USA > Illinois > Cook County > History of Cook County, Illinois : being a general survey of Cook County history, including a condensed history of Chicago and special account of districts outside the city limits : from the earliest settlement to the present time, volume II > Part 11
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In 1838 Strachan & Scott opened a stock and exchange office and
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HISTORY OF COOK COUNTY
also began to do a limited banking business. Soon after opening their doors they began issuing regularly a bank note list or table giving the latest quotations of bank funds throughout the country. In 1839 bills of the Illinois State bank and its branches, the Missouri State bank, and the Indiana State bank and its branches were at par. Bills of the Bank of Mineral Point, Wis., were 10 per cent. discount; Bank of Dubuque, 10 per cent. discount; Bank of Wis- consin, 621/2 per cent. discount; Michigan State bank and branches, 5 per cent. discount; Michigan Farmers' and Merchants' Bank and branches, 5 per cent. discount; exchange on New York, 2 per cent. premium. On August 8, 1839, Illinois stock was quoted at 82 cents on the New York stock exchange. On August 19, 1839, the Branch bank here paid out $96,000 in specie on government drafts for the Indians of Wisconsin. In May, 1839, the special issue of scrip by the canal began to circulate here. They were like ordinary checks and brought six per cent. interest after ninety days. Much was expected of the canal currency. At first it was well received but later passed at a considerable discount. To make matters worse it was counterfeited extensively and gave business men abundant trouble. About a dozen of the counterfeiters were, in the end, ar- rested and duly punished. The New York Express of June, 1839, said: "Hog Bankers .- It is said that the Chicago Bank (Illinois) lately purchased 5,800 hogs and cleared $42,000 by the speculation." When this statement became known to Mr. Brown, cashier of the Branch bank, he emphatically denied its truth. However, such a speculation was probably made here, no doubt with money bor- rowed from the Branch bank.
In October, 1839, the Branch announced that it would exchange its larger notes at par for the bills of all solvent Eastern banks and that persons who wished to enter land would be supplied with bills of the proper denomination in exchange for those usually not received at the land office. This was an accommodation designed to save purchasers of land from the shaving operations of brokers.
On April 18, 1840, Murray & Brand had succeeded Strachan & Scott and began doing an extensive banking business in addition to a general brokerage business. They received deposits and sold exchange on New York and Great Britain. In 1843 George Smith & Co. conducted a private bankers' and brokers' office at the corner of La Salle and Washington streets. Their quotations at this time were as follows: Specie, par ; treasury notes, 11/2 per cent. premium; eastern drafts, 11/2 per cent. premium; Illinois bonds, 50 per cent. discount; Bank of Illinois bills, 70 per cent. discount ; - Wisconsin Marine & Fire Insurance Co., 11/2 per cent. discount ; Missouri Bank bills, 2 to 3 per cent. discount; New York funds, par to 1 per cent. discount: canal scrip, 80 per cent. discount ; county orders, 60 per cent. discount ; city scrip. 121/2 per cent. dis- count ; Indiana bills, 2 to 3 per cent. discount. By February, 1844, the city scrip had risen to par.
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The Branch was removed from Chicago to Lockport in July, 1840. This removal was caused by an act of the Legislature re- quiring it to resume specie payments on a certain date. Later in 1840 strong efforts to secure its return to Chicago were made.
"And what good object has been effected by the destruction of the bank? None whatever; on the contrary a very serious blow has been struck at the prosperity of our city. During its brief existence of four years its line of discount has been rising to half a million dollars. Not only did the bank freely discount good busi- ness paper, but it also extended its favors by a very heavy discount of accommodation bills. The very men who have pulled down the bank are many of them largely indebted to it. They have borrowed its funds and have refused to refund them. The records of our courts tell a melancholy story of sums of money loaned by the bank to leading Locofoco politicians and hopelessly lost. . The bank furnished our merchants with large amounts of exchange. Before the subtreasury times exchange on the East could always be obtained at from 1 to 2 per cent., and since these blasting days have come on, this bank has always sold exchanges far below the rates charged by brokers. It was a safe depository for money to merchants and all others who had money. It afforded great facili- ties for collections, and its certificates of deposit were always good for remittance. Besides all this the bank gave a commercial char- acter and standing to our city ; it was the nucleus of money matters ; it was the proof in the eyes of strangers that we were indeed a busi- ness community. But now what a spectacle do we present-a com- mercial city without a bank! A business community without a single monied institution to represent it. And what will be the result of this measure? In place of a bank we shall have a board of brokers acting in concert and fleecing the community to the amount of thou- sands. We do not blame the brokers. It will be a long time be- fore merchants can borrow money again at 6 per cent. William H. Brown, cashier of the bank, is universally respected in this com- munity. Messrs. F. Howe, bookkeeper, and E. S. Sherman, teller, of the bank, were without fault or blemish and enjoyed the respect and confidence of the community in an eminent degree."-(Chicago American, July 24, 1840.)
