USA > Massachusetts > Suffolk County > Professional and industrial history of Suffolk County, Massachusetts, Volume II > Part 22
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remaining Directors it shall be necessary to fill up such Vacancies before the Period for a general Election, they shall call a general Meeting of the Stockholders for that purpose. The Directors shall at their first Meeting after every general Election choose one from among them for Presi- dent.
VI. That there be a Meeting of the Directors quarterly, for the Purpose of regulating the Affairs of the Bank, any five of the Directors to make a Board, and that the Board have Power to adjourn from time to time and to meet at any other time, when they may think it necessary.
VII. That the Board of Directors determine the Manner of doing Business, and the Rules and Forms to be pursued ; appoint and pay the various Officers, which they may find necessary, and dispose of the Money and Credit of the Bank for the Interest and Benefit of the Proprietors ; and make from Time to Time such Dividends out of the Profits as they may think proper, provided they shall in no Instance do any Act contrary to the Regulations made by the Stockholders.
VIII. That the Board shall be empowered from Time to Time to open new Subscriptions for the purpose of encreasing the Capital of the Bank, on such Terms and Conditions as they shall think proper.
IX. That the Board shall at every Quarterly Meeting choose three Directors to inspect the Business of the Bank for the ensuing three Months
X. That the Inspectors so chosen shall on the Evening of every Day. Sundays excepted, exam- ine into the State of the Cash Account, and of the Notes issued and received, and shall see that those Accounts are regularly balanced, and the Balances transferred.
XJ. That any Person especially appointed by the Legislature of this State for that Purpose, shall have a right to examine into the Affairs of the Bank, and shall at all times have access to the Bank Books.
XII. That Application be made to the Legislature to incorporate the Subscribers under the Name of the President. Directors and Company of the Bank of . ... and to pass Laws to se- cure the Bank Notes from being counterfeited, and also to prevent any President, Director, In- spector, Officer or Servant of the Bank from converting any Property, Money or Credit of said Bank to his own use.
XIII. That any Director or Officer of the Bank who shall commit any Frand or Embezzlement, touching the Money or Property of the Bank, shall forfeit all his Share or Stock to the Company.
XIV. That none of the Directors shall be intitled to any pecuniary Advantage for his Attend- ance on the Duties of his Office as Director, or as President or Inspector, unless the Profits arising from the Bank Stock shall exceed 6 per Cent. per Annum, and an Alteration in this respect shall hereafter be made by the Consent of a Majority of Stockholders.
XV. That as soon as Two Hundred Shares shall be subscribed, and the Subscriptions paid, the said William Phillips, Isaac Smith and Jonathan Mason, Esq'rs, shall appoint a Day for the Choice of Directors, and notify the Stockholders in two of the Boston, and such other Papers as they may think necessary, to meet for the Purpose, to whom, when chosen, they shall deliver over the Money by them received.
SUFFOLK COUNTY.
John Lowell, Jonathan Mason, Samuel A. Otis, Edward Payne, Will- iam Phillips, Thomas Russell, Isaac Smith, and Oliver Wendell, di- rectors. Subsequently the directors elected Edward Payne cashier. The bank commenced business with a paid in capital of $253,500, on July 5, 1784, and on that day its discounts amounted to $19, 645.
The bank first occupied the building known in colonial days as the Manufactory House, with 125 feet of land fronting on Common (now Tremont) street, and 225 feet on the east side of what is now Ilamilton Place. On a map of Tremont street published about that time is a picture of the building, which somewhat resembled the " Old Feather Store," once at the junction of Ann and Union streets, with its quaint roof with gable or triangular ends. This property, to-day valued at up- wards of $5,000,000, the bank purchased for $4, 000.
The rules adopted for the management of the bank were of the most stringent character, and were "not to be deviated from in the smallest instance, nor on any pretense whatever." Offerings for discount were required to be sealed up and left at the bank, directed to the cashier, be- tween the hours of ten and one o'clock on Mondays. The rate of dis- count was one-half of one per cent. per month, and nodiscounts were to he made for a longer period than sixty days upon merchandise, bulion or other securities as collateral, nor for more than thirty days on personal obligations with two sureties. No loan was to be made for a smaller sum than $100, nor for a larger sum than $3,000 to any person at the same time, nor beyond $5,000 to any one borrower in the aggregate, nor beyond $7,500 to any one person as promisor and indorser. No per- son was allowed to renew his note on any terms, and in case of non- payment the security was to be sold, and the borrower was not to be allowed any discount for eight months thereafter, unless restored to credit by a unanimous vote of the directors, and the names of delin- quents were to be posted in a conspicuous place in the bank. This would be called hard treatment in these days and other of the condi- tions named would be found impracticable, but under these stringent, prudential regulations the bank became very successful, its dividends increasing from nine per cent. in 1785, two per cent. in 1286, and six and one-half per cent. in 1782, to fifteen and one-half per cent. in 1791, and sixteen and one-half per cent. in 1492. Subsequent dividends were, however, reduced, owing to competition of other banks.
