History of Chicago. From the earliest period to the present time, Part 153

Author: Andreas, Alfred Theodore
Publication date: 1884
Publisher: Chicago, A. T. Andreas
Number of Pages: 1340

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ran short he had only to buy some bank outside of the State, legally organized. He thus bought the Atlanta Bank of Georgia, the International Bank, Griffin, Ga., and others.

A reference to the sketches of the State banks will show the reader that the circulation furnished by them was, at its largest, but a small proportion of the capital invested by them, and that they gradually diminished it until in 1856, the aggregate authorized cir- culation of all the Chicago State banks was only $250,000, and of this sum it seldom occurred that it was all in circulation. The KREE amount was entirely inadequate for the busi- ness wants of the community. As the ille- gal issues had been suppressed, the bills of banks of other States, more particularly those of Georgia banks, gained a wide circulation. Many of them were owned or controlled by Chicago capitalists and were redeemable at the banking offices of their sponsors. Besides this there appeared the bills of many banks not guaranteed by any local banking firm, which were tolerated, though suspected of being of the wild-cat breed. In fact the cur- rency was, so far as safety or reliability went, but little improved by the substitution of Georgia bills for the irregular issues of home bankers which had been suppressed. The character of circulating bills is shown by a list turned over by Oscar L. Caldwell, a conductor on the Burlington railroad, as taken by him during one trip in September, 1855. The whole amount was $203, made up of the following : Five $5s on Atlanta Bank, Georgia ; eight $5s and one Sio, on Interior Bank of Georgia ; five $5s and one Şıo, on LaGrange Bank, Georgia ; two §5s on Michigan Insurance Company, Detroit ; one ȘI on Marine Bank, Chicago ; one §5. THHERDOLLARSITHREE DOLLAR THILEY DOLLARI RULES one $2, and one $3 on State Bank of Illinois; one Sio on Mahoning County Bank, Yourgs- town, Ohio ; one Și on Dairyman's Bank, N. Y .; one $3 on People's Bank, Wisconsin ; one $2 on City Bank, Racine, Wis .; one Si on Kenosha Bank, Wis .; one $5 on Charter Oak Bank, Connecticut ; one $3 on Alton MICHIGAN WILDCAT MONEY. Bank, Illinois ; one $2 on Bank of Naper- ville, Illinois ; one $5 on Dank of Cumber- land, Maine ; one $5 on State Bank of Indi- ana ; one $5 on Agricultural Bank, Tennes- see ; one $5 on Luther Wright's Bank, Os- wego, N. Y .; one $5 on Bank of Virginia ; one S5 on Fire & Marine Insurance Compa- ny, Burlington, Iowa ; one $5 on Merchant's Bank, Macon, Ga .; one $5 on Bank of Bing- hamton, New York ; and one $5 on Gran- ville Bank, Granville, Ill. Of the Szo ;. Georgia banks furnished $115 ; New York, Sil; lowa, $5 ; Virginia, $5 : Tennessee. $5 : Indiana, $5; Wisconsin, $6; Ohio, SI0; Michigan, Șto; Connecticut, $5 ; Maine, $5 ; Illinois country banks, Szo; Chicago city banks, ŞI.

Although this list may not show the true proportion of the various issues in general circulation, it shows that under the banking law the State banks furnished but a tithe of the money in circulation, and that the strin- gent law passed in 1853 against irregular banking in the State had not been effectual

547

BANKS AND BANKING.

in closing the gates against a flood of paper money from all quarters outside its jurisdiction. Of these the Georgia Bank bills gained the largest circu- lation, as many of them were made redeemable in Chicago in current bank bills. This forced the strong Illinois banks to keep their own circulation constantly fortified with an undue amount of specie for its redemption, and thereby rendered their circulation unprofitable to them however desirable it might be to the public. Any attempt to drive the better class of Georgia money out of circulation by gathering it up and demanding its redemption in current money in Chicago was sure to result in the gathering up of all current Chicago bank notes as an offset. To eradicate the one was to suppress the other, and the wild-cats still flourished. Banks which had depended solely on the profits arising from the circulation of their bills as money were many of them forced into liquidation, and others abandoned the business except that outside the issue of bills, which they continued to sturdily pursue. The statement of two of them on the first Monday of January, 1856, shows how strongly their circulation was fortified. On that date the Marine Bank reported a circulation of $84,850, with specie on hand, $90,000, and the Chicago Bank $50,000 in circulation, and $50,000 of specie on hand.

