A False Start
Matters began to change in 1814.
The New England Bank of Boston announced it too would go into the moneybroker business,
accepting country notes from holders and turning them over to the issuing bank for redemption.
The note holders, though, still had to pay the cost.
In 1818, a group of prominent merchants formed the Suffolk Bank to do the same thing.
This enlarged competition brought the basic rate of country note discount down from 3%
in 1814 to 1% in 1818 and finally to a bare ½ of 1% in 1820.
But this did not necessarily mean that country banks were behaving more responsibly in their
note creation.
By the end of 1820, the business had become clearly unprofitable and both banks stopped
competing with the private money brokers.
The Suffolk became just another Boston bank.