USA > Michigan > Wayne County > Detroit > The city of Detroit, Michigan, 1701-1922, Vol. I > Part 63
Note: The text from this book was generated using artificial intelligence so there may be some errors. The full pages can be found on Archive.org (link on the Part 1 page).
Part 1 | Part 2 | Part 3 | Part 4 | Part 5 | Part 6 | Part 7 | Part 8 | Part 9 | Part 10 | Part 11 | Part 12 | Part 13 | Part 14 | Part 15 | Part 16 | Part 17 | Part 18 | Part 19 | Part 20 | Part 21 | Part 22 | Part 23 | Part 24 | Part 25 | Part 26 | Part 27 | Part 28 | Part 29 | Part 30 | Part 31 | Part 32 | Part 33 | Part 34 | Part 35 | Part 36 | Part 37 | Part 38 | Part 39 | Part 40 | Part 41 | Part 42 | Part 43 | Part 44 | Part 45 | Part 46 | Part 47 | Part 48 | Part 49 | Part 50 | Part 51 | Part 52 | Part 53 | Part 54 | Part 55 | Part 56 | Part 57 | Part 58 | Part 59 | Part 60 | Part 61 | Part 62 | Part 63 | Part 64 | Part 65 | Part 66 | Part 67 | Part 68 | Part 69 | Part 70 | Part 71 | Part 72 | Part 73 | Part 74 | Part 75 | Part 76 | Part 77 | Part 78 | Part 79 | Part 80 | Part 81 | Part 82 | Part 83 | Part 84 | Part 85 | Part 86
George H. Hammond, Sr.
Simon J. Murphy
Alexander McGraw
Francis Palms
OLD PORTRAITS OF PROMINENT DETROIT MEN
619
CITY OF DETROIT
From 1802 till 1873, the tax levy was passed upon by a "citizens' meeting", an inheritance from the old New England town meeting system. The citizens were called together in the council chamber and the proposed tax levy was submitted to them, item by item, and passed upon by viva voce vote. The attendance at the meetings was generally not large, and the budget was practically decided by a few of the leading citizens. This answered very well at times when there was not much interest in the budget, but it broke down completely in 1873, over a hotly contested issue. The question was upon the voting of $200,000 in bonds for the purchase of land for a park. The subject had been discussed for months and feeling ran high. The council chamber was too small to hold a tenth part of the citizens who gathered, and the meeting was held at the west entrance of the city hall. The crowd that gathered filled a whole block of Griswold Street and overflowed into Fort. In the end it became a mob. There were numerous fist fights and one irate citizen produced a halter, with which he proposed to hang the mayor. It was impossible to hear the speakers, and the viva voce vote was inconclusive. An attempt at a division was equally futile. This was the last attempt at a citizens' meeting. Legislative enact- ment provided for a board of estimates to take its place. This board served a very useful purpose for nearly forty years. It was composed of two members from cach ward, elected upon ward tickets and five members at large elected on a general ticket. The president pro tem of the common council, the chairman of the ways and means committee and the heads of departments were ex officio members of the board, with the right to speak, but not to vote. The heads of departments were required to submit to the controller, on or before the first Tuesday of February in each year, their estimates of the amount of money required for their respective departments for the ensuing fiscal year. The controller was required, by the first Tuesday in March, to transmit them to the common council, together with such other funds as were mandatory under the charter. The common council had until the 28th day of March for their consideration, when they were transmitted to the board of estimates. That body had about a month for their consideration. It might reduce or eliminate items but could not increase any item nor add new ones. Its members had no patronage, nor any other official duties that could influence their action on the estimates. The membership generally included many substantial tax payers and its influence was generally conservative and prudent. The city justly boasted of a low tax rate and a small public debt.
Under the present charter, adopted in 1914, the estimates go to the common council which has a month for their consideration. They then go to the mayor, who may decrease or disallow any items, and his action on such items is final unless subsequently overruled by a two-thirds vote of the council. The budget must go to the city treasurer by the fourth Tuesday of April, and taxes arc payable, without percentage added from the 15th of July till the 15th of August. The assessment list upon which city taxes are based is also used for the state and county taxes in December.
With the recent growth of the city, and especially with the increasing cost of service during and since the war, the cost of the municipal government has enormously increased. In 1910 the assessed valuation was $377,335,980, and the gross city appropriations were $10,091,665; in 1915 assessed valuation $736,552,960; gross city appropriations $17,344,859; in 1920, assessed valuation $1,699,149,580; appropriations, $69,628,223.
