USA > Michigan > Saginaw County > History of Saginaw County, Michigan; historical, commercial, biographical, Volume II > Part 80
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This was a remarkable plan, peculiar of the times and worthy of the projector. The bank suspended, and in court proceedings which followed an employee declared, "they broke the bank the first night."
A Legislative Report, dated January 18, 1839, stated that "no species of fraud and evasion of law, which the ingenuity of dishonest corporations has ever devised, have not been practiced under the banking act. The loan of specie from established corporations became an ordinary traffic, and the same money set in motion a number of institutions. Specie certificates, verified by oath, were everywhere exhibited, although these very certificates had been cancelled at the moment of their creation by a draft for a similar amount ; and yet such subterfuges were pertinaciously insisted upon as fair business transactions, sanctioned by custom and precedent. Stock notes were given for subscriptions to stock and counted as specie, and thus not a cent of real capital existed, beyond the small sums paid in by the upright and unsuspecting farmer and mechanic, whose little savings and honest name were necessary to give confidence and credit. Quantities of paper were
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BANKS AND BANKING
checked out of the banks by individuals who had not a cent in bank, with no security beyond the verbal understanding that notes of other banks should be returned at some future time."
Financial Ruin
As a natural result of the speculative mania, inflation of the currency and the fraud and trickery of the banks, a violent reaction set in in the Summer of 1838, and all the wild cat banks were at once in dire distress. It was either a case of redeeming their currency in specie, or suspend, and eventually all were forced to the latter alternative. When all the banks had been swept out of existence there were bills afloat representing millions of dollars. Many of these were in the hands of bona fide holders who lost heavily thereby, while some had never been in circulation, and were then given away promiscuously. Children used to play with them, and in the rural districts, where paper hangings were scarce, people papered their rooms with them making the walls of a log cabin look rather grotesque, and they were thrown into old garrets, closets and bookcases, to be at last forgotten by their once prosperous holders.
Currency of the Bank of Zilwaukee
In this connection Fzra Rust related an amusing incident relating to the bank bills of a proposed banking institution, styled the Bank of Zilwau- kee. In 1849 Johnson Brothers came to Saginaw Valley, and at a point on the river which marked the head of deep water navigation, laid out and started a village which they confidently expected would become the metropolis of the valley. Having not the slightest idea that the Carrollton bar would ever be dredged to admit a large class of lake vessels above to Saginaw City, they proceeded to build a dock, warehouse, saw mill, several houses, and opened a store stocked with general merchandise. From clear cork pine from the forests of the Cass River, they cut heavy planks and built a road to Saginaw, thereby connecting their embryo city with civilization. To further their aims they planned to open a bank of their own, to be named the Bank of Zilwaukee, and had a quantity of very fetching currency printed for its circulation. But their hopes of building up a prosperous community were not realized, for East Saginaw, although occupying a no more favorable location, was forging rapidly ahead, and about 1858 they failed.
At this juncture their saw mill property was purchased by James H. Hill, and Mr. Rust, who had recently come to Saginaw, was placed in charge of the lumbering operations. At intervals during the following years, one or other of the Johnsons would come into the mill office and look longingly at an old iron safe in the corner, of the ancient kind which opened with a large brass key. Several times they remarked that there might be some their personal papers in the safe that they were looking for, but as the key had been lost Mr. Rust refused to break open the safe, merely to satisfy the curiosity of its former owners.
About 1863, when the operations of Mr. Hill at Zilwaukee were con- cluded, the affairs there were wound up and the office records and furniture were moved to Saginaw. The last thing to meet the eye of Ezra was the old iron safe within which he had never looked. The mystery surrounding Johnsons' actions in relation to it, came back to him in a flash, and he resolved to open it. Securing sledges and chisels the door was soon forced open, revealing to their astonished gaze package upon package of clean and crisp bills of the Bank of Zilwaukee, which apparently had never been circulated. The Bank, indeed, had never opened owing to the failure of its projectors. Hastily filling his pockets with the bogus yet interesting cur- rency, Mr. Rust replaced the safe door and returned to Saginaw.
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HISTORY OF SAGINAW COUNTY
ZILNAUKIE
"In the Tomates. on demand, atour Ufficio 995
Silani, Three Dollars within interest fer value inred ...