Several attempts were made to drive the Georgia money out of circulation by bringing it into popular discredit. In the fall of 1855 the railroads seriously discussed but never fully agreed to the measure of re- fusing all Georgia and Tennessee bills. December 27, 1855, a card appeared in the daily papers, addressed to the banks and bankers of Chicago, signed by one hun- dred and twenty merchants and firms, which read as follows:

" The undersigned merchants and business men of this city respectfully solicit your aid in suppressing and driving out of circulation all Georgia and Tennessee money from our city and State, believing it highly in- jurious to the business interests of the community and unworthy of a longer credit. We hereby assure you that we heartily concur in the late movement of our prominent railroad companies against the issue of Georgia and Tennessee banks, and would urge the banks and bankers of this city to refuse receiving them on deposit on and after the 15th of January next."

The editor of the Democrat, commenting on the above, said:

"So long as the bills of the sound Georgia banks are convertible into New York exchange at three- quarter per cent, and into gold at a rate no higher than one per cent, they will be freely taken by all business men."

In the Democratic Press of January 6, 1856, ap- peared, under the heading, " Georgia Banks Sustained," a counter card signed by one hundred and twenty-five firms. It read:

" We the undersigned, persons engaged in business in the city of Chicago, having been familiar for years with its immense and rapid growth and unparalleled in- crease of business, and the every-day increasing demand for money to carry on the business so rapidly pouring in upon us, have observed with regret an effort on the part of some of our newspapers and brokers, as well as people at a distance, to discredit and render useless the currency upon which this city has mainly relied and used in the various transactions of business. If the general banking law of the State had been such that legitimate banking could have been done under it, or if it could be immediately so amended as to admit of such

successful banking, and thus supply a circulating me- dium at once for this city and State, the undersigned would have no objection to forcing out of circulation all foreign bills, or bills of other States. Since it is con- ceded that this banking law cannot be altered or amended until the State Constitution is amended, and since that cannot be effected under three or four years. there appears no remedy for the use of foreign bills. The undersigned therefore look upon any successful effort to discredit any circulating medium that is re- deemed promptly where issued, as not only unwise but exceedingly mischievous to the general interests of the State and city and individuals, and it generally would most seriously effect the value of both personal and real property. The rate of interest money commands here is proof that we have too little rather than too much. The undersigned are decidedly opposed to the invidi- ous distinction sought to be made by some of our news- papers and brokers against the issues of the banks of the State of Georgia, the bills of which we have become familiar with, the owners of which we have become acquainted with, and the security of many of which we are perfectly satisfied with. The fact that two of the Georgia banks have stood a continuous run for four months or more, and have redeemed a half million per month of their issue in gold and silver, have increased our confidence in these banks, and the ability and dis- position of the stockholders to promptly redeem all their issues. We shall therefore continue to receive and pay out, use and give credit to Georgia money, the same as the bills of other States, so long as they are redeemed in specie at the banks where issued, and we advise others who are engaged in business to do the same, until a full remedy can be had by amending our own banking law.'

The Marine Bank, and the banking house of R. K. Swift, advertised on January 16, 1856, that they would no longer receive on deposit Georgia or Tennessee bank bills. In the same paper, Preston & Co., bankers, advertised that they were partial stockholders of the Planter's and Mechanic's Bank, Dalton, Georgia, were liable for its issues, and that its notes would be received by them, the same as Illinois, Wisconsin, Ohio, and other Western currency. Smith redeemed the issues of the Atlanta Bank, the International Bank, and others in which he was interested.

