Standard history of Pittsburg, Pennsylvania, Part 34

Author: Wilson, Erasmus, 1842-1922; Goodspeed, Weston Arthur, 1852-1926. cn
Publication date: 1898
Publisher: Chicago : H.R. Cornell & Co.
Number of Pages: 1192

USA > Pennsylvania > Allegheny County > Pittsburgh > Standard history of Pittsburg, Pennsylvania > Part 34

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The Branch office at Pittsburg probably, from its establishment, was intrusted with the Government deposits arising from the sale of public land, etc. It was arranged that whenever the deposits in this Branch were required by the Government, the parent Bank of Pennsylvania should honor drafts or checks for the full amount. It was enacted, March II, 1815, "that each branch bank within this Commonwealth shall receive in payment, as well as from other banks as from individuals, any note or notes of the original bank of which it is a branch." The greatest amount of deposits at any one period from March 4, 18II, to January 8, 1812, was $154,474.17. On the 30th of September, 1811, the amount was $69,562.82. On the 17th of January, 1811, it was $137,442. II, received wholly, or nearly so, from the sale of public lands. On the 28th of November, 1814, there was in the Branch belonging to the Government only $910.59 (j). So great was the need at this time of money to carry on the military expenses of the Government that all the banks in the Union containing national deposits were thoroughly drained. On January 1, 1816, there was in the Branch belonging to the Government a special deposit of banknotes to the amount of $616,088.76; March 1, 1817, the amount had fallen to $37,225.83; June 1, 1817, it was $98,904.83; September 1, 1817, it was $209,607.23; still later in 1817 it was $16,314.88. On June 28, 1817, the Treasurer of the United States drew on this Branch for $633,127.04. On December 27, 1817, $255,880.35 of Govern- ment funds was drawn from the Pennsylvania Branch at Pittsburg and deposited in the United States Branch recently established here. On February 18, 1818, $20,848 more was thus transferred, after which no more special deposits were placed in the former Branch, which ceased to exist. It should be noted that, in 1817, special deposits of the Government were made in the Bank of Pitts- burg and in the Farmers' and Merchants' Bank of Pittsburg. They, in comnion with all other State banks in which deposits were made by the Government, fought hard against the relinquishment of this privilege.

It should be borne in mind, therefore, that Pittsburg had two Branch banks. One, which was established in 1804 and continued until February, 1818, was a Branch of the Bank of Pennsylvania, and in it were stored the moneys of the Government as special deposits. The other was a branch of the Bank of the United States, and succeeded in 1817-18 as the custodian of the public money, but not as a special custodian. The former was a Pennsylvania bank, intrusted with the Government funds; the latter was chartered by Congress and was a child of the Government. The first Branch and the Pittsburg Manufacturing Company (later the Bank of Pittsburg) carried this borough through the War of 1812, greatly to their credit.

(i) American State Papers, Vol. III.

(j) American State Papers, Vol. II.

307

HISTORY OF PITTSBURG.

On June 1, 1818, George Poe, Jr., cashier of the Branch of the Bank of the United States at Pittsburg, sent to the Treasury Department "an account for services rendered in arranging the special deposit of banknotes in the late office of the Bank of Pennsylvania at Pittsburg" (k). On August II, 1820, he was allowed $367. 50 for his services.

By act of Congress, approved April 10, 1816, the second Bank of the United States was established, with a capital of $35,000,000, divided into 350,000 shares of $100 each. Of this amount the Government subscribed for 70,000 shares, amounting to $7,000,000, and the balance was opened to the subscription of individuals, companies or corporations in the several States, neither of which was permitted to subscribe for more than 3,000 shares. Of this stock it was provided that $7,000,000 should be paid in "gold or silver coin of the United States, or in the gold coin of Spain, or the dominions of Spain. . . . or in other foreign gold or silver coin," upon certain specified estimates of valuation. It was also provided that payments for stock should be partly made in the funded debt of the United States; that at the time of subscribing $5 on each share in gold or silver coin and $25 more on each share, either the same coin or funded debt obligations of the Government, should be paid, and the balance in specifled installments; that the corporation should be styled "The President, Directors and Company of the Bank of the United States," and should continue in existence until March 3, 1836; that it should have twenty-five directors, of whom five should be appointed by the President of the United States; that the directors should have power to elect officers and adopt rules and by-laws; that the amount of debt which the corporation might owe at any time by bond, bill, note or other contract (except in deposits) should not exceed $35,000,000; that it should not take more than six per centum per annum for or upon its loans or discounts; that its operations should be limited to certain banking privileges specified, and that no note of less amount than $5 should be issued. The act further recites tliat-

