At the adoption of the federal constitution New York was a city of 24,000 inhabitants, which did not have within its limits a single banking institution. In the colonial days, indeed, the term "bank" was commonly used to designate the financial department of a colony's government in its capacity as issuer of paper money. Robert Morris's Bank of North America, founded at Philadelphia at the close of 1781, was the first distinctive banking institution chartered on this continent, and the Bank of New York, which broke ground in New York city, was chartered only after a ten-year interval.

Hamilton, still a young man of thirty-four, but undertaking even then the reconstruction of American national finance, was the founder of this institution. In the decade after 1791 only two banks had been added in New York, and one of these was established as a political maneuver. To offset Hamilton's Bank of New York, his bitter enemy, Aaron Burr, undertook to establish a rival institution. He lobbied through the Legislature a charter originally as unlimited as that of the British East India Company, and this was the origin of the Bank of the Manhattan Company. Even this institution began as a company to supply water to the city; its active work in banking was chiefly an afterthought.

At the outbreak of the war of 1812, eight banks were in operation In New York; of the banks now in existence, the Bank of America, the Mechanics' Bank, the City Bank, and the Phoenix Bank were chartered during or immediately before that year. Despite the severe financial depression during the ten or twelve years after that war, the organization of New York banks continued, the Chemical and Tradesmen's Banks being among the number added to the list at that period, with the Dry Dock Bank, which enjoyed a short but prosperous existence, until it led the way for the general banking collapse in the crash of 1837. It is worth noticing, as an index to the life of American banking institutions, that of the sixteen banks doing business in New York in 1830, only nine survive to-day; one of the nine, the Delaware and Hudson Canal Company, having virtually withdrawn from the field of banking.

The panic of 1837 was really started among the New York banks, which had been liberally favored with government deposits after Jackson's violent withdrawal of such accounts from the Bank of the United States. The New York banks had not led in the wild speculation of the period in Western lands and produce, but they had backed up many of the mushroom interior institutions, and therefore had to face the music on their own account when the government suddenly called for return of its deposits for transfer, under the act of 1836, to the treasuries of the states.

In the next serious panic, that of 1857 the greatly increased strength of the New York institutions was plainly manifested. The storm centre of that year was not in New York, but in Ohio. In 1857, indeed, the New York city banks first played the part which since then has been regularly expected from them: to sustain by use of their joint resources the tottering structure of American credit. The famous system of clearing-house loan certificates, a New York invention, and a purely American institution, was virtually introduced in 1857, when the clearing-house issued through the Metropolitan Bank certificates of credit to other state banks which could not redeem their notes.

The action of the New York banks at the outbreak of the civil war was less creditable. If a thoroughly experienced financier had been at the head of the national Treasury, and if the New York banks had been under the influence of the men who controlled their united policy in 1873 and 1893, it is possible that suspension of specie payments might have been warded off. But, as it happened, the New York banks were the first to surrender, and their joint resolution of December 30, 1861, suspending specie payments on their own account, really forced the hand of the government.

When, however, the question of resumption of specie payments arose, fifteen years later, the New York bank were the most efficient agents of the government. Under the national banking system, and with the rapid increase of capital and population after the civil war, the number of New York banks had been greatly enlarged; without their aid, it is doubtful if resumption in 1879 could have been achieved. It certainly could not have been otherwise achieved on Secretary Sherman's plan, which was assured of success only when, after all other preliminaries were completed, the United States Sub-Treasury was admitted to the privileges of the New York clearing-house. This arrangement, with the voluntary abolition of special gold accounts by the banks in December, 1878, made possible the free exchange of gold and United States notes at par between the Treasury and the business community.

The services rendered by the New York banks to the country at large in the panics of 1884, of 1890, and of 1893,are matters of recent history. The management of the joint resources of the clearing-house banks, four years ago by the specially appointed loan committee — F. D Tappen, J. Edward Simmons, William A. Nash, Henry W. Cannon, Edward H. Perkins, jr., and Geo. G. Williams — deserves a place in the literature of scientific banking. Their ready return of deposited reserves to embarrassed interior institutions and their liberal rediscounting of interior paper, undoubtedly saved the West and South from complete wreck of credit. Their prompt use of the loan-certificate device, with rates on loans to outsiders properly fixed at a high figure, sustained the local business community. When, in the worst of the panic months, some of the city banks lost heart and suspended cash payments to depositors, the immediate use of the loan certificates by three strong institutions to furnish sterling credits broke the deadlock in foreign exchange and filled the empty channels of domestic trade with foreign gold. With equally competent management, and with the experience of 1893 to guide them, the New York banks will possibly, in the next emergency, be able, like the Bank of England In 1890,not only to allay panic, but to prevent it.

That the inhabitants of the enlarged city, the Greater New York, will not lack banking facilities can be very easily demonstrated. Proportionately they will be better off in that respect possibly than the people of the old New York were in the closing days of the last century, when the Bank of New York and the Manhattan Bank were the only institutions of the sort in existence. In those days, and for some time afterwards, the banks were not "rushed" as they are now. They used to close up for an hour in the middle of the day for dinner, and do other things which would seem very strange to the people of the present day. During the cholera scare in this city early in the present century, the banks moved up to what was then called Greenwich village, and did business there until the disease was stamped out. It was in that way that Bank Street got its name.

To illustrate what the banking facilities of the Greater New York will be at its inauguration, it may be stated that on January 1, 1898, according to the latest reports available at the Clearing-house, there will be sixty-four associated banks in this city, having a combined capital and surplus amounting to $133,200,000, with deposits aggregating $669,000,000, loans of $610,000.000, and they will have in their vaults a cash reserve of more than 100,000,000 of gold and $75,000,000 of United States currency. These banks, however, will only represent a part of the banking facilities of the new city. Besides the associated or Clearing-house banks, there are some fifty other banks in this city, Brooklyn, and Long Island City, whose combined capital and surplus is $14,000,000, and which have deposits aggregating more than $55,000,000, and whose loans exceed $50,000,000. But that is not all. In addition to the banks there are in this city eighteen trust companies that also do a banking business, whose capital and surplus amount to more than $60,000,000, and which have deposits aggregating more than $250,000,000. It can readily be seen, therefore, that the residents of the Greater New York will not lack banking facilities, and that compared to their predecessors of a century ago, or even of half a century ago, they will be quite well off in that respect. Fifty years ago there was no clearing-house in this city, and a few words about that institution will not be inappropriate.