USA > Ohio > Franklin County > Columbus > History of the city of Columbus, capital of Ohio, Volume I > Part 52
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 | Part 87 | Part 88 | Part 89 | Part 90 | Part 91 | Part 92 | Part 93 | Part 94 | Part 95 | Part 96 | Part 97 | Part 98 | Part 99 | Part 100 | Part 101 | Part 102 | Part 103 | Part 104 | Part 105 | Part 106 | Part 107 | Part 108 | Part 109 | Part 110 | Part 111 | Part 112 | Part 113 | Part 114 | Part 115 | Part 116 | Part 117 | Part 118 | Part 119
At the time the United States Bank sent its branches into the state of Ohio, our state banks, with few exceptions, had issued bills to such an amount as rendered it impossible to redeem them without pressing hard upon the borrowers, and this pressure, improvidently made, forced those borrowers to become borrowers of the branch banks to keep good their credit in the state banks. From a variety of circumstances known to all of us, the principal of which was the general peace of Europe, the paper of our State banks was not, by far, as valuable in the seaport towns where our merchants are indebted, as that of the Bank of the United States. Hence it happened, that the paper of the United States Bank had little circu- lation among us. It was immediately gathered up by the merchants and sent off, and when the time came around that the debtors of the branch banks were called upon to pay up, their only resource was in our daily diminishing specie capital, or in the notes of State banks negotiable only at a ruinous discount. The consequence was that the state banks were broken, and in truth they were virtually broken before the law passed to tax the branches of the United States Bank.
The money lenders at one period of the late war [1812], would advance to the govern- ment only seventy dollars in cash for one hundred dollars in government securities. The bank of the United States, during the last year, advanced to the government one hundred and six dollars in cash for one hundred dollars in the same securities.
A writer, referring to this era in our history, says he knew one manufacturer " who was compelled to borrow from one house about thirty thousand dollars, and paid as long as he could pay it monthly, at twentysix to thirty per cent." The coin in circulation at that time was almost entirely Spanish, consisting of the silver dollar and its half, quarter, eighth and sixteenth, the last two being known as " four pence-ha'penny" or "fippeny bit," and "ninepence" respectively. There was also a "pistareen " worth eighteen and three quarters cents. The last two of these pieces being scarce, their place was supplied by cutting a quarter into two or four pieces, which passed for a " ninepence" or a "fip" respectively, and were known in popular parlance as " sharp shins." As late as 1852, Indiana, Illinois, Kentucky, Virginia, Louisiana and Michigan, furnished nearly all the circulation
399
BANKS AND BANKING.
used in Ohio. New England had what was known as the Suffolk bank system, by which all her banks were required to keep a specified amount on deposit in Boston, so as to keep their notes at par in that city, and New York had adopted u safety fund system by which the circulation was sought to be made secure But the Metropolitan Bank Note Reporter of February 11, 1860, contained a broker's notice that he would purchase the notes of sixtytwo specified banks at a discount of from five to ninety per cent., and in the list of banks which was published, there were one hundred and twentyone "closed," thirty " broken " and nine " worthless" in New York; and in New England one hundred and twenty " closed," thirty " broken " and twentysix " worthless."
The following is a list of notes current in Ohio at one time : Bank of Marietta, Bank of Steubenville, Farmers' and Manufacturers' Bank of Steubenville, Western Reserve Bank, Bank of Mt. Pleasant, Bank of St. Clairsville, Bank of Lancaster, Bank of Chillicothe, Franklin Bank of Columbus, Dayton Manufacturing Com- pany, Commercial Bank of Scioto and the Bank of Xenia. In addition to the un- trustworthy character of the bank notes in circulation, counterfeits were so abun- dant, that it required the knowlege of an expert to avoid them. There were counterfeits on a large portion of Ohio banks, as well as the Bank of the United States. The engraving of the bank notes of that day was so poor, that it was not a very difficult task to imitate them. In 1851, some of the notes of the State Bank of Ohio having been counterfeited, the bank had a set of new plates engraved, and so perfectly was it done that no successful attempt to counterfeit any of them was ever made. At the trial of the cashier of the Havre de Grace Bank, Maryland, in 1851, he was acquitted because, ns was claimed by the attorney, "all the opera- tions of the bank were fictitious ; that the funds, soon after they were paid in by the stockholders, were returned to them in New York where all the money be- longing to the concern was kept, so that there was nothing left for the cashier to steal."
