USA > Michigan > Monroe County > History of Monroe County, Michigan : a narrative account of its historical progress, its people, and its principal interests Volume I > Part 45
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HISTORY OF MONROE COUNTY
this is shown by the fact that whereas the population of the territory in 1810 was 4,762, it had only reached a total of 8,927 in 1820.
EFFECT OF ERIE CANAL OPENING
The opening of the Erie canal in 1825 made a change for Michigan as well as for other portions of the west. The canal boats connecting with steamers and sailing vessels on the lakes made travel easier and more economical, which started a tide of emigration that rapidly swept westward for more than a decade. Detroit and Monroe as a termini of the principal water routes from Buffalo were the landing places of many of the emigrants who swarmed over the territory and filled up so rapidly that the population increased from 31,639 in 1830 to 87,278 in 1834 and to 175,169 in 1837.
This rapid increase of population and the equally rapid taking up of lands aroused a fierce spirit of wild speculation especially in real estate. It was not an uncommon thing for a "promoter" to hunt up a mill site or some other location supposably available for a town site, purchase "an eighty" or a quarter section from the government at $1.25 an acre, make a plat showing the river and mill site, the water lots (sometimes numer- ous), a public square, court house and eligible sites for locating other public buildings (for every paper city was to be a county seat). Then the plat was taken around to citizens for their admiration and exercise of faith in the golden future, advertised in the papers, a city lot quite likely being given in payment for the advertisement, and the business entered upon a "boom," lots selling all the way from five dollars, depend- ing upon the gullibility of buyers. It is perhaps needless to add that many of these paper cities and villages thus laid out and sold at that time are swamps and farm lands even unto the present day.
CRAZE FOR INTERNAL IMPROVEMENTS
Mindful of the impetus which the Erie canal had given to emigra- tion, and the great benefits which it had conferred on central and western New York, a craze for internal improvements far beyond any possible needs at that time or the immediate future seized upon the people. Rail- roads, canals, plank roads, common roads were planned in every direc- tion, and the promoters were as thick as huckleberries. During the short period between the adoption of the Constitution of 1835 and the date of the actual admission of the state into the Union in 1837 laws were enacted for the laying out of no less than sixty-six state roads.
Eleven railroads and nine banks were chartered, and permission given to construct thirteen dams upon navigable waters for manufacturing pur- poses. Two canals were also planned to extend across the state, together with several shorter ones. Aside from those private charters the state within a few years projected, on its own account, 596 miles of railroad, 233 miles of canal, and the improvement of five rivers and harbors, in- volving an outlay estimated by Governor John S. Barry at $15,000,000.
Two of the acts of the national administration helped to foster the spirit of speculation. When President Andrew Jackson ordered the re- moval of the government deposits from the United States Bank and their distribution among the state institutions, Michigan banks received as their share $1,895,000, thus adding for the time to the ready money in the state for speculative purposes. Afterwards when the surplus revenue of the government was divided among the states the share of Michigan was $286,721.49.
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IIISTORY OF MONROE COUNTY
Though the state had not been admitted into the Union, it had a legislature, which by act of March 22, 1837, the amount was accepted.
By a further act of March 22, 1837, the amount was placed to the credit of the internal improvement fund as a loan, to be returned to the state whenever the $5,000,000 loan for such improvements should be suc- cessfully negotiated or whenever called for by the legislature. Within two years $160,000 of this money was drawn out of the state treasury, according to law, to defray current expenses, and $100,000 more was credited to the general fund. The remaining $26,751.49 remained to form part of the internal improvement fund. It is not apparent how the surplus was of any real benefit to the state. It only served momentarily to relieve the inhabitants from the burden of their own extravagance. Swept along by the resistless tide of reckless speculation, the people of Michigan had contracted an indebtedness of $5,340,000 before 1838, when the population did not exceed 200,000. It would seem that the presence of the surplus stimulated rather than checked their prodigality, for it was affirmed early in 1839 that the appropriations, though somewhat re duced, far exceeded the pecuniary means of the state.
