USA > Massachusetts > Suffolk County > Professional and industrial history of Suffolk County, Massachusetts, Volume II > Part 21
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Hutchinson, who was well qualified to judge upon the subject, said of the trade of this colony ( Massachusetts, which in a commercial view respected Boston only) from 1692 to 1749, that the other governments
211
FINANCIAL HISTORY.
of New England imported no English goods, or next to none, directly from England. They were supplied by the Massachusetts traders. Again, in another page of the same work, it is said: "The increase of trade was so great that from Christmas, 1444, to Christmas, 1148, five hundred vessels elcared from the port of Boston to foreign ports, and four hundred and thirty were entered inward, besides coasting and fishing vessels, both of which were very numerous."
Till a few years before the Revolution the business of shipbuilding was carried on here to a great extent. Vessels were sometimes built on commission, but more commonly constructed by the merchants of the town on their own account, these loading them with the produce of the country, naval stores, fish, fish oil, lumber, etc., and sending them on trading voyages to Spain, Portugal and the Mediterranean, where, having disposed of their cargoes, they made what they could by freight until they could sell the vessels to advantage. The proceeds they generally received in commercial bills on London.
Mr. Shaw gives the following table showing the state of Boston com- merce at different periods :
ENTRIES.
CLEARANCES.
1749.
From West Indies 60
Great Britain
Great Britain 1×
Other Ports 311
--
1773.
From West Indies
192
Great Britain
+1
Great Britain
Other Ports 251
-
1784. For six months.
1784. For six months.
For West Indies 111
England and Scotland. 21
England and Scotland. 13
Other Ports 326
450
1793. Twelve months.
1793. Twelve months.
From West Indies 167
For West Indies 119
Great Britain.
Great Britain 11
Other Ports 162
- 356
Amount of exports in certain years :
1809. Domestic products. . .
$4,009,031.11
Foreign
3,979,851.04
$7.948, 885.15
1:49.
For West Indies 115
Other Ports
549
1773.
For West Indies 134
Other Ports. 32.1
5.8℃
111
From West Indies 90
Other Ports 261
Other Ports .. 16]
212
SUFFOLK COUNTY.
1810.
Domestic products
$3,589,680.36
Foreign
4,525,420.73
$8.115,101.09
1811.
Domestic products
$3,047,641.77
Foreign
2,804,379.17
$5,852,020.94
1812.
Domestic productions
$1,765,945,91
Foreign
1,218,782.32
$2,984,528.23
1813.
Domestic productions
$1,458,314.02
Foreign
201,902.66
$1,660,276.68
1814.
Domestic productions
$ 106,976.27
Foreign
11,308.62
$ 118,284.89
1815.
Domestic productions
$3,276, 466.52
Foreign
1,967,931.15
$5, 244,397.67
1816.
Domestic productions
$3,186,830.99
Foreign
4,857,146.15
$8,043,977.14
These statistics are interesting as showing the considerable com- merce of the town just before the war of 1812, its prostration during the war. and its rapid recovery after the close of the war. They also illus- trate the truth that trade flows in channels like a river, which may be diverted or diminished by artificial obstacles of unwise legislation or war, but promptly seeks its wonted course as soon as the obstacles are removed.
If fostering legislation should in 1893 nurture again the shipping interests of the United States, so that our immense commerce might be conducted, in part at least, under our own flag, is it not certain that these interests would again spring into vigorous life as did our com- merec of 1816? And how can any American read of the enterprise of the early merchants of Boston without indignation at the narrow- minded policy which has driven our flag from the seas?
The work of Mr. Shaw also shows that the early prosperity of Bos- ton sprung from its commerce and the trading instincts of its people, and that this writer of 1816 was fully in accord with the tariff views of 1892 as affecting commerce.
It is not proposed to dwell at length in this article upon the com- meree of Boston, because the article of Mr. Hamilton A. Hill in this history deals exhaustively with that subject: but the writers wish to quote from the report of the Massachusetts Harbor and Land Commis-
213
FINANCIAL HISTORY.
sions for the year 1891, to show in a concise way the present amount of Boston commerce as compared with that of 1816. The Board was directed by the Legislature to report upon the feasibility of a bridge to East Boston over the upper part of Boston harbor, and whether such a structure could be tolerated with due regard to the commerce of the port. It was elaimed by the advocates of the bridge that the growth of the population of East Boston since 1868, when a similar project had been defeated, was such as to warrant a reversal of the decision and the building of the bridge. The commissioners answered this claim on page 32 et seq. of their report, as follows:
This argument has no force unless it is further shown that population has grown faster than commerce. Facilities for suburban travel are not, to say the least, a greater public necessity than facilities for commerce. The fact that Boston is the business and commercial center, is what makes suburban travel.
