USA > Ohio > Hamilton County > Cincinnati > Cincinnati, the Queen City, 1788-1912, Volume II > Part 22
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CINCINNATI-THE QUEEN CITY
mittee, which was a long and careful one, was favorable to the banks. It recited that actual specie was very scarce, that it was being drained from the west by the importation of goods from the east, and that it was a measure of self de- fense, to suspend the payment of specie.
In 1816 the first private bank started, John H. Piatt and Company taking up banking, partially giving up the general merchandise business which they had been carrying on, in addition to which Mr. Piatt had been supplying food and supplies to the U. S. army, under contract, during the War of 1812. Philip Grandin, brother-in-law of Mr. Piatt, was the silent partner in the bank of John H. Piatt & Co .; the banking office was on the south side of lower Market street, east of Main-John Armstrong was the first cashier. The firm's notes were soon in general circulation, in addition to those of the three incorporated banks, and some scrip of the corporation of Cincinnati, and some of their wage tickets, which passed as currency.
On January 27, 1817, the Cincinnati branch of the Second Bank of the United States, chartered by the United States in 1816 for twenty years, with a capital of $37,000,000, was established, Gorham A. Worth being sent out from the home office in Philadelphia, to act as cashier. Jacob Burnet was appointed president, with the following as the local directorate: Judge Jacob Burnet, John H. Piatt, Thomas Sloe, Jr., Col. William Piatt, Gen'l Wm. H. Harrison, Martin Baum, Hugh Glenn, Wm. M. Worthington, Joseph Perry, General James Findlay, James Keys, Andrew Mack, Daniel Drake.
The office of discount and deposit was opened in April, on the east side of Main between Third and Fourth streets. This branch of the U. S. bank brought some actual specie into the community, most of the capital, assigned to this branch being from the east, and in July of this year the other banks in Cincinnati resumed specie payments. The established banking hours were from 10 o'clock to I. It was usual to leave all notes for discount the day before the funds were needed, except at the branch bank, which only discounted on Tuesdays.
Early in 1818 the Cincinnati banks found that the paper in circulation in- cluded all the banks except the U. S. bank notes, that the notes of the local banks flowed into the branch bank, through the deposits made there by the land office, and that soon after the issuance of a note, it came back for redemption. The capital assigned to the Cincinnati branch in May of this year amounted to $2,401,- 000, and their loans in June were $1,825,000.
During this year almost $900,000 of paper money issued by the banks of Cincinnati, and vicinity, was sent out to the branch from the home office, for redemption. Cincinnati bank paper had been widely distributed by this time, was quoted at 6 per cent discount in Philadelphia, and Piatt's bank notes at 41/2 per cent discount. Thus the large amount of paper which had been accumulating at the offices of the various branches for some time, was finally sent to Cincinnati for redemption, and could not be immediately redeemed.
From this time on, it was a struggle between the U. S. branch bank and the local banks in regard to the redemption of their paper. The land office would only accept such paper as would be accepted by the branch ; this excluded several Ohio banks which were not paying specie on their notes, but made all the Cin- cinnati bank paper acceptable.
SHIL
NHOS
LITO
CINCINNATI.
"NECESSITY MONEY," 1860
ES
& CO.
BANK OF ESPY, HEIDELBACH & COMPANY
LA
The Prosideal
the Farmers Mechanics Frank ~ Smeinnan promis :
to ferry way of the bomb bonds the. of recording to the tides of . A parution to -
( instit
BANK NOTES ISSUED BY THE FARMERS & MECHANICS BANK, 1812-1820
ONE
13
ONE
Cy the BANK OF CINCINNATI Lama
Dan demand Die
dellaif
ONE DOLLAR
NOTE ISSUED BY THE BANK OF CINCINNATI, 1814-1820
175
CINCINNATI-THE QUEEN CITY
On the 5th of November the Cincinnati banks suspended specie payments. The following is the account given in the Liberty Hall and Cincinnati Gasctte of Nov. 10, 1818:
"On Thursday last, the banks of the town came to the resolution to suspend the payment of specie. This policy was forced upon them by the hostile attitude assumed by the Bank of the United States. The cashier of the office here received orders last week to require immediate payment in specie or U. S. notes of the whole amount due from these banks to that institution, and not to receive in future in deposit or in payments to be made for lands in the receiver's office, which it seems is thus far under the control of this institution. "
The great question of the day was now specie, and specie payments: Thus, when later in the month $120,000 specie was shipped, two wagon-loads of it overland, from the branch at Chillicothe to the home office of the U. S. bank at Philadelphia, the newspapers bristled with the "further draining of Ohio of specie," and "so the specie goes from our western country! Such are the blessed effects of our mammoth bank."
