USA > Michigan > Michigan as a province, territory and state, the twenty-sixth member of the federal Union > Part 12
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work of women, which were shown in the woman's building. Among the interesting exhibits in that build- ing was a library made up exclusively of books by wo- men authors, and in this library Michigan was well rep- resented.
CHAPTER XIII FINANCIAL DISTRESS
T HE year 1893 was marked by one of those financial disturbances which have swept over the country at longer or shorter in- tervals periodically. That it was un- foreseen appears in the fact that R. G. Dun & Co. in their weekly review of December 31, 1892, say: "The most prosper- ous year ever known in business closes today with strong favorable indications for the future." In a book published early in 1893 giving a transla- tion of M. Clement Juglar's work on Crises, which pertains to America, the translator, after pointing out some disturbing features, says: "But the fact that an analysis of the bank returns shows that available re- sources as compared with demands are good and grow- ing, considered in regard to the other signs indicating prosperity, justifies the prediction of the steady devel- opment of a prosperous period." Nevertheless, the crash came so early as May 9th with the conspicuous failure of the Chemical National bank of Chicago, with a capital of a million dollars, followed two days later by the Columbian National bank of Chicago, with a capital of an equal sum. These suspensions accompan- ied by the collapse of private and state banks and busi- ness firms and corporations, paralyzed credit and brought the country to the verge of a crisis.
It seems to be thought by students of finance that this unexpected state of affairs in America was an echo of the failure in 1890 of the house of Baring Bros. which had a disastrous effect in Europe and Australia. The rapid growth and development of large enterprises in America had attracted European capital to an unpre- cedented extent. The magnitude of these investments was not fully realized, from the fact that money paid in the shape of interest and dividends was again invested.
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But when this process was suspended and when foreign capital was withdrawn from municipal obligations and industrial investments there followed at once heavy shipments of gold to Europe without any compensating return in kind or equivalent. It was computed that at this time the principal of America's debt to Europe was not less than two billion dollars. The interest alone up- on this vast debt was sufficient to turn the balance of trade against us when demand was made for its pay- ment in gold. The Sherman law of 1890 for the com- pulsory purchase by the government of silver by the is- sue of new treasury notes was part of the effort of bi- metalists to preserve the equality of the two metals. Then followed negotiations and conventions with Euro- pean countries in the effort to secure their co-operation to this end. The failure of all such plans is well known. In the meantime gold was flowing out of the treasury in an uninterrupted stream, until the net reserve had fallen far below the one hundred million fixed by the law.
Thus a combination of influences worked together to produce an unhealthy condition of finance. It was a pe- culiarity of this disturbance that it was not caused to any perceptible extent by industrial unsoundness. Times were prosperous, so far as industry was concerned. Rail- roads were doing a large and profitable business. Farm- ers were producing large crops which sold at remunera- tive prices. Manufactories were running with full forces of employes and large orders ahead. All these were affected only as the banks suffered from depre- ciated securities or were unable to realize upon their loans. As the bottom fell out of the silver market by the decrease in price from seventy-eight cents per ounce in New York to sixty-five cents in four days, the gov- ernment alone lost on the silver bullion in its vaults over thirty-seven million dollars. Such an effect upon the
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currency of the country could not be otherwise than dis- astrous. Twenty-five national banks suspended in June, which was a larger number than had ever before sus- pended in a single year. Seventy-eight suspended in July and thirty-eight in August. The collapse of pri- vate and state banks was even more alarming. An aver- age of about seventy suspensions a year up to the close of 1892 swelled to four hundred and fifteen during the first eight months of 1893. Their total liabilities amounted to nearly one hundred million dollars. Banks all over the country began to refuse to pay checks except in certified or clearing house checks; currency went to a premium and many factories were obliged to shut down for lack of money to pay their employes.