During the earlier years of its existence, before the United States be- gan its coinage, fractional silver of any kind was very scarce and the
223
BANKING INSTITUTIONS.
Massachusetts Bank issued notes of the denomination of $1.50, $2.50, $3.50, $4.50, and also of $6, $1, $8, $9, SI5, $25, 830, $35, and $40 each, specimens of which are still preserved. In 192, to check the is- sne of small bills, which threatened to drive specie out of circulation, the Legislature passed an act prohibiting the Massachusetts Bank from issuing any notes of a less denomination than $5, and the total amount of all its promissory notes, together with the money loaned by it, by a credit on its books, or otherwise, was limited to twice the amount of its paid up capital, and in case of any excess, the directors, under whose administration it occurred, were made personally liable for any demand against the bank, unless, in case of their absence or dissent from the act creating such excess, they forthwith gave notice of the fact to the supreme executive of the Commonwealth. This was the commence- ment of that war upon small bills which was kept up by the State gov- ernment of Massachusetts until 1805.
It is generally believed that the fibre paper used by the government for its notes and bills, to prevent counterfeiting, is patented. This, however, is erroneous. The principle has long been in use. The Mas- sachutsetts Bank more than fifty years ago printed its notes on paper through which fibres of silk were liberally distributed, paper similar to that now used by the printers of the United States currency at Washington.
The Massachusetts Bank being for some years the only institution of its kind in New England, its president was naturally a personage of considerable importance in such a place as Boston. At the reception given to Lafayette in 1984, among the list of dignitaries who dined with him were the governor, lieutenant-governor and Council, the president of the Senate, the speaker of the House, and the president of the bank. On all public occasions he was one of the central figures.
It was formerly the custom of the Boston banks to celebrate com- mencement Day at Harvard College. The custom came about in this way. When William Phillips was president of the Massachusetts Bank, the meetings of the faculty were held in a hall of the bank building. Mr. Phillips being a member of that body. It was the only bank in Boston, and being thus doubly connected, Mr. Phillips observed the day, which was likewise honored by the other attaches of the bank. Subse- quent banks emulated the example of their venerated predecessor, and the custom was continued until 1865. In that year Decoration Day be- came a legal holiday, and as the annual day of commencement was
224
SUFFOLK COUNTY.
changed from September to July, the two holidays so close were con- sidered more than the banks could afford. So they relinquished the observance of Commencement Day, and have substituted that of Deco- ration Day.
The original building in which the Massachusetts Bank began busi- ness was sold in 1806, when the bank, having purchased the old Ameri- can Coffee House on State street, erected on its site a building for its use, where it remained for more than sixty years. After the great fire of 1842 the bank removed to Post-Office Square, where it continued un- til 1892, when it removed to the more spacious quarters now occupied in the Exchange Building. The original capital of the bank was re- duced in 1286 to $100,000; increased to $200,000 in June, 1292; to $400,- 000 in July, 1292; to $800,000 in June, 1802, and to $1, 600,000 in June, 1810. In April, 1821, its capital was reduced to $800,000, at which figure it still remains.
The stable character of the Massachusetts Bank was exemplified by the amounts of specie in its vaults in the six years from 1809 to 1814 inclusive. These amounts were marvelously large for those days, and no other bank in this country before or since had held so large a pro- portion of the specie of its people. The sums are as follows: 1809. January 1, $124,700; July 1. $184,000; 1810, January 1, $236,500; July 1, $214,800; 1811, January 1, $169,800; July 1, $394,800; 1812, Jani- ary 1, $904,900; July 1, $319,350; 1813, January 1, $1,852, 144; July 1, $1,966,300; 1814, January 1, $2, 114, 164; July 1, $1,890,200.
For the first fifty years of its existence this bank never suspended its specie payments. During the one hundred and eight years which have elapsed since its establishment, it has omitted to pay dividends but twice, first at the close of the War of 1812, and second during the financial crisis of 1836. But after it was converted into a national association it compensated for these omissions by declaring an extra dividend of ten per cent. In the eighty-one years of its existence as a State bank, from 1484 to 1865, the whole amount of circulating notes issued by it was $4,644,122, of which the amount lost or not presented for redemption was $22, 111, or not quite one-half of one per cent.