The local committee, which had been chosen to investigate the question of specie payments, reported that it seemed to it a necessary step, for the banks of Cincinnati to suspend specie payments, under the existing conditions, and that they agreed with the action.
Below will be seen statements of the five Cincinnati banks, from 1819 to 1821, which show the local conditions of note issue and specie on hand, at the given dates. In January, 1819, several Ohio banks made a report of their condition to the auditor of state, in accordance with the new law, which appeared in the papers. From these figures, the total circulation almost equalled the total capital, the deposits were one-seventh of the capital, and the actual specie on hand was but one-quarter of the circulation.
EARLY CINCINNATI BANK STATEMENTS.
Capital Paid in
Notes in Circulation Bank and others
Debts due U. S. Deposits Surplus and
Profits
Miami Exporting Co., May, 1821 ..
379,178
104,157
381,907
9,000
Farmers' & Mechanics' Bank, Jan., 1819. .
154,776
87,000
Bank of Cincinnati, Jan., 1819.
216,430
230,696
209,945
47,172
34,467
John H. Piatt & Co., March, 1819
85,429
242,983
64,514
19,637
U. S. Branch Bank, Sept., 1820.
. 2,141,696
473,960
111,656
29,072
Bills Discounted
Specie
U. S. Bk.
Other
Due from Banks
Real Estate
Other
Miami Exporting Co ... 628,266
15,500
Farmers'
& Mechanics'
218,048
26,000
3,650
20,000
Bank of Cincinnati.
527,505
21,70I
6,420
152,776
21,846
7,543
John H. Piatt & Co ..
192,304
*117,465
87,994
+14,000
U. S. Branch Bank ...
1.712,833
140,763
27,340
270,433
564,39I
185
"Consisting in judgments against individuals, considered safe, and also 869,810 of doubt- ful and bad paper.
*Includes drafts on New Orleans, cash on hand and other cash items.
+Advanced on Steamboat General Pike.
Assets
Notes
Notes
15,905
205,57I
Bank
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CINCINNATI-THE QUEEN CITY
In January, 1819, a bill was passed at Columbus, to levy and collect a tax from all banks doing business in this state, without being authorized so to do by the laws thereof-namely, that the Bank of the U. S. upon each office of discount and deposit in this state pay a tax of $50,000 per annum, and every other un- authorized bank pay $10,000-payable September Ist.
The question as to whether the state could collect this tax became the topic of the newspapers.
As none of the banks were paying specie, some merchants took one bank's paper more readily than another's, and two exchange brokers opened offices. The paper of John H. Piatt & Co. became more and more questioned, and in March, 1819, a full statement of the bank appeared, as given in this article, to- gether with a statement of Mr. Piatt's large personal holdings of unencumbered real estate, worth over $500,000. This statement was attested to by a local committee, which had been requested to examine the bank.
By May of this year the Farmers' & Mechanics' Bank resumed specie pay- ments, and became the depository of public monies. The land office announced that the paper of all the Cincinnati banks, including Piatt's, would now be acceptable. The Bank of Cincinnati announced a 4 per cent semi-annual divi- dend, and banking matters seemed on a more solid basis, except for the debt of the local banks to the branch bank for the large amount of paper held against them, as yet unredeemed, except partially by rediscounts.
Late in July, however, the Farmers' & Mechanics' Bank suspended specie payments, having found that while it was paying in specie, its paper had advanced over others, and it had been forced to pay out more specie than it could possibly obtain, even with the aid of the public deposits.
The Bank of the United States did not declare any dividend for the first six months of 1819, being the result of losses either sustained or apprehended, Cin- cinnati and Baltimore being the two branches not in favor at Philadelphia.
On September Ist the tax due the state from the Bank of the United States became due, but unpaid, the bank obtaining an injunction from the U. S. circuit court, to restrain the state from collecting the tax. The state, however, took steps of its own, and after some delay, collected the tax on September 23d. The manner in which the collection was made, is given in the Gazette as follows :
"The officer entered, made the demand, showed his warrant, secured the entrance to the vault, and on refusal to pay, entered the vault himself and levied the amount of the tax, with a small overplus to correct any mistake which might have been made in counting, which overplus he has offered to refund, but he has been refused admittance into the banking house. He used no force or violence, but conducted himself in an orderly, but determined manner. The money has since been conveyed to Columbus to deliver to the auditor."
