USA > Indiana > LaPorte County > Michigan City > History of Michigan City, Indiana > Part 18
Note: The text from this book was generated using artificial intelligence so there may be some errors. The full pages can be found on Archive.org (link on the Part 1 page).
Part 1 | Part 2 | Part 3 | Part 4 | Part 5 | Part 6 | Part 7 | Part 8 | Part 9 | Part 10 | Part 11 | Part 12 | Part 13 | Part 14 | Part 15 | Part 16 | Part 17 | Part 18 | Part 19 | Part 20 | Part 21 | Part 22 | Part 23 | Part 24 | Part 25
er Ames, and a stove, tin and iron store, established by Reynolds Couden. One of the best stores was kept by the cous- ins, Jacob Carter and John Barker, who had arrived from Ohio in the spring of 1836.
Then came the panic of 1837. Ac- cording to all narratives of this episode in United States history, it was the se- verest financial catastrophe since the dark days of our revolutionary war, but it fell with particular mercilessness upon the middle west, embracing Michigan, Illinois and Indiana, because, in addition to the change in banking methods which precipitated it, and on top of the inflated structure of these states who had given unwarranted support to a system of in- ternal improvements and could not there- fore stand the strain of tight money in the east, came an unprecedented drought over farm and pasture, so that crops were blighted and cattle died, and there was nothing to sell even had there been a market.
After the year 1830 railroad building had intensified land speculation into a craze, and further harm had been done in 1833 by President Jackson's violent distribution of the public deposits. In 1837 banks suspended all over the coun- try, thousands of families were ruined, and laborers were deprived of work. No wonder that Michigan City, a boom town, resting undoubtedly upon a firm foundation but not yet possessing within herself a permanent energy, suffered with the rest. A forecast of this distress may be noticed in the conduct of Hiram Wheeler, who had just started a business in Michigan City. In 1836 he removed to St. Joseph, Michigan, saying that "Michigan City was a dead town :" but it is not likely that he found any more animation across the Michigan border. Another indication of the prostration of business in all industries, is found in the testimony of Sylvester Marsh, before the
I4I
HISTORY OF MICHIGAN CITY
United States Senate in 1883. He tells of the immense activity in 1833 to 1837, during which period he had been down to the Wabash country for sheep and hogs ; he had been paying high prices for meat up to that time, but in 1838 he bought 100 pounds of pork for $6.00, and wheat had been sold in Chicago as low as twenty-five cents a bushel. An- other instance of misfortune is found in an advertisement appearing in the La- Porte Herald January 11, 1839, to the effect that Abraham R. Lyston, having been in business (general merchandise) at Michigan City, wished to sell out. It is also stated that Sleight & Moore for- merly had a store at Michigan City and in 1839 the Michigan City Gazette suspended for the second time
However great was the hardship, it cannot be denied that this crisis had a wholesome effect upon Michigan City. Those who were attempting to get rich from speculation alone, failed to do so and disappeared from sight and knowl- edge ; those who on the other hand had an unfaltering faith in the future of the place, soon found that there was a stur- dier prosperity than that which rests upon fancy prices, or depends upon state aid alone for internal improvements and such encouragement to industry. When all the unstable fortunes had been swept away, there still remained the land, the grain and cattle, and the real energy of those who were determined to improve the natural resources. The harbor was beginning and the government had not yet shown that apathy which a few years later discouraged some citizens but in- cited others to undertake a harbor con- struction of their own.
Business men like the following still survived : C. B. and L. Blair, J. and C. Hitchcock, Sleight & Gould, B. Folsom, Wm. S. Clark, W. H. Goodhue and Jas. McAdoo as commission merchants, (who represented Rochester, N. Y., mer-
chants) and Viele and Brother on Ames' corner ; Fisher Ames, Harvey Truesdale, Cole and Willys Peck, George Ames, E. S. Holliday and John Barker, whose partner had retired in 1839.
Real farming did not cease on account of the panic, so that from 1837 to 1844 Michigan City was the principal grain market for northern Indiana, and pro- duce came in from even the southern parts of the state.
Yet speculation did not entirely end, even if the land bubble had burst. We need not assume that only in our genera- tion has a cornered market been the am- bition of the business man. In 1839 a famous case of the kind aroused excite- ment in Michigan City when an effort was made to control the supply of salt. There was no telegraph then, and this necessary commodity came slowly to market ; the price was raised to $4.00 a barrel when indignant residents threaten- ed violence and a law suit, till the mon- opoly was broken.
