46 G. S. CALLENDER 



provisions for the investment of educational funds in bank 

 stock. The early Connecticut charters provided that "the 

 bank shall at all times be open for subscriptions at the rate 

 of $100 for each share from the school fund of this state, and 

 from the funds of any college, ecclesiastical society, school, or 

 corporation for charitable purposes within the state." Sev- 

 eral New York charters contained similar clauses. The act 

 which rechartered the bank of New York in 1813 authorized 

 the comptroller of the state to subscribe $15,000 to the stock 

 of the bank for the benefit of the common schools; and the 

 treasurers of Hamilton, Union, and Columbia colleges were 

 given the right to subscribe a similar amount for the benefit 

 of these institutions. Banking privileges were frequently 

 given to companies formed for the purpose of carrying out 

 canals and railwaj^s, as in case of the Morris Canal company, 

 the Central Railway and Banking company of Georgia, and 

 the Southwestern Railroad bank of South Carolina. Clearly, 

 the banking business was looked upon as in some way excep- 

 tionally advantageous to the investor; and the devotion of 

 the surplus public revenue to the purchase of bank stock was 

 simply a device for increasing the revenue of the state. 



In the newer states, where capital was more scarce, other 

 motives played a considerable part. The people were anxious 

 to furnish a circulating medium, and also to provide banking 

 accommodations to the commercial classes as well as loans to 

 farmers. But in all, except the cotton states of the gulf 

 region, the desire to secure for the benefit of the public the 

 large profits to be earned in the banking business was an im- 

 portant, if not the most important, motive which led the 

 states to invest in these industries. Thus, when Indiana and 

 Illinois began their system of internal improvements, they 

 both increased the capital of certain banks, and authorized 

 the states to subscribe for the new capital. In Illinois the 

 act which authorized this action was entitled "an act to 

 increase the capital stock of certain banks, and to provide 

 means to pay the interest on a loan authorized by an act en- 

 titled ' an act to establish and maintain a general system of in- 

 ternal improvements. ' " These states could borrow money at 

 5 or 6 per cent interest, and the banks earned from 7 to 



