History of Detroit and Wayne County and early Michigan: A Chronological Cyclopedia of the Past and Present, Vol. I, Part 134

Author: Farmer, Silas, 1839-1902
Publication date: 1890
Publisher: Detroit, Pub. by S. Farmer & co., for Munsell & co., New York
Number of Pages: 1094

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The bank being nearly completed, the subscription was again offered, not publicly, as before, but only to a few gentlemen of spirit and enterprise ; but the first installment which, only three weeks before, was not less than twenty-five dollars nor more than fifty dollars, was now reduced to two dollars per share ; and instead of giving every person an opportunity of subscribing, Messrs. Parker and Broadstreet, at one dash, swept off for them- selves and friends in Boston the fifteen hundred shares which remained after satisfying their new converts in Detroit. When Parker and Broadstreet opened the subscription at Smyth's Hotel they asserted that they did not know what the amount of the first installment would be, but assured us that it would not be less than twenty-five dollars nor more than fifty dollars. They knew then that they asserted a falsehood ; for they brought just money enough with them to pay for the Boston installments at the rate of two dollars per share. At the same time they were deceiving the public with fifty-dollar installments to prevent a general con- nection. Meanwhile they were busily engaged in sounding the moral characters of certain individuals whose opposition they dreaded, whose support was indispensably necessary, and whose virtue, alas ! was too flexible to resist the golden allurements of the Detroit mint.

Having brought matters to a favorable issue, a meeting of the founders and their new converts assembled, and appointed Judge Woodward president, and William Flanagan, of Boston, cashier. Parker and Broadstreet then embarked for Boston with a small venture of $163,000 of Detroit bank notes. The appearance of the notes excited the curiosity of the Bostonians, but on inquiring they were given to understand that they were very safe notes, and that the rich Territory of Michigan was concerned in them. Agents were also stationed throughout the Northern States, who disposed of immense quantities of them to the unwary, at from ten to twenty-five per cent discount. Not long after the intro- duction of the notes in New England, the following remark ap

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peared in the Boston Sentinel, developing the motives of the Detroit bank, supposed to be the production of Mr. Parker : "The enterprise the Detroit Banking Company have in contem- plation, of which this bank is but a part, involves in it as much public advantage as any enterprise that ever was undertaken, viz., the diversion of the valuable trade of Canada to the ports of Boston and New York." Yes, and peddling Detroit bank notes through the New England States is the very plan to effect that object. Every lover of sport must admire this choice diversion - diverting the cash from the Atlantic States into the Detroit bank. The next time our bank gentry get into a frolicsome mood, I will not be the least surprised to see them undertake to divert the channel of the great river St. Lawrence into the Hudson and Connecticut rivers, or to cut the United States in two by the Alleghany Mountains.

I have asserted " that the Detroit Bank is part of a deep plan against the rights and properties of the people of this country." This remark exceedingly enraged some of the stockholders in this mock bank, particularly Dr. William Brown, who is a pro- prietor of fifty shares, worth one hundred dollars. He said that the remark was " an arrant falschood ; that the intention of the bank is honest ; the prospect of the profits is immense ; that the Government have no connection with the bank, nor the bank with the schemes of Government." If the pecuniary prospects of the banking company are so flatteringly immense, it is morally impossible that their intentions can be so purely honest unless they have discovered in some of the invisible regions an unknown resort of commercial intercourse with invisibles, for all the profits that can possibly result from their banking trade in this country will not defray one half of the cashier's gambling expenses unless he is very economical indeed.

The amount of their paper currency circulating here never, until very lately, exceeded $2,000, and how even that much got afloat is a mystery, for no person ever deposited money in the bank, and no person ever borrowed from them, neither do I know that any notes of hand, bills, or bonds were ever discounted ; still this does not altogether invalidate the honest Dr.'s premises.

In the month of March or April, news came to Detroit that Parker and Broadstreet had sold their interest in the Detroit Bank to a Mr. Dexter, at or near Boston, and it appeared by the length of their faces that our Detroit proprietors were somewhat suspicious that their late associates had swindled them. Before our mock bankers were entirely recovered of this shock, a Mr. Latimer, of Presque Isle, arrived and brought on one of the New England five-dollar Detroit Bank notes, which he presented at the bank, but it was refused admittance. The week following, Mr. Conrad Ten Eyck returned from Albany with a small cargo of five hundred dollars' worth of Detroit Bank notes, which he purchased from one of the agents at or near Albany at twenty-five per cent discount. He made a tender of them at the bank, but to his great surprise the directors refused to discount them.

