A CONNECTICUT LAND BANK OF THE EIGHTEENTH CENTURY.

[FrankChodorov]

http://www.dinsdoc.com/davis-2.htm

     IN a previous paper the writer described the Massachusetts Land Bank of 1740, and pointed out that the theory upon which it was founded had been the subject of discussion long before the actual trial made in 1740.* In 1714 an attempt had been made to organize a similar company; and this in turn had been based upon a project originally submitted to the Council of the Massachusetts Bay in 1686, and for a time favorably considered by that body. In the account of a Connecticut company organized in 1732, which forms the subject of the present paper,? certain resemblances to the Massachusetts Land Bank will be easily detected, whose origin may perhaps be attributed to the discussion in this province in 1714 and 1686. In each case the intention apparently was to form a company which should furnish bills somewhat similar in character to the bills of public credit then in circulation. The currency of these bills was to be attained through lending them to borrowers who would agree to receive them in trade and commerce, and who were to furnish adequate security for their loans, the general idea being that real estate was best for that purpose. The borrowers were to constitute the company, which was to have no capital stock paid in; and their voice in the management of its affairs was to be proportionate to their borrowings.

     The Connecticut company did not originally pose as an organization of this description. It was chartered in 1732 by the Connecticut Assembly, under the title of the New London Society United for Trade and Commerce. It is evident from the language of the charter that the intention of the Assembly was to permit the formation of a joint stock company, in which the members should participate in proportion to the amount of their investments. The alleged purposes of the society are sufficiently indicated in its title. If upon an analysis of the affairs of this company we shall find in its actual organization enough points of identity with the schemes of the banks proposed in Massachusetts to indicate a community of origin, we shall add to the proof already at hand another instance of the far-reaching influence of the London pamphlet* which furnished the methods for the Massachusetts projects of 1686 and 1714 and for the experiment of 1740. In order that we may reach a conclusion upon this point, a review of the facts connected with the career of this society, so far as they can be gathered from the Colonial Records of Connecticut and the publications of the Connecticut Historical Society, will now be presented.

     In May, 1732, Thomas Seymour, John Curtiss, John Bissell and fifty-eight others, said to have been representative men of good standing from various parts of the colony, presented a petition to the Assembly. The petitioners represented that for the promoting and carrying on trade and commerce to Great Britain and his Majesty's islands and plantations in America and to other of his Majesty's dominions, and for the encouraging the fishery, . . . as well for the common good as their own private interests, they had agreed to unite themselves together to be a society and have one common stock. For want of authority to act as societies do by vote, they labored under great disadvantage. They prayed to be put in a politic capacity as a society.?

     The Assembly favored the petitioners, and at the same session resolved and granted that the memorialists should be declared and constituted to be for the future one society in fact and in name, by the name of the New London Society United for Trade and Commerce. They and their successors were empowered to admit others; to sue and be sued by their name aforesaid as other societies were by the law of Connecticut; to elect officers annually, and to prescribe rules for their meetings, which orders and rules were to be binding upon the particular members of said society; and no man should have liberty to take out his stock without leave of the society, though he might sell the same. Then followed provisions for organizing the society.

     The generally accepted account of the career of this society is that the society was formed in 1730,* ?being legalized and patronized by the colonial government,? and went into immediate operation.? Loans upon mortgage were obtained from the public treasury, and the capital employed in trade. It had about eighty members scattered over the whole colony. . . . To facilitate its operations, the New London Society emitted bills of credit, or society notes, to run for twelve years from the day of date, October 25, 1732, to October 25, 1744. These bills were hailed by the business part of the community with delight. They went into immediate circulation. But the government was alarmed. Wise men declared the whole fabric to be made of paper; and, having no solid support, it must soon be destroyed. The governor and council issued an order denouncing the new money, and an extra session of the Assembly was convened to consider the bold position of the society. This was in February, 1733. The legislature dissolved the association; and the mortgages were assumed by the governor and company, and the bills allowed to run until they could be called in and the affairs of the society settled. . . . According to their own statement, a great part of their stock had been consumed by losses at sea and disappointments at home. . . . At a meeting held June 5, 1735, they unanimously dissolved themselves.?

     This account is derived in part from sources not indicated by the author. In part it rests obviously upon the legislation of the colony. It happens that the published records of the colony contain so complete a rehearsal of the various transactions of the society that, when taken in connection with the material to be derived from the publications of the Connecticut Historical Society, they make possible a more detailed analysis of its career. It is evident, from information to be obtained from the sources mentioned above, that the society was organized under the charter granted at the May session in 1732, and that, in disregard to the purposes set forth therein, it immediately proceeded to enter upon the work actually proposed?namely, to furnish a medium of trade to the colony of Connecticut?through the notes or bills of the society. The so-called stockholders turned out to be, not contributors of funds, but borrowers of notes. In short, the company was the prototype of the Massachusetts Land Bank of 1740.

[BaRbArIaN]

Sounds like a scam.  Though it started as a private club, they made the mistake in trying to involve the State.

[FrankChodorov]

well I believe you probably had to get a charter from the state as this was pre-revolutionary war...