OLD TENOR. therefore confine ourselves principally to a brief account of banking operations in this state.* *We have, doubtless, most of us heard our fathers or grandfathers speak of Old Tenor and of Continental Money, and as it will, doubtless, be gratifying to the rising generation to understand the meaning of these terms we will here endeavor to explain them. OLD TENOR. CONTINENTAL AND LAWFUL MONEY. For many years after the organization of the government of this state, a large majority of the people were decidedly opposed to the issue of paper money; nor could they be brought to consent to the establishment of banks within the state till they felt themselves compelled to such a measure in self defence, in consequence of the great multiplication of banks in the While bank bills The first issue of paper money in America was neighboring states. made by the provincial government of Massachu- were the circulating medium in other Betts in 1690, under the denomination of bills of states, it was found to be impossible to credit, and for the purpose of defraying the expense of an expedition against Canada. As specie could prevent their introduction here, and the not be had for that purpose, new issues were made consequence was that the people of Verfrom time to time for the redemption of these bills, mont suffered by being imposed upon by and various other means were resorted to for sustain-counterfeit bills and by the failure of banks, ing their credit. By the laws of that province we find the following issues of bills of credit authorized, from 1700 to 1720, viz.: in 1702 £10,000, in 1703 £10.000, in 1714, 50,000, in 1717, 100,000, and in 1720 £50,000. In 1712 a law was passed making bills of credit a tender for ten years, and in 1722 the same law was continued for ten years longer, But, without an adequate specie basis, legislative enactments could not avail to sustain the credit of such an amount of paper money. Its value depreciated very The Province of Massachusetts, TO THOMAS WILLISTON, Dr. For sundries bought for the use of the gentlemen Rump of Beef and pieces to roast, Cucumbers, Mustard, Salt and Meal, Bread and Biscuit, Lemons, hundred and a half, Two bottles of Claret and Cider, £ 3. d. 5 0 0 1 10 0 1 4 0 2 15 0 15 0 3 15 1 0 4805 while neither the state nor any of its inhabitants shared any of the profit accruing from the banking operations. The only remedy, which they could devise for this evil, was to establish banks within the state, which should furnish to the people a medium of their own, similar to that possessed by other states, and serve as a guard against the circulation of spurious bills and the bills of insolvent foreign banks. Though we had nothing which could continental money began to depreciate in value, although accounts were still kept in it, the specie value was usually entered upon the account book under the denomination of lawful money, as in the following item copied from the account book of the first treasurer of this state: 1779. June 5.-To cash paid Reuben Dean for a Screw for a State Seal, Con.94.-Law.01.,168,4d. By this item it appears that, at the time the charge was made, 11. in continental money were 0 valued at 11. in specie. The rates of deprecia0 tion of continental money, in the several states, 0 were in most cases fixed by law. That was the 0 case in Vermont. In April, 1781, an act was pass0 ed, which declared that all contracts made on or before the first day of September, 1777, for money, 0 1 18 3 1 0 0 shall be deemed equal to the same nominal sum in gold or silver; and that all contracts made between that period and the first day of September, 1780, it understood at the time to be for the common currency of the United States, shall be rated in specie agreeably to the following table, where the numbers denote the amount of continental money, to which $100 in specie shall be equivalent on comtracts made at the time, against which that amount stands. 7 Lawful money, £5 5 When these bills of credit were finally redeemed, by a grant made by the British parliament to defray the military expenses of the colonies, their value had so far depreciated that 111. old tenor were considered equivalent to only 11. in specie or lawful money. CONTINENTAL AND LAWFUL MONEY. The United States having no adequate sources of revenue, Congress found it necessary, in the early part of the revolution, to resort to the former practice of the colonies and make large issues of bills of credit. These at first possessed the same value as specie, and in these the troops and all the other exponses of the government were paid. But the United States not having the ability to redeem these bills with specie, they began, in the early part of the year 1777, to depreciate in value, and, before the close of the war, they became nearly worthless. These bills of credit constituted what was called Continental Money, and as this formed almost the entire circulating medium of the country during the revolution, bargains were very generally made and accounts kept in it during that period. After the Sept. 1, 1777, Oct. $100 April, 1, 1779, 600 do 110 May, do 800 June, do 1000 July, do 1100 Jan. 1, 1778, 140 Aug. do 1200 Feb. do 155 Sept. do 1300 Mar. Oct. April, May, June, July, Aug. Sept. Oct. May, do 3600 Nov. 400 Jan. 1, 1779, 450 Aug. do 6000 Feb. do 500 Sept. do 7200 Mar. 99 VERMONT COPPER COINS. REASONS AGAINST BANKING. banks received but little attention for a number of years, and no serious efforts were made for the incorporation of banking institutions within the state till 1803. This year application was made for the establishment of a bank at Windsor and another at Burlington. After a long discussion, a bill passed the house of representatives in favor of the former by a vote of 93 to 83, and was