and the votes had no sectional character. The majority of the delegates who had immigrated to California from southern states were not only not fighting to have the Convention adopt boundaries so extensive that the constitution would be rejected by Congress, but they were actually contending against that very thing. Every time they had a chance to express themselves by their votes-with the possible but not probable exception of the first vote taken on the Gwin-Halleck proposal, where the names of the voters were not given the majority of them opposed the extreme eastern boundary. Even when Jones submitted his double proposition making the 112th degree of west longitude a proviso clause to be considered by Congress only in case that body should absolutely refuse to accept the new state with contracted limits, the majority of the delegates from southern states voted against it. And the motive which seems to have actuated them, as the rest, was a desire to obtain immediate admission to statehood.

CHAPTER VIII

CORPORATIONS AND BANKS

ic of 1837 had such a pronounced effect on the n and revision of the fundamental laws of the far as they controlled the incorporation of assospecially those with banking privileges, that it to consider very briefly the panic itself and its n the making of state constitutions in general ing more fully with the discussion of the subject ornia Convention of 1849.

nancial Disorder in the Late Thirties

mber 26, 1833, Taney, Secretary of the Treasury, der directing that the money of the United States ceforth be deposited in certain state banks see purpose. The amount on deposit in the United was soon exhausted through drafts for the ornditures of the government, and by 1836 it had e a fiscal institution of national importance.1 1835, the national debt was paid,' and the next ual income of the government from taxation, ies, etc., was increased by $24,877,179 from

ancial History of the United States, 206–208.

175

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the sale of public lands.1 To procure additional places for storing the nation's currency, the number of "pet banks" was increased. On January 1, 1835, the government had $10,323,000 distributed among twenty-nine banks. By November 1, 1836, eighty-nine banks held $49,378,000 of government moneys.2 The selection of state banks as places of deposit for the national funds proved a strong incentive to bank building, and the passage of a bill in June, 1836, making the states the depositories of the surplus added an increasing number of such institutions to those already in existence. In 1834 there were five hundred and six banks in the United States. This number had increased from seven hundred and four in 1835 to seven hundred and thirteen and seven hundred and eighty-eight in 1836 and 1837 respectively. During the last named year occurred a national panic which brought ruin to hundreds and thousands of people, but the wealth of paper issued for money seems to have encouraged still further the development of banks. By 1838 there were eight hundred and twenty-nine, and the number increased to eight hundred and forty in 1839 and to nine hundred and one in 1840. The destruction of the national bank removed the only agency for preserving a sound currency," and the small banks throughout the country issued paper without much regard to the amount of specie on hand with which to redeem it. During the summer

1 Dewey, Financial History of the United States, 217. 2 Ibid., 210.

3 Ibid., 225.

4 Ibid.

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specie payments were suspended in all the banks it the country. In New York the legislature leispension for a year, and other state legislatures ed similar enactments. There were in circulation United States and state notes, but paper issued by anks and even by private individuals. The naernment paid its creditors in the paper of susnks.1

Effect on State Constitutions

financial chaos necessarily had its effects on the state constitutions. Between 1838 and the year California began the organization of her state govour new states drew up constitutions for admishe Union, and six of the older states adopted new the former group were Florida in 1838, Texas in

in 1846, and Wisconsin in 1848; of the latter sylvania, Rhode Island, New Jersey, Louisiana, and Illinois in 1838, 1842, 1844, 1845, 1846, and ctively. In all of these, except Rhode Island, res were inserted limiting the power of the legisreate banks or associations of any kind for bankes. The provisions restricting banking privileges titutions of New York and Iowa were taken as

History of the United States, IV, 279-80.

rters and Constitutions. For the Iowa constitution of 1846 va as it is in 1855, 206–233. Poore does not give this, but has

examples by delegates in California for the formation of similar provisions in the constitution of 1849. We shall have a chance to compare these presently.

The California Attitude-Majority and Minority Report

Many of the delegates who took part in drawing up the California constitution of 1849 knew of the effect of the panic of 1837 on the revision and formation of state constitutions. It is not surprising, therefore, that they were strongly opposed to permitting the organization of corporations or associations of any kind with banking privileges. Gwin, one of the older members, recalled conditions in the United States between 1836 and 1840, when "the country was flooded with post notes, corporation and individual tickets, and, in many instances, certificates of deposit," and warned his colleagues against creating possibilities for similar occurrences in California. "It would be a curious spectacle,' he asserted, "to exhibit before this Convention the various kinds of paper in circulation, as money, during that memorable period." He claimed to have seen collected as a matter of curiosity about one hundred different kinds, and if he had them there, he thought they would be the strongest arguments he could produce against the organization of banking establishments in any form.1

On the other hand there were some who, while feeling that it would be unnecessary to organize banks in California, considered it essential to provide for the establishment of

1 Browne, Debates, 117.