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Art.Brewer.
A MODERN HISTORY
OF
NEW LONDON COUNTY
CONNECTICUT
EDITOR-IN-CHIEF
BENJAMIN TINKHAM MARSHALL, A.M., D.D. 10
PRESIDENT OF CONNECTICUT COLLEGE, NEW LONDON
1781
VOLUME II
1922 LEWIS HISTORICAL PUBLISHING COMPANY, NEW YORK CITY
Val.2 Copi-2
COPYRIGHT LEWIS HISTORICAL PUBLISHING COMPANY 1922
J !! 1 2, 925
CCIA864023
-
HISTORY OF NEW LONDON COUNTY
.
CHAPTER XV. BANKS
By Nathan A. Gibbs
A bank is an establishment having power to receive deposits, discount business paper, loan and remit money, pay checks, and make collections. It may also deal in notes, foreign and domestic bills of exchange, coin, bullion and credits. Originally, banks were used only as places for the safe keeping of money, bullion, plate, or the like, which was left unused and unproductive in the vaults of the bank until the depositors should call for it.
Modern banking may be traced to the money lenders of Florence as lenders of money and receivers of deposits in the Fourteenth Century. The Jews of Lombardy, Italy, are supposed to be the first to make a business of dealing in money. They had benches or tables upon which they exchanged money and bills. These benches were called "bancos." This word "banco" is supposed to be the original of the word bank. Some claim it came from "banco" when applied to a heap-"a heap of money."
The Bank of Venice was established in 1171. The republic, wanting funds, compelled each citizen to contribute one per cent. of his possessions to the State at four or five per cent. interest, for which he received cer- tificates of stock which were bought and sold on the open market. The Bank of Amsterdam, founded in 1609, was the first bank organized for the pro- motion of commerce.
The Bank of England was chartered in 1694. This bank has two sepa- rate departments, one for note issue and one for general business. Up to the time of the World War it governed commerce and credits over all the world. Since then the United States has taken perhaps the leading part in this world business.
The Bank of North America was the first authorized bank in the United States, Robert Morris being a leader in its organization. It began in 1781, and aided greatly in establishing American independence. The first Bank of the United States was founded by Alexander Hamilton in 1791, with a fixed capital of $10,000,000, and expired at the termination of its charter in ISII. The second Bank of the United States was chartered in 1816 with a capital of $35,000,000, which expired in 1836, when Congress refused to renew its charter.
"Wild Cat Banks" were old State banks organized under State charters by private individuals. Charters are now issued to State banks, savings banks, and trust companies, by the States, and to National banks by the Federal Government. Each have their own separate functions, but possess many features in common. The National banks come nearest the business life of the Nation, although State banks and trust companies are vital to its prosperity. Mutual savings banks touch the lives of more people than do the others, and their statements present the best barometer of the financial condition of the country.
424
NEW LONDON COUNTY
The National Bank system was begun by the passage of the National Bank Act in 1863, and banks organized under it are now the only banks issuing bank notes, outside of the Federal Reserve Banks. These National Banks are under the direct control of the Comptroller of the Currency. They are subject to not less than two examinations by his department, and two by its own directors, in each year. Not less than five reports of condition are required from them each year.
The National Bank system was established to provide a market for gov- ernment bonds, and to give the country a unified currency system. The growth of the system has four periods: Ist. 1863 to 1882-Formative Period. Throughout the earlier period of banking, the use of bank credit was in the forın of note issue, and being subjected to no central supervisor, lacked sta- bility and constant value. The national banking period developed larger use of deposits than of note issue. Note issue as a privilege under federal super- vision resulted in stable values. This period ended by the passage in face of bitter opposition, of a bill permitting the extension of charters of existing banks for twenty years more. The second period, from 1883 to 1899, was one of natural development. While circulation was declining, the extending of credits through deposits was rapidly growing. The third period, from 1900 to 1913, was that of development of smaller banks. This was aided by the reduction of the required National Bank capitalization from $50,000 to $25,000, by which many small places were enabled to enjoy banking privileges.
