BANKS. The paramount position of New York City in the American financial world places New York State in the lead among the States in the number and resources of its financial institu tions. The first bank of the State was the Bank of North America. incorporated in 1782. In 1791 the second bank was chartered the name of the Bank of New York. In 1804 an act was passed prohibiting nankin;; and the issuing of currency in the State except under a special charter from the Legislature. Due to the high profits, banking charters were eagerly sought and became political favors. At the time of the declaration of War With great Britain in 1812 there were twenty banks in the State, and t wenty-f?mr more were chartered between 1812 and 1829. As the bank charters were for a limited number of year-, and IllOnt of them were to expire in 1831. the hanks in 1828 made a combined effort for a general renewal of their charters. But a strong opposition developed to this plan. The careless distribution of charters to political friends had produced had results, and the New York currency was becoming less secure. A reform of the banking system was undertaken in 1829. and the plan of securing hank circulation by the formation of a safety fund was successfully carried through. The law required all banks with new or renewed eharters to contribute one-half of one per cent. of their capital annually to a common safety fund, out of which losses from hank failures were to be covered. A IN?ard of three bank com missioners was ereated by the same bill. quarterly examinations and annual report: pro object of popular dissatisfaction. which expressed itself in a demand for a free banking system. As a result of this agitation a free banking law was passed in 1838. which. in order to secure the bank currency. compelled the investment of the bank capital in New York State bonds or equally good securities and their deposit with the State. This was the plan afterwards adopted by the Federal Government in the national bank ing system. For some time both systems of banking worked side by side, notwithstanding a great deal of friction. For twelve years (1829 a1) this safety fund was not drawn upon, as no ehamer41 bank failed during that time. lint the failure of six banks in 1841 so exhausted the fund that a law was passed in 1842 limiting the guarantee to circulation only, and not to all the liabilities of the failing banks. As the charters of the chartered safety fund banks expired, most of them reorganized under the free banking law. This was amended in 1S40 by limiting the deposits to New York State bonds. as many of the other securities deposited had proved worth less. In the many hank failures during the crisis of 1841, this system of deposits proved its value. preventing, serious losses on circulation.
In the severe financial crisis of 1857 this sys tem was again put to a severe test, but not withstanding a genera] suspension of specie pay ment for some time, the banks remained tirm.
At the time of the introduction of the national banking system the New York banking was not only the greatest. but also the most secure in the country. The new system was therefore not welcomed. and specially heavy taxes were im posed on the national banks. These taxes were. howevwr. declared unconstitutional by the Federal courts. The Stale banks were forced to obtain national charters, and from 30:1 in 1863 the number of State banks was reduced to 45 in 18tIS. After that their number increased but slowly until 1880 (701. when a steady increase began. Since 1894 capital has preferred the new form of organization known as trust companies, which. while doing a general banking business, are yet different enough to have a more favor able system of taxation. Savings banks hare existed in the State since 1S19, and their number grew rapidly. especially after the Civil War, increasing from 71 in 1863 to 150 in 1873. Though since then their number has gradually diminished. the amount of deposits has increased immensely. Sic article on BANK, BANKIN“.
The condition of the banks in New York State in 1902 is shown as follows: sided for. In 1832 fifty-two hanks Were members of the safety fund. find twelve did not belong to it.
The financial crisis of 1837 was heavily felt in New York. where the hanks suspended specie payments, and bill-s of many concerns passed at it discount. The chartered banks became the The system of clearing houses originated in .NVW York City. The total exchanges for the first Vear(185t)were more than tire and a half billions, and in 1900 mon...than sixty dollars. Consolidation has latterly become a prominent feature of the banking business of New York, about thirty small banks having been bought out by larger institutions, and in many instances becoming local branches of the same. The largest financial transactions all over the country mostly emanate from New York, and, besides, New York City remains the main channel for all financial transactions between the Old and New Worlds. The New York clearing house is therefore the clearing house for the whole nation. '11w New York money market regulates the country's money markets, and is beginning to assert a dominant influence upon the European Slant' foreign loans have been floated in New York during the last few years. and many foreign securities listed on the New York exchange. The greatest industrial and railroad consolidations between 1890 and 1900, though chartered in New 'Jersey and Delaware, and uniting property located in various parts of the Union, arc never theless all creatures of 'Wall Street'—as the New York financial world has come to be known.