We propose to show, on the other hand, that commerce has grown faster than population, and that the demands of suburban travel, instead of being greater, are relatively less than they were in 1868.
We shall also prove that the commerce of Boston has grown faster than its valu- ation, and is therefore a more important factor relatively to capital and wealth than it was in 1868.
The growth in population and valuation as a whole, and of the district of East Boston, from 1870 to 1890-the census years nearest the beginning and end of the period under comparison -- is shown in the following table:
INCREASE IN POPULATION AND VALUATION OF BOSTON AND EAST BOSTON FROM 1870 to 1890.
1870.
1800.
Percentage of Increase.
Population of Boston ..
250,526
448,417
79.0
Population of East Boston
23,816
36,930
55.1
*Valuation of Boston.
$630,355,762
$822,041,800
30.4
Valuation of East Boston
13,296,900 20,458,675
53.9
The largest percentage of increase shown in the table is 79 per cent .. and the smallest 30.4 per cent. ; and the average increase of population and valuation, for both Boston and East Boston, is abont 55 per cent.
We are indebted to the courtesy of the present collector of the port of Boston for the following statistics of the foreign commerce of the port for two periods of five years each, ending respectively with the years 1868 and 1891, the years in which the former and the present bridge projects have been under discussion.
The number and tonnage of vessels entered and cleared during each of these periods are shown for convenience in this table.
· Including annexations.
214
SUFFOLK COUNTY.
FOREIGN COMMERCE OF THE PORT OF BOSTON-COMPARISON OF TWO PERIODS OF FIVE YEARS EACH, ENDING 1868 AND 1891.
Fiscal Years.
1864-1868.
1887-1891.
Percentage of Increase.
Value of imports
$179,783,754
$325,742,962
81.2
Value of exports
88,066,062
330,559,613
275.4
Total
$267,849,816
$656,302,575
145.0
Number of vessels entered
14,882
11,996
*19.4
Number of vessels cleared.
15,000
11,914
*20.6
Total
29,882
23,910
20.0
Total tonnage of vessels entered
3,398,979
6,894,260
102.8
Total tonnage of vessels cleared
3,251,175
5,839,878
$9.6
Total.
6,650,154
12,734,138
91.5
Average tonnage of vessels entered
228 tons
575 tons
151.6
Average tonnage of vessels cleared.
217
490
126.2
Total
445 tons
1,065 tons
139.2
The import trade of Boston, then, has increased 81 per cent. in the last twenty- three years, and the export trade (a most gratifying exhibit) 275 per cent., and both together 145 per cent. Population and valuation have grown meantime, as before shown, about 55 per cent. In other words, the foreign commerce has grown nearly three times as fast as its population and valuation.
The domestic trade and navigation of the port of Boston have increased in a still larger ratio. There is no corresponding official record to show this, but it is proved by established or admitted facts.
While the tonnage of both foreign and domestic vessels is from two to threefold greater than twenty-three years ago, the number of vessels engaged in both kinds of commerce has largely increased. This must be due to the greater expansion of domestic trade and shipping.
It will be seen that our banking system represents the growth of one hundred and eight years, or a period equal to two consecutive lives of fifty-four years each, and that a man now living at ninety years of age has witnessed most of its expansion. The capital of the Massachusetts Bank when it was issued in 1784 was $253,500, and represented the entire banking capital of the town. To-day there are in the Boston Clearing House Association, fifty-two national banks, with an aggregate capital of $52,200,000, with a surplus of $14,649,600, with loans of $160,000,000. In addition there are national banks, not members of
' Decrease.
215
FINANCIAL HISTORY.
the Clearing House Association, with an aggregate capital and surplus of $2,894,500, and ten trust companies or State banks with an ag- gregate capital and surplus of $10,126,005.71. The total capital in- vested in the banking business of Boston is therefore about $85,000,000. Moreover these figures do not in any sense show the magnitude of the business done daily by the banks of Boston. The aggregate amount of the transactions of the clearing house daily represent the sum of $16,000,000, and if we add to this sum the daily business of these asso- ciated banks which does not pass through the clearing house, and which is at least $3,300,000, we shall see that the aggregate yearly transac- tions of the clearing house banks are not less than $4,000,000, 000. In addition to this are the daily transactions of the trust companies and banks and members of the clearing house, $6,000,000,000. Several of the large banks carry on a business which represents daily transac- tions of more than a million and a half of dollars. The following table exhibits the increase in business in the Boston Clearing House Associ- ation :
EXCHANGES.