The American of December 11, 1840, said: "Chicago Branch Bank .- We are glad to see a petition in circulation in this city for the relocation of this Branch which Mr. Senator Woodworth, in his wisdom and for which the people remember him, succeeded in re- moving. It is rather a remarkable fact that the petition is full of the names of the Locofoco party, including their hitherto anti-bank leaders. It is never too late to repent."
Under the act of February 27, 1841, it was provided "That so much of an act entitled 'An act in relation to the State Bank of Illinois' approved January 31, 1840, as requires that the directors
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HISTORY OF COOK COUNTY
of the parent bank shall within six months from the passage of said act, remove from Chicago the branch located at that place and establish the same at such other place as the bank may deem proper, be and the same is hereby repealed and the said bank is hereby authorized to relocate said branch at Chicago."
"It is high time that the business men of this city should raise a united and indignant voice against the flood of Michigan shin- plasters which have deluged our city for the last few years and whelmed in almost absolute ruin the unsuspecting laborers and farmers of the country. The bills are now for all practical purposes little better than waste paper, the brokers offering them, we believe, at 3 shillings on the dollar. The produce of the country earned by the sweat of our hardy yeomanry; the work of our laborers, the price . of their constant toil, have been exchanged for the bastard issues of rotten institutions; and all that now remains of the fruits of their industry is a ragged roll of nearly worthless shinplasters lumbering their drawers and pockets. Since the batch of Michigan wildcats were swarmed into existence by the Locofoco Legislature of 1837 the currency of Michigan has been one of constant speculation and disorder."-(Chicago American, June 21, 1841.)
In response to a general demand the Branch was reestablished here in March, 1841. At this date the Whigs of the county in mass meetings demanded a national bank. Brokers in the West dealt extensively in land patents and land claims of all sorts. When President Tyler vetoed the bank bill in 1841 a meeting of the Whigs of Chicago denounced the act in severe terms. This bill was for the purpose of establishing a Fiscal Bank of the United States.
On August 7, 1841, drafts on New York were quoted at 10 per cent. premium; Southwestern bank bills were quoted at from 7 to 9 per cent. premium; specie from 9 to 10 per cent. premium above current funds. At this date bills of the Illinois State bank were quoted at par ; the same of the Bank of Illinois. Bills of the Bank of Michigan were 60 per cent. discount; checks of the Wisconsin Marine and Fire Insurance company were at par. In November. 1841, Illinois State bonds sold on the stock exchange in New York at less than 40 cents on the $1. At this date Cook county was lit- erally flooded with every variety of wild-cat, red dog and State bank rags. In the spring of 1842, canal issues were redeemed at the Branch bank. They were at par with bills of the State Bank of Illinois, but the latter were at 50 and 55 per cent. discount. At this date Murray & Brand conducted an exchange and brokers' offire at 127 Lake street.
From 1842 to January, 1853, Illinois was without a banking law. During that period all banks in Cook county were private in their character. In January, 1853, a new State banking law was passed and within a year thereafter nine banks in Chicago were organized in addition to the usual banking houses. Late in the '40s Illinois
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HISTORY OF COOK COUNTY
State credit had risen immensely and early in the '50s was as good as that of the average State. The bank panic of 1853 and that of 1857 were not serious in Chicago. In 1853 there was some suf- fering, but in 1857 little inconvenience was felt.
In April, 1842, W. H. Brown, cashier of the Branch bank, offered all the property of the bank for sale at public auction. He found himself unable to continue against the conditions prevailing in this State.
"Beyond all question one of the great causes of the present scarcity of specie is the want of a tariff of adequate protection. Let us persist in the blind, senseless and un-American course we are now pursuing and specie will always be scarce, our people poor, and the nation weak."-( American, February 11, 1842.)
