State banks, which include commercial banks incorporated under state charters, amounted in 1860 to 1,562. By 1868 this number had decreased to 247 owing to national bank legislation, particularly the 10 per cent tax on circulation. After 1870 they again began to increase. The state banks developed without regulation because the issue of bank notes was impossible and the regulation of deposit banking was not regarded a duty of the government until some time after the national bank system had led the way. In recent years the individual states have undertaken the general supervision of the financial institutions within the States.

In certain states constitutional prohibition delayed the growth of state banks. The state of Texas retained such prohibition longest - until 1905. In practically every state the incorporation of banks was hedged about with limitations, such as referendum of all banking laws, a two-thirds vote for the enactment of banking laws, and incorporation by special legislation rather than general laws. The general tendency has been to liberalize incorporation by means of general banking acts as distinguished from business incorporation laws.