Banks around the state of New York has suspended rocks payments (eg payment in gold and silver) in May 1837 after the collapse of several banks in the state, and the beginning of a nationwide financial panic. Amid the chaos, the upstart Whigs were able to overthrow the long Republican majority in the state legislature. Responding to citizen anger, and long-term demand for more bank capital, the Whigs made novel "free banking" bill, which would override the mechanism established by the bank charter and allow any associations with sufficient capital can open a bank account and issue bank notes (widespread form of paper money at the time). The bill also requires that every note issued by the Bank of New York will be provided with bonds or mortgages. if approved, the bill seemed likely to encourage the creation of many new banks. There was no one knows what the economic impact of the special provisions of the draft bill will be. After the bill passed by the Legislature, the Governor Marcy had to decide whether to sign this radical proposal into law. "Hide
by Cole Bolton, David A. Moss Source: Harvard Business School 16 pages. Publication Date: December 20, 2007. Prod. #: 708038-PDF-ENG
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