The appearance of Ten Eyck with so much of Detroit paper at first determined the directors to shut the bank. On that occasion Governor Hull delivered the following very learned oration : " It is reported there are now in circulation in New England from $400,000 to $600,000 of Detroit paper money, and I believe it. It is very strange that I was not informed of it before. I assure you, gentlemen, I never knew that a single bill of this bank went down the country. This bank business, I find, is one of the damnedest swindles that was ever heard of ; but (laying his hand on his breast), thank God, I have no hand in it !" Mon Dieu ! What an example of piety and virtue !

For about three weeks the bank gentry assembled daily, no doubt to deliberate on the propriety or impropriety of shutting up the bank. If they shut the bank on the bills from below, the report would very soon reach Boston, and put a final stop to the circulation of bills in that quarter ; on the contrary, if they satis- fied Ten Eyck, and maintained the credit of the bank a few months longer, they could easily dispose of five or six hundred dollars' worth more of their paper, which would amply compen- sate for Ten Eyck's five hundred dollars. Accordingly, after a

series of consultations, it appears that the latter proposition pre- vailed. The cashier was dispatched with tidings for Ten Eyck to repair to the bank and receive the cash for his notes. There were in circulation at that time, in Detroit and its vicinity, $1,700 of the Detroit paper currency, and the report having gone abroad that the bank refused to discount its own bills, the people crowded in from all quarters with their bills, and without any difficulty received cash for them, which was more than they expected.

Just at this time the following conversation accidentally took place on the subject of the bank. Mr. S., who was one of the largest shareholders, said that " Parker and Broadstreet had acted a very treacherous part, and for that reason the directors were determined not to pay the bills that are in circulation below :" but he pledged his word and honor " that no person in this country would be suffered to lose a single cent by the bills which had been circulated here." It was answered, "How will you evade payment of your own notes ? You can surely be compelled by law to pay them." Mr. S. replied, " We never will pay them, neither can we be compelled by law to pay them, unless we please." Mr. S.'s observations are perfectly correct, for the Ter- ritory of Michigan holds an interest of ten shares in the bank, and Congress, not having the fear of God before their eyes nor the interest of the Detroit banking company, at the last session willfully and maliciously destroyed the charter of the bank ; and every stockholder is now bound for the bank debts to the full amount of his fortune (and that is not much). To prove this let the following copy of one of the new bills be submitted :

" The President and Directors of the Detroit Bank promise to pay out of the capital stock and funds thereof, to. ... ....... or bearer, on demand, five dollars, and the stockholders jointly and severally guarantee the payment at their office of discount and deposit at Detroit, July the 10th, 1807.

(Signed)

A. B. WOODWARD, President.

WILLIAM FLANAGAN, Cashier."

The Territory being a stockholder involves a general interest in the bank, and the property of every person therein is bound by these promises for the payment of the Detroit Bank notes, and no person, agreeably to the laws of the land, being eligible to serve as judge, or jury, or evidence, in processes wherein his in- terest is concerned, consequently no suits can be instituted in this Territory for debts due by the Detroit Bank.

The people, through their grand juries, have three different times remonstrated to the government of this Territory against the illicit connection with the bank, but their respectful solicita- tion has been disregarded.

Shortly after the events just narrated, Mr. Dexter, the new Boston proprietor, arrived, and brought another cargo of bank notes not filled up ; the same, in effect, as the former, but differ- ently worded. The bank was again started, on a new plan, as they said, but I never could discover any difference, only tha: James Henry was appointed president in room of Judge Wood- ward. Mr. Dexter then embarked with another venture of De- troit Bank notes, to try his luck in the New England market.

The Detroit bank, since its re-establishment, has done no busi- ness in this country, in any line, of any kind, that mortal eye can perceive, yet there are afloat in this town and vicinity not less than ten or twelve thousand dollars of its notes. The mys- tery does not end here. The notes from other banks which are sent on here for public purposes are instantly transfigured into Detroit Bank notes. The Detroit notes which are afloat in this country have been circulated at full value, and it is probable they may be redeemed at full value : if the Directors please.

There are now afloat on the shores of the Atlantic not less than fifteen or sixteen hundred thousand dollars in Detroit Bank notes, which have been circulated at from ten to twenty-five per cent dis- count. How they will be redeemed is a query for the learned to solve. The report of Mr. Leitch, who lately returned from visit- ing his friends in New England, partly resolved the foregoing

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857

query. He says it was rumored there that the agents of this bank were beginning to buy up the Detroit Bank notes at three dollars for a five dollar note. But I question the correctness of that rumor. If they intend to redeem their notes at any under value, they could, with as much facility, depreciate them to one dollar for a five, or even a ten dollar note ; then their profits on the enterprise would be immense indeed.

