History of Saint Louis City and County, from the earliest periods to the present day: including biographical sketches of representative men, Part 86

Author: Scharf, J. Thomas (John Thomas), 1843-1898
Publication date: 1883
Publisher: Philadelphia : L.H. Everts
Number of Pages: 1358

USA > Missouri > St Louis County > St Louis City > History of Saint Louis City and County, from the earliest periods to the present day: including biographical sketches of representative men > Part 86

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" The Missouri and Yellowstone Rivers afford accessible com- munication by steamboat to within one hundred and twenty miles of the richest mines of the Rocky Mountains. The Pacific Railroad, the early completion of which we now hope for, will open to St. Louis direct communication with the rich gold districts of the Sierra Nevada and Pike's Peak. The rich treasures of these mines will naturally flow back by these routes into the lap of St. Louis. Our great city, being situated in the geographical centre of this continent, reaching out her arms by her rivers and railroads to every extremity of the nation, makes her, by her providential location, not only the great centre of the commerce of the Mississippi valley, but of the United States.

"In view, therefore, of these considerations, and in order to the speedy convertibility of the crude products of these mines into coin, your memorialists pray your honorable body to estab- lish a branch mint in the city of St. Louis, Mo., and, as in duty bound, your petitioners will ever pray."

$ The following general order was issued in St. Louis in Sep- tember, 1862 :

" OFFICE OF THE PROVOST-MARSHAL-GENERAL,

" DISTRICT OF MISSOURI AND IOWA. "ST. LOUIS, Sept. 15, 1862.

" GENERAL ORDER NO. 1.

" All banks, bankers, banking institutions, brokers, and all persons, natural or politic, doing a banking business, or any branch thereof, wholly or partially within this district, are hereby notified and warned that all transfers and assignments of stock, certificates in the nature of stock, certificates of de- posit, money, or currency used as money, or any other credits or effects, made by the following persons, that is to say :

1381

BANKS, AND OTHER FINANCIAL INSTITUTIONS, AND BANKERS.

On the 25th of February, 1863, the National Bank Act was passed, authorizing $300,000,000 of bank capital to be distributed, half of it according to bank- ing capital, and half of it according to population. An act approved July 12, 1870, added $54,000,000, and provided for withdrawing and redistributing an excess above the quota held in New York and the East. This last was found impracticable. The act of Jan. 14, 1875, removed all restrictions. On Oct. 5, 1865, there were sixty-six national banks in opera- tion. The system rapidly absorbed nearly all the banks. The law required that country banks should hold fifteen per cent. of their circulation and deposits in greenbacks, and that the banks in the large re- demption cities should hold twenty-five per cent. The banks were afterwards allowed to count their reserves with their redemption agents as part of this reserve up to three-fifths of the required amount. The act of June 20, 1874, did away with this re- serve, as far as circulation was concerned, and substi- tuted a five per cent. reserve to be kept at Washing- ton, where the redemption takes place.

The act of June 30, 1864, limited the amount of greenbacks to $400,000,000, and such part of $50,- 000,000 more as might be needed to redeem tem- porary loans. A general resolution in favor of con- traction and resumption passed Dec. 18, 1865, and a measure allowing the Secretary of the Treasury to withdraw $10,000,000 in six months, and thereafter $4,000,000 per month, was adopted April 14, 1866. The crisis in England in the spring of 1866, and the war on the continent in the summer of that year, caused some stringency in the United States, and set the gold premium in activity. In February, 1868, McCulloch's contraction was suspended by order of Congress. He had reduced the greenbacks to $356,000,000, at which

" Ist. Persons holding any office, civil or military, under the government called the government of the Confederate States of America.

"2d. Persons holding any office, civil or military, under the government of any of said Confederate States.

"3d. Persons who have in any manner assisted or given aid and comfort to the said Confederate States, orany of them, dur- ing the present rebellion against the authority of the United States, are all absolutely null and void; and all banks, bankers, banking institutions, brokers, and all persons, natural or politic, doing a banking business, or any branch thereof, wholly or partially within this district, are forbidden to recognize or give effect to any such transfer or assignment, or to pay any money, or transfer any credit, by reason of any check, draft, bill of exchange, or order drawn or made by any person claim- ing to be the proprietor, owner, or assignee of any such stock, money, credits, certificates or effects, or the procceds thereof.

" By order of Brig. Gen. SCHOFIELD.

