. " Trust Companies 97 

XV A. Capital, Banks 98 

B. " Trust Companies 99 

XVI A. Liabilities, Banks 100 

B. " Trust Companies 100 

XVII A. Taxation, Banks 101 

B. " Trust Companies 103 

XVIII. " Trust " in Titles of Corporations 105 

XIX. General Remarks 105 



ABBREVIATIONS IN THE SCHEDULES 



Ann. S. Annotated Statutes. 

Ballinger's S. Ballinger's Annotated Codes and Statutes of Washington. 

Bates' S. Bates' Annotated Ohio Statutes. Revision of 1897. 

Birdseye's S. Revised Statutes, Codes and General Laws of New York. 

C. C. Civil Code. 

C. L. Compiled Laws. 

C. S. Compiled Statutes. 

G. L. General Laws. 

G. S. General Statutes. 

Horner's S. Horner's Annotated Statutes. 

Hill's L. Hill's Annotated Laws of Oregon, 1892. 

Mills' S. Mills' Annotated Statutes. 

P. and L. Pepper and Lewis' Digest, 1894. 

P. G. L. Public General Laws. 

P. S. Public Statutes. 

R. L. Revised Laws. 

R. S. Revised Statutes. 

S. Statutes. 

S. and H. Sandels and Hill's Digest. 

Note.— When not otherwise stated, the numbers in the Schedules refer to 
the Session Laws of the respective States. 



343] 



Appendix III. 



79 



SCHEDULE I. 



States 

and 

Territories. 


Powers of Trust Companies. 


Safe deposit. 


Fidelity insurance. 


Title insurance. 


Alabama 


No 


trust company legisla 


tion. 


Arizona 1 


Arkansas 


„ 


it n ,i 




California 


No special provisions ; prob 


ably nothing to prevent in 


general law. 


Colorado 


Yes. '91, p. 102. 
Fixed by charter. 


Yes. '91, p. 102. 
Fixed by charter. 


No. 

Fixed by charter. 


Connecticut 


Delaware 








Dis. of Columbia 2 


Yes. Code, §715. 


Yes. 


Yes. 


Florida 


No 


trust company legisla 


tion. 




Georgia 


Yes. '91, p. 173. 


No. 


No. 


Iowa 


Probably have all these po 


wers because organized und 


er gen'l corporation law. 




Yes. '01, p. 26. 

j Yes. R. S. '99, p. 470. 

' Banks may have trust po 


Yes. '01, p. 26. 
Yes. R. S. '99, p. 470. 


Yes. '01, p. 26. 

Yes. R. S. '99, p. 470. ( 


Illinois 




wers by fulfilling requireme nts. 


Indian Territory. 


No legis 


lation on banks or trust 


companies. 


Indiana 


Yes. S. '97, §3815a. 


No. 


No. 


Kansas 1 


No. 
Yes. 


Yes. '01, ch. 407. 
No. 


Yes. '01, ch. 407. 


Kentucky 


No. 


Louisiana 1 


Yes. 


No. 


No. 


Massachusetts — 


Yes. '88, ch. 413. 


No. 


No. 


Maryland 


j Powers fixed by charter. 

'Yes. 


1 Powers fixed by charter, 
■< trustee without usual bo 
( of surety. 


but a company, acting as 
nd, cannot incur liability 




Maine 


Powers fixed by charter. 
Yes. 


Fixed by charter. 
No. 


Fixed by charter. 


Michigan 


No. 


Minnesota 


Yes. S. '94, §2849. 


Yes. S. '94, §2849. 


No. 


Mississippi 


No. 


Yes. "97, ch. 33. 


No. 


Missouri 


Yes. '91, p. 99. 


Yes. '91, p. 99. 


Yes. '91, p. 99. 


Montana 


Yes. Civil Code, §604. 


Yes. Civil Code, §604. 


No. 


Nebraska 


No 


trust company legisla 


tion. 


Nevada l 


u 


i> .. » 




North Carolina... 


Banks and trust 


companies are specially 


chartered. 


North Dakota 1 ... 


Yes. Code, '99, §3258. 


Yes. Code, '99, §3258. 


Yes. Code, '99, §3258. 


New Hampshire . 


Powers fixed by charter. 






New Jersey 


Yes. '99, ch. 174. 


Yes. '99, ch. 174. 


Yes. '99, ch. 174. 




Act provides for savings ba 


nks and trust ass'ns. Usual tr 


ust powers not mentioned. 


New York 


Yes. '01, ch. 443. 


No, unless by special charter 


Yes. '01, ch. 443. 


Ohio 


Yes. Bates' S. §3821a. 


No. 


No. 


Oregon 


No 


trust company legisla 
Yes. '01, p. 99. 


tion. 


Oklahoma 


Yes. '01, p. 99. 


No. 


Pennsylvania 


Yes. '95, ch. 286. 


Yes, '95, ch. 286. 


Yes. '95, ch. 286. 


Rhode Island 


Powers fixed by charter. 


Fixed by charter. 


Fixed by charter. 


South Carolina... 


" " " 


" 




South Dakota .... 


Yes. Ann. S. '99, §4205. 


Yes. Ann. S. '99, §4205. Yes. Ann. S. '99, §4205. 


Tennessee 


Yes. Code, '96, §2090. 


No. 


No. 


Texas 


Yes. R. S. '95, §642. 
No. R. S. '98, §423. 


Yes. R. S. '95, §642. 
Yes. R. S. '98, §423. 


No. 


Utah 


Yes. R. S. '98, §423. 


Virginia 


Powers fixed by charter. 


Fixed by charter. 


Fixed by charter. 


Vermont 


Powers fixed by charter. 
Yes. '01, ch. 85. 






West Virginia.... 


Yes, '01, ch. 85. 


Yes. '01, ch. 85. 


Washington 


No pro 


visions on these subjects in 


State. 


Wisconsin 


Yes. S. '98, §1791d. 


Yes. S. '98, §1791d. 


No. 


Wyoming 1 


Yes. '88, ch. 88. 


No. 


No. 



1 No trust companies in State. 

2 In the District of Columbia the same company may not do safe deposit, fidelity and title insur- 
ance business. 



80 



Trust Companies in the United States. 



[344 



States 

AND 

Territories. 



Alabama 
Arkansas' 



Connecticut 
Delaware. .. 



Fixed by char 
Yes. 

Governed by 
Dist. of Columbia Yes. 



SCHEDULE II. 



Banking privileges of trust 
companies. 



Receive 
demand 
deposits. 



Yes. '91, p. 102. 

Mills' S. 
Shall not enga 



Discount 
paper. 



SCHEDULE III. 



May trust companies 
conduct branches ? 



Florida . 
Georgia. 



Idaho . . 
Illinois 



Indiana. 



Indian Territor; 
Iowa 



Kentucky , 



Louisiana 2 . 



Maine 

Maryland 

Massachusetts. 
Michigan 

Minnesota 



No trust com 
Yes. 

'98, P- 78, §3, 
May engage in 
Yes. '01, p. 26, 

No. 

R. S. '99, p. 470, 

but banks 

der trust act. 
Yes. '93, p. 344, 
Ann. S. '97, 
§3815m. 
Yes. 

No. 

Code '97, §1889, 

Yes. 

For compani 
before 1886. 

Yes. 

Only from 
banks, sav- 
ings banks, 
trust co's, 
public offi- 
cers or 
boards. 

Yes. Statutes 
94, §606. 

May engage 
counties un 
ch. 14. 

Yes. 

R. L. '97, §277. 

Yes. 

R. S. '83, ch. 47 

Governed by 

Yes. 

Governed by 

Yes. 

No. C. L. '97, 

§6164. 
Shall not ruga 
No. 

Shall not enga 
S. '94, §2851. 



Yes. 

Yes. '91, p. 102, 
§544c. 

ge in banking. 
Yes. 

ter, '01, ch. 143. 
No. 

charter. 
No. 

pany legislati 

Yes. 

banking. 
Yes. '01, p. 26. 

No. 

y qualify un- 

Yes. '93, p. 344 



Yes. 

es organized 



Yes. '01, ch 

407. 



Yes. Stat nics 

'94, §612. 
n banking in 
der 100,000. '97. 

Yes. 



Yes. 

§84. 

charter. 

fes. 

charter. 
Yes. 
Yes. C. L. '97, 

§6164. 
ge in hanking. 
No. 

e in banking. 



No provisions. 



No. 

No provisions. 

No. 

No provisions. 



No. 
No provisions. 



SCHEDULE IV. 



May bank and trust 

companies occupy 

same office ? 



No provisions. 



Yes. 

No provii 



There is no provision in La. 
for trust cos separate from 
banks. R. L. '97, §277. 

Not without consent of Leg- 
islature, '01, ch. 196. 
No provisions. 



lu To loan money on real or personal securities," "buy and sell stocks, bills of exchange, bonds and 
mortgages and other securities" means discount paper.— 57 S. W. 936 ; Sup. Ct. of Ark., June 16, 1900. 
2 No trust companies in State. 
3 See Schedule V. 



345] 



Appendix III. 



81 



States 

AND 

Teukitokies. 



SCHEDULE Il.-Cont'd. i SCHEDULE Ill.-Cont'd. 



Banking privileges of trust 
companies. 



Receive 
demand 
deposits. 



Discount 
paper. 



May trust companies 
conduct branches. 



SCHEDULE IV.-Cont'« 



May bank and trust 

companies occupy 

same office. 



Mississippi 

Missouri 1 

Montana 

Nebraska 

New Mexico 2 

Nevada 2 

New Hampshire.. 
New Jersey 

New York 

North Carolina .. 
North Dakota 2 ... 

Ohio 

Oklahoma 

Oregon 

Pennsylvania 3 ... 



Rhode Island... 
South Carolina. 
South Dakota . . 

Tennessee 

Texas 



Yes. '97, ch. 33. 

Yes. R. S. '99, 
§1437. 

Yes. Civil 
Code §604. 
No trust com 

Yes. C. L. 
§263. 



Yes. 

Governed by 
Yes. '99, ch. 

174, §6, 118. 
Shall notenua 
Yes. '93, ch. 

696. 
May do gener 
57S.\v.;i:;r,*ir,ii. 
Yes. 

No. 

No. 

'82, p. 101. 
Yes. 

'01, pp. 89-91 
Yes. 

Yes. 

'95, ch. 286. 
105 F. 491. 
Shall notenga 
Yes. 
Governed by 



Code '96, §2040, 
Yes. 
' No corpora 



Utah 

Vermont 

Virginia 

Washington 



West Virginia. 
Wisconsin 



Wyoming 2 



No. R. S. '99, 

§1427. 
Yes. 

pany legislati < 

Yes. C. L. '97, 

§262. 

No 
No 
Yes. 
charter. 
No. '99, ch. 174, 

§7. 
ge in banking. 
Yes. 

al banking. 

Yes. 

No 

No. 

Yes. 

Yes. 

No. 

ge in banking, 
charter. 

Yes. 

Yes. 

Yes. 

te body shall 



ing or discojuntingprivile 
R. S. '95, p. 164. 

Yes. 



§424. 



Yes. 

R. S. 
Yes. 
Governed by 
Yes. 

Governed by 
Yes. 

Hal linker's Co 
No legislation 

banks. 
No. 

No. Statutes 
'98, §1791g. 

Shall not do a 
ing- business 

No. R. S. '99 
§3137. 



Yes. 
charter. 
Yes- 
charter. 
Yes 

des.''97, §4266. 
apart from 

No. 

No. 

general baDk 

Yes. R. S. '99 



No provisions. 

No. 

No provisions. 

n. 

No provisions. 

provisions on these subj 
trust companies in the 
No provisions. 



If named in charter. '92, ch, 
19, §156. 



No provisions. 

No. 
No provisions. 



hereafter be created, renew 
ges." Const. '76, Art. 16, §16 

No provisions. 

No. 

No provisions. 



No provisions. 
No provisions. 
No provisions. 

Yes. 
No provisions. 

Yes. 
No provisions. 



Yes. Knox Hist, of 
ing, p. 464. 



No provisions. 



ed or extended with bank- 
No provisions. 

Yes. Statutes '94, § 4121. 

No provisions. 

Trust co's have banking 
powers. Ballinger, §1266. 

No provisions. 



J In Missouri trust companies may receive demand deposits if they pay interest thereon. Such de- 
posits may be paid on checks. Trust companies may not operate a general deposit account without 
paying interest. They may buy and sell bills of exchange. When statute enumerates powers of a 
trust company, no others should be assumed.— 114 Mo. 562 ; Sup. Ct. of Mo., June 14, 1898. 

- No trust companies in the State. 

3 " In the absence of statutory provisions on the subject, a trust company authorized to receive 
money on deposit, has lawful authoritv to issue certificates of deposit therefor in the usual form."— 
105 F. 491 ; U. S. Circuit Court, Pa., Dec. 26, 1900. 
24 



82 



Trust Companies in the United States. 



346 



SCHEDULE V. 



States and 
Territories. 



Alabama 

Arkansas 

Arizona 1 

California 

Colorado 

Connecticut 

Delaware 

District of Columbia 

Florida 

Georgia 

Idaho 

Illinois 

Indiana 

Indian Territory 

Iowa 

Kans 

Kentucky 

Louisiana 1 

Maine 

Maryland 

Massachusetts . 

Michigan 

Minnesota 

Mississippi 

Missouri 

Montana 

Nebraska 

New Mexico 1 . . . 

Nevada 1 

New Hampshire 

New Jersey 

New York 

North Carolina . 
North Dakota 1 .. 
Ohio 

Oklahoma 

Oregon 

Pennsylvania. . 
Rhode Island . . 
South Carolina . 

South Dakota... 

Tennessee 

Texas- 

Utah 

Vermont 

Virginia 

Washington. . 
West Virginia ■ , 

Wisconsin 

Wyoming 1 



Incorporation of Trust Companies. 



How chartered. 



No special provisions, but may be formed under 
general corporation law. Code '96, Vol. 1, § 1251. 

No special provision, but may be formed under 
general corporation law. Sandels & Hill, Digest, 
'94, § 1326. 

No special pro vis ions, hut may be formed under 
general law. R. S. '87, §232. 

General law. '91, ch. 264. 

General law. '91, p. 102. 

Special act. G. S. 88, § 1944. 

Special act. 

Genera 1 law. Co<i e '01, §§ 715-21. 

General law or by special act. The general 
law is for all corporations. It does not mention 
trust companies. R. S. '92, §2119. 

General law. Code '95, Vol. 3, §1903. 

General law. '01, p. 26. 



p. 296. This is the general 
Trust companies may be 

R. S. '99, p. 433. 

p. 344. Horner's Statutes, '97, 



General law. 
corporation law 
formed under it. 

General law. '9 
§3815 a. 

No provision for chartering corporations. Am. 
Corporation Le°r. Manual, 1901, p. 164. 

General corporation law. Code '97, §1889. 
§iss9 appears to have been added by revisors in 
1897. 

General law. '01, ch. 407. 

General law. Statutes '94, ch. 32. 

General law. R. S. '97, §277. 

Special act. 

Special act, '90, ch. 272. 

Special act. 

General law. '89, ch. 108. 
General law. Statutes, '94, §2841. 
General law. '97, ch. 33. 

General law. R. S. '99, §1424. 
General law. Code '95, Vol. 1, p. 877. 



Probably under general law, C. S. '97, §1826. 
There is no provision concerning trust companies 
in Nebraska laws. 

General law. '87, ch. 68, R. S. '97, §260. This act 
is for savings banks and " trust associations." It 
does not mention usual trust company powers. 

Probably under general law. C. S. '00, § 866. No 
provisions concerning t rust co's in Nevada laws. 

Specialact, Nogen'i incorporation law in State 

General law. '93, p. 269 ; '99, ch. 174. 

General law. '87, ch. 546, also special charters. 

Special act. 

General law. '97, ch. 143. 

General law. '82, p. 101. General trust powers 
were conferred by act of 1882, but such com- 
panies are organized under general corporation 
law first passed 1852. 

General law. Oklahoma S. '93. § 930. Special pro- 
visions in general law first made, '01, p. 87. 

General incorporation law. No legislation 
concerning trust companies in State ; Hill's laws 
'92, § 3217. 

General law. '81, ch. 26. 

Special act. G. L. '96, ch. 176, § 10. 

General law. '96, ch. 45. No special trust com- 
pany legislation in State. Some companies oper- 
ate under banking and corporation laws. 

General law. Ann. S. '99, § 3812. 

General law. 'S3, ch. 168, Code '96, §2090. 

General law. R. S. '95, § 642. 

General law. '90, p. 107. R. S. '98, §423. 

Special act. 

Special act. 

General law. Ballinger's Codes '97, § 4266. 

General law. Code '99, p. 557. 

General law. Statutes '98, § 1791 d. 

General law. R. S. '99, §3128. 



General law : year of 

first passage. 



70, p. 



1887. 

1891. 

1877. G.L. '77, p. : 



1890. U. S. Statutes at 
L. Vol. 26, p. 625. 
1868. '68, ch. 1639. 



1891. '91, p. 172. 

1901. '01, p. 26. 

1872. R. S. '99, p. 433. 



p. 344. 



Prior to 1851 




1901. 
1893. 
1892. 


*92, ch 


95. 


1876. p. 292 
1890, ch. 272. 


. Repealed 


1871. 

1883. '83, ch. 107. 

1892. Code was adopted 
1892 

1885. '85, p. 103. 

1887- Code '95, Vol. p 
877, '93. p. 105. Comp. stat. 
'87, p. 765. 


1887. 


'87, ch. 


68. 


1865. 






1885. 
1887. 


1897. 

1882. 

S. '97, § 


, 82, p. 
3821a. 


101 ; Bates' 


1893. 


Okl. S 


'93, p. 228. 


1862. Date general cor- 
poration law was passed. 
Hill's L. '92, §3217. 

1881. 


1896. 






1893. 
1883. 
1891. 
1890. 


'93, ch 

'91, ch 
'90, p. 


42. 

101. 
107. 




1886. 
1891. 

1883. 
1888. 


'85-6, p 
'91, ch 
'83, ch 
'88, ch 


. 84. 
28. 
294. 
88, §38. 



No trust companies in State. 



2 Schedule XIX. 



347] 



Appendix III. 



83 



SCHEDULE VI. 



States and 
Territories. 



May trust companies incorporated elsewhere operate. 1 



Alabama 

Arkansas 

Arizona'- 

California 

Colorado 

Connecticut... 



Delaware 

Dist. of Columbia 

Florida 

Georgia 

Idaho 



Illinois 

Indiana 

Indian Territory 
Iowa 



Kentucky 

Louisiana 2 

Maine 

Maryland 

Massachusetts — 

Michigan 

Minnesota 

Mississippi 

Missouri 

Montana , 

Nebraska 

New Mexico 2 

Nevada 2 

New Hampshire. 

New Jersey 

New York 

North Carolina. . . 

North Dakota 2 . . . 

Ohio 

Oklahoma 

Oregon 

Pennsylvania — 



Rhode Island... 
South Carolina. 
South Dakota . . 

Tennessee 

Texas 3 

Utah 

Vermont 

Virginia 

Washington ... 
West Virginia.. 

Wisconsin 

Wyoming 2 



Yes. 37 F. 242. No restrictions in foreign corporation law. Code '96, vol. 1, §§1316-1324. 

Yes. No restrictions in law of foreign corporations. '99, ch. 19. 

Yes. No restrictions in law of foreign corporations. R. S. '87, §347, §352. 

Yes. No restrictions in law of foreign corporations. '99, p. 111. 

Yes. No restrictions in law of foreign corporations. '93, p. 88; '97, p. 157. 

No foreign trust companies in state, but no restrictions in law of foreign corpor- 
ations. '95, p. 629. May not do banking business. 

Yes. No restrictions in law of foreign corporations. '93, ch. 703 ; '97, ch. 513. 

Yes. Code '01, §725. 

Yes. No restrictions on foreign trust companies. 37 Fla. 64. 

Yes. No restriction in law of foreign corporations. Code '95, vol. 3, §§1816-1850. 

No special provision. No restrictions iu law of foreign corporations. R. S. '87, 
§2653. 

Yes. '99, p. 118. 68 111. App. 666. W. Va. '95, corp. p. 51. 68 F. 412. 

Yes. No restrictions in law of foreign corporations. Ann. S. '97, §3022. 

Yes. No laws concerning corporations. Am. Corporation Legal Manual '01, p. 165. 

Yes except for banking. Code '97, §1367. No special provision, but no restrictions 
on foreign corporations. 

Yes. 35 Kan. 236. 

No restrictions in law of foreign corporations. Statutes '94, §202. 



Yes. 
No. 
Yes. 
Yes. 
No. 
No. 
Yes. 



'99, ch. 123. No restrictions in law of foreign corporations. 
'92, ch. 109. 



No restrictions in law of foreign corporations. 

No restrictions in law of foreign corporations. Code '92, §849. 

Yes. No restrictions in law of foreign corporations. '91, p. 75, 101. 

Yes. No restrictions. '01. p. 150. Civil Code, §§1030-1038. 

Yes. No restrictions in law of foreign corporations. C. S. 97, §1946. 

Yes. 43 Pac. 701. No restrictions in law of foreign corporations. C. L. '97, §§445,446. 

Yes. No restrictions in law of foreign corporations. C. L. '00, §§897-901. 

No. Trust companies must be specially chartered. 

Yes. '90, p. 427. 

No. May not act as trustee nor engage in banking. '92, ch. 689, §88. 

Yes. No law regulating foreign corporations except transportation companies. 
Am. Corp. Legal Manual, '01, p. 431. 

Yes. No restriction in law of foreign corporations. Code '99, §326. 

No. 

Yes. No restrictions. S. '93, §1167, §1169. 

Yes. No restrictions. Hill's L. '92, p. 1449. 

Yes. W. Va. '01, p. 552; '74, ch. 108. Pepper & Lewis, p. 2175. (No foreign com- 
panies in state.) 

Yes. G. L. ch. 253, §37. W. Va. '97, corp. p. 103. 

Yes. R. S. '93, §1472. 

Yes. Ann. S. '99, §4204. '95, ch. 45. (May act as trustee.) 

Yes. Code '96, §2545. No restrictions. 

Yes. No restrictions. R. S. '95, §745-9. 

Yes. No restrictions. R. S. '98, §351. 

No. 

Yes '94 ch 661. 

Yes! No restrictions in law of foreign corporations. Ballinger's Code '97, §§4291-4294. 

Yes. No restrictions in law of foreign corporations. Code '99, ch. 54, §30. 

Yes. No restrictions in law of foreign corporations. Statutes '98, §1770. 

Yes. No restrictions in law of foreign corporations. R. S. ' 



1 So-called foreign trust companies. 



No trust companies in State. 



'Schedule XIX. 



84 



Trust Companies in the United States. 



'348 



SCHEDULE VII. 



States 


Reports. (State regulation of trust companies.) 


Territories. 


Required. To whom made. 


Year of 1st passage 
of law. 




No. 

No. 

Yes. R. S.'Ol §§130-1. 

Yes, twice yearly. 

Yes, not less than 
three a year. 
Yes. quarterly. 

No. 

Charters require 
Savings banks must 
Yes. 

Yes, if doing bank- 
ing business. 

Yes. If doing bank- 
ing business, '98, p. 
78. §12. 

No. 

Yes. 

Yes. 
No. 
Yes, quarterly. 

Yes, quarterly. 

Yes. 

Yes, quarterly. 

Yes, twice yearly. 

Yes, twice yearly. 

Yes. 

Yes, quarterly. 

Yes. 

Yes, twice yearly. 

Yes,when required 
by Secretary of 
State, at least twice 
yearly. 


No trust company legislation. 

No trust company legislation. 

Territorial auditor. Applies to bank- 
ing companies. 
Bank commissioners, '91, ch. 264, §12. 

State treasurer, '91, p. 102, §11. 

Bank commissioners, G. S. '88, § 1787. 

No trust company legislation, 
annual publication in some cases, 
also publish report.R. Laws, '93, p. 570. 

U. S. comptroller, Code '01, §720, §730. 

Comptroller, R. S. '92, §2190. 
No trust company legislation. 
Bank examiner, who is State treas- 
urer, Code '95, Vol. 3, § 1912. 


1901. 

1891. 
1891. 

1872. 

1890. 
at Lai 
625. 

1889. 

1894. 

1887. 
1893. 

1873. 
1901. 

1877. 

1893. 
1892. 

1888. 
1889. 
1883. 
1897. 
1895. 




















Connecticut 


'72, ch. 78 


Dist. of Columbia.. 


U. S. Statutes 
ge, Vol. 26, p. 




'94, p. 77. 






Auditor of public accounts, '87, p. 
144, R. S. '99, p. 470. 

Auditor of State. Horner's Statutes, 
'97. § 3815 n. 

No trust company legislation. 

Auditor of State. Code '97, § 1872; ap- 
plies to banks. Code '97. § 1889; applies 
banking law to trust companies. 

Bank Commissioner, '01, ch. 407, §13. 

Auditor of public accounts. Statutes 
'94, §4078, §4092, p. 615. 

Bank examiner. '98, p. 449. Except in 
special cases the bank examiner does 
not examine banks, other than by 
getting reports. 

Bank examiner, '93, ch. 258; '95, ch. 130. 

State treasurer, '92, ch. 109. 

Commissioners of savings banks. '88, 
ch. 413. 

Commissioner of banking, C. L. '97, 
§ 6170. 
Public Examiner. Statutes, '94, §2852. 

No one. Must be published. 

Secretary of State. R. S. '99, §1284, 
§1287. 






'93, p. 344. 


Indian Territory. . . 


'73, ch. 60, §22 
'01, ch. 407. 










'77, p. 129. 




Maryland 

Massachusetts 


'92, ch. 109. 
'89, ch. 108. 




'83, ch. 107. 




'97, ch. 33. 




'95, p. 97. 





No trust companies in State. 



349] 



Appendix III. 



85 



SCHEDULE VH.-Continued. 



States 


Reports. (State regulation of trust companies.) 


Territories. 


Required. 


To whom made. 


I Year of 1st passage 
1 of law. 




Yes, quarterly. 

No. 

Yes, twice yearly. 

No. 

Yes. 

Yes. 

Yes. 

Yes, if doing 
banking business 
live times a year on 
call. 

Yes. 

Yes. 

Yes, when re- 
quired. 

No. 

Yes. 

Yes. 

Yes. In form of 
quarterly state- 
ments to be pub- 
lished in newspaper. 
R. S. '93, §1464. 

Yes. 
No. 

Yes. 

Yes, quarterly. 

Yes. 

Yes. 

Yes. 

Yes, quarterly. 

Yes. 

No. 


State auditor. Civil Code, §607. 

No provision. 

No trust company legislation. 

Secretary of the territory. C. L. '97, 
§269. 

No provision. 

No trust company legislation. 

Board of bank commissioners. P. S. 
'01, p. 536. 

Commissioner of banking, '99, ch. 
174. Formerly to secretary of State. 
'89. p. 368. 

Sup't. of banking, '74, ch. 334. 

Corporation commission, '99, ch. 164. 

State examiner, Code '99, §3258n. 

Auditor of State. '77, p. 72, Bates' S. 
'97. § 3821b. 
Secretary of territory. '01, p. 95. 

No trust company legislation. 

Superintendent of banking. '91, ch. 
190. 
State auditor. Gen'l Laws, '96, p. 555. 


1887. C. S. '87, p. 
765. 




New Mexico 1 


1887. '87, ch. 68, § 8. 


New Hampshire . . . 
New Jersey 


1895. '95, ch. 105. 
1889. 

1874. 


North Carolina 

North Dakota 1 


1887. '87, ch. 175. 

1897. '97, ch. 143. 

1877. 




1901. 






Pennsylvania 

Rhode Island 


1891. 
1877. 
1874. '74, ch. 432. 


South Dakota 


Secretary of State. Ann. S. '99, §4205. 

Statement of condition to be pub- 
lished in newspaper every six months. 
'83, ch. 168. 

Commissioner of insurance, R. S. '95, 
§ 042, p. 164. 

Secretary of State, R. S. '98, §430, §388. 

Inspector of finance. Statutes, '94, 
§4081. 

Auditor of public accounts. '94, ch. 
661, §16. 

State Auditor. Ballinger's Codes '97, 
§4266. 

Commissioner of banking. '01, ch. 83, 
§81, 1 8; '01, ch. 85, § 1; 01, ch. 85. §81, «fl5. 

Secretary of State. Statutes '98, 
§17911. 


1895. '95, ch. 45. 
1883. 




1891. '91. ch. 101. 


Utah 


1890. '90, p. 107. 

1878. 






1894. 


Washington 

West Virginia 

Wisconsin 


1886. '85-6, p. 84. 
1901. '01, ch. 83, §81, 
1885. '85, ch. 33. 









1 No trust companies in State. 



'■ Schedule XIX. 



86 



Trust Companies in the United States. 



[350 



SCHEDULE VIII. 





Examinations. (State regulation of trust companies.) 


Territories. 


Required. 


Made by. 


Year of 1st passage 
of law. 




No. 


No trust company legislation. 






No. 

Yes. R.S. '01, §§130-1. 


1901. 










ing companies. 








. 


1891. 






No. 






Connecticut 


Yes, twice yearly. Bank commissioners. G. S. '88, §1827. 


1872. 


'72 c. 78. 




No. 








Dist. of Columbia. . 


Yes. 


U. S. Comptroller. Code '01, §720. 


1890. U. S. Statutes 
at Large, vol. 26, p.625, 




Yes, if doing bank- 
ing business. 


Comptroller at discretion. Applies to 
"banking companies." R. S. '92, §2191. 


1889. 


'89, ch. 3864. 








Yes, if doing bank- 
ing business. '98, p. 
79, §12. 


Bank examiner. Code '95, vol. 3, §1919. 


1889. 


'89, p. 65. 






No. 










Yes. 


Auditor of public accounts. '87, p. 
144. R. S. '99, p. 470. 


1887. 








Indiana 


Yes. 


Auditor of state. '93, p. 344. Horner's 
Statutes, '97, §3815o. 


1893. 


'93, p. 344. 


Indian Territory. . . 


No. 


No trust company legislation. 






Yes. Code '97, §1873. 


1873. 


'73, ch. 60, §23. 






may appoint examiners. '90, ch. 50. 
applies to banks. Code '97, §1889, ap : 
plies banking law to trust companies. 










Bank commissioner. '01, ch. 407, §13. 


1901. 






No. 












1877. 


'77, p. 129. 




leans parish. | years. R. S. '97, §303. 




Yes, twice yearlyj Bank examiner. '97, ch. 218. R. S. 
'83, ch. 47, §119. 


1897. 


'97, ch. 219. 










1892. 


'92, ch. 109. 


Massachusetts 


Yes. 


Commissioners of savings banks. '88, 
ch. 413. 


1888. 






Yes. 


Commissioner of banking. C. L. '97, 
§§6124-6128, 6172. 


1887. 


'87, ch. 205. 








Yes, twice yearly. 


Public examiner. Statutes '94, §2853. 


1883. 


'83, ch. 107. 










Yes. 


Secretary of state. R. S. '99, §1304. 


1895. 


'95, p. 97. 





No trust companies in State. 



I 



351] 



Appendix III. 



87 



SCHEDULE Vlll.-Continued. 





Examinations. (State regulations of trust companies.) 


Territories. 


Required. Made by. 


Year of 1st passage 
of law. 




Yes, at discretion 
of state auditor. 

No provision. 

No, but may be 
made at discretion 
of secretary of ter- 
ritory. 

No. 

Yes, twice a year. 
No. 

Yes. 

Yes, if doing bank- 
ing business. 

Yes, twice yearly. 

No, may be made 
at any time. 
Yes. 

No. 

Yes. 

No. 

Yes. 

No. 

No. 

No, but may be 
made at any time. 

Yes. 

Yes. 

No, but may be 
made at any time. 
No. 

Yes. 

Yes. 

Yes. 


State auditor or some one designated 
by him. Civil Code §607. 
No trust company legislation. 
Secretary of territory. C. L. '97, §28. 

No trust company legislation. 

Board of bank commissioners, three 
members. '89, ch. 55. 
Commissioner of banking. '99 ch. 174. 

Superintendent of banking. '74. ch. 
324. 

No trust company legislation. Ex- 
aminer appointed by state treasurer. 
'91, ch. 155. 

State examiner. Code '99, §3258e. 

Examiner appointed by auditor of 
state. Bates' S. '97, §3821d. 
Bank commissioner. '01, p. 101. 

No trust company legislation. 

Superintendent of banking. '91, ch. 
190. 

Bank examiner. '96, ch. 48. 


1887, C. S. '87, p. 765. 




New Mexico 1 


1887. '87, ch.68. 


New Hampshire... 


1889. 


New York 

North Carolina 

North Dakota 1 

Ohio 

Oklahoma 

Oregon 

Pennsylvania 


1874. 
1891. 

1897. '97, ch. 143. 


1901. 


1891. 


South Carolina 


1896. 




Commissioner of insurance. R. S. '95, 
§642, 137. 
Bank examiner. R. S. 98, §2441. 

Inspector of finance. Statutes '94, 
§4120. 

Auditor of public accounts. '94, ch. 
661, §18. 






1891. '91, ch. 101. 


Utah 


1898. R. S. '98, §2441. 
This § was added by 
revisors and adopted 
by legislature. 

1874. 






Washington 

West Virginia 




Bank commissioner. '91, ch. 26. Code 
'99, p. 598 ; '01, ch. '85, §7. 
Bank examiner. '95, ch. 291. 

State examiner. R. S. '99, §129. 


1891. '91, ch. 26. 
1895. 




1891. '91, ch. 84. 







No trust companies in State. 



-Schedule XIX. 



Trust Companies in the United States. 



352 



SCHEDULE IX. 





Receivership. (State regulation of trust companies.) 




States and 
Territories. 


May state officials apply for 
receiver ? 


Year of first 
passage. 


May state offi- 
cials take posses- 
sion pending ap- 
pointment of 
receiver ? 


Year of first 
passage 
of law. 


Alabama 

Arkansas 


No provision. No trust com- 
pany legislation. 




No. 
No. 






It u u 








California 


Yes. Attorney general on in- 
formation of bank commissioners, 
'91, ch. 264, § 17. 

No. 

Yes. G. S. '88, §1830. 

No. No trust company legis- 
lation. 

Yes. U. S. District Attorney, 
Code '01, §786. U. S. Comptroller. 
U. S. Statutes at L. Vol. 26, p. 
625. § 6. 

No trust company legislation. 
No provision as to trust com- 
panies. Comptroller may apply in 
case of banking companies, R. S. 
'92, § 2192. 

Yes. If doing banking business, 
'98, p. 79, § 12. Bank examiner re- 
ports to governor who directs 
attorney general to begin proceed- 
ings, '95, p. 58. 

No provision. 

Yes. '87, p. 144, § 13 ; R. S. '99, p. 
470. 

Yes. '93, p. 344. 

No. No trust company legislation 

Yes. By attorney general on 
information of state auditor. 
Code '97, §1877, applies to banks. 
Code '97§, 1889, applies banking law 
to trust companies. 

Yes. Attorney general on in- 
formation of bank commissioner, 
G. S. '99, §§418, 434, '01, ch. 407, §15. 

Yes. Attorney general, '94, ch. 
35. Secretary of state, statutes, 
'94, §616. 

Yes. Auditor of public accounts 
may act. R. L. '97, §§ 284, 293. 

Yes. '97, ch. 218, R. S. '83, ch. 47, 
§121. 

Yes. Attorney General on in- 
formation, '92, ch. 109. 
Yes. '88, ch. 413. 

Yes. C. L. '97, §6184. Attorney 
general on information of bank 
commissioner. 

Yes. Statutes '94, §2854. At- 
torney general on information of 
state auditor or public examiner. 

No provision. 

Yes. R. S. '99, §1305. 


1891. 

1879." ''79,'ch. 8. 


No. 

No. 

No. But bank or 
trust company 
may be restrained 
from paying out 
on application of 
commissioners to 
court, '97, ch. 3. 




Connecticut 


1897. 


Dist. of Columbia. 


1890. 

1889. '89, ch. 
3864. § 37. 


Yes. Comp- 
troller, Code, '01, 
§720. 

No. 


1890. U. S. 
Statutes at L. 
Vol. 26, p. 625, 
§6. 








1895. '95, p. 58. 


No. 

No. 

No. '87, p. 144, §13. 

No. '93, p. 344. 

No. 

No. 

Yes. 
No. 

No. 

No. R. S. '83, ch. 
47, §121. 

No. 

No. Injunction 
may be granted, 
•88,'ch. 418. 
Yes. 

Yes. 

No. 

Yes. '97, p. 83. 














1893. 

1873." '73,' ch. 
60 § 25. 

1901. '01, ch. 
407. 

1894. 

1855. '55, ch. 
166. 

1897. 

1892. '92, ch. 
109. 

1888. '88, ch. 
413. 

1887. '87, ch. 
205. 

1883. '83, ch. 
107. 

No. 

1897. '97, p. 83. 




Indian Territory. 
Iowa 


1901. '01, ch. 


Kentucky 

Louisiana 1 


407, § 15. 






Massachusetts ... 

Michigan 

Minnesota 

Mississippi 

Missouri 


1888. 

1899. '99, ch. 
200, § 14. 

1897. r'.'s. '99, 
§1305. 



No trust companies in State. 



153] 



Appendix III. 



89 



SCHEDULE IX.-Continued. 



States and 
Territories 



Receivership. (State regulation of trust companies.) 



May state officials apply for 
receiver ? 



Year of first 
passage. 



May state offi- 
cials take posses- 
sion pending ap- 
pointment of 
receiver? 



Year of first 
passage 
of law. 



Montana 

Nebraska 

New Mexico 1 — 

Nevada 1 

New Hampshire 



New Jersey 

New York 

North Carolina. 



North Dakota 1 .. 

Ohio 

Oklahoma 

Oregon 

Pennsylvania . . . 

Rhode Island — 
South Carolina. 



South Dakota 
Tennessee — 



Texas 2 
Utah . , 



Virginia. 
Washington ... 
West Virginia. 



Wisconsin , 
Wyoming 1 



No provision. 

No provision. No trust com- 
pany legislation. 

Yes. Attorney General on in- 
formation of Secretary of terri- 
tory, C. L. '97, §280. 

No provision. No trust com- 
pany legislation. 

Yes. R. S. '01, p. 537. 



Yes. '99, ch. 174, §24. 
Yes. '82, ch. 409, §223. 

Yes. '93, ch. 478. Applies to 
banking corporations. No trust 
company legislation. 

Yes. Attorney general on in- 
formation of state examiner. 
Code, '99, §3258 p. 

No. 

Yes. Bank commissioner, '01, p. 
101. 

No provision. No trust com- 
pany legislation. 
Yes. '91, ch. 190. 

No provision. 

Yes. '96 ch. 48. No special trust 
company legislation in state. Such 
companies operate under banking 
and corporation laws. 

No provision. 

Governor and attorney general 
of state may direct attorney gen- 
eral of district to apply, Code '96. 
§ 6168. 

No provision. 

Yes. Attorney general on in- 
formation of secretary of state. 
R. S. '98, §390. 



Yes. '84, ch. 41, §42. 



1887. '87, ch. 
68, §20. 



9. '89, ch. 
55. The law for 

ks was 
passed in 1837. 
In 1889 trust 
companies 
were brought 
under its pro- 
visions. 



1897. '97, ch, 
143. 



1890. '90, ch. 
70. Examiner 
may also ap- 
ply for re- 
ceiver, '90, ch. 

0. 

1884. 



No. 

No. 

Yes- Bank examiner may re- 
port insolvent bank to board of 
public works who may revoke 
charter, '91, ch. 26. Bank examiner 
may apply for receiver with con- 
sentof governor and attorney gen- 
eral, '01, ch. 83, §81; '01, ch. 85, §1. 

No. 

Yes. Governor on information 
of state examiner, R. S. '99, § 130. 



No. 

Nn. 



No. 
No. 



'99, ch. 174, 
3, ch. 333, 



No. 
No. 



No. 

Yes. Bank com- 
missioner, '01, p. 
101. 

No. 

Yes. '91, ch. 190. 



1. '91,ch.{ 



No. 

No. Code 
§§5165-5187. 



No. 
No. 



Yes. If court 
orders. '84, ch. 41, 
§42. 

No. 

No. 

No. 



No. 
Yes. 



1 No trust companies in State. 



'Schedule XIX. 



90 



Trust Companies in the United States. 



354 



States and 
Territories. 



SCHEDULE X. 



Securities required of 
trust companies. 



Deposit of funds with 
state officials. 



SCHEDULE XI. 



Double liability of stockholders. 



Year of 

1st passag 

of law. 



Trust 
companies. 



Year of 

1st passage 

of law. 



Alabama 

Arizona 1 

Arkansas 

California 

Colorado 

Connecticut 

Delaware 

Dist. of Columbia 

Florida 

Georgia 

Iowa 

Idaho 

Illinois 

Indian Territory , 
Indiana 

Kansas 1 

Kentucky 

Louisiana 1 

Massachusetts . . . 
Maryland 

Maine 

Michigan 

Minnesota 

Mississippi 

Missouri 



No trust co. legislation. 

$200,000 with treasurer, '91, 
ch. 264. 

No. 

No. 

Banks anc 
Yes. Code §746. 

No trust co. legislation. 

No. 



No. 

No. 

( $200,000 in cities of 100,000; 
$50,000 elsewhere, R. S. '99, 
( p. 470. 

No legislation 

No. 



No. 
No. 



Court may require. 

No. 

15$ of capital with treas 
urer. The deposit to be not 
less than 10$ of value of 
capital, and $30,000 
amount, '92, ch. 109. 

No. 



50£ of capital with treasurer 
C. L. '97, §6157. 



$100,000 with auditor, S. '94, 

§2845. 



$200,000 with Supt. of Insur- 
ance,^!, p. 99. 



No. 

No. 

No. 

No. Pro rata 
liability. 

Yes. Mills' S 
p. 650. 

No. 

trust compan 

Yes. C. L. '94. 
ch. 15, §162. 

Yes. R. S. '92. 
§2172. 

Yes. '91, p.175. 



Yes. '74,ch. t 

No. 

Yes. Const. 

Art. 11, §6, 

on banks or 

Yes. Const, 
art. 11. 

Yes. '91,ch. 43 

Yes. '93, ch. 
171. 

No. 

No state banks 

Yes. '70, ch 



Const, art. 12 



ies are specia 
1876 



1870 

trust compan 

1851 



No trust co. 



No. Pro rata 
liability. 



No. 
lly chartered. 



Yes. Code 
§734. 



No trust co. 



Yes. '98, p.81. 
Some are 
specially 
charterd. 

Yes. Code, '97, 
§1889. 

No. 

Banks may 

trust powers 
ies. 

Yes. ' 



p. 344 



Const. 1851 
" 1867 



'87, ch 



Yes. '01,ch.407 

Yes. '93, ch. 
171. 

No. 

Yes. '88, ch. 

413. 
Yes. '92, ch. 

109. 



Yes.'99,ch.6i 
Liability 
usually 
fixed by 
charter. 

Yes. '89, ch. 
108. 



Yes. S. 
§2501. 



No. 
No. 



legislation 



Const, 
art. 12,§3. 



legislation 



acquire 



No trust companies in State. 



355] 



Appendix III. 



91 





SCHEDULE X.-Cont. 




SCHEDULE Xl.-Cont. 




States and 
Territories. 


Securities required of 
trust companies. 


Double liability of stockholders. 




Deposit of funds with 
State officials. 


Banks. 


Year of 

1st passage 
of law. 


Trust 
companies. 


Year of 1st 
passage 
of law. 






No. 










No. 


Yes. 


Const. 1875, 
art. 2, §7. 


No trust co. 


legislation 




Nevada l 

North Carolina . . . 


No. 
No. 


No individ- 
ual liability 
exists. 

No. 


Const. 1864, 
art. 8, §3. 


No trust co. 
No. 


legislation 


North Dakota 1 .... 


$50,000 with state auditor. 
Code, §3258. 


Yes. '90, ch. 23 


1890 


No. 




New Hampshire.. 


No. 


No. 




No. 




New Jersey 


f Trust liabilities not 
-rr„ J to exceed 10 times 
xes -]fund deposited, '99, 

[ch. 174. 


No. 




No. 




New Mexico 1 .... 


No. 


No. 




No. 




New York 


Court may require, '98, ch. 
'98. 


Yes. '82, ch. 
409. 


1882 


Yes. '87, ch. 
546. 


1887 


Ohio 


Probate court may require. 
Bates, §3821d 


Yes. Const, 
art. 13. 


1851 


Yes. '82,p. 101. 


1882 


Oregon 


No trust co. legislation. 


No. 




No trust co. 


legislation 


Oklahoma 


§200,000 with treas., '01, p. 99. 


Yes. 




No. 




Pennsylvania 


No. 


Yes. Pepper 
& Lewis, p. 263. 


1876 


No. 




Rhode Island 


No. 


Yes. G. L. '96, 
p. 541. 


1872 


Fixed by cha 


rter. 


South Carolina . . . 


No. 


Yes. Const, 
art. 9, §18. 


1895 


Yes, if engag 
ing. 


ed in bank- 


South Dakota 


No. 


Yes.'91,ch.27. 


1891 


No. 








No. 




No. 




Texas 2 


$50,000 with state treasurer, 
R. S. '95, §642. 


No. 




No. 




Utah 


No. R. S. '98, §§423-30. 






No. 






'95, art. 12, 
§18. 










5% of capital with treasurer, 
'94, ch. 661. 

No. 






No. 




Vermont 


No. 




Yes. '84,ch.41. 


1884 


West Virginia .... 


20% of capital. '01, ch. 85. 


Yes. '01, ch. 83 


1881 


Yes.'01,ch.85. 


1891 


Washington 


No. 


Yes. '86, p. 85. 


1886 


Yes. '86, p. 85. 


1886 






No legislation 


for other than 


bk'swith trust 


powers. 




