USA > Michigan > Wayne County > Detroit > The city of Detroit, Michigan, 1701-1922, Vol. I > Part 64
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When the time came to increase the capital stock, Williams resisted because he thought it would be putting the control of the bank in the hands of a monopo- list and taking the management of affairs out of the hands of Detroit citizens. He resigned his office. His letter of resignation recites the reasons for it as follows:
"Detroit Nov. 7, 1824
"Gentlemen:
"It is now more than six years since I was first elected president of the Bank of Michigan and during that period I have been annually reelected. The oper- ations of the institution commenced at an epoch remarkable in the history of the United States for its peculiar difficulties in a pecuniary point of view. Never, perhaps, since the period of the Revolution did the inhabitants of the United States, and particularly of her commercial cities, experience a more general or universal state of distress and bankruptcy. Our territory then inundated with depreciated currency, the stamp of uncertainty and loss was fixed upon every commercial transaction until some time after the establishment of the Bank of Michigan, when the introduction of a currency founded on a solid basis caused all the miserable and depreciated trash soon to disappear. The manner in which the affairs of the institution have hitherto been conducted, has secured public confidence and restored to our territory a fixed and respectable circulat- ing medium. The widespread prejudice and distrust created by the mismanage- ment of a former banking system, have been done away with and the character of this community retrieved from unmerited obloquy and stigma.
"For several years past I have felt the responsibility of the trust confided in me-and as I have no personal interest to advance distinct from the general advantage of this community, I looked forward with solicitude to the moment when I might divest myself of a change without incurring responsibility or reproach. That moment seems now to have arrived. The institution is in a
WAYNE COUNTY SAVINGS BANK AND MASONIC HALL IN '90s
MICHIGAN EXCHANGE, CORNER JEFFERSON AND SHELBY
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CITY OF DETROIT
flourishing condition and its credit established on the most flattering basis, the undivided confidence of community.
"I, however, feel myself bound to declare to you that I do not approve of any measure calculated to subject the institution to the disposition or control of any individual or company however high their standing or character may be. Monopolies are at all time injurious to the general interests of community and in the transfer of stock the monopolizing attempts of individuals should be guarded against.
"As it now appears to me that I can no longer be useful to the institution, I therefore feel free to retire. I therefore do gladly avail myself of the opportunity now offered to me to relinquish a charge which has been a great tax upon my time and frequently interfered with my private interest and domestic comfort. I cannot, however, take this step without expressing, however imperfectly, the feeling which, at this moment influences me and the recollection of the harmony and friendship which have for so many years attended our public and united labors will never be obliterated and will always claim a place among my happiest recollections. I leave you then, my fellow laborers, with best wishes for your future success in the management of the Bank of Michigan and prayers to the divine Disposer of all things for your individual happiness and prosperity.
"John R. Williams.
"P. S. At the same time I wish it to be distinctly understood that I enter- tain no other feelings than those of friendship, towards Mr. Dwight and that the course which I have taken is purely in obedience to what I conscientously believe to be the only correct and proper view of the subject predicated on a fair construction of the charter.
"I also wish the Board of Directors to appoint a person to receive the papers in my possession belonging to the institution. After that is done I shall still have left the consolation of having served the institution and worn out my health and eyes upward of six years without the least compensation."
A meeting of the directors was held November 20th and presided over by Stephen Mack as president pro tem. The other directors present were Thomas Palmer, Philip Lecuyer, Peter J. Desnoyers and De Garmo Jones. Peter J. Desnoyers was elected president. James McCloskey was the cashier at that time, his defalcation being discovered a few days later. John R. Williams presented a bill for his services from the first Tuesday in June, I818. Part of the first year he acted as both president and cashier. For the first year he charged $1,000 and for each subsequent year $500, making a total of $4,000.