620
CITY OF DETROIT
The net city debt stood for a number of years around $18,000,000 or $20,000,000. January 1, 1920 it was $26,837,317, but there were bonds author- ized but not sold to the amount of $33,111,350. At the April election an issue of $15,000,000 for street railway purposes was authorized, and at the primaries, August 31, 1920, the following additional issues were submitted to the voters: for sewers, $20,000,000; waterworks, $12,000,000; both were adopted by large majorities.
The enlargement of the city's area and the great increase in its population and business have introduced large figures into all departments of the municipal finances. The assessed valuation as completed in May, and the net city debt at the beginning of the fiscal year in July, have been from 1916 to 1921 inclu- sive as follows:
Assessed Valuation
Net City Debt
1916
$ 736,552,960
$16,217,863
1917
1,176,517,900
18,127,310
1918
1,237,238,500
18,280,820
1919
1,372,713,110
25,176,987
1920
1,699,149,580
26,901,334
1921
1,854,053,560
68,395,828
The increased assessment in 1917 was due in great part to the annexation of 21 square miles of adjoining territory into which the population and business had already overflowed. The increase in the next three years was due partly to annexations, partly to enhanced actual values and partly to a raising of assessments so as to bring them more nearly up to cash value. The property exempt from taxation, including schools, churches, city, county and United States property exceeds $150,000,000.
The recent great increase in the public debt is due to very unusual conditions. During the war needed improvements were held up by a scarcity of labor and by government restrictions. Meantime the city annexed 40 miles of new terri- tory, creating a demand for sewer and water extensions. The population in- creased from 726,000 in 1916 to 993,739 in 1920, this ereating an imperative demand for new schools and other improvements. The people voted liberal amounts in bonds, not only for the objects named, but for parks and playgrounds, hospitals and a new House of Correction. The bonds outstanding October 1, 1921, amounted to $77,789,248, and there was $9,393.519 in the sinking fund, leaving the net debt something over $68,000,000, as stated above. Of the bonds outstanding $21,782,000 was for sewers. The city has nearly completed a system of trunk lines, including two of the largest in the country, and adequate to the needs of the large area for many years to come. Over $18,000,000 raised by bond issue was used for school buildings and $4,800,000 more of school bonds were ready for sale. The water debt was $11,567,114, expended for pumping works, extensions of the mains and a complete filtration system. The people voted $10,000.000 in bonds for parks and playgrounds, of which $3,500,000 was issued up to October 1 and $1,500,000 more was advertised for sale. Public Library bonds to the amount of $2,475,000 were outstanding, as were SS,750,000 of street railway bonds. Receipts from fares are expected to care for the interest and sinking fund requirements of the latter. In October, 1921, additional bonds for various purposes were sold at good prices. In November a referendum
621
CITY OF DETROIT
vote gave approval of an issue of $5,500,000 in bonds for the construction of a suitable building as a soldiers' memorial.
The gross appropriations and the tax levy for the fiscal year commencing on the first of July in each of the years named was as follows:
Gross Appropriations
Tax Levy
1916
. $18,821,364
$13,585,069
1917
31,381,058
16,218,778
1918.
36,658,876
22,010,134
1919
41,119,482
25,501,273
1920.
69,628,223
35,086,358
1921.
65,339,634
40,163,706
The difference between the two amounts is made up by bond issues, receipts from the primary school interest fund, licenses, interest on daily balances and miscellaneous sources.
There were three conditions which account for much of the recent large increase in appropriations. The increase in salaries and the cost of construction work occasioned by war prices, the great increase in population and the annexa- tion of 40 miles of new territory. Some of the increased costs were met by the bond issues to which reference is made above, but these were in addition to the expenditures for engine houses, police stations, for the maintenance of those two departments, for the support of the schools, for garbage collection and for all street and alley service. The distribution of some of the largest items in the appropriations for the fiscal year 1921-2 was as follows: public school fund, $20,689,174; interest and sinking fund on the public debt, $6,981,603; general road fund, including paving and cleaning streets and alleys, $6,960,298; police department, $5,877,622; fire department, $4,604,582; health department, $3,302,355; public lighting, $2,198,900; water board, $1,967,692; parks and boulevards, $1,620,210; and welfare fund, $1,567,802. The tax levy for the current year is $21.67 on the thousand dollars of assessed valuation.