50# of capital. S. '98, §1791d. 
No. '88, ch. '88. 


Yes. S. '98, p. 
1537. 

Yes. '88, ch. 88 


1852 


No. 




Wyoming 1 


1888 


Yes. '88,ch. 88. 


1888 



No trust companies in State. 



-Schedule XIX. 



92 



Trust Companies in the United States. 



[356 



SCHEDULE XII. 



States and 
Territories. 



Deposits: proportionate reserve required. 



Banks. I Tear of passage of law. [Trust co's.l Year of passage of law. 



Alabama 

Arkansas 

Arizona 1 

California 

Colorado 

Connecticut 

Delaware 

Dist. of Columbia 

Florida 

Georgia 

Idaho 

Illinois 

Indiana 

Indian Territory . 
Iowa 

Kans 

Kentucky . 
Louisiana 1 — 
Maine 

Maryland 

Massachusetts 

Michigan 

Minnesota — 



None. 
None. 



None. 
None. 
None. 
None. 



None. 

None. 

(Savings 
" •) 
15# 
2($ 



R. S. '01, §138. 



1877. 

G. L. '77, p. 165. Mills S. §526. 



1901. 

'01, ch. 143. 



1872. 

Code '01, §713. 

U. S. Revised S. '74, §5191. 



'89, ch. 3864 ; R. S. '92, §2182 

1891. 

'90-1, p. 171. 

Code '95, vol. 3, §1915. 



for savings banks in cities 
under 3,000. 
elsewhere. 

for state banks in cities un- 
der 3,000. 
others. 
Code '97, §1867. 

1897. 
in cities under 5,000. 
in other cities. 

'97, ch. 47 ; G. S. '99. §418. 

1894. 
in cites over 50,000. 
'94, ch. 35. 



(if demand deposits. 
'00, ch. 116. 



of demand deposits, or those 
requiring 10 days notice. 

'93, ch. 281. 
savings banks. 



1887. 
in cities exceeding 100.000. 
'87, ch. 205 ; C. L. '97, §611: 



of immediate liabilities. 
'95, ch. 145. 



None. 
None. 
None. 
None. 
None. 

15 
None. 

None. 



25;: 



None. 
None. 
None. 
None. 
None. 



1901. 

'01, ch. 143. 



if doing banking business. 
'98, p. 78. 
Code '95, vol. 3, §1915. 



1901. 
of demand, 
of time. 

'01, ch. 407. 



1900. 
of demand deposits. 
'00, ch. U6. 



of demand deposits or th 
requiring 10 days notice. 

'93, ch. 281. 



15s? of demand deposits. 
I '88. ch. 413. 



20% of obligations and money. 
"91, ch. 126 ; C. L. '97, §6165. 



1 No trust companies in State. 



357] 



Appendix III. 



93 



SCHEDULE XH.-Continued. 



States and 
Territories. 



Deposits : proportionate reserve required. 



Year of passage of law. 



Tear of passage of law. 



Mississippi. 
Missouri . . . 



Montana . 

Nebraska 
Nevada ' . . 



New Hampshire. 
New Jersey 



New Mexico 1 
New York . . . 



North Carolina. 
North Dakota 1 . 



Oklahoma 

Oregon 

Pennsylvania... 
Rhode Island . . . 
South Carolina 
South Dakota . 

Tennessee 

Texas 2 

Utah 



Vermont 

Virginia 

Washington ... 
West Virginia. 

Wisconsin 

Wyoming 1 



None. 
None. 
None. 
None. 
21 
None. 
None. 



None. 
None. 
None. 

15% 
None. 
None. 



1899, 

R. S. '99, §§1280, 1304. 

1887. 
of immediate liabilities. 

Civil Code §584. C. S. '87, 
p. 754. 

1895. 
in cities of 25,000. 
'95, ch. 17. 

for savings banks with no 
capital. 
'69, ch. 93, §11. 



of liabilities. 
'99, ch. 173, §20 



in cities of 800,000. 
elsewhere. 
'95, ch. 929, §44. 



'93. ch. 2T, §20. 
Code 99, s:;;.'ir,. 



1879. 

'79, p. 73 ; Bates, p. 



'97, ch. 4, §23. 



in cities of 25,000. 
elsewhere. 

R. S. '98, §378 ; U. S. R. 
1878, §5191. 



1901. 
'01, ch. 



None. 



None. 

None. 



lf," 



None. 
None. 



None. 
None. 



None. 
None. 
None. 
None. 
None. 
None. 
None. 
None. 



None. 
None. 
None. 

15* 
None. 
None. 



R. S. '99. §§1280, 1304. 



of liabilities. 
'99, ch. 174, §20. 



of demand deposits or those 
payable in ten days. 
'82, p. 101 ; Bates 3821b. 



1890. 
in cities of 25,000. 
elsewhere. 

This applies to trust com- 
panies engaged in banking. 

R. S. '98, §424. 



1901. 
'01, ch. : 



\ §1. 



No trust companies in State. 



2 Schedule XIX. 



94 



Trust Companies in the United States. 



[358 



SCHEDULE XIII A. 






States and 
Territories. 



LOANS (Legal restrictions). 



Banks. 



Alabama 

Arizona 

Arkansas 

California 

Colorado 

Connecticut 

Delaware 

Dist. of Columbia 

Florida 

Georgia 

Iowa 

Tdaho 

Illinois 

Indian Territory. 

Indiana 

Kansas 

Kentucky 

Louisiana 

Massachusetts . . . 

Maryland 

Maine 

Michigan 



Minnesota 

Mississippi 

Missouri 

Montana 

Nebraska 

Nevada 

North Carolina. 
North Dakota .. 



New Hampshire 
New Jersey 

New Mexico — 
New York 

Ohio 

Oklahoma 

Oregon 

Pennsylvania .. 

Rhode Island. . 
South Carolina. 
South Dakota .. 



Tennessee 
Texas l .... 
Utah 

Vermont . 
Virginia .. 



West Virginia. 



Washington 
Wisconsin . . 
Wyoming . 



None. 

None. 

None. 

None. 

Not over 25? of paid in capital in one loan. Mills S. ch. 12, §2. 

Not over 20;" of paid in capital, surplus and undivided profits. '01, ch. 143. 

No general law in state. Banks and trust companies are specially chartered. 

National banks. Not over 10? of paid in capital in one loan. 

Not on capital stock. R. S. §2183. 

Not over 10? of capital and surplus in one loan. '98, p. 48. Total loans to officers not to 
exceed 25? of capital. Code §1948. Not to loan on officer's indorsement. Code §1949. 

Not over 20? of paid in capital to one person : discount of bills of of exchange and 
commercial paper not counted as loan. Code '97, §1870. 

None. 

Not over 1/10 paid in capital in one loan ; discount of bills of exchange and commer- 
cial paper not counted as loan. R. S. '99, p. 200. 

None. 

None. 

Not over 15? of paid in capital and surplus in one loan; discount of bills of ex- 
change and commercial paper not counted as loan. G. S. '01, §419. 

Not over 20? of paid in capita; and surplus in one loan ; no person to become liable 
to bank for more than 30? capital and surplus. S. '94, §583. 

Not to loan on capital stock. R. S. '97, §281. 

Not to loan to officers. '94, ch. 3.17, §22. (Savings banks.) 

To states not to exceed $50,000. P. G. L. p. 107. 

Not to loan to officers. R. S. '83, ch. 47, §104. 

Not over 1/10 paid in capital in one loan, 1/5 by 2/3 vote of directors ; bills of exchange 
and commercial paper discounted not counted as loan. Not over 50;; of capital to be 
loaned on real estate, 2/3 vote of directors necessary. C. L. '97, §§0113, 0143. Not to loan 
on capital stock. '99. ch. 205. 

Not over 15% of paid in capital and surplus in one loan. S. §3428. 

Not over 1/5 capital in one loan. Code §851. 

Not over 25;.' of paid in capital and surplus in one loan if surplus is 50% of capital. 
R. S. '99. §1292. Discount of bills of exchange, and commercial paper not counted as 
loans if based on collateral. 

Not over 15% of paid in capital and surplus in one loan. C. C. §583. Discount of 
commercial paper and bills of exchange not counted as loan. 

Not over 20? of paid in capital in one loan nor total of 50jS of capital to stockholders 
collectively. Bills of exchange, and commercial paper discounted not counted as 
loans. C. S. '97, §043. 

None. 

None. 

Not to loan on or hold own stock. R. C. 99, §§3244-7. Not over 15$ of paid in 
capital in one loan. Bills of exchange, and commercial paper discounted and loans 
on collateral not counted as loans. R. C. '99, §3347. 

Not over 10? of deposits or capital stock in one loan. P. S. '01, p. 541. 

Not over 1(1% of paid in capital and surplus in one loan ; discount of commercial 
paper and bills of exchange not counted as loans. Not to loan on or buy its own 
stock. '99, ch. 173. 

Not to loan on or buy its own stock. C. L. '97, §244. 

Not over 1/5 paid in capital and surplus in one loan; discount of bills of exchange, 
commercial paper and loans on collateral not counted as loans; not to loan on 
shares. Birdseye S. p. 204. 

Not over 1/10 paid in capital in one loan ; discount of bills of exchange, and commer- 
cial paper not counted as loans. Bates' S. §§3831-80. Not to loan on or own its own 
capital stock. Bates' S. §§3831-71. 

Not over 20% of paid in capital and surplus in one loan ; discount of bills of exchange 
and commercial paper not counted as loan. Not over 50? of capital to be loaned to 
stockholders. '99, ch. 4. Not to loan on its own stock. 

None. 

Not over 10? of paid in capital and surplus to director. Loans to officers not to 
exceed 25? of capital paid in. '01, ch. 268. Not to loan on capital. P. & L. Digest, p. 274. 

Fixed by charter. 

Not over 1/10 paid in capital and surplus in one loan. '97, ch. 291. 

Not over 15? of capital in one loan ; discount of bills of exchange, and commercial 
paper not counted as loans. R. S. '99, §1358. Not to loan on shares of its stock. R. S. 
'99, §4358. Real estate loans not to exceed 60? of capital. R. S. '99, §4340. 

None. 

None. 

Not over 15? of paid in capital and surplus to one person nor 10? to officer. R. S. '98, 
§§379, 380. Discount of bills of exchange and commercial paper not counted as loans. 

None. 

Not over 1/10 paid in capital in one loan ; discount of bills of exchange and com- 
mercial paper not counted as loans. Code §1108. Not to loan on shares of its stock. 
Code §1103. 

NotoverSO? of capital, surplus and undivided profits in one loan ; discount of bills of 
exchange and commercial paper not counted as loans. Not to loan on its own stock. 
'01, ch. 83, §79. 

None. 

None. 

Not over 1/7 of paid in capital in one loan ; discount of bills of exchange, and com- 
mercial paper not counted as loans ; 1/10 if capital exceeds $40,000. R. S. '99, §3096. Not 
to loan on its own stock. R. S. '99, §3088. 



Schedule XIX. 



359] 



Appendix III. 



95 



SCHEDULE XIII B. 



States and 
Territories. 



LOANS (Legal restrictions). 



Trust companies. 



Arizona 1 

Arkansas 

California 

Colorado 

Connecticut ! 

Delaware 

Dist. of Columbia 

Florida 

Georgia 

Iowa 

Idaho 

Illinois 

Indian Territory. 
Indiana 



Kentucky 

Louisiana 1 

Massachusetts. 



Maryland . 
Maine 



Michigan 

Minnesota 

Mississippi — 

Missouri 

Montana 

Nebraska ' 

Nevada x \ 

North Carolina... 
North Dakota 1 ...] 
New Hampshire . 

New Jersey 

New Mexico 1 

New York 

Ohio 

Oklahoma 

Oregon 

Pennsylvania ... 

Rhode Island 

South Carolina. . . 

South Dakota 

Tennessee 

Texas 2 

Utah 

Vermont 



Virginia 

West Virginia — 

Washington 

Wisconsin 

Wyoming 1 



None. 

None. 

None. 

None. 

Not to stockholders. Mills S. §535. 

Same as banks. '01, ch. 143. 

Banks and trust companies are specially chartered. No general law in State. 

None. 

None. 

Same as banks. '98, p. 82. 

Same as banks. Code '97, §1889 

None. 

Same as banks ; banks may acquire trust powers. 

None. 

Not to loan to directors. Horner's S. '01, §3815m. 

None. 

Not over 20# of paid in capital in one loan. S. '94, §610. 

Same as banks. R. S. '97. §281. 

Not to persons outside state, nor over 1/5 of paid in capital in one loan. '88, ch. 
413. If capital is $500,000, 1 '5 capitaljpaid in and surplus. Discount of bills of exchange 
and commercial paper not counted as loans. '01, ch. 255. 

Fixed by charter. 

Not to loan to officers without approval of directors: not to loan on capital stock. 
'01, ch. 196. 

None. 

Not to officers. S. '94, §2851. 

None. 

Must be on collateral. R. S. '99, §1430. 

None. 

None. 

None. 

None. 

None. 

Same as banks. P. S. p. 541. 

Not to loan on its own stock. Loans must be on collateral. '99, ch. 174. 

None. 

Same as banks ; 1/10 of paid in capital may be loaned to officer. Birdseye, p. 248. 

Not over 1/10 paid in capital in one loan; none to officers or employees; must be 
on collateral. Bates' S. §3821a. 

None. 

None. 

Same as banks in regard to loans to officers. '01, ch. 268. 

Fixed by charter. 

Fixed by charter. 

None. 

None. 

None. 

Same as banks. R. S. '9S, §424. 

Not over b% of deposits or $30,000 in one loan, nor over $10,000 on personal security. 
S. '94, §4102. Not over b% of paid in capital to officers, discount of bills of exchange, 
and commercial paper owned by officer not counted. S. '94, §4103. May loan over 
5% to one person if deposits are $1,000,000. '00, ch. 53. 

Fixed by charter. 

None. 

None. 

None. 

None. 



No trust companies in State. 



•■Schedule XIX. 



96 



Trust Companies in the United States. 



[360 



SCHEDULE XIV A. 



States and 
Territories. 



[NVESTMENTS. (Legal restrictions.) 



Banks. 



Arizona . 



California — 

Colorado 

Connecticut . . 

Delaware 

Dist. of Columbia 

Florida 

Georgia 

Iowa . . 

Idaho 

Illinois 

Indian Territory. 
Indiana 



Kentucky 



Louisiana 

Massachusetts 

Maryland 

Maine 



Michigan 

Minnesota 

Mississippi 

Missouri 

Montana 

Nebraska 

Nevada 

North Carolina.. 
North Dakota . . . 
New Hampshire 
New Jersey 



New Mexico. 



New York 

Ohio 

Oklahoma 



Oregon 

Pennsylvania .. 
Rhode Island... 
South Carolina. 
South Dakota . . 

Tennessee 

Texas 1 

Utah 

Vermont 



Virginia 

West Virginia.. 



Washington 
Wisconsin . . 
Wyoming... 



None. 

None. 

None. 

None. 

May hold only necessary real estate and that acquired in business. Mills S. §514. 

Fixed by charter. 

Banks and trust companies are specially chartered. No general law in state. 

National Banks. Yes. 

None. 

None. 

None. 

None. 

None. 

None. 

May hold only necessary real estate and that acquired in business. Horner's S. '01, 
§2695. 

May hold real estate to value of 50$ of capital. G. S. '01, §457. Not to engage in 
trade or buy stock of bank or corporation or loan or hold its own stock ; may hold its 
own stock if necessary to prevent loss. G. S. '01, §417. 

May hold only necessary real estate and that acquired in business. S. '94, §582. 
Not engage in trade. S. §582. 

Not engage in trade. R. L. §314. 

Many restrictions. '94, ch. 317. §21. May hold real estate to amount of 5% of capital. 

Not to deal in other than exchange, notes, bullion, stocks, or bonds. P. G. L. p. 106. 

Many restrictions ; only in prescribed securities. R. S. '83, ch. 47, §§102, 103 ; '93, ch. 
170: '95, ch. 161. 

May hold only necessary real estate or that acquired in business. C. L. '97, §6100. 

May hold only necessary veal estate and that acquired in business. S. '94, §2500. 

May own S1.0li0.000 worth of property. Code §838. 

Not to engage in industrial pursuits. R. S. '99, §1291. 

May hold only necessary real estate and that acquired in business. C. C. §575. 

May hold only necessary real estate and that acquired in business. C. S. '97, §636. 

None. 

None. 

May hold only necessary real estate and that acquired in business. R. C. '99, §3220. 

Not over 10% of deposits or paid in capital in one investment. P. S. '01, p. 541. 

Not over 25$ of capital in real estate. May hold real estate acquired by judicial 
sale. '99, ch. 173. 

May hold real estate necessary for business i.nd that acquired by judicial sales. 
C. L. '97, §248. 

May hold only necessary real estate and that acquired in business. Birdseye p. 213. 

May hold necessary rf al estate and that acquired by judicial sale. Bates' S. §3821. 

Not over 1/3 of capital to be invested in real estate except such as is acquired in 
business. Not to engage in commerce, nor invest in stock of corporation nor dis- 
count on, or own shares of its own stock. '99, ch . 4. 

None. 

Only real estate necessary and that acquired in business. 

Fixed by charter. 

Fixed by charter. 

Only real estate necessary and that acquired in business. 

Only necessary real estate and that acquired in business. 

None. 

Necessary real estate and that acquired in business. R. S. '98, §376. 

Necessary real estate and that acquired in business. Not to invest funds in trade 
or commerce. S. '94, §§4031,2. 

Necessary real estate anil that acquired in business. Code §1163. 

May not deal in real estate, buy stocks, bonds or securities of corporation or guar- 
antee corporate debts. Code '99, p. 538. '01, ch. 83, §76. 

None. 

May hold only necessary real estate and that acquired in business. S. '98, §2024. 

Not to buy it's own stock except when necessary. R. S. '99, §3088. May hold only 
necessary real estate and that acquired in business. 



L. Digest p. 



R. S. '99, §4340. 
Code '96, §3226. 



'Schedule XIX. 



361] 



Appendix III. 



97 



SCHEDULE XIV B. 



States and 
Territories. 



INVESTMENTS. (Legal restrictions.) 



Trust companies. 



Arizona 1 ; 

Arkansas 

California 

Colorado 

Connecticut 

Delaware ; 

Dist. of Columbia 

Florida 

Georgia : 

Iowa 

Idaho 

Illinois 

Indian Territory . 

Indiana 

Kansas 1 

Kentuck}' I 

Louisiana 1 

Massachusetts ...I 

Maryland j 

Maine 

Michigan ! 

Minnesota ! 

Mississippi 

Missouri 

Montana 

Nebraska 

Nevada x i 

North Carolina... 
North Dakota 1 ... 
New Hampshire.. 

New Jersey 

New Mexico 1 | 

New York 



Ohio 



Oklahoma 

Oregon 

Pennsylvania .. 
Rhode Island... 
South Carolina. 
South Dakota .. 

Tennessee 

Texas 2 

Utah 



Vermont . 



Virginia 

West Virginia. 
Washington ... 

Wisconsin 

Wyoming 1 



None. 

None. 

None. 

None. 

Not in stock of private corporations. Mills' S. §544a. 

Fixed by charter. 

Fixed by charter. 

May hold §500,000 of real estate, and that acquired in business. Act 1890, §12. 

None. 

None. 

None. 

None. 

None. 

None. 

None. Not to engage in commerce. Horner's S. '01, §3S15m. 

May hold real estate to value of 50£ of capital. G. S. '01, §1477. 

None. 

Same as b-inks. E. S. '97, §314. 

Restricted as to trust funds. '88. ch. 413, §7. May hold $250,000 of real estate. 
'88, ch. 413, §18. 

Fixed by charter. 

None. 

Not over 50% of paid in capital and surplus in real estate. C. L. §6165. 

Realty only by contracts and stipulations. 

None. 

May own only necessary real estate. R. S. '99, §1430. 

May own only necessary real estate. C. C. §606. 

None. 

None. 

None. 

None. 

Same as banks. P. S. '01, p. 541. 

None. 

None. 

Capital to be invested in bonds and mortgages 
stock of private corporations. Birdseye S., p. 251. 

Real estate same as banks. List of securities for investments prescribed. 
Bates' S. §3821a. 

None. 

None. 

None. 

Fixed by charter. 

Fixed by charter. 

None. 

None. 

None. 

Federal, state, municipal and school district bonds and real estate mortgages. 
R. S. '98, §429. 

Not over 7W of paid in capital in real estate, mortgages nor 1/3 of assets in 
personal securities. S. '94, §4099. Other mmute regulations. S. '94, §4101. 

None. 

May hold real estate of which they have insured the title. '01, ch. 85. 

None. 

None. 

May hold only necessary real estate. No restrictions as to personal securities. 
R- S. '99, §3131. 



May not hold more than 10£ of 



No trust companies in State. 
25 



2 Schedule XIX. 



98 



Trust Companies in the United States. 



[362 



SCIIKDULE XV A. 



States and 
Territories. 



CAPITAL. (Legal restrictions.) 



Hanks. 



Arizona 

Arkansas 

California 

Colorado 

Connecticut 

Delaware 

Dist. of Columbia 

Florida 

Georgia 

Iowa — 

Idaho 

Illinois 

Indian Territory. 

Indiana 

Kansas 

Kentucky 

Louisiana 

Massachusetts ... 
Maryland 

Maine 

Michigan 

Minnesota 

Mississippi 

Missouri 

Montana 

Nebraska 

Nevada 

North Carolina. . . 
North Dakota — 
New Hampshire . 

New Jersey 

New Mexico 

New York 

Ohio 

Oklahoma 

Oregon 

Pennsylvania — 

Rhode Island 

South Carolina... 
South Dakota — 

Tennessee 

Texas i 

Utah 

Vermont 

Virginia 

West Virginia — 

Washington 

Wisconsin 

Wyoming 



p. 27; maximum, $500,000. Code '96, 



), oh. 1(37. Half paid in in money. 

Mill's S. §510. 



Minimum, $15,000 to $35,000 paid in. 
|1085, 1086. 
None. 
None. 

Minimum, $25,1 100 to $200,000 ; no maximum. '! 
Minimum, $30,000, half paid in ; no maximum, 
Fixed by charter. 

Minimum $25,000 to $200,000 ; no maximum. 50^ paid in U. S. It. S. §5138-40. 
Minimum, $15,000 to $50,000, half paid in. It. S. §3169. 
Minimum, $25,(101); no maximum. 3o;<: or $15,01)0 paid in. Code §1910. 
Minimum, $25,000 to $50,000 paid in. Code '97, §1861. 
None. 

Minimum, $25,000 to $200,000 paid in ; no maximum. R. S. '99, pp. 199-200. 
None. 

Minimum, $25,000 ; no maximum. 50% paid in. Horner's S. '01, §§2684, 2690. 
Minimum, $5000; no maximum: paid in. G. S. '01, §408. 

Minimum, $50,000 to $100,000 ; half paid in ; no maximum. S. '94, §577, '98, ch. 
Minimum, $10,000 to $100,000 paid in. R. S. §376. 
Fixed by charter. 

Minimum. $31 n. (too in Baltimore. $50,000 inanv other part of the state; maximum. 
2,000,000 in Baltimore, $500,000 in any other part of the state. P. G. L. p. 100. 
Fixed by charter. 

Minimum, $20,000 to $350,000, half paid in. '99, ch. 265. 
Minimum, $10,000 to $25,000 paid in. S. '94, §2490. 
None. 

Minimum, $10,000; maximum, $5,000,000, half paid in. R. S, '99, §1278. 
Minimum, $20,000 ; no maximum. C. C. §570. 
Minimum, $5,000 to $50,000 ; no maximum. C. S. '97, §619. 
None. 

Fixed by charter. 

Minimum, $5000 to $50,000, 50% paid in. R. C. '99, §3231. 
Fixed by charter. 

Minimum, $50,000 paid in. '99, ch. 173. 
Minimum. $30,00(1, half paid in. C. L. '97, §244. 
Minimum, $25,000 to $100,000 paid in. Birdseye, p. 212. 

Minimum, $25,000; maximum, $500,000; 00;: paid in. Bates' S. §§3821,3866, 386 1 ; 
Minimum, $5000 paid in. '99, ch. 4. 
None. 

Minimum, $50,000, half paid in. Pepper and Lewis, Dig. p. 363. 
Fixed by charter. 
Fixed by charter. 

Minimum, $5,000 to $35,000 ; half paid in. R. S. '99, §4343. 
None. 
None. 

Minimum, $25,000 to $100,000; maximum, $1,000,000, 25;; paid in. R. S. '98, §37." 
M inimum, §50,000 ; maximum, $500,000 paid in. S. '94, §3998. 
Fixed by charter. 

Minimum, $25,000, maximum, $500,000 ; 40^ paid in. '01, ch. 83. 
None. 

Minimum, $35,000, maximum, $500,000: $15,000 paid in. S. '9S, §2024. 
Minimum, $10,000 to $100,000; 50;;' paid in. R. S. '99, §3086. 



Schedule XIX. 



363] 



Appendix III. 



99 



SCHEDULE XV B. 



States and 
Territories. 



CAPITAL. (Legal restrictions.) 



Trust companies. 



Alabama 

Arizona 1 

Arkansas 

California — 

Colorado 

Connecticut . . 

Delaware 

Dist. of Columbia 

Florida 

Georgia 

Iowa 

Idaho 

Illinois 

Indian Territory 

Indiana 

Kansas 1 



Kentucky 



Louisiana 1 

Massachusetts... 

Maryland 

Maine 

Michigan 

Minnesota 

Mississippi 

Missouri 

Montana 

Nebraska 

Nevada x 

North Carolina. . 
North Dakota 1 .. 
New Hampshire. 

New Jersey 

New Mexico 1 . .. 

New York 

Ohio 

Oklahoma 

Oregon 

Pennsylvania . . . 
Rhode Island — 
South Carolina.. 
South Dakota . . . 

Tennessee 

Texas 2 

Utah 

Vermont 

Virginia 

West Virginia... 

Washington 

Wisconsin 

Wyoming 1 



None. 

None. 

None. 

Minimum, $250,000 paid in. '91, ch. 264. 

Minimum, $50,000 to $250,000 paid in. Mills' S. §544j. 

Fixed by charter. 

Fixed by charter. ' 

Minimum, $1,000,000, half paid in. Act 1890, §14. 

None. 

Minimum, $100,000; maximum, $2,000,000, $100,000 paid in. '98, p. 82. 

Same as banks. 

Minimum, S25.000 paid in. No maximum. '01, p. 26. 

Same as banks. 

None. 

Minimum, $25,000 to $100,000 paid in. Horner's S. '01, §3815c. 

Minimum, $100,000; maximum, $1,000,000, 1/5 paid in, remainder within 6 months. 

G. S. '01, §1469. 
Minimum, $15,000 to $200,000, half paid in; no maximum. S. '94, §§003. 007. "98, ch. 32. 

'97, ch. 14. 
Minimum, $10,000 paid in; no maximum. R. S. §277. 
Fixed by charter. 

Fixed by charter. Foreign surety companies capital, $250,000 paid in. 
Fixed by charter. 
Minimum, $15u,(i0(i; maximum, $5,0 i0,00u, half paid in. C. L. '97, §6157. 

Minimum, $200,000; maximum, $2,( mo. i. $200,000 paid in. '99, ch. 200. 

Minimum, $100,000; maximum. $1,000,000 ; $50,000 paid in. 

Minimum, $1,000,000; maximum, s1o.oihi.oiio. uuarter paid in. R. S. §1429. 

Minimum, $100,000; maximum, $10,000,000; $100,000 paid in. C. C. §605. 

None. 

None. 

Fixed by charter. 

None. 

Fixed by charter. 

Minimum, $100,000 paid in. '99, ch. 174. 

None. 

Minimum, $100,000 to $500,000 paid in. Birdseye, p. 246. 

Minimum, $200,000 paid in. Bates' S. §3821d. 

Minimum, $200,000, half paid in. '99, ch. 11, art. 5. 

None. 

Minimum, $125,000 paid in. '95, ch. 286. 

Fixed by charter. 

Fixed by charter. 

None. 

None. 

None. 

Minimum, $25,000 to $100,000 paid in. 

Fixed by charter. 

Fixed by charter. 

Minimum, $150,000 paid in. '01, ch. 85. 

None. 

Minimum, $100,000; maximum. $5,000,0(10; 50;: paid in. S. '98. §1791d. 

Same as banks. •£>% paid in ; K)% of remainder a month. R. S. '99, §3129. 



1 No trust companies in State. 



■ Schedule XIX. 



100 



Trust Companies in the United States. 



[364 



SCHEDULE XVI. 



States and 
Territories. 



LIABILITIES. (Legal restrictions.) 



Trust companies. 



Arizona 1 

Arkansas 

Caliiornia 

Col orado 

Connecticut 

Delaware 

Dist. of Columbia 



None. 
None. 
None. 
None. 

None. 

Fixed by charter. 

Fixed by charter. 



None. 
None. 
None. 

Deposits must not exceed 10 times 
capital. '91, ch. 261. 
None. 

Fixed by charter. 
Fixed by charter. 
None. 





Not to exceed capital; deposits, bills 
of exchange and liabilities for divi- 
dends not counted. R. S. §2184. 

None. 

None. 

None. 

None. 

None. 

None. 

None. 

None. 

None. 

None. 

Not to exceed amount of capital paid. 
P. G. L. 103. Deposits not to exceed 10 
times amount of paid up capita) and 
surplus. 

None. 

None. 

None. 

None. 

None. 

None. 

Not over 2/3 of capital to be invested 
in rediscounts and bills payable. C. S. 
'97, §(533. 

None. 

None. 

None. 

None. 

None. 

None. 

None. 

Not to exceed paid in capital: de- 
posits, bills of exchange drawn against 
money credits and liabilities of stock- 
holders for balance on shares not 
counted as liabilities. Bates' S.,§§3S21-78. 

None. 

None. 

None. 

Not to exceed C5g of capital. Deposits 
not counted. G. L. '96, p. 543. 

Fixed by charter. 

None. 

Not to exceed assets. Code '96, §3226. 

None. 

None. 

None. 

None. 

None. 

Debenture bonds not to exceed 10 
times capital of corporation. Bal- 
linger's S., '97, §4266. 

None. 

Not to exceed capital; deposits, bills 
of exchange for money due, redis- 
counts for cash, liabilities for capital 
stock and dividends not counted. R. S. 
'99, §3093. 


None. 

None. 
None. 
None. 
None. 
None. 
None. 
None. 
None. 
None. 
None. 
None. 

None. 
None. 
None. 
None. 

Not to exceed 10 tiE 
R. S. '99, §1427. 
None. 
None. 

None. 
None. 
None. 
None. 
None. 
None. 
None. 
None. 

None. 
None. 
None. 
None. 

Fixed by charter. 

None. 

None. 

None. 

None. 

None. 

None. 

None. 

None. 

None. 




Georgia 




Idaho 




Indian Territory 




Kansas 1 
















Maine 

Michigan 








Missouri 


aes capital 










North Carolina 




New Hampshire 




New Mexico 1 




Ohio 












































Virginia 

West Virginia 



















No trust companies in State. 



: Schedule XIX. 



365 



Appendix III. 



101 



SCHEDULE XVII A. 



States and 
Territories. 



TAXATION. 



Rate and character. 



Tear of 

passage 
of law. 



Alabama 

Arkansas 

Arizona 

California 

Colorado 

Connecticut 

Delaware 

Dist. of Columbia 

Florida 

Georgia 

Idaho 

Illinois 

Indiana 

Indian Territory . 
Iowa 

Kansas 

Kentucky 

Louisiana 

Maine 

Maryland 

Massachusetts 

Michigan 



Minnesota . 



Missouri 



Real estate locally. Shares, real estate deducted, to owners where 
bank is located. Value fixed by local assessor. Tax paid by bank. 
Code '96. §3911, r S ; '97, p. 1489, §36. 

Real estate locally. Shares to owners where bank is located. 
Value fixed by local assessor. Tax paid by bank. Sandels and Hill's 
Digest '94, §§6445-54. 

Real estate locally. Shares to owners where bank is located. 
Value fixed by local assessor. R. S. "87, §2649 ; '93, ch. 85. 

Real estate locally. Shares in national banks, real estate deducted, 
to owners where bank is located and by local assessor. '99, ch. 80. 
Capital stock of other baaks to corporation. Shares not taxed to 
owners. '95, ch. 167; '99, ch. 80. 

Real estate locally. Shares to owners where bank is located. 
Value fixed by local assessors. Tax paid by bank. Mill's S. §3810a ; 
'93, ch. 139, §24. 

Real estate locally. 1% on market value of shares less taxes on 
realty in state, '01, ch. 165. Savings banks M of 1% on deposits, 
deducting $50,000 real estate and state aid railroad bonds. G. S. '88, 
§3918. 

Real estate locally. R. S. '93. p. 114. X of 1% on capital stock. R. L. 
'93, p. 54. % of 1% on surplus above 25$ thereof. R. L. '93, p. 589. 

$.50 on each S10U0 of capital. Savings banks without capital stock, 
1/40 of \% on deposits every 6 months. C. S. D. C. '94, p. 344, §25. Capital 
stock, real estate deducted, assessed to bank. C. S. D. C. '94, p. 530. 

Real estate locally. '95, p. 4, §6. Shares, real estate deducted, to 
owners where bank is located. Value fixed by local assessors. Tax 
paid by bank. '93, p. 41 ; '95, p. 5. Taxed on trust deposits. '95, p. 5. 

Real estate locally. Shares, real estate deducted to owners, where 
bank is located. Value fixed by local assessors. '00, p. 33, §12. 

Real estate locally. Shares, real estate and debts deducted, to owner 
where bank is located. Value fixed by local assessor. Tax paid by 
bank. Deductions for debts. R. S. '87, §1441. 

Real estate locally. '81, p. 133. Shares to owners where bank is 
located. Value fixed by local assessor. K. S. '99, p. 1400, §35. 

Real estate locally. Shares, real estate deducted, to owners where 
bank is located. Value fixed by local assessor. '73, p. 214. Ann. 
Statutes. '97, §3257. 

Shares to owner where bank is located. Value fixed by local 
assessor. Tax paid by bank. Ind. Terr. Statutes. "99, §§4944-53. 

Real estate locallv. '74, ch. 60, §28. Shares to owners, real estate 
deducted, where bank is located. Value fixed by local assessor. Tax 
paid by bank. Code '97, §§1322, 1323. 

Real estate locally. Shares, real estate deducted, at true value fixed 
by local assessor where bank is located. Tax paid by bank. G. S. '99, 
§7207. 

Real estate locally. '86, ch. 1233. Shares in national banks to owner 
where bank is located Tax paid by bank. '00, ch. 23. Other banks 
taxed locally on value of franchise fixed by state board. Shares not 
taxed. '92, ch. 103 ; 173 U. S. 636. 

Real estate locally. Shares, real estate deducted, to owners where 
bank is located. Value fixed by local assessors. Tax paid by bank. 
R. L. '97, p. 798. 

Real estate Locally. R. S. '83, ch. 6. Shares national and state banks 
locally. R. S. '83, ch. 6. Savings banks 7/8 of 1% on value of franchise 
fixed by state assessors. '95, ch. 130. 

Real estate locally. '96, ch. 120. Shares, real estate deducted, at mar- 
ket value fixed by state tax commissioner. Tax paid by bank. '96, 
ch. 120. 

Real estate locally. Shares of stock at cash value where bank is 
located. '73, ch. 315. 

Real estate locally. C. L. '97, §6148. Shares, real estate deducted, as 
personalty to owner at residence. Value fixed by local assessor. C. 
L. '97, §3831. 

Real estate locally. Shares, real estate deducted, to owners where 
bank is located. Value fixed by local assessor. Tax paid by bank. 
Statutes '94, §1532. 

Real estate locally. Code '92, §3749. Shares to owners where bank is 
located. Value fixed by local assessor. Tax paid by bank. '00, ch. 3. 

Real estate locally. Shares, real estate deducted, to owners where 
bank is located and by local assessors. Tax paid by bank. R. S. '99, §9153. 



1883. S. & 
H.'94.p.l429 



1901 

1878 



ch. 3f 

1872 
1877 



ch. 39. 

1874 

1891. '91, 
ch. 84. 

1900. '00, 
ch. 23. 



ch.85,p. 
111. 

1845 
1895 



1893. '93, 
ch. 206. 

1878 

1900 

1895. '95. 
ch. 242. 



National banks can only be taxed on shares of stock in names of shareholders, 
-173 U. S. 664; U. S. Sup. Ct„ April 3, 1899. 



. on their real estate. 



102 



Trust Companies in the United States. 



[366 



SCHEDULE XVII A.— Continued. 



States and 
Territories. 



TAXATION. 



Kate and character. 



Montana 

Nebraska 

New Mexico — 

Nevada 

New Hampshire 

New Jersey 

New York 

North Carolina . 



North Dakota. 
Ohio 



Oklahoma . 
Oregon — 



Pennsylv; 



Rhode Island. 



South Carolina. 



South Dakota. 



Virginia . 



Washington. 



West Virginia 



Wyoming 



Ileal estate locally. Shares, real estate deducted, to owners where 
bank is located. Value fixed by local assessor. Pol. Code, §3691. 
Banks and trust companies pay license from $10 to $100 a quarter ac- 
cording to business. Pol. Code, §4061. 

Real estate locally. Shares, real estate deducted, to owner where 
bank is located. Value fixed by local assessor. C. S. '97, §§4311-14. 

Real estate locally. Shares, real estate deducted, to owner where 
bank is located. Value fixed by local assessor. Tax paid by bank, 
C. L. '97, §§257-9, 4025. 

Real estate locally. C. L. '00, §1084. Shares to owner at residence. 
Value fixed by local assessor. '00, C. L. §1084. License from $12 to 
S200 a month, according to business done. C. L. '00, §1190. 

Real estate locally. Shares, real estate deducted, to owners by local 
assessors. P. S. '01, p. 227. Savings banks, 3/4 of \% on deposits draw- 
ing interest, real estate and mortgage loans in N. H. at not exceed- 
ing 5% deducted. P. S. '01, p. 229. Stock, savings banks 1% on guarantee 
fund or capital stock in addition to above. P. S. '01, p. 229. 

Real estate locally. Shareholders on actual value of stock in dis- 
trict of residence. '00, ch. 107. 

Real estate locally. State tax of 1% on capital stock, surplus and un- 
divided profits. No deductions. '01, ch. 550. 

License, S25 on $10,000 capital ; $2 for each $1000 additional. Real 
estate locally. Shares, less real estate at actual value where bank is 
located for state purposes, and tax paid by bank to state treasurer. 
$25 for each branch bank. For local purposes shares are taxed where 
owner resides. '99, ch. 15, §40. 

Real estate locally. Shares, real estate deducted, to owners where 
bank is located. Value fixed by local assessor. Code '99, §1203. 

Real estate locally. Shares to owners where bank is located. Value 
fixed by county auditor. Tax paid by bank. Bates' statutes, '97, 
§§2762-66, 2840. 

Real estate locally. Shares to owner where bank is located. Value 
fixed by local assessor. Tax paid by bank. Statutes '93, §§5598-5601. 

Real estate locally. Shares at par value to owners at residence. 
Hill's Laws, '92, §2764. 

Real estate locally for local purposes. Shares, 2/5 of 1% on actual 
value, or 1% on par value at option of bank. Tax paid by bank. '97, 
ch. 227. 

Real estate locally. Shares in national banks, real estate deducted, 
to owner at residence and by local assessor. Savings banks $.40 a $100 
of deposits and profits, '93, ch. 1215. 

Real estate locally. Shares at true value, real estate deducted, 
where bank is located and by local assessors. Tax paid by bank. 
R. S. '93, §253-60. 

Real estate locally. Shares, real estate deducted, to owners where 
bank is located. Value fixed by local assessor. Ann. S. '99, §2156. 

Real estate locally. Shares, real estate deducted, to owners where 
bank is located. Value fixed by local assessors. Tax paid by bank. 
Code '96, §§790, 791. 

Real estate locally. Share, real estate deducted, to owners where 
bank is located. R. S. '95, §5080. Occupation tax, $25 to $240 according 
to population. R. S. '95, p. 1015. 

Real estate locally. Shares, real estate and debts deducted, to 
owners where bank is located. Value fixed by local assessors. R. S. 
'98, §2507. 

Shares in national banks to owners at residence by local assessors. 
'92, ch. 16. Savings banks 7/10 of 1% on deposits ; W% of assets invested 
in United States bonds, and individual deposits above $1500 if listed 
elsewhere, to be deducted. '96, ch. 18. 

Real estate locally. Shares at market value to owners where bank 
is located and by local assessor. Rate, $.40 a $100. Tax paid by bank. 
'96, ch. 669. 

Real estate locally. Shares, real estate deducted, to owners where 
bank is located. Value fixed by local assessors. Tax paid by bank. 
Hallinger's Codes, '97, §4266. '97, ch. 147. 

Real estate locally. Value of capital, real estate and debts deducted, 
assessed to firm by local assessor. Shares not taxed. Code '99, pp. 
202, 203. License tax from $10 to $70 according to capital. '01, p. 111. 

Keal estate locally. Shares where bank is located, and by local 
assessors. Statutes '98, §§1039, 1042, 2024. 

Real estate locally. Shares to owners at residence. Value fixed by 
local assessor. R. S. '99, §§1772-74. 



1879. 
p. 276. 

1891. 
ch.40 


'79, 
'91, 


1891. '91, 
ch. 99, §117 


1895. '95. 
ch. 108, ch 
lib. 


1900 




1901 





ch. 29. 

1867 



1870. 
L. '92, 



1S82. 

ch. 66 



p. 426. 



p. 147. 



1887. ' 
ch. 28. 



Hills 
P. 



ch. 10: 
, 1869. 
p.p. 



C. L. 

564. 



' Schedule XIX. 



367] 



Appendix III. 



103 



SCHEDULE XVII B. 



States and 
Territories. 



TAXATION. 



Trust companies. 



Rate and character. 



Alabama 

Arkansas 

Arizona 1 

California 

Colorado , 

Connecticut 

Delaware 

Dist. of Columbia 

Florida 

Georgia 

Idaho 

Illinois 

Indiana 

Indian Territory 

Iowa 

Kans 

Kentucky 

Louisiana 1 — 

Maine 

Maryland 

Massachusetts 

Michigan , 

Minnesota 

lippi .... 



No trust company legislation. Corporations are taxed same as 
banks. '98-9, p. 48 ; '01, p. 214. License tax $10 to S50 a year according 
to capital. '01 p. 229. 

No trust company legislation. Corporations taxed on assets like 1887. S. & 
individuals. Shares of stock taxed to owner as personal property. H. p. 1432. 
S. & H. Digest, '94, §§6462. 6463. 

No trust company legislation. Real estate of corporations taxed 
locally. Shares not taxed to owner if capital stock is taxed to firm. 
R. S., '87, §2649. 

Same as for banks other than national, '99, ch. 80. 

Corporations taxed on actual or market value of real and personal 1902. 
estate by local assessors. Shares not taxed to owners, '93, ch. 139, §29. 
Attorney General's Report, '93-4, p. 34. 

Same as for banks, '01, ch. 165. 1901. 

Same as banks. '93, p. 54. 

Real estate locally, l 1 /^ on gross earnings. Shares not taxed. TJ. S. 
Statutes at Large, vol. 26, p. 629. Capital stock, real estate deducted, 
assessed to company. C. S. D. C, '94, p. 530. 

No trust company legislation. Same as for banks. '95, pp. 5, 13. 

Same as for banks. '98, p. 78. 1% on all premiums in addition. Paid 
to comptroller, '00, p. 28, §7. 1901. 

Real estate of corporations locally. Capital stock and other| 188' 
property in name of firm at value fixed by local assessor. Shares not 
taxed. R. S., '87, §§1440-2. 

Same as banks. R. 8. '99, p. 1400. 



Real estate of corporations locally. Capital stock at full cash value, 
real estate and personalty deducted. Paid by corporation. Ann. S., 
".•7. §§6337-8, 6279-80. 

No trust company legislation. No provisions for taxation of cor- 
porations except occupation tax to non-citizens. Am. Corporation 
Legal Manual, '01. p. 165. 
Same as for banks. Code '97, §§1322, 1323. 



Same as for banks. G. S., '99, §7207. 



Same as for banks. '92, ch. 103. 
Same as for banks. R. L., '97, p. 798. 



p. 173. 



1874. 
ch. 60. 



'71, 



ch. 85. 
1845. 



Real estate locally. Shares to owners locally. R. S., '83, ch. 6, §2 
7 3 of \% on value of franchise fixed by state assessors. '95, ch. 130. 

Same as for banks. '96, ch. 120. 2% on gross receipts in addition. 
'96. ch. 120, §146. 

Real estate locally. '62, ch. 183. Market value of shares less real es- 
tate at average rate in state. Personalty held in trust at above rate. 
% of average rate on other than demand deposits. '88, ch. 413. 

Real estate locally. Shares, real estate deducted to owner at resi-| 1889. '89, 
dence and by local assessors. C. L. '97, §6168. 2% of gross premiums as ch. 108. 
surety on bonds. '97. ch. 106. | 1897. 

I Real estate of corporations locally. Shares, real estate deducted, at 1881. 
market value where corporation is located. Value fixed by local 
assessor. Statutes '94, §§1516. 1530. 

Real estate of corporations locally. Assets taxed to firm. Shares 1892. Code 
not taxed to individuals. Code '92, §§3750-8. adopted. 



No trust companies in State. 



104 



Trust Companies in the United States. 



[368 



SCHEDULE XVII B.-Continued. 



States and 
Territories. 



TAXATION. 



Trust companies. 



Rate and character. 



Year of 
passage, 
of law. 



Missouri 

Montana 

Nebraska 

Nevada 1 

New Hampshire 

New Jersey 

New Mexico 1 ... 

New York 

North Carolina . 