In October, 1837, the Ohio State Journal said the stockholders and directors of several of the banks of Ohio, entertained serious intentions of closing their banking business and diverting their capital to some species of investment which would promise a better return. On the sixth and seventh of June, 1838, a conven- tion of Ohio banks was held in Columbus, and a committee on resumption of specie payments previously appointed, consisting of Messrs. Swan, Hubbard, Woodbridge, Moore and King, reported that,
Whereas, the General Assembly, by act of March 13, 1838, required resumption by Ohio hanks on or before July 4, 1838, provided the banks of New York, Philadelphia and Balti- more shall at that time have resumed :
Resolved, That it be recommended to the banks of this state to resume the payment of their notes in specie on the fourth of July next, provided that authentie information shall have been received that the banks of New York, Philadelphia and Baltimore have resumed the payment of their notes in specie.
2. In case said eastern banks do not resume July 4, Messrs. J. M. Creed, R. W. Mc- Coy and William Neil are appointed a committee to fix the day, and give information when the banks shall resume.
400
HISTORY OF THE CITY OF COLUMBUS.
On the second of August this committee issued notice that, believing that the banks of Massachusetts, Rhode Island, Connecticut, Pennsylvania, Virginia, Ken- tucky, and Baltimore would resume the payment of their bills in specie on the thirteenth, they recommended to the Ohio banks to do the same. The Ohio State Journal in announcing the fact adds that, "as the curreney regains its original strength, the hopes of the 'experimenters' sink."
Niles's Register of May 20, 1820, says, " the speciepaying banks of Ohio are Chillicothe, Lancaster, Marietta, Belmont, Mt. Pleasant, Western Reserve and two at Steubenville. The notes of the rest are generally seventy to seventyfive per cent. discount. Some of the bank notes of Columbus have been sold at that rate in the town of Columbus. The new banks of Kentucky have chiefly gone by the board ; the bills of the old banks are hardly disposed of at Baltimore at twenty per cent. discount. The same or a higher discount is required on those of Tennessee, Mississippi and Alabama. Pennysivania bills of banks west of the mountains, are generally bad, except those of Pittsburgh, varying from fifteen to fiftyfive per cent. discount, but happily scarce."
Niles's Register further says: " The following has been published as the true ' democratic' plan of operations when the Bank of the United States shall wind up its affairs : ' A substitute for cach state instead of a branch of the United States Bank, increasing the capital of each state from one to ten millions (to be owned and managed by the citizens of each state).' According to this plan Ohio, Pennsylvania and New York would have had ten millions apiece." The Register comments on this plan by saying, " with this project perfected how great would be the ' division of the spoils' in presidentships, cashierships, directorships, clerk- ships, and all sorts of agencies."
On the fourteenth day of February, 1836, the legislature of Ohio enacted a law "to prohibit the circulation of small bills." The act provided that the Treasurer of State should draw on the banks for twenty per cent. of their divi- dend, with the proviso that if any bank should " prior to the fourth of July next, with the consent of its stockholders, by an instrument in writing under its corporate seal, addressed to the Auditor of State, surrender the right conferred by its charter to issue or circulate notes or bills of a less denomination than three dollars, after the fourth of July, 1836, and any notes or bills of a less denomination than five dollars after July 4, 1837," then the Auditor should draw for only five per eent. of the dividend. And this legislation was enacted at a time when the country was flooded with what was known as the " fippenny bit " or " shinplaster " currency, issued by towns, corporations and individuals in amounts from five cents up to a dollar.
On the tenth of the following June, a convention of delegates from the banks in the State was held in Columbus. The number of delegates in attendance indi- eates the interest felt. The following is the list: From the Franklin Bank, Columbus, Gustavus Swan and Alfred Kelley ; Clinton, Columbus, Joseph Ridgway ; Commercial, Cleveland, T. P. Handy ; Bank of Cleveland, John M. Woolsey ; Bank of Marietta, Douglas Putnam ; Bank of Zanesville, D. W. Rhodes ; Bank of Xenia, J. Hivling ; Bank of Chillicothe, Thomas James and Nathaniel Sawyer;
Ing doy F & Komman, N.
:
401
BANKS AND BANKING.