"It shall be lawful for the directors of the said corporation to establish offices of discount and deposit, wheresoever they shall think fit, within the United States or the Territories thereof, and to commit the management of said offices, and the business thereof, respectively, to such persons and under such regulations as they shall deem proper, not being contrary to law or the constitution of the bank. Or, instead of establishing such offices, it shall be lawful for the directors of the said corporation, from time to time, to employ any other bank or banks, to be first approved by the Secretary of the Treasury, at any place or places that they may deem safe and proper, to manage and transact the business proposed as aforesaid, or other than for the purposes of discount, to be managed and transacted by such offices, under such agreements, and subject to such regulations as they shall deem just and proper. Not more than thirteen or less than seven inanagers or directors, of every office established as aforesaid, shall be annually appointed by the directors of the bank, to serve one year; they shall choose a president from their own number; each of them shall be a citizen of the United States and a resident of the State, Territory or District wherein such office is established; and not more than three-fourths of the said managers or directors, in office at the time of an annual appointment, shall be reappointed for the next suc- ceeding year; and no director shall hold his office more than three years out of four, in succession; but the president may always be reappointed" (1).

Among other provisions it was declared that the Treasury of the United States should be furnished from time to time with statements of the amount of the capital stock of the corporation and of the debts due to the same; of the moneys deposited therein; of the notes in circulation and of the specie on hand; and

(k) American State Papers, Vol. IV.

(1) Extract from the Enactment of April 10, 1816.

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HISTORY OF PITTSBURG.

shoukl have a right to inspect such general accounts in the books of the bank as related to such statement; that the bills or notes of the corporation originally made payable or which should become payable on demand should be receivable in all payments to the United States unless otherwise directed by Congress; that the bank should facilitate the transfer of public funds from place to place within the United States without charging commission or exchange; that it should not suspend nor refuse to redeem any of its notes, bills or obligations in gold and silver, nor refuse the payment "of any moneys received upon deposit in said bank, or in any of its offices of discount and deposit."

The officers of the Bank of the United States performed the duty of com- missioner of loans for the State of Pennsylvania, were the agents for the payment of pensions of every description in this State, and were charged with the super- intendence of the branches of the bank (m). The bank found it impossible at first to sign its notes fast enough to supply its branches with the necessary currency, which checked the progress of some of the branches and prevented the con- tinuance of others (m). The banks of the principal cities which had suspended in 1814 resumed specie payment, by special agreement with State and United States banks, February 20, 1817. According to existing laws, in 1818, specie and the bills and notes of the Bank of the United States were alone receivable in all payments to the Government.

"We understand that the directors of the Bank of the United States have determined upon establishing a Branch bank in this city and have elected the following gentlemen directors: Adamson Tannehill, George Stevenson, William Robinson, Jr., George Boggs, James Ross, Robert Patterson, Walter Forward, S. Barlow (Meadville), Ebenezer Denny, Thomas Baird, Anthony Beelen, William McCandless, William Hill, George Poe, Jr., cashier" (n).

The Mercury of November 14, 1817, announced that Adamson Tannehill had been elected president of the board of directors of the Branch.'

"The Office of Discount and Deposit, established in this city by the Bank of the United States, commenced business on Monday last. We understand notes intended for discount must be lodged in the office on Wednesday in each week" (o).

By the 18th of May, 1818, the Government's deposit of the notes of State banks in the Branch at Pittsburg had been reduced to $212,095.67, and by June 22, 1818, to $158,532.20 (p). This reduction was owing to the heavy demands of the Government for funds to pay its current expenses and its notes falling due.

About the Ist of June, 1818, E. J. Roberts and John Taggart were sent out as agents of the Branch at Pittsburg by George Poe, Jr., cashier, to collect cer- tain accounts due the bank. They presented to the cashiers of the Farmers' Bank of Canton, Ohio, the German Bank of Wooster, and the Commercial Bank of Lake Erie their own notes for redemption, to the aggregate amount of $68,626. They reported that the Canton bank paid part in coin, but refused to pay the balance, though offering to assign judgments for more than the amount; that the Wooster bank refused to pay anything or assign a reason for so doing; that the Cleveland bank at first complied by counting out nearly the whole amount in specie, boxing and marking it with the letters "U. S .; " but when, after much trouble, means were obtained for carting it, the directors, who in the meantime had held a hurried meeting, refused to let it go, and refused to receive it as a special deposit of the Government, and even refused to return the notes, or to give a certificate of deposit, but tendered a post note due in twenty days, or nothing. In other banks the agents were similarly treated. Every effort was made by the banks to avoid paying in first-class paper or specie, for the evident

(m) American State Papers, Vol. III. (n) Mercury, October 24, 1817.