PRIMITIVE CURRENCY ISSUES
The settlement at Detroit had a varied experience with currency before any experiment with banking was ever tried. In the earliest trade with the Indians wampum had its use, and fire water cut an important part. Furs and pel- tries had a fairly well defined value in trading for other products, beaver skins establishing the best accepted standard. Tobacco also had some use as a medium of exchange. None of these, however, furnished a very convenient or flexible currency and, during the Revolution, Detroit merchants issued their own due bills which passed for currency in the community. In 1779 the governor officially recognized such issues, the amount allotted to each merchant being regulated by the estimated value of his stock on hand. The amount of coin in circulation was not large, and the practice arose of cutting Spanish dollars into halves, quarters and eights as a substitute for small coin.
THE FIRST BANKING VENTURE
It was under these conditions that the first proposition for a bank of issue was made. When the territory was organized the legislative powers which Congress conferred upon the governor and judges were construed by that body to include the granting of charters. At their meeting March 27, 1806, a petition was presented by six Boston gentlemen for authority to establish a bank with a
622
CITY OF DETROIT
capital of $400,000. The future historian of early Michigan banking, Gov. Alpheus Felch, with full knowledge of the business requirements and facilities of the time had this to say in his retrospect of the situation:
"This was at a time when the local business could scarcely have demanded a banking institution, or have afforded much promise of its success. The small town of Detroit had just been laid in ashes. The population of the entire terri- tory was inconsiderable. The country was possessed mainly by the Indians, and the small French settlements were neither enterprising nor prosperous. No roads pierced the forests to the interior; no manufactures existed; agricul- ture yielded nothing for market, and navigation had scarcely begun to vex the waters of the rivers and the lakes. The multifarious transactions of commercial and civilized communities, which require bank and banking facilities, were almost unknown in the frontier settlement."
The only exception to this general statement was the fur trade, and that was financed mostly from the East. It was from Boston men, therefore, headed by Russel Sturgis, that the petition for a bank came. It was possible that the long distance of the locality from the centers of business may have been a con- sideration in seeking this charter. If the promoters could issue bills and give them circulation in the Atlantic states they would be slow in finding their way back to Detroit for redemption.
THE FIRST TERRITORIAL BANK BY C. M. BURTON
An act of the governor and judges of Michigan territory was passed Septem- ber 19, 1806, entitled "An Act Concerning the Bank of Detroit." It provided "That a bank shall be established at the city of Detroit, the capital stock whereof shall not exceed one million of dollars, to be divided into ten thousand shares." Subscription books should be opened the next day and be closed in four days thereafter. The official name of the corporation was the "President, Directors and Company of the Detroit Bank." The corporate life was fixed one hundred and one years. The officers were to consist of a president and four directors. Bills of the bank payable on demand "shall be receivable in all payments to the territory." The governor was authorized to make a subscription to the bank in behalf of the territory.
These were the prominent features of the act. There was no limit to the emission of bills, unless fixing the capital at one million of dollars can be con- strued as a limit. No security was required by the act for the redemption of the bills. This act was signed by William Hull, governor, Augustus B. Wood- ward, chief judge, and Frederick Bates, senior associate judge. It was attested by Peter Audrain, secretary of the governor and judges in their legislative department.
The petitioners for the incorporation of this bank were citizens of the eastern states, being Russel Sturgis, Henry Bass, Jr., Benjamin Wheeler, Samuel Coverly and Nathaniel Parker, all of Boston. Associated with them were Andrew Dexter, Andrew Dexter, Jr., and Samuel Dexter, personal friends of Judge Woodward. Some of these men had been engaged in the Michigan fur trade for years and experienced the necessity of a bank at Detroit. They asked for a bank with a capital of $80,000 and not more than $400,000.
The petition for the establishment of the bank is dated March 31, 1806,
.
SOUTHEAST CORNER GRISWOLD AND CONGRESS ABOUT 1881, THEN THE LOCATION OF THE PEOPLES SAVINGS BANK
SITE OF UNION TRUST BUILDING IN EARLY '90s The Hammond Building at the left
625
CITY OF DETROIT
showing that the matter was under discussion by the local authorities some time before the act of incorporation was passed.
William Flanagan, of Boston, was sent on here to take charge of the bank, to superintend its organization and to act as cashier. He gave a bond to the "bank which is contemplated to be organized," in the sum of fifteen thousand dollars and his bondsmen, in addition to the names above enumerated, were David S. Eaton, Eliphalet Williams, Dudley S. Bradstreet, George Odurne and Barzillia Holmes, also of Boston.