THREE
SPECIMEN OF THE UNCIRCULATED CURRENCY OF THE BANK OF ZILWAUKIE
For some time he displayed the paper money of the bank that never existed, to the great amusement of his friends; and in writing to some others m the Union Army he slipped in a bill or two as a curiosity. The effect of this action was surprisingly manifested. In an incredibly short time letters by the score began to pour in on Mr. Rust thanking him for the "good" currency, and having one common appeal. "Send us more of that pretty money," they said, "the people down here like it better than their own shin- plasters."
The Recovery Was Slow
The financial highway travelled by our Michigan pioneers illustrates the weakness and dangers of a system which strives to create something from nothing, and brings out in strong contrast the strength and security of the National Banking and Federal Reserve Systems. To reach our present national financial soundness, with its stable yet elastic currency, the country passed along a road stewn with the ruins of corporations, business firms and individuals. Looking backward it is hard to understand how men of ordinary wisdom and prudence could have been led into such a wild and reckless system of banking as existed eighty to fifty years ago. Individual and State credit were ruined, and all suffered severely for it. Michigan, which was being rapidly settled by a sturdy New England population, received a check in her immigration and commercial prosperity, from which she did not recover for many years. Saginaw Valley severely felt the depression, and not until the coming of enterprising men with capital to develop the timber resources of the Michigan forests, did the county awaken to industrial and commercial activity.
Beginning of Sound Banking
The first banking institution in Saginaw Valley conducted on sound and enduring principles of finance was the bank of W. L. P. Little & Company. This private banking office was organized at East Saginaw in November, 1855. with a capital of ten thousand dollars, Jesse Hoyt being the silent partner. The bank occupied rooms up stairs in the Exchange Block, at Water and Genesee Streets, and for several years was the only financial institution in this section of the State, extending north as far as Alpena and Cheboygan. In August, 1859, the banking office was removed to a ground floor room in the new Bancroft House Block on Genesee Street.
747
BANKS AND BANKING
In October, 1856, James F. Brown, who had come to East Saginaw in 1853 and found employment in the mercantile house of Mr. Little, became connected with the bank in the capacity of general utility man. He built fres, swept out the office, collected checks and drafts, attended to the cor- respondence, received and paid out money, and did about every thing else in connection with the financial relations of the people. About 1860 the capital of the bank was increased to twenty thousand dollars, which was ample for the business needs of the times. Through all financial storms of this forma- tive period, this private bank survived with the full confidence of the community.
Meanwhile, the city had grown and prospered to a surprising degree and in August, 1865, the organization of a bank under the new national banking law, was first discussed. In October of that year a charter was granted, and on January 1. 1866, the banking office of W. L. P. Little & Company was merged with the new bank, having a capital of two hundred thousand dollars, which was named the Merchants' National Bank of East Saginaw. William L. P. Little was president, James F. Brown was cashier, and Donglas Hoyt was assistant cashier, of the new bank. Upon the death of Mr. Little, on December 9, 1867, James F. Brown was elected president of the bank, Douglas Hoyt, cashier, and L. C. Storrs, assistant cashier. Later, when Mr. Storrs became assistant treasurer of the Flint & Pere Marquette Railroad, the office of assistant cashier of the bank was abolished.
The old banking office on Genesee Street, though centrally and con- veniently located, was far from being adequate to the business transacted, and in 1872, when the capital and surplus of the bank amounted to three hundred and seventy thousand dollars, an elegant stone-front bank building was erected on North Washington Street, at a cost of fifty thousand dollars. This modern fire-proof structure with large vaults extending through the third floor, and with massive walnut furniture and fixtures, was one of the show places of the city, and the office was well arranged for the transaction of a large business. For the last twenty-two years this building has been occupied by the Second National Bank.
