BANKS DIRECT CAPITAL

97

first, and, for good reason, was a persistent one. It has to do,
however, with banking practice, rather than banking theory!

! A classic example was that of the Farmers’ Exchange Bank, of Gloucester,
Rhode Island, which failed in 1809 with $86. 50 in specie in its vaults, after having
loaned $845,771 on the basis of $100,000 capital, upon unendorsed notes reading:
“I, Andrew Dexter, Junr., do promise the President, Directors, and Co. of the
Farmers’ Exchange Bank, to pay them, or order, — dollars, in ... years, from
this date, with interest at two per cent. per annum; it being, however, understood
that the said Dexter shall not be called upon to make payment until he thinks
proper, he being the principal Stockholder and best knowing when it will be proper
to pay the same.” Davies, Bank Torpedo (1810), p. 57.