(Signed)

" THOMAS T. GANTT,

" Provost- Marshal-General."

point they stood until October, 1872, when Mr. Bout- well, who affirmed that the $44,000,000 so withdrawn were under his control, issued $5,000,000 of them to correct a stringency in Wall Street. These were withdrawn during the winter, and the sum remained $356,000,000 until the crisis of 1873, when it was raised to. $382,000,000. The act of Jan. 14, 1875, made that sum the limit, allowed national banks to be formed to any extent, and authorized them to issue notes for ninety per cent. of the bonds deposited. Greenbacks to the amount of eighty per cent. on the additional notes issued werc to be withdrawn until greenbacks were reduced to $300,000,000.1

The phenomena of excessive issues of paper money during the years 1863, 1864, and 1865 were pecu- liarly impressive. Prices frequently rose and fell from rapid fluctuations in the volume of the issues as well as from the vicissitudes of war.2

1 The case of Hepburn vs. Griswold, involving the constitu- tionality of the Legal Tender Act as to contracts made before its passage, was decided by the United States Supreme Court in conference Nov. 27, 1869, by the chief justice and seven asso- ciates. One of these, Judge Grier, resigned Feb. 1, 1870, and the decision against the constitutionality of the act as applied to the contracts mentioned was announced February 7th. Judge Strong was appointed Feb. 18, 1870, and Judge Bradley March 21, 1870. The re-argument of Knox v8. Lee, involving the decision just mentioned, took place in December, 1870. Judge Miller read the decision of the majority affirming the constitu- tionality of the law, Chase, Nelson, Clifford, and Field dissent- ing .- Professor William G. Sumner, "First Century of the Republic," p. 258; 8 Wallace, United States Reports, p. 626; 12 Wall. 457, and note, p. 528.

" The following is a copy of an act passed by the Legislature of Missouri, entitled " An Act relative to railroad directors or other officers, bank directors or other officers, and directors or other officers or trustees of any incorporated company or insti- tution," approved March 23, 1863 :

" Be it enacted by the General Assembly of the State of Mis- souri as follows :

"SECTION 1. That all railroad directors and officers, bank directors and officers, and all officers of all incorporated com- panies, or of any incorporated institutions in this State, before entering upon their duties as such officers or directors, shall take and subscribe an oath in form as follows:

"' I, A. B., do on oath (or affirmation) declare that I have not at any time since the 17th day of December, A.D. 1861, willfully taken up arms or levied war against the United States, nor against the provisional government of the State of Missouri, nor have willfully adhered to the enemies of cither, whether domestic or foreign, by giving aid and comfort or countenance thereto, but have always in good faith opposed the same; and, further, I will support, protect, and defend the Constitution of the United States, and of the State of Missouri, against all enemies and opposers, whether domestic or foreign, any ordi- nance, laws, or resolutions of any Stato Convention or Legisla- ture, or of any order or organization, secret or otherwise, to the contrary notwithstanding; and that I do this with an honest purpose, pledge, and determination faithfully to perform the same without any mental reservation or evasion whatever, and

1382

HISTORY OF SAINT LOUIS.

Suffering and distress prevailed among the poor and all who were dependent on fixed incomes. There were stupendous speculations in gold, in stocks and commodities and property, and sudden acquisitions of wealth from these speculations, as well as from gov- ernment contracts, with heavy losses and depressions in many branches of trade and industry. Since the close of the war, the panic of 1869, from a great speculation in gold,1 and that of 1873, from the breaking down of new railroad enterprises, have been the most notable.

The stringency which had occurred in the fall of 1871 and 1872 was significant of the approaching absorption by expanding credit of the legally limited amount of paper currency. In the summer of 1873 the granger agitation in the West frightened investors from railroad bonds and crippled the enterprises which depended on the continuance of these investments for funds. The rebuilding of Chicago and Boston had also caused a great absorption of circulating capital. On the 8th of September the New York Warehouse and Security Company failed, and its suspension was followed by that of one or two firms involved by railroad construction. Confidence in persons known to be burdened in this way was impaired, and a run on them for deposits began. On the 18th of Septem- ber, Jay Cooke & Co. succumbed to this demand, and a panic followed. The country depositors began a

that I will faithfully demean myself while in office,' which said oath or affirmation shall be filed in the office of the clerk of the county court for the county where the said directors or other officers or trustees reside within ten days after taking said oath or affirmation.

"SEC. 2. All railroad directors and officers, bank directors and officers, all officers of all incorporated companies, or of any incorporated institution, who shall fail to take and subscribe to the foregoing oath or affirmation on or before the 1st day of April, A.D. 1863, shall vacate their office as said directors or officers, and the vacancy occasioned shall be filled by appoint- ment or election under existing laws.