The merchants bravely tried to pay cash for produce, and even advertised the fact, J. G. Sleight on Front street offering on October 5, 1839, to purchase wheat at seventy-five cents a bushel. While this was going on, land was changing hands, sometimes under forced sheriff's sale, as in' 1839 lots in Orr's subdivision were so disposed of, and Jos. C. Orr lost 960 acres of good land near Michigan City by going security for others, a misfortune which drove him to newer fields in Wisconsin, where he fin- ished his life.
Slowly but surely, out of this chaos of unsubstantial hopes, the genuine Michi- gan City arose. From 1840 onwards, business settled into better channels. Merchandising was not the only indus- try, for the city began to produce. In 1840 a cooper shop was established by Robert Curran, an Irishman, who was a restless soul, capable, of seeing a demand
142
HISTORY OF MICHIGAN CITY
but not able to resist the excitement of being on the move. In 1849, he caught the California gold fever and moved westward, to make a small fortune and to return in 1868 to a farm in Water- ford. Other coopers were D. L. Jackson, and Eli Smith.
The lake traffic increased, and this larger sort of commerce was added to the simpler trade or more systematic business of former years. At one time Michigan City was seriously threatened with a strangling monopoly of such traf- fic, but in 1842 a new steamboat, the "Daniel Webster," refused to become part of the combination of other boats, and the "extortionaté and ruinous prices" were not enforced. One good effect of this, had the law been changed, would have been to stop the custom of the day to report the productions of northern I11- diana as "exports of Chicago," and to give Michigan City her proper rating. This was a wise move, because produc- tion now increased rapidly, but the self- ishness of Chicago overcame their hon- esty, so that from that port was register- ed the output of contiguous shipping points, and even today the shipments to and from Michigan City are listed in the Chicago custom house as Chicago com- merce.
There was now much barrel making in the city to supply not only the demand in Chicago, but also that for home use, as beef and pork packing was an increas- ing industry, while the annual catch of fish in the local waters was a noticeable factor in commerce. It is reported that Lyman Blair's output of fish for one year was as high as $40,000.00, probably one of the best records on the lakes. Lumber, too, became a decidedly important article of commerce.
As cargo for the vessels bringing into the harbor lumber and supplies from the north and eastern ports, for it must be remembered that as yet the railroads
were not built and practically everythin~ came by water, there was a growing ex- port commerce in corn, wheat, pork and beef; $500,000.00 was shipped from Michigan City yearly, besides the live cattle and horses driven to Chicago or Detroit. In 1846 congress established a new port of entry at Chicago, so that from now on an international trade could be conducted, but unfortunately all rec- ords of this were and are kept in Chi- cago, as has been said.
Another industry at this time natural to the place, and one able to hold its own against eastern producers, was the man- ufacture of shoes and heavy boots for the neighborhood. For miles around farmers and settlers came to Michigan City to purchase these necessary articles and Addison J. Phillips with his son em- ployed in 1846 over forty workmen at the cobbler's bench, while other enter- prising men of the period had factories only less in size.
The population, after the panic of 1837, had declined materially, but from 1840 when it was probably under a thou- sand, it rose slowly, partly by absorption of migration from the east, but to some extent also by foreigners, who were at- tracted by the advantages of the place. The Germans formed a large portion of these new settlers and by their thrift and activity added much to the business and commerce. The older hotels still remaining after the flush years to 1836, now found newer rivals in the Franklin House, the Genesee House and the Jewell House, where the Vreeland Hotel now is. The Lake House, which had be- come the Michigan City Institute, was removed from the corner of Franklin and Boston streets, and became again a hotel kept by Ainsworth and Jewell. There was also the United States Hotel of which Mr. Jewell had been the man- ager.
The Indiana Gazetteer for 1849 gives
I43
HISTORY OF MICHIGAN CITY
in Michigan City nine dry goods stores, only one drug store, seven grocery and provision stores, besides the warehouses in which the grain was stored. This would account for a population of about 1500. But the panic and hard times had been survived, the city, unlike hundreds of others built on paper and sold by auc- tion to crazed speculators east or west, had found a stable existence and North- ern Indiana had become a region of
For the three intervening years to 1852, there was scarcely any growth and the merchants could do nothing more than hold their own. In many ways Chi- cago was still but a mere neighbor whose genuine attractions were inferior to the Indiana city. We can read in the life of Leland Stanford, who then was seek- ing a home in the West, that he was dis- gusted with Chicago's swampy site and her mosquitoes, and would not stay therc.