The two men who collected the tax were imprisoned on a charge of violating the Federal injunction, and held in prison, awaiting some decision about the matter. The matter became the great legal question under discussion. Long communications and editorials appeared in the newspapers. One letter signed "Liberty," after a long discussion of the matter contained the following: "In all events, as yet the United States government and the United States bank are two distinct things in law; but how long they will remain so, unless the people
177
CINCINNATI-THE QUEEN CITY
or states effectually take care of their rights and liberties, God only knows. The state and the United States are not yet in opposition to each other, and we hope no event will ever place them in that condition, but a state of freedom is a state of trial, always liable to invasion from open and covert foes." Finally, the tax collectors were released from prison, the tax was returned to the branch bank, under protest from the state, and it was not until February, 1824, that the U. S. Supreme court sustained the Bank of the United States in refusing to pay the tax.
By the Fall of 1819, local currency was accepted at different rates. Bank notes had been issued as low as 614 cents by all the banks, and also by the cor- poration of Cincinnati. The tickets and notes of the corporation were accepted only at a discount, some merchants advertised that they would only accept Piatt's notes, others at best rates, etc. Finally a committee was appointed to look into the city finances, and to report on its paper, in the hope of making the notes more stabie in value. When the first public statement of the debt of the corporation appeared in November, 1819, it showed $16,087.321/2 net balance of notes in cir- culation.
In November the home office of the United States bank recalled G. A. Worth from the office of cashier of the Cincinnati branch, feeling that they should show some decisive measures at Cincinnati, because of the delay in the reduction of the debt dute the branch by the local banks, and their refusal to pay interest on unredeemed notes.
Thus the year 1820 opened with financial matters in a very unsettled condi- tion in Cincinnati. Gilmore's Exchange office opened, on Main street, a few doors above the Branch Bank building, starting the first regular exchange quotations, quoting U. S. bank paper at I per cent premium, Bank of Cincinnati and Miami Exporting Company notes at 26 per cent discount, Piatt's paper at 30 per cent discount, and reporting no sales in Farmers' & Mechanics' bank notes.
Main street was the financial center, the Branch Bank building, recently completed, just above Third street on Main, being considered the finest building in the town; built of free stone, with Doric columns in front. The Cincinnati Inquisitor-Advertiser commented: "Without compliment we feel warranted in saying, it is an honorable evidence of the spirit and liberal views of the directors, and highly creditable to the architect, Mr. Tilton." The Bank of Cincinnati was on the other side of the street, a few doors below the Branch Bank, Gilmore's Exchange office being above. The Farmers' & Mechanics' Bank and Fosdick's Exchange office were on Main street between Second and Third; the Miami Exporting Company and Calvin, Washburn & Co., brokers and exchange dealers, on Front street, near Sycamore. The banking house of John H. Piatt & Co. was at Second and Broadway. None of the streets, however, were paved; pav- ing being an improvement only recently suggested. Banking hours were from IO o'clock to I, and all notes for discount had to be left at the banks the day previous to obtaining the loan. The Branch Bank insisted on having all notes . dated on Tuesday.
Mr. Worth was reappointed cashier of the Cincinnati branch in January, 1820, the Philadelphia directors being more satisfied with matters here. The notes of the Farmers' & Mechanics' Bank were becoming more and more de- preciated, and by the end of January they were generally refused. Accordingly,
Vol. II-12
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CINCINNATI-THE QUEEN CITY
the bank was forced to close, and to demand payment of their loans. This was a difficult matter, as the other banks would not take on new loans, property was declining in value at an alarming rate, credit was unobtainable, and soon Farmers' & Mechanics' Bank paper was worthless.
In February twenty-one leading merchants announced that they would no longer accept the paper of John H. Piatt & Co., or in any wise encourage its cir- culation. Accordingly John H. Piatt & Co. abandoned the banking business, moved to their old building and warehouse at Front and Broadway, and adver- tised a new stock of merchandise, groceries, iron, etc., for their own paper, or any other bankable paper. Thus the firm redeemed the greater part of its notes with merchandise.
At the beginning of March, 1820, the Branch Bank, the Miami Bank and the Bank of Cincinnati, were the ones still open; the notes of the two latter cir- culating at 24 per cent discount. On June Ist, the Bank of Cincinnati announced that all loans must be reduced at each maturity hereafter, thus going into liquida- tion. The Miami Exporting Company's paper fell to 45 per cent discount, and it was the only State bank open in the town.