"Sale of Scrip, etc .- Stanton and Russell, auctioneers, sold this day $2,000 of Illinois and Michigan canal scrip in parcels at from 22 to 24 cents in current funds; $5,000 of State indebtedness in parcels at 20 to 23 cents in current funds; and $500 of certificates of first payments on canal lots at 181/2 cents in current funds; and $1,500 bills of the State Bank of Illinois at 381/2 cents in specie." --- (American, July 4, 1842. )
In January, 1845, the city newspapers noted that the agency of the Mechanics' and Farmers' bank in this city redeemed its bills in currency or in Eastern exchange at the usual rates of discount. The money of this bank was at par with the ordinary bank bills then in circulation in this city. In October, 1842, Alexander Brand & Co. succeeded Murray & Brand, private brokers and bankers.
In the spring of 1846 money was very close in this city. At this date Ohio wild-cat bills were a drug on the market. It was noted that they had driven out the wild-cat bills of Michigan.
"Banking .- If banks are proper every person ought to have the privilege of using them to the extent of his credit and his capital. Why should the legislatures say to one man, you may use three, or five, or ten times as much money as your neighbor of equal credit and capital? If banks are improper, no person ought to be allowed to establish them; and herein consists the selfishness of all bankers, viz. : they are not willing that any one should enjoy the same privi- lege that they do. They want the profits all to themselves. They must be allowed to bank and no one else. It is as difficult to get up a fair system of banking as an honest one."-(Chicago Democrat, October 3, 1846.)
"The city during the past week has experienced one of those fluctuations and panics ever attendant upon the paper system. Ow- ing to some misunderstanding (or from some other cause unknown) between the agency of the Wisconsin Marine and Fire Insurance company and the agency of the Farmers and Mechanics Bank of Michigan in this city, the former refused to take the bills of the latter, as also did all the other broker shops in the city. The bills
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HISTORY OF COOK COUNTY
of this bank constitute the largest portion of the circulating medium in this part of the country. The agent has paid out what current funds he had on hand, and continues we believe, as usual, to draw on New York at 11/2 per cent., and most of the merchants take the money as before. We know nothing of the condition of this con- cern, 'for the ways of banks are past finding out.' We have, how- ever, a distrust of the whole bank genus. The history of the sys- tem, and especially the experience of this community, proves that they are honest only when they can't help it, and when their inter- ests demand it, and he who reposes confidence in them leans on a broken staff. From the manner in which the business men talk of the matter, we are inclined to advise people not to sacrifice on the money. But they had better push it as fast as they can advanta- geously, and in the future take as little of this and other paper trash as possible. We have heretofore cautioned the public against all of these rag mills. What has been the course and fate of the banks of this country from the National bank down to the wild-cats of Mich- igan and the State banks of Illinois will be very likely to occur with the irresponsible agencies of banks in other parts of the country which issue bills here and refuse to pay specie on them. What throws greater distrust on this Michigan concern is that several years ago it suspended payment and lost its credit so that its bills did not pass. We hope the people will by and by 'learn wisdom from the things they suffer,' and that by their demanding specie in their transactions, they may create a system of currency not subject to the panics and fluctuations of the paper system."-(Chicago Dem- ocrat, January 15, 1845.)
"The bankers and bogus money makers are very troublesome. It is difficult to tell which is the most criminal. Bogus are un- doubtedly the most so in the eyes of the law. But where the bogus makers cheat the community out of a dollar, the bankers do out of a thousand. We can not see, therefore, why banking and counter- feiting should not by the law be regarded as equally penal offences." -(Chicago Democrat of February 18, 1846.)
"Banks are generally managed by the most mercenary men in the country-men whose god is gold and whose worship of him consists in getting it most unscrupulously and by the sacrifice of conscience and humanity. This has been proved by the universal history of banking. They are honest as long as they can make more money by being so. But when they can make more by pocketing . their money and bursting, they do it, leaving the people with worth- less rags in their pockets to lament their folly."-(Chicago Demo- crat of May 1, 1846.)