The passage of the Federal Reserve Act in 1913 ushered in the present period. Under the National Bank system of note issue it was very inelastic, and no provision was made that enabled banks in time of distress to realize upon their commercial paper. This led to many banks carrying large lines of bonds, which they used as collateral for loans from the reserve banks in the larger cities. When these larger cities lacked funds, money was high and credit difficult to get. This led to violent fluctuations in interest rates. Under the reserve system, the use of commercial paper in these stringent periods was developed and the cause of these rapid changing rates was removed. In case of need, these Federal Reserve Banks can issue their own notes secured by government bonds or by other collateral. They are allowed to rediscount, for the member banks of the system, commercial paper under certain con- ditions, as follows:
(a) It must be a note, draft, or bill of exchange which has been issued or drawn, or the proceeds of which have been used or are to be used in the first instance in producing, purchasing, carrying, or marketing goods in one or more steps of the process of production, manufacture, or distribution, or for the purpose of carrying or trading in bonds or notes of the United States.
(c) It must not be a note, draft, or bill of exchange the proceeds of which have been used or are to be used for permanent or fixed investments of any kind, such as land, buildings, or machinery, or for any other capital purpose.
(c) It must not be a note, draft, or bill of exchange the proceeds of which have been used or are to be used for investment of a purely speculative char- acter or for the purpose of lending to some other borrower.
(d) It may be secured by the pledge of goods or collateral of any nature, including paper, which is ineligible for rediscount, provided it (the note, draft, or bill of exchange) is otherwise eligible.
425
BANKS
This system has developed a sound financial protection against panics, as shown in the two years following the close of the World War when our Nation passed through the greatest deflation period in financial history, in an orderly process, in great contrast with previous sudden financial disasters. By regulating credits through its members, thereby stopping inflation, unnum- bered failures were prevented.
There are now twenty banks in New London county, all well estab- lished, with a long and honorable past to justify the confidence with which they approach the future. This statement, of course, does not apply to the four trust companies recently formed, they all being less than a year old, with their history yet to be made. There are eight National Banks: The Thames, Merchants', and Uncas, of Norwich; the National Whaling, New London City, and National Bank of Commerce, of New London; the First National of Stonington, and the Mystic River National, of Mystic. There are two combined bank and trust companies-the Union, of New London, the oldest financial institution in the county, and the Pawcatuck, the youngest. There are three trust companies doing business-the Bankers', of Norwich; the Winthrop, of New London; and the Jewett City, of Jewett City. The seven savings banks are: The Savings Society, the Chelsea, and the Dime, of Norwich; the Groton, of Mystic; the Jewett City, of Jewett City; the Savings, and Mariners', of New London. These institutions, working under the recognized plans under which banks may lawfully operate, provide the county with excellent banking facilities, and in New London county, as else- where, they have met and resisted shocks, thus preventing appalling disaster to the business of the county, which would otherwise have followed. New London county has had bankers of high quality, men of brain, courage and vision, men of highest integrity, and its present prosperity is in a large meas- ure due to its progressive, enlightened, public-spirited financiers, working in connection with their contemporaries under a wise banking law, the Federal Reserve Act of 1913.
Union Trust and Bank Company-As has been previously stated in this chapter, the first bank chartered in the territory we now know as the United States of America was established at Philadelphia, Pennsylvania, un- der an all-embracing title suitable for such an institution, The Bank of North America. That was in 1781, when the American Colonies were still battling for their freedom. Eleven years later, in January, 1792, there were but five banks in the United States: The Bank of North America, Philadelphia, instituted 1781; Massachusetts Bank, of Boston, 1784; the Bank of New York, 1784; the Bank of Maryland, Baltimore, 1790; and the Providence Bank, Rhode Island, 1791. In 1792 three banks were chartered in Connecti- cut, one in May, the others in October. New London county had then within its borders two towns that bid for the honor of being the first to establish a bank, New London and Norwich. The Legislature of the period would not consider authorizing two banks in the same county. and, not wishing to seem to advance one town beyond the other, the applicants were induced to
426
NEW LONDON COUNTY
merge their claims, New London to have the bank location, but the directors to be chosen from both towns in equal numbers, the institution to be known as the Union Bank of New London and Norwich. This was the best solution of the difficulty, and the bank was chartered in May, 1792. The form of title was shortened, and as "The Union Bank" the institution had a prosperous life, both the name and the institution being perpetuated in The Union Bank and Trust Company of New London.