This state of things in the country generally was much ameliorated so far as Michigan was concerned, by the honesty and integrity of bank officers, the financial ability of directors and the intelligence of citizens. Ef- forts to allay excitement, to consider the situation calmly and deliberately produced good effects. The Central Michigan saving bank at Lansing closed its doors April 18, the Bank of Crystal Falls, upper peninsula, June 12, the City National bank of Greenville, June 23, and the Northern National of Big Rapids, July 8. All these banks showed assets above their liabilities and eventual- ly liquidated with very small loss to their depositors. In addition to these, the First State bank of Hillsdale went into voluntary liquidation May 10, and the Farmers' National bank of Constantine, August 28. Nine private banks closed their doors, with liabilities far in excess of assets. These were I. M. Strong & Son of Bancroft, April 27; Farmers' bank, Brooklyn, May 25; Bank of Rockford, May 15; C. W. Chapin & Co., Stanton, July 10; Mather's bank, Lake View, July 18; Exchange bank, Gaylord, July 18; Exchange bank of Climax, July
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20; Bank of Charlevoix, August 1 ; Olmstead & Storms Galesburg. . The Lansing bank failure was due to very heavy loans to two local industrial enterprises which as it turned out, had been badly managed. The Crystal Falls bank was brought down by the failure of its cor- respondent, the Plankinton bank of Milwaukee.
A widely felt influence in quieting popular excitement and thus averting many failures was the action taken by the banks of Detroit. Though some of these banks were notoriously weak and unable to stand up under any considerable stress, by united agreement among all the banking institutions of the city it was arranged that all should stand or fall together. The failure of any one would have meant great excitement and the undoubted collapse of others, and the effect would have been wide- ly disastrous. By the joint action taken the critical per- iod was tided over and the weak banks were given an opportunity to strengthen themselves or quietly wind up their affairs at a time and in a manner which would at- tract no public attention. This wise action undoubted- ly saved great disturbance and loss in the state gener- ally, as well as in the metropolis locally. The Detroit Clearing House Association adopted the plan which had been previously found effective in New York, and by amendment to its constitution provided for a loan com- mittee, authorized to receive from banks, members of the association, bills receivable and other securities to be approved by the committee, and issue therefor loan certificates, not in excess of seventy-five per cent. of the securities, to draw interest at the rate of seven per cent. and to be received and paid only in settlement of bal- ances at the clearing house. Upon the delivery of such certificates a proper obligation was taken from the de- positing member satisfactory to the loan committee together with the securities pledged therefor, for the
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benefit of the holders of the certificate issued to the de- positing member. In case of loss resulting from default in payment by a member or a maker of the obligation and failure to realize a sufficient amount from these se- curities held as collateral to the obligation, such loss was borne by all the members of the association.
The total amount of certificates thus issued was five hundred thousand dollars. The largest amount out- standing at any one time was three hundred and sixty thousand dollars, on September 11, 1893, and the last certificate was cancelled on November 10, of that year. The issuance of these loan certificates was criticised in some quarters, but without any substantial ground. They were not designed for, neither did they circulate as, money. They were only promises to pay and their sole function was that of discharging obligations at the clearing house. The first banks to feel the general monetary stringency were those of the large cities. In- terior banks in ordinary times are accustomed to keep a considerable portion of their reserve funds in the city banks, for the reason that they get interest on the same while they are always available on demand. During the months of June to September inclusive, several million dollars were withdrawn from Detroit by interior banks, which, to protect themselves against the unusual de- mands by local depositors, were compelled to call in all their available funds. The system of settling clearing house balances with certificates was adopted in such cases with satisfactory results. This action had good ef- fect upon public confidence, for it assured depositors of the safety of their funds, since it apprised them of the fact that by the united action of the clearing house as- sociation the support of all the banks was pledged for the protection of each. The savings banks also enforced, for the time being, the provision of law which permitted
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them to require ninety days' notice before a depositor could withdraw funds. This rule was not rigidly en- forced, as it might have been, but it served the purpose of allaying excitement and giving depositors to under- stand that all were upon an equal footing.
The effects of the panic passed off very slowly. In fact, the depression in industrial and business affairs was more severely felt in the following year than when the excitement was at its height. Three or four years elapsed before matters again resumed their normal con- dition. The real estate market had been stagnant and those who had investments tied up in such deals were sometimes left in a bad predicament. The rally was very tardy in making its appearance. This state of things applied to farming lands, as well as city lots.