North Dakota 1 .. 
Ohio 

Oklahoma 

Oregon 

Pennsylvania . . . 

Rhode Island ... 
South Carolina.. 
South Dakota... 

Tennessee 

Texas 2 

Utah 

Vermont 

Virginia 

Washington 

West Virginia .. 
Wisconsin 

Wyoming l 



Same as for banks. R. S. '99, §9153. 
Same as for banks. Civil code §611. 

No trust company legislation. Real estate of corporations locally. 
Capital, debts and real and personal estate deducted at place of prin- 
cipal office. C. S. '97. §§4289,"4313. 

No special tax. No trust company legislation. License same as 
banks. C. L. '00, §1190. Real estate locally. Capital stock at actual 
value ; shares not taxed. Property taxes deducted. C. L. '00, §§1084-9. 

3/4 of 1% on deposits drawing interest, real estate and mortgage loans 
in N. H. at not exceeding f>% deducted, and 1% on capital stock, real 
estate deducted if not already deducted from deposits. P. S. '01, p. 229. 

Real estate locally for local and school purposes. True value of 
capital stock less real estate is taxed at local rate in office district. 
Capital property and franchises exempt from other taxes. '99, ch. 174. 

Same as banks. C. L. '97, §§257-9, 4025. 

Real estate locally. '96. ch. 908. State tax of 1% on capital stock, sur- 
plus and undivided profits. '01, ch. 132. 

No trust company legislation. Real estate of corporations locally. 
Capital stock less realty to company. Shares not taxed to owners. 
'99, ch. 15, §14. 

No special tax. Property of corporations assessed at market value, 
debts deducted, by local assessor. Code '99, §1198. 

Real estate locally. Shares where company is located. Value fixed 
by county auditor. Tax paid by company. This is for general cor- 
porations. No special law. Bates' S. '97, §§275s, 2", 62-6. 2840. 

No special law. Real estate of corporations locally. Corporations 
taxed locally like individuals. Shares taxed to owner at residence- 
Statutes §§5580-3. 

No trust company legislation. Real estate of corporations locally. 
Capital at place where principal office is located. Shares not taxed to 
individuals. Hills L. 92, §§2744, 2750. 

Real estate locally for local purposes. 1/2 of l^on actual value of 
capital stock. 4/10 of l^on obligat ions held by residents. 2/5 of 1% on 
taxable securities held in trust. '91, ch. 200. 

S.40 a S100 of deposits. '93, ch. 1213. Shares, real estate deducted to 
owner at residence by local assessor. G. L. '96, p. 182. 

No trust company legislation. Same as for banks. R. S. '93, §261. 

No special tax. Corporations taxed on market value of real and 

personal estate, debts deducted. Value lixed by local assessor. Ann. 
S. '99, §2153. 

Same as for banks. Code '96, §§790-1. 

No special tax. Occupation tax same as banks. $25 a year on filing 
statement. R. S. §642. Corporate property assessed like that of indi- 
viduals by local assessor. R. S. §§5084, 5118. 

Same as for banks. R. S. '98, §2507. 

Same as savings banks. '96, ch. 18. 

Annual license tax $200 : \% tax on gross annual receipts. 

Same as for banks. There is no provision for organization of trust 
companies apart from banks. Ballinger's code '97, §4266. 

Same as for banks. Code '99, pp. 202-3 ; '01, p. 111. 

Real estate locally. License of $300 annually. 2% on net profits. 
Statutes '98, §1222k. 

Same as for banks. No tax on capital stock of domestic corporations. 
R. S. '99, §1774. 



1895. ' 
ch. 242. 

1893. ' 
p. 105. 

1879. ' 
ch. 276. 

1893. ' 

ch. 48. 



ch. 40. 
1901. 



1897. '97, 
ch. 126, §25. 
1867. 



1864. 

Hill's L. p. 
1381. 



ch. 677. 
1897. '97, 
ch. 28. 

1895. 

1876. '76, 
p. 280. 

1896. '96, 
p. 432. 

1896. 
1890. 

1897. '97, 
ch. 147. 

1901. 

1891. '91, 
ch. 204. 

1895. '95, 
ch. 87. 



No trust companies in State. 



■ Schedule XIX. 



169] Appendix III. 105 



SCHEDULE XVIII. 

States Restrictions on the use of the word "trust" in the 

title of corporations. 

Indiana Only corporations organized under Trust Act may use 

word trust in title. 

Horner's S. '01, §3815q. 

Massachusetts Only incorporated trust companies may use word trust 

in title. Exception in case of licensed insurance 
companies already in operation. 

'99, ch. 467. 

New Jersey Only corporations organized under Trust Act may use 

word in title. '99, ch. 174, §1. 

New York Only corporations formed under Banking and Insur- 
ance Laws may have word trust, banking-, assurance, 
guaranty, savings, investment or loan as part of title. 
'00, ch. 704. 
No other states appear to have such restrictions. 



SCHEDULE XIX.-GENERAL REMARKS. 

Alabama No trust company legislation. 

Arizona " " " No companies in State. 

Arkansas " " " 

Florida " " " 

Illinois — Banks may acquire trust powers. 

Indian Territory No legislation on banks or trust companies. 

Kansas No trust companies in State. 

Louisiana No legislation for other than banks with trust powers. 

No companies in State. 

Massachusetts No state banks in the state, other than savings banks. 

Nebraska No trust company legislation. 

Nevada " " " No companies in State. 

New Mexico Act provides for savings banks and trust associations, 

but usual trust powers not mentioned. No com- 
panies in State. 

North Dakota No trust companies in State. 

Oregon No trust company legislation. 

South Carolina No trust company legislation. 

Tennessee No trust company legislation. 

Texas No corporat e body shall hereafter be created, renewed 

or extended with banking or discount privileges. 
Const. '76, Art. 16, §16. 

Washington No legislation for other than banks with trust powers. 

Wyoming No trust companies in State. 



APPENDIX IV 



TABLE I.-TRUST COMPANIES IN NEW YORK STATE. 
From Reports of Superintendent of Banking. 



Capital. 



Trust 
deposits. 



1875. 
1881. 
1885. 



1893. 
1900. 
1901. 



12 1 
13 2 
SO-' 
20 2 
212 
25 2 



443 
49 3 
593 

57 3 



811,584,475 
11,500,000 
14,202,900 
15,260,950 
15,603,000 
19,501,300 
22,287,000 
24,787,000 
29,600,000 
33,000,000 
34,850,000 
48,050.000 
47,150,000 



654,948 
888,913 
023,132 
166,059 
030,840 
018,183 
517,355 
427,787 
630,045 
739,925 
205,442 
190,671 
,983,512 



$29,442,552 
61,321,484 
75,422,656 
76,971,344 
106,133,132 
89,463,837 
130,954,406 
104,974,386 
123,069,072 
185,099,694 
197,664,749 
213,484,885 
245,367,995 



$20,923,017 
32,800,852 
52,289,212 
72,523,792 
51,854,439 
85,640,807 
83,290,756 
124,537,051 
184,282,820 
198,229,029 
269,519,509 
310,056,684 
392,753,774 



'June; 



2 July 1. 



January 1. 



1 January 1, 



TABLE IL-RESOFRCES OF FINANCIAL INSTITUTIONS IN 

NEW YORK STATE. 

From Report of New York Supt. of Banking, Feb. 26, 1901. p. 11. 



Savings banks. ^^^^ Trust companies. S ^l« 



count banks 



companies. 1 



$667,865,396 
675,987,634 
718,454,662 
704,535,118 
735,863,598 
783,078,580 
812,173,632 
869,571,244 
932,420,861 

1.000,209,099 

1,066,0 



$233,839,051 
271,830,699 
295,459,929 
271,496,822 ; 
284,911,631 
285,407,997 
280,691,855 
324,766,619 
355,485,972 
366,304,182 
380,711,930 



797. 



765,575 
707,779 
466,011 
419,729 
630,045 
742,947 
739,925 
205,442 
190,671 
983,512 



$3,964,942 
4,370,117 
5,045,787 
5,025,769 
5,102,689 
4,517,699 
4,677,325 
5,116,362 
5,197,996 
5,269,271 
5,255,452 



!The Buffalo Loan, Trust and Safe Deposit Co., and the Rochester Safe 
Deposit and Trust Co., are not included with the Safe Deposit Companies, 
as they are given under the head of Trust Companies. 

2 November 28, 1892. 



371] 



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375] 



Appendix II 7 . 



Ill 



TABLE VII. 
(Prepared for George Cator by The Bradstreet Company.) 
List of Companies in the Following States who act as Trustees or Admin- 
istrators and Execute such Forms of Trust. 

Name. Town. State. Stat. Cap. & Sur. 

Birmingham Trust and Savings Co... Birmingham, Ala. 12-31-01 $ 575,000 

Alabama Trust and Savings Co Birmingham, " 12-31-01 105,000 

Peoples Savings Bank and Trust Co.. Birmingham, " 12-31-01 78,000 

Union Trust and Savings Co Montgomery, " 12-31-01 45,883 

Alabama Trust and Banking Co Sheffield, " 12-31-01 60,000 

Arizona None. 

Jonesboro Saving and Trust Co Jonesboro, Ark. 12-31-01 50,000 

Little Rock Trust Co Little Rock, " 4-16-02 79,804 

Cotton Belt Saving Trust Co Pine Bluff, " 12-31-01 70,522 

Union Trust Co Little Rock, " 4-30-02 50,000 

Broadway Bank and Trust Co Los Angeles, Cal. 4-1-02 113,000 

State Bank and Trust Co Los Angeles, " 12-31-01 525,000 

Los Angeles Trust Co Los Angeles, " 5-1-02 450,000 

Pasadena S. T. and S. D. Co Pasadena, " 12-31-01 25,000 

California S. D. and Trust Co San Fran., «' 5-1-02 1,241,607 

Germania Trust Co San Fran., " 12-31-01 340,000 

Mercantile Trust Co San Fran., " 4-30-02 1,000,000 

Union Trust Co San Fran., " 12-31-01 1,252,169 

East Florida Saving and Trust Co Palatka, Fla. 12-31-01 30,000 

Sanford Loan and Trust Co Sanford, " 12-31-01 30,540 

Citizens Bauk and Trust Co Tampa, " 12-31-01 175,000 

Spokane and Eastern Trust Co Moscow, Idaho. 4-30-02 100,000 

Antlers Bank and Trust Co Antlers, Ind. Ty. 6-1-02 14,500 

Citizens Bank and Trust Co Coalgate, " 12-31-01 15,000 

Territorial Trust and Surety Co Muskogee, " 12-31-01 100,001 

German Trust Co Davenport, Iowa. 5-1-02 72,361 

Iowa Loan and Trust Co Des Moines, " 4- 1-02 600,000 

Citizens Saving and Trust Co IowaCity, " 12-31-01 65,000 

Wettstein Loan and Trust Co LaPorteC, " 5-1-02 50,000 

Home Trust and Saving Bauk Osage, " 12-31-01 27,546 

Farmers Loan and Trust Co Sioux City, " 5-1-02 600,000 

Leavitt and Johnson Trust Co Waterloo, " 12-31-01 150,000 

Kansas None. 

Louisiana None. 

Belzona Trust and Banking Co Belzona, Miss. 12-31-01 25,000 

Delta Trust and Banking Co Vlcksburg, " 5-1-02 143,040 

Walton Trust Co Butler, Mo. 4-30-02 60,500 

Fredericktown Trust Co Fredericktown, " 4-30-02 125,000 

Fidelity Trust Co Kansas City, " 3-31-02 1,459,513 

Missouri Union Trust Co Kansas City, " 12-31-01 100,000 

South Western Trust Co Kansas City, " 3-13-02 63,276 

United States Trust Co Kansas City, " 12-31-01 250,000 

Missouri Valley Trust Co St. Joseph, " 4-30-02 100,000 

American Central Trust Co .....St. Louis, " 12-31-01 1,500,000 

Colonial Trust Co St. Louis, " 4-30-02 3,00C,OuO 

Commonwealth Trust Co St. Louis, " 4-30-02 2,000,000 

Germania Trust Co St. Louis, " 4-30-02 1.673,460 

Lincoln TrustCo St. Louis, " 4-30-02 3,500,000 

Mercantile Trust Co St. Louis, " 12-31-01 3,500,000 

Mississippi Valley Trust Co St. Louis, " 4-30-02 6,500,000 

St. Louis Trust Co St. Louis, " 12-31-01 5,000,004 

Missouri Trust Co St. Louis, " 4-30-02 2,134,940 

UnionTrustCo St. Louis, " 12-31-01 5,000,000 

Union Bank and Trust Co Helena, Mont. 12-31-01 125,000 

Smith Bros. Loan and Trust Co Beatrice, Neb. 12-31-01 128,000 

Empire Loan and Trust Co Haigler, " 5-1-02 5,600 

Lincoln S. D. and Trust Co Lincoln, " 5- l-0i 25,500 

Equitable Trust Co Omaha, *' 12-31-01 201,000 

Nevada None. 

New Mexico None. 

North Dakota None. 



112 



Trust Companies in the United States. 



[376 



TABLE VII.— Continued. 



Union Trust Co. 



Town. State. 
.Oklahoma, Okla. 



Grants Pass Bank and Trust Co Grants Pass, Ore. 

Security Saving and Trust Co Portland, " 

Portland Trust Co Portl ind, " 

Farmers Loan and Trust Co Anderson, S. C. 

Columbian Bank and Trust Co Charleston, " 

Exchange Bank and Trust Co Charleston, " 

Hibernia Trust and Saving Bank. . . . Charleston, " 

S. C. Loan and Trust Co Charleston, " 

Centra] Bank and Trust Co Sioux Falls, S. Dak. 

State Bank and Trust Co Sioux Falls, 

Ashland City Bank and Trust Co Ashland C, Tenn. 

Citizens Bank and Trust Co Chattanooga, " 

Clarksville Trust and Bank Co Clarksville, " 

Dayton Bank and Trust Co Dayton, " 

Dickson Bank and Trust Co Dickson, " 

Williamson Co. Bank and Trust Co... Franklin, " 

Banking and Trust Co Jonesboro, " 

Knox Co. Bank and Trust Co Knoxville, " 

Lawrence Bank and Trust Co Lawrenceburg, " 

Lynnvllle Bank and Trust Co Lynnville, " 

American S. B. and TrustCo Memphis, " 

Memphis Trust Co Memphis, " 

Nashville Trust Co Nashville, " 

Union Bank and TrustCo Nashville, " 

Com. Bank and Trust Co Pulaski, " 

Robertson Co. Bank and TrustCo Spingfield, " 

Utah Savings and TrustCo Salt Lake C, Utah. 

Burlington Trust Co Burlington, Vt. 

Enosburg Falls S. B. and Trust Co.. . .Enosburg F's, 

Ludlow S. B. and Trust Co Ludlow, • ' 

Capital S. B. and Trust Co Moutpelier, ' 

Montpelier S. B. aud Trust Co Montpeller, 

Orleans Trust Co Newport, * 

Bichford S. B. and Trust Co Richford, 

Proctor Trust Co Proctor, ' 

Rutland Trust Co Rutland, ' 

State Trust Co Rutland, ' 

Franklin Co. S. B. and Trust Co St. Albans, 

Citizens S. B. and TrustCo St. Johnsbury, ' 

Lynchburg Trust and S. B Lynchburg, Va. 

Newport News Trust and S. D. Co Newport News, " 

Petersburg Bank aud Trust Co Petersburg, " 

Radford TrustCo Radford, " 

Richmond Trust and S. D. Co Richmond, " 

Virginia Trust Co Richmond, 

South West Virginia Trust Co Roanoke, •' 

American S. B. and Trust Co Seattle, Wash. 

Spokane and Eastern TrustCo Spokane, " 

Fidelity Trust Co Tacoma, " 

North West Loan and TrustCo Kenosha, Wis. 

Savings Loan and TrustCo Madison, " 

Wis. Fidelity Trust and S. D. Co Milwaukee, " 

Milwaukee Trust Co Milwaukee, " 



Stat. 


Cap. & Sur. 


12-31-01 


46,500 


12-31-01 


25,000 


12-31-01 


260,000 


12-31-01 


300,000 


12-31-01 


78,859 


12-31-01 


53,000 


12-31-01 


100,000 


12-31-01 


42,181 


12-31-01 


105,908 


1-15-02 


26,590 


12-31-01 


69,438 


12-31-01 


4,750 


12-31-01 


235,000 


12-31-01 


50,000 


12-31-01 


23,000 


12-31-01 


19,900 


12-31-01 


150,000 


12-31-01 


25,000 


12-31-01 


46,973 


12-31-01 


28,000 


12-31-01 


23,000 


12-31-01 


50,000 


4-30-02 


462,073 


5- 1-02 


390,623 


12-31-01 


158,064 


12-31-01 


36,927 


12-31-01 


32,500 


12-31-01 


163,000 


4-30-02 


194,005 


12-31-01 


27,894 


12-31-01 


50,000 


12-31-01 


120,000 


12-31-01 


106,000 


1- 1-02 


56,523 


12-31-01 


74,500 


5-10-02 


a, 500 


5- 1-02 


99,151 


12-31-01 


100,000 


1- 1-02 


53,558 


12-31-01 


9 1,457 


12-31-01 


215,000 


12-31-01 


50,000 


4-30-02 


112,259 


5- 1-02 


102,500 


12-31-01 


l,6i2,825 


12-31-01 


604,507 


6- 1-02 


200,000 


5- 1-02 


50,000 


4-30-02 


100,000 


12-31-01 


330,000 


12-31-01 


60,965 


12-31-01 


150,000 


12-31-01 


125,000 


12-31-01 


200,000 



Wyoming None. 



377] 



Appendix IV. 



113 



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The Maryland Constitution of 1 85 1 



Series XX Nos. 7-8 

JOHNS HOPKINS UNIVERSITY STUDIES 

IN 

Historical and Political Science 

(Edited 1882-1901 by H. B. Adams.) 
J. M. VINCENT 

J. H. HOLLANDER W. W. WILLOUGHBY 

Editors 



The Maryland Constitution of 
1851/ 



BY 

JAMES WARNER HARRY 



BALTIMORE 
THE JOHNS HOPKINS PRESS 

PUBLISHED MONTHLY 

JULY-AUGUST, 1902 



Copyright, 1902, by 
JOHNS HOPKINS PRESS 



THE FRIEDENWALD COMPANY 
BALTIMORE, MD. 



PREFACE 

This monograph was undertaken at the suggestion of the 
late Professor H. B. Adams. Its purpose is to add one 
chapter to the constitutional history of Maryland: the period 
between the years of 1836 and 1851. The author is under 
obligations to many friends for their interest and their help ; 
especially to Associate Professor J. M. Vincent and to Dr. 
Bernard C. Steiner of the Johns Hopkins University, who 
have assisted with many useful suggestions and corrections. 

J. W. H. 

Johns Hopkins University, June, 1902. 



CONTENTS 

PAGE 

Introduction 9 

CHAPTER I 
Constitutional Reform. 

General Sketch. — State Reform Convention of 1836. — Internal 
Improvement and Taxation. — Object Sought by the Re- 
formers. — Southern Counties Opposed to a Convention. — 
State Reform Convention of 1845. — Reform Agitation 
1847-9. — State Reform Convention 1849. — The Legisla- 
ture of 1849. — The Referendum 12 

CHAPTER II 
The Convention. 

Sectionalism. — Personnel of the Convention. — The Convention 
and the Compromise Acts of 1850. — Basis of Representa- 
tion. — Secession of Eastern from the Western Shore. — 
Committee's Report on Representation. — An Elective ver- 
sus an Appointive Judiciary. — Political Individuality of 
Counties. — United States Senatorial Districts. — Free- 
Negro Population. — Public-School System 33 

CHAPTER III 

The Constitution. 

Ratification of the Constitution. — Critical and Comparative 
Study of the Constitution 68 

Appendix. 

Vote by Counties on Call of the Convention. — Vote by Coun- 
ties on Adoption of Constitution 85 



THE MARYLAND CONSTITUTION OF 1851 



INTRODUCTION 

The original constitution of Maryland, framed at an 
early period of the Revolutionary War, remained for three- 
quarters of a century the fundamental law of the State, 
until it was superseded by the Constitution of 185 1. At 
the time of its formation the constitution was well adapted 
to the wants and circumstances of the people. But the 
rapid growth of population, and the great commercial and 
industrial development of the State rendered necessary the 
alteration of the constitution then framed, so as to con- 
form to social and economic progress. 

Many of the more objectionable features of the con- 
stitution were amended or abolished. Among these 
changes were the abolition of the property qualification for 
the right of suffrage, and the repeal of the clause which 
prevented those who were conscientiously scrupulous of 
taking the oath from sitting in the General Assembly, or 
serving as a witness in criminal cases where capital punish- 
ment was involved. The electoral college for selecting the 
members of the Senate had been abolished, and the people 
had been given the right, with some restrictions, of electing 
their governor. 

All of these changes in the constitution had been effected 
by successive acts of the General Assembly; but these 
alterations, so far from producing the desired result, had 
in many instances tended to destroy the harmony of the 
original instrument, and instead of improving had served 
to render it a " shapeless mass of unintelligible and con- 
tradictory provisions," so that in many of its features it 
bore little or no resemblance to the original constitution. 



10 Tlie Maryland Constitution of 1851. [388 

The question of a state convention to amend the con- 
stitution of Maryland had long been discussed in various 
parts of the State. Among those who were in favor of 
calling a convention to change the constitution there was 
considerable difference of opinion as to the proper mode 
of procedure. The 59th article of the constitution provided 
for its own amendment by the identical action of two 
successive legislatures, and the Declaration of Rights re- 
ferring to that provision declared: "That this Declaration 
of Rights, or form of government to be established by this 
convention, or any part of either of them, ought not to be 
altered, changed, or abolished by the legislature of this 
State, but in such manner as this convention shall prescribe 
and direct." * 

The question was presented whether it was within the 
constitutional power of the legislature of the State by a 
simple resolution of that body, without first repealing the 
59th article of the constitution, to call a convention to 
alter or amend the constitution and frame a new one. This 
very important question gave rise to considerable discus- 
sion concerning the rights of the majority and of the 
minority, and of the true intent and meaning of these 
clauses of the old constitution. 

Many leading men of the State considered that, without 
the previous repeal of these articles of the constitution the 
very call of a convention would be an open act of revolu- 
tion, and its action null and void, even if sanctioned sub- 
sequently by the popular approval. They considered that 
the General Assembly had no authority either directly to 
call a convention, or to take the vote of the people in 
reference to its call. 3 On the other hand it was argued by 
the advocates of what was then called " conventional re- 
form," that there was, underlying the whole system of state 
government, a principle of acknowledged right in the peo- 



Md. Dec. of Rights, 1776, sec. 42. 

Report of Majority of Committee on Constitution, 1848. 



389] Introduction. 11 

pie to change their constitution in the manner in which a 
majority of the people desired. They claimed that, as the 
authority to change, alter, or abolish their form of govern- 
ment was guaranteed to the people in the Declaration of 
Rights, 3 and that as a convention was neither prohibited 
by the constitution, nor the mode of its organization pre- 
scribed, the General Assembly could constitutionally pro- 
vide for a convention. 

The struggle between these two parties, representing 
roughly the agricultural and the commercial interests of 
the State, extended over a period of some twenty-five 
years. The agitation finally resulted in a call of a consti- 
tutional convention by the General Assembly, known as 
the " Reform Convention of 1850." 

It is the purpose of the writer to trace the growth of the 
idea of " conventional reform " in the State. It includes 
the history of the Convention of 1850 and the character of 
the constitution which it gave to the people of the State 
for their ratification, or rejection. 

3 Md. Const, of 1776, Dec. of Rights, sees. 1, 2, 4. 



CHAPTER I 

CONSTITUTIONAL REFORM AGITATION 

The period of prosperity which succeeded the War of 
1812 was marked by great industrial and economic changes 
throughout the American States. During this time the 
spirit of democracy diffused itself throughout the nation 
and produced many great and important changes in the 
political, social, and economic life of the people. It was a 
period characterized by the erection of schools, the exten- 
sion of the right of suffrage, the construction of various 
works of internal improvement, and wild speculation. With 
this growth of democracy and the idea of popular sov- 
ereignty, there were many changes made in the constitu- 
tions of the several states to correspond with the social 
and economic conditions of the people. These changes 
were, for the most part, effected by constitutional conven- 
tions, elected directly by the people. 

Conventions of such a character, prior to 1850, had been 
held in Massachusetts, New Hampshire, Connecticut, Rhode 
Island, New York, New Jersey, Pennsylvania, Virginia, 
South Carolina, Georgia, and Missouri. These assem- 
blies were called for constitutional purposes by the respec- 
tive state legislatures, under the general legislative power, 
without the special authorization of their constitutions. 1 
During the year of 1850 conventions for the purpose of 
amending or framing new constitutions were held in the 
following states, New Hampshire, Vermont, Michigan, 
Indiana, Ohio, Virginia, and Kentucky. 2 

With such precedents, a large portion of the people of 



1 Jameson's Constitutional Convention, p. 209. 
a Ibid., p. 533 et seq. 



391] Constitutional Reform Agitation. 13 

Maryland demanded of their legislature the right of meet- 
ing in a convention, elected by the people, for the purpose 
of amending their constitution. The legislature, defending 
itself behind the phraseology of the fifty-ninth article of 
the constitution, which prescribed for its own amendment 
by the identical action of two successive legislatures, re- 
sisted for some twenty years every attempt of the friends of 
constitutional reform to secure the calling of a convention. 

Maryland, since the framing of the Constitution of 1776, 
had become a government of the minority. Within this 
period of seventy-five years, the economic and social con- 
ditions of the people had undergone a complete change. 
The city of Baltimore, at that time scarcely more than a 
village, had expanded into a great commercial city, num- 
bering a population of more than a hundred thousand, and 
possessing one-third of the entire wealth of the State. 3 
The center of population had shifted from the Eastern 
Shore and the southern counties to the northern and 
western sections. With these changes there had been no 
corresponding change effected in the constitution. The 
smaller counties, though so unequal to the city of Bal- 
timore and the larger counties in respect to population, 
still had the majority of representatives in the legislature, 
and foreseeing what demands would be made, if a conven- 
tion was called for the purpose of changing the constitu- 
tion by which their ascendency in the legislature was 
secured, were opposed to every project of calling such a 
body. In 1836, when the popular mind was agitated more, 
perhaps, on this question of constitutional reform than in 
any other period of the State's history, the legislature had 
instructed a select committee to inquire into the expediency 
of making it high treason for citizens to conspire against 
the constitution of the State. 4 

The question of constitutional reform by means of a con- 

3 U. S. Census, 1850. 

* Niles Register, 5th series, vol. 52, p. 73. 



14 The Maryland Constitution of 1851. [392 

vention had long been agitated among the people of Mary- 
land, and had been largely mixed with party movements 
and purposes. From 1820 to the Civil War the State was 
a close one in regard to the numerical strength of the 
respective political parties. In general the Whigs were 
stronger. As one party secured the control of the gov- 
ernment, the other agitated the question of " conventional 
reform," as it was alleged, " to ride into office." 

In the movement of 1835-36 for constitutional reform, 
which resulted in the radical amendments of the constitu- 
tion of 1836, a portion of the people of the State were pre- 
pared to effect the proposed amendments without the aid 
of the legislature. Local conventions were held in several 
counties of the State urging the necessity of constitutional 
reform, and for the purpose of selecting delegates to a 
state convention to be held in the city of Baltimore in the 
spring of 1836. The purpose of this convention was to 
bring pressure to bear on the legislature in order to obtain 
the desired changes in the constitution. On the 6th of 
June, 1836, the State Reform Convention, composed of 
representatives from both political parties, assembled in 
Baltimore City. In this convention Cecil, Harford, Balti- 
more, Frederick, Montgomery, and Washington counties, 
and Baltimore City were represented. The convention 
adopted a set of resolutions recommending to the voters of 
the State not to support any candidate for the state legis- 
lature who did not pledge himself to introduce and sup- 
port a bill in the legislature providing for taking the vote 
of the people on the question of reforming the constitution 
of the State. The convention resolved: "That if within 
forty days after the commencement of its session the legis- 
lature shall refuse or neglect to provide for ascertaining the 
sense of the people of the State upon this important ques- 
tion, and for calling a convention as prescribed in the 
previous resolutions, the president of the convention is 
hereby requested forthwith to convene this convention for 
the adoption of such ulterior measures, as may then be 



393] Constitutional Reform Agitation. 15 

deemed expedient, just and proper, as may be best calcu- 
lated, without the aid of the legislature, to ensure the 
accomplishment of the desired results." B 

The legislature, coerced by the state of public feeling, 
and by the course pursued by the nineteen Democratic 
senatorial electors, who refused to qualify and meet the 
twenty-one Whig electors to elect the Senate," made many 
of the desired changes in the constitution. The persistence 
with which the nineteen " reform " electors pursued their 
determination of electing a senate composed of a majority 
in favor of reform, and the illegal and revolutionary man- 
ner in which they endeavored to bring about a convention 
for the purpose of forming a new constitution, produced 
a reaction throughout the State in regard to the calling of 
a convention. Public meetings were held in many of the 
counties, and in the city of Baltimore, condemning the 
course pursued by the " reform " electors as " disorganizing 
and revolutionary." 7 The changes made in the constitu- 
tion by the " reform legislature " of 1836-37 served to 
check for a few years the demand for a constitutional con- 
vention. 

The legislature in the effort to secure to Maryland the 
growing trade of the West, and with the view of developing 
the mineral resources of western Maryland, was induced to 
make use of the capital and credit of the State in the aid 
of various works of internal improvement. In the Decem- 
ber session of the legislature of 1835-36, a measure was 
introduced to grant heavy subsidies to the various pro- 
jects of internal improvement in course of construction. 
This measure was opposed in the legislature, and, with a 
view of enabling the members to learn the sentiments of 
their constituencies on the subject, was postponed until the 
extra session held in May. 



8 Scharf s History of Md., vol. iii, p. 189. See also Niles Register, 
5th series, vol. 52, p. 124. 

8 Steiner's Electoral College, Amer. Hist. Association, Rep. 1895. 
p. 142. 

7 McSherry's History of Maryland, p. 351. 



16 The Maryland Constitution of 185 1. [394 

During this time a convention was held in the city of 
Baltimore at which delegates were present from the states 
interested. The subject of internal improvement was 
thoroughly discussed, and, in the language of Governor 
Lowe, " promises were made which created a wild delusion 
scarcely equalled by the dream of oriental imagination. 
The people were told that instantaneous wealth and power 
were within their grasp; that millions upon millions of 
public debts might safely be incurred as the returns of the 
investment would be certain and immediate; and that, for 
all time thereafter Maryland would be free from even the 
light burden which she had borne from the beginning; 
while from her exhaustless treasury, perennial streams of 
gold should flow bearing upon their bosom into the re- 
motest section of the State the blessing of knowledge and 
refinement." s 

The result was that when the legislature met in extra 
session in May, after a violent opposition, an appropriation 
of eight millions of dollars was made, which together with 
the appropriation already made, and those made two years 
later, involved the State in a debt of over sixteen millions 
of dollars. 9 To meet the interest on this debt and gradually 
absorb the principal, excessive taxes were imposed upon 
the people. Violent opposition to the taxes was manifested 
in several places. In some of the counties anti-tax associa- 
tions were formed declaring their inability to pay the tax. 
In Harford county open resistance to the law was made. 
When the collector of the tax attempted to sell some prop- 
erty on which an execution was levied for the payment of 
the state tax a mob chased him from the place of the sale, 
threatening to kill any one who should venture to bid. 10 
This condition of affairs, and the popular excitement 
caused by the financial embarrassment of the State brought 



Gov. Lowe's Inaugural Address, June 6, 1851. 
McSherry's History of Maryland, p. 368. 
Niles Register, 5th ser., vol. 65, p. 354. 



395] Constitutional Reform Agitation. 17 

the subject of " conventional reform " again into promi- 
nence. 

As the evils of having a constitution so completely in 
the power of the legislature became apparent in the ex- 
travagant use of the State's credit, it was seen that there 
must be some effectual check to prevent the legislature in 
the future from involving the State in financial ruin. Each 
succeeding election found the subject of constitutional re- 
form a topic of increasing excitement and agitation, and 
augmented the number of those who advocated the calling 
of a constitutional convention. The subject came regularly 
before the legislature, and the governors in their messages 
to the General Assembly repeatedly called the attention of 
that body to the necessity of calling a convention. 

The most important alterations in the constitution con- 
templated were : a change in the system of representation in 
the House of Delegates; limitation upon the power of the 
General Assembly to contract debts, or pledge the public 
credit; reduction in governmental expenses; the right to 
elect all local county officers; a reform of the judicial sys- 
tem, and especially a constitutional convention, elected 
directly by the people for the express purpose of framing a 
new constitution. 

The rapid growth of population in the northern and 
western sections of the State, especially in Baltimore City, 
rendered necessary the reapportioning of representatives 
in the General Assembly. The smaller counties of south- 
ern Maryland, and of the Eastern Shore, fearing the pre- 
ponderance of Baltimore City's influence in the legislature, 
fixed an arbitrary and unjust limitation upon her representa- 
tion. Although with a population including considerably 
over one-fourth of the entire population of the State, the 
representation of Baltimore City embraced only about one- 
sixteenth of the total representation in the House of Dele- 
gates. 

Representation in Maryland from colonial days down to 
1836 had been based upon territory. In the year 1659 the 



18 The Maryland Constitution of 1851. [396 

legislature organized into two separate branches, and the 
representation in the " Lower House " was made equal 
among the counties. In 1692 the legislature by law fixed 
the representation from each county at four. This equality 
of representation among the counties remained unaltered 
until the Revolutionary War. 11 

In 1776, when the constitutional convention assembled 
to form a constitution for the State just emerging from 
colonial dependency, the system of equal representation of 
the counties was engrafted upon the constitution, and each 
county was given four delegates, and the town of Baltimore 
and city of Annapolis two each. In 1824 a constitutional 
amendment was passed by the legislature which gave Bal- 
timore City four delegates, so as to place her representa- 
tion on an equality with the counties; but it failed to be 
ratified by the succeeding legislature as the constitution 
required. 12 A similar amendment was made in 1835, but 
failed likewise to be ratified. 13 By the amendment of the 
constitution in 1836, Baltimore City, Baltimore and Fred- 
erick counties were each given five representatives. The 
counties of Cecil, Kent, Queen Anne's, Caroline, Talbot, 
St. Mary's, Charles, Calvert and Allegany three; and the 
remaining counties four each. 

After 1840, representation in the House of Delegates 
from the several counties was to be established on a given 
ratio, having federal numbers as its basis; but Baltimore 
City was limited to equal representation with that of the 
largest county, and no county was to have less than three 
representatives. 14 

In the judicial department of the State a complete reor- 
ganization was urged by the reformers. The appointing of 
the judges by the governor, and the tenure of office for 
good behavior, which was found to be in practice equal to 

11 McMahon's History of Maryland, vol. 1, p. 465. 

12 Act 1824, ch. 115. 

13 Act 1835, ch. 98. 

14 Act 1836, ch. 197, sec. 9. 



397] Constitutional Reform Agitation. 19 

a life tenure, were considered to be, as the phrase went, 
" contrary to the spirit of American institutions." In 1842 
there were in commission twenty-one common law judges 
and a chancellor at an expense for their salaries of $36,000 
per annum. Governor Thomas in his message to the 
General Assembly in the same year declared that there was 
not a state in the whole Union, notwithstanding the fact 
that the population of several of the states was four times 
as great as that of Maryland, where the number of the law 
judges, and the amount of their salaries, were not less 
than those of Maryland. " Besides these objections," Gov- 
ernor Thomas continues, " another is that there are no 
effectual means provided for in the constitution to get rid 
of judges once commissioned as promptly as public interest 
may demand." 

In 1844 the House of Delegates appointed a committee 
to take into consideration the advisability of reducing the 
expenses of the judicial system of the State, and of chang- 
ing the tenure of office. In their report they showed that 
Maryland in 1840 paid for her judiciary the sum of $41,500" 

"The State paid in 1840 in salaries the sum of $36,100, as follows: 

Chancellor $ 3,400 

Twelve associate judges of county courts 16.800 

Five chief judges " " 11,000 

Chief judge of Court of Appeals 2,500 

Chief judge of Baltimore City Criminal Court 2,400 



$36,100 
In addition to the salaries thus paid from the treas- 
ury, the two associate judges of Baltimore City 

Court were paid by the city ($1500 each) 3,000 

The judges of the sixth district (including Baltimore 
and Harford counties) received in addition to their 
salaries, in equal shares the amount of certain 
taxes on proceedings in the court, amounting to 
($800 each) 2,400 



$5,400 

Making a total of $41,500 

See Report of Committee on Grievances and Courts of Justice, 
House Journal, March 5, 1844. 



20 The Maryland Constitution of 1851. [398 

(excluding the salaries of the clerks, etc., etc.), while Massa- 
chusetts, with a population more than twice as great, and 
almost three times the extent of territory, was paying but 
$25,750. The committee recommended the reduction of 
the number of judges; but not of their salaries. 

In addition to the lack of authority claimed by the legis- 
lature, the fear of agitating the question of slavery in the 
State greatly increased the difficulties of securing legislative 
sanction for the call of a constitutional convention. That 
portion of the State which was deeply interested in slavery, 
jealously guarded that institution from both internal and 
external interference. It was feared that, if a convention 
assembled, with full power of framing a new constitution, 
the relation between master and slave might be changed. 
By an amendment of 1836, a provision was engrafted upon 
the constitution, declaring that the relation of master and 
slave in the State should not be abolished unless a bill for 
that purpose should pass by a unanimous vote of both 
branches of the General Assembly, be published three 
months before a new election, and be unanimously con- 
firmed by both branches of the succeeding General As- 
sembly after a new election. In event of slavery being 
abolished within the State, the constitution required full 
compensation to be made to the master for the value of his 
slaves. 18 

The dissension between the North and South arising over 
the settlement of the slavery question in the new territories 
acquired by the Mexican War, and the position of Mary- 
land as a border State, rendered the southern counties 
more determined than ever to place around the institution 
of slavery those safeguards which should render it more 
secure from both internal and external violence. They 
considered that security could best be assured when they 
had a controlling voice in the government of the State. 
This predominant influence in the General Assembly they 



Act 1836, ch. 197, sec. 26. 



399] Constitutional Reform Agitation. 21 

could no longer hope to retain if a convention, whose rep- 
resentation was based upon popular numbers, as was urged 
by Baltimore City, and the larger counties, assembled to 
frame a new constitution. 

The distribution of slave property in Maryland was very 
unequal. The number of slaves was rapidly decreasing in 
the northern and western sections of the State, especially 
in those counties bordering on the free State of Penn- 
sylvania. The proximity to a free State, and the conse- 
quent facilities for escape, rendered slavery almost imprac- 
ticable, and slave property almost worthless. In southern 
Maryland, on the other hand, where agriculture was exten- 
sively carried on, and slave labor productive, the num- 
ber of slaves was constantly increasing. 

The southern planters had the greater part of their cap- 
ital invested in this kind of property. This interest which 
they guarded with so much jealousy, and which formed so 
large a part of their wealth, might be destroyed and the 
wealth of the other part of the State scarcely feel the shock. 
These considerations led the people of the southern coun- 
ties to believe it would be dangerous to them and to their 
interest to give the legislative authority into the hands of 
the people of the north and west, especially to those of 
Baltimore City, who were suspected of holding anti-slavery 
sentiments. This group considered that they were not con- 
cerned in sustaining the rights of the slave-owners. Though 
there were no public manifestations of a wish for the im- 
mediate abolition of slavery in the State, the tendency of 
the times and the action taken by the northern abolition- 
ists were well calculated to increase the apprehensions of 
the slave-owners. This fear of agitating the question of 
slavery in the State was one of the principal causes for the 
legislature's resistance of the demands of the large majority 
of the people for a constitutional convention. 

The financial embarrassment of the State, due to the 
failure of realizing the large returns which had been so 
confidently predicted from the works of internal improve- 



22 The Maryland Constitution of 1851. [400 

ment, increased the agitation for " retrenchment and re- 
form." This agitation arose paramount to all other issues. 
After the Stamp Tax law of 1844 was put in execution, 
which was the most objectionable among the many laws 
passed for the purpose of raising a revenue, and which was 
referred to as the " British Stamp Act," 17 the demands for 
a convention became general over the State. 

On the 27th of August, 1845, a state reform convention, 
composed of delegates from several counties, was held in 
Baltimore City. The convention organized by the selec- 
tion of Colonel Anthony Kimmel, of Frederick county, 
president; and George W. Wilson, secretary. A committee 
of five was appointed for the purpose of drafting a me- 
morial to the legislature in behalf of the convention in 
favor of " conventional reform." It was decided to estab- 
lish a permanent central reform committee, consisting of 
ten members from the city of Baltimore, and five from 
each county, for the purpose of " securing the great object 
of retrenchment and reform." The convention adopted a 
set of resolutions without a dissenting voice. Among 
which were: 

"Resolved, That it be recommended to all the election 
districts in the State to organize reform associations, and 
to appoint corresponding committees, whose duty it shall 
be to report to the central committee all information that 
they may collect with regard to the progress of reform 
principles, and suggest such measures as may be deemed 
advisable to advance the cause in their several districts." 

" Resolved, That it be recommended to the people 
throughout the State to give their votes to no candidate 
for either branch of the legislature who will not pledge 
himself to vote for the call of a convention; the abolition 
of all useless offices, and the retrenchment of all unneces- 
sary expenses." 

" Resolved, That we consider any apprehension that, in 

" Scharf's History of Maryland, vol. iii, p. 212. 



-101 J Constitutional Reform Agitation. 23 

a convention assembled to form a new constitution to be 
submitted to the people for ratification, there is danger 
that the slavery question might be agitated to the preju- 
dice of the quiet and happiness of the public, as altogether 
visionary; and as implying injurious and unfounded doubts 
of the good sense and sound principles of the people; that 
we believe the views of all classes of our citizens on the 
subject are sound, and that the State is more dishonored 
by the intimation of doubts with regard to it, than she 
could be by any agitation of the question that would be 
likely to take place in a convention." " 

When the legislature assembled in December, 1845, a 
bill was introduced in the House which provided for tak- 
ing the vote of the people of the State upon the question 
of calling a constitutional convention. Petitions were re- 
ceived from the several reform organizations of Maryland, 
praying for the passage of the bill. The majority of the 
committee to whom the petition and bill were referred, 
reported that under the present form of government the 
legislature had no power to call a convention, and that 
whatever amendments were necessary, could be made by 
the legislature in the manner prescribed by the constitu- 
tion. The minority of the same committee reported that 
under the Declaration of Rights, and the constitution of 
the State, the legislature did have the power, and it was its 
duty to do so at the present session. After a violent de- 
bate between the members from the smaller counties on 
one side, and the representatives from the larger counties 
and from the city of Baltimore on the other, the bill was 
lost by a tie vote." 

When a new legislature was elected in 1847, the sub- 
ject was again introduced in the House. The committee 
in their report deplored the idea of agitating a question of 
such moment when the State was involved in financial 



18 Niks Register, 5th ser., vol. 68, p. 405. 
10 House Journal, December session, 1845. 



24 The Maryland Constitution of 1851. [402 

embarrassment of the most serious character, and re- 
quested that the whole discussion might be postponed until 
its agitation could exercise no injurious influence upon 
the credit of the State. That " conventional reform " 
would be a violation of the constitution, subversive of the 
interest of the smaller counties; and an abridgment to 
the rights of the minority. 20 

In the gubernatorial canvass of 1847, tne Democratic 
party nominated Philip Francis Thomas of Talbot county 
for governor. Mr. Thomas's opinion on the question of 
a constitutional convention was so well known that he was 
presented as the standard bearer of the " reform party," 
whose motto was " reform, retrenchment, and conven- 
tion." 21 The leaders of the reform movement entreated 
the people to lay aside all party prejudices and act inde- 
pendently of party affiliations in order to secure Mr. Thom- 
as's election. They urged the counties to select their 
tickets for the General Assembly with direct reference to 
this question of " conventional reform," which had become 
paramount to all other questions. The Whigs, as a party 
opposed to the calling of a convention, nominated Mr. 
William Goldsborough for governor in opposition to Mr. 
Thomas. Active canvass of the State was made by both 
parties. Excitement ran high, and invectives were used 
to a considerable extent on both sides. 

The W nigs characterized their opponents as " syco- 
phants " and " parasites," " who pander to the prejudice 
and interest of the larger counties in hope of lucre." 2: 
The Democrats returned the abuses with equally oppro- 
brious terms. Mr. Thomas was elected governor by a ma- 
jority of 709 votes; while the Whigs had the majority in 
both branches of the General Assembly. The friends of 
" conventional reform " were again destined to disappoint- 
ment. The legislature refused to pass an act authorizing 



20 Report of Majority on Constitution, Dec. session, 1847. 

21 Easton Star, July 27, 1847. 22 Easton Star, October 12, 1847. 



403] Constitutional Reform Agitation. 25 

a vote of the people to be taken upon the subject of a con- 
stitutional convention, claiming lack of authority and 
power to enable them to do so. 