The May session of the General Assembly of Connecticut, which in 1792 granted the Union Bank its charter, granted also similar privileges to the Bank of New Haven and the Hartford Bank, but if, as claimed, the Union opened its doors at an earlier period, it may be called the oldest bank within the limits of the State, which gives the Union Bank and Trust Company the distinction of being the oldest bank in the State of Connecticut and the fifth oldest in the United States, and, of course, the oldest in New London. In fact, it is the oldest existing institution of any sort in the city today.
The first recorded movement for obtaining a charter for the Union Bank was at a meeting held in New London on February Ioth, 1792, at which a committee of six was appointed to solicit subscriptions to the amount of $100,000. At a subsequent meeting held at the tavern of Ephraim Minor on the fifth day of March, it appeared that the full amount of stock had been subscribed, divided among one hundred and seven persons, no one having taken more than thirty shares. At this session the following directors, about half of whom were residents of Norwich, were chosen: General Jedediah Huntington, Marvin Wait, Guy Richards, William Stewart, Edward Hallam, Joseph Perkins, Joshua Lathrop, Joseph Howland, Joseph Williams, Daniel L. Coit, Samuel Woodbridge, George Phillips, Samuel Wheat.
The name of the new bank was The President, Directors and Company of the Union Bank in New London. The same day Jedediah Huntington was elected president, and John Hallam, cashier. The capital stock was fixed at $100,000, with liberty to increase the same to half a million at any future time. An act of corporation was granted at a General Assembly of the State, held on the second Thursday of May, 1792, and thus the Union Bank sprang into existence.
The first meeting of the directors, after the incorporation, was held June 5, 1792, and arrangements were made for immediate business. The record of this meeting shows that the president was instructed to procure an office, desk, seals, scales and weights, and to send to Philadelphia for sixteen reams of paper. Notes to be discounted were required to have two witnesses to the signature of the maker, and no loan should be made for a longer period than sixty days. At an annual rental of thirty dollars, a banking room was secured in the brick building owned by Edward Hallam & Company, and was standing on the west side of Water, just below Hallam street, until about ten years ago. Here the bank was located until the removal to its old State street quarters.
At a meeting of the board of directors, held November 9, 1798, it was voted "that fifteen dollars be allowed for Mr. John Prentis as a compensa- tion for the trouble in his house in consequence of the business of the bank
427
BANKS
being done there about five weeks, during the prevalence of the epidemie fever."
At a meeting of the directors, held November 18, 1817, it was resolved that the president, Mr. Starr, and Mr. Law, be a committee for the purpose of contracting for the building of a stone bank on the ground bought of George Williams, on the north side of State street. The contract referred to was awarded to Colonel Potter, and the entire cost of the building and land was $6,225. The bank moved into its new building in 1818. The pres- ent building which the Union Bank and Trust Company occupies, was built in 1905. While it is a most compact and well laid out building, it long since was outgrown, and in the very near future it will be added to in a manner that will double its capacity.
At a meeting of the stockholders, held March 28, 1865, it was voted to convert the bank into a national banking association under the general bank- ing laws of the United States. On January 10, 1882, it was deemed expedient to go into liquidation as a National Bank, and that the business be continued as a State bank by the resumption of its charter of 1792, which had been suspended since 1865.
The only amendment to the bank eharter since organization was in 1913, at which time trust company privileges were granted, and in addition to conducting a regular banking business the bank, through its trust depart- ment, transaets all business of a trust nature, such as trustee, executor, guardian, transfer agent, etc.
There is no recorded action of the bank relating to the suspension of specie payments during the War of 1812; the only matter of record indicating a disturbed condition of the currency at that period, is found in a vote of the directors, passed February, 1815, by which a dividend was declared pay- able in New York bills. The bank redeemed its own bills all through the War of 1812, but probably condueted most of its transactions, as did the country at large, in the depreciated curreney of the times.