That Michigan's share of the national surplus was largely wasted (to use a mild term) and exerted an effect in creating extravagance is alto- gether probable, and was so regarded by contemporaneous writers. Like all the western states they planned many extensive public works at such an expense that all their resources were exhausted before anything was actually finished, and so very much was absolutely lost. When it is re- membered that with a population of only 175,169, in 1837 composed mostly of farmers with very little capital, in a new country largely unset- tled improvements were designed whose cost would equal $15,000,000, some idea of the utter wildness of these undertakings may be gained. When such methods of financiering obtained it is not a matter of wonder that millions of surplus was wasted or worse than wasted.
BANK OF BREST
Monroe was no exception to the rule of speculation and extravagance. Among the notes that were issued and soon ceased to be current and never redeemed were those of the Bank of Brest. They were in fact fiat notes, issued by a fiat bank, in a fiat town. Brest, located at the mouth of Swan creek, is seven miles from Monroe, as a town doing business is but a memory-but in the "palmy days" it was a most ambitious place. A map of the "city" made in 1837, finely lithographed and artistically colored, represented it with broad avenues, sonorously named, lined with handsome residences standing in charmingly ornamented grounds. The extended "water front" of the city had continuous lines of docks, above which were commodious warehouses, while the largest steamers were shown as passing the city. Many imaginary vessels were lying at imagi- nary docks, and the streets were thronged with people. A visit to the "city" by a friend in 1850 disclosed the existence of a frame hotel of considerable size, one store and "the bank," a building costing about $1,200, whose front was made imposing by four square pillars reaching from the floor to the roof of the "porch." The inhabitants were composed mostly of the native mosquitoes and frogs, and did not have occasion to bother the postmaster very much. The rural free delivery of the post office department now handles the mail for this point. The history of this bank at Brest is perhaps interesting as a type of the banks of the times in which it flourished. The capital paid in consisted of a bank "specie check" for $1,146 and an individual check for $2,000. On the
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HISTORY OF MONROE COUNTY
1st of August, 1838, the bank made the following statement: Loans, $96,537 ; specie, $12,900; eastern exchange and cash items, $22,627 ; circu- lation, $39,425 ; deposits, $20,000; due banks, $23,834; profit and loss, $5,009.
On the 3d of August, two days later, when the commissioners exam- ined the bank, they discovered that its principal resources actually con- sisted of loans on bonds, $16,000; bank stocks, $10,000; specie, $12,900. It afterwards appeared that $10,500 of the specie belonged to Lewis God- dard, who exploited a number of wildcat banks. This specie was depos- ited in the bank the day before the commissioners arrived to inspect the institution, and was returned to him the day after their departure. The $16,000 loan was made to the town of Brest, to secure which the bank received an assignment of bonds executed by Lewis Goddard for the sum of $35,400 and also of mortgages upon "one hundred and eighteen city lots in the city of Brest."
On the day after the examination by the commissioners the directors assigned the bonds and mortgages back to the trustees of the city having received not a dime for them. It is no doubt true that the officers of banks knew in advance of the approaching visits of the examiners and had an opportunity to "fix up things."
In the case of the examination of the bank of Brest there was a sequel. The examiners made a supplementary call about a week later, "un- announced," when the bank was caught with only $138.39 in specie on hand and $84,241 in circulation outstanding.
RAPID CIRCULATION OF SPECIE
A few days after this the commissioners examined the Bank of Clinton and found specie on hand to the amount of $11,029.36. The next day $10,500 of this was taken to Detroit and turned over to Lewis Goddard, being the same specie that had figured in the assets of the Bank of Brest and had no doubt done duty in the same way in other of Goddard's "chain" of financial institutions. It was quite a custom among weak banks to pass specie around from one to another when they heard of the coming of the commissioners. Some of these were in such straits that they could not even borrow specie. There was an instance in the case of the Bank of Sandstone, at Barry, which never had over $5.00 in specie, though it owned up to liabilities of $38,000.
The safe of the Exchange Bank of Shiawassee disclosed in a remote corner seven cents in silver and copper and a small sum in currency, while it had in outstanding circulation $22,261. Some of these banks had neither capital nor specie; they were organized by the use of stock notes instead of specie, and when they made their reports specie certificates were used. In all, twenty-four banks in the state were thus organized and operated, notwithstanding the statute requiring twelve and one-half per cent of the capital in specie to be paid in on the day of organization. From the 19th of August, 1837, to March 22, 1838, there were thirty-nine banking organizations fully established, with an aggregate capital of $3,065,000. Before the work ceased there were seventy organized. Of the whole number there was but one in Detroit, although it was Detroit who put up the Bank of Gibralter and one at Plymouth, both in Wayne county.
