By Peter Huntoon
The key date associated with the organization of a national bank was not the date of charter, but rather the date of organization, defined as the day when the last of the organizers signed their organization certificate filed with the Comptroller of the Currency. This is the day when the corporate clock began to tick for the bank.
In contrast, the date of charter was when the comptroller issued his certificate of authority that allowed the bankers to commence business. The date of charter was the day the bonds were deposited with the treasurer to secure the bank’s circulation.
The date of organization preceded the date of charter. These dates become particularly important when banks were extended. Prior to February 1927, bankers had to periodically apply for extensions of their corporate lives. From 1864 forward, the date of extension was predicated on the date of organization, not the date of charter. Congress gave banks perpetual lives in 1927 thus eliminating the need for them to apply for periodic extensions.
You can see that the date of charter was important to comptrollers because this was when they authorized the bank to commence business. However, from the bankers’ perspective, the key date was the date of organization because that date dictated the length of the corporate life of the bank and the dates of subsequent extensions.
The 1863 version of the National Bank Act gave banks a corporate life of 20 years or less from the date of passage of the act. This was revised in 1864 to a corporate life of 20 years after the date of organization. The important thing here is that by 1880s the lives of banks began to expire.
The first question you might ask is what was the idea behind these limited corporate lives? The answer is that the national banking system was a controversial innovation resisted by many in the banking community in 1863. The national banking system provided for examinations of banks to determine their soundness and constrained the types of activities they could engage in.
The free-wheeling Southern and Western bankers, who tended to work highly speculative ventures, had little interest in such stringent oversight. Many Eastern bankers felt the national system would be less profitable than the state systems under which they were operating.
The National Bank Act was passed reluctantly by a largely unenthusiastic Congress as an expedient to help fund the Civil War by means of the sale of bonds that the bankers were forced to buy to back their circulations and through the tax on that circulation. Passage of the act was facilitated by the loss from Congress of the opposing Southern delegations when the Southern states seceded, a factor that helped to nudge the act through Congress.
That Congress built in a sunset clause on the entire enterprise. Specifically, Congress limited the lives of the national banks to 20 years or less. From their perspective in 1863, if national banking turned out to be a bad idea, it would be gone by 1883.
Banks began to expire as early as 1880, but the flood of extinctions was coming in 1882 and 1883. Of course, by then times were good, bankers were making a lot of money and the public liked the idea of a uniform currency that circulated freely without discount. Species payments had resumed so National Bank Notes were redeemable in gold, instead of being discounted against gold. Agitation grew to have Congress pass legislation to allow for corporate extensions.
The Comptroller of the Currency’s office had to confront the technical details of what constituted the corporate life of the existing banks; more specifically, what constituted the end of their lives if extension legislation didn’t get enacted.
The man in the hot seat was John Jay Knox, comptroller between 1872 and 1884, who was first appointed to the post by Republican President Ulysses S. Grant. Knox probably ranks as the foremost theoretical thinker ever to occupy the position. He was a gifted writer who wrote extensively on banking and monetary theory and policy. He was a hard money advocate, even though the national bank currency over which he presided was distinctly characterized as soft owing to the fact that it was redeemable in legal tender currency rather than gold at the time the National Bank Act was passed.
Kane (1922) wrote of him: “Mr. Knox, like his predecessor, Mr. McCulloch, had an exalted opinion of the dignity and importance of the office of the Comptroller of the Currency. He was exceedingly sensitive in regard to official etiquette and resentful of any interference with or infringement upon his statutory prerogatives.”
Like all other aspects of his position, Knox gave considerable attention to the definition of the corporate life of a national bank. His 1881 annual report contains the most lucid explanation in existence on the topic. Knox (1881, p. vii) concluded:
“* * * the period of existence of an association, as a body corporate, commences from the date of its organization certificate, and not from that of the certificate of the Comptroller, authorizing the association to commence business.”
Twenty years later, while grappling with the same issue, Comptroller William Ridgely (1901, p. xxiv) spelled out exactly what was meant by the date of organization.
“A national bank * * * becomes a body corporate from the date of the execution of its organization certificate, the date of the last acknowledgment (where there is more than one) being construed as the date of the execution of the certificate.”
Plate dates
Knox obviously concerned himself with the plate dates on national currency because plates for new banks began to carry the date of charter during his tenure. The first was Jan. 2, 1882 on the Series of 1875 10-10-10-20 plate for The First National Bank of Pontiac, Mich., charter 2607.
This was an important step, because the plate dates were now dates that had a unique association with the banks of issue.
It had been customary to put a plate date on the faces of National Bank Notes as part of their validation, a tradition passed down from the earlier bank note issues preceding the Civil War.