At a meeting of the directors, held October 14, 1857, the period of the memorable financial panie, it was resolved that under existing circumstances and because of the suspension of specie payment by the banks of the city of New York, the payment of specie by this bank be necessarily suspended. This action was reconsidered at a meeting held December 15 and the above vote reseinded.
The first dividend of this bank was two per cent., paid March, 1793, and the one paid in January, 1921, was the 261st. From its commencement it has never passed a dividend. During the centennial of its existence, 83234 per cent. had been paid to its stockholders, more than eight times its capital stoek, 841/2 per cent. of which was in extra dividends. During the last forty- five years the number of individual depositors has increased over three hun- dred per eent.
During its long career of prosperity, one hundred and thirty years, the bank has had but ten presidents. Jedediah Huntington held the office for twenty-six years, 1792-1818; his successors in office being: George Hallam, 1818-1825 ; William P. Cleveland, 1825-1834; Jonathan Starr, 1834-1852; Rob-
428
NEW LONDON COUNTY
ert Coit, 1852-1858; William H. Chapman, 1858-1893; Robert Coit, 1893-1904; George Tinker, 1904-15; William H. Coit, 1915-20; Charles H. Klinck, elected in 1920, being the present incumbent.
The cashiers for the same period have been but eight: John Hallam, 1792-1800; Robert Hallam, 1800-1827; Ebenezer C. Sistare, 1836-1851 ; Charles C. Sistare, 1851-1860; Leonard C. Lawrence, 1860-1885; J. Lawrence Chew, 1885-1905; Carlos Barry, 1905, until the present, 1922. Mr. Barry came to the bank in 1874, just out of school, beginning as a clerk. Forty-eight years have since elapsed and the association then formed has never been broken, Mr. Barry being with one exception the oldest member of the banking fra- ternity of his city in point of years of service.
Condensed statement of the condition of The Union Bank and Trust Company, New London, Connecticut, May 5, 1922 :
RESOURCES
LIABILITIES
Loans and Discounts.
$1,297,914.1I
Capital Stock $300,000.00
Overdrafts
800.56
Surplus and Undivided Prof- its 272,896.07
Stocks and Securities
319,276.79
Due to Banks.
104.777.63
Dividends Unpaid
107.50
General Deposits 1,208,819.72
Bills Payable 100,000.00
Reserves 7,734 05
$1.994,334.97 $1,994,334.97
Officers-Charles H. Klinck, president; Alfred Coit, vice-president; Car- los Barry, cashier ; Edward Bull, Jr., assistant cashier ; Joseph A. Stanners, assistant cashier.
Directors -- Charles H. Klinck, Carlos Barry, Alfred Coit, Lucius E. Whiton, Benjamin L. Armstrong, Charles E. White, James Bathgate, W. Kyle Sheffield, Laurence A. Chappell, Joseph A. Stanners.
New London City National Bank-This is the same banking institu- tion that was granted a State charter by the General Assembly of Connecti- cut at the May session, 1807, under the name of "The President, Directors and Company of the New London Bank." It was known as "The New Lon- don Bank" until 1865, when by reason of conditions growing out of the Civil War it was reorganized under the laws of the United States, with a change of name, becoming "The New London City National Bank." From that time until the present it has been operated under the requirements and safeguards of the National Banking Act, and with the supervision and advice of the National Bank Examiners. The increase in its business and resources has kept pace through all these years with the growth and development of the city, and with the tremendous changes that have come about everywhere in banking ideas and methods.
It is interesting to recall the fact that in 1807, New London, with a population then of little more than 3.000 people, was the only city in the State to have two banks. There were but five other banks in Connecticut, at Hartford, New Haven, Middletown, Norwich and Bridgeport, each being
Banking House
95,000.00
Furniture and Fixtures.
10,193.04
Cash and Due from Banl:s ..