The next few months were uneventful. The city was at a standstill. The Branch Bank tried to recover on a note by suit, and was unable to collect, "having no power by its charter to discount promissory notes,"-the State and the Branch Bank were in constant opposition, the tax matter still unsettled, and local feeling hostile to the bank, all of which seemed to be the cause of the prevailing depres- sion.
On October 12, 1820, the Cincinnati branch of the United States Bank was closed, and it was announced that a liquidating agent would be appointed to close up the affairs of the bank. The statement of the Branch Bank in Septem- ber, just previous to its closing, appears further on. The Spy, issue of December 28, 1820, comments editorially : "From this statement it appears that the small sum due at this place, which the bank modestly requests to be paid immediately in specie, is only $2,251,061! All the specie in the western country, leaving out New Orleans and the branch banks, is probably less than one million."
The financial depression increased with the year 1821. The Miami Export- ing Company was the only bank in active operation, and its notes circulated at 30 per cent discount. Bank of Cincinnati paper was accepted at 73 per cent discount. Piatt notes were redeemable in merchandise and circulated at 31 per cent discount. John & G. R. Gilmore's Exchange office, in their new building at 30 Main street, handled most of the exchange business, quoting exchange rates weekly.
By May the local conditions were unchanged-liquidation of the closed banks was very slow. The Miami Exporting Company made a public statement (given on another page), in the hope of helping the credit of their notes, and elected ยท the following directors for the ensuing year: O. M. Spencer, John Sterret, H. G. Phillips, Jacob Burnet, David Griffin, Wm. Ramsey, David E. Wade, James Riddle, Samuel Stitt, Samuel Perry and Wm. Barr.
This strong directorate aided the bank temporarily, but one morning a crowd collected on upper Main street, and marched down the street, toward the Miami bank, intending to get what they could from the bank.
179
CINCINNATI-THE QUEEN CITY
What started as a proposed run on the bank, became a mob a dray with a huge coffin, inscribed "Miami Bank No More!" headed the procession down the street, the crowd becoming larger each moment. When it reached Front street, the mayor, Isaac G. Burnet, stood in front of his office, at the corner, and succeeded in dispersing the mob without violence. Thus the bank was saved from actual demolition, but it was soon forced to go into liquidation.
The period of liquidation, with no banks open, lasted for a long time. The suspended debt of the Cincinnati office of the United States Bank amounted to $2,528,000 in 1822, when Geo. W. Jones was made the first agent of the bank. Collections of debts proceeded-the United States bank was forced to take over an immense amount of real estate, as it was usually the only bidder when it had to foreclose, no one having any credit. From the fall of 1821 until 1825 there were no banks in the city, and general depression prevailed.
The year 1825, however, marked the revival of enterprise in the city. Peter Benson was sent out from Philadelphia in May, to establish another branch of the United States Bank, of which he became cashier, and J. Reynolds, president. The capital assigned to the Cincinnati Branch Bank was $1,329,000. The agency of the first Branch was moved to the second floor of the bank building, and Cincinnati again had a banking institution in operation. Business began to improve steadily; fourteen steamboats were launched during the year, more than had been built in the last five years together. Immigration increased, the population reaching 16,000 in 1826, a gain of 4,000 in two years.
The directors of the United States Branch Bank in 1828 were: Bellamy Storer, Wm. Phillips, James Gest, James Reynolds, M. P. Cassily, Henry Emer- son, William Greene, William Neff, J. W. Mason, Luman Watson, John H. Groes- beck, C. W. Gazzam, Benjamin Urner.
Gilmore's Exchange office continued, owned by Gurdon R. Gilmore.
The population of Cincinnati was continuing to increase rapidly, new enter- prises were being started constantly, and soon the census showed a population of over twenty thousand people. The first issue of Cincinnati bonds appeared, amounting to $30,000, which issue cared for the whole debt of the city. By 1829 the population reached 24,148, which showed a very marked increase over the previous year.
With the expansion of the city, the need for a bank with a state charter was soon felt, with the result that a body of prominent citizens obtained a charter from the legislature in the fall of 1829, for the Commercial Bank. Subscriptions for the stock were taken during the year 1830, shares were widely distributed, and the bank opened for business in April, 1821, at 45 Main street, with an authorized capital of $500,000. The following were the officers and directors : Robert Buchanan, president ; Augustus Moore, cashier ; Robert I. Dunlap, teller ; Rowland Ellis, bookkeeper; directors: Robert Buchanan, Thos. Reilly, Elisha Brigham, E. C. Smith, G. R. Gilmore, Caleb Bates, J. T. Martin, John Young, Henry Orne, Francis Read, David Griffin, Ezekiel Thorp, Wm. S. Hatch.