It does not appear that the Southern banks having reliable fiscal agencies at Chicago were much restricted in their general circulation by the partially successful effort to discredit them. They continued as a part of the circulating medium, in spite of all the local opposi- tion until extraneous circumstances destroyed the entire system of State banking throughout the land.

The history of legitimate banking in Illinois or Chi- cago after 1853 was uneventful until 1856. The panic of that year brought the banks of Illinois in common with those of the whole country, to the severest test. It is truth to say that the Chicago banks stood the test well. Some of them failed, some went into voluntary liquidation, and a few weathered the storm and con- tinued to do business until they were superseded by the National Banks in 1863-64. . Of changes subsequent to 1857 this history will treat hereafter. The following is a sketch of each bank doing business in Chicago and recognized under the laws of the State from 1851 to 1857.

THE MARINE BANK OF CHICAGO .- Chartered Jan- mary 13, 1852. Officers, J. Young Scammon, president : Edward 1. Tinkham, cashier. Capital 850.000-in- creased, May 20, 1852, by $500,000. Paid in, $150,000.

548

HISTORY OF CHICAGO.

Circulation of $99,044, secured, by Auditor's report of November 20, 1852, by Virginia six per cent bonds, valued at par, $30,000 ; Illinois State bonds and Illinois & Michigan Canal securities amounting to $142,398.14, valued at $69,052.23. In 1854 its circulation had in- creased to $158,901, to secure which it had deposited $42,000 of Virginia bonds and $244,623.40 of Illinois State and canal bonds, having a market value of $128,- 303.85. In 1856, its circulation had been reduced to $ 100,705. Its securities were : $9,000 of Missouri bonds and $198,705.15 of State bonds of Illinois, valued at $100,705.73. November 30, 1858, the circulation had been reduced to $50,000, for the redemption of which there were deposited with the State Auditor, $47,276 Illinois New Internal Improvement bonds, valued at $1.05, and $1 2,000 Illinois interest bonds valued at So.96. November, 1860, the amount of the circulation remained unchanged ($50,000), secured by Illinois State bonds valued at $53,098. Its charter expired in 1877, at which time it went out as a solvent bank.

BANK OF AMERICA .- This was a proprietary bank, owned by George Smith and Elisha Willard (George Smith & Co.) Chartered July 19, 1852; capital, $1,- 000,000; paid in, $50,000. Circulation, November, 1852, $50,000, secured by deposit with the State Audi- tor of $10,000 Pacific Railroad bonds of the State of Missouri, valued at par, and $77,000 of various canal bonds, valued at fifty cents on the dollar, and $6,501.87 of canal certificates, valued at thirty-three cents on the dollar. For the succeeding four years the amount of circulation and the securities deposited remained un- changed. In November, 1859, the circulation had been reduced to $1, 162, for the security of which $2,000 of Missouri sixes were deposited.

THE BANK OF COMMERCE was owned by Davisson, McCalla & Co .; incorporated in May, 1852. Capital, $260,000; paid in, $52,000. Officers, Alfred W. Davis- son, president; Thomas McCalla, cashier. Its first circulation amounted to $50,000, to secure which were deposited July 24, 1852, $35,000 of Missouri State bonds, $10,000 of Kentucky State bonds, and $5,000 of Ohio canal bonds. November, 1854, the circulation had increased $4,998, and $5,000 additional Kentucky State bonds had been deposited for security. In the Auditor's report for 1858, its name appears among the suspended banks. Its final showing in the Auditor's report of 1860 speaks well for the Illinois banking law, under which the bank had been organized and its bills issued. It was as follows:

1858.

DR.

Sept. 18, To amount of stock deposited .$2,005 00

Sept. 28, To amount of sale of securities .. 2,059 00

1858.

$1,094 00 CR.

Sept. 28, By amount of notes in circulation. .$2,005 00 1860.

Nov. 30, By amount of notes redeemed. 522 00

Nov. 30, By express account. 5 00

Nov. 30, By specie on hand.

