USA > Connecticut > Tercentenary pamphlet series, v. 3 The Beginnings of Roman Catholicism in Connecticut > Part 3
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In 1882, there was incorporated under the laws of the state of Connecticut a fraternal and beneficent society of Catholic men, named the Knights of Columbus. The ten original incorporators were residents of New Haven and formed the first council, San Salvador. The purpose of the society was to develop a practical Catholicity among its members, to promote Catholic education and charity, and to furnish temporary aid to the families of deceased members through its insurance department. In the course of time subordinate councils were formed in different cities and towns throughout the state, then in Rhode Island, and later across the country. The order is now established in every state and territory of the United States, in every province of Canada, and is branching into the republics of Central and South America. The organization publishes a monthly magazine of general interest entitled Columbia. The Reverend Michael J. McGivney, one of the original organizers, and his two brothers, also priests, have served in turn as supreme chaplains of this great lay organization.
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AT present the Roman Catholic population in the state numbers considerably over six hundred thousand. In 1835, one hundred years before the Tercentenary year, only seven hundred and twenty Catholics resided in Connecticut. No indication of the present growth of Catholicism could even be imagined at that time. Today the Catholic churches of the state number two hundred and ninety-two, many of which are contributions of
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Gothic, Renaissance, Spanish Mission, and Modern architecture of compelling beauty. Nine religious com- munities of men and thirty religious communities of women are engaged in parochial, educational, hospital, or welfare activities. Four hospitals, three orphan asy- lums, two homes for the aged, two homes for self-sup- porting girls, and two institutions for delinquents are among the diocesan projects of social service. One hun- dred parochial schools, nine academies, two commercial schools, two colleges for young women, one college for young men, and four ecclesiastical seminaries constitute the educational institutions of the diocese.
The actual fulfillment of such phenomenal expansion at the present day is all the more remarkable since it is the achievement of but a single century. Assuredly under the Constitution of 1818, Connecticut has proved itself a prolific homeland for its Catholic citizenry and a state much to be loved. The motto, "Qui transtulit sustinet," may fittingly apply to all people who have chosen as their life's habitation this beautiful, rolling land of wooded hills, fertile valleys, and promising harbors. God has singularly sustained Connecticut people with gifts of comparative abundance, peace, safety, and longevity. In expression of gratitude and in keeping with human adoration of the supreme God above, Connecticut has been embellished with places of worship and the skyline has been pierced with steeples, towers, and crosses in supplication for a continued providence in answer to the faith, hope, and charity of its people.
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Bibliographical Note
FULLER accounts will be found in James H. O'Donnell, History of the diocese of Hartford (History of the Catholic Church in the New England states, vol. 2, pp. 1-445, Boston, 1899); Thomas S. Duggan, The Catholic Church in Connecticut (New York, 1930); and Sister Mary Ignatia McDonald, The Barber family of Claremont (Notre Dame, 1931). Reference may also be made to Richard J. Purcell, Connecticut in transition, 1775-1818 (Washington, 1918).
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The Printing-Office of the Yale University Press
TERCENTENARY COMMISSION OF THE STATE OF CONNECTICUT
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TRANSTULIT
COMMITTEE ON
HISTORICAL PUBLICATIONS
XLII A History of Banking in Connecticut FRANCIS PARSONS
PUBLISHED FOR THE TERCENTENARY COMMISSION BY THE YALE UNIVERSITY PRESS 1935
The Printing-Ofice of the Yale University Press
TERCENTENARY COMMISSION OF THE STATE OF CONNECTICUT
COMMITTEE ON HISTORICAL PUBLICATIONS
XLII A History of Banking in Connecticut FRANCIS PARSONS
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I HERE is a close race for the position of the first bank in Connecticut between the Hart- ford Bank (now the Hartford National Bank and Trust Company) and the Union Bank of New London (now the Union Bank and Trust Company). Both were chartered at the May session of the general assembly in 1792. The legislative records of that year are so imperfect that the question of priority is, so far, un- answerable, but for all practical purposes the incorpora- tions were simultaneous.