The stock was subscribed within the time limited by the law and many of the best informed citizens of Detroit became stockholders. Among others we find the names of:
James May 46 shares
John Griffin.
10 shares
Solomon Sibley 100 shares
James Henry.
100 shares
Samuel T. Dyson.
10 shares
William Hull.
5 shares
William Brown
50 shares
Elijah Brush .
100 shares
Richard Pattinson
5 shares
Robert and James Abbott
10 shares
Territory of Michigan
10 shares
Henry B. Brevoort.
10 shares
Willam McDowell Scott
1 share
Augustus B. Woodward. 1 share
Woodward became the first president. The bank purchased two lots on the north side of Jefferson Avenue west of Randolph Street. That street was opened eleven feet further east than it is now, at first, and the vacated portion was added to lot twelve which now stands on the corner. The first deed recorded in the city registry is one from the governor and judges to the Detroit Bank of the lots eleven and twelve above described, November 10, 1806. The vacated street on the corner was conveyed to William Flanagan March 18, 1809. On these lots the corporation erected a small brick building (the first brick struc- ture in the territory) and opened a bank. Immediately after the charter was granted bills to the amount of from SS0,000 to $100,000 were issued and sent to Boston for disposal, the officers hoping that only a part of them would ever return to Detroit for redemption.
Some opposition to the formation of the bank, originating probably in Boston, reached Congress and on the 8th of February, 1807, a committee was appointed to present a bill disapproving of the bank act. Josiah Quincy was chairman of this committee. The disapproving bill was reported to the lower house on February 24, 1807. A few days later it passed the House and on the third of the following month it passed the Senate without noticeable opposition. This was the only Michigan act ever disapproved by Congress.
In December, 1808, the subject of the bank's title to its banking house and lot in the city was presented to the governor and judges in Detroit and the attorney general of the territory was requested to give an opinion as to the ownership of the land. His answer was as follows: "The Governor and Judges of Michigan on the 19th day of September, 1806, adopted a law incorporating a bank at Detroit under the name of The President, Directors and Company of Vol. 1-40
626
CITY OF DETROIT
the Detroit Bank, to whom, as commissioners under the aet of the Congress of the United States of the 21st of April, 1806, they did deed in fee simple abso- lute, two certain lots of ground in the city of Detroit. Subsequent to this and on the third day of March, 1807, the aforesaid law incorporating the Bank of Detroit aforesaid was negatived by Congress by reason whereof the said incor- poration became dissolved; the question then is, in whom is the fee of these lots vested that were thus deeded as aforesaid to the corporation, they having never made any disposition of the same. Answer :- There are in general two kinds of incorporations, aggregate and sole; created either by the common law, by legislative authority, as by the acts of parliament, by prescription or by charter. To a corporation created by one of the foregoing means they have incident to them certain things, and that, too, without any express words in their charter to authorize them, as for example to purchase and alien lands, to sue and be sued, implead and be impleaded; so likewise are they liable to lose their corporate franchise and be destroyed in a variety of different ways and means, as for example in a corporate sole by a reunion with itself, and antecedent cor- porate right granted out. So likewise in aggregate corporations by surrender, by forfeiture and last by the dissolution of its corporate franchise by legislative authority, which Mr. Blackstone considers as boundless in its operation.
"The question, then what is to become of the lands that a corporation thus dissolved were seized and possessed of at the time of its dissolution, these agree- ble to the common law of England must revert to the grantor, donor or their heirs, for the law, saith the same learned authority, doth always annex a condi- tion to every such grant, that if the corporation be dissolved the grantor shall have the lands again, because the cause of the grant faileth, which, in contem- plation of the law, is only supposed to be made during the life of the corporation and this is said to be the only instance where a reversion can be expected on a grant in fee simple absolute.
"To the Legislature of the Michigan Territory.
"With very great respeet "I have the honor to be the Legis- lature's most obedient and very humble servant, "E. Brush."
Andrew Dexter, Jr., one of the original corporators, began buying up the stoek which had been issued and had completed the purchase, with the excep- tion of one share held by Judge Woodward, when on the 12th of April, 1809, a deed of the same property was made to him by the governor and judges. Sub- sequently a judgment was obtained against Dexter and a levy made upon the property. Dexter had conveyed the lots to Elijah Brush, who died in 1814, still holding the title. The ereditors under the judgment assigned their claims to the Bank of Michigan and that institution began suit against Brush's heirs to obtain the title alleging that Brush held it in trust only. Many years passed before the matter was finally determined and then, in 1833, under a decree of the supreme court the title passed to the Bank of Michigan.