These repeated refusals of the legislature to call a con- 
vention; or to take the vote of the people in reference to its 
call, made the reform party more determined than ever to 
secure a convention with, or without, the aid of the legis- 
lature. Accordingly the leaders of the reform party 
throughout the State began early in the spring of 1849 a 
more violent agitation than ever on this all-absorbing 
question of " conventional reform." Local conventions 
were held in several counties, and delegates were selected 
to meet in a state reform convention to be held in the city 
of Baltimore. One of the first of these county conventions 
was held in Westminster, on the 9th of June. In this gath- 
ering addresses were made by several prominent men of 
the county, earnestly recommending prompt and judicious 
action with a view to a thorough reform in the constitution 
of the State by a convention. Among the defects of the 
constitution comprised in the resolutions adopted were:, 
its liability to be changed at the caprice of the legislature; 
the inequality of representation in the Senate; the life ten- 
ure of the judiciary; the lack of constitutional check upon 
the legislature in the expenditures of the public money, 
and as a grievance, that the legislature had failed to meet 
the wishes of the people in granting constitutional reform. 23 

The Worcester county reform convention met at Snow 
Hill on the 10th of July. The complaints made against 
the government of the State in the convention were, ex- 
cessive taxes, both direct and indirect, and no constitu- 
tional check placed upon the legislature in the expenditure 
of public money. The convention selected ten delegates 
to attend the state reform convention to be held in Balti- 
more city. 21 Similar conventions were held in several 

28 Westminster Democrat, June II, 1849. 
24 Baltimore Sun, July 16, 1849. 



26 The Maryland Constitution of 1851. [404 

counties. Resolutions were adopted with the view of ob- 
taining constitutional reform, and delegates were selected 
for the state reform convention. 

In some of the county conventions there was a division 
of opinion as to whether the reforms in the constitution 
should be made by a convention; or by the legislature of 
the State. Generally the southern counties and those of 
the Eastern Shore were opposed to the convention. They 
considered a convention would be dangerous to their rights 
and privileges guaranteed in the constitution. The Demo- 
cratic candidates for the legislature in Frederick county 
issued a card pledging themselves not only to vote for, 
but to use every honorable means to secure the passage of 
a bill in the legislature, providing for the call of a con- 
vention. They declared that " we hold that the 59th ar- 
ticle of the constitution is not, and was not intended to be 
other than a restriction upon the legislature; and that the 
people cannot be curtailed of their sovereignty by consti- 
tutional provisions, nor by legislative enactments." 25 

The delegates from the several county conventions, 
composing the state reform convention, assembled in Bal- 
timore City, July 25, 1849. Represented were Washing- 
ton, Frederick, Carroll, Baltimore, Harford, Caroline, Wor- 
cester, Somerset, Montgomery, Baltimore City and How- 
ard District. 28 The convention was organized by selecting 
Col. John Pickell of Baltimore City president, and Beale 
H. Richardson, Esq., secretary. Two days were consumed 
in discussing the proposed reforms, and the methods most 
likely to bring the legislature to provide for a constitu- 
tional convention. On the second day the following pre- 
amble and resolutions were unanimously adopted: 

" Whereas, The people of Maryland, through their repre- 
sentatives from many of the counties, districts, and city of 
Baltimore, have called this convention together to declare 

25 Baltimore Sun, September 8, 1849. 
20 Baltimore American, July 26, 1849. 



405] Constitutional Reform Agitation. 27 

and express for them their views and determinations in 
relation to the reform of their constitution, and in primary 
meetings have appealed to all men in Maryland, without 
distinction of party to rally now upon this important and 
vital question; and as in most, if not in all of the States 
of this Union, the people by a convention of delegates se- 
lected for their patriotism and wisdom, have assembled, 
and after calm and mature deliberation amended, remod- 
eled, or reformed their old constitutions (however admir- 
able and appropriate at the period of their formation), and 
adapted them to the changed conditions, growing power, 
and the irrepressible progress of more enlarged spirit of 
improvement and the fuller lights which practice and ex- 
perience have bestowed; and as it is desirable that a work 
of such importance, and so allied with the feelings and in- 
terests of the people themselves, should be commenced, 
pursued and completed in a spirit of harmony and union, 
and that all minor questions, whether of Federal or State 
policy should be omitted, to attain for the people the great 
blessings of reform of their constitution, which they alone 
are competent to make, most beneficially to themselves, by 
the means of a convention, which shall be composed of 
delegates directly elected by, and immediately responsible 
to the people of this State." 

" Resolved, That this convention, constituted as it is of 
delegates appointed from the counties, districts and city of 
Baltimore here represented, do, in behalf of the people of 
Maryland whom they represent, declare that it is their 
wish as it is their fixed determination to have a full and 
thorough reform of the constitution of Maryland, by a 
convention, so far as their votes and efforts can attain this 
desired object." 

" Resolved, That the legislature possesses the power, and 
should call a convention at their next session, in obedience 
to the manifest and expressed will and wishes of the people, 
to reform the constitution of the State." 

" Resolved, That in evidence of our sincerity in the prem- 



28 The Maryland Constitution of 1851. [406 

ises, we the members of this convention, mutually pledge 
ourselves, one to the other, that we will cast our vote for 
no candidate for a seat in either branch of the legislature 
of Maryland, who is not fully committed and pledged to 
vote for a bill providing for an immediate call of a con- 
vention to revise the present constitution; and that we 
commend this course to the friends of conventional reform 
of all political parties throughout the State. That this 
convention also recommends the formation of reform com- 
mittees and clubs in every county, district and city in the 
State, for the purpose of urging on the great work of con- 
ventional reform." 2 ' 

These recommendations were vigorously carried out by 
the local reform organizations of the several counties of 
the State, and of the city of Baltimore, in order to secure 
the election of delegates favorable to " conventional re- 
form." The Democratic party of the State was almost 
unanimously in favor of a convention; while the Whigs in 
the different sections were divided in regard to it. The 
Whigs of Carroll county held a convention at Westminster 
on the 18th of August, and took decided grounds for " con- 
ventional reform." They declared that the legislature had 
the power to call a convention of the people, and pledged 
themselves to support no candidate unless he announced 
himself in favor of the convention. 28 The Whig voters of 
Baltimore City in a convention of delegates appointed from 
the different wards of the city adopted similar resolutions. 29 
The Whigs of the southern counties and of the Eastern 
Shore were opposed to a convention. The Rockville, Md., 
Journal, speaking of the convention held there for the 
purpose of selecting delegates to the state reform con- 
vention in Baltimore City, stated, that " No Whigs at- 
tended the meeting, and so far as we know, there is not 
a conventional Whis; reformer in the district" 30 



27 Baltimore American, July 27, 1849. 

28 Baltimore Sun, August 24, 1849. 

29 Baltimore American, August 31, 1849. 

30 Quoted from the Baltimore Sun, July 31, 1849. 



407] Constitutional Reform Agitation, 29 

The result of the election of 1849, g ave the Whigs a 
majority of twelve in the House, and nine in the Senate. 
Governor Thomas in his message to the General Assembly, 
January 1, 1850, plainly told that body that the large ma- 
jority of the people of the State were in favor of a conven- 
tion, and unless the wishes of the people in that behalf were 
gratified the sanction of the legislature would not much 
longer be invoked. 

The subject of the constitution was one of the first to be 
considered by the House. A select committee was ap- 
pointed to inquire into the expediency of calling a conven- 
tion, and to provide a bill to carry it into effect. Peti- 
tions were received from various parts of the State in favor 
of a convention. On the 15th of January, Mr. Biser of 
Frederick county, who was known in the Convention of 
1850 as the " Father of reform," made a majority report 
favorable to a convention. The report was signed by only 
three of the seven members of the committee. The com- 
mittee admitted that the constitution, as it then stood pro- 
vided that the legislature had th Q . power to change the 
constitution of the State; but denied that that power was 
exclusively in the hands of the legislature. They asserted 
that the majority of the people also had the power to 
amend or abolish their constitution when they so desired. 
The committee showed that by the report of a similar com- 
mittee in 1847, there were placed upon the records of the 
legislature, views and arguments, which, if historically or 
legally correct, would leave no other remedy to the ma- 
jority of the people, should they demand a convention, than 
a revolution. 

The report claimed that the legislature had a precedent 
in taking the vote of the people upon the question of in- 
voking a convention by the act of 1846, which submitted 
to the vote of the people of the State the proposed amend- 
ment of the constitution, requiring in the future biennial 
instead of annual sessions of the legislature, and which was 
sustained by a majority of the voters. The committee 



30 The Maryland Constitution of 1851. [408 

considered that there was ample reason for asserting that 
the vote could be constitutionally taken upon the propriety 
of holding a convention, and reported a bill to that effect, 
with provisions to put it in execution. 31 

On the 16th of January, Mr. Causin of Anne Arundel 
county, from the same committee submitted a minority re- 
port, denying the constitutional authority to submit to the 
vote of the people a proposition relative to a call of a con- 
vention. The report was also accompanied by a bill, which 
provided for the repeal of the 42nd article of the Declara- 
tion of Rights, 32 and the 59th article of the constitution. 3 * 
If the act for the repeal of these articles of the constitution 
should be confirmed by the succeeding legislature, then 
it would be lawful for the legislature to call a convention 
of the people, to reform or make a new constitution. 34 

To secure the sanction of the legislature for a conven- 
tion, it was seen that a compromise must be made between 
the different sections of the State. Baltimore City and 
the larger counties maintained that representation in the 
convention should be apportioned among the counties and 
city of Baltimore according to population. The Eastern 
Shore and the smaller counties considered that all neces- 
sary changes in the constitution could be made by the 
legislature, and that their rights and interest would be put 
to hazard by a convention, having population as the basis 
of representation. They required, if such a convention 
should be called, a vote of two-thirds of the convention to 
pass any constitutional provision touching the interest of 
the people of the Eastern Shore, 35 as guaranteed to them 
by the constitution. 

The radical reformers were unwilling to consent to the 
delay and uncertainty of the succeeding legislature con- 
firming the amendments proposed by the report of the mi- 

31 Report of Majority on Constitution, January 15, 1850. 

32 See p. 10. M Ibid. 

34 Report of Minority on Constitution, January 26, 1850. 

35 House Journal, January 7, 1850. 



409] Constitutional Reform Agitation. 31 

nority of the committee. They demanded the immediate 
enactment of a law authorizing the vote of the people to 
be taken upon the question of a convention. After con- 
siderable opposition, the bill reported by the majority of 
the committee, but slightly amended, was passed by the 
House by a vote of forty-three to thirty-five; and the 
Senate without amendment or debate, except to a question 
of postponement, passed the bill by a vote of eleven to 
seven. The representatives from the following counties 
voted unanimously to submit the bill to popular vote: Balti- 
more, Harford, Cecil, Talbot, Frederick, Washington, Al- 
legany, Carroll and Baltimore City. The counties of St. 
Mary's, Calvert, Charles, Dorchester, Queen Anne's, Wor- 
cester and Kent voted unanimously against the bill. The 
remaining counties were divided in their vote. 30 The Bal- 
timore Sun of May 7, 1850, in an editorial states " That it 
was not until the popular sentiment turned very decidedly 
towards a convention independent of the legislature, that 
the convention was granted; and so decisively had this 
purpose taken hold of the popular mind that there was 
some disappointment when the Senate passed the bill." 

The convention was to have complete power of framing 
a new constitution, except that it was prohibited from 
changing the relation of master and slave as then estab- 
lished and sanctioned by the constitution. The act also 
provided that the new constitution should be submitted to 
the people for their ratification or rejection on the first 
Wednesday in June, 185 1. The representation in the con- 
vention to be the same as each county and the city of Bal- 
timore then had in both branches of the legislature." 

The reform party did not rest with their success in the 
legislature, but endeavored to secure the adoption of the 
measure by the people. In Baltimore City a large meeting 
was held without distinction of party on the 18th of April. 
Addresses were made by several prominent reformers, 

36 House Journal, February 16, 1850. " Act 1849, ch. 346. 



32 The Maryland Constitution of 1851. [410 

urging the people to cast their ballots for the convention. 
The banners displayed bore in large letters the motto: 
4,1 A long pull, a short pull, and a pull together." 38 Similar 
meetings were held in several parts of the State. 

The vote in regard to a convention was taken on the 8th 
of May. The ballots were marked thus — " for a conven- 
tion," and " against a convention." A majority of 18,833 
votes were cast in the State for a convention. In Balti- 
more City the aggregate vote cast was very small, only 
some 8500 voters went to the polls, and of these only 376 
voted against the convention. The following counties 
voted against the proposition: Prince George's, Dorches- 
ter, Charles and St. Mary's. Somerset county voted for a 
convention by a majority of six votes. 39 The election for 
delegates was held on the 4th of September, and on the 4th 
of November, 1850, the convention assembled in Annapolis. 

The fact that the articles of the constitution which gave 
to the legislature the power to propose and make amend- 
ments were not repealed, gives the convention a revolu- 
tionary or extra-constitutional character. 

ss Baltimore American, April 19, 1850. 39 See Appendix, p. 85. 



CHAPTER II 
THE CONVENTION 

The year 1850 was one of profound excitement through- 
out the United States. The slavery question was now 
agitating the country from one end to the other. The 
dispute about freedom in the new territories acquired by 
the Mexican War aroused sectional animosities and seces- 
sion threatened. The article of the constitution and the 
laws of Congress providing for the recapture of fugitive 
slaves had been repeatedly disregarded, or set at defiance. 

The government of the State of Maryland at that time 
was in the hands of the Whigs, who represented the agri- 
cultural and conservative element of the people. Although 
the Whigs were in the minority in respect to popular num- 
bers, they were enabled, by' the system of representation 
recognized by the constitution of the State, to have a ma- 
jority in the General Assembly. 

Representing the agricultural interest of the State, the 
Whigs, as a political party, were opposed to a constitu- 
tional convention. They were reluctant to surrender any 
portion of their relative influence in the state legislature 
to the growing population of the northern and western 
sections of the State, especially to the rapidly increasing 
population of Baltimore City. Self-protection, they con- 
sidered, demanded the retention of the state government 
in their own hands. 

It was not until revolution threatened the State that the 
counties of southern Maryland and of the Eastern Shore, 
through their representatives in the General Assembly, 
consented to submit to the voters of the State a proposi- 
tion relative to a call of a constitutional convention. 
29 



34 The Maryland Constitution of 1851. [412 

The peculiar geographical features of Maryland are such 
that the State is divided into sections whose interests have 
always been regarded as opposed to each other. Sectional 
jealousy was particularly strong before the Civil War. 
The Eastern Shore and southern Maryland had some 
interests in common; both were agricultural districts, and 
both were deeply interested in the maintenance of the in- 
stitution of slavery within the State. The number of 
slaves was increasing in the southern counties of both the 
iEastern and Western Shore. The number of slaves in 
three of the counties: Prince George's, Calvert and 
Charles, exceeded the number of whites. 1 

On the Western Shore the city of Baltimore was clam- 
oring for greater political power. The city's representa- 
tion in the General Assembly of the State was limited to 
equal representation with that of the largest county, 
though with a population more than four times as great. 
The rapid growth of population of Baltimore City, and 
her great commercial expansion; while producing a sense 
of pride among the inhabitants of the agricultural districts, 
filled them with alarm for their own political influence in 
the government of the State, and thereby the control over 
the institution of slavery. This alarm was greatly in- 
creased by the relative decrease of slave population in the 
northern and western sections of the State. 

The commercial interest of Baltimore City was not 
deeply concerned in the maintenance of slavery in the 
State, because the employment of slaves in commercial 
pursuits was not considered to be profitable. 

The sectional jealousy of the two Shores was greatly in- 
creased by the system of internal improvement, which was 
financially aided by the State. For advancing its commer- 
cial interest, the small State of Maryland had become in- 
debted to the extent of over sixteen millions of dollars. 
The citizens of Baltimore City were the real promoters 

1 U. S. Census, 1850. 



413] The Convention. 35 

of the plan of state aid to canals and railroads; in this 
they were supported by the people of western Maryland 
who were interested in finding a market for their agricul- 
tural and mineral products. 

The failure of the works of internal improvement to pay 
interest on the bonds guaranteed and issued by the State, 
compelled the government to resort to heavy taxation. 
The people of the Eastern Shore bitterly complained of 
being heavily taxed for the benefit of the Western Shore 
and Baltimore City. Intersected by rivers and creeks, the 
Eastern Shore did not require works of internal improve- 
ment to develop her resources. The people of the East- 
ern Shore regarded the Chesapeake and Ohio canal, and 
the Baltimore and Ohio railroad as injurious rather than 
beneficial to her agricultural interest. They brought into 
competition with her products the products of the great 
West. 

It was amid these political and economic conflicts of in- 
terest within the State, and amid the agitation concerning 
slavery in the whole country, that the Maryland consti- 
tutional convention assembled in Annapolis on the 4th of 
November, 1850. 

In the convention were many of the leading men of the 
State; men of wide political knowledge and experience. 
Among the more prominent members and those who took 
a leading part in the debates were ex-Governors Samuel 
Sprigg and William Grason. Hon. T. H. Hicks, after- 
ward war governor of Maryland, through whose efforts 
Maryland was prevented from seceding from the Union, 
United States senators Edward Lloyd, of Talbot county, 
William D. Merrick, of Charles county, and David Stew- 
art of Baltimore City. Others who were prominent in the 
convention were Hon. John W. Crisfield, of Somerset 
county, a representative in the Thirtieth and the Thirty- 
seventh Congress of the United States, and one of the 
ablest lawyers of the State. Alexander Randall, of Anne 
Arundel county, a representative in the Twenty-seventh 



36 The Maryland Constitution of 1851. [414 

Congress, Charles J. M. Gwinn, of Baltimore City, a prom- 
inent lawyer of the State, and several others of distin- 
guished ability. The total number of members of the con- 
vention was one hundred and three. Politically there 
were fifty-five Whigs and forty-eight Democrats. 

The convention was temporarily organized by the call- 
ing of Col. Benjamin C. Howard, of Baltimore county, to 
the chair, and James L. Ridgely, of the same county, was 
appointed secretary. 

Elements of discord abounded in the convention. Party 
feeling was very strong, and perhaps to this cause may 
be attributed in a great measure the difficulties and dif- 
ferences which were encountered in the progress of the 
session. An entire week was consumed before the con- 
vention was able permanently to organize, owing to polit- 
ical division and sectional jealousy. 

The candidates for the presidency of the convention were 
Hon. John G. Chapman, of Charles county, Whig; Col. 
Benjamin C. Howard, Democrat; and William C. John- 
son, of Frederick county, independent Whig. After eight 
days of various attempts to elect a president, during which 
time caucuses were held by both parties to instruct their 
members as to what compromises would be accepted and 
what required, Mr. Chapman, the Whig candidate was 
chosen permanent president. He was a conservative re- 
former, and had voted against the call of the convention. 

On taking the chair Mr. Chapman said that venerating 
as he always had done, the characters of those wise and 
patriotic men, who in 1776 formed the first republican con- 
stitution of the State, he had witnessed with a distrust, 
which he never desired to conceal, the efforts that had 
been made to change its provisions. 2 George G. Brewer, 
of Annapolis, was made secretary to the convention. 

Nineteen standing committees were appointed by the 
president to prepare and bring business before the con- 

3 Baltimore American, November 16, 1850. 



415 J The Convention. 37 

vention. The most important committee was considered 
to be that on representation. Other committees to which 
great importance was attached were those on the legis- 
lative department; the committee on the judiciary, and the 
committee on future amendments. The president of the 
convention in appointing the various committees had 
strict regard to the different sections of the State. 

Early in its session the convention had appointed a se- 
lect committee to draw up resolutions in reference to the 
recent compromise measures adopted by the United States 
Congress. On the ioth of December, 1850, the select 
committee reported a series of resolutions, which were 
unanimously adopted. 

These resolutions declared that the constitution of the 
United States had accomplished all the objects — civil and 
political — which its most sanguine framers and friends an- 
ticipated. That a proper appreciation of the blessings 
which that instrument had brought to the country would 
lead every state in the Union to adopt all measures nec- 
essary to give complete effect to all provisions of the 
constitution, or laws of Congress intended for the protec- 
tion of any portion of the Union. 

They declared that the several acts of Congress, namely, 
those relating to the admission of California as a free 
state; to the territorial governments of Utah and New 
Mexico; to the prohibition of slave trade in the District 
of Columbia, and to the reclamation of fugitives from 
labor, did not, to the extent they desired, meet the just 
demands of the South. But in order to heal the public agi- 
tation and perpetuate the Union, the acts of compromise 
received their acquiescence. They declared that of the 
series of laws passed by Congress that intended to insure 
the restoration of fugitives from labor was the only one 
professing to protect the peculiar rights and institution of 
the Southern states from the " mischievous hostility of a 
wicked fanaticism " in the North. The fugitive slave law 
was but a " tardy and meagre measure of compliance with 



38 The Maryland Constitution of 1851. [416 

the clear, explicit and imperative injunction of the con- 
stitution." The provisions of that law could not be vio- 
lated or deliberately evaded without leading to a dissolu- 
tion of the Union." 3 

Copies of the above resolutions were sent to the execu- 
tives of several states. Governor Collier of Alabama in 
acknowledging- the receipt of the resolutions said that 
Maryland had spoken frankly and patriotically, and that 
the South would be true to the Union so long as the " sa- 
cred charter of our rights was respected and honored, and 
the general government manifested a willingness and 
ability to enforce the law made for the protection of the 
South." 4 

Similar resolutions were adopted by the citizens of 
Frederick county. These resolutions declared emphatic- 
ally that the fate of the Union depended upon the future 
conduct of the North. 5 The convention expressed also its 
great admiration for the eminent statesmen " who, rising 
above the influence of party and sectional considerations, 
periled their well-earned reputations for the enduring wel- 
fare of their country." 

On the 25th of March, 1851, the convention entertained 
at dinner the Hon. Daniel Webster. Mr. Webster took a 
leading part in defense of the compromise measures in the 
United States Senate, 6 and was honored by the people of 
Maryland as " the ablest defender of the Union." Amid 
speech-making and toast drinking the attachment and loy- 
alty of Maryland to the Union was proclaimed. 7 

The subject of apportioning representation in the Gen- 
eral Assembly among the several counties and Baltimore 



3 See Resolutions, Baltimore American, December 12, 1850. 

4 Debates of Convention, vol. i, p. 384. 

5 See Baltimore American, November 18, 1850. 

8 See Webster's Speech, 7th March, 1850; Webster's Works, vol. 

5, p. 324- 

7 See Pamphlet, " Dinner given to Hon. Daniel Webster by 
the Md. Reform Convention, 1850." 



417] The Convention. 39 

City was one of the first to be considered by the conven- 
tion, and one of the last to be disposed of. To many this 
took precedence over all issues before the convention. It 
was the most difficult and embarrassing- question upon 
which that assembly was called to act. The issue was 
between the smaller counties of southern Maryland and 
of the Eastern Shore on the one hand, and Baltimore City 
and the larger counties which claimed representation ac- 
cording to population on the other. The smaller counties 
were generally willing to give representation according to 
population to the counties, but desired to restrict the rep- 
resentation of Baltimore City to equal representation with 
that of the largest county, or giving the city the same rep- 
resentation as was agreed to in 1836. The city of Balti- 
more and the counties which were prominent in wealth 
and population protested against the injustice of the 
smaller counties controlling the state legislature. The 
smaller counties having a majority in the legislature under 
the old constitution insisted that they would never sur- 
render the rights and privileges which that constitution 
conferred upon them. Under the constitution of 1776 the 
people of the Eastern Shore enjoyed certain privileges, 
among which was that no constitutional amendment could 
be made touching the interest of the Eastern Shore with- 
out a two-thirds vote of all the members of two successive 
General Assemblies, requiring only a majority vote for the 
rest of the State. 8 

This provision was the result of a compromise between 
the Eastern and Western Shores at the time of the forma- 
tion of the original constitution. The smaller counties of 
the Eastern Shore and southern Maryland having the ma- 
jority in the legislature practically held control over the 
institution of slavery and the public treasury. This power 
they were determined not to yield to the larger counties 
and especially to the people of Baltimore City. 



8 Constitution 1776, art. 59. 



40 The Maryland Constitution of 1851. [418 

Under these circumstances it was seen that a comprom- 
ise was necessary between the contending parties and their 
interests to secure a new constitution. The act itself, by 
which the convention was called, was a virtual acknowl- 
edgment that the constitution to be framed should be a 
work of compromise on the subject of representation, 
since it fixed the representation in the convention. Each 
county and Baltimore City was given the same number of 
representatives as they then had in both branches of the 
General Assembly. 

The majority of the members were hampered in making 
compromises by the instructions given by their constitu- 
encies. These instructions were generally of such a char- 
acter as to give to certain parts of the State some superior 
advantage, or prevent a reduction of their relative in- 
fluence in the future legislatures. 

Closely connected with the subject of representation was 
that of slavery, the only subject upon which the conven- 
tion was unanimously agreed. Mr. Presstman, of Balti- 
more City, had anticipated the representatives of the coun- 
ties more particularly interested in slavery, and submitted 
a proposition providing that the legislature should have 
no power to abolish the relation between master and slave 
as it then existed in the State, 9 and that the committee on 
the legislative department be instructed to report a bill 
to that effect. 10 This was regarded as a decided advance in 
the way of conciliation on the subject of representation, 
since it came from the part of the State where no great 
interest in slavery was felt; and a reciprocal concession was 
expected in return from the southern counties in regard 
to representation. 

The southern counties were considering not only the 
immediate protection of slavery within the State, but the 
future, when the institution of slavery would be practically 
confined to southern Maryland. At the present rate of 



See chap, i, p. 20. 1(1 Debates, vol. i, p. 113. 



419] The Convention. 41 

decrease they considered that it would be only a few years 
until slavery would have entirely disappeared from the 
northern and western counties. They refused to com- 
promise in any manner that would lessen their influence in 
the General Assembly. 

The committee on representation consisted of nine mem- 
bers, representing Charles, Baltimore, Kent, Carroll, Tal- 
bot, Somerset, Washington, Anne Arundel counties and 
Baltimore City. The committee was unable to agree upon 
any plan of apportionment. 

On the nth of December, Mr. Merrick, of Charles 
county, chairman of the committee on representation made 
a negative report as follows: 

(i) "Resolved, That it is expedient to regard federal 
numbers in finding the estimates and basis of representa- 
tion in the House of Delegates." 

(2) " Resolved, That it is inexpedient to adopt a prin- 
ciple of representation based exclusively upon popular 
numbers in organizing the House of Delegates or the 
Senate." u 

Several of the members of the convention desired the 
whole subject of representation to be postponed until the 
convention had made further progress in making the con- 
stitution. They considered the question of representation 
was one to which more importance was attached than to 
any other upon which the convention would be called to 
act. 

The delegates from Baltimore City consisting of Messrs. 
Presstman, Gwinn, Brent, Stewart, Sherwood, and Ware 
were opposed to referring the subject again to the com- 
mittee in any form, and desired the whole subject of repre- 
sentation to be discussed in the convention as a whole, 
without the intervention of the committee. After several 
attempts to recommit, the whole subject was laid upon the 
table. 12 



11 Debates, vol. i, p. 106. The term " federal numbers " meant 
the congressional ratio of 1 free to 3/5 slave population. 

12 Debates, vol. i, p. 137. 



42 The Maryland Constitution of 1851. [420 

The first part of the report that federal numbers should 
be used in finding the basis of representation was not 
approved by the majority of the convention. Federal 
numbers had been recognized in Maryland for the first 
time, in an amendment of the constitution in 1836. It was 
the result of a compromise based upon federal numbers 
and territory. According to this one senator was elected 
from each county and Baltimore City, while representatives 
followed the federal ratio of population. 

If federal numbers had been taken as a basis for repre- 
sentation, it would have deprived southern Maryland of 
a large part of her population in representation. In Bal- 
timore City there were less than three thousand slaves, 
while her free-negro class numbered nearly twenty-five 
thousand. 

As free negroes were to be counted as whites, though 
having no political rights, federal numbers would have re- 
duced the southern counties' representation unduly. In 
Prince George's and Charles counties the slave popula- 
tion exceeded the number of whites and free negroes com- 
bined. In addition Baltimore City had a large alien popu- 
lation, which, on the basis of federal numbers, would be 
made equal to citizens in the counties, where the popula- 
tion almost exclusively consisted either of native-born, or 
of naturalized citizens. 

Federal numbers in apportioning representation in the 
Congress of the United States was the result of a com- 
promise between the slave and the non-slave states. It 
provided that taxation and representation should be appor- 
tioned equally. The slave-holding states received as a 
compensation for the non-enumeration of a portion of their 
slaves in the apportionment of representation, an exemp- 
tion to the same extent from taxation. 

In Maryland there was no such compensation or equiva- 
lent exemption proposed, or contemplated. The effect of 
adopting federal numbers as a basis for representation 
would have been to throw the loss occasioned by slavery, 



421] The Convention. 43 

on the particular portion of the State in which slaves were 
most numerous. 

In regard to the second part of the report that popula- 
tion alone could not be taken as the basis of representa- 
tion in the House of Delegates there was a division in the 
convention. There was both a sectional and a political 
interest against recognizing population as the basis of 
representation; sectional, because it would have thrown 
the smaller counties in the minority in future legislatures, 
and political, because it would have given the State to the 
Democrats. This latter event the Whigs, who were in 
the majority, were determined to prevent. 

There were two views held in the convention in regard 
to representation between which a compromise had to be 
made. The first was in favor of a system of representa- 
tion on a population basis for the whole State. The sec- 
ond favored representation on the basis of population for 
the counties ; but restricted Baltimore City to a represen- 
tation equal to that of the largest county. 

In some of the southern counties during the contest for 
seats in the convention, the question of secession was dis- 
cussed. 13 It was decided in event of population being 
taken as the basis of representation in the General As- 
sembly of the State, that there should be engrafted on the 
new constitution a provision, which would enable the 
Eastern Shore and southern Maryland to secede peaceably 
from the State, and unite with Delaware or Virginia. The 
time of secession was to take place whenever the interest 
of these sections seemed to require it. 

For this purpose Mr. T. H. Hicks, afterwards governor 
of Maryland, offered an amendment to the Declaration of 
Rights providing, " That any portion of the people of this 
State have the right to secede, and unite themselves and 
the territory occupied by them to such adjoining State as 
they shall elect." u One of the members of the conven- 



Debates, vol. i, p. 156. u Debates, vol. i, p. 150. 



44 The Maryland Constitution of 1851. [422 

tion humorously offered an amendment to the above by 
adding, " provided we can get any State to accept us." 

This attempt of the Eastern Shore to secede from the 
Western Shore was not a new feature in the history of 
Maryland. The prevalence of shore jealousy was very 
strong in the convention which framed the constitution of 
1776. A proposition was then made in that convention to 
insert an article in the Declaration of Rights, acknowledg- 
ing the right of either shore to separate from the other 
whenever their interest and happiness so required. This 
proposition in the convention of 1776 received the support 
of sixteen out of the twenty-one members from the Eastern 
Shore. 15 

The amendment offered by Mr. Hicks was lost by a vote 
of fifty-one to twenty-seven. 16 It received the support of 
fifteen out of the twenty-seven votes cast from the Eastern 
Shore. The counties of Dorchester and Worcester voted 
unanimously for secession. Queen Anne's county cast a 
solid vote against it, and the other counties of the Eastern 
Shore were divided in their vote. 17 Mr. Hicks made a sec- 
ond unsuccessful attempt to have his amendment adopted 
when the convention was considering future amendments. 18 

It was the deep interest in the maintenance of slavery 
in the southern counties of both shores that caused those 
sections of the State to view with alarm the demands of 
Baltimore City and western Maryland for representation 
based on population. 

A provision was placed in the constitution intended to 
remove the apprehensions of the southern counties in re- 
gard to the protection of slave property, by prohibiting 

15 McMahon's History of Md., p. 466. 
10 Debates, vol. i, p. 156. 

17 Mr. Hicks, a number of years later, declared that he had intro- 
duced the resolutions, not to declare an " inherent right," but to 
give the people an opportunity to vote on the question. [See 
Radcliffe: Governor Hicks of Maryland and the Civil War, p. 13, 
note.] 

18 Debates, vol. ii, p. 851. 



423] The Convention. 45 

the legislature from altering the relation of master and 
slave as then existed in the State. The representatives 
from the southern counties had no faith in a constitution, 
especially since the old constitution had been abolished by 
a revolutionary act. 19 They did not consider themselves se- 
cure unless they had the controlling influence in the gov- 
ernment of the State in their own hands. 

When the final vote was taken on the popular basis of 
representation for the whole State, only seventeen votes 
were cast in its favor, and sixty against it. 20 Baltimore 
City and Frederick county cast a solid vote for the popular 
basis; Baltimore and Carroll counties three each, and Har- 
ford county one. The remaining counties cast a solid 
vote against the proposal. 

The committee after a long deliberation and comparison 
of views, found it impossible to concur by a majority in 
any plan of representation. On the 15th of February, Mr. 
Merrick, with the permission of the committee, submitted 
a plan for consideration. The report was not one in 
which the committee concurred. It was for the purpose 
of bringing the subject before the convention that the 
committee authorized the report to be made. 

The plan submitted by Mr. Merrick gave Baltimore 
City two more delegates than the largest county in the 
House of Delegates; the members to be chosen annually. 
The Senate was to be composed of twenty-two senators 
elected for a term of four years. One senator from each 
county, and two from Baltimore City; but the city was to 
be divided into two senatorial districts and nine electoral 
districts, for the purpose of electing members to the House 
of Delegates. Each district was to elect one member. 13 
The proposition to district Baltimore City, as has been 
done since, was advocated by the Whig voters of the city, 
who were in the minority. 22 

10 See ch. i, p. 32. 

20 Debates, vol. i, p. 122. 

21 Debates, vol. i, p. 285. 

22 Baltimore American, November 20, 1850. 



46 The Maryland Constitution of 1851. [424 

There were two minority reports made from the com- 
mittee on representation; one by Mr. Lloyd, of Talbot 
county (a Democratic district), giving to Baltimore City 
five more delegates than the largest county and equal rep- 
resentation in the Senate. 23 The second minority report 
submitted by Mr. Chambers, of Kent county, was the same 
plan adopted in 1836 in all respects, except that it adopted 
the aggregate population as a basis instead of federal 
numbers. 24 All of these plans for a basis of representation 
were rejected by the convention. 

There were several compromises offered, but none upon 
which the convention could agree. Baltimore City was 
willing to compromise on a territorial basis in the Senate; 
but claimed popular representation in the House of Dele- 
gates. They considered this would be a sufficient check 
to prevent any legislation detrimental to the counties. 

The plan of representation, which received the greatest 
attention and support was known as the " Washington 
county compromise." It was introduced by Mr. Fiery of 
that county. The plan was based on federal numbers. If 
adopted, it would have given Baltimore City four more 
delegates than the largest county. 25 This compromise was 
rejected, afterwards reconsidered, and finally lost by a vote 
of forty-seven to forty-six. 26 

The question of apportioning representation was finally 
disposed of April 1. The plan was introduced by ex-Gov- 
ernor Grason, of Queen Anne's county, 27 subsequently 
amended so as to give Baltimore City one additional rep- 
resentative, and finally adopted by a vote of forty-three to 
forty. 28 Representation in the House of Delegates was ap- 
portioned among the counties on a population basis; Balti- 
more City was limited in the House to four more delegates 
than the most populous county. No county was to have 



23 Debates, vol. i, p. 286. 2 * Debates, vol. i, p. 287. 

25 Debates, vol. ii, p. 19. 20 Debates, vol. ii, p. 170. 

27 Debates, vol. ii, p. 197. 2S Debates, vol. ii, p. 199. 



425] The Convention. 47 

less than two members, and the whole number of delegates 
never to exceed eighty. 

In the Senate the method of federal representation was 
adopted; one senator from each county and the city of 
Baltimore elected by the people. This increased the rep- 
resentation of Baltimore City in the General Assembly 
from one-sixteenth to one-eighth of the total representa- 
tion of the State. 29 

Among the reforms brought forward, that of the judi- 
cial system of the State held a prominent place. The ju- 
diciary had been but slightly changed since the framing of 
the original constitution. In 1776 a court of appeals was 
established, whose judgment was final in all cases of appeal 
from the county courts, and courts of chancery. Orig- 
inally there was also a court of admiralty, which court was 
abolished at the time of the adoption of the United States 
Constitution in 1789. In 1804 the State was divided into 
six judicial districts. For each district three judges were 
appointed by the governor with the approval of the Sen- 
ate. 

Reform in the judiciary had been one of the prominent 
features of the earlier agitation" of 1836; but no change 
was made at that time. The tenure during good behavior, 
and the appointing of the judges by the governor, together 
with the extraordinary expense attendant upon the ad- 
ministration of justice were the principal grounds of com- 
plaint. The annual cost incurred by the State for the 
maintenance of the judicial system in salaries alone ex- 
ceeded by several thousand dollars that of many other 
states of the Union, far more populous and of much greater 
territorial extent. 30 

A reduction in the number of judges and a limitation on 
the income of county clerks, registers of wills, and other 
officers it was thought, would afford relief to the taxpay- 
ers of the State, and contribute toward payment of the 

20 See ch. iii, p. 75- 3 ° See ch. i, p. 19. 



48 The Maryland Constitution of 1851. [426 

public debt. It was also claimed that the appointive power 
was abused and that the governor and Senate were in- 
fluenced more by political considerations than by public 
interest. 

The majority of the committee on the judicial depart- 
ment, Mr. Bowie, of Prince George's county, chairman, 
submitted a report providing for an elective judiciary. 
The term of office was to be ten years, and the judges re- 
eligible. The State was to be divided into three judicial 
districts; one on the Eastern and two on the Western 
Shore. The report also provided for the election by pop- 
ular vote of all clerks, registers of will, justices of the 
peace, etc. 31 All of these officers heretofore were ap- 
pointed by the governor. 

Mr. Bowie, in presenting the report of the majority said 
that in his judgment, the reform in the judicial system of 
the State was the most important question that could be 
submitted to the convention. He claimed that southern 
Maryland and the Eastern Shore would have never con- 
sented to the calling of that convention, save for the reform 
desired in the judiciary, and for the reduction in govern- 
mental expenses. 32 

On the 18th of March, Mr. Crisfield, of Somerset county, 
one of the most distinguished lawyers of the State, from 
the minority of the same committee, submitted a report, 
providing for an appointive judiciary; with a tenure for 
good behavior. The State was to be divided into eight 
judicial districts. The estimate of the probable cost was 
placed at sixty-three thousand dollars per annum. 
Twenty-nine thousand dollars more than the estimate of 
the majority's report. 83 

The contest in the judicial organization was over an 
elective and an appointive judiciary. Public sentiment in 
the State was strongly in favor of the former, though some 

31 Debates, vol. i, p. 239. 

32 Debates, vol. ii, p. 460. M Debates, vol. i, p. 516-519. 



427] The Convention. 49 

of the counties, as Harford, had instructed their delega- 
tion to vote for the appointive system. 34 

The general public desired to see a system which, while 
it gave- to the judges a term sufficient to guarantee their 
independence would at the same time permit their work 
to be reviewed by the people, or as one member of the 
convention expressed it, " an independent judge dependent 
upon the people." It cannot be said that the change to the 
elective system satisfied the court, or the bar. It was in- 
cidental to the transformation going on in the other de- 
partments. Democracy rejected the appointive system. 
Every official must be chosen by popular vote. 

The old appointive system found its ablest defender in 
Judge Chambers, of Kent county. He made a strong ap- 
peal for the independence of the judiciary as a department 
of the government, and as necessary to that independence, 
the tenure during good behavior. Judge Chambers at- 
tempted to show that there was as much reason for making 
the judges independent of the people in the United States 
as there was in England for making the judges independ- 
ent of the crown. In his autobiography Mr. Chambers said 
that he claimed the merit of being the most ardent oppon- 
ent of the " novel and unwise " system of constituting the 
judiciary by a popular election of judges. 33 

The convention rejected the appointive system by a vote 
of forty-nine to twenty-three, 38 also by a vote of more than 
three to one the convention rejected an amendment offered 
by Mr. Phelps, of Dorchester county, for the election ot 
the judges by joint ballot of the two Houses of the Gen- 
eral Assembly. 37 

The bill as originally reported by the majority, but 
slightly amended, was adopted. The State was divided 
into four judicial districts instead of three as the original 

34 Baltimore Sun, August 4, 1850. 

35 See autobiography in Scharf's Biographical Cyclopedia of 
Representative Men in Md. and D. C. 

38 Debates, vol. ii, p. 492. 37 Debates, vol. ii, p. 487- 



50 The Maryland Constitution of 1851. [428 

report provided. Baltimore City embraced one district, 
and the counties of the Eastern Shore a second. 

The convention found great difficulty in determining 
whether the future sessions of the General Assembly should 
be held annually or biennially. Prior to 1846 the legisla- 
ture had held annual sessions. In that year the General 
Assembly referred the question of biennial sessions to the 
voters of the State. The referendum was held on the gen- 
eral election day in 1846. Each voter was asked by the 
judges of the election whether he was in favor of biennial 
or annual sessions. Biennial sessions were declared for 
by a majority of some five thousand voters. 

The biennial bill had been passed as an anti-reform meas- 
ure. Its object was to reduce the governmental expenses 
and to remove the agitation for a constitutional conven- 
tion. The bill received its greatest support on the East- 
ern Shore. The Western Shore gave a majority of some 
twelve hundred against the change. 38 

The committee on the legislative department favored bir 
ennial sessions. When the report was read, an amend- 
ment was offered providing for annual sessions. Political 
considerations had great influence in the desire to return 
to the annual sessions. The change in the basis of rep- 
resentation would give the Democratic party the majority 
in future legislatures. " Democracy demanded that elec- 
tions be free and frequent." 

Mr. Dirickson, of Worcester county, referring to the 
vote of the people on the biennial bill in 1846, said, " It 
was wonderful that those who professed to drink from the 
very fount of Democracy — who worshiped at no other 
shrine, and bowed to no other political god — should have 
so soon not only scoffed at the mandates, but absolutely by 
their speeches rebuked the very wisdom of the people." 3t 

The argument in favor of annual sessions was made on 
the ground that a greater amount of labor than usual 

38 Debates, vol. i, p. 277. 30 Debates, vol. i, p. 272. 



429] The Convention. 51 

would be imposed upon the General Assembly, by reason 
of the necessity of enacting laws to carry out the provisions 
of the new constitution. They claimed that biennial ses- 
sions were anti-democratic in their tendency; and were an 
indirect and open violation of the spirit of the clause in 
the Declaration of Rights which declared that elections 
ought to be free and frequent. As a proof that annual 
sessions were necessary they referred to the states of New 
York, Massachusetts, Pennsylvania, and other states, 
which had annual sessions. They claimed that the rela- 
tion which cities bear to the rest of the State, because of 
the great concentration of population and capital in the 
cities, rendered annual sessions of the legislature abso- 
lutely necessary for the preservation of the equilibrium be- 
tween the diversified interests. The convention finally 
agreed to annual sessions for three years; thereafter the 
sessions of the legislature were to be biennial. 

The committee on the Declaration of Rights, Mr. Dor- 
sey, of Anne Arundel county, chairman, submitted their 
report on the nth of January, which was taken up by the 
convention for discussion on the 28th. 40 As reported by 
the committee the preamble to the Declaration of Rights 
read as follows: "We, the Delegates of Maryland, in 
convention assembled, taking into our most serious con- 
sideration the best means of establishing a good consti- 
tution in this State, declare," etc. The words of the pre- 
amble were substantially the same as those adopted in 
1776. 

Mr. Dashiell, of Somerset county, moved to amend the 
preamble by inserting after the word " Maryland " the 
words " representing the counties, and city of Baltimore." " 
The object of the amendment was to assert the theory that 
the counties and the city of Baltimore were parties to the 
compact in their municipal capacities. 

This theory of political individuality of the counties had 

40 Debates, vol. i, p. 140. 41 Debates, vol. i, p. 235. 



52 The Maryland Constitution of 1851. [430 

been urged many times in the legislature, during the re- 
form agitation, and was referred to in the convention. Mr. 
Dashiell's view of the government of Maryland was that 
of a confederation of counties: each county being a sepa- 
rate and distinct community. He did not regard the coun- 
ties as sovereignties, because the State herself had scarcely 
a principle of sovereignty left after the formation of the 
Federal Government. 

The basis of this view of the political individuality of 
the counties was an historical one. In the convention of 
1776, which framed the original constitution of the State, 
the counties were represented equally. In that conven- 
tion the voting was by counties; and not by individuals, 
except in certain cases, and on the final adoption of the 
constitution. 42 In the convention of 1776 Baltimore town, 
and Annapolis city were recognized as boroughs; and a 
representation of only one-half of that allowed to a county 
was conceded to them. The resolution in determining the 
representation of Baltimore town and Annapolis says, 
" Nor shall the resolution be understood to engage or se- 
cure such representation to Annapolis or Baltimore town, 
but temporarily; the same being, in the opinion of this 
convention, properly to be modified, or taken away, on 
a material alteration of circumstances of those places, 
from either a depopulation or a considerable decrease of 
the inhabitants thereof." 43 

From these facts Mr. Dashiell argued that the right was 
reserved to take away the representation of Annapolis and 
Baltimore, under certain circumstances; but no such right 
was given, reserved, or acknowledged to have the like 
effect upon the counties under any circumstances what- 
ever. The right to political existence and equal represen- 
tation was reserved to each county, and whenever this 
equal representation was to be changed, modified or abol- 

42 See Proceedings of Convention, June 25, 1774. 
48 Proceedings of Convention, July 3, 1776. 



431] m The Convention. 53 

ished, it must be done by the free consent, or acquiescence 
of the counties, that it was under this agreement of equal 
representation that the counties entered into the compact 
of government in 1776." 

The style of the preamble as finally adopted was intro- 
duced by Mr. Randall, of Anne Arundel county." The 
important change made substituted " people " for " dele- 
gates." The whole clause reading: "We the people of 
the State of Maryland, grateful to Almighty God for our 
civil and religious liberty, and taking into our serious con- 
sideration the best means of establishing a good constitu- 
tion in this State, for the sure foundation, and more per- 
manent security, thereof, declare," etc. This preamble was 
copied verbatim in the constitution of 1867. 

The first article of the Declaration of Rights, as re- 
ported by the committee read as follows: "That all gov- 
ernment of right originates from the people, is founded 
in compact only, and instituted solely for the good of the 
whole." Mr. Presstman, of Baltimore City, moved an 
amendment to the above article by adding, " and they 
have at all times the inalienable right to alter, reform, 
or abolish their form of government in such manner as 
they may think expedient." *° The object of the amend- 
ment was to vindicate the revolutionary character of the 
convention, and to insert in the constitution the right of 
revolution. 