Following is a list of the presidents of this bank from 1284 to the present time in order of service: James Bowdoin, William Phillips, Jonathan Mason, Samuel Eliot, William Phillips, jr., William Parsons, Jonathan Phillips, J. L. Gardner, J. J. Dixwell, H. A. Riec, A. O. Bigelow and William A. French. The present board of directors,
BANKING INSTITUTIONS.
elected in January, 1892, is composed of William A. French, Edward Whitney, Arthur T. Lyman, Nathaniel G. Chapin, Alexander HI. Rice, Edward T. Russell, George Munroe Endicott, Robert D. Evans, Charles A. Sinclair and James T. Furber.
James Bowdoin, the first president of the bank, a descendant of Pierre Bowdoin, who came to New England in 1686, was born in Bos- ton, August 4, 1426, and in 1645 graduated from Harvard College. He entered into political life in 1453 as one of the four representatives of Boston in the Provincial Legislature of Massachusetts, and remained a member of the House for three years. In 125; he was elected a member of the Council, to which he was annually elected to the year 1614. During this long period of service he was among the foremost spirits on the part of the colonies in the memorable fights between the legislative and the executive authorities, which grew in their intensity until the last British governor was driven from our shores. He strongly urged retaliation for the arbitrary taxes imposed by Great Britain, and was styled by the English in authority at the time as the "principal supporter of the opposition to the government." In 1415 he was elected a member of the Provincial Congress to organize the first regu- lar government, and was made president of the Council. He was re- elected to the Council in 1726 and 1722, and continued to serve as its presiding officer whenever his health permitted until the summer of 11tt, when he resigned. In 1126, on the receipt of the news of the Declaration of Independence, he was made chairman of the committee to direct and personally superintend its proclamation from the balcony of the Old State House in Boston. In 1:19 he was elected a delegate from Boston to the convention which framed the Constitution of Massa- chusetts, of which convention he was the president. In 1785, there being no choice by the people, the Legislature elected Bowdoin gov- ernor, and he was re-elected by a large majority of the popular vote in 1987. He was long connected with the government of Harvard College, and always manifested deep interest in educational projects. The " Bowdoin Prizes" were established by his will. He was one of the founders of the American Academy of Arts and Sciences and was its president from its first organization to his death, which occurred November 6, 1790. His enlogist, Judge Lowell, has said of him: " It may be said that our country has produced many men of as much genius; many men of as much learning and knowledge; many of as much zeal for the liberties of their country; and many of as great piety
29
226
SUFFOLK COUNTY.
and virtue; but it is rare indeed to find those in whom they are all combined, and been adorned with his other accomplishments."
Some of the officers of the Massachusetts Bank have served for very long periods. Mr. James Dodd served the longest, having been ac- countant and cashier for fifty-four years. J. J. Dixwell was a director for thirty-six years, during twenty-seven of which he was president. Henry K. Frothingham was also connected with the bank in an official capacity for many years. The Phillips family has been long and ably represented in the bank. William Phillips, one of the faculty of Har- vard College, was president from 1986 to 119 ;. His son, William Phillips, jr., was president from 1804 to 1829. HEis grandson, Jonathan Phillips, was president from 1836 to 1840.
The record of the Massachusetts Bank is remarkable in many re- speets. Co-extensive with the administration of Washington, it has outlived all that followed to the present day. It has withstood the shocks of wars and financial fevers for more than one hundred years. It has marked the rise, decline and fall of hundreds of similar institu- tions in our States and the widespread distress which their mismanage- ment or misfortune occasioned among all classes. Shaken but not shattered, it has breasted the waves of each recurring national or financial calamity, and has been among New England banks like the Constitution among our navy, the oldest and most glorious survivor on the list. The hopes it raised were never disappointed. No crimes or blunders sully its long record. Those eminent men who in turn presided over its destinies, while they conferred distinction on its name, received by the association more honor than they conferred. It has been a boon to the public and a model for the brotherhood of banks. By its steady adherence to a plan founded in prudence and pursued with skill, it has proved alike an example and defence of the banking system, a standard and confidence at home, and an assurance of American honor abroad.
The condition of the Massachusetts National Bank as reported to the comptroller of the currency at the close of business March 6, 1893, was as follows :
RESOURCES.
Loans and discounts.
$2,064,521.75
Overdrafts, unsecured.
15.61
U. S. Bonds to secure circulation
50,000,00
Stocks, securities, etc
9,300.00
Due from approved reserve agents
198,221.07
Due from other National Banks
222,867.49
.
227
BANKING INSTITUTIONS.
Due from State Banks and bankers.