MUSTER ROLL OF "WILD CATS"
Following is the muster roll of "Wild Cats" that actually commenced business :
347
Name and Location. Capital.
Farmers Bank of Homer, Homer. $100,000
Bank of Oakland, Pontiac. 50,000
Bank of Utica, Utica. 50,000
Bank of Brest, Brest, Monroe Co 100,000
Merchants & Mechanics Bank, Monroe City 150,000
Jackson County Bank, Jackson. 100,000
Bank of Marshall, Marshall. 100,000
Miller's Bank of Washtenaw, Ann Arbor
50,000
Farmers & Mechanics Bank, Pontiac 50,000
Bank of Manchester, Manchester
100,000
Bank of Saline, Saline. 100,000
Clinton Canal Bank, Pontiac.
100,000
Bank of Coldwater, Coldwater.
50,000
Bank of Lapeer, Lapeer
100,000
Grand River Bank, Grand Rapids
50,000
Saginaw City Bank, Saginaw
50,000
Detroit City Bank, Detroit
200,000
Bank of Monroe, Monroe.
100,000
Bank of River Raisin, Monroe.
100,000
St. Joseph County Bank, Centreville
100,000
Farmers Bank of Sharon, Sharon.
50,000
Lenawee County Bank, Palmyra.
100,000
Genesee County Bank, Flint.
50,000
Farmers' Bank of Oakland, Royal Oak.
50,000
Commonwealth Bank, Tecumseh.
50,000
Gibralter Bank, Gibralter
100,000
Commercial Bank of Michigan, St. Joseph
50,000
Bank of Niles, Niles
100,000
Bank of Singapore, Singapore.
50,000
Bank of Allegan, Allegan. 100,000
Bank of Auburn, Auburn. 50,000
Bank of Plymouth, Plymouth.
100,000
Goodrich Bank, Goodrich Mills. 150,000
Farmers' Bank of Genesee, Flint.
100,000
Huron River Bank, Ypsilanti.
100,000
Bank of Shiawassee, Owosso
50,000
Bank of Kensington, Kensington.
50,000
Citizens' Bank of Michigan, Ann Arbor
100,000
Bank of Superior, Superior 100,000
Bank of Sandstone, Barry. 50,000
Merchants' Bank of Jackson, Brooklyn 65,000
Detroit & St. Joseph R. R. Bank, Jackson 100,000
Exchange Bank of Shiawassee, Shiawassee 50,000
Bank of Battle Creek, Battle Creek. 100,000
Farmers' & Mechanics' Bank, Centreville 50,000
Bank of Lake St. Claire, Belvideer
50,000
Michigan Centre Bank, Michigan Centre 50,000
50,000
Branch County Bank, Branch. 50,000
Bank of Adrian, Adrian.
150,000
Chippewa County Bank, Sault Ste. Marie.
50,000
WORK OF BANK EXAMINERS
It must not be supposed that all this went on without some effort to check the headlong mad scramble after "something for nothing." The
HISTORY OF MONROE COUNTY
Bank of White Pigeon, White Pigeon.
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HISTORY OF MONROE COUNTY
movement was astounding and called for some drastic measures to head it off. The commissioners whose duties were defined by the December amendments to the original act started out on their tour of inspection in January, 1838. They were honest, energetic and sagacious men. One of them was Hon. Alpheus Felch, who was a member of the legislature that passed the act, and was one of only four members who voted against it. Six years later he was one of the justices of the supreme court who declared the act unconstitutional. Mr. Felch was the original historian of the wildcat bank period and his account of that time was, at the second session of the Fifty-second Congress, printed as one of the execu- tive documents of the United States Senate.
The principal trouble in pursuing this examination was that the pro- moters of the banking scheme were too fast and two keen for the com- missioners, and over twenty banks were organized and commenced busi- ness before the commissioners commenced their examinations, and on the 14th of that month four more were set in motion with an aggre-
BANK OF RIVER RAISIN, MONROE (1836) Odd Fellows Hall and Postoffice on Right; Burned in 1868
gate capital of $400,000. One of them was in an unknown and inaccessi- ble location, one of them was at Ypsilanti, and another at Owosso, villages sixty miles apart, with no railroad connections. It will thus be seen that the commissioners would necessarily have to keep moving at a lively pace to keep up with the procession going at this gait. They did much, however, to puncture this financial bubble. They refused certificates to a considerable number of banks that were organized and ready for business. They discovered and corrected faulty and objectionable meth- ods of bookkeeping and report-making in the few that were honestly conducted; and in the year 1838 they secured injunctions against twenty- nine fraudulent or unsound institutions. The collapse of this rotten fabric of finance came in due time. All but four of the banks named failed before the end of 1839.