"SEC. 3. Any person who shall falsely take, or having taken, shall thereupon willfully violate the oath prescribed in the first section of this act, shall, upon conviction thereof by any court of competent jurisdiction, be adjudged guilty of the crime of perjury, and shall be punished therefor in accordance with ex- isting laws. And it shall be the duty of the judges of all courts having criminal jurisdiction under the laws of this State specially to charge the grand juries in the counties in which said courts shall be held respectively, and of all grand juries, in the performance of their dutics under the laws of this State, specially to inquire concerning the commission of any act of perjury mentioned in the first section of this act. This act to take effect from and after its passage."

1 In September, 1869, a corner in gold was made, which ter- minated in the panic of September 23d, known in history as " Black Friday," when the Secretary of the Treasury inter- vened by a sale of gold to put a stop to the proceedings of a clique of speculators.

"run" on their banks, the country banks called for their balances, and the city banks called their funds in from the brokers. On the 20th the Union Trust Company of New York suspended, and two or three other banks and trust companies followed in quick succession. The panic on the New York Exchange was so great that it was closed, and remained so for ten days. The Gold Exchange closed on Monday, the 22d, with gold at 112.

The financial storm did not break upon St. Louis until late in September. To prevent a panic and business failures a meeting of bank presidents and other members of the Clearing House Association was called at the rooms of the association on Sep- tember 25th, and the following resolutions were unan- imously adopted :

" Resolved, 1st, That, for the protection of our commercial interests and for the purpose of preventing a drain of currency from the banks of this city, we do hereby agree to adopt sub- stantially the plan adopted in New York, viz. : we will not pay out currency or checks except for small sums, to be optional with the banks upon which they are drawn, but we will certify checks drawn on balances in our banks payable through the Clearing-House only.

"2d, That the committee of management of the St. Louis Clearing-House Association are hereby authorized and directed to issue immediately Clearing-Ilouse certificates in sums of five hundred dollars each to an amount not exceeding two million dollars. Said certificates shall be used for the purpose of settling balances between the banks composing the Clearing- House Association, and each bank should be entitled to an amount of said certificates equal to its pro rata of clearings during the past quarter; such certificates so issued to be se- cured by a deposit of ample collateral with a special committee of five bank officers to be selected by the president of the Clear- ing-House Association .?

"3d, That the deposit of collateral with said committee shall consist of United States bonds, bonds of this city and county, such commercial paper and such other securities as the com- mittee in their judgment consider proper and satisfactory, and the committee shall fix the valuation at which the securities shall be taken.

"4th, That these resolutions shall remain in force only until the 1st of November next."

The leading merchants of the city considered this movement of the banks as being commendable and prudent in the highest degree, and as having a direct tendency to prevent a panic and business failures. Immediately after the adjournment of the meeting a general suspension of the St. Louis banks and banking-houses took place, and a run upon them

2 The committee appointed in accordance with the second resolution was as follows : John R. Lionberger, president Third National Bank; William II. Scudder, vice-president State Sav- ings Institution ; James II. Britton, president National Bank of Missouri; Robert Barth, of Angelrodt & Barth ; C. D. Block, president Fourth National Bank ; and R. J. Lackland, president Boatmen's Savings-Bank.

1383

BANKS, AND OTHER FINANCIAL INSTITUTIONS, AND BANKERS.

was thus prevented. As a consequence currency be- came very scarce, and Mayor Brown in a message to the City Council recommended that the city issue its warrants as a measure of relief for existing financial embarrassments. The City Council entertained the proposition favorably, and with curious unanimity on September 29th passed an ordinance providing for an issue of three hundred thousand dollars in municipal " shinplasters." The new scrip was immediately pre- pared, and on November 6th the first installment of one hundred and five thousand dollars was put into circulation. The notes were of three denominations, one dollar, two dollars, and three dollars, and the en- graving and printing were finely executed. They were printed on a superior quality of bank-note paper, in four colors. The back of the notes was brown in color, from which circumstance they came to be known as " brown-backs." In general appearance they were similar, but each was embellished with a different de- sign. They read :

" STATE OF MISSOURI, " ST. LOUIS, Nov. 1, 1873.