After the charter of the Detroit Bank was annulled by Congress the bank officials continued to carry on the concern as a private bank. James Henry became president and a new issue of bills was made which were payable out of the assets of the bank, but for which the stockholders became personally liable. In the first issue the assets only of the bank were holden for the bills. An
627
CITY OF DETROIT
attempt was made in the legislature, to pass a bill that would put an end to the bank, but the action failed because Judges Woodward and Griffin would not consent to it. Hull and Witherell, however, bided their time and on December 9, 1808, they passed "An Act for the punishment of Crimes and Misdemeanors." Section 28 of this act prohibits the issuance of bills by private banks under a penalty of twice the amount of the bills issued. A day or two afterward, James Henry, the president, William Brown, one of the directors and William Flanagan, the cashier of the bank, sent a petition to the Legislature asking that the act passed December 9th, be repealed. The act was not repealed and the bank necessarily went out of existence.
No attempt was made for some years to found another bank. The War of 1812 occupied every thought and attention and the destruction of property, and poverty of the citizens prevented, for years, the return of business or of pros- perity. It was not until 1817 that the pressure of local business drove the people to take up again the organization of a bank.
OTHER EARLY BANKS BY C. M. BURTON
An act to incorporate the Bank of Michigan was passed by the Legislature, then consisting of Lewis Cass, governor, and judges Augustus B. Woodward, John Griffin and James Witherell, December 19, 1817. The act provided that the capital stock should be one hundred thousand dollars, in shares of one hun- dred dollars. The first directors were Solomon Sibley, Stephen Mack, Henry J. Hunt, Abraham Edwards, John R. Williams, Philip Lecuyer and William Brown. The official name of the bank was "The President, Directors and Company of the Bank of Michigan." There is a detailed history of the bank in volume thirty of the Michigan Pioneer and Historical Society publication and it would be needless here to repeat it. Much has already been written concerning the defal- cation of the cashier, James McCloskey. The bank was quite small as we reckon banks of today, and the stealing of $10,300 nearly ruined it, or would have done so if the shortage had not at once been made good. The following notice on the subject was printed in the Michigan Herald:
"Bank of Michigan
"Detroit, May 19, 1825
"Messrs. Chipman and Seymour :- In answer to your request to be made acquainted with the later occurrences at this bank which has led to the removal of the cashier, James McCloskey, with a view to its publication, I am authorized by the board of directors to state that on the 17th inst. a defalcation was ascer- tained to exist and from subsequent investigation it was satisfactorily proved that the stigma arising from that fact alone, rests with the late cashier. And I will state for your satisfaction, and that of the public, that no injury will arise ultimately to this institution, nor any present inconvenience result from it.
"Respectfully your ob't servt. "E. P. Hastings "Pres."
John R. Williams was the first president and he retained the office for many years. During the time of his presidency, David Stone became a small stock- holder and in 1823 began urging the increase of the capital stock. In a letter
628
CITY OF DETROIT
of July 23, 1823, he calls attention to the fact that only $15,000 has been paid in, in money, and that the expenses of carrying on the bank would be $2100 per annum, making a loss that would entirely wipe out the principal in ten years. He understands that some one has offered the bank $5,000 for its charter. This offer should be accepted, he thought, and the money divided among the stock- holders, paying them about thirty-three cents on the dollar.
Williams was greatly incensed at this letter and told Mr. Stone that his premises were wrong and that the bank was making money, not losing. But, he said, "There can be no doubt that if the active capital could be increased it would be greatly to the advantage of the stockholders."
Mr. Stone's efforts to increase the size of the bank were successful. Henry Dwight of Geneva, was solicited to purchase two hundred shares of the stock and thus become a large, perhaps the largest, stockholder. The stock was purchased in the name of James Abbott, but this was only for the purpose of concealing the name of the real owner. Williams went to Geneva, in July, 1824 and from there writes: "Mr. Dwight informs me that the stock subscribed by Mr. James Abbott is for himself and his connections, but he does not wish to give publicity to the fact for the present." The arrangement for issuing and disposing of the bills of the bank were that $1,000 in bills should be left at Geneva with Mr. Dwight and $5,000 dollars of par money. The balance of the bills should be taken down to New York as soon as convenient.
Need help finding more records? Try our genealogical records directory which has more than 1 million sources to help you more easily locate the available records.