(o) Mercury, January 16, 1818.

(p) American State Papers, Vol. IV.

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HISTORY OF PITTSBURG.

reason that they did not have it and wanted time to collect. The branches, there- fore, were unable to collect their dues and the parent bank was compelled to bor- row foreign specie to meet the demands of the Government (q).

On May 7, 1818, George Poe, Jr., gave to his agents, Messrs. Taggart and Roberts, notes and drafts to the amount of $99,011 to collect. They were author- ized to receive in payment notes of the Bank of the United States, its branches, of the Banks of Philadelphia, New York, Baltimore, Richmond and its branches, Pittsburg (except the Farmers' and Mechanics' Bank), banks of the District of Columbia (except the Merchants'), and specie.

On the 25th of June, 1818, the Branch at Pittsburg exhibited discounted bills on personal security to the amount of $910,276. 14; had due it from other branches $106,009.79; owned $14,123. 13 in real estate; had on hand in notes of the Bank of the United States and its branches $338,250, and notes of other banks $164,604.20, and specie $64,035.44; owed the parent bank $1,358,946.98, and had on hand individual deposits to the amount of $54,345.56 (r).

On October 1, 1818, the Branch in this city exhibited the following state- ment: Bills discounted to the amount of $1,008,254.30; was the creditor of specie-paying banks to the amount of $39,500; had on hand the notes of specie- paying banks, $146,967.20, and showed a total amount due the Bank of the United States of $1,194,721. 50. At this time the individual deposits reached the sum of $63,814.66. On September 30, 1818, there was due the Treasurer of the United States from the Pittsburg Branch the sum of $157,713.51. By October I, 1818, the Branch had outstanding $420,000 of bank, branch and post notes, and had on hand of the same $232,380 (s). On November 1, 1818, it had on hand in specie $91,672.64, but individual deposits had fallen to $20,840.64. By Decem- ber 24, 1818, the Branch had issued $420,000 of its own notes. The following statement shows the disposition of the loans of the Branch on February 3, 1819 (t):

To mechanics and manufacturers. $479,III.22

To merchants 183,406.62

To farmers. 30,300.00

To corporations, churches and others 44,945.00

Total $737,762.84

By September 23, 1819, it had outstanding loans on discounted bills to the amount of $689,661.05; on domestic bills of exchange, $38,405; had on hand in specie $10,242.53; owed the parent bank and its officers $1,120,931.37, and had on hand individual deposits to the amount of $17,649.18 (u). After the Bank of the United States went into operation, its stock rapidly increased in value, as shown by the following statement (u):

December, 1816, per share. $ 37 to $42

April, 1817, per share. 81 to 82

August, 1817, per share. 140 to 156

November, 1818, per share. IIO to II2

December 14, 1818, per share. IIO to II4

The enormous shrinkage in the value of the stock, as shown in the above table, was caused by the panic of 1818-19, one of the severest the banks of Pitts- burg, as well as those of the country generally, ever were called upon to undergo. The numerous suspensions which resulted, thus retiring all small change in circu- lation, occasioned intense distress among business men, and were the imme-

(q) American State Papers, Vol. IV.

(s) American State Papers, Vol. III.

(u) American State Papers, Vol. III.

(r) American State Papers, Vol. III.

(t) Mercury, February 12, 1819.

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HISTORY OF PITTSBURG.

diate cause of the issuance of large quantities of small notes of denominations varying from twenty-five cents to two dollars by individuals, brokers, private bankers, turnpike and bridge companies and municipal authorities. Pittsburg was soon flooded with these "shinplasters," issued both here and elsewhere.

"The United States Bank, which a few years ago was identified with Federal- ism and scouted from the haunts of civilized society, was recalled and reinstated in all her former splendor, with tenfold power and influence." "We have heard it further stated that the affairs of the Branch of this place have been canvassed by the mother bank, in consequence probably of our town meeting; the investigation, it is said, has resulted highly in favor of the Branch, whose conduct has been approved and commended in every respect." · 'We

should not be surprised if the hostility against the old Bank of the United States were to reappear with twofold bitterness against the present one. That the investigation will be fatal to the continuance of the branches west of Pittsburg

is beyond a doubt."

