which will in all cases give the true value, to wit: What the same would be worth in payment of a just debt to a creditor entitled to and able to procure the cash for his debt."

AMENDMENTS.

During the great panic of 1857, the banking laws received no material amendment, the State of New York presenting the best banking system and the best currency of any State.

In 1861 came the civil war, and with it the demand of the government for millions of dollars when thousands had heretofore answered. Bank suspension and panic became inevitable, and with the application by Congress of the New York system to its own currency, and with its taxation of ten per cent. on the circulation of the State banks, the latter at once disappeared, and United States "legal tenders" so-called, and National bank currency took its place.63

In the year 1882 a revision of the statutes relating to banks and cognate institutions was enacted. 64 Ten years thereafter another revision was adopted by the legislature as a part of the general revision of all the laws.65 In 1909 a third revision of the statutes of the State was adopted and is known as the "Consolidated Laws" including as part thereof the present revised Banking Law.66 The extension of the liability of stockholders and also of the enlargement of the jurisdiction of the banking department to all moneyed corporations, except insurance corporations, and the increase of its powers have previously been mentioned.

The restrictions specified in section 179 to 188 inclusive and 190, 191 of chapter 409 of the Laws of 1882, which did not seem to be applicable to institutions organized under the act of 1838, but only to the other moneyed corporations mentioned in that act of 1882, now apply to all corporations under the supervision of the bank superintendent. The restriction contained in the twenty-fifth section of the present banking law referring to loans or discounts to any person or persons, to the effect that such loans or discounts shall not exceed one

63 See introduction to National Bank Act, post.

64 See preface to first edition.

65 See preface to fourth edition.

66 See preface to sixth edition.

fifth the capital stock actually paid, and surplus of the bank or banker making the same, was materially amended (ch. 696) by the legislature of 1893. It was then enacted that such restriction shall not apply to loans or discounts secured by collateral security worth ten per centum more than the amount or amounts loaned thereon, nor to the discount of bills of exchange drawn in good faith against actually existing values, provided, however, that such loans or discounts on such collaterals shall not exceed one-half the actual paid-in capital stock and surplus of such banks or bankers, or of commercial or business paper actually owned by the person negotiating the same. This percentage of ten per centum was in 1896 increased to fifteen per centum. Other amendments made to the laws by the Legislature in adopting the last-named revision were as follows:

Loans to any person, company, corporation or firm, or on paper upon which any such person, company, corporation or firm may be liable, are limited to one-fifth part of the capital stock actually paid in, and surplus.

Banks of discount and deposit, having their principal places of business in the cities of Brooklyn or New York are required to have at all times on hand at least fifteen per cent. of their aggregate amounts of deposits, and all other banks ten per cent. This provision, if rigidly enforced, the revisers thought to be sufficient to provide such a reserve as conservative banking demands.

Each director to be qualified is required to own at least one thousand dollars in value of its stock in banks having a capital of fifty thousand dollars or over, and at least five hundred dollars worth in banks having a capital of less than that amount. All vacancies in the office of director are to be filled by election of the stockholders, but vacancies not exceeding one-third of the whole number of the board may be filled by election by the directors then in office. Each director is required to take an oath when elected, promising to discharge his duties faithfully, to declare that he owns the number of shares of stock required, and that the same is not pledged or hypothecated.

The provisions relating to the conduct of elections have been transferred to the Stock Corporation Law. A statement of all unclaimed dividends and deposits amounting to fifty dollars or over which have remained unclaimed for five years must be published in a newspaper

of the county of location and in an official paper of Albany at least once a week for six successive weeks.

Every provision applicable to corporations in general or to stock corporations in general, was transferred to those general laws respectively, while all penal provisions have been transferred to the Penal Law. Such provisions relate mainly to the conduct of elections, the increase or reduction of capital stock, the liability of stockholders, and the change of name of banking corporations.

Chapter 287, Laws of 1904, enacted a one-year statute of limitation of actions by a depositor against his bank for moneys paid by it upon a forged check, or a check raised in amount, the statute beginning to run from the date of the return by the bank to the depositor of the forged or raised check as a voucher for the bank's payment. It gives the depositor, as a period for the detection of such payment, such time as may elapse between the date of payment and the return of the check as a voucher, and one year besides.

The new statute does not relate to genuine checks upon which an indorsement has been forged; as to these, the depositor's remedy is to be found in the existing law.