----
THE GARFIELD SCHOOL
farms, of steady commerce and of homes.
Among the owners of these surviving business places were, Offley W. Leeds, Chauncey B. and Lyman Blair, E. Fol- som, Charles E. and J. E. DeWolfe, George and Fisher Ames, Willys Peck, John Barker, J. G. Sleight, Samuel Mil- ler, Thompson W. Francis, U. C. Follet, Reynolds Couden, W. H. Goodhue, E. S. Holliday, Leonard Woods, W. R. God- frey, J. M. Hitchcock and Thomas Jer- negan.
His retreat further west explains one reason why this whole region remained quiet. Pioneers were excited by Orego:1 and in 1846 to 1850 took place the great movement westward toward this terri- tory. Then again the gold fever was be- ginning, and hundreds who otherwise would have been drawn to the lakes. were hurrying across the continent or through the Isthmus of Panama toward California. Nobody knew just what the future was to be, but those who had de- termined upon permanent lodgment at
I44
HISTORY OF MICHIGAN CITY
the foot of Hoosier Slide used all their energies to bring hither the railroads.
With the advent of the railroads much of the prior carrying trade of the city be- came extinct. Warehouses at the mouth of Trail Creek disappeared, because the vessels that carried grain to Buffalo were displaced by the more rapid train ; the wagons loaded with produce from as far as the Wabash no longer were seen on the streets and the processions of them plowing their way between the sand dunes soon became only a matter of gossip. As the harbor work had been neglected by the government it would seem that the railroad at first did more harm than good. At this time the busi- ness of the place was confined to a small area : no stores reached farther south than Michigan Street, which, with Franklin Street, contained all there was. Front Street, which had till then been an active business thoroughfare, was given up to the railroad. The extent of terri- tory occupied by residences was also small, lying between Washington Street on the west, and Spring Street and the Michigan Road on the east, with Sixth Street as the southern boundary. It may be questioned whether, in 1852, Michi- gan City had more than twelve hundred inhabitants.
But what was lost in trade, and every city must expect such changes in its ac- tivities, it gained in a more permanent direction, because the railroad brought into existence the era of manufacturing. With the building of the Monon came the establishment of the car factory, which will be described in detail in an- other chapter. Michigan City thus changed from an intermediate shipping point to a recognized producing center, and began to rank as one of the foremost places in Indiana. It had been hoped that the Michigan Central would locate the main shops of the road here, but while it made here a division point on
the way to Chicago, and still maintains the original repair shops of 1852 which give occupation to many, the main shops were retained within the state of Michi- gan.
A good start seemed to have been made in 1853, but the panic of 1857 swept over the country, involving the middle west and Michigan City as well. Banks in Philadelphia and New York suspended and all lines of business were disastrously affected, but by 1858 the worst was reached and for a short time prosperity again blessed the country. At the date of greatest depression the state of Indiana decided to locate in Michigan City the Northern Prison, and this addi- tion increased the resources of the city even if it did not at once increase its prestige. Shortly after this came the civil war, and a fair estimate would admit of a population of 2,500 at that time. Michigan City was not in- jured but only delayed by the crisis ; business, which at first was threatened by disaster, was really increased by the prison and by the activity at the car shops stimulated by the war. For some years, however, apart from the railroads, the car works and the local businesses which already were engaged in handling the long established local or general commerce of the neighborhood, it was the prison to which should be credited the greater share in Michigan City's growth.
The first recorded contractors to take advantage of prison labor were the mem- bers of the firm of Haywood & De- Wolfe, who, in 1863, agreed to take the work of the 202 convicts-the total num- ber at that date -- for employment in a cooper shop to be established within prison walls. The next recorded contract for convict labor was made by the firm of Jones & Chapin on July 10, 1864; this was continued by them till 1870, when the name of J. H. Winterbotham
145
HISTORY OF MICHIGAN CITY
was added to theirs, the firm finally be- coming J. H. Winterbotham & Sons, and remaining in connection with the prison for many years.
On November 1, 1868, the firm of Ford & Johnson signed their first con- tract with the prison for the manufac- ture of chairs. This firm, which finally became and is now known as the Ford & Johnson Company, has been continuous- ly connected with the prison until the year 1904, when the new law went into effect, and they decided to depend for labor upon the usual free market. Kum- ler & Melcher had a cigar contract in 1874, but failed in 1876 and were re- lieved by H. H. Walker, who worked out the contract. J. G. Mott began in 1878 with his contract for 100 men in his wire and agricultural implement plant, and has used such labor contin- uously. The Reliance Manufacturing Company, making shirts and overalls, are the last of the Michigan City indus- tries to grow up out of prison labor, and their contract dates from 1899, and will expire in 1910, according to the present system.