This doctrine that the majority of the voters of the State 
had the right to alter or change the constitution whenever 
and in whatever manner the majority deemed best, irre- 
spective of legal authority, or constitutional means re- 
ceived a large support during the reform agitation. 
Although Mr. Gwinn, of Baltimore City, said in support 
of the amendment that its object was not to assert the 
right of revolution, but to compel the recognition by the 



See Mr. Dashiell's speech, Debates, vol. i, pp. 437-441. 
Debates, vol. ii, p. 785. "" Debates, vol. i, p. 143. 



5-1 The Maryland Constitution of 185J. [432 

existing government of the source of power in the State. 

The amendment of Mr. Presstman was taken from the 
Declaration of Rights of the State of Texas, and appears 
in the constitution or Declaration of Rights of several of 
the states. 47 

It was at this time that Mr. Hicks moved his amend- 
ment to the Declaration of Rights, which provided for the 
right of any portion of the State to secede from the other. 48 
The amendment of Mr. Presstman was amended so as to 
give the majority of the voters the right of changing the 
constitution, but in a legal manner, and was adopted. 49 

The 9th section of the report of the committee on the 
legislative department declared that, " No priest, clergy- 
man, or teacher of any religious persuasions, society or 
sect, and no person holding any civil office of profit under 
this State, except justices of the peace, should be capable 
of having a seat in the General Assembly." 

The Rev. Mr. Chandler, of Baltimore county, the only 
clergyman in the convention, made a vigorous attempt to 
abolish the first section of the clause, which he regarded 
as entirely unnecessary and unjust. In defence of his mo- 
tion to " strike out " Mr. Chandler said that, " Equal rights 
and privileges to all " was a principle advocated by the 
members of the convention, yet the same gentlemen calmly 
unite their strength to blot from political existence a nu- 
merous and influential class of citizens as wholly unworthy 
of all confidence and even dangerous to the community. 
" What great offence " he asked, " what crime have this 
class of citizens committed, that they should be deprived of 
one of the dearest privileges of American-born citizens — 
that of eligibility to office? Have they committed treason? 
Have they been guilty of highway robbery? Are they 



47 Maine, Dec. of Rights, 2d sec, 1820; Massachusetts, Preamble 
to Constitution, 1780; Vermont, Dec. of Rights, art. vii, 1793; 
Connecticut, Constitution, art. i, 1818; Virginia, Dec. of Rights, 
2d sec, 1820; Indiana, Constitution, art i, 2d sec, 1816. 

48 See ch. ii, p. 43. 49 Debates, vol. i, p. 186. 



433] The Convention. 55 

murderers? None of these crimes have been alleged 
against them; yet in the opinion of the committee they 
were guilty of a crime, which should forever disfranchise 
them as citizens of the State." w Twenty-one states out 
of the thirty-one in the Union at that time had no pro- 
scription measure against the clergy. Mr. Chandler's mo- 
tion to strike out the section was defeated by a vote of 
two to one. 51 

The report of the committee on the executive depart- 
ment was submitted by ex-Governor Grason, chairman, on 
the 7th of March. The report provided for the election 
of the governor by popular vote, for a term of three years. 
The State was to be divided into three gubernatorial dis- 
tricts. The counties on the Eastern Shore composed one 
district; and the Western Shore the other two. From 
each district the governor was to be chosen in rotation. 
Mr. Dorsey, of Anne Arundel county, moved to amend 
the report by the election of the governor by an electoral 
college.. This amendment was rejected by a vote of sixty 
to nine. 52 Several unsuccessful attempts were made to 
have the State divided into four gubernatorial districts. 
The report was amended by making the term of office four 
years instead of three; and to be eligible to the office the 
candidate was required to have been a citizen of the United 
States for five years instead of ten, and a resident of Mary- 
land for five years instead of seven. 

The system of districting the State for the election of the 
governor, was also attempted for the selection of United 
States senators. In 1809 the legislature passed a law divid- 
ing the State into United States senatorial districts of the 
Eastern and Western Shores. 53 A discussion arose in the 
convention as to its legality. The law of 1809 had always 
been observed by the General Assembly in selecting United 
States senators. The question had never come before the 

50 Debates, vol. i, p. 389. 51 Debates, vol. i, p. 394. 

52 Debates, vol. i, p. 455. M Act 1809, ch. 22. 



56 The Maryland Constitution of 1851. [434 

Senate of the United States for determination as to the 
constitutionality of the law. Several members of the con- 
vention held the opinion that the State of Maryland had 
entire control over the whole subject of the election of 
United States senators, except so far as limited by the 
Federal Constitution, which provides that the election of 
United States senators shall be by the state legislatures." 

Other members of the convention contended that dis- 
tricting the State into senatorial districts would be a vio- 
lation of the Federal Constitution by adding other qualifi- 
cations for United States senators than that provided for 
by the Constitution of the United States. They argued 
that if the legislature could restrict the selection of United 
States senators to a district, it could equally restrict the 
selection to a certain county, or city, and as a logical de- 
duction the legislature had the authority to restrict the 
selection of senators to a certain party, or class. 

Mr. Bowie, of Prince George's county, moved an amend- 
ment to the 24th section of the legislative report, making 
it obligatory upon the General Assembly to lay off six 
United States senatorial districts. Mr. Bowie said that 
it was of great importance to the agricultural portions of 
the State that they should be represented in the Senate of 
the United States, and should not always be overruled by 
the commercial interest. In the Senate of the United 
States, above all places, could agriculture be fostered and 
protected. 55 

Another able defender of the proposition for district- 
ing the State for United States senators was found in Mr. 
T. H. Hicks: "a feeble representative of the Eastern 
Shore " as he called himself. Mr. Hicks said he did not 
profess to be versed in the law; but he did profess to have 
some common sense, and to understand to some extent 
the rights of the people of Maryland. " Were the people 
of the Eastern Shore," he asked, " to be retained as men 

54 U. S. Constitution, art. i, sec. 3. 5B Debates, vol. ii, p. 259. 



435] The Convention. 57 

serfs, hewers of wood and drawers of water for the city of 
Baltimore?" If they could be allowed to secede from the 
Western Shore they would gladly do it. But no, they had 
built canals and railroads for the city of Baltimore, and 
their services were still required. Ten votes in the legis- 
lature had been voted to Baltimore City, and she seemed 
now to be hardly as well — certainly not more satisfied — 
with ten than she had been with five. In a short time 
Baltimore City would require a still greater representa- 
tion. At each new change the agricultural and slave in- 
terests were less protected. He believed it to be right and 
essential for the protection of the interest of the Eastern 
Shore, that the Eastern Shore should have a representa- 
tive in the Senate of the United States. 58 

Mr. Bowie subsequently substituted two senatorial dis- 
tricts for six as his original amendment provided. The 
Eastern Shore comprised the first district, and the Western 
Shore the second." The convention, after a protracted de- 
bate, refused to place in the constitution a provision for 
districting the State for the election of United States sena- 
tors. 

The convention had considerable difficulty in determin- 
ing the manner in which future amendments to the consti- 
tution should take place. The report of Mr. Sollers, of 
Calvert county, chairman of the committee on future 
amendments and revision, gave the amending power to the 
General Assembly. The report also provided for a consti- 
tutional convention. The convention was to be called by 
the General Assembly, subject to the ratification by the 
succeeding legislature, after a new election. The report of 
Mr. Sollers did not receive the assent of the majority of 
the committee." 8 

On the next day (April 4) Mr. Fitzpatrick, of Allegany 
county, from the same committee submitted a report in 



58 Debates, vol. ii, p. 282-283. 

57 Debates, vol. ii, p. 270. 5S Debates, vol. ii, p. 223. 



58 The Maryland Constitution of 1851. [436 

which four of the members of the committee concurred. 
The report provided that the General Assembly should 
submit to the voters of the State a proposition relative to 
the call of a convention every ten years. If the majority 
of the voters so determined the convention was to meet at 
its earliest convenience. 59 Mr. Brent, of Baltimore City, 
offered a substitute for the above report, by making it 
obligatory on the governor of the State to issue a procla- 
mation every ten years for the taking of the vote of the 
people in reference to a convention." The difference be- 
tween Mr. Brent's proposition and the majority of the com- 
mittee's report was that the former guaranteed independ- 
ence of the legislature, while the other left to the legisla- 
ture the right of authorizing the vote to be taken on the 
question of a convention. 

Mr. Sollers said that he did not know how rapid were 
the strides of Baltimore City in the cause of abolition; but 
he knew the insecurity of slave property in southern Mary- 
land. Slave property was insecure just in proportion as 
the counties surrendered their control over the govern- 
ment of the State. He was not willing to trust the main- 
tenance of slavery under a constitutional provision which 
would enable the majority of the voters to call a conven- 
tion." 

Mr. Jenifer, of Charles county, in a speech before the 
convention on the 29th of January, 1851, referring to the 
article in the constitution prohibiting the legislature from 
passing any law affecting the relation of master and slave 
as then existing in the State, said: That article was 
intended to put to rest the fanaticism as regards slavery in 
Maryland, and would do so, so long as the constitution and 
laws were respected. But if the right of a bare majority 
was recognized to abolish the existing system of govern- 
ment, and establish a new one, that provision was no guar- 

' 9 Ibid., p. 245. 

60 Debates, vol. ii, p. 360. 0l Debates, vol. ii, p. 364. 



437] The Convention. 59 

antee to the southern counties that the constitution would 
be respected. If the people of Baltimore City, together 
with those of Baltimore and Frederick counties, who had 
less interest in slavery than any other portion of the State, 
should deem it expedient to abolish slavery there would 
be no means to prevent them. If the right of the majority 
to abolish the constitution was recognized, the right of se- 
cession must go " pari passu " with it. It would become 
the duty of the Eastern Shore and of the lower counties of. 
the Western Shore to adopt any measures to protect them- 
selves, their liberties, and their property from revolution 
and anarchy. 62 

The report of the majority, but slightly amended, was 
adopted. The legislature was authorized to pass a law for 
ascertaining the wishes of the people in regard to calling 
of a convention, immediately after the publication of each 
census of the United States. 

What to do with the free-negro population of Maryland 
had been a problem much discussed for several years. On 
January 12, 1842, a Slave-Holders' Convention was held in 
Annapolis. The purpose of this convention was to take 
such measures as would influence the legislature to pass 
more stringent laws for the protection of slavery. The 
convention proposed laws to prevent all manumissions of 
slaves; except on condition of immediate transportation at 
the expense of the manumittor, to some place out of the 
State, and to prevent free negroes from coming into Mary- 
land. Large rewards were recommended for the convic- 
tion of persons enticing slaves to run away. 03 In compli- 
ance with the recommendations of the convention, the 
legislature passed more stringent laws in reference to the 
free negroes. 64 

On the 4th of December, the convention of 1850 ap- 



02 Debates, vol. i, p. 153. 

03 Niles Register, 5th ser., vol. 61, p. 322. 
M Scharf's History of Md., vol. iii, p. 325. 



60 The Maryland .Constitution of 1851. [438 

pointed a committee to whom was referred the subject of 
the status of the free colored population. The committee 
was required to submit to the convention " some prospec- 
tive plan, looking to the riddance of this State, of the free 
negro, and mulatto population thereof, and their coloniza- 
tion in Africa." 

The increase of the free black population in Maryland 
between the years of 1840 and 1850 was eleven thousand 
one hundred and twenty-nine. From 1790 to 1850 the 
annual increase averaged one thousand and fifty-two. The 
counties of Cecil, Kent, Caroline, Worcester, Harford and 
Baltimore City, had more free negroes than slaves in 1850. 
The counties of Charles, St. Mary's, Calvert, Kent, Caro- 
line and Worcester showed an increasing per cent of free 
negroes over the whites in the ten years between 1840 and 
1850. The total white increase during the same decade 
for the whole State was 29.9 per cent. The free black in- 
crease was 17.9 per cent. Slaves had decreased. 65 The 
committee showed that at the given rate of progression, 
the free negro population must in a few years exceed the 
white population in eleven of the counties. The committee 
explained the cause of this increase by the emigration of 
the white population to the western states, while the free 
negro remained, knowing that when once he emigrated, the 
law forbade his return. 

The Maryland State Colonization Society was incorpor- 
ated by the state legislature in i83i. cs The object of the 
society was to employ the funds collected in Maryland for 
the removal of the free negro population. From this time 
the plan of colonization in Africa was adopted as a state 
policy. 

The act of 1831 ordered the governor and council to 
appoint a board of three managers, members of the Mary- 
land Colonization Society, whose duty it should be to 



05 Committee's Report, Debates, vol. ii, p. 220. 
00 Act 1831, ch. 314. 



439] The Convention. 61 

have removed from Maryland all blacks then free who 
might be willing to leave. All those who might be freed 
subsequently to the act were to be removed whether wil- 
ling or not. 67 

In 1834 the State Colonization Society purchased terri- 
tory in Liberia, Africa, to the extent of one hundred and 
thirty miles on the Atlantic Coast, and to an indefinite ex- 
tent into the interior. The seat of the government was 
Cape Palmas. For the removal of the free black popula- 
tion the treasurer of the State was authorized to contract 
loans to the amount of two hundred thousand dollars. 
Ten thousand dollars were placed annually upon the tax- 
list to pay the interest on the loans, and to provide for the 
payment of the principal. Between the years of 183 1 and 
1850 there were one thousand and eleven free negroes 
colonized in Africa from the State of Maryland, at a cost 
of two hundred and ninety-eight thousand dollars. Of 
this amount one hundred and eighty-four thousand five 
hundred and thirty-three dollars was paid by the State. 

The committee reported the following to be placed in 
the constitution: 

Sec. 1. "The General Assembly shall have power to 
pass laws for the government of the free colored popula- 
tion and for their removal from the State, and at its first 
session after the adoption of this constitution, shall pro- 
vide by law for their registration." 

Sec. 2. " No person of color shall be capable of pur- 
chasing or holding real estate within this State, by title 
acquired after the adoption of this constitution, . . . ." 

Sec. 3. " No slave shall be emancipated or become free 
except upon condition that he or she leave this State 
within thirty days next after his or her right to freedom 
shall accrue." 

Sec. 4. " No free person of color shall immigrate to, or 
come within this State to reside." es 



67 Brackett, The Negro in Md., p. 165. 

68 Debates, vol. ii, p. 223. 



62 The Maryland Constitution of 1851. [440 

The report of the committee on the free negro popula- 
tion was never considered by the convention; though there 
were several attempts made for its consideration. The 
question was considered when the twenty-first article of 
the Declaration of Rights was under discussion. This 
article declared: "That no freeman ought to be taken 
or imprisoned, or disseized of his freehold, liberty or privi- 
leges, or outlawed, or exiled, or in any manner destroyed, 
or deprived of his life, liberty or property, but by the judg- 
ment of his peers, or by the law of the land." 69 

Mr. Brent, of Baltimore City, moved an amendment to 
the article by substituting the word " citizen " for " free- 
man." 70 Mr. Brent said that the object of the amendment 
was to provide for a contingency, which might arise, in 
which it would be necessary to banish the free negro popu- 
lation of the State. He considered that without his amend- 
ment the Declaration of Rights would prohibit the legisla- 
ture from removing this class. Several members of the 
convention expressed their belief that the time was not 
far distant when the State would be compelled to take 
serious measures for the removal of the free colored 
population from its borders. Mr. Merrick, of Charles 
county, said that the time must come when a separation, 
peaceably or forcibly, must take place between the free 
blacks and the whites. No two distinct races could, or 
ever would, inhabit the same country, except in the relative 
condition of master and slave — of the ruler and the ruled. 
Sooner or later they must separate or the extermination of 
the one or the other must take place. The black race 
could not remain; they were multiplying too fast. 71 

Under the original constitution there was no difference 
in the character of citizenship between freemen of what- 
ever color. In 1802 the political power of the State was 
vested in free white male citizens only. 72 Since that time 

69 Compare Magna Charta, art. 39. 70 Debates, vol. i, p. 194. 
71 Debates, vol. i, p. 197-198. T2 Act 1802, ch. 20. 



441] The Convention. 63 

the free negro had no political rights whatever. Mr. 
Brent's amendment was rejected, and a provision was in- 
serted in the Declaration of Rights, which permitted the 
legislature to pass laws for the government, and disposi- 
tion of the free colored population. 73 

A petition was presented to the convention from a num- 
ber of citizens of Frederick county, praying that an article 
be inserted in the constitution, compelling all free negroes, 
annually to give bond, with responsible security to the 
State, for their good behavior; in default of bond they 
were to be compelled to leave the commonwealth. 71 

Another question of interest that received the earnest 
consideration of the convention, but upon which no final 
decision was taken was the question of public education. 
Maryland at that time had no general system of public 
schools. 75 Each county and city maintained its own 
schools, except as to certain funds distributed by the State. 
These funds were derived from different sources. The 
first was called " The Free-School Fund." It was derived 
from the surplus revenue of the Federal Government dis- 
tributed among the states. 70 The free-school fund 
amounted to nearly sixty-three thousand dollars in 1851. 77 
This fund was distributed among the counties and Balti- 
more City as follows: one-half equally, and one-half ac- 
cording to the white population of each respectively. 

The second fund was derived from certain taxes on 
banks. 78 It amounted to about tw T enty thousand dollars in 
185 1. 79 All fines collected from the violation of the laws 

73 Dec. of Rights, 1851, sec. 21. 74 Debates, vol. i, p. 371. 

70 See Steiner's History of Education in Md., p. 66. 

70 An act of the legislature 1836, ch. 220, sec. i, provided that of 
the money received, and to be received from the Federal Govern- 
ment, $274,451 should be set aside for the purpose of defraying the 
interest on the public debt already created. The residue was to 
be deposited with banks, with interest at 5 per cent or more; the 
interest accruing was to be distributed among the counties and 
Baltimore City for the support of common schools. 

77 Debates, vol. i, p. 431. 

78 Act 1821, ch. 113. 70 Debates, vol. i, p. 431. 



64 The Maryland Constitution of 1851. [442 

against betting on elections; and all deposits of wagers on 
elections, were to be paid to the treasurer of the Western 
Shore for the benefit of the school fund, 80 the fines col- 
lected from persons violating the oyster laws were also 
appropriated to the same purpose/ 1 

On the 25th of February, Mr. Smith, of Allegany county, 
chairman of the committee on education submitted a ma- 
jority report. The report recommended to the legislature 
to establish a permanent and adequate school fund, so 
soon as the financial condition of the State should justify 
it. The fund was to be securely invested, and remain per- 
petually for educational purposes. The legislature was also 
to establish a uniform system of public schools through- 
out the State. The report also provided for the estab- 
lishing of a State Normal School, and for the election 
of a state superintendent of public schools. 82 The consid- 
eration of the committee's report, after several attempts 
to have it taken up by the convention, was postponed in- 
definitely, and no final action was taken on the subject. 

The question of public education was discussed in the 
convention when the report of the committee on the legis- 
lative department was considered. The original bill as re- 
ported by this committee provided that no loans should 
be made upon the credit of the State, except such as may 
be authorized by an act of the General Assembly passed 
at one session; and be confirmed at the next regular ses- 
sion of the General Assembly. 83 Mr. Constable, of Cecil 
county, moved an amendment to this article by inserting 
a provision which would authorize the legislature to im- 
pose taxes for the establishment of a uniform system of 
public schools throughout the State, adequately endowed 
to educate every white child within its limits. 84 This 
amendment was rejected. The extravagance of the legis- 

80 Act 1839, ch. 392, sec. 2. 81 Act 1833, ch. 254, sec. 5. 

82 Debates, vol. i, p. 339. 

83 Debates, vol. i, p. 124; Committee's Report, sec. 21. 

84 Debates, vol. i, p. 395. 



443] The Convention. 65 

lature in granting state aid to works of internal improve- 
ment, created a general demand for restriction on the 
power of the General Assembly to make appropriations. 

The convention adopted a provision which prohibited 
the legislature from appropriating public money, or pledg- 
ing the State's credit for the use of individuals, associa- 
tions, or corporations, " except for purposes of education." 
The last clause was an amendment introduced by Mr. 
Davis, of Montgomery county, an ardent advocate for a 
general system of public education. This amendment of 
Mr. Davis was adopted by the convention by a vote of 43 
to 24;'° but on the motion of Mr. Thomas, of Frederick 
countv, was reconsidered and rejected bv a vote of 39 to 

3i. 8 ° ' 

The opposition to the establishing of a uniform system 
of public education within the State, came from Balti- 
more City and the larger counties. The cause of the op- 
position was due to the very unequal manner in which 
the existing school fund was distributed; and because many 
of the counties and Baltimore City had ample provisions 
for schools under their local systems. Several of the 
counties had their own funds specially devoted to educa- 
tional purposes. There was a general feeling of disap- 
pointment in the convention at the failure to provide for a 
uniform system of public schools. One member advocated 
a poll-tax. No man, he said, would be so unworthy the 
name of an American citizen as to refuse the price of one 
day's labor, to maintain public schools. 87 It is noteworthy 
that the constitutional convention in 1864 provided for a 
uniform system of public schools along the line recom- 
mended by the committee on education in 185 1. 

Petitions were presented to the convention from citi- 
zens of thirteen counties, and from Baltimore City, praying 
that a provision might be made in the constitution which 
would prohibit the legislature from granting the privilege 



M Debates, vol. i, p. 425. m Debates, vol. i. p. 433. 

81 Debates, vol. ii, p. 808. 
31 



66 The Maryland Constitution of 1851. [444 

to sell intoxicating liquors to any person in any part of the 
State, except on the condition that his application to sell 
the same was approved by a majority of the voters in the 
district where the liquors were to be sold. The petitions 
were referred to a special committee; but no report was 
made. One member made the proposition that every 
member of the convention should join the temperance 
society. ss 

Mr. Hicks proposed an amendment which would make 
it unconstitutional for a member of that convention to ac- 
cept any office or an appointment under the constitution 
until ten years after its adoption. This amendment was 
rejected by a vote of 39 to 32. s9 

The convention, after a session of more than six months, 
adjourned sine die on the 13th of May, at 1.30 A. M. The 
constitution was not adopted as a whole by the convention. 
That a majority of the members present at the final session 
would have voted for its adoption, is doubtful. The final 
adjournment took place rather unexpectedly. The reports 
from several committees had not been considered. 

There was a general feeling of disappointment through- 
out the State with the convention, and a demand for its 
adjournment. The last scene was one of confusion and 
disorder. A gentleman, who was present at the final ses- 
sion, and whom the Baltimore American assures the readers 
was an authentic and responsible person, said that there 
were some things connected with the constitution of 185 1 
which properly belongs to its history, but which would 
never appear in the official proceedings as published^ A 
few days before the adjournment it was announced by 
several of the leading and most influential men of the " re- 
form party " that a final vote of acceptance on the con- 
stitution as a whole would be taken, when all the parts 
were completed and arranged. At this time there were 
some eighty or ninety members in attendance. It soon 



Debates, vol. ii, p. 605. S9 Debates, vol. i, p. 205. 



445] The Convention. 67 

became evident that the known objections to certain pro- 
visions in the constitution would prevent its acceptance by 
the majority of the convention. Finding that the consti- 
tution would not be adopted as a whole, an order was 
passed that when each separate part of the document 
had been passed, the whole should be signed by the presi- 
dent and secretary. To further these purposes a day was 
set on which all must be finished; whether ready or not 
the convention must close. The committee on revision 
sat in the senate chamber, and as fast as a defect or omis- 
sion was discovered, sent in one of their members to have 
it corrected by the convention. The last scene would 
have been amusing, had the occasion not been a grave 
one. At two in the morning the committee on revision, 
headed by its chairman, with an assembly partly excited 
and partly asleep, was presenting as the constitution a 
bunch of paper only fit to be offered at the counter of a 
rag merchant. Some asked for a needle and thread to 
stitch the constitution. 

Our author concludes as follows : " If the law-loving 
and dignified men, who framed the constitution of 1776, 
were permitted to revisit the scenes of their former glory, 
they would have bowed their heads with shame at the de- 
generacy of their posterity." °° 

Frequently the convention was unable to transact busi- 
ness for want of a quorum. The Baltimore Sun in an edi- 
torial May 7, 185 1, said that, "It is clear to every dis- 
passionate observer that the people were either remiss in 
their selections of men as reformers; were governed in the 
matter by party rather than by political considerations, or 
were unprepared to appreciate the quality and character 
of a bold and searching reform. Instead of a convention 
of men acting under an exalted sense of great responsi- 
bility, we have seen on the part of many of them a constant 
display of factious opposition, originating in sectional in- 
terests, and party prejudice." 



Baltimore American, May 19, 1851. 



CHAPTER III 

THE CONSTITUTION 

The constitution was submitted to the voters of the 
State, June 4, 185 1, and was ratified by a majority of 
10,409 votes. 1 The eight counties of the Eastern Shore 
gave a majority of 1337 for the new constitution. The 
counties of Anne Arundel, Charles, Calvert, Kent, Mont- 
gomery, Prince George's, Somerset and St. Mary's voted 
against its adoption. 

The constitution pleased no one; but to many it was an 
improvement on the old one, " a thing of shreds and 
patches." Of the sixty articles of which the original con- 
stitution consisted, twenty-five had been abrogated and 
twenty had been so amended as to have retained little of 
their original form. Altogether there had been sixty-six 
amendments made. 

Only twenty-two days intervened between the adjourn- 
ment of the convention and the ratification of the consti- 
tution. During this time the friends and opponents of 
the new constitution kept constantly before the public its 
merits and defects. 

It has been stated that the people of the State adopted 
the constitution of 1851 without a full knowledge of its 
provisions. This statement appears to be entirely un- 
founded. The text of the constitution was published in 
the daily and weekly presses of the State. It was also pub- 
lished in pamphlet form. Furthermore it was translated 
into German, and published in the daily Deutsche Corre- 
spondent, a paper having quite a reputation in its activity 
for promulgating the public documents and laws among 
the large number of Germans in the State. 3 

1 See Appendix, p. 86. * Baltimore Sun, May 22, 185 1. 



447] The Constitution. 69 

Of the one hundred and three members of the conven- 
tion, only fifty-five favored the adoption of the constitu- 
tion. 3 The president of the body, himself, the Hon. John G. 
Chapman, a few moments before he declared the conven- 
tion adjourned sine die, said, that he had witnessed with 
profound regret many of the features embodied in the con- 
stitution. That the salutary changes were so few and light 
when weighed in the balance against graver and more ob- 
jectionable features, that he had no other alternative than 
to vote, at the ballot-box, against its ratification. 4 

While the constitution was before the people for their 
consideration, the general tone of public discussion in re- 
gard to the work was free from strict party spirit. Two of 
the leading Whig papers: the Frederick Herald and the 
Hagerstown Torchlight declared in favor of the new consti- 
tution. The Democratic papers generally throughout the 
State urged its adoption, as well as several of the neutral 
county presses. The Cambridge Democrat, the Centerville 
Sentinel and the Easton Star w T ere also in favor of adopting 
the constitution. These papers, while not entirely satisfied 
with the instrument, considered it an improvement on the 
old one. Other papers, as the Rockville Journal and the 
Port Tobacco Times, urged the rejection of the constitution. 5 
The Baltimore American was very strong in its opposition 
to the constitution, while the Baltimore Sun strongly urged 
its adoption. 

While the discussion on the constitution was free from 
party spirit, it was not free from the appeals of the dema- 
gogues, who sought to array the poor and the rich in an- 
tagonistic positions. 6 The provisions of the constitution 
relating to the homestead exemption, 7 and to the abolish- 
ment of imprisonment for debt, 8 gave rise to these unjusti- 
fiable attacks. 

3 Baltimore Sun, May 14, 1851. ' Debates, vol. ii, p. 890. 

5 Baltimore Sun, May 23, 1851. 

Baltimore American, June 2, 1851. 

7 See page 78. 8 See page 78. 



70 The Maryland Constitution of 1851. [448 

The chief objection to the new constitution was the 
change introduced in the organization of the judicial sys- 
tem of the State. The Baltimore American in an editorial 
of June 3, 1 85 1, declared, that "there were many men in 
Maryland, who, if they approved of every feature in the 
constitution, save that which reorganized the judiciary, 
would vote against the constitution on account of that one 
insuperable objection." 

Other objections to the adoption of the constitution 
were placed on less objectionable grounds. An attempt 
was made tc show that there would be a period of four 
months of anarchy in the State, if the instrument was 
adopted. During these four months civil wrongs would 
go unredressed; debts uncollected, and crimes unpunished. 

The constitution, if adopted, was to go into effect July 
4. No election was to be held until November the 5th. 
Until the latter date, the new offices created by the new 
measure could not be put in operation, while the offices 
which were to be abolished were to be discontinued from 
the day of its adoption. The county courts, and the Balti- 
more City court were abolished. No specific provisions 
were made for the continuation of the jurisdiction of these 
courts until their successors could be established. The 
court of chancery, which was also abolished, was to con- 
tinue by a specific provision until two years after the adop- 
tion of the constitution. 9 Those who opposed the adoption 
maintained that the same provision did not apply to the 
former courts. 10 

The framers of the constitution intended that the eighth 
section of Article 10 should bridge over the transition 
period. This section provided that the governor and all 
civil and military officers then holding commissions should 
continue in office until they were superseded by their suc- 
cessors. Whether the adoption of the constitution would 



9 Constitution 1851, art. iv, sec. 22. 

10 Baltimore American, May 26, 1851. 



449] The Constitution. 71 

or would not create an " interregnum " of four to six 
months in the administration of justice was a debatable 
question. The omission of a definite provision for the 
continuation of the courts until their successors could be 
established, shows the inability of the majority of the 
framers of the constitution, to do the task assigned them. 

A contributor to the Baltimore American from Cumber- 
land, Md., states that he observed a group of citizens on 
the street discussing the constitution. " One said that it 
had cost the State $183,000, which, according to the best 
calculation he could make, was a little more than $1.50 
per word, which, considering the quality of the goods, 
made it about the hardest bargain of modern times." 11 

Other motives than the merit of the constitution in- 
fluenced many to vote for its adoption. Its rejection 
would have again placed the fundamental law of the State 
in the power of the General Assembly. Governor Lowe in 
his inaugural address, January 6, 185 1, referring to the 
convention then in session said, " Even should no practi- 
cal reforms result from the labors of the present conven- 
tion, still I regard the value of the principle, now estab- 
lished, so great in view of the possible future, as to hold 
the expense, inconveniences, and even total failure of this 
first attempt, however deplorable, to be entirely of subor- 
dinate importance. While, therefore, the people yearn for 
the enjoyment of those salutary reforms, which right, jus- 
tice, and good policy call for; and although they should 
possibly be doomed to meet with a total or partial disap- 
pointment of their reasonable hopes, they cannot forget to 
console themselves with the knowledge that the great 
battle, in fact was fought and won, when the legislature 
after a steady resistance of twenty years, finally pro- 
mulged, and Maryland by an almost unanimous vote 
ratified the doctrine, that the people are not enchained by 
the fifty-ninth article of the constitution. 12 This is the en- 
tering wedge to the future. This is the key to the treas- 

11 Baltimore American, June 2, 1851. 12 See ch. i, p. 10. 



72 The Maryland Constitution of 1851. [450 

ury of popular rights. With this weapon the people will 
be resistless, in all future struggles for the extension of 
their privileges." 13 

On the whole, the constitution of 185 1 was rather a poor 
instrument, though there were some salutary reforms 
made. A comparative study of the constitution with the 
one it superseded reveals some radical changes. 

In the Declaration of Rights there were but few changes 
made. The addition to the first article, which declared 
that the people had at all times, according to the mode 
prescribed in the constitution, the inalienable right to 
alter, or abolish their form of government in such manner 
as they may deem expedient, was a subject of much discus- 
sion during the reform agitation, and in the convention. 14 

The twenty-fourth article of the Declaration of Rights 
declared that no conviction should work corruption of 
blood, or forfeiture of estate. This was a modification of 
the original article, which permitted forfeiture of estate 
for murder, and treason against the State, on conviction 
and attainder. 15 A new article was inserted in the Decla- 
ration of Rights, which declared that the legislature ought 
to encourage the diffusion of knowledge and virtue, the 
promotion of literature, the arts, sciences, agriculture, 
commerce, and manufactures, and the general ameliora- 
tion of the condition of the people. 16 

The thirty-fourth article of the Declaration of Rights is 
especially worthy of notice, as it permitted Jews and others 
to hold office, if they declared their belief in a future state 
of rewards and punishments. The constitution of 1776 
required in addition to the oath of support and fidelity to 
the laws and constitution of the State, a declaration of a 
belief in the Christian Religion. 17 



13 Debates, vol. ii, p. 96. u See ch. ii, p. 26. 

15 Dec. of Rights, 1776, art. 24. 

16 Compare Cal. Const. 1849, art. x, sec. 2. 

17 Dec. of Rights, 1776, art. 35. The latter clause was repealed in 
1826, and Jews were given the same privileges as Christians. See 
Steiner's Citizenship and Suffrage in Md., p. 33. 



451] The Constitution. 73 

The first article of the constitution relates to the elective 
franchise. Some salutary reforms were made in this with 
the view of obtaining the purity of the ballot-box. Il- 
legal voting had been a great source of complaint from 
both political parties. The right of suffrage required a 
residence of twelve months in the State, and six in the 
city or county. The act of Congress requiring members 
of that body to be elected by single districts throughout 
the United States, made it necessary to divide the State 
into congressional districts. There was no fixed dura- 
tion of residence required in passing from one district to 
another within the same county or city. This gave fa- 
cility to the perpetration of frauds on the elective franchise 
under the system, known as " colonizing voters." 

The first attempt to have a registration of voters was 
made in 1837. In that year a law was passed to provide 
for the registration of the voters in Baltimore City. This 
law was considered by many to be unconstitutional, be- 
cause it imposed duties upon the citizens of Baltimore City, 
which were not common to other citizens of the State. An 
unsuccessful attempt was made in the convention of 1850 
to provide for a general registration law in the State. It 
was not until 1865 that Maryland had such a law. 18 

The constitution of 185 1 required six months' residence 
in the district, and twelve in the State, in order to exer- 
cise the right of suffrage. The right to vote was retained 
in one district, until the same right was acquired in an- 
other. The constitution also provided that a person guilty 
of receiving or giving bribes for the purpose of procur- 
ing votes, should be forever disqualified to hold any 
office of profit or trust, or to vote at any election there- 
after. The pardoning power of the governor did not ex- 
tend to this offense. All officers before entering upon 
their duties were obliged to take an oath that they had not 
been guilty of bribery or fraud in any way. 10 

19 Steiner's Citizenship and Suffrage in Md., p. 47. 
19 Art. i, sec. 4. 



74 The Maryland Constitution of 1851. [452 

The constitution of 185 1 made only slight changes in 
the executive department of the State. Prior to 1836 the 
governor was elected by joint ballot of both Houses of 
the General Assembly. By an amendment to the consti- 
tution in that year, the governor was to be elected by pop- 
ular vote. The term of office was for three years. The 
State was divided into three gubernatorial districts, from 
each of which the governor was to be chosen in rotation. 

The constitution of 1851 adhered to the system of dis- 
tricting the State for the election of the governor. The 
counties of the Eastern Shore formed one district. St. 
Mary's, Charles, Calvert, Prince George's, Anne Arundel, 
Montgomery, and Howard counties, and Baltimore City 
formed a second district. Baltimore, Harford, Frederick, 
Washington, Allegany, and Carroll counties constituted 
the third district. The qualification for the office of gov- 
ernor was slightly changed. The requirements were a 
five years' residence in the State, and a three years' resi- 
dence in the district from which he was elected. 

The most important change in the executive department 
was the limitation on the governor's appointing power. 
Previous to the adoption of the constitution of 185 1, the 
governor, with the consent of the Senate, appointed the 
chancellor, all judges and justices and all civil officers of 
the government (assessors, constables, and overseers of 
roads only excepted). 20 The governor also appointed the 
clerks of the several county courts; the clerks of the court 
of appeals, and of Baltimore City court. The register of 
the High Court of Chancery, and the registers of wills 
throughout the State were also appointed by the gover- 
nor. 21 This extensive power of appointment, or the " ex- 
ecutive patronage " as it was called, was thought to have 
an injurious influence upon popular elections, and a grow- 
ing tendency to abuse. The constitution of 185 1 provided 
for the election of nearly all of these officers by popular 

20 Constitution 1776, art. 48. 21 Act 1836, ch. 224, sec. I. 



453] The Constitution. 75 

vote. A new duty was imposed upon the governor, by 
making it obligatory on him to examine semi-annually the 
treasury accounts." 

In the legislative and judicial departments the changes 
made by the constitution were more radical and numerous. 
The term of office of state senator was reduced from six 
to four years. One-half of the Senate was to be elected 
biennially, instead of one-third as formerly. The six-year 
term was thought to be so long as to take away, in a meas- 
ure, the responsibility of senators to the people, for their 
conduct. No change was made in the mode of electing, 
nor in the numbers of senators. Each county and Balti- 
more City was given one senator. 23 For the first time in 
the history of the State, representation in the House of 
Delegates was based on the aggregate population. 24 This 
principle extended only to the representation of the coun- 
ties. Baltimore City was limited to four more delegates 
than the largest county. Baltimore county was the most 
populous county in the State. Its population in 1850, in- 
cluding free black and slaves, was 41,589. The popula- 
tion of Baltimore City was 169,012, a difference of 127,- 
423." 

The duty imposed upon the legislature to appoint two 
commissioners to revise and codify the laws of the State 
deserves to be noticed. There had long been need of a 
proper codification. Several attempts had been made, but 
without success. 

Another salutary change in the constitution was the 
provision that no bill should become a law unless it was 
passed in each House by a majority of the whole number 
of members elected, and unless, at its final passage, the ayes 
and noes were recorded. 26 Formerly a great number of 
laws were passed by the silent assent of many of the mem- 
bers of the legislature. No vote being recorded, the mem- 

22 Art. ii, sec. 17. 23 Art. iii, sec. 2. 

24 See ch. i, p. 17. 

25 U. S. Census; Debates, vol. i, p. 287. 
20 Constitution 1851, art. iii, sec. 19. 



76 The Maryland Constitution of 1851. [454 

bers of the General Assembly were enabled to escape from 
the responsibilty of injurious legislation. 

The constitution of 1776 permitted the Senate to give 
only their assent or dissent to all money bills. This re- 
striction was removed by the constitution of 185 1. 

In Maryland until 1841 divorces were granted by the 
legislature, and no court had power to grant them. By 
an Act of 1841, ch. 262, for the first time, jurisdiction over 
applications for divorce was conferred upon equity courts. 
But it was held that this did not divest the legislature of 
its power to grant divorces. 27 The constitution of 1851 
gave the equity courts the exclusive power to grant di- 
vorces. This change was made on the ground that it 
consumed too much of the legislature's time, and because 
it is properly a judicial act. The legislature in 1849, it 
was said, granted twenty-one divorces, and that gener- 
ally upon ex-parte testimony. 28 

The constitution of 185 1 prohibited the legislature from 
contracting debts, unless authorized by a law providing 
for the collection of an annual tax sufficient to pay the in- 
terest of the debt contracted, and to discharge the debt 
within fifteen years. The amount of debt contracted 
should never exceed one hundred thousand dollars. The 
credit of the State was not to be given in aid of any indi- 
vidual, association, or corporation. The General Assembly 
was prohibited from involving the State in the construc- 
tion of works of internal improvement, or making appro- 
priations to works of like character. 29 

The office of attorney-general was abolished. Judge 
Chambers, of Kent county, one of the delegates to the 
convention of 1850, fourteen years later said that the 
reason for the abolition of this office was purely from per- 
sonal considerations, having relation to an individual, 



See Wright's Case, 2 Md. 429. 
Debates, vol. i, p. 247. 
Const. 1851, art. iii, sec. 22. 



455] The Constitution. 77 

who, it was supposed was going to obtain the office. 30 The 
evidence for this assertion does not appear in the debates 
of the convention. The office was abolished by a vote of 
45 to 14. Mr. Chambers himself voted for its abolish- 
ment. 31 

The office of attorney-general was created by the con- 
stitution of 1776. The attorney-general was appointed by 
the governor, with a tenure of office during good behavior. 
The duties of the attorney-general were left undefined. 
In 1816 the legislature abolished this office. 32 But in the 
succeeding session, a law was passed re-establishing the 
office, and defining its duties. In 1821 the duties of at- 
torney-general were further defined. He was required to 
prosecute and defend on the part of the State all cases 
wherein the State was interested. He was required to 
give legal advice whenever the General Assembly, or the 
governor required it. He had also authority to appoint 
deputies in each county and in Baltimore City to aid him 
in the execution of his duties. Neither the attorney-gen- 
eral, nor his deputies received a fixed salary, but were 
paid for their services in fees. These fees were paid by 
the county or city where the services were rendered. 

The objections to the continuation of this office arose 
from the manner in which the attorney-general was ap- 
pointed, the tenure of office, and the extensive patronage 
in appointing his deputies. 

The method of paying the attorney-general, and his 
deputies in fees was also objected to on the ground of 
affording greater remuneration than was necessary. It 
was estimated that the fees of the attorney-general 
amounted to $9000 per annum. In addition to this sum 
the State was paying on the average $1700 yearly to others 
than the attorney-general and his deputies, for legal 

80 Myers, The Md. Const. 1864, p. 72; J. H. U. Studies, vol. 19. 

31 Debates, vol. i, p. 549. 

82 Act 1816, ch. 247, confirmed by Act 1817, ch. 269. 



78 The Maryland Constitution of 1851. [456 

services. 33 The great majority of the convention consid- 
ered the office unnecessary, and desired its abolishment. 

In place of the attorney-general the constitution of 1851 
created the office of " State's Attorney." One state's at- 
torney was to be elected by popular vote in each county 
and in the city of Baltimore. The duties of the state's at- 
torneys were defined as being the same as that of attorney- 
general and his deputies, whom they superseded. The 
term of office was fixed at four years. The salary was to 
be paid in fees. 34 

The prohibition against imprisonment for debt was a 
progressive step, though at the time it called forth adverse 
criticism. The Baltimore American in an editorial of June 
4, 1851, said that: "The abolishment of imprisonment for 
debt discharged not merely the innocent bankrupt, but the 
swindler and the whole family of knaves. It paralyzed the 
arm of the law, because its processes are of no other avail 
than to give notice to the debtor that he may escape with 
his means if he will. Its tendency is to destroy the credit 
of the poor man, because it offers a temptation to defraud 
those on whom his credit must depend." The clause abol- 
ishing imprisonment for debt was introduced in the con- 
vention by Mr. Presstman, of Baltimore City, and was 
passed by a vote of 60 to 5. 3S 

The homestead exemption clause of the constitution was 
objected to on the ground of depreciating the value of the 
large capital invested in tenements. 30 The amount that 
could be exempted from execution for debt was five hun- 
dred dollars." 

The legislature was prohibited to authorize the issue of 
any lottery grants. The same restriction was placed upon 
the legislature by a constitutional amendment in 1839."* 
Until the expiration of the lottery grants in the State, one 



Debates, vol. i, p. 535. u Const. 1851, art. v. 

Debates, vol. i, p. 448. 

Baltimore American, May 31, 1851. 

Const. 1851, art. iii, sec. 39. 

Act 1839, ch. 31. Confirmed, Act 1840, ch. 261. 



457] The Constitution. 70 

commissioner of lotteries was to be elected by popular 
vote. After the first day of April, 1859, no lottery schemes 
could be operated, nor any lottery ticket sold within the 
State. 30 

A new feature in the constitution of 185 1 was the pro- 
vision for a general corporation law, and the prohibition 
against the chartering of a corporation by special act; 
except for municipal purposes, and in cases where, in the 
judgment of the legislature, the object of the corporation 
could not be attained under general laws. 40 The old sys- 
tem of chartering corporations by special act gave greater 
facility for corruption, and consumed much of the limited 
time of the legislature. 

The liability clause of the constitution relative to banks, 
prohibited the legislature from granting thereafter any 
charter for banking purposes, or to renew any charter, ex- 
cept on the condition that the stockholders and directors 
of the bank should be liable to the amount of their respect- 
ive shares of stock. A further restriction upon the char- 
tering of banks was that no director or other officer of a 
bank should borrow any money from that particular 
bank. 41 

There was considerable opposition to this liability clause. 
It was claimed that the effect of the restrictions on the 
banks, and the double liability of the stockholders would 
seriously cripple the State's industrial activities.' 2 The lia- 
bility clause as originally introduced in the convention by 
Mr. Sollers, of Calvert county, made the stockholders and 
directors responsible in their individual capacities for the 
full amount of the bank's liabilities. Mr. Sollers also made 
it a penitentiary offence, and the forfeiture of a bank's 
charter forever, for the officers of a bank to have any 
dealings with the bank with which they were connected, 
except in the matter of salaries. 43 

3fl Const. 1851, art. vii, sec. 5. 

40 Art. iii, sec. 47; Act 1852, ch. 23. 

a Art. iii, sec. 45. 42 Baltimore American, May 17, 1851. 

iS Debates, vol. ii, p. 761. 



80 The Maryland Constitution of 1851. [458 

The change in the judicial department was the cause oi 
much opposition to the adoption of the constitution. 44 The 
jury was declared to be the judges of law as well as fact 
in the trial of all criminal cases. 45 All judges were to be 
elected by popular vote for a term of ten years. The sal- 
ary of the judges of the court of appeals was fixed at 
twenty-five hundred dollars per year, and that of the cir- 
cuit judges at two thousand. The State was divided into 
four, instead of six, judicial districts. The number of 
judges in each district was reduced from three to one. 46 
The court of appeals was composed of four judges; one of 
whom was elected from each of the four judicial districts. 
The chief judge was to be designated by the governor. 
The court of appeals had appellate jurisdiction only, and 
its judgment was final in all cases. 