No reliable record of the outstanding circulation could be obtained, but it was thought that $1,000,000 or even $2,000,000 in their worthless notes were in the hands of the innocent public. These notes were of handsome steel engraved work, executed in New York and Boston. The only cost of these to the banks was the freight charges, for they never
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HISTORY OF MONROE COUNTY
paid even the engravers. That was a severe and fatal "jolt" to the whirlwind banking days in Michigan, but the echoes were heard for many months and years.
FOR CIRCULATION IN THE CONFEDERACY
The last incident in connection with it arose during the Civil war. The Union troops and especially Michigan troops sometimes found their pay very slow in coming, or, as was the case, frequently, the people in the confederacy would refuse to take a "greenback" at all in payment for anything, but would willingly take the bills of state banks, no mat- ter where they were or how long defunct. The boys therefore, to be obliging, sent for the old wildcat currency, and found that it was re. ceived very readily. So bushels of the stuff were disposed of. It is re- membered that a stout box was found in the attic of one of the Monroe stores one day which was filled with new bills of the old Merchants and Mechanics Bank of Monroe. They had never been cut apart nor signed, and withal were very handsome and respectable looking bank notes. "The boys" held a council of war and organized a bank "for this occa- sion only." The bills were duly signed with impressive autographs of unknown people, beautifully numbered in brilliant carmine ink, dated in blue ink, neatly trimmed and duly sent southward to hungry soldiers from the peninsula state and found to be "legal tender" for anything that they could buy south of Mason and Dixon line. The writer of this has seen in a unique scrap-book a $100 Confederate note received in Monroe in "war times" with instructions to send its face value in "nice new bills like the last." I believe that fifty five-dollar notes of the "Merchants and Mechanics Bank" were returned very much to the joy of the other party interested. As neither note was, of course, possible of redemption it was a "stand-off" as to the merits of the transaction. At all events it was considered a "legitimate deal" under the circumstances.
AMUSING AND SURPRISING
Some very amusing and surprising facts have come to light in con- nection with transactions in high finance during that period. It proved that of the old town of Singapore at the mouth of the Kalamazoo river. Not a trace remains, and the town might as well have been its prototype in India as in Michigan. The Peoples' Bank of Grand Haven, located at Grand Rapids, did not even go through the formality of adopting arti- cles of incorporation or filing a certificate. A few men simply got to- gether, rented an office, bought a small sheet iron safe, put up a sign and opened up a bank-very simple and easy-and all going along comfortably until the commissioners heard of the affair, when they promptly suspended its functions, took charge and turned its affairs over to a trustee. The anomaly of the thing was that, though started so ex- tremely irregularly, without leave or license had been honestly con- ducted and all its debts to the public paid in full. It was a "close shave" for the projectors and they were undoubtedly glad to settle on any terms.
The utter failure of the free banks discredited the chartered banks and caused their ruin. In January, 1839, there remained transacting business five chartered banks in Detroit, with a branch at St. Joseph, seven chartered country banks, and fourteen associations under the gen- eral law ; at the end of that year only four chartered banks and four free banks were alive, and of these eight banks half of them failed soon after.
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HISTORY OF MONROE COUNTY
BANK OF RIVER RAISIN
The Bank of River Raisin should justly not be included in the list of banks mentioned. It was regularly organized and competently con- ducted, and survived ten years, went into voluntary liquidation and paid off all its obligations. The last notes issued by the bank were dated September, 1844. The president was Austin E. Wing of Monroe, uncle of the cashier of the People's State Bank of Detroit.
FEDERAL BANKRUPT LAW
The first efficient remedy for the evils of the vicious methods of banking was the Federal bankrupt law of 1841. It brought scanty divi- dends to creditors, but it relieved debtors from their crushing burdens and permitted them, sobered and in their right minds, to enter once more the field of industry and activity. Thereafter wildcat banking was a by-word in the state. But the lessons it taught needed to be learned at some time and were not likely to be learned except with experience as teacher. One of its lessons was that real estate nor anything else not immediately convertible into money can support the credit of bank currency.