Late this fall, Mr. R. H. Jones, a merchant of Detroit, went down to Boston for a supply of goods ; and on his return brought from Mr. Dexter, addressed to the Detroit Bank, a package containing one hundred and thirty pounds weight of bank notes, not filled up ; and the president of the bank has ever since been constantly employed in sign- ing and filling them up.

The New England folks may look out for a sleigh-load or so of them this winter. Mr. Jones also states that on his way through the New England States to and from Boston, not less than five hundred different persons proposed to sell him Detroit Bank notes. From this it appears there are a plentiful stock of them in that quarter. Well, the net profits arising from the sale of fifteen hundred thousand dollars worth of Detroit Bank notes at, say ten per cent discount, on an average, will amount to - let me see - pre- cisely $1,350,000 according to my calculation, and I guess the New England purses can bear testimony to the correct- ness of this statement.

Terrifying threats of ruin and destruction are copiously poured forth against the writer of these publications by the gentlemen stockholders in this pellucid shadow, this miraculous phenomenon in our western world, - the Detroit Bank. Twenty thousand dollars, the present deposit, is unquestionably no more than the shadow of a million, the imaginary capital.

The Directors say that the intentions of the banking company are honest, their views extensive, and their pros- pects of pecuniary remuneration incalculable, that the Michigan government has no concern in the bank, nor the bank with the schemes of government. A few more words in their cars. If one is really to be hung, it makes no man- ner of difference whether it be for stealing a grown sheep or a young lamb.

First,- Governor Hull and Judge Woodward, in the spring of last year, while they sojourned in the States, spent a great deal of time and a great deal of money, negotiating with the good people of Boston and New York, for the establishment of the Detroit Bank. Still, the government have no concern in the bank.

Second, -The Governor and Judge Bates accommodated the bank with two of the most valuable lots in the new town, in total disregard of the Act of Congress and the in- terests of the people. Still, the government have no concern in the bank.

Third, - Although Governor Hull was himself living in an old storehouse, he stopped the building of his own man- sion, and sent all his workmen to expedite the erection of the bank ! Still, the government have no concern in the bank.

Fourth,-Last September Judge Woodward, in his charge to the Grand Jury, recommended this infant bank to their particular protection. Still, the government have no con- cern in the bank.

Fifth,-The Governor and Judges made a law incorporat- ing the Detroit Bank, in utter contempt of a law of Con- gress, in favor of the United States Bank, which says in plain terms " that no other bank shall be established by any future law of the United States, during the continuation of the corpora- tion hereby created, for which the faith of the United States is hereby pledged." Still, the government have no concern in the bank.

Sixth,-Judge Woodward is President of the bank. Still, the government have no concern in the bank.

Seventh,-The Governor and Judges removed one of the streets forty to fifty feet nearer the bank, to make it form the corner of two streets, to the great damage of the principal range of houses in the new town. Still, the government have no concern in the bank.

Eighth,-The Governor and Judges are proprietors of a few shares, publicly, and an immense number, clandestinely, in the

DETROIT

WO DOLLARS

Pres.

deurne

The President and Directors of the

and the Stockholder jointly and severally guarantee the payment thereof to /thack or bearer on demand

at their OFFICE OF DISCOUNT & DEPOSIT at Detract

Valanagan Cash.

Detroit Bank. Still, the government have no concern in the bank.

Ninth,- The Governor and Judges passed a law, making it lawful for this Territory to become proprietors in the bank. Still, the government have no concern in the bank

Tenth,- The Governor and Judges made a law, authorizing Governor Hull to purchase ten shares in the bank, for the Ter-

FAC-SIMILE OF BANK-NOTE.

BANK promise to pay out of the Capital Stock and Funds

Cadbanan , - 1808

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BANKS AND CURRENCY.

ritory of Michigan. Still, the government have no concern in the bank.

Eleventh,- Governor Hull did purchase ten shares in the De- troit Bank, for the Territory of Michigan, without the advice or consent of the inhabitants thereof. Still, the government have no concern in the bank.

Twelfth,- The people have often solicited the Governor and Judges, through the Grand Juries, and otherwise, to exonerate the Territory from its dangerous connection with the bank, but their respectful solicitations are to this day totally disregarded. Still, the government have no concern in the bank.

