South Carolina: A Short History, 1520-1948

THE HIGHLY specialized agriculture and commerce of the coast region called for banking. The failure of the primitive, self-sufficient farmer of the up country and the back parts of the low country to understand the situation appeared in 1796, when the "lower division" voted heavily for chartering the Bank of South Carolina (a private corporation in operation without a charter since 1792), and the "upper division" voted overwhelmingly against it. In 1796 there were in Charleston this institution; the Union Bank, capital $600,000, established 1796; and a branch of the United States Bank. The legislature, on chartering the State Bank (a private corporation) in 1802, elected three of the fifteen directors, delivered $300,000 of the State's bonds for an equal amount of the bank's $800,000 of stock, and required all State funds and public and court moneys of Charleston and Charleston District to be deposited there. The Union Bank and the Planters and Merchants Bank were incorporated in 1810.

All banks south and west of New England suspended specie payments early in the war of 1812. The distress of even the wealthy planters brought the State to the rescue by creating in December, 1812, the Bank of the State of South Carolina. The idea of a mere loan office like that shortly after the Revolution was dismissed in favor of a complete commercial bank chartered for twenty-three years. The State was the sole owner of the bank and delivered to it as its capital various securities. All State funds were required to be deposited in the new institution. The bank's debts were forbidden to exceed (over and above deposits) twice its capital under penalty of the directors' unlimited liability; but the State's faith and credit were unconditionally pledged. Loans, none exceeding $2,000, were to be apportioned according to representation in the lower house. Its notes were receivable in all dues to the State. The head office was in Charleston, with a branch at Columbia and later one also at Camden and one at Abbeville.

Thus began what was doubtless the most successful bank ever conducted by an American State. But the depression to which it owed its origin had hardly passed when the jealousy of its great powers, sus

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