" The city of St. Louis hereby promises to pay to bearer at the city treasury one (two or three) dollar. This note is re- ceivable for all city taxes, licenses, and other municipal dues. " JOSEPH BROWN, Mayor, " SAMUEL PEPPER, Comptroller, " A. GEISEL, Treasurer." 1

The panic of 1873 was allayed in New York by the union of the banks, as in 1860 and 1861, although not without serious disasters incident to a shrinkage in values estimated at three hundred millions of dollars within four weeks, principally in the obligations of railroad enterprises, which had been placed upon the market to an extent far exceeding the immediately available financial resources of the country. The re- vulsion was precipitated by a falling off in the demand for American railway securities in other countries. Happily, the course pursued by the bank officers in New York and other cities was effectual in preserving the industry, trade, and commerce of the country from a catastrophe that threatened at one time to overwhelm the economical interests of the people. The suspen- sion of paper payments by the banks continued until Nov. 22, 1873.

In the summer of 1877 considerable depression was felt in commercial circles in St. Louis, which seriously affected the banking institutions of the city.

With the decrease of business the banks became crippled in their resources, and in consequence of fail- ing securities a considerable amount of depreciated real estate came into their possession. The banks could not realize upon this class of assets in time to meet the demands of their clamorous depositors, and when the crisis came a number of the small savings institutions were forced to suspend business.

The German Bank, then located at the corner of Fifth and Market Streets, was the first to suspend, on July 10, 1877. The announcement of the failure of this institution, though not altogether unexpected among the well informed in the community, was a surprise to the public at large. On the 14th, soon after the beginning of banking hours, crowds began to gather at the numerous small banking-houses, and a run was made on them by frightened depositors, who were determined to withdraw their money. As a consequence the Butchers' and Drovers' Bank, at the corner of Fifth and Morgan Streets, soon went into liquidation, and its suspension was followed on the 16th by the closing of the North St. Louis Savings Associ- ation, situated at the southeast corner of Fourth and Morgan Streets, and of the Bank of St. Louis. The suspension of the Bank of St. Louis appears to have been directly the result of the failure of the North St. Louis Savings Association. At the same time a slight run was made on the Boatmen's, but the with- drawals amounted to scarcely more than a trifle for that wealthy institution. A number of the most sub- stantial citizens offered this bank liberal assistance if it nceded it, one gentleman making a proffer of one hundred and seventy-five thousand dollars cash ; but the Boatmen's Bank declined these kind offers, as it felt fully able to satisfy all the demands that might be made upon it. The Provident Savings Association, the Union Savings, the German Savings, the Broad- way Savings, the Biddle Market Bank, and a number of other banks sustained something of a "run," but cheerfully paid all deposits on demand.

At the close of business on the 16th of July the run had about ceased, and although quict prevailed in banking circles, on the 17th another moneyed institution closed its doors. The Bremen Savings-Bank opened as usual on that day, but in the face of a pressing demand for more money than it had at hand, it sus- pended about ten o'clock.

The failure of this bank ended the financial crash of 1877. The suspensions fell like a thunderbolt upon a great number of small depositors, frugal, trust- ful, hard-working men and women, whose little all, representing years of toil at the market-stall or the wash-tub, was swept away.

1 In 1861 the city issued similar warrants, but it would have been better if they had never been issued. Seven years after- wards frauds connected with the issue were discovered, but the full extent of them was never completely developed. Some officials estimate that the city lost by the first transaction about one hundred thousand dollars.

1384

HISTORY OF SAINT LOUIS.

The act of Congress of Jan. 14, 1875, specified Jan. 1, 1879, as the day for the resumption of specie payments by the national banks, and at the time named all the banks resumed, and to-day the country is enjoying unexampled prosperity.

The extent of the commercial interests of St. Louis is plainly indicated by the strength and proportions of her banking business. A larger capital is em- ployed in banking in St. Louis than in any other city in the country of approximate size. Notwithstanding the enormous capital invested the business has been uniformly profitable, and while the number and strength of the banks have increased year by year, the wonderful development of the commercial and manufacturing interests of the city. has kept the money employed.

At one time St. Louis received calls from some of the Southern States for large amounts of money. This demand was sufficient to absorb all the money that the banks could spare during the entire season of moving the cotton crop. It was a profitable business, as the margins were liberal and the borrowers were able to offer the very highest grade of commercial paper. Since the war, with the opening up of new channels of trade, this class of banking business has changed somewhat. Then, again, the commerce of certain of these States is so disturbed that St. Louis bankers noted for conservatism refuse to accept any paper offered from them unless it is well secured.