"The pressure is over; the panic is over; money, though not plenty or cheap, is to be had. The banks have commenced discount- ing to a fair extent. Only half a dozen small failures have been caused by the pressure in this vast commercial emporium. A bank
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HISTORY OF COOK COUNTY
officer said the other day : 'We are pressing down because to-morrow is report day and because other banks haul in we must or we shall be a debtor bank and lost all our specie.' The quarterly reports are great humbugs; the people know nothing about a bank by its report, nothing at all."-(Chicago Democrat of May 13, 1846. )
In January, 1847, Chicago city scrip was 5 per cent. discount ; Cook county orders, 10 per cent. discount; auditor's warrants, 10 to 20 per cent. discount ; canal scrip, 72 per cent. discount ; railroad scrip, 65 per cent. discount; Michigan State scrip, 45 per cent. dis- count; Indiana State scrip, 10 per cent. discount.
In 1847 Mr. Wentworth made a strong effort to defeat the bank plank in the proposed new State constitution. Finding that could not be done he next tried to kill the Constitution itself "as dead as ever General Jackson killed the United States bank." The cry of the Democrats at this time and had been for fifteen years was "Dow11 with the bankers!" Mr. Wentworth was a politician and of the Jacksonian school. He had imbibed his financial principles from Jackson and Van Buren and accordingly could not regard a national bank, or in fact any bank, without indignation. At all times he made war upon the banking systems in vogue and at the same time denounced any attempts to inaugurate a national or a State banking system1.
In August, 1847, city scrip was 15 per cent. discount; Cook county orders, 30 per cent. discount ; auditor's warrants, 25 per cent. discount ; canal scrip, 70 per cent discount ; railroad scrip, 60 to 85 per cent. discount ; specie at par; treasury notes, 34 of 1 per cent. premium.
"Bank or No Bank .- The Whigs have made this the issue and we accept it and mean to beat them upon it; and we freely turn over to their aid every bank Democrat in the State (if there is such a white blackbird) at the coming election for delegates to the constitutional convention. No man should be elected to that convention who is even mistrusted of being in favor of paper money. And we now say that if the new constitution does not completely annihilate beyond all suspicion of resurrection all prospects of having banks in Illinois, we shall be compelled to oppose its adoption. 'No banks,' are the words." -- (Weekly Chicago Democrat, March 30, 1847.)
The Cook county convention to select delegates to the State con- vention to adopt a new constitution adopted the following resolu- tion :
"Resolved, That banking in all its forms and operations has been evil, only evil, and that continually ; and that our delegates in the convention are instructed to use their best efforts to prohibit the establishment of such institutions in this State."-(Democrat, April 9, 1847.)
"The banking system as it now exists in this country is but little calculated to promote the general interest. However individuals
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HISTORY OF COOK COUNTY
have been favored, the public has always suffered from its opera- tion. It possesses the worst and most odious features of monopoly and is therefore utterly inconsistent with Republican institutions. I am, therefore, strongly solicitous to see this system prohibited in our State."-(John Bickerstaff in Chicago Democrat of March 30, 1847.)
On August 3, 1847, specie was at par.
Treasury notes 3/4 per cent premium
Eastern drafts
1 per cent premium
Indiana bills 1 per cent discount
Wisconsin Marine and Fire Insurance Company 1 per cent discount Missouri bills
1 per cent discount
New York funds
1 per cent discount
Virginia and Pennsylvania funds .. 2 to 4 per cent discount
Bank of Illinois bills (Shawneetown) 75 per cent discount
State Bank of Illinois bills. .50 per cent discount
New England bills
1 per cent discount
Michigan State bank bills.
1 per cent discount
Michigan Insurance Company
2 per cent discount
Ohio bills 21/2 per cent discount
Kentucky bills 3 per cent discount
Canada bills
4 per cent discount
City scrip
.15 per cent discount
Cook county orders 30 per cent discount
Auditor's warrants .25 per cent discount
Canal scrip
70 per cent discount
Railroad scrip 60 to 65 per cent discount
Michigan State scrip
45 per cent discount
Indiana State scrip
10 per cent discount
Indiana land scrip
.40 per cent discount
In October, 1848, the property of the old State Bank of Illinois in Chicago was sold by Mr. Mather, the former president of the bank. The property brought $49,575.
In December, 1848, the gold excitement in California roused the interest of the financiers of Chicago. During 1849, the cry of "Gold ! Gold " it was said, drove slavery forever from California. The cry was "Every man picks his own gold." During 1849 the bankers of this city in common with those throughout the United States were in a state of trepidation, fearing that gold in prodigious quan- tity would take the place of their paper currency. At this date many alleged banks were being established in this city.
