USA > Connecticut > Connecticut as a colony and as a state; or, One of the original thirteen, Volume III > Part 7
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By an amendment passed in 1856, the term of office of the judges of the Supreme Court of Errors, and of the Superior Court, was fixed at eight years; they were debarred from holding this position after reaching the age of seventy. In 1880 the constitution was further amended to the effect that the said judges were to be nominated by the Governor and appointed by the General Assembly.
An amendment adopted in 1864 gave the right of suf- frage to all drafted persons or volunteers then in the service of the United States, who were absent from the State. In 1873 Hartford was made the sole capital. The following year the membership of the House of Representatives was modified, allowing every town the representation it then had, but a new town had to contain a population of five thousand
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to entitle it to two representatives. This was further amended in 1876, so that a new town must have at least twenty-five hundred inhabitants to be entitled to any repre- sentation.
The time for election of State officers was changed in 1875 to the Tuesday after the first Monday of November, the election to be held annually; this in 1884 was changed to "biennially," and the term of office made two years.
An amendment was adopted in 1901, which provided that the election of the State officials should be determined, not by majority, but plurality of votes. This ended the greatest political scandal of the State, under which for many years a minority of voters regularly put their candidate in office, and the majority as regularly went to the polls on a fool's errand. The Senate was also increased, so that it was to consist of not more than thirty-six members nor less than twenty-four. The General Assembly was empowered to redistrict the State, but the act was not to go into effect until the Wednesday after the first Monday of January 1905.
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CHAPTER VIII THE MONEY PANICS OF 1819-37
T HE commencement of the nineteenth century found Connecticut with five chartered banks, representing a united capital of $595,000. The contiguous State of Massachusetts at this time had twenty-two banking institutions; these possessed, collectively, capital amounting to $8,024,562. The population of Connecticut, compared to that of Massa- chusetts, was forty-three as to one hundred, while her bank- ing capital was but as seven to one hundred. This was due to the fact that the people of Connecticut were more largely engaged in agricultural pursuits than the inhabitants of the Bay State. Also, from 1790 to 1810, her population did not increase in the same ratio as that of the other States in the Union; the cause of this was the liberal contributions of her inhabitants made to forward the development of the West- ern frontiers, which hindered her commercial and industrial progress. It was also a fact that Rhode Island, New Hamp- shire, and New York extended their banking facilities in greater proportion to their population than did Connecticut.
The Legislature in 1802 passed the first general law in ref- erence to banks, prohibiting them from issuing bills in frac- tional denominations of a dollar, and forbidding the circula- tion of bills for these amounts in the State.
The following year, the State having a surplus of $400,- 000, the General Assembly authorized subscriptions to be made to the capital stock of the five banks then in existence; the State retained the right, however, to withdraw such invest- ments on giving six months' notice. The stock thus created was non-transferable, but was entitled to all profits and divi- dends, the same as stock of other holders. It conferred no right to vote at the general meetings; but if the amount in any bank exceeded $5,000, the State might appoint a director
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on the managing board of that institution. The Comptroller of Public Accounts had the right to demand financial state- ments, and to inspect the books of any bank. This was the first act passed by the Legislature of the State providing for an inspection of moneyed institutions by a State official, and was not for the protection of stockholders and depositors, but as a measure of security for State investments.
The quintette of State banks was increased in 1807 by the incorporation of a bank at Bridgeport, which place seven years previously had been raised to the dignity of a borough. The capital stock was $200,000, divided into one thousand shares of two hundred dollars each, of which the State was not allowed to hold more than one-fifth without the consent of the directors. The following year a charter was granted for the establishment of a bank at New London.
Owing to the Embargo and Non-intercourse acts passed by Congress in 1807, a depreciation had occurred in the com- mercial interests of the State. As a preliminary measure of relief, the banks were authorized to issue post notes.