Therefore this old channel for the employment of bank- ing capital is temporarily closcd. Yet the grain trade, the flour interest, the cotton traffic, and other elements of St. Louis commerce have increased so largely that the bankers have been able to employ their immense resources safely and profitably. In view of this success under conditions somewhat unfavorable, the banks properly feel assured of the future. There is no other section of country in the world that is re- cuperating and advancing commercially so rapidly as the South. The influence that the prosperity of Texas and Arkansas has had upon St. Louis is well known. There is not a branch of trade in the city that has not been benefited by it, and the banking business has had its share. With the further progress of prosperity in the South, and with continued commercial activity, there will be a greater demand for the employment of banking capital than has ever been known in St. Louis, and this will no doubt necessitate an in- crease on even the enormous resources now in the hands of existing banks, if it does not call for the establishment of other banking institutions. For a generation past St. Louis has been renowned for the strength of her banks.

The leading institutions of this class have long held a high rank among the very best banks of the United States, and the representative bankers of St. Louis have enjoyed a wide reputation as enterprising, saga- cious, and prudent financiers.

AGGREGATE STATEMENT OF THE TWENTY-FOUR BANKS IN ST. LOUIS,-eighteen State banks on the 15th December, 1882, and six national banks on the 30th December, 1822,-compared with statement of 31at December, 1881, as exhibited by Edward Chase, manager of the Clearing-House.

Dec. 31, 1881.

Dec. 15 and 30, 1882.

DIFFERENCES.

Capital and surplus.

$11,696,063

$13,492,964

Increase.

$1,796,901

Savings and time deposits.

7,863,391

Current deposits.

35,479,737

8,901,522 32,827,489 632,850

Decrease.

......

2,652,248

Circulation.

1,448,590

815,740

Liabilities

$56,487,781

$55,854,825

Decrease.

$632,956

Bonds to secure circulation

$1,610,000

$710,000

Decrease

$900,000

Good loans and bonds. .....

41,578,226

39,898,252

1,679,974

Cash, checks, and exchange.

5,990,551

7,599,187

Increase.

1,609,036

Cash, coin, and currency ...

6,276,348

6,627,158

350,810

Real estate and other assets.

1,032,656

1,020,228

Decrease

12,428

Assets

$56,487,781

$55,854,825

Decrease $632,956

The Bank of St. Louis, or " the Old Bank of St. Louis," as it is distinctively known, was chartered by the Territorial Legislature on Aug. 21, 1813, the commissioners being Auguste Chouteau, John B. C. Lucas, Clement B. Penrose, Moses Austin, Bernard

Pratte, Manuel Lisa, Thomas Brady, Bartholomew Berthold, Samuel Hammond, Rufus Easton, Robert Simpson, Christian Wilt, and Risdon H. Price.

On the 2d of October, 1813, subscription books were opened under the supervision of the board of

...

1,038,131

1385

BANKS, AND OTHER FINANCIAL INSTITUTIONS, AND BANKERS.

commissioners, Christian Wilt secretary, as follows : At St. Louis, by Robert Simpson ; at St. Charles, by Uriah J. Devore ; at Ste. Genevieve, by Thomas Oli- ver ; at Mine à Breton, by Moses Austin ; at Cape Girardeau, by Joseph McFerron ; at New Madrid, by John La Vallee.

In December, 1814, Thomas F. Riddick, Risdon H. Price, and John Cromwell, on the part of the com- missioners, gave the public notice that

" on the 15th of December instant subscription books will be opened at St. Louis, St. Charles, Herculaneum, Mine à Breton, and Ste. Genevieve, in the Missouri Territory, and at Kaskaskia and Cahokia, in the Illinois Territory, under the direction of William Smith, Theodore Hunt, and Edward Hempstead, at St. Louis; Nathaniel Simonds and Jesse Morrison, at St. Charles ; John W. Honey and Elias Bates, at Herculaneum ; Moses Austin and William H. Ashley, at Mine à Breton; Joseph Pratte and William Shannon, at Ste. Genevieve; Pierre Menard and William Morrison, at Kaskaskia ; Nicholas Jarrot and John Hay, at Cahokia, for the purpose of receiving sub- scriptions for stock in the Bank of St. Louis. A copy of the articles of the association will be found in the hands of each of the commissiouers above named, the books to continue open for three months ; shares at one hundred dollars each."

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History of Saint Louis City and County, from the earliest periods to the present day: including biographical sketches of representative men, Part 86

Author: Scharf, J. Thomas (John Thomas), 1843-1898 Publication date: 1883 Publisher: Philadelphia : L.H. Everts Number of Pages: 1358

Author: Scharf, J. Thomas (John Thomas), 1843-1898
Publication date: 1883
Publisher: Philadelphia : L.H. Everts
Number of Pages: 1358