Suffolk Bank

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Suffolk Bank was a clearinghouse bank in Boston, Massachusetts that exchanged specie or locally backed bank notes for notes from country banks to which city-dwellers could not easily travel to redeem notes.^[1] It operated from 1824 until 1858.^[2]

The bank operated by redeeming country banks' notes at par value, so long as the banks maintained an account with Suffolk Bank. To qualify for such an account, a bank was required to remit a starting deposit of $2000 or more, and—in the case of banks not located in Boston—to maintain a sufficient balance to redeem any of the banks' notes that Suffolk Bank might receive for redemption. The Suffolk Bank also enabled member banks to deposit notes from other banks at par value, and to be credited for these deposits within one business day.^[3]

In his History of Money and Banking in the United States, Murray Rothbard credits the Suffolk Bank with exercising "a stabilizing influence on the New England economy."^[4] John Jay Knox, a former Comptroller of the United States Treasury, stated that the success of the Suffolk Bank demonstrated that,

the fact is established that private enterprise could be entrusted with the work of redeeming the circulating notes of the banks, and it could thus be done as safely and much more economically than the same service can be performed by the Government.^[5]

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