. "There are three banks here: The Branch of the

United States Bank, the Bank of Pittsburg and the Farmers' and Mechanics'

Bank, but the buildings they occupy were originally intended for private dwell-

ing houses." "The Branch Bank of the United States in this place and the other Western offices have been authorized to purchase bills of exchange drawn on New Orleans, giving therefor checks at four months after date on the bank at Philadelphia, the operation to commence at the season when produce is usually sent down the Mississippi" (v).

Adamson Tannehill, Thomas Baird, William McCandless, James. S. Ste- venson, John Little, Richard Biddle, James Riddle, Matthew B. Lowrie and William McKnight were elected directors of the Branch of the United States Bank in Pittsburg for the year, October, 1819, to October, 1820. James S. Ste- venson was elected president for one month; but about December 1, 1819, was succeeded by Dr. George Stevenson. The Directors of the mother bank elected these men and voted out the following, who were prohibited by law from serving any longer, their terms having expired: Ebenezer Denny, Anthony Beelen, Oliver Ormsby, Robert Patterson, George Wallace, William Robinson, Jr., and George Boggs (v).

Previous to October, 1819, no definite capital had been assigned to the branches of the Bank of the United States, but on October 5th of that year the capital of the Pittsburg Branch was fixed at $700,000, exclusive of $12,900.76 estimated worth of realty, fixtures, etc. (w).

"The Bank of the United States never has lost a single cent by its loans in Pittsburg, and there is no danger, no suspicion of a loss in future. We state upon undoubted authority that the amount of bills discounted, including bills of exchange, does not exceed $690,000. Upwards of $400,000 of this sum were discounts transferred from the Bank of Pennsylvania when the present Branch Bank was located here. Of course, not more than $300,000 have been loaned by the present directors. About four months since an order came from the parent board for a uniform curtailment of five per cent .; the last discount day was the fifteenth of this curtailment, and we are informed that only one or two instances have occurred of a failure in complying with this demand. The bank, in granting an extended period for payment, has accepted from its debtors the pledge of a part only of their estates as ample security. . When the whole amount of large possessions was offered, honestly offered, by one or two of our townsmen, whose enterprise left them embarrassed when the day of our adversity arrived, even the bank, smarting as she must have been under the losses with which she was threatened from other places, was perfectly satisfied with the security of a portion

(v) Various issues of the Gazette from December, 1818, to October, 1819.

(w) American State Papers, Vol. IV.

3II

HISTORY OF PITTSBURG.

of the offered property. Not a single stock note was ever discounted, for no stock was held here except the amount necessary to enable citizens to sit as directors; nothing, we candidly believe, was done but upon good personal security, in addi- tion to what may be termed real security; that is, the actual proprietorship on the part of the borrowers of valuable real property. In times of common prosperity, such as Pittsburg has seen, and such as, we confidently believe, she will see again, the property of one of the individuals alone upon whom suspicion of failure has fallen would be amply sufficient to pay the whole amount loaned by the board in their new capacities of directors of the Branch of the United States" (x).

By 1820 the financial condition at Pittsburg had not visibly improved. On June 21, 1821, the Branch had outstanding of its own notes $136,650; had individual deposits on hand, $34,038.82; specie on hand, $59,751.42, and had discounted bills on personal security to the amount of $668,725.61 (y). On February 20, 1824, the Branch had on hand in specie $57,283.06; in notes of the Bank of the United States and its branches, $108,735; owned real estate worth $35,000; had discounted on personal security, $661,653.76. It had on hand individual deposits, $43,650.05; deposits of the Treasurer of the United States, $46,272. 73; was the creditor of the Bank of the United States and its branches to the amount of $682,366.46, and its own notes were in circulation to the amount of $134,227.50. On January 25, 1826, the Branch had outstanding on bills dis- counted on personal security, $748,857.10; on domestic bills of exchange, $80,- 687.91; owned real estate worth $77,905; had on hand in specie, $37,675.77; had issued in notes, $176,977.50; owed the parent bank and branches, $61,829.02, and had individual deposits on hand to the amount of $72,708.22 (z).

On December 30, 1823, the Branch had outstanding $145,437.50 in notes; had on hand deposits to the amount of $58,479.61, and owed to the Bank of the United States and its offices $678,410.14. It had discounted on personal security bills to the amount of $665,308.66; owned $93,889 worth of real estate; was the creditor of the Bank of the United States and its offices to the amount of $39,- 568.87; had on hand $8,015 worth of State banknotes, $50,330 of notes of the Bank of the United States and its branches, and $21,385.68 in specie.

