The banks at such times kept their coin reserve up by keeping the discounts down.
The banks of Virginia from 1827 to 1860 had a prosperous period, keeping on an average $10,000,000 of notes in circulation without loss.
It is reported that occasionally drafts drawn on New York were placed in the safe to make up a balance, and called "coin." Be that as it may, there is no case on record where a bank of circulation and deposit failed, and it is claimed by those acquainted with the banking of that day that no one ever lost a dollar by a Virginia bank note previous to the war of 1861, and they were at a discount of only one-quarter of one per cent in New York.
On Jan. 31, 1860, the capital was $16,000,000, specie was $2,943,000, circulation was $9,812,000, deposits $7,729,000.
The Bank of the State of Missouri was started in 1837, with authority to issue notes at the ratio of three to one for the specie in its vaults, and with a branch at each of five considerable towns in different sections of the state; Lexington, Fayette, Palmyra, Cape Girardeau and Springfield. Its capital was $3,450,000.
In 1856, when the population of Missouri was eight hundred and forty thousand and that of St. Louis one hundred and twenty-five thousand, and the indications of substantial prosperity were to be seen in every department of business, the bank circulation was only $2,200,000, although its stock of $1,400,000 specie warranted notes to the amount of $4,200,000, and a considerable part of its circulation was doing duty in California, Oregon and New Mexico, whither it had been carried by emigrants and traders. It is no wonder that under these circumstances Missouri offered an inviting field for the "Wild Cat" money issued so profusely by banks in other western states and that its people became victims of an inconvertible and unreliably currency, which the bank note reporter quoted at a discount all the way from 5 to 25 per cent.
So valuable were the notes of the banks of the State of Missouri in California in the '50's that a gang of counterfeiters took advantage of their popularity, and struck off imitations of them in large quantities.
It was a remedy for this evil, which had become unendurable, and in response to the persistent demands of the important commercial interests of the chief city of the state that the legislature, in 1857, chartered seven banks of issue, with branches conveniently located for the accommodation of business.
These banks were promptly organized in the spring of 1857, immediately after the Act authorizing them was passed; for the state was prosperous, and offered a fair field for legitimate investment. The monetary crisis which was impending but not discerned fell upon the country shortly after they had opened for business; but they stood the strain well; two of them, the Mechanics and the Exchange of St. Louis, refused to suspend specie payment, and continued to redeem in coin through the panic; and when the Civil War broke upon the country four years later, these two banks again refused to join in the general suspension, and maintained coin payment under all conditions that followed.
The system of banks organized under the Act of 1857 rendered the important service of partially displacing the uncertain and variable currency issued by the banks of other states and territories which had found so easy a field in Missouri. The legislature had also authorized the old banks in the state to establish additional branches and to issue notes for $5.00, and in a short time every considerable town in the state had a bank, and the notes of Missouri banks, issued at the rate of $3.00 to every dollar of specie on hand, afforded a local currency better than that brought in from the outside, which had for years almost monopolized the field. The "Wild Cat" money nevertheless made a stubborn contest, and the last of it did not disappear until the National Bank Act went into operation.