The New London advocates of the Union Bank had taken an early start and organized their institution before incorporation. However unusual this action may seem, there was a precedent in the establishment of the Bank of New York, under the guidance of Hamilton, in 1784, nearly seven years before the New York assembly granted a charter. Presumably these New London citizens decided that Alexander Hamilton was a safe lawyer to follow. On February 10, 1792, they held their first general meeting, followed on Monday, March 5, by what was termed "the
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first annual meeting," at which the capital was sub- scribed and thirteen directors (the number of the Bank of New York's original directorate) were elected. The following day officers were chosen by the directors. All this, it will be noted, was before the assembly convened. No original record of the beginning of business exists, though one authority states that arrangements were made for this on June 5, 1792, when a directors' meeting was held. A promissory note in favor of the bank, bearing that date, is still in existence.
As to the Hartford Bank, there is no question but that the institution began business on August 8, 1792, for the record is clear. The project of a bank in Hartford had taken form at a meeting at David Bull's tavern on the evening of February 27. A definite plan, and articles of association, followed, and by May 14 the capital was subscribed. After the incorporation the stockholders gathered at the courthouse on June 14 and elected nine directors who, two days later, chose officers. The capital was $100,000, divided into two hundred and fifty shares of $400 each.
The original capital of the Union Bank was also $ 100,000, but the par value of the shares was $100. It has continued without consolidating or merging with any other institution. In 1865 it entered the national system, but in 1882 returned to state sovereignty, resuming its historic charter under which it still operates. The Hart- ford Bank became nationalized in 1865 and has since continued under the federal aegis.
New Haven was not far behind New London and Hart- ford. The New Haven Bank was chartered in October of the same year, 1792, with an authorized capital of
Benjamin T. Marshall, ed., Modern history of New London county, Vol. 2, p. 426.
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$100,000. Organization was not effected, however, till 1795 when the charter was amended, permitting the bank to start with a subscribed capital of $50,000, which could be enlarged up to $400,000 should the "increase of trade" require it. The New Haven Bank qualified under the national banking law in 1863 and has since continued as a national bank, consolidating August 28, 1915, with the City Bank of New Haven and the New Haven County National Bank, under its present title of The New Haven Bank, National Banking Association.
Middletown followed with the charter of the Middle- town Bank enacted in 1795, though organization was deferred till 1801. In 1865 it became a national bank. The Norwich Bank was incorporated in 1796. During the following decade these five institutions were the only incorporated banks which served the people of this state. Four of them are still doing business. The Norwich Bank became nationalized in 1865 and was voluntarily liqui- dated in 1889.
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IN 1792 Washington was approaching the end of his first term as president. His sound judgment and common sense, together with the genius of Hamilton, seemed, in spite of difficulties, to be on the way to working out successfully the unprecedented American experiment in government. Hitherto, all the confusion of thought and uncertainty of events at home and abroad had re- sulted in confused and experimental action, particularly in the field under consideration. The emergency experi- ments of Continental and state paper money, issued chiefly during the Revolutionary War, had failed, as schemes of fiat money are always bound to fail in the end, the disaster culminating in the years following 1780. For
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a while various expedients had been resorted to, barter being a frequent method of trade, and foreign coin being used when obtainable. But why could not banks, when organized, issue currency? They could and soon they proceeded to do so.
In the formation of the Bank of North America at Philadelphia in 1781, Hamilton, who was always in- trigued by financial problems, was associated with Robert Morris. It was three years later that Hamilton wrote the "constitution" of the Bank of New York which at once began business, though not chartered till 1791. This "constitution" formed the model, with adaptations to local conditions, of the articles of association and charters of the earliest Connecticut banks.
The establishment of these Philadelphia and New York institutions marked an important beginning-the change from depreciated Continental and state currency to a scheme of bank notes redeemable in specie. For it must be remembered that the checking system was practically nonexistent and the chief function of the early banks, aside from the making of loans, was the issuance of their notes which came to form the main medium of exchange. For a long time specie had been scarce and mostly foreign at that. The English monetary system had prevailed, and its translation into "hard money" of various kinds re- sulted in great variation. In 1785 congress resolved that the money unit of the country should be one dollar, and provided that "the several pieces, shall increase in a deci- mal ratio"; but it was not until 1792 that the United States mint was definitely established.