In Baltimore City there was established a court of com- 
mon pleas, which had civil jurisdiction in all suits where 
the debt or damage claimed did not exceed five hundred 
dollars ; and was not less than one hundred dollars. This 
court had also jurisdiction in all cases of appeal from the 
judgment of justices of the peace in Baltimore City, and 
in all applications for the benefit of the insolvent laws of 
the State. 47 A superior court of Baltimore City was also 
established with jurisdiction over all suits where the debt 
or damage claimed exceeded five hundred dollars. Each 
of these courts consisted of one judge, elected by the voters 
of Baltimore City, for a term of ten years. The salary of 
the judges was twenty-five hundred dollars annually. 48 A 
criminal court of Baltimore City was also established, 
which exercised the jurisdiction heretofore exercised by 
the Baltimore City court. 49 In place of the county courts, 
the constitution of 185 1 established circuit courts. For 
this purpose, the State was divided into eight judicial cir- 
cuits. For each of these judicial circuits (except the fifth, 

44 Baltimore American. June 3, 1851. 45 Art. x, sec. 5. 

48 Art. iv, sec. 7. 47 Art. iv, sec. 10. 

48 Art. iv, sec. 12. 49 Art. iv, sec. 13. 



459] The Constitution. 81 

which included only Baltimore City, whose courts are 
described above), one judge was to be elected. The cir- 
cuit judges were required to hold a term of court at least 
twice a year in each county. 50 The object in thus reorgan- 
izing the courts was to reduce the number of judges, and 
thereby decrease the cost of the judiciary. The qualifi- 
cations for judges were: that, they must be learned in the 
law, having been admitted to practice in the State, and 
citizens of the State at least five years. They must be 
above the age of thirty years, and residents of the dis- 
tricts from which they were elected. A judge of the court 
of appeals was re-eligible until he attained the age of sev- 
enty years, and not after. 51 He was subject to removal for 
incompetency, wilful neglect of duty or misbehavior in 
office, on conviction in a court of law, or by the governor 
upon the address of two-thirds of the members of each 
House of the General Assembly. 

The treasury department of the State was remodeled. 
The constitution provided for a comptroller of the treas- 
ury. This was a new officer designed to be a check upon 
the treasurer. The comptroller was to be elected by the 
people at each election of members of the House of Dele- 
gates (i. e. every two years). His salary was twenty-five 
hundred dollars per annum. The treasurer was to be 
elected on joint ballot, by the two Houses of the General 
Assembly at each session. The salary was the same as 
the comptroller received. The duties of the comptroller 
were: to have the general superintendence of the fiscal 
affairs of the State. He must grant all warrants for money 
to be paid out of the treasury, and make a report of the 
financial condition of the State's treasury within ten days 
after the commencement of each session of the legislature. 52 

The treasurer was required to render his account quar- 
terly to the comptroller, and submit at all times to an in- 

00 Art. iv, sec. 8. 

51 Art. iv, sec. 4. 52 Art. vi, sec. 2. 

32 



82 The Maryland Constitution of 1851. [460 

spection of the public funds in his hands. This plan of 
giving authority to the comptroller from one source; and 
to the treasurer from another, was to make them, in a 
measure, independent of each other, and thereby lessen 
the danger of collusion. 

The constitution of 1851 provided for the establishment 
of an office of " Commissioners of Public Works." Such 
an office had been long deemed a necessity, but no provi- 
sion had been made for its establishment. The control of 
the State over works of internal improvement had been ex- 
ercised previously by a board of directors, appointed by 
the General Assembly. An act of the legislature in 1832 
required the governor, with the consent of the council, to 
appoint three agents to represent the State at the meetings 
of the stockholders of all joint stock companies " incorpo- 
rated to make roads and canals, and vote according to the 
interest of the State." 53 

In 1840 the number of the board of directors for the 
State was increased to five. The power of appointment 
was taken from the governor, and given to the General 
Assembly. The directors were required to keep a journal 
of the proceedings of the stockholders in their general 
meetings, and report the same to the legislature. 54 It will 
be noticed that these commissioners were appointed to 
represent the State as one of the stockholders, and to cast 
the vote of the State in proportion to the amount of stock 
held by the State. 

The office of commissioners of public works as estab- 
lished by the constitution of 185 1, consisted of four mem- 
bers, who were elected by popular vote for a term of four 
years. One of the commissioners was to be taken from 
each of the four districts into which the State was to b 
divided for that purpose. The first district included the 
counties of Allegany, Washington, Frederick, Carroll, Bal- 
timore and Harford. The counties of Montgomery, How- 

05 Act 1832, ch. 318. "Act 1840, ch. 155. 



461] The Constitution. 83 

ard, Anne Arundel, Calvert, St. Mary's, Charles and Prince 
George's formed the second district. Baltimore City con- 
stituted the third district, and the eight counties of the 
Eastern Shore the fourth. A residence of five years in the 
district from which the commissioner was chosen was re- 
quired to be eligible to this office. The commissioners' 
duties were, to have supervision over all public works in 
which the State was interested as stockholder or creditor. 

The commissioners were also given authority to regu- 
late the " tolls " so as to prevent injurious competition. 
In case of an equal division of opinion among the commis- 
sioners, the State's treasurer had the final decision." It 
will be noticed that the districts were so arranged as to 
place the sections of the State with similar interest in the 
same district. 

County commissioners were to be elected directly by the 
people. These officers were previously appointed by the 
governor. The election must be by a " general ticket," 
and not by district. The powers of the county commis- 
sioners were strictly limited by the legislature. Road su- 
pervisors were also to be elected by popular vote, as well 
as the county surveyors. The county of Worcester was 
required to elect a wreck master. Every commonwealth 
officer, with the exception of the governor, whose yearly 
income exceeded three thousand dollars was required to 
keep a record of all money he received, and to report the 
same to the treasurer annually. The excess over three 
thousand dollars was to be paid in to the state treasury. 
This provision was intended to prevent the enormous sala- 
ries received by some of the public officers in fees. It was 
said that the clerk of the Baltimore county court received 
fifteen thousand dollars annually in fees. Howard dis- 
trict, a part of Anne Arundel county, was erected into a 
county called Howard. A provision was also made for 
the erection of another county out of part of Allegany 
county/ 8 

B Art. vii. 50 Art. viii, sec. 2. 



84 The Maryland Constitution of 1851. [462 

The constitution of 185 1 provided for its own amend- 
ment by a convention elected expressly for that purpose. 
The legislature was required at its first session imme- 
diately succeeding the returns of every census of the 
United States, to pass a law for ascertaining the wishes of 
the people of the State in regard to the call of a convention 
for the purpose of amending the constitution. This was 
not done until February 3, 1864. 51 The constitution went 
into effect July 4, 185 1. It remained in force until 1864, 
and is remarkable for its extremely democratic features. 
All state officials from the governor to the constable were 
to be elected by popular vote. This provision was a reac- 
tion against the very conservative and aristocratic character 
of the constitution of 1776. 

BT Act 1864, ch. s- 



APPENDIX 

Vote for the Call of the Convention of 1850. 

a a , . FOR - against. 

Anne Arundel g IS 2 g 

Allegany II44 " 

Baltimore 1682 144 

Baltimore City 8 o6o 3?6 

^ ecil r 1342 365 

Caroline 277 140 

Charle s 90 199 

Carroll 6q 5 It - 4 

Calvert 58 M 

Dorchester 251 399 

F red erick 2793 I53 

Harford 881 149 



Kent 



323 234 



Montgomery 426 186 

Prince George's 162 325 

Queen Anne's 489 328 

Somerset 356 350 

Saint Mary's 129 361 

Talbot 393 279 

Washington 2646 184 

Worcester 460 279 



23423 4935 

The official count declared a majority of 18,833 for the conven- 
tion. 

58 Returns not given. 



86 The Maryland Constitution of 1851. [464 

Vote on the Adoption of Constitution of 1851. 

Anne Arundel 

Allegany 

Baltimore 

Baltimore City 

Cecil 

Caroline 

Charles 

Carroll 

Calvert 

Dorchester 

Frederick 

Harford 

Kent 

Montgomery 

Prince George's 

Queen Anne's 

Somerset 

St. Mary's 

Talbot 

Washington 

Worcester 

29,025 18,616 

Majority for constitution, 10,409. 



FOR. 


AGAINST. 


948 


1113 


1333 


703 


2122 


849 


94l6 


5830 


1378 


638 


372 


340 


l6o 


427 


1473 


1094 


174 


333 


511 


488 


3179 


943 


1 135 


875 


384 


443 


569 


717 


207 


656 


627 


517 


592 


633 


165 


533 


6l8 


340 


2913 


688 


749 


456 



THE POLITICAL ACTIVITIES OF 
PHILIP FRENEAU 



Series XX Nos. 9-10 

JOHNS HOPKINS UNIVERSITY STUDIES 

IN 

Historical and Political Science 

(Edited 1 882-1901 by H. B. ADAMS.) 

J. M. VINCENT 

J. H. HOLLANDER W. W. WILLOUGHBY 

Editors 



THE POLITICAL ACTIVITIES OF 
PHILIP FRENEAU 



BY 
SAMUEL E. FORMAN, Ph. D. 



BALTIMORE 
THE JOHNS HOPKINS PRESS 

PUBLISHED MONTHLY 

SEPTEMBER-OCTOBER, 1902 



Copyright, 1902 by 
JOHNS HOPKINS PRESS 



£#e £ovt> Q0aftttnore (preee 

THE FRIEDENWALD COMPANY 
BALTIMORE, MD. 



PREFACE 

In this sketch of Philip Freneau I have tried to bring- 
out in its proper proportion the public side of the man's 
career. There have appeared several accounts of Freneau 
as a poet, and these are appreciative and just. But as a 
politician and publicist Freneau has not received the atten- 
tion which he deserves. Historians have been content to 
bestow upon him a contemptuous phrase and let him pass. 
He is a " reptile journalist," a " barking cur," a " low edi- 
tor," a " democratic scribbler." Such treatment is unfair 
to the memory of Freneau and is not good history. Any 
one who will take the trouble to get at the facts of Fre- 
neau's life will find that he deserves the gratitude of pos- 
terity, not its contempt. It was a long and stormy life 
and it was lived for human rights and human freedom. 

In the prosecution of my work I have been greatly as- 
sisted by the Librarians of the New York Historical So- 
ciety and of the Pennsylvania Historical Society, and to 
these gentlemen my thanks are due. I am also indebted 
to the late Professor H. B. Adams and to Dr. J. M. Vin- 
cent, of the Johns Hopkins University, for valuable sug- 
gestions. 

S. E. Forman. 



CONTENTS 

PAGE 

CHAPTER I 
Youth and Early Manhood 9 

CHAPTER II 
The Poet of the Revolution 20 

CHAPTER III 
The Democratic Editor 35 

CHAPTER IV 
The Poet of the War of 1812 80 

CHAPTER V 

Conclusion 97 

Bibliography 103 



THE POLITICAL ACTIVITIES OF 
PHILIP FRENEAU 



CHAPTER I 

YOUTH AND EARLY MANHOOD 

Philip Freneau was born of Huguenot parentage in the 
city of New York, January 13, 1752. His father died 
when Philip was but a child. His mother upon the death 
of her husband removed from New York to New Jersey, 
and with her four children established herself upon the 
Freneau estate of Mount Pleasant, a settlement just out- 
side of Middletown Point (now Mattawan) in Monmouth 
county. Philip was given into the hands of good tutors 
and proved to be a diligent pupil. One of his teachers 
was the Rev. William Tennant, a divine whose name is 
still held in blessed memory in Monmouth county. Dr. 
Tennant was acting president of Princeton College when 
Freneau entered that institution as a Freshman in 1767. 1 
The youth was so well prepared that the president wrote 
a note to Mrs. Freneau congratulating her upon her son's 
superior acquirements. 2 Philip remained at Princeton Col- 
lege for four years, and during that period his future career 
was largely determined. The college was a hot-bed of 
whiggism. 3 Teachers and students joined in resisting the 



1 Hageman's History of the College of New Jersey. 

2 Griswold's Poets of America, p. 31. 

3 " Several years before a speck of war against the mother 
country could be discovered, an electric spark of patriotic fire 
was struck in Princeton which betokened the flame that afterward 
lighted up New Jersey. James Madison in 1770 wrote to Thomas 



10 The Political Activities of Philip Freneau. [474 

pretensions and aggressions of England. The president, 
John Witherspoon, was one of the signers of the Declara- 
tion of Independence. Among the students in whose 
minds rebellion was germinating were Henry Lee, Hugh 
Brackenridge, Samuel Spring, William Bradford, Aaron 
Burr, Frederick Frelinghuysen and James Madison. 4 
With these great spirits Freneau mingled freely. James 
Madison was his classmate, while Brackenridge, Madison 
and Freneau formed a friendship which remained firm not 
only during their college career, but which was dissolved 
in after years only by death. " These three," says Gris- 
wold, " were all gifted with satirical powers which they 
were fond of displaying as frequently as there were occa- 
sions. They joined in lampooning not only the leaders of 
adverse parties in college, but also those prominent public 
characters who opposed the growing enthusiasm of the 
people for liberty. I have before me a considerable manu- 
script volume of personal and political satires written by 
them in about equal proportions." 5 Freneau and Bracken- 
ridge tried their hands at verse as well. In the attempt 
Brackenridge discovered what he could not do, although 
vanity constrained him to an occasional indulgence in bad 
verse all his life. Freneau's sophomoric pen, on the other 
hand, moved easily and gracefully and turned off lines that 
sometimes sparkled with the light of genius. Some of 
these youthful pieces were included by Freneau in an edi- 
tion of his poems published in after years. Most of them 
are of no consequence, yet they show that Freneau's na- 
tive talent for verse writing: was verv strong:. 



Martin: 'We have no news but the base conduct of the merchants 
in breaking through the spirited resolutions not to import. The 
letters to the merchants regarding their concurrence were lately 
burned by the students of this place in the college yard, all of 
them appearing in black gowns and the bell tolling. There are 
about 115 in the college grammar school, all of them in American 
cloth.' " Princeton and its Institutions, vol. i, p. 101. 

4 MacLean's History of the College of New Jersey. 

6 Poets of America, p. 14. 



4?5] Youth and Early Manhood. 11 

Freneau was graduated in distinguished company in 
1 77 1. It is doubtful whether Princeton College has ever 
sent out a class that contained a larger per cent of cele- 
brated men. Of the eight who then took their degrees, 
six achieved fame and high position in church, in state, in 
letters, and in science, yet neither Freneau nor Madison, 
apparently, took any of the prizes. In the records of the 
college there is an account of the commencement exercises 
of 1771, and the sixth and seventh items of the programme 
are as follows : 

6. An English forensic dispute on the question: Does 
Ancient poetry excel Modern? Mr. Freneau the respond- 
ent, being necessarily absent, his argument in favor of the 
ancients was read. Mr. Williamson answered him; Mr. 
McKnight replied. 

7. A poem on " The Rising Glory of America " by Mr. 
Brackenridge, was received with great applause. 7 

A little further down in the account we find that Mr. 
Madison was also excused from attending the exercises. 
One would like to know where those two young gentle- 
men were upon this important occasion. Freneau ought 
certainly to have been present for he was the largest con- 
tributor to the entertainment. In addition to his speech 
on the poetry of the ancients, he was the principal author 
of the poem that was read by Mr. Brackenridge and that 
gained such hearty applause. There can be no doubt that 
this poem was for the most part composed by Freneau, for 
Brackenridge himself has told us that such was the case. 8 



a The members were: 1. Gunning Bedford, Member of Conti- 
nental Congress and of the Constitutional Convention of I7§7- 
2. John Black. 3. H. H. Brackenridge, Judge of the Supreme 
Court of Pennsylvania and eminent in literature. 4. Donald Camp- 
bell. 5. Philip Freneau. 6. Charles McKnight, the most dis- 
tinguished surgeon of his day. 7. James Madison, President of 
the United States. 8. Samuel Spring, a celebrated divine. 

7 MacLean's History of College of. New Jersey, vol. i, p. 3^3- f 
8 Southern Literary Messenger, vol. viii, p. 2; also Hildeburn's 
Issue of the Press of Pennsylvania, vol. ii, p. 148. 



12 The Political Activities of Philip Freneau. [476 

The poem was to have been a joint production, but Brack- 
enridge, recognizing the slowness and heaviness of his 
own lines when compared with the graceful and sponta- 
neous verses of Freneau, wrote but a very small part, be- 
ing content to deliver it from the platform and to leave the 
honors of authorship to his friend. 

In this commencement ode, " The Rising Glory of 
America," Freneau strikes the key-note of his life — resist- 
ance to Great Britain. The Massacre at Boston, March 
5, 1770, is thus glanced at: 

Nor shall these angry tumults here subside. 
Nor murders cease through all these provinces, 
Till foreign crozvns have vanished from our view 
And dazzle here no more — no more presume 
To own the spirit of fair liberty. 
Vengeance shall cut the thread, and Britain sure 
Will curse her fatal obstinacy. 

The following is a clever bit of prophecy for a boy of 
nineteen; we find in it a constant and favorite theme of the 
poet — the greatness of America: 

I see, I see 
Freedom's established reign, cities and men, 
Numerous as sands upon the ocean shore, 
An Empire rising where the sun descends! 
The Ohio soon shall glide by many a town 
Of note; and where the Mississippi stream, 
By forests shaded, now runs sweeping on 
Nations shall grow, and States not less in fame 
Than Greece and Rome of old. We too shall boast 
Our Scipios, Solons, Catos, sages, chiefs 
That in the womb of time yet dormant lie, 
Waiting the joyous hour of life and light. 

Freneau left college in September, 1771, with his mind 
full of epics and his heart full of liberty and hatred for 
oppression. He went to Philadelphia and pretended to 
read law, but probably he neglected his Blackstone for the 
society of wits, for he fell in with the whig leaders of the 
place and established a reputation as an exceedingly clever 
young scape-grace. It was while in Philadelphia in 1772 



477] Youth and Early Manhood. 13 

that he first saw himself in print. In that year the vale- 
dictory ode came out in pamphlet form. The charms of 
authorship seem to have allured him from serious study, 
for he soon abandoned law altogether. In the spring of 
1772 he left Philadelphia and undertook to teach a school 
on Long Island but failed miserably. In the autumn of 
the same year we find him assisting his classmate Brack- 
enridge in the management of an academy on the " East- 
ern Shore " of Maryland. The following letter to James 
Madison, besides giving his experience as teacher, shows 
how restless and aimless was his early manhood: 

Somerset county in Maryland, 

November 22, 1772. 
Sir, 

If I am not wrongly informed by my memory, I have 
not seen you since last April, you may recollect I was then 
undertaking a School at Flatbush on Long Island. I con- 
tinued in it thirteen days — but — 

Long Island have I bid adieu, 

With all its brutish brainless crew. 

The youth of that detested place, 

Are void of reason and of grace, 

From Flatbush hills to Flatbush plains, 

Deep ignorance unrivalled reigns. 

I am very poetical but excuse it. " Si fama non venit 
ad aures," if you have not heard the rumor of this story 
(which, by the by, is told in various taverns and eating 
houses) you must allow me to be a little prolix with it. 
Those who employed me were some gentlemen from New 
York, some of them are bullies, some merchants, others 
scoundrels: They sent me eight children, the eldest of 
whom was 10 years old. Some could read, others spell 
and a few stammer over a chapter of the Bible — these were 
my pupils and over these I was to preside. My salary 
moreover was £40. There is something else relating to 
that I shall not at present mention. After I forsook them 



14 The Political Activities of Philip Freneau. [478 

they proscribed me for four days and swore if I was caught 
in New York they would either Trounce or Maim me: 
but luckily I escaped with my goods to Princeton — where 
I remained till commencement — so much for this affair. 

I have printed a poem in New York called the American 
Village, containing about 450 Lines, also a few short pieces 
added; I would send you one if I had a proper opportu- 
nity. The additional poems are — A Poem to the Nymph 
I Never Saw — The Miserable Life of a Pedagogue — and 
Stanzas on an ancient Dutch House on Long Island — As 
to the main poem it is damned by all good and judicious 
judges. My name is on the title page. This is called 
vanity by some — but " who so fond as youthful bards of 
fame?" 

I arrived at this Somerset Academy the 18th of Oc- 
tober and intend to remain here till next October. I am 
assistant to Mr. Brackenridge. This is the last time I 
shall enter into such a business; it worries me to death and 
by no means suits my " giddy, wandering brain." 

I would go over for the gown this time two years, but 
the old hag Necessity has got such a prodigious grip of 
me that I fear I shall never be able to accomplish it. I 
believe if I cannot make this out I must turn quack, and 
indeed I am now reading Physic at my leisure hours, that 
is, when I am neither sleeping, hearing classes, or writing 
poetry — for these three take up all my time. 

It is now late at night; not an hour ago I finished a little 
poem of about 400 lines, entitled a Journey to Maryland — 
being the sum of my adventures — it begins — 

From that famed town where Hudson's flood 
Unites with Streams perhaps as good; 
Muse has your bard begun to roam — 

and I intend to write a terrible satire upon certain vicious 
persons of quality in New York — who have also used me 
ill — and print it next fall. It shall contain 5 or 600 lines. 
Sometimes I write pastorals to show my wit. 



479] Youth and Early Manhood. 15 

Deep to the woods I sing a Shepherd's care, 
Deep to the woods . . . 9 call me there, 
The last retreat of Love and Verse I go, 
Verse made me mad at first — and will keep me so. 

I should have been glad to have heard from you before 
now; while I was in college I had but a short participa- 
tion of your agreeable friendship, and the few persons I 
converse with and yet fewer whose conversation I delight 
in, make me regret the loss of it. I have met a variety of 
rebuffs this year, which I forbear to mention. I look like 
an unmeaning Teague just turned out of the hold of an 
Irish Ship. Coming down hither I met with a rare ad- 
venture at Annapolis. I was destitute of even a brass 
farthing. I got clear very handsomely. Could one ex- 
pect ever to see you again, if I travel through Virginia, I 
shall stop and talk with you a day or two. I should be 
very glad to receive a letter from you if it can be conve- 
niently forwarded. 

In short " Non sum qualis eram " as Partridge says in 
Tom Jones. My hair has grown like a mop, and I have a 
huge tuft of beard directly upon my chin. I want but five 
weeks of twenty-one years of age and already feel stiff with 
age. We have about 30 students in this academy who prey 
upon me like Leeches. 

" When shall I quit this whimpering pack, 
And hide my head in Accomack? " 
Shall I leave them and go 
Where Pokomokes long stream meandering flows — 

Excuse this prodigious scrawl without style or sense. 
I send this by Mr. Luther Martin who will forward it to 
Col. Lee — and he to you I hope. Mr. Martin lives in Ac- 
comack in Virginia this side the bay. 

Farewell and be persuaded I remain your truly humble 
servant and friend, 

PH. F-R-E-N-E-A-U- 10 



9 Illegible. 

10 Manuscript in the Archives of the Department of State at 
Washington. 



16 The Political Activities of Philip Freneau. [480 

This letter keeps us informed of Freneau's doings as far 
as the autumn of 1773, after which time we lose sight of 
him for a year or two. It is impossible to say where he 
was or what he was doing immediately after leaving Mary- 
land, although we may confidently assume that on all 
occasions and in all places he did pretty much as he 
pleased. When we next meet with him he is in New York, 
the hot-bed of toryism, lampooning the tories. In 1775 
we find him paying his respects in the columns of Hugh 
Gaine's n " Mercury " to General Gage, who had proclaimed 
in June of that year that the provinces were in a state of 
rebellion and out of the King's protection. Freneau pro- 
fessed, as rebels are wont to profess, to be deeply injured 
by the epithet " rebel." 

" Rebels you are " — the British Champion cries; 
Truth, stand thou forth and tell the wretch he lies. 
Rebels! and see this mock imperial lord 
Already threats these rebels with a Cord! 

Americans! at Freedom's fane adore! 
But trust to Britain and her flag no more. 
The generous genius of their isle has fled 
And left a mere impostor in his stead. 

To Arms! To Arms! and let the Murdering Sword 

Decide who best deserves the hang-man's cord. 

Nor think the hills of Canada too bleak 

When desperate freedom is the prize you seek. 

For that the call of honor bids you go 

O'er frozen lakes and mountains wrapped in snow. 

Haste! to your tents, in iron fetters bring 
Those slaves that serve a tyrant and a king. 
So just, so virtuous is your cause, I say 
Hell must prevail if Britain gains the day. 12 

11 Hugh Gaine, an Irishman, was the editor of the New York 
Mercury. His journal was edited in the interest of the whig party 
until the British troops approached New York in 1776. Then he 
went over to the royal cause. His double course is severely 
criticised by Freneau in his poem entitled: "The Political Biog- 
raphy of Hugh Gaine." 

12 The poem from which those lines are taken is addressed " To 
The Americans, on the rumored approach of the Hessian forces." 



481] Youth and Early Manhood. IT 

Thus the young man, without the slightest hesitation, 
and without any authority or responsibility, declares in 
the most fervid language for American Independence and 
proclaims a war upon England a twelve-month before 
Jefferson drew up the famous Declaration of the Fourth of 
July, 1776. In truth, such daring lines as these quick- 
ened the minds of the colonists and did much to create 
the sentiment which made the Declaration of Independence 
a plausible thing. To strong and brave minds, to the 
Henrys, and Otises and Hancocks, the only solution of 
the difficulties with the mother country was to be found in 
the absolute severance of all political ties. In this opin- 
ion Freneau shared to the fullest extent. In the year 1775 
the opinion-makers of the Revolution were exceedingly 
busy and none were more active than the young poet. In 
verse, sometimes good, more frequently bad, always bold 
and always effective, he held up for the detestation of man- 
kind, General Gage, Lord North, King George the Third, 
and the royal Governors, wherever he could find them. 
One of the shortest of these poems will serve to show how 
the cutting and slashing of the pen preceded the cutting 
and slashing of the sword, and how telling was Freneau's 
work as a precursor of a great movement. The poem is 
given entire. 

EMANCIPATION FROM BRITISH DEPENDENCE. 

Libera nos, Domine, Deliver us, O Lord, 

Not only from British Dependence but also — 

From a junto that labor for absolute power. 
Where schemes disappointed have made them look sour. 
From the lords of the council who fought against freedom 
Who still follow on where delusion shall lead them, 

From a group at St. James that slight our petitions, 
And fools that are waiting for further submissions, 
From a nation whose manners are rough and abrupt, 
From scoundrels and rascals whom gold can corrupt, 
34 



18 The Political Activities of Philip Freneau. [482 

From pirates sent out by command of the king 
To murder and plunder but never to swing, 
From Wallace and Graves and Vipers and Roses 13 
Whom, if Heaven pleases we will give bloody noses, 

From the valliant Dunmore with his crew of banditti, 
Who plunder Virginians at Williamsburg city, 
From hot-headed Montague mighty to swear, 
The little fat man, with his pretty white hair, 

From bishops in Britain, who butchers are grown, 
From slaves that would die for a smile of the throne, 
From assemblies that vote against Congress proceedings, - 
(Who have seen the fruit of their stupid misleadings), 

From Tyron, 14 the mighty, who flies from our city, 
And 'swelled with importance disdains the committee; 
(But since he is pleased to proclaim us his foes, 
What the devil care we where the devil he goes); 

From the caitiff Lord North, who would bind us in chains, 
From our noble King Log, with his tooth-full of brains, 
Who dreams and is certain (when taking a nap) 
He has conquered our lands, as they lay on his map, 

From a Kingdom that bullies and hectors and swears, 
I send up to heaven my wishes and prayers, 
That we disunited, may freemen be still, 
And Britain go on — to be damn'd if she will. 

The young verse-maker was sure as to the course to be 
pursued by America, but he was not sure as to the prob- 
lem that confronted his individual life. The poetry in his 
nerves unbalanced him and weakened his purposes. His 
property in New Jersey was neglected, and gradually be- 
gan to slip from his hands. The young patriot followed 
his instinct — often a surer guide than reason — and aban- 
doned himself to verse-making. The muse he chose was 
satire. The troublous times, he said, admitted of no other 
choice. 

In doing this Freneau was building better than he knew. 
The pieces which he sent to the press every week were 

13 " Wallace and Graves," British naval officers. " Vipers " and 
" Roses," the names of two ships in the English service. 

14 The last royal governor of New York. 



483] Youth and Early Manhood. 19 

rarely ineffectual. They made the tories wince and they 
inspired the whigs with hope and courage. They brought 
him no money, yet they did better than this. They ren- 
dered the country an important service, and they brought 
their author lasting fame : they made him the " Poet of the 
Revolution." 



CHAPTER II 

THE POET OF THE REVOLUTION 

In 1776, Freneau left New York and its tory citizens to 
their own devices and embarked upon a vessel bound for 
the Danish West Indies. According to one account he 
sailed as the agent of a New York trading firm; another 
account states that he shipped as a common sailor and 
worked his way up to the post of captain. 1 It is certain 
that he learned the art of navigation and that he soon be- 
came the master of a ship. From this time on we shall 
find him a rover, now upon the sea, now upon the land; 
now a captain, now an editor, but always a poet, writing 
for the American cause. 

His first voyage was to the Virgin Islands, where he 
seems to have remained for some time. He fell in love 
with the natural beauties of the southern isles, and con- 
ceived a disgust for their institutions. Slavery was always 
an abomination in his eyes. The mild form of northern 
servitude was distasteful to him, but the degraded condi- 
tion of the West Indian slave awakened the warmest indig- 
nation in his generous mind. In a poem descriptive of the 
island of Santa Cruz, he expresses in sorrowful strain his 
repugnance to the ugly form of human bondage found 
there. " It casts," he says in a preface to this poem, " a 
shade over the native charms of the country; it blots out 
the beauty of the eternal spring which Providence has 
there ordained to reign; and amidst all the profusions of 
beauties which nature has scattered — the brightness of the 
heavens, the mildness of the air, and the luxuriance of the 
vegetable kingdom — it leaves me melancholy and discon- 

1 American Magazine of History, vol. xvii, p. 124. 



485] The Poet of the Revolution. 21 

solate. Thus the earth which, were it not for the lust of 
pride and dominion, might be an earthly paradise, is, by 
the ambition and overbearing nature of mankind, rendered 
an eternal scene of desolation, woe, and horror: the weak 
go to the wall while the strong prevail." ' 

This hatred of slavery was not an evanescent passion of 
youth doomed through the hardening processes of years 
to die; it was a settled principle of his life and conduct. 
In another poem, written in middle life, he thus holds up 
the torch of liberty, and with it runs ahead of his times by 
half a century: 

" O come the time and haste the day 
When man shall man no longer crush; 
When reason shall enforce her sway, 
Nor these fair regions raise one blush, 
Where still the African complains. 
And mourns his yet unbroken chains." 3 

" In after life," says Duyckinck, " when the poet himself 
became the owner of slaves in New Jersey, he uniformly 
treated them with kindness, manumitted them in advance 
of the Emancipation Act in the State, and supported on 
the farm those of them who were too old to take care of 
themselves." 

When Freneau returned to America, independence had 
been declared and the Revolution was progressing with 
varying fortune. The poet threw himself into the strug- 
gle with a poet's ardor. One of his first acts after fairly 
getting upon land was to ratify the Declaration of Inde- 
pendence in four hundred spirited verses. This poem, en- 
titled " American Independent," was printed at Philadelphia 
in 1778 at the press of Robert Bell, the printer of Thomas 
Paine's " Common Sense." When foreign troops were 
ravaging the land, when the principal cities were in pos- 
session of the enemy, when the Continental Army at Val- 
ley Forge was starving, when toryism threatened to wreck 
the cause of liberty, Freneau's animating voice was heard. 



2 United States Magazine, 1779. * Poems, edition of 1795. 



22 The Political Activities of Philip Freneau. [486 

Americans! revenge your country's wrongs 

To you the honor of the deed belongs. 

Expel yon thieves from these polluted lands, 

Expect no peace i till haughty Britain yields, 

Till humbled Britons quit your ravaged fields. 

No dull debates or tedious councils know, 

But rush at once embodied on your foe! 

Your injured country groans while yet they stay, 

Attend her groans, and force their hosts away. 

Your mighty wrongs the tragic muse shall trace, 

Your gallant deeds shall fire a future race. 

To you may Kings and potentates appeal, 

You may the doom of jarring nations seal. 

A glorious empire rises bright and new, 

Firm be its base, and it must rest on you. 

Fame o'er the mighty pile extends her wings, 

Remote from princes, bishops, lords, and kings, — 

Those fancied gods, who famed through every shore, 

Mankind have fashioned and like fools adore. 

Freneau kept his eye upon the events of the day and 
cheered and exhorted and celebrated as the poet-general 
of a revolution should. But he was not content to lurk 
and write. In 1778 New Jersey became the battle-ground 
of the revolution, and the region of the poet's home was 
filled with the soldiery of the contending parties. The 
battle of Monmouth was fought almost within sight of his 
ancestral door. Philip shouldered his gun for the defense 
of his fireside. He entered the army as a private and was 
promoted to the rank of sergeant. 5 His career as a soldier 
was brief and unimportant, but it served to show the stuff 
of which he was made. 

Freneau soon laid down the sword for the pen. The 
year following the battle of Monmouth (1779) was a busy 
one, and was more profitably spent than if he had remained 
in the field. Poem after poem came out to revive the 
flagging spirits of the revolutionists. His old college- 
mate and colleague in poetry, Hugh Brackenridge, was 
in Philadelphia trying to drive the wolf from the door by 

4 Aimed at Lord North's " Conciliating Bills " which arrived in 
New York in April, 1778, and which conciliated nobody. 

5 Jerseymen in the Revolution, p. 465. 



487] The Poet of the Revolution. 23 

editing " The United States Magazine, A Repository of 
History. Politics and Literature." The columns of this 
periodical were open to Freneau and he became one of its 
principal contributors. Brackenridge used a free lance 
and his magazine was feared and hated. In addition to 
the poems that were written on the voyage to the West 
Indies, there appeared in this magazine Freneau's " King 
George the Third's Soliloquy," and his " Dialogue be- 
tween his Britannic Majesty and Mr. Fox." The object of 
these pieces was to urge on to carnage and conquest rather 
than to awaken feelings of the sublime and beautiful. They 
are blunt, coarse appeals to the Americans to " up and at 
the bloody red coats," and there is no poetry in them. The 
British army is characterized as a band of devils that it 
would be a mercy to rid the earth of. George III in solil- 
oquy, thus describes his method of raising a force to march 
against America: 

Is there a robber close in Newgate hemmed? 
Is there a cut-throat fettered and condemned? 
Haste loyal slaves, to George's standard come, 
Attend his lectures when you hear the drum! 
Your chain I break; for better days prepare; 
Come out my friends from prison and from care. 
Far to the West I plan your desperate sway, — 
There 'tis no sin to ravage, burn, and slay, 
There without fear your bloody aims pursue, 
And show mankind what English thieves can do. 

In the dialogue between Fox and King George, the lib- 
eral-minded and far-seeing statesman thus advised his 
monarch : 

In one short sentence take my whole advice, 
(It is no time to flatter and be nice) 
With all your soul for instant peace contend, 
Then shall you be your country's truest friend; 
Peace, instant peace, may stay your tottering throne, 
But wars and death and blood can profit none. 
Withdraw your arms from the American shore, 
And vex her ocean with your fleet no more; 
Implore the friendship of the injured states, 
Nor longer strive against the stubborn fates. 

Southern Literary Messenger, vol. vii, p. 3. 



24 The Political Activities of Philip Freneau. [488 

But the haughty monarch would not listen to Fox, or to 
any one else. The war went on by land and by sea, and 
whether by land or by sea, Freneau was prompt to record 
in "superior [?] lays" the glorious deeds of the Ameri- 
cans. In 1779, the gallant Paul Jones of the Bon Homme 
Richard, gloriously defeated Captain Pearson of the Sera- 
pis, and the victory was duly celebrated by our poet, and 
the victor thus urged on to further conquest: 

Go on great man to scourge the foe, 
And bid these haughty Britons know 
They to our thirteen states shall bend; 
The stars that veiled in dark attire 
Long glimmered with a feeble fire, 
But radiant now ascend. 

Bend to the stars that flaming rise 

On western worlds, more brilliant skies, 

Fair Freedom's reign restored. 

So when the Magi came from far 

Beheld the God-attending star, 

They trembled and adored. 

" The United States Magazine " died in the first year of 
its life and its talented editor abandoned journalism and 
sought and gained distinction in law. Freneau was in 
no sense the editor of this magazine, as has been stated so 
frequently. 7 He simply gave a helping hand to his friend 
Brackenridge, who was the real proprietor. 

After the magazine had gone under, Freneau ventured 
again upon the sea. This time he sailed for the West In- 
dies with letters of marque against British commerce, 
commanding the Aurora, a smart little craft fitted out for 
privateering. 8 But Freneau's naval achievements were 
destined to be of no greater importance than his career as 
a land soldier. When his vessel was well beyond the 

7 See Griswold's Male Poets of America, p. 32, and Alibone's 
Dictionary of Authors. 

8 Forman's Journey down the Ohio, p. 10. From Freneau's own 
account of this voyage, it does not appear that he was the actual 
commander. See his " Some Account of the Capture of the ship 
Aurora " recently published for the first time. 



489] The Poet of the Revolution. 25 

capes at the mouth of the Delaware Bay, she was pursued, 
and after a sharp engagement, was captured by the British 
cruiser Iris. The captives were taken to Xew York and 
confined in a British prison-ship that lay moored off the 
battery. Freneau was placed upon the Scorpion, where he 
was kept two months, and then, when dangerously sick of 
a fever, was removed to the hospital-ship Hunter, " to all 
hospitals disgrace." From the Hunter in a short time he 
escaped, broken and emaciated by the cruel experiences 
through which he had passed. Of course the incident be- 
came the occasion of a poem. The whole story is told 
in " The British Prison-Ship," in four cantos, written and 
published in 1781. 

Freneau wrote nothing for the American cause that was 
more effective than this piece. In it the cruelty and inhu- 
manity of the British were depicted by the hand of one who 
had himself seen and suffered. " The picturesque inci- 
dents of the voyage which is described; the animated ac- 
tion of the capture; the melancholy circumstances of the 
prison-ship contrasted with the happy scenes of the shore; 
the stern terrors of the Hospital, are all in Freneau's best 
vein." 9 The following lines are too realistic to be untrue: 

Such food they sent to make complete our woes, — 
It looked like carrion torn from hungry crows: 
Such vermin vile on every joint were seen, 
So black, corrupted, mortified, and lean, 
That once we tried to move our flinty chief, 
And thus addressed him, holding up the beef: 

" See, Captain, see! what rotten bones we pick; 
What kills the healthy cannot cure the sick; 
Not dogs on such by Christian men are fed. 
And see, good master, see what lousy bread! " 

" Your meat or bread," this man of death replied, 

" Tis not my care to manage or provide — 
But this, base rebel dogs, I'd have you know 
That better than your merit we bestow." 

When the poet escaped from the clutches of the British, 
he returned to Philadelphia and slowly regained his health. 



Poems of the Revolution, edited by E. A. Duyckinck, p. 10. 



26 The Political Activities of Philip Freneau. [490 

He soon resumed his post as verse-chronicler of the revo- 
lution and followed with anxious eyes the closing scenes 
of the struggle. On the eighth of October, 1781, he ad- 
dressed these savage and semi-prophetic lines to the proud 
Cornwallis : 

Would thou at last with Washington engage, 
Sad object of his pity not his rage? 
See round thy posts how terribly advance 
The chiefs, the armies, and the fleets of France. 
Fight while you can for warlike Rochambeau 
Aims at your head his last decisive blow; 
Unnumbered ghosts from earth untimely sped, 
Can take no rest till you like them are dead. 
Then die, my lord; that only chance remains 
To wipe away dishonorable stains. 
For small advantage would your capture bring — 
The plundering servant of a bankrupt king. 10 

A month later came Yorktown and the consummation 
of American Independence. Freneau, like all Americans, 
hated Cornwallis bitterly, and gloated over the fallen 
chief in coarse and careless verse. With this malediction 
he sped him from our shores: 

Now curst with life, a foe to man and God, 
Like Cain we drive you to the land of Nod; 
He with a brother's blood his hands did stain, 
One brother he, — you have a thousand slain. 
And may destruction rush with speedy wing, 
Low as yourself to drag each tyrant king. 11 

The war was over but there was aftermath enough to 
keep the patriotic pen of Freneau in motion. When the 
traitor Arnold left New York in December, 1781, the 
poet's fiercest and choicest curse went with him; the battle 
of Eutaw Springs was celebrated in a lyric that Scott 
learned by heart and regarded as one of the finest things 
in the language; Washington,' on his way to Virginia was 
greeted in Philadelphia by a worthy ode; the rejoicing over 
the recognition of National Independence stirred the poet 

10 Poems Relating to the Revolution, p. 121. "Ibid., p. 132. 



491] The Poet of the Revolution. 

to one of his highest flights. 12 Taking it altogether, the 
year 1782 was a most productive one. Freneau seems to 
have settled down to literature with the purpose of making 
a living out of it. He wrote constantly and much, both 
in prose and verse, for " The Freeman's Journal," through- 
out the three years of its existence. 

Freneau was now enjoying fame as poet, essayist and 
patriot, but money was not forthcoming. America was 
too poor to pay for literature and the poet was driven to 
seek bread upon the water. Next to literature he loved 
the sea. He became captain of a vessel and it was a com- 
mon occurrence of his life to sail down to the West Indies 
with a cargo of grain, and bring up a cargo of molasses 
and poetry. In 1784, we find him wandering about among 
the ruins of old Port Royal and riming the sad condition 
of that unfortunate and desolate place. For five or six 
years without interruption, he led the hardy life of a tar. 

In April, 1789, George Washington proceeded in tri- 
umph through the States to New York to be inaugurated 
as president. " Thursday last between two and three 
o'clock," says the " Gazette of the United States " of 
April 25, 1789, " the most illustrious president of the 
United States arrived in this city. At Elizabethtown he 
was received by a deputation of three senators and five 
representatives of the United States, and the officers of the 
state and corporation, with whom he embarked on the 
barge for the purpose of wafting him across the bay. It is 
impossible to do justice to an attempt to describe the 
scene exhibited in his Excellency's approach to the city." 
In another column in the same number of the Gazette is 
this notice: 

" Thursday, April 23, arrived here the schooner Colum- 
bia, P. Freneau, in 8 days from Charleston. On board 
was Dr. King from S. America, with a collection of nat- 
ural curiosities, particularly a male and female ourang- 
outang." 

12 Poems of the Revolution, pp. 201, 260, 270. 



28 The Political Activities of Philip Freneau. [492 

Captain Freneau, with Dr. King and his monkeys on 
board, brought his ship into line and sailed up the bay with 
the gay and magnificent procession of boats that escorted 
the president-elect to the capital city. When the poet 
landed he found himself in the midst of old friends. There 
was his room-mate and classmate, James Madison, the 
young "father of the constitution"; there was the ambi- 
tious and unscrupulous Aaron Burr; and, the rising Henry 
B. Livingston, boon companions at Princeton. These 
men, now powerful in the nation, were glad to grasp the 
hand of their old friend, for they recognized in him one 
almost as famous as themselves and one not inferior in 
talent. Freneau was charmed by the new and invigorating 
associations of New York life. He gave up his ship and 
again took up his pen. He made friends with the leading 
democrats, and was soon conspicuous as a champion of 
democracy. The pen of a contemporary has left us a pic- 
ture of him as he moves about in printing offices and 
government halls, or stands chatting with senators and 
generals. " He was somewhat below the ordinary height; 
in person, he was thin yet muscular; his countenance was 
traced by care; he was mild in enunciation, neither rapid 
nor slow, but clear, distinct and emphatic. His forehead 
was rather beyond the medium elevation; his eyes a dark 
gray, occupying a socket deeper than common; his hair 
a beautiful iron gray. He was free of all ambitious dis- 
plays. His habitual expression was pensive. His dress 
might have passed for that of a farmer." 13 

Freneau found employment as a writer for the New 
York Daily Advertiser. 14 He does not seem to have been 

13 Sketch of Freneau in Dr. J. W. Francis' Cyclopedia of Ameri- 
can Literature, vol. i, p. 333. 

""About 1790," says Major Samuel Forman in his "Journey 
down the Ohio," " Captain Freneau married my sister Eleanor." 
Eleanor Forman was the daughter of Samuel Forman of New 
Jersey, one of Freneau's neighbors, and a hero of the revolution. 
The poet and Eleanor seemed to have been drawn together by 
an affinity of tastes, for she was a verse-maker as well as he. 



493] The Poet of the Revolution. 29' 

its editor, as Hudson and others assert, but its manager or 
superintendent — a kind of man-of-all-work. 15 One of .his 
co-laborers upon the Advertiser was John Pintard, a warm 
personal friend, and the translating-clerk in the Depart- 
ment of State. Freneau worked vigorously for the Ad- 
vertiser, and he was soon recognized in political circles as 
a strong ally of the anti-federalists. 

In 1790, Thomas Jefferson came to New York to as- 
sume the duties of Secretary of State. He had just come 
from Paris where he had been an eye witness of the storm- 
ing of the Bastile and had learned from terrible object- 
lessons to respect the power of the masses. When he 
arrived in New York, his democracy was at a white heat 
and he eagerly set about building up a democratic party. 
He met Freneau and found him a congenial spirit. The 
true eye of the great politician saw in the poet good tim- 
ber for the edifice it was his intention to rear. Jefferson, 
as a well-known patron of letters, was in a position to 
make overtures to any man of distinguished talents. An 
opportunity to render Freneau good service soon pre- 
sented itself. When the government removed to Phila- 
delphia early in 1791, John Pintard, the French translator 
in Jefferson's office, resigned his place, declining to leave 
New York for the pitiable stipend of two hundred and fifty 
dollars per annum, the amount appropriated for the trans- 
lating-clerk. Madison and Henry Lee urged Jefferson to 
appoint Freneau to the position made vacant by Pintard. 
Jefferson gladly acceded to their request, and on February 
28, 1791, wrote to Freneau as follows: 

"Sir: The clerkship for foreign languages in my office 
is vacant. The salary indeed, is very low, being but two 



The writer has seen in manuscript some very clever verses written 
by Mrs. Freneau. For several years before marriage, their cor- 
respondence is said to have been conducted largely in rhyme. 
The Freneau home, when we get glimpses of it, was a happy one, 
albeit unthrifty. 