1,562 00 .

$4,094 00

THE CITY BANK was a proprietary bank owned by Messrs. Bradley & Curtiss; chartered June 26, 1852; capital, $200,000. Its place of business was No. 24 Clark Street. Amount of circulation, November, 1852, $59,994, which was secured by deposits of $60,000 in Virginia State bonds, valued at par. In 1854 the circu- lation had diminished Sto.ooo. November, 1856, the Auditor reported a circulation outstanding of $1.539, against which was held $1,537.40 in specie. The bank

went into involuntary liquidation, being "closed by protest."

THE CHICAGO BANK was owned by I. H. Burch & Co., the firm being Isaac Howe Burch and Samuel Howe. President, Thomas Burch; cashier, I. H. Burch. Incorporated July, 1852; capital, $100,000; paid in, $59,501.29. Circulation in November, 1852, was $53,997, secured by deposit with the State Auditor of $10,000 in Missouri State bonds and $77,501.57 in canal securities. In November, 1856, the circulation was $50,000, secured by SS,ooo in Virginia sixes and $$6,000 in Illinois and canal bonds. In November, 1860, the amount of circulation had been reduced to $4,903 (2,281 ones, 1,060 twos, 94 threes, and 43 fives), to redeem which the State Auditor held $5,454 of Illinois State bonds.

THE EXCHANGE BANK was owned by Messrs. H. A. Tucker & Co .; organized in January, 1853. Officers: President, H. A. Tucker; cashier, Hamilton B. Dox. Capital unknown. Place of business, 34 Clark Street. The circulation in 1854 was $49,995; security deposited, $50,000 in Missouri State bonds. In 1856, the circula- tion had been withdrawn. At that time there was only $675 outstanding, for which the Auditor held $675 in specie.

THE UNION BANK was owned largely by Forrest Bros. & Co. It was organized August 18, 1852; capital, $200,000; paid in, $50,000. The circulation was, in October, 1852, $49,995, secured by $50,000 of Virginia sixes. This bank was "closed by protest " in 1856. At the closing up of its business in 1857 there was of its bills outstanding $1,611, of which amount there was subsequently redeemed $78. Lost, $1,533.

THE FARMER'S BANK was organized December 25, 1853, by Messrs. Chase Bros. & Co. Its circulation was secured by $50,000 Missouri State bonds. It was forced into liquidation in 1854. The bonds proved ample to redeem its circulation.

THE PHOENIX BANK was organized in 1854. It had a circulation of $50,000, secured by $50,000 in Missouri State bonds. It was forced into liquidation in 1855. In November, 1856, the Auditor reported of its bills outstanding, $415, to redeem which he held a deposit of $413.40 in specie. The bank was owned by N. C. Roe & Co., 42 Clark Street.

MERCHANTS' AND MECHANICS' BANK was organized in February, 1852. Officers: President, Levi Boone; cashier, Stephen Bronson. Capital, $100,000. The circulation, in 1853 was $54,700, for which it had pledged to the State Auditor $50,000 in Virginia sixes and SIo,- ooo in canal bonds. In 1854 its circulation had in- creased to $58,700, with a corresponding increase of securities in canal bonds. The bank closed business in 1856. The Auditor's report in the fall of that year showed $2,068 of bills still outstanding, with a deposit of a like amount of specie.

Whatever of disaster may have befallen these banks, it will be seen that no material loss ever came upon the holders of their bills. The financial storms of 1856 forced some of them to close up business, but the law under which they had been organized grew in favor with the people until the unexpected contingencies which grew out of the civil war in 1861 destroyed the basis on which banking had been done, and, shortly after, forced an abandonment of banking under State laws altogether, and the law was repealed.

OTHER FINANCIAL INSTITUTIONS,-In addition to the banks of issue which flourished during the period subsequent to the passage of the State banking law of 1851, there were several stanch financial institutions

BANKS AND BANKING.

549

worthy of mention. The Butchers and Drovers' Bank was the only bank on the North Side. It issued no bills, but did a thriving business. It was located at the corner of North Water and North Clark streets.