sent to the governor and council for their concurrence, which they refused, and entered their reasons upon the journal of the assembly. As this document is illustrative of the views entertained by many of the leading men of the state at that period, we here lay it before our readers: The amount authorised to be issued was £25,155. The bills were to be redeemed by the treasurer of the state by the first of June, 1782, with specie, at the rate of six shillings for one Spanish milled dollar, or gold equivalent; and, for the purpose of raising the means for their redemption, a tax was laid, by the same act, of one shilling three pence on the pound, on the grand list of the state, to be paid in gold or silver, or the aforesaid bills. These were the only bills of credit ever issued by Vermont, and to the credit of the state it may be added, they suffered no depreciation and were all faithfully redeemed. The above act, which may be found entire on the 424th page of the Vermont State Papers, closes as follows: "Be it further enacted, that whosoever shall be guilty of altering, or counterfeiting any of said bills, or shall be any way concerned therein; by making instruments for that purpose, or be any ways aiding or assisting therein, and be thereof convicted, shall suffer death; any law, usage, or custom to the contrary notwithstanding." "Reasons of the Governor and Council for non-concurring in the Bill entitled an act to incorporate a Bank at Windsor in this State in 1803. 1. Because bank bills being regarded as money, and money like water always seeking its level, the bills put into circulation within this state must displace nearly the same sum of money now in circulation among us, and by driving it into the seaports, facilitate its exportation to foreign countries; which, as bank bills cannot be made a legal tender, must prove a calamity to the citizens generally, and especially to those who dwell at a distance from the proposed bank. During the great scarcity of money and the embarrassments which led to insurrectionary movements in 1786,* a class of the people were very clamorous for a bank, and flattered themselves that such an institution would relieve them from all their sufferings. Accordingly, at the session of the legislature in October, a resolution was passed submitting the question of the establishment of a bank directly to the people, by whom it was decided in the negative in January, 1787, by a large majority.t From this time the subject of * Sce part second, page 80. † See part second, page 79 and 81. Although Vermont had no banks till many years after her admission into the union, yet she had exercised the powers of an independent government, and had authorized the coining of money long before that period. At the June session of the legislature in 1785, it appears that the legislature granted to Reuben 2. Because, by introducing a more extensive credit, the tendency of banks would be to palsy the vigor of industry and to stupify the vigilance of economy, the only two honest, general and sure Harmon, jr., of Rupert, the exclusive right of coining copper within this state for the term of two years from and after the first of July following. After much trouble and delay, he at length got his works in operation, and commenced the coining of coppers; and as these are rarely to be met with at the present day, we here present our readers with a fac simile of one of the earliest coins issued s mon, for his exclusive privilege, was, after the expiration of three of the eight years, to pay into the treasury of the state two and a half per cent. of all the copper he should coin during the remainder of the term, and enter into a bond of £5000 with sufficient surety for the faithful performance of his At the October session in 1786, Mr. Harmon ap- | ET LIB, for independence and liberty. Mr. Har plied to the legislature and procured an extension of the time, for which he was to be allowed the exclusive right to coin coppers, to the period of eight years after the first of July, 1787. The weight of the pieces was fixed by law at 4 put. 15 grs., and they were, after that period, to have on one side, a head with the motto Auctoritate Vermontensium, and on the other a woman, with the letters INDE. trust. REASONS AGAINST BANKING. VERMONT STATE BANK. sources of wealth. In this view, banks | banks government would, in our opinion would tend to divert the attention of the go farther than could have been contemspeculator, the inexperienced youth, the plated in its original institution. Govindolent and incautious, from those hon-ernment, we apprehend, was not designed est, honorable and sure sources of medi- to open fields of speculation, nor to direct ocrity and independence, and to fix it upon the efforts of individuals, but merely to imaginary and unjustifiable methods of protect them in respect of property, and suddenly accumulating an overgrown such of their pursuits as are not inconsisproperty; in pursuit of which, a large tent with the general good of the citizens proportion of the adventurers would prob- at large; much less was it designed as a ably at the same time sacrifice the prop- means of drawing property out of the erty with which they began their specu- hands of the less wealthy, to place it in lations, and imbibe an ungovernable dis- the hands of the more wealthy." gust for wholesome industry and economy, now become more necessary than ever. 3. Because banks by facilitating enterprizes both hazardous and unjustifiable, are natural sources of all that class of vices, which arise from the gambling system, and which cannot fail to act, as sure and fatal, though slow poisons to the republic in which they exist. Notwithstanding the arguments here set forth, the clamor for banks still continued, and in 1805 two bills passed the house of representatives, one establishing a bank at Windsor, and the other at Burlington. These being non-concurred in by the council, a grand scheme was brought forward, which, many seem to have supposed, was to replenish abundantly the treasury of the state and the pockets of the people. This scheme was the establishment of a state bank, but the friends of the measure did not succeed in into effect till the next year. In 1806 maturing their plans and carrying them the business was entered upon in earnest, and on the 10th of November an act was 4. Because banks tend strongly to draw off the dependence of debtors from their own exertions, as means of payment,and to place it on the facility of increasing new debts to discharge the old, which cannot but be detrimental, both to the debtor, and through his example to society at large. 