If the bank was prosperous before 1824, it was doubly so after its capital was increased. It was the only bank in the north west and its services were greatly needed. Even its large issue of bills was not sufficient to supply the needs of business and many dealers issued shin plasters to be used as fractional currency. The bank had, at various times, associated with it some of the very best men in the city and territory. We find Eurotus P. Hastings, Charles C. Trowbridge, Oliver Newberry and many others who were foremost in the city's business interests. The bank officials varied somewhat, although Trowbridge and Hastings were connected with it for some years and the following names appear as directors at different times: James Abbott, Peter J. Desnoyers, Henry J. Hunt, De Garmo Jones, Stephen Mack, Henry Stanton, Ralph Wadhams, Darius Lamson and William Brewster.
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CITY OF DETROIT
The following is the report of the finances of the bank, made at the request of the Legislative Council in 1827.
Bills at par and funds in deposit in New York
$21,617.74
Bills in Specie paying banks 1,266.00
Specie on hand 18,356.85
Total.
$41,240.59
Debts due the Bank in sending drafts in transit.
68,008.46
Bills discounted. 55,043.02
Forfeited stock 2,520.00
Banking house and furniture.
3,180.41
Capital stoek actually paid in. 69,900.00
Bills in eireulation. 66,880.00
Amount of deposits. 28,951.64
In the original act of incorporation the charter was granted to expire in June, 1839, and the capital was limited to $500,000. In 1831 the Council extended the charter to twenty-five years beyond the date fixed in the original act, and in 1834 the authorized capital was increased three hundred and fifty thousand dollars. In this aet of 1834, a braneh bank was authorized to be established at Bronson (now Kalamazoo) in the County of Kalamazoo. On June 23, 1837, the bank suspended specie payment.
The report of the Bank Commissioner in December, 1837, gives the total assets of the bank as $1,719,722 and the principal items of the liabilities as follows:
$500,000.00
Capital stock paid in
110.330.00
Deposits.
Circulation. 169,439.41
Due the United States Treasury and public officers 539,536.73
In 1836 Trowbridge had resigned as cashier and Henry K. Sanger supplied his place. Both men were honest, capable and diligent. The directors of the bank were men of ability and experience and yet, with every effort that they could make, the bank was forced to elose its doors. It would be unprofitable here to enter into a long discussion of the causes that led to the downfall of this bank and of the ruin and desolation that spread over the entire country following the panic in 1836 and the following years. It was not alone this bank, but all the other banks and commercial houses of the country that suffered and failed or were barely able to weather the great financial tornado.
Governor Mason in his message in 1839 says:
"The unparalleled agitation which has existed throughout the country for the past two years makes it my imperative duty to call your attention to the subject of the currency. It certainly is one of the highest duties of the legis- lature to guard the public against the evils of a spurious and vitiated currency. Ours has hitherto chiefly consisted of the paper issues of the State banks. These institutions, if properly condueted, are not only highly useful, but may be con- sidered as essential to the prosperity of the country. The object of legislation should therefore be, not to destroy, but to correct the abuses incident to the present system of banking.
"In reviewing the history of the embarrassments that have so recently
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CITY OF DETROIT
convulsed the American continent, the distant observer must be struck with little wonder when seeing a nation at the very height of its prosperity, and almost without any apparent cause, suddenly plunged into bankruptcy and ruin. To him, however, who watched the progress of events at home, the approaching catastrophe was inevitable.
"But a short time previous to the revulsion throughout the country, our commercial affairs and trade in general, were greatly extended and chiefly con- ducted on credit. The means for sustaining this state of things were furnished by the immense amount of paper currency issued by the innumerable banks established by the different states. This increase of currency, if it can be called a currency, occasioned increase of prices, fluctuations in the circulating medium and finally a total derangement of the laws of trade and as the profits of the banks were in proportion to their discounts, the approaching demand for specie, by a return of their issues, was overlooked. The period arrived, however, when the demand for specie to pay foreign debts, must be made and the inability in the banks to meet it, produced the general suspension of specie payments which has been so destructive to the country.
"No state, perhaps, has suffered more from the evils of a deranged currency than our own."
One of the many things that led to the financial embarrassment of the times was the continued quarrel between President Andrew Jackson and the Bank of the United States. The bank charter expired in 1836 and a renewal of it, though passed by both houses of Congress by a good majority, was vetoed by the President. The President ordered the deposits of the United States that were in that bank removed and distributed among certain state banks. The Secretary of the Treasury refused to obey the order of the President and resigned his office. His successor, Roger B. Taney, was more compliant and the moneys were removed. The immediate result was widespread commercial embarrass- ment and distress.