The change, however, did not come immediately. It was seven years after the congressional resolution that the Hartford Bank took the lead in introducing the decimal system into Connecticut. At the first meeting of
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the directors after the charter became operative, to wit on June 16, 1792, it was voted that the bank's notes should be issued and made payable in dollars. Neverthe- less the force of habit was hard to overcome. It was not till 1797 that the accounting system in the state treas- urer's office was changed to dollars and their fractions, from pounds, shillings, and pence.
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MUCH of the financial confusion and uncertainty follow- ing the Revolutionary War was eliminated by the adop- tion of the federal constitution of 1787, the enactment of the funding bill in 1790, and the establishment of the first Bank of the United States in the following year-the latter two being creations of Hamilton, devices which bore their part in accelerating the incorporation of the three Connecticut banks in 1792. From the postwar depression the country swung into an era of wild specu- lation dealing chiefly with the United States securities under the funding act and with transactions in western lands. This in turn had its inevitable reaction.
During this period of alternating boom and depression the Connecticut banks stood firm, but it seems probable that the failure of any banking expansion in the state till 1806 may be attributed to the uncertainties of this decade. In that year the Bridgeport Bank was incorpo- rated, its charter providing that the state of Connecticut could come in as a stockholder. This provision followed a precedent established in 1803 when the general assembly accepted an offer of the Hartford, New Haven, and Middletown banks, that it become a stockholder in these corporations in proportion to their respective capitaliza- tions. In accepting this offer the state made its acceptance conditionally applicable to the other two Connecticut
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banks-in New London and Norwich-and further pro- vided, among other things, that in any case where the state became a stockholder the comptroller should be furnished, when he should require it, with a statement of the bank's condition and also should have "the right to inspect such general accounts in the books of the bank, as shall relate to said statement." This is memorable as the first Connecticut legislation relating to state super- vision of banks. It should be noted, however, that the motive in this first instance was the protection, not of the depositors, bill holders, and stockholders, but of the state itself.
This year, 1806, marked a renewal of Connecticut banking activities. The minimum capital of the Bridge- port Bank was $50,000 and its maximum $200,000. It is a commentary on the importance of shipping in those days and on the advantages of New London as a seaport that a demand arose there at this time for more banking facilities. At the general assembly's May session in 1807 the New London Bank was incorporated with an author- ized capital of $200,000-the maximum of the Bridgeport Bank-which might be expanded to $500,000. The strange and ill-fated Derby Fishing Company was char- tered in 1806. By an odd development this corporation got into the banking business. Its original purpose was to further the cod and other fisheries, but in 1807 it was authorized to engage in marine insurance and in the following year (the fishing and marine insurance business having been practically killed by the embargo and non- intercourse acts of 1807) it was empowered to loan its capital and take security therefor. On the strength of this it proceeded to enter into banking and even issued its notes for circulation. Called to account by the general assembly in 1808, it was prohibited from issuing "any
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more notes." Later it came under the control of New York interests and in 1825 it collapsed. In 1809 the Derby Bank was chartered on condition that no director of the Fishing Company should hold shares, that com- pany also being restrained by indirection from owning stock. In 1812, however, for some occult reason, the Fishing Company was permitted to own stock to a limited extent. In 1811 the Eagle Bank of New Haven was organized with an initial capital of $500,000. Through mismanagement it was to furnish in 1825 the first in- stance of a bank failure in Connecticut. In that disas- trous year the Derby Bank also stopped payment.
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IT was unfortunate for the country that the charter of the first Bank of the United States expired in 1811 and that efforts to renew it were defeated, for the approach- ing war with Great Britain was casting its shadow in advance, and commerce, and consequently banking in- terests, were suffering. Undoubtedly, a central bank would have been a reassuring anchor to windward.
The first Bank of the United States had been a stabilizing influence, but it had not always been popular. The prejudice against banks in general, which seems to accompany every panic or depression, was illustrated by the debates upon the charter's renewal in congress, where the institution was quite unjustly abused. Probably its very success was an element in this antagonism. Divi- dends had averaged about eight per cent and on final liquidation the stockholders received $434 on each of their shares, the par value of which, like those of the Hartford Bank, which had perhaps followed this prece- dent, was $400.