BALANCES.
1856
$1,051,678,544
$ 77,990,324
1866
2,262,939,930
262,159,773
1876
2,283,729,198
319,629,049
1886
4,095,215,231
496,051,964
1892
5,005,389,685
566,147,604
Smallest exchanges, May 27, 1862
$ 1,377,917.00
Largest July 2, 1889
31,321,877.00
Smallest amount paid by any one bank in one day's settlement 1.45
Largest amount paid by any one bank in one day's settlement 2,200,122.20
Smallest gain by any one bank in one day's settlement
28
Largest gain by any one bank in one day's settlement
1,871,855.87
The financial growth of Boston, which is found in railroads, has a twofold aspect. First, its relation to railroads having their termin- als in Boston, and as such a part of itself; second, its relation to rail- road enterprises in other communities which simply represent invest- ments of Boston capital. The marvelous growth of all of these enter- prises has taken place within the period of sixty years, so that many men who are still in active life have seen the entire development of the rail- road systems of this country. Whether any of the gloomy prophets of 1833 who then seriously opposed railroads, for the reason that they did not believe they would succeed, or if they did, that horses would cease to have any value after railroads should be built, still exist, it is impos-
216
SUFFOLK COUNTY.
sible to say ; but if they are living they must recall their prophecies with satisfaction when they view the elevated railroad built through the air over the streets of New York, or read of the sale of a single stallion for more than $100,000.
The most instructive fact for our guidance in considering the effect of railroads is, that nobody who projected these enterprises could realize in the faintest degree their importance for the future of Bos- ton. We, however, who look back to this beginning after only six decades have passed, can see that the financial history of Boston since 1834 is largely the history of its railroad system. To the projectors in 1834 of the Boston system of railroads, the ends had in view were to extend their lines to Lowell, Worcester, Providence, and possibly to Albany. Extensions much beyond these points hardly seemed possi- ble. To us the present railroad systems, which have their terminals here, appears as part of 170,000 miles of railroad running over every part of the United States and connecting us with Canada, Mexico, and the Pacific Ocean.
HISTORY OF BANKING INSTITUTIONS.
As early as 1686 a bank was established in Boston. No account of its operations, however, has survived. It had an ephemeral existence, not probably extending beyond 1689. In 1714 a project for the estab- lishment of a bank was presented to the Legislature, but a charter was refused. Notwithstanding this official negative, a meeting was held and notice was given that "there will be attendance at the Sun Tavern of Boston weekly to complete the subscriptions for entering into part- nership." Within two months from the publication of this notice, directors of the bank were chosen and circulating bills issued to the amount of £100,000. Almost as little is known of this bank as of its predecessor, but during its brief existence it was the source of consider- able embarrassment and trouble to the colony. 1
In 1433 sundry merchants and others of Boston, in order to supply the deficiency of a circulating medium, and to counteract the circulation of a large issue of Rhode Island colonial bills in Boston, formed a pri-
' In the library of the Essex Institute is a pamphlet with the title :
" A Vindication of the Bank of Credit Projected in Boston from the Aspersions of Paul Dudley, Esqr. In a letter direeted to John Burril. Esqr., Late Spcaker of the House of Representatives for the Province of Massachusetts Bay in New England. Printed in the year 1714."
"Sir," the letter begins, " Mr. Attorney General, by his letter of the Twenty Second of October last past to your Self as Speaker of the House of Representatives for this Province, having mnost unaccountably, with an uncommon Frecdom, taken upon him to Insult and Arraign a Consider- able Company of Gentlemen Merehants &c. (as he is pleased to entitle them) Projeetors of the Bank of Credit and call them to the Bar of that Honorable House, charging them with the many High Crimes and Misdemeanors following : " One was that the projeet would " invalidate and break in upon the Prerogative of the Crown ; " another that it would " be in effect the setting up of an Absolute Independent Government." It seems "that two or three Gentlemen in the Town of Boston discoursing of the Difficulties that Trade labored under for want of a Medium of Exchange, the Silver being sent home for England, and the Bills of Credits on the several Provinces daily ealled in by the Funds on which they are emitted, thought it proper to consult some other Friends and to meet together and consider of a Suitable Remedy for the Present and growing Inconven- iences and Difficultics."