In Detroit the public was called to meet at the Capitol, April 4th, 1834, "to remonstrate against the acts of the President in removing the deposits."
This was the largest meeting that had ever been held in the city up to that time. Levi Cook presided, Shubael Conant was first vice president and John Palmer was second vice president. The secretaries were Henry V. Disbrow and Horace Hallock.
Twenty-four men were appointed to prepare a memorial and resolutions. These men were Oliver Newberry, Theodore Williams, Jacob M. Howard, William S. Abbott, Alexander D. Fraser, Tunis S. Wendell, Jerry Dean, John Watson, Phineas Davis, Jr., Job F. Howland, Lewis Godard, Nathaniel T. Ludden, Alanson Sheley, Edward Bancroft, Horace Hallock, Thomas S. Knapp, Benjamin Woodworth, George L. Whitney, Enoch Jones, Abram C. Conniff, Henry Howard, Frederick H. Steevens, John Farrar and J. T. Penny.
The memorial to Congress drafted by this committee, deprecated the avowed hostility of the President to the Bank of the United States and maintained that the action of hostility had unsettled business and caused distress and bank- ruptcy to overspread the nation. It charges President Jackson with attempting to usurp all the powers of government. Nor was this opinion confined to the citizens of Detroit. It was the freely received and expressed opinion of many of the best people of the country that Jackson was establishing a "one man power"; that he was attempting to manage the affairs of government without consulting
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CITY OF DETROIT
either house of Congress and was relying upon his popularity and the interest he took in the "common people" to maintain himself in office. The govern- ment deposits were divided among the various state banks and the Bank of Michigan, as we see by the report of 1837, obtained over $539,000 of these funds. The bank paid interest on this amount to the general government and used the money in its ordinary business. This distribution had spread the sur- plus of the United States Treasury far and wide over the country and a period of speculation of the wildest sort immediately followed. The government debt was completely extinguished and the surplus began to pile higher and higher.
Much of the wild speculation was in western lands and any one curious to ascertain the facts regarding this species of speculation can find sufficient proof by examining the land records of Wayne County for the years IS35-6 and 7. "Every one knew that the public lands had hitherto been the great source of the surplus and expected that it would continue to be so in the future." (Von Holst Vol. 2, p. 187).
Speculation was the order of the day. How to make debts, not how to pay them, was the effort of every one. Jackson undertook to remedy this evil in a manner than only tended to increase the trouble. "Bank notes had been issued in enormous quantities and it was necessary to cheek the evil." On the eleventh day of July, 1836 the President had a circular issued to the various land offices, directing the receivers of publie moneys to accept nothing but specie for lands they were selling. Immediately the persons who were to purchase these lands applied to the bank for specie in exchange for their bank bills. The drain on the banks was too severe to be withstood for any length of time and they were forced to suspend specie payment. The bank did not at once close its doors but obtained a large sum of money, $300,000 or more, from the Dwights, its eastern stockholders, to bring it back to its normal condition. Its assets consisted largely of real estate and real estate securities, neither of which eould be readily sold.
Eurotus P. Hastings, who had been president for some time, gave up his offiee to Charles C. Trowbridge. It was, however, useless to try to save the institution. In 1841 the bank made an assignment of its property to Charles C. Trowbridge, John Owen and Robert Stuart in trust for its many ereditors. The trustees attempted to dispose of the real estate and mortgages and were fairly successful for a time, until Scott began a suit in the court of Chancery to declare the conveyance to the trustees void because of partiality in the payment of creditors. The court appointed Shubael Conant receiver and the trustees assigned all of the property to him. He settled the balance of the property that came into his hands and the bank ceased to exist.
The first banking office of the Bank of Michigan was on the northwest corner of Jefferson Avenue and Randolph Street. In 1831 the bank erected a stone building on the south side of Jefferson Avenue.
In 1836 the bank purchased the lot on the southwest corner of Griswold Street and Jefferson Avenue and erected the building now located there. The history of this lot is to be found on another page of this work.