Alexander Brackenridge, James S. Stevenson, John S. Riddle, John Towne, Samuel Thompson, William McKnight, Charles Avery, George Boggs, William McCandless, John Little, James Park and Thomas Bakewell were appointed directors of the Branch on the 14th of October, 1828, for the coming year. On the 20th of October the directors reelected Mr. Brackenridge president.

From 1826 until the removal of the deposits from the Bank of the United States by President Jackson, Pittsburg enjoyed remarkable prosperity. The removal was made at a period when manufacturers required the accommodation of bank loans-had absolutely depended upon them. In the light of subsequent history it seems that it would have made little difference whether there was a large curtailment of loans by the Bank of the United States or not, so long as business men depended upon them and were fearful they would not be granted. · The panic was one affecting credit. The Branch was compelled to act as directed by the parent bank. From February 1, 1833, to February 1, 1834, the Branch here reduced its discounts to the amount of $242,000; its bills of exchange to the amount of $335,000; its deposits to the amount of $170,000; and its circulation to the amount of $363,000.

"This branch has recently been compelled to decline purchasing bills on the West, which has caused much embarrassment and difficulty to the manufacturers and commission merchants here by deranging entirely their former very con- venient and advantageous plans of doing business, and at the same time depriving

(x) Pittsburg Gazette, September 14, 1819.

(y) American State Papers, Vol. V.

(z) American State Papers, Vol. V.

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HISTORY OF PITTSBURG.

them of so much cash capital. During the time of the prosperity-of the Branch . . the manufacturer had only to make his sales to merchants or others at Nashville, St. Louis, etc., then draw his bill at four or six months, and then he could at once get the money at the Branch. Thus, on the very day he would be prepared to go on to receive and execute other orders of equal amount. Such were the facilities which the Branch formerly afforded and under which our manufac- turers prospered so much and arrived at their recent prosperous condition" (a).

The directors of the Branch chosen October 24, 1834, were A. Bracken- ridge, John Little, James Park, Thomas Bakewell, Benjamin Darlington, Abishai Way, William Holmes, Samuel Thompson, John D. Davis and James Thomp- son. Mr. Brackenridge was elected president.

"Resolved, as the sense of the Senate and House of Representatives, that, whereas, the Bank of the United States has tended, in a great degree, to main- tain a sound and uniform currency, to facilitate the financial operations, to regu- late foreign and domestic exchange, and has been conducive to commercial prosperity, the Legislature of Pennsylvania recommend a renewal of its charter, under such regulations and restrictions, as to the power of the respective states, as Congress may deem right and proper" (b).

By resolution the General Assembly of Pennsylvania instructed its representa- tives in Congress to use their exertions to secure a renewal of the charter of the Bank of the United States (c). During January and February, 1835, it became apparent in Pittsburg that the Bank of the United States would not be rechar- tered, and, in consequence, would be obliged to close its doors in March, 1836. Accordingly, in order to supply the money thus withdrawn from circulation and prevent any embarrassment among local business men, several petitions were for- warded to the Legislature asking that "The Commercial Bank of Pittsburg" might be chartered. A writer in the Gazette of February II, said:

"It is not to be presumed that, taking into view the wholesome conditions of the loans made at the Branch bank in this city, it will not be necessary to make any curtailment of discounts much, if any, before the expiration of her charter; but it must be apparent to any intelligent mind, that if another institution is not prepared to take the place of the present Branch bank in supplying the wants of the community, the expiration of the United States Bank charter, or the dis- continuance of the Branch in this place to discount, will be the signal for a severe pecuniary pressure throughout our community, and our manufacturers and arti- sans will not be the last to suffer. To the State banks these notes and bills (d) have performed the office of specie. All the State banks have discounted upon the possession of them with the same freedom and boldness as they would have done on an equal amount of the precious metals" (e).

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Standard history of Pittsburg, Pennsylvania, Part 34

Author: Wilson, Erasmus, 1842-1922; Goodspeed, Weston Arthur, 1852-1926. cn Publication date: 1898 Publisher: Chicago : H.R. Cornell & Co. Number of Pages: 1192

Author: Wilson, Erasmus, 1842-1922; Goodspeed, Weston Arthur, 1852-1926. cn
Publication date: 1898
Publisher: Chicago : H.R. Cornell & Co.
Number of Pages: 1192