Wednesday, February 10, 2010

Bank of New York Founded (2)

These early charters stipulated that the banks must not trade in stocks of merchandise, nor hold any more real estate than was needed in the conduct of their business, except such property as was received in satisfaction of claims against a debtor.

The amount of indebtedness a bank might incur might not exceed three times its paid up capital, and the notes issued must not be of small denominations, nor exceed certain limits. In theory and practice a bank could do anything that was not forbidden.

Until 1825, or during a period of thirty-four years, the charters granted in New York State made no specific enumeration of the powers banks might exercise. There were no checks on fraud; no examinations of books or transactions: no method of preventing trickery. The Legislature during the first decade after 1791 granted few charters.

The need for banks was not great, there was a prejudice against such institutions as monopolies, and the few established banks desired no rivals. For the first fifteen years the Bank of New York had no competitor in the city except the New York branch of the Bank of the United States. More outstanding is the fact that the bank had become an important factor in politics, and the getting of a charter from the Legislature was something only attained by one having political skill or favor.

Source of Information: New York State, A History; Lewis Historical Publishing Company, Inc. New York

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