The Derby Fishing Company was incorporated in 1807, to engage in fisheries; two years later it was granted the privi- lege of writing marine insurance. On account of the inter- ruption of its industries by the Embargo act, it was allowed to loan its capital. The directors of the company, considering this sufficient authorization, began the business of banking, issuing notes of circulation. This was considered by the General Assembly an abuse of privileges granted, and the company was summoned to appear before them. The fol- lowing year a charter was granted for the establishment of a bank at Derby, but with the provisoes that the fishing com- pany should hold no stock, nor should any one of its officials act as a director of the financial institution. The bank was
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required to furnish an annual statement to the General As- sembly ; this was the first time in the history of the State that such a demand had been made. These restrictions, however, were repealed two years later. The Eagle Bank of New Haven was chartered in 18 1 I with a capital of $500,000.
The agitation by Congress of the renewal of the charter of the Bank of the United States, coupled with the declaration of war with England, tended to unsettle the financial affairs of the country. That the war was unpopular in Connecticut is evidenced by the fact that in 1812, out of a loan of $13,- 100,200 obtained by the general government, she is credited with only $6,200. The war party gained in strength, how- ever, as two years later, to a loan of $25,000,000, several individual citizens each subscriber more than four times this amount.
For twenty-two years the Hartford Bank had enjoyed a monopoly of the financial business of that city and the sur- rounding country. In 1814 a petition was presented to the Legislature for the incorporation of a new bank, with a cap- ital of $1,000,000, a portion of which was to be devoted to the establishment of a branch at Litchfield. The petitioners for the new bank offered for the privilege of incorporation, a bonus of $60,000; to be used, in such proportion as the Gen- eral Assembly might deem expedient, for the support of the medical department of Yale College, also for the Bishop's Fund of the Episcopal Church, or be otherwise disposed of if that body deemed it necessary.
The foremost movers for the new bank were Episcopalians, who hoped, through favoring a donation to Yale, to further the granting of a charter for a college of their own religious belief, for which they had repeatedly petitioned the Legis- lature without success. The branch at Litchfield was to
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influence the legislative votes in the western part of the State. The directors of the Hartford Bank presented to the Legislature a memorial, offering to increase their capital stock $1,000,000, for which privilege they would pay the State a bonus of $50,000; but notwithstanding this opposi- tion, a charter was granted to the Phoenix Bank, compelling them to pay into the State treasury a bonus of $50,000. This was the first instance in Connecticut of a bonus being made a condition for granting a bank charter. Such a requirement is not justifiable, as it takes in bulk what should be distributed annually in the shape of taxation.
That Hartford at this time must have contained many moneyed men, is shown by the fact that on the books of sub- scription for the new bank being opened, stock was taken amounting to $7,000,000. The establishment of the Phoenix Bank made the total amount of the banking capital of the State $4,000,000.
The liquidation of the first Bank of the United States, which had conducted a successful business, created a desire on the part of its stockholders to continue the banking business ; this caused throughout the Middle States a mania for the organization of financial institutions. The opinion soon became universal that the establishment of a bank would create the necessary capital, and that a promise to pay money was money itself.
During the war, the exportation of specie was prohibited. This, in connection with the British blockade, operated as a check against the expansion which was taking place all over the country. Foreign goods realized a large profit, which also added to the show of prosperity.
In October 1814, specie was at a premium of eleven per cent .; when peace was declared, it was thought the currency
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of the country would return to a healthy condition. Suspended banks were expected to resume; and though specie fell to three or four per cent. premium, in July 1815 it advanced to fifteen per cent. This was due to various causes, among which were the excessive amount of foreign goods imported, also the unequal depreciation of the suspended bank notes in ยท different localities, and the repeal of the act allowing banks to issue post notes.
The fever of speculation, like the bank and war fever, did not take a strong hold in Connecticut and the other New England States. The conservative conduct of Connecticut's bankers and merchants, in resisting expansion, attracted spe- cie; and while some of the banks in New England suspended, those of Connecticut never refused to pay their demand notes in gold and silver. They were obliged, however, on account of the suspension of so many banks throughout the country, to replace these notes with others payable two years after the close of the war.