The first dates to appear on National Bank Notes were rather arbitrary batch dates that were assigned to groups of banks chartered during the same period. These were in use from 1863 to 1870.
They were followed by a second type of batch dates between 1870 and 1882 that corresponded more closely to when particular printing plates were ordered.
The choice of using the date of charter by Knox starting in 1882 was a bit peculiar. He knew that the date of organization was the key to the corporate life of the bank, but instead he chose the date when he granted the bankers their authorization to open for business. Clearly there was a bit of hubris here.
Knox, the fellow who was enamored with the dignity and importance of the office of the Comptroller of the Currency, considered the date when he granted the license to open to be more significant than the date when the corporate life of the bank began. His was a comptroller-centric choice, in effect lofting his role the launching a bank to the forefront.
No one gave the matter further consideration until Charles G. Dawes was appointed comptroller on Jan. 1, 1898, by Republican President William McKinley. Dawes carried with him a pro-banker ideology, so he was predisposed to view the operation of the comptroller’s office as one of facilitating the interests of the bankers.
The date of organization replaced the date of charter under his tutelage beginning with a plate date of Dec. 18, 1897 on the 10-10-10-20 Series of 1882 plate for The American National Bank of Chicago, charter 5111. This change was carried out without fanfare or justification in Dawes annual reports. It was simply a fait accompli.
Of course, the date of organization was of far greater significance to his banker clientele than his date of charter. The date of organization appeared on the first plates made for new banks during the rest of the large note era.
Ironically, dates of extension had been in use on the first plates made for extending banks beginning with July 14, 1882 for The First National Bank of Findlay, Ohio, charter 36. Notice that this practice began under Knox’s stewardship.
There was a real disconnect in logic here. The dates of extension for banks chartered under the Act of 1864 were predicated on the date of organization, so Knox was acknowledging the importance of the date of organization for extending banks whereas he discounted it for new banks.
Dawes’ use of the date of organization on the plates for new banks gave the plate dating conventions internal consistency.
Other dates appeared on National Bank Notes. For example, plates made for banks undergoing title changes between Feb. 16, 1882 and Feb. 21, 1919, bore the date when the Comptroller of the Currency approved the title change. The first of these reflected a move wherein The Blue Hill National Bank of Dorchester, Mass. (684) became The Blue Hill National Bank of Milton. The last involved the change in name of The Southwest National Bank of Commerce, Kansas City, Mo. (10231) to The National Bank of Commerce.
Similarly, dates of statehood appeared on plates following admissions beginning with Nov. 2, 1889 for the Dakota banks.
The laws governing national banks evolved over the years and the most important provisions of those laws impacting numismatics were the provisions dealing with corporate life and the extension of corporate life because they gave rise to the different series of notes that were issued by the banks. We attach great significance to the Acts of 1882 and 1902, which respectively provided for a first and second 20-year corporate extension of life. The timing of these extensions was dictated by dates of organization for the banks.
We numismatists—just like the bankers of yore—find ourselves deeply invested in the date of organization. It determined the life of the bank for the bankers. We need it to unravel the timing of the issuances of the different series of notes by the bank. For both of us, the date of charter is but a bureaucratic milestone in the founding of the bank. Once the charter was granted, that date sank to footnote status never to be considered again in the operational affairs of the bank or its supervision by Federal authorities other than to established the order in which the bank was licensed within the national banking system.
The topic of plate dates on National Bank Notes involves many arcane twists as the conventions for applying them changed over the decades. You can read the entire blow-by-blow story in Huntoon (2002) or contact me so I can provide an updated version of that work along with all the related tables and photos at peterhuntoon@embarqmail.com.
References cited
Huntoon, Peter, May-June 1986, “The relationship between national bank notes and corporate extensions and reorganizations of national banks”: Paper Money, v. 25, p. 97-118, 131.
Huntoon, Peter, March-April 2002, “The mystery of plate dates and treasury signatures on national bank notes”: Paper Money, v. 41, p. 51-69.
Kane, Thomas, 1922, The Romance and Tragedy of Banking: The Bankers Publishing Co., New York, 549 p.
Knox, John Jay, 1881, Annual report of the Comptroller of the Currency to the First Session of the Forty-Seventh Congress of the United States: U.S. Government Printing Office, Washington, D.C., 738 p.
Ridgely, William B, 1901, Annual report of the Comptroller of the Currency to the First Session of the Fifty-Seventh Congress of the United States, vol. 1: U. S. Government Printing Office, Washington, D.C., 818 p.
This article was originally printed in Bank Note Reporter.
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