John T. Rich of Elba, Lapeer county, was elected governor in 1892 and took his seat on the first of Janu- ary, 1893. He was a native of Conneautville, Pennsyl- vania, where he was born April 23, 1841. His mother died when he was a child and at the age of seven he went alone to Michigan to make his home with rela- tions. Afterward his father removed to Michigan and bought the farm at Elba where he lived until his death in 1872 and on which the son continued to reside. He was brought up a farmer and was a very intelligent and successful one. He was especially interested in the breeding of cattle and sheep, to which he gave consid- erable attention. He was for several years president of the state agricultural society and of the sheep breeders' association. He took active interest in politics and in 1872 was elected to the lower house of the state legis- lature in which he served eight years. He was speaker of the house one term. In 1880 he was elected to the state senate and while serving in this position he was elected to congress to succeed Omar D. Conger, who
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had been chosen United States senator. He served one term in congress and was defeated for re-election. He was president of the farmers' mutual fire insurance company; was appointed by Governor Luce in 1889 commissioner of railroads. He served two terms as governor, being elected in 1892 and again in 1894. Lat- er he served two terms as United States collector of cus- toms at Detroit.
At the election in 1892 Governor Rich was elected by a vote of two hundred and twenty-one thousand to two hundred and five thousand for Allen B. Morse, democrat, and twenty-one thousand for John W. Ew- ing, populist. In 1894 he was re-elected by a plurality of more than one-hundred thousand over Spencer O. Fisher, democrat. In this latter election A. W. Nichols populist, received upwards of thirty thousand votes. The other state officers who served during his first term were J. Wright Giddings, lieutenant governor ; John W. Jochim, secretary of state; Joseph F. Hambitzer, treas- urer; Stanley W. Turner, auditor general; John G. Ber- ry, commissioner of land office; Adolphus A. Ellis, at- torney general; H. R. Pattengill, superintendent of in- struction. In February, 1894, John W. Jochim was re- moved by the governor for cause and Washington Gardner was appointed to fill the vacancy. At the same time James M. Wilkinson was appointed treasurer to fill the unexpired term of Joseph F. Hambitzer, re- moved for cause, and William A. French, was appointed to fill the vacancy in the office of land commissioner, created by the removal by the governor, for cause, of John G. Berry. These appointees were elected at the ensuing election and served during the second term of Governor Rich. The other state officers during this term were Alfred Milnes, lieuteant governor; Stanley W. Turner, auditor general; Fred A. Maynard, attor-
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ney general; Henry R. Pattengill, superintendent of public instruction.
The disagreeable necessity for removing the incum- bents of three important state offices arose in this man- ner. The three officers named were made by law a board of canvassers to canvass the votes cast for state officers and upon constitutional amendments. At the general election on April 3, 1893, several propositions were sub- mitted for amending the constitution. Among these was one to increase the salaries of all the state officers, ex- cept governor. This same proposition, substantially in the same form, had been previously submitted to the people and rejected. This time it was duly declared by the board of canvassers to have been carried by a vote of sixty-four thousand, four hundred and twenty- two in favor to sixty-two thousand, six hundred against. It will be noted that this was a matter in which the can- vassers were directly interested, inasmuch as their own salaries were thereby to be increased, with others. Shortly after the announcement of the favorable result upon the amendment it began to be noised about that there had been some juggling with the figures. Persons who had looked through the returns in the office of the secretary of state reported that, so far from the amend- ment having been carried, there was a decided majority the other way. Thereupon the attorney general took proceedings in the supreme court to mandamus the board to re-convene and canvass the vote anew. This they did, with the report that this time they found fifty- nine thousand, three hundred and seventeen votes in favor to seventy-thousand, seven hundred and seventy- two against. Hereupon the governor peremptorily re- moved the officers who had been guilty of such fraudu- lent practices, in violation of their oaths of office and of common honesty. They refused to surrender, claim-
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ing that the governor had no power to remove them. It should also be said that in explanation of the bad looking mess they said that the figures had been com- piled by a clerk in the office of the secretary of state; that, without verifying them, they simply met and dis- charged their duties in a perfunctory manner by signing the report which the clerk had placed before them. Their contest in the supreme court did not go into the merits of the matter, but was strictly upon the technical ground of the rights of the governor in the premises. The supreme court held that the incumbent of an office had no vested rights therein, that his relations with the people who put him into office were not contractual re- lations, and that the power of the governor was indis- putable. Thereupon the appointes of the governor were given possession of the offices.
