have given a stronger significance to the words justice and impartiality. Let me close my imperfect sketch of the judicary by naming to you Judge Solomon Sibley, to whom I presented an introductory note, at Detroit in July 1833. His head, his face, his address impressed you with with the idea that the President of the United States was not at fault when he gave him his commission as a Territorial Judge of Michigan. Long practice at the bar, service in congress as a delegate, and the able and faithful discharge of his judicial, duties make his life an important part of the history of Michigan.

In the summer of 1835 the people of the Territory of Michigan under the sanction of the law, called eighty-nine of their fellow citizens to the city of Detroit, and there assembled in what was familiarly known as the old capitol building, they proceeded to prepare a constitution for a proposed state. John Biddle, well known to all the inhabitants of Wayne County, was chosen its president and discharged the duties of the position faithfully and well. I was honored as a novice, by the people of Kalamazoo County, with a seat in that body, but I well remember what seemed to me the strange admixture of men there congregated. The largest number originally from New York, quite a list born in Michigan, some from New England, Pennsylvania, New Jersey, Ohio and Indiana; possibly representatives from other states were with us. In fact in the early days," out west," it was a difficult matter to know where some of us came from. All this was before "Bygones" was about with his note book, giving us an insight into the past. How well these men performed their task I may not say; it is history that the people ratified their action and the constitution there prepared was the fundamental law of Michigan until 1851. Under and by virtue of the provisions of that constitution our comman school system was established, and that is the richest, best gift ever conferred upon the people of Michigan. Its influence reaches the humblest citizen of the State, and can make him the peer of the highest official and the most affluent. May that system be continued through time. Over the portals of all the school houses of Michigan let it be marked in letters, never to be effaced, "Our common school system is to last forever." Let us all assent and agree, that it is the prop and main stay of good government. Of the eighty-five men constituting the convention of 1835 not more than nine survive of my own knowledge but six. Here and there over the surface of Michigan the little mounds of earth indicate that these men have nearly all passed away. Peace to the memory of my dead associates; they were enlightened, earnest, good

men.

EARLY BANKS AND BANKING IN MICHIGAN.

By ALPHEUS FELCH-Read February 7th, 1878.

The earliest effort for the establishment of a bank within the present limits of the State of Michigan was in 1805. The act of congress establishing the Territory of Michigan, conferred legislative powers on the governor and judges, and at their first session as a board, a petition for an act incorporating a bank was presented to them. This was at a time when the local business could scarcely have demanded a banking institution, or have afforded much promise of its success. The small town of Detroit had just been laid in ashes. The population of the entire territory was inconsiderable. Five years before the whole population was reckoned at 551, and although it rapidly increased after the organization of the territorial government, five years later (1810) the census showed it to be less than 5000. The country was possessed mainly by the Indians, and the small French settlements on the Ecorse, the St. Clair, and the Raisin, were neither enterprising nor prosperous. No roads pierced the forests of the interior; no manufactures existed; agriculture yielded nothing for market, and navigation had scarcely begun to vex the waters of the rivers and the lakes. The multifarious transactions of commercial and civilized communities, which require banks and banking facilities, were almost unknown in the frontier settlement. There was, however, one branch of trade which belongs peculiarly to such a state, and diminishes as population increases and important mercantile and industrial interests advance. This business is the fur trade, which at that time was a most important one in Michigan.

The petition for a bank charter was accordingly presented, not by citizens of Detroit, but by capitalists who resided in Boston, -Russell Sturgess and others, and who were engaged in the fur trade. In their petition they set forth this interest, and pray for a charter for a bank in Detroit, on account of the great hazards and inconveniences in transmitting specie to so great a distance. The petition was referred to Governor Hull, and on the 15th day of September, 1806, an act was passed by the governor and judges incorporating the Bank of Detroit, with a capital of $400,000. It is possible that the long distance of the locality of the bank from the great centers of business may have been deemed by the projectors an important advantage. If these eastern capitalists could give the bills of the bank a circulation in the Atlantic states, there would be litttle fear of their sudden return to the remote banking-house for redemption.

