they had been when connected with like concerns in the past. The history of the abuses of different banking systems was fully discussed; but the conclusion was reached that judicious amendments of the majority report should be attempted before it was rejected. The question of the substitution of the minority report was defeated and farther consideration of the possibility to form a banking system for Iowa was assured.

When this report came up for consideration again, an attempt was made to strike out all the bill after the first provision, requiring the law to be submitted to a vote of the directors, and leave the regulation of the details of the banking system to Legislative authority rather than to incorporate them into the Constitution. The central ideas of those in favor of striking out the provisions seemed to be a desire to give freedom to legislation, and that the Legislature, was the proper body to devise special restrictions; another was that no plan of restrictions that could be inserted in a Constitution would be sufficient to procure complete safety to note holders.

One argument introduced was that if the unlimited individual liability clause was retained the effect of it would be that only men of great means would invest money in legitimate banking business; by reason of the large number of shares owned by them, they would be able to control the management of the business and in this way protect themselves against loss. This would have a tendency to prevent men of limited means, such as laborers, artisans, etc., from investing their surplus money in the banks. To place the banking system of an entire state in the hands of a few persons would tend to make the whole system insecure; for where the most stable banking systems were formed, in the Eastern states, the capital of the banks was owned by small stockholders. Objections were made to the repeal of the amendment or repeal of the charter by the Legislature, but in support of this provision the laws of Massachusetts were cited to show that such action was not based on a new principle.

The debate upon this brought out the position of the Whigs

to be that of keeping of all restrictions out of the Constitution, leaving to the future Legislatures, before which the chartering of a bank might come, the deciding of the character of the details in the light of all the knowledge the Convention now had and that might be gained in the interval. The Democrats occupied two positions. Those of that party who had been in favor of the minority report were in favor of not only the restrictions in the majority, but others and stronger ones. Those in favor of the restrictions of the majority report were in general men who either favored a well-regulated banking system from principle, or who considered themselves pledged to assist in devising a well-regulated system, and they were in favor of having some of these restrictions in the Constitution and leaving some of them to be provided by legislative action. The result of this division of opinion among the Democrats and a portion of them combining with the Whigs led to a division of the question and a consideration of each restriction separately.

The motion to strike out the second section,' providing that the bank and branches should not commence operations until half of the capital stock subscribed for shall be actually paid for in gold and silver, when it came to a vote produced a curious result. No hard money Democrat could vote against such a proposition; and only five votes of Whigs who held extreme views upon leaving restrictions to the legislative action voted to strike out the provision.

The amendment to the third section, changing the denomination of the smallest bill to be issued from ten to fifty dollars, caused eighteen persons, mostly radical anti-bank Democrats, to cast their vote in favor of it. An attempt to reduce the size of the smallest bill from ten to five dollars was lost by a vote of twenty-four to forty-five. The great majority voting in the affirmative were Whigs. On the next morning3 the attempt to strike out entirely the provision, providing that the

1 Journal of Convention, p. 93.

2 Journal of Convention, p. 94.

3 October 22, 1844.

bank "shall not have the power to issue any bank note of a less denomination than ten dollars," only received fifteen votes in the affirmative, all Whigs, while fifty-two were cast against it.

The section in regard to the remedy for the collection of debts being reciprocal was not struck out.

An attempt was made to amend1 the section "The stockholders shall be liable respectively, for the debts of said bank and branches," by the addition of two clauses. They were:

In any sum not less than double the amount of the capital stock described in their charter, in good real estate, to be valued by persons appointed by the Legislature of the State, approved and signed by the Governor and Secretary of State, and they shall never be allowed to take any security, either directly or indirectly, for any money loaned by them in their corporate capacity.

That no bank chartered under the regulations of this Constitution shall ever lend any money or any bank note or bank notes to any member of the Legislature, or any other officer in any civil department of the State.

This amendment was defeated by a vote of 14 to 52; and from that one requirement, that of forbidding the taking of security for debts, it seems as if the vote against it should have been greater.