8,938.65
Banking-house furniture and fixtures
4,517.55
Other real estate and mortgages owned
20,211.30
Current expenses and taxes paid
17, 138.86
Premiums paid on U. S. bonds
6,000.00
Checks and other cash items
6,097.22
Exchanges for clearing-house
150,803.24
Bills of other banks
11,216.00
Fractional paper currency, nickels and cents
400.000
Specie
126,078,50
Legal tender notes.
64,555.00
Redemption fund with U. S. Treasurer (5 per cent. of circulation)
2,250.00
Due from U. S. Treasurer other than 5 per cent. redemption fund
2,000,00
Total
$2,965,665.24
LIABILITIES.
Capital stock paid in
$ 800,000.00
Surplus fund
[00,000.00
Undivided profits
44,981.55
State Bank notes outstanding
45,000.00
Dividends unpaid
191.00
Individual deposits subject to check
1,235,143.07
Demand certificates of deposit
13,840.62
Certified checks
88,453.60
Cashier's checks outstanding
117,300.00
Due to other National Banks.
113,825.81
Due to State Banks and bankers
216,928.50
Bills payable
190,000.00
Total
$2,965,665.24
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1
UNITED STATES BANK.
The idea of a United States Bank, which should be somewhat simi- lar in character to the Bank of England, originated with Alexander llamilton, the first secretary of the treasury. It was established in Philadelphia in 1791, and its charter expired in 1812, but was revived in 1816 and finally dissolved in 1836. In 1792 a branch of the United States Bank was established in Boston. William Gray was the first president, and Peter Roe Dalton the first cashier. The directors, who were appointed by the parent bank at Philadelphia, were Joseph Bar- rett, John Codman, Caleb Davis, Christopher Gore, John Coffin Jones, John Lowell, Theodore Lyman, Jonathan Mason, jr., Joseph Russell, jr., David Sears, Israel Thorndike and William Wetmore. Business was commenced in an old two-story wooden house which stood upon
228
SUFFOLK COUNTY.
the site of Brazer's building. In 198 a bank building was erected on the site of the present Exchange Building, which bore on its front an American eagle with its wings outstretched, as if in the act of swoop- ing down upon the bulls and bears of the street. The next location of the bank was in Congress street, on the west side, and not far from State street. Here the bank erceted a building, the corner stone of which was laid July 4, 1824, the parent bank appropriating one hun- dred thousand dollars for the building.1 At this time the capital of the Boston branch was $1,500,000, and the officers of the bank were : Gardiner Greene, president; Samuel Frothingham, cashier; Gardiner Greene, Thomas H. Perkins, John Welles, John Parker, Daniel Pinck- ney Parker, Nathaniel Silsbee, David Sears, Daniel Webster, George Blake, Resin Davis Shepard, Harry Gardner Rice and Horace Gray, directors. In 1810 George Cabot was serving as president of this bank. He was a prominent leader of the Massachusetts Federal- ists. He was a very successful merchant, and had a great reputation as a financier. While in the United States Senate in 1:91-96, Hamil- ton, the founder of our financial system, often conferred with him. He incurred great odium by his connection with the Hartford Conven- tion in 1814, of which body he was president. Aaron Burr once said of him, that "he never spoke but light followed him."
The attempt to permanently establish a bank under government con- trol, like the Bank of England, proved a failure, as is well known. The removal of the deposits by General Jackson affected the Boston branch but little. In 1836 Congress revived the charter, but Jackson vetoed it.
NATIONAL UNION BANK.
From 184 to 1792 the Massachusetts Bank continued the only insti- tution of its kind in the State, with the exception of the brief period
1 The building committee, " for the information of futurity," gave the following facts in relation to the erection of this edifice : "The appropriation for the building of this bank by the parent in- stitution was one hundred thousand dollars, of which sum fifty-four thousand, eight hundred and fifty dollars was paid for the land, and it is the hope of the building committee that the whole sum disbursed will not exceed the appropriation. The pillars, under one of which this document is placed, were quarried in Chelmsford in this State, being the first granite shafts of these dimensions ever erected in this country. Their dimensions are twenty-four feet in length, four feet in diame- ter at the base, and three feet at the head. The cost of them, delivered at the spot where they were quarried, was nine hundred dollars each, and the expense of bringing them here about five hundred dollars each. They were brought separately, by land, and drawn by thirty-four yoke of oxen. The stone of the walls of the bank was worked principally at the State Prisons at Charles- town, Massachusetts and Concord, New Hampshire." This document was signed by Solomon Williard, architect ; Gridley Bryant, master workman ; James McAllaster, master carpenter ; Gar- diner Greene, John Welles. Thomas H. Perkins, Daniel P. Parker and J Parker, building commit- tee, and attested November 30, 1824, by Samuel Frothingham, cashier.