The letter is dated at Boston and signed on behalf of the partnership by Samuel Lynde, E. Lynde, John Colman, Elisha Cooke, jr., J. Oulton, Timothy Thornton, Oliver Noyes, William Pain and Nath. Oliver.
The Boston merchants of 1714 were not behind those of the present in generous plans for the publie welfare. The projectors of the Bank of Credit proposed to give out of the " nect profits " of
28
SUFFOLK COUNTY.
vate bank and issued paper to the nominal value of $110,000, redeem- able in ten years with silver at nineteen shillings an ounce. A com- mittee of the Legislature reported that " the merchants' notes emitted by Boston gentlemen should be backed with greater security." The notes, however, continued to circulate, and were rated at thirty-three and one-third per cent. higher than the currency issued by the Province. Still another attempt at banking was made in 1:39-40. There were then outstanding bills of credit to the amount of over $200,000, which were under royal instructions to be redeemed during the year 1441. The treasury being empty, there was no way of effecting the redemption of the notes except by a direct tax, which was not expected to yield more than £40,000 annually at the utmost. Specie was extremely scarce, and as a measure of relief it was proposed to establish "The Land Bank." This was carried into effect in 1740 by the association of be- tween four hundred and eight hundred persons. The stock was paid by mortgages of real estate at three per cent. per annum, or, in case of a mechanic, in notes for not over £100 with two sureties. The bank was to issue £150,000 in bills to be circulated as lawful money, and every note of £1 was to be equal to three ounces of silver. Loans were to be secured by mortgages of real estate and to be payable in provin- cial produce or manufactures at such prices as the directors might from time to time determine. The scheme was violently opposed by Gov- ernor Belcher, and the Land Bank was soon compelled by an act of Parliament to wind up its affairs, and a right of action was given to each holder of its bills against any individual partner for the amount of the bills held and interest. Many years elapsed before the affairs of the Land Bank were finally wound up, and its stockholders suffered severely in their estates on account of their liability. Another bank, called the Specie Bank, which went into operation about the same time, shared the same fate. It was to issue £120,000 of notes redeemable in fifteen years in silver at twenty shillings per ounce.
The first regularly established bank in Boston, however, was a branch of the Bank of North America, which was incorporated by the Legis-
the bank " Four Hundred Pounds per Annum to the Use of an Hospital or Charity School for the Support and Education of the Poor Children in the Town of Boston."
" Two Hundred Pounds per Annum for a Mathematical Professor at Harvard College."
" Forty Pounds per Annum " for three scholarships at Harvard College.
" One Hundred Pounds per Annum " for the support of six ministers' sons at the college.
" Forty Pounds per Annum " to a " Professor of Physick and Anatomy " at the college. .
" Twenty Pounds per Annum toward the further support of a Publick Grammar School in each county now in the Province of the Massachusetts Bay in New England."
219
BANKING INSTITUTIONS.
lature of Massachusetts in compliance with an act of the general gov- ernment, March 8, 1252, or only about two weeks after the parent in- stitution was projected and founded in Philadelphia by Robert Morris, at that time superintendent of finance, an office corresponding to that of secretary of the treasury. By its charter no other bank was to be in- corporated during the war with Great Britain, and its notes were to be received for taxes or dues for or on account of the United States. For- gery, counterfeiting and embezzlement committed against this bank were made punishable by death without benefit of clergy, but this pen- alty was subsequently modified. Unfortunately little record remains of the operations of the Bank of North America at Boston. But it proved so beneficial that two years later, in 1284, the Massachusetts Bank was founded, being the first purely local bank established in the State and the second in the United States. "It was the first institu- tion of its kind," says Felt in his History of Massachusetts Currency, " promoted solely by the inhabitants of our commonwealth, since that of the silver scheme and still more unfortunate Land Bank. While these were pressed into operation under the burden of legislative displeasure and were doomed to resistance in almost every direction, this was received with public and private favor and extensively encour- aged as the instrument of promoting the interests of trade and com- merce. "
MASSACHUSETTS NATIONAL BANK.
