Early Rhode Island
Bank Notes
1808 Ten Dollar Banknote from
Farmers Exchange Bank Gloucester
1857 One
Dollar Banknote from the Tiverton Bank |
The
Banknotes,
while not related to Postal History are nevertheless interesting
and I have included a short history of the
1865 Tax
that effectively ended the practice of issuing these State
Banknotes.
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In 1809,
the Farmers Exchange Bank of Gloucester became the first bank in the
United States to fail.
The
Tiverton Bank also failed, however I don't have the date of the
closing.
(Possibly between 1865-68 - See Below)
In 1865,
Congress imposed a prohibitive 10% tax on State Banknotes which
effectively stopped State Banks from issuing banknotes.
It was generally
believed that this would make the public better off by doing away with
inferior brands of currency while also helping to finance the Civil
War by enhancing bond sales. However, the actual purpose of the 10%
tax was not to improve the quality of the currency, nor to enhance
bond sales. National currency and banknotes were suffering from high
inflationary pressures due to the expense of the Civil War. The actual
purpose of this tax was to offset the effects of inflation on the
National Banknotes.
The enactment of this tax not only drove the
State Banks out of the business of producing Banknotes, but also
forced many of the State Banks to become members of the Federal Bank
system. In 1863 there were 1466 State Banks in existence, however by
1868 there were only 247 remaining. |
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