Its discontinuance as a national institution stimulated
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the organization of a large number of state banks, in spite of the approach of war, and of the war itself, particularly in Pennsylvania where the principal office of the Bank of the United States had been situated. The theory was, the more banks, the more money. A wave of bank incorpora- tions spread through the Middle Atlantic states. It be- came evident, however, in 1814, when most of the banks outside New England suspended specie payments, that there was something wrong with this idea. One thing wrong with it, besides the inability of the banks to re- deem their notes in specie, was that with so many banks issuing their notes, which became currency, speculative activity had increased and prices had risen. As banks began to suspend, the value of this outstanding currency depreciated, but not at a uniform rate, and much con- fusion resulted.
Connecticut, however, along with Massachusetts, re- mained conservative and its banks issued their notes with caution. "Not a bank in Connecticut refused to pay its demand notes in specie," wrote J. G. Woodward. Nevertheless, as these notes kept pressing in for redemp- tion and were thus withdrawn from circulation, their place began to be taken by the depreciated issues of suspended institutions in other states, thus furnishing a currency highly unsatisfactory to Connecticut people. To meet this difficulty the general assembly in 1815 authorized the banks to issue bills payable in specie "two years after the war." Indeed, all through these days of chaotic conditions the Connecticut banks had an excel- lent record. About the only disturbance from which they suffered was the purely physical inconvenience caused by the removal to Norwich of the New London banks when Decatur's little squadron was driven into the harbor.
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V
THAT in spite of the confused situation there was need of more banking facilities in Connecticut toward the end of the war is illustrated by the fact that in 1814 (the year in which the city of Washington was captured by the British) the Phoenix Bank in Hartford was incorporated with a capital of one million dollars. It is recorded that the stock was oversubscribed seven times, but no his- torian, so far as the writer is aware, has commented upon that extraordinary fact. That $7,000,000 was volunteered for this purpose in Connecticut in the midst of the war and a disturbed economic situation is a circumstance that implies either a flattering confidence by the people in their prospective bankers and a resourcefulness that is surprising in view of current conditions, or else a possi- bility that the subscriptions were not all made in expec- tation of fulfillment.
Though there is space here for only brief reference to individual banks, the story of the Phoenix Bank's organi- zation was so peculiar as to merit fuller narration.2 In Connecticut the Congregational Church (sometimes styled contemporaneously "Presbyterian") was in effect the established church of the colony and the state. The management of the Hartford Bank was, speaking gener- ally, of the Standing Order so far as religious affiliations were concerned. In politics it was Federalist. For twenty- two years it had enjoyed a monopoly in the financial affairs of Hartford and its vicinity. It was well managed and had prospered. That very prosperity stimulated an ambition in others to share the abundant crops in the same field, and in February, 1814, a petition, signed by
2 See O. S. Seymour, Beginnings of the Episcopal Church in Connecticut (no. XXX in this series), pp. 21-22.
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the Episcopalians, Ward Woodbridge, Samuel Tudor, Jr., and Charles Sigourney (the last the husband of the poetess, Lydia Huntley Sigourney, "the sweet singer of Hartford,") was presented to the general assembly, praying for the incorporation of a bank with a capital of $1,500,000 and offering what now seems a strange in- ducement; namely, the payment "in conformity to precedent in other states," of four per cent on the capital, or $60,000, to the state if the prayer were granted. This bonus, or "premium," as it was more euphoniously termed, was to be appropriated to the use of Yale Col- lege and of its Medical Institute (a bid for the votes of the Congregationalists) and to the Bishop's Fund of the Episcopal Church, or "to be otherwise disposed of, for the use of the state or for any purpose whatever which to your honours may seem best."