The circulatory currency had no universal basis of redemp- tion, which caused great inconvenience in making remittances from one part of the country to the other. This produced a state of affairs unsatisfactory to every one except the money brokers. Congress in 1816 sanctioned the establishment of a second United States Bank, to be prohibited from suspend- ing specie payment; branches could be established in every State; Middletown was selected for the Connecticut branch.
Congress could only legislate indirectly for the State banks; but its requirement that all dues to the United States should be collected in gold and silver, or notes payable in such coin, caused the nominal resumption of specie payment. The currency of the country, however, was far from being on a sound basis during 1817-18; the general government im-
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ported $7,000,000 worth of specie, and it was deemed im- practicable to maintain an adequate supply in the country un- less the Bank of the United States would curtail its discounts. This policy was adopted; the parent bank and its branches also declined to receive on deposit any bills but those of their own issue. This, in connection with the contraction of the cir- culating medium, could lead to only one result, for a people heavily burdened with debt.
The money crisis of. 1819 was felt to a less degree in New England than any other part of the country : but trade became stagnant and real estate rapidly depreciated; many were made bankrupt by a refusal of their customary bank accom- modations; employment was sought by thousands of idle per- sons. The recovery from the panic of 1819 was slow in Con- necticut. Owing to the scarcity of work, and low wages, the population of the cities drifted into the country; the price of land and living commodities in 1820-21 ruled at less than one-half the price of a year before the crisis. The General Assembly, watchful of the financial safety of her citizens, in 1812 required the cashiers of banks to make annual sworn statements of their capital stock to the State Comptroller; also of debts due them, money on deposit, and notes in circu- lation. No provision, however, was made for personal in- spection, or for publication of the reports.
It was during this depression of finances that the first steps were taken, at Hartford, to incorporate a society for the sav- ing of small amounts of money. The success of similar insti- tutions in Massachusetts influenced several gentlemen to peti- tion the Legislature, and in 1819 forty-one persons were incorporated under the name and style of The Society for Savings. The first six months' deposits amounted to $4,352 .- 77. The following year the Savings Bank of New Haven
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was incorporated. Other charters were granted as follows : The Norwich Savings Bank in 1824; the Middletown Sav- ings Bank in 1825; and the Savings Bank of New London in 1827.
The Legislature in 1822 chartered the Stonington Bank at Stonington, and the Windham Bank at Brooklyn; two years later the Fairfield County Bank at Norwalk, with a branch at Danbury, also the Mechanics' Bank of New Haven, received articles of incorporation. The Connecticut branch of the Bank of the United States was removed to Hartford in 1824; the next year the Thames Bank of Norwich was granted a charter.
Bank notes at this time were redeemable only at the places where they were issued. This retarded business with distant points, as money exchanges depended on the credit of the banks of issue or the discount attendant on their redemption into current funds. The Suffolk Bank of Boston, in 1819, began to deal in uncurrent money, and offered to allow coun- try banks, on their depositing $5,000 and such further sums as might be necessary, to redeem their bills, and allow them the discount at which they might be purchased. This plan was put in full operation in 1824, when seven Boston banks formed a combination, and designated the Suffolk Bank as a clearing-house for the clearance of their bills; thus forcing the country banks to provide also an agent of redemption. The permanent deposit was reduced to $2,000, and the Con- necticut banks joined the Suffolk system, thus providing a depository for redemption of their bills without discount, which brought them to par where Boston funds were redeem- able.
A financial crash occurred in England in 1825, owing to a speculative fever that raged during the preceding year. This
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commercial disturbance was soon felt in the United States, and indirectly caused the failure of two banks in Connecticut ; the first disaster of the kind in her history. The Eagle Bank of New Haven was the first to succumb; this failure was due to unwise and reckless management. The other was the Derby Bank, whose charter was repealed by the Legislature in 1826, the management having fallen into the hands of a party of New York bank-wreckers. These financial disturbances retarded for a time the chartering of new banks; it was not until 1828 that the Tolland County Bank of Tolland was incorporated. Three years previous to this, the Legislature had empowered the Quinnebaug Canal Bank to transact busi- ness, but its charter was vacated in 1832.