Thirteenth, - The Governor and Judges passed a law making the Detroit Bank notes a lawful tender. Still, the government have no concern in the bank.

Fourteenth,- In the winter of last year, Governor Hull made a tour through the New England States, sounding the praises, as he went, and jingling the unaccountable riches of Michigan, in the listening ears of the astonished Yankees. "Come all to Michigan ! It is the richest country, and the finest land for rais- ing pumpkins in the world." Immediately on his return to De- troit, he instituted the bank, and shipped with all possible speed to New England an immense cargo consisting of $163,000 in Detroit Bank notes, peddling them through the country ever since, and passing them away on the credit of the immense riches of Michigan. And yet the government have no concern in the bank.

The news of the organization of the bank finally reached Washington, and on December 8 James Madison, then Secretary of State, wrote to Gov- ernor Hull for a copy of the law authorizing its organization. All of the laws of the Territory were subject to the approval of Congress; and on March 3, 1807, they disapproved of this Act. The bank, however, continued to issue its bills, and one dated February 4, 1808, is in the possession of the State Historical Society.

In May, 1808, John Randolph said in Congress that he understood that the troops of the United States were paid in bills of the Bank of Detroit.

On September 10, 1808, the Governor and Judges passed an Act on "Crimes and Misdemeanors," which made it a penal offence to transact banking business without authority.

On October 28, 1808, the Governor and Judges

Resolved, that the Governor be and he is hereby authorized to sell and transfer the ten shares in the late Bank of Detroit, which belonged to the Territory, provided he receives the principal and interest from the time the money was paid.

On December 12 a petition was presented to them, signed by James Henry, president, William Flanagan, cashier, and William Brown, director, praying that the bank be relieved from the opera- tion of the Act of September 10, and allowed to continue its business. The petition was referred to Judge Witherell. He was too true a patriot to countenance the bank, and the officers were com- pelled to close the concern.

The following copy of a letter from Governor Hull to President Madison, on file at Washington, confirms many of the statements of Mr. Gentle :

J. Madison :

DETROIT, 26th May, 1807. SIR,-

Heretofore I have uniformly stated to the Government, as my opinion, that the design of establishing a bank here was laudable and calculated to promote the public interest. Until very lately I believed the views of the applicants were pure, and the man- agement of the institution would have been such as to have pro- moted the public interest. Within a few days a gentleman has arrived from the State of New York, with five or six thousand dollars of the Bills. They have been presented, and payment has been refused.

It is now evident that immediately after the charter was granted by the territorial government, bills to the amount of eighty or one hundred thousand dollars were issued and delivered to Messrs. Parker and Broadstreet, the agents from Boston ; none of these bills probably have returned excepting those brought by the gentleman from New York. All the specie paid into the bank does not exceed twenty thousand dollars, the principal part of which was deposited by the agents from Boston.

Whether the whole of that was left I am unable to say. In addition to the bills sent to Boston, the bank was in the habit of discounting, until the law was disapproved by Congress. From what has taken place I am now induced to believe that the agents had improper views in the first instance, and I consider the man- agement of those who have had the direction of it as highly reprehensible. Payment, after these bills were issued, might have been immediately demanded, which could not have been complied with. I have conversed with some of the Directors on the subject, and expressed my astonishment at their conduct. They do not deny the fact of having issued the bills to the agents, and they make no other answer than this, - that if Congress had not disapproved of the law, money would have been sent on, and the bills would have been paid when presented.

Although I am now of the opinion that a small bank, conducted on fair and proper principles, would be promotive of the public interest, yet, under the circumstances this has been conducted, 1 rejoice Congress has disapproved of the law.

What security was given for the large sum sent to Boston. I have not been able to learn. I sincerely hope it will appear to be sufficient to indemnify the holders of the bills, and that the present stockholders will have sufficient integrity faithfully to apply all their funds to that purpose.

If, Sir, I have committed any error, it was in signing the Act, which I did not approve in all its parts. It seemed to be the only one in which we could all agree.

I repeat, Sir, that I never have had any other connection with it, since the establishment, either directly or indirectly, excepting my subscription for five shares, for which I have paid ten dollars.

Mr. Mclellan of Portland, who married one of my daughters, wrote me, and requested me to take a large number of those shares for him ; I balanced for some time, when the subscription was opened, and finally concluded, as I was one of those who passed the Act, that I would have no agency in it, and I have no knowledge that he or any of my connections have any interest in it. I have made this statement because it has been suggested that those who passed the law were influenced by other motives than those of public interest.

