millions capital at that time; the independent banks, with $720,000 capital, and the free banks, with $695,000 capital. During these years repeated laws were passed to try to stop the circulation of out-of-State notes.
Taxes on banks were increased by laws of March 21, 1851, and April 13, 1852, by way of a war on banks. The banks succeeded in breaking down the law in the courts.[1]
The banks of this State received their first shock in 1854, when it appears that, as a result of piling one system upon another, they had produced an excessive inflation and a commercial crisis.[2]
A new act for the incorporation of a Bank of Ohio, with branches, was passed April 14, 1857. After five branches should be organized, each of them was to appoint one delegate, to constitute a Directory of the bank, which should procure and furnish to the branches their circulating notes. Ten per cent. on the circulation was to be paid over to the Directory in money or in bonds of the United States or of Ohio, to constitute a safety fund; the money part to be invested in bonds or mortgages. On the first $100,000 of capital notes might be issued only for double the amount; on the second $100,000, for 175 per cent. of the amount; and so on; lowest note, $1; non-redemption on the part of any branch constitutes insolvency, and thereupon its assets vest in the Bank of Ohio, and a receiver is to be appointed; all the branches are to contribute to pay the notes of an insolvent branch. The chief Directory is to get an injunction against any disobedient branch; the bank is to have offices at Cleveland, Cincinnati, and New York, and is to act at New York as the transfer agent of the State. At least half of the capital of each branch is to be in specie or its equivalent. Any existing bank or branch of the Bank of the State may come into this one, and the old corporation is dissolved. Thirty per cent. of the circulation is to be kept in specie funds, of which at least half must be real specie; the balance in New York or other eastern cities may be counted as cash. Bank Commissioners are appointed to set this bank in operation.
September 30, 1857, the Board of Control of the Bank of the State of Ohio resolved that its branches could and would maintain specie payments, and they did so.[3] There was great complaint all through this period of the anti-bank legislation in this State. It appears to be, thanks to that legislation, that Ohio was saved from the banking distress of the States further west.
Ohio adopted an independent treasury system in 1858. Taxes were to be collected in coin or notes of those specie paying banks of Ohio which issued no notes under fives—"a virtual exclusion of Ohio bank paper as well as all other." After July 4, 1860, no notes under ten dollar, were to be received; after July 4, 1865, none under twenty dollars. The State Bank would cease in 1866. The free banks would cease in 1872. After that nothing but coin was to be used by the State.[4]