15 Hudson's Journalism in America, p. 175. 



30 The Political Activities of Philip Freneau. [494 

hundred and fifty dollars; but also, it gives so little to do 
as -not to interfere with any other calling the person may 
choose which would not absent him from the seat of gov- 
ernment. I was told a few days ago that it might perhaps 
be convenient for you to accept it. If so, it is at your ser- 
vice. It requires no other qualification than a moderate 
knowledge of the French. Should any thing better turn 
up within my department that might suit you, I should be 
very happy to bestow it as well. Should you conclude to 
accept the present, you may consider it as engaged to you, 
only be so good as to drop me a line informing me of your 
resolution." 16 

We have not Freneau's reply to this letter but we know 
that he was in no hurry to accept the offer. It was his in- 
tention to remove from New York, his work upon the 
Advertiser rendering him but slender returns; but he had 
misgivings about going to Philadelphia. His immediate 
project was to settle in New Jersey and to establish a 
country newspaper, a plan which he long cherished and one 
which he finally carried out. Madison, however, saw the 
value of the man as a democratic publicist and would not 
listen to his burying himself in the obscurity of a New 
Jersey village. He went to Freneau and reasoned with 
him, endeavoring to make him sensible of the advantages 
that Philadelphia offered for his private undertaking over 
a small country town. He explained the nature of the 
services required of him as translator in the Department 
of State. Freneau had thought that he would be expected 
to turn English into French, and feeling his incompetency 
for this work, delicacy forbade him to accept the position. 
Madison dissipated this objection by assuring him that no 
such task would be required of him. Freneau listened to 
the solicitations of his friend and decided to go to Phila- 
delphia at once. Madison wrote to Jefferson stating that 
he might expect Freneau in Philadelphia in a very short 

16 Jefferson's Works, vol. iii, p. 215. 



495] The Poet of the Revolution. 31 

time. The letter contains a tribute to Freneau's char- 
acter and genius, and principles, and closes with these 
words: " It is certain that there is not to he found in the 
whole catalogue of American Printers [Editors] a single 
name that can approach rivalship." 17 

But Freneau halted in New Jersey, and Jefferson con- 
cluded that he had abandoned the notion of going to 
Philadelphia. On May 9 Jefferson wrote to Madison: 

" Your favor of the first came to hand on the third. 
Mr. Freneau has not followed it. I suppose, therefore, he 
has changed his mind back again, for which I am sorry." 1S 
A few days after this Jefferson wrote to Thomas Mann 
Randolph, his son-in-law, as follows: 

" I enclose you Bache's as well as Fenno's papers. You 
will have perceived that the latter is a paper of pure tory- 
ism, disseminating the doctrine of monarchy, aristocracy, 
and the exclusion of the people. We have been trying to 
get another weekly or half-weekly set up, excluding ad- 
vertisements, so that it might go through the States and 
furnish a whig vehicle of intelligence. We hoped at one 
time to have persuaded Freneau to set up here but 
failed." 19 

Jefferson did not intend to lose Freneau if he could help 
it. Further pressure was brought to bear upon the editor. 
Gen. Henry Lee, another friend, wrote to him and urged 
him to embrace the opportunities of a career at the seat 
of government. 20 The general promised aid in securing 
subscribers for the projected paper and, (Parton says) ad- 
vanced money for the enterprise. 21 Jefferson, on July 21, 
1791, again wrote to Madison with the view of getting Fre- 
neau. " I am sincerely sorry," he says, " that Freneau has 
declined coming here. Though the printing business be 

17 Writings of Madison, vol. i, p. 535. 

18 Jefferson's Writings, vol. v, p. 330. 

19 Ibid., vol. v, p. 336. 

20 Randall's Life of Jefferson, vol. ii, p. 74. 

21 Parton's Life of Jefferson, p. 433. 



32 The Political Activities of Philip Freneau. [496 

sufficiently full here, yet I think he would set out on such 
advantageous grounds as to have been sure of success. 
His own genius, in the first place, is so superior to that of 
his competitors. I should have given him the perusal of 
all my letters of foreign intelligence and all foreign news- 
papers, the publication of all proclamations and other pub- 
lic notices within my department, and the printing of the 
laws, which added to his salary would have been a consid- 
erable aid. Besides this, Fenno's being the only weekly 
paper and under general condemnation for its toryism and 
its incessant efforts to over-turn the government, Freneau 
would have found that ground as good as unoccupied." 

This encouragement from such influential quarters 
finally caused Freneau to abandon his original scheme and 
settle in Philadelphia. On the twenty-fifth of July, four 
days after Jefferson's last letter to Madison, he himself 
wrote to Madison: 

" Some business detains me here [in New Jersey] a day 
or two longer from returning to New York. When I 
come, which I expect will be upon Thursday, if you shall 
not have left the city, I will give you a decisive answer 
relative to printing my paper at the seat of government 
instead of New York. If I can get Mr. 'Childs to be con- 
nected with me on a tolerable plan I believe I shall sacri- 
fice other considerations and transfer myself to Philadel- 
phia." 

Freneau came to terms with the printer, Childs, and in 
a short time repaired to Philadelphia, leaving his family 
temporarily behind him. In the course of a few days after 
his arrival he received the following document: 

" Philip Freneau is hereby appointed clerk for foreign 
languages in the office of Secretary of State, with a salary 
of two hundred and fifty dollars a year, to commence from 
the time he shall take the requisite oaths of qualification. 
Given under my hand and seal this 16th day of August, 
I79 1 * Thomas Jefferson." 22 

22 Jefferson MS. Archives of State Department at Washington. 



497] The Poet of the Revolution. 33 

This is the story of Freneau's coming to Philadelphia to 
set up a paper and of his appointment to an office under 
Jefferson. It is a simple story and one that is not sug- 
gestive of crookedness upon the part of any of the per- 
sons connected with it. As far as Freneau is concerned, 
his course was one of absolute single-mindedness through- 
out. He intended to start a newspaper of his own, and a 
democratic newspaper at that. If he did not set up one in 
New Jersey, then he would start one in New York. Jef- 
ferson, Madison, and other democrats, hearing of this, 
held out, in a perfectly honorable way, inducements for him 
to establish his paper in Philadelphia, and after due re- 
flection he adopted the counsel of his friends. Those 
friends knew that he intended to edit a paper — that indeed 
he must do something of the kind or starve. They knew, 
moreover, that he was a fierce and uncompromising demo- 
crat and that he would conduct the paper according to his 
own notions. What their motives were in getting such a 
man to come to the seat of government is very easy to 
determine. They wanted the influence of his pen for party 
purposes. Whether Jefferson was justified in using pa- 
tronage for the accomplishment of his purpose is a prob- 
lem of ethics for those who are interested in the question 
to solve. It may be here remarked that from the begin- 
ning of our government to the present day influential edi- 
tors have fared very well in the matter of federal appoint- 
ments. With Freneau, the establishing of his paper in 
Philadelphia was purely a matter of business, and it is dif- 
ficult to conceive how there could have arisen in his mind 
any quibbling as to the rightfulness or wrongfulness of his 
earning a little additional money by translating. The mat- 
ter would not be worth referring to, if, as we shall see 
later, so much had not been made of it by the enemies of 
Freneau and of Jefferson. 

We shall now take up a chapter in Freneau's history 
which has not received the consideration it deserves. We 
shall follow Freneau in his career as an editor. We all 
35 



34 The Political Activities of Philip Freneau. [498 

know something of him in a vague sort of way as a poet. 
We know a little of him, too, as an editor, but, unfortu- 
nately what we know of him as an editor is false knowl- 
edge. Washington Irving called him a " barking cur," 
and succeeding historians down to Goldwin Smith, who re- 
fers to him as a " reptile journalist," have been content to 
perpetuate a false and unjust estimate of the man. 



CHAPTER III 

THE DEMOCRATIC EDITOR 

The plan and purposes of the new paper were published 
at considerable length. The Gazette was to appear every 
Wednesday and Saturday; 1 the subscription price was to be 
three dollars per annum; the news published was to be of 
national character, especial attention being promised to 
the doings of the national government; the columns of the 
Gazette were to be open to all original and interesting 
productions whether prose or verse; political discussion 
was to be conducted with perfect fairness and the great- 
est latitude; the debates of congress and reports of de- 
partments were to be printed; all important books were to 
be reviewed; advertisements were to be allotted a certain 
space and were not to encroach upon the columns intended 
for general reading matter. 

The title of the paper, " The National Gazette," suggests 
the aims of its founder. It was to be a paper for circula- 
tion in all parts of the union. It was to be an organ with 
national influence and a national constituency as opposed 
to those papers which appealed to local constituencies 
and which rarely found their way out of the neighborhood 
in which they were printed. This was the idea of the editor 
and his advisers, and every effort was made to keep the 
paper cosmopolitan and to get it into distant parts. 

Freneau pushed forward the publication of the Gazette 
and the first number came from the press several days be- 
fore it was announced to appear. In the first issues there 
was nothing to shadow forth that violent partisanship 
which later was to make its editor one of the best hated 

1 It was actually published every Monday and Thursday. 



36 The Political Activities of Philip Freneau. [500 

men in America. In one respect, indeed, it offended from 
the beginning the opinion of a large and influential ele- 
ment of the American people. It supported without re- 
serve the principles of the French revolution. Its col- 
umns were filled with equality and fraternity, and Tom 
Paine and Rousseau. Aside from this undisguised endorse- 
ment of what was then to many minds, political heresy, its 
tone was mild, and its articles harmless and colorless. 
Its professed policy was broad and patriotic. It early 
maintained the doctrine that the union between the states 
should be social and commercial as well as political. " The 
interests of the northern and southern states are insepa- 
rable forever. It seems to have been the design of nature 
in her formation and distribution of that part of North 
America known by the name of the United States, that a 
mutual dependence should take place between the north- 
ern and southern inhabitants." ' But the tendency of the 
paper was unmistakable. It appealed to the common 
people as the true rulers of government. Its evident pur- 
pose was to evoke and energize the spirit of democracy. 

Was there need for such a paper? Was the spirit of 
democracy flagging and the tide running toward a gov- 
ernment, strong, centralized, and aristocratic? Was the 
constitution, as Jefferson says it was, galloping toward 
monarchy? We cannot understand Freneau and the part 
he played in public affairs until we have found answers to 
these questions, and to answer them we must try to get as 
clear a notion as possible of the state of political opinion 
in the United States in 1791. 

To do this let us begin with the rulers. Let us interro- 
gate those who were in the saddle at the time, and deter- 
mine the direction they were galloping by the tendency of 
their thought; for as men think, so are they. 

If we begin with the President, there can be no doubt 
of Washington's perfect loyalty to the constitution and to 

2 National Gazette, November, 1791. 



501] The Democratic Editor. 37 

a republican form of government. In 1786, indeed, he 
recognized that times were changing, and that monarchy 
was in the air, 3 but he deprecated with the utmost horror 
the progress of monarchical sentiment. Freneau has 
attested to the soundness of the great chief's republicanism 
in these lines: 

" Oh Washington, thrice glorious name! 
What due rewards can man decree? 
Empires are far below thy aim. 
And sceptres have no charm for thee. 
Virtue alone has your regard, 
And she must be your great reward." 

We pass from the President to the Vice-president. John 
Adams has written many hundreds of pages upon the sub- 
ject of government, but human reason cannot fathom his 
meaning and what he really thought will never be known." 
Madison, open and above board, spoke of him to Washing- 
ton as aiming at mixed monarchy, 5 but Adams said he was 
not aiming at monarchy, and we must believe he knew his 
motives better than Madison knew them. We cannot get 
from his writings what Adams thought, but we can learn 
from them what he felt. He hated democracy, he loved 
a strong government. " Democracy," 6 he says, " never 
has been and never can be so desirable as aristocracy or 
monarchy, but while it lasts, is more bloody than either. 
Remember, democracy never lasts long. It soon wastes, 

3 Sparks' Life and Writings of Washington, vol. ix, p. 187. 

4 An English reviewer of the day thought he understood Adams: 
" The great and leading idea which runs through the ingenious 
and learned works of Mr. Adams is that a mixture of the three 
powers, the regal, the aristocratical and the democratical, prop- 
erly balanced, comprises the most perfect form of government." 
American Daily Advertiser, Nov., 1792. Such an interpretation 
must have been based upon such statements as these: " The Eng- 
lish Constitution is the only scientifical government." John 
Adams' Works, vol. vi, p. 118. "A hereditary first magistrate 
would perhaps be preferable to an elective one." 

5 In a conversation with the President in 1792, Writings of 
Madison, vol. i, p. 558. 

John Adams' Works, vol. vi, p. 483. 



38 The Political Activities of Philip Freneau. [502 

exhausts, and murders itself. There never was a democ- 
racy that did not commit suicide." And again: "It is 
true and I rejoice in it, that our president has more power 
than the stadt-holders, the doges, the archons, or the 
kings of Lacedaemon." He expresses his profound dis- 
trust of self-government in these words : " The proposi- 
tion that the people are the best keepers of their own lib- 
erties is not true. They are the worst conceivable, they 
are no keepers at all; they can neither judge, act, think, 
or will, as a political body. Individuals have conquered 
themselves; nations and large bodies never.'" In a letter 
to his democratic cousin, Samuel Adams, John Adams, in 
a few inadvertent words, betrays his feelings towards pop- 
ular liberty. Samuel Adams had advanced the proposi- 
tion that the love of liberty is interwoven in the soul of 
man. John Adams, candidate for popular favor, replied: 
" So it is, according to La Fontaine, in that of a wolf." * 
Late in life, John Adams said that his political downfall 
was largely due to the writings of Philip Freneau.' He 
would more justly have attributed his retirement to his 
own writings. 

When we come to Washington's first cabinet we find a 
house divided against itself. Relying upon his own vast 
authority and the rectitude of his intentions, the president 
invited to assist him in governing, two men whose views 
upon government diverged as widely as possible. Thomas 
Jefferson and Alexander Hamilton, by every principle and 
implication of their being, were unfitted to work together, 
and Washington's attempt at a mixed cabinet failed. In 
a short time the imperious- and imperial Hamilton domi- 
nated Washington and the administration, and Jefferson 
was forced to retire. 

What were Hamilton's views upon government? If he 
could have had his will, what form of government would 



Works of John Adams, vol. i, p. 587. 
' Works of Samuel Adams. 9 Works of John Adams. 



503] The Democratic Editor. 39 

have been instituted? What was the tendency of our gov- 
ernment when it was under his direction? To get an an- 
swer to this question, we may take the testimony first of 
a friend, then of an enemy. Gouverneur Morris, an inti- 
mate friend and co-worker in politics, said of Hamilton: 
" He hated republican government because he confounded 
it with democratic government. One marked trait of the 
general's character was his pertinacious adherence to 
opinions once formed. He never failed on every occa- 
sion to advocate the excellence of and avow his attach- 
ment to monarchical government." 1 ' Thomas Jefferson 
corroborates this language by putting the following words 
in Hamilton's mouth; words, Jefferson avers, which were 
written down almost immediately after they were spoken: 
" I own it is my opinion, although I do not publish it in 
Dan and Beersheba, that the present government is not 
that which will answer the ends of society by giving sta- 
bility and protection to its rights, and that it will probably 
be expedient to go to the British form." u 

Hamilton's correspondence is replete with lugubrious 
apprehensions that the government by the people might 
fail. 12 The people were to him " in forme ingens, cut lumen 
ademption." 1S In a letter to Theodore Sedgwick he speaks 
of democracy as a virulent poison, that was threatening to 
destroy the life of the nation." In 1802, when he had been 
unhorsed and Jefferson was in the saddle, he writes to his 
old friend and fellow-aristocrat, Morris, bitterly com- 
plaining of his fate: "Mine is an odd destiny. I am still 
laboring to prop the frail and worthless fabric. Yet I have 
the murmurs of its friends no less than the curses of its 
foes for my reward. What can I do better than withdraw 
from the scene? Every day proves to me more and more 

10 Sparks' Gouverneur Morris, Life and Works, vol. Hi, p. 260. 

11 Ford's " Jefferson's Writings," vol. i, p. 169. 

12 See Hamilton's Works, vol. v, p. 441; vol. vi, p. 54; vol. iii, 
p. 260. 

13 Ibid., vol. vi, p. 540. M Ibid., vol. vi, p. 568. 



40 The Political Activities of Philip Frencau. [504 

that this American world was not made for me." lD At a 
banquet in New York, in reply to a toast Hamilton uttered 
these remarkable words: "Your people, sir, your people 
are a great beast." 1G But enough of quotations. Every- 
body knows now as well as Jefferson knew in 1791 that 
Alexander Hamilton hated democracy and that he had 
little faith in the government that he had helped to estab- 
lish. 

It is of interest to note also what the lesser lights, what 
senators and representatives and diplomats of the time 
thought of democracy. The young and eloquent Fisher 
Ames, the confidential friend of Hamilton and a leader 
in the house of representatives, declared democracy to be 
the isthmus of a middle state, nothing in itself. Like death 
it was the dismal passport to a more dismal hereafter. 
He thought our nation began self-government without 
education for it. " Like negroes," he says, " freed after 
grown up to man's estate, we are incapable of learning 
and practicing the great art of taking care of ourselves."" 
He greets Hamilton's sympathetic ears with these words: 
" Our government is becoming a mere democracy which 
has never been tolerable or long tolerated." 1S And again, 
in an explosion of disgust and despair he cries: "Our 
country is too big for union, too sordid for patriotism, too 
democratic for liberty! What is to become of it, He who 
made it best knows." 19 

Gouverneur Morris has answered for Hamilton and may 
now answer for himself on the subject of democratic gov- 
ernment. Writing from Paris to Rufus King he says: 
" The people, or rather the populace — a thing which, thank 
God, is unknown in America — are flattered with the idea 
that they are under no restraint except such as might be 

15 Hamilton's Works, vol. vi, p. 530. 

16 Adams' History of the United States, vol. i, p. 85. 

17 Works of Fisher Ames, vol. i, p. 224. 

18 Hamilton's Works, vol. vi, p. 201. 

19 Ames' Works, vol. i, p. 327. 



505] The Democratic Editor. 41 

inspired by magistrates of their own choice." 20 This 
haughty lieutenant of Hamilton's having narrowly escaped 
the fury of that same Parisian populace, wished to check 
the power of the people in his own country by a strong 
government. He believed that a national law should re- 
peal any state law, and was for a senate for life, appointed 
by the chief magistrate. The body should consist of men 
of wealth and of aristocratic spirit — one that would " lord 
it through pride." 

Theodore Sedgwick, speaker of the House of Repre- 
sentatives, had no faith in the manner of electing the 
president. 21 John Jay, Chief Justice of the Supreme Court, 
doubted whether the people could long govern themselves 
in an " equal, uniform and orderly manner." " Oliver 
Wolcott, Comptroller of the Treasury, and successor of 
Hamilton as Secretary, believed that our system of gov- 
ernment would fail. 23 Chauncey Goodrich, a leader in poli- 
tics wrote : " Our greatest danger is from the antagonism 
of levelism. What folly is it that has set the world agog 
to be all equal to French barbers?" George Cabot, sena- 
tor from Massachusetts, held the belief that " Democracy 
in its natural operation is the government of the worst." ~* 

Such was the faith, or rather lack of faith, of our fed- 
eral fathers. Such were the avowed opinions regarding 
self-government held by those who were administering the 
government, making its laws, conducting its diplomacy, 
pronouncing its justice, at the period when Freneau set 
up his National Gazette in Philadelphia. Washington 
warned the federal leaders against their monarchical no- 
tions, reminding them that it was but a step from think- 
ing to speaking and but another to acting. 26 And they did 



20 Life of Rufus King, vol. i, p. 432. 

21 Hamilton's Works, vol. vi, p. 511. 

22 Gill's " Administration of Washington and Adams," vol. i, 
300. 

23 Ibid., p. 88. 2i Lodge's Cabot, p. 341. 
25 Sparks' " Life and Writings of Washington," vol. ix, p. 187. 



42 The Political Activities of Philip Freneau. [506 

act as far as prudence would permit. Hamilton tried to 
hedge Washington around " with a divinity that did befit 
a King." Titles and royal trappings were employed to 
dazzle and awe; measures were introduced into congress 
under Hamilton's doctrine of " implied powers " that made 
democrats like Maclay and Madison stand aghast. Ham- 
ilton and Hamiltonism ruled not only in the cabinet but in 
the legislature also. It was charged that the Treasurer 
in British fashion cracked his whip over congress, 29 and 
" converted the legislature into a committee of sanction," 
and Washington himself was accused of " treading on the 
neck of the senate." 27 

The organ upon which the federalists relied to make 
public opinion for their cause was John Fenno's " Gazette 
of the United States." This paper was started in New 
York but was moved to Philadelphia when the government 
was transferred to that place. 23 Fenno was completely 
under Hamilton's control and the columns of his Gazette 
were filled with the monarchical notions of his patron. The 
following extract, taken from the writings of " Tablet " who 
contributed, every week, something upon the subject of 
government, will give an idea of the spirit of Fenno's 
paper: 

" Take away thrones and crowns from among men and 
there will soon be an end of all dominion and justice. There 
must be some adventitious properties infused into the 
government to give it energy and spirit, or the selfish, 
turbulent passions of men can never be controlled. This 
has occasioned that artificial splendor and dignity that 
are to be found in the courts of many nations. The people 
of the United States may probably be induced to regard 



26 Mercer in a speech in congress said: " I have long remarked 
in this house that the executive, or rather the treasury department, 
was really the efficient legislature of the country. The House of 

"Representatives is converted into a committee of sanction." 

27 Maclay's Journal, p. 131. 

28 Hudson's Journalism in America, p. 18. 



507] The Democratic Editor. 43 

and obey the laws without requiring the experiment of 
courts and titled monarchs. In proportion as we become 
populous and wealthy must the tone of the government 
be strengthened." M 

Americans were invited to distrust their fitness for sov- 
ereignty, " for the experience of past ages proved that 
whenever the people have exercised in themselves the three 
powers, the democracy is immediately changed into an- 
archy. Violent orators agitate the multitude as the winds 
toss the waves, and the people agitated by demagogues 
have committed all excesses." Titles were upheld as the 
essential features of a vigorous government. The argu- 
ment for them was simple and cogent. There are differ- 
ences in men, in talent, in wealth, in position; therefore, 
there should be titles to designate these differences. 

Hamilton, the powerful patron of the Gazette, was the 
theme of its highest panegyric. " He is the highest jewel 
in Columbia's crown. As a pillar in the Federal building 
he seems to unite the solidity of the Doric order, the deli- 
cacy and elegance of the Ionic, and the towering beauty of 
the Corinthian." In return for this subserviency, Fenno, 
as we shall presently see, merely demanded cash. 

It was to furnish an antidote to the aristocratic and 
monarchical sentiments of Fenno's paper that Freneau's 
" National Gazette " was established, and the better we 
know the Gazette of the United States, the plainer does 
it become that an antidote was needed. The columns of 
Fenno's paper read like those of a journal of the court of 
St. James. A few paragraphs will illustrate : " The prin- 
cipal ladies of the city have with the earliest attention and 
respect paid their devoirs to the amiable consort of our 
beloved president, namely, the Lady of his Excellency, the 
Governor, Lady Stirling, Lady Mary Watts, Lady Kitty 
Duer, La Marchioness de Breham, the ladies of the Most 
Honorable Mr. Layton, the Most Honorable Mr. Dalton, 

29 Gazette of the United States, March, 1790. 



44 The Political Activities of Philip Freneau. [508 

the Mayoress, Mrs. Livingston of Clermont, Lady Temple, 
Madam de la Forest, Mrs. Houston, Mrs. Griffin, the Miss 
Bayards and a great number of other respectable charac- 
ters." 

Again: "We are informed that the President, His Ex- 
cellency, the Vice-President, His Excellency, the Governor 
of this State, and many other personages will be present 
at the theatre this evening." 

Again: "The Most Honorable Morris and Lady at- 
tended the theatre last evening." 

Such royal gibberish as this could not be reasoned with 
and Freneau did not attempt to reason with it, but he 
drove it out of Fenno's paper and out of the United States. 
He caused it to be laughed at, and that it could not en- 
dure. A bit of horse-play like the following was far more 
effective than any amount of abstraction could have been: 
— The writer, in imagination goes ahead of the time ten 
years and gives a page of news for the year 1801 — 

'•' On Monday last arrived in this city in perfect health, His Most 
Serene Highness the Protector of the United States, who on 
Wednesday next will review the regular troops which compose the 
garrison." 

" Yesterday came on before the circuit court of the Protector, the 
trial of James Barefoot, laborer, for carelessly treading on the 
great toe of My Lord Ohio. The defendant was found guilty, 
but as the offense appeared quite accidental, and his lordship had 
already inflicted on him fifty lashes, the court fined him only 100 
pounds and ordered him to be imprisoned six months. Consider- 
ing the blood and rank of the prosecutor, the humanity of the 
sentence cannot be too highly extolled. His lordship's toe is in 
a fair way of recovery, although one of his physicians thinks the 
nail is in danger." 

" Yesterday was capitally convicted by a majority of the jury, 
John Misprision, for high treason, for lying with the mistress of 
the Protector's second son, the duke of Erie. Great efforts will be 
made to obtain a pardon, but it is feared that the enormity of the 
offense, with a suspicion of its being the third or fourth time he 
has taken this liberty with his Grace, will prevent their desired 
effect." 

" Sunday last, being the birthday of the Protector's lady, was 
celebrated in this city with becoming attention. No divine service 
was performed. The levee of her Highness was remarkably 



509] The Democratic Editor. 45 

crowded. She looked uncommonly cheerful considering it is the 
ninth month of her pregnancy. In the evening the theatre was 
unusually brilliant in expectation of her Highness's company, who 
for the reason just mentioned was obliged to forego the pleasure." 

" It is said that Lady Champlaine, a maid of honor to her High- 
ness the Protectoress, has had an intrigue with the Duchess of 
Rye's footman." 

" To remedy the inconveniences attending the election on the 
death of every protector, a bill will be brought in at the next 
session of Congress to make the office hereditary, and to increase 
his annual revenue from five hundred thousand to one million of 
dollars. It is certainly impossible for his Highness to support 
the dignity of his high station upon his present small allowance." 

" The hereditary council will meet in the future at the new 
palace in Philadelphia. This superb edifice cost the moderate sum 
of six hundred thousand dollars, ten cents and five mills, which 
exceeded the calculations of the first lord of the Treasury only 
by two dollars, three cents and one mill." 

" A few copies of the act to restrain the freedom of press may 
be had at this office." 

Monarchy was not the only thing the National Gazette 
abhorred. Freneau, as a life-long democrat and consistent 
whig, detested the avowed principles of the federal party 
and there was no love in his heart for its leader, Alexan- 
der Hamilton. Hamilton was therefore singled out and 
made the principal target for the anti-federal arrows that 
sped from Freneau's bow. It was upon the appearance of 
Hamilton's report on manufactures that Freneau's career 
as a publicist began. The Secretary of the Treasury an- 
nounced the startling doctrine that it was the unquestion- 
able meaning of the constitution that Congress had power 
to provide for any object that concerned the general wel- 
fare. The phrase " general welfare," he contended, was 
susceptible neither of specification nor of definition. Every 
object which in its operations extends throughout the 
union concerns the general welfare and it was left to the 
discretion of the National Legislature to decide what shall 
be regarded as concerning the general welfare. The Sec- 
retary entertained no doubts that whatever concerned 
education, agriculture, manufacturing, or commerce was 
within the sphere of the action of the National Govern- 
ment. 



46 The Political Activities of Philip Freneau. [510 

Freneau, as a champion of strict construction, swooped 
down upon the doctrine of " implied power " with savage 
talons. " Is there," the Gazette asks, " any object for 
which money is not necessary, or any object for which 
money may not be applied and brought under the object of 
congress? Under such a construction of the power of 
congress, what is to become of the word constitutional? 
Nothing henceforth would be unconstitutional. It would 
be the easiest thing in the world to conceive that religion 
is a matter of the general welfare; and then an ecclesiasti- 
cal establishment supported by government would quickly 
follow. Besides, such a doctrine knocks down every 
boundary worth contending for between the general gov- 
ernment and the state government. This doctrine of non- 
specification and non-limitation of the power of the consti- 
tution was subversive of liberty." so The Secretary is 
charged with bad faith in attempting to promulgate such 
ideas. He is reminded that when he urged the adoption 
of the constitution, he taught the people that usurpation 
was not to be apprehended; that construction by implica- 
tion was impossible, that the states had nothing to fear. 
Now, by a little refinement in politics, and by the legerde- 
main of fiscal operations, he was about to do all that he 
had promised would not and could not be done. The fund- 
ing scheme, the bank scheme, the excise, were all contrary 
to himself, the constitution and American freedom. 

Hamilton was unfitted by nature to brook opposition, 
and he met the opposition of Freneau in a most unfortu- 
nate manner. At first he left his defense in the hands of 
his editor Fenno, but Fenno was a heavy fellow and could 
do little but rave. He hurled invective against any who 
should dare to criticize a measure of government. The 
National Gazette, he said was the vehicle of party spleen 
and the opponent of the principles of order, virtue and re- 
ligion; 81 its editor was a "wretch," "a spaniel," "a fawn- 

30 National Gazette, 1792. 

31 Gazette of the United States, Aug. 2, 1792. 



511] The Democratic Editor. 47 

ing parasite," " a black-guard," " a grumbletonian," " a 
crack brain," " a Bedlamite," " a jackal of mobocracy," " a 
salamander." Freneau reprinted in his own paper these 
courtly epithets, and kept calm. A few lines of doggerel 
was all the reply he would vouchsafe to his enraged ad- 
versary. 

Since the day I attempted to print a gazette 

This Shylock-Ap-Shenkin does nothing but fret; 

Now preaching and screeching, then nibbling and scribbling 

Remarking and barking and whining and pining 

And still in a pet, 
From morning 'till night with my humble Gazette. 

Instead of whole columns our page to abuse, 
Your readers would rather be treated with news; 
While wars are a-brewing, and kingdoms undoing, 
While monarchs are falling, and princesses squalling, 
While France is reforming, and Irishmen storming — 
In a glare of such splendor, what folly to fret 
At so humble a thing as a poet's Gazette. 

One Printer for Congress (some think) is enough 
To flatter and lie, to palaver and puff, 
To preach up in favor of monarchs and titles, 
And garters and ribbands to prey on our vitals. 

To criticise government and governors seemed to him a 
perfectly legitimate act and he exercised this right with- 
out any great perturbations of conscience. A squib from 
his paper furnishes the basis of a philosophy for the free- 
dom of press: 

" Free government in any country naturally urges by impercepti- 
ble advances to tyranny, unless corrected by the vigilance of the 
people. Nothing but the perpetual jealousy of the governed has 
ever been found effectual against the machination of ambition. 
When this jealousy does not exist in some reasonable degree the 
saddle is soon placed upon the backs of the people and occupied 
by a succession of tyrants. There never was a government that 
had not its flatterers whose incense of adulation is always in 
readiness to be offered at the shrine of power, and whose abilities 
are prostituted to cover the abuse of office. Monarchies it is well 
known owe no small share of their disability to such support. 
Republics ought to be above it." " 

32 National Gazette, 1791. 



48 The Political Activities of Philip Freneau. [512 

But it must not be inferred that Freneau abused the lib- 
erty of the press. The National Gazette was not a scur- 
rilous or libellous sheet. It has an unsavory reputation in 
history, but we shall see before we have finished, that it 
does not deserve such a reputation, that scurrility and slan- 
der are not a feature of its pages. It was called atheistical 
and subversive of religion and morals, not because it de- 
nied the existence of God or attacked religion, for it let 
such subjects severely alone, but because it advocated 
democratic principles. In those days if a man was a 
democrat he was an atheist, and that was all there was 
to it. Compared with the Daily Advertiser, a republican 
contemporary, or with Fenno's paper, the National Ga- 
zette was a mild and decent sheet. The fear and hatred 
that it won for itself arose from the ability with which it 
was edited. It was supported by the best talent of the 
age. Hugh Brackenridge, Freneau's classmate at col- 
lege, now eminent as a jurist, sympathized with the aims 
of the paper and contributed largely to its success by writ- 
ing for its columns. 35 James Madison worked for it, 
talked for it, and wrote for it. 34 Jefferson could not have 
been more interested in it if his political life had depended 
upon its success. He was always writing about it to his 
friends, calling attention to its merits, and drumming up 
subscribers and subscriptions. He kept Freneau sup- 
plied with foreign newspapers, and thus enabled him to 
make his paper the source of the fullest information re- 
specting the mighty movements and triumphs of democ- 
racy in Europe. By good management on the part of the 

33 Brackenridge, Francis Hopkinson, and Freneau are admitted 
by critics to be the three greatest American prose writers of the 
eighteenth century. Freneau's prose writing is characterized by 
Moses Coit Tyler as " delightful, easy, sinewy, touched with a 
delicate humor, crisp and keen edged." Lit. Hist. American 
Revolution, vol. ii, 275. 

34 " I used occasionally to throw in an article with a view chiefly 
to contrast the monarchical spirit which characterized Fenno's 
paper." Randall's " Thomas Jefferson," vol. ii, p. 74. 



513] The Democratic Editor. 49 

editor and his friends, the paper prospered and became the 
power it was sought to make it. In May, 1792, Freneau 
published the following card in his paper: *' Upward of six 
months being elapsed since the publication of this paper, 
and the subscriptions having succeeded beyond the editor's 
most sanguine expectations, he now begs leave to solicit 
the attention of the people of the United States to a pub- 
lication which he trusts will at all times be found truly 
republican in its principles and tendency." 

The chief business of the Gazette was to destroy Hamil- 
ton, the one man in whom the hopes of the federalists lay. 
That the Secretary of the Treasury was the head and front 
of the federal party was clearly recognized by Jefferson. 
" Hamilton is really a colossus to the anti-republicans," he 
writes to Madison. " Without numbers he is a host with- 
in himself. When he comes forward there is nobody but 
yourself who can meet him. For God's sake take up your 
pen and give him a fundamental reply." 31 Freneau, after 
the manner of editors generally, did not concern himself 
deeply about " fundamental replies." His plan was to 
render Hamilton and his schemes odious and unpopular. 
Every utterance, every report, every recommendation of 
the Secretary was construed as having but one ultimate 
aim — the overthrow of the constitution and the establish- 
ment of a monarchy. His funding system, his national 
bank, his excise law, his love of titles, his advocacy of a 
perpetual public debt, his loose-construction notions, were 
all of the same cloth. If you want rules for the conversion 
of a limited republic into an absolute monarchy, said 
Freneau, here they are: 

1. Get rid of constitutional shackles. 

2. Confer titles of rank. If the principal magistrate should be 
particularly venerable in the eyes of the people take advantage of 
that fortunate circumstance. 

3. If the principal magistrate is averse to titles, persevere in 
indoctrinating the people with the idea. Time will gain it respect. 

35 Jefferson's Works, vol. iv, p. 122. 
36 



50 The Political Activities of Philip Freneau. [514 

4. Harp incessantly upon the dangers of the mob. 

5. Let the great nostrum be a perpetual public debt. If a debt 
is not at hand assume one, and then swell it and stretch it in every 
possible way. 

6. Interest the legislators in speculation and speculators in 
legislation. 

7. Establish an incorporated bank by which those who are to 
inherit the kingdom that is preparing for them may be enriched. 

8. Arrogate all power to the general government under the 
phrase " general welfare." 

9. Secure a rich manufacturing class by making laws in their 
interests. 

10. Create a standing army. 

11. Take England as a model. 

Hamilton's doctrine that a public debt is a public bless- 
ing was resisted by the National Gazette with bull-dog 
ferocity. " Brutus," who fulminated for months against 
the funding system ably supported these charges : 

1. The funding system threw $50,000,000 into the hands of the 
wealthy. 

2. It combined the money interest with the monopoly of the 
Nation?! Bank. 

3. By its excise and impost offsprings it swallowed up by future 
payments the last resource of the country. 

4. The certificates of indebtedness fell into the hands of specula- 
tors and foreigners. 

5. It had diverted capital from its proper channels and turned it 
into speculation. 

6. It created an immense body of revenue officials from the 
Secretary down to the tide-waiter, all bound together by common 
interests. 

The editor's compassion was deeply moved for the sol- 
dier of the revolution who had been paid by certificates 
of indebtedness which had passed out of his hands at a 
discount into the hands of speculators, and which by Ham- 
ilton's law, had appreciated to several times their value. 
The theme caused the editor to drop into rhyme: 

Public debts are public curses 

In soldiers 1 hands; there nothing worse is! 

In speculators' hands increasing, 

A public debt's a public blessing. 



515] The Democratic Editor. 51 

Jonathan Pindar, who is Philip Freneau 8B in disguise, 
appears before Hamilton and other magnates as candi- 
date for the position of poet-laureate. To further his 
chances of appointment he promised to swear — 

The nation's debt's a blessing vast, 
Which far and wide its general influence sheds, 
From whence Pactolian streams descend so fast, 
On their — id est — the speculators' heads. 

That to increase this blessing and entail 
To future time its influence benign, 
New loans from foreign nations cannot fail 
While standing armies clinch the grand design. 

That taxes are no burthen to the rich. 
That they alone to labor drive the poor — 
The lazy rogues would neither plow nor ditch, 
Unless to keep the sheriff from the door. 

Freneau was a master of irony and frequently subjected 
Hamilton's sensitive nerves to this species of wit. The fol- 
lowing piece is a sample of the fine satire that was con- 
stantly directed against the federalists and their chief: 

A NEW POLITICAL CREED. 

" Whoever would live peaceably in Philadelphia, above all 
things it is necessary that he hold the federal faith and the federal 
faith is this, that there are two governing powers in this country, 
both equal and yet one superior; which faith unless one keep 
undefiledly without doubt he shall be abused everlastingly. The 
Briton is superior to the American and the American is superior 
to the Briton, and yet they are equal and the Briton shall govern 
the American. 

" The Briton while here is commanded to obey the American 
and yet the American ought to obey the Briton; and yet they 
ought not both to be obedient. For there is one dominion nominal 
of the American and another dominion real of the Briton. And 
yet there are not two dominions but only one dominion. 

" The American was created for the Briton and the Briton for 
the American, and yet the American shall be a slave to the Briton 
and the Briton the tyrant of the American. 

89 Jefferson says these " Probationary leaders," as they were 
called, were written by St. George Tucker and not by Freneau. 
They were, at any rate, saddled on the editor. Ford's Writings 
of Thomas Jefferson, vol. vi, p. 328. 



52 The Political Activities of Philip Freneau. [516 

" The Britons are of three denominations, and yet only of one 
soul, nature, and subsistence: The Irishman of infinite impudence; 
the Scotchman of cunning most inscrutable; and the Englishman 
of impertinence altogether insupportable. 

" For the true faith is that we believe and confess that the 
government is fallible, and infallible: Fallible in its republican 
nature; and infallible in its monarchical tendency; erring in its 
state individuality and unerring in its federal complexity. So that 
it is both fallible and infallible; yet it is not twain but one govern- 
ment only, as having consolidated all state dominion in order to 
rule with sway uncontrolled. This is the true federal faith, which 
except a man believe and practice faithfully, beyond all doubt he 
shall be cursed perpetually.'' 

Such reading- was exceedingly painful to a proud and 
highly organized nature like Hamilton's. Fenno defended 
the Secretary as best he could, but Fenno was no match 
for Freneau. The National Gazette continued to pour 
forth its effective broadsides until Hamilton's patience 
gave way and he determined to break a lance in his own 
behalf. Freneau he affected to despise. In the editor and 
clerk who met his eyes daily in the office of government he 
saw only the servile instrument of Thomas Jefferson. 
Without evidence and without reason he cherished the no- 
tion that the National Gazette had been established by the 
Secretary of State, and that it was supported and directed 
by him, and that Freneau was a man of straw. With vis- 
ion blurred and his facts all tangled, Hamilton rushed into 
print with an attack upon Jefferson. The chastisement, 
of course, had to be administered over Freneau's shoul- 
ders. In July, 1792, there appeared in Fenno's Gazette 
the following communication: 

Mr. Fenno : 

The editor of the National Gazette receives a salary from the 
government. Quaere: Whether this salary is paid for translations 
or for publications the design of which is to villify those to whom 
the voice of the people has committed the administration of our 
public affairs, — to oppose the measures of government and by 
false insinuation to disturb the public peace? 

In common life it is thought ungrateful for a man to bite the 
hand that puts bread in his mouth, but if the man is hired to do 
it, the case is altered. T. L. 



517] The Democratic Editor. 53 

" T. L." was Alexander Hamilton. Freneau paid but 
little attention to the squib, doubtless because he did not 
suspect its high authority. He re-printed it in his paper 
and said it was beneath notice, and propounded this query 
by way of retort: "Whether a man who receives a small 
stipend for services rendered as French Translator to the 
Department of State and as editor of a free newspaper ad- 
mits into his publication impartial strictures on the pro- 
ceedings of the government, is not more likely to act an 
honest and disinterested part toward the public than a 
vile sycophant who, obtaining emoluments from the gov- 
ernment far more lucrative than the salary alluded to, 
finds his interest in attempting to poison the mind of the 
people by propagating and disseminating principles and 
sentiments utterly subversive of the true interests of the 
country and by flattering and recommending every and 
any measure of government, however pernicious and de- 
structive its tendency might be to the great body of the 
people?" The world is then called upon to judge between 
the motives of Freneau and those of Fenno. 37 

The world probably took very little interest in the mo- 
tives of either of the editors, yet it did take the greatest 
interest in the names that were soon involved in the con- 
troversy that ensued. A struggle between Hamilton and 
Jefferson was fraught with issues of the most profound 
significance. The triumph of Hamilton meant conserva- 
tism and the rule of the classes in America; the triumph 
of Jefferson meant radicalism and the rule of the masses. 
To be precise and just, we may say that Hamiltonism 
meant a strong central government administered in the 
English spirit, while Jeffersonism meant a light and easy 
central government that would respond readily to the will 
of the populace. Both Jefferson and Hamilton honestly 
wished to avoid a quarrel, yet a conflict between them was 
inevitable. Hamilton by a few inopportune strokes of the 

37 National Gazette, July, 1792. 



54 The Political Activities of Philip Freneau. [518 

pen in a moment of irritation precipitated the contest. In 
reply to Freneau's retort he wrote for Fenno's paper, over 
the signature " An American," a letter that made peace no 
longer possible. 

" Mr. Freneau," he said in this letter — thinking and car- 
ing nothing about Freneau — " Mr. Freneau should not 
escape with the plea that his hostility toward the measures 
of government was only a mark of independence and dis- 
interestedness." The whole truth in regard to the National 
Gazette should be known. That truth for the enlighten- 
ment of the world and the discomfiture of Jefferson is then 
set forth in these paragraphs: 

" Mr. Freneau, before he came to Philadelphia, was em- 
ployed by Childs and Swaine, printers of the Daily Adver- 
tiser, in New York, in the capacity of editor or superintend- 
ent. A paper more devoted to the views of a certain party, 
of which Mr. Jefferson is the head than any to be found 
in this city was wanted. Mr. Freneau was thought a fit 
instrument; a negotiation was opened with him which 
ended in the establishment of the National Gazette under 
his direction. 

" Mr. Freneau came here at once editor of the National 
Gazette and clerk for foreign languages in the department 
of Mr. Jefferson, Secretary of State; an experiment some- 
what new in the history of political manoeuvres in this 
country; a newspaper instituted by a public officer and the 
editor of it regularly pensioned with the public money in 
the disposal of that officer, an example which could not 
have been set by the head of any other department with- 
out having long since been rung through the United States. 
[By the National Gazette, of course.] 

" Mr. Freneau is not, then, as he would have it sup- 
posed, the independent editor of a newspaper who though 
receiving a salary from the government has firmness 
enough to express its maladministration; he is the faith- 
ful and devoted servant of the head of a party from whose 
hands he receives the boon. The whole complexion of 



519] The Democratic Editor. 55 

this paper exhibits a decisive internal evidence of the in- 
fluence of that patronage under which he acts. Whether 
the services rendered are equivalent to the compensation 
he receives is best known to his employer and himself; 
there is, however, some room for doubt. It is well known 
that his employer is himself well acquainted with the 
French language, the only one of which Mr. Freneau is 
the translator and it may be a question how often his aid 
is necessary. 

" It is somewhat singular too, that a man acquainted 
with but one language, engaged in an occupation which it 
may be presumed demands his whole attention — the editor 
of a newspaper — should be the person selected as the 
clerk for foreign languages in the department of the United 
States for foreign affairs. Could no person be found ac- 
quainted with more than one foreign language? and who in 
so confidential a trust could have been regularly attached 
to, in the constant employ of the department and imme- 
diately under the eye of the head of it? " s 

Hamilton then turns from Freneau to Jefferson and 
hauls that gentleman over the coals for divers political 
iniquities. At the time of Hamilton's attacks, Jefferson 
was in Virginia designing geometrical wheelbarrows and 
mould-boards of least resistance. He does not seem to 
have entered into the melee but was content to let Freneau 
and Hamilton fight it out for themselves. Many writers 
rushed to his defense, but his own hand was stayed, and 
the hand of Freneau even is not apparent in the replies to 
Hamilton's attack. Moreover the champions of Jefferson 
had their articles printed not in the National Gazette but 
in the Daily Advertiser of Philadelphia. 