I am, respectfully, your most ob't serv't, WILLIAM HULL.

Bank of Michigan.

As the little community in Michigan emerged from the embarrassments entailed by the War of 1812, the necessity of a bank of deposit and issue became apparent. Large expenditures were in pro- gress in the military department, treaties with the Indians required the disbursement of moneys in

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BANKS AND CURRENCY.

Ohio, Indiana, Illinois, and Michigan, and every- thing indicated the necessity of a bank. Capitalists became interested, and on December 19, 1817, the Bank of Michigan was chartered, the capital stock to be $100,000.

On May 12, 1818, the following notice appeared in the Gazette:

BANK OF MICHIGAN.

Books will be opened for subscription to the Capital Stock of the Bank of Michigan on the first Tuesday of June next, at twelve o'clock, noon, at the brick store of Messrs. Lecuyer & Watson, in the city of Detroit, and will continue open until two, for six days, and until the whole stock shall be subscribed, Sun- days excepted. Shares $100 each, ten dollars on each share to be paid in specie at the time subscribed.

By order of the Directors.

SOLOMON SIBLEY.

In response to this notice the following persons became shareholders: John R. Williams, General Alexander Macomb, Augustus B. Woodward, Otis Fisher, Andrew G. Whitney, James Abbott, William Woodbridge, Stephen Mack, James May, Solomon Sibley, Peter J. Desnoyers, Benjamin Stead, Eben- ezer S. Sibley, Charles James Lanman, John Ander- son, De Garmo Jones, John H. Piatt, Henry J. Hunt, Barnabas Campau, Joseph Campau, John J. Deming, Henry B. Brevoort, William Brown, Cath- erine Navarre, Sarah Macomb, and Mary Deveaux. The sum of $20,000 was paid in upon the subscrip- tions, and seemed quite equal to the needs of the community.

On June 2, 1818, the bank organized by the elec- tion of John R. Williams, Solomon Sibley, William Brown, Abraham Edwards, Philip Lecuyer, Stephen Mack, and Henry J. Hunt as directors. John R. Williams was chosen president, and James McClos- key cashier.

The cashier was sent to Ohio and New York to take lessons in banking, and on January 2, 1819, $10,000 capital was deposited, and the bank opened its doors for business in the same building that had been occupied by the old Detroit Bank. Over $400 was deposited by the public the first day. During the remainder of the month the deposits varied from thirty-eight dollars up, except for five days, when the cashier was away with sleighing parties and the doors were locked. He entrusted the key, however, to his old black servant-woman, and if any person wanted money and could not wait, she called upon David Cooper to unlock the door and get the funds.

The same week that the bank opened, it issued its first bills. Early in 1824 Edmund Dwight, of Boston, George Bancroft (the historian), Jonathan Dwight, William Dwight, and Benjamin Day, of Springfield, Mass., John and William Ward, of New York, and Henry Dwight, of Geneva, New York, established banks at Buffalo, Cleveland, Massilon,

and Monroe, and also purchased the Bank of Michigan, whose paid-up capital was represented as $20,000. They increased it to $60,000, and the bank was often called the "Bank of the Dwights," because the gentlemen of that name were the chief stockholders. They invested several million dollars of bona fide capital in their banks, and never bor- rowed from them. A Mr. Day came from Spring- field to manage the Bank of Michigan, but not being pleased with his position, he returned, and his place was supplied by Eurotas P. Hastings, who had been teller of the Bank of Geneva. He had not been long in Detroit when he discovered evidence of something wrong in the cashier's department, and early in May the old directors were astounded to find that their cashier, from the very beginning of his career, had been accustomed to help himself to temporary loans; regular dividends had been made every year, and the deficiency made up on examina- tion days by his borrowing from the special deposits of the Receiver of the Land Office. The amount so withdrawn was about three fourths of the orig- inal capital stock, or $15,000. Fortunately, the bank was in the hands of men able to bear this loss.

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History of Detroit and Wayne County and early Michigan: A Chronological Cyclopedia of the Past and Present, Vol. I, Part 134

Author: Farmer, Silas, 1839-1902 Publication date: 1890 Publisher: Detroit, Pub. by S. Farmer & co., for Munsell & co., New York Number of Pages: 1094

Author: Farmer, Silas, 1839-1902
Publication date: 1890
Publisher: Detroit, Pub. by S. Farmer & co., for Munsell & co., New York
Number of Pages: 1094