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.