The growth of the Merchants' National Bank is shown by its increase in deposits, from 1866 to 1874:
April, 1866 $192,000
March, 1871 $334.000
April, 1867 241,000
April, 1872 445,000
April, 1868 221,000 Sept .. 1873 (before panic). 373.000
April, 1869 256,000
Mlav. 1874 (after panic) .. 236,000
March, 1870 305.000
An exhibit of the condition of this bank is shown in the statement of May 6, 1881 :
Resources
Loans and discounts. $557.464.88
U. S. Bonds. 125,000.00
Stocks, mortgages, etc .. 31,500.00
Undivided profits 69.848.74 Dne from banks 115,141.56
National bank notes 112,500.00
Individual deposits 522,700.10
Other deposits 78.693.57
Specie and currency . 186,964.69
Redemption fund, etc .. . . 8,625.00
Liabilities
Capital stock $200,000.00
Surplus 100,000.00
Real estate 54,523.00
Current expenses, taxes. 4,613.28
$1.083,832.41
$1.083.832.41
748
HISTORY OF SAGINAW COUNTY
The Home National Bank
Early in 1882 the Home National Bank was chartered under the National Banking Association, and took over the business of the Merchants' National. The new bank was organized by Wellington R. Burt, Temple E. Dorr, William C. McClure, James H. Booth and others, and began business in the banking office formerly occupied by its predecessor. W. R. Burt was president, James H. Booth was cashier, and A. H. Comstock held the office of assistant cashier. It was the largest banking institution in Saginaw Valley, having a capital of three hundred thousand dollars and a surplus of fifty-four thousand, and because of its strong financial backing and con- servative management enjoyed the patronage of the largest lumber operators.
In April, 1882, Asa W. Field was engaged as teller of this bank, and from that time until its liquidation in 1896, with the exception of a few months, he continued in this position and that of assistant cashier. No banking official in this city was better and more favorably known. He was a close student of finance and was very well informed on the best banking systems and forms. He died in the Fall of 1914.
Every institution serving the public must run its course, and in the case of the llome National this was accomplished on December 31, 1895, the date the business and banking property was sold to the Second National Bank. Some time before, Mr. Burt, in the belief that Saginaw was on a downward course and would never recover from the depression following the decline of lumbering and salt manufacture, had determined to close out all his business interests here. Enlisting the co-operation of his friend, Temple E. Dorr (in whose combined interests the control of the stock was vested) he forced the liquidation of a very successful bank much against the wishes of the other stockholders. In some respects his hasty and arbitrary action touched violation of the national banking act, but as no formal protest was made nothing came of it. Much feeling as to the injustice of the action, in respect to the interests of other stockholders, was aroused, which called to mind his similar procedure in closing up the tool works, the saw and file works, and his efforts to that end in the case of the Saginaw & Bay Salt Company, several years before. Whatever credit is due Mr. Burt for his benefactions in behalf of education and civic progress for the benefit of the people, and of which full account has been given in the preceding pages, little may be said of him in a complimentary way concerning his disposition and policy toward industrial or commercial projects.
Other private banks in the early period of banking in East Saginaw were: the Saginaw Valley Bank, established by Bliss, Fay & Company in 1863, which did an extensive business for a time : Thurber & Hollon, opened in 1868, and John Gallagher & Company, in 1870. The business of these banks was well conducted for several years, but owing to the increase of national and savings banks here, the capital employed by the smaller institu- tions was withdrawn and otherwise invested.
The First National Bank
Shortly after the National Banking Association became an actuality Erastus T. Judd, Samuel 11. Webster, William 11. Warner, DeWitt C. Gage and others organized the First National Bank of East Saginaw, which was the first institution to be established in this valley under federal supervision. Its capital was fifty thousand dollars, but was later increased to one hundred thousand; and its banking office was in the Bancroft House Block, on Washington Street. A number of years after the bank built a three-story structure at Genesee and Cass ( Baum) Streets, in which it transacted con-
749
BANKS AND BANKING
siderable business for an extended period. The first officers were E. T. Judd, president, C. K. Robinson, cashier, and L. A. Clark, teller. Afterward Mr. Clark was elected cashier, which position he held until Clarence L. Judd assumed the responsibilities of the office. In the Fall of 1896 this bank became deeply involved by reason of some very questionable lumbering investments, and was forced to suspend to the considerable loss of its stock- holders. This was the only bank in Saginaw that ever closed its doors because of unlawful and reckless action of its executive officers.
Savings Bank of East Saginaw
Until 1872 there was no savings bank or special facilities to encourage the saving of money by thrifty people, but in March of that year Henry C. Potter. Edwin Eddy, Augustus Schupp and others organized the Savings Bank of East Saginaw. The bank was incorporated April 1 under State charter, with a capital of one hundred thousand dollars. Its banking office was in the basement of the Merchants' National Bank building. on Washing- ton Street. II. C. Potter was president. Edwin Eddy, vice-president, and .A. Schupp was treasurer of the bank.