The Connecticut River Banking Company had been incor- porated as a financial institution, to further the operations of the Connecticut River Company; but the bank did not com- mence business until October 1829. The following year the Middlesex County Bank was authorized to do business at. Middletown. The General Assembly, at its session in May 1831, chartered the City Bank at New Haven, the Connecti- cut Bank at Bridgeport, also a bank in East Haddam and in Jewett City. At the session held in 1832, the Quinnebaug Bank of Norwich, and the Windham Bank to be located in the town of Windham, were granted articles of incorporation. The Legislature at its May session in 1833 granted char- ters to six banks : the Farmers' and Mechanics' of Hartford, the Merchants' of Norwich, the Whaling of New London, the Thompson located at Centre Village, the Mystic of Ston- ington, and the Meriden in the town of that name.
The determined opposition to the Bank of the United States made by President Jackson, when he vetoed the bill for the renewal of its charter, and his subsequent re-election
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in opposition to all the influences of the banking interests of the country, had a tendency to depreciate monetary affairs. The cessation of depositing the government funds in the Bank of the United States, in the fall of 1833, and the depos- iting of them in State banks designated by the Secretary of the Treasury, were the forerunners of a money panic. The United States depositories in Connecticut were the Mechan- ics' Bank of New Haven, the Farmers' and Mechanics' Bank of Hartford, and the New London Bank at New London.
The confidence of the public was taken by these monetary changes; business became paralyzed, manufactories shut down, and many of their owners failed. Though the Presi- dent was repeatedly petitioned to recharter the Bank of the United States, he was imperious to all demands, and obsti- 'nate in his refusals. This created in the country a disturbed state of affairs. The people considered it an abuse of power, that the monetary system of the country should be subject to the caprice of one man; the banks exaggerated the evil, and demanded payment of loans, refusing further business accom- modations.
Though the period of disturbance was not of long dura- tion, it unsettled the commerce of the country; but in the summer of 1834 confidence was restored, and the financial dangers were over. In that year four banks were chartered: the Exchange at Hartford, the New Haven County at New Haven, the Manufacturers' at Farmington, which however never went into operation, and the Stamford in the town of that name. For the first time in the history of the State, the shares of capital stock in these institutions were placed at fifty dollars each, and in one instance at twenty-five dollars, in order to give the poor man, if he so desired, an opportunity to invest his savings. Thus at the close of the year 1834
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there were thirty-one banks in Connecticut. Of these, fifteen were chartered in the years 1831 to 1834 inclusive.
This increase in banking enterprises was proportionate throughout the country; and coupled with the transfer of the public funds from the Bank of the United States to the smaller State banks, managed by financiers possessed of no practical knowledge of banking, engendered a speculative fever. Cotton, the acknowledged king of products, advanced twenty-five per cent., owing to the demand from England, where credits were also expanding. This caused the people to make extravagant purchases of Western and Southern lands. The times were in a chaotic state, when in July 1836 the famous specie circular was issued by the general govern- ment; which demanded payment for all lands, except from actual settlers and residents of the State, to be made in gold and silver.
Congress legislated in favor of rescinding the specie circu- lar, but it received a "pocket veto" by the President; this was the cause of the returning of the bills to the banks of issue, for redemption in specie. The government depositories be- ing also obliged to provide on Jan. 1, 1837, for the payment of one-quarter of the surplus of the government to the States, in proportion to their respective representation in Congress, the whole brought the financial unsettlement of the country to a climax.
General contraction was unavoidable, the rates for money steadily advanced; cotton fell in price to seven cents a pound, and more than half the cotton mills shut down. Merchants became bankrupt, and on the suspension of the New York and Boston banks in May 1837, those of Connecticut (with the exception of the City Bank of New Haven, the Union Bank of New London, and the Mystic and Stonington Banks
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of Stonington) refused to liquidate their obligations in specie. The losses of Connecticut banks were chiefly through loans made in Western New York, and through the failure of E. M. Morgan & Co. of New York, who were the agents in that city for at least six banks of the State. No bank in the State failed, however, and they were all prepared to resume specie payment in May 1838.