Bank of Norwalk, G. Mygatt; Farmers' and Mechanics' Bank of Steubenville, Daniel L. Collier ; Commercial Bank of Scioto, HI. Buchanan and T, Irvin ; Bank of Cireleville, Joseph Olds and H. Lawrence; Belmont Bank of St. Clairsville, W. B. Hubbard ; Western Reserve Bank, Zalmon Fitch ; Columbiana Bank of New Lisbon, Charles D. Coffin ; Bank of Muskingum, R. Stillwell and B. Van Horne ; Farmers' Bank of Canton, John Harris ; Bank of Wooster, Joseph S. Lake; Gran- ville Alexandrian Society, A. G. Hammond and J. Baker ; Lancaster Bank, J. Creed and Samuel F. Maccracken ; The Miami Exporting Company, Daniel Gano. Gustavus Swan was chairman and T. P. Handy secretary of the convention. The object of the convention was declared to be to consider the propriety of surren- dering that portion of the bank charters which allowed the issue of bills of a less denomination than five dollars, and adopt other measures in relation to the act before referred to. Resolutions were adopted recommending compliance with the terms of the act, both by the banks which are and those which are not embraced in its provisions. Among the resolutions adopted was the following :
Resolved that, in the present state of pecuniary embarrassment, it is, in the opinion of this convention, the duty of the banks to extend to the community all the relief in their power not inconsistent with the paramount duties of preserving a sound currency and secur- ing their own safety.
On the seventeenth of April, 1837, a large meeting was held in the United States Courtroom, composed largely of leading citizens in attendance on the Cir- cuit Court, then in session, to consider the deranged state of the currency and the measures adopted by the late, and persisted in by the present administration of the General Government. Addresses were made by Colonel William Key Bond, Al- fred Kelley, General W. H. Murphy and Colonel Richard W. Thompson. A cor- responding committee was appointed consisting of John L. Miner, Lyne Starling, William Doherty, John W. Andrews and Joseph Ridgway, Junior.
On June 2, 1837, the Ohio State Journal said : " The fippenny bit note system has now got completely under way in many parts of the country, especially in the eastern cities, and is daily being adopted in the principal business towns in Ohio." On the twentieth of May, 1837, the delegates again met in convention, with W. B. Hubbard, chairman, and J. Delafield, secretary. Among other resolutions the fol- lowing were adopted :
1. Each bank pledges itself not to sell, during the suspension, other than by the exchange of coin for coin, any of its silver, gold or bullion.
2. The business of each bank shall be so conducted as to enable it to resume specie payments at any moment.
3. The rate of exchange for sight drafts on Eastern cities not to exceed two per cent.
4. Every bank to receive for debts dne it paper at par of banks represented in this convention.
5. Every bank to furnish the others its officially certified statement every sixty days.
The statement of the banks of Ohio at this time showed liabilities, 89.674,747 ; available means, $17,715,106. The Ohio Life Insurance and Trust Company saved
26
402
HISTORY OF THE CITY OF COLUMBUS.
its charter by resuming, but succumbed ten years later. The newspapers contained a notice of $32,000 of Eastern drafts for sale on liberal terms by D. W. Deshler, corner of High and Broad streets.
At a convention of Ohio banks held in Columbus on the twentyseventh of June, 1839, of the thirtytwo banks in the State twentyfive were represented. Among other things recommended was that frequent and frank disclosures should be made between the banks, and by the banks to the public, as to condition and business. This was subsequently effectually accomplished by the State Bank of Ohio, every branch being required to make out on the first of every month a com- plete statement of its business on that day, which was forwarded to the Secretary of the Board of Control, and by him tabulated and printed, and a copy sent to every branch.
At a meeting of citizens of Detroit in January, 1820, it was agreed that the notes of Ohio banks should be received at the following rates: Chillicothe, New Lancaster, Marietta, St. Clairsville, Farmers' and Mechanics' Bank of Stenben- ville, and Western Reserve Bank, at par, these banks paying specie; Miami Exporting Company: Leka .. m ; Miami Banking Company ; Dayton Manufacturing Company ; Zanesville Canal and Banking Company ; Urbana, Columbus, Canton, Hamilton, West Union, and Commercial Bank of Lake Erie at twenty per cent. discount.
As late as October, 1854, " wildcat " banking had assumed serious propor- tions. The newspapers abounded in statements that monetary distress pervaded all classes, and " the bank excitement was raging furiously." All the banks of Columbus except the City Bank refused to receive any notes of banks west of Ohio except the State Bank of Indiana.