229
BANKING INSTITUTIONS.
when the Branch Bank of North America was in operation. The success of the Massachusetts Bank led in the latter year to the establishment of a rival, the Union Bank. The act incorporating this institution was passed by the Legislature June 22, 1192, and was to con- tinue to 1802. David Cobb was the speaker of the House, and Samuel Phillips, president of the Senate. The act was approved and signed by Governor John Hancock on June 25, 1792. The incorporators named in the act were Stephen Higginson, Caleb Davis, William Tudor, Oli- ver Wendell, Nathaniel Fellows, Joseph Coolidge, William Smith, Joseph Blake, Frederick William Geyer, Daniel Hubbard and David Green. The capital stock of the corporation was to consist of not less than 8400, 000, nor more than $800,000 in specie, and should be divided into 100,000 shares. 'The State was to have the right to be interested in the bank to the amount of one-third of its whole capital.
The Union Bank was the first of a series of banks organized under peculiar charter provisions. It was not to issue bills of less denomina- tion than $5.00, nor to owe more than twice its capital in addition to its deposits; the directors to be personally liable in case of any exeess. One-fifth of its funds was to be always appropriated to loans out of Boston, made exclusively for the benefit of the agricultural interest, in sums of not less than $100 nor more than $1,000, secured by mortgage of real estate, and to run for a term of not less than one year. This questionable provision does not appear in any other bank charter granted previous to 1802. But from that time to 1816 nearly every bank charter contained a requirement to appropriate a certain propor- tion of the bank's funds to such loans. In common with the Massachu- setts, the Union Bank was not to vest, use or improve its funds in trade or commerce. No one but a citizen of Massachusetts, and no director of any other bank couldl be a director, and any director accept- ing an office in any other bank, thereby vacated his office of director in the Union Bank. No stockholder was allowed to have more than ten votes, those owning over $100 of stock having only one vote for each additional $200. The directors were to make half yearly dividends of all the profits of the bank, while a loan not exceeding $100,000 was to be made to the State at five per cent. interest. Provision was made for attaching the shares of its stockholders, and for the examination by a legislative committee, and, if on the report of such committee and a hearing theron, it should appear that the corporation had exceeded the powers granted in the charter, or failed to comply with its provisions,
230
SUFFOLK COUNTY.
its corporation was thereupon to be declared forfeited and void The bank was also made the depository of the Commonwealth.
Annexed are given the names of some of the original stockholders of the Union Bank, and the number of shares held by each :
Oliver Wendell 30
Benjamin Bussey
Timothy Bigelow.
1
Josiah Quincy
26
Stephen Codman
William Phillips 20
Ilenderson Inches.
Samuel Eliot_ 1
Benjamin Joy
5
George Cabot
200
Samuel Cobb
1
Samuel Parkman. 320
John Davis.
10
Stephen Salisbury 109
Samuel Brown
12
Andrew Brimmer
128
Thomas L. Winthrop
45 Jonathan Amory, jr. 117
John Welles.
10 Gardiner Greene 240
The few names above given are selected at random from a host of suggestive names, some of which have been familiar in Boston's history for more than a century, and many of which are prominent in the rec- ords of other public institutions, from that day to this, and in the no- menelature of our streets, wharves, shipping, ete. ; as for instance Moses Gill, the first president of the bank, and afterwards governor of the State; Benjamin Bussey, the munificent donor of the Bussey Farm ; Josiah Quiney, a director in 1800, president of Harvard College, and grandfather of the present Josiah Quincy; John Welles, a director in 1803, resident in Summer street, and one of the wealthiest citizens of Boston at that day; Peter C. Brooks, at whose residence, corner of High and Summer streets, Daniel Webster dwelt for years; and Gardi- ner Greene, whose grand estate on Pemberton Hill covered more than the square now occupied by Pemberton Square, and was the largest and most beautiful private domain in the city, as he was its most opulent citizen : while the names of Wendell, Winthrop, Bigelow, Codman, Joy, Davis, Parkman, Eliot, Brimmer, Amory, Peter O. Thacher, Thomas H. Perkins, Lynde, Walter, Wainwright, Coolidge, and numerous others, who were at various carly periods directors or stockholders in the bank, are identified with the political, financial and commercial history of the city and State, and as Webster said of Lafayette, "Have come down to us from a former generation, " illustrious for public spirit and noble ac- tions which created and founded for all time the aims and character of Massachusetts.
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