271,150.47
429
BANKS
served by one only ; while in New London was the Union Bank, dating from 1792, and the New London Bank, just established in 1807. The desire of New London for greater banking facilities than the Union Bank could afford, very probably arose from the need of financing the marine enterprises carried on here. Beside the West Indian trade, there was the whaling industry, then beginning to assume importance. Its future magnitude could be foreseen, although it did not come to its height until forty years later. The building and fitting out of whale ships required the use of large sums of money and, during the long voyages of one, two or three years, the banks had often to virtually carry some of the ship owners and some of the local merchants. It is not easy to overestimate the value of the assistance rendered by the banks of New London not only in the whaling ventures, but in manufacturing and other enterprises, that has tended to promote the steady, healthy growth which New London has enjoyed during the past one hundred and twenty- five years.
The record of the New London Bank (or the City Bank, as it is called today), has been a most excellent one during its existence of more than a century. It has weathered the many financial storms that the country has encountered, through days of war and days of peace as well. Its manage- ment has been proved to be wise and capable to a marked degree; and its support and help have ever been ready and generous when the Nation or the city were in need. A list of those who have been officers of this bank would include many of New London's most prominent and successful citizens. Henry P. Haven, president of the bank in 1876; J. N. Harris, its president from 1876 to 1896; and Asa Otis, a director from 1834 to 1859, are all widely known for the many public benefactions that have come from their large fortunes. A list of the directors of the bank who have been prominent in the business affairs of the city, would embrace many names familiar to one acquainted with the old New London families, but perhaps it would not be sufficiently of general interest to call for such mention. As the population of the city has been changing in its character through succeeding genera- tions, so the management and operation of the bank, which once was ex- clusively in the hands of a few, is now fully representative of all elements and interests of our city, and serves all impartially and acceptably.
The old stone building on Bank street, which was built for this institu- tion in 1820 and was occupied by it for eighty-five years, was in most respects sufficient for the need of former days, but in 1905 it seemed evident that the time had come for increased facilities, and the present structure was erected, covering the old site and also the land extending to the corner of Golden street. This is a modern building, with a well protected vault and such other equipment as the business of the bank has thus far required. That the days to come will call for greater facilities and more room, there can be no doubt ; and it is the purpose of the bank's officers to meet fully and adequately such legitimate demands as the future shall bring to us.
The New London City National Bank was the second bank chartered in New London, its history dating from May, 1807, when the Connecticut Legislature gave it birth as The New London Bank. The first board of
430
NEW LONDON COUNTY
directors was composed of : Elisha Denison, Edward Chappell, William Williams, Edward Hallam, Elias Perkins, Isaac Thompson, Jacob B. Gurley, Cushing Eells, William Noyes.
That board, at their first meeting, held July 18, 1807, elected Elias Perkins, president, and Anthony Thatcher, cashier. In July, 1808, Elias Perkins resigned the presidency, and Elisha Denison succeeded him, holding office until 1828. Jacob B. Gurley was the next president, and for nineteen years held the office, resigning in 1847, Ezra Chappell becoming the third president. Mr. Chappell held office until 1853, when he resigned and was succeeded by Elijah F. Dutton, formerly cashier. Mr. Dutton resigned in 1856, Albert N. Ramsdell following him as president, an office he held until his death in 1873. It was in 1865, under President Ramsdell, that the bank was reorganized under the National Banking Act and became The New London City National Bank. President Ramsdell's place as president was taken by Richard N. Belden, who resigned the office of cashier, which he had held for twenty years, to accept the honor. President Belden held the presi- dency three years, until January 11, 1876, when Henry P. Haven was elected his successor, Mr. Belden returning to the cashier's desk. President Haven died only three months after becoming president, the next to hold that office being Jonathan N. Harris, who was elected in May, 1876. He held the office until October, 1896, when death ended his tenure of office. In October, 1896, William Belcher was elected to fill out the unexpired term, and in January following was elected for a full term, a formality that has now been complied with twenty-five times, Mr. Belcher being the present incumbent (1922). He has been a member of the New London county bar for fifty years, and is also president of The Savings Bank of New London.
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