WEBVTT

NOTE 17. The Country Banks Resist

1
00:00:00.000 --> 00:00:03.000
The Country Banks Resist

2
00:00:03.000 --> 00:00:06.360
How did the inflationist country banks react to this?

3
00:00:06.360 --> 00:00:10.640
Not very well, for as one could see the Suffolk system put limits on the amount of notes they

4
00:00:10.640 --> 00:00:11.840
could issue.

5
00:00:11.840 --> 00:00:16.880
They resented par redemption and detested systematic specie redemption because that forced

6
00:00:16.880 --> 00:00:18.680
them to stay honest.

7
00:00:18.680 --> 00:00:22.920
But country banks knew that any bank that did not play by the rules would be shunned

8
00:00:22.920 --> 00:00:27.360
by the banks that did, or at least see its notes accepted only at discount and not in

9
00:00:27.360 --> 00:00:29.800
a very wide area at that.

10
00:00:29.800 --> 00:00:32.360
All legal means to stop Suffolk failed.

11
00:00:32.360 --> 00:00:37.180
The Massachusetts Supreme Court upheld in 1827 Suffolk's right to demand gold or silver

12
00:00:37.180 --> 00:00:38.960
for country bank notes.

13
00:00:38.960 --> 00:00:43.360
And the state legislature refused to charter a clearing bank run by the country banks,

14
00:00:43.360 --> 00:00:48.000
probably rightly assuming that these banks would run much less strict operations.

15
00:00:48.000 --> 00:00:53.120
Stung by these setbacks, the country banks, played by the rules, bided their time and

16
00:00:53.120 --> 00:00:55.120
and awaited their revenge.