The project of the establishment of a bank of deposit and issne had been much discussed by leading merchants of Boston during the winter of 1183-84. On December 18, 1283, the following advertisement ap- peared in the Independent Chronicle: "The utility of a bank, estab- lished on right principles, being generally known and acknowledged, a plan has been projected and is now ready for the patronage of those gentlemen who wish to derive the many public and private advantages which have resulted from such institutions in other countries. Copies of the plans are lodged with, and subscriptions received by William Phillips, Isaac Smith, Jonathan Mason, Thomas Russell, John Lowell. and Stephen Higginson, and at the offices of Edward Payne, John Hurd and M. M. Hays. " Like all the banks established in the State for the next seventy years, it was incorporated by special act of the Legisla- ture. Its charter was granted February 6, 1:84, with an authorized
220
SUFFOLK COUNTY.
capital of $300,000. A copy of the original subscription list is still pre- served. 1
When the Massachusetts Bank was chartered in Boston, gold and sil- ver were the only true standard of value in conformity with the usage in all civilized countries, and this was the first effort in the United States subsequent to the Revolution to introduce a paper currency equivalent to specie. At that period the trade of our country was limited in its extent. Manufactures were carried on by individul exertions only ; the markets for them were circumscribed within the narrow precincts of this immediate neighborhood, and the products of agriculture were ex- changed for articles of domestic use. Our commerce was then in its infancy and was principally employed in the conveyance of our agri- cultural products, and the proceeds of our fisheries, to the West Indies, South America and Europe, returning home with such productions of those countries as were required for immediate consumption or use ; and bank facilities were hardly needed in these operations.
1 The following were the conditions subscribed to by the original stockholders of the Massachu- setts Bank :
PROPOSALS FOR A BANK.
Taught by the Experience of many Nations that well regulated Banks are highly useful to Society, as they promote Punctnality in the Performance of Contracts, increase the Medium of Trade, facilitate the Payment of Taxes, prevent the Exportation of, and furnish a safe Deposit for Cash, and in the way of Discount, renders easy and expeditious the anticipation of Funds at the Expence only of common Interest, while by the same Means they advance the Interest of the Pro- prietors, we the Subscribers, desirous of promoting such an Institution, do hereby engage to take the Number of Shares set against our respective Names in a Bank to be established upon the fol- lowing Plan, viz.
I. That a Subscription be opened for Three Hundred Thousand Dollars, in Shares offFive Hun- dred Dollars each, to be paid in Gold or Silver.
II. That the Subscription be paid into the Hands of William Philips, Isaac Smith, and Jonathan Mason, Esq'rs, or their Agents.
III. That every Subscriber of these Shares shall pay two-thirds of the Sum on the first day of February next, or within fourteen Days afterwards, and the otber third in two Months from that Day .- Every Subscriber of more than three Shares shall pay half on the first Day of February next, or within fourteen Days afterwards, and the other half in two Months from that time, and every Subscriber of less than three Shares shall on the first Day of February aforesaid, or within fourteen Days afterwards, pay the Amount thereof, and any Person who shall fail of making Pay- ment in manner aforsaid shall be intitled under his Subscription to no more Shares than he shall have then actually paid for.
IV. That every Holder of a Share shall be intitled to vote by himself, his Agent, or Proxy prop- erly appointed, at all Elections of Directors, and shall have as many Votes as he holds Shares, and that every such Stockholder may sell or transfer his Share or Shares at bis pleasure, the Transfer being made in the Bank Books, in presence and with the Approbation of the Proprietor, or his law- ful Attorney, the Purchaser tben to become intitled to the Right of voting and every Advan- tage which the Stockholder enjoyed.
V. That there be twelve Directors chosen by a Majority of Voters, present in Person or by Proxy, from among those who are intitled to vote, who sball after the nrst Choice be annually elected, and as often as any Vacancy shall happen by Death or otherwise, if in the opinion of the
George G. Lord_ -
221
BANKING INSTITUTIONS.
The charter of the Massachusetts Bank provided that the bank might hold real estate to the amount of £50,000, and "monics, goods, chat- tels and effects to the amount of five hundred pounds and no more. " Neither the bank nor any person for it, was to employ its funds in trade or commerce, and the Legislature might employ a person to examine its affairs. By an act passed March 16, of the same year, heavy penal- ties were provided for the crime of counterfeiting, embezzlement and other frauds committed against the bank. By virtue of the authority vested in them by the act, William Phillips, Isaac Smith, and Jonathan Mason called a meeting for organization, to be held March 18, 1284, at which time the stockholders elected the following officers: James Bow- doin, president ; Samuel Breck, George Cabot, Stephen Higginson,
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