'The METROPOLITAN BANK was also a bank of de- posit, owned and run by Gurley & Farlin.

"SWIFT'S BANK," the proprietors of which were R. K. Swift, Lyman P. Swift, and . J. S. Johnson, did a very extensive business at the corner of Randolph and La Salle streets.

The leading savings banks were: The Chicago Savings Bank, 125 Lake Street; Dollar Savings Bank, 22 Clark Street; Marine Savings Bank (a department of the Marine Company); and the Dime Savings Bank.

The Illinois Saving Institution, which for many years was regarded as being undoubtedly secure, was or- ganized in 1855-6. Its first president was John H. Kinzie. He was succeeded in 1859 by John C. Haines. George E. Stanton was its vice-president, and Nathan B. Kid- der its cashier. Among its permanent trustees were: John H. Kinzie, Gurdon S. Hubbard, Erastus S Williams, Alexander C. Coventry, William B. Ogden, George W. Dole, Benjamin W. Raymond, John S. Reed, O. R. W. Lull, George E. Stanton, and Nathan B. Kid- der. Serving as directors for brief periods were: John H. Dunham, Henry Witbeck, John C. Haines, and Conrad L. Deihl.

In 1857 was organized the Merchants' Savings, Loan and Trust Company, the only financial institution now in existence, under its old name, organized prior to 1858. It office was at the corner of Water and La- Salle streets. It capital was $500,000. Its first presi- dent was J. H. Dunham, and its first vice-president Walter L. Newberry. D. R. Holt was its first perma- nent cashier, although before him M. B. Bartlett had served as cashier and secretary pro tem. The directors,. prior to 1861, were: John H. Foster, 1857-61; Jona- than Burr, 1857-61; W. L. Newberry, 1857-61; D. R. Holt, 1857-61; William E. Doggett, 1857-61; Henry Farnam, 1857-61; I. N. Arnold, 1857-61; A. H. Burley, 1857-61; J. H. Dunham, 1857-61; William B. Ogden, 1857-58; George Steel, 1857-58; M. D. Ogden, 1858- 61; S. A. Smith, 1858-61; C. H. McCormick, 1858-61.

The Western World Insurance and Trust Company, 142 and 144 South Water Street, was chartered in 1853. Its authorized capital was $500,000, of which it issued $250,000, the par value of its shares being $50. George H. Hazelton was its first president, and Charles H. Abbott its first cashier. He subsequently became the treasurer of the company, and Alfred Edwards succeeded him as cashier. The early directors were: O. Kendall, George H. Hazelton, Amzi Benedict, L. S. Church, and Charles H. Abbott.

The Chicago Marine & Fire Insurance Company was first chartered in 1836 by Theophilus W. Smith and others. It did a banking business to the extent of any private bank or banker not issuing currency. It ceased to do business in 1839 or 1840, but did not thereby for- feit or resign its charter. In 1848, its stock having passed into other hands. its business, under the old charter, was revived .* It commenced with a nominal capital of 835,000, and an actual cash capital of $25,000. J. Young Scammon was the largest stockholder, the president, and managing head of the institution, and so remained, with the exception of three years while he was abroad, until it finally closed up business in 1874. Until 1857 its career was that of unprecedented success. It had at that time extended its business more widely

than any like institution in the West, had an actual cash capital of half a million dollars, and was the largest moneyed institution in the State. The Marine Bank, chartered in 1852, was owned by the same stockholders and was under the same management. In 1857 Mr. Scammon retired from the active management of both institutions and visited Europe, where he remained about three years. At the time of his departure the joint capital of the two concerns was $1,050,000. Under the new management a train of misfortunes befell the company, which seriously depleted its financial strength and impaired its credit. Mr. Scammon on his return resumed the management, and it again regained its credit and prestige, which it held until the great fire of 1871. This disaster followed, before recuperation was possible, by the financial disaster of 1873, rendered it necessary to permanently close its business, which was done in the winter of 1874 or spring of 1875.