The legislation of Ohio was very hostile to banks during the first fifty years of the existence of the State, or until the year 1860. Repeated acts of hostility were passed changing the bank charters, especially by altering the manner of taxation. By an act passed March 14, 1853, it was enacted that if a bank should refuse to pay the tax assessed against it, which might be different from that provided in its charter, with a penalty of five per cent , within five days after notice, the treasurer was authorized to seize any "gold, silver, or copper coin, bullion, bank bills, promissory notes or bills of exchange or other securities or chattels . . . of the bank, or of any partner or member thereof," and any " commissioner" appointed to col- lect such tax was authorized to pursue "said coin, bullion, bank bills, promissory notes," &c., into any other county in the State to which they may have been re- moved : and to perform their duties under the act, " the county treasurer or com- missioner . . . shall have power to break and open any outer or inner door, win- dow, or enclosure, and any vault, safe, chest, box, desk, drawer or other depository." The county treasurer or commissioner was also made subject to a penalty of the amount of taxes due, with interest and penalty of ten per cent. for any neglect of duty. Such laws as these were enacted even after the Supreme Court of the State had declared them unconstitutional.
By an act passed May 1, 1854, it was made unlawful " to pass, transfer, or cir- culate, either directly or indirectly, or offer to pass, transfer or circulate, or cause
l'incimadi
403
BANKS AND BANKING.
to be passed, transferred or circulated, or to receive or cause to be received, any bank bill or note of less denomination than ton dollars" issued by any bank out of this State, under a penalty, if a bank officer, of one hundred dollars ; or if issued by any other person, ten dollars ; and the bank officer must redeem the notes issued " in gold or silver coin." The object of the law abolishing small notes was to bring into circulation silver and gold coin -" Benton's Mint Drops," as the pieces were then ealled, from an eloquent passage in one of Senator Benton's speeches in which he represented the gold coins dropping from the mint, and every farmer carrying a long silken purse, through the interstices of which the golden coin would glitter. The bank of the United States had established a branch at Cincinnati January 28, 1817, and one at Chillicothe October 13, in the same year. The charter of the bank provided the method of taxation, but the States Rights doctrine got possession of the legislature ot' Ohio, and on the eighth of February, 1819, an act was passed pro- viding that " if, after the first day of September next, the Bank of the United States . . . shall continue to transact banking business within this state " it "shall pay a tax of fifty thousand dollars per annum upon each office of discount and de- posite." The act also taxed "each individual, company or association . . . that shall commence or continue to transaet banking business within this state after the first day of September next" ten thousand dollars per year. The Anditor of State was authorized to appoint " any person " he might choose to collect the tax and, in case payment was refused, and such person could not find in the banking room any money, bank notes, goods, chattels, or other property whereon to levy he should go into cach and any other room or vault of such banking house, " and every closet, chest, box, or drawer in such banking bouse to open and search " and take pos- session of whatever might be found. If the levy should not be made, then the " cashier, clerk or other persons . . . who have charge of the funds of the bank" were to be brought before the next court of common pleas, but if they were dis- charged they must pay the costs.
On the twentyninth of January, 1821, the legislature of Ohio enacted a law to withdraw from the Bank of the United States the protection and aid of the laws of the State in certain cases. Section one of that act made it unlawful, after Sep- tember first, for " any sheriff or other keeper of any jail within this State to receive into his custody any person arrested .. . taken, or charged in oxecution at the suit of the president, directors, and company of the Bank of the United States, or any person committed for or upon account of any offense alleged and charged to have been committed upon the property, rights, interests or corporate franchises of said bank." Section two prohibited any "judge, justice of the peace, or other judicial officer" in the State from receiving "any acknowledgment in proof of the acknowledgment of any deed or conveyance of any kind whatever to which " the Bank of the United States was a party, " and no recorder shall receive into his office or record any deed of conveyauce of any description whatever " in which the bank was a party. Notaries were forbidden to make protest of any note or bill payable to the bank. Section four provided that for any violation of the provisions of the act the sheriff should be liable to a fine of two hundred dollars, and a judge, justice or recorder to a fine not exceeding five hundred dollars, and a notary should
404
HISTORY OF THE CITY OF COLUMBUS.
be removed from office. But seetion five was perhaps the most remarkable speci- men of legislation to be found in the history of the country. It provided that if the Bank of the United States should discontinue its suits in the courts of the State brought to determine its rights under the laws of the State, and agree to pay a tax equal to four per cent. on its dividends, then the Governor should issue his proclamation declaring the aet suspended and that it eeased to have any effect. Thus a bank chartered by Congress being objected to and an attempt to destroy it having been frustrated by the courts, the legislature then outlawed it, deprived it of all the usual means of even collecting a debt, and to give a romantic finish to such legislation, if the bank would acknowledge itself beaten and do all that had been demanded of it, the Governor was to repeal the act of the legislature by issu . ing his proclamation declaring it null and void. Why could not such legislation be enacted against some obnoxious individual as well as against a bank ? The following members of the legislature entered their protest against the passage of this act : William Vance, James Cooley, James Harris, Jonathan Sloane, John R. Parish, and William W. Gault.
