existence. Until the declaration of war (June, 1812), the issuing of
notes was always made with the intention of redeeming them, but the
over-issue soon became general, and depreciation followed. The
periodical demands for dollar-pieces for the East Indian and Chinese
trade were warnings of the over-speculations on the part of those
companies whose members were not personally liable. Traders, who through
their notes or their deposits had a right to credit with the banks, did
not hesitate to ask for $100,000, whereas, formerly they would have
hesitated to ask for $1,000. The war put a stop to the exportation of
precious metals, which, in the ordinary course of things, limits the
issue and circulation of paper. The upshot of this was to redouble the
note issue, each one believing its only duty was to get the largest
amount into circulation. Loans, and enormous sums of money, were
distributed above all reason among individuals and among the States. The
increase of dividends and the ease of obtaining them extended the spirit
of speculation in certain districts, and especially among those who
owned land. The remarkable results shown by the Bank of Lancaster, the
"Farmers' Bank," which, by means of an extraordinary issue of notes, had
yielded as much as 12 per cent. and piled up in capital twice the amount
of its stock, caused it to be no longer thought of as a bank intended to
assist trade with available capital, but as a mint destined to coin
money for all owning nothing at all. Led by this error, laborers,
shopkeepers, manufacturers, and merchants betook themselves to quitting
active occupations to indulge in golden dreams. Fear alone restrained
some stockholders connected with the non-authorized companies, and led
them to seek for a legal incorporation.

In Pennsylvania, during the session of 1812, an act was passed
authorizing twenty-five banks, with a capital of $9,000,000. The
Executive nevertheless refused to ratify it, and returned it with some