The bankers and banks of Chicago which survived the panic of 1856, and appeared as doing business in 1857, were given in the directory of that year, with the time they had done business in the city, as follows :

F. Granger Adams, 44 Clark Street, forty-seven years in city.

J. MI. Adsit, 39 Clark Street, ten years in the city.

Brewster, Hoyt & Co., 24 Clark Street, nine months in the city.

I. H. Burch & Co., 123-125 Lake Street, twelve years in the city.

Davisson, McCalla & Co. (Bank of Commerce), 128 Lake Street, corner of Clark.

John Denniston, money broker, 11I Lake Street, eight years in the city.

Evans, Whipple & French, money brokers, 48 Ran- dolph Street, four months in the city.

Gurley & Farlin (Metropolitan Bank), 48 LaSalle Street-Joel Gurley and D. H. Farlin.

Hoffman & Gelpecke, 58 LaSalle Street, two years in the city.

E. H. Huntington & Co., 34 Clark Street, two years in the city.

Morford Bros. (R. H. Morford), 32 Clark Street, one year in the city.

Officer & Brother (R. W. & S. P. Officer), 154 Lake Street, one year and three months in the city.

Charles G. E. Prussing, 40 Clark Street, eleven years in the city.

Daniel Richards, 29 Randolph Street.

Strong & Wiley, 141 Randolph Street (D. C. Strong and C. V. Wiley), six months in the city.

H. A. Tucker & Co. (Exchange Bank), H. A. Tucker, president ; Hamilton B. Dox, cashier, four years in the city.

Wadsworth & Hitz (Strong Wadsworth and Louis J. Hitz), 66 Clark Street.

R. K. Swift, Brother & Johnson, northwest corner of Randolph and LaSalle streets, three years in the city

E. I. Tinkham & Co., 34 Clark Street, two years in the city.

Wheeler, Bunker & Co., 65 Clark Street (George H. Wheeler, New York, Edward H. Bunker, Chicago , nine months in the city.

G. C. Whitney & Son (G. C. and C. H. Whitney , 36 Clark Street, one and one-half years in the city.

Bank of America, George Smith & Co., proprietors. 41 Clark Street.

Bank of Commerce (Commercial Bank), Davisson, McCalla & Co., proprietors, northwest corner of Lake and Clark streets.

" See on previous pages of bank history, and biography of Hon. J. Y. Scammon.

- -

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550

HISTORY OF CHICAGO.

Chicago Bank (I. H. Burch & Co.), corner of Lake and Clark streets.

Exchange Bank (H. A. Tucker & Co.), 34 Clark Street.

Marine Bank & Chicago Marine Insurance Com- pany (incorporated in 1836), 154 Lake Street, twenty

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A grelleger

on Demand

WISCONSIN WILDCAT MONEY.

TEN DOLLARS

GREEN BAY

Pronuses In

years in the city. J. Young Scammon, president; Ben- jamin F. Carver, cashier.

State Bank, 55 Clark Street, William B. Rogers, house 103 Adams Street.

It is appropriate to close this chapter with a bio- graphical sketch of one who filled an important place in the banking history of that period.

J. YOUNG SCAMMON was born in Whit . field, Lincoln Co., Maine, July 27, 1812. His father, Hon. Eliakim Scammon, was an early settler and a long resident of East Pitts- ton, Kennebec Co., Maine. He was a man widely known and esteemed and represented his town and county in both branches of the State Legislature. His mother was the daughter of David Young, who was a wealthy man of affairs, and had represented the town of Pittston, District of Maine, where he re- sided, in the General Court of Massachu- setts, before the separation of Maine from Massachusetts.

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History of Chicago. From the earliest period to the present time, Part 153

Author: Andreas, Alfred Theodore Publication date: 1884 Publisher: Chicago, A. T. Andreas Number of Pages: 1340

Author: Andreas, Alfred Theodore
Publication date: 1884
Publisher: Chicago, A. T. Andreas
Number of Pages: 1340