The bank went early into operation. Indeed, the company was organized, the banking-house erected, and the cashier appointed before the charter was granted. Judge Woodward, one of the judges who granted the act of incorporation, was appointed its president. Imputa

tions unfavorable to Judge Woodward in regard to this and other matters were made, and much feeling being excited against him, he was threatened with impeachment. The act creating the corporation was laid before congress, as required by the ordinance of 1787, and was finally disapproved by that body. The bank, however, continued to do business, but in September, 1808, the governor and judges, in the absence of Judge Woodward, passed an act making it punishable as a crime to carry on unauthorized banking business. This put an end to the brief existence of the institution. Its bills were in circulation until 1809, when they seem to have been quietly withdrawn from circulation.

The next bank which was established in the territory was the Bank of Michigan, incorporated by the board of governor and judges, on the 19th day of December, 1817, with a capital of $100,000.

The legislative power given to the governor and judges by the ordinance of 1787 authorized them "to adopt and publish in the district such laws of the original states, criminal and civil, as may be necessary and best suited to the circumstances of the district." The charter of the Bank of Michigan is declared in the body of the act to have been adopted from the laws of three of the original states, to-wit: New York, Ohio and Massachusetts, so far as necessary and applicable to the circumstances of the territory. In 1830 a question was presented in the courts of the State of New York as to the validity of the charter of this bank. The suit was brought by the bank against a former president of the institution, on a promissory note. It was contended by the defendant that under the limitation on the powers of the governor and judges above cited, they had no authority to create a corporation; that the act was in no sense adopted from the laws of any original state or states; that it named parties and places, and conceded powers which were neither named nor given in any statute of such states, and that the charter was therefore unauthorized and void. But both the court of errors and the supreme court of that state gave a more liberal construction to the grant of legislative authority contained in the ordinance, and held the act of incorporation valid: Bank of Michigan vs. Williams, 5 Wend., 478; and 7 Wend., 540.

A construction equally liberal as to the legislative power of the governor and judges has also been given by the supreme court of the United States (14 How., 68), and by the highest judicial tribunal of this State. (Walk. Ch. R. 85, and 2 Mich., 427.)

The corporation, by the terms of its charter, was to expire on the first Monday of June, 1839, but by an act of the legislative council, approved February 25th, 1831, it was extended 25 years longer, and by a subsequent enactment the corporation was allowed to increase its capital stock and to establish a branch bank at Bronson, now Kalamazoo.

The two above named are all the banks which derived their corporate existence from the governor and judges of the territory of Michigan. In 1823 the legislative power was taken away from them by act of congress, and conferred upon the governor, and a newly constituted body denominated the legislative council. The first session of the legislative council was held at Detroit on the 7th day of June, 1824.

The first bank charter granted by the legislative council was to the Merchants' and Mechanics' Bank of Michigan, which was approved by the governor April 2, 1827. The bank was to be established at Detroit with a capital of $200,000, with liberty to increase it to $500,000. This charter, in addition to the usual provisions, contained a full grant of power to insure against fire and the casualties and dangers of transportation by water, and authorized the issuing of policies for that purpose. It contained also a provision requiring the corporation to subscribe for and take $4,000 of the stock of a steam mill company, at or near Detroit, to be thereafter incorporated. The steam mill company was incorporated a few days after, but it does not appear that the bank subscribed for any of its stock. Indeed, it does not appear that a banking company was ever organized under this charter.

On the 29th day of March, 1827, the charter of the Bank of Monroe, passed by the legislative council, was approved by the governor, its capital stock to be $100,000, with liberty of increase to $500,000, and to continue in existence 20 years.

The Farmers' and Mechanics' Bank of Michigan was chartered by act of the legislative council, approved November 5th, 1829, and on the 7th day of March, 1834, it was allowed by act of the council to increase its capital stock and to establish a branch bank at St. Joseph.