In the spring of 1849 the Chicago Temperance Saving associa- tion was organized in the old bank building at the corner of Water and La Salle streets, with William H. Brown as president. At this date city scrip was at 10 per cent. discount; Cook county orders at 40 per cent. discount; auditor's warrants, 20 per cent. discount, and canal scrip, 68 per cent. discount.
The Democrat of May 18, 1849, said: "To the banking system may be attributed in a greater or less degree the present commer- cial distress."
The management of city financial affairs early in 1849 was so excellent that by June 8 city scrip was at par with current funds.
Careyle Rhodes
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HISTORY OF COOK COUNTY
In September, 1849, the savings bank of R. K. Swift paid interest on time deposits. He advertised to pay as high as 10 per cent. for 45 days.
"We understand the new banks in this city, after giving the directors, of course, the first hand in for discounts, will let the various newspaper editors of the city have their turns. We hope that Grandpapa Dutch will see 'fair play and no gouging' when that good time comes; it will be a last chance to many of the fra- ternity."-(Democrat, April 13, 1849.)
The act of February 12,'1849, incorporated the Chicago Savings and Insurance company under Thomas Dyer, James H. Wood- worth, Charles Walker, John P. Chapin, William F. DeWolf, Thomas Richmond, R. C. Bristol, J. C. Walters and B. W. Ray- mond. The capital was fixed at $200,000, and the directors were limited to nine. The corporation was given power to make all kinds of insurance against fire.
"The news of the defeat of the bank bill threw the speculators, stock jobbers and fancy financiers into hysterics yesterday. Num- bers who were prominent for directors to sundry bubble companies are thrown upon the flat of their backs and as usual are cursing the Democracy."-(Democrat, February 10, 1849.)
"The persons who are engaged in getting up this bank (the Chicago Marine and Fire Insurance company) are produce specu- lators. Their object is to obtain the farmer's produce on trust, charging him from 12 to 15 per cent. for the credit he has ex- tended to them. Besides this 12 to 15 per cent. which they will make, they expect to realize also a handsome profit on the produce in the way of legitimate trade. And as they own and control ves- sels on the lakes and command freights, they have every means of regulating the market to suit themselves. Besides having the con- trol of the money market in Chicago, they can raise or depress the prices of all articles of farmer's produce at their will and pleasure."-(Democrat, February 19, 1849.)
"To the banking system may be attributed in a greater or less extent the present commercial distress. Banks excite speculation unduly. Loaning to a man engaged in a certain line of business, they compel his neighbor in the same trade to borrow in order to compete successfully with him; they thus induce men to enter into liabilities which they would otherwise avoid, while the circle of credit running through all grades and classes at length involves all in a chain of responsibility."-(Democrat, May 8, 1849.)
"Gold for the Rich and Rags for the Poor" was the popular slogan of all who opposed banks at this date.
"The Advertiser, it would appear. has been constituted the organ par excellence of the new banks which are being started in this city, and which, it is promised, will reduce the rate of interest one-half, attract capital to the State, and perform other sundry Vol. II-9.
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HISTORY OF COOK COUNTY
miracles too numerous to mention. But who ever heard of banks attracting capital to a country, when the fact is they drive real money away and substitute in its stead a spurious currency for which the people must pay an enormous percentage and which is liable to become worthless trash in their hands at any moment? Besides, banks place an unlimited power in the hands of a few persons, who thus hold the purse strings of the whole community and at their will and pleasure will raise or depress the price of every commodity-one day making one man a beggar and the next raising some lucky gambler in stocks and merchandise to comparative affluence. Who are the foremost in getting up these banks of issue contrary to law in this city? For the most part they are speculators in produce or holders of real estate-the classes deeply interested in their establishment. The produce men, by being stockholders and directors, have the power of issuing their own money, upon which they obtain an unlimited credit from the producer, and thus draw profits both ways-from the legitimate traffic and from interest on their promises. The producer thus becomes their slave. They regulate the scale of his profits." --- (Democrat, April 12, 1849.)
In September, 1849, city scrip was quoted at from par to 5 per cent. discount; Cook county orders were 30 to 35 per cent. dis- count ; auditor's warrants, 10 to 15 per cent. discount; 160-acre land warrants were quoted at from $132 to $155. At this time the best current funds consisted of the bills of the New England, New York, New Jersey, Maryland, Ohio, Indiana, Kentucky, Mississippi, Virginia and Missouri banks. The bills of Pennsyl- vania banks generally were 1 per cent. discount.
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