STATE CURBS ON SPECULATION
John S. Barry was elected governor in the year named, a selection most wise and fortunate. He was a native of Vermont, where he had been trained to habits of industry and frugality. As a pioneer mer- chant in Michigan he had accumulated a very comfortable fortune for those days, and had passed through the period of business depression and distress without asking an extension or failing to meet an obligation. He had not been at all in sympathy with the speculative spirit that had swept over the west. He did not believe that it was the province of the state to engage in works of internal improvement, but since the state had already commenced such works, advocated keeping up those that were of real value until they could be sold upon advantageous terms to corporations or individuals. Frequent schemes for getting money out of the public treasury arose for the benefit of private enterprises; these he vetoed or barred by his personal influence. His power was all the greater because he had the appointment of all the judges and the heads of all departments.
When the state constitution was adopted in 1835 the population was estimated at 87,000. It had few organized townships and fewer organized counties; it had no manufacturing worth mentioning, and had not yet commenced the development on any considerable scale of its resources in copper, iron and salt. In 1840 the census gave Michigan 397,364 popu- lation and there had been established a large variety of industrial inter- ests whose regulation was not embraced within the limits of that instru- ment. Besides that, its experience with internal improvements and wild- cat banks had impressed upon the people the necessity for constitutional provision which would prevent such extravagance and recklessness in the future. A constitutional convention was accordingly called, which adopted a very radical proposition.
The governor, Mr. Barry, was greatly interested in this convention and in all its proceedings to such an extent, in fact, that Wilbur F. Story, then editing a paper in Mason, Ingham county, openly charged the governor with interfering personally with the work of its committees and using his official powers to influence its conclusions. This Mr. Storey was afterwards part owner and the aggressive editor for several years of
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HISTORY OF MONROE COUNTY
the Detroit Free Press, and later of the Chicago Times. The governor denied these imputations and was believed to be exercising his rights and influence in the right direction by his constituents, while it is true and very apparent that his strong personality and mentality were im- pressed upon the constitution that was framed. There were many wise and economical provisions intended to safeguard the interests of the people of the state. For instance, in the way of preventing hasty legis- lation it provided that the second and third reading of bills in the leg- islature should not occur on the same day, and that a majority vote of all the members-elect to both houses should be necessary for the pas- sage of a bill or resolution. It required the legislature to provide a sinking fund for the public debt which fund should be increased an- nually, at least 5 per cent until the whole debt was extinguished. It prohibited the issuance of state script and contained many features that were calculated to raise the credit of the state, which had suffered severely during the wildcat days.
To RESTRAIN WILD BANKING
The constitution of 1835 required the state to inaugurate works of internal improvement, but that of 1850 was more emphatic against this action. It prohibited the state not only from engaging directly or indi- rectly in such works, but from loaning its credit to individuals or cor- porations for that or any other purpose. Having thus secured the state as far as possible against hasty legislation and public debt, and placed restriction upon the tendency to individual speculation, the convention sought to restrain banking within safe and suitable limits by forbidding all special acts of incorporation and providing that no general banking law should be valid unless approved by a majority vote of the people at a general election. No action was taken under this clause of the con- stitution for seven years, which is rather strange, under the circum- stances ; but two banks were organized under the act of 1837, providing for special charters under the 1850 constitution, no special charters could be granted.
There was an interval therefore of twenty years during which but little capital took the form of incorporated banks in the state. This opened up an opportunity for the formation of private banks and loaning firms, which rapidly came into existence and connected with which were many men who afterwards became prominent in financial circles, and whose knowledge of credits afterwards made them useful as officers and organizers of national and state banks.
WOOL AND WHEAT MARKETS
The business of the state was increasing rapidly and large amounts of currency were necessary to move the products of the farmers and manufacturers. Wool was the staple product, and generally a cash product, and Boston was the principal and controlling market for that textile in this country ; large sums of currency were sent from that city every spring to Detroit and Monroe, and thence distributed throughout the wool-growing districts. Upwards of 15,000,000 pounds was in one year shipped to eastern markets, bringing into the state about $5,000,000 less the usual commissions, exchanges and transportation charges.
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