Some of the industries which have come and gone should be noted, as their existence is an integral part of history. In 1884 J. and Edward Dolman had a flour and feed mill on the Michigan Road at the edge of the city, but it disap- peared long ago. There was at one time a buggy and carriage bottom fac- tory connected with Winterbotham's prison contracts, managed by W. B. Mc- Cartney, from Columbus, Ohio, but that soon ceased. In 1883 a glass factory was established here, but it failed the next year. Innumerable other businesses flourished or decaved, but those which have lasted and must be mentioned in detail, growing as they did because of the city, yet without having association with the prison, are the American Press- ed Brick Company, the Michigan City
Ice and Cold Storage Company, the Philip Zorn Brewery, the Smith (Alas- ka) Refrigerator and Manufacturing Company, the J. B. Thompson Company, the United States Brick Corporation, the Western Launch and Engine Works, the Greer-Wilkinson Lumber Company, the Sash and Door Company.
Such were the beginnings of Michi- gan City's splendid industrial develop- ment. The car factory, brought by the advent of the railroad, has ever since been the leading enterprise of the place. The location of the prison was a very great advantage, for out of it grew a large number of great and prosperous factories. And the imports of lumber, added to the working up of the native timber, brought woodworking industries of large proportions. Out of the neigh- boring sand, clay and marl will come the factories of the future to contribute to the city's greatness, and its propin- quity to the ever-widening Chicago terri- tory will also attract many future enter- prises to this place, where rails and wa- ter meet.
Finance.
The charter of the State Bank of In- diana, approved on the 28th of January, 1834, made, according to Hugh McCul- loch, one of the most honest and well regulated institutions the world has ever seen. Its active life was to run to Jan- uary 1, 1857, but it was allowed two years more, that is to January 1, 1859, to close up its affairs and retire from business. This bank was intentionally a monopoly, permitting no competition from private banks, but it was managed quite as much in the interests of the people of the state as of its own stock- holders. The central organization was in Indianapolis, although the capital had no bank of itself, but the charter made provision for thirteen branches, of each of which the state was to own one-half the stock of $160,000.00, the other half
I46
HISTORY OF MICHIGAN CITY
being carefully distributed among re- sponsible local business men.
Michigan City became eligible to the thirteenth branch, which was established here in February, 1839. The state had then paid its second instalment of capital stock in advance, in order to furnish ad- ditional aid to the purchasers of wheat which was the great staple of the northern part of the state. Its first officers were William Clark, President, with a sal- ary of $800.00, D. G. Collamer, Cashier, $1300.00, Samuel Gordon, Teller and Clerk, with $600.00 a year.
The city had, on December 21, 1838, passed an ordinance granting to the branch of the state bank the use of cer- tain grounds, and it soon occupied a sub- stantial brick building on the southeast corner of Washington and Front streets, but a short distance south of the present Michigan Central station.
The directors elected at the stockhold- ers meeting held in November, 1839, were as follows: Joseph Orr, Jacob Early, Ezekiel Morrison, Hiram Wheel- er, Amzi Clark, John B. Niles, Jeremiah Hitchcock and A. P. Andrew, Jr.
The first report of this Michigan City branch, rendered on Friday, November 16, 1839, reads thus :
Dr.
Loans on notes and personal
security. $178,212.36
State and Branch banking houses ..
2,484.33
Furniture and Fixtures.
580.57
Expenses, sinking fund and protest fees
32.00
Deposits in other banks
202.91
Cash
140,648.50
$322,176.72
Cr.
Capital stock, state $45,000, indi-
viduals, $40,000. $ 85,000.00
iscounts and exchange 308.22
Profit and loss 5,812.49
Branch banks. 33,245.59
Other banks 3,233.10
Circulation
169,800.00
Individual deposits
24,777.32
$322,176.72
If the State Bank met the approval of trained bankers, it did not always find favor with depositors or with those who understood little of banking methods; it was a time of fierce speculation, of land booms exploded or yet inflated, of paper money, and "accommodation" did not always mean the same thing to those on opposite side of the teller's window. Troubles had begun very soon. Thus, on December 14, 1839, a man gave pub- licity to his complaint that the Michigan City bank had refused to pay a depositor his money in the identical bills deposited or in specie, as agreed at the time of de- posit, and in describing his trouble he calls the cashier "a hump-backed, bandy- legged, baboon-faced looking animal, who made his appearance from a back room or cage, a cigar protruding from his face, his hands and arms crowded into his breeches pockets above his elbows, and, puffing like a young bellows, strutting and making an effort to imi- tate some human puffing being."