The third banking establishment organized in Detroit was The Farmers & Mechanies' Bank.
In the article on the Bank of Michigan it was stated that John R. Williams resigned the presidency of the bank upon the increase of stock and the turning over of the institution to the Eastern capitalists. He also presented a claim for
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CITY OF DETROIT
$4,000 for his personal services, which was not paid and upon which he subse- quently began a suit. At this time he was liable to the bank for a note or en- dorsement which we wanted to pay by offsetting his personal claim. In the early part of 1827, Mr. Williams was in New York, but hearing of illness in his family he hastened home and upon his arrival wrote a letter to Hermanns Bleecker, his attorney in Albany, which shows the state of ill feeling that existed between the Bank and himself. This letter is dated May 28, 1827 and in it he says: "You will perhaps be somewhat surprised to learn that a couple of days after my arrival in New York, I was again arrested at the suit of the President, Direc- tors & Co., of the Bank of Michigan for the same note and matters for which I was arrested and gave bail at Albany. I waited on the attorney of Mr. Ward, the agent of the bank, in the same building opposite the Exchange on the left side of the second floor fronting Wall Street, who, after being informed of the facts in relation to the matter, observed to the sheriff that he would pay the costs, remarking that it was Mr. Ward's fault, who had urged that I should be arrested that very day. The attorney seemed to think it extraordinary that their attorney at Albany had neglected to apprize them of the state of the case. The sequel will show that the matter was not to rest there. I arrived at Buffalo on the night of the 22d inst. and on the 23d, being about to embark on board the Superior for Detroit, was again arrested on a writ at the suit of the same Presi- dent, Directors & Co. for the same demand. As the suit was for $4,500 the sheriff required bail to the amount of $9,000, which I was compelled to find or remain in custody. So that I have been arrested three times at different places on the same demand and probably would have been arrested at every village and town through which I passed if they had been apprized when I passed by. Is not such conduct more than malicious and villainous?" With this display of viciousness on the part of the Bank it is hardly to be wondered at that Mr. Williams felt inclined to do whatever he could to injure the bank that he had founded and for which he had worked so long. Williams was a man of great energy, wealthy and of more than ordinary political ability, as is evident by the number of times he held the office of mayor in the City. The formation of a new and rival bank was then, to him, "a consummation devoutly to be wished."
An act of the Legislative Council was passed November 5, 1829 for the establishment of "The President, Directors and Company of the Farmers & Mechanics' Bank of Michigan." The charter was granted to John R. Williams, Levi Cook, Orville Cook, Henry V. Disbrow, John Hale, Elliot Gray, Tunis S. Wendell, Daniel Thurston and Henry Sanderson, who were the first directors.
The capital stock was $100,000 and not to exceed $500,000.
One tenth of the stock subscribed for was to be paid in specie.
Of the directors, a majority must be residents of Michigan.
All banks chartered before 1849 were banks of issue and in the case of the Farmers & Mechanics' Bank no bank note should be issued for less than one dollar. The total issue and all other outstanding debts should never be more than three times the amount of stock issued less the specie on hand.
The life of the bank was fixed at twenty years.
A copy of the charter was sent to Ebenezer Johnson at Buffalo and he soon wrote to John R. Williams on the subject of subscribing to the stock. He said he was sorry to see the name of Daniel Thurston as a director, as he thought they would not get along with him. Johnson said that he and his brother, Elisha Johnson, of Rochester would take one half of the stock.
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CITY OF DETROIT
In January, 1830, Ebenezer Johnson made another proposition to subscribe for three-fourths of the stoek and pay the required money in order to open the bank. He asked that he name the president, John R. Williams and the cashier, Henry M. Sizer. Regarding Mr. Sizer he said that he was a young gentleman of good address, in whom he had great confidence.