But the fifth section3 was amended by inserting "jointly and severally" for "respectively" and by adding to at the end of the section "whether they hold the stock in their own names or by trustees, to the full extent of the debts of such bank." The motion to strike out the amended section was lost by a vote of 17 to 52.

The sixth section was amended by striking out "according to the promise therein expressed" by a vote of 53 to 16. This section, as amended, would make it impossible for a bank organized under the law to issue any post note, or any other kind of an obligation than a demand obligation.

1 Journal of Convention, p. 96. 2 Ibid, p. 96.

3 Journal of Convention, p. 97. 4 Ibid, p. 98.

An additional section' was offered to be inserted after the sixth, which provided that "No bank shall be allowed to issue a greater amount of bank notes than double the amount of capital stock actually paid into such bank in gold and silver," but it was rejected.

2

The seventh section, which secured to the legislative assembly the power to amend or repeal the charter, was attempted to be amended by a provision requiring the act of repeal to be passed by both houses, approved by the governor, and submitted to the people at the next general election, and if a majority of the qualified electors approved it, the act of repeal was to become a law. The amendment was not agreed to; and the section was not struck out.

An additional section3 was added, which was that "Any violation of, or non-compliance with the provisions and restrictions contained in this section, by the stockholders, commissioners or officers, or persons connected with the creation of any such bank or its management, in any of its accounts, exhibits, certificates of stock paid, or by embezzling its funds or property, shall be punished by fine or imprisonment in the penitentiary, and shall subject the offender to the same disqualification as conviction for infamous crimes." The vote upon this additional section was 37 yeas to 33 nays.

An amendment requiring the pledging in real estate or United States stock to three times the capital, as a security for the redemption of the liabilities of the bank was voted down by a decisive vote.

As decisively, an additional clause4 was passed forbidding the State of Iowa from becoming either directly or indirectly a stockholder in any bank or corporation.

By a vote of 27 to 29, there was rejected an amendment which provided that only one bank charter should be passed by the same Legislature.

The report of the Committee on Incorporations as now

I Journal of Convention, p. 99.

2 Ibid, p. 99.

3 Ibid, p. 100.

4 Journal of Convention, p. 103.

5 Ibid, p. 104.

6 Ibid, p. 107.

amended was finally referred to a Select Committee,2 after unsuccessful attempts to refer it to the Committee on Judiciary and to the Committee on Incorporations.

2. Report of the Select Committee on Banks.

On October 25th the Select Committee on Banks submitted its reports to the convention. They recommended that the portion of the amended report of the Committee on Incorporations that referred to one bank (Sec. 1) be indefinitely postponed, and added section 4.

The report as amended and re-arranged by the Select Committee now consisted of the following sections:

Sec. 2. The assent of two-thirds of the members elected to each house of the Legislature, shall be requisite to the passage of every law, for granting, continuing, altering, amending, or renewing any act of incorporation.

Sec. 3. No a of incorporation shall continue in force for a longer period an twenty years, without the re-enactment of the Legislati e, unless it be an incorporation for public improvement.

Sec. 4. The General Assembly shall create no bank or banking institution, or corporation with banking privileges in this State, unless the charter with all its provisions shall be submitted to a vote of the people at a general election for State officers, and receive a majority of all the votes of the qualified electors of the State.

Sec. 5. The personal and real property of the individual members of the corporation hereafter created, shall at all times be liable for the debts due by any such corporation.

Sec. 6. The Legislative Assembly shall have power to repeal all acts of incorporations by them granted.

These sections followed very closely the different articles of other State Constitutions and the principles of the banking laws of other States. The second section followed very closely the requirements of the Constitution of New Jersey. The period of incorporation was, of course, common in nearly

I Journal of Convention, p. 107.

2 Hall, Galbraith, Bailey, Langworthy, Evans, Chapman, Randolph. 3 Journal of Convention, p. 121.

♦ Required 3-5 for granting, altering, continuing or renewing.