Again, on December 21, 1839, was a criticism launched, this time by The Herald, which said that "many people in the county believe the bank to be a mere shaving shop, that it is an oppres- sive monopoly, that the funds of the bank, notwithstanding a portion of them belong to the state, have been lavished upon a few 'shaving, monopolizing spec- ulators, regardless of the necessities, wants and applications of many of the most deserving and substantial farmers in the county." Charges were repeated that salt, beef and pork were cornered by the stockholders, which might ac- count for the semi-annual dividend of four per cent.
The same Herald, on February 4, 1840, asserts that "the stockholders have already borrowed more than their stock allowed, and are liable, with the direc- tors, for more than double the total amount of all the private stock"-which
147
HISTORY OF MICHIGAN CITY
is really an accusation of peculation but the officers of the main bank at Indian- apolis did not think so, although they did reprimand these local directors for indiscretion.
Later, on July 18, 1840, The Herald has another scolding in these terms : "There has recently been much turning and twisting about the Federal shaving shop, as we are informed. Mr. Collamer, the Cashier, has resigned ; and A. P. An- drew, Jr., the editor of the La Porte Whig, is his successor. Five individ- uals, we are informed, have purchased nearly all the individual stock of the bank. Daniel Brown, the Federal can- didate for representative of this county, is one of the five owners of the rotten, aristocratic, insolent shaving shop. He is one of the directors, we are told. Will the freemen of this county choose a rep- resentative whose salvation is based upon the success of an institution which has been so tyrannical with the farming community ?"
Much of this, it is plain, had its rise in politics, and the language used savors unmistakably of the vituperative oratory of a political campaign. The bank pros- pered, however, and deservedly so, be- cause the state and local directors were men of unusual integrity and foresight. The report on November 21, 1840, showed a safe balance, and the officers elected were Joseph Orr, President, with a salary of $500.00, A. P. Andrew, Jr., Cashier, with $200.00, Samuel Gordon, Teller, with $600.00, and John B. Niles, Attorney, with $75.00 a year.
Samuel Gordon severed his connection with the bank in 1842, and at the end of this year the Michigan City branch was censured by the central directors because "the item of Real Estate was admitted1 by the officers to be overvalued ;" how- ever, "the Michigan City branch escaped the charge of extravagance which intox- icated the whole community before the
present revulsion, and it has in the main been conducted with ability and pru- dence, though some great errors have been committed, the most objectionable of which is large loans to directors and officers. The discount line is equal to 13g of its capital, and. is believed to be about as fair as that of the best man- anaged branches. The losses however resulting from the extraordinary crisis, will be considered. The apology for the large loans to directors is, in effect, that owing to some feuds among stockhold- ers as to control and management of the bank, it became necessary for the one party to purchase the stock of the other, by which the necessity followed of mak- ing large loans to the purchasers, to en- able them to effect that object." The retiring stockholders were found on the list of bad debtors. "The directory of this bank manifest a remarkable degree of independence, and seem hardly con- scious that the state has any interest in the branch." "Overchecking has not been practiced recently, but on a former occasion a cashier was dismissed for per- mitting this, and other delinquencies." In 1842 the bank had 31 stockholders, and the directors were George Ayres, James Andrew, Daniel Brown, Jonathan Burr. William Clark, James Forrester, W. H. Goodhue, C. B. Blair, J. Whitten, J. B. Niles and J. Orr.
In 1843 the dividend for the year was eight per cent, and in 1845 it was 12 per cent. In 1846, although this branch was prospering, the president of the state bank felt some solicitude because three Illinois men had lately bought most of the stock of the Michigan City branch, and that, being strangers to the com- munity and to the officers of the bank, they might not understand local condi- tions. The president was Edmund Tay- lor on an annual salary of $700.00, Dan- iel Kreich, cashier, with $1200.00 and house rent ; and Edmund B. Woodson, teller, with $600.00.
Need help finding more records? Try our genealogical records directory which has more than 1 million sources to help you more easily locate the available records.