The people of the United States, at this time, had not reached the point of using banks for deposit, to any great extent. When loans were made the bor- rower usually received notes issued by the bank, instead of a credit against which to check. Savings accounts were very rare, and Cincinnati was just beginning
180
CINCINNATI-THE QUEEN CITY
to feel the need of banks as a depository, as well as a place to secure credit and as a source of notes for circulation purposes. To encourage the habit of saving among the people of Cincinnati, a Savings bank idea had been suggested as early as 1819, but it was not until March, 1831, that the Cincinnati Savings Institution was organized, and incorporated at the following winter session of the legislature. The office was opened at Goodman's Exchange office on West Third street, where deposits were received on Mondays from 10 to I o'clock. Geo. W. Jones was the president, and H. H. Goodman, secretary ; with the following twenty-four directors, in addition to Mr. Jones, viz .: Martin Baum, Ephraim Morgan, John H. Groesbeck, Peter Britt, James Reynolds, Wm. Hartshorne, Jacob Burnet, Wm. Stephenson, Lewis Howell, Francis Carr, Ezekiel Thorp, David Loring, Joseph Gest, Mathew Benson, Jacob Resor, David Gwynne, Wm. Burke, Joseph Smith, Daniel H. Horne, Stephen Burrows, Charles Tatem, George W. Jones, John P. Foote, O. M. Spencer, James McIntire.
This institution was an organization to encourage saving; purely an associa- tion of depositors for mutual benefit as the following announcement of its pur- poses, made at the opening of business, shows :
"The object of this institution is to provide a place where individuals in moderate circumstances, may deposit their funds in small sums and draw interest upon them. It is eminently calculated to promote industry and frugality among the laboring population of the city.
"The charter provides that any person may make a deposit of any sum not less than five dollars, nor more than three hundred in one year, on which he will receive an interest of five per cent per annum. Where the interest is left in deposit, at the end of the year, it is compounded at the same rate.
"All deposits are subject to the order of the depositor and may at any time be drawn out, but no interest is allowed if the deposit is withdrawn in less than four months from the time it was put in.
"At the end of three years, the profits of the institution over and above five per cent are to be divided among the depositors, in such equitable manner as the directors shall determine.
"The directors shall loan money deposited, to such persons, and upon such terms, as they may think proper ; but no director shall borrow any part of the funds directly or indirectly.
"The institution is expressly restrained from issuing any notes in the nature or description of bank notes."
Thus at the beginning of the year 1832, Cincinnati had a branch of the Bank of the United States-a State bank and a Savings institution, as well as two Exchange offices, G. R. Gilmore & Company, and Goodman's Exchange office.
The population of the town was about 28,000 and the business outlook bright.
In February, 1833, the Franklin Bank received its charter, with an authorized capital of $1,000,000, and when one fourth of the capital was paid in, the state commissioners of banking authorized it to begin business. The full capital was soon subscribed. Its office was on Main street, between Third and Fourth, John H. Groesbeck was president, and Augustus Moore, cashier, with the following directors : Samuel Wiggins, John P. Foote, Josiah Lawrence, Edward King, Wil-
JOSIAH LAWRENCE
GRIFFIN TAYLOR
JOHN BATES President of the Exchange Bank
GEORGE CARLISLE
G. W. GANO
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CINCINNATI-THE QUEEN CITY
liam Disney, Wm. Greene, M. T. Williams, Daniel Corwin, Marcus Smith, Geo. Luckey, James McGregor.
During this year, new capital obtained the charter of the Miami Exporting Company, which had closed its doors in 1821, and opened a new banking office at Main and Court streets, having an authorized capital of $600,000. J. C. Wright was the president and J. C. Lamb, cashier.
In February, 1834, two new banks were incorporated, the Lafayette Bank of Cincinnati, obtaining a charter for twenty years, and the Ohio Life Insurance and Trust Co. The organization and the issue of the shares of the new institutions took up the summer of this year, and the new banking offices were not open for business until the fall. In October the Exchange Bank and Savings Institution opened, owned by John Bates & Co., being the only private bank in the city since the existence of John H. Piatt & Co.'s Bank, with the exception of the Exchange Brokers.
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