As shown by the statement made July 4, 1887, this bank had a surplus of thirty-eight thousand five hundred and seventy-eight dollars: and its deposits amounted to six hundred seventy thousand eight hundred and forty- six dollars. Its loans on real estate and other securities totaled five hundred and sixty-eight thousand two hundred and three dollars, and bonds of East Saginaw and school districts of the county amounted to thirty-one thousand nine hundred dollars. In 1887 the directors were: H. C. Potter, William L. Webber, Edwin Eddy, W. J. Bartow, George C. Warner, Emil Moores, H. C. Potter, Junior, James B. Peter, Charles Lee and Henry Melchers.
In 1890, having outgrown its office facilities in the bank building on Washington Street, the Savings Bank purchased the property at 310-12 Genesee Avenue. and erected thereon an imposing four-story brown stone office and store building with a frontage of forty feet. The west half of the ground floor was occupied by the banking office, and the remainder of the building was leased to Henry Feige for his large furniture business. From that time the business of the Savings Bank increased very rapidly and at length reached such a volume that it was necessary to make use of the entire building. The structure was entirely remodeled and the floor space arranged to meet the needs of the future as well as those of the present. The banking office was refitted with modern furniture in marble and mahogany. and the private offices and ante-rooms were sumptuously furnished. In May. 1907. the business and valuable property of the Savings Bank was absorbed by the Bank of Saginaw, which has since occupied the banking office for its East Side bank.
East Saginaw National Bank
The national banks of Saginaw were augmented in 1884 by the organi- zation of the East Saginaw National Bank, whose office was at 108 South Washington Avenue. John G. Owen, who was largely instrumental in organizing the bank, was president: Edwin Eddy was vice-president, and S. S. Wilhelm was cashier. Its capital stock was one hundred thousand dollars. As shown by a statement of its condition on August 1, 1887. its surplus and undivided profits amounted to twenty-two thousand two hundred and fifty-three dollars. At that time the directors were: Max Heavenrich, D. B. Freeman, Louis Quinnin, Edwin Eddy, William B. Baum, and S. S. Wilhelm, president. William T. Wickware was cashier. The bank outgrew
750
HISTORY OF SAGINAW COUNTY
its cramped quarters and removed to the office in the Bliss Block, vacated by the Michigan Central Railroad ticket office, now the store of J. Will Grant. A few years later the bank liquidated its affairs.
The American Commercial & Savings Bank
In the Fall of 1891. believing that the business interests of the city would appreciate the services of a bank extending liberal facilities to the people, a number of enterprising men organized the American Commercial and Savings Bank, with a paid-in capital of one hundred thousand dollars. Isaac Bearinger, who was one of the prime movers in this project, was elected president : William L. Webber, vice-president ; and George W. Emerick. cashier. The bank was located in a two-story office building adjoining the Bearinger Building on the south, where it remained until 1898, when the bank purchased the bank building of the old First National and moved into it. William Barie meanwhile became president of the bank. and Hugo G. Wesener, who had been assistant cashier. was advanced to the cashiership. On January 1. 1899, the business and property of the bank was turned over to the Bank of Saginaw, which at once moved its East Side office to the banking office of the former at Genesee Avenue and Baum Street. The affairs of the American Commercial and Savings Bank were then closed and its stock liquidated.
George L. Burrows & Company
The first solid financial institution at Saginaw City was the private bank of George L. Burrows & Company, which was formed in 1862. It was at a time when banking facilities of the lumber town were greatly needed, and to provide a suitable counting room for his bank Mr. Burrows in the follow- ing year, built the first brick block on Court Street. In 1869 Fred II. Potter, for years well known as the veteran banker of the West Side, became associated with the Burrows Bank. With the rapid development of the lumber and salt business of the Saginaw Valley, the bank extended its scope of usefulness, and came to be regarded as one of the solid institutions of its kind in Michigan.
The enormous transactions and business of the Rust Brothers and other lumbermen interested in large timber land deals, were largely made through the Burrows Bank, and it acquired a reputation for conservative management. In the financial panics of 1873 and subsequent years this bank was justly
. 16.
1
treasurer of the
SAGINAW
CITY
Bearer.,
5
FIVE CENTS at the Banking Office of GEORGE L. BURROWS when presented in Jums of C ne er mere 9 eMars
SAGINAW, MICH Vox 24 1862.