In previous editions of this work a number of special statutes directly affecting the daily business of banking institutions had been carefully collated. Many of these statutes have been transferred to the new revisions. The statutes affecting the taxation of banking institutions have been embodied in the Tax Law, and many enactments directly affecting banking organizations and bankers have been made part of the Negotible Istruments Law. The latter general law has been adopted almost in its entirety by many of the States, and is destined to become the code of negotiable paper. In a volume intended for ready examination by bankers and by members of the bar, these laws seemed a necessary part of this work and have been col· lated herein.

It is not out of place to add that whatever is excellent in the present National bank system belongs not to one Secretary of the Treasury or another, but to the fact that the general government borrowed the principles of sound finance from the State of New York. This method has also been applied to the Bank of England. New York may thus justly claim to be the Empire State of sound banking,

whose men and whose principles have given a currency the actual value of which is the same as its nominal value, in two hemispheres.

ARTICLE II.

SAVINGS INSTITUTIONS.

A savings institution is thus defined by the Supreme Court of the United States: "It is not a commercial partnership, nor is it an artificial being, the members of which have property interests in it. Nor is it strictly eleemosynary. Its purpose is rather to furnish a safe depository for the money of those members of the community disposed to intrust their property to its keeping. It is somewhat of the nature of such corporations as churchwardens for conservation of the goods of the parish, the College of Surgeons for the promotion of medical science, or the Society of Antiquaries for the advancement of the study of antiquities. Its purpose is a public advantage, without any interest in its members."

Judicial decisions in Pennsylvania, New Jersey and Connecticut, respectively, describe them as "really charities for the benefit of the poor," as "large incorporated agencies for the common investment and care of deposits," and as " quasi charitable and purely benevolent. institutions."

As soon as the earning capacity of money became recognized, philanthropic persons devised plans whereby the laboring classes might compel their small accumulations to lighten the burden of maintaining themselves and those dependent on their efforts. Savings banks had their origin in those plans which were, in the beginning, wholly philanthropic in their character.

The first savings bank was founded in Hamburg in 1778, and that of Berne nine years later, intended for and indeed restricted to receiving the savings of servants, mechanics, "and other trades people." A suggestion of a "frugality bank" was made by Irving Bentham in 1797; whether or not he knew of the savings banks already established does not appear.

1

The conclusion of the eighteenth century 2 witnessed the first at

1 Scratchley's Treatise on Savings Banks, 36.

"In this country [Great Britain], the first proposals for a bank of savings were made in 1798." Lewin's Hist. of Savings Banks, 19.

1

tempt in England at establishing a savings bank, when Rev. Joseph Smith of Wendover, in conjunction with two of his parishoners, offered to receive from any inhabitant of his parish sums from two pence upward, every Sunday evening during the summer months, and to repay to each individual, at Christmas, the amount of his deposit with an addition of one-third of the sum as a bounty upon his frugality. If the money was paid back before Christmas, no bonus was allowed.

There can be no doubt that the Rev. Henry Duncan, minister at Ruthwell, Dumfriesshire, Scotland, did more than any other man to originate a self-sustaining bank which did not partake of the nature of a charity, and was applicable not to one locality only, but to the whole country.3

The scheme, which was started in May, 1810, showed deposits of savings during the first year amounting to £151, which gradually increased until 1814, when the deposits amounted to £922.

The first savings bank of any note in the city of London did not begin operations until the end of January, 1816. In 1817, savings banks were for the first time recognized by the government of Great Britain.5 Before this time they were purely voluntary associations of a local character, and necessarily limited in their operations. Savings banks were not established in France until 1834.

The first savings bank in the United States was "The Philadelphia Savings Fund Society," which was organized as a private voluntary association in 1816, and commenced to receive deposits on the second of December in that year. This institution was not incorporated by the legislature of Pennsylvania until February 25, 1819, while "the

3 We are warranted on the whole to conclude, that though some institutions, similar both in their principles and details, had been formed before the Parish Bank of Ruthwell, yet it was the first of the kind which was regularly and minutely organized and brought before the public; and further, that as that society gave the impulse which is fast spreading through the kingdom, it is in all fairness entitled to the appellation of the parent society. London Quarterly Review, Vol. XVI., 102.

4 London Quarterly Review, Vol. XVI., 103.

5 The preamble of this, the first act, begins as follows: "Whereas certain provident institutions or banks for savings have been established in England for the safe custody and increase of small savings belonging to the industrious classes; and it is expedient to give protection to such institutions and the funds established thereby, etc." Act 57, George III., ch. 130, 1817.