A charter to the Bank of River Raisin was granted June 29th, 1832, and by act of March 7th, 1832, the institution was allowed to increase its capital stock and to establish a branch bank at Pontiac.

The Bank of Wisconsin was chartered by an act approved January 23, 1835. This bank was to be located in that part of the territory known as the Green Bay country, and which, on the organization of the State of Michigan soon after, was thrown outside of the state jurisdiction. We have no knowledge of any organization under the charter.

On the 26th day of March, 1835, four bank charters, passed by the legislative council, were approved by the governor, to wit: 1, Michigan State Bank, at Detroit; 2, Bank of Washtenaw, at Ann Arbor; 3, Bank of Pontiac, which was, by an amendment to the charter of the Detroit and Pontiac railroad company, an existing corporation, authorized to be established by that company at Pontiac; 4, Erie and Kalamazoo Railroad Bank. This also was a grant of banking powers to an existing railroad corporation, the bank to be established at Adrian.

The nine banks last above named complete the list of banking corporations which were chartered during the existence of the legislative council of the territory of Michigan.

In 1835 the state constitution, prepared by a convention, was adopted by vote of the people, and the members of the senate and house of representatives who were elected under its provisions assembled as a state legislature at Detroit on the 2d day of November, 1835.

By the state legislature charters were granted to the following companies, viz: Bank of Manhattan, approved March 25, 1836; Calhoun County Bank, approved March 26, 1836; Bank of St. Clair, approved March 28, 1836; Bank of Clinton, approved March 28, 1836; Bank of Ypsilanti, approved March 28, 1836; Bank of Macomb County, approved

March 28, 1836; Bank of Oakland County; Bank of Tecumseh; Bank of Constantine, approved July 25, 1836.

At the same session of the legislature, when the last-mentioned bank charters were passed, another act, intended to have an important bearing on the future financial interests of the state, was proposed and considered. It became a law by the approval of the governor on the 28th day of March, 1836. This act is entitled "an act to create a fund for the benefit of the creditors of certain moneyed corporations." It was, in fact, an adoption of the famous "safety fund system" previously in operation in the state of New York. It required each bank to deposit with the state treasurer, at the beginning of each year, a sum equal to one-half of one per cent. on the capital stock paid in, and the fund so created was to be held and to be used for the benefit of the creditors whenever any bank subject to its provisions should become insolvent. The act was made applicable to such monied corporations only as should be created after its passage, and such existing corporations as should subsequently obtain a renewal or extension of their charters, or should voluntarily comply with the provisions of the act.

This statute was destined to have little practical effect. In New York the system proved inadequate for the security of the public interests, and was abandoned. In Michigan, subsequent events which speedily followed would have rendered it impotent for any good, even if its merits as a system had been far greater than its most sanguine supporters dared to claim for it.

This act, however, contained an important provision in providing for the appointment of a bank commissioner, and in requiring him to make careful examinations into the affairs of the banks subject to his inspection and make periodical reports of their condition.

Such had been the legislative action in the grant of corporations with banking powers under both the territorial and state governments down to the close of the year 1836.

At this time the financial affairs of the whole country had become sadly deranged, and the entire community was laboring under an unprecedented pressure of pecuniary embarrassment. A wild and reckless spirit of speculation had overrun the land. Capital had been withdrawn from its legitimate uses and was sunk in unprofitable investments. The currency in general circulation had become greatly inflated, and fabulous prices were imparted to property, which passed rapidly from one owner to another, chiefly upon credit, until the indebtedness was everywhere more than the debtors were able to pay.

The next regular session of the legislature commenced, under the provisions of the constitution, on the 2d day of January, 1837. Applications for bank charters almost without number were presented. They came from all portions of the state, and from citizens of nearly every condition and occupation. The tables of the committees on banks and incorporations in both branches of the legislature were loaded with petitions, and the outside pressure for the grant of bank charters, which it was fondly hoped would afford relief from all embarrassments, was almost irresistible. In this dilemma a proposition was started for a sys