Banks and Banking


Authority of legislature restricted.

The legislature shall not have the power to establish or incorporate any bank or banking company or moneyed institution for the purpose of issuing bills of credit or bills payable to order or bearer, except under the conditions prescribed in this Constitution.


Banking laws to be general; specie basis; authority of banks to issue bills to circulate as money.

No bank shall be established otherwise than under a general banking law, nor other than upon a specie basis; provided, that any bank may be established with authority to issue bills to circulate as money in an amount equal to the face value of bonds of the United States, or of this state, convertible into specie at their face value, which shall, before such bank is authorized to issue its bills for circulation, be deposited with the state treasurer or other depository prescribed by law, in an amount equal to the aggregate of such proposed issue, with power in such treasurer or depository to dispose of any or all of such bonds for a sufficient amount of specie to redeem the circulating notes of such bank at any time and without delay, should such bank suspend specie payment or fail to redeem its notes on demand.


Bills or notes issued as money redeemable in gold or silver; laws not to sanction suspension of specie payments.

All bills or notes issued as money shall be at all times redeemable in gold or silver, and no law shall be passed sanctioning directly or indirectly the suspension by any bank or banking company of specie payment.


Preference of certain creditors in case of insolvency of bank.

Holders of bank notes, and depositors who have not stipulated for interest, shall, for such notes and deposits, be entitled in case of insolvency, to preference of payment over all other creditors; provided, this section shall apply to all banks, whether incorporated or not.


Termination of business.

Every bank or banking company shall be required to cease all banking operations within twenty years from the time of its organization, unless the time be extended by law, and promptly thereafter close its business; but after it has closed its business it shall have corporate capacity to sue and shall be liable to suits until its affairs and liabilities are fully closed.


Maximum rate of interest.

No bank shall receive, directly or indirectly, a greater rate of interest than shall be allowed by law to individuals for lending money.


State and political subdivisions thereof not to be stockholders in banks or lend credit thereto.

Neither the state nor any political subdivision thereof, shall be a stockholder in any bank, nor shall the credit of the state or any political subdivision thereof be given or lent to any banking company, association, or corporation.


Examination of banks by public officers; semiannual reports by banks.

The legislature shall by appropriate laws provide for the examination, by some public officer, of all banks and banking institutions and trust companies engaged in banking business in this state; and each of such banks and banking companies or institutions shall, through its president, or such other officer as the legislature may designate, make a report under oath of its resources and liabilities at least twice a year.


Applicability of article.

The provisions of this article shall apply to all banks except national banks, and to all trust companies and individuals doing a banking business, whether incorporated or not.