United States senator Francis B. Stockbridge was re- elected for the full term of six years. He died, how- ever, a little less than a year later and Governor Rich appointed John Patton of Grand Rapids, to fill the va- cancy until the next meeting of the legislature. When the legislature of 1895 met Mr. Patton was a candidate to complete the term. Julius C. Burrows, who had sat in the house for several years was a candidate for the vacancy and was successful in the republican caucus, in which the vote was divided between himself, Mr. Pat- ton and Schuyler Olds. He did not carry a majority, but a small plurality over Mr. Patton. The same legisla- ture re-elected Senator James McMillan for the full term to succeed himself.
The accession of Grover Cleveland to the presidency in 1893, gave opportunity to place some Michigan men in important positions. Don M. Dickinson was made postmaster general in the cabinet; William E. Quinby of Detroit was appointed minister to the Netherlands;
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Gen. John G. Parkhurst of Coldwater was appointed minister to Belgium; Allen B. Morse of Ionia was made consul at Glasgow, and John M. B. Sill of Ypsilanti was sent as consul at Seoul, Corea. At the spring election in that year Frank A. Hooker was elected a justice of the supreme court, and Frank W. Fletcher and Dr. Hermann Kiefer were chosen regents of the university. The legislature author- ized the organization of naval militia, which was a timely move, as appeared afterward upon the breaking out of the war with Spain. The legislature also author- ized the creation of a public lighting plant in Detroit, the first of its kind in any city of considerable size in this country.
So much of the time of each legislature having been taken up with the consideration of charters and charter amendments for the several municipalities of the state, the legislature of 1893 passed an act for the appoint- ment by the governor of a charter commission whose duty it should be to prepare charters for cities and vil- lages of the several classes. It was the idea of those who advocated this measure that a carefully considered and well balanced general charter could wisely be sub- stituted for the numerous special charters then in vogue, and thus would be saved much legislative time and wrangling. Governor Rich appointed Wm. Hartsuff, Garrett Diekema and Edwin F. Conely as such com- mission. Mr. Hartsuff shortly withdrew for lack of time to give attention to the matter and Mark S. Brewer was put into his place. This commission prepared a ser- ies of charters for villages and cities of small popula- tion and presented the same to the legislature of 1895. But this work apparently was not very cordially received by the legislature. It was handled rather roughly by the committees which had it in charge. The members of
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these committees seemed to think that they knew as much about charter making as did the commission who had given the subject long and careful consideration. The result was the passage of a general village charter and a charter for cities of the fourth class, but upon lines quite widely divergent in some important partic- ulars from those prepared by the commission. The lat- ter accordingly took notice that their services were not likely to prove acceptable to the law makers and their efforts were gradually suspended.
In his message to the legislature of 1895 Governor Rich called attention to the unsatisfactory financial con- dition of the state. The legislature of 1891, being an opposition legislature, appeared to think it good politi- cal policy to cut down appropriations and thus make a record of economy. The result was that in November, 1893, the treasury was empty. The railroads kindly came to the relief of the state by making advance pay- ment of their taxes. The governor taking this fact for a text in his message to the legislature of 1895 urged a constitutional amendment to authorize more liberal bor- rowing. The constitution of 1850 permitted the bor- rowing of no more than fifty thousand dollars. But the governor suggested that while fifty thousand dollars might have looked like a very large sum in 1850, the state and all its resources and the situation of things generally had in the meantime so greatly expanded that the sum had become really a very small one.
A great deal of the time of the legislatures of both 1893 and 1895 was wasted in discussion of a scheme of taxation of church property. From the organization of the state, real estate used for religious and educa- tional purposes has been exempt from taxation. The people had acquiesced in this system, without remon- strance. But some legislator had a bright idea and IV 15
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forthwith sprung the church taxation scheme. The whole subject was threshed over two sessions, but it ended where it began and church property is still exempt.