Save Sous Le Co Buffalo NY
Heen der
SCRIPT OF THE CITY OF SAGINAW. CIRCULATED IN THE EIGHTEEN-SIXTIES
BANKS AND BANKING
held to be one of the strongest banks in the State, having, it was said, more specie in its vaults than many large city banks of two or three times the liability. After a successful career of fifty-three years, nearly all of which was spent in the one banking office, its business was taken over in 1915 by the Bank of Saginaw.
The First National Bank of Saginaw
This bank of long and honorable career, like some others of this city, had its origin in a private banking institution. In 1866 the banking house of Miller, Braley & Company was formed by Harry Miller and Alfred F. R. Braley, which soon acquired a profitable business. So successful and solid was this bank that, as the city grew and greater banking facilities were needed. it was merged into the First National Bank of Saginaw. This bank was organized in 1870 with J. E. Shaw as president and Smith Palmer as cashier. Mr. Smith was succeeded by Alfred F. R. Braley who continued in the office of cashier until his death in August. 1880. In 1881 the officers were: Ammi W. Wright, president : Charles W. Wells, vice-president ; William Powell. cashier, and Smith Palmer, assistant cashier. These officers and Reuben Kimball and Gordon Corning composed the board of directors.
The condition of this bank on May 9. 1881, is shown by the following statement :
Resources
Liabilities
Loans and discounts. $753.860.14
U. S. bonds 50.000.00
Due from banks 7,787.70
Bank notes outstanding. 45,000.00
Furniture and fixtures. . 3,000.00
Deposits 560.273.49
Current expenses 5,226.14
Specie and other cash. 93.569.20
Redemption fund 2.250.00
$915,693.24
$915.693.24 Afterward Thomas W. Stalker assumed the office of cashier, which position he held until the bank was absorbed by the Bank of Saginaw. in 1898. For several years after, its office was used by the Saginaw County Savings Bank, which had been organized by Richard Khuen. A. P. Bliss. Isaac Parsons and others, but it in turn was consolidated with the Bank of Saginaw which, by previous acquirement of banks in this city, has become the largest bank in this section of Michigan.
A Run on the Bank
Many years ago, when confidence in our banks was less firm and univer- sal than now. there was a miniature run on the national bank at Saginaw City. It started from so ridiculous a cause as to be a matter of amusement to all who knew about it. Dark whispers passed from ear to ear that "some- thing was rotten in Denmark," or, in other words, that a heavy depositor had called for his money to the great inconvenience of the bank, and the shaking of its financial base. It was a very nonsensical piece of business, and according to A. F. R. Braley, cashier of the bank, publicity was simply mixing the sublime with the ludicrous.
"On Wednesday last," said Mr. Braley. "a German by the name of Schick, who keeps a saloon in the city, came to me and asked me to sign a petition for him to obtain a renewal of his license. This I refused to do. stating that I had signed one already and that the law did not contemplate a man signing more than one petition for the same purpose. At this reply Mr. Schick became very much incensed and said :
Notes rediscounted 38,592.22
Capital $200.000.00
Surplus and profits 71,827.53
752
HISTORY OF SAGINAW COUNTY
" 'Mr. Burrows, he sign four petitions, why you no sign mine, eh ?'
"'Mr. Burrows may sign a hundred if he pleases, that is none of my business,' I replied.
".Well. I got money in this bank and I take him out.'
"'Do so, sir, you know the method to pursue in the matter.'
".Well. I draw my check and I demand my money.'
"'AAll right,' I said, turning away. 'Mr. teller pay Mr. Schick the balance of his account.'
"This was done and Mr. Schick's check for thirty-three dollars and fifty cents was immediately cashed, to his great astonishment, and he departed. Yesterday we were surprised and somewhat annoyed by a constant influx of depositors with their several checks calling for sums of from five to twenty dollars, to the number of some thirty or forty. This constituted the run on the bank in which the footings of money paid out did not anywhere near approximate other busy days within the month.
"After standing on the corner for several hours talking about the grievances of their friend Schick, and noting the usual heavy deposits being made in the bank by the merchants and regular customers, the money in their pockets began to grow heavy, and one by one they slipped back inside and redeposited it. No person with knowledge of the strength of this bank could for a moment have thought of its failure. It never vet had to sue for the payment of a note. It has not one dollar charged to profit and loss account, and can pay one dollar and fifteen cents on the dollar tomorrow, if demanded. This is stated to show the ludicrous character of the whole business."
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