Suffolk Banking System
SUFFOLK BANKING SYSTEM
SUFFOLK BANKING SYSTEM was a note clearing system for New England banks established in 1826 by Boston's Suffolk Bank. Membership required a bank to maintain a noninterest-bearing deposit with Suffolk. Deposits of notes of member banks were credited and debited at par to members' accounts. Since clearing was on a net basis, membership permitted banks to economize on specie. By 1838, virtually all New England banks had joined the system. Under the system, notes of New England banks circulated at par in that region. A newly formed competitor, the Bank of Mutual Redemption, drove out the system in 1858.
Rolnick, Arthur J., Bruce D. Smith, and Warren E. Weber. "Lessons from a Laissez-Faire Payments System: The Suffolk Banking System (1825–58)." Federal Reserve Bank of St. Louis Review 80, no. 3 (May/June 1998): 105–116.
Whitney, D. R. The Suffolk Bank. Cambridge, Mass.: Riverside Press, 1878.
See alsoBanking .