This was like throwing a bomb among the Hartford Bank's directors. They countered with an offer to in- crease their capital by $1,000,000 and to pay a bonus of $50,000. The Episcopalians had long considered them- selves under a grievance because of alleged discrimina- tion against their denomination, and they lined up pretty generally back of the Woodbridge petition. The general assembly, after considerable turmoil, granted a charter to the Phoenix Bank, changing the capitalization to $1,000,000 (with power to double this amount) and stipulating a premium of $50,000. The assembly voted Yale's Medical Institute $20,000 (though this does not seem to have been a clear and direct charge against the bonus), but the Bishop's Fund got nothing. A fine "con- testation" ensued, with mutual recriminations. A sub- sequent application to the state for aid to the Bishop's Fund was refused, and permission to establish an Episcopalian college was declined. The opinion spread
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that the Episcopalians were being shabbily treated. The Episcopal group went over to the Republicans, drawing many new partisans with them, and formed the "Tolera- tion" party, which in a few years dominated the legisla- tive and executive branches of the state's government. It was able to force the calling of the convention which framed the constitution of 1818 under which church and state were separated in Connecticut.3 Washington (now Trinity) College was chartered in 1823. In 1820 the trustees of the Bishop's Fund were granted authority, in lieu of what they considered their claim against the state, to raise $15,000 by a lottery. They sublet this privilege for about $7,000 and lost $5,500 of it when the Eagle Bank of New Haven failed.
Thus the battle for the Phoenix Bank's incorporation started an important train of events. Not the least of these has been the development of the institution itself into one of the most successful of the banks and trust companies in Connecticut.
In the effort to secure votes from western Connecticut, the incorporators of the Phoenix Bank had asked au- thorization to establish a branch in Litchfield. This re- quest was granted and the branch presently began business. In 1865 it organized independently as the First National Bank of Litchfield.
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THE news of the treaty that ended the War of 1812 reached this country in February, 1815. In October, 1814, specie had been at a premium of eleven per cent. When peace was declared the premium dropped to three or four per cent, but the financial optimism indicated by
3 See J. M. Morse, Under the constitution of 1818: the first decade (no. XVII in this series).
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this was short-lived. In July, 1815, specie was quoted at a fifteen per cent premium. The Connecticut banks, themselves in a healthy condition and dissatisfied with the action of the New York financial institutions in not resuming specie payments, sent delegates to a conference at Middletown on July 7. Representatives chosen at this meeting went to New York but could secure no tangible results.
The truth was that the currency was in a chaotic con- dition. In spite of peace, specie was still scarce and notes of state banks, wandering here and there through the country, were of uncertain value, particularly when far from home. The United States government itself, for example, accepted this local currency, and the result was it had money everywhere, "but nothing with which to pay its debts in the places where they were due."
It began to permeate the national intelligence that the Bank of the United States, which had been called names in the congress that had refused to renew its charter, had had its good points after all, and a second Bank of the United States was chartered in 1816 with a capital of $35,000,000 of which the government took $7,000,000. The parent bank operated largely through a system of branches, and the Connecticut branch was first estab- lished at Middletown, but moved to Hartford in 1824. Its capital was $250,000, increased later to $300,000.
Through the efforts of the Bank of the United States the banks of the Middle and Southern states agreed to resume specie payments February 20, 1817. Despite this and other attempts of the new bank to relieve the situa- tion, the redundant and uncertain currency had done too much damage to be repaired quickly, and the ultimate contraction (the only alternative to national bankruptcy) and curtailment of discounts produced a period of distress
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and depression that culminated in the panic year of 1825, when the Eagle and Derby Banks failed.
Connecticut fared better than most of the country in these lean years. In 1819, one of the most discouraging of these years, the Society for Savings, the first mutual savings bank in Connecticut, was established in Hart- ford. Almost simultaneously similar institutions were chartered in Philadelphia and New York. Massachusetts already had two savings banks, instituted in 1816 and 1818 respectively, while in the latter year one had been started in Baltimore. The first by-law of the Society for Savings read: "The primary objects of the institution are to aid the industrious, economical and worthy, and to protect them from the extravagance of the profligate, the snares of the vicious, and to bless them with competency, respectability and happiness." The following year the Savings Bank of New Haven was incorporated, its charter following closely that of the Society for Savings, though it was authorized to accept deposits up to $500 from any one individual in each year, while the Hartford savings bank was restricted to a $200 limit.
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