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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 morning the attempt to strike out entirely the provision, providing that the 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.
1 Journal of Convention, p. 93. 2 Journal of Convention, p. 94. 3 October 22, 1844.
The section in regard to the remedy for the collection of debts being reciprocal was not struck out.
An attempt was made to amend 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 section 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 section4 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.
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.
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 section 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 stock holder in any bank or corporation.
By a votes of 27 to 29, there was rejected an amendment which provided that only one bank charter should be passed by the same Legislature.
The reportó of the Committee on Incorporations as now
1 Journal of Convention, p. 99.
4 Journal of Convention, p. 103.
amended was finally referred to a Select Committee, after unsuccessful attempts to refer it to the Committee on Judiciary and the Committee on Incorporations.
2. Report of the Select Committee on Banks.
On October 25th the Select Committee on Banks submitted its report3 to the convention. They recommended that the portion of the amended report of the Committee on Incorporations that referred to one bank (Sec. I) 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 ar“ 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
Journal of Convention, p. 107. 2 Hall, Galbraith, Bailey, Langworthy, Evans, Chapman, Randolph. 3 Journal of Convention, p. 121. 4 Required 3-5 for granting, altering, continuing or renewing.
all charters granted by the different States. The fifth section was found in the laws of Massachusetts, Rhode Island and Connecticut. It is almost an exact copy of the law of Massachusetts. In Pennsylvania the power was reserved to the Legislature to repeal charters as provided in the sixth section of this report. The provisions of the fourth section in regard to submitting the question to the people is found in many of the constitutions, and also in many of the laws in regard to the establishment of banks.
This report was taken up for consideration by the Convention on the 28th of October. An attempt was made to change the provision of the fourth section requiring that the vote giving assent to the incorporation of a bank should be a majority of all qualified electors in the State to a majority of those casting a vote upon the question; but this was lost by a vote of 21 to 44. This was followed by a series of amendments of all kinds and conditions. Seemingly every delegate with a “pet provision” sought to have it inserted. An especial attack was made by the means of amendments, to have the restrictions already adopted applied to banking corporations alone, leaving other corporations exempt from them.
In the debate upon the different amendments exempting corporations from the restrictions applied to banks, a special appeal was made by the Whig members to the delegates from the southern portion of the State as to the need of corporate bodies for carrying on the internal improvements of the State, such as slack-water navigation of Des Moines river. But all attempts to pass amendments to exempt other corporations than banking institutions from these restrictions were futile.
The radical anti-bank delegates were defeated in an attempt to amend so that "no bank of circulation shall be established in this State" by a vote of 16 to 52. An attempt to postpone the establishment of any bank until 1860 was also defeated.
The requirement of a "two-thirds” vote to charter a bank was changed to a "majority;" and in the same section submitting the charter to the vote of the electors the phrase "and