The state had suffered from labor disturbances which interrupted industrial operations in many ways. The railroads were more or less hampered by striking employes. It was necessary to send troops to Negaunee in 1894 to suppress riots started by striking miners. The labor element had long been trying to stop the competition of prison workers. Sufficient influence was now brought to bear to prevent further contracts for prison labor. This was a hardship in some respects upon the prisoners who were thereby compelled to idle- ness, and upon the state which is compelled to support them. The Detroit house of correction has from its organization, about 1860, worked its prisoners on its own account. Without exception, every year has shown a profit, and in the aggregate the city has derived a large revenue therefrom. No reason appeared in theory why the state could not do the same with its prisons. The legislature of 1895 took steps to abolish the contract system and to utilize the labor of prisoners for the bene- fit of the state. This did not work out quite satisfac- torily in practice, but showed some improvement in the conditions.
The legislature passed an act to stop the fusion of political parties, by forbidding the printing of the name of any candidate more than once upon the Australian ballot. Before the April election a case was made up to test this act and the Supreme Court sustained the law. Politics did not cut much of a figure at the session of the legislature in 1895, in view of the unprecedented fact that there was but a single democrat in the entire Legis-
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lature, John Donovan of the first representative district of Bay county.
At the spring election of 1895 Joseph B. Moore was elected to the supreme bench and Roger W. Butterfield and Charles H. Hackley were chosen regents of the university. Mr. Hackley resigned immediately after election and George A. Farr was appointed to fill the vacancy.
The Legislature authorized the county of Wayne to purchase a site and erect a new county court house. The county then had no court house, but rented quarters for its courts and officers from the city government in the city hall. The site for this new building was purchased in 1894 at a cost of five hundred and fifty thousand dol- lars. It embraces forty-four thousand six hundred and twenty-five square feet. The extreme length of the building is two hundred and fifty-five feet, and its depth one hundred and seventy-five feet. The extreme height of the tower is two hundred and forty-seven feet above the grade level. The material used is gray granite for ground and first floors and Ohio sand stone for the three upper floors and tower. The design and treat- ment are pleasing. There is some ornamentation, but it is not profuse. The interior is elegant in finish, with a grand marble staircase, marble wainscoting and mahog- any woodwork. The total cost of the building, exclu- sive of site, was one million, five hundred and eighty- nine thousand, four hundred and fifty-nine dollars. Ground was broken September, 1896, and the com- pleted building was first occupied July 1, 1902.
CHAPTER XIV THE PINGREE REGIME
H AZEN S. PINGREE first appeared in state politics in the Republican conven- tion held at Grand Rapids in the sum- mer of 1894. He there came forward as a candidate for governor and was defeated by Governor Rich, who, according to all party usage, was entitled to a second term. To thus undertake to set aside the precedent, without some substantial complaint against Governor Rich was foolish. To this folly was added the further unwisdom of requiring the entire Wayne delegation, supporting Mr. Pingree in the convention, to sit mute and refuse to vote when, upon roll call, it became evident that Rich was to be nominated. It was characteristic of Mr. Pingree that he despised conventional ways of doing things and was inclined to govern his conduct according to his own ideas. His career was short but strenuous. Hazen S. Pingree was born at Denmark, Maine, August 30, 1840. He was a son of Jasper Pingree, a farmer, who was born at Denmark in 1806 and continued to reside there until 1871, when he removed to Detroit where he died in 1882. The son lived at home until fourteen years of age, when he went to Saco, Maine, where he secured employment in a cotton mill. In 1860 he went to Hopkinton, Massachusetts, where he was employed in a shoe factory and learned the trade of cutter, at which he worked until August, 1862, when he enlisted as a private in the first Massachusetts regiment of heavy artillery. When the regiment was mustered out at the end of its three years of service, he re-enlisted in the field for the war. With the regiment he participated in the battles of Second Bull Run, Fredericksburg, Spottsylvania, Cold Harbor, North Anna, and other desperate and bloody engagements. In May, 1864, he
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