On the passage of the act, the bank not ceasing to do business, the officers of . the State proposed to collect the tax. The bank applied to the United States Court for an injunction, which was granted. Notice of the injunction was served on the Auditor of State, but he issued a warrant for the collection of the tax, and authorized John L. Harper to collect it. Taking with him Thomas Orr and J. McCollister, on the seventeenth of September, he went to the Chillicothe branch and demanded one hundred thousand dollars, which was refused, the refusal being accompanied by notice of the injunction. Harper entered the vault and seized the amount in coin and bank notes, and handed it over to the Treasurer of State. Subsequently, Samuel Sullivan, then State Treasurer, reported that the United States Court had ordered him to return the amount taken from the United States Bank, but inasmuch as the Auditor of State had issued no order as required by law, he refused to comply, whereupon he was " placed in custody of the marshal " and the keys of the treasury taken from him by " the commissioners named in the writ, who entered the vault of the treasury and took therefrom the ninetyeight thousand dollars" which had been taken from the bank at Chillicothe. Two thousand dollars of the sum taken from the bank had been retained by the sheriff as his fee. The Supreme Court affirmed the decision, and the State submitted, but in January, 1821, the legislature adopted the following resolutions :
That in respect to the powers of the governments of the several states that compose the American Union, and the powers of the Federal Government, this General Assembly do recognize and approve the doctrines asserted by the legislatures of Kentucky and Virginia in their resolutions of November and December, 1798, and Jannary, 1800, and do consider that their principles have been recognized and adopted by a majority of the American people.
That this General Assembly do assert and will maintain, by all legal and constitutional means, the right of the State to tax the business and property of any private corporation or trade incorporated by the Congress of the United States and located to transact its corporate business within any state.
That the Bank of the United States is a private corporation of trade, the capital and business of which may be legally taxed in any state where they may be found.
405
BANKS AND BANKING.
That this General Assembly de protest against the doctrine that the political rights of the separate states that compose the American Union and their powers as such sovereign States may be settled and determined in the Supreme Court of the United States so as to conclude and bind them in cases contrived between individuals and where they are no one of them parties direct.
As a further illustration of the singular legislation of the period, the following may be cited : An act passed January 27, 1816, intended to prohibit the cirenla- tion of the notes of unincorporated banks provided that, if any person shall receive and offer in payment the bond, bill, note or contract of any bank knowing the same to be unincorporated, payable to bearer or to order, he shall for such offense for- feit three times the amount of such bond, bill, note or contract.
On February 8, 1819, an act was passed which provided that it shall not be lawlul for any person within this State to purebase, receive in payment, or receive upon any kind of barter or exchange whatever, any bank note or bank notes for a less amount than the sum expressed to be due in the body thereof under a penalty of five hundred dollars.
In order to furnish a better currency for the State, the legislature, on February 23, 1816, enacted a general banking law, incorporating the following banks : The Franklin Bank, Columbus; The Bank of Lancaster, The Belmont Bank of St. Clairsville : The Commercial Bank, of Lake Erie ; The Bank of Mount Pleas- ant, and The Bank of West Union, with a capital of one hundred thousand dollars cach. The act was signed by Matthias Corwin, President of the Senate, and Peter Hitchcock, Speaker of the House of Representatives. The charter provided that " the total amount of the debts which any one of said corporations shall at any time whether by bond, bill, note or otherwise contract over and above the monies actually deposited in such bank, shall not exceed three times the sum of capital stock subscribed and actually paid into the bank, one half of which at least shall be in specie." The capital of every bank might be augmented to five hundred thou- sand dollars by vote of the directors. One share in every twentyfive was set apart to the State in lieu of all taxes, the dividends on such shares to be reinvested for the State in stock until it should " amount to one sixth part of the whole stock of each bank," thus making the State a stockholder and engaging it in the business of banking. This law was-repealed in 1825 by an act relinquishing the stock so set apart, and substituting in its stead a tax of two per cent. on the dividends from the date of the charter up to that date, and four per cent. thereafter.
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.