If the reader has recalled the facts connected with Fre- 
neau's coming to Philadelphia he will have seen that Ham- 
ilton's charges were nothing more than assumptions. 
These charges Freneau met in a characteristic way. He 

38 Gazette of the United States, Aug., 1792. 



56 The Political Activities of Philip Freneau. [520 

went before the Mayor of Philadelphia and duly swore: 
" That no negotiation was ever opened with him by 
Thomas Jefferson, Secretary of State for the establishment 
or institution of the National Gazette; that the deponent's 
coming to the city of Philadelphia as a publisher of a news- 
paper was at no time urged, advised or influenced by the 
above officer, but that it was his own voluntary act; that 
the Gazette or the Editor thereof was never directed, con- 
trolled or attempted to be influenced in any manner either 
by the Secretary or any of his friends; that not a line was 
ever directly or indirectly written, dictated or composed for 
it by that officer, but that the editor had consulted his own 
judgment alone in the conducting of it — free, unfettered 
and uninfluenced." 39 

This solemn and explicit denial by a man whose char- 
acter was above reproach would have caused a less pertina- 
cious and a more sagacious man than Hamilton to let the 
matter drop. But his feelings now had the whip hand of 
his judgment and he could not stop. He rushed further 
into the blind encounter. He now came forward with the 
insinuation that Freneau had sworn to a lie. This he said, 
would be just what a pensioned tool would do. How, he 
would like to know, was Mr. Freneau able to swear that 
Mr. Jefferson never wrote a line for his paper. No editor 
who does not himself write every line for his paper can 
make any such affirmation as that. Facts were against 
Mr. Freneau. He then opens his artillery of facts : 

" It is a fact, Mr. Freneau, that you receive a salary as clerk for 
foreign languages, and yet you can translate but one language." 

" It is a fact that you left New York to become the editor of the 
National Gazette." 

" It is a fact that your appointment was antecedent to the com- 
mencement of your paper." 40 

" It is a fact that Mr. Jefferson was in the beginning opposed 
to the constitution." 

39 Gazette of the United States, Aug., 1792. 

40 Freneau's appointment was made Aug. 3, 1791. The first num- 
ber of the Gazette appeared Oct. 31, 1791. 



521] The Democratic Editor. 57 

" It is a fact that that officer arraigns the principal measures of 
government." 

" From these facts the inferences which are to be drawn are 
irresistible. If you had previously been the conductor of a news- 
paper in this city — if your appointment had been any considerable 
time subsequent to the institution of your paper, there might have 
been some room for subterfuge. But as matters stand you have 
no possible escape." 

" It makes no difference, Mr. Freneau, whether there was a pre- 
liminary negotiation or not; there are many facts to presuppose 
that such a negotiation did occur, and these facts will be brought 
out, sir, if scruples of family connection or the dread of party 
resentment do not forbid. And the evidence adduced will be 
incontestable. Any honest man must conclude that the relations 
that subsist between you and Mr. Jefferson are indelicate, unfit, 
and suspicious. Your apology that the meagre compensation 
provided renders it necessary for the translator to engage in some 
other occupation is inadmissible, for a competent clerk could have 
been employed at a full salary, and if his work as a translator did 
not occupy all this time, he could have used his surplus time at 
some other kind of work in the department. If there had been 
difficulty in finding such a man, undoubtedly, you. the editor of a 
newspaper should not have been selected, and the fact that you 
were selected is a proof of sinister design. The fact that your 
predecessor, Mr. Pintard, received but two hundred and fifty 
dollars a year and was a newspaper man is not to the point; the 
employment of that gentleman was a natural consequence of a 
particular situation. These strictures involve you, Mr. Freneau, 
but it is confessed that they are aimed at a character of greater 
importance in the community." tt 

Nothing could be more flimsy and illogical than the 
above, and it is strange that an intellect like Hamilton's 
should have expressed itself in such a way. It was due 
doubtless to the fact that he had begun the controversy in 
a mental fog and could not find his way out. He had got 
the cart before the horse. On Aug. n, 1792, he made the 
charge that Madison had conducted an unworthy negotia- 
tion with Freneau, and two days after wrote to Elias Bou- 
dinot for an authentication of the charge. "If I recollect 
right," Hamilton says to Boudinot, " you told me, that 
this, if necessary, could be done; and if practicable it is of 

41 Gazette of the United States, Aug., 1792; Hamilton's Works, 
vol. v, p. 518. 



58 The Political Activities of Philip Freneau. [522 

real importance that it should be done. It will confound 
and put down a man who is continually machinating 
against public happiness." (Not Freneau but Jefferson is 
meant.) 

" You will oblige me in the most particular manner by 
obtaining and forwarding to me without delay the par- 
ticulars of all the steps taken by Mr. Madison — the when 
and the where — with the liberty to use the name of the 
informant. His affidavit to the facts, if obtainable would 
be of infinite value." 

But behold! "the when and the where" and the "affi- 
davit of infinite value," to meet Freneau's affidavit did not 
materialize. Boudinot informs him that there is no direct 
evidence of a negotiation available; that the gentleman 
upon whom he relied for information was more attached 
to Freneau than he had supposed and would say nothing; 
that there was nothing but hearsay upon which to base 
the charge, although he (Boudinot) would do all he could 
to get together some evidence. 42 Hamilton also wrote to 
Jonathan Dayton for " the when and the where " of the al- 
leged negotiation, but that gentleman, although desirous 
of frustrating the designs of a particular party, could not 
comply with his request. 

Freneau called for the proof that was promised, declin- 
ing to answer charges of a personal nature unless they 
were supported by the declarations of persons. But proof 
there was none, and Hamilton was driven to the miserable 
confession " that the secret intentions of men being in the 
repositories of their own breasts it rarely happens and is 
therefore not to be expected that direct and positive proof 
of them can be adduced. Presumptive facts and circum- 
stances must afford the evidence." a 

After this graceless acknowledgment that his charges 
against Freneau were without proof, Hamilton spared the 

42 Hamilton's Works, vol. v, p. 520. 

43 Parton's Life of Jefferson, p. 447. 



523] The Democratic Editor. 59 

editor and applied his bad names to Jefferson direct. The 
bringing of Freneau into this quarrel was most unfortunate 
to Hamilton's cause and reputation. He stood before the 
country convicted of an unwarranted attempt to injure an 
innocent private citizen in order that he might punish a 
political enemy. And the country did not forgive him. 
" He lost something," says Parton, " which is of no value 
to an anonymous writer in a presidential campaign, but is 
of immense value to a public man — WEIGHT." His 
query in Fenno's paper calling in question Freneau's honor 
was the beginning of his political downfall. Besides, view- 
ed from the standpoint of private morality, Hamilton's at- 
tack upon Freneau was very low, for he was himself doing 
precisely what he accused Jefferson of doing. He was 
supporting a partisan paper by means of the patronage of 
his department. Freneau did not fail to bring out the fact 
that Fenno was exclusive printer to the treasury depart- 
ment, and that his emoluments in that direction were 
twenty-five hundred dollars per annum. 44 And candid his- 
tory brings out another fact still more damaging, to wit, 
that Fenno was at times the direct beneficiary of Hamil- 
ton's private purse. Not long after the attack upon the 
editor of the National Gazette, Fenno wrote to Hamilton 
stating that he was in financial straits and that if the hand 
of benevolence and patriotism were not speedily extended 
to him his career as a printer would be over. 45 Hamilton 
upon the receipt of the letter wrote to his friend Rufus 
King as follows: 

"My Dear Sir: 

"Inclosed is a letter just received from poor Fenno. 
It speaks for itself. 

" If you can without delay raise iooo dollars in New 
York, I will endeavor to raise another thousand at Phila- 



** National Gazette, Sept., 1793. 

* Life of Rufus King, vol. x, p. 502. 



60 The Political Activities of Philip Freneau. [524 

delphia. If this cannot be done we must lose his services 
and he will be the victim of his honest public spirit. 
" Yours truly, 

"A. Hamilton." 

" Poor Fenno " continued to publish his Gazette, hence 
it is tolerably certain that the " hand of benevolence and 
patriotism " was in some way extended. 

Either a consciousness of his innocence or his stubborn 
nature prevented Freneau from offering an elaborate de- 
fense against Hamilton's charges. His biographer there- 
fore is not called upon to dwell long upon his exculpation. 
As we have seen, Jefferson kept out of the quarrel. His 
name as far as possible was kept out of the National Ga- 
zette. He was attacked in Fenno's paper and defended in 
the Daily American Advertiser, a paper which was as vio- 
lent in its republicanism as Freneau's paper. In one of 
the articles in the Advertiser in behalf of Jefferson is the 
following incidental defense of Freneau: 

" Mr. Freneau has the following well-authenticated claim for the 
office of Translator. A native of the Middle States, he had been 
liberally educated at Princeton. To an accurate knowledge and a 
refined taste in the English language, he had added a similar 
acquirement in the French, the nation with whom we have the 
most intimate relations and whose language has become in a great 
measure throughout Europe the general medium of political nego- 
tiation. Through life his morals were without blemish and his 
conduct in the revolution was that of a sound whig and republican. 
Perhaps his sufferings as a prisoner of war may have excited 
additional sympathy in his favor. [In the matter of getting an 
appointment.] To what trait in his character, to what defect in 
his qualification does " American " [Hamilton] object? To his 
occupation? and if so, to occupations in general or to printing in 
particular? The low rate of pay made it necessary to get one 
engaged in some other business. Is printing less honorable, less 
beneficial to mankind than all others? Does "American" come 
forward to traduce it and lessen it? Vain and unworthy effort! 
Whether he had already set up a press or was about to set up one, 
— for " American " can have it either way — is a matter of indiffer- 
ence. He could not take the clerkship without the aid of the press. 
The objection in the point of influence, if the characters in question 
were capable of it, is scarcely worthy of notice. The office was 
created by law and a salary attached to it. If the person appointed 



The Democratic Editor. Gl 



performs these duties, what other claim can the principal have 
upon him? Degraded indeed would be* the condition of a free- 
man, if an appointment to an office carried with it low subservience 
to the Superior. It is treasonable to infer that any such sub- 
servience exists between a superior and his subordinate and a 
great injustice has been done both Jefferson and Freneau by 
' American.' " 40 

We cannot let the Hamilton-Freneau-Jefferson quarrel 
drop without giving Jefferson's version of the affair. 
Washington had called his two secretaries to task for their 
bickerings and implored them in the name of the country 
to cease from their strife. Jefferson answered at consid- 
erable length the charge that he had set up the National 
Gazette and that Freneau was his hireling: 

" While the government was at New York I was applied to on 
behalf of Freneau to know if there was any place within my 
department to which he could be appointed. I answered there 
were but four clerkships, all of which I found full and continued 
without any change. When we removed to Philadelphia, Mr. 
Pintard. the translating clerk, did not choose to remove with us. 
His office then became vacant. I was again applied to there for 
Freneau and had no hesitation to promise the clerkship to him. 
I cannot recollect whether it was at the same time or afterwards, 
that I was told he had a thought of setting up a paper there. 47 But 
whether then or afterwards, I considered it a circumstance of 
some value, as it might enable me to do what I had long wished 
to have done, that is to have the material parts of the Leyden 
Gazette brought under your eye, and that of the public, in order 
to possess yourself and them of a juster view of the affairs of 
Europe, than could be obtained from any other public source. 
This I had ineffectually attempted through the press of Mr. Fenno. 
while in New York, selecting and translating passages myself at 
first, then having it done by Mr. Pintard, the translating clerk, 
but they found their way too slowly into Fenno's paper. Mr. 
Bache essayed it for me in Philadelphia, but his being a daily 
paper did not circulate sufficiently in other states. He even tried, 
at my request, the plan of a weekly paper of recapitulation from 
his daily paper, on hopes it might go into the other States, but 
in this, too, we failed. Freneau as translating clerk and the 

40 American Daily Advertiser, Oct., 1792. 

47 We cannot gather from the correspondence whether it was 
before or afterwards. The offer was made Feb. 28, 1791. A letter 
from Madison, May, 1791, reads as if Jefferson was aware of 
Freneau's intention. 



62 The Political Activities of Philip Freneau. [526 

printer of a periodical paper likely to circulate through the states 
(uniting in one person the parts of Pintard and Fenno) revived 
my hopes that they could at length be effected. On the establish- 
ment of his paper, therefore, I furnished him with the Leyden 
Gazettes with an expression of my wish that he could always 
translate and publish the material intelligence they contained, and 
have continued to furnish them from time to time as regularly as 
I have received them. But as to any other direction or any indica- 
tion of my wish how his press shotild be conducted, what sort of 
intelligence he should give, what essays encourage, I can protest in 
the presence of Heaven that I never did by myself or any other, 
or indirectly say a syllable nor attempt any kind of influence. I can 
further protest in the same awful presence, that I never did by 
myself or any other, directly or indirectly write, dictate, or procure 
any one sentence or sentiment to be inserted in his or any other 
gazette, to which my name was not affixed or that of my office. 
I surely need not except here a thing so foreign to the present 
subject as a little paragraph about our Algerian captives, which I 
once put into Freneau's paper. 

" Freneau's proposition to publish a paper having been about 
the time that the writings of Publicola and the discourses of 
Davilla had a good deal excited the public attention, I took for 
granted from Freneau's character, which had been marked as that 
of a good whig, that he would give free place to pieces written 
against the aristocratical and monarchical principles these papers 
had inculcated. This having been in my mind, it is likely enough 
I may have expressed it in conversation with others, though I do 
not recollect that I did. To Freneau I think I could not, because 
I still had seen him but once and that was at a public table, at 
breakfast at Mrs. Elsworth's, as I passed through New York the 
last year. And I can safely declare that my expectations looked 
only to the chastisement of the aristocratical and monarchical 
writings, and not to any criticism on the proceedings of govern- 
ment. Colonel Hamilton can see no motive for any appointment 
but that of making a convenient partizan. But you, sir, who have 
received from me recommendations of a Rittenhouse, Barlow, 
Paine, will believe that talents and science are sufficient motives 
with me in appointments to which they are fitted, and that Freneau 
as a man of genius, might find a preference in my eye to be a 
translating clerk and make a good title to the little aids I could 
give him as the editor of a Gazette by procuring subscriptions to 
his paper as I did some before it appeared, and as I have done 
with pleasure for other men of genius. Col. Hamilton, alias 
' Plain Facts,' says that Freneau's salary began before he resided 
in Philadelphia. I do not know what quibble he may have in 
reserve on the word ' residence.' He may mean to include under 
that idea the removal of his family; for I believe he removed 
himself before his family did to Philadelphia. But no act of mine 
gave commencement to his salary before he so far took up his 



527] The Democratic Editor. 63 

abode in Philadelphia as to be sufficiently in readiness for his 
duties of his place. As to the merits or demerits of his paper 
they certainly concern me not. He and Fenno are rivals for the 
public favor. The one courts them by flattery, the other by 
censure, and I believe it will be admitted that the one has been as 
servile as the other severe. No government ought to be without 
censors; and where the press is free, no one ever will." 48 

This solemn and semi-official history of the establish- 
ment of the National Gazette agrees perfectly with the 
facts as they have hitherto been related in these pages. It 
agrees with the account given by James Madison,' 18 with 
the sworn statement of Freneau, and it must stand as true 
history until evidence is produced to shake it. Freneau 
was the independent editor of an independent paper. 

The charge of perjury with which Hamilton tried to 
blacken Freneau's character, aroused the resentment of 
the poet and excited the editor to the fullest exercise of 
his license. 60 If the federalists had heretofore been 
scourged with whips, they were now scourged with scor- 
pions. Every phase of their policy was assailed in the Na- 
tional Gazette most bitterly, most fearlessly, and with a 
persistence that was as relentless as fate. The senate held 
its sessions with closed doors. The Gazette attacked these 
doors with a crow-bar. Appealing to Hamilton's " great 
beast " — the people — it says : 

A motion for opening the doors of the senate chamber has 
again been lost by a considerable majority — in defiance of instruc- 
tion, in defiance of your opinion, in defiance of every principle 

48 Writings of Jefferson, vol. vi, pp. 106-108. 
48 Writings of Madison, vol. i, pp. 569-570. 

50 Fenno continued to cast discredit upon Freneau's oath. 
" Enquirer " wanted to know if Freneau took the oath reverently, 
if he kissed the holy evangel in a pious manner. The correspond- 
ent suspects that instead of kissing the Bible he saluted with 
reverence a copy of Jefferson's " Notes on Virginia." A doubting 
rhymester thus delivered himself: 

To many a line in humble prose 
Thy voice is wont to swear, 
And once to shame thy patron's foes 
Didst lie before the mayor. 
Gazette of the United States, Aug., 1792. 



64 The Political Activities of Philip Freneau. [528 

which gives security to free men. What means this conduct? 
Which expression does it carry strongest with it, contempt for 
you or tyranny? Are you freemen who ought to know the indi- 
vidual conduct of your legislators, or are you an inferior order 
of beings incapable of comprehending the sublimity of senatorial 
functions, and unworthy to be entrusted with their opinions? How 
are you to know the just from the unjust steward when they are 
covered with the mantle of concealment? Can there be any ques- 
tion of legislative import which freemen should not be acquainted 
with? What are you to expect when stewards of your household 
refuse to give account of their stewardship? Secrecy is necessary 
to design and a masque to treachery; honesty shrinks not from 
the public eye." 

" The Peers of America disdain to be seen by vulgar eyes, the 
music of their voices is harmony only for themselves and must 
not vibrate in the ravished ear of an ungrateful and unworthy 
multitude. Is there any congeniality excepting in the administra- 
tion, between the government of Great Britain and the government 
of the United States? The Senate supposes there is, and usurps 
the secret privileges of the House of Lords. Remember, my 
fellow citizens, that you are still freemen; let it be impressed upon 
your minds that you depend not upon your representatives but 
that they depend upon you, and let this truth be ever present to 
you, that secrecy in your representatives is a worm which will 
prey and fatten upon the vitals of your liberty. 51 

Freneau could be trusted to keep the " truth ever pres- 
ent " before the mind of the public, and after little more 
than a year of agitation the doors of the senate were 
opened to the public and secrecy no longer preyed upon 
the vitals of liberty. His hostility to Hamilton's National 
Bank scheme was equally pronounced. To a " Truly 
Great Man " (Washington) he addresses these lines : 

George, on thy virtues often have I dwelt, 
And still the theme is grateful to mine ear, 
Thy gold let chemists ten times even melt 
From dross and base alloy they'll find it clear. 

Yet thou'rt a man — although perhaps, the first, 
But man at best is but a being frail; 
And since with error human nature's curst, 
I marvel not that thou shouldst sometimes fail. 

That thou hast long and nobly served the state 
The nation owns, and freely gives thee thanks, 
But, sir, whatever speculators prate, 
She gave thee not the power to establish BANKS. 

61 National Gazette, Feb., 1792. 



529] The Democratic Editor. 65 

Probably to no other influence was the final downfall of 
the National Bank more directly traceable than to the ha- 
tred for it which was inspired in the minds of the people 
by the National Gazette. Freneau was now the leading 
editor in America. He was the oracle for all editors of 
humble democratic sheets. In the south, where there 
were but few newspapers, it was the only paper that had a 
general circulation. 52 The leaders of the republican party 
left no stone unturned to get it among the people, and the 
fifteen hundred copies of its circulation were sent where 
they would do the most good. In the small papers of the 
country extracts from it were published as coming from a 
sacred source. Examine a democratic paper of the time 
and the chances are that you will find in it a clipping from 
the National Gazette and when the extract is found, the 
chances are still great that it is an attack upon the National 
Bank. 53 Public opinion was in a formative state when 
Freneau attacked the bank scheme, and the seeds of en- 
mity to it which he sowed fructified in its destruction. 

The strength of the paper, however, is to be found in 
its democracy and in its perpetual harping upon the theme 
of federal enmity to republican government and federalist 
love of monarchy. There may have been no intention in 
the minds of the federal leaders to abandon republican 
forms of government as soon as expedient, yet Freneau be- 
lieved there was and made the people believe there was; 
and that was all that was necessary for the success of 
democracy. 

Jefferson, as we shall see, could not be induced even by 
Washington to forsake Freneau, and we are not surprised 
at his loyalty, for Freneau was a thorough Jeffersonian, 
and in the Gazette Jefferson's opinions were reflected as in 



52 In Virginia, in 1791, there were nine newspapers; in South 
Carolina, three; in North Carolina, two; and in Georgia, two. 
National Gazette, Nov., 1791. 

03 One of the charges against the Gazette was that it was circu- 
lated in every state. National Gazette, March 27, 1792. 
37 



66 The Political Activities of Philip Freneau. [530 

a mirror. We can imagine the pleasure of the great demo- 
crat in the little sentiments from Paine and Rousseau which 
sparkled in the columns of the Gazette; or this morsel of 
an epitaph for the tomb of Frederick the Great: 

Here lies a king, his mortal journey done, 
Through life a tyrant to his fellow-man; 
Who bloody wreaths in bloody battles won — 
Nature's worst savage since the world began. 64 

In January, 1793, " Louis Capet lost his caput " — as the 
irreverent Boston Argus put it — and France was declared 
a republic. In May of the same year, citizen Genet, the 
embassador of the new republic after an almost triumphal 
journey northward from Charleston, arrived in the city of 
Philadelphia amid the roar of cannon and the acclamations 
of a noisy populace. War had just been declared by 
France against England and the ebullient minister was 
sent by his government to awaken the sympathy and se- 
cure the aid of America in behalf of France. His mission 
began with the brightest prospect of success. Farmers 
and merchants offered him provisions at a lower price 
than they would sell them to the agent of any other na- 
tion. Six hundred thousand barrels of flour were at his 
disposal. 65 When he passed through a city, enthusiastic 
lovers of France crowded the avenues shouting for the lib- 
erty of the nation that had helped America to secure her 
own freedom. At Philadelphia three thousand went out to 
Dobb's Ferry to meet the representative of the sister re- 
public; while a counter demonstration, gotten up by the 
lovers of England, numbered barely three hundred. Genet 
was banqueted on every possible occasion and toasted 
sometimes when a toast to Washington was forgotten. 
Men put on the tri-colored cockade, joined Jacobin clubs, 
and restricted the form of salutation to " citizen." 

Citizen Freneau was with the French heart and soul. 
The French cause was dear to him for sentimental reasons 

04 Freneau's Poems. 55 National Gazette, May, 1793. 



531] The Democratic Editor. 67 

as well as for political, for, as De Lancey says, " although 
he belonged to the third generation of his family in Ameri- 
ca, he was as thorough a Frenchman as if he had been 
born under the sunny skies of Provence or had drawn his 
first breath amid the Bordelais or beneath the lofty tower 
of an ancient chateau of historic Normandy." H With the 
warmth of a Frenchman and the boldness of an American 
he threw the influence of his paper upon the side of the 
French party. The interests of America became in his 
mind identical with the interests of France. He believed 
with John Dickinson that if " France did not succeed in 
her contest every elective republic upon earth would be 
annihilated and that the American republic would be 
crushed at once." As between France and England it was 
impossible for Freneau's fervid and positive mind to pro- 
fess neutrality. " When of two nations the one has en- 
gaged herself in a ruinous war for us, has spent her blood 
and money for us, has opened her bosom to us in peace 
and has received us on a footing almost with her own citi- 
zens, while the other has moved heaven and earth and 
hell to exterminate us in war, has insulted us in all her 
councils, in peace shut her doors to us in every port where 
her interest would admit it, libelled us in foreign nations, 
endeavored to poison them against the reception of our 
most precious commodities: to place these two nations on 
an equal footing is to give a great deal more to one than 
to the other, if the maxim be true that to make unequal 
quantities equal you must add more to one than to the 
other. To say in excuse, that gratitude is never to enter 
into the notions of national conduct is to revive a principle 
which has been buried for centuries, with its kindred prin- 
ciples of the lawfulness of assassination, perjury and poi- 
son." " That is the way the matter appeared to Jefferson; 
Freneau's feelings upon the subject were still stronger. 



50 Edward F. De Lancey in Proceedings of the Huguenot Soc. 
"Jefferson's Works, vol. iii, p. 98. 



68 The Political Activities of Philip Freneau. [532 

But the president decided that it was no time for grati- 
tude and declared by proclamation that the United States 
should pursue an impartial course and should grant noth- 
ing to France that was not granted to England also. A 
storm of disapproval burst upon the president's head 
when this proclamation was published. Of all the voices 
that were lifted up against his policy, none was louder and 
none was more distinctly heard by the president or gave 
him more discomfiture than the voice of Freneau. " Sir," 
said the editor to the president, " Sir, let not, I beseech 
you, the opiate of sycophancy, administered by interested 
and designing men, lull you into a fatal lethargy at this 
awful moment. Consider that a first magistrate in every 
country is no other than a public servant whose conduct 
is to be governed by the will of the people." 5i 

When Genet had brought upon himself the united oppo- 
sition of the administration and had alienated many of his 
supporters by his high-handed actions and by his boast 
that he would appeal from the president to the people, 
Freneau stood by him and supported him to the last. 
" Why all this outcry," he said, " against Mr. Genet, for 
saying he would appeal to the people? Is the president a 
consecrated character that an appeal from him must be 
considered criminal? What is the legislature of the union 
but the people in congress assembled? And is it an 
affront to appeal to them? The minister of France, I 
hope will act with firmness and with spirit. The people 
are his friends, or rather the friends of France, and he will 
have nothing to apprehend, for as yet the people are sov- 
ereign in the United States. Too much complacency is an 
injury done his cause, for as every advantage is already 
taken of France (not by the people) further condescension 
may lead to further abuse. If one of the leading features 
of our government is pusillanimity, when the British lion 
shows his teeth, let France and her minister act as becomes 

68 National Gazette, June, 1793. 



533] The Democratic Editor. 69 

the dignity and justice of their cause and the honor and 
faith of nations." 

This was strong language and it affected Washington 
powerfully. Before this French interference he had never 
been crossed in his policy, and criticism went hard with 
him. " By God," he said in one of those passions that 
sometimes took possession of him, " By God that he had 
rather be in his grave than in his present situation. That 
he had rather be on his farm than to be made emperor of 
the world; that that rascal Freneau, sent him three copies 
of his paper every day, as if he thought he would become 
the distributor of his paper; that he could see nothing in 
this but an impudent design to insult him." 60 

Washington was so sensitive and fretful upon the sub- 
ject of Freneau that he intimated to Jefferson that it would 
be agreeable to him if the secretary would withdraw Fre- 
neau's appointment as translating clerk. " But I will not 
do it," said Jefferson. " His paper has saved our consti- 
tution which was galloping fast into monarchy, and has been 
checked by no one means so powerfully as by that paper. 
It is well and universally known that it has been that 
paper which has checked the career of the monocrats and 
the president has not with his usual good sense looked 
upon the efforts and effects of that free press and seen that 
though some bad things have passed through it to the 
public, yet the good have preponderated immensely." 

Jefferson could have discharged Freneau but he could 
not have silenced him. The sturdy editor had taken up 
the French cause for its own sake and without regard to 
consequences. His perfect independence in the manage- 
ment of his paper is attested to indirectly by Jefferson in a 
letter written to Madison after Genet had been abandoned 
by the more discreet republicans. Speaking of Genet, 
Jefferson says in this letter: " He has still some defend- 



National Gazette, July, 1793. 
Jefferson's Works, vol. i, p. 231 



70 The Political Activities of Philip Freneau. [534 

ers in Freneau's and Greenleaf's papers. Who they are 
I do not know." 61 This was written after Jefferson had 
abandoned Genet. Does the language imply subserviency 
upon the part of Freneau? If the National Gazette had 
been under the control of Jefferson would it have con- 
tinued to support a cause after its master had withdrawn 
his support from the cause? 

Besides being its greatest literary champion, Freneau 
was in other ways a conspicuous figure among the pro- 
moters of the French cause. His editorial office was a 
rendezvous for French sympathizers; he solicited and col- 
lected funds to be sent to France, acting as agent for the 
" French Society of Patriots of America." 62 At the not- 
able civic feast given in Philadelphia in honor of Genet an 
ode in French was read, and Citizen Freneau was requested 
to translate it into English. This the poet did in an un- 
commonly careless and unhappy fashion. 

Historians have the habit of abusing Freneau for the 
part he played in the French incident and they are espe- 
cially severe when they animadvert upon his opposition 
to Washington. It is difficult to see why this habit has 
not been laid aside. Freneau as a partisan of France had 
for company the greatest and wisest of the land, patriots 
and statesmen and scientists. The heart of America, its 
generosity, its justice, its pride, its gratitude were all on 
the side of giving assistance to the French. Policy alone 
dictated neutrality. Freneau, knowing nothing of policy, 
and failing to appreciate the wisdom of Washington's 
course, resisted the government in its effort for neutrality. 
Washington as the head of the government could not 
escape criticism, and Freneau did not spare him. Yet 
Freneau's part in the widespread and violent opposition to 
Washington has been grossly misrepresented. After read- 
ing the story of the French episode as it is usually told, 



61 Jefferson's Works, vol. i, p. 
02 National Gazette, July, 1793. 



535] The Democratic Editor. 71 

one would expect to find the National Gazette filled with 
scandalous and scurrilous attacks upon the president. As 
a matter of fact one will find there nothing of the kind. 
There are some pretty sulphurous passages in that paper, 
and no wonder. There were blows to give as well as blows 
to take. When Fisher Ames spoke of those who sup- 
ported the French cause " as salamanders that breathed 
only in fire, as toads that sucked in no aliment from the 
earth but its poison, as serpents that lurked in their places 
the better to concoct their venom," ra — when a federalist 
talked that way about French democrats in America, we 
can scarcely expect the reply of the democrat to be as 
gentle as the cooing of a dove. But the savage passages 
in the National Gazette are not directed against Washing- 
ton. The most offensive paragraph that can be found in 
Freneau's paper is, unquestionably, one that comments 
upon the president's proclamation of neutrality. It reads: 
" I am aware, sir, that some court satellites may have 
deceived you with respect to the sentiment of your fellow 
citizens. The first magistrate of a country whether he be 
called king or president seldom knows the real state of a 
nation, particularly if he be so buoyed up by official im- 
portance as to think it beneath his dignity to mix occa- 
sionally with the people. Let me caution you, sir, to be- 
ware that you do not view the state of the public mind at 
this critical moment through a fallacious medium. Let not 
the little buzz of the aristocratic few and their contempt- 
ible minions of speculators, tories and British emissaries, 
be mistaken for the exalted and generous voice of the 
American people." The ugliest and coarsest sentence that 
Freneau published against Washington is to be found in 
the paragraph just quoted. It was most certainly not writ- 
ten by Freneau, yet he must be held responsible for it. 
When it is examined and compared with other pasquinades 
of the time it must be admitted that its tone was mild and 

03 Fisher Ames' Works, vol. ii. 



72 The Political Activities of Philip Freneau. [536 

decent. It is equally mild and decent when compared with 
editorial utterances of our own day. 

Personally Freneau shared the general regard and rev- 
erence for Washington, and he let no opportunity slip for 
paying tribute to the great man. If placed together, the 
verses written by Freneau in Washington's praise would 
make a comfortable little volume. Even when the French 
trouble was at its height, he could see the greatness of the 
man, for, in June, 1793, when Washington was probably 
the most unpopular man in America, the poet forgot his 
partisanship far enough to publish in his Gazette a grace- 
ful and inspiring ode written in the president's praise. 

Yet Freneau did not make an idol of Washington. His 
working hypothesis was that the president was a man after 
all, and he had but little patience with those who affected 
to see in Washington a god. It was the fashion in high 
federal circles to twist every anti-federal sentiment or 
movement into treason to Washington. " Would to God 
this same Washington were in heaven," cried Senator 
Maclay, disgusted with what he thought was Washington- 
worship. " We would not then have him brought forward 
as the constant cover to every unconstitutional and irre- 
publican act." 64 When soon after Washington's death ex- 
travagant and even blasphemous encomiums appeared 
from every quarter, Freneau thus rebuked their fulsome- 
ness: 

One holds you more than mortal kind, 

One holds you all ethereal mind, 

This puts you in your Savior's seat 

That makes you dreadful in retreat. 

One says you are become a star, 
One makes you more resplendent far; 
One sings that when to death you bowed 
Old mother nature shrieked aloud. 

We grieve to see such pens profane 
The first of chiefs, the first of men; 
To Washington — a man who died — 
Is "Abba, father," well applied! 

64 Maclay's Journal, p. 351. 



537] The Democratic Editor. 73 

He was no god, ye flattering knaves, 

He " owned no world," he ruled no waves. 

But — and exalt it if you can — 

He was the upright HONEST MAN. 

In the autumn of 1793, Philadelphia was stricken by a 
deadly plague. A putrid yellow fever broke out in the 
city and thousands of victims perished. Half of the popu- 
lation fled into the country. Government offices were 
closed and business came to a standstill. In the general 
depression that accompanied the pestilence Freneau suf- 
fered with others. His list of talents did not include a 
talent for business and the finances of his paper were badly 
managed. Subscribers though often dunned failed to re- 
mit; and it was upon subscriptions that the paper chiefly 
depended, for the editor scrupulously refused to allow ad- 
vertisements to encroach upon the space allotted to read- 
ing matter. 

On the 26th of October, the following notice was in- 
serted in the Gazette: 

With the present number (208) conclude the second volume and 
second year's publication of the National Gazette. Having just 
imported a considerable quantity of new and elegant type from 
Europe, it is the editor's intention to resume the publication in a 
short time — at the opening of the next congress. 
Please send in subscriptions. 
S^" Printers of newspapers may no longer send in exchange 
until further notice. 

About the time of the discontinuance of the newspaper, 
Jefferson resigned his office, and Freneau was compelled 
to resign his clerkship in the department of state. It is 
not absolutely certain that a bankruptcy wound up the 
affairs of the Gazette. The yellow fever may have driven 
out Freneau as it drove out thousands of others. Jeffer- 
son writing to Randolph said: " Freneau's paper is dis- 
continued. I fear it is the want of money. I wish the 
subscribers in our neighborhood would send in their 
money." 65 In a letter to Wm. Giles, Freneau says: " Sev- 

85 Jefferson's Works, vol. vi, p. 428. 



74 The Political Activities of Philip Freneau. [538 

eral unfavorable circumstances have determined me to a 
final discontinuance of the National Gazette." b,; Precisely 
what the unfortunate circumstances were we do not know. 
Three causes for abandoning the Gazette are suggested by 
the facts : Shortage in subscription money, the prevalence 
of the yellow fever, and the loss of government patronage 
and of his clerkship through Jefferson's resignation. The 
publication of the paper was never resumed. Freneau as 
an editor had done his work. 

What was that work? What was the mission of the Na- 
tional Gazette? What was its influence upon American 
politics and upon the American mind? 

We have considerable material from which we may draw 
answers to these questions, for politicians have expressed 
themselves freely regarding the National Gazette. For 
Hamilton's opinion of the paper we are prepared: "As to 
the complexion and tendency of that Gazette a reference 
to itself is sufficient No man who loves the government 
or is a friend to tranquility but must reprobate it as an in- 
cendiary and pernicious publication." 67 And again: "If 
you have seen some of the last numbers of the Gazette you 
will perceive that the plot thickens and that something 
very like a serious design to subvert the government dis- 
closes itself." To Hamilton's mind, then, the Gazette was 
a most dangerous foe to the government — which happened 
to be the federalist party. 

The testimony of John Adams regarding the influence 
of Freneau is interesting. " We Federalists," he wrote to 
Benjamin Stoddard, " are completely and totally routed 
and defeated. If we had been blessed with common sense 
we would not have been overthrown by Freneau, Duane, 
Callendar or their great patron and protector." 68 In a 



00 From a letter in the possession of the Pennsylvania Historical 
Association. 

07 Hamilton's Works, vol. vii, p. 32. 
88 John Adams' Works, vol. viii, p. 514. 



539] The Democratic Editor. 75 

letter to Thomas Jefferson, 03 Adams says: "What think 
you of terrorism, Mr. Jefferson? I shall investigate the 
motive, the incentive to these terrorisms. I shall remind 
you of Philip Freneau, Lloyd, Ned Church," etc. — naming 
other partisan writers. Late in life the aged statesman 
said: " The causes of my retirement are to be found in the 
writings of Freneau, Markoe, Xed Church " 7J — and other 
troublesome newspaper men." It will be seen that when 
Adams begins to name the writers that have injured his 
political fortunes, he always puts Freneau at the head of 
the list. The Editor of the National Gazette seems to 
have lain like an incubus upon his life. For the year 1791 
there is but one entry in his diary and that is a jotting re- 
specting the National Gazette. In writing to Tristam 
Dalton in 1797 Adams says: "I have ever believed in 
his [Jefferson's] honor, integrity, love of country and 
friends. I may say to you that his patronage of Paine and 
Freneau is and has long been a source of inquietude and 
anxiety to me." 71 When it assailed Washington, Adams re- 
joiced, saying that he himself had held the post of libellee- 
general long enough. The following verses are a sample 
of the writings that Adams found so destructive of his 
peace : 

TO A WOULD-BE GREAT MAN. 
Cert at tergeminis tollere honoribus. 

Daddy vice, Daddy vice, 

One may see in a trice 
The drift of your fine publication; 

As sure as a gun, 

The thing was just done 
To secure you — a pretty high station. 

Defenses you call 

To knock down your wall 
And shatter the STATE to the ground, sir. 

So thick was your shot, 

And hellish fire-hot 
They've scarce a whole bone to be found, sir. 



63 John Adams' Works, vol. ix, p. 582. 

70 John Adams' Works, vol. iii, p. 414. 

71 Ford's Writings of Jefferson, vol. vii, p. 



76 The Political Activities of Philip Freneau. [540 

When you tell us of kings, 
And such petty things, 
Good Mercy! how brilliant your pages! 
So bright in each line 
I vow now you'll shine — 
Like — a glow worm to all future ages. 

On Davilla's ~'~ page 

Your Discourses so sage 
Democratical numskulls bepuzzle 
With arguments tough 

As white leather or buff, 
(The republican Bull-dog to muzzle). 

Fisher Ames expressed his view of Freneau's paper as 
a factor in politics in these words : " The manifestoes of 
the National Gazette indicate a spirit of faction that must 
soon come to a crisis. Every exertion is made through 
their (the republicans') Gazette to make the people as fu- 
rious as themselves." 73 

Timothy Dwight of Hartford, " the Metropolitan see of 
Federalism," upon reading the Gazette was moved to ex- 
press himself thus: "Freneau your printer, linguist, etc., 
is regarded here as a mere incendiary and his paper is a 
public nuisance." 74 

Oliver Wolcott was not quite so severe but he hits the 
nail pretty squarely on the head when he said that it was 
the settled purpose of the National Gazette to destroy the 
popularity of the leading men of our country. 75 

Rufus King complained that the censures of the Na- 
tional Gazette were creating a dissatisfaction with the gov- 
ernment. 78 

Freneau's friends have not placed on record as much 
evidence of the great influence of the Gazette as his ene- 
mies have left; yet they have not been silent. We have 
already seen that Jefferson estimated the Gazette as being 



72 Adams' Discourses of Davilla — a treatise defending strong 
government. 

73 Fisher Ames' Works, vol. i, p. 128. 

74 Gibbs' Washington's and Adams' Administration, vol. i, p. 109. 

75 Ibid. 7e Life and Correspondence of Rufus King. 



541] The Democratic Editor. 77 

one of the strongest influences in American politics. In 
his judgment, it was the Gazette that saved the United 
States from drifting into monarchy. The great democrat 
watched the paper with an anxious eye and its success 
brought him the highest satisfaction. " Freneau's paper," 
he wrote to a friend, " is getting into Massachusetts under 
the patronage of Hancock and Samuel Adams, and Mr. 
Ames the colossus of the monocrats, will either be left out 
or have a hard run. The people of that state are republi- 
can, but hitherto they have heard nothing but the hymns 
and lauds of Fenno." " 

James Madison was also gratified at the work which his 
old friend was doing in the cause of democracy. " Fre- 
neau's paper," he said, "justifies the expectations of his 
friends and merits the diffusive circulation they have en- 
deavored to procure it." 78 

From the contemporaries of the National Gazette, we 
may glean some matter that will enable us to form a judg- 
ment as to the part it played in the propaganda of demo- 
cratic doctrine. In the unfriendly Connecticut Courant we 
find this tribute to its influence: "From the National 
Gazette whence in streams pure and smoking like a drain 
from a whiskey distillery it is conveyed to reservoirs es- 
tablished in every part of the community." 79 

In the friendly Independent Chronicle, of Boston, we 
read: "As the friends of civil liberty wish at all time to 
be acquainted with every question which appears to regard 
the public weal, a great' number of gentlemen in this and 
neighboring towns have subscribed for Mr. Freneau's Na- 
tional Gazette." 80 

The Halifax Journal of North Carolina attributes the de- 
feat of Mr. Adams in that state to the discussion of his 
career in the columns of Freneau's paper. The South 

77 Jefferson's Works, vol. iii, p. 491. 

78 Madison's Works, vol. iv, p. 543. 
70 Connecticut Courant, 1792. 

80 Boston Independent Chronicle, 1793. 



78 The Political Activities of Philip Freneau. [542 

Carolina Gazette was so enraged by Freneau's opposition 
to the measures of government, that it called for his pun- 
ishment. 

These utterances of friends and foes ought to give us 
a fairly correct notion of Freneau's place in the history oi 
our politics. They teach us that he was hated and feared 
as the greatest editor of the democratic party. His paper 
was published in the seed-time of democracy in America. 
The soil of party politics was virgin and Freneau sowed 
with a lavish hand. To the federalist mind it seemed that 
the seeds he was sowing were dragons' teeth which would 
one day spring up as giants and destroy society and gov- 
ernment. Society and government were not injured by 
the principles advocated by the editor, but the federalist 
party was. 

The part Freneau played in the making of democratic 
sentiment may be summed up as follows : 

i. He was the ablest champion of what is known as " Jef- 
fersonian simplicity." The war which he waged upon 
titles, distinctions, and court-like ceremonies was success- 
ful and decisive. 

2. Through his paper the strongest opposition to Ham- 
ilton's centralizing schemes found expression. If Freneau 
had not early checked Fenno, it may be that loose con- 
struction would have run away with the constitution. 

3. Freneau's paper did much to give a French coloring 
to our political philosophy. The doctrines of liberty, fra- 
ternity, equality, of equal rights to all and special privi- 
leges to none, was unwelcome to many American minds in 
Freneau's day, yet this was the keynote of all Freneau's 
writings. The editor of the National Gazette was the 
schoolmaster who drilled Jeffersonian or French Democ- 
racy into the minds — willing or unwilling — of the Ameri- 
can people. 

Freneau's place in the history of journalism is distinct 
and eminent. He is the prototype of the partisan editor... 



543] The Democratic Editor. 79 

A recent student of the history of American journalism 
thus speaks of him: 

" Xext to Washington, Jefferson and Hamilton, one 
figure assumes a prominence superior to that of all others 
engaged in the political contest, not so much perhaps by 
the weight of his intellect as by his versatility and vivacity 
and the keenness and the readiness of the weapons he 
brought to the contest. We refer to Philip Freneau. 
What Tyrtaeus was to the Spartan was Freneau to the re- 
publicans or anti-federalists. In all the history of Ameri- 
can letters or of the United States press there is no figure 
more interesting or remarkable, no career more versatile 
and varied than that of Philip Freneau." 81 

81 Magazine of American History, vol. xvii, p. 121. 



CHAPTER IV 

THE POET OF THE WAR OF 1812 

Freneau had just entered his forties when he ceased to 
publish the National Gazette. He had given two of the 
best years of his life to that paper, but there was a long 
span still before him. Immediately upon leaving Philadel- 
phia he went to Charleston, South Carolina, to visit his 
brother Peter. Peter Freneau was a democratic editor 
of repute, the Secretary of State of South Carolina, and 
Jefferson's political manager in that state. Philip was well 
received in Charleston and he made friendships while there 
which were genuine and lasting. 

After a pleasant sojourn of several months in the South, 
Freneau returned to his New Jersey home. There he 
spent a year or two doing nothing of importance, unless it 
was to write an occasional attack upon the government and 
print it in Bache's " Aurora," — just to let John Adams 
know that Philip Freneau was still living. With letters 
in his pocket from Jefferson and Madison recommending 
him for " his sound discretion and extensive information " 
the editor applied for the managership of a projected 
newspaper in New York, but nothing came of that 
scheme. 1 We may remember that when he closed up the 
affairs of the National Gazette he had on hand " a consid- 
erable quantity of new and elegant type." This type he 
seems to have removed to his old home in Mount Pleasant, 
near Middletown Point (now Mattawan), New Jersey, 
where he set up as a practical country printer. Following 
the bent of his genius he tried journalism again, this time 
in the role of a country editor. May 2, 1795, he printed 

1 Hudson's History of Journalism, p. 187. 



545] The Poet of the War of 1812. 81 

the first number of the " Jersey Chronicle." A copy of 
this quaint journal is preserved in the library of the New 
York Historical Society. It is a little typographical fail- 
ure, in the form of a quarto, precisely seven inches by eight. 

Freneau made his bow to his rural constituents in these 
lines: "The Editor in the publication of this paper pro- 
poses among other things to present his readers with a 
complete history of the foreign and domestic events of the 
times, together with such essays, remarks, and observa- 
tions as shall tend to illustrate the politics or mark the 
general character of the age and country in which we live." 
We learn also from the paper that P. Freneau was ready 
and willing to print Handbills and Advertisements at the 
shortest notice, and upon the most reasonable terms. The 
political tone of the Chronicle was of course democratic, 
and the editor never failed to deal an opportune blow at 
the political aspirations of John Adams and Alexander 
Hamilton. 

But the chronicle did not prosper. " Newspapers," 
says Hudson, " have not made their mark in New Jersey as 
in many of the old states. Situated between New York 
and Philadelphia, it has been placed in a position to enjoy 
the news facilities of those two cities."