5. Because banks have a violent ten-passed establishing the Vermont State dency, in their natural operation, to draw into the hands of the few a large proportion of the property at present fortunately diffused among the many; and, in this way, straiten the circumstances of the many, and thus to render them still more dependent on the few; and, of course, to make them, through necessity, yet more subservient to their aspiring views; and by these means, the tendency of banks seems to be, to weaken the great pillars of a republican government, and at the same time to increase the forces employed for its overthrow. Bank. This bank at first consisted of two branches, one at Woodstock and the other at Middlebury. The next year two additional branches were established, one at Burlington and the other at Westminster. All the stock of this bank, and all the profits arising therefrom, were to be the property of the state, and all the concerns of the bank were to be under the control and direction of the legislature forever. The immediate management of the bank was to be committed to thirteen directors, to be chosen annually by the their number president of the bank. legislature, and who were to elect one of 6. Because, as banks will credit none but persons of affluence, those who are in The bank at length went into operathe greatest need of help cannot expect to tion, but the anticipations of the people be directly accommodated by them; and as the banks would enable those who have peared so fair and plausible in theory, was were not to be realized. What had apcredit with them to loan money at an ex-found to work very badly in practice, and, orbitant interest to the necessitous, there is reason to fear lest they should operate as means of an increased usury and oppression. 7. Because, should the bill pass into a law, we apprehend it would be found necessary at least, to render the bank granted thereby perpetual; a measure which appears to us too important to be adopted without a more thorough investigation than the novelty of the question and the shortness of the time will allow. 8. Because by the establishment of bank would afford an instructive lesson to although a history of the Vermont state the present and future generations, we have neither materials nor room for it here. Suffice to say, its affairs were soon found to be in inexplicable confusion, and the institution insolvent. Various acts of legislation were resorted to for sustaining it, notwithstanding which its condition grew worse and worse, and within five years from its establishment, affairs were * Journal of General Assembly for 1803, p. 235. BANKING OPERATIONS. TABLE OF BANKS. put in train for winding up its concerns. | Burlington and Windsor for the incorpoThe legislature in 1811 passed an act directing the removal of the Westminster branch to Woodstock; and the next year, for the removal of the branches at Burlington and Middlebury to the same place, and also ordering all the bills of said bank to be burned, except what were necessary for the payment of checks due from the bank. In 1814 an act was passed ordering the treasurer of the state to burn all the bills of the state bank in his possession, excepting such sum as he deemed necessary to meet demands upon the treasury. Since that period the outstanding bills have always been received for taxes, and in that way have nearly, or quite all, been called in and destroyed. The loss to individuals in consequence of the failure of the institution was trifling, but the loss to the state was very considerable. ration of a bank in each of those towns. In 1816, applications were made from * In those cases where the time between the act of incorporation and the expiration of the charters exceed 18 years, the charters have been renewed. act for the regulation of banks to be char tered or re-chartered within the state, and designed to secure the public against losses, by the mismanagement of these institutions. It provides for the appointment of a bank commissioner, who is authorized to examine the condition of the several banks, and institute proceedings against them in the court of chancery. In 1830 a branch of the U. S. bank was established at Burlington, which continued in operation till the expiration of the charter of that institution. Each of the above banks is managed by | In 1840 the legislature passed a general a board of five or seven directors, and six per cent. of the profits of each bank incorporated before 1830, and ten per cent. of those incorporated since that period is to be paid into the treasury of the state. Each bank, incorporated since 1830, is also required to pay annually into the treasury three fourths of one per cent. on the capital stock paid in until the amount paid shall be equal to 4 per cent. upon the capital, which is to remain as a "bank fund for the payment of the debts of the bank in case it shall become insolvent. 18 Pr. 11. |