Upon the receipt of this offer the board of directors was called in session and a resolution passed February 2, 1830, accepting the proposition and directing the necessary public notice to be given of the opening of the books for subscrip- tions. At this board meeting all of the directors were present except Gray, Thurston and Sanderson. Johnson was notified of this action of the directors and Williams thought he eould divert from twenty to thirty thousand dollars in good loans from the old bank to this bank at once. He said he was willing to act as president but only upon condition that his services were paid for. In the following July, Elisha Johnson visited Detroit for the purpose of sub- seribing for three-fourths of the stock of the new bank for himself and his brother.
The bank paid fair dividends till the collapse of 1837, suspended payments in 1839, but kept its charter alive, renewed business in 1849 and wound up its affairs in 1869, with all debts paid and a moderate return to stockholders. It was the longest lived of any of the early banks.
The Michigan Insurance Company of Detroit was incorporated by an aet of the Legislative Council March 7, 1834. The incorporators and first directors were: John R. Williams, Barnabe Campau, Levi Cook, Enoch Jones, Peter J. Desnoyers, James Abbott, John Palmer, Oliver Newberry, Henry Howard, Solomon E. Mason, Hart L. Stewart, Stilman Blanchard, Oliver Johnson, Anson Brown, Michael Dousman, Christian Clemens and William Draper.
John R. Williams was the first president.
It will be seen from the list of names that several of the incorporators were not residents of Detroit.
The object of the association, as stated in the preamble of the aet, was "to enable them the better to carry on and to extend the business of insurance on ' land and water, and of insurance upon houses, goods and lives, which are the useful purposes of their institution."
It was to exist until the first day of June, IS60.
The stock, estate and property of the concern should never exceed $500,000.
The general objeet of the association is stated in the preamble, but the company was also authorized to ransom persons in captivity.
The corporation could not begin business until $20,000 dollars of the capital stock was paid in.
There was no provision in the aet permitting the corporation to engage in banking.
MICHIGAN STATE BANK
The first intimation we have of the organization of this bank is the some- what imperfeet record of a meeting at Woodworth's Hotel. This record is as follows:
"At a publie meeting held at Woodworth's Steam Boat Hotel, pursuant to public notice, on Monday evening 16th March 1835, in relation to obtaining a charter to incorporate the stockholders to the Michigan State Bank.
John R. Williams was called to the chair and John Truax appointed secretary. The objeet of the meeting having been stated by the chairman, on motion a committee was appointed to draft and report resolutions to this meeting. The
Hugh McMillan
Hiram Walker
John S. Newberry
Henry B. Ledyard
OLD PORTRAITS OF PROMINENT DETROIT MEN
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CITY OF DETROIT
memorial which was prepared on this occasion, and of which only the first draft appears to be in existence, reads as follows:
"To the Honorable, The Legislative Council of Michigan. The Memorial of the undersigned citizens of the United States inhabitants of Michigan.
"Respectfully sheweth
"That from the great and rapid increase of the population and improvements of the Territory; the expansion of commerce on our waters and the growing importance of the City of Detroit as a point of concentration to emigrants from the States of the Union and from Europe; experience of the past and the prospects of the future importance that await our territory become every day more striking and less problematical. But it devolves upon the inhabitants that now occupy the busy stage of life to fulfill their part in order to satisfy the judgment of posterity and carry into effect the beneficent favors of Providence:
"Your Memorialists deem it unnecessary to expatiate on the natural or acquired advantages of the State which is about being formed and which will add another star to the bright constellation of independent sovereignties that constitute our Union. The transition about to take place is too important to fail in attracting our interest and vigilant attention. In view of the great developments, which are evidently near at hand, the present is therefore an epoch highly interesting to the people of Michigan. The prospects before us should stimulate every good citizen to exertion. And above all the Legislative authority should, we respectfully suggest, second the efforts of our enterprising citizens. The increasing exigencies of the country and City of Detroit for moneyed capital are universally acknowledged. Were it necessary to offer any argument to show that there is a great want of capital in this city, it would be sufficient, perhaps, to advert to the fact that for some time past considerable sums have been loaned by individuals in the city to safe borrowers at the enormous rate of sixty per cent per annum, notwithstanding the statutory provision fixing the legal rate of interest at seven per cent. The existence of such usurious practices in the face of the law affords the strongest grounds to show the absolute and indispensable necessity of an increase of the monied capital of the country.
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