to this early species of
corruption which in some of the states at least assumed the proportions
of a serious political evil.

"During the first half century banking in New York," says Horace White,
"was an integral part of the spoils of politics. Federalists would grant
no charters to Republicans, and Republicans none to Federalists. After a
few banks had been established they united, regardless of politics, to
create a monopoly by preventing other persons from getting charters.
When charters were applied for and refused, the applicants began
business on the common-law plan. Then, at the instigation of the favored
ones, the politicians passed a law to suppress all unchartered banks.
The latter went to Albany and bribed the legislature. In short,
politics, monopoly, and bribery constitute the key to banking in the
early history of the state."[187]

The intervention of the courts which made the conditions above described
possible, while ostensibly limiting the power of the state legislature,
in reality enlarged and extended it in the interest of the
capital-owning class. It gave to the state legislature a power which up
to that time it had not possessed--the power to grant rights and
privileges of which the grantees could not be deprived by subsequent
legislation. Before the adoption of the Federal Constitution no act of
the legislature could permanently override the will of the qualified
voters. It was subject to modification or repeal at the hands of any
succeeding legislature. The voters of the state thus had what was in
effect an indirect veto on all legislative acts--a power which they
might exercise through a subsequent legislature or constitutional
convention. But with the adoption of the Constitution of the United
States the Federal courts were able to deprive them of this power where
it was most needed. This removed the only effective check on corruption
and class legislation, thus placing the people at the mercy of their
state legislatures and any private interests that might temporarily
control them.

The power which the legislatures thus acquired to grant charters which
could not be amended or repealed made it necessary for the people to
devise some new method of protecting themselves against this abuse of
legislative authority. The outcome of this movement to re-establish some
effective popular check on the legislature has taken the form in a
majority of the states of a constitutional amendment by which