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Article VIII., Section 1. No corporation shall be created by special laws; but the General Assembly shall provide, by general laws, for the organization of all corporations hereafter to be created, except as herein. after provided.

Sec. 2. The property of all corporations for pecuniary profit shall be subject to taxation, the same as that of individuals.

Sec. 3. The State shall not become a stockholder in any corporation, nor shall it assume or pay the debt or liability of any corporation, unless incurred in time of war for the benefit of the State.

Section i guards against corporations monopolizing privileges by securing rights which others may not have under similar circumstances. The justice of Sec. 2 is very evident. As the State may not be sued, it would be an unwise plan to allow a State to become a stockholder in any corporation which can be sued.

289, Prohibition, Sec. 4. No political or municipal corporation shall become a stockholder in any banking corporation, directly or indirectly.

This means that no county, city, or town can hold stock in any bank. The county, city, and town, unlike the State, are liable to suit, but a strong prejudice against banks existed in the State when the constitution was adopted (38, 42, 43), and this section is inserted in deference to this feeling and the belief that even local government should have no interest in banking establishments.

290, Bank Legislation.-Sec. 5. No act of the General Assembly, authorizing or creating corporations or associations with banking powers, nor amendments thereto, shall take effect, or in any manner be in force, until the same shall have been submitted, separately, to the people, at a general or special election, as provided by law, to be held not less than three months after the pas.

sage of the act, and shall have been approved by a majority of all the electors voting for and against it at such election.

Here is another case of referendum. Notice the three months clause.

291. Provision for a State Bank.-Sec. 6. Subject to the provisions of the foregoing section, the General Assembly may also provide for the establishment of a State bank with branches.

Sec. 7. If a State bank be established, it shall be founded on an actual specie basis, and the branches shall be mutually responsible for each other's liabilities upon all notes, bills, and other issues intended for circulation as money.

Sec. 8. If a general banking law shall be enacted, it shall provide for the registry and countersigning, by an officer of State, of all bills, or paper credit designed to circulate as money, and require security to the full amount thereof, to be deposited with the State treasurer, in United States stocks, or in interest paying stocks of States in good credit and standing, to be rated at ten per cent below their average value in the city of New York, for the thirty days next preceding their deposit; and in case of a depreciation of any portion of such stocks, to the amount of ten per cent on the dollar, the bank or banks owning said stocks shall be required to make up said deficiency by depositing additional stocks; and said law shall also provide for the recording of the names of all stockholders in such corporations, the amount of stock held by each, the time of any transfer, and to whom. (71).

A bank wishing to have the privilege of issuing bills of credit, as they are called in the Constitution, of the United States or bank bills to the amount of $9,000, must deposit United States bonds (or other security satisfactory to the State), worth $10,000 in the New York market, and if at any time these bonds come to be worth less than $9,000, more bonds must

be deposited to make up the deficiency. State banks are numerous, but none of them issue bank-bills because of the United States tax of ten per cent on State bank currency.

292. Responsibility of Stockholders. - Sec. 9. Every stockholder in a banking corporation or institution shall be individually responsible and liable to its creditors, over and above the amount of stock by him or her held, to an amount equal to his or her respective shares so held, for all of its liabilities, accruing while he or she remains such stockholder.

A stockholder owning $10,000 worth of stock is thus liable for $20,000 in case that amount is needed to make good the deficiency of funds when the bank fails.

293. Further Protective Measures.-Sec. 10. In case of the insolvency of any banking institution, the bill-holders shall have a preference over its other creditors.

Sec. 11. The suspension of specie payment by banking institutions shall never be permitted or sanctioned.

Sec. 12. Subject to the provisions of this article, the General Assembly shall have power to amend or repeal all laws for the organization or creation of corporations, or granting of special or exclusive privileges or immunities, by a vote of two-thirds of each branch of the General Assembly; and no exclusive privileges, except as in this article provided, shall ever be granted.

Any one who has a bank bill is a creditor of the bank. The general plan of State bank currency is the same as that of the National Banks, but it was of earlier date, the first National Banking Law being passed in 1863. The suspension of specie payment means the refusal to redeem obligations in real money or coin.

294. Outline Study,

Corporations.
Provision for their organization, Section 1.

Restriction touching laws,
Taxation, Sec. 2.
The State as a stockholder, Sec. 3;
Assumption of corporation debts,

Exception;
Banking corporation, Sec. 4.

Restriction touching stockholders.
Banking laws, Sec. 5.

Restrictions on passing same.
State bank,
How established, Sec. 6.

Restriction,
On what basis, Sec. 7
Responsibility of branches,
Security of currency, Sec. 8.

How rated.
Stockholders, Sec. 9.

Extent of responsibility;
Creditors having preference, Sec. 10.
Suspension of specie payment, Sec. 11.

TOPICS AND QUESTIONS. 1. A very interesting article will be found in the April (1897) number of Iowa Historical Record, on “Some Iowa Bank History.”

2. Look up the subject of Wild-cat banking in the United States.

CHAPTER XXII

ARTICLE IX. -EDUCATION AND SCHOOL LANDS 295. State Board of Education.—The first part of Article IX. is a matter of interest simply as history. It provides for a State Board of Education, but by Section 15 allows that board to be reorganized or abolished after the year 1863. The Tenth General Assembly did abolish the board. (See Laws of Tenth General Assembly, Chapter LII., Sec. 1.) We insert the article in full, as part of the Constitution, recommending that it be read over by the class.

FIRST. EDUCATION.-Section 1. The educational interest of the State, including common schools and other educational institutions, shall be under the management of a Board of Education, which shall consist of the lieutenant-governor, who shall be the presiding officer of the board, and have the casting vote in case of a tie, and one member to be elected from each judicial district in the State.

Sec. 2. No person shall be eligible as member of said board who shall not have attained the age of twenty-five years, and shall have been one year a citizen of the State.

Sec. 3. One member of said board shall be chosen by the quali. fied electors of each district, and shall hold the office for the term of four years, and until his successor is elected and qualified. After the first election under this constitution, the board shall be divided, as nearly as practicable, into two equal classes, and the seats of the first class shall be vacated after the expiration of two years; and one half of the board shall be chosen every two years thereafter.

Sec. 4. The first session of the Board of Education shall be held at the seat of government, on the first Monday of December, after their election; after which the General Assembly may fix the time and place of meeting.

Sec. 5. The session of the board shall be limited to twenty days, and but one session shall be held in any one year, except upon extraordinary occasions, when, upon the recommendation of two thirds of the board, the Governor may order a special session.

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