The money panic had demonstrated that unsecured bank notes were dangerous to the public welfare; for every dollar that was hastened home for redemption, it was necessary to call in a corresponding dollar that was loaned, and no new accommodations could be extended to bank patrons. Another serious objection was, that in the hands of unprincipled men, a bank circulation could be extended to its utmost limits in periods of expansion.
The State had obliged banks, under the law of 1821, to lodge annual statements in the office of the Comptroller; no regular forms were provided, and each bank prepared a state- ment in accordance with the personal views of its officers. At the May session of the Legislature in 1836, a committee was appointed with the power to inspect and examine, under oath, all officers, agents, and servants of the banks. This was the first step taken by the State to examine all of its banks, and it resulted the following year in the appointment of John C. Palmer and Chauncey F. Cleveland as bank commissioners. From that time this has been a permanent office of the State government.
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CHAPTER IX
INDUSTRIES OF CITIES AND TOWNS IN THE FIRST QUAR- TER OF THE NINETEENTH CENTURY
A T the opening of the nineteenth century, New Haven, as a commercial port, had not recov- ered from the disastrous effect to her com- merce received during the French Revolu- tion. Her export trade was largely with the West Indies; her maritime enterprises were the prey of English and French cruisers stationed in the waters about those islands, and she suffered in consequence large pecuniary losses to both vessels and cargoes. Nevertheless, in 1800 we find registered in the district eleven thousand tons of shipping. At her wharves vessels were frequently anchored during the early part of the first decade of the new century, laden with wines and brandy from Marseilles, wines and silks from Bordeaux, myriads of articles of British manufacture from London, wines, oils, and opium from Cadiz; in fact, at that time there was imported into the city nearly everything required for the use of her citizens.
The equipment of the "New Haven South Sea Fleet" was a commercial venture that will, in all probability, never be rivaled in that city. The fleet consisted of no less than twenty ships, commanded by officers the peers of any naviga- tors, and manned by American seamen, largely from New Haven and vicinity. The crew of each numbered about forty men, besides a mechanical force; their armament was from ten to twenty-six pound guns, muskets, cutlasses, boarding- pikes, etc. The object of the adventure was to visit the Pacific Ocean, in the neighborhood of the St. Felix group of islands, for the purpose of seal-fishing. The voyages were from twenty to thirty months in duration. The skins were sold at Canton, where the ships were laden with silks and teas for the homeward course.
There was on the coast of Patagonia a tract of land nearly
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two miles in length on which the captains of the New Haven vessels used to dry the skins of the captured seals; it was known in those early days of seal fishing, by the name of "the New Haven Green." Before the close of 1804, New Haven ships had visited the Sandwich Islands and a number of the ports of China; valuable cargoes of spices had also been imported from the Spice Islands in the Indian Ocean. These extensive undertakings were not confined to the citi- zens of New Haven; merchants of the other large towns of the State were also interested in the enterprises, both in ships and cargoes.
Seal-fishing as a type of commerce was maintained with greater vigor until 1806, when, owing to the competition of vessels sailing from other New England seaports, and the wholesale destruction of the seals, the market became so overstocked that the venture was unprofitable. Still, under all these reverses, we find New Haven in 1807 with a popula- tion of six thousand inhabitants, paying annual customs duties amounting to $150,000, with fully one hundred foreign- bound vessels leaving her port each year.
The Embargo Act, passed in that year, destroyed the foreign commercial interests of New Haven: in July 1808 there were seventy-eight ships lying embargoed in her port. Month after month passed away, and there was no relief for the stagnation of business; merchandise was valueless, ship- wrights and seamen were listless wanderers; an indignation meeting was held ,and the President was petitioned to imme- diately suspend the act. The ship-owners in the fall of 1808, seeing no indications of the removal of the embargo, dis- mantled their ships to await the advent of more propitious. times. Early in 1809 the President issued his proclamation declaring the Embargo Act at an end; the New Haven ship-
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